B.R. Dube. J.
1. The questions which are referred to the Full Bench for opinion are as under :
(i) Whether an unregistered lease-deed can be used to show the nature and character of possession of the defendant that is whether he is a tenant in the premises or not and (ii) Whether assuming the demise of the premises to be under unregistered lease deed Ex. P.2, then whether a monthly tenancy can be presumed on the facts and circumstances of this case.
2. The facts- giving rise to this reference may be briefly stated. The plaintiff filed a suit for ejectment and arrears of rent against the defendants on the basis of an unregistered lease deed dated 13-7-1972 vide Ex. P.2. It was alleged that the plaintiff had purchased the suit house from the defendant No. 1 on 13-7-1972 under a registered sale-deed and he later became her monthly tenant on a rent of Rs. 170/- per month. The tenancy was for a period of one year commencing from 13-7-1972 and it was for non-residential purposes. It was also alleged that the defendant No. 1 illegally sub-let the suit premises to the defendant No. 2. The plaintiff, therefore, served a notice on defendant No, 1 on 6-12-1972, terminating the tenancy by the end of the tenancy month on 12-2-1973.
The defendants resisted the suit on the ground that in the money-lending transactions which took place between defendant No. 1 and plaintiff's father-in-law, a bogus sale-deed was executed by the defendant No. 1 by way of security for the loans but the parties never intended to act upon that document. It was further averred that the defendant No. 1 continued to be in posse-ssion as owner and the suit premises was not let out to him. According to the defendant No. 1, the lease deed was a bogus document. The allegations of sub-letting were also denied. It was further averred that the lease deed was under-stamped and not registered and it could not be admitted in evidence.
3. The plaintiff made an amendment in the plaint to the effect that at the time of finalisation of the sale transaction, an oral lease accompanied by delivery of possession was created and the lease deed was only a memorandum of the oral lease already entered into, between the parties. At the stage of evidence, the plaintiff sought to admit the lease deed Ex. P.2 in evidence. He also desired to lead evidence with respect to the alleged oral lease. The defendants raised objections to the admissibility of the said document in evidence on the ground that it was not registered. They also objected to the recording of evidence to prove oral lease. The trial Court overruled the objections and allowed the lease deed to be admitted in evidence. It also permitted the plaintiff to lead evidence with respect to the alleged oral tenancy. Against that order, the defendants had come to this Court in revision.
Our learned brother C. P. Sen, J., who heard the revision, felt the necessity to place the record before Honourable the Chief Justice for orders to constitute a larger bench, as according to him there was apparent conflict between the division Bench decision of the Nagpur High Court in Dammulal v. Mohd. Bhai, AIR 1955 Nag 306 and the division Bench decision of this Court in Smt. Dhana Bai v. Smt. Kewara Bai, 1972 MPLJ 227 = (AIR 1972 Madh Pra 100), on the question whether an unregistered lease deed is admissible in evidence for the collateral purpose of proving the nature of possession. The learned Judge pointed out that according to the view taken in Dammulal v. Mohd. Bhai (supra) an unregistered lease deed can be used to show the nature and character of possession of the defendant, but in the later decision of this Court in Smt. Dhana Bai v. Smt. Kewara Bai (supra), the question which was dealt with as 'point No. 2', that is, whether the rent note even if it required registration was admissible under the proviso to Section 49 of the Indian Registration Act for the collateral purpose of proving the nature of possession of the defendants, was decided in the negative.
4. According to the first paragraph of Section 107 of the Transfer of Property Act, 1882, a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. The second paragraph of this section was substituted for the original sub-paragraph (2) by amending Act 6 of 1904, to the effect that all other leases may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. In the original sub-paragraph (2), the word 'registered' was omitted. Thus, with the addition of the word 'registered' in the present second paragraph of the said section, it is clear that all other leases not covered by the first paragraph may be made either by oral agreement accompanied by delivery of possession or by a registered instrument.
