dedol-hf/india-case-legal-rag huggingface dataset:
then, notwithstanding that the contract, though required
to be registered, has not been registered  ...... the trans-
feror  or  any person claiming under him shall  be  debarred
from  enforcing against the transferee and persons  claiming
under him any right in respect of the property of which  the
transferee has taken or continued in possession, other  than
a   right   expressly   provided  by  the   terms   of   the
contract  ......  ".
    The section  is  a partial   importation   in the  stat-
ute law of  India  of the English  doctrine of part-perform-
ance.  It furnishes a statutory defence to a person who  has
no. registered  title   deed in his favour to maintain  his-
possession if he can prove a written and signed contract  in
his  favour and some action on his part in  part-performance
of  that contract.  In 'order to find whether the  defendant
in the present case has satisfied the conditions of the
84
section, it has to be held proved that the Talukdari Settle-
ment  Officer contracted to give a lease of the survey  num-
bers in suit to Manilal Maganlal by a writing signed by  him
and  that from this writing the terms of the tenancy can  be
ascertained with reasonable certainty.  It has further to be
held established that .the transferee took possession of the
property or did any acts in furtherance of the contract.  It
may be mentioned that in cases of lease the legislature  has
recognized that the equity of part performance is an  active
equity  as  in English law and is sufficient to  support  an
independent  action by the plaintiff. (Vide S. 27-A  of  the
Specific  Relief Act). This section however applies to  con-
tracts  executed after 1st April, 1930, and has no  applica-
tion  in  the present case; but there can be no  mariner  of
doubt  that the defence under Section    53-A  is  available
to  a  person who has an agreement of lease  in  his  favour
though  no lease has been executed and registered.   We  are
satisfied  that the defendant has fulfilled both the  condi-
tions necessary to attract the application of the section in
the  present case. The High Court was in error when it  held
that  the correspondence summarised in Ex. 181 could not  be
treated as evidence of the contract and that its terms could
not  be  reasonably deduced from this document.   It  is  no
doubt true that Ex. 181 is merely secondary evidence of  the
agreement of lease but it is equally true that it is a  very
reliable piece of secondary evidence coming as it does  from
government  records.  It furnishes proof of  the  fact  that
there was an acceptance in writing under which the  contract
to  transfer the survey numbers in suit by way of lease  was
effected  by the Talukdari Settlement  Officer in favour  of
Manilal   Maganlal. The offer was also in writing signed  by
the offeror. The Government Resolution which made the agree-
ment binding was also in writing and was signed by competent
authority.   No objection as to admission of secondary  evi-
dence  could be taken in this case as the  primary  evidence
was  in  the possession either of the plaintiff  or  of  the
talukdars,  the  predecessors in interest and  in  spite  of
notice  it was not produced.  Reference in  this  connection
may be made to the statement of the
85
plaintiff  in  the  witness box which is  to  the  following
effect :--
    "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
whether T.S.O. has called survey No. 226
as  Lalliti and hence the talukdars are not entitled to  any
income  for it.  I also cannot say without that  correspond-
ence 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 part of the same statement he said that  the
talukdars  had  got the records of the  time  preceding  his
management.   It  appears that the original  documents  were
returned to the talukdars after the discharge of the  Taluk-
dari Settlement Officer and were in the possession and power
of  the plaintiff or his predecessors in interest  and  they
were not produced by him in spite of notice.  Para. 2 of the
plaint clearly recites that there was correspondence between
the Talukdari Settlement Officer and the defendant'S  prede-
cessor in interest under which a lease was negotiated.   The
plaintiff's  knowledge of this correspondence and  its  con-
tents  is  thus  prima facie established and  leads  to  the
conclusion that it was in his possession or power and he has
intentionally withheld it.  Without a perusal of this corre-
spondence  the  facts  recited   in para. 2  of  the  plaint
could  not  have  been     mentioned  in  the plaint.   Once
it   is  held  that  Ex. 181 is  good secondary evidence  of
the  agreement of lease, there can then be no hesitation  in
holding  that by an offer and an acceptance made in  writing
and  signed by the respective parties an agreement was  com-
pleted  between  the Talukdari Settlement  Officer  and  the
predecessor in interest of the defendant and that  necessary
sanction  of the' Government was also in writing  signed  by
the  officer concerned.  It has further to be held that  the
terms of the contract can be fairly deduced from the  recit-
als of this document.  The only important clause with  which
we are concerned in the present case is as to the nature  of
the tenancy.  It is clearly recited therein
86
that  the lease was to be of a permanent character  and  the
terms  as regards rental could be revised after a period  of
fifty  years.   The rent payable is recited  in  unambiguous
terms in the document as Rs. 290 per annum.
