1. In the case before us, the plaintiff, after being for some years in possession of lands conveyed to him under an unregistered deed, the registration of which, owing to the small value of the lands, was optional, has been ejected. About three months afterwards his vendor has sold again to a third person under a registered deed of sale, and in suing to recover possession, plaintiff finds himself opposed by this second purchaser, who maintains that under his registered conveyance, his title is preferable to that of plaintiff under an unregistered deed of sale. The Subordinate Judge in appeal held that 'it was a settled point of law that an unregistered kobala supported by possession shall prevail over a registered kobala without possession.'
2. The second appeal was heard originally by a Division Bench consisting of Cunningham J., and myself, and in consequence of a difference of opinion was re-heard by us sitting with Wilson, J. We had determined to remand the case for retrial on the issues stated in the judgment now about to be delivered when the attention of Cunningham and Wilson, JJ., was drawn to a judgment delivered by Field, J., sitting with me in second appeal, and in accordance with their request, I agreed to have this case referred to a Full Bench. The facts of the present case, which I have already briefly stated, were, however, different from those of the case heard by Field, J., and myself. In the latter case the plaintiff, a second purchaser under a registered deed, sought to obtain possession of land already conveyed by his vendor to the defendant, who was in possession under an unregistered instrument, registration being optional, and I there held, following the precedent in Second Appeal No. 1122 of 1876, decided by Markby, J., and myself on August 20th, 1877, that defendant being in possession under a valid instrument, could not be ejected by plaintiff, the subsequent purchaser, under a registered deed. I would also explain that although I agreed in remanding the case now before us for retrial on certain issues, I had not agreed in the terms of the judgment to be delivered. As I had merely signified my general dissent and the grounds of the judgment had not been settled in consultation with reference to my opinion, the opinions of my learned colleagues cannot, I apprehend, be properly quoted or at most be regarded otherwise than their opinions subject to re-consideration for the settlement of judgment. In this respect I would only refer to the remarks of Sir B. Peacock, C.J., in the Full Bench case of Mahomed Akil v. Asadunnissa Beebee B.L.R. Sup. Vol. 774 see pp. 817 818; S.C. 9 W.R. 1 see pp. 29 30.
3. I regret extremely that the opinions I entertain regarding the interpretation to be put on Section 50 of the Registration Act of 1877 are not in accordance with those of my learned colleagues. I have reconsidered the matter very carefully with the advantage of seeing the judgment that they propose to deliver, but I still find myself unable to agree.
4. In all the successive enactments relating to registration of deeds since 1793 to the present day, the general rule has been that preference is to be given to a registered over an unregistered deed relating to immoveable property. Regulation XXXVI of 1793 and the Acts of 1843 declared that a registered deed should 'invalidate' an unregistered and previously executed deed; Act XVI of 1864, that it should have 'priority'; and Act XX of 1866 and the more recent Acts have enacted that any such instrument shall 'take effect as regards the property comprised therein against every unregistered instrument.' To use the words of Lord Chancellor Cairns in the case of Agra Bank v. Barry L.R. 7 H.L. 135; at pp. 147 148 any person reading over that Act of Parliament would perhaps 'in the first instance conclude that it was an Act absolutely decisive of priority under all circumstances, and enacting that, under every circumstance that could be supposed, the deed first registered was to take precedence of a deed which, although it might be executed before, was not registered till afterwards. But by decisions, which have now, as it seems to me, well established the law, and which it would not be, I think, expedient in any way now to call in question, it has been settled that, notwithstanding the apparent stringency of the words contained in this Act of Parliament, still, if a person in Ireland registers a deed, and if, at the time he registers the deed, either he himself, or an agent whose knowledge is the knowledge of his principal, has notice of an earlier deed, which, though executed, is not registered, the registration which he actually effects will not give him priority over that earlier deed.' Our Courts have consequently considered in each case whether the person in whose favour the second deed was executed had notice or knowledge of the previous transaction, and have been influenced by such considerations in applying the law.
