Section 53-A contemplates effectuating the English doctrine of what is called "part performance" under which when the possession is obtained by a transferee in part performance of the contract or when the transferee has already been put in possession prior to his performance of the other part of the contract, the possession is safeguarded under the doctrine. It envisages several conditions precedent.
The transferee has to show that he had taken or continued in possession of the property, that he was willing to perform his part of the contract and has undertaken some action in part performance of the contract. Since a transferee in possession would require essentially only to pay the balance consideration, he has to show that he has paid up the full purchase price or that he was ready and willing and able at all times to make payment of the entire purchase price.
29. This doctrine has been enunciated in the case of Nanasaheb Gujaba Bankar Vs. Appa Ganu Bankar & Ors. AIR 1957 BOMBAY 138 DB. Paragraph 6 of the Judgment sets out that the Section was inserted in 1929 in Transfer of Property Act, 1882. It required a contract to transfer, for consideration, the immovable property. In part performance of such contract the transferee should have taken possession. The consideration was paid by such transferee.
Bombay High Court
Yuvrani Hansa Devi vs Zafar Farooq Vohra & Anr on 2 August, 2011
Bench: R. S. Dalvi
1. This Suit is filed for a declaration that the agreement dated 18th October, 1977, which is the last agreement between the parties, has been duly cancelled and/or terminated and/or rescinded by the Plaintiff and the Defendants have no right, title and interest in the Suit flat No.10 on the 3rd floor and garage in the basement of 'Asha Mahal' situated at 46B, Pedder Road, Bombay- 400 026. Upon such declaration, the Plaintiff has claimed possession of the Suit flat, damages of Rs.10,000/- and mesne profits of Rs.1450/- p.m. which would be computed after the decree in this Suit, if any, is passed.
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2. The Defendants' father was the Plaintiff's licencee. The leave and licence agreement was initially executed between those parties on 13.08.1969 for a period of 11 months. Thereafter two other agreements were executed for periods of 11 months each. The period of 33 months of licence expired on 14.05.1972. The amendment to the Bombay Rent Act regarding licences came into force on 01.02.1973. The Defendants' father was not a licencee of the Plaintiff under the valid and subsisting licence on that date, but he was holding over the Suit flat on the date of amendment. He claims to be a protected tenant under the Bombay Rent Act. That claim, aside from being outside the inherent jurisdiction of this Court, does not matter in view of further contractual relationship between the parties outside tenancy. The Plaintiff claims that the Defendants' father was not a protected tenant since the licence period under the three licences had expired before the Bombay Rent Act was amended.
3. The Plaintiff had given a notice to the Defendants' father to vacate on 04.05.1972. He did not vacate. Those parties entered into an agreement instead on 14.08.1973 for purchase of the Suit flat by the Defendants' father. Part payment was made under the said agreement. The Defendants' father expired on 08.10.1974. Thereafter the parties to this Suit entered into a fresh agreement on 18.10.1977 for sale of the Suit flat to the Defendants upon a higher (3) () S 1491/80
consideration. Whereas under the agreement dated 14.08.1973 the purchase price of the Suit flat was Rs.1,35,250/-, under the fresh agreement dated 18.10.1977, the purchase price was fixed at Rs.1,75,350/-. Part payment of Rs.85,000/- made by the Defendants' father under the earlier agreement was accepted by the parties. From the remaining unpaid earlier consideration of Rs.90,350/- a further part payment of Rs.25,000/- came to be made under the second agreement between the parties after the death of their father leaving a balance amount of Rs. 65,350/-. The Defendants agreed to make payment of balance consideration by three post dated cheques (PDCs) 18.11.1977, 03.12.1977 and 15.01.1978. All the cheques were dishonoured upon presentation. The Plaintiff claims that for no further payment has been made as agreed. The Defendants claim that the further amount of Rs.10,000/- was sent to the Plaintiff which was refused. The Defendants claim that they were ready and willing to pay the balance consideration. They still claim that they are ready and willing to do so. They have made no payments thereafter.
4. The Plaintiff terminated the agreement dated 18.10.1977 under her notice of termination dated 31.07.1980 for non payment of balance consideration. The Plaintiff seeks to recover possession of the Suit flat from the Defendants. Hence the aforesaid Suit for declaration.
