17 May 2024 Contract Law >> Corporate Law   |   Hindu Succession Act >> Inheritance   |   Property/Real Estate Law >> Property & Real Estate  

A recent Supreme Court case highlights the importance of clear ownership and communication in real estate transactions. The case involved a dispute over a land sale agreement where the buyer, unable to complete the purchase, sued to enforce the contract.

Facts:

The buyer (appellant) entered into an agreement to purchase land from one of the sellers (respondent no. 4), who claimed to act on behalf of the other co-owners (respondents 2-11) through a power of attorney. The buyer made some payments towards the purchase price, and the agreement was extended a few times. However, before the final deadline for completing the sale, another individual acting as a power of attorney holder for the co-owners (respondent no. 1) sold the land to a different party (respondents 12-14). The buyer, frustrated by the turn of events, sued the original sellers to enforce the initial agreement.

Lower Courts Disagreed on Enforcement:

The trial court initially ruled in favor of the buyer, but the High Court overturned that decision and dismissed the case. The key issues that reached the Supreme Court centered on co-owner consent and the power of attorney holder's authority.

Supreme Court Sides with Co-owner Consent:

The Supreme Court agreed with the High Court's reasoning. Since not all co-owners signed the initial agreement to sell, the contract was not legally binding. All co-owners must consent to the sale of jointly owned property for a real estate transaction to proceed. The Court also addressed the buyer's argument that the power of attorney holder acting on their behalf could confirm their readiness and willingness to complete the purchase. The Court disagreed, stating that in specific performance cases, where a party seeks to enforce a contract, the party themself typically needs to testify about their own intentions.

Conclusion:

With the Supreme Court ruling against the buyer on both key points – lack of co-owner consent and limitations of the power of attorney holder's testimony – the appeal was dismissed. The buyer could not enforce the agreement due to incomplete ownership consent and their own failure to personally confirm their readiness to complete the purchase. This case serves as a reminder for both buyers and sellers in real estate transactions. Buyers should ensure clear ownership and proper authorization from all co-owners before entering an agreement. Sellers, when utilizing power of attorney holders, should understand the limitations of their authority, particularly regarding the other party's state of mind.

  Specific Relief Act, 1963    Hindu Succession Act, 1956