Introduction: The Hon’ble Supreme Court has held that an agreement to sell does not create any right title or interest in immovable property and that a suit for permanent injunction without a declaration of title is not maintainable against third parties

The Respondents who were not in possession and had no registered sale deed had instituted a suit seeking an injunction against the Appellant despite not having any privity of contract with them. The agreement to sell dated 10th April 2018 was not executed with the Appellant and was not supported by a registered document. The vendors under the agreement were not parties to the suit.

The Hon’ble Supreme Court while allowing an appeal filed by a 148-year-old charitable trust reiterated that a mere agreement to sell does not confer any legal right or title to the agreement holder under Section 54 of the Transfer of Property Act 1882. The Court set aside the orders of the Karnataka High Court and the Trial Court and allowed the application for rejection of the plaint under Order VII Rule 11(a) and (d) of the Code of Civil Procedure 1908.

The Court held that the doctrine of part performance under Section 53A of the Transfer of Property Act cannot be invoked against third parties. Any remedy under such agreements is limited to seeking specific performance against the vendor. A suit for injunction without a declaration of title is not maintainable when title is in dispute.

The Court found that the plaint was drafted in a manner that created an illusion of a cause of action but failed to disclose any legal right. The Court relied on Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Anr. (2012) 1 SCC 656; Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra (Dead) through LRs & Anr. (2004) 8 SCC 614; and Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) (D) thr LRs & Ors.(2020) 7 SCC 366 and held that no enforceable right arose from the agreement to sell.

The Respondents had claimed to have paid Rs. 7500000 in cash. This was found to be in violation of Section 269ST of the Income Tax Act 1961. The Court directed all trial courts to inform jurisdictional income tax authorities whenever a plaint discloses cash transactions above Rs. 200000. Directions were also issued to all High Courts State Governments and Income Tax authorities to ensure compliance.

The suit was dismissed and the plaint rejected. The Court reiterated that such speculative litigation must be curtailed at the threshold to protect judicial time and public interest¹.

By - Chaitanyaa Bhandarkar