TMI Blog1981 (12) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 ₹ 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 ₹ 50,000. Account of the mortgage transaction was made and the consideration of ₹ 50,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 con tract. 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 ₹ 1,000 for purchase of stamps and expenses of registration, it was held that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 1,000 advanced to mortgagor for purchase of stamps etc. was in furtherance of the contract. The only such act pleaded was payment of ₹ 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 Ist plaintiff mortgagor Govindrao Mahadik and his subsequent transferee Gyarsilal because he was in possession and continued to be in possession and paid ₹ 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 ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 there of, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rawing up and registering the sale deed; (b) discharge of a debt of ₹ 541 which was included in the amount of ₹ 17,735 retained by the mortgagee from the total consideration payable for discharging other debts; (c) mortgagee agreed to discharge the mortgage subsisting on the property in his favour on settlement of accounts; (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 ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale you should pay ₹ 1,000 (Rupees one thousand 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 ₹ 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 ₹ 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 ₹ 1,000 paid by the mortgagee for purchase of stamp. So far there is no dispute. The grievance is that according to the Ist 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 repur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Dl. 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 ₹ 1,000 an amount of ₹ 700 was paid on October 9, 1950, and that was prior to the agreement. As for the payment of ₹ 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 unequivocally 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 ₹ 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 ₹ 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 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 itself) unless connection is established by parol te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 intest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 preexisting 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 ₹ 1,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 17,735 he paid ₹ 541 to any particular creditor. In his written statement he has stated that the amount of ₹ 17,735 was kept in deposit for payment to other creditor of the mortgagor. One such creditor was to be paid a sum of ₹ 541. This creditor is none other than the mortgagee himself. This would mean that he himself was creditor to whom he paid ₹ 541. Assuming that he could have reimbursed himself, there is nothing to show that he gave a discharge or that he gave credit in his books of accounts. Further, there is no statement in his evidence to that effect. That aspect was never canvassed before the trial court as well as the High Court and we find no material evidence to substantiate this contention. The contention, has, therefore, to be negatived. The third act of part performance pleaded on behalf of the mortgagee is that the mortgagee agreed to discharge the mortgage subsisting on the property in his favour on settlement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d continued in possession in part performance of the contract ? Therefore, the submission is without merits. The next act of part performance pleaded by the mortgagee is that the nature and character of possession changed as recited in the contract. Mortgagee was in possession as mortgagee. Now according to him since the date of execution of the sale deed the nature of possession changed. For this he relies upon a statement in the sale deed Ext. D-1 wherein it is stated that he is being put in possession as owner. This mere recital is hardly indicative of the change in the nature of possession. There is no evidence to show that he moved the authorities that he would be liable to pay taxes as owner. There is no overt act on his part to so assert possession as owner. A mere recital in the disputed sale deed is of dubious evidentary value and when it would be pointed out that he was never willing to perform his part of the contract which is a pre-requisite for claiming protection of the doctrine of part performance it will be shown that he believed himself to be a mortgagee and acted as such even at a date much later than October 10, 1950, from which date he claims to be the owner. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gagor himself made an application for mutation to the municipal authorities and the name of the mortgagee was mutated as owner of the property, it was held sufficient to clothe the mortgagee with the protection of section 53A in a suit for redemption of the mortgage and the mortgagor s suit was dismissed. The Court attached considerable importance to the provision in the unregistered agreement for mutation in favour of the mortgagee as owner and the subsequent conduct of the mortgagor in making an application for mutation was held to be the clearest indication which is essential for invoking the doctrine of part performance. The decision can be said to depend more or less on the facts of the case. However in this connection a reference was also made to Thota China Subba Rao and Ors. v. Matapelli Raju and Ors(2) That decision is hardly of any importance because an extreme contention was advanced on behalf of the mortgagee resisting a suit for redemption that he continued to be in possession in part performance of the agreement which argument was repelled by the Court on the observation that the mortgagee had never been in possession and the contention that he was always in construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 735 out of the total consideration of ₹ 50,000 for payment to the other creditors of the mortgagor. Barring a claim made in the written statement that he paid himself ₹ 541 which was included in the amount of ₹ 17,735 which allegation itself is unconvincing, there has not been the slightest attempt on his part to pay up any of the creditors of the mortgagor. There is nothing to show that he had the list of all the creditors of the mortgagor or that he 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. Not a single creditor has been paid is an admitted position. But the more inequitous conduct of the mortgagee is that he had not made the slightest attempt to contact any of the creditors of the mortgagor or to pay even the smallest sum. There is no such statement in the written statement but even in his evidence at the trial he has not been able to show that he has paid any creditor or made any attempt to pay any of the creditors including those whose names were admittedly known to him such as Ramkaran Ghasilal, Kajodimal, Motilal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistering a sale deed in respect of the mortgaged property in favour of 2nd