TILAK RAJ BAKSHI versus AVINASH CHAND SHARMA (DEAD) THROUGH LRS. & OTHERS on 20 August 2019

[2019] 10 S.C.R. 251

TILAK RAJ BAKSHI

v.

AVINASH CHAND SHARMA (DEAD) THROUGH LRS. &OTHERS

(Civil Appeal Nos. 1524-1525 of 2019)

AUGUST 20, 2019

[ASHOK BHUSHAN AND K. M. JOSEPH, JJ.]

Suit – Right of pre-emption – When not applicable – Fatherof the appellant-plaintiff executed will of the suit scheduled propertyin favour of his three sons, the plaintiff, first defendant and thirddefendant – Suit for specific performance filed alleging that thefirst defendant without getting plaintiff’s written concurrence, soldthe suit property to the first respondent-second defendant, thusviolating Clause (5) of the agreement entered between the threebrothers – Trial court decreed the suit – Appellate Court dismissedthe second defendant’s appeal – High Court dismissed the suit filedby the plaintiff – On appeal, held: Clause in question does notplace absolute restriction on alienation in favour of a stranger –All that it contemplates is an offer being made to the brothers, oncethe first step of concurrence in writing by the brothers for the saleis obtained – Plaintiff not justified in invoking the principleunderlying the right of pre-emption – First defendant indeed madeoffer to the appellant for selling his share for Rs. 5 lakhs – Plaintiffestopped from setting up the plea of absence of written consent ofthe brothers as he led the first defendant to assume, that even withoutwritten concurrence, the sale is permitted – First defendant actedon that basis, otherwise, he could have certainly obtained theconcurrence – Having thus acted in the matter, and the second stagehaving been reached, when the fault cannot be attributed to thefirst defendant, the offer, which the plaintiff himself describes asreasonable, was not seized upon by him, the third stage emerged –It became open to the first defendant to sell to a stranger and hesold the property to the second defendant – Further, plaintiff notable to persuade the Court to hold that the assignment in favour ofthe second defendant is vulnerable on the basis that it involvesfragmentation of the site, which according to the plaintiff was

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Aprohibited under 1952 Act – Transaction cannot be impugned onthe said ground also – Indian Contract Act, 1872 – s.29 – Capitalof Punjab (Development and Regulation) Act, 1952 – Specific ReliefAct, 1963 – s.20.

Capital of Punjab (Development and Regulation) Act,B1952 – ss.2(f), (k), 3-5, 22 – Difference between ‘site’ andbuilding’ – Discussed – Chandigarh (Sale of Sites and Building)Rules, 1960 – r.14 – Chandigarh Estate Rules, 2007 – r.16 – PartitionAct, 1893 – ss.2-4.

Practice and Procedure – Plea not taken before the AppellateCCourt, if can be decided by it – Permissibility of – Held: Mere factthat the plea that the clause in question was vague, and hence,unenforceable and void was not taken, will not stand in the way ofthe Appellate Court looking into the contract and, if on its terms, itfinds it to be vague and unenforceable, it can be so held – IndianEvidence Act, 1872 – s.93.D

Dismissing the appeals, the Court

HELD : 1.1 WHETHER THERE WAS A FAMILYSETTLEMENT?

No material has been placed by the second defendant toEestablish that the alleged family settlement is a forged document.There is no case that it is not a family settlement. The settlementis arrived at between the plaintiff, his brother-the first defendantand another brother-third defendant. Therefore, it is proceededon the basis that there is a family settlement. [Para 17][265-G-H]F1.2 WHETHER THE FAMILY SETTLEMENT WASVAGUE?

The mere fact that a plea is not taken, that the clause inquestion is vague, and hence, unenforceable and void will notGstand in the way of the Appellate Court looking into the contractand, if on its terms, it finds it to be vague and unenforceable, itcan be so held. Clause (5) in question provides that the propertyin question cannot be sold without concurrence of the threebrothers in writing. If it is sold on the agreement of three brothers,the first preference is to be given to both other brothers. WhenH

it is stated that the property cannot be sold without concurrenceof the three brothers in writing, there cannot be any doubt aboutits meaning. It means what it says which is that should a brotherwant to sell the property, the other two brothers must agree inwriting. This clause cannot be described as vague. This is differentfrom the aspect as to whether it is a clog on ownership or whetherit is otherwise unenforceable but it cannot be described as beingvague. The second contention is that when a decision is taken bythe brothers permitting sale by a third brother, then, firstpreference is to be given to both the other brothers. What isintended is that after the written concurrence is obtained forselling in order that property is not sold to a third party/stranger,the other two brothers are given an opportunity to buy thatproperty. This portion of the clause cannot also be described asvague as such. No doubt, it could be argued that the price atwhich the offer is to be made is not expressly mentioned. Theclause is part of a family settlement between brothers. Courtsordinarily lean in favour of family settlement. Clause (5) itselfdoes not contain an agreement to sell. It only contemplates apreferential offer being treated as a condition precedent to abrother affecting a sale outside of a family to a stranger. The pricecan only be understood as market price which would be the fairprice. Therefore, the finding by the High Court that contract isvague cannot be sustained. In the last letter dated 01.04.1996, itis written by the plaintiff to the first defendant and his wife. Hehas shown awareness of the first defendant’s health.Correspondence indeed establish, therefore, that the health ofthe first defendant was poor and it was deteriorating and he wasin urgent need for money. The first defendant had made offer tothe appellant for selling his share for Rupees Five Lakhs. Theplaintiff himself acknowledged in the letter dated 01.04.1996 thatthe offer of Rupees five lakhs was reasonable. Appellant, quiteclearly, has articulated his pressing priority to be to conduct themarriage of his daughter. This means that he was hard pressedfor money. Otherwise there was no need for him after finding theoffer to be reasonable to request the first defendant and his wifeto try to reduce the value. Letter dated 15.04.1996 written bythe first defendant’s wife shows that she did not wish to thenreceive earnest money and she finally demanded that final AB

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Apayment be made as prices in Chandigarh were increasing quiterapidly and rate settled by the plaintiff was quite old. Sheemphasized that the offer was given because she was in dire needof money. Now the need is of the plaintiff. This correspondencealso tends to show that the rate of five lakhs was, in fact, evenacceptable to the plaintiff as the letter referred to the rate settledBby the plaintiff being quite old. But nothing was happening on theground. This leads the first defendant wife to state that she wouldonly handle the situation in any manner but it will not be possiblelater on. The sale took place after more than a year. One thing isclear that an offer was made on behalf of the first defendant to theCplaintiff. [Paras 21, 22, 29 and 30] [268-A-F; 273-D-H; 274-A-B]

1.3 Apparently, in keeping with the family settlement, apreference was indeed shown. The price was reasonable andacceptable even to the plaintiff though he wanted a reduction.Having regard to the health of the first defendant and the direDstage at which first defendant and his wife were placed, they hadmade an attempt to comply with the condition in the familysettlement providing for preference. [Para 32] [274-G-H]

The Appellate Court finds that the plaint schedule propertywas owned by the father. It is found that the three sons get equalFshares. The Trial Court finds that no offer was made by the firstdefendant to the plaintiff. It decrees specific performance bydirecting so on the basis that first defendant will have to make anoffer to the plaintiff and the third defendant after finding that thefirst defendant was not bound to make an offer to sell at Rs.4.80lakhs. The Appellate Court, on the other hand, has gone to decreeGspecific performance by even directing possession of the propertyto be given to the plaintiff by the second defendant. On the basisof 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 theH

property as a tenant. He can be evicted only in accordance withlaw even if everything is held in favour of the plaintiff. In otherwords, even if it is found that the assignment by the first defendantin favour of the second defendant is null and void, he has theright to continue in possession unless he is evicted under therelevant law for the eviction of tenants. Therefore, the directionto deliver possession is clearly unsustainable. The second flawwhich vitiated the judgment of the first Appellate Court is that ithas proceeded to hold that plaintiff is entitled to specificperformance as per the terms and conditions of the agreementdated 31.03.1982. The Appellate Court was in error in decreeingspecific performance on the basis that the family settlementwithout anything more, embodied a contract for sale of immovableproperty. The terms of the agreement, viz., the price at whichthe property is to be sold and purchased, are not spelt out in thefamily settlement, as correctly noticed by the Trial Court. TheAppellate Court has not proceeded to hold that the plaintiff isentitled to purchase the property at Rs.4.80 lakhs at which pricethe first defendant has sold to the second defendant. If the decreeis treated as confirming the decree of the Trial Court, then, theprice at which it is to be purchased would only have beenascertained on the basis of an offer which is made in pursuance ofthe Trial Court’s judgment, and therefore, no decree for specificperformance, as passed by the First Appellate Court, couldcertainly have been passed. [Para 37] [276-A-H; 277-A-E]

