Chandra Reddy, C.J.
6. The question referred to the Full Bench is whether Ex. A-6 is a lease within the meaning of Section 17(1)(d) of the Registration Act. The fact's necessary for an appreciation of the relative contentions of the parties may be briefly set out.
7. The suit was laid by the appellant on the basis of Ex. A-6 dated 30-5-1955 an agreement to lease permanently properties mentioned therein on certain terms and conditions which would be referred to presently. The answer of the defendants was that the agreement in question was the result of fraud and misrepresentation and that the document relied on should not be received in evidence for want of registration as it fell within the scope of Section 17(1) (d) of the Indian Registration Act. The trial Court over-ruled the objection based on the provisions of the Registration Act, but dismissed the suit accepting the plea of the defendants that the instrument was brought about by fraud and misrepresentation. The aggrieved plaintiff preferred the present appeal against that judgment complaining against the finding. When the appeal came up before Justice Bhimasankaram and Justice Krishna Rao, the view of the trial court, that the document was unaffected by the provisions of Section 17(1)(d) read with Section 49 of the Indian Registration Act was canvassed before them by the respondent. As the learned Judges felt some difficulty in applying the observations of the Privy Council in ILR 47 Cal 485 : (AIR 1919 PC 79) they wanted a Full Bench to interpret the document.
8. The determination of the question as tot whether Ex. A-6 is an agreement to lease or not depends upon the meaning to be attributed to the words 'agreement to lease'. In other words, the exact scope of Section 2 Clause 7 of the Registration Act has to be determined. ''Lease' has been defined to include a counterpart, kabuliyat, an undertaking to cultivate or occupy, and an agreement to lease. The construction of this clause was the subject of several judicial decisions.
9. The leading case on the subject is ILR 47 Cal 485 ; (AIR 1919 PC 79). There, two actions were laid by the appellant to his Majesty in Council, one against Midnapur Zamindari and the other against the Government for recovery of possession of certain plots of land. The suit against the company was premised on terms that the company should recognise the title of the plaintiff bull should be allowed to remain in possession of the property as lessee and that the properties forming the subject-matter of the other suit should be granted a Jote settlement in the event of her succeeding in that suit.
Eventually, when the suit was decreed, the appellant refused to fulfil the terms of the compromise. This led the company to file a suit for specific performance of the agreement embodied in the compromise petition. The main defence to the action was that the compromise was unenforceable for the reason that it was not registered as required by the relevant provisions of the Registration Act. This contention was repelled by their Lordships in the view that the document in question did not create any immediate and present demise in the company. The rule was stated by there Lordships in the following words :
'xxxxx, the Registration Act of 1908 provides that 'lease' includes an agreement to lease and by Section 17 enacts that leases must be registered, the penalty for non-registration being imposed by Section 49, which provides that, if not registered, no document shall affect immoveable property which it comprises or be received as evidence of any transaction affecting such property. If the document in question can he regarded as a lease within the meaning of this definition it could not be received in evidence. Their Lordships are of opinion that it cannot be so regarded. An 'agreement for a lease' which a lease is by the statute declared to include, must, in their Lordships' opinion, be a document which effects an actual demise and operates as a lease.
They think that Jenkins C.J.. in the case of ILR 37 Cal 808 correctly stated the interpretation of Section 17 in this respect. 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 even* 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 for a lease', 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.'
In this decision the dictum of Jenkins C. J., in ILR 37 Cal 808 was approved. In the latter case the plaintiffs sought declaration of their right to a patta for a share in some lands and for possession thereof. The claim was based by the defendants on various grounds but in the appeal the controversy was confined to the question whether the 'solehnama' which was foundation for the suit was admissible in evidence. Jenkins, C.J., who delivered the opinion of the Court upheld the pleas of the plaintiffs that the document did not amount to a lease for the reason that it only created a right to obtain another document which alone was contemplated to operate as an actual demise. The learned Judge thought that the document was merely an agreement to create a lease at a future data the (terms of which were to be defined by a document to be executed in future.
10. Sri Ramamurthy, the learned counsel for Hie appellant seeks to bring the present case within the ambit of these rulings. His contention is that the document by itself did not form the transaction and as such it was only an agreement between the parties that some time later and on fulfilment of certain conditions a permanent lease was to be granted to the appellant. It was also urged by him that the Full Bench ruling in ILR 35 Mad 63 which laid down the proposition that an agreement to execute a sub-lease and get it registered at a future date, whether possession was given to the lessee or not, was a lease within the meaning of Section 3 of the Indian Registration Act of 1877 corresponding to Section 2(7) of the present Act requiring registration under Clause 1(d) of Section 17, is no longer good law in view of ILR 47 Cal 485 : (AIR 1919 PC 79).
