K. Veeran Ambalam Vs. Vellaiammal and ors. - Court Judgment

1. This second appeal Which raises interesting point of law under S. 77, Registration Act is preferred against the decree and judgment of the learned subordinate Judge of Madurai in A. S. No. 39 of 1956, confirming the decree and judgment of the learned District Munsif of Madurai Taluk in O. S. No. 86 of 1955.

(2) The facts are: The plaint properties belong to defendants 1 and 2. They usufructuarily mortgaged the said properties along with other properties to the plaintiff under a registered othi deed dated 25-5-1951. The plaintiff has been in possession of the properties from that date. The properties were leased back to defendants 1 and 2. They defaulted in the payment of rent. The plaintiff thereupon instituted S. C. S. No. 113 of 1953 on the file of the District Munsif's court, Melur, for recovery of the said rent and obtained a decree. The defendants 1 and 2 thereupon requested the plaintiff to take a sale of the properties for Rs. 3075/- in discharge of the othi amount and the decree amount, The plaintiff agreed to it and a contract of sale was entered into on 15-6-1954. Defendants 1 and 2 executed a sale deed on 17-6-1954. The plaintiff paid a sum of Rs. 300 in cash to defendants 1 & 2 as recited in the sale deed. The sale deed was attested by attesting witnesses. On 22-6-1954 the document was presented to the Sub-Registrar of Tamaraipatti by defendants 1 and 2 for registration. The Sub-Registrar returned the document as there were scorings and interlineations and directed that a fresh sale should be executed upon fresh stamp papers. The sale deed was presented by defendants 1 and 2 to the Joint District Registrar on 22-6-1954. Then at that stage the village Munsif of Meenakshipuram and his brother viz., the nephews of the first defendant intervened and dissuaded defendants 1 and 2 from registering the document. they decamped. The plaintiff could not get at them to register the document. In fact subsequent to the institution of the suit defendants 1 and 2 have secured old stamp papers purporting to bear the date of 4-5-1954 and have executed a sale deed in favour of the third defendant. It is made to appear as if this sale was anterior to the sale in favour of the plaintiff.

These facts have been established by the plaintiff and both the Courts below have found that the third defendant is not a bona fide transferee for value without notice of the sale in favour of the plaintiff. It is in these circumstances that the suit, out of which this second appeal arises, was filed by the plaintiff for specific performance. On coming to Court the plaintiff has been confronted with the contention that his remedy lay under section 77 of the Indian Registration Act and not by means of a suit for specific performance.

(3) Both the courts below relied upon three decisions of this court viz., Venkataswami v. Kristayya, ILR 16 Mad 341 Sanga Thevar v. Thanukodi Ammal : AIR1954Mad116 and Venkatasubbayya v. Venkatarathnamma : AIR1954Mad681 and held that this suit for specific performance will not lie and dismissed the plaintiff's suit. Hence this second appeal by the defeated plaintiff.

(4) On a review of the entire circumstances of the case, I have come to the conclusion that both the Courts below did not correctly interpret the scope of the aforesaid decisions as applied to the facts of this case and secondly, that they have not taken into consideration the other relevant decisions and that the plaintiff in the context of this case is entitled to specific performance. Here are my reasons.

(5) When a person executes a documents but refuses to appear before the registering officer and to admit execution, whether a suit will lie for specific performance of the implied contract to register unless steps have been taken under the Registration Act to register has been the subject matter of two sets of conflicting views necessitating elaborate discussion in the standard treatises on the Registration Act:

Mulla I. R. Act Fifth edition p. 276 and foll: Rustomji Law of Registration third edition p. 388 and foll: M. Krishnamachariar. The Law of Registration in B. 1 p. 452 and foll.; Sanjeeva Raw The Indian Registration Act 3rd edition by K. B. Sethi p. 431 and foll; AIR commentaries I. R. Act Third edition p. 526 to 530.

