Chandra Reddy, C.J.
1. The subject matter of the appeals and the parties are the same in both. These appeals arise out of two connected suits, O. S. No. 409/1951: filed by the appellant for partition of certain lands and for delivery of his 1/3rd share and O. S. No. 137of 1952 filed by the 2nd respondent for specific performance of an alleged agreement for reconveyance of the suit lands in his favour on 26th September 1926.
2. The facts material for the purpose of this enquiry may be briefly slated as follows : An extent of five acres of land, in which 1/3 share is now claimed by the appellant, originally belonged to the respondent No. 2 and his brothers and theysold it to one Nukalapati Ramireddi and another.
Two months later, Ramireddi and the other purchaser sold it to three brothers, Seshayya, Sreenivasiah and Varadayya for Rs. 2,900/-. Varadayya is the 3rd defendant in O. S. No. 409 of 1931. On the same date, they executed an agreement Ex. A. 12 in favour of the 2nd respondent, whereunder the latter could continue in possession of the property on payment of rent.
It was also recited in the agreement that they would convey their share in the property to the 2nd respondent for the price mentioned in the sale deed in the event of their deciding to sell it. Pursuant to this agreement, the 2nd respondent continued in possession of the property. Later on, he sub-based the property to a third party who is impleaded as the 5th defendant in O. S. No. 409 of 1951 and, in fact, at the time of the suits, it was the sub-1essee that was in actual possession of the properties. Under some arrangement, the shares of Seshayya and Sreeoivasiah were acquired by the respondent, while the third brother Varadayya mentioned above i.e. the 3rd defendant in O. S. No. 409 of 1951 continued to own the 1/3rd share, which is involved in these appeals. Varadayya agreed to sell his share to the appellant under Ex. B. 1 dated 17-8-1948 and two months later i.e., on 15-10-1948 the appellant obtained a sale deed in respect of his share under Ex. B-2.
Thereupon, he issued a notice to the tenant to deliver possession of the properties. The latter replied that he was not prepared to surrender possession as he was a tenant under the respondent. As a counterblast, the 2nd respondent demanded of the appellant's vendor Varadayya by notice to execute a sale deed in his favour in fulfilment of the terms of Ex. A-12. As he denied the said agreement, the 2nd respondent filed O. S. No. 137 of 1952 on the 26th of April 1952, while the appellant brought O. S. No. 409 of 1951 for the reliefs mentioned above.
3. The main issues in both the suits were whether Ex. A-12 was genuine and whether the 2nd respondent was entitled to specific performance of the agreement. The trial Court decreed O. S. No. 137 of 1952 and dismissed O. S. No. 409 of 195L finding both the issues in favour of the 2nd respondent. On appeal, the Subordinate Judge affirmed the judgment and decree of the trial court. Both the courts proceeded on the assumption that Ex. A-1,2 contained an agreement to Sell the property and that the 2nd respondent was entitled to specific performance. Further, the Subordinate Judge came to the conclusion that, though nearly 26 years have elapsed since the execution of Ex. A-12, the suit was not barred under Article 113 of the Limitation Act since the 2nd respondent had notice that performance was refused only in 1949 when the predecessor-in-interest of the appellant declined to give effect to Ex. A12.
4. The aggrieved plaintiff filed two appeals against the decrees in both the suits. When the matter came up for hearing before Ranganadham Chetty, J. the finding of the courts below that Ex. A-12 was a genuine document was not canvassed. The only question that seems to have been debated was whether the respondent could resist the appellant's suit for possession of the property though his claim for pre-emption was barred under Article 10of the Limitation Act. The learned Judge referred the matter to a Bench for an authoritative pronouncement as he felt that the two sets of rulings relied on by either side in support of the relative contentions contained divergent opinions. The point for determination is whether the 2nd respondent is entitled to any relief on the basis of Ex. A-12.
5. At the outset, we may dispose of a contention faintly urged by Sri Kuppuswmny that between the date of Exs. A-12. and B-2 the sale deed in favour of the appellant, the vendor of die appellant agreed to sell the property to the 2nd respondent and consequently the latter could claim the benefit of Section 53-A of the Transfer of Property Act though this was not raised before Ranganadham Chetty, J. According to him, Varadayya offered to sell his interest in the land in March 1943 as could be seen from Ex. A37 and this was accepted by the 2nd respondent. An effective answer to this argument is furnished by Ex. B-10 and Ex. B-8 dated 5-6-1943 and 19-6-1946 respectively apart from there being no acceptable evidence in support of this plea.
