JUDGMENT

A.A. Desai, J.

1. The question involved in this appeal relates to extent of protection available under Section 53-A of the Transfer of Property Act (for short, ‘the Act’) to maintain one’s possession derived through part performance. In the case of Nanasaheh reported in AIR 1957 Bom. 138, the Division Bench of this Court took a view that the vendor is entitled to resist the claim of eviction of a vendor; even if vendee’s claim for specific performance is barred by limitation.

Subsequently, the Division Bench in the case of Adinath reported in 1991 Mh. L.J. 256, took a view:

The agreement could not be enforced in law since relief of specific performance is beyond the period of limitation. The agreement in question met with its legal death. As a result, the protection under Section 53-A of the Act which flows from such agreement cannot survive beyond its life time which is the source of the protection.

8. The defendants were merely prospective purchasers and the title has not vested in them. Once the remedy for acquiring title through specific performance is lost to the vendee, equitable relief of protection to possession comes to end. Such protection is conterminous and does not survive beyond the span of the agreement. It is no doubt held that Section 53-A is a shield for the vendee and not a sword. Limitation has also nothing to do with, defence. However, the right asserted must subsist as per the limitation prescribed by law. Legally nonexistent right cannot oust the claim of vendor to recover possession, which was delivered in part performance of the contract. To allow the vendee to hold the possession even if the contract is not enforceable would lead to very anomalous, legal and factual situation. It would be paying dividends to vendee whose gesture suffers from laches and who lost the right to claim the transfer of title. It would be defeating the doctrine of equity which has been codified in Section 53-A of the Act.

2. Having regard to the conflict, the learned Single Judge formulated a question for being referred to the Full Bench as thus:

Whether once the remedy of acquiring title by a suit for specific performance is lost to the vendee by lapse of time, right to protect his possession upon satisfying the conditions contained in Section 53-A of the Transfer of Property Act comes to an end?

In other words, the question as posed is whether the transferee in possession, who does not avail the remedy of acquiring title by specific performance, can be regarded of having fulfilled the conditions envisaged by Section 53-A of the Act, so as to sustain the possession?

3. In the submission of Shri Khapre, the learned Counsel appearing for the appellant, the answer is in affirmative. According to him, to perform a contract specifically by execution and registration of a Deed of Sale is the obligation on the transferor. His failure or refusal does not cast any obligation on the transferee when he fulfils or is willing to fulfil other conditions of the contract. His right to hold possession remains intact even without registration of a Deed of Sale in his favour. Shri Khapre placed reliance on the non-obstante clause under Section 53-A of the Act.

This clause has a reference to a contract or instrument of transfer, which is compulsorily required to be registered under the relevant provisions of law, such as contract to lease, etc. Contract of sale of immovable property or parole agreement of transfer of possession by any instrument needs no compulsory registration. This clause has no reference to the registration of deed of sale. The clause does not save the registration of deed of sale of immovable property. The reliance of the learned Counsel is, therefore, completely misplaced.

4. Shri Khapre urged that the view as taken in the case of Nanasaheb is the correct one. According to him, limitation prescribed by the statute can take away the remedy and not the right connected therewith. Therefore, in terms of Section 53-A of the Act, a transferee is entitled to hold possession even if remedy of specific performance is barred by limitation. In support, he placed reliance on the decisions in Gopal Bhaurao Jape v. Jagannath Pandit Vasudeorao Pandit Maharaj AIR 1935 Bom. 326, Mahanth Singh v. U Ba Yi , Vishmanath and Anr. v. Mst. Deokabai 1948 NLJ 10, Bombay Dyeing and Manufacturing Co. Ltd. v. The State of Bombay and Ors. and Khadi Gram Udyog Trust v. Shri Ram Chandraji Virajman Mandir . The last word on the subject is of Supreme Court in Punjab National Bank and Ors. v. Surendra Prasad Sinha , which reads as thus:

The rules of limitation are not meant to destroy the rights of the parties. Section 3 of the Limitation Act 36 of 1963 for short “the Act”, only bars the remedy, but does not destroy the right which the remedy relates to. The right to the debt continues to exist notwithstanding the remedy is barred by the limitation. Only exception in which the remedy also becomes barred by limitation if the right is destroyed, for example under Section 27 of the Act a suit for possession of any property becoming barred by limitation, the right to property itself is destroyed.

… It is settled law that the creditor would be entitled to adjust, from the payment of a sum by a debtor, towards the time barred debt. It is also equally settled law that the creditor when he is in possession of an adequate security, the debt due could be adjusted from the security in his possession and custody.

5. Money claim, even if the remedy to recover is barred, does exist. The creditor by a private device, if available, can adjust such time barred claims against the payment to be made to a debtor. On questioning in a legal action at the behest of the debtor or guarantor, such adjustments can legally be upheld. The ratio can be extended thus far and no further.

Owing to loss of legal remedy, the creditor cannot take resort to a legal action to recover the time barred money claim. In a legal action by a debtor for recovery of his dues, the creditor cannot claim a set off or set up a counter claim of his time barred dues.

6. Parties to the contract of sale of immovable property, on their volition, can execute and register a Deed of Sale even if the legal remedy to acquire title is barred by limitation. However, transferee is precluded to initiate legal action to enforce the contract of sale. Such transferee is left with no device to acquire a title when transferor has initiated legal action to recover possession after specific performance is barred. Such transferee is without legally enforceable right to acquire title and no private device therefor is available. To such transferee, the right to acquire marketable title is completely lost and destroyed. Can right of such transferee to hold possession would prevail over to defeat the right of transferor to recover possession? The Authorities cited do not guide to answer the question.

7. According to the learned Counsel, specific performance of a contract of sale is a remedy to acquire and perfect the title in favour of the transferee. Even if such remedy is barred, protection to possession does subsist even thereafter. He sought support from the decisions in Nakul Chandra Polley v. Kalipada Ghosal and Anr. . Bholai Phukan v. Lakhi Kanta Ahom and Ors. AIR 1949 Assam 8, Jahangir Begum v. Gulam Ali Ahmed AIR 1955 Hyd. 101, Ekadashi v. Ganga and Ors. and Baruna Giri and Ors. v. Rajakishore Giri and Ors. .

Broadly it is laid down that Section 53-A of the Act:

(a) does not create a right in the transferee;

(b) does operate bar against the transferor in asserting title;

(c) confers right on transferee to protect possession, but precludes transferor to recover possession;

(d) does not import limitation and operates even if specific performance is barred and limitation does not create bar to defence.

8. The dictum as laid down leads to a situation:

(a) limitation does not bring infirmity to the right of a transferee without title to hold possession, but it cripples the right of vendor with title to recover possession;

(b) possession is one of the incidence of transfer of interest of a transferor. As a consequence, transferee holds possession irrespective of transfer of interest as a whole of the transferor as envisaged by Section 8 of the Act;

(c) as statutory limitation cannot be carved out in Section 53-A of the Act, protection available to transferee thereon runs indefinitely;

(d) shield becomes more effective than sword and equity then prevails over law.

The consequences thus follow lead to a seriously anomalous situation. This is not and cannot be a design of equity recognised by Section 53-A of the Act, which has been incorporated by Amending Act No. XX of 1929.

9. Earlier to 1929, an ignorant transferee of immovable property, who is placed in possession pursuant to the contract, could be evicted by the transferor by treating him as a trespasser. He had no statutory protection. He had to suffer for mischief and fraud practised by the holder of title. His right to hold possession as a prospective purchaser had to succumb to the claim of title holder. To relieve the transferee from such situation, the equitable principle enshrined in the Doctrine of Part Performance prevalent in England was pressed into service even in India.

