G.T. GIRISH versus Y. SUBBA RAJU (D) BY LRS AND ANOTHER on 18 January 2022

[2022] 8 S.C.R. 991

G.T. GIRISH

v.

Y. SUBBA RAJU (D) BY LRs AND ANOTHER

(Civil Appeal No. 380 of 2022)

JANUARY 18, 2022

[K. M. JOSEPH ANDPAMIDIGHANTAM SRI NARASIMHA, JJ.]

Specific Performance – Suit for – Maintainability – Plaintproperty was allotted to first defendant by Bangalore DevelopmentAuthority (BDA) and a lease-cum-sale agreement was entered intobetween BDA and the first defendant on 04.04.1979 – On17.11.1982, the first defendant entered into the agreement with theplaintiff agreeing to execute the sale deed of the site within threemonths from the date on which, the plaintiff obtained the sale deedfrom the BDA – Failure to execute the sale deed by first defendant– Plaintiff instituted suit seeking specific performance – Trial Courtdid not decree the suit for specific performance – On appeal, HighCourt held the suit to be maintainable and directed the defendantsto execute the sale deed of plaint property in favour of plaintiff –Whether the agreement to sell dated 17.11.1982 was in the teeth ofs.23 of the Contract Act and led to palpable defeat of the law inquestion, as contained in the Statutory Rules or prohibited by thesame – Held: Case herein was governed by the Allotment of SiteRules, 1972 which were statutory Rules, and contemplated a definitescheme – Allotment to first defendant was made on 04.04.1979 andhe was obliged to construct a residential building within two yearsunder Rule 17(6) – But, at the time, agreement dated 17.11.1982was entered into, the first defendant was already in breach – Underthe agreement, the parties expressly provided that the plaintiff wasto be put in possession of the site on 17.11.1982 – Clear case whereenforcing the agreement, as it is, would necessarily result in thefirst defendant not acting in accordance with lease-cum-saleagreement, which, she entered into with the BDA and importantly,against the mandate of the law, as contained in the Rules –Agreement between the parties contemplated giving a short shrift tothe mandate of the law – This is clear from the fact that under theagreement, the first defendant was obliged to sell the site as it is –

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AConstruction of the building became a practical impossibility – Theprice, agreed upon, was qua the site alone – The consideration andthe other terms of the agreement ruled out the possibility of aresidential building being constructed by the first defendant, whoas the allottee, was, under the law, obliged to construct the building– The agreement to sell involved clearly terms which were impliedlyBprohibited by law in that the first defendant was thereunder to delivertitle to the site and prevented from acting upon the clear obligationunder law – The contract / agreement was unenforceable for reasonthat it clearly defeated the objects of the Rules which were statutoryin nature – The contract / agreement was patently illegal – HighCCourt erred in holding the suit for specific performance to bemaintainable – City of Bangalore Improvement Allotment of SiteRules, 1972.

Contract Act, 1872 – s.23 – Constitution of India – Art.13 –What is contemplated u/s.23 of the Contract Act is law, in all itsDforms, being immunised from encroachment and infringement by acontract, being enforced – Not only would a Statutory Rule be lawwithin the meaning of Art.13 of the Constitution but it would alsobe law u/s.23 of the Contract Act.

Contract – A contract may expressly or impliedly, be prohibitedEby provisions of a law – The intentions of the parties do not salvagesuch a contract.

Allowing the appeals, the Court

Conclusion

HELD: 1. A contract may expressly or impliedly, beprohibited by provisions of a law. The intentions of the parties doFnot salvage such a contract. In the instant case, the BangaloreRules of Allotment, 1972 contemplate a definite scheme. Land,which is acquired by the Public Authority, is meant to be utilisedfor the particular purpose. The object of the law is to inviteapplications from eligible persons, who are to be selected by aGCommittee and the sites are allotted to those eligible persons,so that the chosen ones are enabled to put up structures, whichare meant to be residential houses. It is implicit in the Rules,and what is more, in the lease-cum-sale agreement, that theallottee, who is treated as a lessee under Rule 7, will remain inpossession and, what is more, proceed to fulfil his obligation underHthe lease-cum-sale agreement and the Rules. The obligations of the allottee/lessee are unambiguous. He has held himself out tobe in dire need of a plot of land for the purpose of constructing aresidential building. He has to disclose his annual income andany other means indicating his capacity, not only to purchase thesite applied for but also to construct the house. He has to respondto the query as to whether any member of the family, of which heis a member, owns or has been allotted a site or a house by theBoard or any other Authority, within the area under jurisdictionof the Board. The applicant must, furthermore, disclose whetherhe already owns a house or house site in the city or outside thecity. Whether the applicant’s wife, husband or minor child owns ahouse or house site, is another matter, he must disclose. Incorrectinformation in any of these matters, would entitle the Board toresume the site. Rule 11 specifically announces among theprinciples as relevant for selecting an applicant for allotment,the income of the applicant to build the house on the site for hisresidence. No doubt, it is not applicable to certain classes, whichinclude the other backward classes. Rule 11(3) declares furtherthat the number of years, the applicant has been waiting forallotment of a site, inter alia, as a relevant principle. [Para74][1048-G-H; 1049-A-E]

2. Under the agreement, the parties contemplated and haveexpressly provided that the plaintiff was to be put in possessionof the site on the date of the agreement, i.e., on 17.11.1982. Didthe parties contemplate the construction of the building residentialin nature, for the purpose of which, the site was allotted to thefirst defendant? Is it not a clear case where enforcing theagreement, as it is, would necessarily result in the first defendantnot acting in accordance with lease-cum-sale agreement, which,she entered into with the BDA and, what is even more cruciallyimportant, against the mandate of the law, as contained in theRules, which contemplated that the allotment was made for theconstruction of a residential building by the allottee and theconstruction was to be completed within the period of two yearsor an extended period? The agreement between the partiescontemplated giving a short shrift to the mandate of the law. Thisis clear from the fact that under the agreement, the first defendantwas obliged to sell the site as it is. Construction of the buildingbecame a practical impossibility. The price, which was agreed AB

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Aupon, was qua the site alone. The consideration and the otherterms of the agreement, in other words, ruled out the possibilityof a residential building being constructed by the first defendant,who as the allottee, was, under the law, obliged to construct thebuilding. [Para 76][1050-D-G]

B3. The contention of the plaintiff that there was nothing,which could have prevented putting up a building, is rejected.The argument of plaintiff involves rewriting of the contract. Thisis different from a situation where an allottee, without beingtrammelled by an agreement, is unable to put up a building evenfor the whole of ten years and action is not taken under RuleC17(6) and yet conveyance is made in his favour under Rule 17(7).The direct impact of the agreement is that it compelled the partyto abstain from performing its obligation in law apart frombreaching the agreement with BDA. In other words, taking theagreement as it is, it necessarily would be in the teeth of theDobligation in law of the first respondent to put up the construction.The agreement to sell involved clearly terms which are impliedlyprohibited by law in that the first defendant was thereunder todeliver title to the site and prevented from acting upon the clearobligation under law. This is a clear case at any rate whereinenforcing the agreement unambiguously results in defeating theEdictate of the law. The ‘sublime’ object of the law, the very soul ofit stood sacrificed at the altar of the bargain which appears to bea real estate transaction. It would, in other words, in allowing theagreement to fructify, even at the end of ten-year period of non-alienation, be a case of an agreement, which completely defeatsFthe law for the reasons already mentioned. [Para 77][1051-C-F]

4. The illegality goes to the root of the matter. It is quiteclear that the plaintiff must rely upon the illegal transaction andindeed relied upon the same in filing the suit for specificperformance. The illegality is not trivial or venial. The illegalityGcannot be skirted nor got around. The plaintiff is confronted withit and he must face its consequences. The matter is clear. Theobject of the law is set out in unambiguous term. If every allotteechosen after a process of selection under the rules with reference to certain objective criteria were to enter into bargains of thisnature, it will undoubtedly make the law a hanging stock. [Para79][1052-A-C]

Vishwa Nath Sharma v. Shyam Shanker Goela andanother (2007) 10 SCC 595 : [2007] 3 SCR 268 andFerrodous Estates (Pvt.) Limited v. Gopiratnam (Dead)and others AIR 2020 SC 5041 – relied on.

Kedar Nath Motani and others v. Prahlad Rai and othersAIR 1960 SC 213 : [1960] SCR 861; Narayanammaand another v. Govindappa and others (2019) 19 SCC42; Sita Ram v. Radhabai and others AIR 1968 SC 534: [1968] SCR 1 805; Balwant Vithal Kadam v. SunilBaburaoi Kadam (2018) 2 SCC 82 : [2017] 12 SCR 44;Punjab & Sind Bank v. Punjab Breeders Ltd. andanother (2016) 13 SCC 283 : [2016] 2 SCR 876; SurajLamp & Industries (P) Ltd. (2) Through Director v. Stateof Haryana and another (2012) 1 SCC 656 : [2011] 11SCR 848; Jambu Rao Satappa Kocheri v. NeminathAppayya Hanamannayar 6 AIR 1968 SC 1358 : [1968]SCR 706; Bhagat Ram v. Kishan and others (1985) 3SCC 128; Union of India v. Col. L.S.N. Murthy (2012)1 SCC 718 : [2011] 13 SCR 295; Gherulal Parakh v.Mahadeodas Maiya and others AIR 1959 SC 781 :[1959] Suppl. SCR 406; Ramzan v. Hussaini (1990) 1SCC 104 : [1989] 2 Suppl. SCR 287; AhmadsahabAbdul Mulla (2) (dead) v. Bibijan and others (2009) 5SCC 462 : [2009] 5 SCR 476; I.S. Sikandar 112 (Dead)by Lrs. v. K. Subramani and others (2013) 15 SCC 27: [2013] 17 SCR 24 and Mohinder Kaur v. Sant PaulSingh (2019) 9 SCC 358 – referred to.

Yogambika v. Narsingh ILR 1992 KAR 717; Subbireddyv. K.N. Srinivasa Murthy AIR 2006 Karnataka 4; SyedZaheer and others v. C.V. Siddveerappa ILR 2010Karnataka 765; Manjeshwara Krishnaya v. VasudevaMallya and Four Others. AIR 1918 Madras 578;Nallakumara Goundan v. Pappayi Ammal and Another,AIR 1945 Mad 219; T. Dase Gowda v. D. Srinivasaiah A

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A(1990) SCC Online Karnataka 613; K. ChandrashekarHegde v. Bangalore City Corporation and N.B. Menonv. Bangalore Development Authority ILR 1988 KAR356 – referred to.

Motilal v. Nanhelal AIR 1930 PC 287 – referred to.BHolman v. Johnson [1775 1 COWP 341] – referred to.

Case Law Reference

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 380 of2022.G

From the Judgment and Order dated 24.08.2016 of the High Courtof Karnataka at Bengaluru in R.F.A. No. 1307 of 2002.

With

Civil Appeal No. 381 of 2022.H

Ms. Kiran Suri, Basant R., Sr. Advs., Mrs. Kirti Renu Mishra,Ms. Apurva Upmanyu, S. J. Amith, Krishna Kumar, Dr. (Mrs.) VipinGupta, Ms. Pritha Srikumar, Abhinav Ramanand, Vishnu Pazhanganat,Ms. Mansi Binjrajka, Advs. for the appearing parties.

The Judgment of the Court was delivered by

K. M. JOSEPH, J.

1. Leave granted.

2. The appellants are defendant 1(a), defendant 1(b) and seconddefendant in a Suit filed for specific performance. Defendant 1(a) andDefendant 1(b) have filed SLP(C)No.6858/2017 while defendant No.2has filed SLP(C)No.6857/2017. The Trial Court while refusing specificperformance, directed the return of the amount paid by the plaintiff underthe contract. By the impugned judgment, the High Court allowed theplaintiffs appeal and directed the appellants to execute the sale deedrelating to the plaint schedule property in favour of the plaintiffs (legalrepresentatives of original plaintiff). The parties will be hereinafterreferred to by their status in the Trial Court.

