2017 (7) TMI 1434 - SC - Indian Laws

Recovery of the amount of dues to bank from the Company and the guarantors - attachment of suit property - HELD THAT - This Court clearly held that an agreement to sell which is not a registered deed of conveyance would not meet the requirements of Section 54 and 55 of the Transfer of Property Act. With respect to Section 53A of the Transfer of Property Act it is well settled that the same can only be used as a defence in proceedings initiated by the transferor or by any person claiming under him. Shri Dhillon P. Shah and his wife never disclosed the fact of the alleged sale of the suit property to anybody including any member of the Society. It is more than obvious that with a view to wriggle out of the recovery proceedings after the death of Shri Dhillon P. Shah this document has been fabricated. This document does not transfer any right title or interest of the property and therefore the Revisional Court and the High Court erred in allowing the claim of the respondent No.1. The order of the High Court and the revisional/appellate authority accepting the claim of respondent No.1 are set aside and the claim of the respondent No.1 is rejected - Appeal allowed.

Summary

Issues involved:
1. Validity of attachment order of a flat in a cooperative housing society.
2. Claim of ownership and membership by a third party based on an alleged agreement to sell.
3. Interpretation of the Transfer of Property Act regarding the validity of unregistered agreements to sell.
4. Examination of the authenticity and legal implications of the alleged agreement to sell in the context of property attachment proceedings.

Issue 1: Validity of attachment order of a flat in a cooperative housing society:
The Supreme Court analyzed the case where a bank had attached a flat owned by a company's directors as part of recovery proceedings for unpaid dues. The Court noted that the attachment order was issued in 2001, and subsequent challenges by the directors did not disclose any prior sale or transfer of the flat. The Court highlighted that the bank's attachment was valid and rejected the argument that the attachment order was invalid due to a pre-existing agreement of sale.

Issue 2: Claim of ownership and membership by a third party based on an alleged agreement to sell:
The Court examined the respondent's claim of ownership of the flat based on an alleged agreement to sell executed with the deceased director. The respondent asserted possession of the flat since 1996 and sought membership in the housing society. However, the Court found discrepancies in the agreement's authenticity and the respondent's actions, concluding that the agreement did not transfer any right, title, or interest in the property. The Court rejected the respondent's claim and set aside the lower court's decision granting membership.

Issue 3: Interpretation of the Transfer of Property Act regarding the validity of unregistered agreements to sell:
The Court referred to the Transfer of Property Act, emphasizing that immovable property can only be transferred through a registered deed of conveyance. Unregistered agreements to sell do not confer any title or interest in the property unless specifically allowed under Section 53A of the Act. The Court reiterated that agreements to sell must be registered to be legally valid for property transfers.

Issue 4: Examination of the authenticity and legal implications of the alleged agreement to sell in the context of property attachment proceedings:
The Court scrutinized the alleged agreement to sell presented by the respondent, highlighting doubts regarding the signature authenticity and timing of the document's disclosure. The Court concluded that the agreement lacked credibility, suggesting it was fabricated to evade recovery proceedings. The Court held that the respondent had no legal claim to the property and rejected the membership application to the housing society.

Overall, the Supreme Court allowed the bank's appeals, setting aside the lower court's decisions and affirming that the respondent had no right, title, or interest in the property. The Court emphasized the importance of registered deeds for property transfers and dismissed the respondent's claim based on an unregistered agreement to sell.