Analysis Of Doctrine Of Part Performance In Property Transactions
Author: LawSphereX
Category: Property & Real Estate
Published:
Updated:
ANALYSIS OF DOCTRINE OF PART PERFORMANCE IN
PROPERTY TRANSACTIONS
Ayushi Yadav & Pragya Singh, BA LLB, Symbiosis Law School, Nagpur
ABSTRACT
The “doctrine of part performance” plays an important role in the contracts related to the sale of the immoveable property transactions that comes under TPA. This study throws the light upon the comprehensive analysis of the theory of part performance analyzing its significance in today’s property transactions. This study also examines history and the position of part performance under both English and Indian law. This study also transverse the provisions related to the doctrine as well as it also covers the objectives, essential components related to the doctrine including its exceptions. In addition to this study, it also analysis the challenges that are faced while the transfer of the immoveable property including the remedies for the same and following up with the suggestions that can make this doctrine more applicable.
Keywords: immovable property, part performance, property transactions, agreements.
INTRODUCTION-
“The Transfer of Property Act” (TPA) governs the transferring of immovable property in Indian Legal System since even before the time of independence. It comprehensively defines the rights and liabilities of an individual and their interests vested in property. Among many provisions of TPA guiding us in facing the Immovable property disputes, there is Doctrine of Part Performance covered under section 53A of Transfer of Property Act which favours and protects the rights of transferee which in itself acts as an exception to the strict provisions pertaining to transfer of property. This doctrine has an important and distinctive place under property law because of its application which allows even the incomplete transaction and transfer of property to enforce the rights arising of a transferee.
Doctrine of part performance having its undeniable significance is worth researching and exploring the topic more deeply and extensively. Under this research paper we will be throwing some light mainly upon the problems arising out of such property transactions and performance which are even unexplored today along with its meaning, delving into both English and Indian jurisprudence. We will be looking into the grey areas of this transfer in more depth and detail. We will also be dealing with its essentials, remedies, objectives and suggestions to make it more effective when it comes to contemporary property transactions and issues generated out of it, along with delving into its evolution.
Our research paper will be dealing with both its positive application while critically examining its grey areas, which still remains unexplored, while this exploration delves into providing the basic understanding of part performance and critically examining its intricacies to broaden the perspective of part performance governed by Transfer of property act. This paper aims to contribute the research discourse in the ambit of Indian law governing immovable property transaction deeply.
LITERATURE REVIEW-
This research is all about doctrine of part performance for which reviewing the already existing literature was more than necessary. Doctrine of Part performance is not very frequently researched topic. Coming to the literature we have taken as a path to our research, the first one is titled as “The emergence of Doctrine of Part Performance: A legal analysis of Section 53A of the Transfer of Property Act”1 by law journal. This paper laid emphasis on the part
1 CHAITANYA THAKUR; THE EMERGENCE OF DOCTRINE OF PART PERFORMANCE: A LEGAL
ANALYSIS OF SECTION 53 A TRANSFER OF PROPERTY ACT (2022).
performance in the agreement, its genesis in English legal aspect of the doctrine and Indian legal perspective and the differences between them including the amendment of 53A, essentials and relevance. But as the article in the title itself claimed to analyse the doctrine, it has not been particularly addressed the problems associated with this doctrine still remains undressed by the author. The doctrine has not been criticized in broad manner. As the doctrine of part performance still has many lacunas and grey areas associated with it, it will not to justice if we tend to ignore them wholly. Another article which has been taken to be path of this research is the blog named as “Transfer of Property Act,1882” by Advocate Tanwar2.
This blog gives key details about the doctrine of Part performance under section 53A including the historical background of the doctrine, its principles, definition, elements, change of position, remedies, limitation and several judicial precedents. But this blog also tends to ignore the problems and grey areas associated with the doctrine and as well as ways to make it more effective by taking into consideration the contemporary legal scenario remains unaddressed. This blog entirely lays its emphasis on providing the key details which are contextual in nature and not analytical. These literatures are significant in our article as these literatures provide us with the pathway to proceed with, as these literatures even after providing with the basic and key details pertaining to the topic have certain gaps in them which needs to be filled.
OBJECTIVES-
1) To analyse the problems associated with the doctrine of part performance in Transfer
of property Act.
