The Supreme Court has held that under Section 31 of the Specific Relief Act, 1963 (SRA), it is not mandatory for a third party, against whom a sale deed is void, to apply for its cancellation.
The Court clarified that if a third person, who was not part of a sale transaction, is adversely affected by the sale deed, they are not required to initiate a separate suit for cancellation.
The ruling came in the case where a co-owner had sold a joint family property without the authorization of the other co-owners, which led to a legal challenge.
The co-owners act of transferring the entire property to the appellant via a sale deed was contested by the respondent, one of the co-owners, who claimed that such a transfer was void since the co-owner was only entitled to sell his share of the property and not the entire property.
Court’s Observations
A bench comprising Justices Sudhanshu Dhulia and Pankaj Mithal observed that in cases where there are multiple co-owners, a purchaser cannot claim title over the entire property solely based on a sale deed executed by just one co-owner.
The Court further noted that when a co-owner sells the whole property without the consent of the other co-owners, the sale deed becomes void concerning the other co-owners shares.
One of the key contentions raised by the appellant was that since the respondent had not specifically asked for the cancellation of the sale deed, it could not be canceled by the court. However, relying on Section 31 SRA, the Court rejected this argument.
It stated that the provision uses the word “may,” which makes it discretionary rather than mandatory for an affected third party to seek a declaration that the sale deed is void.
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Applicability of Section 31 of the Specific Relief Act
The Supreme Court highlighted that the cancellation of an instrument as per Section 31 SRA is not an action in rem (against the world at large), but rather in personam (against specific parties involved).
Therefore, the cancellation would only bind the parties to the proceedings and not others who are not part of the instrument.
This observation was made in light of the Court’s earlier decision in the case M/s Asian Avenues Pvt Ltd vs Sri Syed Shoukat Hussain, 2023 LiveLaw (SC) 369, where it was held that an action under Section 31 for cancellation is not a universal remedy that affects all parties but only those directly involved in the instrument.
Implications of the Judgment
This judgment brings clarity to the legal position regarding the rights of co-owners in property disputes, particularly in cases where one co-owner unlawfully transfers the entire property.
It underscores that a third party, such as the non-transferring co-owners, is not obligated to file a separate suit for cancellation if they are not parties to the sale deed.
The Court’s ruling is significant for property law, especially for cases involving joint family property or co-ownership.
By interpreting Section 31 of the Specific Relief Act as discretionary, the Supreme Court has ensured that third parties are not burdened with unnecessary litigation when challenging a void sale deed.
Case Details:
- Title: SK. Golam Lalchand vs Nandu Lal Shaw @ Nand Lal Keshri & Ors.
- Civil Appeal No.: 4177 of 2024
- Bench: Justices Sudhanshu Dhulia and Pankaj Mithal