(4) () S 1491/80
5. All these aforesaid facts are admitted. The Defendants have claimed that consequent upon continuance of their possession since prior to May, 1972, they have become protected tenants. They further claim that consequent upon their possession, they cannot be evicted. The Plaintiff claims that the agreement dated 14.08.1973 terminated and rescinded the earlier agreement of licence. The Plaintiff further claims that under the fresh agreement again entered into by the Defendants with the Plaintiff on 18.10.1977, the earlier agreement stood rescinded, terminated and altered. The case of the Plaintiff is, therefore, essentially on the novation by substitution of the new contract dated 18.10.1977 for the old contract dated 14.08.1973. Of course, the new contract is essentially on only alteration of the consideration since part consideration remained payable despite possession continuing with the Defendants. The rights of the parties are, therefore, governed by the last agreement dated 18.10.1977. Since the contract is in respect of his residential flat which was already in possession of the transferor, the only part which remained to be performed of the contract was the payment of the balance consideration. The balance consideration was to be made on specified dates since they were under PDCs. The liability of the Defendants to make payment of the consideration is to be discharged on the specified dates of the PDCs. The Defendants have claimed that they need not have made payment on any (5) () S 1491/80
specified dates because no such dates were specified and the time was not made of the essence. It is the Plaintiff's case that the time was of the essence since the dates of the cheques showed payment to be made precisely thereon upon presentation of the cheques. Since mere payment of price under a contract is never a part of the contract which is taken to be of the essence of the contract, unless it is made of the essence, it would have to be seen whether the PDCs would make time of the essence.
6. Aside from Rs.85,000/- paid under the earlier contract dated 14.08.1973 and Rs.25,000/- paid under a fresh agreement dated 18.10.1977, the Plaintiff claims that no further payments are made. It is not even the Defendants' case that any further payment, except an installment of Rs.10,000/-, was made after the last agreement between the parties dated 18.10.1977. It is for Defendants to show and prove the payment, if any, made since admittedly the cheques have been dishonoured. It is the plaintiff's case that the mode of performance was specified and frozen. The contract was to be performed by honouring the PDCs and, therefore, had to be performed in that manner and none other which has not been done.
7. The Plaintiff's notice of termination is upon the non performance by the Defendants of the only part of the contract which was open for performance being the payment of balance consideration.
(6) () S 1491/80
8. The Defendants claim that the contract could not be terminated by the Plaintiff because they were and are ready and willing to perform their contract. The Defendants, of course, do not claim that they have made payment of the entire balance consideration. The Defendants however claim that the flat has been transferred to them. They have also claimed that the share certificates stood in their names, the share transfer deeds duly filled in were sent by the Plaintiff to the Defendants and consequently the society passed its resolution to transfer the flat to the Defendants which came to be transferred. The Defendants, therefore, claim a completed and concluded contract even without payment of the balance consideration. Counsel on behalf of the Defendants has also contended, though it has not been pleaded, that pursuant to the possession of the Defendants in the Suit flat prior to the execution of both the agreements and under the initial agreements of leave and licence, they are protected under Section 53-A of the Transfer of Property Act as transferor in possession of the property sought to be transferred in part performance of their obligation. The Defendants have hence resisted case of recovery of possession and the declaration sought by the Plaintiff. Based upon the aforesaid pleadings, the following issues have been framed which are answered as follows :
(7) () S 1491/80
ISSUES FINDINGS
1. Whether the Plaintiff proves that the Does not period for use and occupation of the come for Suit flat and garage under the agreement conside- dated 13th August, 1969 including renewal ration. period expired on 14th May, 1972 as
alleged in paragraph 3 of the Plaint.
2. Whether the Defendants prove that Cannot Mohammed Farooq Vohra and the 1st be Defendant became protected tenants of answered. the Plaintiff in respect of the Suit
flat and the Suit garage as alleged in
paragraph 4 of the Written Statement.
3. Whether the Plaintiff proves that the Yes. Agreement of Leave and Licence dated 13th
August, 1969 between the Plaintiff on
the one hand and the said Mohammed
Farooq Vohra and the 1st Defendant on the
other hand was deemed to have been
revoked or cancelled or determined by
the Agreement for Sale dated 14th August,
1973 between the Plaintiff and the said
Mohammed Farooq Vohra and the 1st Defendant as alleged in paragraph 6 of
the Plaint.
