Tiruvenibai & Another v. Smt. Lilabai

Gajendrngadkar J. the construction of thn words " agreement to lease "

was not specifically argued before the Full Bench, and the main point considered was the effect of the provi-sions of s. 49 of the Act. In that connection the argument had centred round the effect of the provi-sions of cl. (h) of s. 17 of the Registration Act and s. 54 of the Transfer of Property Act. The Full Bench took the view that in enacting s. 49 of the Act the Legis-lature meant to indicate that the instrument should not be received in evidence even where the transaction sought to be proved did not amount to a transfer of interest in immoveable property but only created an obligation to transfer the property. A contract to sell immovable property in writing, though it may affect the property without passing an interest in it, is exempted from registration by clause (h) (now cl. 2 (v)) of section 17 but an agreement in writing to let, falling within cl. (d) of s. 17, is not. That is why,. according to the Full Bench, such an agreement cannot be received in evidence of the transaction which affects the immovable property comprised therein. Thus this decision does not directly or materially assist us in construing the expression "agreement to lease".

Besides, the said decision has not been followed by the Madras High Court in Swaminatha Mudaliar v. Ramaswami Mudaliar(') on the ground that it can no longer be regarded as good law in view of the decision of the Privy Council in Hemanta Kumari Debi's case('), and, as we have already pointed out, all the other High Courts in India have consistently followed the said Privy Council decision.

The learned Attorney-General has, however, con-tended before us that the correctness of the decision of the Privy Council in Hemanta Kumari Debi's case(') is· open to doubt and he has suggested that we

(r) (I92I) l.L.R. 44 Mad. 399· (2) (I9I9) L.R 46 I A. 240. should re-examine the point on the merits afresh. We 1959 do not think there is any substance in this contention Tiruvenibai because, if we may say so with respect, the view taken & Another by the Privy Council in the said case is perfectly right. v. Section 17(1) of the Act deals with documents of which Smt. Lilabai registration is . compulsory. It is obvious that the Ga 'endra adkar J. documents fallmg under els. (a), (b), (c) and (e) of 1 g sub-s. (1) are all documents which create an immediate and present demise in immovable properties mentioned therein. The learned Attorney-General's argument is that cl. (d) which deals with leases does not import any such limitation because it refers to leases of immoveable properties from year to year or any term exceeding one year or reserving a yearly rent; and the Act deliberately gives an in"tllusive definition of the term 'lease ' in s. 2(7). This argument, however, fails to take into account the relevant provisions of the Transfer of Property Act. Section 4 of the said Act provides that s. 54, paragraphs 2 and 3, 59, 107 and 123 shall be read as supplemental to the Indian Registration Act, 1908. Section 107 is material for our purpose. Under this section a lease of immove-able property from year to year or for any term exceeding one year or reserving a yearly rent can be made only under a registered instrument. This section also lays down that where a lease of immoveable pro-perty is made by a registered instrument, such instru-ment, or, where there are more instruments than one, each instrument, shall be executed by both the lessor and the lessee. It would be noticed that if s. 107 has to be read as supplemental to the Act, the definition of the word 'lease ' prescribed by s. 105 would inevitably become relevant and material; and there is no doubt that under s. 105 a lease of immoveable property is a transfer of right to enjoy such property made in the manner specified in the said section. Therefore, it would not be right to assume that leases mentioned in cl. (d) of s. 17, sub-s. (1), would cover cases of docu-ments which do not involve a present and immediate transfer ofleasehold rights. It would thus be reason-able to hold that, like the instruments mentioned in els. (a), (b) and (c) of s. 17(1), leases also are instruments

116 SUPREME COUR'.l' REPORTS [1959] Supp. '959 which transfer leasehold rights in the property

immediately and inpresenti. VVe have already referred Tiruvenibai to the requirement of s. 107 of the Transfer of Pro-

Anoth"

v. perty Act that a lease must be executed both by the Smt. Lilabai lessor and the lessee. It may be pertinent to point out

- that an instrument signed by the lessor alone which Gajendrngadka. J. may not be a lease under s. 107 may operate as an

agreement to lease under s. 2(7) of the Act.

The legislative history of the provisions of s. l 7(2)(v} may perhaps be of some assistance in this connection. Section l 7(h) of Act III of 1877 which :corresponds to the present s. 17(2) (v) did not appear in the earlier Registration Acts of 1864, 1866 and 1871. Its intro-duction in Act III of 1877 became necessary as a result of the decision of the Privy Council in Fati Chand Sahu v. Lilarnbar Singh Das (1) in which it was held that an agreement to sell immoveable property for Rs. 22,500 coupled with an acknowledgment of the receipt of Rs. 7,500 and a promise to execute a sale-deed on the payment of the balance was compulsorily registrable under s. 17 of the Act (2). Section l 7(h) was therefore enacted in 1877 to make it clear that a document which does not itself create an interest in the immoveable property does not require registration even if .it expressly contemplates and promises the creation of that interest by a subsequent document; in other words, contracts of sale and purchase of which specific performance would be granted under certain circumstances fall within this provision and would no longer be governed by the said decision of the Privy Council in the case of Fati Chand Sahu v. Lilarnbar Singh Das (1 ). Thus the policy of the Legis-lature clearly is to exclude from the application of els. (b) and (c) of s. 17(1) agreements of the said character. On principle, there is-no difference between such agreements of sale or purchase and agreements to lease. Under both classes of documents no present or immediate demise is made though both of them may lead to a successful claim for a specific perform-ance. That is why the Privy Council observed in the (1) (1871) 9 Bcng. LR. 433; 14 M.I.A. 129.

