Thursday, 27 December 2018

Whether seller is bound to deliver possession of property to purchaser in absence of recital in that regard in agreement of sale?

 On the other hand, the reliance placed on behalf of the respondent on the judgment of the Madras High Court in the case of Sundara Ramanujam Naidu v. Sivalingam Pillai and another (supra) is appropriate. It has been held by the Madras High Court in the said judgment as follows :-

"I am quite clear that the suit falls within section 7, clause (1)(a) of the Court Fees Act. The words used are "specific performance of a contract of sale." Specific performance does not exist merely of the execution of a sale-deed. A suit to obtain a sale-deed is not what is referred to in the said section; but it is a suit for specific performance of a contract of sale. The execution of a conveyance is only a part of the specific performance. If the vendor agrees to execute a conveyance as well as to deliver possession, it cannot be said that specific performance of the contract does not comprise both the execution of the sale-deed and delivery of possession. In every contract of sale, unless the contrary appears, the vendor must be deemed to impliedly agree to give possession of the property to the purchaser. In a suit for specific performance, the purchaser seeks to enforce the terms of his contract. The seller as much agrees to put the purchaser in possession, as he agrees to execute a conveyance in his favour."
16. It has been observed in the judgment of the Special Bench of the Calcutta High Court in the case of Sm. Dhiraj Bala Karia v. Jethia Estate Pvt. Ltd. (supra), as follows :-

"Mr. Bhabra himself did not seriously dispute that prior to the repeal of the Specific Relief Act, 1877, although there was some divergence of judicial views, there was preponderance of judicial authority that obligation to deliver possession was an integral part of a contract to sell or lease an immovable property. Such obligation of the vendor to put the vendee in possession flowed from the agreement to sell or to grant lease. Even in the absence of any express provision in the agreement, the vendor had such obligation under Section 55(1) (f) and under Section 108(b) of the Transfer of Property Act, 1882."
17. I agree with the said exposition of law by the Madras High Court and Calcutta High Court. It is evident that the above quoted provisions of Transfer of Property Act, 1882, demonstrate that once parties entered into an agreement to sale of the kind which is subject matter of the present appeal, unless the contrary is demonstrated, it must be deemed that the seller has impliedly agreed to deliver the possession of the property to the purchaser, upon execution of sale deed.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Second Appeal (SA) No. 363 of 2017

Decided On: 19.04.2018

 Maroti   Vs.  Dada

Hon'ble Judges/Coram:
Manish Pitale, J.

Citation: 2018(6) MHLJ 642


1. Heard. Admit. Heard finally with the consent of the learned Counsel appearing on behalf of the respective parties.

2. The appellant is the original defendant, who has suffered a decree of specific performance concurrently granted by the two Courts below and his principal contention is that even if such decree stood granted against him, he is not liable to handover possession of the suit property to the respondent-purchaser, because the agreement to sell does not contain a specific stipulation that upon execution of sale deed, the appellant (seller) shall handover possession of the suit property to the respondent/decree holder.

3. The respondent (original plaintiff) filed Special Civil Suit No. 16 of 2000 against the appellant (original defendant) seeking specific performance of agreement dated 12.03.1997 executed between the parties. The subject matter of the aforesaid agreement to sell was land at Gat No. 41/2 in village Parsodi, Tahsil and District Bhandara admeasuring 0.70 hectare owned by the appellant. The said agreement dated 12.03.1997 recorded that out of total consideration of Rs. 2,18,750/-, a sum of Rs. 1,55,000/- had been paid by the respondent to the appellant and that the balance amount of Rs. 63,750/- was to be paid by the respondent at the time of registration of the sale deed. It was agreed that the sale deed would be executed by 31.03.1998. It was the case of the respondent that while he was ready and willing to perform his part of the said contract, the appellant avoided to do so, compelling him to file the aforesaid suit for specific performance.

4. The appellant filed his written statement and denied the said agreement, claiming that it was nothing but a document of security executed by him in favour of the respondent as they were having business transactions pertaining to purchase of cement and iron from the shop of the respondent. On the basis of the pleadings and the evidence led by the parties, by judgment and order dated 22.04.2003, the trial Court decreed the suit and directed the appellant to execute sale deed in terms of the aforesaid agreement upon receiving balance amount and to deliver possession of the suit land to the respondent.

5. Aggrieved by the same, the appellant filed Regular Civil Appeal No. 47 of 2012 before the appellate Court. By the impugned judgment and order, the appellate Court has confirmed the findings of facts rendered by the trial Court to the effect that the agreement was found to be valid and that the respondent was ready and willing to perform his part of contract and that he was entitled to decree of specific performance granted by the trial Court. The appellate Court differed with the trial Court only on one aspect, which was regarding the amount of balance consideration to be paid by the respondent to the appellant. While the trial Court had held that the respondent was required to pay balance amount of only Rs. 28,989/- as some amounts had been already given to the credit of the appellant, the appellate Court held that the respondent was liable to pay the entire balance amount of Rs. 63,750/- to the appellant, as reflected in the aforesaid agreement dated 12.03.1997. Therefore, while the appellate Court partly allowed the appeal in favour of the appellant to the aforesaid extent, the decree for specific performance granted by the trial Court directing the appellant to execute sale deed in favour of the respondent and to deliver possession of the suit property, was confirmed.

