Nasim Ali, J.
1. This appeal arises out of a suit for specific performance of contract and in the alternative for recovery of compensation and for arrears of rent. The plaintiff's case briefly stated is as follows:
The plaintiff is the lessee under Govern-ment of premises No. 33 Canal East Road. By a letter dated 20th February 1932 the defendant offered to take lease from the plaintiff of the said premises for a term of five years at a monthly rent of Rs. 150. He also offered to pay the occupier's share of the Municipal taxes in respect of the said premises. This offer of the defendant was accepted by the plaintiff and that upon the basis of this agreement the defendant was put into possession of the said premises from 1st March 1932. The defendant also agreed to execute a formal registered lease embodying these terms. Subsequently he refused to execute the lease although he was repeatedly asked by the plaintiff to do so. On 25th January 1935 the defendant gave a notice to the plaintiff that he would vacate the premises on 28th February 1935 alleging that he was a monthly tenant and that he did not require the premises any longer. The relationship of landlord and tenant between them could not be terminated by the defendant by a notice as there was a verbal agreement for five years' lease. The plaintiff is therefore entitled to have specific performance of the oral agreement or in the alternative to recover compensation on the basis of the rent reserved under the contract and also to recover arrears of rent due from November 1934 to January 1935.
2. The defences of the defendant are : (1) the plaintiff had no right or title to grant any lease for five years from February 1932 in respect of the premises in question, (2) that there was no valid agreement for lease for five years which could be specifically enforced; and (3) that only the rent of January 1935 was due and that although he was all along willing to pay, he could not pay it as the plaintiff did not send the bill for that amount.
3. The trial Court came to the following conclusions : (1) that there was no written document embodying the terms of the proposed lease; (2) that the letter dated 20th February 1932 written by the defendant shows that he offered to take lease of the premises for five years as alleged by the plaintiff; (3) that the defendant came into possession of the premises on the basis of the agreement as alleged by the plaintiff from 1st March 1932; (4) that the defendant vacated the premises after giving notice from 1st March 1935. On these findings he refused to enforce the contract specifically but under Section 19, Specific Relief Act, awarded one year's rent, that is Rs. 1,800, as compensation for breach of the contract. He also passed a decree for arrears of rent for the month of January 1935.
4. The defendant appealed to the lower Appellate Court against the decree of the trial Court awarding Rs. 1,800 as compensation for breach of contract. The findings of the lower Appellate Court are as follows : (1) that the defendants agreed to pay Rs. 150 per month for five years as alleged by the plaintiff; (2) that the defendant came into possession of the premises in pursuance of that agreement; (3) that the amount of compensation was rightly assessed at one year's rent by the trial Court. He accordingly affirmed the decree of the trial Court and dismissed the appeal. Hence this second appeal by the defendant.
5. It cannot be disputed that under the provisions of Section 19, Specific Relief Act, the Court has power to award compensation to the plaintiff for breach of a contract if the plaintiff has not debarred himself from claiming specific performance of the contract : Ardeshir H. Mama v. Flora Bassoon AIR 1928 P C 208 The case of the defendant is that the contract for breach of which compensation has been awarded by the Courts below is not specifically enforceable.
6. The first contention of the learned advocate for the appellant is that Section 27-A, Specific Relief Act, is a bar to the plain-tiff's claim for specific performance of the agreement alleged by him. Section 27-A is in these terms:
Subject to the provisions of this Chapter, where a contract to lease immovable property is made in writing signed by the parties thereto or on their behalf, either party may, notwithstanding that the contract though required to be registered has not bean registered, sue the other for specific performance of the contract if : (a) where specifics performance is claimed by the lessor, he has delivered possession of the property to the lessee in part performance of the contract; and (b) where specific performance is claimed by the lessee, he has in part performance of the contract taken possession of the property, or being already in possession continues in possession in part performance of the contract, and has done some act in furtherance of the contract; provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.
7. Where specific performance is claimed by the lessor under this section, the lessor must show : (a) that the contract to lease is in writing; (b) that it is signed by both the parties; (c) that it is required to be registered under the law but has not been registered; (d) that there has been delivery of possession of the property by the lessor to the lessee in part performance of the contract.
