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Smart Summary

Factual and Procedural Background

This appeal arises from a suit in which the Plaintiffs-Appellants (four darputnidars of Mouza Bendi) sought a declaration that a decree based on a solenama was illegal, fraudulent, inoperative and void, and prayed that the decree be set aside. Background facts set out in the opinion: the predecessors of the Plaintiffs granted a mining lease in 1894; in 1894 the lease was granted to Mr. White who later transferred rights to Defendant No. 2. On 2 August 1935 the Plaintiffs transferred by registered deed the right to receive royalty for the years 1930–1946 to Defendant No. 1, who in turn executed an agreement to pay the Plaintiffs a proportion of those royalties.

In 1937 a suit for recovery of royalty was instituted against Defendants Nos. 2 and 3 by the four Plaintiffs and Defendant No. 1 in the present suit. That suit was compromised and a decree embodying the solenama was passed. The minimum royalty under the original lease was Rs. 80 per annum, but under the solenama Defendants agreed to pay Rs. 500 per annum as a first charge on the colliery.

The Plaintiffs in the present suit alleged fraud in procuring the earlier decree, contending that the earlier suit was instituted without their knowledge and that certain papers (used as vakalatnamas) had been signed when blank. The Subordinate Judge found no fraud but granted a declaration that the solenama embodied in the earlier decree was inoperative and not binding for want of registration under section 49 of the Registration Act. The Defendants appealed; the Plaintiffs cross-objected seeking a declaration that the decree was void for fraud. The District Judge (first appellate court) upheld the finding of no fraud but held that the Subordinate Judge had not properly exercised his discretion under section 42 of the Specific Relief Act in granting the declaration, reversed that order and dismissed the suit. The present appeal challenges that reversal and seeks reinstatement of the trial Court’s declaration.

Legal Issues Presented

  1. Whether the Plaintiffs were entitled to a declaratory decree that the compromise decree embodying the solenama was illegal, fraudulent, void or inoperative.
  2. Whether the trial Court properly exercised its discretionary power under section 42 of the Specific Relief Act in granting a declaration that the solenama (embodied in the decree) was not binding on the Plaintiffs for want of registration under section 49 of the Registration Act.
  3. Whether an appellate Court should interfere with a trial Court's grant of declaratory relief under section 42 of the Specific Relief Act when the trial Court entered into the merits and awarded such a declaration.

Arguments of the Parties

Appellants' Arguments

  • The appellants (through Mr. Mukherji) contended that the declaration granted by the Subordinate Judge was a proper exercise of discretion under section 42 of the Specific Relief Act and that the appellate Court should not interfere with the trial Court's discretionary grant of declaratory relief.
  • In support of non-interference, appellants relied on authorities including Isridut Koer v. Hansbutti Koerain, Kunwar Partab Singh v. Bhabuti Singh, and Sant Kumar v. Deo Saran to show circumstances in which declaratory relief should not be refused on discretionary grounds or should not be disturbed on appeal if the trial Court had jurisdiction and reached correct conclusions on the merits.
  • The plaint contained an explicit allegation (paragraph 10) that the solenama was not signed, executed and registered according to law and therefore void, which the appellants relied upon in support of the trial Court's declaration under section 49 of the Registration Act.

