K. Venkatasubbayya vs K. Rosayya and Others

Subba Rao, C.J.—The Plaintiffs purchased the plaint schedule property from Defendant 5 under Ex. A-l dated 14-5-1943 for a sum of Rs. 500/-. The same property was agreed to be sold to Defendant 1 by Defendant 5 under Ex. B-3 dated 11-7-1942 and he was put in possession of the property on the . said date. Defendant 1 filed O. S. No. 175 of 1945 on the file of the Court of the District Munsif, Bapatla for specific performance of the said agreement. That suit v/as'' dismissed by the first Court and it was confirmed on appeal by the Sub-Court and on Second Appeal by the High Court.

The Plaintiff''s filed at an earlier stage O. S. No. 357 of 1943 on the file of the Court of the District Munsif, Bapatla, alleging that they were in possession and for an injunction restraining Defendants 1 to 4 from obstructing their possession But the first Court as well as the two Appellate Courts held that they were not in possession and, therefore, their claim was rejected. The present suit was filed by the Plaintiffs on the basis of title for possession and for manse profits. They alleged that Defendants 1 .to 4 dispossessed them on 17-8-1946

Defendants 2 to 4 were ex parte.

Defendant 1 pleaded, inter alia, that he had been in possession pursuant to the agreement in his favour and that he was entitled to continue in possession u/s 53-A, Transfer of Property Act.

The learned District Munsif found that the Plaintiff''s took the sale deed with knowledge of the" prior contract in favour of Defendant 1, that Defendant 1 was guilty of laches and had abandoned his right under the suit contract and that he was not anxious to perform his part of the contract. In this view, he held that Defendant 1 could not rely upon Section 53A, Transfer of Property Act.

The appellate Court agreed with the learned District Munsif that the Plaintiffs took Ex. A-l with knowledge of the prior contract. He accepted the finding of the District Munsif that Defendant l''s conduct amounted to waiver and abandonment of the contract. He came to the conclusion that, as Defendant 1 had not only not performed his part of the contract but, on the Section 53A of the Act. In the result, he confirmed the decree of the first Court. Hence the appeal.

Learned Counsel for the Appellant contends that, as both the Courts found that the Plaintiffs had purchased the property with "knowledge of the prior agreement of sale in favour of Defendant 1, they could not recover possession from Defendant 1 and that the mere fact that the suit for specific performance was dismissed earlier would not affect his rights, as the decision in that suit was held to be not res judicata between the parties.

In support of his contention reliance is placed upon the decision of the Calcutta High Court in Puchha Lal v. Kunj Behari Lal 18 Cal WN 445: (AIR 1914 Cal 21) (A). There, a purchaser of immovable property under an unregistered kobala paid Rs. 500/- the agreed price to his vendor and was placed in possession. A subsequent purchasor of the same property under a registered conveyance with knowledge of the prior unregistered kobala, filed a suit for recovery of possession. At page 447 (of Cal WN): (at p. 22 of AIR), the learned Judges observed:

There are cases, of which Walsh v. Lonsdale (1882) 21 Ch. D 9 (B) is a type, which establish the protection to which in a Court of Equity a person in the position of the Defendants is entitled. It is quite true that the question whether the Defendants, 1st party, were entitled to bring a suit for specific performance in vindication of their rights was not debated before the lower Appellate Court, but there is no matter brought to our notice which can throw any serious doubt upon the Defendants right to complete their right by such a suit.

In that case, if the Defendants had brought a suit for specific performance of the contract, they would have succeeded. In the present case, the suit instituted by Defendant 1 for the said relief was dismissed on the ground of laches. Indeed even in the present litigation, both the Courts found that he was guilty of laches and that he abandoned his right. The equitable defense invoked by the Defendant in the Calcutta case is not; available to Defendant 1 in the present case.

The Judicial Committee in AIR 1931 79 (Privy Council) (C) definitely held that the doctrine of part performance was inapplicable to India. In that case, the Defendant took possession of a parcel of land under, an oral agreement of 1913 for the ''grant to him by the Plaintiff of a permanent lease the property on a fixed rent. In 1923 the owner instituted a suit to recover possession from the ''Defendant. The Defendant relied upon the equitable doctrine of part performance. The Judicial "Committee dismissed the suit and Lord Russell of Killowen observed at page 1245 (of ILR Cal): (at p. 82 of AIR):

Whether an English equitable doctrine should, in any case, be applied so as to modify the effect of an Indian statute may well be doubted; but that an English equitable doctrine, affecting the provisions of an English statute relating to the right to sue upon a contract, should be applied, by analogy, to such a statute as the Transfer of Property Act and with such a result as to create without any writing an interest which the statute cays can only be created by means of a registered instrument appears to their Lordships, in the absence of some binding authority to that effect, to be impossible.

The Judicial Committee again in re-stated the law in the following words at page 658 (of ILR Bom): (at p. 237 of AIR):

The English doctrine of part performance as Lord Russell of Killowen explained in AIR 1931 79 (Privy Council) (C) is not available in India by way of defence to an action of ejectment....