8. The contention of the learned advocate for the appellant is that the letter dated 20th February 1932 is a contract to lease in writing within the meaning of Section 27-A, but as it is not signed by both the parties, it cannot be specifically enforced under Section 27-A, Specific Relief Act. If there is a proposal in writing and it is also accepted in writing, the proposal and acceptance constitute a contract in writing: Sufdar Reza v. Amzad Ali (1881) 7 Cal 703 But if the proposal is in writing but the acceptance is not in writing, the entire agreement not being in writing it cannot be said that the contract to lease is in writing (ibid) : see also the cases reported in Bhogeeruth Adhikaree v. Tarinee Chundee Pakrassee (1870) 14 W R 173. and Bibee Meheroonnissa v. Abdool Gunee (1872) 17 W R 509. The letter of 20th February 1932 simply contains the offer or counter offer of the defendant. The acceptance of the plaintiff of this offer was oral and not in writing. The contract to lease therefore in the present case is not in writing. The trial Judge did not consider this letter as a written contract to lease. He definitely said that there was no written contract embodying the terms of the proposed lease. He evidently treated the letter as evidence of the negotiation between the parties relating to the oral contract. The lower Appellate Court has no doubt observed in one part of its judgment that the defendants came into possession of the premises from 1st March in pursuance of an agreement as embodied in the letter, but his judgment read as a whole clearly indicates that he also held that the contract was oral as alleged by the plaintiff and as found by the trial Court.
9. There being no contract to lease in writing in the present case, the question of its being signed by both the parties or of its being registered under the law cannot possibly arise. The provisions of Section 27-A are therefore not attracted to the facts of the present case and the plaintiff cannot claim specific performance under that section. The question then is whether Section 27-A precludes the plaintiff from specific performance of an oral contract to lease. Under Section 12, Specific Relief Act, the specific performance of any contract may in the discretion of the Court be enforced. But this power of the Court is subject to other provisions of Chap. 2, Part 2 of the Act. If therefore the law permits an oral agreement to lease, there is no reason why it cannot be enforced specifically. In Baranashi Dassi v. Papat Velji Rajdeo AIR 1919 Cal 710 Woodroffe J. observed as follows:
The next question is then whether there can be an oral agreement to lease. It has been so held. Section 107, T.P. Act, refers to leases, that is, actual transfers of property and not to agreements to lease. Under the Registration Act, 'lease' includes 'agreement to lease'. It is not necessary to discuss the law as to registration of written agreements for lease or written and unregistered leases, for the agreement before us was a verbal one. It is enough to say that Section 49, Registration Act, only provides that no unregistered and registrable document shall affect any immovable property comprised therein or be received as evidence of any transaction affecting such property. What is precluded in either case is the affecting of the property. It by no means follows that an agreement to lease, that is, an obligation to transfer is a transaction affecting the property. However, I need not discuss what, having regard to the facts and to my finding that an oral agreement for a lease is valid, is unnecessary.
10. Sanderson C.J. observed in the same case:
This involved an implied agreement (oral) to do everything necessary to make the agreement effective in law, which would include a right in the (plaintiff to call for a formal lease.
11. In Sanjib v. Santosh AIR 1922 Cal 436 this Court observed:
Oral agreements for leases are allowed by the law. If any such concluded agreement...is not followed by any more formal and effective transfer...there would seem to be no difficulty...in the way of applying the rule in Banjib v. Santosh AIR 1922 Cal 436 (1882) 21 Ch D 9 and Bibi Javahir Kumari v. Chatterput Singh (1905) 2 C L J 313 by granting a decree for specific performance of the original agreement.
