Ramachandra Naidu and Another vs Ramayya Naidu

Alagiriswami, J.—This appeal arises out of a suit for specific performance filed by the plaintiff, who has succeeded in both the Courts below.

The defendants'' contention was that the agreement in question was really a usufructuary mortgage and that there was no agreement to sell, which

could be specifically enforced. Both the Courts below have found against the contention of the defendants that it was only a usufructuary mortgage

and their decision on this point is undoubtedly correct on the facts of the case. In this Court, in addition to the contention that the agreement in

question is only a usufructuary mortgage, the appellants have also raised the question that the deed of agreement is really a sale deed and therefore,

it cannot be specifically enforced, though this point has not been raised in the memorandum of appeal. As I have already pointed out, the

conclusion of the Courts below that the agreement is not a usufructuary mortgage is quite correct. The other contention put forward in this Court is

in a sense really contradictory of the stand taken by the defendants in the Courts below. I shall, however, deal with it.

The agreement Ex. A-1 states that the defendants have agreed to sell the properties, that they have also received the sum of Rs. 5281 in full,

towards the sale price, that on that date itself they handed over possession of the properties mentioned in the schedule attached to that letter, that

the plaintiff, should take possession of the properties absolutely and enjoy the same, and that whenever he demands the execution of a regular

document of sale, on that day, at his own expense, the defendant should execute and register a document of sale in plaintiffs favour. The contention

of the defendants, as I have already mentioned, is that this amounts to a document of sale I do not think that is correct. The document does not

contain any words of conveyance. It does not say that the executants of that document were selling their properties. It only says that they had

agreed to sell. The mere fact that the document mentions that the executants have received the sale consideration or that possession has been

handed over to the plaintiff does not mean that it can be interpreted as a deed of conveyance. Apart from that, there is also a specific agreement

contained in that document by which the executants have agreed to execute a document of conveyance whenever the plaintiff wanted. That

agreement itself could be specifically enforced. Therefore, the argument on behalf of the defendants, that this being a document of sale and being

unregistered a decree for specific performance based on it cannot be granted cannot be accepted. This itself is enough to dispose of the contention

of the appellants. But, however, I shall deal with the question even on this basis that it amounts to a document of sale.

The first decision on which reliance was placed is one in J.R. Skinner v. R.H. Skinner, AIR 1929 PC 269. It was held there that an agreement

for the sale of Immovable property is a transaction ''affecting'' the property within the meaning of Section 49 of the Registration Act, inasmuch as, if

carried out, it will bring about a change of ownership; and to allow a document which does itself create such an interest to be used as the

foundation of a suit for specific performance is an evasion of the Registration Act. In that case, the document stated that the vendor confirmed it to

be a complete and conclusive sale and that by virtue of that sale and agreement if the vendee considers necessary, the vendor would always be

ready to execute and register a power of attorney or give the vendee any other document of help, the vendee may demand. Unlike the document in

that case, the document in the present case is merely an agreement to sell and does not mention that it is a sale. That apart, both the Registration

Act as well as the Transfer of Property Act were amended subsequently in order to nullify the effect of this decision of the Privy Council. The

effect of the amendment was summed up as follows in the Full Bench decision of this Court in N.M.S.S. Subramanian Chettiar Vs. S.M.A.M.

Arunachalam Chettiar and Others, :

Section 49 of the Registration Act states that no document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to

be registered shall affect Immovable property comprised therein or be received as evidence of a transaction affecting the property, unless it has

been registered but there is a proviso which reads as follows:

''Provided that an unregistered document affecting Immovable property and required by this Act, 1882, to be registered may be received as

evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act 1877, or as evidence of part performance of a

contract for the purpose of Section 53-A of the Transfer of Property Act 1882, or as evidence of any collateral transaction not required to be

effected by registered instrument.

This proviso was inserted in the section by the Transfer of Property (Amendment) Supplementary Act 1929, as the result of the decision of the

Privy Council in AIR 1929 PC 269. The proviso makes it perfectly clear that an unregistered document affecting immovable property may be put

in evidence in a suit for specific performance. If the document is put in evidence and embodies the contract between the parties it is sufficient to

support the claim. In the judgment in Venkadari Somappa Vs. The Official Receiver of Bellary, , it was said that it is well settled law in this

presidency that an unregistered document of a transfer is not of itself sufficient to support a suit for specific performance of an agreement to transfer

and stress was laid on the fact that there it was not established that a separate agreement to mortgage was entered into prior to the execution of the

mortgage deed in suit. The decisions of this court which preceded the introduction of the proviso to Section 49 no longer have application, and we

do not agree that an unregistered instrument affecting Immovable property is not sufficient to support a suit for specific performance. In such a suit,

the production of the document and its proof will be sufficient to support the plaintiff''s case if it embodies the whole agreement between the parties

and there are no other factors to be taken into consideration. The proviso in express terms says that it may be received as evidence of a contract in

a suit for specific performance.

