2025 INSC 490 1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5200 OF 2025

(Arising from SLP (C) No. 13679 of 2022)

The Correspondence,

RBANMS Educational Institution ... Appellant

VERSUS

B. Gunashekar & Another ...Respondents

JUDGMENT

R. MAHADEVAN, J.

Leave granted.

2. The present appeal challenges the order dated 02.06.2022 passed by the

High Court of Karnataka at Bengaluru

1

in Civil Revision Petition No.130 of 2021,

whereby the High Court dismissed the revision petition filed by the appellant

against the order of the trial Court dated 11.06.2021 rejecting their application

filed under Order VII Rule 11(a) and (d) of the Code of Civil Procedure, 1908

2

for rejection of the plaint.

1

Hereinafter referred to as “the High Court”

2

For short, “CPC”

2

3. On 12.08.2022, when the matter was taken up for consideration, this Court

has passed the following order:

“Issue notice, returnable in six weeks.

There will be stay of the operation of proceedings in OS No.25968 of 2018 pending

before the Court of XIII Addl. City Civil & Sessions Judge, MayoHall Unit,

Bengaluru (CCH-22) till the next date of hearing.”

3.1. On 22.11.2024, the aforesaid interim order was extended by this Court and

is in force till date.

BRIEF FACTS

4. The appellant viz., R.B.A.N.M.S. Educational Institution, was established

in the year 1873 as a public charitable trust, dedicated to serving first-generation

learners from marginalized communities in urban Bangalore. In 1905, a

significant parcel of land, then known as 'the Sappers Practice Ground,' was

leased to the appellant. Subsequently, in 1929, this property was formally

conveyed to the appellant by the Municipal Commissioner of Civil and Military

Station of Bangalore. Since then, the appellant has been in continuous possession

of the said property, utilizing it for various educational purposes including

Pre-University Colleges, first-grade degree colleges, and sporting facilities

serving both their institutions and the youth of Bangalore.

5. The respondents filed a suit bearing O.S.No.25968 of 2018 against the

appellant, before the City Civil Court and Sessions Judge at Bangalore, seeking

permanent injunction restraining the appellant from creating any third-party

3

interest over the suit schedule property, based on an alleged agreement to sell

executed by the respondents and Ramesh S. Reddy with one Maheshwari

Ranganathan and others, in respect of the suit schedule property, on 10th April,

2018 for a sale consideration of Rs.9,00,00,000/-, for which, they claim to have

paid Rs.75,00,000/- as an advance payment. It was alleged in the plaint that the

appellant was trying to manipulate the title deeds of the suit schedule property

with an intention to alienate or dispose of the same to third parties.

6. After service of summons, the appellant filed an application bearing

I.A. No. 3 of 2018 under Order VII Rule 11(a) and (d) CPC, seeking rejection of

the plaint, inter alia stating that the respondents are only agreement holders and

not owners of the suit schedule property and that, mere execution of an agreement

to sell does not create or confer any right or interest in the property in favour of

the proposed purchasers.

7. The respondents filed their objections to the aforesaid application filed by

the appellant.

8. Upon hearing both sides, the trial Court rejected the aforesaid application

seeking rejection of the plaint on 03.06.2020. Challenging the same, the appellant

preferred C.R.P. No. 205 of 2020, which was allowed in part, by the High Court

vide order dated 19.11.2020. The operative portion of the order reads as under:

“The petition is allowed in part. The impugned order dated 3.6.2020 in

O.S.No.25968/2018 on the XIII Additional City Civil and Sessions Judge, Mayohall

4

Unit, Bengaluru is set aside. The petitioner’s application filed under Order VII Rule

11(a) and (d) of Code of Civil Procedure is restored for reconsideration calling

upon the Civil Court to decide on merits of the application in accordance with law

in the light of the grounds urged in an expedited manner but within an outer limit

of three months from the date of first hearing after this order.”

9. Pursuant to the aforesaid order, the trial Court reconsidered the application

filed under Order VII Rule 11(a) and (d) CPC and ultimately, rejected the same,

on 11.06.2021. Aggrieved by the same, the appellant preferred Civil Revision

Petition No. 130 of 2021 before the High Court and the same also ended in

dismissal by the order impugned herein. Therefore, the appellant is before us with

the present appeal.

CONTENTIONS OF THE PARTIES

10. The learned counsel appearing for the appellant submitted that the alleged

agreement to sell, which forms the fundamental basis of the suit, cannot create

any interest in the suit schedule property as per Section 54 of the Transfer of

Property Act, 1882. In this regard, the learned counsel relied on the judgment in

Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra Dead throught LRs. & Anr.

3

, wherein, this Court held that a mere agreement to sell does not create any

interest in the property. This position was further reinforced in the judgment in

Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another

4

,

which reiterated that a contract for sale merely confers a limited right under

3

(2004) 8 SCC 614

4

(2012) 1 SCC 656

5

Section 53-A of the Transfer of Property Act, 1882. The learned counsel also

highlighted the practical application of this principle in K. Basavarajappa v. Tax

Recovery Commissioner, Bangalore & Others

5

, in which, it was held by this

Court that a proposed vendee with an agreement to sell lacks locus standi to

challenge third-party rights.

10.1. The learned counsel emphasized the suspicious circumstances surrounding

the alleged agreement to sell i.e., the purported vendors have not been made

parties to the suit, their addresses were conspicuously absent in the plaint, and the

entire advance payment of Rs.75 lakhs was claimed to have been made in cash

without any documentary proof. Additionally, the learned counsel invited our

attention to the respondents' pattern of filing similar suits in respect of the other

valuable properties in Bangalore, suggesting a systematic attempt at land

grabbing through dubious agreements to sell.

10.2. The learned counsel further pointed out impropriety of maintaining a pure

injunction suit where title itself is in dispute. Citing the decision of this court in

Jharkhand State Housing Board v. Didar Singh & Another

6

, the learned counsel

contended that when there is a cloud over title, a suit merely for injunction

without seeking declaration of title is not maintainable. Referring to the decision

in Premji Ratansey Shah & Others v. Union of India & Others

7

, the learned

5

(1996) 11 SCC 632

6

(2019) 17 SCC 692

7

(1994) 5 SCC 547

6

counsel contended that Section 41(h) and (j) of the Specific Relief Act, 1963, bars

grant of injunction when equally efficacious relief is available through other

means and when the plaintiffs have no personal interest in the property.

