Supreme Court Upholds Eviction Based on Agreement to Sell and Possessory Rights: Ghanshyam vs. Yogendra Rathi (2023)

Introduction

Date of the Judgment: June 2, 2023

Citation: 2023 INSC 575

Judges: Justice Dipankar Datta and Justice Pankaj Mithal. The judgment was authored by Justice Pankaj Mithal.

Can a person be evicted from a property if they are occupying it as a licensee, after having transferred possession to the plaintiff as part of an agreement to sell? The Supreme Court of India addressed this question in a recent case involving a dispute over property rights. The court examined the validity of an eviction suit based on an agreement to sell, a possession memo, and a receipt of full payment, where the original owner was later allowed to occupy the property as a licensee. The core issue was whether these documents confer sufficient possessory rights to evict the original owner after the license period expired.

Case Background

The plaintiff, Yogendra Rathi, filed a suit seeking the eviction of the defendant, Ghanshyam, from a property located in J.J. Colony, Shakarpur, Delhi. The plaintiff claimed ownership of the property based on several documents, including an agreement to sell dated April 10, 2002, a power of attorney, a memo of possession, a receipt of payment for the sale consideration, and a will executed by the defendant in favor of the plaintiff. The plaintiff asserted that possession of the property was handed over to him as part of the agreement to sell. Subsequently, at the defendant’s request, the plaintiff allowed the defendant to occupy a portion of the property as a licensee for three months. After the license period expired, the defendant failed to vacate the premises despite a termination notice dated February 18, 2003.

The defendant contested the suit, alleging that the documents were manipulated on blank papers. However, the defendant did not dispute the execution of the documents, the possession memo, or the fact that the sale consideration was paid.

Timeline

Course of Proceedings

The trial court framed three issues: (1) whether the documents were manipulated or fraudulently obtained, (2) whether the plaintiff was entitled to evict the defendant, and (3) whether the plaintiff was entitled to mesne profits. The trial court decided all issues against the defendant, finding no evidence of manipulation or fraud. It held that the plaintiff had proven his right over the property and was entitled to a decree of eviction and mesne profits at the rate of Rs. 1000 per month. The High Court, in the second appeal, held that the defendant could not raise new issues that were not raised in the trial court or the first appellate court, and that the appeal did not involve any substantial question of law.

Legal Framework

The Supreme Court considered Section 54 of the Transfer of Property Act, 1882, which defines a sale as a transfer of ownership in exchange for a price. According to this section, a sale of immovable property of a value of one hundred rupees and upwards can be made only by a registered instrument.

The Court also considered Section 53A of the Transfer of Property Act, 1882, which protects the possessory rights of a prospective buyer who has performed their part of the contract, even if there is no registered sale deed. This section provides that the transferor cannot disturb the possession of the transferee if the transferee has taken possession in part performance of the contract.

The court also referred to Section 17 of the Indian Registration Act, 1908, which mandates the registration of documents that transfer rights in immovable property.

Arguments

The defendant-appellant argued that the documents presented by the plaintiff were manipulated on blank papers and did not confer any title upon the plaintiff-respondent. The defendant contended that the agreement to sell, power of attorney, will, possession memo, and receipt of payment did not transfer ownership of the property.

The plaintiff-respondent argued that the agreement to sell, the possession memo, and the receipt of payment of the sale consideration, established that he had possessory rights over the property. He contended that the defendant was occupying the property as a licensee, and the license had been terminated, entitling him to eviction and mesne profits.

Issues Framed by the Supreme Court

The Supreme Court considered the issue of whether the agreement to sell, power of attorney, will, memo of possession, and receipt of payment of sale consideration, would confer any title upon the plaintiff-respondent so as to entitle him to a decree of eviction and mesne profits.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal provisions:

• 
  Section 54 of the Transfer of Property Act, 1882: This section defines sale and requires that a sale of immovable property of a value of one hundred rupees and upwards can be made only by a registered instrument.
• 
  Section 53A of the Transfer of Property Act, 1882: This section protects the possessory rights of a prospective purchaser who has performed their part of the contract.
• 
  Section 17 of the Indian Registration Act, 1908: This section mandates the registration of documents that transfer rights in immovable property.

