GOVIND RAM Vs. MADAN GOPAL

JUDGEMENT

(1.) The point for decision on this appeal from the High Court at Allahabad is short, but not free from difficulty. The relevant facts which gave rise to it must first be stated. One Seth Kashi Nath obtained a decree (in a Suit No. 42 of 1930) against the present respondents 2, 3 and 6, and one Lala Sagarmal. Lala Sagarmal is dead, and his sons the present respondents 4 and 5 were substituted for him on the record in the present suit. Respondent 6 has been declared insolvent and the Official Receiver, Aligarh, has also been brought on the record in the present suit. For convenience the original defendants to Suit No. 42 of 1980 or those representing their interests from time to time will all be included in the words "the debtors." Seth Kashi Nath having obtained his decree applied to attach certain immovable property as being the property of the debtors and liable to be sold in execution of the decree. He was met by an objection filed on behalf of the present appellants claiming the property as trustees under a deed of 25 May 1929. The objection was allowed. Thereupon Seth Kashi Nath commenced the suit in which this appeal arises, claiming a declaration that the property was liable to be attached and sold in satisfaction of his decree. To that suit he joined the present appellants as co-defendants with the debtors. By his plaint he alleged that the said deed was a collusive and fraudulent document. He also alleged that it had not been registered. By their written statement the appellants alleged that there was no necessity for the deed being registered, and that the plaintiff's allegation as to want of registration had no effect.

(2.) The deed in question was a composition deed by which the debtors conveyed, assigned and transferred to the appellants (therein called the trustees) (1) the lands, hereditaments and premises described in Sch. 1 thereto, (2) the shares and other personal properties the particulars whereof were contained in Sch. 2 thereto, and (3) all other the property of the debtors and each of them except the property described in Sch. 3 thereto, upon trust for sale and conversion, the proceeds to be divided among the "creditors" (as therein defined) of the debtors as therein provided, and the surplus (if any) to be paid to the debtors. The deed contains powers and provisions commonly found in a composition deed which creates a trust of property for the benefit of creditors. The point at issue can now be stated-it is whether by reason of S. 17, Registration Act, 1908, the deed of 25 May 1929 (hereinafter called the said deed), was exempt from any requirement to be registered, notwithstanding that S. 5, Trusts Act, 1882, enacts that no trust in relation to immovable property is valid unless registered. The trial Judge decreed the suit, holding that the said deed was a collusive document, and was not binding on Seth Kashi Nath. The appellants appealed to the High Court pending the hearing of the appeal Seth Kashi Nath died. His son (the present respondent 1) was substituted for his father on the record.

(3.) The High Court held that the said deed, not having been registered in accordance with S. 5, Trusts Act, 1882, was invalid. The appellants however had applied to be allowed to amend their written statement, and to plead that the defect due to non-registration had been cured by the registration of a document dated 6 June 1929, and the High Court made an order on 26 September 1935, (1) setting aside the decree of the Court below, and (2) remanding the case to that Court to dispose of it after hearing argument and any relevant evidence as to the effect of the registered document of 6 June 1929. The case was then heard before the Civil Judge, who held that the registered deed did not cure the defect. He accordingly, by decree dated 14th December 1936, declared that the immovable properties in suit and specified in the plaint were liable to be sold in satisfaction of the decree in Suit No. 42 of 1930. The appeal by the present appellants from this decree was dismissed by decree of the High Court of 9 November 1938. It is from this decree that the present appeal has been brought. It is convenient at this stage to state that no point now arises in regard to the alleged curative effect of the document of 6 June 1929. The argument was not pressed before the Board by counsel for the appellants, and very properly, for in their Lordships' opinion there is nothing in it. Their Lordships now proceed to consider in detail the relevant enactments. The Registration Act, 1908, is an Act consolidating the law contained in previous Acts and repealing those Acts. Its most important section in connection with the present appeal is S. 17, the relevant provisions of which run thus: 17. (1) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they hare been executed on or after the date on which Act 16 of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely: (a).... (b) other non-testamentary instruments 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 of one hundred rupees and upwards, to or in immovable property; (c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and (d) . . . . (2) Nothing in cls. (b) and (c) of sub-s. (1) applies to- (i) any composition deed; or It will be observed that there is not, in terms, any direct provision enacting that no composition deed need be registered, or that no composition deed may be registered. There is in terms only a provision that nothing in cls. (b) and (c) of sub-s. (1) applies to any composition deed. These words are, their Lordships think, open to two constructions, viz., they might be construed as meaning (a) that all composition deeds are exempt from any requirement to be registered, or they might be construed as meaning (B) that all composition deeds are exempt from the requirement to be registered imposed by that Act : in other words that a composition deed is not required to be registered because it purports or operates to do any of the things enumerated in (b) or because it acknowledges the receipt or payment of a consideration on account of the matters enumerated in (c). Construction A would, in the case of composition deeds declaring trusts of immovable property, clash with S.5, Trusts Act, 1882; construction B would not. Section 5, Trusts Act, is in the following terms : "5. No trust in relation to immovable property is valid unless declared by a non-testamentary instrument in writing signed by the author of the trust or the trustee and registered, or by the will of the author of the trust or of the trustee. No trust in relation to moveable property is valid unless declared as aforesaid, or unless the ownership of the property is transferred to the trustee.