The opinion does not contain a detailed account of the respondents' (defendants') specific legal arguments opposing the appellants' contentions.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Isridut Koer v. Hansbutti Koerain (Privy Council) Illustration of a Court refusing declaratory relief to avoid protracting litigation when the decision may have no immediate or future effect; the Court may refuse declaratory relief on grounds of inexpediency or to avoid unnecessary expense and delay. The Court reviewed this authority and concluded it was not an apt precedent for the present appeal because in that case the defendants had not objected to declaratory relief at trial and the point was first raised on appeal; thus the Privy Council's approach there did not support the appellants' contention here.
Kunwar Partab Singh v. Bhabuti Singh Discussed in relation to whether section 42 of the Specific Relief Act applied to a suit seeking a declaration that a decree in another suit was not binding; the head-note language was examined. The Court analyzed the Privy Council text underlying that head-note and concluded that the head-note did not justify the proposition that section 42 did not apply; the opinion did not read that case as holding non-application of section 42.
Sant Kumar v. Deo Saran Held that if the trial Court had jurisdiction and reached correct conclusions on the merits, a declaratory decree should not be reversed on appeal merely because discretion was allegedly improperly exercised; but appellate interference is possible when the exercise is wholly arbitrary or grossly inconsistent with judicial principles. The Court relied on the qualification in Sant Kumar — especially the statement that appellate interference is justified where the trial Court's discretion was exercised in a way "grossly inconsistent with judicial principles" — and applied that standard to assess whether the Subordinate Judge's declaration was a permissible exercise of discretion.
Sreenarain Mitter v. Sreemutty Kishen Soondery Dassee (case cited) Affirmed that obtaining a declaratory decree is not an absolute right and that a Court must exercise sound judgment whether a declaration is reasonable under the circumstances; discretionary nature of declaratory relief. The Court cited this authority (and its approval in Lankapara) to support the proposition that declaratory relief is discretionary and must be reasonable under all circumstances, using it to justify appellate reversal where a declaration is unnecessary or merely a recital of legal consequences.
Lankapara Tea Company, Limited v. Gopalpur Tea Company, Limited Applied the discretionary principle to refuse a "bare declaration" that would be unnecessary and not of real utility to the plaintiff; courts may refuse declarations that merely state law and will not meaningfully assist the plaintiff. The Court used this decision to analogize that the trial Court's declaration in the present case was similarly a virtual statement of the legal consequences of non-registration (under section 49) and therefore an unnecessary declaration not contemplated by section 42.

Court's Reasoning and Analysis

The Court's analysis proceeded in these main steps, staying strictly within the statements in the opinion:

  1. Findings of Fact: Both the Subordinate Judge and the District Judge found there had been no fraud practiced on the Plaintiffs. The Plaintiffs had originally prayed for a declaration that the compromise decree was void on the ground of fraud, but fraud was negatived by both courts below.
  2. Nature of Trial Court's Declaration: The Subordinate Judge nonetheless granted a declaration that the solenama embodied in the compromise decree was inoperative and not binding upon the Plaintiffs for want of registration under section 49 of the Registration Act. The Court observed that the solenama embodied the terms of the lease, and that the solenama had been merged in the decree; thus the trial Court's declaration effectively stated that the lease embodied in the decree was not binding because of the legal consequences of non-registration under section 49.
  3. Statutory Context — Section 49 Registration Act: The opinion reproduces section 49, noting the legal consequences enumerated there: an unregistered document required to be registered shall not affect immovable property comprised therein, confer certain powers, or be received as evidence of a transaction affecting immovable property unless registered; but the proviso preserves limited evidentiary uses (e.g., evidence in a suit for specific performance, part performance under section 53A of the Transfer of Property Act, or as evidence of collateral transactions not required to be effected by a registered instrument).
  4. Legal Character of the Declaration: The Court reasoned that the declaration made by the trial Court — that the solenama is not binding under section 49 — amounted only to a restatement of the statutory legal consequences of non-registration attaching to the decree in which the solenama was embodied. It did not amount to a declaration that the decree was void in all senses, because section 49's proviso permits certain evidentiary uses of an unregistered document.
  5. Discretion under Section 42 Specific Relief Act: The Court examined authorities on the discretionary nature of declaratory relief under section 42. It accepted the principle (from Sreenarain and Lankapara) that obtaining a declaratory decree is discretionary and a Court must exercise sound judgment as to reasonableness under the circumstances; authorities show courts may refuse declarations that are unnecessary or merely state legal propositions without practical utility.
  6. Application of Sant Kumar: The opinion considered Sant Kumar's strong proposition that a declaratory decree, when the trial Court had jurisdiction and reached correct conclusions on the merits, should not ordinarily be reversed simply because discretion was allegedly misapplied. However, the Court emphasized the qualification in Sant Kumar that appellate courts may interfere where the trial Court's exercise of discretion was wholly arbitrary or grossly inconsistent with judicial principles.
  7. Conclusion on Reasonableness: Applying these principles, the Court concluded that the trial Court's declaration was essentially a bare statement of the legal consequences of non-registration under section 49 and was not a form of declaratory relief contemplated by section 42 of the Specific Relief Act. Because the declaration was unnecessary (merely reciting the legal effect of non-registration) and not of practical utility, the appellate Court correctly reversed the trial Court's order.

