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Rangarao Ramarao Deshpande v. Channappa Basappa Lakamanahalli And Others
Judgment Summary — Sadanandaswamy, J.
Factual and Procedural Background
The plaintiff was a tenant in respect of Survey No. 554 (13 acres 2 guntas) in Amminabhavi village, Dharwar taluk. The land originally was Watan land of defendants 5 to 7; on abolition of Watans the defendants 5 to 7 became owners by regrant. Prior to 1955 the plaintiff was admittedly a tenant.
On 25 April 1955 defendants 5 to 7 executed a registered agreement to sell (Exhibit P-3) for Rs. 8,500; an advance of Rs. 6,000 was paid on that day and the plaintiff was permitted to continue in possession. Defendants 1, 2 and 3 obtained a money decree against the plaintiff in L.C. 174/57 (decree for Rs. 5,207). On 5 April 1957 the suit property was attached before judgment. In execution of the decree (L.D. 26/1962) the suit property was brought to sale.
The plaintiff was served with notice under Order 21, Rule 66, C.P.C but did not file an objection. Defendant-6 applied in the execution court (4 September 1962) claiming ownership and asserting that only an agreement of sale existed in favour of the plaintiff. The execution court asked the decree-holder (defendant-1) to make a statement; defendant-1 filed Exhibit P-7 (dated in the record as 11th September, 1972) stating that the plaintiff had been put in possession under Exhibit P-3 and had acquired rights under Section 27-A of the Specific Relief Act and that those rights, title and interest were to be sold.
A sale was held and defendant-1 purchased the rights; the plaintiff applied under Order 21, Rule 90, C.P.C to set aside the sale but the application was dismissed and the sale was confirmed. Exhibit D-7 is the sale certificate under which all the rights and title of the plaintiff are purported to have been sold. Defendant-1 applied for delivery of possession in Delivery proceeding No. 25/65; defendant-4 was appointed receiver and put in possession.
The plaintiff filed suit (27 July 1965) seeking a declaration that the attachment before judgment, subsequent proceedings, sale in execution and delivery of possession are void and not binding on his rights as tenant; he sought a permanent injunction restraining interference with his possession and, alternatively, delivery of possession. The trial court dismissed the suit as against the receiver for want of a Section 80 notice and granted a decree declaring the attachment before judgment, the sale in court auction and the sale certificate illegal and void and therefore not binding on the plaintiff; the consequential reliefs (injunction/possession) were rejected. Defendants 1, 2 and 3 appealed; the lower appellate court dismissed the appeal. The present (second) appeal is by defendant-1 alone.
Legal Issues Presented
- Whether the plaintiff's tenancy rights were destroyed or merged into rights acquired under the registered agreement to sell (Exhibit P-3) and/or under Section 53-A of the Transfer of Property Act, thereby rendering those tenancy rights incapable of being attached and sold.
- Whether the execution sale and sale certificate are void insofar as they affected the plaintiff's tenancy rights given the prohibition on sale of tenancy rights under the relevant Tenancy legislation (Bombay Tenancy and Agricultural Lands Act and the Mysore Tenants (Temporary Protection from Eviction) Act, 1961).
- Whether the plaintiff is barred by res judicata or constructive res judicata from challenging the sale because he did not raise the merger/tenancy argument earlier (including at service of Order 21 Rule 66 notice).
- Whether the bar under Section 34 of the Specific Relief Act applies (i.e., whether the plaintiff, having sought consequential relief, is precluded from only seeking a declaration).
Arguments of the Parties
Appellant's Arguments (Defendant-1, advanced by Mr. B.K. Ramachandra Rao)
- The plaintiff's tenancy right was destroyed by Exhibit P-3 (agreement to sell dated 25 April 1955); from that date the Tenancy Acts do not apply and the character of possession changed — the plaintiff continued in possession as owner.
- What was sold in execution was the plaintiff's rights under Section 53-A of the Transfer of Property Act (i.e., rights of a transferee in possession), and defendant-1 acquired those rights by purchase in the execution sale.
- The suit is barred by res judicata/constructive res judicata because the plaintiff did not urge this contention when the property was attached before judgment and did not object after service of notice under Order 21, Rule 66; the sale became absolute and the plaintiff cannot now contest it.
- There is a merger of lessor and lessee interests under Section 111(d) of the Transfer of Property Act via the transaction in Exhibit P-3.
