Sardar Govindrao Mahadik & ANR Vs. Devi Sahai & Ors [1981] INSC 206 (15 December 1981)

DESAI, D.A.

MISRA, R.B. (J)

CITATION: 1982 AIR 989 1982 SCR (2) 186 1982 SCC (1) 237 1982 SCALE (1)191

CITATOR INFO :

E&R 1990 SC1828 (9) RF 1992 SC 385 (7)

ACT:

Transfer of Property Act, Section 53A-Scope of

HEADNOTE:

The appellant mortgagor took a loan by mortgaging his house property to the respondent mortgagee. The mortgage was a mortgage with possession. According to the mortgagee sometime thereafter the mortgagor agreed to sell the property to him and that pursuant to this agreement requisite stamps were purchased and a draft sale deed was drawn up. The sale deed was however not registered.

A few days later the mortgagor sold the property to another person and the mortgagor and the subsequent purchaser filed a suit against the mortgagee for a decree for redemption.

In the written statement the mortgagee claimed that even though the sale deed was not registered, since he was in possession of the property in part performance of the contract of sale and continued to be in possession and did several acts attributable to the contract, the mortgagor was debarred from enforcing any right against him in respect of the property. It was also claimed that since the mortgagor himself had no subsisting title to the property on the date of sale, he could not have transferred the property to the subsequent purchaser.

The trial court held that though the sale deed was executed but since it was not registered the transaction of sale was not complete. The Court further held that benefit of section 53 A is not available to the mortgagor defendant because the mortgage being a mortgage with possession, continued possession of the mortgagee after the date of contract would not be in part performance of the contract, and also the payment made for the purchase of stamps and for expenses of registration could not be said to be in furtherance of the contract because that amount was paid before the execution of the contract.

In the mortgagee's appeal the High Court held that he was entitled to the benefit of section 53A against the mortgagor and the subsequent purchaser for the reason that he was in possession of the property and paid Rs. 1000 in furtherance of the contract.

The appellant in Civil Appeal No. 1145 of 1969 filed a suit against the mortgagor for recovery of a debt owed to him and obtained attachment of the 187 suit property before judgment. The suit eventually ended in a decree in his favour, In the auction of the suit property since there were no bidders the decree holder's bid was accepted with the permission of the Court.

The High Court allowed the decree holder to be impleaded as a respondent in the mortgagee's appeal which was then pending in the High Court.

It was contended on behalf the mortgagor that the decree holder could not maintain an application under order XXII, Rule 10 of the Code of Civil Procedure because he could not be said to be claiming under the mortgagor. (Rule 10 of order XXII CPC provides for continuance of any action by or against a person who acquires any interest either by assignment, creation or devolution during the pendency of the suit with the leave of the Court.) ^

HELD: To qualify for the protection of the doctrine of part performance it must be shown that there is a contract to transfer immovable property for consideration and the contract is evidenced by a writing signed by the person sought to be bound by it and from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. After establishing these circumstances, it must be further shown that a transferee had in part performance of the contract either taken possession of the property or any part thereof or the transferee being already in possession, continued in possession in part performance of the contract and had done some act in furtherance of the contract. The acts claimed to be in part performance must be unequivocally referable to the pre-existing contract and the acts of part performance must unequivocally point in the direction of the existence of contract and evidencing implementation or performance of contract. There must be a real nexus between the contract and the acts done in pursuance of the contract or in furtherance of the contract and must be unequivocally referable to the contract. When series of acts are done in part performance one such may be payment of consideration.

Any one act by itself may or may not be of such a conclusive nature as to conclude the point one way or the other but when taken with many others, payment or part of the consideration or the whole of the consideration may as well be shown to be in furtherance of the contract. [209 D-H] The view of the House of Lords that one must not first look at the oral contract and then see whether the alleged acts of part performance are consistent with it but that one must look at the alleged acts of part performance and see whether they prove that there must have been a contract and that it is only if they do so prove that one can bring in the oral contract may not be wholly applicable to the situation in India because an oral contract is not envisaged by section 53A. Even for invoking the equitable doctrine of part performance there has to be a contract in writing from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. The correct view would be to look at that writing that is offered as a contract for transfer for consideration of any immovable property, examine the acts said to have been done in furtherance of the contract and find out wether there is a real nexus between the contract and the acts pleaded as in part performance so that to refuse relief would be perpetuating the fraud of the party who, after having taken advantage or benefit of the contract, backs out and pleads non-registration as defence. [210A-D] Foxcroft v. Lester, 2 Vern. P. 456; Elizabeth Meddison v. John Alderson, Lord Selborne (1882-1183) 8 A.C. 467;

Clinan & Anr. v. Cooke & Ors. 1775-1802 188 All. E.R. (Reprint) 16; Chapronierse v. Lambert 1916-17 All.

E.R. (Reprint) 1889; Steadman v. Steadman [1974] 2 All. E.R.

977, referred to.

In short, acts preliminary to the contract would be hardly of any assistance in ascertaining whether they were in furtherance of the contract. Anything done in furtherance of the contract postulates the pre-existing contract and the acts done in furtherance thereof. Therefore, the acts anterior to the contract or merely identical to the contract would hardly provide any evidence of part performance [210 E] Although the mortgagee's claim regarding payment of Rs.

1000 to the mortgagor for the purchase of stamps and for expenses incidential to registration was not in dispute, there is no evidence on record to show that there was an oral contract anterior to the unregistered sale deed, nor was there a draft agreement prior to the drawing up of the sale deed. Out of the sum of Rs. 1000 a sum of Rs. 700 was paid prior to the agreement. It was not subsequently claimed that the balance of Rs. 300 was paid in furtherance of the contract.

The High Court was in error in holding that the act envisaged by the phrase "in furtherance of the contract" should be in pursuance of the contract and not that it should either precede or follow the agreement or the contract. If a written contract is a sine qua non for the application of the equitable doctrine of part performance any act preceding the contract could never be in furtherance of that contract which was yet to materialise. Negotiations for a contract and a concluded contract stand apart from each other. Anything at the negotiating stage cannot be claimed as a contract unless the contract is concluded between the parties, that is the parties are ad idem. The contract should be a written contract from which the necessary ingredients constituting the transfer could be ascertained with reasonable certainty.