The Supreme Court considered the following cases:

• 
  Veer Bala Gulati Vs. Municipal Corporation of Delhi and Anr. [(2003) 104 DLT 787] – Delhi High Court: This case held that an agreement to sell with payment of full consideration and possession, along with an irrevocable power of attorney, is a transaction of sale.
• 
  Asha M. Jain Vs. Canara Bank and Ors. [(2001) 94 DLT 841] – Delhi High Court: This case held that an agreement to sell with payment of full consideration and possession, along with an irrevocable power of attorney, is a transaction of sale.
• 
  Imtiaz Ali Vs. Nasim Ahmed [AIR 1987 DELHI 36] – Delhi High Court: This case observed that an agreement to sell or a power of attorney are not documents of transfer and do not transfer title unless a registered sale deed is executed.
• 
  G. Ram Vs. Delhi Development Authority [AIR 2003 DELHI 120] – Delhi High Court: This case observed that an agreement to sell or a power of attorney are not documents of transfer and do not transfer title unless a registered sale deed is executed.
• 
  Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. [(2009) 7 SCC 363] – Supreme Court of India: This case deprecated the transfer of immovable property through sale agreements, general power of attorney, and wills instead of a registered conveyance deed.

Judgment

The Supreme Court explicitly disagreed with the Delhi High Court’s view in Veer Bala Gulati Vs. Municipal Corporation of Delhi and Anr. [(2003) 104 DLT 787] and Asha M. Jain Vs. Canara Bank and Ors. [(2001) 94 DLT 841]. The court clarified that an agreement to sell does not transfer ownership of immovable property.

The Supreme Court followed the view taken by the Delhi High Court in Imtiaz Ali Vs. Nasim Ahmed [AIR 1987 DELHI 36] and G. Ram Vs. Delhi Development Authority [AIR 2003 DELHI 120], which held that an agreement to sell does not transfer title unless a registered sale deed is executed.

The Supreme Court also followed its own decision in Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana & Anr. [(2009) 7 SCC 363], which deprecated the transfer of immovable property through sale agreements, general power of attorney, and wills instead of a registered conveyance deed.

The court held that, while an agreement to sell does not transfer ownership, the prospective purchaser who has performed their part of the contract and is in lawful possession acquires possessory rights that are protected under Section 53A of the Transfer of Property Act, 1882. The court stated, “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 court concluded that the defendant’s entry onto the property was as a licensee, and after the license was terminated, the defendant had no right to remain in possession. The court stated, “the defendant-appellant parted with the possession of the suit property by putting the plaintiff-respondent in possession of it under an agreement to sell. The plaintiff-respondent in this way came to acquire possessory title over the same.”

The court also clarified that the power of attorney and the will executed by the defendant in favor of the plaintiff were inconsequential. The court stated, “the will dated 10.04.2002 executed by the defendant-appellant in favour of the plaintiff-respondent is meaningless as the will, if any, comes into effect only after the death of the executant and not before it.”

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the plaintiff had possessory rights over the property due to the agreement to sell, possession memo, and full payment of the sale consideration. The court emphasized that the defendant’s subsequent occupation of the property was as a licensee, and the license had been validly terminated. The court’s reasoning focused on protecting the possessory rights of the plaintiff under Section 53A of the Transfer of Property Act, 1882. The court also highlighted that the defendant had parted with the possession of the property and that the documents were not manipulated.

Key Takeaways

• ✓ An agreement to sell, coupled with a memo of possession and receipt of full payment, grants possessory rights to the prospective buyer.
• ✓ The person in possession under an agreement to sell can protect their possessory rights under Section 53A of the Transfer of Property Act, 1882.
• ✓ A person occupying a property as a licensee can be evicted upon termination of the license.
• ✓ A general power of attorney and a will do not transfer title to immovable property.
• ✓ The transfer of immovable property requires a registered conveyance deed as per Section 54 of the Transfer of Property Act, 1882 and Section 17 of the Indian Registration Act, 1908.

Directions

The Supreme Court dismissed the appeals and upheld the decree of eviction and mesne profits awarded by the lower courts.

Development of Law

The ratio decidendi of the case is that an agreement to sell, coupled with possession and full payment, does not transfer ownership but grants possessory rights to the prospective buyer. The judgment clarifies that the transfer of immovable property requires a registered conveyance deed as per Section 54 of the Transfer of Property Act, 1882 and Section 17 of the Indian Registration Act, 1908. This judgment reinforces the importance of registered conveyance deeds for transferring title and protects the possessory rights of the prospective purchaser under Section 53A of the Transfer of Property Act, 1882.

Conclusion

In conclusion, the Supreme Court dismissed the appeals, upholding the eviction decree and mesne profits awarded by the lower courts. The court clarified that while an agreement to sell does not transfer ownership, it does grant possessory rights to the prospective buyer, and a licensee can be evicted after the termination of the license.