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Judgment
S. M. AH Mohamed, J.—These two appeals arise out of the Common Order passed by the learned single Judge on the Original Side of this
court in Original Application No. 399 of 1991 and Application No 4026 of 1991 in C.S. No. 584 of 1991.
The plaintiff/ respondent filed C.S. No. 584 of 1991 on the file of the Original Side of this court for specific performance of the contract for sale
of the suit property for a sum of Rs. 8.01 ,000/- in favour of the respondent/ plaintiff against the appellants/defendants. Original Application No.
399 of 1991 was filed by the respondent/ plaintiff for grant of an interim injunction restraining the appellants/defendants from selling the suit
property to any other person other than the respondent/plaintiff, pending disposal of suit, and the same was granted by the learned single Judge.
Application No. 4026 of 1991 was field by the respondent/plaintiff for a direction to deposit a sum of Rs.8,01.000/-being the consideration for the
sale of the suit property to the credit of the plaintiff in C.S. No. 584 of 1991 in the name of the Registrar of this Court, pending further orders and
the same was granted by the learned single Judge. Aggrieved by the abovesaid Common Order, the appellants/defendants have preferred the
above two appeals.
The respective pleadings of the appellants/defendants and respondent/plaintiff as summarised by the learned single Judge are as follows:
The applicant company in the capacity of a lenant is in occupation of the suit property situnte at No. 120, R.K. Mutt Road, Raja
Annamalaipuram, Madras 28 and continuous possession and occupation of the same for the last more than 25 years under one Smt. Bhavani Bai
Prabhu through her son-in-law, the third respondent herein and that during the continuance- of the tanancy, the said original owner died learing Will
be-queathing the said property to the respondents I and 2 for the daughters of the third respondent and that even after the name, the applicant has
been in continaous occupation and possession of the said premises as a tenant and that while being so, in or about April 1987, since the third
respondent acting for and on behalf of the repsondent I and 2 offered the suit property to the applicant for sale for a consideration of Rs.
8,01,000/-which was arrived after taking into account of all aspects'' including the continuous-possesr sion of the suit premises for a long period'',
followed by a Series of correspondence as evident for the letters dated 9-4-1987 and 13-4-1987 written by the third respondent herein and
replied by the applicant to the third respondent herein and replied by the applicant to the third respondent on 2-5-1987 which was in turn replied
by the third respondent on 5-5- 1987 and the letter dated 23-5-1987. sent by the third respondent to the applicant seeking forborne clarification
and that the sevent correspondences Between the applicant and the third respondent on 6-6-1987, 19-6-1987, 20-8-1987 and 25-8-1987
resulted in the finalization of the above sale consideration coupled with a draft agreement of sale and thereby the applicant was induced into the
possession of the suit properly pursuant to the agreement of sale and that, therefore, the applicant''s possession is entitled to be protected by virtue
of the provisions of Section 53 of the Transfer of Property Act. While that being so the respondents failed to furnish any further information as was
agreed to be given to the applicant after getting the Will executed by the deceased Bhavani Bai, probated so as to complete the abovesaid sale
transaction. The applicant was waiting and that while being so in the first week of April 1991, the applicant came to know that the probate of the
Will was granted by this Court as early as 16-11-1988 and that even so, for the reasons best known to the respondents herein, they are making
every effort to go back upon their own words and to dispose the suit property to a third party for higher monetary benefit even though the
applicant is always ready and willing to pay the sale consideration to execute the sale deed as agreed and for which it was alleged that the
respondents committed the breach of promise in spite of the fact that the applicant company has been in continuous possession of the suit property
in part performance of the contract. Inasmuch as the respondents had committed the breach of the agreement, it was avcrred-that the applicant has
come forward with the suit for specific performance as well as the abovesaid application for seeking the order of ad interim injunction restraining
the respondents herein from disposing the suit property to any third party with a view to avoid irreparable loss and prejudice to the applicant
herein.
The brief facts stated in the affidavit filed in support of the application No. 4026 of 1991 are as follows:-
Apart from the averments stated in the previous application, the applicant has added further that on the basis of the agreement of sale entered into
with the respondents to purchase the suit property and in the context of filing the suit for specific performance and the applicant is in actual
possession and enjoyment of the same as part peformance of the agreement of sale entered into already, he is ready and willing to deposit the sale
consideration of Rs. 8,01,000/ - into the credit of the suit pending disposal of the same to show his bona fide and that for which, he wants a
direction to do so as prayed for in the application.