6. Ex. B10 is a lease deed executed by the 2nd respondent in favour of Varadayya on 5-6-1943 i.e., 2 1/2 months after Ex. A-37 stipulating a rent of (15 1/2 tooms per year. The lease was to enure for a period of three years. The material term of the document is that
'at the end of the crop time in the last fasli of the lease period, you are at liberty to take possession of the lands without any notice to me'. This document dearly indicates that the 2nd respondent continued in possession of the property not in accordance with any agreement to sell but only pursuant to the lease deed Ex. B-10. More than this, Ex. B-8 completely negatives any such theory. Having regard to the importance of this document, it is useful to set out in extenso the terms thereof:-
'You are under the impression that I am doing personal cultivation. I have given all the lands on lease. Our two shares also are given on lease.....
This year the tenant kept in arrears 6 tooms and paid only the balance on 4 acres 73 cents .....Iwould have felt sorry for losing 1/3 share if I was personally cultivating the land. But I am giving the whole extent of the land on lease as it is undivided. Perhaps you are under the impression that you have benefited me very much by the lease in my favour. You need not be under such impression, You may lease out your share for a total rent of 12 tooms per year for a period of five years without hesitation. If so I will pay you the rent on my own responsibility. But if you do not want to do so, you may come here with Srinivasulu Mamayya and get the lands divided by metes and bounds and lease out your 1/3 share to anyone you like and I would have absolutely no objection to that course. I request you not to be under the impression that I want to deprive you of any benefit that you may get by leasing out the land to others. On the other hand if you do so I will stand to gain by it.'
7. It is immediately plain from this document that the 2nd respondent was not putting forward any sort of claim to this property either on the basis of any agreement to sell or by way of preemption. He wanted the land to be leased out tohim at a favourable rent for a period of five years and if Varadayya was not willing to pursue that course, the 2nd respondent was prepared to have his land divided into free shares and put the latter in possession of his 1/3 share so that he can lease it out to anybody he liked. This document destroys the theory of the existence of an agreement to sell in favour of the 2nd respondent. There is, therefore, no question of the 2nd respondent having any agreement in his favour which could be specifically enforced under Section 53-A of the Transfer of Property Act.
8. It must also be mentioned here that Ex. A-12 cannot be read as containing a contract for sale of the land falling within the ambit of Section 53-A of the Transfer of Property Act. Even if it were to be so construed, it would not avail the 2nd respondent for the reason that Section 53-A was enacted only in 1929, while Ex. A-12 came into being in 1926 and this section has no retrospective operation. This position is not contested by the Counsel for the respondents. Ex. B-8 further does not disclose an intention on the part of the writer of that letter to claim the option of buying this property though Varadayya is alleged to have offered to sell the land to him under Ex. A-37 (as per the case of the 2nd respondent). On the other hand, it proves that he was not inclined to exercise any right of pre-emption which means that such a right had become extinguished.
9. This would have been sufficient to have disallowed any claim of the 2nd respondent for preemption and to have decreed the appellant's suit for possession. But it is urged that it was not the case of the appellant that the right of pre-emption had become extinguished. This does not seem to be altogether without force. We may, therefore, proceed on the footing that any right to be claimed under Ex. A-12 is not lost by reason of its not having been exercised if it is otherwise not barred.
10. On this assumption, we will proceed to consider whether the 2nd respondent could still enforce it. This depends upon the construction to he put on Article 10 which stands thus:
Description of suitPeriod Limitation.Time from which period begins to run.
To enforce aright of preemption, whether the right is founded on law, or general usage oron special contract.
One year.When thepurchaser takes, under the sale sought to be Impeached, physical possessionof the whole property sold or where the subject of the sale does not admit orphysical possession. when the Instrument fs registered.
