Supreme Court DecisionsSupreme Court Rules: Co-Owner Cannot Sell Entire Property Without Partitioning Joint Estate

The Hon’ble Supreme Court, in the case of SK. Golam Lalchand vs. Nandu Lal Shaw Civil Appeal no 4177 of 2024 decided on 10.09.2024, has held that a co-owner of a non-partitioned property cannot transfer the entire property without getting his share determined and demarcated to bind the other co-owners.

FACTS

The issue revolved around whether Brij Mohan, the son of late Sita Ram, had the legal authority to sell the entire suit property to S.K. Golam Lalchand (hereinafter referred to as the “Appellant”). The property in question was originally purchased jointly by late Sita Ram and his brother late Salik Ram, making them co-owners with equal rights. Following the deaths of both brothers, the property remained undivided among their heirs.

Nandu Lal (hereinafter referred to as the “Respondent”) contended that no valid family settlement or transfer of ownership had occurred that would grant Brij Mohan exclusive rights over the property. Therefore, Brij Mohan, according to the Respondent, did not have the authority to transfer the entire property to the Appellant.

The Hon’ble Supreme courts found that Brij Mohan’s claim of an exclusive right to the entire property was not substantiated by evidence. There was no valid family settlement or proof of gift or relinquishment of rights by other heirs. Consequently, the sale deed executed by Brij Mohan in favour of Appellant was deemed invalid as Brij Mohan could not sell the entire property without partitioning it among all co-owners. The appeal was dismissed, upholding the decision that Brij Mohan alone was not competent to transfer the entire property without proper partition and demarcation of shares among all co-owners.

The Hon’ble Supreme Court discussed the principles under the Section 44 of Transfer of Property Act, 1882, (hereinafter referred to as “TPA Act”), which deals with the transfer of property by one of the co-owners. The court also referred to the Section 31 of  Specific Relief Act, 1963,( hereinafter referred to as “SR Act”) concerning the declaration of a document as void when the person affected is not a party to it.

ISSUES BEFORE THE COURT

• Whether Brij Mohan had the authority to transfer the entire property, which was jointly owned, through a sale deed ?
• Whether the claims of a family settlement or gift deed were properly substantiated by evidence ?

CONTENTION OF THE PARTIES

 Appellant contented that Brij Mohan, as the son of late Sita Ram, claimed he had the right to sell the entire property, asserting that the property had been fully transferred to him through a family settlement and relinquishments by his sisters.

Appellant contented that the sale deed dated 19.05.2006 was valid as Brij Mohan was a bona fide purchaser in good faith of the property, and the property was legally transferred to him.

Respondent contended that the property remained jointly owned by late Sita Ram and late Salik Ram, as there was no valid evidence of a gift deed or family settlement transferring Salik Ram’s share to Sita Ram.

Respondent argued that Brij Mohan did not have the authority to sell the entire property without partitioning it, rendering the sale deed invalid.

DECISION AND FINDINGS

The Hon’ble Supreme Court dismissed the appeal of the Appellant, a tenant to whom one of the co-owners sold the undivided property. The Court upheld the decision of the High Court, which restrained the Appellant by the decree of injunction in acting in derogation of the propriety rights of the co-owners until and unless the partition takes place.

The Hon’ble Supreme Court observed

“20. In this view of the matter, the entire property purchased by the two brothers late Salik Ram and late Sita Ram in the year 1959 vide Exh.1 continued to be the joint property in which both of them had equal rights. On their death, the same devolved upon their respective heirs and legal representatives including Brij Mohan (transferor), his three sisters on one side and plaintiff-respondent Nandu Lal, his three brothers and five sisters on the other side. Thus, Brij Mohan alone was not competent to execute a sale of the entire property in favour of the defendant-appellant S.K. Golam Lalchand (subsequent purchaser), that too without its partition by metes and bounds.”,

“25.  ..it is held that Brij Mohan alone was not competent to transfer the entire property without getting his share determined and demarcated so as to bind the other co-owners. Accordingly, the defendant-appellant S.K. Golam Lalchand has rightly been restrained by the decree of injunction in acting in derogation of the propriety rights of the co-owners until and unless the partition takes place.”,

The Hon’ble Supreme Court held that the transferor’s attempt to sell the entire suit property, which included interests from other co-owners, could not legally bind the other co-owners. Such an action would effectively deprive them of their rightful share in the property. The Appellant may seek appropriate remedies through a partition suit or a suit for compensation and damages against the transferor, but he is not entitled to claim ownership or control over the entire suit property.

AMLEGALS REMARK

The Hon’ble Supreme Court’s decision reinforces the principle that no single co-owner can unilaterally decide the fate of shared property without the explicit consent or legal partitioning with other co-owners. The ruling protects the rights of all heirs and sets a precedent for similar disputes, emphasizing due process and documentation. This judgment is a vital reminder of the complexities involved in property law and the importance of adhering to statutory requirements to avoid legal pitfalls.

The  judgment underscores a clear affirmation of property rights and co-ownership principles, underscoring the necessity for proper legal authority and evidence in property transactions. It reinforces the importance of respecting the rights of all co-owners and ensuring that property transfers are conducted with due regard to existing ownership interests. The decision wisely balances the need for legal clarity with fairness to all parties involved.

Team AMLEGALS

For any query or feedback, please feel free to get in touch with rohit.lalwani@amlegals.com