Annamalai Chettiar and Another vs Muthiah Chettiar and Another

Ramamurti, J.—The two Plantiffs in the suit, Original Suit No. 488 of 1956, on the file of the District Munsif�s Court, Pudukkottai, have preferred this Letters Patent Appeal against the judgment of Ramachandra Ayyar J., (as he then was) in Civil Miscellaneous Appeal No. 294 of 1959. The learned Judge has dismissed the Appellants� suit as barred by limitation. The short point that arises for our consideration is whether a person who has been in possession of immovable properties for over twelve years in pursuance of an agreement of sale entered into with him by a guardian of the minors (the owners of the properties) can prescribe for and acquire title by adverse possession when in subsequent Court proceedings it was held that the agreement of sale entered into by the guardian on behalf of the minors was not binding upon them.

The facts of the case may be briefly stated. The Appellants (plantiffs in the trial Court) are the owners of the house and site in Natham Survey No. 56 in Chockalingapuram village, Tirumayam taluk while the Respondents (Defendants) are the owners of the northern house and plot in Natham Survey No. 56. On 20th February 1942, the father of the Respondents (Defendants) entered into an agreement of sale with the Appellants� mother, Udayasamai Achy under which she on behalf of the minors and as their guardian agreed to sell 6 kuzhis of vacant site in the north-eastern portion of Natham Section No. 56 lying south of Section No. 55 and in pursuance of such an agreement a sum of rupees four-hundred was paid on the date of the agreement and the balance of rupees two thousand remained unpaid. On the date of the agreement possession of the properties was delivered over to the father of the Respondents who, immediately thereafter, put up a boundary wall enclosing the property agreed to be conveyed under the agreement of sale aforesaid and the property has been in the sole and exclusive possession of the family of Respondents from 20th February 1942. As some dispute arose about the completion of the transaction the Respondents were obliged to file the suit, Original Suit No. 85 of 1945, on the file of the Chief Court, Pudukkottai, for specific performance of the agreement of sale. The suit was contested on behalf of the Appellants minors on the ground that the agreement of sale entered into by their mother was not binding upon them and could not be specifically enforced. The Chief Court of Pudukkottai accepted the contention of the Appellants and dismissed the suit for specific performance. This decision was ultimately confirmed by this Court in Second Appeal No. 812 of 1951 on 3rd May 1955.

In the meanwhile the mother of the Appellants filed the suit, Original Suit No. 439 of 1945, on the file of the Chief Court of Pudukottai (which was later on numbered as Original Suit No. 449 of 1950, District Munsif''s Court, Pudukkottai) on the ground that the Respondent�s father had trespassed upon the adjoining property of Appellants (Plaintiffs) that he was also committing nuisance by letting rain water into the Appellants� plot and that a mandatory injunction should be issued for abatement of the nuisance and for other connected reliefs. In this suit no relief was asked for by way of recovery of possession of the property covered by the agreement of sale, dated 20th February 1942. The reliefs prayed for, related only to the weepholes, the wheather board and the letting off of the rain water into the adjoining land of the Plaintiffs. This suit, Original Suit No. 449 of 1950, ended in a decree in favour of the Appellants, the Plaintiffs in the suit, on 13th June 1951.

On 6th August 1956, the Appellants instituted the suit, Original Suit No. 488 of 1956 (out of which this Letter Patent Appeal arises) on the file of the District Munsif''s Court, Pudukottai for recovery of possession of the six kuzhs of land in Natham Survey No. 56 which was taken possession of by the father of the Respondents under the agreement of sale referred to above, for demolishing the construction or constructions made by the father of the Respondents and for connected reliefs. The suit was contested by the Respondents on the grounds, that it was barred by limitation, that the suit was barred by Order II, Rule 2, CPC on account of the earlier suit, Original Suit No. 449 of 1950, that the portion built upon by the Defendants--Respondents belonged to the tatter quite independently of the agreements of sale. The learned District Munsif dismissed the suit on the ground that the suit was barred by limitation as well as by Order II, Rule 2, Code of Civil Procedure.