Ultimately, the learned counsel submitted that applying the ratio laid down in the

decision in T. Arivandandam v. T.V. Satyapal & Another

8

to the facts of the

present case, the plaint is barred by law and does not disclose a right to sue against

the appellant herein on the basis of an agreement to sell executed by the

respondents, with third parties.

10.3. With these submissions and case laws, the learned counsel prayed that this

appeal will have to be allowed and the suit filed by the respondents deserves to

be rejected under Order VII Rule 11 CPC.

11. Per contra, the learned counsel appearing for the respondents would submit

that at the stage of considering an application under Order VII Rule 11 CPC, the

court must confine itself to the averments in the plaint without examining the

defense or other external materials. Placing reliance on the decisions in P.V. Guru

Raj Reddy v. P. Neeradha Reddy & Others

9

and Soumitra Kumar Sen v. Shyamal

Kumar Sen & Others

10

, the learned counsel proceeded to argue that the plaint's

8

(1977) 4 SCC 467

9

(2015) 8 SCC 331

10

(2018) 5 SCC 644

7

averments must be accepted as true at this stage, and the defendant's objections

are immaterial.

11.1. According to the learned counsel, the suit was filed to protect the

respondents' legitimate interests over the property in question under the

agreement to sell, apprehending alienation of the property by third parties.

Further, the learned counsel distinguished the decisions cited by the appellant,

particularly that in Rambhau Namdeo Gajre (supra) and contended that it was

decided after full trial and examination of evidence, unlike the present case where

the cause of action stems from the agreement itself. The learned counsel also

sought to differentiate the decision in T. Arivandandam (supra) noting that unlike

that case which involved vexatious litigation following lost eviction proceedings,

the present matter involved genuine rights under a registered agreement to sell.

The learned counsel further submitted that rejection of plaint is a drastic remedy

that should be exercised sparingly, only when the plaint is manifestly vexatious

and meritless; and that, the proper course would be for the appellant to file a

written statement and contest the suit on merits, rather than seeking rejection of

the plaint at the threshold.

11.2. It is further submitted that both the Courts below have examined the plaint

in the light of Order VII Rule 11 (a) CPC to ascertain that it does indeed make

out a valid cause of action, i.e., that the Respondents have acquired an interest in

the property by virtue of the agreement to sell dated 10.04.2018 and hence, if the

8

claim of the appellant is that they hold a valid title to the property, it is for them

to prove the same during trial.

11.3. The learned counsel also submitted that the appellant is misguided in

asserting that the provisions of Section 53-A of the Transfer of Property Act, 1882

act as a bar against parties or interlopers who are not party to the transaction

envisaged in that section. That apart, the decision in K. Basavarajappa (supra)

does not apply to the facts of the present case, for that the same was about whether

an agreement to sell will stand in the way of the property being sold under auction

for tax recovery purposes and the same cannot and should not be used as a device

to defeat the suit at the threshold.

11.4. Therefore, according to the learned counsel, the impugned order of the

High Court does not require any interference at the hands of this court.

DISCUSSION AND FINDINGS

12. We have heard the learned counsel appearing for both sides and perused

the materials available record.

13. Seemingly, the appellant institution's journey began nearly 150 years ago,

and its possession of the disputed property dates back to 1905, when it was

initially leased and subsequently conveyed by the Commissioner of Civil and

Military Station of Bangalore. The present dispute arose when the respondents

9

filed a suit in O.S. No. 25968 of 2018 seeking permanent injunction against the

appellant. The respondents' claim rests entirely on an agreement to sell dated

10.04.2018, purportedly executed by certain individuals who, notably, are not

parties to the suit. The appellant, confronted with this litigation, filed an

application under Order VII Rule 11(a) and (d) CPC seeking rejection of the

plaint. Both the trial court and the High Court rejected the said application filed

by the appellant. Hence, this appeal came to be filed by the appellant before us.

14. Let us first examine the scope and purpose of Order VII Rule 11 CPC

11

.

This Court in Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) dead through

legal representatives

12

, explained in detail the applicable law for deciding the

application for rejection of the plaint. The relevant paragraphs of the said decision

are reproduced below:

“23.1 …

11

“11. Rejection of plaint.– The plaint shall be rejected in the following cases–

(a) where it does not disclose a cause of action;

(b) where the relief claimed in undervalued, and the plaintiff, on being required by the Court to correct

the valuation within a time to be fixed by the Court, fails to do so;

(c) where the relief claimed is properly valued but the plaint is written upon paper insufficiently

stamped, and the plaintiff, on being required by the Court to supply the requisite stamp-paper within a

time to be fixed by the Court, fails to do so;

(d) where the suit appears from the statement in the plaint to be barred by any law;

(e) where it is not filed in duplicate;

(f) where the plaintiff fails to comply with the provisions of rule 9:

Provided that the time fixed by the Court for the correction of the valuation or supplying of the requisite

stamp-paper shall not be extended unless the Court, for reasons to be recorded, is satisfied that the

plaintiff was prevent by any cause of exceptional nature for correction the valuation or supplying the

requisite stamp-paper, as the case may be, within the time fixed by the Court and that refusal to extend

such time would cause grave injustice to the plaintiff.”

12

(2020) 7 SCC 366 : 2020 SCC OnLine SC 562

10

23.2. The remedy under Order VII Rule 11 is an independent and special remedy,

wherein the Court is empowered to summarily dismiss a suit at the threshold,

without proceeding to record evidence, and conducting a trial, on the basis of the

evidence adduced, if it is satisfied that the action should be terminated on any of

the grounds contained in this provision.

23.3. The underlying object of Order VII Rule 11 (a) is that if in a suit, no cause of

action is disclosed, or the suit is barred by limitation under Rule 11 (d), the Court

would not permit the plaintiff to unnecessarily protract the proceedings in the suit.

In such a case, it would be necessary to put an end to the sham litigation, so that

further judicial time is not wasted.

