TaxTMI 
TaxTMI 
2019 (8) TMI 1899
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....ndant in the suit. Thereafter, the disputed house 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 Defe....
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....espondence. Defendant No. 1 was not ready to accept earnest money. 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 Plaintif....
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....here is no absolute prohibition against sale of his share. It is only a partial 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 settl....
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....Defendant told him about the offer made to the Appellant. He would point out that this conversation 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 bro....
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....y C". As the price is capable of being made certain, there is no uncertainty here to make the agreement void. (f) A agrees to sell to B "my white horse for rupees five hundred or rupees one 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 ....
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.... brother want to sell the property, the other two brothers must agree in writing. This Clause cannot be described as vague. This is different from the aspect as to whether it is a clog on ownership or whether it is otherwise unenforceable but 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 ....
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....points he asked: 1. What would be the earnest money? 2. How the payment would be made? 3. What would be the rate? 4. Where the payment would be made and when the sale deed would be executed? 5. How the house would be got vacated? 1. The earnest money can be paid Rs. 1 lac or two; even the entire payment 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....
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....sult my children, so there was some delay. Manik is not ready to give you the portion of the house. He is quite angry but I have spoken to Rajiv. He has told me that if your goodself are interested in purchasing, then you are requested to come to Bhilai with all the payment in one go and get all the papers signed. We do not wish to inform him because he is in Dubai for one month with Anju. He has got his visa extended by one month and if till then his job is fixed, then he would 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 fro....
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....as about the portion of the first Defendant. Thereafter, it is stated that a reasonable offer of the first Defendant has come at such a time that it is hard for him to take a decision. He promised to do his best to complete the deal. Next, he would say that an attempt may be made to reduce the total value if there is some scope. 30. Correspondence indeed establish, therefore, that the health of the first Defendant was poor and it was deteriorating and he was in urgent need for money. It is quite clear that the 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 fin....
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....ble and acceptable even to the Plaintiff though he wanted a reduction. Having regard to the health of the first Defendant and the dire stage at which first Defendant and his wife were placed, we cannot for a moment but hold that they had made an attempt to comply with the condition in the family settlement providing for preference. 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? 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 Defend....
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....iff, finding that the relief of delivery was a consequential relief liable to be granted. It will be remembered that the Trial Court has decreed the suit for specific relief on the reasoning that under the family settlement, the first Defendant has to give first preference to the Plaintiff and it was also found that the first Defendant is not bound to sell at an amount of Rs. 4.80 lakhs for which first Defendant has sold to the second Defendant. All that he was to do was that he was bound to make an offer to the Plaintiff before 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 performan....
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.... male heirs would get the two properties in question as absolute owners. The properties were mentioned as properties 'A' and 'B'. It is, thereafter, that Clause (11) provided as follows: (11) As and when Savithri Ammal's male heirs get and enjoy A property and as and when Rukmani Ammal's heirs get and enjoy B property, if any one of them wants to sell their share, they have to sell to the other sharers only as per the market value then prevailing and not to strangers. 40. The learned Counsel for the Appellant had contended 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 Bi....
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....right to follow the thing sold. (3) It is a right of substitution but not of re-purchase i.e., the pre-emptor takes the entire bargain and steps into the shoes of the original vendee. (4) It is a right to acquire the whole of the property sold and not a share of the property sold. (5) Preference being the essence of the right, the Plaintiff must have a superior right to that of the vendee or the person substituted in his place. (6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted 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 pla....
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....ust be a written concurrence from the two brothers, if the third brother wishes to sell his share. The second part is that the offer must be made to the other brothers before transfer is effected to a stranger. The contention is that the family settlement was arrived at so that the stranger is not inducted into the property. 46. To answer these questions, which have been posed, it may be also necessary to look at the case law in relation to the family settlements and restrictions which are put on property rights under such settlements. In Muhammad Raza (supra), which is relied upon by the Appellant, under a 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 ge....
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....n conditions. One of these conditions was that she would not alienate the property outside the family. Their Lordships are asked by the Appellants to say that this condition was not binding upon her, and that what she took she was free to transfer to them. 47. It will be noted that Privy Council took note of the fact that Plaintiff in the earlier suit got title under the compromise, which contained the restriction against sale to strangers. It was not a deed of gift or conveyance but in the nature of the contract. It was upon compromise of their conflicting claims that she agreed to certain conditions one of which was the prohibition 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 tha....
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....his was in the nature of a right of pre-emption which could be enforced by the male heir of either sister in the event of sale of property by the male heir of the other sister. If the term "other sharers" used in Clause 11 is interpreted keeping in view the context in which it was used in the will, there can be no manner of doubt that it referred to the male heirs of the other sister. The only restriction contained in Clause 11 was on alienation of property to strangers. 50. In the case decided by the Privy Council, in Muhammad Raza (supra), during the pendency of the disputes in a suit, a compromise was arrived at, which among other things, put 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 c....
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....Defendant No. 3. the site plan showing the portion sold by the Defendant No. 1 to Defendant No. 2 (in red) is attached with this plaint. 52. Thus, what is sought is specific performance. The Appellant proceeded in the suit on the basis that there is a contract. A contract presupposes an offer which is accepted which means that there was an offer from the Defendant. The correspondence, which we have referred to, fortifies us in holding that there was an effective offer and it did not materialize on account of any default on the part of the Plaintiff. 53. Now, if the Clause is broken down, it involves the following steps. A brother announces his desire to sell his share. 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 br....
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....nt, if any, due to the Central Government on account of the transfer of any site or building, or both, under Sub-section (1) is paid, such site or building, or both, as the case may be, shall continue to belong to the Central Government. 56. Section 4 of the 1952 Act confers power upon the Central Government and the Chief Administrator to issue directions in respect of any site or building in regard to the matters which are mentioned therein. The word "transferee" is defined in Section 2(k) of the Act, which reads as follows: 2(k)"transferee" means a person (including a firm or other body of individuals, whether incorporated or not) to whom a site or building is transferred in any manner whatsoever, under 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....
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.... xxx xxx xxx 2(h) the conditions with regard to the buildings to be erected on sites transferred under this Act; 60. Rule 14 of the Chandigarh Sale of Sites and Building Rules, 1960 provides that no fragmentation of any site is permitted. Subsequently, in exercise of powers Under Sections 3 and 22 of the Act, Chandigarh Estate Rules, 2007 came to be made. Rule 16 deals with fragmentation/amalgamation, which reads as follows: 16. Fragmentation/Amalgamation. No fragmentation or amalgamation of any site or building shall be permitted. Provided that amalgamation of two or more adjoining sites shall be permissible only in the case of commercial or industrial sites subject to the condition that the revised plans are approved by the competent authority, prior thereto. Provided 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 Defenda....