On appeal the learned Subordinate Judge came to a contrary conclusion on both the points. He held that the cause of action for the present suit Original Suit No. 488 of 1956, was entirely different from the cause of action in the earlier suit, Original Suit No. 449 of 1950, and that having regard to the nature of the claim and the character of the reliefs and the cause of action, Order II, Rule 2, CPC was not a bar to the present suit. On the question of limitation, the learned Subordinate Judge took the view that possession of the property obtained in pursuance of the agreement of sale was only permissive in character and not adverse. In the result he remanded the suit to the learned District Munsif for trial on the merits on the other issues.

The Respondents preferred Civil Miscellaneous Appeal No. 294 of 1959, against the order of remand and as observed earlier Ramachandra Ayyar J., has set aside that order and dismissed the suit on the ground that it was barred by limitation. Hence the present Letters Patent Appeal by the Plaintiff.

On a careful consideration of the matter, with great respect to the learned Judge, we are unable to agree with him. The legal position from the point of view of the Defendants has been best stated in the judgment of the learned Judge and we might as well extract the same before we proceed further.

It is admitted that possession of the property was handed over to the Appellants on the date of the agreement and that thereafter they put up a compound wall enclosing that property as part of there own property and enjoying the same during the subsequent years. According to the finding of this Court in Second Appeal No. 812 of 1951, the agreement, dated 20th February 1942, was not binding on the minors. The result will be that the mother of the Respondent did not represent the minors when she handed over possession of the properties to the Appellants. Their possession would, therefore, be adverse from that date. It is no doubt true that the property is a vacant piece of land. But that property had been enclosed by the Appellants by putting up a wall at its northern boundary and has been in continuous and exclusive enjoyment of the Appellants since then. The Appellants should, therefore, be held to have perfected their title to the property by adverse possession. Mr. Gopalaswamy Iyengar, learned Counsel for the Respondents contended that as the possession of the property was given to the Appellants under the agreement it should be deemed to be permissive I am unable to agree. As stated earlier, the mother of the Respondents delivered possession of the property to the Appellants under an invalid agreement. It was open to the Respondents to have instituted a suit for the recovery of possession of the same within three years after the elder one of them attained majority. This they did not do. Nor did they file any suit within. 12 years of the Appellants entering into possession.

It was then contended that so long as the Appellants had faith in the agreement their animus could not be held to be that of the owner, but that on under the agreement. That may be so; so far as the Respondents were concerned, the delivery of possession by the mother was an adverse act, and if the Appellants were in possession of the property by virtue of an agreement with the mother, it was certainly adverse as against the minors.

The main contention of the learned Counsel for the Respondent is that if in pursuance of an intended sale the intending purchaser is put in possession of the property, and continues in such possession for over twelve years, the purchaser would acquire title by adverse possession which will be good statutory defence to an action for ejectment brought by the vendor. In support of this contention learned Counsel drew our attention to several decisions in which the transferee was held to have acquired title by adverse possession as against a transferor where the deed of transfer was useless and inadmissible for want of registration. He contended that the principle of the Privy Council decision in Varada Pillai v. Jeevarathnammal ILR (1919) Mad. 244 (P.C.) which dealt with a case of adverse possession by a donee under an unregistered deed of gift would equally apply to the instant case.

Learned Counsel placed considerable relience upon the Full Bench decision in Sohan Lal v. Mohan Lal ILR (1928) All. 986 (F.B.), as completely supporting his contention. In that case the owner of the property executed an usufructuary mortgage of a house in 1873, and sold the house to the mortgagee himself in 1901, for a sum of Rs. 90 under a duly executed sale deed which, however, was never registered. In 1919, the mortgagor''s heir sold the same property to a second purchaser. The latter filed a suit for redemption on the ground that the sale deed of 1901 being unregistered cannot be relied upon by the mortgagee, and that the possession with him throughout should be regarded as mortgagee only. The Full Bench held that the unregistered sale deed can be used as evidence of a change in the nature of the mortgagee''s possession, and that being so, the possession of the mortgagee from 1901 was as owner only, and, therefore, after a period of twelve years the title of the mortgagor and his heir become extinguished. Learned Counsel relied upon the following observations of the Full Bench at page 997.