A very lengthy counter-affidavit covering about third pages to the Original Application No. 399 of 1991 was filed on behalf of the respondents and
in which it was mainly contended inter alia while admitting the possession of the applicant in the suit property for the last more than 28 years as a
tenant and all the correspondences and negotiations transpired among themselves as claimed in the affidavit, it was averred that there was no
concluded contract of sale entered into among the respondents and the applicant and that as such, it was contended that the present suit as well as
the applications are not at all maintainable and accordingly the same arc liable to be dismissed; that the possession of the applicant in the suit
property is only in the capacity of a tenant holding over as evident from the Rent Control Proceedings now wending before the Rent Controller and
that as such, the appli-cant has been paying the rent for the suit property at the rate of Rs.400/-and that, therefore, the question of the possession
of the suit property by the applicant pursuant to the agreement of sale as part performance as provided u/s 53 of the Transfer of Property Act is a
patent falsehood and does not arise in any event and that as long as the applicant has not paid any single pie towards the alleged agreement of sale,
as advance or otherwise and that when there is no agreement of sale signed by any of the parties herein, the doctrine of part performance is not
available to the applicant herein, that all the letter correspondence between the parties herein would clinch the fact that there was no concluding
contract of sale among themselves with regard to the selling of the suit property as claimed and that therefore either the balance of convenience or
the question of irreparable loss, breaches of damages are not available in favour of the applicant and that therefore in substances, the respondents
contend that the present application in O.A. No. 399 of 1991 is to be rejected in limine.
The contentions made in the counter-affidavit filed on behalf of the respondents to Application No. 4026 of 1991, are that inasmuch as the suit
filed by the applicant for the relief of specific performance itself is one on the basis of the oral agreement of sale as alleged and that the applicant is
in occupation of the suit property only as a tenant holding over and not in the capacity of part performance as provided u/s 53 of the Transfer of
Property Act, the suit ilself is not maintainable and that, therefore, the applicant is not entitled to deposit any amount in the court to the credit of the
suit and that besides the respondents never agreed to sell away the suit property for the sum of Rs. 8,01,000/- as claimed and that the claim being
made by the applicant to deposit the said amount is only to mislead the court on the basis of an oral agreement of sale and that, therefore, the same
is to be rejected.
On the above pleadings of the respective parties, the learned single Judge framed the following two points:
1) Whether the applicant plaintiff has established a prima facie case in his favour warranting the indulgence of this Court to sustain the Order of ad
interim injunction passed on 29-4-1991 as absolute, till the disposal of the suit?
2) Whether the applicant is entitled to deposit the sum of Rs. 8,01,000/- in Co the Court to the credit of the suit, pending disposal of the suit?.
The learned single Judge answered the above two points in favour of the respondent/ plaintiff. The learned Judge after perusal of the respective
documents was of the prima facie view that possession of the suit property for a quite lung time nearly for 25 years was with the respondent
plaintiff as a tenant and subsequently as a tenant holding over and rent control proceedings were pending against the respondent ''plaintiff. The
learned Judge w as also of the view that the facts of the case revealed that definite negotiation with :regard to the sale of the suit property look
place among the parties, but it was not shown there was any concluded agreement for sale and the alleged draft agreement of sale was not
concluded among the parties and the suit was filed on the basis of an oral agreement for :sale and that not a single pie was paid by the respondent
plaintiff as an advance following the alleged oral agreement for sale. The learned Judge was of the view that there was prima facie case in favour of
the respondent/ plaintiff as he was in possession of the suit property first as a tenant and later on as a tenant holding over and answered point No. I
in favour of the applicant/respondent herein. The learned single Judge answered point No. 2 in favour of the respondent/plaintiff and directed him
to deposit a sum of Rs. 8,01,000. into the court to the credit of the suit and accordingly made the interim injunction absolute till the disposal of the
suit.
Mr. Govind Swaminathan, learned Senior Counsel appearing on behalf of the appellant herein contended that the order of the learned single
Judge is unsustainable in law and contended that the learned single Judge totally misconstrued the principle and meaning of part performance as
stated in, Section 53A of the Transfer of Property Act 1882 which provision can be used only as a defensive weapon as a shiaid and not as an
offensive weapon as a sword. He further contended that an agreement for sale by itself does not create any interest or any charge on such property
and the relief of specific performance is a discretionary relief based upon equity and the learned single Judge erred in granting an injunction against
the appellants defendants from selling the suit properly. On the OTHER hand, Mr. Padmanabha Rao, learned counsel, for the respondent/ plaintiff
vehemently contended that there is no infirmity or error in the impugned order of the learned single Judge and the two appeals preferred by the
appellants/defendants ought to be dismissed by this Court.
We have carefully considered the respective pleadings of the parties and the contentions of the leared counsel for the appellants and the
respondent and we are of view that the order of the learned single Judge is not sustainable.
