CASE ANALYSIS: GHANSHYAM V.

YOGENDRA RATHI (2023) 7 SCC 361

PROPERTY LAW – CASE ANALYSIS

SUBMITTED BY: SUBMITTED TO:

NAME- UJJWAL SABOO DR. UTKARSH VERMA
ROLL NO. – 1384 ASSISTAN PROFESSOR, LAW
SEM- V NUSRL, RANCHI
SECTION- A

NATIONAL UNIVERSITY OF STUDY AND RESEARCH IN LAW

RANCHI

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CASE NAME: GHANSHYAM V. YOGENDRA RATHI

CITATION: (2023) 7 SCC 631

FORUM: SUPREME COURT OF INDIA

BENCH: HON’BLE JUSTICE DIPANKAR DATTA And HON’BLE

JUSTICE PANKAJ MITHAL

LAWS/ACTS INVOLVED IN THIS CASE:

1. Section 53A of Transfer of Property Act 1882

Part performance.—Where any person contracts to transfer for consideration any immoveable
property by writing signed by him or on his behalf from which the terms necessary to
constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in
part performance of the contract, taken possession of the property or any part thereof, or the
transferee, being already in possession, continues in possession in part performance of the
contract and has done some act in furtherance of the contract, and the transferee has
performed or is willing to perform his part of the contract,

then, notwithstanding that, where there is an instrument of transfer, that the transfer has not
been completed in the manner prescribed therefor by the law for the time being in force, the
transferor or any person claiming under him shall be debarred from enforcing against the
transferee and persons claiming under him any right in respect of the property of which the
transferee has taken or continued in possession, other than a right expressly provided by the
terms of the contract:

Provided that nothing in this section shall affect the rights of a transferee for consideration
who has no notice of the contract or of the part performance thereof

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 TABLE OF CONTENTS:

1. INTRODUCTION:........................................................................................................4

2. FACTS OF THE CASE:................................................................................................5

3. ISSUES FOR CONSIDERATION BEFORE THE COURT:.......................................6

4. ARGUMENTS BY BOTH PARTIES:..........................................................................7

5. JUDGEMENT:...............................................................................................................9

6. OBITER DICTA:...........................................................................................................9

7. RATIONALE:................................................................................................................9

8. CRITICAL ANALYSIS AND CONCLUCSION:......................................................10

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 INTRODUCTION:

Section 53A of Transfer of Property Act 1882 talks about part performance. Section 53A was
inserted in TOPA by 1929 amendment act. Section 53A protects transferees who have taken
possession of the property or made improvements based on an oral agreement or an
agreement not registered as required by law. Section 53A states that if a person has taken
possession of a property and has performed acts in furtherance of a contract for the transfer of
that property, they may be protected and allowed to enforce their rights to the property, even
if the contract is not in compliance with the formal requirements of the law.

The case of Ghanshyam v. Yogendra Rathi is one of the landmark judgement in Indian
Property law which talks about the rights of a property purchaser under an agreement to sell
and deals with sections 53A and 54 of the Transfer of Property Act of 1882. The case
revolves around the issue whether Agreement to Sell can be considered as a title deed and the
legal sale of immovable property.

The case involved a conflict over ownership of a property and eviction of the seller. In this
case, the purchaser claims rights over the property by virtue of an agreement of sale, making
the full payment, power of attorney, possession over the property, and a will in favour of him
whereas the seller of the property claimed title ownership contesting fraudulent acts by the
buyer. The Hon’ble Supreme Court dealt with the case in detail and gave a landmark
judgement which clarified the position of law in such cases by ipholding the possessory title
of the buyer obtained through part performance. Hon’ble SC also observed that the agreement
of sale does not confer title ownership of the property.

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 FACTS OF THE CASE:

Defendant-Appellant Ghanshyam was the owner of disputed property which was part of H-
768, J.J. Colony, Shakarpur, Delhi. On 10th April 2002, agreement to sell was signed between
Defendant-Appellant Ghanshyam and Plaintiff-Respondent Yogendra Rathi. Further, the
Appellant Ghanshyam conferred a power of attorney, made a will in the favour of
Respondent and gave possession of the premises to Respondent. On the request of Appellant,
Plaintiff-Respondent allowed Defendant-Appellant to occupy the ground floor and one room
on the first floor for a period of 3 months as a licencee.

Post three months, when the appellant failed to leave the premises even after the end of the
license period and its termination vide dated 18-2-2003, the respondent filed an eviction suit
in the civil court for eviction of the appellant and for mesne profits by asserting ownership of
the property by virtue of the agreement to sell, power of attorney, will in his favour, memo of
possession, and of payment of sale consideration.

