Undavilli Nagarathnam & ANR Vs.
Reddi Satyanarayana Murthi & Ors  INSC 93 (1 April 1976)
KHANNA, HANS RAJ
CITATION: 1976 AIR 1830 1976 SCR (3) 983 1976
SCC (4) 20
Transfer of Property Act 1882-Secs. 76
(a)(e), 105- Meaning of lease- Distinction between lease & settlement-
Whether recital in a document conclu-give-Andhra Pradesh (Andhra Area) Tenancy
Act 1956 Secs. 2(f)(e) 16, 17 Meaning of Landlord and Tenant-Bar of
One Mr. Subbarayudu had no male issue. He had
his wife, plaintiff No. 2, and two daughters, one of whom is plaintiff No. I
and another defendant No. 4. The defendant No. I is the son of defendant No. 4.
Mr. Subbarayudu and plaintiff No. 2 made various gifts in favour of their daughters.
Shri Subbrayudu made a settlement in the year 1955 whereby he gave the
properties m Schedules A and to the first plaintiff. The properties were to be
enjoyed by Subbarayudu and plaintiff No. 2 during their life time and after the
death of Subbarayudu plaintiff No. 1 was to get property mentioned in Schedule
A and after the death of plaintiff No. 2 she was to get property mentioned in
Schedule In 1958, Subbarayudu was alleged to have executed 4 documents
including a Deed of Revocation revoking the settlement of 1955. In 1958,
Subbarayudu entered into a document with defendant No. 1 giving him possession
of the property in which he had life interest. The document provided that
defendant No. 1 should deliver 43 bags of paddy every year to Subbarayudu and
take a receipt. After the death of Subbarayudu plaintiffs Nos. 1 and 2 basing
their claim on the settlement of 1955 called upon the defendant No. 1 to
(deliver the possession of the property. The two issues which now survive are
whether defendant No. 1 is entitled to any protection under the Andhra Tenancy
Act and secondly whether the deed executed by Subbarayudu in favour of first
defendant is a settlement deed or a lease. The Trial Court found that the E;
settlement deed of 1955 was valid and that the subsequent deed of revocation
was invalid. the High Court confirmed the said findings. The same are not under
challenge. The Trial Court, however, held the document to be a settlement deed
and not a lease and that. therefore, the first defendant was not entitled to
any protection under the Andhra Pradesh (Andhra Area) Tenancy Act, 1956.
Accordingly, the Trial Court decreed the suit of possession in favour of the
The High Court in appeal came to the
conclusion that the document satisfied all the conditions of the definition of
lease under section 105 of the Transfer of Property Act and could not be
treated as settlement.
The appellant-plaintiffs contended (1) that
the High Court was wrong in holding the document to be a lease and not a
(2) Subbarayudu had reserved only life
interest in Schedule and Properties and after he gifted the same to the
plaintiff No. 2 he could not in law imperil her right to possession of the same
after his death by leasing out the same property.
(3) In any case it was not an act of prudent
management of the properties in which he had only life interest and the
principles applicable to a mortgagee in possession under section 76(a) and (e)
of the Transfer of Property Act would be applicable in the present case and the
lease would not be binding on the plaintiffs.
(4) Plaintiffs are not landlords within the
meaning of Section 2(f) of the Act and the defendant No. 1 is not a cultivating
tenant under the plain tiffs.
984 Dismissing the appeal,
HELD: 1. The document is described as
Settlement Deed but that recital is not decisive of the real intent of the
document. The document makes it clear that the possession was handed over to
defendant No. l; that the defendant No. I was to give 43 bags of paddy every year
and it further mentioned "without subjecting me to do any expense
whatsoever and obtaining proper receipts from me". The document does not
disclose the disposition of the property by a grandfather to a grandson but a
business-like instrument. [988C-E]
2. Subbarayudu was old and the Settlement
Deed made it clear that during his life time he would enjoy the produce of the
land and therefore` he was keen to have at least some paddy from the land
during his life time as a source of income and perhaps thought that his
grandson would faithfully carry out the conditions without creating any
3. Assuming without deciding that the
principles under section 76(a) & (e) of the Transfer of Property Act might
be applicable, it cannot be said that granting of the lease to defendant No. 1
in the entire circumstances of the case was not a prudent act of management of
the properties. In view of the relationship of the parties that was a natural
arrangement for cultivation of the land. [989E-F] 4. When a person with full
knowledge of the law.
