Holding

Title to the evacuee property passes to the auction purchaser only upon full payment of the purchase price and issuance of the sale certificate; therefore the 1984 suit was within the limitation period and the appeal is dismissed.

Summary

The predecessor-in-interest of the respondents bought an evacuee property at an auction in 1962 but failed to pay the full price, leading to cancellation of the sale. After a High Court set aside the cancellation, the full price was paid in 1980 and a sale certificate was issued on 31 March 1981, confirming title effective from 16 January 1964. The respondents filed a suit for possession on 1 February 1984, which the trial court and the Delhi High Court dismissed, holding that the appellants had not acquired title by adverse possession and the suit was not time‑barred. On appeal, the Supreme Court examined when title passes under Rule 90(15) of the Displaced Persons Compensation and Rehabilitation Rules, 1955 and held that title passes only after full payment of the purchase price and issuance of the sale certificate, i.e., in 1980. Consequently, the 1984 suit fell within the 12‑year limitation period under Article 65 of the Limitation Act, and the appeal was dismissed with costs.

Issues considered

When does title to an evacuee property pass to the auction purchaser under the Displaced Persons Compensation and Rehabilitation Rules, 1955?
Whether the suit for possession filed in 1984 is barred by the 12‑year limitation period under Article 65 of the Limitation Act.
Whether the appellants acquired ownership by adverse possession.

Legislation cited

Displaced Persons (Compensation and Rehabilitation) Rules, 1955s. Rule 90 sub‑rule 15
Limitation Acts. Article 65

Subjects

evacuee propertyauction saletitle transferlimitation periodadverse possessionDisplaced Persons Compensation and Rehabilitation Rulesproperty law

Judgment

DR. BHARGAVA AND CO. AND ANR. A
v.
SH. SHYAM SUNDER SETH BY L.RS.

' .JYLY 12, 1994 .
(KULDIP SINGH AND K. 'RAMASWAMY, JJ.] B
' ·, ' 1, ·_ • e

, Displaced Persons Cpmpensation and Rehabilitation Rules, 1955: Rule
90 Sub-Rule(J5). Auction Sale-Purchase of evacuee propcrtfTit/e to auc-
tiqn purchaser-When passes-cSuit for .recovery of immovable property pur-
chased in auction ~ale-:f'.eriod ofLimitatiort-Reckoning of c
The re;pondeni's 'predecessor-in-interest purchased an evacuee
property on November 2o,
i962 in ~n· auction sale. As he failed to pay the
full auction price the sale was cancelled. He filed a llTit petition challenging
the cancellation in the High Court which quashed the cancellation order.
Subsequent to the High Court's judgment he paid the remaining sale price D
in 1980 and.consequently a sale certificate was issued to him on March 31,
1981 confirming the title to the suit property with effect from January 16,
1964. On February 1, 1984 the Respondents' predecessor-in-interest filed
a suit for possession''of the said property which was contested by the
defendants-appellants on the grounds that (i) they had become the owners E
of the property by adverse possession; and (ii) the suit was barred by
limitation. Rejecting both the contentlons, the Trial Court decreed the suit.
On appeal the High Court upheld the decision of the Trial Court.

' . In appeal to this Court is. was contended on behalf of the appellants
that a suit for possession of immovable property can be instituted under F
Article 65 of the Limitation Act within 12 years from the point when the
possessi~n of the defe:idaiit beca~e adverse to the plaintiffs and since the
appellant's possession became adverse to the respondents on January 16,
1964, from which date the titie in the property has been perfected in favour
of the respondents, the suit filed in the year 1984 was barred by limitation. G
Dismissing the appeal, this Court

HELD : 1. There is no ground to interefere with the conclusions
reached by the trial court as upheld by the Division Bench of the High
Court. [451-F) H
445
446 SUPREME COURT REPORTS [1994] SUPP. 1 S.C.R.

