Allahabad High Court Reverses Trial Court's Decision on Impleadment in Property Dispute

Agreement to Sell Does Not Confer Ownership; Court Sets Aside Impleadment of Proposed Vendees

In a significant ruling, the Allahabad High Court has overturned a lower court's decision regarding the inclusion of parties in a property dispute, emphasizing that an agreement to sell does not confer any legal interest or ownership rights in the property. The judgment, delivered by Justice Manish Kumar Nigam, addressed the complexities surrounding the impleadment of proposed vendees based on an agreement to sell executed by one of the co-owners of the disputed property.

The case in question, Deependra Chauhan v. Phool Kumari Chauhan and others, revolves around a suit for partition and permanent injunction concerning a property in NOIDA. The plaintiff, Deependra Chauhan, contested the trial court's decision to allow the impleadment of two individuals who claimed interest in the property through an agreement to sell executed by the plaintiff's mother, Phool Kumari Chauhan.

Justice Nigam, while setting aside the trial court's order dated August 29, 2023, clarified that under Section 54 of the Transfer of Property Act, 1882, an agreement to sell does not create any interest or charge upon the property. It only establishes an enforceable right to seek specific performance for the execution of a sale deed. The judgment delineates that such agreements do not vest ownership rights in the proposed vendee, thereby making them neither necessary nor proper parties to the suit.

The court further underscored the principle of lis pendens under Section 52 of the Transfer of Property Act, which prohibits the alienation of property during the pendency of litigation without court approval. Justice Nigam reiterated that the proposed vendees could not claim any substantive interest in the property as their agreement was not backed by a sale deed, and thus, did not alter the legal standing of the property in dispute.

The judgment highlighted the importance of Order I Rule 10 of the Civil Procedure Code, which governs the addition of parties to a suit. Justice Nigam emphasized that only those whose presence is essential for the complete adjudication of the questions involved should be added, which was not the case for the proposed vendees.

The ruling provides clarity on the legal standing of agreements to sell and reinforces the protection of parties involved in property disputes from unwarranted claims. The judgment serves as a crucial precedent in property litigation, emphasizing the limitations of agreements to sell in conferring legal rights to vendees.

Bottom Line:

Agreement to sell does not create any legal or equitable interest in property; it only creates an enforceable right to get the sale deed executed.

Statutory provision(s): Transfer of Property Act, 1882 Sections 52, 54; Civil Procedure Code, Order I Rule 10.

Deependra Chauhan v. Phool Kumari Chauhan, (Allahabad) : Law Finder Doc Id # 2807806