1.5 Right to preemption is ordinarily born out of custom orin terms of a statutory provision. This case does not concernwith the statutory right of preemption or custom. There is nocase expressly set up in the plaint that what appellant is seekingto enforce is a right of preemption. If the suit involved a right ofpreemption, and proceeding on the basis that the appellant waspursuing his secondary right to follow the property sold, then,the relief would have been to substitute himself in place of thebuyer/second defendant. The right of preemption is not right ofre-purchase. Even proceeding on the basis of it being a case ofpreemption, as held by the High Court and by this Court, firstpreference was given to the plaintiff. In this case, the concernedclause, certainly does not place an absolute restriction on AB

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Aalienation in favour of a stranger. All that it contemplates is anoffer being made to the brothers, once the first step of concurrencein writing by the brothers for the sale is obtained. Therefore, theappellant would not be justified in invoking the principleunderlying the right of preemption in this case. [Paras 43, 44][279-F-G; 280-D-G]B

1.6 IMPACT OF ABSENCE OF WRITTENCONCURRENCE BY BROTHERS FOR SALE

The controversial clause, according to the appellant, fallsin two parts. Firstly, there must be a written concurrence fromCthe two brothers, if the third brother wishes to sell his share.The second part is that the offer must be made to the otherbrothers before transfer is effected to a stranger. In this case,the title to the share in the property of the first defendant istraceable to the will executed by the father. The plaint revealsthat the legatees, viz., the brothers applied to the Estate OfficeDand the property was transferred in favour of the brothers on theterms and conditions in Memo dated 10.07.1981. One of theconditions was that there will be no fragmentation of the site. Itis thereafter that the controversial agreement was entered intobetween the brothers. Thus, the family arrangement was enteredEinto by the brothers when their rights as owners had crystallized.It was not subject to any condition. Being brothers, they could topromote harmony and avoid future disputes, enter into a familysettlement. The first defendant has sold his share to the seconddefendant. Under the clause, can the first defendant sell to astranger? He can sell provided there was a written concurrenceFby the other brothers for a sale and the offer is made to the otherbrothers and it does not fructify into a sale for reasons which arenot attributable to the brother who wishes to sell. There was anoffer to the appellant by the first defendant. He has failed to actupon it. The other brother has no case about offer not being madeGand he has not raised any dispute over the sale to the seconddefendant. [Paras 45, 50 and 51] [280-H; 281-A; 284-B-F]

1.7 Thus, what is sought is specific performance. Theappellant proceeded in the suit on the basis that there is a contract.A contract presupposes an offer which is accepted which means H

that there was an offer from the defendant. The correspondence,which fortifies in holding that there was an effective offer and itdid not materialize on account of any default on the part of theplaintiff. Now, if the clause is broken down, it involves thefollowing steps. A brother announces his desire to sell his share.He seeks written concurrence of the other brothers. A writtenconcurrence is given. Then, the next step is reached. The sellingbrother offers to sell it to the other brothers. If they take theoffer and the price is agreeable to the parties, sale follows. If thebrothers 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 theappellant and the first defendant, without insisting on the writtenconcurrence, went to the stage of offer to brothers. The appellanthas led the first defendant to assume, even without a writtenconcurrence, that the sale is permitted. The first defendant hasacted clearly on the basis that the requirement of the first stagewas not being insisted upon. Otherwise, he could have certainlyobtained the concurrence. Having thus acted in the matter, andthe second stage having been reached, when for reasons wherethe fault cannot be attributed to the first defendant, the offer,which the appellant himself describes as reasonable, was notseized upon by the appellant, the third stage emerged. This meantthat it became open to the first defendant to sell to a strangerand which is what he did by it selling it to the second defendant.Even proceeding to enforce the clause, the appellant is clearlyestopped from setting up the plea of absence of written consentof the brothers. It would be inequitable, particularly when thematter is considered in an appeal sourced under Article 136 ofthe Constitution of India. [Paras 52, 53] [285-D-H; 286-A-B]

1.8 EFFECT OF PROHIBITION AGAINSTFRAGMENTATION OF PROPERTY IN QUESTION UNDERTHE CAPITAL OF PUNJAB (DEVELOPMENT ANDREGULATION) ACT, 1952

The Capital of Punjab (Development and Regulation) Act,1952 (hereinafter referred to as ‘the 1952 Act’ for short) defines“site” in Section 2(f) as meaning “any land which is transferredby the Central Government under Section 3. Section 4 of the AB

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A1952 Act confers power upon the Central Government and theChief Administrator to issue directions in respect of any site orbuilding in regard to the matters which are mentioned therein.The word “transferee” is defined in Section 2(k) of the Act. Section5 of the 1952 Act forbids erection or occupation of any building atChandigarh in contravention of Building Rules made under sub-BSection (2). The word “site” means any land which is transferredunder Section 3 of the 1952 Act. When it comes to the terms ofSection 3, it contemplates power with the Central Governmentto transfer by auction, allotment or otherwise any land or buildingbelonging to the Government in Chandigarh on such terms andCconditions as may subject to any Rules that can be made underthe Act, the Government thinks fit to impose. Thus, though it isopen to the Central Government to transfer either land or buildingbelonging to the Government in Chandigarh under Section 3 ofthe 1952 Act, the word “site” is confined to only the land which

is transferred by the Central Government under Section 3. InDfact, the word “building”, as defined in the Act, points to anyconstruction or part of construction transferred under Section 3.It includes outhouse, stable, cattle shed and garage and alsoincludes any building erected on any land transferred by theCentral Government. The construction must be intended to beEused for residential, commercial, industrial or any other purposes.A clear distinction is maintained between “site” and “building”.The Chandigarh (Sale of Sites and Building) Rules, 1960 came tobe made. Section 22 of the 1952 Act confers power upon theCentral Government to make the Rules for various purposes,which are mentioned in sub-Section (2). It includes Sections 2(a),F2(d), 2(e) and 2(h) of the 1952 Act. Rule 14 of the ChandigarhSale of Sites and Building Rules, 1960 provides that nofragmentation of any siteis permitted. Subsequently, in exerciseof powers under Sections 3 and 22 of the Act, Chandigarh EstateRules, 2007 came to be made. Rule 16 deals with fragmentation/Gamalgamation. [Paras 54, 56, 58-60] [286-C-D; 287-B, D, G-H;288-A-C, F]

1.9 While it may not be true that the issue of fragmentationwas not raised in the courts, the appellant is not able to persuadethe Court to hold that the assignment in favour of the second H

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defendant is vulnerable on the basis that it involves fragmentation.The deposition of the plaintiff about partition of the house intothree portions has been noticed. The fact that one-third sharehas been duly transferred and mutated in the name of the firstrespondent/second defendant by the Chandigarh Administration,has been noted. The second defendant has produced thecommunication dated 19.12.1997 which indicates the transfer ofrights of site in Sector 19A held by first defendant is noted infavour of the second defendant subject to certain conditions. Thisis obviously before the 2007 Rules came into force. In the lightof the aforesaid facts, the appellant cannot be permitted to impugnthe transaction on the said ground. The contentions of theappellant are rejected. [Paras 63-66] [289-A-H; 290-A-B]

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K. Naina Mohammed (Dead) Through Lrs. v. A.M.Vasudevan Chettiar (Dead) Through Lrs.and Others(2010) 7 SCC 603 : [2010] 7 SCR 927 ; Hari ShankarSinghania and Others v. Gaur Hari Singhania andOthers (2006) 4 SCC 658 : [2006] 3 SCR 726 ;Muhammad Raza (since deceased) and others v. AbbasBandi Bibi AIR 1932 PC 158 – referred to.

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Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd.AIR 1958 SC 512 : [1959] SCR 213 ; Bishan Singh v.Khazan Singh AIR 1958 SC 838 : [1959] SCR 878– relied on.

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CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 1524-1525 of 2019.

From the Judgment and Order dated 02.02.2015 of the HighCourt of Punjab and Haryana at Chandigarh in R.S.A. Nos. 3496 of2012 (O&M) and 3497 of 2012 (O&M).

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ANidhesh Gupta, Sr. Adv., Tarun Gupta, Ms. Vriti Gujral, Ms. PallaviSingh, Ms. Japneet Kaur, Advs. for the Appellant.

Dhruv Mehta, Sr. Adv., Siddharth Mittal, Prabhat Kumar, Advs.for the Respondents.

The Judgment of the Court was delivered byB

K. M. JOSEPH, J.

1. These appeals arise out of special leave petitions and aredirected against the impugned judgment of the High Court of Punjab &Haryana by which the second appeal filed by the second defendant inCthe suit has been allowed and the civil suit filed by the appellant hereinhas been dismissed. Parties will be referred to with reference to theirposition in the Trial Court.