Where in an intended sale, which can be effected in law only by a registered document no such document is executed and yet the intending purchaser gets possession, he gets possession with the consent of the intending vendor; but, nonetheless, the purchaser''s possession begins adversely to the vendor. If the intending purchaser be fortunate enough to continue, undisturbed by the vendor, in possession for 12 years, he would acquire a perfect title as against the former owner, the vendor.

Sulaiman C.J. while expressing that the point was not free from difficulty stated the law in these terms at page 1008.

I do not see why, if both parties agree and intend that from a particular date the possession of the mortgagee over the property should cease to be that of a mortgagee and be adverse as against the mortgagor, such a change cannot be recognised or be effectual. As a result of the act of both the parties, a person may have adverse possession even though he also has a legal title as a co-sharer or mortgagee.

Learned Counsel also relied upon a Bench decision of the Patna High Court in Sribhagwan Singh and Others Vs. Rambasi Kuer and Others, . In that case the Plaintiff purchased certain property under an oral sale in 1927, for a sum of rupees three hundred and continued in possession till December 1947, when he filed a suit in ejectment. It was held that the fact that the sale in favour of the Plaintiff was an oral sale and was therefore, invalid was of no consequence as the transferee having acquired title under an invalid transaction, continued in possession for more than twelve years, thereby acquiring a perfectly good title to the property by virtue of Section 28 of the Indian Limitation Act.

Learned Counsel next drew our attention to the decision of a Bench of the Bombay High Court in Dagadu Dhondu Patil Vs. Trakadu Motiram Patil and Another, . There also a person purchased some land under an oral sale for a price execeeding Rs. 100 and he was put in and continued in possession of the property purchased for over twelve years. It was held that the title of the vendor became extinguished on the ground that the possession of the transferee must be deemed to be adverse to the owner. It is unnecessary to burden this judgment with the other eases referred to by learned Counsel for the Respondent, as no exception can be taken regarding the rationale underlying that line of cases. If the owner of a property transfers the property (whether in pursuance of an oral transfer or a deed of transfer not registered) 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 or title to the property, the transferor''s title would be extinguished after the expiry of twelve years. In all these cases the owner or the transferor 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. At the same time and as part and parcel of the same arrangement the transferee after getting into possession retains the same with the clear animus that he has become the absolute owner of the property arid in complete negation of any right or title of the transferor. In other words his enjoyment is solely as owner in his right and not derivatively or in recognition of the title of any other person. So far as the vendor is concerned both in mind and in actual conduct, there is a total divestiture of all his right, title and interest in the property.

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 position is different. The purchaser who gets possession in such cases is in possession in a derivative character and in clear recognition of and in acknowledgment of the title of the vendor. 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.

Markby in his Elements of Law, sixth edition, page 288 in discussing the essentials of adverse possession has put the matter thus:

The period which brings the statute into operation is in India generally measured from a date which is described as that when the dispossession occurs. No suit can generally be brought to recover any property except within so many years after that date. No further technical definition of this date is given, as in the English statute, but it is obvious that the cases in which the statute effects ownership are those in which there has been, or might be, a dispute as to possession; and the position of hostility thus implied requires that the party in possession should hold, not for, but against the other, should hold also as owner, and not derivatively; not consistently with the ownership of the other, but adversely.

