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Lal Mohan Mahanty v. Onkar Mall Marwari
Factual and Procedural Background
This is a second appeal by the plaintiffs from a judgment of reversal passed by the learned District Judge of Cuttack. Plaintiffs 1 and 2 (nephew and relative) appealed. Raghunath, grandfather of plaintiff 1, was in possession of certain touzis (including Touzi No. 616). On Raghunath's death his interest devolved on plaintiff 1, who applied for mutation (mutation case No. 901/902 of 1926–1927). Defendant 2, Mani Dei (the widow and second wife of Raghunath), objected to the mutation.
The parties reached a compromise recorded in a document (Ex. 3) dated 12 March 1927. The compromise provided that Mani Dei would "hold and enjoy the said properties during her lifetime" for maintenance and "will not be competent to transfer the immovable property which is given to her." It also provided that the name of plaintiff 1 would be recorded in revenue records and that plaintiff 1 would meet the expenses of the marriage of Mani Dei's daughter.
After the compromise there was a partition among co‑sharers. About 5 acres out of the land given to Mani Dei were allotted to the plaintiffs (described in schedule 'ga'); subsequent partition between plaintiff 1 and plaintiff 2 allotted 3.08 acres to plaintiff 1 (schedule 'gha') and 1.96 acres to plaintiff 2. In 1936 Mani Dei executed a simple mortgage over the said 5 acres in favour of defendant 1, Onkar Mall Marwari, for Rs. 100. A decree was obtained on that mortgage and defendant 1 purchased the lands in execution on 20 February 1940.
The plaintiffs' case was that Mani Dei had only a personal right of enjoyment (a restricted right) and no power of alienation; they sought a declaration that she had no right to transfer the land, that the sale in execution be set aside, and a perpetual injunction restraining defendant 1 from taking possession.
The defence maintained that Mani Dei had power of alienation, that plaintiffs had not met the marriage expenses and therefore Mani Dei had to raise money by mortgaging the lands for legal necessity.
The trial Court (Munsif) decreed for the plaintiffs, holding Mani Dei had only a right to enjoy the usufruct for maintenance and no power of alienation. The District Judge reversed that decree: he held the compromise involved a transfer requiring registration; in absence of registration the document was inadmissible; Mani Dei had been in possession since March 1927 and, since the suit was in 1940 (over 12 years later), the District Judge found Mani Dei had perfected title by adverse possession and that title passed to defendant 1. The present appeal challenges that reversal.
Legal Issues Presented
- Whether the compromise petition (Ex. 3) operated as a transfer of immovable property or merely recorded a family arrangement/admission of restricted enjoyment by the widow.
- Whether a restriction on alienation contained in the compromise is hit by Section 10 of the Transfer of Property Act (i.e., whether the restriction is void and the condition repugnant).
- Whether the compromise petition required registration under the Registration Act (including consideration of Section 17(1)(b)).
- Whether possession by Mani Dei since 1927 constituted adverse possession sufficient to perfect title against the plaintiffs and their successors.
- Whether an unregistered document like the compromise petition can be considered for collateral purposes (to explain nature of possession) despite being inadmissible to prove a transfer.
Arguments of the Parties
Appellants' Arguments
- The appellants (plaintiffs) contended Mani Dei only had a personal right of enjoyment (usufruct) for maintenance and no power of alienation; thus the mortgage sale should be set aside and injunction granted.
- Before the present court the appellants argued the District Judge's finding that Mani Dei had perfected title by adverse possession was incorrect.
- The compromise petition recorded an arrangement under which the plaintiff's name was to be in revenue records, indicating the arrangement did not transfer absolute title to the widow.
Respondent's / Defence Arguments
- The defence/respondents contended that Mani Dei had the power of alienation; plaintiffs had failed to meet the daughter's marriage expenses which justified Mani Dei raising money by mortgaging the land.
- It was contended on behalf of the respondent that Section 10 of the Transfer of Property Act applied to the condition restraining alienation in the compromise petition; reliance was placed on an authority referenced as 143 I.C 65.3 to support that contention.