5. The point I propose to consider is, whether having sold his right, title, and interest, and having put his vendee in possession of certain land under an unregistered but valid deed, a man can sell the same property over again to a third party, so as to give him a good title by reason of the conveyance being registered. If the transaction were not reduced to writing, the law since 1871 has made it clear, that an oral agreement or declaration accompanied or followed by possession, confers a title which cannot be disturbed by subsequent recourse to the registration office, and so far an honest purchaser is protected against the fraudulent conduct of his vendor; but if the strict construction of the law which I understand my colleagues desire to adopt be maintained, one who to avoid the 'uncertain testimony of a slippery memory' has the agreement committed to writing, but takes advantage of the law enacted expressly for the convenience of the poorer classes, and does not register his conveyance, remains at the mercy of his vendor until his possession has fructified into a perfect title by the lapse of twelve years. To me it appeared that the Legislature could not have contemplated such consequences, and I thus expressed myself:
I am unable to learn any valid reason for any difference between an unregistered and an oral agreement, both followed by delivery of possession, or why, where registration is optional, such a deed should be placed at a disadvantage; in other words, why because such an agreement has been reduced to writing, it should not be at least as good as the previous state of the same transaction before the terms agreed on were fixed and made certain by a permanent record. 'Such a construction of the law,' to quote a recent judgment of the Privy Council on the same Act, 'would cause great difficulty and injustice which it cannot be supposed the Legislature contemplated, and would be inconsistent with the language and tenor of the rest of the Act'--Mahomed Ewaz v. Birj Lal 13th June 1877 L.R. 4 I.A. 166; at p. 172. If the term were interpreted strictly, a person in the position of the respondent Fulmoni would have a title, not only uncertain, but dependent on the conduct of her vendor until she had perfected that title by a possession of twelve years, so as to enable her successfully to plead limitation. I find it impossible to conceive that the Legislature intended to countenance such a state of things, and therefore it appears to me that the rule laid down in the case of Salim Sheik must be followed, and that we must hold that, notwithstanding the enactment of Section 48 of the Act of 1871, the full force of that rule is unaffected.
6. A contrary opinion has, however, been expressed in the case of Fuzluddeen Khan v. Fakir Mahomed Khan I.L.R. 5 Cal. 336; see p. 350. In that case it was held, that 'the defendant can put his case no higher than that he and the plaintiff are two innocent purchasers; and if that is so, the fact that the plaintiff did register, while the defendant did not, is sufficient under Section 50 to compel us to hold that the plaintiff's registered deed must prevail against the defendant's unregistered deed.' The effect of such a rule would be to declare that although the Legislature has said that, under certain circumstances, an unregistered instrument shall be received as evidence of the absolute title it confers, and although this title be confirmed by possession obtained under it, an instrument conveying the same title to a third party, executed subsequently by the same person, but registered, shall nullify the previous title long enjoyed without any question; so that, although the proprietor of certain land sells it fairly and honestly under a valid instrument, he shall have the power to convey what no longer remains with him to a third party, and unless it can be shown by the prior purchaser that the later purchase was made with notice or knowledge of his title, he will find that he has lost what he has long enjoyed in security. I cannot believe that the Legislature could deliberately have devised such a trap for the ruin of the poorer and more ignorant classes of the community, that it should on the one hand have benevolently declared its intention to spare them the expenses of registration wholly disproportionate to the value of such small transactions, but that at the same time it should have obscurely enacted, that a long possession held under such a valid title might be at once annulled by the dishonesty of the vendor. I can quite understand the great importance of a perfect system of registration, and of the security so afforded to persons inclined to invest money in land; but in smaller transactions,--that is to say, where the value of the property is less than Rs. 100, and registration is consequently optional, such investors should be put on their guard, and should be especially cautious in making full enquiry regarding possession of the particular property.
7. Where the particular instrument confers anything short of an absolute title, and is in the nature of a mortgage on the land, and is unregistered, I can see no objection to preference being given to a subsequently executed but registered deed. In such a case the rights of the executant of the instrument would still remain to some extent so as to enable him to deal with another party, and in the competition between two such instruments 'priority' may be given to the registered deed, or the registered deed may 'take effect' before the unregistered one. But where the executant has already divested himself by a valid instrument and by delivery of possession, he cannot, in my opinion, convey to another what no longer remains with him. The second purchaser is, in my opinion, in no better position than one who buys from a man who never had any title at all.
8. In the case of Raja Sahib Perhlad Sen v. Baboo Budhu Singh 12 Moore's I.A. 301at pp. 306 307; S.C. B.L.R. P.C. 111 at p. 117 their Lordships of the Privy Council thus expressed themselves: 'They (that is, the Judges of the lower Court) seem to have ruled that the effect of the execution of a bill of sale by a Hindu vendor is, to use the phraseology of English law, to pass an estate irrespective of the actual delivery of possession, giving to the instrument the effect of a conveyance operating by the Statute of Uses. Whether such a conclusion would be warranted in any case is, in their Lordships' opinion, very questionable. It is certainly not supported by the two cases cited in the judgment under review, in both of which actual possession seems to have passed from the vendor to the purchaser. To support it, the execution of the bill of sale must be treated as a constructive transfer of possession, but how can there be any such transfer, actual or constructive, upon a contract under which the vendor sells that of which he has not possession, and to which he may never establish a title? The bill of sale in such a case can only be evidence of a contract to be performed in futuro, and upon the happening of a contingency of which the purchaser may claim a specific performance, if he comes into Court, showing that he has himself done all that he was bound to do.'