12. There cannot be any doubt therefore that an oral agreement to lease could be enforced specifically before the introduction of Section 27-A, Specific Relief Act, by Act 20 of 1929. It is however contended by the learned advocate for the appellant that after the introduction of Section 27-A in Ch. 2, Specific Relief Act, Section 12 must be read as controlled by Section 27-A and consequently by operation of Section 27-A an oral agreement is no longer specifically enforceable. The provisions of Section 27-A however are subject to the other provisions contained in Ch. 2, Specific Belief Act, including Section 12. A contract to lease may be oral or in writing. It may create a present demise or it may not. If an agreement to lease creates a present demise and operates as a lease, it is required to be in writing and registered: (see Section 107, T.P. Act, 1882 and Section 17 and Section 2 (7), Registration Act). If it does not create a present demise, it is not required to be in writing or registered. Now what would happen if an agreement to lease creates a present demise, but is not registered? In Sanjib's case it was held by this Court that on such an agreement a suit for specific performance could not be founded even though the tenant was put in possession in pursuance of the said agreement as the document was hit by Section 49, Registration Act, and could not therefore be put in evidence. In that case the learned Judge observed:
If I admit the document at all, it seems to me that I would be receiving it as evidence of a transaction affecting the property.
13. By Section 55 of Act 20 of 1929 a lease of immovable property if made by a registered instrument is to be executed by both the lessor and the lessee. A contract to lease which creates a present demise must therefore be now in writing and must be signed by both the lessor and the lessee. It must also be registered. In view of the decision in Sanjib's case, the lessor would be entitled to treat the lessee in possession as a trespasser if the contract was not registered. In order to prevent this fraud, Section 27-A was introduced into the chapter on specific performance in Specific Relief Act. A proviso has also been added to Section 49, Registration Act, in order that such unregistered contract may be received as evidence of a contract in a suit for specific performance under Ch. 2, Specific Relief Act. The object of Section 27-A was therefore not to take away the right to claim specific performance in cases where such right existed before the introduction of that section in the Specific Belief Act. If there is a valid oral agreement to lease, and it has not been followed by a formal or effective transfer, it can still be specifically enforced. But if the agreement to lease is not oral but is as indicated in Section 27-A, in order to enable the lessor to claim specific performance, he must show that the contract on which] he relies fulfils all the requirements of Section 27-A. Section 27-A, in my opinion, does not abrogate the right to the specific performance of an oral agreement which is given by Section 12, Specific Relief Act. I am therefore unable to accept the contention of the learned advocate for the appellant that Section 27-A operates as a bar to the plaintiff's claim for specific performance of the oral agreement.
14. The second point urged by the learned advocate for the appellant is that the plaintiff cannot claim specific performance, inasmuch as at the time when the con. tract to lease was made, the plaintiff had no right to grant a lease for five years, as his own lease under Government at that time had only two years to run. Section 18 (a), Specific Relief Act, provides that if the lessor had an imperfect title to the property leased at the time of the lease, but if he subsequently acquires interest in the property, the lessee may compel him to make good the contract out of such interest. By Section 25 (b) of the same Act a contract for letting property cannot be specifically enforced in favour of the lessor if the lessor, who, while entering into the contract believed that he had a good title to the property, but within the time fixed by the parties or by the Court for the completion of the letting was unable to give the lessee a title free from any reasonable doubt. It appears that the plaintiff in this case under the terms of the unexpired lease had a right to renew the lease at the time when he agreed to let. At the time when he entered into the contract he therefore believed that he had good title to the property. It further appears that after the contract the lease has been actually renewed for 30 years (Ex. 8). The plaintiff's claim for specific performance of the contract to lease cannot, therefore, be refused on the ground that he is not in a position to give the lessee a title free from reasonable doubt.