- The District Judge's position (respondent supporting) was that the compromise involved a transfer which required registration; because it was unregistered it was inadmissible and Mani Dei's long possession perfected title by adverse possession.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.I.R. 1919 P.C. 441 | Where a donor did not execute a registered gift-deed but allowed the donee to enter into possession and the donee remained in possession for over twelve years, the donee's title becomes perfected as against donor's heirs; an unregistered deed may be referred to to explain the nature/character of possession. | The court noted this authority to explain that, if the compromise were a gift imperfect for lack of registration, a 12‑year possession could perfect title; but the court also relied on the authority to permit considering Ex. 3 collaterally to explain the nature of the widow's possession and to conclude that the possession was not adverse. |
| 5 P.L.T. 5412 | Even if a document is inadmissible under the provisions of the Registration Act, it may be admitted for collateral purposes (e.g., to explain why a transferee was in possession or the nature of that possession). | The court applied this principle to justify considering the compromise petition (Ex. 3) for the collateral purpose of showing why the widow was in possession and concluded that such possession was not adverse. |
| 18 C.W.N. 9294 and A.I.R. 1939 P.C. 157 | Support for the proposition that an interest restricted to personal enjoyment (usufruct) is not alienable under Section 6 of the Transfer of Property Act. | The court cited these authorities to support its conclusion that the compromise created a restricted right of enjoyment (a personal/usufructuary interest) which is not transferable under Section 6, and therefore Section 10 did not invalidate the restriction. |
| 51 ALL. 796 (Full Bench, Allahabad) | Held that a binding family arrangement not involving transfer can be made orally; whether a subsequent writing records the arrangement formally (and thus requires registration) depends on facts and on whether the document is intended as a document of title. | The court relied on this Full Bench approach to reason that whether the compromise petition required registration depends on whether it was intended as a formal record or only to inform the Court of an agreement; the court found the present Ex. 3 to be an informing recital and not a document of title requiring registration. |
| I.L.R. 1937 ALL. 8177 I | Followed the Full Bench principles about family arrangements and whether writings recording them require registration. | The court referred to this later decision as following the Full Bench principles and used the same line of reasoning about the registration requirement being a question of fact. |
| A.I.R. 1926 ALL. 1738 | Where a bona fide dispute is composed and parties make a petition to the Court informing terms of agreement (each recognising antecedent title in the other), there is no necessity to register such a petition as it does not purport to create, assign or otherwise affect a right in immovable property under Section 17(1)(b) of the Registration Act; it is a recital informing the Court. | The court considered the facts similar and was "inclined to hold" that the compromise petition did not require registration because it merely amounted to an admission of rights by virtue of prior settlement and informed the Court of terms. |
| 143 I.C. 65.3 (as cited by respondent) | Referenced by the respondent to support the contention that Section 10 of the Transfer of Property Act invalidates conditions restraining alienation (as relied upon in argument). | The court recorded that reliance was placed on this authority by the respondent but held that Section 10 would apply only if the compromise involved a transfer (or created a life interest) with an absolutely repugnant condition prohibiting alienation; the court concluded the compromise did not have that character. |
Court's Reasoning and Analysis
The court proceeded through a sequence of focused legal analyses based strictly on the record and cited authorities:
- The court observed that the District Judge proceeded on the premise that the compromise of 1927 effected a transfer of property, but the District Judge did not determine the nature of that transfer (e.g., whether it was a gift, a life interest, or merely a family arrangement). The court found this omission critical.
- The court considered the possibility that, if the compromise were an unregistered gift, principles in A.I.R. 1919 P.C. 441 would mean that twelve years' possession could perfect the donee's title; further, an unregistered document may still be used collaterally to explain the nature of possession (citing 5 P.L.T. 5412). The court therefore examined Ex. 3 as a collateral document to discern the character of possession.
- Having examined Ex. 3, the court concluded the widow's possession was not adverse. The compromise explicitly allowed the widow to possess for her lifetime for maintenance and stated she was not competent to transfer the property. Such possession, where the possessor is permitted to enjoy the usufruct and is expressly restricted from alienating, is inconsistent with an assertion of adverse title against the plaintiffs.
- The court noted that adverse possession had not been pleaded by the defendants. Even if Ex. 3 were considered collaterally, its terms showed possession by the widow was permissive/restricted and not adverse; therefore the District Judge's finding of perfected title by adverse possession could not be sustained.
- The court proceeded further to construe Ex. 3 as a family arrangement rather than a transfer. The court addressed the respondent's contention that Section 10 of the Transfer of Property Act struck down the restriction on alienation: Section 10 would only operate if the compromise created a transfer or life interest coupled with an absolutely repugnant condition. The court held the compromise did not create such a transfer or life estate; instead it was an admission of a restricted interest limited to personal enjoyment (usufruct), which is not alienable under Section 6 of the Transfer of Property Act.
