MOHAMMADE YUSUF & ORS. versus RAJKUMAR & ORS. on 5 February 2020

[2020] 3 S.C.R. 649

MOHAMMADE YUSUF & ORS.

v.

RAJKUMAR & ORS.(Civil Appeal No. 800 of 2020)

FEBRUARY 05, 2020

[ASHOK BHUSHAN AND M. R. SHAH, JJ.]

Registration Act, 1908 – s. 17 – Compromise decree – Ifrequires registration – Suit filed in 1984, by appellant’s father interalia for declaration in respect of a 7 biswa area of survey no. 203which was attached in east with their land bearing survey No. 223– They were in possession of suit land, which was recorded in thenames of defendant – Compromise decree dtd. 04.10.85 was passeddeclaring their right on 7 biswa area and it was declared thatremaining land belonged to defendant – Suit filed in 1998 byrespondent nos.1 & 2 against the appellants for perpetual injunctionin respect of two areas bearing survey no. 203 – Respondent nos. 1& 2 sold the said areas to respondent nos. 4-7 and they wereimpleaded as plaintiffs – During evidence, one of the appellanttried to exhibit the decree dtd. 04.10.85 – Plaintiff’s objection tothe admissibility of decree was that decree being not registeredcannot be accepted in evidence – Civil Judge held that decree wasrequired to be registered, hence it was not admissible – High Courtdismissed appellant’s writ petition holding that decree was requiredto be registered – Held: By virtue of sub-sec.(2)(vi) of s.17, anydecree or order of a Court does not require registration– In sub-clause (vi) of sub-sec.(2), one category is excepted from sub-clause(vi), i.e., a decree or order expressed to be made on acompromise and comprising immovable property other than thatwhich is the subject -matter of the suit or proceeding – By conjointlyreading s. 17(1)(b) & s. 17(2)(vi), it is clear that a compromise decreecomprising immovable property other than which is the subject matterof the suit or proceeding requires registration, although any decreeor order of a Court is exempted from registration by virtue ofs. 17(2)(vi) – Decree dated 04.10.85 was with regard to property,which was subject matter of the suit, hence not covered byexclusionary clause of s.17(2)(vi) and present case is covered bythe main exception u/s.17(2)(vi), i.e., “any decree or order of a

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ACourt” – Compromise decree dated 04.10.85 did not requireregistration – Order of the Civil Judge and the judgment of HighCourt is set aside – Compromise decree dtd. 04.10.85 be exhibitedby trial court – Indian Stamp Act, 1899 – s. 2(14).

Allowing the appeal, the CourtB

HELD: 1.1 Under Section 17(1)(b), non-testamentaryinstruments which purport or operate to create, declare, assign,limit or extinguish, whether in present or in future, any right,title or interest, whether vested or contingent, of the value ofone hundred rupees and upwards, to or in immovable propertyCrequires registration. The word “instrument” is not defined inRegistration Act, but is defined in the Indian Stamp Act, 1899 bySection 2(14). A compromise decree passed by a Court wouldordinarily be covered by Section 17(1)(b) but sub-section(2) ofSection 17 provides for an exception for any decree or order of aCourt except a decree or order expressed to be made on aDcompromise and comprising immovable property other than thatwhich is the subject-matter of the suit or proceeding. Thus, byvirtue of sub-section (2)(vi) of Section 17 any decree or order ofa Court does not require registration.In sub-clause (vi) of sub-section (2), one category is excepted from sub-clause (vi), i.e., aEdecree or order expressed to be made on a compromise andcomprising immovable property other than that which is thesubject-matter of the suit or proceeding. Thus, by conjointlyreading Section 17(1)(b) and Section 17(2)(vi), it is clear that acompromise decree comprising immovable property other thanwhich is the subject matter of the suit or proceeding requiresFregistration, although any decree or order of a Court is exemptedfrom registration by virtue of Section 17(2)(vi). A copy of thedecree passed in Suit No. 250-A of 1984 was brought on recordas Annexure P-2, which indicates that decree dated 04.10.1985was passed by the Court for the property, which was subject matterGof the suit. Thus, the exclusionary clause in Section 17(2)(vi) isnot applicable and the compromise decree dated 04.10.1985 wasnot required to be registered on plain reading of Section 17(2)(vi).[Paras 5, 6][654 G-H; 655 A-E]

