Hamzabi and Ors. Vs. Syed Karimuddin and Ors.
EmailAppeal: Civil Appeal No. 3419 of 1988
(From the Judgment and Order dated 25.9.87 of the Bombay High Court in S.A. No. 201 of 1981)
(From the Judgment and Order dated 25.9.87 of the Bombay High Court in S.A. No. 201 of 1981)
Petitioner: Hamzabi and Ors.
Respondent: Syed Karimuddin and Ors.
Apeal: Civil Appeal No. 3419 of 1988
(From the Judgment and Order dated 25.9.87 of the Bombay High Court in S.A. No. 201 of 1981)
(From the Judgment and Order dated 25.9.87 of the Bombay High Court in S.A. No. 201 of 1981)
Judges: V.N. KHARE & RUMA PAL, JJ.
Date of Judgment: Nov 28, 2000
Appearances:
Mr. Ranjit Kumar, Mr. Kashi Vishweshwar, Ms. Nandini Gore and Mrs. Manik Karanjawala, Advocates for the Appellants.
Mr. S.V. Deshpande, Advocate for the Respondents.
Head Note:
TRANSFER OF PROPERTY
Transfer of Property Act, 1882
Sections 53, 60 – Mortgage and possession in part performance of sale agreement – Impact on right to redeem mortgage – ‘M’ mort-gaging house to ‘H’ – Later ‘M’ agreeing to sell house to one ‘Y’, husband of ‘H’ – Before execution of sale deed, ‘M’ died – Later sale deed executed by son and daughter of ‘M’ in favour of ‘H’, who adjusted mortgage amount and paid balance in cash – This document not registered – ‘Y’ improving the property – Later son and daughter and other heirs of ‘M’ selling house to ‘K’ for higher amount – Amount of mortgage retained to redeem mortgage – Suit filed by ‘K’ for redemption – ‘Y’ permitted to become party – Meanwhile ‘Y’ died and LRs brought on record – If equity of redemption was extinguished and ‘K’ entitled to redeem the mortgage – No evidence to show that ‘Y’ was not ready and will-ing to perform his part of contract – Nothing for him to be performed. Held that ‘K’ was debarred from claiming the posses-sion of property. Case law discussed.(Paras 4, 9 to 14, 21 to 24)
Transfer of Property Act, 1882
Sections 53, 60 – Mortgage and possession in part performance of sale agreement – Impact on right to redeem mortgage – ‘M’ mort-gaging house to ‘H’ – Later ‘M’ agreeing to sell house to one ‘Y’, husband of ‘H’ – Before execution of sale deed, ‘M’ died – Later sale deed executed by son and daughter of ‘M’ in favour of ‘H’, who adjusted mortgage amount and paid balance in cash – This document not registered – ‘Y’ improving the property – Later son and daughter and other heirs of ‘M’ selling house to ‘K’ for higher amount – Amount of mortgage retained to redeem mortgage – Suit filed by ‘K’ for redemption – ‘Y’ permitted to become party – Meanwhile ‘Y’ died and LRs brought on record – If equity of redemption was extinguished and ‘K’ entitled to redeem the mortgage – No evidence to show that ‘Y’ was not ready and will-ing to perform his part of contract – Nothing for him to be performed. Held that ‘K’ was debarred from claiming the posses-sion of property. Case law discussed.(Paras 4, 9 to 14, 21 to 24)
Cases Reffered:
1. Pomal Kanji Govindji v. Vrajlal Karsandas Purohit (JT 1988 (4) SC 307) (Para 2)
2. Sardar Govindrao Mahadik and Another v. Devi Sahai and Others (1982 (1) SCC 237) (Para 6)
3. Narandas Karsondas v. S.A. Kamtam and Another (AIR 1977 SC 774) (Para 3)
4. Nathulal v. Phoolchand (1969 (3) SCC 120) (Para 5)
5. Maneklal Mansukhbhai v. Hormusjii Jamshedji Ginwalla & Sons, (AIR 1950 SC 1) (Para 23)
JUDGEMENT:
RUMA PAL, J.
