Supreme Court Upholds Sale Deed, Settles Land Dispute: Damodhar Narayan Sawale vs. Shri Tejrao Bajirao Mhaske (2023)

Introduction

Date of the Judgment: May 4, 2023
Citation: 2023 INSC 491
Judges: Justice M.R. Shah and Justice C.T. Ravikumar

Can a registered sale deed be invalidated based on claims of it being a sham transaction or due to violations of land fragmentation laws? The Supreme Court of India recently addressed this question in a case concerning a land dispute in Maharashtra. This judgment clarifies the legal importance of registered sale deeds and the limitations of challenging them based on oral claims and the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947. The bench comprised Justice M.R. Shah and Justice C.T. Ravikumar, with Justice C.T. Ravikumar authoring the judgment.

Case Background

The case revolves around a land dispute in village Gangalgaon, Taluk Chikhli, District Buldana, Maharashtra. The original plaintiff, Damodhar Narayan Sawale, claimed ownership of a field (Khasra No.20/2) measuring 3 acres and 20 guntas, based on a registered sale deed dated April 21, 1979. The defendants were Ramakrishna Ganpat Mhaske and Tejrao Bajirao Mhaske. According to the plaintiff, he was put in possession of the land immediately after the sale, but Tejrao Bajirao Mhaske started disturbing his possession on April 25, 1979, leading to the filing of the suit on May 21, 1979.

The plaintiff contended that he had paid a total sale consideration of Rs. 10,000 to the defendants. Ramakrishna Ganpat Mhaske had obtained title to 2 acres and 20 guntas of the land from Tejrao Bajirao Mhaske through a registered sale deed dated July 4, 1978, while Tejrao Bajirao Mhaske remained the owner of the remaining 1 acre. The plaintiff stated that Tejrao Bajirao Mhaske had used the sale consideration for various purposes, including paying his debts. During the proceedings, the original plaintiff died, and his legal representatives were substituted as appellants. Similarly, legal representatives of the deceased defendants were also impleaded as respondents.

Timeline:

Course of Proceedings

The trial court dismissed the suit, ruling that the plaintiff had not proven the purchase of the land or the legal necessity for the sale. It accepted the second defendant’s claim that the sale deed was a sham document, executed as security for a money lending transaction. The trial court also held that the sale deed violated the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947.

On appeal, the First Appellate Court reversed the trial court’s decision, holding that the trial court had ignored the legal effect of the registered sale deed. The First Appellate Court found that the second defendant failed to prove that the sale was part of a money lending transaction and decreed the suit for possession in favor of the plaintiff. The High Court, in a second appeal, reversed the First Appellate Court’s decision and restored the trial court’s decree, stating that the First Appellate Court had ignored the trial court’s findings on material facts.

Legal Framework

The judgment discusses several key legal provisions:

• Section 5 of the Transfer of Property Act, 1882: Defines “transfer of property” as an act by which a living person conveys property to one or more other living persons.
• Section 54 of the Transfer of Property Act, 1882: Defines “sale” as a transfer of ownership in exchange for a price paid or promised. It also mandates that the transfer of ownership of any land worth more than Rs.100/- shall be effected by a registered deed.
• Section 17 of the Indian Registration Act, 1908: Mandates that transfer of ownership of any land worth more than Rs.100/- shall be effected by a registered deed.
• Section 9(1) of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: States that any transfer or partition of land contrary to the provisions of the Act is void. The Act aims to prevent the fragmentation of agricultural holdings and to provide for their consolidation for better cultivation.
• Section 36A of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: Bars civil courts from settling, deciding, or dealing with any question that the State Government or any officer or authority is required to settle under the Act.
• Section 36B of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: Requires civil courts to stay suits and refer issues to the competent authority if the suit involves issues that need to be decided under the Act.
• Section 9 of the Code of Civil Procedure, 1908: Confers jurisdiction upon the Civil Courts to determine all disputes of civil nature, unless the same is barred under a statute, either expressly or by necessary implication.
• Order VIII Rule 6A of the Code of Civil Procedure, 1908: Pertains to counterclaims by a defendant against the plaintiff.
• Sections 91 and 92 of the Indian Evidence Act, 1872: Pertain to the exclusion of oral evidence by documentary evidence and the exclusion of evidence of oral agreement.

The Court emphasized that the Transfer of Property Act and the Registration Act mandate that the transfer of ownership of any land worth more than Rs. 100 must be through a registered deed, which implies a transfer of all rights the vendor possessed in the property. The Fragmentation Act aims to prevent fragmentation of agricultural holdings, not to prohibit all land transfers.

Arguments

Plaintiff’s Arguments:

• The plaintiff argued that he purchased the suit field from the defendants through a registered sale deed dated April 21, 1979 (Exhibit 128).
• He claimed that he was put in possession of the land immediately after the sale.
• He asserted that he had paid the full sale consideration of Rs. 10,000 to the defendants.
• The plaintiff relied on the registered sale deed as proof of his absolute title over the land.