1.2 In facts of the present case, the decree dated 04.10.1985Hwas with regard to property, which was subject matter of the suit, hence not covered by exclusionary clause of Section 17(2)(vi)and present case is covered by the main exception crafted inSection 17(2)(vi), i.e., “any decree or order of a Court”. Whenregistration of an instrument as required by Section 17(1)(b) isspecifically excluded by Section 17(2)(vi) by providing thatnothing in clause (b) and (c) of sub-section (1) applies to anydecree or order of the Court, the compromise decree dated04.10.1985 did not require registration and learned Civil Judgeas well as the High Court erred in holding otherwise. The orderof the Civil Judge as well as the judgment of the High Court isset aside. The compromise decree dated 04.10.1985 be exhibitedby the trial court. [Para 14][660 C-E]

Som Dev and Others v. Rati Ram and Another (2006)10 SCC 788 : [2006] 5 Suppl. SCR 778 – relied on.

Bhoop Singh v. Ram Singh Major and Others (1995) 5SCC 709 : [1995] 3 Suppl. SCR 466 – held inapplicable.

Gurdwara Sahib v. Gram Panchayat Village Sirthalaand Another (2014) 1 SCC 669; Ravinder Kaur Grewaland Others v. Manjit Kaur and Others (2019) 8 SCC729 – referred to.

Case Law Reference(2014) 1 SCC 669referred toPara 2.3[1995] 3 Suppl. SCR 466 held inapplicablePara 6(2019) 8 SCC 729referred toPara 9[2006] 5 Suppl. SCR 778 relied onPara 13

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 800 of2020.

From the Judgment and Order dated 13.02.2017 of the High Courtof Madhya Pradesh, Indore Bench in Writ Petition No. 2170 of 2015.

Amit Wadhwa, Amit K. Srivastava, Raunak Parekh, SanjayK. Hadala, Sanjay Yadav, Sunil K. Singh, Sanjeev Kumar, Gopi Chand,Dr. Vinod Kumar Tewari, Ms. Taruna Ardhendumauli Prasad,Ardhendumauli Kumar Prasad, Piyush Singh, Vaibhav Shrivastava,Mohnish Nirwan, Advs. for the appearing parties.

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AThe Judgment of the Court was delivered byASHOK BHUSHAN, J.

1. This appeal has been filed against the judgment of High Courtof Madhya Pradesh at Indore Bench dated 13.02.2017 dismissing thewrit petition of the appellant challenging the order of the trial court datedB07.01.2015 whereby the trial court has held that the compromise decreesought to be filed by the appellant is not admissible in evidence for wantof registration.

2. The brief facts of the case are: -

C2.1 A Suit No. 250-A of 1984 was filed by one Habib Kha, thefather of the appellant for declaration and injunction. TheSuit was filed for 7 biswa area of survey No.203 situated atVillage Kitvani, Kasba Mandsaur, which was attached in eastwith the land of plaintiff being survey No.223. The plaintiffwas in possession of suit land, which was recorded in theDnames of defendant. A compromise decree was passed inthe suit dated 04.10.1985 declaring the right of plaintiff on 7biswa area and it was declared that remaining land belong todefendant.

