A Builder Lacking Ownership Title Cannot Enter into an Enforceable Agreement to Sell Immovable Property.

The Plaintiff filed a suit for specific performance of an Agreement to Sell dated 15.06.2018 regarding the first floor of a property in Pitampura

Defendant No. 2 is the registered owner of the property and had entered into a Collaboration Agreement with Defendant No. 1 (a builder) in 2015

Under this agreement, Defendant No. 1 was to receive the first floor in exchange for constructing the building

The Plaintiff’s father initially paid Rs. 1.45 crores to Defendant No. 1, and the Plaintiff later paid an additional Rs. 15 lakhs under a new agreement after his father's demise

Defendant No. 1 filed an application under Order VII Rule 11 of the CPC for rejection of the plaint, arguing that the contract was not performable as the construction remained incomplete and he had no title to transfer

1. Whether the plaint discloses a cause of action for specific performance against Defendant No. 1 and the owner (Defendant No. 2) when the builder has not yet acquired title

2. Whether the plaint should be rejected in its entirety, including the prayer for alternative relief (damages), if the underlying contract is found to be unenforceable

Order VII Rule 11(a) of the Code of Civil Procedure (CPC), which mandates the rejection of a plaint that fails to disclose a cause of action

Section 13 of the Specific Relief Act (SRA), 1963, which defines the rights of a purchaser against a vendor with "no title or imperfect title," specifically noting that such rights only accrue if the vendor subsequently acquires an interest in the property or can compel concurrence from the owner

The Court observed that there is no privity of contract between the Plaintiff and the owner (Defendant No. 2)

Under Clause 10 of the Collaboration Agreement, the owner is only bound to execute a sale deed in favor of the builder (Defendant No. 1) once construction of the owner's share is completed

Since the construction is admittedly incomplete and possession has not been handed back to the owner, Defendant No. 1 has not yet acquired any legal right or title to sell the property

Consequently, Section 13 of the SRA does not assist the Plaintiff because the condition precedent—acquisition of interest by the vendor—has not occurred

Regarding the alternative prayer for a refund of Rs. 2.79 crores, the Court reasoned that since the Agreement to Sell was entered into by a party (Defendant No. 1) who was not the owner, the suit cannot continue even for alternative reliefs as the basis of the claim is an unenforceable contract

The application was allowed, and the plaint was rejected in toto under Order VII Rule 11(a) of the CPC

The Court Clarified that this order does not bar the Plaintiff from filing a fresh suit specifically for damages or recovery of the amount paid to Defendant No. 1