Ariyaputhira Padayachi and Others vs Muthukomaraswami Padayachi and Others

Miller, J.—I think the transaction alleged in this case ,to have taken place in 1892 may properly be held to be an exchange of property -

within the meaning of Section 118 of the Transfer of Property Act, if it is hot sale. By it the mortgagee gave up his right to possession in part of the

land mortgaged and the mortgage money due to him and received the equity of redemption in another part of the land. Even if this transaction was

made by way of a compromise of disputes it is not suggested that it amounted merely to an acknowledgment or adjustment of existing rights and

the operations amounted, I think, to transfers of ownership in Immovable property. The arrangement was therefore invalid for want of a registered

instrument and could not affect the title.

It is, however, contended that it may be proved as showing the intention of the parties to discharge this mortgage at that time and so, as showing

charge in the nature of the mortgagee''s possession after the date of the arrangements, so as to make it adverse to the mortgagor. The intention to

discharge the mortgage involves the intention to make certain transfers and it is impossible to say that if those transfers failed both parties

nevertheless intended to discharge the mortgage. The mortgagor therefore had 60 years for his suit under Article 148 of the 2nd schedule of the

Limitation Act and he has come within that time.

The appeal therefore fails, and is dismissed with costs.

Sadasiva Ayyar, J.

I entirely agree in the conclusion of my learned brother and in the reasons given by him for the said conclusion. But out of respect for the

strenuous arguments advanced with great acuteness by the appellant''s learned vakil, I have thought it not improper to pronounce a judgment in my

own words.

The facts and pleadings necessary to understand the contentions on both sides are shortly as follows: plaintiff sues for redemption of the plaint A

schedule lands alone, though both A and B schedule lands were usufructually mortgaged in 1885 by a registered instrument for Rs. 380 1/2. The

plaintiff''s allegation is that the B scheduled lands were redeemed in 1893 by a payment of Rs. 200 and hence, only the A scheduled land remained

to be redeemed on payment of the balance of Rs. 180 1/2. The contesting defendants (who represent the original mortgagee) pleaded (a) that the

A schedule properties were ""orally sold"" to the mortgagee in consideration of Rs. 1,600 due to the mortgagee under the mortgage document of

1885 and some other documents (the written statement itself using the word ""sold""); (b) that thus the mortgage document of 1885 was discharged

and the mortgagee became full owner of the A schedule properties by the oral sale, while the mortgagor got back the B schedule property free of

the mortgage charge; and (c) that, as the mortgagee and his assignees have been enjoying the A schedule lands as owners by adverse possession

from 1892 for more than 12 years before suit, they have got a good title by prescription under Article 144 of the second schedule of the Limitation

Act.

The Lower Appellate Court held that the mortgage contract created by the registered document of 1885 could not be rescinded by the alleged

oral agreement or sale of 1892 and; that u/s 92 of the Indian Evidence Act, oral evidence was inadmissible to prove any such agreement. In this

ground, the Lower Appellate, Court confirmed the Munsif''s decree, allowing in plaintiff''s favour the redemption of the A schedule lands. The

defendants Nos. 2, 3 and 4 are the special appellants before us.

The contentions of the appellants'' learned vakil were as follows:

(a) The oral sale of 1893 in respect of the A schedule lands set up by the appellants does not come under the definition of ""sale"" or ""exchange"" in

the Transfer of Property Act, it is a peculiar ""transfer"" of property not covered by the Transfer of Property Act, Section 54, and such a transfer

could be effected by oral agreement and does not require a written registered instrument to effect it, though the consideration for such a transfer

and the value of the transferred property (roughly) have been Rs. 1,600.

(b) Even if the oral sale of 1892 is invalid to transfer the title to the A scheduled properties to the ,mortgagee, it operated as a discharge of the

mortgage debt of 1885 charged on both A and B schedule properties. Hence the mortgagee''s possession of the A. schedule properties ceased

from 1892 to be the possession of a mortgagee and became the possession of a trespasser. More than 12 years'' possession before suit as

trespasser has conferred full title as owner on the mortgagee and his assigns, and

(c) Oral evidence can be given, notwithstanding Section 92 of the Evidence Act, to prove that the obligation of the mortgagor to pay money under

the mortgage has been discharged; such oral evidence need not be restricted to the evidence of the payment of money or its equivalent ,in

moveables or choses in action or other personal property. Oral evidence can be given of an invalid sale (invalid for want of a registered written

instrument evidencing it) and such invalid sale could validly operate as a discharge of the mortgage deed, though ineffectual to transfer title.

As regards contention (a), I think it very improbable that the legislature, when enacting by the Transfer of Property Act, that a registered

instrument is indispensable in the case of a. transfer of land by sale (section 54), transfer of land by exchanges (118), transfer of land, by gift (123),

transfer of interests in land by way of lease (section 107) and transfer of interests in land by way of mortgage (section 59) where the interest

transferred in any of these modes is a substantial interest, could have intended to exclude any transfers by act of parties of an interest in Immovable

property of over Rs. 100 in value, from the necessity of being evidenced by a registered instrument, or could have intended to allow such transfer

to be effected by oral agreement or by other than a registered instrument. I have very little doubt that all such transfers inter vivos were intended to

be included is the one or other of the transactions coming under the heads of ""sale"" (chapter III), ""mortgage"" (chapter IV), ""lease"" (chapter V),

exchange"" (chapter VI) and ""gift"" (chapter VII). Any ""transfers"" made in the way of creation of trusts were provided for in the Trusts Act, Section

5 of which says, ""no trust in relation to Immovable property is valid unless declared by a non-testamentary instrument in writing...registered.

