Report No. 70
49.11. Position in England.-
In England, the Statute of 1677 was intended to prevent fraud and perjury which is possible where a contract for transfer of the land could be alleged by the mere oral testimony. But this Statute opened a new and different avenue of fraud, namely, a person who had made a genuine contract might repudiate it on the ground that there was no proper memorandum as required by statute.
In certain cases, the part performance was applied to check such fraud. This doctrine is not to be viewed in isolation, but only as one instance of the relief granted by equity against fraud. "In cases of fraud, equity should relieve even against the words of a statute." So observed Lord Parker, Lord Chancellor in 17201.
1. Countess Mountacuta v. Crosswell, (1720) 1 Williams 618 (620).
The doctrine first appeared in England in 1686, and was established by a decision of the House of Lords in 1701.1 Its found mental postulate is that a party performing a part of the contract on his side, in reliance on the promise which is made by the defendant, has a right to require the defendant to keep his promise2. The use of the expression "plaintiff or defendant" in some of the English cases incidentally shows that in England this doctrine is available to the plaintiff also. We shall revert to this aspect later.
It may be noted that section 40(2) of the Law of Property Act, 1925 has given statutory recognition to the doctrine. Sub-section (1) of that section requires writing, by providing that no action may be brought upon any contract for the sale or other deposition of land or any interest in land unless the agreement upon which such action is brought or some memorandum or note thereof is in writing and signed by the parties or by some other person lawfully authorised.
Subsection (2) provides that the "section shall not affect the law relating to part performance. In England, the effect of the doctrine of part performance is to remove the barrier set up by statute and to open the door to parol evidence of the whole agreement for the grant of equitable relief. But a long line of decisions has laid down certain ingredients and the following important conditions must be satisfied3:-
(1) Clear evidence of the contract is required.
(2) The plaintiff should establish a case for specific performance of the contract.
(3) The act of part performance must have been done by the plaintiff or on his behalf.
(4) Such act of part performance must be unequivocally referable to some such agreement as is alleged.
1. Lester v. Foxcroft, 1701 Colles PC 108.
2. Mundy v. foliffe, (1839) 5 My&Cr 167 (177).
3. Megarry and Wade Real Property, (1966), pp. 571-573
Taking possession on the land with the vendor's consent is an "act of part performance par excellence1". Continuing in possession, where such act is referable to the contract, is also good part performance. But there may be other instances, for example, the making of expenses on alterations in the property, when carried out by someone who has no right of possession to the alleged property2.
1. Williams Statute of Frauds, p. 256.
2. Biouten v. Snook, 1928 Ch 505.
It is to be noted that the basis of the doctrine of part performance is, in general, specific performance. Of course, like all remedies acquires an equity against the defendant1.
The remedy of the person who has satisfied the condition of part-performance is, in general, specific performance. Of course, like all remedies of equity, this is discretionary, so that, if in a particular circumstance the Court does not grant it, then he is without remedy. The plaintiff must adduce proof for his act of part performance.
The plaintiff is also allowed by equity to give parol evidence of an agreement that would otherwise require a written evidence. If he satisfies the Court in these two aspects proof of part performance and evidence of agreement though not in writing-he is entitled to a decree ordering the other party to execute a formal transfer to include the terms which have been agreed upon2.
1. Cheshire Real Property, (1972), p. 382.
2. Cheshire Real Property, (1972), p. 380.
49.15. Contracts to transfer and instrument of transfer.-
A document of transfer which is not registered or not completed in the manner prescribed by law, may operate as a contract to transfer. Consequently, the section applies not only to contracts to transfer as such, but also to instruments of transfer. This is made clear by the words "or where there is an instrument of transfer" in the first paragraph of the section.
49.16. Invalidity on other grounds.-
The section has no application where the contract to transfer or the instrument of transfer is invalid on any ground other than that it was not completed in the manner prescribed by the law for the time being in force. Where the flaw in the transferee's position is not a defect of form or the absence of some formality, normally necessary, but is one which, apart from form, renders the transaction unenforceable-e.g., minority-the equitable doctrine of part performance is not applicable.
49.16A. Rights provided by the Act.-
The words "other than a right expressly provided by the terms of the contract" show that the transferor is not debarred from enforcing rights expressly provided by the terms of the contract.1 Thus, the transferor can, where the transfer is by way of a lease, sue for damages for breach of an agreement as provided by the terms of the lease,2 or sue for the rent due,3 or enforce the terms of the lease entitling him to re-enter if there is default in payment of rent.4
A contrary view has been held in some cases.5 In those cases the transferor was held debarred from suing to enforce merely rights given by the contract of transfer. The expression "other than a right expressly provided by the terms of the contract" has not been adverted to in those said decisions. It is submitted that this view is not correct.