The fact that the Plaintiff has agreed to sell the land in question to the Defendant is not rendered an effective defence by reason of the Plaintiff having in part performance of the agreement permitted the Defendant to take possession....

IT the contract is still enforceable, the Defendant may found upon it to have the suit stayed, and suing for specific performance obtain a title which will protect him from ejectment. But if it is no longer enforceable, its part performance will not avail him to any effect.

It is therefore, clear that before the enactment of Section 53A, Transfer of Property Act, there was no scope for the application of the doctrine of part performance and, in view of the aforesaid decisions of the Judicial Committee, the view expressed in 18 Cal WN 445: (AIR 1914 Cal 21) (A) was unsound.

The Indian Legislature gave statutory recognition to the doctrine of part performance by inserting Section 53A in the Transfer of Property Act by Act 20 of 1929 and, thereafter the rights of the parties situated as Defendant 1 are governed only by the provisions of that section. The provisions of that section read:

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 transferor 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 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 there for 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:

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.

Under this section, the transferor or any person claiming under him shall be debarred from enforcing against the transferee any right in respect of property of which the transferee had taken possession under contract of sale. Before invoking this equitable doctrine, the transferee should have performed or was willing to perform his part of the contract. The proviso, in terms, saves the rights, of a transferee from the owner for consideration without notice of the contract or of the part performance of it.

Learned Counsel for the Appellant, relying upon the proviso, contends that the section has no application to the Plaintiffs because it was found by the Courts below that they had knowledge of the agreement to sell in favour of Defendant 1. If this argument be accepted, a Defendant whose equitable defence depends upon S. 53-A loses the only shield available to him for, apart from the section, in India the doctrine of part performance cannot be invoked by Defendant 1.

But the proviso only saves the rights of a bona fide purchaser for valuable consideration and it does not enlarge the content of the defence of equity in favour of Defendant 1. If he is a bona fide purchaser for consideration the Defendant can. not rely upon Section 53A.

If title had passed to him despite his knowledge of the earlier contract, the Defendant could non-suit him only if he had complied with the conditions laid down u/s 53-A of the Act. The question, therefore, is whether title passed to the Plaintiffs notwithstanding the fact that they had knowledge of the earlier contract in favour of Defendant 1.

In Marina Appa Rao and Others Vs. Marina Veeranna, (E), in a different context I considered the question of the rights of a transferee with knowledge of the prior agreement to sell in favour of a third party. At page 170 (of Mad LJ): (at p. 412 of AIR) I observed as follows:

An agreement to sell immovable property does not create any interest in the said property unless a sale-deed is executed conveying the said property. The vendor, who has not transferred his interest in the property, though he entered into an agreement with Anr. to sell the same, can certainly .confer title on a 3rd party by executing a sale-deed in his favour.

As between the vendor and the subsequent purchaser, there can be little doubt that there is a transfer of ownership and therefore the title to the property vests in the latter. But the title of the subsequent purchaser with notice of the prior agreement in favour of Anr. is subject to the obligation u/s 91, Indian Trusts Act. He holds the property for the benefit of the latter to the extent necessary to give effect to the contract. The person in whose favour there was a prior agreement can specifically enforce his agreement u/s 27(2) Specific Relief Act and compel him to execute a sale deed in his favour.

But till such a sale-deed is executed by the subsequent purchaser, the person in whose favour there was a prior agreement cannot acquire any title to the same. If the contract for the purchase . of immovable property with .the original owner does not create any interest in him, the subsequent sale by the owner to a third person cannot confer a''-better title on him. He can only acquire title to'' the property by getting a conveyance from the subsequent purchaser.

The Supreme Court in Lala Durga Prasad and Another Vs. Lala Deep Chand and Others, (F) stated the law at page 68 (of Mad LJ): (at p. 181 of AIR) thus:

First we reach the position that the title to the property has validly pushed from the vendor and resides in the subsequent transferee. The sale to him is not void but only avoidable at the option of the earlier contractor.

It is therefore, manifest that title passes to the subsequent purchaser though the sale can be avoided by the person in whose favour there was a prior agreement to sell. If so, in the present case, title certainly passed from Defendant 5 to the Plaintiffs. They are persons claiming under Defendant 5.

Plaintiffs being purchasers with knowledge of the agreement .to sell in favour of Defendant 1, Defendant 1 may enforce his rights under the contract in a suitable action for specific performance and, indeed, he attempted to do so but failed. If he seeks to resist the transferee relying upon Section 53A, he must comply with the conditions laid down in that section. One of the conditions is that he had performed or was willing to perform his part of the contract.

Both the Courts found that he was guilty of dachas, that he had abandoned the suit contract and that he was not anxious to perform his part of the contract. The said finding disentitles Defendant 1 to any protection under 53A, Transfer of Property Act.

In this view it is necessary to consider the wider question raised, namely whether S. 53-A could be invoked at all by a Defendant in possession if his suit for specific performance was barred by limitation or if his suit to enforce the contract was dismissed on the ground that he was guilty of laces.

In the result the appeal fails and is dismissed with costs.