SUPREME COURT UPHOLDS PLAINTIFF’S OWNERSHIP OF PROPERTY BASED ON POSSESSORY TITLE OBTAINED THROUGH PART PERFORMANCE OF AGREEMENT TO SELL

A Two Judge Bench of the Supreme Court comprising of Justice Dipankar Datta and Justice Pankaj Mithal passed a judgment dated 02-06-2023 in the matter of Ghanshyam v. Yogendra Rathi [Civil Appeal Nos. 7527-7528 of 2012], which involved the dispute regarding the Respondent / Plaintiff, Yogendra Rathi’s ownership of a property in Delhi based on possessory title and consequent right of eviction of the Appellant / Defendant, Ghanshyam from the said property. The Respondent / Plaintiff claimed ownership of property based on an agreement to sell, possession memo, receipt of payment, and a will. Further, the Appellant / Defendant accused the Plaintiff of manipulating the said documents to claim ownership of the property. However, the lower Courts ruled in favour of the Plaintiff. The Appeal before the Apex Court raised questions regarding the validity of the said documents and their impact on the Plaintiff’s right to get the Defendant evicted and claim mesne profits.

Facts

(1) The present case dealt with the eviction of the Defendant from a property, which is a part of H-768, J.J. Colony, Shakarpur, Delhi (Property).

(2) The Plaintiff claimed ownership of the Property based on the following documents:

(i) Agreement to Sell dated 10.04.2002

(ii) Power of Attorney

(iii) Memo of Possession

(iv) Receipt of payment of sale consideration

(v) “Will” of the Defendant-Appellant thereby bequeathing the Property in favour of the Plaintiff-Respondent

(3) The Plaintiff-Respondent initially handed over possession of the Property to the Defendant-Appellant after execution of the Agreement to Sell. However, on the Defendant-Appellant’s request, the Plaintiff-Respondent allowed the Defendant-Appellant to occupy the ground floor and one room on the first floor as a licensee for a period of 3 months.

(4) Despite the expiry of the said License period and the termination of the License through a Notice dated 18.02.2003, the Defendant-Appellant failed to vacate the Property.

(5) As a result, the Plaintiff-Respondent approached the Trial Court thereby, seeking eviction of the Defendant-Appellant and further, claimed mesne profits.

(6) The Trial Court framed the following three issues:

(i) The first issue was regarding the Plaintiff’s alleged acts of manipulation and fraud in obtaining the aforesaid documents to claim ownership of the Property.

(ii) The second issue was about the Plaintiff’s right to evict the Defendant from the Property.

(iii) The third issue was regarding the Plaintiff’s entitlement to mesne profits for the period overstayed by the Defendant at the Property.

(iv) The Trial Court passed an Order dated 18.08.2005 and observed as follows:

(v) The Trial Court decided all the issues against the Defendant-Appellant and observed that there was no evidence to prove misrepresentation, manipulation, or fraud on the part of the Plaintiff in obtaining the documents.

(vi) That the Plaintiff-Respondent proved his right over the Property, and since the license of the Defendant-Appellant had been terminated, the Trial Court granted a Decree of Eviction and awarded Mesne Profits at the rate of Rs. 1000/- per month for the use and occupation of the Property by the Defendant beyond the License period.

(7) Aggrieved by the Trial Court Order dated 18.08.2005, the Defendant filed an Appeal before the First Appellate Court, which was rejected, vide, Order dated 03.08.2006.

(8) Aggrieved by the First Appellate Court’s Order dated 03.08.2006, the Defendant filed an Appeal before the High Court of Delhi in RSA No. 314/2006.

(9) The High Court, vide Order dated 21.01.2011, observed as follows:

(i) The High Court considered the Defendant’s contention that the Suit was erroneously decreed based on the documents of title presented by the Plaintiff. The Defendant claimed that the aforementioned documents were insufficient to establish ownership of Property, in the absence of a registered sale deed.

(ii) The High Court noted that the Plaintiff had averred in the Plaint that the Defendant had executed the aforementioned documents and handed over possession of the Property to the Plaintiff on the same day.

(iii) The High Court observed that the written statement filed by the Defendant did not specifically deny the aforesaid assertions, but made allegations against the Plaintiff regarding fraudulent execution of documents to wrongfully claim ownership of Property.

(iv) The High Court further considered the evidence presented in lower Courts, which established that the Defendant had indeed executed the documents and delivered physical possession of the Property to the Plaintiff.

(v) Referring to previous judgments, the High Court concluded that the execution of a Power of Attorney accompanied by consideration and delivery of possession constitutes a valid transfer of immovable property in Delhi.

(vi) Thus, based on the aforesaid analysis, the High Court held that the Trial Court and the First Appellate Court were justified in relying on the documents presented by the Plaintiff to uphold the Plaintiff’s title to the Property. Therefore, the High Court dismissed the Defendant’s Appeal.

Supreme Court Observations

Aggrieved by the High Court Order dated 21.01.2011, the Defendant filed Civil Appeal Nos. 7527-7528 of 2012 before the Supreme Court. The Apex Court passed a Judgment dated 02-06-2023 and made the following observations:

1) That the Agreement to Sell, by itself, does not transfer title or act as a document of transfer, according to the Transfer of Property Act, 1882 (TP Act). However, the Plaintiff, in part performance of the agreement, had obtained possessory rights over the Property. These rights could not be disturbed by the Defendant, who occupied the Property as a licensee and not as an owner.

2) That the Power of Attorney and Will executed by the Defendant were irrelevant to establish the Plaintiff’s ownership. Such documents do not confer rights in an immovable property, unless executed as per Section 54 of the TP Act (“Sale” defined) and registered under Section 17(Documents of which registration is compulsory) the Indian Registration Act 1908.

3) That legally, an agreement to sell may not be considered a transaction of sale or a document transferring proprietary rights in an immovable Property. However, if the prospective purchaser fulfils their obligations and lawfully possesses the property, they acquire possessory title, which is protected under Section 53A of the TP Act. These possessory rights cannot be infringed upon by the transferor or anyone claiming under them.

4) Thus, applying the aforesaid principles of law in the present case, it is clear that (i) the Plaintiff-Respondent had possessory title to the Property through part performance of the Agreement to Sell and (ii) that the Defendant-Appellant has lost possession of the Property. (iii) The Defendant-Appellant, who initially possessed the Property under a mere license, no longer had the right to continue occupying it after the license was terminated. (iv) Therefore, by transferring possession of the Property to the Plaintiff-Respondent through the Agreement to Sell, the Plaintiff-Respondent acquired possessory title and the Defendant-Appellant ceased to be the owner and became a licensee for a specific period. (v) However, this license period ended with a valid notice, leaving the Defendant-Appellant with no right to remain in possession of the Property.

Therefore, based on the aforementioned observations, the Supreme Court upheld the Trial Court Order dated 18.08.2005, the Appellate Court Order dated 03.08.2006 and the High Court Order dated 21.01.2011, that held that the Plaintiff-Respondent is entitled to a decree of eviction with mesne profits. As a result, the Appeal filed by the Defendant was dismissed.

 

Udit Krishna

Associate

Indian Lawyer & Allied Services