2. The suit scheduled property located in Chandigarh was ownedby one Kirpa Ram Bakshi. He had executed a registered will onD04.09.1974 in favour of the plaintiff, the first defendant and another sonwho was the 3[rd] defendant in the suit. Thereafter, the disputed housewas transferred in favour of the aforesaid three persons by the EstateOfficer. The plaintiff filed the present suit from which the appeal arisesalleging that on 31.03.1982 there was an agreement entered into betweenthe three brothers namely himself, the first defendant and the youngerEbrother. Clause (5) of the agreement provides as follows:

“The individual portions of New Delhi and Chandigarh andagricultural land cannot be sold without concurrence of all threein writing and if it is sold on agreement of three, first preferenceto be given to both other brothers. Any special renovation afterFexpiry of joint upkeep is done by any one of us and full accountsare maintained, then in the event of total sale of any unit, the extraamount spent on special renovation (subject to reasonabledepreciation/appreciation) by individual will be payable to theindividual over and above 1/3[rd] 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 thesame the first defendant sold the suit scheduled property to the seconddefendant. It was alleged that this will result in fragmenting the sitewhich is prohibited and it was also alleged that the sale was void. The G

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suit came to be filed for declaring the sale deed in favour of the seconddefendant void and for specific performance directing first defendant toexecute sale deed in respect of one-third share to the plaintiff.

4. The second defendant contested the matter. It was inter aliacontended that the family settlement was forged and fabricated. Theplaintiff did not have any preferential right. The second defendant wasa bonafide purchaser. The plaintiff never intended to purchase theproperty. The share of the first defendant was transferred to the seconddefendant by the Estate Officer of Chandigarh on his application.

5. The trial Court found that the family arrangement was indeedexecuted. It is a genuine document and not forged or fabricated. Thesuit filed on 03.02.1998 challenging the sale deed dated 12.11.1997 wasfiled within time. The second defendant was found not to be a bonafidepurchaser. He was aware of giving preference by the first defendant tothe appellant. It was further found that the plaintiff was never offeredto purchase the share of the first defendant. The trial court found thatthe plaintiff was entitled to specific relief and declared the sale null andvoid. The plaintiff was entitled to specific performance as per the termsand conditions of the agreement dated 31.03.1982 to purchase the shareof the first defendant.

6. The second defendant appealed against the judgment. Thefirst Appellate Court found that the family arrangement was genuine. Itreferred to the correspondence between the plaintiff and the wife of thefirst defendant. He proceeded to find that the only controversy waswhether the first defendant has offered to the plaintiff to purchase hisone-third share or whether the plaintiff never came forward for thesame. The first Appellate Court found that no document was producedto show that the first defendant himself offered. The court further goeson to find letters by the wife of the first defendant which reveals thatoffer was given to the plaintiff to purchase. As per clause (5) of thefamily arrangement, the concurrence of the plaintiff was not taken inwriting before selling to the second defendant. As far as the offer isconcerned the Appellate Court referred to the correspondence.Defendant no.1 was not ready to accept earnest money. The housewas located at Chandigarh. The sale could be effected only atChandigarh. Plaintiff visiting Bhilai, where first defendant lived, wouldnot have been served any purpose. Reference is made to the telephonebills of the plaintiff to prove communication between him and the first AB

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Adefendant regarding sale. The sale in favour of the second defendantwas effected through power of attorney. No offer was made for sellingto the plaintiff by the first defendant through a power of attorney. It isfound that though P19 shows that a deal was struck but because thewife of the first defendant was pressing hard for the plaintiff to come toBhilai, it did not work. The plaintiff was found ready and willing. TheBfirst defendant has violated the family settlement. The second defendantwas aware from the wife of the first defendant that she wanted to sell tothe plaintiff. The second defendant was a tenant who was aware of thefamily arrangement. There was no notice issued to the other sharers.The appeal of the second defendant was dismissed. That apart theCAppellate Court also allowed the cross appeal filed by the plaintiff anddirected the second defendant to hand over possession to the plaintiff.

PROCEEDINGS BEFORE THE HIGH COURT

7. The High Court after referring to the correspondence betweenthe parties found that the first defendant has indeed offered to sell hisDshare to the plaintiff. Plaintiff could have sent a draft. The precariouscondition of the first defendant, having regard to his health, was knownto the plaintiff.

8. The High Court found that there was no valid and bindingcontract between the parties. No price has been fixed nor there is anyEpenalty clause, i.e., in case of failure, either one of the parties can enforcethe agreement (obviously clause (5) which we have already quoted). Inview of the omissions of the appellant to act on the offer, he has lost thepreemptory right to purchase the share and it led to the sale in favour ofthe second defendant. The High Court proceeds to hold that clause (5)Frelied upon by the plaintiff is not only vague but indefinite and void. Theplaintiff cannot be permitted to exercise belatedly after he has lost toencash offer reflected in the letters which we will refer to hereinafter.

9. It is also found that the second defendant being the tenantcould only be evicted under the law relating to tenants.

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10. The High Court noted that the fragmentation may not bepossible but solution was found in Sections 2, 3 and 4 of the Partition Actand by ascertaining market value they could buy each other’s share.Section 22 of the Hindu Succession Act was found to have been declaredunconstitutional by this Court. Appellant had not accepted the offer.

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Reference was made to Section 20 of the Specific Relief Act and it wasfound that in the circumstances, appellant was not entitled to thediscretionary relief.

11. We heard Shri Nidhesh Gupta, learned senior counselappearing on behalf of the appellant and Shri Dhruv Mehta, learnedsenior counsel appearing on behalf of the first respondent (seconddefendant).

12. Learned senior counsel for the appellant would contend thatthis is a clear case of family settlement. The family settlement containedtwo distinct conditions. Not only preference must be given to the othersharers, the first defendant was obliged to obtain the written concurrenceof the other sharers. He would submit that courts lean in favour offamily settlements and uphold the same. In this case, there is no absoluteprohibition against sale of his share. It is only a partial prohibition. Thefirst defendant could sell his share to his brothers. The object behindclause (5) was highlighted to be that third party is not rendered entitledto the family property. Such a partial prohibition has been approved byboth the Privy Council and also by this Court. In this regard, he drewour attention to the judgments of this Court in the case of K. NainaMohammed (Dead) Through Lrs.v. A.M. Vasudevan Chettiar (Dead)Through Lrs.and Others1, Hari Shankar Singhania and Othersv. GaurHari Singhania and Others2 and also judgement of the Privy Council inthe case of Muhammad Raza (since deceased) and othersv. AbbasBandi Bibi3. He also drew our attention to the judgment of this Court inHari Shankar Singhania(supra) to contend that family settlement istreated differently from any other formal commercial settlement. Thisis what the court held:

“A family settlement is treated differently from any other formalcommercial settlement as such settlement in the eye of the lawensures peace and goodwill among the family members. Suchfamily settlements generally meet with approval of the courts.Such settlements are governed by a special equity principle wherethe terms are fair and bona fide, taking into account the well-being of a family.

1 2010 (7) SCC 603

2 2006 (4) SCC 658

3 AIR 1932 PC 158

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Technicalities of limitation, etc. should not be put at risk of theimplementation of a settlement drawn by a family, which is essentialfor maintaining peace and harmony in a family. …”

13. Next, he would contend that under Rule 16 of the ChandigarhEstate Rules, 2007, no fragmentation or amalgamation of any of the siteBis permissible. Therefore, in regard to the sale deed in favour of thesecond defendant the High Court overlooked that the aforesaid rule shallbe observed in its breach. Next he was at pains to demonstrate beforeus that the plaintiff was always willing and ready to take the share of thefirst defendant. The correspondence, however, revealed that the wife ofthe first defendant was insisting that the entire consideration must beCpaid at Bhilai where the first defendant resided, whereas the conveyancecould be effected only at Chandigarh where the plaint schedule propertyis located. The plaintiff was ready to accommodate the reasonabledemands of the first defendant but the property came to be conveyed tothe second defendant.

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14. It was argued by Shri Nidhesh Gupta, learned senior counselfor the appellant that even if preference was given to the plaintiff, hemust succeed on the ground that clause (5) of the family settlementenvisages written concurrence from the other sharers before a validsale deed was made by the first defendant.

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15. Per contra, Shri Dhruv Mehta, learned senior counsel,appearing on behalf of the first respondent, supports the order of theHigh court. He also took us to the correspondence and pointed out theplight of the first defendant whose health was in a precarious conditionand he wanted money urgently. An offer was made. The offer, heFwould point out, was not unreasonable namely Rs.5 lakhs but the plaintiffwas not prepared to act on the offer leaving no option with the firstdefendant except to sell the share to the second defendant. He wouldfurther point out that the second defendant was actually a bonafidepurchaser of the property and the Trial Court and the first AppellateCourt erroneously found that he was not a bona fide purchaser on theGbasis that he deposed that the wife of the first defendant told him aboutthe offer made to the appellant. He would point out that this conversationdid not establish that respondent was aware of the family arrangementand therefore, the second defendant was indeed a bonafide purchaser.

TILAK RAJ BAKSHI v. AVINASH CHAND SHARMA (D) THR.LRS. & ORS. [K. M. JOSEPH, J.]