11. Before we examine the soundness of this contention with reference to the terms of the document we shall also deal with the cases referred to by the counsel for the appellant. In Valiya Kalyamani v. Krishna Nambiar, AIR 1927 Mad 699 Ramesam. J., ruled that an agreement between the parties for a renewal of 'kanom' did not amount to an agreement to lease for the reason that the parties intended that the document should not operate as a present demise till the payment of a particular sum of money. The ratio of this ruling is that the demise was intended to come into existence only on the happening of some contingent event and the parties did not want that it should operate as a present demise,
Suleman v. P. N. Patel, AIR 1933 Bom 381 Illustrates the same principle, namely, that if agreement Is to grant a lease in future it would not constitute an agreement, to lease within the scope of Section 2(7) of the Indian Registration Act. In that case, the defendant wrote to the plaintiff agreeing to take a flat for five years commencing from a certain day. Since on the relevant date the plaintiff had not decided which flat he would let to the defendant it was decided by Justice Wadia that the latter did not create a present demise of either the one or the other flat and consequently it was not an agreement to lease requiring registration. Trivenibai v. Leelabai, AIR 1955 Nag 170 belongs to the same category. On a reading of the whole document, the learned Judge came to the conclusion that the document was primarily meant to evidence payment that was made and was not meant to effect an actual demise in the property concerned.
12. Kanti Chandra v. Brojendra Mohan, AIR 1929 Cal 186 does not carry the appellant any farther. There, an agreement was entered into for leasing certain properties after calculation of the area of the land and for fixing the rent after measurement thereof. Pursuant to this agreement the intending lessee was put in possession of the land not for its immediate use but for clearing the jungle so that the land could be measured. In a suit for rent the question arose whether the agreement was inadmissible in evidence, not having been registered. It was answered in the negative as it was felt that the agreement was to lease the property on certain conditions such as clearing the jungle, for measuring the land, fixing the rent etc., and that there was no present right created in the land in favour of the proposed lessee.
13. It is seen that in all these cases, the instrument in question was found to be not a lease for the reason that the terms and the surrounding circumstances clearly indicated that the parties did not intend to effect a present demise in the immovable property by and under that document. If the intention of the parties as could be collected from the words of the instrument was that they should take effect as an actual demise, there could be little doubt that the instrument would constitute an agreement to lease, so as to attract Section 17(1)(d) read with Section 49 of the Registration Act.
In Purmanand Das Jiwandas v. Dharsey Virji, ILR 10 Bom 101, the opinion expressed by Sargent, C.J. and justice Bayley is that of the document tends to create a present interest although the agreement contemplated the execution of a formal document at an early date it needs registration. iT was observed that it was the paramount intention that could be gathered from the instrument itself that should prevail. The view taken in Sanjib Chandra Sanval v. Santosh Kumar Lahiri, ILR 49 Cal 507: (AIR 1922 Cal 436) is to the same effect.
14. There is an exhaustive discussion on the subject in Ramjoo Mahomed v. Haridas Mullick, ILR 52 Cal 695 : (AIR 1925 Cal 1087). Justice Page who decided the case had collected all the cases bearing on the subject. There, a suit was filed for specific performance of an alleged agreement embodied in two letters to lease a particular premises in Calcutta, that was in possession of the plaintiff and in the alternative for damages for breach thereof. The contents of the letters were as follows:
'I do hereby agree to take by our personal settlement your house and premises No. 7, Bowbazar street on a lease for 21 years under the following terms:'
The defendant replied:
'I do confirm your letter dated 19-11-1921. All terms will be settled on the agreement.' These two letters were interpreted by the learned Judge as containing terms amounting to a present demise of the said premises and creating an immediate interest therein. In his judgment reference is made to several English decisions touching the topic. In Maldon's Case (Doe d. Jackson v. Ashburner), (1793) 5 TR 163 at p, 167, the words 'you shall have a lease of my lands in D for twenty one years, paying therefor 10 shillings per annum, make a lease in writing and I will seal were interpreted as making a good lease by parol, and that the making of it in writing was but for further assurance. The proposition that a document would operate as a present demise though it has to take effect in future on either of the two dates mentioned therein whichever first happened after the lessor recovered the land in question from the person then in possession is contained in Barry v. Nugent. (1782) 3 Doug (KB) 179. The observations of Lord Ellenborough in Doe d. Walker v. Groves, (1812) 15 East 244, which are instructive have been extracted by the learned Judge:
'If by the terms of this agreement it had been provided that there should be no entry until a lease was executed I should have had considerable doubts. But as the case stands it does appear to me that the instrument must be considered as a present lease from 5-4-1798. From that period it Has the operation of a demise, not depending upon the contingency of the party's granting a future lease, which was the stipulation only for the better security of the lessee. It falls, therefore, within the case of Poole v. Bentley, (1810) 12 East 168; and in (1782) 3 Doug (KB) 179 the Court thought, notwithstanding it was agreed that leases with the usual clauses were to be drawn, that! such a stipulation did not affect the words of present demise. Here the lessee might never have the benefit of an executed lease; in the interim, therefore, this was an agreement to operate as a present demise, commencing immediately from the 5th of April; though a more formal lease was afterwards to be granted.'