A 2. It is obvious from sub-rule (15) or Rule 90 or the Displaced
Persons Compensation and Rehabilitation Rules, 1955 that the title in the
property cannot pass to the auction purchaser unless the purchase price
has been realised in run. Till the time the full price or the evacuee property
sold at auction is realised from the highest bidder, the question or trans·
B £erring the property to him or his perfecting the title in the said property
does not arise. Therefore, the auction purchaser cannot claim title to the
property till the time the full price in respect or the said property is paid
which is a condition precedent and sale certificate is issued. [449-C, 451-E)

3. In the present case the full price or the property in dispute was
c paid in the year 1980 and sale certificate was issued thereafter. As such,
the title passed on to the respondent in the said year. Therefore, the suit
filed in the year 1984 was clearly within limitation. [451-E)

Mis Bombay Salt & Chemical Industries v. LJ. Johnson & Ors., AIR
(1958) SC 289, referred to.
D
Bishan Paul v. Mothu Ram, AIR (1965) SC 1994, explained and held
inapplicable.

Jaimal Singh v. Gini Devi, 66 Pun.L.R.99 : AIR (1964) Punj. 99, cited.

E
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 910 of
1988.

From the Judgment and Order dated 21.10.87 of the Delhi High
Court in R.F.A. No. 364 of 1985.
F
Shiv Dayal Srivastava, S. Bagga, Seeraj Bagga and Ms. S. Bagga for
the Appellants.

A.P. Mohanty for the Respondents.
G The Judgment of.the Court was delivered by

KULDIP SINGH, J. This appeal is sequel to a suit for possession
instituted by Shyam Sunder Seth predecessor-in-interest of the respondents
in the appeal herein. The suit was decreed by the trial court. Appeal
H against the judgment and dec~ee of the trial court was dismissed by a
DR. ilHARGAVA & CO. 1·. S.S. SETH [KULDIP SINGH.J.] 447

Division Bench of the Delhi High Court. This appeal by way of special A
leave is against the judgment of the High Court.

The property in dispute was an evacuee property. Late Shyam
Sunder Seth purchased the property in an auction - sale held on November
20, 1962. He failed to pay the full auction price in aceordance with the
terms of the sale and as such the Deputy Chief Settlement Commissioner
B
cancelled the sale by his order dated May 27, 1977. Shyam Sunder Seth
challenged the order of cancellation by way of a writ petition before the
Delhi High Court. A learned single Judge of the High Court allowed the
writ petition by his judgment dated December 6, 1979 and directed as
under :- c
"The petitioner, as is apparent from the record has made payments
of more than Rs. 56,000. He is ready and willing to pay the
remainder in cash. For the reasons stated above, the orders dated
22.7.75, 27.5.77 and 4.11.77 passed by the Settlement Commis- D
sioner, Chief Settlement Commissioner and the Central Govern-
ment are quashed. However, as the conduct of the petitioner with
regard to making payments has been very far from exemplary, he
is not entitled to costs. 11

Thereafter, Shyam Sunder Seth paid the remaining sale-price in E
respect of the suit property to ihe competent authority. The said payment
was made in the year 1980. Thereafter, a sale certificate was issued to
Shyam Sunder Seth on March 31, 1981. The sale certificate confirmed the
title of Shyam Sunder Seth to the suit property with effect from January
16, 1964. The present suit for possession was filed by Shyam Sunder Seth F
on February 1, 1984. The suit ·was contested, inter a/ia, on the ground that
the defendants-aopellants were in actual physical possession of the proper-
ty continuously for more than 12 years and, as such, they had become the
owners of the property by adverse possession. It was also contended that
the suit was barred by limitation. The trial court rejected all the contentions G
raised by the defendants-appellants and decreed the suit. Before the High
Court, the appellants reiterated the contentions raised before the trial
court but primarily concentrated on the points that the appellants had
perfected their title to the property by adverse possession and that the suit
was barred by limitation. The High Court upheld the findings_ of the trial
court on both the issues. The High Court rejected the first contention on H
448 SUPREME COURT REPORTS (1994] SUPP. 1 S.C.R.

