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TaxTMI 
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TaxTMI 
2025 (7) TMI 1646
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.... appeal was preferred against the said order. The Division Bench in APOT 159 of 2021 in terms of Order dated 17th November, 2021 directed that the issue of maintainability of the suit shall be decided as a preliminary point. Accordingly, the suit is taken up for passing the judgment on preliminary issue. On 4th January, 2023, Co-Ordinate Bench framed preliminary issue and proceeded with witness action. Thereafter, the suit was taken up for hearing argument on preliminary issue, 3. The sum and substance of the plaint case is that the original Plaintiff being the deceased father of the Plaintiff nos. 1 to 3 instituted the instant suit against the original Defendant, praying for decree of specific performance of the agreement for sale dated 22nd January, 1989 in respect of premises no. 6, Chowringhee Lane, Kolkata-700016 along with other prayers. The prayers made in the plaint are decree for specific performance of the agreement; decree directing the Defendants their servants, agents and representatives and assigns to execute and register in due form of law in favour of the substituted Plaintiffs of their nominee or nominees, deed or deeds of conveyance in respect of the premises no.....
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....agraphs 14(A) to 14 (D) of the written statement? iii) Is the Plaintiff entitled to any damage as alleged in paragraph 17 and 18 of the plaint? iv) To what relief, if any, is the Plaintiff entitled? Subsequently, a co-ordinate Bench by this Court in terms of Order dated 04/01/2023 framed an additional issue which is as follows: v) Is the suit barred by Section 31 of the Foreign Exchange Regulation Act, 1973? 7. Mr. Ghosh, the Learned Counsel for the Plaintiff firstly argued that Section 31(1) of FERA, 1973 prohibits transfer and disposal of immovable property without prior permission of the Reserve Bank of India. In terms of Section 54 of the Transfer of Property Act, 1882, transfer of immovable property can take place only by execution of registered of deed of sale. Execution of an unregistered agreement for sale does not result in transfer or disposal of any immovable property; nor does execution of such agreement create any interest in the property. Mr. Ghosh referred to Rambhau Namdeo Gajre Vs. Narayan Bapuji Dhotra [(2004) 8 SCC 614]. It was contended that execution of agreement for sale did not come within prohibition or restriction imposed by Section 31 of the FERA,....
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....y or disposition of property. Interpretation is to be given following the principle of ejusdem generis. Agreement for sale does not come within the ambit of the words transfer or disposition so that it would attract the rigors of Section 31 of the FERA, 1973. Section 31 has to be read but ejusdem generis inasmuch as agreement for sale does not tantamount to "otherwise" disposing of a property. It is neither sale nor mortgage, lease, gift or settlement as contemplated in Section 31 of FERA, 1973. Mr. Ghosh referred to M/s. Siddehwari Cotton Mills (P) Ltd. Vs. Union of India and Another [(1989) 2 SCC 458]. 11. It was argued that the bar under Section 78 of FERA, 1973 is not on institution of suit in any civil court. The FERA, 1973 did not put any bar on filing of any civil suit unlike some other special statutes like SARFESI Act, 2002, the Companies Act, 2013, the Income Tax Act, 1961 of the Central Goods & Services Tax Act, 2017. A civil suit in respect of any agreement for sale is of course not barred by the FERA, 1973. That was not the avowed object of the law-makers. 12. Mr. Ghosh also distinguished the judgments relied on by the Defendant by the Learned Counsel for the Defenda....
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....there is no manifestation of intent to give broader meaning to the general words. Mr. Sarkar referred to Tribhuban Parkesh Nayyar Vs. Union of India [(1969) 3 SCC 99]. He further argued that on perusal of object of Section 31 of FERA, 1973 as explained in Asha John Divianathan's case it is clear that the intention of FERA, 1973 is to give widest meaning to the term "or otherwise" and hence the rule of (ejusdem generis) is not applicable. 15. It was argued that at the time of agreement both the parties knew that it was unlawful and void, hence barred by Section 23 of the Indian Contract Act, 1872. Court does not assist a person who comes to the court with soiled hands. Hence, Section 65 of the Indian Contract Act, 1872 does not apply and the Plaintiffs are not entitled to in the refund of the earnest money, and, as such, the suit is not maintainable or damages. Mr. Sarkar referred to Loop Telecom and Trading Limited vs. Union of India & Anr. [(2022) 6 SCC 762]. 16. Sum and substance of the argument advanced by Mr. Sarkar is that the entire suit is not maintainable being offensive to Section 23 of the Indian Contract Act, 1872 and being barred by the provision of the FERA, 1973. Th....
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....he Act :- (1) No person shall enter into any contract or agreement which would directly or indirectly evade or avoid in any way the operation of any provision of this Act or of any rule, direction or order made thereunder. (2) Any provision of, or having effect under, this Act that a thing shall not be done without the permission of the Central Government or the Reserve Bank, shall not render invalid any agreement by any person to do that thing, if it is a term of the agreement that, that thing shall not be done unless permission is granted by the Central Government or the Reserve Bank, as the case may be; and it shall be an implied term of every contract governed by the law of any part of India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted. (3) Neither the provisions of this Act nor any term (whether express or implied) contained in any contract that anything for which the permission of the Central Government or the Reserve Bank is required by the said provisions....
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.... be barred when such an agreement would tend to avoid, defeat or frustrate any of the provisions of the Act. In fact, as the then existing Rules and the proforma of application seeking for permission under section 31 of the Act showed, execution of agreement for sale was needed for this purpose; a copy of the agreement was to be produced before the Reserve Bank of India for seeking permission under section 31 of the Act. 20. In Asha John Divianathan's case the Supreme Court of India considered interplay of section 31, section 47, section 50 and section 63 of the FERA act, 1973 at length. It was observed that a person who is not a citizen of India, holding immovable property situated in India was obliged to make disclosure in that behalf to RBI. In any case, if the person intended to dispose of such property by sale, mortgage, lease, gift, settlement or otherwise, he was expected to obtain previous general or special permission from the Reserve Bank of India. Only then, transfer so intended could be given effect to. It is true that the consequences of failure to seek such previous permission have not explicitly specified in the same provision or elsewhere in the Act but then the pu....
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....." 22. The agreement for sale was executed on 2nd January, 1989 copy of which was marked as Ext. 3. There is no specific averment in the agreement that permission under Section 31 of FERA, 1973 should be taken from the Reserve Bank of India. It is in the agreement that prior to execution of a deed of conveyance compliances should be made with the West Bengal Urban Land (Ceiling and Regulation) Act, 1976 as well as the Income Tax Act,1961. Rather Clause 11 mandates that the Vendor will do of acts, deeds and thinks that are to be performed and "other order or permission" as may be necessary. But there is no provision which can be interpreted as calculated to defeat or frustrate the operation or application of the FERA, 1973. The agreement, in fact, does not come within the mischief of Section 47. It rather contemplates and by deeming provision of Section 47 deemed to contain provision that permission requisite for transfer of title would have to be taken. The agreement itself as such is not illegal, offending any of the provision of the FERA, 1973 for which the Court would not come to the assistance by entertaining a suit. Inference of this Court, therefore, is that the agreement it....