The Punjab & Haryana High Court has reaffirmed that a registered sale deed executed pursuant to a prior agreement to sell cannot be invalidated by a subsequent release deed, where the latter is tainted by mala fide intent to defeat the buyer’s enforceable rights. The judgment underscores the doctrine of lis pendens and the limited scope of interference in second appeals on factual findings.
Background & Facts
The Dispute
The plaintiffs, Krishna Devi and Niranjan Lal, filed a civil suit seeking declaration that a Release Deed dated 24.04.2007 and Mutation No.1595 dated 28.05.2007 were null and void, and that Krishna Devi was entitled to have her name recorded in the revenue records for a property measuring 3 kanal 17 marla. The dispute arose from a chain of transactions involving the defendant No.3, Pat Ram, who allegedly sold the property to the plaintiffs under an Agreement to Sell dated 17.11.2006, but later executed a Release Deed in favour of his minor sons - defendants No.1 and 2 - before completing the sale.
Key Facts
- The suit property was owned by defendant No.3, Pat Ram, measuring 3 kanal 17 marla.
- On 17.11.2006, Pat Ram executed a registered Agreement to Sell (Ex.PW1/A) with plaintiff No.2, Niranjan Lal, for sale of the property at Rs.20 lakh per acre.
- An earnest money of Rs.2,00,000 was paid on execution of the Agreement.
- The Agreement stipulated that the Sale Deed was to be executed by 30.06.2007.
- On 06.06.2007, Pat Ram executed a registered Sale Deed (Ex.PW1/B) in favour of plaintiff No.1, Krishna Devi, for the same property.
- The balance sale consideration of Rs.7,62,500 was paid in cash before registration, as attested by two witnesses.
- On 24.04.2007, Pat Ram executed a Release Deed (No.133) in favour of his minor sons (defendants No.1 and 2), transferring his entire share in the property.
- Mutation No.1595 dated 28.05.2007 was sanctioned in favour of the appellants based on the Release Deed.
- The plaintiffs discovered the Release Deed when attempting to record the Sale Deed in revenue records and filed suit on 26.07.2007.
- The appellants claimed the property was ancestral and that Pat Ram was intoxicated at the time of executing the Agreement to Sell.
- Pat Ram did not appear as a witness despite filing a written statement.
Procedural History
- 17.11.2006: Agreement to Sell executed between Pat Ram and Niranjan Lal.
- 24.04.2007: Release Deed No.133 executed by Pat Ram in favour of defendants No.1 and 2.
- 28.05.2007: Mutation No.1595 sanctioned in favour of appellants.
- 06.06.2007: Sale Deed No.594 executed in favour of plaintiff No.1.
- 26.07.2007: Civil Suit filed by plaintiffs seeking declaration and possession.
- 31.08.2012: Additional Civil Judge (Senior Division), Rewari, decreed the suit, setting aside the Release Deed and Mutation.
- 16.04.2015: Additional District Judge, Rewari, dismissed the first appeal filed by defendants No.1 and 2.
- 23.03.2026: Regular Second Appeal dismissed by Punjab & Haryana High Court.
The Parties' Positions
- Plaintiffs: Argued that the Agreement to Sell and Sale Deed were duly executed, consideration was paid, and the Release Deed was a mala fide attempt to defeat their rights.
- Defendants No.1 & 2 (Appellants): Claimed they were lawful owners since the Release Deed preceded the Sale Deed; alleged the Sale Deed was without consideration and the Agreement was executed under intoxication.
- Defendant No.3 (Pat Ram): Filed written statement denying execution of Agreement and receipt of consideration, but did not appear as a witness.
Relief Sought
The plaintiffs sought:
- Declaration that the Release Deed No.133 dated 24.04.2007 and Mutation No.1595 dated 28.05.2007 are null and void.
- Inclusion of plaintiff No.1’s name in revenue records.
- Permanent injunction restraining defendants from interfering with possession.
The Legal Issue
The central question was whether a registered sale deed executed pursuant to a prior agreement to sell can be invalidated on the ground that the seller had previously executed a release deed in favour of third parties, and whether the doctrine of lis pendens applies to protect the buyer’s rights under such circumstances.
Arguments Presented
For the Appellant
Counsel for appellants contended that:
- At the time of execution of the Sale Deed on 06.06.2007, Pat Ram had already divested himself of title by executing the Release Deed on 24.04.2007.
- The Release Deed was registered and the mutation was sanctioned, establishing appellants’ ownership.
- The plaintiffs failed to prove payment of consideration, as the Sale Deed bore no endorsement by the Sub-Registrar.
- Under Section 54 of the Transfer of Property Act, a sale without consideration is void.