2.2 The appellants, who were son of Habib Kha claimed to be inEpossession, continued to be in possession of the aforesaidarea. A Suit No.90-A of 2006 was filed on 16.09.1998 byrespondent Nos. 1 and 2 against the appellants for perpetualinjunction in respect of two areas admeasuring 825 sq. ft.and 1650 sq. ft. bearing survey No.203. The respondent Nos.F1 and 2 sold the above said two areas to respondent Nos. 4 to7 and they were impleaded as plaintiffs in the above said suit.A written statement was filed by the appellants in Civil SuitNo. 260A of 1998 pleading that respondents have forcefullytook the possession of area admeasuring 1650 sq. ft. beingthe part of survey No. 203, which was in actual, peacefulGand uninterrupted possession of the appellant and theirancestral since 1951. Alongwith the written statement, acounter claim was filed by the appellant for recovery ofpossession of the area.

2.3 During evidence of Mohammade Hafiz, one of the appellants,Hhe tried to exhibit the decree dated 04.10.1985 passed in Civil Suit No. 250A of 1984, which was objected by the plaintiff.Plaintiff’s objection to the admissibility of the decree wasthat decree being not registered cannot be accepted inevidence. Learned Civil Judge heard the parties and passedorder dated 07.01.2015 on issue regarding admissibility ofthe above document. Civil Judge took the view that decreedated 04.10.1985 is required to be registered as per provisionof Section 17(1)(e) of the Registration Act, hence it is notadmissible in evidence. A Writ Petition No. 2170 of 2015 wasfiled by the appellant challenging the order dated 07.01.2015.The High Court by the impugned judgment has dismissed thewrit petition taking the view that decree was required to beregistered. The High Court held that the very fact that thesuit was based on the plea of adverse possession reflectsthat plaintiff of Suit No. 250-A of 1994 had no pre-existingtitle in the suit property. Relying on the judgment of this Courtin Gurdwara Sahib Vs. Gram Panchayat Village Sirthalaand Another, (2014) 1 SCC 669, High Court held that it issettled that declaratory decree based on plea of adversepossession cannot be claimed and adverse possession canonly be used as a shield by the defendant. Aggrieved with thejudgment of High Court, this appeal has been filed.

3. The only question to be considered in this appeal is as to whetherthe above noted compromise decree dated 04.10.1985 was required tobe registered under Section 17 of the Registration Act, 1908 or not?

4. Part III of the Registration Act contains a heading “ofRegistrable Documents” in which Section 17 finds place, which containsa heading “Documents of which registration is compulsory”. Section17(1) deals with documents of which registration is compulsory. Section17(2) provides that nothing in clauses (b) and (c) of sub-Section (1)applies to various documents as enumerated therein. Sections 17(1)and 17(2)(vi), which are relevant for the present case are as follows: - “17. Documents of which registration is compulsory.—(1)The following documents shall be registered, if the property towhich they relate is situate in a district in which, and if they havebeen executed on or after the date on which, Act No. XVI of1864, or the Indian Registration Act, 1866, or the IndianRegistration Act, 1871, or the Indian Registration Act, 1877, orthis Act came or comes into force, namely:—

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SUPREME COURT REPORTS

A(a)instruments of gift of immovable property; (b)other non-testamentary instruments which purport or operateto create, declare, assign, limit or extinguish, whether inpresent or in future, any right, title or interest, whether vestedor contingent, of the value of one hundred rupees andBupwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receiptor payment of any consideration on account of the creation,declaration, assignment, limitation or extinction of any suchright, title or interest; and C

(d) leases of immovable property from year to year, or for anyterm exceeding one year, or reserving a yearly rent; (e)non-testamentary instruments transferring or assigning anydecree or order of a Court or any award when such decreeor order or award purports or operates to create, declare,Dassign, limit or extinguish, whether in present or in future,any right, title or interest, whether vested or contingent, ofthe value of one hundred rupees and upwards, to or inimmovable property:

Provided that the State Government may, by orderEpublished in the Official Gazette, exempt from the operationof this sub-section any lease executed in any district, or partof a district, the terms granted by which do not exceed fiveyears and the annual rents reserved by which do not exceedfifty rupees.