11. In this case, the earlier part of col. 3 does not apply as indisputably it was not Capable of actual physical possession, jt being an undivided 1/3 share and it is the latter part of that column that governs the case. This position is not disputed, there , being abundant authority in support of it. See Batul Becum v. Mansur Ali Khan ILR 24 All 17 (PC) That being so the claim of the 2nd respondent is prima facie barred because the sale deed in favour of the appellant Ex. B-2 is dated 15th October 1948, while he sought to enforce it by a suit instituted on the 26fh of April 1952
This difficulty is sought to be got over by the argument that even if the suit by a pre-emptor for specific performance is barred by limitation, the pre-emptor could urge his right by way of defence as Section 28 was inapplicable to a case where Possession was not sought to be recovered. This argument is founded on Krishna Menon v. Kesavan, ILR 20 Mad 305 and Kanharankutti v. Uthotti, ILR 13 Mad 490,
12. I.L.R. 20 Madras 303 lends some support to this contention. There, the suit was for redemption against a mortgagee, who was in possession and the defendant pleaded a right of pre-emption which the Ottidar had under the customary law of Malabar. A Bench consisting of Subramania Ayyar and Benson JJ. overruled the objection of the plaintiff that the defendant could not claim pre-emption as it was barred under Section 10 on the expiry of a year from the date of the registration of the sale in his favour and therefore any right which the ottidar bad could not be urged by way of defence, observing;
'This contention is manifestly untenable. For, if, not with standing that an otti mortgagee's right to sue to enforce his right of pre-emption has become barred, that right of pre-emption, owing to the inapplicability of Section 28 to the case, is still unextinguished, it is difficult to see on what principle such right is to be held to be unavailable by way of defence.'
The learned Judges thought that such a right was not extinguished by the operation of Section 28. Except the above statement, there is no other discussion on this question nor have the learned Judges considered the bearing of Sections 54 and 60 of the Transfer of Property Act on the enquiry before them. They also assumed that the right of pre-emption involved interest in the property, while in fact such a right was an inchoate one.
13. This was not followed in subsequent rulings of the same Court.
14. We will now turn to ILR 13 Mad 490. There, the suit was by the purchaser of the jenm title of the mortgagor for redemption, instituted more than six years after the sale. It was resisted by the ottidar i.e., the mortgagee on the ground that be had a right of pre-emption. The defence prevailed with the Bench consisting of Handley and Weir JJ. In the opinion of the learned Judges, though six years had lapsed from the date of sale, Section 28 of the Limitation Act had no application for the reason that the ottidar had no need to bring in a suit for possession of the property in question as he had already obtained a decree for such possession. Obviously what influenced their Lordships in coming to that conclusion was that the ottidar had already obtained a decree for possession, which means that he had a right to the property and not an inchoate right as in the present case.
We, therefore, do not regard this case as supporting the proportion that Article 10 would not govern every case in which possession is with the defendant in any capacity. The respondents, therefore, cannot derive much assistance from ILR 13 Mad 490. Even if it lays down the same proposition, the criticism that is levelled against, ILR 20 Mad 305 applies with equal force to this also.
15. Coming back to ILR 20 Mad 305 it wasdissented from expressly in Ramaswami Pattar v. Chairman Asari, ILR 24 Mad 449. There, an instrument of mortgage was executed in 1872 by one Appavu Pillai and his son in favour of Samu Ayyar to secure a sum of Rs. 100/-. That contained the following covenant in favour of the mortgagee;
'If we assign our right over these properties to any one, the land delivered possession of to you for appropriating the interest shall be assigned to you alone and it shall not be assigned to anybody else.'
In 1873, the mortgagors sold their interest in the land to Vedanayakam. The latter's interest was sold in execution of a decree against him and bought by the plaintiff, who instituted a suit for redeeming the mortgage. The right of pre-emption created by the mortgage deed was pleaded in defence of the suit. This defence did not prevail with Shep-hard and Bhashyam Ayyangar JJ, who constituted the Bench. The learned Judges took the view that, since the time for the performance of the agreement in favour of the defendant had long passed and no suit could have been brought to enforce that contract, the agreement could not be set up in defence to a suit for redemption.