He would further complain that first Appellate Court has gone one stepfurther than the Trial Court and even ordered that second defendant toput the plaintiff in possession even though undisputedly he was a tenantwho was entitled to protection of the statute against eviction except inaccordance 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 unenforceableand void?

C.Whether an offer was made by the first defendant to theplaintiff before the sale of the property to the seconddefendant?

D.Whether the High Court was right in holding that the courtscould not exercise discretion under Section 20 of the SpecificRelief Act, 1963 as the contract is not specificallyenforceable?

E.What is the impact of absence of written concurrence bybrothers for sale?

F.What is the effect of the prohibition against fragmentationof poperty in question under the Capital of Punjab(Development and Regulation) Act, 1952?

FINDINGS

WHETHER THERE WAS A FAMILY SETTLEMENT?

17. As far as the first question is concerned, whether there was afamily settlement, at paragraph 6 of the plaint, the family settlement waspleaded. The answer to the same, by the second defendant, is that thealleged family settlement dated 31.03.1982 is a forged and fabricateddocument. We can safely conclude that no material has been placed bythe second defendant to establish that the alleged family settlement is aforged document. There is no case that it is not a family settlement. Thesettlement is arrived at between the plaintiff, his brother-the firstdefendant and another brother-third defendant. Therefore, we canproceed on the basis that there is a family settlement.

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AWHETHER THE FAMILY SETTLEMENT WAS VAGUE?

18. With regard to the finding by the High Court that whether thefamily settlement is vague, unenforceable and void, the complaint of theplaintiff is that there is no pleading that family settlement is vague andunenforceable. Section 29 of the Indian Contract Act, 1872 (hereinafterBreferred to as ‘the Contract Act’, for short), reads as follows:

“29. Agreements void for uncertainty.—Agreements, themeaning of which is not certain, or capable of being made certain,are void. —Agreements, the meaning of which is not certain, orcapable of being made certain, are void.” Illustrations C

(a) A agrees to sell B “a hundred tons of oil”. There is nothingwhatever to show what kind of oil was intended. Theagreement is void for uncertainty.”

(b) A agrees to sell B one hundred tons of oil of a specifieddescription, known as an article of commerce. There is noDuncertainty here to make the agreement void.”

(c) A, who is a dealer in coconut-oil only, agrees to sell to B“one hundred tons of oil”. The nature of A’s trade affords anindication of the meaning of the words, and A has enteredinto a contract for the sale of one hundred tons of coconutoil.”

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(d) A agrees to sell B “all the grain in my granary at Ramnagar”.There is no uncertainty here to make the agreement void.”

(e) A agrees to sell to B “one thousand maunds of rice at a priceto be fixed by C”. As the price is capable of being madeFcertain, there is no uncertainty here to make the agreementvoid.”

(f) A agrees to sell to B “my white horse for rupees five hundredor rupees one thousand”. There is nothing to show which ofthe two prices was to be given. The agreement is void.”

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19. Section 93 of the Indian Evidence Act, 1872, reads as follows:

“93. Exclusion of evidence to explain or amend ambiguousdocument.—When the language used in a document is, on its TILAK RAJ BAKSHI v. AVINASH CHAND SHARMA (D) THR.LRS. & ORS. [K. M. JOSEPH, J.]

face, ambiguous or defective, evidence may not be given of factswhich would show its meaning or supply its defects. Illustrations (a) A agrees, in writing, to sell a horse to B for “Rs. 1,000 orRs. 1,500”. Evidence cannot be given to show which pricewas to be given.

(b) A deed contains blanks. Evidence cannot be given of factswhich would show how they were meant to be filled.”

20. The question is not res integra. A Bench of three learnedJudges of this Court considered the very same question in KeshavlalLallubhai Patelv. Lalbhai Trikumlal Mills Ltd.4 and held as follows:

“10. There is one more point which must be considered. Itwas strongly urged before us by the appellants that, in the trialcourt, no plea had been taken by the respondent that the agreementfor the extension of time was vague and uncertain. No such pleaappears to have been taken even in the grounds of appeal preferredby the respondent in the High Court at Bombay; but apparentlythe plea was allowed to be raised in the High Court and theappellants took no objection to it at that stage. It cannot be saidthat it was not open to the High Court to allow such a plea to beraised even for the first time in appeal. After all, the plea raised isa plea of law based solely upon the construction of the letter whichis the basis of the case for the extension of time for theperformance of the contract and so it was competent to the appealcourt to allow such a plea to be raised under Order 41 Rule 2 ofthe Code of Civil Procedure. If, on a fair construction, the, conditionmentioned in the document is held to be vague or uncertain, noevidence can be admitted to remove the said vagueness oruncertainty. The provisions of Section 93 of the Indian EvidenceAct are clear on this point. It is the language of the documentalone that will decide the question. It would not be open to theparties or to the court to attempt to remove the defect of vaguenessor uncertainty by relying upon any extrinsic evidence.Such anattempt would really mean the making of a new contract betweenthe parties. That is why we do not think that the appellants cannow effectively raise the point that the plea of vagueness shouldnot have been entertained in the High Court.”

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A21. Therefore, the mere fact that a plea is not taken, that theclause in question is vague, and hence, unenforceable and void will notstand in the way of the Appellate Court looking into the contract and, ifon its terms, it finds it to be vague and unenforceable, it can be so held.

22. The question is to whether clause (5) in question is vague andBunenforceable. We noticed that it provides that the property in questioncannot be sold without concurrence of the three brothers in writing. If itis sold on the agreement of three brothers, the first preference is to begiven to both other brothers. When it is stated that the property cannotbe sold without concurrence of the three brothers in writing, there cannotbe any doubt about its meaning. It means what it says which is thatCshould a brother want to sell the property, the other two brothers mustagree in writing. This clause cannot be described as vague. This isdifferent from the aspect as to whether it is a clog on ownership orwhether it is otherwise unenforceable but it cannot be described as beingvague. The second contention is that when a decision is taken by theDbrothers permitting sale by a third brother, then, first preference is to begiven to both the other brothers. What is intended is that after the writtenconcurrence is obtained for selling in order that property is not sold to athird party/stranger, the other two brothers are given an opportunity tobuy that property. This portion of the clause cannot also be described asvague as such. No doubt, it could be argued that the price at which theEoffer is to be made is not expressly mentioned. We have found that theclause is part of a family settlement between brothers. Courts ordinarilylean in favour of family settlement. Clause (5) itself does not contain anagreement to sell. It only contemplates a preferential offer being treatedas a condition precedent to a brother affecting a sale outside of a familyFto a stranger. The price can only be understood as market price whichwould be the fair price. Therefore, we are of the view that the finding bythe High Court that contract is vague cannot be sustained.

WHETHER OFFER WAS MADE BY DEFENDANT NO.1 TOPLAINTIFF

G23. We will first ascertain from the correspondence admittedlyentered into between the plaintiff and the wife of the first defendant,whatactually transpired. Ex. P16 was written on 16.2.1996 by ShyamaMehta, wife of the first defendant, the same reads as under:

“Dear Santosh and Tilak ji,

Namaskar

I hope you people are hale and hearty. I had received a letterwith respect to Havan being got performed by Buaji. I had alsogot a Havan performed on First. God may give peace to the sole.The almighty may give place to her near him. She had beenrelieved of her difficulties.

I am once again writing to you that if you or Kuku is interest inpurchase of our portion, then let us finalize the deal. From ourside, the deal can be closed. From our side, Rs.5,00,000/- is finaland I am making last request. I am sending last request and Iwant that before the property goes into the hands of children, thebrother should settle. The health of Mehtaji is deteriorating dayby day. He is not in a position to travel. I hope you would alsolike that your son should remain with you. You are elder andliving on the ground floor, therefore, first offer is being made toyou and second offer would be made to Kuku and only thereafter,I would offer the sale of my portion to outside. What is the statusof eyes of Santosh? I hope there would be improvement. Pleaseinform as to what Mamta is doing these days. She must havecompleted her degree. Kindly convey my love to Mani, Lakshmitaand Dhruv. Please send photographs of Dhruv and Lakshmitaand Naini. These days, Dhruv must be quite talkative. Pleasecome over to Bhilai. We could be very happy. Mehtaji also joinsme in wishing you Namaskar and love to children.

Awaiting your reply,

Yours Shyama”

Awaiting your reply,

Yours Shyama”

24. On 10.03.1996 by Exhibit P17, the wife of the first defendantwrote as follows:

“Dear Tilakji and Santoshji

Namaskar

We are well here and I hope everyone would be hale and hearty.I heard about death of sister-in-law of Santoshji. It is veryshocking. May God giver her soul peace. I had a talk with Tilakjiand I am responding to the points he asked :- A

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A1. 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 deedBwould be executed?

