TaxTMI 
TaxTMI 
2022 (3) TMI 265
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....nsisted of a site, was allotted to the first Defendant (since deceased), by the Bangalore Development Authority (hereinafter referred to as, 'the BDA'). Based on the allotment, a lease-cum-sale agreement was entered into between the BDA and the first Defendant on 04.04.1979. The first Defendant was put in possession on 14.05.1979. On 17.11.1982, the first Defendant entered into the agreement with the Plaintiff agreeing to execute the sale deed of the site within three months from the date on which, the Plaintiff obtained the sale deed from the BDA. On 01.03.1983 and 26.04.1984, the Plaintiff issued letters to the first Defendant, calling upon her to execute the sale deed. The first Defendant issued letter dated 08.05.1984, intimating that the Plaintiff was in breach. The agreement itself had lapsed and the advance amount by the Plaintiff was forfeited. After issuing Notice on 14.02.1985, the Plaintiff instituted the Suit in question, seeking specific performance. The first Defendant, after filing Written Statement on 14.08.1986, died pending the Suit, on 18.07.1994. The Plaintiff impleaded the husband of the Defendant as Defendant-1(a). A sale deed came to be executed by th....
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....n question, within the meaning of Section 23 of the Indian Contract Act, 1872. She invited our attention to the terms of the lease-cum-sale agreement entered into between the first Defendant and the BDA. She pointed out that there was clear prohibition against the alienation of the site or the plaint Schedule property for a period of ten years. She drew support from the Bangalore Rules of Allotment, 1972 (hereinafter referred to as, 'the Rules'). She pointed out that the court has erred in not noticing that Rule 18(2) proclaims an embargo against alienation for a period of ten years. The very agreement relied upon by the Plaintiff was unlawful, and therefore, the court could not have granted specific performance. She drew support from judgment of this Court in Kedar Nath Motani and Ors. v. Prahlad Rai and Ors. AIR 1960 SC 213 and Narayanamma and Anr. v. Govindappa and Ors. (2019) 19 SCC 42. She further contended that the Suit itself, besides being not maintainable, was premature. She elaborated and contended that, what the agreement between the Plaintiff and the first Defendant contemplated, was that, the first Defendant would execute the sale deed in favour of the Plaintif....
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.... an agreement to sell the site. He pointed out that the Rule, which is relevant to the fact, is Rule 17. Even Rule 18, relied upon by the Appellants, did not stand in the way of the agreement to sell or the sale in favour of the Plaintiff. He also emphasised that it does not lie in the mouth of the Appellants to invoke the proposition that agreement in question was unlawful. He pointed to the findings of the High Court that by his conduct there was complete absence of bonafides in the claim. He pointed out that as correctly found by the High Court, Doctrine of Lis Pendens, applies. He further submitted that, at any rate, if the court found that Lis Pendens did not apply, the fact that the second Defendant has not been found to be a bonafide purchaser for value, was sufficient for this Court to decline to interfere, particularly, in a jurisdiction, which originates from the grant of Special Leave Under Article 136 of the Constitution of India. He would refute the contention that the suit was not maintainable and further that it was premature. He would point out that confronted with the definite stand of the first Defendant, who he points out was the wife of an MLA and also a Ministe....
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....standing anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882) or any other law have effect according to their tenor. 11. Section 42 conferred power to make Rules. Following provisions are relevant for the purpose of this case: 42. Power of Government to make rules.--The Government may, from time to time; make rules, not inconsistent with this Act.-- xxx xxx xxx (aa) regulating the allotment or sale by auction of sites by Board; (ab) specifying the conditions, restrictions and limitations subject to which the Board may sell, lease or otherwise transfer movable or immovable property; xxx xxx xxx 12. Initially, bylaws regulating the allotment of sites were published on 08.01.1954. These bylaws came to be cancelled upon enactment of City of Bangalore Allotment of Site Rules, 1964. Thereafter, the City of Bangalore Improvement Disposal of Site Rules, 1971 came to be enacted. The said Rules came to be repealed with the making of the City of Bangalore Improvement Allotment of Site Rules, 1972. These Rules came into force on the 1st Day of September, 1972. These Rules are the Rules, which would govern the fate of this case. 13. Rule 2(b)....
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....e/husband/minor child, owned a house or house site inside or outside the city. Since, it may be relevant to the decision at hand, we may advert to the Form. FORM I [See Sub-rule (1) of Rule 8] Form of Application for Purchase of Site To The Chairman, Improvement Trust Board, Bangalore 20 Sir, I wish to purchase a building site measuring........ in ......Extension, Bangalore. I agree to abide by the conditions of allotment and sale of the site contained in Rule 17 of the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, and the terms of the lease-cum-sale agreement; copies of which are enclosed in duplicate. I also enclose the duplicate copies of the conditions of allotment and sale and lease-cum-sale agreement duly signed in token of having accepted the conditions therein. Particulars about me are given below.-- 1. Name (in Block letters) 2. Father's/Husband's name 3. Age 4. Whether the applicant belongs to Scheduled Caste or Scheduled Tribe, Nomadic Tribes, Semi-Nomadic Tribes, Backward Classes, Denotified Tribes. 5. Whether married or single 6. (a) Residential address: Permanent (House No. Name of street, locality and Town): (b) Present addr....
