Sheth Maneklal Mansukhbhai vs Messrs. Hormusji Jamshedji Ginwala and Sons
Rewritten Version Notice: This is a rewritten version of the original judgment.
Court: Supreme Court of India
Case Number: Appeal No. XXXVII of 1949
Decision Date: 21 March 1950
Coram: Mehr Chand Mahajan, Saiyid Fazal Ali, B.K. Mukherjea
In this case, the Supreme Court of India delivered its judgment on 21 March 1950. The opinion was written by Justice Mehr Chand Mahajan and the bench consisted of Justices Mehr Chand Mahajan, Saiyid Fazal Ali and B.K. Mukherjea. The petitioner was Sheth Maneklal Mansukhbhai and the respondents were Messrs Hormusji Jamshedji Ginwala and Sons. The judgment is reported in 1950 AIR 1 and 1950 SCR 75, and it is cited in later authorities such as RF 1977 SC2425 (5). The matter concerned the provisions of the Transfer of Property Act, 1882, particularly section 53-A, which deals with the doctrine of part performance.
The headnote summarizes the factual background. The predecessor-in-interest of the defendants desired to establish a factory on several plots of land that formed part of a Taluqdari estate administered under the Gujarat Taluqdars Act, 1888. He applied in writing to the Taluqdari Settlement Officer for a permanent lease of the plots. The Settlement Officer agreed to grant such a lease on certain conditions, subject to the approval of the Government, and he forwarded a letter to the Government stating the offer and his provisional acceptance pending that approval. By a resolution dated 5 September 1917, the Government gave its sanction to the proposed lease.
Following the sanction, the defendant’s predecessor was placed in possession of the plots. Although no formal lease deed was executed or registered, the Settlement Officer, and after the estate was released by the Government the agent of the taluqdar, together with the plaintiffs who subsequently became ijaradars, continued to receive the agreed rent up to the year 1939. In 1933 the plaintiffs instituted a suit for ejectment, claiming that the defendant was a mere trespasser because there was no registered lease deed.
The Supreme Court held that the correspondence between the defendant’s predecessor-in-title and the Settlement Officer, the letter sent by the Settlement Officer to the Government, and the Government’s resolution of 5 September 1917 together established that a written contract for lease had been formed on the terms specified in the Settlement Officer’s letter. The Court observed that the predecessor’s taking possession in furtherance of that contract and the plaintiffs’ acceptance of rent for several years amounted to part performance of the contract. Accordingly, section 53-A of the Transfer of Property Act applied, and the plaintiffs were not entitled to eject the defendant. The Court therefore reversed the decision of the Bombay High Court.
The appeal originated from the High Court of Judicature at Bombay, appeal number XXXVII of 1949. It challenged a judgment and decree of the Bombay High Court dated 9 March 1943, which had been rendered in Second Appeal No. 717 of 1940. That judgment varied the decree of the Assistant Judge, Ahmedabad, in Appeal No. 173 of 1936, which itself had reversed the decree of the Joint Sub-Judge, Ahmedabad, in Suit No. 830 of 1933.
Suit No. 830 of 1933 was represented for the appellant by R J Thakur, while the respondents were represented by Nanak Chand Pandit with Diwan Charanjit Lal assisting. The judgment was delivered on 21 March 1950 by Justice Mahajan. The present matter is an appeal against the judgment and decree of the High Court of Bombay dated 9 March 1943, which had been rendered in Second Appeal No. 717 of 1940. That judgment varied the decree of the Assistant Judge of Ahmedabad issued in Appeal No. 173 of 1936, which itself had reversed the decree of the Joint Sub-Judge of Ahmedabad in Suit No. 830 of 1933. The original suit, filed by the respondents’ firm in July 1933, sought ejectment to recover possession of survey numbers 222, 223, 225 and 226 situated in Rampura, Ahmedabad district, and also claimed mesne profits. Over the ensuing seventeen years the suit experienced a rather uneven course. The court observed that the parties who drafted the pleadings failed to understand properly the subject matter, and that the entire litigation was conducted in a careless and disorganized manner. Evidence that should have been produced at the outset was allowed only at a much later stage after the case was remanded, and the Assistant Judge finally determined the suit on fresh issues and with new material. The record, therefore, remained confused when the High Court finally decided the matter, and its judgment was described as unsatisfactory. The considerable delay in resolving a case that involved only a few straightforward issues was criticized as bringing the administration of justice into ridicule.