9. Section 27 of the Specific Relief Act (I of 1877) declares, that 'except as otherwise provided by this chapter, specific performance of a contract may be enforced against.
(a) either party thereto:
(b) any other person claiming under him by a title arising subsequently to the contract, except a transferee for value, who has paid in money in good faith and without notice of the original contract.'
10. The following illustration is given of this latter clause: A contracts to sell certain land to B for Rs. 5,000. B takes possession of the land. Afterwards A sells it to C for Rs. 6,000. C makes no enquiry of B relating to his interest in the land. B's possession is sufficient to affect C with notice of his interest, and he may enforce specific performance of the contract against C.
11. Our Courts have refused to hold, that, in order to perfect a title, possession must have been given, but they have never held that a title followed by possession is not a perfect title, so far as its former proprietor is concerned, and if it is good as against him, it must, in my opinion, be good against any one deriving a subsequent title from him. If a vendee in possession under an unregistered conveyance (registration of which is optional) be ejected by a third party, he is competent to sue to recover possession on his title, and if he can alone do so, his vendor can have nothing to convey to any one else.
12. Some observation has been made regarding the manner of obtaining possession of land in some instances, generally known as symbolical possession,--that is, by sticking up a bamboo in some prominent place accompanied by beat of drum or some sort of proclamation, and it has been stated that such a practice would convey insufficient notice of any change of possession. If such a proclamation be properly made, I have no doubt that it would convey notice to the ryots who would consequently be in a position to communicate the information to any person making enquiries regarding possession, but this is not the only way of getting possession of land, and whatever argument might be derived from it, would not apply to cases such as we have now before us, in which registration is optional. In transactions regarding immoveable property of less value than Rs. 100, the property would generally be ryoti lands--not extensive zamindaries--lands probably not comprising an entire mouza.
13. On such considerations as these, I have, in the two cases already mentioned, held, that a purchaser under a registered conveyance subsequently executed cannot succeed in a suit to eject one who holds possession under a prior but unregistered conveyance, registration of which is optional. The unanimity of my learned colleagues has made me have much hesitation in adhering to those decisions, but after long and careful consideration I find myself unable to concur in their opinions. The point under discussion is one of very considerable importance, and it is therefore to be hoped that an early opportunity will be taken by the Legislature of clearly expounding the law in this respect.
14. In the present case, where the second sale was made while the unregistered and prior purchaser was out of possession, I am not unwilling that a retrial should be held on the issues stated in the judgment of my learned colleagues, but I am bound to say that further consideration has made me inclined to agree with the opinion expressed by Mr. Justice Field, that having once sold, the vendor has no title to convey to any one else.
15. Two of the learned Judges who referred this case were of opinion, that none of the grounds relied upon by the lower Courts were correct statements of the law.
16. They were of opinion that the ruling in the case of Fuzluddeen Khan v. Fakir Mahomed Khan I.L.R. 5 Cal. 336 was correct,--namely, that the fact of a first purchaser under an unregistered conveyance having obtained possession, even if such possession continued at the date of a second registered conveyance, did not necessarily prevent the operation of Section 50 of the present Registration Act, which enacts broadly, that a registered document 'shall take effect as regards the property therein comprised against every unregistered document relating to the same property.'
17. They were further of opinion upon the authorities, that the only case in which the title of an unregistered purchaser for a less consideration than Rs. 100 can prevail against a subsequent purchaser for value, who registers, is when the latter takes with notice of the title of the former; because a vendor who sells property for less value than Rs. 100, by an unregistered kobala, gives a title perfectly good as against himself. If such vendor afterwards sells to another, so as to defeat that title, he commits a fraud on the first purchaser, and if the second purchaser takes with notice of the first purchaser's title, he has notice of, and is party to, the fraud; and his title therefore will not be allowed to prevail against that of the first purchaser.