10. On 25th April 1927, the Government of India appointed a Special Committee to examine the provisions of the Bill to amend the Act of 1882. By 16th August 1927, the Special Committee submitted its report. Clause 15 of the Report deals with Section 53-A. Portion relevant for the purpose is extracted:

We have proposed a more rigorous use of registration in the transfer of immovable properties than is now enjoined by law, and the changes we have proposed are, we think, calculated to minimise, if not to prevent perjuries and fraud.

The general ground upon which the doctrine is based is prevention of fraud. It is said that where one party has executed his part of the agreement in the confidence that the other party would do the same, it is obvious that, if the latter should refuse, it would be a fraud upon the former to suffer this refusal to work to his prejudice. Again, “a more general ground and that which ought to be the governing rule in cases of this sort is that nothing is to be considered as a part-performance which does not put the party into a situation which is a fraud upon him unless the agreement is fully performed.

(emphasis supplied)

Ignorant transferees in this country who have partly performed the contract require a greater measure of protection than even a transferee in England. When the transferee has in the faith that the transfer would be completed according to law taken possession, it would be inequitable to allow the transferor to treat the transferee as a trespasser. We, therefore, think that statutory recognition should be given to the doctrine of part-performance. At the same time, care should be taken that the law of registration is not evaded and that the introduction of the doctrine does not lead to “perjuries and frauds” which it is the object of the doctrine to prevent.

(emphasis supplied)

We think that it should be made clear that by reason of the part-performance, although the terms of the contract are made binding on the parties thereto, the transferee will not get a good title unless the transfer is effected according to law, that is, executed and registered. In this view, registration would still be necessary in order that the transferee may acquire a perfect and marketable title. But, although on account of non-registration, no title has passed, yet by reason of part-performance equities have arisen which Courts of law ought to recognise and enforce.

(emphasis supplied)

11. Intendment as revealed, to incorporate Section 53-A is thus:

(a) Equity needs to be enforced in favour of a person without marketable title;

(b) Registration is still inevitable. To make enforcement of registration more vigorous and registration is not allowed to be evaded;

(c) To minimize probabilities of perjuries and frauds;

(d) Safeguard against a fraud to be made available only when the agreement is fully performed.

Let us examine as to whether the intendment as made explicit would be achieved if the equitable protection is made available, even if the specific performance of a contract of sale, fails.

12. Having defined the intendment, the Committee proceeded to deal with the contrary view as then prevailing:

There is some conflict of decisions in the Indian Courts with regard to the period within which equitable relief can be given to parties to a transaction when there has been no registered instrument. One view is that such relief can he given only within the period during which a suit for specific performance would lie, the other view being that such relief can be given even after the period has expired. It seems to us that the first view, to which we propose to give effect by adding Section 30-A to the Specific Relief Act, 1877, does not go far enough, in all cases, to afford the relief which the equities arising out of part-performance require. Because, even after the period of limitation, when part-performance has taken place, the parties stand in the same relation to each other as they did within the period of limitation and the equities which arose within that period remain the same. In fact, the longer the possession in part-performance, the higher will be the equities. We, therefore, think that In order to be available at all times during which the transferee is in possession in part-performance of the contract and subject to the other conditions which we have proposed.

(emphasis supplied)

13. It is explicit that even earlier to 1929, the view was prevailing that the equity under the Doctrine of Part-Performance was extendable only till the specific performance lies. The Committee took cognizance of it and thought to give effect to it. This, the Committee suggested by proposing incorporation of Section 30-A of the Specific Relief Act.

Instead by Act No. XXI of 1929, the Legislature has incorporated Section 27-A in the Specific Relief Act, which reads as thus:

27. Specific performance in case of part performance of contract to lease.- Subject to the provisions of this Chapter, where a contract to lease immovable property is made in writing signed by the parties thereto or on their behalf, either party may, notwithstanding that the contract though required to be registered, has not been registered, sue the other for specific performance of the contract if-

(a) where specific performance is claimed by the lessor, he has delivered possession of the property to the lessee in part performance of the contract; and

(b) where specific performance is claimed by the lessee, he has, in part performance of the contract, taken possession of the property, or, being already in possession, continues in possession in part performance of the contract, and has done some act in furtherance of the contract:

Provided that nothing in this section shall affect the rights of the transferee for consideration who has no notice of the contract or of the part performance thereof.

This section applies to contracts to lease executed after the first day of April 1930.

This incorporation deals only with contract of a lease, which otherwise needs a compulsory registration. It prevents frustration of specific performance for want of registration. Equity as incorporated by this section is active which is in contradistinction to Section 53-A of the Act. The lessee in possession can protect his possession in terms of Section 53-A of the Act and can also seek specific performance on the strength of these provisions, even if the contract, though required, is not registered. However, this has no application to the contract of sale of immovable property.

14. The contract of lease merely transfers some interest of transferor. However title remains with the transferor, whereas contract of sale ultimately transfers all the interests including title in favour of transferee. The Committee though thought, has not given effect to the view in relation to the specific performance of such contract. The Committee observed that the view of confining relief in equity to a particular period does not go far enough. The Committee tried to argue that the relationship of the parties remains the same even after the specific performance is barred by limitation. In its thinking, longer the possession, more is the equity. The Committee amongst others was examining the prospect of giving statutory recognition to the doctrine of part performance. The Committee has not rejected the view, but completely traversed outside the term of reference while dealing with the view. Equitable protection in a contract of sale of immovable property has a predominant feature, which the Committee has not logically dealt with.

The Committee tried to argue against the view and adopted the view which is beyond the ambit of doctrine of part-performance. The relationship, even after limitation, might remain the same. To keep the relations of parties as they were for all the time to come, cannot be and has never been the intendment of doctrine of part-performance. Equity in its design, does not intend to drive at a stalemate. Equity, no doubt, has an intention to prevent injustice, but to keep the parties in same position and with some relationship indefinitely would be defeating of justice. Equity cannot be absolute in the terms observed by the Committee. It tends to defeat the provisions of the Law of Limitation and Transfer of Property.

15. Stretching the equity according to the longevity of possession itself shatters it and also defeats all the intendments as carved out for incorporation of Doctrine of Part-Performance in Section 53-A of the Act. The doctrine has been pressed into service to prevent the transferor from practising any fraud to evict the transferee in possession only till the time the contract can reach to its end, and not thereafter. Giving indefinite protection in equity to the possession, in turn, would activate the transferee to play mischief and fraud against the title holder. Such protection completely evades specific performance as well as registration of a Deed, which have specifically been envisaged as the indispensable intendment.

Enquiry into the question of willingness to perform the contract by the transferee would invite perjuries, fictitious assertions and vexatious litigation. It would place the transferee in a dominant position to enjoy the property without title and would exploit and deprive the transferor with title. Extent of such equity would flow completely in disproportion and also in distortion.

16. The Committee then records:

Inasmuch as the statutory recognition of part- performance is a matter of considerable importance, we think it desirable to explain in further detail the reasons for the various recommendations we are making-

In providing that the transferor shall be debarred from enforcing against a transferee any rights except such as arise out of the agreement, we desire to make it clear that the rights arising out of the contract as between the transferor and the transferee should be enforceable as if the transfer has been completed according to law. This provision will prevent a transferor from ejecting a transferee who has in part-performance of the contract taken possession, and at the same time enable the transferor to sue the transferee upon his covenant, say, to pay rent. The effect of this provision will be that the mutual covenants between the transferor and the transferee will be operative, though by reason of non-registration, no title has passed. This will necessitate the completion of the transfer according to law by execution and registration in order that the transferee may get a marketable title. Thus, the law of registration will not be evaded.

(emphasis supplied)

This is reiteration of intendment referred to earlier. The completion of transfer and registration cannot be achieved if equity is allowed to flow beyond the period legally admissible for a specific performance. If longevity of possession strengthens the equity, the marketable title will never pass to the transferee. His enjoyment of property without title and at the peril of right of title holder cannot be conceived in a principle of equity. Equity has no strength to operate in negation of statutory obligations of specific performance and ultimate execution and registration of Deed of Sale.