The property in dispute belonged to the Bhankoda talukdari estate, located in Viramgam taluka of Ahmedabad district. The estate was jointly owned by several talukdars in varying shares and comprised twelve villages, one of which was Rampura where the suit lands were situated. By Government Resolution No. 8170 dated 30 August 1912, the estate had been placed under Government management pursuant to section 28 of the Gujarat Talukdars Act (Bombay Act VI of 1888). The firm of Shah Manilal Maganlal and Bros., predecessors in interest of the appellant, intended to construct a ginning factory on survey numbers 228, 225 and 226 and therefore approached the Talukdari Settlement Officer for a permanent lease of those numbers. The officer agreed to grant such a lease subject to Government sanction. Consequently, by Resolution No. 10795 of 1917 dated 5 September 1917, the Government of Bombay granted the required sanction. Exhibit 181, a certified copy of a letter from the Chief Secretary to the Government addressed to the Commissioner and the Talukdari Settlement Officer, detailed the various steps taken to effect the transaction. On 9 December 1916, Shah Manilal Maganlal submitted a written application, signed by himself, to the Talukdari Settlement Officer offering to take a permanent lease of the aforementioned survey numbers for an annual rent of Rs .
In July 1917 the applicant offered to pay an annual rent of Rs 290 for the purpose of constructing a ginning factory. On 12 July 1917 the Talukdari Settlement Officer provisionally accepted this offer after examining objections raised by several talukdars concerning the grant of a lease. He then forwarded the papers to the Government together with the following recommendation: “As the petitioner was in urgent need to start operations during the current ginning season, I have, in anticipation of Government sanction, permitted him to enter upon the land and have the honour to approach you for sanction under section 27(A) of the Court of Wards Act, the provisions of which have been made applicable to Talukdari Estates by section 29(G) of the Gujarat Talukdars Act.” The conditions of the lease that had been agreed between the parties were annexed to this letter, and a copy of the offer was also transmitted to the Government. Exhibit 181 records the contents of the offer and the undertaking given by the lessee, and it contains internal evidence that the writings were signed by the proposer. In a signed communication the Settlement Officer formally accepted the offer and sent it for Government sanction. The officer also appears to have notified the lessee of his acceptance and assured him that a lease would be granted if the Government provided its sanction. At that time the survey numbers concerned were occupied by tenants; the parties agreed that the lessee would acquire possession after reaching private settlements with those tenants. They further agreed that, should private settlement fail, the Settlement Officer would issue ejectment notices against the tenants. On 20 July 1917 the Commissioner forwarded the documentation to the Government with his recommendations, and on 5 September 1917 the Government sanctioned the arrangement that the Settlement Officer had made with Shah Manilal Maganlal. The sanction order, signed by the Chief Secretary to the Government, bore an endorsement confirming that it had been sent to the relevant officers. Consequently, a binding agreement to lease the surveyed lands was created between the Settlement Officer and Shah Manilal Maganlal, and this agreement received the required Government sanction.
