New Delhi: The Supreme Court has made it clear that people buying property cannot simply trust the seller's version without doing their own checks. If a buyer doesn't conduct proper verification and due diligence, they cannot claim legal protection later, even if they paid money in good faith.
The Court's Key Observations
A bench of Justices JB Pardiwala and R Mahadevan ruled that a person who buys property by relying only on what the seller tells them—without making reasonable inquiries—cannot be considered a genuine purchaser acting in good faith. Such buyers are not protected under Section 19(b) of the Specific Relief Act, which shields genuine buyers from earlier agreements they had no knowledge of.
The Court emphasized: "A subsequent purchaser who relies merely on the assertions of the vendor or who chooses to remain content with his own limited knowledge while consciously abstaining from making further inquiry into the subsisting interests in the property cannot escape the consequences of deemed notice."
Facts of the Case
The case involved agricultural land in Haveri district, Karnataka, spanning about 354 acres. In April 2000, the original owners entered into an Agreement to Sell with certain buyers for Rs. 26 lakh, accepting Rs. 2 lakh as advance. However, in 2003, the owners unilaterally terminated the agreement, claiming they were unable to complete the sale due to a court order and the death of one owner.