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PETITIONER: ACHAL REDDI

       Vs.

RESPONDENT: RAMAKRISHNA REDDIAR AND ORS.

DATE OF JUDGMENT17/11/1989

BENCH: FATHIMA BEEVI, M. (J) BENCH: FATHIMA BEEVI, M. (J) OZA, G.L. (J)

CITATION:  1990 AIR  553            1989 SCR  Supl. (2) 193  1990 SCC  (4) 706        JT 1989 (4)   322  1989 SCALE  (2)1130

ACT:     Limitation     Act,    1963:     Section     65--Adverse possession--Implies   commenced  in  wrong  and   maintained against right--Purchaser getting possession under  executory contract  of  sale--Whether  could  contend  possession  was adverse.

HEADNOTE:     A,  the owner of the land in question, conveyed  posses- sion of it to B under an oral agreement of sale. A deed  was drawn up within about a week, but before it could be  regis- tered,  A died and his sons executed a sale-deed in  respect of the land, in favour of C. Aggrieved, B instituted a  suit against  C  and A’s sons for specific  performance.  B  died during the pendency of the suit and his son D was  impleaded as his legal representative. The suit was decreed in  favour of D. Though the decree became final, it was not executed.     C filed a suit alleging that he was put in possession by D  and  that E and others trespassed into  the  property.  E contested  the suit on the ground that D had  orally  trans- ferred  his rights and conveyed possession to him for  valu- able  consideration.  The Trial Court decreed the  suit.  On appeal, the first appellate court held that C was not  enti- tled to a decree.     On  appeal to the High Court, the Learned  Single  Judge held that B’s possession was adverse to A on the  assumption that a sale had been effected orally leaving only  execution of  the  sale deed to be done later and so, C would  not  be entitled to add the period before the sale in his favour  on 6.6.49 for the purpose of calculating the period of  posses- sion for 12 years, prior to the suit, and that such  posses- sion  could  not enure to his benefit under  the  Limitation Act,  1963.  However, the concurrent findings of  the  Trial Court  and the first Appellate Court on the question of  C’s title had not been challenged.     The  Division Bench reversed the above judgment  holding that  the Learned Single Judge failed to apply  the  correct legal  position  on the assumption that the  transaction  of 10.7.46 was only an oral sale.     This appeal by special leave has been filed by E against the judgment of the Division Bench.

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194 Dismissing the appeal, this Court,     HELD:  1. If a person is in actual possession and has  a right  to possession under a title involving a due  recogni- tion of the owner’s title his possession will not be regard- ed  as adverse in law, even though he claims  under  another title  having  regard to the well recognised policy  of  law that possession is never considered adverse if it is refera- ble to a lawful title. The purchaser who got into possession under an executory contract of sale in a permissible charac- ter cannot contend that his possession was adverse.  Adverse possession  implies that it commenced in wrong and is  main- tained against right. When the commencement and  continuance of possession is legal and proper, referable to a  contract, it cannot be adverse. [198F-G; 199A]     2.1  In the case of an executory contract of sale  where the  transferee  is  put in possession of  the  property  in pursuance  of  the agreement of sale and where  the  parties contemplate the execution of a regular registered sale  deed and  animus  of the purchaser throughout is that  he  is  in possession of the property belonging to the vendor and  that the  former’s title has to be perfected by a  duly  executed registered  deed of sale under which the vendor has to  pass on and convey his title. The purchaser’s possession in  such cases is of a derivative character and in clear  recognition of  and in acknowledgement of the title of the  vendor.  The position  is different in the case where in pursuance of  an oral transfer or a deed of transfer not registered the owner of a property transfers the property and puts the transferee in  possession  with the clear animus and  on  the  distinct understanding  that from that time onwards he shall have  no right of title to the property. In such a case the owner  of the property does not retain any vestige of right in  regard to the property and his mental attitude towards the property is  that  it  has ceased to belong to  him  altogether.  The transferee  after getting into possession retains  the  same with the clear animus that he has become the absolute  owner of  the  property and in complete negation of any  right  or title of the transferor, his enjoyment is solely as owner in his  right  and not derivatively or in  recognition  of  the title of any person. So far as the vendor is concerned  both in mind and actual conduct, there is a total divestiture  of all  his  right, title and interest in the  property.   This applies only in a case where there is a clear  manifestation of the intention of the owner to divest himself of the right over  the  property.  On the other hand in the  case  of  an executory  contract the possession of the  transferee  until the date of registration of the conveyance is permissible or derivative and in law is deemed to be on behalf of the owner himself. [199B-F] 195     2.2  In the instant case, the parties are  concluded  by the  finding of the Division Bench that the  transaction  of 10.7.46 was only an agreement for sale and not an oral  sale of the property. [199G]     Annamalai  Chettiar and Another v. Muthiah Chettiar  and Another, ILR 19651 Madras 254 approved.

