K.S. Rm. Ramanathan Chetty and Others vs Ranganathan Chetty and Others

Abdur Rahim, J.—The question raised by this Letters Patent Appeal is one of considerable importance and difficulty. It is, to put it shortly,

how far it is open to the Court to refuse to recognise the title of the plaintiffs-appellants suing to recover Immovable property of the value of more

than Rs. 100 which they purported to convey to the defendants-respondents by an unregistered document, on the ground that the transfer has been

acted upon by the latter who spent considerable money in erecting valuable buildings on the land, with the knowledge of and encouraged by the

appellants. The facts are sufficiently set forth in the judgments For facts see the report of the learned Chief Justice and Seshagiri Aiyar, J., who

took different views and it is unnecessary to repeat them in detail. The result of the findings is that at the time of the transaction in question, which

was an exchange of two plots of land between the appellants and the respondents, both the parties believed that the document evidencing the

exchange did not require registration. Possession was taken by each party of the plot received by him under the exchange. The respondents

erected a building which cost about Rs. 40,000 placing the wall of this building on one side on the land which they had got in exchange, and the

appellants during the time the building was in progress also demanded and obtained a sum of Rs. 525 from the respondents as compensation on

the allegation that the land which they had parted with was larger in quantity than the land which they had received from the respondents. It is

further found that the objects of the appellants in instituting the suit to recover the land which belonged to them before the exchange and which they

say still belongs to them notwithstanding the attempted transfer is not so much to benefit themselves as to injure the respondents. The question for

decision, however, is one purely of law, viz., whether, under the circumstances, the equities in favour of the defendants are a sufficient answer to

the plaintiffs'' suit for ejectment.

The effect of Sections 54 and 118 of the Transfer of Property Act on what has taken place in this case is, that Exhibit B which is described as

an agreement of exchange is ineffectual to create a valid transfer of the plaintiffs'' land, and by reason of Section 49 read with Section 17 of the

Registration Act that document cannot be held to affect the right of the appellants to the property in dispute.

On behalf of the appellants it is argued that their title to the property remains and as the suit is within time, to refuse their claim for recovery of

the land will be virtually nullifying the enactment of the legislature the effect of which is to preserve the title in them in spite of what has taken place.

The answer to this argument on behalf of the respondents is that in none of the enactments referred to, does the legislature purport to deal with the

question of rights based on equities arising from the actings and conduct of the parties. It is argued that it is open to the court to say to the

appellants, "" It is true that your rights in the property have not been transferred to the respondents by the instrument in question but having regard

to what has taken place it will be fraudulent on your part to set up your legal title against the respondents and the Court will not help you to

perpetrate the fraud.

Such an answer to the suit is, in my opinion, in accord with well recognised equitable principles, of the application of which there are many

instances in the law.

One of them is the doctrine of part performance by which the operation of the Statute of Frauds in England is prevented from being used for

purposes of committing fraud. The Statute of Frauds provides that ""no action shall be brought whereby to charge any person upon any contract or

sale of land...unless the agreement...shall be in writing...&c. "" No doubt it has been held that this provision relates to procedure, but as it has been

pointed out by Fry, L.J. in his book on Specific Performance, it really goes to the solemnities of the contract. (See paragraph 497, page 254). It is

not necessary for the application of this equitable doctrine that there should have been a fraudulent conception from the beginning. It is sufficient if

the circumstances render it a fraud on the part of the party relying on the statute to take advantage of the fact that the bargain was not recorded as

required.

I fail to understand why this equitable rule should not be applied to a transaction purporting to be a transfer in pursuance of a valid contract. On

the other hand, there would seem to be less difficulty in applying the doctrine in such cases than where its aid is sought to compel the defendant to

carry out a parol contract in spite of a Statute which says that no action shall be brought to enforce such a contract. Further if a defendant can be

debarred because of his conduct from setting up a statutory defence it should be easier to uphold the defence to such a suit as this on the ground

that although the transfer which the appellants purported to make to the respondents was invalid, it would be inequitable on their part, having

regard to the fact that the latter have acted upon it in such a way as to alter their position to resile from the bargain to the prejudice of the

respondent.

The question, how far the actings of parties can be allowed to effect the application of Section 54 of the Transfer of Property Act to cases of

this class was discussed by a Full Bench of this Court in Kurri Veerareddi v. Kurri Bapireddi ILR (1901) M. 336., where the previous rulings on

the subject were considered in detail. The law as laid down there would undoubtedly be binding on us unless, as suggested by the learned Chief

Justice, the pronouncements of the Privy Council in a later case in Mahomed Musa v. Aghore Kumar Ganguli 28 M.L.J. 548, make it necessary

that we should reconsider that ruling. It was held by the Full Bench that "" a contract of sale followed by delivery of possession does not, when

there is no registered sale, create any interest in the property agreed to be sold and cannot, even if enforceable at date of suit or decree, be

pleaded in defence to an action for ejectment by one having a legal title to recover."" Then, there are general observations in the judgments

delivered by the learned Judges in which the duty and expediency of giving full effect to the words of fixe Statute is emphasised as against

recognition of equities modifying the application of the Statute Law.

So far as it holds that delivery of possession under an unregistered instrument of sale is not a sufficient answer to a suit by the vendor to recover

possession, I am not prepared to express any doubt on the correctness of the ruling. The Transfer of Property Act contemplates sales being

effected in some cases by delivery of possession and in others only by a registered instrument, and to hold that in cases of the latter class where the

legislature insists on a registered instrument, mere delivery of possession would be sufficient would be going directly against the wishes of the

legislature. (See Lalchand v. Lakshman ILR (1901) 28 Bom. 466 and Jagadbandu Saha v. Radha Krishna Pal ILR (1909) Cal. 920. Even with

reference to the rulings under Statute of Frauds, Lord Blackburn said in Maddison v. Alderson (1883) L.R. 8 App. Cas. 467, that if the matter

were res Integra he would not go so far as to hold that delivery of possession of the land would take the case out of the statute. And it is possible

that too many exceptions have been allowed to the operation of the Statute of Frauds (see Story''s Equity Jurisprudence, Sections 765 and 766).

