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Whether suit for specific performance is maintainable on basis of unregistered agreement of sale?

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 22nd May, 2018
RFA 700/2016 CM APPL. 44927/2017

RISHI RAJ ORS
Vs
RAKESH YADAV

CORAM:JUSTICE PRATHIBA M. SINGH

1. The keys of the suit property have been deposited in this Court by SI Tahir Hussain, PS, Swaroop Nagar. The same shall be kept in safe custody.

2. These two appeals arise out of the impugned judgment dated 5th July, 2016 by which the Trial Court rejected the relief of specific performance, but granted the alternate relief of recovery of Rs.8,00,000/- in favour of Mr. Rakesh Yadav- the Plaintiff (hereinafter, „Plaintiff?).

3. The operative portion of the Trial Court?s order reads as under: –

“16. In view of the opinion of this court, upon all these
issues, relief of specific performance, declaration,
possession and permanent injunction is declined
against all the defendants but the plaintiff is entitled
for alternate relief of recovery of Rs. 8 Lacs as
mentioned in the receipt. Therefore, the decree of Rs.8
Lacs as mentioned in the receipt. Therefore, the decree
of Rs.8 Lacs is hereby passed in favour of the plaintiff
and against the defendants No. 1 to 3 only and all
reliefs against defendant No. 4 are declined.”

4. A set of documents including General Power of Attorney, Agreement to Sell, Receipt and Will were executed between Mr. Rishi Raj and Mr. Rakesh Yadav on 6th August, 2013 in respect of a plot measuring 50 square yards out of Khasra No.3/4 situated in the abadi of extended Lal Dora of Village Nathupura, Burari, Delhi-110084 (hereinafter „suit property?). The said documents which have been placed on record in original are signed by Mr. Rishi Raj, Mr. Rakesh Yadav and two witnesses one of whom is Mr. Kamlesh Chandra who was Defendant No.4 and Mr. Kunwar Bhan, the father of Mr. Rishi Raj. The execution of these documents is not disputed between Mr. Rakesh Yadav and Mr. Rishi Raj. The Trial Court refused the grant of specific performance relying upon the judgment of Supreme Court in Suraj Lamp and Industries Pvt. Ltd. v. State of Haryana Anr. (2012)

5. The question before this Court is whether the said set of documents required registration and if so, as to whether Mr. Rakesh Yadav is entitled to specific performance.

6. The documents executed on 6th August, 2013 are: –
(i) General Power to Attorney executed by Mr. Rishi Raj(Ex.PW1/1);
(ii) Agreement to Sell (Ex.PW1/2);
(iii) Receipt acknowledging a sum of Rs.8,00,000/- as having been received by Mr. Rishi Raj (Ex.PW1/3);
(iv) Affidavit of Mr. Rishi Raj (Ex.PW1/4);
(v) Will of Mr. Rishi Raj (Ex.PW1/5);
(vi) Possession letter given by Mr. Rishi Raj to Mr. Rakesh Yadav(Ex.PW1/6).
None of these documents are registered.

7. Mr. Rishi Raj claims rights in the suit property through an earlier set of documents executed by Mr. Kamlesh Chandra in his favour dated 26th March, 2012. Mr. Kamlesh Chandra claimed rights in the suit property on the basis of a General Power of Attorney and Agreement to Sell and similar documents dated 17th August, 2011 from Mr. Amit Gupta to him.

8. The case in the Plaint is that despite the Agreement dated 6th August, 2013 having been executed, Defendant No.4, Mr. Kamlesh Chandra, who was in possession, as a caretaker of Mr. Rishi Raj, did not handover the suit property to Mr. Rakesh Yadav. This led to filing of the present suit seeking the following reliefs: –

“(A) Pass a decree of specific performance whereby
direct the defendant no. 1 to execute a sale deed
of the suit property in favour of the plaintiff.
(B) Pass a decree of declaration whereby the right,
title and interest of the suit property be declare
in favour of the plaintiff.
(C) Pass a decree of possession thereby directing the
defendants to handover the peaceful and vacant
physical possession of the suit property to the
plaintiff.
(D) Pass a decree of permanent injunction in favour
of the plaintiff and against the defendants 1 to 4,
their agents, heirs, administrator and anybody
representing or acting on behalf of the
defendants 1 to 4 not to create any third party
interest or cased any damage and alteration in
the suit property i.e. aforesaid flat/suit property.
(E) Pass a decree of refund of paid amount of
13,20,000/- (Rupees thirteen Lac twenty
thousand) with pendentelite and future interest
against the defendants in case other claim of
plaintiff cannot be allowed.
Suit property is a house measuring 50 sq.
yard falls in khasra no. ¾, near Durga Mandir,
presently abadi known as Nathupura Burari
Delhi 110084 is specifically shown in red in the
site plan attached along with the suit”