1. The question to be determined in this case is whether Section 53A 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 mort-gage deed. It is a right which has been zealously 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 protec-tion.
(See: Pomal Kanji Govindji v. Vrajlal Karsandas Purohit (JT 1988 (4) SC 307 = AIR (1989) SC 436) 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 mort-gagee. 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.”
3. 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 Another (AIR 1977 SC 774) 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”.
4. Section 53A provides for another equitable principle, viz. the doctrine of part performance. The Chancery Court had devel-oped 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 53A 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 consti-tute the transfer can be ascertained with reasonable certainty,
and the transferee has, in part performance of the con-tract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in posses-sion 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 transferrer 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.”
5. The conditions necessary under this Section for making out the defence of part performance to an action in ejectment by the owner have been extricated in Nathulal v. Phoolchand (1969 (3) SCC 120) as:
(1) that the transferrer has contracted to transfer for considera-tion 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 con-tract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in posses-sion 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.”
6. The language of the Section is mandatory, and if the condi-tions 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 claim-ing 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” See Sardar Govindrao Mahadik and Another v. Devi Sahai and Others (1982 (1) SCC 237).
7. This Court in Narandas Karsondas v. S.A. Kamtam and Another (supra) was not called upon to decide whether the equity of redemption could also be extinguished by part performance of a contract of sale under Section 53A. 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 53A against the transferor, provided of course, the preconditions for the application of Section 53A are fulfilled. Given the mandatory language of Section 53A, it must be held that in such a situation the equity of redemption in the mortgagor/vendee 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 53A but would result in an anoma-lous situation. An owner who may not have mortgaged his property cannot be in a worse position vis-a-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.
8. Let us now consider the facts of this case:
The subject matter of dispute is a house at Mohalla Boiwada, Aurangabad. The house belonged to one Mohd. Hussain. In 1951, Mohd. Hussain created a usufructuary mortgage of the house for 7 years in favour of the petitioner no.1 for a consideration of Rs.700/-. If the amount were not repaid within the period of 7 years, the mortgagee would be entitled to retain the mortgaged house in her possession till the payment of amount or by filing suit for foreclosure, get the same foreclosed.
9. In 1953, Mohd. Hussain agreed to sell the house to petitioner no.1’s husband, Mohd. Yarkhan for Rs.825/-. The agreement is evidenced by a document, dated 8th July, 1953, which records that Mohd. Hussain had received Rs.15/- as earnest from Mohd.Yarkhan and:
“transferred the possession of the mortgage of the house by way of as a sale (sic). The remaining amount will be received in cash before the competent authority at the time of registration. Hence, I have given these few sentences as an Isar Pawati. The registration will be effected on 15th July, 1953”.
10. Mohd. Hussain died before any sale deed was registered. On 21st June, 1954, a sale deed was executed by Amir Hussain and Rabiyabi, the son and daughter of Mohd. Hussain in favour of petitioner no. 1. This document records that the sale of the house was effected for a consideration of Rs.900/- and that after adjusting the mortgage amount of Rs. 700/-, the remaining amount of Rs.200/- had been received in cash. The document, however, was not registered.
11. According to the petitioners, after this, Mohd.Yarkhan im-proved the mortgaged property and made various additions and alterations and converted the two room house into a 15 roomed one.
12. On 12th January, 1965 a sale deed was executed by which Amir Hussain, Rahimabi, Rabiyabi, Anisabi, and Hamidabi, all claiming to be the children of Mohd. Hussain, sold the house to the re-spondent no. 1 for a sum of Rs. 3000/-, out of which an amount of Rs. 600/- was retained by respondent no.1 for the purpose of redeeming the mortgage in favour of the petitioner no. 1.
