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PETITIONER: NATHULAL

       Vs.

RESPONDENT: PHOOLCHAND

DATE OF JUDGMENT: 16/10/1969

BENCH: SHAH, J.C. BENCH: SHAH, J.C. HEGDE, K.S.

CITATION:  1970 AIR  546            1970 SCR  (2) 854  1969 SCC  (3) 120  CITATOR INFO :  R          1982 SC 989  (10,40)

ACT: Transfer of Property Act 4 of 1882, ss. 4 and 53A-Defence of part performance under s. 53A-Conditions for-When  defendant is  deemed  to be ready and willing to perform his  part  of contract-Effect  of  s. 4 on provisions of  Indian  Contract Act,  1872-Sequence  in which parties to  agreement  are  to carry  out their parts of contract-Effect of ss. 70 (4)  and 70(8)  of Madhya Pradesh Land Revenue and Tenancy Act 66  of 1950-Repeal of Act 66 of 1950 by Madhya Pradesh Land Revenue Code 1959 whether retrospective.

HEADNOTE: The  appellant agreed in writing to sell a  ginning  factory situated  in  Madhya Pradesh and the  agricultural  land  on which,it stood, to the respondent for a sum off Rs.  43,077. The land in question stood entered in the revenue records in the  name of the appellant’s brother.  The  respondent  made part payment at the time of the execution of the  agreement and  promised  to pay the balance by a fixed date.   On  the ground  that the balance was not paid on the due  date,  the appellant rescinded the contract and commenced an action  in the  Court  of  the  District Judge.   The  defence  of  the respondent  was  that he had made arrangements  to  pay  the balance  of the agreed amount and had offered to pay it  was the  appellant  who had failed to fulfill his  part  of  the agreement inasmuch as he had not taken steps to get  deleted the name of his brother from the revenue records.  The trial court  decreed  the  suit but the High  Court  reversed  the decree.   The  appellant  filed  the  present  appeal   with certificate.  Dismissing the appeal, HELD, : The respondent was entitled to rely on the  doctrine of  part performance in S. 53A of the Transfer  of  Property Act,  and  s. 70(8) of the Madhya Pradesh Land  Revenue  and Tenancy  Act, 1950 was not a bar to that  defence.   Section 70(8) only requires that not only the conditions  prescribed by  s. 70 but registration of sale deed in  accordance  with the  land of registration for the time being in force  is  a condition  required  to be complied with before  a  sale  is deemed valid.  There was no sale in the present case and the

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respondent was not relying on any sale.  He was relying upon a  contract  of  sale  and  the  equity  for  defending  his possession against the claim made by the appellant. [858  B- D] There  was  in the present case a contract to  transfer  for consideration  immovable property by writing signed  by  the appellant  from which the terms necessary to constitute  the transfer could be ascertained with reasonable certainty.  In part  performance of the contract the respondent  had  taken possession  of the property and he had in pursuance  thereof paid  an  amount  of Rs. 22,011. The  contention  raised  on behalf  of the appellant that the act done in  pursuance  of the  contract  must  be  independent of  the  terms  of  the contract could not be accepted.  The first three  conditions for the defence of part performance to be effectively set up by. the respondent therefore existed. [859 B] The  fourth  condition  in s. 53A-that  the  transferee  has performed or is willing to perform his part of the contract- was also satisfied in the case because: 855 (i)  In  considering whether a person is willing to  perform his  part  of  the  contract  the  sequence  in  which   the obligations  under  a contract are to be performed  must  be taken  into account.  By virtue of s. 4 of the  Transfer  of Property  Act the chapters and sections of the  Transfer  of Property  Act which relate to contracts are to be  taken  as part  of the Indian Contract Act, 1872.  If therefore  under the terms of the contract obligations of the parties have to be  performed in a certain sequence, one of the  parties  to the contract cannot require compliance with the  obligations by the other party without in the first instance  performing his  own  part  of the contract which  in  the  sequence  of obligation is performable by him earlier. (ii) The  appellant  had expressly undertaken  to  have  the revenue  records rectified by securing the deletion  of  his brother’s name from the revenue records, and it was  further an  implied  condition of the contract  that  the  appellant would secure the sanction of the Collector to the transferor under s. 70(4) of the Madhya Bharat Land Revenue and Tenancy Act,  66 of 1950.  The first condition was not fulfilled  in due time and the second condition was never fulfilled.   The repeat of Act 66 of 1950 by the Madhya Pradesh Land  Revenue Code, 1959 did not have retrospective operation. (iii)     In view of the arrangement made by the  respondent it  was  clear  that  he had  at  all  relevant  times  made necessary  arrangements  for paying the amount due,  but  so long  as  the appellant did not carry out his  part  of  the contract the respondent could not be called upon to pay  the balance  of the price.  It must therefore be held  that  the respondent  was at all times ready and willing to carry  out his part of th contract. [859 E-H] Motilal  & Ors. v. Nanhelal and Anr.  LR. 57 I.A. 333,  Mrs. Chandhee Widya Vati Madden v. Dr. C. L. Katial & Ors. [1964] 2 S.C.R. 495 and Bank of India Ltd. & Ors. v. Jamsetji A. H. Chinov  and  M/s.   Chinoy and Co., L.R.  77  I.A.  76,  91, referred to.

