Property Law P.S.D.A.

Reaction Paper

Submitted by:
Jaskaran Singh
6-K
05817703515
 Reaction on Article:
CODIFYING THE COMMON LAW OF PROPERTY IN INDIA:
CRYSTALLIZATION AND STANDARDIZATION AS STRATEGIES OF
CONSTRAINT
(Article authored by Shyamkrishna Balganesh)
Sale of property requires a treatment more special than an ordinary contract or agreement.
Under the common law, a sale of land or other immovable property required compliance with
a set of formalities. A mere contract of sale was thus treated by the common law as insufficient
to effect a transfer of ownership. Due to this, the rights and duties of both buyer and seller
remained unaffected under the common law of property even when both parties had intended
the sale to give the transaction a sense of finality. It was to cure this lacuna that doctrine of
equitable conversion was established by common law courts. Doctrine of part performance is
an equitable doctrine. If a person after entering into a contract performs his part or does any act
in furtherance of the contract, he is entitled to reimbursement or performance in case the other
party drags its feet. This doctrine is based on this part performance of contract. If a person has
taken possession of an immovable property on the basis of contract of sale and has either
performed or, is willing to perform his part of contract then, he would not be ejected from the
property on the ground that the sale was unregistered and the legal title had not been transferred
to him. If a contract is made for the purchase and sale of land which has buildings on it, and,
after the making of the contract, but before the conveyance of the land, the buildings be casually
destroyed by fire, upon whom will the loss fall? At law it will clearly fall upon the vendor in
all cases. In equity, however, the majority of courts have placed the risk on the purchaser but
for these courts the most troublesome problem has been to determine as of what moment the
risk passes from vendor to purchaser.

However, the drafters of TP Act sought to eliminate the doctrine of equitable conversion. The
Act said nothing about the risk of loss, the principal area where equitable conversion matters.
Indian courts found themselves constrained to follow the black letter of the law, and all the
consequences that flowed from it. Courts thus accepted not just the literal wording of the
section, but also the underlying idea that it displaced any possible judicial superimposition of
equitable principles. The effects of this constraint were however more than just doctrinal. The
idea that the contract for sale itself created no real interests or obligations shifted the property
system’s emphasis towards the process of “conveying” title and its reliance on formalities in
order to create enforceable real rights. This has resulted in delaying the registration process of
the property and also increased expenditure, which could have been avoided to some extent by
a more robust doctrine.
 Reaction on the case:
Delhi Motor Company and Ors.
Vs.
U.A. Basrurkar and Ors.
Appellant firm brought a suit against the respondent company for possession of a part of the
“Scindia House’ building at Connaught Place, New Delhi, on the basis of an agreement of sub-
lease. It, however, was able to produce only 3 letters purporting to be related to the agreement
but not the actual agreement. According to the Delhi & Ajmer Marwara Rent Control Act, 1947
if a sub-lease had been granted by the Company to the firm without the consent of the landlord,
the Company would have been liable to ejectment from the premises. That’s why the agreement
was not made as directly evidencing a sub-lease, so that the landlord should not have an
opportunity of suing the Company for ejectment. In order to avoid the liability of the Company
for ejectment under the Delhi and Ajmer Merwara Rent Control Act, 1947, the agreement was
sought to be given the form of a partnership; and in order to enable the Company to enter into
such a transaction, a special resolution Ext. P. 4 was passed on 24th November, 1950 at an
Extra-ordinary General Meeting of the Shareholders of the Company amending the
Memorandum of Association of the Company. This amendment was subsequently approved
by the District Judge and was registered with the Registrar of Companies. So far as the landlord
is concerned, he was not a party to these transactions, though, on 5th April, 1951, the landlord
gave a letter Ext. P. 22 recognising the possession of the firm, but he specifically stated in that
letter that the firm would be a licensee and not a sub-lessee. It was further contended buy the
firm when the previous sub-lessees vacated the premises which were included the firm’s sub-
lease leases the Company did not give possession of that portion of the leased property to the
firm and also started obstructing the use of those portions of the property by the firm. A stage
came when the firm was completely dispossessed from the property ]eased and, ultimately,
after giving notices, the firm instituted a suit.

