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CASE NO.: Appeal (civil) 3419 1988

PETITIONER: HAMZABI AND ORS.

       Vs.

RESPONDENT: SYED KARIMUDDIN AND ORS.

DATE OF JUDGMENT:       28/11/2000

BENCH: V.N.Khare, Ruma Pal

JUDGMENT:

RUMA PAL,J

     The  question to be determined in this case is whether Section  53-A of the Transfer of Property Act has any impact on  the  right of redemption granted by Section 60  of  that Act.  The right of the mortgagor to redeem had its origin as an  equitable principle for giving relief against forfeiture even  after the mortgagor defaulted in making payment  under the  mortgage deed.  It is a right which has been  jealously guarded  over  the  years by Courts.  The maxim of  once  a mortgage  always a mortgage and the avoidance of provisions obstructing   redemption  as  clogs   on  redemption   are expressions  of this judicial protection.[ See:  Pomal Kanji Govindji  V.  Vrajlal Karsandas Purohit AIR (1989) SC 436 in this context] As far as this country is concerned, the right is  statutorily recognised in Section 60 of the Transfer  of Property  Act.   The  section gives the mortgagor  right  to redeem  the  property at any time after the principal  money has  become due by tendering the mortgage money and claiming possession  of  the mortgaged property from  the  mortgagee. The  only limit to this right is contained in the proviso to the section which reads:  Provided that the right conferred by  this  section  has not been extinguished by act  of  the parties or by decree of a Court.

     While  the  expression decree of Court  is  explicit enough,  the  phrase  act  of parties has  given  rise  to controversy.   One such act may be when the mortgagor  sells the  equity  of redemption to the mortgagee.  This Court  in Narandas  Karsondas V.  S.A.  Kamtam and Another AIR 1977 SC 774  has said that in India it is only on execution of  the conveyance  and registration of transfer of the  mortgagors interest by registered instrument that the mortgagors right of  redemption will be extinguished.  Section 53-A provides for  another equitable principle viz.  the doctrine of  part performance.  The Chancery Court had developed the principle of  part  performance to deal with situations when a  person took an unfair advantage of the transaction entered into and then  denied  the transaction itself.  The party seeking  to resist dispossession must have altered his position and done

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some act under the contract so that it would amount to fraud in  the opposite party to take advantage of the contract not being  in writing.  The principle was statutorily recognised in the United Kingdom by Section 4 of the Statute of Frauds, 1677.   In  India,  Section   53-A  similarly  protects  the possession  of  persons who may have acted on a contract  of sale but in whose favour no legally valid sale deed may have been  executed  or  registered.  The section  reads:   53A. Part  performance.  - Where any person contracts to transfer for  consideration any immoveable 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 thereof,  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,   notwithstanding  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 person  claiming under him shall be debarred from  enforcing against  the  transferee and persons claiming under him  any right in respect of the property of which the transferee has taken  or  continued  in  possession,  other  than  a  right expressly provided by the terms of the contract:

     Provided that nothing in this Section shall affect the rights  of a transferee for consideration who has no  notice of the contract or of the part performance thereof.

     The conditions necessary under this Section for making out  the  defence  of  part  performance  to  an  action  in ejectment  by the owner have been extricated in Nathulal  V. Phoolchand 1969 (3) SCC 120 as:  (1) that the transferor has contracted  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;

     (2)  that the transferee, has, in part performance  of the  contract, taken possession of the property or any  part thereof,  or  the  transferee, being already  in  possession continues in possession in part performance of the contract

     (3)  That  the  transferee  has   done  some  act   in furtherance of the contract;  and

     (4) That the transferee has performed or is willing to perform his part of the contract.

     The  language of the section is mandatory, and if  the conditions  are  fulfilled  then notwithstanding  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,

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the  transferor or any person claiming under him is debarred from  enforcing against the transferee any right in  respect of  the  property  of  which, the transferee  has  taken  or continued  in  possession,  other  than  a  right  expressly provided  by the terms of the contract See Sardar Govindrao Mahadik  and Another V.  Devi Sahai and Others 1982 (1)  SCC 237.