The Civil Court framed three issues - first being with regard to manipulation and fraudulently
obtaining the alleged documents, the second regarding the right of the respondent to get the
appellant evicted and the third with regard to entitlement of mesne profits. All three issues
were decided in favour of respondent. The Civil Court held that respondent has proved his
right over the property and is entitled to decree of eviction and payment of mesne profits at a
rate of Rs.1000 per month for the use and occupation of premises in dispute.

Being aggrieved by the decision of Civil Court, appellant filed two appeals to High Court
which were dismissed. Hence, aggrieved by High Court’s decision, appellant has filed an
appeal in Supreme Court.

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ISSUES FOR CONSIDERATION BEFORE THE COURT:

1. WHETHER THE POWER OF ATTORNEY, THE WILL, THE

AGREEMENT TO SELL COUPLED WITH POSSESSION MEMO
AND THE RECEIPT OF PAYMENT OF SALE CONSIDERATION
WOULD CONFER ANY TITLE UPON THE RESPONDENT SO
AS TO ENTITLE HIM TO A DECREE OF EVICTION AND
MESNE PROFITS?

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 ARGUMENTS BY BOTH PARTIES:

Arguments on behalf of Defendant-Appellant (Ghanshyam)

Learned Counsel for Defendant contended that agreement to sell is not a document of title or
deed of transfer of property by sale and as such, not confers absolute title upon the
respondent over the disputed property in view of Section 54 of Transfer of Property Act
1882.

Learned Counsel for Defendant further contended that on the strength of power of attorney,
neither sale deed has been executed nor any action pursuant thereof has been taken by the
power of attorney holder which may confer title upon the plaintiff-respondent. Learned
Counsel further contended that will executed by appellant in favour of respondent is of use
use in present case as will comes into effect only after death of person making will and not
before it. Hence, Learned Counsel submitted that neither power of attorney nor will confers
any right upon respondent as law requires execution of document of title or transfer and its
registration so as to confer right and title in an immovable property of over Rs.100 in value.

Learned Counsel for Defendant relied on Imtiaz Ali v. Nasim Ahmed1 and G.Ram v. Delhi
Development Authority2, in which Hon’ble Delhi HC observed that agreement to sell or the
power of attorney are not documents of transfer and as such the right title and interest of an
immovable property do not stand transferred by mere execution of the same unless any
document as contemplated u/s 54 of TOPA 1882, is executed and is got registered u/s 17 of
Indian Registration Act 1908. Learned Counsel further relied on Suraj Lamp & Industries
Pvt. Ltd. v. State of Haryana3, in which Hon’ble SC disapproved the transfer of immovable
property through sale agreement, general power of attorney and will instead of registered
conveyance deed.

1
Imtiaz Ali v. Nasim Ahmed, 1986 SCC OnLine Del 269
2
G.Ram v. Delhi Development Authority, 2002 SCC OnLine Del 405
3
Suraj Lamp & Industries Pvt. Ltd. v. State of Haryana, (2012) 1 SCC 656

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Arguments on behalf of Respondent (Yogendra Rathi)

Learned Counsel for Respondent relied on Civil Court judgement where Court recorded that
there is no evidence to prove that any of the documents i.e. Agreement to Sell, Power of
Attorney and Will were obtained by misrepresentation, manipulation or by playing fraud
upon appellant and respondent has right over the property and is entitled to decree of eviction
and payment of mesne profits.

Learned Counsel for Respondent contended that he is the owner of property ad to prove his
ownership, he relied on agreement to sell, power of attorney and will and memo of
possession as well as payment of sale consideration. Learned Counsel submitted that
respondent is de-facto having possessory rights over the dispute property and respondent’s
possessory right is not liable to be disturbed by appellant.

Learned Counsel for Respondent further submitted that defendant was given ground floor and
room on first floor as licencee of respondent and appellant does not continue to occupy it in
capacity of owner. Learned Counsel further submitted that Appellant has not right to remain
in possession but to restore possession to the person having rightful possessory title over it.

Learned Counsel for Respondent relied on Veer Bala Gulati v. Municipal Corporation of
Delhi4 and Asha M. Jain v. Canara Bank5 in which Hon’ble Delhi HC observed that
agreement to sell with payment of full consideration and possession along with irrevocable
power of attorney and other ancillary documents is transaction to sell even though there may
not be a sale deed.

Learned Counsel for respondent submitted that Respondent having performed his part of
contract and lawfully in possession acquires possessory title which is liable to be protected in
view of Section 53A of TOPA 1882. Learned Counsel for Respondent further submitted that
Respondent admittedly was settled with possessory title in part performance of the agreement
to sell dated 10.04.2002 and that the Appellant has lost his possession over it and had
acquired the right of possession under as licencee and exhausted his right to continue in
possession after the licence has been expired.

