1. The facts of this case as found in both courts are simple, but the question of law is one of some importance. By a duly registered sale-deed, the defendant, Musammat Salamat-uz-Zamin, about the 14th of August, 1905, sold and transferred to one Muhammad Ali Jan Khan (inter alia) the two and half biswansis of land now in suit. On the same date Muhammad Ali Jan Khan by another duly registered sale-deed, sold and transferred to Musammat Salamat-uz-Zamin (inter alia) a certain shop in Bulandshahr. The value of the shop on the said date has been found to have been Rs. 125, and the value of the land now in suit has been found to have been Rs. 100. Shortly after these two sale-deeds, Muhammad Ali Jan Khan and the defendant verbally agreed to re-transfer or to exchange these two properties which each had thus purchased from the other, and each remained in possession of what had originally been transferred by the deeds. Neither purchaser had any property in the district in which the property originally transferred to him by his deed was situate, and, although it is not found, and therefore is not material to any point we have to decide, it is probable that the original inclusion of the two properties in the deeds of sale was only with the object of defeating, or technically complying with, the registration law. From the date of the agreement to re-transfer, or exchange, the two remained in possession of the original properties, and treated them as their own. Muhammad Ali Jan Khan was a mukhtar. He obtained mutation of the other properties purchased by him from the lady, but not of the land now in suit. He died about five years afterwards, and at the date of his death the shop which he had agreed to take back in exchange, being still in his possesssion, was treated as part of his inheritance, and in February, 1911, was sold by his heirs to his widow, with the rest of his property in lieu of dower. In fact every thing was done as regards the property in suit and the shop which it was agreed to exchange for it, as though the exchange had been formally carried out, as it ought to have been, by a registered instrument under Sections 118 and 54 of the Transfer of Property Act (IV of 1882), except that there was no writing of any kind on either side. The plaintiffs, who are some of the heirs of Muhammad Ali Jan Khan and who sue in that capacity, now claim the land originally sold and transferred to him by the said deed. Both courts below are in agreement as to the facts above stated. The first court dismissed the suit. The lowe appellate court reversed this decision upon the ground that the exchange was 'not valid,' or in other words, that there was no transfer by a registered instrument and no delivery of possession. The question which we have to decide is whether under the general principles of law in this country a transaction of this kind, so acted upon by the parties, has become effectually binding upon them, in spite of the fact that the provisions of Sections 54 and 118 have not been complied with.
2. This question turns upon the further question whether the dicta of the Privy Council in Mahomed Musa v. Aghore Kumar Ganguli (1914) I. L. R., 42 Calc., 801 (817-18.) apply to this and other similar cases. In England if the question arose under the analogous case of the Statute of Frauds, and the contention was that no interest in the land had passed, because the contract not being in writing, did not comply with the provisions of the Statute, she plaintiff's position would be quite untenable. As to this the law has been well settled since Maddison v. Alderson (1883) 8. A C., 467., where Lord Selborne, with the concurrence of the other members of their Lordships' House said that in a suit founded on performance, or part performance, the defendant (in this case the plaintiff) is 'really 'charged' upon the equities resulting from the acts done in execution of the contract, and not (within the meaning of the Statute of Frauds) upon the contract itself. If such equities were excluded, injustice of a kind which the Statute cannot be thought to have had in contemplation would follow.'
3. The case in the Privy Council above mentioned arose out of some mortgage transactions of 1848, and 1871, respectively. Differences arose between the parties. A suit was brought and a compromise was reached by which the mortgage debts were to be paid off and the properties were to be legally conveyed by the mortgagor to the parties entitled to them in certain shares. A decree was made that the suit was decided in terms of the compromise and struck off. No conveyances were executed in completion of the contract of compromise, nor was the compromise registered. But it was acted upon by the parties for a period of from 30 to 40 years. The Privy Council held that, though the compromise and decree taken together might be considered defective or inchoate as a validly concluded agreement the acts, of the parties had been such as to supply all defects. It was strongly contended that the document of compromise being unregistered was inadmissible, that oral evidence was inadmissible that there had been no transfer, and that the acts of the parties conferred no title. In the judgement of their Lordships, delivered by Lord Shaw, it was pointed out that at that date no written conveyance was required by the law of India, and that the Transfer of Property Act, 1882, did not apply. But 'in view of the argument strongly pressed upon them their Lordships think it right to say,' that 'the laws of India and of England follow the same rule' and, following the principle of Maddison v. Alderson (1883) 8 A, C., 467., 'equity will support a transaction clothed imperfectly in those legal forms to which finality attaches after the bargain has been acted upon.'
