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Vaman Trimbak Joshi Vs. Changi Damodar Shimpi - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtMumbai
Decided On
Case Number Appeal from Order No. 29 of 1924
Judge
Reported inAIR1926Bom97; (1925)27BOMLR1261
AppellantVaman Trimbak Joshi
RespondentChangi Damodar Shimpi
Excerpt:
document - construction-deed of sale-agreement to reconvey-unregistered agreement-indian registration act (xvi of 1908), section 17(2) (v)-specific performance of agreement-vendor's representatives--right to sue-indian contract act (ix of 1872), sections 37, ill. (a), 40.;on september 2, 1921, a predecessor of plaintiffs passed a registered sale deed to defendant no. i for rs. 2009. at the same time defendant no 1 passed an unregistered agreement to the vendor stipulating that if the vendor repaid rs. 2000 with in eleven years of its date, he would reconvey the property. there was to be no rent for the property and no interest for the sum. after the vendor's death, his legal representatives sued within the period of eleven years, for specific performance of the agreement and for..........of this agreement and for possession. in the plaint it is stated that the plaintiffs believed the sale transaction to be one in the nature of a mortgage. they claim that even if it is not so regarded they have a right to demand reconveyance and possession on the strength of that agreement, which has been recorded as exhibit 12. the main contention put forward in the defendants' written statement was that the agreement to reconvey, being unregistered was inadmissible in evidence. they also raised other objections which are sufficiently indicated by the issues that were framed. these are:-1. whether the agreement relied upon is admissible in evidence being unregistered ?2. is the suit maintainable ?3. whether the agreement is a personal contract anil heirs of damodar are not entitled to.....
Judgment:

Fawcett, J.

1. This litigation arises out of a transaction on September 28, 1911. On that date one Damodar Ramchandra passed a registered sale deed in favour of defendant No. 1, Shankar. By the terms of that deed there was an absolute sale of the plaintiffs' property by Damodar to Shankar. On the same day the vendee Shankar passed an unregistered agreement to Damodar that he would reconvey the property to the vendor, provided the latter paid the purchase money, namely Rs. 2,000, to him within a period of eleven years. Damodar is now dead, and on May 12, 1921, his legal representatives, namely the plaintiff No. 1, his daughter and plaintiff No. 2 his widow, assigned their rights under that transaction in favour of the plaintiffs Nos. 3 and 4 by a registered deed of that date. On September 2, 1921, that is to say, within the period of eleven years mentioned in the agreement of September 28, 1911, the plaintiffs Nos. 1 to 4 brought a suit to obtain specific performance of this agreement and for possession. In the plaint it is stated that the plaintiffs believed the sale transaction to be one in the nature of a mortgage. They claim that even if it is not so regarded they have a right to demand reconveyance and possession on the strength of that agreement, which has been recorded as Exhibit 12. The main contention put forward in the defendants' written statement was that the agreement to reconvey, being unregistered was inadmissible in evidence. They also raised other objections which are sufficiently indicated by the issues that were framed. These are:-

1. Whether the agreement relied upon is admissible in evidence being unregistered ?

2. Is the suit maintainable ?

3. Whether the agreement is a personal contract anil heirs of Damodar are not entitled to sue under it ?

4. Whether the plaintiff No. 1 is not properly represented ?

5. What decree will be passed ?

2. In his judgment the Subordinate Judge states that issues Nos. I and 2 were first framed for trial as preliminary issues, But the pleader for the plaintiffs urged that the case should be tried on its merits also, and hence the other issues were framed, No evidence appears to have been , adduced except the production of the requisite documents, and the question, therefore whether Exhibit 12 requires registration, was left to be decided purely upon its construction. It is in these terms :--

Kararnama Shake 1833 Aswin Shuda 6 Thursday dated 28th September 1911 passed to Damodar Hamchandra Shot Shimpi by Shankar Mahadev Dharane to the effect that you passed in my favour and registered a sale deed of your house bearing Municipal No. 188 in Trimbak after taking Rs. 2.000 within ten years from the said date. I shall pass a reconveyance of the said house and register it, 1 will not plead any excuse or objection, If you do not pay the said sum with in ten years, this agreement is of no effect after ten years and after ton years no reconveyance will be passed, If within ten years that is to say when the Sinhastha, year is over, you repay the 2,000 rupees to me, you have the right to have the house reconvened. After ten years you will have right to get a reconveyance. This agreement is passed voluntarily.

