Transfer of movable property may be affected by transferring its physical possession from transferor to transferee. However, in case of immovable property this is not possible due to its immovable nature. Therefore such a transfer takes place by way of writing a deed in this regard. Sanctity to such a document/deed is provided by registration, law relating to which is dealt with under the Registration Act, 1908. General principle, involving transaction of immovable property is that "purchaser beware". This aspect is substantiated by section 17(1) of the Registration Act, 1908, which makes it obligatory to get following kinds of documents registered with a Central Agency called "Registrar". These documents are:
(a) instruments of gift of immovable property;
(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;
(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and
(d) leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;
(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:
Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees.1
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1. Section 17(1).
(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they have been executed on or after the commencement of the Registration and Other Related laws (Amendment) Act, 2001 and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said section 53A.
(3) Authorities to adopt a son, executed after the 1st day of January, 1872, and not conferred by a will, shall also be registered.
Once such a document is registered in terms of section 17(1) of the Registration Act, 1908, it is presumed under law that whole world is aware of the transaction as contained in that particular document. However, despite that transaction having been registered with the "Registrar", if somebody enters into an agreement contrary to that transaction law would neither recognize that agreement nor any further transaction in pursuance of that agreement contrary to the transaction already registered vide the said registered document. The reason is that mistake of fact is an excuse but mistake of law cannot be considered as an excuse. It is the duty of the purchaser to enquire from the Registrar's office qua the status of the property, with regard to whom the transaction has been registered with the Registrar. In such a scenario he cannot take the plea that he was not aware of the aforesaid registration, which in terms of the law, as contained in the Registration Act, 1908, was got done, since it is presumed under the law that the purchaser was aware of the said transaction in the office of Registrar. Here lies the significance of the Registration Act, 1908.
However, what is the effect of non-registration of such a document is contained in section 49, which says no document required by section 17 or by any provision of the Transfer of Property Act, 1882 to be registered shall:
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power,
unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act,1or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 or as evidence of any collateral transaction not required to be effected by registered instrument.2
Under these circumstances all the words which are used in section 17(1) have been the subject-matter of judicial comment from time to time and it has been now settled that the requirements of this sub-section (1) broadly speaking are the document:
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1. The Registration Act, 1908.
2. Section 49.
1. must be a non-testamentary instrument other than the instrument of gift;
2. it must relate to immovable property;
3. it must create, declare, assign, limit or extinguish any right, title or interest in the said property.1
It would be pertinent to mention that the Apex Court has culled out the following principles under the Registration Act:
(a) A document required to be registered, if unregistered is not admissible into evidence under section 49 of the Registration Act.
(b) Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to section 49 of the Registration Act.
(c) A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
(d) A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc., any right, title or interest in immovable property of the value of one hundred rupees and upwards.
(e) If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.
(f) To the aforesaid principles, one more principle may be added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.2
For the purpose of our study of the Registration Act, 1908, we have to simply determine as to which document requires compulsory registration and which document is not required to be compulsorily registered under the Registration Act. Before coming to the relevant cases, which respectively deal with the requirement of compulsory registration qua respective documents, it would be useful to discuss all such documents at one place with reference to relevant judgments.
It requires compulsory registration, since it falls under section 17(1)(b) of the Registration Act, 1908. In a suit for redemption based on such an invalid mortgage, the use of the said mortgage deed is not for any collateral purpose, but for the very purpose of proving the mortgage, which the Registration Law forbids. However, it can be used by the plaintiff in a suit for possession (not in a suit for redemption) to prove the nature of possession, if the defendant denies the claim of the plaintiff on the ground of adverse
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1. Ghulam Ahmad v. Ghulam Qadir, AIR 1968 J&K 35.
2. S. Kaladevi v. V.R. Somasundaram, Civil Appeal No. 3192 of 2010 [Arising out of SLP (C) No. 1451 of 2009], decided on 12-4-2010.
possession. Hence, proviso to section 49 cannot be availed in support of a suit for redemption.1
Partition in the Mitakshara sense may be only a severance of the joint status of the members of the coparcenary, that is to say, what was once was a joint title has become a divided title though there has been no division of properties by metes and bounds. Partition may also mean what ordinarily is understood by partition amongst coparceners who may not be members of a Hindu coparcenary. For partition in the former sense, it is not necessary that members of the joint family should agree, because it is matter of individual volition. For partition in the latter sense of allotting specific properties or parcels to individual coparceners, agreement amongst all the coparceners is absolutely necessary. Such a partition may be effected orally, but if the parties reduce the transaction to a formal agreement which is intended to be the evidence of the partition it has the effect of declaring the exclusive title of the coparcener to whom a particular property is allotted by partition, and is thus within the mischief of section 17(1)(b).2
A family arrangement presumes an admission of a previously existing title. A Full Bench case of the Allahabad High Court in Ramgopal v. Tulshi Ram, MANU/UP/0144/1928 : AIR 1928 All 641 (FB) has laid down that "in the usual type of a family arrangement in which there is no question of any property, the admitted title to which rests in one of the parties, being transferred to the other parties, there is no transfer of ownership such as is necessary to bring the transaction within the definition of exchange in section 118 of the Transfer of Property Act, 1882. A binding family arrangement of this type may be made by a word of mouth. If made orally, there being no document no question of registration arises. If the terms are not reduced in the form of a document, registration is not necessary, but if they are reduced to writing they may not be used as a document of title but as a piece of evidence for what it may be of worth, e.g., as corroborative of other evidence, as an admission of the transaction. But this authority as well as a subsequent authority Jagannath Singh v. Triloki Singh, MANU/UP/0304/1954 : AIR 1954 All 769 have held that if the contending parties come to an oral agreement in respect of disputed rights, which is subsequently reduced into writing, the writing must be registered. When the agreement is purely mutual and a family one for the enjoyment of property without limiting or extinguishing anybody's rights it may not be registered.3
A vital distinction lies between a private award and an award made in a reference in pending court proceedings, as regards its registrability. So far as the latter type of the award was concerned unlike in the case of private award there was no provision making the award as such final and binding on the parties. Such an award, therefore, unlike a private award
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1. Hansia v. Bakhtawarmal, MANU/RH/0032/1958 : AIR 1958 Raj 102.
2. Ghulam Ahmad v. Ghulam Qadir, AIR 1968 J&K 35; Roshan Singh v. Zile Singh, AIR 1988 SC 881.
3. Ghulam Ahmad v. Ghulam Qadir, AIR 1968 J&K 35; Roshan Singh v. Zile Singh, AIR 1988 SC 881; also see Swaminathan v. Koonavalli, MANU/TN/0313/1982 : AIR 1982 Mad 276.
unless it is made a decree of the court was incapable of operating or purporting to create any rights, declaration, etc. between the parties to or in immovable property and as such has no more value than a mere scrap of paper. Arbitration proceedings in pending court proceedings though culminating into an award have no independent existence and continue to be a part of the judicial proceedings pending before the court in which reference was made and the award made in such proceedings has got to be made a decree of the Court if it were to create any rights between the parties hereto. The distinction drawn by the Supreme Court in the case of a private award viz., its capacity to create rights without being made a decree of the Court and its enforceability only on its being made a decree of the court, cannot exist in respect of an award in court proceedings. Therefore, a private award requires compulsory registration, whereas an award in the proceedings pending before the Court are incapable of and/or could not operate or purport to create, declare, assign, etc. any rights in or to immovable property and therefore do not require compulsory registration.1
Requires compulsory registration in view of section 107 of the Transfer of Property Act, 1882 if the same is for year to year.2
If the deed also refers to creation of an immediate right in the adopted son and the divesting of the right of the adoptive mother/father in the property, it will squarely fall within the ambit of section 17(1)(b) and therefore under section 49 of the Registration Act, 1908, this could not be admitted if it is not a registered document.3
On two counts it did not require compulsory registration because under section 17(1) of the Registration Act, first of all, the document should be regarding immovable property. But in the case of dissolution of partnership firm its assets are first converted into money, which is nothing but moveable property, and only thereafter the same are distributed amongst the partners according to their shares. Secondly, the partnership firm is not a separate legal entity but it is only a compendious name for each and every partner who has a beneficial interest in the property of the firm even though he cannot lay a claim on any earmarked portion thereof as the same cannot be predicated. Therefore, when any property is allocated to him from the residue, after deduction of liabilities of the partnership firm, it cannot be said that he had a definite limited interest in that property and that there is a transfer of the remaining interest in his favour within the meaning of section 17 of the Registration Act, 1908.4
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1. Chandrakant Maganlal Patel v. Ishwarlal Ghelabhai Choksey, MANU/MH/0324/1981 : AIR 1981 Bom 248; Sardar Singh v. Krishna Devi, MANU/SC/0102/1995 : (1994) 4 SCC 18.
2. Budh Ram v. Ralla Ram, MANU/SC/0744/1987 : (1987) 4 SCC 75; Anthony v. K.C. Ittoop & Sons, MANU/SC/0443/2000 : (2000) 6 SCC 394.
3. Dina Ji v. Daddi, MANU/SC/0213/1990 : AIR 1990 SC 1153; Chiranjilal Srilal Goenka v. Jasjit Singh, (2001) 1 SCC 486.
4. S.V. Chandra Pandian v. S.V. Sivalinga Nadar, MANU/SC/0450/1993 : (1993) 1 SCC 589; N. Khadervali Saheb v. N. Gudu Sahib, MANU/SC/0088/2003 : (2003) 3 SCC 229.
Unregistered award per se is not inadmissible in evidence. It is a valid award and not a mere waste paper. It creates rights and obligations between the parties and is conclusive between the parties. It can be set up as a defence evidence of resolving the disputes and acceptance of it by the parties. If it is a foundation, creating right, title and interest in praesenti or future or extinguishes the right, title or interest in the immovable property of the value of Rs.100 or above it is compulsorily registrable and non-registration renders it inadmissible in evidence. If it contains a mere declaration of a pre-existing right, it is not creating a right, title and interest in praesenti, it is not a compulsorily registrable instrument. It can be looked into as evidence of the conduct of the parties of accepting the award, acting upon it that they have pre-existing right, title or interest in the immovable property.1
Does not require compulsory registration as mentioned above.2
Does not require compulsory registration, the same being like a family arrangement.3
Under section 17(2)(vi) of the Registration Act, 1908, before its amendment in 1929, even an award did not require registration. However, after omission of the words 'and any award' an award creating or declaring right or interest in immovable property of the value of Rs. 100 or more would require registration. But then that award would be an award under the Arbitration Act and certainly not a foreign award. Court further observed that a foreign judgment does not require registration as the process of suit having been decreed on that basis will have to be gone through. When a decree is passed by a Court, it does not require registration in view of said
section 17(2)(vi). A decree or order of a Court affecting the rights mentioned in sections 17(1)(b) and 17(1)(c) would not require registration. It would, however, require registration where the decree or order on the basis of compromise affects the immovable property other than that which is the subject-matter of the suit or proceeding. Even a decree passed by the Foreign Court, execution of which is sought under Code of Civil Procedure, 1908 would not require registration. That being the position, a foreign award under the provisions of the Foreign Awards Act does not require registration under the Registration Act, 1908.4
Requires compulsory registration in view of the language of section 17(1)(b) of the Registration Act, 1908, if it pertains to immovable property worth more than Rs. 100. However, if it is unregistered such a document is inadmissible in evidence, but can be looked into for collateral purpose, e.g., nature of possession over the land in question.5
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1. Sardar Singh v. Krishna Devi, MANU/SC/0102/1995 : (1994) 4 SCC 18.
2. Gangadhar Madhavrao Bidwai v. Hanmantrao Vyankatrao Mungale, MANU/SC/0656/1995 : (1995) 3 SCC 205.
3. Bakhtawar Singh v. Gurdev Singh, (1996) 9 SCC 370.
4. Harendra H. Mehta v. Mukesh H. Mehta, MANU/SC/0370/1999 : (1999) 5 SCC 108.
5. Bondar Singh v. Nihal Singh, MANU/SC/0193/2003 : (2003) 4 SCC 161.
Hindu law has always treated hereditary office as immovable property. After referring the definition of immovable property under the Transfer of Property Act, 1882, under the Registration Act, 1908 and General Clauses Act, 1877, the Court came to the conclusion that Shebait's hereditary office is immovable property because the definition includes hereditary allowances. Office of Shebait is hereditary unless provision to the contrary is made in the deed creating the endowment. In the conception of Shebait both the elements of office and property, duties and personal interest are mixed up and blended together and one of the elements cannot be detached from the other. After referring to old texts, one of the principal sources of Hindu law and the commentaries thereon, it was held that over a century the courts with very few exceptions have recognized hereditary office of Shebait as immovable property and it has all along been treated as immovable property almost uniformly. Hence, while examining the nature and character of an office as envisaged by Hindu law it would be correct to accept and designate it in the same manner as has been done by the Hindu Law text writers and accepted by Courts over a long period. Therefore, it was concluded that hereditary office of Shebait, which would be enjoyed by the person by turn would be immovable property. In other words the gift of such immovable property must of course be by registered instrument.1
Whether such a document, containing "Agreement to Sell", requires compulsory registration or not, would depend upon the fact as to whether possession of the property in question has been taken by the transferee or not. Prior to the amendment made in the year 20012in the Registration Act, 1908 it was held that "A mere agreement to divide does not require registration."3However, by way of the aforesaid amendmentsub-section (1-A) has been added in section 17, which is reproduced as under for ready reference:
"The documents containing contracts to transfer for consideration, any immovable property for the purpose of section 53A of the Transfer of Property Act, 1882, shall be registered if they have been executed on or after the commencement of the Registration and Other Related Laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement then, they shall have no effect for the purposes of the said section 53A."
Correspondingly section 53A was also amended4in the same year. Therefore, section 53A is also reproduced as under for ready reference:
"53A. Part performance.-Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on
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1. Ram Rattan v. Bajran Lal, MANU/SC/0318/1978 : (1978) 3 SCC 236.
2. Act 48 of 2001, sec. 3.
3. Roshan Singh v. Zile Singh, AIR 1988 SC 881.
4. The words "the contract, though required be registered, has not been registered, or," omitted by Act 48 of 2001, sec. 10 (w.e.f. 24-9-2001).
his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty,and 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 and has done some act in furtherance of the contract,and the transferee has performed or is willing to perform his part of the contract,then, notwithstanding [***]1where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof."
From bare perusal of the aforesaid amendments it is crystal clear that if the transferee has taken possession of the said property within the meaning of section 53A of the Transfer of Property Act, 1882, the said document shall require compulsory registration under section 17(1A) of the Registration Act, 1908, if the same is executed on or after the said amendment, made in the year 2001. On the other hand, if the transferee has not taken the possession of the property in question, as contemplated above, such a document containing the "Agreement to Sell" shall not require compulsory registration.
It is pertinent to mention here that the amendment has been made with a view to curb the evasion of stamp duty in those cases, wherein transaction of immovable property takes place merely on the basis of "Agreement to Sell" and not on any kind of "Sale Deed".
Section 17(3) makes registration of the same obligatory, if it is executed after 1-1-1872 and not conferred by a Will.
In view of section 17(3) authorities to adopt a daughter does not require compulsory registration.
Under section 17(1A) instrument of gift of immovable property, even if it is worth less than Rs. 100 it requires compulsory registration.
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1. The words "the contract, though required be registered, has not been registered, or," omitted by Act 48 of 2001, sec. 10 (w.e.f. 24-9-2001).
Question of law decided:How far a non-registered document, which is compulsorily required to be registered under section 17 of the RegistrationAct, 1908, can be used in a proceeding. The document in question in the present case was a mortgage deed which was not registered, though its registration was obligatory under section 17(1) of the Registration Act, 1908. It was held that in a suit for redemption based on such an invalid mortgage, the use of the said mortgage deed is not for any collateral purpose, but for the very purpose of proving the mortgage, which the Registration Law forbids. However, it can be used by the plaintiff in a suit for possession (not in a suit for redemption) to prove the nature of possession, if the defendant denies the claim of the plaintiff on the ground of adverse possession. Hence, proviso to section 49 cannot be availed in support of a suit for redemption.
Facts of the case:This is the second appeal by the two of four defendants against the judgment and decree of the Civil Judge, in a suit for redemption of mortgage. The plaintiff, respondents Nos. 1 and 2 herein, had mortgaged a house with predecessors-in-title of the defendants for Rs. 209 in Samwat 1967. The mortgage was to be redeemed after a period of 31 years. When the plaintiffs sought to redeem the property after expiry of this period, the defendants refused to accept the money and hand over the possession and contested the suit brought by the plaintiffs for redemption. Two of the defendants admitted the plaintiffs' claim. The other two denied the mortgage and asserted that property belonged to themselves on the ground that the document produced in support of the mortgage by the plaintiffs was not a registered document and, therefore, it was of no avail to them (plaintiffs). The trial Court dismissed the suit, on the ground that it was based on an unregistered mortgage, which was inadmissible in evidence. The appeal filed by the plaintiffs was allowed by holding that the unregistered mortgage deed could be referred to for looking into the character of possession and also for determining the quantum of interest for which the defendants had prescribed under the invalid mortgage. Hence the present second appeal.
