REPORTABLE

IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL     APPEAL     NO.800 OF     2020  (arising out of SLP (C) No. 32799 of 2018)

MOHAMMADE YUSUF & ORS.        ...APPELLANT(S)  

VERSUS

RAJKUMAR & ORS.   ...RESPONDENT(S)  

J     U     D     G     M     E     N     T

ASHOK     BHUSHAN, J.

This appeal has been filed against the judgment

of High Court of Madhya Pradesh at Indore Bench dated

13.02.2017  dismissing  the  writ  petition  of  the

appellant challenging the order of the trial court

dated  07.01.2015  whereby  the  trial  court  has  held

that the compromise decree sought to be filed by the

appellant is not admissible in evidence for want of

registration.  

2. The brief facts of the case are: -

2.1 A Suit No. 250-A of 1984 was filed by one

Habib Kha, the father of the appellant for

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declaration and injunction.  The Suit was

filed  for  7  biswa  area  of  survey  No.203

situated at Village Kitvani, Kasba Mandsaur,

which was attached in east with the land of

plaintiff  being  survey  No.223.   The

plaintiff was in possession of suit land,

which  was  recorded  in  the  names  of

defendant.  A compromise decree was passed

in the suit dated 04.10.1985 declaring the

right of plaintiff on 7 biswa area and it

was declared that remaining land belong to

defendant.   

2.2 The appellants, who were son of Habib Kha

claimed to be in possession, continued to be

in possession of the aforesaid area.  A Suit

No.90-A of 2006 was filed on 16.09.1998 by

respondent  Nos.  1  and  2  against  the

appellants  for  perpetual  injunction  in

respect of two areas admeasuring 825 sq. ft.

and 1650 sq. ft. bearing survey No.203.  The

respondent Nos. 1 and 2 sold the above said

two areas to respondent Nos. 4 to 7 and they

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were impleaded as plaintiffs in the above

said suit.  A written statement was filed by

the  appellants  in  Civil  Suit  No.  260A  of

1998  pleading  that  respondents  have

forcefully  took  the  possession  of  area

admeasuring 1650 sq. ft. being the part of

survey No.203, which was in actual, peaceful

and  uninterrupted  possession  of  the

appellant  and  their  ancestral  since  1951.

Along with the written statement, a counter

claim  was  filed  by  the  appellant  for

recovery of possession of the area.   

2.3 During evidence of Mohammade Hafiz, one of

the  appellants,  he  tried  to  exhibit  the

decree dated 04.10.1985 passed in Civil Suit

No.250A of 1984, which was objected by the

plaintiff.   Plaintiff’s  objection  to  the

admissibility of the decree was that decree

being not registered cannot be accepted in

evidence.   Learned  Civil  Judge  heard  the

parties and passed order dated 07.01.2015 on

issue regarding admissibility of the above

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document.  Civil Judge took the view that

decree dated 04.10.1985 is required to be

registered as per provision of Section 17(1)

(e) of the Registration Act, hence it is not

admissible  in  evidence.   A  Writ  Petition

No.2170 of 2015 was filed by the appellant

challenging the order dated 07.01.2015.  The

High  Court  by  the  impugned  judgment  has

dismissed the writ petition taking the view

that decree was required to be registered.

The High Court held that the very fact that

the suit was based on the plea of adverse

possession reflects that plaintiff of Suit

No.250-A of 1994 had no pre-existing title

in  the  suit  property.   Relying  on  the

judgment of this Court in Gurdwara Sahib Vs.

Gram Panchayat Village Sirthala and Another,

(2014) 1 SCC 669, High Court held that it is

settled  that  declaratory  decree  based  on

plea of adverse possession cannot be claimed

and adverse possession can only be used as a

shield by the defendant.  Aggrieved with the

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judgment of High Court, this appeal has been

filed.     

3. The only question to be considered in this appeal

is as to whether the above noted compromise decree

dated 04.10.1985 was required to be registered under

Section 17 of the Registration Act, 1908 or not?