This decision is a complete answer to the defendants'' contention. Therefore, the two other decisions relied upon by the appellants in B.

Mopurappa Vs. K. Ramaswami Gramani, and Ramaswami Chettiar v. Muthiah Chettiar, 71 Mad LJ 641 AIR 1937 Mad 22 should be deemed

to have been overruled by the decision of the Full Bench. Those decisions themselves though rendered after the amendment of Section 49 of the

Registration Act, make no reference to that amendment. Indeed the decision in B. Mopurappa Vs. K. Ramaswami Gramani, relied upon the

decision in Ramjoo mahomed Vs. Haridas Mullick and Others, which was rendered before the amendment earlier referred to. In that case the

plaintiff entered into an oral agreement granting three years'' lease to the defendant, all the details about the tenancy were agreed upon and a draft

lease was prepared but no formal document was ever drawn up, and it was held that as the agreement conferred an immediate right on the party to

be, from that moment and before the execution of any lease a tenant from a future day, it was an agreement of present demise and not having been

registered, the suit for the specific performance of that agreement was not maintainable. The respondent''s contention there was that all the details

were agreed upon on that date and that the only agreement as regards the future was that a deed in pursuance of that agreement should formally be

drawn up. It is difficult to understand why the agreement that a deed in pursuance of that agreement was to be executed in future, should not be

specifically enforced. It is true that in that case, there was no formally executed document and therefore, Section 49 of the Registration Act does

not directly come in. But it is possible to split that agreement into two parts one an agreement of lease and the other, the agreement to execute a

formal lease deed and this agreement should be held to be capable of specific performance. In Vakacherla Venkatasubbamma and Another Vs.

Gobbooru Subbiah, ; Abdur Rahman J. made this distinction. A suit for specific performance of a contract to sell certain Immovable properties

exceeding Rs. 100 in value, was instituted by the plaintiff. The document read as follows:

For payment of circar cists and for family necessity, I have borrowed from you Rs. 300. .... A. 1. (for this money by the 25th May. I agree to sell

the schedule mentioned properties to you and execute the sale deed on a proper stamp and get it registered). A-2 (If I fail to do so, you should

treat this letter itself as a sale deed, get into possession of the properties and enjoy them with rights of gift and sale etc). This is the letter executed

with my consent.

It should be noticed that that document said that it was to be treated as a sale deed and therefore, it could be argued that being a sale deed it

could not be used to support a suit for specific performance. Abdur Rahman, J. in discussing the question observed as follows:

There can be no manner of doubt that the second sentence in Ex. A. and (marked A-1 by me) contains an express agreement to sell the property

in consideration of a sum of Rs. 300.....It is conceded by Mr. ''Raghava Rao, learned counsel for the appellant that no exception could have been

taken to the decision of the learned District Judge if the document had ended here. He contends.

however, that in view of the following sentence (and marked A-2) by me where the parties had agreed to treat this letter itself as a sale deed in the

event of Chenchiah''s failure to execute one within the time mentioned by him in this letter, Ex. A. must be regarded to be a sale deed under which

title to the property must have been intended to be conveyed in favour of the respondent from the date on which it was executed or at all events, as

one purporting to create a future or contingent right or interest in Immovable property of more than Rs. 100 in value and that in either case, it

would not be admissible in evidence.

Whatever might have been the law before 1929, the proviso added to Section 49 of the Indian Registration Act by the Amending Act 21 of

1929, expressly provides that an unregistered document affecting Immovable property may be, even if not registered, received in a suit for specific

performance as evidence of a contract ...... It must be remembered that the plaintiff is not trying to enforce the contract of sale contained in Ex. A.

2 as distinguished from what is found in Ex. A. 1. He is suing for specific performance of a contract to sell and does not therefore, need to give

evidence as to the terms of the sale as alleged to be stated in Ex. A. 2. For this purpose, so far as this case is concerned, it is needless to refer to

Ex A-2 altogether. From that point of view, it is unnecessary to find whether Ex. A-2 is admissible in evidence or otherwise Moreover, if the title

to the property has not passed in favour of the plaintiff as contended by learned counsel for the appellant, by what is contained in A-2 it being

inadmissible in evidence according to learned counsel why should it be impossible for the plaintiff to enforce specific performance of Chenchciah''s

contract to sell the property to him ..... But an agreement to sell is not being spelt by me in this case out of what has been described (and wrongly

described in my opinion) to be an unregistered sale deed Ex. A-2 in order to found the suit for specific performance. I can safely ignore A-2 and

depend for that purpose on A-1 alone. This contains an express agreement to sell ..... My attention was next drawn to a Division Bench decision

of this Court in Venkadari Somappa Vs. The Official Receiver of Bellary, ..... It may be that in the absence of a specific agreement to sell a

property, it is not possible in this presidency to regard an unregistered sale deed as sufficient to support a suit for specific performance of a

contract to sell. (It should be noticed that this case was before the decision of the Full Bench in Subbaraya Goundan Vs. O.K. Nachimuthu

Mudaliar and Another, . But it does not follow that an express contract to sell must necessarily be regarded to have merged in a sale deed, when

that deed is not accepted by the vendee or happens to be incomplete in regard to its terms or is otherwise legally inoperative ..... There are no

express words of conveyance in that document and it is not easy to accept the contention that the plaintiff must have become satisfied for his title to

the properties with what is contained in Ex. A-2. In the absence of any definite words of conveyance by Chenchiah of his title to the properties, the

first two steps in the argument must also fall to the ground.