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2345  of 1966. Appeal  from the judgment and decree dated December 3,  1965 of  the  Madhya Pradesh High Court, Indore  Bench  in  First Appeal No. 56 of 1961.

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I.   N. Shroff and B. L. Joshi, for the appellant. R.   Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. Nathulal-appellant in this appeal-was the owner  of a  Ginning  Factory constructed on a  plot  of  agricultural ’land  bearing Khasra No. 259/1.  The land stood entered  in the  revenue records in the name of  Chittarmal.-brother  of Nathulal.  On February 26, 1951, Nathulal agreed to sell  to Phoolchand  the land and the Ginning Factory for  Rs.  43,01 1,/-.   He received in part payment Rs. 22,011 /-,  and  put Phoolchand in possession of the property.  Phoolchand agreed to  pay the balance on or before May 7, 1951. The  terms  of the  agreement, were reduced to writing in counter-part  and were duly signed by the parties. 856 On  the  plea that Phoolchand had failed to pay on  the  due date  the balance of price, Nathulal rescinded the  contract on  October 8, 1951 and commenced an action in May, 1954  in the  Court  of the District Judge, Nimar, for a  decree  for possession of the land and the factory and for mesne profits from  the date of delivery till possession was  restored  to him,  alleging that Phoolchand was a trespasser  because  he had  contrary  to ’the express terms of the  agreement  made default  in payment of the balance of the purchase price  on or  before May 7, 1951.  Phoolchand contended that  Nathulal had failed to get the name of Chittarmal "deleted" from  the revenue record according to the terms of the agreement, that he, Phoolchand, was ready and willing- to pay the balance of Rs.  21,000/’-, that he had sent a telegram on May 7,  1951, offering  to pay the balance against execution of  the  sale deed,  that  the  agreement had  been  unlawful  altered  by Nathulal  after  execution by adding a clause by  which  the possession  of Phoolchand in default of payment of money  on or before May 7, 1951, was declared unlawful. The  Trial  Court decreed the suit holding  that  Phoolchand committed  breach of contract in that he failed to  pay  the balance due by him on or before the due date.  In appeal the High Court of Madhya Pradesh reversed the decree.  The  High Court declared that Nathulal was entitled to the balance  of the  consideration a,-. also ’mesne profits" at the rate  of Rs.’  1,500/- per annum from ,%lay 7, 1951 till the date  on which Rs. 21,000,/- were deposited by Phoolchand within  two months  of  the  passing of the  decree.   Subject  to  this direction  Phoolchand was allowed to retain.  possession  of the  entire property, i.e., land Khasra No. 259/1  including the Ginning Factory and structures standing on the land.  it was directed that if Phoolchand, committed default  Nathulal may  claim  possession  of the entire  property  with  mesne profits  at the rate of Rs. 3,000/- per annum from the  date he  was  out  of  possession and  till  the  date  on  which possession  was  delivered.  The cross-objections  filed  by Nathulal  relating to mesne profits were disposed of in  the light   of  the  directions  given  in  the  decree.    With certificate  granted by the High Court this appeal has  been preferred by Nathulal.  In  the  view of the Trial Court Phoolchand was  unable  to procure  the amount of Rs. 21,000/- which he had  agreed  to pay on or before May 7, 1951 and on that account he had com- mitted  breach  of the contract.  The High Court  held  that Nathulal  was  not  guilty  of  breach  of  contract,   for, Phoolchand  had  arranged  with a Bank to  borrow  upto  Rs. 75,000/’-,  when needed by him, and Phoolchand had  on  that account  sufficient resources at his disposal to enable  him to pay the amount due.  The Trial 857

