A compromise decree passed by a court would ordinarily be covered by Section 17(1)(b) but sub-section (2) of Section 17 provides for an exception for any decree or order of a court except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. Thus, by virtue of sub-section 2(vi) of Section 17 any decree or order of a court does not require registration. In sub-clause (vi) of sub-section 2, one category is excepted from sub-clause (vi), a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. Thus, by conjointly reading Section 17(1)(b) and Section 17(2)(vi), it is clear that a compromise decree comprising immovable property other than which is the subject matter, of the suit or proceeding requires registration, although any decree or order of a court is exempted from registration by virtue of Section 17(2)(vi). Mohd. Yusuf v. Rajkumar, (2020) 10 SCC 264.
Tag Archives: immovable property
Compromise Decree Comprising of Immovable Property Other Than That Which is subject matter of Suit or Proceeding – Requires Registration
Law relating to bona vacantia provides for conservation of abandoned properties. The nature of the property to which the Escheats Act applies must necessarily be abandoned property in the sense that there should be no claimants to the property.
The question is, what exactly is “abandoned property” or what property is “bona vacantia”. In Bombay Dyeing Manufacturing Co. Ltd. v. State of Bombay, AIR 1958 SC 328, a Constitution Bench of the Hon’ble Supreme Court while deciding the challenge to the constitutional validity of the Bombay Labour Welfare Fund Act observed and held that the expression “abandoned property”, or to use the more familiar term “bona vacantia”, comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim.
Property is subject to the right of escheat, where upon intestacy, there is no heir. Escheat was a right, whereby land of which there was no longer any tenant, returned by reason of tenure, to the Lord by whom, or by whose predecessors in title, the tenure was created.
In A-G of Ontario v. Mercer, (1883) 8 App Cas 767, it was held, that “Escheat is a term of art and derived from the French word escheat that is cadere excidere or accidere and signifyeth property when by accident the lands fall to the Lord of whom they are holden.” Escheat was an incident of feudal tenure and was based on the want of tenant to perform the feudal services. State of Rajasthan v. Lord Northbrook, 2020 (1) AWC 122.
The expression “development agreement” has not been defined statutorily. In a sense, it is a catch all nomenclature which is used to describe a wide range of agreements which an owner of property may enter into for development of immovable property. As real estate transactions have grown in complexity, the nature of these agreements has become increasingly intricate. Broadly speaking, (without intending to be exhaustive), development agreements may be of various kinds:
- An agreement may envisage that the owner of the immovable property engages someone to carry out the work of construction on the property for monetary consideration. This is a pure construction contract;
- An agreement by which the owner or a person holding other rights in an immovable property grants rights to a third party to carry on development for a monetary consideration payable by the developer to the other. In such a situation, the owner or right holder may in effect create an interest in the property in favour of the developer for a monetary consideration;
- An agreement where the owner or a person holding any other rights in an immovable property grants rights to another person to carry out development. In consideration, the developer has to hand over a part of the constructed area to the owner. The developer is entitled to deal with the balance of the constructed area. In some situations, a society or similar other association is formed and the land is conveyed or leased to the society or association;
- A development agreement may be entered into a situation where the immovable property is occupied by tenants or other right holders. In some cases, the property may be encroached upon. The developer may take on the entire responsibility to settle with the occupants and to thereafter carry out construction;
- An owner may negotiate with a developer to develop a plot of land which is occupied by slum dwellers and which has been declared as a slum. Alternately, there may be old and dilapidated buildings which are occupied by a number of occupants or tenants. The developer may undertake to rehabilitate the occupants or, as the case may be, the slum dwellers and thereafter share the saleable constructed area with the owner.
When a pure construction contract is entered into, the contractor has no interest in either the land or the construction which is carried out. But in various other categories of development agreements, the developer may have acquired a valuable right either in the property or in the constructed area. The terms of the agreement are crucial in determining whether any interest has been created in the land in favour of the developer and if so, the nature and extent of the rights. Sushil Kumar Agarwal v. Meenakshi Sadhu, 2018 (131) ALR 756.
Gift means to transfer certain existing movable or immovable property voluntarily and without consideration by one person called the donor to another called the donee and accepted by or on behalf of the donee as held by the Hon’ble Supreme Court in Naramadaben Maganlal Thakker v. Pranjivandas Maganlal Thakker, (1997) 2 SCC 255. As further held by the Hon’ble Court in Naramadaben Maganlal Thakker, (1997) 2 SCC 255:
“It would thus be clear that the execution of a registered gift deed, acceptance of the gift and delivery of the property together make the gift complete. Thereafter, the donor is divested of his title and the donee becomes absolute owner of the property.”
A conditional gift with no recital of acceptance and no evidence in proof of acceptance, where possession remains with the donor as long as he is alive, does not become complete during lifetime of the donor. When a gift is incomplete and title remains with the donor, the deed of gift might be cancelled.
In Renikuntla Rajamma v. K. Sarwanamma, (2014) 9 SCC 445, a Hindu woman executed a registered gift deed of immovable property reserving to herself the right to retain possession and to receive rent of the property during her lifetime. The gift was accepted by the donee but later revoked.
In Renikuntla Rajamma v. K. Sarwanamma, (2014) 9 SCC 445, it was held that the fact that the donor had reserved the right to enjoy the property during her lifetime did not affect the validity of the deed. The Court held that a gift made by registered instrument duly executed by or on behalf of the donor and attested by at least two witnesses is valid, if the same is accepted by or on behalf of the donee. Such acceptance must, however, be made during the lifetime of the donor and while he is still capable of making an acceptance. S. Sarojini Amma v. Velayudhan Pillai Sreekumar, (2019) 11 SCC 391.
