9911796707
TMI Blog1981 (12) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... efendant 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 ₹ 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 ₹ 50,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat ₹ 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 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 the mortgagee to retain possession of the mortgaged property. The High Court gave a further direction that if ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... story 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ific 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 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: &qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 repurchase. It would thus transpire that payment of ₹ 1,000 consisting of two separate payments-one of ₹ 700 on October 9, 1950, and an amount of ₹ 300 on October 10, 1950, by the defendant mortgagee to Ist plaintiff mortgagor for purchasing stamps for execution of a sale deed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ₹ 1,000 started on a wrong premise w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubtle, 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 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-mon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ₹ 1,000 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 ₹ 700 out of the amount of ₹ 1,000 was paid on October 9, 1950, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 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 accounts. The mortgage deed admittedly was not returned to the mortgagor even after the mortgagor executed Ext. D-1 the sale deed which was not ultimately registered. But that is not enough. The mortgage admitted in his evidence that even after Ext. D-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gagee 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. 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. Mere possession ceases to be of assistance when as in this case the person claiming be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption 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 constructive possession could hardly assist him. In Jahangir Begum v. Gulam Ali Ahmed,(1) the Court after holding that the defendant was in possession and had put up a structure on it, came to the conclusion that he was not entitled to the benefit of do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation 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 Bhagirath and Kanhaiyalal Chagganlal. Further shifting stand of mortgagee to suit his convenience is discernible here. In Ext. D-1, the entry of ₹ 17,735 is described as 'have been taken from you from time to time for domestic expenses'. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 October 10, 1950, is not in dispute. Therefore the conduct of the mortgagor is consistent with this case. It was next contended that defendant mortgagee made all attempts to get the deed registered by approaching the Sub- Registrar, and that the defe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ₹ 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 that as he is the purchaser of the equity of redemption, the mortgagor and the subsequent purchaser from the mortgagor cannot now maintain the action for redemption of the suit property and he should be substituted in place of the plaintiffs and be permitted to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lication 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 before the confirmation of the sale on September 23, 1952, the subsequent purchaser had purchased the equity of redemption by the sale deed Ext. P-1 dated October 17, 1950, and that the original mortgagor had no subsisting right, title and interest in the suit prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions 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 equity of redemption. According to Motilal this equity of redemption was sold at the court auction and it was purchased by him. Subject to the decision on the second contention so as to the effect of attachment before judgment, there is no substance in this contention be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 suit was for a money claim. It finally ended in a decree for ₹ 500 by High Court and in between the 1st appellate court had dismissed Motilal's suit in entirety. There is nothing to show that the attachment which would come to an end on the suit being dismissed woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or 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 out that there is no bidder at the auction, for a nominal sum purchases the property, to wit, in this case for a final decree for ₹ 500, Motilal purchased the property for ₹ 300, an atrocious situation, and yet by a technicality he wants to protect himself. To such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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