5. How the house would be got vacated?

1 The earnest money can be paid Rs.1 lac or two; even theentire payment can be made and signatures can be got done.

2 Half payment would be through draft and the remaining halfCwould be in cash.

3 As regards the rates, we have already quoted quite low ratesand this is final. I want to finalize the deal without telling Manubecause it we are not able to finalize, then next offer would beto an outsider. If the deal is finalist by 1[st] April, after 15[th]DManu would come and if he comes, then he would not let thehouse be sold.

4 Payment will have to be made at Bhilai on coming to Bhilaibecause Mr. Mehta is not in a position to travel.

E5 After giving the earnest money, we would issue notice forvacating the house or adopt any other method (notreadable)…….We will see.

I hope you have got answer to all the points. Please reply inwriting immediately or give me a phone call.

FKindly 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 thoughhe 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 firstGdefendant and his wife which inter alia read as follows:

“Fax No.0788-324339Fax for Sh. V.D. Mehta,48/6, Nehru Nagar (West)Bhilai (MP)H

Res.Tele-324651

13/19-A, Chandigarh01.04.1996

Respected brother and Shyama Bhabi,

Namaskar, Ref. Today morning phone talks. In response toBhabi’s letter dated 10.03.1996, replied on 22.03.1996. Main pointsare (1) Your reply pointwise received and discussed with familyand in principal your offer is acceptable to us broadly. Pleasereconsider the matter and try to visit both of your along with ManyChandigarh. Also we are aware of brother’s health but if you trycan come here, we will complete the formalities in one or twoworking days and give Biana one lac plus agreement to sell willbe done. At present, matrimonial talks of Mamta are in advancedstayed with 4/5 parties and their/our visits to each other are likely.Our top priority is Mamta’s marriage and second priority is aboutyour portion and Naini shifting to us. Your reasonable offer hascome at such a time that it is hard on me to take decision. Frommy side, I will do my utmost best to complete the deal. Rest it isGod’s wish. I and Santosh both are about 60 years old and arekeeping indifferent health. I am due to retire in August this year.Please try to reduce the total value if there is some scope. Incase you decide not to come to Chandigarh, I will come for one ortwo working days to you. Please inform convenient trains fromDelhi and for return journey try to make II sleeper reserve up toDelhi/Ambala. Hope brother’s health is improving and all childrenare happy at their places and so are grand children. Please replysoon or phone or fax at my office No.0172-703603 “Attn: TilakRaj Bakshi” With regards, your affectionately-Tilak Raj Bakshi.”

26. To the same P19 letter is sent by the wife of the first defendant,the same reads as under:

“Dear Tilak,

Namaskar

I am in receipt of your letter and fax. I was to consult my children,so there was some delay. Manik is not ready to give you theportion of the house. He is quite angry but I have spoken to Rajiv.

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AHe has told me that if your goodself are interested in purchasing,then you are requested to come to Bhilai with all the payment inone go and get all the papers signed. We do not wish to informhim because he is in Dubai for one month with Anju. He has gothis visa extended by one month and if till then his job is fixed, thenhe would stay otherwise he would come back and do somethingBhere. I do not wish to now receive earnest money. Please makethe final payment as the prices in Chandigarh are increasing quiterapidly and the rate settled by you is quite old. Therefore, I havegiven you offer because I wan in dire need of money. Now theneed is yours. If the deal is finalized before Manu coming back,Cthen it is alright because health of Mehtaji is also very delicate. Inany case, I would handle the situation in any manner but it wouldnot be possible later on.

For coming to Bhilai, you can catch Chhattisgarh Express fromAmbala or you can catch Mahamaya super fast which starts at2.20 P.M from Delhi. There is another train from Nizammuddinwhich runs three days a week which is again good train. Pleasetell me on telephone whenever you wish to come. I would get theseat booked because during summer vacation, there would beheavy rush.

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EConvey love to children. Namaskar to both of you.

Sd/-Shyama”

27. There is no response to this letter by the plaintiff. It is thereafterthat the sale was affected in favour of the second defendant on 12.11.1997.It is undoubtedly true that learned counsel for the plaintiff drew ourFattention to the telephone bills on record which go to show that appellantwas engaged in communication defendant No. 1 or his wife in regard totheir property and their interest in purchasing the property. From thecorrespondence, we are inclined to find as follows:

In letter dated 16.02.1996, he wrote that if the plaintiff or Kuku isinterested in purchasing the portion, then let the deal be finalized.Consideration of Rupees 5 lakhs was final and she was makingthe last request before the property goes into the hands of thechildren, the brother should settle. The health of Mehtaji (firstdefendant) was deteriorating day by day. He was not in a position G

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to travel. Plaintiff being elder and living on the ground floor, offerwas made to him and second offer made to Har Krishan Lal aliasKuku (the other brother of the first defendant) and only thereafterthe offer would go to outside.

28. In the second letter dated 10.03.1996, she wrote to the plaintiffand his wife. It was mentioned that earnest money could be paid Rupeesone lakh or two, half payment was to be through draft and remaininghalf was to be in cash. It is specifically stated that as regards the ratesthey have already quoted low rates and it is final. It was pointed out thatif the deal is not finalized by 1[st] April, after 15[th], if Manu, apparently, theson of the first defendant came, he will not allow the property to be sold.Payment was to be made at Bhilai on going to Bhilai, as first defendantwas not in a position to travel.

29. In the last letter dated 01.04.1996, it is written by the plaintiffto the first defendant and his wife. He has shown awareness of the firstdefendant’s health. Next he pointed out matrimonial talks of Mamta’s(daughter) that was in an advanced stage and 4/5 parties were in talks,the marriage was the top priority and second priority was about theportion of the first defendant. Thereafter, it is stated that a reasonableoffer of the first defendant has come at such a time that it is hard for himto 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 totalvalue if there is some scope.

30. Correspondence indeed establish, therefore, that the health ofthe first defendant was poor and it was deteriorating and he was inurgent need for money. It is quite clear that the first defendant hadmade offer to the appellant for selling his share for Rupees Five Lakhs.It is also quite clear that the plaintiff himself acknowledged in the letterdated 01.04.1996 that the offer of Rupees five lakhs was reasonable.Appellant, quite clearly, has articulated his pressing priority to be toconduct the marriage of his daughter. This means that he was hardpressed for money. Otherwise there was no need for him after findingthe offer to be reasonable to request the first defendant and his wife totry to reduce the value. Letter dated 15.04.1996 written by the firstdefendant’s wife shows that she did not wish to then receive earnestmoney and she finally demanded that final payment be made as prices inChandigarh were increasing quite rapidly and rate settled by the plaintiff A

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Awas quite old. She emphasized that the offer was given because shewas in dire need of money. Now the need is of the plaintiff. Thiscorrespondence also tends to show that the rate of five lakhs was, infact, even acceptable to the plaintiff as the letter referred to the ratesettled by the plaintiff being quite old. But nothing was happening on theground. This leads the first defendant wife to state that she would onlyBhandle the situation in any manner but it will not be possible later on.The sale took place after more than a year. One thing is clear that anoffer was made on behalf of the first defendant to the plaintiff.

31. We may also notice that in his deposition as PW4, plaintiff hasstated that it is correct that three brothers had partitioned amongstCthemselves, the house in question, by making three portions A, B, andportion. He then says, it is wrong to suggest that each owner came intopossession of its respective portion which fell to him on partition. PortionA fell to apparently the plaintiff. He does not remember to whom portionB felt. He does not remember who became owner of portion C. HeDclaims to be in possession of the entire house after partition. The firstdefendant let out his share of portion 15-16 years before to the seconddefendant, he deposes. He deposes that it is correct that he was offeredto purchase first defendant’s one-third share vide Exhibit P16. Theagreement could not be executed as per the offer because defendantnever turned up in Chandigarh. He was ready to make the entire paymentEwhile coming at Chandigarh, since the property is in Chandigarh. Anamount of Rs.5 lakh was settled as consideration amount. (It may benoted that plaintiff, in P18 letter writes “please try to reduce thetotal value, if there is some scope). He further says, it is correct thathe had offered in that letter-Exhibit P19 to get the payment at Bhilai andFafter the payment, the documents will be executed. He volunteered andstated that since the documents could not be executed at Bhilai as theproperty in question is at Chandigarh, he never made any final paymentto the first defendant in Bhilai.

32. Apparently, in keeping with the family settlement, a preferenceGwas indeed shown. The price was reasonable and acceptable even tothe plaintiff though he wanted a reduction. Having regard to the healthof the first defendant and the dire stage at which first defendant and hiswife were placed, we cannot for a moment but hold that they had madean attempt to comply with the condition in the family settlement providingfor preference.H

WHETHER THE HIGH COURT WAS RIGHT IN HOLDINGTHAT THE COURTS WOULD NOT EXERCISE DISCRETIONUNDER SECTION 20 OF THE SPECIFIC RELIEF ACT, 1963 ASTHE CONTRACT WAS NOT SPECIFICALLY ENFORCEABLE?

