1937 (10) TMI 7 - HC - Indian Laws

Court voids surrender deed as an evasion tactic, upholds proprietary sale. Plaintiffs deemed lawful tenants. Refund ordered.

The court declared the surrender deed void under the Central Provinces Tenancy Act, considering it a device to evade the law. The sale of proprietary ... - Issues Involved:1. Validity of the surrender deed under the Central Provinces Tenancy Act.2. Validity of the sale of proprietary rights.3. Limitation period for the suit.4. Refund of consideration in case of void transactions.Detailed Analysis:1. Validity of the Surrender Deed:The plaintiffs challenged the surrender deed on the grounds of illegality under the Central Provinces Tenancy Act. The court scrutinized the transaction, noting that the surrender and sale were executed on the same day, suggesting a pre-arranged agreement to circumvent the law. The court referred to Section 49 of the Central Provinces Tenancy Act, which mandates that a proprietor who loses his right to occupy sir land becomes an occupancy tenant. The court concluded that the surrender was a device to evade this provision, rendering it void and illegal. The court emphasized that such collusive actions designed to defraud alienees should fail, and the plaintiffs, being minors, were not in pari delicto with the vendors or purchaser.2. Validity of the Sale of Proprietary Rights:The plaintiffs also sought to invalidate the sale deed. The court differentiated between the sale and the surrender, noting that the sale of proprietary rights was not inherently illegal. The court found that there was no pleading suggesting that the sale was part of a single consideration with the surrender. Consequently, the sale was upheld as valid, while the surrender was void due to its illegal nature. The court relied on the precedent set in Bhagwant v. Anandrao, which allowed the separation of legal and illegal parts of a transaction.3. Limitation Period for the Suit:The court addressed the issue of limitation, referencing Schedule 2, Article 1 of the Tenancy Act, which prescribes a two-year period for suits for possession by a person claiming to be a tenant. Despite the plaintiffs being minors, Section 104 of the Tenancy Act excludes the extension of time for persons under legal disability. However, the court considered whether the plaintiffs' suit was under the Tenancy Act or seeking to set aside illegal alienations. The court concluded that the plaintiffs were occupancy tenants by operation of law and that their suit was within the limitation period, as the cause of action accrued on the date of the surrender.4. Refund of Consideration:The court deliberated on whether the defendant should receive a refund of the consideration paid under the void surrender deed. The court referenced Section 65 of the Contract Act, which mandates restitution when an agreement is discovered to be void. The plaintiffs were required to restore the benefits received under the impugned transaction. The court determined that the plaintiffs must return the consideration amounting to Rs. 7267-3-10 to the defendant. The court emphasized that the plaintiffs, having benefited from the transaction, could not retain the property without compensating the defendant.Conclusion:The court declared the surrender deed void and the defendant a quasi-trustee of the sir land, directing the plaintiffs to repay the consideration received. The sale deed was upheld as valid. The suit was deemed within the limitation period, and the plaintiffs were required to return the consideration to the defendant to restore the status quo. Each side was ordered to bear its own costs throughout the proceedings.