Executory construction and hiring agreement, promissory estoppel, and limitation principles supported damages for premature termination.

An executory arrangement for construction and later hiring of plinths did not create a present lease or transfer any interest in praesenti, so compulsory registration was not required and the absence of a registered lease deed did not defeat a damages claim. Where the defendant induced the plaintiff to raise funds and construct the plinths to agreed specifications, then terminated occupation after taking the benefit of that performance, promissory estoppel and breach of contract principles supported liability in damages. The compensation claim was within limitation because it arose on vacating the premises, and an unexplained reduction in damages was unsustainable where the agreed monthly rent supplied the measure of loss.

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Issues: (i) whether the agreement for construction and hiring of plinths was an executory arrangement not requiring compulsory registration, and whether the absence of a registered lease deed defeated liability for damages; (ii) whether the premature termination of occupation after inducing the plaintiff to construct the plinths attracted the doctrine of promissory estoppel and amounted to breach of contract; (iii) whether the suit for damages was barred by limitation and whether the High Court was justified in reducing damages by 6%.

Issue (i): whether the agreement for construction and hiring of plinths was an executory arrangement not requiring compulsory registration, and whether the absence of a registered lease deed defeated liability for damages.

Analysis: The agreement contemplated future execution of a lease deed after completion of construction and obtaining completion formalities. It did not create any present demise or transfer any right in praesenti. The arrangement therefore fell within the category of an executory agreement and not a lease requiring compulsory registration. The absence of a registered lease deed could not extinguish the contractual promise that the plinths would be hired for the stipulated period, nor could it prevent reliance on the agreement in a suit for damages for breach.

Conclusion: The agreement was not compulsorily registerable as a lease deed, and the absence of registration did not defeat the claim for damages.

Issue (ii): whether the premature termination of occupation after inducing the plaintiff to construct the plinths attracted the doctrine of promissory estoppel and amounted to breach of contract.

Analysis: The tender, correspondence, agreement terms and subsequent conduct consistently represented that the premises would be occupied for three years, extendable by one year. The plaintiff altered his position by raising loans and constructing the plinths to the defendant's specifications. After taking the benefit of that performance, the defendant could not repudiate the assurance and escape liability by treating the arrangement as a mere monthly tenancy. The contract was lawfully terminable in form, but termination did not absolve the promisor from compensating the promisee for the loss caused by acting on the assurance.

Conclusion: The defendant was bound by its assurance and was liable in damages for breach of the promise held out to the plaintiff.

Issue (iii): whether the suit for damages was barred by limitation and whether the High Court was justified in reducing damages by 6%.

Analysis: The cause of action for compensation for breach arose when the defendant vacated the premises after giving notice and thereby broke the contract. The suit, filed within three years of that date, was within the period prescribed for a suit for compensation for breach of contract. As to quantum, the reduction of damages by 6% was made without any cogent basis, despite the accepted measure of damages being the agreed monthly rent. In the absence of a sound reason, the reduction could not stand.

Conclusion: The suit was not time-barred, and the reduction of damages was unsustainable.

Final Conclusion: The dismissal of the appeal challenging the decree was warranted, while the plaintiff's appeal succeeded and the trial decree was restored in full.

Ratio Decidendi: An executory agreement that does not itself create a present demise is not compulsorily registrable as a lease, and a party that induces performance by a definite promise cannot avoid damages for breach merely because the contemplated formal lease was never executed.

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