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SARDAR GOVINDRAO MAHADIK & ANR.

v

DEVI SAHAI . & ORS.

December 15, 1981

[D.A. DESAI AND R.B. MISRA,JJ.J

Transfer of Property Act, S.Cctio11 53A-Scope of

The appellant mortgagor took a loan by mortgaging his house property to

the respondent mortgagee. The mortgage was a mortgage with possession.

According

to the mortgagee sometime thereafter the mortgagor agreed to sell the

property to him and that pursuant to !his agreement requisite stamps were

purchased and a draft sale deed

was drawn up. The sale deed was however not

registered.

A

few days later the mortgagor sold the property to another person and the

mortgagor and the subsequent purchaser

filed a suit against the mortgagee for a

deeree for redemption.

In the written statement the mortgagee claimed that even though the sale

deed was not registered, since

he was in possession of the property in part

per­

formance of the contract of sale and continued to be in possession and did

several acts attributable to the contract, the mortgagor was debarred from en­

forcing any right against him in respect of the property. It was also claimed

that since the mortgagor himself had no subsisting title to the property on the

date

of sale, he could not have transferred the property to the subsequent

purchaser.

The trial court held that though the sale deed was executed but since it

was

net registered the transaction of sale was not complete. The Court further

held that benefit

of section 53 A is not available to the mortgagor defendant

because the mortgage being a mortgage with possession, continued possession

of

the

mortgogee after the date of contract would not be in part performance of the

contract, and also the payment made for the purchase of stamps and for expenses

of registration could not

be said to be in furtherance of the contract because that

amount was paid before the

execu1ion of the contract.

Ia the mortgagee's appeal the High Court held that he was entitled to the

benefit

of section 53A against the mortgagor and the subsequent purchaser for the

reason that

he was in possession of the property and paid Rs.

1000 in furtherance

of the contract,

The appellant 1n Civil Appeal No. I 145 of 1969 filed a suit against the

!nortgaiior for reco\er)' of a cJcbt owed to him and obtained attachment of the

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s. GOViNb RAO v. DEVi SAHAi 187

suit property before judgment. The suit eventually ended in~a decree in his

favour.

In the aution of the suit property since there were no bidders the decree

holder's

bid was accepted with the permission of the Court.

The High Court allowed the decree holder to

be impleaded as a respondent

in the mortgagee's appeal which was then pending in the High Court.

A

It was contended on behalf the mortgagor that the deeree bolder could not

II

maintain an application under Order XXII, Rule 10 of the Code of Civil Proce-

dure because be could not be said to be claiming under the mortgagor. (Rule 10

of order XXJI CPC provides for continuance of any action by or against a person

who acquires any interest either

by assignment, creation or devolution during

the pendency of the suit with the leave

of the Court.) '

HELD : To qualify for the protection of the doctrine

of part performance it

must

be shown that there is a con tract to transfer immovable property for

consideration and the contract

is evidenced by a writing signed by the person

sought to be bound by

it and from which the terms necessary to constitute the

transfer can be ascertained with reasonable certainty. After establishing these

circumstances, it must be further shown that a transferee had in part performance

of the contract either taken possession of the property or any part thereof or

the transferee being already in possession, continued in possession in part

performance

of the contract and had done some· act in furtherance of

the contract. The acts claimed to

be in part performance must be unequivo-

cally referable to the pre-existing contract and the acts

of part performance

must unequivocally point in the direction

of the existence of contract and

evidencing implemention or performance

of contract. There must be

a real nexus between the contract and the acts done in pursuance of the con-

traact

or in furtherance of the contract and must be unequivocally referable to

the contract. When series

of acts are done in part performance one such may

be payment of consideration. Any one act by itself may or may not be of such

a conclusive nature as to conclude the point one

way or the other but when taken

with many others, payment

or part of the consideration or the whole of the

consi­

deration may as well be shown to be in furtherance of the contract. [209 D-H]

The

view of the House of Lords that one must not first look at the oral

contract and then

see whether the alleged acts of part performance are consistent

with it but that one must look at the alleged acts

of part performance and see

whether they prove that there must have been a contract and that it

i~ only if

they do so prove that one can bring

in the oral contract may not be wholly

applicable to the situation in India because an oral contract

is not envisaged

by section 53A, Even for invoking the equitable doctrine of part performance

there has

to be a contract in writing from which the terms necessary to

constitute

the transfer can be ascertained with reasonable certainty. The correct view would

be to look at that writing that

is offered as a contract for transfer for

considera­

tion of any immovable property, examine the acts said to have been done in

furtherance

of the contract and find out wet her there is a real nexus between the

contract and the acts pleaded as

in part performance so that to refuse relief would

be perpetuating the fraud of the party who, after having taken advantage or

benefit of the contract, backs out and pleads non-registration as defence.

[210A-D]

Foxcroft v. Lester, 2 Vern. P. 456; Elizabeth Meddison v. John Alderson,

Lord Se/borne

(1882-1183) 8 A.C. 467; Clinan & Anr. v. Cooke &

Ors. 1775-1802

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188 SUPllEMil coullt llEPOlltS [1982) 2 s.c.l.

All. E.R. (Reprint) 16; Chapronierse v. Lambert 1916·17 All. E.R. (Reprint) 1889;

Steadman v. Steadman [1974) 2 All. E.R. 977, referred to.

In short, acts preliminary to the contract would

be hardly of any assistance

in ascertaining whether they were in furtherance of the contract. Anything done

in furtherance of the contract postulates the pre-existing contract and the acts

done

in furtherance thereof. Thereofore, the acts anterior to the contract or

merely idcidential to the contract would hardly provide any evidence of part

performance.

[210 E)

Although the mortgagee's claim regarding payment of Rs. 1000 to the

mortgagor for the purchase of stamps and for expenses incidential to registration

was not in dispute, there is no evidence on record to show that there was an oral

contract anterior to the unregistered sale deed, nor was there a draft agreement

prior to the drawing up of the sale deed.

Out of the sum of Rs. 1000 a sum of

Rs. 700 was paid prior to the agreement. It was not subsequently claimed that

the balance

of Rs.

300 was paid in furtherance of the contract.

The High Court was

in error in holding that the act envisaged by the

phrase

·'in furtherance of the contract" should be in pursuance of the contract and not

that it should either precede or follow the agreement or the contract.

If a written

contract

is a sine gua non for the application of the equitable doctrine of part

performance any act preceding the contract could never

be in furtherance of that

contract which

was yet to materialise. Negotiations for a contract and a

con­

cluded contract stand apart from each other. Anything at the negotiating stage

cannot

be claimed as a contract unless the contract is concluded between the

parties, that

is the parties are ad idem. The contract should be a written contract

from which the necessary ingredients constituting the transfer could

be ascertained

with resonable certainty.

[203 A-Bl

There

is no material on record to substantiate the mortgagee's claim that

out of the total consideration payable to the mortgagor he had retained in deposit

with him a sum

of Rs.

17000 odd for being paid to other creditors of the mortga­

gee and that out of this amount a sum of Rs. 541 due to him had been adjusted.

Assuming that

he could reimburse himself there is no evidence to show that he

gave discharge or gave credit

in his books of account to this sum. Also there

is nothing to show that the mortgagor had in his possession a list of the

mort­

gagee's creditors or that he had made any attempt to procure the list or that he

issued a public notice iuviting the creditors of the moatgagor to claim payment

from him to the extent of the consideration retained

by him. Neither did he pay

any creditor nor did

he make any attempt to pay any creditor including those

whose,names were known to him.

[211 G]

Induction into possession of an immovable property for the first time

subse­

quent 10 the contract touching the property, may be decisive of the plea of part

performance. But merer possession ceases to

be of assistance when the person

claiming benefit of part performance

is already in possession prior to the

contra~:!

and continues to retain posscssian. There is an understandable and noteworthy

difference

in the probative value of entering into possession for the first time and

continuing

in possession coupled with a claim of change in character. Where a

person claiming benefit of part performance

of a contract was already in posses-

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s. GOVJNO RAO v. DEVI SAHAi 189

sion prior to the contract, the Court would expect something independent of the

mere retention of possession to evidence part performance. Mere retention

of

possession, quite legal and

valid, if mortgage with possession is not discharged,

could hardly be said to be an act in part performance unequivocally referable to

the contract of sale.

[213 D-E, 215 E-F]

In the instant case retention of possession

is of no consequence because the

A

mortgage was not discharged and was subsisting and the mortgage being a B

mortgage with possession, the mortgagee was entitled to retain possession. The

fact that immediately a sale deed was executed

in favour of the subsequent pur-

chaser

by the mortgagor

would show that he was not willing to accept the con-

tract

as

offered by the mortgagor. The subsequent purchaser had taken a condi-

tional sale and this reinforces the stand of the mortgagor. The existence of the

dispute, about the nature of the transactiop,

is not in dispute. Therefore the

conduct

of the mortgagor is consistent with bis case. l217 D-F] C

The mortgagee bad failed to prove that he did any act in furtherance of the

contract, continued retention

of possession being a circumstance of neutral

character

in the facts and circumstances of the case and it being further

establish­

ed that the mortgagee was not willing to perform his part of the contract, he is

not entitled to the benefit of the equitable doctrine of part performance.

(217 HJ

(2) A persual at the chronological events of. the case would clearly show

that the decree holder bad

mor~ than a mere semblance of title. Even if tbe

application would not fall under Order 22 Rule 10 CPC. section 146 of the Code

enables him to maintain the application. Smt. Saila Balo Desai v. Smt. Nirma/a

Sundari Dassi and another, [1958J S.C.R. 1287 at 1291, referred to. [221-D-E]

The decree bolder did not acquire under the sale certificate the equity

of

redemption

of the mortgage. The suit property was sold subject to subsisting

mortgage in favour

of the mortgagee. At a Court auction what is sold is right,

title and interest

of the judgment debtor who in this case was the mortgagor.

Subject to other conditions, his right

is the right to redeem the mortgage. Much

before the proclamation

of sale was issued the equity of redemption held by the

mortgagor was sold

by him to the subsequent purchaser. Therefore, even on the

date

of decree as also on the date of filing of the execution

application the mort­

gagor had no subsisting interest in the property which could be sold at the Court

auction.

[222 A-BJ

The object behind the order levying an attachment before judgment is to

give an assurance to the plaintiff that

his decree, if made, would be satisfied.

Where an attachment has been made, any private transfer or

delivery of the

property attached would be void as against all claims enforceable under the

attachment. What

is claimed enforceable is claim for which the decree is made.