16. Dealing with the question, this is what Shephard, J. remarks:
'The cases relating to covenants in leases for renewal are exactly in point; and having regard to them I think we may disregard the recent case ILR 20 Mad 305 which is in the main founded on ILR 13 Mad 490. In these cases moreover it seems to have been assumed that the right of pre-emption involved an interest in the property'. The other learned Judge Bhashyam Ayyangar J., after referring to the passage in ILR 20 Mad 305 which we have extracted above namely: 'This contention is manifestly untenable ..... unavailable by way of defence'
said that in neither of those cases was the question raised or argued with reference to the stringent provisions of Section 54 of the Transfer of Property Act, nor was the attention of the Court drawn to Section 60 of the Transfer of Property Act and in particular to the conspicuous absence therein of the usual saving clause 'in the absence of a contract to the contrary'. The learned Judge further remarked:
'When a mortgagee is allowed to plead in bar of redemption a contract of pre-emption, secured by the mortgage instrument itself you really import into Section 60 the above saving clause which has been deliberately omitted by the legislature.....
In none of these cases did the pre-emptor who was in possession as mortgagee, offer to exercise his right of pre-emption, and give notice that he would hold possession thenceforward as vendee under his right of pre-emption, ready to pay the price. I do not pause to consider whether that would really make any difference nor to consider whether an ottidar having a right of pre-emption under law would stand on a different or higher footing than a pre-emptor under a contract. I may observe that in the former case the right of pre-emption is not collateral to the mortgage, but is one which is an incident of an otti mortgage. In the latter case, the right of preemption of the mortgage is not qua mortgagee, but is a collateral advantage resting upon express contract'.
The learned Judge remarked that as the defendant failed to show that be was at the date of the suit in a position to enforce his right of pre-emption by a suit for specific performance, he could not urge it by way of defence. The learned Judge expressed the opinion that, although the mortgagee seemed a valid right of pre-emption, and as (his right was infringed even in 1873 when the equity of redemption was assigned by the mortgagor to the plaintiff's vendor, his right of pre-emption was hopelessly barred and did not therefore avail him in the suit for redemption, He extracted the following passage from the judgment of the Master of the Rolls in Swain v. Ayres, (1888) 21 Q. B. D. 289 at 293;
'I should therefore be disposed to say that, when there is such a state of things that a Court of Equity would compel specific Performance of an agreement for a lease by the execution of a lease both in the equity and common law divisions, the case ought to be treated as if such a lease had been granted and was actually in existence. There would then be the equivalent of a lease, that is to say, the lease of which equity would compel the execution in specific performance of the agreement. That is a very different thing from saying that, where equity would not compel specific performance by the execution of a lease, the lease of which equity would not decree execution is to be considered in equity as existing. That contention seems to me quite untenable. It seems to me quite impossible to say that equity would consider a lease in existence, though it would not grant specific performance by decreeing execution of a lease. Such a contention seems to me to make the the doctrine of equity on the subject self-contradictory'.
The dictum contained in the passage extracted above is in consonance with the view taken by their Lordships in the above case. In our opinion, if we may say so with respect, the law on the topic has been well elucidated by the learned Judges.
17. This view is emphasised in Veerarcddi v. Bapireddi, ILR 29 Mad 336 (FB) and re-affirmed in some of the pronouncements of the Privy Council. This opinion is also shared by the Calcutta High Court, all of which will be referred to presently.
18. The controversy in ILR 29 Mad 336 (FB) centered round S. 54 of the Transfer of Property Act. The problem to be solved there was whether a defendant who was in possession of some property pursuant to an agreement to sell and who had not obtained a conveyance could resist the suit on the basis of this agreement. The Full Bench consisting of Sir Arnold White C. J. and Subramania Ayyar and Benson JJ. answered it in the affirmative, holding that a mere contract of sale followed by delivery of possession did not create any interest in the property agreed to be sold in the absence of a proper conveyance and that it could not be pleaded by way of defence to a suit for ejectment by one having a legal title to recover even if the agreement was enforceable at that time. A fortiori, if such an agreement is barred by limitation, it would afford no defence at all to a suit for possession of the property.
19. No doubt in the body of the Judgment of any of the learned Judges, there is no reference toILR 20 Mad 305 but two of the learned Judges Sir Arnold White, C. J. and Subramania Ayyar J. approved of ILR 24 Mad 449. In the course of his opinion, the learned Judges said:
'The point was considered by Sir Bhashyam Ayyangar in the course of his judgment in ILR 24 Mad 449. The learned Judge after referring to the law of England under which in certain cases, a Court of Equity would act on the supposition that what ought to be specifically performed had been performed and give relief on that supposition observes that the same course may be adopted in this country 'as in fact it is in cases in which it can be done without contravening the express and fundamental provisions of the Transfer of Property Act or of any other positive enactment'.