Holding and Implications

Holding: The appeal is dismissed. The Court affirmed the lower Appellate Court's reversal of the Subordinate Judge's decree. The opinion concludes that the Subordinate Judge's grant of the declaration was not an appropriate exercise of discretion under section 42 of the Specific Relief Act because the declaration simply stated the legal consequences of non-registration under section 49 of the Registration Act and was therefore not the kind of declaratory relief contemplated by section 42. The appeal "fails and is dismissed with costs." The hearing-fee was assessed at two gold mohurs.

Implications: The direct effect is that the trial Court's declaration that the solenama (as embodied in the compromise decree) was not binding upon the Plaintiffs for want of registration has been set aside by the appellate process; the appeal is dismissed and costs awarded. The Court's reasoning emphasizes the discretionary nature of declaratory relief under section 42 and that courts may refuse or set aside declarations that merely recite statutory consequences or are unnecessary for the plaintiff's practical relief. The opinion does not purport to establish a new principle beyond applying and reconciling existing authorities on the discretionary scope of section 42; it addresses the proper exercise of discretion in the particular facts of this case.

    Uday Chandra Paul v. B.H. Parmar

    The Judgment of the Court was as follows:—

    Khundkar, J.:— This appeal arises out of a suit in which the Plaintiffs who are the Appellants here prayed for a declaration that a decree based upon a solenama was illegal, fraudulent, in operative and void, and for an order that the said decree be set aside.

    The material facts are as follows:—

    The Plaintiffs-Appellants who are four in number are the darputnidars of a mouza known as Mouza Bendi. In 1894 their predecessors granted a mining lease of this mouza to one Mr. White who subsequently transferred his rights to the Defendant No. 2. On the 2nd August, 1935, the Plaintiffs by a registered deed of conveyance transferred to the Defendant No. 1 their right to receive royalty for the years 1930 to 1946. Later the Defendant No. 1 executed a deed of agreement by which she undertook to pay to the Plaintiffs a certain proportion of the royalty for the years 1930 to 1946.

    In 1937 a suit for the recovery of royalty was instituted against Defendants Nos. 2 and 3. The Plaintiffs in that suit were the four Plaintiffs-Appellants and the Defendant No. 1 in the suit out of which this appeal arises. The suit was compromised and a decree was passed embodying the solenama. The minimum royalty payable under the original lease was Rs. 80 per annum, but under the terms of the solenama the Defendants agreed to pay Rs. 500 per annum as royalty which would be a first charge upon the colliery.

    In the present suit the Plaintiffs-Appellants alleged that fraud had been practised upon them by the Defendants, that the former suit had been instituted without their knowledge, that the husband of the first Defendant in the present suit had contrived to get the former suit instituted with the assistance of papers which had been used as vakalatnamas, but upon which he had obtained the signatures of the Appellants at a time when those papers were blank.

    The learned Subordinate Judge found that there had been no fraud, but held that the Plaintiffs were entitled to a declaration that the solenama embodied in the decree in the earlier suit was inoperative and not binding upon the parties for want of registration under sec. 49 of the Registration Act. The Defendants appealed and the Plaintiffs filed a cross-objection in which they prayed for a declaration that the decree was void on the ground of fraud. The learned District Judge who heard the appeal upheld the finding of the learned Subordinate Judge that there, had been no fraud, but he also held that the learned Subordinate Judge had not acted in the proper exercise of his discretion under sec. 42 of the Specific Relief Act in granting the declaration just referred to. He accordingly reversed the order of the learned Subordinate Judge and dismissed the suit.

    The only point urged in the present appeal on behalf of the Appellants is that they are entitled to the declaration which was granted by the learned Subordinate Judge. Mr. Mukherji has in support of this contention invited our attention to paragraph 10 of the plaint which is in these terms:—

    “The Plaintiffs further state that the aforesaid solenama not being signed, executed and registered according to law is for all reasons void and ??? and no decree can be passed on its basis.”

    Mr. Mukherji has contended that the declaration granted by the learned Subordinate Judge was within his discretion, and that in any event the exercise of that discretion was not a matter with which the lower Appellate Court should interfere. In support of this contention Mr. Mukherji has cited the following cases; Isridut Koer v. Hansbutti Koerain was a decision of the Privy Council in an appeal which arose out of a suit brought during the life of a Hindu widow by the presumptive heir, entitled on her death to the possession of the property in which she held her limited estate, to have an alienation by her declared to operate only for her life. The High Court on appeal held that the Plaintiff was not entitled to the declaration prayed for for reasons which Mr. Justice Ainslie stated as follows:—

    “It seems to me that we ought not to allow this suit to be protracted and great additional expense to be incurred, when it is quite possible that the widows or one of them may survive the Plaintiffs so that the ??? may never vest in them and the decision arrived at may prove no bar to further ???.

