National Textile Corporation Ltd. v. Durga Trading Co. & Ors.
Background
The respondent claimed it had entered into an agreement to purchase certain mill premises in Mumbai in 1975 from the original owner, Shri Sitaram Mills Ltd., paid the full price, and had been in possession ever since, though no formal conveyance deed was ever executed. The mill's management was later taken over by the Central Government and vested in the appellant, a government textile corporation, under nationalisation laws of 1983 and 1995. When the corporation's Estate Officer initiated eviction proceedings against the respondent as an "unauthorized occupant" of public premises, the Bombay High Court quashed those proceedings, holding that a genuine title dispute existed that could only be resolved through a civil suit, not the summary eviction procedure under the 1971 Act.
Decision Breakdown
The Supreme Court reversed the High Court and upheld the eviction notices. It held that since the property had, by operation of the nationalisation statutes, vested in the Central Government and then in the appellant corporation completely free of all prior encumbrances, an unregistered agreement to sell, even one fully paid for, could not make the respondent an "authorized occupant" under Section 2(g) of the 1971 Act; a mere agreement to sell does not transfer ownership in law, and the High Court was wrong to apply contract-law defences like Section 53A of the Transfer of Property Act to override the statutory vesting. The Court held that the eviction (summary) procedure was the correct legal route, not a civil suit.
Lesson Learnt
Paying the full price under an agreement to sell, without an actual registered conveyance deed, does not give a buyer ownership or ownership-like protection against eviction, especially where the property has since been taken over by the government under a nationalisation law that vests it free of earlier claims.