2022 (8) TMI 1595 - SC - Indian Laws

Compromise cannot confer title; S.2(4) exclusion and 1973 Rules limit revenue rights, registration required, possessory rights prevail

SC held the compromise dated 18.12.1975 did not confer title on the plaintiff; it only affirmed limited revenue/cultivation rights under the 1973 Rules ... Effect of the compromise for correction of revenue records - Seeking declaration and possession in respect of the land - applicability of principles of estoppel against defendants. Whether the compromise dated 18.12.1975 confers title? - HELD THAT:- The power under the 1973 Rules confers limited power to the circle officer’s and it is confined to verifying, amending, and authenticating revenue records as they existed on the cutoff date i.e., 1st September, 1971. Thus, it is clear that a mere affirmation in the context of revenue records and personal cultivation rights cannot be interpreted as an intention of Sucha Singh to confer title upon the Plaintiff. With his endorsement on the compromise, Sucha Singh perhaps intended to give the right of personal cultivation but the same does not in any manner suggest that Sucha Singh had intended to confer title on the plaintiff. It is also important to note that Plaintiff in his own testimony (led before Trial Court, and recorded in the Trial Court judgment) had stated that Sucha Singh prepared “orchards”. Albeit, by using the salary of Plaintiff. The land is therefore of the orchard category. In this situation, the land which is the subject matter of the Compromise being an Orchard stood excluded from the definition of land under S. 2(4) of the 1972 Act. As such, the title for such category of land could not vest with the Plaintiff. This determination of fact is essential to adjudicate the title and the issue was definitely raised in the LPA proceeding before the High Court, apart from being raised in the lower court also. In such a situation this Court is required to keep the ‘orchard’ aspect in mind and also address the implication of the same on the contesting parties - The compromise (18.12.1975) does not convey any lawful title on the Plaintiff. Did the compromise require registration? - HELD THAT:- The compromise was not amongst family members but between the plaintiff and the tenant – Jalil Khan (not a family member). The statement of Sucha Singh “I accept the compromise”, is only with regard to the internal arrangement regarding the tenancy of Jalil Khan, and this will not make it a family arrangement. Moreover, the plea that compromise is a “Family Arrangement” is raised for the first time before this Court. The Plaintiff significantly had waived his claim to other assets left by Sucha Singh (on the basis that the Plaintiff is his adopted son), before the High Court. He cannot therefore be permitted to raise such a contention for the first time before this Court. Even otherwise, Jalil Khan was not a family member. Thus, he could not have been a party to a so called “family arrangement”. Besides, none of the other family members were parties to the said compromise either. Therefore, the documents in question would require registration and it cannot be treated as a family arrangement. This case is outside the ambit of any of the exempted sections such as Section 15 (Prohibition on transfer of land), 25 (levy of annual tax), 27 (collection of tax), 28 (Determination of ques-levy of tax related), 51 (repeal & savings) of the 1972 Act. Only such provisions of Chapter V which were relatable to the aforesaid provisions were relevant, and not all sections were within the ambit of exception. Section 31 of the 1972 Act which provided for Appeals and Revisions, was not protected by Section 4 of the Suspension Act, 1975. Thus, the DC, lacked inherent jurisdiction to either entertain the appeal or endorse the compromise during the suspended phase. Whether estoppel principle would apply against the defendants in their challenge to DCs order? - HELD THAT:- The records in the case show that Sucha Singh, during his life time, had cancelled the two Wills in favour of the plaintiff. This indicates that Sucha Singh was not interested to give any part of his property to the plaintiff. Even otherwise, the suit property is self-acquired property of Sucha Singh, and a donee cannot claim equity in respect of the disposal of self-acquired properties, by a donor. Equity is all about balancing the competing interests and due weightage must be given to the fact that the appellants have been in possession and was nurturing their father’s land for over four decades and the estoppel principle propounded against them by the respondent must give way to the law set out by the statute. Notwithstanding the concurrent finding against them, in a case like this, where the law leans in appellant’s favour, the Court has to exercise corrective jurisdiction as the circumstances justify. As such, taking a cue from Haryana State Industrial Development Corporation vs. Cork Manufacturing Co [2007 (8) TMI 803 - SUPREME COURT]., the exercise of extraordinary jurisdiction under Article 136 is found to be merited in this matter. Proceeding accordingly, the decree in favour of the respondent (Plaintiff) in respect of the land measuring 11 Kanals and 15 Marlas falling within the survey nos. 1829 and 1838 situated at Ranbirpora, Anantnag, are set aside. The Appeal stands allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether a compromise recorded in proceedings for correction of revenue records under the Agrarian Reforms Act can, by itself, confer lawful title in immovable property on a party who had no antecedent registered transfer. 