Supreme Court Annual Digest 2024 | Transfer of Property Act, 1882

Section 54 - In the case concerning the auction sale of a property conducted under the SARFAESI Act, the appellant, as the highest bidder, purchased the property at an auction conducted by the Bank (respondent No.1) and was issued a sale certificate. Respondent No.2 challenged the auction, claiming prior unregistered transactions and possessory rights over the property. The High Court ruled in favor of respondent No.2, setting aside the auction and sale certificate. The Supreme Court held that respondent No.2's claims were based on unregistered documents, which do not constitute valid conveyance under Section 54 of the Transfer of Property Act, 1882. The Bank, having conducted the auction in compliance with the SARFAESI Act, was not deemed to have knowledge of these unregistered transactions. The Court found no irregularity or illegality in the auction process that would warrant setting aside the sale. The Appellate Tribunal's order in favor of the appellant was restored, and the High Court's order was set aside. The Bank was directed to hand over possession to the appellant, and respondent No.2 was allowed to withdraw any deposited amounts. Appeal allowed; High Court's order set aside. Sanjay Sharma v. Kotak Mahindra Bank Ltd; 2024 LiveLaw (SC) 1054

Section 53A - Whether the defendants were entitled to protection under Section 53A of the Transfer of Property Act, 1882, based on an unregistered sale agreement - Whether the concurrent findings of the Trial Court, First Appellate Court, and High Court were perverse or erroneous. Held, the Supreme Court dismissed the Special Leave Petition, affirming the judgments of the High Court, First Appellate Court, and Trial Court, which decreed the suit in favor of the plaintiffs for declaration of title and recovery of possession of the suit property. The defendants failed to prove the execution of the alleged sale agreement dated 25-11-1968 and their possession based on it. The courts below found consistent evidence establishing that the defendants had no lawful possession and had illegally occupied the property. The High Court correctly held that the defendants did not satisfy the prerequisites for invoking protection under Section 53A of the Transfer of Property Act. Section 53A, being an exception to the usual requirements of registration and writing, must be strictly construed and could not apply in this case due to lack of proof of the agreement and part-performance. Section 53A of the Transfer of Property Act provides protection to a transferee in possession only if the essential conditions, including the existence of a written and signed contract and acts of part-performance, are fulfilled. The burden of proving readiness and willingness to perform under Section 16 of the Specific Relief Act, 1963, lies on the party seeking specific performance or protection under Section 53A. Special Leave Petition dismissed. Giriyappa v. Kamalamma, 2024 LiveLaw (SC) 1038

Section 106 - Constitution of India - Article 254 - Applicability of - to resolve inconsistencies between Central and State legislation under the Concurrent List - Validity of a notice of ejectment issued under Section 106 of the Transfer of Property Act, 1882, as amended by Parliament in 2002, vis-à-vis an earlier amendment made by the Uttar Pradesh State Legislature in 1954. Held, the Parliamentary amendment to Section 106 of the Transfer of Property Act, 1882, with effect from 31.12.2002, supersedes the earlier amendment made by the Uttar Pradesh State Legislature in 1954. This is due to the doctrine of implied repugnancy under Article 254(1) and the supremacy of Parliamentary law as provided under the proviso to Article 254(2) of the Constitution. The Court directed the High Court to consider the tenant's revision petition on its merits rather than awaiting the decision of a larger Bench on a related reference. The impugned order of the High Court was set aside. The High Court was requested to decide the case on its merits expeditiously. Naeem Bano Alias Gaindo vs Mohammad Rahees, 2024 LiveLaw (SC) 1011

Section 52 - The Courts can set aside a sale transaction, which was carried out in violation of its directions, as void in the exercise of its contempt jurisdiction. The Court held that although a sale transaction carried out during the pendency of court proceedings (pendente lite) would not become void due to the operation of the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, the Court can reverse such a sale transaction if it was done in contempt of judicial directions. Celir LLP v. Sumati Prasad Bafna, 2024 LiveLaw (SC) 991

