Monday, 17 August 2020

Supreme Court: Person in possession of the immovable property under an agreement of lease is entitled to get the benefit of the doctrine of part performance

On the other hand in the case of Maneklal
Mansukhbhai10 relied on by learned senior counsel for the respondents it
is clearly held by this Court that defence under Section 53A of the

Transfer of Property Act, 1882 is available to a person who has
agreement of lease in his favour though no lease has been executed
and registered. Similar proposition is also approved in the judgment of
this Court in the case of Hamzabi11 wherein this Court has held that
Section 53A of the Transfer of Property Act, 1882 protects the
possession of persons who have acted on a contract of sale but in
whose favour no valid sale deed is executed or registered. As it is clear
that respondents were put in possession and the Panchayat has acted
upon their proposal for grant of lease said case law supports the case of
the respondents.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.9049-9053 OF 2011

Union of India Vs  M/s. K.C. Sharma & Co. 

R. Subhash Reddy, J.
Dated:August 14, 2020.

1. The Union of India through Secretary (Revenue) and another,
have filed these appeals aggrieved by the judgment and decree dated
21.05.2007 passed by the High Court of Delhi in R.F.A.Nos.204-8/2006.
By the aforesaid impugned judgment, the High Court has allowed the
Regular First Appeals, preferred by the respondents, by setting aside
judgment and decree dated 04.01.2006 passed in Suit No.203 of 2005
by the Addl. District Judge, Delhi.
2. Necessary facts in brief are as under :
The land admeasuring 36 bighas 11 biswas comprising in Khasra
Nos.14/9, 12, 17, 18, 19, 20/1, 23 and 24 belonged to Gaon Sabha
Luhar Heri, Delhi. The large extent of land in the village, including the
aforesaid land, was acquired by the Government by initiating