9. The cheques of Rs.8,00,000/- were duly encashed and there is no doubt that the consideration amount was fully received. Since the Plaintiff, Mr. Rakesh Yadav, could not obtain the possession of the property, suit came to be filed impleading Mr. Rishi Raj, his brother Mr. Sandeep and father Mr. Kunwar Bhan as Defendant No.1, 2 and 3. Defendant No.4, Mr. Kamlesh Chandra, who was in possession of the property, was also impleaded. Though in the written statement, the execution of all the documents is admitted, it is pleaded as under: –

“1. That the defendant no. 4 has purchased a plot
in Khasra no. ¾ situated in the abadi of extended
Lal Dora of Village Nahupura, Burari Delhi-
110084 from one Sh. Amit Gupta S/O Sh. Babu
Ram on 07.08.2011. Copy of the GPA, Agreement
to sell, Affidavit, receipt, Possession Letter dated
17.08.2011.

2. That on 26.03.2012 the defendant no. 4 Kamlesh
Chandra sold the above mentioned plot to Sh. Rishi
Raj by executing the title documents i.e. GPA,
Agreement to sell, Affidavit, Receipt, Possession
Latter in his favour. Therein the defendant no. 4
signed as the seller.

3. That on 06.08.2013, the said defendant no. 1
further sold the said pot to plaintiff by executing
the title documents i.e. GPA, Agreement to sell,
Affidavit, Receipt, Possession letter in his favour.
Copy of Possession Letter signed by the Plaintiff
Defendant no. 1 is annexed as Annexure „A?.

4. That in all the above mentioned transaction, the
original chain of the documents handed over to the
new/last purchaser i.e. Rakesh Yadav (Plaintiff).

5. That the plaintiff allowed the defendant no. 4 to
continue his stay in the said property as a tenant
and as per the knowledge of the answering
defendants a rent agreement was also executed
between Sh. Rakesh Yadav and Sh. Kamlesh
Chandra with the agreed rate of rent i.e. Rs. 2800/-
per month.”

10. Thus, in the written statement, Defendant No.1, 2 and 3 alleged collusion between the Plaintiff, Mr. Rakesh Yadav and Defendant No. 4 – Mr. Kamlesh Chandra.

11. Mr. Kamlesh Chandra, Defendant No.4, filed his written statement and admitted that he had signed various documents. However he claimed that the same pertained to some transaction in respect of which a friendly   loan of Rs.1,20,000/- was taken by Mr. Rishi Raj?s father i.e., Mr. Kunwar Bhan from Mr. Kamlesh Chandra. However, there was another outstanding amount which was to be paid by Mr. Rishi Raj to him.

12. The signatures on the documents dated 6th August, 2013 and 26th March, 2012, however, are not disputed. He admits that in the Agreement between Mr. Rishi Raj and Mr. Rakesh Yadav, he signed as a witness.

13. The following issues were framed in the suit: –

“1) Whether the plaintiff is entitled for a decree of
specific performance against defendant No. 1
w.r.t suit property i.e. house measuring 50 sq.
yards falls in Khasra No. 3/4 near Durga Mandir
presently abadi known as Nathupura, Burari,
Delhi-84, specifically shown in red colour in the
site plan? OPP
2) Whether the plaintiff is entitled for a decree of
possession against defendants w.r.t above
mentioned suit property? OPP
3) Whether the plaintiff is entitled for a decree of
permanent injunction against defendants w.r.t
above mentioned suit property restraining the
defendants, their agents, legal heirs,
administrators etc. from creating any kind of 3rd
party interest, causing any damages and from
altering the suit property? OPP
4) Whether the plaintiff is entitled in alternate of
above mentioned claims, for money decree for a
sum of Rs.13,20,000/- with pendent lite and future
interest against the defendants? OPP
5) Whether the value of the suit property is more
than Rs.20 Lacs? OPD (defendants No. 1 to 3)
6) Whether the suit of the plaintiff is properly valued
for the purpose of court fees and jurisdiction?
OPD (defendants No. 1 to 3)
7) Relief.”