18. Being of opinion that neither the Munsif nor the Subordinate Judge had directed their minds to what was the actual point in the case, viz., whether the appellant took with notice of the previous sale to the plaintiff, two of the learned Judges who have referred this case were of opinion that it should be remanded to the Munsif, in order that the question of notice might be properly tried, with an instruction that, in determining it, the long continued possession of the plaintiff would be an important circumstance for consideration, though it would not be conclusive; more especially, as the plaintiff was not in actual possession at the date of the appellant's alleged purchase. The facts and circumstances attending his dispossession might, however, be material if known to the appellant.
19. But before their intended order of remand was in fact made, a Division Bench, consisting of Prinsep and Field, J.J. (and therefore containing one of the Judges before whom the present case came) had delivered judgments in the case of Dinonath Ghose v. Auluck Moni Dabee I.L.R. 7 Cal. 753 which was of a similar character to the present, with this difference, that the first unregistered purchaser obtained possession, and continued in possession up to the date of the registered conveyance to the second purchaser.
20. In dealing with that case, Mr. Justice PRINSEP decided in favour of the first unregistered purchaser, on the ground that the second and registered purchaser 'presumedly had notice of title of the first purchaser in the fact of possession having been given,'--that is, from the fact of the first purchaser being in possession at the time of the second purchase.
21. This possibly might on the facts of that case have been a sufficient ground for the correct decision of it; though if it was intended to lay down that possession alone was in all cases sufficient notice, we think the proposition would be stated too broadly; because, in many conceivable cases, of which the case of Fuzluddeen Khan v. Fakir Mahomed Khan I.L.R. 5 Cal. 336 furnishes an example, such possession might reasonably be accounted for without necessarily affecting the second purchaser with notice of the first purchaser's title, and so making him a participator in the fraud of the common vendor.
22. Mr. Justice Field, however, in his judgment appears to have agreed with the dictum of the Subordinate Judge in the present case, that 'it is a settled point of law that an unregistered kobala supported by possession shall prevail over a registered kobala without possession.' Indeed he would seem to have gone further, and to have been of opinion that a purchaser under an unregistered deed, who obtains possession for a single day, must be preferred to a subsequent purchaser under a registered deed, though the first purchaser may be out of possession at the date of such second registered conveyance. For though in one part of his judgment he states the case before him to be 'a case of possession' (meaning continuing possession) 'and a prior unregistered conveyance, registration of which was optional, versus a subsequent registered conveyance and nothing more,' he does in fact deal with the question as follows: 'If A sells property to C on the 1st of January 1880 by an instrument which the law does not require to be registered, and which therefore although unregistered is admissible in evidence to prove the transfer and the title of the transferee; and if this legal conveyance made in legal form is further followed immediately by delivery of the possession of the property to C, upon what principle can it be reasonably contended that A has on the 1st of February of the same year any right which he can convey to X?'
23. But this is merely stating in other words the proposition in the report of the case of Fuzluddeen Khan v. Fakir Mahomed Khan I.L.R. 5 Cal. 336 see p. 338 viz. 'when a man sells property of less value than Rs. 100 by an unregistered deed, that deed will give a valid title, and the title of the vendor will cease from the date of its execution. Therefore he will have no power to reconvey the same property three months later to another person'--a proposition which was directly overruled by considered judgments in that case; and which represents the conditions occurring in almost every case under the English Registration Acts.
24. It is true that Mr. Justice Field refers to the fact of possession having been given to the first purchaser; but possession had also been given to and maintained by the first purchaser in the case of Fuzluddeen Khan v. Fakir Mahomed Khan I.L.R. 5 Cal. 336. So that the latter case was in that respect on all fours with the case before Mr. Justice FIELD; and the continued possession of the first purchaser carried his case further than the alphabetical case put by Mr. Justice FIELD. It seems doubtful whether that learned Judge construes the words accompanied or followed by possession' as meaning a continued possession down to the date of the second conveyance. In the alphabetical case put by him, it would seem that he did not consider continued possession necessary; as there he bases his argument on the vendor having parted with his estate, and having nothing further to convey; but in the latter part of his judgment he deals with the case of continued possession; for he says: 'In giving effect to the prior unregistered conveyance and possession, there is no real hardship done to the later registered purchaser, who, if he had used ordinary precaution, would have been able to discover that his vendor had no possession to give him.'
25. Mr. Justice Field also seems to have been inclined to support the dictum of the Munsif in the present case, 'that delivery of possession is under the Hindu law essential to complete the title' of a purchaser for value. The observations of Mr. Justice Field on this point, though apparently considered by him to be extra-judicial, do in fact seem to influence his entire judgment and his construction of the Registration Act.