[203 A-B] There is no material on record to substantiate the mortgagee's claim that out of the total consideration payable to the mortgagor he had retained in deposit with him a sum of Rs. 17000 odd for being paid to other creditors of the mortgagee and that out of this amount a sum of Rs. 541 due to him had been adjusted. Assuming that he could reimburse himself there is no evidence to show that he gave discharge or gave credit in his books of account to this sum. Also there is nothing to show that the mortgagor had in his possession a list of the mortgagees creditors or that he had made any attempt to procure the list or that he issued a public notice inviting the creditors of the mortgagor to claim payment from him to the extent of the consideration retained by him. Neither did he pay any creditor nor did he make any attempt to pay any creditor including those whose names were known to him. [211 G] Induction into possession of an immovable property for the first time subsequent to the contract touching the property, may be decisive of the plea of part performance.

But mere possession ceases to be of assistance when the person claiming benefit of part performance is already in possession prior to the contract and continues to retain possession. There is an understandable and noteworthy difference in the probative value of entering into possession for the first time and continuing in possession coupled with a claim of change in character. Where a person claiming benefit of part performance of a contract was already in posses- 189 sion prior to the contract, the Court would expect something independent of the mere retention of possession to evidence part performance. Mere retention of possession, quite legal and valid, if mortgage with possession is not discharged, could hardly be said to be an act in part performance unequivocally referable to the contract of sale. [213 D-E, 215 E-F] In the instant case retention of possession is of no consequence because the mortgage was not discharged and was subsisting and the mortgage being a mortgage with possession, the mortgagee was entitled to retain possession.

The fact that immediately a sale deed was executed in favour of the subsequent purchaser by the mortgagor would show that he was not willing to accept the contract as offered by the mortgagor. The subsequent purchaser had taken a conditional sale and this reinforces the stand of the mortgagor. The existence of the dispute, about the nature of the transaction, is not in dispute. Therefore the conduct of the mortgagor is consistent with his case. [217 D-F] The mortgagee had failed to prove that he did any act in furtherance of the contract, continued retention of possession being a circumstance of neutral character in the facts and circumstances of the case and it being further established that the mortgagee was not willing to perform his part of the contract, he is not entitled to the benefit of the equitable doctrine of part performance. [217 H] (2) A perusal at the chronological events of the case would clearly show that the decree holder had more than a mere semblance of title. Even if the application would not fall under order 22 Rule 10 CPC. section 146 of the Code enables him to maintain the application. Smt. Saila Bala Desai v. Smt. Numala Sundari Dassi and another, [1958] S.C.R. 1287 at 1291, referred to. [221-D-E] The decree holder did not acquire under the sale certificate the equity of redemption of the mortgage. The suit property was sold subject to subsisting mortgage in favour of the mortgagee. At a Court auction what is sold is right, title and interest of the judgment debtor who in this case was the mortgagor. Subject to other conditions, his right is the right to redeem the mortgage. Much before the proclamation of sale was issued the equity of redemption held by the mortgagor was sold by him to the subsequent purchaser. Therefore, even on the date of decree as also on the date of filing of the execution application the mortgagor had no subsisting interest in the property which could be sold at the Court auction. [222 A-B] The object behind the order levying an attachment before judgment is to give an assurance to the plaintiff that his decree, if made, would be satisfied. Where an attachment has been made, any private transfer or delivery of the property attached would be void as against all claims enforceable under the attachment. What is claimed enforceable is claim for which the decree is made. A dismissal of the suit may terminate the attachment and would not be revived even if the suit is restored As a corollary, if attachment before judgment is obtained in a suit which ends in a decree but if in appeal the decree is set aside, the attachment of necessity must fall. It at an intermediate stage pursuant to the decree of the trial Court the attached property is sold at a Court auction and where an appeal is preferred, an attempt should be made to obtain stay of the execution of the decree of the trial court. If the execution proceeds and the property is 190 sold at a court auction before the appeal is disposed of, the equity in favour of a person as a auction purchaser may come into existence. In such a case if the auction purchaser is an outsider and if the execution of the decree was not stayed, the auction purchaser would be protected even if the decree in execution of which the auction sale had been held is set aside because the equity in favour of the stranger should be protected. [223 C-E] If on the other hand the auction purchaser is the decree holder himself, he should not be entitled to any protection because when he proceeds with the execution he was aware that an appeal against the original decree was pending and that if the appeal was allowed the decree which he sought to execute might be set aside. He could force the place by executing the decree, taking advantage of the economic disability of the judgment debtor in a money decree by making the situation irreversible. Therefore, where the auction purchaser was none other than the decree holder who purchased the property for a meagre sum, this results in an atrocious situation, but yet by a technicality he wants to protect himself. To such an auction purchaser, who is not a stranger and who is none other than the decree holder, the Court should not lend its assistance. [224 G-H] Janak Raj v. Gurdial Singh & Anr. [1967] 2 S.C.R. 77 at 86, followed.

In the instant case the High Court was right in holding that the auction purchaser decree holder was entitled to recover only the decretal amount and proportionate costs.

[225 D] But yet the conduct of the mortgagor, the subsequent purchaser and the mortgagee in not paying a small debt and allowing the property to be auctioned and forcing the decree holder to fight a never ending litigation was iniquitous in the facts and circumstances of this case. Taking into consideration the conduct of the parties the decree holder should be paid a sum of Rs. 7,000 inclusive of decretal amount, interest, proportionate costs and costs of litigation so far. [225 E-F]

CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1144- 1145 of 1969.

From the judgment and decree dated the 5th March, 1964 of the Madhya Pradesh High Court in First Appeal No. 14 of S.S. Ray, G.S. Solanki, S. Kachwah and K.J. John for the Appellant in C.A. 1144/69 and for Respondent Nos. 2 and 3 in C.A. 1145/69.

G. L. Sanghi. A.G. Ratnaparkhi and K.K. Gupta, for the Appellant in C.A. 1145/69 and for Respondent No. 2 in C.A. 1144 of 1969.