In Suraj Lamp & Industries (P) Ltd. v. State of Haryana, (2012) 1 SCC 656, it was observed as under:
“Therefore, an SA/GPA/will transaction does not convey any title nor creates any interest in an immovable property. The observations by the Delhi High Court in Asha M. Jain v. Canara Bank, (2001) 94 DLT 841, that the concept of power of attorney sales has been recognized as a mode of transaction when dealing with transactions by way of SA/GPA/will are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/will transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/will transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
Transactions of the nature of ‘GPA sale’ or ‘SA/GPA/will transfers’ do not convey title and do not amount to transfer, nor can they be recognized a valid mode of transfer of immovable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of Section 53-
A of the Transfer of Property Act. Such transactions cannot be relied upon or made the basis for mutations in municipal or revenue records. What is stated will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered assignment of lease. It is time that an end is put to the pernicious practice of SA/GPA/will transactions known as GPA sales.” Delhi Development Authority v. Gaurav Kukreja, (2015) 14 SCC 254.
The concept of ownership in a landlord-tenant litigation governed by rent control laws has to be distinguished from the one in a title suit. Indeed, ownership is a relative term, the import whereof depends on the context in which it is used. In rent control legislation, the landlord can be said to be the owner if he is entitled in his own legal right, as distinguished from for and on behalf of someone else to evict the tenant and then to retain control, hold and use the premises for himself. What may suffice and hold good as proof of ownership in Landlord-tenant litigation probably may or may not be enough to successfully sustain a claim for ownership in a title suit. Boorugu Mahadev and Sons v. Sirigiri Narasing Rao, (2016) 3 SCC 343.
“Ownership” denotes the relation between a person and an object forming the subject matter of his ownership. It consists in a complex of rights, all of which are rights in rem, being good against all the world and not merely against specific persons” (Salmon on Jurisprudence, 12th Ed.). There are various rights or incidents of ownership all of which need not necessarily be present in every case. They may include a right to possess, use and enjoy the thing owned, and a right to consume, destroy or alienate it. Such a right may be indeterminate in duration and residuary in character. A person has a right to possess the thing which he owns, even when he is not in possession, but only retains a reversionary interest, i.e., a right to repossess the thing on the termination of a certain period or on the happening of a certain event. Suneel Galgotia v. State of U.P., 2016 (92) ACC 40.
A right cannot exist without an enforceable duty. Ownership means a bundle of rights which would normally include the right to exclude and transfer the property in a manner one wants, subject to contractual obligations as agreed or statutory restrictions imposed on the owner. Colonel Shrawan Kumar Jaipuriyar v. Krishna Nandan Singh, (2020) 16 SCC 594.
To put binding effect and the essentials of a family settlement in a concretized form, the matter may be educed into the form of following propositions:
(1) The family settlement must be bona fide one so as to resolve family disputes and rival claims by a fair and equitable division or allotment of properties between the various members of the family.
(2) The said settlement must be voluntary and should not be induced by fraud, coercion or undue influence.
(3) The family arrangement may be oral even in which case no registration is necessary.
(4) It is well settled that registration would be necessary only if the terms of the family arrangements are reduced into writing. Here also, a distinction should be made between a document containing the terms and recitals of a family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of the record or for information of the Court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any rights in immovable properties and therefore does not fall within the mischief of Section 17(2) of the Registration Act and is, therefore, not compulsorily registrable.
(5) The members who may be parties to the family arrangement must have some antecedent title, claim or interest, even a possible claim in the property which is acknowledged by the parties to the settlement. Even if one of the parties to the settlement has not title but under the arrangement the other party relinquishes all its claims or titles in favour of such a person and acknowledges him to be the sole owner, then the antecedent title must be assumed and the family arrangement will be upheld and the courts will find no difficulty in giving assent to the same.
(6) Even if bona fide dispute, present or possible, which may not involve legal claims are settled by a bona fide family arrangement which is fair and equitable is final and binding on the parties to the settlement. Smt. Rama Devi v. Mahendra Pal, 2016 (114) ALR 852.
The distinction between “possession” and “occupation” was considered in Seth Narainbhai Iccharam Kurmi v. Narbada Prasad Sheosahai Pande, AIR 1941 Nag 357 and the court held:
“Bare Occupation and possession are two different things. The concept of possession, at any rate as it is understood in legal terminology, is a complex one which need not include occupation. It comprises rather the right to possess, and the right and ability to exclude others from possession and control coupled with a mental element, namely, the animus possidendi, that is to say, knowledge of these rights and the desire and intention of exercising them if need be. The adverse possession of which the law speaks does not necessarily denote actual physical ouster from occupation but an ouster from all those rights which constitute possession in law. It is true that physical occupation is ordinarily the best and the most conclusive proof of possession in this sense but the two are not the same. It is also true that there must always be physical ouster from these rights but that does not necessarily import physical ouster from occupation especially when this is of just a small room or two in a house and when this occupation is shared with others. The nature of the ouster and the quantum necessarily varies in each case. State of U.P. v. Daiya Charitable Society, 2015 (112) ALR 138.
Probate of a will is not necessary outside the presidency towns of Bengal, Bombay and Madras as has been held in Bhaiya Ji v. Jageshwar Dayal Bajpai, AIR 1978 All 268 and Smt. Pitmo v. Shyam Singh, 1978 (4) ALR 173. The said decisions hold that a probate is not required to be obtained by a Hindu in respect of a Will regarding immovable properties in territories other than Bengal, Bombay and Madras. Thus, probate of will is not mandatory in respect of a Will concerning properties situate in the State of U.P. Ramjas (Dead) through LRs v. Smt. Sunder Devi (Dead) and another, 2014 (125) RD 376.