4. Whether the Defendants prove that the No. Plaintiff executed the necessary documents for the transfer of her right,
title and interest in respect of the
Suit flat and the Suit garage and the
five shares of Hope Hall Co-operative
Housing Society Limited in favour of the
1st Defendant in pursuance of the Agreement dated 18 th
October, 1977 as
alleged in paragraph 9 of the Written
Statement.
5. Whether the Defendants prove that the No. said Society passed a Resolution dated
6th January, 1978 for the transfer of the
Suit flat and the Suit garage and five
shares of the said Society from the name
of the Plaintiff in favour of the 1st
Defendant as alleged in paragraph 2(f)
of the Written Statement.
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6. Whether the Defendants prove that the No. Plaintiff ceased to be the owner of the
Suit flat and the Suit garage and/or to
have any right, title or interest in
respect thereof after the said
Resolution dated 6 th
January, 1978 was
passed by the said Society as alleged in
paragraph 9 of the Written Statement.
7. Whether the Defendants prove that the Is not resolution dated 18.01.1979 is bad in required law as alleged in para 12 of the Written to be Statement. answered.
8. Whether the Plaintiff proves that the Yes. Agreement for Sale dated 18th October,
1977 between the Plaintiff and the
Defendants became impossible of
performance as alleged in paragraph 14
of the Plaint.
9. Whether the Plaintiff proves that the Yes. said Agreement for Sale dated 18th
October, 1977 was validly rescinded or
cancelled or terminated by the Plaintiff
by her Advocate's letter dated 31st July,
1980 as alleged in paragraph 14 of the
Plaint.
10.Whether the Plaintiff proves that the Yes. Defendants are in wrongful or illegal
use and occupation of the Suit flat and
the Suit garage as alleged in paragraph
15 of the Plaint.
11.Whether the Plaintiff proves that she is As per entitled to recover from the Defendants final any damages or compensation for the use Order. of the Suit flat and the Suit garage
from 1st September, 1973 upto the date of
filing of the Suit, and if so, what
amount.
12.Whether the Plaintiff proves that the As per sum of rs.1,20,000/- paid by the said final Mohammed Farooq Vohra and/or the Order. Defendants to the Plaintiff stands
adjusted against the amount of
compensation claimed by the Plaintiff in
respect of the Suit flat and the Suit
garage for the period from 1st September,
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1973 as alleged in paragraph 15 of the
Plaint.
13.Whether the Plaintiff proves that she is As per entitled to recover any damages from the final Defendants, and if so, what amount. Order.
14.Whether the Plaintiff proves that she is
entitled to any amount for the use and As per occupation of the Suit flat and the Suit final garage by the Defendants from the date Order. of filing of the Suit, and if so, what
amount.
15.Whether the Plaintiff proves that she is As per entitled to any relief and if so, what final relief. Order.
9. The Plaintiff has not examined herself or any other witness. The Defendants have examined one witness. The oral evidence is required only in respect of the readiness and willingness for the payment to be made claimed by the Defendants, the further payment made by the Defendants, the transfer deeds executed by the Plaintiffs, the Resolution passed by the Society in which the flat is situate and the actual transfer of the flat alleged to have been made in the names of the Defendants by issue of share certificates in their names, all the other dates and events having been admitted by the Defendants. The only other aspect is to consider the law in respect of the possession of the Defendants under Section 53-A of the Transfer of Property Act in part performance of the Contract for adjudicating whether or not the Plaintiff can recover possession.
ISSUE NO.1 :
10. The expiration of the period of the licence (10) () S 1491/80
under the admitted agreement of licence is not disputed. Hence Issue No.1 does not come for consideration.
ISSUE NO.2 :
11. The question relating to the protection of the Defendants as protected tenants under the Bombay Rent Act is outside the inherent jurisdiction of this Court. Hence Issue No.2 cannot be answered.