There is of course a proviso to Section 107, according to which the State Government may, from time to time, by notification in the official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases may be made by unregistered instrument or by oral agreement without delivery of possession. It is true that Section 17(1)(d) of the Registration Act makes registration compulsory only for the leases under Section 107. paragraph (1) of the Transfer of Property Act. However, all other leases whose registration is not compulsory under Section 17(1)(d) of the Registration Act. become compulsorily registrable, if reduced into writing by virtue of second paragraph of Section 107 of the Transfer of Property Act read with paragraph (2) of Section 4 of the Transfer of Property Act, according to which Sections 54. paragraphs 2 and 3, 59. 107 and 123 of the said Act shall be read as supplemental to the Indian Registration Act, 1908. Therefore, the effect is to exclude from evidence all unregistered leases which are reduced into writing. This view gets support from the decision in Mst. Nasiban v. Md. Sayed. AIR 1936 Nag 174.
5. As regards effect of non-registration of documents required to be registered, Section 49 of the Indian Registration Act may be seen which reads thus :
'No document required by Section 17 or by any provision of the Transfer of Property Act. 1882. to be registered shall--
(a) affect any immovable property comprised therein; or
(b) confer any power to adopt, or
(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered.'
[Provided that an unregistered document affecting immovable property and required by this Act or the Transfer of Property Act, 1882 (4 of 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 (I of 1877). or as evidence of part performance of a contract for the purposes of Section 53A of the Transfer of Property Act, 1882 (4 of 1882), or as evidence of any collateral transaction not required to be effected by registered instrument].
From the aforesaid Section it is clear that the said section does not say that an unregistered document which requires to be regis-tered, shall not be received in evidence. The only bar is that such a document cannot be received as evidence of any transaction affecting the property. As a matter of fact, the proviso to Section 49 clearly empowers the Courts to admit any unregistered document as evidence of collateral transaction not required to be registered. A Division Bench of the Nagpur High Court in Dammulal v. Mohd. Bhai, AIR 1955 Nag 306 (supra), clearly held that an unregistered lease deed was admissible to prove the nature and character of possession of the defendant and that Section 49 of the Registration Act did not come in the way. There is a latest decision of the Supreme Court in M. Chelamayya v. M. Venkatratnam, AIR 1972 SC 1121 wherein their Lordships of the Supreme Court were required to examine the question as regards the admissibility of an award which was not registered. In the award, which was for consideration, there was reference to the partition of the immovable properties made between 26-3-1952 and 30-5-1952 amongst the four members of the joint Hindu family, i. e. Venkataratnam, Venkataswami, Chelamayya and Narainmurthi.
There was a finding with regard to the amount in excess of their share recovered by Chelamayya and Narain Murti and their liability to account for the same to the other two members, namely Venkataratnam and Venkataswamy, Lastly, there was a creation of a charge on immovable properties of Chelamayya and Narainmurty for the payment of the amount found due and payable to Venkataratnam and Venkataswami. As regards the direction in the award to pay the sum of money by one party to another, there was no difficulty because that created a personal liability and the award containing such a direction did not require registration. However, the point raised for consideration was that since the award created a charge also for the payment of the amount due on immovable properties, the whole transaction had to be regarded as one and unseverable and hence the instrument could not be read in evidence for want of registration. On considering the said question, their Lordships of the Supreme Court held as under :
'Since the charge was not registered, it will be correct to say that the document will not affect the immovable properties of the appellants sought to be charged. It will not also be received as evidence of any transaction affecting such property that is to say, in this case, as evidence of the charge. It should be noted that the section does not say that the document cannot be received in evidence at all. All that it says is that the document cannot be received as evidence of any transaction affecting such property. If under the Evidence Act the document is receivable in evidence for a collateral purpose, Section 49 is no bar. This construction of the provision which was accepted for a long time by the High Courts, has been duly recognised by the Amending Act 21 of 1929 which added a proviso to the section. The proviso clearly empowers the Courts to admit any unregistered document as evidence of a collateral transaction not required to be registered.'
