1. Mr. Desai on behalf of the defendant has tendered for being admitted into evidence two letters, each dated October 24, 1924, one being from the defendant to the plaintiff and the other from the plaintiff' to the defendant, as constituting an agreement between the parties on the faith of which the defendant constructed a shed on the land demised to him for which he now claims compensation by his counter-claim. Mr. Vachha on behalf of the plaintiff objects to these letters being admitted into evidence on the ground that they constitute) an agreement to lease an immovable property for a period of five years which, under the Indian Registration Act, is compulsorily registrable and would be inadmissible in evidence without registration.
The first of these two letters, which the second letter confirmed, is in the following terms :-
'Bombay, October 24, 1924.
To,Sultanali Mulla Rasoolji, Esqr. Dear Sir,I beg to note that I have agreed to take a lease from you of the vacant land lying in front of your three chawls at Foras Road in Bombay excluding the portion of the land ten feet in width running along the front of the three ohawls and also excluding a ten feet passage for ingress to and egress from the chawls.
The lease is to be for a period of five years commencing from January 1, 1925, at the monthly rent of Rs. 151. You are to pay all Municipal taxes in respect of the land, provided that if the annual rent of the property for the purpose of Municipal assessment is fixed at over Rs. 1812, I am to pay the increase in the Municipal taxes by reason of the annual rent being fixed at over 1812,
I am to pay rent for every month in advance on the first day of the month. I have given you a cheque for Rs. 151 which sum is to be kept by you as deposit during the continuance of the lease.
I am not to use the demised premises for any other purpose other than that of storing timber.
I am not to assign the demised premises without your previous consent in writing and am not to erect any building or structure on the land which may contravene the rules and regulations of the Municipality or any other public body.
You are to be at liberty to determine the lease after giving me three months' notice in writing in the event of your deciding to build on the demised land.
A formal lease is to be executed, and such lease will contain a proviso for re-entry in case of default in payment of rent for a month after it became due or in case of breach of any of the covenants and conditions contained in the lease and to be performed and observed by me and such other usual terms and conditions as your attorneys may think fit to be inserted in the lease.
The charges in connection with the preparation and execution and registration of the lease will be paid by us in equal shares.
3. Paragraph 1 of the letter states that the writer has agreed to take a lease from the addressee; paragraph 2 states that the lease is to be for a period of five years commencing from January 1, 1925 ; paragraph 3 states that the rent for each month is to be paid by the writer in advance on the first day of the month and that he has given to the addressee a cheque for Rs. 151 which sum is to be kept by the addressee as deposit during the continuance of the lease. Paragraph 4 refers to the premises as demised premises. The premises are referred to as ' demised premises ' and ' demised land' respectively in paragraphs 5 and 6. Paragraph 7 of the letter states that a formal lease will be executed and such lease will contain a proviso for re-entry in case of default in payment of rent for a month after it becomes due or in case of breach of any of the covenants and conditions in the lease to be performed and observed by the writer and such other usual terms and conditions as the addressee's attorneys may think fit to be inserted in the lease.
4. The test to be applied in a case like the present is to see from the document itself whether it contains words which can be construed as constituting a present demise. It would be immaterial, in my opinion, to consider for the purpose of deciding this point what the conduct of the parties in respect of the document was. Whether the parties acted upon the document to the extent of giving and taking possession of the premises in terms of the document, would be immaterial. In Narayanan Chetty v. Muthiah Servai I.L.R. (1910) Mad. 63 a Full Bench of the Madras High Court has held that it is immaterial whether possession has passed or not in accordance with the agreement. In the case before me it is common ground that the defendant went into possession of the premises on January 1,1925,-the date from which the lease for five years was to commence.
5. Mr. Desai has relied upon the case of Purmananddas Jiwandas v. Dharsey Virji I.L.R. (1885) 10 Bom. 101 whore Sargent C. J. has observed (p. 104) :-
Now, here the agreement, which is dated October 8, 1882, provides that the lease was to commence from the 1st October-a date already passed, that the rent was to commence from that day, and the rent then due to be paid by next day. This shows clearly that the defendant was regarded as tenant for four years from October 1, 1882, subject to a right of forfeiture in the lessor if the Rs. 300 were not paid next day.
6. These observations of the learned Chief Justice apply to certain facts which were found in the case before him ; the ratio decidendi of the case was that an agreement for a lease needs registration if the parties to such agreement intend to create a present demise and that although the agreement may contemplate a formal document being subsequently executed, the paramount intention as gathered from the whole of the instrument must prevail.