However that may be in cases where owing to his own conduct it would be clearly inequitable or fraudulent for a party to insist upon his legal

rights, it is the duty of the Court of Equity to give relief to the other party who has suffered by such conduct. So far Lord Blackburn entertained no

doubt. He says ""the conduct of the parties may be such as to make it inequitable to refuse to complete a contract partly performed. Wherever that

is the case I agree that the contract may be enforced on the ground of an equity arising from the conduct of the party."" That seems to be in accord

with what is laid down by the Privy Council in Mahomed Musa v. Aghore Kumar Ganguli ILR (1914) Cal. 801 Venkayamma Rao v. Appa Rao

ILR (1916) Mad. 509 : 31 M.L.J. 58 and in an earlier case in Immudipattam Thirugnanakondama Naick v. Periya Dorasami ILR (1900) Mad.

377.

Before dealing with the Privy Council decisions, however, I shall mention the case H. Young and Co. v. Mayor and Corporation of Royal

Leamington Spa (1883) L.R. 8 A.C. 517 where it was held that a contract entered into by an urban authority but not under seal as required by a

Statute did not bind the Corporation and therefore the plaintiff who had carried out certain works in pursuance of such an agreement could not

recover the value of what he had done. But the basis of this decision was that the Corporation could exercise statutory power to enter into

contracts only by the observance of certain solemnities, that is, the affixing of the seal, intended for the protection of rate-payers and there was no

room therefore in such a case for the operation of the equitable doctrine of part performance. What are the circumstances which should be

sufficient to raise an equity that would be an answer to a suit for possession by a person who purported to convey the property by an unregistered

instrument must depend on the facts of a particular case. But they must be such as should have altered though not irretrievably the position of the

defendant acting on the faith of the bargain sought to be resiled from. If the effect of Immudipattam Thirugnana Kondama Naick v. Periya

Dorasami ILR (1900) M. 377, be that even in such cases the plaintiff is entitled to eject the defendant I venture to think as I shall show presently

that it is no longer good law after the pronouncements of the Judicial Committee in Mahomed Musa v. Aghore Kumar Ganguli ILR (1911) C 801,

and Venkayyamma Rao v. Appa Rao ILR (1916) M. 509. Nor is the proposition laid down in the Full Bench case, namely that even where a

valid contract of sale in favour of the defendant is proved, that would not be a sufficient defence to a suit in ejectment in such cases any longer

tenable.

The case of Mahomed Musa v. Aghore Kumar Ganguli ILR (1916) M. 509, related to transactions which took place before the passing of the

Transfer of Property Act; there is thus no question of the actual decision in that case being applicable here. But their Lordships of the Judicial

Committee while pointing out the fact that no written conveyance was necessary by the law of India, considered it desirable to lay down certain

principles of general application which, as I understand their judgment, would not be affected by any such enactment as the provision of the

Transfer of Property Act requiring certain classes of transfer to be in a particular form. They observe: ""To use language common from very early

times in Scotland, and highly approved in the case of Maddison v. Alderson (1888) L.R. 8 A.C. 467, in the House of Lords, it is no doubt true

that there is a locus penitentice, that is, a power of resiling from an incomplete engagement, from an unaccepted offer, from a mutual contract to

which all have not assented, from an obligation to which writing is requisite and has not yet been adhibited in an authentic shape'' "".

This is the situation where the parties stand upon nothing but an engagement which is not final or complete Bat where actings and conduct of

parties are founded on, then in all such cases, to use language of Professor Bell in his Principles, Section 26, ""rei interventus raises a personal

exception, which excludes the plea of locus penitentice. It is inferred from any proceedings, not unimportant, on the part of the obligee, known to

and permitted by the obligor to take place on the faith of the contract, as if it were perfect; provided they are unequivocably referable to the

contract and productive of alteration of circumstances, loss or inconvenience, though not irretrievable."" Then they say that there is nothing in the

law of India inconsistent with it but that upon the contrary, the law of India follows the same rule. They further quote with approval the statement of

Lord Selborne in Maddison v. Alderson (1888) L.R. 8 A.C. 467 that the defendant in such a case really '' charged '' upon the equities resulting

from the acts done in execution of the contract, and not (within the meaning of the Statute of Frauds) upon the contract itself. If such equities were

excluded injustice of a kind which the statute could not be thought to have had in contemplation would follow. It seems to me the reasoning would

apply with all the greater force to the present case where it is the plaintiffs that are faced with equities resulting from the acts done by the

defendants not merely on the faith of the contract, but also on the basis of further acts of the plaintiffs purporting to be done in perfecting the

contract. It is observed by the Board that "" many authorities are cited in support of these propositions from English and Scotch Law and no

countenance is given to the proposition that equity will fail to support a transaction clothed imperfectly in those legal forms to which finality attaches

after the bargain has been acted upon.