2) To provide for the recommendations to make the doctrine of Part performance more
effective taking into consideration the modern and technological aspect of law.
STATEMENT OF PROBLEM
This research aims to deal with the gaps of the reviewed literature in depth by encountering the challenges and examining the existing grey area of the doctrine of part performance under TPA Which still remains unexplored. This Paper also endeavours to deal with countering the issues and problems lying in the doctrine to provide the effective suggestions to make the doctrine more effective and adoptive to current legal outlook. It will also look upon the lack
2 TPA; ADVOCATE TANWAR
technological advancement in the field of transfer of property act when it comes to deal with the doctrine of part performance.
RESEARCH QUESTIONS-
1) What are the grey areas and problems associated with the doctrine of Part performance?
2) What are the solutions to make the doctrine of part performance more suitable in current
legal scenario?
HYPOTHESIS-
This Article studies the challenges and uncertainties the doctrine of part performance encounters, by examining these challenges, this research will seek to provide for the practical solutions that can make the doctrine more adaptive to the evolving nature of property law in modern perspective. WHAT IS THE DOCTRINE OF PART PERFORMANCE?
Sec 53(A) of TPA, recognizes the notion of the above-mentioned doctrine. The doctrine is also known through another name that is “equity of part performance”. According to TPA, 1882 Sec 53(A) states that “if an individual agrees to transfer any immoveable property for the consideration in writing signed by themselves or by someone else on their behalf by someone else.
If an individual agrees to transfer any immovable property for consideration in writing, signed by themself or on their behalf, and the terms required to constitute the transfer can be reasonably determined, and the transferee has partially performed the contract and furthered the contract, and has performed or is willing to perform his portion of the contract, then, even in the case where there is an instrument of transfer, The transferor and anyone claiming under him will not be allowed to enforce any rights against the transferee and those claiming under him regarding the property that the transferee has taken or is still in possession of, unless those rights are specifically granted by the terms of the contract, on the grounds that the transfer has not been completed in the manner specified by the law currently in effect”3.
3 TPA 1882, § 53 (A)
In layman language it means that if a person has possession or is under the possession of any immoveable property as per contract sale deed, he/ she has either performed or eager to execute their part as mentioned in the contract deed then they would not be restricted from the ownership of the property based on the sale deed was not registered and the official title of the property is not fetched to any other person. Therefore, this theory is designed to safeguard the rights of transferees who get control of the property or has the control of the property but are unable to get the title after making the partial or full payment for the immoveable property, and who later face legal challenges from the transferor against such an agreement or possession lawsuits. Illustration- Aman and Raman made a deal for the sale of land, contingent on compensation being paid.
Additionally, the contract said that Raman might take possession upon the partial payment of consideration, which he did. Subsequently, Aman says he doesn't want to sell the land and disputes giving up ownership. In this case, Raman's interest will be safeguarded by using the law of part performance, either by requesting that Aman reimburse the payment that was paid.
EVOLUTION OF DOCTRINE OF PART PERFORMANCE
The Indian doctrine of part performance is taken from the English law and was evolved by Court of Equity in England. There was an enactment of a statute in England which is known as “Statute of frauds” in 1677. The aim for which this statute was enacted was to prevent further prolongation of frauds in the transfer of property. Sec 4 of this statute expressly stated that all the deeds and agreements pertaining to the transfer of property must be in writing, which resulted in the restriction on oral agreements and was held as illegal, and in the transfer of property resulting from oral agreements the transferee could not claim the title over it. But this resulted in prolongation of fraud rather than preventing it further. Due to this provision the rights and title of transferee over property were facing various challenges.
So, to tackle those challenges Chancery court (Court of Equity) taking into consideration the principle of Equity which negated the relevance of statute of fraud and said that in the part performance of the transferee resulting from an oral agreement will not be governed by Statute of Frauds. Following the principle of equity the transferees could even get the title over the immovable property if they have performed their part of contract even if the agreement is not duly
registered and legal formalities has not been fulfilled properly. This principle was established in in the case of “Maddison v Alderson” where Lord Selbourne said that “In a suit founded on part-performance, the defendant is really charged upon the equities resulting from the acts done in execution of the contract and not upon the contract itself. If such equities were excluded, injustice of a kind which the statute cannot be thought to have had in contemplation, would follow.”