23.4. In Azhar Hussain v. Rajiv Gandhi

13

this Court held that the whole purpose of

conferment of powers under this provision is to ensure that a litigation which is

meaningless, and bound to prove abortive, should not be permitted to waste judicial

time of the court, in the following words : (SCC p.324, para 12)

“12. …The whole purpose of conferment of such power is to ensure that a

litigation which is meaningless, and bound to prove abortive should not be

permitted to occupy the time of the Court, and exercise the mind of the

respondent. The sword of Damocles need not be kept hanging over his

head unnecessarily without point or purpose. Even in an ordinary civil

litigation, the Court readily exercises the power to reject a plaint, if it does

not disclose any cause of action.”

23.5. The power conferred on the court to terminate a civil action is, however, a

drastic one, and the conditions enumerated in Order VII Rule 11 are required to be

strictly adhered to.

23.6. Under Order VII Rule 11, a duty is cast on the Court to determine whether

the plaint discloses a cause of action by scrutinizing the averments in the plaint

14

read in conjunction with the documents relied upon, or whether the suit is barred

by any law.

23.7. Order VII Rule 14(1) provides for production of documents, on which the

plaintiff places reliance in his suit, which reads as under:

“14.Production of document on which plaintiff sues or relies.– (1)Where

a plaintiff sues upon a document or relies upon document in his possession

or power in support of his claim, he shall enter such documents in a list,

and shall produce it in Court when the plaint is presented by him and shall,

13

1986 Supp SCC 315. Followed in Manvendrasinhji Ranjitsinhji Jadeja v. Vijaykunverba, 1998 SCC

OnLine Guj 281 : (1998) 2 GLH 823

14

Liverpool & London S.P. & I Assn. Ltd. V. M.V. Sea Success I, (2004) 9 SCC 512

11

at the same time deliver the document and a copy thereof, to be filed with

the plaint.

(2)Where any such document is not in the possession or power of the

plaintiff, he shall, wherever possible, state in whose possession or power

it is.

(3)A document which ought to be produced in Court by the plaintiff when

the plaint is presented, or to be entered in the list to be added or annexed

to the plaint but is not produced or entered accordingly, shall not, without

the leave of the Court, be received in evidence on his behalf at the hearing

of the suit.

(4)Nothing in this rule shall apply to document produced for the cross

examination of the plaintiff’s witnesses, or, handed over to a witness

merely to refresh his memory.”

(emphasis supplied)

23.8. Having regard to Order VII Rule 14 CPC, the documents filed alongwith the

plaint, are required to be taken into consideration for deciding the application

under Order VII Rule 11(a). When a document referred to in the plaint, forms the

basis of the plaint, it should be treated as a part of the plaint.

23.9. In exercise of power under this provision, the Court would determine if the

assertions made in the plaint are contrary to statutory law, or judicial dicta, for

deciding whether a case for rejecting the plaint at the threshold is made out.

23.10. At this stage, the pleas taken by the defendant in the written statement and

application for rejection of the plaint on the merits, would be irrelevant, and cannot

be adverted to, or taken into consideration

15

.

23.11. The test for exercising the power under Order VII Rule 11 is that if the

averments made in the plaint are taken in entirety, in conjunction with the

documents relied upon, would the same result in a decree being passed. This test

was laid down in Liverpool & London S.P. & I Assn. Ltd. v. M.V.Sea Success

I which reads as : (SCC p.562, para 139)

“139. Whether a plaint discloses a cause of action or not is essentially a

question of fact. But whether it does or does not must be found out from

reading the plaint itself. For the said purpose, the averments made in the

plaint in their entirety must be held to be correct. The test is as to whether

if the averments made in the plaint are taken to be correct in their entirety,

a decree would be passed.”

15

Sopan Sukhdeo Sable v. Charity Commr., (2004) 3 SCC 137

12

23.12. In Hardesh Ores (P.) Ltd. v. Hede & Co.

16

the Court further held that it is

not permissible to cull out a sentence or a passage, and to read it in isolation. It is

the substance, and not merely the form, which has to be looked into. The plaint has

to be construed as it stands, without addition or subtraction of words. If the

allegations in the plaint prima facie show a cause of action, the court cannot

embark upon an enquiry whether the allegations are true in fact. D.Ramachandran

v. R.V.Janakiraman

17

.

23.13. If on a meaningful reading of the plaint, it is found that the suit is manifestly

vexatious and without any merit, and does not disclose a right to sue, the court

would be justified in exercising the power under Order VII Rule 11 CPC.

23.14. The power under Order VII Rule 11 CPC may be exercised by the Court at

any stage of the suit, either before registering the plaint, or after issuing summons

to the defendant, or before conclusion of the trial, as held by this Court in the

judgment of Saleem Bhai v. State of Maharashtra

18

. The plea that once issues are

framed, the matter must necessarily go to trial was repelled by this Court in Azhar

Hussain (supra).

23.15. The provision of Order VII Rule 11 is mandatory in nature. It states that the

plaint “shall” be rejected if any of the grounds specified in clause (a) to (e) are

made out. If the Court finds that the plaint does not disclose a cause of action, or

that the suit is barred by any law, the Court has no option, but to reject the plaint.

24. “Cause of action” means every fact which would be necessary for the plaintiff

to prove, if traversed, in order to support his right to judgment. It consists of a

bundle of material facts, which are necessary for the plaintiff to prove in order to

entitle him to the reliefs claimed in the suit.

24.1. In Swamy Atmanand v. Sri Ramakrishna Tapovanam

19

this Court held:

“24. A cause of action, thus, means every fact, which if traversed, it would

be necessary for the plaintiff to prove an order to support his right to a

judgment of the court. In other words, it is a bundle of facts, which taken

with the law applicable to them gives the plaintiff a right to relief against

the defendant. It must include some act done by the defendant since in the

absence of such an act, no cause of action can possibly accrue. It is not

limited to the actual infringement of the right sued on but includes all the

material facts on which it is founded”

(emphasis supplied)

16

(2007) 5 SCC 614

17

(1999) 3 SCC 267

18

(2003) 1 SCC 557

19

(2005) 10 SCC 51

13

24.2. In T. Arivandandam v. T.V. Satyapal

20

this Court held that while considering

an application under Order VII Rule 11 CPC what is required to be decided is

whether the plaint discloses a real cause of action, or something purely illusory, in

the following words: (SCC p. 470, para 5)

“5. …The learned Munsif must remember that if on a meaningful – not

formal – reading of the plaint it is manifestly vexatious, and meritless, in

the sense of not disclosing a clear right to sue, he should exercise his

power under Order VII, Rule 11 C.P.C. taking care to see that the ground

mentioned therein is fulfilled. And, if clever drafting has created the

illusion of a cause of action, nip it in the bud at the first hearing …”

(emphasis supplied)

24.3. Subsequently, in I.T.C. Ltd. v. Debt Recovery Appellate Tribunal

21

this Court

held that law cannot permit clever drafting which creates illusions of a cause of

action. What is required is that a clear right must be made out in the plaint.