13. Five months later, the respondent no.1 filed a suit against the petitioner no.1 for redemption of the mortgage and for pos-session of the house. The trial court dismissed the suit inter alia on the ground that the petitioner no.1 was not the true mortgagee but her husband Mohd. Yarkhan was. The respondent no.1 preferred an appeal before the District Judge. The District Judge, while upholding the finding that Mohd. Yarkhan was the actual mortgagee, reversed the decision of the trial court and passed a decree permitting the respondent no.1 to redeem the mortgage. The High Court in second appeal was of the view that because of the concurrent finding that the petitioner no.1 was really the ‘benamidar’ of Mohd. Yarkhan, the suit should have been dismissed as Mohd.Yarkhan had never been made a party. It was noted that had Mohd.Yarkhan been a party, he could have claimed protection from eviction under Section 53A of the Trans-fer of the Property Act. The parties conceded the position before the High Court. The appeal was accordingly allowed and the decree of the District Judge set aside. The suit was remanded to the trial court with a direction that the respondent no. 1 should be permitted to add Mohd. Yarkhan as a party to the suit and if this was done then, Mohd. Yarkhan should be given an opportunity to file his written statement and to raise all the contentions which were open and available to him and the suit should then be disposed of on merits.
14. By the time the matter was remanded back, Mohd. Yarkhan was dead. As such his legal heirs, namely the petitioner nos. 2 to 7 before us, were added as defendants in the suit. They filed a written statement in which they inter alia claimed the right to retain possession of the house by virtue of Section 53A of the Act. After framing of fresh issues, the trial court again dismissed the respondent no.1’s suit on 31st October, 1977. The trial court held that the agreement of sale dated 8th July, 1953 was proved; that Rahimabi, Anisabi, and Hamidabi were also the children of Mohd. Hussain along with Amir Hussain and Rabiyabi; that Amir Hussain and Rabiyabi had executed the sale deed on 21st June, 1954 in favour of the petitioner no.1 as ‘benamidar’ of Mohd. Yarkhan; that the respondent no.1 had purchased the house with notice of the agreement for sale, dated 8th July, 1953 and the part performance thereof, that the petitioners had been able to establish all the ingredients of Section 53A and that because of this the respondent no.1 was not entitled to redeem the house or seek possession of it.
15. On appeal, the Assistant Judge by his judgment, dated 20th December, 1980 upheld the findings of the trial court on all issues but held that the plea under Section 53A of the Act was not available to the petitioners as there was no evidence that Mohd. Yarkhan was ready and willing to perform his part of the contract. This was based on the finding that the agreement to sell mentioned that the sale deed was to be executed and the sale completed on 15th July, 1953 and that there was no evidence that Mohd.Yarkhan had offered to pay the balance consideration and get the deed executed on 15th July, 1953 or during Mohd. Hussain’s lifetime. The Assistant Judge negatived the submission of the petitioners that the execution of the sale deed on 20th June, 1954, showed that Mohd. Yarkhan was willing to perform the contract dated 15th July, 1953. In reversing the decree of the trial court and allowing the respondent no.1 to redeem the mort-gage by payment of Rs.600/- to the petitioner, the District Judge noted that:
“The evidence has been brought on record to the effect that certain improvements have also been made by the mortgagees in the mortgaged property and that, therefore, the plaintiff is not entitled to get the possession of the suit property as it exists now. This question will be finally decided while passing a final decree ordering the delivery of possession.”
16. The petitioner no.1 had died during the proceedings before the trial court. The remaining petitioners challenged the deci-sion of the Assistant Judge before the High Court. The High Court held that as a matter of law, the equity of redemption was not extinguished even if the conditions under Section 53A of the Act had been fulfilled by the petitioners. As such, the High Court was of the view that the respondent no.1 was entitled to redeem the mortgage and dismissed the appeal.