The Legislature has added anon-obstante clause in Section 53-A of the Act so as to protect possession even in absence of registration of agreement or instrument. If recommendation of the Committee had a sway on longevity of possession, the Legislature could add another non-obstante clause as nevertheless the specific performance fails, protection to possession continues. Equitable protection has no strength to go beyond the tenure of the contract,

17. The background which led to incorporation of Section 53-A does not prevail with same magnitude. Ignorance sensed by the Committee in 1927 is not in vogue after about 65 years. People in India, during recent past, might not have earned formal qualification, but they have been knowledgeable. Equity codified about 60 years before, needs to be regulated to advance the cause of justice and law, promote congenial/commercial relations and to minimise possibility of either party to play fraud. This can only be achieved if the Court refuses to take cognizance of equitable protection to a transferee, once the contract has become legally unenforceable.

Definite judicial view on this line was prevailing, as discussed, even prior to 1927. The Committee expressed to give effect to that view, but avoided. A collateral attempt, as discussed, was made by incorporating Section 27-A in the Specific Relief Act of 1877. It is pertinent to note that the Act of 1993, however, eliminated Section 27-A. As such, the view that equitable protection to possession is available till the specific performance lay, has a sway and must prevail.

18. Placing transferee in possession by way of part-performance is a parole agreement under the contract. Equity cannot usurp the authority to maintain such transitory situation to have the edge over the express provisions of law. A contract of sale of immovable property essentially culminates, unless frustrated, rescinded or otherwise becomes unenforceable in registration of a Deed of Sale. “Transferee is willing to perform his part of the contract” as envisaged by Section 53-A, necessarily includes taking by him all steps as permissible by law to carry the contract to its ultimate end. This could be with or without intervention of the Court. Such steps take within their sweep legal action to enforce the contract specifically.

Transferee placed in possession by way of part performance, who claims equity to protect his possession, has a responsibility of higher degree in the performance of contract. A transferor by performing his part under the contract has placed the transferee in possession even before the sale. The transferor has thus parted with some of the interest in the property in favour of the transferee. Such transferee has to take steps meticulously and effectively to achieve the ultimate result of the contract.

Sections 46 and 47 of the Contract Act deal with the time and place of performance and how it is to be worked out. Section 48 reads as thus:

When a promise is to be performed on a certain day, and the promisor has not undertaken to perform it without application by the promisee it is the duty of the promisee to apply for performance at a proper place and within the usual hours of business.

Section 50 gives upper hand to the transferee. While transferee is in action to carry the contract to its ultimate end protection under Section 53-A of the Act operates.

Mere willingness without positive action and meekly associating with failure or refusal of a transferor to execute a Sale Deed is equally a fraud on the part of the transferee. The contract cannot be said to be fully performed as envisaged by the Committee by mere offering of a balance consideration or any other part. Unless steps are taken for execution of Deed of Sale as legally admissible, there could not be a full performance of the contract. Registration in the case of Deed of Sale can be enforced only when specific performance is unavoidable. A transferee in possession is always in an advantageous position. To maintain his possession, when he does not take legal steps for specific performance would be encouraging him to play fraud and perjury. Protection envisaged under Section 53-A of the Act has to extinguish when the contract, which is a source of the right to hold possession, becomes legally unenforceable.

Even if statutory limitation cannot be imported in Section 53-A, protection in equity cannot have an indefinite durability. It cannot run even after the contract becomes legally unenforceable. Besides this, the claim for specific performance, even if within limitation in terms of Section 20 of the Specific Relief Act, the decree therefor is discretionary. The Court can refuse the decree. To make the protection of Section 53-A of the Act available to such transferee would be more than inequitable and unjust. Section 24 of the said Act precludes the transferee to claim compensation for a breach on the part of the transferor once the suit for specific performance fails. The intention of the Legislature is clear. The transferee cannot maintain his possession once having failed to avail specific performance during the period admissible by law. Whatever might be the extent of right of a transferee, his possession cannot receive protection in a legal action at the behest of the transferor, to recover possession. Equity cannot have any design to lead a situation of uncertainty. To grant protection beyond the specific performance of contract would evade transfer of property and registration. It would also Invite chaos, which is now vagrant. It would further completely defeat the basic intendments, which led to incorporate Section 53-A of the Act.

In the case of Adinath, the law is, therefore, correctly laid down.

H.W. Dhabe, J. (On behalf of M. K. Mukherjee, C. J. and H. W. Dhabe, J.)

1. Having noticed during the hearing of the instant Second Appeal No. 231 of 1992, the conflict of views in the Division Bench Judgments of this Court in Nanasaheb v. Appa (for short

Nanasaheb’s case) and Adinath v. Policeman Housing Society 1991 Mh.L.J. 256 (for short, Adinath’s case), to which our learned brother Desai, J. was a party, the learned Single Judge of this Court has referred the following question for decision by the Full Bench:

Whether once the remedy of acquiring title by a suit for specific performance is lost to the vendee by lapse of time, the right to protect his possession upon satisfying the conditions contained in Section 53A of the Transfer of Property Act. comes to an end and whether to protect his possession it is incumbent upon the vendee to take recourse to a suit for specific performance within the period of limitation prescribed for such a suit.

2. We have gone through the draft of the Judgment prepared by our learned brother Desai, J. in answering the above question of law referred to us in the instant case. We, however, regret our inability to agree with his view upon the same. Hence, this separate Judgment.

3. It is not necessary to state the facts giving rise to the present reference in detail. Suffice it to state that the

respondents/plaintiffs filed a Suit for possession and mesne profits against the appellant in respect of the field Survey No. 29/2 admeasuring 10 acres of village Kalkhed, Taluka Khamgaon, District Buldana. The appellant/defendant inter alia raised a defence in the said Suit that he was in possession of the suit field pursuant to part performance of an agreement of sale of the said field dated 20-5-1974 (Ex. 38) executed by the husband of the respondent No. I by name Khushalchand Lakkad and therefore, his possession of the suit field was protected by Section 53A of the Transfer of Property Act. 1882 (for short ‘the Act’) as he was ready and willing to perform his part of the contract. The learned trial Court accepted the above plea or the appellant/defendant and dismissed the suit for possession and mesne profits filed by the respondents/plaintiffs,

4. The respondents /plaintiffs preferred an appeal against the above Judgment of the learned trial Court dismissing their suit for possession and mesne profits. In appeal preferred by them one of the contentions raised by them was that since the appellant/defendant did not file the suit for specific performance of the said contract of sale (Ex. 38), i.e. for getting the registered document of title in his favour within the period of limitation prescribed therefor, his right of possession in respect of the suit field was lost and it was not, therefore, open to him to defend his possession by claiming a right in that regard under Section 53A of the Act. The learned Lower Appellate Court accepted the above plea raised by the respondents/ plaintiffs in appeal in view of the Judgment of this Court in Adinath’s case cited supra. It, therefore, decreed the suit of the respondents/plaintiffs for ‘possession of the suit-field. It also allowed the claim for mesne profits partly but directed that in the said claim, adjustment should be given to the appellant/defendant in regard to the earnest money and the loan amount he had paid under the contract (Ex. 38).

5. Feeling aggrieved by the Judgment and decree of the learned Lower Appellate Court, the appellant/defendant has preferred the instant Second Appeal in this Court. In order to support his plea under Section 53A of the Act so as to protect his possession of the suit field, the appellant relied upon the Judgment of the Division Bench of this Court in Nanasaheb’s case cited supra before the learned Single Judge of this Court, before whom on Notice before admission, the Second Appeal was listed for hearing. Since the learned Single Judge found that the Judgment in Nanasaheb’s case undoubtedly supported the view that the plea in defence under Section 53A of the Act could be raised even though the Suit for specific performance of contract of sale at the instance of the transferee is barred by time to get the document of title registered in his favour, he was of the view that there was conflict of view on this question between Nanasheb’s case cited before him and Adinath’s case relied upon by the learned Lower Appellate Court. He, therefore framed the above quoted question of law for being answered by the Full Bench.