In my opinion the proposition laid down in such clear and emphatic language entirely covers this case. Their Lordships were of course aware

that in India there was no Statute of Frauds and the statute to which their observations were most applicable was the Transfer of Property Act. In

a more recent appeal from the decision of this Court Venkayyamma Rao v. Appa Rao ILR (1916) M. 509 their Lordships took occasion to

repeat that equitable principle enunciated by Lord Selborne in Maddison v. Alderson (1888) L.R. 8 A.C. 467, was as pointed out by them in

Mahomed Musa v. Aghore Kumar Ganguli ILR (1914) C. 801, as much applicable in India as in England. That was a suit to recover possession

of land on the strength of a contract and the propositions which have been referred to above were cited in order to show that even if the

acceptance of the proposal to convey the village in dispute might be considered to be defective, the defect must be taken to have been cured in

view of the actings of the plaintiff. The case affords another illustration of the principle that equities may support a transaction clothed imperfectly in

those legal forms to which finality attaches after the bargain has been acted upon.

In an earlier case Immudipattam Thirugnana Kondama Naick v. Periya Doraisami ILR (1900) M. 377, the Privy Council had expressed the

same view in a case in which the provisions of the Transfer of Property Act made the mortgage in question in that suit invalid as not being made by

a registered instrument. There it was contended that though the mortgage might fall short of an actual transfer, it showed a good contract for one

and that the defendant might now call upon the heir of the mortgagor to implement that contract. Their Lordships said that if such a contract were

proved, it would have been an answer to the plaintiff''s claim and the exact form in which it could be enforced was not material. As pointed out by

the learned Chief Justice, if the defendant in that case had sought to enforce the alleged contract by a suit he would have been time-barred. Here,

there can be little doubt that there was a valid contract for transfer of the land in dispute by way of exchange and it seems to me that Immudipattam

Thirugnana Kondama Naick v. Periya Dorasami ILR (1900) M. 377 is authority for the proposition that it is a sufficient answer to the plaintiffs''

suit. No doubt the observation of the Judicial Committee in Immudipattam Thirugnana Kondama Naick v. Periya Dorasami ILR (1900) Mad. 377

was considered by the Full Bench in Kurri Veerareddi v. Kurri Bapareddi ILR (1904) Mad. 336 and put aside as an obiter. But now that the

principle on which the dictum of the Privy Council was based has been so clearly explained and developed in Mahomed Musa v. Aghore Kumar

Ganguli ILR (1911) Cal. 801 and Venkayyamma Rao v. Appa Rao ILR (1916) Mad. 509 we should no longer be justified in disregarding the

principle itself because embodied in a statement not necessary for the decision of the case.

Another group of cases in which the operation of equity founded on the conduct of parties is exemplified is represented by Gregory v. Mighell

(1811) 18. Ves. 328 the rule of which is explained by Lord Kings-down in the leading case of Ramsden v. Dyson (1866) L.R. 1 H.L. 129 in these

words: ""If a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation,

created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord and upon

the faith of such promise or expectation with the knowledge of the landlord and without objection by him, lays out money upon the land, a Court of

Equity will compel the landlord to give effect to such promise or expectation. This was the principle of the decision in Gregory v. Mighell (1811)

Ves. 328 and as I conceive, is open to no doubt."" Other well-known cases illustrative of the same doctrine are Plimmer v. Mayor of

Wellington (1884) 9 A.C. 699 and Attorney-General of Southern Nigeria v. John Holt and Company (Liverpool) Limited (1915) A.C. 599 where

an irrevocable license from the Crown to erect jetties and buildings on the foreshore was presumed. The Judicial Committee while adverting in the

latter case to the remark of Willes, J. in Rogers v. Brooks and wife (1783) I T.R. 481, that after so long a possession (i.e., of 36 years) he would

presume anything in favour of the plaintiff and to the comment thereon of Lord Herschel observes, "" in the opinion of the Board this passage does

not support the proposition that a transfer of the dominium of lands can be effected with the presumption of a lost grant, or without possession

during the full requisite period of prescription. But the case does bear upon a question of maintenance of possession considered apart from

declaration of ownership."" The italics are mine. It is worthy of note that the facts of the case in 2 Eq. C. 522 referred to by the Chief Justice and

which was cited with approval by Kay, J. in McManus v. Cooke (1887) 35 Ch. D. 681, as laying down that if a man builds a house partly on his

neighbor''s land and the neighbour acquiesces in, this being done Courts of Equity will interfere to prevent him from disturbing it, very closely

resemble the facts of the present case.

Rulings of the above categories which are really illustrations of the same principle on which the doctrine of part performance is found are based

on grounds of acquiescence and Fry, J. in Willmot v. Barber (1880) 15 Ch. D. 96. expressed the limitations of this rule in these words: ""In the first

place, the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done

some act (not necessarily upon the defendant''s land, on the faith of his mistaken belief. Thirdly, the defendant the possessor of the legal right must

know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position

as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights. Fourthly, the defendant, the

possessor of the legal right, must know of the plaintiff''s mistaken belief of his rights. If he does not, there is nothing which calls upon him to assert

his own rights. Lastly, the defendant, the possessor of the legal right, must have encouraged the plaintiff in his expenditure of money or in the other

acts which he has done, either directly or by abstaining from asserting his legal right. Where all these elements exist, there is fraud of such a nature

as will entitle the court to restrain the possessor of the legal right from exercising it, but, in my judgment nothing short of this will do.

The third condition mentioned in the above proposition must however be understood as subject to exceptions as Mr. Justice Story states in his

Equity Jurisprudence, Second English Edition, Section 387 "" there are indeed, cases where even ignorance of title will not excuse a party: for, if he

actually misleads the purchaser by his own representations, although innocently, the maxim is probably applied to him, that, where one of the two

innocent persons must suffer, he shall suffer who, by his own acts occasioned the confidence and the loss. That is also the effect of Section 115 of

the Evidence Act as interpreted by the Judicial Committee in Sarat Chunder Dey v. Gopal Chunder Laha ILR (1892) Cal. 296. The existence of

estoppel does not depend on the motive or the knowledge of the matter on the part of the person making the representation. It is not essential that

the intention of the person whose declaration, act or omission has induced another to act or to abstain from acting should have been fraudulent or

that he shall not have been under a mistake or mis-apprehension.