191 V.S. Desai and Dr. Y.S. Chitale. Rameshwar Nath, K.A. Chitale and Mrs. S. Ramachandran for Respondent No. 1 in both the Appeals.

The Judgment of the Court was delivered by DESAI, J. . What constitutes part performance within the meaning of the expression in Section 53-A of the Transfer of Property Act ('Act' for short) so as to clothe a mortgagee in possession with the title of ownership which would defeat the suit of the erstwhile mortgagor for redemption, is the question canvassed in these two appeals by common certificate.

Facts first Sardar Govindrao Mahadik original plaintiff 1 (now deceased prosecuting these appeals through his legal representatives) and Gyarsilal original plaintiff 2 (appellant 2) filed Civil Suit No. 14151 in the Court of the District Judge, Indore, for redemption of a mortgage in respect of house No. 41 more particularly described in plaint paragraph 1, dated February 22, 1951. A loan of Rs. 10,000 was secured by the mortgage. The mortgage was mortgage with possession. Plaintiff I was the mortgagor and the sole defendant Devi Sahai was the mortgagee. Plaintiff 2 is a purchaser of the mortgaged property from plaintiff I under a registered sale deed Ex. P-I, dated October 14, 1950. Plaintiff I will be referred to as mortgagor Defendant Devi Sahai as a mortgagee and plaintiff 2 Gyarsilal as subsequent purchaser in this judgment. Even though the mortgage was mortgage with possession, it was not a usufructuory mortgage but an anomalous mortgage in that the mortgagor had agreed to pay interest at the rate of 12% and the mortgagee was liable to account for the income of the property earned as rent and if the mortgagee himself occupied the same he was bound to account for the rent at the rate of Rs. 515 per annum. Mortgagor served notice dated October 5, 1945, calling upon the mortgagee to render true and full account of the mortgage transaction. The mortgagee failed to comply with the notice. Subsequently it appears that there were some negotiations between the mortgagor and the mortgagee which according to the mortgagee, culminated in a sale of the mortgaged property in favour of mortgagee for Rs. 50,000. Account of the mortgage transaction was made and the consideration of 192 Rs. 50,000 for the sale of the house which would mean sale of equity of redemption was worked out as under:

Rs. 25,000 Principal mortgage money plus the amount found due as interest on taking accounts of mortgage.

Rs. 17,735 Given credit for the amounts taken from time to time by the mortgagor from the mortgagee s for domestic expenses. This is disputed as incorrect and it was suggested that the entry be read as amount retained to pay off other creditors of the mortgagor.

Rs. 1,000 Taken in advance for purchasing stamps and incurring registration expenses.

Rs. 6,265 To be paid in cash at the time of registration before the Sub-Registrar.

---------- Rs. 50,000 ---------- Requisite stamps were purchased and the draft sale deed was drawn up on October 10, 1950, but it was never registered.

On October 14, 1950, Ist plaintiff mortgagor sold the suit house by a . registered sale deed to plaintiff 2 Gyarsilal for Rs. 50,000 with an agreement for resale. Thereafter the mortgagor and the subsequent purchaser as plaintiffs 1 and 2 respectively filed a suit on February 22, 1951 against mortgagee defendant Devi Sahai for taking accounts of the mortgage transaction and for a decree for redemption.

The mortgagee Devi Sahai defended the suit on diverse grounds but the principal and the only defence canvassed was one under section 53A of the Act, namely, that even though the sale deed purporting to sell equity of redemption having not been registered would not clothe the mortgagee with title of owner to the mortgaged property, yet he could defend his possession as transferee owner under the doctrine of part performance in as much as not only is the mortgagee in possession in part performance of the contract of sale but has continued in possession in part perfor- 193 mance of the contract and has done several acts unequivocally referable or attributable to the contract and that the mortgage as transferee has not only performed but is willing to perform his part of the contract and, therefore, the mortgagor is debarred from enforcing against the mortgagee any right in respect of the mortgaged property. As a necessary corollary, it was also contended that plaintiff 2 has acquired no right, title or interest in the mortgaged property under the alleged sale deed dated October 14, 1950, in view of the fact that the transferor, viz., original mortgagor had no subsisting title to the property on the date of the sale which he could have transferred to the 2nd plaintiff.

Arising from the pleadings of the parties, trial court framed five issues. The trial court held that plaintiff I executed a sale deed of the mortgaged property in favour of the defendant mortgagee but as the sale deed was not registered the transaction of sale is riot complete on the issue of protection of section 53A claimed by the defendant mortgagee the trial court held against him. It was held that the mortgage being mortgage with possession, continued possession of the mortgagee after the date of the contract dated October 10, 1950, would not be in part performance of the contract. The trial court further held that no payment was made could remotely be said to be in part performance of the contract. With regard to the payment of Rs. 1,000 for purchase of stamps and expenses of registration, it was held that the same was paid before the execution of the contract, and therefore, could not be said to be in furtherance of the contract. On these findings the trial court held that section 53A of the Act was not attracted and the mortgage was accordingly held to be subsisting and a preliminary decree for taking accounts was passed. A Commissioner was appointed for taking accounts.

Defendant mortgagee Devi Sahai preferred Civil First Appeal No. 14/66 to the Indore Bench of the Madhya Pradesh High Court. When this appeal was pending, appellant Motilal in cognate Civil No 1145/69 applied under order 22, rule 10, Code of Civil Procedure , for being joined as a party to the appeal claiming that under s the sale certificate dated March 25, 1953, issued by the Additional City Civil Judge First Class, Indore, he had purchased the equity of redemption in respect of the mortgaged property and that he has a subsisting interest in the property involved in the dispute and, therefore, he would contest the rights of the plaintiffs as well as of the mortgagee defendant to claim any right, title or interest in the 194 property. In his application Motilal alleged that he had filed Civil Suit No. 243/47 dated November 3,1947 for recovering a certain amount against the 1st plaintiff mortgagor and had secured attachment before judgment of the mortgaged property on November 6, 1947. His suit was decreed to the extent of Rs. 2500 by the trial court. He filed execution application No. 216/51 and in this proceeding the mortgaged property was sold subject to mortgage and he purchased the same for Rs. 300. The auction sale was confirmed on September 25, 1953. It may also be mentioned that the mortgagor 1st plaintiff had preferred appeal against the decree of the trial court and the appellate court by its judgment dated March 27, 1953, allowed the appeal and dismissed the suit of Motilal in entirety.