In the decision in 71 MLJ 641 AIR 1937 Mad 22 it was held that a document executed in favour of the plaintiff''s father by defendants''

grandfather''s firm contained not merely general words suggesting a conveyance and a definite agreement that another document would be

executed later on in pursuance of it, but on the other hand, recited that the suit property was sold ''this day''. There was further a clause which

mentioned that if the plaintiff''s father requires any document or power etc, therefore, the defendants'' grandfather shall, without any delay, have the

same completed whenever required at the cost of the plaintiff''s father. It was held-

that the recitals in the document made it quite clear that the parties had thought a sale had actually taken place that day and that a document was

only to be executed in the future, should the plaintiff''s father require it. Therefore the document on the face of it purported to bring about an actual

conveyance of property.

Held also, that the document of conveyance not having been registered, did not bring about any conveyance and the transaction had therefore, no

legal effect. Under the circumstances, the promise to execute a regular deed if the plaintiff''s father required it, could not be separated from the rest

of the transaction."" This decision again does not consider the effect of the amendment of the Registration Act in 1929. Under that amendment, this

document would have been admissible in evidence and there is ho reason why the promise to execute a regular deed should not be separated from

the rest of the transaction. Indeed in the decision of a Bench of this Court, in K. Hutchi Gowder Vs. H. Bheema Gowder, the vendor executed a

release deed on 30-10-1949, but the debtor defaulted in getting the deed registered and the release deed contained a clause ""the releasor hereby

assures and declares that whenever called upon by the releasee the releasor will do sign and execute the deeds and writings for better securing the

estate."" It was held that on the language used in the unregistered release deed, which contained a promise that wherever called upon, the releasor

would sign and execute the deeds and writings for better securing the estate, the plaintiff was entitled to have a proper deed of conveyance

executed by the defendant at the plaintiff''s place and register.

In dealing with this question at page 337 (of Mad LJ) = (at p. 41 of AIR) it was observed as follows-

The plaintiff''s claim to have a conveyance executed is rested in the alternative on the agreement contained in Ex. A-2. Ex. A-2 (release deed)

states:

''the releasor hereby assures and declares ..... that whenever called upon by the releasee the releasor will do sign and execute all deeds and

writings for better securing the estate.''

The proviso to Section 49 of the Registration Act enables Ex. A-2 to be received in evidence to prove the agreement. The plaintiff''s learned

counsel in the lower Court appears unfortunately to have failed to tell the learned Subordinate Judge that a release deed would not be effective to

transfer title ...... In order that title to the estate might be secured to him, it was necessary that he should have a proper deed of conveyance. Even

if Ex. A-2 had been registered the plaintiff would need a deed of conveyance in order to become owner otherwise than by adverse possession.

The expression ''all deeds and writings for better securing the estate'' cannot be limited to deeds or writings which were in the contemplation of the

parties at the time of the execution of Ex. A-2. Any deed or writing which the plaintiff may subsequently find to be necessary in order to secure

title, would under that clause in Ex. A-2 have to be executed by the defendant, provided the plaintiff''s claim that such further document be

executed was reasonable and the plaintiff offered to bear the expenses of the execution and registration of such document. Among the many

reservations which Srinivasa Aiyangar, J. made in his exhaustive judgment if I may say so, in Valambalachi Vs. Duraiswami Pillai and Another, is

the following:

if in a sale or sale deed there should be a covenant for further and better assurance, the right to get a fresh document may conceivably be covered

by such a covenant.'' That was said before the amendment of Section 49 of the Registration Act by the introduction of the proviso. The proviso

places the plaintiff''s right in that matter beyond the plea of controversy. We hold that, in enforcement of the promise made by the defendant in Ex.

A-2 to sign and execute all deeds and writings for better securing the estate, the plaintiff is entitled to have a proper deed of conveyance executed

by the defendant at the plaintiff''s cost and registered.

The conclusions that flow from the above discussion are as follows:--

Ex. A-1 contains merely an agreement to sell. Therefore, there is no objection to a suit for specific performance being based on it.

Even if it should be deemed to be a sale deed which it is not, it would be admissible in evidence.

The earlier part could be separated from the later part, in which the defendants have agreed to execute a formal deed of conveyance.

This agreement to execute a formal deed of conveyance could be specifically enforced. The contention of the appellants on this point is

unsustainable and the second appeal is dismissed with the costs of the respondent. No leave.