15. The third point raised by the learned advocate for the appellant is that under the terms of the lease on the basis on which he holds the land under Govern-ment, the plaintiff has no right to sublet without the permission of the Collector of 24-Parganas and as the plaintiff admittedly did not obtain such permission before the contract or the institution of the suit, the plaintiff cannot claim specific performance of the contract. By Section 18 (b), Specific Relief Act, where a person contracts to let property in which he has an imperfect, title and where the concurrence of other persons is necessary to validate the title and they are bound to convey at the lessor's request, the lessee may compel him to procure such concurrence. This provision contemplates a case where the third person whose concurrence is necessary is bound to convey at the lessor's request. It does not contemplate a case where the third person is not bound, to convey. Section 18 lays down certain rights which the purchaser or the lessee of a property has against the vendor or lessor who having an imperfect title thereto contracts to sell or let. It does not make the contract invalid. The absence of concurrence of persons whose consent is necessary to validate the transfer is no doubt a serious defect in the title of the lessee. Under the provisions of Section 25 (b), Specific Belief Act, the Court cannot enforce a contract specifically if the lessor enters into a contract believing that he has a right to sub-let but within the time fixed by the parties or by the Court he cannot procure the consent of his landlord to the sub-lease. But if he is called upon by the lessee or by the Court to obtain the concurrence of his lessor and he succeeds in obtaining such consent, I see no reason why the contract cannot be specifically enforced. If a person agrees to let, there is an implied covenant on his part to do all things necessary to make the transfer effective. If the lessor is in a position to do all things that are necessary for completing the title of the lessee, there is no reason why the contract to lease could not be specifically enforced: see Moti Lal v. Nanhe Lal . The objection that the plaintiff is not entitled to claim specific performance of the contract to lease, as he did not take the per-mission of the Collector for granting a sub-lease, was not taken in the written statement nor was it put into issue. It was not debated in any of the Courts below. No facts were brought to my notice which would go to show that there was any reason why such permission of the Collector could not be obtained by the plaintiff within the time fixed by the parties or by the Court. The defendant therefore at this stage cannot be allowed to contend that the plaintiff is not entitled to claim specific performance of the contract as he did not obtain the sanction of the Collector of 24-Parganas to grant a sub-lease before the contract or before the institution of the suit.
16. The last point urged by the learned advocate for the appellant is that the plaintiff's claim for specific performance is barred by limitation. This point apparently was not pressed in any of the Courts below. After the oral contract, the defendant agreed to execute a formal registered lease. The time within which this was to be done was not specified. A notice was served upon the plaintiff by the defendant on 25th January 1935, intimating that he was a monthly tenant and was entitled to vacate by giving a notice. From this notice the plaintiff for the first time came to know that (he?) would not complete the transaction by a formal instrument. The suit is evidently within three years from that date and consequently it is not barred by limitation. The result therefore is that this appeal fails and is dismissed with costs.
B.K. Mukherjea, J.
17. This appeal is on behalf of the defendant and arises out of a suit commenced by the plaintiff for specific performance of a contract alleged to be entered into by and between him and the defendant under which the latter agreed to take a lease of the property in suit for a period of five years on certain terms. It is alleged in the plaint that the plaintiff is the lessee of premises No. 33, Canal East Road, under the Government and that the defendant by his letter dated 20th February 1932 offered to take a lease of the said premises for a period of five years at a rent of Rs. 150 a month. He also offered to pay the occupier's share of the Municipal taxes payable in respect of the premises and wanted the lessor to put him in possession of the same as soon as it was fit for occupation. This offer was accepted by the plaintiff on 23rd February 1932, and on 1st March next the defendant was put into possession and he occupied the premises since then on payment of the stipulated amount of rent and taxes. No registered lease was executed between the parties and on 25th January 1935, the defendant gave a notice to the plaintiff that he would vacate the premises on the last day of February following alleging that he was a monthly tenant under the plaintiff and did not require the premises any further. On 22nd February 1935, the present suit was instituted by the plaintiff and the plaintiff claimed a specific performance of the contract mentioned above under which the plaintiff agreed to take a lease for a period of five years. In the alternative, the plaintiff claimed compensation under Section 19, Specific Belief Act, There was an additional prayer for rent for three months from November 1934 to January 1935.
18. The defence was that there was no valid concluded agreement; that the plaintiff himself had no title to the property at the date of the contract, and that the contract was wanting in mutuality and the defendant was really a monthly tenant in respect of the premises in suit which he vacated after proper notice to quit on 28th February 1935. The plaintiff there-fore was not entitled either to specific performance or to compensation under Section 19, Specific Relief Act. As regards the claim for rent, it was said that the rent for the month of January 1935 only was due and that the defendant was ready and willing to pay the same. The trial Court came to the conclusion that there was a concluded agreement under which the defendant promised to take a lease of the premises in suit for a period of five years but as the property was already vacated, the Court below did not think it proper to decree the claim for specific performance. It gave plaintiff a relief by way of compensation under Section 19, Specific Relief Act, and fixed the compensation at Rs. 1,800 which was one year's rent payable in respect of the premises. The claim for rent for the month of January 1935 was also allowed. This decision was affirmed in appeal by the Court of Appeal below. Mr. Nalin Chandra Paul who appears in support of the second appeal has challenged the propriety of the decision of the, Courts below on a number of grounds and I propose to take them up one after another.