(2) Act XX of 1866.

case of Hemanta Kumari Debi (1) that the context and I959 the scheme of the statute justified the view taken by Tiruvenibai Jenkins, C. J., in the case of Panchanan Bose (2). & Another

It may also be relevant to bear in mind that the v: other documents which are included within the word Smt. Lilabai ' lease ' by s. 2(7) of the Act support the same conclu- . - sion. A counterpart, as it is usually understood, is a Ga;endragadkar J. writing by which a tenant agrees to pay a specified rent for the property let to him and signed by him alone. It is thus in the nature of a counterpart of a lease and as such it is included within the meaning of the word ' lease' under s. 2(7). Same is the position of a kabuliyat and an undertaking to cultivate or occupy. In other words, it is clear that all the four instruments which, under the inclusive definition of s. 2(7), are treated as leases satisfy the test of imme-diate and present demise in respect of the immoveable property covered by them. We must, therefore, hold that the expression " an agreement; to lease " covers only such agreements as create a present demise.

Let us now proceed to deal with the question as to whether the document (Ex. P-1) constitutes" an agree-ment to lease ". It purports to be a receipt executed in favour of the respondent by defendant 1 and bears a four anna revenue stamp. "I have this day given to you", says the document, "the land described below which is owned by me. Now you have become occupancy tenant of the same. You may enjoy the same in any way you like from generation to genera-tion. My estate and heirs or myself shall have abso-lutely no right thereto. You shall become the owner of the said land from date 1-6-1944. I will ha.ve absolutely no right thereto after the said date". Then the document proceeds to mention tbe properties and describes them in detail, and it adds " all the above fields are situate at Mouza Mohammadpur, mouza No. 312, tahsil Arvi, district Wardha. The estate described above has been given to you in lieu of your Rs. 8,700 due to you, subject to the condition that in case your amount has not been paid to you on date 1-6-1944, you may fully enjoy the estate described I959 above in any way you like from generation to genera-

tion". The question for our decision is: Does this Tiruvenibai document amount to an agreement to lease uuder

Another v. s. 2(7) of the. Act ?

Smt. Lilabai In construing this document it is necessary to re-

member that it has been executed by laymen without GaJendragadkar 1 ·legal assistance, and so it must be liberally construed

without recourse to technical considerations. The heading of the document,. though relevant, would not determine its character. It is true that an agreement would operate as a present demise although its terms may commence at a future date. Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document iu future. In considering the effect of the document we must enquire whether it contains unqualified and un-conditional words of present demise and includes the essential terms of a lease. Generally if rent is made payable under an agreement from the date of its execution or other specified date, it may be said to create a present demise. Another relevant test is the intention to deliver possession. If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to .be an agreement to lease. As in the construction of other documents, so in the construction of an agree-ment to lease, regard must be had to all the relevant and material terms; and an attempt must qe made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage.

The learned Attorney-General contends that this document is not a contingent· grant of lease at all. According to him it evidences a grant of lease subject to a condition and that shows that a present demise fo intended by the parties. He naturally relies upon tho opening recitals of the document. According to him, when the document says th~t defendant I has given to the respondent the land described below and that the respondent has become occupancy tenant of the same, it amounts to a clear term of present demise. A similar recital is repeated in the latter part of the document where it is stated that the estate described above has· been given to the respondent in lieu of I959 Rs. 8,700 due to her. In our opinion, it would be un-reasonable to construe these recitals by themselves, Tiruvenibai & Another a.part from the other recitals in the document. We v. cannot lose sight of the fact that the document ex-Smt. Lilabai pressly states that the respondent shall become the - owner of the laud from 1-6-1944 and that defendant 1 Gajendragadkar f. would have no title over it after that date. This recital also is repeated in the latter part of the docu-ment ; and it makes the intention of the parties clear that it is only if the amount of debt is not repaid by defendant 1 on the date specified that the agreement was to come into force. In other words, reading the document as a whole it would be difficult to spell out a present or immediate demise of the occupancy rights in favour of the respondent. In this connection the fact that the document is described as a receipt may to some extent be relevant. It is clear that by exe-cuting this document the defendant wanted to comply with the respondent's request for acknowledging the receipt of the amount coupled with .the promise that the amount would be repaid on 1-6-1944. The defen-dant also wanted to comply with the respondent's demand that, if the amount was not repaid on the said date, he would convey the occupancy rights in his lands to her. Besides, it is significant that the document does not refer to the payment of rent and does not contemplate the delivery of possession until 1-6-1944. If the document had intended to convey immediately the occupancy rights to the respondent it would undoubtedly have referred to the delivery of possession and specified the rate at which, and the date from which, the rent had to be paid to her. The stamp purchased for the execution of the document also incidentally shows that the document was intend-ed to be a receipt and nothing more. Under s. 2 of the Central Provinces Land Revenue Act, 1917 (C. P.