ignorance of which is no excuse, enters upon
a lawful transaction or executes a valid document, the rights flowing from the
law cannot be denied to those who are entitled to their benefit on the supposed
theory of estoppel or a plea of contracting out by implication. [990A-B]
5. Section 2(f) defines a landlord to mean
the owner of holding or part thereof who is entitled to evict the cultivating
tenant from such holding and includes the heirs and assigns, legal representatives
of such owners. Or per sons deriving rights through him. Section 2(c) defines
cultivating tenant to mean a person who cultivates by his own labour or by
hired labour under his supervision and control any land belonging to another
under a tenancy agreement. express or implied. The High Court has found that
defendant No. I was a cultivating tenant of the landlord. In view of the
conclusion that the instrument is of lease there is no difficulty in holding
that Subbarayudu was the landlord and on the death or Subbarayudu plaintiffs
are landlords. Section 16 of the Act provides for a special forum for
adjudication of disputes under the Act including eviction of cultivating
tenants and under section 17 of the Act the provisions of the act over-ride
anything inconsistent therewith contained in any pre-existing law.
custom, usage, agreement or decree or order
of a Court.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1048 of 1968.
Appeal from the Judgment and Decree/order
dated the 26th April 1967 of the Andhra Pradesh High Court in Appeal No. 64 of
M. Natesan, K. Jayaram and R. Chandrasekar,
for the Appellant.
B. V. Subramanyam, I. Balaiah and G.
Narasimhulu, for Respondent No. 1.
Ex-parte for Respondents 2-4.
The Judgment of the Court was delivered by
GOSWAMI, J.-This is an appeal on certificate from the judgment of the Andhra
Pradesh High Court.
985 The two plaintiffs in the original suit
are the appellants. They brought a suit in the court of the Subordinate Judge, Rajahmundry,
for evicting defendants 1 to 3 from the properties in Schedule A, B and C and
for delivery of possession of A and Schedule properties to the first plaintiff
and of the Schedule properties either to the first plaintiff or to the second
plaintiff. The suit properties were owned and possessed by Meenavalli.
Subbarayudu of Vedurupaka (hereinafter to be
described as Subbarayudu). Subbarayudu was the husband of the second plaintiff
and father of the first plaintiff. He had no male issue. He had only two
daughters, plaintiff No. 1 and defendant No. 4., who was the older of the two.
Subbarayudu made various dispositions of his property by executing several
documents during his life time in favour of his daughters. So did his wife, the
second plaintiff. While making such dispositions he was careful enough to make
provision for himself and for his wife during their life time. The fourth
defendant was married in 1923 and defendant No. 1 is her son. The first
plaintiff was married in 1935.