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....n of the site and forfeit part or whole of the amount paid by me till then towards cost of the site or deposit. I am aware that under the Rules, I have to build the house myself with my own resources. Signature of Applicant Station ..................... Date .............................. Attested Magistrate of the First Class Date................ 18. Rule 10 dealt with the issue of eligibility for allotment and it reads as follows: 10. Eligibility for allotment.--No person. (1) Who is not ordinarily resident (living independently or with his family members) in the area within the jurisdiction of the Board for not less than five years immediately before the last date fixed for making applications: Provided that the persons who are domiciled in the State of Karnataka but serving in the Armed Forces of the Union outside the State of Karnataka shall be eligible for allotment of Sites under these rules. (2) Who or any member of whose family owns or is a lessee entitled to demand conveyance eventually or has been allotted a site or a house by the Board or any other authority, within the area under the jurisdiction of the Board; or of the Corporation....
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.... empowered to reject any application without assigning any reason. 22. Rule 17 provides for conditions of allotment. Since, much turns on the impact of this Rule, we would refer to the same. 17. Conditions of allotment and sale of site.-The allotment of a site under these Rules shall be subject to the following conditions.-- (1) The allottee shall within a period of fifteen days from the date of receipt of the notice of allotment, pay to the Board twelve and a half per cent of the price of the site and if no such payment is made the allottee shall be deemed to have declined the allotment. (2) The balance of the value of the site (less than a sum of rupees thirty where the area of the site does not exceed two hundred square meters, rupees sixty where the area exceeds two hundred square meters and does not exceed five hundred square meters and rupees one hundred and twenty where the area exceeds five hundred square meters) shall be paid within ninety days from the date of receipt of the notice of allotment, or such extended period not exceeding one year as the Chairman may specify. Interest at [fifteen per cent] shall be paid on the said amount for the extended per....
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.... on the site in accordance with the plans and designs approved by the Board. If in any case it is considered necessary to add any additional conditions in the agreement the Board may make such additions. Approval of the City of Bangalore Municipal Corporation for the plans and designs shall be necessary when the layout in which the site is situated is transferred to the control of the said Corporation. (5) The allottee shall comply with the conditions of the agreement executed by him and the buildings and other bye-laws of the Board or the Corporation, as the case may be, for the time being in force. (6) The allottee shall construct a building within a period of two years from the date of execution of the agreement or such extended period '[as the Chairman may] in any specified case by written order permit. If the building is not constructed within the said period the allotment may, after reasonable notice to the allottee, be cancelled, the agreement revoked, the lease determined and the allottee evicted from the site by the Board, and after forfeiting twelve and a half per cent of the value of the site paid by the allottee, the Board shall refund the balance to....
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....ilding on the site within such period as may be specified by the Board, as per plans, designs and conditions to be approved by the Board or in conformity with the provisions of the City of Bangalore Municipal Corporation Act, 1949 and the Bye-laws made thereunder; (ii) the purchaser shall not without the approval of the Board, construct on the site any building other than a building for the construction of which the site was allotted, granted or sold; (iii) the purchaser shall not alienate the site within a period of ten years from the date of allotment except by mortgage in favour of the Government of India, the Government of Mysore, the Life Insurance Corporation of India or the Mysore Housing Board, or any [any company or Co-operative Society approved by the Board] or any Corporation set up, owned or controlled by the State Government or the Central Government to secure moneys advanced by such Government, [Corporation, Board, Company], Society or Corporations, as the case may be, for the construction of the building on the site; (b) in the case of a site on which a building has been constructed, the purchaser shall not alienate the site and the building c....
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....time after allotment, surrender the site allotted to him to the Board. On such surrender the Board shall refund all amounts paid by the allottee to the Board in respect of the said site. 25. The Rules did not apply to disposal of corner sites and commercial sites. 26. We may notice in fact that the City of Bangalore Improvement Act, 1945 came to be repealed by the Bangalore Development Authority Act, 1976. There were certain amendments carried out to the 1972 Rules which need not detain us. THE PURPORT OF THE ABOVE LAW 27. It is clear that what is involved is the allotment of public property. The allottee was to be a lessee. The allottee, during the period of lease, was to pay rent, as provided in Rule 7. Allotment was premised on selection being carried out based on principles for selection, as provided in Rule 11 and to be carried by the Allotment Committee Under Rule 12. The value of the site is fixed. This is clear from Rule 17(1). The allottee was to pay 12 ½ per cent of the price of the site within 15 days of the receipt of notice of allotment. Within 90 days from the date of receipt of notice of allotment or extended period not exceeding one year, which may be fix....
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....ich has been, admittedly, entered into by the first Defendant with the BDA. FORM II [See Rule 17(4)] Lease-cum-sale agreement An agreement made this...............day of...................................................................................................197.., between the City of Bangalore Improvement Trust Board, Bangalore, (hereinafter called the "Lessor/Vendor") which term shall wherever the context so permits, mean and include its successors in interest and assigns of the ONE PART and .........hereinafter called Lessee/Purchaser (which term shall wherever the context so permits mean and include his/her heirs, executors; administrators and legal representatives) of the OTHER PART;. Whereas, the City of Bangalore Improvement Trust Board advertised for sale building sites in Extension; And, whereas, one of such building site in Site No.:........... more fully described in the Schedule hereunder and referred to as property; And, whereas, there were negotiation between the Lessee/Purchaser on the one hand and the Lessor/Vendor on the other for allowing the Lessee/purchaser to occupy the property as Lessee until the payment in full of the price of the aforesaid s....