- On whether the compromise petition required registration even as a family arrangement, the court acknowledged difficulty and uncertainty in the law. The court explained (with reference to the Full Bench of Allahabad and subsequent decisions) that a family arrangement not involving transfer may be oral and that whether a subsequent writing requires registration depends on whether the writing was intended as a formal document of title (a declaration of right under Section 17(1)(b) of the Registration Act) — a question of fact.
- Considering the wording and context of Ex. 3 (including a recital that the dispute was settled by respectable persons and accepted by both parties, and that the property would be recorded in the name of the plaintiff in revenue records), the court was "inclined to hold" Ex. 3 did not require registration and merely amounted to an admission of rights by virtue of prior settlement and informed the Court of the terms.
- On this construction the court concluded the family arrangement was valid and binding: Mani Dei had a restricted right of enjoyment of the usufruct and no power of alienation; accordingly the District Judge's finding of perfected title in Mani Dei (and thus passing to defendant 1) was incorrect.
Holding and Implications
HOLDING: The appeal is allowed. The decree of the learned District Judge is set aside and the decree of the Munsif (trial Court) is restored. The appellants are entitled to costs throughout.
Implications:
- The direct effect is that the plaintiffs' relief as decreed by the trial Court is restored — the court accepted that Mani Dei had only a restricted personal/usufructuary right and no power of alienation, thereby undermining the basis for the mortgage sale held by defendant 1. (The opinion concludes by restoring the Munsif's decree in favour of the appellants.)
- The court held that the compromise petition was, on the facts, a family arrangement/ admission of rights rather than an alienable transfer; accordingly Section 10 of the Transfer of Property Act did not invalidate the restriction on alienation because the arrangement did not create an alienable estate with a repugnant condition.
- The court further held (on the facts) that the compromise petition did not require registration, as it was not intended as a formal document of title but rather to inform the Court of an antecedent settlement (citing relevant Allahabad authorities); however, the court acknowledged the question of registration for family arrangements can be fact‑specific and not entirely free from difficulty.
- No new broad legal precedent was declared by the court beyond applying existing authorities to the facts: the decision resolves the dispute between the parties by restoring the trial court's decree and awarding costs to the appellants.
Disposition recorded in the opinion: "10. Appeal allowed."
1. This is a second appeal by the plaintiffs from a judgment of reversal passed by the learned District Judge of Cuttack. The facts out of which the appeal has arisen are shortly stated below. Plaintiffs 1 and 2 are the appellants before me. They belong to the same family, plaintiff 1 being the nephew of plaintiff 2. One Raghunath was the grandfather of plaintiff 1. Defendant 2 Mani Dei, is the widow of Raghunath being his second wife. Touzi no. 616 and other touzis of mahal Mrutanga, etc., belonged to the plaintiffs and some other co-sharers. Plaintiff 1 lost his father when he was a minor. On death of the father of plaintiff 1, Raghunath, the grandfather of plaintiff 1, was in possession. On the death of Raghunath, his interest. In the said touzis devolved on plaintiff 1, who applied for mutation of his name in the revenue records. On this application a mutation case, No. 901/902 of 1926–1927, was started. Defendant 2, Mani Dei, objected to the mutation of the plaintiff's name. There was, however, a compromise, the terms of which are mentioned in a document which is Ex. 3 in the record. By the compromise it was settled that Mani Dei would get about 10 acres of nijchas lands, appertaining to touzi Nos. 616 and 619, for the maintenance of herself and her daughter till her lifetime. The compromise petition then stated as follows:
“The objector (Mani Dei) will hold and enjoy the said properties during her lifetime, but the objector will not be competent to transfer the immovable property which is given to her.”
2. It was further agreed that the name of plaintiff 1 would be recorded in the revenue records in respect of the property. Plaintiff 1 further agreed to bear the expenses of the marriage of the daughter of Mani Dei.
3. Subsequent to the above compromise, there was a partition amongst the plaintiffs and their cosharers of the mahal. About 5 acres out of the land given to Mani Dei for maintenance were allotted to the share of the plaintiffs, the rest having gone to the share of other cosharers. These 5 acres and odd have been described in schedule ‘ga’ of the plaint. There was again a partition as between plaintiff 1 and plaintiff 2 in respect of these 5 acres and odd, 3.08 acres described in schedule ‘gha’ of the plaint falling to the share of plaintiff 1 and 1.96 acres falling to the share of plaintiff 2. I had forgotten to mention before that the compromise petition was dated 12th March 1927. In 1936 Mani Dei executed a simple mortgage in favour of defendant 1, Onkar Mall Marwari, for a sum of Rs. 100 only, in respect of the said 5 acres and odd land. On the foot of this mortgage Onkar Mall Marwari obtained a decree against Mani Dei, and in execution thereof he purchased the said lands on 20th February 1940. The case of the plaintiffs was that the widow had only a personal right of enjoyment of the usufruct of the lands and that she had no power of alienation. The plaintiffs, therefore, asked for a declaration that Mani Dei had no right to transfer the land and that the sale of the land in execution of the mortgage decree be set aside. They further prayed for a permanent injunction against defendant 1, restraining him from taking possession of the disputed land.