6. There is no manner of doubt that there is a clear conflict of view in Nanasaheb’s case and Adinath’s case as noticed by the learned Single Judge in the instant case. The Division Bench in Nanasaheb’s case has clearly held in para 8 of its Judgment that although there may be divergence of views prior to 1929 i.e. prior to enactment of Section 53A of the Act, upon the legal position about this question, which is referred to us, even in our court itself as noticed by it, there is no doubt about the same after enactment of Section 53A of the Act according to which it is its view that the defendant is entitled to protect his possession of the suit property obtained pursuant to the part performance or the agreement of sale even after his suit for specific performance of contract of sale is barred by time. On the other hand, the Division Bench in Adinath’s case has taken the view that once the remedy of acquiring title through specific performance of the agreement of sale is lost to the defendant by lapse of time, equitable relief of protection of his possession of the suit property under the agreement of sale incorporated under Section 53A of the Act comes to an end. Its reasoning is that the right assereted by the defendant under the agreement of sale subsists till the period of limitation prescribed by law for its enforcement and therefore, when it becomes unenforceable by lapse of time, the agreement in question meets with its legal death (the expression in Italics is used by the Division Bench). It was thus of the view that the protection under Section 53A of the Act which flows from the agreement of sale is conterminous and does not survive beyond its life time which is the source of its protection.

7. Having thus noticed the divergence of view between the two Division Benches of this Court in the above two cases, we proceed to consider the rival submissions of the parties upon the question of law referred to us. The learned Counsel for the appellant has urged before us that although, prior to 1929, i.e. prior to the introduction of Section 53A in the Act, there was some difference of view amongst the High Courts on the question whether the defendant/transferee was entitled to protect his possession on the basis of the equitable doctrine of part performance of contract, which was made applicable in England, particularly after his suit for specific performance of contract was barred by time, after enactment of Section 53A, the said controversy stands resolved in favour of the defendant/transferee. Apart from Nanasheb’s case, he has relied upon the Judgment of the Assam High Court in the case of Bholai Phukan v. Lakhi Kanta Ahom and Ors. AIR 1949 Assam 8, in support of his submission that Section 53A of the Act does not import limitation. He has also relied upon the Judgments in the following cases for the proposition that for a plea in defence there is no bar of limitation. See Nakul Chandra Polley v. Kalipada Ghosal and Anr. Jahangir Begum v. Gulam Ali Ahmed AIR 1955 Hyd. 101, and (3) Baruna Giri and Ors. v. Rajkishore Giri and Ors. . As regards the contrary view, it is expressed in the case of Sheikh Nagaji Sheikh Chattu v. Ashroba Pirtaji Bhoi and Ors. 1988 Mh. L.J. 414 by the learned Single Judge of this Court, apart from the Division Bench Judgment in Adinath’s case.

8. The learned Counsel for the appellant has then urged before us that except as provided in Section 27 of the Limitation Act, 1963, corresponding to Section 28 of the old Limitation Act, 1908, the rights and obligations under a contract do not come to an end by the expiry of the period of limitation prescribed by any law to a remedy to enforce them. Thus controverting the reasoning adopted by the Division Bench in Adinath’s case. In support he has relied upon the following Judgments of the Supreme Courts in Bombay Dyeing and Manufacturing Co. Ltd. v. The State of Bombay and Ors. , Khadi Gram Udyog Trust v. Shri Ram Chandraji Virajman Mandir and Punjab

National Bank and Ors. v. Surendra Prasad Sinha .

9. Section 53A of the Transfer of Property Act whose interpretation is in issue is reproduced below for ready reference:

Section 53A.

Where any person contracts 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,

and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract,

and the transferee has performed or is willing to perform his part of the contract,

then, notwithstanding that the contract, though required to be registered, has not been registered, or where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract :

provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.

10. Obviously Section 53A of the Act partially incorporates the English Doctrine of part performance of contract. It is enacted to protect the possession of a transferee by debarring the transferor from enforcing against him and the persons claiming under him any right in respect of such property other than a right expressly provided by the terms of the contract, provided the transferee fulfils the essential requirements of the said section which are as follows :-

1. There is a contract of transfer of immovable property.

2. The contract is for consideration.

3. It is in writing, signed by or on behalf of the transferor.

4. Its terms can be ascertained from writing.

5. The transferee has taken the possession or is already In possession of the property in part performance of the contract, and

6. He has done some act in furtherance of the contract.

See: Shri Shrauan v. Garbad AIR 1943 Bom. 406, Nathulal v. Fulchand .

If the above requirements are satisfied, Section 53A allows such protection to the transferee, notwithstanding the fact that the said contract is not registered although required to be registered or that when there is an instrument of transfer the transfer has not been completed in the manner prescribed therefor by the law for the time being in force.

11. It is an undisputed proposition that Section 53A of the Act provides for a defence to a transferee to protect his possession, if he satisfies the requirements of the said section. It confers no active title or right upon a transferee in possession under an unregistered contract or instrument of transfer because such possession is protected not by creating any right of possession upon him as such but by creating disabilities in the transferor i.e. by debarring him from enforcing any right against such a transferee in possession except the right expressly conferred upon him under the contract. This is also clear from the fact that under the proviso to Section 53A, even though the requirements of the said section are complied with by the transferee, he cannot affect the rights of a second transferee for consideration, who has no notice of the contract or the part performance thereof. Since the doctrine of part performance incorporated in Section 53A of the Act, thus provides for a defence to a transferee in possession it is described as a shield and not a sword. For the above proposition see :

Dantmara Tea Company v. Probodh Kumar Das 41 Calcutta Weekly Notes 54 (Cal. H.C.) affirmed by Privy Council in appeal inProbodh Kumar Das v. Dantmara Tea Company ;

Reddy v. Additional Custodian, Evacuee Property ;

Ranchhoddas v. Devaji ;

Technicians Studio Private Ltd. v. Ma Ghosh .

12. It will be next necessary to see whether to a plea available to a transferee under Section 53A of the Act, the law of limitation is applicable. As herein before shown, a plea under Section 53A of the Act is available to the defendant/transferee by way of defence. It is well settled that the law of limitation applies to only institution of suits and not to a plea in defence. The above proposition is well settled by the Judgment of the Privy Council in the case of Sri Kishan Lal v. MSL Kashmiro AIR 1916 PC 172, in which it is held that the limitation would not apply to a defence. Following the above Judgment of the Privy Council, the Judgment of Jardine, J. in Hargovinddas v. Bajibhai (1889) 14 Bom. 222 and the Full Bench of the Madras High Court in Lakshmi Dass v. Roop Laul (1906) 30 Mad. 169 p. 178, this Court held in Gopal Bhaurao v. Jagannath AIR 1935 Bom. 326, that where a title of a person in possession is challenged, he may set forth any defence in favour of his right to the property and. the Statute will not come so as to prevent him from setting forth any relief i.e. (defence). It is pertinent to see that the Full Bench of the Madras High Court has categorically held in the case cited supra that because a party’s remedy as plaintiff to have an instrument avoided is time barred, it would not mean that his right to say, by way of equitable defence, if sued, that the instrument ought not to be enforced, is equally time barred. See also Orr. v. Sundra (1894)17 Mad. 255.

12A. It is thus clear that all that the Limitation Act does is to take away the remedy of a plaintiff to enforce his rights by an action; it is however, open to a defendant to put forward any defence though such defence as a claim made by him may be barred on the date it is put forward. The following observations of the then East Punjab High Court in para 7 of its judgment in the case of Ram Sarup v. Ram Chandar AIR 1949 E.P. 29, are also worthy of notice in this regard:

The fact that the defendant’s suit for cancellation of the sale was held to be barred by time cannot debar him from raising a plea that the sale was voidable at his instance for the simple reason that being in possession it was not necessary for him to bring the suit.