A dismissal of the suit

may terminate the attachment and would not be revived

even if

the suit is restored As a corollary, if attachment before judgment is

obtained in a suit which ends

in a decree but if in appeal the decree is set aside,

the attachment of necessity

must fall. It at an intermediate stage pursuant to the

decree

of the trial Court the attached property is sold at a Court aution and where

an appeal

is preferred, an attempt should be made to obtain stay of the execution

of the decree of the trial court. If the execution proceeds and the property

is

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i90 s1jptuMiJ couRt iti:lPoR.ts (1982) 2 S.C.R

sold at a court auction before the appeal is disposed of, the equity in favour of a

person as a auction purchaser may come into eidstence. In such a case if the

auction purchaser

is an outsider and if the execution of the decree was not stayed,

the auction purchaser would be protected even if the decree in execution

of which

the

auction sale had been held is set aside because the equity in favour of the

stranger sholud be protected. [223 C-E]

If on the other hand the auction purchaser is the decree holder himself, he

should not be entitled to any protection because when he proceeds with the exe­

cution he was aware that an appeal against the original decree was pending and

that if the appeal was allowed the decree which he sought to execute might be

set aside.

He could force the place by executing the decree, taking advantage of

the economic

disability of the judgment debtor in a money decree by making the

situation irreversible. Therefore, where the auction purchaser was none other

than the decree holder who purchased the property for a meagre sum, this results

in an atrocious situation, but yet by a technicality he wants to protect himself. To

such

an auction

purchaser, who is not a stranger and who is none other than

the decree holder, the Court should not lend its assistance.

(224

G·H]

Janak Raj v. Gurdial Singh & Anr. (1967] 2 S.C.R. 77 at 86, followed.

,-

In the instant case the High Court was right in holding that the auction {. '

purchaser decree holder was entitled to recover only the decrelal amount and

proportionate costs.

(225 DJ

But yet the conduct

of the mortgagor, the subsequent purchaser and the

mortgagee in not paying a small debt and allowing the property

to be auctioned

and forcing the decree holder to fight a never ending litigation was inequitous

in the facts and circumstances

of this case. Taking into consideration the conduct

of the parties the decree holder should be paid a sum of Rs.

7,000 inclusive of

decretal amount, interest, proportionate costs and costs of litigation so

far. [225 E-F]

•

F CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1144-1145

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of 1969.

From the judgment and decree dated the 5th March, 1964 of

the Madhya Pradesh High Court in First Appeal No. 14 of

1959.

S.S. Ray, G.S. Solanki, S. Kachwah and K.J. John for the

Appellant in C.A. 1144/69 and for Respondent Nos. 2

and 3 in

C.A. 1145/69.

G.L. Sanghi. A.G. Ratnaparkhi and K.K. Gupta, for the

Appel­

lant in C.A. J 145/69 and for Respondent No. 2 in C.A. 1144of 1969.

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s. GOVIND RAO v. DEVI SAHAI (Desai, J.) 191

V.S. Desai and Dr. Y.S. Ch/tale, Rameslnvar Nath, K.A.

Chitale

and Mrs.

S. Ramachandran for Respondent No. 1 in both

the Appeals.

The Judgment

of the Court was delivered by

DESAI, J. What constitutes part performance within the

meaning of the expression in Section 53-A of the Transfer of Pro­

perty Act ('Act' for short) so as to clothe a mortgagee in possession

with the title

of ownership which would defeat the suit of the

erst­

while mortgagor for redemption, is the question canvassed in these

two appeals by common certificate.

Facts first. Sardar Govindrao Mahadik original plaintiff 1

(now deceased prosecuting these appeals through his legal representa­

tives) and Gyarsilal original plaintiff 2 (appellant 2) filed Civil

Suit No. 14/51 in the Court of the District Judge, Indore, for

redemption

of a mortgage in respect of house No. 41 more

parti­

cularly described in plaint paragraph l, dated February 22, 1951.

A loan

of Rs.

10,000 was secured by the mortgage. The mortgage

was mortgage with possession. Plaintiff I was the mortgagor and

the sole defendant Devi Sahai was the mortgagee. Plaintiff 2 is a

purchaser

of the mortgaged property from plaintiff I under a

registered sale deed Ex.

P-1, dated October 14, 1950. Plaintiff 1 will

be referred to as mortgagor. Defendant Devi Sahai as a mortgagee

and plaintiff 2 Gyarsilal as subsequent purchaser in this judgment.

Even though the mortgage was mortgage with possession, it was

not a usufructuory mortgage but an anomalous mortgage in

that the

mortgagor had agreed to pay interest at the rate

of 12% and the

mortgagee

was liable to account for the income of the property

earned as rent and if the mortgagee himself occupied the same he

was bound to account for the rent at the rate

of Rs. 515 per

annum. Mortgagor served notice dated

October 5, 1945,

calling upon the mortgagee to render true

and full account

of the mortgage transaction. The mortgagee failed to comply

with the notice.

Subsequently it appears that there were

some negotiations between the mortgagor and the mortgagee which

according to the mortgagee, culminated in a sale

of the mortgaged

property in favour

of mortgagee for Rs.

50,000. Account of

the mortgage transaction was made and the consideration 9f

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192

SUPREME COURT REPORTS [1982] 2 S,C.R

Rs. 50,000 for the sale of the house which would mean sale of

equity of redemption was worked out as under :

Rs. 25,000

Rs. 17,735

Rs. 1,000

Rs. 6,265

Rs. 50,000

Principal mortgage money plus the amount

found due as interest on taking accounts

of

mortgage.

Given credit for the amounts taken from time

to time

by the mortgagor from the mortgagee

for domestic expenses. This

is disputed as

incorrect and it was suggested that the entry be

read

as amount retained to pay off other

credi·

tors of the mortgagor.

Taken in advance for purchasing stamps and

incurring registration expenses.

To be paid in cash at the time

of registration

before the Sub-Registrar.

Requisite stamps were purchased and the draft sale deed was

drawn up on October

IO,

1950, but it was never registered. On

October 14, 1950, 1st plaintiff mortgagor sold the suit house by a

.registered sale deed to plaintiff

2 Gyarsilal for Rs.

50,000 with an

agreement for resale. Thereafter the mortgagor and the subsequent

purchaser

as plaintiffs I and 2 respectively

filed a suit on

February

22, 1951 against mortgagee defendant Devi

Sahai for

taking accounts

of the mortgage transaction and for a decree for

redemption.

The mortgagee Devi

Sahai defended the suit on diverse

grounds but the principal and the only defence canvassed was one

under section 53A

of the Act, namely, that even though the sale

deed purporting to sell equity

of redemption having not been

registered would not clothe the mortgagee with title

of owner to

the mortgaged property, yet

he could defend his possession as

transferee owner under the doctrine

of part performance in. as much

as not only

is the mortgagee in possession in part performance of

the contract of sal~ bµt !las cmHinµ~d in possession in part perfor-

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s. GOVIND FAO v. DEVI SAHA! (Desai, J.) 193

mance of the contract and has done several acts unequivocally

referable

or attributable to the contract and that the morgagee as

transferee has not only performed but is willing to perform his

part

of the contract and, therefore, the mortgagor is debarred from

enforcing against the mortgagee any right in respect

of the mort­

gaged property. As a necessary corollary, it was also contended

that plaintiff 2 has acquired no right, title or interest in the mort­

gaged property under the alleged sale deed dated October

14,

1950,

in view of the fact that the transferor, viz., original mortgagor had

no sub~isting title to the property on the date of the sale which he

could have transferred to the 2nd plaintiff.

Arising from the pleadings

of the parties, trial court framed

five issues. The trial court held that plaintiff I executed a

sale deed

of the mortgaged property in favour of the defendant mortgagee

but as the sale deed was

not registered the transaction of sale is not

complete.

On the issue of protection of section 53A claimed by

the defendant mortgagee the trial court held against him.

It was

held that the mortgage being mortgage with possession, continued

possession

of the mortgagee after the date of the contract dated

October

IO, 1950, would not be in part performance of the con­

tract. The trial court further held that

no payment was made

could remotely be said to be in

part performance of the contract.

With regard to the payment

of Rs.

1,000 for purchase of stamps

and expenses

of registration, it was held that the same was paid

before the execution

of the contract, and therefore, could not be

said

to be in furtherance of the contract.

On these findings the

trial court held that section 53A of the Act was not attracted and

the mortgage was accordingly held to be subsisting and a prelimi­

nary decree for taking accounts was passed. A Commissioner

was appointed for taking accounts.

Defendant mortgagee Devi Sahai preferred Civil First Appeal

No. 14/66

to the Indore Bench of the Madhya

Pradesh High Court.

When this appeal was pending, appellant Motilal in cognate Civil

No. 1145/69 applied under Order 22, rule I 0, Code of Civil Proce­

dure, for being joined as a party to the appeal claiming that under

the sale certificate dated March 25, 1953, issued by the Additional

City Civil Judge First Class, Indore, he had purchased the equity

of

redemption in respect of the mortgaged property and that he has a

subsisting interest in the property involved in the dispute

and,

therefore, he would contest the rights of the plaintiffs as well as of

the mortgagee defendant to claim any right, title or interest in the

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194

SUPREME COURT REPORTS [ 1982] 2 S.C.R,

property. In his application Motilal alleged that he had filed Civil

Suit No. 243/47 dated November 3, 1947 for recovering a c~rtain

amount against the !st plaintiff mortgagor and had secured attach­

ment before judgment of the mortgaged property on November 6,

1947. His suit was decreed to the extent of Rs. 2500 by the trial

court. He

filed execution application No. 216/51 and in this

pro­

ceeding the mortgaged property was sold subject to mortgage and

he purchased the same for Rs. 300. The auction sale was confirmed

on September 25,

1953. It may also be mentioned that the

mort­

gagor 1st plaintiff had preferred appeal against the decree of the

trial court and the appellate court

by its judgment dated March 27,

1953, allowed the appeal and dismissed the suit of Motilal in

entirety. Against the appellate decree Motilal

filed

Second Appeal

No. 78/53

in the High Court and by its judgment dated September

4, 1958, Motilal's claim to the tune of Rs.

500 against the Ist

plaintiff mortgagor along with proportionate interest and costs was

decreed. The application

of Motilal for being impleaded as a party

was contested by the Ist and the 2nd plaintiffs as well as by the

defendant mortgagee. The High Court allowed the application

of

Motilal for being joined as party to the appeal and examined the

contentions advanced on

his behalf on merits.

The only contention canvassed

by the mortgagee in his appeal

in the High Court was that he is entitled to the protection

con­

ferred by Section 53A of the Act. In order to attract section 53A

it

was urged that Rs.

1,000 advanced to mortgagor for purchase of

stamps etc. was in furtherance of the contract. The only such act

pleaded

was payment of Rs.

1,000 and no other act or circum­

stance was relied upon. The High Court was of the opinion that

original mortgagee Devi Sahai was entitled to the benefit of the

doctrine of part performance

as against the Ist plaintiff mortgagor

Govindrao Mahadik and his subsequent transferee Gyarsilal because

he was

in possession and continued to be in possession and paid

Rs.

1,000 in furtherance of the contract. While so holding the

High Court imposed a condition that the mortgagee must pay or

deposit

in the court an amount of Rs.

24,000 with interest at the

rate

of 4% per annum from the date of delivery of possession to

him as vendee till the date of payment or deposit on the footing

that that

was the balance consideration promised but not paid by

the mortgagee. The deposit was directed to be made in the trial

court within

thtee months from the date of the judgment of the

High Court for payment to the 2nd respondent which would enable

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s. GOVIND RAO v. DEVI SAHAI (Desai, J.) 195

the mortgagee to retain possession of the mortgaged property.