    It was not denied that the lessee took possession  after
this  agreement was arrived at.  It was argued that  posses-
sion  was  taken before sanction of the Government  was  ob-
tained  in  September, 1917.  There is however no  proof  of
this  except  a  bare recital in  the  Talukdari  Settlement
Officer's  letter  to Government that he had  permitted  the
defendant  to enter on the land in anticipation  of  Govern-
ment's sanction.  As already pointed out, the possession was
with the tenants and had to be taken after entering into  an
arrangement  with them or by issuing notice to them.  It  is
not possible to think that this could have happened in  such
a short space of time as elapsed between the middle of  July
and  the  beginning of September.  In any case  the  factory
could not have been built before the sanction of the Govern-
ment  was received. Not only did the lessee take  possession
in part-performance of the agreement but he offered the rent
agreed upon and paid it not only to the Talukdari Settlement
Officer but to all those who subsequently managed the inter-
est of the talukdars in the survey numbers in dispute.   The
original lessee after having entered into possession of  the
property effected a mortgage of it in favour of the  defend-
ant.   The defendant advanced a substantial sum on  security
of the property to the lessee.  The equity of redemption was
sold at an auction sale.  The defendant and his  predecessor
in  interest were willing to perform their part of the  con-
tract.   As a matter of fact, they have performed the  whole
of  it.  All that remains to be done is the execution  of  a
lease  deed  by the lessor in favour of the  lessee  and  of
getting  it  registered.  The plaintiff in para.  6  of  the
plaint  in unambiguous terms admitted that he  received  the
amount of the lease up to 31st July, 1932, in respect of the
survey numbers in dispute. It is difficult to imagine  what.
lease  he  was referring to in the absence of  a  registered
deed  of lease.  It Could only mean the agreement  of  lease
given in writing
87
and  signed  by the Talukdari Settlement Officer. It  is  in
pursuance of this agreement of lease that all the subsequent
acts  above  mentioned were done.  It-may also  be  observed
that an agreement of lease creating a present demise but not
registered is admissible under S. 49 of the Indian Registra-
tion  Act  as evidence of part performance and  Ex.  181  is
secondary evidence of that agreement. A formal lease is  not
necessary  to  attract  the application of S.  53-A  of  the
Transfer  of Property Act. All that is required is  that  an
agreement  in writing signed by the transferor can be  gath-
ered from the evidence.  The correspondence mentioned in Ex.
181 fully establishes that fact.
    We are therefore of the opinion that the learned Assist-
ant  Judge  rightly dismissed the plaintiff's suit  and  the
High Court was in error in interfering with that decision in
second  appeal.  The result therefore is that    the  appeal
is allowed, the decision of the Assistant Judge restored and
that  of  the High Court reversed.The circumstances  of  the
case are such that we would make no order as to costs.   The
defendant was at fault  in not producing all the documentary
evidence  at  the proper stage of the case and he  has  been
enabled  to  avail himself of the defence furnished  to  him
under  S. 53-A by reason of the admission in evidence  after
remand  of  Ex. 181, which though not properly  admitted  at
that stage was not rejected by the High Court and could  not
be  rejected at the stage when we dealt with the case.   The
parties are therefore left to bear their own costs  through-
out.
                        Appeal allowed.
Agent for the appellant: S.P. Varma.
Agent for the respondent: Ganpat Rai.
12
88
PETITIONER:
MESSRS. KHIMJI POONJA AND COMPANY
        Vs.
RESPONDENT:
SHRI BALDEV DAS C. PARIKH
DATE OF JUDGMENT:
14/03/1950
BENCH:
DAS, SUDHI RANJAN
BENCH:
DAS, SUDHI RANJAN
KANIA, HIRALAL J. (CJ)
FAZAL ALI, SAIYID
SASTRI, M. PATANJALI
MAHAJAN, MEHR CHAND
MUKHERJEA, B.K.