DOCTRINE OF PART PERFORMANCE UNDER INDIAN LAW
The doctrine of part performance was taken from English law but few changes and conditions were added in later part of Indian jurisprudence pertaining to the part performance. In the case of “Kurri Reddi v Kurri Bapi Reddi”4 the court held that the doctrine of part performance given by the English law is not applicable in Indian Law but in the case of “Md Musa v Aghore Kumar Ganguli”5, held that taking into consideration the principle of justice equity and good conscience this doctrine will be applicable in India. But again, in the case of Ariff v Jadunath the court said that the English doctrine of part performance could not be applied in Indian context as it will breach the provisions of Indian Registration Act which provides that if the document is not duly registered it will not result in to valid document.
Then there was an amendment in 1929 which resulted in insertion of section 53A in Transfer Of Property Act,1882 after which this doctrine gained statutory presence in Indian jurisprudence. Coming to the landmark cases after the insertion of this doctrine. There was the judgment “Nathulal v Phoolchand”6 under which it was observed by the court that willingness to perform their part of contract along with its sequence must be taken into consideration. So the obligations of the parties pertaining to the contract must be in certain sequence as the parties could not claim for compliance of another party if they themselves have not performed their part of the contract in the required sequence. In another case of “Ranchhoddas Chhaganlal v Devaji Supadu Darik and ors (1977)”7 The court held that this doctrine is a defence and it is an sword and not a shield.
It is an right of an party to protect their possession. In 1982 there was the case of “Sardar Govindrao Mahadik and anr v Devi Sahal and Ors”8, - It held that as per the requirement of section 53A the party which is claiming the benefit of part performance must
4 Kurri Reddi v. kuri Bapi Reddi, (1906) ILR 29MAD 336.
5 Mahomed Musa v. Aghore Kumar Ganguli, 1914 SCC OnLine PC 76
6 Nathulal v. Phoolchand, (1969) 3 SCC 120
7 Ranchhoddas Chhaganlal v. Devaji supadu Darik, (1977) SCC (3) 584
8 Sardar Govindrao Mahadik v. Devi Sahai, (1982) 1 SCC 237
have the willingness and be ready to perform his part of contract and if it is proved that he was not willing to do his part performance of the contract he cannot claim the possession under this section. In another case of 2004, “Rambhau Namdeo Gajre v Narayan Bapuji Dhotra9(dead)” It was laid by the court that the doctrine of part performance is based upon the equity principle and shields the transferee to give the possession against the transferor who has come into agreement to sell his property if the conditions under section 53A is satisfied by the transferee. In recent judgment if “Union Of Inda v M/s. K. C. Sharma &co10(2020)” The protection of section 53A is available to person who is given the possession as per the agreement to lease the property in his favour though the lease has not been registered or executed.
This is how the doctrine of Part performance has been evolved over time with the amendment and case laws, while still there is a room for changes and amendments to make it more effective and suitable in contemporary property transaction.
“DOCTRINE OF PART PERFORMANCE” OF THE CONTRACT UNDER ENGLISH
LAW
According to English law, the doctrine of part performance can be applied to oral contracts as well because of the statute that was validated in England which is known as the statute of frauds
1677. This statue was passed just to prevent the perpetuation of fraud in the transfers of land.
According to sec 4 of the “statute of frauds” it states that all agreements in the context of the transfer of land or the immoveable property should be or have to be in written. Which eventually allowed the perpetuation of fraud instead of preventing it. The rigid execution of this legislation generated significant difficulty for transferees. For dealing up with these frauds. The court of equity England came up with the idea that the contracts must be in written. Therefore, even in the lack of a formal written agreement or registered instrument, the genuine transferee who had fulfilled their end of the bargain by paying the entire amount or gaining possession. As mentioned in the matter of “Maddison V. Anderson (1883)”11, Alderson, Maddison's employer, held her accountable for failing to execute the oral contract's explicit terms.
According to the contract it was held that Alderson will his property or we can consider it as the estate if she (Maddison) continued to work for him till the indefinite period. Alderson
9 Rambhau Namdeo Gajre v. Narayan Bapuji Dhotra, (2004) 8 SCC 614
10 Union of India v. M/s K.C. Sharma & Co.& Ors, (2020) SCC 686
11 Maddison v. Anderson, (1883) 8 App Cas 467
signed the will in the name of Maddison and he left the estate for Maddison after his death. But the will made by Alderson will fail due to improper attestation. The court decided against Maddison because she could not enforce the contract, no matter how hard she tried.
