This article is written by Varnika Singh, a student of UWSL Karnavati University. In this article, important judgements are analysed regarding property given on lease and their part performance.
Table of Contents
Introduction
Our law has been derived from English Law and in the pre-independence era the property laws were based on the governance and ways of the Britishers. Therefore, the need for a proper civil codified law was felt necessary so the first law commission was set-up in 1870 followed by the second law commission in 1879 headed by Whitely Stokes and their main aim was to create such property laws that are easily understandable and apprehendable by the local judges and advocates and is much fitted to the Indian population. Thus, on 17th February 1882 finally, the Transfer of Property Act was passed into law. Under the English Law for real estate there was ‘The Law of Conveyancing and Property Act, 1881’ which was previously amended in England and our law has been derived from this statute. There were still many contradicting facets of this law and so it underwent many amendments.
In 1927 a Special Committee was formed and the bill that was proposed by them with some amendments was passed in 1929, Act. No. 20 and under this amendment section 53 A was added to give statutory recognition to old English Equity of Part Performance i.e. Doctrine of Part performance. The main reason this doctrine was not instituted before by the privy council was that the lease can be given by way of an oral agreement as under this Act and also the Indian Contract Act 1872, states that agreement can be in oral form too. But this was needed to safeguard the interest of transferee and protect his possession of the said property. The privy council in the case Probodh Kumar Das v. The Dantmara Tea Co. Ltd. has fixated upon the relevance of this doctrine is to impose a statutory bar on transferor and protect transferee’s possession.
Under the Transfer of Property Act, 1882, Section 53A describes part performance and its main aim was to protect the transferee from fraud. Its purpose was to avoid fraud or misdemeanour on part of the buyer so that he can enjoy his right of property.
Under the Transfer of Property Act, 1882 Section 53A that deals with this doctrine states that:
This section states that when a transferor or someone on his behalf transfer’s his immovable property for some consideration in a written manner that is signed by him to the transferee or someone on his behalf on some terms with reasonable certitude. And in the advancement of such contract, he had used his right of part performance to exercise possession over the property or be in partly use of it and acted on such contract. This also includes his wish to willingly perform his part of contract and also if he has already performed on his part.
Therefore, if there is no registered or proper completion of this procedure of transferring of property as prescribed by the law but such agreement was achieved then the transferor cannot enforce against transferee his rights where the transferee has taken the possession or is continuing to be in possession. Only if the term of such contract describes any such exception then only transferor can do so. Also, if the transferee is not aware about the contract or this doctrine still his rights shall not be affected. So, this is what the section reads as.
Now let’s look at how it is different from the English equity of part performance, in India, there is mandatory to be a written document whereas there an oral agreement can also be accounted for the same. In India, this doctrine can only be used a right to defence i.e. to protects own interest and not as a right to action this was also laid down by the Supreme Court in the landmark case of Delhi Motor Company and Ors vs U.A. Basrurkar. In England it can be used for both defence and attack thus, they enjoy both passive and active equity. Also, it is essential to take possession or show willingness to take possession in furtherance of the contract in India whereas there any act done in accordance of contract is sufficient. Therefore, Section 53A is a partial importation of the English equity of part performance.
Now in this article, we will mainly see few cases that show how an agreement or contract of any kind that is written and signed by both parties not necessarily registered is providing a defence by way of doctrine of part performance. And also, we will see other relevant cases that help us to understand the applicability of this doctrine.
Case Analysis
Sheth Maneklal Mansukh Bhai v. Messrs. Hormusji Jamshedji 1950
Facts of the case –
A Talukdari estate was situated in Viramgam taluka Ahmedabad District, comprising of 12 villages and this estate was owned by several talukdars. One of the villages was Rampura, here government under section 28 of Gujarat Talukdars Act took the estate under it. In 1916 the plaintiff i.e. Maneklal Mansukhbhai applied for a permanent lease to Talukdari settlement officer. So, he gave permission on the 12th July 1917 to the petitioner as he was in urgent need to setup his ginning factory and therefore, he sent a letter to the government for their sanction mentioning the same which was signed by the proposer and the officer both i.e. he accepted the proposal of petitioner and agreed to lease after government sanction’s the land. Also, it was agreed upon that the lessee would take possession of the land after the private settlements are done between him and the tenants already in possession. On this the settlement officer also said that he would make arrangements to eject the tenant if no such settlement is reached. On 20th July 1917 finally, the government too gave its sanction. A draft was prepared but a formal registration was still waited on. And then the whole factory and bungalow was setup by the plaintiff and he continued to pay the rent for about two years even though the management changed to management of the talukdars as per the deed set before.