CITATION:
 1950 AIR    7            1950 SCR   64
ACT:
   Bombay Cotton Contracts Act (IV of 1932), s. 8  (1)--East
India  Cotton  Association Bye-laws, Nos.  51-A,  65-A,  80,
82--Cotton  Contract--Contract note  stating minimum  amount
Of   deposit   as   Rs.   25   and    not   in    prescribed
form--Validity--Arbitration  and  award  under   arbitration
clause, whither void.
HEADNOTE:
    Section  8 of the Bombay Cotton Contractors Act,  1939,,
provided  that  contracts entered into after  the  date  the
commencement of the Act which are not in accordance with the
bye-laws of any recognised cotton association shall be void.
Bye-law 80 of the East India Cotton Association, Ltd., which
was  a recognised cotton association within the  meaning  of
the  Act provided that  contracts between members acting  as
commission agents on the one hand and their constituents  on
the  other shall be subject to the bye-laws and that a  con-
tract note in the form given in the Appendix to the bye-laws
shall  be  rendered in respect of every  contract.   Bye-law
51-A  originally  required a deposit at a rate     not  less
than  Rs.  9,5 per bale and the  contract  note  accordingly
contained  a  clause to that effect.  During  the  war  this
bye-law was amended by reducing the minimum amount of depos-
it to Rs. 12-8 per bale and introducing a new bye-law  (bye-
law  65-A)  which, inter alia, gave certain options  to  the
last buyer, and by a Notification of the Government the form
of the contract note Was also amended by altering the  mini-
mum  deposit  to  Rs. 12,-8 and adding two  new  clauses  to
comply with the bye-law 65-A. A contract note rendered after
these  amendments  to the byelaws and the form  of  contract
note,  contained  a  rubber stamp impression  in  which  the
minimum amount of deposit was stated as Rs. 9.5, and did not
contain  the  two new clauses that were  introduced  by  the
Government Notification:
   Held,   that  the contract note  rendered  was   not   in
accordance  with the bye-laws and in the prescribed form  as
the  clause  relating to the minimum amount of  deposit  was
inconsistent with the provisions of bye-law 51-A as amended,
and  the two new clauses had been omitted, even though.  the
contract  note recited that it was made in  accordance  with
the  byelaws, and it was accordingly void and a valid  award
could not be made under the arbitration clause contained  in
the note.
   [PATANJALI  SASTRI  .J  preferred to  rest  his  decision
solely  on  the  ground of the omission to  include  in  the
contract  in  question the two clauses newly  added  in  the
prescribed form in order to give effect to bye-law 65-A.]
    Judgment of the Bombay High Court affirmed,
65
JUDGMENT:
    APPEAL  from  the High Court of  Judicature  at  Bombay.
Civil Appeal No. XXVI of 1949.
    This  was  an appeal from a judgment and decree  of  the
Bombay  High  Court (Stone C.J. and Coyajee J.)  dated  20th
March, 1947, in Appeal No. 42 of 1946, reversing a  judgment
of Chagla J. dismissing an application. made by the respond-
ent  under the Indian Arbitration Act, 1940,  praying  inter
alia  that  the arbitration agreement contained  in  certain
contract  notes sent by the appellants to the respondent  be
declared  invalid  and void and for setting aside  an  award
made by arbitrators appointed under the said contract note.
    M.C. Setalvad, (Rameshwar Nath with him), for the appel-
lants.
    C.K. Daphtary, (B. Sen and K.T. Desai with him), for the
respondent.