A BRIEF OVERVIEW OF FACTS

3. On 04.04.1979, the plaint schedule property, which consistedof a site, was allotted to the first defendant (since deceased), by theBangalore Development Authority (hereinafter referred to as, ‘the BDA’).Based on the allotment, a lease-cum-sale agreement was entered intobetween the BDA and the first defendant on 04.04.1979. The firstdefendant was put in possession on 14.05.1979. On 17.11.1982, the firstdefendant entered into the agreement with the plaintiff agreeing toexecute the sale deed of the site within three months from the date onwhich, the plaintiff obtained the sale deed from the BDA. On 01.03.1983and 26.04.1984, the plaintiff issued letters to the first defendant, callingupon her to execute the sale deed. The first defendant issued letterdated 08.05.1984, intimating that the plaintiff was in breach. Theagreement itself had lapsed and the advance amount by the plaintiff wasforfeited. After issuing Notice on 14.02.1985, the plaintiff instituted theSuit in question, seeking specific performance. The first defendant, afterfiling Written Statement on 14.08.1986, died pending the Suit, on18.07.1994. The plaintiff impleaded the husband of the defendant asDefendant-1(a). A sale deed came to be executed by the BDA in favourof the son of defendant no.1 and defendant-1(a), on 19.06.1996.

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AThereafter, the son executed sale deed of the plaint schedule property infavour of the second defendant. It is further not in dispute that the son ofthe first defendant and defendant-1(a) was impleaded as defendant-1(b) in the Suit in the year 1997. The second defendant came to beimpleaded as second defendant in the Suit in the year 1997. Both thedefendant-1(b) and second defendant filed Written Statements.B

4. The Trial Court did not decree the suit for specific performancebut directed return of Rs.50,000/- with 9 per cent interest. The HighCourt found that the Suit is maintainable. It was further found that thesecond defendant is not a bonafide purchaser for value without notice ofthe Agreement to Sell dated 17.11.1982. It was further found by theCHigh Court that, the alienation made in favour of the second defendant,was hit by the provisions of Section 52 of the Transfer of Property Act,1882. Answering the point, whether the plaintiff was entitled to the reliefof specific performance, it was found that, in the facts, when the entiresale consideration was paid by the plaintiff to the first defendant, nothingDmore remained to be done by the plaintiff, and having found that thesecond defendant was not a bonafide purchaser for value without notice,and taking the view that Section 23 of the Specific Relief Act, 1963 didnot apply at all and there being no reason to not exercise discretion infavour of the plaintiff, the Suit was decreed by directing defendant-1(a),defendant-1(b) and the second defendant to jointly convey the plaintEschedule property to the plaintiff.

5. We heard Smt. Kiran Suri, learned Senior Counsel on behalf ofthe second defendant and Shri R. Basant, learned Senior Counsel onbehalf of the plaintiff. Mrs. Kirti Renu Mishra, AOR, appears in theAppeal filed by defendant-1(a) and defendant 1(b).F

THE CONTENTIONS OF THE APPELLANTS

6. Smt. Kiran Suri, learned senior counsel appearing on behalf ofsecond defendant contended that the finding that the Suit wasmaintainable, was unsustainable. She contended that an agreement mustGbe lawful, in order that a court may grant specific relief. It’s her contentionthat the agreement is unlawful, being opposed to public policy, and alsoas it was a bargain, which would defeat the provisions of the law inquestion, within the meaning of Section 23 of the Indian Contract Act,1872. She invited our attention to the terms of the lease-cum-saleagreement entered into between the first defendant and the BDA. SheHpointed out that there was clear prohibition against the alienation of the

site or the plaint schedule property for a period of ten years. She drewsupport from the Bangalore Rules of Allotment, 1972 (hereinafterreferred to as, ‘the Rules’). She pointed out that the court has erred innot noticing that Rule 18(2) proclaims an embargo against alienation fora period of ten years. The very agreement relied upon by the plaintiffwas unlawful, and therefore, the court could not have granted specificperformance. She drew support from Judgment of this Court in KedarNath Motani and others v. Prahlad Rai and others1 andNarayanamma and another v. Govindappa and others2. She furthercontended that the Suit itself, besides being not maintainable, waspremature. She elaborated and contended that, what the agreementbetween the plaintiff and the first defendant contemplated, was that, thefirst defendant would execute the sale deed in favour of the plaintiffupon the expiry of three months from the date of conveyance of saledeed executed by the BDA. The agreement of lease-cum-salecontemplated such a conveyance in favour of the first defendant onlyafter the expiry of ten years from the date of allotment and the date ofthe lease-cum-sale agreement dated 04.04.1979. The Suit is filed a goodfour years prior to even the expiry of ten years. She attacked the findingof the High Court that the second defendant was not a bonafide purchaserfor value. She pointed out that as far as knowledge of pendency of Suitis concerned, the evidence pointed to the second defendant not beingaware of the Suit, defendant-1(b) has admitted to not disclosing aboutthe pendency of the Suit to the second defendant. The second defendantinspected the site and found it to be a vacant land except for a smallshed. Regarding the finding of the High Court that the original document,evidencing delivery of possession of the plaint schedule property by theBDA to the first defendant, was not given to the second defendant andthat only a photocopy was given, it is contended that second defendantwas informed that the original was lost. There was already an assignmentin favour of defendant-1(b). There was no need for the second defendantto make any further inquiry. All possible inquiry was conducted by thesecond defendant. There is no justification for the High Court to concludethat second defendant was not a bonafide purchaser for value. As far asfinding of the High Court that the second defendant, a 20-years old, atthe time of the sale, did not have the wherewithal to purchase the property,it could not be justified, having regard to the evidence which established 1 AIR 1960 SC 213

2 (2019) 19 SCC 42

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Athat the second defendant was the owner of 10 acres of land. He wasinto the business of selling milk and he had the necessary funds andthere is no occasion for the High Court to interfere with the findings ofthe Trial Court in this regard.

7. Per contra, Shri R. Basant, learned Senior Counsel for theBplaintiff, reminded us that matter is appreciated by the two courts. Thefinding that there was a valid contract by the Trial Court was notchallenged by the appellants. There is no pleading to justify the argumentthat the agreement in question was not lawful. He would point out thatneither the lease- cum-sale agreement nor the Rules, prohibited the alloteeentering into an agreement to sell the site.He pointed out that the Rule,Cwhich is relevant to the fact, is Rule 17. Even Rule 18, relied upon by theappellants, did not stand in the way of the agreement to sell or the sale infavour of the plaintiff. He also emphasised that it does not lie in themouth of the appellants to invoke the proposition that agreement inquestion was unlawful. He pointed to the findings of the High Court thatDby his conduct there was complete absence of bonafides in the claim.He pointed out that as correctly found by the High Court, Doctrine ofLis Pendens, applies. He further submitted that, at any rate, if the courtfound that Lis Pendens did not apply, the fact that the second defendanthas not been found to be a bonafide purchaser for value, was sufficientfor this Court to decline to interfere, particularly, in a jurisdiction, whichEoriginates from the grant of Special Leave under Article 136 of theConstitution of India. He would refute the contention that the suit wasnot maintainable and further that it was premature. He would point outthat confronted with the definite stand of the first defendant, who hepoints out was the wife of an MLA and also a Minister, and havingFregard to Article 54 of the Limitation Act, 1963, had no choice, except torush to the civil court and institute the Suit. He would rely upon largebody of case law, including judgments of the High Court of Karnataka,to contend that an agreement to sell, in circumstances, such as obtainingin the present case, was valid and lawful. He would command for ouracceptance, the findings of the High Court regarding the fact that secondGdefendant was not a bonafide purchaser for value. He did not have thenecessary capacity and he was fully aware of the pendency of the Suit.

THE LAW IN QUESTION

8. The City of Bangalore Improvement Act, 1945, going by theHPreamble, was enacted for the improvement of the city of Bangalore and to provide space for its future expansion. It contemplated theappointment of a Board of Trustees, which was to consist of elevenTrustees with the Chairman and six Trustees being appointed by theGovernment. The Act clothed the Board with the power to undertakeimprovement schemes. What is of relevance to the present case are thefollowing provisions:

9. Section 24 read as follows:

“24. Board not to sell or otherwise dispose of sites in certaincases.—The Board’ shall not sell or otherwise dispose of anysites for the purpose of constructing buildings thereon for theaccommodation of person until all the improvements specified inSection 23 [have been substantially provided for the estimates.”

10. Section 29 dealt with the power of the Board to acquire, holdand dispose of the property and it reads as follows:

“29. Power of Board to acquire, hold and dispose of property.—(1) The Board shall, for the purposes of this Act, have power toacquire and hold movable and immovable property, whether withinor outside the City.

(2) Subject to such restrictions, conditions and limitations as maybe prescribed by rules made by the Government, the Board shallhave power or lease, sell or otherwise transfer any movable orimmovable property which belongs to it, and to appropriate orapply any land vested in or acquire by it for the formation of openspaces or for building purposes or in any other’ manner for thepurpose of any improvement scheme.

(3) The restrictions, conditions and limitations contained in anygrant or other transfer of any immovable property of any interesttherein made by the Board shall notwithstanding anythingcontained in the Transfer of Property Act, 1882 (Central Act 4 of1882) or any other law have effect according to their tenor.]”

11. Section 42 conferred power to make Rules. Following provisionsare relevant for the purpose of this case:

“42. Power of Government to make rules.—The Government may,from time to time; make rules, not inconsistent with this Act. —xxxxxxxxx A

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A(aa)regulating the allotment or sale by auction of sites by Board; (ab)specifying the conditions, restrictions and limitations subjectto which the Board may sell, lease or otherwise transfermovable or immovable property;”

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12. Initially, bylaws regulating the allotment of sites were publishedon 08.01.1954. These bylaws came to be cancelled upon enactment ofCity of Bangalore Allotment of Site Rules, 1964. Thereafter, the City ofBangalore Improvement Disposal of Site Rules, 1971 came to be enacted.The said Rules came to be repealed with the making of the City ofCBangalore Improvement Allotment of Site Rules, 1972. These Rulescame into force on the 1[st ]Day of September, 1972. These Rules are theRules, which would govern the fate of this case.

13. Rule 2(b) defines the word ‘allottee’ as meaning the person towhom the site is allotted under these Rules. The Rules define backwardDclass. It also, inter alia, defines stray site.

14. Rule 3 reads as follows:

“3. Offer of sites for allotment.—(1) Whenever the Board hasformed an extension or layout in pursuance of any scheme, theEBoard may, subject to the general or special orders of theGovernment, offer any or all the sites in such extension or layoutfor allotment to persons eligible for allotment of sites under theserules.

(2) Due publicity shall be given in respect of the sites forFallotment specifying their location, number, the amount payableas earnest money, the last date for submission of applications and, such other particulars as the Chairman may consider necessary;by affixing a notice to the notice board of the office of the Board,and any other office as the Chairman may decide from time toGtime and by publication in not less than three daily .newspaperspublished in the City of Bangalore in English and Kannada havinga wide circulation in the city.”

15. Rule 5 dealt with the allotment of stray sites.

Rules 6 contemplated disposal of sites for heritable purposes.