No doubt as observed by Lord Selbourne, the doctrine of estoppel by representation is applicable only to representation as, to some state of

facts alleged to be at the time actually in existence and not to promises de futuro which if binding at all must be binding as contracts. But

representation as to the legal act of a party being valid as was the case in Sarat Chunder Dey v. Gopal Chunder Laha ILR (1892) Cal. 296, is

within the meaning of Section 115 of the Evidence Act and in the present case the conduct of the appellants in obtaining from the respondents Rs.

525 on account of this land while construction of the building, was in progress amounted to a representation that the transaction of exchange was

valid and the respondents were actively encouraged thereby to go on spending money on the faith of the representation. This at least is sufficient to

estop the appellants from contending that the title did not pass to the respondents even if no estoppel arose from what had happened previously.

The recognition of equities arising from the conduct of parties is not confined to transactions with respect to land as held by Kay, J, in

McManus v. Cooke (1887) 35 Ch. D. 681 and as will also be seen from In re Wilson (1916) 1 K. B. 382, and the cases cited there by Horridge,

J. In re Wilson (1916) 1 K.B. 382, the question was as to the effect of actings on a deed of arrangement admittedly void for want of registration

and an observation of Honyman, J. which had the approval of Lord Esher, M.R. is quoted: ""A man cannot say at one time that the transaction is

valid and thereby obtain the advantage to which he could only be entitled on the footing that it is valid and at another time say it is void for the

purpose of securing some further advantage."" Horridge, J. on the authority of that and other cases held that the appellant could not rely upon the

invalidity of the deed of arrangement observing ""The view that I have taken does not make the registration of the deed good but prevents the

appellant from relying on its invalidity.

The Indian cases before Kurri Veerareddi v. Kurri Bapireddi I.L.R (1909) M. 336 as reviewed there, show a conflict of decisions and it is

unnecessary to discuss them again. The ruling in the Pull Bench case has been followed in Narasimha Raju v. Raghunadha Raju (1915) M.W.N.

In Thiruvenkatachariar v. Seshadri Aiyangar (1916) 80 M.L.J. 559 however, the Chief Justice and Srinivasa Aiyangar, JJ., held that it did not

apply to a suit in which the defendant was sought to be ejected by the plaintiffs who had bought the land from the owner by a registered sale-deed

but with notice of a prior contract of sale in favour of the defendants, on the ground that the latter obtained a registered conveyance afterwards. In

neither of these cases, however, the effect of the pronouncements of the Judicial Committee was taken into consideration.

The only case brought to our notice in which it was considered is Khagendra Nath Chatterjee v. Sonathan Guha 20 C.W.N.149 and there the

learned Judges expressed their dissent from Kurri Veerareddi v. Kurri Bapireddi I.L.R (1909) M. 336 and gave effect to equitable considerations

arising from the conduct and actings of parties in the light of the propositions laid down by the Judicial Committee.

Agreeing with the learned Chief Justice, I would dismiss the appeal with costs.

As my learned brothers Sadasiva Aiyar and Napier JJ. have taken a different view of the case, the order shall be as proposed by them.

Sadasiva Aiyar, J.

I had the great advantage, before I began to write this judgment of a perusal of the opinion which my brother, Naper, J. has prepared in this

case and which he is about to deliver.

I agree with that judgment except on one or two very minor points which will be mentioned in the course of the following judgment of my own.

The estoppel in Bamxden v. Dyson (1856) L.R. 1 H.L. 129 and MacManus v. Cooke (1887) 35 Ch. D. 681 is based on what is called ''a

duty'' on A the owner of a land to actively assert his title to that land and set up his adverse title when he sees B building upon his land, when B

was supposing by mistake that he (B) was the owner of the land and not A., I am myself (with the greatest respect) inclined to doubt very much

whether there is any such legal duty upon A''s part to actively correct the mistake made by B. Especially where B''s mistake was a very foolish and

reckless mistake, why should not B surfer for it? However, as my learned brother has pointed out, there is nothing to show in the present case that

the plaintiff knew his own subsisting title to the site when the building in question was being raised by the defendant. In Russell v. Watts (1883) 25

Ch D. 559, Cotton, L.J. speaks of A letting B ""run into a trap"" by A''s failure in his duty to undeceive B.

The learned Lord Justice was evidently not satisfied that the mere doctrine of estoppel by omission was sufficient to support the decisions and

attempts to press into service the doctrine of '' laying traps'' which had been till then utilised only as a part of the law of torts. That doctrine of ''

trap'' seems to have been once pushed too farm English Courts (see Crompton, J''s dictum in an old case of Gallagher v. Humphrey (1862) 10

W.R. 661 and I do not feel inclined to introduce all the refinements and uncertainties found in the subsequent English Case Law on this point into

India, Under that doctrine, trespassers were, sometimes converted into licensees, invitations to trespass by good-natured negligent owners of land

were implied oa most slender grounds and a man was made civilly liable in damages to trespassers because he was too indolent to fence his lands

not even clos3ly bordering on a highway. In short, moral and social duties were sought to be converted into legal duties. The rather too wide

language (if I may say so with respect) used by some of the Law Loris in Cooke v. Midland Great Western Railway of Ireland (1909) A.C. 229

was sometimes sought to be availed of for even extending the doctrine. In that case, however, there was a statutory duty cast upon the Railway

Company to fence their land and to keep the fencing in proper repair and we also know that Railway Companies guilty of negligence are trentel

much less indulgently in England than in India. In the more recent case of Latham v. Johnson (1918) 1. K.B. 338 this doctrine of trap has been,

however, now confined within strict limits. Because some English decisions have established a legal duty on the negligent owner of the land for not

looking after it and not preventing the public from trespassing upon it, I am not inclined to hold that Indian Courts ought to create a legal duty in A

the owner of a land to actively take the trouble to warn a reckless person, B, who chooses to build in A''s land and to impose upon A the disability

of losing his right to recover the possession of his land from a trespasser, because he did not give the warning to B.