1950. March 14.  The judgment of the Court was delivered
by
    DAS J.--This appeal arises out of an application made by
the  Respondent  under  the Indian  Arbitration  Act,  1940,
praying inter alia that the arbitration agreement  contained
in certain contract notes including contract note No.  17996
sent  by the Appellants to the Respondent be declared to  be
invalid, void and unenforceable and be set aside and that  a
purported  award made by the arbitrators appointed in  terms
of  the said contract notes be set aside.  That  application
came to be made in the following circumstances:
    The  Appellants were and are members of the  East  India
Cotton  Association Ltd.  The Respondent, however,  was  not
and is not a member of that Association. In April, 1945, the
Respondent  employed the Appellants as his agents to  effect
forward  contracts  for the sale and/or purchase  of  cotton
according  to  the rules, regulations and bye-laws  of  that
Association.  Between  the  9th April, 1945,  and  the  10th
August,  1945,  the 'Appellants as such agents  put  through
various  contracts  for sale and/or purchase of  cotton  for
July, 1945, and September, 1945, deliveries and sent to  the
Respondent
66
contract notes in respect of each of such contracts. All the
said  contract notes were in printed forms, a specimen  copy
whereof is set out at pages 12 to 15 of the Paper Book.   On
the  10th August, 1945, the purchase of 900 bales of  cotton
at  Rs. 432 per candy for September 1945  delivery  remained
outstanding.   According  to  the Respondent,  on  the  11th
August,  1945, the Respondent instructed the  Appellants  to
close the said outstanding purchase by selling 900 bales for
September 1945 delivery at a rate not less than Rs. 426  per
candy,  which  is said to be the prevailing market  rate  on
that  date.  As the Respondent did not receive any  contract
note from the Appellants in respect of the closing  transac-
tion of 900 bales, the Respondent on the 18th August,  1945,
put  on  record  his aforesaid instructions  and  asked  the
Appellants  to  send  the contract  note.   The  Appellants,
however, deny that any instruction was given by the Respond-
ent  on the 11th August, 1945, for closing  the  outstanding
contract.  They deny the receipt of the Respondent's  letter
of that date.  According to the Appellants the 21st  August,
1945, was a clearing date and on that clearing a sum of  Rs.
18,900  became  due  and payable by the  Respondent  to  the
Appellants  and that instead of paying up his dues  the  Re-
spondent concocted the false story of having given  instruc-
tions  to the Appellants to close the outstanding  purchase.
The  Appellants  by their letter of the 22nd  August,  1945,
repudiated  the  allegations in the Respondent's  last  men-
tioned  letter and called upon the Respondent to pay up  Rs.
18,900  and gave notice to him that if he failed to  pay  up
the amount by noon of the 23rd August, 1945, the  Appellants
would be compelled to square up the outstanding contract  at
their discretion on account and at the risk of the  Respond-
ent.  The Respondent on the 24th August, 1945, denied having
fabricated any false story and repudiated liability for  Rs.
18,900  and  returned  the Appellants' bill.   On  the  27th
August, 1945, the Appellants closed the outstanding contract
for purchase of 900 bales by selling the same at Rs. 356 per
candy  for  September  1945 delivery and  along  with  their
letter dated the 27th August, 1945, sent contract 'note  No.
17996.  The
67
Respondent by his letter dated the 28th August, 1945,  reit-
erated  the  story of previous instruction for  closing  the
contract, denied having given any instruction to the  Appel-
lants  to close the contract on the 27th August,  1945,  and
returned  the contract note No. 17996.  On the 28th  August,
1945,  the Appellants wrote to the Respondent  claiming  Rs.
34,313  and expressing the desire to refer the  disputes  to
arbitration in terms of the arbitration agreement  contained
in the contract notes.  Both parties appointed their respec-
tive  arbitrators.  The arbitrators entered upon the  refer-
ence  and  eventually fixed the 24th October,  1945,  for  a
meeting  of the arbitrators. The Respondent alleges that  he
received  the notice of meeting only on 22nd October,  1945,
and could not attend the meeting on the 24th October,  1945,
as  he  had to appear before the Income Tax Officer  on  the
same  day.   Accordingly, the Respondent sent his  agent  to
attend the arbitration meeting and to obtain an adjournment.
The  arbitrators,  however,  rejected  the  application  for
adjournment  and made an ex parte award on the same day  for
Rs.  34,313 and interest and costs.  Being aggrieved by  the
award  the Respondent on the 10th November, 1945,  filed  an
appeal  to the Board of the Association.   The  Respondent's
allegation  is  that pending the said appeal  he  discovered
that the contract notes rendered by the Appellants from time
to  time including the contract note No. 17996 were  not  in
accordance  with  the prescribed official form  of  contract
notes  of  the Association and he was advised  that  in  the
premises the contracts were void under the provisions of the
Bombay  Cotton  Contracts Act (IV of 1932)  and  that,  that
being  so,  there was no arbitration agreement  between  the
parties under which there could be any reference to arbitra-
tion  on  which  any award could be  made.   The  Respondent
thereupon  amended  his memorandum of appeal  to  the  Board
pointing out the invalidity of the contracts and at the same
time made a substantive application to the High Court  under
the  Indian Arbitration Act for the reliefs  already  summa-
rised above.
