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Mutta Venkatachalapathy Died And Ors. v. Rao Sahib Pyinda Venkatachalapathy Garu And Ors.
Structured Summary of the Opinion
Factual and Procedural Background
The disputes arise from a suit to recover immoveable property brought in A.S. No. 209 of 08 (the appellant here) and a related appeal No. 46 of 09 in which the appellant in the first appeal is respondent. Relevant facts as stated in the opinion:
- In November 1894 the plaintiff executed a deed of mortgage in favour of the defendant.
- In 1896 the plaintiff executed a deed of sale (Exhibit A) in respect of the same property for about Rs. 8,000, which represented the amount of the earlier mortgage plus about Rs. 4,000 then paid by the defendant. Exhibit A is relied on by the defendant as a sale.
- On the same day a separate unregistered document in the form of a letter was written which purported to show that the parties intended the transaction to be a usufructuary mortgage rather than a sale.
- In 1900 the defendant attempted to enforce what was contended to be a usufructuary mortgage; the High Court ultimately held that the alleged mortgage could not be enforced because the instrument relied upon was not registered as required by law.
- The present suit seeks recovery of the property on the plaintiff's ground that Exhibit A was never intended to be an effective sale and thus the property never passed to the defendant. The Subordinate Judge decreed recovery of possession in favour of the plaintiff but conditioned the decree on the plaintiff restoring to the defendant the money received under the deed.
Legal Issues Presented
- Whether the Subordinate Judge was correct in issuing a decree for possession conditioned on the plaintiff restoring to the defendant the advantage (the money) derived from the abortive transaction (appeal No. 209).
- Whether secondary evidence of the contemporaneous unregistered letter (intended to show the parties intended a usufructuary mortgage and not a sale) was admissible, given the requirements of Section 49 of the Registration Act and Section 92 of the Evidence Act (appeal No. 46).
Arguments of the Parties
Appellant's Arguments
- In appeal No. 209 the appellant (plaintiff in the suit) argued that while he is entitled to a decree for possession, the court cannot make restitution a condition precedent to recovery of possession because Section 65 of the Indian Contract Act does not expressly confer on the court the power to attach such a condition to a decree.
- In the challenge to the admissibility of evidence (represented by Mr. Ramachandra Aiyar), it was contended that Section 49 of the Registration Act prevents the unregistered contemporaneous document (the letter) from being used in evidence to establish the true nature of the transaction.
Respondent/Defendant's Position (as reflected in the opinion)
- The respondent (defendant in the suit) is entitled to restitution of whatever advantage the plaintiff derived from the abortive transaction under Section 65 of the Contract Act, because the supposed sale is being treated as void and the defendant must be restored to the position he would have been in but for the transaction.
- Implicitly, the respondent relies on the letter and on the history of the transactions to maintain that Exhibit A was not an effective sale but that the defendant had provided funds which ought to be restituted if the property is recovered.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gurraj Baksh v. Kazi Hamid Ali (1886) I.L.R. 9 A. 340 at p.345 | Supports the proposition that courts may refuse to grant legal relief except on terms dictated by justice (taking account of equities even in actions at law). | The court relied on this case to justify the imposition of a conditional decree (restitution) even though the suit is one at law (ejectment), showing courts can attach terms to do complete justice between parties. |
| Clough v. London and Northwestern Railway Company (1871) L.R. 7 Ex. 26 at 37 | Authority for the view that courts may consider equitable considerations even where relief is legal. | Cited to support the principle that a court may impose terms when granting legal relief to achieve equitable justice. |
| Raja of Venkitagiri v. Narayana Beddi (Full Bench) (1893) I.L.R. 17 M. 456 | Held that terms of an unregistered agreement affecting immoveable property could be proved by secondary evidence for certain purposes (e.g., to show existence of contract and damages) where the object was not to enforce the contract as an instrument affecting immoveable property. | The majority relied on this Full Bench decision to conclude that Section 49 of the Registration Act does not bar the admission of the unregistered contemporaneous letter when it is used to show that Exhibit A was not intended to be an operative sale (i.e., the object was to deny the effect of Exhibit A rather than to enforce the unregistered document as creating rights in immoveable property). |
| Subbayya v. Maddulithiah / Kanuparthi Subbayya v. Kurnum Maddulitiah (1907) 17 M.L.J. 469 | Held that an unregistered instrument may be inadmissible when it is used to prove a transaction which affects immoveable property (the decision refused to admit an unregistered permanent lease used to prove adverse possession). | The majority considered this authority but held it had no application to the facts before them; Justice Miller relied on its reasoning in dissent to exclude the unregistered letter as inadmissible under Section 49 because it was being used to prove a mortgage (a transaction affecting immoveable property). |
| Kunhiamma Umma v. Ibrayam Haji (1912) 12 M.L.T. 264 | Mentioned in the context of declaring a charge or lien on property (an equitable relief) in circumstances similar to those discussed. | The court noted the case but expressly declined to consider whether a charge or lien could be declared here, stating it was not called upon to do so. |
| Padamma v. Themana Amma (1895) I.L.R. 17 M. 232 | Mentioned in the same context as Kunhiamma Umma — authorities where equitable remedies (charge or lien) were recognized. | The court mentioned the case but did not decide the point or apply it to the present controversy. |
Court's Reasoning and Analysis
The opinion contains a majority judgment (delivered first) and a concurring/dissenting opinion by Miller, J., limited to the evidentiary point. The court's analysis proceeds in two principal strands corresponding to the two central issues.