Findings of the Court:The present case explains as to how far section 49 may come into play in case of non-registration of document, which is required to be registered under section 17. It was held that although a person cannot sue for redemption on the strength of an abortive or invalid usufructuary mortgage, yet if he sues for possession and proves his title and then the defendant sets up adverse possession, the plaintiff may prove that the character of the possession was not adverse to him by giving evidence of the factum of the unregistered mortgage though not of its terms. In other words, where a mortgage is invalid in view of the law for the time being in force, the said mortgage deed would be inadmissible in evidence in view of section 49 of the RegistrationAct, 1908 or an analogous law. Nor the proviso to section 49 can be used to show the nature of possession where the suit is based on the mortgage deed and prayer is for Registration of the mortgage. However, the said document can be used if it is for possession and stand taken by the defendants is of adverse possession. Under these circumstances, the said mortgage deed, which is invalid due to its non-registration, can be used for collateral purpose just to show the nature of possession. This is because of the reason that proviso to section 49 allows an unregistered document effecting immovable property, which is compulsorily registerable, to be received as evidence of any collateral transaction not required to be effected by registered instrument. Accordingly, the Court laid down as under:-
"But it is one thing to use the document as evidence of a collateral transaction under section 49 and another to use it for the very purpose of proving the mortgage. In a suit for redemption based on such an invalid mortgage, the use of the document is not for any collateral purpose, but for the very purpose of proving the mortgage which the Registration law forbids. The proviso to section 49 therefore, cannot be availed of by a plaintiff in support of a suit for redemption.
It would be a different thing if the plaintiff brought a suit for possession
and he was met by a plea of adverse possession; he can then use the unregistered document to show the nature of the defendant's possession and prove that it was never adverse. That would be using the document for a collateral transaction to meet the case of the defendant based on adverse possession.
The conclusion, therefore, at which we arrive is that where there is an invalid mortgage which is required by law to be registered, it cannot be used in evidence and the fact that the mortgagee under the invalid mortgage has been in possession for over 12 years cannot convert him into a mortgagee who is to be redeemed and cannot make the document which was inadmissible into a document conferring the interest of a mortgagee on the person in possession. The only remedy for the plaintiff in such a situation is to sue for possession based on title which must be proved by evidence other than the invalid mortgage deed.
Accordingly, the appeal was allowed and the suit was dismissed. It is pertinent to mention here that respondents were not permitted to convert their suit for redemption into a suit for possession on the ground that there are vital differences between the two, which arise on account of Court-Fee and limitation. It was held that in the suit for redemption the limitation is 60 years and in the suit for possession it is only 12 years. Hence, it was observed that it may not be always convenient to treat a suit for redemption as suit for possession.
However, in the opinion of the author the equity demanded that prayer of the respondents to get the suit converted into a suit for possession, in view of the law laid down by the Court, ought to have been accepted, more particularly when the other two defendants had admitted the claim of the plaintiffs, as mentioned above and further when we keep on hammering the fact that justice delayed is justice denied. For example recently in "Bhopal Tragedy - Criminal Trial" everybody including over Law Minister criticised the judgment/sentence delivered on 7-6-2010 on the ground of delay in trial & consequent delay in pronouncement of the said judgment-order on sentence.
Question of law decided: Basically this judgment makes a distinction between 'partition deed' and 'family arrangement'. Besides this the judgment also explains the meaning of different terms used in section 17(1)(b) of the Registration Act, 1908 namely 'create', 'declare', 'assign', 'limit' or 'extinguish'.
Facts of the case: The facts relevant for the purpose of our subject are that Sub-Registrar Munsif, Srinagar held the document in question to be admissible in evidence, while over ruling the contention of the otherside namely the defendant/petitioner that it was inadmissible in evidence for want of registration. However, the trial Court held the document to be memorandum and as such not a partition deed and, therefore, did not require registration. Against this order, the revision was preferred before the High Court and the question to be decided in the matter was as to whether the document in question was a memorandum or a partition deed.
Findings of the Court: In order to appreciate the findings of the Court it would be apt to look into the rival contentions. Learned counsel for the respondent reiterated the findings of the Sub-Registrar and termed the document as a mere memorandum of some previous family arrangement and, therefore, not hit by the provisions of section 17 of the Registration Act, 1908. On the other hand learned counsel for the petitioner argued that the document in question at the best can be considered to be a family arrangement and not a partition deed. According to him the deed of partition requires two ingredients. It must fix the shares of the parties and it must demarcate the property by metes and bounds. A family arrangement is arrived at to set at rest certain differences between the members of a family with respect to family property and result in some sort of adjustment not in accordance with the shares of the parties therein. Accordingly, it was contended that the document makes mention of some previous documents and simply reiterates some of the provisions with minor modification of the earlier documents. Learned counsel for the petitioner further argued that the document could not be admitted to registration because it did not specify the property as required by section 21 of the Registration Act, 1908, which lays down that what a non-testamentary document relating to immovable property should contain. It is pertinent to mention here that the question of section 21 did not arise at all in the matter, since the Court held that document was hit by section 17 and the reasoning given in this regard is as follows. While rejecting the argument that the document is family arrangement the Court held as under:
"The argument that it is a family arrangement, I am afraid, is not correct. A family arrangement presumes an admission of a previously existing title. A Full Bench case of the Allahabad High Court in
Ramgopal v. Tulsi Ram, MANU/UP/0144/1928 : AIR 1928 All 641 (FB) has laid down that "in the usual type of a family arrangement in which there is no question of any property, the admitted title to which rests in one of the parties, being transferred to the other parties, there is no transfer of ownership such as is necessary to bring the transaction within the definition of exchange in section 118 of the Transfer of Property Act, 1882. A binding family arrangement of this type may be made by a word of mouth. If made orally, there being no document no question of registration arises. If the terms are not reduced in the form of a document registration is not necessary, but if they are reduced to writing they may not be used as a document of title but as a piece of evidence for what it may be of worth, e.g., as corroborative of other evidence, as an admission of the transaction. But this authority as well as a subsequent authority Jagannath Singh v. Triloki Singh, MANU/UP/0304/1954 : AIR 1954 All 769 have held that if the contending parties come to an oral agreement in respect of disputed rights, which is subsequently reduced into writing, the writing must be registered. When the agreement is purely mutual and a family one for the enjoyment of property without limiting or extinguishing anybody's rights it may not be registered."
The Court also took note of the following observations of Justice B.P. Sinha as under:
"Partition in the Mitakshara sense may be only a severance of the joint status of the members of the coparcenary, that is to say, what was once was a joint title has become a divided title though there has been no division of properties by metes and bounds. Partition may also mean what ordinarily is understood by partition amongst coparceners who may not be members of a Hindu coparcenary. For partition in the former sense, it is not necessary that members of the joint family should agree, because it is matter of individual volition. For partition in the latter sense of allotting specific properties or parcels to individual coparceners, agreement amongst all the coparceners is absolutely necessary. Such a partition may be effected orally, but if the parties reduce the transaction to a formal agreement which is intended to be the evidence of the partition it has the effect of declaring the exclusive title of the coparcener to whom a particular property is allotted by partition, and is thus within the mischief of section 17(1)(b)......"
In order to sort out the controversy in the present case, the Court looked into the document and emphasized its clause 4 which reads as under:
"With respect to the dispute of immovable property the parties have agreed that agricultural land measuring 8 kanals which stands in the name of Haji Sahib, deceased, is divisible in equal shares between the parties and should be entered as such because the said land has been purchased when the parties lived joint. An application for mutation should be moved that the property be entered in the revenue papers in equal shares of the parties".
While examining the above mentioned clause the Court observed that it mentions some immovable property and observed as under:
"Let us examine now the implications of clause (4) of this document. It mentions some immovable property. Further it says that 8 kanals of agricultural land stand in the name of Haji Sahib, who may perhaps to be the ancestor of the parties. There is a stipulation that land is divisible between the parties in equal shares. There is an admission that it has been purchased while the family was joint. There is a further stipulation that it will be got entered in equal shares in the name of the parties in the revenue records."
Consequently, the Court opined that the document satisfies most of the requirements of section 17(1)(b) of the Registration Act, 1908, since it is a document which creates rights in the immovable property vis-…-vis the parties. Further while on one hand it declares their rights, at the same time it limits the rights of the other party. Moreover, it also extinguishes them as well as creates the rights in favour of either one or both of the parties. The Court also laid down that all the words which are used in this sub-section have been thesubject-matter of judicial comment from time to time and ruled that requirements of section 17(1) of the Act for making a document compulsorily registerable are as under:
1. The document must be a non-testamentary instrument other than an instrument of gift.
2. It must relate to immovable property.
3. It must create, declare, assign, limit or extinguish any right, title or interest in such property".
With regard to the meaning of the words, 'creating', 'declaring', 'limiting' and 'extinguishing' of the rights, the Court observed as under:
"Now what is to be understood by the words, creating, declaring, limiting and extinguishing of rights. The word "create" in legal terminology means to bring into being to invest with a new title, or to produce. Therefore, every non-testamentary instrument which means to, or has the effect of originating some right, title of interest in immovable property will be governed by the word 'create'.
The word 'declare' has been defined by West. J. in Sakharam Krishnaji v. Madan Krishnaji, (1880-81) ILR 5 Bom 232 as under:-
"The word 'declare' implies a declaration of will merely a statement of fact and that a deed of partition which causes a change of legal relations to the property divided amongst all the parties to it is a declaration in the intended sense....."
In Bageshwari Charan Singh v. Jagannath Kuari, MANU/PR/0012/1931 : AIR 1932 PC 55 their Lordships of the Privy Council said that 'though the word 'declare' might be given a wider meaning they are satisfied that the view originally taken by West. J. is right. The distinction is between a mere recital of a fact and something which itself creates a title'.
Similarly the word 'limit' connotes restriction of some right or interest in immovable property. It has been held an agreement allocating particular days for holding the bazaar coupled with the condition that the parties are not to be allowed to hold the bazaar on certain other days limits the general right possessed by the owner of the land to hold the market on his lands whenever he wishes to do so and requires registration Ganesh Singh v. Sitla Baksh Singh, MANU/OU/0092/1929 : AIR 1931 Oudh 110.
The same is the scope of word 'extinguish'. Extinguish is a counterpart of the word 'create'. In the document in question a right is created in the parties equally and it is extinguished equally. The rights of the parties are further limited to the extent of half each."
Further the Court observed that a word memorandum is not a legal expression. The memoranda of past transactions are no doubt exempted from registration because such memoranda by themselves do not create, declare, assign or limit or extinguish any right, but make a recital of what has been done in the past. Otherwise the word memorandum has no separate legal definition. Hence, in the present case, as mentioned above, no recital of the previous document was held to be made in relevant clause (4) of the same, but new rights are created, extinguished and limited and therefore the document was held to be compulsorily registerable and consequently hit by section 17(1)(b) of the Registration Act, 1908. With regard to the last argument to the effect that the document was compromise and did not require registration, it was held that compromise is a settlement of disputed claim and applies to demands of all sorts. Where it merely contains a recital of a previous agreement, it does not require registration but where the compromise itself declares a right to immovable property, it operates as a contract and requires registration. It was further held that true test to apply to a transaction like a compromise, in order to decide whether it comes within the purview of section 17(1)(b) of the Act, is whether it speaks for the present and it does not say that it was some past agreement and whether by itself it creates the title claimed. If it is intended to be the evidence of the agreement mentioned therein and with that end in view, it is reduced to a formal agreement, it requires a declaration of will and as such it has the effect of declaring the title mentioned therein within the meaning of section 17(1)(b) of the Act which makes it compulsorily registerable. Finally the revision petition was accepted with costs.
Question of law decided: Whether arbitration award requires registration under section 17(1)(b) of the Registration Act, 1908? The Court after relying upon a decision of Rangoon High Court held that if it is an award in an arbitration proceedings outside the Court (referred as private award) it requires compulsory registration, while differentiating the same from arbitration award with the intervention of the Court.
Facts of the case: This is an appeal by the original plaintiff against the order of the learned Judge of the Bombay City Civil Court, dated 4-10-1974 raising a question as to the registrability of an award, made in reference by the Court in pending proceedings, under section 17(1)(b) of the Registration Act, 1908.
The plaintiffs had filed a suit being suit No. 825 of 1967 against 15 defendants in respect of certain property. On 24-10-1969, the parties to the suit filed consent terms agreeing to refer to the arbitration of Advocate Shri P.C. Kapadia all questions or issues arising out of pleadings of the parties including those specifically set out in the said consent terms. Initially defendant Nos. 1 to 3 were joined as defendants to the suit. However, subsequently defendant Nos. 4 to 15 were joined as defendants to the suit as it was disclosed that they had interest in the property.
The Arbitrator Shri Kapadia made his award on 27th June, 1973. The said award was filed in the Court and notices of the award being filed were issued to the parties. Defendant Nos. 1 to 3 received the said notice on 28th August, 1973. On 24th September, 1973, they filed a petition raising objections to the said award and prayed for setting aside the same. The said petition was subsequently amended by taking one more ground viz., the award was invalid for want of registration under section 17(1)(b) of the Registration Act, 1908.
The learned Judge who heard the said application dealt only with the question of registration of the award and by his order dated 4th October, 1974, held that the said award was compulsorily registrable under the said provisions of section 17(1)(b) of the Registration Act, 1908 and since it was not so registered it was invalid. He, therefore, set aside the said award on that ground alone and directed that the suit be referred back to the Court for trial from the stage at which, it was referred to the arbitration of Shri Kapadia.
Against the said judgment and order of the learned Judge, the plaintiff filed an appeal to the Bombay High Court being appeal from Order No. 417 of 1977. The said appeal came up for hearing on 27th September, 1979. To the said appeal although the plaintiff had made all the defendants to the suit as party respondents, notices were issued only to defendant Nos. 1 to 3 and no bhatta was paid in respect of notices to be issued to the other defendants being defendant Nos. 4 to 15 although they were parties not only to the suit but also to the consent terms and the arbitration proceedings before Shri Kapadia.
The learned Judge after considering the rival contentions on the question of registrability of the said award and various decisions cited across the Bar in support thereof, held on merits that the award made as a result of an arbitration in a suit was not required to be registered and that the learned Judge of the City Civil Court was not right in taking a contrary view. The learned Judge, however, held that since the appellant-plaintiff had not paid bhatta for respondent Nos. 4 to 15 who were joined as party respondents to the appeal and not served them with the notices of the appeal, there was no proper appeal before him. Accordingly, although disagreeing with the lower Court's finding on the main issue, on the said technical ground only he dismissed the appeal.
Findings of the Court: The contention of the learned counsel for the appellant mainly was that there was a vital distinction under the Arbitration Act between an award obtained in an arbitration proceeding without the intervention of the Court, for the sake of convenience referred to as 'a private award' and not one brought about by the intervention pending before it. While not disputing that a private award was compulsorily registrable, if it otherwise fell within the provisions of section 17(1)(b), according to him, it would not be so in respect of an award in Court proceedings. He submitted that in case of such an award the source of jurisdiction of an arbitrator was an order of reference by the Court, with the arbitrator acting under the orders of the Court, that the provisions of the Arbitration Act showed that unlike in the case of private arbitration, in an arbitration of the judicial proceedings before the Court, the Court retained full control over the arbitration proceedings and it was permissible delegation by the Court on part of its functions to the arbitrator, on the parties by consent agreeing to do so. Further, according to him, in fact, such arbitration proceedings were part of the judicial proceedings kept pending before the Court, the same coming to an end only on the Court passing a decree in terms of the award. He further contended that unlike a private award, the award made in the pending proceedings cannot by itself purport or operate to create, declare, assign, etc., any right in or to immovable property which was the subject-matter of the award, but merely created a right to obtain a decree in terms of the award, with the power of the Court either to set it aside, vary or remit the same.
The Court, in the present case referred to various decisions on the subject, one of them being Kya Hla Pru v. Ma Pan Mra Pru, AIR 1935 Rang 16. In that case while dealing with the said question the Court held that an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in decree of the Court is not an award which was compulsorily registrable. While negativing the contention that in view of the fact that the word 'award' had been removed from section 17(2)(vi) of the RegistrationAct, 1908, it was necessary for any award which deals with immovable property to be registered and if not the same was invalid, the Court observed:-
"The argument was unsound. When a matter relating to partition of immovable property has been referred by the Court to an arbitration and the arbitrators make what is called an award that award in itself does not purport, or operate to create, declare, assign, etc., any right, title or interest in or to immovable property. An award of this nature purports to be a recommendation to the Court and it has no validity and in no way affects any immovable property until and unless it is incorporated in a decree of the Court or is made a part of the decree of the Court. Had the reference to arbitration been a private one outside the Court, then the reference to arbitration together with the award of the arbitrators would constitute a pair of documents which would by themselves purport to effect the partition and the award of this nature would no doubt be of no effect unless registered, but an award made by the arbitrators appointed by the Court with a view to having its terms incorporated in a decree of the Court is not an award which can be compulsorily registrable".
