J&K Transfer Of Property Act | Buyer's Possession Only Permissive, Doesn't Convert To Ownership Till Property Is Registered: High Court

Justice Javed Iqbal Wani highlighted that possession by the buyer under such agreements is permissive and does not constitute a transfer of an interest in the property. This means that until the property is registered under the Registration Act, the buyer does not acquire ownership rights, he underscored.

“..Under the Act of 1977 after the execution of a contract for sale/agreement to sell, title clearly resides in the vender and even though he may have parted with possession, the possession of the proposed vendee is under the agreement and not being a transfer of interest and in fact is permissive”, Justice Wani recorded.

The Dispute:

The case originated from a dispute over land possession in District Rajouri, Jammu between the successors-in-interest of the deceased petitioner and the respondents, including educational institutions and individuals.

Initially filed under Article 227 of the Constitution of India, the petition challenged an order passed by the appellate court, which upheld an appeal against the trial court's decision. The trial court had dismissed an application for interim relief filed by the respondents, which sought to restrain interference with the suit land.

The crux of the dispute lay in the interpretation of agreements for sale and possession rights under the Transfer of Property Act. The respondents argued that they were in possession of the land pursuant to agreements executed by the deceased petitioner.

However, the petitioner contended that the agreements had lapsed, and the respondents had no valid claim to the property. The petitioners also argued that the appellate court had erred in relying on Section 53-A of the Act of 1882, which was not applicable to the case as the relevant legislation in effect at the time was the Act of 1977.

Observations Of The Court:

After considering the rival contentions Justice Wani agreed with the petitioners contention and pointed out that the appellate court had committed a "patent error" by misconstruing the applicable law.

“It would be significant to note here that Section 53-A of the Act of 1882 admittedly was not applicable to the case in hand on the date of passing of the impugned order by the appellate court, instead Transfer of Property Act, Svt., 1977 (for short “Act of 1977”), in fact, was applicable wherein there has been no such provision of Section 53-A in place. The appellate Court, thus, has patently and grossly misdirected itself”.

Clarifying the mandate of the Act of 1977 that was applicable to the instant case the court clarified that under the Act of 1977 upon execution of a sale agreement, ownership remains with the seller (vendor) even if possession is handed over to the buyer (vendee). The buyer's possession is considered permissive and does not transfer any ownership rights until the property is registered under the Registration Act, it added.

Deliberating on the concept of part performance, as embodied in Section 53-A of the Act of 1882, the court said,

“..that under the Act of 1977 applicable to the case in hand neither the principle of part performance as contained in Section 53-A of the Act of 1882 nor the principle of equitable estoppels akin to it could be invoked by a party to its aid seeking relief against third-party”.

The bench further noted that the appellate court had exceeded its jurisdiction by expressing an opinion on the merits of the case during an appeal on an interim relief order. The court remarked,

“..the appellate court has fallen in grave error while wrongly passing the impugned order not only while placing reliance on Section 53-A of the Act of 1882, but also while expressing opinion to the merits of the case which the appellate court could not have done while deciding a miscellaneous appeal arising out of an order passed in an application for interim relief, in that, the powers of an appellate court deciding a miscellaneous appeal are limited and circumscribed”.

Consequently, the High Court set aside the appellate court's order. It directed both parties to maintain the existing status quo regarding possession of the land until the trial court reaches a final verdict in the suit.

Case Title: Shani Devi Vs Fr. Tomi Principal Christ School

Citation: 2024 LiveLaw (JKL) 48

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