1. The first defendant is the appellant. The suit was filed by the respondents herein for a declaration and permanent injunction restraining the defendants from interfering with his possession and enjoyment. There was an alternative relief for partition and separate possession, which was later on given up. The facts of this case are as follows.
2. The property in question originally belonged to one Chenni Vannan, the father of plaintiff 6 to 8 and grand father of plaintiffs 2 to 5. The first plaintiff is the daughter-in-law of the said Chenni Vannan. This Chenni Vannan entered into an agreement to sell with the first defendant on 7th April, 1949. Under the same document, the first defendant also agreed to reconvey the property within a period of seven years on the terms and conditions contained therein. The first defendant sold the property on 20th September, 1954 before the expiry of the said period of seven years to one Pappa Naicker with an agreement that the said Pappa Naicker will reconvey the property to the first defendant within a period of three years. Chenni Vannan subsequently purchased the property directly from Papa Naicker on 1st August, 1957 . The first defendant filed a suit O. S. No. 737 of 1957 on the file of the Court of the District Munsif, Erode against Pappa Naicker for specific performance of the agreement to sell dated 20th September, 1954. Pappa Naicker in this suit filed a written statement contending that he had already sold the property to Chenni Vannan and that the purchaser Chenni Vannan is a necessary party to the suit. In spite of this defence, the first defendant did not implead Chenni Vannan as a party to O. S. No. 737 of 1957. The suit itself was decreed in 1963 and in execution of the decree, a sale deed was executed in favour of the first defendant. A certificate of possession was also given to the first defendant. It has now been found by both the Courts below that the purchase by Chenni Vannan on 12th August, 1957, was with the knowledge of the agreement of reconveyance executed by Pappa Naicker to the first defendant. It has also been found by the lower appellate Court that though a sale deed was executed in pursuance of the decree in O. S. No. 737 of 1937, the possession given under that sale deed was only a symbolic possession and the actual possession of the property continued with Chenni Vannan.
3. The learned Counsel for the appellant contended that since he has obtained a decree for specific performance against Pappa Naicker, the vendor of Chenni Vannan and obtained a sale deed in execution of the same, the plaintiff is not entitled to the declaration and injunction prayed for in the suit. The question for consideration is whether this submission is acceptable.
4. A contract for sale of immoveable property does not create any interest in such immoveable property. Therefore the vendor could enter into a sale transaction with a third party and confer absolute title on him in spite of the agreement to sell. As between the subsequent purchaser and his vendor, there is a valid transfer of ownership and the title is conveyed to the subsequent purchaser. But if the purchase by the third party was with the knowledge of the agreement to sell, he will hold the property subject to the obligation under Section 91 of the Indian Trust Act, 1882. This section provides that where a person acquires property with notice that another person has entered into an existing contract affecting that property, of which specific performance could be enforced the former must hold the property for the benefit of the latter to the extent necessary to give effect to the contract. Thus, the obligation of holding it as a trustee is only to the extent necessary to give effect to the contract. It does not affect the passing of the title. In other words even where Section 91 of the Act is applicable the transaction of sale is not made void, but the subsequent purchaser is under an obligation to convey the property to the agreement-holder as and when he establishes his rights. In fact the Supreme Court in Durga Prasad v. Deep Chand , held that it would not be proper in a suit for specific performance to declare the sale void or cancel the sale in favour of the subsequent purchaser but the proper decree that could be passed is
"to direct the specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff"
. It is on this basis as noticed by this Court in
Thangavel Chettiar and Anr. v. Kuppu Bai and Anr. , that the practice has grown in suits for specific performance to direct not only the person, who agreed to sell immoveable property but also the person to whom contrary to that agreement the owner had sold the property, should join in the execution of the sale deed in favour of the person entitled to specific performance. In
Marina Appa Rao v. Marina Veeranna , this Court considered the effect of execution of a sale deed by the original owner alone without the subsequent purchaser joining the sale. After noting that the title of the subsequent purchaser with notice of the prior agreement in favour of another is subject to the obligation under Section 91 of the Act, Subba Rao J. (as he then was), held that if the contract for the purchase of immoveable property with the original owner does not create any interest in him, the sale effected by the owner after he had already parted with the title to a third party, to the original agreement-holder cannot also confer a title. The agreement-holder can acquire title to the property only if proper conveyance is executed by the subsequent purchaser as well. Though this judgment might be interpreted as holding that the sale deed in purchase of a decree for specific performance is to be executed only by the subsequent purchaser and to that extent is not fully supported by the view of the Supreme Court in
Durga Prasad v. Deep Chand 1954 S.C.J. 23 : (
1954)1 M.L.J. 60, the decision is certainly an authority for the position that the original owner by himself could not confer or convey any title in respect of the property, which he had already sold to a subsequent purchaser. These principles clearly show that the subsequent purchaser is a necessary party in a suit for specific performance and the decree should direct both the owner and the subsequent purchaser to execute the conveyance in favour of the agreement-holder. This was also the view expressed in
Premsukh Gulgulia v. Habib Ullah
A.I.R. 1945 Cal. 355, The same view was expressed in a different way in Krishnaswamy v. Sundarappayyar (
1895) I.L.R. 18 Mad. 415 :
5 M.L.J. 164. There it was argued that the subsequent purchaser is not a necessary party to the suit and when he was impleaded an objection was raised that the suit is bad for mis-joinder of parties. Overruling this objection this Court held:
The cause of action, namely, the right to obtain a sale deed and possession of the property purchased, concerns both the defendants and entitles plaintiff to relief against both.
This legal position is also recognised in Section 19 (b) of the Specific Relief Act, 1963, which enables the agreement-holder to enforce specific performance of the contract against any person claiming under a party to the contract by a title arising subsequent to the contract. Unfortunately, for the defendants in this case, in spite of objection taken by Pappa Naciker, he did not implead Chenni Vannan in O. S. No. 737 of 1957. The sale deed was executed only by Pappa Naicker in execution of the decree and that could not have conveyed the title in the suit property in favour of the first defendant.
5. In the result, the second appeal fails and it is dismissed. There will be no order as to costs.
6. No leave.