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Ramachandra Naidu and anr. Vs. Ramayya Naidu - Court Judgment

LegalCrystal Citation
SubjectContract
CourtChennai High Court
Decided On
Case NumberSecond Appeal No. 362 of 1964
Judge
Reported inAIR1969Mad418; (1969)2MLJ151
ActsSpecific Relief Act, 1877 - Sections 21; Registration Act, 1908 - Sections 49; Transfer of Property (Amendment) Supplementary Act, 1929; Contract Act, 1872 - Sections 10
AppellantRamachandra Naidu and anr.
RespondentRamayya Naidu
Appellant AdvocateS. Vaidyanathan and ;R.D. Indrasenan, Advs.
Respondent AdvocateS. Seetharama Iyer and ;S. Rajarama Iyer, Advs.
DispositionAppeal dismissed
Cases ReferredValambalachi v. Duraiswami Pillai.
Excerpt:
.....mortgage deed in suit. i agree to sell the schedule mentioned properties to you and execute the sale deed on a proper stamp and get it registered). a-2 (if i fail to do so, you should treat this letter itself as a sale deed, get into possession of the properties and enjoy them with rights of gift and sale etc). this is the letter executed with my consent. however, that in view of the following sentence (and marked a-2) by me where the parties had agreed to treat this letter itself as a sale deed in the event of chenchiah's failure to execute one within the time mentioned by him in this letter, ex. (it should be noticed that this case was before the decision of the full bench in air1944mad82 .but it does not follow that an express contract to sell must necessarily be regarded to..........mortgage, the appellants have also raised the question that the deed of agreement is really a sale deed and therefore, it cannot be specifically enforced, though this point has not been raised in the memorandum of appeal. as i have already pointed out, the conclusion of the courts below that the agreement is not a usufructuary mortgage is quite correct. the other contention put forward in this court is in a sense really contradictory of the stand taken by the defendants in the courts below. i shall, however, deal with it.2. the agreement ex. a-1 states that the defendants have agreed to sell the properties, that they have also received the sum of rs. 5281 in full, towards the sale price, that on that date itself they handed over possession of the properties mentioned in the schedule.....
Judgment:

Alagiriswami, J.

1. This appeal arises out of a suit for specific performance filed by the plaintiff, who has succeeded in both the Courts below. The defendants' contention was that the agreement in question was really a usufructuary mortgage and that there was no agreement to sell, which could be specifically enforced. Both the Courts below have found against the contention of the defendants that it was only a usufructuary mortgage and their decision on this point is undoubtedly correct on the facts of the case. In this Court, in addition to the contention that the agreement in question is only a usufructuary mortgage, the appellants have also raised the question that the deed of agreement is really a sale deed and therefore, it cannot be specifically enforced, though this point has not been raised in the memorandum of appeal. As I have already pointed out, the conclusion of the Courts below that the agreement is not a usufructuary mortgage is quite correct. The other contention put forward in this Court is in a sense really contradictory of the stand taken by the defendants in the Courts below. I shall, however, deal with it.

2. The agreement Ex. A-1 states that the defendants have agreed to sell the properties, that they have also received the sum of Rs. 5281 in full, towards the sale price, that on that date itself they handed over possession of the properties mentioned in the schedule attached to that letter, that the plaintiff, should take possession of the properties absolutely and enjoy the same, and that whenever he demands the execution of a regular document of sale, on that day, at his own expense, the defendant should execute and register a document of sale in plaintiffs favour. The contention of the defendants, as I have already mentioned, is that this amounts to a document of sale I do not think that is correct. The document does not contain any words of conveyance. It does not say that the executants of that document were selling their properties. It only says that they had agreed to sell. The mere fact that the document mentions that the executants have received thesale consideration or that possession has been handed over to the plaintiff does notmean that it can be interpreted as a deed of conveyance. Apart from that, there is also a specific agreement contained in that document by which the executants have agreed to execute a document of conveyance whenever the plaintiff wanted. That agreement itself could be specifically enforced. Therefore, the argument on behalf of the defendants, that this being a document of sale and being unregistered a decree for specific performance based on it cannot be granted cannot be accepted. This itself is enough to dispose of the contention of the appellants. But, however, I shall deal with the question even on this basis that it amounts to a document of sale.

