Murdga Mudaliar (Deceased) And Others v. Subba Reddiar., Madras High Court, Judgment, Law, casemine.com

Precedent	Rule or Principle Cited For	Application by the Court
Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 (Full Bench)	Admissibility of unregistered documents evidencing agreements to lease in suits for damages; distinction between proving title and proving breach of contract.	Held that unregistered documents may be admitted to prove the contract in suits for damages where title is not asserted; supported the appellant's position.
Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 (Full Bench)	Unregistered agreements to lease creating immediate interest affect immovable property and are inadmissible in suits for specific performance or damages.	Held that such unregistered agreements are inadmissible in suits for damages, overruling the contrary earlier Full Bench decision.
Hemanta Kumari Debi v. Midnapore Zamindari Co., 47 Cal. 485 (Privy Council)	Definition of "lease" includes agreements creating present and immediate interest; such agreements require registration.	Clarified distinction between agreements creating immediate interest (registrable) and mere agreements to lease (non-registrable).
M. E. Moolla Sons Ltd. v. Burjorjee, 10 Rang. 242 (Privy Council)	Non-registration of admitted documents is not necessarily fatal unless the document is foundation of judgment affecting immovable property.	Observed that unregistered documents may be admitted in evidence in suits for damages if the proceedings do not affect immovable property; but this was obiter dictum.
James Skinner v. R. H. Skinner, 51 All. 771 (Privy Council)	Agreements for sale or lease are transactions affecting immovable property and require registration.	Held unregistered documents evidencing such transactions are inadmissible in suits for specific performance; supported restrictive interpretation of admissibility.
Ulfatunnissa Elahijan Bibi v. Hussain Khan, 9 Cal. 520 (Full Bench)	Unregistered document may be used as evidence of personal obligation though it affects immovable property.	Supported interpretation that "transaction affecting immovable property" means "so far as it affects immovable property," allowing limited admissibility.
Sriramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596 (Division Bench)	Application of Section 49 to suits for damages; inadmissibility of unregistered agreements to lease in such suits.	Applied Narayanan Chetti ruling to suits for damages, rejecting claims based on unregistered agreements.
Satyanarayana v. Chinna Venkatarao, 49 Mad. 302	Unregistered documents purporting to create rights in immovable property cannot be used to found suits for specific performance.	Supported restrictive approach to admissibility of unregistered documents affecting immovable property.
Ardeshir H. Mama v. Flora Sasoon, 52 Bom. 597 (Privy Council)	Damages and specific performance are alternative remedies; compensation under Section 19 Specific Relief Act applies only in suits for specific performance.	Rejected appellant’s argument extending proviso to Section 49 to suits for damages.
Swaminatha Mudaliar v. Ramaswami Mudaliar, 44 Mad. 399	Agreements to lease not creating present interest are not registrable and admissible in suits for damages.	Distinguished between registrable and non-registrable agreements to lease; supported appellant's claim for admissibility in damages suit.

1. The suit in this case is for damages for breach of an agreement of lease.

The document evidencing the agreement has been ruled out by both the Courts below for want of registration. The question is whether it has been rightly so ruled out.

2. A typed translation of the document has been placed before me by the learned counsel for the respondent, which has been accepted by the learned counsel for the appellant as correct. It runs as follows :

"Agreement dated 30-5-1942 executed by R. Subba Reddiar residing at Chinnakandanur, Velliyanai village, Karur taluk in favour of E. Ruruga Mudaliar of Mohanur village, Namakkal taluk. Having agreed this day for a lease on a rent of Rs. 600 per year in respect of 4 acres known as Onnekalkani etc., belonging to me in Vangal, I have received this day Rs. 100 as advance.

You having agreed for 31/2 years (in respect of) the above lands, you shall pay the rent at the end of Kalavati each year and shall get receipt therefor."

3. It is argued for the appellant that the Courts below are in error because the document on its true construction must be regarded as nothing more than a receipt acknowledging payment of Rs. 100 as advance by the plaintiff which even if it required registration as falling within Section 17(1)(c), Registration Act, and could not be used as evidencing the agreement of lease itself referred to therein owing to the prohibition of Section 49(c) might still be used for the collateral purpose of proving an anterior oral agreement which would nonetheless be valid because oral. I cannot accept this view of the document and my judgment in Arumuga Mudaliar v. Muruga Mudaliar, C. M. A. No. 255 of 1946 : relied on for the appellant does not govern the present case.

4. The document is styled an agreement. The label given to it by the parties is of some significance as to their intention although not conclusive. It may be noted that the English word "agreement" itself is used at the head of the vernacular document. If the document is an agreement, as it purports to be, it can be nothing else than an agreement of lease. It contains the terms of the bargain between the parties and is in my opinion the bargain itself, the agreement itself as it professes to be on its face, and not merely an informal or incomplete memorandum of the terms of a bargain already concluded and later sought to be reduced to writing. It is not that the reference to the transaction of lease in the body of the document occurs as a thing of a incidental character or of only subordinate significance as it might well be if the document purported to be something else than an agreement, if the document called itself, say, a receipt and only proceeded to refer to the transaction of lease in order to indicate the situation in connection with which the payment was made which is acknowledged by the receipt. The land by its name, the rate of rent per year and the period of the lease are all mentioned. The dominant purpose of the document seems to be not to serve as a receipt in respect of the payment as such so much as to register the terms of the transaction as a whole in connection with which the payment came to be made. The word "agreement" is used not merely in the preamble but twice again in the body of the document and seems designed deliberately to emphasise such purpose. Some point was sought to be made by the learned counsel for the appellant of the fact that according to his case in the plaint there were also certain other terms agreed upon between the parties than those mentioned in the document. That is however disputed by the respondent in the written statement. Moreover, on its face, the document does not bear to be an informal or incomplete, record of the terms of the transaction. It rather reads like the sole authentic repository of the terms of the bargain, and evidence adding to the terms of the document stands accordingly forbidden by Section 92. Evidence Act. It was also submitted for the appellant that the learned District Judge is wrong in stating that the document specifically purports to come into force "from this day", i.e., from the date of its execution. The learned District Judge is no doubt wrong in so stating; but that is hardly material. Admittedly the document does not say that it is to come into force only from a later date, and the presumption must therefore hold good that it creates a present and immediate demise and operates from its very date.

5. The point next argued for the appellant is that the present suit being one for damages for breach and not for specific performance there is the authority of a Full Bench ruling of this Court in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F. B.) supporting the admissibility of the document for the purpose of the present suit. I have referred to the exact state of authority in this Court on this point in my judgment in Arumuga Mudaliar v. Muruga Mudaliar, C. M. A. No. 255 of 1946: wherein however I did not find it necessary to decide the point. I there observed on the point thus ;

"With reference to the latter submission I am of of opinion that it does not strictly arise for consideration. The document with which I am concerned is not an unregistered document affecting immoveable property but an unregistered document acknowledging the payment or receipt of consideration on account of the creation of a right, title or interest to or in immoveable property. If the question arose with reference to "an unregistered document affecting immoveable property" I should find myself in some difficulty to decide it; for although it seems to me that the submission of the learned counsel for the respondents might in such a case have to be held correct on a reading of the judgment of the Full Bench in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F. B.) as it stands, there would then be the difficulty created by the explanation given of that judgment by the later Full Bench ruling in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.) wherein it is said that the earlier Full Bench must be understood to have only ruled that a Kabuliat signed by the lessee but inadmissible to prove the lease for want of registration was admissible to prove the Karar or the agreement to lease which preceded it, and wherein it is further pointed out that there is no distinction on principle between a suit for specific performance and a suit for damages. The difficulty would stand further accentuated by the circumstance that a later decision of a Division Bench consisting of Sir John Wallis C. J. and Oldfiled J. reported in Streeramalu Naidu v. Ramaswami, Mudaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393) has accepted the law as laid down by Narayana Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.) giving the earlier Full Bench ruling only a restricted operation; and sitting as single Judge if the question arose for determination, I should deem it proper to hold myself bound in this state of authority to follow the ruling in Streeramalu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad 393) which has stood the field for the last about three decades and more. As against that difficulty, it has no doubt been pressed upon me by the learned counsel for the respondents that the view expressed by the Privy Council in M. E. Moolla Sons Ltd. v. Burjorjee, 10 Rang. 242 at p. 255 : (A. I. R (19) 1932 P. C. 118) serves to rehabilitate in its wider operation, Rajah of Venkatagiri v. Narayan Reddi, 17 Mad. 456 : (4 M. L. J. 198 F. B.) which although not cited in the argument before the Privy Council or referred to in its judgment proceeds on the same line of reasoning as is employed in Ultafatunnissa v. Hussain Khan, 9 Cal. 520 : (12 C. L. R. 209 F. B.) one of the several cases cited before the Privy Council. It has also been pressed upon me that even an obiter dictum of the Privy Council is bound to be followed by Courts in India, and that in fact in the case in M. E. Moolla Sons Ltd. v. Burjorjee. IC Rang. 242 : (A. I. R. (19) 1932 P. C. 118) the expression of view by their Lordships became necessary as part of their reasoning founded upon the consideration prima facie entering into the decision of the question whether the point of the inadmissibility of the document therein in question for want of registration was to be allowed to be raised before their Lordships for the first time. As I have said, it is not necessary for me in this case to arrive at a definite decision upon the submission made to me by the learned counsel for the respondents, because the document with which this case is concerned is not an unregistered document affecting immoveable property but an unregistered document acknowledging receipt or payment of consideration on account of the creation of right, title or interest to or an immoveable property."

6. The question whether an agreement of lease in writing required to be registered but unregistered may be used as evidence of the agreement in a suit for damages for its breach not decided by me in that case accordingly falls to be decided here. The question is one which calls in my opinion for decision by a Pull Bench, preferably of more than three Judges, in view of the conflict that exists between the two Full Bench rulings in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M. L. J. 198 F. B.) and Narayana Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520). It is true that the former ruling is by a Bench of five Judges which ordinarily speaking ought to prevail as against the later ruling of three Judges in any conflict between the two. But as I have observed in my judgment in Arumuga Mudaliar v. Muruga Mudaliar, C. M. A. No. 255 of 1946 : (A. I. R. (87) 1950 Mad. 603) there is the explanation given of the earlier Full Bench ruling in the later Full Bench case which I should have been prepared to accept in view of the manner, by no means unreasonable, in which Sir John Wallis C. J. and Oldfield J. actually dealt with the legal position in Streeramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596: (A.I.R. (5) 1918 Mad. 393). On account of that explanation, it may be well that the earlier Full Bench ruling ought to be given only a restricted operation which renders it unavailing to the respondent. But then, there are the observations of the Privy Council in M. E. Moolla Sons Ltd. v. Burjorjee, 10 Rang. 242 : (A.I.R. (19) 1932 P. C. 118) which seem to support Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M L. J. 198 F. B.) in its wider operation and consequently invalidate the explanation of that decision by the later Full Bench which decided Narayana Chetti v. Muthia Servai, 35 Mad. 63 : (8 I. C. 520 F. B.).

7. In these circumstances I direct that the papers be placed before the Chief Justice for appropriate orders being passed in regard to the reference of the question whether an agreement of lease in writing required to be register, ed but unregistered may be used as evidence of the agreement in a suit for damages for its breach, to a Full Bench preferably consisting of more than three Judges as already observed by me.

OPINION Rajamannar, C.J.

8. I have had the advantage of perusing the opinions prepared by my learned brothers Satyanarayana Rao and Panchapagesa Sastri. After a deep consideration of the two conflicting views propounded by them, I find myself in agreement with the conclusion arrived at by Satyanarayana Rao J. and I would answer the question referred to the Full Bench in the affirmative.