     This  Court in Narandas Karsondas V.  S.A.  Kamtam and Another  (supra)  was not called upon to decide whether  the equity  of  redemption  could also be extinguished  by  part performance  of a contract of sale under Section 53-A.  When a  mortgagor/vendee agrees to sell the mortgaged property to the mortgagee/putative vendee in possession, the mortgagees status  is  subsumed or merged in his rights as  a  putative vendee  under Section 53-A against the transferor,  provided of  course the pre-conditions for the application of Section 53-A are fulfilled.  Given the mandatory language of Section 53-A, it must be held that in such a situation the equity of redemtion in the mortgagor/vendee is lost to the extent that the  mortgagor  cannot reclaim possession of  the  mortgaged property.   To  hold to the contrary, would not only  defeat the mandate of Section 53-A but would result in an anomalous situation.  An owner who may not have mortgaged his property cannot  be in a worse position vis-Ã -vis the vendee than  an owner  who may have mortgaged the subject matter of sale  to the  vendee.   The  only right left with the owner  in  both cases  is to sue for the completion of the contract.  Let us now  consider the facts of this case.  The subject matter of dispute  is  a  house at Mohalla Boiwada,  Aurangabad.   The house  belonged  to  one  Mohd.  Hussain.   In  1951,  Mohd. Hussain  created a usufructuary mortgage of the house for  7 years  in favour of the Petitioner No.1 for a  consideration of  Rs.700/-.   If  the amount were not  repaid  within  the period of 7 years, the mortgagee would be entitled to retain the  mortgaged  house in her possession till the payment  of amount  or  by  filing  suit for foreclosure  get  the  same foreclosed.  In 1953 Mohd.  Hussain agreed to sell the house to  petitioner  No.1s husband Mohd.  Yarkhan for  Rs.825/-. The  agreement  is evidenced by a document dated  8th  July, 1953  which records that Mohd.  Hussain had received Rs.15/- as earnest from Mohd.Yarkhan and:

     transferred  the  possession of the mortgage  of  the house  by way of as a sale (sic).  The remaining amount will be  received  in cash before the competent authority at  the time  of  registration.   Hence,  I  have  given  these  few sentences  as  an  Isar Pawati.  The  registration  will  be effected on dated 15th July, 1953.

     Mohd.    Hussain  died  before   any  sale  deed   was registered.   On 21st June, 1954 a sale deed was executed by Amir  Hussain  and Rabiyabi, the son and daughter  of  Mohd. Hussain in favour of Petitioner No.1.  This document records that  the sale of the house was effected for a consideration of  Rs.900/- and that after adjusting the mortgage amount of Rs.700/-  the remaining amount of Rs.200/- had been received in  cash.   The  document,   however,  was  not  registered. According  to  the  petitioners,  after  this,  Mohd.Yarkhan improved  the mortgaged property and made various  additions and  alterations and converted the two room house into a  15 roomed  one.  On 12th January, 1965 a sale deed was executed by  which  Amir  Hussain, Rahimabi, Rabiyabi,  Anisabi,  and Hamidabi, all claiming to be the children of Mohd.  Hussain, sold  the  house  to  the  Respondent  No.1  for  a  sum  of

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Rs.3000/-,out  of which an amount of Rs.  600/- was retained by respondent No.1 for the purpose of redeeming the mortgage in  favour  of the petitioner No.1.  Five months later,  the respondent No.1 filed a suit against the petitioner No.1 for redemption  of the mortgage and for possession of the house. The  Trial Court dismissed the suit inter alia on the ground that  the petitioner No.1 was not the true mortgagee but her husband  Mohd.  Yarkhan was.  The respondent No.1  preferred an  appeal  before the District Judge.  The District  Judge, while  upholding  the  finding that Mohd.  Yarkhan  was  the actual  mortgagee, reversed the decision of the Trial  Court and passed a decree permitting the respondent No.1 to redeem the  mortgage.   The High Court in Second Appeal was of  the view  that  because  of  the  concurrent  finding  that  the petitioner  No.1 was really the benamidar of Mohd.  Yarkhan, the  suit  should  have been dismissed as  Mohd.Yarkhan  had never been made a party.  It was noted that had Mohd.Yarkhan been a party, he could have claimed protection from eviction under Section 53-A of the Transfer of the Property Act.  The parties  conceded  the position before the High Court.   The appeal  was  accordingly  allowed  and  the  decree  of  the District  Judge  set  aside.  The suit was remanded  to  the Trial Court with a direction that the respondent No.1 should be  permitted  to add Mohd.  Yarkhan as a party to the  suit and  if this was done then Mohd.  Yarkhan should be given an opportunity  to file his written statement and to raise  all the contentions which were open and available to him and the suit  should then be disposed of on merits.  By the time the matter  was remanded back, Mohd.  Yarkhan was dead.  As such his  legal heirs namely the petitioners Nos.2 to 7 before us were  added as defendants in the suit.  They filed a written statement  in  which  they inter alia claimed the  right  to retain  possession of the house by virtue of Section 53-A of the  Act.   After framing of fresh issues, the  Trial  Court again  dismissed the respondent No.1s suit on 31st October, 1977.  The Trial Court held that the agreement of sale dated 8th  July,  1953  was proved;  that Rahimabi,  Anisabi,  and Hamidabi were also the children of Mohd.  Hussain along with Amir  Hussain and Rabiyabi;  that Amir Hussain and  Rabiyabi had  executed the sale deed on 21st June, 1954 in favour  of the  petitioner  No.1 as benamidar of Mohd.  Yarkhan;   that the  respondent No.1 had purchased the house with notice  of the  agreement  for sale dated 8th July, 1953 and  the  part performance  thereof, that the petitioners had been able  to establish  all  the  ingredients of Section  53-A  and  that because  of  this  the respondent No.1 was not  entitled  to redeem  the house or seek possession of it.  On appeal,  the Assistant  Judge  by his judgment dated 20th December,  1980 upheld  the  findings of the Trial Court on all  issues  but held  that  the plea under Section 53-A of the Act  was  not available  to the petitioners as there was no evidence  that Mohd.   Yarkhan was ready and willing to perform his part of the  contract.   This  was  based on the  finding  that  the agreement  to  sell mentioned that the sale deed was  to  be executed  and the sale completed on 15th July, 1953 and that there  was no evidence that Mohd.Yarkhan had offered to  pay the  balance consideration and get the deed executed on 15th July,  1953  or  during   Mohd.   Hussains  lifetime.   The Assistant  Judge negatived the submission of the petitioners that  the  execution  of the sale deed on  20th  June,  1954 showed  that  Mohd.   Yarkhan  was willing  to  perform  the contract  dated 15th July, 1953.  In reversing the decree of the  Trial Court and allowing the respondent no.1 to  redeem the  mortgage by payment of Rs.600/- to the petitioner,  the District  Judge noted that:   The evidence has been brought

