'No Transfer Of Title In Absence Of Registered Document' : Supreme Court Rejects Tenant's Claim For Ownership Based On Settlement With Landlord

Holding that no transfer of title is possible in the absence of a registered instrument, the Supreme Court recently rejected a tenant's claim for ownership of the premises on the basis of a settlement with the landlord. The Court held that the settlement arrived between the landlord and tenant that the tenant would not be evicted from the premise upon deposit of the stipulated amount could not confer the right of ownership upon the tenant.

The case relates to the filing of an eviction suit by the appellant/landlord against the respondent/tenant as the suit property was in a dilapidated condition that needed to be repaired. Meanwhile, a settlement was entered between the parties which stated if the tenant pays the stipulated amount of Rs. 12,000/- then the application seeking eviction of the tenant would deemed to be dismissed, whereas if the tenant fails to pay the stipulated amount of Rs. 12,000/- then the application seeking eviction of the tenant would be deemed to be allowed and the tenant would deliver vacant possession of the house immediately.

Immediately after filing of an application by the landlord, the tenant deposited the stipulated amount and claimed ownership and possession over the suit property in light of the settlement entered between the parties that the landlord application was deemed to be dismissed upon payment of the stipulated amount.

The trial court and the first appellate court held in the landlord's favor and refused to grant a permanent injunction against the landlord in an application preferred by the tenant. However, the High Court in the second appeal reversed the first appellate court's order by holding that as per the settlement deed the tenant had become the owner of the suit premises upon deposit of the stipulated amount and since he became the owner, and had been dispossessed by the landlord, he was entitled to a decree of possession.

Following this, an appeal was preferred before the Supreme Court.

Setting aside the High Court's order, the Bench comprising Justice Pankaj Mithal and Justice R. Mahadevan observed that the tenant can't be conferred with ownership over the property because the settlement recorded in terms of the statements of the parties nowhere provides that the tenant would be conferred with ownership over the property upon deposit of stipulated amount.

The Court noted that the consent order was only about dismissing and allowing the application of the landlord in the eventuality of depositing of the amount and non-depositing of the amount by the tenant. Moreover, the settlement recorded doesn't confer the right of ownership upon the tenant.

“The settlement recorded in terms of the statements of the parties and even the consent order does not in any way provide or confer the right of ownership upon the tenant, nor it could have been done in a proceeding for eviction of the tenant. No document, much less a registered instrument, was executed between the parties transferring the title of the suit premises. In its absence obviously, no transfer of title can pass from one party to another. In such a proceeding, the only option available to the Rent Controller was either to order eviction or to dismiss the application for eviction as has been done by him.”, the judgment authored by Justice Pankaj Mithal said.

In essence, the Court observed that by no stretch of the imagination, it can be concluded that the settlement recorded between the parties validates the transfer of property in the tenant's favor, and the amount deposited by the tenant could not be termed as the payment of the sale consideration.

“The aforesaid two statements nowhere provide that the amount liable to be deposited by the tenant was a sale consideration of the property, though, it may have been stated that it is equivalent to the value of the property or that the tenant, or on deposit of such an amount, he would become the owner of the property. Therefore, on the plain reading of the above statements, it cannot be said by any stretch of imagination that there was any settlement of transfer of the property on the above sale consideration. It may also be noted that there is no document witnessing the transfer of the property in pursuance of the above statements or the consent order.”, the court observed.

Upon holding that the High Court had patently erred in interpreting the consent order and in reversing the well-considered judgments and orders of the court of first instance and the First Appellate Court, dismissing the suit of the tenant.

Accordingly, the appeal was allowed.

Appearance:

For Appellant(s) Mr. Rajesh Gupta, Adv. (arguing counsel) Mr. Harpreet Singh, Adv. Mr. Puneet Taneja, AOR

For Respondent(s) Mr. Rajesh Srivastava, AOR (arguing counsel) Mr. Gaurav Verma, Adv.

Case Title: BEENA AND ORS. VERSUS CHARAN DAS (D) THR. LRS. & ORS., CIVIL APPEAL NO.3190 OF 2014

Citation : 2024 LiveLaw (SC) 706

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