ACHAL REDDIversusRAMAKRISHNA REDDIAR AND ORS.

                            ACHAL REDDI
                                                                              A
                                    v.
             RAMAKRISHNA REDDIAR AND ORS.

                         NOVEMBER 17, 1989

           [G.L. OZA AND M. FATHIMA BEEVI, JJ.]                               B

     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.

      A, the owner of the land in question, conveyed possession of it to B    c
under an oral agreement of sale. A deed was drawn up within about a
week, but before it could be registered, 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             D
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 tresspassed into the property. E contested the suit on the
gronnd that D had orally transferred his rights and conveyed possession       E
to him for valuable consideration. The Trial Court decreed the suit. On
appeal, the first appellate court held that C was not entitled 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      F
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 possession
for 12 years, prior to the suit, and that such possession 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.                                         G

     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 IO. 7.46 was only an oral sale.

     This appeal by special leave has been filed by E against the judg-       H
ment of the Division Bench.
                                 193
    194          SUPREME COURT REPORTS                  [1989] Supp. 2 S.C.R.

          Dismissing the appeal, this Court,
A
        HELD: 1. 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
B 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 contend that his pos-
  session was adverse. 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 to a contract, it
  cannot be adverse. ll98F-G; 199A]
c
          2.1 In the case of an executory contract of sale where the trans-
    feree 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
D   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 o.f right in regard to
    the property and his mental attitude towards the property is that it has
F   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 concern€d both in mind and actual conduct, there is
G   a total divestiture of all his right, title and_interest in the property. This
    applies mily in a case where there is a clear manifestation of the inten-
    tion 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 registeration of the conveyance is permissi-
    ble or derivative and in law is deemed to be on behalf of the owner
H   himself. !l99B-F]
            A. REDD! v. R. REDDIAR [FATHIMA BEEVI, J.)               195

     2.2 In the instant case, the parties are concluded by the finding of
                                                                            A
the Division Bench that the transaction of 10.7.46 was only an agree-
ment for sale and not an oral sale of the property. I l99G I

     Annamalai Chettiar and Another v. Muthiah Chettiar and
Another, ILR 1965 I Madras 254 approved.
                                                                            B
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1945
of 1974.

     Erom the Judgment and decree dated 9 .10.1973 of the Madras
High Court in LP.A. No. 78 of 1969.

    S. Padmanabhan, K.M.M. Khan and Vineet Kumar for the                    c
Appellant.

      Vepa Sarathy and Ramesh N. Keshwani for the Respondents.

      The Judgment of the Court was delivered by                            D

      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.
                                                                            E
      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 rep-
resentatives of Munisubba Reddi, the plaintiff 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      F
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.
                                                                            G
      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, butDasu Reddi
died before it could be registered. Thereafter his sons Ra jaram Reddi      H
    196         SUPREME COURT REPORTS                 [1989] Supp. 2 S.C.R.

  and Ramalinga Reddi executed Ex. A.1 sale deed in favour of
A 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 c.ontract for sale, asserting his possession
  in pursuance of the agreement dated 10.7.1946. Varada Reddi died
  pe11ding the suit. Muthukrishna Reddi was impleaded as his legal rep-
B resentative. 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 Muthukrishna Reddi after the
    said decree under an arrangement evidenced by Ex. A.4 dated
    12.12.1955 and while in possession, the defendants Achal Reddi and
C   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 con-
    veyed possession to him for valuable consideration.

D       5. The trial court in granting the petitioner a decree for posses-
  sion 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
E property and that he is not i.n possession of the same. The first appel-
  late 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
F               and his vendors, that would have put an end to the title of
                the plaintiff under Ex. A. l. As already stated, the decree
                was allowed to lapse leaving the title of the plaintiff under
                Ex. A.1 unaffected. The title that vested in the plaintiff on
                6.6.1949 continued to remain with him thereafter for the
                abo.ve_reasons .. J\$against this, the defence contention that
G               the · !st defendant under an oral agreement, became the
                owner of the .properties cannot stand. My finding, there-
                fore, is that the plaintiff has title to the properties unde Ex.
                A.1."