Although a draft of a formal deed of lease was prepared, the parties never executed or registered such a deed for reasons that need not be detailed here. Shortly after the agreement the lessee entered into possession of the surveyed lands and erected a ginning and pressing factory, a bungalow, engine rooms and other structures on the site. He tendered the agreed rent of Rs 290 to the Talukdari Settlement Officer, who received the payment. The officer continued to receive the rent for approximately two years, after which the estate was re-leased from Government management and placed under the administration of the talukdars. The manager appointed by the talukdars thereafter continued to collect rent from the lessee in accordance with the arrangement previously settled by the Settlement Officer. On 4 May 1924 a possessory mortgage of
The ginning factory together with all of its ancillary buildings was mortgaged by Shah Manilal Maganlal for a sum of Rs 1,40,000 in favour of the defendant, and the schedule of the mortgage also listed certain additional property as part of the mortgaged estate. During the years 1924-1925 the two parties to the present suit—namely the defendant and the plaintiffs—acquired their respective rights in the mortgaged property. The defendant entered the transaction as the mortgagee as described above, whereas the plaintiffs entered as ijaradar and as an assignee of particular mortgage rights. From that time the plaintiffs had been receiving the rental income in accordance with the grant made by the Talukdari Settlement Officer. In 1933 the appellant purchased at a court auction the equity of redemption in the suit property, thereby acquiring all of the rights that had previously belonged to Manilal Maganlal in that estate; the value of those rights has subsequently been estimated at roughly Rs 38,000. Also in 1933 the plaintiffs discovered that the defendant possessed no registered lease in his favour, and consequently, under the law, he could not claim the status of a permanent tenant with respect to the disputed survey numbers. On that basis the plaintiffs instituted the present suit for the ejectment of the defendant. The second and third paragraphs of the plaint admitted that, during correspondence with the Government of Bombay, a lease had been negotiated between the firm of Shah Manilal Maganlal and the Talukdari Settlement Officer for the disputed survey numbers, that lease being for a period of fifty years at an annual rent of Rs 290. However, the plaint also asserted that because Manilal Maganlal had not executed a formal registered lease, the parties occupied the premises as trespassers. The fourth paragraph of the plaint further challenged the authority of the Talukdari Settlement Officer to grant such a lease. In the eighth paragraph it was claimed that the plaintiffs had received lease payments up to 31 July 1932 and that no notice was required to be served, describing the defendant’s position as that of a trespasser; the plaint nevertheless alleged that a notice had been served on 25 December 1930. The defence advanced several grounds, inter alia contending that the plaintiffs had no right to sue for ejectment because they were not landlords, having not obtained any direct right in the land itself nor having acquired the complete title through an assignment of the entire interest of the talukdars in the disputed survey numbers. The defence further pleaded that the defendant was a permanent tenant of the survey numbers and that the plaintiffs’ own conduct barred them from seeking ejectment. The trial Judge decreed in favour of the defendant, finding that the absence of a written lease meant that no lease could be deemed to exist. The judgment also observed that no evidence had been produced to demonstrate that the Settlement Officer, with the Government’s approval, had sanctioned a permanent lease over survey numbers 223 and 225.
In the judgment, the Court noted that the doctrine of equitable part performance could not be applied to the case involving Shah Manilal Maganlal. Although no specific question on that doctrine was formally raised, the matter appears to have been argued before the trial Judge on the basis of facts that were either found or admitted. An attempt was made to obtain a review of the decision on the ground that fresh materials had been discovered, but that effort was unsuccessful. The dispute was then taken to the Court of Appeal, where the appellant contended in ground number three that the Subordinate Judge had erred by not taking into account the position created by the equitable rule of law embodied in section 53-A of the Transfer of Property Act. On 30 July 1938, the appellate court issued an order of remand under Order XLI, Rule 25, and directed that a report be prepared on two specific issues: first, whether the plaintiff was a mortgagee in occupation of survey numbers 222, 223, 225 and 226; and second, whether the suit was defective because of the non-joinder of certain parties. The trial Judge complied with the remand and reported on the matters raised against the plaintiffs. During the remand proceedings, the Judge admitted into evidence a number of documents that had been produced after the remand, including Exhibit 181. The appellant objected, arguing that those post-remand documents were irrelevant to the issues specified in the remand and therefore should not have been admitted; the Court overruled that objection. On 27 April 1940, the Assistant Judge allowed the appeal, holding that the plaintiffs had failed to establish a right to maintain the suit either as ijaradars or as assignees of mortgage rights. In paragraph 21 of his judgment, the Judge explained that Exhibit 181 demonstrated that the terms of the lease had been reduced to writing even though no formal lease had been executed. He stated that section 53-A of the Transfer of Property Act provided a complete answer to the question of whether the lease bound the plaintiff. The Exhibit showed that the Talukdari Settlement Officer, with the Government’s sanction, had contracted to lease the lands, and that the written instrument bore the Government’s signature, allowing the lease terms to be clearly ascertained. It was not denied that the defendant’s predecessor-in-title had been placed in possession of the property in performance of that contract, and that both the Settlement Officer and the plaintiff had accepted rent fixed by the contract, indicating that the defendant’s possession resulted from part performance of the lease. Although there was no registered lease, the conditions of section 53-A were fully satisfied, and consequently the plaintiff could not eject the defendant on the ground of the absence of a registered lease. The Judge further observed that section 53-A embodied the doctrine of estoppel, and that a plea based on that doctrine had been taken.