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16. Rule 7 proclaimed that the allottee was to be lessee and itreads as follows:

“7. Allottee to be a lessee. —The site allotted under Rule 3 orRule 5shall be deemed to have been leased to the allottee until thelease is determined or the site is conveyed in the name of theallottee in accordance with these rules. During the period of thelease, the allottee shall pay to the Board rent at the rate of rupeesthree per annum where the area of the site does not exceed twohundred square meters, rupees six per annum where the area ofthe site exceeds two hundred square meters but does not exceedfive hundred square meters and rupees twelve per annum wherethe area of the site exceeds five hundred square meters beforethe commencement of each year.”

17. Rule 8 dealt with applications. It contemplated that theapplications for allotment of site was to be in Form I. Several details areto be furnished. It included the annual income of the applicant, whetherthe applicant already owned a house or house site in the city, outside thecity and whether he had any share in such property and the value of theshare. It further included the query as to whether the applicant’s wife/husband/minor child, owned a house or house site inside or outside thecity. Since, it may be relevant to the decision at hand, we may advert tothe Form.

“FORM I

[See sub-rule (1) of Rule 8]

Form of Application for Purchase of Site To The Chairman, City Improvement Trust Board, Bangalore 20

Sir,

I wish to purchase a building site measuring ........ in ... . . .Extension, Bangalore. I agree to abide by the conditions of allotmentand sale of the site contained in Rule 17 of the City of BangaloreImprovement (Allotment of Sites) Rules, 1972, and the terms ofthe lease-cum- sale agreement; copies of which are enclosed induplicate. I also enclose the duplicate copies of the conditions of A

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Aallotment and sale and lease-cum-sale agreement duly signed intoken of having accepted the conditions therein.

Particulars about me are given below. —

1. Namë (in Block letters)

2. Father’s/Husband’s name

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3. Age

4. Whether the applicant belongs to Scheduled Caste orScheduled Tribe, Nomadic Tribes, Semi-Nomadic Tribes,Backward Classes, Denotified Tribes.

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5. Whether married or single

6. (a) Residential address: Permanent (House No., Name ofstreet, locality and Town):

(b) Present address: (if different from above) forDcorrespondence with the Board.

7. (i) Occupation or post.

(ii) Address

(iii) Place of employment or business.

E8.(a) Annual income of the applicant (both from professionand from properties if any)

(b) Any other means indicating the capacity of the applicantto purchase the site applied for and to building a housethereon.

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9. Whether the applicant is ordinarily a resident in BangaloreCity or in the area under the jurisdiction of the Board andthe period of such residence.

10. Whether any member of the family of which the applicantis a member owns or has been allotted site or a house byGthe Board or any other authority, within the area under thejurisdiction of the Board. (Furnish details).

11. (1) Whether the applicant already owns a house or a house-site:

(a) in the City (with details)

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[K. M. JOSEPH, J.]

(b) outside the city (with details)

(2) Whether he/she has any share in such property and thevalue of the share thereof.

12. (1) Whether the applicant’s wife/husband /minor child ownsa house or a house-site:

(a) in the City (with details)

(b) outside the city (with details)

(2) Whether the applicant’s wife/husband/minor child hasany share in such property and the value o1 the sharethereof.

13. Whether the applicant has transferred the ownership orrights in the house or house- site already allotted to him/herin any of the schemes of the Board or any other authorityto somebody else (if so, himish details).

14. Whether the applicant or any members or his/her familyhas already availed of any housing or loan scheme ofGovernment local body or Co-operative Society, if so, givedetails.

15. Whether the applicants applied for allotment of a site or asite with a building, in any of the scheme of the Board orand other authority and whether his/her deposit was refund(if so, furnish details).

16. Amount of earnest money deposited now (with Challan No.and date).

I hereby solemnly declare that all the above information given byme is true. I shall furnish any additional information in mypossession which you may require. If there is any delay on mypart to furnish the necessary information required by the Board, itwill be within the discretion of the Board to reject my application.

If, at any time it is found that the information given by meabove is incorrect, the Board can cancel the allotment, resumepossession of the site and forfeit part or whole of the amount paidby me till then towards cost of the site or deposit.

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AI am aware that under the Rules, I have to build the housemyself with my own resources.

Signature of Applicant

Station …………………Date …………………………

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Attested

Magistrate of the First Class

Date.............................. .”

18. Rule 10 dealt with the issue of eligibility for allotment and it reads as follows:C

“10. Eligibility for allotment. —No person.

(1) Nho. is not ordinarily resident (living independently or withhis family members). in the area within the jurisdiction of the Boardfor not less than five years immediately before the last date fixedfor making applications:

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Provided that the persons who are domiciled in the State ofKarnataka but serving in the Armed Forces of the Union outsidethe State of Karnataka shall be eligible for allotment of Sites underthese rules.

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(2) Who or any member of whose family owns or is a lesseeentitled to demand conveyance eventually or has been allotted asite or a house by the Board or any other authority, within thearea under the jurisdiction of the Board; or of the Corporation ofthe City of Bangalore, shall be eligible to apply for allotment of asite:

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Provided that the Board may relax the restriction in c1ause (1)regarding residence in the case of persons. —

(i) who are domiciled in the State of Mysore and who bonafide intend to reside within the area under the jurisdictionof the Board; or, G

(ii) who are domiciled.in the State of Mysore but have goneoutside the State on business, employment, study or trainingand who bona fide intend to reside within the area underthe jurisdiction of the board; or H

(iii) who though not domiciled in the State of Mysore bona fideintend to reside within the area under the jurisdiction of theBoard.”

19. Rule 11 provided for the principles for selection of applicantsfor allotment of sites. The following principles have been set out in Rule11(1):

“11. Principles for selection of applicants for allotment of sites.—(1) The Board shall consider the case of each applicant on itsmerits and shall have regard to the following principles in makingselection. —

(i) the status of the applicant, that is whether he is married orsingle and has dependent children;

(ii) the income of the applicant and his capacity to purchase asite and build a house thereon for his residence:

Provided that this condition shall not be considered in case ofapplicants belonging to Scheduled Castes, Scheduled Tribes,Wandering Tribes, Nomadic Tribes and other Backward Classes.

(iii) the number of years the applicant has been waiting forallotment of a site and the fact that he did not secure a siteearlier though he is eligible and had applied for a site;

(iv) persons who are ex-servicemen or members of the familyof the deceased servicemen killed in action, during the lastten years.”

20. The sites were to be allotted among different classes of personswhich included wandering tribes, scheduled tribes, scheduled castes, ex-servicemen, persons domiciled in Karnataka but serving in the ArmedForces of the Union outside the State, State Government servants, CentralGovernment servants and servants of Corporation. 51 per cent wasreserved, in other words, in specific percentage terms for these categories.49 per cent was made available for the general public. Non-availabilityof applicants was also dealt with.

21. Rule 13 provided for selection of an applicant. The Boardwas empowered to reject any application without assigning any reason.

22. Rule 17 provides for conditions of allotment. Since, much turnson the impact of this Rule, we would refer to the same.

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A“17. Conditions of allotment and sale of site.

- The allotment of a site under these rules shall be subject to thefollowing conditions. —

(1) The allottee shall within a period of fifteen days from thedate of receipt of the notice of allotment, pay to the BoardBtwelve and a half per cent of the price of the site and if nosuch payment is made the allottee shall be deemed to havedeclined the allotment.

(2) The balance of the value of the site (less than a sum ofrupees thirty where the area of the site does not exceedCtwo hundred square meters, rupees sixty where the areaexceeds two hundred square meters and does not exceedfive hundred square meters and rupees one hundred andtwenty where the area exceeds five hundred square meters)shall be paid within ninety days from the date of receipt ofDthe notice of allotment, or such extended period notexceeding one year as the Chairman may specify. Interestat [fifteen per cent]] shall be paid on the said amount forthe extended period. If the said amount is not paid withinthe period of ninety days or the extended period the earnestmoney paid by the allottee shall be liable to forfeiture andEthe allotment may be cancelled: [Provided that where anallottee is a person. —

(i) whose annual income does not exceed [threethousand and six hundred rupees], he may choose toFpay the balance value of the site in quarterly, halfyearly or annual installments and the rate of intereston the said amount for the extended period forquarterly payment will be two per cent for half yearlypayments will be three per cent and annual paymentsfour per cent; G

(ii) whose annual income exceeds [three thousand andsix hundred rupees] but does not exceed seventhousand and two hundred rupees interest at twelveper cent per annum shall be paid on the said amountfor de extended period:

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Provided further that where an allottee is a person belongingto a Scheduled Caste or Scheduled Tribe or other BackwardClasses or a nomadic tribe or a wandering tribe, or adenotified tribe or a family of Defence personnel killed ordisabled during the recent war and whose annual incomefrom all sources does not exceed rupees five thousand, thebalance of the value of the site required to be paid underthis sub-rule shall be paid by him without interest within aperiod of six years from the date of receipt of the notice ofallotment.]

(3) Until the site is conveyed to the allottee the amount paid bythe allottee for the purchase of the site shall be held by theBoard as security deposit for the due performance of theterms and conditions of the allotment and the lease-cum-sale agreement entered into between the Board and theallottee.

(4) After payment under sub-rule (2) is made the Board shallintimate the allottee the actual measurements of the siteand the particulars thereof and a lease-cum-sale agreementin Form II shall thereafter be executed by the allottee andthe Board and registered by the allottee. If the agreementis not executed within forty-five days after the Board hasintimated the actual measurements and particulars of thesite to the allottee, the earnest money paid by the allotteemay be forfeited, the allotment of the site may be cancelled,and the amount paid by the allottee after deducting theearnest money refunded to him. Every allottee shallconstruct a building on the site in accordance with the plansand designs approved by the Board. If in any case it isconsidered necessary to add any additional conditions inthe agreement the Board may make such additions.Approval of the City of Bangalore Municipal Corporationfor the plans and designs shall be necessary when the layoutin which the site is situated is transferred to the control ofthe said Corporation.

(5) The allottee shall comply with the conditions of theagreement executed by him and the buildings and other bye-laws of the Board or the Corporation, as the case may be,for the time being in force.

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A(6)The allottee shall construct a building within a period oftwo years from the date of execution of the agreement orsuch extended period ‘[as the Chairman may] in anyspecified case by written order permit. If the building is notconstructed within the said period the allotment may, afterreasonable notice to the allottee, be cancelled, theBagreement revoked, the lease determined and the allotteeevicted from the site by the Board, and after forfeitingtwelve and a half per cent of the value of the site paid bythe allottee, the Board shall refund the balance to the allottee.

(7) (a) On the expiry of the period of ten years and if theCallotment has not been cancelled or the lease has not beendetermined in accordance with these brutes or the termsof the agreement in the meanwhile the Board shall by noticecall upon the allottee to get the sale deed of tire site executedat his own cost within the time specified in the said notice.

D(b) If the allottee fails to get the sale deed executed withinthe time so specified the Board shall itself execute the sameand recover the cost and other charges, if any, incidentalthereto from the allottee as if the same are amount due tothe Board.]

E(8)The allottee shall ordinarily reside or himself make use ofthe building constructed on the site allotted to him.

(9) With effect from the date of taking possession of the sitethe allottee or his heirs and successors shall be liable to paythe taxes, fees and cesses payable in respect of the siteFand any building erected thereon.

If the particulars furnished by the applicant in the prescribedapp1icaüon form for allotment of site are found incorrector false subsequently, twelve and half per cent of the sitevalue, shall be forfeited after the site is resumed by theBoard and the balance amount of site value refunded to theGapplicant.”

23. Rule 18, likewise, speaks about restrictions, conditions andlimitations on sale of sites and we refer to the same:

“18. Restrictions, conditions and limitation on sales of sites.— (1)HNotwithstanding’ anything contained in. —

(i) these rules or any other rules, bye- laws or orders governingthe allotment, grant or sale of sites by the Board forconstruction of buildings; or

(ii) any instrument executed in respect of any site allotted,granted or sold by the Board for construction of buildings, the Chairman may at the request of the allottee grantee orpurchaser of a site, execute a deed of conveyance subject to therestrictions, conditions and limitations specified in sub-rule (2).

