TaxTMI 
TaxTMI 
2019 (8) TMI 1899
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....se was transferred in favour of the aforesaid three persons by the Estate Officer. The Plaintiff filed the present suit from which the appeal arises alleging that on 31.03.1982 there was an agreement entered into between the three brothers namely himself, the first Defendant and the younger brother. Clause (5) of the agreement provides as follows: The individual portions of New Delhi and Chandigarh and agricultural land cannot be sold without concurrence of all three in writing and if it is sold on agreement of three, first preference to be given to both other brothers. Any special renovation after expiry of joint upkeep is done by any one of us and full accounts are maintained, then in the event of total sale of any unit, the extra amount spent on special renovation (subject to reasonable depreciation/appreciation) by individual will be payable to the individual over and above 1/3rd share of the sale proceeds. 3. It was alleged that the said Clause was violated by his brother, the first Defendant and without getting his written concurrence for the same the first Defendant sold the suit scheduled property to the second Defendant. It was alleged that this will result in fragmenti....
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....ney. The house was located at Chandigarh. The sale could be effected only at Chandigarh. Plaintiff visiting Bhilai, where first Defendant lived, would not have been served any purpose. Reference is made to the telephone bills of the Plaintiff to prove communication between him and the first Defendant regarding sale. The sale in favour of the second Defendant was effected through power of attorney. No offer was made for selling to the Plaintiff by the first Defendant through a power of attorney. It is found that though P19 shows that a deal was struck but because the wife of the first Defendant was pressing hard for the Plaintiff to come to Bhilai, it did not work. The Plaintiff was found ready and willing. The first Defendant has violated the family settlement. The second Defendant was aware from the wife of the first Defendant that she wanted to sell to the Plaintiff. The second Defendant was a tenant who was aware of the family arrangement. There was no notice issued to the other sharers. The appeal of the second Defendant was dismissed. That apart the Appellate Court also allowed the cross appeal filed by the Plaintiff and directed the second Defendant to hand over possession to....
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....ial prohibition. The first Defendant could sell his share to his brothers. The object behind Clause (5) was highlighted to be that third party is not rendered entitled to the family property. Such a partial prohibition has been approved by both the Privy Council and also by this Court. In this regard, he drew our attention to the judgments of this Court in the case of K. Naina Mohammed (Dead) Through Lrs. v. A.M. Vasudevan Chettiar (Dead) Through Lrs. and Ors. 2010 (7) SCC 603, Hari Shankar Singhania and Ors. v. Gaur Hari Singhania and Ors. 2006 (4) SCC 658 and also judgment of the Privy Council in the case of Muhammad Raza (since deceased) and Ors. v. Abbas Bandi Bibi AIR 1932 PC 158. He also drew our attention to the judgment of this Court in Hari Shankar Singhania (supra) to contend that family settlement is treated differently from any other formal commercial settlement. This is what the court held: A family settlement is treated differently from any other formal commercial settlement as such settlement in the eye of the law ensures peace and goodwill among the family members. Such family settlements generally meet with approval of the courts. Such settlements are governed by....
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....ion did not establish that Respondent was aware of the family arrangement and therefore, the second Defendant was indeed a bonafide purchaser. He would further complain that first Appellate Court has gone one step further than the Trial Court and even ordered that second Defendant to put the Plaintiff in possession even though undisputedly he was a tenant who was entitled to protection of the statute against eviction except in accordance with law. 16. The following points arise for our decision: A. Whether there was a family settlement? B. Whether the High Court was right in, without even a plea, holding that the family settlement is vague and unenforceable and void? C. Whether an offer was made by the first Defendant to the Plaintiff before the sale of the property to the second Defendant? D. Whether the High Court was right in holding that the courts could not exercise discretion Under Section 20 of the Specific Relief Act, 1963 as the contract is not specifically enforceable? E. What is the impact of absence of written concurrence by brothers for sale? F. What is the effect of the prohibition against fragmentation of property in question under the Capital of Punjab ....
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....thousand". There is nothing to show which of the two prices was to be given. The agreement is void. 19. Section 93 of the Indian Evidence Act, 1872, reads as follows: 93. Exclusion of evidence to explain or amend ambiguous document.--When the language used in a document is, on its face, ambiguous or defective, evidence may not be given of facts which would show its meaning or supply its defects. Illustrations (a) A agrees, in writing, to sell a horse to B for "Rs. 1,000 or Rs. 1,500". Evidence cannot be given to show which price was to be given. (b) A deed contains blanks. Evidence cannot be given of facts which would show how they were meant to be filled. 20. The question is not res integra. A Bench of three learned Judges of this Court considered the very same question in Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd. AIR 1958 SC 512 and held as follows: 10. There is one more point which must be considered. It was strongly urged before us by the Appellants that, in the trial court, no plea had been taken by the Respondent that the agreement for the extension of time was vague and uncertain. No such plea appears to have been taken even in the grounds of appe....
