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A. Swaminatha Mudaliar Vs. S.V. Ramaswami Mudaliar - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Reported inAIR1921Mad72; (1921)40MLJ161
AppellantA. Swaminatha Mudaliar
RespondentS.V. Ramaswami Mudaliar
Cases ReferredChitravelu Servai v. Samanna Aiyer
Excerpt:
.....claim the learned judge was of opinion that as the correspondence at best only amounted to an agreement to lease and as such an agreement was inadmissible in evidence for want of registration, the defendant was not entitled to have that considered in the suit. 53 should no longer be regarded as good law; if we turn back to the earliest registration act, we still find a 'lease' includes 'an agreement to lease'.the framers of the transfer of property act attached less importance to this principle of equity in enacting that an agreement to sell did not create an interest in the property, and their failure to enact a similar provision in respect of leases was probably due to a desire to leave the law as contained in the registration act untouched as it has withstood the test of time for..........judge himself seems to have proceeded upon the footing that there was a completed agreement to lease. the question as to whether this agreement amounted to a present demise will depend to some extent at least upon the evidence as to when the previous lease terminated and whether the defendant continued to occupy the premises on the strength of the correspondence that passed between the parties. the only question that need be decided at present is whether the learned judge was right in holding that an agreement to lease should under all circumstances be registered and whether the view taken in narayanan ghetti v. muthiah servai i.l.r.(1910) m. 63 should be followed. the difficulty arises because of the decision of the judicial committee in hemanta kumar debi v. midnapur zemindari.....
Judgment:

John Wallis, C.J.

1. I agree that the case should go back. The words ' agreement to lease ' which were included in the definition of ' lease ' at least as far back as the Registration Act of 1866, long before the enactment of the Transfer of Property Act, and were apparently, intended to guard against the possibility that courts in India might otherwise extend the same degree of recognition to agreements to lease that is extended them pursuant to equitable principles in England, have apparently received a restricted construction in the recent decision of the Privy Council in Hemanla Kumari Debi v. Midnapur Zemindari Company which approves of the construction put upon them by Sir Lawrence Jenkins, Chief Justice in Panchanan Bose v. Ghandicharan Misra I.L.R. (1910) C. 803 ; and it appears necessary to reconsider in the light of these decisions and on the facts of the case whether there was here any agreement to lease within the meaning of the definition in Section 2 of the Indian Registration Act. If there was, we are still bound by the decision of the Full Bench in Narayanan Chelly v. Muthiah Servai 21 M.L.J. 44.

Seshagiri Aiyar, J.

2. This is a suit in ejectment. The defendant had a lease of the premises, which expired in the beginning of October or November 1919. Negotiations began for the renewal of the lease. The parties failed to agree. Thereupon the plaintiff gave notice to terminate the tenancy and brought this suit.

3. The defendant filed a counter claim in which he asked that damages should be awarded to him for failure to give the lease as agreed upon.

4. Mr. Justice Kumaraswami Sastriar came to the conclusion that, as there was no registered lease deed, the plaintiff was entitled to possession. On the counter claim the learned Judge was of opinion that as the correspondence at best only amounted to an agreement to lease and as such an agreement was inadmissible in evidence for want of registration, the defendant was not entitled to have that considered in the suit. Hence this appeal.