33. Next question we must pose and answer is whether the HighCourt was right in holding that the courts would not exercise discretionunder Section 20 of the Specific Relief Act, 1963 as the contract wasnot specifically enforceable.

34. In this regard, the question would arise in the first place as towhich is the contract which is sought to be enforced. It is pleaded in theplaint that first defendant was interested in disposing of his share andthe plaintiff was ready and willing to purchase the share of first defendant.It is specifically averred that the third defendant (the other brother) didnot show any interest in purchasing share of the fist defendant. Finally,the relief sought is by way of decree for specific performance directingthe defendant to sell by the sale of one-third share in the house to theplaintiff and handover vacant possession of the demised portion to theplaintiff. This is apart from the relief against the sale in favour of thesecond defendant.

35. Now, let us see the judgment of the Trial Court. The TrialCourt proceeds to hold inter alia that there is a family settlement, thereis correspondence and there are telephone bills. They made out the casethat the plaintiff was never offered to purchase the share of the firstdefendant as per the terms and conditions of the family settlement. Thesale in favour of the second defendant is null and void, he not being thebonafide purchaser. The plaintiff has the right of first preference topurchase. The sale consideration in favour of the second defendant isRs.4.80 lakhs, but the first defendant is not bound to sell his share forthat amount. However, he is bound to offer the plaintiff and defendantno.3 for purchase of that share before selling it to anybody else as nospecific amount was mentioned as sale consideration in the familysettlement. On these findings, the Trial Court decreed that the plaintiff isentitled to specific performance as per the terms and conditions of theagreement dated 31.03.1982 to purchase the share of defendant no.1.Thus, it can be seen that the family settlement has been understood asthe agreement and the plaintiff is entitled to specific performance of theagreement.

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A36. The first Appellate Court finds that it is admitted that the housebelonged to the father of the plaintiff, first defendant and third defendant.He left behind him a registered will bequeathing properties including theplaint schedule house. It was found that the only controversy was whetheroffer was made to purchase the one-third share and whether the plaintiffcame forward to accept the offer. It was further found that concurrenceBof the plaintiff in writing was not taken before transferring the propertyto the second defendant. The plaintiff was ready and willing but it wasthe first defendant who violated the terms of the family settlement. TheAppellate Court goes further than the Trial Court and allowed the cross-appeal of the plaintiff and decreed that the second defendant will handoverCvacant possession to the plaintiff, finding that the relief of delivery was aconsequential relief liable to be granted. It will be remembered that theTrial Court has decreed the suit for specific relief on the reasoning thatunder the family settlement, the first defendant has to give first preferenceto 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 soldDto the second defendant. All that he was to do was that he was bound tomake an offer to the plaintiff before selling to anyone else.

37. A perusal of these judgments would reveal the followingaspects:

E1.The Appellate Court finds that the plaint schedule property wasowned by the father. It is found that the three sons get equalshares.

2. The Trial Court finds that no offer was made by the firstdefendant to the plaintiff. It decrees specific performance byFdirecting so on the basis that first defendant will have to makean offer to the plaintiff and the third defendant after finding thatthe first defendant was not bound to make an offer to sell atRs.4.80 lakhs. The Appellate Court, on the other hand, has goneto decree specific performance by even directing possession ofthe property to be given to the plaintiff by the second defendant.GOn the basis of the terms and conditions of the agreement dated31.03.1982, there are clearly two palpable flaws in the findingsand directions. Admittedly, the second defendant was alreadyoccupying the property as a tenant. He can be evicted only inaccordance with law even if everything is held in favour of the H

plaintiff. In other words, even if it is found that the assignmentby the first defendant in favour of the second defendant is nulland void, he has the right to continue in possession unless he isevicted under the relevant law for the eviction of tenants.Therefore, the direction to deliver possession is clearlyunsustainable. The second flaw which vitiated the judgment ofthe first Appellate Court is that it has proceeded to hold thatplaintiff is entitled to specific performance as per the terms andconditions of the agreement dated 31.03.1982. The AppellateCourt was in error in decreeing specific performance on thebasis that the family settlement without anything more, embodieda contract for sale of immovable property. The terms of theagreement, viz., the price at which the property is to be sold andpurchased, are not spelt out in the family settlement, as correctlynoticed by the Trial Court. The Appellate Court has notproceeded to hold that the plaintiff is entitled to purchase theproperty at Rs.4.80 lakhs at which price the first defendant hassold to the second defendant. If the decree is treated asconfirming the decree of the Trial Court, then, the price at whichit is to be purchased would only have been ascertained on thebasis of an offer which is made in pursuance of the Trial Court’sjudgment, and therefore, no decree for specific performance,as passed by the First Appellate Court, could certainly havebeen passed.

38. This brings us to yet another question. Whether the terms ofthe family settlement embodied a right of preemption and what is thedistinction between the right of preemption and right to purchase propertyunder an agreement to sell.

39. The decision of this Court in K. Naina Mohamed(supra)involved a will which was executed in favour of the two sisters of thetestator. The will inter alia provided that after the demise of both thesisters who were to enjoy the properties during their life time, the maleheirs would get the two properties in question as absolute owners. Theproperties 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 andenjoy A property and as and when Rukmani Ammal’s heirs get AB

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Aand 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 valuethen prevailing and not to strangers.”

40. The learned counsel for the appellant had contended essentiallythat the first defendant must honour his obligations under the settlementBand what is involved here must be treated as a right of preemption. Thisis for the reason that in the decision which we have referred to thiscourt, has taken the view that clause (11) was in the nature of right ofpreemption which can be enforced by the male heir of either sister in theevent 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 otherCsister”. We must, before we pronounce on this aspect, consider thecontent of the right of preemption.

41. In Bishan Singhv. Khazan Singh5, this Court has articulatedthe matter with clarity and we, hence, set out the following statement ofthe law:D

“7. Before attempting to give a satisfactory answer to thequestion raised, it would be convenient at the outset to notice anddefine the material incidents of the right of pre-emption. A concisebut lucid statement of the law is given by Plowden, J. in 136 P.R.1894, at page 511, thus:E

“A preferential right to acquire land, belonging to anotherperson upon the occasion of a transfer by the latter, does notappear to me to be either a right to or a right in that land. Itis jus ad rem alienum acquirendum and not a jus in realiena…. A right to the offer of a thing about to be sold is notFidentical with a right to the thing itself, and that is the primaryright of the pre-emptor. The secondary right is to follow thething sold, when sold without the proper offer to the pre-emptor,and to acquire it, if he thinks fit, in spite of the sale, made indisregard of his preferential right.”

GThe aforesaid passage indicates that a pre-emptor has tworights: (1) inherent or primary right i.e. a right for the offer of athing about to be sold and (2) secondary or remedial right to followthe thing sold.”

42. We also think that it would be appropriate to refer toparagraph 11:

“11. The plaintiff is bound to show not only that his right is asgood as that of the vendee but that it is superior to that of thevendee. Decided cases have recognized that this superior rightmust subsist at the time the pre-emptor exercises his right andthat that right is lost if by that time another person with equal orsuperior right has been substituted in place of the original vendeecourts have not looked upon this right with great favour,presumably, for the reason that it operates as a clog on the rightof the owner to alienate his property. The vendor and the vendeeare, therefore, permitted to avoid accrual of the right of pre-emptionby all lawful means. The vendee may defeat the right by sellingthe property to a rival pre-emptor with preferential or equal right.To summarize: (1) The right of pre-emption is not a right to thething sold but a right to the offer of a thing about to be sold. Thisright is called the primary or inherent right. (2) The pre-emptorhas a secondary right or a remedial 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 theoriginal vendee.(4) It is a right to acquire the whole of the propertysold and not a share of the property sold. (5) Preference beingthe essence of the right, the plaintiff must have a superior right tothat of the vendee or the person substituted in his place. (6) Theright being a very weak right, it can be defeated by all legitimatemethods, such as the vendee allowing the claimant of a superioror equal right being substituted in his place.”

43. Right to preemption is ordinarily born out of custom or in termsof a statutory provision. We are not, in this case, concerned with thestatutory right of preemption or custom. We would necessarily have tofall back on first principles relating to preemption, which we feel, havebeen explained in Bishan Singh(supra) which we have set out. We willproceed on the basis that a family settlement/contract can give rise to aright of preemption. But is this a case which calls for the application ofright of preemption? The relief which is sought by the appellant in hisplaint, reads as follows:

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“14.That the suit for the purposes of court fee and jurisdictionfor relief of declaration is Rs.19-50 paise declaration andaccordingly 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 specificperformance is Rs.4,80,000/- and accordingly court i.e. Rs…….Is affixed on the plaint.

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It is therefore, respectfully prayed that the decree of thedeclaration be passed in favour of the plaintiff and against thedefendant no.1 and 2 declaring sale deed dated 12.11.1997 nulland void ab initio and for setting aside the same and decree thespecific performance be also passed directing the defendant. Noto sell by the sale deed of 1/3[rd] share of property bearing HouseNo.13, Sector 19-A, Chandigarh (shown red in site plan) to theplaintiff and to handover vacant possession of demised portion toplaintiff. Any other relief which the plaintiff under the law is heldentitled to also granted to him. The suit be decreed with costs.”

