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Madras High Court
Kurri Veerareddi And Ors. vs Kurri Bapireddi And Anr. on 9 March, 1904
Equivalent citations: (1906) ILR 29 Mad 336
Author: A White
Bench: A White, S Ayyar, Benson


Arnold White, C.J.

1. In this case I have come to the conclusion, though not without some doubt, that our answer to the question which has been referred to us should be in the affirmative.

2. There is much to be said in support of the view that notwithstanding the express words of Section 54 of the Transfer of Property Act, it is inequitable to apply the section as against a party who is in possession and who, if he had sued for specific performance of the contract to sell, would have been entitled to a decree.

3. On the other hand in dealing with the question which arises in this case, I think it is legitimate to take into account the considerations of public policy on which the requirements laid down in Section 54 of the Transfer of Property Act are based. In enacting Section 54, it was, I take it, the intention of the Legislature, by means of compulsory registration to minimize as far as possible the chances of litigation and to reduce the opportunities for perjury in connection with sales of immoveable property.

4. The application of the strict letter of the law untempered by equitable consideration may, no doubt, at first, result in hardship to individuals. But as soon as it is known to be well settled that the strict letter of the law will be applied, cases of individual hardship will cease to occur, and full effect will be given to the considerations of public policy on which the enactment in question is based.

5. The application of the letter of the law leads to certainty of title and to a diminution of the opportunities for perjury. The tempering of the letter of the law by recognizing equities which would take a case out of the statute, leads in precisely the opposite direction.

6. The terms of the enactment in connection with the requirement of a registered instrument, are perfectly clear and unambiguous. Section 54 of the Transfer of Property Act defines “sale” as a transfer of ownership in exchange for a price paid or promised, or part paid and part promised, and the section then proceeds to enact that, in the cases mentioned the transfer can be made only by a registered instrument.

7. The section further provides that a contract for sale “does not, of itself, create any interest in or charge on” immoveable property. We are asked to read this provision as enacting by implication that a contract for sale coupled with possession, does create an interest in or charge on the property, even although the requirements of the section with reference to a registered instrument have not been complied with. Such a construction seems me to be altogether inconsistent with the express enactment in the earlier part of the section.

8. The object of the provision, as it seems to mo, was to prevent the question being raised as to whether the law of England as to the legal effects of a contract of sale see for instance, Edwards v. West L.R. 27 Ch. D. 394, In re Adams and The Kensington Vestry L.R. 27 Ch. D. applied in this country.

9. The Transfer of Property Act purports to codify certain parts of the law relating to the transfer of property by act of parties and it is not in accordance with sound canons of construction or with public policy to real into such an enactment propositions of equity which have been laid down with reference to some other enactment not altogether in pari materia. The English Courts are bound by decisions in connection with the Statute of Frauds, which are based upon the “equity of statute.”

10. We are not so bound, and I do not think we are under any obligation in law to engraft these decisions, whenever they can be said to be in point, on to the enactment in question ; and on grounds of public policy, 1 do not think it desirable to do so. Here we have more or less a clean state. In England it is otherwise. In dealing with the principles of equitable construction? Mr. Maxwell observes (Maxwell on the ‘Interpretation of Statutes,’ 4th edition, p. 390):

This principle of equitable construction has, however, fallen “into discredit. It was condemned, indeed, by Lord Bacon, who ” declared that non est interpretatio sed divinatio quce recedit a “litera : Lord Tenterden lamented it and pronounced it dangerous; “and it may now be considered as altogether discarded as “regards the construction of most modern statutes. Statutes are “now to be considered as framed with a view to equitable as well “as legal doctrines.” In connection with the question of public policy, I may cite the following passage from Story’s. Equity Jurisprudence’ (see Story, para. 765 on p. 505).

It must be admitted that the exceptions thus allowed do “greatly trench upon the policy and objects of the Statute of “Frauds; and, perhaps, there might have been as much wisdom “originally in leaving the statute (o its full operation, without “any attempt to create exceptions, even in cases where the statute “would enable the party to protect himself from a performance “of his contract through a meditated fraud. For even admitting “that such cases might occur, they would become more and more “rare as the statute became better understood; and a partial evil “ought not to be permitted to control a general convenience. “And, indeed, it is far from being certain that these very exceptions do not assist parties in fraudulent contrivances and increase “the temptations to perjury, quite as often as they do assist them “in the promotion of good faith and the furtherance of justice. “These exceptions have also led to great embarrassments in the “actual administration of equity; and although in some cases “one may clearly see that no great mischiefs can occur from “enforcing them, yet, in others, difficulties may be stated in their “practical application which compel us to pause and question “their original propriety.

