(Gandreddi) Naganna and Another vs (Revinipati) Appalaraju and Others

Anantakrishna Ayyar, J.—Defendant 1 was entitled to one-fourth of the suit lands, and he sold his one-fourth share to defendant 6 on 28th

July 1900 for Rs. 500 (Ex. 1). The father of defendants 3 and 5 was entitled to one-fourth of the suit lands, and he sold the said one-fourth share

to defendant 6 on 2nd June 1901 for Rs. 500 (Ex. 2). Defendant 1 executed a kadapa on 8th July 1903 to defendant 6 in respect of the lands so

purchased by defendant 6. Defendant 6 sold to the plaintiff on 24th June 1917 (Ex. A) the half-share in the suit lands purchased by him under Exs.

1 and 2. The plaintiff sued to declare his title to a moiety of the plaint lands and to recover possession of the same after partition. Defendant 6 did

not appear in the suit; the other defendants contended that the sale in favour of the plaintiff was a sham transaction, that when the properties were

sold to defendant 6, defendant 6 agreed to re-convey the properties to the vendors on their repaying Rs. 500, the price mentioned in Exs. 1 and 2,

that defendant 1 was in possession of the properties as a lessee from defendant 6 (Ex. 3, 1903); that defendant 1 paid defendant 6 Rs. 500 in

March 1905, but as defendant 3 was not then ready with his money, defendant 6 promised to execute a sale deed in favour of defendant 1 but had

delayed in doing so; that the suit was barred by limitation; and that the plaintiff was not entitled to any relief.

The trial Court found that Ex. A, the sale deed in favour of the plaintiffs, was a sham transaction. It also found that the defendants had acquired

title by adverse possession, and dismissed the suit. On appeal by the plaintiff, the learned Additional Subordinate Judge of Vizagapatam found it

unnecessary to go into the question of the sham nature of the sale deed to the plaintiff, since defendant 6 as P.W. 3 admitted execution of the sale

deed to the plaintiff and also receipt of consideration for the same, and thought that the suit should be decided on the footing that the rights of

defendant 6 passed to the plaintiff. As regards the contentions raised by defendant 3, the plaintiff and defendant 3 having settled matters between

themselves the only question that remained was whether the plaintiff was entitled to possession of the one fourth-share of the lands claimed by

defendant 1. The lower appellate Court found that defendant 1 had paid Rs. 500 to defendant 6 as agreed, and that Ex. 7 a letter executed by

defendant 6 in favour of defendant 1 on 22nd December 1912, was genuine; but as no registered sale deed had been executed by defendant 6 in

favour of the first, the Court held that defendant 1 could not resist the plaintiff''s suit. The suit was accordingly decreed against defendant 1.

Defendant 1 and his son defendant 2 have preferred the present second appeal.

Both the lower Courts have found that Ex. 7 is genuine and that Rs. 500 was paid by defendant 1 to defendant 3. Defendant 3 was in

possession of one-fourth share in question as a lessee, at least, from 1903: see Ex. 3 executed by defendant 1 to defendant 6. On the date of Ex. 7

defendant 1 was in possession. Ex. 7 states as follows:

You paid back to mo Rs. 500 being the sale amount of the absolute sale effected in my favour on 28th July 1900 in respect of the jirayeti lands

known as Pallapupampulu and requested me to re-sell the same to you, and I have, out of grace, agreed to execute a sale deed in your favour. I

shall execute a sale deed and give the same to you registered within one month from this day.

The contention of defendant 1 in the lower Courts was that as he was in possession and as he had paid Rs. 500 to defendant 6, and as

defendant 6 had promised under Ex. 7 to execute a registered sale deed to him, the plaintiff would not be entitled to any relief as against him for

two reasons:

(1) Defendant 1''s possession after payment of Rs. 500 at any rate after Ex. 7, should be taken as possession as vendee, and that his prior

possession as lessee was changed since he was given possession as vendee, that the absence of a registered sale deed by defendant 6 in his favour

is no obstacle, since there was part performance as defendant 1 was given possession as vendee at the time of Ex. 7.

(2) The plaintiff having notice that defendant 1 was in possession at the time of the plaintiff''s purchase, the plaintiff must be taken to have notice of

defendant 1''s claims, and therefore the plaintiff is not a bona fide purchaser for value without notice.