24.4. If, however, by clever drafting of the plaint, it has created the illusion of a

cause of action, this Court in Madanuri Sri Ramachandra Murthy v. Syed Jalal

22

held that it should be nipped in the bud, so that bogus litigation will end at the

earliest stage. The Court must be vigilant against any camouflage or suppression,

and determine whether the litigation is utterly vexatious, and an abuse of the

process of the court.

…..

28. A three-Judge Bench of this Court in State of Punjab v. Gurdev Singh

23

held

that the Court must examine the plaint and determine when the right to sue first

accrued to the plaintiff, and whether on the assumed facts, the plaint is within time.

The words “right to sue” means the right to seek relief by means of legal

proceedings. The right to sue accrues only when the cause of action arises. The suit

must be instituted when the right asserted in the suit is infringed, or when there is

a clear and unequivocal threat to infringe such right by the defendant against whom

the suit is instituted. Order VII Rule 11(d) provides that where a suit appears from

the averments in the plaint to be barred by any law, the plaint shall be rejected.”

20

(1977) 4 SCC 467

21

(1998) 2 SCC 170

22

(2017) 13 SCC 174

23

(1991) 4 SCC 1 : 1991 SCC (L&S) 1082

14

14.1. Thus, it is clear that the above provision viz., Order VII Rule 11 CPC serves

as a crucial filter in civil litigation, enabling courts to terminate proceedings at

the threshold where the plaintiff's case, even if accepted in its entirety, fails to

disclose any cause of action or is barred by law, either express or by implication.

The scope of Order VII Rule 11 CPC and the authority of the courts is well settled

in law. There is a bounden duty on the Court to discern and identify fictitious suit,

which on the face of it would be barred, but for the clever pleadings disclosing a

cause of action, that is surreal. Generally, sub-clauses (a) and (d) are stand alone

grounds, that can be raised by the defendant in a suit. However, it cannot be ruled

out that under certain circumstances, clauses (a) and (d) can be mutually

inclusive. For instances, when clever drafting veils the implied bar to disclose the

cause of action; it then becomes the duty of the Court to lift the veil and expose

the bar to reject the suit at the threshold. The power to reject a plaint under this

provision is not merely procedural but substantive, aimed at preventing abuse of

the judicial process and ensuring that court time is not wasted on fictitious claims

failing to disclose any cause of action to sustain the suit or barred by law.

Therefore, the appeal before us requires careful consideration of the scope of

rejection of the plaint under Order VII Rule 11 CPC, particularly, in the context

of the suit filed based on an agreement to sell against third parties in possession.

15. Order VII Rule 11(a) CPC mandates rejection of the plaint where it does

not disclose a cause of action. In Om Prakash Srivastava v. Union of India &

15

Another

24

, this Court pointed out that cause of action means every fact which, if

traversed, would be necessary for the plaintiff to prove in order to support their

right to judgment. It consists of bundle of facts which narrate the circumstances

and the reasons for filing such suit. It is the foundation on which the entire suit

would rest. Therefore, it goes without saying that merely including a paragraph

on cause of action is not sufficient but rather, on a meaningful reading of the

plaint and the documents, it must disclose a cause of action. The plaint should

contain such cause of action that discloses all the necessary facts required in law

to sustain the suit and not mere statements of fact which fail to disclose a legal

right of the plaintiff to sue and breach or violation by the defendant(s). It is

pertinent to note here that even if a right is found, unless there is a violation or

breach of that right by the defendant, the cause of action should be deemed to be

unreal. This is where the substantive laws like Specific Relief Act, 1963, Contract

Act, 1872, and Transfer of Property Act, 1882, come into operation. A pure

question of law that can be decided at the early stage of litigation, ought to be

decided at the earliest stage. In the present case, the respondents' claim based on

an agreement to sell. The legal effect of such an agreement must be examined in

light of Section 54 of the Transfer of Property Act, 1882, which explicitly states

that a contract for the sale of immovable property does not, of itself, create any

24

(2006) 6 SCC 207

16

interest in or charge on such property. This principle has been consistently upheld

by this Court in the following judgments:

(i) Rambhau Namdeo Gajre (supra)

“13. The agreement to sell does not create an interest of the proposed vendee in

the suit property. As per Section 54 of the Act, the title in immovable property

valued at more than Rs 100 can be conveyed only by executing a registered sale

deed. Section 54 specifically provides that a contract for sale of immovable

property is a contract evidencing the fact that the sale of such property shall take

place on the terms settled between the parties, but does not, of itself, create any

interest in or charge on such property. It is not disputed before us that the suit land

sought to be conveyed is of the value of more than Rs 100. Therefore, unless there

was a registered document of sale in favour of Pishorrilal (the proposed transferee)

the title of the suit land continued to vest in Narayan Bapuji Dhotra (original

plaintiff) and remain in his ownership. This point was examined in detail by this

Court in State of U.P. v. District Judge [(1997) 1 SCC 496] and it was held thus :

(SCC pp. 499-500, para 7)

“7. Having given our anxious consideration to the rival contentions we

find that the High Court with respect had patently erred in taking the view

that because of Section 53-A of the Transfer of Property Act the proposed

transferees of the land had acquired an interest in the lands which would

result in exclusion of these lands from the computation of the holding of

the tenure-holder transferor on the appointed day. It is obvious that an

agreement to sell creates no interest in land. As per Section 54 of the

Transfer of Property Act, the property in the land gets conveyed only by

registered sale deed. It is not in dispute that the lands sought to be covered

were having value of more than Rs 100. Therefore, unless there was a

registered document of sale in favour of the proposed transferee

agreement-holders, the title of the lands would not get divested from the

vendor and would remain in his ownership. There is no dispute on this

aspect. However, strong reliance was placed by learned counsel for

Respondent 3 on Section 53-A of the Transfer of Property Act. We fail to

appreciate how that section can at all be relevant against the third party

like the appellant State. That section provides for a shield of protection to

the proposed transferee to remain in possession against the original owner

who has agreed to sell these lands to the transferee if the proposed

17

transferee satisfies other conditions of Section 53-A. That protection is

available as a shield only against the transferor, the proposed vendor, and

would disentitle him from disturbing the possession of the proposed

transferees who are put in possession pursuant to such an agreement. But

that has nothing to do with the ownership of the proposed transferor who

remains full owner of the said lands till they are legally conveyed by sale

deed to the proposed transferees. Such a right to protect possession

against the proposed vendor cannot be pressed in service against a third

party like the appellant State when it seeks to enforce the provisions of the

Act against the tenure-holder, proposed transferor of these lands.”