The High Court gave a further direction that if the payment or

deposit

as directed in the judgment was not made, the appeal of the

mortgagee would stand dismissed and

if the amount directed in the

judgmept of the High Court was paid or deposited in the trial court

within the stipulated time the appeal

of the mortgagee would stand

allowed and in that event the suit

of the mortgagor would stand

dismissed. In respect

of Motilal's claim the High Court directed

that in either event he shall be entitled to recover the balance

of his

decretal amount and interest

at the rate of 4% per annum from

the date

of the auction sale till the date of

realisation and to the

extent

of that amount there shall be a charge on the mortgaged

property enforceable at the instance

of Motilal. In the

circum­

stances of ;the case the High Court did not award costs to either side.

Both the original plaintiffs and Motilal made separate applica­

tions for certificate under. Article 133 (1) (a) and (b) of the Constitu-

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tion which were granted. Hence these two appeals. D

The Appeal (CA 1144/69) preferred by the original plaintiffs­

plaintiff 1 being the mortgagor, may be dealt with first. In this

appeal Ist defendant (mortgagee) seeks to non-suit the plaintiff on

the only ground that he

is entitled to the benefit of equitable

doctrine

of part performance as enacted in section 53A of the Act.

According to the defendant-mortgagee the mortgagor agreed

to sell

the mortgaged property to the mortgagee for consideration

of

Rs.

50,000 made up in the manner set out in the sale deed Ex. D 1

dated October 10, 1950 and purusuant to the agreement he has given

Rs. 1,000 being part of the consideration for purchasing stamps

and for expenses

of registration and after stamps were purchased,

sale deed Ex. D 1 was drawn up and executed and since then he

being in possession retained the same as a vendee and accordingly he

is entitled to the protection of section 53A of the Act.

This necessitates focussing

of the attention on the requirements

what constitutes part performance as enacted in section 53A.

Even though at the hearing

of the appeals what was the state of

law prior to the introduction of section 53A in the Act by the

Transfer

of Property (Amendment) Act, 1929, was canvassed at

length, we would like to steer clear of this confusing mass of legal

squabble and, proceed to analyse the contents

of section 53A,

sub­

sequently referring to legislative cum legal history so far as it is

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196 SUPREME COURT REPORTS (1982] 2 S.C.R

A relevent for interpretion of the section. Section 53A reads as

under:

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"53A. Where any person contracts to transfer for con­

sideration 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, and the transferee has, in part

performance

of the contract, taken possession of the pro­

perty

or any partthereof, 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,

not withstanding 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 per­

son claiming under him shall

be debarred from enforcing

against the transfered and persons claiming under him any

right

in respect of the property of which the transferee has

taken

or continues in possession, other than a right expressly

provided

by the terms of the contract ;

Provided that no'.hing 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."

In order to qua\ify for the protection conferred by the equitable

doctrine

of part performance as enacted in section 53A, the following

facts

will have to be established :

(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 con­

tract taken possession

of the property or any part

thereof, or the transferee, being already in possession,

...

> /.

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s. GOVJND RAO v. DEVI SAHA! (Desai, J.) 197

continues in possession in part performance of the A

contract;

(3) That the transferee has done some act in furtherance

of the contract; and

(

4) That the transferee has already or is willing to per- B

form his part of the

contract." (see Nathulal v. Phool

Chand.(1)

There was no dispute that the aforementioned conditions have to

be satisfied to make good the defence

of part performance. The

controversy

is on their application to the facts of the case. C

The High Court which accepted the defence of part per­

formance as canva,sed on behalf

of the mortgagee who claimed to

have purchased the property under a sale deed Ext. D 1 dated

October 10, 1950, found that payment of Rs. 1,000 for purchase of

stamps was an unequivocal act in furtherance of the contract.

The defendant mortgagee did not invite the High Court to consider

any other act as having been done

by him under the contract

or in furtherance of the contract, or unequivocally referable to the

contract. However, when the matter

was heard in this Court,

Mr.

V.S. Desai, learned counsel appearing for the respondent mort­

gagee urged the following acts as having been done by the mort­

gagee

in furtherance of the contract which would constitute part

performance ;

(a) payment of Rs.

1,000 as agreed to under the contract

for purchase

of stamps for drawing up and registering

the sale

deed;

(b) discharge of a debt of Rs. 541 which was included in

the amount

of Rs. 17, 735 retained by the mortgagee

from

the total consideration payable for discharging

other debts ;

(c) mortgagee agreed to discharge the mortgage subsisting

on the property in his favour on settlement

of

accounts ;

(!) [1970] 2

SCR 854 at 858.

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SUPREME COURT REPORTS fl 982] 2 s.c.R

(d) all dues owed by the mortgagor to the mortgagee may

have to

be taken as cleared on completion of the

contract;

(e) nature and character of possession changed as recited

in the contract;

A few more circumstances were relied upon to show that the

mort­

gagee was willing to perform his part of the contract and the

ommissions pointed out are not fatal to bis case. They are :

(f) failure

to offer the amount agreed to be paid before

the Registrar

and/or not discharging debts agreed to

be discharged as having been given credit in the

consi­

deration for the sale would not detract from part

performance because they have to be evaluated in the

facts and circumstances

of the case ;

(g) conduct of the l st plaintiff mortgagor in executing

and registering a sale deed

in respect of the mortgaged

property

in favour of the 2nd plaintiff Gyarsilal and

thereby frustrating the contract

of sale in favour of

the defendant mortgagee evidence that the I st plaintiff

mortgagor was aware

of the contract in favour of the

defendant mortgagee and he

was retaining possession

in furtherance

of the contract;

(h) defendant mortgagee made all attempts to get

the deed registered

by approaching the Sub-Registrar ;

(i) the defendant mortgagee intiated criminal proceedings

against the I st plaintiff mortgagor for misusing the

stamp papers.

Ordinarily this Court would be loath to examine conten-

tions

of facts based on evaluation of evidence advanced for the first

time

before this Ccurt v. ithout any attempt at inviting the adjudi­

cation of the same by the High Court. However, as all the conten­

tions arise from the record and proceedings, we propose to examine

them on merits more so because

we do not propose to rest this

judgment on a technical ground and also because

we are inclined

to reverse the decision of the High Court which is in favour of

1st defendant mortgagee.

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s. GOVIND RAO v. DEVI SARAI (Desai, J.) 199

Section 4 of the Statute of Frauds, 1677 of United Kingdom

provided that no person shall be charged upon any contract for

sale

of lands or any interest in land etc. unless the agreement or

some memorandum or some note thereof shall be in writing and

signed

by the party to be charged thereunder or some other person

there unto

by him lawfully authorised. This provision has been

substantially re-enacted in section

40 (i) ol the Law of Property

Act, 1925 with this departure that sub-section 2 specifically provides

that the substantive provision in sub-section I does not effect the law

ralating to part-performance

or sales by the court. As no action

could be brought on oral agreement the doctrine

of part performance

was devised

by the Chancery Court with a view to

mitiga­

ting the hardship arising out of an advantage taken by a person

under an o~al contract and failure to enforce it would permit such

person to retain the undeserved advantage

by the Equity Court

enforcing the contract. The situation must be such that not to

enforce the contract in face

of the defence of Statute of Frauds

after taking advantage

of oral contract would perpetuate the fraud

which the statute sought to prevent. The party who altered its

position under the contract must have done some act

under the

contract and it would amount to fraud in the opposite party to

take advantage

of the contract not being in writing. Such a

situa·

tion arose where one of the parties to the oral agreement altered

its position and when specific performance was sought after taking

advantage under

oral contract, set up the defence available under

the Statute

of Frauds. The Chancery Court while granting relief of

specific performance wanted to be wholly satisfied that the

pleaded oral contract exists and

is established to its utmost

satisfac­

tion and in order to ascertain the existence of the oral contract

before granting a relief

of specific performance the court wanted

to be satisfied

that some such act has been done which would be

unequivocally referable to the oral contract as would prove the

existence beyond suspicion, meaning

part performance of the

cont­

ract. The departure under our law is that when giving its statutory

form

in section 53A of the Act the existence of a written contract

has been made

sine qua non and simultaneously the statute also

insists upon

proof of some act having been done in furtherance of

the contract. The act relied upon as evidencing part performance

must be

of such nature and character that its existence would

establish the contract and its implentation. Each and every act

subsequent to contract

by itself may not be sufficient to establish

part performance. The act must be

of such a character as being

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200 SUPREME COURT REPORTS (1982] 2 s.c.R.

one unequivocally referable to the contract and having been per·

formed in performance of the contract. In Lady Thynne v. Earl

of Glengall (1) it was observed that: "part performance to take the

case

out of the Statute of Frauds, always supposes a completed

agreement. There can be no part performance where there

is no

completed agreement in existence. It must be obligatory, and what

is done must be under the terms of the agreement and by force of

the

agreement." This approach would necessitate that the act

relied upon as being in the part-performance

of the contract was

such as by its own force would show the very same contract as is

alleged

by the person seeking the protection of

part-per·

formance.

In the fact situation as it unfolds itself in this case. continued

possession

of the mortgagee hardly offers any clue to the question

of part performance. Defendant mortgagee was in possession of

the mortgaged property. Therefore,. physical possession having

not changed hands,

it would be for the mortgagee to show that he

continued to retain possession in part performance

of the contract and

has done some act in furtherance

of the contract. Where physical and

actual possession was already with the person claiming the benefit

of the doctrine of part performance its continued retention by itself

without anything more would hardly be indicative

of an act

unequi·

vocally referable to part performance of the contract. He must

further establish

that he has done some act

in furtherance of the

contract. This was not disputed and, therefore, th<: mortgagee

defendant urged before the High Court and reiterated before us

that,

payment of Rs.

1,000 inter alia to the 1st plaintiff mortgagor for

purchase

of stamps and for expenses incidental to registeration was

an act unequivocally done in furtherance

of the contract.

Before evaluating the submission

a few relevant facts may be

noticed.

By letter Ext. P-3 dated October 9,

1950, 1st plaintiff

wrote

to defendant mortgagee portion of which may be extracted

as it has some bearing on the question under consideration :

" ... It is requested that we have entered into a contract

with you for the

sale-condition of our house No. 12

situated in Kalai Mohalla. Therefore to buy stamps etc. for the sale you should pay Rs. 1,000 (Rupees one thousand

(I) H.L. Cases, 158.

' ...

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•·

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s. GOVIND RAO v. DEVI SAHAI (Desai, J.) 201

only) to our Mukhtiar Shri Madhavraoji Vishnu Joshi, 82,

Ada Bazar, Indorewale, I agree for tbs same and

shall deduct the amount at the time

of registration."

Purusuant to this letter defendant mortgagee paid Rs.

700 to

the Muktiar and an endorsement to that effect

is found as Ext.

P·4.

