Source: Supreme Court

Why in News?

A bench of Justice Pankaj Mithal and Justice R Mahadevan held that the title to the property can be transferred only by way of a registered instrument.

• The Supreme Court held this in the case of Beena and Ors v. Charan Das (D) Thr. Lrs. & Ors.

What was the Background of Beena and Ors v. Charan Das (D) Thr. Lrs. Ors. Case?

• Late Bhawani Parshad was the landlord and Late Charan Das was the tenant of the premises consisting of a house of two rooms/godown.
• Eviction Proceedings and Consent Order:
  • The landlord applied under Section 14 of the Himachal Pradesh Urban Rent Control Act, 1971 (the Act) for eviction of tenant on the ground that the house in question was in a dilapidated condition and required demolition and reconstruction.
  • During the course of the suit the landlord appeared before the Court and stated that there has been a settlement between the parties and the tenant has accepted to deposit a sum of Rs. 12, 500 in the Court.
  • According to the settlement if the amount is deposited before the date decided the application of the landlord shall be deemed to have been dismissed otherwise the application of landlord would be allowed.
  • The tenant also appeared and accepted the above settlement.
  • The tenant deposited the above amount in the Chamba Treasury before the date mentioned.
  • Thus, the application of landlord under Section 14 of the Act was dismissed in terms of the consent order.
  • The landlord filed a revision petition before the High Court against such order which was dismissed. The Court while dismissing observed that the appropriate remedy for landlord here would be filing an appeal under Section 21 (1) (b) of the Act.
• Application for Execution of Consent Order by the Tenant:
  • Thereafter, the tenant moved an application for execution of consent order. This was allowed by the Rent Controller.
  • The Rent Controller directed that the name of the tenant should be entered as owner by correcting relevant records.
  • Aggrieved by the above the landlord filed a civil suit. However, during the meantime the building had collapsed and hence it was held that the order of Rent Controller was not sustainable in law.
• Present Suit by Tenant for Injunction and Recovery of Possession:
  • Consequently, the tenant filed a suit for permanent mandatory injunction for possession and recovery of Rs. 2,000 making the landlord as the defendant.
  • The civil suit was dismissed and in appeal also the tenant failed.
  • However, in second appeal the above judgment and order passed was reversed.
  • Thus, in second appeal the Court held that the tenant was the owner of the property and entitled to decree of possession.
  • Thus, the question before the Court was whether under the consent order dated 05.09.1979 passed on an application under Section 14 of the Act moved by the landlord, the tenant can claim himself to be the owner of the property as he has deposited the stipulated amount of Rs.12,500/-.

What were the Court’s Observations?

• The Court held that the answer to this issue would depend on the interpretation of the consent order vis-a-vis the statements of the landlord and tenant recorded by the Rent Controller in passing the consent order.
• The Court held that by reading the statements of the landlord and the tenant it can be concluded that:
  • It was nowhere provided in the statements that the amount agreed to be paid was a sale consideration of the property.
  • Although it may have been stated that the amount is equivalent to the value of the property.
  • Therefore, by any stretch of imagination it cannot be said that there was any settlement of transfer of the property on the above sale consideration.
  • Also, there is no document witnessing the transfer of property in pursuance of the above consent order.
• The Court further observed that it cannot be inferred from the statements that on deposit the tenant would become the owner of the property.
• The settlement recorded does not in any way provide or confer ownership rights upon the tenant.
• In the absence of the registered document, it cannot be said that any transfer of title takes place.
• Hence, the Court reversed the judgment and order of the High Court.

How is Title to the Property Transferred?

• Section 54 of the Transfer of Property Act, 1882 (TOPA) defines sale.
• It provides that sale is
  • Transfer of ownership
  • In exchange for price
    • Paid
    • Promised
    • Part paid
    • Part promised
• Para 2 of Section 54 provides how sale should be made.

• Further, it provides that delivery of tangible immoveable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

What Documents are Compulsorily Registrable?

• Section 17 of the Registration Act, 1908 provides for documents that are compulsorily registrable. These are:

What is the Case Laws on Transfer of Title?

• Suraj Lamps and Industries v. State of Haryana (2012):
  • The Court in this case held that immovable property can be transferred only by way of a registered deed of conveyance.
  • The Court also in this case deplored the practice of transferring the title to the property by way of ‘SA/GPA/WILL’ transfers.
  • The Court further held that as per Section 54 of TPA sale of an immovable property can only happen by way of a registered instrument and an agreement to sell does not create any right title or interest in the subject matter.