11. The Indian authorities upon the question raised in this case are in conflict.

12. In Ukku v. Kutti I.L.R. 15 Mad. 401 this Court laid down the broad proposition that whatever right a party in the position of the defendant in the present case could assert as plaintiff, was also available to him as a ground of defence. In Ittappan v. Parangodan Nair I.L.R. 21 Mad. 91, the plaintiff brought his suit in ejectment before the expiration of the time within which the defendants might have sued for specific performance of the contract to renew the lease. This Court held that to allow the plaintiff to eject the lessee would be to give the plaintiff a decree in fraud of his contract of lease.

13. In this case the learned Judges dissented from an earlier decision in Papireddi v. Narasareddi I.L.R. 16 Mad. 646 in which there had been an oral contract for sale, possession given to the defendant, and part payment of the purchase money made, but the Court held that the vendor was entitled to evict on the ground that there had been no registered instrument. The point was considered by Sir Bhashyam Ayyangar in the course of his judgment in Ramasami Pattar v. Chinnan Asari I.L.R. 24 Mad. 449. The learned Judge (p. 466) after referring to the law of England under which, in certain cases, a Court of Equity would act on the supposition that what ought to be specifically performed had been performed and give relief on that supposition, observes that the same course may be adopted in this country “as in fact it is in cases in which it can be done without contravening the express and fundamental provisions of the Transfer of Property Act or of any other positive enactment.”

14. In Achutan Nambudri v. Roman Nair 13 M.L.J. 217, it was held by this Court that the fact that the party in possession was in a position to enforce specific performance of the contract, was no defence to an action of ejectment, if the requirements of the Transfer of Property Act with regard to the registration had not been complied with.

15. The case Karalia Nanubhai v. Mansukhram I.L.R. 24 Bom. 400 at p. 402 may perhaps be distinguished on the ground that in that case the purchaser’s title was perfected by a registered conveyance which was executed before the case was decided by the Court of First Instance. Lalchand v. Lakshman I.L.R. 28 Bom. 466 is a clear authority in support of the view (although as a matter of fact there had been in that case a suit for specific performance by the defendant which was dismissed) that in a case like the present the express provisions of the statute must prevail.

16. In Begam v. Muhammad Yakub I.L.R. 16 All. 344, a Full Bench of the Allahabad High Court took the same view as was taken by this Court in Ittappan v. Parangodan Nair I.L.R. 21 Mad. 291, subject to this limitation that the defendant must prove that he had at a proper time and place tendered a proper conveyance of the property to the seller (the report says “purchaser” but this is an obvious misprint) for execution by him (see p. 850).

17. In the course of the judgment of the Privy Council in Immudipattam Thirugnana Kondama Naik v. Periya Dorasami I.L.R. 24 Mad. 377, an observation was made (p. 384) which, no doubt, supports the view that in a case like the present the defendant had a good equitable defence notwithstanding the fact that the requirements of the Transfer of Property Act have not been complied with. In dealing with the contention raised before the Judicial Committee that, though the mortgage in question fell short of an actual transfer, it showed a good contract for one, and that the defendant could call upon the plaintiff to “implement” the contract, their Lordships observe that if such a right existed it would be an answer to the plaintiff’s claim and the exact form in which it could be enforced, need not be considered. From the language of the judgment it would seem that their Lordships had present to their minds the Scotch law of implement. This is part of the ordinary jurisdiction of Scotch Courts, whilst in England the remedy of speeific performance is a matter of discretion, and defences are admitted which would be inadmissible according” to the doctrines and practices of the Courts of Scotland. See Brodie Innes’ ‘Corporation Principles of the laws of England and Scotland.’ p. 763.) This being so, it may perhaps be said that the observations do not affect the present case. But however, this may be, the observations are obiter and I do not think they preclude us from holding that effect cannot be given to the equities in the defendant’s favour in the present case in contravention of the express provisions of the Transfer of Property Act.