It is unnecessary to multiply citation on either side since the cases referred to above lay down in clear terms the rule that should govern the interpretation of Section 2(7) of the Registration Act. The principles that emerge from the various authorities ace these.
If the conditions of a contract to lease are fully ascertained and if ie is intended that the right to possession should vest in the lessee either immediately if the term is to commence at once or in future, if it is to come into operation subsequently, the instrument has to be regarded as a lease. 'Such a lease takes effect from the date fixed for the commencement of the lease without the necessity of actual entry.' If, on the other hand, it is only an agreement binding one of the parties to the agreement to lease and the other to accept it, it is only an executory contract since the legal relationship of landlord and tenant would not be created by and under the instrument. Thus, the test is whether the agreement itself would confer a legal right or whether the execution of another instrument which give a legal right was in the contemplation of the parties. It should be construed to be a lease if the present demise is to be inferred from the language employed. The fact that it contains a stipulation for the execution of a formal document subsequently would not make any difference if the covenants mentioned therein are to become binding at once. If, on the other hand the terms are not fully ascertained and some at lease of the essential conditions are to be settled at a later stage even if the words used indicate a present demise, it would not be a lease as defined in In Section 2(7). It is the dominant intention of the parties that should be gathered from the language in which the document is couched that should be the criterion in deciding whether a particular instrument is an agreement to lease or merely an agreement to grant a lease m future creating a right in a party to obtain a document under certain circumstances or on the happening of a certain contingency.
15. The rules stated by Readman in his bookon 'Landlord and Tenant' in paragraphs 50, 51 and52 are in conformity with the principles indicatedabove.
16. We do not also accede to the proposition that ILR 35 Mad 63 (FB) was overruled by Hemanta Kurmari Debi v. Midnapur Zamindari Co., ILR 47 Cal 485: (AIR 1919 PC 79) on the issue as to whether an agreement to lease would require registration even if possession of the property was not given to the proposed lessee. For one thing, no reference was made by the Privy Council to this ruling, nor could it be said that by necessary implication ILR 47 Cal 485: (Am 1919 PC 79) has nullified the effect of ILR 35 Mad 63 (PB) on this aspect of the matter. Further we are not here concerned with the answer given by ILR 35 Mad 63 (FB) on the question as to whether a lease requiring registration but not registered is receivable in evidence in a suit for specific performance of a contract or for damages for breach of contract. It was only on this issue that the majority of the Full Bench of five Judges in Muruga Mudaliar v. Subba Reddiar, : AIR1951Mad12 expressed the opinion that ILR 35 Mad 63 (FB] should be overruled. On the other point, it was not overruled; on the other hand, it is stated specifically by Justice Viswanathan Sastry that it is still good law on the question whether such an agreement required registration or not. However, that does not help the appellant in any way for she reason that the present problem has to be solved Only with reference to the question whether the document has the effect of creating an actual demise or not.