plaintiff Gyarsilal and thereby frustrating the contract of sale in favour of the defendant mortgagee evidence that the Ist plaintiff was aware of the contract in favour of the defendant mortgagee and he was retaining possession in furtherance of the contract. The submission does not constitute any independent act on the part of mortgagee but it is merely another facet of the fact of permission being retained by the defendant mortgagee. Retention of possession is of no consequence in this case 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 2nd plaintiff by Ist plaintiff would show that he was unwilling to accept the contract as offered by the mortgagee. The subsequent purchaser Gyarsilal has taken a conditional sale and this reinforce the stand of the mortgagor. The existence of the dispute about the nature of the transaction, namely, according to the mortgagor he wanted an absolute sale and this dispute between the parties as on Oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gagee in the proclamation of sale, a fresh auction was held on August 23, 1952. In the meantime, in the absence of any bidder at the auction Motilal the decree holder himself obtained permission of the court to bid at the auction and his bid in the amount of ₹ 300 was accepted and the sale in favour of Motilal was confirmed on September 23, 1952. In the mean time mortgagor Govindrao Mahadik the judgment debtor in Motilal s suit filed Regular Appeal No. 125/51 which was allowed by the Additional District Judge as per his judgment dated March 27, 1953 and thereby the suit of Motilal was dismissed in entirety. Motilal preferred Second Appeal No. 78/53 in the High Court of Madhya Bharat and by its judgment dated September 1, 1958, Motilal s appeal was allowed and a decree in his favour in the amount of ₹ 500 with interest and proportionate costs was passed. Motilal made an application on April 2, 1962 purporting to be under order XXII, rule 10 of the Code of Civil Procedure alleging that he came to know about the suit filed by the mortgagor for redemption of the mortgage in December, 1961 and as the decision in the suit is likely to have an impact on his rights and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntinuance by or against a person of any action who acquires any interest either by assignment, creation or devolution during the pendency of suit, with the leave of the court. In ascertaining whether Motilal can maintain the application his averments in the application will have to be taken as the basis for invoking the Court s jurisdiction under order XXII, rule 10. The question that will have to be posed would be whether Motilal acquired any interest by assignment, creation or devolution during the pendency of the suit and would, therefore, be entitled to continue the suit. The suit is primarily a suit for redemption of mortgage. A suit for redemption of mortgage can be brought by a person holding the equity of redemption. Motilal contends that the suit property was sold at a court auction with subsisting mortgage thereon and the right, title and interest of the mortgagor was sold at the court auction and on the sale being confirmed and the sale certificate being issued he acquired the interest either by assignment or devolution of the original mortgagor. Now this assertion is controverted on behalf of the original mortgagor and the subsequent purchaser contending that much befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant to overlook the gross delay in preferring the application but even after this reluctance the High Court having granted the application, we would consider it imprudent to reject the application on the ground of delay. Once Motilal becomes a party, two contentions advanced on his behalf will have to examined: (a) has he become, under the sale certificate obtained by him, a purchaser of equity of redemption so as to dissentitle the original mortgagor from bringing the present action; (b) What is the effect of the attachment before judgment secured by him on November 6, 1947, on the sale of equity of redeption in favour of the subsequent purcharser under the sale deed Ext. P-1 dated October 14, 1950. Looking to the proclamation of sale it is crystal clear that the property was sold subject to subsisting mortgage in favour of Devi Sahai, mortgagee. At a court auction what is sold is the right, title and interest of the judgment debtor. The judgment debtor in the decree obtained by Motilal was original mortgagor Sardar Govindrao Mahadik. Subject to other conditions, his right, title and interest would be one of a mortgagor, that is the right to redeem the mortgage style as equi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... What is the effect of attachment before judgment ? Attachment before judgment is levied where the court on an application of the plaintiff is satisfied that the defendant, with intent to obstruct or delay the execution of any decree that may be passed against him (a) is about to dispose of the whole or any part of his property. Or (b) is about to remove the whole or any part of his property from the local limits of the jurisdiction of the Court. The sole object behind the order levying attachment before judgment is to give an assurance to the plaintiff that his decree if made would be satisfied. It is a sort of a guarantee against decree becoming infructuous for want of property available from which the plaintiff can satisfy the decree. The provision in section 64 of the Code of Civil Procedure provides that where an attachment has been made, any private transfer or delivery of the property attached or of any interest therein and any payment to the judgment debtor of any debt, dividend or other monies contrary to. such attachment, shall be void as against all claims enforceable under the attachment. What is claimed enforceable is the claim for which the decree is made. Motilal s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him even if the decree in execution of which the auction sale has been held is set aside. This proceeds on the footing that the equity in favour of the stranger should be protected and the situation is occasionally reached on account of default on the part of the judgment debtor not obtaining stay of the execution of the decree during the pendency of the appeal. But what happens if the auction-purchaser is the decree holder himself ? In our opinion, the situation would materially alter and this decree holder-auction purchaser should not be entitled to any protection. At any rate when he proceeds with the execution he is aware of the fact that an appeal against the original decree is pending. He is aware of the fact that the resultant situa-may emerge where the appeal may be allowed and the decree which he seeks to execute may be set aside. He cannot force the pace by executing the decree taking advantage of the economic disability of a judgment debtor in a money decree and make the situation irreversible to the utter disadvantage of the judgment debtor who wins the battle and loses the war. Therefore, where the auction-purchaser is none other than the decree holder who by pointing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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