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How A Possession On Property Can be Maintained Without An Executed Sale Deed?

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Introduction

In a transfer of Immovable property whereby possession on property is acquired the transfer happens between the parties for the purpose of doing business or for other purpose. A possession on property is considered as an asset which is huge asset class within an Indian society. The character of immovable property can only be ascertained by the title over the property through a proper registration process, properly stamped and in the name of the person acquiring or holding the property.

The transaction is a lengthy process and parties in a transaction initially formulate a formal agreement upon which the future registration and transfer of title will take place. The parties fix the sale price of the property, the method of payment to the seller and the date on which such sale deed will be executed. This may also include a precursor before execution to place buyer in the possession on property.

However, dispute may arise, if the defendant/ buyer after coming into possession of the suit property without execution of a formal sale deed, the transferor/seller has executed a parallel transaction with a third party or is trying to dispose of the defendant/buyer from the property.

Part-Performance of the contract is the shield for the defendant in protecting the possession of the suit property from any dispossession by the seller


Index


What is Part Performance of Contract?

Part performance of contract happens when one party in a contract has completed his obligations as mentioned in the manner, as provided in the contract/agreement for sale. The law formulates a general binding rule in the transfer of property. wherein it determines the act of parties in performing their duties as agreed in the contract. Therefore, a party in a contract if defying such terms as mentioned in the contract will cause legal obligation which will be binding upon the party objecting with the intent of the contract. Therefore, a seller in the contract if defying terms as mentioned in the contract will attract legal obligations for objecting the sole intent of the agreement for sale. The defence under Part-Performance of a contract is to defend the aggrieved buyer in a contract.


Also Read: What is The Procedure of Auction Sale Under SARFAESI Act?

However, in the case of Part performance of a contract, the aggrieved person is always the buyer or a transferee. The effect of the non-performance of a part of the contract will attract legal protection to the transferee, whereby saving the buyer’s interest in the possession on property in dispute.

Section 53-A of the Transfer of Property Act, 1882 defines Part Performance, the text of the section is produced below:

53A. Part performance.—Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[***] 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.

When the nature of immunity arise?

The law protects the possession of the transferee on the immovable property upon which the terms of the contract has not been duly executed by the transferor.

As per the provision of the Act, the immunity of the transferee arises from the date the transferee comes into the possession on property (suit property) by the transferor in part performance of the contract or the transferee was in the possession by being the tenant of the suit property.

The immunity is ascertained from the date of coming into possession which can only be claimed when such possession is challenged by the transferor or a person who is in significance to take possession of the suit property thereof.


Also Read: What are the Defenses A Tenant Establishes in a Tenancy Dispute?

What Evidences are Required to Prove the Possession of the Transferee?

The transferee has to produce on record the agreement to sale of the immovable property by the Transferor in favour of the transferee. The agreement shall also contain, the procedure of the execution of the sale deed and the consideration amount to be transferred by the transferee before or on the date of the execution of the sale deed.

The transferee has on this documentary evidence has to show his continuous willingness for the execution of the sale deed. The agreement executed between the party is the necessary piece of evidence.

In a defence of Part-Performance of contract, the defendant immunity is subject to conditions laid down on conduct of the transferee as per the contract agreed between the parties. However, a contract being not registered can have the same effect in providing protection to the transferee/buyer.

The question on the validity of the agreement for not being registered can have the same force of law in providing the defendant (transferee) the benefit of the security over the possession on the suit property.

Though, this question of law has been observed in the case of Aksha Doogad vs State of M.P and others [2016(2) MPLJ 157].  In the said case the order of the trial court was reversed on the ground that as per Section 49 of the Registration Act, 1908 specifically laid down the provision for not including contracts or deed in evidence if the document is not duly “registered” as per the law.

However, the proviso under Section 49 of the 1908 Act an unregistered document is admissible as evidence considering on the ground of being an oral agreement of a sale and the agreement though not registered can be taken as evidence before a court.

The Court has elaborated the position of law in which has been exclaimed in the  Para 12 of the judgements which reiterates on the said provision:

  1. A document required to be registered if unregistered is not admissible into evidence under Section 49 of the Registration Act.
  2. Such unregistered document can be used as an evidence of collateral purpose as provided in the proviso to Section 49 of the Registration Act.
  3. A collateral transaction must be independent of divisible from the transaction to effect which the law required transaction.
  4. A collateral transaction must be a transaction, not itself required to be effected by a registered document, that is, a transaction creating etc any right, title or interest in immovable property of the value of one hundred rupees and upwards.
  5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.

To the aforesaid principles, one more principle may be added namely that a document required to be registered if unregistered and proved to be used as a collateral transaction can be admitted in evidence of a contract in a suit for specific performance.


Also Read: Who is a Promoter in a Real Estate Project?

The Applicability Of The Defence Of Part Performance Even After Escaped Period Of Limitation.

Section 53-A provides vide protection to the person in possession of an immovable property even a contract not being duly registered can be admissible as evidence to prove the use of such document as a collateral transaction for the sale of the disputed property.

This protection for a person in possession can also extend before the court of law if a suit for specific performance of a contract is filed after the prescribed period of limitation for bringing the suit.

As adjudicated in the Shrimant Rao Suryanwanshi and another v/s Pralhad Bhairoba Suryawanshi and another [2002(1) MPLJ 589], in the said case, the parties agreed for the sale of immovable property whereupon, in part performance, the defendant was placed in possession of the suit property.

The plaintiff filed a suit for declaration and possession whereby it pleaded for the dispossession of the defendant from the suit property. The defendant in its protection raised the defence as per Section 53-A of the Transfer of Property Act, 1882. The plaintiff, however, executed the sale deed with a third party. However, the trial court dismissed the suit for specific performance, against which the plaintiff filed letters patent Appeal before the Bombay High Court.

The Court adjudicated on the legal protection the defendant by comprehending a scenario wherein a suit for specific performance is filed by the defendant against the plaintiff, which will be ineffective because of the prescribed limitation within which such suit can be brought.

So can a defence available to the defendant can be curtailed because of the period of limitation. The court held otherwise which said that as per the rule of limitation, the law of limitation is not applicable to a plea taken in defence unless expressly a provision is made in the statute.

The law of the limitation only applies to suits and application which means it only bars or take away the remedy of a plaintiff to enforce his rights by bringing an action in a court of law. The law of limitation does not restrict the defendants to put forward any defence. As it was rightly held in M.K Venkatachari and Ors. v/s I.A.R Arunachalan Pillai and Ors [1967 AIR Madras 410] defence to limitation is a creature of positive law and therefore it cannot be extended to cases which do not strictly fall within the enactment.


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