2023 (6) TMI 1497 - SC - Indian Laws

Appeal dismissed; eviction and Rs.1,000 monthly mesne profits upheld as buyer had part performance under Section 53A

Ghanshyam Versus Yogendra Rathi

The SC dismissed the appeal and affirmed decree for eviction of the defendant-appellant, holding there was no evidence of fraud in obtaining documents. ... Suit for eviction of the defendant-appellant from the suit premises for mesne profits - manipulation and fraudulently obtaining the alleged documents - right of the plaintiff-respondent to get the defendant-appellant evicted - entitlement of mesne profits - HELD THAT:- A categorical finding of fact was recorded that there is no evidence to prove that any of the above documents were obtained by misrepresentation, manipulation or by playing fraud upon the defendant-appellant. The plaintiff-respondent has proved his right over the property and since the licence of the defendant-appellant stands determined, he is entitled to a decree of eviction and payment of mesne profits though not at the rate claimed by the plaintiff-respondent for which there is evidence but at the rate of Rs. 1000/- per month for the use and occupation of the premises in dispute. No doubt, agreement to sell is not a document of title or a deed of transfer of property by sale and as such, may not confer absolute title upon the plaintiff-respondent over the suit property in view of Section 54 of the Transfer of Property Act, 1882, nonetheless, the agreement to sell, the payment of entire sale consideration as mentioned in the agreement itself and corroborated by the receipt of its payment and the fact that the plaintiff-respondent was put in possession of the suit property in accordance with law as is also established by the possession memo on record, goes to prove that the plaintiff-respondent is de-facto having possessory rights over the suit property in part performance of the agreement to sell. This possessory right of the plaintiff-respondent is not liable to be disturbed by the transferer, i.e., the defendant-appellant. The entry of the defendant-appellant over part of the suit property subsequently is simply as a licencee of the plaintiff-respondent. He does not continue to occupy it in capacity of the owner. Legally an agreement to sell may not be regarded as a transaction of sale or a document transferring the proprietary rights in an immovable property but the prospective purchaser having performed his part of the contract and lawfully in possession acquires possessory title which is liable to be protected in view of Section 53A of the Transfer of Property Act, 1882. The said possessory rights of the prospective purchaser cannot be invaded by the transferer or any person claiming under him. The plaintiff-respondent has rightly been held to be entitled for a decree of eviction with mesne profits, we do not find any error or illegality in such a decree being passed - Appeal dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether documents described as an agreement to sell, possession memo, receipt of payment of sale consideration, power of attorney and a will - if proved genuine and not procured by fraud - confer on the plaintiff a title sufficient to entitle him to a decree for eviction and mesne profits. 2. Whether part performance (possession given to a purchaser after payment of consideration) creates a possessory right protecting the purchaser against disturbance by the transferor under Section 53A of the Transfer of Property Act, 1882, notwithstanding that no registered sale deed under Section 54 has been executed. 3. Whether a licensor/licencee relationship arises where the transferor, after putting the purchaser in possession in part performance, subsequently occupies part of the property and whether the occupier's licence, once terminated, permits continued possession. 4. The legal significance of a power of attorney and a will in conferring title or occupation rights in immovable property prior to execution of a registered sale deed. 5. Whether local practice or judicial decisions treating agreements to sell plus ancillary documents as equivalent to a sale deed can override statutory requirements for transfer and registration of immovable property. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Sufficiency of the pleaded documents (agreement to sell, possession memo, receipt, power of attorney, will) to confer title for eviction and mesne profits Legal framework: Section 54 of the Transfer of Property Act, 1882, defines sale and contemplates transfer by a registered instrument; registration requirements under the Registration Act are relevant. Section 53A protects the purchaser in possession in part performance. Precedent Treatment: The Court notes and distinguishes certain High Court decisions which treated agreement to sell plus full payment, possession and irrevocable power of attorney as effecting a de facto sale; it also aligns with other High Court precedents and a Supreme Court view that deprecate transfer of immovable property by sale agreement, general power of attorney and will in place of a registered conveyance deed. Interpretation and reasoning: The Court accepts that an agreement to sell is not itself a transfer document under Section 54; however, where the purchaser has performed his part (payment of consideration) and has been put in possession, he acquires possessory rights under Section 53A. Those possessory rights are protected against disturbance by the transferor even though proprietary title by registered conveyance is not yet executed. Ratio vs. Obiter: Ratio - An agreement to sell coupled with payment of the full sale consideration and lawful delivery of possession creates possessory title under Section 53A which is protectable and can ground a decree of eviction and mesne profits against the transferor who subsequently occupies; Obiter - critical remarks about certain High Court practices treating ancillary documents as equivalent to sale deeds and discussion of policy