9. As the entire case law on the point has been fully and exhaustively discussed by my learned brothers, I shall not go over the whole ground, but shall confine myself to a discussion of the general principles. As the question referred to us is in general terms, I shall not make any reference to the actual facts of the case. I shall proceed on the basis that the question relates to an agreement of lease in writing which is required to be registered, because it is a document which creates a present and immediate interest in land and operates as a lease (Hemanta Kumari Debi v. Midnapore Zamindari Co., 47 Cal. 485 : (A. I. R. (6) 1919 P. C. 79)) but has not been registered. I shall also bear in mind that the question is as regards a suit for damages for breach of the agreement.

10. Section 49, Registration Act, in so far as it is material runs thus :

No document required by Section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall--(a) affect any immoveable property comprised therein, or ....... (c) be received as evidence of any transaction affecting such property ...... unless it has been registered.

I am omitting the proviso for the present. It is clear that this section enacts both a rule of substantive law and a rule of evidence. "Affect" means "have effect on." The document which is required to be registered but has not been registered shall not have any effect on immoveable property comprised in it. The effect which is contemplated is, in my opinion, an effect which has a relation to a right, title or interest, whether vested or contingent in or to immoveable property. It is not necessary for the purpose of answering the question referred to us to say whether the interpretation adopted by Spencer J. in Saraswatamma v. Paddayya, 46 Mad. 349 : (A. I. R. (10) 1923 Mad. 297) is unduly restricted, though I am inclined to agree that the word "affect" in Section 49 was employed to compendiously express what had been set out in Section 17. The words "create, declare, assign, limit or extinguish" are very wide and would ordinarily comprise every kind of transaction which is in any manner concerned with right, title or interest to or in immoveable property. Even assuming there are transactions which may not fall within the categories denoted by the above words but which may be said to affect immoveable property, it appears to me that such transactions should concern in some manner right, title or interest to or in immoveable property. There may be several documents which may relate to immoveable property but which do not nevertheless affect immoveable property. It is true as Panchapagesa Sastri J. observes that it is neither necessary nor desirable to lay down an exact and exhaustive test to ascertain whether a document affects immoveable property, but I think any criterion must have reference to right, title or interest to or in immoveable property. If the document does not in any manner concern any right, title or interest to or in immoveable property, I find it difficult to call that document as a document which affects immoveable property.

11. Clause (c) of Section 49 prohibits the reception of an unregistered document in evidence of any transaction affecting immovable property comprised in it. For a proper appreciation of the scope of this prohibition, I think the nature of the proceeding in which, it is sought to be offered as evidence is very material. A sale or a lease is certainly a transaction affecting immovable property because it does concern the right, title or interest to or in immovable property. Bat I cannot imagine an unregistered sale deed or lease deed being excluded from evidence in a criminal case when it is sought to be used as evidence that the executant was present at a particular place at a particular time or as evidence of handwriting or even as evidence of mens rea. This is because Clause (c) is only an application of the rule of substantive law contained in Clause (a) to proceedings in Court. After declaring that the unregistered document shall not have any effect on immovable property, the section goes on further to enact that such a document shall not be received to bring about such an effect. If an unregistered sale-deed cannot transfer the ownership of the property comprised in it, it shall not also be used in evidence to bring about that result. A party cannot obtain such relief on the basis of such a document and for that purpose it cannot be admitted in evidence. The document shall not be received as a document affecting land, i.e., a document which has any effect on land. As early as Ulfatunnissa Elahijan Bibi v. Hussain Khan, 9 Cal. 520 : (12 C.L.R. 209 F.B.) the words "shall be received as evidence of any transaction affecting land" were construed as meaning "shall be received as evidence of any transaction, so far as it affects land." This, I think, is a reasonable construction and the true construction. I wish only to point out that the decision in Ulfatunnissa v. Hussain Khan, 9 Cal. 520 : (12 C. L. R. 209 F.B.) was given at a time when there was no proviso to Section 49 like the proviso inserted by Act XXI [21] of 1929. The learned Judges also expressly say that the view they took of the section rendered it unnecessary to consider the question whether a document embodied only a single cransaction or may properly be said to contain two.

12. My view of Section 49(c), Registration Act, is this. It prohibits the use of an unregistered document in any legal proceeding in which such a document is sought to be relied on in support of a claim to enforce or maintain any right, title or interest to or in immovable property. So long as the document is not sought to be relied on as evidence of any right, title or interest to or in immovable property, there is nothing to prevent the document being received in evidence for other purposes. In this view, it may be that a distinction will have to be made between a suit for specific performance and a suit for damages. In a suit for specific performance, the relief sought does concern title to or interest in land; whereas a claim for damages is personal and may be enforced without in any manner affecting immovable property.

13. With all respect I think that this is the view which the Full Bench took in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M. L. J. 198 F.B.). The learned Judges say :

"If the plaintiff's action was founded on an alleged title in virtue of a lease granted by the defendant. . . there can be no doubt that the document VI could not be admitted in evidence. The plaintiff would then be seeking to use it as evidence of a transaction affecting immoveable property. It is clear that the plaintiff does not assert his title under the incomplete lease, and that he does complain of the breach of contract on the part of the defendant in refusing to register the kabuliat and give him a cowle, and also in disturbing his possession."

Though I see the force of the remarks of Panchapagesa Sastri J. about the observations of Lord Tomlin in M. E. Moolla Sons, Ltd. v. Burjorjee, 10 Rang. 242 : (A.I.R. (19) 1932 P. C. 118), that they cannot be deemed to be a final pronouncement of the Judicial Committee on the point, yet, I do not think it right to dismiss altogether those observations. They appear to me to throw some light on the subject, particularly in the manner of approach to the construction of the section. The unregistered document will be excluded from evidence only when it is sought to be used "as the foundation of a judgment affecting immovable property comprised in such document." (I think the word "judgment" there is used in the sense of adjudication or decision.) Further, if the proceedings do not in any respect affect any immovable property, that is to say, if the proceedings do not result in a decision which has any effect on immovable property, then, the section does not apply. If the only claim in the proceedings is a personal one for damages for breach of contract, then, there can be no possibility of immovable property being affected by the reception of the unregistered document which may be only used in support of the claim for damages.

14. It is true that the proviso to Section 49, Registration Act, inserted by Act XXI [21] of 1929 does not in terms apply to a suit for damages. But I fail to see any principle or policy which justifies the admission of an unregistered document as evidence of a contract in a suit for specific performance but at the same time requires its rejection as evidence of a contract in a suit for breach of that contract. I venture to think that the omission to provide for the reception of such a document in a suit for damages was due to the fact that such a provision was unnecessary as a suit for damages wan-not concerned in any manner with a right, title or interest to or in immovable property, that is to say, was not one affecting immovable property. 15. Satyanarayana Rao J.--In view of the important and difficult question of law raised in this reference I wish to state my reasons in support of the conclusion I have reached in the case. Raghava Rao J. referred the following question to the Full Bench :

"Whether an agreement of lease in writing required to be registered but unregistered may be used as evidence of the agreement in a suit for damages for its breach?"

In his judgment on which the reference is based, the learned Judge made it clear that the document in question, though in form an agreement of lease, does create a present and immediate demise and operates from its very date.

16. Section 2(7), Registration Act, contains the definition of lease. According to this provision, "'Lease' includes a counterpart, kabuliyat, an undertaking to cultivate or occupy, and an agreement to lease." Section 17(i)(d) provides: "Leases of immoveable property from year to year, or for any term exceeding one year, or reserving a yearly rent shall be registered." The effect of non-registration of documents required to be registered is stated in Section 49 of the Act. Under it:

"No document required by Section 17 (or by any provision of the Transfer of Property Act, 1882) to be registered shall:

Provided that an unregistered document affecting immoveable property and required by this Act or the Transfer of Property 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 purposes of Section 53A of the Transfer of Property Act, 1882, or as evidence of any collateral transaction not required to be effected by registered instrument,"

The proviso was added by the amending act, act xxi [21] of 1929. Until the decision of the Judicial Committee in Dayal Singh v. Indar Singh, 53 I. A. 214 : (A. I. R. (13) 1926 P. C. 94) it was considered that an agreement for the sale of immovable property containing an acknowledgment of receipt of part of the purchase price paid by the buyer as earnest money did not require registration. The decision in Dayal Singh's case, 53 I. A. 214 ; (A.I.R. (13) 1926 P.C. 94), however, revolutionized the law, notwithstanding the clear provision in Section 54, T. P. Act, that a contract for the sale of immovable property does not by itself create any interest or charge on such property. This decision was pronounced in 1926. Immediately it was realised by the Legislature that this view was erroneous and caused great hardship with the result that an Amending Act, Act II [2] of 1927, was passed by which an explanation was added to Section 17 in these terms :

"A document purporting or operating to effect a contract for the Bale of immoveable property shall not be deemed to require or ever to have required registration by reason only of the fact that such document contains a recital of the payment of any earnest money or of the whole or any part of the purchase money."

This provision, as the language clearly indicates, is retrospective in its operation and the law, therefore, as it stood before 1926 was restored by the timely intervention of the Legislature.

17. The definition of lease contained in the Registration Act includes an 'agreement to lease' and, therefore, under Section 17(1)(d) " agreements to lease" are made compulsorily registrable. Until the decision of the Judicial Committee in Hemanta Kumari Debi v. Midnapur Zamindari Co., 47 Cal. 485: (A.I.R. (6) 1919 P.C. 79), it was thought that all agreements to lease whether they created a present and immediate interest in the land, or intended to operate in futuro, required registration, but the decision of the Judicial Committee in the aforesaid case finally established that an agreement to lease contemplated by the definition is a document which affects actual demise and operates as a lease. In other words, the document contemplated is one which creates a present and immediate interest in the land. In this respect the Judicial Committee accepted the view of Jenkins C. J. in Panchanan Bose v. Chandi Charan, 37 Cal. 808 : (6 I. C. 443). It therefore follows from this decision of the Judicial Committee that there are two classes of agreements to lease : (a) agreements which do not operate to create a present and immediate interest in the land, but operate in future. Such agreements, it must now be taken as well established do not require registration and do not in any manner affect any immoveable property : vide Swaminatha Mudaliar v. Ramaswami Mudaliar, 44 Mad. 339: (62 I. C. 354): (b) Agreements to lease, which create a present and immediate interest in the land. Such agreements alone are compulaprily registrable under Section 17(1)(d).

For convenience sake, in the course of this judgment agreements falling under Clause (b) are referred to as registrable agreements in contradistinction to those falling under Clause (a), which are not registrable, and are described as mere agreements to lease.

18. Before 1929, there was a conflict of decisions on the question whether a document, which was unregistered but purported to create rights in immoveable property, such as a sale or a lease, and inoperative in law and wholly ineffectual to create title in the property covered by it, could be used as evidence of a valid agreement either to execute a sale deed or a lease, as the case may be, so as to found an action for specific performance. This Court answered the question in the negative in Satyanarayana v. Chinna Venkatarao, 49 Mad. 302 : (A. I. R. (13) 1926 Mad. 530). The Calcutta High Court, however, in some decisions, had taken the contrary view. The decision of the Judicial Committee in James Skinner v. R. H. Skinner, 51 ALL. 771 : (A.I.R. (16) 1929 P. 0. 269) upheld the view in Satyanarayana v. Chinna Venkata Rao, 49 Mad. 302 : (A. I. R. (13) 1926 Mad. 530) and ruled that such a document could not be used to spell out an agreement to transfer the property and make it a foundation for a suit for specific performance. This decision of the Privy Council was pronounced in 1929. To supersede and wipe off the effect of these decisions, the Legislature introduced in 1929 by the amending Act, Act XXI [21] of 1929, the proviso to Section 49 permitting the use of an unregistered document affecting immoveable property to be received as evidence of a contract in a suit for specific performance and also as evidence of part performance of a contract for the purpose of section 53a, t. p. act, and even as evidence of any collateral transaction not required to be effected by a registered instrument.