4. In my opinion this is an authoritative statement of the law binding upon the courts in India, and applicable to the case, as the facts have been found now before us. Its binding effect can only be questioned in so far as it can be shown that there is some express statutory enactment inconsistent with it, and not present to their Lordships' mind. In my opinion Section 54 is not inconsistent with it and, moreover, it must have been present to their Lordships' mind. The defendant in this - case is not relying upon a document of transfer, but upon the complete performance of a contract for sale by exchange.
5. Of the most recent authorises in this country, in which this question of principle has arisen, there are some in which the view of the Privy Council has clearly been acted upon, and there are none which suggest any special feature of the law of India which would appear likely to have affected their Lordships' opinion if their attention had been drawn to it.
6. In Sumsuddin Goolam Husein. v. Abdul Husein Kalimuddin (1906) I. L. R., 91 Bom., 165. Jenkins, C.J., said that the chance of an heir-apparent succeeding was not transferable, and it could only be bound, if at all, by the application of the principles of equity, and that they could not be applied because the properly in question belonged to a category, the transfer of which was prohibited 7 altogether.
7. In Karalia Nanubhai Muhomedbhai v. Mansukhram Vakhatchand (1900) I. L. R., 24 Bom., 400. Jenkins, C. J., had given effect to the principle by holding that a judgement-debtor who had sold certain land and delivered possession thereof and been paid the purchase money, had no attachable interest, although there bad been no transfer by him within the meaning of Section 54. It follows logically from this decision that if he had lost all interest in the laud, his purchaser must have acquired it, though there was no transfer.
8. This case, and the case of Ram Bakhsh v. Mughlani Khanam (1903) I. L. R., 26 All., 266., to which reference will be made hereafter, were definitely said not to be good law in the Madras Presidency by the court which decided Chidambara Chettiar v. Vaidilinga Padayachi (1903) I. L. R., 38 Mad., 519., following the so-called Full Bench decision in Madras in Kurri Veerareddi v. Kurri Bapireddi (1906) I. L. R., 29 Mad, 336. This latter decision was the authority most relied upon by the respondent in the present appeal. It would, therefore, appear that there is a conflict of opinion, upon the application of the principles above stated to cases in India, between the Madras and the Allahabad decisions, and the question really is whether the more recent pronouncement of the Privy Council has solved this doubt.
9. The Madras case was decided by the Chief Justice, and two Judges. The Chief Justice evidently entertained considerable doubt. In that case there was an agreement for sale, followed by delivery of possession to the purchaser and payment of the price. It was held that Section 54 was imperative, and unless complied with, equity could not uphold the transaction. The Chief Justice referred to the considerations of public policy, namely, the intention of the Legislature to minimize the chances of litigation, and the opportunity for perjury. These are equally applicable, if relevant, to the English Statute of Frauds. It is not easy to follow the distinction drawn by the learned Chief Justice between the English and the Indian law. He takes the view that the courts in India are under no obligation to engraft the English decisions upon the Transfer of Property Act, and discusses the principles of the interpretation of Statutes. But the question is not one of the interpretation of the Statute. There is admittedly no 'transfer' within the meaning of the section. But the section does not prohibit the vesting of title to or interest in property unless effected by a formal transfer. The cases which have dealt with the matter upon the principle that there can be no estoppel in the case of a statutory prohibition, are open to the same criticism, as the case of the defendant before us does not rest upon the doctrine of estoppel as applied to an admittedly invalid transfer. The learned Chief Justice points out that at) that date (1904) the Indian authorities were in conflict, and it is not therefore profitable to examine them in detail. There are, however, four cases in which the principle now contended for on behalf of the appellant has been applied by this High Court, Begam v. Muhammad Yakub (1894) I. L. R., 16 All., 344., by a Bench of six Judges (of whom one dissented), vide the judgement of Edge, C. J., on p. 350; Ram Bakhsh v. Mughlani Khanam (1903) I. L. R., 26 All., 266., in which it was held that Section 54 did not apply; Muhammad Talib Husain v. Inayati Jan (1911) I. L. R., 33 All., 683, in which the section was not referred to, and the recent case of Jhamplu v. Kutramani (1917) I. L. R., 39 All., 696., decided by my brother Tudball and myself. In the latter case there had been a relinquishment by the acts of the parties, which had originally been attempted to be carried out by an unregistered document, and adverse possession for the statutory period. The question was whether the unregistered document was admissible to explain the possession. The same point had been taken in the Privy Council in Mahomed Musa v. Aghore Kumar Ganguli (1914) I. L. R., 42 Calc., 801. Admittedly there had been no transfer, but we held that the document was admissible, and that the evidence supported the title of the party in whose favour the informal relinquishment had been been made and the staute of limitation had run. I adhere to the view I then expressed that the judgement of the Privy Council as to the law in India was decisive upon the point.