The Court also took note of the judgment of the Supreme Court in Satish Kumar v. Surinder Kumar, MANU/SC/0264/1968 : AIR 1970 SC 833, wherein while dealing only with a private award, it was specifically laid down that private award was compulsorily registrable and consequently the same fall within the ambit of section 17(1)(b) of the Registration Act, 1908. In the said case, while making it specifically clear both in the beginning and at the end of the judgment, that they were dealing only with an award made on a reference by the parties without intervention of the court, it pointed out that by reason of clause (7) to
Schedule I which made the award final and binding on the parties, it can hardly be said that it was waste paper unless it was made rule of the court. Finally the Court held as under:-
"In my view, the very circumstances that a private award by reason of the specific provisions of para 7 of Schedule I of the said Arbitration Act making it final and binding on the parties was held to be capable of validly creating rights though they could not be enforced without making the award a decree of the Court, constitutes a vital distinction between a private award and an award made in a reference in pending court proceedings, as regards its registrability. So far as the latter type of the award was concerned unlike in the case of private award there was no provision making the award as such final and binding on the parties. Such an award, therefore, unlike a private award unless it is made a decree of the court was incapable of operating or purporting to create any rights, declaration, etc., between the parties to or in immovable property and as such has no more value than a mere scrap of paper. Arbitration proceedings in pending court proceedings though culminating into an award have no independent existence and continue to be a part of the judicial proceedings pending before the court in which reference was made and the award made in such proceedings has got to be made a decree of the court if it were to create any rights between the parties hereto. The distinction drawn by the Supreme Court in the case of a private award viz. its capacity to create rights without being made a decree of the Court and its enforceability only on it being made a decree of the Court, cannot exist in respect of an award in court proceedings. Further, as the provisions of section 16(2) of the said Act (which is also applicable to award in pending Court proceedings, under section 25 of the said Act) suggest that such an award at the most can be considered to be a decision of the arbitrator but as such it was incapable of operating or even purporting to create, declare, etc. rights in or to an immovable property. As the Rangoon High Court in the aforecited decision has observed that at the most it could be recommended to the court and has no validity unless made a decree of the Court."
In my view, therefore, for the aforesaid reasons an award in the proceedings pending before the court was incapable of and/or could not operate or purport to create, declare, assign, etc. any rights in or to an immovable property and was therefore not compulsorily registrable under the provisions of section 17(1)(b) of the Registration Act, 1908. In that view of the matter, I am in agreement with the similar view taken by the other courts in the aforesaid decision and also with the view expressed by my brother Judge S.D. Desai in this very case in his judgment dated 24th September, 1970.
Consequently the appeal was allowed and the order of the lower Court was set aside and the matter was remanded back to the trial court for consideration of remaining grounds.
Question of law decided: The deed of sale requires compulsory registration under section 54 of the Transfer of Property Act, 1882 and in the absence of such a registration the document cannot be received in evidence of any transaction effecting the property mentioned in that sale deed in view of section 49 of the Registration Act, 1908. The case also discusses the amendment made in the year 1929 in section 49 by virtue of which section 49 was made applicable even to the provision of the Transfer of Property Act, 1882, since it was argued that the effect of non-registration of documents, as explained in section 49 of the Registration Act, 1908, shall be applicable only to the documents which are mentioned in section 17 of the Registration Act, 1908 and not to the documents which are compulsorily required to be registered under the Transfer of Property Act, 1882. However, by way of the aforesaid amendment in the year 1929 the Supreme Court was saved from giving the decision in the matter from this angle.
Facts of the case: In the suit, from which the present appeal arose, the plaintiff alleged that one Dwarka Prasad took a loan of Rs. 1700 from Madho Ram, father of the defendants and that on 27-7-1922 Dwarka Prasad along with one Mst. Kunta, his maternal grand-mother, executed the possessory mortgage deed of the disputed house for Rs. 1700 in favour of Madho Ram. The mortgage was termed to be usufructuary mortgage. In other words the mortgager was to pay according to the terms of the agreement, the mortgagee was entitled to the rent of the house as part of the interest and the remaining part was to be paid in cash. It was further agreed that mortgage would be redeemable within 20 years after paying principal amount and that portion of the interest which was not discharged by the usufruct and other amount. When Dwarka Prasad failed to pay the amount, he delivered the possession of the house to Madho Ram, who let out the house. The mortgagers Dwarka Prasad and Mst. Kunta died leaving Mst. Radha Bai as Dwarka Prasad's heir. Ms. Radha Bai sold the house in dispute to the plaintiff on 2-2-1953 and executed a sale deed. The plaintiff, therefore, became entitled to redeem the mortgage and asked the defendants to render accounts. The suit was contested on the ground that Madho Ram was not the mortgager nor were the defendants mortgagees. It was alleged that in order to pay the customary Haqe-Chaharum - prevalent in locality at the time, the original deed dated 27-7-1922 was drafted and executed in the form of mortgage though it was actually an out-right sale and accordingly the house was actually sold out. It was further pleaded that if the deed dated 27-7-1922 was held to be a mortgage, the mortgagees were entitled to get the payment of Rs. 6442.80 as interest, Rs. 2315 as costs of repair, etc. However, the Trial Court held the deed dated 27-7-1922 a mortgage deed, though Dwarka Prasad did not sell the house to Madho Ram and that plaintiff was entitled to redeem the mortgage on payment of Rs. 1709.14. The Trial Court accordingly decreed the plaintiff's suit for redemption of payment of Rs. 1709.14. In the appeal, the District Judge, Varanasi, dismissed the suit of the plaintiff. The matter was taken by the plaintiff to the High Court in second appeal, where an issue was framed and case was remanded to lower appellate Court for a fresh decision. The issue framed was "Have the defendants become the owners of the property in dispute by adverse possession?" The High Court also directed the lower appellate Court to decide the question of admissibility of Ex. A25 and A26. After remand, the lower appellate Court held that deed dated 27-7-1922, was a mortgage deed and not a sale deed and therefore the plaintiff was entitled to redeem the mortgage. The lower appellate Court further held that the defendants had failed to prove that they had acquired the title by adverse possession. The lower Court made following order:
"The appeal is allowed with half costs in this way that the suit is decreed for the redemption of the mortgage in question if the plaintiff pays within six months Rs. 1700 as principal, Rs. 9.87 N.P. Prajawat paid before this suit and any Prajawat paid by the defendants during the pendency of this suit till the plaintiff deposits the entire sum due under this decree and the interest at the rate of Rs. 6/12 per month from 27th July, 1922, till the plaintiff deposits the entire sum due 500 under this decree. The costs of the Trial Court are made easy. Let the preliminary decree under Order XXXIV, rule 7, CPC, be modified accordingly".
Against the judgment and decree of lower appellate Court both the plaintiffs and defendants filed appeals before the High Court. The plaintiff prayed that decree of the lower appellate Court should be set aside and the decree of the Trial Court should be restored. The defendants, on the other hand, prayed that the decree of the lower Court should be set aside and the plaintiff's suit should be dismissed with costs. By its judgment dated 27-4-1964 the High Court dismissed the second appeal preferred by the defendants but allowed the plaintiffs appeal and set aside the judgment of the lower appellate Court and restored the Trial Court's judgment. The High Court further remanded the case to the lower appellate Court with the direction that "the defendants be asked to render accounts before they claim any payment from the plaintiff at the time of redemption of the mortgage". The present appeals are by special leave against the said judgment of the High Court.
Findings of the Court: The main contention of the appellant in these appeals was that Ex. 4 dated 27-7-1922 was a sale deed and not a mortgage deed. It was however, pointed out that there was subsequent deed of sale, dated 8-10-1922 Ex. A26. The contention was that Ex. 4 dated 27-7-1922 must be construed along with Ex. A26 which forms part of the same transaction and so construed the transaction was not a usufructuary mortgage but was an outright sale. The Court while rejecting the argument of the appellant held that Ex. A26dated 8-10-1922 is not a registered document in terms of section 54 of the Transfer of Property Act and is hence not admissible in evidence to prove the nature of transaction covered by the registered mortgage deed Ex. 4dated 27-7-1922. If Ex. 4 is taken by itself, there is no doubt that transaction is one of mortgage, clause (2) of which provides a period of 20 years for redemption of the mortgage and its clause (6) stipulates the cost of repairs would be borne by the mortgagors. Besides these clauses while reading other terms Court held that Ex. 4 was a mortgage deed and not a sale deed.
In order to counter the plea that Ex. 26, deed of sale was required to be registered under section 54 of the Transfer of Property Act, 1882, it was argued that same was not hit by section 49 of the Registration Act, 1908, since section 4 of the Transfer of Property Act, 1882 was not to make section 49 of the Registration Act, 1908 applicable to documents which are compulsorily registrable by the provisions of section 54 which reads as under:
"Sale is a transfer of ownership in exchange for a price paid or promised or part paid and part promised.
Such transfer, in the case of tangible immovable property of the value of one hundred rupees and upwards, or in the case of a reversion or other intangible thing, can be made only by a registered instrument.
In the case of tangible immovable property, of a value less than one hundred rupees, such transfer may be made either by a registered instrument or by delivery of the property"
It is worthwhile to mention here that by way of section 10 of the Transfer of Property Act (Amendment) Supplementary Act, 1929, section 49 of the Registration Act, 1908 was amended and accordingly by way of that amendment section 49 was made applicable even to the provisions of the Transfer of Property Act, 1882 also by way of inclusion of words "by any provision of the Transfer of Property Act, 1882". In this way, the Court was absolved from examining the correctness of the impugned decision of the High Court from this angle, because admittedly the Ex. A26, deed of sale, was required to be registered under section 54 of the Transfer of Property Act, 1882 and the same was not done in the present case. Hence, it was hit by section 49 of the Registration Act, 1908. Therefore, its contents could not be received as evidence of any transaction affecting such property. In these circumstances, the Court rightly held that transaction in question was not an outright sale rather it was a mortgage in view of Ex. 4, which was a registered document. Accordingly, the appeals were dismissed.
Question of law decided This case is more on facts, because it simply reiterates what is laid down in section 107 of the Transfer of Property Act, 1882, according to which a lease of immovable property from year to year can be made only by a registered instrument.
Facts of the case:The case being decided on the facts of the case, same are being reproduced from the judgment itself as under:
"This is an appeal by the tenant against an order of eviction granted by the Rent Controller and maintained by the appellate authority and revision petition against which was dismissed by the High Court. The eviction was sought on the ground of arrears of rent. It was alleged that the shop in dispute was let out to the appellant-tenant @ Rs. 5,000 per annum whereas according to the appellant-tenant the rent wasRs. 2,500 per annum and not Rs. 5,000 per annum. It was pleaded in the application on behalf of the landlord that the rent note was executed on March 25, 1975. This was for one year and rent fixed was Rs. 5,000. According to the tenant, it was pleaded that the rent was Rs. 2,500. The signature on the rent note was disputed.
After recording evidence the courts below have come to the conclusion that the rent note was executed by the appellant-tenant. The rent note mentions that it is for one year. It appears in evidence that initially Rs. 5,000 were paid by the appellant and later on Rs. 2,500 were returned. According to the landlord this was returned as it was agreed that the tenant will remain in the premises only for 6 months and not for one year and therefore Rs. 2500 were returned. It is alleged that in the rent note there is also a term that the rent will be paid in advance.
The landlord before the Rent Controller claimed that the tenant was in arrears of rent to the extent of Rs. 2,500 for the period commencing from
October 1, 1975 to March 31, 1976 and was in arrears of Rs. 5,000 for the period commencing from April 1, 1976 to March 31, 1977. It is not in dispute that on July 30, 1976, the tenant appellant tendered a sum of Rs. 2,500 saying that it is the advance rent from April 9, 1976 to April 8, 1977. He also tendered Rs. 52 by way of interest and Rs. 30 as costs and it is on this basis that it was contended that as this amount of rent was tendered on the first date of hearing, the landlord was not entitled to eviction under section 13 of the East Punjab Rent Restriction Act. The courts below came to the conclusion that the contention of the tenant that the annual rent was Rs. 2,500 is not established. It was further held that therefore on July 30 when the tenant tenderedRs. 2,500 it was not rent up to date as he was in arrears not only of the amount of Rs. 2,500 for the year ending on March, 1976 but he was in arrears for the next year.
It was also held that if this rent note could not be used as a piece of evidence for lease from year to year and the lease came to an end after one year, the tenant could only be said to be a tenant holding over and thus he could only be treated as a monthly tenant and even in that view of the matter within the language of section 13, the tenant will be in arrears at least for 2 months rent i.e., April and May even if the term in the rent note of payment of yearly rent in advance is also not given effect to and in this view of the matter the order of eviction has been maintained".
Findings of the Court:The Supreme Court while reiterating that in view of section 17 of the Registration Act, 1908 and section 107 of the Transfer of Property Act, 1882, since rent note is for a year and it fixed yearly rent and talks of yearly rent in advance it clearly is a lease from year to year and as such could not be admitted in evidence. Therefore, its terms could not be enforced which talked of payment of yearly rent in advance. Hence, it was contended that the tenant at the most could be held to be in arrears to the tune of Rs. 2,500 asRs. 2,500 was paid in advance and on this basis decree for eviction could not be maintained. Under these circumstances the Court held as under:
"It is no doubt true that this document talks of payment of yearly rent in advance but it clearly is a lease for one year and it is therefore clear that this document could not be considered as a piece of evidence for the proof of a lease from year to year, on the basis of yearly rent. But the High Court took the view and rightly that the lease came to an end after the expiry of one year and thereafter even if the tenant is held to be holding over still he is expected to pay rent as contemplated in the provision of the Rent Act itself and in that view of the matter it could not be disputed that the petitioner-appellant is expected to pay rent from month to month and that rent has to be paid in the succeeding month before the end of the month and in this view of the matter it is not disputed that on the day when the appellant tendered the rent in the court in addition to what he had deposited he was in arrears of rent at least for two months which he did not tender and in this view of the matter the courts below were right in coming to the conclusion that the landlord was entitled to a decree for eviction on that ground."
Finally, it was held that the Courts below were right in holding that the appellant-tenant was in arrears of rent and on the first day of hearing he did not tender or pay the whole amount of arrears and courts below were right in granting decree of eviction. Therefore, the appeal was dismissed with costs to be paid to the respondents.
Question of law decided:The judgment laid down the distinction between the instrument of partition, which requires compulsorily registration under section 17 of the Registration Act, 1908, and a memorandum of family arrangement arrived at between the parties, which was not hit by section 49 of the Registration Act, 1908.
Facts of the case:The subject-matter of the present appeal by special leave before the Supreme Court is a suit filed by the plaintiffs for declaration and injunction and in the alternative for partition. In order to understand the facts completely it is necessary to look upon the following mentioned family chart of the plaintiffs and defendants:
|
Chattar Singh |
|
|
Jai Ram |
Ram Lal |
|
defendant Puran Singh Bhagwana Soonda (died in 1966) Plaintiff |
|
|
(1972) |
(issueless) |
S S2 S3 d1 d2 S1 S2 S3 S4
Keeping in mind the above mentioned chart the facts of the case may be stated as under from the judgment itself:
"The plaintiffs who are four brothers are the sons of Soonda. They and the defendants are the descendants of the common ancestor Chhatar Singh who had two sons Jai Ram and Ram Lal. Soonda was the son of Ram Lal and died in 1966. Jai Ram in turn had two sons Puran Singh and Bhagwana. The latter died issueless in 1916-17. Puran Singh also died in the year 1972 and the defendants are his widow, three sons and two daughters. It is not in dispute that the two branches of the family had joint ancestral properties, both agricultural and residential in Village Nasirpur, Delhi Cantonment. The agricultural land was partitioned between Puran Singh and Soonda in 1955 and the names of the respective parties were duly mutated in the revenue records. This was followed by a partition of their residential properties including the house, gher/ghetwar, etc. The factum of partition was embodied in the memorandum of partition Exh. P12 dated 3rd August, 1955 and bears the thumb impression and signatures of both Puran Singh and Soonda. In terms of this partition, the ancestral residential house called rihaishi and the open space behind the same shown as portions marked A1 and A2 in the plaint map Exh. PW 25/1, fell to the share of Puran Singh. Apart from this, Puran Singh also allotted gher shown as A3 in the plaint map admeasuring 795 square yards. Thus, the total area falling to the share of Puran Singh came to 2417 square yards. The plaintiffs' ancestor Soonda on his part got a smaller house called baithak used by the male members and visitors marked B1 in the plaint map having an area of 565 square yards. Apart from the house marked B1, Soonda also got ghers marked B2 to B5, demarcated in yellow in the plaint map and thus the total area got by Soonda also came to 2417 square yards.
In terms of this partition, the plaintiffs claim that the parties have remained in separate exclusive possession of their respective properties. However, in February, 1971 the plaintiffs wanted to raise construction over the gher marked B2 in the plaint map and started constructing a boundary wall. The defendant Nos. 1-3, sons of Puran Singh, however, demolished the wall, as a result of which proceedings under section 145 of the Code of Criminal Procedure, 1898, were drawn against both the parties about this property. The Sub-Divisional Magistrate, Delhi Cantt., New Delhi by her order dated 26th April, 1972 declared that the second party, namely Puran Singh, father of defendant Nos. 1-3, was in actual possession of the disputed piece of land marked B2 on the date of the passing of the preliminary order and within two months next before such date and accordingly directed delivery of possession thereof to him until evicted in due course of law. On revision, the Additional Sessions Judge, Delhi by order dated 4th March, 1974 agreed with the conclusions arrived at by the learned Sub-Divisional Magistrate. On further revision, a learned Single Judge (M.R.A. Ansari, J.) by his order dated 6th August, 1975 affirmed the findings reached by the courts below on condition that while party No. 2 Puran Singh would remain in possession of the property in dispute, he would not make any construction thereon. The plaintiffs were accordingly constrained to bring the suit for declaration and injunction and in the alternative, for partition.