1. On the propriety of a conditional decree (appeal No. 209)
- The majority accepted the premise that the alleged sale (Exhibit A) was to be treated as void because the parties did not intend the sale to operate as such; consequently, restitution principles apply.
- The court relied on Section 65 of the Contract Act as the statutory basis for restitution — the defendant is entitled to be restored the advantage the plaintiff derived from the abortive transaction.
- The appellant argued that Section 65 does not expressly empower the court to condition a decree for possession on restitution. The majority responded that the absence of express language is not decisive: Section 65 does not prohibit such a remedy, and the court has an inherent competence to impose a condition that achieves complete justice between the parties.
- The majority invoked authorities and statutory analogies to support this competence: the ruling in Gurraj Baksh v. Kazi Hamid Ali and Mellor J.'s dictum in Clough, and analogies to statutory provisions (Section 41 Specific Relief Act; Section 55(6)(b) Transfer of Property Act; Section 86 Trusts Act) that reflect the practice of attaching conditions or recognizing equities.
- The court emphasized that it would be unreasonable to force the defendant to institute a fresh suit for recovery of money he paid; instead, the proper course in this suit is to order restitution as a condition of the decree, assuming the plaintiff can restore parties to their original positions in this proceeding.
2. On admissibility of secondary evidence of the unregistered letter (appeal No. 46)
- The central statutory provisions engaged were Section 49 of the Registration Act (which prohibits unregistered documents required to be registered from being received as evidence of transactions affecting immoveable property) and Section 92 of the Evidence Act (prohibiting oral evidence to vary or contradict certain documents).
- The majority analyzed the purpose for which the contemporaneous letter was offered: not to enforce the alleged usufructuary mortgage (which would be ineffective because unregistered), but to show that Exhibit A was never intended to operate as a sale — i.e., to displace the asserted effect of Exhibit A.
- The majority interpreted Section 49 as preventing the use of an unregistered document to support/enforce a transaction affecting immoveable property, but not as an absolute bar to receiving an unregistered document when it is used for the different purpose of proving that another instrument (Exhibit A) did not operate as an effective sale.
- Section 92 (on oral evidence) was found not to apply to the present circumstances because the evidence was not being used to vary the terms of Exhibit A but to show lack of intention for Exhibit A to be operative.
- The majority relied on the Full Bench decision in Raja of Venkitagiri v. Narayana Beddi to support the admissibility of the unregistered letter for this purpose, distinguishing cases where the object is to enforce an unregistered instrument or to prove a transaction that itself affects immoveable property in order to obtain relief based on it.
- On that basis the majority concluded the secondary evidence was admissible and dismissed the appeal contesting its reception.
3. Concurring/dissenting view (Miller, J.) on admissibility
- Justice Miller agreed with the majority as to the overall disposition of the appeals but dissented on the question of admissibility of the unregistered letter.
- He held that Section 49 unequivocally forbids reception of a document required to be registered as evidence of a transaction affecting immoveable property. In his view the letter (which converted Exhibit A into a mortgage) was a document requiring registration under Section 17 and was tendered to prove a mortgage — a transaction affecting immoveable property.
- Miller J. considered the Full Bench decision (Venkitagiri) to allow reception only where the document is used to prove a transaction that does not affect immoveable property; he concluded the present use was to prove a mortgage (which does affect immoveable property) and thus the evidence was inadmissible. He relied on Kanuparthi Subbayya v. Kurnum Maddulitiah to support exclusion.
- Under Miller J.'s reasoning, without admissible secondary evidence the plaintiff had only Exhibit A and so the plaintiff's suit for possession would have to be dismissed; Miller would have dismissed without costs but acknowledged the court's final order followed the majority view on costs.
