Chettinad Corporation Pvt. Ltd. Vs. Tamil Nadu Agricultural Income-tax Appellate Tribunal and ors. - Court Judgment

Nainar Sundaram, J.

1. The petitioner wanted to avoid the mischief of the Tamil Nadu Agricultural Income-tax Act (V of 1955), hereinafter referred to as ' the Act', in respect of an extent of acres 13.77. According to the petitioner, this extent was the subject-matter of an agreement of sale deed dated December 22, 1969, in favour of one Meenakshi Achi and she has been put in possession thereof and hence the petitioner could not be deemed to be the person owning or holding the said extent of land within the meaning of the provisions of the Act. This contention of the petitioner has been repelled by all the authorities who are respondents herein. The orders of the authorities are being put in issue in this writ petition.

2. Mr. T. Chengalvarayan, learned counsel appearing for the petitioner, would contend that when possession of that extent of land has been parted with in favour of the transferee under the agreement of sale, the petitioner cannot be held to be a person owning or holding the land within the meaning of Section 2(q) of the Act read with Section 2(nn) of the Act. Section 2(q) read as follows :

' ' person' means any individual or association of individuals, owning or holding property for himself or for any other or partly for his own benefit and partly for another, either as owner, trustee, receiver, common manager, administrator or executor or in any capacity recognized by law, and includes an undivided Hindu Mitakshara family, an Aliyasanthana family or branch, a Marumakkattayam tarwad or a tavazhi possessing separate properties, or a Nambudiri or other family to which the rule of impartibility applies, a firm or a company, an association of individuals, whether incorporated or not, and any institution capable of holding property.'

Section 2(nn) runs as follows :

' ' to hold ' with its grammatical variations and cognate expressions means to possess and enjoy either as owner or tenant or mortgagee in possession or as a maintenance holder or in one or more of those capacities.'

Learned counsel would also draw my attention to Section 23 of the Act which contemplates that where a person in receipt of agricultural income from any land in the State is found to have transferred his interest in such land to another person, the transferor and the transferee shall each be assessed in respect of his actual share, if any, of such agricultural income. For the proposition that the petitioner has ceased to be the owner of the land and the transfer in favour of the transferee got completed and the transferee alone must be held to be the owner of the land, learned counsel would rely on Section 53A of the Transfer of Property Act. Section 53A of the Transfer of Property Act runs in the following terms :

'Part performance.--Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,

and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract,

then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession,other than a right expressly provided by the terms of the contract:

Provided that nothing in this section shall affect the rights of atransferee for consideration who has no notice of the contract or of thepart performance thereof.'

The right conferred by Section 53A of the Transfer of Property Act is a right available only to the transferee to protect his possession, and the section is so framed as to impose a statutory bar on the transferor, but it confers no active title on the transferee. The scope of the right under Section 53A of the Transfer of Property Act has been defined by P.N. Ramaswami J. in Ettapparambath Atiyandi Pakkirichi Umma v. Kaiprath Kalandan, : AIR1954Mad702 , in the following terms (p. 703 of AIR) :

' The right conferred by Section 53A of the Transfer of Property Act, 1882, is different from the English law where a transferee under a parole contract, which has been partly performed, can either as plaintiff or as defendant claim relief on the basis of a valid transfer. The right conferred by this section is a right on the part of the transferee to plead in defence that the transferor is debarred from enforcing any right in respect of the property transferred. While in English law the equity of part performance is an active equity which a plaintiff in possession may enforce in an independent suit or proceeding, e.g., a suit for specific performance, or for an injunction to restrain dispossession, after the enactment of Section 53A, the right conferred by the section is a passive equity available only to the defendant to protect his possession.'

The interest which a person has in the property by virtue of Section 53A of the Transfer of Property Act does not amount to ownership of property and hence no claim on his behalf with respect to such property would be entertained, to which he would become entitled only after a registered sale deed has been executed. Part performance does not convey title to the transferee. Whatever may be the right the transferee under the agreement of sale could avail of to protect his possession, certainly, it will not lie in the mouth of the transferor to say that the title got transferred to the transferee and hence he has ceased to be the owner. Section 53A of the Transfer of Property Act cannot be used as a weapon of attack and it confers upon the transferee, the privilege of invoking the doctrine embodied therein only as a shield against any invasion of his rights by the transferor or persons claiming under him. Title can only be transferred in the manner provided by the Transfer of Property Act read with the Registration Act, because Section 53A only gives a right of defence to the defendant in possession in part performance of the contract. That does not make him transferee of propertyand in fact it does not bring into existence a transfer of title at all. These are all well-settled propositions and it will be redundant to attempt at profuse citations.

3. There is no need to raise any dispute over the factum and operation of the agreement of sale put forth by the petitioner. Even then, the question is as to whether the petitioner ceased to be the owner of the land and title has passed on to the transferee under the said agreement. The ' person ' within the meaning of Section 2(q) of the Act must own or hold the property and ' to hold ' within the meaning of Section 2(nn) of the Act could only be possessing and enjoying either as owner or in other capacities mentioned therein. We are not concerned with other capacities here. Hence, there is no escape for the petitioner from the Act in respect of this extent, covered by the agreement of sale, because he has not ceased to be the owner ; and there is no transfer of title in favour of the transferee. Section 23 of the Act has no place and relevancy in the context and on the facts of the case, because no transfer in the eye of law has taken place. A Bench of the High Court of Gujarat in CWT v. H.H. Maharaja F.P. Gaekwad : [1983]144ITR304(Guj) , in a case arising under the Wealth-tax Act, observed as follows (p. 313):

' The assessee in spite of the fact that he had received part of the consideration and had parted with possession of the property continued to be the legal owner of the Jay Mahal Palace; nor had the vendee become the owner of the property before the payment of the full price and before securing a conveyance in his favour. In other words, he was not divested of his title over the property on the relevant valuation dates. Doctrine of part performance embodied in Section 53A of the Transfer of Property Act on which reliance was placed by the assessee, as pointed out by us in our judgment in Ashaland Corporation's case : [1982]133ITR55(Guj) , has limited application and it affords only good defence to the person put in possession to the extent provided in that section. Receipt of part of the price and parting of possession does not divest the assessee of his title nor do the purchasers acquire any title over the property. We, therefore, do not see any substance in the contention of the assessee that on receipt of part of the sale price and parting with possession of the property, the assessee ceased to be the owner of the property.'

It is not as if Mr. T. Chengalvarayan, learned counsel for the petitioner, is not aware of these legal implications and, in fact, he conceded that Section 53A of the Transfer of Property Act is more a shield for the transferee rather than a weapon in the hands of the transferor. Byfalling back upon Section 53A of the Transfer of Property Act, it is notpossible to state that the title got transferred to the transferee and the petitioner ceased to be the owner of the land in question.

4. In this view, I do not find any warrant to interfere with the orders passed by the authorities under the Act and accordingly the writ petition fails and the same is dismissed. I make no order as to costs.