2. Whether the compromise and the consequent order recording it required registration under the Registration Act (and corresponding Transfer of Property provisions) to create title or interest in immovable property. 3. Whether the authority that recorded the compromise and passed the consequential order had jurisdiction to do so when the underlying Agrarian Reforms Act was under suspension, and if lack of jurisdiction renders the compromise/order a nullity. 4. Whether equitable doctrines (estoppel/family arrangement) can validate or defeat statutory requirements or cure defects arising from lack of registration or want of jurisdiction. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Effect of compromise recorded in revenue-correction proceedings: Does it confer title? Legal framework: Compromise recorded in proceedings under the Agrarian Reforms Act and Rules relates to revenue entries and recognition of personal cultivation and ownership for revenue-record purposes; definitions of 'owner' and 'personal cultivation' in the 1972 Act are inclusive and extend to persons claiming through proprietor, including adopted sons. Circle Officers' and similar authorities are empowered to verify, amend and authenticate Kharif 1971 girdwari entries and correct revenue records as on cutoff date. Precedent treatment: Authorities distinguish between recognition of pre-existing rights and creation of new title by compromise; precedents require registration where new rights/title are created by compromise. Interpretation and reasoning: The compromise in question was entered in the context of correction of revenue records and must be read within the statutory scheme. The inclusive statutory definitions show that the term 'owner' in that context need not denote legal/proprietary title but may denote recognition for revenue/personal cultivation purposes (including adopted sons). The functions of the officers under the Rules were limited to amending entries as they existed on the cutoff date; an affirmation in such proceedings evidences recognition of cultivation/possession for revenue purposes, not an intention by the legal proprietor to transfer title. Ratio vs. Obiter: Ratio - A compromise recorded in revenue-correction proceedings under the Agrarian Reforms framework, construed against statutory definitions and limited powers of revenue officers, does not by itself confer lawful proprietary title where it only recognizes personal cultivation or revenue ownership; such a recognition cannot be equated to an intention of the legal owner to transfer title. Conclusion: The compromise did not convey lawful title to the claimant; it at best recognized personal cultivation/possession in the revenue record context and is insufficient to transfer proprietary rights in the absence of a valid registered instrument. Issue 2 - Requirement of registration for the compromise and consequent order Legal framework: Registration Act provisions mandate registration of instruments creating rights, title, or interest in immovable property of a specified value; Transfer of Property provisions similarly require registration for transfer of immovable property. Precedents set out tests distinguishing compromises that merely record recognition of pre-existing rights from those that create rights/title afresh. Precedent treatment: Established jurisprudence holds that a compromise which creates new rights, title or interest in immovable property (as distinct from recognizing pre-existing rights) requires registration; cases affirm that unregistered instruments that create title are ineffective to vest proprietary rights. Interpretation and reasoning: The claimant's title rested solely on the compromise and the DC's order; no antecedent title in the claimant was shown. The compromise was recorded in an appeal arising from change of entries during verification under the 1972 Act and the order endorsed recognition of the claimant's possession/ownership for the first time. Such a transaction, creating title by compromise and endorsed in a non-judicial/revenue proceeding, falls within the category requiring registration. The fact that the compromise was not a family arrangement (being between