Holding and Implications
The court delivered the following dispositive rulings and consequences:
- Disposition of A.S. No. 209 of 08 (appeal concerning conditional decree): The Subordinate Judge was correct in making the decree for possession conditional upon restitution. The decree is to be modified so that the plaintiff must repay the defendant Rs. 8,250 (the amount paid by the defendant). With this modification, appeal No. 209 is dismissed with costs.
- Disposition of the appeal on admissibility of evidence (appeal No. 46 of 09): The majority held that the contemporaneous unregistered letter was admissible by secondary evidence for the limited purpose of proving that Exhibit A was not intended to operate as an effective sale; the appeal contesting admission is dismissed. Justice Miller dissented on admissibility and would have excluded the document and dismissed the plaintiff's suit (without costs), but accepted the court's final order that both appeals be dismissed with costs.
Implications: The direct practical effect is that the plaintiff recovers possession only on condition of repaying Rs. 8,250 to the defendant; the restitution condition is enforced to do complete justice between the parties in this suit. The court applied existing statutory provisions and precedents to reach these outcomes and did not indicate that it was creating a novel legal principle beyond the application of the cited authorities.
Additional Observations from the Opinion
- The court emphasized that where an alleged sale is shown to have been intended not to operate as a sale, restitution under Section 65 of the Contract Act is an appropriate remedy.
- The majority treated Section 49 of the Registration Act as directed principally at preventing unregistered documents from being used to enforce transactions affecting immoveable property, and not as an absolute exclusion of such documents for all possible evidentiary purposes.
- The opinion records a clear difference of judicial approach on the interpretation of Section 49: the majority allowed limited use of the unregistered document to negative the effect of Exhibit A, while Justice Miller would exclude it because it was being used to prove a transaction affecting immoveable property (a mortgage) and thereby affect title/possession.
1. These two appeals arise in a suit to recover certain immoveable property. The suit was instituted by the appellant in A.S. No. 209 of 08. He is the respondent in the other appeal No. 46 of 09. The facts that led to the institution of the suit, so far as they are relevant to these appeals, are these:-The plaintiff executed a deed of mortgage in favor of the defendant in November 1894. In 1896 he executed a deed of sale with respect to the same property for Rs. 8,000 and odd made up of the amount of the previous mortgage and Rs. 4,000 then paid to the plaintiff by the defendant. The sale deed is marked as exhibit A in this case. On the same day as exhibit A document was written which showed that the transaction between the parties was intended to be an usufructuary mortgage and not a sale. This document which is in the shape of a letter was not registered. Then in 1900 the defendant in the present suit tried to enforce what was intended to be a usufructuary mortgage, but it was ultimately held by the High Court that the mortgage could not be enforced as the document on which reliance was placed for the purpose was not registered as required by the law. The present suit is for the recovery of the same property and the plaintiff's case is that as the parties did not intend that Exhibit A should be treated as an effective deed of sale the property never passed to the defendant. The Subordinate Judge has decreed the suit but has made it a condition of the decree that the plaintiff should make over to the defendant whatever money he received under the deed.
2. The main question in appeal '209 is whether the Subordinate Judge was right in passing such a conditional decree. I am of opinion that he was. Taking the transaction to be void on the ground that the so called deed of sale was never intended to be given effect to, there can be no doubt that under Section 65 of the Contract Act the defendant will be entitled to the restitution of whatever advantage the plaintiffs derived by the abortive transaction.