A the following reasoning: -

"These documents ·show that the appellants were not the
trespassers but the appellants came into possession of the suit
property as a licensee or sub-tenants· through the lawful occupants
under the Custodian. Thus, the possession of the appellants was
B permissive. It is settled law that. the appellants whose possession
\\'as permissive cannot claim title on the basis of adverse possession
unless they show specific overt act and assertion on their part that
• they disclaimed the title of the true owner. They must allege and
prove that as to when and under what circumstances, their posses-
C sion became adverse. This requires a definite overt act and asser-
tion on the part of the appellants. This has neither been pleaded
nor proved by the appellants. We are of the view that the appellants
have not made out a case of adverse possession.

We find that there is nothing on record to show any hostility on
D the part of the appellants against the title of the true owner.
Accordingly, we hold that the possession of the appellants in
respect of the property in suit was not adverse till the sale certifi-
cate Ext. PW-1/1 dated March 31, 1981 was issued in favour of the
respondent."

E We see no ground to interfere with the above quoted findings of the
High Court and we uphold the same.

Mr. Shiv Dayal, learned senior advocate appearing for the appellants,
vehemently contended before us that the title in the property having been
F passed to the respondents with effect from January 16, 1964, the suit filed
on February 1, 1984 was hopelessly time barred. According to him a suit
for possession of immovable property can· be instituted under Article 65
of the Limitation Act within 12 years from the point when the possession
of the defendant became adverse to the plaintiffs. The precise argument is
that the possession of the appellant became adverse to the respondents on
G January 16, 1964 from which date the title in the property has been
perfected in favour of the respondents and as such the suit filed in the year
1984 was barred by limitation. We do not agree with· the learned counsel.
Sub-rule (15) of Rule 90 of the Displaced ·Persons Compensation and
Rehabilitation Rules, 1955 (the Rules) to the extent it is relevant is
H reproduced hereunder: -
DR. BHARGAVA & CO. v. S.S. SETH [KULD!P SINGH. J.J 449

"_(15) When the purchase price has been realised in full from A
the auction purchaser, the managing officer shall issue to him a
sale certificate in the form specified in Appendix XXII or XXIII,
as the case may be. A certified copy of the sale certificate shall be
sent by him to the Registering Officer within the local limits of
whose jurisdiction the whole or_ any part of the property to which B
the certificate relates is situ1ted ...... "

It is obvious from the· rule reproduced above that the title in the
property cannot pass to the auction purchaser unless the purchase price
has been realised in full. Till the time the full price of the evacuee property
sold at auction is realised from the highest bidder, the question of trans- C
ferring the property to him or his perfecting the title in the said property
does not arise. This Court in Mis. Bornbay Salt & Chemical Industries v.
L.J.
/
Johnson & Ors., AIR {1958) SC 289, dealt rule 90 and other relevant
rules and held as under:-
D
It is clear from the rules and the conditions of sale set out above
that the declaration that a person was the highest b~dder at the
auction does not amount to a complete sale and transfer of the
property to him. The fact that the bid has to be approved by the
Settlement Commissioner shows that till such approval which the
Commissioner is not bound to give, the auction purchaser has no E
right at all. It would further appear that even the approval of the
bid by the Settlement Commissioner does not amount to a transfer
of property for the purchaser has yet to pay the balance of the
purchase money and the rules provide that if he fails to do that he
shall not have any claim to the property. The correct position is F
that on the approval of the bid by the Settlement Commissioner,
a binding contract.for tho sale of the property to the auction-pur-
chaser comes into existence. Then the provision as to the sale
certificate would indicate that only upon tthe issue of it a transfer
of the property takes place. Condition of sale No.7 in this case,
furthermore, expressly stipulated that upon the payment of the G
purchase price in full the ownership would be transferred and a
sale certificate issued. It is for the appellants to show that the
property had been transferred. They have not stated that the sale
certificate was issued, nor that the balance of the purchase money
had been paid." H
450 SUPREME COURT REPORTS [1994] SUPP. I S.C.R.