On the next day that is October 10, 1950, a further amount of

Rs. 300 was given and stamps were purchased and on the same day

sale deed Ext. D I was drawn up. While reciting the consideration

for the sale deed a credit was given for Rs. 1,000 paid by the mort­

gagee for purchase

of stamp.

So far there is no dispute. The

grievance

is that according to the 1st plaintiff mortgagor he had

agreed to

sell the house to the mortgagee but the sale was to be a

conditional sale with a right to repurchase and that was agreed to

between the parties. Subsequently when the sale deed Ext.

D-1 was

drawn up

he found that it was an absolute sale in breach of the

agreement and therefore he did not complete the transaction and

sold the house subsequently on October

14, 1950 to the 2nd

plaintiff, under Ext.

P-1 which is a conditional sale with a right to

repurchase.

It would thus transpire that payment of Rs.

1,000 cons1st1ng

of two separate payments-one of Rs. 700 on October 9, 1950, and

an amount

of Rs.

300 on October 10, 1950, by the defendant mort·

gagee to 1st plaintiff mortgagor for purchasing stamps for execution

of a sale deed is not in dispute. What is in dispute is whether the

payment was made towards some contract anterior to the letter

Ext. P-3 dated October 9,1950, or it was in pursuance to the con­

tract dated October

10, 1950, as reflected in the unregistered sale

deed. In this connection the stand taken by the mortgagee

defen­

dant is both equivocal and fluctuating. In the written statement

filed on his behalf on April 10, 1951, there is no specific, clear and

unambiguous plea

of part performance.

Under the heading 'addi­

tional plea' in

para 9 it is contended that the sale deed ·having

been executed in favour

of the mortgagee in settlement of mortgage

transaction mutually between the parties and that the mortgaged

property has been given to the mortgagee as an owner, the mortgage

transaction does

not subsist in law. Ibis has been understood to

mean a plea for the protection

of the doctrine of part performance.

Be that as it may, it is not suggested that there was any oral con­

tract anterior to the one as found in the unregistered sale deed

Ext. D-1.

Nor is there any suggestion of any draft agreement prior

to the drawing up

of the sale deed Ext.

D-I. What transpires from

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202 SUPREME COURT REPORTS f 1982} 2 S.C.R.

the diverse recital is that there was some oral discussion between

the parties prior to the letter Ext. P-3 dated October 9, 1950, at

which the understanding was that there was to

be a conditional sale

with a right

of repurchase by the mortgagor and that becomes

evident from the recital in Ext.

P-3, "sale condition" which is con­

temporaneous evidence having its intrinsic worth and a stamp

of

truthfulnesss because at that time no dispute had arisen

and the mortgagor was seeking to work out and implement

the agreement

by seeking a loan of Rs.

1,000 for purchase of stamps

and for expenses incidental to registration

so as to complete the

transaction. But there was no written contract.

It must be stated

that there was dispute about the nature

of transaction is also borne

out

by the parol evidence. Mortgagee Devi

Sahai DW I has

deposed in para 6 that mortgagor

in Chit Ex.

P. :i proposed a con­

ditional sale to which he did not agree where11pon mortgagor agreed

to give absolute sale. This establishes that there was a dispute as to

the nature

of the transaction.

Section 53A postulates a writt(m

contract from which the terms necessary to constitute the transfer

can be ascertained with reasonable certainty. There was no concluded

contract prior to Ext. D-1. The only written contract which is relied

on

is the unregistered sale deed Ex. D-1 of October

10, 1950. On

the admission of the mortgagee himself it is crystal clear that out

of Rs. 1,000 an amount of Rs. 700 was paid on October 9, 1950,

and that was prior to the agreement. As for the payment of

Rs. 300 it is not specifically claimed that that was payment in fur­

therance of the contract. In any event, stamps were purchased

prior to the drawing up

of Ext. D-1 which is the contract relied

upon for the purposes of section 53A. And it must

be shown that

the act has been done in furtherance

of the contract, i.e. subsequent

to the contract or at best simultaneously with the contract but un­

equivocally attributable

or referable to the contract. It must follow

that acts anterior to and done previous to the agreement cannot be

presumed to

be done in pursuance of it and cannot, therefore, be

considered as acts

of part performance

(See Whiteread v. Brockhunt

quoted by White and Tudor, leading cases on Equity at

p. 416).

The High Court while evaluating the probative value of the

circumstances

of payment of Rs.

1,000 started on a wrong premise

when it observed that the act envisaged

by

the phrase in fur­

therance

of the

contract" in section 53A should be in pursuance of

the contract and not that it should either precede or follow the

. "·

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s. GOVIND RAO v. DEVI SAHAI (Desai, J.) 203

agreement or the contract. If a written contract is a sine qua 11011

for seeking coverage of the umbrella of the equitable doctrine of

part performance any act preceding the contract could conceivably

never be in furtherance

of that contract which was yet to materialise.

Negotiations for a

contract and a concluded contract stand apart

from each other. Anything at the negotiating stage cannot be

claimed as

contract unless the contract is concluded between the

parties, i.e.

the parties are ad idem. Coupled with this is

the further requirement

that it should be a written contract

in that the contract which would purport to transfer for

consideration the immovable property must be by writing

and the writing must be such that the necessary ingredients

constitute

the transfer can be ascertained with reasonable certainty.

The High Court overlooking the .very important fact situation that

the only contract relied upon by the mortgagee defendant was one

contained in the unregistered sale deed Ext. D-1

dated October

10,

1950, committed an error in holding that the payment of Rs. 1,000

prior to October 10, 1950 would undoubtedly be an act in pursuance

of the contract which is evidenced by the writing Ext. D-1 duly

signed

by the 1st respondent. This approach overlooks a vital

dispute between

the parties and the High Court could not have

utilised this circumstance without resolving the dispute in as

much

as unquestionably there were some negotiations between the parties

either on

October 9, 1950, or some time prior thereto but there was

no concluded contract because the very letter Ext. P-3 which the 1st

plaintiff

mortgagor sought a loan of Rs.

1,000 for purchasing the

stamps etc. was pursuant to a conditional sale and that is totally

denied

and repudiated by the mortgagee as shown hereinabove.

Accordingly when the

amount of Rs.

1,000 was paid it was the

stage of negotiations and not a concluded contract. And when the

contract was drawn up as evidenced by Ext. D-1 being the unregis­

tered sale deed dated October IO, 1950, the parties were not ad idem.

beacause the mortgagor declined to agree to registration of the sale

deed as it was contrary

to the understanding arrived at between the

parties though no doubt he had executed the sale deed. The con­

tention therefore

that the amount of Rs.

1,000 was paid in fur­

therance

of the contract does not bear scrutiny.

However, assuming

that the finding of fact recorded by the

High

Court that the amount of Rs.

1,000 was paid in furtherance

of the contract, is a finding of fact recorded on appreciation and

evaluation of evidence and ordinarily not interefered with by this

Court unless shown to be ·perverse, the alternative con ten ti on that

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SUPREME COURT REPORTS [ 1982] 2 S.C.R.

payment of part or even whole of the consideration could not be

said to be

in furtherance of the contract and, therefore, not sufficient

to constitute part performance, may now be examined.

How far payment

of part or even whole of the consideration

would constitute part performance

so as to take the case out of

section 4 of the Statute of Frauds may now be examined with refe­

rence first to the English decisions because section 53A enacts with

some modification the

English equitable doctrine of part­

performance.

In order to mitigate the hardship arising out of the rigorous

provisions

of the Statute of Frauds equitable doctrine of part

per­

formance was divised by the Court of Chancery. Commenting upon

section 4

of the Statute of Frauds 1677, Lord Redesdale observed in FOxcroft v. Lester,(1) (quoted in White & Tudor's Leading cases on

Equity, 8th Edn., p.

413) as under:

"The Statute of Frauds says that no action or suit

shall be maintained on an agreement relating to lands,

which

is not in writing, signed by the party to be charged

with it; and yet the Court is

in the daily habit of relieving,

where the party seeking relief has been put into a situation

which makes it against conscience in the other party to

insist on the want

of writing so signed, as a bar to his

relief. The first case (apparently)

of this kind was Pox­

cro.ft v. Lyster

(1), which was decided on a principle acted

upon in Courts

of law, but not applicable to the particular

case.

It was against conscience

·to suffer the party who

had entered and expended his money on the faith of a

parol agreement to be treated as a trespasser, and the other

party to enjoy the advantage

of the money he had laid

out."

The question often arises whether payment of part or even

G whole of the consideration can be unequivocally attributed to the

contract. At 416 the authors observe :

H

"Payment of part or even of all the purchase-money

will not be considered an act of part performance to take

(1) 2 Vern p. 456.

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s. GOVIND RAO v. DEVI SAHA! (D<sai, J.)

a parol contract out of the Statute of Frauds. Nor will

payment of the auction duty."

205

The payment of a part or even a whole of the consideration

was not treated unequivocal act

of part performance because it was

believed that money can be repaid

or can be reclaimed and, there-

A

fore, it is not an unequivocal

act evidencing an act in furtherance B

of the contract (See Hanbury & Maudsley, Modern Quity, 10th

Edn., p. 37). Similarly, Story's Equity Jurisprudence 14th Edn.;

para 1045, p. 424, neatly sets out the history of the approach to

payment of money as evidence of part performance. It may be

extracted :

" ...... It seems formerly to have been thought that a

deposit,

or security, or payment of the purchase money,

or of a part of it, or at least of a considerable part of it,

was such a part performance as took the case out

of the

statute. But that doctrine was open

to much controversy,

and

is now finally overthrown. Indeed the distinction

taken in some

of the cases between the payment of a small

part and the payment

of a considerable part of the

purchase-money seems quite too refined and subtle,

for independently

of the difficulty of saying what shall

be deemed a small and what a considerable

part of the

purchase money, each must, upon principle, stand upon the

same reason, namely, that it

is a part performance in both

cases, or not in either.

One ground why part payment is

not now deemed a part performance, sufficient to take a

case out

of the statute, is that the money can be recovered

back again at law, and therefore the case admits

of full

and direct

compensation."

Equity by G.M. Keeton and L.A. Sheridan, 2nd Edn., p. 366

sets out chronologically the approach

of the Court to payment of

money as evidencing part performance. Attitude to the payment

of money as an act of part performance bad varied from time to

time. In Elizabeth Meddison v. John Alderson,(

1

)

Lord Selborne,

L.C. pointed out :

" ... the payment of money is an equivocal act not (in

(I) (1882-1883) 8 A.C. 467.

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206 SUPREME COURT REPORTS ( 1982] 2 S.C. R.

itself) unless connection is established by parol testimony

indicative

of a contract consisting of

land."

In Snell's principles of Equity, 20th Edn., p. 587, under the

heading 'Insufficient Acts to bring the case out of the doctrine of

part performance', it is noted that payment of a part of the pur-

B chase-money, or even apparently the whole, is not sufficient for

part performance of a contract for the sale of land for the payment

of money is an equivocal act (not in itself), until the connection is

established

by parol testimony, indicative of a contract concerning

land.