6. Aggrieved by the impugned judgment and order passed by the appellate Court, the appellant has filed this appeal. Only one aspect in this case was argued on behalf of the appellant and on that basis, on 03rd July, 2017, this Court issued notice on the following Substantial Question of Law:-

"What is the effect of absence of any recital in the Agreement of Sale (Exh. 28) that possession of Gat No. 41/2 was to be delivered after completion of the transaction?"
7. Shri S.V. Sohoni, learned Counsel appearing on behalf of the appellant, contended that a perusal of the agreement dated 12.03.1997 shows that it nowhere stipulates that upon execution of sale deed, the appellant was required to handover possession of the suit property to the respondent. It was contended that in the absence of such stipulation in the agreement to sell dated 12.03.1997, even if the Courts below had granted the decree of specific performance, only a direction to execute the sale-deed could have been given and the direction given by the Courts below to the appellant to deliver possession of the suit property to the respondent upon execution of the sale deed was wholly unwarranted. It was contended that if a stipulation pertaining to delivery of possession had been stated in the aforesaid agreement dated 12.03.1997, the Courts below could have granted the direction for delivery of possession. Reliance was placed on the judgment of the Hon'ble Supreme Court in the case of Adcon Electronics Pvt. Ltd. v. Daulat and another (reported in MANU/SC/0550/2001 : AIR 2001 SC, 3712).

8. Per contra, Shri A.Z. Jibhkate, learned Counsel appearing on behalf of the respondent submitted that there was no substance in the contention raised on behalf of the appellant. It was contended that the delivery of possession was part of the process of sale and that, therefore, upon considering the provisions of the Transfer of Property Act, 1882, it could not be said that merely because there was no express stipulation for delivery of possession in the aforesaid agreement dated 12.03.1997, the Courts below could not have given such a direction, having found that the agreement was valid and that the respondent was entitled to the decree of specific performance of contract. Reliance was placed on the judgment of the Madras High Court in the case of Sundara Ramanujam Naidu v. Sivalingam Pillai and another (reported in MANU/TN/0091/1923 : AIR 1924 Madras 360) and the judgment of Special Bench of the Calcutta High Court in the case of Sm. Dhiraj Bala Karia v. Jethia Estate Pvt. Ltd. (reported in MANU/WB/0032/1983 : AIR 1983 Calcutta 166).

9. Having heard the learned Counsel appearing on behalf of the respective parties and upon perusal of the record, with reference to the aforesaid Substantial Question of Law framed by this Court, it is indeed an interesting question raised on behalf of the appellant. It is contended that even if the Court finds that the respondent is entitled for decree of specific performance, it could be only in terms of the agreement dated 12.03.1997. It is the contention of the appellant that since a specific term of stipulation in the said agreement regarding delivery of possession is absent, even while granting decree of specific performance, the Court could not have given the direction for delivery of possession of the suit land to the respondent. According to the appellant, giving such a direction would amount to reading something more than what has stated in the agreement and that a decree of specific performance including the direction for delivery of possession in such circumstances was unsustainable.

10. Although at first blush the said contention appears to be attractive, but upon being examined in detail, it becomes clear that such contention is not sustainable. This is because the agreement dated 12.03.1997 executed between the parties in the present case is admittedly an agreement of sale in respect of suit property, details of which have been stated in the said agreement. It was also clearly stated in the said agreement that sale deed was to be executed by 31.03.1998 and details of the total consideration and earnest amount received were also specified. An agreement to sell would certainly mean "sale" as contemplated under the provisions of the Transfer of Property Act, 1882, which also provides for the rights and liabilities of the buyers and sellers. Thus, an agreement to sale in the nature of the agreement which is the subject matter of the present case, would necessarily mean "sale" in terms of the provisions of the said Act.

11. The term "sale" is defined in Section 54 of the aforesaid Act, which reads as follows :-

"54. "Sale" defined. - "Sale" is a transfer of ownership in exchange for a price paid or promised or part-paid and part-promised.

Sale how made. - Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.

In the case of tangible immovable property of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property.

Delivery of tangible immovable property takes place when the seller places the buyer, or such person as he directs, in possession of the property.

Contract for sale. - A contract for the sale of immovable property is a contract that a sale of such property shall take place on terms settled between the parties.

It does not, of itself, create any interest in or charge on such property."