It may be mentioned that the sentence in the judgment of Bhashyam Ayyangar J.
'as in fact it is in cases in which it can be done without contravening the express and fundamental provisions of the Transfer of Property Act or of any other positive enactment'
precedes the quotation made by the learned Judge from the judgment of the Master of the Rolls in (1888) 21 Q. B. D. 289 at p. 293, excerpts from which have already been given. This shows that the doctrine of ILR 24 Mad 449 was acceptable to the learned Judge.
20. The opinion of Subramania Ayyar J. in the following passage also indicates that he had acted on the principle underlying ILR 24 Mad 449. After stating that the object of the provision in Section 54 that a contract for sale does not of itself create any interest in or charge on such property was to guard against that policy being defeated, he remarked:
'That being so, it would follow that in a suit like the present in ejectment by the plaintiff, whose title is admitted, the defendant cannot succeed by merely setting up a contract on the part of the plaintiff with himself to sell the disputed land and showing that that contract is specifically enforceable. To hold otherwise would be to ascribe to the contract the very effect denied to it by the statute in the most explicit terms. Nor is there ground for saying that part performance by delivery of possession, would warrant the same being relied on as a valid defence to such an action ...... It was however urged that toallow a seller who has so far acted upon the contract as to let the buyer into possession pending the execution of the conveyance, to eject him when he is not in fault, is to enable the former to act in fraud of his contract and that as the courts of this country are courts both of law and equity the decisions just referred to ought to be followed on the analogy of the rule of equitable construction adopted in regard to the Statute of Frauds. But as pointed out in ILR 24 Mad 449 such a mode of construction has been disapproved of by high authorities and can no longer be resorted to in dealing with clear and unambiguous provisions of modem statutes like those in question'.
The learned Judge had also remarked that Achutan Nambudri v. Koman Nair, 13 Mad LJ 217 which laid down that the fact that the party in possession was in a position to enforce specific performance of the contract, was no defence to an action of ejectment, if the requirements of the Transfer of Property Actwith regard to registration had not been complied with, following Papireddi v. Narasareddi, ILR 16 Mad 464 and ILR 24 Mad 449, containing the right doctrine. He was not prepared to uphold the correctness of Ittappan v. Parangodan Nair, ILR 21 Mad 291 which took a view contrary to ILR 16 Mad 464.
21. Incidentally, it may be noted that in ILR 21 Mad 291, the suit in ejectment was brought before the expiration of the time within which the defendant might have sued for specific performance of the contract to renew the lease. It is thus apparent that Subramania Ayyar J. in more than one place showed his acceptance of ILR 24 Mad 449.
22. The ruling of the Privy Council in Pir Baksh v. Mahommed Tahar, 61 Ind App 388: (AIR 1934 PC 235) strengthens ILR 24 Mad 449. The question for consideration there was whether in a suit for ejectment by the registered proprietor of land over Rs. 100/- in value the defendant could successfully plead an agreement to sell without a registered instrument in his favour. Their Lordships ruled that he could not do it, though he might be in possession under a contract, since the contract by itself did not create any interest in or charge on the property.
According to their Lordships, the only remedy available to him was that if the contract was still enforceable, the defendant may found upon it to have the suit stayed, and by suing for specific performance, obtain a title which will protect him from ejectment; but if it is no longer enforceable, its part performance wilt not avail him to any effect. The following remarks of their Lordships make it abundantly clear that if the agreement could not be enforced, it could not be used as a shield by the defendant:
'The remedy thus available to the defendant would not have depended on any recognition of the agreement of sale as in itself a defence to the action of ejectment, but rather on the principle that the Court will not grant a decree or ejectment which can at once be rendered ineffective by the same court being required to grant a decree of specific performance resulting in reinstatement. But the defendant did not ask for a stay, and did not raise any action for specific performance. Now he is too late to do so, the agreement of sale has become unenforceable'.
Another ruling of the Privy Council, which restates this principle is Ariff v. Jadunath Majumdar, 60 Mad LJ 538: (AIR 1931 PC 79). Their Lordships expressed the view there that, if the right to enforce the contract was allowed to become barred under Article 13 of the Limitation Act, the defendant could not resist the claim to possession by referring to a title, the acquisition of which was forbidden by statute. Thus, this also illustrates the principle that when a right to enforce a contract became barred, the defendant could not contest the plaintiffs claim to possession by relying upon a tide which is no longer alive.
