Bhoop Singh Vs. Ram Singh Major and Others - Court Judgment

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civil - compromise decree - section 17 (2) of registration act, 1908, order 12 rule 6 and order 23 rule 3 of cpc, 1908 and section 2 (14) of indian stamp act, 1899 - exception to section 17 (1) (vi) meant to cover decree or order of court including decree or order expressed to be made on compromise which declares pre-existing right and does not by itself creates new right in praesenti in immovable property of value of rs. 100 or upwards - duty of court to examine in each case whether parties have pre-existing right to immovable property or whether under order or decree of court one party having right therein agreed or suffered to extinguish same and created right in praesenti in immovable property of value of rs. 100 or upwards in favour of other party for first time either by compromise or pretended consent - if later be position document compulsorily registerable. - [ d.a. desai,; o. chinnappa reddy and; r.s. sarkaria, jj.] the industries (development and regulation) act, 1951 empowers the union of india in the public interest to take under its control the industries specified in the first schedule to the act. item 23 of the first schedule relates to textiles of various categories. section 15 authorises the central government to make or cause to be made a full and complete investigation into the circumstances of the case if the central government is of the opinion that (a) in respect of any scheduled industry or industrial undertaking or undertakings (i) there has been, or is likely to be, a substantial fall in the volume of production for which, having regard to the economic conditions prevailing, there is no justification; or (ii) there has been, or is likely to be, a marked deterioration in the quality of any article... which could have been or can be avoided; or (iii) there has been or is likely to be a rise in the price of any article..... for which there is no justification; or (iv) it is necessary to take any such action for the purpose of conserving any resources of national importance; or (b) any industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. after the investigation is made under section 15, section 16(1) empowers the central government if action is desirable, to issue appropriate directions, and section 16(2) provides for the issue of interim directions by the central government pending investigation under section 15. chapter iii-a consisting of sections 18a, 18-aa, 18-b, 18-c, 18-d, 18-e and 18-f deal with "direct management or control of industrial undertakings by central government in certain cases". sec. 18-a empowers the central government by notified order, to authorise any person or body of persons to take over the management of the whole or any part of an industrial undertaking or to exercise in respect of the whole, or any part of the undertaking such functions of control as may be specified in the order, if the central government is of opinion that: (a) an industrial undertaking to which directions have been issued in pursuance of section 16 has failed to comply with such directions, or (b) an industrial undertaking in respect of which an investigation has been made under section 15 is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest. section 18aa(5) stipulates that the provisions of sections 18-b to 18 e shall be applicable to the industrial undertaking in respect of which an order has been made under section 18-aa even as they apply to an industrial undertaking taken over under section 18-a. section 18-f empowers the central government to cancel the order made under section 18-a if it appears that the purpose of the order has been fulfilled or it is not necessary that the order should remain in force. the appellant m/s. swadeshi cotton mills was taken over by the government of india by a notification dated april 13, 1978 in exercise of the powers conferred on it under clause (a) of sub-section (1) of section 18aa of the industries (development and regulation) act, 1951 on the ground that the company had by creation of encumbrances on the assets of its industrial undertakings, brought about a situation which had affected and is likely to further affect the production of articles manufactured or produced by it and that immediate action is necessary to prevent such a situation. the government authorised the national textile corporation limited to take over the management, subject to the conditions that the authorised person shall comply with all the directions issued from time to time by the central government and that the authorised person shall hold office for a period of five years. the appellant mills challenged the aforesaid order in a writ petition in the high court. the case was heard by a full bench of five judges to consider the question whether in construing section 18aa of the industries development and regulation act, 1951, compliance with the principle of audi alteram partem is to be implied and whether hearing is to be given to the parties who would be affected by the order to be passed prior to the passing of the order or whether hearing can be given after the order is passed and whether the order passed under the said section is vitiated by not giving of such hearing and whether such vice can be cured. the bench by a majority answered the three questions as follows:- (a) section 18aa(1)(a)(b) excludes the giving of prior hearing to the party who would be affected by order thereunder. (b) section 18-f expressly provides for a post- decisional hearing to the owner of the industrial undertaking, the management of which is taken over under section 18aa to have the order made under section 18aa cancelled on any relevant ground. (c) as the taking over of management under section 18a is not vitiated by the failure to grant prior hearing the question of any such vice being cured by a grant of a subsequent hearing does not arise. the minority, however, held that in compliance with the principles of natural justice, prior hearing to the owner of the undertaking was required to be given before the passing of an order under section 18aa, that the second question did not arise as the denial of a prior hearing would not cure the vice by the grant of subsequent hearing, but it would be open to the court to moderate the relief in such a way that the order is kept alive to the extent necessary until the making of the fresh order to subserve public interest and to make appropriate directions. after the decision on the reference the case was reheard on merits by a full bench of three judges and the writ petition was allowed in part. the challenge to the validity of the order being rejected but insofar as the impugned order seeking to take over the corporate entity of the company, the corporate entity of the subsidiary and its assets, the petition was allowed and the respondents, the union of india and the authorised person were directed to release from its control and custody and/or deliver possession of any assets or property of the company which were not referable to the industrial undertakings. appeals to this court were filed on behalf of the company as well as by the union of india and the national textile corporation. two propositions were propounded on behalf of the company that: (a) whether it was necessary to observe the rules of natural justice before issuing a notified order under section 18aa(1)(a) and further whether section 18-f impliedly