(2) The conveyance by the Chairman of a site in favour of anallottee, grantee or purchaser of a site (hereinafter referred to as“the purchaser”) shall be subject to the following restrictions,conditions and limitations, namely.—

(a) in the case of a site on which a building has not beenconstructed. —

(i) the purchaser shall construct a building on the sitewithin such period as may be specified by the Board,as per plans, designs and conditions to be approvedby the Board or in conformity with the provisions ofthe City of Bangalore Municipal Corporation Act, 1949and the Bye-laws made thereunder;

(ii) the purchaser shall not without the approval of theBoard, construct on the site any building other than abuilding for the construction of which the site wasallotted, granted or sold;

(iii) the purchaser shall not alienate the site within a periodof ten years from the date of allotment except bymortgage in favour of the Government of India, theGovernment of Mysore, the Life InsuranceCorporation of India or the Mysore Housing Board,or any [1][any company or Co-operative Societyapproved by the Board] or any Corporation set up,owned or controlled by the State Government or theCentral Government to secure moneys advanced bysuch Government, [2][Corporation, Board, CompanyJ,Society or Corporations, as the case may be, for theconstruction of the building on the site; A

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A(b)in the case of a site on which a building has been constructed,the purchaser shall not alienate the site and the buildingconstructed thereon within a period of ten years from thedate of allotment, except. —

(i) by mortgage in favour of the Government of India,Bthe Government of Mysore, the Life InsuranceCorporation of India or the Mysore Housing Boardor any Co-operative Society approved by the Boardto secure moneys advanced by such Government,3[Corporation, Board, Company] or Society for theconstruction of the building on the site; or C

(ii) with the previous approval of the Board;

(c) in the event of the purchaser committing breach of any ofthe conditions in clause (a) or clause (b), the Board may atany time, after giving the purchaser reasonable notice,Dresume the site free from all encumbrances. The purchasermay remove all things which he has attached to the earth:

‘Provided he leaves the site in the state in which he receivedit. All transaction entered into in contravention of the conditionsspecified in clauses (a) and (b) shall be null and void ab initio.

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‘Explanation. — In this rule, references to the Board shall bedeemed to include the Chairman when authorised by the Boardby a general resolution to exercise any power vested in the Board.

1[(3) Notwithstanding anything in sub-rule (2), but withoutFprejudice to the provisions of Rule 17 where the lessee appliesthat for reasons beyond his control he is unable to reside in theCity of Bangalore or by reasons of his insolvency or impecuniosityit is necessary for him to sell the site or site and the building, ifany, he may have put up thereon, the Bangalore DevelopmentAuthority may, with the previous approval of the State Government,Geither. —

(a) require him to surrender the site, where there is no building,in its favour; or (b)where there is a building put up, permit him to sell the vacantHsite and building:

Provided that. —

(i) in case covered by clause (a), the Bangalore DevelopmentAuthority shall pay to the lessee the allotted value of thesite and an, additional sum equal to the amount of interestat twelve per cent per annum thereon; and in case covered by clause (b), the lessee shall pay to the BangaloreDevelopment Authority a sum equal to the amount of interest attwelve per cent per annum on the allotted value of the site.]”

24. Rule 19 dealt with voluntary surrender and it read as follows:

“19.Voluntary surrender. — An allottee may at any time afterallotment, surrender the site allotted to him to the Board.On such surrender the Board shall refund all amounts paidby the allottee to the Board in respect of the said site.”

25. The Rules did not apply to disposal of corner sites andcommercial sites.

26. We may notice in fact that the City of Bangalore ImprovementAct, 1945 came to be repealed by the Bangalore Development AuthorityAct, 1976. There were certain amendments carried out to the 1972 Ruleswhich need not detain us.

THE PURPORT OF THE ABOVE LAW

27. It is clear that what is involved is the allotment of publicproperty. The allottee was to be a lessee. The allottee, during the periodof lease, was to pay rent, as provided in Rule 7. Allotment was premisedon selection being carried out based on principles for selection, as providedin Rule 11 and to be carried by the Allotment Committee under Rule 12.The value of the site is fixed. This is clear from Rule 17(1). The allotteewas to pay 12 ½ per cent of the price of the site within 15 days of thereceipt of notice of allotment. Within 90 days from the date of receipt ofnotice of allotment or extended period not exceeding one year, whichmay be fixed by the Chairman, the balance had to be paid. Non-paymentattracted interest for the extended period. If the amount was not paidwithin 90 days or the extended period, earnest money was liable to beforfeited and the allotment may be cancelled. The two provisos of Rule17 provided for certain concessions to certain categories. The amount,which was paid by the allottee, formed the security deposit for the dueperformance of the obligation, under the lease-cum-sale agreement A

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Abetween the Board and the allottee. This was to be so till the conveyancewas executed regarding the site to the allottee. A lease-cum-saleagreement in Form 2 was to be entered into by the allottee. Every allotteewas mandated to construct a building, which, we may clarify was to bea residential building, on the site in accordance with plan approved bythe Board. The allottee was to comply with the conditions in theBagreement. Rule 17(6) fixed the period of two years from the date ofexecution of the lease-cum-sale agreement or such extended period,within which the building had to be put up. Till 29.05.1980, the power toextend the period was vested with the Board. After 29.05.1980 the powerto extend by a written Order was vested with the Chairman. If theCbuilding was not constructed within the period of two years or extendedperiod, the allotment could be cancelled and the agreement revoked, thelease determined and the allottee evicted from the site by the Board.Such action was to be preceded by according a reasonable notice to theallottee against the proposed action. In the event of such action beingtaken, the allottee was entitled to the refund of the amount after forfeitingD12 ½ per cent of the value. It is under Rule 17(7)(a) that on expiry of 10years of the allotment, the time arrived for conveying the rights over thesite. When 10 years expired, if the allotment had not been cancelled orlease determined, in accordance with the Rules or in terms of theagreement, the Board, after issuing a notice to the allottee, calls uponEthe allottee to execute the sale deed at his cost. If the allottee failed toget the sale deed executed, the Board was to execute the sale deed andrecover the cost.

28. Now, the time is ripe to advert to the statutory lease-cum-saleagreement referred to in Rule 17(4). It is in Form II and much turns onFits terms and we advert to the same, which has been, admittedly, enteredinto by the first defendant with the BDA.

“FORM II

[See Rule 17(4)]

GLease-cum-sale agreement

An agreement made this . . . . . . . . . . . . . . . day of.......................................... 197.. , between the City of BangaloreImprovement Trust Board, Bangalore, (hereinafter called the“Lessor/Vendor”) which term shall wherever the context sopermits, mean and include its successors in interest and assignsH

of the ONE PART and ………hereinafter called Lessee/Purchaser (which term shall wherever the context so permits meanand include his/her heirs, executors; administrators and legalrepresentatives) of the OTHER PART; .

Whereas, the City of Bangalore Improvement Trust Boardadvertised for sale building sites in Extension; And, whereas, one of such building site in Site No:………..more fully described in the Schedule hereunder and referred to asproperty; And, whereas, there were negotiation between the Lessee/Purchaser on the one hand and the Lessor/Vendor on the otherfor allowing the Lessee/purchaser to occupy the property asLessee until the payment in full of the price of the aforesaid siteas might be fixed by the Lessor/Vendor as hereinafter provided; And, whereas, the Lessor/Vendor agreed to do so subject tothe terms and conditions specified in the City of BangaloreImprovement (Allotment of Sites) Rules, 1972, and the terms andconditions hereinafter contained; And, whereas, thus the Lessor/Vendor has agreed to lease theproperty and the Lessee/Purchaser has agreed to take it on leasesubject to the terms and conditions specified in the said rules andthe terms and conditions specified hereunder:

Now this Indenture Witnesseth

1. ..............................................................................The

Lessee/Purchaser is hereby put in possession of the property andthe Lessee/Purchaser shall occupy the property as a tenant thereoffor a period of ten years from (here enter the date of givingpossession) or in the event of the lease being determined earliertill the date of such termination. The amount deposited by theLessee/Purchaser towards the value of the property shall, duringthe period of tenancy, he held by the Lessor/Vendor as securitydeposit for the due performance of the terms and conditions ofthese presents.

2. .......................................................................... Thelessee/purchaser shall pay a sum of rupees ... per years as renton or before . . . . . . . . . . . commencing from . . . . .

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3. The Lessee/Purchaser shall construct a building in theproperty as per plans, designs and conditions to be approved bythe Lessee/Vendor and in conformity with the provisions of theCity of Bangalore Municipal Corporations Act, 1949, and the bye-laws made thereunder within two years from the date of thisagreement:

Provided that where the Lessor/Vendor for sufficient reasonsextends in any particular case the time for construction of suchbuilding, the Lessee/Purchaser shall construct the building withinsuch extended period.

4. The Lessee/Purchaser shall not sub-divide the property orconstruct more than one dwelling house on it.

The expression “dwelling house” means a building constructedto be used wholly for human habitation and shall not include anyapartments to the building whether attached thereto or not, usedas a shop or a building of ware-house or building in whichmanufactory operations are conducted by mechanical power orotherwise.

5. The Lessee/Purchaser shall not alienate the site or thebuilding that may be constructed thereon during the period to thetenancy. The Lessor/Vendor may, however permit the mortgageof the right, title and interest of the Lessee/Purchaser in favour ofthe Government of Mysore, the Central Government or bodiescorporate like the Mysore Housing Board or the Life InsuranceCorporation of India, Housing Co-operative Societies or Banks tosecure moneys advanced by such Governments or bodies for theconstruction of the building.

6. The Lessee/Purchaser agrees that the Lessor/Vendor maytake over possession of the property with the structure thereon ifthere is any misrepresentation in the application for allotment ofsite.

7. The property shall not be put to any use except as a residentialbuilding without the consent in writing of Lessor/Vendor.

8. The Lessee/Purchaser shall be liable to pay all outgoingswith reference to the property including taxes due to theGovernment and the Municipal Corporation of Bangalore.

9. On matters not specifically stipulated in these presents theLessor/Vendor shall be entitled to give directions to the Lessee/Purchaser which the Lessee/Purchaser shall carry out and defaultin carrying out such directions will be a breach of conditions ofthese presents.

10.. In the event of the Lessee/Purchaser committing defaultin the payment of rent or committing breach of any of the conditionsof this agreement or the provisions of the City of BangaloreImprovement (Allotment of Sites) Rules, 1972, the Lessor/Vendormay determine the tenancy at any time after giving the Lessee/Purchaser fifteen days’ notice ending with the month of thetenancy, and take possession of the property. The Lessor/Vendormay also forfeit twelve and a half per cent of the amount treatedas security deposit under Clause 1 of these presents.

11. At the end of ten years referred to in Clause 1 the totalamount of rent paid by the lessee/purchaser for the period of thetenancy shall be adjusted towards the balance of the value of theproperty.

12. If the Lessee/Purchaser has performed all the conditionsmentioned herein and committed no breach thereof the Lessor/Vendor shall at the end of ten years referred to in Clause 1, sellthe property, to the Lessee/Purchaser and all attendant expensesin connection with such sale such as stamp duty, registrationcharges, etc., shall be borne by the Lessee/Purchaser.

13. The Lessee/Purchaser hereby also confirms that thisagreement shall be subject to the terms and conditions specifiedin the City of Bangalore Improvement (Allotment of Sites) Rules,1972, and agreed to by the Lessee/Purchaser in his/her applicationfor allotment of the site.

14. In case the Lessee/Purchaser is evicted under Clause 9 heshall not be entitled to claim from the Lessor/Vendor andcompensation towards the value of the improvements or thesuperstructure erected by him on the scheduled property by virtueof and in pursuance of these presents.