Possession continuing under and in privity with and with the acknowledgment of the owner''s title cannot be adverse. When a person holds under an invalid transfer he holds adversely to the real owner and his possession is adverse from its commencement even in the case of an unauthorised sale by a guardian of property belonging to the minor. In the instant case the possession of the Respondent was in pursuance of and under the agreement of sale, right from the inception, and, therefore, clearly permissive in character besides being in recognition and acknowledgment of the title of the owner. The suit, Original Suit No. 85 of 1945, for specific performance filed by the Respondent clearly proceeded on the footing that the title was still with the vendors, the minors, and that the same should be conveyed to the purchaser by a decree of Court for specific performance. We have perused the printed papers in Second Appeal No. 812 of 1951, arising out of the aforesaid suit for specific performance. The plaint in that case clearly proceeded on the footing that in pursuance of the written agreement of sale a sum of rupees four hundred had been paid, and that the minors (the vendors) should be directed to convey the property on receipt of the balance of the sale price of rupees two thousands. The question is whether during this period when the proceeding for specific performance was pending, the possession of the Respondent could be regarded as adverse as against the vendors. We are of the clear opinion that in the conception of adverse possession there is an essential and baste difference between a case in which the other party is put in possession of property by an outright transfer, both parties stipulating for a betal divestiture of all the rights of the transferor in the property, and a case in which, there is a mere executory agreement of transfer both parties contemplating a deed of transfer to be executed at a latter point of time. In the latter case the principle of estoppel which applies between mortgagor and mortgagee or a lessor and lessee clearly applies, estopping the transferee from contending that his possession, while the contract remained executory in stage, 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 continuance of possession is legal and proper, referable be a contract, it cannot be adverse.

In I--American Jurisprudence, page 814, Section 40, the law is stated thus:

The vendee under an executory contract of the sale enter into possession under, and without hostility to, his vendor. Hostility being one of the elements necessary to adverse possession, it follows that the vendee''s possession is not adverse. Accordingly, it is the general rule--which, however, frequently yields when additional circumstances appear,--that the possession taken by a vendee under an executory written contract for the purchase of land is not Adverse as to his vendor. For practical purposes, therefore, the vendee, and vendor stand in the relation of landlord and tenant, and the principles stated in that connection are also applicable here.

In the same volume at page 816 in Section 42, the effect of the invalidity of the contract is stated in these terms:

As a general rule, the invalidity of the executory contract of purchase will not have the effect of rendering adverse, as to the vendor, the possession taken thereunder by the vendee who enter into possession in pursuance thereof. Although the instrument is invalid, the possession of the vendee is taken in pursuance thereof, and, therefore, amicably to the vendor; and, inasmuch as it is so taken, it is looked upon as so continuing, regardless of the fact that the vendee cannot enforce his rights as purchaser under the contract. Thus, when a party goes into possession under a verbal contract for the purchase of land, his possession is not adverse to the other party, but is held under him until the purchase money is paid.

Section 44 : Possession taken by a vendee under a contract executed by an agent without Authority is not adverse to the vendor.

In II--Corpus Juris Secundum the statement of the law, which is to the same effect, is as follows, (page 672, Section 121):

purchaser under an executory contract of sale holds in subordination to his vendor unless and until the privity of title obtaining between them is broken.

It is a well settled general rule that where one enters into and holds possession of land under an executory contract of purchase or land for title, his entry and possession are in subordination to, and not adverse to, the rights of the vendor of those holding under him. In such case privity exists which precludes the idea of a hostile possession pending the completion of the contract which can silently ripen into title by adverse possession under the statute of limitations, and it has been said that the reason for the rule which forbids a person who has gone into possession under a contract of purchase to dispute the title of his vendor is the same as that which exists in cases of landlord and tenant and is to be found in the injustice of allowing a person who has obtained possession by admitting the title of another to enjoy that title, and, in case of failure in proof of it, to hold the premises himself. The vendee is equitably estopped from claiming that the possession is adverse. Other decisions find the reason for the rule in a Supposed trust relation which the parties sustain to each other.