Signature of Vendee, Attestation,Postscript. After eleven years that is to say within one year after the coming Sinhastha year, if you pay the said Rupees 2,000 I shall reconvey the property. If you do not pay me in time the 2,000 rupees you have then no right for reconveyance. There is no rent for the house and no interest for the sum. You should not require account of rent and I shall not require interest for money. I shall recover and enjoy rent in lieu of interest, You should pay me Rs. 2 010 us per term as loan without interest. This agreement is passed voluntarily,' Signature of the Vendee.

3. The Subordinate Judge held that the postscript in this document clearly led to the inference that the transaction was in the nature of mortgage, and after referring to the judgment of Macleod C. J. in Bala v. Sadashiv : (1921)23BOMLR1066 , held that the agreement, being unregistered, was inadmissible, and that the suit was not maintainable. Issues 3 and 4 he decided in favour of the plaintiffs, However on his findings as to the document Exhibit 12 he ordered that the suit should be dismissed with costs.

4. An appeal was made by the plaintiffs to the District Court. It held that, inasmuch as the plaintiffs were suing for specific performance of the agreement to reconvey, which is not a remedy open to a mortgagor, they could, under the ruling in Sayad Mir Gazi v. Miya Ali I.L.R.(1921) 38 Bom. 703 16 Bom. L. R. 582 proceed towards obtaining such relief, as Exhibit 12 separately considered was a document which did not require to be registered. Accordingly the District Judge reversed the decree of the lower Court and remanded the suit for disposal on the merits, after giving both parties an opportunity to adduce further evidence.

5. From this order of remand the present appeal has been brought, and the first question obviously is whether the document Exhibit 12 is one that is inadmissible in evidence as being a document required to be registered under Section 17 of the Indian Registration Act, and, therefore, falling under Section 49 of that Act, As have already mentioned, the Subordinate Judge on the construction of its terms held it to be in the nature of a mortgage. The District Judge, so far as I understand his judgment, has not given a definite ruling as to whether it is a document indicating a mortgage or is merely an agreement to reconvey tacked on to an ordinary sale deed. He thinks that, following Sayad Mir Gazi v, Miya Alli, a decision which has not been overruled, the Courts should treat Exhibit 12 as nothing more than an ordinary agreement to reconvey, which is exempted from registration. Sayad Mir Crash's case was, as the judgment shows, one where the intention of the parties was to have a mortgage transaction. But it was held that the subsequent agreement, separated entirely from the conveyance, was nothing more than an ordinary agreement to sell and that, as such agreements were expressly exempted from the operation of Section 17 (1) (b) and (c) by the exception now contained in Clause (v) of Sub-section (2) of the same section, there was nothing to prevent the plaintiff getting a decree for reconveyance and possession of the property. This decision has been the subject of some comment in Bala v. Sadashiv : (1921)23BOMLR1066 , where it is stigmatised as a very extreme case. It was also remarked that it should not be the policy of the Courts to recognise transactions of this kind, which are in effect mortgages, unless they are carried into effect by proper documents, and that where the second document is one which has the effect of really changing the sale deed into a mortgage and is for property above Rs. 99, it should be carried out by a registered document. It might, in my opinion, have been necessary to refer to a Full Bench whether the decision in Sayad Mir Gazi v. Miya Ali is correct, But in the present case I do not think that this question really arises. For it seems to me that on the very clearest authority the document Exhibit 12 must be held not to evidence a mortgage transaction but to be a mere agreement to reconvey conditionally on a particular payment within a certain time, attached to an absolute sale, I refer to the Privy Council case of Bhagwant, Sahai v. Bhagvan Din I. L. R. (1890) All. 387 . It is a curious coincidence that the document in that case contained exactly similar stipulations to those contained in the postscript to the present document, which have been relied upon as indicating that the transaction was really in the nature of a mortgage. These are as follows :-

