Source: Supreme Court 

Why in News? 

Justice Sudhanshu Dhulia and Justice Prasanna B. Varale held that protection under Section 53A of the Transfer of Property Act, 1882 (“TPA”), for a person possessing a property under part performance of a contract, is not available to a party who knowingly entered into the agreement despite being aware of pending litigation. 

• The Supreme Court has held in the matter of Raju Naidu v. Chenmouga Sundra & Ors (2025). 

What was the Background of Raju Naidu v. Chenmouga Sundra & Ors Case? 

• Chenmougam Aroumugam (father of respondents 1-8) purchased a ½ share of 'A' Schedule property under a sale deed. 
• On 15^th December 1959, Tiranti Tam (mother of respondents 1-8) purchased the other ½ share of 'A' Schedule property (Door No. 10, Mariamman Kovil Street, Thiruvalluvar Nagar, Pondicherry). 
• On the same day the father donated his half share to his wife, making her the absolute owner of the entire 'A' Schedule property. 
• The mother died on 11^th February 1976, leaving behind respondents 1-8 as her legal heirs. 
• On 12^th December 1977, the father purchased 'B' Schedule property. 
• The father bequeathed the 'B' Schedule property through a Will in favor of respondent No. 9, allegedly after developing intimacy with her. 
• Respondent No. 2 filed a suit against his father seeking permanent injunction to prevent alienation of the suit properties. 
• On 22^nd June 1981, while the suit was pending, the father executed a sale agreement with Raju Naidu (appellant) for the 'B' Schedule property for Rs. 60,000. 
  • Rs. 10,000 was paid as advance on the same day. 
  • Rs. 30,000 was paid later. 
  • Rs. 20,000 remained unpaid. 
  • The appellant was put in possession of the property. 
• The court decreed in favor of respondent No. 2, directing the father not to alienate Item 2 of the suit properties to the extent of 7/8th share. 
• The father executed another Will in favor of respondent No. 9 in respect of 'A' Schedule property. 
• The father died during the pendency of his appeal against the judgment in OS No. 262 of 1980. 
• Respondents 1-8 filed a suit against respondent No. 9 and the appellant to: 
  • Declare both Wills void and unenforceable. 
  • Establish themselves as rightful owners of 'A' and 'B' Schedule properties. 
  • Direct the appellant to pay rent for 'B' Schedule property. 
• The subsequent legal proceedings centered around: 
  • The validity of the two Wills executed by the father. 
  • The legal rights of the appellant who had paid partial consideration and was in possession of the 'B' Schedule property. 
  • The refund of the advance money paid by the appellant. 
  • The timing and execution of court orders regarding property possession. 
• Trial Court (Principal Subordinate Judge at Puducherry) 
  • Declared Exhibit A7 Will (for 'B' Schedule property) as void and not binding on respondents 1-8. 
  • Declared Exhibit A8 Will (for 'A' Schedule property) as void and unenforceable to the extent of 7/8th share. 
  • Held that respondents 1-8 are:  
    • Rightful owners of 7/8th share of 'A' Schedule property. 
    • Absolute owners of 'B' Schedule property. 
  • Ordered respondents 1-8 to refund the advance money of Rs. 40,000 to the appellant within three months. 
  • Entitled respondents 1-8 to recover possession of 'B' Schedule property within one month after such payment. 
• Appellate Court (III Additional District Judge at Pondicherry) 
  • Held that Exhibit A8 Will (for 'A' Schedule property) was valid to the extent of 1/9th share in favor of respondent No. 9. 
  • Held that Exhibit A7 Will (for 'B' Schedule property) was valid to the extent of 1/4th share. 
  • Partly allowed the appeal in favor of the respondents. 
  • Dismissed the appeal (A.S. No. 145 of 1989) filed by the appellant. 
• High Court of Judicature at Madras 
  • Applied the doctrine of 'merger' - held that once the decree is modified by the Appellate Court, the Trial Court's decree merges with it. 
  • Rejected the contention that execution petition was time-barred, noting that:  
    • The Appellate Court passed its judgment in 1993. 
    • Review petitions remained pending until December 13, 2001. 
  • Held that Section 53A of the Transfer of Property Act was not applicable because:  
    • The appellant had knowledge about the pendency of the suit. 
    • Yet still entered into an agreement with the father of respondents 1-8. 
  • Supported the Executing Court's extension of time for deposit under Section 148 of CPC. 
  • Noted that limited rights of a transferee during litigation (lis pendens) cannot obstruct decree holders' rights to execute the decree. 
• The appeal was filed before the Supreme Court. 

What were the Court’s Observations? 

• The Supreme Court observed the following: 
  • There is no fault with the High Court's observations and conclusions. 
  • The Court confirmed the doctrine of 'merger' - when an Appellate Court passes a decree, the decree of the Trial Court merges with it regardless of whether it affirms, modifies, or reverses the original decree. 
  • It Supported the High Court's finding that there was no inordinate delay in execution. 
  • The Court agreed that Section 53A of TPA was not applicable in this case. 
  • The Court endorsed the view that the limited rights of a transferee during litigation cannot obstruct the decree holders' execution rights. 
  • Finally, the Court dismissed the appeal as devoid of merit. 

What is Section 53A of TPA? 

• Section 53A of TPA provides for part performance of contract.  
• The purpose for introducing Section 53 A in TPA is to partly set right the conflict of views in this country.  
• Principally, it was inserted however for the protection of ignorant transferees who take possession of or spend money on improvements relying on documents which are ineffective as transfers or on contracts which cannot be proved for want of registration.   
• The effect of this section is to relax the strict provisions of the Transfer of Property Act and the Registration Act in favor of transferees in order to allow the defense of part performance to be established.  
• Section 53-A is an exception to the provisions which require a contract to be in writing and registered and which bar proof of such contract by any other evidence.  
• The exception must therefore be strictly construed. 

What are the Conditions Requisite for Invoking Section 53A of TPA?  

• The conditions requisite for invoking Section 53 A of TPA are as follows:  
  • There is a contract in writing by the transferor for transfer for consideration of any immovable property signed by him or on his behalf, from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty.  
  • 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.  
  • The transferee has done some act in furtherance of the contract and has performed or is willing to perform his part of the contract.  
• Thus, the elements of Section 53 A of TPA:  
  • Existence of an Agreement:  
    • There must be a valid agreement between the parties for the transfer of property, even if it is not in writing or registered.  
  • Payment of Consideration:  
    • The transferee must have paid or agreed to pay the consideration, either fully or in part, as per the terms of the agreement.  
  • Taking Possession or Making Improvements:  
    • The transferee must have taken possession of the property or performed substantial acts of improvement on it based on the agreement.