Against the appellate decree Motilal filed Second Appeal No. 78/53 in the High Court and by its judgment dated September 4, 1958, Motilal's claim to the tune of Rs. 500 against the Ist plaintiff mortgagor along with proportionate interest and costs was decreed. The application of Motilal for being impleaded as a party was contested by the 1st and the 2nd plaintiffs as well as by the defendant mortgagee. The High Court allowed the application of Motilal for being joined as party to the appeal and examined the contentions advanced on his behalf on merits.

The only contention canvassed by the mortgagee in his appeal in the High Court was that he is entitled to the protection conferred by Section 53A of the Act. In order to attract section 53A it was urged that Rs. 1,000 advanced to mortgagor for purchase of stamps etc. was in furtherance of the contract. The only such act pleaded was payment of Rs. 1,000 and no other act or circumstance was relied upon. The High Court was of the opinion that original mortgagee Devi Sahai was entitled to the benefit of the doctrine of part performance as against the 1st plaintiff mortgagor Govindrao Mahadik and his subsequent transferee Gyarsilal because he was in possession and continued to be in possession and paid Rs. 1,000 in furtherance of the contract. While so holding the High Court imposed a condition that the mortgagee must pay or deposit in the court an amount of Rs. 24,000 with interest at the rate of 4% per annum from the date of delivery of possession to him as vendee till the date of payment or deposit on the footing that was the balance consideration promised but not paid by the mortgagee. The deposit was directed to be made in the trial court within three months from the date of the judgment of the High Court for payment to the 2nd respondent which would enable 195 the mortgagee to retain possession of the mortgaged property. The High Court gave a further direction that if the payment or deposit as directed in the judgment was not made, the appeal of the mortgagee would stand dismissed and if the amount directed in the judgment of the High Court was paid or deposited in the trial court within the stipulated time the appeal of the mortgagee would stand allowed and in that event the suit of the mortgagor would stand dismissed.

In respect of Motilal's claim the High Court directed that in either event he shall be entitled to recover the balance of his decretal amount and interest at the rate of 4% per annum from the date of the auction sale till the date of realisation and to the extent of that amount there shall be a charge on the mortgaged property enforceable at the instance of Motilal. In the circumstances of the case the High Court did not award costs to either side.

Both the original plaintiffs and Motilal made separate applications for certificate under Article 133 (l) (a) and (b) of the Constitution which were granted. Hence these two appeals.

The Appeal (CA 1144/69) preferred by the original plaintiffs-plaintiff 1 being the mortgagor, may be dealt with first. In this appeal 1st defendant (mortgagee) seeks to non-suit the plaintiff on the only ground that he is entitled to the benefit of equitable doctrine of part performance as enacted in section 53A of the Act. According to the defendant-mortgagee the mortgagor agreed to sell the mortgaged property to the mortgagee for consideration of Rs. 50,000 made up in the manner set out in the sale deed Ex. 1 dated October 10, 1950 and pursuant to the agreement he has given Rs. 1,000 being part of the consideration for purchasing stamps and for expenses of registration and after stamps were purchased, sale deed Ex. 1 was drawn up and executed and since then he being in possession retained the same as a vendee and accordingly he is entitled to the protection of section 53A of the Act.

This necessitates focussing of the attention on the requirements what constitutes part performance as enacted in section 53A. Even though at the hearing of the appeals what was the state of law prior to the introduction of section 53A in the Act by the Transfer of Property (Amendment) Act, 1929, was canvassed at length, we would like to steer clear of this confusing mass of legal squabble and, proceed to analyse the contents of section 53A, subsequently referring to legislative cum legal history so far as it is 196 relevant for interpretation of the section. Section 53A reads as under:

"53A. 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, not withstanding 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 per son claiming under him shall be debarred from enforcing against the transferred and persons claiming under him any right in respect of the property of which the transferee has taken or continues 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 a transferee for consideration who has no notice of the contract or of the part performance thereof." In order to qualify for the protection conferred by the equitable doctrine of part performance as enacted in section 53A, the following facts will have to be established:

(1) That the transferor has contracted 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;

(2) That 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, 197 continues in possession in part performance of the contract:

(3) That the transferee has done some act in furtherance of the contract: and (4) That the transferee has already or is willing to perform his part of the contract." (see Nathulal v. Phool Chand.

There was no dispute that the aforementioned conditions have to be satisfied to make good the defence of part performance. The controversy is on their application to the facts of the case.

The High Court which accepted the defence of part performance as canvassed on behalf of the mortgagee who claimed to have purchased the property under a sale deed Ext. D 1 dated October 10, 1950, found that payment of Rs.

1,000 for purchase of stamps was an unequivocal act in furtherance of the contract. The defendant mortgagee did not invite the High Court to consider any other act as having been done by him under the contract or furtherance of the contract, or unequivocally referable to the contract.

However, when the matter was heard in this Court, Mr. V S. Desai, learned counsel appearing for the respondent mortgagee urged the following acts as having been done by the mortgagee in furtherance of the contract which would constitute part performance;

(a) payment of Rs. 1,000 as agreed to under the contract for purchase of stamps for drawing up and registering the sale deed;

(b) discharge of a debt of Rs. 541 which was included in the amount of Rs. 17,735 retained by the mortgagee from the total consideration payable for discharging other debts;

198 (d) all dues owed by the mortgagor to the mortgagee may have to be taken as cleared on completion of the (e) nature and character of possession changed as recited in the contract;

A few more circumstances were relied upon to show that the mortgagee was willing to perform his part of the contract and the omissions pointed out are not fatal to his case.