Plaintiff's Arguments
- The plaintiff continued to be a tenant notwithstanding Exhibit P-3; his tenancy rights could not be attached and sold and he could not be evicted under the Mysore Tenants (Temporary Protection From Eviction) Act, 1961.
- The sale and sale certificate are void and not binding upon his rights as tenant.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Sakalaguna v. Munuswami | Transaction providing reconveyance (counter-part) held to be a completed contract; benefit of such contract (for reconveyance) capable of assignment. | The court cited this to support the proposition that rights arising from agreements may be assignable; used in distinguishing between assignable rights under an agreement and an interest in immovable property. |
| Nochat Kizhakke Madathil Venkateswara Aiyar v. Kalloor Illath Raman Nambudri | Rights under a recorded compromise/karar (entitling reconveyance on payment) are assignable; merely executory contract for sale does not create any interest in immovable property; right to specific performance cannot be the subject of a mortgage. Reference also made to Section 60, CPC (property over which judgment-debtor has disposing power can be sold). | The court relied on these principles to hold that rights under Exhibit P-3 (an agreement to sell) constitute rights capable of being sold and purchased (i.e., the right to specific performance), but that such rights do not amount to an interest in immovable property. |
| Nathulal v. Phoolchand | Articulates the four conditions for invoking part performance as a defence (written agreement, possession taken/continued, acts in furtherance, and performance or willingness to perform). | The court applied these conditions to the facts: it considered that the first three conditions could be said to be satisfied but held that the fourth (readiness/willingness to perform) is a question of fact relevant to whether the plaintiff acquired rights of a transferee by part performance. |
| Champalal v. Sumitramma | Held that the question of merger is a mixed question of fact and law and cannot be urged for the first time in a second appeal. | The court invoked this authority to refuse to entertain the merger argument raised in the second appeal, noting that the merger issue was not raised in the courts below and therefore could not properly be urged at this stage. |
Court's Reasoning and Analysis
The court proceeded by analysing (a) what rights the plaintiff obtained under Exhibit P-3 and (b) whether those rights resulted in merger of his tenancy rights so as to make the tenancy rights nonexistent and therefore capable of being validly sold in execution.
First, the court examined the nature of Exhibit P-3 (agreement to sell): it recites a contract of sale with a requirement of prior sanction of the Deputy Commissioner (under the Abolition of Watans Act) and further conditions (notice and payment of balance). The court noted Section 54 of the Transfer of Property Act which makes clear that an agreement to sell does not create any interest in immovable property.
Applying the precedents cited, the court accepted that rights under an agreement (such as the right to specific performance or other contractual rights) are assignable and were what the decree-holder understood to be the subject of sale (Exhibit P-7 states plaintiff's rights under Exhibit P-3 were to be sold). However, because an agreement to sell does not create an interest in immovable property, those rights are distinct from a tenant's possessory/in-rem tenancy rights.
The appellant's contention that the tenancy rights merged with the rights under Exhibit P-3 (invoking Section 111(d) of the Transfer of Property Act and Section 53-A) was addressed on procedural and substantive grounds:
- Procedurally, the court pointed out that the merger argument and the contention under Section 53-A were not raised in the courts below; there was no issue on merger in the trial or first appeal. Reliance was placed on Champalal v. Sumitramma: merger being a mixed question of fact and law cannot be first raised in a second appeal. Therefore the court declined to decide the merger question on this appeal.
- Substantively, on the facts as pleaded and found, the court concluded that only the plaintiff's contractual rights under Exhibit P-3 (essentially the right to seek specific performance/contractual rights) were put to sale in execution; the tenancy rights continued to subsist because an agreement to sell does not create a proprietary interest and there was no demonstrated merger. Consequently the sale in execution did not in law extinguish or validly transfer the plaintiff's separate tenancy rights.
Regarding part performance (Section 53-A and the defence of part performance), the court set out the four conditions from Nathulal v. Phoolchand and observed that while the first three conditions might be regarded as satisfied on the material, the fourth (that the transferee has performed or is willing to perform his part) is a question of fact. The court noted there was no pleading that the plaintiff had acquired transferee rights under Section 58-A (as was relevant to the appellant's submission), and again the factual basis for merger through section 53-A was not raised below.
