A contract is successful where both the parties perform their rights and obligations equally and in good faith. However, there are instances where one party performs the contract, and the other party does not. Therefore, the doctrine of part performance has been introduced to prevent the transferee from the deceitful transferors. They take advantage of the innocent transferees and do not fulfil their obligations.
What is Doctrine of Part Performance under Transfer of Property Act, 1882?
The doctrine of part performance was introduced in 1929 under Section 53A of the Transfer of Property (Amendment) Act, 1929. It is derived from English law’s Equitable doctrine of part performance.
Section 53A, Transfer of Property Act states that –
Suppose a person, either himself or on his behalf, enters into a contract to transfer certain immovable property in exchange for a consideration. In that case, all the terms can be determined from the contract with reasonable belief.
Where the transferee (person to whom the property is being transferred) has taken the possession of the property or retained the possession of the contract and has in furtherance of the contract done some act in part performance of the contract.
Moreover, the transferee is willing to perform or has performed his part of the contract.
Then, even though the transfer is incomplete in accordance with the procedure prescribed by the law, the transferor (person transferring the property) or any other person on his behalf cannot enforce any claim against the transferee, except in case there is any right granted in terms of the contract.
However, this section shall not affect the transferee’s rights for consideration who does not know the contract or part performance.
Essential elements of Doctrine of Part Performance/ conditions to be satisfied for applying the doctrine of part performance.
The doctrine of part performance aims to protect the transferee’s interest, who has in good faith that the transfer would be complete in the future, takes possession of the property. In Vasanthi Vs. Venugopal, the Supreme Court, had laid down the essential elements. Hence, to make an application under section 53A, there are some essential elements, namely;
- The contract must be written and signed;
- The property must be immovable;
- There must be a consideration for the purchase of property;
- The terms of the contract must clearly state about the transfer;
- The transferee should have taken possession of the property;
- If the transferee is already in possession, he has retained the possession and has done some act in pursuit of the contract.
- The transferee is willing to perform or has performed his part of the contract.
If these essential elements are fulfilled, the transferee cannot be evicted from the property. The transferor is not entitled to claim any rights against the transferee.
A enters into a contract with B to sell a plot of land for Rs. 50,000. B promises to pay half of the amount after the sale deed is executed, and A agrees for the same. The contract is in writing and signed by both parties. B, in part performance of the contract, builds a fence and shed for his cattle. Now, A cannot refuse to register the document and try to evict B as a trespasser. B has a right to resist A’s claim under Section 53A stating the contract has been partly performed by B, and A cannot be allowed to deny it.
Exceptions to Section 53A
Section 53A is not applicable in the situation where a subsequent transferee has acted in good faith and has no knowledge about the part performance of a contract.
A enters into a contract to sell a plot of land to B for Rs. 50,000. B pays Rs. 40,000 and promises to pay the remaining amount at the time of execution of the document and took possession of the land. Later, A sold the same plot to C for Rs. 70,000 and registered the sale deed for the same. Now, C can vacate B from the plot of land under an exception to Section 53A, as the right of subsequent transferee cannot be affected if done without any knowledge of the previous contract or part performance of the contract. However, B can also claim against C under Section 53A.
What is the nature of the transferee’s rights under Section 53A?
The ownership rights remain with the transferor until conveyed to the transferee by a sale deed (Rajpal Vs. Harswroop, 2011).
Section 53A can be used only as a defence and not as a sword which means it can be used to protect the transferee’s interest and cannot be misused (Chetak Construction Ltd. V Om Prakash, 2003).
The transferee has no right of action against the evictor (person evicting). The transferee cannot file a suit against the subsequent transferee or third party to the contract for restricting the transferor (Patel Natwarlal Rupji Vs Kondh Group Kheti Vishayak, 1996).
Scope of Section 53A/ Whom can the Doctrine of part performance can be applicable?
The doctrine of part performance is applicable only under the following scenario:
- The contract should be written and valid. It should not be an oral and a void contract.
- The transferor must sign the contract.
- The property must be immovable. It does not apply to moveable property.
- The transferee must have taken possession of the property.
- The transferee must be willing to perform or have performed the contract’s part.
- The doctrine can be used only for obtaining an injunction.
- After the 2001 Amendment Act (48 of 2001), the doctrine of part performance is applicable even if the contract is not registered.
The legal purpose of the doctrine of Part Performance
The doctrine of part performance can be instituted to protect the transferee’s interest.
A suit for possession under Section 53A can be raised if the person can prove that:
- there is a written and a signed contract. He has taken possession of the property or has partly performed the contract in furtherance of the contract.
- A suit for the part performance of a contract can be filed to protect the transferee’s interest and for an injunction to restrain the transferor from restricting the possession.
- If the transferee has been forcefully evicted, he can claim possession under Section 6 of the Specific Relief Act.
- However, if the property was never in the transferee’s possession, he cannot file a suit under Section 53A to claim the possession. Thus, Section 53A can be used to retain the possession of the property and cannot be used to obtain the possession of the property.
A enters into a written contract to rent B’s house at Rs. 1000 per month for two years. A had made an advance payment of Rs. 12,000. A took possession of one portion of the house as B had promised to possess the remaining house after his daughter’s wedding, which was supposed to take place after five days.
Now, after the wedding, B did not hand over the possession of the remaining portion of the house to A. Therefore, A is entitled to remain or retain in possession of one portion of the house given by B. However, A cannot file a suit under Section 53A for claiming the possession of the remaining portion of the house that was never given by B.
What is the difference between the doctrine of part performance under Indian law and the English equity of part performance?
The differences between the Indian law and English law of part performance are the following:
1) Applicability: Under Indian law, the doctrine of part performance is applicable only if there is a written contract. Whereas, under English law, the equity of part performance can be applied irrespective of whether the agreement is oral or written.
2) Right of action: Under Indian law, the doctrine of part performance is used only as a defence, and the right of action is not given to the transferee. Whereas, in English law, the equity of part performance can be used as a defence and attack. The right of action is given to the transferee against the evictor.
3) Possession: In Indian law, the property has to be in possession. Whereas in English law, control is not relevant. Only acting in furtherance of a contract is sufficient.
Union of India Vs. M/s K.C. Sharma & Co. & Ors. (2020)
In this case, the respondent (K.C. Sharma) had taken the land of Gaon Sabha (Gram Panchayat) of Luhar Heri, Delhi, on a lease, to remove the ‘shora’ and cultivate the land. This land was later acquired by the government (appellant) under Section 4(1) and Section 6 of the Land Acquisition Act, 1984. The respondent had filed a suit under Section 30 and 31 of the Land Acquisition Act, 1984, claiming compensation for such acquisition. However, the appellant had refused to grant bonus, stating that the respondent’s claim was a fraud and there was no registered lease deed.
Therefore, the Supreme Court had upheld the High Court’s order on fraud as there was no sufficient evidence. With regard to compensation, the Court had also allowed the compensation given by the trial court. The Court had further held that where a person has been put in possession of land and has acted on a contract, then irrespective of whether the contract is registered or not, such person’s interest should be protected under Section 53A of the Transfer of Property Act.
The doctrine of part performance aims at protecting the interest of the transferee. Section 53A of the Transfer of Property Act can be invoked if the transferee has entered into a contract to transfer immovable property and has acted in furtherance of an agreement. To claim the benefit of Section 53A of the Transfer of Property Act, it is important that the transferee has acted in part performance of the contract or is willing to act in accordance with the contract. Section 53A acts as a shield and not as a sword against the transferor.