They are:

(f) failure to offer the amount agreed to be paid before the Registrar and/or not discharging debts agreed to be discharged as having been given credit in the consideration for the sale would not detract from part performance because they have to be evaluated in the facts and circumstances of the case;

(g) conduct of the 1st plaintiff mortgagor in executing and registering a sale deed in respect of the mortgaged property in favour of the 2nd plaintiff Gyarsilal and thereby frustrating the contract of sale in favour of the defendant mortgagee evidence that the 1st plaintiff mortgagor was aware of the contract in favour of the defendant mortgagee and he was retaining possession in furtherance of the contract:

(h) defendant mortgagee made all attempts to get the deed registered by approaching the Sub-Registrar;

(i) the defendant mortgagee initiated criminal proceedings against the 1st plaintiff mortgagor for misusing the stamp papers.

Ordinarily this Court would be loath to examine contentions of facts based on evaluation of evidence advanced for the first time before this Court without any attempt at inviting the adjudication of the same by the High Court. However, as all the contentions arise from the record and proceedings, we propose to examine them on merits more so because we do not propose to rest this judgment on a technical around and also because we are inclined to reverse the decision of The High Court which is in favour of 1st defendant mortgagee.

199 Section 4 of the Statute of Frauds, 1677 of United Kingdom provided that no person shall be charged upon any contract for sale of lands or any interest in land etc.

unless the agreement or some memorandum or some note thereof shall be in writing and signed by the party to be charged there under or some other person there unto by him lawfully authorised. This provision has been substantially re-enacted in section 40 (i) of the Law of Property Act, 1925 with this departure that sub-section 2 specifically provides that the substantive provision in sub-section I does not effect the law relating to part-performance or sales by the court. As no action could be brought on oral agreement the doctrine of part performance was devised by the Chancery Court with a view to mitigating the hardship arising out of an advantage taken by a person under an oral contract and failure to enforce it would permit such person to retain the undeserved advantage by the Equity Court enforcing the contract. The situation must be such that not to enforce the contract in face of the defence of Statute of Frauds after taking advantage of oral contract would perpetuate the fraud which the statute sought to prevent The party who altered its position under the contract must have done some act under the contract and it would amount to fraud in the opposite party to take advantage of the contract not being in writing. Such a situation arose where one of the parties to the oral agreement altered its position and when specific performance was sought after taking advantage under oral contract, set up the defence available under the Statute of Frauds. The Chancery Court while granting relief of specific performance wanted to be wholly satisfied that the pleaded oral contract exists and is established to its utmost satisfaction and in order to ascertain the existence of the oral contract before granting a relief of specific performance the court wanted to be satisfied that some such act has been done which would be unequivocally referable to the oral contract as would prove the existence beyond suspicion, meaning part performance of the contract. The departure under our law is that when giving its statutory form in section 53A of the Act the existence of a written contract has been made sine qua non and simultaneously the statute also insists upon proof of some act having been done in furtherance of the contract. The act relied upon as evidencing part performance must be of such nature and character that its existence would establish the contract and its implantation. Each and every act subsequent to contract by itself may not be sufficient to establish part performance. The act must be of such a character as being 200 One unequivocally referable to the contract and having been per. formed in performance of the contract. In Lady Thynne v. Earl of Glengall it was observed that: "part performance to take the case out of the Statute of Frauds, always supposes a completed agreement. There can be no part performance where there is no completed agreement in existence. It must be obligatory, and what is done must be under the terms of the agreement and by force of the agreement." This approach would necessitate that the act relied upon as being in the part-performance of the contract was such as by its own force would show the very same contract as is alleged by the person seeking the protection of part-performance.

In the fact situation as it unfolds itself in this case, continued possession of the mortgagee hardly offers any clue to the question of part performance. Defendant mortgagee was in possession of the mortgaged property.

Therefore, physical possession having not changed hands, it would be for the mortgagee to show that he continued to retain possession in part performance of the contract and has done some act in furtherance of the contract. Where physical and actual possession was already with the person claiming the benefit of the doctrine of part performance its continued retention by itself without anything more would hardly be indicative of an act unequivocally referable to part performance of the contract. He must further establish that he has done some act in furtherance of the contract.

This was not disputed and, therefore, the mortgagee defendant urged before the High Court and reiterated before us that, payment of Rs. 1,000 inter alia to the 1st plaintiff mortgagor for purchase of stamps and for expenses incidental to registration was an act unequivocally done in furtherance of the contract.

Before evaluating the submission a few relevant facts may be noticed. By letter Ext. P-3 dated October 9, 1950, 1st plaintiff wrote to defendant mortgagee portion of which may be extracted as it has some bearing on the question under consideration:

".. It is requested that we have entered into a contract with you for the sale-condition of our house No. 12 situated in Kalai Mohalla. Therefore to buy stamps etc. for the sale you should pay Rs. 1,000 (Rupees one thousand 201 only) to our Mukhtiar Shri Madhavraoji Vishnu Joshi, 82, Ada Bazar, Indorewale, I agree for the same and shall deduct the amount at the time of registration." Pursuant to this letter defendant mortgagee paid Rs. 700 to the Muktiar and an endorsement to that effect is found as Ext. P-4. On the next day that is October 10, 1950, a further amount of Rs. 300 was given and stamps were purchased and on the same day sale deed Ext. 1 was drawn up.

While reciting the consideration for the sale deed a credit was given for Rs. 1,000 paid by the mortgagee for purchase of stamp. So far there is no dispute. The grievance is that according to the 1st plaintiff mortgagor he had agreed to sell the house to the mortgagee but the sale was to be a conditional sale with a right to repurchase and that was agreed to between the parties. Subsequently when the sale deed Ext. D-1 was drawn up he found that it was an absolute sale in breach of the agreement and therefore he did not complete the transaction and sold the house subsequently on October 14, 1950 to the 2nd plaintiff, under Ext. P-1 which is a conditional sale with a right to repurchase.

