SUPREME COURT HOLDS THAT LOWER COURTS ERRED IN HOLDING TRANSFER OF PROPERTY VOID, WITHOUT FRAMING ANY ISSUES THEREOF
A Two Judge Bench of the Supreme Court comprising of Justice M.R. Shah and Justice C.T. Ravikumar passed a Judgment dated 04-05-2023 in the matter of Damodhar Narayan Sawale (D) through LRs. Vs Shri Tejrao Bajirao Mhaske & Ors. Civil Appeal No.930 of 2023 and observed that the High Court and the Trial Court erred in making observations regarding the validity of the Sale Deed dated 04-07-1978 executed by and between the Defendants, without framing any issues thereof.
Facts
(1) In the present case, in respect of a field comprised in Khasra No.20/2, having an extent of 3 Acres and 20 guntas in village Gangalgaon, Taluk Chikhli, District Buldana, Maharashtra (Property), the Defendant No. 2, Tejra Bajirao Mhaske had transferred 2 acres and 20 guntas of the Property in favor of the Defendant No. 1, Ramakrishna Ganpat Mhaske vide Registered Sale Deed dated 04-07-1978 and thereafter, the Defendant No. 2 retained the title over the balance 1 acre.
(2) The Defendants-Sellers together sold the Property to the Plaintiff, Damodhar Narayan Sawale for Rs. 10,000.00, vide Registered Sale Deed dated 21-04-1979, as the Defendants-Sellers were in need of money to discharge their family debts and other family needs.
(3) Upon execution of the Sale Deed, the Plaintiff was put in possession of the Property. However, the Defendant No. 2 started disturbing his possession from 25-04-1979.
(4) Aggrieved, the Plaintiff-Buyer filed Regular Civil Suit No. 104 of 1979 before the Court of Civil Judge, Senior Division, Buldana, which was later transferred to the Court of Joint Civil Judge, Junior Division, Chikhli (Trial Court) in Regular Civil Suit No. 257 of 1985.
(5) The Defendant No. 1 endorsed the claims and contentions of the Plaintiff-Buyer and further stated in his written statement that after parting with the possession of the Property in favor of the Plaintiff, the Defendant No. 2 turned dishonest and started disturbing the possession of the Plaintiff.
(6) The Defendant No. 2 denied the claims of the Plaintiff-Buyer and further stated in his written statement that the Sale Deed is a sham document and that he never intended to sell the Property. Further, the Sale Deed was executed as a collateral security to a money lending transaction of Rs. 1000/- with a promise to repay the Buyer Rs. 1500/- within 12 months.
(7) The Trial Court, vide Order dated 31-07-1987, dismissed the Suit filed by the Plaintiff-Buyer, on the following grounds:
(i) That the Plaintiff failed to prove that he has purchased the Property from the Defendants,
(ii) That the Plaintiff failed to prove that the execution of the Sale Deed was for legal necessity of the Defendant No. 2,
(iii) Further, the Parties failed to obtain the District Court permission for the alleged transfer of agricultural land under Section 8 of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947 (Fragmentation Act) (Fragmentation prohibited). Thus, the said Sale Deed is void.
(iv) Furthermore, the Sale Deed was, in fact, executed only as a security for a money lending transaction, and that the Plaintiff dealt in such money lending business without license.
(8) Aggrieved, the Plaintiff filed Regular Civil Appeal No. 98 of 1987 before the Court of Additional District Judge, Buldana (First Appellate Court), which reversed the Trial Court Judgment, vide Order dated 31-07-1995, on the grounds that (i) the Plaintiffs had established that the Sale Deed was executed in their favor and (ii) the Defendants had failed to establish that the Sale Deed was executed as a security for a money lending transaction. Accordingly, a Decree for Possession was passed in favor of the Plaintiff-Buyer.
(9) Aggrieved, the Defendants filed Second Appeal No. 435 of 1995 before the High Court of Bombay, at Nagpur, which reversed the First Appellate Court Judgment, vide Order dated 30-10-2015 on the following grounds:
(i) Out of the total extent of 3 Acres and 20 guntas of the Property, the Defendant-2 transferred 2 acres and 20 guntas in favor of the Defendant No. 1 and retained title over the balance 1 acre, vide Registered Sale Deed dated 04-07-1978.
(ii) However, such transfer would create a fragment of 1 acre in the remaining Property and the same is prohibited under Section 8 of the Fragmentation Act, which provides that “No land in any local area shall be transferred or partitioned so as to create a fragment”.
(iii) Hence, the transfer of 2 acres and 20 guntas of the Property by Defendant No. 2 in favor of Defendant No. 1, vide Registered Sale Deed dated 04-07-1978, would be void, in terms of Section 9 of the Fragmentation Act (Penalty for transfer or partition contrary to provisions of Act), which provides that “The transfer or partition of any land contrary to the provisions of this Act shall be void.”
(iv) As a result, the High Court held that (a) the Sale Deed dated 04-07-1978 transferring 2 acres and 20 guntas of the Property in favor of the Defendant No. 1 is void, (b) the Defendant No. 1 is not a lawful owner of the said 2 acres and 20 guntas of the Property and (c) the ownership thereof is retained with the Defendant No. 2.