In the earlier stage of the proceedings, the trial judge gave effect to the defendant’s claim that the plaintiffs were estopped by their own conduct from demanding possession; consequently, the judge held that no separate issue needed to be decided on that point. The plaintiffs, who were unsuccessful before the Assistant Judge, filed a second appeal to the High Court of Bombay. The High Court allowed the appeal, altered the Assistant Judge’s decree, and ordered that the plaintiffs’ suit should proceed with respect to survey numbers 223 and 225 while dismissing the suit with respect to survey numbers 222 and 226. Regarding the plaintiffs’ entitlement to maintain the suit, the High Court explained that, even if it were necessary to consider the plaintiffs’ status as ijaradar and as an assignee of the mortgagees, the plaintiffs had nevertheless satisfied the requirement to sue. The Court observed that the defendant himself had admitted paying rent to the plaintiffs for three of the fields in dispute—survey numbers 223, 225 and 226—and that the rent was paid for the full hundred Dakdas, not merely the sixty-four Dakdas that the defendant claimed. The Court further noted that, from the time the plaintiffs entered the picture, the defendant had treated the plaintiffs as the landlord for those three survey areas, and therefore the defendant could not now deny the plaintiffs’ right to bring an ejectment action. Later in the judgment, the Court added that, irrespective of the earlier findings, Ginwalla, who acted as the manager of the plaintiff firm, would be entitled to continue the present suit in the capacity of receiver.
The High Court then turned to the second issue, namely whether a written contract under section 53-A of the Transfer of Property Act existed. The Court held that it was unnecessary to decide whether a signed contract by the transferor, if it existed, would fall within section 53-A, because the correspondence summarised in the Government Resolution could not be regarded as proof of a contract, and the terms of any such contract could not be deduced from the correspondence with reasonable certainty. Accordingly, the Court concluded that the Government Resolution relied upon by the defendant did not constitute the writing required by section 53-A, and that the defendant possessed no legal basis to claim ownership of the land either as a permanent lessee or for a fixed term. The appeal therefore raised two principal questions: first, whether the plaintiff firm had established its title to maintain the present ejectment suit against the defendant; and second, whether the defendant could invoke the provisions of section 53-A of the Transfer of Property Act. The question of whether the suit could be maintained without a proper notice was raised before the High Court, but permission to argue that point was refused because the issue had not been raised in any of the lower courts.