After the marriage of the first plaintiff the
mother executed a deed of gift (Ex. B-6) on February 13, 1935 in her favour in
respect of certain land. On the same day her father also executed is her favour
of deed of gift (Ex. B-7) in respect of some other land. On June 7, 1935,
Subbarayudu executed another deed of gift in favour of his first daughter,
defendant No. 4, giving her also some land (Ex. B- 8). All the three documents
were registered on the same day, namely, on June 11, 1935. After about nine
years the mother executed a settlement deed (Ex. B-5) dated June 7, 1944, in
respect of her joint 1/3 share in certain property in favour of her two
daughters to be shared by them equally reserving life interest for her. Then
followed a settlement deed (Ex. A-4) of January 8, 1950 executed by Subbarayudu
in favour of the first plaintiff living her ten acres of pasture land as
mentioned in- Schedule. Subbarayudu further executed a registered deed dated
January 23,1950 (Ex. A-B), described as will, whereby he gave to his daughters
all the properties barring a few mentioned therein and stating that after his
own life time and after the life time of his wife all his movable and immovable
properties would be taken in equal shares by his two daughters. On April 14,
1955, he executed a settlement deed (Ex. A-l) hereunder he gave A and Schedule
properties to the first plaintiff, his second daughter. By this document the A
Schedule property was to beyond by the first plaintiff after his life time and
Schedule property after the life time of her parents. Three years later on
August 4, 1958, Subarayudu executed four more documents including a deed of
revocation. Ex. B-10 is the document by which the earlier document Ex. A-l was
revoked stating that the earlier one had been brought about by fraud and
misrepresentation. Ex. B-ll was executed purporting to settle his property on
both the daughters to be enjoyed in equal shares after the life time of their
parents. Ex. B-12 was executed in favour of his wife and the elder daughter
giving them a certain extent of the land in Mellore village besides the house
sites and houses in Vedurupaka. It was mentioned in Ex. B-12 that after his
life time his wife would be in possession without powers of alianation and that
thereafter the elder daughter 986 would be entitled to possession and enjoyment
of the property as an absolute owner. Ex. B-13 was executed in favour of the
first defendant, namely, grandson of Subbarayudu through his first daughter,
giving him possession of the properties in which he had life interest
stipulating at the same time that he (the first defendant) should deliver forty
three bags of paddy and obtain receipt from him every year during his life
The plaintiffs' case is that Subbarayudu had
leased out A and Schedule properties mentioned in Ex. A-l on August 16, 1958,
to the third defendant, the son of the second defendant and that both these
defendants were in possession of the properties as tenants from that time.
Subbarayudu died on May S, 1960. After his death plaintiffs 1 and 2 basing
their claim on Ex. A-l respectively gave notice to the third defendant on June
14, 1960 and on July 11, 1960 to deliver back the lands in their possession.
The third defendant replied that he was only working as a farm servant under
the first defendant and the latter was the lessee under a deed dated August 4,
1950 and that the settlement deed in favour of the plaintiff`s had been removed
by late Subbarayudu. The first plaintiff also had trouble with the first
defendant when the latter drove away his watchman and lodged a complaint with
the police claiming that he was in possession of the lands. The first plaintiff
thereupon sent a notice on August 20, 1960, to the first defendant who, on the
other hand, asserted his rights in the lands under a deed of settlement (Ex.
B-13) dated August 4, 1958. That led to the institution of the present suit by
the plaintiff out of which this appeal has arisen.
The first daughter of Subbarayudu was
impleaded as defendant No. 4 in the plaint.
The first and the fourth defendants filed
separate written statements. Defendants Nos. 2 and 3 filed a memo adopting the
written statement filed by the first defendant.
All of them repudiated the plaintiffs' claim
for possession of the lands.
Several issues were raised, but we are
concerned in this appeal only with Issue No. S and the additional Issue No. 1
which are as follows "Issue No. 5. Whether defendant No. 1 is entitled to
any protection under the Andhra Tenancy Act ? Additional Issue No. 1
"Whether the deed dated 4-8-1958 executed by late Meenavalli Subarayudu in
favour of the 1st defendant is a settlement deed or a lease ?" It may be
mentioned that issue were raised regarding the validity of Ex. A-l, Ex. B-10,
Ex. B-11 and Ex. B-13.
The trial court held that Ex. A-1 on which
the plaintiffs based their suit was a valid document. The trial court further
held that the deed of revocation (Ex. B-10) and deed of settlement (Ex. B-11)
were invalid. The High Court affirmed these findings of the trial court and
that controversy is closed.