10. Although it is not customary to refer to the works of living authors, I observe that in discussing this question Dr. Gour in the fourth edition of the 'Law of Transfer' Vol. I, p. 602, takes the other view, and referring to Karalia Nanubhai Mahomedbhai v. Mansukhram Vakhatchand (1900) I. L. R., 24 Bom., 400. and Ram Bakhsh v. Mughlani Khanam (1903) I. L. R. 26 All., 2(sic)6. says that 'these cases are founded on no intelligible principle and if accepted would have the effect of overriding the clear provisions of the law.' This is rather severe on the Privy Council, and is supported in the main by reliance upon the Madras cases cited above However, in the addenda to Vol. III contained in the reprint which brings the citation of cases up to 1916, he refers to his notes above mentioned and says:---'but see Mahomed Musa v. Aghore Kumar Ganguli' (1914) I. L. R., 42 Calc., 801. indicating that in his view the Privy Council has in that case decided otherwise.
11. From all these authorities it appears that there is nothing inconsistent in India with the rule of law in England on this matter, unless it be Section 54 of the Transfer of Property Act, and that this difficulty has been removed by the dicta of the Privy Council which are in my opinion binding upon us.
12. The question of limitation was not raised in the case in the Privy Council, and is not raised in the suit now under appeal. It is clear, however, from the judgement delivered by Lord Shaw that he was dealing with the period which had elapsed only as one of the details of the history, and not as a matter of principle.
13. This view is not inconsistent with the decision of the Privy Council in Maung Shwe Goh v. Maung Inn (1916) I. L. R., 44 Calc., 544. Even accepting the dictum in the head-note, which, however, goes far beyond what was said by the Lord Chancellor, the point in that case was, what were the rights of the parties under a decree for specific performance of a contract which had not been performed. Under an inchoate contract which remains unperformed in India, Section 54 of the Transfer of Property Act prevents the purchaser being treated as the owner in equity of the estate as he would be treated in England.
14. In my opinion Mahomed Musa v. Aghore Kumar Ganguli (1914) I. L. R., 42 Calc., 801. in effect overrules Kurri Veerareddi v. Kurri Bapireddi (1906) I. L. R. 29 Mad., 333. and is decisive of this appeal.
15. I concur in the proposed order. I feel it incumbent on me to say that I am unable to apply the dicta of their Lordships of the Privy Council in Mahomed Musa v. Aghore Kumar Ganguli (1914) I. L. R., 42 Calc., 801., to the facts of the present case so as to hold that there has been a valid transfer of the property in suit by way of exchange. Their Lordships were dealing with a suit to redeem a mortgage, and they held that the mortgage bad long before been extinguished by act of parties. It is nowhere laid down in the Transfer of Property Act (IV of 1882), that redemption of a mortgage can be effected only by a registered instrument. Where the statute requires that a particular kind of transfer (as for instance a mortgage) shall be effected by a particular kind of instrument, it seems to me that their Lordships have always enforced such a provision with great stringency, as for instance in the importance attached to the word 'attested' in Section 59 of the Transfer of Property Act.
16. I think therefore that on the facts as found I must regard the plaintiffs as being in law the owners of the property in suit. It does not follow that they are entitled to present possession as against the defendants, who are obviously not mere trespassers. There has been a contract of exchange, partly executed by what must be regarded as equivalent to mutual delivery of possession; all that was required for complete execution of the contract was a registered instrument. There is no reason why the law should not hold the parties bound by the contract so far as it was carried into effect and by the equities arising out of their own acts.
17. The contract between the parties clearly involved this agreement, that the defendants should not be disturbed in their possession of the Jafarabad property, so long as Muhammad All Jan Khan or his successors retained the Bulandshahr shop, dealt with it as their own and did not make it over to the defendants. I do not think the plaintiff's are by law estopped from calling themselves the owners of the Jafarabad property; but I think they are bound, under the circumstances, by an agreement which the court will recognize and enforce, not to eject the defendants from the same. The case for the present defendants is stronger than that which found favour with a Bench of this Court in Ram Bakhsh v. Mughlani Khanam (1903) I. L. R., 26 All., 226. I agree therefore that the decree of the lower appellate court must be set aside and that of the court of first instance restored. The plaintiffs will pay all costs throughout.
By The Court.
18. The order of the Court is that this appeal is allowed, the decree of the lower appellate court is set aside and that of the court of first instance is restored. The plaintiffs will pay all costs throughout.