On behalf of the Company and the Directors, the plea put forward was that there was no
agreement of sub-lease or a completed sub-lease between the Company and the firm and that,
in fact, all that took place were negotiations for entering into a partnership. Even the agreement
for partnership was never completed, so that the firm was not entitled to any relief at all.

a bench of three Judges had held that Section 53-A is meant only to bring out a bar against the
enforcement of a right by a lessor in respect of the property of which the lessee had already
taken possession but does not give any right to the lessee to claim possession or to claim any
other right on the basis of an unregistered lease. Section 53-A is available only as a defence to
a lessee and not as conferring a right on the basis of which the lessee can claim rights against
the lessor. In that case the appellants had put forward certain documents as a lease which was
admittedly beyond 11 months and, therefore, it was held that the company was not entitled to
avail of the statutory right under Section 53-A.
 Reaction on the case:
Patel Natwarlal Rupji
Vs.
Shri Kondh Group Kheti Vishayak and another
A sum of Rs. 1,31,596.07 was due from the first respondent and an award for recovery thereof
was made against him and his property was also attached. The petitioner(first respondent) filed
a suit in the court of the Senior Civil Judge at for a declaration that the suit land was not liable
to attachment and sale by public auction to execute the award made in favour of the first
respondent-Society and also for permanent injunction restraining the second respondent [Sale
Officer] from selling the land and also for perpetual injunction restraining them front
interfering with the petitioner's possession and enjoyment of the land.

According to the petitioner, Bai Leelawati, wife of Nagindas as General Power of Attorney had
executed an agreement on June 29, 1969 to sell the said land in his favour for a consideration
of Rs. 35,000. On the even day, he paid a sum of Rs. 15,000 as part consideration and a further
sum of Rs. 15,000 was paid on the following day, i.e., June 30, 1969. The balance amount was
agreed to be paid on or before June 29, 1971. "Pursuant thereto, he was put in possession and
ever since he was in enjoyment thereof in his own right as owner. The proclamation of sale
dated June 22, 1971 of the land by the second respondent [Sale Officer] was illegal.
Consequently, he filed the suit for a declaration and injunction.

The trial Court found that the agreement was genuine, true and valid and that the petitioner was
inducted into possession under the said agreement. The respondents obtained a decree against
Nagindas on May 19, 1970. The proclamation of sale was issued on January 22, 1971. The
agreement of sale had by the petitioner is dated June 29, 1969. Therefore, the petitioner, having
been in possession of the land under the agreement, is entitled to retain possession of the land
and he could not be proceeded with against the said property. Accordingly, tie suit was decreed
on July 31, 1975. On appeal, the Division Bench by the aforesaid judgment and order dated 11,
1988 allowed the appeal and dismissed the suit.
the petitioner contended that by operation of Section 53-A of the Transfer of Property Act is
entitled to retain possession of the land; that he had already performed his part of the contract
except payment of a sum of Rs. 5,000/- which was to be paid at the time of registration of the
document; he having had lawful agreement is entitled to the declaration as prayed for and the
consequent injunctions; the attachment of the property being subsequent to the agreement the
petitioner is entitled to resist the action of the respondents.

The Apex Court observed that the contract for sale of immovable property does not create any
title except when covered under Section 54 of the Act and registered under Section 17 of the
Registration Act, Equally, it does not create an interest in the property. It merely gives a right
to enforce it specifically as an equitable relief in a court of law.

It further observed that the evidence established that the petitioner did not have the
consideration of Rs 30,000 said to have been paid to Bai Leelawati whose husband was
absconding at the relevant time. They had intimacy with Bai Leelawati and her husband. With
a view to save the property of Bai Leelawati, the agreement was brought into existence. It is a
fraudulent agreement and no consideration has been passed thereunder. The agreement (Ex.55)
was executed after the attachment but before judgment was made on February 1, 1969. For vast
property of 53 acres is wet land and 5 acres and odd dry land, the consideration mentioned in
the document is inadequate. It was brought into existence to defeat the right of the respondents
to proceed against the property. In view of these facts though the agreement was in writing, the
petitioner is not a genuine transferee but a privy to the fraud. The contract is a sham and
nominal document fraudulently brought into existence. It would thus be clear that the statutory
rights of part performance under Section 53-A cannot be used for the declaration sought in the
suit. In view of these findings it is unnecessary to go into the question whether the agreement
prevails ever the attachment nor the ratio in Vanarakhal Kallalathil Streedharan's case helps
the petitioner. The trial Court, therefore, com-mitted manifest error in decreeing the suit. The
High Court had rightly adverted to all the relevant facts and the petitioner was denied the right
to avail of the statutory rights under Section 53-A, the case, therefore, did not warrant
interference. The petition was accordingly dismissed.