987 With regard to Ex. B-13, the trial court
held it to be a true document and that it was a settlement deed and not a lease
and that the first defendant was not entitled to any protection under the
Andhra Pradesh (Andhra Area) Tenancy Act, 1956 (briefly the Andhra Act) and
that defendants 2 and 3 were not tenants in possession of the land at the time
of institution of the suit. In the view it tools the trial court decreed the
suit for possession of A and Schedule properties in favour of the first
plaintiff and directing that the future profits, which would be payable by the
first defendant, were to be determined in separate proceedings.
The suit was also decreed in favour of the
second plaintiff for possession of the Schedule properties with similar orders
regarding future profits.
On appeal by the defendants the High Court,
after hearing the parties, remanded the matter for a finding under order 41,
rule 25, Civil Procedure Code, by framing the following issue:
"Whether the plaintiffs accepted the
gift of A and Schedule properties by late Subbarayudu before its revocation on
4-8-1958 by late Subbarayudu" ? The subordinate judge returned a finding
that the gift had been accepted prior to the execution of the deed of
revocation (Ex. B-10). The High Court thereafter heard the appeal and partly
allowed the same.
The High Court, in disagreement with the
trial court, came to the conclusion that the document Ex. B-13 satisfied all
the conditions of the definition of lease under section 105 of the Transfer of
Property Act and could not be treated as a settlement. The High Court further
"The term of lease is co-terminus with
the life of the lessor with the result that as soon as the life of Subbarayudu
ended, the term of lease automatically expired. On the death of Subbarayudu the
property would pass to the per sons specified in Exc. A-1. That must be the
normal incidents of the transaction under the ordinary law. At the time of the
transaction of lease was entered into the Andhra Tenancy Act had already come
into force. Subbarayudu was the landlord and the 1st defendant was the
cultivating tenant within the meaning of those terms in the Andhra Tenancy Act.
On the death of Subbarayudu his heirs, assignees and successors would likewise
be landlords and they are entitled to evict the cultivating tenants".
Repelling the contention of the plaintiffs
that the first defendant was not the tenant of Subbarayudu at all, but only a
trespasser, the High Court held, on the oral and documentary evidence as well
as on the admissions of defendants 2 and 3 with regard to the possession of
defendant No. 1 as a lessee, that the defendant No. 1 was a cultivating tenant
under the plaintiffs on the death of Subbarayudu. The High Court having come to
that conclusion further held that the plaintiffs could evict the defendants
only under the provisions of the 988 Andhra Act by making an appropriate
application to the Tehsildar and not in the present suit in the civil court.
The High Court, therefore, granted all the
reliefs prayed for by the plaintiffs except that of eviction from A and
Schedule properties which was directed to be obtained by due recourse to. the
provisions of the Andhra Act The High Court accordingly partly allowed the
appeal refusing the prayer for eviction from A and Schedule properties but at
the same time declaring that the plaintiffs were entitled to the suit
properties in terms of Ex. A-l. The Schedule property was not the subject
matter of appeal before the High Court and the decree in relation to that
property was unaffected.
Mr. Natesan, the learned counsel appearing on
behalf of the appellants, submits that the High Court is wrong in holding that
Ex. A-1 is a lease and not a settlement.
We have perused the document (Ex. B-13). It
is true that it is described in the very opening words of the document as
"settlement deed". But that recital is not decisive of the real
intent of the document. Under section 105 of the Transfer of Property Act, a
lease of immovable property is a transfer of a right to enjoy such property,
made for a certain time, express or implied, or in perpetuity, in consideration
of a price paid or promised, or of money, a share of crops, service or any
other thing of value, to be rendered periodically or on specified occasions to
the transferor by the transferee, who accepts the transfer on such terms. The
necessary ingredients mentioned under section 105 of the, Transfer of Property
Act are found in the document (Ex. B-13). It is clear from the recitals that
possession of the land was handed over by Subbarayudu to the first defendant
for enjoying the same during the life time of Subbarayudu inconsideration of
''fortythree weighed bags of paddy worth Rs. 800/....every year commencing from
15-1- 1959". The document does not disclose a disposition of the property
by a grandfather to a grandson out of love and affection but is a business-like
instrument. To illustrate, the document refers to paddy to be delivered to
Subbarayudu "without subjecting me to any expenses whatsoever and
obtaining proper receipts from me". It goes on to say that "payment
not borne by receipt need not be given credit to you". We are satisfied
that the document (Ex. B-13) fulfils the ingredients of a lease under section
105 of the Transfer of Property Act. The submission of Mr Natesan, therefore,
cannot be accepted.