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on  record to the effect that certain improvements have also been  made  by the mortgagees in the mortgaged property  and that  therefore  the  plaintiff is not entitled to  get  the possession  of  the  suit property as it exists  now.   This question  will  be  finally decided while  passing  a  final decree ordering the delivery of possession.

     The  petitioner  No.1 had died during the  proceedings before   the  Trial  Court.    The   remaining   petitioners challenged  the  decision of the Assistant Judge before  the High Court.  The High Court held that as a matter of law the equity  of  redemption  was  not extinguished  even  if  the conditions  under Section 53-A of the Act had been fulfilled by the petitioners.  As such, the High Court was of the view that the respondent No.1 was entitled to redeem the mortgage and dismissed the appeal.  The petitioners have impugned the decision  of  the  High  Court  before  this  Court.   After granting special leave on 27th September, 1988, it was found necessary  to  have  a  factual finding of  the  High  Court whether  the  appellants were ready and willing  to  perform their   part  of  Agreement  dated   the  8th  July,   1953. Presumably  this was because the principle of law enunciated by the High Court was unacceptable.  The appeal was directed to be heard after the finding of the High Court on the point was received, on the evidence on record and within the ambit of  Second  Appeal keeping in view the findings recorded  by the  Trial Court.  The High Court by its decision dated  3rd February,  1989 came to the conclusion that the  petitioners were  not  ready and willing to perform the agreement  dated 8th  July  1953.  The High Court deduced this from the  fact that  in  the written statement filed by petitioner No.1  in 1965  there was no mention regarding willingness to  perform the  part of the contract either on the petitioner No.1s or Mohd.   Yarkhans  part.   The  second  ground  for  finding against  the petitioners was that the balance  consideration was  not  paid even when Amir Hussain and Rabiyabi  executed the  unregistered sale deed in favour of the petitioner No.1 on  20th  June, 1954.  The basic facts as narrated  in  this judgment have been accepted by all the Courts.  The question remains  whether the Assistant Judge and the High Court were right  in  drawing the inference from the established  facts that the Mohd.  Yarkhan was not ready and willing to perform his  part  of  the contract dated 8th July,  1953.   If  the inference  was  perverse and the petitioners  are  therefore entitled  to  the protection of Section 53-A, then  for  the reasons  stated  earlier,  the respondent  No.1s  right  of redemption  does not survive and the appeal must be allowed. The decision in Mahadiks (supra) is instructive as that was a  case  where the question of readiness and willingness  of the  mortgage/vendee was in issue.  In that case, the owner, Mahadik,  had morgaged his house to Sahai.  The mortgage was not  a  usufructuary  mortgage.  Although  Sahai  was  given possession  of the house nevertheless he was accountable  to Mahadik  for the rent earned from the house.  The mortgagor, Mahadik was also required to pay interest on the rent amount to secure which the mortgage has been created.  A draft deed of sale was prepared on 5th October 1945 under which Mahadik purportedly  sold  the house to Sahai in  consideration  for finalising  the accounts of the mortgage, repaying the other creditors  of  the  mortgagor  and payment  of  the  balance consideration  money  in cash at the time  of  registration. The  sale  deed  was not registered.  In the suit  filed  by Mahadik  for  redemption  and   possession,  Sahai   claimed protection  under  Section 53A of the Act.  The  High  Court found  in favour of Sahai.  This Court reversed the  finding