14. The Plaintiff deposed as PW-1. On behalf of the Defendants, Mr. Rishi Raj and Mr. Kunwar Bhan deposed as DW-1 and DW-3. Mr. Kamlesh Chandra deposed as DW-4. In the evidence of the Plaintiff, all the documents have been exhibited. The Plaintiff further states in his crossexamination as under: –

“I never visited the suit prior to the execution of
document in my favour. I was well aware at the time of
the execution of document in my favour that Sh.
Kamlesh Chandra is residing in the suit property.
It is wrong to suggest that defendant No. 1, 2 and
3 have done all the formalities in handing over the
physical vacant possession to me. I have visited 3-4
times the suit property prior to purchase the same. I
along with defendant No. 1, 2 and 3 visited the suit
property, prior to the purchasing of the same. And at
that time I found Kamlesh Chandra residing there. All
the relevant document necessary for the transaction
were executed by Rishiraj in my favour. It is correct
that no relevant /necessary documents left to be
executed in my favour by Rishiraj. I do not know the
meaning of word “Care Taker”. It is correct that no
electricity /water connection exists in the name of
Rishiraj, Sandeep and Kanwar Singh at the time of
purchase of the suit property in 2013. It is correct that
all the three above mentioned person visited the suit
property only once in order to help me get the
possession from the Kamlesh Chandra.”

15. The Plaintiff also denied that there was any rent agreement between him and Mr. Kamlesh Chandra and despite repeated attempts by him to take possession, Mr. Kamlesh Chandra refused to vacate the property. In so far as Mr. Rishi Raj is concerned, he admits the execution of the agreement with the Plaintiff. DW-3, Mr. Kunwar Bhan, admits as under: –

“I doing my job with MCD as a driver. The plaintiff
was also in service with me. We know well to each
other being the colleague of the same department. The
suit property was purchased in the name of my son
Rishi Raj from defendant no. 4 after paid the entire
agreed sale consideration. The defendant no. 4 hand
over the original document of chain to us. The
defendant no. 4 was in possession of the suit property
as caretaker on behalf of us for that we used to take a
less amount of rent from the defendant no.4. On the
day of execution of document of sale in favour of the
plaintiff the defendant no. 4 was also present and he
signed all the documents as a witness. It is correct that
on the day of execution of said document the suit
property was under the possession of defendant no.4. I
did not hand over the vacate possession of the suit
property because the plaintiff himself agreed to keep
the defendant no.4 as tenant in the suit property.”

16. Mr. Kamlesh Chandra DW-4 in his cross-examination categorically admits his signatures on all the documents which have been placed on record. However, it is alleged by him that the same were obtained fraudulently. Apart from claiming that there was some loan transaction, he has not placed any agreement to prove any arrangement with Mr. Rishi Raj. In these circumstances, the Trial Court, passed the impugned judgment

17. When the appeal was listed before this Court on 16th September, 2016, the execution was stayed subject to the Appellants, Mr. Rishi Raj and others depositing a sum of Rs.8,00,000/-. The said amount stands deposited as directed on 11th December, 2017. The same is lying in a FDR in this Court.

18. On 24th January, 2018, none appeared for Mr. Kamlesh Chandra. Arguments were heard in part on behalf of Appellants and the Respondent No.1. Both the parties were ad idem that Mr. Kamlesh Chandra was still in   possession of the property and was not handing over the possession because of which this litigation had ensued. Accordingly, this Court had appointed a Local Commissioner to ascertain as to who was in possession of different portions of the property. The Local Commissioner submitted his report and as per the said report, Mr. Kamlesh Chandra was confirmed to be in possession. Directions were issued to ensure the presence of Mr. Kamlesh Chandra in Court as there was no appearance on his behalf. Notice was served though the Local SHO, PS, Swaroop Nagar, pursuant to which Mr. Kamlesh Chandra had entered appearance in Court on 26th April, 2018. Time was sought by his Counsel to file documents to establish his title in the property. However, no documents were filed.

19. On the last date, Mr. Kamlesh Chandra was directed to deposit the keys of the property in Court and the following order was passed on 14th May, 2018:

“Further to the previous orders dated 24th
January, 2018, 16th February, 2018, 14th March, 2018
and 26th April, 2018, Mr. Rishi Raj and Mr. Kamlesh
Chandra are present in Court today. The statement of
Mr. Kamlesh Chandra has been recorded. Admittedly,
Mr. Kamlesh Chandra is a witness to the Agreement to
Sell and the other documents executed between the
Appellant and the Respondent No.1. The same are in
original on the Trial Court record. It is obvious that
he has complete knowledge of the sale which took
place. Further, on the last date, time was granted to
Mr. Kamlesh Chandra to file any documents he wishes
to rely upon. However, no document has been filed to
show that he has any right or claim in the suit
property. Two documents relied upon by him in his
statement today are GPAs and do not establish any
right. In order to effectively resolve the matter between
all the parities, it is directed that Mr. Kamlesh
Chandra shall vacate the property and deposit the keys
of the property in Court on the next date of hearing.
Mr. Tahir Hussain, Sub Inspector, Police
Station, Swaroop Nagar is present in Court who shall
ensure that the keys shall be deposited before the Court
on the next date.
List on 22nd May, 2018.”