Mr. Natesan next contends that Subbarayudu
only "life interest" in the
Schedule and properties after he had gifted the same to the plaintiffs by A-1
on April 14, 1955, could not in law imperil their rights to possession of the
same after his death by leasing out the same properties in 1958 in the manner
done in view of the provisions of the Andhra Act which had already come into
force in 1956. At any rate, says Mr. Natesan, it was not an act of prudent
management of the properties in which he had only life interest and the
principles applicable to a mortgagee in possession under section 76(a) and (e)
of the Transfer of Property Act would be applicable in the present case and the
lease will not be binding on the plaintiffs.
989 In Ex. A-l itself, which is the
sheet-anchor of plaintiffs' claim, A there was reference, inter alia, to two
things relevant for consideration on this aspect of the matter. Firstly, it is
"I and my wife, Bapanamma, who is your
mother shall during our life time, be in enjoyment of the A Schedule mentioned
property and Schedule mentioned property respectively without powers of
disposition by way of gift, sale, etc., but only enjoying the produce got there
by paying all Government taxes".
"After my life time you take possession
of the A Schedule mentioned property and after your mother's life-time the
Schedule mentioned property".
In the first extract just set out,
Subbarayudu made it clear that during his life he would enjoy the produce of
the land "got there by paying all Government taxes". Subbarayudu was
already an old man in 1955 and was apparently unable personally to look after
cultivation of the land. His wife and younger daughter were also, perhaps,
considered by him no better for the purpose. Besides, it appears that he was
keen to have at least some paddy to come to him from the land during his life
time as a source of income and perhaps thought that his grandson, the first
defendant, would faithfully carry out the conditions without creating
difficulties. This position does not appear to have been disapproved even by
the plaintiffs during the life time of Subbarayudu.
Assuming, but not deciding, that the
principles under section 76(a) and (e) of the Transfer of Property Act may even
be applicable in this case, we are unable to hold that granting of the lease to
defendant No. 1 in the entire circumstances of the case was not a prudent act
of management of the properties. In view of the relationship of the parties,
that was a natural arrangement for cultivation of the land.
Mr. Natesan drew our attention to several
decisions of this Court dealing with section 76 of the Transfer of Property Act
and in particular to the decision in Prabhu v.
Ramdev & ors.(l), wherein this Court held
that- "even in regard to tenants inducted into the land by a mortgagee
cases may arise where we said tenants may acquire rights of special character
by virtue of statutory provisions which by, in the meanwhile, come into
operation. A permissible settlements a mortgagee in possession with a tenant in
the course of prudent management and the springing up of rights in the tenant
conferred or created by statute based on the nature of the land and possession
for the requisite period, it was observed, was a different matter
990 Counsel submits that the present case is
clearly distinguishable from the above case since prior to the execution of Ex.
B-13 in 1958 the Andhra Act had already come into force and it was not a case
where certain special rights were created "in the meanwhile".
When a person with full knowledge of the law,
ignorance of which is no excuse, enters upon a lawful transaction or executes a
valid document, the rights flowing from the law cannot be denied to those who
are entitled to their benefit on the supposed theory of estoppel or a plea of
contracting out by implication. Prabhu's case (supra) is not an authority for
such a proposition which counsel seeks to spell out. The provisions of the
Andhra Act will, therefore, be attracted to the tenancy created by Ex. B-13.
It is further contended by Mr. Natesan that
the plaintiffs are not landlords within the meaning of section 2(f) of the
Andhra Act. He also submits that defendant No. 1 is not a cultivating tenant
under the plaintiffs.