excludes rules of natural justice relating to prior hearing; and it was contended (1) the mere use of the word 'immediate' in sub-clause (a) of section 18aa does not show a legislative intent to exclude the application of audi alteram partem rule altogether. (2) the word 'immediate' in clause (a) has been used in contra distinction to 'investigate'. it only means that under section 18aa action can be taken without prior investigation under section 15. the use of the word 'immediate' in section 18aa(1)(a) only dispenses with investigation under section 15 and not with the principle of audi alteram partem altogether and this is indicated by the marginal note of section 18a and para 3 of the statement of objects and reasons of the amendment bill which inserted section 18aa in 1971. (3) the word 'immediate' occurs only in clause (a) and not in clause (b) of section 18aa(1). it would be odd if intention to exclude this principle of natural justice is spelt out in one clause of the sub-section when the other clause does not exclude it. (4) section 18-f does not exclude a pre-decisional hearing. the so-called post-decisional hearing contemplated by section 18-f cannot be and is not intended to be a substitute for a pre-decisional hearing. (5) section 18f incorporates only a facet, albeit qualified, of section 21 of the general clauses act. the language of the section implicity prohibits an enquiry into circumstances that led to the passing of the order of take-over and under it the aggrieved person is not entitled to show that on merits the order was void ab initio. (6) 'immediacy' does not exclude a duty to act fairly because even an emergent situation can co-exist with the canons of natural justice. the only effect of urgency on the application of the principle of fair hearing would be that the width, form and duration of the hearing would be tailored to the situation and reduced to the reasonable minimum so that it does not delay and defeat the purpose of the contemplated action. (7) where the civil consequences of the administrative action are grave and its effect is highly prejudicial to the rights and interests of the person affected and there is nothing in the language and scheme of the statute which unequivocally excludes a fair pre-decisional hearing and the post-decisional hearing provided therein is not a real remedial hearing equitable to a full right of appeal the court should be loath to infer a legislative intent to exclude even a minimal fair hearing at the pre-decisional stage merely on ground of urgency. (8) the central government appointed four government officials including one from the office of the textile commissioner to study the affairs of the company and to make recommendation. this official group submitted its report on february 16, 1978. the evidence on the basis of which the impugned order was passed was not disclosed to the appellant company till may 1978, only after it had filed the writ petition in the high court. if there was anything adverse to the appellants in the survey report there was time enough about six weeks between the submission of the survey report and the passing of the impugned order for giving a short, reasonable opportunity to the appellants to explain the adverse findings against them. if there was immediacy situational modifications could be made to meet the requirement of fairness, by reducing the period of notice; that even the manner and form of such notice could be simplified to eliminate delay, that telephonic notice or short opportunity for furnishing their explanation to the company might have satisfied the requirements of natural justice. such an opportunity of hearing could have been given after the passing of a conditional tentative order and before its enforcement under section 18aa. for the interregnum suitable interim action such as freezing the assets of the company or restraining the company from creating further encumbrances, could be taken under section 16. on behalf of the union of india and the authorised officer it was contended that (1) the presumption in favour of audi alteram partem rule stands impliedly displaced by the language scheme, setting and the purpose of the provision in section 18aa. (2) section 18aa on its plain terms deals with situations where immediate preventive action is required. the paramount concern is to avoid serious problems which may be caused by fall in production. the purpose of an order under section 18aa is not to condemn the owner but to protect the scheduled industry. the issue under section 18aa is not solely between the government and the management of the industrial undertaking. the object of taking action under this section is to protect other outside interests of the community at large and the workers. (3) the rule of natural justice to give a hearing has been incorporated in section 18-f which gives an opportunity of a post-decisional hearing to the owner of the undertaking who if he feels aggrieved can on his application be heard, to show that even the original order under section 18aa was passed on invalid grounds and should be cancelled or rescinded. (4) on a true construction of section 18aa read with section 18-f the requirements of natural justice and fair play can be read into the statute only insofar as conformance to such canons can reasonably and realistically be required of it by the provision for a remedial hearing at a subsequent stage. (5) under section 18-f the central government exercises curial functions and that section confers on the aggrieved owner a right to apply to the government to cancel the order of take-over. this section casts an obligation on the central government to deal with and dispose of an application filed thereunder with reasonable expedition. allowing the appeal by the company,held: (sarkaria & desai, jj. per chinnappa reddy, j. dissenting.) in the facts and circumstances of the instant case, there has been a noncompliance with the implied requirement of the audi alteram partem rule of natural justice at the pre-decisional stage. the impugned order could be struck down as invalid on that score alone. but in view of the commitment / concession that a hearing would be afforded to the company, the case is remitted to the central government to give a full, fair and effective hearing. [587g-h, 588c] the phrase 'natural justice' is not capable of a static and precise definition. it cannot be imprisoned in the straight-jacket of a cast-iron formula. rules of natural justice are not embodied rules. hence not possible to make an exhaustive catalogue of such rules. two fundamental maxims of natural justice have now become deeply and indelibly ingrained in the common consciousness of mankind as pre-eminently necessary to ensure that the law is applied impartially objectively and fairly. these twin principles are (i) audi alteram partem and (ii) nemo judex in re sua. audi alteram partem is a highly effective rule devised by the courts to ensure that a statutory authority arrives at a just decision and it is calculated to act as a healthy check on the abuse or misuse of power. its reach should not be narrowed and its applicability circumscribed.