There is do rent for the house and no interest for the sum, You should Not require account of rent and I shall not requite interest for money. I shall recover and enjoy rent in lieu of interest, You should pay me Rs. 2,000 as per term as loan without interest).

6. In the document, which was under consideration in the Privy Council case, there were similar terms, namely :-

During the aforesaid term I shall remain in possession, collect the rent, enjoy the profits, and be liable for lose; the vendors shall have no concern whatever. I shall not claim interest from the vendors, nor will they demand profits from me after the expiry of the term.

7. Also in that case the two documents were passed on the same date. Their lordships had to consider whether the document created a mortgage, as the lower Courts had held, purely upon a construction of the two documents. The case is, therefore, entirely on all fours with the present case, and their lordships were very emphatically of opinion that the transaction should not be treated as a mortgage transaction, as had been held in the Courts below, hut that the second document was merely a contract reserving to the vendor a right to repurchase the property sold. It seems to me that that decision is conclusive on the dispute as to the nature of the document Exhibit 12, and that it must be held to he not in the nature of mortgage but to be merely an agreement to reconvey. It is not as if. the parties had adduced any evidence, which might indicate that the transaction was clearly in the nature of mortgage-such as evidence showing that the price of Us. '2,000 had no proper relation to the real value of the property sold. Consequently it is, in my opinion, unnecessary to consider the effect of Sayad Mir Gazi v. Miya Ali I. L. R (1914) . 38 Bom. 703 16 Bom. L. R. 582 in dealing with the present case,

