'Agreement To Lease Didn't Create Leasehold Rights Without Execution'

 

While interpreting the clauses in an agreement to lease entered into between the Delhi Development Authority (DDA) and a party, the Supreme Court noted that the agreement to lease did not create leasehold rights unless the lease deed was executed and registered.

The bench comprising Justice Abhay S. Oka and Justice Ujjal Bhuyan was deciding Delhi Development Authority's (DDA) appeal against the High Court's ruling, which had affirmed the auction sale of the suit property.

“Thus, the scenario which emerges is that the first respondent(SGG Towers) is not entitled to either ownership or leasehold rights in respect of the said plot. The first respondent cannot claim to be a lessee as the lease in terms of the lease agreement was never executed.”, the court observed.

The auction sale to the first respondent was conducted on an as it is basis, meaning the purchaser acquired only whatever rights M/s Mehta Constructions had (which were none).

The Court clarified that since the agreement to lease (which was never executed) in favor of M/s Mehta Constructions was on an "as it is basis”, the subsequent transferee, i.e., the first respondent (S.G.G. Towers), could only acquire the rights that M/s Mehta Constructions held.

"The first respondent will get only those rights which M/s Mehta Constructions had under the lease agreement, provided the rights can be claimed at this stage. In fact, in the impugned judgment, the Division Bench of the High Court had observed that the auction would not amount to sale of the said plot. The impugned judgment leaves the remedy of the appellant open to proceed against the concerned parties. These findings have been accepted by the first respondent."

With these observations, the Court dismissed the appeal, clarifying that the first respondent, S.G.G. Towers, had no rights over the plot. It further held that the DDA is free to pursue remedies for possession recovery and unearned income against the first respondent. Additionally, the Court stated that if S.G.G. Towers seeks to regularize the transaction, it may apply to the DDA for approval, subject to the payment of unearned income.

“Thus, the scenario which emerges is that the first respondent is not entitled to either ownership or leasehold rights in respect of the said plot. The first respondent cannot claim to be a lessee as the lease in terms of the lease agreement was never executed. At the same time, if according to the case of the appellant, M/s Mehta Constructions had committed breach of the lease agreement, notwithstanding the impugned orders, it will be always open for the appellant to adopt appropriate remedy for recovery of possession and/or recovery of unearned income against the first respondent.”, the court held.

Case Title: Delhi Development Authority Versus S.G.G. Towers (P) Ltd. & Ors.

Sale Under Power Of Attorney Unaffected By Subsequent Cancellation Of PoA

 The Supreme Court has observed that sale transactions carried out on the basis of a valid Power of Attorney (PoA) cannot be sought to be set aside later on the ground that the PoA was cancelled subsequently.

Holding so, the Court affirmed an order of the Trial Court rejecting a plaint, which sought to annul certain past sale transactions on the basis of the subsequent cancellation of the PoA.

The PoA was executed by the plaintiff in the name of the first respondent on 15.10.2004. In 2018, the plaintiff filed a suit seeking to annul certain sale transactions carried out between 2004-2006 and in 2009. The plaintiff claimed that he got knowledge about the sale transactions only on 21.09.2015 and the suit was filed within the three-year limitation period from such date. The power of attorney was cancelled on 22.09.2015.

"We are clear in our minds that the cancellation does not affect the prior conveyances made which are clearly on the strength of the power conferred on the appellant. There is no contention raised as to the power of attorney having not conferred the power to enter into conveyances or that such power of attorney was executed by reason of a fraud or coercion employed on the executant. The power holder having exercised the authority conferred; to convey the properties in the name of the purchasers, the cancellation of the power of attorney will have no effect on the conveyances carried out under the valid power conferred. Nor would it confer the person who executed the power of attorney any cause of action, by virtue of a cancellation of the power conferred by a subsequent document, to challenge the valid exercise of the power when it existed."

V Ravikumar v S Kumar

Co-sharer--When a co-sharer sells his share in the joint holding or any portion thereof and puts the vendor into possession of land in his possession what he transfers is his right as a co-sharers in said land and right to remain in its exclusive possession till joint holding is partitioned amongst all co-sharers---Sale of subsequent portion of land out of joint holding by the co-owners is nothing but a sale of a share out of the joint holding and is pre-emptible under Section 15(1)(b) of Act

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Mortgage--Whether a document is mortgage by conditional sale or a sale with a condition of repurchase is a vexed question--One of the ingredients for determining the true nature of transaction, therefore, is that the condition of repurchase should be embodied in the document which effects or purports to effect the sale--Indisputably, the said condition is satisfied-- Transfer of Property Act, 1882, Mortgage--In a case where deed of mortgage is executed with a condition of repurchase, the amount of consideration remains the same.

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Land and Property Law--Allotment of Plot--Cancellation of--Predecessor-in-interest of appellant not eligible for allotment of plot under scheme for rehabilitation of locally displaced persons--Notwithstanding the fact that transfer of plot in favour of appellant is duly approved by Trust, appellant did not acquire any independent right in the plot and be only acquired whatever rights the transferor or original allottee had therein--Defect in allotment made in original allottee's favour on account of her ineligibility to avail scheme was inherited by appellant as her transferee

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Unauthorised Possession—To prove that the possession is legal, prima facie plaintiff has to prove that he is either the owner of such property or is in possession as a lawful tenant or is in its permissive possession with the express consent of its true owner

sclaw.in

Gift Deed—Cancellation of—When a gift is incomplete and title remains with the donor then deed of gift can be cancelled. Gift Deed—A conditional gift becomes complete only on compliance of the conditions in the deed

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