4. Part  III  of  the  Registration  Act  contains  a

heading “of Registrable Documents” in which Section

17 finds place, which contains a heading “Documents

of which registration is compulsory”.  Section 17(1)

deals  with  documents  of  which  registration  is

compulsory.  Section 17(2) provides that nothing in

clauses (b) and (c) of sub-Section (1) applies to

various  documents  as  enumerated  therein.   Sections

17(1)  and  17(2)(vi),  which  are  relevant  for  the

present case are as follows: - “17.  Documents  of  which  registration  is compulsory.—(1)  The  following  documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act No. XVI 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) instruments of gift of immovable property;  

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(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) leases  of  immovable  property from year to year, or for any term  exceeding  one  year,  or reserving a yearly rent;  

(e) non-testamentary  instruments transferring  or  assigning  any decree or order of a Court or any award  when such  decree or order  or  award  purports  or operates  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:

Provided  that  the  State Government  may,  by  order published  in  the  Official Gazette,  exempt  from  the operation  of  this  sub-section any  lease  executed  in  any district, or part of a district,

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the terms  granted by  which do not exceed  five years  and the annual rents reserved by which do not exceed fifty rupees.

(2) Nothing in clauses (b) and (c) of sub- section (1) applies to—  

XXXXXXXXXXXX

(vi) any decree or order of a Court except a decree or order expressed to be made on a  compromise  and  comprising  immovable property  other  than  that  which  is  the subject-matter of the suit or proceeding; or”

5. Under  Section  17(1)(b),  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  requires  registration.   The  word

“instrument” is not defined in Registration Act, but

is defined in the Indian Stamp Act, 1899 by Section

2(14).   

6. A  compromise  decree  passed  by  a  Court  would

ordinarily be covered by Section 17(1)(b) but sub-

section(2) of Section 17 provides for an exception

for any decree or order of a Court except a decree or

order  expressed  to  be  made  on  a  compromise  and

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comprising immovable property other than that which

is  the  subject-matter  of  the  suit  or  proceeding.

Thus, by virtue of sub-section(2)(vi) of Section 17

any  decree  or  order  of  a  Court  does  not  require

registration.  In sub-clause(vi) of sub-section (2),

one category is excepted from sub-clause(vi), i.e., a

decree or order expressed to be made on a compromise

and  comprising  immovable  property  other  than  that

which  is  the  subject-matter  of  the  suit  or

proceeding.   Thus,  by  conjointly  reading  Section

17(1)(b) and Section 17(2)(vi), it is clear that a

compromise decree comprising immovable property other

than  which  is  the  subject  matter  of  the  suit  or

proceeding requires registration, although any decree

or order of a Court is exempted from registration by

virtue of Section 17(2)(vi).  A copy of the decree

passed in Suit No.250-A of 1984 has been brought on

record as Annexure P-2, which indicates that decree

dated  04.10.1985  was  passed  by  the  Court  for  the

property,  which  was  subject  matter  of  the  suit.

Thus, the exclusionary clause in Section 17(2)(vi) is

not  applicable  and  the  compromise  decree  dated

04.10.1985 was not required to be registered on plain

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reading  of  Section  17(2)(vi).   The  High  Court

referred to judgment of this Court in Bhoop Singh Vs.

Ram  Singh  Major  and  Others,  (1995)  5  SCC  709,  in

which  case,  the  provision  of  Section  17(2)(vi)  of

Registration Act came for consideration.  This Court

in the above case while considering clause (vi) laid

down following in paragraphs 16, 17 and 18:-

“16. We have to view the reach of clause (vi), which is an exception to sub-section (1), bearing all the aforesaid in mind. We would think that the exception engrafted is meant to cover that decree or order of a  court,  including  a  decree  or  order expressed  to  be  made  on  a  compromise, which declares the pre-existing right and does not by itself create new right, title or  interest  in  praesenti in  immovable property  of  the  value  of  Rs  100  or upwards.  Any  other  view  would  find  the mischief  of  avoidance  of  registration, which  requires  payment  of  stamp  duty, embedded in the decree or order.

17. It would, therefore, be the duty of the court to examine in each case whether the parties have pre-existing right to the immovable property, or whether under the order or decree of the court one party having  right,  title  or  interest  therein agreed or suffered to extinguish the same and created right, title or interest  in praesenti in  immovable  property  of  the value of Rs 100 or upwards in favour of other party for the first time, either by compromise or pretended consent. If latter be  the  position,  the  document  is compulsorily registrable.

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18. The  legal  position  qua  clause  (vi) can,  on  the  basis  of  the  aforesaid discussion, be summarised as below:

(1) Compromise decree if bona fide, in the sense that the compromise is not a device to obviate payment of stamp  duty  and  frustrate  the  law relating to registration, would not require registration. In a converse situation,  it  would  require registration.

(2) If the compromise decree were to create  for  the  first  time right, title  or  interest  in  immovable property of the value of Rs 100 or upwards in favour of any party to the suit the decree or order would require registration.

(3)  If  the  decree  were  not  to attract any of the clauses of sub- section (1) of Section 17, as was the position in the aforesaid Privy Council and this Court’s cases, it is  apparent  that  the  decree  would not require registration.