26. It was only in consequence of the judgments delivered in Dinonaih Ghose v. Auluck Moni Dabee I.L.R. 7 Cal. 753 that two of the three learned Judges, before whom the present case originally came, considered it advisable to refer it to a Full Bench. But we understand that those two learned Judges themselves dissented from the statements of law contained in the judgment of Mr. Justice FIELD.
27. After giving due consideration to the judgment of Mr. Justice Field in Dinonath Ghose v. Auluck Moni Dabee I.L.R. 7 Cal. 753 we agree with Justices Cunningham and Wilson, two of the referring Judges, that none of the grounds relied upon by the lower Courts in the present case were correct statements of the law.
28. We are of opinion that the fact of the vendor having given possession to the first and unregistered purchaser, even if such possession continued to the date of the second conveyance, does not necessarily prevent the operation of that part of Section 50 of the Registration Act which enacts broadly that a registered document shall 'take effect as regards the property therein comprised against every unregistered document relating to the same property;' and that the only case in which the title of the prior unregistered purchaser can prevail against the subsequent registered purchaser for value is when the latter takes with notice of the title of the former. We think that the observations of Lord Cairns in the (lately reported) case of the Agra Bank Limited v. Barry L.R. 7 H.L. 135 at pp. 157 158 are applicable to cases under Section 50 of the Indian Registration Act. We are further of opinion, that delivery of possession is not, under the Hindu law, essential to complete the title of a purchaser for value.
29. The universal practice in this province has for years been to consider that a proper deed of conveyance for valuable consideration by itself passes the vendor's title. It is a matter of every-day practice that mofussil properties are conveyed by deed executed in Calcutta. The Registration Acts themselves are founded on the sufficiency of the execution of a duly registered deed to convey the vendor's interest; and indeed it would seem to be a necessary implication from the language of Section 48 of the present Act, that even an oral transfer without delivery of possession would effectually pass the property as against the vendor and all persons claiming under him otherwise than by a duly registered conveyance. Legislation has for years, as in the matter of sales in execution, proceeded on the same foundation.
30. We feel bound emphatically to negative the proposition that delivery of possession is necessary to give full validity and effect to a transfer for valuable consideration. Indeed in this country the actual possession of the land seldom accompanies its transfer by deed. In the great majority of cases actual possession is with, and continues with the ryot. It is difficult to understand how 'possession' can be given in cases where the ryot is not a party to the conveyance. The Procedure Code in such cases directs that symbolical possession shall be given; but this of course only applies to execution cases. It seems to us that to hold that 'delivery of possession of the property sold is essential to complete the title of the vendor' as suggested by Mr. Justice Field, would be to hold that the greater part of the transfers of property by deed in this country are ineffectual to convey the land.
31. We agree with the learned Judges who have referred this case that it must be remanded to the Court of the Munsif for re-trial, with liberty to the parties to adduce fresh evidence, if so advised, in order that the following questions may be determined:
First.--Was the appellant a bona fide purchaser for value? and
Second.--If the appellant was a bona fide purchaser for value, was he affected by notice of the plaintiff's title
32. If the appellant was a bona fide purchaser for value, and was unaffected by notice of the plaintiff's title, the plaintiff's suit should be dismissed. Otherwise the plaintiff is entitled to recover against the appellant.
33. The costs of this appeal and reference will abide the result of such trial.
34. I would only add with reference to the judgment which has been delivered by my learned brother Prinsep, that I entirely agree with him as to the injustice which has frequently been done by the system of what is called 'optional registration.' With the professed object of relieving poor people from a burthen, the law of optional registration has made them in numbers of cases the victims of fraud and litigation. I have already expressed my opinion very strongly to the Government upon that subject.
34. And as to the suggestion of my learned brother, that the Legislature should interfere to prevent this unhappy state of things, it has already, as I understand, been carried out.
35. As I road the Transfer of Property Act, which was passed the other day, Section 54 does virtually abolish optional registration. No transfer can now be made, after that Act comes into operation, by any instrument in writing, unless it is registered.
36. It is true that, in the case of possessory interests, the value of which is less than Rs. 100, an oral transfer coupled with possession will pass the property; but there will be no such thing as a transfer in writing, unless it is registered.
37. And by that same section, as I take it, the point which has been raised by my brother Field, and which we have decided to-day, has also been set at rest.
38. A registered transfer without delivery of possession will pass any interest in land, whether in possession or otherwise; and when the value of the interest amounts to Rs. 100, there is no other means of transferring it.
39. It was mainly for these reasons that I considered the recent Transfer of Property Act would prove so beneficial to this country.