Ariyaputhira Padayachi And Ors. v. Muthukumarasami And Ors.

1. I think the transaction alleged in this case to have taken place in 1892, may properly be held to be an exchange of property within the meaning of Section 118 of the Transfer of Property Act, if it is not a sale. By it the mortgagee gave up his right to possession in part of the land mortgaged and the mortgage money due to him and received the equity of redemption in another part of the land. Even if this transaction was made by way of a compromise of disputes, it is not suggested that it amounted merely to acknowledgment or adj ustment of existing rights and the operations amounted, I think, to transfer of ownership in immoveable property. The arrangement was, therefore, invalid for want cf a registered instrument and could not affect the title.

2. It is, however, contended that it may be proved as showing the intention of the parties to discharge this mortgage at that time and so, as showing change in the nature of mortgagee's possession after the date of the arrangement, so as to make it adverse to the mortgagor. The intention to discharge the mortgage involves the intention to make certain transfers and it is impossible to say that if those transfers failed both parties nevertheless intended to discharge the mortgage. The mortgagor, therefore, had 60 years for his suit under Article 148 of the 2nd Schedule of the Limitation Act and he has come within that time.

3. The appeal therefore fails and is dismissed with costs.

Sadasiva Aiyar, J.

4. I entirely agree in the conclusion of my learned brother and in the reasons given by him for the said conclusion. But out of respect for the strenuous arguments advanced with great acuteness by the appellant's learned Vakil, I have thought it not improper to pronounce a judgment in my own words.

5. The facts and pleadings necessary to understand the contentions on both sides are shortly as follows:--Plaintiff sues for redemption of the plaint A schedule lands alone though both A and B schedule lands were usufructuarily mortgaged in 1885 by a registered instrument for Rs. 380-8-0. The plaintiff's allegation is that the B schedule lands were redeemed in 1893 by a payment of Rs. 203 and hence only A schedule land remained to be redeemed on payment of the balance of Rs 180-8-0. The contesting defendants (who represent the original mortgagee) pleaded (a) that the A schedule properties were "orally sold "to the mortgagee in consideration of Rs 1600 due to the mortgagee under the mortgage document of 1885 and some other documents (the written statement itself using the word "sold "); (b) that thus the mortgage document of 1885 was discharged and the mortgagee became full owner of the A. Schedule properties by the oral sale, while the mortgagor got back the B. Schedule property free of the mortgage charge and (c) that as the mortgagee and his assignees have been enjoying the A. Schedule lands as owners by adverse possession from 1892 for more than 12 years before suit, they have got a good title by prescription under Article 144 of the second schedule of the Limitation Act.

6. The lower appellate court held that the mortgage contract created by a registeted document of 1885 could not be rescinded by the alleged oral agreement or sale of 1892 and that under Section 92 of the Indian Evidence Act, oral evidence was inadmissible to prove any such agreement. On this ground, the lower appellate court confirmed the Munsif's decree, allowing in plaintiff's favour the. redemption of the A schedule lands. The defendants No. 2, 3 and 4 are the special appellants before us.

7. The contentions of the appellamt's learned vakil were as follows:--(a) The oral sale of 1893 in respect of the A schedule lands set up by the appellants does not come under the definition of "sale" or "exchange" in the Transfer of Property Act. It is a peculiar "transfer" of property not covered by the Transfer of Property Act, Section 54 and such a transfer could be effected by oral agreement and does not, require a written registered instrument to effect it, though the consideration for such a transfer and the value of the transferred property (roughly) have been Rs. 1600. (b) Even if the oral sale of 1892 is invalid to transfer the title to the A schedule properties to the mortgagee, it operated as a discharge of the mortgage debt of 1885 charged on both A and B schedule properties. Hence the mortgagee's possession of the A schedule properties ceased from 1892 to be the possession of a mortgagee. and became the possession of a trespasser; more than 12 years' possession before suit as trespasser has conferred full title as owner on the mortgagee and his assigns, (c) Oral evidence can be given, notwithstanding Section 92 of the Evidence Act, to prove that the obligation of the mortgagor to pay money under the mortgage has been discharged; such oral evidence need not be restricted to the evidence of the payment of money or its equivalent in moveables or choses in action or other personal property. Oral evidence can be given of an invalid sale, (invalid for want of a registered written instrument evidencing it) and such invalid sale could validly operate as a discharge of the mortgage deed, though ineffectual to transfer title.

