The Kerala High Court has held that a prior agreement of sale will prevail over a subsequent attachment before judgment, clarifying that an attaching creditor cannot claim rights over the property itself and can seek recovery only from the balance sale consideration payable to the vendor.

The Court observed that contractual obligations arising from an earlier agreement to sell cannot be defeated by a later attachment obtained in a money recovery proceeding.

The Bench made the observation while allowing an execution second appeal filed by a purchaser whose claim petition under Order XXI Rule 58 of the Code of Civil Procedure, 1908 had been dismissed by the executing court and affirmed by the District Court.

Justice Easwaran S. observed, “…it is beyond cavil that the order of attachment certainly operates to the extent of the balance amount which has been paid by the appellant in execution of the same in pursuance to the decree for specific performance. Unfortunately, the courts below did not consider the above aspects in proper perspective. Thus, the approach of the courts below is clearly flawed and has been rendered without adverting to the basic tenets of law which governs the right of the party in a contract of sale. If the findings of the courts below are sustained, then necessarily, the rights of the parties flowing under the contract of sale become redundant...”.

Advocate D. Kishore appeared for the appellant and Advocate Shajahan M.V. appeared for the respondents.

In the matter the purchaser entered into an agreement of sale on May 18, 2013 with the judgment debtor and paid ₹51.88 lakh as advance. When the vendor failed to complete the sale, the purchaser filed a suit for specific performance, which was decreed on March 31, 2015. Meanwhile, another creditor had obtained an order of attachment before judgment in a separate money recovery suit concerning the same property.

The purchaser challenged the attachment, contending that his prior contractual rights arising from the sale agreement and the decree for specific performance could not be defeated by a later attachment.

Placing reliance on the Supreme Court judgment in Vannarakkal Kallalathil Sreedharan v. Chandramaath Balakrishnan and Another 1990 (3) SCC 291, the Court held that attachment before judgment does not affect rights that existed prior to the attachment, including contractual obligations arising from an earlier agreement to sell.

The Bench further observed that although a contract for sale does not create title in the property under the Transfer of Property Act, 1882, it nevertheless creates enforceable equitable rights that courts must protect. An attaching creditor, the Court noted, cannot claim a better right than the judgment debtor.

Significantly, the Court also held that the earlier Division Bench judgment in Kumaran v. Kumaran 2011 (1) KLT 252, relied upon by the subordinate courts, was per incuriam as it failed to consider the binding Supreme Court precedent in Vannarakkal.

Accordingly, the Court set aside the orders of the subordinate courts, allowed the purchaser’s claim petition, and lifted the attachment over the property, while permitting the attaching creditor to seek recovery from the amount deposited by the purchaser pursuant to the decree for specific performance.

Cause Title: Kesavan v. D. Chandran & Anr. [Neutral Citation: 2026:Ker:17081]

Appearances:

Appellant: D. Kishore, Meera Gopinath, R. Muraleekrishnan, Advocates.

Respondents: Shajahan M.V., Advocate.

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Justice Easwaran S.Kerala High Court

Agatha Shukla