It would thus transpire that payment of Rs. 1,000 consisting of two separate payments-one of Rs. 700 on October 9, 1950, and an amount of Rs. 300 on October 10, 1950, by the defendant mortgagee to 1st plaintiff mortgagor for purchasing stamps for execution of a sale deed is not in dispute. What is in dispute is whether the payment was made towards some contract anterior to the letter Ext. P-3 dated October 9,195, or it was in pursuance to the contract dated October 10, 1950, as reflected in the unregistered sale deed. In this connection the stand taken by the mortgagee defendant is both equivocal and fluctuating. In the written statement filed on his behalf on April 10, 1951, there is no specific, clear and unambiguous plea of part performance.

Under the heading 'additional plea' in para 9 it is contended that the sale deed having been executed in favour of the mortgagee in settlement of mortgage transaction mutually between the parties and that the mortgaged property has been given to the mortgagee as an owner, the mortgage transaction does not subsist in law. This has been understood to mean a plea for the protection of the doctrine of part performance. Be that as it may, it is not suggested that there was any oral contract anterior to the one as found in the unregistered sale deed Ext. D-l. Nor is there any suggestion of any draft agreement prior to the drawing up of the sale deed Ext. D-l. What transpires from 202 the diverse recital is that there was some oral discussion between the parties prior to the letter Ext. P-3 dated October 9, 1950, at which the understanding was that there was to be a conditional sale with a right of repurchase by the mortgagor and that becomes evident from the recital in Ext. P-3, "sale condition" which is contemporaneous evidence having its intrinsic worth and a stamp of truthfulness because at that time no dispute had arisen and the mortgagor was seeking to work out and implement the agreement by seeking a loan of Rs. 1,000 for purchase of stamps and for expenses incidental to registration so as to complete the transaction. But there was no written contract. It must be stated that there was dispute about the nature of transaction is also borne out by the parol evidence.

Mortgagee Devi Sahai DW 1 has deposed in para 6 that mortgagor in Chit Ex. P. 3 proposed a conditional sale to which he did not agree whereupon mortgagor agreed to give absolute sale. This establishes that there was a dispute as to the nature of the transaction. Section 53A postulates a written contract from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. There was no concluded contract prior to Ext. D- l. The only written contract which is relied on is the unregistered sale deed Ex. D-l of October 10, 1950. On the admission of the mortgagee himself it is crystal clear that out of Rs. 1,000 an amount of Rs. 700 was paid on October 9, 1950, and that was prior to the agreement. As for the payment of Rs. 300 it is not specifically claimed that was payment in furtherance of the contract. In any event, stamps were purchased prior to the drawing up of Ext. D-l which is the contract relied upon for the purposes of section 53A.

And it must be shown that the act has been done in furtherance of the contract, i.e. subsequent to the contract or at best simultaneously with the contract but un- equivocally attributable or referable to the contract. It must follow that acts anterior to and done previous to the agreement cannot be presumed to be done in pursuance of it and cannot, therefore, be considered as acts of part performance (See Whiteread v. Brockhunt quoted by White and Tudor, leading cases on Equity at p. 416).

The High Court while evaluating the probative value of the circumstances of payment of Rs. 1,000 started on a wrong premise when it observed that the act envisaged by the phrase in furtherance of the contract" in section 53A should be in pursuance of the contract and not that it should either precede or follow the 203 agreement or the contract. If a written contract is a sine qua non for seeking coverage of the umbrella of the equitable doctrine of part performance any act preceding the contract could conceivably never be in furtherance of that contract which was yet to materialise. Negotiations for a contract and a concluded contract stand apart from each other. Anything at the negotiating stage cannot be claimed as contract unless the contract is concluded between the parties, i.e. the parties are ad idem. Coupled with this is the further requirement that it should be a written contract in that the contract which would purport to transfer for consideration the immovable property must be by writing and the writing must be such that the necessary ingredients constitute the transfer can be ascertained with reasonable certainty. The High Court overlooking the very important fact situation that the only contract relied upon by the mortgagee defendant was one contained in the unregistered sale deed Ext. D-1 dated October 10, 1950, committed an error in holding that the payment of Rs. 1,000 prior to October 10, 1950 would undoubtedly be an act in pursuance of the contract which is evidenced by the writing Ext. D-1 duly signed by the Ist respondent. This approach overlooks a vital dispute between the parties and the High Court could not have utilised this circumstance without resolving the dispute in as much as unquestionably there were some negotiations between the parties either on October 9, 1950, or sometime prior thereto but there was no concluded contract because the very letter Ext. P-3 which the 1st plaintiff mortgagor sought a loan of Rs. 1,000 for purchasing the stamps etc. was pursuant to a conditional sale and that is totally denied and repudiated by the mortgagee as shown hereinabove. Accordingly when the amount of Rs. 1,000 was paid it was the stage of negotiations and not a concluded contract. And when the contract was drawn up as evidenced by Ext. D-1 being the unregistered sale deed dated October 10, 1950, the parties were not ad idem.

because the mortgagor declined to agree to registration of the sale deed as it was contrary to the understanding arrived at between the parties though no doubt he had executed the sale deed. The contention therefore that the amount of Rs. 1,000 was paid in furtherance of the contract does not bear scrutiny.

However, assuming that the finding of fact recorded by the High Court that the amount of Rs. 1,000 was paid in furtherance of the contract, is a finding of fact recorded on appreciation and evaluation of evidence and ordinarily not interfered with by this Court unless shown to be perverse, the alternative contention that 204 payment of part or even whole of the consideration could not be said to be in furtherance of the contract and, therefore, not sufficient to constitute part performance, may now be examined.

How far payment of part or even whole of the consideration would constitute part performance so as to take the case out of section 4 of the Statute of Frauds may now be examined with reference first to the English decisions because section 53A enacts with some modification the English equitable doctrine of part performance.