ISSUE NO.3 :
12. The parties admittedly entered into an Agreement for Sale dated 14.08.1973. This was after the lience agreement terminated by afflux of time as well as after the amendment to the Bombay Rent Act. The parties, therefore, on 14.08.1973 agreed that instead of being licencee the Defendants would purchase the Suit flat. That had to be for consideration. It is shown to be for consideration of Rs.1,35,250/-. Part of Rs.85,000/- has been made thereunder. Consequent upon the agreement, the Defendants discontinued the payment of compensation under the leave and licence agreement. Hence the agreement, in fact, constitutes a novation under Section 62 of the Indian Contract Act which runs thus :
62. Effect of novation, rescission, and alteration of contract.- If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original
contract need not be performed.
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13. Agreement dated 14.08.1973 showed the substitution of the old contract of leave and licence by the new contract of sale. The leave and licence agreement thereafter need not be performed and has not been performed. Consequently the Defendants have not shown payment of compensation under the licence agreement. Hence Issue No.3 is answered in the affirmative.
ISSUE NO. 4 :
14. The parties admittedly had a further novation under the agreement dated 18.10.1977. Since part payment was not made under the earlier agreement, the consideration for the sale of the Suit flat to the Defendants was increased under the later agreement to Rs.1,75,350/-. The Plaintiffs have given credit for the earlier consideration of Rs.85,000/- received from the consideration of Rs.1,35,250/- payable under the earlier agreement. Thereafter the Defendants have admittedly paid Rs.25,000/- to the Plaintiff after the death of their father and upon execution of the fresh agreement by themselves. Still Rs.65,350/- remained to be balance amount unpaid by the Defendants. This was to be paid under three PDCs. PDCs have been admittedly dishonoured. The Defendants have not shown any payment made by any cheque, demand draft or cash to the Plaintiffs thereafter though they have claimed to have made a payment of Rs.10,000/- under their letter dated 24.09.1980 marked Exhibit D-10 in evidence. The letter is a notice of the Defendants' (12) () S 1491/80
Advocate to the Plaintiff's Advocate setting out the aforesaid admitted facts and claiming that the Defendants are paying directly to the Plaintiff a further sum of Rs.10,000/- as and by way of further part payment and claiming that thereafter the balance amount would be Rs.54,350/-. It is also claimed in that letter that the balance payment of Rs.54,350/- would be cleared by payment at the rate of Rs.5000/- p.m. This is a unilateral alteration of the contract. This would not amount to a novation. This was the fresh offer made by the Defendants. It was not accepted by the Plaintiffs which cannot be taken to be a contract between the parties enforceable in law. The balance amount claimed by the Defendants is seen to be arithmetically inaccurate. However that does not matter since the fact remains that the letter dated 24.09.1980 shows that at that time the Defendants had admittedly not paid up the entire agreed consideration.
15. The said letter shows that Defendant No.1 "is paying" directly to the Plaintiff Rs.10,000/-. No cheque or demand draft is enclosed with the letter. Even the amount paid in cash, which could be a legal tender, is not shown. Hence the claim of the Defendants made by the Advocate for Defendant No.1 has remained unsubstantiated as stated in the letter produced by the Defendants. The Defendants themselves do not claim or allege any further payment being made. (13) () S 1491/80
16. They however continuously state that they are ready and willing to make payment. This claim has continued from 1977 when the agreement was entered into till 1980 when the letter dated 24th September, 1980 was written to 1982 when the Written Statement was filed and later when the evidence was led on behalf of the Defendants and has continued in argument on behalf of the Defendants. The only thing that remains is for the Defendants to substantiate their readiness or their willingness as also their ability and their capacity to profess such readiness and willingness. The PDCs show otherwise. The letter dated 24th September, 1980 does not show any payment. The statement in the letter that Rs.5,000/- shall be paid per month is admittedly breached. The Defendants have not accounted for the balance payment of Rs. 65,350/- remaining unpaid since the date of their last agreement.
17. In the teeth of such conduct, the Defendants claim that the Plaintiff executed the necessary documents of transfer. This absurd claim has naturally not been shown. The cross-examination of the Defendants shows that the transfer deeds are not produced. The Defendants have not called upon the society to produce them either. The Defendants claim that resolution was passed by the society. No copy of the resolution is produced or proved. No officer of the society is examined. The Defendants claim that they had the original share certificates in respect of (14) () S 1491/80
the Suit flat. When called upon, they failed to produce it. It is needless to point out the redundant evidence of the Defendants as to how they failed in their endeavour. The Defendants have consequently not shown and the Plaintiff consequently never executed any document of transfer in respect of the Suit flat or the garage. Hence Issue No.4 answered in the negative.