[554c-g] the rules of natural justice can operate only in areas not covered by any law validly made. if a statutory provision either specifically or by inevitable implication excludes the application of the rules of natural justice then the court cannot ignore the mandate of the legislature. whether or not the application of the principles of natural justice in a given case has been excluded in the exercise of statutory power depends upon the language and basic scheme of the provision conferring the power, the nature of the power the purpose for which it is conferred and the effect of that power. [556a-b] the maxim audi alteram partem has many facets. two of them are (a) notice of the case to be met, and (b) opportunity to explain. the rule cannot be sacrificed at the altar of administrative convenience or celerity; for, convenience and justice are often not on speaking terms. difficulties, however, arise when the statute conferring the power does not expressly exclude this rule but its exclusion is sought by implication due to the presence of certain factors such as urgency where the obligation to give notice and opportunity to be heard would obstruct the taking of prompt action of a preventive or remedial nature. audi alteram partem rule may be disregarded in an emergent situation where immediate action brooks no delay to prevent some imminent danger or injury or hazard to paramount public interests. section 133 of the code of criminal procedure empowers the magistrates specified therein to make an exparte conditional order in emergent cases for removal of dangerous public nuisances. action under section 17 land acquisition act furnishes another such instance. similarly action on grounds of public safety public health may justify disregard of the rule of prior hearing. [556c-h] cases where owing to the compulsion of the fact situation or the necessity of taking speedy action no pre- decisional hearing is given but the action, is followed soon by a full post-decisional hearing to the person affected do not in reality constitute an exception to the audi alteram partem rule. to call such cases as exception is a misnomer because they do not exclude fair play in action but adapt it to the urgency of the situation by balancing the competing claims of hurry and hearing. [560h-561a] the general principle as distinguished from an absolute rule of uniform application seems to be that where a statute does not in terms exclude this rule of prior hearing but contemplates a post-decisional hearing amounting to a full review of the original order on merits then such a statute would be construed as excluding the audi alteram partem rule at the pre-decisional stage. [561g] if the statute conferring the power is silent with regard to the giving of pre-decisional hearing to the person affected and the administrative decision taken by the authority involves civil consequences of a grave nature and no full review or appeal on merits against that decision is provided courts will be extremely reluctant to construe such a statute as excluding the duty of affording even a minimal hearing shorn of all its formal trappings and dilatory features at the pre-decisional stage, unless viewed pragmatically it would paralyse the administrative process or frustrate the need for utmost promptitude. [561h] 7(i). a comparison of the provisions of section 18a(1)(b) and section 18aa(1)(c), bring out two main points of distinction: first, action under section 18a(1)(b) can be taken only after an investigation had been made under section 15; while under section 18aa(1)(a) or (b) action can be taken without such investigation. the language, scheme and setting of section 18aa read in the light of the objects and reasons for enacting this provision make this position clear beyond doubt. second, before taking action under section 18a(1)(b), the central government has to form an opinion on the basis of the investigation conducted under section 15, in regard to the existence of the objective fact, namely: that the industrial undertaking is being managed in a manner highly detrimental to the scheduled industry concerned or to public interest; while under section 18a(1)(a) the government has to satisfy itself that the persons incharge of the undertaking have brought about a situation likely to cause fall in production, by committing any of the three kinds of acts specified in that provision. this shows that the preliminary objective fact attributable to the persons in charge of the management or affairs of the undertaking, on the basis of which action may be taken under section 18(a)(1)(b), is of far wider amplitude than the circumstance, the existence of which is a sine qua non for taking action under section 18aa(1). the phrase "highly detrimental to the scheduled industry or public interest" in section 18-a is capable of being construed to cover a large variety of acts or things which may be considered wrong with the manner of running the industry by the management. in contrast with it, action under section 18aa(1)(a) can be taken only if the central government is satisfied with regard to the existence of the twin conditions specifically mentioned therein, on the basis of evidence in its possession. [569d-h] an analysis of section 18aa(1)(a), indicates that as a necessary preliminary to the exercise of the power thereunder, the central government must be satisfied "from documentary or other evidence in its possession" in regard to the co-existence of two circumstances: (i) that the persons in charge of the industrial undertaking have by committing any of these acts, namely, reckless investments, or creation of incumbrances on the assets of industrial undertaking, or by diversion of funds, brought about a situation which is likely to affect the production of the article manufactured or produced in the industrial undertaking, and (ii) that immediate action is necessary to prevent such a situation.[570b-d] it cannot be laid down as a general proposition that whenever a statute confers a power on an administrative authority and makes the exercise of that power conditional on the formation of an opinion by that authority in regard to the existence of an immediacy, its opinion in regard to that preliminary fact is not open to judicial scrutiny at all. while it may be conceded that an element of subjectivity is always involved in the formation of such an opinion, the existence of the circumstances from which the inference constituting the opinion, as the sine qua non for action, are to be drawn, must be demonstrable, and the existence of such "circumstances", if questioned, must be proved at least prima facie. [571 e-g] from a plain reading of section 18aa, it is clear that it does not expressly in unmistakable and unequivocal terms exclude the application of the audi alteram partem rule at the pre-decisional stage. [574b] in the instant case, so far as kanpur unit is concerned, it was lying closed for more than three months before the passing of the impugned order. there was no 'immediacy' in relation to that unit, which could absolve the government from the obligation of complying fully with audi alteram partem rule at the pre-decisional or pre- takeover stage. [583a] keshav mills co. ltd. v. union of india, [1973] 3 s.c.r. 22; kamla prasad khetan v. union of india,[1957] s.c.r. 1052; maneka gandhi v. union of india, [1978] 2 s.c.r. 621; sukhdev singh & ors. v. bhagatram sardar singh, [1975] 3 s.c.r. 619; a. k. kraipak v. union of india, [1970] 1 s.c.r. 457; ridge v. baldwin, [1964] a.c. 40; 196; heatley v. tasmanian racing & gaming commission, 14 australian law reports 519; nawabkhan abbaskhan v. state of gujarat, [1974] 3 s.c.r. 427; state of orissa v. dr. bina pani dei, [1962] 2 s.c.r. 625; ambalal m. shah v. hathi singh manufacturing co. ltd. [1962] 3 s.c.r. 171; and s. l. kapoor v. jagmohan & ors., [1981] 1 s.c.r. 746, referred to. (per chinnappa reddy, j. dissenting) the principles of natural justice are not attracted to the situations contemplated by section 18aa of industries (development and regulation) act. natural justice like ultra vires and public policy is a branch of the public law and is a formidable weapon which can be wielded to secure justice to the citizen. while it may be used to protect certain fundamental liberties, civil and political rights, it may be used as indeed it is used more often than not, to protect vested interests and to obstruct the path of progressive change. the time has come to make an appropriate distinction between natural justice in its application to fundamental liberties, civil and political rights and natural justice in its application to vested interests. [590a-b] our constitution as befits the constitution of a socialist secular democratic republic, recognises the paramountcy of the public weal over the private interest. natural justice, ultra vires, public policy, or any other rule of interpretation must, therefore, conform, grow and be tailored to serve the public interest and respond to the demands of an evolving society. [590c] the principles of natural justice have taken deep root in the judicial conscience of our people. they are now considered so fundamental as to be implicit in every decision making function, judicial, quasi-judicial or administrative. where authority functions under a statute and the statute provides for the observance of the principles of natural justice in a particular manner, natural justice will have to be observed in that manner and in no other. where the statute is silent about the observance of the principles of natural justice, such statutory silence is taken to imply compliance with the principles of natural justice. where the conflict is between the public interest and the private interest the presumption must necessarily be weak and may, therefore, be readily displaced. the presumption is also weak, where what are involved are mere property rights. in cases of urgency, particularly where the public interest is involved, preemptive action may be a strategic necessity. even in cases of preemptive action, if the statute so provides or if the courts so deem fit in appropriate cases, a postponed hearing may be substituted for natural justice. [590a-c; 591f-g] 3(ii). where natural justice is implied, the extent of the implication and the nature of the hearing must vary with the statute, the subject and the situation. [592b] the absence of the expression 'immediate action' in section 18aa(1)(b) does not make any difference. section 18aa(1)(a) refers to a situation where immediate preventive action may avert a disaster, whereas section 18aa contemplates a situation where the disaster has occurred and action is necessary to restore normalcy. restoration of production where production has stopped in a key industry or industrial undertaking is as important and urgent in the public interest as prevention of a situation where production may be affected. immediate action is, therefore, as necessary in the situation contemplated by section 18aa(1)(b) as in the situation contemplated by section 18aa(1)(a). [596 f-g] the marginal note refers to the power to take over without investigation but there is no sufficient reason to suppose that the word immediate is used only to contra- distinguish it from the investigation contemplated by section 15 of the act, though of course a consequence of immediate action under section 18aa may be to dispense with the enquiry under section 15. in fact, facts which come to light during the course of an investigation under section 15 may form the basis of action under section 18aa(1)(a). where in the course of an investigation under section 15 it is discovered that the management have, by reckless investments or creation of encumbrances on the assets of the industrial undertaking or by diversion of funds brought about a situation which is likely to affect the production of the articles manufactured or produced in the industrial undertaking, if the government is satisfied that immediate action is necessary to prevent such a situation, there is no reason why the central government may not straightaway take action under section 18aa(1)(a) without waiting for completion of investigation under section 15. [597a-b] where there is a provision in the statute itself for revocation of the order by the very authority making the decision, it appears to be unnecessary to insist upon a pre- decisional observance of natural justice. [598a] the likelihood of production being jeopardized or the stoppage of production in a key industrial undertaking is a matter of grave concern affecting the public interest. parliament has taken so serious a view of the matter that it has authorised the central government to take over the management of the industrial undertaking if immediate action may prevent jeopardy to production or restore production where it has already stopped. the necessity for immediate action by the central government contemplated by parliament is definitely indicative of the exclusion of natural justice. it is not as if the owner of the industrial undertaking is left with no remedy. he may move the central government under section 18-f to cancel the order made under section 18aa. [598c-d] neither section 18-f of the industries (development and regulation) act nor section 21 of the general clauses act by itself excludes natural justice. the exclusion of natural justice where such exclusion is not express has to be implied by reference to the subject, the statute and the statutory situation. where an express provision in the statute itself provides for a post decisional hearing the other provisions of the statute will have to be read in the light of such provision and the provision for post- decisional hearing may then clinch the issue where pre- decisional natural justice appears to be excluded on the other terms of the statute. that a post-decisional hearing may also be had by the terms of section 21 of the general clauses act may not necessarily help in the interpretation of the provisions of the statute concerned. [599 a-c] ridge v. baldwin, 1964 a.c. p. 40; annie g. phillip v. commissioner of internal revenue, 75 l.e.d. 1289; john h. fahey v. paul mallonee, 91 l.e.d. 2030; margarita fuentes v. robert l. shevin, attorney general of florida, 32 l.e.d. 2d 556 and lawrence mitchell v. w. t. grant co., 40 l.e.d. 2d 406, referred to.  orderb.l. hansaria, j.1. the petitioner is one of the defendants in the suit out of which the present special leave petition arises. the plaintiffs are heirs of one nand ram, who is one of the five sons of one jeevan ram. the petitioner belongs to the branch of rakha ram, another son of jeevan ram. ganpat was a son of nanha ram, still another son of jeevan ram.2. the petitioner filed, at one point of time, suit no. 215 of 1973 which came to be disposed of on 6.4.1973 as below :it is ordered that a declaratory decree in respect of the property in suit fully detailed in the heading of the plaint to the effect that the plaintiff will be the owners in possession from today in lieu of the defendant after his death and the plaintiff deserves his name to be incorporated as such in the revenue papers, is granted in favour of the plaintiff against the defendant, in view of the written statement filed by the defendant admitting the claim of the plaintiff to be correct. pleader's fee fixed rs. 16. it is further ordered that there is no order as to costs.