Agreement to Sell, Part Performance and a Subsequent Sale
On 5 June 2012, P agrees to sell his house at Warangal to Q for ₹40 lakh. Q pays ₹35 lakh and is put in possession. The agreement says the sale deed will be executed “when demanded” after the balance is paid. No date is fixed. Q pays the balance of ₹5 lakh in 2015, but P does not execute the deed. P dies in 2019. His son R inherits the house. In 2020, R sells the house to S for ₹70 lakh by a registered sale deed. S knows that Q is in possession. In 2023, Q files a suit for specific performance and injunction against R and S. R pleads that the suit is barred by Article 54 of the Limitation Act and that time was of the essence. S pleads that he is a bona fide purchaser for value without notice. Q pleads and proves that he has always been ready and willing to perform.
1. Is Q’s suit barred by limitation under Article 54?
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Article 54 provides three years from the date fixed for performance, or, if no date is fixed, from the date the plaintiff has notice that performance is refused. The agreement fixes no date; it says “when demanded”. Q’s knowledge of the 2020 sale to S can be treated as notice of refusal. The suit in 2023 is within three years of that notice. If the court finds that Q demanded performance earlier and was refused, limitation would run from that refusal; but no such date is pleaded. The plea that time was of the essence fails because no time was fixed and the nature of the transaction does not make time essential. The suit is within limitation.
2. What protection does Section 53A of the Transfer of Property Act give Q against S?
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Section 53A protects a transferee who has a written and signed contract, has paid consideration or performed his part, and has taken possession. Q satisfies these conditions and is willing to perform. Section 53A does not confer title; it is a shield against the transferor and any person claiming under him, except a bona fide purchaser for value without notice. S is not such a purchaser because Q’s possession was visible and put S on inquiry. Under Section 3 TP Act, notice includes constructive notice. S therefore takes subject to Q’s rights, and Q can defend his possession. Section 53A cannot be used as a sword to claim title, but it strengthens Q’s equity in the specific performance suit.
3. Should the court grant specific performance against R and S?
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Specific performance is discretionary but not arbitrary. Section 16(c) of the Specific Relief Act requires the plaintiff to plead and prove readiness and willingness. Q has paid the full price, is in possession, and has proved continuous readiness. R is the legal heir and is bound by the agreement. S purchased with notice of Q’s possession and is not protected. Under Section 19(b) of the Specific Relief Act, specific performance can be enforced against a subsequent transferee who has notice. The court should decree specific performance against R and direct R to execute the sale deed; S’s sale deed will be subject to the decree. If S had been a bona fide purchaser without notice, the court might have refused specific performance and awarded compensation, but that is not the case.