considerations. Conclusions: The proved documents (agreement to sell, receipt of payment, possession memo) give the plaintiff a possessory title in part performance; such possessory title entitles the plaintiff to eviction of the defendant who later occupied as a licencee and to recover mesne profits. Issue 2 - Effect of part performance under Section 53A on the transferor's right to disturb possession Legal framework: Section 53A protects a purchaser who has taken possession in part performance of an agreement to sell from being evicted or disturbed by the transferor. Precedent Treatment: The Court relies on the statutory position and supportive judicial exposition; it treats contrary High Court practice as inconsistent with Section 54 and Section 53A. Interpretation and reasoning: Where possession is delivered pursuant to an agreement and full consideration is paid (as evidenced by the receipt and possession memo), the purchaser's possessory right is settled and cannot be disturbed by the transferor. The subsequent entry by the transferor on part of the property is only as a licencee vis-à-vis the purchaser. Ratio vs. Obiter: Ratio - Possessory rights acquired by part performance are enforceable against the transferor; the transferor cannot reassert ownership to defeat such possession. Obiter - commentary on the need for formal registered deeds to confer absolute title. Conclusions: Part performance produced a possessory title for the plaintiff which the defendant could not lawfully invade; eviction and mesne profits are warranted on that basis. Issue 3 - Status and consequences of licence created by re-entry and termination of licence Legal framework: Principles of licence law and termination of licence; interplay with possessory rights of purchaser under Section 53A. Precedent Treatment: The Court applies established principles distinguishing licence from ownership and referring to inability of licencee to resist eviction after licence termination. Interpretation and reasoning: After putting the plaintiff in possession under the agreement, the defendant retained occupancy only by licence for a limited period; upon expiry and termination of that licence (valid notice), no right subsisted for continued possession. The licencee status does not convert into ownership or a defensive title against the purchaser's possessory rights. Ratio vs. Obiter: Ratio - A licencee whose licence has been validly terminated cannot resist eviction by the person having possessory title by part performance. Obiter - none material beyond direct application. Conclusions: The defendant was a licencee with no subsisting right after termination and was rightly decreed to be evicted and ordered to pay mesne profits (subject to quantification). Issue 4 - Legal relevance of power of attorney and will in conferring title prior to execution of a registered sale deed Legal framework: Registration and conveyance requirements; nature and operation of general power of attorney and wills in property transfers. Precedent Treatment: The Court again distinguishes inconsistent High Court practices and refers approvingly to authorities that exclude power of attorney and will as substitutes for registered conveyance. Interpretation and reasoning: A general power of attorney which is not acted upon to execute a sale deed is ineffectual to transfer proprietary rights; a will operates only on the death of the testator and confers no right while the testator is alive. Thus, neither document, in the absence of consequent registered transfer, confers title enabling eviction. Ratio vs. Obiter: Ratio - Power of attorney unexercised and a will during the testator's life do not confer enforceable title for the purposes of eviction; Obiter - criticism of practices treating such documents as documents of title contrary to statutory law. Conclusions: The power of attorney and the will were legally ineffective to confer title; the plaintiff's entitlement rested on part performance and possession memo, not on those documents. Issue 5 - Whether local practice or judicial decisions treating agreements and ancillary documents as de facto transfers can override statutory registration requirements Legal framework: Mandatory nature of statutory provisions governing transfers (Section 54 and registration requirements) and the supremacy of statute over custom. Precedent Treatment: The Court expressly holds that certain High Court decisions and local practice treating ancillary documents as transfer instruments are not consonant with the statutory scheme and are therefore of no help to a claimant relying on them to assert proprietary title. Interpretation and reasoning: Custom or judicial practice cannot override clear statutory mandates requiring execution and registration of a deed of transfer for immovable property above a specified value. While possessory protection under Section 53A is available, it does not convert an agreement or ancillary document into a registered transfer. Ratio vs. Obiter: Ratio - Statutory requirements for transfer and registration cannot be bypassed by practice or conventions; Obiter - commentary on decisions which attempted to treat agreements and ancillary documents as effectuating a sale. Conclusions: Practices or precedents to the contrary do not validate a transfer in absence of compliance with Section 54 and registration; protection available to a purchaser in possession is distinct from conferment of absolute title by registered deed. Overall Conclusion The Court affirms that where an agreement to sell, receipt of full consideration and lawful delivery of possession are proved and not procured by fraud, the purchaser acquires possessory title under Section 53A enforceable against the transferor; ancillary documents such as an unexercised general power of attorney and a will do not independently confer title; a licencee whose licence has been terminated cannot resist eviction. On these grounds the decree for eviction with mesne profits is sustainable.