ISSUE NO.5 :
18. The resolution of the society has to be proved from the records of the society by an officer of the society certifying how it was passed. No such witness is examined. Hence the passing of any resolution cannot be shown or proved. Consequently Issue No.5 is answered in the negative.
ISSUE NO.6 :
19. The claim of the Defendants that the Plaintiff ceased to be an owner is as devoid of law as of the facts. It is unconceivable how the Plaintiff can cease to be owner of the flat, which she admittedly is, upon an agreement to transfer the flat to the Defendants for consideration part of which remained unpaid from 1977 until now. Hence Issue No.6 is answered in the negative.
ISSUE NO.7 :
20. The Defendants have claimed that certain resolution of the society is bad in law. Since the (15) () S 1491/80
Defendants have failed to prove the resolution propounded by them it is not even required by this Court to consider whether resolution is bad or not. Hence Issue No.7 is not required to be answered.
ISSUE NOS. 8 & 9 :
21. The Plaintiff claims that she has validly terminated the Suit contract dated 18th October, 1977 under the termination notice dated 31st July, 1980. She claims that the agreement dated 18th October, 1977 is impossible of performance such that the Plaintiff would execute any document to transfer the Suit flat in the name of the Defendants upon non payment of the entire balance consideration which remained unpaid from the date of execution till date.
22. The notice of termination is the most justified. The Defendants' claim is a wholly egregious, abuse of Plaintiff's largesse. Since the Defendants' father was in possession of the Suit flat as licencee of the Suit flat and held possession after the last licence agreement terminated by afflux of time, the Defendants took advantage of their possession. It appears that initially the Defendants' father and later the Defendants failed to pay and/or were not willing to pay the compensation agreed to be paid in respect of the Suit flat. They entered into an Agreement of Sale which was an eye-wash. After making payment of a part of the consideration, they defaulted in further payment. They thereafter agreed (16) () S 1491/80
to execute yet another agreement showing a larger consideration which obviously they promised to pay and which they completely and fully defaulted and breached. They dishonoured the cheques showing their dishonourable intention. They claimed to make further payment albeit of the princely sum of Rs.10,000/- which also they failed to make. They promised to pay amounts each month which they never did. They continued in possession taking advantage of their position. The Plaintiff was fully justified in terminating the agreement.
23. The Plaintiff was required to perform her part of the agreement in transferring the Suit flat in the name of the Defendants. This is the Plaintiff would do only if and after she received the entire agreed balance consideration at the time specified as reflected in the dishonoured cheques of the Defendants. Under Section 54 of the Indian Contract Act, the reciprocal promise of the parties would be required to be performed only as mentioned therein. Section 54 runs thus :
54. Effect of default as to that promise
which should be first performed, in contract consisting of reciprocal promises. - When a
contract consists of reciprocal promises, such that one of them cannot be performed, or that its performance cannot be claimed till the
other has been performed, and the promisor of the promise last mentioned fails to perform
it, such promisor cannot claim the performance of the reciprocal promise, and must make
compensation to the other party to the
contract for any loss which such other party (17) () S 1491/80
may sustain by the non-performance of the contract.
24. Since the Defendants did not perform their part of the reciprocal promises of the parties under the last agreement by payment of consideration, the Plaintiff was not required to perform her part of the reciprocal promises of transferring the Suit flat to the Defendants. Consequently the Plaintiff claims that the agreement has terminated and became impossible of performance under Section 56 of the Indian Contract Act which runs thus :
56. Agreement to do impossible act. - An
agreement to do an act impossible in itself
is void.
25. This impossibility is upon the Defendants' failure to perform on the dates that the Defendants agreed to do as reflected in the PDCs. Hence Issue Nos.8 & 9 are answered in the affirmative.
ISSUE NO.10 :
26. This follows as a matter of corollary to Issue Nos.8 & 9. The Defendants cannot be stated to be in lawful possession of the Suit flat without payment of the entire agreed consideration within the agreed time or at least reasonably thereafter. Hence Issue No.10 is answered in the affirmative.