In order to mitigate the hardship arising out of the rigorous provisions of the Statute of Frauds equitable doctrine of part performance was divised by the Court of Chancery. Commenting upon section 4 of the Statute of Frauds 1677, Lord Redesdale observed in Foxcroft v. Lester,(l) (quoted in White & Tudor's Leading cases on Equity, 8th Edn., p. 413) as under:

"The Statute of Frauds says that no action or suit shall be maintained on an agreement relating to lands, which is not in writing, signed by the party to be charged with it; and yet the Court is in the daily habit of relieving, where the party seeking relief has been put into a situation which makes it against conscience in the other party to insist on the want of writing so signed, as a bar to his relief. The first case (apparently) of this kind was Foxcroft v. Lyster (1), which was decided on a principle acted upon in Courts of law, but not applicable to the particular case. It was against conscience to suffer the party who had entered and expended his money on the faith of a parol agreement to be treated as a trespasser, and the other party to enjoy the advantage of the money he had laid out." The question often arises whether payment of part or even whole of the consideration can be unequivocally attributed to the contract. At 416 the authors observe :

"Payment of part or even of all the purchase-money will not be considered an act of part performance to take 205 a parol contract out of the Statute of Frauds. Nor will payment of the auction duty." The payment of a part or even a whole of the consideration was not treated unequivocal act of part performance because it was believed that money can be repaid or can be reclaimed and, therefore, it is not an unequivocal act evidencing an act in furtherance of the contract (See Hanbury & Maudsley, Modern Quity, 10th Edn., p. 37).

Similarly, Story's Equity Jurisprudence 14th Edn., para 1045, p. 424, neatly sets out the history of the approach to payment of money as evidence of part performance. It may be extracted:

".. It seems formerly to have been thought that a deposit, or security, or payment of the purchase money, or of a part of it, or at least of a considerable part of it, was such a part performance as took the case out of the statute. But that doctrine was open to much controversy, and is now finally overthrown Indeed the distinction taken in some of the cases between the payment of a small part and the payment of a considerable part of the purchase-money seems quite too refined and subtle, for independently of the difficulty of saying what shall be deemed a small and what a considerable part of the purchase money, each must, upon principle, stand upon the same reason, namely, that it is a part performance in both cases, or not in either. One ground why part payment is not now deemed a part performance, sufficient to take a case out of the statute, is that the money can be recovered back again at law, and therefore the case admits of full and direct compensation." Equity by G.M. Keeton and L.A. Sheridan, 2nd Edn., p. 366 sets out chronologically the approach of the Court to payment of money as evidencing part performance. Attitude to the payment of money as an act of part performance had varied from time to time. In Elizabeth Meddison v. John Alderson,(1) Lord Selborne, L.C. pointed out:

".. the payment of money is an equivocal act not (in 206 itself) unless connection is established by parol testimony indicative of a contract consisting of land." In Snell's principles of Equity, 20th Edn., p. 587, under the heading 'Insufficient Acts to bring the case out of the doctrine of part performance', it is noted that payment of a part of the purchase-money, or even apparently the whole, is not sufficient for part performance of a contract for the sale of land for the payment of money is an equivocal act (not in itself), until the connection is established by parol testimony, indicative of a contract concerning land. Maddison v. Alderson is relied upon in support of this statement.

A few cases to which our attention was drawn may now be referred to. In Clinan and Anr. v. Cooke and Ors.,(1) Cooke inserted an advertisement in the public papers inviting offers to let a piece and parcel of land for the period set out in the advertisement. In response to this advertisement the plaintiffs applied to Edmund Meagher to whom the application was to be addressed and entered into a treaty with him for lease of land. A memorandum of agreement was entered into between the parties and the intending tenant deposited 50 guineas which the advertiser received in consideration of the lease on the recommendation of Meagher who also appeared to have received a sum of 20 guineas from the plaintiffs for which no receipt was given Subsequently Mr. Cooke refused to perform the agreement and he granted a new term of lease to the defendants who entered into the same with the knowledge of the agreement with the plaintiffs. An action was brought by the plain tiffs for specific performance. Declining to grant that relief Lord Redesdale held as under:

"But I think this is not a case in which part performance appears. The only circumstance that can be considered as amounting to part performance is the payment of the sum of fifty guineas to Mr. Cooke. It has always been considered that the payment of money is not to be deemed part performance to take a case out of the statute." In Maddison's case Earl of Selborne, L.C. in unequivocal terms observed that it may be taken as new settled that part payment of purchase money is not enough, and judges of high authority 207 have said the same even of payment in full. Clinan v. Cooke, (supra) Hughes v. Morris(1) and Britain v. Rossiter(2) were relied upon in support of this. Again at p. 484 Lord O'Hagan taking note of the conflict of decisions pertinently observed as under:

"I confess I have found it hard to follow the reasoning of the judges in some of the cases to which the Lord Chancellor has referred to reconcile the rulings, in others of them-and to regard as entirely satisfactory the state of the law in which the taking of possession or receipts of rent is dealt with as an act of part performance, and the giving and acceptance of any amount of purchase money, confessedly in pursuance and affirmance of a contract of sale, is not.

As to some of the judgments prompted no doubt by a desire to defeat fraud and accomplish justice, I am inclined to concur with the present Master of the Rolls in Britain v. Rossiter (1), when he called them" bold decisions." It may be noted that in that case an intestate induced a woman to serve him as his house-keeper without wages for many years and to give up other prospects of establishment in life by a verbal promise to make a will leaving her a life estate in land and afterwards signed a will, not duly attested, by which he left her the life estate. lt was contended on behalf of the woman who worked as house-keeper that she had wholly performed her part by serving the intestate as house-keeper till the intestate's death without wages yet the Court in its equity jurisdiction declined to hold such an act as referable to any contract and was not such a part performance as to take the case out of the operation of section 4 of the Statute of Frauds. This case is being referred to show how firstly established and entrenched the view was that payment is not enough. Offer to work without wages was treated as evidencing some payment not enough to sustain the plea of part performance. The equity should take such a view of human service and sacrifice is difficult to appreciate. Modern notions of equity, fairplay and just approach would stand rudely shaken by the view taken in that case & and quoting the case is not to be interpreted to mean sharing the view.

208 In Chaproniere v. Lambert,(1) the Court of Appeal reinforced the view which held the field till then that the mere payment of rent is not such part performance to take the case out of the statute and even payment of whole of the purchase money has been held not to be sufficient to take the case out of the statute. In so doing it reiterated the view taken in Muddison v. Anderson, (supra).

