Case Note & Summary
The dispute arose out of a lease of land in Jharia, where the Eastern Coal Co. Ltd., as lessee from the Zamindar, had erected coke manufacturing buildings and later sold machinery to the appellant and granted him a lease of the land on 17 May 1946. The registered lease provided for payment of royalty at Re 1 per ton on despatches of coke, with a clause permitting revision by mutual arrangement justified by market conditions. The appellant claimed that in 1950 the Eastern Coal Company agreed to a royalty of 2 annas per ton on breeze coke, and in December 1951 agreed to reduce royalty on hard coke to 8 annas per ton effective 19 July 1952. On 5 January 1955, Eastern Coal informed the appellant that the colliery had been sold to respondent No.1, effective 1 January 1955. Respondent No.1 claimed royalty at Re 1 per ton on all despatches of coke, including breeze coke, while appellant paid at the reduced rates. Respondent No.1 filed a suit on 31 January 1956 claiming Rs 23,287-4-3 as royalty balance for January to November 1955 and damages at 6% per annum amounting to Rs 1212-11-9. The trial court accepted the appellant's plea regarding reduced rates and held that the document Ex A-4, which embodied the arrangement, did not require compulsory registration and was admissible in evidence. Consequently, the trial court dismissed the suit. Respondent No.1 appealed to the Patna High Court, which did not decide the question of admissibility of Ex A-4 but allowed the appeal and decreed the suit on the finding that the appellant had failed to prove that the reduction in the rate of royalty had been given effect from July 1952 as claimed. The appellant then appealed to the Supreme Court by certificate. Before the Supreme Court, the appellant sought to raise the question of admissibility of Ex A-4 for want of registration. The Court noted that this contention could not be entertained unless the High Court's finding on the only point canvassed before it was set aside; the appellant did not persuade the Court to reverse that finding. Even assuming the mutual arrangement or agreement as evidenced by Ex A-4 was arrived at, the Supreme Court held that any reduction in royalty could not have been effected by Ex A-4 because it had not been registered under the Indian Registration Act, 1908. The Court affirmed the well-settled principle that a document which varies the essential terms of an existing registered lease, such as the amount of rent, must be registered. It approved the Calcutta High Court decisions in Durga Prasad Singh v. Rajendra Narain Bagchi and Lalit Mohan Ghosh v. Gopal Chuck Coal Co. Ltd., and disapproved the Madras High Court decision in Obai Goundan v. Ramalinga Ayyar. The Court observed that the consistent view of the Indian High Courts required registration of an agreement which reduces the rent of an existing registered lease. The other contentions regarding issue No.3 and that Ex A-4 had been acted upon did not survive. The Civil Miscellaneous Petitions for additional evidence and impleading Oriental Coal Co. Ltd. were dismissed. The appeal failed and was dismissed with costs.
Headnote
A) Registration Law - Compulsory Registration of Documents Varying Lease - Unregistered agreement varying essential terms of registered lease (rent/royalty) is inadmissible and ineffective - Indian Registration Act, 1908 (Sections not specified) - The dispute concerned an alleged reduction of royalty under a registered lease, evidenced by an unregistered document Ex A-4. The Supreme Court held that even assuming the mutual arrangement existed, the reduction could not be effected by an unregistered document because a document which varies the essential terms of an existing registered lease, such as amount of rent, must be registered. The Court approved Durga Prasad Singh v. Rajendra Narain Bagchi and Lalit Mohan Ghosh v. Gopal Chuck Coal Co. Ltd., disapproved Obai Goundan v. Ramalinga Ayyar, and dismissed the appeal with costs (Paras 233-235).
Issue of Consideration
Whether an unregistered document which varies the essential terms of an existing registered lease, such as the amount of rent/royalty, is admissible in evidence and can effect a reduction in the rate of royalty.
Final Decision
Appeal dismissed with costs; Civil Miscellaneous Petitions dismissed; Supreme Court held that unregistered Ex A-4 could not effect reduction in royalty; decree of High Court affirmed.
Law Points
- A document varying essential terms of an existing registered lease
- such as amount of rent
- must be registered under the Indian Registration Act
- 1908
- an unregistered agreement reducing rent cannot be given effect to
- the consistent view of Indian High Courts requires registration of such agreements
- the Madras High Court view in Obai Goundan v. Ramalinga Ayyar was disapproved
- appeal dismissed.