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....e or the building that may be constructed thereon during the period to the tenancy. The Lessor/Vendor may, however permit the mortgage of the right, title and interest of the Lessee/Purchaser in favour of the Government of Mysore, the Central Government or bodies corporate like the Mysore Housing Board or the Life Insurance Corporation of India, Housing Co-operative Societies or Banks to secure moneys advanced by such Governments or bodies for the construction of the building. 6. The Lessee/Purchaser agrees that the Lessor/Vendor may take over possession of the property with the structure thereon if there is any misrepresentation in the application for allotment of site. 7. The property shall not be put to any use except as a residential building without the consent in writing of Lessor/Vendor. 8. The Lessee/Purchaser shall be liable to pay all outgoings with reference to the property including taxes due to the Government and the Municipal Corporation of Bangalore. 9. On matters not specifically stipulated in these presents the Lessor/Vendor shall be entitled to give directions to the Lessee/Purchaser which the Lessee/Purchaser shall carry out and default in carrying out such d....
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....n the............ Extension. Site bound on.-- East by: West by: North by: South by: and measuring east to west.....:...north to south...... in all measuring.... square feet. In witness whereof the parties have affixed their signatures to this agreement. Chairman. The City of Bangalore Improvement Trust Board. Witnesses: 1. 2. Witnesses: 1. 2. Lessee/Purchaser. 29. The question then arises, as to what is the purport of Rule 18. Rule 18, in our view, produces the following effects and is intended to apply as follows: It begins with a non obstante Clause as far as Rule 18(1) is concerned. Rule 18(1) is to apply despite anything which is contained in the Rules itself. That apart, it would operate, notwithstanding any other Rules, bylaws and orders, which may occupy the field. Even an instrument executed in respect of any site allotted, rented or sold by the Board for the construction of buildings, will not detract from the exercise of power. The power, Under Rule 18, is vested with the Chairman. The scope of the power is to execute a deed of conveyance. This is premised on the request being made by the allottee grantee or purchaser of the site. Rule 18(1) further con....
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.... He is obliged to pay rent, as provided in the Rules and also the lease-cum-sale agreement. Under Clause (5) of the lease-cum-sale agreement, the allottee, who is also described as the lessee/purchaser, is forbidden from alienating the site or the building that may be constructed during the period of the tenancy. The period of tenancy is fixed as a period of 10 years from the date of giving possession to the allottee. In other words, an allottee, who is obliged to enter into a lease-cum-sale agreement is prohibited from alienating the site or the building, which may be put up for the period of 10 years. This period of 10 years is adverted to in Rule 17(7). In other words, for a period of 10 years, the allottee, who is also described as the lessee and purchaser, cannot alienate the site or the building. It is to be understood that by virtue of Rule 7 of the Rules, the allottee is treated as a lessee. What the Rules and agreement contemplate is, though the entire amount of the value of the site is payable within a period of 90 days or extended period Under Rule 17(2), the allottee/lessee becomes the purchaser of the site, only when the conveyance deed is executed in his favour Under ....
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....s without prejudice to the provisions of Rule 17. Secondly, Rule 18(3) applies, notwithstanding anything contained in Rule 18(2). Now, coming to the exact scope of Rule 18(3), it contemplates the existence of either of the conditions mentioned therein. They are-(1) the lessee applies pointing out that for reason beyond his control, he is unable to reside in the city of Bangalore; (2) by reason of his insolvency or impecuniosity, it has become necessary for him to sell the site and or site and the building, if any, he may have put up thereon. 33. We have already explained the scope of Rule 18 and the interplay between Rule 17 and Rule 18. Rule 18(3) must be read along with Rule 17. The argument to the contrary by the Plaintiff is untenable. In fact, it would involve denying relief intended for persons falling Under Rule 17, as will be clear hereinafter. A perusal of Rule 18(3) would reveal the following: While a person is a lessee (which means while he is an allottee), the course open to an allottee/lessee, is to follow the Rules and lease-cum-sale agreement and put up a residential building on the site. He may be disabled by the financial condition from fulfilling his promise und....
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....der Rule 18(3) appears to us to encompass situations of insolvency or impecuniosity, which overtake an allottee after the allotment takes place. In other words, the unplanned and uncontemplated vicissitudes of life may visit him inter alia with insolvency or impecuniosity, leaving with him no other choice but to sell the site or even the site with the building. The fact that power Under Rule 18(3) is not meant to be a mechanical exercise of power, can be discerned from the requirement that 'previous' approval of the State Government is the sine qua non for the BDA exercising its power. THE UNDISPUTED FACTS 34. The BDA made an allotment of the plot on 04.04.1979 to the first Defendant. The lease-cum-sale agreement was also executed on the same date. It is while so that on 17.11.1982, the Plaintiff entered into the agreement with the first Defendant. Under the allotment, the first Defendant was put in possession of the site. A perusal of the agreement would reveal the following: NOW THIS DEED WITNESSETH AS FOLLOWS: 1. The vendor does hereby agrees to sell the Schedule site to the purchaser for a price of Rs. 50,000/- (Rs. Fifty thousand only). 2. The purchaser has hereby....
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....t Defendant as follows: Y. SUBBARAJU ENGINEERING CONTRACTORS 24, 2nd CROSS, KODANDARAMAPURAM, MALLESWARAM, ' BANGALORE-560003 Date: 1.3.1983 REGISTERED POST ACK. DUE To, Smt. Jayalakshmamma, W/o K.T. Krishnappa, Ex. M.L.A., TB Extn., Nagamangala, Mandya District Madam, Sub: Agreement for the sale of Site No. 1588, Block II at Banashankari I Stage Extension-Regarding. You have agreed for the sale of the above site, for which an agreement was made on 17.11.1982 on the condition that you will register the sale deed within 3 months from the date of obtaining all the necessary documents required in this connection from BOA. So far you have not informed about obtaining the documents from BDA. You had promised that all the documents will be handed over to me within 2 weeks time to facilitate me for registering the property. Since 3 months are over, I am proposing to sell to my nominee for the agreed amount of Rs. 50,000/- (Rupees Fifty Thousand only), as you have failed to produce the clear documents. I am forced to transfer the property to my nominee at the agreed amount of Rs. 50,000/- with you. This is for your kind information and early necessary action. Thanking ....