19. The sum and substance of the aforesaid decisions of the Privy Council and the legislative changes introduced in the Registration Act in 1927 and 1929 may be stated as follows: (1) Agreements of sale and agreements to lease immoveable property do not require to be registered and therefore the prohibition contained in Section 49, Registration Act, does not apply to such agreements. (2) Unregistered documents affecting immoveable property in which term must be included registrable agreements operating by way of present demise and creating, immediate interest in the property, are admissible in evidence to prove an agreement to transfer, in a suit for specific performance, or as evidence of part performance of a contract, or as evidence of a collateral transaction. The decisions, therefore, which are by no means unanimous and pronounced before 1929 to the contrary must all be taken to have been overruled.

20. In this view the agreement now under consideration would have been admissible in evidence if the suit was one to enforce specific performance of an agreement to lease. The view taken in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 620 F. B.) and Streeramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 696 : (A.I.R. (5) 1918 Mad. 398) to the contrary is no longer good law.

21. The question, therefore, that remains for consideration is whether the registrable agreement in the present case is admissible in evidence to establish the claim for damages. An agreement to lease, which is not compulsorily registrable in the sense contemplated by the decision in Hemantha Kumari's case, 47 Cal. 485 : (A. I. R. (6) 1919 P. C. 79) is outside the purview of the Act and is certainly admissible like an ordinary contract for sale in a suit for damages for breach of the agreement. Such an agreement is not a transaction affecting immoveable property and is not required to be registered and the restriction in Section 49 does not apply (Swaminatha Mudaliar v. Ramaswami Mudaliar, 44 Mad. 399 : (62 I. C.

354).) The question, therefore, resolves itself to this, namely, whether in the present case the registrable agreement, but not registered, could be admitted in evidence in the suit for recovery of damages for breach of the agreement.

22. There is a direct conflict between two decisions of this Court--one a decision of a Full Bench of five Judges in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 and the other a Full Bench decision of three Judges in Narayanan Chetty v. Muthiah Servai, 35 Mad.

63 : (8 I. C. 520 F. B.). If the case first mentioned was correctly decided, the appellant should succeed and the question referred to must be answered in the affirmative. If, on the other hand, the latter mentioned case lays down the law correctly and holds the field the appellant must fail and the answer to the question must be in the negative.

23. I might observe at the outset that the prohibition against admissibility enacted by Section 49 of the Act is not an absolute one, but the section renders the unregistered document inadmissible only for the two limited purposes specified in the section, Clauses (a) and (c) and leaves it available to be used in evidence for other purpose. Under Clause (a) of Section 49, the document required to be registered, but unregistered, is wholly inoperative and ineffectual to create, declare, assign, limit or extinguish any right, title or interest in immoveable property. As pointed out by Spencer J. in Saraswathamma v. Paddayya, 46 Mad. 349 at p. 359 : (A. I. R. (10) 1923 Mad. 297) the verb "affect" in Section 49 is only a compendious term employed by the Legislature to express the meaning of the longer phrase "purporting or operating to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest whether vested or contingent to".

(See also Kanjee & Moolji Bros, v. Shanmugham Pillai, 56 Mad. 169 at pp. 174 and 176: (A. I. R. (19) 1932 Mad. 734), where the view of Spencer J. was accepted).) This conclusion of the learned Judge follows from the language employed in Section 49, as it refers to a document required by Section 17, or by any provision of the Transfer of Property Act to be registered. The consequence of non-registration is to prevent the document from operating in the manner and to the extent indicated in Section 17; in other words, to make the document wholly inoperative and ineffectual to achieve the purpose of the document contemplated by Section 17. The other consequence of non-registration is to prohibit the document from being received not "in" evidence, but "as" evidence of any transaction affecting such property. The emphasis on the word "as" was, in my opinion, rightly laid by Venkatasubba Rao J. in Saraswathamma v. Paddayya, 46 Mad. 349 : (A. I. R. (10) 1923 Mad. 297), where the learned Judge observed:

"What is prohibited by the section is receiving a document as evidence of a transaction, not merely receiving it in evidence, i. e., as a piece of evidence having a bearing on the question to be ultimately decided."

In other words, the prohibition is to prevent a person from establishing by the use of the document in evidence a "transaction, affecting immoveable property". A person should not be permitted to establish indirectly by use of the document what he is prevented from doing directly under Clause (a). The section in the present form was introduced by the Registration Act, III [31 of 1877. Under the previous Registration Act, XX [20] of 1866, the language of the section was:

"No instrument required by Section 17 to be registered shall be received in evidence in any civil proceeding is any Court, or shall affect any property comprised therein if unregistered."

The prohibition in that section was against reception in evidence altogether and not, as in the present section, receiving it as evidence of any transaction affecting immoveable property; so that, the scope of the prohibition in the present section is not absolute as in the Act of 1866, but is a limited and narrower one.

24. In the present case the plaintiff is not seeking to establish a "transaction affecting immoveable property", for he is not seeking to prove a present demise of the land. He is no doubt asking that the document be received in evidence. The reception of the document in evidence, in my judgment, is not prohibited by Sub-clause (c). What one has to see under the clause is to consider what is it that he is seeking to establish in evidence by using the document. Is he attempting to prove by the document a "transaction affecting immoveable property". In other words, is he seeking to prove a present demise of the property, or a lease of the property ? That is not the object, of the plaintiff in the present case. The object is to establish an agreement to lease the property, which was broken by the defendant. He is in no way attempting to show that an interest in immoveable property is created by a present demise of the land. Proof of a mere agreement to lease, if one remembers the distinction drawn by the Privy Council in Hemantha Kumari's case, 47 Cal. 485 : (A.I.R. (6) 1919 P. C. 79) between agreements which merely enable a person to obtain a lease in future and agreements which operate to create a present demise, or an immediate interest in land, is not prohibited. The former agreement is not a transaction affecting immoveable property. The agreement, therefore, in such a case is not hit at by Clause (c) of Section 49, as a mere agreement to lease without more does not create any interest in immoveable property. It stands on the same footing as a contract of sale. Here it is necessary to bear in mind that under Indian law there is no distinction between legal interests and equitable interests in immoveable property. In other words, Indian law does not recognise, as under English law, a divided ownership in property. This has been pointed out by the Privy Council in more than one case, Webb v. Macpherson, 31 Cal. 57: (30 I. A. 238 P. C.) being the earliest, where at p. 72 of the report it was observed :

"The law of India speaking particularly, knows nothing of the distinction between legal and equitable property in the sense in which that was understood when equity was administered by the Court of Chancery in England."

See also Chatra Kumari Devi v. Mohan Bikran Shall, 10 Pat. 851 at p. 869: (A.I.R. (18) 1931 P. C. 196) and M. E. Moola Sons Ltd. v. Official Assignee, Rangoon, 14 Rang. 400 at p. 416 : (A.I.R (23) 1936 P. C. 230).

25. The document may be also used in evidence to prove the extent of the damage that has been suffered by the plaintiff as a consequence of the breach. All these purposes for which the document is intended to be used in evidence are outside Section 49. The restriction imposed by the section is confined to the use of the document to affect immoveable property and to use the document as evidence of a transaction affecting immoveable property and no more. If the object in putting the document in evidence does not fall within any of these two purposes, there is no reason for excluding the document from evidence altogether. The scope of the restriction or of the disability imposed cannot be extended beyond the limits imposed by the section.

26. Bearing these considerations in mind, it becomes necessary now to examine the decisions bearing upon the question, Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456:

(4 M. L. J. 198 F. B.) arose out of a suit for damages for breach of a contract to lease immoveable property. In 1889 the plaintiff applied to the defendant, a zamindar, offering to take an izara for a term of five years at an yearly rent of Rs. 1400. This offer was accepted by the Dewan of the Estate on 24-10-1889. On 30-11-1889, the plaintiff performed his part of the contract by executing and settling to the defendant's agent a kabuliat, which is marked Ex. VI in the case. He also executed other documents and was immediately put in possession of the villages. On 28-4-1890 the plaintiff demanded the defendant by a notice to register the kabuliat and execute a cowle. The defendant without carrying out the terms of the contract cancelled the lease without any excuse. The plaintiff thereupon instituted a suit for recovery of damages. The defendant himself produced in evidence the kabuliat and the other documents, which the plaintiff wanted to take advantage of in order to establish his case. This was objected to by the defendant, particularly, the admissibility of the kabuliat;

Ex. VI. This matter came up for hearing in the first instance before the Chief Justice and Davis J. who referred to the Full Bench the question:

"Can the Exa. J. IV, V, VI and VII be considered to ascertain the nature and terms of the contract made between the plaintiff and the defendant for the purpose of assessing the damages caused to the plaintiff by the wrongful act of the defendant or for any other and what purpose."

At the time of the hearing of the case before the Full Bench, however, the objection based on the ground of want of registration was confined to Ex. VI, the kabuliat, signed by the plaintiff and given to the defendant. The question that had to be considered was whether the document could be admitted in evidence in support of the plaintiff's claim. It was ruled by the Full Bench that the document was admissible to prove the contract, even though the document was not registered. The distinction between using the document to establish title and to prove an agreement to lease was pointed out in the judgment. At p. 457 it was observed :

"The question is whether the document, although not registered, can be admitted in evidence in support of the plaintiff's claim. If the plaintiff's action was founded on an alleged title in virtue of a lease granted by the defendant, and his case where that as lessee he had been unlawfully ejected from the demised land, there can be no doubt that the document VI could not be admitted in evidence. The plaintiff would then be seeking to use it as evidence of a transaction affecting immoveable property. But it is clear that that is not the case made in the plaint. The plaint sets out the agreement for a lease of the village which was to run from fasli 1299 and last for five years. It is stated that certain things were done in pursuance of the agreement, among other things, that the plaintiff was put in possession. Then it is charged that the defendant did not register the kabuliat and improperly deprived the plaintiff of possession. The cause of action alleged is the failure on the part of the defendant to act up to the karar (i.e., the agreement for a lease) and the improper resumption of the village.

It is clear that the plaintiff does not assert his title under the incomplete lease and that he does complain of the breach of contract on the part of the defendant in refusing to register the kabuliat and give him a cowle, and also in disturbing his possession. The act of the defendant in thus disturbing the plaintiff's possession is merely a part of the defendant's conduct which the plaintiff complains of as a breach of the contract made with him. It is not an essential part, for, if the plaintiff had never been in possession he would have had his right of action.

Having regard to the language of Section 49, Registration Act, we think there is no doubt that the kabuliat, although not registered, is admissible in evidence to prove the contract."

27. The distinction that was drawn, as would be seen, is between using the document as evidence of a transaction affecting immoveable property and using it merely to prove the contract. There is no objection to the latter, but the former cannot be permitted under Section 49. When the case went back to the Division Bench, these principles were again amplified and emphasised. At p. 460 it is stated :

"The prohibition in Section 49 is that no document required to be registered (and in this case, the lease being for five years, undoubtedly required to be registered) shall be received as evidence of any transaction affecting immoveable property. The real nature of this suit is for compensation for disturbing the plaintiff in his possession, and doing the necessary acts to entitle him to possession, such for example, as not executing the counterpart of the lease and duly registering it, so that the non-registration is itself part of the plaintiff's cause of action."

and lower down it was pointed out:

The proper answer, however, to the argument advanced is that this is not a suit brought upon the kabuliat and cowle (Exs. VI and V), which, it should be noticed, were not filed for plaintiff as part of his case but by defendant, but a suit upon a breach of an implied contract by the defendant to do that which it was necessary for him to do in order to give effect to the agreement he had entered into with the plaintiff. The other unregistered documents that have been put in showing the terms of the lease have not been put in to enforce the lease, in which case they would not have been admissible as evidence as they would have been evidence of a transaction affecting immoveable property, but they must be deemed to have been put in simply as evidence of the character of the breach of the agreement by the defendant, and as a basis for calculating, the measure of damages, neither of which things can, in the least, affect the land lying in the village of Valamaid.

So that if the document is not the foundation of the suit of the plaintiff and the plaintiff does not seek to establish his title under the document, there is no objection to receive the document in evidence to establish the agreement and also to prove the acts which constitute the breach of the agreement.