8. The only question that can arise is whether, treating it as a mere agreement to reconvey, the document is one that requires registration as falling under Clause (6) of Sub-section (1) of Section 17 of the Indian Registration Act, or whether it is exempt from such registration under Clause (v) of Sub-section (2) of that section. Mr. Shingne for the appellant did in fact contend that it did require registration, even treating it as a mere agreement to reconvey. Personally I think that there is considerable force in that contention. It is not a case of an isolated agreement to sell given by an owner several years after he has acquired title to the property. It is a case of a contemporaneous agreement to reconvey, forming part of the actual transaction by which the owner acquires title. And obviously it seems desirable that the records of the Registration Department should in such cases contain both the documents to show what is the real title that has passed to the vendee or mortgagee, as the case may be. But of course one cannot decide the legal point whether the document requires registration merely on a ground of expediency such as I have mentioned. There is, however, a strong consideration in favour of the view that at any rate in such a case the agreement to reconvey should be registered, For it has been ruled in Bapu Apaji v. Kashinath Sadoba I. L. R.(1916) 41 Bom. 438 19 Bom. L. R. 100 that an agreement to sell attaches a fiduciary obligation to the owner who gives such an agreement, that the person in whose favour the agreement is passed has a fiduciary interest in the property, and that the owner who is given that document is a trustee, as is in fact laid down in the Specific Relief Act and the Indian Trusts Act. The effect, it was held, was to qualify the provisions of Section 54 of the Transfer of Property Act, which says that a contract for sale of immovable property does not of itself create any interest in or charge on such property. The contrary view, which alone of all the Indian High Courts the Madras High Court once held, has since been overruled in Vizagapatam Sugar Co. v. Muthurama Reddi I. L. R(1923) Mad. 919. Therefore, it can be contended, in ray opinion forcibly, that in such a transaction the second document is one which does not merely give a right to obtain another document such as is covered by Clause (v) but which has the effect of ' limiting' the title which would have passed under the first document for sale, if it were unaccompanied by the second, document, just as it limits it if it indicates that the transaction was really a mortgage. That is a question which, in my opinion, might have been properly referred for decision to a Full Bench, if there was no strong authority to the contrary. But although most of the cases which deal with thin Clause (v) are cases not of contemporaneous documents like the kind now in question but of an entirely separate agreement to sell, yet, there are cases-which deal with two such documents passed at the same time and where it has been held that that the second agreement does not require registration. For instance in Sangawa v. Huchangowda I. L. R.(1923) 48 Bom. 166 25 Bom. L. R. 1207where there was first of all a registered sale deed and secondly an unregistered document saying ' I shall without any objection give up your land at any time you may ask to give up,' it was held that the second document did not require registration as, even on the assumption that in terms it fell within Section 17 (1) (b) or (c) of the Indian Registration Act, it would clearly be saved by the Clause (v) of Sub-section (2) and was, therefore, admissible in evidence. That is a ruling which certainly goes against the contention I am considering. In Rajangam Ayyar v. Rajangam Ayyar I. L. R.(1922) Mad. 373 the Privy Council considered the effect of a memorandum of partition among the members of a joint Hindu family, which provided among other things that ' from this day forward each party shall enjoy the properties in the schedule allotted to his share' and further that pending the execution of the later deed contemplated, ' this itself shall be in force.' The Madras High Court held that in view of these provisions the document did not come within Section 17(2) (v) of the Indian Registration Act, but the Privy Council in their judgment at p.381 says that this document ' is not one by itself creating, assigning, limiting or extinguishing any right or interest in immovable property; it merely creates a right to obtain another document which will when executed, create a right in the person claiming the relief.' and accordingly they held that the document was admissible in evidence so far as it went. In view of that ruling it certainly seems to me hopeless to expect a Full Bench to give effect to the view to which I am personally inclined. It is more a matter which the legislature can remedy if it thinks fit. Therefore, following the general current of authorities as to the interpretation of Clause (v), I think that we must hold that this document Exhibit 12 is a document which is exempted from registration under Clause (v) and that accordingly it is admissible in evidence.

9. The District Judge has ordered a remand for the decision of the suit on its merits But the learned Counsel and pleader for the parties in this appeal could not point out any other question that remains to be considered. The Subordinate Judge, as I have already mentioned, found the remaining two issues in favour of the plaintiffs, and although Mr. Shingne did contest in his arguments the finding that the agreement Exhibit 12 was one under which the heirs of Damodar had a similar right to repurchase and to sue under it, yet it is quite clear that the Subordinate Judge's decision is the only one possible. The document itself contains nothing to indicate that the intention of the parties was that Damodar alone should have a right of repurchase, and the illustration (a) to Section 37 and a 40 of the Indian Contract Act suffice to show that this is among the class of cases where, in the absence of evidence of a contrary intention, the legal representatives have a right to require performance or are bound by the promise to perform: of. J. H. Tod v. Lakhmidas Purshotamdas I. L. R. (18B2) 16 Bom. 441 This is no doubt a case of purchase of immovable property and not one of the sale of goods, but the same consideration applies, as there is nothing in the nature of the transaction to imply that merely a personal option was conferred, It is not a case where the document specifically limits the option of repurchase to the vendor and his heirs as in Situl Purshad v. Luchmi Purshad I. L. R. (1833) Cal. 30 or to the vendor and his descendants as in Vithoba Madhav v. Madhav, Damodar I. L. R.(1918) 42 Bom. 344Section c. 20 Bom. L. R. 654 nor is there a stipulation against assignment of the option as there was in Jhanda Singh v. Wahidud-din I. L. R.(1916)All. 570 Accordingly, in my opinion, there is no necessity for a remand. The questions raised in the suit have all been decided, if my view is correct, in favour of the plaintiffs; and it is obviously undesirable to extend this litigation unnecessarily. I would, therefore, pass a decree in favour of plaintiffs-respondents Nos 3 and 4, who have acquired the right of Damodar, requiring the heirs of defendant No 1 (appellants Nos. 2, 3 and 4) to execute a registered deed re-conveying the property in suit to them upon payment of the sum of Rs. 2,000, and providing that, if they fail to do so, action may be taken in accordance with the provisions of Order XXI, Rule 34, Civil Procedure Code. I would also allow their prayer to obtain possession upon such reconveyance.