4
Veer Bala Gulati v. Municipal Corporation of Delhi, 2003 SCC OnLine Del 345
5
Asha M. Jain v. Canara Bank, 2001 SCC OnLine Del 1157

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 JUDGEMENT:
OBITER DICTA:

Hon’ble SC observed that Section 54 of Transfer of Property Act 1882 provides that transfer
of ownership of the property never happens unless document contemplated under Section 54
is executed and registered under Section 17 of Indian Registration Act, 1908. Hon’ble SC
further observed that an agreement to sell is not a deed of property of transfer by sale or a
certificate of title.

Hon’ble SC observed that since no document was executed in pursuance of the power of
attorney it is of no consequence. Similarly will is of no consequence as it comes into force
after the death of the executant. Hon’ble SC further observed that a general power of attorney
executed in favour of the buyer by the seller is meaningless and of no impact unless it is
registered under section 17 of Registration Act, 1908.

Hon’ble SC observed that an agreement to sell indeed cannot transfer proprietary right but by
virtue of Section 53A of TOPA the transferor cannot disturb the possession of the plaintiff as
he has possessory rights over the property.

RATIONALE:

Hon’ble SC overruled the judgements of Delhi High Court in Veer Bala Gulati v.
MCD and Asha M. Jain vs Canara Bank, and held that any state accepting the general
power of attorney and will as valid documents of transfer of title conferring right in
immovable property are not in consonance with statutory law and are invalid.

Hon’ble SC held that “legally an agreement to sell may not be regarded as a transaction of
sale or a document transferring the proprietary rights in an immovable property but the
prospective purchaser having performed his part of the contract and lawfully in possession
acquires possessory title which is liable to be protected in view of Section 53A of the
Transfer of Property Act, 1882. The said possessory rights of the prospective purchaser
cannot be invaded by the transferer or any person claiming under him.”

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Hon’ble SC concluded that agreement to sell can't be considered a document of transfer of
title in immovable property however once the buyer performs his part performance and gets
possession of the property, he acquires the possessory title which may be protected under
section 53A of TOPA 1882.

Hon’ble SC dismissed the appeal with no order as to costs as it lacks merit and upheld the
judgements delivered by Civil Court and High Court.

CRITICAL ANALYSIS AND CONCLUCSION:

The Hon’ble SC in case of Ghanshyam v. Yogendra Rathi discussed some of the very
important questions related to the transfer of property. Hon’ble Supreme Court through this
judgement has addressed the issues related to the transfer of property, question of tenancy,
and applicability of provisions for eviction. The case was especially relevant to the property
laws that exist in the country of India and the rights and responsibilities of buyer and seller in
particular. It also gave information touching on the law of eviction under different tenancy
terms, clarifying procedural rules and steps as well as the entitlements of the individuals
concerned.

The Hon’ble SC clarified that the sale of the agreement, and power of attorney are not valid
documents for the transfer of title of property under section 54 of TOPA which talks about
the sale of a property. Once a property is sold, the seller loses his right of enjoyment of the
property and can't disturb the buyer of the property.

According to this ruling, if the transferee satisfies additional requirements of section 53A, the
original owner who has agreed to sell the immovable property cannot force the prospective
transferee to give up ownership of the property. However, this protection does not affect the
ownership of the transferor who continues to be the absolute owner of the property until, by
virtue of a sale deed; the ownership is transferred to the transferee. The Hon’ble SC also
made it clear that any state law that validates the transfer of title ownership of property on the
basis of documents like power of attorney and sale agreement is a violation of the statutory
law. Any such state law would be overridden by the TOPA of 1882.

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One must also be mindful of the decision that has been passed in the judgment of N.N.
Global Mercantile Private Limited v. Indo Unique Flame Ltd.6 in which Hon’ble SC held
that an unstamped instrument cannot be taken into cognizance for any purpose and it remains
unenforceable. No Public Officer nor Court nor Arbitrator, can permit any person to ask them
to act upon it or receive it as evidence. In law, such an unstamped agreement is bereft of life
and not enforceable in law, cannot exist in law and would be void.

Hence, it can be concluded that an instrument of title to an immovable property is a vital

document to claim, enforce one’s rights and enjoy the benefits arising from and out of the
immovable property to be conveyed. Therefore, while entering into any such deed of
conveyance, the seller as well as the purchaser must ensure that all the parameters of Section
54 of TOPA are complied with including but not limited to requirement of stamping and
registering the deed with the concerned authorities. Any such evasion and/or negligence
would lead to a defect in conferring the title of the property unto the purchaser and the
purchaser will then be required to seek appropriate measures and reliefs from the Courts to
perfect the title to such immovable property.

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N.N. Global Mercantile Private Limited v. Indo Unique Flame Ltd., (2023) 7 SCC 1

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