Possession Without Title Is Legally Insubstantial: Gujarat HC Dismisses Appeal By Dairy Cooperative Over Void Land Transfer

“An agreement to sell holder does not have any right in the property” –  In a significant ruling upholding statutory restrictions on transfers of new tenure agricultural land, the Gujarat High Court dismissed a second appeal filed by Bharuch Jilla Dudh Sahakari Sangh Ltd. seeking protection of its possession over agricultural land originally acquired without statutory permission. The Court reiterated that a void transaction cannot form the basis for any equitable or legal relief, including permanent injunction or protection under Section 53A of the Transfer of Property Act.

The Court, through Justice Sanjeev J. Thaker, concluded that the dairy cooperative society, having taken possession under an unregistered memorandum of understanding (MOU) for restricted tenure land without obtaining permission from the competent authority under the Gujarat Tenancy and Agricultural Lands Act, 1948, had no enforceable right in the property and could not be granted protection. The Court also held that since the society never sought specific performance of the agreement, it could not be allowed to seek relief indirectly through a suit or defence based on possession.

“No suit for specific performance, no legal title, no rights”: Court Rejects Defence Based On Unregistered MOU

The case arose from Special Civil Suit No. 17 of 2010, where the legal heirs of the original landowner Dahyabhai Gangaram Solanki sought recovery of possession after the State abandoned acquisition proceedings for the land. The appellant-society had entered into a MOU in 1983 with the plaintiff’s predecessor, paid Rs. 1,33,000, and took possession of the land under the belief it would be acquired by the State. However, when the acquisition proceedings were dropped in 1989, the land remained in the society’s possession without any registered transfer deed or statutory approval under Sections 43 and 63 of the Tenancy Act.

Both the Trial Court and the First Appellate Court held that the land was new tenure land subject to restrictions under Section 43, and since no prior permission was obtained, the transaction was void. The Courts directed the return of possession to the plaintiffs and rejected the society’s claim for continued possession based on the MOU.

In the second appeal before the High Court, the appellant argued that the payments made and possession given under the MOU entitled them to either protection or specific performance. The Court, however, categorically rejected this argument, stating:

“An agreement to sell holder does not have any right in the property... the only right available to such agreement to sell holder is to seek specific performance of the said agreement.”

(Citing Munishamappa v. M. Rama Reddy, 2023 SCC OnLine SC 1701 and Raheja Universal Ltd. v. NRC Ltd., (2012) 4 SCC 148)

Unregistered MOU Cannot Be Basis for Injunction or Possessory Rights

The Court emphasized that the defendant never filed a suit for specific performance and relied entirely on the unregistered MOU and payment receipts to claim possession. Such a plea, the Court said, could not survive legal scrutiny. Referring to the Supreme Court's decision in Balram Singh v. Kelo Devi (MANU/SC/1241/2022), the Court noted:

“The plaintiff cannot get the relief indirectly which otherwise he/she cannot get in a suit for substantive relief, namely, in the present case the relief for specific performance… more particularly when the defendant specifically filed the counter-claim for getting back the possession which was allowed by the learned trial Court.”

Similarly, the Court applied the reasoning of its own earlier judgment in Devesh Metacast Pvt. Ltd. v. Girish Nagjibhai Savaliya (CRA Nos. 288 & 289 of 2022, decided 01.05.2025), where it was held:

“No decree for permanent injunction can be granted on basis of an unregistered agreement to sell, especially where a prayer for specific performance has not been sought… The Plaintiff cannot be permitted to achieve indirectly what it cannot achieve directly.”

Further, the Court observed that the entire defence was built on a document that had no legal validity in the absence of registration under Section 17 of the Registration Act and was inadmissible as evidence of ownership or transfer under Section 49.

No Adverse Possession, No Substantial Question of Law

The Court also dismissed the appellant’s attempt to claim title by adverse possession, noting that:

“The defendant has not taken any plea of stating that entire sale consideration has been paid and/or that the defendant has become owner by way of adverse possession.”

Thus, no factual or legal foundation existed for such a claim.

Justice Thaker reiterated the limited scope of second appeals under Section 100 of the Civil Procedure Code, 1908, citing multiple precedents, including Navaneethammal v. Arjuna Chetty, (1996) 6 SCC 177, and Jaichand (Dead) through LRs v. Sahnulal, 2024 SCC OnLine SC 3864:

“The High Court cannot interfere with the findings of fact arrived at by the first Appellate Court… except in cases where such findings were contrary to mandatory provisions of law or based on inadmissible evidence or without evidence.”

On this basis, the Court concluded that no substantial question of law arose for consideration, and both lower courts had rightly applied the law.

Appeal Dismissed, Possession To Be Returned

The second appeal was dismissed at the admission stage. The connected civil application (for stay) was also disposed of. The Court upheld the decree requiring the dairy cooperative to return possession of the land to the original owners, holding that possession without legal title or a valid, enforceable agreement cannot be protected in law.

“This Court does not find any substance in the present Second Appeal as the same is devoid of any merit both on facts and law.”

This judgment reinforces the legal position that:

• Transactions involving new tenure agricultural land without prior approval are void under the Gujarat Tenancy and Agricultural Lands Act;

• An unregistered MOU or agreement to sell cannot create any rights in immovable property;

• Specific performance must be specifically sought—injunctive or possessory relief cannot substitute or indirectly achieve the same;

• The doctrine of adverse possession requires clear pleadings and proof, which was wholly absent in this case;

• Section 100 CPC does not permit a reappreciation of facts without a substantial question of law.

The Gujarat High Court’s decision underscores the need for compliance with statutory conditions in land transactions, especially involving cooperative societies and restricted tenure lands, and serves as a clear warning against attempts to bypass legal requirements through unregistered or informal arrangements.

Date of Decision: 02 December 2025