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....0,000/- on the date of the agreement, was stated to be unnecessary but it was pointed out that the total sum of Rs. 50,000/- stood paid. It was reiterated that on the date of the sale agreement itself, the Plaintiff was put in possession. The claim that the sale consideration was Rs. 1,50,000/- was denied. The first Defendant, it was pointed out, had committed default in not complying with the terms of the agreement, by obtaining absolute sale deed from the BDA. Legal action was spoken of by the Plaintiff. Lastly, on 14.02.1985, a legal notice was sent by the Plaintiff to the first Defendant. Thereinafter, referring to the agreement, it was complained that though it was then more than two years that the first Defendant had entered into the agreement. First Defendant had given a reply on 08.05.1984, pleading excuses for execution of the sale deed. Thereafter, the first Defendant was called upon to act in terms of the sale agreement and execute the sale deed within fifteen days of the receipt of the notice. It was held out that failure on the part of the first Defendant would constrain the Plaintiff to seek relief from the court. That the Plaintiff meant business, is proved by the fa....
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....d could not be enforced. 41. The second Defendant, in his Written Statement, inter alia, pleaded no knowledge about the agreement dated 17.11.1982, providing that the first Defendant must obtain an absolute sale deed from the BDA and it must be intimated in writing to the Plaintiff. The allegation that the Plaintiff was put in possession, was denied as false. Regarding putting the Plaintiff in possession of the possession certificate, the Appellant pleaded no knowledge. It was further pleaded that the first Defendant was the absolute owner in possession of the site and, after her demise, in view of the death of the husband of the first Defendant, the son became the owner of the property. It was pleaded that the first Defendant was a site-less and houseless person and permanent resident of Bangalore City. After having made due enquiries, property was purchased by sale deed dated 19.09.1996. An additional Written Statement was filed by the Appellant to the amended plaint which was largely devoted to his case about him being a bonafide purchaser. THE ORAL EVIDENCE 42. PW2, the son of the Plaintiff (the Plaintiff died on 05.01.2001) deposed, inter alia, that possession of the entire....
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....ll have loss of money. 44. The Appellant (second Defendant) examined as DW1, inter alia, deposed that he owned both irrigated and non-irrigated lands to the extent of 12 acres. He did not own any site or building in Bangalore. He invested amount arrived from agriculture and milk-vending business to purchase this property. His father helped him. On the date of purchase, the possession was handed over to him. Apart from Bettanna, none acted as broker at the time of purchase. He, inter alia, further states that he went to the site. He found tin shed. He made inquiries with regard to ownership of the site and possession. He was told that one Sudershan was the owner of the site, who use to visit the site often. He, along with is elder brother, who was residing in Bangalore, went to the house of Sudershan. Sudershan wanted price of Rs. 6,00,000/-. Finally, the parties agreed for Rs. 4,50,000/-. Certain xerox copies of documents, including possession certificate, was handed over to him and he consulted an Advocate who said that the title was clear. On the date of sale, the possession was handed over to the Appellant. Property was mutated. The broker was not aware of the pendency of the S....
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..../-. At the time of the agreement, there was a shed on the site. It was agreed to execute sale deed in favour of the Plaintiff after getting the absolute sale from the BDA. The BDA was supposed to execute the sale deed after the 10-year lease period. The Plaintiff had not taken any steps to waive-off the non-alienation Clause for the period of 10 years. His father gave consent to the BDA to issue the sale deed only in his name. He knew the Appellant from June, 1996. The name of the broker-Bettana, is spoken to by him. He speaks about handing over of xerox copies to DW1. The second Defendant had met him twice in June, 1996. Appellant when he met DW2 for the second time, showed his interest to purchase the property in September, 1996 for Rs. 4,50,000/-. Appellant took time till September, 1996 to ascertain whether he was in possession and to mobilise funds. Entire amount of Rs. 4,50,000/- was paid in cash. DW2 owned a residential house at Arti Nagar in Judges Colony. The said property was standing in the name of his father. He owned an industrial site. He did not own any residential property in Bangalore apart from the residential property. Since, Plaintiff was not having any right, t....
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....er agreement of sale as well as pendency of the Suit. It was further found that in view of the allotment and the lease-cum-sale agreement, the Plaintiff had no right to file the Suit so as to enforce the agreement to sell during the year 1985. The Plaintiff ought to have waited till year 1989. The first Defendant died on 18.07.1994 without obtaining the absolute sale deed from the BDA. After her death, property stood transferred in favour of her son and the son sold it to the Appellant. On 17.09.1996, when the sale took place, the predecessor in interest of the second Defendant was not a party. The suit property was sold to the second Defendant for a huge sale consideration of Rs. 4,50,000/-. There was no cause of action to institute the Suit. On these findings, inter alia, the Trial Court partly decreed the Suit by ordering return of Rs. 50,000/- along with 9 per cent interest per annum by Defendants 1(a) and 1(b). The relief of permanent injunction was rejected. PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS 47. The principle of in pari delicto potior est conditio defendentis is a maxim which we must bear in mind. We need only notice the following discussion by this Court. The de....