28. This principle was extended in Srinivasacharyulu v. Venkataraju, 17 M. L. J. 218, to a suit for specific performance of a contract to grant a lease and it was held that the unregistered deed could be used in evidence to establish the agreement to give a lease. The Full Bench in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.) differed from the view in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M.L.J. 198 F.B.). The agreement in that case was an agreement to execute a sub-lease and to get it registered at a future time. The suit was for enforcing the agreement by way of specific performance of the agreement and for damages. The document in question was marked as Ex. A and its terms are fully set out at p. 64 of the report. It seems to have been construed as a mere agreement to sub-lease and get it registered on a future day. It does not appear to operate as a present demise and create an immediate interest in the property. It must be remembered, that at that time, the distinction pointed out in Hemantha, Kumari's case, 47 Cal. 485: (A.I.R. (6) 1919 P. C. 79) between agreements to lease, which require registration, and which do not require registration, was not noticed. If really the agreement in the particular case was one, which did not at all require registration, the foundation of the decision falls to the ground. It proceeded on the assumption that the document did require registration, notwithstanding that it did not create any present interest. Krishnaswami Aiyar J. delivered the leading referring judgment and the reasons given in that judgment were practically the reasons, which were adopted by the Full Bench in the opinion which they delivered. The judgment of the learned Judge proceeded on a fundamental misconception that in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 466 : (4 M. L. J. 198 F. B.) the agreement to grant a cowle was an oral and was not in writing, while, in fact, there was the darkhast by the plaintiff in that case, which was in writing and the offer was accepted by the Dewan, which was also in writing, so that the contract was concluded by the offer and acceptance of the plaintiff and defendant respectively contained in two separate written documents. The decision in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M. L. J. 198 F.B.) in allowing the kabuliat to be received in evidence, says the learned Judge,

of the contract to grant a cowle and to register the kabuliat is not an authority for the position that an unregistered lease or agreement to grant a lease can be used in evidence for proving the lease or the agreement to grant it.

The Full Bench undoubtedly did not hold that the kabuliat could be used to establish the lease. On the contrary, they distinctly said that the title based upon the document as a lease could not be established, but they did hold that it could be used to prove an agreement to grant a lease. It was further laid down that the agreement to grant a lease was itself a transaction affecting immoveable property, as such agreement created an equitable interest in the property in favour of the promisee and the two-fold distinction of equitable and legal ownership of property obtaining in England was adopted by the learned Judge and that is, in effect, the basis of the judgment of the Full Bench. By reason of the assumption that the agreement to lease itself created an equitable interest in immoveable property, it was held that an attempt to prove an agreement amounted to proving a "transaction affecting immoveable property." The basis of this assumption, as pointed out by me already, is entirely wrong, as there is no distinction in Indian law between equitable interest in property and legal ownership. No such distinction is recognised under the Indian law. The enactment of a provision exempting agreements or documents, which do not themselves create an interest in immoveable properties under Section 17(2)(v) is taken as an indication that a document, which is only an agreement to execute another, may be deemed to affect the property and, but for this provision, a contract of sale would have required registration. An agreement to grant a lease, being itself a lease, within the definition of Section 2(7), required registration under Section 17(1)(d). No exception is created under the Act in favour of agreements to grant a lease. It was argued, therefore, that it was a clear indication of the intention of the Legislature to treat agreements to grant a lease as creating interest in immoveable property. So ran the reasoning of the learned Judge. This view is no longer tenable, in view of the decision of the Judicial Committee in Hemantha Kumari's case, 47 Cal. 485 : (A.I.R. (6) 1919 P. C. 79). The opinion of the Full Bench proceeded substantially on the same grounds contained in the referring judgment of Krishnaswami Aiyar J. The whole basis underlying the judgment is that a mere agreement to lease creates an interest in immoveable property and, therefore, is a transaction affecting immoveable property and the attempt, therefore, to use it in evidence to prove an agreement to grant a lease was to establish a transaction affecting immoveable property, which was not permitted by Section 49(c). This view, of course, is now untenable. The inference that agreements to lease create interest in immoveable property is sought to be based also upon the use of the expression "affect" employed in Section 40, T.P. Act, and Section 91 Trusts Act. The word "affect" is of a wider import and in the context in Section 49, it must be read as a compendious expression to denote the long expression employed in Section 17 as stated already. The conclusion of the Full Bench is stated at p. 74 in these terms :

"It is enough for the purpose of this reference to say that a contract to lease immoveable property which is compulsorily registrable under Section 17, Clause (d) affects the immoveable property and cannot, if unregistered, affect the property or be received in evidence to prove the contract. Suits for specific performance of a contract to sell were referred to in the course of the argument as suits affecting property. That is no doubt true as the relief asked for is the conveyance of property. The doctrine of lis pendens has been held to apply to a transfer of immoveable property pending a suit for specific performance."

It is difficult to see the relevancy of the doc trine of lis pendens applicable to suits for specific performance to determine the question whether an agreement to lease creates any interest in immoveable property, if it does not contain words establishing a present demise.

The doctrine of lis pendens is based on Section 62, T. P. Act, and when there is a dispute relating to immoveable property, the principle of lis pendens would apply. It does not, therefore, follow that the agreement sought to be enforced in a suit for specific performance does by itself create an interest in immoveable property. In the case of contracts to sell, Section 54 definitely states that it does not create an interest in immoveable property. It cannot be said that because the doctrine of lis pendens applies in suits to enforce contracts to sell, therefore, the contract to sell itself creates an interest in immoveable property. The whole basis of the reasoning of the Full Bench, in my opinion, is wrong, as it is coloured mostly by the doctrine obtaining in England that an agreement to sell, or lease, creates an interest in immoveable property.

29. The decision of the Full Bench in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 620 F. B.) was applied in Streeramulu Naidu v. Ramasami Madaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393), where the suit was one for specific performance with a claim for damages in the alternative, instituted on foot of an unregistered agreement for a lease. The document in the suit in that case appears to be a mere agreement to grant a lease and does not create any immediate interest in the land. This decision was pronounced before the decision of the Judicial Committee in Hemantha Kumari's case, 47 Cal. 485 : A.I.R. (6) 1919 P. C. 79). In the light of the later decision of the Judicial Committee and of the decision in Swaminatha Mudaliar v. Ramaswami Mudaliar, 44 Mad. 399 : (62 I. C. 354) which construed that decision, it appears to be a case in which the agreement to grant a lease did not require registration. The claim for specific performance was rejected on the ground that the document required registration and, therefore, was inadmissible in evidence in view of the decision of the Pull Bench in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 620 F.B.) which was taken as settling the question so far as this Court was concerned. The claim for damages was also rejected, notwithstanding the decision of five Judges in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 466: (4 M. L. J. 198 F.B.) as it was held that from the decision in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63: (8 I. C. 620 F.B.) it logically followed that if the agreement was inadmissible in evidence for specific performance, it was equally inadmissible even in a suit for damages. "The transaction affecting property" said Wallis C. J., "if it does not affect, it is the agreement to lease." (It is rather difficult to understand the meaning of this sentence.) "Therefore the section in this view prohibits the document from being given in evidence of the agreement to lease, and it seems to us that it prohibits it equally whether the claim be for specific performance or for damages. It appears to be the logical result that the claim for damages must also fail, if the view taken by the more recent Full Bench be adhered to, and, as I have already said, we are not prepared to reopen that question."

Of course, even as pointed out in the Full Bench decision in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (81. C. 620 F. B.), there can be no logical distinction between a suit for specific performance and a suit for damages. Both stand on the same footing regarding the admissibility of the unregistered agreement to grant a lease. If it is admissible for one purpose it must be equally admissible for the other purpose. This decision, therefore, treats the decision in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F.B.) as practically overruled by the later Full Bench of three Judges in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F.B.). The question in view of the direct conflict should have been then referred to a fuller-Bench for an authoritative decision on the point instead of leaving the law in such an uncertain state.

30. In support of the view taken in the two decisions in Narayanan Chetti v. Muthiah-Servai, 35 Mad. 63 : (8 I. C. 520 F.B.) and in, Streeramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393), Mr. Bhashyam, the learned advocate for the respondent relied on the decision in Skinner v. Skinner, 51 ALL. 771 : (A. I. R. (16) 1929 P.C. 269). It arose out of a suit for specific performance of an agreement to sell certain properties. In proof of the agreement, a document, which was in form and in substance a sale-deed, which was unregistered, was relied on. The document relied on was construed by the Privy Council as itself creating an interest in the immoveable property specified in the schedules appended to the document and, therefore, was within the terms of Section 17 of the Act and required registration. The next question to be considered was whether it could be admitted in evidence to establish an agreement to sell the property. This decision, it must be remembered was pronounced after the decision of the Judicial Committee in Dayal Singh's case, 53 I. A. 214 : (A.I.R. (13) 1926 P. C. 94) which held that an agreement to sell reciting payment of part of consideration as earnest money required registration under the provisions of the registration act as a document evidencing a transaction affecting immoveable property. The attempt, therefore, in that case being to establish an agreement to sell, it followed that it was tendered as evidence of a transaction affecting immovable property and could not, therefore, be admitted in evidence without registration. At page 778, it was observed:

"In the present case, the document under consideration in addition to creating an interest in the immoveable property concerned, provides as one of the terms and therefore as an integral part of the transfer, that the vendor should, if the vendee so requires, execute a registered sale deed and it is contended for the first respondent that notwithstanding the non-registration, he can sue upon this agreement in evidence as proof of it. Their Lordships-are clearly of opinion that this is within the prohibition of the section. They think that an agreement for the sale of immoveable property is a transaction 'affecting' the property within the meaning of the section, inasmuch as if carried out it will bring about a change of ownership. The intention of the Act is shown by the provisions of Section 17(2)(v), which exempts from registration and therefore frees from the restriction of Section 49 a document, which does not itself create an interest in immoveable property, but merely creates a right to obtain another document, which will do so. In the face of this provision, to allow a document, which does itself create such an interest to be used as the foundation of a suit for specific performance appears to their Lordships to be little more than an evasion of the Act."

Putting the document in evidence as proof of the agreement according to the Privy Council, is prohibited by Section 49, the reason being an agreement for sale of immoveable property, which is sought to be established by the document is a transaction affecting the property within the meaning of Section 49. No doubt as emphasised by Mr. Bhashyam, the reason for their holding that the transaction, namely, the agreement of sale, affects immoveable property is that if carried out the agreement would bring about a change of ownership. But, having regard to the whole passage above extracted and having regard to the fact that in Dayal Singh's case, 63 I. A. 214 : (A. I. R. (13) 1926 P. C. 94), the Judicial Committee held that even agreements to sell were within the mischief of Sections 17 and 49, Registration Act, the only conclusion possible is that the Judicial Committee considered an agreement to sell immoveable property as by itself creating an interest in immoveable property and therefore constituted a transaction affecting immovable property. The basis of the reasoning of the Judicial Committee has now been wiped out by the two amendments, one the explanation to Section 17 introduced in 1927 and the other, the proviso to Section 49 enacted in 1929. The foundation, therefore, of this decision falls to the ground. An agreement for sale of immovable property does not create any interest in immovable property and, therefore, is not a transaction affecting such property. The unregistered document like the one considered by the Judicial Committee, even though it affects immovable property can be now used in evidence in a suit for specific performance to establish an agreement to sell by virtue of the proviso to Section 49.