Now the plaintiff gave the land and building on it as mortgage or ijaradar to the defendant i.e. Hormusji Jamshedji making them the mortgagee in 1924. Later in 1933 as they were not able to repay the rent the mortgagee by use of equity of redemption took possession of the mortgaged property. Under this, all rights of Manilal Maganlal were shifted to the defendant. Now the plaintiff said that as the defendants did not have any permanent lease in their name, they cannot take the possession of this land and instituted a suit to eject the defendants. So, the defendants claimed the land saying that plaintiff did not have a registered lease deed, therefore, they were never the lessees in the first place but just trespassers and also the lease granted by the Talukdar Settlement Officer was challenged. Thus, the defendants pleaded that they were the permanent tenant and plaintiff should be ejected.
Therefore, the trial court stated that the lease agreement was not a valid one and equitable part performance doctrine cannot apply here thus defendants were rightly the tenants. Further, the Assistant Judicial Magistrate said that in this case Section 53 A is a complete answer and as there was a written agreement by annexure Ex.181 with the government it can be taken as evidence for the same though no registered deed is available plaintiffs had a lease agreement and so they had the doctrine of estoppel so the defendants further went for an appeal. But on a further appeal the Bombay high court reversed this judgement and stated that defendants have treated the plaintiffs as landlords as they were paying them the rents, but they won’t be the permanent lessees either. Due to lack of any primary evidence of a registered lease deed the high court overlooked the plaintiffs right and stated that defendants had no legal basis. Thus, both the parties were aggrieved.
Issue raised –
Whether Plaintiffs had the right under section 53 A of Transfer of Property Act can be availed or not?
Held by Supreme Court –
In this case, the court elaborated on Section 53A of the Transfer of Property Act 1882 and said this provision states that any written agreement should be there i.e. a signed contract by both the parties and some part should be done in accordance to the part performance. Therefore, in this case by Ex. 181 it was taken to be secondary evidence and it was stated that there was a written contract that was signed by both T.S.O. and Manilal and was in the government files. Therefore, this was constituted to be sufficient evidence for the same. Also said that as per English law from which this equity of part performance is derived it is actively incorporated in the legislature of cease of lease. And so no registered lease deed execution was necessary. And therefore, there was an agreement of the lease and the defendant can further lease it once there is registered deed and the plaintiff gives all the rights.
Thus, the court held that a formal deed wasn’t necessary as long as there is a written agreement signed by both the parties can be established by evidence. Therefore, the decision of the High Court was reversed and that of assistant judge was restored.
Thus, this case forms a basis of many more judgements to come and the most recent judgement that came on 14th August 2020 by the Supreme Court which we have dealt with further.
Other relevant cases
Nathulal v. Phool Chand
The Supreme Court has in Nathulal v. Phool Chand, has given the following conditions on which the doctrine of part performance can be taken as defence in case of encroachment by the transferor,
- Transferor has contracted to transfer with reasonable terms.
- Possession has been given to or is with the transferee of the immovable property.
- In advancement of such contract transferee has also acted upon.
- If it is clear that transferee has performed or is willing to do his part of the contract.
The court stated that if these conditions are fulfilled then the transferor cannot force for the ejectment from the property to the transferee.
Roop Singh v. Ram Singh
The court has stated in this case and cited it in the above case that in case the question is about the possession of the property whether the transfer is done by lease, sale, etc. then the plea of adverse possession is inconsistent when we talk about possession under section 53 A of the Transfer of Property Act.
Moolchand Bakhru & Anr v. Rohan & Others on 29 January, 2002
In this case, in furtherance of a land dispute, Mr. Moolchand had written many letters to Mr. Bhagwan Das to sell of his half share interest in the property as he needed money. But respondents took possession of the property stating that the letters were the agreement to give the property away and therefore Bhagwan Das is now under adverse possession of the whole property. So, the aggrieved plaintiff went to court where the high court stated that the defendants could not be given possession because of adverse possession but instead because of the letters written by Moolchand to Bhagwan Das stating to sell of the property but the court also said that they continue to remain in joint possession but still no mesne profits to be given to plaintiff.
Therefore, the appeal came to the Supreme Court,
The Supreme Court stated that the letters written by Moolchand to Bhagwan Das stating to give his half share of property in exchange of some amount cannot be taken to be a written agreement between the parties moreover it can be only considered as oral agreement besides that the term of the agreement must also be seen and its reasonability must be ascertained in furtherance of which one can decide whether it is an oral or written agreement. And in this case where he has written about selling his share of land but other essentials of selling of an agreement are not fulfilled. Thus, the necessary terms cannot be ascertained from the letters therefore they won’t fall within the ambit of Section 53A as letters construed only to be an oral agreement.
This was also necessary because under Section 53A the person who is the transferee must be given possession so that his interest of part performance is safeguarded and, in this case, Bhagwan Das was never put into possession even after written agreement was instituted. Thus, in this case the respondents had to pay mesne profits to plaintiffs as they were not under possession of the property as stated by the Supreme court reversing the order of High court.
