A agrees to sell his house to B. B pays advance money and takes possession, but the sale deed is not executed. A then refuses to execute the sale deed. Advise B.

B's Immediate Protection: Section 53A

The first and most immediate protection available to B is under section 53A of the Transfer of Property Act, 1882. B has paid advance money and taken possession — these two facts together, supported by a written and signed agreement, satisfy the essential conditions of the doctrine of part performance. A cannot evict B or assert any right over the property so long as B is willing to perform his part of the contract.

The Supreme Court in Rambhau Namdeo Gajre v Narayan Bapuji Dhotra (2004 8 SCC 614) stated with clarity that section 53A operates as a shield — it disentitles the transferor from disturbing the possession of the proposed transferee who has been put into possession under the agreement. A, therefore, cannot file a suit for possession against B, cannot sell the property to a third party and use that as a ground to evict B, and cannot in any manner assert his ownership rights in a manner that contradicts the terms of the contract.

However, it must be remembered that this protection operates only as a defence. B cannot use section 53A to compel A to execute the sale deed, nor can he obtain a declaration of title on this basis alone. For that, B must look to a separate, more powerful remedy.

B's Affirmative Remedy: Suit for Specific Performance

B's real weapon lies in the Specific Relief Act, 1963. Under section 10 of that Act, specific performance of a contract for transfer of immovable property is ordinarily granted by the court, since it is presumed that monetary compensation cannot adequately substitute for the unique value of immovable property. B can file a suit praying that A be directed by a court decree to execute the registered sale deed in B's favour.

To succeed, B must satisfy the court of the following: that there is a valid and enforceable contract for the sale of the house; that B has paid advance money, demonstrating his seriousness and partial performance; that B is ready and willing to perform his remaining obligations under the contract — meaning, he is prepared to pay the balance consideration; and that A's refusal to execute the sale deed is a breach of the contract. The Supreme Court in Nathulal v Phoolchand (AIR 1970 SC 546) recognised that a party cannot be called unwilling merely because he awaits performance of a condition by the other side — if A was obliged to fulfil any prior condition before demanding the balance, B's withholding of payment does not amount to unwillingness.

The readiness and willingness required under section 16(c) of the Specific Relief Act must be genuine and unconditional. In Jacob Pvt Ltd v Thomas Jacob (AIR 1995 Ker 249), the court held that willingness loaded with conditions — such as insisting on the other party clearing certain dues before payment — is not the kind of absolute willingness that the law demands. B must therefore come to court with clean hands and demonstrate an unqualified preparedness to pay the balance and complete the transaction.

What if A Sells to a Third Party?

A real danger lurking in B's situation is that A, having refused to execute the deed in favour of B, may attempt to sell the house to some other person — perhaps C — through a registered sale deed, hoping to defeat B's claim. The law does not permit A to do this without consequence.

If C purchases the property with notice of B's contract or of B's possession, C is bound by the same disability as A under the proviso to section 53A. The Supreme Court in Hemraj v Rustomji (AIR 1953 SC 503) held that the protection of part performance cannot be invoked against a bona fide transferee for value who has no notice of the contract. But where C knows — or where B's visible possession puts C on constructive notice — C cannot claim the shield of a bona fide purchaser. B's possession of the house is itself notice to the world; any subsequent purchaser who fails to enquire about the nature of B's possession does so at his own peril, as affirmed in DS Parvathamma v A Srinivasan (AIR 2003 SC 3542).

B's Position: A Summary of Steps

B should proceed as follows:

• Remain in possession — B should not vacate the property, since his physical possession is both the foundation of his defence under section 53A and evidence of part performance.

• File a suit for specific performance under section 10 of the Specific Relief Act, 1963, praying for a court decree directing A to execute the registered sale deed, coupled with a prayer for permanent injunction restraining A from alienating or creating any third-party interest in the property pending the suit.

• Plead and prove readiness and willingness to pay the balance consideration — this is a condition sine qua non for the grant of specific performance.

• If eviction is attempted, B raises the defence of part performance under section 53A to resist dispossession, in addition to prosecuting the specific performance suit.

It is important to note that filing a suit for specific performance is not a precondition for claiming protection under section 53A — the Supreme Court confirmed in Ranchhoddas Chhaganlal v Devaji Supdu Dorik (AIR 1977 SC 1517) that the two remedies are independent of each other. But prudence dictates that B pursue both simultaneously, for the specific performance suit will ultimately give him title, which is the only complete and enduring answer to A's refusal.

One Caution: Limitation

B must act within the period of limitation prescribed under the Limitation Act, 1963 — a suit for specific performance of a contract must generally be filed within three years from the date fixed for performance of the contract, or from the date the plaintiff has notice of the refusal. A's outright refusal to execute the sale deed triggers the running of limitation from that date itself. The right under section 53A, interestingly, does not itself become extinguished merely because the period of limitation for a specific performance suit has expired — the Supreme Court in Mahadeva v Tanabai (2004 8 SCC 88) held that the right to protect possession under section 53A survives even if the specific performance suit has become time-barred. But to obtain the ultimate relief of title, B must file his suit in time.