(emphasis supplied)3. a perusal of the impugned judgment shows that among other reasons to decide the present proceeding against the petitioner, one was that the aforesaid decree not having been registered, the same could not have conferred any right on the petitioner. it is this view of the learned judge which has been principally assailed in this petition.4. shri sehgal appearing for the petitioner has strenuously contended that the aforesaid view is not tenable in law inasmuch as, accordingly to learned counsel, the decree is not required to be registered in view of what has been stated in clause (vi) of sub-section (2) of section 17 of the registration act, 1908. the learned judge of the high court did not agree to this contention because, according to him, the decree has to be treated 'to create a gift' which would take the case out of the purview of the aforesaid clause, because that is to apply only to clauses 7(b) and (c) of sub-section (1), whereas the present case would attract clause (a) of sub-section (1). shri sehgal contends that the view taken by learned judge was not correct in law as, according to him, the present is really not a case attracting clause (a) of sub-section (1), but the case of the petitioner falls within clause (b), which would make clause (vi) of sub- section (2) operative.5. in support of his submission, the learned counsel has referred us to number of decisions starting from that of the privy council in rani hemanta kumari debi v. midnapur zamindari co. ltd. : (1919) la. 240 , whose ratio was relied upon by this court in mangan lal deoshi v. mohammad moinul haque : [1950]1scr833 . in these two cases it was held that the decree in question was not required to be registered because, in the first case, the compromise was accepted to be 'an agreement to lease', whereas in the second case the facts disclosed that the agreement was contingent, and so, no lease came into existence. it was, therefore, held that the cases did not come within the fold of clause (d) of sub-section (1) of section 17, and so, the court's order was not required to be registered. these cases are thus of no assistance to the petitioner.6. shri sehgal has then referred us to bishundeo narain v. seogeni rai & jagernath : [1951]2scr548 , and shankar sitaram sontakke v. balkrish-na sitaram sontakke : [1955]1scr99 . a perusal of these judgments show that they are not relevant having dealt with some other questions of law.7. among the decisions of the high court to be relied on by shri sehgal, the first is one rendered in the case of fazal rasul khan v. mohd-ul-nisa : air (1944) lah 394. the question for determination in that case was whether disposal of a suit by stating 'suit compromised and accordingly dismissed', could be said to embody the terms of the compromise. the bench opined that it would not unless the terms of the compromise are in some way embodied in the decree or the order, which would be so where a suit is disposed of by saying 'suit decreed in the terms of the compromise or suit dismissed in terms of the compromise'. this decision is thus on a different point.8. coming to the post-independent decisions, the first to be pressed into service is that of high court of assam and nagaland in sudhir chandra guha v. jogesh chandra das air (1970) a & n 102. this decision does support the legal submission advanced by shri sehgal inasmuch as it has been held that the compromise decree in an earlier suit being relatable to immovable property which was subject matter of the suit, section 17(2)(vi) of the registration act did exempt the decree from registration. it was, therefore, held that the compromise decree in question was not required to be registered for conferring title in respect of property in the decree as per its terms. : air1982 cal222 surjya kumar das v. smt. maya dutta) also sustains the legal proposition advanced by the learned counsel to the extent that a compromise decree confined to the subject matter of suit does not require registration to confer title by its force.9. the point in c. muthuvel piliai v. hazarath syed shah mian : air1974 mad199 , was relatable to the question as to what is the purport to the expression 'subject matter of the suit or proceeding' finding place in clause (vi). this decision is thus is on a point not relevant for our purpose.10. the decision of the lucknow bench in luxmi narain kapoor v. radhey mohan kapoor : air1986 all244 , is also on different point as the bench was called upon to decide whether the compromise incorporating the terms of an earlier settlement and the decree based on it required to be registered. it was held after referring to some earlier decisions that a compromise representing a family settlement was in law not a transfer of property. it was also observed that compromise did not create any right or title in favour of the parties of its own force, but it operated to recognise pre-existing right. this decision would, in a way, go against the proposition advanced by shri sehgal because, if what is stated therein be the correct position in law, then a compromise decree creating a right by its own force would require registration.11. the sheet anchor of shri sehgal's submission is a bench decision of the punjab and haryana high court in gurdev kaur v. mehar singh (1989) plj 182. reference to that decision shows that the bench opined that the view taken by learned single judges of high court in some earlier cases that a decree based on compromise conferring title required registration, even though it related to the property in suit, was not correct. one such view had been taken in ranbir singh v. shri chand : (1984) plj 562, on the reasoning that a compromise is basically a contract and decree founded on it, if the same created right for the first time, would be treated as an instrument of gift and so would require registration. the bench, however, held that a compromise decree creating right even for the first time would not require registration. this decision is thus rightly pressed into service by shri sehgal. its perusal, however, shows that it distinguished the case of sumintabai ramkrishna v. rakhmabai ramkrishna jadhav : air1981 bom52 , because in that case the compromise itself was not regarded as bona fide by the court, as it was described as sham compromise brought about for the purposes of practising fraud upon the law relating to stamp duty and registration.12. the aforesaid decisions do not cover the whole ground, according to us. they meet our approval as far as they go. but something more is required to be said to find out the real purport of clause (vi). it needs to be stated that sub-section (1) of section 17 mandates that the instrument enumerated in clauses 7(a) to (e) shall be registered compulsorily if the property to which they relate is. immovable property value of which is rs. 100 or upwards. when the document purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest therein, whether vested or contingent, it has to be registered compulsorily. the act does not define 'instrument'. section 2(14) of the indian stamp act, 1899, defines 'instrument' to include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. sub-section (2) of section 17 of the act engrafts exceptions to the instruments covered only by clauses 7(b) and (c) of sub-section (1). we are concerned with clause (vi) of sub-section (2). clause (vi) relates to any decree or order of a