4. The defence was that Mani Dei had the power of alienation; plaintiff 1 had agreed to meet the expenses of her daughter's marriage, but the plaintiffs had not met the expenses of the marriage, and, therefore, Mani Dei had to raise money by mortgaging the lands. The defence contended that Mani Dei could mortgage the lands for justifying legal necessity.
5. The trial Court gave a decree in favour of the plaintiffs, holding that Mani Dei had the right to enjoy only the usufruct of the lands for her maintenance till her death and that she had no power of alienation in respect of the property. The trial Court repelled the contention that the restriction on alienation was invalid in law, and the further contentions that the compromise created a widow's estate in Javour of Mani Dei or an absolute gift in her favour. The Court of appeal below rightly pointed out that there was no question of a widow's estate, inasmuch as Mani Dei did not inherit the property as a widow. The Court of appeal below found that the compromise involved a transfer of property from one person to another, and the compromise petition required registration; in the absence of registration the document was not admissible in evidence and no other evidence could be given as to the terms contained therein. Inasmuch as there was an admission in para. 4 of the-plaint that the widow was in possession since March 1927, and the suit was brought in 1940, that is, more than 12 years after, the learned District Judge came to the finding that the widow had perfected her title by adverse possession and that title would pass to her successor in interest, namely, defendant 1. It is on this finding of adverse possession that the learned District Judge has disposed of the appeal.
6. On behalf of the appellants it has been contended before me that the finding of the learned District Judge regarding title by adverse possession is incorrect. In my opinion, this contention is correct. The learned District Judge has proceeded on the footing that the compromise of 1927 effects a transfer of property from one person to another. He has not, however, come to any finding as to the nature of the transfer, nor has he considered the question if the compromise can be treated as a family arrangement which involves no transfer. Even if the compromise petition be considered as a transfer of property from one person to another, it was necessary for the learned District Judge to come to a finding on the nature of the transfer. If the transfer was of the nature of a gift, which was not effected by a registered deed, then the question of perfecting title by 12 years' possession would arise. As has been held in A.I.R 1919 P.C 441 Where the donor did not effect a registered gift-deed but allowed the donee to enter into possession of the gifted property, and the donee thus remained in possession for over twelve years, the title of the donee became perfected as against the donor's heirs. In the same case, it has been held that even if the document were not admissible to prove a gift, it may nevertheless be referred to as explaining the nature and character of the possession held by the donee. In 5 P.L.T 5412 it has been held that a document which is inadmissible in evidence for the purposes mentioned in Section 49 of the Registration Act, may nevertheless be admitted for a collateral purpose, as for example, to explain why a transferee, under a deed imperfect through lack of registration, was in possession, or to prove the nature of that possession. Therefore, the compromise petition (Ex. 3) even though it be accepted as an imperfect title deed for lack of registration may be considered for the collateral purpose of explaining the nature of the possession of the widow. If so considered, it is clear to me that the possession of the widow was in no sense adverse possession. The widow was allowed to possess the land during her lifetime for her maintenance, with no right of alienation. If the compromise creates only a life interest, or if it operates not as a transfer but as an admission that the widow has no right to alienate, and creates in her favour a restricted interest, which under Section 6 of the Transfer of Property Act, is not transferable then it can hardly be said that the widow has got an absolute title by twelve years' possession. In coming to his finding on the question of adverse possession the learned District Judge has not considered the document from these aspects. He has merely stated that the compromise involves a transfer of property without indicating the nature of the transfer, and has then come to the finding that the widow has perfected her title by adverse possession inasmuch as the compromise is not registered. I am of the view that the finding of the learned District Judge on the question of adverse possession cannot be supported. Adverse possession was not pleaded by the defendants; and even if the document (Ex. 3) is considered for the collateral purpose of showing the nature of the possession of the widow, then it is clear to me that, whether it be a family arrangement or a transfer, the possession which it gives is not adverse possession.