1. Lal Behari v. Kanak Kanti, AIR 1962 Cal 502 (503).
2. AIR 1950 Cal 23 (28).
3. AIR 1942 Oudh 231 (236).
4. AIR 1953 Cal 349 (352).
5. (a) Ramarao v. Purnand, AIR 1954 Mad 702 (704); (b) Jambad Coal Syndicate Ltd. (in re:), AIR 1940 Born 281 (282);
49.17. Third person.-
The section has no operation against third persons. In S.N. Banerji v. Kuchwar Lime & Stone Co. Ltd., AIR 1941 PC 128 (130), A leased property to B with the condition that if B transferred his interest, the lease would be forfeited. B transferred his interest to C, but without a registered instrument and gave him possession of the properties. Thereupon, A purported to forfeit the lease to B and granted a fresh lease to D who sued C for ejectment. It was held that the transfer by B to C was invalid for want of registered instrument, that the lease to B therefore subsisted, that D could not invoke the aid of section 53A and claim that by reason of that section B's transfer to C was valid and that he was entitled to claim possession from C. The Privy Council observed as follows:
"The section does not operate to create a form of transfer of property which is exempt from registration. It creates no real right. It merely creates rights of estoppel between the proposed transferee and transferor, which have no operation against third persons not claiming under those persons."
49.18. Judgment creditor.-
It has been held1 in Madras that a judgment-creditor, who has attached the property of his judgment-debtor in execution of his decree, is a person "claiming under" the judgment-debtor, within the meaning of this section. A contrary view has been taken by the High Court of Orissa.2
The Bombay High Court3 has held that an auction purchaser is not a person claiming under the judgment debtor.
We think that it is just and fair that effect should be given to the Madras view, and we recommend accordingly.
1. Audinarayudu v. Mangamma, AIR 1943 Mad 706 (707).
2. Padmalabha v. Appalanarasamma, AIR 1952 Ori 143 (149).
3. Maruti v. Krishna, AIR 1967 Born 34 (38, 39) (Naik, J.) (reviews cases).
The onus under the proviso is on the person claiming part performance to show that the transferee had notice of the contractor of the part performance thereof. The Court would expect that those who allege that the subsequent transferee had notice of the prior contract or of possession thereunder, would make it out, not by evidence of any casual conversation but by proof that the mind of the subsequent transferee had in some way been brought to an intelligent apprehension of the nature of the transaction in respect of the property so that a reasonable man, or an ordinary man of business, would act upon the information and would regulate his conduct by it.
Explanation H to section 3 provides that possession of a person is notice of the title of the person in adverse possession. The High Court of Patna has held that although section 53A does not confer full title to the property, it is nevertheless an interest sufficient to attract the provisions of Explanation II to section 3. The subsequent transferee will therefore be deemed to have notice of the title of the prior transferee and consequently it will be the duty of the subsequent transferee to make diligent enquiries regarding the nature of the equitable interest of the prior transferee in possession1.
On this view with respect it is somewhat difficult to see what cases are contemplated by the proviso. For the applicability of the proviso it must be assumed that the title referred to in the said Explanation does not include the right of the transferee under a contract which has been partly performed.
1. Rama Krishna v. Mahadevi, AIR 1965 Pat 467 (469).
49.19. Title whether passes.-
At this stage it may be convenient to discuss the question whether title passes under contract. In ordinary legal and juristic discussion, the word "title" is understood as meaning the source of a legal right, but the matter is not so simple in the context of section 53A, because section 54 (so far as sale of tangible immovable property of the value of rupees one hundred and upwards is concerned), provides expressly that the transfer can be made only by a registered instrument. If any other mode of transfer is not recognised, can it transfer an interest in the property? And if not, can it pass title? In general, if an unregistered deed of sale is executed where registration is required, there is no transfer and the property does not pass.1
1. Mulla, (1973), p. 306.
49.20. The true position is that a contract does not pass any right in rem. A contract for the sale of such property is merely a document which creates a right to obtain another document. That, indeed, is the basis why it is not regarded for the purposes of the Registration Act, as creating declaring, assigning etc. any right in immovable property. The Patna judgment1 under section 53A read with section 3, after noting the argument of counsel that title refers to a completed title and not a mere equitable interest rejected the argument on two grounds:-
(i) Counsel could not cite any authority in support of his contention;
(ii) in an English case,2 it has been held that possession of a tenant is a notice to a purchaser of the actual interest which he may have either as tenant or, farther by an agreement to purchase the premises.
With great respect to Court, this judgment misses one important aspect, namely that an agreement for the sale of land does not, in India, create any interest in land; this is expressly provided by section 54 as already pointed out.
1. Ram Krishna v. Mahadevi, AIR 1965 Pat 467 (Narasimhan, C.J. and G.N. Prasad, J.).
2. Daniel v. Davison, (1808) 33 English Reports 978.