1. Agreement to sell — failure to pay balance consideration — suit for possession and mesne profits — claim of protection under Section 53A, Transfer of Property Act. (Para 2 )
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2018 Supreme(SC) 1851
SUPREME COURT OF INDIA
A.K. Sikri, Ashok Bhushan, JJ.
Sardar Bhag Singh - Appellant
Versus
Vikram Sandhu - Respondent
Civil Appeal No. 5855 of 2018 (Arising Out of Special Leave Petition (C) No. 11819 of 2016) with Civil Appeal No. 5856 of 2018 (Arising out of Special Leave Petition (C) No. 27487 of 2017)
Decided On : 23-02-2018
The main legal point established is the wrongful possession under an agreement to sell, leading to the entitlement to compensation for the wrongful possession.
Headnote:
agreement to sell - possession of property - Transfer of Property Act, 1882 - Section 53A, Order 12 Rule 6 of CPC - mesne profit and damages
Fact of the Case:
The appellant entered into an agreement to sell a property with the respondent. The respondent paid earnest money but did not fulfill the contractual obligations. The appellant filed a suit for possession and mesne profits. The trial court decreed possession and awarded mesne profits. The respondent appealed against the mesne profits.
Finding of the Court:
The court found that the possession of the respondent was wrongful, leading to the decree of possession in favor of the appellant. The Division Bench set aside the award of mesne profits due to lack of evidence. However, in the interest of justice, the respondent agreed to pay compensation, which the appellant refused.
Issues: The issues included the validity of the possession, entitlement to mesne profits, and compensation for wrongful possession.
Ratio Decidendi: The court held that the possession of the respondent was wrongful, leading to the decree of possession in favor of the appellant. The lack of evidence led to the setting aside of the award of mesne profits. However, the court emphasized the need for reasonable compensation for the wrongful possession.
Final Decision: The appeal was disposed of with the respondent agreeing to pay compensation, which the appellant refused. The cross-appeal of the respondent was dismissed as withdrawn.
Act Referred
Legal Category Hierarchy
Table of Contents
2. Whether possession was protected under Section 53A, Transfer of Property Act, and whether mesne profits are applicable to an unbuilt terrace. (Para 2 , 6 )
3. Possession was wrongful following the dismissal of the specific performance suit; reasonable compensation can be awarded for wrongful possession despite lack of evidence on mesne profits. (Para 9 , 10 , 11 )
4. Reasonable compensation for wrongful possession may be granted in the interest of justice even where the claimant failed to lead evidence on the issue of mesne profits. (Para 11 )
5. Appeal disposed of with directions for the respondent to deposit a compensation amount in the High Court. (Para 12 )
6. Can a party be granted compensation for wrongful possession if no evidence was led to prove the exact amount of mesne profits?
Yes, in the interest of justice, the court may grant reasonable compensation for the wrongful possession of premises even if the party failed to lead evidence on the specific issue of mesne profits. (Para 11 )
7. What is the effect of a dismissed suit for specific performance on the status of the occupant's possession?
Once a suit for specific performance is dismissed and the decree attains finality, the occupant's continued possession of the premises is considered wrongful. (Para 9 , 10 )
8. Does an unbuilt terrace necessarily fetch rent for the purpose of calculating mesne profits?
The court observed that if no evidence is led to show that an unbuilt terrace can fetch rent, mesne profits cannot be granted based on the rental rates of built-up areas. (Para 6 )
JUDGMENT
A.K. Sikri, J. - Leave granted.
2. The appellant entered into an agreement to sell dated 09.09.1994 with the respondent in respect of Second Floor with Terrace forming part of property No. A/11, N.D.S.E Part-I, New Delhi (hereinafter referred to as "the suit property") for a total sale consideration of Rs. 27 lakhs. The respondent paid Rs. 1 lakh to the appellant as earnest money and took the possession of the suit property. The balance sale consideration i.e. Rs. 26 lakhs was payable at the time of registration of sale deed which was to be executed within four months. The appellant after taking all necessary permissions requested the respondent to perform his part of the contract. However, the respondent did not turn to perform the contractual obligations. The appellant filed a suit for possession being CS(OS) No. 1143 of 1996 of the suit property and as also for mesne profits from the date of filing of the suit till delivery of the possession. The respondent filed written statement wherein he claimed that his possession was protected under Section 53A of the Transfer of Property Act, 1882. It was further alleged that the appellant was liable to execute sale deed after taking necessary permission from the concerned authorities but they failed to do so and violated the contractual obligations. It was also alleged that the respondent was not liable to pay any damages since he was occupying the suit property pursuant to the agreement to sell.
3. It is worth mentioning that after filing of suit by the appellant in the year 1996, the respondent herein also filed a suit for specific performance being CS (OS No. 1874/1997 against the appellant. The said suit was dismissed vide order dated 23.03.2005.
4. Issues were framed on 04.03.2003 in the suit filed by the appellant. However, the appellant filed an application under Order 12 Rule 6 of the CPC being I.A. No. 1462 of 2011 which was disposed of by the learned Single Judge vide order dated 15.02.2011. The learned Single Judgereturned to the finding that the respondent had failed to abide by the terms of the agreement to sell since he did not pay balance sale consideration inasmuch as continued to occupy the suit property for a long period of about 17 years against the earnest money i.e. Rs. 1 lakhs only and directed the respondent to handover the peaceful possession to the appellant. Further, the appellant and respondent were directed to led evidence in respect of damages/mesne profit and other remaining issues.
5. The learned Single Judge after taking into consideration the evidence led by the parties came to the conclusion vide order dated 10.01.2014 that the suit property was in illegal occupation and as per the market rate of the rent in the area where the property in question is situated, the appellant is entitled for mesne profit and damages.
6. Being aggrieved by judgment and decree dated 10.01.2014 passed by the learned Single Judge, the respondent filed RFA No. 119 of 2015 before the Division Bench of the High Court after a lapse of 623 days. The Division Bench of the High Court vide judgment and order dated 11.12.2015, while setting aside the judgment and decree dated 10.01.2014 passed by the learned Single Judge, held as under:
"7. Vide impugned judgment dated January 10, 2014 the learned Single Judge noted that plaintiffs have proved on record another lease deed dated April 28, 2009 in respect of property being No. A-12, Ring Road, NDSE, Part-I which was adjacent to the suit property, however, the said lease related to the entire property andthe property in question was second floor of the building. Thus determining the rate of rent of the second floor at Rs. 60/- per sq. ft. on the date of filing of the suit and the area of the suit property being 2000 sq. ft. the learned Single Judge calculated mesne profit at Rs. 1.20 lakh per month with further stipulation of 20% increase after every three years from the date of filing of the suit. While returning this findi