31. The other decision on which considerable reliance was placed by Mr. Bhashyam, the learned advocate for the respondent, is the decision of Page J. in Ramjoo Mahomed v. Haridas Mullick, 52 Cal. 695 : (A.I.R. (12) 1925 Cal. 1087), a decision of a single Judge. It was a suit for specific performance of an alleged agreement to lease certain properties and in the alternative for damages for breach of the agreement. The terms of the agreement were contained in two letters, which were construed by the learned Judge as operating a present demise of the premises and as creating an immediate interest in the properties. The documents not being registered, the question that arose for consideration was whether they could be admitted in evidence to prove an agreement to grant a lease. The learned Judge rejected the contention that the document could be adduced as evidence of an agreement under which the defendant contracted a personal obligation to grant a lease on the strength of the Full Bench decision in Narayanan Chetti v. Muthiah, Servai, 35 Mad. 63: (8 I.C. 520 F.B.) and differed from the conclusion in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M.L.J. 198 F.B.) though Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 620 F.B.) itself has followed the Calcutta High Court in two cases Satyendra Bose v. Anil Chandra Ghose, 14 C. W.N. 65 : (5 I. C. 38) and Hemanta Kumari Debi v. Midnapur Zamindary Co., Ltd., 19 C. W. N. 347 : (A.I.R. (2) 1915 Cal. 505). This latter decision of Mukherji and Beachcraft JJ. was affirmed by the Privy Council in Hemantakumari's case, 47 Cal. 485 : (A.I.R. (6) 1919 P.C. 79). Mookerji J. at pages 350 and 351 followed Srinivasacharyulu v. Venkata Raju, 17 M.L.J. 218 and Satyendra Bose v. Anil Chandra Bose, 14 C.W.N. 65: (5 I. C. 38) and Sarat Chandra v.. Shamchand, 39 Cal. 663 : (14 I.C. 701) where it; was observed that an agreement to lease does not operate as a lease and does not affect the land. The decision of Page J. in the case in. Ramjoo Mahomed v. Haridas Mullick, 52 Cal. 695 : (A.I.R. (12) 1925 Cal. 1087) was rested also-upon the principle of stare decisis. The decision does not add any additional reason to the-reasons given in Narayanan Chetti v. Muthiah Servai, 35 Mad 63 : (8 I. C. 520 F.B.).

32. On the other hand, the view taken in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M.L.J. 198 F.B.) is supported by the decision of the Full Bench of the Calcutta High Court in Ulfatunnissa v. Husain Khan, 9 Cal. 520: (12 C. L. R. 209 F.B.) and the recent decision of the Privy Council in M. E. Moolla, Sons, Ltd. v. Burjorjee, 10 Rang. 242 : (A.I.R. (19) 1932 P. C. 118). For a fuller report of the; arguments in the Rangoon case see the report in the Calcutta Weekly Notes (36 C.w.N. 677).

33. In Ulfatunnissa v. Hussain Khan, 9 Cal. 520: (12 C.L.R. 209 F.B.), a Suit was instituted on foot of an unregistered bond containing a personal undertaking to repay money borrowed and also a hypothecation of land of the value of over Rs. 100 as security. The point that arose for consideration was whether the document could be used in evidence to prove the personal obligation. A Full Bench of five Judges held that it could be used in evidence to establish the personal obligation. It was taken as settled law for the whole of India that an unregistered document like the one in suit was effectual "and might be used in evidence to charge the person, though not the land." And the conclusion of Field J. at p. 525 which was based on an earlier Full Bench decision in Lachmipat Singh Dugar v. Mirsa Khairat Ali, 4 Reng. L. R. 18 : (12 W. R. 11 F.B.) was as follows :

"In the Full Bench case already referred to, the words 'shall be received in evidence or shall affect' land were held to mean 'should be received in evidence as a document affecting' land. We are applying exactly the same method of interpretation in holding that the words 'shall be received as evidence of any transaction affecting land,' mean 'shall be received as evidence of any transaction so far as it affects land.' And this we think is the true construction."

In M. E. Moolla Sons, Ltd. v. Burjorjee, 10 Rang. 242 : (A. I. R. (19) 1932 P. C. 118), the Judicial Committee had to consider the question of the admissibility of an unregistered agreement to sell to establish a claim in liquidation proceedings for damages for breach of the contract. There was another question of fact, which was considered by the Judicial Committee, namely, whether or not the purchaser Moolla named in the contract had not acted as agent for the company. On the question of fact their Lordships agreed that Moolla was the undisclosed principal of the company and, there-fore, was entitled to the damages. For the first time before the Judicial Committee the question of the admissibility of the agreement to sell on the ground of non-registration was raised, but the Judicial Committee had to consider the question whether at that stage of the case, the appellant should be permitted to raise the point of non-registration. The Judicial Committee had to consider the question of permitting a party to a proceeding to raise a new point at a late stage in the light of the principles laid down by Lord

"Watson in Connecticut Fire Insurance Co. v. Kavanagh, ( 1892) A. C. 473 at p. 480 : ( 61 L. J. P. C. 50). The passage from Lord "

Watson's judgment was extracted by the Judicial Committee. According to the principle laid down by Lord Watson, a new point ought not to be allowed to be raised, unless the Court was satisfied that the evidence upon which they were asked to decide established beyond doubt that the facts, if fully investigated, would have supported the new plea. In other words, the Judicial Committee had to be satisfied whether there was any substance in the new plea. It is in that light their Lordships dealt with the construction of Section 49, Registration Act, and after examining the provisions, their Lordships' conclusion is stated at p. 255 in these terms :

"Their Lordships are satisfied that there is nothing in the section cited, when properly construed, to compel the Court to take notice of the non-registration of an admitted document unless at any rate such document must, if treated as elective, be the foundation of a judgment affecting immoveable property comprised in such document.

Here the agreement has been admitted throughout. Indeed, it was first put in by the appellant. Further the proceedings do not in any respect affect any immoveable property. The immoveable property affected by the agreement long since passed out of the picture, and, the only claim in these proceedings is a personal one for damages for breach of an admitted contract against an alleged undisclosed principal who denies he was a principal."

Two principles, therefore, emerge from this passage. Firstly, unless the document is the foundation of a judgment affecting immovable property, or, in other words, a document on which the title claimed in the suit is based, there is no objection to admit the document in evidence for other purposes. Secondly, there can be no objection if the claim in the proceedings in which the document is sought to be used as evidence of a personal claim, i.e., for damages for breach of an admitted contract. This is exactly the view that was taken by the learned Judges in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F.B.). This decision shows that the restriction contained in Section 49 is confined only to the use of the document as evidence of a transaction affecting such property and not its use for any other purpose. So long as the intended use is not to establish title to the property and is not made the basis or the foundation for a judgment affecting immovable property, there is no objection for the use of the document in evidence. The effect of this judgment of the Judicial Committee cannot be belittled, as was attempted by Mr. Bhashyam, the learned counsel for the respondent, on the ground that the Judicial Committee later decided not to permit the appellant to raise the point of non-registration, It was pointed out in conclusion that the appellant was not able to bring himself within the principles indicated by Lord Watson governing the conditions on which a new point could be permitted to be raised in the appeal.

34. In view of this decision of the Privy Council it seems to me unnecessary to refer to the other decisions of other Courts on which reliance was placed by Mr. Bhashyam, the learned counsel for the respondent, particularly as those decisions did not consider the decision in M. E. Moolla Sons, Ltd. v. Burjorjee, 10 Rang. 242 : (A.I.R. (19) 1932 P. C. 118). Nor is it necessary to consider the scope and ambit of the new section (S. 27A) of the Specific Relief Act, which relates to specific performance of contracts to lease where there was part performance. The section was considered recently by a Bench in Ranganatham Chetti v. Kanaka-ratnammah, (1948) 2 M. L. J. 189: (A. I. R. (36) 1949 Mad, 225). The present suit is not one for specific performance and it is unnecessary to go into the question whether that section is exhaustive. Light is thrown on this question by the decision of the Calcutta High Court in Gokal Chandra v. Haji Mahomed Din, I.L.R. (1938) 1 Cal. 563 : (A.I.R. (25) 1938 Cal. 136).

35. Lastly, there is one contention urged on behalf of the appellant, which requires consideration. The argument was that as the proviso to Section 49 permitted the use in evidence of a document affecting immovable property in a suit for specific performance, it followed on the principle of Section 19, Specific Relief Act, that it could be used also in evidence in a suit for damages as under Section 19, Specific Relief Act, a person suing for specific performance of a contract is entitled to ask for compensation for its breach either in addition to, or in substitution for such specific performance. This argument cannot be accepted for the simple reason that the right recognised in Section 19 is available only to a person who sues for specific performance of a contract and does not enable a person to institute a suit for damages without reference to a claim for specific performance. It is only in a suit for specific performance that it is permissible for a party to ask for compensation for its breach either in addition to, or in substitution for, such performance: see also Ardeshir H. Mama v. Flora Sasoon, 52 Bom. 597 ; (A.I.R. (15) 1928 P.C. 208).

36. It follows from the foregoing discussion that the decision in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.), must be overruled and the decision in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 ; (4 M. L. J. 198 F. B.) in my judgment lays down the law correctly. The question referred to us must, in my opinion, be answered in the affirmative.

Panchapagesa Sastri, J.

37. The question referred for the opinion of the Full Bench is as follows :

"Whether an agreement of lease in writing required to be registered but unregistered may be used as evidence of the agreement in a suit for damages for its breach."

My answer to the reference is in the negative.

38. An agreement to lease is, in my opinion, a transaction affecting immovable property within the meaning of Section 49(c), Registration Act. Such an agreement does not of it self create any legal interest in the property. It is unnecessary to decide whether it creates at least an equitable interest. In Narayana Chetti v. Muthiah Servai, 35 Mad, 63 : (8 I. C. 520 F.B.), in the order of reference to the Full Bench Krishnaswami Aiyar J. was of the opinion that it creates an equitable interest in favour of the promisee. In Hemantakumaree Debi v. Midnapore Zamindari Co.,47 Cal. 485 : (A.I.R. (6) 1919 P. C. 79), the Judicial Committee observed that document in question there was not an "agreement to lease", coming under the definition of the term "lease" in the Registration Act and compulsorily registrable under Section 17(1)(d) as it was not a document that "effected an actual demise and operated as a lease". They, however, said that the document there "did purport to create a contingent right or interest in immovable property within the meaning of Section 17(1)(b)". The document in that case was a decree of Court passed on a compromise and it contained all the terms of the compromise. One of the terms was an agreement to give a lease of immovable property on the happening of a certain, contingency in the future. It was with reference to this obligation to grant a lease that their Lordships remarked that the document purported to create a contingent right or interest. In view, however, of Section 17(2)(vi), Registration Act, as it then stood, a decree of Court was taken out of Section 17(1)(b). The particular document therefore was not compulsorily registrable, and Section 49, Registration Act, therefore, was said not to stand in the way of the document being received in evidence of the agreement to lease in future on the happening of a contingency in a suit for specific performance thereof. Notwithstanding these two authorities, it would be difficult to hold now that an equitable interest is created in view of the later decisions of the Judicial Committee, particularly, the decision in Ariff v. Jadunath Majumdar, 58 Cal. 1235 : (A. I. R. (18) 1931 P. C. 79).

39. A document, however, may affect immovable property even though by itself it creates no legal or equitable interest in the same. The word 'affecting' cannot be limited to mean only

"purporting or operating to create, declare, assign, limit, or extinguish, whether in the present or in future, any right, title or interest, whether vested or contingent to."