15. It is also agreed between the parties hereto that Rs . . . . .. . . (Rupees . . . . . . ) in the hands of the Lessor/Vendor receivedby them from the Lessee/Purchaser shall be held by them as A

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Asecurity for any loss or expense that the Lessor/Vendor may beput to in connection with any legal proceedings including evictionproceedings that may be, taken against the Lessee/Purchaser and,all such expenses shall be appropriated by the Lessor/Vendorfrom and out of the moneys of the Lessee/Purchaser held in theirhands.B

THE SCHEDULE

Site No . . . . . . . . . . . . . . . . . . formed by the City ofBangalore Improvement Trust Board in Block No. . . . . . . . . . . .. in the. . . . . . . . . . . . Extension. Site bound on.—

CEast by:

West by:

North by:

South by:

Dand measuring east to west . . . . . . . . . . . north to south . . . . . .in all measuring . . . . . . square feet.

In witness whereof the parties have affixed their signatures tothis agreement.

Chairman.EThe City of Bangalore Improvement Trust Board. Witnesses:

1.

2. Witnesses:F1.

2. Lessee/Purchaser.”

29. The question then arises, as to what is the purport of Rule 18.Rule 18, in our view, produces the following effects and is intended toGapply as follows:

It begins with a non obstante clause as far as Rule 18(1) isconcerned. Rule 18(1) is to apply despite anything which iscontained in the Rules itself. That apart, it would operate,notwithstanding any other Rules, bylaws and orders, which mayHoccupy the field. Even an instrument executed in respect of any

site allotted, rented or sold by the Board for the construction ofbuildings, will not detract from the exercise of power. The power,under Rule 18, is vested with the Chairman. The scope of thepower is to execute a deed of conveyance. This is premised onthe request being made by the allottee grantee or purchaser ofthe site. Rule 18(1) further contemplates that when the power isinvoked by the Chairman under Rule 18(1), the restrictions,conditions and limitations mentioned in Rule 18(2) will ipso factoapply. Rule 18(2) divides the categories into two. Rule 18(2)(a)deals with the situation where no building has been constructedon the site. Rule 18 (2)(b) deals with the situation where a buildinghas been constructed on the site. Since, we are, in this case,concerned with the case of a site on which the building has notbeen constructed, within the meaning of the Rules, we may indicatethat the condition that is imposed, includes the obligation on thepart of the purchaser to construct the building on the site, withinthe period as may be specified by the Board. The purchaser isvisited with the restriction that he shall not, without the approvalof the Board, construct on the site, any building other than thebuilding for which the site was allotted, rented or sold. Thepurchaser, who is the beneficiary of deed of conveyance in hisfavour under Rule 18(1), is bound by the further limitation orcondition that the purchaser shall not alienate the site within aperiod of 10 years from the date of allotment. The restrictionagainst alienation, however, could not operate against a mortgage,as provided in Rule 18(2)(iii). The mortgage is, however, to beone effected for the purpose of construction of the building on thesite. Rule 18(2)(c) visits the purchaser, committing breach of anyof the conditions in clause (a), inter alia, with the resumption ofthe site, no doubt, after a reasonable notice. Rule 18(2)(c) furtherdeclares that all transactions entered into in contravention of theconditions in Clause (a) and (b) are to be null and void ab initio.The transactions, which are referred to in Rule 18(2)(c), are thetransactions which are referred to in Rule 18(2)(a)(iii) or Rule18(2)(b).

30. Now, the question would arise as to the effect of the interplayof Rule 17, the lease-cum-sale agreement and the provisions of Rule18(1) and Rule 18(2). An allottee begins his innings as a lessee. Theterms of the lease are set out in the Rules itself, which we have adverted A

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Ato. The entire value of the site is to be paid at the very beginning, asalready noticed, or within the extended period. However, the allotteecontinues as a lessee. He is obliged to observe the conditions of thelease-cum-sale agreement. He is obliged to pay rent, as provided in theRules and also the lease-cum-sale agreement. Under Clause (5) of thelease-cum-sale agreement, the allottee, who is also described as theBlessee/purchaser, is forbidden from alienating the site or the building thatmay be constructed during the period of the tenancy. The period oftenancy is fixed as a period of 10 years from the date of giving possessionto the allottee. In other words, an allottee, who is obliged to enter into alease-cum-sale agreement is prohibited from alienating the site or theCbuilding, which may be put up for the period of 10 years. This period of10 years is adverted to in Rule 17(7). In other words, for a period of 10years, the allottee, who is also described as the lessee and purchaser,cannot alienate the site or the building. It is to be understood that byvirtue of Rule 7 of the Rules, the allottee is treated as a lessee. What theRules and agreement contemplate is, though the entire amount of theDvalue of the site is payable within a period of 90 days or extended periodunder Rule 17(2), the allottee/lessee becomes the purchaser of the site,only when the conveyance deed is executed in his favour under Rule17(7). During this period, the Rules and the agreement contemplate clearlythat the allottee puts up the building for his residence but he cannotEalienate the property during the period of 10 years, which is the period oftenancy, and this period of 10 years begins, from the time he is put intopossession, based on the agreement. Rule 18(1) and Rule 18(2), in amanner of speaking, fast tracks the conveyance. In other words, Rule18(1) enables the Chairman, on the request of an allottee, within themeaning of Rule 17, to execute a deed of conveyance, even before theFexpiry of 10 years, contemplated in Rule 17(7). However, when anallottee is the beneficiary of the exercise of power under Rule 18(1)and a conveyance deed is executed to him, the Rule-maker, has stillincorporated the condition against alienation for a period of 10 years,which is not to operate from the date of the conveyance. The embargoGagainst alienation in the case of the conveyance deed being executedin favour of the allottee during the currency of the lease-cum-saleagreement in Form II will operate for a period of 10 years from thedate of allotment.

31. Thus, in a case of allotment under Rule 17, the condition againstHalienation is to exist for a period of 10 years from the date of allotment.

In the case of conveyance deed, which is executed in favour of theallottee, the condition against alienation will again operate for the periodof ten years from the date of allotment. This is apart from the otherconditions, viz., construction of the building on the site. In short, theallottee becomes the owner of the site before the expiry of 10 yearsupon power being invoked under Rule 18(1) but the assignment of therights, which would have been otherwise absolute, is subjected to theconditions, as mentioned in Rule 18(2)(a), which includes the prohibitionagainst the alienation. We must remind ourselves that under Section29(3) of the Act of 1945, the Transfer of Property Act is eclipsed by theterms of any grant or transfer. The condition against alienation is not tobe counted from the date of the execution of the conveyance deed butfor the unexpired period, in the case of the lease-cum-sale agreementexecuted.

32. The impact of Rule 18(3) is to be noticed. This Rule wassubstituted w.e.f. from 21.12.1976. The Rule contemplates two conditionsfor its operation. Firstly, it operates without prejudice to the provisions ofRule 17. Secondly, Rule 18(3) applies, notwithstanding anything containedin Rule 18(2). Now, coming to the exact scope of Rule 18(3), itcontemplates the existence of either of the conditions mentioned therein.They are – (1) the lessee applies pointing out that for reason beyond hiscontrol, he is unable to reside in the city of Bangalore; (2) by reason ofhis insolvency or impecuniosity, it has become necessary for him to sellthe site and or site and the building, if any, he may have put up thereon.

33. We have already explained the scope of Rule 18 and theinterplay between Rule 17 and Rule 18. Rule 18(3) must be read alongwith Rule 17. The argument to the contrary by the plaintiff is untenable.In fact, it would involve denying relief intended for persons falling underRule 17, as will be clear hereinafter. A perusal of Rule 18(3) wouldreveal the following:

While a person is a lessee (which means while he is an allottee),the course open to an allottee/lessee, is to follow the Rules and lease-cum-sale agreement and put up a residential building on the site. Hemay be disabled by the financial condition from fulfilling his promiseunder the lease-cum-sale agreement and the Rules to put up the building.In either case, i.e., when because of the dire financial straits, he findshimself in, he can apply to the Authority to permit him to sell the site, ifno building has been put up or if he has put up a building on the site, the A

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Asite along with the building. The courses of action open to the BDAwould be as follows:

It may with the previous approval of the State Government, callupon the applicant, when he has not put up the building, to surrender thesite. Thus, in a case where a lessee/allottee wishes to sell the site, theBRules contemplate that site would have to be surrendered in favour ofthe Authority. The rationale appears to be, instead of permitting the sitebeing sold to any third party, the site would go back to the Authority,which in turn, will enable it to allot it to the eligible persons waiting in thequeue. Where a building has been put up, again, Rule 18(3)(b)contemplates that the lessee can be permitted to sell the vacant site andCthe building. When the lessee, on the basis of his request that he may bepermitted to sell the site, has surrendered the site to the BDA, the furtherconsequence contemplated is that the lessee will get back the value ofthe allotted site, which he has deposited under Rule 17(1) and (2). Overthe above the same, the lessee is to be paid an additional sum equal toDthe amount of interest at the rate of 12 per cent per annum. We must, atthis juncture, also do justice to the words in Rule 18(3) “but withoutprovisions of Rule 17”. The import of this part of Rule 18(3) is as follows– under Rule 17, it is open to the Authority to cancel allotment andrevoke the agreement and determine the lease. The allottee can be evictedfrom the site. The amount of 12 ½ per cent of the value paid, under RuleE17(1) can be forfeited. No doubt, the Board will refund the balance tothe allottee. This is a consequence which is contemplated in Rule 17(6).This power with the Board is kept preserved when an allottee does notput up the building. Thus, Rule 18(3) must be understood as a powerwith the Board to be exercised with the previous approval of the State

FGovernment. Thus, an allottee, as a Rule, is expected to hold up to thepromise he has made about his financial capacity to construct the building.Consequences in Rule 17 would remain alive. The power under Rule18(3) appears to us to encompass situations of insolvency orimpecuniosity, which overtake an allottee after the allotment takes place.In other words, the unplanned and uncontemplated vicissitudes of lifeGmay visit him inter alia with insolvency or impecuniosity, leaving withhim no other choice but to sell the site or even the site with the building.The fact that power under Rule 18(3) is not meant to be a mechanicalexercise of power, can be discerned from the requirement that ‘previous’approval of the State Government is the sine qua non for the BDAHexercising its power.

THE UNDISPUTED FACTS

34. The BDA made an allotment of the plot on 04.04.1979 to thefirst defendant. The lease-cum-sale agreement was also executed onthe same date. It is while so that on 17.11.1982, the plaintiff entered intothe agreement with the first defendant. Under the allotment, the firstdefendant was put in possession of the site. A perusal of the agreementwould reveal the following:

“NOW THIS DEED WITNESSETH AS FOLLOWS :

1. The vendor does hereby agrees to sell the schedule site tothe purchaser for a price of Rs. 50,000/- (Rs. Fifty thousandonly).

2. The purchaser has hereby agreed with the vendor topurchase the schedule site for the said price of Rs.50,000(Fifty thousand only).

3. The purchaser has paid a sum of Rs.30,000/- (Rs.Thirtythousand only) as advance and part of the purchase moneyby cheque No. 81/YA. 709838 dated 17 .11.1982, drawn onIndian Bank, Malleswaram, Bangalore to the vendor, whohereby acknowledges the receipt of the said amount fromthe purchaser.

4. The vendor does hereby agree with the purchaser to obtainthe absolute sale deed from the Bangalore DevelopmentAuthority and then complete the sale transaction with thepurchaser. It is agreed that the sale has to be completed onor before the expiry period of three months from the daythe vendor obtains the absolute sale deed from the BangaloreDevelopment Authority and intimates the purchaser inwriting.