By section 2(f) of the Andhra Act, "
'landlord' means, the owner of a holding or part thereof who is entitled to
evict the cultivating tenant from such holding or part, and includes the heirs,
assignees, legal representatives of such owner, or person deriving rights
By section 2(c) of the said Act, "
'cultivating tenant' means a per son who cultivates by his own labour or by
that of any other member of his family or by hired labour under his supervision
and control, any land belonging to another under a tenancy agreement, express
or implied, but does not include a mere intermediary".
The High Court has found that defendant No. 1
was a cultivating tenant of the landlord under Subbarayudu relying on Ex. B-13
r and also on admissions by the defendants 2 and 3 who conceded possession of
the land by defendant No. 1 as a lessee under Subbarayudu and their own
possession as farm servants under the first defendant. We have no reason to take
a contrary view.
In view of our conclusion that Ex. B-13 is an
instrument of lease, there is no difficulty in holding that Subbarayudu was the
quondam landlord of the first defendant within the meaning of section 2(f) of
the Andhra Act. Once that is established, section 10 of the Andhra Act takes
care of the tenancy that has been created under Ex. B-13.
Section 10 of the Andhra Act at the relevant
time reads as under:
"10(1) "The minimum period of every
lease entered into between a landlord and his cultivating tenant on or after
the commencement of this Act, shall be six years. Every such lease shall be in
writing and shall specify the holding, its extent and the rent payable therefore,
with such other particulars, as may be prescribed. The stamp and registration
charges for every such lease shall be borne by the landlord and the cultivating
tenant in equal shares.
991 (2) Notwithstanding anything contained in
sub- section (1) all tenancies subsisting on the date of promulgation of the
Andhra Cultivating Tenants' Protection ordinance, 1956 (Andhra ordinance 1 of
1956), and protected by that ordinance, and all subsequent tenancy agreements
entered into up to the commencement of this Act, shall continue for a period of
five years from the 1st June 1956 or until the expiry of the lease in the
normal course, whichever is later, on the same terms and conditions as before,
but subject to the determination of fair rent in case of dispute.
(3) After such termination, the landlord may
resume the land from the cultivating tenant without any notice, and if the
tenant does not surrender possession, the landlord may by an application before
the Tahsildar obtain an order for delivery of possession in the prescribed
Thus under section 10(1) when Ex. B-13 was executed
on August 4, 1958, the lease created would by statute continue up to August 4,
1964 and even for further periods by later amendments of the Act. Taking the
original section 10(1) itself, the landlord Subbarayudu died in May 1960 and
there is no question of the lease ceasing on his death in view of the clear
provision under section 10(1). As assignees by gift the plaintiffs are
landlords on the death of Subbarayudu. Under section 11, the ownership thus
being changed on the death of the landlord, the tenancy, which subsists by
operation of law, will continue on the same terms and conditions for the
unexpired portion of the lease under the scheme of the Act as amended. The
expression "currency of the lease" in section 1-1 will include the
statutory extension of the lease under the provisions of the Andhra Act.
Termination of tenancy under the Andhra Act
is provided for under section 13. Under section 16" there is a special
forum for adjudication of disputes under the Act including eviction of
cultivating tenants. Under section 17 the provisions of the Andhra Act override
anything inconsistent therewith contained in any preexisting law, custom,
usage, agreement or decree or order of a Court.
It is, therefore, clear that the civil
litigation between the parties having established their respective rights based
on the two documents, Ex. A-1 and Ex. B-13, and the plaintiffs being landlords
and defendant No. 1 being a cultivating tenant, eviction will have to be sought
for in accordance with the provisions of the Andhra Act. The High Court is
right in refusing eviction through the process of the civil court.
In the result we are unable to interfere with
the judgment and decree of the High Court. The appeal is dismissed. There will
be, however, no order as to costs.
P.H.P. Appeal dismissed.