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....ly perform the duties of their office. Williston in his Book on Contracts (Revised Edn.), Vol. VI, has discussed this matter at p. 5069, para 1785 and in paras 1771 to 1774, he has noted certain exceptional cases, and has observed as follows: If recovery is to be allowed by either partner or principal in any case, it must be where the illegality is of so light or venial a character that it is deemed more opposed to public policy to allow the Defendant to violate his fiduciary relation with the Plaintiff than to allow the Plaintiff to gain the benefit of an illegal transaction. Even in India, certain exceptions to the Rule of turpi causa have been accepted. Examples of those cases are found in Palaniyappa Chettiar v. Chockalingam Chettiar (1920) ILR 44 Mad 334 and Bhola Nath v. Mul Chand (1903) ILR 25 All 639. 49. We may also notice the following statement by this Court in Kedar Nath Motani (supra): 15. The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the Plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be t....
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....: (Kedar Nath Motani case [Kedar Nath Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960 SC 213] AIR pp. 218-19, para 15) 15. The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the Plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the Plaintiff is not required to rest his case upon that illegality, then public policy demands that the Defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the Plaintiff's conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the Plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the Defendant should not prevail. 16. It could thus be seen, that this Court has held that the corre....
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....r-in-title of the Defendant(s) as well as the Plaintiff, are confederates in this illegality. Both, the Plaintiff and the predecessor-in-title of the Defendant(s) can be said to be equally responsible for violation of law. 26. However, the ticklish question that arises in such a situation is: "the decision of this Court would weigh in side of which party"? As held by Hidayatullah, J. in Kedar Nath Motani [Kedar Nath Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960 SC 213], the question that would arise for consideration is as to whether the Plaintiff can rest his claim without relying upon the illegal transaction or as to whether the Plaintiff can rest his claim on something else without relying on the illegal transaction. Undisputedly, in the present case, the claim of the Plaintiff is entirely based upon the agreement to sell dated 15-5-1990, which is clearly hit by Section 61 of the Reforms Act. There is no other foundation for the claim of the Plaintiff except the one based on the agreement to sell, which is hit by Section 61 of the Act. In such a case, as observed by Taylor, in his "Law of Evidence" which has been approved by Gajendragadkar, J. in Immani Appa Rao [Immani A....
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.... said case, affirmed the decision of the Judicial Commissioner, decreeing a Suit for Specific Performance, taking note of Section 50 of the Central Provinces Act of 1920, which read as follows and the Court, inter alia, held as follows thereafter: If a proprietor desires to transfer the proprietary rights in any portion of his sir land without reservation of the right of occupancy specified in Section 49, he may apply to a revenue-officer and, if such revenue-officer is satisfied that the transferor is not wholly or mainly an agriculturist, or that the property is self-acquired or has been acquired within the twenty years past preceding, he shall sanction the transfer. In view of the above mentioned construction of the agreements of September 4, 1914--namely, that Sobhagmal agreed to transfer the cultivating rights in the sir land--there was, in their Lordships' opinion, an implied covenant on his part to do all things necessary to effect such transfer, which would include an application to the revenue-officer to sanction the transfer. 55. In other words, in an agreement wherein the vendor agrees to convey property, which is permissible only with the permission of some Autho....
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....Defendant received certain amounts thereafter. This was followed by a written agreement on 01.10.1981 wherein the Defendant agreed to sell. According to the plaint averments, the Plaintiff was put in possession and he completed the construction. It was the Plaintiff's further case that he was dispossessed by the Defendant. The High Court, under Point 6, considered the question whether agreement was legally enforceable. The Court has referred to Rule 18 of the Rules, which, apparently, was invoked by the Defendant. Answering the point, the Court took the view that there was no transfer of interest, which results from an agreement to sell and, therefore, Rule 18(2)(a)(iii), did not apply, as there was no alienation on a mere agreement to sell being executed. The Court distinguished the decision, which was relied upon by the Defendant in the said case and, interestingly, the Appellant before us, viz., the decision of a learned Single Judge in K. Chandrashekar Hegde v. Bangalore City Corporation and N.B. Menon v. Bangalore Development Authority ILR 1988 KAR 356. We may further notice that the high court in the said case took the view that a period of ten years had expired even duri....
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....rtgaged property should not be sold for three years without prior permission, inter alia. An agreement to sell was found not to be a sale. 61. In Suraj Lamp & Industries (P) Ltd. (2) Through Director v. State of Haryana and Anr. (2012) 1 SCC 656, this Court, while dealing with the effect of what has been described as GPA Sales in Delhi, inter alia, and considering the scope of an agreement to sale, declared that "a transfer of immovable property by way of sale, can only be by a Deed of Conveyance (Sale Deed)". No title is transferred by a mere agreement to sell, it was further found. 62. In K. Chandrashekar Hegde (supra), which is relied upon by the Appellant, a Single Judge of the High Court of Karnataka, was dealing with batch of Writ Petitions. Among the issues, which prominently arose, was the objection taken to the construction of multi-storey buildings, wherein claims were made on the basis of allotment under the Act, as repealed by the Bangalore Development Act and the Rules. The learned Single Judge has elaborately considered the scheme of the Rules. He has further explored the impact of the Forms prescribed under the Allotment Rules, 1964 and similar provisions were foun....