ISSUE NOS.11 TO 15 :
27. It is contended on behalf of the Defendants that the Defendants are protected as transferees in (18) () S 1491/80
possession of the property sought to be transferred under Section 53-A of the Transfer of Property Act. The relevant part of which runs thus :
53-A. 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 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.
28. Section 53-A contemplates effectuating the English doctrine of what is called "part performance" under which when the possession is obtained by a transferee in part performance of the contract or when the transferee has already been put in possession prior to his performance of the other part of the contract, the possession is safeguarded under the doctrine. It envisages several conditions precedent. (19) () S 1491/80
The transferee has to show that he had taken or continued in possession of the property, that he was willing to perform his part of the contract and has undertaken some action in part performance of the contract. Since a transferee in possession would require essentially only to pay the balance consideration, he has to show that he has paid up the full purchase price or that he was ready and willing and able at all times to make payment of the entire purchase price.
29. This doctrine has been enunciated in the case of Nanasaheb Gujaba Bankar Vs. Appa Ganu Bankar & Ors. AIR 1957 BOMBAY 138 DB. Paragraph 6 of the Judgment sets out that the Section was inserted in 1929 in Transfer of Property Act, 1882. It required a contract to transfer, for consideration, the immovable property. In part performance of such contract the transferee should have taken possession. The consideration was paid by such transferee.
In that case the Plaintiff had left for Karachi in 1925. He returned to his home in India in 1947. It was his case that he executed the sale deed in 1939 when the land was in possession of his agricultural tenant. The Plaintiff contended that his signature was obtained on a blank paper by his agent and hence the transfer was fraudulent. The transferee in the meantime had sold the property to a third party. The transfer was not registered. Defendant No.2 had (20) () S 1491/80
obtained constructive possession of the Suit land. Defendant No.2 had paid consideration to the Plaintiff.
It was, therefore, held that the transferee had taken or continued in possession as provided by the terms of the contract. In that case the Defendants had paid the full purchase money as observed in para 8 of the Judgment. They were already in possession of the property.
Referring to the Supreme Court decision in the case of Maneklal Mansukhbhai Vs. Hormusji 52 Bom LR 521 (AIR 1950 SC 1). It was observed at page 141 in para 8 of the Judgment thus:
"Section 53-A of the Transfer of Property Act, 1882, is a partial importation into the statute law of India of the English doctrine of part performance. It furnishes a statutory defence to a person who has no registered title deed in his favour to maintain his possession if he can prove a written and signed contract in his favour and some action on his part in part performance of that contract."
30. The least, therefore, that the Defendant must show whilst claiming the right to possession under Section 53-A of the Transfer of Property Act is that their possession was under the Contract and the possession was not taken illegally or gratis. Hence the Defendant must show payment of consideration made. (21) () S 1491/80
In this case the Defendants have admittedly not paid any consideration whatsoever under the last agreement dated 18.10.1977. That having not been so, they cannot take advantage under the doctrine.
31. In the case of Balasaheb Manikrao Deshmukh & Anr. Vs. Rama Lingoji Warthi AIR 2000 Bombay 337, it has been held that Section 53-A would not confer any right upon a person in possession. It only prevents a Plaintiff from recovering possession of the property already transferred to the Defendant.
In that case the Appellants were in possession under the agreement for sale. They were found ready and willing to perform their part of contract. Therefore possession was valid defence.
32. In this case the possession of the Defendants continued since they are holding over the Suit flat after the leave and licence agreement expired by afflux of time. The Defendants made part payment under the first agreement. Since the entire amount was not paid, there was novation between the parties by the execution of second agreement. Aside from a further part payment of Rs.25,000/- on the date of the second agreement, the entire remaining balance remained due and payable until the filing of the Suit and until now. It is astounding that the Defendants claim under the beneficient doctrine when they have caused the highest inequity to the Plaintiff by (22) () S 1491/80
failing to make payment altogether and also by having all the three cheques dishonoured. It would be absurd to allow the Defendants the benefit of the equitable doctrine when the Defendants have neither paid nor shown their readiness and willingness to make payment at any point in time and when they have failed and neglected to make even part payments by installments agreed by themselves and recorded in their Advocate's letter.