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.... it cannot be described as being vague. The second contention is that when a decision is taken by the brothers permitting sale by a third brother, then, first preference is to be given to both the other brothers. What is intended is that after the written concurrence is obtained for selling in order that property is not sold to a third party/stranger, the other two brothers are given an opportunity to buy that property. This portion of the Clause cannot also be described as vague as such. No doubt, it could be argued that the price at which the offer is to be made is not expressly mentioned. We have found that the Clause is part of a family settlement between brothers. Courts ordinarily lean in favour of family settlement. Clause (5) itself does not contain an agreement to sell. It only contemplates a preferential offer being treated as a condition precedent to a brother affecting a sale outside of a family to a stranger. The price can only be understood as market price which would be the fair price. Therefore, we are of the view that the finding by the High Court that contract is vague cannot be sustained. WHETHER OFFER WAS MADE BY Defendant NO. 1 TO Plaintiff 23. We will first ....
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....yment can be made and signatures can be got done. 2. Half payment would be through draft and the remaining half would be in cash. 3. As regards the rates, we have already quoted quite low rates and this is final. I want to finalize the deal without telling Manu because it we are not able to finalize, then next offer would be to an outsider. If the deal is finalist by 1st April, after 15th Manu would come and if he comes, then he would not let the house be sold. 4. Payment will have to be made at Bhilai on coming to Bhilai because Mr. Mehta is not in a position to travel. 5. After giving the earnest money, we would issue notice for vacating the house or adopt any other method (not readable).......We will see. I hope you have got answer to all the points. Please reply in writing immediately or give me a phone call. Kindly convey my love to children and regards to both of you. Sd/- Shyama 25. There is no response again to the letter by the Plaintiff though he claimed that he responded by a letter dated 23.02.1996 and 22.03.1996. Again on 01.04.1996 P18 was addressed by the Plaintiff to the first Defendant and his wife which inter alia read as follows: Fax No. 0788-324....
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.... stay otherwise he would come back and do something here. I do not wish to now receive earnest money. Please make the final payment as the prices in Chandigarh are increasing quite rapidly and the rate settled by you is quite old. Therefore, I have given you offer because I wan in dire need of money. Now the need is yours. If the deal is finalized before Manu coming back, then it is alright because health of Mehtaji is also very delicate. In any case, I would handle the situation in any manner but it would not be possible later on. For coming to Bhilai, you can catch Chhattisgarh Express from Ambala or you can catch Mahamaya super fast which starts at 2.20 P.M. from Delhi. There is another train from Nizamuddin which runs three days a week which is again good train. Please tell me on telephone whenever you wish to come. I would get the seat booked because during summer vacation, there would be heavy rush. Convey love to children. Namaskar to both of you. Sd/- Shyama 27. There is no response to this letter by the Plaintiff. It is thereafter that the sale was affected in favour of the second Defendant on 12.11.1997. It is undoubtedly true that learned Counsel for the Plaintiff....
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....first Defendant had made offer to the Appellant for selling his share for Rupees Five Lakhs. It is also quite clear that the Plaintiff himself acknowledged in the letter dated 01.04.1996 that the offer of Rupees five lakhs was reasonable. Appellant, quite clearly, has articulated his pressing priority to be to conduct the marriage of his daughter. This means that he was hard pressed for money. Otherwise there was no need for him after finding the offer to be reasonable to request the first Defendant and his wife to try to reduce the value. Letter dated 15.04.1996 written by the first Defendant's wife shows that she did not wish to then receive earnest money and she finally demanded that final payment be made as prices in Chandigarh were increasing quite rapidly and rate settled by the Plaintiff was quite old. She emphasized that the offer was given because she was in dire need of money. Now the need is of the Plaintiff. This correspondence also tends to show that the rate of five lakhs was, in fact, even acceptable to the Plaintiff as the letter referred to the rate settled by the Plaintiff being quite old. But nothing was happening on the ground. This leads the first Defendant....