Maddison v. Alderson is rehed upon in support of this

statement.

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A few cases to which our attention was drawn may now be

referred to.

In C/inan and Anr. v. Cooke and Ors.,(

1

)

Cooke

inserted an advertisement in the public papers inviting offers to let

a piece and parcel

of land for the period set out in the advertiment.

In response to this advertisement the plaintiffs applied to Edmund

Meagher to whom the application was to be addressed and entered

into a treaty with him for lease

of land. A memorandum of

agree­

ment was entered into between the parties and the intending tenant

deposited 50 guineas which the advertiser received in consi­

deration

of the lease on the recommendation of Meagher who also

appeared to have received a sum

of

20 guineas from the plaintiffs

for which no receipt was given. Subsequently Mr. Cooke refused

to perform the agreement and he granted a new term of lease to the

defendants who entered into the same with the knowledge

of the

agreement with the plaintiffs.

An action was brought by the

plain­

tiffs for specific performance. Declining to grant that relief Lord

Redesdale held as under:

"But I think this is not a case in which part perfor·

mance appears. The only circumstance that can be con­

sidered as amounting to part performance is the pay­

ment of the sum of fifty guineas to Mr. Cooke.

It has alwa s been considered that the payment of money

is not to be deemed part performance to take a case out

of the statute."

In Maddison' s case Earl of Selborne, L.C. in unequivocal

terms observed that it may be taken as new settled that

part pay­

ment

of purchase money is not enough, and judges of high authority

ti) (1775-1802] All E.R. (Reprint), 16.

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s. GOVJND RAO v. DEVI SARAI (Desai, J.) 207

have said the same even of payment in full. C/inan v. Cooke, (supra)

Hughes v. Morris(') and Britain v. Rossiter(

2

)

were relied upon in

support

of this. Again at p. 484 Lord

O' Hagan taking note of the

conflict

of decisions

pertinently observed as under :

"I confess I have found it hard to follow the reasoning

of the judges in some of the cases to which the Lord

Chancellor has referred to reconcile the rulings, in others

of them-and to regard as entirely satisfactory the state

of the law in which the taking of possession or receipts of

rent is dealt with as an act of part performance, and the

giving and acceptance

of any amount of purchase money,

confessedly in pursuance and affirmance

of a contract of

sale, is not. As to some of the judgments prompted no

doubt

by a desire to defeat fraud 1nd accomplish justice, I

am inclined

to concur with the present Master of the

Rolls

in Britain v. Rossiter

('), when he called them" bold

decisions."

It may be noted that in that case an intestate induced a woman to

serve him as his house-keeper without wages for many years and to

give up other prospects of establishment in life by a verbal promise

to make a will leaving her a life estate

in land and afterwards signed

a

will, not duly attested, by which he left her the life estate. It was

contended on behalf

of the woman who worked as house-keeper

that she had wholly performed her part

by serving the intestate as

house-keeper till the intestate's death without wages yet the

Court in its equity jurisdiction

dt:clined to hold such an act as

referable to any contract

and was not such a part performance as to

take the case out of the operation of section 4 of the Statute of

Frauds. This case is being referred to to show how firmly

establi­

shed and entrenched the view was that payment is not enough.

Offer to work without wages was treated as evidencing some pay­

ment not enough to sustain the plea of part performance. The

equity should take such a view of human service and sacrifice is

difficult to appreciate. Modern notions of equity, fairplay and just

approach would stand rudely shaken by the view taken

in that case

and quoting the case

is not to be interpreted to mean sharing

the

view.

(!) (2 D.M. & G. 356).

(2) (11 Q.B.O. 123).

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208 SUPREME COURT REPORTS [J 982] 2 S.C.R

In Chaproniere v. Lambert,(1) the Court of Appeal reinforced

the view which held the field till then that the mere payment of rent

is

not such part performance to take the case out of the statute and

even payment of whole of the purchase money has been held not

to be sufficient to take the case out of the statute. In so doing it

reiterated the view

taken in Maddison v. Alderson, (supra).

In Enland the law took a sharp

U·turn in Steadman v.

Steadman,(

2

)

Lord

Simon of Claisdale under the heading 'Payment

of momey' observed as under :

"It bas sometimes been said that payment of money

can never be a sufficient act

or part performance to raise

the required equity in favour of the plaintiff-or, more

narrowly,

that payment of part or even the whole of the

purchase price for an interest in land is not a sufficient act

of part performance. But neither of the reasons put

forward for the rule justifies it as framed so absolutely.

The first was that a plaintiff seeking to enforce an oral

agreement to which the statute relates needs the aid of

equity; and equity would not lend its aid if there was an

adequate remedy at law. It was argued that a payment

could be recovered

at law, so there was no call for the

inter­

vention of equity. But the payee might not be able to re­

pay the money (he might have gone bankrupt), or the land

might have a particular significance for the plaintiff

(of

the equitable order for specific delivery of a chattel of

particular value to the owner: (Duke of

Somersef,v.

Cookson) or it might have greatly risen in value since the

payment, or money may have lost some of its value. So,

it was sought to justify the rule, alternatively, on the

ground that payment of money is always an equivocal act,

it need

not imply a pre-existing contract, but is equally

consistent with

many other hypotheses. This may be so

in many cases, but it is not so in all cases. Oral testimony

may

not be given to connect the payment with a contract;

but circumstances established by admissible evidence

(other acts

of part performance, for case, for example,

what was said (i.e. done) in the magistrates' court in part

(l) [ 1916-17]

All· E.R. (Reprint) 1889.

(2) (1974] 2 All. E.R. 977.

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t ,

s. GOVIND RAO v. DEVI SAHAI (Desai, J.)

performance of the agreement makes it plain that the pay­

ment of the £108 was also in part performance of the

agreement

and not a spontaneous act of generosity or

discharge of a legal obligation or attributable to any other hypothesis."

209

To some extent, therefore the statement of law in Maddison's

case that it may be taken as well settled that payment of part of

purchase money or even the whole of the consideration is not

sufficient act

of part performance can be taken to have been shaken

considerably from its

foundatiOn.

While text book writers and English decisions may shed some

light

to illuminate the blurred areas as to whether part payment of

purchase money or even the whole of the consideration would not

. ··

be sufficient act of part performance, it is nece8sary that this aspect

may be examined in the background of statutory recfuirement as

enacted

in section 53A. To qualify for the protection of the doctrine

of part performance it must be shown that there is a contract to

transfer for consideration immovable property and the contract is

evidenced by a writing signed

by the person sought to be bound by

it and from which the terms necessary to constitute the transfer can

be ascertained with reasonable certainty. These are pre-requisites

to invoke the equitable doctrine of part performance. After

establi­

shing the aforementioned circumstances it must be further shown

that a transferee

had in part performance of the contract either

taken possession

of the property or any part thereof or the

trans­

feree being already in possession continues in possession in part per­

formance

of the contract and has done some act in furtherance of

the contract. The acts claimed to be in part

·performance must be

unequivocally referable to the pre-existing contract and the acts

of

part performance must unequivocally point in the direction of the

existence

of contract and evidencing

implementati0n or performance

of contract. There must be a real nexus between the contract and

the acts done in pursuance of the contract or in furtherance of the

contract and must be unequivocally referable

to the contract. When

series

of acts are done in part performance, one such may be

pay­

ment of consideration. Any one act by itself may or may not be

of such a conclusive nature as to conclude the point one way or

the other but when taken with many others payment of

part of the consideration or the whole of the consideration may

as well be shown to be in furtherance of contract. The correct

approach would be,· what lt<?fd Reid said in Steadman's ~l\se

--.. •· -. .. . ..

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210 S\J.l'REME COURT REPORTS (19821 2 s.c.~ .

that one must not first look at the oral contract and then see whe­

ther the alleged acts of part performance are consistent with it. One

must first look at the alleged acts of part performance and see whe­

ther they prove that there must have been a contract and it is only

if they do so prove that one can bring in the oral contract. This

view may not be wholly applicable to the situation in India because

an oral contract is not envisaged by section 53A. Even for invoking

the equitable doctrine of part performance there has to be a contract

in writing from which the terms necessary to constitute the transfer

can be ascertained with reasonable certainty. Therefore, the correct

view in India would be, look at that writing that is offered as a

contract for transfer for consideration of any immovable property

and then examine the acts said to have been done in furtherance of

the contract and find out whether there is a real nexus between the

conrr21.ct and the acts pleaded as in part performance so that to

refuse reli~f w0uld__be perpetuating the fraud of the party who after

having taken advantage or benefit of the contract backs out and

pleads non registration as defence, a defence analogous to section

4

of the Statute of Frauds.

We may recall here that the acts preliminary to the contract

would be hardly of any

assistance in ascertaining whether they were

in furtherance of the contract. Anything dorie in furtherance of the

contract postulates th.e pre-existing contract and the acts done in

furtherance thereof. Therefore, the acts interior to the contract or

merely incidental to the contract would hardly provide any evidence

of part performance.

The .contention of Mr. Desai that payment of Rs. 1,000 for

purchase of stamps in an act of part performance unequivocally attri­

butable to the contract dated October 10, 1950, cannot be accepted

for two reasons, one being that Rs. 700 out of the amount

of Rs. 1,000 was paid on October 9, 1950, that is prior to the

date of contract. Then there is a serious dispute as to the nature

of contract which was negotiated on October 9, I 950, the day on

which

payment of Rs.

700 was made. Mortgagor was insisting

upon a conditional sale and defendant mortgagee declined to accept

the conditional sale and that is borne out by his evidence also. There

was thus no concluded contract on October 9, 1950, and, therefore,

the payment of Rs. 700 out of Rs. 1,000 in any case could not be

said to be part performance and the same reasons would mutatis

mutandis apply to the payment of Rs. 300 also. In the facts of this

~':1~~ this paynwnt \V??.1~ !?-?~ l>~ an act pf part performance. In

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s. GOVIND RAO v. DEVI SAHA! (Desai, J.) 211

our opinion, therefore, the High Court recorded an utterly unsus­

tainable finding without minutely examining the relevant evidence

coupled with the requirements

of law and erred in holding that the

payment

of Rs.

1,000 was in furtherance of the contract. We would

also add that

in the facts and circumstances of the case payment of

Rs.

1,000 was not such an act of part performance which would help

defendant mortgagee in any manner.

Mr. Desai next contended that the mortgagee discharged a

debt

of Rs. 541 which was included in the amount of Rs. 17,735

retained

by the mortgagee from the total consideration payable for

discharging other debts and that this payment was in furtherance

of

the contract. This contention is being put forward for the first time

in this Court and should

be negatived on that account alone. Even

apart from this there

is no sufficient

evidence to uphold this conten­

tion. In fact, the defendant mortgagee himself has to some extent

prevaricated on the question

of retention of Rs. 17,735 out of the total consideration for the sale transaction agreed at Rs. 50,000.

Consideration of Rs. 50,000 was made up, inter alia, by retaining

Rs. 17,735

in discharge of debts owed by mortgagor to mortgagee

by borrowing loans on different occasions for domestic expenses.