After an elaborate discussion of the evidence adduced by the parties, the learned Single Judge by his judgment dated April 18, 1980 came to the conclusion, on facts, that the plaintiffs were the owners in possession of the property marked as B1, as smaller house known as baithak, and the disputed plot B2, and the properties marked as A1, the ancestral residential house called rihaishi and A2, the open space behind the same, belonged to the defendants. Taking an overall view of the evidence of the parties in the light of the circumstances, the learned Single Judge came to the conclusion that the gher marked B2 belonged to the plaintiffs and it had fallen to their share in the partition of 1955 and later confirmed in the settlement dated 31st January, 1971. In coming to that conclusions, he observed:
"I have little hesitation that the portions marked A1 and A2 andB1 and B2 were ancestral residential houses or Gher of the parties and Soonda and Puran had equal share in them. The residential house shown as A1 and the open space behind that marked as A2 were admittedly given to Puran in the partition of 1955. Similarly, B1 was allotted to Soonda. I am unable to hold that B2 was also allotted to Puran. This would have been wholly unequitable and could not have by any stretch reflected the equal division of these joint properties. Puran in that case apart from getting the residential house for which he paid Rs. 3,000 to Soonda would have also got area far in excess if defendants' case that Gher B2 also belongs to them is accepted. In any natural and equitable division of the properties, that allotment of the residential house marked 'A' and the open space behind the same to Puran, Baithak B1 and Gher No. 1 could have naturally been given to Soonda. That it was actually done so, gets clarified in the document Exh. P1 dated 31-1-1971 which was written in the presence of a number of villagers between Puran and Soonda."
The learned Judge went on to say that the document Ex. P12 was executed by Puran Singh and Soonda in the presence of the villagers who attested the same and there was some sanctity attached to it. What is rather significant is that Puran Singh was required to pay Rs. 3,000 for equalization of shares.
Feeling aggrieved by the aforesaid judgment the defendants preferred the appeal before the Division Bench of High Court, who by its judgmentdated 4-8-1986 affirmed the reasoning and conclusion arrived at by the single Judge and accordingly dismissed the appeal. In fact the High Court construed the document in question Exh. P12 to be a memorandum of family arrangement and not an instrument of partition requiring registration and therefore admissible in evidence under proviso to section 49 of the Registration Act.
Findings of the Court:Before deciding the rival contentions the Supreme Court reproduced relevant terms of the impugned document Exh. P12 as under:
"Today after discussion it has been mutually agreed and decided that house rihaishi (residential) and the area towards its west which is lying open i.e. the area on the back of rihaishi (residential) house has come to the share of Chaudhary Pooran Singh Jaildar.
2. House Baithak has come to the share of Chaudhary Soonda. The shortage in area as compared to the house rihaishi and the open area referred to will be made good to Chaudhary Soonda from the field and gitwar in the eastern side.
3. Rest of the area of the field and gitwar will be half and half of each of co-sharers. The area towards west will be given to Chaudhary Pooran Singh and towards east will be given to Chaudhary Soonda.
4. Since house rihaishi has come to the share of Chaudhary Pooran Singh therefore he will pay Rs. 3,000 to Chaudhary Soonda.
5. A copy of this agreement has been given to each of the co-sharers.
Dt./- 3-8-1955
|
Sd/- in Hindi Pooran Singh Zaildar |
LTI Ch. Soonda" |
After looking into the aforesaid terms of the documents it was held that it was not an instrument of partition but merely a memorandum regarding decision arrived at between the parties as to the manner in which the partition was to be effected. In this regard the emphasis was laid down on the opening words of the document Ex. P12 i.e. "Today after discussion it has been mutually agreed and decided that ........" What follows is a list of properties allotted to the respective parties. From these words, it is quite obvious that the document Ex. P12 contains the recital of past events and does not itself embody the expression of "Will" necessary to effect the change in the legal relation contemplated. So also the Panch Faisla Ex. P1 which confirmed the arrangement so arrived at, opens with the words "Today on 31-1-1971 the following persons assembled to effect a mutual compromise between Chaudhary Puran Singh and Chaudhary Zile Singh unanimously decided that...."
Hence it was observed that the purport and effect of the decision so arrived at is given thereafter. One of the terms agreed upon was that the gher marked B2 would remain in the share of Zile Singh, representing the plaintiffs. In order to distinguish deed of partition from family arrangement Court also held that it is well-settled that while an instrument of partition which operates or is intended to operate as a declared volition constituting or serving ownership and causes a change of legal relation to the property divided amongst the parties to it, requires registration under section 17(1)(b) of the Act, a writing which merely recites that there has in time past been a partition, is not a declaration of Will, but a mere statement of fact, and it does not require registration. The essence of the matter is whether the deed is a part of the partition transaction or contains merely an incidental recital of a previously completed transaction. The use of the past tense does not necessarily indicate that it is merely a recital of a past transaction. It is equally well-settled that a mere list of properties allotted at a partition is not an instrument of partition and does not require registration. Section 17(1)(b) lays down that a document for which registration is compulsory should, by its own force, operate or purport to operate to create or declare some right in immovable property. Therefore, a mere recital of what has already taken place cannot be held to declare any right and there would be no necessity of registering such a document. Two propositions must therefore flow: (1) A partition may be effected orally; but if it is subsequently reduced into a form of a document and that document purports by itself to effect a division and embodies all the terms of bargain, it will be necessary to register it. If it be not registered section 49 of the Act will prevent its being admitted in evidence. Secondly evidence of the factum of partition will not be admissible by reason of section 91 of the Evidence
Act, 1872. (2) Partition lists which are mere records of a previously completed partition between the parties, will be admitted in evidence even though they are unregistered, to prove the fact of partition.
The Court further observed that the tests for determining whether the document is an instrument of partition or a mere list of properties, have been laid down in a long catena of decisions and thereafter specifically mentioned the judgment delivered by Vivian Bose, J. in Narayan Sakharam Patil v. Co-operative Central Ban, Malkapur, MANU/NA/0197/1937 : AIR 1938 Nag 434. In that judgment, learned Judge relied upon the decision of Privy Council in Bhageshwari Charan Singh v. Jagarnath Kuari, MANU/PR/0012/1931 : AIR 1932 PC 55 and Subramanian v. Lutchman, AIR 1923 PC 50 and expressed as follows:-
"It can be accepted at once that mere lists of property do not form an instrument of partition so would not require registration, but what we have to determine here is whether these documents are mere lists or in themselves purport to 'create, declare, assign, limit or extinguish.... any right, title or interest' in the property which is admittedly over Rs. 100 in value. The question is whether these lists merely contain the recital of past events or in themselves embody the expression of will necessary to effect the change in the legal relation contemplated"
The Court also observed that partition, unlike the sale or transfer which consists in its essence of a single act, is a continuing state of facts. It does not require any formality, and therefore, if parties actually divide their estate and agree to hold in severalty, there is an end of the matter. On its true construction, the document Exh. P12 as well as the subsequent confirmatory panch failsa Exh. P1 merely contains the recitals of a past event, namely decision arrived at between the parties as to the manner in which the parties would enjoy the distinct items of joint family property in severalty. What follows in Exh. P12 is a mere list of properties allotted at a partition and it cannot be construed to be an instrument of partition and therefore did not require registration under section 17(1)(b) of the Act. That apart, the document could always be looked into for the collateral purpose of providing the nature and character of possession of each item of property allotted to the members.
Besides this it was further held that matter can be viewed from another angle also. The true and intrinsic character of the memorandum Exh. P12 as later confirmed by the panch faisla Exh. P1 was to record the settlement of family arrangement. The parties set up competing claims to the properties and there was an adjustment of the rights of the parties. By such an arrangement, it was intended to set at rest competing claims amongst various members of the family to secure peace and amity. The compromise was on the footing that there was an antecedent title of the parties to the properties and the settlement acknowledged and defined title of each of the parties. The principle governing this was laid down by the Judicial Committee in Khunni Lal v. Govind Krishan Narain, (1911) 38 Ind App 87, where in Privy Council while approving the following passage from the judgment of Lalla Oudh Beharee Lall v. Ranee Mewa Koonwer, (1868) 3 Agra HCR 82 observed:
"The true character of the transaction appears to us to have been a settlement between the several members of the family of their disputes, each one relinquishing all claims in respect of all property in dispute other than that falling to his share, and recognizing the right of the others as they had previously asserted it to the portion allotted to them respectively. It was in this light rather than as conferring a new distinct on each other, that the parties themselves seem to have regarded the arrangement and we think that it is the duty of the Courts to uphold and give full effect to such an arrangement".
Finally the Court crystallized the law on the subject as under:
"If the arrangement of compromise is one under which a person having an absolute title to the property transfers his title in some of the items thereof to the others, the formalities prescribed by law have to be complied with, since the transferees derive their respective title through the transferor. If, on the other hand, the parties set up competing titles and the differences are resolved by the compromise, there is no question of one deriving title from other, and, therefore, the arrangement does not fall within the mischief of section 17 read with section 49 of the Registration Act, 1908 as no interest in property is created or declared by the document for the first time. As pointed out by this Court in Sahu Madho Dass case, it is assumed that the title had always resided in him or her so far as the property falling to his or her share is concerned and therefore no conveyance is necessary."
Finally the Court held that there was a partition by metes and bounds of the agricultural lands effected in year 1955 and the shares allotted to the two branches were separately mutated in the revenue records. There was thus a disruption of joint status. All that remained was that partition of the ancestral residential house called rihaishi, the smaller house called baithak and ghers/ghetwars. On the basis of above mentioned discussion the impugned document Exh. P12 was held to be not affecting the partition but merely recording the nature of the arrangement arrived at as regards the division of the remaining property. Hence, the document in question Exh. P12 could be, it was held, used for the limited and collateral purpose of showing that the subsequent division of the properties allotted was in pursuance of the original intention to divide, since it was merely a list of properties allotted to the shares of the parties.
Question of law decided:Whether adoption deed requires compulsory registration. It is pertinent to mention here that the judgment discusses some important provisions of Hindu Adoptions and Maintenance Act, 1956 also with regard to the effect of adoption and the rights of the adopting parents to dispose of their properties. However, for the purpose of the present study we have to confine ourselves to the discussion pertaining to the document in question vide which while adopting a son certain rights to the immovable property were relinquished/transferred, wherein consequently the question arose as to whether non-registration of the same was hit by section 49 of the Registration Act, 1908.
Facts of the case:The present appeal arose out of the suit for injunction and possession on the basis of registered sale deed dated 28-4-1966 executed by Yashoda Bai in his favour with respect to immovable property including the agricultural land and house. The property originally belonged to her husband and after his death she got it as limited owner and by influx of time and by coming into force of the Hindu Succession Act, 1956, she acquired the rights of an absolute owner. The twist in the matter arose when she adopted the respondent Nain Singh as her son on 28-4-1963 and executed the impugned document said to be Deed of Adoption, wherein she stated that after this deed of adoption her adopted son will be entitled to the whole property including movable and immovable and consequently she will have no right to alienate any part of the property after this deed of adoption. It is pertinent to mention here that this deed was not registered. While taking benefit of this document, she disputed the transfer of the property in favour of the plaintiff on the ground that after executing the said adoption deed she had no right left in that property. Learned Trial Court decreed the suit. First appellate Court while allowing the appeal dismissed the suit and set aside the decree passed by the learned Trial Court. Learned High Court maintained the judgment of lower appellate Court. It is under these circumstances that the matter came up for hearing before the Supreme Court by way of Appeal against the said judgment of the High Court of Madhya Pradesh in the second appeal.
"Section 17(1)(b) of the Registration Act, 1908 clearly provides that such a document where any right in immovable property is either assigned or extinguished will require registration. It could not be disputed that this part of the deed which refers to creation of an immediate right in the adopted son and the divesting of the right of the adoptive mother in the property will squarely fall within the ambit of section 17(1)(b) and therefore under section 49 of the RegistrationAct, 1908, this could not be admitted if it is not a registered document. Unfortunately, the Hon'ble Judge of the High Court did not notice this aspect of the matter and felt that what could not be done because of the proviso (c) to section 12 has been specifically provided in the document itself but this part of the document could not be read in evidence as it could not be admitted. In view of this, the appeal is allowed. The judgments of the High Court and that of the lower appellate Court are set aside and that of the trial Court is restored. In view of these special circumstances, there is no order as to costs"
Question of law decided: Whether the arbitration award vide which after dissolution of the partnership, partnership properties were allotted to the partners, required registration under section 17(1) of the Registration Act, 1908? The Court on two counts held that it did not require compulsory registration because under section 17(1) of the Registration Act, 1908, first of all, the document should be regarding immovable property. But in the case of dissolution of partnership firm its assets are first converted into money, which is nothing but movable property, and only thereafter the same are distributed amongst the partners according to their shares. Secondly, the partnership firm is not a separate legal entity but it is only a compendious name for each and every partner who has a beneficial interest in the property of the firm even though he cannot lay a claim on any earmarked portion thereof as the same cannot be predicated. Therefore, when any property is allocated to him from the residue, after deduction of liabilities of the partnership firm, it cannot be said that he had a definite limited interest in that property and that there is a transfer of the remaining interest in his favour within the meaning of section 17 of the Registration Act, 1908.
Facts of the case: The four appellants and respondents 1 and 2 are brothers. They were carrying on business in partnership in the name and style of Messrs Sivalinga Nadar & Brothers and S.V.S. Oil Mills, both partnerships being registered under the Partnership Act, 1932. Most of the properties were acquired by the firm of Sivalinga Nadar & Brothers. The firm of Messrs S.V.S. Oil Mills merely had leasehold rights in the parcel of land belonging to the first named firm on which the superstructure of the oil mill stood. Both the partnerships were of fixed durations. Disputes arose between the six brothers in regard to the business carried on in partnership in the aforesaid two names. For the resolution of these disputes the six brothers entered into an arbitration agreement dated October 8, 1981, which was as under:
"We are carrying on business in partnership together with other partners under several partnership names. We are also holding shares and managing the Public Limited Company namely, the Madras Vanaspati Ltd., at Villupuram. Disputes have arisen among us with respect to the several business concerns, immovable and movable properties standing in our names as well as other relatives.
We are hereby referring all our disputes, the details of which would be given by us shortly to you, namely, Sri B.B. Naidu, Sri K.R. Ramamani and Sri Seetharaman.
We agree to abide by your award to our disputes."
All the three arbitrators were fairly well-conversant with the business carried on in different names by the aforesaid two partnership firms; the first two being their Tax Consultants and the third being their Chartered Accountant. The parties, therefore, had complete faith and trust in their objectivity and impartiality.
The arbitrators accepted and entered upon the reference and after giving the disputants full and complete opportunity to place their rival points of view before them, circulated a draft award and after considering the response and reaction of the disputants thereon made their final award on July 9, 1984. The arbitrators then proceeded to set out the properties belonging to or claimed to belong to the aforesaid two firms in paragraphs 6 to 24 of their award. Paragraph 25 is a residuary clause which says that any asset left out or realized hereafter or any liability found due other than those reflected in the account books, shall, likewise, be divided and/or borne equally among the disputants. Paragraphs 26 and 27 deal with the use of the firm names. Paragraph 28 refers to the claim of Smt. C. Kanthimathi, sister of the six partners. Paragraph 29 refers to the business carried on by the relatives of the disputants in the names of Sri Brahmasakthi Agency and Srimagal Finance Corporation. The arbitrators have recognized the fact that even though the said business is not carried on by the disputants it would be desirable to dissolve the said firms also w.e.f. July 24, 1984 in the larger interest of peace and amity among the disputants and their relatives. Paragraph 30 refers to the properties standing in the name of the father of six disputants, i.e., partners of the two firms in question. It is stated that although initially the disputants had shown an inclination to refer the dispute concerning the properties owned by their father to the arbitration of the three arbitrators but when it was noticed that the deceased had left a Will disposing of the properties the need for resolution of the dispute through arbitration did not survive. In paragraph 31 the arbitrators have determined their fees and have directed the disputants to bear them equally. At the end of the award the properties falling to the share of the disputants have been set out in detail in Schedules 'A' to 'F' referred to earlier.
After the award was made on July 9, 1984, O.P. 230 of 1984 was filed by S.V. Chandrapandian and Others for a direction to the arbitrators to file their award in Court which was done. Thereupon, the applicants S.V. Chandrapandian and others filed a Miscellaneous Application No. 3503 of 1984 requesting the Court to pass a decree in terms of the award. Before orders could be passed on that application, O.P. Nos. 247 and 275 of 1984 were filed by S.V. Sivalinga Nadar and S.V. Harikrishnan respectively under section 30 of the Arbitration Act to set aside the award. The said application came up for hearing before a learned Single Judge of the High Court. Various points were raised and decided by the learned Single Judge but it would be sufficient to refer to the one which the Court was called upon to decide in these group of appeals. The contention urged was that having regard to the allotment of partnership properties under the award, it was incumbent that the award should have been registered as required by section 17(1) of the Registration Act and since it lacked registration, the Court had no jurisdiction to make it the rule of the Court and grant a decree in terms thereof.