The rule that a purchaser under an executory contract of sale ordinarily holds in subordination and not in hostility to his vendor has been applied where the purchaser was in possession under an oral contract of purchase. Further, the possession has been held not adverse although the instrument under which the vendee entered was void forged, or unauthorised, and it has been said that where a vendee who purchases, from his vendor a particular tract of land enters upon another tract of the same vendor, under color of his purchase but through fraud or mistake, the possession of the vendee is not adverse to the title of his vendor.

The position in certain cases may be different if the vendee openly and unequivocally disawoves the title of the vendor and such positive and continued disclaimer of the title continues. In this case the suit for specific performance filed by the vendee rules out any theory of the vendor disawoving the title of the vendor. On the other hand, the vendee in the suit for specific performance has unequivocally and clearly recognised and acknowledged the title of the vendor.

The bringing by a claimant in adverse possession of land, of an action involving title thereto which is based on the existence of a right, in another is such a recognition of that right as will arrest the running of the statute of limitations in favour of the occupant and against such right (Vide XXXIV American Jurisprudence, Section 247, page 203).

The instant case is governed by a well settled rule of law that if a person is in actual possession and has a right to possession under a title involving a due recognition of the owner''s title his possession will not be regarded 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 referable to a lawful title. The purchaser who got into possession under an executory contract of sale in a permissible character cannot be heard to contend that his possession was adverse.

In Dadoba v. Krishna ILR (1879) 7 Bom. 34 which dealt with a case of adverse possession between a landlord and tenant West J. delivering the judgment of the Bench, stated the law thus at page 38

As he entered and continued to hold in a character consistent with the subsistence of this rights, they were never called on to eject him or by any other process to establish rights which were not denied. While there subsists any contract, express or implied, between the parties in and out of possession to which the possession may be referred as legal and proper, it cannot be pronounced adverse.

In Ramchandra Yashvant Sirpotdar v. Sadashiv Abaji Sirpetdar (1886) ILR 11 Bom. 422 the question arose as to how far the possession of the redeeming mortgagor can be regarded as adverse, and it was held that so long as a possession can be referred to a right consistent with the subsistence of ownership in being at its commencement, so long must the possession be referred to that right rather than to a right which contradicts the ownership.

In Makina Atchayya Patrudu Vs. Jalaluddin Sahib and Others, Venkata subba Rao J. delivering the judgment of the Bench explained the position in these terms:

The possession of the wrong doer to avail him must be adverse in its character, imparting a denial of the owner''s title in the property claimed. It is settled law, that possession cannot be adverse unless it is held in such circumstances as are capable in their nature of notifying mankind that the party is on the land, claiming it as his own, openly and exclusively... There ought to be nothing equivocal in a possession which is relied upon as a bar... Possession cannot be adverse unless the owner is in denial of his title, excluded from enjoyment. In other words, the test is, are the acts of the person in possession such as to be irreconcilable with the rights of the true owner.

In Ramachandra v. Vasant ILR (1956) Nag. 5 it was observed as follows:

The possession of a person who has admitted the title of the true owners most be regarded as on behalf of the true owners and not independent or adverse to them. It follows that his continued possession of the property must also be deemed to be in the same capacity unless it is established that he, to the knowledge of the true owners, ceased to hold possession on their behalf and assumed possession in his own right and on his own behalf.

The principle is clear and there is no need to refer to other cases on the point.

In our opinion, the possession of the purchaser which was derivative and permissive to start with, not only never became adverse, but on the other band the permissive character was reaffirmed in the suit for specific performance, with the result that there is no question of the purchaser having acquired title by adverse possession. The fact that he had encroached on the land or raised a building cannot alter the character of the possession.

In this view of the law it will be clear that the decision in Sohan Lal v. Mohan Lal ILR (1928) All. 986 (F.B.) relied upon by learned Counsel for the Respondent does not support him. Learned Counsel for the Respondent relying upon the use of the words intended sale, intending purchaser and intending vendor in Sohan Lal v. Mohan Lal ILR (1928) All. 986 (F.B.) argued that the said decision would apply alike whether it is a case of executory sale or an executed one. We are unable to agree and we are clear in our minds that the law stated in Sohan Lal v. Mohan. Lal ILR (1928) All. 986 (F.B.) has no application to the case of an executory sale.