court, except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. clause (v) is relevant which in contrast reads thus: 'any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another instrument which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest;'. the explanation amplifies that a contract for the sale of immovable property containing a recital of payment of any earnest money or of the whole or any part of the purchase price shall not be deemed to be required or ever to have required registration.13. in other words, the court must enquire whether a document has recorded unqualified and unconditional words of present demise of right, title and interest in the property and included the essential terms of the same; if the document, including a compromise memo, extinguishes the rights of one and seeks to confer right, title or interest in praesenti in favour of the other, relating to immovable property of the value of 00 and upwards, the document or record or compromise memo shall be compulsorily registered.14. in tek bahadur v. debi singh and ors. : air 1966 sc292 , the constitution bench of this court considered the validity of the family arrangement had the question was whether it requires to be compulsorily registered under section 17, this court, while upholding oral family arrangement, held that registration would be necessary only if the terms of the family arrangements are reduced into writing. a distinction should be made between the document containing the terms and recital of family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of record or for information of the court for making necessary mutation. in such a case the memorandum itself does not create or extinguish any right in immovable properties and therefore, does not fall within the mischief of section 17(2) of the registration act. it was held that a memorandum of family arrangement made earlier which was filed in the court for its information was held not compulsorily registrable and therefore it can be used in evidence for collateral purpose, namely, for the proof of family arrangement which was final and binds the parties. the same view was reiterated in maturi pulliah and anr. v. maturi narasimhan and ors. : air 1966 sc1836 , wherein it was held that the family arrangement will need registration only if it creates any interest in immovable property in present time in favour of the parties mentioned therein. in case where no such interest is created the document will be valid, despite it being non-registered and will not be hit by section 17 of the act.15. in ratan lal sharma v. purshottam harit : [1974]3scr109 , this court held that the award had expressly made an exclusive allotment of partnership assets, including the factory and liabilities to the appellant, and made him absolutely entitled to the same, thereby purporting to create rights in immovable property worth-above rs. 100 in favour of the appellant. it was, therefore, held that it required registration under section 17 of the act. it was also pointed that it is equally settled law that the share of a partner in the assets of the partnership which has immovable property is a movable property and that the assignment of the share does not require registration under section 17. take the familiar cases of a decree in suit for specific performance of a contract. though a contract of sale is not compulsorily registrable as it does not create title or right in immovable property; but on a decree for specific performance made by the court, the document executed in furtherance thereof requires registration though it has the imprint of the decree of the court.16. we have to view the reach of clause (vi), which is an exception to sub-section (1), bearing all the aforesaid in mind. we would think that the exception engrafted is meant to cover that decree or order of a court, including a decree or order expressed to be made on a compromise, which declares the pre- existing right and does not by itself create new right, title or interest in praesenti in immovable property of the value of rs. 100 or upwards. any other view would find the mischief of avoidance of registration, which requires payment of stamp duty, embedded in the decree or order.17. it would, therefore, be the duty of the court to examine in each case whether the parties have pre-existing right to the immovable property, or whether under the order or decree of the court one party having right, title or interest therein agreed or suffered to extinguish the same and created right, title or interest in praesenti in immovable property of the value of rs. 100 or upwards in favour of other party for the first time, either by compromise or pretended consent. if latter be the position, the document is compulsorily registrable.18. the legal position qua clause (vi) can, on the basis of the aforesaid discussion, be summarised as below :(1) compromise decree if bona fide, in the sense that the compromise is not a device to obviate payment of stamp duty and frustrate the law relating to registration, would not require registration. in a converse situation, it would require registration.(2) if the compromise decree were to create for the first time right, title or interest in immovable property of the value of rs. 100 or upwards in favour of any party to the suit, the decree or order would require registration.(3) if the decree were not to attract any of the clauses 7 of sub-section (1) of section 17, as was the position in the aforesaid privy council and this court's cases, it is apparent that the decree would not require registration.(4) if the decree were not to embody the terms of compromise, as was the position in lahore case, benefit from the terms of compromise cannot be derived, even if a suit were to be disposed of because of the compromise in question.(5) if the property dealt with by the decree be not the 'subject matter of the suit or proceeding', clause (vi) of sub-section (2) would not operate, because of the amendment of this clause by act, 21 of 1929, which has its origin in the aforesaid decision of the privy council, according to which the original clause would have been attracted, even if it were to encompass property not litigated.19. now, let us see whether on the strength of the decree passed in suit no. 215 of 1973, the petitioner could sustain his case as put up in his written statement in the present suit, despite the decree not having been registered. according to us, it cannot for two reasons : (1) the decree having purported to create right or title in the plaintiff for the first time that is not being a declaration of pre-existing right, did require registration. it may also be pointed out that the first suit cannot really be said to have been decreed on the basis of compromise, as the suit was decreed 'in view of the written statement filed by the defendant admitting the claim of the plaintiff to be correct'. decreeing of suit in such a situation is covered by order 12 rule 6, and not by order 23 rule 3, which deals with compromise of suit, whereas the former is on the subject of judgment on admissions. (2) a perusal of the impugned judgment shows that the first appellate court held the decree in question as 'collusive' as it was with a view to defeat the right of others who had bona fide claim over the property of ganpat. learned judge of the high court also took the same view.20. the result is that the impugned judgment does not suffer from any legal infirmity and the petition is, therefore, dismissed.