18. We have to choose between laying down a rule which, in every case in which a purchaser is in possession under an oral or unregistered agreement and the vendor seeks to eject him, will involve an enquiry as to whether the circumstances of the particular case are such that the defendant is entitled by way of equitable defence to a decree for the specific performance of the oral or unregistered agreement, and the rule that in all cases the express words of the statute must prevail. I do not think we are precluded by authority from adopting the latter rule, which carries out what appears to have been the intention of the Legislature and seems to me to be in accordance with public policy.

19. I would answer the question which has been referred to us in the affirmative.

Subrahmania Ayyar, J.

20. The undoubted policy of the law as enacted by Section 54 of the Transfer of Property Act, was to secure the public register of, inter alia, sales of immoveable property of the value of Rs. 100 and upwards. The provision in the section that a contract for sale does not of itself create any interest in or charge on such property, was to guard against that policy being defeated, as it would obviously be, if the principle that equity takes that as done which ought to have been done, could be invoked in favour of a party who has not secured the proscribed registered proof of his purchase. This being so, it would follow that in a suit like the present in ejectment by the plaintiff, whose title is admitted, the defendant cannot succeed by merely setting up a contract on the part of the plaintiff with himself to sell the disputed land, and showing that that contract is specifically enforceable. To hold otherwise would be to ascribe to the contract the very effect denied to it by the statute in the most explicit terms, Nor is there ground for saying that part performance by delivery of possession, would warrant the same being relied on as a valid defence to such an action. The charge provided for by Section 55(6)(b) of the Transfer of Property Act in favour of a purchaser paying the price or a portion thereof, when considered with the absence of any provision for the case of part performance by delivery of possession, shows that the latter was not intended to give rise to any interest in the property in the buyer, more especially as a sale of immoveable property less than Rs. 100 in value may be made by delivery alone. This aspect of questions such as the present has been either not sufficiently attended to or altogether lost sight of in the decisions in this country relied on to the contrary.

21. It was however urged that to allow a seller who has so far acted upon the contract as to let the buyer into possession pending the execution of the conveyance, to eject him when he is not in fault, is to enable the former to act in fraud of his contract and that as the Courts of this country are Courts both of law and equity the decisions just referred to ought to be followed on the analogy of the rule of equitable construction adopted in regard to the Statute of Frauds. But as pointed out in Ramasami Pattar v. Chinnan Asari I.L.R. 24 Mad. 449 at p. 462, such a mode of construction has been disapproved of by high authorities and can no longer be resorted to in dealing with clear and unambiguous provisions of modern statutes like those in question (see Maxwell on ‘Interpretation of Statutes, 3rd edition, pp. 862, 363). A remarkable instance of the refusal by the English Courts virtually to modify imperative statutory provisions on the ground of equity however clear, is Young & Co. v. The Mayor and Corporation of Royal Leamington Spa L.R. 8 A.C. 517. There an urban authority governed by Sub-section (1) of Section 174 of the Public Health Act, 38 and 39 Vict., Order 55, which provides that “every contract made by an urban authority whereof the value or amount exceeds £50 shall be in writing and sealed with the common seal of such authority,” was hold not liable under an executed contract of which they had had the full benefit, because the contract was not under seal. In the Court of Appeal Lindley, L.J., observed : “It may be that this “is a hard and narrow view of the law; but my answer is that “Parliament has thought it expedient to require this view to be “taken, and it is not for this or any other Court to decline to give “effect to a clearly expressed statute, because, it may lead to “apparent hardship.” Alluding to the same point Lord Blackburn in the House of Lords said : “It is true that this works great “hardship upon the now appellants. They had an agreement but “it was not sealed; and though it is possible that if the agreement “had been under seal the defendants might have established a “defence on the merits to all or part of what is claimed; it is hard “on the appellants that they should not be allowed to raise the “question. 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?” This was of course as strong an instance of hardship, nay, injustice to the appellants in the case, as can be imagined, for, though they had executed their part of the contract, they lost everything and were remediless, while here the effect of the view we are taking would only be to make the defendant resort to his proper remedy, viz., a suit for specific performance in order to complete his title.