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....ar: 6. By Section 23 of the Contract Act, consideration or object of an agreement is unlawful if it is forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent. Both the parties to the contract are agriculturists. By the agreement the Appellant agreed to sell jirayat land admeasuring 41 acres 26 gunthas for a price of Rs. 32,000. The consideration of the agreement per se was not unlawful, for there is no provision in the Act which expressly or by implication forbids a contract for sale of agricultural lands between two agriculturists. Nor is the object of the agreement to defeat the provisions of any law. The Act has imposed no restriction upon the transfer of agricultural lands from one agriculturist to another. It is true that by Section 35 a person who comes to hold, after the appointed day, agricultural land in excess of the ceiling, the lands having been acquired either by purchase, assignment, lease, surrender or by bequest, the acquisition in excess of the ceiling is invalid. The expression "acquisition of such excess land shall be invalid" may appear somewhat ambiguous. But when the scheme of the Act is exami....
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....old land in excess of the ceiling does not invalidate the transfer between the parties. 9. We hold that a contract for purchase of land entered into with the knowledge that the purchaser may hold land in excess of the ceiling is not void, and the seller cannot resist enforcement thereof on the ground that, if permitted, it will result in transgression of the law. 65. We may cull out the ratio in the following terms: Whatever may be intention of the parties, a contract which is expressly or impliedly prohibited by a Statute, may not be enforced by the Court. The Bombay Act did not prohibit a contract of sale of agricultural land between two agriculturists. The invalidity of the acquisition of land in excess, involved the consequence that the land would vest in the Government. In the context of the said Act, the Court has taken the view that a person can be said to hold land only when it is conveyed to him, which would not take place when there is a mere agreement to sell. The further reasoning of the Court appears to be that it is open to the buyer to transfer or dispose of land already held by him to another agriculturist and unless at the date of acquisition, the buyer held th....
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.... appellate court and the High Court on an erroneous view reversed the same. In our opinion the suit is liable to be dismissed. 68. We have set out the provisions of the Rules and the lease-cum-sale agreement. Before we deal with the question as to whether the agreement in question, falls foul of Section 23 of the Indian Contract Act, we shall deal with the contention raised by the Respondent that there is no law, as understood in this case, which would be defeated by the agreement and what is holding the field is only the Rules. It is true that this Court in Union of India v. Col. L.S.N. Murthy (2012) 1 SCC 718, has observed as follows: 17. In Pollock & Mulla, Indian Contract and Specific Relief Acts, 13th Edn., Vol. I published by LexisNexis Butterworths, it is stated at p. 668: The words 'defeat the provisions of any law' must be taken as limited to defeating the intention which the legislature has expressed, or which is necessarily implied from the express terms of an Act. It is unlawful to contract to do that which it is unlawful to do; but an agreement will not be void, merely because it tends to defeat some purpose ascribed to the legislature by conjecture, or ev....
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....lves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. 71. The very first head under which an agreement become unlawful is, when the consideration or object of agreement is forbidden by law. In regard to the same, we may notice the view of a Bench of three learned Judges in Gherulal Parakh v. Mahadeodas Maiya and Ors. AIR 1959 SC 781. Therein, quoting from Pollock and Mullah from their work Indian Contract Act, this Court has stated as follows: 8. xxx xxx xxx An act or undertaking is equally forbidden by law whether it violates a prohibitory enactment of the Legislature or a principle of unwritten law. But in India, where the criminal law is codified, acts forbidden by law seem practically to consist of acts punishable under the Penal Code and of acts prohibited by special legislation, or by Regulations or orders made under authority derived from the Legislature. (Emphasis supplied) 72. In regard to the Commentary by the very sa....
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.... held himself out to be in dire need of a plot of land for the purpose of constructing a residential building. He has to disclose his annual income and any other means indicating his capacity, not only to purchase the site applied for but also to construct the house. He has to respond to the query as to whether any member of the family, of which he is a member, owns or has been allotted a site or a house by the Board or any other Authority, within the area under jurisdiction of the Board. The applicant must, furthermore, disclose whether he already owns a house or house site in the city or outside the city. Whether the applicant's wife, husband or minor child owns a house or house site, is another matter, he must disclose. Incorrect information in any of these matters, would entitle the Board to resume the site. Rule 11 specifically announces among the principles as relevant for selecting an applicant for allotment, the income of the applicant to build the house on the site for his residence. No doubt, it is not applicable to certain classes, which include the other backward classes. Rule 11(3) declares further that the number of years, the applicant has been waiting for allotm....
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....ally important, against the mandate of the law, as contained in the Rules, which contemplated that the allotment was made for the construction of a residential building by the allottee and the construction was to be completed within the period of two years or an extended period? The agreement between the parties contemplated giving a short shrift to the mandate of the law. This is clear from the fact that under the agreement, the first Defendant was obliged to sell the site as it is. Construction of the building became a practical impossibility. The price, which was agreed upon, was qua the site alone. The consideration and the other terms of the agreement, in other words, ruled out the possibility of a residential building being constructed by the first Defendant, who as the allottee, was, under the law, obliged to construct the building. Assuming for a moment that the construction was put up, which assumption must be premised on possession not being handed over to the Plaintiff and which is contrary, not only to the terms of the agreement, but also pleading of the Plaintiff and the consistent stand in the evidence adduced on behalf of the Plaintiff and even proceeding, however, o....
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....e clear that the parties contemplated a state of affairs which is completely inconsistent with and in clear collision with the mandate of the law. On its term, it stands out as an affront to the mandate of the law. 79. The illegality goes to the root of the matter. It is quite clear that the Plaintiff must rely upon the illegal transaction and indeed relied upon the same in filing the suit for specific performance. The illegality is not trivial or venial. The illegality cannot be skirted nor got around. The Plaintiff is confronted with it and he must face its consequences. The matter is clear. We do not require to rely upon any parliamentary debate or search for the purpose beyond the plain meaning of the law. The object of the law is set out in unambiguous term. If every allottee chosen after a process of selection under the Rules with reference to certain objective criteria were to enter into bargains of this nature, it will undoubtedly make the law a hanging stock. 80. To elucidate the matter a little further, let us take another example. If the agreement was entered into by the first Defendant, under which, the first Defendant would abide by her obligations, both under the le....