(6) Before examining the decisions the following points emerge from the facts of this case and they have to be borne in mind. First of all, this is a case where the contract of a sale has been entered into prior to the date of the sale deed. Secondly, the subsequent transferee has been impleaded as a necessary party to the suit for getting effective relief. It will be remembered that it has been found that the subsequent sale deed has been ante-dated in order to make it anterior to the sale deed in favour of the plaintiff.

Therefore, even if the sale deed in favour of the plaintiff is registered under section 77 of the Registration Act, that will not give him any effective relief, whereas in a suit for specific performance if the subsequent purchaser is found to have an antedated document and is not a bona fide transferee for value without notice, his sale will be avoided and specific performance will be granted to the plaintiff, thereby obtaining effective relief. Thirdly, this is not a case where the Registrar has refused to register the document.

On the other hand, the exeuctants after presenting the document for registration have decamped leaving the document in the hands of the Registrar. Fourthly, this was a case where an unregistered sale deed full of defects and corrections was returned necessitating the execution of a fresh document Fifthly, the plaintiff has not been guilty of any laches.

(7) I shall now proceed to examine the case law on the subject.

Nynakka Routhen v. Vavana Mahomed Naina Routhen, 5 Mad HCR 123. In this case an instrument, the registration of which was rendered compulsory by section 17 of the last Registration Act (Act No. XX of 1866) was destroyed accidentally by fire soon after its execution and before registration. It was held in the suit to compel the defendant to execute another instrument to the same effect as that which had been destroyed, that secondary evidence of the contents of the unregistered instrument was admissible and that the plaintiff was entitled to the relief prayed for.

Adakklam v. Theethan, ILR 12 Mad 505. In a suit for redemption filed by an assignee for value of the equity of redemption against a mortgagee in possession, it was found that the mortgagor had agreed with the defendant to sell the mortgage premises to him, that part of the purchase-money had been acknowledged as paid, and that the balance had been tendered in pursuance of the agreement. It was further found that the plaintiff had taken his assignment with notice of the above agreement and tender. The agreement was in writing, but not registered.

It was held that though the agreement was not admissible in evidence as creating an interest in land, still it might be used for the purpose of obtaining specific performance, and the plaintiff having purchased the equity of redemption with notice as above, was not entitled to redeem.

Nagappa v. Devu, ILR 14 Mad 55. In this case the suit was filed to compel the defendant to register the sale deed and for possession of the land in suit. It was held:

'ILR 12 Mad 505, is authority for holding that a document which, for want of registration is not admissible in evidence as creating an interest in land, is admissible for the purpose of obtaining specific performance of the contract, which is in effect the object of the present suit; and 5 Mad HCR 123 is authority for the admission of secondary evidence in case of a document being allowed to remain unregistered through no fault of the plaintiff. In either case, therefore, the Subordinate Judge's decision is wrong'.

ILR 16 Mad 341 In this case, the plaintiff and defendant agreed that, in consideration of a sum of money already paid and of a further sum to be paid on the completion of the transaction, the defendant should transfer a certain mortgage to the plaintiff, and an instrument of transfer was prepared and executed to give effect to that agreement but it was not registered. The plaintiff then sued for a decree compelling the defendant to execute and register that or a similar instrument.

It was held that the plaintiff was not entitled to a decree for compulsory registration, and should have proceeded under sections 36, and 72 to 77 of the Registration Act. It will be seen that this decision proceeds on the view that the unregistered instrument in inadmissible in evidence which cannot now be held to be correct after the amendment in 1929 to section 49 of the Registration Act. In the decided case the plaintiff had possession of the document, whereas in the instant case it is not so. In the decided case the suit was between the very parties to the instrument and there was no subsequent transferee. There was also no previous agreement to transfer. The previous decisions of this High Court set out above do not appear to have been brought to the notice of this Bench. Therefore, this decision is not an authority for refusing specific performance in the context of this case.

Thayarammal v. Lakshmi Ammal, 39 Mad LJ 181 : AIR 1920 Mad 660. In this decision it was held that where a sale deed of immovable property is executed and delivered to the vendee, but is not registered owing to his default in payment of the purchase money, it is not open to him to sue for specific performance of the contract of sale implied in the conveyance. The facts of the instant case are quite different.