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....? 33. Next question we must pose and answer is whether the High Court was right in holding that the courts would not exercise discretion Under Section 20 of the Specific Relief Act, 1963 as the contract was not specifically enforceable. 34. In this regard, the question would arise in the first place as to which is the contract which is sought to be enforced. It is pleaded in the plaint that first Defendant was interested in disposing of his share and the Plaintiff was ready and willing to purchase the share of first Defendant. It is specifically averred that the third Defendant (the other brother) did not show any interest in purchasing share of the fist Defendant. Finally, the relief sought is by way of decree for specific performance directing the Defendant to sell by the sale of one-third share in the house to the Plaintiff and handover vacant possession of the demised portion to the Plaintiff. This is apart from the relief against the sale in favour of the second Defendant. 35. Now, let us see the judgment of the Trial Court. The Trial Court proceeds to hold inter alia that there is a family settlement, there is correspondence and there are telephone bills. They made out the....
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....e selling to anyone else. 37. A perusal of these judgments would reveal the following aspects: 1. The Appellate Court finds that the plaint Schedule property was owned by the father. It is found that the three sons get equal shares. 2. The Trial Court finds that no offer was made by the first Defendant to the Plaintiff. It decrees specific performance by directing so on the basis that first Defendant will have to make an offer to the Plaintiff and the third Defendant after finding that the first Defendant was not bound to make an offer to sell at Rs. 4.80 lakhs. The Appellate Court, on the other hand, has gone to decree specific performance by even directing possession of the property to be given to the Plaintiff by the second Defendant. On the basis of the terms and conditions of the agreement dated 31.03.1982, there are clearly two palpable flaws in the findings and directions. Admittedly, the second Defendant was already occupying the property as a tenant. He can be evicted only in accordance with law even if everything is held in favour of the Plaintiff. In other words, even if it is found that the assignment by the first Defendant in favour of the second Defendant is null....
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....ed essentially that the first Defendant must honour his obligations under the settlement and what is involved here must be treated as a right of preemption. This is for the reason that in the decision which we have referred to this Court, has taken the view that Clause (11) was in the nature of right of preemption which can be enforced by the male heir of either sister in the event of sale of property by the male heir of the other sister. The words "other sharers" were understood to mean, "the male heirs of the other sister". We must, before we pronounce on this aspect, consider the content of the right of preemption. 41. In Bishan Singh v. Khazan Singh AIR 1958 SC 838, this Court has articulated the matter with clarity and we, hence, set out the following statement of the law: 7. Before attempting to give a satisfactory answer to the question raised, it would be convenient at the outset to notice and define the material incidents of the right of pre-emption. A concise but lucid statement of the law is given by Plowden, J. in 136 P.R. 1894, at page 511, thus: A preferential right to acquire land, belonging to another person upon the occasion of a transfer by the latter, does n....
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....ubstituted in his place. 43. Right to preemption is ordinarily born out of custom or in terms of a statutory provision. We are not, in this case, concerned with the statutory right of preemption or custom. We would necessarily have to fall back on first principles relating to preemption, which we feel, have been explained in Bishan Singh (supra) which we have set out. We will proceed on the basis that a family settlement/contract can give rise to a right of preemption. But is this a case which calls for the application of right of preemption? The relief which is sought by the Appellant in his plaint, reads as follows: 14. That the suit for the purposes of court fee and jurisdiction for relief of declaration is Rs. 19-50 paise declaration and accordingly court fee i.e. Rs. 19-50 paise is affixed on the plaint. The value of the suit for the jurisdiction of court fee for specific performance is Rs. 4,80,000/- and accordingly court i.e. Rs. ....... Is affixed on the plaint. It is therefore, respectfully prayed that the decree of the declaration be passed in favour of the Plaintiff and against the Defendant No. 1 and 2 declaring sale deed dated 12.11.1997 null and void ab initio an....
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....compromise between the two Shia Mahomedans, the Defendant agreed to marry the Plaintiff. Certain rights were conferred upon the Plaintiff upon her marriage with the Defendant. The Defendant was already married. Under the compromise, it was provided inter alia that the Plaintiff would become owner of one-half of the property along with the first wife of the Defendant. However, it was provided that the Plaintiff, as also the first wife, shall not have the power to transfer the property to a stranger. Ownership was to devolve on the legal heirs of the two wives, generation to generation. Dispute arose upon the first Plaintiff in earlier case/second wife, selling/mortgaging her share before her death. One of the contentions raised by the transferees from the wife, who was the Plaintiff in the earlier suit which resulted in the compromise, was about the validity of the restriction against sale of the property to strangers. Dealing with the said aspect, the Privy Council had this to say: Their Lordships feel the weight of these contentions, and they might have some difficulty in holding that Sughra Bibi took nothing more than a life estate. But assuming in the Appellants' favour th....