Mr. Govind Swaminathan learned Senior Counsel appearing for the appellants pointed out the following passages, in the order passed in
C.M.P. No. 8571 of 1993 O.S.A. Nos. 115 and 116 of 1993 dated 12-7-1993 which is as follows:
The above facts show that the plaintiff/ respondent has stated that in terms of the correspondences between the parties on 6-6-1987, 19-6-1987,
20-8-1987 and 25-8-1987, an agreement was reached under which the plaintiff/respondent was inducted into possession of the suit property and
accordingly, it has stated that it is entitled to be protected by the virtue of the provisions of Section 53 of the Transfer of Property Act, 1882.
Although the learned single Judge while culling out the facts has used the expression, ''agreeement of sale'', it is obviously for ''agreement for sale''
which is defined u/s 54 of the Transfer of Property Act, ''1882 as follows:
''Contract for sale:-- A contract for the sale immovable property is a contract that a sale of such property shall take place on terms settled between
the parties. It does not, of itself, create any interest in or charge on such property.''
Considering the effect of Section 53 and Section 54 of the Transfer of Property Act, 1882, as Bench of this Court, to which one of us (Mishra, J.)
was a member has stated-
''These two provisions together leave no manner of doubt that there is no right under a contract for sale except to sue for its enforcement and that
possession in part performance of the contract in the hands of the transferee shall also not defeat any transfer to a third party who had no notice of
the contract or of the part performance thereof.''
The Bench in the case of T. Parameshwari v. S.S. Investments Private Limited 1993 I Mad LW 109 has stated the law in these words:
The above view of the Patna High Court has a worthy companion in a Division Bench Judgment of this Court in Krishnamoorthy Koundar Vs.
Paramasiva Koundar, where a similar question to the one posed before us is a suit for specific performance was involved and it was observed as
follows at page 311:
Apart from this factual aspect there is one other impediment in the way of the respondent from getting the relief of temporary injunction in his suit
for specific performance. Even assuming that the plaintiff was given possession of the suit properties on the date of the agreement of sale by the
first defendant, the question still is whether the plaintiff could claim the relief of injunction based on S. 53A of the Transfer of Property Act.
Admittedly, in this case, the plaintiff has not yet got title to the properties. He can get title to the properties only if he succeeds in the suit and
obtains sale deed in respect of the properties. It is well established that an agreement of sale does not create any interest in the property which is
subject matter of the agreement. Therefore, the plaintiff if at all can claim only an equitable, right based on S. 53A of the Transfer of Property Act.
Therefore the relief of temporary injunction claimed by the plaintiff pending the suit can be taken to have been claimed by the plaintiff only on the
basis of S. 53A of the Transfer of Property Act as mere possession of the plaintiff of the suit properties on the date of the suit cannot be taken to
enable him to obtain injunction from the court. If that will be the case even a trespasser in possession can approach the Court and ask for an
injunction to protect his possession. Therefore, we have to treat the plaintiffs application for temporary injunction pending the suit as an application
for claiming equitable relief under S. 53A of the Transfer of Property Act. If the application for injunction is so treated; then the plaintiff cannot be
granted the relief for the reason that Section 53A can be used to resist the defen-dant when he seeks to dispossess the plaintiff. It is well
established that S. 53A of the Transfer of Property Act provides for a passive equity and not for an active equity. Therefore, the plaintiff cannot
seek his relief of injunction in a Court of Law based on S. 53A of the Transfer of Property Act though he uses S. 53A to debar the transferor who
has agreed to sell the property from claiming any right in respect of that property. It is well established that the right conferred by S. 53A is a right
available to the defendant only to protect his possession and on the basis of that section, the defendant cannot claim any title and it merely operates
as a bar to the plaintiff to ascertain his title. Though in English Law the equity of part performance is an active equity which the plaintiff in
possession may enforce in an independent suit for proceeding, such as a suit for specific performance or for an injunction two restrain
disposession, such equity is not available after the Amendment of the Transfer of Property Act in the year 1929. In this case, the plaintiff used his
right u/s 53A not as a shield but as a sword. Hence, the plaint iff is not entitled to the injunction sought for by him.
