1. The facts relevant to the answer of the question propounded to us in this case can be very briefly stated. The predecessor-in-title of the plaintiff, in return for the allotment to him of a number of shares in the Vizagapatam Sugar Development Company, Limited, handed over certain lands, theretofore his property, to the company for the purpose of their business in the year 1907. No registered sale deed was ever executed embodying the transaction, but the company has been in possession of the lands ever since that date. It is now sought to recover these lands on the ground that no title passed to the company in the absence of a registered document. Two main answers were made; first, that as the defendant Company had a valid contract enforceable by specific performance, they could rely upon that by way of defence to the suit; secondly, that they could rely on their possession as such part performance of the contract as would take it out of the operation of the statute. There can be no doubt that the latter question has been directly referred to us; as to the former, it is more doubtful, though the reference of the learned Judges to Kurri Veer a Reddi v. Kurri Bapi Reddi I.L.R. (1906) M. 336 would seem to suggest that it was in their minds.
2. On the question of part performance, there can be no doubt that there is an express authority of this Court in Ramanathan v. Ranganathan I.L.R. (1917) M. 1134 to the effect that Section 54 of the Transfer of Property Act (IV of 1882) by implication excludes any right to set up an equity, such as possession in pursuance of a subsisting and enforceable contract of sale, against a registered title, even as between the parties to such contract.
3. With respect, we think that such a construction involves a confusion of thought between two essentially different conceptions. What the statute enacts is that a document of title to land - a conveyance in short - can only acquire validity, can only in fact be provable, on registration. So far from forbidding unregistered contracts for the sale of land, it expressly recognizes their existence, denying to them only the creation of an interest in or charge upon the land itself - and therefore leaving their contractual effect as between the parties to the contract unimpaired. Were there no other guide to us we should be prepared on principle to hold that the decision of the majority of the learned Judges in I.L.R. 40 Mad. 1134 was erroneous. In fact our opinion is fortified by two other considerations. In the first place without saying that the decision under review is definitely and necessarily in conflict with the two rulings of the Privy Council that have been cited to us Mahomed Musa v. Aghore Kumar Ganguli I.L.R. (1944) C. 801 and Venkayamma Rao v. Appa Rao I.L.R.(1916) M. 509 (P.C.), it is clearly contrary to the indicated trend of their Lordships' opinion. In the next place, every other Court in India has taken the opposite view and we cannot but attach great weight to that fact.
4. It is unnecessary to set out the cases, which are all cited in the Order of Reference. Our answer to the question propounded to us is therefore in the negative, and it is so because we are satisfied that 40 M. 1134 was wrongly decided.
5. We have already intimated that we do not feel clear whether the question has been definitely referred to us as to whether the possession of a proved right to specific performance would afford a good defence to a suit such as the present. Here again, there is an express ruling of a Full Bench of this Court in 29 Mad. 336, to the effect that it cannot. Notwithstanding our view that the two defences, though sometimes they may coincide, are in essnce logically distinct, and that only one has been categorically referred for our opinion, it falls to be observed that the learned judges who referred this case to us conceived I.L.R. 29 Mad. 336, to be an authority on the question referred, unless it was supposed to be overruled by the subsequent pronouncements of the Privy Council. More over, the learned Judges who gave the prevailing opinions in I.L.R. 40 Mad. 1134, expressed themselves as following the Full Bench decision and treated it as a relevant authority. We therefore, think it right to say that the learned Judges who decided the earlier case laboured under the same misconception as those whose opinion prevailed in the later one. They treated a prohibition of unregistered conveyances as being a prohibition of unregistered ^contracts, and neglected a very clear expression of opinion to the contrary in the Privy Council in the case of Immudipattam Thirugnana S.O. Kondama Naik v. Periya Dorasami , as being an obiter dictum. Strictly speaking, that may be so; it is sufficient for us to say that we respectfully agree with it, and consider that the case in I.L.R. 29 Mad. 336 was wrongly decided. We desire to add that if the learned referring Judges are to be taken as having impliedly referred this point to us, we are not clear whether they have determined that the facts exist which would make good that plea, or whether they are only inviting an expression of our opinion as to whether if substantiated by the facts such plea would in law be a good answer to the suit. If the latter course was intended to be adopted, we deprecate the practice of submitting a hypothetical question of law to a Full Bench before the Divisional Bench has satisfied itself that the facts really exist which would necessarily raise that question. That would no doubt entitle us to refuse to consider this matter without a direct finding that on the facts the plea, if valid in law, is established. However, the inconvenience caused to the parties by a fresh reference back is very great, and Mr. Narayanamurti was content to argue the point before us, provided it was left open to him to contend before the Divisional Bench that the facts do not show that the Appellant Company now possess an enforceable equity to specific performance. On this understanding we have no hesitation in saying that in our opinion the decision in I.L.R. 29 Mad. 336, is contrary both to principle and authority and should no longer be followed in this Court.