33. The equitable doctrine of part payment and the object of the amendment setting out that law from the equitable English law came to be enunciated and explained upon reference to earlier cases in the case of Shrimant Shamrao Suryavanshi & Anr. Vs. Pralhad Bhairoba Suryavanshi & Ors. (2002) 3 Supreme Court Cases 676.
In para 7 of the Judgment the Supreme Court sought to interpret the provisions of Section 53-A in a scientific manner looking to the legislative history and structure of the provisions referring to the case of R. S. Nayak Vs. A. R. Antulay. It considered the report of the Committee preceding the legislation as a permissible as well as substantial and illuminating aid to construction.
In para 12 of the Judgment the Supreme Court considered the position in England which essentially caused the Court of Equity to consider the doctrine. (23) () S 1491/80
The provisions of the Statute of Fraud required that no Suit or action would be brought on an agreement which was not in writing. The aim of that statute was to protect innocent parties against fraud. However parties under an oral agreement who had performed their part under the contract could not bring any action in law for specific performance of the agreement as the Statute of Fraud required the agreement to be in writing. Consequently innocent buyers would be defrauded under an oral agreement under which they had performed their part of the contract. The Court of Equity intervened and took action to enforce specific performance of a parole agreement to protect the defrauded party against the fraud. The Court of Equity did not allow the Statute of Fraud to be used as an instrument to perpetuate a fraud by the transferor upon the transferee where there was part performance of the parole agreement. This would essentially be by payment of consideration by the transferee seeking possession.
This doctrine became law under Section 53-A of the Transfer of Property Act. The Special Committee constituted to bring about the amendment considered the illiterate and ignorant buyers who had partly performed their part of the contract to be granted the statutory protection. Hence the transferee who took possession of the property in the absence of a lawful transfer instrument was protected, if he was in possession of the property or was put in possession (24) () S 1491/80
consequent upon making payment of consideration in part performance of the contract. The purpose of enacting the section was to provide protection to such transferees.
However there were several conditions. These have been set out in para 16 of the Judgment. The most important of the conditions was that the transferee had done some act in furtherance of the contract had performed or was willing to perform his part of the contract.
34. In this case the Defendants have not done any act in furtherance of the last contract dated 18.10.1977. They have not performed any part of that contract. They have completely and hopelessly failed in performance of their part of the contract aside from saying, which they always did, up to the arguments in this Suit when their Counsel reiterated their statement that they were ready and willing to perform their contract. They were not shown any readiness or willingness. They have only shown pure and complete failure and neglect to perform their part of the contract and that is only because they have been in possession as holding over the property ever since the licence of their further agreement expired by afflux of time. It would be complete travesty of justice to apply the equitable doctrine to parties as inequitable as the Defendants.
(25) () S 1491/80
35. In the case of Mahadeva & Ors. Vs. Tanabai (2004) 5 SCC 88 the abuse by a party, such as the Defendants of Section 53-A has been considered. One of the issues in that case was whether such a party could plead his defence under Section 53-A of the Transfer of Property Act despite the Plaintiff's title having been established and whether they can continue to be in possession despite the fact that they had not chosen to enforce the agreement for sale. The possession claimed by the transferee was held to be illegal in that case. They were ready to pay the remaining consideration amount. They claimed their title by adverse possession which plea was negatived. They were not entitled to the protection of the equitable doctrine of part performance merely by the factum of their possession, illegally held.
36. In this case the possession claimed by the Defendants is not lawful and juridical possession. They have not come into possession under the agreement of sale entered into by them. They have held over as transferees without paying absolutely any consideration consequent upon the last agreement for sale. In fact the only thing they required to do was to make payment of consideration. They have abused their position and their possession. They being not in lawful possession, their unlawful possession would have to be returned to the Plaintiff.
37. The aforesaid Judgments relied upon by the (26) () S 1491/80
Counsel on behalf of the Defendants himself show how they are inapplicable to the Defendants such as one in the case.
38. It is also contended on behalf of the Defendants that the time was not made the essence of the contract and hence the notice of termination is void and possession cannot be recovered from the Defendants. Time could be made of the essence in a number of ways. Even if time is not made of the essence in a written contract between the parties, it can be made of essence later by a specific notice in that behalf. Thereafter if time which is made of the essence is disregarded, a notice of termination can be validly given setting out the specific date for payment which made time of the essence. Of course, if it is not made of the essence by setting out any date, mere payment of consideration is one of the terms of the contract of which would be presumed that time was not made of the essence.