3. The contention on behalf of the appellant is that the court, while giving the plaintiffs a decree for possession to which he is entitled cannot make it a condition precedent to recovery of possession, that he should make restitution because Section 65 of the Contract Act, does not give such a power to the court. But the fact that this section does not give the power in so many words, is not to my mind, conclusive. There is nothing in Section 65 which suggests that the court has no such power and in my opinion, independently of the Contract Act it lies perfectly within the competence of the court, in a case of this nature, to impose a condition which would do complete justice between the parties. There is no reason why the defendant should be driven to a fresh suit to recover the money which he paid for the property which the plaintiff seeks to recover on the ground that the intended transaction proved infructucus and it is for the plaintiff to show that we, cannot in this suit restore both the parties to their original position. No doubt this suit is one in ejectment and cannot therefore be called a suit in which an equitable relief is sought and the learned pleader for the appellant contends that we have got the power to attach such a condition to the decree only in cases where the relief sought is a relief in equity. But I agree with the ruling in Gurraj Baksh v. Kazi Hamid Ali (1886) I.L.R. 9 A. 340 at page 345 that even in suits in which the relief sought is not, strictly speaking, an equitable relief, the court has the power in a proper case to refuse to grant a decree to the plaintiff: except on terms indicated by obvious considerations of justice and this view also finds support from Mellor J. dictum in Clough v. London and Northwestern Railway Company (1871) L.R. 7 Ex. 26 at 37. In this country there has never been any distinction between equitable and legal jurisdictions and the same court has the power in a proper case to take note of the equities of the parties although the action may be strictly one at law. The principle upon which think we ought to act in this case is similar to taht embodied in several statutes of the Indian legislature, for instance Section 41 of the Specific Relief Act, Section 55, Subsection 6, Clause (b) of the Transfer of Property Act and Section 86 of the Trusts Act. I do not propose to consider whether we could declare a charge or a lien on the property in the circumstances of the case as was done in Kunhiamma Umma v. Ibrayam Haji (1912) 12 M.L.T. 264 and Padamma v. Themana Amma (1895) I.L. R. 17 M, 232 as we are not called upon to do either.
4. I would therefore hold that before the plaintiff recovers the property he must restore to the defendant whatever advantage he has derived under the so called sale. The parties agree that there should be no claim for mesne profits or interest on the amount paid by the defendant. The decree of the Subordinate Judge will therefore be modified accordingly, that is to say, the decree in favour of the plaintiff should contain a condition that the plaintiff do pay back to the defendant Rs. 8,250, the amount paid by the defendant to the plaintiff. With this modification the appeal 209 will be dismissed with costs.
5. The other appeal raises the question whether certain evidence, has been rightly admitted to show that the transaction evidenced by Exhibit A was not intended to be given effect to as a sale. The evidence objected to on this point is that which is adduced to show that what the parties really intended was that there should be a usufructuary mortgage and not a sale and I can hardly doubt that that was what the parties intended. This evidence is practically a reproduction of the recitals of the letter written contemporaneously with Exhibit A, already alluded to. The document was not produced at the trial but no objection was taken to the reception of its contents by secondary evidence. Mr. Ramachandra Aiyar, the learned vakil for the appellant, however contends relying upon Section 49 of the Registration Act that the document itself could not be used in evidence at all. Section 49 says : " No document required by Section 17 to be registered shall.
6. (a) affect any immoveable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property or conferring such power unless it has been registered." The question is whether any such document has been received as evidence of a transaction affecting inmoveable property. I take it. what is meant is that a document which is required to be registered by the law cannot be received as evidence in support of a transaction affecting inmoveable property. What was, then, the object, with which the evidence in question in this case was given? As I understand it, it was adduced in order to show that the so called deed of sale was not intended to operate as a transaction affecting certain immoveable property. It was not adduced to show that the parties entered into a valid transaction in the nature of a usufructuary mortgage. There is no question in this case of enforcing any such mortgage. The plaintiff relied upon his title which does not depend upon that mortgage in order to recover the property. What he says is that Exhibit A cannot stand in the way because it was never intended to be an operative transaction. No doubt, in order to prove that, he has got to show that the transaction which was intended was something else, that is, a mortgage transaction. But, though it may be necessary to prove that, in order to prove that Exhibit A was not intended to create an effective sale, the object was not to prove that there was an effective mortgage. Section 49 does not say that a document which requires registration shall not be received in evidence for any purpose if it is unregistered. Now, I think there can be little doubt that it would be permissible for the plaintiff to prove that there was no valid sale by adducing evidence to the effect that Exhibit A was not intended to be given effect to. Section 92 of the Evidence Act which prohibits the admission of any oral evidence varying or contradicting the terms of certain documents has no application. As regards the provision of the registration act it has to be borne in mind that the main object of the Act is to prevent documents of a certain class having any effect unless they are registered. The primary object of that Act is not to deal with the questions of evidence pure and simple. If the question, whether Exhibit A. the document of sale, was intended to be a real transaction of sale or not, could bo proved by other evidence, it appears to me, there is no good reason for holding that it could not be proved by a document which was intended to be a mortgage but which would fail to have that effect by reason of its not being registered, unless of course the language of Section 49 is clear enough to that effect. As I read it, it only shows that you cannot prove a document which requires to be registered, in order to support a tranasction affecting immoveable property. But this is not what is intended in this case. In my opinion the Full Bench decision in Raja of Venkitagiri v. Narayana Beddi (1893) I.L.R. 17 M. 456 tears out this view of Section 49. There, what was sought to be proved, was, the terms of an agreement to lease, which was not registered, in order to show that the plaintiff was entitled to damages for breach of the contract. Now the contract as evidenced by the unregistered agreement was certainly a transaction affecting immoveable property. But, nevertheless, it was held that its terms could be proved for the purpose, not of enforcing the contract but for proving the existence of the contract and showing the damages sustained by the plaintiff by the non performance of the contract. But it is argued that that was not a suit affecting immoveable property, but I do not see how that makes any essential difference except in cases where the suit is brought to enforce the terms of a document of which the law requires registration but which has not been registered. No doubt there is a sentence in the Full Bench case referred to which, if it stood alone might to some extent countenance the contention of Mr. Ramachandra Aiyar but the decision itself supports the view which I have stated. The ruling in Subbayya v. Maddulithiah (1907) I. 17 M.L.J. 469 has no application to this case I am, therefore, of opinion that Section 49 of the Registration Act doss not apply nor does Section 92 of the Evidence Act. There is no force in the contention that the suit is barred by res judicata by reason of previous proceedings. I would therefore dismiss the appeal.
