He who seeks equity must do equity
DOCTRINE OF PART PERFORMANCE
The Doctrine of Past Performance, based on principle of equity, developed in England and was subsequently added to the Transfer of Property Act, 1882 via the Amendment Act of 1929. In law of contracts (for e.g., a contract for sale), no rights pass to another till the sale is complete But if a person after entering into a contract performs his part or does any act in furtherance of the contract, he is entitled to reimbursement or performance in case the other party drags its feet.
Section 53A says that if a person makes a agreement with another and lets the other person act on the behalf of the contract; such a person creates an equity himself that can not be resisted on the mere grounds of absence of formality in the evidence or contract of such a transfer. Thus, if the contract has not been registered or completed in the prescribed manner, the transferor can still not go against the transferee or anyone claiming under him. However, the deed should not be unsigned or unstamped. Nothing in this section affects the rights of a transferee for consideration even if he had no notice of contract of part performance.
Illustration: A contracts with B to sell his plot for X amount of money. A accepts the advance from B towards the sale of the plot and hands over the possession of the said plot to B. After some time, B is ready to pay the remaining sale amount but A refuses to accept the same. Further A asks B to hand over the plot back to him.
Here B is ready to perform his part of the contract but A is not. In such a case, B can bring a case requiring specific performance from A. It does not matter that the sale was not registered.
As per law, a transfer of immovable property valued over Rs. 100 has to be registered. But it was believed that strict compliance may lead to extreme hardships especially where one party has already performed his part in the confidence that the other party will honor the agreement. If such registration or other formalities have not taken place, the doctrine of part performance will be applicable. If such a transferee takes possession of the property, he can not be evicted due to an unregistered contract.
The section is a defense as well as a right that helps protect the possession against any challenge. It tries to prevent fraud on the mere basis of ineffective evidence of the transfer. The section does not confer a title upon the transferee in possession but it imposes a statutory bar on the transferor.
Equity looks to the intent rather than to the form
ESSENTIALS OF THE DOCTRINE OF PART PERFORMANCE
a) There must be a written contract for transfer of an immovable property signed by or on behalf of the transferor. The doctrine can not be applied if there is a void agreement or no agreement.
b) There must be consideration;
c) The contracts should give out the terms of the transfer with reasonable certainty;
d) The transferee must have taken possession as a result of this contract or continued in possession if he was already in possession of the property;
e) The transferee must have done some act in furtherance of the contract. Acts done prior to the agreement or independent of it can not be deemed to be part performance of the contract; and
f) The transferee should have performed his part of the deal or be willing to perform it.
WALSH vs. LONGSDALE and MADDISON vs. ALDERSON are two of the major cases that have helped develop the doctrine of part performance in England. In India, this doctrine has been enacted with a few modifications.
MADDISON vs. ALDERSON 1888
B was A’s servant. A had promised B a certain property as life estate, meaning B could enjoy the property during his life time. B served A for years upon this promised life estate. The will bequeathing such interest and property to B failed due to want for proper attestation. After A died, one of his heirs brought action to recover the property from B.
It was held that the act of part performance could not be proof of the contract since the performance was a condition precedent to the contract. The heir of A was able to recover the said property.
WALSH vs. LONGSDALE 1882 21 Ch d 9
Walsh took a cotton mill on lease for 7 years from Longsdale, the owner of the mill. The agreement was prepared but not signed. In the meantime, rent arrears started to accumulate as Walsh could not keep up with the quarterly payments of rent. An advance of one year’s rent could be demanded by Longsdale as per the contract. Lonsdale demanded the advance rent for one year and seized some goods of Walsh when he defaulted. Walsh sued for damages.
The House of Lords decided in favor of Lonsdale stating that by running the mill, Walsh had admitted he was a lessee and evidence of his consent to the unsigned lease deed.
The rule laid down in Walsh vs. Longsdale is not applicable in India – as it did not constitute the doctrine of part performance.
Prior to the enactment of the Transfer of Property Act, 1882, the English law of Part Performance was applied. Before Section 53A was inserted in the Transfer of Property Act, 1882, there were different views upon such application. After the Transfer of Property Act, 1882 came into force, some thought that Sections 54 and 59 which required registered documents were necessary for sale of immovable property or regarding mortgage respectively. While others argued that requiring strict compliance would be detrimental to the rights of the impoverished masses of India who could be duped by scrupulous individuals taking advantage of the law.
The Privy Council in MOHD MUSA vs. AGHOR KUMAR GANGULI AIR 1914 PC 27 (30) held that doctrine of part performance is applicable in India. There were divergent views a few years later stating that doctrine can not be used to override statutory provisions. Finally in 1929, the Transfer of Property Act was amended and the English law of part performance became a part of Indian Laws though a little modified.
Equity on that as done as which ought to have been done.
Section 53A of the Transfer of Property Act, 1882
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 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 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.
The proviso is an exception of sorts stating that the interests and rights of a subsequent transferee for consideration will be protected as long as he had no notice of the contract leading to the part performance due or the part performance thereof.
In India, the doctrine is used only as a shield and not to enforce rights as laid down by the Supreme Court in Delhi Motors case. But it must be noted that the aggrieved party can either be the plaintiff or the defendant in a suit as the case maybe.
ENGLISH AND INDIAN LAW
The English Law of Part Performance
1) The contract need not be written or signed by the transferor
2 The right under the doctrine is an equitable right
3) It can be used for enforcing the right as well as defending the right; and
4) It creates a title in the transferee.
The Indian Law of Part Performance
1) Section 53A deals with the Doctrine and state that the contract has to be written as well as signed by the transferor
2) It is a statutory right;
3) It can only be used to defend the possession of the transferee; and
4) It does not create a title in the transferee.
After 2001 amendment to Section 53A, the application of the section has seen dilution – it no longer serves as a ‘substitute’ for registration. It should still hold good for defects other than registration. But, registration of sale of immovable property is compulsory and Section 53A has been amended to incorporate the same.