39. In this case the Defendants have issued three PDCs. The PDCs bear specific dates. These are dates agreed upon by the parties for the presentation of the cheques by the Plaintiff upon the Defendants' bankers. The parties, therefore, specifically contracted to make payment on only those dates. The Plaintiffs could not present the cheque earlier. The Defendants cannot hold on the payment until later. The PDCs are, therefore, the manner in which specific payments were (27) () S 1491/80
agreed to be made on specified dates. They had to made on those dates and no other. The execution of the PDCs, therefore, specifically show that time was made of the essence. If that time is not adhered, the cheques would be dishonoured. The readiness and willingness would not be shown. In fact the default of the Defendants would be shown. Aside from the criminal liability under Section 138 of the Negotiable Instruments Act, the Defendants would incur the liability of committing a default of their part of the contract. It would be such default which would show the Defendants unwilling to perform their contract and liable for termination of the contract. It would consequently, of course, disentitle the Defendants from retaining the possession as possession obtained in part performance of the contract also.
40. Counsel on behalf of the Defendants drew my attention to the Judgment in the case of Swarnam Ramachandran & Anr. Vs. Aravacode Chakungal Jayapalan (2004) 8 SCC 689 in which it is observed that time cannot be presumed to be of the essence and that the person alleging the time to be of the essence is to prove it and be willing to proceed to complete the contract. In this case it is not presumed that the time was of the essence; it is shown that the time was of the essence under three specified dates of the PDCs on which those cheques were to be honoured. The Plaintiff would only then require to perform her part of the contract in transferring the flat to the (28) () S 1491/80
Defendants by executing the share transfer form, hitherto rightly not executed, and by handing over the share certificates of the society, hitherto not handed over.
41. I have also been shown the case of Govind Prasad Chaturvedi Vs. Hari Dutt Shastri & Anr. (1977) 2 SCC 539 in which the mere fixation of the period within which the contract had to be performed was held not to make a stipulation, as to make a time the essence of the contract. Of course, that is so but this is not the case of mere fixation of the period. It is the case of the specific dates on which the amount had to be paid if the cheques were not to be dishonoured.
42. Upon the admitted facts of this case, it is seen that the Defendants have defaulted in making payment of the entire balance consideration that had remained due and payable by them since the date of the last agreement between the parties on 18.10.1977 and have at all times failed to show any readiness and willingness to perform their part of the said agreement which is the only agreement that governs the rights of the parties. They professing their readiness or willingness is an empty exercise which is a mockery of the equitable law that the Defendants seek shelter under. In a contract in which possession is already with the transferee, the only part remaining to be performed is the payment of balance (29) () S 1491/80
consideration. Unless that is performed, nothing further can be done by the transferor and, therefore, if that essential part to be performed is breached, even partly, the contract must necessarily come to end; in fact it would be incapable to any further performance.
43. Hence such a contract must be determined by the Court and the necessary declaration in that behalf must be granted. Further the reliefs of handing over the possession, wrongfully claimed by such transferee, as are the Defendants in this case, and compensation by way of mesne profits for wrongful occupation of the premises sought to be transferred under the agreement between the parties must follow as corollary therefrom.
44. This is the most fit case for the grant of all the above reliefs to the Plaintiff. The Plaintiff is, therefore, entitled to the declaration under prayer (a) of the plaint, recovery of possession of the Suit premises under prayer (b) of the plaint as also compensation for unlawful occupation and use of the Suit flat from the date of the filing of the Suit till the Defendants hand over possession of the Suit flat to the Plaintiff. Hence the Suit is decreed in terms of prayers (a) & (b). Prayers (c) & (d) need not be granted in view of prayers (a) & (b) which are granted. The Plaintiff shall be further entitled to apply for and be granted compensation by way of mesne (30) () S 1491/80
profits from the date of the Suit as would be determined by the Commissioner for taking accounts in accordance with law as per the market rate and occupation of the Suit flat.
45. The Defendants shall pay costs fixed at Rs. 25000/- to the Plaintiff.
(ROSHAN DALVI, J.)
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