3. The first decision on which reliance was placed is one in J.R. Skinner v. R.H. Skinner, AIR 1929 PC 269. It was held there that an agreement for the sale of immoveable property is a transaction 'affecting' the property within the meaning of Section 49 of the Registration Act, inasmuch as, if carried out, it will bring about a change of ownership; and to allow a document which does itself create such an interest to be used as the foundation of a suit for specific performance is an evasion of the Registration Act. In that case, the document stated that the vendor confirmed it to be a complete and conclusive sale and that by virtue of that sale and agreement if the vendee considers necessary, the vendor would always be ready to execute and register a power of attorney or give the vendee any other document of help, the vendee may demand. Unlike the document in that case, the document in the present case is merely an agreement to sell and does not mention that it is a sale. That apart, both the Registration Act as well as the Transfer of Property Act were amended subsequently in order to nullify the effect of this decision of the Privy Council. The effect of the amendment was summed up as follows in the Full Bench decision of this Court in Subramanian Chettiar v. Arunachalam Chettiar : AIR1943Mad761 :

'Section 49 of the Registration Act states that no document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall affect immoveable property comprised therein or be received as evidence of a transaction affecting the property, unless it has been registered but there is a proviso which reads as follows: 'Provided that an unregistered document affecting immoveable property and required by this Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act 1877, or as evidence of part performance of a contract for the purpose of Section 53-A of the Transfer of Property Act 1882, or as evidence of any collateral transaction not required to be effected by registered instrument.'

'This proviso was inserted in the section by the Transfer of Property (Amendment) Supplementary Act 1929, as the result of the decision of the Privy Council in AIR 1929 PC 269. The proviso makes it perfectly clear that an unregistered document affecting immovable property may be put in evidence in a suit for specific performance. If the document is put in evidence and embodies the contract between the parties it is sufficient to support the claim. In the judgment in Venkatadri Somappa v. Official Receiver, Bellary : AIR1938Mad801 , it was said that it is well settled law in this presidency that an unregistered document of a transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer and stress was laid on the fact that there it was not established that a separate agreement to mortgage was entered into prior to the execution of the mortgage deed in suit. The decisions of this court which preceded the introduction of the proviso to Section 49 no longer have application, and we do not agree that an unregistered instrument affecting immoveable property is not sufficient to support a suit for specific performance. In such a suit, the production of the document and its proof will be sufficient to support the plaintiff's case if it embodies the whole agreement between the parties and there are no other factors to be taken into consideration. The proviso in express terms says that it may be received as evidence of a contract in a suit for specific performance.'

This decision is a complete answer to the defendants' contention. Therefore, the two other decisions relied upon by the appellants in Mopurappa v. Ramaswami Gramani : AIR1934Mad418 and Ramaswami Chettiar v. Muthiah Chettiar, 71 Mad LJ 641 AIR 1937 Mad 22 should be deemed to have been overruled by the decision of the Full Bench. Those decisions themselves though rendered after the amendment of Section 49 of the Registration Act, make no reference to that amendment. Indeed the decision in : AIR1934Mad418 relied upon the decision in Ramjoo Mohamed v. Haridas Mullick : AIR1925Cal1087 which was rendered before the amendment earlier referred to. In that case the plaintiff entered into an oral agreement grantingthree years' lease to the defendant, all the details about the tenancy were agreed upon and a draft lease was prepared but no formal document was ever drawn up, and it was held that as the agreement conferred an immediate right on the party to be, from that moment and before the execution of any lease a tenant from a future day, it was an agreement of present demise and not having been registered, the suit for the specific performance of that agreement was not maintainable. The respondent's contention there was that all the details were agreed upon on that date and that the only agreement as regards the future was that a deed in pursuance of that agreement should formally be drawn up. It is difficult to understand why the agreement that a deed in pursuance of that agreement was to be executed in future, should not be specifically enforced. It is true that in that case, there was no formally executed document and therefore, Section 49 of the Registration Act does not directly come in. But it is possible to split that agreement into two parts one an agreement of lease and the other, the agreement to execute a formal lease deed and this agreement should be held to be capable of specific performance. In Venkatasubbamma v. Subbiah : AIR1942Mad716 ; Abdur Rahman J. made this distinction. A suit for specific performance of a contract to sell certain immoveable properties exceeding Rs. 100 in value, was instituted by the plaintiff. The document read as follows:

'For payment of circar cists and for family necessity, I have borrowed from you Rs. 300. .... A. 1. (for this money by the 25th May. I agree to sell the schedule mentioned properties to you and execute the sale deed on a proper stamp and get it registered). A-2 (If I fail to do so, you should treat this letter itself as a sale deed, get into possession of the properties and enjoy them with rights of gift and sale etc). This is the letter executed with my consent.'

4. It should be noticed that that document said that it was to be treated as a sale deed and therefore, it could be argued that being a sale deed it could not be used to support a suit for specific performance. Abdur Rahman, J. in discussing the question observed as follows:

'There can be no manner of doubt that the second sentence in Ex. A. and (marked A-1 by me) contains an express agreement to sell the property in consideration of a sum of Rs. 300.....It is conceded by Mr. 'Raghava Rao, learned counsel for the appellant that no exception could have been taken to the decision of the learned District Judge if the document had ended here. He contends.

however, that in view of the following sentence (and marked A-2) by me where the parties had agreed to treat this letter itself as a sale deed in the event of Chenchiah's failure to execute one within the time mentioned by him in this letter, Ex. A. must be regarded to be a sale deed under which title to the property must have been intended to be conveyed in favour of the respondent from the date on which it was executed or at all events, as one purporting to create a future or contingent right or interest in immoveable property of more than Rs. 100 in value and that in either case, it would not be admissible in evidence.'

'Whatever might have been the law before 1929, the proviso added to Section 49 of the Indian Registration Act by the Amending Act 21 of 1929, expressly provides that an unregistered document affecting immoveable property may be, even if not registered, received in a suit for specific performance as evidence of a contract ...... It must be rememberedthat the plaintiff is not trying to enforce the contract of sale contained in Ex. A. 2 as distinguished from what is found in Ex. A. 1. He is suing for specific performance of a contract to sell and does not therefore, need to give evidence as to the terms of the sale as alleged to be stated in Ex. A. 2. For this purpose, so far as this case is concerned, it is needless to refer to Ex A-2 altogether. From that point of view, it is unnecessary to find whether Ex. A-2 is admissible in evidence or otherwise Moreover, if the title to the property has not passed in favour of the plaintiff as contended by learned counsel for the appellant, by what is contained in A-2 it being inadmissible in evidence according to learned counsel why should it be impossible for the plaintiff to enforce specific performance of Chenchciah's contract to sell the property to him .....But an agreement to sell is not being spelt by me in this case out of what has been described (and wrongly described in my opinion) to be an unregistered sale deed Ex. A-2 in order to found the suit for specific performance. I can safely ignore A-2 and depend for that purpose on A-1 alone. This contains an express agreement to sell ..... My attentionwas next drawn to a Division Bench decision of this Court in : AIR1938Mad801 ..... It may bethat in the absence of a specific agreement to sell a property, it is not possible in this presidency to regard an unregistered sale deed as sufficient to support a suit for specific performance of a contract to sell. (It should be noticed that this case was before the decision of the Full Bench in : AIR1944Mad82 . But it does not follow that an express contract to sell must necessarily be regarded to havemerged in a sale deed, when that deed isnot accepted by the vendee or happens tobe incomplete in regard to its terms or isotherwise legally inoperative .....There are no express words of conveyance in that document and it is not easy to accept the contention that the plaintiff must have become satisfied for his title to the properties with what is contained in Ex. A-2. In the absence of any definite words of conveyance by Chenchiah of his title to the properties, the first two steps in the argument must also fall to the ground.'