F(2) Nothing in clauses (b) and (c) of sub-section (1) applies to—

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(vi) any decree or order of a Court except a decree or orderexpressed to be made on a compromise and comprising immovableproperty other than that which is the subject-matter of the suit orGproceeding; or”

5. Under Section 17(1)(b), non-testamentary instruments whichpurport or operate to create, declare, assign, limit or extinguish, whetherin present or in future, any right, title or interest, whether vested orcontingent, of the value of one hundred rupees and upwards, to or inH

immovable property requires registration. The word “instrument” is notdefined in Registration Act, but is defined in the Indian Stamp Act, 1899by Section 2(14).

6. A compromise decree passed by a Court would ordinarily becovered by Section 17(1)(b) but sub-section (2) of Section 17 providesfor an exception for any decree or order of a Court except a decree ororder expressed to be made on a compromise and comprising immovableproperty other than that which is the subject-matter of the suit orproceeding. Thus, by virtue of sub-section (2)(vi) of Section 17 anydecree or order of a Court does not require registration. In sub-clause(vi)of sub-section (2), one category is excepted from sub-clause(vi), i.e., adecree or order expressed to be made on a compromise and comprisingimmovable property other than that which is the subject-matter of thesuit or proceeding. Thus, by conjointly reading Section 17(1)(b) andSection 17(2)(vi), it is clear that a compromise decree comprisingimmovable property other than which is the subject matter of the suit orproceeding requires registration, although any decree or order of a Courtis exempted from registration by virtue of Section 17(2)(vi). A copy ofthe decree passed in Suit No. 250-A of 1984 has been brought on recordas Annexure P-2, which indicates that decree dated 04.10.1985 waspassed by the Court for the property, which was subject matter of thesuit. Thus, the exclusionary clause in Section 17(2)(vi) is not applicableand the compromise decree dated 04.10.1985 was not required to beregistered on plain reading of Section 17(2)(vi). The High Court referredto judgment of this Court in Bhoop Singh Vs. Ram Singh Major andOthers, (1995) 5 SCC 709, in which case, the provision of Section17(2)(vi) of Registration Act came for consideration. This Court in theabove case while considering clause (vi) laid down following in paragraphs16, 17 and 18:- “16. We have to view the reach of clause (vi), which is anexception to sub-section (1), bearing all the aforesaid in mind. Wewould think that the exception engrafted is meant to cover thatdecree or order of a court, including a decree or order expressedto be made on a compromise, which declares the pre-existingright and does not by itself create new right, title or interest inpraesenti in immovable property of the value of Rs 100 or upwards.Any other view would find the mischief of avoidance of registration,which requires payment of stamp duty, embedded in the decreeor order.

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17. It would, therefore, be the duty of the court to examine ineach case whether the parties have pre-existing right to theimmovable property, or whether under the order or decree of thecourt one party having right, title or interest therein agreed orsuffered to extinguish the same and created right, title or interestin praesenti in immovable property of the value of Rs 100 orupwards in favour of other party for the first time, either bycompromise or pretended consent. If latter be the position, thedocument is compulsorily registrable.

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18. The legal position qua clause (vi) can, on the basis of theaforesaid discussion, be summarised as below:

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(1) Compromise decree if bona fide, in the sense that thecompromise is not a device to obviate payment of stamp dutyand frustrate the law relating to registration, would not requireregistration. In a converse situation, it would require registration.

(2) If the compromise decree were to create for the first timeright, title or interest in immovable property of the value of Rs100 or upwards in favour of any party to the suit the decree ororder would require registration.

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(3) If the decree were not to attract any of the clauses of sub-section (1) of Section 17, as was the position in the aforesaidPrivy Council and this Court’s cases, it is apparent that thedecree would not require registration.

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(4) If the decree were not to embody the terms of compromise,as was the position in Lahore case, benefit from the terms ofFcompromise cannot be derived, even if a suit were to bedisposed of because of the compromise in question.