Miller, J.
7. I have asked my learned brother to deliver the first Judgment in this case because his Judgment covers the whole field whereas mine is confined to one point.
8. I regret to say that I have come to a different conclusion from him on the question whether this alleged mortgage, this letter which converted Exhibit A into a mortgage and of which secondary evidence has been given is admissible in evidence or not. In my opinion it is not admissible because Section 49 of the 'Registration Act forbids its admission. If it is not admissible, then, it is not denied that no admission of the defendant can be admitted to prove its contents; and the result would be, if it is not admissible, as I understand it, that all we have is Exhibt A and the plaintiff's suit must be dismissed. Now Section 49 of the Registration Act says that no document required by Section 17 to be registered is to be received as evidence of any transaction affecting immoveable property. Now it is not denied that this letter which is not before us is a document which required registration under Section 17. If the court is asked to recover it as evidence of a transaction affecting immoveabie property the court must refuse so to receive it. As I understand the plaintiff's case it is possible he might simply have placed his case thus: " This is my land. There was no sale to the defendant. Defendant is in possession. I asked him but he did not give up possession". The answer to that would no doubt be the land was sold by Exhibit A. Plaintiffs would then have to show that the sale was something other than a sale and probably the result would have been the same as it is now. But the plaintiff did not so frame his plaint. He based his claim on a mortgage transaction. He says " There was what was intended to be a usufructuary mortgage which has failed for want of registration and I am entitled to possession on account of the failure ". What, then, did he want to prove by this document of which he tendered secondary evidence? He wanted to prove, as I understand it, that this possession of the defendant was under a mortgage which was no mortgage. That is to say, he wanted to prove a transaction which affected immovable property though the actual document would not, of course, have any effect upon the title in the particular case for want of registration. The transaction he wanted to prove was a mortgage and that is a transaction affecting immoveabie property though the document for want of registration did not have any effect. Now according to the Full Bench case Rajah of Venkatagiri v. Narayana Reddi (1893) I.L.R. 17 M. 456 it does not matter that the document may have the effect of proving a transaction affecting immoveabie property if it is used:-That is how I understand it--if it is used for the purpose of proving a transaction which does not affect immoveable property in any way; then it may be received in evidence. That, it seems to me is not so here. Not only was the purpose to prove a transaction which does affect immoveable property but the purpose of proving it was, to affect immoveable property to enable the plaintiff to disturb the possession and replace it by his own. The case is nearer to that in Kanuparthi Subbayya v. Kurnum Maddulitiah (1907) 17 M.L.J. 469 where Benson and Wallis JJ. refused to admit an unregistered permanent lease which was put forward not to prove i.e., not in order to enforce the lease, but to prove the nature of the adverse possession which was set up by the defendant. The Judges said, "The transaction to be proved is the nature of adverse possession, that is, a transaction which affected immoveable property. This document is put in to prove that transaction and that cannot be allowed". So here, it seems to me, though the case is not exactly the same as in that case. The document is put forward to prove that there was a mortgage and not a sale. Because there was a mortgage and not a sale the defendant is not entitled to retain possession and therefore the document is in this case put forward not only in order to prove a transaction affecting immoveable property, but further, if that makes any difference in order that the result of the suit may be a decree affecting immoveable property based on this transaction. I hold that the document is not admissible in evidence, according to the decisions in this Court as I understand them. The plaintiffs' suit for possession will have to be dismissed and I would dismiss it without costs, but as the effect of my learned brother's decision is that both the appeals should be dismissed with costs, that will be the order of the Court.
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