19. In the first place it is said that the con-tract to lease not being signed by the parties or on their behalf, no specific performance could be claimed under Section 27-A, Specific Relief Act, even though there were acts or part performance as contemplated by the section. This section, (27-A), was inserted in the Specific Belief Act by Section 3 of the Amending Act, 21 of 1929, the same Act by another section introducing the Proviso to Section 49, Registration Act. It gives effect to the doctrine of part performance enunciated in Section 53-A, Transfer of Property Act, by allowing a specific enforcement of a contract to lease which is in writing and signed by both the, parties or on their behalf and which, though required to be registered, is not registered, provided there are acts of part performance within the meaning of the section. The Legislature makes this special provision with regard to 'contract to lease' which in my opinion has been used in the same sense as an 'agreement to lease' under Section 2, Clause (7), Registration Act, and which is compulsorily registrable if it comes under Section 17, Clause (d) of the Act. The section does not contemplate a case where one party has agreed to grant or take a lease at some future time or the terms of which are to be defined by documents which are to be executed or afterwards, but is confined to cases where an agreement creates a present and immediate demise. As the Judicial Committee observed in Hemanta Kumari Debi v. Midnapur Zemindari Co. Ltd. AIR 1919 P C 79.
An 'agreement for a lease' which a lease is by the statute declared to include must...be a document which effects an actual demise and operates as a lease.
20. It appears to me that it is for this reason that the Legislature has made the aforesaid provision in Section 27-A, Specific Relief Act; for, in any other contract, e. g. for sale, exchange or mortgage, no deed in writing or registered is necessary and there will be no difficulty in proving such contracts, even if unregistered, either for the purpose of part performance or for specific enforcement in law. It was held by this Court in Banjib v. Santosh AIR 1922 Cal 436 that when the agreement to lease created a present demise, then even if the lessee got possession of the property in pursuance of the same, he could not sue for specific performance because he could not prove the agreement which required registration. This section, (27-A), is obviously aimed at removing this difficulty. It is curious however to note in this connection that the Proviso to Section 49, Registration Act, which was inserted by the same Amending Act is not confined to oases where there has been delivery of possession or other acts of part performance, and it is laid down in the most general fashion that any registered document affecting immovable properties and required by the Act or by the Transfer of Property Act to be registered, may be received as evidence of contract in a suit for specific performance under Ch. 2, Specific Relief Act, or for proving part performance under Section 53-A, T.P. Act.
21. The Legislature, it seems, has made an exception to the general rule contained in this Proviso by Section 27-A, Specific Relief Act. If the contract to be enforced is a contract to lease within the meaning of Section 27-A, it is incumbent upon the plaintiff to show not only a contract in writing signed by both the parties but also delivery of possession of the property in part performance of the contract. In the present case therefore, the controversy narrows down to the short point as to whether there can be said to be any contract upon which the plaintiff relies, which operates as a present demise and which requires to be registered under the provisions of the Registration Act. If this question is answered in the affirmative, the appellant can certainly insist that all the formalities of Section 27-A, Specific Relief Act, should be complied with before the plaintiff is given a decree for specific performance. Mr. Gupta appearing on behalf of the respondents seeks to repel his argument by saying that the case would not come at all within Section 27-A, Specific Relief Act, as there was no contract in writing which would require registration and even if the letter of 20th February 1932 be considered as embodying that agreement, it did not purport to create a present lease and did not come within the mischief of the law of registration. In my opinion this view is sound and must prevail.
