2023 (12) TMI 1 - HC - Indian Laws

Sale deed cannot be cancelled for non-payment of consideration despite cheque dishonor under Section 138

The Chhattisgarh HC dismissed an appeal where the plaintiff sought cancellation of a sale deed and restraint of defendants from interfering with ... Cancellation of sale deed on dishonor of cheque - Dismissal of suit filed by the appellant/plaintiff - suit was filed for cancellation of the sale deed and to restrain the defendants from interfering the possession of the plaintiff - contradiction in sales amount as per two agreements - HELD THAT:- In the case of non payment of sale consideration, the issue came up for consideration before the Supreme Court in the matter of Dahiben Versus Arvindbhai Kalyanji Bhanusali (Gajra) [2020 (7) TMI 786 - SUPREME COURT] wherein the Supreme Court at paras 29.7 held that if the sale consideration has not been paid, it could not be a ground for cancellation of sale deed. Following the judgment of Madhya Pradesh High Court in the matter of J.B.O. Association vs. State of M.P. [2002 (12) TMI 652 - MADHYA PRADESH HIGH COURT] wherein the High Court held that in case of conflict between two decisions of the Apex Court Benches comprising of equal number of judges, decision of earlier bench is binding unless explained by the latter bench of equal strength in which case the later decision is binding. Therefore, it was held that the decision of the earlier Division Bench unless distinguished by the decision of latter Division Bench, would be binding on the High Court and the subordinate courts. Therefore, in the instant case if the plaint averments are accepted that the sale having been made, the only recourse left to the appellant was to file a suit for recovery and evidence would show that for dishonour of the cheque proceeding has already been drawn and the complaint was filed under Section 138 of the Negotiable Instrument Act. As such the agreement Ex.P/3 cannot be given over riding effect over registered document of sale whereby the property has been transferred to the defendant. Consequently, the document Ex.P/3 wherein the plaintiff relied that in case non payment the agreement deemed to be cancelled cannot be given a legal precedent. There are no merit in the appeal, warranting interference in the impugned judgment and decree passed by the Court below, which is just and proper - appeal dismissed. Issues Involved:1. Validity of the sale deed in light of dishonoured cheque.2. Enforceability of the agreement dated 18.11.2010.3. Counterclaim for possession and return of the cheque.Summary:Validity of the Sale Deed in Light of Dishonoured Cheque:The plaintiff claimed that the sale deed should be cancelled because a cheque for Rs. 12,30,000/- given as part of the sale consideration was dishonoured. The plaintiff argued that the dishonour of the cheque led to the automatic cancellation of the sale deed as per the agreement between the parties. The court, however, referred to Section 54 of the Transfer of Property Act, 1882 and the Supreme Court's ruling in Dahiben vs. Arvindbhai Kalyanji Bhanusali (2020) 7 SCC 366, which states that non-payment of sale consideration cannot be a ground for cancellation of a sale deed. Therefore, the court held that the sale deed cannot be cancelled on the basis of the dishonoured cheque.Enforceability of the Agreement Dated 18.11.2010:The plaintiff contended that the agreement dated 18.11.2010, which stipulated that the sale deed would be cancelled if the cheque was dishonoured, should be enforced. However, the court found that the registered sale deed (Ex.D/1) and the agreement (Ex.P/3) contradicted each other. The court emphasized that a registered sale deed, which indicates the transfer of ownership, cannot be overridden by an unregistered agreement. The court cited the Supreme Court's decision in Kewal Kishan vs. Rajesh Kumar 2021 SCC OnLine SC 1097, reaffirming that the transfer of ownership through a registered sale deed is final and cannot be annulled by subsequent agreements.Counterclaim for Possession and Return of the Cheque:The defendants made a counterclaim for the return of the cheque and possession of the suit property. The trial court allowed the counterclaim to the extent that the plaintiff was ordered to hand over possession of the suit property within 30 days. The High Court upheld this decision, noting that the plaintiff had not delivered possession despite receiving the sale consideration. The court found no merit in the plaintiff's appeal and dismissed it, affirming the trial court's judgment and decree.Conclusion:The appeal was dismissed, and the court upheld the trial court's decision that the sale deed was valid despite the dishonoured cheque, the agreement dated 18.11.2010 could not override the registered sale deed, and the defendants were entitled to possession of the suit property.