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....rohibition against alienation to strangers. The court also dealt with the matter on the basis that a partial restriction would not, in case of the transfer inter vivos, be bad, after the passing of the Transfer of Property Act, 1882 (hereinafter referred to as 'the TP Act'). 48. In K. Naina Mohamed (supra), the owner of the property, by a registered will, created life interest in favour of her two sisters. The will stipulated that after the death of the sisters, their male heirs would acquire absolute rights in the properties with the limitation that they shall not sell the properties to strangers. The sisters divided the properties amongst themselves. The property which stood allotted to one of the sisters came to be sold by the sister and her son in favour of the Appellant. The sale was challenged as being violative of the condition in the will. In the course of its judgment, this Court observed as follows: 38. Reverting to the case in hand, we find that by executing the will dated 22-9-1951, Smt. Ramakkal Ammal created life interest in favour of her two sisters with a stipulation that after their death, their male heirs will acquire absolute right in A and B propertie....
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....ut an end to the dispute between the parties and recognized the right with the Plaintiff over the property, however, subject to the condition that there will be no right to sell to strangers. In this case, as already noted, the title to the share in the property of the first Defendant is traceable to the will executed by the father. The plaint reveals that the legatees, viz., the brothers applied to the Estate Office and the property was transferred in favour of the brothers on the terms and conditions in Memo dated 10.07.1981. One of the conditions was that there will be no fragmentation of the site. It is thereafter that the controversial agreement was entered into between the brothers. Thus, the family arrangement was entered into by the brothers when their rights as owners had crystallized. It was not subject to any condition as was the case in Muhammad Raza (supra) where the compromise in the suit created the right but subject to the condition against alienation to stranger. No doubt, being brothers, they could to promote harmony and avoid future disputes, enter into a family settlement. 51. The first Defendant has sold his share to the second Defendant. Under the clause, can....
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....e. He seeks written concurrence of the other brothers. A written concurrence is given. Then, the next step is reached. The selling brother offers to sell it to the other brothers. If they take the offer and the price is agreeable to the parties, sale follows. If the brothers do not wish to buy, the sale to the strangers is permitted. In the above process, in the facts of this case, it is clear that the Appellant and the first Defendant, without insisting on the written concurrence, went to the stage of offer to brothers. The Appellant has led the first Defendant to assume, even without a written concurrence, that the sale is permitted. The first Defendant has acted clearly on the basis that the requirement of the first stage was not being insisted upon. Otherwise, he could have certainly obtained the concurrence. Having thus acted in the matter, and the second stage having been reached, when for reasons where the fault cannot be attributed to the first Defendant, the offer, which the Appellant himself describes as reasonable, was not seized upon by the Appellant, the third stage emerged. This meant that it became open to the first Defendant to sell to a stranger and which is what h....
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....er this Act and includes his successors and assigns; 57. Section 4(2) of the 1952 Act reads as follows: 4(2) Every transferee shall comply with the directions issued under Sub-section (1) and shall as expeditiously as possible, erect any building or take such other steps as may be necessary, to comply with such directions. 58. Section 5 of the 1952 Act forbids erection or occupation of any building at Chandigarh in contravention of Building Rules made under Sub-section (2). The word "building" is defined in Section 2(c), which reads as follows: 2(c)"building" means any construction or part of a construction which is transferred by the '[Central Government] Under Section 3 and which is intended to be used for residential, commercial, industrial or other purposes, whether in actual use or not, and includes any out-house, stable, cattle shed and garage and also includes any building erected on any land transferred by the Central Government Under Section 3; 59. From a perusal of the aforesaid provisions, it becomes clear that the word "site" means any land which is transferred Under Section 3 of the 1952 Act. When it comes to the terms of Section 3, it contemplates power wit....
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....ided further that fragmentation of any site shall be allowed if such fragmentation is permitted under any scheme notified by the Administration. 61. It is on the strength of the provisions contained in Rule 14 of the 1960 Rules and Rule 16 of the 2007 Rules that the Appellant would argue that the assignment of the share of the first Defendant occasioned a breach of the law. The second Defendant, on the other hand would point out that there was no issue of fragmentation ever raised before the courts and the same was not decided in the courts. 62. It is contended by the second Defendant that the sale deed in favour of the Respondent No. 1 specifically says that the sale is in respect of one-third share in the residential house No. 13 of Sector 19A, Chandigarh. After the sale deed, it is contended, one-third share of the party was duly transferred and mutated in the name of Respondent No. 1/second Defendant by the Chandigarh Administration. The High Court, in fact, tides over this objection by the Appellant by pointing out that once the second Defendant steps into the shoes of the first Defendant, he became a co-owner and his remedy is to sue for partition and while fragmentation of....