“No Transfer Of Title In Absence Of Registered Document”: Supreme Court Denies Tenant’s Ownership Claim Based On Settlement With Landlord

Last Updated on September 17, 2024 by Administrator

The Supreme Court recently denied a tenant’s claim to ownership of the property based on a settlement with the landlord, holding that no transfer of title is allowed in the absence of a registered instrument. The Court determined that the agreement reached between the landlord and renter, which stated that the tenant would not be forced to vacate the property upon depositing the agreed-upon sum, did not grant the tenant the right of ownership.

This case concerns the eviction suit that the appellant/landlord filed against the respondent/tenant because the suit property needed to be renovated due to its deteriorating state. A settlement was reached between the parties in the interim, which stated that the tenant’s application for eviction would be deemed to be dismissed if they paid the agreed-upon sum of Rs. 12,000, but that the application would be deemed to be allowed if they failed to pay the agreed-upon amount and the tenant would give vacant possession of the house right away.

Following the landlord’s application, the tenant promptly deposited the agreed upon sum and asserted ownership and possession of the suit property. This was in accordance with the parties’ agreement, which stated that the landlord’s application would be considered dismissed as soon as the agreed upon sum was paid.

In response to a tenant-preferred motion for a permanent injunction against the landlord, the trial court and the first appellate court ruled in favor of the landlord. In the second appeal, the High Court overturned the decision made by the first appellate court, ruling that the tenant was entitled to a decree of possession because, as per the settlement deed, he had become the owner of the suit premises upon deposit of the agreed-upon amount and had been evicted by the landlord.

After then, the Supreme Court was requested to hear an appeal.

Judges Pankaj Mithal and R. Mahadevan observed that the tenant cannot be granted ownership of the property after the High Court’s order was overturned. This is because the settlement agreement, which was recorded based on the parties’ statements, does not specify that the tenant will receive ownership of the property upon deposit of a certain amount.

The Court observed that the consent order merely addressed the landlord’s application being dismissed and permitted in the event that the tenant failed to deposit the required sum. Furthermore, the renter does not acquire ownership rights from the documented settlement.

“The renter is not granted ownership rights by the settlement that was documented based on the parties’ statements or consent order; this could have only been accomplished through an eviction procedure.The parties did not execute a document, much less a registered instrument, transferring the title of the suit premises. It goes without saying that a transfer of title cannot occur between two parties without it. The judgment, written by Justice Pankaj Mithal, stated that the Rent Controller’s two options in such a proceeding were to either order eviction or to dismiss the motion for eviction, as he has done.

Essentially, the Court noted that it is not possible to conclude—by any stretch of the imagination—that the settlement signed by the parties authorizes the transfer of property to the renter, and the sum that the tenant placed cannot be considered the payment of the consideration for the sale.

“That aforementioned two statements do not specify that the amount that the tenant must deposit is a sale consideration of the property; instead, they may indicate that the amount is commensurate with the property’s value or that the tenant will become the property’s owner upon deposit of the specified amount. Therefore, it is impossible to conclude that there was a settlement or transfer of the property for the above sale amount based on a simple reading of the aforementioned words. The court said, “It should be emphasized that no document attests to the transfer of the property in accordance with the aforementioned assertions or the consent order.

After concluding that the High Court had clearly erred in its interpretation of the consent decree and in overturning the thoughtful rulings and opinions of the First Appellate Court and the Court of First Instance, the tenant’s complaint was dismissed.

Thus, the appeal was granted.

Case Title: BEENA AND ORS. VERSUS CHARAN DAS (D) THR. LRS. & ORS; CIVIL APPEAL NO.3190 OF 2014