    In  order  to appreciate the rival  contentions  of  the
parties  it is necessary  to  refer to the relevant
68
provisions of the Bombay Cotton Contracts Act, 1932, and the
bye-laws of the said Association.
    Section  (8)  (i) of the Bombay  Cotton  Contracts  Act,
1932, runs as follows :-
    "Save  as hereinafter provided in this Act any  contract
(whether  either party thereto is a member of  a  recognised
cotton  association or not) which is entered into after  the
date on which this Act comes into operation and which is not
in  accordance  with the byelaws of  any  recognised  cotton
association shall be void."
    There is no dispute that the East India Cotton  Associa-
tion  is one of the recognised cotton associations  for  the
purposes of the said Act.  Bye-laws 80 and 82 of Chat  Asso-
ciation are in the terms following :--
    "80. Delivery Contracts between members shall be made on
the  Official  form given in the Appendix.  Hedge  Contracts
between  members  may be verbal or in writing  and  when  in
writing  shall be in one or other of the forms given in  the
Appendix.  Whether verbal or written all contracts shall  be
subject to the bye-laws, provided that in the case of Deliv-
ery Contracts Byelaws 149 to 163 inclusive shall not apply.
    82.  Contracts  between  members  acting  as  commission
agents' on the one hand and their constituents on the  other
shall,  be made subject to the bye-laws and a contract  note
in the form given in the Appendix (pages 92, 93, 94 and  95)
shall  be rendered in respect of every such contract.   Bye-
laws  130 to 166 (inclusive) shall' not apply to these  Con-
tracts."
    Bye-law 51-A originally required a deposit at a rate not
less than Rs. 25 per bale and accordingly the contract  note
submitted  by. the agent to the constituent used to  contain
the  following clause at the end of the clause  relating  to
payment of margin :-
    "In  addition  to the above, the deposit  (not  carrying
interest)  payable under bye-law 51-A;namely, at a rate  not
less  than Rs. 25 per bale shall, when demanded, be made  by
you to me/us in Bombay."
    During the war bye-law 51-A was amended by reducing  the
minimum amount of deposit from Rs. 25 per
69
bale  to Rs. 12-8-0 per bale and accordingly the  Government
of  Bombay  by a Notification made on  the  19th  September,
1945,  in  exercise of the powers conferred  by  the  Bombay
Options  in Cotton Prohibition Act, 1939 (Act XXV  of  1939)
provided  that the contract note should also be  amended  so
that the clause last quoted above should read as follows :--
    "In  addition  to the above, the deposit  (not  carrying
interest) payable under bye-law 51-A, namely, at a rate  not
less than Rs. 12-1/2 per bale shall, when demanded, be  made
by you to me/us in. Bombay."
In order to enforce war-time controls another  amendment
of the bye-laws  was  made whereby a  new bye-law was  added
as  bye-law 65-A. In view of this last  mentioned  amendment
and  in order to bring the contract note between  the  agent
and  the  constituent into line with this  new  bye-law  the
Government of Bombay by the same Notification dated the 19th
September  1944 directed the inclusion of the two  following
clauses in the contract note, namely:
"If  this contract is a contract for sale, then  if  be-
tween us and other members of the East India Cotton Associa-
tion we become, under the bye-laws, the first seller of  the
cotton  so  sold and if the last buyer exercises  the  right
given by bye-law 65-A, you will then be bound by the  provi-
sions of that bye-law as between you and us.
    If  this  contract  is a contract of  purchase,  and  if
between us and other members of the East India Cotton  Asso-
ciation Ltd., we become the last buyers unless we shall have
received  express instructions from you in writing  to.  the
contrary, before the commencement of the delivery period  if
the contract is entered into before the commencement of  the
delivery  period, or with the order if the contract  is  en-
tered  into  during  the permitted days of  trading  in  the
delivery  period, we shall be at liberty at our  option  and
without  any further reference to you to exercise the  right
given  to  the last buyer under bye law 65-A, and if  we  so
exercise  the right you will be bound by the  provisions  of
that bye-law as between you and us."
70
    After  all  these  amendments the contract  note  to  be
rendered  by  an agent to the constituent had to be  in  the
form, a specimen copy whereof is set out at pages 17 and  18
of the Paper Book.  The contracts between the Appellants and
the  Respondent were made after the aforesaid contract  note
form came into vogue.  The official Contract Note form to be
used after the aforesaid amendments opens with the following
clause :--