Hamzabi
& Ors Vs. Syed Karimuddin & Ors [2000] INSC 586 (28 November 2000)
V.N.Khare,
Ruma Pal
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
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, 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-à-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 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 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 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 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.
Back