(emphasis supplied)

There was no agreement between the appellant and the respondent in connection

with the suit land. The doctrine of part-performance could have been availed of by

Pishorrilal against his proposed vendor subject, of course, to the fulfilment of the

conditions mentioned above. It could not be availed of by the appellant against the

respondent with whom he has no privity of contract. The appellant has been put in

possession of the suit land on the basis of an agreement of sale not by the

respondent but by Pishorrilal, therefore, the privity of contract is between

Pishorrilal and the appellant and not between the appellant and the respondent.

The doctrine of part-performance as contemplated in Section 53-A can be availed

of by the proposed transferee against his transferor or any person claiming under

him and not against a third person with whom he does not have a privity of

contract.”

(ii) Suraj Lamp & Industries (P) Ltd. v. State of Haryana & Another

25

, wherein,

this Court comprehensively examined the nature of rights created by an

agreement to sell and concluded that such agreements create, at best, a personal

right enforceable against the vendor. The relevant paragraphs read as under:

“16. Section 54 of TP Act makes it clear that a contract of sale, that is, an

agreement of sale does not, of itself, create any interest in or charge on such

property. This Court in Narandas Karsondas v. S.A. Kamtam and Anr. (1977) 3

SCC 247, observed: (SCC pp.254-55, paras 32-33 & 37)

“32. A contract of sale does not of itself create any interest in, or charge

on, the property. This is expressly declared in Section 54 of the

25

(2012) 1 SCC 656

18

Transfer of Property Act. See Rambaran Prasad v. Ram Mohit Hazra

[1967]1 SCR 293. The fiduciary character of the personal obligation

created by a contract for sale is recognised in Section 3 of the Specific

Relief Act, 1963, and in Section 91 of the Trusts Act. The personal

obligation created by a contract of sale is described in Section 40 of

the Transfer of Property Act as an obligation arising out of contract

and annexed to the ownership of property, but not amounting to an

interest or easement therein.

33. In India, the word `transfer' is defined with reference to the word

`convey'. The word `conveys' in Section 5 of Transfer of Property Act

is used in the wider sense of conveying ownership...

37....that only on execution of conveyance, ownership passes from one

party to another...."

17. In Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra [2004 (8) SCC 614]

this Court held:

"10. Protection provided under Section 53-A of the Act to the proposed

transferee is a shield only against the transferor. It disentitles the

transferor from disturbing the possession of the proposed transferee

who is put in possession in pursuance to such an agreement. It has

nothing to do with the ownership of the proposed transferor who

remains full owner of the property till it is legally conveyed by

executing a registered sale deed in favour of the transferee. Such a right

to protect possession against the proposed vendor cannot be pressed in

service against a third party."

18. It is thus clear that a transfer of immovable property by way of sale can only

be by a deed of conveyance (sale deed). In the absence of a deed of conveyance

(duly stamped and registered as required by law), no right, title or interest in an

immovable property can be transferred.

19. Any contract of sale (agreement to sell) which is not a registered deed of

conveyance (deed of sale) would fall short of the requirements of Sections 54 and

55 of the TP Act and will not confer any title nor transfer any interest in an

immovable property (except to the limited right granted under Section 53-A of the

TP Act). According to the TP Act, an agreement of sale, whether with possession

or without possession, is not a conveyance. Section 54 of the TP Act enacts that

sale of immovable property can be made only by a registered instrument and an

agreement of sale does not create any interest or charge on its subject-matter.”

19

(iii) Cosmos Co. Operative Bank Ltd v. Central Bank of India & Ors

26

“25. The observations made by this Court in Suraj Lamp (supra) in paras 16 and

19 are also relevant.

…..

26. Suraj Lamp (supra) later came to be referred to and relied upon by this Court

in Shakeel Ahmed v. Syed Akhlaq Hussain, 2023 SCC OnLine SC 1526 wherein

the Court after referring to its earlier judgment held that the person relying upon

the customary documents cannot claim to be the owner of the immovable property

and consequently not maintain any claims against a third-party. The relevant

paras read as under:—

“10. Having considered the submissions at the outset, it is to be emphasized that

irrespective of what was decided in the case of Suraj Lamps and Industries (supra)

the fact remains that no title could be transferred with respect to immovable

properties on the basis of an unregistered Agreement to Sell or on the basis of an

unregistered General Power of Attorney. The Registration Act, 1908 clearly

provides that a document which requires compulsory registration under the Act,

would not confer any right, much less a legally enforceable right to approach a

Court of Law on its basis. Even if these documents i.e. the Agreement to Sell and

the Power of Attorney were registered, still it could not be said that the respondent

would have acquired title over the property in question. At best, on the basis of

the registered agreement to sell, he could have claimed relief of specific

performance in appropriate proceedings. In this regard, reference may be made

to sections 17 and 49 of the Registration Act and section 54 of the Transfer of

Property Act, 1882.

11. Law is well settled that no right, title or interest in immovable property can

be conferred without a registered document. Even the judgment of this Court in

the case of Suraj Lamps & Industries (supra) lays down the same proposition.

Reference may also be made to the following judgments of this Court:

(i). Ameer Minhaj v. Deirdre Elizabeth (Wright) Issar (2018) 7 SCC 639

(ii). Balram Singh v. Kelo Devi Civil Appeal No. 6733 of 2022

(iii). Paul Rubber Industries Private Limited v. Amit Chand Mitra, SLP(C) No.

15774 of 2022.