The document cannot be treated as a transaction not affecting immovable property merely because it does not, by itself, bring about any of the things stated above. In James Skinner v. R.H. Skinner, 51 ALL. 771 : 57 M. L. J. 765 : (A. I. R. (16) 1929 P. C. 269) the Judicial Committee held, that an agreement for sale of immovable property is a transaction affecting the property within the meaning of Section 49(c), Registration Act, "inasmuch as if carried out it will bring about a change of ownership." A contract for the sale of immovable property does not by the statute law of India of itself create any interest in or charge on such property. Nevertheless, their Lordships had no difficulty in holding that such an agreement is a transaction affecting immovable property. Their Lordships also referred to the provisions of Section 17(2)(v) as showing the intention of the Act. I am, therefore, unable to agree with the limited interpretation of the term "affecting" adopted by the Division Bench in Saraswathamma v. Peddayya, 46 Mad. 349 : (A. I. R. (10) 1928 Mad. 297). Spencer J.'s definition of the term in that decision was really by way of obiter as the actual decision was only that a document declaring a division in status amongst Hindu coparceners does not affect immovable property so as to require registration. On the other hand, the Full Bench decision in Narayanan Chetti v. Muthiah Servai, 35 Mad 63 : (8 I. C. 520 F. B.) considers the question very exhaustively and holds that an agreement to lease is a transaction affecting immovable property. It may be noted in passing that the opinion of the Full Bench is not based on the view that an agreement to lease creates an equitable interest notwithstanding the observations to that effect in the order of reference by the Division Bench; it is based really on other grounds which are fully set out therein, particularly with reference to the provisions of Section 40, T. P. Act, Section 91, Trusts Act, and the applicability of the doctrine of lis pendens to a suit for specific performance of such an agreement. Nothing has been urged in the arguments against the cogency of the reasoning in the Full Bench opinion. All that was said was the provisions were statutory. No doubt, they are; but what follows? It only shows that the Indian law does recognise unmistakably that such agreements do affect immovable property. The very word "affecting" is used in the statutes. I see no reason why the use of the term "affecting" there could not be taken as giving a proper clue to the meaning of the term in Section 49, Registration Act.

40. While holding that the word "affecting" is wider than what it was attempted to be confined to by Spencer J .'s definition in Saraswathamma v. Peddayya, 46 Mad. 349 : (A. I. R. (10) 1923 Mad. 297) it by no means follows that there may not be transactions in relation to an immovable property which nevertheless do not affect immovable property. An agreement to supervise the construction "of a building for an agreed remuneration, an agreement to supply the necessary materials for carrying out repairs to an existing building are obvious instances.

It may not be possible to define exhaustively what kinds of agreements affect the immovable property comprised therein. It is not necessary or desirable to lay down an exact test applicable to all cases. Speaking generally and with no intention of laying down an exhaustive test, I may observe that an agreement which binds the land in its inception or concerns or touches the land so as to affect the nature or quality or value of the land, may be taken to be an agreement which affects immovable property. It is sufficient to hold in this case that an agreement to lease immovable property is transaction affecting immovable property. The opinion of the Full Bench in Narayanan Chetti v. Mithiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.) should be accepted as correct and followed.

41. That decision of the Full Bench was no doubt one with reference to a suit for specific performance of an agreement to lease. It was held that Section 49(c), Registration Act, as it then stood, precluded the reception of the unregistered document as evidence of a transaction, affecting immovable property in a suit for specific performance of the agreement. That decision, however, was applied and extended to a case where the suit was for specific performance with a claim for damages in the alternative--Vide Sriramulu Naidu v. Ramaswami Mudaliar, 83 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393). While rejecting the claim for specific performance on the basis of the Full Bench decision, the Division Bench observed that the claim for damages in the alternative: should also be rejected. They stated that if the view taken by the Full Bench is to be accepted as regards suits for specific performance the necessary consequences should be accepted, as regards suits for damages.

"Section 49 prohibits the document from being received as evidence of a transaction affecting immovable property"

. They state the transaction affecting the property is the agreement to lease. The section in this view prohibits the document from being given in evidence of the agreement to lease; and it prohibits it equally whether the claim-be for specific performance or for damages.

"The logical result is the claim for damages also must fail if the view of the Full Bench is adhered to."

42. Since the above decisions were given Section 49 has been amended by a proviso being introduced therein by Section 10, T. P. Act (Amendment) Supplementary Act of 1929.

43. The newly introduced proviso has no application to the present case. The present suit is not one for specific performance under chap. II of the Specific Relief Act, 1877. It is a suit simpliciter for recovery of damages for art alleged breach of contract to give a lease. It is well established that a suit for specific performance is in its origin and nature entirely different from a suit for recovery of damages for breach of the contract. Specific performance is asked for on the footing of the continued existence of the contract while damages are claimed on the basis of a breach of contract accepted by the party as a breach. The claim for specific performance requires continued readiness and willingness on the part of the plaintiff to perform the contract which he is keeping alive and trying to get enforced. Although a brief reference was made in the course of the argument to Section 19, Specific Relief Act, which empowers a person to ask for compensation for breach in addition to or in substitution for specific performance it was realised that a suit merely asking for damages on the footing of an accepted breach of contract cannot be described as a suit for specific performance. Section 29, Specific Relief Act, which bars a suit for compensation for breach of contract after the dismissal of a suit for specific performance is also significant in this connection. Moreover, with respect to agreements to lease, the suit contemplated by the proviso to Section 49 would appear to be the suit provided for by Section 27A, Specific Relief Act. It is, however, unnecessary to come to a definite conclusion as regards this last question.

44. The learned counsel for the appellant admitted that he cannot claim the benefit of the proviso on the ground that the present suit should be regarded as a suit for specific performance.

45. Nor is it possible to invoke the provisions of the proviso on the ground that the document is asked to be received in evidence only of any collateral transaction not required to be effected by a registered instrument. The transaction which is sought to be established by tendering the document in evidence is the factum of the agreement to lease. There is no question of any collateral transaction in this case. There is only one transaction throughout and that is a contract to give a lease. The relief may be either specific performance where the breach is not accepted and a party wants to enforce the contract specifically or a right to recover damages where the breach of contract is accepted and the party sues for compensation for breach. It is not as if there are two transactions one of which gives a right to specific performance and the other, a collateral transaction giving rise to a claim for damages for breach of the contract. A very faint suggestion was made that there is a primary obligation to carry out the terms of the contract and a secondary obligation in the nature of a further and a distinct agreement to compensate for its breach if the first contract is not carried out. This, however, was not persisted, in and was withdrawn no sooner than it was mentioned. The learned counsel conceded that it would be impossible to agree that there was a collateral transaction as evidence of which he is trying to get the document in. Apart, from his concession, I have no doubt that there is only one transaction and that is the transaction of an agreement to lease which by its nature is a transaction affecting immovable property as I have already held. The proviso, therefore, is inapplicable to the present case.

46. We are left therefore with the only question of the applicability of Sub-clause (c) of Section 49 of the Act. The main argument of the appellant's counsel was that Section 49(c) precludes the document being received only in so far as the Court is asked to give relief to affect immovable property comprised in the document. The decree granting damages for compensation for breach of contract is of course a money decree and the relief does not by itself affect immovable property. I find myself unable to agree with the contention of the appellant's counsel on the construction of Section 49(c). The section reads as "no document etc., etc. shall be received as evidence of any transaction affecting such property." It cannot be read as equivalent to "No document etc. etc., shall be received in evidence so as to affect such property." What is prohibited is the reception of the document as evidence of the transaction itself. The section does not merely prohibit the granting of a relief by way of an ultimate decree, a relief affecting immovable property. The reference to the conjoint words "any transaction affecting such property" is significant. The contrary construction is not warranted by the language. A relief for damages can be given only if the plaintiff succeeds in establishing that there was a contract which was broken. It is to establish that contract that he wants this document to be received as evidence. The section prohibits the reception of the document as evidence of the transaction. The section cannot be construed to mean that the document can be received as establishing the transaction but relief should be denied on the basis of the transaction so established in so far as such relief affects immovable property alone. I entirely agree with the reasoning in Sriramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 696 : (A.I.R. (5) 1918 Mad. 393) on this aspect of the matter. It may be mentioned in passing that the reference to Ulfatunnissa Elahijah Bibi v. Hossain Khan, 9 Cal. 620 : (12 C. L. E. 209) which is found in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 (FB)), cannot be taken to mean that the Full Bench understood the section to mean that the document cannot be received as evidence of the transaction only so far as the relief to be decreed affects such property. In the particular case before the Full Bench the suit being one for specific performance there was no occasion to come to a Conclusion on that matter.

47. Finally it was argued that the pronouncement by the Judicial Committee in M. E. Moolla Sons Ltd. v. Burjorjee, 10 Rang. 242 : (A.I.R. (19) 1932 P.C. 118) was conclusive on the question. Strong reliance was placed upon certain observations in that judgment for the view that Section 49(c) does not preclude the reception of the unregistered document in a suit claiming damages only for breach of contract. It is necessary therefore to examine that case somewhat more closely in view of the arguments pressed on us by the appellant's learned counsel. The question there arose with respect to a document which was not registered. For the first time before the Judicial Committee it was sought to be argued that the document required registration and Section 49 therefore stood in the way of its being received as evidence. Their Lordships finally declined to allow the point of non-registration to be raised before them. It is obvious, therefore, that there was no decision on the question before their Lordships. It was submitted however that the observations of their Lordships amounted to an obiter dictum which ought to be followed. The proceedings in the lower Court from out of which the appeal was filed arose out of a proof filed by a creditor in the liquidation of a company which proof was rejected by the liquidator. Their Lordships at the opening referred to it as a proof for an amount of. Rs. 63,000 and odd

"damages alleged to have been incurred by the creditor, by reason of the failure of the company to complete the purchase of property agreed to be sold under an agreement of 27-7-1921."

The question in controversy in the suit related to one point and that was whether the agreement of sale, on the face of which the purchaser was one M. E. Moolla, had been entered into by him on his own account or whether the company was the undisclosed principal of Moolla in respect of such an agreement. The petition for winding up of the company was presented on 6-4-1927 and an order for winding up was made on 21-6-1927. In between the two dates, the respondent, the other party to the agreement of sale, filed an affidavit claiming that she was a secured creditor of the company for Rs. 1,31,000 and odd, that being the sum which was claimed by her as owing under the agreement of sale. Moolla also was subsequently declared an insolvent, sometime between April and June 1927. Their Lordships state "what subsequently followed is not clear." No oral evidence was given at the trial by the liquidator. He was content with filing an affidavit. Their Lordships observe :

"It is, however, reasonably clear from the affidavit (1) that the respondent had put in a proof of claim presumably on the same lines as that contained in her affidavit of 18th June 1927; (2) that for the purpose of minimising her claim to damages she had offered to take over the property at Rs. 4500 per acre; (3) that the liquidator had neither admitted nor rejected her claim, but had applied to the Court for directions, putting in the agreement and pointing out that there was a question whether Moolla was principal or agent."

The Court would appear to have given directions to sell the property by public auction. The sale was held and the proceeds were paid to the respondent. Their Lordships presumed that the proceeds were so paid under the orders of Court. Their Lordships further held that in order to confer a valid title on the purchaser in court auction, there must have been some agreement between the Official Liquidator and the respondent, though the Official Liquidator did not admit that there was any such agreement. Their Lordships were inclined to find an agreement that the parties arranged to minimise the damages by concurring in a sale of property and in handing the proceeds of sale to the respondent. The question whether the company was the principal in respect of the agreement of sale being the only question, left open for decision. The proof was subsequently amended by the amount being reduced to Rs. 63,219-15-0. It was in those circumstances that the question of non-registration of the document was sought to be raised for the first time before the Judicial Committee. As already stated, they decided not to allow the point to be raised. In so doing they observed that there is nothing in Section 49, Registration Act, when properly construed to compel the Court to take notice of the non-registration of an admitted document unless at any rate such a document, must, if treated as effective, be the foundation of a judgment affecting immovable property comprised in such document. Their Lordships pointed out that the agreement had been admitted throughout and indeed it was put in by the liquidator himself. Then they observe :

Further, the proceedings do not in any respect affect any immovable property. The immovable property affected by the agreement long since passed out of the picture, and, the only claim in these proceedings is a personal one for damages for breach of an admitted contract against an alleged undisclosed principal who denies he was a principal... . There are indications of a course of conduct or agreement on the part of the liquidator which, would preclude him from raising any point in the proceedings except that as to the respective positions of the company and Moolla in regard to the agreement of 27th July 1921.