JUDGMENT:     CIVIL  APPELLATE JURISDICTION: Civil Appeal No. 1945  of 1974.     From  the  Judgment and decree dated  9.10.1973  of  the Madras High Court in L.P.A. No. 78 of 1969.

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   S.  Padmanabhan,  K.M.M. Khan and Vineet Kumar  for  the Appellant. Vepa Sarathy and Ramesh N. Keshwani for the Respondents. The Judgment of the Court was delivered by     M.  FATHIMA  BEEVI, J. 1. This is an appeal  by  special leave against the judgment and decree dated the 9th October, 1973  of the High Court of Judicature at Madras  in  Letters Patent Appeal No. 78 of 1969.     2. The appellant was the first defendant in O.S. No.  53 of  1959 in the Munsiff’s Court Chingleput. The  respondents are the legal representatives of Munisubba Reddi, the plain- tiff  therein.  That suit was instituted  on  11.2.1959  for recovery  of  possession  of the suit  property  with  mesne profits.  The  suit  was  decreed  by  the  trial  court  on 7.11.1960. The first appellate court by the revised judgment dated  the 5th August, 1961 in A.S. No. 21 of 1961  reversed the decree. The second appeal preferred by the plaintiff was dismissed  by  the  High Court in S.A. No. 426  of  1965  on 31.1.1969.  However,  the Division Bench of the  High  Court allowed the Letters Patent Appeal filed by the plaintiff.     3. It is necessary to set out few facts for the  purpose of  this  appeal. The suit property having an extent  of  13 acres  and  42-1/2  cents originally belonged  to  one  Dasu Reddi.  He  conveyed possession of the land  to  one  Varada Reddi  under an oral agreement of sale on 10.7.1946. A  deed of  sale  was  drawn up on 17.7.1947, but  Dasu  Reddi  died before  it could be registered. Thereafter his sons  Rajaram Reddi 196 and Ramalinga Reddi executed Ex. A. 1 sale deed in favour of Munisubba  Reddi  on  6.10.1949.  Varada  Reddi,  aggrieved, instituted  O.S. No. 78 of 1949 against Munisubba Reddi  and his  vendors  for specific performance of the  contract  for sale, asserting his possession in pursuance of the agreement dated  10.7.1946.  Varada Reddi died pending the  suit.  Mu- thukrishna Reddi was impleaded as his legal  representative. That  suit  was  decreed in his favour  on  13.12.1952.  The decree became final, but was not executed.     4.  In  the present suit the plaintiff  Munisubba  Reddi alleged  that  he was put in possession of the land  by  Mu- thukrishna Reddi after the said decree under an  arrangement evidenced  by Ex. A.4 dated 12.12.1955 and while in  posses- sion, the defendants Achal Reddi and others trespassed  into the property in 1956. Achal Reddi contested the suit denying the petitioner’s title and the alleged trespass and claiming that  Muthukrishna Reddy had orally transferred  his  rights and conveyed possession to him for valuable consideration.     5.  The trial court in granting the petitioner a  decree for  possession found that the plaintiff’s title  under  the sale  deed of 1949 as against his vendors was  made  perfect and  title did not pass to Muthukrishna Reddi as he did  not choose  to  execute  the decree and the  petitioner  was  in possession  within 12 years prior to the suit. It was  found that  the  first defendant Achal Reddi has no title  to  the suit property and that he is not in possession of the  same. The  first  appellate court by the judgment  dated  5.8.1964 rendered  after the remand considered the question of  title as well as possession and held:               "If Muthukrishna Reddi had enforced the decree               in  O.S. No. 76/1949 for specific  performance               against  the plaintiff and his  vendors,  that               would  have  put an end to the  title  of  the               plaintiff  under Ex. A. 1. As already  stated,               the  decree was allowed to lapse  leaving  the               title  of the plaintiff under Ex. A.  1  unaf-