10. The plaintiffs have succeeded and therefore defendants Nos 1 and 2 must pay the costs of plaintiffs and their own costs throughout and defendant No. 3 must also bear his own costs, if any.

11. Madgavkar J. On September 28,1911, the predecessor in title of the plaintiffs-respondents passed a registered sale-deed in favour of the predecessor in title of the defendants-appellants and took from the latter on the same day an ostensible unregistered agreement Exhibit 12 to reconvey the property which is worth over Rs. 100 within ten years increased by a postscript to eleven years. The respondents sued to obtain specific performance of the second agreement and for possession and were resisted by the appellants on the ground that the deed Exhibit 12 was inadmissible for want of registration. The trial Court upheld this contention but the District Court disallowed it and remanded the suit though the trial Court had found on all the issues. Defendants Nos. 1 and 2 appeal.

12. The point faintly urged in appeal that the agreement is a personal contract on which the assignors cannot sue has been sufficiently disposed of in the judgment of my learned . brother. On the main point as to the admissibility of Exhibit 12, it is argued for the appellants that the transaction is one of mortgage and that in any case Exhibit 12 limits the right under the sale deed and therefore is compulsory registrable on the grounds of policy stated by Macleod C. J. in Bala v. Sadashiv (1921) 23 Bom. L. R. 1063. For the respondents it is contended, firstly, that the transaction is not a mortgage; secondly, that even if this Court holds it a mortgage, the second deed is not compulsory registrable, any more than the deed in Say ad Mir Gazi v. Miya Ali I. L. R.(1914) 38 Bom. 703 16 Bom. L. R. 582 ; and, thirdly, if this Court prefers the view in the former decision to the view in the latter, the matter should be referred to a Full Bench rather than the question decided against the respondents.

13. The question whether registration is compulsory or otherwise depends upon whether the document Exhibit 12 falls under Section 17 (1) (b) or whether it falls under Section 17 (2) (v) of the Indian Registration Act, that is, whether it does or does not itself create, declare, assign, limit, or extinguish any right, title and interest of the value of Us. 100 and upwards to or in immovable property but merely creates a right to obtain another document.

14. These documents are of frequent occurrences in this Province as well as in other parts of India, The question raised by them has usually been defined to be whether the two documents evidence a single transaction of mortgage by conditional sale or whether the second document evidences an agreement to reconvey, separable from the first sale and sale deed. And the answer depends upon the intension of the parties, as expressed in the language of the documents themselves in the; light of the surrounding circumstances, Balkishen Das v. W. F. Legge I. L. R.(1899) All. 149 Section 2 Bom. L. R. 523 such as...is clearly required to show in what manner the language of the documents was related to existing facts:' Narasingerji v. Parthasaradhi Rayanam Garu I. I. R.(1924) Mad. 729