Section 9 of Act IV of 1882 allowing ""transfer of property"" without writing except where a writing is expressly recpiired by law, does not weaken

to any appreciable degree the patent conclusion derivable from a study of the Transfer of Property Act as a whole, that the legislature was very

anxious that all important transfers of landed property [and even transfers of choses (section 130) in action and transfers of intangible rights

(section 54)] should be evidenced by registered instrument, so as to prevent litigants from letting in oral evidence as to alleged transfers, about the

truth or falsehood of which oral evidence, it is almost impossible for Courts to come to a satisfactory conclusion in most cases.

So far as transfers of land by conveyance (that is excluding transfers by mortgages and leases) are concerned, I think that if they are not

settlements or declarations of trust, they were intended by the legislature to come within one of the headings ""sale,"" ""exchange"" or ""gift"" in the

Transfer of Property Act. ""Sale"" is denned in Section 54 as a transfer of ownership in exchange for a price paid or promised and partly pai4 and

partly promised, etc. The appellants'' vakil ingeniously argued that ""price"" means tangible money in current coins, it may be currency notes, and

does not mean any other valuable consideration. Thus according to this contention, if I sell my land to another in satisfaction of Rs. 300 which I

owe to him on a promissory-note, the transaction is not a ""sale"" within the definition of the Transfer of Property Act, because I did not receive nor

was I promised in future any current coins as ""price."" Of course in ordinary parlance it is undoubtedly a ""sale,"" and in this very case, the appellants

in their statement talked of the oral sale of 1893 in consideration of moneys not paid or promised, at time of sale but of moneys due on prior debts.

However I find in Bouvier''s Law dictionary that the word ""price"" signifies that ""it consists in money to be paid down, or at a future time; for if it be

of anything else it will no longer be a price, nor the contract a sale, but exchange or barter""; and Shepherd, J., in his commentary on the Transfer of

Property Act says ""price"" includes ""money only."" The startling result of this technical view is that many so-called sales of land where the

consideration is the satisfaction of the old debts due to the vendee as creditor are not ""sales"" at all under the Transfer of Property Act. Pushing the

matter further, suppose the purchaser hands over Government promissory-notes or a cheque on a Government Bank or on the Bank in which both

parties have invested their money, or currency notes instead of money, can it be said he does not pay ""price"" for his purchase. I do not think that

such was the intention of the legislature by the mere use of the word ""price."" If the price is fixed in the conveyance in current coin, I think that the

words ""price paid"" will cover oases where the vendors claim for the receipt of the price is satisfied by giving him what he accepts as tantamount to

such payment. For instance, if he says in effect. ""Here I owe you three hundred rupees under promissory-note and you now owe me three hundred

rupees as the price of the land I sell, Why should we go through the farce of your paying me Rs. 300 in current coin for the purchase money and

my handing it back to you to repay your promissory note debt? We shall take it that both processes have taken place."" I think that in such a case

we must take it that the ""price"" was paid and the transaction is a ""sale"" though no coins were actually paid by the purchaser. If two persons

mutually exchange two things (neither of which is ""money only"") it may be an exchange or barter and not a sale. But if they mentally fix the values of

the exchanged things in current coin and then exchange them as of equal value, I think they might -be held to effect ""sales"", and not to pay ""prices

and not merely to effect an exchange or barter.

Even if I am wrong in holding that a conveyance of, land in consideration of the moneys already due to the vendee by the vendor do come under

the definition of ""sale"" in Section 54 of Act IV of 1882, I think such transactions ought to be brought under the definition of "" exchange"" u/s 118 of

Act IV of 1882, which makes all the provisions as to the mode of effecting transfers of land by sales applicable to transfer of land by exchanges

also. ""Exchange"" according to the definition in Section 118, is a mutual transfer of ownership of two things, neither of which is ""money only. It

seems to me that if a conveyance of land for a debt due by the vendor to the vendee is not a ""sale"" it is clearly an ""Exchange"" as the debtor-vendor

transfers his ownership in land (which is not ""money and a fortiori not money only"") while the vendee transfers the ownership in his chose in action

(the debt due by the vendor) to the debtor-vendor (so as to merge and extinguish the debt the debtor and creditor becoming the same individual

by the transfer of the debt to the debtor -himself). Here also, the chose in action so transferred in its turn, is not ""money only."" It is argued that the

vendee-creditor does not transfer his rights as creditor to the vendor-debtor but only treats the debt as discharged. This seems to me to be merely

a play upon words, for the debt is relinquished in favour of the debtor, and the substance of the transaction is a transfer of the debt to the debtor.

