Land Sale Void If Society’s Charge Not Cleared: Supreme Court Explains Legal Consequence

Facts Of The Case:

The case originated from Special Civil Suit No. 49/1973, filed by the original plaintiff, Machhindranath, seeking possession and reconveyance of ancestral agricultural land, Survey No. 30, admeasuring 15 Acres and 17 Guntha, located in Village Kendal Bk., Taluka Rahuri, Ahmednagar, Maharashtra. The plaintiff had obtained a loan from Kendal Bk. Vividh Karyakari Seva Sahakari Sanstha Limited (Society) in 1956 and created a charge on the suit land, recorded as Mutation Entry no. 3346 on September 9, 1969.On November 2, 1971, due to financial difficulties, the plaintiff executed a registered Sale Deed of the suit land in favor of his nephew and son-in-law, defendant no. 1, for Rs. 5,000, as security for a loan. On the same day, defendant no. 1 executed a “Ram Ram Patra” (Reconveyance Deed), stating he would reconvey the land upon repayment of Rs. 5,000. Mutation Entry no. 3520 was recorded in defendant no. 1’s name on December 24, 1971.On July 15, 1972, defendant no. 1 sold 10 acres of the suit land (Survey No. 30/1) to defendant no. 2 for Rs. 30,000. The plaintiff filed the suit on February 28, 1973, seeking possession of both Survey Nos. 30/1 and 30/2. The Society later released its charge on the suit land on August 27, 1973, after the plaintiff repaid the loan. The Trial Court initially decreed possession in favor of the plaintiff, declaring the 1971 Sale Deed void under Section 48 of the Maharashtra Co-operative Societies Act, 1960. This decision was challenged and underwent multiple appeals and remands before reaching the Supreme Court.

Procedural History:

The plaintiff initiated Special Civil Suit No. 49/1973 before the Civil Judge, Senior Division, Ahmednagar, seeking possession and reconveyance of the suit land. On March 27, 1980, the Trial Court ruled that the Sale Deed dated November 2, 1971, was void under Section 48 of the Act and found defendant no. 2 not to be a bona fide purchaser, granting a decree for possession and direction for reconveyance upon payment of Rs. 5,000.Defendant no. 2 appealed this decision to the High Court of Judicature at Bombay, filing First Appeal No. 457/1980, later re-numbered as First Appeal No. 624/1992 at the Aurangabad Bench. The learned Single Judge initially remanded the matter to the Trial Court on October 14, 1988, for consideration of four additional issues. After the Trial Court’s findings on these issues on April 28, 1989 , the learned Single Judge dismissed the appeal, confirming the decree of possession.Subsequently, defendant no. 2 filed LPA No. 1/1990, which a Division Bench allowed, remanding the matter for fresh reconsideration on all issues by the learned Single Judge. Upon reconsideration, the learned Single Judge allowed the first appeal, setting aside the decree of possession and dismissing the plaintiff’s suit. Aggrieved, the original plaintiff (predecessor-in-interest of the appellants) filed LPA No. 33/1998 before the Division Bench, which was dismissed by the Impugned Order dated January 15, 2019, affirming the Single Judge’s decision. The current appeal is filed before the Supreme Court of India against this Impugned Order

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Court Observation:

The Supreme Court observed the undisputed application of Section 48 of the Maharashtra Co-operative Societies Act, prohibiting alienation of property with a created charge until loan repayment. The plaintiff’s charge on the suit land predated the Sale Deed, and no repayment or release application occurred before the sale. While initially appearing void, the Court suggested a deeper probe, noting the Society’s subsequent release of the charge after the plaintiff repaid dues, implying the Society’s interest was not harmed. The Court interpreted Section 48(e) as directory, meaning only the aggrieved society, not the breaching member-loanee, could seek nullification, thus making the transaction voidable, not void ab initio. Furthermore, the “Ram Ram Patra” reconveyance deed was doubted due to lack of stamp paper, registration, and crucial terms like a time limit or interest. The plaintiff’s failure to seek reconveyance also weakened his claim. The Court found defendant no. 2 a bona fide purchaser and refused to aid the plaintiff in benefiting from his own wrong.

Final Decision & Judgement:

The Supreme Court dismissed the appeal, affirming the Impugned Order passed by the High Court of Judicature at Bombay, Bench at Aurangabad. The Court found no merit in the appeal, concurring with the learned Single Judge and the Division Bench. The judgment upheld the dismissal of the original plaintiff’s suit for possession and reconveyance of the suit land. The Court’s decision was based on the reasoning that the alienation of the charged property, while potentially voidable, could only be challenged by the aggrieved Society, not by the plaintiff who committed the breach of Section 48 of the Maharashtra Co-operative Societies Act, 1960. The subsequent release of the charge by the Society on August 27, 1973, after the plaintiff’s loan repayment, effectively validated the transaction. Furthermore, the Court found the “Ram Ram Patra” (reconveyance deed) to be legally invalid due to lack of stamp paper and registration, and the absence of crucial terms like a time period or escalation in the reconveyance amount. The principle that no party can take advantage of his or her own wrong was squarely applied, leading to the dismissal of the appeal. No order was made as to costs, and I.A. No. 42744/2020 was closed. The Registry was directed to prepare the Decree Sheet accordingly.

Case Details:

Case Title: Machhindranath S/O Kundlik Tarade Deceased Through LRS Versus Ramchandra Gangadhar Dhamne & Ors. 
Citation: 2025 INSC 795 
Civil Appeal No.: Civil Appeal No. 7728 of 2020
Date of Judgment: June 02, 2025
Judges/Justice Name: Justice Sudhanshu Dhulia and Justice Ahsanuddin Amanullah

Download The Judgement Here