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Court and the High Court have held that Phoolchand failed to pay the amount on or before May 7, 1951.  The have also held that lie had not made the tender as pleaded by him. Under the terms of the agreement Nathulal had undertaken  to get  the  name of his brother Chittarmal removed  from  the revenue  records  and to get his own name entered,  but  the lands continued to stand recorded in the name of  Chittarmal till  October  6,  1952,  and  before  that  date   Nathulal rescinded the contract.  Again by virtue of s. 70 (4) of the Madhya  Bharat  Land  Revenue and Tenancy Act  66  of  1950, Phoolchand not being an agriculturist the land could not  be sold  to him without the sanction of the  State  Government. In  the  absence of any specific clause  dealing  with  this matter,  a condition that Nathulal will secure the  sanction under  s.  70(4) after paying- the appropriate fee  must  be implied  in  the  agreement  for  it  is  well-settled  that whereby,  statute property is not transferable  without  the permission  of the authority, on agreement to  transfer  the property  must  be deemed subject to the  implied  condition that  the  transferor  will  obtain  the  sanction  of   the authority concerned : see Motilal and Others v. Narhelal and Another(1) and Mrs Chandhee, Widya Vati Madden v. Dr. C.  L. Katial & Others(2). Phoolchand  could be called upon to pay the balance  of  the price   only  after  Nathulal  performed.his  part  of   the contract.   Phoolchand had an outstanding  arrangement  with his  Banker to enable him to draw the amount needed  by  him for payment to Nathulal.  To prove himself ready and willing a  purchaser has not necessarily to produce the money or  to vouch  a  concluded scheme for financing the  transaction  : Bank of India Ltd. & Ors. v.  Jamsetji  A.  H.  Chinoy   and Messrs.  Chinoy and Company(1).  The  High Court proceeded to  decide the case largely  upon the  view that Nathulal committed breach of  contract.   But the  question whether Nathulal had committed the  breach  is not  of  much significance.  Nathulal was the owner  of  the land : he had executed no conveyance in favour of Phoolchand in  the  land  or  the  factory.   Nathulal  had  sued   for possession relying upon his and Phoolchand could defeat that claim  if  lie established his defence  of  part-performance under s. 53A of the Transfer of Property Act. The argument raised by counsel for Nathulal, that by  virtue of  s. 70(8) of the Madhya Bharat Land Revenue  and  Tenancy Act,  the  plea of part performance is not  available  to  a person put (1) L.R. 57 I.A.333              (2) [1964] 2 S.C.R. 495. (3)  L.R. 77 I.A. 76, 91. 858 in possession of the property under a contract of sale, has, in our judgment, no force.  Section 70(8) provides :               "No sale under this section shall be deemed to               be valid until the sale deed effecting such  a               sale  has been registered in  accordance  with               the law of registration in force for the  time               being".               But  this clause only requires that  not  only               the  conditions  prescribed  by  s.  70,   but               registration  of sale deed in accordance  with               the law of registration for the time being  in               force  is a condition required to be  complied               with before a sale is deemed valid.  There  is               no sale in the present case, and Phoolchand is               not relying upon any sale.  He is relying upon               a contract of sale and equity which he may set               up to defend his possession against the  claim

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             made  by  Nathulal.  To the making of  such  a               claim,  relying  upon  the  doctrine  of  part               performance  in  s.  53A of  the  Transfer  of               Property Act, there is nothing in s. 70(8)  of               the Madhya Bharat Land Revenue and Tenancy Act               66 of 1950 which may operate as a bar.               The  conditions necessary for making  out  the               defence  of part performance to an  action  in               ejectment by the owner are ,               (1)   that  the transferor has  contracted  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:               (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. If these 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 therefore by the law for the time being in force, 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 859 transferee has taken or continued in possession, other  than a right expressly provided by the terms of the contract. There   is  in  this  case  a  contract  to   transfer   for consideration  immoveable  property  by  writing  signed  by Nathulal from which the terms necessary to, constitute  ’the transfer can be ascertained with reasonable. certainty.   In part  performance  of  the contract,  Phoolchand  has  taken possession  of the property and he had in pursuance  thereof paid  an  amount of Rs. 22,011/-.  The  argument  raised  by counsel  for Nathulal that the act done in pursuance of  the contract  must be independent of the terms of  the  contract cannot  be  accepted.  The first three  conditions  for  the defence  of  part performance to be effectively  set  up  by Phoolchand exist.  Mr. Shroff for Nathulal however  contends that  Phoolchand was not willing to perform his part of  the contract. Nathulal  had  expressly  undertaken  to  have  the  revenue records  rectified by securing the deletion of  Chittarmal’s name,  and it was an implied condition of the contract  that Nathulal  will secure the sanction of the Collector  to  the transfer  under s. 70 (4) of the Madhya Bharat Land  Revenue and  Tenancy  Act 66 of 1950.  The first condition  was  not fulfilled till October 6, 1952 and the second condition  was never  fulfilled.   We are unable to agree with  Mr.  Shroff that  the repeal of the Madhya Bharat Act 66 of 1950 by  the Madhya  Pradesh Land Revenue Code, 1959,  has  retrospective operation. In  considering whether a person is willing to  perform  his part  of the contract the sequence in which the  obligations under  a  contract are to be performed must  be  taken  into

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account.   The argument raised by Mr. Shroff  that  Nathulal was  bound  to  perform the two conditions  only  after  the amount  of  Rs. 21,000/was paid is plainly contrary  to  the terms  of the agreement.  By virtue of s. 4 of the  Transfer of Property Act the chapters and sections of the Transfer of Property  Act which relate to contracts are to be  taken  as part  of  the  Indian Contract Act,  1872.   If,  therefore. tinder  the  terms, of the contract the obligations  of  the parties  have to be performed in a certain sequence, one  of the  parties to the contract cannot require compliance  with the  obligations  by the other party without  in  the  first instance  performing his own part of the contract  which  in the sequence of obligations is performable by him earlier. In view of the arrangement made by Phoolchand it was  clear that   he   had  at  all  relevant  times   made   necessary arrangements  for  paying  the amount due, but  so  long  as Nathulal  did  not  carry  out his  part  of  the  contract, Phoolchand  could not be called upon to pay the  balance  of the price.  It must, therefore, be held that 860 Phoolchand  was at all relevant times willing to  carry  out his part. of the contract. The appeal fails and is dismissed with cost. Appeal dismissed. Y.P. 861