12. The embargo put on registration of documents would not override the

statutory provision so as to confer title on the basis of unregistered documents

with respect to immovable property. Once this is the settled position, the

respondent could not have maintained the suit for possession and mesne profits

against the appellant, who was admittedly in possession of the property in

question whether as an owner or a licensee.

26

2025 SCC OnLine SC 352

20

13. The argument advanced on behalf of the respondent that the judgment in Suraj

Lamps & Industries (supra) would be prospective is also misplaced. The

requirement of compulsory registration and effect on non-registration emanates

from the statutes, in particular the Registration Act and the Transfer of Property

Act. The ratio in Suraj Lamps & Industries (supra) only approves the provisions

in the two enactments. Earlier judgments of this Court have taken the same view.”

15.1. Undoubtedly, a sale deed, which amounts to conveyance, has to be a

registered document, as mandated under Section 17 of the Registration Act, 1908.

On the other hand, an agreement for sale, which also requires to be registered,

does not amount to a conveyance as it is merely a contractual document, by which

one party, namely the vendor, agrees or assures or promises to convey the property

described in the schedule of such agreement to the other party, namely the

purchaser, upon the latter performing his part of the obligation under the

agreement fully and in time. Section 54 of the Transfer of Property Act, 1882

explicitly lays down that a contract for sale will not confer any right or interest.

Section 53-A of the Transfer of Property Act, 1882 offers protection only to a

proposed transferee who has part performed his part of the promise and has been

put into possession, against the actions of transferor, acting against the interest of

the transferee. For the proposed transferee to seek any protection against the

transferor, he must have either performed his part of obligation in full or in part.

The applicability of Section 53-A of the Transfer of Property Act, 1882 is subject

to certain conditions viz., (a) the agreement must be in writing with the owner of

the property or in other words, the transferor must be either the owner or his aut

21

horised representative, (b) the transferee must have been put into possession or

must have acted in furtherance of the agreement and made some developments,

(c) the protection under Section 53-A is not an exemption to Section 52 of the

Transfer of Property Act, 1882 or in other words, a transferee, put into possession

with the knowledge of a pending lis, is not entitled to any protection, (d) the

transferee must be in possession when the lis is initiated against his transferor and

must be willing to perform the remaining part of his obligation, (e) the transferee

must be entitled to seek specific performance or in other words, must not be

barred by any of the provisions of the Specific Relief Act, 1963 from seeking such

performance. The protection under Section 53-A is not available against a third

party who may have an adversarial claim against the vendor. Therefore, unless

and until the sale deed is executed, the purchaser is not vested with any right, title

or interest in the property except to the limited extent of seeking specific

performance from his vendor. An agreement for sale does not confer any right to

the purchaser to file a suit against a third party who is either the owner or in

possession, or who claims to be the owner and to be in possession. In such cases,

the vendor will have to approach the court and not the proposed transferee.

15.2. In the present case, juxtaposing the above legal principles to the facts of

the case, we find that the respondents' claim suffers from multiple fatal defects

that go to the root of the case, which are as follows:

22

15.2.1. First, there is no privity between the respondents and the appellant.

The agreement to sell, is not between the parties to the suit. According to

Section 7 of the Transfer of Property Act, 1882, only the owner, or any person

authorised by him, can transfer the property. We have already held that an

agreement to sell does not confer any right on the proposed purchaser under the

agreement. Therefore, as a natural corollary, any right, until the sale deed is

executed, will vest only with the owner, or in other words, the vendor to take

necessary action to protect his interest in the property. According to the

respondents, the property belongs to the vendors and according to the appellant,

the property vests in them. Since the respondents are not divested any right by

virtue of the agreement, they cannot sustain the suit as they would not have any

locus. Consequently, they also cannot seek any declaration in respect of the title

of the vendors. But when the title is under a cloud, it is necessary that a declaration

be sought as laid down by this Court in the judgment in Anathula Sudhakar v. P.

Buchi Reddy (Dead) by LRs and others

27

. Therefore, the suit at the instance of the

respondents/plaintiffs is not maintainable and only the vendors could have

approached the court for a relief of declaration. In the present case, strangely,

the vendors are not arrayed as parties to even support any semblance of right

sought by the respondents/plaintiffs, which we found not to be in existence.

Further, the respondents/plaintiffs claim to have paid the entire consideration of

27

AIR 2008 SC 2033 : MANU/SC/7376/2008

23

Rs.75,00,000/- in cash, despite the introduction of Section 269ST to the Income

Tax Act in 2017 and the corresponding amendment to Section 271 DA.

As held by us, the agreement can only create rights against the proposed vendors

and not against third parties like the appellant herein. As the agreement to sell

does not create any transferable interest or title in the property in favour of the

respondents/ plaintiffs, as per Section 54 of the Transfer of Property Act, 1882,

we hold that the attempt of the plaintiffs to disclose the cause of action through

clever drafting, based solely on an agreement to sell, must fail, as such disclosure

cannot be restricted to mere statement of facts but must disclose a legal right to

sue.

15.2.2. Secondly, and perhaps more fundamentally, as we have seen and

held above, the respondents have no legal right that can be enforced against the

appellant as their claim is impliedly barred by virtue of Section 54 of the Transfer

of Property Act, 1882. Their remedy, if any, lies against their proposed vendors.

The plaint averments remain silent regarding the execution of a registered sale

deed in favour of the respondents, which alone can confer a valid right on them

to file a suit against the appellant as held by us earlier. Another, remedy available

to them is to institute a suit against the vendors for specific performance. This

principle was clearly established in K. Basavarajappa (supra), wherein this Court

held that an agreement holder lacks locus standi to maintain actions against third

parties. The relevant paragraph of the said judgment is extracted below:

24

“8. … By mere agreement to sell the appellant got no interest in the property put

to auction to enable him to apply for setting aside such auction under Rule 60 and

especially when his transaction was hit by Rule 16(1) read with Rules 51 and 48.

Consequently he could not be said to be having any legal interest to entitle him to

move such an application. Consequently no fault could be found with the decision

of the Division Bench of the High Court rejecting the entitlement of the appellant

to move such an application.”

