Supreme Court Rules on Developer’s Possession and Specific Performance in Land Dispute

The case of Saketa Vaksana LLP & Anr. v. Kaukutla Sarala & Ors. is a significant ruling concerning the possession of land by a developer and the applicability of specific performance in real estate transactions. The Supreme Court, in its judgment dated December 17, 2019, dismissed the appeals filed by the developer and upheld the Telangana High Court’s ruling that vacated a temporary injunction granted to the developer.

Background of the Case

The case revolves around an Agreement of Sale executed on November 17, 2017, between the landowners (respondents) and the appellant-developer for the sale of 54 acres and 13 guntas of agricultural land situated in Turkapalli Village, Shamirpet Mandal, Medchal-Malkajgiri District. The agreed sale consideration was Rs. 46,00,000 per acre. The land was divided into five schedules, with each schedule to be transferred upon the proportionate payment.

The agreement mentioned that physical possession of the entire land had been handed over to the developer at the time of execution. However, disputes arose regarding the balance consideration and the extent of land for which payments were completed.

Petitioner’s Arguments

The appellant-developer argued that:

Their possession of the entire land was established through the agreement, which stated that physical possession was handed over.
They had already paid Rs. 17,25,00,000 towards the sale consideration.
The landowners were obstructing access to the plots that had already been developed and sold to third parties.
There was a risk of the landowners creating third-party interests in the disputed portion.
The trial court correctly granted an injunction restraining interference with possession.

Respondent’s Arguments

The landowners contended that:

Possession was only symbolic and not physical.
The developer still owed a balance consideration of Rs. 10,73,95,000 and had failed to pay despite repeated assurances.
They continued to cultivate the land and had various structures, including a guest house and servant quarters, on the disputed portion.
The developer was wrongfully claiming possession to delay payments and arm-twist the landowners.
The trial court’s order was based on an incorrect assumption that possession was legally transferred.

Supreme Court’s Analysis

The Supreme Court analyzed the facts and found that:

There were seriously disputed facts regarding possession, which needed to be adjudicated in trial.
The agreement merely stated that possession was handed over, but the landowners had evidence of continued occupation.
The developer had not cleared the full payment for the disputed portion.
The lower court’s temporary injunction in favor of the developer was not justified as the developer’s possession was not conclusively established.

The Court observed:

“The interest of the Appellant-Developer has been sufficiently protected with respect to ownership of the suit property. The question of possession is a matter to be determined during the trial.”

Final Judgment

The Supreme Court dismissed the appeals and ruled:

“The orders dated 14.08.2019 passed by the division bench of the High Court do not warrant any interference. The temporary injunction restraining the Respondents from interfering with the possession of the Appellant-Developer over the suit property has been vacated.”

The Court also directed that the trial in O.S. No. 213/2018 be expedited and disposed of within one year.

Impact of the Judgment

This ruling has significant implications for real estate disputes:

It reinforces that physical possession must be established through evidence rather than just contractual clauses.
It clarifies that specific performance suits must be accompanied by full payment of the agreed consideration.
It protects landowners from developers seeking injunctions without proving actual possession.
It ensures that courts do not grant interim reliefs in property disputes without thoroughly examining the facts.

Conclusion

The Supreme Court’s decision in Saketa Vaksana LLP & Anr. v. Kaukutla Sarala & Ors. is a crucial ruling for real estate transactions and contract enforcement. By vacating the temporary injunction, the judgment ensures that disputed questions of possession and consideration are resolved through proper trial proceedings rather than interim orders. The ruling serves as a key precedent for property law disputes involving agreements of sale and possession claims.

Petitioner Name: Saketa Vaksana LLP & Anr..
Respondent Name: Kaukutla Sarala & Ors..
Judgment By: Justice Uday Umesh Lalit, Justice Indu Malhotra, Justice Krishna Murari.
Place Of Incident: Telangana.
Judgment Date: 17-12-2019.

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