15. The answer is not always easy. The difficulty arises partly from the lack of definitness of the intention, actual and legal, of the parties, partly perhaps from the fact Clause (1) (b) and Clause (2) (v) of Section 17 of the Indian Registration Act are not contradictory nor, taken together, exhaustive. There may be a third category of documents which create a right to obtain another document but do not merely create it or which also ., limit a right. And documents such as the one in suit may be argued to fall under it and to be excluded from the category of Clause (2) (v). Each party generally puts forward the interpretation which suits itself. Either party may be out of possession. The period, if any, specified in the second agreement may or may not have expired. Thus in the last case (4) the Madras High Court held that it was an agreement to reconvey while their Lordships of the Privy Council held it was a mortgage by conditional sale as in Balkishen Das v. W. F. Legge. The other view of the transaction was taken in cases of somewhat similar documents in Bhagvan Sahai v. Bhagvan Din I. L. R. (1890) All. 387 and in Jhanda Singh v. Wahid-ud-din I. L. R.(1916) All. 570 Section c. 19 Bom. L. R. 1 though in both these cases the two deeds were passed on the same day. This fact is not, therefore, of itself, decisive, any more than in the cases of Namdev v. Dhondu : (1920)22BOMLR979 or Muthuvelu Mudaliar v. Vythilinga Mudaliar I. L. R.(1919) Mad. 407 .

16. In the present case little evidence other than the document itself has been proffered. The learned pleader for the appellant relies on para 8 of the plaint where the plaintiffs say that they believe that the sale deed passed to defendant No. 1 is in the nature of a mortgage, That, however, is not sufficient as the sub-sequent words of the same paragraph of the plaint proceed 'even if it is not so regarded, yet plaintiffs have a right to demand a sale deed and possession on the strength of the agreement.' The suit is, therefore, in the alternative The defendants-appellants did not in their written statement expressly allege that the transaction was a mortgage nor did they ask for an issue on this point, nor lead evidence to show that it was a mortgage. The trial Court, it is true, thought that words in the postscript of the agreement such as interest and rent proved the mortgage nature of the transaction. But the main object of the postscript was to increase the term from ten years to eleven and the rest of the recital and the particular words therein are incidental rather than an essential part of the contract. The lower appellate Court has held that it was nothing more than an ordinary agreement to reconvey, for reasons which, apart from the reference to the decision of Sayad Mir Gazi v. Miya Ali I. L. R. (1914) 38 Bom. 703Section c. 16 Bom. L. R. 582 are not very clear. It appears to me on the whole that the transaction is not proved to be a mortgage.

17. On this view of the transaction, we are, I think, bound by the current of decisions of this Court that at least in the case of a transaction, which is not a mortgage, a deed such as Exhibit 12 even though it may be argued to limit the right of the purchaser is not compulsory registrable : Sangawa v. Huchungowda I. L. R.(1923) 48 Bom. 166 Section c. 25 Bom. L. R. 1207 . Nor, as I understand the judgment in Bala v. Sadashiv (1920) 23 Bom. L R. 1066 does the decision itself go the length argued for the appellants, its ratio decidendi being that the transaction in that case was a mortgage, though there are observations as to the desirability of registration which go further. But as I have held in the present case that the transaction is not proved to be a mortgage, it is not necessary to consider how far it would have been difficult for us to follow the decision of Beaman J. in Sayad' Mir Gazi v. Miya All, in case it had been held to be a mortgage.

18. I agree, therefore, that the document Exhibit 12 is admissible and the plaintiffs-respondents are entitled to the relief sought and under Order XLI this Court should pass a decree in their favour instead of the decree of remand of the lower appellate Court.

19. As to the point of policy raised in arguments and touched upon in the judgment in Bala v, Sadashiv, as was said by Lord Davey, 'Public policy is always an unsafe and a treacherous ground for legal decision:' Janson v. Driefontein Consolidated Mines, Limited [1902] A. C. 484 referred to in Shrinivasdas Lakahminarayan v. Ramchandra Ramrattan Das I. L. R. (1919) 44 Bom. 6 Section c. 21 Bom. L. R. 788 . Whether these agreements to reconvey obtained from the vendee by the vendor do not incidentally cloud and unsettle the title of subsequent purchasers of the property and destroy much of the value and purpose of registration so as to render advisable an alteration in the law which would make them compulsorily registrable -these, I conceive, are matters, for the legislature rather than for the Courts, to consider and to decide.


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