Why 2 registered deeds couldn't undo a 1987 agreement of sale.

One agreement, two sales, and a kartha who changed his mind

In 1987, Munichannarayappa, as head of a Hindu joint family, agreed to sell family properties to Pillappa for Rs.23,500. He took the money. He handed over possession. He never signed the sale deed. Seven years later, he and his brother Venkatesha partitioned the properties between themselves. The next year, Venkatesha sold his share to C. Kempanna. Pillappa, who had been sitting on a paid-for agreement for eight years, finally went to court. The question that reached the Karnataka High Court in 2024 was not whether Pillappa had been wronged — both lower courts had already said yes — but whether a subsequent buyer who paid full value could undo a decree of specific performance that had been pending for nearly two decades.

The stakes were concrete: a family property, a bank loan repaid, a buyer who had paid the full price and taken possession, and another buyer who had bought a partitioned share from a co-owner. The High Court of Karnataka at Bengaluru, through Justice H.P. Sandesh, dismissed the second appeal in C. Kempanna v. Munichannarayappa & Others (R.S.A. No.1102/2008 (SP)), decided on 28 March 2024. The judgment answers two questions that practitioners face regularly: whether a kartha's agreement binds the entire joint family without all members being parties, and whether a plaintiff seeking specific performance must also seek a declaration under Section 34 of the Specific Relief Act, 1963 against subsequent documents.

The agreement that never became a deed

Munichannarayappa, acting as kartha of the Hindu undivided joint family, executed an agreement of sale on 19 February 1987 in favour of Pillappa. The consideration was Rs.23,500 — paid in full. Possession was delivered. The purpose was to repay a bank loan taken by the joint family. But the sale deed was never executed.

In 1994, Munichannarayappa and his brother Venkatesha executed a partition deed, dividing the properties between themselves. In 1995, Venkatesha sold his share to C. Kempanna under a registered sale deed dated 22 May 1995. Pillappa, who had been in possession since 1987, discovered these transactions and filed a suit for specific performance of the 1987 agreement.

The Trial Court — the Civil Judge (Jr.Dn.) and JMFC, Devanahalli — decreed specific performance on 24 June 2006. It found the agreement genuine, the consideration paid, possession delivered, and Pillappa ready and willing to perform his part. It also held that Kempanna was not a bona fide purchaser for value without notice. The First Appellate Court — the Civil Judge (Sr.Dn.) and JMFC, Devanahalli — confirmed this on 3 November 2007 after re-appreciating the evidence.

Kempanna then filed a second appeal before the Karnataka High Court under Section 100 of the Code of Civil Procedure, 1908.

What Kempanna argued — and why it failed

Kempanna raised three substantial questions of law. First, he argued that the suit for specific performance was not maintainable because all members of the joint family were not parties to the agreement of sale. Second, he contended that the plaintiff ought to have sought a declaration under Section 34 of the Specific Relief Act that the subsequent partition deed and sale deed were not binding on him. Third, he argued that the suit was barred by limitation and that Pillappa had not proved readiness and willingness.

To support these arguments, Kempanna cited three Supreme Court decisions. In B. Vijaya Bharathi v. P. Savitri and Others (2018) 11 SCC 761, the Court had held that the bar of Section 16(c) requiring readiness and willingness is a basic condition for grant of specific performance, and if attracted, the suit must be dismissed at threshold regardless of whether purchasers are bona fide. In Shanmughasundaram and Others v. Diravia Nadar and Another (2005) 10 SCC 728, the Court had held that in the absence of all co-owners being parties to the agreement, the vendee can at best obtain the undivided interest of the contracting co-owners, and Section 12 of the Specific Relief Act cannot be invoked to force partition on non-party co-owners. In Shenbagam and Others v. K.K. Rathinavel 2022 SCC Online SC 71, the Court had held that courts must consider the conduct of parties, escalation of price, and whether one party will unfairly benefit when deciding specific performance.

Justice Sandesh distinguished each of these precedents on facts. In B. Vijaya Bharathi, the plaintiff had not proved readiness and willingness. Here, both lower courts had concurrently found that Pillappa was ready and willing. In Shanmughasundaram, the agreement was not by a kartha for legal necessity binding the joint family. Here, Munichannarayappa had acted as kartha, the consideration was used to repay a joint family debt, and possession had been delivered. In Shenbagam, the Court had considered the conduct of the parties and the escalation of price, but here the suit had been filed immediately after Pillappa discovered the subsequent transactions — there was no delay that warranted denial of relief.