Section 127 - Gift deed which is conditioned upon perpetual rendering of services, without any remuneration would amount to a “begar” or forced labour, even slavery and therefore it is not just wrong or illegal but even unconstitutional. Naresh Kumari v. Chameli, 2024 LiveLaw (SC) 980

Section 55 - Whether the executing court can grant the relief of possession when a decree for specific performance does not explicitly include possession - Interpretation of the scope of Section 22 of the Specific Relief Act concerning relief for possession during execution proceedings. Held, the Supreme Court reiterated that in a suit for specific performance, the relief of possession can be implied under certain circumstances, even if not explicitly decreed, particularly when possession is with the contracting party. The Court upheld the decision of the High Court, which directed the executing court to issue a warrant of possession to the decree-holder, recognizing the implied right to possession under a decree for specific performance. The Court relied on its precedent in Babu Lal v. Hazari Lal Kishori Lal, (1982) 1 SCC 525 and the principle that Section 22 of the Specific Relief Act allows the amendment of pleadings to include possession at any stage, including execution proceedings. This is to ensure complete and effective relief to the decree-holder and avoid multiplicity of proceedings. The petition was dismissed as the High Court's order directing the executing court to grant possession to the decree-holder was found to be in accordance with established legal principles. Birma Devi v. Subhash, 2024 LiveLaw (SC) 976

Section 58(c) - Whether the mortgage deed dated 17.10.1990 constitutes a "mortgage by conditional sale" - Whether the plaintiff is entitled to redeem the mortgage. Whether permissive possession of the mortgaged property by the mortgagor affects the validity of the transaction as a mortgage by conditional sale. Held, the mortgage deed dated 17.10.1990 satisfies all statutory requirements for a mortgage by conditional sale under Section 58(c) of the Transfer of Property Act, 1882. The conditions for conversion of the mortgage into an absolute sale upon default of payment were explicitly embodied in the same document. Permissive possession of the property by the plaintiff (mortgagor) does not alter the nature of the transaction as a mortgage by conditional sale, as possession was granted to safeguard the property and did not confer any ownership rights beyond the scope of the mortgage deed. The plaintiff failed to repay the mortgage amount within the stipulated period of three years, and no credible evidence was produced to establish an attempt to do so. Furthermore, the plaintiff's failure to testify personally weakened her case. The Trial Court and the High Court erred in interpreting the transaction as a simple mortgage by placing undue emphasis on possession and disregarding the express terms of the registered mortgage deed. The appeals were allowed, and the suit filed by the plaintiff was dismissed. The judgments and decrees of the High Court and the Trial Court were set aside. Leela Agrawal v. Sarkar, 2024 LiveLaw (SC) 967

Section 52 - Doctrine of Lis Pendens and Interim Injunctions - While Section 52 of the Transfer of Property Act protects against pendente lite transfers, it may not fully safeguard the plaintiff's interests in specific cases. Courts are empowered under Order 39 Rule 1 CPC to grant interim injunctions restraining transfers during litigation to prevent undue hardship and maintain the status quo. Examples include cases where third-party bona fide purchasers may complicate equitable relief like specific performance. (Sm. Muktakesi Dawn v. Haripada Mazumdar, AIR 1988 Cal 25; Promotha Nath Roy v. Jagannath Kisore Lal Singh Deo, (1912) 17 Cal LJ 427). Ramakant Ambalal Choksi v. Harish Ambalal Choksi, 2024 LiveLaw (SC) 939

Section 52 - The High Court's order was set aside for failing to meet the standards of appellate scrutiny. Respondents are directed to maintain the status quo concerning the suit property, avoiding further encumbrances or transfers. Any future transfers will be subject to Section 52 of the Transfer of Property Act, even if lis pendens is not formally registered. This judgment underscores the necessity for appellate courts to exercise caution and adhere to established principles in reviewing interlocutory orders, while also emphasizing the importance of interim protections in property disputes. Ramakant Ambalal Choksi v. Harish Ambalal Choksi, 2024 LiveLaw (SC) 939

