Section 7 Transfer of Property Act | Fraudulent Sale by Unauthorized Person Void Ab Initio, Res Judicata Inapplicable: Karnataka HC

The Karnataka High Court, in a landmark judgment, has redefined the boundaries of Section 7 of the Transfer of Property Act, 1882, by holding that a sale deed executed by an unauthorized person under fraudulent circumstances is void ab initio. The Court set aside multiple lower court decrees, declaring the appellants as the rightful owners of the disputed agricultural land, and underscored that fraud unravels all judicial acts, including those that have attained finality.

Background & Facts

The Dispute

The dispute revolves around agricultural land measuring approximately 11 acres (Sy.Nos.90 and 91) situated at Kolavanahalli Village, Chikkaballapur Taluk. The property was originally purchased by Sri Mallige Byrappa in a public auction on 16.11.1944, as evidenced by a saguvali chit (Ex.P12 and P13). Mallige Byrappa had a son, Sri Ramaiah, and five daughters. During his lifetime, Ramaiah allegedly sold the property to Sri Krishnappa (respondent No.1) via a sale deed dated 04.10.1979 (Ex.D3), despite Mallige Byrappa being alive and residing with him.

Key Facts

• 16.11.1944: Mallige Byrappa purchases the suit property in a public auction.
• 04.10.1979: Ramaiah executes a sale deed (Ex.D3) in favour of Krishnappa, excluding Mallige Byrappa.
• 19.04.1980: Mallige Byrappa files O.S.No.81/1980 for declaration and injunction, alleging fraud and collusion in the sale deed.
• 20.06.1980: Mallige Byrappa executes a registered Will (Ex.P11) bequeathing the property to his daughters.
• 30.04.1982: Mallige Byrappa passes away during the pendency of O.S.No.81/1980.
• 18.12.1992: Trial Court dismisses O.S.No.81/1980, holding that Ramaiah had authority to sell as kartha of the joint family.
• 09.08.1994: First Appellate Court confirms the dismissal of O.S.No.81/1980.
• 26.02.2001: Karnataka High Court dismisses R.S.A.No.379/1996, the second appeal against the dismissal of O.S.No.81/1980.
• 06.03.2006: Mallige Byrappa’s daughters execute sale deeds (Ex.P5 and P6) in favour of the appellants (Narayanaswamy and Venkatesh).
• 2006-2007: Multiple suits filed by both parties:
  • O.S.No.170/2006: Krishnappa sues for injunction.
  • O.S.No.416/2007: Appellants sue for declaration and injunction.
  • O.S.Nos.10/2015, 11/2015, 12/2015, 13/2015: Subsequent suits for injunction and declaration.
• 18.08.2007: Temporary injunction granted in O.S.No.170/2006.
• 16.11.2007: Single Judge dismisses W.P.No.16029/2007 challenging the injunction.
• 28.12.2007: Division Bench disposes of W.A.No.2136/2007, directing the Trial Court to dispose of the suit without being influenced by earlier findings.
• 17.12.2016 and 28.12.2016: Trial Court delivers judgments in the various suits:
  • Dismisses O.S.No.416/2007 (appellants’ suit for declaration and injunction).
  • Decrees O.S.No.10/2015 in favour of Krishnappa (respondent’s suit for injunction).
  • Dismisses O.S.Nos.11/2015, 12/2015, and 13/2015 (appellants’ suits).
• 15.06.2023: First Appellate Court confirms the Trial Court’s judgments in R.A.Nos.6/2017, 7/2017, 8/2017, 9/2017, and 13/2017.
• 24.04.2026: High Court reserves judgment in the present appeals.