    “For the purposes of this appeal it is sufficient to say that the Court will not, in a declaratory suit, decide intricate questions of law, when to immediate effect and possibly no future effect can be given to its decision, and when the postponement of the decision to the time when there may be before the Court some person entitled to immediate relief (if the decision is in favour of the Plaintiff) will not prejudice his rights in any way.”

    Mr. Mukherji has relied upon a passage in the decision of their Lordships of the Privy Council which appears at page 333 of the report:

    “But their Lordships think that a strong case of inexpediency should be shown for refusing declaratory relief to clasaes of persons expressly recognized by the law as suitors for such relief.”

    That however is not a complete statement of the principle of their Lordships' decision which goes on to state:—

    “They do not say that there may not be such a case, but they cannot find it here.

    The only reasons assigned for refusing relief on the ground of discretion is that part of the case raises a difficult point of law, the decision of which, though involving expense and delay, may after all not be binding upon the actual reversioners. That may be a reason more or less weighty according to circumstances……If the Defendants had in the first instance objected to declaratory relief and had taken the opinion of the Subordinate Judge on that point, there would then have been more ground for refusing relief in order to save expense and litigation. But they did not do that. They disputed the whole case of the Plaintiff. An important issue of fact, and two important issues of law, were decided by the first Court in the Plaintiffs' favour. After all this it comes very late for the Court above to reverse the action of the Court below on the ground of discretion and in order to save further litigation and expense.”

    In our judgment the decision just referred to is no authority for the contention raised in the appeal before us. In the case relied on the Defendants had not objected to the declaratory relief in the trial Court, and the question was laised for the first time in appeal in the High Court which refused the relief in order to prevent protraction of the litigation and further expense.

    Mr. Mukherji next relied on the language of a portion of the head-note in the case of Kunwar Partab Singh v. Bhabuti Singh ; which reads as follows:—

    “Held that—section 42 of the Specific Relief Act did not apply to a suit by P. and A for a declaration that the decree in B's suit was not binding on them and to have the decree in their own suit set aside.”

    The only justification for this wording is a passage in the decision of their. Lordships of the Privy Council at page 1172 of the report which is in the following terms:—

    “The Judicial Commissioner and the First Additional Judicial Commissioner having differed in opinion on the point of law as to whether section 42 of the Specific Relief Act, 1877, applied to the case, directed that the appeal should be laid before the Second Additional Judicial Commissioner under section 98 of the Code of Civil Procedure, 1908. The Second Additional Commissioner did not apparently confine himself to a consideration of the point of law with which alone he had under section 98 of the Code of Civil Procedure, 1908, jurisdiction to deal, he apparently agreed with the opinion of the First Additional Judicial Commissioner that section 42 of the Specific Relief Act, 1877, applied, and held that the appeal should be allowed and the suit should be dismissed with costs in both Court.”

    The decision of their Lordships was that the Appellants P and A should have a decree setting aside the decree in their suit and declaring that the agreement of compromise and the decree in the suit of B were not binding upon them. Even though the declaration prayed for was granted, we do not find it possible to read into this decision the implication of the head-note that the Privy Council held that sec. 42 of the Specific Relief Act did not apply.

    Mr. Mukherji then drew our attention to a passage in the judgment in the case of Sant Kumar v. Deo Saran in which Mr. Justice Mahmood stated:—

    “I hold that, so long as a Court of first instance possesses jurisdiction to entertain a declaratory suit, so long as that Court entering into the merits of the Plaintiff's case arrives at right conclusions, and awards a declaratory decree, such a decree cannot be reversed in appeal simply because the discretion has been improperly exercised. X know that in saying this I am laying down a strong proposition of law…..”

    The principle of that decision, so far as it related to sec. 42 of the Specific Relief Act, is accurately summarised in the concluding portion of the head-note at page 366:—

    “The awarding of declaratory relief, as regulated by section 42 of the Specific Relief Act, is a discretionary power which Courts of equity are empowered to exercise with reference to the circumstances of each case and the nature of the facts stated in the plaint, and the prayer of the Plaintiff; that so long as a Court of first instance possesses Jurisdiction to entertain a declaratory suit, and entering into the merits of the case arrives at right conclusions and awards a declaratory decree, such a decree cannot be reversed in appeal simply because the discretion has been improperly exercised; and that such improper exercise of discretion under section 42 of the Specific Relief Act has no higher footing than that of an error, defect or irregularity, not affecting the merits of the case or the jurisdiction of the Court, within the meaning of section 678 of the Civil Procedure Code.