It is material to see that the above reasoning in Punjab case is pragmatic and sound and is equally applicable in cases where the defence is raised under Section 53A of the Act because when in possession, the defendant/ transferee may not think it necessary to bring the suit for specific performance of contract to acquire title and may remain content in maintaining his possession of the suit property in accordance with the provisions of Section53A of the Act which would protect his possession, if he would comply with its requirements.

13. However, since the view expressed in Adinath’s case is that the protection to a transferee under Section 53A of the Act which flows from the agreement of sale is conterminous and does not survive beyond its life time which is the source of its protection or in other words since the view expressed is that once the remedy of acquiring title by filing a suit for specific performance of contract is lost to the defendant/transferee by lapse of time, equitable relief of protection of his possession of the suit property incorporated under Section 53A of the Act comes to an end and after the limitation for a suit for specific performance of contract has expired, it becomes necessary to consider the question whether the rights and obligations created under the contract pursuant to which the possession is taken by the transferee really came to an end after the period of limitation for their enforcement has expired, and secondly, whether the legislative intent in enacting Section 53A is to make available its protection to the defendant/transferee in possession only till the period of limitation for filing a suit for specific performance of contract to get a registered document of title executed in his favour has not expired.

14. We shall first consider the question as to the legislative intent behind enactment of Section 53A which would also show as to what the mischief was which was intended to be prevented by its enactment. It would therefore, be useful to refer to the legislative history of Section 53A of the Act.

15. As already pointed out, Section 53A is introduced in the Act by the Transfer of Property (Amendment) Act, 1929 (for short, the Amending Act, 1929). However, prior to the introduction of Section 53A in the Act, by the above Amending Act, 1929 i.e. prior to 1929, the Courts in India also made applicable the doctrine of part performance of contract as in England, but there was difference of view in its application in India for which reason it appears that by amendment, the said right was codified by partial importation of the English Doctrine of part performance in Section 53A introduced in the Act. The protection granted under Section 53A of the Act is thus a statutory protection and does not merely depend upon equitable considerations.

15A. It will be at this stage useful to refer to the English Law upon the doctrine of part performance of contract. In England, Section 4, since re-enacted in Section 40 of the Law of Property Act, 1925, of the Statute of Frauds (1677) (29 Car. He. 3) provided that no action or suit could be brought on agreement relating to land which was not in writing signed by the parties to be charged with it. The said Statue was intended to guard against fraud. However, the strict application of the said provision in Section 4 of the Statute of frauds led to great hardship in cases where a parole agreement relating to land had been partly performed by one party and yet he could not sue the other party for its specific performance in view of the aforesaid Section 4 of the Statute of frauds. Thus, the latter party was enabled to practise a fraud upon the former. It is in such cases that the Courts of Equity stepped in on grounds of equity and enforced the specific performance of even a parole agreement holding that the part performance took such cases out of the statute of frauds. The general ground upon which the doctrine of part performance of parole agreement is based is thus prevention of fraud for “the Courts of equity will not permit the Statute to be made an instrument of fraud”. See Judgment of Lord Sclborne in Maddison v. Alderson (1883) 8 App Cs. 467 at p. 475 (H.L.) Story, in his book on equity, has observed in Section 1045 that where one party has executed his part of the Agreement in confidence that the other party will do the same, it is obvious that, if the latter were to refuse, it would be a fraud upon the former to suffer this refusal to work to his prejudice.

16. It however appears from

Chaproniere v. Lambert (1917)2 Ch. 356 at p. 361 :(1916) All. E.R. Rep. 1089, and Lester v. Foxcroft (1701) Colles 108 (H.L.) : Land T. Leading Cases Vol. II, 9th Edn. p. 410. that the correct principle according to these decisions on which the doctrine of part performance is based is that if a man has made a bargain with another and allowed that other to act upon it, he may have created an equity against himself which he cannot resist by setting up the want of a formality in the evidence of the contract out of which the equity in part arose. It is thus clear that although the doctrine of part performance of contract is not meant to nullify the requirements of a Statute as to the validity of a contract, which would make it enforceable at law, it takes notice of the fact that the transaction has progressed beyond the stage of a contract and that therefore certain equities have sprung up which cannot be disregarded. It thus takes the parole contracts out of the statute of frauds.

16A. Turning to the position in India prior to 1929 about application of the doctrine of part performance there was divergence of view on the said question amongst the High Courts whether the said doctrine is applicable in India or not. This is clear from the two Judgments of this Court referred to in Nona Saheb’s case cited supra viz. (1) Venkatesh Damodar v. Mallappa Bhimappa AIR1922 Bom. 9 and (2) Nemtulla v. Safiabu AIR 1935 Bom. 208, from which it appears that in this Court itself there was difference of view upon the question of application to the equitable doctrine of part performance of contract prior to the Amending Act. 1929.

17. It may be seen that Lord Shaw, J. in the Judgment of the Privy Council in the case of Mahomad Musa v. Aghore Kumar Ganguli, 42 Cal. 801, after quoting the Judgment of the House of Lords in Maddtson v. Alderson cited supra with approval observed as follows:

For equity will support a transaction clothed imperfectly in those legal forms to which finality attaches after the bargain has been acted upon. There was nothing in the laws of India inconsistent with these principles; on the contrary those laws followed the same rule.

Following the above Judgment of the Privy Council, it was held by the High Courts in India that the doctrine of part performance could be applied when the Instruments of transfer requiring registration were not registered or when agreements to transfer property were not followed up by formal deeds of transfer. See Vizapatam Sugar Development Company v. Muthuramareddi, 46 Mad. 919 (F.B.); Sandu Walji v. Bhikchand, 47 Bom. 621, Mating Myat v. Ms Dun 2 Rang. 285 (F.B.)

18. However, the question about the application of the Doctrine of part performance arose again before the Privy Council in the case of Ariff v. Judunath (1931) 58 Indian Appeals ’91 and in the case of Mian Pirbux v. Sardar Mohd Tahar,(1934) 61 Indian Appeals 388, in which it was held by it that the equity of part performance was not applicable in India and would not prevail in India so as to set at naught the express statutory provisions regarding Registration contained both in the Transfer of Property Act and the Registration Act. In Ariff s case cited supra, the Privy Council distinguished its Judgment in Musa’s case cited supra on the ground that on the relevant date in the said case the Transfer of Property Act was not applicable and therefore, no written conveyance was required.

19. It is, then pertinent to see that before enacting the Amending Act, 1929 which introduced Section 53A in the Act, the Government of India had constituted a Special Committee in accordance with the Legislative Department Resolution No. F. 43 27-G dated 25th April, 1927. The Statement of Objects and Reasons of the Bill pertaining to the Amending Act, 1929 (L.A. Bill No. 6 of 1929) shows that it relies upon the report of the said Special Committee which is contained in the Govt. of India’s Gazette, Part V dated 9th October, 1929 page 40, because it is stated in its Objects and Reasons that the said Bill is sufficiently explained in the report of the said Committee (see page 45 of the above Gazette). Appendix B to the report of the Special Committee shows that it contains the notes on clauses of the above Amendment Bill itself. Clause 15 of the Bill (see page 54 of the above Gazette) deals with the proposed provision of Section 53A to be introduced in the Act.

20. On perusal of the recommendations of the Special Committee under Clause 15, it is clear that the said Committee has exhaustively considered the doctrine of part performance as it existed in England, its good points, its pit-falls, particularly such as the enforcement of a parole Agreement in regard to which there was equally a possibility of a transferee practising a fraud upon the transferor by leading perjured evidence to prove the essential requirement of the doctrine of part performance. It has also examined the law applicable in India and the divergence of view in the High Courts. The question before the Special Committee thus was whether the equitable doctrine should be abrogated in India in favour of the rigid application of the law of Registration and other procedural requirements for transferring title to the transferee or whether the equitable doctrine of part performance, suitably framed should be made applicable in India also.