We are, however, aware of a dissent to the view expressed by a Bench of this Court in Krishnamoorthy Koundar Vs. Paramasiva Koundar, by a
learned Judge of the Bombay High Court in Venkat Dharmaji Gontalwar Vs. Vishwanath and Another, and the view of the Calcutta High Court in
Muktakesi Dawn and Others Vs. Haripada Mazumdar and Another, . In the Calcutta decision it has been stated that in a suit for specific
performance of a contract for sale also temporary injunction can be granted. In the judgment of the Bombay High Court in Kalyanpur Lime Works
Ltd. Vs. The State of Bihar and Another, , we find that the learned Judge only took notice of the rules of injunction to say that there is no bar under
the CPC which can be invoked in support of the proposition that a plaintiff suing for specific performance cannot obtain any injunction whatsoever
and that if there is no bar in the CPC and if the application for temporary injunction is solely governed either by O. 39, Rr. 1 and 2 or in the
alternative by invoking the inherent powers of the court under S. 151 of Civil Procedure Code, there is no justification to treat such an application
as an application for relief of injunction as provided by S. 53-A of the Transfer of Property Act, But then, there is absolutely no reason stated why
the learned Judge thought that he should dissent from the view taken by the Madras High Court. No one can question the jurisdiction of this Court
to grant temporary injunction even in a suit for specific performance of a contract for sale. While applying to exercise the discretion, it would
necessarily take the Court to the various provisions governing the suit for specific performance of a contract for sale of immovable property.
Presence of power alone is not enough to exercise it. It is the exercise which is controlled by judicial discipline. Courts who always advise that all
adjudications must conform to the rules of equity, and discretion must always be exercised within the bounds of law, cannot merely because there
is power to do a thing do that thing. The decision in Kalyanpur Lime Works Ltd. Vs. The State of Bihar and Another, , and the decision in
Krishnamoorthy Koundar Vs. Paramasiva Koundar, , would appear to take a principled stand to be applied in determining as to whether there is
any balance of convenience in favour of the plaintiff or it is in favour of the defendant. There is no reason why we constituted a co-ordinating Bench
do not follow the law stated by this Court in Krishnamoorthy Koundar Vs. Paramasiva Koundar, The Calcutta High Court''s view is not essentially
in conflict with the view taken by the High Court of Patna and the High Court of Madras. In Muktakesi Dawan v. Haripada Muzumdar, AIR (988
Calcutta 25, all that is stated is (at page 27):
''It is true that the doctrine of its pendens enunciated in Sec. 52 of the Transfer of Property Act takes care of all pendente lite transfers; but it may
not always be good enough to take fullest care of the plaintiff''s interest vis-a-vis such a transfer. Where suit is one for specific performance of sale
in respect of the suit property and if the defendant is not restrained from selling the property to a third party and accordingly, a third party
purchases the same bona fide for value without any notice of the pending litigation and spends a huge sum of the improvement thereof for
construction thereon the equity in his favour may intervene to persuade the Court to decline, in the exercise of its discretion, the equitable relief of
specific performance to the plaintiff at the trial and to award damages only in favour of the plaintiff. It must be noted that R. 1 of O. 39 of the CPC
clearly provides interim injunction restraining the alienation or sale of the suit property and if the doctrine of its pendens as enacted in S. 52 of the
Transfer of Property Act was regarded to have provided all the panacea against pendente lite transfers, the Legislature would not have provided in
R. 1 for interim injunction restraining the transfer of suit property. Order 1 of Rule 39, clearly demonstrates that notwithstanding the Rules of its
pendens in S. 52 of the Transfer of Property Act, there can be occasion for the grant of injunction restraining pendente lite transfers in a fit and
proper case.''
A further elucidation of the above law was required on account of a persuasive argument by the learned counsel for the appellants in O.S.A. No.
284 of 1992 by us and in the judgment that we have delivered on 7-1-1993, we have stated as follows:--
''What has been culled out by us leaves no manner of doubt that possession in part performance of a contract is a right falling under S. 53-A of the
Act and the transferee in possession of the property in part performance of the contract can defend his possession in case there is any attempt by
the transferor or any person claiming through him to dispossess him. That the transferee can do either as a plaintiff or a defendant. Ordinarily, the
issue as to possession or any other right under S. 53-A of the Act shall be consequential or a defendant issue upon the issue of the existence of the
contract itself and with a decree for the enforcement of the contract, there can be an order for maintaining the possession of the agreement-
holder/transferee. In considering, however, whether injunction should be granted on the plea of possession and allegation of threat of dispossession
to a person holding t he agreement for sale, the rule will be as one reiterated almost in every case that to a plaintiff claiming only an equitable right
the Court would not ordinarily grant temporary injunction pending the suit on the basis of S. 53-A of the Act, as mere possession of the plaintiff of
the suit property on the date of the suit cannot be taken to enable him to obtain injunction from the Court. The passive equity as provided under S.
