Transfer of Property Act Section 53A and some relevant provisions

[CA DEV KUMAR KOTHARI]

Protective shield for property buyers:

Section 53A of the Transfer of Property Act, 1882 is to protect non-defaulting buyer of property.

References and links:

The Transfer of Property Act, 1882.

The Indian Contract Act, 1872.

NATHULAL VERSUS PHOOLCHAND [1969 (10) TMI 67 - SUPREME COURT]

Section 53 A of the Transfer of Property Act, 1882 reads as follows (with highlights added by the author for analysis):

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 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.]

Some other relevant provisions of the Transfer of Property Act:

Section 53A cannot be read in isolation of other provisions of the TPA. Therefore, some other related provisions are analysed below by reproducing them with highlights added by author:

Enactments relating to contracts

4. Enactments relating to contracts to be taken as part of Contract Act and supplemental to the Registration Act

The Chapters and sections of this Act which relate to contracts shall be taken as part of the Indian Contract Act, 1872 (9 of 1872).

5. Transfer of property defined

In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to himself and one or more other living persons; and "to transfer property" is to perform such act.

In this section "living person includes a company or association or body of individuals, whether incorporated or not, but nothing herein contained shall affect any law for the time being in force relating to transfer of property to or by companies, associations or bodies of individuals.

8. Operation of transfer Unless a different intention is expressed or necessarily implied, a transfer of property passes forthwith to the transferee all the interest which the transferor is then capable of passing in the property and in the legal incidents thereof.

Such incidents include, when the property is land, the easements annexed thereto, the rents and profits thereof accruing after the transfer, and all things attached to the earth;

and, where the property is machinery attached to the earth, the movable parts thereof; and, where the property is a house, the easements annexed thereto, the rent thereof accruing after the transfer, and the locks, keys, bars, doors, windows, and all other things provided for permanent use therewith;

and, where the property is a debtor other actionable claim, the securities therefor (except where they are also for other debts or claims not transferred to the transferee), but not arrears of interest accrued before the transfer;

and, where the property is money or other property yielding income, the interest or income thereof accruing after the transfer takes effect.

33. Transfer conditional on performance of act, no time being specified for performance Where, on a transfer of property, an interest therein is created subject to a condition that the person taking it shall perform a certain act, but no time is specified for the performance of the act, the condition is broken when he renders impossible, permanently or for an indefinite period, the performance of the act.

34. Transfer conditional on performance of act, time being specified Where an act is to be performed by a person either as a condition to be fulfilled before an interest created on a transfer of property is enjoyed by him, or as a condition on the non-fulfilment of which the interest is to pass from him to another person, and a time is specified for the performance of the act, if such performance within the specified time is prevented by the fraud of a person who would be directly benefited by non-fulfilment of the condition, such further time shall as against him be allowed for performing the act as shall be requisite to make up for the delay caused by such fraud. But if no time is specified for the performance of the act, then, if its performance is by the fraud of a person interested in the non-fulfilment of the condition rendered impossible or indefinitely postponed, the condition shall as against him be deemed to have been fulfilled.

Observations of the author:

On conjoint reading of the above provisions, in view of author , S.53A will provide protection to the transferee of immovable property on condition that there must be full satisfaction of all conditions as laid down in section 53A of the T.P.Act and also all conditions as required to complete sale, as per the Indian Contract Act, 1872, to consider even unregistered sale as transfer protected from adverse action by transferor. In fact there should be complete sale and transfer on fulfillment of all conditions by buyer, and on his willingness to perform certain promises to be met by him in terms of agreement. There should not be fault or even apparent intention to default by the buyer in performance of his promises as per agreement. Section 53A is to protect interest of property buyer who has satisfied his commitments and is willing to satisfy his commitments then only transferor cannot go against him and take back possession or cancel sale.

In case the buyer has made defaults, or from his conduct it appears that he will not fulfill his promises which are required to complete sale, then buyer may not get protection of section 53A and the seller can cancel sale and repossess property. The compliance of conditions, on part of the buyer are to be considered in light of the terms and conditions agreed in the contract, and also the applicable provisions of the Indian Contract Act. Therefore, the seller can insist on the buyer to fulfill his promises which he is required to fulfill, in a sequential manner, if any , applicable and provided in the contract.

An analysis and observations by the Supreme Court of India:

Section 53A of the Transfer of Property Act, 1882, which was added in the statute book by the Transfer of Property (Amendment) Act, 20 of 1929, was analysed by the Supreme Court in the case of NATHULAL VERSUS PHOOLCHAND [1969 (10) TMI 67 - SUPREME COURT] :

"The conditions necessary for making out the defence of part performance to an action in ejectment by owner are :

(1) that the transferor has contracted 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 ;

2.  that 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 ;

3.  that the transferee has done some act in furtherance of the contract ; and

4.  that the transferee has performed or is willing to perform his part of the contract.

If these, 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 been taken or continued in possession other than a right expressly provided by the terms of the contract."

Thus, the amending Act of 1929 has not altered the law in this respect but recognized in a limited manner the English doctrine of part performance and has enabled the transferee to raise the defence, which was not available to him before the said amending Act was passed. Section 53A does not provide that under the circumstances stated therein, a good title passes to the transferee. It only provides that the transferor shall be debarred from enforcing against the transferee and the person claiming under him any right in respect of the immovable property of which the transferee has taken possession. In addition to a valid title section 53A recognizes an equitable interest which might accrue to the transferee in the property on the fulfillment of the conditions mentioned therein.

Conclusions:

In nutshell it can be said that S.53A of TP Act will come into picture for protection of the buyer, only when buyer has performed his promises substantially, and is willing to perform remaining promises, if any, and there is no way in which buyer can be considered to have commit breach or there are indication of buyer breaching his promises when required to be met as per contract. Section 53A is simply to the effect that absence of registration of conveyance deed will not go against the buyer when buyer has performed his part and has purchased property, in a manner and to the extent that sale in his favor is completed except requirement of legal transfer by way of registration. If there is no sale, then S.53A will not be helpful.