5. The vendor has handed over the original possessioncertificate to the purchaser.

6. The vendor has agreed to deliver the following documentsto the purchaser :

(a) Absolute sale deed after obtaining from the BangaloreDevelopment Authority, Bangalore.

(b) Katha certificate issued by the BangaloreDevelopment Authority in favour of the vendor.

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A(c)N I L Encumbrance Certificate.

(d) Uptodate tax paid receipt.

7. The vendor hereby aggress with the purchaser to makenecessary applications to the competent authority under theUrban Land Regulations) Act, 1976 and obtain permissionBto transfer the schedule (Ceiling and necessary site to thepurchaser. The purchaser has agreed to render necessaryassistance to the vendor in this regard.

8. The vendor has put the purchaser in possession of theschedule site this day as part performance of this contractCof sale. The vendor covenants with the purchaser that thepurchaser is entitled to put up temporary structure on theschedule site.”

35. Clause 5 shows that the first defendant has handed over theoriginal possession certificate to the plaintiff. Clause 8 recites that theDfirst defendant has put the plaintiff in possession of the site on the dateof the agreement as part performance of the contract of sale. The firstdefendant further covenanted with the plaintiff that he is entitled toconstruct a temporary structure on the site.

THE CORRESPONDENCE BEFORE THE SUIT

E36. The plaintiff, on 01.03.1983, i.e., within four months ofagreement dated 17.11.1982, wrote to the first defendant as follows:

“Y. SUBBARAJUENGINEERING CONTRACTORS

24, 2nd CROSS, KODANDARAMAPURAM,

FMALLESWARAM,‘ BANGALORE - 560003

Date : 1.3.1983

REGISTERED POST ACK. DUE

GTo,

Smt. Jayalakshmamma,

W /o K.T. Krishnappa,

Ex. M.L.A., TB Extn.,

HNagamangala, Mandya District

Madam,

Sub:Agreement for the sale of Site No. 1588, Block II atBanashankari I Stage Extension - Regarding.

You have agreed for the sale of the above site, for whichan agreement was made on 17.11.1982 on the condition that youwill register the sale deed within 3 months from the date ofobtaining all the necessary documents required in this connectionfrom BOA. So far you. have not informed about obtaining thedocuments from BDA. You had promised that all the documentswill be handed over to me within 2 weeks time to facilitate me forregistering the property.

Since 3 months are over, I am proposing to sell to my-nominee for the agreed amountof Rs.50,000/ (Rupees FiftyThousand only), as you have failed to produce the clear documents.I am forced to transfer the property to my nominee at the agreedamount of Rs.50,00,0/- with you.This is for your kind informationand early necessary action.

Thanking you,Yours faithfully

Sd/-

(Y. Subbaraju)”

(Emphasis supplied)

There is no reference to any threat by the first defendant to sell toothers.

37. The plaintiff did not rest content with the first letter and in thevery next month, on 26.04.1984, complains to the first defendant, bypointing to the letter dated 01.03.1983 and pointing out that the firstdefendant has not replied to his letter, notifying her readiness to complywith the agreement. Thereafter, it is stated that by the letter dated26.04.1984, he was finally calling upon the first defendant to act in termsof the agreement, execute the sale deed in favour of the plaintiff or hisnominee within one week from the date of receipt of the letter, failingwhich, litigation would be launched. This letter provoked the firstdefendant to reply through a lawyer on 08.05.1984. The first defendantadmitted the agreement dated 19.11.1982. She, however, pointed out A

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38. On 03.07.1984, the plaintiff sent a lawyer notice. Clause 4,which we have extracted, in the agreement, was invoked. The plaintiffpointed out that in terms of the said Clause, the first defendant wasobliged, in the first place, to obtain the sale deed from the BDA and toDinform the plaintiff in writing about having obtained the sale deed. Theplaintiff was also to obtain the Khata Certificate. Period of three monthswould begin to run only from the said date. The claim of the first defendantthat he had handed over the documents of title, was denied. The furtherpayments, which were made, after having paid Rs.30,000/- on the dateof the agreement, was stated to be unnecessary but it was pointed outEthat the total sum of Rs.50,000/- stood paid. It was reiterated that on thedate of the sale agreement itself, the plaintiff was put in possession. Theclaim that the sale consideration was Rs.1,50,000/- was denied. Thefirst defendant, it was pointed out, had committed default in not complyingwith the terms of the agreement, by obtaining absolute sale deed fromFthe BDA. Legal action was spoken of by the plaintiff. Lastly, on14.02.1985, a legal notice was sent by the plaintiff to the first defendant.Thereinafter, referring to the agreement, it was complained that thoughit was then more than two years that the first defendant had entered intothe agreement. First defendant had given a reply on 08.05.1984, pleading excuses for execution of the sale deed. Thereafter, the first defendantGwas called upon to act in terms of the sale agreement and execute thesale deed within fifteen days of the receipt of the notice. It was held outthat failure on the part of the first defendant would constrain the plaintiffto seek relief from the court. That the plaintiff meant business, is provedby the fact the Suit, out of which this Appeal arises, was filed onH16.11.1985.

THE PLEADINGS

39. In the plaint, the plaintiff, inter alia, again reiterated that hewas put in possession of the site at the time of executing the agreement.After referring to the correspondence, which we have referred to, it isaverred that the first defendant was not willing to perform her part ofthe contract. It was complained that the first defendant could notunilaterally treat the contract as cancelled and that he had unjustlyrepudiated her obligation. It was pleaded that he is likely to execute asale deed in favour of some other person. To prevent the same, the Suitfor Specific Performance of the agreement and for injunction, it wasstated, was filed. It was further stated that the first defendant is boundand liable to obtain the absolute sale deed from the BDA and deliver thesame to the plaintiff to execute the sale deed. In the amended pleadings,there is reference to the husband and the son being brought on the partyarray on the death of the first defendant. There is also reference to thesubsequent sale by the son to the appellant. The prayer sought was adirection to execute the sale deed and to convey the title and deliver thedocuments of title including the sale deed, after obtaining the same fromthe BDA and injunction was sought against interfering with the plaintiff’slawful possession. Such relief of injunction was also sought against theappellant also.

40. First defendant, in her Written Statement, denied the case ofthe plaintiff that he was ready and willing. According to her, plaintiff hadto pay the balance of Rs. 1,00,000/-, which remains after payingRs.50,000/-. Time was pointed out to be essence of the contract. Thefirst defendant was ready and willing to perform her part. It was furtheralleged that the plaintiff was not put in possession. The defendant No.1(b)son of the first defendant filed a Written Statement. He refers to theClause prohibiting alienation for a period of ten years from the date ofallotment, and that, absolute rights were not created by the BDA by theallotment. It was further contended that the first defendant, his mother,was only the lessee of the site and she did not have any right to conveyownership rights. She was not competent to convey the property. It waspointed out that the agreement was a void agreement and could not beenforced.

41. The second defendant, in his Written Statement, inter alia,pleaded no knowledge about the agreement dated 17.11.1982, providingthat the first defendant must obtain an absolute sale deed from the BDA

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Aand it must be intimated in writing to the plaintiff. The allegation that theplaintiff was put in possession, was denied as false. Regarding puttingthe plaintiff in possession of the possession certificate, the appellantpleaded no knowledge. It was further pleaded that the first defendantwas the absolute owner in possession of the site and, after her demise,in view of the death of the husband of the first defendant, the son becameBthe owner of the property. It was pleaded that the first defendant was asite-less and houseless person and permanent resident of Bangalore City.After having made due enquiries, property was purchased by sale deeddated 19.09.1996. An additional Written Statement was filed by theappellant to the amended plaint which was largely devoted to his caseCabout him being a bonafide purchaser.

THE ORAL EVIDENCE

42. PW2, the son of the plaintiff (the plaintiff died on 05.01.2001)deposed, inter alia, that possession of the entire property was deliveredto the plaintiff. Subsequently, his legal representatives are in possession.DAfter the plaintiff was put in possession, he has allegedly constructed atemporary shed in it. The shed was demolished in the year 1991 duringthe Cauvery riots. He has never made any attempts to go to the BDA toknow about the Suit property. He deposed that since he guessed thatsince 1960 his father commenced civil contract work he was doing so tillEhis death. With reference to the question that the site was inalienable fora period of ten years, PW2 answered that it could have been sold tothem. He confessed to ignorance of the BDA Rules regarding allotment.He did not know that the lease period was completed on the 13[th ]Day ofMay, 1989. He did not know about the non- alienation clause in theallotment by the BDA. He did not know that in the year 1985, his fatherFdid not have the right to file the Suit. He was associated with his fatherin construction work. He refers to Exhibit-P14, which was a show causenotice received by the plaintiff from the BDA. He deposed that plaintiffintimated the BDA about the sale agreement.

43. The following evidence of PW2, the son of the plaintiff is veryGrelevant. He has deposed interalia as follows:- ‘My father was contractor and real estate business since 30 years.It is not true that there are 70 to 80 cases pending in differentcourts. There are about 35 to 40 cases pending. My elder brotheris doing construction.’

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‘I guess since 1960 my father commenced civil contract work.He was doing same business till his death. Simultaneously, hecommenced real estate business and continued till his demise.’

‘My father was getting monthly rental income of Rs.1,00,000/-.’

‘In the name of our mother, there is commercial complex atShehsdripuram. We presently get monthly rent of Rs. 4,50,000/-.The said commercial complex is joint family property.’ PW 2 hasentered into an agreement to purchase 24 acres land atTannishandra. He has negotiated to purchase the land at the rateof Rs.8,00,000/- per acre. At also Ulsoor, they have vacant site of-90,000/ sq. feet. It is quite expensiveproperty PW2 deposes.They are staying at a rented house. At Cunningham Road, theyhave got a property which is in dispute. Cunningham property is-1,20,000/ sq. feet. It is vacant land. Most importantly PW2 deposesthat if decree is denied they will have loss of money.

44. The appellant (second defendant) examined as DW1, interalia, deposed that he owned both irrigated and non-irrigated lands to theextent of 12 acres. He did not own any site or building in Bangalore. Heinvested amount arrived from agriculture and milk-vending business topurchase this property. His father helped him. On the date of purchase,the possession was handed over to him. Apart from Bettanna, noneacted as broker at the time of purchase. He, inter alia, further statesthat he went to the site. He found tin shed. He made inquiries withregard to ownership of the site and possession. He was told that oneSudershan was the owner of the site, who use to visit the site often. He,along with is elder brother, who was residing in Bangalore, went to thehouse of Sudershan. Sudershan wanted price of Rs.6,00,000/-. Finally,the parties agreed for Rs.4,50,000/-. Certain xerox copies of documents,including possession certificate, was handed over to him and he consultedan Advocate who said that the title was clear. On the date of sale, thepossession was handed over to the appellant. Property was mutated.The broker was not aware of the pendency of the Suit. He will be put togreat hardship if the Suit is decreed. The original of the Sale Deed iswith the bank. In cross-examination, he, inter alia, deposed that he hasstudied up to PUC. His brothers were staying in Bangalore. His fatherowned 12 acres. Six acres were irrigated and six acres was dry land.His brothers were doing jewellery work in Bangalore. 12 acres wasancestral property. They used to get daily 20 litres of milk per day. They A

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Ause to get Rs.195-196/- per day by selling milk. Father had not spent anymoney during marriage of elder brothers. Neither father, second defendantnor his brother Mukund were income-tax assessees. He has no recordto show that he had the money to the extent of Rs.4,50,000/- with him.His brothers were staying in the rented house. He knew the brokersince his childhood. He invested Rs.3,00,000/- of his own. The remainingBwas paid by his father. He earned Rs.3,00,000/- by selling milk andvegetables. He informed the broker for the first time in June, 1996 thathe intended to purchase the site at Bangalore. After seeing the site onthe next day itself, he approached the defendant 1(a) and defendant1(b) for discussion. Defendant 1(a) was MLA of their Taluk and alsoCformer Minister. The negotiations were completed on the same day.The amount was paid by cash. His Advocate did not tell him that bothdefendant 1(a) and defendant 1(b) had acquired title and informed himto purchase from both. The entire process of seeing the site, sale talks,were done in the first week of June, 1996. Defendant 1(a) and defendant1(b) did not disclose regarding the pendency of the Suit. He did notDinquire with the BDA as to who is the owner of the site. He denied thesuggestion that till day, the legal representatives of the original plaintiffwere in possession of the property. The suggestion that the possessionof the site was handed over to plaintiff, was denied. Defendant 1(b)furnished xerox copy of the possession certificate at the time ofEnegotiations. After receipt of Suit Summons, he was not on talking termswith defendant 1(a) and defendant 1(b). Defendant 1(b) disclosed tohim that the original possession certificate was lost and, therefore, hegave the duplicate certificate.