Defendant’s Arguments:

• The second defendant (Tejrao Bajirao Mhaske) contended that the sale deed dated April 21, 1979, was a sham document, never intended to be acted upon.
• He claimed that the sale deed was executed only as collateral security for a loan of Rs. 1,000, with a promise to repay Rs. 1,500 within 12 months.
• He also alleged that the registered sale deed executed in favor of the first defendant was of the same nature.
• He argued that no sale consideration was passed, and the sale deeds were executed without any intention to effect the sale of the properties.
• The defendant further contended that the sale transaction violated the provisions of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, and Section 10 of the Bombay Money Lenders Act, 1946.

The innovativeness of the argument of the defendant was that he tried to bypass the effect of the registered sale deed by saying that the sale deed was a sham document and was only a collateral security for a money lending transaction. The defendant also tried to bring in the provisions of the Fragmentation Act to declare the sale deed as void.

Issues Framed by the Supreme Court

The High Court re-framed the following substantial questions of law:

1. Whether the plaintiff has established his entitlement for a decree of possession of the suit property on the basis of the sale deed dated 21.04.1979 at Exh.128 executed by the defendant Nos.1 and 2?
2. Whether the defendant No.2 has established that the sale deed at Exh.128 was nominal and by way of collateral security and the said transaction was hit by the provisions of Section 8 of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act?
3. While reversing the findings recorded by the trial Court, whether the lower appellate Court has ignored the findings recorded by the trial Court on the material facts in the light of undisputed factual position?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues:

Authorities

The Supreme Court considered the following authorities:

Cases:

• Charanjit & Ors. v. State of Punjab & Anr. [(2013) 11 SCC 163] – Supreme Court of India: The Supreme Court can reverse concurrent findings of fact by lower courts if affirming them would result in a grave miscarriage of justice.
• Adambai Sulemanbhai Ajmeri & Ors. v. State of Gujarat [(2014) 7 SCC 716] – Supreme Court of India: Similar to Charanjit, this case reinforces the Supreme Court’s power to reverse concurrent findings to prevent injustice.
• Jag Mohan Chawla and Anr. v. Dera Radha Swami Satsang & Ors. [(1996) 4 SCC 699] – Supreme Court of India: This case explains the wide scope of counterclaims under Order VIII Rule 6A of the Code of Civil Procedure, 1908.
• Rohit Singh and Ors. v. State of Bihar [(2006) 12 SCC 734] – Supreme Court of India: A defendant cannot raise a counterclaim against a co-defendant, but only against the plaintiff.

Legal Provisions:

• Section 5 of the Transfer of Property Act, 1882: Defines “transfer of property.”
• Section 54 of the Transfer of Property Act, 1882: Defines “sale” and the requirement of a registered deed for properties worth more than Rs. 100.
• Section 17 of the Indian Registration Act, 1908: Mandates the registration of documents for the transfer of immovable property worth more than Rs. 100.
• Section 9(1) of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: Declares transfers contrary to the Act void.
• Section 36A of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: Bars civil courts from deciding issues under the Act.
• Section 36B of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947: Requires civil courts to refer issues to competent authorities under the Act.
• Section 9 of the Code of Civil Procedure, 1908: Confers jurisdiction upon the Civil Courts to determine all disputes of civil nature, unless the same is barred under a statute, either expressly or by necessary implication.
• Order VIII Rule 6A of the Code of Civil Procedure, 1908: Deals with counterclaims by a defendant.
• Sections 91 and 92 of the Indian Evidence Act, 1872: Pertain to the exclusion of oral evidence by documentary evidence and the exclusion of evidence of oral agreement.

Judgment

How each authority was viewed by the Court?

• Charanjit & Ors. v. State of Punjab & Anr. [(2013) 11 SCC 163]* and Adambai Sulemanbhai Ajmeri & Ors. v. State of Gujarat [(2014) 7 SCC 716]*: These cases were cited to justify the Supreme Court’s intervention to correct errors made by lower courts.
• Jag Mohan Chawla and Anr. v. Dera Radha Swami Satsang & Ors. [(1996) 4 SCC 699]*: This authority was used to explain the scope of counterclaims under the Code of Civil Procedure, 1908.
• Rohit Singh and Ors. v. State of Bihar [(2006) 12 SCC 734]*: This case was used to emphasize that a defendant cannot raise a counterclaim against a co-defendant.
• The Court relied on Section 54 of the Transfer of Property Act, 1882 and Section 17 of the Indian Registration Act, 1908 to emphasize the legal importance of registered sale deeds.
• The Court referred to the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, particularly Sections 9(1), 36A, and 36B, to clarify that the civil court did not have jurisdiction to decide on issues under the Act.
• The Court used Sections 91 and 92 of the Indian Evidence Act, 1872 to emphasize that oral evidence could not override the registered sale deed.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the following factors:

• Legal Validity of Registered Sale Deed: The Court emphasized the importance of a registered sale deed as a valid proof of ownership. The execution and registration of the sale deed (Exhibit 128) were admitted by the defendants, which created a strong presumption of a genuine transaction.
• Lack of Evidence for Sham Transaction: The second defendant failed to provide sufficient evidence to prove that the sale deed was a sham document or a collateral security for a loan. The Court noted that the defendant’s oral evidence could not override the registered sale deed.
• Inapplicability of the Fragmentation Act: The Court held that the provisions of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, were not applicable in this case. The civil court did not have the jurisdiction to decide on issues under the Act, and the defendant’s pleas were mutually destructive.
• Erroneous Assumption of Jurisdiction: The trial court and the High Court erred in applying the Fragmentation Act and in ignoring the legal impact of the registered sale deed. The High Court reversed the First Appellate Court’s decision without considering the legal impact of the registered sale deed.
• Importance of First Appellate Court’s Findings: The First Appellate Court correctly appreciated the evidence and the legal impact of the registered sale deed. The High Court erred in reversing the First Appellate Court’s decision.

Fact:Law Ratio

The Court’s reasoning was heavily based on legal principles, such as the importance of registered sale deeds and the limitations of civil courts’ jurisdiction under the Fragmentation Act. However, the Court also considered the factual aspects of the case, such as the admission of the execution and registration of the sale deed by the defendants.

Logical Reasoning:

The Court rejected alternative interpretations, such as the defendant’s claim that the sale deed was a sham transaction and that the Fragmentation Act applied. The Court emphasized that the defendant’s oral evidence could not override the registered sale deed and that the civil court did not have the jurisdiction to decide on issues under the Fragmentation Act.

The Supreme Court held that the High Court had committed a serious error by setting aside the judgment and decree of the First Appellate Court and restoring the decree of dismissal of the suit of the trial Court. The Court emphasized the importance of registered sale deeds and the limitations of civil courts’ jurisdiction under the Fragmentation Act.

The key reasons for the decision were:

• The registered sale deed (Exhibit 128) was a valid document transferring ownership to the plaintiff.
• The defendant failed to prove that the sale deed was a sham document or a collateral security for a loan.
• The Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947, was not applicable in this case.
• The civil court lacked jurisdiction to decide on issues under the Fragmentation Act.
• The High Court failed to consider the legal impact of the registered sale deed.

The Court quoted the following from the judgment:

• “Even though the powers under Article 136 of the Constitution of India must be exercised sparingly, yet there is absolutely nothing in the said Article which prohibits the Supreme Court from reversing even concurrent findings of the fact by courts below, if it is of the opinion on the basis of the evidence on record, that affirming the findings of the courts below would result in a grave miscarriage of justice.”
• “A conjoint reading of Section 54 of the TP Act and Section 17 of the Indian Registration Act, 1908, mandates that transfer of ownership of any land worth more than Rs.100/- shall be effected by a registered deed.”
• “The very object of the mandate for registration of transfer of an immovable property worth more than Rs. 100/- under Section 54 of the Transfer of Property Act, 1882, read with Section 17 of the Indian Registration Act, is primarily to give certainty to title.”

There were no dissenting opinions in this case. The bench comprised Justice M.R. Shah and Justice C.T. Ravikumar, with Justice C.T. Ravikumar authoring the judgment.

Final Order

The Supreme Court allowed the appeal, set aside the judgment and decree of the High Court, and restored the judgment and decree of the First Appellate Court. The Court emphasized the importance of registered sale deeds and the limitations of civil courts’ jurisdiction under the Fragmentation Act. The Court concluded that the High Court had committed a serious error by setting aside the judgment and decree of the First Appellate Court and restoring the decree of dismissal of the suit of the trial Court. The Court, therefore, restored the judgment of the First Appellate Court.

Key Takeaways

This judgment reinforces several critical legal principles:

• Importance of Registered Sale Deeds: A registered sale deed is a crucial document that transfers ownership of immovable property. It carries a strong presumption of validity and cannot be easily invalidated based on oral claims or alleged sham transactions.
• Limitations of Oral Evidence: Oral evidence cannot override the legal effect of a registered sale deed. The Court emphasized that the defendant’s oral claims of a sham transaction could not be accepted against the registered sale deed.
• Jurisdiction under the Fragmentation Act: Civil courts do not have jurisdiction to decide on issues that need to be settled by the competent authority under the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947.
• Intervention by the Supreme Court: The Supreme Court can reverse concurrent findings of fact by lower courts if affirming them would result in a grave miscarriage of justice.
• Importance of First Appellate Court: The First Appellate Court’s findings are crucial, and the High Court should not reverse them without proper consideration of the legal impact of the registered sale deed.

The Supreme Court’s decision highlights the importance of adhering to legal procedures and the significance of registered documents in property transactions. It also clarifies the limitations of challenging registered sale deeds based on oral claims and the applicability of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947.