Learned Single Judge observed that the award has been submitted for registration long ago in October 27, 1984 itself and it is stamped and if there is any deficiency, the registering authority could direct proper stamp to be affixed and therefore he found no impediment for the award being rule of the Court and decree being passed as contended by learned counsel for the respondents. Accordingly, he proceeded to make final order in his judgment.
After the making of the award one of the arbitrators Shri B.B. Naidu passed away on October 20, 1984. At the request of some of the parties the surviving arbitrators presented the award before the District Registrar, Madras for registration on October 27, 1984. Even though the signature of the deceased arbitrator was identified by the surviving arbitrators the document was kept pending for registration. In the meantime, on January 23, 1987, advocate for Sivalinga Nadar served notice on the Registrar not to register the document and threatened to take proceedings in Court if the document was registered. It will thus be seen that the registration of the document was blocked by one of the disputants Sivalinga Nadar on the premise that the High Court had in O.P. No. 247 of 1984 granted a stay against the operation of the award on September 5, 1984.
Against the said judgment of the Single Judge, the matter was carried in appeal to the Division Bench of Madras High Court, who reversed the aforesaid finding recorded by the Single Judge and came to the conclusion that award required compulsory registration under the Registration Act. Hence, it was not necessary to go into the other contentions dealt with by the learned Single Judge. It was further held that since award required registration and was in fact not registered no proceeding for making the award the rule of the Court can be entertained because in the absence of a valid award the Court had no jurisdiction to grant a decree in terms of the award. It, however, took note of the fact that award was presented for registration but on account of the conduct of the one of the disputants it could not be registered. Hence the appeal was allowed and impugned judgment of the Single Judge was set aside and the award could not be made rule of the Court. Against this judgment, the matter came to the Apex Court by way of the present Special Leave.
Findings of the Court:Before coming to the main question the Supreme Court looked into the provisions of Partnership Act, 1932 and held that-
"The provisions of the Partnership Act, 1932 make it clear that regardless of the character of the property brought in by the partners on the constitution of the partnership firm or that which is acquired in the course of business of the partnership, such property shall become the property of the firm and an individual partner shall only be entitled to his share of profits, if any, accruing to the partnership from the realization of this property and upon dissolution of the partnership to a share in the money representing the value of the property. It iswell-settled that the firm is not a legal entity, it has no legal existence, it is merely a compendious name and hence the partnership property would vest in all the partners of the firm. Accordingly, each and every partner of the firm would have an interest in the property or asset of the firm but during its subsistence no partner can deal with any portion of the property as belonging to him, nor can he assign his interest in any specific item thereof to anyone. By virtue of the implied authority conferred as agent of the firm his action would bind the firm it is done to carry on, in the usual way, the business of the kind carried on by the firm but the act or instrument by which the firm is sought to be bound must be done or executed in the firm name or in any other manner expressing or implying an intention to bind the firm. His right is merely to obtain such profits, if any, as may fall to his share upon the dissolution of the firm which remain after satisfying the liabilities set out in the various sub-clauses (i) to (iv) of clause (b) of section 48 of the Act."
Thereafter, while referring to certain judgments, the Court came to the conclusion that regardless of its character the property brought into stock of the firm or acquired by the firm during its subsistence for the purposes and in the course of the business of the firms shall constitute the property of the firm unless the contract between the partners provides otherwise. On the dissolution of the firm each partner becomes entitled to his share in the profits, if any, after the accounts are settled in accordance with section 48 of the Partnership Act, 1932. Thus, in the entire asset of the firm all the partners have an interest albeit in proportion to their share and the residue, if any, after the settlement of accounts on dissolution would have to be divided among the partners in the same proportion in which they were entitled to a share in the profit. Thus, during the subsistence of the partnership a partner would be entitled to a share in the profits and after its dissolution to a share in the residue, if any, on settlement of accounts. The mode of settlement of accounts set out in section 48 clearly indicates that the partnership asset in its entirety must be converted into money and from the pool the disbursement has to be made as set out in clause (a) and sub-clauses (i), (ii) and (iii) of clause (b) and thereafter if there is any residue that has to be divided among the partners in the proportions in which they were entitled to a share in the profits of the firm. So viewed, it becomes obvious that the residue would in the eye of law be movable property i.e. cash, and hence distribution of the residue among the partners in proportion to their shares in the profits would not attract section 17 of the Registration Act, 1908.
Viewed from another angle it must be realized that since a partnership is not a legal entity but is only a compendious name each and every partner has a beneficial interest in the property of the firm even though he cannot lay a claim on any earmarked portion thereof as the same cannot be predicated. Therefore, when any property is allocated to him from the residue it cannot be said that he had only a definite limited interest in that property and that there is a transfer of the remaining interest in his favour within the meaning ofsection 17 of the Registration Act, 1908. Each and every partner of a firm has an undefined interest in each and every property of the firm and it is not possible to say unless the accounts are settled and the residue or surplus determined what would be the extent of the interest of each partner in the property. It is, however, clear that since no partner can claim a definite or earmarked interest in one or all of the properties of the firm because the interest is a fluctuating one depending on various factors, such as, the losses incurred by the firm, the advances made by the partners as distinguished from the capital brought in the firm, etc., it cannot be said, unless the accounts are settled in the manner indicated by section 48 of the Partnership Act, 1932, what would be the residue which would ultimately be allocable to the partners. In that residue, which becomes divisible among the partners, every partner has an interest and when a particular property is allocated to a partner in proportion to his share in the profits of the firm, there is no partition or transfer taking place nor is there any extinguishments of interest of other partners in the allocated property in the sense of a transfer or extinguishments of interest under section 17 of the Registration Act, 1908. Therefore, viewed from this angle it seems clear to usthat when a dissolution of the partnership takes place and the residue is distributed among the partners after settlement of accounts there is no partition, transfer or extinguishment of interest attracting section 17 of the Registration Act, 1908.
Finally the Court held that the award read as a whole makes it absolutely clear that the Arbitrators had confined themselves to the properties belonging to the two firms and had scrupulously avoided other properties in regard to which they did not reach the conclusion that they belonged to the firm. On a correct reading of the award, it was held that the award seeks to distribute the residue after settlement of accounts on dissolution. While distributing the residue the Arbitrators allocated the properties to the partners and showedthem in the schedules appended to the award. Therefore, it was further held that, on a true reading of the award as a whole, there was no doubt that it essentially dealt with the distribution of the surplus properties belonging to the dissolved firms. The award, therefore, did not require registration undersection 17(1) of the Registration Act, 1908.
In view of the aforementioned discussion, the appeals were allowed and the impugned orders of the Division Bench were set aside. The matter was remanded back for answering the other contentions which arose in the appeal before it, but were not decided in view of its decision on the question of registration of the award.
Question of law decided: Whether the arbitration award requires compulsorily registration under section 17(1)(b) of the Registration Act, 1908. It was held in this case that unregistered award per se is not inadmissible in evidence. It is a valid award and not a mere waste paper. It creates rights and obligations between the parties and is conclusive between the parties. It can be set up as a defence evidence of resolving the disputes and acceptance of itby the parties. If it is a foundation, creating right, title and interest in praesenti or future or extinguishes the right, title or interest in the immovable propertyof the value of Rs. 100 or above it is compulsorily registrable andnon-registration renders it inadmissible in evidence. If it contains a mere declaration of a pre-existing right, it is not creating a right, title and interestin praesenti, it is not a compulsorily registrable instrument. It can be lookedinto as evidence of the conduct of the parties of accepting the award, acting upon it that they have pre-existing right, title or interest in the immovable property.
Facts of the case:While the appellant was in government service, Kartar Lal (first defendant in the suit), his brother had purchased on 7-4-1959 the house bearing Municipal No. 313, with land admeasuring 222 Sq yards in Karol Bagh from the Ministry of Rehabilitation. On 22-1-1963 the sale certificate was issued in favour of Kartar Lal. Finding it exclusively in the name of Kartar Lal, the appellant raised a dispute which was referred to named private arbitrators for resolution. The two arbitrators by their award dated 16-10-1963 declared that:
"We award that Shri Sardar Singh is the owner of half house bearing Municipal No. 313, Ward No. XVI situate at Gali No.10, Faiz Road, Karol Bagh, New Delhi, from the date of purchase of the said house, i.e. from 7-4-1959 as he paid Rs. 18,100 to Shri Kartar Lal in the shape of claim bonds valued at Rs. 11,560.00 and Rs. 6,540.00 in cash towards the purchase price of the said house and Shri Kartar Lal paid half of the price of the said house in the shape of claim bond and cash. The price of the said house was contributed half and half by both of them. Though, the sale deed was taken by Shri Kartar Lal in his name benami but actually Shri Kartar Lal and Shri Sardar Singh, are the owners of the said house in equal share from the date of its purchase, i.e., from 7-4-1959 and Shri Sardar Singh, is also entitled to half the amount of rent of the said house from the date of its purchase after deducting property taxes paid by Shri Kartar Lal".
On an application made under section 14 of the Arbitration Act, 1940 by the appellant, the arbitrators produced the award in suit No. 299 of 1963 in the Court of the Judge, First Class, Delhi which was made rule of the court under section 17 thereof by decree dated 28-12-1963. The appellant laid proceedings before the Rent Controller for eviction of their tenants for personal occupation on the ground that he being a government servant was entitled to possession under special procedure prescribed under that Act and accordingly had possession. Kartar Lal entered into a contract of sale of the entire property with Joginder Nath, husband of the first respondent on 15-1-1973 for Rs. 90,000 and had received part consideration. The time to execute the sale deed was extended from time to time up to 31-12-1979 by which date Joginder Nath died and the first respondent had entered into fresh contract with Kartar Lal and laid the suit in OS No. 2 of 1983 against Kartar Lal. The appellant, becoming aware of the contract of sale and pending suit, got himself impleaded in that suit as second defendant. The Trial Court by decree dated 5-5-1986 decreed the suit. On appeal the High Court of Delhi in RFA No. 206 of 1986 by judgment and decree dated 21-11-1990 confirmed the decree.
The Courts below found that the appellant's title is founded upon the award to acquire title to or to divest the title of Kartar Lal; it is compulsorily registrable under section 17 of the Registration Act, 1908 and being an unregistered award the same was inadmissible in evidence as source of title under section 49 thereof. The appellant's claim as owner of the half share in the property was thus negatived. The question, therefore, is whether the award, on the facts and in the circumstances, is compulsorily registrable under section 17 of the Registration Act, 1908.
Findings of the Court: The court observed that conjoint reading of section 17(1)(b) and section 49 of the Registration Act, 1908 establishes that non-testamentary instrument which purports or operates to create, declare, assign, limit or extinguish in present or future, any right, title or interest, whether vested or contingent to or in any immovable property of the value of Rs. 100 and above, shall compulsorily be registered, otherwise the instrument does not effect any immovable property comprised therein or shall not be received as evidence of any transaction affecting such immovable property.
The Court also appreciated the observations of the Supreme Court in Lachhman Dass v. Ram Lal, (1989) 2 SCR 250 for the purpose of registration and held that:
"In other words, it is necessary to examine not so much what it intends to do but what it purports to do.
The real purpose of registration is to secure that every person dealing with the property, where such document requires registration, may rely with confidence upon statements contained in the register as full and complete account of all transactions by which title may be affected. Section 17 of the said Act being a disabling section, must be construed strictly. Therefore, unless a document is clearly brought within the provisions of the section, its non-registration would be no bar to its being admitted in evidence."
In this scenario the Court formulated the question in the present case as under:
"Whether the award in favour of the appellant creates any right, title and interest in half share of the house in his favour or extinguishes the right, title and interest therein of Kartar Lal."
Hence, it was necessary to examine the award not so much to find what the award intended to do, but what it purports to do and the consequences that would flow therefrom. The Court rejected the contention that the award did not require registration as it merged in the decree of the Civil Court making it a rule of the Court and in this regard found the support in the observations of Satish Kumar v. Surender Kumar, MANU/SC/0264/1968 : AIR 1970 SC 833 to the effect that in case the award, if it creates for the first time a right in the immovable property of the value of Rs. 100 or above, in the absence of its registration, the awardee would not get title on the award and the title would remain with the party against whom the award was made. This view was found to be reiterated in Ratan Lal Sharma v. Purushottam Harit, (1974) 3 SCR 109 and in Lachhman Dass's case (supra). In all these cases, it was observed that, the title was founded on the award. Similarly, on the facts of the present case observations of Supreme Court in Uttam Singh Duggal v. Union of India, C.A. No. 162 of 1962, decided on
11-10-1962 were considered relevant wherein it was held that:
"all claims which are the subject-matter of the reference to arbitration merged in the award which is pronounced in the proceeding before the Arbitrator and that after the award has been pronounced the rights and liabilities of the parties in respect of the said claims can be determined only on the basis of the said award."
Yet another pronouncement of the Supreme Court in Kashinatsha Yamosa Kabadi v. Narsingsa Bhaskarsa Kabadi, MANU/SC/0378/1961 : AIR 1961 SC 1077 on a question whether an award made in arbitration out of court and accepted by the parties, in the absence of registration, could be pleaded in defence as a binding decision between the parties, was considered and below mentioned observations were made:
"It may be sufficient to observe that where an award made in arbitration out of court is accepted by the parties and it is acted upon voluntarily and a suit is thereafter sought to be filed by one of the parties ignoring the acts done in pursuance of the acceptance of the award, the defence that the suit is not maintainable is not founded on the plea that there is an award which bars the suit but that the parties have by mutual agreement settled the dispute, and that the agreement and the subsequent actings of the parties are binding. By setting up a defence in the present case that there has been a division of the property and the parties have entered into possession of the properties allotted, defendant 1 is not seeking to obtain a decision upon the existence, effect or validity of an award. He is merely seeking to set up a plea that the property was divided by consent of parties. Such a plea is in our judgment not precluded by anything contained in the Arbitration Act."
Thus, it was decided that though the award was not registered, it could be relied on as a defence to show that parties had agreed to refer the dispute to private arbitration, the award made thereon was accepted by the parties and acted upon it. In the peculiar facts of the case and also relying upon the pronouncement in the judgments, the Court laid down as under:
"It is, thus, well-settled law that the unregistered award per se is not inadmissible in evidence. It is a valid award and not a mere waste paper. It creates rights and obligations between the parties thereto and is conclusive between the parties. It can be set up as a defence as evidence of resolving the disputes and acceptance of it by the parties. If it is a foundation, creating right, title and interest in praesenti or future or extinguishes the right, title or interest in immovable property of the value of Rs. 100 or above it is compulsorily registrable and non-registration renders it inadmissible in evidence. If it contains a mere declaration of a pre-existing right, it is not creating a right, title and interest in prasenti, in which event it is not a compulsorily registrable instrument. It can be looked into as evidence of the conduct of the parties of accepting the award, acting upon it that they have pre-existing right, title or interest in the immovable property."
In this peculiar ground the Court came to the conclusion that the contents of the award referred to in the matter did not create any right, title or interest in the appellant for the first time, but it declared the pre-existing factum, namely the appellant and Kartar Lal purchased the property jointly and that Kartar Lal was the benamidar and that both of the brothers had half share in the house with a right to enjoyment of the property in equal moiety. Thus, the award was held to be non-compulsorily registrable. The Court also held that award does not have the effect of creating any right in prasenti, nor is it an attempt to avoid law. The award was made rule of the court a decade earlier to the date of the initial agreement of sale. The rest of the judgment deals with the suit for specific performance under Specific Performance Act, which is not relevant for the purpose of our study. Consequently, the appeal was allowed and the decree of the High Court was set aside.
Question of law decided:Does 'Deed of Dissolution' reflecting partnership property requires compulsorily registration? The Court answered in the negative and held that there is no need for its registration.
Facts of the case:Both the plaintiff-appellant and defendant-respondent were partners in M/s. Maharashtra Metal Manufacturing Company. The partnership was formed in 1952 and it lasted till 1959. In 1955, the plot in dispute was purchased by the defendant. At the time of dissolution partition deed, Ext. 46, was executed. A Deed of Dissolution, Ext. 47, was executedon 1-8-1961 and another deed, Ext. 48, was executed on 1-9-1961. In all the deeds, this plot was mentioned. In the last deed the recital read as under:
"We both have been carrying on the business of making and selling lotas of copper in partnership for a long time in the name of
'M/s. Maharashtra Metal Manufacturing Company, Pune. We have duly recorded the deed of dissolution of partnership on the date 1-9-1961. There were factories running at two places and belonging to our partnership. Similarly there is a plot bearing Survey No. 699 of the ownership of our partnership, situated near Saibaba Temple,
Satara-Poona Road, Swargate and we both reside there. The places of both the factories are taken on rent and the same were also (included) in our partnership."