OBJECTIVES OF DOCTRINE OF PART PERFORMANCE
Every provision is inserted in a statute keeping in mind its purpose and objective of That particular provision. This doctrine has its existence because of the principle of equity. The objectives for the said doctrine are listed below-
1) Parties abide by the obligations - It ensures that both parties of the contract perform
their part and abide by the obligations of the contract.
2) Protecting the rights of the transferee - It protects the rights and title of Transferee
who has got possession on his part of performance of contract towards enjoying the ownership of the property.
3) Prevents injustice and fraud- It is based on the principle of Equity and thus prevents
any injustice and fraudulent act by the transferor against the transferee to protect its interest and title in the property, and restricts the transferor from taking advantage of the transferee.
4) Maintains Trust and relationship -It also maintains the trust and relationship between
the parties by making them accountable for the promises they have made in furtherance to the contract.
5) Providing remedies - Another object behind this doctrine could be to provide for the
remedies to the aggrieved transferee who have suffered from the loss even after performing his part of a contract and preventing the transferor from getting the excessive benefit by escaping the obligations of the contract.
ESSENTIAL COMPONENTS OF DOCTRINE OF PART PERFORMANCE
Essential components of the “doctrine of part performance” are as follows-
1. The contract ought to be in written for the transfer of the immoveable property
The contract must be in written to assert one’s right for the benefit of “doctrine of part performance”. In the matter of “Smt. Kalawati Tripathi and ors v. Smt. Damyanti Devi and anr (1992)”12 It was held that according to the Indian court of law doctrine of part performance doesn’t include oral agreements. But moreover, in the matter of “V.R. Sudhakara Rao and Ors v. T.V. Kameshwari (2007)”13 The court of law said that any immovable property transferred by the means of the oral agreements is null and invalid.
2. There must be valid consideration by both the parties
For the transfer of immoveable property, the contract must be formed on the valid consideration or on the condition of both the parties. In the matter of “Piru Charan Pal and Anr v. Minor Sunil Moy Nemo and Anr (1972)”14 It was determined in the case that this case clarifies what Sec 53(A) encompasses and if reversioners are protected by it. In the end, the court decided in the plaintiffs' favour, highlighting the restrictions on Sec 53 (a) protections.
3. Person must have the possession of the Immoveable property
Sec 53(A) made it clear that transferee must have the access to the immoveable property as a part of the doctrine or remains in the ownership of the person, if a person does an act to claim the benefit as mentioned therein. As mentioned in the matter of “A.M.A Sultan V. Seidu Zoyra Beevi (1989)”15 In this case the trial court ruled in favour of the plaintiff. The complainant filed an appeal against the judgement and decision. The defendants requested that the matter be remanded to the trial court so that they may present their arguments. The plaintiff contended that remanding the matter would be futile due to a lack of pleadings.
4. The contract must be partly performed
As per sec 53(A) of TPA, the contract deed must be partly performed or parties to contract are willing to perform their part in the contract. As mentioned in the matter of “Chinnaraj v. Sheikh Davood Nachiar (2002)”16 , the court held that if a person failed to meet his contractual responsibilities, he or she could not receive Section 53A benefits.
12 Smt. Kalawati Tripathi v. Smt. Damyanti devi and Anr, (1993) PAT 1
13 V.R. Sudhakara Rao and Ors v. T.V. Kameswari, (2007) 6 SCC 650
14 Piru Charan pal and Anr v. Minor Sunil Moy Nemo and Anr, (1973) Cal 1
15 A.M.A sultan v. Seidu Zoyra Beevi, (1990) KER 186
16 Chinnaraj v. Sheikh Davood Nachiar, (2003) MAD 89
AMENDMENTS MADE TO SECTION 53A OF TPA
Before 2001, the unregistered document was considered as valid proof to seek protection under the doctrine of part performance. In 2001, the amendment was made to the section and now sec- 53A does not has the phrase “the document, though needed to be registered, has not been registered” which made the unregistered document as acceptable as a valid proof to attain the benefit of this section. But now these lines have been omitted and this made it necessary to have a registered document in order to claim protection under section 53A as now the previous position has been changed by the amendment as a result of which the documents which are not registered are not a valid document to claim the benefits of doctrine of part performance under the property law and now the position is all together changed.