(5) If the property dealt with by the decree be not the “subject-matter of the suit or proceeding”, clause (vi) of sub-section(2) would not operate, because of the amendment of this clauseby Act 21 of 1929, which has its origin in the aforesaid decisionof the Privy Council, according to which the original clausewould have been attracted, even if it were to encompassproperty not litigated.”

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7. In the facts of that case, this Court held that the first suit cannotreally be said to have been decreed on the basis of compromise, as the H

suit was decreed “in view of the written statement filed by the defendantadmitting the claim of the plaintiff to be correct”. Further, the earlierdecree was held to be collusive. Two reasons for holding that the earlierdecree in the above said case required registration have been mentionedin paragraph 19 of the judgment, which is to the following effect:- “19. Now, let us see whether on the strength of the decree passedin Suit No. 215 of 1973, the petitioner could sustain his case as putup in his written statement in the present suit, despite the decreenot having been registered. According to us, it cannot for tworeasons:

(1) The decree having purported to create right or title in theplaintiff for the first time that is not being a declaration of pre-existing right, did require registration. It may also be pointedout that the first suit cannot really be said to have been decreedon the basis of compromise, as the suit was decreed “in viewof the written statement filed by the defendant admitting theclaim of the plaintiff to be correct”. Decreeing of suit in sucha situation is covered by Order 12 Rule 6, and not by Order 23Rule 3, which deals with compromise of suit, whereas theformer is on the subject of judgment on admissions.

(2) A perusal of the impugned judgment shows that the firstappellate court held the decree in question as ‘collusive’ as itwas with a view to defeat the right of others who had bonafide claim over the property of Ganpat. Learned Judge of theHigh Court also took the same view.”

8. Following the above judgment of Bhoop Singh (supra), theHigh Court held that since the compromise decree dated 04.10.1985 didnot declare any pre-existing right of the plaintiff, hence it requiresregistration. The High Court relied on the judgment of Gurdwara SahibVs. Gram Panchayat Village Sirthala and Another (supra) and madefollowing observations in paragraphs 11, 12 and 13: - “11. In the present case, in the earlier suit CS No. 250-A/1984the petitioner had claimed declaration of title on the plea of adversepossession and the compromise decree was passed in the suit.The very fact that the suit was based upon the plea of adversepossession reflects that the petitioner had no pre-existing title inthe suit property. Till the suit was decreed, the petitioner was amere encroacher, at the most denying the title of lawful owner.

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12. The Supreme Court in the matter of Gurudwara Sahib Vs.Gram Panchayat Village Sirthalareported in 2014 (3) MPLJ36has settled that declaratory decree based on plea of adversepossession cannot be claimed and adverse possession can be usedonly as shield in defence by the defendant. It has been held that:- B“7. In the Second Appeal, the relief of ownership byadverse possession is again denied holding that such a suitis not maintainable. There cannot be any quarrel to thisextent the judgments of the courts below are correct andwithout any blemish. Even if the plaintiff is found to be inadverse possession, it cannot seek a declaration to the effectCthat such adverse possession has matured into ownership.Only if proceedings filed against the appellant and appellantis arrayed as defendant that it can use this adversepossession as a shield/defence.”

13. The plea of the petitioner based upon Sec.27 of the LimitationDAct is found to be devoid of any merit since it relates to theextinction of the right of the lawful owner after expiry of theLimitation Act, but in view of the judgment of the supreme courtin the matter ofGurudwara Sahib(supra), the petitioner cannotclaim himself to be the owner automatically after the expiry ofEthe said limitation.”