A This Court in Bishan Paul v. Mothu Ram, AIR (1965)SC 1994, on
the interpretation of rules 90 and 92 of the rules observed a.s under:-

"The passing of title thus presupposes the payment of price in full
and the question is at what stage this takes place. Obviously, there
are serveral distinct stages in the sale of property. These are: (a)
B the fall of the hammer and the declaration of the highest bid; (b)
the approval of the highest bid by the Settlement Commissioner
. or officer appointed by him; (c) payment of the full price after
approval of the highest bid; (d) grant of certificate; and (e)
registration of the certificate.
c The first and the last in this series, namely, the fall of the hammer
and the registration of the certificate are not critical dates for this
purpose and they have not been suggested as the starting point of
title. It is also clear that till payment of full price title is in abeyance
for the rules themselves say that if the price is not paid the auction
D purchaser has no claim to the property."

Applying the above quoted interpretation of the facts of that came
this Court further observed as under:-

"It seems to us that the matter must be considered on general
E principles. In this case the highest bid was of the respondent and
he paid the full price before the sale in him favour was confirmed.
The sale certificate, though issued later, mentioned the date of the
confirmation of the sale in his favour. The tenant was asked to
attorn to the purchaser from the date of confirmation of sale and
F thus prossession was also delivered on that day. Title, therefore,
was not in abeyance till the certificate was issued but passed on
the confirmation sale. The intention behind the rules appears to
be that title shall pass when the full price is realised and this is
now clear from the new form of the certificate reproduced in
Jaima/'s case 66 Pun. L.R. 99: (AIR 1964 Punj. 99). No doubt till
G the price is paid in full there is no claim to the property, but it
seems somewhat strange that a person who has paid the price in
full and in whose favour the sale is also confirmed and who is
placed in possession should only acquire title to the property from
the date on which a certificate is issue to him. There may con-
H ceivably be a great deal of time spent before the certificate is
·1

DR. BHARGAVA & CO. 1·. S.S. SETH iKULD!P SINGH, J.J 451

granted. In this case the tenant was told to attorn from October A
3, 1956 because nothing remained to be done except the ministerial
acts of issuing the certificate and getting it registered. Therefore,
so far as title was concerned, it must be deemed to have passed
and the certificate must relate back to the date when the sale
became absolute."
B
Mr. Shiv Dayal relying upon Bishan Paul's case (supra) vehemently
contended that so far as the title, in this case, was concerned it must be
deemed to have passed with effect from January 16, 1964 - the date
mentioned in the sale certificate - and the certificate must relate back to
the said date. There is obvious fallacy in' the argument. In Bishan Paul's C
case (supra) the sale had become absolute much earlier to the date of issue
of the sale certificate as the full price had been paid by the highest bidder
before the confirmation of the sale. In the present case, it is not disputed
that the full price of the suit property was paid in the year 1980. It is not
necessary for us to go into the question as to whether the title in the
property passes to the auction purchaser from the date of the sale certifi- D
cate or from the date mentioned in the certificate. It all depends on the
facts of each case. We are, however, firmly of the view that the auction
purchaser cannot claim title to the property till the time the full price in
respect of the said property is paid which is a condition precedent and sale
certificate is issued. It is not disputed that in the present case the full price E
of the property in dispute was paid in the year 1980 and sale certificate
was issued thereafter. As such, the title passed on to the respondent in the
said year. The suit was filed in the year 1984 and, as such, was clearly within
limitation. .

For the reasons recorded above, we see no ground to interfere with F
the conclusions reached by the trial court as upheld by the Division Bench
of the High Court. The appeal is, therefore, dismissed with costs. We
quantify the costs as Rs.20,000.

T.N.A. Appeal dismissed.