17. The petitioners have impugned the decision of the High Court before this Court. After granting special leave on 27th Septem-ber, 1988, it was found necessary to have a factual finding of the High Court whether the appellants were ready and willing to perform their part of agreement, dated 8th July, 1953. Pre-sumably this was because the principle of law enunciated by the High Court was unacceptable. The appeal was directed to be heard after the finding of the High Court on the point was re-ceived, on the evidence on record and within the ambit of second appeal, keeping in view the findings recorded by the trial court.
18. The High Court by its decision dated 3rd February, 1989 came to the conclusion that the petitioners were not ready and willing to perform the agreement, dated 8th July, 1953. The High Court deduced this from the fact that in the written statement, filed by petitioner no. 1 in 1965, there was no mention regarding willingness to perform the part of the contract either on the petitioner no.1’s or Mohd. Yarkhan’s part. The second ground for finding against the petitioners was that the balance considera-tion was not paid even when Amir Hussain and Rabiyabi executed the unregistered sale deed in favour of the petitioner no.1 on 20th June, 1954.
19. The basic facts, as narrated in this judgment, have been ac-cepted by all the Courts. The question remains whether the Assistant Judge and the High Court were right in drawing the inference from the established facts that Mohd. Yarkhan was not ready and willing to perform his part of the contract, dated 8th July, 1953. If the inference was perverse and the petitioners are, therefore, entitled to the protection of Section 53A, then for the reasons stated earlier, the respondent no.1’s right of redemption does not survive and the appeal must be allowed.
20. The decision in Mahadik’s (supra) is instructive as that was a case where the question of readiness and willingness of the mortgagee/vendee was in issue. In that case, the owner, Mahadik, had mortgaged his house to Sahai. The mortgage was not a usufruc-tuary mortgage. Although Sahai was given possession of the house, nevertheless he was accountable to Mahadik for the rent earned from the house. The mortgagor, Mahadik was also required to pay interest on the rent amount, to secure which, the mortgage has been created. A draft deed of sale was prepared on 5th October 1945, under which Mahadik purportedly sold the house to Sahai in consideration for finalising the accounts of the mort-gage, repaying the other creditors of the mortgagor and payment of the balance consideration money in cash at the time of regis-tration. The sale deed was not registered. In the suit filed by Mahadik for redemption and possession, Sahai claimed protec-tion under Section 53A of the Act. The High Court found in favour of Sahai. This Court reversed the finding, having deter-mined from the facts that no action had been taken by Sahai in furtherance of the sale deed. Sahai had not settled the mortgage accounts nor had he paid the creditors of the mortgagor. Sahai’s possession was also not relatable to the contract of sale. In an application filed by Sahai in proceedings, subsequent to the execution of the sale deed, Sahai had claimed that an amount of Rs.27,792.23 was due under the mortgage from Mahadik. This Court also found that the agreement on which Sahai had relied upon was not a concluded contract because the parties were not ad idem. According to Mahadik, the agreement did not correctly reflect the negotiations between the parties which was that there would be a conditional sale. That was why Mahadik had refused to execute the deed of sale. Sahai’s defence was negatived but it is apparent that Mahadik’s case proceeded on the basis that had Sahai been successful in establishing his claim under Section 53A, Mahadik would not have been entitled to possession.
21. 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 was 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 was 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.
22. 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 spe-cifically held that Yarkhan should be added as a party and that he should be permitted to raise the defence of Section 53A. This was done. To reject the plea of the willingness of Yarkhan on the basis of the earlier written statement, filed by the peti-tioner 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.
23. 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. Hus-sain. 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. As stated in Maneklal Mansukhbhai v. Hor-musjii Jamshedji Ginwalla & Sons, (AIR 1950 SC 1):
“The defendant and his predecessor-in- interest were willing to perform their part of the contract. As a matter of fact, they have performed the whole of it. All that remains to be done is the execution of a lease deed by the lessor in favour of the lessee and of getting it registered.”