In Enland the law took a sharp U-turn in Steadman v. Steadman,(2) Lord Simon of Claisdale under the heading 'Payment of money' observed as under:

"It has sometimes been said that payment of money can never be a sufficient act of part performance to raise the required equity in favour of the plaintiff or, more narrowly, that payment of part or even the whole of the purchase price for an interest in land is not a sufficient act of part performance. But neither of the reasons put forward for the rule justifies it as framed so absolutely. The first was that a plaintiff seeking to enforce an oral agreement to which the statute relates needs the aid of equity; and equity would not lend its aid if there was an adequate remedy at law. It was argued that a payment could be recovered at law, so there was no call for the intervention of equity. But the payee might not be able to re pay the money (he might have gone bankrupt), or the land might have a particular significance for the plaintiff (of the equitable order for specific delivery of a chattel of particular value to the owner: (Duke of Somerset v. Cookson) or it might have greatly risen in value since the payment, or money may have lost some of its value.

So, it was sought to justify the rule, alternatively, on the ground that payment of money is always an equivocal act, it need not imply a pre-existing contract, but is equally consistent with many other hypotheses. This may be so in many cases, but it is not so in all cases. Oral testimony may not be given to connect the payment with a contract; but circumstances established by admissible evidence (other acts of part performance, for case, for example, what was said (i.e. done) in the magistrates' court in part 209 performance of the agreement makes it plain that the payment of the 108 was also in part performance of the agreement and not a spontaneous act of generosity or discharge of a legal obligation or attributable to any other hypothesis." To some extent, therefore the statement of law in Maddison's case that it may be taken as well settled that payment of part of purchase money or even the whole of the consideration is not sufficient act of part performance can be taken to have been shaken considerably from its foundation.

While text book writers and English decisions may shed some light to illuminate the blurred areas as to whether part payment of purchase money or even the whole of the consideration would not be sufficient act of part performance, it is necessary that this aspect may be examined in the background of statutory requirement as enacted in section 53A. To qualify for the protection of the doctrine of part performance it must be shown that there is a contract to transfer for consideration immovable property and the contract is evidenced by a writing signed by the person sought to be bound by r it and from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. These are pre-requisites to invoke the equitable doctrine of part performance. After establishing the aforementioned circumstances it must be further shown that a transferee had in part performance of the contract either 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. The acts claimed to be in part performance must be unequivocally referable to the pre-existing contract and the acts of part performance must unequivocally point in the direction of the existence of contract and evidencing implementation or performance of contract. There must be a real nexus between the contract and the acts done in pursuance of the contract or in furtherance of tho contract and must be unequivocally referable to the contract. When series of acts are done in part performance, one such may be payment of consideration.

Any one act by itself may or may not be of such a conclusive nature as to conclude the point one way or the other but when taken with many others payment of part of the consideration or the whole of the consideration may as well be shown to be in furtherance of contract. The correct approach would be what Lord Reid said in Steadman's case 210 that one must not first took at the oral contract and then see whether the alleged acts of part performance are consistent with it. One must first look at the alleged acts of part performance and see whether they prove that there must have been a contract and it is only if they do so prove that one can bring in the oral contract. This view may not be wholly applicable to the situation in India because an oral contract is not envisaged by section 53A. Even for invoking the equitable doctrine of part performance there has to be a contract in writing from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty. Therefore, the correct view in India would be, look at that writing that is offered as a contract for transfer for consideration of any immovable property and then examine the acts said to have been done in furtherance of the contract and find out whether there is a real nexus between the contract and the acts pleaded as in part performance so that to refuse relief would be perpetuating the fraud of the party who after having taken advantage or benefit of the contract backs out and pleads non registration as defence, a defence analogous to section 4 of the Statute of Frauds.

We may recall here that the acts preliminary to the contract would be hardly of any assistance in ascertaining whether they were in furtherance of the contract. Anything done in furtherance of the contract postulates the pre- existing contract and the acts done in furtherance thereof.

Therefore, the acts interior to the contract or merely incidental to the contract would hardly provide any evidence of part performance.

The contention of Mr. Desai that payment of Rs. 1,000 for purchase of stamps in an act of part performance unequivocally attributable to the contract dated October 10, 1950, cannot be accepted for two reasons, one being that Rs.

700 out of the amount of Rs. 1,000 was paid on October 9, 1950, that is prior to the date of contract. Then there is a serious dispute as to the nature of contract which was negotiated on October 9, 1950, the day on which payment of Rs. 700 was made. Mortgagor was insisting upon a conditional sale and defendant mortgagee declined to accept the conditional sale and that is borne out by his evidence also.

There was thus no concluded contract on October 9, 1950, and, therefore, the payment of Rs. 700 out of Rs. 1,000 in any case could not be said to be part performance and the same reasons would mutatis mutandis apply to the payment of Rs. 300 also. In the facts of this case this payment would not be an act of part performance. In 211 our opinion, therefore, the High Court recorded an utterly unsustainable finding without minutely examining the relevant evidence coupled with the requirements of law and erred in holding that the payment of Rs. 1,000 was in furtherance of the contract. We would also add that in the facts and circumstances of the case payment of Rs. 1,000 was not such an act of part performance which would help defendant mortgagee in any manner.

Mr. Desai next contended that the mortgagee discharged a debt of Rs. 541 which was included in the amount of Rs. 17,735 retained by the mortgagee from the total consideration payable for discharging other debts and that this payment was in furtherance of the contract. This contention is being put forward for the first time in this Court and should be negatived on that account alone. Even apart from this there is no sufficient evidence to uphold this contention. In fact, the defendant mortgagee himself has to some extent prevaricated on the question of retention of Rs. 17,735 out of the total consideration for the sale transaction agreed at Rs. 50,000. Consideration of Rs. 50,000 was made up, inter alia, by retaining Rs. 17,735 in discharge of debts owed by mortgagor to mortgagee by borrowing loans on different occasions for domestic expenses. It is so stated in Ext. D-l which had been extracted earlier.

Mortgagee in his evidence gave a go bye to this recital and deposed that the amount of Rs, 17,735 from the total consideration payable by him was retained by the mortgagee for payment of other creditors of the mortgagor. Even apart from this he has not stated a word that out of the amount of Rs. 17,73