    “This does not imply that, even in cases where the discretionary power to award declaratory relief has been exercised wholly arbitrarily, and in a manner grossly inconsistent with judicial principles the Court of appeal would have no power to interfere.”

    In our judgment it is the last sentence that is of importance for the purposes of the appeal before us. Can it be said that the discretion to award declaratory relief was exercised by the trial Court in a manner not grossly inconsistent with judicial principles? The Plaintiffs prayed in the first instance for a declaration that the compromise decree was void on the ground of fraud. Fraud has been negatived by both the Courts below, but the trial Court granted the Plaintiffs a declaration that the solenama not being registered under the law is not binding upon the Plaintiffs under sec. 49 of the Registration Act. It should be noted that the solenama embodied the terms of the lease, and the solenama itself was merged in the decree. The effect of the trial Court's decision therefore is that the lease embodied in the decree not having been registered is not binding upon the Plaintiffs under sec. 49 of the Registration Act. Now that section is in the following terms:—

    “No document required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall—

    (a) affect any immovable property comprised therein, or

    (b) confer any power to adopt, or

    (c) be received as evidence of any transaction affecting each property or conferring such power, unless it has been registered.

    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, I877, 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 a registered instrument.”

    The declaration granted by the trial Court that the solenama is not binding upon the Plaintiffs under sec. 49 of the Registration Act amounts to no more than saying that the legal consequences of non-registration enumerated in sec. 49 attach to the decree in which the solenama is embodied. It is not a declaration that the decree is void, because it may still be received as evidence of a contract in a suit for specific performance, or as evidence of part-performance of a contract for purposes of sec. 53A of the Transfer of Property Act, or as evidence of any collateral transaction not required to be effected by a registered instrument.

    In the case of Sreenarain Mitter…Defendant; v. Sreemutty Kishen Soondery Dassee…Plaintiff. , it was held that it is not a matter of absolute right to obtain a declaratory decree. It is discretionary with the Court to grant it pr not, and in every case the Court must exercise a sound judgment as to whether it is reasonable or not under all the circumstances of the case to grant the relief prayed for. This case was cited with approval in the case of Lankapara Tea Company, Limited v. Gopalpur Tea Company, Limited*, Limited . In the latter case the reliefs which the Plaintiff had prayed for included certain declarations based on the rights of the Plaintiff as the lower riparian owner, and the disabilities of the Defendant as the upper riparian owner in respect of a river. With respect to these reliefs the trial Court's direction was as follows:—

    “Plaintiff's right to have the free and natural flow of the Pugli river through its original and natural course be declared, and it be declared that the Defendants 1 and 8 have no right to interfere with the right subject to the terms of the compromise with Defendant No. 1; and subject to the compromise between the Plaintiff and Defendant No. 1, it be declared that the Defendants 1 and 2 have no right to erect bonds etc., in the bed of the Pugli, to narrow down the bed or divert the waters of the Pugli from its original and natural course, or to obstruct the free and natural flow of the Pugli through its original and natural course.”

    On appeal this Court held that it was not prepared to support the bare declaration for more reasons than one. One of the reasons was that the

    “declaration was unnecessary because it purported merely to recite the law such as the learned Judge understood it to be, and was not likely to be of any real utility to the Plaintiff; for in a future suit which he might have to institute, should any fresh obstruction be caused, this declaration he would have without any difficulty, the moment he showed that he was a lower riparian owner and that there had been no contract which precluded him from his rights as such.”

    Now, it seems to us that the declaration granted by the learned Subordinate Judge in the present case was virtually a statement of the legal consequences of non-registration under sec. 49 of the Registration Act of the lease-embodied in the compromise decree, and we are of the opinion that such a declaration is not contemplated by sec. 42 of the Specific Relief Act, and that the lower Appellate Court acted rightly in reversing the decree of the learned trial Court.

    This appeal accordingly fails and is dismissed with costs. The hearing-fee is assessed at two gold mohurs.

    Lodge, J.:— I agree.

    P.C

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    Comments

    Uday Chandra Paul v. B.H. Parmar
    (Jul 16, 1940)