Supreme Court: Full Ownership is Transferred Once Sale Deed is Duly Executed, Registered, Delivered & Paid

Supreme Court: Full Ownership is Transferred Once Sale Deed is Duly Executed, Registered, Delivered & Paid

The Supreme Court while allowing an appeal pertaining to a property dispute, observed that where a sale deed had been duly executed and registered, its delivery and payment of consideration have been endorsed thereon, it would amount to a full transfer of ownership so as to entitle its purchaser to maintain a suit for possession of the property sold.

The two judge’s bench of Justices M.R. Shah and C.T. Ravikumar clarified hat an inter-se dispute on the validity of the sale deed executed between the defendants in respect of the suit land, cannot be considered in the suit for possession instituted by the plaintiff on the basis of a registered sale deed executed in its favor, as it would amount to adjudication of a right or a claim by way of counter-claim by one defendant against his co-defendant, which cannot be permitted by virtue of Order VIII Rule 6A of the Code of Civil Procedure, 1908 (CPC).

In the present case, as per the plaint, the first two Original Defendants/Respondents- Ramakrishna Ganpat Mhaske and Tejra Bajirao Mhaske, had sold the suit field in favor of the Plaintiff/Appellant- Damodhar Narayan Sawale as per registered sale deed. Soon on its execution the Plaintiff was put in possession but the second defendant started disturbing his possession. Suit was then filed in 1979.

In view of the registered sale deed, he obtained absolute title over the suit land and in such circumstances, the second defendant who sold the same for discharging debts and family got no right or reason to disturb his peaceful possession. The total sale consideration of ten thousand was given to defendants for the said entire extent of over 3 acres as the first defendant obtained title over 2 acres out of the total extent from the second defendant as per registered sale deed and the second defendant remained as the owner in possession of the balance one acre.

It was the plaintiff’s case that the second defendant had utilized the sale consideration passed on to him for different purposes, including to pay his debts. Thereafter, for the non-compliance with the order of the Chamber Judge, the SLP stood dismissed qua sixth respondent.

Subsequently, when the matter reached the Trial Court, the Court came to the conclusion that the plaintiff had not purchased the suit field as claimed and the sale deed was a sham document which was executed only as a security for a money lending transaction and consequently, the original suit was dismissed with costs. The Regular Civil Appeal, filed by the unsuccessful plaintiff before the First Appellate Court was allowed. It was against this judgment that the Second Appeal was filed by the original second defendant viz., the first respondent herein, which ultimately culminated in the impugned judgment.

Against this, Tejra filed an appeal before the Bombay High Court, which allowed the appeal and reversed the judgment of the First Appellate Court. The High Court restored the decree of dismissal of the suit by the Trial Court.

The Apex Court while noting the facts observed that, the sale deed executed in favor of the plaintiff was registered and its execution was admitted by both the defendants- even though it was the case of the 2nd defendant that the same was executed as a collateral security at the time of a money lending transaction.

Further, the 2nd defendant had also admitted execution of a registered sale deed in favor of defendant No. 1 in respect of a portion of the suit land, which was executed prior to the sale effected to the plaintiff.

After considering the submissions and referring to the Fragmentation Act, the bench specified that it is only aimed at preventing the fragmentation of agricultural holdings and to provide for the consolidation of agricultural holdings for the purpose of the better cultivation thereof.

In this context it observed that, the sale deed executed in favor of the 1st defendant to be virtually invalid by accepting the contention that the transaction violated Section 8 of the Fragmentation Act. Thus, the sale deed executed in 1978 between defendant 1 and 2 was held as one creating a ‘fragment’ and therefore, violating the prohibition contained in Section 8.

“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. When execution is challenged, registration by itself is no proof of execution and proof of complying with Section 67 of the Evidence Act is necessary”, the Bench held.

The Court remarked that while entertaining the contentions founded on the Fragmentation Act raised by the second defendant, the Trial Court and the High Court had not bestowed attention to the statutory bar of jurisdiction under Section 36A of the Fragmentation Act, which bars the jurisdiction of the Civil Court under the Act.

“A conjoint reading of Section 36A and 36B of the Fragmentation Act would reveal that when a suit is instituted in a Civil Court, the Court concerned has to consider if the suit involves any issue(s) which is/are required to be settled, decided or dealt with by any competent authority to settle, decide or dealt with, such issues under the said Act. If it does, then after staying the suit the said issue(s) is to be referred to such competent authority for determination. Apparently, no such consideration had been made by the trial Court as also by the High Court,” the bench ruled.

The Court asserted that the Jurisdiction of the Court has to be determined only on the averments in the plaint and it cannot be determined only on the basis of the uncorroborated averments made in the written statement.

Apropos to this, the Court referred the written statement of the 2nd defendant only contained a vague averment referring to the Fragmentation Act, the bench ruled that the same could not be construed as a counter-claim capable of being treated as a plaint and be governed by the rules applicable to plaints in terms of Order VIII Rule 6A, CPC. Therefore, the Court opined that the same does not enable the Court to pronounce a final judgment in the same suit, on the said issue.

The Court vehemently pointed out that the vague plea taken by the 2nd defendant viz., in regard to ‘Fragmentation Act,’ was not available to the defendant since as per the first proviso to Section 9(3) of the Fragmentation Act, the automatic voidness would not be attracted to a transfer of land contrary to the provisions of the Fragmentation Act, if it was made on or after 15th November, 1965 and before the date of commencement of the Maharashtra Prevention of Fragmentation and Consolidation of Holdings (Amendment) Act, 2017.

The bench said, “Thus, going by his mutually destructive pleas as well, no case for attracting the provisions of ‘the Fragmentation Act’ was made out by the second defendant.”

The Court further avowed that an inter-se dispute on the validity of the sale deed executed by the 2nd defendant against the 1st defendant, could not have been considered in the subject-suit, as it would amount to adjudication of a right or a claim by way of counter-claim by one defendant against his co-defendant.

Referring to the registered sale deeds, which were admitted by the 2nd defendant, the Court remarked “The oral evidence of the second defendant could not registered Ext. 128 sale deed, as held by the First Appellate Court in the facts, circumstances and evidence on record in this case.”

Thus, observing that the High Court had committed a serious error based on perverse appreciation of evidence, in setting aside the decree of the First Appellate Court, the Bench allowed the appeal.

S.M. Jadhav & Company appeared for the Appellant, whereas, Lambat & Associates appeared for the Respondent.