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             fected. The title that vested in the plaintiff               on  6.6.1949  continued  to  remain  with  him               thereafter  for the above reasons. As  against               this,  the  defence contention  that  the  1st               defendant under an oral agreement, became               the  owner of the properties cannot stand.  My               finding, therefore, is that the plaintiff  has               title to the properties under Ex. A.1."     The learned Judge, however, found that the plaintiff was not in possession of the suit land in 1955 and the plaintiff having neither 197 proved  possession  nor  dispossession at  anytime  was  not entitled to a  decree.     6. In S.A. No. 426 of 1965 these concurrent findings  of the trial court as well as the first appellate court on  the question  of plaintiff’s title had not been challenged.  The only  question raised therein and considered by the  learned Single  Judge  was whether the plaintiff was  in  possession within  12 years of suit in order to enable him  to  recover possession  and whether for that purpose he could  say  that his vendors and before him, Dasu Reddi were in possession of the  property and consequently he could add that  period  to the period before 6.6.1949, the date of sale in his  favour. The  learned  Judge was of the view that if  Varada  Reddi’s possession  was  permissive, then the possession  should  be deemed to have continued with the original owner Dasu  Reddi and  thereafter his sons, but if on the other hand the  pos- session  of  Varada Reddi was adverse even  as  against  the original  owner, the plaintiff would not be entitled to  add the  period  before 6.6.1949 and such possession  could  not enure  to  his benefit. After referring to the  decision  in Annamalai  Chettiar  and  Another v.  Muthiah  Chettiar  and Another,  ILR 19651 Madras 254 the learned Judge  held  that Varada  Reddi’s  possession was adverse to Dasu  Reddi  from 10.7.1946,  on the assumption that a sale had been  effected orally even on 10.7.1946 leaving only execution of the  sale deed to be done later. This assumption of the learned Single Judge was found to be faulty by the Division Bench.     7.  The Division Bench noticed that all that the  plain- tiff has to prove is that he or his predecessor-in-title was in  possession at any time between 11.2.1947 and  11.2.1959. If between 11.2.1947 and 17.7.1947 the possession of  Varada Reddi  was possession held on behalf of Dasu Reddi  then  it could be held that the plaintiff’s predecessor-in-title  had been  in possession within 12 years prior to the  suit.  The Division Bench held that the transaction of 10.7.1946 was in fact and in law only an oral agreement for sale and that  on the  assumption that it was an oral sale the learned  Single Judge  failed to apply the legal position as  enunciated  in Annamalai v. Muthiah, (Supra). They observed that possession as  held by Varada Reddi subsequent to 10.7.1946 and  before he instituted the suit in 1949 for specific performance  was in  the consciousness that it was only possession on  behalf of  the real owner. Even if the execution of an  infructuous sale  deed  on 17.7.1947 by Dasu Reddi in favour  of  Varada Reddi is assumed to have altered the complexion of events in any  manner,  the possession by Varada Reddi  from  1.7.1946 upto  17.7.1947  at  least was clearly  possession  held  on behalf 198 of Dasu Reddi, the predecessor-in-title of the plaintiff. If the  plaintiff’s predecessor had been in possession  of  the suit  property on 17.7.1947, that is to say within 12  years prior  to the institution of the present suit on  11.2.1959,