45. Defendant 1(b) was examined as DW2. He has deposed about Fthe non-alienation clause and about the agreement in favour of the plaintifffor Rs.50,000/-. At the time of the agreement, there was a shed on thesite. It was agreed to execute sale deed in favour of the plaintiff aftergetting the absolute sale from the BDA. The BDA was supposed toexecute the sale deed after the 10-year lease period. The plaintiff had not taken any steps to waive-off the non-alienation clause for the periodGof 10 years. His father gave consent to the BDA to issue the sale deedonly in his name. He knew the appellant from June, 1996. The name ofthe broker-Bettana, is spoken to by him. He speaks about handing overof xerox copies to DW1. The second defendant had met him twice inJune, 1996. Appellant when he met DW2 for the second time, showedHhis interest to purchase the property in September, 1996 for Rs.4,50,000/

-. Appellant took time till September, 1996 to ascertain whether he wasin possession and to mobilise funds. Entire amount of Rs.4,50,000/- waspaid in cash. DW2 owned a residential house at Arti Nagar in JudgesColony. The said property was standing in the name of his father. Heowned an industrial site. He did not own any residential property inBangalore apart from the residential property. Since, plaintiff was nothaving any right, they did not inform the appellant regarding the pendencyof the Suit. The plaintiff never asked his mother to alienate the suitproperty before expiry of the non-alienation period. He took duplicatePossession Certificate from BDA in June, 1996. He did not hand overthe transfer agreement executed by the BDA at the time of sale infavour of the appellant. His father was present, when appellant met himtwice. His mother has not given any application to the BDA to waive-off the non-alienation clause. He denied the suggestion that possessionwas handed over to the plaintiff on the date of agreement. There is nodocument to show that he has received Rs.4,50,000/- from the seconddefendant. There is reference to a site as Koramangala being allotted tohim and it being cancelled by the High Court. He is confronted with theagreement to sell the said site in favour of another person (P-19).

THE FINDINGS BY THE TRIAL COURT

THE FINDINGS BY THE TRIAL COURT

46. Seven issues were struck by the Trial Court. Thereafter, twoadditional issues were also raised, of which, the first additional issuewas whether the second defendant, second Legal Representative ofdeceased defendant, ‘proved that the proved sale agreement’ is void.The Trial Court found the agreement dated 17.11.1982 as proved. Itfurther found that the plaintiff has not proved that plaintiff was put inpossession. It was further found that till the year 1989, the first defendantwas unable to take an absolute sale deed from the BDA and, therefore,unable to execute the sale deed in response to the communication sentby the plaintiff. It was further found that since the first defendant wasnot able to get the sale deed from the BDA, she could not cancel theagreement unilaterally. It was further found that the plaintiff ought tohave waited till the expiry of the lease period. It was found, however,that the plaintiff was always ready and willing, however, at the sametime, the first defendant was not in breach. It was further found thatthere was no iota of evidence to prove that the defendant had tried tosell the property in favour of the third party. It was further found thatthere was no oral agreement of sale for Rs.1,50,000/- and the plaintiff AB

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Awas not in breach. This aspect was found against the first defendant. Itwas found that the second defendant was a bonafide purchaser of thesite for value without notice of the earlier agreement of sale as well aspendency of the Suit. It was further found that in view of the allotmentand the lease-cum-sale agreement, the plaintiff had no right to file theSuit so as to enforce the agreement to sell during the year 1985. TheBplaintiff ought to have waited till year 1989. The first defendant died on18.07.1994 without obtaining the absolute sale deed from the BDA. Afterher death, property stood transferred in favour of her son and the sonsold it to the appellant. On 17.09.1996, when the sale took place, thepredecessor in interest of the second defendant was not a party. TheCsuit property was sold to the second defendant for a huge saleconsideration of Rs. 4,50,000/-. There was no cause of action to institutethe Suit. On these findings, inter alia, the Trial Court partly decreed theSuit by ordering return of Rs.50,000/- along with 9 per cent interest perannum by defendants 1(a) and 1(b). The relief of permanent injunctionwas rejected.D

PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS

47. The principle of in pari delicto potior est conditiodefendentis is a maxim which we must bear in mind. We need onlynotice the following discussion by this Court. The decision of this CourtEin Kedar NathMotani(supra) comes to mind:

“9. … Where both parties do not show that there was anyconspiracy to defraud a third person ought to commit any otherillegal act, the maxim, in pari delito etc., can hardly be madeapplicable. …”F48. This Court in Kedar Nath Motani(supra) also referred tothe following statement by Lord Mansfield in Holman v. Johnson[3],wherein it was held as follows:

“12. The law was stated as far back as 1775 by Lord Mansfieldin Holman v. Johnson [(1775) 1 Cowp 341, 343 : 98 ER 1120,G1121] in the following words:

“The principle of public policy is this; ex dolo malo nonoritur actio. No Court will lend its aid to a man who foundshis cause of action upon an immoral or an illegal act. If, from H3 [1775 1 COWP 341]

the plaintiff’s own stating or otherwise, the cause of actionappears to arise ex turpi causa, or the transgression of apositive law of this country, there the Court says he has noright to be assisted. It is upon that ground the Court goes; notfor thesake of the defendant, but because they will not lendtheir aid to such aplaintiff. So if the plaintiff and defendantwere to change sides, and the defendant was to bring his actionagainst the plaintiff, the latter would then have the advantageof it; for where both are equally in fault, potior est conditio”defendentis.

There are, however, some exceptions or “supposed exceptions”to the rule of turpi causa. In Salmond and William on Contracts,four such exceptions have been mentioned, and the fourth of theseexceptions is based on the right of restitutio in integrum, wherethe relationship of trustee and beneficiary is involved. Salmondstated the law in these words at p. 352 of his Book (2nd Edn.):

“So if A employs B to commit a robbery, A cannot sue Bfor the proceeds. And the position would be the same if Awere to vest property in B upon trust to carry out somefraudulent scheme: A could not sue B for an account of theprofits. But if B, who is A’s agent or trustee, receives on A’saccount money paid by C pursuant to an illegal contract betweenA and C the position is otherwise and A can recover the propertyfrom B, although he could not have claimed it from C. In suchcases public policy requires that the rule of turpis causa shallbe excluded by the more important and imperative rule thatagents and trustees must faithfully perform the duties of theiroffice.”

Williston in his Book on Contracts (Revised Edn.), Vol. VI, hasdiscussed this matter at p. 5069, para 1785 and in paras 1771 to1774, he has noted certain exceptional cases, and has observedas follows:

“If recovery is to be allowed by either partner or principalin any case, it must be where the illegality is of so light orvenial a character that it is deemed more opposed to publicpolicy to allow the defendant to violate his fiduciary relationwith the plaintiff than to allow the plaintiff to gain the benefitof an illegal transaction.”

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AEven in India, certain exceptions to the rule of turpi causa havebeen accepted. Examples of those cases are found in PalaniyappaChettiar v. Chockalingam Chettiar [(1920) ILR 44 Mad 334]and Bhola Nath v. Mul Chand [(1903) ILR 25 All 639].”

49. We may also notice the following statement by this Court inBKedar Nath Motani(supra):

“15. The correct position in law, in our opinion, is that what onehas to see is whether the illegality goes so much to the root of thematter that the plaintiff cannot bring his action without relyingupon the illegal transaction into which he had entered. If the illegalityCbe trivial or venial, as stated by Williston and the plaintiff is notrequired to rest his case upon that illegality, then public policydemands that the defendant should not be allowed to takeadvantage of the position. A strict view, of course, must be takenof the plaintiff’s conduct, and he should not be allowed tocircumvent the illegality by resorting to some subterfuge or byDmis- stating the facts. If, however, the matter is clear and theillegality is not required to be pleaded or proved as part of thecause of action and the plaintiff recanted before the illegal purposewas achieved, then, unless it be of such a gross nature as to outragethe conscience of the Court, the plea of the defendant should notEprevail.”50. In Sita Ram v. Radhabai and others4, this Court observed asfollows:

“11. The principle that the Courts will refuse to enforce anillegal agreement at the instance of a person who is himself aFparty to an illegality or fraud is expressed in the maxim in parideucto portior est conditio defendentis. But as stated in Anson’sPrinciples of the English Law of Contracts, 22nd Edn., p. 343:there are exceptional cases in which a man will be relieved of theconsequences of an illegal contract into which he has entered —Gcases to which the maxim does not apply. They fall into threeclasses: (a) where the illegal purpose has not yet been substantiallycarried into effect before it is sought to recover money paid orgoods delivered in furtherance of it; (b) where the plaintiff is notin pari delicto with the defendant; H4 AIR 1968 SC 534

(c) where the plaintiff does not have to rely on the illegality tomake out his claim’.

51. In Narayanamma(supra), this Court was considering a Suitfor specific performance, which was resisted on the ground that theagreement to sell was contrary to the provisions of the Statute. Section61 of the Karnataka Land Reforms Act, 1961 provided that no land forwhich occupancy was granted, shall within 15 years of the order of theTribunal, be transferred by sale, inter alia. A partition was permitted.Equally, a mortgage could be effected to secure a loan. Drawing supportfrom Judgment of this Court in Kedar Nath(supra), this Court, interalia, as follows:

“15. The three-Judge Bench of this Court, after referring to theaforesaid judgments, speaking through M. Hidayatullah, J. (as hisLordship then was), observes thus: (Kedar Nath Motani case[Kedar Nath Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR1960 SC 213] , AIR pp. 218-19, para 15)

“15. The correct position in law, in our opinion, is that whatone has to see is whether the illegality goes so much to theroot of the matter that the plaintiff cannot bring his actionwithout relying upon the illegal transaction into which he hadentered. If the illegality be trivial or venial, as stated by Willistonand the plaintiff is not required to rest his case upon that illegality,then public policy demands that the defendant should not beallowed to take advantage of the position. A strict view, ofcourse, must be taken of the plaintiff’s conduct, and he shouldnot be allowed to circumvent the illegality by resorting to somesubterfuge or by misstating the facts. If, however, the matteris clear and the illegality is not required to be pleaded or provedas part of the cause of action and the plaintiff recanted beforethe illegal purpose was achieved, then, unless it be of such agross nature as to outrage the conscience of the Court, theplea of the defendant should not prevail.”

16. It could thus be seen, that this Court has held that the correctposition of law is that, what one has to see is whether the illegalitygoes so much to the root of the matter that the plaintiff cannotbring his action without relying upon the illegal transaction intowhich he had entered. This Court further held, that if the illegalityis trivial or venial and the plaintiff is not required to rest his case A

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Aupon that illegality, then public policy demands that the defendantshould not be allowed to take advantage of the position. It hasfurther been held, that a strict view must be taken of the plaintiff’sconduct and he should not be allowed to circumvent the illegalityby resorting to some subterfuge or by misstating the facts.However, if the matter is clear and the illegality is not required toBbe pleaded or proved as part of the cause of action and the plaintiffrecanted before the illegal purpose is achieved, then, unless it beof such a gross nature as to outrage the conscience of the Court,the plea of the defendant should not prevail.”