Satyanarayana v. Venkatrao, 50 Mad LJ 674 : ILR 49 Mad 302 : AIR 1926 Mad 530. In pursuance of an agreement to sell immovable property, a sale deed was drawn up, but when it was presented for registration, one of the persons who executed the agreement to sell objected to the registration of the document and the registration authorities after an inquiry into the matter refused to order registration as against the objector. The vendee instead of suing for compulsory registration under section 77 of the Registration Act, sued his vendors for specific performance of the agreement.

It was held that the suit was not maintainable, that the object of the legislature in enacting section 77 of the Registration Act was to provide a remedy with a very short period of limitation for putting right a wrongful refusal to register a document, and that must be held t be the only remedy given by law and that a person who fails to take advantage of such a statutory remedy cannot ask a Court of law for the exercise in his favour of the discretionary and equitable remedy of specific performance. This decision, it will be seen, was based upon the default or laches of the plaintiff and must be deemed to have implied that in the absence of such laches, a suit for specific performance is maintainable.

This decision also cannot be held to be correct after the amendment to section 49 of the Registration Act in 1929. (This is pointed out by Mulla (supra) at page 277). In the decided case the suit was between the parties to the document and there was no subsequent transferee coming on the scene; there was no previous agreement to sell. It may also be noted that this decision has been adversely commented in the later decisions of this Court and cannot be followed in view of the Full Bench decision of this Court in Subramanian v. Arunachalam, : AIR1943Mad761 . On the facts of the instant case also which are different, this decision cannot be held to govern.

Venkadari Somappa v. Official Receiver of Bellary : AIR1938Mad801 . This case follows ILR 49 Mad 302 : AIR 1926 Mad 530 and holds that an unregistered document of transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer and that the law on this point is in no manner modified by the new proviso to section 49 of the Registration Act. But there is a significant observation at page 366:

'It is not open to me to ignore the provisions of the Registration Act, and treating, the instrument as a contract to transfer--which it is not--compel the transferor to execute a formal transfer--which he has already done--But this is not the same thing as saying that the unregistered instrument is itself the contract. In the present case it is not established that any separate agreement to mortgage was entered into prior to the execution of the mortgage deed, to prove which, the mortgage deed might have been tendered in evidence.'

In other words, the decision would seem to imply that if there had been a prior agreement, the result would be different. This decision has been adversely commented upon in Venkata Seshayya v. District Board, East Godavari, AIR 1939 Mad 391 and was disapproved by the Full Bench in : AIR1943Mad761 . This decision is by a single Judge (Abdur Rahman, J.) This decision holds that a suit for specific performance is maintainable in spite of the existence of an unregistered instrument. It criticises : AIR1938Mad801 and ILR 49 Mad 302 : AIR 1926 Mad 530 as not correct. It holds that if there was a prior agreement, a suit for specific performance would be maintainable.

In Venkatasubbamma v. Subbiah, 1943 1 Mad LJ 469 : AIR 1942 Mad 716, an inoperative sale deed was held admissible in a suit for specific performance especially if there was no evidence that the sale deed had been accepted by the plaintiff. This also is a decision by Abdur Rahman, J. which criticises the view taken in ILR 49 Mad 302 : AIR 1926 Mad 530 and hold that the larger right of suit for specific performance available under the Specific Relief Act with a longer period of limitation cannot be taken away by the provisions of the Registration Act.

: AIR1943Mad761 held that an unregistered document affecting immovable property may be received as evidence of the contract and can be sufficient to support a suit for specific performance. It was observed at page 426:

'In the judgment of : AIR1938Mad801 it was said that it is well settled law in this presidency that an unregistered document of a transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer and stress was laid on the fact that there it was not established that a separate agreement to mortgage was entered into prior to the execution of the mortgage deed in suit. The decisions of this Court which preceded the introduction of the proviso to section 49 no longer have application, and we do not agree that an unregistered instrument affecting immovable property is not sufficient to support a suit for specific performance. In such a suit, the production of the document and its proof will be sufficient to support the plaintiff's case if it embodies the whole agreement between the parties and there are no other factors to be taken into consideration'.