In the schedule appended to the partition deed it was mentioned that the said property together with the structure standing thereon, the well and the motor fixed on the said well would be treated as joint or common property. Since in the Deed of Dissolution of 1-8-1961 it was mentioned:
"Survey No. 699 has been purchased in the name of No. 1 Mungale, No. 1 Mungale should execute a sale deed of half share in this land in favour of No. 2 Bidwai at Bidwai's expense."
The appellant issued notice for execution of the sale deed. But when the defendant neglected to do so the appellant filed the suit for partition by metes and bounds. The suit was dismissed by the trial Court. The two deeds of dissolution of partnership were held inadmissible for want of registration. The order was upheld in appeal. It was held that the recital in Exts. 46 and 47 with regard to terms of dissolution of partnership did not require registration. But so far as it sought to affect the interest of defendant in the non-partnership immovable property the document being unregistered was inadmissible. In respect of Ext. 48 the High Court held that the recital in the document that it was partnership property did not appear to be correct.
Findings of the Court:Reliance was placed heavily on a case already discussed earlier in this law series namely S.V. Chandra Pandian v. S.V. Sivlinga Nadar, MANU/SC/0450/1993 : (1993) 1 SCC 589 for the proposition that no registration was required of the partnership property, as it did not result in transfer of any interest. On the other hand findings of the High Court were supported on the ground that documents did not establish that plot No. 699 was partnership property. It was also contended that High Court having found documentary evidence to be insufficient or inadmissible examined the oral evidence and held that the land was not partnership property and as such it was not an appropriate case in which indulgence was required to exercise jurisdiction under article 136 of the Constitution.
In these circumstances the real question which arose for consideration before the Apex Court was that "if the recital in the Deed of Dissolutiondated 1-9-1961 showing that plot No. 699 was partnership property was inadmissible for want of registration." The Supreme Court observed that it was found by the High Court and could not be disputed by the respondent that if plot No. 699 was held to be partnership property then it did not require registration. On the basis of evidence the Court came to the conclusion that it is true that plot in question was purchased in 1955 by the respondent alone but he was not precluded in law from bringing it in the partnership. The circumstances and the three documents indicate that even though the land was purchased by the respondent, both the parties treated the same as being the property in joint ownership of both. This may have been due to good relations which existed between them prior to 1959 but there appears no reason to discard the recital in these documents which unequivocally establish that the property at the time of dissolution was owned by the partnership. The recital in the Deed of Dissolution of partnership of September, 1961 that it was a partnership property, could not be ignored. Apart from it, the appellant had filed earlier suit in which the claim of the appellant that these documents were obtained under duress was not accepted. The Court further observed that even though the suit was dismissed on the ground of limitation, but the genuineness of the documents was not doubted. In this scenario the recital in the dissolution deed could not be ignored. Hence, the Court ruled that the High Court was in absence of any challenge to Ext. 48 was not justified in recording the finding that recital in the deed did not carry out intention of executants.
In the result it was held that plot No. 699 was partnership property and, therefore, there was no need for registration. Accordingly, the appellant's suit was decreed. Hence, the appeal was allowed, while setting aside the judgments of two Courts below dismissing the plaintiff's suit. Consequently the suit for partition was decreed.
Question of law:Whether the memorandum recording past partition requires compulsory registration? The Court, while relying upon the case of Roshan Singh v. Zile Singh, AIR 1988 SC 881, already discussed in this law series, held that a subsequent memorandum recording past oral partition is nothing but a family settlement and does not require registration.
Facts of the case:Though this aspect has already been discussed specifically in earlier case, but this issue arose just as passing reference in the present matter. This aspect of the matter was not taken note of by the lower courts, however, when it reached to the Supreme Court, while relying upon decision in Roshan Singh v. Zile Singh, AIR 1988 SC 881, it was reiterated that memorandum recording past partition did not require compulsory registration. It would be convenient to reproduce the facts of the case directly from the judgment as under:
"The demised premises is a shop which stood rented out to the first respondent by a joint Hindu family, the Karta of which was Gurbax Singh, one of the four brothers, the second respondent. The Karta used to receive rent from the first respondent. On 23-2-1982, a memorandum recording past partition was prepared by the brother through a lawyer and the appellant herein had acknowledged to have got this shop in his share. Thereafter, he issued a notice on 1-1-1986 to the respondent stating that w.e.f. 1-3-1982 he was the landlord and that the rent at the rate of Rs. 50 per month, as orally enhanced mutually, be paid to him. That notice was not responded to by the first respondent though its receipt is not disputed. In this situation, the appellant on 25-2-1986 filed an ejectment application on two grounds, namely (i) non-payment of rent since 1-3-1982 @ Rs. 50 per month; (ii) closure of the rented shop since 1-10-1985 and sub-letting of the same to one Mohinder Singh. The ejectment was disputed by both the respondents by filing separate but supportive written statements on 19-5-1986 contending that up-to-date rent (without specifying the date) at the rate of Rs. 28 per month, as originally fixed, stood paid by the first respondent to Gurbax Singh, second respondent. On the other ground, it was stated that there was no sub-letting. The Rent Controller, Moga, after examining the evidence of the parties, came to the conclusion that the rent fixed was Rs. 28 per month which did not stood enhanced to Rs. 50 per month, and since the same stood paid by the first respondent to the second respondent, the tenant was not in arrears of rent. The relationship of the appellant and the first respondent after service of notice dated 1-1-1986 was omitted to be pronounced upon. On the ground of sub-letting, the Rent Controller was in favour of the landlord and so he ordered eviction. On appeal to the appellate authority, the order of the Rent Controller was reversed by affirming the decision on the ground of non-payment of arrears of rent and by upsetting the decision on ground of sub-letting holding that in the absence of Mohinder Singh, the alleged sub-lessee, as party to the proceedings, no ejectment order could be passed. The High Court, as said before, dismissed the revision petition of the appellate in limine."
Hence, the present special leave before the Supreme Court.
Findings of the Court:Before the Supreme Court the ground of subletting was not pressed by the appellant, though on the ground of non-payment of rent, there was a considerable debate. The Court besides this, took note of the fact that the tenant respondent did not respond to the notice Ex. A4, undeniably sent by the appellant on 1-1-1986, thereby intimating that he (appellant) had become the exclusive landlord of the property demised w.e.f. 23-2-1982 or 1-3-1982 and that, therefore, he was entitled to receive the rent thenceforth. In other words, facts as stated in that notice were not controverted nor the title of the appellant to the said property was questioned. The Court also observed that till date the respondent did not controvert that rent uptil date stood paid to the second respondent.
Another important issue, which lower courts ignored, as mentioned above, was the memorandum Ex. A1 regarding past partition, put on record before the Rent Controller. It was observed that Rent Controller did not pronounce upon it, and the same was brushed aside by the appellate authority holding that it could not be seen in the absence of registration even though the decision of the Supreme Court in Roshan Singh v. Zile Singh, stood cited, in which it was specifically held that a subsequent memorandum recording past oral partition as a family settlement was not required to be registered. The Court held that memorandum Ex. A1 when read, substantially discloses that the shop in dispute stood fallen to the share of the appellant. Besides this, the other evidence which corroborated this aspect of the matter was the testimony of two brothers of the appellant, who appeared as AW2 and AW5. It was observed that the memorandum of partition recorded the factum of the past but for certainty the brothers had chosen to straighten things w.e.f. 23-2-1982 and the said notice EX. A4 to the respondent was to the effect that the appellant was entitled to receive rent w.e.f. 1-3-1982. It was also observed that the Rent Controller did not fully grasp the legal situation in the matter and wrongly denied eviction of the respondent on that score. Similarly, the appellate authority as also the High Court committed the same error. The said orders of the Courts below were set aside and instead of remanding the matter back, the appeal was allowed and the order for ejectment of the respondent was made.
Question of law decided:Whether a Foreign Award under the provisions of Foreign Awards (Regulation and Enforcement) Act, 1961 (in short Foreign Awards Act) requires compulsory registration under section 17(1)(b) of the Registration Act, 1908? Court held that under section 17(2)(vi) of the Registration Act, before its amendment in 1929, even an award did not require registration. However, after omission of the words 'and any award' an award creating or declaring right or interest in immovable property of the value of Rs. 100 or more would require registration. But then that award would be an award under the Arbitration Act and certainly not a foreign award. Court further observed that a foreign judgment does not require registration as the process of suit having been decreed on that basis will have to be gone through. When a decree is passed by a Court, it does not require registration in view of said section 17(2)(vi). A decree or order of a Court affecting the rights mentioned in sections 17(1)(b) and 17(1)(c) would not require registration. It would, however, require registration where the decree or order on the basis of compromise affects the immovable property other than that which is the subject-matter of the suit or proceeding. Even a decree passed by the Foreign Court, execution of which is sought under Code of Civil Procedure, would not require registration. That being the position, a foreign award under the provisions of the Foreign Awards Act does not require registration under the Registration Act, 1908.
Facts of the case:For the purpose of present study, elaborate statement of facts is not required to be discussed. Suffice it to say that appellant and the respondent, who are brothers, appointed their elder brother Lalit Mehta as arbitrator to divide their businesses and properties both in the United States of America and India. Consequently, said arbitrator gave his award in New York. Some proceedings arising out of the arbitration agreement and the award were held there in the courts. Arbitration agreement was entered into at New York where arbitration proceedings were held and award given. Mukesh applied to the Bombay High Court under the provisions of Foreign Awards Act for enforcing the award. The High Court, after contest, ordered the award to be filed and pronounced judgment according to the award as required under section 6 of the Foreign Awards Act. Harendra, the appellant herein, finding himself aggrieved by the judgment filed the present appeal.
Findings of the Court: Ld. counsel for the appellant submitted that the High Court could not order award to be filed and give judgment in terms thereof. His objections to the impugned judgment were:
(1) It is not an arbitral award inasmuch as there was no dispute on the basis of which the arbitrator could give his award. The arbitrator merely acted as a rubber stamp.
(2) It is not an award under the Foreign Awards Act as the award is merely effecting a family settlement. It is not of commercial nature. Dispute did not arise out of any international trade.
(3) Chapter XX-C of the Income-tax Act, 1961 has been violated and the enforcement of the award in violation of the law of this country would be against the public policy.
(4) The award merged in the foreign judgment of a New York Court which modified the award. So only the judgment could be enforced.
(5) A fraud has been committed in getting the award and further that certain schedules which formed part of the agreement to refer the disputes to arbitration have been fraudulently substituted.
(6) The Supreme Court of the State of the New York had already passed judgment on 6-6-1995 directing enforcement of the award which would now be a foreign judgment. The respondent has, in fact, filed a suit in the Bombay High Court on the basis of the foreign judgment which suit was filed in 1996 and service was effected on the appellant only in 1997 .
The Supreme Court after discussing various provisions of the said Foreign Awards Act and the New York Convention in this regard came to the conclusion that the award in question is a foreign award, since all the ingredients of a foreign award were there and also held that same is arbitral award. After rejecting all the contentions urged on behalf of the appellant, Court held as under:
"A decree or order of a court does not require registration underclause (b) of sub-section (1) of section 17 of the Registration Act, 1908. This is the effect of clause (vi) of sub-section (2) of section 17. Earlier under this clause (vi) before its amendment in 1929 even an award did not require registration. However, after omission of the words "and any award" an award require registration. But then that award would be an award under the Arbitration Act, 1940 and certainly not a foreign award.
Let us examine this argument of Mr. Ganesh that a foreign award required registration from another angle. He said that the foreign award has already merged in the foreign judgment on the basis of which Mukesh has brought a suit in the Bombay High Court. A foreign judgment does not require registration as the process of suit having been decreed on that basis will have to be gone through. When a decree is passed by the court, it does not require registration in view of clause (vi) of sub-section (2) of section 17 of the Registration Act, 1908. A decree or order of a court affecting the rights mentioned in sections 17(1)(b) and 17(1)(c) would not require registration. It would, however, require registration where the decree or order on the basis of compromise affect the immovable property other than that which is the subject-matter of the suit or proceeding. Even a decree passed by the Foreign Court execution of which is sought under section 44A of the Code of Civil Procedure, 1908 would not require registration. That being the position, we are of the view that a foreign award under the provisions of the Foreign Awards Act does not require registration under the Registration
Act, 1908. In any case, in the present case the award creates a right to obtain transfer and closing documents which as regards Indian properties and businesses are yet to be executed by D.M. Harish and Co., Chartered Accountants. Decision of this Court in Tehmi P. Sidhwa case, MANU/SC/0344/1974 : (1974) 2 SCC 574 as rightly pointed by Mr. Dholakia, learned counsel appearing for the respondents would be fully applicable and the argument that the award required registration has to be rejected on this ground as well."
Consequently the Court dismissed the appeal with costs.
Question of law decided:Whether a lease could be made by an unregistered instrument when such deed is compulsorily registrable? While relying upon section 107 of the Transfer of Property Act, 1882, Court laid down that a lease of immovable property from year to year or for any term exceeding one year or reserving a yearly rent can be made only by registered instrument. Otherwise, the lease shall be presumed to be from month to month.
This case basically deals more under the Rent Control Act and deals less with the provisions of the Registration Act, 1908. However, since the case talks about three statutory inhibitions for creating a lease and two of them being under the Registration Act, 1908 in the form of section 17(1)(a) and section 49, besides the third one under section 107 of the Transfer of Porperty Act, 1882, we will discuss even this case here.
Facts of the case:The building which is the subject-matter of this litigation is described as a shed which originally belonged to a family the senior member of which inducted the appellant in possession thereof as per a lease deeddated 4-1-1974 which was ostensibly meant for a period of five years. The monthly rent of the building had been fixed at Rs. 140. The appellant paid rent of the building at the said rate till October 1974. Sometime during this period ownership of the building happened to be allotted to a female member of the family (Devaki) as per a partition effected between its members. Thereafter rent of the building was paid by the appellant to the aforesaid Devaki. Subsequently ownership of the building was transferred by Devaki to the respondent who filed the suit as plaintiff (respondent/plaintiff). The Trial Court decreed the suit by repelling the contention of the appellant that the suit was not maintainable as he is protected from eviction under the provisions of the Rent Act. The Trial Court found that the appellant is not a tenant as the lease was void on account of non-registration of the lease deed. In the first appeal filed by the appellant a District Judge held that in spite of non-registration of the instrument there was a valid tenancy of the building and hence the appellant could not be evicted except in accordance with the provisions of the Rent Act.
In a second appeal filed by the respondent a single Judge of the High Court of Kerala set aside the judgment of the District Court and remanded the first appeal to that court by holding that the plaintiff was inducted into possession under a void lease and hence the court should consider "whether, independent of this lease the defendant was in possession as a lessee from month to month". Learned single Judge pointed out that since it is a question of fact the same has to be decided on the evidence on record. After the remand the District Court entered upon a finding that despite the defect of non-registration of the instrument "the facts and circumstances of this case and the evidence discussed above could clearly show that the parties intended to create a lease". The District Judge further held that the appellant is the tenant as defined in the Rent Act and hence the plaintiff is not entitled to a decree in this case and his remedy is to apply before the Rent Control Court.
The matter came before the High Court and then by Special Leave before the Supreme Court, wherein the Bench of two judges heard the case and after noticing a conflict of opinions expressed by Benches of equal strength the appeal was decided by a larger Bench.
Findings of the Court: It was observed that in spite of chequred carrier of the litigation the only question which remained to be decided was whether the suit building was held by the appellant under the lease or not. After discussing the various provisions of the Rent Act, the Court was of the view that in order to bring a building within a purview of the Rent Act, there has to be a lease under the law. If there is no lease of the building Rent Act has no application. Thus, it was held that what was important was to know whether there had been a lease of the building in question. The Court also observed that the lease deed relied on by the plaintiff was intended to be operative for a period of five years, which was an unregistered document. Hence, it could not create a lease on account of three-pronged statutory inhibitions. The first interdict is contained in the first paragraph of section 107 of the Transfer of Property Act, 1882 (the TP Act) which reads:
"Section 107. A lease of immovable property from year to year, or for any term exceeding one year, or reserving an yearly rent, can be made only by a registered instrument."
The second inhibition can be discerned from section 17(1) of the Registration Act, 1908. The third interdict is contained in section 49 of the Registration Act, 1908 which speaks about the fatal consequence ofnon-compliance of section 17 thereof. No endeavour was made by the counsel to obviate the said interdict with the help of the exemptions contained in the proviso. In this background the court held as under:
"The resultant position is insurmountable that so far as the instrument of lease is concerned there is no scope for holding that the appellant is a lessee by virtue of the said instrument. The Court is disabled from using the instrument as evidence and hence it goes out of consideration in this case, hook, line and sinker.
But the above finding does not exhaust the scope of the issue whether the appellant is a lessee of the building. A lease of immovable property is defined in section 105 of the TP Act, 1882. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created. What is mentioned in the three paragraphs of the first part of section 107 of the TP Act, 1882 are only the different modes of how leases are created. The first para has been extracted above and it deals with the mode of creating the particular kinds of leases mentioned therein. The third para can be read along with the above as it contains a condition to be complied with if the parties choose to create a lease as per a registered instrument mentioned therein. All other leases, if created, necessarily fall within the ambit of the second para. Thus, de hors the instrument parties can create a lease as envisaged in the second para of section 107 which reads thus:
"All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession."