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9. The judgment of Gurdwara Sahib Vs. Gram Panchayat VillageSirthala and Another (supra) has now been expressly overruled by aThree Judge Bench judgment in Ravinder Kaur Grewal and OthersVs. Manjit Kaur and Others, (2019) 8 SCC 729. This Court held inFthe above case in paragraph 62 that once 12 years’ period of adversepossession is over, even owner’s right to eject him is lost and thepossessory owner acquires right, title and interest possessed by theoutgoing person/owner. In paragraph 62, following has been laid down:

“62. We hold that a person in possession cannot be ousted byGanother person except by due procedure of law and once 12 years’period of adverse possession is over, even owner’s right to ejecthim is lost and the possessory owner acquires right, title and interestpossessed by the outgoing person/owner as the case may beagainst whom he has prescribed. In our opinion, consequence isthat once the right, title or interest is acquired it can be used as a H

sword by the plaintiff as well as a shield by the defendant withinken of Article 65 of the Act and any person who has perfectedtitle by way of adverse possession, can file a suit for restorationof possession in case of dispossession. In case of dispossessionby another person by taking law in his hand a possessory suit canbe maintained under Article 64, even before the ripening of titleby way of adverse possession. By perfection of title onextinguishment of the owner’s title, a person cannot be remediless.In case he has been dispossessed by the owner after having lostthe right by adverse possession, he can be evicted by the plaintiffby taking the plea of adverse possession. Similarly, any other personwho might have dispossessed the plaintiff having perfected titleby way of adverse possession can also be evicted until and unlesssuch other person has perfected title against such a plaintiff byadverse possession. Similarly, under other articles also in case ofinfringement of any of his rights, a plaintiff who has perfected thetitle by adverse possession, can sue and maintain a suit.”

10. In paragraph 61, this Court has expressly overruled theGurdwara Sahib Vs. Gram Panchayat Village Sirthala and Another(supra).

11. In view of the pronouncement of this Court by Three JudgeBench judgment in Ravinder Kaur Grewal and Others Vs. ManjitKaur and Others (supra), the very basis of the High Court for holdingthat compromise deed dated 04.10.1985 requires registration is knockedout. The present is not a case where there is any allegation that thedecree dated 04.10.1985 is a collusive decree. The decree dated04.10.1985 was in favour of the plaintiff of 7 biswa land, survey No. 203and for remaining land of survey No.203, it was held that it belonged todefendants.

12. In Bhoop Singh (supra), this Court held that the earlier decreerequired registration for the reasons as mentioned in paragraph 19. Thereasons given in paragraph 19 of the above case has no application inthe facts of the present case.

13. This Court in Som Dev and Others Vs. Rati Ram andAnother, (2006) 10 SCC 788 while explaining Section 17(2)(vi) andSection 17(1)(b) and (c) held that all decree and orders of the Courtincluding compromise decree subject to the exception as referred that A

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Athe properties that are outside the subject matter of the suit do not requireregistration. In paragraph 18, this Court laid down following: - “18. ……………But with respect, it must be pointed out that adecree or order of a court does not require registration if it is notbased on a compromise on the ground that clauses (b) and (c) ofBSection 17 of the Registration Act are attracted. Even a decreeon a compromise does not require registration if it does not take inproperty that is not the subject-matter of thesuit…………………….”

14. In facts of the present case, the decree dated 04.10.1985 wasCwith regard to property, which was subject matter of the suit, hence notcovered by exclusionary clause of Section 17(2)(vi) and present case iscovered by the main exception crafted in Section 17(2)(vi), i.e., “anydecree or order of a Court”. When registration of an instrument as requiredby Section 17(1)(b) is specifically excluded by Section 17(2)(vi) byproviding that nothing in clause (b) and (c) of sub-section (1) applies toDany decree or order of the Court, we are of the view that the compromisedecree dated 04.10.1985 did not require registration and learned CivilJudge as well as the High Court erred in holding otherwise. We, thus, setaside the order of the Civil Judge dated 07.01.2015 as well as the judgmentof the High Court dated 13.02.2017. The compromise decree datedE04.10.1985 is directed to be exhibited by the trial court. The appeal isallowed accordingly.

Divya Pandey

Appeal allowed.

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