This Full Bench which expressly overrules 1938 2 Mad LJ 362 : AIR 1938 Mad 801 must be held to have impliedly overruled all the decisions which that decision followed such as ILR 16 Mad 341 and ILR 49 Mad 302 : AIR 1926 Mad 530 and must be held to overrule all the decisions taking the contrary view.

: AIR1954Mad116 wherein Basheer Ahmed Sayeed, J. observed:

'When once in pursuance of the contract which is alleged to have been oral, a document came into existence and that the document went to the extent of being presented to the registering officer for being registered and was not registered for some reason or other, it follows that there was no further contract to be enforced. The contract had in fact become executed by reason of the execution of the sale deed so that an this ground also the plaintiff was bound to be non-suited. There was nothing more for the first defendant to do if the evidence of the plaintiff's witnesses was taken to be true, he having executed a document and if the document had gone out of the reach of the plaintiff, it was open to the plaintiff to have compelled its production and to have taken adequate remedies (for enforcing her rights by the registration of this document instead of proceeding to Court to enforce the oral contract, which had become performed so far as the 1st defendant was concerned.'

This decision in the very different context from the instant case, is not an authority against the plaintiff. In : AIR1954Mad681 it was observed:

'It would be a different matter if this unregistered document is sought to be received as evidence of a contract in a suit for specific performance if the party has not set in motion the machinery provided by the Registration Act under Ss. 72 to 76. In our opinion, when once this machinery has been set in motion, the logical conclusion should be that action should be taken under S. 77 of the Registration Act & it was incumbent upon the party to file a suit to enforce the registration before she could think of a suit for specific performance.'

This decision will not apply to the facts of this case, because, following ILR 49 Mad 302 : AIR 1926 Mad 530, it did not consider the effect of a third party being impleaded in the suit and secondly, it says that section 77 of the Registration Act would not apply if the plaintiff had not gone to the registration officers. It proceeds upon the basis that a party who has chosen the procedure under the Registration Act and taken the matter in appeal to the District Registrar and failed, ought to pursue the remedy of suit under S. 77 of the Registration Act and not the remedy of suit for specific performance. In Durga Prasad v. Deep Chand : [1954]1SCR360 it was held: In a suit by a purchaser against the vendor and a subsequent purchaser for specific performance of the contract of sale, if the plaintiff succeeds, the proper form of the decree to be passed is to direct specific performance of the contract between the vendor and the plaintiff and direct the subsequent transferee to join in the conveyance so as to pass on the title which resides in him to the plaintiff. He does not join in any special covenants made between the plaintiff and his vendor; all he does is to pass on his tittle to the plaintiff. In Manicka Goundan v. Elumalai Goundan : AIR1957Mad78 the learned Chief Justice has observed at p. 540 (of Mad LJ): (at p. 81 of AIR) as follows:

'On a consideration of all the authorities it appears to us that there is no need to subscribe to either of two extreme propositions. One is that a party to an agreement has no right whatever in any circumstances to seek specific performance of the agreement once a document has been executed in pursuance of the agreement but the document is not registered. The other is that a party to an agreement is entitled to compel the other party who has duly executed a document in pursuance of the agreement to go on executing fresh documents by resorting to a suit or suits for specific performance so long as no document has been registered. The decisions in 5 Mad HCR 123, Chinna Krishna Reddi v. Doraisami Reddi, ILR 20 Mad 19 clearly demonstrate the untenability of the first proposition. The acceptance of the second proposition would mean that a party can take advantage of his own negligence or laches. In our opinion the correct view to take which also seems to us to be just and equitable is this. Taking the case of an agreement to sell, it cannot be said that the contract has been fully performed till there is a properly executed document which is also registered. It cannot be said that the moment a document is executed the contract ceases to be in force. The purchaser is always entitled to insist upon his right to have a proper registered instrument. Every vendor is bound to do all that is necessary to perfect the title of the purchaser, which includes the execution and registration of a proper conveyance. It is true that the purchaser can resort to proceedings under the Registration Act and the special statutory remedy under S. 77 of the Act to obtain registration of the executed document. But if for any reason it becomes impossible to obtain registration after resort to such proceedings or because of other circumstances which prevent and resort to such proceedings under the Act, then undoubtedly the vendee is entitled to bring a suit for specific performance of the agreement to sell in his favour. This does not however mean that every such suit should be decreed. Being an equitable remedy, a Court is not bound to grant specific performance in every case in which an agreement has not been carried out in its entirety. Well established equitable considerations would justify a Court refusing to grant the relief of specific performance. To take an obvious case, if the vendor duly executes a sale deed and hands it over to the vendee and the vendee neglects to present it for registration within the time prescribed and, therefore loses his right to have it registered, a Court may well say that the plaintiff has only to blame himself for not securing registration and therefore he would not be entitled to any relief because of his own negligence. Or if a vendee after the execution of the sale deed fraudulently makes alterations in the document to the detriment of the vendor and therefore registration is refused, he cannot obtain the relief of specific performance because of his fraudulent conduct.''

