Foreign exchange breach and trustee power limits do not void a lease absent statutory invalidity or timely avoidance.

A transfer made in breach of foreign exchange restrictions does not become void unless the statute expressly so provides, and a lease executed beyond a trustee's power is voidable at the instance of the trust, not automatically invalid. On the facts, no material showed that the lease consideration or object offended Section 23 of the Contract Act, and the trust had not avoided the transaction, so the lease deeds were treated as valid and enforceable. An unstamped and unregistered family arrangement could be used only for collateral purposes; because it did not itself prove delivery or continued possession, and no independent evidence filled the gap, the claim for permanent injunction failed.

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Issues: (i) whether the permanent lease deeds executed in favour of the lessee were invalid for want of permission under the Foreign Exchange Regulation Act, for alleged excess of trustee power, or for alleged unlawfulness of consideration under the Indian Contract Act; and (ii) whether the plaintiff proved possession and enjoyment of the suit property on the basis of an unstamped and unregistered family arrangement so as to sustain a decree for permanent injunction.

Issue (i): whether the permanent lease deeds executed in favour of the lessee were invalid for want of permission under the Foreign Exchange Regulation Act, for alleged excess of trustee power, or for alleged unlawfulness of consideration under the Indian Contract Act.

Analysis: A transfer in breach of Section 31 of the Foreign Exchange Regulation Act attracts penal consequences and does not, by itself, nullify the transaction. A lease of trust property made beyond the trustee's power is not void but voidable at the instance of the trust. No material was shown to establish that the consideration or object of the lease offended Section 23 of the Indian Contract Act. The trust had not taken steps to avoid the transaction.

Conclusion: The lease deeds were held to be valid and enforceable, and this issue was decided against the respondent.

Issue (ii): whether the plaintiff proved possession and enjoyment of the suit property on the basis of an unstamped and unregistered family arrangement so as to sustain a decree for permanent injunction.

Analysis: An unstamped and unregistered document may be looked into only for collateral purposes, but it cannot be relied upon to prove possession where it does not contain a specific recital placing the parties in possession on the date of execution. The family arrangement in question did not by itself establish the plaintiff's possession or enjoyment, and no independent evidence filled that gap. Since possession was not proved, the equitable protection against dispossession otherwise available in law could not be invoked.

Conclusion: The plaintiff failed to prove possession and enjoyment, and the injunction decree was not sustainable; this issue was decided against the respondent.

Final Conclusion: The second appeal succeeded, the decree of the lower appellate court was set aside, and the trial court's dismissal of the suit was restored.

Ratio Decidendi: A transaction barred only by the regulatory restrictions governing foreign exchange does not become void unless the statute so provides, and an unstamped or unregistered family arrangement cannot establish possession unless it independently evidences delivery of possession or is supported by other proof.

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