15.2.3. The contention of the learned counsel for the respondents that the

judgements relied upon by the appellant are not applicable, cannot be accepted

for the simple reason that the ratio laid down by this court, is applicable

irrespective of the stage at which it is relied upon. What is relevant is the ratio and

not the stage. Such contentions go against the spirit of Article 141 of the

Constitution of India. Once a ratio is laid down, the courts have to apply the ratio,

considering the facts of the case and once, found to be applicable, irrespective of

the stage, the same has to be applied, to throw out frivolous suits. There is no

gainsaying in contending that the other party must be put to undergo the ordeal of

entire trial, when the plaintiff’s claim is either barred by law or the plaint fails to

disclose a cause of action, as it would amount to abuse of process of law, wasting

the precious time of the courts. On the other hand, the judgments relied upon by

the respondents do not come into their aid as the judgments referred to by them

also lay down the proposition that the plaint can be rejected if on a meaningful

reading of it, fails to disclose a cause of action or is barred by law. In the present

case, from the facts, we also find this to be a case of champertous litigation,

between the plaintiffs and the vendors, who are not parties to the suit. Though

25

champertous litigations have been recognized in our country to some extent by

way of amendment to CPC by certain states, considering the facts of the present

case and the averments in the plaint, we only find the litigation to be inequitable,

unconscionable or extortionate.

15.2.4. Further, the respondents are not in possession of the property.

Whereas, the appellant's possession since 1905 is admitted in the plaint itself.

In such circumstances, where the plaintiffs are not in possession and the

defendant is in settled possession for over a century, a suit for bare injunction by

a proposed transferee is clearly not maintainable. Section 41(j) of the Specific

Relief Act, 1963 prohibits grant of injunction when the plaintiff has no personal

interest in the matter. In the present case, the respondents, being mere agreement

holders, have no personal interest in the suit schedule property that can be

enforced against third parties. The “personal interest” is to be understood in the

context of a legally enforceable right, as when there is a bar in law, the mere

existence of an interest in the outcome cannot give a right to sue. As held by us

above, no declaratory relief has been sought as contemplated under Section 34 of

the Specific Relief Act, 1963. This principle was clearly established in Jharkhand

State Housing Board (supra), in which, this Court emphasized that where title is

in dispute, a mere suit for injunction is not maintainable. The relevant portion of

the said judgment is reproduced hereunder:-

26

“11. It is well settled by catena of judgments of this Court that in each and every

case where the defendant disputes the title of the plaintiff it is not necessary that

in all those cases plaintiff has to seek the relief of declaration. A suit for mere

injunction does not lie only when the defendant raises a genuine dispute with

regard to title and when he raises a cloud over the title of the plaintiff, then

necessarily in those circumstances, plaintiff cannot maintain a suit for bare

injunction.”

15.2.5. Yet another defect in the plaint is regarding the identity of the

property. The respondents/plaintiffs, as seen above, have admitted to the

possession of the appellant over the suit property. The plaint, on one hand, raises

a dispute as to whether the property claimed by the respondents is the same as

that possessed by the appellant, and on the other hand, seeks only a relief of

permanent injunction restraining the appellant/defendant from alienating the

property, without seeking a declaration affirming the title of their vendors. The

entitlement of the plaintiffs to the possession rests on the title of their vendors and

it is not an independent right. Without possession and without seeking a

declaration of title, not only is the suit barred but the cause of action is also

fictitious.

16. The High Court without noticing the above defects in the plaint, dismissed

the application filed by the appellant under Order VII Rule 11 CPC by observing

that the cause of action is a mixed question of fact and law and that the matter

requires trial. When the defects go to the root of the case, barred by law with

fictitious allegations and are incurable, no amount of evidence can salvage the

27

plaintiffs' case. Though an agreement to sell creates certain rights, these rights are

purely personal between the parties to the agreement and can only be enforced

against the vendors or, in limited circumstances, under Section 53A of the

Transfer of Property Act, 1882, against a subsequent transferee with notice, as

held by us above. They cannot be enforced against third parties who claim

independent title and possession. Therefore, the High Court's observation that an

agreement to sell creates an "enforceable right" cannot be countenanced by us.

17. At the same time, we are conscious of principle that only averments in the

plaint are to be considered under Order VII Rule 11 CPC. While it is true that the

defendant's defense is not to be considered at this stage, this does not mean that

the court must accept patently untenable claims or shut its eyes to settled

principles of law and put the parties to trial, even in cases which are barred and

the cause of action is fictitious. In T. Arivandandam (supra), this Court

emphasized that where the plaint is manifestly vexatious and meritless, courts

should exercise their power under Order VII Rule 11 CPC and not waste judicial

time on matters that are legally barred and frivolous. The present case falls

squarely within this principle.

18. In the instant case, admittedly, no sale was originally effected and only part

consideration was made, which was not even to the appellant, but rather to a third

party. Upon discovering that the property did not belong to the third party, the

respondents instituted a suit. It must be noted that the appellant has been in

28

possession of the suit schedule property for several decades. Given these

circumstances, the trial court must have adopted a fair and balanced approach,

carefully weighing all relevant factors, considered the provisions of the Transfer

of Property Act, 1882 and the Specific Relief Act, 1963, but it did not do so. The

decision of the trial Court was also affirmed by the High Court. However, we

have to take into consideration that the respondents are in the habit of filing

similar suits in respect of other valuable properties in Bangalore, based on various

alleged agreements to sell, which do not confer any right to sue. On the other

hand, the appellant is a 148-year-old charitable trust serving marginalized

communities. The public interest implications of this case are significant

consideration. Such institutions must be protected from speculative litigation that

can drain their resources and impede their charitable work. Moreover, allowing

suits like the present one to proceed to trial, would not only waste judicial time

and resources, but also encourage similar speculative and extortionate litigations.

Hence, this is a fit case for the imposition of costs on the respondents under

Section 35A of the Civil Procedure Code, 1908. However, we refrain from doing

so at this stage. At the same time, the respondents are hereby cautioned that any

future misuse of the judicial process lacking in bonafides may invite strict action

including imposition of exemplary costs.

18.1. Further, through the averments made in the plaint and in the agreement, the

respondents/plaintiffs have claimed to have paid huge sum towards consideration

29

by cash. It is pertinent to recall that Section 269ST of the Income Tax Act, was

introduced to curb black money by digitalising the transactions above

Rs.2,00,000/- and contemplating equal amount of penalty under Section 271DA

of the Act. As per the said provisions, action is to be taken on the recipient.