The lower appellate Court, while finding that Rs. 500 was repaid by defendant 1 to defendant 6 as recited in Ex. 7, was not quite sure when

exactly the same was paid. It disbelieved defendant 6''s statement, as P.W. 3, that money had not been paid. Relying on the recital in Ex. 7 and the

evidence of defendant 1, the lower appellate Court held that Rs. 500 had been paid by defendant 1 to defendant 6 and that Ex. 7 was genuine,

though it was not quite sure as to the exact date on which the said Rs. 500 was paid. The lower appellate Court however disallowed defendant l''s

contention for the following reasons:

It cannot be said that possession was meant to be given in pursuance of the agreement Ex, 7 by a change in the nature of possession. If lessee''s

possession was meant to be changed into that of an owner''s possession, reference must have been made to delivery of possession thereunder. I

therefore find that until the date of suit defendant 1 continued to be in possession, not in his own right and that the character of the original

permissive possession as lessee was not changed into adverse possession after Ex. 7. The ruling in Muthukaruppan v. Muthusamban [1914] 38

Mad. 1158 cannot assist the defendants. I find that the plaintiff and his vendor were in legal possession within the statutory period.... There was no

agreement which could have been specifically enforced at the time of the suit, and possession which was given under a kadapa executed in 1903

and which was continued till 1912 could not be in pursuance of the contract to sell. There ''is therefore no doctrine of part performance to be

applied in this case as there was no part performance under the agreement, possession not having been given under it. Defendant 1 cannot

therefore claim any equitable right to resist the plaintiff''s suit for recovery of possession of the land under the circumstances.

Having regard to the finding that Ex. 7 is genuine and that Rs. 500 had been paid by defendant 1 to defendant 6, having regard to the

undertaking in Ex. 7 that defendant 6 would execute a sale deed to the plaintiff and having regard to the fact found by the lower Courts that both

Ex. 1 the sale deed executed by defendant 1 to defendant 6 in 1900, for this very land, and Ex, 3 the registered kadapa executed by defendant 1

to defendant 6 in 1903 relating to this very land,''were returned by defendant 6 to defendant 1 and were produced by defendant 1 in this suit I

think that the proper inference to be drawn from the facts proved in this case is that the possession of defendant 1 as lessee was put an end to on

the date of Ex. 7, and that the understanding of the parties should be taken to be that the defendant''s possession, subsequent to Ex. 7, was to be

that of owner, and that defendant 6''s only further obligation was to execute a registered sale-deed. I am unable to draw any inference to the

contrary from the mere circumstances that Ex. 7 does not specifically refer to possession; but having regard to the circumstance that Ex. 1 (sale

deed) and Ex. 3 (the lease deed) executed by defendant 1 were returned to defendant 1 and the only further undertaking was that defendant 6 was

to execute a registered sale deed I think the reasonable inference to be drawn from the facts is that defendant 1''s possession after Ex. 7 was to be

as owner, and not as lessee as before. It has been held that if the vendee had been put into possession (of the properties agreed to be sold to him)

at the time of the sale, and consideration paid, the circumstance that a registered sale deed had not been executed in his favour is no ground to give

a decree against him and in favour of a subsequent purchaser with notice who sues to recover possession from him. The doctrine of part

performance has been applied in such cases, and the defendant in possession in such circumstances has been protected by Courts. The Full Bench

decision of this High Court in the case reported in Vizagapatam Sugar Co. v. Muthuramareddi AIR 1924 Mad. 271 is an authority for the

proposition that part performance by way of delivery of possession and an enforceable right on the defendant''s part to specific performance are

each good defences to a suit in ejectment.

But it was argued by the learned advocate for the respondent (if I understood him correctly) that part performance by way of delivery of

possession must be delivery of possession at the time of the agreement, and that if the defendant was in possession already, the doctrine of part

performance would not apply. I am unable to agree. In Fry on Specific Performance, Section 602, it is stated as follows:

Continuance in possession may, if unequivocably referable to the contract alleged, be a sufficient act of part performance, although the taking of

possession was antecedent to the contract.

In Biss v. Hygate [1918] 2 K.B. 314, A.T. Lawrence, J., observed:

the respondent''s retention of possession after 25th March was an act of part performance unequivocally referable to the agreement...There was

therefore no evidence on which the Judge could find either that the respondent was not in possession under the agreement or that there was no part

performance of the agreement. Consequently the appeal must be allowed.

