1. This Letters Patent Appeal is against the judgment of our learned brother, Krishnaswami Nayudu J. in C. M. A. No. 625 of 1949. The appeal raises an interesting question relating to the applicability of Section 9-A, Madras Agriculturists Relief Act (Act 4 of 1938) introduced by the amending Act No. 23 of 1948. One Ramachandra Aiyar obtained a usufructuary mortgage from the owner of the property, one Doraiswami Aiyar, under Ex. A.3 dated 15-3-1925 under which an amount of Rs. 3675 was advanced as a loan. The period fixed for redemption of the mortgage was five years. On the same date, there was a lease back, Ex. A. 5, by the mortgagee to the mortgagor of the properties. Under this lease, the mortgagor agreed to pay a rent of Rs. 275 per annum for a period of five years. On 21-7-1927 the mortgagee filed O. S. No. 563 of 1927, District Munsif's Court, Villupuram, for arrears of lease amounts and for recovery of possession of the property as the lessee defaulted in payment of rent.
2. The suit however did not proceed to trial, and was compromised under Ex. A.4 dated 9th May 1928. It was provided under the compromise that the mortgagor should pay the arrears of the lease amount by 15-10-1928, and that the lease arrangement should continue till the expiry of the lease on 15-3-1930. The compromise further provided that if there was default in payment of the rent the decree-holder should be entitled to possession of the property in execution of the compromise decree. After the expiry of the lease period, the mortgagee was successful in obtaining possession of the wet lands, but for obtaining possession of the dry lands he was obliged to file the suit, O. S. No. 571 of 1930 in the District Munsif's Court, Villupuram, wherein he also prayed for arrears of rent. The suit was decreed on 12-11-1930.
3. In I. P. No. 16 of 1932 the mortgagor Doraiswami Aiyar was adjudged an insolvent on 5th September 1932, and the property vested in the Official Receiver. The equity of redemption in the property was brought to sale by the Official Receiver, and one Ramanujulu Naidu purchased it for a sum of Rs. 105 on 26-1-1933. He did not however obtain a sale deed from the Official Receiver. On 30-9-1947 Chengammal, the wife of Ramanujulu Naidu, sold the property to Sankari Animal, the present appellant, under Ex. A.1.
It was realised in 1947 that there was really no legal transference of title from the Official Receiver to Ramanujulu Naidu and therefore from Chengammal to the appellant Sankari Ammal. It was then on 7th March 1949 that Chengammal, the vendor of the appellant, obtained a sale-deed Ex. A.2 from the Official Receiver. Sankari Ammal then filed the application, out of which these proceedings arise, in the District Court, South Arcot under Ss. 19CA) and 8 of Madras Act 4 of 1938 read with Section 9-A of the amending Act for a declaration of the amount due under the usufructuary mortgage dated 15-3-1925.
4. The petition was resisted before the learned Judge by the respondent on the ground that the petitioner was not entitled to the benefit of the Act. The contention was that as the sale-deed by Chengammal in favour of the appellant was executed on 30-9-1947, under Section 9-A Clause (7)(ii)(a) the usufructuary mortgage was not affected. The clause is in these terms:
"Nothing contained in this section except Sub-section (1) shall apply to any usufructuary mortgage (ii) in respect of property situated in any other area, in the cases mentioned below:
(a) where during the period after the 30th September 1937 and before the 30th January 1948, the equity of redemption in the property subject to the usufructuary mortgage has devolved either wholly or in part on a person by or through a transfer 'inter vivos' either from the original mortgagor or from a person deriving title from or through such mortgagor otherwise than by a transfer 'inter vivos', then, to the whole or such part, as the case may be."
As the transfer by Chengammal in favour of the appellant was in between those two dates, it was contended that the beneficial provisions of the Act would not apply to the usufructuary mortgage.