Section 52 - Doctrine of Lis Pendens and Its Applicability - This judgment examines the doctrine of lis pendens under Section 52 of the Transfer of Property Act, 1882, which prohibits the transfer of immovable property during the pendency of litigation where the property is directly and specifically in question. The Court reiterated the conditions for the application of the doctrine, emphasizing that: The suit or proceeding must be pending in a competent court. The suit should not be collusive. The right to the immovable property must be directly in question. Any transfer by a party to the suit or proceeding must affect the rights of other parties involved. The Court rejected the argument that the doctrine does not apply because the review petition was lying in the registry in a defective state. It clarified that the doctrine of lis pendens is triggered at the stage of "institution" of proceedings, not when the court issues notice. Thus, any transfer made after the institution of a review petition, even if the petition is later perfected, is subject to the outcome of the litigation. The judgment underscores the purpose of lis pendens: to prevent the subversion of judicial processes and protect the integrity of the court's authority over the property in question. Transfers made during the pendency of litigation, unless authorized by the court, bind third parties to the ultimate outcome of the proceedings. Siddamsetty Infra Projects Pvt. Ltd. v. Katta Sujatha Reddy, 2024 LiveLaw (SC) 870

Section 126 - Gift deed could not be revoked ordinarily, especially when no right of revocation is reserved in the deed. N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board, 2024 LiveLaw (SC) 839

If in a suit for declaration of title, a further relief of recovery of possession is also sought, then the limitation period for filing the suit would be governed by the limitation period prescribed for filing a suit for recovery of possession (i.e., 12 years as per Article 65 of Limitation Act) and not the one prescribed for seeking declaration of title (i.e., 3 years as per Article 58 of the Limitation Act). N. Thajudeen v. Tamil Nadu Khadi and Village Industries Board, 2024 LiveLaw (SC) 839

Adverse Possession - the period of limitation to prove title by adverse possession would commence from the date of the defendant's possession becoming adverse and not from when the plaintiff acquires the right of ownership. Neelam Gupta v. Rajendra Kumar Gupta, 2024 LiveLaw (SC) 796

Section 54 - Sale to minor - There's no bar to transfer immovable property in favour of a minor by way of a sale deed. The minor can become the transferee/owner by way of a sale deed and the conditions stipulated under Section 11 of the Indian Contract Act, 1872 (persons competent to contract) would not come in the way of challenging the minor's capacity to contract because a sale can't be termed as a contract. Once the property is transferred to a person being a minor, then on attaining majority, he would be competent to transfer the said property to any other person. The transfer made by the person upon attaining majority cannot be challenged just because he happened to be a minor when the property was transferred to him. Neelam Gupta v. Rajendra Kumar Gupta, 2024 LiveLaw (SC) 796

Section 52 - Specific Performance – Doctrine of Lis Pendens – Applicability of - Cross-Objection - Requirement - Whether the doctrine of lis pendens applies to a sale deed executed during the pendency of a suit for specific performance - Whether the First Appellate Court could examine findings against the plaintiff without a cross-objection from the defendants. Held, the Supreme Court reiterated that the doctrine of lis pendens applies to transactions executed during the pendency of a suit. Once a transaction is found to be hit by the doctrine of lis pendens, then the defences of being a bona fide purchaser and lack of notice regarding the sale agreement are not available. The First Appellate Court erred in recording a finding of collusion in the absence of a cross-appeal or cross-objection by the defendants. Relying on Banarsi v. Ram Phal, (2003) 9 SCC 606, it was emphasized that in cases where a partial decree is accepted without challenge, adverse findings against the decree-holder cannot be raised without a cross-objection. The Supreme Court dismissed the appeal, affirming the High Court's decree for specific performance and overruling the concurrent judgments of the Trial and First Appellate Courts. Appeal dismissed. Shingara Singh v. Diljith Singh, 2024 LiveLaw (SC) 795