Procedural History

• 19.04.1980: Mallige Byrappa files O.S.No.81/1980 for declaration and injunction.
• 18.12.1992: Trial Court dismisses O.S.No.81/1980.
• 09.08.1994: First Appellate Court dismisses R.A.No.6/1993.
• 26.02.2001: High Court dismisses R.S.A.No.379/1996.
• 2006-2007: Multiple suits filed by both parties, leading to common trial.
• 17.12.2016 and 28.12.2016: Trial Court delivers judgments in O.S.Nos.416/2007, 10/2015, 11/2015, 12/2015, and 13/2015.
• 15.06.2023: First Appellate Court confirms Trial Court’s judgments in R.A.Nos.6/2017, 7/2017, 8/2017, 9/2017, and 13/2017.
• 12.06.2026: High Court allows the present appeals, setting aside all lower court decrees.

The Parties' Positions

For the Appellants

• Title Claim: Appellants derive title from Mallige Byrappa’s daughters, who inherited the property under a registered Will (Ex.P11) dated 20.06.1980. The daughters executed sale deeds (Ex.P5 and P6) in favour of the appellants on 06.03.2006.
• Fraud Allegation: Ramaiah had no authority to sell the property as he was neither the owner nor the kartha of the joint family. The sale deed (Ex.D3) was executed fraudulently by manipulating the RTC (Ex.P24) to insert Ramaiah’s name, excluding Mallige Byrappa.
• Res Judicata: The earlier judgments in O.S.No.81/1980 and subsequent appeals were obtained by fraud and do not operate as res judicata.
• Possession: Appellants claim possession based on the sale deeds executed by the daughters, who were the rightful legatees under the Will.

For the Respondent

• Title Claim: Krishnappa claims title under the sale deed (Ex.D3) executed by Ramaiah, arguing that Ramaiah acted as the kartha of the joint family.
• Possession: Respondent claims possession based on Ex.D3 and argues that the appellants’ suits for injunction are barred by res judicata.
• Fraud Denial: Respondent denies any fraud, contending that Ramaiah had the authority to sell the property and that the earlier judgments have attained finality.
• Res Judicata: Relies on the principle of res judicata, arguing that the issues were already adjudicated in O.S.No.81/1980 and subsequent appeals.

Relief Sought

• Appellants: Seek declaration of title and permanent injunction in their favour, setting aside the decrees in O.S.No.10/2015 and confirming the decrees in O.S.Nos.416/2007, 11/2015, 12/2015, and 13/2015.
• Respondent: Seeks dismissal of the appeals and confirmation of the decrees in his favour.

The Legal Issue

The central legal questions before the Court were:

1. Whether Section 7 of the Transfer of Property Act, 1882, permits a person without title or authorization to convey valid title to a property.
2. Whether the doctrine of res judicata applies to a judgment obtained through fraud or based on a void transaction.
3. Whether the First Appellate Court erred in rejecting the appellants’ application under Order 6 Rule 17 of the CPC to amend the plaint to plead fraud in detail.
4. Whether the Trial Court and First Appellate Court erred in granting injunction in favour of the respondent based on a void sale deed.

Arguments Presented

For the Appellants

• Section 7 of TP Act: Ramaiah was not competent to transfer the property as he lacked title or authorization. The sale deed (Ex.D3) is void ab initio.
• Fraud: Ramaiah manipulated the RTC (Ex.P24) to insert his name, excluding Mallige Byrappa. The respondent and Ramaiah colluded to defraud Mallige Byrappa.
• Res Judicata: The earlier judgments were obtained by fraud and do not operate as res judicata. Relied on Canara Bank v. N.G. Subbaraya Setty (2008) 16 SCC 228, which holds that an erroneous judgment on jurisdiction or illegality cannot be res judicata.
• Will: Mallige Byrappa’s Will (Ex.P11) was proved in compliance with Sections 63 of the Indian Succession Act and 68 of the Evidence Act, and the daughters’ sale deeds (Ex.P5 and P6) convey valid title.
• Possession: Appellants are in possession based on the sale deeds executed by the daughters, who were the rightful legatees.