proceedings under Land Acquisition Act, 1894 (for short, ‘the Act’). The
notification under Section 4(1) of the Act was issued on 27.01.1984 and
declaration under Section 6 of the Act came to be published on
20.09.1984. By passing the Award bearing No.101/86-87 on
19.09.1986, possession of the land was taken by the Government. In
the award proceedings, as the respondents have claimed compensation
on the ground that the land was given to them on lease by Gaon Sabha,
the matter was referred to the Civil Court under Sections 30 and 31 of
the Act, for apportionment of the amount of compensation. In the
aforesaid reference proceedings, preferred under Sections 30 and 31 of
the Act, it was the claim of the respondents that as the land was not fit
for cultivation, it was granted on lease to the respondents to remove the
“shora” and to make the land fit for cultivation. It is their case that in
view of the lease granted by the Gaon Sabha, they have spent huge
amount for removal of “shora” and made the land fit for cultivation, and
continued in possession by cultivating the same for more than 30 years.
In the aforesaid proceedings referred under Sections 30 and 31 of the
Act, the Civil Court has passed the judgment and decree on 28.09.1989,
declaring that the respondents-claimants are entitled for compensation
to the extent of 87% and remaining 13% is to be paid to the
panchayat/Gaon Sabha.
3. Nearly after three years of the aforesaid judgment and decree in
the proceedings under Sections 30 and 31 of the Act, some villagers
have filed Writ Petition No.1408/1992 alleging that the respondents were not the lessees of the land in question and they have claimed
compensation in collusion with ex-Pradhan of the Gaon Sabha. The
 said writ petition was disposed of by the High Court of Delhi on
21.02.1997. In the aforesaid order the High Court has permitted the
Additional District Magistrate to intervene in the pending proceedings
under Section 18 of the Act and place on record the available material to
substantiate their case. At the same time it was kept open to the legal
heirs of the original lessee to support their contention that there is a
lease and they are entitled to claim compensation for the land acquired.
The relevant portion of the order dated 21.02.1997 passed in the writ
petition reads as under :
“We are not to be understood as deciding anything regarding
the rights of the parties one way or the other. The A.D.M. is
hereby directed to file his intervention application within one
month from the date of receipt of this order and the leaned
Addl. District Judge is directed not to dispose of the
application for enhancement before a decision is rendered on
the intervention application of the A.D.M. It will be open to the
A.D.M. to consider, apart from intervention in the matter,
whether any separate proceedings are to be initiated or not for
the recovery of the compensation already paid.”
4. In view of the observations made by the High Court in the writ
petition, Gaon Sabha/ Panchayat has filed application under Order 1
Rule 10 of the Code of Civil Procedure to implead it in the proceedings
under Section 18 of the Act. In the aforesaid proceedings it was held
that in view of the judgment and decree passed in proceedings under
Sections 30 and 31 of the Act holding that the respondents-claimants
are entitled for compensation to the extent of 87%, the Civil Court has held that Panchayat is entitled only to seek enhancement of
compensation to the extent of their 13% share.
5. Further, in view of the observations made by the High Court, a suit
was filed by the appellants, initially before the High Court of Delhi, which
was subsequently transferred to the Court of Additional District Judge,
Delhi on the ground of pecuniary jurisdiction and same was numbered
as Suit No.203 of 2005. The said suit was filed seeking declaration that
the judgment and decree dated 28.09.1989 was obtained by fraud as
such they are entitled for recovery of Rs.11,20,707/- with interest @
18% p.a. In the aforesaid suit mainly it was the case of the appellantsplaintiffs
that the said decree was obtained by fraud in collusion with ex-
Pradhan, and created a resolution showing that the said land was
leased in their favour for a period of five years from 04.04.1981. It was
their specific case that since the ex-Pradhan of the Gaon Sabha was in
collusion with the respondents-defendants and due to such fraud
committed by them upon the court they could obtain order and decree
as such the same was assailed in the suit.
6. The said suit was decreed by judgment and decree dated
04.01.2006 and aggrieved by the same respondents-defendants have
preferred First Appeals in R.F.A.Nos.204-8/2006 before the High Court
of Delhi. The High Court, by appreciating the documentary and oral
evidence on record, has come to the conclusion that appellants-plaintiffs
have not pleaded necessary particulars so as to show how fraud was
committed upon the court which decided the reference under Sections 30 and 31 of the Act. Further by recording a finding that Gram Panchayat wanted to give the said land on lease to make the land fit for cultivation by removing “shora” and the said proposal was signed by all the members of the Gaon Sabha and only after approval from the Dy. Director, Panchayat, it was put to auction. It was further held by the High Court that in the auction proceedings there were as many as six bidders and as the bid of the respondents was highest at Rs.89/- per
acre same was accepted. It is further held by the High Court that the
proposal regarding acceptance of the bid was also approved by the Dy.
Director vide letter dated 16.04.1981 and only thereafter respondents
took possession of the land and paid the money through various receipts
which are part of the record. Further the High Court has held that the
entries made in the revenue records support the plea of the respondents
that they continued in possession by cultivating the land and as, every
action of the Gaon Sabha from the stage of proposal to create lease and
acceptance of lease was approved by Dy. Director, there is no case
made out by the appellants to show that lease was created only with the
collusion of the ex-Pradhan of the Gaon Sabha. With the aforesaid
findings the appeals filed by the respondents were allowed and
judgment and decree of the trial court was set aside. Hence, these civil
appeals, by plaintiffs.
7. We have heard Ms. Aishwarya Bhati, learned Additional Solicitor
General for the appellants and Sri Jayant Bhushan, learned senior
advocate appearing for the respondents-defendants.

8. Learned Additional Solicitor General appearing for the appellants
has mainly contended that respondents have claimed compensation by
playing fraud. It is submitted that there is no lease deed as such in
favour of the respondents and the only rights which were conferred on
the respondents were to remove the “shora” on the land in question so
as to make the land fit for cultivation. It is submitted that in absence of
any lease deed executed by the Gram Panchayat in favour of the
respondents, at best it can be treated as a licence for removal of “shora”
only and same cannot be treated as a lease. The learned ASG has
submitted that as the judgment and decree which was questioned in the
suit was obtained by fraud, the suit was rightly decreed by the trial court
but same was reversed by the High Court without appreciating their
case in proper perspective. It is submitted by learned ASG that in any
event having regard to claim made by the respondents-defendants they
are not entitled for compensation to the extent of 87%. In support of her
pleading that as much as the judgment and decree dated 28.09.1989 is
obtained by fraud and the same is a nullity and it is vitiated, she has
placed reliance on the following judgments of this Court :
1. S.P. Chengalvaraya Naidu (Dead) by LRs v. Jagannath (Dead)
by LRs & Ors.1
2. A.V. Papayya Sastry & Ors. v. Govt. of A.P. & Ors.2
3. Madhukar Sadbha Shivarkar (Dead) by LRs v. State of
Mahrashtra & Ors.3
1 (1994) 1 SCC 1
2 (2007) 4 SCC 221
3 (2015) 6 SCC 557