20. Today parties have addressed their submissions. On the first issue as to whether the documents dated 6th August, 2013 required registration, it is the stand of the Plaintiff, Mr. Rakesh Yadav, that no possession was in fact given to him vide the documents executed by Mr. Rishi Raj in his favour. The suit property is located in Lal Dora area. Since no possession was given and the relief for specific performance is being sought, it is his submission, that the documents dated 6th August, 2013 did not require registration.

21. This position is not disputed by the counsel for Mr. Rishi Raj. It is however submitted that the case of the Plaintiff itself being that no possession was handed over, the documents did not require registration.

22. The Plaintiff herein seeks specific performance of agreement to sell dated 6th August, 2013. The question that has arisen is whether the Trial court is right in holding that since the documents are not registered, no right vests in the Plaintiff and no specific performance is liable to be granted. The Trial Court has proceeded on the basis of Suraj Lamps (supra). There is a fundamental difference where a sale is to be recognized merely on the basis of an Agreement to Sell, Power of Attorney, Will etc., and a case where specific performance is sought based on an unregistered Agreement to Sell. In the latter case, the party is seeking the Court’s intervention to conclude the sale transaction, which had commenced with the Agreement to Sell. The  Sale is yet to take place. In the case of an Agreement to Sell there are two categories viz., one wherein simultaneously with the execution of the agreement, possession of the property is handed over and one in which no possession is handed over. If the agreement to sell is not accompanied with possession of the property, then the same does not require registration. If the agreement is accompanied with possession, and is not registered, then possession is capable of being protected under Section 53A of the TP Act. However, for the same to be recognised as a sale, it would have to be registered, in view of the amendments carried out in Sections 17(1A) of the Registration Act and 53A of the TP Act. This legal position finds support in two decisions. In Sukhwinder Kaur v. Amarjit Singh AIR 2012 PH 97, the Punjab Haryana High Court held:

“8. Section 53-A of the TPA before amendment
prescribed that where in pursuance to part
performance of the contract, the transferee has taken
possession of the property and has done some act in
furtherance of the contract, and the transferor has
performed or is will to perform his part of the contact
then despite the fact that the contract was required to
be registered and has not been registered, the
transferrer shall be debarred from enforcing against
the transferee any right other than a right expressly
provided by the contract. Meaning thereby, Section 53-
A of the TPA recognized part performance of the
contract even though the contract used to be
unregistered and the transferee’s rights to remain in
possession was protected. By the amendment Act No.48
of 2001 (w.e.f. 24.9.2001), the words “the contract,
though required to be registered, has not been
registered, or” have been omitted from the provision.
The effect of the amendment is that now if any person
takes possession in pursuance to a contract which is
required to be registered but has not been registered,
the transferee has no right to remain in possession of
the property. To give effect to this principle, Section
17(1A) has accordingly been inserted in the Act which
mandates that such contract is now required to be
registered. If such a contract entered into after the
amendment is not registered then per Section 49 of the
Act, the same can neither affect any immovable
property comprised therein nor will it be received as
evidence of any transaction affecting such property or
conferring such power.

9. Now the question arises as to whether the provision
of Section 53-A of the TPA has any applicability on the
facts of the present case. The answer is in the negative
for the reasons that in the case in hand, the plaintiff is
seeking possession of the property by way of specific
performance of the agreement to sell. He is not seeking
protection of his possession on the basis of agreement
to sell. A person seeking protection of his possession
on the basis of unregistered agreement is a different
situation and where a person seeks possession of the
property by way of specific performance of the
agreement which is unregistered is a different
eventuality. In the latter class of cases, the agreement
to sell is not required to be registered as it does not fall
within the ambit of either Section 53-A of the TPA or
Section 17(1A) of the Act and does not require any
registration. Such agreement to sell falls under the
mischief of Section 17(2)(v) of the Act. It itself does not
create, declare, assign, limit or extinguish any right,
title or interest in the property. Rather it creates a right
to obtain another document which will, when executed,
create, declare, assign, limit or extinguish. Not only
that, proviso to Section 49 of the Act makes the things
more clear. It envisages that an unregistered document
affecting immovable property and required by this Act
or the TPA to be registered may be received as
evidence of a contract in a suit for specific
performance under Chapter II of the Specific Relief
Act, 1877. A conjoint reading of Section 17(2)(v) and
proviso to section 49 of the Act leaves no room for
doubt that an agreement to sell property itself does not
create any right, title to the property. It is the sale-deed
which when executed will create right, title and interest
in the property. Hence, an agreement to sell is not
required to be registered and the same is receivable in
evidence in a suit for specific performance under
Chapter II of the Specific Relief Act, 1877.

