VERY IMPORTANT POINT
When a mortgagor/vendee agrees to sell the mortgaged property to the mortgagee/putative vendee in possession, the mortgagee s status is subsumed or merged in his rights as a putative vendee under Section 53-A against the transferor, provided of course the pre-conditions for the application of Section 53-A are fulfilled. Given the mandatory language of Section 53-A, it must be held that in such a situation the equity of redemption in the mortgagor/vendee (vendor?) is lost to the extent that the mortgagor cannot reclaim possession of the mortgaged property.

Headnote:(i) Transfer of Property Act, 1882 -Section 60 read with Section 53A-Mortgage-Right of Mortgagor to redeem-Impact of Section 53A on right of redemption-Mortgagor agreeing to sell mortgaged property to mortgagee/putative vendee in possession-Mortgagee s status subsumes in his rights as putative vendee under Section 53A-If pre-conditions for application of Section 53A are statisfied equity of redemption in mortgagor is lost to that extent that mortgagor cannot reclaim possession.
       The language of the Section 53A is mandatory, and if the conditions are fulfilled 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 is debarred from enforcing against the transferee 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". (Para 5)
       When a mortgagor/vendee agrees to sell the mortgaged property to the mortgagee/putative vendee in possession, the mortgagee s status is subsumed or merged in his rights as a putative vendee under Section 53-A against the transferor, provided of course the pre-conditions for the application of Section 53-A are fulfilled. Given the mandatory language of Section 53-A, it must be held that in such a situation the equity of redemption in the mortgagor/vendee (vendor?) is lost to the extent that the mortgagor cannot reclaim possession of the mortgaged property. To hold to the contrary, would not only defeat the mandate of Section 53-A but would result in an anomalous situation. An owner who may not have mortgaged his property cannot be in a worse position vis-à-vis the vendee than an owner who may have mortgaged the subject matter of sale to the vendee. The only right left with the owner in both cases is to sue for the completion of the contract. (Para 6)
       (ii) Transfer of Property Act, 1882-Section 53A read with Section 60-Part performance-Mortgagee, putative vendee in possession-In terms of agreement for sale earnest money paid-Mortgagee/putative vendee made improvements to property-On death of vendor legal heirs executed sale deed and received balance consideration-Sale deed not registered-No evidence to support lack of readiness and willingness on part of vendee to perform his part of contract-Non-registration of document within date stated in agreement not fatal to Vendee s case-Mentioning of date in sale agreement in favour of vendee-All conditions of Section 53A fulfilled-Vendor/mortgagor s right to redemption lost-Vendor debarred from claiming possession of mortgaged property.
       In the present case, there is no dispute that the agreement of sale dated 8th July, 1953 was a concluded contract. Yarkhan, the actual mortgagee and putative vendee had acted in terms of the agreement for sale dated 8th July, 1953. The reason given by the Assistant Judge for holding that Yarkhan was not ready and willing to perform his part of the contract of sale with that in terms of the agreement dated 8th July, 1953, the sale was to be completed by 15th July 1953 and that there was no evidence that Yarkhan had called upon Mohd. Hussain to execute the sale deed on that date. This inference of lack of readiness and willingness assumes that the time mentioned in the contract was of the essence of the contract. There is no evidence in support of this. On the other hand, the agreement does not state that if the registration were not effected on 15th July 1953, there would be no sale. The mentioning of the date appears to be a term in favour of the vendee casting a duty on the vendor to complete the vendee s title within the time specified. The term cannot be construed against the vendee to limit his right to have the sale completed on a subsequent date. The reasoning of the High Court is equally unacceptable. Yarkhan was not a party to the suit as originally filed. The High Court in remanding the matter to the Trial Court had specifically held that Yarkhan should be added as a party and that he should be permitted to raise the defence of Section 53-A. This was done. To reject the plea of the willingness of Yarkhan on the basis of the earlier written statement filed by the petitioner No. 1 was, to say the least, erroneous. The second reason given by the High Court is factually incorrect. The balance consideration had in fact been paid to Amir Hussain and Rabiyabi when the unregistered sale deed was executed as averred by Yarkhan and admittedly recorded in the sale deed dated 20th July 1954. The contract for sale required Mohd. Hussain to pay Rs.15/- as earnest money. This had been done. Yarkhan had paid not only the consideration envisaged under the agreement of sale but an additional amount as demanded by two of the heirs of Mohd. Hussain. Yarkhan had drafted the deed of sale and taken it for registration to the Registration Office. Two of the heirs had even executed the deed of sale. It is also in evidence that subsequent to the deed, Mohd. Yarkhan had exercised rights of ownership and altered his position under the contract by adding several rooms to the existing structure at some expense. Yarkhan had, therefore, asserted his possession qua-owner. This was also in terms of the agreement of sale. Short of actual registration of the deed of sale, there was nothing else that Yarkhan could do. The four conditions under Section 53-A of the Act having been fulfilled by the petitioners predecessor in interest, it must be held that the respondent No. 1 is debarred from claiming possession of the mortgaged property. The judgment of the High Court is accordingly set aside and the appeal allowed without any order as to costs. (Paras 20 to 23)

JUDGMENT

Ruma Pal, J.-The question to be determined in this case is whether Section 53-A of the Transfer of Property Act has any impact on the right of redemption granted by Section 60 of that Act.

2. The right of the mortgagor to redeem had its origin as an equitable principle for giving relief against forfeiture even after the mortgagor defaulted in making payment under the mortgage deed. It is a right which has been jealously guarded over the years by Courts. The maxim of once a mortgage always a mortgage and the avoidance of provisions obstructing redemption as "clogs on redemption" are expressions of this judicial protection. [See: Pomal Kanji Govindji v. Vrajlal Karsandas Purohit1 in this context] As far as this country is concerned, the right is statutorily recognised in Section 60 of the Transfer of Property Act. The section gives the mortgagor right to redeem the property at any time after the principal money has become due by tendering the mortgage money and claiming possession of the mortgaged property from the mortgagee. The only limit to this right is contained in the proviso to the section which reads:

"Provided that the right conferred by this section has not been extinguished by act of the parties or by decree of a Court."

While the expression "decree of Court" is explicit enough, the phrase "act of parties" has given rise to controversy. One such act may be when the mortgagor sells the equity of redemption to the mortgagee. This Court in Narandas Karsondas v. S.A. Kamtam and Another2 has said that "in India it is only on execution of the conveyance and registration of transfer of the mortgagor s interest by registered instrument that the mortgagor s right of redemption will be extinguished".

3. Section 53-A provides for another equitable principle viz. the doctrine of part performance. The Chancery Court had developed the principle of part performance to deal with situations when a person took an unfair advantage of the transaction entered into and then denied the transaction itself. The party seeking to resist dispossession must have altered his position and done some act under the contract so that it would amount to fraud in the opposite party to take advantage of the contract not being in writing. The principle was statutorily recognised in the United Kingdom by Section 4 of the Statute of Frauds 1677. In India, Section 53-A similarly protects the possession of persons who may have acted on a contract of sale but in whose favour no legally valid sale deed may have been executed or registered. The section reads :

"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 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 right of a transferee for consideration who has no notice of the contract or of the part performance thereon."

4. The conditions necessary under this Section for making out the defence of part performan

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2000 Supreme(SC) 1902

Cases Referred (5)