24. The four conditions under Section 53A 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.
1. The question to be determined in this case is whether Section 53A 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 mort-gage deed. It is a right which has been zealously 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 protec-tion.
(See: Pomal Kanji Govindji v. Vrajlal Karsandas Purohit (JT 1988 (4) SC 307 = AIR (1989) SC 436) 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 mort-gagee. 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.”
3. 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 Another (AIR 1977 SC 774) 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”.
4. Section 53A provides for another equitable principle, viz. the doctrine of part performance. The Chancery Court had devel-oped 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 53A 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 consti-tute the transfer can be ascertained with reasonable certainty,
and the transferee has, in part performance of the con-tract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in posses-sion 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 transferrer 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.”
5. The conditions necessary under this Section for making out the defence of part performance to an action in ejectment by the owner have been extricated in Nathulal v. Phoolchand (1969 (3) SCC 120) as:
(1) that the transferrer has contracted to transfer for considera-tion 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 con-tract, taken possession of the property or any part thereof, or the transferee, being already in possession continues in posses-sion 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.”
6. The language of the Section is mandatory, and if the condi-tions 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 claim-ing 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” See Sardar Govindrao Mahadik and Another v. Devi Sahai and Others (1982 (1) SCC 237).
7. This Court in Narandas Karsondas v. S.A. Kamtam and Another (supra) was not called upon to decide whether the equity of redemption could also be extinguished by part performance of a contract of sale under Section 53A. 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 53A against the transferor, provided of course, the preconditions for the application of Section 53A are fulfilled. Given the mandatory language of Section 53A, it must be held that in such a situation the equity of redemption in the mortgagor/vendee 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 53A but would result in an anoma-lous situation. An owner who may not have mortgaged his property cannot be in a worse position vis-a-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.
8. Let us now consider the facts of this case:
The subject matter of dispute is a house at Mohalla Boiwada, Aurangabad. The house belonged to one Mohd. Hussain. In 1951, Mohd. Hussain created a usufructuary mortgage of the house for 7 years in favour of the petitioner no.1 for a consideration of Rs.700/-. If the amount were not repaid within the period of 7 years, the mortgagee would be entitled to retain the mortgaged house in her possession till the payment of amount or by filing suit for foreclosure, get the same foreclosed.
9. In 1953, Mohd. Hussain agreed to sell the house to petitioner no.1’s husband, Mohd. Yarkhan for Rs.825/-. The agreement is evidenced by a document, dated 8th July, 1953, which records that Mohd. Hussain had received Rs.15/- as earnest from Mohd.Yarkhan and:
“transferred the possession of the mortgage of the house by way of as a sale (sic). The remaining amount will be received in cash before the competent authority at the time of registration. Hence, I have given these few sentences as an Isar Pawati. The registration will be effected on 15th July, 1953”.
10. Mohd. Hussain died before any sale deed was registered. On 21st June, 1954, a sale deed was executed by Amir Hussain and Rabiyabi, the son and daughter of Mohd. Hussain in favour of petitioner no. 1. This document records that the sale of the house was effected for a consideration of Rs.900/- and that after adjusting the mortgage amount of Rs. 700/-, the remaining amount of Rs.200/- had been received in cash. The document, however, was not registered.
11. According to the petitioners, after this, Mohd.Yarkhan im-proved the mortgaged property and made various additions and alterations and converted the two room house into a 15 roomed one.
12. On 12th January, 1965 a sale deed was executed by which Amir Hussain, Rahimabi, Rabiyabi, Anisabi, and Hamidabi, all claiming to be the children of Mohd. Hussain, sold the house to the re-spondent no. 1 for a sum of Rs. 3000/-, out of which an amount of Rs. 600/- was retained by respondent no.1 for the purpose of redeeming the mortgage in favour of the petitioner no. 1.