II of 1917) an agricultural year commences on the first day of June and it is from this date that the agreement would have taken effect if defendant 1 had not repaid the debt by then. It is clear that the respondent was not intended to be treated as an r959 occupancy tenant between the date of the document

and June I, 1944. During that period the agreement Tfruvenibai did not come into operation at all. In other words, it is

Another on the contingency of defendant's failure to repay the v.

snit. Litabai amount on June I, 1944, that the agreement was to

take effect. We have carefully considered the material Gajendrngadkar J. terms of the document and we are satisfied that it was

not intended to, and did not, effect an actual or present demise in favour of the respondent. In our opinion, therefore, the High Court was right in hold-ing that the document was not an agreement to lease under s. 2(7) of the Act and so did not require regis-tration.

We would now briefly refer to some of the decisions on which the learned Attorney-General relied in support of his construction of the document. In Purmananddas Jiwandas v. Dharsey Virji (1), the agreement between the parties had expressly provided that the lease in question was to commence from October l, 1882, though the agreement was executed seven days later, that the rent was to commence from that day and the rent then due was to be paid by the next day. It is in the light of these specific terms that the Bombay High Court held that the relevant words in the document operated as an actual demise. None of these conditions is present in the document with which we are concerned.

Similarly in Poole v. Bentley ('), by the instrument in question, Poole had agreed to let unto Bentley, and Bentley had agreed to take, all that piece of land described for the term of 61 years at the yearly rent of£ 120 free and clear of all taxes, the said rent to be paid quarterly, the first quarter's rent within 15 days after Michaelmas 1807, and that in consideration of the lease, Bentley had agreed within the space of four years to expend and lay out in 5 or more houses of a third-rate or class of building £ 2000 and Poole had agreed to grant a lease or leases of the said land and premises as soon as the said 5 houses were covered in. In dealing with the construction of this document Lord

(I) (1886) I.L.R. 10 Born. 101.

(2) (1810) 12 East. 168; 104 E.R. 66.

Ellenborough, C. J., observed that the rule to be collect-x959 ed from the. relevant decisions cited before him was that the intention of the parties as described by the Tiruvenibai &; Another. words of the instrument must govern the construction v. and that the intention of the parties to the document smt. Lilabai before him appeared to be that the tenant, who was to - have spent so much capital upon the premises within Gajendragadkar J. the first four years of the term, should have a present legal interest in the term which was to be binding up-on both parties; though, when certidn progress was made in the building, a more formal lease or leases might be executed. This decision only shows that if the intention is to effect a present demise the fact that a further formal document is contemplated by the parties would not detract from the said intention. It would, however, be noticed that the document in that case contained a stipulation for the payment of the rent and the tenant was to be let into possession immediately. This case also does not assist the appel-lant.

In Satyadhyantirtha Swami v. Raghunath Daji (1) the contract of lease was contained in two documents which showed that the lands were being cultivated by Appaji and Ravji who had signed the first document and that they were authorised to. continue in occupa-tion of the lands on terms mentioned in the first docu-ment. The argument that a part of the agreement would not come into operation till some years later, it was held, did not operate to make the document other than a present demise. It is difficult to appreciate how ·this decision can assist us in construing the pre-sent document.

In Balram v. Mahadeo (2) the Nagpur High Court was dealing with an instrument which purported to be a receipt and the terms of which seemed to contem-plate the execution of a sale-deed in respect of the · properties covered by it. Even so, the material clause was that "it is agreed to give to you both the above fields in occupancy rights". It was held that, on a fair and reasonable construction, the document was

(r) A.I.R. 1926 Born. 384. (2) l.L.R. 1949 Nag. 849.

'959 intended to affect a transfer of the occupancy right in

presenti and was as such an agreement to lease. No TiYuvenibai doubt, as observed by Bose, J., " on a superficial view & Anoth!r

v. of the document it would not appear to be an agree' Smt. Lilabai ment to lease. But in construing a transaction one . - has to look beneath the verbiage and ascertain what Ga1endragadkar J. are the real rights which are being transferred. When

that is done, we consider that this document is an agreement to lease despite the fact that it calls itself a receipt and speaks throughout of a sale ". It is un-necessary to consider the .merits of the conclusion rea-ched by the Nagpur High Court in this case. It would be enough to say that the said decision would not afford any assistance in construing the document be-fore us. Besides it is obvious that in construing docu-ments, the usefulness of the precedents is usually of a limited character; after all courts have to consider the material and relevant terms of the document with which they are concerned ; and it is on a fair and rea-sonable construction of the said terms that the nature and character of the transaction evidenced by it has to be determined. In our opinion, the High Court was right in holding that the instrument (Ex. P-1) was not an agreement to lease under s. 2(7) of the Act.

The result is the appeal fails and must be dismissed with costs.

Appeal dismissed.