EXCEPTIONS RELATED TO THIS DOCTRINE-
It is well understood that Sec 53(A) applies to transactions in which the transferee has completed his role in the contract and obtained ownership in the property as a result of the contract deed. There is one expectation in regard to section 53(A) of this act that is as follows- • The transferee to the contract or the party that is the part of the contract will not be responsible or the subject to the part performance of the doctrine. In this regard, the Apex court had mentioned in the matter of “Hemaraj V. Rustomji (1952)”17 that the exclusion to the Sec includes the provision to protect the rights of legal transferee’s who are heedless from the party responsible for the incomplete performance of the contract.
As a result, the party attempting to use Sec 53(A) as a defence must demonstrate that the later transferee was cognizant of the contract's partial performance and had notice of it.
REMEDIES RELATED TO DOCTRINE OF PART PERFORMANCE-
The “doctrine of part performance” also provides the remedy to the party who has suffered deprivation due to the other party to the contract who had not performed the roles assigned to them as per the contract. In order to get the advantage of the remedy the parties to the contract,
17 Hemaraj v. Rustomji,1953 SC 503
the transferee must agree before the court of law that they are willing to perform their part in the contract but the other party to the contract is refusing to do so. if the above-mentioned scenario is proved before the court of law, then only the order related to specific performance of the contract is granted to the affected party to the contract.
GREY AREAS AND LACUNAS IN THE DOCTRINE OF PART PERFORMANCE-
This doctrine instead of having sufficiently established and amended by the law needs, some lacunas which need to be filled, and there are also some unexplored lacunas which needs to be addressed. We will be looking upon it separately under this part of the article-
1) Principle of Equity and justice depends upon the interpretation of judges – This
doctrine is based on the principle of justice and equity but there is no hard and fast rule to apply that principle, as it is totally upon the discretion of judges. It depends upon the perspective of the judges itself, what may be justice and equity for one judge may not be for the other. Their understanding on justice and equity may vary which makes the application of the same quite vague. There are the precedents in which the understanding of the principle is varying from judges to judges and case to case.
2) Difficult to be understood by Laymen – Thid doctrine even after being so important
for preserving the rights of transferee is not that widely known, less people are aware of the doctrine of part performance also the provision is quite difficult to be understood by the perspective of laymen until and unless they consult with some legal practitioner or professional to gain the understanding of the same.
3) Technological Advancement- As the evolution of time, there is evolution in the
technological aspects of transaction, there are new advancements technologically in the arena of property transfer. These modern technological advancements are creating certain complexities under property law. For example, there are electronic contracts taking place in which there is digital signature done, which makes the parties to enter into agreement to sell the property electronically through the use of technology or other kinds of digital transactions or real estate transaction for that matter. So weather this kind of agreement is fulfilling the requirement of part performance of will be covered under the protection of this doctrine still remains unaddressed as to whether these kinds of agreement will get recognition under the provision of Doctrine of part performance
and application U/S 53A OF TPA.As there is a scope of lot of technological advancement still these areas are not well accommodated into the scope of doctrine of part performance under Indian jurisprudence.
4) Solely protects the rights of Transferee – This section and doctrine has its whole
emphasis on only protecting the rights of transferee and the rights of transferer is completely ignored and remains untouched by the law which makes it quite unjust on the part of transferer. There should be application of equity and justice principle on protecting the rights of both the parties not just the transferee although it cannot be denied that the transferee is the party which is more prone to get their rights breached. The conduct and intention and reason behind the non-fulfilment of the agreement from the side of transferee should be taken into consideration while deciding upon granting the protection U/S 53A of TPA to the transferee.
There should be defence given to the transferor in these cases as to defence of mistake or necessity or any other defence for that matter or the chance to proof the innocence of the transferor to prove the enforcement of these kinds of agreement covered under the doctrine of part performance. There should be consideration of the factors like if transferee was acting in good faith or not, weather the consideration was given or not from the side of transferee in the just manner. While, the main objective lying behind this doctrine was to protect the rights of transferee only but still the rights of transferor cannot be ignored wholly.
