Though Agreement To Sell Doesn't Confer Title, Possessory Right Of Prospective Purchaser Protected Under Sec 53A TP Act : Supreme Court

The Supreme Court has held that even though an Agreement to Sell does not transfer proprietary rights in an immovable property, however, when the prospective purchaser performs his part of the contract and receives possession of the property, then he/she is said to have acquired possessory title and the same is protectable under Section 53A of the Transfer of Property Act, 1882 (TPA).

The Bench comprising of Justice Dipankar Datta and Justice Pankaj Mithal, while adjudicating the appeal Ghanshyam v Yogendra Rathi, has observed as under:

“Legally an agreement to sell may not be regarded as a transaction of sale or a document transferring the proprietary rights in an immovable property but 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 said possessory rights of the prospective purchaser cannot be invaded by the transferer or any person claiming under him.”

BACKGROUND FACTS

Mr. Ghanshyam (“Appellant”) was the owner of a property situated in Delhi (“Suit Property”). He entered into an Agreement to Sell dated 10.04.2002 with Mr. Yogendra Rathi (“Respondent”) for sale of Suit Property and received the entire sale consideration from the Respondent. On the same day, the Appellant executed a will bequeathing the Suit Property to the Respondent. The Appellant further executed a General Power of Attorney in favour of the Respondent. The possession of the Suit Property was handed over to the Respondent, however, no sale deed was executed.

The Respondent permitted the Appellant to occupy a portion of the Suit Property for 3 months as a licencee. After expiry of 3 months period, the Appellant did not vacate the Property. The Respondent filed a suit against the Appellant seeking the latter’s eviction from the Suit Property and recovery of mesne profits.

The Respondent claimed his ownership on the Suit Property on the strength of the Agreement to Sell dated 10.04.2002, General Power of Attorney, memo of possession, receipt of payment of sale consideration and a will dated 10.04.2002.

The Appellant argued that the documents cited by the Respondent have been manipulated on blank papers. However, there was no evidence to that effect. The Appellant did not dispute the execution of such documents or receipt of sale consideration by him.

The Trial Court held that there was no manipulation of documents and thus the Respondent is entitled to decree for eviction and recovery of mesne profits.

The Appellant filed a first appeal and thereafter a second appeal before the High Court and both were decided in favour of the Respondent. Subsequently, the Appellant filed an appeal before the Supreme Court.

SUPREME COURT VERDICT

Agreement to Sell does not confer absolute title in view of Sec. 54 of Transfer of Property Act

The Bench noted that an Agreement to Sell is neither a document of title nor a deed of transfer of property by sale. Therefore, it does not confer any absolute title upon the Respondent over the Suit Property, in view of Section 54 of the Transfer of Property Act, 1882. However, the factors such as entering into an Agreement to Sell, payment of entire sale consideration and being put in possession by the transferor, shows that the Respondent has de-facto possessory rights based on his part performance of the Agreement to Sell.

Further, the Appellant’s entry into the Suit Property subsequently was as a licencee of the Respondent and not as the owner of Property.

When does a prospective purchaser acquires possessory title?

The Bench opined that ordinarily an Agreement to Sell does not transfer proprietary rights in an immovable property. Nonetheless, when the prospective purchaser performs his part of the contract and receives possession of the property, then he/she is said to have acquired possessory title and the same is protectable under Section 53A of the Transfer of Property Act, 1882. The Bench held as under:

“Legally an agreement to sell may not be regarded as a transaction of sale or a document transferring the proprietary rights in an immovable property but 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 said possessory rights of the prospective purchaser cannot be invaded by the transferer or any person claiming under him.”

The Bench held that the possessory right of the Respondent is not liable to be disturbed by the transferer (Appellant). Accordingly, the Bench upheld the High Court’s view that the Respondent is entitled to a decree for eviction with mesne profits.

Also Read : Will(Before Death Of Executant) Or General Power Of Attorney(GPA) Cannot Confer Title In Immovable Property : Supreme Court

Case Title: Ghanshyam v Yogendra Rathi

Citation: CIVIL APPEAL NOS.7527-7528 OF 2012

Counsel for Appellant: Shri Rajul Shrivastav

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