The kartha's power — and why it binds the family

The first substantial question — whether specific performance could be decreed without all joint family members being parties — was answered by the High Court by examining the nature of a kartha's authority. When a kartha executes an agreement of sale for legal necessity, such as repayment of a joint family debt, the agreement binds the entire joint family. The consideration received is used for the benefit of the family. The fact that other members were not parties to the agreement does not make the agreement unenforceable against the family property.

Justice Sandesh observed that both lower courts had found that the sale consideration of Rs.23,500 was used to repay a bank loan taken by the joint family. This was a legal necessity. The kartha had the authority to sell the property for this purpose. The subsequent partition between Munichannarayappa and Venkatesha, and the sale to Kempanna, were attempts to defeat the prior agreement. The High Court held that specific performance could be decreed against the entire property, not merely against Munichannarayappa's share.

THE PLAY: When a kartha executes an agreement of sale for legal necessity and receives full consideration used for family benefit, the agreement binds the entire joint family property. Subsequent purchasers from individual co-owners cannot defeat the prior agreement by arguing that other family members were not parties to it.

No declaration needed — the Section 34 trap avoided

The second substantial question — whether the plaintiff ought to have sought a declaration under Section 34 of the Specific Relief Act that the subsequent partition and sale deeds were not binding — was the most significant legal issue in the appeal. Section 34 provides that a person entitled to any legal character or right as to any property may institute a suit for a declaration, but no court shall make such a declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so.

Kempanna argued that since the subsequent documents were registered, Pillappa could not ignore them and had to seek a declaration that they were not binding. The High Court rejected this argument. Justice Sandesh held that when subsequent documents are executed with the intention to defeat a prior agreement of sale, the court can grant specific performance without the plaintiff seeking a separate declaration that those documents are not binding. The reason is simple: a decree of specific performance, by its very nature, overrides subsequent transactions. If the court orders that the property be conveyed to the plaintiff, the subsequent documents automatically become ineffective to the extent they are inconsistent with that decree.

The Court noted that Section 34 is a discretionary relief and the plaintiff cannot claim it as a right. More importantly, the proviso to Section 34 — that a plaintiff who can seek further relief must do so — applies only when the plaintiff seeks a mere declaration. Here, Pillappa was not seeking a mere declaration. He was seeking specific performance, which is a form of further relief. The declaration that the subsequent documents were not binding was implicit in the decree for specific performance. No separate prayer was required.

Limitation — the clock starts on refusal

The third substantial question — limitation — was answered by reference to the nature of agreements for sale of immovable property. Time is not the essence of such contracts unless the parties expressly make it so. The agreement of 1987 did not specify a date for execution of the sale deed. Pillappa had paid the full consideration and taken possession. He had no reason to sue until he discovered that Munichannarayappa and Venkatesha had executed a partition deed and sold the property to Kempanna.

The suit was filed in 1995, immediately after Pillappa discovered these transactions. The cause of action arose upon refusal — which occurred when the subsequent documents were executed. The suit was within limitation. The High Court upheld the concurrent findings of the lower courts on this point.

Why this matters in practice

For advocates, this judgment clarifies two recurring issues in specific performance litigation. First, when a kartha of a Hindu joint family executes an agreement for legal necessity, the plaintiff does not need to implead all joint family members. The kartha's agreement binds the family property. Second, a plaintiff seeking specific performance does not need to add a separate prayer for declaration under Section 34 against subsequent documents. The decree of specific performance itself overrides those documents.

For CFOs and founders dealing with property transactions, the takeaway is simpler: if you buy property from a co-owner after a partition, you must check whether there was a prior agreement of sale by the kartha. If there was, and if the consideration was paid and possession delivered, your registered sale deed may be worthless. The prior agreement will prevail, even if you paid full value and acted in good faith.

The High Court dismissed the appeal. The judgment and decree of the Trial Court and First Appellate Court granting specific performance in favour of Pillappa were confirmed. Kempanna, who had bought the property in 1995, lost it in 2024 — nearly three decades later. The lesson is as old as property law itself: a prior agreement, fully performed except for the deed, will defeat a subsequent registered sale every time.