17. Bearing in mind these principles, we shall proceed to scrutinise the terms of Ex. A-6 and consider their effect on the relevant provisions of the Registration Act. The contents of Ex. A-6 are as follows;
'We have agreed to permanently lease out to you the following lands situated in Kondadadi village in Chipurupali Sub-district belonging to us and which are in our enjoyment by virtue of purchase by individuals Nos. 1 and 2 from Kolanavadai Suryatnarayanaraju and others and from Gachamatta Peda Venkataraju and others viz., lands in Yeguvapoonu Istuva wet and dry lands in Sankarapuvani Istuva, wet and dry lands, under Routuvani tank and Chintapoonu tank istuva, together with all the trees like palm, margosa, mango etc., thereon and inclusive of mango usufruct, water rights! and fishery rights, with the stipulations that you should duly pay us a fixed cist of Rs. 1800/- annually, that you should evict the tenants from all those lands and take possession of the entire extent according to the sale deeds and get them cultivated granting sub-leases to tenants of your choice bearing the expenses thereof yourself, that you should yourself without any concern to us, look to the repairs and improvement of these lands, that you should pay the circar taxes deducting the same from out of the cist payable to us, that in regard to this permanent lease to you, you should deposit with us Rs. 12,000/- (rupees twelve thousands only), that interest thereon at Rs. 0-6-0 per cent, per mensem might be deducted from the cist payable to us and the balance alone need be paid. Should the annual cist for any year be not properly paid but default committed the stipulations as to the permanent lease are to be cancelled, and you should forfeit the deposit and surrender the lands to us, It is also agreed that you should look to she disputes and to the repairs etc., of these lands yourself reaping the benefit by an act of State or Vis Major. The lease is to be got written (on a stamp paper) and registered within a month from this date. As regards the cist due to us from the ryo's of these lands for this year pardhiva we shall transfer the Kadapas to you and on your responsibility you will recover the said cist from them yourself and debiting the public court expenses incurred in respect thereof against us, you will pay us the balance, and this transaction is unalterable. This unalterable document letter (Dastavesu Uttaram) is executed out of our free will.'
It is seen that this document contains the whole bargain and the parties had agreed on all the cardinal points of the contract and no essential particulars remained to be settled at a future date. The description of the document has also to be borne in mind although the label that is given to an instrument docs not furnish conclusive test in determining the nature of the document. In the preamble it is described as a document letter (Dastavesu Uttaram) and at the end of the document the descriptsion given is 'unalterable document letter.' That a finality is given to the transaction appears from he recitals ''Sthirachittamnto and Moonohpoortigo' which expressions are meant to convey the impression that it was a solemn, document. Sri. Ramamurthy invites us to hold than this document merely conferred a right upon the proposed lessee to obtain a grant of the lease on fulfilment of certain conditions by him on the grounds that the deposit of Rs. 12,000/- was a condition precedent to the creation of a lease, that no time was fixed for the coming into operation of the lease and that lastly it contained a stipulation that the lessor should transfer the kadapas executed in his favour by the previous tenants. We do not think we can give effect to this argument. Whatever might be the force of the argument, if the condition regarding the deposit of Rs. 12,000/- is a pre-requisite to the grant of a lease, it loses all force if it is regarded as one of the several terms and conditions of the agreement. A reading of the concerned recital leaves no room for doubt in our minds that it was only one of the terms of the agreement and was not a condition precedent as contended for by the appellant. Neither the fact that a lease comes into effect at a future date or on the termination of the existing lease nor the fact that a formal document shall be executed at a subsequent stage is conclusive in deciding the nature of the document. If it was intended that the transaction should be kept in abeyance till the execution of a formal document, it may be said that there was no concluded agreement to lease the properties. That is not the position here. It is plain from a reading of the document that the dominant intention of the parties was that it by itself should be regarded as the transaction. The circumstance that the lessor was required to transfer the kadapas executed by the previous tenants, is on the other hand a clear indication that immediate effect should be given to the document and that the lessee should he given as much possession as the property was capable of, having regard to the fact that a permanent lease was given under the agreement. That this is so is manifest from the admission of the appellant himself in his deposition in Exs. B-6 and B-6(a).
'We had a final discussion and the document was written on 30th. As Vizianagaram was far away, the defendants did not want the agreement to he written on stamp paper. Nothing remains to he done by the defendants after the execution of Ex. P-1. I have to pay them money and take possession of the lands.'
18. These admissions answer the contention of the counsel for the appellant that the deposit of Rs. 12,000/- was a condition precedent to the granting of a lease and that the parties contemplated that nothing could be done till the deposit was made and that the execution of a formal document was essential before the parties could fulfil the terms of the contract. In these circumstances, we hold that Ex. A-6 is a lease within the definition of Section 2(7) of the Indian Registration Act requiring registration and Is hit by Section 17(1)(d) and Section 49 of the Indian Registration Act.
(This Appeal coming on for final hearing on Friday the 3rd July, 1959 after the expression oi opinion by the Full Bench and the Appeal having stood over for consideration till this day, the Division Bench delivered the following):