In this appeal counsel for both parties presented extensive arguments before the Court, but the Court found it unnecessary to consider every point that was raised. The Court held that the Assistant Judge had correctly entertained the plea that relied on section 53-A of the Transfer of Property Act and that there were no substantial reasons to set aside the decision of the lower court in the second appeal. Section 53-A, which was inserted into the Transfer of Property Act in 1929, states that when a person contracts in writing, signed by him or his agent, to transfer any immovable property for consideration, and when the terms of the transfer can be ascertained with reasonable certainty from that writing, certain consequences follow. If the transferee, in part-performance of the contract, has taken possession of the property or any part thereof, has performed acts in furtherance of the contract, and has performed or is willing to perform his part of the agreement, then, notwithstanding that the contract is required to be registered but has not been registered, the transferor or any person claiming under the transferor shall be barred from enforcing any right against the transferee or those claiming under the transferee, except for rights expressly provided in the terms of the contract. This provision represents a partial incorporation into Indian statutory law of the English doctrine of part-performance. It supplies a statutory defence to any person who does not possess a registered title deed, allowing that person to retain possession if he can demonstrate a written and signed contract in his favour together with some act of part-performance of that contract. Moreover, the legislature has recognized that in lease cases the equity of part performance operates as an active equity, similar to the rule in English law, and that it is sufficient to support an independent action by the plaintiff, as reflected in section 27-A of the Specific Relief Act.
To ascertain whether the defendant in the present matter satisfied the conditions of section 53-A, the Court must find that the Talukdari Settlement Officer entered into a written agreement, signed by the Officer, to grant a lease of the surveyed numbers that are the subject of the suit to Manilal Maganlal, and that the terms of that tenancy can be ascertained with reasonable certainty from the writing. The Court must also be satisfied that the transferee actually took possession of the property or performed acts in furtherance of the lease agreement. Although section 53-A applies only to contracts executed after 1 April 1930 and therefore does not apply prospectively to the contract at issue, there can be no doubt that the defence under section 53-A is available to a person who holds a lease agreement even though no lease deed has been executed and registered. Consequently, the defence under the statutory provision can be invoked by a person who possesses an agreement of lease in his favour, despite the absence of a formally executed and registered lease deed.
The Court found that the defendant had satisfied both requirements necessary to bring the statutory provision within the scope of the present dispute. It held that the High Court had erred in concluding that the correspondence reproduced as Exhibit 181 could not be admitted as proof of the lease contract and that the contract’s terms could not be reasonably inferred from that document. While the Court acknowledged that Exhibit 181 was only secondary evidence of the lease agreement, it also emphasized that the document was a highly reliable piece of secondary evidence because it originated from official government records. The Exhibit demonstrated that a written acceptance had been issued, through which the Talukdari Settlement Officer had effected a contract to transfer the surveyed lands that form the subject of the suit by way of lease to Manilal Maganlal. The offer that preceded this acceptance was likewise a written instrument bearing the signature of the offeror, and the Government Resolution that rendered the agreement binding was likewise a written document signed by a competent authority.
The Court observed that no objection could be sustained regarding the admission of secondary evidence, since the primary evidence was in the possession of either the plaintiff or of the talukdars, who were the predecessors in interest, and despite a statutory notice that primary evidence had not been produced. The Court referred to the plaintiff’s testimony given under oath, in which the plaintiff stated, “I must have read the correspondence with T.S.O. since it is so recited in the para. 2 of the plaint. I cannot say whether that correspondence is in my office or with the talukdars. I cannot say without that correspondence as to as Lalliti and hence the talukdars are not entitled to any income for it. I also cannot say without that correspondence that the rents of survey Nos. 225 and 223 were fixed at Rs. 135 and Rs. 115 respectively and that Rs. 45 were to be taken by way of sugar…”. In another portion of the same testimony the plaintiff admitted that the talukdars had obtained the records pertaining to the period preceding his administration. The Court inferred that the original documents had been returned to the talukdars after the discharge of the Talukdari Settlement Officer, and that they were thereafter in the possession or control of the plaintiff or his predecessors in interest, yet remained unproduced despite the notice. Paragraph 2 of the plaint clearly set out that there existed correspondence between the Talukdari Settlement Officer and the defendant’s predecessor in interest, under which a lease had been negotiated. Consequently, the plaintiff’s knowledge of this correspondence and its contents was established on a prima facie basis, leading to the inference that he had retained the documents deliberately. The Court noted that without having examined the correspondence, the factual assertions recited in paragraph 2 of the plaint could not have been included in the pleading. Having determined that Exhibit 181 constituted admissible secondary evidence of the lease agreement, the Court proceeded to consider the ramifications of that finding.