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there can be little doubt that the plaintiff must succeed on the  question of possession as well. In this view the  judg- ment of the learned Single Judge was reversed.     8.  There  is no controversy that the plaintiff  has  to establish  subsisting title by proving possession within  12 years  prior to the suit when the plaintiff alleged  dispos- session while in possession of the suit property. The  first appellate  court as well as the second appellate court  pro- ceeded  on the basis that the plaintiff is not  entitled  to succeed as such possession has not been proved. The  concur- rent  findings that the plaintiff had title inspite  of  the decree  for specific performance obtained against him,  when that  decree had not been executed are not assailed  by  the appellant  in the High Court. The appellant  cannot,  there- fore,  urge  before us on the basis of the findings  in  the earlier suit to which he was not a party that Ex. A. 1  sale deed is one without consideration and does not confer  valid title  on  the plaintiff. The sole question  that  has  been considered by the High Court is that of subsisting title. We have  to  consider  whether the question of law  as  to  the character  of  the  possession  Varada  Reddi  had   between 10.7.1946  and 17.7.1947 is adverse or only  permissive.  In the  case  of  an agreement of sale the  party  who  obtains possession, acknowledges title of the vendor even though the agreement  of sale may be invalid. It is an  acknowledgement and  recognition of the title of the vendor  which  excludes the  theory of adverse possession. The well-settled rule  of law  is  that if person is in actual possession  and  has  a right  to possession under a title involving a due  recogni- tion of the owner’s title his possession will not be regard- ed  as adverse in law, even though he claims  under  another title  having  regard to the well recognised policy  of  law that possession is never considered adverse if it is refera- ble to a lawful title. The purchaser who got toto possession under an executory contract of sale in a permissible charac- ter  cannot  be  heard to contend that  his  possession  was adverse. In the conception of adverse possession there is an essential  and basic difference between a case in which  the other party is put in possession of property by an  outright transfer,  both parties stipulating for a total  divestiture of all the rights of the transferor in the property, and  in case in which, there is a mere executory agreement of trans- fer  both  parties contemplating a deed of  transfer  to  be executed  at a later point of time. In the latter  case  the principle of estoppel applies estopping the transferee  from contending that his possession, while the contract  remained executory in stage, 199 was  in his own right and adversely against the  transferor. Adverse possession implies that it commenced in wrong and is maintained against right. When the commencement and continu- ance  of  possession  is legal and proper,  referable  to  a contract, it cannot be adverse.     9.  In the case of an executory contract of  sale  where the  transferee  is  put in possession of  the  property  in pursuance  of  the agreement of sale and where  the  parties contemplate the execution of a regular registered sale  deed the  animus  of the purchaser throughout is that  he  is  in possession of the property belonging to the vendor and  that the  former’s title has to be perfected by a  duly  executed registered  deed of sale under which the vendor has to  pass on and convey his title. The purchaser’s possession in  such cases is of a derivative character and in clear  recognition of  and in acknowledgement of the title of the  vendor.  The position  is different in the case where in pursuance Of  an

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oral transfer or a deed of transfer not registered the owner of a property transfers the property and puts the transferee in  possession  with the clear animus and  on  the  distinct understanding  that from that time onwards he shall have  no right of title to the property. In such a case the owner  of the property does not retain any vestige of right in  regard to the property and his mental attitude towards the property is  that  it  has ceased to belong to  him  altogether.  The transferee  after getting into possession retains  the  same with the clean animus that he has become the absolute  owner of  the  property and in complete negation of any  right  or title of the transferor, his enjoyment is solely as owner in his  right  and not derivatively or in  recognition  of  the title of any person. So far as the vendor is concerned  both in mind and actual conduct, there is a total divestiture  of all  his  right, title and interest in  the  property.  This applies only in a case where there is a clear  manifestation of the intention of the owner to divest himself of the right over  the  property.  On the other hand in the  case  of  an executory  contract the possession of the  transferee  until the date of registration of the conveyance is permissive  or derivative and in law is deemed to be on behalf of the owner himself.  The  correctness of the decision in  Annamalai  v. Muthiah (supra) cannot, therefore, be doubted.     10.  The  parties are concluded by the  finding  of  the Division  Bench  that the transaction of  10.7.1946  between Dasu  Reddi and Varada Reddi is only an agreement  for  sale and  not  an oral sale of the property. If that  be  so  the possession of Varada Reddi in pursuance of such an agreement of  sale and in the expectation that there would be  a  com- plete  divestiture  of all the rights of the  owner  in  his favour on execution of a regular sale deed, until the execu- tion of the sale deed, 200 was only possession on behalf of Dasu Reddi. Such possession having been within a period of 12 years prior to the present suit,  the  plaintiff  succeeds in  having  established  the possession  of  his predecessor-ininterest within  12  years prior to the date of the suit. The plaintiff is,  therefore, entitled  to  a decree in his favour. The  decision  of  the Letters  Patent  Bench of the High Court is correct  and  we confirm  the same. The appeal is accordingly dismissed  with costs. G.N.                                    Appeal dismissed.                                 1 ?201