However, there is also an onus on the plaintiffs to disclose their source for such

huge cash. The Central Government thought it fit to cap the cash transactions

and move forwards towards digital economy to curb the dark economy which has

a drastic effect on the economy of the country. It will be useful to refer to the

Budget Speech during the introduction of the Finance Bill, 2017 and the extract

of the memo presented with the Finance Bill, 2017, which lay down the object:

Budget Speech:

“VII. DIGITAL ECONOMY

111. Promotion of a digital economy is an integral part of Government’s strategy

to clean the system and weed out corruption and black money. It has a

transformative impact in terms of greater formalisation of the economy and

mainstreaming of financial savings into the banking system. This, in turn, is

expected to energise private investment in the country through lower cost of credit.

India is now on the cusp of a massive digital revolution.

…..

Promoting Digital Economy

162. The Special Investigation Team (SIT) set up by the Government for black

money has suggested that no transaction above Rs.3 lakh should be permitted in

cash. The Government has decided to accept this proposal. Suitable amendment to

the Income-tax Act is proposed in the Finance Bill for enforcing this decision.”

Extract from Memo of Finance Bill, 2017

“Restriction on cash transactions

In India, the quantum of domestic black money is huge which adversely affects the

revenue of the Government creating are source crunch for its various welfare

programmes. Black money is generally transacted in cash and large amount of

unaccounted wealth is stored and used in form of cash.

30

In order to achieve the mission of the Government to move towards a less cash

economy to reduce generation and circulation of black money, it is proposed to

insert section 269ST in the Act to provide that no person shall receive an amount

of three lakh rupees or more,—

(a) in aggregate from a person in a day;

(b) in respect of a single transaction; or

(c) in respect of transactions relating to one event or occasion from a person,

otherwise than by an account payee cheque or account payee bank draft or use of

electronic clearing system through a bank account.

It is further proposed to provide that the said restriction shall not apply to

Government, any banking company, post office, savings bank or co-operative bank.

Further, it is proposed that such other persons or class of persons or receipts may

be notified by the Central Government, for reasons to be recorded in writing, on

whom the proposed restriction on cash transactions shall not apply. Transactions

of the nature referred to in section 269SS are proposed to be excluded from the

scope of the said section.

It is also proposed to insert new section 271DA in the Act to provide for levy of

penalty on a person who receives a sum in contravention of the provisions of the

proposed section 269ST. The penalty is proposed to be a sum equal to the amount

of such receipt. The said penalty shall however not be levied if the person proves

that there were good and sufficient reasons for such contravention. It is also

proposed that any such penalty shall be levied by the Joint Commissioner.

It is also proposed to consequentially amend the provisions of section 206C to omit

the provision relating to tax collection at source at the rate of one per cent. of sale

consideration on cash sale of jewellery exceeding five lakh rupees.

These amendments will take effect from 1

st

April 2017.”

However, when the Bill was passed, the permissible limit was capped under

Rupees Two Lakhs, instead of the proposed Rupees Three Lakhs. When a suit is

filed claiming Rs.75,00,000/- paid by cash, not only does is create a suspicion on

the transaction, but also displays, a violation of law. Though the amendment has

come into effect from 01.04.2017, we find from the present litigation that the

same has not brought the desired change. When there is a law in place, the same

31

has to be enforced. Most times, such transactions go unnoticed or not brought to

the knowledge of the income tax authorities. It is settled position that ignorance

in fact is excusable but not the ignorance in law. Therefore, we deem it necessary

to issue the following directions:

(A) Whenever, a suit is filed with a claim that Rs. 2,00,000/- and above is paid

by cash towards any transaction, the courts must intimate the same to the

jurisdictional Income Tax Department to verify the transaction and the violation

of Section 269ST of the Income Tax Act, if any,

(B) Whenever, any such information is received either from the court or

otherwise, the Jurisdictional Income Tax authority shall take appropriate steps by

following the due process in law,

(C) Whenever, a sum of Rs. 2,00,000/- and above is claimed to be paid by cash

towards consideration for conveyance of any immovable property in a document

presented for registration, the jurisdictional Sub-Registrar shall intimate the same

to the jurisdictional Income Tax Authority who shall follow the due process in

law before taking any action,

(D) Whenever, it comes to the knowledge of any Income Tax Authority that a

sum of Rs. 2,00,000/- or above has been paid by way of consideration in any

transaction relating to any immovable property from any other source or during

the course of search or assessment proceedings, the failure of the registering

authority shall be brought to the knowledge of the Chief Secretary of the State/UT

32

for initiating appropriate disciplinary action against such officer who failed to

intimate the transactions.

19. In light of the above discussion, we are of the firm view that the plaint

ought to have been rejected under Order VII Rule 11(a) and (d) CPC. Hence, the

orders passed by the High Court as well as the trial Court rejecting the application

filed by the appellant, cannot be sustained in law and deserve to be set aside.

CONCLUSION

20. In fine,

(i) This appeal is allowed.

(ii) The impugned judgment of the High Court dated 02.06.2022 and the

order of the trial Court dated 11.06.2021 are set aside.

(iii) As a sequel, the application filed under Order VII Rule 11(a) and (d)

CPC is allowed.

(iv) The plaint in O.S. No. 25968 of 2018 pending on the file of XIII

Additional City Civil and Sessions Judge, Mayohall Unit, Bengaluru, is

rejected.

(v) The directions given by us in paragraph 18.1 of this judgment shall be

intimated by the Registrars of the High Courts, the Chief Secretaries of the

States/Union Territories and the Principal Chief Commissioner of Income

33

Tax Department to the District Judiciary, the officials of the registration

department and the jurisdictional officers under the Income Tax

Department respectively, so as to facilitate the conduct of periodical audit.

(vi) The parties shall bear their respective costs throughout the

proceedings.

(vii) Miscellaneous Application(s), if any, shall stand disposed of.

21. The Registrar (Judicial) is directed to circulate a copy of this Judgment to

the Registrar General of all the High Courts, the Chief Secretaries of all the States

/ Union Territories, and the Principal Chief Commissioner of Income Tax

Department, enabling them to communicate the directions issued by this Court

for strict compliance.

…………………………J.

[J.B. Pardiwala]

…………………………J.

[R. Mahadevan]

NEW DELHI;

APRIL 16, 2025.