(4) If the decree were not to embody the terms of compromise, as was the position  in  Lahore  case,  benefit from the terms of compromise cannot be derived, even if a suit were to be  disposed  of  because  of  the compromise in question.

(5) If the property dealt with by the  decree  be  not  the  “subject- matter of the suit or proceeding”, clause (vi) of sub-section (2) would not  operate,  because  of  the amendment of this clause by Act 21 of 1929, which has its origin in the aforesaid  decision  of  the  Privy

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Council,  according  to  which  the original  clause  would  have  been attracted,  even  if  it  were  to encompass property not litigated.”

7. In the facts of that case, this Court held that

the first suit cannot really be said to have been

decreed on the basis of compromise, as the suit was

decreed “in view of the written statement filed by

the defendant admitting the claim of the plaintiff to

be correct”. Further, the earlier decree was held to

be  collusive.   Two  reasons  for  holding  that  the

earlier  decree  in  the  above  said  case  required

registration have been mentioned in paragraph 19 of

the judgment, which is to the following effect:-

“19. Now,  let  us  see  whether  on  the strength of the decree passed in Suit No. 215 of 1973, the petitioner could sustain his  case  as  put  up  in  his  written statement in the present suit, despite the decree  not  having  been  registered. According  to  us,  it  cannot  for  two reasons:

(1) The decree having purported to create  right  or  title  in  the plaintiff for the first time that is not being a declaration of pre- existing  right,  did  require registration.  It  may  also  be pointed  out  that  the  first  suit cannot really be said to have been decreed on the basis of compromise, as the suit was decreed “in view of the written statement filed by the

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defendant  admitting  the  claim  of the  plaintiff  to  be  correct”. Decreeing  of  suit  in  such  a situation  is  covered  by  Order  12 Rule 6, and not by Order 23 Rule 3, which  deals  with  compromise  of suit, whereas the former is on the subject of judgment on admissions.

(2)  A  perusal  of  the  impugned judgment  shows  that  the  first appellate court held the decree in question as ‘collusive’ as it was with a view to defeat the right of others who had bona fide claim over the  property  of  Ganpat.  Learned Judge of the High Court also took the same view.”

8. Following  the  above  judgment  of  Bhoop  Singh

(supra),  the  High  Court  held  that  since  the

compromise  decree  dated  04.10.1985  did  not  declare

any  pre-existing  right  of  the  plaintiff,  hence  it

requires registration.  The High Court relied on the

judgment of Gurdwara Sahib Vs. Gram Panchayat Village

Sirthala  and  Another  (supra) and  made  following

observations in paragraphs 11, 12 and 13: - “11. In  the  present  case,  in  the earlier  suit  CS  No.250-A/1984  the petitioner  had  claimed  declaration  of title on the plea of adverse possession and the compromise decree was passed in the suit.  The very fact that the suit was based upon the plea of adverse possession reflects that the petitioner had no pre- existing title in the suit property.  Till the suit was decreed, the petitioner was a mere encroacher, at the most denying the title of lawful owner.  

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12. The  Supreme  Court  in  the  matter  of Gurudwara Sahib Vs. Gram Panchayat Village Sirthala reported in  2014(3) MPLJ 36 has settled that declaratory decree based on plea  of  adverse  possession  cannot  be claimed and adverse possession can be used only  as  shield  in  defence  by  the defendant.  It has been held that:-

“7. In the Second Appeal, the relief  of  ownership  by  adverse possession is again denied holding that  such  a  suit  is  not maintainable. There cannot be any quarrel  to  this  extent  the judgments of the courts below are correct  and  without  any  blemish. Even if the plaintiff is found to be in adverse possession, it cannot seek  a  declaration  to  the  effect that  such  adverse  possession  has matured  into  ownership.  Only  if proceedings  filed  against  the appellant and appellant is arrayed as defendant that it can use this adverse  possession  as  a shield/defence.”

13.  The plea of the petitioner based upon Sec.27 of the Limitation Act is found to be devoid of any merit since it relates to the extinction of the right of the lawful owner after expiry of the Limitation Act, but in view of the judgment of the supreme court  in  the  matter  of  Gurudwara  Sahib (supra),  the  petitioner  cannot  claim himself  to  be  the  owner  automatically after the expiry of the said limitation.”  

