1981 (12) TMI 163 - SC - Indian Laws

Supreme Court reinstates trial court decision, emphasizes written contracts & part performance in property law

SARDAR GOVINDRAO MAHADIK Versus DEVI SAHAI

The Supreme Court allowed the appeal by the original plaintiffs, setting aside the High Court's judgment and restoring the trial court's decision. The ... - Issues Involved:1. Part performance under Section 53A of the Transfer of Property Act.2. Validity of the sale deed and its registration.3. Mortgagee's defense under Section 53A.4. Rights of the subsequent purchaser.5. Effect of attachment before judgment.6. Auction sale and rights of the auction purchaser.7. Entitlement to the benefit of the equitable doctrine of part performance.8. Payment of consideration and its impact on part performance.9. Nature and character of possession.10. Readiness and willingness to perform the contract.11. Impact of appellate court decisions on execution proceedings.Detailed Analysis:1. Part Performance under Section 53A of the Transfer of Property Act:The core question was whether the mortgagee could claim ownership under the doctrine of part performance as per Section 53A of the Transfer of Property Act. The Court analyzed the requirements of Section 53A, which include a written contract, part performance by taking possession, and acts done in furtherance of the contract. The Court found that the mortgagee's actions did not meet these criteria, particularly emphasizing that mere payment of consideration and continued possession were insufficient to constitute part performance.2. Validity of the Sale Deed and its Registration:The sale deed dated October 10, 1950, was not registered, which the trial court held rendered the sale incomplete. The High Court initially found that payment of Rs. 1,000 for stamp duty constituted part performance. However, the Supreme Court disagreed, stating that acts done prior to the contract could not be considered in furtherance of it. The Court emphasized that a written contract is a prerequisite for invoking Section 53A, and acts must be unequivocally referable to the contract.3. Mortgagee's Defense under Section 53A:The mortgagee argued that he was entitled to the protection of Section 53A because he had performed acts in furtherance of the contract, such as paying Rs. 1,000 for stamp duty. The Supreme Court rejected this defense, noting that the payment was made before the contract was finalized and that the mortgagee was not willing to perform his part of the contract, as evidenced by his failure to discharge the mortgage or pay other creditors.4. Rights of the Subsequent Purchaser:The subsequent purchaser, who bought the property on October 14, 1950, was found to have a valid claim. The Court held that the mortgagee's continued possession did not affect the subsequent purchaser's rights, as the mortgagee had not performed any acts in furtherance of the contract that would qualify for protection under Section 53A.5. Effect of Attachment Before Judgment:Motilal, who had obtained an attachment before judgment on November 6, 1947, argued that the sale to the subsequent purchaser was void against him. The Court examined the effect of the attachment and concluded that while the attachment provided security for Motilal's decree, it did not invalidate the sale to the subsequent purchaser, as the attachment was not revived after the appellate court initially dismissed Motilal's suit.6. Auction Sale and Rights of the Auction Purchaser:Motilal, who purchased the property at a court auction, claimed the equity of redemption. The Court found that the auction sale was subject to the subsisting mortgage and that Motilal did not acquire the equity of redemption because the mortgagor had already sold it to the subsequent purchaser before the auction.7. Entitlement to the Benefit of the Equitable Doctrine of Part Performance:The Court held that the mortgagee was not entitled to the benefit of the equitable doctrine of part performance because he failed to perform his part of the contract and did not do any acts unequivocally referable to the contract. The mortgagee's claim of part performance was further weakened by his continued treatment of the property as mortgaged and his failure to discharge the mortgage.8. Payment of Consideration and its Impact on Part Performance:The Court examined whether the payment of Rs. 1,000 for stamp duty constituted part performance. It concluded that payment of consideration alone is not sufficient to constitute part performance, especially when the payment was made before the contract was finalized. The Court emphasized that acts in furtherance of the contract must be unequivocally referable to the contract.9. Nature and Character of Possession:The mortgagee's claim that the nature of his possession changed to that of an owner was rejected. The Court found no evidence of any overt act by the mortgagee asserting ownership, and his continued possession was deemed to be in his capacity as a mortgagee, not as an owner.10. Readiness and Willingness to Perform the Contract:The Court found that the mortgagee was not ready and willing to perform his part of the contract, as he failed to discharge the mortgage and did not pay other creditors. This lack of readiness and willingness disqualified him from claiming the benefit of part performance under Section 53A.11. Impact of Appellate Court Decisions on Execution Proceedings:The Court addressed the impact of the appellate court's decision on the execution proceedings initiated by Motilal. It held that the auction purchaser, who is also the decree holder, does not get protection if the decree is set aside on appeal. The Court emphasized that the equity in favor of a stranger auction purchaser should be protected, but not when the auction purchaser is the decree holder aware of the pending appeal.Conclusion:The Supreme Court allowed the appeal by the original plaintiffs, setting aside the High Court's judgment and restoring the trial court's decision. The Court also directed that Motilal be paid Rs. 7,500 inclusive of the decretal amount, interest, and costs, with a charge on the property for this amount. The judgment underscores the importance of a written contract, unequivocal acts of part performance, and readiness to perform contractual obligations in claims under Section 53A of the Transfer of Property Act.