48. In my opinion these observations could not be regarded as a considered opinion of the Committee. Their Lordships rejected the argument of counsel that the public policy underlying Section 49, Registration Act, compelled the Court to take notice of non-registration of even an admitted document. Their Lordships' observations are that the proper construction of the section did dot make out any such obligatory duty on the Court. They no doubt add

"unless at any rate such a document must, if treated as effective, be the foundation of a judgment affecting immovable property comprised in such a document."

In other words, their Lordships are holding that so far at any rate as the scope of Section 49(c), Registration Act, is concerned there is no such obligation on the Court in spite of the fact that the parties have admitted the agreement though contained in a compulsorily registrable but unregistered document. Whatever may be the force of the argument based on public policy underlying Section 49(a), Registration Act, their Lordships would seem to have had no doubt that so far as Section 49(c) is concerned there was no such argument available. Section 49(a), it will be observed, lays down a rule of substantive law. The statute requires in certain cases a registered instrument for creating a title or interest in immovable property. Section 49(c), however, embodies merely a rule of evidence. The guarded exception found in the latter portion of the sentence of their Lordships extracted above is, in my opinion, intended to reserve their Lordships' further consideration of the question whether even as regards Section 49(a) the Court could allow parties to waive the requirement of registration by admitting the existence of the agreement. The word "judgment" in that sentence really means a decree. Having regard to the statutory requirements even an admission cannot create title, that is all, it seems to me, that their Lordships intended to indicate by that reservation. Otherwise their Lordships found nothing in the section properly construed which prevents the parties from dispensing with proof and agreeing on the existence of certain agreements. There is no obligation on the Court in such circumstances to decline to give effect to the admission of parties and hold that the agreement was not established. The further reference to the fact that the property had long passed out of the picture and the only claim was one for damages was only to lead up to and emphasise the final consideration relied on by them for declaring to allow the point of non-registration to be raised, namely "that the only question which was reserved for the consideration of the Court and which it was competent for the liquidator and the creditor to raise in the proceedings before the Court was the point as to the respective position of the company and Moolla with regard to the agreement of sale."

I am unable therefore to read these observations as amounting even to an obiter dictum that Section 49(c) does not preclude the reception of the document as for the purpose of establishing a claim to damages and not for any relief affecting immovable property. If their Lordships had intended otherwise, the lengthy discussion in the judgment would have been wholly superfluous as they had only to say that Section 49(c) did not preclude reception of the unregistered document (though compulsorily registrable) in a suit claiming merely damages for a breach of the contract to buy immovable property.

49. Even apart from the observation of the Privy Council above referred to it was contended that the Full Bench case in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456: (4 M. L. J. 198 F.B.) had decided that an unregistered document can be received in evidence in a suit for damages for breach of contract. The precise scope of the decision in the above case was considered in the later Full Bench decision in Narayana Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F.B.). It was explained there that the earlier Full Bench case related only to proof of an oral agreement and not to the reception of an unregistered document containing a written agreement to lease. An examination of the facts of the Full Bench case in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F.B.) bears out this distinction as correct. The order of reference to the Full Bench related to admissibility of five documents for ascertaining the nature and terms of the contract and for the purpose of assessing the damages for breach of the alleged contract. Before the Full Bench it was agreed that only one of these five documents raised any question of registration. That was a kabuliat executed by the respondent in favour of the appellant. That by itself was not relied on as the agreement to lease. It was only an anterior oral agreement which was sought to be established as having existed for the breach of which the suit for damages was laid. This is made clear in several passages in the opinion of the Full Bench as well as in the judgment of the Division Bench after the receipt of the opinion of the Full Bench. The Full Bench opinion points out that the plaint set out the agreement for a lease of the village which was to run from Fasli 1299 and to last for five years. The cause of action alleged was the failure on the part of the defendant to act up to the karar, that is, the agreement to lease and the improper resumption of the village which had been put into possession of the plaintiff. It may also be pointed out that the contract to give a lease was not in writing. No doubt the offer was in writing, but the communication of the acceptance of the offer to the proposed tenant was not in writing. On examination of the printed paper, I find that Exs. IV and J in that case which showed the acceptance of the offer were only communications addressed by the Diwan of the Zamindar to his own subordinate, the Tahsildar, and were not communications to the tenant. That is why the later Full Bench pointed out that the agreement to lease set up in the earlier case was only an oral agreement. When the facts are understood it is clear that the decision in Rajah of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 F.B.), has really no application to the present case.

50. A general argument was advanced that it is anomalous to construe the section so as to preclude the reception of the document in a suit for damages while the statute as it stands now permits the use of the document in a suit for specific performance by reason of the proviso to Section 49 of the Act. No doubt the resultant situation may look anomalous. The reason however for the anomaly is to be found only in the piecemeal legislation effected by the Indian Legislature by introducing the proviso (be it noted, not an explanation) and in terms confining it to certain cases only. The section as construed prior to the proviso applied equally to suits for specific performance and to suits for damages as pointed out already. There was nothing anomalous in that and in fact, it was quite logical to apply it to both cases as pointed out by the Division Bench in Sriramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393). The scope of Section 49(c) cannot, however, be taken away in cases where the proviso does not it terms apply.

51. I am accordingly of the opinion that this reference should be answered in the negative.

Yiswanatha Sastri, J.

52. As my learned brethren are not unanimous in their conclusion, I consider it not inappropriate to add a few words of my own. Few expressions in the Registration Act have been more often discussed than the words "affect immovable property" and "a transaction affecting such property" occurring in Section 49(a) and (c), Registration Act, hereinafter referred to as "the Act." It is not every contract in which immovable property comes into the picture that can be said to "affect" it. A building contract or a contract to instal sanitary or electric fittings in a house, in some sense, affects immovable property. Such a contract, though unregistered, would be admissible in a suit of specific performance or damages for its breach. It is a personal contract not affecting immovable property in any real or legal sense and the relief sought is personal redress for its wrongful breach. It is also necessary to put aside cases where two or more distinct contracts are rolled up in one document, as for instance, a mortgage containing a personal covenant to pay and also a collateral security of immovable property for the debt. In such a case Courts have held that the mortgage deed though unregistered might be received in evidence to charge the person, though not the land, with liability for the debt, Ulfatannussa v. Hossain Khan, 9 Cal. 520: (12 C.L.R. 209 P. B.), Kunhu Moidu v. Madhava Menon, 32 Mad. 410: (1 I. C. I. F. B.). Again an unregistered deed may be inoperative to effect a valid transfer of immovable property or an interest therein but may be effective to transfer title to movable property or a chose in action comprised therein, Imperial Bank of India v. Bengal National Bank, Ltd., 58 I. A. 323 : (A. I. R. (18) 1931 P. B. 245). In these cases Section 49, Registration Act, does not come into play.

53. A contract to sell or lease immovable property "affects" the property though it may not create or transfer any interest in the property and such a contract for sale or lease is a transaction "affecting" immovable property. Section 54, T. P. Act, does not adopt the English equitable doctrine that a contract for sale of immovable property creates an equitable interest in the property in the purchaser: Maung Shwe Goh v. Maung Inn, 44 Cal. 642 : (A. I. R. (3) 1916 P. C. 139), Pir Bux v. Mohamed Taher, 58 Bom. 650 : (A. I. R. (2l) 1934 P. 0. 235), Ariff v. Jadunath, 58 Cal. 1235: (A. I. R. (18) 1931 P.C. 79). But on that account it could not be said that a contract for sale of land does not "affect" land, that a contract or covenant though it does not create an interest in land may yet "affect" it, is recognised by the Legislature in Section 40, T. P. Act, and Section 91, Trusts Act. An easement may be created by a grant and restrictive covenants as regards the user of property may be entered into without the creation of an interest in the property of the grantor or covenantor. In such cases immovable property is "affected" though no interest therein is created while rights under a contract may be assigned, a duty or liability arising out of a contract is unassignable. If, however, immovable property is transferred, the transferee with notice takes it subject to restrictive covenants running with the land, though such covenants do not create an interest in land. Section 27 (b), Specific Relief Act, gives a right to specific performance against a subsequent purchaser of land with notice of a prior contract for sale, evidently because the prior contract "affects" the land and not merely the person of the vendor. In James Skinner v. B.H. Skinner, 51 ALL. 771: (A. I. R. (16) 1929 P. C. 269) the Judicial Committee ruled that an agreement for the sale of immovable property was a transaction "affecting" the property within the meaning of Section 49(c) of the Act inasmuch as if carried out, it would bring about a change of ownership. Their Lordships relied on the exemption created by Section 17(2)(v) of the Act to reinforce their interpretation of Section 49(c) of the Act. The exemption would be unnecessary if a contract for a sale or lease of immovable property was not a transaction affecting such property. The view of the Full Bench in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 620 F.B.) must be accepted as correct so far as this point is concerned. I find it difficult to accepted the dictum of Spencer J. in Saraswatamma v. Peddayya, 46 Mad. 349 : (A. I. R. (10) 1923 Mad. 297) quoted with approval in Kanji & Mooli Bros. v. Shanmugam Pillai, 56 Mad. 169 : (A. I. R. (19) 1932 Mad. 734) that the word "affect" in Section 49 of the Act is a compendious expression conveying only the same idea as the expressions "create, declare, assign, limit or extinguish any right, title or interest" found in Section 17(1)(b) of the Act.

54. Courts in India, however, held that a contract for sale of land was merely a document creating a right to obtain another document and was exempted from registration by Section 17(2)(v) of the Act, even though it contained an acknowledgment of earnest money or receipt of part payment of the price. These decisions were upset by the Judicial Committee in Dayal Singh v. Inder Singh, 531. A. 214: (A. I. R. (13) 1926 P. C. 94), but the Legislature promptly nullified the effect of this decision and restored the previous view of the law by adding an explanation to Section 17 of the Act in 1927. In James Skinner v. R. H. Skinner, 51 ALL. 771: (A. I. R. (16) 1929 P. C. 269) the Judicial Committee while recognising that a mere agreement for the sale of land, though it affected the land was exempt from registration and therefore freed from the prohibition in Section 49 by reason of Section 17(2)(v) of the Act, held that an unregistered sale deed which purported to create an interest in land was inadmissible in evidence to prove the contract of sale contained therein in a suit for specific performance. The Legislature again nullified the effect of this decision by inserting a proviso to Section 49 of the Act. Thereafter this Court held that an unregistered sale deed could be received in evidence in a suit by the vendor for recovery of the purchase money, the suit being viewed as one for specific performance, Subramania Chettiar v. Arunachalam Chettiar, 1943-2 M. L. J. 424 : (A. I. R. (30) 1943 Mad. 761 F.B.). Unregistered sale deeds of immovable properties are now admissible in evidence in suits for specific performance of the contract of sale under the proviso to Section 49 of the Act. A contract for sale of immovable property, though it is a transaction affecting it, is exempt from registration under Section 17(2)(v) and would, though unregistered, be admissible in evidence in a suit for specific performance or for damages for its breach.