8. As regards contention (a), I think it very improbable that the legislature, when enacting by the Transfer of Property Act, that a registered instrument is indispensable in the case of a transfer of land by sale (section 54) transfer of land by exchanges (section 118), transfer of land by gift (section 123), transfer of interests in land by way of lease (section 109) and transfer of interests in land by way of mortgage (section 59), where the interest transferred in any of these modes is substantial interest could have intended to exclude any transfers by act of parties of an interest in immoveable property of Rs. 100 in value, from the necessity of being evidenced by a registered instrument, or could have intended to allow such transfer to be effected by oral agreement or by other than a registered instrument. I have very little doubt that all such transfers inter vivos were intended to be included in the one, or other of the transactions coming under the heads of "sale" (Chapter III), "mortgage "(Chapter IV), "lease "(Chapter V), "Exchange" (Chapter VI) and "gifts "(Chapter (VII). Any "transfer" made in the way of creation of trusts is provided for, in the Trusts Act, Section 5 of which says, "No trust in relation to immoveable property is valid unless declared by a non-testamentary instrument in writing...registered." Section 9 of Act IV of 1882 allowing "transfer of property" without writing except where a writing is expressly required by law does not weaken to any appreciable degree the patent conclusion derivable fro;n a study of the Transfer of Property Act as a whole, that the legislature was very anxious that all important transfers of landed property and even transfers of choses in action--(Section 130) and transfers of intangible rights--(Section 54) should be evidenced by registered instruments so as to prevent litigants from Jetting in oral evidence as to alleged transfers about the truth or falsehood of which on oral evidence it is almost impossible for courts to come to a satisfactory conclusion in most cases.

9. So far as transfers of land by conveyance (that is, excluding transfers by mortgages and leases) are concerned I think, that if they are not settlements or declarations of trusts they were intended by the Legislature to come within one of the headings "sale" "exchange" or "gift "in the Transfer of Property Act. "Sale " is defined in Section 54 as a transfer of ownership in exchange for a price paid or promised and partly paid and partly promised, etc. The appellants' vakil ingeniously argued that "price "means tangible money in current coin, it may be current notes and does not mean any other valuable consideration. Thus according to this contention if I sell my land to another in satisfaction of Rs. 300 which I owe to him on a pro-note, the transaction is not a "sale " within the definition of the Transfer of Property Act, because I did riot receive nor was I promised in future any current coin as "price." Of course in ordinary parlance it is undoubtedly a "sale "and in this very case the appellants in their statements talked of the oral sale of 1893 in consideration of moneys not paid or promised at the time of sale bub moneys due prior on debts. However, I find in Bouvier's Law Dictionary that the word "price "signifies that," it consists in money to be paid down or at a future time; for if it be anything else, it will no longer be a. price, not the contract of sale but exchange or barter "and Shephard J. in his commentary on the Transfer of Property Act, says : "Price includes money only." The startling result of this technical view is that many so-colled sales of land where the consideration is the satisfaction of old debts due to the vendee as a creditor are not 'sales' at all under the Transfer of Property Act. Pushing the matter furth;r, suppose the purchaser han,ds over Government promissory note or a cheque on a Government bank, or on the bank in which both parties have invested their money, or currency notes instead of money. Can it be said he does not pay 'price' for his purchase? I do not think that such was the intention of the Legislature by the mere use of the word 'price.' If the price is fixed in the conveyance in current coin, I think, that the words 'price paid' will cover cases where the vendor's claim for the receipt of the price is satisfied by giving him what he accepts as tantamount to such payment. For instance, if he says in effect, "Here I owe you three hundred rupees under pro-note and you now owe me three hnndred rupees as the price of the land I sell. Why should we go through the farce of your paying me Rs. 300, in current coin for the purchase money and my handing it back to you to repay your promissory note debt? We shall take it that both processes have taken place. I think that in such case we must take it that the 'price' was paid and the transaction is a 'sale' though no coins were actually paid by the purchaser. If two persons mutually exchange two things (neither of which is 'money only'), it may be an exchange or barter and not a sale. But if they mutually fix the values of the exchanged thing in current coin and exchange them as of equal value, I think they might be held to effect 'sales' and to pay 'prices' and not merely to effect an exchange or barter.

10. Even if I am wrong in holding that a conveyance of land in consideration of the moneys already due bo the vendee by the vendor does come under the definition of 'sale' in Section 54 of Act IV of 1882, I think such transactions ought to be brought under the definition of 'exchange' under Section 118 of Act IV of 1882, which makes all the provisions as to the mode of effecting transfers of land by sale applicable to transfers of land by exchanges also. "Exchange" according to the definition in Section 118, is a mutual transfer of ownership of two things neither of which is 'money only.' It seems to me that if a conveyance of land for a debt due by the vendor to the vendee is not a 'sale', it is clearly an 'exchange' as the debtor (vendor) transfers his ownership inland (which is not 'money' and a fortiori not money only) while the vendee transfers the ownership in his chose in action (the debt due by the vendor) to the debtor (vendor)(so as to merge and extinguish the debt, the debtor and creditor becoming the same individual by the transfer of the debt to the debtor himself): Here also, the chose in action so transferred, in its turn, is not 'money only.' It is argued that the vendee creditor does not transfer his rights as creditor to the vendor-debtor but only treats the debt as discharged. This seems to me to be merely a play upon words, for the debt is relinquished in favour of the debtor and the substance of the transaction is a transfer of, the debt to debtor. In fact, where a testator relinquishes, by his will, a debt in favour of the debtor, it is appropriately styled a gift, by way of legacy of the debt to the debtor and where a mortgagee relinquishes his mortgage debt he frequently does it by executing a reconveyance of the mortgage interests created under the mortgage deed to the mortgagor.