21. The Special Committee observed at pages 54 and 55 of the report that it was of the view that the time had not arrived when the said equitable doctrine should be abrogated in favour of a rigid application of the law of registration. According to it, the ignorant transferees in India, who had partly performed the contract required a greater measure of protection than even a transferee in England. It was, therefore of the view that when a transferee had in the faith that the transfer would be completed according to law taken possession, it would be inequitable to allow the transferor to treat him as a trespasser. It was thus of the view that the statutory recognition should be given to the doctrine of part performance, but the care should however be taken that the law of Registration was not evaded and that the introduction of the doctrine would not lead to perjuries and frauds, which it was its object to prevent.

22. With the above end in view, the Committee made the following recommendations:

i) that the agreement should be in writing signed by the party or his agent whom it is sought to bind;

ii) that the transferee should in part performance of the contract take possession of the property or, if already in possession, should continue in possession and in the latter case should do some act in furtherance of the contract;

iii) that the transferee, seeking to avail himself of the doctrine, should perform or he willing to perform his part of the bargain as contained in the writing;

iv) that when the contract has been partly performed all rights and liabilities under the contract should arise and be enforceable as between the parties to the contract notwithstanding that the transaction has not been completed according to law; and

v) that the application or the doctrine should not affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.

It is thus clear from the above recommendations that while recognising the doctrine of part performance the Special Committee has insisted upon the agreement to be in writing so as to avoid the pit-falls of perjured evidence and the fraud being practised by the transferee upon the transferor.

23. What is most important for our purpose is that the Special Committee had also considered the question whether the protection proposed to be given by it by introduction of Section 53A in the Act is available even after the period of limitation of the suit for specific performance of contract had expired because there were some conflicting decisions in the Indian Courts with regard to the period during which the equitable relief could be given to the parties to a transaction when there was no registered instrument, (see pages 55-56 of the Gazette). One view was that such relief could be given only within the period during which the suit for specific performance would lie the other view being that such relief could be given even after the expiry of the period to limitation for such a suit had expired. The Special Committee was of the view that since even after the period of limitation had expired when part performance had taken place the parties stood in the same relation to each other as they did within the period of limitation the equities which arose within that period remained the same. In fact according to it the longer the possession in part performance was, the higher would be the equities. It was therefore of the view that in order that the relief should be effective it ought to be available at all times during which the transferee was in possession in part performance of the contract i.e. even after the expiry of the period of limitation for the suit for specific performance of contract by the transferee to get the document of title registered in his favour of course subject to the other conditions which it had proposed.

24. It may also be seen that the Special Committee proposed to give effect to its view that the equitable relief should be given only during the period during which a suit for specific performance would lie by adding new Section 30A in the Specific Relief Act 1877 but then it was to the view that such amendment would not go far enough in all cases to afford the relief which the equities arising out of part performance would require because as pointed out hereinabove according to it the parties would stand in the same relation even after the expiry to the period of limitation so far as the equities were concerned and also because according to it the longer the possession the higher would be the equities. For this reason also, it was of the view that the protection granted to the defendant/transferee by introduction of Section 53A should not be restricted to the period during which his suit for specific performance would lie.

25. It is pertinent to see that although as per the Original Bill i.e. Bill No. 7 of 1929 for enactment of Transfer of Property (Amendment) Supplementary Act, 1929, it was proposed to add Section 30-A to the Specific Relief Act, 1877, the Select Committee to which the said Bill was referred found that its place was after Section 27 and therefore as per the amendment proposed by it, it was added as Section 27A in the Specific Relief Act, 1877. Section 27A, however protected only the rights of the lessor and the lessee by providing them with a remedy for specific performance of contract in case of part performance of contract of lease, even though it was not registered. The essential difference between Section 27A introduced into Specific Relief Act, 1877 and Section 27A to the Act is that the lessee could base his claim under Section 27A and enforce the same by filing a suit whereas under Section 53A of the Act, it was not open to the transferee to enforce his right by filing a suit. It is pertinent to see that Section 27A was deleted when the new Specific Relief Act, 1963 was enacted.

26. It is further pertinent to see that by Section 10 of the aforesaid Supplementary Amending Act, 1929, the proviso was introduced in Section 49 of the Indian Registration Act, 1908 in which it was provided that unregistered documents affecting immovable property and required by the said Act or the Transfer of Property Act to be registered can be received as evidence of a Contract in a Suit for specific performance under Chapter 11 of the Specific Relief Act, 1877 or as evidence of part performance or a contract for the purposes of Section 53A of the Act or as evidence of any collateral transaction not required to be effected by registered Instrument.

27. The above legislative history of the Amending Act, 1929 introducing Section 53A in the Act thus shows the selling in which the said section was introduced in the Act. The Statement of Objects and Reasons for the Amending Act, 1929 shows that the report of the Special Committee hereinbefore referred to has sufficiently explained the objects and reasons for its enactment. It is well settled that in construing a statute, the Court is entitled to take into account such external or historical facts as may be necessary to understand the subject matter of the statute or to have regard to the surrounding circumstances, which existed at the time of the passing of the Statute. See Lord Halsbury’s Judgment in Harron v. Rathmines Rathgar Improvement Commissioner (1892) A. C. 498 (H. L.) at page 502. See also Harrietta Nair Advard v. A.G. of Canada AIR 1930 Privy Council 120 at page 125.

Lord Alkinson has observed in Keats v. Lewi’s Merthyr Consolidated Collieries Ltd. (1911) A.C. 641 as follows :

In the Construction of Statutes it is, of course, at all times and under all circumstances permissible to have regard to the state of things existing at the time the Statute was passed and to the evils, which as appears from the provisions, it was designed to remedy.

The above canon of construction enunciated in the above case is quoted with approval by the Supreme Court in the case of D. N. Banerjee v. P. R. Mukhrjee para 12.

28. We may also refer to what is known as “mischief rule” as laid down in the well-known Heydon’s case (1584) 3 Co. Rep. 7 a p 7b : 76 E.R.

637. The mischief rule is also known as a rule of purposive construction. See Anderson v. Ryen (1985) 2 All E. R. 355 (H.L.). The above rule enables consideration of the following four matters in construing an enactment:

i) What was the law before the making of the Act.

ii) What was the mischief or defect for which the law did not provide,

iii) What is the remedy that the Act has provided, and

iv) What is the reason of the remedy.

29. It is now well-settled that the report of the Commissions, the Enquiry Committees and the objects and reasons preceding the introduction of the Bill can also be referred to for finding out the setting in which the Statute is enacted i.e. for understanding the background, the antecedent state of affairs, the surrounding circumstances in relation to the Statute and the evil which the Statute was sought to remedy. As regards the use of Statement of Objects and Reasons as an external aid to construction, the rule is settled by catena of the judgments of the Supreme Court in this regard. See for instance:

State of West Bengal v. Subodh Gopal Bose , Utkal

Contractors and Refinery Private Ltd. v. State of Orissa , Taong Shang v. Commander S. D. Baijal

pages 6O7 and 608.

Similarly, as regards the use of the Reports of Commissions, the Enquiry Committees as an external aid to construction, the rule is also settled by catena of Judgments of the Supreme Court in that regard. See for instance:

A. Thangal Kunju Masaliar v. Venkatachalam Potti

p. 256, CIT M. P. v. Sodra Devi , Express

Newspapers Put. Ltd. v. Union of India ,Madanlal

Fakirchand Dudhediya v. S. Changdeo Sugar Mills Ltd. , Union of India v. Harbhajan Singh Dhillon

, C.I.T., Gujarat v. Vadilal Lallubhai

, R.S. Nayak v. A. R. Antalay ,

Mithilesh Kumari v. Prem Bihari Khare .