9. The judgment of Gurdwara Sahib Vs. Gram Panchayat

Village  Sirthala  and  Another  (supra) has  now  been

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expressly overruled by a Three Judge Bench judgment

in  Ravinder Kaur Grewal and Others Vs. Manjit Kaur

and Others, (2019) 8 SCC 729.  This Court held in the

above case in paragraph 62 that once 12 years' period

of adverse possession is over, even owner's right to

eject him is lost and the possessory owner acquires

right, title and interest possessed by the outgoing

person/owner.  In paragraph 62, following has been

laid down:

“62. We hold that a person in possession cannot be ousted by another person except by due procedure of law and once 12 years’ period of adverse possession is over, even owner’s right to eject him is lost and the possessory owner acquires right, title and interest  possessed  by  the  outgoing person/owner as the case may be against whom he has prescribed. In our opinion, consequence is that once the right, title or interest is acquired it can be used as a  sword  by  the  plaintiff  as  well  as  a shield  by  the  defendant  within  ken  of Article 65 of the Act and any person who has  perfected  title  by  way  of  adverse possession,  can  file  a  suit  for restoration  of  possession  in  case  of dispossession. In case of dispossession by another person by taking law in his hand a possessory  suit  can  be  maintained  under Article 64, even before the ripening of title  by  way  of  adverse  possession.  By perfection of title on extinguishment of the  owner’s  title,  a  person  cannot  be remediless.  In  case  he  has  been dispossessed  by  the  owner  after  having lost the right by adverse possession, he can be evicted by the plaintiff by taking

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the plea of adverse possession. Similarly, any  other  person  who  might  have dispossessed  the  plaintiff  having perfected  title  by  way  of  adverse possession can also be evicted until and unless  such  other  person  has  perfected title against such a plaintiff by adverse possession.  Similarly,  under  other articles also in case of infringement of any of his rights, a plaintiff who has perfected the title by adverse possession, can sue and maintain a suit.”

10.  In  paragraph  61,  this  Court  has  expressly

overruled  the  Gurdwara  Sahib  Vs.  Gram  Panchayat

Village Sirthala and Another (supra).   

11. In view of the pronouncement of this Court by

Three Judge Bench judgment in  Ravinder Kaur Grewal

and Others Vs. Manjit Kaur and Others (supra), the

very  basis  of  the  High  Court  for  holding  that

compromise  deed  dated  04.10.1985  requires

registration is knocked out.  The present is not a

case where there is any allegation that the decree

dated 04.10.1985 is a collusive decree.  The decree

dated 04.10.1985 was in favour of the plaintiff of 7

biswa land, survey No.203 and for remaining land of

survey  No.203,  it  was  held  that  it  belonged  to

defendants.      

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12. In Bhoop Singh (supra), this Court held that the

earlier decree required registration for the reasons

as mentioned in paragraph 19.  The reasons given in

paragraph 19 of the above case has no application in

the facts of the present case.   

13. This Court in Som Dev and Others Vs. Rati Ram and

Another, (2006) 10 SCC 788 while explaining Section

17(2)(vi) and Section 17(1)(b) and (c) held that all

decree and orders of the Court including compromise

decree subject to the exception as referred that the

properties that are outside the subject matter of the

suit do not require registration.  In paragraph 18,

this Court laid down following: -

“18. ……………But  with  respect,  it  must  be pointed out that a decree or order of a court does not require registration if it is not based on a compromise on the ground that clauses (b) and (c) of Section 17 of the Registration Act are attracted. Even a decree on a compromise does not require registration  if  it  does  not  take  in property that is not the subject-matter of the suit…………………….”

14. In facts of the present case, the decree dated

04.10.1985  was  with  regard  to  property,  which  was

subject  matter  of  the  suit,  hence  not  covered  by

exclusionary clause of Section 17(2)(vi) and present

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case  is  covered  by  the  main  exception  crafted  in

Section 17(2)(vi), i.e., “any decree or order of a

Court”.   When  registration  of  an  instrument  as

required by Section 17(1)(b) is specifically excluded

by  Section  17(2)(vi)  by  providing  that  nothing  in

clause (b) and (c) of sub-section (1) applies to any

decree or order of the Court, we are of the view that

the  compromise  decree  dated  04.10.1985  did  not

require registration and learned Civil Judge as well

as the High Court erred in holding otherwise.  We,

thus, set aside the order of the Civil Judge dated

07.01.2015 as well as the judgment of the High Court

dated  13.02.2017.   The  compromise  decree  dated

04.10.1985 is directed to be exhibited by the trial

court.  The appeal is allowed accordingly.                    

......................J.                                   ( ASHOK BHUSHAN )

......................J.                                   ( M.R. SHAH ) New Delhi, February 05, 2020.

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