Even in Smt. Dhana Bai v. Smt. Kewara Bai. AIR 1972 Madh Pra 100 (supra) while proceeding to decide point No. 2 which was raised in that case, the division Bench of this Court in which one of us (A. P. Sen, J.) was a party, did not lay down that an unregistered lease deed cannot be admitted in evidence even for collateral purpose. The discussion with respect to point No. 2 in paragraph No. 10 is as under :
'The plaintiff is trying to use the unregistered rent note (Ex. P/16) to prove the transaction of lease, and not for any collateral purpose. The terms of a lease is not a collateral purpose. In Dulichand v. Devidin (Second Appeal No. 346 of 1964, decided on 6th September. 1965) (Madh Pra). Naik. J. stated as follows :
'It is settled law that the document compulsorily registrable, if unregistered, is inadmissible in evidence of a transaction affecting immovable property.....
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.....Collateral purpose is that which is by the side of or distinct from the main purpose. A term of a deed of lease being one of its main purpose, it could not be termed a collateral purpose within the meaning of the proviso to Section 49 of the Indian Registration Act.'
'We are in respectful agreement with that view. That was the view taken by Shevde, J. in Karimulla Khan v. Thakur Brianu Pratapsingh, AIR 1949 Nag 265 and Fatelal Shah v. Dayalal, ATR 1949 Nag 218. The answer to the second point must, therefore, be in the negative.'
Thus, in deciding point No. 2. the settled law on the subject is reiterated that a document compulsorily registrable, if unregistered, is inadmissible in evidence of a transaction affecting immovable property. However, it appears that while recording the answer to point No. 2 in the negative, the learned Judges lost sight of the fact that it involved the question as regards the admissibility of the rent note for the collateral purpose of proving the nature of possession of the defendant. It appears that the answer in the negative was given with the assumption that the plaintiff in that case, was intending to use the unregistered rent note to prove the transaction of lease.
As a matter of fact, this Court, while proceeding to decide point No. 2. was aware of the position that an unregistered document could be used to prove a collateral transaction, but it was right in saying that the terms of lease was not a collateral purpose. The manner in which the said point was dealt with, does not indicate that the learned Judges were inclined to take a contrary view that an unregistered instrument could not be used in evidence even to prove a collateral transaction. There was, therefore, to real conflict with the view taken in the decision in Dammulal v. Mohd. Bhai, AIR 1955 Nag 306 (supra) and the answer to point No. 2 ought to have been recorded in the affirmative. The answer given in the negative on the said point was clearly an error apparent on the face of the record which could be corrected at any time by this Court.
6. The law is, therefore, well sealed that an unregistered lease deed can be admited in evidence to prove the collateral transaction. Now the question which arises for consideration is what is a collateral transaction or a collateral purpose and to what extent oral evidence can be allowed. In the Indian Registration Act by Mulla (7th edition) it has been stated at pages 204 and 205 as under :
'Where a document is inadmissible in evidence for want of registration, no oral evidence can be received, having regard to Section 91 of the Indian Evidence Act, 1872, of the terms of the transfer effected by the document, whether it be a sale, mortgage or any other transfer. Similarly, where a deed of partition is not registered, oral evidence is not admissible to establish the plaintiff's title to any of the immovable properties allotted to him under the deed. But though a document which requires registration is not registered, oral evidence is admissible to prove facts which do not constitute the terms of the document. Thus, the fact of partition may be proved by oral evidence although the deed embodying the terms of partition cannot be proved for want of registration. The principle is that the fact of the existence of a particular relationship may be shown by oral evidence, though the terms which govern such relationship appear to be in writing. Thus a tenancy may be proved by oral evidence though there is a lease which is unregistered Similarly where a tenancy is admitted, the nature of the tenancy, e. g. whether the rent is liable to enhancement, may be proved without putting the lease in evidence. But rent reserved by an unregisterd lease cannot be proved by oral evidence, for it is a term of the lease. A landlord, therefore, under an unregistered lease, to whom rent is due, cannot recover the rent payable under the lease; he is entitled to recover only as for use and occupation, but he may use the unregistered lease for the collateral purpose of ascertaining the fair amount of compensation for use and occupation.'