23. In Viswanathan Chetty v. Ethirajulu Chetty, 45 Mad LJ 389: (AIR 1924 Mad 57). Kumaraswami Sastri J. held that a plaintiff, whose suit for specific performance is barred, could not hold on to the property and he could not resist a suit for redemption. He also observed that ILR 29 Mad 336 (FB) was also to the effect that, in suits for possession under title it is no defence to say that the defendant hasgot a right to enforce specific performance of a contract. A Bench of the Calcutta High Court also in Sabed Ali v. Sahatulla, 42 Cal WN 1028 took the same view.
They held that where a suit for pre-emption by the defendant would be barred by limitation under Article 10 of the Limitation Act, it could not form a valid ground of defence. The learned Judges pointed out that the right of pre-emption is an inchoate right and in order to be completed it might be exercised and, if that right is not still enforceable, it cannot be a ground of a valid defence. In support of their view, the learned Judges cited ILR 29 Mad 336 (FB) and also 61 Ind App 388: (AIR 1934 PC 235) besides 45 Mad LJ 389: (AIR 1924 Mad 57). There is thus abundant authority for the proposition enunciated above. Therefore, the law declared in ILR 24 Mad 449 is correct and that contained in ILR 20 Mad 305 is inconsistent not only with it but with the judgment of the Full Bench of the same Court and of the rulings of the Privy Council mentioned above.
24. Sri Kuppuswami cited a judgment of Rang-nekar J. in Gopal v. Jagannath, AIR 1935 Bom 326 as taking the opposite view. We do not think that this decision really comes to his rescue. The point for decision there was whether in a suit for recovery of possession based on a lease executed by the defendant in favour of the plaintiff, the defendant could resist it on the ground that it was obtained by undue influence, and misrepresentation. The learned Judge held that, where the title of a person in possession is challenged, he could raise any defence in favour of his right to the property and the statute of limitation could not prevent him from setting forth any such relief. It is seen that emphasis is laid on the title of the defendant which was being challenged by the plaintiff. It was not a case of a right of pre-emption, which as already stated, is an inchoate right.
25. Sri Kuppuswami invites us to hold that whatever might be the nature of the right, it would be pleaded in defence though it could not be enforced by a suit having been barred by limitation on the basis of the following observations of the Privy Council in Sri Kishan Lal v. Mt. Kashmiro, 20 Cal WN 957: (AIR 1916 PC 172), which has been quoted by Rangnekar J. in the above cited case:
'It has been contended here that limitation is a bar to Mt. Kashmiro's defence. The Limitation Act would not apply to her defence. Even if she were suing to recover possession of the property of which she was deprived by the award, time would not, under the circumstances of this case, begin to run against her until Faqir Chand died'. The above remarks cannot give rise to any such contention. It is plain from them that a suit for recovery of possession was not barred there.
26. That there is a distinction between a case where the defendant puts forward his title to possession and a case where he pleads an agreement to sell is apparent from the following observation of the Privy Council in 61 Ind App 388: (AIR 1934 PC 235):
'The plaintiff is the registered proprietor of the half plot in question. Prima facie he is entitled to possession of it. The defendant whom he seeks to eject does not put forward any title to possession; hemerely pleads that the plaintiff has agreed to sell him the half plot, and that he is in fact in possession of it'.
The case relied on by Mr. Kuppuswami relates to a defendant who has title to the property and which was being Challenged, whereas in the case of preemption no such right exists in the defendant, it being only an inchoate right. Even if, as contended by Mr. Kuppuswami, AIR 1935 Bom 326, lays down such a broad proposition, we cannot assent to it and express our respectful dissent from it.
27. The judgment under appeal could not be sustained as the reasoning in support of the conclusion is untenable in law and is also based upon erroneous assumptions as to the applicability of the relevant provisions of the Limitation Act.
28. In the result, the appeals are allowed with costs in S. A. No. 988 of 1955 throughout. O. S. No. 137 of 1952 is dismissed, while O. S. No. 409 of 1951 is remitted to the trial Court for purpose of passing a preliminary decree.