4. Satluj Jal Vidyut Nigam v. Raj Kumar Rajinder Singh (Dead)
through LRs4
5. Shrist Dhawan (Smt.) v. M/s. Shaw Brothers5
6. Meghmala & Ors. V. G. Narasimha Reddy & Ors.6
It is submitted that above said case law supports the case of the
appellants that as the decree was obtained by fraud, same is a nullity
and vitiated and same can be set aside at any point of time. Further
learned ASG, in support of her argument that the transaction from the
Gaon Sabha is to be construed as a licence but not a lease and to draw
the difference between ‘lease’ and ‘licence’, placed reliance on the
judgments of this Court in the case of Associated Hotels of India Ltd. v.
R.N. Kapoor7; C.M. Beena & Anr. V. P.N. Ramachandra Rao8; and
Bharat Petroleum Corporation Ltd. v. Chembur Service Station9.
9. On the other hand Sri Jayant Bhushan, learned senior counsel
appearing for the respondents has contended that judgment and decree
passed in proceedings under Sections 30 and 31 of the Act has become
final. It is submitted that in view of the finality attained to such judgment
and decree, only question which arose for consideration in the suit was
whether such judgment and decree was obtained by fraud or not. In
support of the plea of fraud, the only contention of the appellants was
that there was no lease and resolution for grant of lease was obtained in
collusion with the ex-Pradhan of the Gaon Sabha. It is submitted by
4 2018 (11) SCALE 383 = (2019) 14 SCC 449
5 (1992) 1 SCC 534
6 (2010) 8 SCC 383
7 (1960) 1 SCR 368
8 (2004) 3 SCC 595
9 (2011) 3 SCC 710

learned senior counsel that it is clear from the evidence on record that
the decision to grant lease of the land was taken by Gaon Sabha and all
the members are signatories and only after approval of the Dy. Director,
Panchayat land was leased. It is submitted that lease was granted by
conducting auction and as much as the original respondent-defendant
was the highest bidder lease was granted by parting possession to the
respondents. It is submitted that as the respondents continued in
possession which is evident from the evidence produced as reflected in
the revenue records, it is not open for the appellants to plead that
respondents are to be considered only as licensees but not lessees. It
is submitted that as the trial court has not properly appreciated the
evidence on record and decreed the suit, same is rightly set aside by the
High Court and there are no grounds to interfere with the same. The
learned senior counsel has submitted that though no lease deed has
been executed and registered, respondents are entitled to the benefit of
Section 53A of the Transfer of Property Act, 1882. To support his
contention, he has relied on judgments of this Court in the case of
Maneklal Mansukhbhai v. Hormusji Jamshedji Ginwalla & Sons10 and
Hamzabi & Ors. v. Syed Karimuddin & Ors.11. Further, in support of his
argument that the fraud has to be established by pleading with sufficient
proof, he has relied on judgment of this Court in the case of
Ranganayakamma & Anr. V. K.S. Prakash (D) by LRs & Ors.12.
10 AIR 1950 SC 1
11 (2001) 1 SCC 414
12 (2008) 15 SCC 673

