Latest JudgementTransfer of Property Act, 1882Code of Civil Procedure, 1908

The Correspondence RBANMS Educational Institution v. B. Gunashekar & Another, 2025

Purchaser under an agreement to sell has no locus standi to seek injunction against a third party without privity of contract.

Supreme Court of India·21 April 2025

Court

Supreme Court of India

Date of Decision

21 April 2025

Judges

Justice J.B. Pardiwala ⦁ Justice R. Mahadevan

Citation

Acts / Provisions

Order VII Rule 11, Code of Civil Procedure (CPC) Section 53A, Transfer of Property Act, 1882

Facts of the Case

The Respondent entered into an agreement to sell with a vendor for a certain immovable property.
That property was in possession of the Appellant, a trust.
The Respondent filed a suit for permanent injunction against the Appellant, seeking to protect the vendor’s interest and to prevent third-party rights being created over the property.
Ironically, the vendor was not made a party to the suit.
The Appellant filed an application under Order VII Rule 11 CPC for rejection of the plaint.
Both the Trial Court and High Court dismissed the application, holding that the agreement to sell created enforceable rights.
The Appellant then approached the Supreme Court.

Whether a purchaser under an agreement to sell, with no privity of contract with a third party, can seek injunctive relief against that third party?
Whether the courts below erred in not rejecting the Respondent’s suit for want of cause of action?
Whether the absence of the vendor as a party affects the maintainability of the suit?

The Supreme Court reversed the findings of the courts below.
It held that an agreement to sell creates no proprietary right or interest in the property in favor of the purchaser.
Any rights created are personal rights, enforceable only against the vendor.
In the absence of any privity of contract with the Appellant, the Respondent had no locus to seek any injunction.
The Court emphasized that only the vendor, not the prospective buyer, could have filed such a suit.
The fact that vendors were not even party to the suit further weakened the Respondent’s claim.
As a result, the Court allowed the appeal and held the suit to be not maintainable.

Agreement to sell does not confer proprietary interest in the immovable property.
A proposed purchaser cannot sue a third party in possession when no privity of contract exists.
Only the vendor has locus to protect title or possession until the sale deed is executed.
Suit without the vendor as a party is not maintainable.
Trial court and High Court erred in rejecting the Appellant’s Order VII Rule 11 CPC application.

The judgment reaffirms the principle that an agreement to sell is not a title deed and does not create proprietary rights.
The Court's interpretation of Section 53A of the Transfer of Property Act was consistent with previous jurisprudence — protection under this provision is only available against vendors or transferees with notice, not independent third parties.
The Supreme Court distinguished between contractual rights and proprietary rights, clarifying that injunctive relief cannot be claimed by someone who does not hold title or legal possession.
This decision strengthens the need for precise party inclusion in property-related suits and discourages indirect assertion of vendor’s rights by third parties.
The ruling also underlines the importance of pleading a valid cause of action and provides clear guidance for trial courts when considering plaint rejection.