Learned Counsel for the Respondent also relied upon certain observations in Birajmohini Dassi Vs. Sm. Sarala Devi Chowdhurani, at pages 91 and 92 as supporting his contention that the plea of adverse possession would be available to the purchaser even in the case of an executory agreement of sale. In that case on the facts, it was normally found that there was no agreement of sale at all The question in the present form, therefore, did not require to be considered in that case and learned Counsel cannot,therefore, rely upon the observations in that decision.

Lastly it was contended that, when, in the earlier proceedings, it was held that the guardian had no authority to enter into the agreement of sale the possession of the purchaser was not referable to an agreement of sale, but it must be deemed to be adverse as of a trespasser right from the inception. There is no force in this contention. Want of title in the purchaser when he gets into possession may be due either to the absence of registration or want of title or authority in the transferor and there is no difference in the principle applicable because in both the cases property is actually conveyed under an outright sale. In the case of an agreement of sale the party who obtains possession, acknowledges the title of the vendor even though the agreement of sale may be invalid. It is the ackowledgment and recognition of the title of the vendor which excludes the theory of adverse possession. Suppose, for illustration, a person executes an usufructuary mortgage and puts the mortgagee in possession but the deed of mortgage is unregistered, the mortgage after twelve years cannot possibly contend that because the mortgage is invalid he has perfected title as absolute owner, the reason being that while in possession the animus of the mortgagee is one of recognition of the title of the mortgagor. Similarly, in the instant case the Respondent, when he got into possession under the agreement of sale was holding the same in a derivative character, acknowledging the right of the minors. For all these reasons we are unable to agree with the view taken by the learned Judge. We accordingly, hold that the rights of the Plaintiffs are not barred by limitation.

Learned Counsel for the Respondent raised a further point that the proceedings in the suit, Original Suit No. 449 of 1950, operated as a bar under Order II, Rule 2, Code of Civil Procedure. We have no hesitation in holding that there is absolutely no substance in this contention. A bare perusal of the pleadings in Original Suit No. 449 of 1950, and the present suit would show that either in respect of cause of action or the reliefs prayed for, Order II, Rule 2, Code of Civil Procedure, cannot possibly apply to the instant case. The cause of action in the earlier suit is in respect of alleged trespass and encroachment and the cause of action in the present suit is entirely different, and the reliefs in the two suits flow out of entirely different causes of action. Further the relief of specific performance could not have been asked for in the earlier suit. We, therefore, hold that the suit as framed is maintainable.

The order of the learned Judge is, therefore, set aside and the suit is remanded to the trial Court for disposal on the merits, except on the question of limitation and on the plea of Order II, Rule 2, Code of Civil Procedure. All other points in controversy between the parties will be disposed of by the learned District Munsif.

When the suit goes back to the trial Court, as a condition for recovery of possession the trial Court should direct that the Plaintiffs should pay the Defendants (by way of refund) a sum of rupees four hundred with interest at 6 per cent from 20th February 1942. The trial Court should also consider the question as to whether the property in dispute is actually comprised in the agreement of sale or whether the Defendants are enjoying the property in their own right, a point which has already been raised by the Defendants. The trial Court should also consider the question as to how far the Defendants will be entitled to any protection on considerations of equity on the ground that they have bona fide put up the compound wall and whether they should be directed to demolish and whether any other order on terms could be passed under the circumstances of the case. The trial Court should also consider as to what compensation the Defendants would be entitled in the event of its holding that the Defendants are bound to vacate and hand over possession to the Plaintiffs after demolishing the compound wall. We have merely held against the Defendants and in favour of the Plaintiffs on the question of limitation. As regards the appropriate reliefs to be granted and the directions to be given the trial Court should take all the circumstances of the case into consideration.