Avery, J., added:

The decision in Hodson v. Heuland [1896] 2 Ch. 428 is a conclusive authority on this point. The decision in that case was that although the

entering into ""possession was antecedent to the contract, yet the continuing in possession after the contract, being unequivocally referable to the

contract, was a sufficient part performance. The case is referred to as an authority in Article 602 of Fry on Specific Performance.... I cannot see

how any other inference can be drawn than that the respondent was in possession under and in pursuance of the contract which he had made on

18th March. I agree that the appeal should be allowed.

As remarked by Kekewich, J., in Hodson v. Heuland [1896] 2 Ch. 428 possession taken before, but continued after, a parol contract, for lease

may, if unequivocally referable to the contract, constitute part performance taking the case out of the Statute of Frauds. The learned Judge quotes

an observation of Knight Bruce, L.J., to the following effect:

Is there any authority for the proposition that the continuance in possession after a parol agreement, or after a variation of the parol agreement, may

not be part performance of a contract with reference to the Statute of Frauds? I am not persuaded at present that it may not.

Kekewich, J.

observed, that no case had been cited to show that the doctrine of part performance was not equally applicable to a case of this kind as to the

other cases to which it had been applied.

The only Indian case to which my attention was drawn supports this view. In Ramappa v. Yellappa AIR 1928 Bom. 150 (of 52 Bom.) the

learned Judges held that the possession of the mortgagee, coupled with the subsequent agreement to sell, was a good defence. At p. 312 the

learned Judges remarked:

It follows therefore that possession coupled with the agreement to sell will ordinarily be a good defence. It is not necessary that the agreement at

the time of defence should be capable of specific performance; it may even be barred.... and possession need not be given only at the time of the

agreement, but need only be retained if it already exists.

In the case reported in Venkatesh Damodar v. Malappa Bhimappa AIR 1922 Bom. 9, referred to by the appellants'' learned advocate, the

plaintiff agreed to sell certain property to the defendants, which property was already in their possession. The defendants paid up the whole

purchase money to the plaintiffs, but omitted to take from him a registered sale dead. After their right to obtain specific performance of the

agreement to sell had become time barred, the plaintiff sued to recover possession of the property. The Court held that the defendants were

entitled to remain in possession against the plaintiff and dismissed the plaintiff''s suit. Section 27, Specific Relief Act, and III. 3, Clause 3, were also

relied on in support of the general proposition that possession was notice of all rights claimed by the person in possession. But I do not think that

these are relevant to answer the specific contention raised by the learned advocate for the respondents. The learned advocate for the respondent

referred to Maddison v. Alderson [1883] 8 A.C. 475; but I do not see anything in that decision which supports the respondent''s view. The

decisions reported in Muthu Karuppan v. Muthu Samban [1914] 38 Mad. 1158 and Sheik Dawood Saheb v. Moideen Batcha Saheb AIR 1925

Mad. 566, though passed u/s 54, T.P. Act, also support in principle this view. I am therefore unable to accept the view of the learned Subordinate

Judge, and I hold that the doctrine of part performance applies to the present case, that defendant 1''s continuing in possession after Ex. 7 must be

taken unequivocally to refer to the contract Ex. 7 and that it is a sufficient act of part performance although the taking of possession was antecedent

to the contract.

It was also argued by the learned advocate for the respondent that the defendant''s right to specific performance was barred by limitation and

that therefore the plaintiff''s suit was properly decreed by the lower appellate Court. There seems to be some difference of opinion on this question

in the Calcutta. High Court: see G.H.C. Ariff Vs. Jadu Nath Majumdar, , and Phillips and Devadoss, JJ., held in Vizianagaram Sugar Co. v.

Muthurama Reddi AIR 1924 Mad. 271 that the plea of part performance is not limited to cases where the right to sue for specific performance is

not barred on the date of the subsequent suit. They followed Meher Ali Khan v. Aratunnessa Bibi [1922] 67 I.C.167. The decision in Ramappa v.

Yellappa AIR 1928 Bom. 150 (of 52 Bom.), already referred to, also supports this view. There however seem to be some Calcutta cases

apparently against this view: see case referred in G.H.C. Ariff Vs. Jadu Nath Majumdar, . But I need not pursue this matter further, since I am

bound by the decision in Vizianagaram Sugar Co. v. Muthurama Reddi AIR 1924 Mad. 271.

For the above reasons I reverse the decision of the lower appellate Court and restore that of the first Court, with costs of defendants 1 and 2

here and in the lower appellate Court.