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44. We would notice that there is no case expressly set up in theplaint that what appellant is seeking to enforce is a right of preemption.If the suit involved a right of preemption, and proceeding on the basisthat the appellant was pursuing his secondary right to follow the propertysold, then, the relief would have been to substitute himself in place of theEbuyer/second defendant. As held by this Court, the right of preemptionis not right of re-purchase. Even proceeding on the basis of it being acase of preemption, as held by the High Court and by us, first preferencewas given to the plaintiff. As far as decision in K. Naina Mohamed(supra)is concerned, clause (11) of the will in the said case tabooedalienation in favour of strangers. In this case, the clause, we are concernedFwith, certainly does not place an absolute restriction on alienation infavour of a stranger. All that it contemplates is an offer being made tothe brothers, once the first step of concurrence in writing by the brothersfor the sale is obtained. We do not, therefore, think that the appellantwould be justified in invoking the principle underlying the right ofGpreemption in this case.

IMPACT OF ABSENCE OF WRITTEN CONCURRENCE BYBROTHERS FOR SALE

45. The controversial clause, according to the appellant, falls intwo parts. Firstly, there must be a written concurrence from the two H

brothers, if the third brother wishes to sell his share. The second part isthat the offer must be made to the other brothers before transfer iseffected to a stranger. The contention is that the family settlement wasarrived at so that the stranger is not inducted into the property.

46. To answer these questions, which have been posed, it may bealso necessary to look at the case law in relation to the family settlementsand restrictions which are put on property rights under such settlements.In Muhammad Raza (supra), which is relied upon by the appellant, undera compromise between the two Shia Mahomedans, the defendant agreedto marry the plaintiff. Certain rights were conferred upon the plaintiffupon her marriage with the defendant. The defendant was alreadymarried. Under the compromise, it was provided inter alia that the plaintiffwould become owner of one-half of the property along with the firstwife of the defendant. However, it was provided that the plaintiff, asalso the first wife, shall not have the power to transfer the property to astranger. Ownership was to devolve on the legal heirs of the two wives,generation to generation. Dispute arose upon the first plaintiff in earliercase/second wife, selling/mortgaging her share before her death. Oneof the contentions raised by the transferees from the wife, who was theplaintiff in the earlier suit which resulted in the compromise, was aboutthe 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 theymight have some difficulty in holding that Sughra Bibi took nothingmore than a life estate. But assuming in the appellants’ favourthat she took an estate of inheritance, it was nevertheless onesaddled, under the express words of the document, with a restrictionagainst alienation to “a stranger.” Their Lordships have no doubtthat “stranger” means anyone who is not a member of the family,and the appellants are admittedly strangers in this sense.Unless, therefore, this restriction can for some reason bedisregarded, they have no title to the properties which can prevailagainst the respondent.

On the assumption that Sughra Bibi took under the terms ofthe document in question an absolute estate subject only to thisrestriction, their Lordships think that the restriction was not absolutebut partial; it forbids only alienation to strangers, leaving her freeto make any transfer she pleases within the ambit of the family.

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AThe question therefore is whether such a partial restriction onalienation is so inconsistent with an otherwise absolute estate thatit must be regarded as repugnant and merely void. On this questiontheir Lordships think that Raghunath Prasad Singh’s case[29]isof no assistance to the appellants, for there the restriction againstalienation was absolute and was attached to a gift by will. It is, inBtheir Lordships’ opinion, important in the present case to bear inmind that the document under which the appellants claim was nota deed of gift, or a conveyance, by one of the parties to the other,but was in the nature of a contract between them as to the termsupon which the ladies were to take. The title to that which SughraCBibi took was in dispute between her and Afzal Husain. Incompromise of their conflicting claims what was evidently a familyarrangement was come to, by which it was agreed that she shouldtake what she claimed upon certain conditions. One of theseconditions was that she would not alienate the property outsidethe family. Their Lordships are asked by the appellants to say thatDthis condition was not binding upon her, and that what she tookshe was free to transfer to them.”

47. It will be noted that Privy Council took note of the fact thatplaintiff in the earlier suit got title under the compromise, which containedthe restriction against sale to strangers. It was not a deed of gift orconveyance but in the nature of the contract. It was upon compromiseof their conflicting claims that she agreed to certain conditions one ofwhich was the prohibition against alienation to strangers. The court alsodealt with the matter on the basis that a partial restriction would not, incase of the transfer inter vivos, be bad, after the passing of the Transferof Property Act, 1882 (hereinafter referred to as ‘the TP Act’).

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48. In K. Naina Mohamed(supra), the owner of the property, bya registered will, created life interest in favour of her two sisters. Thewill stipulated that after the death of the sisters, their male heirs wouldacquire absolute rights in the properties with the limitation that they shallnot sell the properties to strangers. The sisters divided the propertiesamongst themselves. The property which stood allotted to one of thesisters 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. Inthe course of its judgment, this Court observed as follows:

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“38. Reverting to the case in hand, we find that by executingthe will dated 22-9-1951, Smt Ramakkal Ammal created life interestin favour of her two sisters with a stipulation that after their death,their male heirs will acquire absolute right in A and B propertiesrespectively subject to the condition that if either of them want tosell the property then they shall have to sell it to the other sharersonly as per the prevailing market value and not to strangers. Therestriction contained in Clause 11 was not absolute inasmuch asalienation was permitted among male heirs of the two sisters.The object of incorporating this restriction was to ensure that theproperty does not go out of the families of the two sisters. Themale heirs of Savithri Ammal and Rukmani Ammal did not questionthe conditional conferment upon them of title of the properties.Therefore, the appellant who purchased B property in violation ofthe aforesaid condition cannot be heard to say that the restrictioncontained in Clause 11 of the will should be treated as void becauseit violates the rule against perpetuity.”

49. The court also, while dealing with the question of preemption,held as follows:

“44. In the light of the above, we shall now consider whetherClause 11 of the will executed by Smt Ramakkal Ammal is violativeof the rule against perpetuity. If that clause is read in conjunctionwith Clauses 4 and 10 of the will, it becomes clear that the twosisters of the testator, namely, Savithri Ammal and RukmaniAmmal were to enjoy house properties jointly during their lifetimewithout creating any encumbrance and after their death, their maleheirs were to get the absolute rights in A and B properties. Themale heirs of the two sisters could alienate their respective sharesto other sharers on prevailing market value. It can thus be saidthat Smt Ramakkal Ammal had indirectly conferred a preferentialright upon the male heirs of her sisters to purchase the share ofthe male heir of either sisters. This was in the nature of a right ofpre-emption which could be enforced by the male heir of eithersister in the event of sale of property by the male heir of the othersister.If the term “other sharers” used in Clause 11 is interpretedkeeping in view the context in which it was used in the will, therecan be no manner of doubt that it referred to the male heirs of the A

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Aother sister. The only restriction contained in Clause 11 was onalienation 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 wasBarrived at, which among other things, put an end to the dispute betweenthe parties and recognized the right with the plaintiff over the property,however, subject to the condition that there will be no right to sell tostrangers. In this case, as already noted, the title to the share in theproperty of the first defendant is traceable to the will executed by theCfather. The plaint reveals that the legatees, viz., the brothers applied tothe Estate Office and the property was transferred in favour of thebrothers on the terms and conditions in Memo dated 10.07.1981. One ofthe conditions was that there will be no fragmentation of the site. It isthereafter that the controversial agreement was entered into betweenthe brothers. Thus, the family arrangement was entered into by theDbrothers when their rights as owners had crystallized. It was not subjectto any condition as was the case in Muhammad Raza(supra) where thecompromise in the suit created the right but subject to the conditionagainst alienation to stranger. No doubt, being brothers, they could topromote harmony and avoid future disputes, enter into a family settlement.E51. The first defendant has sold his share to the second defendant.

51. The first defendant has sold his share to the second defendant.Under the clause, can the first defendant sell to a stranger? He can sellprovided there was a written concurrence by the other brothers for asale and the offer is made to the other brothers and it does not fructifyinto a sale for reasons which are not attributable to the brother whoFwishes to sell. We find that there was an offer to the appellant by thefirst defendant. He has failed to act upon it. The other brother has nocase about offer not being made and he has not raised any dispute overthe sale to the second defendant. The perusal of the plaint reveals thatthe following case has been set up by the plaintiff:

“7. that the defendant no.1 was interested in disposing his sharein House no.19-A, Chandigarh and the plaintiff was already andwilling to purchase the portion of the defendant no.1 and the plaintiffhas been expressing his readiness willingness to purchase the shareof the defendant no.1 through number of Regd. Letters, telephoneand even on FAX.