In Padma Vithoba v. Mohd. Multani, AIR 1963 SC 70, reliance was placed on the decision in Varada Pillai v. Jeevarathnammal, AIR 1919 PC 44 for holding that the endorsement of cancellation on the back of sale deed, if not registered does not extinguish title of the vendee and it is not admissible in evidence except to show character of possession of vendee. In Rajendrasingh v. Hulasdass, AIR 1945 Nag 69 it was held that the landlord cannot sue for rent on the basis of unregistered lease deed. Similarly, in Fatelal Shah v. Dayalal, AIR 1949 Nag 218 it was laid down that the question as to who is the tenant and on what terms he has been created a tenant are not collateral facts. They are important terms of the contract of tenancy which cannot be proved by admission of an unregistered lease deed into evidence. The Nagpur High Court, in another decision in Umar Haji Shop v. Badridas Ramrai Shop, AIR 1941 Nag 72 while relying on Varada Pillai v. Jeevarathnammal, AIR 1919 PC 44 (supra), held that though unregistered lease deed is ineffective to pass title, it can be used to explain the nature of possession taken under it. It may oprate as starting point for adverse possession of vendee if he has set up independent title.
7. It is true, as held in Panchapagesa v. Kalyanasundaram, AIR 1957 Mad 472 that the expression collateral purpose is a very vague one and the Court must decide in each case whether the purpose for which it is sought to use the unregistered document is really a collateral one or is to establish directly the title to immovable property sought to be conveyed by the document. As stated by this Court in Dulichand v. Devidin S. A. No. 346 of 1964, D/- 6-9-1965 (Madh Pra) collateral purpose is that which is by the side of or distinct from the main purpose. In Mulla on the Transfer of Property Act, 1882 (Sixth Edition), it is stated at page 641 that the essential elements of a lease are (1) the parties, (2) the subject-matter or immovable property, (3) the demise or partial transfer, (4) the term or period, and (5) the consideration or rent. It is, therefore, clear that the nature and character of possession, or the relationship of a landlord and the tenant are purposes which are by the side of or distinct from the main purpose of a lease.
8. In the decision in Mohanlal v. Ganda Singh, (AIR 1943 Lah 127) (FB) (supra) which was relied on by this Court in Smt. Dhana Bai v. Smt. Kewara Bai, (AIR 1972 Madh Pra 100) (supra), it has been held as under:
'A rent note (not compulsorily registr-able under the Registration Act) executed by a tenant in favour of a landlord, if not registered, can be relied upon to establish the relationship existing between the parties. For, it contains an admission or an acknowledgement by the person attempted to be made liable and should be the very best evidence that one can possibly have as to the oral agreement of a lease and a Court is not prevented from looking into it for this purpose.'
9. Much reliance was placed by the learned counsel for the applicants on the decision in Mst. Kirpal Kaur v. Bachan Singh, AIR 1958 SC 199. In our opinion, the facts of that case are distinguishable and can be briefly stated. One Ram Datta, a Hindu Jat, died in April or May 1920 leaving certain lands. Ram Datta had a son Jeona who predeceased him leaving a widow Harnam Kaur. She had a daughter Kirpal Kaur who was the appellant before the Supreme Court. Kirpal Kaur had a son of the name Satwant Singh. Ram Datta had certain collaterals as well. The dispute was between collaterals on the one hand and Harnam Kaur and Kirpal Kaur on the other. On Ram Datta's death, Harnam Kaur took possession of lands on 24-8-1920, and she obtained mutation as owner.