In this context, relevant portion of Section 55, which pertains to rights and liabilities of buyer and seller is Section 55(1)(f) of the said Act. It reads as follows :-

"55. Rights and liabilities of buyer and seller. - In the absence of a contract to the contrary, the buyer and the seller of immovable property respectively are subject to the liabilities, and have the rights, mentioned in the rules next following or such of them as are applicable to the property sold :-

(1) the seller is bound -

(f) to give, on being so required, the buyer, or such person as he directs, such possession of the property as its nature admits."
12. Thus, when parties enter into an agreement to sale, delivery of the immovable property which is subject matter of the agreement is built in and it is an integral part of an obligation of a seller who is party to such agreement. Thus, the seller, upon the buyer requiring him to give possession of the property is bound to give delivery of such possession as part of the act of sale of the property.

13. In the present case, it has been concurrently held by the two Courts below that the aforesaid agreement to sale dated 12.03.1997 has been duly proved and it has been found that the respondent is entitled to the decree of specific performance of the said agreement, having satisfied all parameters for grant of such decree. If the contention raised on behalf of the appellant is accepted then upon such decree being granted in favour of the respondent, it would stand satisfied and executed only by execution of a document in the form of sale deed and that for delivery of possession, the respondent/decree holder would have to initiate further proceedings on the basis of having obtained a document of title in the form of the aforesaid sale deed. This would be a travesty and it would lead to multiplicity of litigation, which cannot be countenanced.

14. In any case, when parties enter into an agreement of sale of immovable property, in the nature of an agreement as in the present case, the obligation of the seller to deliver possession of the property subject matter of the agreement, upon execution of sale deed is built in and it is certainly part of the action of sale of the property in question. Thus, merely because a specific express stipulation in the agreement that the seller shall deliver possession of the property to the buyer upon execution of sale deed, is absent, it could not be said that even when specific performance of such an agreement is granted, the Court cannot give a direction for delivery of possession of the property which is subject matter of such an agreement. It would be a different matter where the agreement would specifically record that the property in question is in possession of a third party like a tenant, from whom the buyer would have to then take possession in accordance with law. But, such are not the facts in the present case. Therefore, unless the contrary appears, in agreement to sale of the nature which is subject matter of the present appeal, it has to be deemed that the seller has agreed to deliver possession of the property to the purchaser upon execution of sale deed.

15. The reliance placed on behalf of the appellant on the judgment of the Hon'ble Supreme Court in the case of Adcon Electronics Pvt. Ltd. v. Daulat and another (supra) is misplaced because in that case the question was as to whether the Court in a suit for specific performance could grant direction of delivery of possession when no such claim for possession of land has been made in the suit filed by the plaintiff. Such are not the facts in the present case. On the other hand, the reliance placed on behalf of the respondent on the judgment of the Madras High Court in the case of Sundara Ramanujam Naidu v. Sivalingam Pillai and another (supra) is appropriate. It has been held by the Madras High Court in the said judgment as follows :-

"I am quite clear that the suit falls within section 7, clause (1)(a) of the Court Fees Act. The words used are "specific performance of a contract of sale." Specific performance does not exist merely of the execution of a sale-deed. A suit to obtain a sale-deed is not what is referred to in the said section; but it is a suit for specific performance of a contract of sale. The execution of a conveyance is only a part of the specific performance. If the vendor agrees to execute a conveyance as well as to deliver possession, it cannot be said that specific performance of the contract does not comprise both the execution of the sale-deed and delivery of possession. In every contract of sale, unless the contrary appears, the vendor must be deemed to impliedly agree to give possession of the property to the purchaser. In a suit for specific performance, the purchaser seeks to enforce the terms of his contract. The seller as much agrees to put the purchaser in possession, as he agrees to execute a conveyance in his favour."
16. It has been observed in the judgment of the Special Bench of the Calcutta High Court in the case of Sm. Dhiraj Bala Karia v. Jethia Estate Pvt. Ltd. (supra), as follows :-

"Mr. Bhabra himself did not seriously dispute that prior to the repeal of the Specific Relief Act, 1877, although there was some divergence of judicial views, there was preponderance of judicial authority that obligation to deliver possession was an integral part of a contract to sell or lease an immovable property. Such obligation of the vendor to put the vendee in possession flowed from the agreement to sell or to grant lease. Even in the absence of any express provision in the agreement, the vendor had such obligation under Section 55(1) (f) and under Section 108(b) of the Transfer of Property Act, 1882."
17. I agree with the said exposition of law by the Madras High Court and Calcutta High Court. It is evident that the above quoted provisions of Transfer of Property Act, 1882, demonstrate that once parties entered into an agreement to sale of the kind which is subject matter of the present appeal, unless the contrary is demonstrated, it must be deemed that the seller has impliedly agreed to deliver the possession of the property to the purchaser, upon execution of sale deed. Therefore, the Substantial Question of Law framed by this Court is answered in favour of the respondent and against the appellant.

18. Accordingly, this appeal is dismissed with no order as to costs.


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