Interpretation of Section 57 of Transfer of Property Act, 1882

The Kerala High Court while pronouncing a judgment in the matter of M.P Varghese Vs. Annamma Yacob & Anr., MFA No. 47/2020 on 05.08.2020, observed that-

“The purpose of Section 57 of the TP Act is unmistakable from its tenor that it is intended to assist any party to the sale of an immovable property, which is subject to an encumbrance, to fructify the sale for its fair value after receiving in deposit – for payment to the incumbrancer – the capitalised value of the periodical charge, or the capital sum charged on the property, together with incidental charges. It thus enables the parties to a sale to invoke the jurisdiction of the court for the purpose of fulfilling their contracts, notwithstanding the encumbrances on the property”.
In this matter, the Appellant wanted to sell his property which he has acquired from a partition deed. The said deed contained a covenant that the Appellant has to pay a sum of Rs. 500/- to his sister (Respondent herein) within a year, failing which the said amount would stand charged on the property. However, due to some personal issues between the parties, the Respondent has refused to accept the amount of Rs.500/- and execute necessary receipt in Appellant’s favour. The Appellant had approached the District Court u/s 57 of TP Act, volunteering to deposit the amount of Rs.500/- in favour of the first respondent, so as to obtain a declaration from the said court that the property is free of the said encumbrance however, the District Court dismissed the same on a misdirection as to the scope and amplitude of Section 57 of the TP Act.
The High Court taking opposite view from the District Court observed that “there can be little ground for divergence that the provisions of Section 57 of the TP Act would come to play in a case of this nature, whether the sale been conducted by the court or in execution of a decree or by parties outside court”.

Since there are hardly any precedents in regard to Sec 57 of TP Act, the Court examined it very closely and carefully from both its academic and practical ambit. The said section with the exception of its last two sub-sections is almost a verbatim of Sec 5 of the English Conveyancing and Law of Property Act, 1881, therefore the Court has taken reference from Wilberforce v. Wilberforce ((1915) 1 Ch 94), on the utility and purpose of sec 5.

Section 57 also provides that in the case of sale of immovable property subject to an encumbrance being sold by a court, or in execution of a decree, or out of court, any party to it can apply for a declaration that the said property is free of such encumbrance; in which event, the appropriate court may direct or allow payment, sufficient to meet the encumbrance on the property, into court. There is thus no doubt that this section is intended to facilitate sale out of court, as much as it is for sale by a court or in execution of a decree.

The Court also held that sec 57 of TP Act is wider in its amplitude than Section 83 or Order XXXIV Rule 12 of the CPC, since it permits the court to declare a property free of encumbrance even against the will of the encumbrancer and even in the case of sales not directed by Order XXXIV of the CPC.

However, reiterating the provisions voiced by the Hon’ble High Court of Madras in Mallikarjuna Sastri v. Narasimha Rao ((1901) ILR 24 Mad 412), it was noted that sec 57 cannot be applied when it comes to a charge or encumbrance already adjudicated by a court and which has become part of a decree or even in a case of adjustment of a decree out of court.