22. It is not the case of either side that there was any written contract in this case of which specific enforcement was prayed for. The plaintiff stated in the plaint that the letter of 20th February 1932 contained the proposals of the defendant and that they were accepted by the plaintiff on 23rd February following. No letter of acceptance is admitted to have been received by the defendant and none was produced in the case, and it cannot be said therefore either in fact or in law that this letter of 20th February 1932, which at best contained the offer or the counter offer of the defendant, did constitute the entire agreement within the meaning of law. It may be that if the contract was entered into by exchange of letters, the letter of offer as well as that of acceptance both taken together might constitute the whole lease which would require registration under the law if they purported to create any instant demise; but the facts in this case are otherwise. The trial Court came to the definite conclusion that the agreement was oral, implying thereby that the letter of 20th February 1932 was a. mere piece of evidence from which the terms could be gathered, and although our attention has been drawn to an observation in the lower Appellate Court's judgment to the effect that the defendant came into possession of the premises in pursuance of that agreement as embodied in the letter, the learned Additional District Judge did not intend in my opinion to say more than this that the terms of the agreement were to be found in the letter of 20th February 1932. It can never be taken to be a finding that the letter in question embodied the whole contract between the parties and it cannot be looked upon as a concluded contract which would amount to an agreement to lease within the meaning of Section 2, Clause 7, Registration Act. In this view, I need not consider the other question as to whether the agreement to lease can be said to create a pro-sent demise in view of the fact that the lease did not effect immediately on the date that the agreement was said to have been entered into; and it is unnecessary also to consider as to whether the intention of the parties was that the agreement by itself would create the lease without the necessity of any further formal document. The Registration Act strikes only at documents and not at transactions and if there is no document in existence, the question of an agreement which is found to be a purely oral agreement as coming within the mischief of the law of registration does not at all arise. In my opinion it cannot be seriously argued that Section 27-A, Specific Relief Act, lays down certain additional requirements and that after the insertion of this section it is necessary that all contracts to lease must be made by writing which has to be signed by both the parties to the contract. I would therefore overrule the first contention that has been put forward by Mr. Paul.
23. The second argument that is raised by Mr. Paul is that the contract could not be specifically enforced as the plaintiff, knowing full well that he had no right as a lessee under Government for a period of five years from the date of the contract, agreed to let out the premises to the defendant for that period. This contention was not seriously put forward in either of the Courts below and in my opinion has got no substance. The plaintiff was a lessee under the Government for a period of 30 years and the period would run out in course of two years more after February 1932. It appears also that there was a renewal clause in the plaintiff's lease with the Government under which the plaintiff was entitled to get a renewed lease for another period of 30 years in terms of the said agreement and the finding actually is that the plaintiff has got a renewed lease in accordance with those terms for another period of 30 years. Under these circumstances the question of want of title does not at all arise in the present case.
24. The third contention that is raised by Mr. Paul is that even if the plaintiff had title, he could not grant a lease without the consent of his lessor, and as no such consent was taken even at the date of the institution of the suit, there was no legally binding contract which could be enforced in law. This argument would have been of some substance had there not been an infirmity attached to it by reason of the fact that there was no foundation laid for this contention either in the pleading or in the issues. It is perfectly true that if this fact was pleaded by the defendant in the written statement, the Court could have insisted upon the plaintiff's getting the required sanction from the Government before the plaintiff could get a decree for specific performance or the decree could have been passed in the conditional form in which it was passed in the case of Motilal v. Nanhe Lal that went up to the Judicial Committee and is reported in Moti Lal v. Nanhe Lal . As observed by the Judicial' Committee in that case, when the plaintiff cannot lease out the land without the consent of some other person, the contract must be deemed to contain an implied covenant on his part to do all that is necessary to effect such transfer. Had the question been raised properly at any stage of the suit, the plaintiff could have satisfied the Court as to what the circumstances really were, for, as a matter of fact, the defendant was enjoying the possession of the property without any objection for a period of nearly three years and he could also have secured the consent if it was necessary even at the date when the decree was passed. Under these circumstances it would not be proper to allow this question to be raised for the first time in second appeal, seeing that it is not a true point of law but requires investigation of facts which can be done only after proper evidence is adduced on this point in the trial Court. The last contention which raises the plea of limitation cannot certainly be seriously pressed. Accepting that the plaintiff's story is correct and it is found to ha correct by the Courts below, the date of the contract was 23rd February 1932, and even from that date the present suit was within three years. The result is that I agree with my learned brother that the appeal should be dismissed.