Judgment:
ORDER

B.L. Hansaria, J.

1. The petitioner is one of the defendants in the suit out of which the present special leave petition arises. The plaintiffs are heirs of one Nand Ram, who is one of the five sons of one Jeevan Ram. The petitioner belongs to the branch of Rakha Ram, another son of Jeevan Ram. Ganpat was a son of Nanha Ram, still another son of Jeevan Ram.

2. The petitioner filed, at one point of time, suit No. 215 of 1973 which came to be disposed of on 6.4.1973 as below :

It is ordered that a declaratory decree in respect of the property in suit fully detailed in the heading of the plaint to the effect that the plaintiff will be the owners in possession from today in lieu of the defendant after his death and the plaintiff deserves his name to be incorporated as such in the revenue papers, is granted in favour of the plaintiff against the defendant, in view of the written statement filed by the defendant admitting the claim of the plaintiff to be correct. pleader's fee fixed Rs. 16. It is further ordered that there is no order as to costs.

(Emphasis supplied)

3. A perusal of the impugned judgment shows that among other reasons to decide the present proceeding against the petitioner, one was that the aforesaid decree not having been registered, the same could not have conferred any right on the petitioner. It is this view of the learned Judge which has been principally assailed in this petition.

4. Shri Sehgal appearing for the petitioner has strenuously contended that the aforesaid view is not tenable in law inasmuch as, accordingly to learned Counsel, the decree is not required to be registered in view of what has been stated in Clause (vi) of Sub-section (2) of Section 17 of the Registration Act, 1908. The learned Judge of the High Court did not agree to this contention because, according to him, the decree has to be treated 'to create a gift' which would take the case out of the purview of the aforesaid clause, because that is to apply only to Clauses 7(b) and (c) of Sub-section (1), whereas the present case would attract Clause (a) of Sub-section (1). Shri Sehgal contends that the view taken by learned Judge was not correct in law as, according to him, the present is really not a case attracting Clause (a) of Sub-section (1), but the case of the petitioner falls within Clause (b), which would make Clause (vi) of sub- section (2) operative.

5. In support of his submission, the learned Counsel has referred us to number of decisions starting from that of the Privy Council in Rani Hemanta Kumari Debi v. Midnapur Zamindari Co. Ltd. : (1919) LA. 240 , whose ratio was relied upon by this Court in Mangan Lal Deoshi v. Mohammad Moinul Haque : [1950]1SCR833 . In these two cases it was held that the decree in question was not required to be registered because, in the first case, the compromise was accepted to be 'an agreement to lease', whereas in the second case the facts disclosed that the agreement was contingent, and so, no lease came into existence. It was, therefore, held that the cases did not come within the fold of Clause (d) of Sub-section (1) of Section 17, and so, the court's order was not required to be registered. These cases are thus of no assistance to the petitioner.

6. Shri Sehgal has then referred us to Bishundeo Narain v. Seogeni Rai & Jagernath : [1951]2SCR548 , and Shankar Sitaram Sontakke v. Balkrish-na Sitaram Sontakke : [1955]1SCR99 . A perusal of these judgments show that they are not relevant having dealt with some other questions of law.

7. Among the decisions of the High Court to be relied on by Shri Sehgal, the first is one rendered in the case of Fazal Rasul Khan v. Mohd-ul-Nisa : AIR (1944) Lah 394. The question for determination in that case was whether disposal of a suit by stating 'Suit compromised and accordingly dismissed', could be said to embody the terms of the compromise. The Bench opined that it would not unless the terms of the compromise are in some way embodied in the decree or the order, which would be so where a suit is disposed of by saying 'Suit decreed in the terms of the compromise or suit dismissed in terms of the compromise'. This decision is thus on a different point.

8. Coming to the post-Independent decisions, the first to be pressed into service is that of High Court of Assam and Nagaland in Sudhir Chandra Guha v. Jogesh Chandra Das AIR (1970) A & N 102. This decision does support the legal submission advanced by Shri Sehgal inasmuch as it has been held that the compromise decree in an earlier suit being relatable to immovable property which was subject matter of the suit, Section 17(2)(vi) of the Registration Act did exempt the decree from registration. It was, therefore, held that the compromise decree in question was not required to be registered for conferring title in respect of property in the decree as per its terms. : AIR1982 Cal222 Surjya Kumar Das v. Smt. Maya Dutta) also sustains the legal proposition advanced by the learned Counsel to the extent that a compromise decree confined to the subject matter of suit does not require registration to confer title by its force.

9. The point in C. Muthuvel Piliai v. Hazarath Syed Shah Mian : AIR1974 Mad199 , was relatable to the question as to what is the purport to the expression 'subject matter of the suit or proceeding' finding place in Clause (vi). This decision is thus is on a point not relevant for our purpose.

10. The decision of the Lucknow Bench in Luxmi Narain Kapoor v. Radhey Mohan Kapoor : AIR1986 All244 , is also on different point as the bench was called upon to decide whether the compromise incorporating the terms of an earlier settlement and the decree based on it required to be registered. It was held after referring to some earlier decisions that a compromise representing a family settlement was in law not a transfer of property. It was also observed that compromise did not create any right or title in favour of the parties of its own force, but it operated to recognise pre-existing right. This decision would, in a way, go against the proposition advanced by Shri Sehgal because, if what is stated therein be the correct position in law, then a compromise decree creating a right by its own force would require registration.

11. The sheet anchor of Shri Sehgal's submission is a Bench decision of the Punjab and Haryana High Court in Gurdev Kaur v. Mehar Singh (1989) PLJ 182. Reference to that decision shows that the Bench opined that the view taken by learned Single Judges of High Court in some earlier cases that a decree based on compromise conferring title required registration, even though it related to the property in suit, was not correct. One such view had been taken in Ranbir Singh v. Shri Chand : (1984) PLJ 562, on the reasoning that a compromise is basically a contract and decree founded on it, if the same created right for the first time, would be treated as an instrument of gift and so would require registration. The Bench, however, held that a compromise decree creating right even for the first time would not require registration. This decision is thus rightly pressed into service by Shri Sehgal. Its perusal, however, shows that it distinguished the case of Sumintabai Ramkrishna v. Rakhmabai Ramkrishna Jadhav : AIR1981 Bom52 , because in that case the compromise itself was not regarded as bona fide by the court, as it was described as sham compromise brought about for the purposes of practising fraud upon the law relating to stamp duty and registration.

12. The aforesaid decisions do not cover the whole ground, according to us. They meet our approval as far as they go. But something more is required to be said to find out the real purport of Clause (vi). It needs to be stated that Sub-section (1) of Section 17 mandates that the instrument enumerated in Clauses 7(a) to (e) shall be registered compulsorily if the property to which they relate is. immovable property value of which is Rs. 100 or upwards. When the document purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest therein, whether vested or contingent, it has to be registered compulsorily. The Act does not define 'instrument'. Section 2(14) of the Indian Stamp Act, 1899, defines 'instrument' to include every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded. Sub-section (2) of Section 17 of the Act engrafts exceptions to the instruments covered only by Clauses 7(b) and (c) of Sub-section (1). We are concerned with Clause (vi) of Sub-section (2). Clause (vi) relates to any decree or order of a court, except a decree or order expressed to be made on a compromise and comprising immovable property other than that which is the subject matter of the suit or proceeding. Clause (v) is relevant which in contrast reads thus: 'any document not itself creating, declaring, assigning, limiting or extinguishing any right, title or interest of the value of one hundred rupees and upwards to or in immovable property, but merely creating a right to obtain another instrument which will, when executed, create, declare, assign, limit or extinguish any such right, title or interest;'. The Explanation amplifies that a contract for the sale of immovable property containing a recital of payment of any earnest money or of the whole or any part of the purchase price shall not be deemed to be required or ever to have required registration.