5. The learned District Judge overruled the objection of the mortgagee, as, in his opinion, there was no transfer by which the right of the equity of redemption vested in the petitioner between the two dates, 30-9-1947 and 30-1-1948. On appeal that decision was reversed by our learned brother, Krishnaswami Nayudu J. He was of opinion that the purchase of the equity of redemption on 30-9-1947 under Ex. A.1 during the relevant period transferred 'inter vivos' the equity of redemption to the purchaser and that therefore the exception applied. He thought that the date on which the purchaser acquired title to the equity of redemption was the crucial date, and that therefore the mortgagor was not entitled to the benefit of the Act. The decision of the learned District Judge was reversed. Hence this Letters Patent Appeal.
6. The section requires that there should be a transfer 'inter vivos' of the equity of redemption in the property subject to the usufructuary mortgage between 30-9-1937 and 30-1-1948. By reason of the vesting order after the adjudication of the mortgagor the equity of redemption vested in the Official Receiver. Ramanujulu Naidu no doubt "purchased" the property in the sense that he became the highest bidder for Rs. 105 and presumably paid the consideration to the Official Receiver. The sale not being an Involuntary sale, the purchaser from the receiver could acquire no title to the property, unless the legal mode of vesting title was adopted, viz., by a sale deed in writing and registered. When the bid of Ramanujulu Naidu was accepted by the Receiver, he was merely in the position of a person who had entered into a contract for the purchase of the property but had not clothed himself with the legal title to it. The Receiver was under an obligation to execute a duly registered conveyance.
It might be that Ramanujulu Naidu who was put In possession as he paid the consideration for the sale could have resisted successfully a suit for ejectment invoking the doctrine of part performance. But it must be remembered that the doctrine of part performance is only a passive equity and not an active equity. He could only defend himself against a transfer if he was sued in ejectment; but he could not himself figure as a plaintiff to recover possession of the property if he did not get it. The rights therefore which flowed from such a contract of sale are not equivalent to an absolute transfer of title in the property, so long the legal mode by which alone title could be transferred under the Statute was not adopted by the parties. Neither Ramanujulu Naidu nor his wife Chengammal had therefore any conveyable title on 30th September 1947 when they purported to sell the property to the present appellant under Ex. A.1.
7. If therefore in 1947 there was no transfer 'inter vivos' of the equity of redemption in the property subject to usufructuary mortgage in favour of the present appellant, the appellant is not precluded from claiming the benefit under the Act.
8. What then is the effect of the subsequent sale-deed executed by the Official Receiver on 7-3-1949 in favour of Ramanujulu Naidu's widow Chengammal Ex. A.2? This date is undoubtedly beyond the relevant period, and if the title of the purchaser commenced only from that date the benefit of the Act cannot be denied to the appellant. If, on the other hand, the conveyance of 1949 has retrospective operation so as to clothe the appellant with title with effect from 1947, then the decision of the learned Judge would be correct. The appellant's title can only be rested under Section 43, T. P. Act, which embodies the well known doctrine of English law of "feeding the grant by estoppel". Under Section 43 it is on the interest and title that Chengammal, the appellant's transferor, acquired from the Official Receiver under the deed of 1949, that the sale in favour of the appellant by Chengammal in 1947 operates. The relevant portion of the section is:
"Such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which, the contract of transfer subsists."
That is, the sale in favour of the appellant under Ex. A.1 would operate on the interest which Chengammal acquired in the property in 1949. Prima facie, therefore, on the language of the section, the operation on the interest of Chengammal could only commence when Chengammal herself acquired title to the property in 1949. But the learned counsel for the respondent would have it that it operates retrospectively from the date of the sale in favour of the appellant in 1947. It is difficult to accept the contention in view of the clear language of the section that the transfer shall operate on any interest which the transferor may acquire in such property which implies an event in the future. Before the acquisition of interest, the sale in favour of the appellant would not operate, and there can be no "feeding" of the estoppel before the "food" is provided for.