On res judicata/constructive res judicata the court rejected the appellant's contention that the plaintiff was barred from challenging the sale because he had not objected earlier. The court observed the sale certificate and the order of attachment recorded the entire property but the decree-holder's statement (Exhibit P-7) referred to the plaintiff's rights under Exhibit P-3 being sold; the tenancy rights were distinct and had not been put to sale. Therefore the present suit, directed to protect the plaintiff's tenancy rights, was not barred.
On the applicability of Section 34 of the Specific Relief Act (bar against seeking a mere declaration when consequential relief is available and omitted), the court reasoned that the bar applies only when the plaintiff abstains from asking for consequential relief. Here the plaintiff had asked for consequential relief (possession) but the court below found he was not entitled to it; consequently the bar under Section 34 did not apply and the plaintiff remained entitled to a declaration regarding the invalidity of the sale insofar as his tenancy rights were concerned.
Holding and Implications
Holding: The appeal is dismissed. Parties shall bear their own costs.
Implications and immediate consequences:
- The court held that the execution sale and sale certificate are void so far as the plaintiff's rights as a tenant in the suit property are concerned, because the tenancy rights continued to subsist and were not properly the subject of the execution sale.
- The court did not decide the broader legal question whether a tenant's rights necessarily merge with rights acquired under Section 53-A of the Transfer of Property Act where part performance is relied upon; that question was not raised in the courts below and so could not be entertained in the second appeal. Therefore no authoritative determination was made on merger under Section 53-A in this judgment.
- No broader precedent on the merger question was established by this decision; the direct effect is limited to the parties: the plaintiff retains protection in respect of his tenancy rights, and the decree-holder's appeal is dismissed.
Note: This summary is strictly based on the reasoning and statements contained in the provided opinion and does not add or infer facts beyond that text.
Sadanandaswamy, J.:— Appellant is defendant-1, 1st respondent is the plaintiff, respondent-2 is defendant-4 and respondents 3, 4 and 5 are defendants 5, 6 and 7. On 27th July, 1965, the plaintiff filed a suit for a declaration that the court proceedings under which the defendants have got the suit property attached before judgment and the further proceedings leading to the sale of the property in execution and delivery of possession are void and are not binding on the plaintiff's rights as a tenant. He prayed for a permanent injunction restraining the defendants from interfering with his possession of the suit property and in the alternative, for delivery of possession in case the defendants are found in possession of the suit property. The suit property in Survey No. 554 measuring 13 acres 2 guntas situate in Amminabhavi village, Dharwar taluk. Originally it was a Watan land belonging to defendants 5 to 7. On the abolition of Watans, defendants 5 to 7 became the owners of the same on a regrant by the Government. Plaintiff was admittedly a tenant of the suit property under defendants 5 to 7 prior to 1955. On 25th April, 1955, defendants 5 to 7 executed a registered agreement to sell, Exhibit P-3, agreeing to sell the suit land for Rs. 8,500 and an advance of Rs. 6,000 was paid the same day and the plaintiff was allowed to continue in possession of the property. Defendants 1, 2 and 3 obtained a money decree against the plaintiff in L.C 174/57. On 5th April, 1957, the suit property was attached before judgment. The decree was for Rs. 5,207. In execution of the decree in L.D 26/1962 the suit property was brought to sale. The plaintiff was served with notice under Order 21, Rule 66, C.P.C but no objection was filed by him. Defendant-6 filed an application on 4th September, 1962 before the execution court stating that the suit property belongs to him and that there was only an agreement of sale in favour of the plaintiff. Thereupon, the court asked defendant-1 to make a statement. Defendant-1 accordingly filed a statement on 11th September, 1972 which is Exhibit P-7. He stated therein that under Exhibit P-3, the agreement of sale, the plaintiff was put in possession and that the plaintiff has acquired rights under Section 27-A of the Specific Relief Act and that the said right, title and interest of the plaintiff are to be sold. The sale was thereafter held and defendant-1 himself purchased the suit property. The plaintiff filed an application under Order 21, Rule 90 C.P.C for setting aside the sale, but it was dismissed. The sale was confirmed. Exhibit D-7 is the sale certificate under which all the rights and title of the plaintiff are purported to have been sold. The auction-purchaser defendant-1, applied for delivery of possession in Delivery proceeding No. 25/65 and in that proceeding defendant-4 has been appointed receiver of the suit property and he has been put in possession.