22. No doubt the same result could be attained in this very suit it the law of procedure in this country permitted the Court to enforce specific performance on a counter-claim by the defendant. That however it does not. But even as the law stands in this respect, the defendant could have saved himself from all difficulty had he made the claim for specific performance the subject of a separate suit pending this action in ejectment, for, then, the disposal of the latter might have been postponed until the result of the other suit was known or the two actions dealt with together and decided with reference to the success or failure of the claim for specific performance. Be this as it may, the right doctrine would seem to be that applied in Achutan Nambudri v. Koman Naik 13 M.L.J. 217, with reference to the instance of mortgage there in question, following Papireddi v. Naratareddi I.L.R. 16 Mad. 464 and Ramasami Pattar v. Chinnan Asari I.L.R. 24 Mad. 449. But it must be admitted that the observation in the judgment of Lord Hobhouse in Immudipattam Thirugnana Kondama Naik v. Periya Dorasami L.R. 28 I.A. 46 at p. 53 seems to go far to uphold the contention that the contract for sale may be set up as an answer to a suit in ejectment such as the present. This opinion cannot however be taken to be an actual decision. It is by no means clear, that the circumstance that a definite period of limitation is prescribed for the enforcement of a claim for specific performance in this country, was present to the mind of his Lordship. Now, in the view suggested by him, the defence will have to be allowed, in all cases where the light to specific relief is not barred by limitation, when the defendant enters on his pleading. But this period of limitation may expire pending the suit, and if the suit results in its dismissal, the defendant would either win but to be dispossessed in a fresh suit or obtain a title notwithstanding he has no registered conveyance as prescribed by law. It is difficult to believe that the framers of the Transfer of Property Act contemplated that such a state of things could be rightly brought about.

23. I would therefore answer the question submitted in the affirmative.

Benson, J.

24. I am of opinion that our answer to the question referred for our decision must be in the affirmative.

25. As shown in the order of reference, this Court has taken different views at different times according as it looked at the question mainly from the legal or from the equitable point of view. The true rule, however, seems to be that where the words of a statute are clear and unambiguous it is the duty of the Courts to give effect to them, and not to allow the statute to be made of no effect by introducing what may appear, in particular cases, to be equitable considerations, but which, in the long run, are more likely to lead to inequities and litigation and perjury than if it is known that the letter of the written law will be consistently enforced in all cases. As observed by the Privy Council in the case of Gokul Mandar v. Pudmanund Singh L.R. 29 I.A. 196. “The essence of a Code is to “be exhaustive on the matters in respect of which it declares the “law, and it is not the province of a Judge to disregard or to go “outside the letter of the enactment according to its true “construction.”

26. Now under Section 54 of the Transfer of Property Act a sale of immoveable property of the value of Rs. 100 and upwards can be made only by a registered instrument, and the section expressly enacts that a contract for sale “does not, of itself, create any “interest in, or charge on such property.” It is argued, however, that the contract for sale, accompanied as it is in the present case by delivery of possession, that is by a part performance, does give the purchaser a lien on the property and such an interest as is sufficient to enable him to resist a suit in ejectment by the vendor. No doubt there is an observation of the Privy Council in the case of Immudipattam Thirugnana Kondama Naik v. Periya Dorasami I.L.R. 24 Mad. 377, which lends support to this contention but I do not think that it is more than an obiter dictum. There is nothing in the Transfer of Property Act to support the contention, and the fact that no lien on or interest in the property is given by the Act in such a case, while a charge is expressly given by Section 55 (6)(b) in the case of part performance by payment of the price, or portion of the price, leads very clearly to the inference that the Legislature did not intend that delivery of possession should, like part payment, create a lien on, or an interest in, the property. To hold otherwise would nullify the policy of the Act, and give dishonest persons an opportunity for evading its requirements. On the other hand to hold that a contract for sale even when accompanied by delivery of possession does not create a lien on or an interest in the property, does not lead to any real hardship, for the purchaser can resort to his proper legal remedy by instituting a suit for specific performance of the contract – a remedy to which, he must, in any case, resort in order to complete his title and secure legal evidence of it – and he can then apply to have the trial of the ejectment suit stayed pending the trial of his own suit for specific performance.

27. Looking to the express terms and to the manifest policy of the Transfer of Property and Registration Acts in force in India, I think that our answer to the reference should be in the affirmative.

28. The appeal came on for final hearing before (Subramania Ayyar and Sankaran Nair, JJ.), when the Court delivered the following


29. Following the Full Bench ruling we dismiss the second appeal with costs.

30. The memorandum of objections is also dismissed with costs.

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