claimant and a tenant, not all family members) reinforces that it cannot be treated as outside registration requirements. Ratio vs. Obiter: Ratio - Where a compromise creates rights, title or interest in immovable property for the first time and is not simply a recognition of pre-existing rights, it is compulsorily registrable; absence of registration prevents such compromise/order from vesting legal title. Conclusion: The compromise and the Deputy Commissioner's order required registration; being unregistered, they cannot confer legal title on the claimant. Issue 3 - Jurisdiction during suspension of the Agrarian Reforms Act: Effect on the compromise/order Legal framework: Suspension statute suspended operation of the Agrarian Reforms Act for a specified period but preserved certain enumerated sections and related proceedings; powers exercised under provisions that were suspended are invalid for want of jurisdiction. Principle: orders passed without jurisdiction under special acts are nullities and can be challenged whenever enforcement is attempted. Precedent treatment: Authorities establish that where an authority lacks statutory jurisdiction and yet acts, the resulting order is a nullity; consent of parties cannot cure lack of jurisdiction. Interpretation and reasoning: The Suspension Act excluded certain specified sections from suspension but did not protect the provision that conferred appellate/revisional jurisdiction which was invoked for the compromise and DC order. Since Section(s) relevant to the appeal/compromise recording were not among the exempted provisions, the DC lacked jurisdiction during suspension. Therefore, the DC's endorsement and order passed in the suspended phase are ultra vires and legally non-existent. Ratio vs. Obiter: Ratio - An order or compromise recorded by an authority exercising powers traceable only to suspended provisions of a statute, during the period of suspension, is a legal nullity; absence of jurisdiction cannot be cured by party consent and such defective orders may be set aside or disregarded whenever relied upon. Conclusion: The Deputy Commissioner's order recording the compromise, passed during suspension of the Agrarian Reforms Act provisions conferring jurisdiction, had no legal effect and cannot serve to vest title. Issue 4 - Role of estoppel/family-arrangement/fairness against statutory requirements Legal framework: Equitable doctrines (estoppel, family arrangement) can supplement law but cannot override clear statutory requirements (e.g., registration) or cure lack of jurisdiction. Equity follows the law; where law prescribes mandatory formalities or prohibits action by a tribunal lacking jurisdiction, equity cannot validate non-compliant acts. Precedent treatment: Courts have held that family-arrangement or estoppel may operate in intra-family transactions when consistent with law, but cannot displace statutory mandates like compulsory registration or validate acts by authorities without jurisdiction. Recognition of family arrangement as an exception requires the transaction to be bona fide family arrangement with requisite parties and context. Interpretation and reasoning: The compromise was between claimant and a tenant (not a family arrangement involving all relevant family members) and the proprietor's thumb endorsement related to the revenue context. Moreover, documents and evidence indicated the proprietor had revoked earlier testamentary dispositions in favour of the claimant. Given the statutory requirement of registration for creation of title and the jurisdictional nullity of the DC's order, equitable estoppel cannot be invoked to validate the compromised creation of proprietary rights. Equity cannot supplant mandatory legal formalities or cure void action by an authority lacking jurisdiction. Ratio vs. Obiter: Ratio - Equitable doctrines cannot override statutory mandates (registration) or validate acts done without jurisdiction; family-arrangement or estoppel will not save a compromise that creates title without compliance with statutory requisites or when recorded by an authority acting beyond its jurisdiction. Conclusion: Estoppel or equitable family-arrangement principles cannot cure the defects of lack of registration or absence of jurisdiction; they do not preclude setting aside the compromise/order for these legal defects. Final Disposition (legal conclusion): The compromise recorded in revenue-correction proceedings did not, by itself, convey proprietary title. The compromise and the Deputy Commissioner's order required registration to create title and were unregistered. Further, the authority that recorded the compromise and passed the consequential order acted during suspension of the statutory scheme and thus lacked jurisdiction, rendering the order a nullity. Equitable doctrines cannot cure these legal defects. Accordingly, the decree founded on the compromise/order cannot stand.