2. According to the plaintiff, he continues to be a tenant inspite of the agreement of sale, Exhibit P-8 and his tenancy rights in the suit property cannot be attached and sold and he cannot be evicted from it under the Mysore Tenants (Temporary Protection From Eviction) Act, 1961. The trial court dismissed the suit as against the receiver since the required notice under Section 80, Civil Procedure Code had not been issued by the plaintiff and granted a decree declaring that the attachment before judgment and the sale in court auction and the sale certificate are illegal and void and therefore not binding on the plaintiff. The relief for permanent injunction or for possession was rejected. Defendants 1, 2 and 3 appealed and the lower appellate court dismissed the appeal. The present second appeal is by defendant-1 only.
3. The contentions urged on behalf of the appellant by Mr. B.K Ramachandra Rao are these: The tenancy right of the plaintiff was destroyed when Exhibit P-3 came into existence on 24th May, 1955 and the Tenancy Acts are not applicable, that the character of possession changed after the date of Exhibit P-3 and the plaintiff continued in possession only as owner since Exhibit P-3 amounts to an alienation of the property. What is sold in the execution sale is the right of the plaintiff under Section 53-A of the Transfer of Property Act and that is what has been purchased by defendant-1 in execution sale. The suit is barred by resjudicata since the plaintiff did not urge this contention when the property was attached before judgment and did not do so even after service of notice under Order 21 Rule 66; the sale became absolute and it is not now open to the plaintiff to raise this contention.
4. Exhibit P-3 recites that the defendants 5 to 7 have filed an application before the Deputy Commissioner for permission to sell and that after such permission was obtained, the sale deed has to be executed and the balance of sale consideration to be received by them. It also recites that the plaintiff is in possession as tenant of the suit property and that his possession is confirmed as purchaser. The previous sanction of the Deputy Commissioner is necessary for transfer under Section-1 of the Abolition of Watans Act. It is contended by Mr. Ramachandra Rao that there is merger of the interest of the lessor and lessee under Section 111(d) of the Transfer of Property Act and the tenancy rights of the plaintiff no longer are in existence after P-3 and the execution sale. It is not disputed that the sale in execution of the rights of a tenant is prohibited by Section 28 of the Bombay Tenancy and Agricultural Lands Act and if the sale is of the tenancy rights of the plaintiff, it is void. But what is contended is that the tenancy rights of the plaintiff got merged with the rights of the lessor under Exhibit P-3 by virtue of the provisions of Section 53-A of the Transfer of Property Act and on the date of the execution sale, the plaintiff was no longer a tenant of the suit property and therefore the sale is not void and defendant-1 has stepped into the shoes of the plaintiff.
5. In Sakalaguna v. Munuswami(1) on the same day on which the sale was executed, the parties executed a counter-part document under which it was provided that the purchaser should reconvey the property to the vendor after the period of 30 years in case the vendor so wished. It was held that the transaction of reconveyance amounted to a completed contract and that the benefit of the contract for reconveyance could be assigned. In (Nochat Kizhakke Madathil Venkateswara Aiyar v. Kalloor Illath Raman Nambudri)(2) there was a dispute with regard to the validity of an execution sale. The parties compromised and the sale was confirmed on terms which the parties reduced to writing in a registered karar. It was agreed that within tea years the judgment-debtor should be entitled, on payment of the price of the property, to have the property reconveyed to him. The judgment-debtor assigned his interest under the karar to various persons and even mortgaged it to one of them. It was held that the judgment-debtor's rights under the karar were capable of being assigned in law and were validly assigned. It was also held that since a merely executory contract for the sale of immovable property does not create any interest in such property, the mere right to specific performance cannot be the subject of a mortgage. Under Section 60 of the Code of Civil Procedure, property over which the judgment-debtor has a disposing power can be sold. The order of attachment in the present case states that the entire property is attached. The sale certificate also does not state that the rights of tenancy of the plaintiff in the suit property are sold. Under Section 54 of the Transfer of Property Act, it is made clear that an agreement to sell does not create any interest in immovable property. Hence, the rights which the plaintiff acquired in Exhibit P-3, the agreement to sell, have been sold and purchased by defendant-1. But since those rights do not constitute any interest in immovable property, it cannot be said that there is a merger of the rights of the plaintiff as a tenant.