It is so stated in Ext. D-1 which had been extracted earlier.

Mortgagee in his evidence gave a go bye to this recital and

deposed that the amount

of Rs, 17, 735 from the total consideration

payable

by him was retained by the mortgagee for payment of other

creditors

of the mortgagor. Even apart from this he has not stated

a word that out

of the amount of Rs. 17, 73 5 he paid Rs. 541 to any

particular creditor.

In his written statement he has stated that the

amount

of Rs. 17,735 was kept in deposit for payment to other

creditor~ of the mortgagor. One such creditor was to be paid a

sum

of Rs. 541. This creditor is none other than the mortgagee

himself. This would mean that he himself was creditor to whom he

paid Rs. 541. Assuming that

he could have reimbursed himself,

there

is nothing to show that he gave a discharge .or that he gave

credit in his books

of accounts. Further, there is no statement in

his evidence to that effect. That aspect

was never canvassed before

the trial court as

well as the High Court and we find no material

evidence to substantiate this contention. The contention, has,

therefore, to be negatived.

The third act

of part performance pleaded on behalf of the

mortgagee is that the

nwrtgagee agreed to discharge the mortgage

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212

SUPREME COURT REPORTS [1982) 2 s.c.R.

subsisting on the property in his favour on settlement of

accounts. The mortgage deed admittedly was not returned to the

mortgagor even after the mortgagor executed Ext. D· 1 the sale deed

which was not ultimately registered. But

that is not enough. The mortgage~ admitted in his evidence that even after Ext. D-1 was

executed he maintained the accounts

of mortgage and in that

account he debited Rs.

1,000 paid to the mortgagor for purchase of

stamps. Could it be said that he had discharged or agreed to dis­

charge the mortgage subsisting on the property ? There is however

a piece

of evidence which completely belies the claim and

demons­

trably establishes that mortgagee never claimed to regard himself as

owner from October 10, 1950 the date of contract but till a later

date continued

to regard himself as a mortgagee with subsisting

mortgage. Mortgagee made

an application on June 23, 1952 nearly

two years after the contract of sale in the execution proceedings

filed

by Motilal seeking to bring mortgage property to court auction

for realising his decretal amount, which decree he had obtained

against the mortgagor. In this application dated June 23, 1952

mortgagee has stated that till that date Rs. 27792/2/3 were due under

the mortgage from the mortgagor and that fact must be noted in

the sale proclamation and thereafter property should be sold. Now

if on

O.:tober 10, 1950 accounts were made, mortgage was satisfied

and mortgage debt was discharged, how

is it that on June 23, 1952

he retained the mortgage account, worked out the amount due

and

sought its mention in the sale proclamation. This conduct of

mort­

gagee is sufficient to negative this contention. -In any event mere

oral agreement to discharge a mortgage could hardly be said to be

an act of part performance unless in fact such an act was done and

that could have been only done by a discharged mortgage deed

being returned to the mortgagor.

The next act

of part performance pleaded by the mortgagee is

that all dues owed

by the mortgagor to the mortgagee have be taken

as cleared on completion

of the contract.

Now, even here his stand

is equivocal. In the written statement it was stated that at the time

of filing the written statement a sum of Rs. 29,000 was found to be

-

due from the mortgagor. If on October 10, 1950, all accounts were IA__.......

made up, bow could he continue a mortgage account which mort-

gage according to him came to be satisfied when he took the sale

deed and continued in possession in part performance of the cont-

ract? Therefore, the submission is without merits.

i

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ii. GOVIND RAO v. DEVI SAHAI (Desai, J.) 213

The next act of part performance pleaded by the mortgagee is

that the nature and character of possession changed as recited in the

contract. Mortgagee was

in possession as mortgagee. Now accor­

ding to him since the date

of execution of the sale deed the nature

of possession changed. For this he relies upon a statement in the

sale deed Ext. D-1 wherein it is stated that he is being put in posse­

sion as owner. This mere recital

is hardly indicative of the change

in the nature

of possession. There is no evidence to show that he

moved the authorities that

he would be liable to pay taxes as owner.

There

is no overt act on his part to so assert possession as owner.

A mere recital in the disputed sale deed

is of dubious evidentary

value and when it would

be pointed out that he was never' willing

to perform his part

of the contract which is a pre-requisite for

claiming protection

of the doctrine of part performence it will

be shown that he believed himself to be a mortgagee and

acted as such even at a date much later than

October 10, 1950, from

which date be claims to be the owner.

Induction into possession of an immovable property for the

first time subsequent to the contract touching the property, may be

decisive

of the plea of part performance.

·Mere possession ceases to

be

of assistance when as in this case the person claiming benefit of

part performance is already in possession, prior to the contract and

continues to retain possession. However a reference to a statement

of law in Halsbury's Laws of England, 3rd Edition, Vol. 36, para

418 would be instructive. It reads as under : "Where possession is given to a "tenant" before a

tenancy agreement bas been concluded and the possession

is retained after the conclusion of the agreement, the posse­

ssion, if unequivocally referable to the agreement, is a

sufficient part performance but subject

to this, acts done

prior to,

or preparatory to, the contract will not

suffice."

If a person claiming benefit of part performance is inducted into

possession for the first time pursuant to the contract it would

be

strong evidence of the contract and possession changing bands pur­

suant to the contract. in

Bedson v.

Ileuland (

1

)

it was held that

although the entry into possession

was antecedent to the con tract,

yet the subsequent continuance in possession being, under the cir­

cumstances, unequivocally referable to the contract, constituted a

(1) [1896) 2 Ch. 428.

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214 SUPRBMB COURT REPORTS [ 1982] 2 s.c.i.

A part performance sufficient to take the case out of the Statute of

Frauds.

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In Nathulal's case, the fact that Nathulal parted with posses­

sion after receiving part payment of the sale consideration was held

sufficient to constitute part performance. This Court observed that

in part performance of contract Phoolchand has taken possession of

the property and he had in pursuance thereof paid a part of the

consideration and thereby the first three conditions for making good

the defence

of part performance had been satisfactorily shown to

exist. But greater emphasis was laid on the decision of

Somnath

Iyer, Acting C.J. in Babu Murlidhar v. Soudagar Mohammad

Abdul Bashir and Anr.(

1

)

In that case an unregistered agreement

of sale executed by the mortgagor in favour of the mortgagee in

possession recited that

after the date of the agreement the mort­

gagee who had been in possession as such would become the owner

of the property and that he could get his name mutated into muta­

tion register of the municipality and in implementation of this

agreement

of sale, the mortgagor himself made an application for

mutation to the municipal authorities and the name

of the

mort­

gagee was mutated as owner of the property, it was held sufficient

to clothe the mortgagee with the protection

of section 53A in a

suit for redemption

of the mortgage and the mortgagor's suit was

dismissed. The Court attached considerable importance to the

provision

in the unregistered agreement for mutation in favour of

the mortgagee as owner and the subsequent conduct of the

mort­

gagor in making an application for mutation was held to be the

clearest indication which

is essential for invoking the doctrine of

part performance. The decision can be said to depend more or

less on the facts of the case. However in this connection a

refe­

rence was also made to Thota China Subba Rao and Ors. v. Matape/li

Raju and Ors.(') That decision is hardly of any importance

because an ext1 eme contention was advanced on behalf of the

mortgagee resisting a suit for redemption that he continued to be

in possession in part performance of the agreement which arrgu­

ment was repelled by the Court on the observation that the mort­

gagee had never been in possession and the contention that he was

always

in constructive possesssion could hardly assist him.

(1) AIR

1970 Mysore. 203.

(2) A.LR. 1950 FC I at 7

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S. ooViNi> RAO v. DEVI SAHA! (Desai, i.)

Jn Jahangir Begum v. Gulam Ali Ahmed,(1) the Court after holding

that the defendant was

in possession and had put up a structure on

it, came to the conclusion that he was not entitled to the benefit

of

doctrine of part performance because he was already in possession

before the contract to transfer the property, relied upon by him,

was entered into, and, therefore, it was obligatory upon him

to

show that he had done some act in furtherance of the contract in

order to constitute a part performance of the contract. In Kukali

v.

Basantilal(2) the facts found were that A mortgaged with posses­

sion his house with

B. Subsequently A sold the house to B in

consideration

of the mortgage debt and the amount spent by A on

improvements and repairs

of the house. The deed was not registered.

Subsequently A sold the same property to C under a registered sale

deed. C sued B for redemption. B relied on the equitable doctrine

of part performance in defence. Negativing the defence of part

performance the Court held

that as B was already in possession

as a mortgagee, unless he shows that

he did some act in furtherance

of the contract, over and above being in possession, mere con­

tinuance

in possession would not constitute part performance.

The case

is very near to the facts disclosed in the case under

discus­

sion. There is an understandable and noteworthy difference in the

probative value

of entering into possession for the first ti me and

continuing

in possession with a claim of change in character.

Where person claiming benefit

of part performance of a contract

was already in possession prior to the contract, the court would

expect something independent

of the mere retention of possession

to evidence part performance. Therefore mere retention of posses­

sion

is not discharged, could hardly be said to be an act in part

performance unequivocally referable to the contract of sale.

Section 53A requires that the person claiming the benefit

of

part performance must always be shown to be ready and willing to

perform his part

of the contract. And if it is shown that he was

not ready and willing to perform his part

of the contract he will

not qualify for the protection of the doctrine of part performance.

Reverting to the consideration recited in Ext.

D-1 the sale deed,

even according to the mortgagee

it was agreed that he had retained

an amount

of Rs. I 7,735 out of the total consideration of Rs.

50,000

for payment to the other creditors of the mortgagor. Barring a

(I) AIR 1955 Hyd. 101.

(2) AIR 1955 Madhya Bharat 93.

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216 SUPREME COURT REPORTS [ 1982] 2 s.c.tl.

claim made in the written statement that he paid himself Rs. 541

which was included in

the amount of Rs. 17,735 which allegation

itself

is unconvincing, there has not been the slightest attempt on

.)

his part to pay up any of the creditors of the mortgagor. There is

nothing to show that he had the list of all the creditors .of the

mortgagor or that he made any attempt to procure the list or that

he issued a public notice inviting the creditors of the mortgagor to

claim payment from him to the extent of the consideration retained

by him. Not a single creditor has been paid is an admitted posi­

tion. But the more ineq uitous conduct of the mortgagee is that he

had not made the slightest attempt to contact any of the creditors

of the mortgagor or to pay even the smallest sum. There is no

such statement in the written statement but even in his evidence

at the trial

he has not been able to show that he has paid any

creditor or made any attempt to pay any of the creditors including

those whose

names were admittedly known to him such as Ramkaran

G.b!jsilal, Kajodimal, Motilal Bhagirath and Kanhaiyalal Chagganlal.

~!her shifting stand of mortgagee to suit his convenience is dis­

, cernible here. In Ext. D-1, the entry of Rs. 17,735 is described as

'have been taken from you from time to time for domestic expenses'.

