It is well settled that an agreement for sale in
respect of an immovable property does not transfer title in
favour of the purchaser under the agreement. In view of
Section 54 of the Transfer of Property Act, 1882, an
agreement for sale does not create any interest in the
property. The only mode by which an immovable property worth
more than Rs.100/- (Rupees one hundred) can be sold is by a
sale deed duly registered in accordance with the Indian
Registration Act, 1908. {Para 6}
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. OF 2025
(Arising out of Diary No.38616 of 2018)
INDIAN OVERSEAS BANK Vs. M.A.S SUBRAMANIAN & ORS.
Dated: January 07, 2025.
O R D E R
Permission is granted to file civil appeals.
2. Delay condoned.
3. By consent of the parties, the appeals are taken up
for final hearing.
4. We have heard the learned senior counsel for the
appellant, the learned counsel appearing for respondent Nos.
5 to 9 and the learned counsel appearing for respondent
No.10.
5. The challenge in these appeals will have to be
confined to the findings recorded by the National Company
Law Appellate Tribunal, (for short, "the NCLAT") in
paragraph 16 of the impugned judgment which reads thus:
"16. We reject the averments made by the
Appellants that the land belonged to them. The
land was in possession of the Company under an
agreement which can be seen from the records that
against the transfer of shares the original owner
of the land had agreed to sell the land to the
Company. For long the land was in possession of
the Company and the Company was in possession by
way of part-performance of the contract and there
was nothing remaining to be done by the Company
except that late Shri M.A.Shanmugam had to
execute and register the sale deed which
unfortunately he could not do as he suddenly
passed away in a year of incorporation. The
Appellants cannot take advantage of the position
they hold as trustees to deprive the Company of
the possession of its land. The Appellants have
argued that the wives of original Petitioners 1
and 2 who were also near relatives of the
Appellants had litigated with them regarding the
partition of the properties left by late Shri
M.A.Shanmugam in which litigation the present
land was also included. The Appellants have
given details regarding those litigations and
their ending into compromise to argue that
original Petitioners had knowledge about the
disputes and thus they must be said to have come
without clean hands. We find that even if the
wives of the original Petitioners 1 and 2 had any
litigation with reference to the properties left
by Shri M.A.Shanmugam and their relationships
with the Appellants, those disputes cannot be
basis to say that the original Petitioners who
are shareholders in their own rights can be
debarred from making the claims they made in the
Company Petition. We have already discussed as
to how the sale deed dated 31.10.2011 was
executed which came to be entered into books of
2
the District Registrar as Document No.1844/2013
and that the Company Petition filed on 25.10.2014
could not be said to be delayed. The argument of
the Appellants that the original Petitioners did
not disclose in the NCLT the lease deed,
settlement deed and litigations have no
substance. We hold that the petitioners could
maintain the petition in their individual rights
as share holders. We reject the arguments that
the original Petitioners brought the Company
Petition without having clean hands or that they
had suppressed material facts."
6. It is well settled that an agreement for sale in
respect of an immovable property does not transfer title in
favour of the purchaser under the agreement. In view of
Section 54 of the Transfer of Property Act, 1882, an
agreement for sale does not create any interest in the
property. The only mode by which an immovable property worth
more than Rs.100/- (Rupees one hundred) can be sold is by a
sale deed duly registered in accordance with the Indian
Registration Act, 1908.
7. In this case, the NCLAT has recorded a finding that
late Shri M.A.Shanmugam who was the owner of the property
subject matter of these appeals had agreed to sell the
property to the company against the transfer of shares of
the company in his favour. The NCLAT has recorded a finding
that the company was in possession by way of part
performance of the contract. Based on the said finding, the
sale deed dated 31st October, 2011 purportedly executed by the
legal representatives of late Shri M.A.Shanmugam has been
held as not binding on the company. So long as the original
owner had not sold the property by execution of a registered
sale deed, he continued to be the legal owner of the
property. Admittedly, he had not executed a sale deed in
favour of the company. Therefore, the NCLAT in its limited
jurisdiction could not have held that the sale deed dated
31st October, 2011 was not binding on the company as the
company was in possession by way of part performance of the
contract.
8. There is nothing placed on record to show that the
company filed a suit for specific performance for enforcing
the agreement made by late Shri M.A.Shanmugam. In the
circumstances, we set aside the declaration granted by the
NCLAT under the impugned judgment in the following terms:
"We declare that the sale deed dated 31.10.2011
executed by original Respondents 2 to 6 in favour
of original Respondent No.7 as not binding on the
Respondent No.1 Company."
9. While doing so, we make it clear that we have made no
adjudication on the ownership rights claimed by the
different parties pursuant to the sale deed dated
31st October, 2011 and the rights claimed by respondent No.10-
company as well as by the appellant. Their remedies to seek
declaration and/or to enforce their rights are kept open.
4
10. The appeals are accordingly partly allowed on the
above terms.
11. Needless to add that the remedies of the company are
also kept open.
..........................J.
(ABHAY S.OKA)
..........................J.
(UJJAL BHUYAN)
NEW DELHI;
January 07, 2025.
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