When lease is a transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the Court to determine whether there was in fact a lease otherwise than through such deed."
After discussing some cases, relied upon by learned counsel for the appellant, it was observed that the appellant occupied the building as tenant and he paid rent to the landlord and continued as such. Hence with the coming into force of the Rent Act he became a statutory tenant whose eviction can be considered only when an application is moved in that behalf before the Rent Control Court concerned. Accordingly, the appeal was allowed and the judgment of the High Court was set aside.
Question of law decided:Whether an award by which residue assets of a partnership firm are distributed amongst the partners on dissolution of the partnership firm requires registration under section 17 of the RegistrationAct, 1908? The students may recollect in this regard the decision of the Supreme Court in S.V. Chandra Pandian v. S.V. Sivalinga Nadar, MANU/SC/0450/1993 : (1993) 1 SCC 589, wherein this aspect was discussed in detail and consequently on two grounds Court held that such an award does not require compulsory registration, since it did not pertain to immovable property and secondly, the share of respective partners in the partnership property cannot be defined with precision, as every partner is agent of the other and therefore, can use each and every property of the partnership firm without claiming any ownership right over that.
Facts of the case:The facts of the case can be conveniently summarized from the judgment itself as under:-
"Briefly the facts are that a partnership firm was constituted comprising four persons belonging to the same family and differences arose between the partners which were ultimately referred to arbitration. The arbitrators made an award on 2-10-1972. The award was challenged by way of objections filed under section 30 of the Arbitration Act, 1940 by some of the partners. The objection petition was contested by the other partners who prayed that the award be made a rule of the court. The ground of challenge to the award included misconduct on the part of the arbitrators as well as another ground that the award required registration under section 17 of the Registration Act, 1908. The Trial Court accepted both the objections holding that there was misconduct on the part of the arbitrators as also that the award was required to be compulsorily registered and since it was not registered it was inadmissible in evidence. This decision of the trial Court was challenged before the High Court by way of civil revision filed under section 115 of the Code of Civil Procedure, 1908. The High Court found that in the facts and circumstances of the case it could not be said that there was any legal misconduct on the part of the arbitrators. Thus, the first ground of attack against the award was found to be unsustainable. However, the High Court accepted the finding of the Trial Court on the second ground, that is, the award was required to be compulsorily registered. Since the award was unregistered, it could not be made rule of the court."
Findings of the Court:The Supreme Court while heavily relying upon its pronouncement in S.V. Chandra Pandian v. S.V. Sivalinga Nadar, MANU/SC/0450/1993 : (1993) 1 SCC 589 observed as under:
"We have carefully perused the award in question. By the award the arbitrators have distributed the assets of the dissolved firm between the partners in accordance with their respective shares in the partnership. The real question for consideration is whether such an award amounts to creating of or transfer of any fresh rights in movable or immovable properties so as to bring it within the ambit of section 17 of the Registration Act, 1908. A perusal of the award shows that it is simply a case of distribution of assets of the dissolved firm amongst the partners themselves. A partnership firm is not an independent legal entity, the partners are the real owners of the assets of the partnership firm. Actually the firm name is only a compendious name given to the partnership for the sake of convenience. The assets of the partnership belong to and are owned by the partners of the firm. So long as partnership continues each partner is interested in all the assets of the partnership firm as each partner is owner of the assets to the extent of his share in the partnership. On dissolution of the partnership firm, accounts are settled amongst the partners and the assets of the partnership are distributed amongst the partners as per their respective shares in the partnership firm. Thus, on dissolution of a partnership firm, the allotment of assets to individual partners is not a case of transfer of any assets of the firm. The assets which hereinbefore belonged to each partner, will after dissolution of the firm stand allotted to the partners individually. There is no transfer or assignment of ownership in any of the assets. This is the legal consequence of distribution of assets on dissolution of a partnership firm. The distribution of assets may be done either by way of an arbitration award or by mutual settlement between the partners themselves. The document which records the settlement in this case is an award which does not require registration under
section 17 of the Registration Act, 1908 since the document does not transfer or assign interest in any asset. This question stands concluded by a decision of this Court in S.V. Chandra Pandian v. S.V. Sivalinga Nadar, MANU/SC/0450/1993 : (1993) 1 SCC 589. This was also a case of distribution of assets of a dissolved firm by way of an award. This Court noticed that the award read as a whole made it clear that the arbitrators had confined themselves to the property belonging to the partnership firm and had scrupulously avoided other properties. While distributing the residue assets, the arbitrators allocated the properties to the partners. Section 48 of the Partnership Act, 1932 was applied and the properties were allocated to the partners as per their share on the distribution of the residue. The award sought to distribute the assets of the partnership firm after settlement of accounts on dissolution. This court took the view that the property falling to the share of the partner on distribution of the residue would naturally belong to him exclusively but since in the eye of law it is money and not immovable property there is no question of registration under section 17 of the Registration Act, 1908."
Accordingly, the Court observed that the respondents were unable to contest this legal proposition which stands concluded on the basis of the abovementioned decision of S.V. Chandra Pandian v. S.V. Sivalinga Nadar, case. Hence, the appeals were allowed. The judgment of the High Court was set aside and resultantly the objections against the award dated 2-10-1972 stood rejected and award was ordered to be made a rule of the Court.
Question of law decided:This case is more on facts and less on question of law. However, it reiterates proposition of law as laid down by Supreme Court in Dinaji v. Daddi, MANU/SC/0213/1990 : (1990) 1 SCC 1 to the effect that if an adoption deed restrains its executant from disposing of his property by Will, then it is required to be read as a document which limits his rights to deal with his property including immovable property and as such requires compulsory registration.
Facts of the case:The present case is an offshoot of an appeal filed before the Supreme Court against the judgment and order of the High Court of Delhi in Civil Petition filed by the deceased appellant challenging the order of the Gold Control Administrator, New Delhi, whereby the confiscation of the gold by the Customs Authorities under the Gold Control Orders was challenged. The High Court had dismissed the said Writ Petition. During the pendency of the appeal against the said order of the High Court the appellant died and consequently dispute arose as to who was his legal heir.
Three persons claimed separately as legal heirs of the deceased appellant. Therefore, keeping the question of right, title and interests in the property open, for continuing the proceedings, all the three were ordered to be brought on record by order dated 7-10-1991. By a consent order an Arbitrator was appointed who framed the following mentioned issues:-
1. Does Claimant 1 prove execution of the Will dated 29-10-1982 (28-10-1982), and prove the same to be the last and genuine Will of the late Shri C.S. Goenka?
2. If not, does she prove the execution of the Will dated 4-7-1978 and prove the same to be the last and genuine Will of the late Shri C.S. Goenka?
3. Does Claimant 2 prove that the late Shri C.S. Goenka duly adopted him on 26-1-1961?
4. Is the copy of the document dated 26-1-1961 filed by claimant 2 admissible in evidence?
5. Is the said document genuine and brought into existence in the way claimed by claimant 2?
6. If yes, then does the said document constitute an agreement between Mangalchand and the late Shri C.S. Goenka?
7. If yes, can the said agreement be said to be one contemplated by section 13 of the Hindu Adoptions and Maintenance Act?
8. If yes, then would the said agreement dated 26-1-1961 prevent the late C.S. Goenka from disposing of and dealing with the estate, according to his wishes by a Will?
9. In view of the finding of the issues above, who are the legal heirs to the estate of the late Shri C.S. Goenka?
Since with regard to issues Nos. 1 and 2 a Probate Petition was pending before Bombay High Court, the Arbitrator was directed not to decide those issues. But after the decision of said Probate Suit, wherein execution and genuineness of the Will dated 29-10-1982 of the deceased appellant was not challenged without prejudice to the rights, claims and contentions of the parties in the arbitration proceeding, the Arbitrator gave his award. He arrived at the conclusion that the Will in favour of Sushila Bai executed by Chiranjilal was inoperative and Radheyshyam was sole heir as adopted son. On the basis of said award dated 16-6-2000, IA No. 9/2000 was filed for making it rule of the Court. That award was challenged by Sushila Bai by filing objections under section 33 read with section 30 of the Arbitration Act, 1940. The rival contentions of the respective parties may be reproduced from the judgment as under:
"At the time of hearing, Mr. Vinod Bobde, learned Senior counsel for the objector submitted that he was not challenging the finding given by the learned arbitrator that Radheyshyam was the adopted son of Chiranjilal, However, he submitted that finding of the arbitrator that there was an agreement between Chiranjilal Goenka and the parents of Radheyshyam that Radheyshyam was given in adoption to Chiranjilal on the conditions mentioned in the so-called photocopy of letterdated 26-1-1961 is, on the face of it, illegal and arbitrary. He further submitted that assuming that the said letter can be considered to be an agreement, it requires registration as it limits the right of the absolute owner Chiranjilal to bequeath the property by Will. He further submitted that after codification of the Hindu Adoptions and MaintenanceAct, 1956 (hereinafter referred to as "the Act"), sections 12 and 13 govern the rights of the adopted son and the adoptive parents."
In order to resolve the dispute the Court took into account the following mentioned important facts which may also be reproduced from the judgment as under:
"Keeping this in the background, we would consider the facts of the present case. It is the case of both the parties that Mr. Chiranjilal Goenka had two daughters namely Sitabi, born on 29-10-1938 and another Sushila Bai born on 3-9-1950. Sitabai was married to Mangal Chand Kedia of Kanpur and gave birth to Radheyshyam on 8-9-1954 and to another son Govind on 3-8-1956. On 26-1-1961 Chiranjilal adopted Radheyshyam. It is the contention of the learned counsel for Radheyshyam that on the said date prior to the adopting, a writing recording the terms of an earlier arrived oral agreement was dictated by Chiranjilal in the form of an offer letter from the natural parents, which was recorded by a relative Mr. Hanuman Prasad Poddar. Photocopy of the said letter is produced on record, which is in Hindi and its translation is to the following effect:-
"Salutations from Mangal Chand Kedia to the respected Shri Chiranjilal Goenka. I am giving you in adoption with much pleasure my son Chiranjeev Radheyshyam. From now he is your son alone. And he alone will inherit your entire movable and immovable property. During your life time you shall be entitled to your entire movable and immovable property. In case if you die, your wife Smt. Bhagwandevi shall have absolute right. Similarly, if she dies earlier then you will have absolute right. After the death of both of you, Chiranjeev Radheyshyam alone shall have full right on the total movable and immovable property. I am writing this letter with pleasure. 26-1-1961 - Magh Shukla 10 Samvat 2017 Thursday."
Accordingly, the Court formulated following questions for consideration:
(1) whether the writing dated 26-1-1961 can be considered to be an agreement between Chiranjilal and the parents of Radheyshyam?
(2) whether it is an agreement as contemplated by section 13 of the Act limiting the rights of adoptive parents to dispose of the property by Will? And if so,
(3) whether it requires registration?
Findings of the Court:In this background, the Court came to the conclusion that presuming that the aforesaid letter was written by Mangal Chand Kedia, Chiranjilal at the time of giving Radheyshyam in adoption, there can be no doubt that it does not reflect any agreement between the parties. At the most it was only a unilateral offer giving the child in adoption on certain expectations. It was also observed that the letter appeared to be signed by certain persons except Chiranjilal who, if had accepted, then would have definitely signed the same. However, it was held that, there was nothing on record that he accepted the same. Further the Court also came to the conclusion that there was nothing to indicate in the said letter that it was a covenant or a contract restricting the powers of appellant or his wife to dispose of the property either by transfer or by Will, since nowhere it was stated in that letter that during his life-time the appellant would not be entitled to dispose of his property either by transfer or by Will. Hence, there was no positive or negative argument limiting the rights of appellant to dispose of the property by executing will. Presuming that the said letter was an agreement, at the most it can be stated that from the said date Radheyshyam would be the son of Chiranjilal and would be entitled to inherit his properties. This also would not mean that there is any agreement that the adoptive father has no right to dispose of his property. While relying upon judgment of the Supreme Court as reported in Dinaji v. Daddi, MANU/SC/0213/1990 : (1990) 1 SCC 1, it was observed as under:
"The next question would be whether the said letter, if considered as an agreement, restraining or limiting the rights of the adoptive father to bequeath the property requires registration. In support of this contention, learned counsel Mr. Bobde referred to the decision of this Court in Dinaji v. Daddi, MANU/SC/0213/1990 : (1990) 1 SCC 1. In that case a Hindu widow adopted a son on 28-4-1963 by executing a deed of adoption. The document was not registered and the Trial Court admitted the same in evidence in proof of adoption. Subsequently, by registered sale deed dated 28-4-1966, she transferred immovable property including agricultural land and houses in favour of the appellant Dinaji. On the basis of the sale deed, suit for injunction and possession was filed against the adopted son. After considering the provisions of section 12(c), this Court held that after the Hindu Succession Act, 1956 came into force, a widow became absolute owner of the property of her husband and, therefore merely by adopting a child, she could not be deprived of any of her rights in the property. The Court further held "the adoption would come into play and the adopted child could get the rights for which he is entitled after her death as is clear from the schemes of section 12 proviso (c)". Thereafter, the Court considered section 13 of the Act and observed that
"this section enacts that when the parties intend to limit the operation of proviso (c) to section 12, it is open to them by an agreement and it appears that what she included in the present deed of adoption was an agreement to the contrary as contemplated in section 13 of the Hindu Adoptions and Maintenance Act, 1956".
However, the Court held that in view of section 17(1)(b) of the Registration Act, 1908, the said part of the deed which refers to the creation of immediate right in the adopted son and the divesting of the right of the adoptive mother in the property will squarely fall within the ambit of section 17(1)(b) and, therefore, under section 49 of the Registration Act, 1908".
In this scenario while rebutting another argument of the counsel for respondent to the effect that the aforesaid letter is not to be construed as a deed but it is to be taken as an offer letter and by the conduct of adopting Radheyshyam as son, Chiranjilal could not dispose of the property by Will, it was held that argument was totally devoid of any substance because if reliance is required to be placed on the letter for holding that it restrains Chiranjilal from disposing of the property by Will, then it is required to be read as a document which limits the rights of Chiranjilal to deal with his property including the immovable property. Therefore, it requires compulsory registration under section 17(1)(b) of the Registration Act, 1908. In this view of the matter, it was held that the award dated 16-6-2000 passed by Arbitrator holding that Will executed by Chiranjilal is inoperative was set aside and consequently on the basis of the probated Will Sushila Bai N. Rungta was declared to be legal heir of deceased Chiranjilal.
What is the effect of non-registration of the sale deed qua the piece of land worth more than Rs.100 which requires compulsory registration under section 17(1)(b) of the Registration Act, 1908? The Court held that such a document is inadmissible in evidence, but can be looked into for collateral purpose e.g. nature of possession over the land in question. The students may also refer to the case of Hansia v. Bakhtawarmal, MANU/RH/0032/1958 : AIR 1958 Raj 102, discussed earlier in this law series, in which the similar kind of issue arose and was discussed in detail.
Facts of the case:The plaintiffs/respondents herein claimed title to the land in suit, out of which the present appeal before the Supreme Court arose, on the basis of the plea that they had become its owners by adverse possession. The land was owned by one Fakir Chand, predecessor-in-interest of the appellants herein (defendants in the suit). Fakir Chand sold the land to Tola Singh, predecessor-in-interest of the plaintiffs by an unstamped and unregistered sale deed dated 9-5-1931. The plaintiffs claimed to have entered into possession of the land on the basis of the said sale deed and they claimed to be continuously in possession since then. The defendants tried to dispossess the plaintiffs which led to the filing of this suit by them on 15-4-1972. In the written statement filed by the defendants they denied the sale of the land by their father Fakir Chand to Tola Singh and subsequently denied the possession of the plaintiffs of the suit land. They also alleged that sale deed was false, fictitious and without consideration. The suit was decreed, however, in the appeal filed by the defendants against the Trial Court judgment, suit was dismissed by Additional District Judge, Dhar, M.P. Further the appeal was filed by plaintiffs against the said judgment, which was allowed by the High Court and suit was finally decreed. In these circumstances the present appeal came up for hearing before the Supreme Court, in which the main question for consideration was as to whether the plaintiffs were in hostile continuous possession of the suit lands by virtue of which they had perfected their title to the land by adverse possession.