For the Respondent

• Section 7 of TP Act: Ramaiah acted as the kartha of the joint family and had the authority to sell the property. Relied on Nopany Investments (P) Ltd. v. Santokh Singh (HUF) (2008) 2 SCC 728, which holds that a junior member can act as kartha in exceptional circumstances.
• Res Judicata: The issues were already adjudicated in O.S.No.81/1980 and subsequent appeals, and the judgments have attained finality. Relied on Swamy Atmananda v. Sri Ramakrishna Tapovanam (2005) 10 SCC 51, which holds that even erroneous judgments operate as res judicata.
• Fraud Denial: No fraud was pleaded in detail in the plaint, and the appellants cannot raise the issue belatedly. Relied on Jagannadh v. Perumal Naidu (1969) 2 MLJ 558, which holds that fraud cannot be pleaded belatedly.
• Possession: Respondent is in possession based on the sale deed (Ex.D3) and the earlier judgments.

The Court's Analysis

The Court conducted a detailed analysis of the legal principles and factual matrix, focusing on the following key aspects:

Competency to Transfer Under Section 7 of TP Act

The Court extracted Section 7 of the Transfer of Property Act, 1882, which stipulates that only a person competent to contract and entitled to transferable property, or authorized to dispose of transferable property not his own, can transfer such property. The Court held:

"Every person competent to contract and entitled to transferable property, or authorized to dispose of transferable property not his own, is competent to transfer such property either wholly or in part, and either absolutely or conditionally, in the circumstances, to the extent and in the manner, allowed and prescribed by any law for the being in force."

The Court observed that Ramaiah had no title to the property, as it exclusively belonged to Mallige Byrappa. Even assuming the existence of a joint family, Ramaiah had no authority to sell the property without Mallige Byrappa’s consent. The sale deed (Ex.D3) contained no recital that Ramaiah was acting as kartha or was authorized to sell the property. The Court relied on the principle "nemo dat quod non habet" (no one can confer a better title than what he himself has), as discussed in Umadevi Nambiar v. Thamarasseri Roman Catholic Diocese (2022) 7 SCC 90, to hold that the sale deed was void ab initio.

Fraud and Its Implications

The Court extensively discussed the fraudulent manipulation of the RTC (Ex.P24) by Ramaiah to insert his name, excluding Mallige Byrappa. The Trial Court had acknowledged discrepancies in Ex.P24 but erroneously concluded that mere entries in revenue records do not confer title. The High Court held that the fraudulent creation of Ex.P24 vitiated the sale deed (Ex.D3), rendering it void.

The Court relied on several judgments to underscore that fraud unravels all judicial acts:

• Vishnu Vardhan v. State of Uttar Pradesh (2025 SCC Online SC 1501): Held that a judgment obtained by fraud is a nullity and non est in the eyes of law.
• A.V. Papayya Sastry v. Govt. of A.P. (2007) 4 SCC 221: Held that fraud avoids all judicial acts, and a decree obtained by fraud cannot stand.
• Bhaurao Dagdu Paralkar v. State of Maharashtra AIR 2005 SC 3330: Defined fraud as an intention to deceive and held that fraud vitiates every solemn act.

The Court held that the fraud committed by Ramaiah and the respondent extended to the judicial proceedings, as the counsel representing Mallige Byrappa’s legal heirs in O.S.No.81/1980 had attested the Special Power of Attorney (Ex.P72) executed by Krishnappa, creating a conflict of interest. This fraudulent conduct further invalidated the earlier judgments.

Res Judicata and Its Exceptions

The Court examined the applicability of res judicata and its exceptions. While the respondent argued that the earlier judgments had attained finality, the Court relied on Canara Bank v. N.G. Subbaraya Setty (2008) 16 SCC 228 to hold that res judicata does not apply to:

1. Erroneous decisions on jurisdiction: The earlier judgments were based on a void sale deed and thus lacked inherent jurisdiction.
2. Judgments sanctioning illegality: The sale deed (Ex.D3) was void ab initio, and the judgments upholding it were illegal.
3. Fraud: The earlier judgments were obtained through fraud, which vitiates all judicial acts.