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having  determined  from the facts that no action  had  been taken  by Sahai in furtherance of the sale deed.  Sahai  had not  settled  the  mortgage  accounts nor had  he  paid  the creditors of the mortgagor.  Sahais possession was also not relatable  to the contract of sale.  In an application filed by  Sahai in proceedings subsequent to the execution of  the sale deed, Sahai had claimed that an amount of Rs.27,792 .23 was  due  under the mortgage from Mahadik.  This Court  also found that the agreement on which Sahai had relied was not a concluded  contract  because the parties were not  ad  idem. According  to  Mahadik,  the  agreement  did  not  correctly reflect  the negotiations between the parties which was that there would be a conditional sale.  That was why Mahadik had refused  to  execute the deed of sale.  Sahais defence  was negatived  but it is apparent that Mahadiks case  proceeded on  the basis that had Sahai been successful in establishing his  claim  under Section 53-A, Mahadik would not have  been entitled  to  possession.  In the present case, there is  no dispute that the agreement of sale dated 8th July 1953 was a concluded  contract.   Yarkhan,  the  actual  mortgagee  and putative vendee had acted in terms of the agreement for sale dated  8th  July, 1953.  The reason given by  the  Assistant Judge  for holding that Yarkhan was not ready and willing to perform  his part of the contract of sale was that in  terms of  the  agreement dated 8th July 1953, the sale was  to  be completed  by 15th July 1953 and that there was no  evidence that  Yarkhan had called upon Mohd.  Hussain to execute  the sale deed on that date.  This inference of lack of readiness and  willingness  assumes  that the time  mentioned  in  the contract  was  of the essence of the contract.  There is  no evidence  in  support  of  this.  On  the  other  hand,  the agreement  does not state that if the registration were  not effected  on  15th July 1953, there would be no  sale.   The mentioning of the date appears to be a term in favour of the vendee casting a duty on the vendor to complete the vendees title  within  the  time  specified.   The  term  cannot  be construed  against the vendee to limit his right to have the sale  completed on a subsequent date.  The reasoning of  the High Court is equally unacceptable.  Yarkhan was not a party to  the  suit  as  originally  filed.   The  High  Court  in remanding  the  matter to the Trial Court  had  specifically held  that  Yarkhan should be added as a party and  that  he should  be  permitted to raise the defence of Section  53-A. This  was  done.  To reject the plea of the  willingness  of Yarkhan  on the basis of the earlier written statement filed by  the petitioner No.  1 was, to say the least,  erroneous. The  second  reason  given by the High  Court  is  factually incorrect.   The balance consideration had in fact been paid to Amir Hussain and Rabiyabi when the unregistered sale deed was  executed as averred by Yarkhan and admittedly  recorded in  the  sale deed dated 20th July 1954.  The  contract  for sale  required  Mohd.   Hussain to pay  Rs.15/-  as  earnest money.   This had been done.  Yarkhan had paid not only  the consideration  envisaged under the agreement of sale but  an additional  amount as demanded by two of the heirs of  Mohd. Hussain.   Yarkhan had drafted the deed of sale and taken it for  registration  to the Registration Office.  Two  of  the heirs  had  even executed the deed of sale.  It is  also  in evidence  that  subsequent to the deed, Mohd.   Yarkhan  had exercised rights of ownership and altered his position under the  contract  by  adding  several  rooms  to  the  existing structure at some expense.  Yarkhan had, therefore, asserted his  possession  qua-owner.  This was also in terms  of  the agreement of sale.  Short of actual registration of the deed of  sale, there was nothing else that Yarkhan could do.   As

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stated  in  Maneklal  Mansukhbhai vs.   Hormusjii  Jamshedji Ginwalla  &  Sons  AIR 1950 SC 1:  The  defendant  and  his predecessor  in interest were willing to perform their  part of  the contract.  As a matter of fact, they have  performed the  whole  of  it.   All that remains to  be  done  is  the execution  of  a lease deed by the lessor in favour  of  the lessee and of getting it registered.

     The  four  conditions  under Section 53-A of  the  Act having  been  fulfilled by the petitioners pre-decessor  in interest,  it  must  be  held that the  respondent  No.1  is debarred from claiming possession of the mortgaged property. The  judgment of the High Court is accordingly set aside and the appeal allowed without any order as to costs.