Section 58 (f) - Production of title deeds of the property as a security towards the debt amounts to the creation of a 'mortgage by deposit of title deeds'. A.B. Govardhan v. P. Ragothaman, 2024 LiveLaw (SC) 626 : AIR 2024 SC 4269

Section 109 - Rights of the State as the lessor can only be sold by a public auction or by any other transparent method by which, apart from the lessee, others too get a right to submit their offer. Selling the plot to its alleged lessee at a nominal price will not be a fair and transparent method at all. It will be arbitrary and violative of Article 14 of the Constitution of India. City Montessori School v. State of U.P., 2024 LiveLaw (SC) 545

Transfer of Property Act, 1882 and Registration Act, 1908 - A vendor who has executed a sale deed cannot execute another deed with respect to the same plot just because the first sale deed is pending registration. The moment a deed is executed, the vendor loses all rights over the property and he cannot claim any right just because the deed has not been registered. The only consequence of non-registration is that the purchaser cannot produce such a deed as evidence. (Para 33.13) Kaushik Premkumar Mishra v. Kanji Ravaria @ Kanji, 2024 LiveLaw (SC) 493 : AIR 2024 SC 3766

Section 3 Explanation 1 and Registration Act 1908; Section 17(2) – Constructive notice of sale agreement – Under the Uttar Pradesh Civil Laws (Reforms and Amendment) Act 1976, clause (v) of Section 17(2) of the Registration Act 1908 was amended, which made an agreement for the sale of an immovable property, a compulsorily registerable document in the State. Held, in view of explanation 1 to Section 3 of the TP Act, the second to fourth defendants shall be deemed to have knowledge of the suit agreement, which was duly registered in view of the constructive notice. Hence, it cannot be said that they paid money in good faith to the first Defendant. Therefore, the second to fourth defendants can never be held to be bona-fide purchasers who have paid consideration in good faith without the notice of the suit agreement. (Para 13) Maharaj Singh v. Karan Singh, 2024 LiveLaw (SC) 473 : AIR 2024 SC 3328 : (2024) 8 SCC 83

Section 54 – Zamindari Abolition Act; Section 154B - Prohibition of the sale or transfer of agricultural lands to a person who is not an agriculturalist – Section 154-B permits the sale of agricultural land to a non-agriculturalist with the permission of the State Government for the purposes specified in clause (i) to (v) of clause (h). Held, an 'agreement for sale' does not transfer the property subject matter of the agreement to the purchaser and does not create any interest in the property subject matter of the agreement. Therefore, the embargo created by sub-section (1) of Section 154-B will apply only to the execution of the sale deed and not to the execution of the agreement for sale. Further held, a decree enjoining the defendants to obtain permission to sell the suit property can be passed and a decree for the specific performance can be passed contingent upon the grant of the permission. (Para 17 & 18) Maharaj Singh v. Karan Singh, 2024 LiveLaw (SC) 473 : AIR 2024 SC 3328 : (2024) 8 SCC 83

Section 52 – Doctrine of lis pendens – Lis pendens does not render all transfers pendente lite to be void ab-initio, it merely renders rights arising from such transfers as subservient to the rights of the parties to the pending litigation and subject to any direction that the Court may pass thereunder. The mere fact that the registered sale deed was executed during the pendency of the Underlying Suit does not automatically render it null and void. Held, there exists no bar to the impleadment of transferees pendente lite with notice. Permitting the impleadment of a transferee pendente lite is, in each case, a discretionary exercise undertaken to enable a purchaser with a legally enforceable right to protect their interests especially when the transferor fails to defend the suit or where there is a possibility of collusion. Further held, the Appellant has a registered sale deed in his favour and in the interest of justice the appellant is entitled to impleadment in the Underlying Suit in order to protect his interests, if any, in the Subject Land. Hence, the Appellant is directed to be added as a party defendant in the Underlying Suit. (Para 16, 17, 21 & 22) Yogesh Goyanka v. Govind, 2024 LiveLaw (SC) 457 : AIR 2024 SC 3903 : (2024) 7 SCC 524