55. A "lease" is defined in Section 2(7) of the Act as including "an agreement to lease." A lease is the transfer of an interest in immovable property and creates a right in rem. If an agreement to lease fixes the terms of the lease and gives the lessee a right to possession of immovable property, either immediately or at a future date, the document is treated for purposes of registration as a lease, though it does not purport to transfer an interest in the property by way of lease. This is the effect of the decisions in Hemantakumari v. Midnapore Zamindari Co., 47 Cal. 486 : (A. I. R. (6) 1919 P.C. 79), Port, Canning and Land Improvement Co. v. Katyayani Debi, 47 Cal. 280 : (A. I. R. (6) 1919 P. C. 42), Swaminatha Mudaliar v. Ramaswami Mudaliar, 44 Mad. 399 : (62 I. C. 354), Mopurappa v. Ramaswami Gramani, 57 Mad. 760 : (A. I. R. (21) 1934 Mad. 418). While discarding the English doctrine of an equitable interest arising from a contract for the sale of immovable property, the Legislature, perhaps unconsciously, adopted the equitable doctrine with reference to agreements to leases not only by omitting to enact a provision similar to that of Section 54 in Section 105, T. P. Act, but also by including "an agreement to lease" within the definition of a lease in Section 2(7) of the Act. An agreement which does not give the lessee a right to possession either immediately or at a future date but which only binds the parties, the one to create and the other to accept a lease hereafter, is a mere agreement for a lease and stands on a different footing. An agreement to lease operating as an actual demise of immovable property falls within Sections 2(7) and 17(1)(d) of the Act, is not exempted by Section 17(2)(v) and must be registered. It is a transaction "affecting" immovable property and being unregistered would be inadmissible in a suit for specific performance or damages according to Narayanan Chetti v. Muthiah Servai, 35 Mad. 63: (8 I. C. 520 F.B.) though the actual relief sought in that case was specific performance. The same rule was applied to a suit for damages in Sriramulu Naidu v. Ramaswami Mudali, 33 M. L. J. 596: (A. I. R. (5) 1918 Mad. 393). Such an agreement to lease, though unregistered, has since been rendered admissible in evidence in a suit for specific performance of the contract by reason of the proviso to Section 49 of the Act enacted in 1929. Section 27A, Specific Relief Act, and Section 63A. T. P. Act, enacted at the same time as the proviso to Section 49 of the Act permit the reception in evidence of an unregistered agreement to lease effecting a present demise, to sustain a claim for specific performance or a defence of part performance. To this extent the decision in Narayanan Chettiar v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F.B.) has been superseded by legislation. Is an unregistered lease or an unregistered agreement to lease falling within the definition of a "lease" in Section 2(7) of the Act admissible in evidence in a suit for damages for breach of contract or is it ruled out by Section 49(c) of the Act as held in Narayanan Chetti v. Muthiah Servai, 35 Mad. 63 : (8 I. C. 520 F. B.) and Sreeramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596: (A. I. R. (5) 1918 Mad. 393)?

56. A claim for damages for a breach of contract is different from a claim for specific performance, though compensation, not, be it observed, damages, can be awarded in addition to or in substitution for specific performance under Section 19, Specific Relief Act. Damages was the only remedy available at common law for a breach of contract while specific performance was an equitable remedy available in chancery and in spite of the fusion of law and equity, the two reliefs are distinct. The compensation referred to in Section 19, Specific Relief Act, is awarded in the exercise and as part of the equitable jurisdiction to grant a specific performance, in contradistinction to the common law remedy by way of damages, Ardeshir H. Mama v. Flora Sassoon, 52 Bom. 597: (A. I. R. (15) 1928 P. C. 208). The two reliefs, specific performance and damages, are alternative and not cumulative. The proviso to Section 49 of the Act refers to a suit for specific performance falling within Section 27, Specific Relief Act, and cannot be construed as including within its ambit and scope a suit for damages for breach of contract. Nor can I accept the argument that the unregistered agreement to lease is sought to be adduced as evidence of a collateral transaction not required to be effected by a registered document. There is only one transaction, namely, an agreement to lease which may give rise to different reliefs by way of specific performance or damages and that transaction "affects" immovable property.

57. An unregistered agreement to lease which effects an actual demise of immovable property, though it does not transfer any interest by way of a lease and though it contemplates the execution of a lease deed transferring such an interest, nevertheless "affects"" immovable property. It is compulsorily registrable under Section 17(1)(d) read with Section 2(7) of the Act and is not exempt from registration under Section 17(2)(v) of the Act. The reference to-"an agreement to lease" in the sequel is only to this type of agreements. Such an agreement to lease, if unregistered, cannot "affect" immovable property under Section 49(a) or "be received as evidence of any transaction affecting such property" under Section 49(c) of the Act. Section 49(c) is a substantive provision which strikes the transaction with sterility while Section 49(c) bars the reception of the agreement in evidence. Section 49(c) does not concern itself with the reliefs available in respect of a "trans-action affecting immovable property" but shuts out the unregistered agreement as evidence of the transaction itself. The transaction affecting the immovable property is the agreement to lease. Under Section 91, Evidence Act, the transaction cannot be proved otherwise than by the written agreement itself. Section 49(c) prevents the agreement to lease, if left unregistered from being received as evidence of the transaction. Of that which does not exist and that which does not appear in evidence, the reckoning in a Court of law is the same, said Bowen L. J. It follows logically that neither specific performance nor damages for breach of contract could be decreed without proof of the transaction (i.e.), the agreement to lease. It was so held by this Court in Sreeramulu Naidu v. Ramaswami Mudaliar, 33 M. L. J. 596 : (A. I. R. (5) 1918 Mad. 393). The proviso to Section 49 is an exception to Section 49(c) of the Act introduced in 1929 and allows the unregistered agreement to lease to be given in evidence of the transaction only in a suit for specific performance. It does not refer to suits for damages;

58. Dealing with an unregistered memorandum of lease under which possession was taken in Port Canning and Land Improvement Co. Ltd. v. Katyayani Devi, 47 Cal. 280: (A.I.R. (6) 1919 P. C. 42) the Judicial Committee observed : "Being unregistered it is inadmissible in evidence, and no effect can be given to it." The suit was for fixing a fair rent and the memorandum was given in evidence to show the rent previously agreed. With reference to the admissibility of an unregistered agreement to lease in a suit for specific performance, the Judicial Committee observed : "If the document in question can be regarded as a 'lease' within the meaning of this definition (Section 2(7)) it could not be received in evidence." Hemanta Kumari Debi v. Midnapore Zamindari Co., 47 Cal. 485 : (A. I. R. (6) 1919 P. C. 79). It would not have made any difference to the application of this rule if the suit had been for damages for breach of the agreement to lease instead of specific performance. An action for damages in respect of the violation of a contract is as much an action upon the contract as a suit for specific performance ; it may be the only available means of enforcing the contract in cases where, through the act or omission of one of the contracting parties, specific performance had become impossible, Windsor and Annapolis Railway Co. v. Reg, (1886) 11 A. C. 607 at pp. 613-614 : (55 L. J. P. C. 41). Whether the claim is for specific performance or for damages, what is sought to be enforced is a contract affecting immovable property of which the only evidence permissible under the Evidence Act is the unregistered agreement to lease and that evidence is shut out by Section 49(c) of the Act. The proviso to Section 49 introduced in 1929 while it relaxed the prohibition in Section 49(c) in the case of suits for specific performance did not extend or include suits for damages within its scope. I find it difficult to accept the contention that the Legislature when it enacted the proviso must be deemed to have proceeded on the view that there was no need for legislation with reference to suits for damages because in 1929 when the proviso was added the decisions of this and the other High Courts were by no means uniform and if anything, the balance of authority was against the admissibility of an unregistered agreement to lease in a suit for damages for breach of the contract.

59. The decision of the Judicial Committee in M. E. Moola Sons Ltd. v. Burjorjee, 10 Rang. 242 : (A. I. R. (19) 1932 P. C. 118) was given in a suit for damages for breach of an unregistered contract for sale. The contract of sale and its breach were admitted and there was no need to prove the transaction. The Judicial Committee held that the point as to non-registration of the agreement was not open to the appellant. Nevertheless they referred to Section 49(a) and (c) of the Act and felt bound to make a palinode of their previous dicta in Dayal Singh's case, 53 I. A. 214 : (A. I. R. (13) 1926 P. C. 94) and Skinner's case, 51 ALL. 771: (A. I. R. (16) 1929 P. C. 269) as the report of the argument in 36 C. W. N. 677 : (A. I. R. (19) 1932 P. C. 118) shows. The Judicial Committee said:

"Their Lordships are satisfied that there is nothing in the section cited (Section 49), when properly construed, to compel the Court to take notice of the non-registration of an admitted document unless at any rate such document must, if treated as effective, be the foundation of a judgment affecting immovable property comprised in such document .... Further the proceedings do not in any way affect any immovable property. The immovable property affected by the agreement long since passed out of the picture and the only claim in these proceedings is a personal one for damages for breach of an admitted contract."

No reference was made to the previous decisions of the Board cited during the arguments. I do not comprehend--I am sure the fault is wholly mine--the process of reasoning which led their Lordships to paraphrase the language of Section 49 in the manner they did. Their Lordships evidently took the same view as the Calcutta High Court did in Ulfatunnissa's case, 9 Cal. 520 : (12 C. L. R. 209 (F.B.)), a case which was cited before the Board during the arguments, namely, that the words "transaction affecting immovable property" in Section 49(c) mean "so as to affect immovable property" or "so far as it affects immovable property." This is also the interpretation which has commended itself to my Lord in the present case. The reference to the "foundation of a judgment affecting immovable property" and to the immovable property having "passed out of the picture" in the judgment of the Privy Council justify this interpretation. Though it was an obiter dictum of the Judicial Committee, the observation was deliberately made after a full argument in which all the relevant cases were cited before the Board. It coincides, strangely enough, with the view of the Full) Bench of this Court in Raja of Venkatagiri v. Narayana Reddi, 17 Mad. 456 : (4 M. L. J. 198 (F.B.)) which, in my opinion, supports the appellant entirely. I need not rehearse the facts of this case or the conclusion reached by the Full Bench for my learned brother Satyanarayana Rao J. has dealt with the case very fully. Uninstructed by these two decisions and the opinions of the majority of my learned brethren, I should have come to the conclusion on the strict language of Section 49(c) that an unregistered agreement to lease effecting an actual demise of land, is inadmissible in evidence for the purpose of sustaining a claim for damages, for breach of the agreement, just as it would have been inadmissible in evidence, before the proviso to Section 49, in a suit for specific performance. The chameleon-like quality of the same agreement, in changing from an inadmissible document when one relief in respect of a breach of contract is sought into an admissible document when another relief is sought, both reliefs, being in personam, is an odd result of the appellant's contention. It is, however, rendered inevitable by the two decisions above referred to. I have reached this point in drafting my opinion when I had the advantage of reading the opinion of Panchapagesa Sastri J. I find I follow him all along the route till he reaches the decisions in M. E. Moola Sons Ltd. v. Burjorjee, 10 Rang. 242:(A. I. R. (19) 1932 P. C. 118 (P.C.) ) and Raja of Venkatagiri v. Narayana Reddi, 17 Mad. 456:(4 M. L. J. 198 (F.B.)). He has explained them away but I am unable to accompany him in leaping the fence. I need not refer to the other decisions of this Court expressing conflicting opinions on the question under reference for they were decided before Hemanta Kumari's case, 47 Cal. 485 ; (A. I. R. (6) 1919 P. C. 79) when the difference between a mere agreement for a lease and an agreement to lease effecting a present demise, had not always been kept in view. Further my learned brother Satyanarayana Rao J. has assembled all the relevant decisions in his judgment which I had the privilege of studying and it is unnecessary to duplicate the argument.

60. I cannot say I have found the solution of the problem which has puzzled a generation of Judges, other than difficult. The principles of construction abhor, if it can be avoided, a casus omissus especially one so obvious as in the present case. Section 49(c) of the Act is a disabling provision which excluded material evidence and if it is fairly capable of two constructions, I should prefer that which is in harmony with what is just and reasonable. In view of the evasive language of Section 49 of the Act, the interpretation put upon it by the Judicial Committee and a Full Bench of five Judges of this Court, and the conclusion reached by my Lord and Satyanarayana Rao J., I would minimise the conflict of judicial opinions of which Section 49, Registration Act, has been the unfortunate victim, by answering the question referred to us in the affirmative.

Somasundaram, J.

61. The question has been fully dealt with in the judgment of my learned brother Satyanarayana Rao. I am in entire agreement with him. I would answer the reference in the affirmative.

S.A No. 2048 of 1946.

Murdga Mudaliar (Deceased) And Others v. Subba Reddiar.

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Appellant's Arguments

Respondent's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Murdga Mudaliar (Deceased) And Others v. Subba Reddiar.

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