Later on, by a deed dated 27-11-1929, Harnam Kaur made a gift of half of the lands to Kirpal Kaur and that gave rise to certain litigation. However, the disputes were settled at the intervention of certain persons and a document was executed on 6-2-1932, giving life interest to Harnam Kaur and after her death, to Kirpal Kaur. That document was not registered. Later on, in the year 1939, Harnam Kaur again made gift of the entire lands to Kirpal Kaur and the latter obtained mutation showing her to be the owner. That eventually brought about the institution of the suit by the collaterals. In that suit, the unregistered deed dated 6-2-1932 was sought to be admitted in evidence to show the nature of possession of Harnam Kaur. While considering that question, their Lordships of the Supreme Court held as under :
'We cannot agree that on the authority of Varada Pillai's case, the agreement of 6-2-1932 can be admitted in evidence to show the nature of possession. In the present case, Harnam Kaur had been in possession before the date of the document and to admit in evidence to show the nature of her possession subsequent to it, would be to treat it as operating to destroy the nature of the previous possession and to convert what had started as adverse possession into permissive possession and, therefore, to give effect to the agreement contained in it which admittedly cannot be done for want of registration- To admit it in evidence for the purpose sought would really amount to getting round the statutory bar imposed by Section 49 of the Registration Act.'
10. The contention of the learned counsel for the applicants is that in the instant case, the applicants (defendants) being the owner of the suit house, were in its possession and the -sale deed which was a bogus document executed by way of security to the loan transactions was not intended to be acted upon. It is further urged that the applicants (defendants) were not put in actual possession under the oral lease and the lease deed which purported to effect the transfer in praesenti being not registered, could not be admitted in evidence to prove the delivery of possession to the applicants as tenants of the plaintiff. In our opinion, this contention has no force. The (plaintiff) non-applicant having already pleaded oral tenancy prior to the execution of the tease deed, it is for the plaintiff to lead evidence in support of it and it is for the trial court to decide that point. The lease deed certainly cannot be admitted in evidence to prove the terms of the lease. However, by the said document, the nature and quality of possession of the applicants can be proved as it would be certainly a collateral purpose. The nature of possession sought to be proved by this lease deed is not intended to be used against the applicants to affect their previous right vested in the immovable property as was the position in Mst. Kirpal Kaur v. Bachan Singh, AIR 1958 SC 199 (supra). In ca.se the non-applicant (plaintiff) can establish the tenancy by showing the nature of the applicants' possession on the suit land and other attending circumstances, the non-registration of the document in question will not come in his way. The said document would be used for the limited purpose of showing the relationship existing between the parties.
11. As held in Ugni v. Chowa Mahto, ATR 1968 Pat 302 (FB) Section 91 only excludes other evidence of terms of a docu-ment, but not of existence of the contract or the relationship of landlord and tenant brought about by possession and payment of rent. While considering the oral evidence about the delivery of possession, the trial Court shall take into consideration whether there was a constructive possession for creating the lease. It has been held in Mohanlal v. Ganda Singh, AIR 1943 T.ah 127 (FB) that it is not necessary that delivery of possession must be physical at the time of the agree-ment. The delivery of constructive possession is quite sufficient for the purpose of Section 107. What is regarded as sufficient delivery of possession to complete a gift made by a Muslim or a Hindu should be enough under this section as well. In Ghanaram v. Paltoo, AIR 1954 Nag 109 it was held as under :
'Where the purchaser was already in possession as an adhiya under a lease, it was not necessary that he should have first handed over possession of the property to the seller who should then have redelivered the property to the purchaser in order to constitute delivery of possession within the meaning of Section 54. It is enough if the character of possession changes.....
A mere existence of an unregistered instrument does not prevent the purchaser from falling back upon his title by the delivery of property. By mere delivery of property, the purchaser acquires a complete title and the fact that in addition to a good title by delivery he had a bad title by an unregistered instrument should not prejudice him.'