30. It is clear from the above legislative history of the Amending Act, 1929 that after examining rival views upon the equitable doctrine of part performance of contract, as applicable in England, rival views about its application in India, Its good points and pit-falls and the fact that fraud could be practised and that perjured evidence could be led by both the transferor and the transferee, the Special Committee has tried to balance the equities in favour of the transferor and transferee in partial importation of the said doctrine in proposing introduction of Section 53A in the Act as hereinbefore shown. The said Section 53A of the Act grants statutory protection to the defendant/transferee to protect his possession of the suit property if he satisfies the requirements of the said section.

31. As regards the question which is referred to us for decision, it is clear from the Report of the Special Committee that it intended to grant statutory protection to the transferee in possession under an unregistered document, even after the expiry of the period of limitation for a suit for specific performance of contract to get a registered document or title in his favour upon the equitable consideration that the longer was the possession in part performance, higher were the equities in his favour. In this regard it is pertinent to see that for the limited purpose of defending his possession in accordance with Section 53A of the Act and not for basing any title in himself upon the same, the unregistered document affecting immovable property is made admissible in evidence. Apart from the above view expressed by the Special Committee, even on general principles relating to law of limitation, it is well settled as hereinbefore held by us in paras 11 and 12 or the Judgment that a period of limitation is not applicable to a plea in defence and therefore not to Section 53A of the Act which enables the transferee in possession to raise a plea in defence to protect his possession.

32. It is pertinent to see that when the general principle of law of limitation is that it is not applicable to a plea in defence, it is necessary that there must be an express provision in the Statute so as to exclude or limit the application of the said general principle of law to a plea in defence under Section 53A of the Act. When there is no such limitation placed under Section 53A of the Act or any other statutory provision, there is no reason why the statutory protection granted to a transferee in possession under Section 53A of the Act upon the equitable consideration that he has performed his part of the contract and is ready and willing to perform further remaining obligations upon him under the contract should be whittled down by allowing the transferor to dispossess him although he has not shown his willingness to execute a registered document of title and has allowed the period of limitation to expire. As observed by the then East Punjab High Court in its Judgment cited supra being in possession which was protected by Section 53A of the Act, a transferee could remain content with his possession if he so chose and it was not a must for him that he should bring a suit for obtaining a registered document of title in his favour.

33. Moreover, on perusal of the Judgments of the various High Courts on this question, it is clear that the preponderance of the view after enactment of Section 53A of the Act is that the statutory protection afforded to a defendant/transferee under the said section is not lost by expiry of limitation for a suit for specific performance of contract for getting the document of title registered in his favour. There is no reason to deviate from the said view on the principle of stare decisis also when the above view has prevailed in the High Court for a long time after introduction of Section 53A in the Act. The Doctrine of stare decisis was exhaustively considered by the Supreme Court in its Judgment in the case of Wamanrao v. Union of India (1981) 2 SCC 367, although for reasons given in the said Judgment it was not invoked in deciding the constitutional validity of article 31A of the Constitution. The said Doctrine is firmly established in English and American Jurisprudence and is invoked in India also. See Bengal Immunity Co. Ltd. v. State of Bihar ; Mamleshwar

Prasad v. Kanahaiyalal ; Rajnarayan Pande v. Sant

Prasad Tewari ; and the Judgment of this Court in

Mitind v. State 1987 Mh. L.J. 572 paras 16, 17. The Full form of the principle is stare decisis et non qaieta movre, and it means to stand by decisions and not to disturb what is settled. It has however well recognised exceptions as pointed out by the Supreme Court in Wamanrao’s case cited supra but the question of interpretation and application of Section 53A of the Act does not fall in any of the said exceptions.

34. Although, there does not appear to be a direct decision of the Supreme Court on the question referred to us for decision, the Supreme Court seems to have indirectly accepted such a view as rightly pointed out in the Judgment of the division Bench of this Court in Nana Saheb’s case by referring to the Judgment of the Supreme Court in the case of Maneklal v. H. J. Ginwalla and Sons . In the said

Judgment of the Supreme Court the facts were that an agreement of lease was sanctioned by the State Government on 20th July, 1917 pursuant to which the lessee/ defendant came in possession in part performance of the said contract of lease. It is however, in 1933 that the plaintiffs discovered that there was no registered document of lease in favour of the defendant and they therefore, instituted the suit for ejectment against the lessee in the said year 1933, on the ground that he was a trespasser, when the suit for specific performance of contract at the instance of the lessee was barred by time. The Supreme Court still allowed the appellant/lessee to raise the defence under Section 53A of the Act and allowed it notwithstanding that his possession was under an unregistered contract.

35. More recently, in the Judgment of the Supreme Court in the case of Smt. Thakann Mathew v. M. Azamathulla Khan and Ors. J.T. , it was easier for the Supreme Court to grant relief of possession to the transferor since it was expressly found by it that the suit for specific performance of contract by the transferee was barred by time. But it had not done so. The facts in the said case show that the transferor had filed a suit for cancellation of the agreement of sale and for possession of the suit property against the transferee on the ground that the sale was not completed by him within the prescribed period of two months. It also claimed the further relief that the advance paid by him was liable to be forfeited. The trial Court granted a degree of cancellation of the agreement of sale and, directed the transferee/defendant to hand over the possession of the suit property to the transferee/plaintiff. It however, directed the transferor/plaintiff to refund the Earnest Money paid by the transferee/defendant to him with interest. Both the parties feeling aggrieved by the decree of the trial Court, filed appeals in the High Court. The High Court, however, deciding the appeal preferred by the transferee/ defendant not only reversed the decree of the trial Court against him but on the contrary in exercise of discretion under Order

7. Rule 7, Civil Procedure Code to do what is just and equitable granted a decree of specific performance of contract in his favour by directing the transferor/plaintiff to execute the registered Sale Deed in his favour on his depositing in the trial Court the balance of consideration. The High Court did not decide the cross-appeal filed by the transferor/plaintiff in respect of forfeiture of earnest money paid by the transferee/defendant.

36. The transferor/plaintiff challenged the above Judgment and decree of the High Court by filing an appeal in the Supreme Court. In para 9 of its Judgment, while reversing the decree of the High Court granting specific performance of contract in favour of the transferee/defendant in a suit for cancellation of agreement of sale and for possession filed by the transferor/ plaintiff, the Supreme Court held that the suit for specific performance of contract by the transferee/defendant was barred by time under Section 54 of the Limitation Act 1963 apart from the fact that in a suit for specific performance, the transferee was required to aver and prove that he had performed and was always ready to perform the essential terms of the contract to be fulfilled by him as required by Clause (c)of Section 16 of the Specific Relief Act, 1963. The Supreme Court, therefore, held that the High Court could not invoke its discretionary powers under Order 7, Rule 7 of Civil Procedure Code in favour of the defendant/transferee to override the statutory limitations contained in Section 16 of the Specific Relief Act, 1963 and Section 54 of the Limitation Act, 1963 which preclude the grant of relief of specific performance of a contract except within the period prescribed by the said section.

37. It is material to see that although the Supreme Court found that the suit for specific performance of contract of sale by the transferee/defendant was barred by time and therefore reversed the decree of specific performance of contract passed in his favour by the High Court, it did not straightway grant the relief of possession to the transferor/plaintiff which it could have easily done, if it was of the view that by reason of expiry of period of limitation for a suit for specific performance of contract, the transferee/defendant was not entitled to maintain his possession under Section 53A of the Act.