Sections 106 and 111 - Mesne profits become payable on continuation of possession after 'expiry' of lease – A tenant who once entered the property in question lawfully, continues in possession after his right to do so stands extinguished, is liable to compensate the landlord for such time period after the right of occupancy expires. The effect of the words 'determination', 'expiry', 'forfeiture' and 'termination' would, subject to the facts applicable, be similar, i.e., when any of these three words are applied to a lease, the rights of the lessee/tenant stand extinguished and mesne profit would be payable. Held, the very purpose for which a property is rented out, is to ensure that the landlord by way of the property is able to secure some income. If the income remains static over a long period of time, then such a landlord would be within his rights, subject of course, to the agreement with their tenant, to be aggrieved by the same. Hence, deposit of the amount claimed by the petitioner-applicant is must to ensure complete justice inter se the parties. (Para 19, 20 & 21) Bijay Kumar Manish Kumar Huf v. Ashwin Bhanulal Desai, 2024 LiveLaw (SC) 413 : AIR 2024 SC 3051 : (2024) 8 SCC 668

Sections 106 and 111 - Tenant at sufferance – Such a tenant is a person who enters upon a land by lawful title, but continues in possession after the title has ended without statutory authority and without obtaining consent of the person then entitled. (Para 16.2) Bijay Kumar Manish Kumar Huf v. Ashwin Bhanulal Desai, 2024 LiveLaw (SC) 413 : AIR 2024 SC 3051 : (2024) 8 SCC 668

Section 41 – Doctrine of transfer by Ostensible owner – Bonafide purchaser for valuable Consideration – Held, once it has been held that the transactions executed by the respondents are illegal due to the doctrine of lis pendens the defence of the respondents that they are bonafide purchasers for valuable consideration and thus, entitled to protection under Section 41 is liable to be rejected. The Release Deed is held to be without any legal sanctity. (Para 21, 24) Chander Bhan v. Mukhtiar Singh, 2024 LiveLaw (SC) 347 : AIR 2024 SC 2267

Section 52 – Doctrine of lis pendens – Object – The object underlying the doctrine of lis pendens is for maintaining status quo that cannot be affected by an act of any party in a pending litigation. The objective is also to prevent multiple proceedings by parties in different forums. The principle is based on equity and good conscience. (Para 16) Chander Bhan v. Mukhtiar Singh, 2024 LiveLaw (SC) 347 : AIR 2024 SC 2267

Section 52 – Doctrine of lis pendens – Pendency of a suit shall be deemed to have commenced from the date on which the plaintiff presents the suit and extends till a final decree is passed and is realised. The appellant filed a suit for permanent injunction on 21.07.2003 from which the doctrine of lis pendens would take its effect. The release deed executed is of 28.07.2003, which is subsequent to the filing of the suit. Since the release deed is executed after the suit for temporary injunction was filed by the appellant, the alienation made by release deed would be covered by the doctrine of lis pendens. (Para 18, 19, 20) Chander Bhan v. Mukhtiar Singh, 2024 LiveLaw (SC) 347 : AIR 2024 SC 2267

Section 52 – Doctrine of lis pendens – Applicability States of Punjab, Delhi or Bombay – Held, even if Section 52 of T.P Act is not applicable in its strict sense in the present case, the principles of lis-pendens, which are based on justice, equity and good conscience, would certainly be applicable. (Para 17) Chander Bhan v. Mukhtiar Singh, 2024 LiveLaw (SC) 347 : AIR 2024 SC 2267

Section 5 - Clause II(4)(a) covers all the categories of transfers as it provides that the lessee shall not sell, transfer, assign or otherwise part with the possession of the whole or any part of the commercial plots without the written consent of the lessor. The said clause does not exclude involuntary transfers. In the facts of the case, it cannot be said that there is an involuntary transfer, as the transfer is made based on a petition filed by the lessee and the transferee for seeking amalgamation. In a sense, this is an act done by them of their own volition. (Para 8) Jaiprakash Industries v. Delhi Development Authority, AIR 2024 SC 1794 : (2024) 6 SCC 252