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....ng by the correspondence by the Plaintiff wherein the first Defendant was called upon to execute the sale deed of the site, this would be clearly in the teeth of Rule 18(3), the scope of which has already explained. The Plaintiff could not have asked for decree commanding the first Defendant to sell the site in terms of the correspondence with which he began communicating with the first Defendant. In other words, a sale of a site to any other person clearly stood prohibited and unless the allottee/lessee is compelled to sell in the circumstances mentioned in Rule 18(3) the law permitted the sale of the site only to the authority itself. Therefore, if the Plaintiff wanted to enforce the agreement for the sale of the site on an immediate basis it would clearly attract the embargo that it was completely prohibited. IS THE SUIT PREMATURE? SCOPE OF ARTICLE 54 OF THE LIMITATION ACT. 83. The further question which is raised by the second Defendant is that the suit itself was pre-mature. We have found that the trial court has entered into a clear finding that there is absolutely no evidence to support the projected apprehension that first Defendant was about to dispose of the property. T....
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....e must be indicated in an agreement as the date of performance. No doubt, the Court, in fact, went on to distinguish the earlier decision Ramzan v. Hussaini (supra) and held as follows: Para 5. In Tarlok Singh's case (supra) the factual scenario was noticed and the case was decided after referring to Article 54 of the Schedule to the Act. Ramzan's case (supra) related to the specific performance of contingent contract. It was held that the expression "date fixed for performance" "need not be ascertainable in the face of the contract deed and may be ascertainable on the happening of a certain contingent event specified in the contract". Para 8. The judgments in Ramzan and Tarlok Singh cases (supra) were rendered in a different factual scenario and the discussions do not throw much light on the controversy at hand. Para 11. The inevitable conclusion is that the expression "date fixed for the performance" is a crystallized notion. This is clear from the fact that the second part "time from which period begins to run" refers to a case where no such date is fixed. To put it differently, when date is fixed it means that there is a definite date fixed for doing a particular ....
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....a, the Agreement of Sale was terminated as per notice dated 28.03.1985 and thus, there is termination of the Agreement of Sale between the Plaintiff and Defendant Nos. 1-4 w.e.f. 10.04.1985. Para 37. As could be seen from the prayer sought for in the original suit, the Plaintiff has not sought for declaratory relief to declare the termination of Agreement of Sale as bad in law. In the absence of such prayer by the Plaintiff the original suit filed by him before the trial court for grant of decree for specific performance in respect of the suit Schedule property on the basis of Agreement of Sale and consequential relief of decree for permanent injunction is not maintainable in law. 91. The said view has been followed in the judgment of this Court reported in Mohinder Kaur v. Sant Paul Singh (2019) 9 SCC 358. We do not however need to rest our decision to non-suit the Plaintiff on this score in view of our finding that the agreement dated 17.12.1982 should not be enforced. LIS PENDENS 92. The Doctrine of Lis Pendens is based on the maxim "pendente lite nihil innovetur". This means that pending litigation, nothing new should be introduced. Section 52 of the Transfer of Property A....
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....er or otherwise deal with the property, pending adjudication. This embargo is intertwined with the beneficiary of the veto against such transfer, being any other party thereto. In fact, the Special Bench of the Madras High Court in Manjeshwara Krishnaya v. Vasudeva Mallya and Four Ors. AIR 1918 Madras 578, puts the Doctrine of Lis Pendens as an extension of the Doctrine of Res Judicata. Thus, the sine qua non for the Doctrine of Lis Pendens to apply is that the transfer is made or the property is otherwise disposed of by a person, who is a party to the litigation. The Doctrine of Lis Pendens, only subject, however, the transfer or other disposition of property to the final decision that is rendered. The person/party, who finally succeeds in the litigation, can ask the court to ignore any transfer or other disposition of property by any party to the proceeding. This is subject to the condition that transfer or other disposition is made during the pendency of the lis. 95. The first Defendant died pending the Suit on 06.08.1994. Her death was reported before the Court on 16.01.1995. The Plaintiff brought on record, the husband of the first Defendant by Order dated 25.08.1995, as Defe....
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....iable to the dead man's obligations. He survives even after his death, especially the obligations concerning immovable property. The beneficiaries who are entitled to the residue after satisfaction of the creditors, are of two classes: (1) those nominated by the last will of the deceased and (2) those appointed by the law in default of any such nomination. They succeed respectively by testamentary succession (ex testamento) or intestate succession (ab intestate) (source: Salmond on Jurisprudence Twelfth Edition, P.J. Fitzgerald). Section 2(11) of the Code of Civil Procedure, 1908 (CPC) defines legal representative to mean a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued. The aforesaid definition is both exhaustive as well as an inclusive definition. It is exhaustive in the sense that a legal representative means a person who in law represents the estate of immovable property. The beneficiaries who are entitled to the residue after satisfaction of t....