38. The Supreme Court, however, considered in the above case the question whether a decree for possession of the suit property could be passed in favour of the transferor/plaintiff in the suit filed by him when the defence put forward by the transferee/defendant was that he was entitled to protect his possession of the suit property on the basis of the doctrine of part performance of contract incorporated in Section 53A of the Act. since he was in possession of the suit property in pursuance of part performance of the contract and was ready to perform the essential terms of the contract. In considering the said question, it found that the main plea raised by the transferor/plaintiff in his suit in that regard was that the possession of the transferee/defendant was not referable to the contract in question of which the part performance was claimed by him as required by Section 513A of the Act. but was referable to the fact that, he had sought for temporary accommodation for 8 days pursuant to which, he obtained possession of the suit property and illegally continued in possession thereafter. However, according to the Supreme Court, the High Court without considering the said question, although decided by the trial Court against the transferee/defendant, held that there was no dispute that on payment of Rs. 15000/- on 16.11.1974, pursuant to the Agreement of sale, the transferee/defendant was put in possession of the house and was entrusted with the documents pertaining to the same. It is because the High Court did not consider the above plea of the transferor/plaintiff that the Supreme Court remitted the matter to the High Court for reconsideration and also for the reason that the cross-appeal filed by the transferor/ plaintiff was not decided by it along with the appeal of the transferee/ defendant.

39. The facts in the above case clearly show that since the suit of the transferee/defendant for specific performance was barred by time, the Supreme Court would have more readily preferred to grant a decree for possession in favour of the transferor/plaintiff, particularly when a long time had elapsed after filing of the suit by him, if it was of the view that by lapse of time, it was not open to the transferee/defendant to raise the defence under Section 53A of the Act. Instead, it had chosen to remit the case for consideration whether the possession or the transferee/defendant was in pursuance of the agreement of sale or not. The above Judgment thus indirectly supports the construction that even though the suit of the transferee/defendant for specific performance is barred by time, he is entitled to raise the defence under Section 53A of the Act to maintain his possession of the suit property.

40. It is necessary to bear in mind that formalities including registration of document etc. for transferring clear and perfect title to a transferee are creations of a statute since they are prescribed by it and therefore if the Statute so chooses upon some equitable consideration to confer some benefit upon the transferee notwithstanding that his title is inchoate or imperfect, it is not open to us to question the wisdom of such a course adopted by the Statute. It is pertinent to see that in view of Section 53A of the Act, the situation is that although the transferor has title, he cannot claim possession from the transferee and although the transferee is in possession and has fulfilled the essential terms of the contract, he cannot transfer possession of the immovable property to a third person or create any title in him only because there is no registered document of title in his favour. He is also debarred from claiming any protection of his possession against a second transferee for consideration who has no notice of the contract or part performance thereof. If it is the intention of the Statute to allow the transferee to continue in possession “under an unregistered contract or instrument or transfer on fulfillment of its requirement, so that an irrate transferor should see reason and execute the document of title in favour of such transferee, it is not open to us to curtail the statutory protection of such a transferee to continue in possession on the ground that he cannot get a perfect marketable title by lapse of time.

41. The above discussion is in fact sufficient to hold that the statutory protection granted under Section 53A of the Act to a transferee in possession of the immovable property under an unregistered contract q| instrument of transfer by debarring the transferor from enforcing any right in respect of the immovable property against the transferee except a right expressly provided for under the contract, is not lost to the transferee by expiry of limitation for the suit for specific performance of contract to get the document of title registered in his favour in regard to the suit property. However, since the reasoning in paras 7 and 8 of the Judgment in Adinath’s case or the proposition propounded therein is that when the period of limitation expires, the agreement of sale in question meets with its legal death and as a result the protection under Section 53A of the Act which flows from such agreement cannot survive beyond its life time which is the source of protection to the transferee, it is necessary to consider the validity of such a proposition.

42. As regards the question whether the contract is dead by lapse of time, which phraseology is used In Adinath’s case presumably meaning thereby that the rights and obligations created under the agreement come to an end on expiry or the period of limitation prescribed for the enforcement thereof, it is material to see that no such proposition is laid down under the law of contract. The modes of discharge of contract i.e. how the legal obligations assumed on making a contract stand dissolved are well known. There are five such ways of discharge or contract:

i) Unilateral discharge i.e. by giving unilateral notice by one party to another, or his intention to bring the relationship to an end.

ii) Discharge by Agreement between the parties.

iii) Discharge by performance i.e. if the rights and obligations under the contract are fulfilled by both the parties, the contract stands discharged bringing the contractual relationship between the parties to an end.

iv) Discharge by breach of a contractual obligation in its widest sense can give the innocent party an option to treat the contract as discharged subject of course to his right to claim damages for past breaches.

v) Discharge by frustration. When it is not possible to implement the rights and obligations of the contract because of certain supervening events, the contract would stand frustrated and automatically discharged on the basis or doctrine of frustration.

43. For the above modes of discharge of contract, see the Book “An Introduction to Law of Contract” by P. S. Atiyah, IIIrd Edition, Chapter XII relating to Discharge of the Contract. See also the discussion in this regard in Part IV of the Anson’s Law of Contract XXVth Edition by A, G. Guest. In addition to the above forms of discharge of contract the Anson’s Law of Contract considers in Chapter XVI, discharge by operation of law also. For the modes of discharge of contract, we can also usefully refer to para VI of Chitty on Contracts Vol. 1. XXIVth Edition relating to the performance and discharge of contract and also Chapter 8 of the Law of Contract in Halsbury’s Laws of England, Vol. 9, Fourth Edition, on discharge of contractual promises. In none of the above authoritative Books on law of contract, the expiry of period of limitation for enforcement of the rights and obligations under the contract is treated as a mode of discharge of the rights and obligations under the contract. The above modes of discharge of contract are also contained in various provisions of chapter IV of the Indian Contract Act relating to performance of contracts and Chapter IV of the Specific Relief Act, 1963 relating to rescission of contract.

44. It is thus clear from the above authoritative books on law of contract that by lapse of time for a suit for enforcement thereof, the rights and obligations under a contract do not come to an end. The well known rule is limitation bars a remedy and not a right to which the only exception carved out by statute is in regard to the title to an immovable property which is extinguished on expiry of limitation for instituting a suit for possession. Section 27 of the Limitation Act, 1963 which corresponds to Section 28 of the Limitation Act, 1908 contains the above exception to the well recognised rule that lapse of time bars only the remedy, but does not extinguish the right. Section 27 of the 1963 Act provides that when the period of limitation under the said Act for any person to institute a suit for possession of any property expires his right to such property is also extinguished. The said Section 27 (old Section 28) thus assists the person in possession to acquire prescriptive title, by adverse possession.

See Fakirappa Jatappa v. Ningappa Shiolingappa AIR 1943 Bom. 265.

45. What is however material of our purpose to be seen is that Section 27 of the 1963 Act (section 28 of the 1908 Act) cannot apply to persons who are in possession. The said section presupposes that a person who is not in possession of the property has by force of limitation lost his remedy to bring a suit for possession against the person, who is in possession of the same, it is held in the following cases that the above Section 27 (old Section 28) of the Limitation Act is not applicable to the defendant who relies on his actual possession of the property which has not been disturbed.

See : Bagauandas v. Bajibhai, 14 Bom. 222, Jardine J’s Judgment Gopal Bhaurao v. Jagannath AIR 1935 Bom 326. Orr v. Sundra, 17 Madras 255 which have been considered along with others in paras 12 and 13 of the Judgment,

46. For all the above foregoing reasons our view is that the Statutory protection granted under Section 53A of the Act to a transferee in possession to continue his possession under an unregistered contract or instrument of transfer is not lost by lapse of time to file the suit for specific performance of contract- for acquiring title if he satisfies the essential requirements of the said Section 53A of the Act and it is not incumbent upon him to file such a suit within time to protect his possession after the lapse of time. The law is therefore correctly laid down in Nana Saheh’s case and not in Adinath’s case.

BY THE COURT: Our answer to the question of law referred to the Full Bench in the instant case is thus in the negative and in favour of the appellant. Papers be now placed before the learned Single Judge taking Second Appeals for hearing on merits in the light of our Judgment. No order as to costs in this reference.