5) Connection with other laws- The doctrine of part performance is connected with few
other laws and has its place in other statute’s provisions as well which creates vagueness and confusion in the aggrieved parties as to under which law they can seek protection of the doctrine for example, Contract law also has mention of the doctrine of part performance under its arena and both of the contract Act and TPA are very complex, which may create confusion and dilemma to the aggrieved parties as to whether they should go for seek protection under contract act or under transfer of property act.
6) Lack of provision governing in inter-border transaction – People now a days are
getting themselves involved in the international property transfer and purchasing immovable property in countries out of India. So, these international agreements being governed by the property laws of two different countries lacuna as to by which country
laws one should get the protection. Parties who are in property agreement citizen of the multiple jurisdictions has lack of provision as the doctrine of part performance has no mention of international and inter jurisdictional agreement taking place and how the rights of transferee must be protected in that circumstances which may create uncertainty and can have an impact on the application of doctrine of part performance. There may be conflict between the provisions pertaining to different countries.
RECOMMENDATIONS TO MAKE DOCTRINE OF PART PERFORMANCE MORE
EFFECTIVE.
As mentioned in the matter of “Mahadeo Nathuji Patil” that there were some recommendations made by the committee regarding the doctrine that this doctrine must get the legal recognition. For the smooth follow up of this doctrine there are some suggestions that are as follows – • Based upon the interpretation regarding the principle of equity and justice it is easy to say that this doctrine will only act as the substitute remedy to the principle but that would not serve in the benefit of the principle of equity and justice. But while permitting the part performance decree the court may also consider the right fulness of the parties in the contract in order to attain the same degree of fairness in the contract.
• As mentioned above in the grey areas related to this doctrine that is difficult to be understood by the laymen as sometimes the parties to the contract may not be that much educated enough to understand the provisions related to this doctrine. So if in case the parties to the contract is unable to understand the provisions related to the contract then they should consult their legal advisor to the matter and if in the case they are not told about the provisions by the legal advisor then they should approach the court of law and should accept before the jury while presentation of the matter that they were not informed about laws by the advocate and the court should provide them with a guide or any other legal advisor who can explain the provisions related to the performance of the contract.
• In relation to the technological advancement in relation to the transfer of the immoveable property there should be proper provisions or guidelines in relation to the digital transactions of the immoveable property. There should be some proper guidelines related to the blockchain technology in property transactions. Blockchain
technology is basically a technology that stores all the information in a chain that is linked together. • In relation to the protection of the right of the transferee as there is protection against the right of both parties. Then they should also get the remedies regarding their mistake as well. • In context to the problem related to its connections with other laws there should be some clear provisions related it for no doubt and ambiguities between both the parties to the contract. • In context to the suggestions for the lack of laws between the inter country transactions they should be the harmonising of inter countries laws regarding the transactions of the immoveable property. The provisions regarding the inter - country transactions should be clearly mentioned in the act.
CONCLUSION
In conclusion, the doctrine of part performance plays a very crucial role in the Transfer of property act and to protect the rights of transferee whenever there is an exploitation of its rights and unfulfillment of the contract from the side of the seller. This doctrine has been significantly evolved throughout its history and from its emergence it has undergone many changes as it has been shaped by amendments and judicial precedents and judgments pertaining to it. There is an importance to identify the grey areas and lacunas pertaining to the doctrine of part performance which needs to be examined and cleared out to make the provision more effective and freer from lacunas and uncertainties. The suggestions have been provided to clear out those grey areas which still are remaining unexplored.
Having been examined the different aspects of the doctrine right from its history to modern developments, as well as its essentials, meaning, definition with precedents, but still the spotlight lays on its grey areas being the major concern of this article. This article has dealt with all these areas of the doctrine separately and dealt with great details. The grey areas and lacunas are still need to be cleared out by making the changes in the doctrine and addressing the lacunas pertaining to it. The grey areas focusing upon the various areas like dependence of the interpretation of Justice and equity principle on the judges itself which creates the variance in different precedents and judgements, the complexity of the doctrine poses difficulty to be understood by laymen, Various technological advancement
taking place in property transaction, emphasis on solely protecting the rights of transferee and completely ignoring the rights of the transferor, its connection with other laws which tends to create uncertainty and lack of provisions pertaining to the international transfers. These grey areas have been dealt with great detail in this article and the recommendation to improve the same has also been provided.