(8) The above is a summary of the relevant case-law of this Court on the subject. See also Subbaraya Pillai v. Devashayam Pillai, 1922 Mad WN 70; Valambalachi v. Duraiswami : AIR1928Mad344 Nallappa Reddi v. Ramalingachi Reddy. ILR 20 Mad 250; Ponnuswami v. Muttuswami, AIR 1916 Mad 627. It is undisputed that all the other High Courts take the view that the suit for specific performance is maintainable, even though the remedy for registration provided for under the Registration Act has not been followed. In Jhaman Mahton v. Amrit Mahton, : AIR1946Pat62 a distinction is pointed out in favour of the maintainability of a suit for specific performance and the non-applicability of the Registration procedure when there is a subsequent transferee of the property against whom also relief is asked for. The procedure prescribed by the Supreme Court has been adverted to above. This Patna decision also points out that if there was a contract proceeding the conveyance, then a suit for specific performance is maintainable. To that effect is also the decisions of this Court in AIR 1939 Mad 391 and : AIR1942Mad716 wherein it was held that the lesser remedy provided for under S. 77 of the Registration Act cannot take away the larger remedy provided for under the Specific Relief Act. The Registration Act does not touch or affect the equitable jurisdiction possessed by the civil courts to pass a decree for specific performance where circumstances exist entitling the plaintiff to such a decree.

(9) It is interesting in this connection to note that the AIR Commentaries on the Registration Act (Second Edition) at pages 526 to 530, after an elaborate discussion of the entire case-law and the principles of S. 77 of the Registration Act, mention at p. 530 that the view expressed by Abdur Rahman. J. is correct. This view is taken in Rustomji (supra) at page 390; 'it is conceded in all hands i.e. even by those High Courts which hold that a suit to compel registration does not lie independently of S. 77 that if through no default or negligence of the vendee himself the remedy under S. 77 is not available and effective and he is consequently unable and it will be futile to initiate proceedings under the Act the vendee may have his remedy for specific performance.' Similarly by Sanjeeva Rao at p. 431. 'There is a certain amount of reasonableness in that view and it is apparently the reasonableness which has been prompting the cause of so many decisions to such effect both in the Allahabad and Calcutta High Court.' (e.g. Amerchand v. Nathu, 7 All LJ 887; Surendra v. Gopal Chunder, 12 Cal LJ 464; Nasiruddin v. Sidhoo, 27 Cal LJ 538 : AIR 1919 Cal 477. See also Bashashar Nath v. Mian Feroz Shah, AIR 1935 Pesh 12.

Bearing these principles in mind, if we examine the facts of this case, there cannot be the slightest doubt that the plaintiff is entitled to the relief asked for. The decrees and judgments of the Courts below are set aside and the suit is decreed for the plaintiff as prayed for. In view of the fact that the lower courts had not had the benefit of the decision in : AIR1957Mad78 , this second appeal is allowed without costs throughout.

(10) I am indebted to Messrs. N. R. Raghavachari and Rajagopala Iyer for an exhaustive analysis of the case law on the point in controversy.

Appeal allowed.