In the present case the Court observed that the lease was created by a written offer and a written acceptance, each signed by the parties concerned, namely the Talukdari Settlement Officer and the predecessor in interest of the defendant. The written sanction of the Government, also signed by the officer, formed part of the same agreement. From the language of the document, the Court held that the essential terms of the contract could be fairly inferred. The clause that attracted the Court’s attention related to the character of the tenancy. The document plainly stated that the lease was intended to be permanent and that the rental terms could be revised only after a period of fifty years. The rent payable was expressed unambiguously as Rs. 290 per annum. It was not denied that the lessee obtained possession after the agreement had been concluded. The defendant asserted that possession had been taken before the Government’s sanction was obtained in September 1917. The Court found no proof of this claim beyond a mere statement in the Talukdari Settlement Officer’s letter that the officer had allowed the defendant to enter the land in anticipation of the sanction. The Court noted that possession would have required either an arrangement with the tenants or a notice to them, and that the short interval between mid-July and early September made such a sequence implausible. Moreover, the Court pointed out that the factory could not have been constructed before the Government’s sanction was received.
The Court further explained that the lessee had taken possession as part-performance of the agreement and had offered and paid the agreed rent, not only to the Talukdari Settlement Officer but also to all subsequent managers of the talukdars’ interest in the disputed survey numbers. After entering possession, the original lessee had mortgaged the property in favour of the defendant. The defendant, in turn, had advanced a substantial sum secured by the property to the lessee, and the equity of redemption was later sold at an auction. Both the defendant and his predecessor in interest had been ready to fulfil their contractual obligations, and, according to the Court, they had in fact performed the entire contract. What remained, the Court said, was the execution of a formal lease deed by the lessor in favour of the lessee and the registration of that deed. The plaintiff, in paragraph 6 of the plaint, unambiguously admitted that he had received the lease amount up to 31 July 1932 with respect to the disputed survey numbers. The Court found it difficult to conceive what lease the plaintiff referred to in the absence of a registered lease deed, emphasizing that the reference could only be to the written agreement signed by the Talukdari Settlement Officer, which had already been acted upon in the subsequent transactions.
The phrase could refer only to a lease agreement that was prepared in writing and signed by the Talukdari Settlement Officer. All of the subsequent actions described earlier were undertaken in order to give effect to that written lease agreement. It may also be observed that a lease agreement which creates a present demesne but remains unregistered is admissible as evidence of part performance under Section 49 of the Indian Registration Act. In the present case, Exhibit 181 serves as secondary evidence of the existence of that unregistered lease agreement. A formal, registered lease deed is not required to invoke the protection of Section 53A of the Transfer of Property Act. What Section 53A requires is merely a written agreement signed by the transferor, which may be established from the evidence. The correspondence contained in Exhibit 181 fully demonstrates that such a written agreement was in fact in place. Accordingly, the Court is of the view that the learned Assistant Judge correctly dismissed the plaintiff’s suit. The Court further holds that the High Court erred in disturbing that dismissal when hearing the second appeal. Consequently, the appeal is allowed, the Assistant Judge’s decision is restored, and the judgment of the High Court is set aside. Given the particular circumstances, the Court will not make any order as to the award of costs. The defendant was at fault for failing to produce the complete documentary record at the appropriate stage of the proceedings. Nevertheless, the defendant was permitted to rely on the defence provided by Section 53A because Exhibit 181 was admitted into evidence after remand. Although the exhibit had not been properly admitted at that stage, the High Court neither rejected it nor could the present Court reject it. Accordingly, each party is ordered to bear its own costs incurred in the litigation without any cost shifting. In sum, the appeal is allowed, confirming the earlier dismissal of the suit. The appellant’s agent was S.P. Varma, while the respondent’s agent was Ganpat Rai.