6. It is the contention of the appellant that apart from the rights under Exhibit P-3, plaintiff also acquired rights under Section 53-A of the Transfer of Property Act and therefore, there was a merger of the tenancy rights of the plaintiff and that on the date of the execution sale, the tenancy rights of the plaintiff in the suit property were no longer subsisting and therefore, the sale is valid. The conditions necessary for making out the defence of part performance to an action in ejectment by the owner as held by the Supreme Court in Nathulal v. Phoolchand(3) are:—
(1) that the transferor has contracted to transfer for consideration any immovable 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;
(2) that 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;
(3) that the transferee has done some act in furtherance of the contract; and
(4) that the transferee has performed or is willing to perform his part of the contract.
On these conditions being satisfied, the transferor or any person claiming under him is debarred from enforcing against the transferee 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. In the present case, the first three conditions may be said to have been satisfied. Under the 4th condition, the transferee must have performed or be willing to perform his part of the contract. Under the terms of the contract, P-3, the permission of the Deputy Commissioner for transfer had to be obtained and thereafter 30 days' notice had to be given to the plaintiff. It is then that the plaintiff had to perform his part of the contract, namely, payment of the balance of the purchase price of Rs. 2,500. The question whether the plaintiff was ready to perform his part of the contract is a question of fact. In the written statement what was urged was that under the transaction Exhibit P-3, the plaintiff had become the owner of the suit property. There was no allegation that the plaintiff had acquired the rights of a transferee under Section 58-A of the Transfer of Property Act. It is no doubt alleged in the written statement that the rights of tenancy of the plaintiff had been destroyed, but that statement must be read in conjunction with the plea that the plaintiff had become the owner of the property. There is no plea that because the plaintiff acquired the rights of a transferee under Section 58-A of the Transfer of Property Act, his rights of tenancy in the suit land became merged in the said rights. In Champalal v. Sumitramma(4) it has been held that the question of merger is a mixed question of fact and law and cannot be urged for the first time in second appeal. The question whether the plaintiff's rights of tenancy in the suit land got merged in the rights acquired by the plaintiff under Section 53-A of the Transfer of Property Act was not urged in either of the courts below. There was also no issue in that regard. Hence, that question cannot be urged at this stage. It is therefore not necessary to decide the question whether the rights of a tenant became merged in case the tenant acquires rights of a transferee under Section 53-A of the Transfer of Property Act. Since only the right to ask for specific performance had been acquired by the plaintiff under Exhibit P-3 and since such a right does not constitute an interest in immovable property, there was no merger of the tenancy rights of the plaintiff under Section 111(d) of the Transfer of Property Act. Hence, on the date of the execution sale, the plaintiff was possessed of his rights as a tenant to the suit property apart from the rights acquired by him under Exhibit P-3. In the execution sale what was attached and sold was only the rights of the plaintiff acquired by him under Exhibit P-3. They were distinct and separate rights as there was no merger. The statement of the decree-holder prior to sale, Exhibit P-7, shows that it is plaintiff's rights under Exhibit P-3 which were brought to sale. It is not disputed by the appellants that the sale of the tenancy rights of the plaintiff would be void under the provisions of the Bombay Tenancy and Agricultural Lands Act. But, what they contend is that the tenancy rights of the plaintiff did not exist on the date of the sale as they had got merged into his rights under Exhibit P-3. But as stated above, there was no merger of the rights of the plaintiff as tenant with his rights under Exhibit P-3. Therefore, there is no bar of constructive resjudicata to the present suit which is in respect of plaintiff's rights as tenant and which rights were not brought to sale.
7. It is contended by Mr. Ramachandra Rao that the consequential relief of possession which had been asked for by the plaintiff in the suit has been negatived and that the plaintiff is therefore not entitled to a mere declaration under Section 34 of the Specific Relief Act. The bar under Section 34 applies when the plaintiff is entitled to ask for consequential relief but abstains from doing so. In the present case, the plaintiff did ask for the consequential relief of possession but the court has found that he is not entitled to it. Hence, the bar under Section 34 does not apply to the present case and the plaintiff is therefore entitled to a declaration that the execution sale is void so far as his rights as a tenant in the suit property is concerned.
8. This appeal is therefore dismissed. Parties shall bear their own costs.
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