11. If such transfer of land do not come under either the heads 'sale 'or ' exchange 'the extraordinary result would be that a conveyance of land worth even a lakh of rupees can be legally effected by oral agreement. If the purchaser lends the money a few days before the oral conveyance and relinquishes his debt a few days afterwards as consideration for the oral conveyance, I refuse to believe that such a result could have ever been dreamt by the legislature. I have no doubt that all conveyances of ownership right in lands were intended to be brought under 'sales' or (gifts) or 'exchanges' and that a conveyance for a lakh of rupees due on a pro-note to the vendee was not intended to be excluded from the necessity of having evidence by a registered instrument.

12. Reliance is placed by the appellants' learned vakil on a case decided by this High Court but not reported in the authorised reports. It is found in Thiruvengadachariar v. Ranganatha Aiyangar (1903) 13 M.L.J. 500 where it was held that when two brothers orally gave their lands to their sister in satisfaction of some claim of hers against them, 'the transaction was not a gift nor a sale nor an exchange under the Transfer of Property Act.' With greatest respect, I am clear in my mind that it was either a sale, or mutual 'exchange' of, two things neither of which was 'money only' and I am therefore not prepared to follow this case. I know where a compromise is not intended to create or effect newly a transfer of title but is only an acknowledgment of existing rights in lands, it is not a sale or exchange Krishna Tanhaji v. Aba Shetty Patil (1909) I.L.R. 34 B. 139 and need not comply with the provision of Section 5 4 of Act IV. of 1882 in order to be treated as valid. But neither the present case nor Thiruvengadachariar v. Ranganatha Aiyangari is such a case of compromise. I therefore overrule the appellants' contention that a registered writing was not necessary to validate the alleged sale of 1892. I might here be permitted to express the wish that the British Indian Legislature would pass an enactment making a registered writing indispensable for the validity of all settlements, partition agreements and wills and authorities to adopt throughout British India, making very few exceptions in special cases (such as 'soldiers' and 'sailors wills'); so that the flood of intricate and uncertain litigations on such questions might be brought within bounds and the perjury in connection with wills executed out of the Presidency towns and with partitions and adoptions might be put an end to, to some extent.

13. The next contention of the appellant's vakil based on the Limitation Act is not sustainable as, if the original mortgagee continued to hold possession as mortgagee owing to the alleged sale of 1893 being invalid and ineffective to convey to him the ownership in the equity of redemption in the A schedule properties, he cannot by merely asserting possession as owner under the invalid sale convert his possession as mortgagee into possession as owner, even granting that the mortgagor k lew and acquiesced in his assertion. The cases Byari v. Puttanna (1890) I. L R. 14 M. 38 Ramunni v. Kerala Varma Valid Raja (1891) I.L.R. 15 M. 166 Bhagvant Govind v. Kondi (1889) I.L.R. 14 B. 279 Khiraj Mal v. Daim 1904) I.L.R. 32 C. 296 (P.C.) clearly lay down that Article 144 cannot be invoked in favour of the mortgagee if the mortgagor is not barred by Article 148 from redeeming and recovering possession of the mortgaged property.

14. The last contention about the admissibility of oral evidence to prove the alleged discharge of the mortgage of 1885 might be disposed of shortly. A mortgage might, even if created by a registered instrument, be proved to have been extinguished by letting in admissible evidence (including oral evidence) of payment of the mortgage amount or by letting in admissible evidence of any other transaction which operates as a mode of payment Ramawatar v. Tulshi Prosad (1911) 14 C.L.J. 517. It has been similarly held in Kattika Bapanamma v. Kattika Kistnamma (1906) I.L.R. 20 M. 231 that while a subsequent oral agreement to modify the terms of a registered maintenance deed cannot be proved, the fact that in particular years, the obligee was in possession of certain lands of the obligor and paid herself the maintenance amount out of the profits of the lands can be proved. (See also Karampalli Unnikurup v. Thekhu Vittil Muthorakutti (1902) I.L.R. 26 M, 195 and Subbarow v. Venkatanarasimham (1902) I.L.R. 27 M. 368 Here the defendants do not seek to prove that by the payment of any money or by the receipt by the mortgagee of profits of other lands of the mortgagor, the claim of the mortgagee was paid up and thus the mortgage was extinguished, but they wished to prove an invalid oral conveyance (of which evidence is legally inadmissible) of the equity of redemption in a portion of the mortgaged property as having had the effect of the payment of the mortgage money. Oral evidence to prove a conveyance as equivalent to payment of money has not been allowed in any of the cases cited and could not be allowed. Receipt of mesne profits by possession of lands and receipt of moneys can be proved by oral evidence but not an oral sale of lands worth more than Rs 100 nor can such oral sale be taken as equivalent to the payment of the value of the lands invalidly sold.

15. In the result the second appeal fails and is dismissed with costs.