13. Five months later, the respondent no.1 filed a suit against the petitioner no.1 for redemption of the mortgage and for pos-session of the house. The trial court dismissed the suit inter alia on the ground that the petitioner no.1 was not the true mortgagee but her husband Mohd. Yarkhan was. The respondent no.1 preferred an appeal before the District Judge. The District Judge, while upholding the finding that Mohd. Yarkhan was the actual mortgagee, reversed the decision of the trial court and passed a decree permitting the respondent no.1 to redeem the mortgage. The High Court in second appeal was of the view that because of the concurrent finding that the petitioner no.1 was really the ‘benamidar’ of Mohd. Yarkhan, the suit should have been dismissed as Mohd.Yarkhan had never been made a party. It was noted that had Mohd.Yarkhan been a party, he could have claimed protection from eviction under Section 53A of the Trans-fer of the Property Act. The parties conceded the position before the High Court. The appeal was accordingly allowed and the decree of the District Judge set aside. The suit was remanded to the trial court with a direction that the respondent no. 1 should be permitted to add Mohd. Yarkhan as a party to the suit and if this was done then, Mohd. Yarkhan should be given an opportunity to file his written statement and to raise all the contentions which were open and available to him and the suit should then be disposed of on merits.
14. By the time the matter was remanded back, Mohd. Yarkhan was dead. As such his legal heirs, namely the petitioner nos. 2 to 7 before us, were added as defendants in the suit. They filed a written statement in which they inter alia claimed the right to retain possession of the house by virtue of Section 53A of the Act. After framing of fresh issues, the trial court again dismissed the respondent no.1’s suit on 31st October, 1977. The trial court held that the agreement of sale dated 8th July, 1953 was proved; that Rahimabi, Anisabi, and Hamidabi were also the children of Mohd. Hussain along with Amir Hussain and Rabiyabi; that Amir Hussain and Rabiyabi had executed the sale deed on 21st June, 1954 in favour of the petitioner no.1 as ‘benamidar’ of Mohd. Yarkhan; that the respondent no.1 had purchased the house with notice of the agreement for sale, dated 8th July, 1953 and the part performance thereof, that the petitioners had been able to establish all the ingredients of Section 53A and that because of this the respondent no.1 was not entitled to redeem the house or seek possession of it.
15. On appeal, the Assistant Judge by his judgment, dated 20th December, 1980 upheld the findings of the trial court on all issues but held that the plea under Section 53A of the Act was not available to the petitioners as there was no evidence that Mohd. Yarkhan was ready and willing to perform his part of the contract. This was based on the finding that the agreement to sell mentioned that the sale deed was to be executed and the sale completed on 15th July, 1953 and that there was no evidence that Mohd.Yarkhan had offered to pay the balance consideration and get the deed executed on 15th July, 1953 or during Mohd. Hussain’s lifetime. The Assistant Judge negatived the submission of the petitioners that the execution of the sale deed on 20th June, 1954, showed that Mohd. Yarkhan was willing to perform the contract dated 15th July, 1953. In reversing the decree of the trial court and allowing the respondent no.1 to redeem the mort-gage by payment of Rs.600/- to the petitioner, the District Judge noted that:
“The evidence has been brought on record to the effect that certain improvements have also been made by the mortgagees in the mortgaged property and that, therefore, the plaintiff is not entitled to get the possession of the suit property as it exists now. This question will be finally decided while passing a final decree ordering the delivery of possession.”
16. The petitioner no.1 had died during the proceedings before the trial court. The remaining petitioners challenged the deci-sion of the Assistant Judge before the High Court. The High Court held that as a matter of law, the equity of redemption was not extinguished even if the conditions under Section 53A of the Act had been fulfilled by the petitioners. As such, the High Court was of the view that the respondent no.1 was entitled to redeem the mortgage and dismissed the appeal.