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8. That the defendant no.1 as well as his wife and son hasbeen corresponding and discussing on behalf of the defendantno.1 promising to sell the property to the plaintiff as defendantno.3 did not show any interest to purchase the share of defendantno.1 nor he was interested at all to purchase the 1/3rdshare of thedefendant no.1 in the property.

9. that the plaintiff was shocked and surprised to learn that thedefendant no.1 has sold his 1/3[rd] share of the property to defendantno.2 a tenant who was already occupying the said portion in atotally secret manner without informing the plaintiff and againstthe terms and conditions of agreement of family partition andminutes dated 31.3.1982 arrived between plaintiff, defendant no.1and defendant no.3. the site plan showing the portion sold by thedefendant no.1 to defendant no.2 (in red) is attached with thisplaint.”

52. Thus, what is sought is specific performance. The appellantproceeded in the suit on the basis that there is a contract. A contractpresupposes an offer which is accepted which means that there was anoffer from the defendant. The correspondence, which we have referredto, fortifies us in holding that there was an effective offer and it did notmaterialize on account of any default on the part of the plaintiff.

53. Now, if the clause is broken down, it involves the followingsteps. A brother announces his desire to sell his share. He seeks writtenconcurrence of the other brothers. A written concurrence is given. Then,the next step is reached. The selling brother offers to sell it to the otherbrothers. 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 strangersis permitted. In the above process, in the facts of this case, it is clearthat the appellant and the first defendant, without insisting on the writtenconcurrence, went to the stage of offer to brothers. The appellant hasled the first defendant to assume, even without a written concurrence,that the sale is permitted. The first defendant has acted clearly on thebasis that the requirement of the first stage was not being insisted upon.Otherwise, he could have certainly obtained the concurrence. Havingthus acted in the matter, and the second stage having been reached,when for reasons where the fault cannot be attributed to the first A

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Adefendant, the offer, which the appellant himself describes as reasonable,was not seized upon by the appellant, the third stage emerged. Thismeant that it became open to the first defendant to sell to a stranger andwhich is what he did by it selling it to the second defendant. Evenproceeding to enforce the clause, we find that the appellant is clearlyestopped from setting up the plea of absence of written consent of theBbrothers. It would be inequitable, particularly when we are consideringthe matter in an appeal sourced under Article 136 of the Constitution ofIndia.

EFFECT OF PROHIBITION AGAINST FRAGMENTATIONOF PROPERTY IN QUESTION UNDER THE CAPITAL OFCPUNJAB (DEVELOPMENT AND REGULATION) ACT, 1952

54. The further obstacle remains posed, however, that the salewill result in contravening the law prohibiting fragmentation. The Capitalof Punjab (Development and Regulation) Act, 1952 (hereinafter referredto as ‘the 1952 Act’ for short) defines “site” in Section 2(f) as meaningD“any land which is transferred by the Central Government underSection 3”.

55. Section 3 of the Act reads as follows:

“3. Power of Central Government in respect of transfer ofEland and building in Chandigarh. –

(1) Subject to the provisions of this section, the CentralGovernment may sell, lease or otherwise transfer, whether byauction, allotment or otherwise, any land or building belonging tothe Government in Chandigarh on such terms and conditions as itmay, subject to any rules that may be made under this Act, thinkFfit to impose.

(2) The consideration money for any transfer under sub-section(1) shall be paid to the Central Government in such manner and insuch instalments and at such rate of interest as may be prescribed.

(3) Notwithstanding anything contained in any other law forthe time being in force, until the entire consideration money togetherwith interest or any other amount, if any, due to the CentralGovernment on account of the transfer of any site or building, orboth, under sub-section (1) is paid, such site or building, or both, G

as the case may be, shall continue to belong to the CentralGovernment.”

56. Section 4 of the 1952 Act confers power upon the CentralGovernment and the Chief Administrator to issue directions in respectof any site or building in regard to the matters which are mentionedtherein. 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 bodyof individuals, whether incorporated or not) to whom a site orbuilding is transferred in any manner whatsoever, under this Actand 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 issuedunder sub-section(1) and shall as expeditiously as possible, erectany building or take such other steps as may be necessary, tocomply with such directions.”

58. Section 5 of the 1952 Act forbids erection or occupation ofany building at Chandigarh in contravention of Building Rules made undersub-Section (2). The word “building” is defined in Section 2(c), whichreads as follows:

“2(c)”building” means any construction or part of a constructionwhich is transferred by the ‘[Central Government] under section3 and which is intended to be used for residential, commercial,industrial or other purposes, whether in actual use or not, andincludes any out-house, stable, cattle shed and garage and alsoincludes any building erected on any land transferred by the CentralGovernment under section 3;”

59. From a perusal of the aforesaid provisions, it becomes clearthat the word “site” means any land which is transferred under Section3 of the 1952 Act. When it comes to the terms of Section 3, it contemplatespower with the Central Government to transfer by auction, allotment orotherwise any land or building belonging to the Government in Chandigarhon such terms and conditions as may subject to any Rules that can bemade under the Act, the Government thinks fit to impose. Thus, thoughit is open to the Central Government to transfer either land or buildingbelonging to the Government in Chandigarh under Section 3 of the 1952

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AAct, the word “site” is confined to only the land which is transferred bythe Central Government under Section 3. In fact, the word “building”, asdefined in the Act, points to any construction or part of constructionwhich his transferred under Section 3. It includes outhouse, stable, cattleshed and garage and also includes any building erected on any landtransferred by the Central Government. The construction must be intendedBto be used for residential, commercial, industrial or any other purposes.A clear distinction is maintained between “site” and “building”. TheChandigarh (Sale of Sites and Building) Rules, 1960 came to be made.Section 22 of the 1952 Act confers power upon the Central Governmentto make the Rules for various purposes, which are mentioned in sub-CSection (2). It includes Sections 2(a), 2(d), 2(e) and 2(h) of the 1952Act, which reads as follows:

“2(a) the terms and conditions on which any land or building maybe transferred by the Central Government under this Act; xxx xxx xxx D

2(d) the terms and conditions under which the transfer of anyright in any sit or building may be permitted; xxx xxx xxx 2(e) erection of any building or the use of any site; Exxx xxx xxx 2(h) the conditions with regard to the buildings to be erected onsites transferred under this Act;”

60. Rule 14 of the Chandigarh Sale of Sites and Building Rules,F1960 provides that no fragmentation of any siteis permitted. Subsequently,in exercise of powers under Sections 3 and 22 of the Act, ChandigarhEstate Rules, 2007 came to be made. Rule 16 deals with fragmentation/amalgamation, which reads as follows:

“16. Fragmentation/Amalgamation. No fragmentation orGamalgamation of any site or building shall be permitted. Providedthat amalgamation of two or more adjoining sites shall bepermissible only in the case of commercial or industrial sites subjectto the condition that the revised plans are approved by the H

competent authority, prior thereto. Provided further thatfragmentation of any site shall be allowed if such fragmentation ispermitted under any scheme notified by the Administration.”

61. It is on the strength of the provisions contained in Rule 14 ofthe 1960 Rules and Rule 16 of the 2007 Rules that the appellant wouldargue that the assignment of the share of the first defendant occasioneda breach of the law. The second defendant, on the other hand wouldpoint out that there was no issue of fragmentation ever raised before thecourts and the same was not decided in the courts.

62. It is contended by the second defendant that the sale deed infavour of the respondent no.1 specifically says that the sale is in respectof one-third share in the residential house no.13 of Sector 19A,Chandigarh. After the sale deed, it is contended, one-third share of theparty was duly transferred and mutated in the name of respondent no.1/second defendant by the Chandigarh Administration. The High Court, infact, tides over this objection by the appellant by pointing out that oncethe second defendant steps into the shoes of the first defendant, hebecame a co-owner and his remedy is to sue for partition and whilefragmentation of property, is not ‘admissible’, the market value of theproperty can be determined, and buying each other’s share, as per theprovisions of Sections 2, 3 and 4 of the Partition Act, 1893.

63. While it may not be true that the issue of fragmentation wasnot raised in the courts, we would think that the appellant is not able topersuade us to hold that the assignment in favour of the second defendantis vulnerable on the basis that it involves fragmentation. We have noticedthe deposition of the plaintiff about partition of the house into threeportions. We have noted the fact that one-third share has been dulytransferred and mutated in the name of the first respondent/seconddefendant by the Chandigarh Administration.

64. The second defendant has produced the communication dated19.12.1997 which indicates the transfer of rights of site in Sector 19Aheld by Vishnu Dutt Mehta (first defendant) is noted in favour of thesecond defendant subject to certain conditions. This is obviously beforethe 2007 Rules came into force.

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A65. In the light of the aforesaid facts, we cannot permit the appellantto impugn the transaction on the said ground.

66. The upshot of the above discussion is that the contentions ofthe appellant are liable to be rejected. We do so. The appeals will standdismissed. The parties will bear their own costs.

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Appeals dismissed.

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