53-A of the Act shall be available as a shield against any interference by the defendant who is either the transferor himself or any other person
claiming through the transferor but would not become active equity without there being something more. The doctrine of lis pendens as enunciated
in S. 52 of the Act and similar other doctrines will take care of all pendente life transfers. But there may be exceptional cases whether the other
rules of equity as are noticed in the cardinal principles for grant of injunction will intervene and injunction may be the proper and equitable order.
The Bench decision of this Court in the case of T. Parameshwari v. S. S. investments Pvt. Ltd., 1993 1 Mad LW 109, which has been affirmed by
the Supreme Court in S.L.P.Nos. 17926 and 17927 of 1991 has clearly said that no one can question the jurisdiction of the court to grant
temporary injunction even in a suit for specific performance of a contract for sale. But while applying to exercise the discretion it would necessarily
lake the court to the various provisions governing the suit for specific performance of a contract for sale of immovable property as well as other
equitable doctrines''.
In view of the above legal position, in spite of the persuasive argument of ''the learned'' counsel for the caveator. We are not inclined to accept that
cm the facts as aforementioned any order of injunction as prayed for, that is to say, restraining the appellants from selling the suit property
described in the schedule to the application to any person other than the applicant for consideration already agreed pending disposal of the suit can
be granted. The impugned order is accordingly stayed.
Learned senior counsel, Mr. Govind Swaminathan, states that the above observation represents the correct legal position and as such, the
appeal ought to be allowed. On the other hand, the learned counsel for the respondent/plaintiff vehemently contended that since the
respondent/plaintiff is in possession of the suit property the appellants/ defendants should be restrained from selling the suit property. Learned
counsel for the respondent/plaintiff in support of the above contention has cited an unreported ruling of a Division Bench of this court in O.S.
Appeal No. 94 of 1989 dated 19-4-1989, in the case of Zebunnisa Begum v. Seven Hills Real Estate, wherein it was observed as follows:
Though ordinarily, any attempted dealing with the property forming the subject matter of the suit pending disposal of the suit would be subject to
the final result of the suit and in that sense, it may not be necessary to grant an injunction, it is seen in this case that the appellant has no intention of
retaining the property with her, but has clearly manifested an intention to develop the property and selling it to third parties by entering into an
agreement with another party in December, 1987. We have therefore to take into consideration the rights of the innocent third parties also, who
are likely, to invest their hard-earned money in the, purchase of either houses or flats which may, be promoted by the appellant. Interests of justice
certainly require that the third parties should be prevented from entering into the vicissitudes of this litigation, who would be the losers, if the
appellant is allowed to implement her intention in the matter of the development of the property and selling it to third parties either as houses or
even as fiats and the suit is eventually decreed. We agree with the learned Judge that on the facts and in the circumstances of the case, the
appellant should not be permitted to do so and she was rightly injuncted from alienation or otherwise disposing of the property or even altering the
physical features of the property pendente lite. We therefore dismiss the appeal. No costs.
In order that the rights of parties may be known to them as early as possible and to enable the parties to exploit the property to their best
advantage, it is desirable that the suit itself is tried and disposed of as early as possible preferably before the end of August, 1989. Counsel on both
sides assure us that they will co-operate with the Court and give their assistance to such disposal and the direction for the disposal as given above
is only pursuant to the assurance so given by the counsel.
We are of the view that the orders passed by the Division Bench was upon the peculiar facts and circumstances of the case and in the interests
of justice as well as in order to protect the innocent third parties who purchased the flats, and the same will not apply to the facts and
circumstances of the instant case.
Upon the facts and circumstances of the case, we are of the view that equity is not in favour of the respondent/plaintiff. In the instant case, the
learned single Judge has held that there is only an alleged oral agreement to sell and, ''that the draft agreement of sale has not been concluded
among the parties herein, be it as it may, it is safe to conclude that the suit was filed on the basis of the oral agreement of sale. The learned single
Judge has also held that the respondent/plaintiff was in possession of the suit property ''for a quite long time'' for more than 25 years as a tenant
and that subsequently as the tenant holding over, and he has to be dispossessed only in accordance with law. A contract for sale in this case, the
alleged oral agreement by itself does not create any interest or charge in the suit property. As has been held in the above rulings, of this court, the
respondent, plaintiff can use equity in his favour only as a shield, and not as a sword restraining the, appellants/defendants from selling the suit
property. Therefore, there is force in the contentions of the learned senior counsel, Mr. S. Govind Swaminathan that upon the facts and
circumstances of the case, the respondent/ plaintiff cannot use the equity as a sword but only as a shield when he is dispossessed. In view of the
above, the appeals are allowed and the impugned orders are set aside. Upon the facts and circumstances of the case, there shall be no order as to
costs.
Appeals allowed.