13. In other words, the court must enquire whether a document has recorded unqualified and unconditional words of present demise of right, title and interest in the property and included the essential terms of the same; if the document, including a compromise memo, extinguishes the rights of one and seeks to confer right, title or interest in praesenti in favour of the other, relating to immovable property of the value of 00 and upwards, the document or record or compromise memo shall be compulsorily registered.

14. In Tek Bahadur v. Debi Singh and Ors. : AIR 1966 SC292 , the Constitution Bench of this Court considered the validity of the family arrangement had the question was whether it requires to be compulsorily registered under Section 17, this Court, while upholding oral family arrangement, held that registration would be necessary only if the terms of the family arrangements are reduced into writing. A distinction should be made between the document containing the terms and recital of family arrangement made under the document and a mere memorandum prepared after the family arrangement had already been made either for the purpose of record or for information of the court for making necessary mutation. In such a case the memorandum itself does not create or extinguish any right in immovable properties and therefore, does not fall within the mischief of Section 17(2) of the Registration Act. It was held that a memorandum of family arrangement made earlier which was filed in the court for its information was held not compulsorily registrable and therefore it can be used in evidence for collateral purpose, namely, for the proof of family arrangement which was final and binds the parties. The same view was reiterated in Maturi Pulliah and Anr. v. Maturi Narasimhan and Ors. : AIR 1966 SC1836 , wherein it was held that the family arrangement will need registration only if it creates any interest in immovable property in present time in favour of the parties mentioned therein. In case where no such interest is created the document will be valid, despite it being non-registered and will not be hit by Section 17 of the Act.

15. In Ratan Lal Sharma v. Purshottam Harit : [1974]3SCR109 , this Court held that the award had expressly made an exclusive allotment of partnership assets, including the factory and liabilities to the appellant, and made him absolutely entitled to the same, thereby purporting to create rights in immovable property worth-above Rs. 100 in favour of the appellant. It was, therefore, held that it required registration under Section 17 of the Act. It was also pointed that it is equally settled law that the share of a partner in the assets of the partnership which has immovable property is a movable property and that the assignment of the share does not require registration under Section 17. Take the familiar cases of a decree in suit for specific performance of a contract. Though a contract of sale is not compulsorily registrable as it does not create title or right in immovable property; but on a decree for specific performance made by the court, the document executed in furtherance thereof requires registration though it has the imprint of the decree of the court.

16. We have to view the reach of Clause (vi), which is an exception to Sub-section (1), bearing all the aforesaid in mind. We would think that the exception engrafted is meant to cover that decree or order of a court, including a decree or order expressed to be made on a compromise, which declares the pre- existing right and does not by itself create new right, title or interest in praesenti in immovable property of the value of Rs. 100 or upwards. Any other view would find the mischief of avoidance of registration, which requires payment of stamp duty, embedded in the decree or order.

17. It would, therefore, be the duty of the court to examine in each case whether the parties have pre-existing right to the immovable property, or whether under the order or decree of the court one party having right, title or interest therein agreed or suffered to extinguish the same and created right, title or interest in praesenti in immovable property of the value of Rs. 100 or upwards in favour of other party for the first time, either by compromise or pretended consent. If latter be the position, the document is compulsorily registrable.

18. The legal position qua Clause (vi) can, on the basis of the aforesaid discussion, be summarised as below :

(1) Compromise decree if bona fide, in the sense that the compromise is not a device to obviate payment of stamp duty and frustrate the law relating to registration, would not require registration. In a converse situation, it would require registration.

(2) If the compromise decree were to create for the first time right, title or interest in immovable property of the value of Rs. 100 or upwards in favour of any party to the suit, the decree or order would require registration.

(3) If the decree were not to attract any of the Clauses 7 of Sub-section (1) of Section 17, as was the position in the aforesaid Privy Council and this Court's cases, it is apparent that the decree would not require registration.

(4) If the decree were not to embody the terms of compromise, as was the position in Lahore case, benefit from the terms of compromise cannot be derived, even if a suit were to be disposed of because of the compromise in question.

(5) If the property dealt with by the decree be not the 'subject matter of the suit or proceeding', Clause (vi) of Sub-section (2) would not operate, because of the amendment of this clause by Act, 21 of 1929, which has its origin in the aforesaid decision of the Privy Council, according to which the original clause would have been attracted, even if it were to encompass property not litigated.

19. Now, let us see whether on the strength of the decree passed in suit No. 215 of 1973, the petitioner could sustain his case as put up in his written statement in the present suit, despite the decree not having been registered. According to us, it cannot for two reasons : (1) The decree having purported to create right or title in the plaintiff for the first time that is not being a declaration of pre-existing right, did require registration. It may also be pointed out that the first suit cannot really be said to have been decreed on the basis of compromise, as the suit was decreed 'in view of the written statement filed by the defendant admitting the claim of the plaintiff to be correct'. Decreeing of suit in such a situation is covered by Order 12 Rule 6, and not by Order 23 Rule 3, which deals with compromise of suit, whereas the former is on the subject of judgment on admissions. (2) A perusal of the impugned judgment shows that the first appellate court held the decree in question as 'collusive' as it was with a view to defeat the right of others who had bona fide claim over the property of Ganpat. Learned Judge of the High Court also took the same view.

20. The result is that the impugned judgment does not suffer from any legal infirmity and the petition is, therefore, dismissed.