As regards the cases like Plimmer v. The Mayor of Wellington (1884) L.R. 9 A.C. 699 and the Attorney. General of Southern Nigeria v. Jhon

Holt and Company (1915) A.C. 599, these are not cases where B who built on A''s land was ignorant of A''s right. He knew it full well and yet

built upon A''s land believing that A was assenting to such building and would give him (B) a perpetual lease-right (or other similar right), A having

conducted himself in such a manner as to induce B to entertain a reasonable belief that A assented to the building. These cases also do not apply to

the facts of the preseat case, as the defendants did not believe that the plaintiffs continued to be the owners of the plaint site or that the defendants

could build only with the plaintiffs'' implied or express consent and had no power to build without such consent.

He did not care for or expect plaintiffs'' consent at all. The plaintiffs'' conduct in not objecting had nothing to do with the defendants'' activities

in the building operations and the defendants did not expect from any such conduct that the plaintiffs as the then owners were going to give the

defendants license to build with permanent rights over the site and the building.

I am also of opinion that Section 51 of the Transfer of Property Act indicates that the person B believing in good faith that he is absolutely

entitled to property and building on it, cannot be allowed to claim larger rights than are mentioned in that section, namely, either to have the value of

the improvements made by him estimated and paid by A (the evictor) or to require the evictor A to sell his interests in the property at the then

market value irrespective of the building. I agree with Seshagiri Aiyar, J. that the option is with A, the person entitled to evict, in this case the

plaintiffs. I think the word '' transferee'' in Section 51 includes also a transferee under an invalid transaction of transfer and the words ""the person

causing the eviction"" include also the transferor under an invalid transaction of transfer.

As regards the Privy Council decision in Venkayamma Rao v. Appa Rao (1916) 20 M.L.T. 137 : 39 Mad. 509, I am clear that the language

of their Lordships at page 148 clearly implies that their Lordships were aware that the decree should be strictly (a) for execution of a conveyance

in plaintiff''s favour and (b) for possession of the plaint lands, these being the two reliefs ordinarily claimed and decreed in a successful suit for

specific performance of a contract of sale, but their Lordships thought that as a Receiver had been appointed in the suit and such Receiver (as an

officer of the Court) would act upon their Lordship''s judgment (as he was bound to do) without the necessity of the plaintiffs applying for

execution of the decree the shape of their Lordships'' decree need not include a direction for the execution of a conveyance and that the decree for

delivery of possession alone "" in the terms of the contract affirmed"" as valid by the Privy Council would be sufficient to give the plaintiff full relief

especially in view of the declaration of the plaintiff''s title as owner and her being given possession through the officer of the Court. I am unable

however to agree with the contention of the learned Advocate-General (and I regret that on this point I differ from my learned brother, Napier, J.)

that the contract relied on by the plaintiff in the above Privy Council case is not a contract io convey, falling u/s 54 of the Transfer of Property Act

but is governed by Section 9 of that Act.

I would allow the appeal and pass an order for return of a finding on the issue in terms of the last paragraph of the judgment of Seshagiri Aiyar,

J. The parties will bear their respective costs throughout. Three months for return of finding and ten days for objections.

Napier, J.

The question raised in this appeal is, whether in the circumstances, the defendant is entitled to resist the suit brought by the plaintiff to recover

possession of land which, he, the defendant received from the plaintiffs in exchange for other land, the exchange not having been made in

accordance with the provisions of Section 118 of the Transfer of Property Act. The first ground on which the claim is resistel is that of estoppel.

Mr. T.R. Venkatarama Sastri relies on the fact that one year after the exchange purported to have been made and the parties took possession of

the respective plots, the plaintiff claimed a sum of money by way of compensation for the difference in size of the two plots and that he received it

knowing at the time that the defendant was building on the land. He has strenuously urged that this receipt of the money intentionally caused the

defendant to believe that the property was his. I am however unable to see how this argument arises on the facts. The money was claimed and

received by the plaintiff in the full belief that he had no longer any title to the land which he had parted with and in compensation for deficiency in

area. It had nothing to do with the fact that the defendant was building and would have been claimed by him whether the defendant built or not. It

represented nothing more than the full completion of the contract to change. It is impossible to argue that the facts of this case can be brought

within the doctrine of estoppel as laid down in the well known case of Wilrnot v. Barber (1880) 15 Ch. D 96 where the requirements for estoppel

by representation under English law are set out and it has been expressly held by the Privy Council that Section 115 of the Indian Evidence Act

reproduces the English law on this point. It is however argued that there is a doctrine of equitable estoppel which is more favourable to persons in

the position of this defendant. This doctrine is referred to by Lord Justice Bowen in Proctor v. Bennis (1887) 86 Ch. D. 740 as the equitable

doctrine of acquiescence, authority for which is to be found in the case of Ramsden v. Dyson (1866) L.R. 1 H.L. 129. It is important to ascertain

exactly the limits of this doctrine as it has been expressly applied to this country by the Privy Council in Beni Bam v. Kundan Lal ILR (1809) All.