       The learned Judge, however, found that the plaintiff was not in
H possession of the suit land in 1955 and the plaintiff having neither
            A. REDD! v. R. REDDIAR [FATHIMA BEEVI, J.]                197

proved possession nor dispossession at any time was not entitled to a
                                                                             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 plaintiffs
title had not been challenged. The only question raised therein and
considered by the learned Single Judge was whether the plaintiff was         B
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           c
thereafter his sons, but if on the other hand th~. possession of Varada
Reddi was adverse even as against the origiifal 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 deci-
sion in Annamalai Chettiar and Another v. Muthiah Chettiar and               D
Another, ILR 1965 1 Madras 254 the learned Judge held that Varada
Reddi's possession was adverse to Dasu Reddifrom 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 ~ssump­
tion of the learned Single Judge was found to be faulty by the Division
Bench.                                                                       E

       7. The Division Bench noticed that all that the plaintiff 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    F
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               G
before he in_stituted 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 comp-
lexion 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   H
    198         SUPREME COURT REPORTS                 [ 1989] Supp. 2 S.C.R.

    of Dasu Reddi, the predecessor-in-title of the plaintiff. If the plaintiff's
A, 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, there can be little doubt that the plaintiff must succeed
    on the question of possession as well. In this view the judgment of the
    learned Single Judge was reversed.
B
          8. There is no controversy that the plaintiff has to establish sub-
  sisting title by proving possession within 12 years prior to the suit when
  the plaintiff alleged dispossession while in possession of the suit pro-
  perty. The first appellate court as well as the second appellate court
  proceeded on the basis that the plaintiff is not entitled to succeed as
  such possession has not been proved. The concurrent findings that the
C 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,
  therefore, urge before us on the basis of the findings in the earlier suit
  to which he was not a party that Ex. A. I sale deed is one without
D consideration and does not confer valid title on the plaintiff. The sole
  question that has been considered by the High Court is that of subsist-
  ing 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
E 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 recognition of the owner's title his posses-
  sion will not be regarded as adverse in law, even though he claims
F under another title having regard to the well rec.>gnised 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 con-
  tract of sale in a permissible character 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
G 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 execu-
  tory agreement of transfer both parties contemplating a deed of trans-
  fer to be executed at a later point of time. In the latter case the
  principle of estoppel applies estopping the transferee from contending
H that his possession, while the contract remained executory i.n stage,
             A. REDD! v. R. )IBDDIAR {FATHIMA BEEVI, J.!                 199

was in his own right and adversely against the transferor. Adverse
possession implies that it commenced in wrong and is maintained                 A
against right. When the commencement and continuance of possession
is legal and proper, referable to a contra9t, it cannot be adverse.

      9. fo the case of an executory contract of sale where the trans-
feree is put in possession of the property in pursuance of the agree-           B
ment 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 farmer'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          c
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 pro-
perty 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         D
the owner of the property does not retain any vestige of right in regard
to the property and his mental attitud~ 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       E
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 givestiture of all his right, title and interest in
the property. This applies only in a case where there is a clear manifes-
tation 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            F
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 m
Annamalai v. Muthiah (supra) cannot, therefore, be doubted.

      10. The parties are. concluded by the finding of the Division             G
Bench that the transaction of 10.7.1946 between basu 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
complete divestiture of all the rights of the owner in his favour on
execution of a regular sale d_eed, until the execution of the sale deed,        H
    200         SUPREME COURT REPORTS              [1989] Supp. 2 S.C.R.

A 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-in-
  interest 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 Let-
  ters. Patent Bench of the High Court is correct and we confirm the
B same. The appeal is accordingly dismissed with costs.

    G.N.                                                Appeal dismissed.