The Court distinguished the respondent’s reliance on Swamy Atmananda and Ramachandra Rao v. S. Nagabhushana Rao (2024) 17 SCC 361, holding that these judgments do not apply where fraud is established. The Court emphasized that fraud and justice cannot dwell together, and finality of litigation cannot be pressed to absurd limits when fraud is unraveled.

Proof of Will and Title Devolution

The Court noted that Mallige Byrappa’s Will (Ex.P11) was proved in compliance with Sections 63 of the Indian Succession Act and 68 of the Evidence Act by examining the attesting witnesses. The Trial Court had conducted an enquiry and held that the Will was genuine, a finding that attained finality. The Court held that the daughters, as legatees under the Will, had the right to execute sale deeds (Ex.P5 and P6) in favour of the appellants.

The Court also addressed the respondent’s argument regarding Section 8 of the Hindu Succession Act, which governs devolution of property. The Court held that Section 8 does not apply where a testamentary disposition (Will) exists, as Mallige Byrappa had bequeathed the property to his daughters.

Possession Follows Title

The Court reiterated the principle that possession follows title. Since the sale deed (Ex.D3) was void, Krishnappa acquired no title or possession. The Court set aside the decrees granting injunction in favour of the respondent and dismissed his suit in O.S.No.10/2015. Conversely, the Court decreed the appellants’ suits in O.S.Nos.416/2007, 11/2015, 12/2015, and 13/2015, declaring them as the rightful owners.

The Verdict

The High Court allowed all the regular second appeals, setting aside the judgments and decrees passed by the Trial Court and First Appellate Court in the following suits:

1. O.S.No.416/2007: Suit filed by the appellants for declaration and injunction allowed. The appellants are declared as the owners of the suit schedule property based on the sale deeds (Ex.P5 and P6).
2. O.S.No.10/2015: Suit filed by the respondent for injunction dismissed. The decree in favour of the respondent is set aside.
3. O.S.Nos.11/2015, 12/2015, and 13/2015: Suits filed by the appellants for injunction allowed. The appellants are entitled to permanent injunction as sought.

The Court also set aside the judgments in R.A.Nos.6/2017, 7/2017, 8/2017, 9/2017, and 13/2017, which had confirmed the Trial Court’s decrees. The parties were directed to bear their own costs.

What This Means For Similar Cases

Fraud Vitiates All Judicial Acts

• Void Transactions: A sale deed executed by an unauthorized person under fraudulent circumstances is void ab initio. Courts must scrutinize the competency of the transferor and the validity of the underlying transaction.
• Fraud Unravels Everything: Fraud avoids all judicial acts, including judgments that have attained finality. Practitioners must plead fraud with specificity and substantiate it with documentary evidence.
• Conflict of Interest: Legal practitioners must avoid conflicts of interest, such as representing parties with opposing claims or attesting documents in dual capacities.

Res Judicata Has Exceptions

• Erroneous Judgments on Jurisdiction or Illegality: Res judicata does not apply to judgments that lack inherent jurisdiction or sanction illegality. Practitioners should challenge such judgments on these grounds.
• Fraudulent Judgments: Judgments obtained through fraud do not operate as res judicata. Courts must reopen such cases to prevent injustice.
• Changed Circumstances: Where the law or facts have materially changed since the earlier judgment, res judicata may not apply. Practitioners should highlight such changes in subsequent proceedings.

Possession Follows Title

• Title Determination: Courts must first determine the validity of title before granting injunctions or declarations of possession. A void sale deed cannot confer possession.
• Burden of Proof: The party claiming title must prove the validity of the underlying transaction. Mere possession or revenue entries are insufficient to establish title.
• Testamentary Dispositions: A valid Will proved in compliance with statutory provisions overrides general rules of devolution under the Hindu Succession Act. Practitioners should ensure proper proof of Wills to establish title.