I gather from the language used by the learned Chief Justice in this case under Appeal that he relies on Ramsden v. Dyson (1866) L.R. 1 H

L. 129, and a later case MacManus v. Cooke (1887) 35 Ch C. 681. The doctrine in Bamsden v. Dyson (1866) L.R. 1 H L. 129 is as follows:

If a stranger begins to build on my land supposing it to be his own, and I perceiving his mistake, abstain from setting him right, and leave him to

persevere in his error, a Court of Equity will not allow me afterwards to assert my title to the land on which he had expended money"". "" It

considers, that when I saw the mistake into which he had fallen, it was in my duty to be active and to state my adverse title"". It is however clearly

stated in a later passage that to raise the equity the real owner should at the time know that the land belongs to him (vide page 141). This condition

is insisted on, in Proctor v. Bennis (1887) 36 Ch. D. 740 where Cotton, L.J. says that ""the party who has suffered, should have been acting in

ignorance of the title of the other man and that the other man should have known that ignorance and not mentioned his own title,"" and Bowen, L.J.

says, ""in order to make out such acquiescence it is necessary for them to establish that the plaintiff stood by and knowingly allowed the defendant

to proceed and to expend money in ignorance of the fact that he, that is, the person setting up his claim, had rights and meant to assert such rights.

In an earlier case, Russell v. Watts (1883) 25 Ch. D. 559 the same learned Lord Justice Cotton, L.J. states as follows: ""The knowledge by A of

B''s mistake imposes on A the duty to undeceive him, if he knows facts which are unknown to the other persons and does not inform them about it

but lies by and lets them run into a trap."" The whole subject is considered in White and Tudor''s Leading Cases in Equity under the heading

Equitable Estoppel"" where a large number of cases are collected and the proposition is thus stated by the learned editor from the language of the

Court of Appeal in a case in 8 Chancery Division 314: ""If a person having a right and seeing another committing an act infringing upon thai right

stands by in such a manner as really to induce the person committing the act to believe that he assents to its being committed, he cannot afterwards

be heard to complain of the act."" The proposition put in this form S3ems rather to narrow the doctrine as enunciated in some of the cases; but it is

clear that the essence of the doctrine of estoppel by acquiescence is that the acquiescence should occur in a party who knows that his right is being

infringed. It may be that this goes a little beyond the doctrine laid down in Willmot v. Barber (1880) 15 Ch. D 96 where estoppel requires that the

possessor of the legal right must have encouraged the plaintiff in his expenditure of the money and it is possible that it also goes beyond the doctrine

as stated in Section 115 of the Evidence Act; but whether this be so or not, it is clear that the facts of this case do not come within the doctrine, for

there is no evidence that at the time the defendant was expending his money, the plaintiff knew that the exchange was bad in law by reason of the

want of registration. With the greatest deference therefore to the learned Chief Justice, I cannot think that this defence can prevail.

The next point argued by Mr. T.R. Venkatrama Sastry was that a license by the plaintiff to the defendant must be implied and reliance is

placed on two cases, Plimmer v. The Mayor of Wellington (1884) L.R. 9 A.C. 699 and Attorney-General of Southern Nigeria v. John Holt and

Company (1915) A.C. 599; but in both those cases the Crown being naturally the owner of the foreshore knew that the land on which the other

parties were building was the property of the Crown and the cases come within the doctrine above stated. It is impossible to say that a person can

give another, license to build on his land when he does not know that the land belongs to him.

The next point taken for the respondents is that there having been part performance of the exchange, the law will treat it as complete although

admittedly there is no valid exchange under the Transfer of Property Act. The authorities relied on for this proposition are two recent cases in the

Privy Council Mahomed Musa v. Aghore Kumar Ganguli 28 M.L.J. 548 and Venkayamma Rao v. Appa Rao ILR (1916) M. 509. Before

examining these cases it is advisable to understand how the law has been regarded in this country.

The language of the Transfer of Property Act admits of no misconstruction. Section 54-"" Sale is a transfer of ownership,"" etc. ""Such transfer in

the case of tangible Immovable property of the value of Rs. 100 can be made only by a registered instrument."" In the case of tangible Immovable

property of a value less than Rs. 100 such transfer may be made either by a registered instrument or by delivery of the property."" It has definitely

been laid down by a Full Bench of this Court that the words ""can be made only"" make it impossible for any person to acquire title to property of

that description by transfer ""inter partes"" otherwise than by a registered instrument. Vide Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 336

where the whole question was exhaustively considered. The learned Chief Justice points out how important it is from the point of view of public

policy to maintain the requirements of registration and how dangerous it is to allow cases of hardship to affect these requirements and thus induce a

system of uncertainty and give opportunities for claims to be founded on perjured evidence. Subramania Aiyar, J. quotes some very strong

observations by the House of Lords on the danger of modifying imperative statutory provisions on the ground of equity from Young and Co. v.

Mayor and Corporation of Royal Leamington Spa (1883) L.R. 8 A.C. 517 from which I extract the following: ""It is however for the legislature to

determine whether the benefits derived by enforcing a general rule are or are not too dearly purchased by occasional hardships. A Court of Law

has only to inquire what has the legislature thought fit to enact."" Bearing in mind that it has been the effort of the legislature of this country to codify

the law so as to make it easily applicable by Judges of inferior courts not so highly trained as those in Courts in England, I have no doubt that this is

the true principle to apply in ascertaining the law of this country. We have not here as there has been in England an equity jurisdiction that has

grown up side by side with the common law of the country, and I think that we should refrain from engrafting equitable doctrines on the plain

words of our Codes. This is the view that I have expressed in other cases and it is founded on decisions of their Lordships of the Privy Council in

several cases. But it is said that we have no alternative since the two"" decisions above referred to. Before dealing with the observations of the

Board relied on, it is advisable to ascertain exactly what was decided in each case. In Mahomed Musa v. Aghore Kumar Ganguli ILR (1914) C.

