Wednesday, 5 February 2020

When it is not necessary to register compromise decree?

A compromise decree passed by a Court would
ordinarily be covered by Section 17(1)(b) but subsection(
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

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

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.

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 subsection
(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 “subjectmatter
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

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

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVI L APPEA L NO.800 O F 2020

MOHAMMADE YUSUF  Vs  RAJKUMAR

ASHO K BHUSHAN, J.
Dated:February 05, 2020.


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

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

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

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

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;

(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,

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 subsection
(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 subsection(
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

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

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.

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 subsection
(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 “subjectmatter
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

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 preexisting
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

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 preexisting
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.
12
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
13
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
14
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.
15
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

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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