5. Mr. Venkatasubba Rao argued a preliminary question that as the correspondence did not evidence a completed contract the learned Judge was right in dismissing the counter claim. Reading the letters that passed between the parties, it seems to me that Exhibit G, the reply of the defendant, dated 6th October, 1918, is a valid acceptance of the proposal contained in Exhibit. The sentences that follow containing a request that the lease should commence on a particular date and terminate on another date do not affect the acceptance contained in the early portion of the letter. The learned Judge himself seems to have proceeded upon the footing that there was a completed agreement to lease. The question as to whether this agreement amounted to a present demise will depend to some extent at least upon the evidence as to when the previous lease terminated and whether the defendant continued to occupy the premises on the strength of the correspondence that passed between the parties. The only question that need be decided at present is whether the learned Judge was right in holding that an agreement to lease should under all circumstances be registered and whether the view taken in Narayanan Ghetti v. Muthiah Servai I.L.R.(1910) M. 63 should be followed. The difficulty arises because of the decision of the Judicial Committee in Hemanta Kumar Debi v. Midnapur Zemindari Company 37 M.L.J. 525. In this Court, acting on Narayanan Ghetti v. Muthiah Servai I.L.R. (1910) M. 63 , it was held in Streeramulu Naidu v. Ramaswami Mudaliar : AIR1918Mad393 that an unregistered agreement to lease should not be considered even with reference to a question for damages for breach of contract. It is therefore necessary to examine with some minuteness the pronouncement of the Privy Council on this question. Hemanta Kumari Debi v. Midnapur Zemmdari Company 37 M.L.J. 525 , was an appeal from the decision of Mukerjee and Beachcroft, JJ. in Hemanta Kumari Debi v. Midnapore Zemindari Company (1914) 19 C.W. N. 347. Mr. Justice Mukerjee whilst pointing out that an agreement to lease was not affected by Section 17, ii (5) held that it was not excluded by Section 49 of the Act when a question relating to specific performance of the contract arose for decision. Mr. Justice Beachcroft put on a slightly different ground. Lord Buckmaster in delivering the judgment of thePrivy Council referred to the definition section and held that an agreement to lease was included in the term 'lease.' His Lordship also held agreeing with Mr. Justice Mukerjee, that Section 17, ii.; (s) was inapplicable. Then he proceeded to say that ' if the document in question can be regarded as a lease within the meaning of this definition it could not be received in evidence. Their Lordships were of opinion that it cannot be soregarded. 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 Panchanan Bose v. Ghandicharan Misra I.L.R. (1910) C 808 , correctly stated the interpretation of Section 17 in this respect.' Turning to Panchanan Bose v. Chandicharan Misra I.L.R(1910) . C 808 , we see that the Chief Justice held that the document he was considering did not come within Section 17, 1(d) of the Registration Act and that consequently it was affected by the rule contained in Clause 11(5). In fact the conclusion was that unless an agreement to lease had the effect of operating as an immediate demise of the property it need not be registered. It may be urged that this view practically destroys the difference between a lease and an agreement to lease but apparently the position created by the definition section has become very anomalous and Courts have been at pains to devise a way out of the difficulty; and as the solution has emanated from such a high authority as Sir Lawrence Jenkins and has the approval of the Judicial Committee I feel that we should accept it unreservedly. I am not prepared to regard the pronouncement of the Judicial Committee as an obiter dictum which is open to us to ignore having regard to the Full Bench decision of this Court. The question was directly before the Board and they pointedly drew attention to the decision of the Chief Justice of the Calcutta High Court on the matter. I feel no compunction in respectfully accepting this view and in holding that Narayanan Chetty v. Muthiah Servai I.L.R.(1910) M. 53 should no longer be regarded as good law; otherwise it would result in perjured evidence being left in to prove a suppositious oral agreement in such cases.

6. In the Transfer of Property Act, the legislature has expressly provided that an agreement to sell does not confer any interest in the property. There is no reason, justice, or principle why an agreement to lease should be on a higher footing than an agreement to sell. Apparently as was suggested by the learned Chief Justice in the course of the argument the definition section in the Registration Act included ' an agreement to lease' in the term ' lease ', on the principle of English Courts that equity regards that as done which ought to be done. If we turn back to the earliest Registration Act, we still find a 'lease' includes 'an agreement to lease'. The framers of the Transfer of Property Act attached less importance to this principle of equity in enacting that an agreement to sell did not create an interest in the property, and their failure to enact a similar provision in respect of leases was probably due to a desire to leave the law as contained in the Registration Act untouched as it has withstood the test of time for a considerable period. If I may say so with respect, there is an obvious inconsistency between the position of sales and leases and it is desirable that both of them should be placed on the same footing by the legislature. However that may be, we must now exclude from the definition of agreements to lease all instruments which do not operate as an immediate demise. Therefore the decision of the learned Judge should be reversed and the case should be sent back to him for further consideration.

7. The question as to whether, in the present case, the agreement amounts to a present demise will depend to some extent upon the evidence that may be adduced. On the correspondence as it stands, without knowing when the old lease terminated and whether the defendant was in possession when notice to evict him would take effect, under the old lease or under the new arrangements, it is not possible to decide in appeal. Therefore the case must go back to the learned Judge.

8. There is another question of equal importance, that is, whether, even supposing that the agreement to lease contained in the correspondence did amount to a present demise because the contract has to be spelled out of the correspondence that passed whether it should be registered. There has been a conflict of opinion on this question in this court. There is first of all the decision of the Judicial Committee in Port Cannig Land Investment Reclamation and Dock Co. v. Smith which was given under the old Registration Act. There has since been a change in the language of the Act to which Mr. Justice Napier has drawn attention. How far this change impairs the authority of the ruling of the Judicial Committee has to be considered. Probably it may be necessary to refer the question for the decision of a Full Bench in view of the two decisions of this court, one in Morgan and Son v. Fernandez : (1916)30MLJ519 , and another in Chitravelu Servai v. Samanna Aiyer (1916) 85 I.C. 105. Under these circumstances, I do not think it desirable to express any decided opinion on this question. 'Costs to abide.


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