17. The petitioners have impugned the decision of the High Court before this Court. After granting special leave on 27th Septem-ber, 1988, it was found necessary to have a factual finding of the High Court whether the appellants were ready and willing to perform their part of agreement, dated 8th July, 1953. Pre-sumably this was because the principle of law enunciated by the High Court was unacceptable. The appeal was directed to be heard after the finding of the High Court on the point was re-ceived, on the evidence on record and within the ambit of second appeal, keeping in view the findings recorded by the trial court.
18. The High Court by its decision dated 3rd February, 1989 came to the conclusion that the petitioners were not ready and willing to perform the agreement, dated 8th July, 1953. The High Court deduced this from the fact that in the written statement, filed by petitioner no. 1 in 1965, there was no mention regarding willingness to perform the part of the contract either on the petitioner no.1’s or Mohd. Yarkhan’s part. The second ground for finding against the petitioners was that the balance considera-tion was not paid even when Amir Hussain and Rabiyabi executed the unregistered sale deed in favour of the petitioner no.1 on 20th June, 1954.
19. The basic facts, as narrated in this judgment, have been ac-cepted by all the Courts. The question remains whether the Assistant Judge and the High Court were right in drawing the inference from the established facts that Mohd. Yarkhan was not ready and willing to perform his part of the contract, dated 8th July, 1953. If the inference was perverse and the petitioners are, therefore, entitled to the protection of Section 53A, then for the reasons stated earlier, the respondent no.1’s right of redemption does not survive and the appeal must be allowed.
20. The decision in Mahadik’s (supra) is instructive as that was a case where the question of readiness and willingness of the mortgagee/vendee was in issue. In that case, the owner, Mahadik, had mortgaged his house to Sahai. The mortgage was not a usufruc-tuary mortgage. Although Sahai was given possession of the house, nevertheless he was accountable to Mahadik for the rent earned from the house. The mortgagor, Mahadik was also required to pay interest on the rent amount, to secure which, the mortgage has been created. A draft deed of sale was prepared on 5th October 1945, under which Mahadik purportedly sold the house to Sahai in consideration for finalising the accounts of the mort-gage, repaying the other creditors of the mortgagor and payment of the balance consideration money in cash at the time of regis-tration. The sale deed was not registered. In the suit filed by Mahadik for redemption and possession, Sahai claimed protec-tion under Section 53A of the Act. The High Court found in favour of Sahai. This Court reversed the finding, having deter-mined from the facts that no action had been taken by Sahai in furtherance of the sale deed. Sahai had not settled the mortgage accounts nor had he paid the creditors of the mortgagor. Sahai’s possession was also not relatable to the contract of sale. In an application filed by Sahai in proceedings, subsequent to the execution of the sale deed, Sahai had claimed that an amount of Rs.27,792.23 was due under the mortgage from Mahadik. This Court also found that the agreement on which Sahai had relied upon was not a concluded contract because the parties were not ad idem. According to Mahadik, the agreement did not correctly reflect the negotiations between the parties which was that there would be a conditional sale. That was why Mahadik had refused to execute the deed of sale. Sahai’s defence was negatived but it is apparent that Mahadik’s case proceeded on the basis that had Sahai been successful in establishing his claim under Section 53A, Mahadik would not have been entitled to possession.
21. 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 was 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 was 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.
22. 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 spe-cifically held that Yarkhan should be added as a party and that he should be permitted to raise the defence of Section 53A. This was done. To reject the plea of the willingness of Yarkhan on the basis of the earlier written statement, filed by the peti-tioner 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.
23. 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. Hus-sain. 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. As stated in Maneklal Mansukhbhai v. Hor-musjii Jamshedji Ginwalla & Sons, (AIR 1950 SC 1):
“The defendant and his predecessor-in- interest were willing to perform their part of the contract. As a matter of fact, they have performed the whole of it. All that remains to be done is the execution of a lease deed by the lessor in favour of the lessee and of getting it registered.”
24. The four conditions under Section 53A 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.
