Shanti Bhushan and Ors vs. State of UP & Ors.; AIR 2015 (NOC) 95 (All)
In the instant case, vendor was landlord and vendee was tenant.
The agreement for sale was arrived at in 1966, but it was oral. On account of failure on the part of the owner landlord, suit had to be filed in which compromise was arrived at and fresh agreement for sale was executed in October, 2010. Thereafter, sale deed was executed in November, 2010. It was pleaded by vendee that as vendor-landlord had only limited right to receive rent, market value should be determined on basis of that limited right on the date the sale deed was executed.
The Hon’ble Court observed that there are two sets of rights enjoyed by a person in respect of the property. One corporeal and the other incorporeal. The corporeal right is the right of ownership in material things whereas incorporeal right is any other proprietary right in rem. The owner of a material object is he who owns a right to the aggregate of its uses. Some of the rights of the owner might have been transferred by way of lease, the right of the user of those rights is as merely encumbrance and not as an owner. The ownership is of general use and not of absolute use. Once certain rights are transferred for a specific purpose, the landlord enjoys residuary rights in the said property. Even if any land may be mortgaged, leased, charged, bound by restrictive covenants and re so on, yet the residuary right remains with the owner. Though the residuary use, so left with the owner, may be of very small dimension and some encumbrancer may own rights over it that is much more valuable than owner, yet the ownership of it remains with the owner and not with the encumbrancer. No such right loses its identity because of an encumbrance vested in someone else. The right of ownership is essentially an inheritable right. It is capable of surviving its owner for the time being. It belongs to the class of rights which are divested by death but are not extinguished by it. The encumbrance does not become owner of the property despite the fact that he enjoys the property to the exclusion of the ownership.
For the aforesaid reason the plea by instrument of sale, the limited right to receive rent is transferred which is the basis for determination of the market value, cannot be accepted. The lessee who is encumbrancer has limited right of enjoyment of the property and nothing more than that. Even if the landlord had limited right of use of property, would not dilute his right of ownership. He continues to enjoy the residuary right in the said property. Once the property has been conveyed, the landlord by virtue of this transfer conveyes to the lessee the right of ownership which does not include only the right of enjoyment of the property, but all the residuary rights which the owner has in the said property.
The High Court concluded that after giving property in tenancy, pleas based on limited right are not tenable.
By virtue of a sale deed executed in favour of the petitioner, ownership has been transferred in his name. It cannot be said that by execution of the sale deed, limited rights have been transferred to the petitioner. As a result of the said sale deed, all the rights of the owner, described herein above, stand transferred in the name of the petitioner. While enjoying these rights, he cannot claim that a limited right of receipt of rent alone has been transferred, which would become the basis for determination of the market value.