7. I am, however, prepared to go further, and hold that on a proper construction of the compromise petition (Ex. 3) it is nothing but a family arrangement which does not involve any transfer. On behalf of the respondent, it has been contended before me that Section 10 of the Transfer of Property Act, hits the condition restraining alienation contained in the compromise petition, and reliance has been placed on the case in 143 I.C 65.3 Section 10 of the Transfer of Property Act, would only apply if the compromise involves a transfer or creates a life interest for the widow, coupled with a repugnant condition which prohibits alienation absolutely. In the view which I take of the compromise petition, it does not involve any transfer at all. It is merely an admission of an interest of the widow in the property, the interest so admitted being a restricted interest, such as that of enjoyment of the usufruct only, which would not be alienable under Section 6 of the Transfer of Property Act. The compromise petition is to be read as a whole for its proper interpretation. It no doubt states that the widow, who was the objector in the mutation case, would become the rightful owner in possession of 10 acres of land. It further recites, however, that the widow will hold and enjoy the said property during her lifetime for her maintenance and that of her daughter, and that she will not be competent to transfer the property. Read as a whole, the ecru promise petition does Sot involve any transfer of property, nor does it create any life interest in favour of the widow, coupled with a repugnant condition prohibiting alienation absolutely. It merely operates as an admission that the widow has the restricted right of enjoying the usufruct of 10 acres of land during her lifetime and that she has no power of alienation. It is significant that in the compromise petition it is stated that the property will be recorded in the name of the plaintiff in the revenue record, though 10 acres are being given to the widow for the enjoyment of the usufruct thereof for the purpose of maintenance. In this view of the matter Section 10 of the Transfer of Property Act, will not apply, and the interest of the widow under the compromise petition is an interest restricted in its enjoyment to the owner personally within the meaning of Section 6 of the Transfer of Property Act, which interest will not be transferable: see in this connexion the cases in 18 C.W.N 9294 and A.I.R 1939 P.C 157.5
8. There is a further question which requires consideration. The question is if the compromise petition requires registration even as a family arrangement, I must say that this question is not entirely free from difficulty. A family arrangement not involving a transfer may be a settlement in which each party takes a share of, or interest in, family property by virtue of an independent title which is to that extent admitted by the other parties. Such an arrangement may, however, involve a declaration of right under Section 17(1)(b) of the Registration Act. Whether the family arrangement involves a declaration of right or not will depend on the facts of each particular case. If it involves a declaration of right, it will require registration. In a Full Bench decision of the Allahabad High Court in 51 ALL. 796 it has been laid down that a binding family arrangement, in which there is no exchange or other transfer of ownership, can be made orally: if such arrangement is followed by a writing containing a reference to it, then the question is whether thereby the terms of the arrangement have been “formally recorded in a document” with the purpose that they should be evidenced by that document, and that is a question of fact in each case to be determined upon a consideration of the nature and phraseology of the writing and the circumstances in which, and the purpose with which, it was written. If the reference to the family arrangement was merely for the purpose of informing the Court of the arrangement which is arrived at, the document would not require registration, and it can be used as a piece of evidence or as an admission of the family arrangement. If on the contrary the document is intended to be a formal record of the arrangement, in other words if it is intended as a document of title, it will require registration. The principles laid down in the aforesaid Full Bench decision were followed in the subsequent case in I.L.R 1937 ALL. 8177 I have already stated that the question whether the compromise petition requires registration or not even as a family arrangement is not entirely free from difficulty. There is a recital in the compromise petition that the dispute between the parties has been settled by respectable persons, which settlement has been accepted by both parties. The facts of the present case appear to me to be more or less similar to the case in A.I.R 1926 ALL. 1738 in which it has been held that where a bona fide dispute between the parties is composed, each party recognising an antecedent title in the other, and the parties make a petition to the Court informing the terms of the agreement, there is no necessity to have such a petition registered as it does not purport to create, assign, etc., any right in immovable property within the meaning of Section 17(1)(b) of the Registration Act; it is merely a recital of fact by which the Court is informed that the parties have come to an arrangement. I am, therefore, inclined to hold that the compromise petition in this case did not require registration, it merely amounted to an admission of the rights of the parties by virtue of a prior settlement, and informed the Court of the terms of the settlement.
9. The family arrangement arrived at between the parties was a vaild arrangement legally binding on the parties. The widow was given a restricted right of enjoyment of the usufruct, and she had no power of alienation. In this view of the matter, the appellants are entitled to succeed. The result, therefore, is that the appeal is allowed and the decree of the learned District Judge is set aside and that of the Munsif is restored. The appellants are entitled to costs throughout.
K.M/V.B
10. Appeal allowed.
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