10. Having heard the learned counsel on both sides, we have perused
the material on record.
11. In this case we are not concerned with the correctness of the
judgment and decree dated 28.09.1989 passed in the proceedings
under Sections 30 and 31 of the Act. In the suit filed in Suit No.203 of
2005 a declaration is sought to the effect that the judgment and decree
dated 28.09.1989 is obtained by playing fraud. In support of their case
the only pleading was that there was no lease in fact and same was
created by creating resolution in collusion with the ex-Pradhan of
Panchayat. From the material and evidence on record we are in
agreement with the view taken by the High Court. In view of the rival
claims for compensation matter was referred under Sections 30 and 31
of the Act and it was held that respondents are entitled to compensation
to the extent of 87% whereas Gaon Sabha was held entitled only to the
extent of 13%. The said judgment has become final. Same was not
questioned in any appeal. Without filing any appeal against the
judgment and decree dated 28.09.1989, a separate suit is filed mainly
on the ground that the said judgment and decree is obtained by fraud.
From the material placed and evidence produced, it is clear that the land
in question was ‘banjar’ land having “shora” and Gram Panchayat
wanted to give the said land on lease to make the same fit for cultivation
by removing “shora”. Such proposal was agreed to by all the members
of Gaon Sabha and proposal as such was sent to Dy. Director,
Panchayat for approval. The Dy. Director of Panchayat has approved the same by deciding that the minimum bid should be for Rs.75/- per acre. Only after receipt of such approval from the Dy. Director,
Panchayat, land was auctioned on 04.04.1981 for grant of leasehold
rights. In the auction conducted there were as many as six bidders and
bid of the respondent was the highest which was at Rs.89/- per acre and
was accepted. Even such acceptance of proposals was again sent to
Dy. Director for approval and the Dy. Director vide letter dated
16.04.1981 approved the acceptance of the bid in favour of the
respondent for a period of five years. Thereafter the respondent was put
in possession and he continued in possession by paying bid amount to
the Gram Panchayat. The revenue records produced also reveal that
the name of the respondent was entered as possessor and cultivator. In
the light of such documentary evidence it cannot be said that lease was
obtained by the respondents in collusion with ex-Pradhan. It is to be
noted that it was not an act of ex-Pradhan of the Gaon Sabha and from
the stage of proposal same was approved by the Dy. Director, only
thereafter by conducting open auction respondents were granted lease.
12. Though the learned Additional Solicitor General appearing for the
appellants has relied on several judgments in support of her plea that as
the judgment and decree was obtained by fraud same is a nullity and
vitiated, but in a given case whether such decree was obtained by fraud
or not, is a matter which is to be judged with reference to pleadings and
the evidence on record. When the judgment and decree is assailed only
on the ground that lease was created in collusion with the ex-Pradhan, as the same is contrary to evidence, the only plea of the respondents
was rightly not accepted by the High Court. As at every stage the
proceedings for grant of lease were approved by the competent
authority/Dy. Director, Panchayat, as such it cannot be said respondents
have obtained lease in collusion with ex-Pradhan of the Panchayat.
Except such a vague plea, there were no particulars how the fraud was
played. It is fairly well settled that fraud has to be pleaded and proved.
More so, when a judgment and decree passed earlier by the competent
court is questioned, it is necessary to plead alleged fraud by necessary
particulars and same has to be proved by cogent evidence. There
cannot be any inference contrary to record. As the evidence on record discloses that fraud, as pleaded, was not established, in absence of any necessary pleading giving particulars of fraud, we are of the view that no case is made out to interfere with the well reasoned judgment of the High Court. The case law in this regard submitted by the learned ASG for the appellants would not render  assistance to support their plea.
Further cases referred in the case of Associated Hotels7 and C.M.
Beena8 also will not come to the rescue of the case of the appellants in
any manner. As it is clear from the evidence that the respondents were
put in possession and they continued in possession by cultivating the
land the said judgments would not render any assistance in support of
the case of the appellants. On the other hand in the case of Maneklal
Mansukhbhai10 relied on by learned senior counsel for the respondents it
is clearly held by this Court that defence under Section 53A of the

Transfer of Property Act, 1882 is available to a person who has
agreement of lease in his favour though no lease has been executed
and registered. Similar proposition is also approved in the judgment of
this Court in the case of Hamzabi11 wherein this Court has held that
Section 53A of the Transfer of Property Act, 1882 protects the
possession of persons who have acted on a contract of sale but in
whose favour no valid sale deed is executed or registered. As it is clear
that respondents were put in possession and the Panchayat has acted
upon their proposal for grant of lease said case law supports the case of
the respondents.
13. For the aforesaid reasons, we do not find any merit in these
appeals so as to interfere with the impugned judgment. Accordingly,
these civil appeals are dismissed with no order as to costs.
………….…………………………………J.
[ASHOK BHUSHAN]
….…………………………………………J.
[R. SUBHASH REDDY]
….…………………………………………J.
[M.R. SHAH]
New Delhi.
August 14, 2020.

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