23. This decision has been followed by a Ld. Single Judge of this Court in Vinod Kumar v. Ajit Singh (2013) 138 DRJ 324 where the Court held

“10. In the instant case, the plaintiff has not sought
relief based on part performance under Section 53A of
the Transfer of Property Act and that being so, Section
17(1A) of the Registration Act, which was only meant
for the provisions of Section 53A of the Transfer of
Property Act, was not attracted and thus, the
agreement did not require registration. Such an
agreement falls under the mischief of Section 17(2)(v)
of the Registration Act, and it itself does not create,
declare, assign, limit or extinguish any right, title or
interest in the property. Rather as held in Sukhwinder
Kaur (supra) it creates a right to obtain another
document which will, when executed, create, declare,
assign, limit or extinguish right, title or interest in the
property. Not only this, provisions of Section 49 of the
Registration Act make the position more clear. It
envisages that an unregistered document affecting
immovable property and required by this Act and the
Transfer of Property Act to be registered may be
received as evidence of a contract in a suit for specific
performance under Chapter -II of Specific Relief Act,
1877. As further held in Sukhwinder Kaur (supra), a
conjoint reading of Section 17(2)(v) and proviso of
Section 49 of the Act leaves no room for doubt that
agreement to sell property itself does not create any
right or title over the property. It is the sale deed,
which when executed will create such right in the
property. Hence, an agreement to sell is not required
to be registered and the same is receivable in evidence
in a suit for specific performance under Chapter-II of
the Specific Relief Act, 1877.”

24. Based on the above judgments it is clear that it is permissible in law to seek specific performance of an unregistered agreement to sell, when possession of the property has not been handed over. In this case, from the evidence which has now come on record, it is clear that physical possession of the property was not handed over to the Plaintiff at the time of the execution of the documents dated 6th August, 2013. As per the documents dated 6th August, 2013 no registration was required for the same.

25. Learned counsel for the Appellants, Mr. Rishi Raj and others also submits that his clients admit the execution of the documents dated 6th August, 2013 and have no objection if the possession of the property is handed over to the Plaintiff, Mr. Rakesh Yadav. It is submitted on their behalf that Mr. Kamlesh Chandra was merely a caretaker who is refusing to vacate the property despite having sold it to Mr. Rishi Raj. It is further submitted that the Defendant No.4, Mr. Kamlesh Chandra, has no rights in the suit property.

26. Learned counsel for Mr. Kamlesh Chandra has also been heard. The submission of his Counsel Mr. Manoj Mishra is that all the signatures were fraudulently obtained and that his client is willing to undergo a Lie Detector Test.

27. From the evidence on record and on hearing the submissions on behalf of Mr. Kamlesh Chandra and the written statement filed by him, it is   clear that he admits the signatures both in the set of documents by which he sold the property to Mr. Rishi Raj and in the documents dated 6th August, 2013 by which the property was sold to Mr. Rakesh Yadav.

28. Under such circumstances, the documents have to be seen for their true purport and any oral submission contradicting the same is not liable to be entertained. Since Mr. Kamlesh Chandra is himself a witness in the transaction of sale between Mr. Rakesh Yadav and Mr. Rishi Raj, he cannot claim ignorance of the same. The counsel for Defendants, Mr. Rishi Raj and others are willing to execute a Sale Deed (if registrable) or any other documents as may be needed, in favour of the Plaintiff, Mr. Rakesh Yadav in respect of the suit property. The stamp duty or any other expenses for the same shall be borne by Mr. Rakesh Yadav. The said documents may be executed within four weeks.

29. The keys of the property shall remain in safe custody with the Deputy Registrar. Upon the execution of documents which are needed to be executed including payment of stamp duty, the Plaintiff is permitted to approach the Deputy Registrar, by means of an application, for release of keys in his favour.

30. The amount lying deposited in this Court to the tune of Rs.8,00,000/- would be liable to be returned to Defendant no.1, once the documents are executed and possession has been handed over to the Plaintiff.

31. The appeal is disposed of and all pending applications are disposed of.

32. List for directions on 18th July, 2018.

PRATHIBA M. SINGH
JUDGE
MAY 22, 2018

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