In the decision in 71 MLJ 641 AIR 1937 Mad 22 it was held that a document executed in favour of the plaintiff's father by defendants' grandfather's firm contained not merely general words suggesting a conveyance and a definite agreement that another document would be executed later on in pursuance of it, but on the other hand, recited that the suit property was sold 'this day'. There was further a clause which mentioned that if the plaintiff's father requires any document or power etc, therefore, the defendants' grandfather shall, without any delay, have the same completed whenever required at the cost of the plaintiff's father. It was held-

'that the recitals in the document made it quite clear that the parties had thought a sale had actually taken place that day and that a document was only to be executed in the future, should the plaintiff's father require it. Therefore the document on the face of it purported to bring about an actual conveyance of property.

Held also, that the document of conveyance not having been registered, did not bring about any conveyance and the transaction had therefore, no legal effect. Under the circumstances, the promise to execute a regular deed if the plaintiff's father required it, could not be separated from the rest of the transaction.' This decision again does not consider the effect of the amendment of the Registration Act in 1929. Under that amendment, this document would have been admissible in evidence and there is ho reason why the promise to execute a regular deed should not be separated from the rest of the transaction. Indeed in the decision of a Bench of this Court, in Hutchi Gowder v. Bheema Gowder, : AIR1960Mad33 the vendor executed a release deed on 30-10-1949, but the debtor defaulted in getting the deed registered and the release deed contained a clause 'the releasor hereby assures and declares that whenever called upon by the releasee the releasor will do sign and execute the deeds and writings for better securing the estate.' It was held that on the language used in the unregistered release deed, which contained a promise that wherever called upon, the releasor would sign and execute the deeds and writings for better securing the estate, the plaintiff was entitled to have a proper deed of conveyance executed by the defendant at the plaintiff's place and register.

5. In dealing with this question at page 337 (of Mad LJ) = (at p. 41 of AIR) it was observed as follows-

'The plaintiff's claim to have a conveyance executed is rested in the alternative on the agreement contained in Ex. A-2. Ex. A-2 (release deed) states:

'the releasor hereby assures and declares ..... that whenever called uponby the releasee the releasor will do sign and execute all deeds and writings for better securing the estate.' The proviso to Section 49 of the Registration Act enables Ex. A-2 to be received in evidence to prove the agreement. The plaintiff's learned counsel in the lower Court appears unfortunately to have failed to tell the learned Subordinate Judge that a release deed would not be effective to transfer title ...... Inorder that title to the estate might be secured to him, it was necessary that he should have a proper deed of conveyance. Even if Ex. A-2 had been registered the plaintiff would need a deed of conveyance in order to become owner otherwise than by adverse possession. The expression 'all deeds and writings for better securing the estate' cannot be limited to deeds or writings which were in the contemplation of the parties at the time of the execution of Ex. A-2. Any deed or writing which the plaintiff may subsequently find to be necessary in order to secure title, would under that clause in Ex. A-2 have to be executed by the defendant, provided the plaintiff's claim that such further document be executed was reasonable and the plaintiff offered to bear the expenses of the execution and registration of such document. Among the many reservations which Srinivasa Aiyangar, J. made in his exhaustive judgment if I may say so, in Valambalachi v. Duraiswami Pillai. : AIR1928Mad344 is the following:

'if in a sale or sale deed there should be a covenant for further and better assurance, the right to get a fresh document may conceivably be covered by such a covenant.' That was said before the amendment of Section 49 of the Registration Act by the introduction of the proviso. The proviso places the plaintiff's right in that matter beyond the plea of controversy. We hold that, in enforcement of the promise made by the defendant in Ex. A-2 to sign and execute all deeds and writings for better securing the estate, the plaintiff is entitled to have a proper deed of conveyance executed by the defendant at the plaintiff's cost and registered.'

6. The conclusions that flow from the above discussion are as follows:--

1. Ex. A-1 contains merely an agreement to sell. Therefore, there is no objection to a suit for specific performance being based on it.

2. Even if it should be deemed to be a sale deed which it is not, it would be admissible in evidence.

3. The earlier part could be separated from the later part, in which the defendants have agreed to execute a formal deed of conveyance.

4. This agreement to execute a formal deed of conveyance could be specifically enforced. The contention of the appellants on this point is unsustainable and the second appeal is dismissed with the costs of the respondent. No leave.


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