Union of India v. M/s K.C. Sharma & Co.& Ors. 2020
Facts of the case –
A Land of 36 bighas 11 bhiswas was owned by Gaon Sabha Luhar Heri, Delhi. This land was acquired by the government (the appellants) under section 4(1) and section 6 of land Acquisition Act, 1894. So, in this case the respondents (K.C. Sharma) said that this land was given to them on lease by Gaon Sabha i.e. the Gram Panchayat and because the government has acquired it now, they have to give compensation under the award proceeding instituted by the respondents in the civil court under section 30 and section 31 of the land Acquisition Act, 1894. The gram sabha had given the land to remove ‘shora’ and make the land cultivable. Thus, in accordance of this they had been cultivating the land and removed all ‘shora’.
Thus, the case went to city civil court in 1989 and the additional District Judge Delhi said that Government is liable to pay compensation of about 87% to the respondents and 13% to the gram panchayat of the loss incurred because of such acquisition. In 1992 in furtherance of this order it was contended by the government that the respondents were not the lessee of the Goan Sabha and even some villagers supported this. Therefore, a writ was filed in the Delhi High Court. In 1997 the writ was disposed of by the High Court, ordering the Additional District Magistrate to intervene under section 18 of the land Acquisition Act, 1894 on which it decided whether any separate proceeding was needed or not. Gram Sabha filed an application under Order 1 Rule 10 to add a person as a party to investigate the matter at this stage of proceeding. Then in 2005 UOI filed a separate suit again in Delhi High Court then as per the pecuniary jurisdiction to Additional District Judge. Where they again contended that the 1989 order of the court was given based on facts that were a fraud. And they said that the ex-Pradhan was in collusion with the respondents and the land was only given for a period of 5 years. In 2006 Delhi High Court stated that UOI has failed to prove the fraud as there were no sufficient evidences. A reasonable agreement was achieved and signed by all at that time of giving the land. Also, the auction of the land at that time was done by way of bidding in a fair manner and was regulated too. So, no point of collusion can be shown. The appeal of respondents was allowed, and the trial court decree was set aside.
Again, further the case came in Supreme Court where the ASG on behalf of appellant i.e. UOI submitted that –
Appellants contention –
They said that the respondents were not eligible for 87% of the compensation and the trial court judgement and decree was appropriate but High Court reversed it without considering that the judgement was obtained by fraud. They said that such compensation award was obtained by fraud and there was no lease deed it can only be taken as a license to work on that land thus no point of giving such compensation.
Respondents contention –
They state that it was clear by the evidences on record that Goan Sabha’s intention was to lease the land and by the Dy. Director Panchayat approval land was leased. And the respondents are in possession of land since past 30 years so no point of discussion for license arose. And even thou no lease deed was executed or registered the learned Senior Counsel said that under section 53 A of Transfer of Property Act,1882 the respondents are entitled to enjoy such possession of land and the benefit on the basis of the doctrine of part performance.
Issues –
- The compensation claimed was obtained by fraud and there was no lease for the said land?
- As there was no lease deed at best this agreement could be a license and not a lease?
Decision of Supreme Court –
By a 3 judge Bench comprising of J. Ashok Bhushan, J. R. Subhash Reddy and J. M.R. Shah on 14th August 2020,
- High court’s order on fraud was upheld as there were no sufficient evidences.
- The compensation order given by the trial court in 1989 was kept intact.
- Referring to section 53 A of the Transfer of property Act it was stated that the respondents were put in possession of the land by way of lease so doesn’t matter whether there was a lease deed or not as there was an agreement and the intentions of the parties were clear as the facts clearly state Dy. Directors approval for such lease was taken as well. And stating the case, we have discussed above i.e. Sheth Maneklal Mansukhbhai vs Messrs. Hormusji Jamshedji, this court has also stated that there is no mandate for a registered lease until an agreement is there. Therefore, the court said that such persons who have acted on this valid sale of contract but don’t have valid registered deed in their favour, then their right of possession shall be protected by this provision.
Therefore, for a valid contract of sale even for lease the transferee has right to protect his possession under Section 53A of the Transfer of Property Act, 1882 from the transferor no matter there is a registered or documented sale deed or not.
Conclusion
This doctrine is important to protect the transferee’s interest. As when a transfer deed of any sort is formed it becomes quite clear that the transferee does its part to pay the consideration in exchange of the property. But also, there should be some protection given to the transferee’s possession for which this doctrine comes in play. As many a times, there’s just a mutual agreement or a contract signed on a piece of paper or by any informal means and in furtherance of that the buyer does some act so in later stages the transferor cannot encroach or ask for eviction such protection or we can call it defence must be available to the transferee. The judiciary has given this statutory defence but it needs more clarity upon some of its ambiguous aspects.
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