12. In Swarnalata Mitra v. Durga Prasad, ILR (1955) 2 Cal 214 a suit for ejectment and arrears of rent was brought on the allegation that the plaintiff's predecessor had purchased the suit property from defendant No. 2 and defendant No. 1, husband of defendant No. 2, was a confirming party to the sale deed; simultaneously with the sale, there was an agreement that the defendants would occupy the premises for three years as tenants on payment of real at a certain rate. The defence inter alia was that the transaction was a mortgage with a condition of reconveyance and that there was no relationship of landlord and tenant between the parties. The agreement was in a letter written by the defendants and was contended to have effected a present demise. On the qustion of admissibility of the letter in evidence, it was held by the Calcutta High Court as under :
'If it was looked upon as a present demise, it might be admitted for the collateral purpose of explaining the possession Of the defendants and establishing the relationship as landlord and tenant between the parties; and if it was regarded as not a present demise but recording an admission of the terms settled, it is also admissible to show that the defendants are tenants and Raghunath Prastd is successor in interest.'
In view of the aforesaid discussion, we are clearly of the view that the unregistered lease deed can be used to show the nature and character of possession of the defendants and virtually from the nature of possession and other circumstances the status of the applicants (defendants) as tenant in the premises can as well be established.
13. As already stated earlier, the unregistered lease deed cannot be used to prove the terms of the lease. Thus, it cannot be used to show the period of the lease and the rent on which the premises were demised, However, when from the nature of posses-sion and the relationship established between the applicants and the non-applicant, if a tenancy can be said to be proved, then by virtue of Section 106 of the Transfer of Property Act, a monthly tenancy between the parties can be presumed. The decision inj Dammulal v. Mohd. Bhai. AIR 1955 Nag 306 (supra) supports this view. In paragraph 25 of the said decision, it has been stated as under :
'Where a lease for a term of years or perpetuity is granted but it is invalid and the lessee enters into possession under such a lease, a tenancy may arise by implication from the payment of rent by the tenant and irs acceptance by the landlord and a presumption of a yearly or monthly tenancy under Section 106, T. P. Act may be drawn in such cases.'
In the above decision, while holding so, reliance was placed on an earlier decision in Karimullakhan v. Bhanupralapsingh, AIR 1949 Nag 265 in which it was stated in paragraph 12 as under :
'The last point that has been urged by Shri R. K. Rao, on behalf of the plaintiff, is that in view of the fact that the unregistered lease deed is invalid and cannot support the defence of permanent tenancy, the case falls within the purview of Section 106, T. P. Act, and that the defendants would be treated as tenants holding from year to year as the lease is for agricultural purposes. The provisions of Section 106, T. P. Act, govern all leases except those which are provided for by a valid contract or usage. If there is a valid contract, the parties will be governed by that contract which is enforceable at law and if there is no valid contract as there is none in the present case, the lease being invalid for want of registration, the relations of the parlies must, in my view, be governed by the provisions of Section 106, T. P. Act. If the defendants were let into possession by the plaintiff's predecessors-in-title as tenants, but they failed to establish that they were let into possession with rights of permanent occupancy, their position will be only that of tenants from year to year and they can acquire by prescription no right of permanent occupancy even by the fact that they were setting up a right of permanent occupancy to the knowledge of the plaintiff's predcces-sors-in-title for upwards of 12 years before the date of suit '
14. Thus in the instant case, the period of the lease and the terms of the lease cannot be proved by admitting the lease deed Ex. P-2 in evidence. But looking to the facts and circumstances of the case, if relationship of landlord and tenant can be said to have been established between the parties, a monthly tenancy can be presumed under Section 106 of the Transfer of Property Act in view of the fact that The tenancy is not with respect to immovable property for agriculture or manufacturing purposes. (See Ram Kumar v. Jagdish Chandra. ATR 1952 SC 23).
15. For the aforesaid reasons, both the questions under reference are answered in the affirmative.