Specific Relief Act (SRA)
Relief Against Parties and Subsequent Transferees: Section 19
A contract to sell land is only as good as the plaintiff's ability to enforce it against whoever now holds the property. Section 19 tells us against whom a decree for specific performance may be obtained. It binds the party and those claiming under him by a later title, but it carves out one vital exception: a transferee for value who paid in good faith and without notice of the earlier contract takes free of it. This note works through clauses (a) to (f), examines the bona fide purchaser defence and the meaning of notice, and connects Section 19 with lis pendens under Section 52 of the Transfer of Property Act.
Figure: Section 19: the persons against whom specific performance may be enforced, and the bona fide purchaser exception
1. Against Whom Relief May Be Obtained: Section 19(a) to (f)
The list ▪ (a) Either party to the contract. ▪ (b) Any other person claiming under a party by a title arising after the contract, except a transferee for value who has paid his money in good faith and without notice of the original contract. ▪ (c) Any person claiming under a title which, though prior to the contract and known to the plaintiff, might have been displaced by the defendant. ▪ (d) A new limited liability partnership where the contracting LLP has since amalgamated with another. ▪ (e) A new company where the contracting company has since amalgamated with another. ▪ (f) The company, where promoters made a contract before its incorporation for its purposes, if the company has accepted the contract and communicated the acceptance to the other party. |
2. The Bona Fide Purchaser for Value Without Notice
The key exception in clause (b) ▪ Three requirements, all necessary. A later purchaser defeats the earlier contract only if he shows that he: paid value; acted in good faith; and had no notice, actual or constructive, of the prior contract. ▪ Burden of proof. The burden of establishing all three lies on the subsequent transferee who sets up the defence. ▪ The policy. The section protects an innocent purchaser who paid and had no means of knowing of the earlier bargain, while denying protection to one who knew or ought to have known. |
3. The Meaning of Notice
Kind of notice | What it means |
|---|---|
Actual notice | The purchaser in fact knew of the prior agreement |
Constructive notice | He would have known had he made the enquiries a prudent buyer makes |
Possession as notice | Possession of the property by the prior buyer is itself notice of his rights, so the purchaser must enquire into it |
Effect of notice | Any form of notice defeats the good-faith defence and binds the purchaser to the earlier contract |
4. Section 19(b) and Lis Pendens: Section 52 of the Transfer of Property Act
- Lis pendens. Under Section 52 of the Transfer of Property Act, a transfer of the suit property during the pendency of a suit is subject to the result of the suit.
- How they work together. A purchaser during the suit is bound by the decree by force of lis pendens, quite apart from Section 19(b); and a purchaser before suit is bound unless he proves the good-faith defence.
- Necessary party. A subsequent transferee against whom relief is sought is a necessary party to the suit, and the decree is framed to direct conveyance by him or by the vendor as the case requires.
5. Frequently Asked Questions
Q. Against whom can specific performance be enforced?
A. Under Section 19, against either party, those claiming under a party by a later title, and a new LLP or company after amalgamation, among others, but not against a bona fide purchaser for value without notice.
Q. Who is a bona fide purchaser for value without notice?
A. A later buyer who paid value, acted in good faith, and had no notice, actual or constructive, of the prior contract. He must prove all three, and he then takes free of the earlier contract.
Q. Is possession by the earlier buyer notice to a later purchaser?
A. Yes. Possession of the property by the prior buyer is itself notice of his rights, so a later purchaser is expected to enquire into who is in possession.
Q. How does lis pendens affect a purchase during the suit?
A. Under Section 52 of the Transfer of Property Act, a transfer during the pendency of the suit is subject to its result, so the purchaser is bound by the decree regardless of Section 19(b).
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