801, the suit was to redeem two mortgages, dated the 22nd July 1848 and the 4th April 1871. The defendants pleaded that in 1873 a suit to

enforce the latter agreement was brought by the mortgagee and settled by a compromise under which the mortgage debts were to be paid off and

the property to be divided into specific shares, the mortgagor to convey those shares to the parties respectively entitled, and that a decree was

made by the Court that the suit be decided in pursuance of the terms of the compromise and be struck off from the list. No conveyance was

executed by the mortgagor nor was the agreement registered; but it was acted upon and Carried out by all the parties and their successors in title

up to the date of the suit as if the conveyance has in fact been made. The High Court of Calcutta held that the mortgages of 1848 and 1871 were

extinguished by the compromise and that therefore the right to redeem was lost. The Privy Council accepting the view of the facts taken by the

learned Judges "" concurred with the legal result arrived at."" That is the actual decision. Their Lordships say on page 815, ""the point which is made

against giving effect to this compromise is that a conveyance was not made. This is true but no written conveyance by law of India was at the date

of that transaction necessary, the Transfer of Property Act not having been passed until the year 1882. "" The judgment of the High Court is not

reported, but it is clear from the arguments that the Court relied on the fact that at the date of the compromise agreement, registration of such an

agreement was optional u/s 18 of the Registration Act IX of 1871 and held that oral evidence was admissible to prove that the equity of

redemption was released by the mortgagor. It cannot be argued that the actual decision in the case is any authority for the proposition that the

requirements of the Transfer of Property Act can be ignored but it is suggested that the obiter dicta of the Board carry the case a great deal further.

Dealing with these dicta with the very greatest respect as I am bound to do, I think it proper to apply the rule laid down by Lord Halsbury in Quinn

v. Leathern (1901) A.C. 495 in discussing the decision in Allen v. Flood (1893) A.C 1. ""There are two observations of a general character which

I wish to make and one is to repeat what I have very often said before, that every judgment must be read as applicable to the particular facts

proved or assumed to be proved since the generality of the expressions which may be found there, are not intended to be expositions of the whole

law but governed and qualified by the particular facts of the case in which such expressions are to be found."" Applying this principle of construction

of judgments, I feel myself entitled to say that general expressions as to the effect of equity or statutory requirements must be confined to the statute

under consideration, and secondly, that where, as in that case no statutory requirement was violated, general expressions of the effect of equity on

the acts of the parties are no authority for ignoring statutory requirements. That the acts of the parties or their intended acts were alone under

consideration is clear from the language used on page l50, ''''but even if a transfer in writing had from a convincing point of view been omitted or if

some other formal defect had occurred, their Lordships are of opining that this would have been unavailing to the appellants in the attempt made in

the present suit to redeem the mortgages, for the points against opening up the transactions are manifold and in their Lordships'' opinion conclusive.

. The compromise has been acted upon by all the parties to it and by their successors in title ""from that date to this."" It is to my mind perfectly

clear that their Lordships are here referring to the failure by the mortgagor to execute a conveyance in accordance with this agreement and not with

any reference to statutory requirement of a conveyance which as their Lordships have pointed out in the previous sentence did not at that time

exist. It is with reference to this state of affairs that their Lordships apply the. case of Maddison v. Alderson (1883) L.R. 8 A.C. 467 and the

language of Professor Bell in his Principles, Section 26, and therefore when their Lordships in the next words say that "" they do not think there is

anything in the law of India inconsistent with it but that on the contrary these laws follow the same rule "" this dictum has reference to the effect of

long continued acts of parties in rendering unnecessary a conveyance which was required by the terms of the agreement, and not to the effect of

such acts on statutory requirements. I will now deal with Vmkayyamma Rao v. Appa Rao I.LR. (1916) M. 509. The facts are as follows: The suit

was brought by a lady for a declaration that she was entitled to a certain village for possession. She based her case on an alleged contract with the

last holder and on a subsequent oral bequest to her. The District Judge hold that the village had been purchased under the alleged contract and had

been held in trust for the appellant. He also upheld the oral devise. The High Court found neither contract nor devise proved and dismissed the suit

(except against a party who had not appealed). Before the Privy Council it was contended that there was a valid contract which could be enforced

by specific performance. It was not contended that anything had occurred which operated as a transfer. The contract as found by the Board was

as follows: The deceased lady had induced the plaintiff, her niece, to live with her by promises of a general character and had actually conveyed to

her two small properties which she purchased. In 1898 she purchased the suit village. She made no concealment that she had done it for the

plaintiff but she refused permission for the title being taken in the plaintiff''s name. A quarrel arose and the plaintiff and her husband left the

deceased. Then the deceased wrote a letter which the Privy Council held to be a promise. By the letter she undertook to convey the property to

the plaintiff on her death. The plaintiff returned to live with the deceased and their Lordships held that constituted acceptance of the promise and

consideration for a good contract (vide page 144). Having found the contract their Lordships say that the citation of Maddison v. Alderson (1888)

8 A.C. 167 and Maunsell v. Hedges (1854) 4 H.L.C. 1039 is beside the mark. ""The true issue is a contract proved? Had a contract been proved

in either of the examples cited there is nothing to suggest that the law would have refused to give effect to it by way of specific performance."" Their