Jn his evidence mortgagee states

that this recital is incorrect and

the correct position according to him is that the amount of

Rs. 17, 735 fro:n total consideration payable by him was retained to

pay to other creditors of mortgagor. According to him the only

amount due to him from mortgagor outside the mortgage transac­

tion was a debt of Rs. 541 only. Mortgagee neither paid himself

nor other creditors and thereby did not perform his part of the

contract. He even did not pay a small decretal amount

tof Rs. 500

plus interest and costs to Motilal in 1952 but allowed the property

to be sold. Coupled with this is the fact according to the recital

in Ext. D-1 he

had agreed to pay the balance of the consideration

of Rs 6265 to the mortgagor at the time of registration of the sale

deed. Now, undoubtedly

the mortgagor did not agree to get the

sale deed registered because there was a dispute between the parties

as to

the nature of the

tran~action. But the defendant mortgagee

._ ~

made unilateral attempt to get the sale deed registered by offering

it for registration.

Thus while attempting to complete his title both

legally and even in equity he was under an

obligation to pay

Rs 6265 to the mortgagor. This liability is not disputed yet in

this behalf he bas not stated anything in his examination-in-chief

I' ..

that he made any attempt to pay that amount to the mortgagor.

Add to this his failure to return the discharged mortgage deed and

his further averment that he used to m~intain the mortgage account

...

j

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s. GOViND RAO v. DEVi SAHAI (besai) J.. 217

even after October I 0, I 950: All this would conclusively show

that the mortgagor _himself was not willing to perform his part

of

the contract. In this view of the matter Mr. Desai's contention

that failure to pay the amount agreed to be paid before the

Registrar and/or not discharging debts agreed to be discharged as

having been given credit in the consideration for the sale would not

detract from part performance because they have to

be

t!valuated

in the facts and circumstances of the case cannot be upheld.

It was next contended on behalf of the mortgagee that the

conduct

of the 1st plaintiff mortgagor in executing and registering

a sale deed in respect

of the mortgaged property in favour of 2nd

plaintiff Gyarsilal and thereby frustrating the contract

of sale in

favour

of the defendant mortgagee evidence that the Ist plaintiff

was aware of the contract in favour

of the defendant mortgagee

and

he was retaining possession in furtherance of the contract. The

submission does not constitute any independent act on the part

of

mortgagee but it is merely another facet of the fact of permission

being retained by the defendant mortgagee. Retention

of posses­

sion is

of no consequence in this case because the mortgage was

not discharged and was subsisting and the mortgage being a mort­

gage with possession the mortgagee

was entitled to retain posses­

sion. The fact that immediately a sale deed was executed in favour

of 2nd plaintiff by Ist plaintiff would show that he was unwilling to

accept the contract as offered

by the mortgagee. The subsequent

purchaser Gyarsilal has taken a conditional sale and this reinforce

the stand

of the mortgagor. The existence of the dispute about the

nature

of the trasaction, namely, according to the mortgagor he

wanted an absolute sale and this dispute between the parties as on

October

10, 1950, is not in dispute. Therefore the conduct of the

mortgagor is

c<;msistent with this case.

It was next contended that defendant

mortgagee· made all

attempts to get the deed registered by approaching

the

Sub­

Registrar, and that the defendant mortgagee initiated criminal pro­

ceedings against the Ist plaintiff mortgagor for misusing the stamp

papers need not detain us, as they have no probative value.

Having, therefore, examined all the contentions canvassed on

behalf

of the mortgagee we unhesitatingly reach the conclusion that

the mortgagee has failed to prove that he did any act in furthe­

rance

of the contract, continued retention of possession being a

circumstance

of neutral character in the facts and circumstances of

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218 SUPRBME ccluiT REPORTS [ i 982i 2 s.c.ll.

the case and it being further established to our satisfaction that the

mortgagee was not willing to perform his part

of the contract, it

is clear that the mortgagee is not entitled

to the benefit of the

equitable doctrine

of part performance.

On the conclusions l.J.ereby indicated the appeal preferred by

the plaintiffs (CA 1144/69) must be allowed and the judgment

of

the High Court

has to be set aside and the one rendered by the

trial court

is restored with costs throughout.

That takes

us to the second appeal preferred by Motilal

being

CA 1145/69. First a synopsis of the facts relevant to the dispute

raised by api;ellant Motilal. Motilal filed Civil Suit No. 243/47 on

November

3, 1947, for recovering his debt from mortgagor

Govindrao Mahadik.

Jn this suit he obtained attachment before

judgment

of the suit property on November 6, 1947. The suit of

Motilal ended in a decree in the amount of Rs.

2,500 on March

5, 1951. On March 27, 1951, execution application No. 216 of

1951 was mad~ by Motilal. On April 3, 1951, the executing court

made an order that as the suit property of the judgment debtor has

already been attached by an order

of attachment before judgment,

steps should be taken for drawing up a proclamation

of sale under

order XXI, rule 66, Code

of Civil Procedure. The

Cour'. directed

auction sale

of the suit property to be held on December 9, 1951.

It appears that the auction sale was stayed. There was some default

on the part

of the judgment debtor to comply with the conditional

stay order and on his failure auction sale was directed to

be held

on March 23,

1952. After correcting the amount due on the

mortgage

of mortgagee in the proclamation of sale, a fresh auction

was held on August

23, 1952. In the meantime, in the absence of

any

bidder at the auction Motilal the decree holder himself obtained

permission

of the court to bid at the auction and his bid

in the

amount

of Rs.

300 was accepted and the sale in favour of Motilal

was confirmed on September

23, 1952.

In the mean time mortgagor Govindrao Mahadik the

judg­

ment debtor in Motilal's suit filed Regular Appeal No. 125/51

which was allowed by the Additional District Judge as per his

judgment dated March 27,

1953 and thereby the suit of Motilal was

dismissed

in entirety. Motilal preferred

Second Appeal No. 78/53

in the High Court

of Madhya Bharat and by its judgment dated

September

1, 1958, Motilal's appeal was allowed and a decree in

...

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....

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s. GOV1ND RAO v. DEVI SAHA! (Desai, J.) 219

his favour

in the amount of Rs.

500 with imerest and proportionate

costs

was passed.

Motilal made an

application on April 2, 1962 purporting to

be under Order XXII, rule 10 of the Code of Civil Procdure alleging

that he came to know about the suit filed by the mortgagor for

redemption

of the mortgage in December, 1961 and as the decision

in the suit is likely to have an impact on his rights and that as he

is the purchaser of the equity of redemption, the mortgagor and

the subsequent purchaser from the mortgagor cannot now maintain

the action for redemption

of the suit property and he should be

substituted in place

of the plaintiffs and be permitted to prosecute

the suit for redemption against mortgagee. This application

was contested on behalf

of the parties to the suit.

The High Court was not fully satisfied about the explanation

of delay in making the application by Motilal and was not even

inclined to accept the

suggestion that he became a ware of the suit

in 1961 and that on the ground of gross delay the application was

Jiabl'.'. to be dismissed. The High Court ultimately made on order

as under:

"Therefore, although ordinarily we might not be

inclined to allow Motilal's request to

be impleaded in this

Court at the appellate stage,

we are of opinion

that it

would be desirable to have final decision about the various

points

of dispute between all the parties in

order to avoid

further unnecessary litigation.

From this point of view

only,

we would allow Motilal to be impleaded in the

present litigation

by addition of his name, and not by

allowing him to replace both the

plaintiffs."

Having thus directed Motilal to be impleaded as a party

respondent,

the High Court proceeded to ascertain, evaluate and

adjudicate the right claimed

by Motilal and ultimately held that in

any event the auction purchaser Motilal shall

be entitled to recover

the balance

of his decretal amount and interest at the rate of 4%

per annum

from the date of his auction sale till the date of realisa­

tion or deposit as the case may be either from the appellant or from

the mortgagor

or subsequent purchaser, as the case may be, and

that there shall be a charge on the suit property for the

aforementioned amount which shall be enforceable

at the

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220 SUPRBMll COURT REPORTS . [ 1982] 2 S.C.R.

instance of Motilal by a sale of the property, Motilal was held

disentitled to costs on account

of the delay in

filing the application.

Mr. Ray, learned counsel for the

1st plaintiff mortgagor con­

tended that the High Court was in error in allowing the

applica­

tion of Motilal to be impleaded as a party because according to

Mr. Ray Motilal could not be said to

be claiming under the

mort­

gagor and that, therefore, be could not maintain the application

under Order XXII, rule 10, Code of Civil Procedure.

Rule 10 of Order XXII, provides for continuance by or against

a person

of any action who acquires any interest either by

assign­

ment, creation or devolution during the pendency of suit, with the

leave

of the court. In ascertaining whether Motilal can maitain the

application bis averments in the application

will have to be taken

as the basis for invoking the Court's jurisdiction under

Order XXII,

rule 10. The question that will have to be posed would be whether

Motilal acquired any interest

by assignment, creation or devolution

during the pendency

of the suit and would, therefore, be entitled to

continue the suit. The suit

is primarily a suit for redemption of

mortgage. A suit for redemption of mortgage can be brought by a

person holding the equity

of redemption. Motilal contends that the

suit property

was sold at a court auction with subsisting mortgage

thereon and the right, title and interest

of the mortgagor was sold at

the court auction and on the sale being confirmed and the sale

certificate being issued he acquired the interest either

by assignment

or devolution of the original mortgagor. Now this assertion is con­

tro'Verted on behalf

of the original mortgagor and the subsequent

purchaser contending that much before the confirmation

of the sale

on Septembes

23, 1952, the subsequent purchaser had p11rchased the

equity

of redemption by the sale deed Ext.

P-1 dated October 17,

1950, and that the original mortgagor had no subsisting right, title

and interest in the suit property on August

23, 1952, being the

date

of the sale in favour of Motilal. This was countered on

behalf

of Motilal by his learned counsel Mr. G.L. Sanghi

asserting that Motilal had obtained an attachment before

judgment

of the suit property by order dated November 6, 1947, and

that this was subsisting till March 5, 1951, when the trial court

decreed the suit

of Motilal against the mortgagor in the amount

of Rs.

2500 and till the application for execution was filed on March

27, 1951, and no reattachment was necessary. These facts are incon­

trovertible but one aspect

of law has to be examined as to what is

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I

s. GOVIND RAO v. DEVI SAHA! (Desai, J.) 221

the effect of the judgment of the appellate court in the appeal filed

by original mortgagor Govindrao Mahadik, the decree obtained by

Motilal,

to wit, the appeal was allowed and Motilal's suit was

dis­

missed on March 27, 1953. Between March 27, 1953, till the High

Court allowed the appeal

of Motilal on September 4, 1958, there

was

no subsisting attachment but it must be recalled that by

Septem­

ber 23, 1952, the sale was codfirmed and the sale certificate was

issued

on March 25, 1953, that the two days before the appeal of

mortgagor preferred against the decree obtained by Motilal was

allowed on March 27, 1953.