- The plaintiffs had not made any inquiry with the revenue department and were not bona fide purchasers.
- The suit was maintainable only for specific performance, not for declaration and possession.
- Relied on Ramesh Chander v. Mangat Ram, Krishan Kumar v. Ram Pal, and Dhanbarti Koerin v. Shyam Narain Mahton to support the argument that title cannot pass without consideration.
For the Respondent
Counsel for plaintiffs countered that:
- The Agreement to Sell and Sale Deed were both registered documents, attracting the presumption of truth under Section 114 of the Evidence Act.
- Multiple attesting witnesses, including the deed writer and registration clerk, proved execution and payment of consideration.
- Defendant No.3, the executant of the Sale Deed, did not appear as a witness despite filing a written statement, warranting an adverse inference.
- The appellants, being strangers to the transaction, had no locus to challenge the Sale Deed.
- No evidence was led to prove the property was ancestral or that Pat Ram was intoxicated.
- The Release Deed was executed after the Agreement to Sell and was therefore hit by lis pendens.
- The concurrent findings of fact by two lower courts could not be disturbed in a second appeal.
The Court's Analysis
The Court undertook a meticulous review of the evidence and held that the appellants’ challenge was fundamentally flawed on both factual and legal grounds. The judgment emphasized that the doctrine of lis pendens operates to protect the rights of a party who has entered into a binding agreement prior to any subsequent alienation.
"The said Release Deed is therefore, hit by the principle of lis pendens."
The Court noted that the Agreement to Sell dated 17.11.2006 was executed first, creating a contractual obligation on Pat Ram to transfer the property. The Release Deed dated 24.04.2007, executed thereafter, was a deliberate attempt to defeat the buyer’s enforceable rights. The Court relied on the principle that a subsequent transfer by a party bound by a prior contract cannot defeat the rights of the prior purchaser.
The Court further held that the absence of a Sub-Registrar’s endorsement on the Sale Deed did not negate payment of consideration, as the attesting witnesses PW6 and PW8 unequivocally testified to the payment of Rs.7,62,500 in cash before registration. The Court cited the First Appellate Court’s observation:
"No reasonable explanation has been put forward for non-examination of Pat Ram and in these circumstances I draw an adverse inference against him because he could not dare to appear into the witness box to test his veracity."
The Court also rejected the appellants’ claim that the property was ancestral, noting that no evidence was led to substantiate this assertion. The burden of proof lay squarely on the appellants, who failed to discharge it.
The Court reiterated the settled position that in a second appeal under Section 100 of the CPC, interference is permissible only on substantial questions of law or procedural error, not on re-appreciation of evidence. The concurrent findings of fact by two lower courts, based on documentary evidence and witness testimony, were entitled to finality.
"The jurisdiction in second appeal is not to interfere with the findings of fact on the ground that findings are erroneous, however gross or inexcusable the error may seem to be."
The judgments cited by the appellants were distinguished on facts, as they involved absence of consideration or fraud by the seller himself, not a subsequent alienation by a party bound by a prior contract.
The Verdict
The Regular Second Appeal was dismissed. The High Court upheld the concurrent judgments of the lower courts, affirming that:
- The Release Deed dated 24.04.2007 and Mutation No.1595 dated 28.05.2007 are null and void.
- The Sale Deed dated 06.06.2007 is valid and enforceable.
- Plaintiff No.1, Krishna Devi, is entitled to have her name recorded in the revenue records.
- The defendants are permanently restrained from interfering with the plaintiffs’ possession.
- Costs of Rs.25,000 were awarded to the plaintiffs.
What This Means For Similar Cases
Lis Pendens Protects Prior Contractual Rights
- Practitioners must argue that any subsequent transfer by a seller bound by a prior agreement to sell is voidable under lis pendens, even if the subsequent transferee is a registered owner.
- The doctrine applies irrespective of whether the subsequent transferee is a family member or stranger.
- Registration of a subsequent deed does not override a prior enforceable contract.
Documentary Evidence and Witness Testimony Trump Allegations
- A mere denial in a written statement, without corroboration or witness testimony, cannot defeat registered documents supported by attesting witnesses.
- Non-examination of a party who executed a document warrants an adverse inference under Section 114 of the Evidence Act.
- Payment of consideration can be established through attesting witnesses even if the registrar’s endorsement is absent.
Second Appeals Are Not Fact Re-trials
- Appellate courts must resist re-appreciating evidence in second appeals unless a substantial question of law arises.
- Findings based on documentary evidence and concurrent findings of fact are binding.
- Challenges based on alleged non-payment of consideration must be substantiated with evidence, not mere technicalities.