In fact, where a testator relinquishes, by his will, a debt in favour of the debtor, it is appropriately styled a gift, by way of legacy, of the debt to the

debtor, and where a mortgagee relinquishes his mortgage debt he frequently does it by executing a reconveyance, of the mortgage interests created

under the mortgage deed to the mortgagor.

If such transfers of land do not come under either the heads of ""sale"" or ""exchange"", the extraordinary result would be that a conveyance of

lands worth even a lac of rupees can be legally effected by oral agreement if the purchaser lends the money a few days before the oral conveyance

and relinquishes his debt a few days afterwards as consideration for the oral conveyance. I refuse to believe that such a result could have ever been

dreamt by the Legislature. I have no doubt that all conveyances of ownership right in lands were intended to be brought under ""sales"" or ""gifts"" or

exchanges"", and that, a conveyance for a lac of rupees due on a promissory-note to the vendee was not intended to be excluded from the

necessity of being evidenced by a registered instrument.

Reliance is placed by the appellants'' learned vakil on a case decided by this High Court but not reported in any authorized reports. It is found

in K. Thiruvengidachariar Vs. Ranganatha Aiyangar and Others, where it was held that when two brothers orally gave their lands to their sister in

satisfaction of some claim of hers against them, ""the transaction was not a gift nor a sale nor an exchange under the Transfer of Property Act."" With

the greatest respect, I am clear in my mind that it was either a sale or a mutual ""exchange"" of two things, neither of which was "" money only "" and I

am therefore not prepared to follow this case, I know that where a compromise is not intended newly to create or effect a transfer of title, but is

only an acknowledgment of existing rights in lands, it is not a sale or exchange see Krishna Tanhaji v. Aba Shetti Patik ILR (1910) Bom. 139 and

need not comply with the provisions of Section 54 of Act IV of 1882 in order to be treated as valid. But neither the present case nor that in K.

Thiruvengidachariar Vs. Ranganatha Aiyangar and Others, is such a case of compromise. I therefore overrule the appellant''s contention that a

registered writing was not necessary to validate the alleged sale of 1892. I might here be permitted to express the wish that the British Indian

legislature would pass an enactment making a registered writing indispensable for the validity of all settlements, partition agreements, and wills and

authorities to adopt throughout British India, making very few exceptions in special cases (such as soldiers'' and sailors'' wills), so that the flood of

intricate and uncertain litigation on such questions might be brought within bounds and the perjury in connection with wills executed out of the

Presidency towns and with partitions and adoptions might be put an end to to some extent.

The next contention of the appellants'' vakil based on the Limitation Act is not sustainable, as, if the original mortgagee continued to hold

possession as mortgagee owing to the alleged sale of 1893 being invalid and ineffective to convey to him the ownership in the equity of redemption

in the A schedule properties, he cannot by merely asserting possession as owner under the invalid sale convert his possession as mortgagee into

possession as owner even granting that the mortgagee knew and acquiesced in his assertion. Byari v. Puttanna ILR (1891) Mad. 38, Ramunni v.

Kerala Varma Valia Raja ILR (1892) Mad. 166, Bhagvant Govind v. Kondi valad Mahadu ILR (1890) Bom. 279 and Khiarajmal v. Daim 32

Calc. 296, clearly lay down that, Article 144 cannot be invoked in favour of the mortgagee if the mortgagor is not barred by Article 148 from

redeeming and recovering possession of the mortgaged property.

The last contention about the admissibility of oral evidence to prove the alleged discharge of the mortgage of 1885 might be disposed of

shortly. A mortgage might, even if created by a registered instrument, be proved to have been extinguished by letting in admissible evidence

(including oral evidence) of payment of the mortgage amount or by letting in admissible evidence of any other transaction which operates as a

mode of payment--Ramavatar v. Tulsi Prosad Singh (1911) 14 C.L.J. 507. It has been similarly held in Kattika Bapanamma v. Kattika

Kristnamma (1907) 30 Mad. 231 that while a subsequent oral agreement to modify the terms a registered maintenance deed cannot be proved,

the fact that in particular years, the obligee was in possession of certain lands of the obligor and paid herself the maintenance amount out of the

profits of the lands can be proved. See also Karampalli Unni Kurup v. Thekku Vittil Muthorakutti (1903) 26 Mad. 195 and Goseti Subba Row v.

Varigonda Narasimham (1904) 27 Mad. 368. Here the defendants do not seek to prove that by the payment of any money or by the receipt by

the mortgagee of profits of other lands of the mortgagor, the claim of the mortgagee was paid up and thus the mortgage was extinguished, but they

wish to prove an invalid oral conveyance (of which evidence is legally inadmissible) of the equity of redemption in a portion of the mortgaged

property as having had the effect of the payment of the mortgage money. Oral evidence to prove a conveyance as equivalent to payment of money

has not been allowed in any of the cases cited and could not be allowed, Receipt of mesne profits by possession of lands and receipt of moneys

can be proved by oral evidence but not an oral sale of lands worth more than Rs. 100 nor can such oral sale be taken as equivalent to the payment

of the value of the land invalidly sold.

In the result, the Second Appeal fails and is dismissed with costs.