What is rule of art performance?
Meaning of rule of art performance: – The rule of art performance is based on the principle of equity, was developed in England and was later added to the Transfer of Property Act, 1882, through the Amendment Act of 1929.
In the law of contract (for example, a contract for sale), no right is passed until the sale is completed but if a person does his part after entering into the contract or does any act in furtherance of the contract, then he is entitled to reimbursement or compensation in case of the other party steps back.
Section 53A of the act states both the parties involved have their respective art performances to be played in a contract, the transferor is required to get the documents made and registeration done whereas the tranferee is required to pay the requisite amount and hence posses the property. But if there comes up a case where the transferor has missed out the registeration part or if there is any other fault in the completion of the contract as prescribed, in such a case, the transferor would not have enough powers or rights to file against the transferee and involved faulty parties. But since the transferor here went wrong, the right and ownership of transferee remain unaffected.
‘A’ contracts with ‘B’ to sell his plot for ‘x’ amount of money. ‘A’ accepts the advance from ‘B’ towards the sale of the plot and hands over the possession of the said plot to ‘B’. After some time, ‘B’ is ready to pay the remaining sale amount but ‘A’ refuses to accept the same. Further, ‘A’ asks ‘B’ to hand over the plot back to him.
Here ‘B’ is ready to perform his part of the contract but ‘A’ is not. In such a case, ‘B’ can bring a case requiring specific performance from ‘A’. It does not matter that the sale was not registered.
What are the essentials of rule of art performance?
The essentials of rule of art performance are as follows: –
- There should be a written contract for the transfer of immovable property by or on behalf of the transferor. The principle cannot be applied if there is a void agreement or no agreement.
- There should be a consideration.
- Contracts should have out the terms of the transfer with reasonable certainty;
- The Transferee must have taken possession as a result of this contract or continued possession if he was already in possession of the property;
- The Transferee may have done some act in advance to the contract. Acts made before the agreement or its independence cannot be considered part of the contract to be performed; And
- The Transferee should have performed its part of the deal or agreed to do it.
What are the objectives behind the doctrine/rule of art performance?
- This Section is based upon the maxim ‘which ought to have been done’.
- In the execution of the transfer of property, the law imposes a duty on both, the transferor and the transferee. Generally, the transferee has to pay the consideration according to the terms of the contract and the transferor has to execute the transfer deed in a manner prescribed by the law.
- Clause 53A focuses on protecting the transferee’s right to retain possession of the property, where there is no fault on his part, as the transferee should not suffer because of the fault of the transferor to complete the instrument of transfer in the prescribed manner.
The transfer can be of immovable property in the form of a sale, and may also be a right of way in the immovable property. Therefore, the rule of art performance applies to leases, mortgages etc.
The situation in Indian law is different from the common law: –
- In India, the contract must be in writing to attract the rule of art performance. Since no special format has been provided for the contract, it does not have to be formal. The rule does not attract oral contract cases where there is a complete absence of any written agreement.
- Simply the contract in writing is not enough, but it must also be signed by the transferor or someone else on behalf of the transferor. If the contract is not signed, it will not be considered a valid contract under this section.
- To attract this section, the contract of sale must be registered (after amendment). Even if the contract of sale is not registered, the section has no application.
- The nature of the transaction should be clear from the reading of the deed and also what rights are being transferred to the transferee.
Possession by the transferee under rule of art performance
One of the main essentials of this section is that the transferee at the time of moving into the contract should have possession of the property. Possession by transferee may be taken after entering into a contract or possession may be a continuous one.
But for attracting this section, the possession of the property should’ve been taken place in part performance of the contract and not for any other purpose.
In case of continuous possession, it must be shown by the transferee that he has done something in advance the contract. A mere continuation of possession by the person who was already in possession before the contract is not sufficient.
For example: – ‘X’ agrees to sell his property to ‘Y’ after a period of two months. But at the moment of the agreement, ‘Y’ had no other place to live, so ‘X’ allows ‘Y’ to live in his property. If the contract fails to takes place, ‘Y’ cannot ask for the retention of possession based on the principle of art performance. As the possession was taken by ‘Y’, here is not done in furtherance of the contract, but it was permission granted by ‘X’ to ‘Y’ for a specific purpose.
Act done in furtherance of the contract
When the property was already in possession of the transferee before the contract, it must be shown by the transferee that he has done something in furtherance of the contract. The act is done and there must be some reasonable real nexus in the contract.
Bonafide transferee rights not affected
Where a subsequent transfer occurs and the transfer is for consideration, the transfer would be valid if there was no notice of the contract already existing. This notice will include an actual as well as constructive notice.
The transferee must have taken reasonable care before entering into the transaction. In a case where the transferee is unaware of the contract, but if he would have become aware of it by taking reasonable care, it will be presumed that the transferee had constructive notice.
Difference between the rule of art performance followed in English and Indian law
|English law of art performance||Indian law of art performance|
|The contract must not be written or signed by the transferor.||Section 53(A) deals with the Doctrine and states that the contract must be in writing as well as signed by the transferor.|
|Right under this doctrine is an equitable right.||The right under the doctrine is a statutory right.|
|Right under principle is an equitable right.||It can only be used to defend the possession of transferee.|
|It creates a title in the Transferee.||It does not create a title in the transferee.|
Case laws of rule of art performance
- Kukaji vs. Basantilal AIR 1955 MB 93
The fact of the case: – ‘A’ mortgaged his house to ‘B’ and gave possession of it. Later, ‘A’ sold the house to ‘B’, but it is not registered. The consideration for the sale was a mortgage loan. After some time, the property was sold to ‘C’ and got the transfer deed registered. ‘C’ sued ‘B’ to release the mortgage. ‘B’ moved under Section 53(A) of the Transfer of Property Act, claiming retention of possession under rule of art performance.
The Judgment of the case: – In this case court held that ‘B’ was already in possession of the property as a mortgage. The continuity of possession is not a part performance ‘B’ would have to show that they had done something else to advance the contract.
- Sardar Govindrao Mahadik vs. Devi Sahai
Facts of the case: – ‘A’ mortgaged his property to ‘B’ and gave possession of the same. Subsequently, an agreement was reached between ‘A’ and ‘B’ to sell the mortgaged property. For the same, the mortgagee advanced Rs. 1000 for purchase of stamp to be affixed on a deed. The sale deed was never registered.
Later, ‘A’ sold the property to ‘C’ and ‘A’ and ‘C’ then filed a lawsuit against ‘B’ for the redemption of the property. ‘B’ claimed that the benefit of the principle of partial performance on the ground i.e., a sale deed was executed in his favor; he retained possession and Rs. 1000 for purchase of stamp which should be considered in the advancement of proceeding of the contract.
The Judgement of the case: – In this case court held that the money provided for the purchase of the stamp is owed to the contract and no further work is done. ‘B’ was not entitled to benefit of the principle of part performance.