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....No. 1 in the said suit is for obvious reasons. Defendant No. 1(a) did not disclose about the pendency of the suit to Defendant No. 2 only with an intention to deprive the right of the Plaintiff in the suit property i.e., by creating third party rights in the said property. Also, it cannot be believed that Defendant No. 1(b), though not arrayed as a legal representative of deceased Defendant No. 1 (his mother) at that point of time was totally unaware about the pendency of the suit. The legal heirs of deceased Defendant No. 1 namely her husband and only son resided at the same address. Therefore, constructive, if not actual, notice has to be attributed to Defendant No. 1(b) regarding the pendency of the suit. By selling the same to Defendant No. 2 would result in Plaintiff's right being jeopardised. As already noted from the evidence of DW-1 and 2, talks for the sale of the suit site by Defendant Nos. 1(a) and 1(b) were held with Defendant No. in the first week of June, 1996. In fact, at that point of time, the BDA had not yet conveyed the site in the name of the Defendant No. 1(b). BOA did so only on 14/06/1996. ... The High Court has relied on the decision of the Madras High ....
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....e period of limitation for substitution of the legal representative of a deceased party in a suit, the legal representative purported to deal with the property. It was in the said context that the court proceeded to hold that lis pendens would apply. In this case the transfer in favour of the second Defendant took place on 16.09.1996. The vendor and the vendee namely Defendant 1(b) and the second Defendant were not parties on the date of the transaction. They were impleaded only almost one year thereafter. No doubt we are not oblivious to the role played by Defendant 1(a) namely the husband of the first Defendant who gave his 'no objection' to the assignment of the entire rights in favour of his son namely Defendant 1(b) without which BDA could not have assigned the right in favour of Defendant 1(b). Though not urged by the Plaintiff, could it be said that as Defendant 1(a) was already a party and this must be treated as a case were Defendant 1(a) as 'otherwise dealt' with the property within the meaning of Section 52 without which the title would not vest in Defendant 1(b). A transfer which is made lis pendens it is settled law, is not a void document. It does crea....
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....uiry about the original. It must be presumed that second Defendant had notice of the agreement to sell the Site in respect of which the Decree for Specific Performance was sought. The Court, then, referred to Section 3 of the TP Act and brings in the concept of constructive notice. Had the second Defendant made inquiries with regard to the original possession certificate, the truth would have been revealed. Much is said about no inquiry is being made about the original possession certificate. The High Court notes that the agreement to sell with the Plaintiff is not registered but, again, it draws inference from absence of inquiries by the second Defendant about why the original possession certificate was not handed over to him. The fact that Defendant 1(a) did not reveal to the second Defendant about the pendency of the Suit, is, on the one hand noted but the Court holds that even then, the second Defendant ought to have made inquiry about pendency of any litigation. The fact that second Defendant 1(b) as DW2 admitted that he had no material to support the fact that he had received Rs. 4,50,000/-, was a very valuable in mid 1990s, if considered. The Court questions the idea that s....
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....llows: 10C. The Plaintiff submits that taking advantage of the fact that the son was not on record, the husband accorded no objection in favour of the BDA so as to ensure that the Sale Deed was executed in favour of HK Sudarshan alone and thereafter the Second legal representative sold the Schedule Property in favour of the Second Defendant. The Plaintiff submits that the Defendants are aware of the pendency of the suit and of the subsistence of the Agreement of Bale in favour of the Plaintiff. The Sale Deed enexecuted in favour of the said person i.e., the Second Defendant is hit by the Doctrine of lis pendens and the Second Defendant's title to the Schedule Property is subject to the outcome of the present suit. 10D. The Plaintiff submits that the Second Defendant is not a bonafide purchaser for value. The sale in favour of the Second Defendant is with the sole intention of complicating the matters in controversy and to prejudice the case of the Plaintiff. Therefore, the Plaintiff submits that the Sale Deed executed in favour of the Second Defendant does not in any way restrict the right of the Plaintiff to seek Specific Performance of the Agreement of Sale executed in fa....
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.... a part of this amount was received on the date of the agreement. It may be true that further amount were received by Defendant 1(a), the husband of the first Defendant. The first Defendant died pending the Suit. It is while the Suit was pending that Defendant 1(b), the son of the first Defendant, had executed the sale deed on 16.09.1996 in favour of the second Defendant. It is again undisputed that at the time when the sale deed was executed, both the second Defendant and his vendor, Defendant 1(b), were not parties in the Suit. We have already found that the sale deed in favour of the second Defendant, cannot be treated as a sham transaction and the finding, in fact, on point No. 2 by the High Court, also that the second Defendant is not a bonafide purchaser. Once we come to the conclusion that the agreement, relied upon by the Plaintiff, cannot be enforced, as to whether, even proceeding on the basis that the sale in favour of the second Defendant was made, not in circumstances which would entitle the second Defendant to set up the case that he is a bonafide purchaser, the question of granting relief to the Plaintiff must first be decided. In other words, in view of the illegali....
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....t with the Plaintiff. It is not a case where the condition of the Plaintiff is such that the interests of justice would overwhelm our findings that the agreement relied upon by the Plaintiff constituted a clear intrusion into the requirement of the law. In fact, we would consider the contract an open and brazen instance of parties entering into a bargain with scant regard for the law. If that were not enough, the very first letter addressed to the first Defendant dated 01.03.1983 betrays the real purpose of the contract. The Plaintiff in no uncertain terms has declared his intention to sell the property to his nominee. It is clear as day light that the Plaintiff had no intention whatsoever to make use of the site for the purpose of putting up a residential building. The communications indicate that the Plaintiff was a contractor. The evidence of PW 2 his son further indicated that he has been in the business since 1960. What is even more revealing is the admission relating to the properties belonging to or in the possession of the Plaintiff and his family members which we have dealt with. The final nail in the coffin, as it were, is driven home in the case by showing the case of th....