7. Mr. Desai has further relied on the judgment of their Lordships of the Privy Council in Hemanta Kumari Debi v. Midnapur Zamindari Company The agreement in that case which was held not to need registration is described by Lord Buckmaster at page 245 of the judgment of the Privy Council. Their Lordships observe :
The present agreement is an agreement that, upon the happening of a contingent event at a date which was indeterminate and, having regard to the slow progress of Indian litigation, might be far distant, a lease would be granted. Until the happening of that event it was impossible to determine whether there would be any lease or not. Such an agreement does not, in their Lordships' opinion, satisfy the meaning of the phrase 'agreement to which , which in the context where it occurs and in the statute in which it is found, must in their opinion relate to some document that creates a present and immediate interest in the land.
9. With regard to the terms contained in this letter, dated October 24, 1924, it cannot be reasonably contended that the creation of the tenancy is made dependent upon the happening of a contingency. The lease is here stated to commence from January 1, 1925. Mr. Desai contends that as the lease is to commence at a future date from that of the agreement it cannot be said that there is a present demise or any immediate interest created in the land. The judgment of their Lordships of the Privy Council in Hemanta, Kumari Debi v. Midnapur Zamindari Company would not, in my opinion, apply to a case like the one I am here dealing with where the interest in land is created by the writing first and is to commence at a definite later date. The agreement concluded by the two letters seems to give to the defendant a present and immediate interest in its subject-matter, viz., land, although the agreement is to be performed at a future date which the contract mentions. Woodfall in ' Law of Landlord and Tenant,' 21st Edn., p. 166, has the following observations :
It is very seldom, if ever, that any question now arises whether a contract for less than throe years amounts to a lease of only be an agreement. It depends upon the intention of the parties, to be collected from the writing, and from collateral circumstances. If it contains words of present demise ('doth agree to let,' &.c.), although to hold from a subsequent day, it will amount to a lease notwithstanding a more formal lease is stipulated for, that being considered only as a further assurance.
10. Mr. Desai has also relied on the case of Sir Mahomed Yusuf v. Secretary of State I.L.R. (1920) 45 Bom. 8. The facts of that case were that on February 1, 1915, defendant No. 1 in that case had written a letter to the Presidency Post Master saying that he ' shall let on a lease for ten years' a portion of the building at Rs. 175 a month, the defendants making the necessary arrangements for the Post Office and keeping the premises ready for occupation by April 1, 1915. Mr. Justice Pratt in his judgment at page 14 observes in this connection:
The defendant proceeded to make what he called the necessary arrangements, that is to adapt the premises for use as a Post Office ; but by the 1st of April these arrangements were not complete, The counters were not varnished, the shelves were not put up, and the electric lights were not installed. Nevertheless the Post Office went into occupation on the 1st of April and the improvements were completed in the following month.
11. At page 16 the learned Judge observes:
Does this agreement import such a (present) demise Under the authorities 'the intention of the parties, as declared by the words of the instrument, must govern the construction' : Poole v. Bentley (1810) 12 East 168; arid 'where there is any doubt as to the operation of the contract, the Court must endeavour to discover the intention of the parties from the contents of the instrument ; and if we see a paramount intention that the instrument shall operate as a lease, we must hold it to be such, although it may contain conflicting expressions' : Pinero v. Judson (1829) 6 Bing. 210.
12. The learned Judge proceeds (p. 17):
Now, there are no words of present demise in the correspondence. 'I let1 or 'I agree to let' have been held to be words of present demise but here the words are 'shall let.' Again as to the intention of the parties, the terms of the agreement and the collateral circumstances negative a present demise. The defendant offers to provide accommodation for a Post Office and to make the necessary improvements, and the plaintiff accepts subject to a counter-offer which is itself accepted. The making of the improvements was a condition precedent to the acceptance of the tenure and there can be no doubt but that the plaintiff could have refused to enter into possession on the 1st of April if counters had not been constructed, The parties, therefore, could not have intended the agreement to operate as a present demise. And the fact the plaintiff waived the previous construction of some of the improvements and did enter into possession on the faith of the defendant's promise to complete does not affect this conclusion.
13. In my opinion the documents with which I have to deal are not similar to those referred to in the judgment of Mr. Justice Pratt. There is nothing in them to indicate that the demise was not a present demise. The agreement arrived at as set out in the letter constitutes in my judgment a present demise of the land and the condition that a formal leas was to be thereafter drawn up and executed is in the nature of a further assurance only. I am of opinion that these two letters fall under Sections 17 (1) (d) and 49 of the Indian Registration Act and are inadmissible in evidence for want of registration. The objection is upheld and the documents rejected.