9. The scope of this doctrine embodied in Section 43 of the Transfer of Property Act and which is founded on the law of England was enunciated by Phillimore L. J. in the Court of Appeal in England in -- 'Poulton v. Moore,' 1915-1-KB 400 (A), at pages 414 and 415 thus:
"With regard to the question of estoppel by recital in a deed, it is truly said that the law of estoppel in the case of real property la different from the law of estoppel as between persons. It is the law which operates when a grantee of land has had a conveyance of the whole interest in the land from a grantor who himself at the time had only a partial interest in the land. The former then has a right, when the grantor gets the entire interest in the land, to say as against all the world that that interest has passed to him. it does not 'then' depend upon the mere representation by the grantor that he had the whole interest The estate feeds the estoppel, and therefore ceases to be 'an estate' by estoppel only and becomes an interest: --'Doe D. James Christmas v. Oliver', (1329) 5 Man & Ry 202 (B); -- '2 Sm LC 11th Edn. page 724 (C)."
From the moment therefore that the transfer commences to operate on the interest acquired by the transferor in the property it is no longer in the region of estoppel but becomes an interest, and the commencement of that interest is from the date when the mortgagor had subsequently acquired the interest in the property. The underlined portion (here in ' ') in the above quotation brings out this distinction clearly.
10. In Vol. 13 (2nd Edn.) of Halsbury's Laws of England by Lord Hailsham the principle is thus summarised at page 466, paragraph 534 :
"Where the grantor or lessor subsequently acquires a title to the premises which he has purported to demise, the interest is said to feed the estoppel, and the grant or the lease then takes effect in interest and not by estoppel. But the grantor or the lessor is estopped from saying that he had no interest at the time of the grant or lease."
So that during the period between the date of the transfer and the date of the acquisition of the interest by the transferor the title is only in the region of estoppel as between the transferor and the transferee; but thereafter it passes beyond that sphere and becomes an interest in the property itself, which title is good against all the world. Estoppel does not by itself create a title but only prevents the transferor from disputing the title of the transferee.
11. Learned counsel for the respondent in the-course of the arguments before us drew our attention to a passage in the judgment of the judicial Committee in -- 'Tilakdharilal v. Khedanlal'. AIR 1921 PC 112 at p. 118 (D), where Lord Buck-master observed :
"This principle of law, which is sometimes referred to as feeding the grant by estoppel, is well established in this country. If a man who has no title whatever to property grants it by a conveyance which in form would carry the legal estate, and he subsequently acquires an interest sufficient to satisfy the grant, the estate instantly passes. In such a case there is nothing on which the second grant could operate in prejudice to the first -- '(1829) 5 Man & Ry 202 (B)', and discussed in -- '2 Sm LC 11th Ed p. 724 (C)."
This passage does not, in our opinion, support the contention of the respondent, because the learned Lord states that the estates instantly passes, that is, when the interest sufficient to satisfy the grant-is subsequently acquired and not on the date of the original transfer.
12. The other case relied on, namely, -- 'Bank of England v. Cutler', 1908-2 KB 208 (E), only explains that estoppel does not create a title, Farewell L. J. states at page 234 thus :
"It is true that a title by estoppel is only good against the person estopped, and imports from its very existence the idea of no real title at all, yet as against the person estopped it has all the elements of a real title."
What we are concerned with under the clause of Section 9-A, which is now under consideration, is not a title by estoppel but an actual transfer 'inter vivos' of the title to the equity of redemption. That title would vest in the appellant only from 7-3-1949 under Ex. A. 2 when the Official Receiver executed a sale deed in favour of the appellant's transferor, Chengammal and not at an earlier date. The distinction therefore between a title by estoppel which is not a real title and a title acquired on the principle of Section 43 must, in our opinion, be borne in mind in deciding the present question. If this is done, the answer to the question raised does not present any difficulty, as, in our opinion, in the light of the authorities referred, to above, the transfer of the equity of redemption in the property in favour of the appellant took effect only from 7-3-1949. In this view, the exception in favour of the usufructuary mortgagee under Section 9-A is of no avail, and the appellant is entitled to the benefit of the provisions of the Madras Agriculturists Belief Act and to have the debt scaled down.
13. The appeal is allowed, the decision of the learned Judge is reversed, and that of the District Judge restored with costs here and before the learned Judge.