Background of the Case
RBANMS Educational Institution, a 148-year-old public charitable trust in Bengaluru, has been in continuous possession of a large parcel of land (leased in 1905 and later conveyed in 1929) used for educational and sports purposes.
In 2018, two individuals, claiming to have entered into an agreement to sell the property with unrelated third parties (not with RBANMS), filed a civil suit against the institution.
They claimed to have paid ?75 lakh in cash as advance for a ?9 crore transaction, and wanted to stop RBANMS from creating third-party rights over the land.
What Was the Legal Dispute?
The plaintiffs were not the owners or in possession of the property. They claimed rights only through an unregistered agreement to sell—not with RBANMS but with a different set of individuals.
The institution (RBANMS) responded with a legal application under Order VII Rule 11 of the Civil Procedure Code (CPC), requesting rejection of the plaint because:
The plaintiffs had no legal right or ownership.
The suit was barred by law.
The claim was based on a suspicious transaction with no registered documentation or title.
Supreme Court’s Analysis & Key Observations
No Privity of Contract
The Court noted that the agreement was not with RBANMS. The plaintiffs cannot sue a third party (RBANMS) based on a contract they had with someone else.
Agreement to Sell ≠ Ownership
The judgment reinforced that as per Section 54 of the Transfer of Property Act, a contract for sale does not create ownership or legal interest in immovable property.
For ownership to pass, a registered sale deed is mandatory.
Rs75 Lakh in Cash: Suspicious & Illegal
The plaintiffs claimed to have paid ?75 lakh in cash, which violates Section 269ST of the Income Tax Act that bars cash transactions above ?2 lakh.
This raised red flags on the legitimacy of the transaction and showed disregard for tax laws.
No Declaration, Only Injunction
The plaintiffs filed a suit for injunction only, without seeking declaration of title—which is essential when there’s a dispute over ownership.
Courts have consistently held that mere injunction suits are not maintainable when the title is under cloud.
Clever Drafting Can't Save Baseless Cases
The Court quoted the landmark ruling in T. Arivandandam v. T.V. Satyapal, stating that “clever drafting to create an illusion of cause of action” must be nipped in the bud.
It held that the plaint was frivolous, misleading, and clearly intended to harass a historic public institution.
Public Interest Consideration
The Court acknowledged the institution’s century-old work for marginalized students and said such charitable bodies must be protected from speculative and extortionate litigation.
Final Verdict by Supreme Court
The appeal by RBANMS was allowed.
The High Court and Trial Court's earlier orders were set aside.
The plaint was rejected under Order VII Rule 11(a) & (d) CPC (no cause of action + barred by law).
The Court cautioned the plaintiffs against filing similar baseless cases in the future.
Directed courts and registrars to report large cash property transactions to Income Tax Department.
Case law RBANMS Educational Institution vs. B. Gunashekar & Another
Citation-2025 TAXONATION 407 (SUPREME COURT)
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