The averments

of Motilal in his own application would prima

facie

be sufficient to sustain an application under order XXII, rule

10. The question whether he bas acquired an interest or not in the

property either

by assignment or devolution which is the subject

matter

of dispute in this appeal would have to be answered on merits

but the narration

of chronological events as delineated hereinabove

would clearly show

that Motilal has

l)lOre than a mere semblance of

title which thi~ Court will have to investigate. And even if stricto

sensu the application would not fall under Order XXII, rule. 10, CPC,

yet section 146 of the Code of Civil Procedure would certainly enable

Motilal to maint< in the application (See Smt. Saila Bala Desai v.

Smt. Nirmala Sundari Dassai and another(

1

), at 1291, referred to with

approval

in

Shew Bux Mohata & Ors. v. Bengal Breweries Ltd &

Ors.(2) Undoubtedly the High Court was reluctant to overlook the

gross delay in preferring the application but even after this reluctance

the High Court having granted the application,

we would consider it

imprudent to reject the application on the ground of delay. Once Motilal becomes a party, two contentions advanced on

his behalf will have to examined :

(a) has he become, under the sale

certificate obtained

by him, a purchaser of equity of redemption so

as to dissentitle the original mortgagor from bringing the present

action ; (b) What

is the effect of the attachment before judgment

secured

by him on November 6, 1947, on the sale of equity of

redep­

tion in favour of the subsequent purcharser under the sale deed

Ext. P-1 dated October 14, 1950.

Looking to the proclamation

of

sale it is crystal clear that the

property was sold subject to subsisting mortgage in favour of Devi

(1) [1958] 2 SCR 1287.

(2) [1961] 1 SCR 680.

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222 SUPREME COURT REPORTS [1982] 2 s.c.R.

Sahai, mortgagee. At a court auction what is sold is the right, title

and interest

of the judgment debtor. The judgment debtor in the

decree obtained

by Motilal was original mortgagor Sardar Govindrao

Mahadik. Subject to other conditions, his right, title and interest

would

be one of a mortgagor, that is the right to redeem the

mort·

gage style as equity of redemption. According to Motilal this equity

of redemption was sold at the court auction and it was purchased by

him. Subject to the decision on the second contention so as

to the

effect

of attachment before judgment, there is no substance in this

contention because much before even the proclamation

of sale was

issued the equity

of redemption held by the mortgagor was sold by

him under sale deed Ext.

P-1 dated October 14, 1950, in favour of

2nd plaintiff Gyarsilal. Therefore, even on the date of the decree as

also on the date

of filing of the execution application mortgagor had

no subsisting interest

in the property which could be sold at the court

auction.

On this short ground it can be held that Motilal did not

acquire under the sale certificate equity of redemption of the

mortgagee.

But Mr. Sanghi, learned counsel for Motilal contended that the

transfer in favour

of subsequent purchaser under the sale deed

Ext.

P-1, dated October 14, 1950, by the mortgagor is void against

Motilal because

in the suit filed by Motilal he had obtained an

order

of attachment before judgment of the suit property and this

attachment before judgment would cover the right, title

and interest

of the mortgagor defendants in that suit and that any private sale

inter vivos of the attached property would under section 64 of the

Code

of Civil Procedure be void against the attaching creditor.

Proceeding further along this line it was contended that as a corollary

if the sale in favour of subsequent purchaser is void against Motilal

'

then the equity of redemption continued to remain vested in the

original mortgagor and at the court auction the same was sold and

purchaged by Motilal. This necessitates examination

of the elTect

of an order of attachment before judgment in a suit.

Order XXXVIII, rule

5, enables the Court to levy attachment

before jugdment

at the instance of a plaintiff if the c0nditions therein

prescribed are satisfied. What

is the nature of attachment levied in

this case

is not made known save and

ellcept saying that the suit

property was attached and the sale proclamation mentioned therein

th~ subsistini mort!la~e. Takin~ the best view in favour of Motil11I,

....

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s. GOVlND llAO v. DEVI SAHA! (Desai, J.) 223

one can say that what was attached was the equity of redemption.

The attachment was levied and contir.ued to subsist till the date of

the decree. It would, therefore, not be necessary to reattach t_he

property.

What is the effect of attachment before judgment ?

Attachment before judgment is levied where the court on an

application

of the plaintiff is satisfied that the defendant, with

intent to obstruct

or delay

the execution of any decree that

may be passed against him (a) is about tn dispose of the whole

or any palt of his property. or (b) is about to remove the whole

or any part of his property from the local limits of the juris­

diction of the Court. The sole object behind the order levying

attachment before judgment

is to give an assurance to the plaintiff

that bis decree if made would be satisfied. It is a sort of a guaraotee

against

decree Lecoming infructuous for want of property available

from which the plaintiff can satisfy

the decree. The provision in

section 64

of the Code of Civil Procedure provides that where an

attachment has been made, any private transfer

or delivery of the

property attached or of any interest therein and any payment to

the·

judgment debtor of any debt, dividend or other monies contrary to

such attachment, shall be void as against all claims enforceable under

the attachment. What is claimed enforceable

is the claim for

which the decree

is made. Motilal's suit was for a money claim. It

finally ended in a decree for Rs.

500 by High Court and in between

the

!st appellate court had dismissed Motilal's suit in entirety. There

is nothing to show that the attachment which would come to an end

on the suit being dismissed would get revived

if a second appeal is

filed which ultimately succeeds. In fact, a dismissal

of the suit may

terminate the attachment and the same would not be revived even

if

the suit is restored and this becomes manifestly clear from the newly

added provision in sub-rule

(2) of rule 11 A of

Order XXXIIT, C.P.C_.

which provides that attachment before judgment in a suit which is

dismissed for default shall not be revived merely because by reason

of the fact that the order for the dismissal of the suit for default has

been set aside and the suit has been restored. As a corollary it would

appear that

if attachment before judgment is obtained in a suit which

ends

in a decree but if in appeal the decree is set aside the

attach­

ment of necessity must fail. There should be no difficulty in reach­

ing this conclusion.

The question, however,

is what happens if at an intermediate

sta~e punisuant to th~ d~cr<;i~ of the trial court the attached pro-

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224

SUPREME COURT REPORTS [1982) 2 s.c.R.

perty is sold at a court auction ? How would tb.e rights aud obliga­

tions of the auction purchaser be adversely affected if the appeal is

allowed and the suit is dismissed? Ordinarily where the appeal is

preferred an attempt should be made to obtain stay

of the execution

of the decree of the trial court. However, it is notorious that the

appellate court

is loath or reluctant to grant stay of a money decree

and the judgment debtor may

not be in a position to deposit the

decretal amount and

in this situation more often the execution

proceeds and before the appeal

is disposed. of an equity in favour

of a third person as auction purchaser who purchases the property

at a court auction may come into existence.

If afterwards the appeal

is allowed and the suit is dismissed, would the auction purcha.ser

be adversely affected

? The emerging situation in this case

clearly

demonstrates the dilemma.

Ordinarily,

if the aution purchaser is an outsider or a stranger

and if the execution

of the decree was not stayed of which he may

have assured himself by appropriate enquiry, the court auction held

and sale confirmed and resultant sale certificate having been issued

would protect him even

if the decree in execution of which the

auction

sale has been held is set aside. This proceeds on the footing

that the equity in favour

of the stranger should be protected and the

situation

is occasionally reached on account of default on the part

of the judgment debtor not obtaining stay of the execution of the

deeree during the pendency

of the appeal.

But what happens

if the auction-purchaser is the decree

holder himself?

In our opinion, the situation would materially

alter and this decree holder-auction purchaser should

not be

entitled to

'any protection. At any rate when he proceeds with the

execution he

is aware of the fact that an appeal against the original

decree

is pending. He is aware of the fact that the resultant

situa­

may emerge where the appeal may be allowed and the decree which

he seeks to execute may be set aside. He cannot force the pace by

executing the decree taking advantage

of the economic disability of

a judgment debtor in a money decree and make the situation

irre­

versible to the utter disadvantage of the judgment debtor who wins

the battle and loses the war. Therefore, where the auction­

purchaser is none other than the decree holder who by pointing out

that there is no bidder at the auction, for a nominal sum purchases

the property, to wit, in this case for a final decree for Rs. 500,

Motilal purchased the property for Rs. 300, an atrocious ~.ituation,

and yet by a technicality he wants to protect himself. To such an

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s. GOYIND llAO v. DEVI SAHA! (Desai, i.) 225

auction purchaser who is not a stranger and who is none other than

the decree holder, the court should not lend

its assistance. The

view which we are taking is not unknown and to some extent it will

be borne out by the observations of this Court in Janak Raj v.

Gurdial Singlz and

Anr.(1) This Court made a pertinent observation

which may

be extracted :

"The policy of the legislature seems to to be that unless

a stranger auction purchaser

is

protectec;l against the

vicissitudes

of the fortunes of the suit, sales in execution

would

not attract customers and it would be to the detri-

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ment of the interest of the borrower and the creditor alike C

if sales were allowed to be impugned merely because the

decree was ultimately set aside

or

modified."

Viewed from this angle, the order of the High Court that the

auction-purchaser decree holder Motilal would

be entitled to recover

the decretal amount

of Rs.

500 with interest at the rate of 4% per

annum and proportionate costs could

be styled as manifestly

equita­

ble. However the Court cannot overlook the conduct of the mort­

gagor Govindrao Mahadik, his subsequent purchaser Gyarsilal and

even the original mortgagee Devi Sahai in not paying a smail debt

and allowing the property to be auctioned and forcing Motilal

to

the logical end of litigation and yet without the slightest

recom­

pense to go on investing into this bottomless pit of unending litiga­

tion. And at best his attachment before judgment is a security that

his decree would be satisfied from the property attached and sale

to the extent

of recovery of decretal amount from attached property

would be, against attaching creditor void.

If we assure him

pay­

ment of decretal amount and costs the sale in his favour is of no

significance. The logical course for us would have been to leave

Motilal to his own remedy which

we consider inequitous in the

facts and circumstances

of this case. The order made by the High

Court would hardly provide him Rs.

1,500 to recover which he must

have spent at the inflated rate

of litigation costs. In our opinion,

while

not granting the substantial relief claimed by Motilal and

looking to the conduct

of an· the parties, we direct tbat Motilal

should be paid Rs.

7,500 inclusive of decretal amount, interest,

proportionate costs and costs

of the litigation till today, and

for this

amount there

will be a charge on this property to be cleared by

(I) (1967) 2

SCR 77, 86.

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226 SU!iREME COURt REPORtS [ 1982] 2 s.ctt

Govindro Mahadik at the time of redemption of the property which

amount

will have to be paid by Gyarasilal's heirs in view of the

sale­

deed in favour of Gyarsilal.

Accordingly, Civil Appeal No. 1144/69 filed by Govindrao

Mahadik

is allowed and the judgment and decree of the

High Court

are set aside and those

of the trial court are restored

witl1 costs

throughout.

Civil Appeal No.

1145/69 preferred by Motilal is disposed of

in accordance with direction herein-above indicated with no

Qrder

as to costs. CMP 9004/80 and CMP 10593/80 for substitution are

allowed.

P.B.R. Appeals allowed. -

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