(v) Hence, the 2 acres and 20 guntas of the Property is not deemed to have been transferred from the Defendant No. 1 in favor of the Plaintiff, vide Sale Deed dated 21-04-1979, as the Defendant No. 1 himself did not have title over such part of the Property.
(vi) Further, in respect of transfer of the fragment of remaining 1 acre of the Property from the Defendant No. 2 in favor of the Plaintiff, the same is prohibited under Section 8 of the Fragmentation Act and hence, the said sale / transfer is also void.
(vii) Thus, based on the aforesaid observations, the High Court held that the Plaintiff cannot seek possession on the basis of the void Sale Deed dated 21-04-1979.
Supreme Court Observations
Aggrieved by the High Court Order dated 30-10-2015, the Plaintiff-Buyer filed Civil Appeal No. 930 of 2023 before the Supreme Court. The Apex Court passed a Judgment dated 04-05-2023 and made the following observations:
1) That the term ‘sale’ has been defined in Section 54 of the Transfer of Property Act 1882 (TP Act) as “sale” is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.”
2) That Section 17 of the Indian Registration Act, 1908 (Documents of which registration is compulsory) mandates that transfer of ownership of any land worth more than Rs.100/- shall be effected by a registered deed.
3) That the object of the Fragmentation Act is “to prevent the fragmentation of agricultural holdings and to provide for the consolidation of agricultural holdings for the purpose of the better cultivation thereof”. Thus, the Fragmentation Act per se does not prohibit transfer of agricultural land, but only prevents fragmentation thereof and provides for consolidation of such land for better cultivation.
4) Further, there is no bar on transfer of agricultural land to an agriculturist under Section 31 (3) of the Fragmentation Act (Restrictions on alienation and subdivision of consolidated holdings).
5) Furthermore, the Bench made observations regarding the jurisdiction of the Trial Court / Civil Court in the present case, as follows:
i) That Section 9 of the Code of Civil Procedure 1908 (CPC) (Courts to try all civil suits unless barred) confers jurisdiction upon all civil courts to determine the disputes of civil nature, unless specifically barred under a statute, etc.
ii) That Section 36A of Fragmentation Act (Bar of jurisdiction) bars the jurisdiction of civil courts from settling, deciding or dealing with any question under the said Act that have to be settled by the State Government or any officer / authority.
iii) Section 36B of the Fragmentation Act (Suits involving issues required to be decided under this Act) provides that if any person has filed a suit under the Fragmentation Act before a civil court, the said suit would be stayed and the issues would be referred to the competent authority under the said Act.
iv) However, in the present case, the Trial Court and the High Court failed to take into consideration (a) the aforesaid provisions of law and (b) the fact that the Defendant No. 2 had not approached any such authority under the Fragmentation Act to nullify the action undertaken under the Sale Deed dated 21-04-1979.
v) Thus, the Bench held that the jurisdiction of the Civil Court in the present case was barred under the Fragmentation Act.
6) Further, the High Court erred in making observations regarding the legality / validity of the earlier Sale Deed dated 04-07-1978, as the same was not the subject matter of dispute, there were no issues framed thereof and the same was also not challenged by the Defendant No. 2 in his written statement filed before the Trial Court. Hence, the High Court had no jurisdiction under the Fragmentation Act to hold that the transfer of part of the Property from the Defendant No. 2 in favor of the Defendant No. 1 under the Sale Deed dated 04-07-1978 was void.
7) Further, in so far as the observation made by the High Court that the transfer of Property from the Defendant No. 1 in favor of the Plaintiff under the subsequent Sale Deed dated 21-04-1979 is void, also cannot be upheld as the same has been based on the incorrect observations made regarding the earlier Sale Deed, i.e. the Defendant No. 1 did not have title to transfer the Property to the Plaintiff under the subsequent Sale Deed, as the earlier Sale Deed granting title to the Defendant No. 1 was held to be void.
8) That a sale deed which has been executed and registered and sale consideration has been paid thereof, would constitute full transfer of ownership so as to entitle the buyer to file a suit for possession of the property sold, under Registration Act. Hence, the Registered Sale Deeds in the present case carry a presumption regarding genuineness. As a result, the Defendant No. 2 cannot raise grievance regarding such transfer.
Thus, based on the aforesaid observations, the Supreme Court held that the Defendant No. 2 had not raised any of its issues / grievances before the competent authority under the Fragmentation Act and had not assailed the validity of the earlier Sale Deed dated 04-07-1978 before the lower Courts, therefore, such grievances and observations made by the Trial Court and the High Court thereof cannot be upheld. As a result, the Appeal filed by the Plaintiff-Buyer was allowed, the First Appellate Court Order dated 31-07-1995 was upheld and the Trial Court Order dated 31-07-1987 and the High Court Order dated 30-10-2015 were set aside.
Harini Daliparthy
Senior Associate
The Indian Lawyer
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