Lordships then go on to consider the facts on a narrower basis. ""Suppose the proof of acceptance in terms by the Rani was considered to be

defective what is the situation in view of the actings of the plaintiff"" and continue "" their acting took place on the footing of a proposal so made and

were known by Papamma to have taken place on that footing. In these circumstances the objection that the contract was inchoate or incomplete

cannot be maintained."" For this proposition their Lordships referred to Maddison v. Alderson (1888) L.R. 8 A.C. 167 and the case in Mahomed

Musa v. Aghore Kumar Ganguli ILR (1914) Cal. 801 and say that the power of resiling is barred by the rei interventus excluding the plea of locus

penetentiae, and once more their Lordships say that there is nothing in the law of India inconsistent with it. With great respect to my learned

brother who takes as different view, I am at a loss to understand what bearing this latter observation has on the supposed efficacy of part

performance to effect a transfer of Immovable property contrary to the Transfer of Property Act. If any Act is referred to, it can only be the

Contract Act or the Specific Belief Act for the existence of a valid and enforceable contract was the sole question under consideration, and if I

may say so with respect, neither do I know anything in either Act which would prevent a Court finding a contract proved in the circumstances

suggested by their Lordships. Neither the decision nor the dicta, nor indeed the argument of counsel had anything whatever to do with part

performance operating as transfer. An argument is however founded on the form of the decree in that case, it being a direction to the Receiver to

put the plaintiff in possession. Their Lordships say that the fact there is a receiver saves any complexity in carrying out the judgment. The plaintiff

had, on the footing of a contract and an oral devise, asked for a declaration of title and possession. Undoubtedly, if the oral devise was proved,

there would have been a valid transfer and the decree asked for would have been proper. Counsel before the Privy Council however based his

case on contract only and asked for specific performance. The Privy Council found the contract proved and did not deal with the devise, so,

naturally did not give a declaration of title. The only question is why did not the Board put its decree for specific performance in the form of a

direction to the Receiver to convey? The report is silent on this matter but I am inclined to think that the suggestion of the learned Advocate-

General is the true explanation. He points out that the transaction/is not a sale because there was no price and not a gift because there was

consideration, and clearly not an exchange; so none of Sections 54, 128 or 118 of the Transfer of Property Act applies with the result that Section

9 applies and the transfer can be made without writing. The simplest form of transfer is by putting a person in possession. Vide Section 54 of the

Transfer of Property Act. No registered instrument was necessary and it follows therefore that the form of the decree in this case does not give any

assistance to the doctrines sought to be established. I would like also to point out that the application of the doctrine of part performance in

England, and the use sought to be made of it in this case are not in pari materia. In England it belongs to the sphere of contract and operates,

where applicable, to allow a party to prove a contract in an action in spite of a statutory prohibition. Here there is no contract part performed. The

contract is executed. What is sought is to make total performance of an executed contract operate to create legal rights in violation of a statute.

Even if there had only been part performance by one party there would have been no statutory difficulty in getting a decree for specific

performance for there is no statutory provision in the Transfer of Property Act or the Contract Act requiring the contract to be proved by writing.

There is therefore no room for the application of the English doctrine of part-performance in this country. What the respondents are really seeking

to do is to apply another entirely different equitable rule inherited from the Courts of Chancery, "" Equity will treat that as done which ought to be

done "" and to apply it against the statute. For the above reasons, I am clear that nothing in either of the two cases relied on has any bearing on the

point and that the authority of the decision of the Full Bench in Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 336, remains unshaken. I

would add that apart from principle and authority I should find great difficulty in accepting the statute where it indicates that placing in possession

will not be. a valid transfer, and ignoring it where it uses the definite words '''' a transfer of ownership can be made only by a registered instrument.

We are next asked to make a decree for specific performance. I have the greatest difficulty in seeing how such a decree can be given to a

defendant (vide observations of Subramania Aiyar, J. in Kurri Veerareddi v. Kurri Bapireddi ILR (1904) M. 336 and I am clear that we cannot

do it in this case when the defendant did not ask for it in his written statement, and no issue was settled on the point. I therefore express no opinion

on the questions whether Exhibit B can be used to prove an agreement for what agreement would be proved by it. The sole question that remains

is whether the defendant is entitled to the benefit of Section 51 of the Transfer of Property Act or the principle underlying it. In my opinion a wide

meaning must be given to the word ""transferee "" in this section and it should read as including a person to whom land purported to be transferred.

The provision in the Mesne Profits and -Improvements Act XI of 1855, which is still in force in India where English law is applicable is "" If any

person shall erect any building etc., upon any lands held by him bona fide in the belief that he had an estate in fee-simple etc., "" and such person be

evicted by any person having a better title, "" and the rest of the section is reproduced in Section 51 of the Transfer of Property Act. It has been

held in Ramalinga v. Samiappa ILR (1889) M. 15, that Section 51 only declared the pre-existing law on the subject and there is no doubt that the

Act of 1855 embodied the English law. I would therefore adopt the course suggested by Seshagiri Aiyar, J. and call for a finding on the 4th issue. I

agree with Sadasiva Aiyar, J. as to costs.

In compliance with the order contained in the above judgment, the lower court returned a finding that the plaintiffs were liable to pay to the

defendants compensation to the extent of Us. 5, 79.5 on account of the damage that was likely to accrue to the defendants, by the severance of

the structure on the site in dispute.

The Court delivered the following.

We think that Rs. 3,505 will be a sufficient compensation in the circumstances of the case on the basis on which the amount is calculated in

paragraph 12 of the Subordinate Judge''s finding. The decree will be modified accordingly. The mandatory injunction will not be issued until this

amount has been deposited in Court. The money will be deposited by the plaintiffs within a fortnight of the re-opening of the Court and the

defendants will remove so much of the building as stands on the land of the plaintiffs within two months from the date of the deposit. There will be

no order as to costs.