In a recent judgment on the Ghanshyam v Yogendra Rathi property dispute case, the Supreme Court of India upheld the possessory rights of the plaintiff-respondent, but clarified that an agreement to sell did not transfer proprietary rights. The plaintiff-respondent claimed ownership over premises occupied by the defendant-appellant based on documents including an agreement to sell, a power of attorney, a possession memo and a payment receipt.
The facts
The plaintiff-respondent sought the eviction of the defendant-appellant from premises in the JJ Colony neighbourhood of Shakurpur, New Delhi. The defendant-appellant contested the suit, alleging that documents had been manipulated, but did not dispute their execution or the payment of sale consideration.
The trial court framed three issues: alleged manipulation and fraudulent acquisition of documents; the plaintiff-respondent’s right to eviction; and the entitlement to mesne profits. The trial court decided all the issues against the defendant-appellant, finding no evidence of misrepresentation or fraud in the documents. The court held the plaintiff-respondent had established his right to the property and was entitled to eviction and mesne profits, albeit at a reduced rate.
The defendant-appellant appealed the decision, primarily questioning the validity of the plaintiff-respondent’s documents. The higher court granted leave to appeal but observed the appellant had not raised this specific issue in the lower courts. Consequently, the court held the appeal did not involve any substantial question of law.
The observations
While an agreement to sell may not confer absolute title to a property, it can establish possessory rights in part performance of the agreement. The court noted the agreement, the payment of sale consideration and possession given to the plaintiff-respondent demonstrated his de facto possessory rights. The defendant-appellant’s subsequent occupation of part of the property was deemed as a mere licensee, and did not grant him ownership.
The court dismissed the significance of the power of attorney and the will executed by the defendant-appellant, stating that they did not confer any rights on the plaintiff-respondent. The power of attorney did not result in the execution of a sale deed, rendering it useless.
The court emphasised that any practice or tradition recognising agreements to sell, general powers of attorney, or wills as documents conferring rights in immovable property contravenes statutory law. The court referred to previous decisions that reiterated the need for the execution of a document of transfer, as per section 54 of the Transfer of Property Act, 1882, to confer right and title in immovable property.
In conclusion
The judgment clarified that an agreement to sell does not transfer proprietary rights but grants possessory title, protected under section 53A of the Transfer of Property Act, 1882. The prospective purchaser who fulfils their contractual obligations and lawfully possesses the property acquires possessory rights that cannot be infringed on by the transferor or any subsequent claimants.
Considering the plaintiff-respondent’s established possessory title and the defendant-appellant’s occupation as a licensee, the court upheld the decree of eviction and mesne profits. The judgment emphasises the importance of honouring possessory rights derived from valid agreements, and highlights the need for proper execution and registration of transfer documents to confer ownership rights.
The dispute digest is compiled by Numen Law Offices, a multidisciplinary law firm based in New Delhi & Mumbai. The authors can be contacted at support@numenlaw.com. Readers should not act on the basis of this information without seeking professional legal advice.
