The Doctrine of Part Performance With Relation To Transfer of Property Act And Indian Registration Act

INTRODUCTION: THE EQUITABLE DOCTRINE OF PART PERFORMANCE

The principle of equity in terms of transfer of immovable property originated in England, which was later incorporated into the Transfer of Property Act as a new provision (Section 53A) by an amendment act ( 1929). A general rule in terms of a contract of sale, which we all are aware of, is that rights do not pass to one another unless the contract in its entirety has been performed. The consequence of one party performing their obligation while the other party drags its feet results in compensation being paid or the unfulfilled obligation being performed, as the case may be. However, the doctrine of part performance, strictly relating to immovable property, in simple terms means that a transferor shall be debarred from enforcing against the transferee any right in respect of the property which the transferee has taken or has continued to be in possession of, other than a right expressly provided by the terms of the contract. The doctrine rests upon the legal maxim, which means that “equity considers of that as done which ought to have been done”. The case which determined the fate of the doctrine to be applicable in India was Muhammad M v. Aghore Kuman Ganguli (1914) 42 CAL 801.




THE SINE QUA NON OF THE DOCTRINE
Every substance has its components; similarly, in order to take up the defence of the doctrine of part performance, there are certain pre-requisites that are indispensable to the role they play. In the case of Jacobs Private Limited v. Thomas Jacob on 28 September 1994 AIR 1995 KER 249, the Court laid down certain essentials for raising a claim based on the section of 53A of the Transfer of Property Act [1]:
(1) The contract should be in writing and signed by the transferor and;

(2) The transferee should have gotten possession of the immovable property, which is covered by the contract and;

(3) The transferee should have done some act in pursuance of the contract and;

(4) The transferee has either performed his part of the contract or is consenting to perform his part of the contract.

IMPORTANCE OF THE WORD “THEN” WITHIN SECTION 53A

The statute clearly indicates that upon satisfying the above-mentioned essentials, then the transferee can claim as a defence against the transferor the doctrine of part performance. In other words, the bar proposed in the section against enforcement of the transferor’s right can be exercised only upon compliance with the postulates[2].


THE REAL NEXUS BETWEEN THE CONTRACT AND THE ACT DONE IN FURTHERANCE OF THE CONTRACT

In the case of Vasanthi v. Venugopal AIR 2017 SC 1569, the Court had placed emphasis on the fact that where the doctrine of part performance has been claimed as a defence, the same cannot be claimed unless the requirements of Section 16 of the Specific Relief Act are fulfilled, and within the essentials, an important factor to take note of is the willingness of the transferee to perform the remaining of his obligations as mentioned in the contract. Without the satisfaction of these two vital details, the doctrine as a defence is deemed to have been surrendered by the transferee[3].

So, it is well settled that when the transferee has taken possession of the property, he must show a willingness to perform the remaining obligations and where the transferee has already been in possession, he must do some act in furtherance of the contract.

An intriguing question that may crop up is that when all essentials may stand to be fulfilled, how does the transferee show that there’s a real nexus between the contract and the act done in furtherance of the contract in order to retain his possession?

One must take a good look at the written contract for consideration of any immovable property, scrutinise the acts done in furtherance of the contract and ascertain with intellect whether there exists a real nexus between the contract and the acts pleaded as done in furtherance of it. This is assumed to be the correct view as to refuse relief in such a case would be perpetuating fraud of the party who, after taking advantage of benefits, backs out and pleads the non-registration of the instrument as a defence[4]. The Court expects something independent of the mere retention of possession of the immovable property to be done in order to evidence part performance. There is an undebatable and noteworthy difference in the probative value of entering into possession of immovable property for the first time and retaining or continuing in possession. The latter is assumed to be a circumstance of a neutral character[5].

The intent of the doctrine of part performance which was introduced and dealt with by the Indian Court, was that it goes against the conscience to watch one party suffer who has entered and has expended his money in the faith of a contract to be treated as a “trespasser”, while the other party connivingly enjoys the benefits he has fraudulently received. The rights of a bona fide transferee will always be protected under the statute.

WILL PAYMENT OF HALF OR EVEN WHOLE OF THE CONSIDERATION CONSTITUTE AS PART PERFORMANCE?

With respect to suits specifically relating to the sale of immovable property, payment of a part or even whole of the consideration would not constitute part performance and not be equivalent to performance in furtherance, as money can easily be repaid and recovered at law. Payment of Monet is an equitable act ( not in itself ) unless an eminent connection is established[6].

IMPOSSIBILITY TO ENFORCE THE BAR OF SECTION 53A ON A THIRD-PARTY BY THE TRANSFEREE

A transferee cannot maintain any suit against any third party to the contract for the enforcement of a bar as against the transferor. This question was rightly answered by the Court in the case of Patel Natwarlal Rupji v. Kondh Group Kheti Vishayak, AIR 1996 SC 1088[7]

SCOPE OF SECTION 17 AND 49 OF INDIAN REGISTRATION ACT: ITS IMPACT ON THE DOCTRINE OF PART PERFORMANCE

As per Section 17, there are certain documents that must compulsorily be registered. Failure to register a contract transferring immovable property for consideration will have no effect for the purpose of Section 53A. Whereas, section 49 enumerated the consequences of non-compliance with the provisions laid down in Section 17 relating to registration of certain documents. This was introduced by an amendment to the act in the year 2001, which was not applicable retrospectively.

Although, after the amendment in the Indian Registration Act, it had become binding upon a party to a contract, who wishes to take the plea of Section 53A as part performance of his contract to have a registered agreement, yet, since a mere agreement to sell did not necessarily convey any title and as such did not require any registration, originally, a contract or an agreement that satiates the very ingredients of Section 53A of 1882 Act was not compulsorily registrable, whether under the Transfer of Property Act or the Indian Registration Act, 1908.

This conflicting view led to a leading judgement that clearly enunciated the implementations of the Indian Registration Act with respect to the doctrine of part performance enshrined in the Transfer of Property Act. The judgement in the case of Ram Kishan and another v. Bijender Mann alias Vijender Mann and others 2013 (2) RCR 419 held that a suit for specific performance, based upon an unregistered contract to sell any immovable property which contains a clause recording part performance of the contract by delivery of possession or has been executed with a person, who is already in possession, shall not be dismissed for want of registration of the contract and that secondly, the proviso to Section 49 of the Indian Registration Act, validates such a contract to the extent that, despite being unregistered, it can form the basis of a suit for specific performance and may also be used as evidence of proof with regard to the agreement or part performance of a contract[8].

CONCLUSION AND CRITICAL ANALYSIS

After analytically pursuing the ratio of law laid down in the cases, it can be said that the amendment to the registration act in the year 2001 was not to disable the equitable remedy for part performance but to allow legal enforcement of the remedy as per law, in case of a fraudulent breach. The doctrine of part performance must be used as a weapon of defence and not as a weapon to attack; it provides for passive equity and no right of action. While this doctrine of equity protects the right of possession over the property of the transferor, it does not enrich the transferor with entitlement, and neither does it create a title on the defendant. However, it does impose a statutory ban on the transfer of such disputed property. The principle behind the doctrine of pat performance is that equity takes a look at the intention rather than the form.

References

[1] https://indiankanoon.org/doc/102138/

[2] https://indiankanoon.org/doc/102138/

[3] https://indiankanoon.org/doc/102138/

[4] https://indiankanoon.org/doc/1965204/

[5] https://indiankanoon.org/doc/1965204/

[6] Snell’s principle of equity, 20th edition p. 587

[7] https://indiankanoon.org/doc/484854/

[8] https://indiankanoon.org/doc/129176381/

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