Findings of the Court:In fact the case was contested on many grounds. However, for the purpose of our discussion the main question is the question of continuous possession of the plaintiffs over the suit lands. The only defence set-up against the document in question, namely sale deed, is that it is unstamped and unregistered and therefore it cannot convey title to the land in favour of the plaintiffs. Court held that though the sale deed cannot be read into evidence, being not registered under section 17(1)(b) of the Registration Act, 1908, but under section 49 of the Registration Act, 1908 it can be looked into for collateral purpose. In other words, the same can be looked into in order to find out the nature of the possession. In the present case besides other facts the Supreme Court came to the conclusion that on the basis of the aforesaid sale deed, it was apparent that the appellants were in the possession of the suit land since beginning. For those who are interested in reading the facts of the case, on the basis of which the case was decided in favour of the respondents by dismissing the appeal, relevant portion is reproduced from the judgment itself as under:
"The main question, as we have already noted, is the question of continuous possession of the plaintiffs over the suit lands. The sale deed dated 9-5-1931 by Fakir Chand, father of the defendants in favour of Tola Singh, the predecessor-in-interest of the plaintiffs, is an admitted document in the sense its execution is not in dispute. The only defence set up against the said document is that it is unstamped and unregistered and therefore, it cannot convey title to the land in favour of the plaintiffs. Under the law a sale deed is required to be properly stamped and registered before it can convey title to the vendee. However, legal position is clear law that a document like the sale deed in the present case, even though not admissible in evidence, can be looked into for collateral purposes. In the present case the collateral purpose to be seen is the nature of possession of the plaintiffs over the suit land. The sale deed in question at least shows that initial possession of the plaintiffs over the suit land was not illegal or unauthorized. It is significant to note that the sale deed is dated 9-5-1931 and Fakir Chand died somewhere in the year 1949-50. During his life-time Fakir Chand never disputed the plaintiff's title or possession of the suit land. There is other reliable evidence on record which establishes that the plaintiffs have been in continuous possession of the land in question. There is notice dated 16-4-1956 Exhibit P6. The notice was issued on behalf of the defendants and is addressed to the predecessor-in-interest of the plaintiffs. By the notice the defendants called upon the plaintiffs to hand over possession of the suit land to them. According to the notice, the plaintiffs were trespassers on the suit land and were liable to hand over its possession to the defendants. This notice is an admission on the part of the defendants that the plaintiffs were in possession of the suit land at least on the date of the notice i.e. 16-4-1956. The notice was followed by an application dated 8-5-1956 (Exhibit P3), filed by the defendants under section 58 of the Madhya Bharat Land Revenue and Tenancy Act, 1950 before the Revenue Authorities. In the said application the defendants admit that the land in question was in possession of the plaintiffs since the life-time of their father. It is further admitted that the land was being cultivated by the plaintiffs. It was prayed in the said application that the plaintiffs be declared trespassers over the suit land and possession of the land be given to the defendants.
In their reply to the application, the present plaintiffs denied the allegation that they were trespassers on the suit land; they refer to the sale deed of 9-5-1931 by Fakir Chand in favour of their predecessor. Thus the plaintiffs were all along asserting that they were in possession of the land in their own right. The Tahsildar vide his order dated 3-10-1959 dismissed the said application of the defendants. He relied on an admission on the part of Punam Chand, eldest son of Fakir Chand that the present plaintiffs were in possession for the last 26-27 years. Relying on the said statement the Revenue Authorities held that since possession of the present plaintiffs was continuing for the last 26-27 years they could not be dispossessed from the suit land. The application of the defendants was dismissed. The defendant filed an appeal against the said order which was also dismissed on 6-8-1962. A copy of the order of the Tahsildar is Exhibit P-8 while a copy of the order of the Appellate Authority i.e. SDO is Exhibit P-9. These judgments of the Revenue Authorities establish that at least till 1962 the plaintiffs were in possession of the suit land. They also totally nullify the assertion of the defendants in their written statement in the present suit that they had taken possession of the suit land in 1957-58. If they had taken possession of the suit land in 1957-58, why were they pursuing the matter before the Revenue Authority till 1962 when the appeal was contested before the SDO and the decision of the SDO was given on 6-8-1962?
It appears that having failed to obtain possession of the suit land through lawful means, the defendants tried to dispossess the plaintiffs forcibly which led to the present suit being filed on 15-4-1972. The claim of the defendants regarding taking possession of suit land from the plaintiffs in 1957-58 having been found to be false, it follows that the defendants never came into possession of the suit land. Another significant conclusion which follows from these facts is that the defendants started asserting their title to the suit land since at least 1956 when they issued the notice Exhibit P6 while the plaintiffs have been denying their title to the suit land and were setting up their own title to the same. This lends support to the plea of adverse possession set up by the plaintiffs. It will be seen from this clear and clinching evidence on record that the plaintiffs were in continuous and uninterrupted possession of the suit land since 1931 and they had been setting up a hostile title thereto as against the defendants. The defendants were asserting their title to the land since 1956. They had, however, failed to get possession of the suit land. The plea of adverse possession raised by the plaintiffs is thus clearly established."
With regard to the plea of sub-tenancy also the Supreme Court did not agree with the defendants on the ground that same was not taken at all in the plaint and moreover the mother of the defendants who was said to have inducted the plaintiffs as sub-tenant was deliberately not examined despite the fact that a Commissioner was sent to record her evidence at her own premises. Not only this, another important witness in this regard, the eldest son of Fakir Chand, was also not examined. Said eldest son did not even file written statement to the suit in question. Under these circumstances, even the argument of
sub-tenancy in the suit land was rejected. With regard to the plea of the defendants that they had taken possession of the land in suit from the plaintiffs in 1957, the Court gave following observations:-
"Regarding the plea of the defendants that they had taken possession of the land in suit from the plaintiffs somewhere in the year 1957, the High Court has aptly remarked that the defendants were required "to open their mouth before the Revenue Authorities if not in 1957 at least in the year 1962 to show to the Revenue Authorities that they had obtained possession". The High Court has further found after scrutinizing the record that the defendants did not care to file even a single revenue entry for the period between 1956 and 1962 that they had been recorded in possession of the suit lands. Therefore, the High Court concluded that the finding recorded by the lower appellate court was based on surmises and conjectures and was contrary to the evidence on record and the law. The High Court came to a definite finding that Tola Singh, predecessor-in-interest of the plaintiffs came in possession of the suit land in the year 1931 and continued to be in possession thereof till the date the present suit was filed in 1972".
In the result, the appeal was found to be devoid of any merit, hence the same was dismissed.
Question of law decided:The short question is one of admissibility of an unregistered sale deed in a suit for specific performance of the contract. Accordingly, following principles have been culled out in this case:
1. A document required to be registered, if unregistered is not admissible into evidence under section 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to section 49 of the Registration Act.
3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc., any right, title or interest in immovable property of the value of one hundred rupees and upwards.
5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.
6. To the aforesaid principles, one more principle may be added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.
Facts of the case:The appellant and the respondents are plaintiff and defendant Nos. 1, 2 and 3 respectively in the suit presented in the Court of Subordinate Judge, Gobichettipalayam. The plaintiff in the suit claimed for the reliefs of directing the defendants to execute a fresh sale deed with regard to the suit property in pursuance of an agreement for sale dated 27-2-2006 on or before the date that may be fixed by the court and failing which execution of the sale deed by the court. She also prayed for grant of permanent injunction restraining the defendants from disturbing with her peaceful possession and enjoyment of the suit property.
According to the plaintiff, 1st defendant for himself, as the guardian father of 3rd defendant and 2nd defendant jointly entered into an oral agreement with her on 27-2-2006 to sell the suit property for a consideration of Rs. 1,83,000. It was agreed that the sale deed, in pursuance of the oral agreement for sale, would be executed and registered on the same day. The plaintiff purchased the stamp papers; paid the entire sale consideration to the defendants; the defendants put the plaintiff in possession of the suit property and also executed a sale deed in her favour. On 27-2-2006 itself, the said sale deed was taken to the Sub-Registrar's office. The Sub-Registrar, however, informed that in view of an order of attachment of the suit property the sale deed could not be registered. The sale deed, thus, could not be registered. The defendant Nos. 1 and 2 then promised the plaintiff that they would amicably settle the matter with the concerned party who had obtained attachment of the suit property and get the sale deed registered no sooner the attachment was raised. The plaintiff averred that she called upon the defendants to get the sale deed registered, but the defendants avoided the same by putting forth the reason that attachment in respect of the suit property was subsisting. On 4-2-2007 however, the plaintiff called upon defendant Nos. 1 and 2 to cooperate in getting the sale deed registered, but instead of doing that the defendants attempted to interfere with her possession and enjoyment of the suit property necessitating action by way of suit.
The 1st defendant filed written statement and traversed plaintiff's case. He denied having entered into an oral agreement for sale with the plaintiff for himself and as a guardian father of 3rd defendant and the 2nd defendant jointly on 27-2-2006 as alleged. He also denied having delivered physical possession of the suit property to the plaintiff. The 1st defendant set-up the defence that he had taken loan from one Subramaniam and when Subramaniam demanded the repayment thereof, he approached plaintiff and requested her to lendRs. 1,75,000 as loan. Upon plaintiff's insistence that 1st defendant should execute an agreement for sale in her favour, he and the 2nd defendant signed the document believing that to be agreement for sale on 27-2-2006 and went to the office of Sub-Registrar for getting the agreement for sale registered. However, when the Sub-Registrar asked the 1st defendant whether the consideration has been received and sale deed could be registered, he and the 2nd defendant learnt that plaintiff had fraudulently obtained the signatures on sale deed by falsely stating that it was only an agreement for sale and hence they went away refusing to agree for the registration of the said document.
On the basis of the pleadings of the parties, the issues were struck. It appears that on 5-12-2007 at the time of examination of P.W. 1, the unregistered sale deed dated 27-2-2006 was tendered for being marked. The counsel for the defendants objected to the said document being admitted in evidence being an unregistered sale deed. The trial court by its order dated 11-12-2007 sustained the objection and refused to admit the sale deed in evidence.
The plaintiff unsuccessfully challenged the order of the trial court dated 11-12-2007 by filing revision petition before the High Court and hence this appeal by special leave.
Findings of the Court:After hearing both the parties Court held that having regard to the proviso to section 49 of the Registration Act, 1908 (for short, '1908 Act'), the trial court erred in not admitting the unregistered sale deed dated 27-2-2006 in evidence and the High Court ought to have corrected the said error by setting aside the order of the trial court.
However, on behalf of respondent it was strenuously urged that 1908 Act is a complete code by itself and is a special law and, therefore, any dispute regarding the registration, including the refusal to register by any party, is covered by the provisions of that Act and the remedy can be worked out under it only. He referred to sections 71 to 77 of the 1908 Act and submitted that refusal to register a document by a party is exhaustively dealt with by the said provisions and the provisions of the Specific Relief Act, 1963 (for short, '1963 Act') cannot be and should not be invoked in a case of failure to register a document which is complete in other respects, except for want of registration. Counsel for the respondents submitted that the defendants refused to admit execution of the said document before the concerned Sub-Registrar because of the fraud played by the appellant (plaintiff) inasmuch as instead of writing an agreement to sell, she got executed a full-fledged sale deed contrary to the agreement and understanding. The defendants accordingly walked out of the office of Sub-Registrar without admitting the execution of the sale deed and under these circumstances the only remedy available to the appellant was to get an endorsement "registration refused" and then file an application before the Registrar under section 73 of the 1908 Act. He also referred to section 3 of 1963 Act and submitted that the provisions of 1963 Act would not override the provisions of 1908 Act.
Court, in reference to sections 17 and 49 of the Act observed as under:
"Section 17 of the 1908 Act is a disabling section. The documents defined in clauses (a) to (e) therein require registration compulsorily. Accordingly, sale of immovable property of the value of Rs. 100 and more requires compulsory registration. Part X of the 1908 Act deals with the effects of registration and non-registration. Section 49 gives teeth to section 17 by providing effect of non-registration of documents required to be registered. Section 49 reads thus:
Section 49.-Effect of non-registration of documents required to be registered.-No document required by section 17 or by any provision of the Transfer of Property Act, 1882 (4 of 1882), to be registered shall-
(a) affect any immovable property comprised therein, or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:
Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 1882), to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1877 (3 of 1877), or as evidence of any collateral transaction not required to be effected by registered instrument.
The main provision in section 49 provides that any document which is required to be registered, if not registered, shall not affect any immovable property comprised therein nor such document shall be received as evidence of any transaction affecting such property. Proviso, however, would show that an unregistered document affecting immovable property and required by 1908 Act or the Transfer of Property Act, 1882 to be registered may be received as an evidence to the contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by registered instrument. By virtue of proviso, therefore, an unregistered sale deed of an immovable property of the value of Rs. 100 and more could be admitted in evidence as evidence of a contract in a suit for specific performance of the contract. Such an unregistered sale deed can also be admitted in evidence as an evidence of any collateral transaction not required to be effected by registered document. When an unregistered sale deed is tendered in evidence, not as evidence of a completed sale, but as proof of an oral agreement of sale, the deed can be received in evidence making an endorsement that it is received only as evidence of an oral agreement of sale under the proviso to section 49 of 1908 Act.
Recently in the case of K.B. Saha and Sons Private Limited v. Development Consultant Limited, MANU/SC/7679/2008 : (2008) 8 SCC 564, this Court noticed the following statement of Mulla in his Indian Registration Act, 7th Edn., at page 189:
...The High Courts of Calcutta, Bombay, Allahabad, Madras, Patna, Lahore, Assam, Nagpur, Pepsu, Rajasthan, Orissa, Rangoon and Jammu & Kashmir; the former Chief Court of Oudh; the Judicial Commissioner's Court at Peshawar, Ajmer and Himachal Pradesh and the Supreme Court have held that a document which requires registration under section 17 and which is not admissible for want of registration to prove a gift or mortgage or sale or lease is nevertheless admissible to prove the character of the possession of the person who holds under it...."
Thus the Court culled out the following principles:
1. A document required to be registered, if unregistered is not admissible into evidence under section 49 of the Registration Act.
2. Such unregistered document can however be used as an evidence of collateral purpose as provided in the proviso to section 49 of the Registration Act.
3. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration.
4. A collateral transaction must be a transaction not itself required to be effected by a registered document, that is, a transaction creating, etc. any right, title or interest in immovable property of the value of one hundred rupees and upwards.
5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose.
Thereafter, to the aforesaid principles, one more principle was added, namely, that a document required to be registered, if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance.
Court further observed as under:
"In Kalavakurti Venkata Subbaiah v. Bala Gurappagari Guruvi Reddy, MANU/SC/0448/1999 : (1999) 7 SCC 114, the question presented before this Court was whether a decree to enforce the registration of sale deed could be granted. That was a case where respondent therein filed a suit for specific performance seeking a direction to register the sale deed. The contention of the appellant, however, was that decree for specific performance based on unregistered sale deed could not be granted. This Court noticed the provisions contained in Part XII of 1908 Act, particularly section 77, and difference of opinion between the various High Courts on the aspect and observed:
The difference of opinion amongst the various High Courts on this aspect of the matter is that section 77 of the Act is a complete code in itself providing for the enforcement of a right to get a document registered by filing a civil suit which but for the special provision of that section could not be maintainable. Several difficulties have been considered in these decisions, such as, when the time has expired since the date of the execution of the document whether there could be a decree to direct the Sub-Registrar to register the document. On the other hand, it has also been noticed that an agreement for transfer of property implies a contract not only to execute the deed of transfer but also to appear before the registering officer and to admit execution thereby facilitating the registration of the document wherever it is compulsory. The provisions of the Specific Relief Act and the Registration Act may to a certain extent cover the same field but so that one will not supersede the other. Where the stage indicated in section 77 of the Act has reached and no other relief except a direction for registration of the document is really asked for, section 77 of the Act may be an exclusive remedy. However, in other cases it has no application, inasmuch as a suit for specific performance is of a wider amplitude and is primarily one for enforcement of a contract and other consequential or further relief. If a party is seeking not merely the registration of a sale deed, but also recovery of possession and mesne profits or damages, a suit under section 77 of the Act is not an adequate remedy."
This Court then held that the first appellate court rightly took the view that under section 49 of the 1908 Act, unregistered sale deed could be received in evidence to prove the agreement between the parties though it may not itself constitute a contract to transfer the property. It was held:
"...The document has not been presented by the respondent to the Sub-Registrar at all for registration although the sale deed is stated to have been executed by the appellant as he refuses to cooperate with him in that regard. Therefore, various stages contemplated under section 77 of the Act have not arisen in the present case at all. We do not think, in such a case when the vendor declines to appear before the Sub-Registrar, the situation contemplated under section 77 of the Act would arise. It is only on presentation of a document the other circumstances would arise. The first appellate court rightly took the view that under section 49 of the Act the sale deed could be received in evidence to prove the agreement between the parties though it may not itself constitute a contract to transfer the property...."
The issue before us is only with regard to the admissibility of unregistered sale deed dated 27-2-2006 in evidence and, therefore, it is neither appropriate nor necessary for us to consider the contention raised by learned Counsel for the respondents about the maintainability of suit as framed by the plaintiff or the circumstances in which the sale deed was executed. If any issue in that regard has been struck by the trial court, obviously, such issue would be decided in accordance with law. Suffice, however, to say that looking to the nature of the suit, which happens to be a suit for specific performance, the trial court was not justified in refusing to admit the unregistered sale deed dated27-2-2006 tendered by the plaintiff in evidence.
The argument of learned Counsel for the respondents with regard to section 3(b) of 1963 Act is noted to be rejected. We fail to understand how the said provision helps the respondents as the said provision provides that nothing in 1963 Act shall be deemed to affect the operation of 1908 Act, on documents. By admission of an unregistered sale deed in evidence in a suit for specific performance as evidence of contract, none of the provisions of 1908 Act is affected; rather court acts in consonance with proviso appended to section 49 of 1908 Act."
In the result appeal was allowed and the order of the High Court dated13-11-2008 and that of the trial Court dated 11-12-2007 were set aside without any costs.
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