52. InNarayanamma(supra), this Court further held as follows:C

52. InNarayanamma(supra), this Court further held as follows:C

“24. The transaction between the late Bale Venkataramanappaand the plaintiff is not disputed. Initially the said BaleVenkataramanappa had executed a registered mortgage deed infavour of the plaintiff. Within a month, he entered into an agreementto sell wherein, the entire consideration for the transfer as well asDhanding over of the possession was acknowledged. It could thusbe seen, that the transaction was nothing short of a transfer ofproperty. Under Section 61 of the Reforms Act, there is a completeprohibition on such mortgage or transfer for a period of 15 yearsfrom the date of grant. Sub-section (1) of Section 61 of the ReformsEAct begins with a non-obstante clause. It is thus clear that, theunambiguous legislative intent is that no such mortgage, transfer,sale, etc. would be permitted for a period of 15 years from thedate of grant. Undisputedly, even according to the plaintiff, thegrant is of the year 1983, as such, the transfer in question in theyear 1990 is beyond any doubt within the prohibited period of 15Fyears. Sub-section (3) of Section 61 of the Reforms Act makesthe legislative intent very clear. It provides, that any transfer inviolation of sub-section (1) shall be invalid and it also provides forthe consequence for such invalid transaction.

25. Undisputedly, both, the predecessor- in-title of the defendant(s)Gas well as the plaintiff, are confederates in this illegality. Both, theplaintiff and the predecessor-in-title of the defendant(s) can besaid to be equally responsible for violation of law.

26. However, the ticklish question that arises in such a situationis:”the decision of this Court would weigh in side of which party”?

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As held by Hidayatullah, J. in Kedar Nath Motani [Kedar NathMotani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960 SC 213] ,the question that would arise for consideration is as to whetherthe plaintiff can rest his claim without relying upon the illegaltransaction or as to whether the plaintiff can rest his claim onsomething else without relying on the illegal transaction.Undisputedly, in the present case, the claim of the plaintiff is entirelybased upon the agreement to sell dated 15- 5-1990, which is clearlyhit by Section 61 of the Reforms Act. There is no other foundationfor the claim of the plaintiff except the one based on the agreementto sell, which is hit by Section 61 of the Act. In such a case, asobserved by Taylor, in his “Law of Evidence” which has beenapproved by Gajendragadkar, J. in ImmaniAppa Rao [ImmaniAppa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 :AIR 1962SC 370] , although illegality is not pleadedby thedefendant nor sought to be reliedupon him by way of defence,yet the Court itself, upon the illegality appearing upon the evidence,will take notice of it, and will dismiss the action ex turpi causanon oritur actio i.e. no polluted hand shall touch the pure fountainof justice.Equally, as observed in Story’s Equity Jurisprudence,which again is approved in Immani Appa Rao [Immani AppaRao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 : AIR1962 SC 370], where the parties are concerned with illegalagreements or other transactions, courts of equity following therule of law as to participators in a common crime will not interposeto grant any relief, acting upon the maxim in pari delicto potiorest conditio defendentis et possidentis.”

53. This Court inNarayanamma(supra) finally found as follows:“28. Now, let us apply the other test laid down in Immani AppaRao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962)3 SCR 739 : AIR 1962 SC 370] . At the cost of repetition, both theparties are common participator in the illegality. In such a situation,the balance of justice would tilt in whose favour is the question.As held in Immani Appa Rao [Immani Appa Rao v. GollapalliRamalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , if thedecree is granted in favour of the plaintiff on the basis of an illegalagreement which is hit by a statute, it will be rendering an activeassistance of the court in enforcing an agreement which is contrary AB

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Ato law. As against this, if the balance is tilted towards thedefendants, no doubt that they would stand benefited even in spiteof their predecessor-in-title committing an illegality. However, whatthe court would be doing is only rendering an assistance which ispurely of a passive character. As held by Gajendragadkar, J. inImmani Appa Rao [Immani Appa Rao v. GollapalliBRamalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , the firstcourse would be clearly and patently inconsistent with the publicinterest whereas, the latter course is lesser injurious to public interestthan the former.”

CASES OF CONDITIONAL DECREE OF SPECIFICCPERFORMANCE

54. The decision, which first comes to mind and is oft quoted, isthe decision of the Privy Council inMotilal v. Nanhelal5. The Court, inthe said case, affirmed the decision of the Judicial Commissioner,decreeing a Suit for Specific Performance, taking note of Section 50 ofDthe Central Provinces Act of 1920, which read as follows and the Court,inter alia, held as follows thereafter:

“If a proprietor desires to transfer the proprietary rights in anyportion of his sir land without reservation of the right of occupancyspecified in s. 49, he may apply to a revenue-officer and, if suchErevenue- officer is satisfied that the transferor is not wholly ormainly an agriculturist, or that the property is self-acquired or hasbeen acquired within the twenty years past preceding, he shallsanction the transfer.”

In view of the above mentioned construction of the agreementsFof September 4, 1914— namely, that Sobhagmal agreed to transferthe cultivating rights in the sir land—there was, in their Lordships’opinion, an implied covenant on his part to do all things necessaryto effect such transfer, which would include an application to therevenue- officer to sanction the transfer.”

G55. In other words, in an agreement wherein the vendor agrees toconvey property, which is permissible only with the permission of someAuthority, the Court can, in appropriate cases, grant relief. We needonly notice two recent Judgments which have reiterated the principle,

the first of which is reported inVishwa Nath Sharma v. Shyam ShankerGoela and another6, which is relied upon, in fact, by the respondents.The decision of this Court, again relied upon by the respondents inFerrodous Estates (Pvt.) Limited v. Gopiratnam (Dead) and others7also reiterates the said view. In Ferrodous Estates(supra), the matterarose under the Tamil Nadu Urban Land (Ceiling and Regulation) Act,1978. The High Court, in the impugned Judgment, had dismissed the Suitfor Specific Performance, taking the view that till 1999, when the TamilNadu Urban Ceiling Act was repealed, the agreement was notenforceable. That apart, under the agreement of sale, vacant land, in theaggregate, exceeding the ceiling limit of the plaintiff, would have to beconveyed to him, attracting the VETO contained in Section 5(3) readwith Section 6 of the State Act. It was this view, which was reversed bythis Court, following the Judgments, which we have referred to whichrelate to conditional decrees. This result was arrived at by this Court,after finding that agreement to sell contemplated transfer of the landonly after getting exemption. Clause (4) of the Agreement contemplatedthat the vendor was to obtain permission from the Competent Authorityunder the Urban Land Ceiling Act. We need not multiply authorities. Allthat is necessary to notice and find is that when an agreement to sell isentered into, whereunder to complete the title of the vendor and for asale to take place and the sale is not absolutely prohibited but a permissionor approval from an Authority, is required, then, such a contract is, indeed,enforceable and would not attract the shadow of Section 23 of the IndianContract Act, 1872.

CERTAIN OTHER DECISIONS

56. We may examine some of the decisions, which have beenreferred to by the respondents. In the decision reported inT. Dase Gowdav. D. Srinivasaiah8, a Division Bench of the High Court of Karnatakawas considering the Suit for Specific Performance in the context of thevery Rules, which arise before us. The defendant/appellant in the saidcase, entered into an oral agreement with the plaintiff therein on01.09.1981, to sell the Suit site along with an incomplete structure. Thedefendant received certain amounts thereafter. This was followed by awritten agreement on 01.10.1981 wherein the defendant agreed to sell.

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AAccording to the plaint averments, the plaintiff was put in possessionand he completed the construction. It was the plaintiff’s further casethat he was dispossessed by the defendant. The High Court, under Point6, considered the question whether agreement was legally enforceable.The Court has referred to Rule 18 of the Rules, which, apparently, wasinvoked by the defendant. Answering the point, the Court took the viewBthat there was no transfer of interest, which results from an agreementto sell and, therefore, Rule 18(2)(a)(iii), did not apply, as there was noalienation on a mere agreement to sell being executed. The Courtdistinguished the decision, which was relied upon by the defendant in thesaid case and, interestingly, the appellant before us, viz., the decision ofCa learned Single Judge in K. ChandrashekarHegde v. Bangalore CityCorporationand N.B. Menon v.Bangalore Development Authority9.We may further notice that the high court in the said case took the viewthat a period of ten years had expired even during 1985 and there wasno impediment with reference to the enforceability, it was further found.It was next found that the plaintiff in the said case was, on evidence,Dfound residing in a rented house and that he had purchased the plaintschedule property for self- occupation. It was found that the buildingwhich was constructed was a residential one. It was, therefore concludedthat the element of public policy (public interest) was also not affected.The court granted decree for specific performance. In Yogambika V.ENarsingh[10], a Division Bench, followed the decision inT. Dase Gowda(supra), noting further that the earlier decision had been affirmed by thisCourt by the dismissal of the SLP by Order dated 17.07.1991. We maynotice also that, in its discussion, the Division Bench, has laid store bythe line of decisions commencing with Motilal(supra).

F57. In Subbireddy v. K.N. Srinivasa Murthy11, the question fellfor decision under Section (3) of the Karnataka Village Offices InamAbolition Act. The Single Judge found that under the agreement, thetransfer was to be effected only after the expiry of the period of non-alienation prescribed in Section 5(3) of the Act in question. This casemust be understood in the light of the Clause which contemplated theGsale being affected, after the expiry of the period, during which, thealienation was prohibited. The vendor was to take permission for theexecution of the sale deed.

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58. InSyed Zaheer and others v. C.V. Siddveerappa12, a DivisionBench decreed a Suit for Specific Performance wherein the agreementcontemplated execution of sale deed, after the period of non- alienationprescribed under the grant. The Suit was filed, in fact, after the lapse ofthe period of fifteen years.

59. In Balwant Vithal Kadam v. Sunil Baburaoi Kadam13, thisCourt rejected the contention that the agreement, which was sought tobe specifically enforced, fell foul of Section 48 of the MaharashtraCooperative Societies Act. It was found that an agreement to sell didnot create an interest in land unlike a sale.

60. In Punjab & Sind Bank v. Punjab Breeders Ltd. andanother14, this Court was dealing with a case of the effect of violationof the conditions, under which, a one-time settlement was extended.The conditions included the stipulation that the mortgaged property shouldnot be sold for three years without prior permission, inter alia. Anagreement to sell was found not to be a sale.

61. In Suraj Lamp & Industries (P) Ltd. (2) Through Directorv. State of Haryana and another15, this Court, while dealing with theeffect of what has been described as GPA Sales in Delhi, inter alia, andconsidering the scope of an agreement to sale, declared that “a transferof immovable property by way of sale, can only be by a Deed ofConveyance (Sale Deed)”. No title is transferred by a mere agreementto sell, it was further found.

62. In K. Chandrashekar Hegde(supra), which is relied uponby the appellant, a Single Judge of the High Court of Karnataka, wasdealing with batch of Writ Petitions. Among the issues, which prominentlyarose, was the objection taken to the construction of multi-storey buildings,wherein claims were made on the basis of allotment under the Act, asrepealed by the Bangalore Development Act and the Rules. The learnedSingle Judge has elaborately considered the scheme of the Rules. Hehas further explored the impact of the Forms prescribed under theAllotment Rules, 1964 and similar provisions were found in the subsequentRules. This Judgment has been distinguished by the Judgment inT. DaseGowda(supra).

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A63. Jambu Rao Satappa Kocheri v. Neminath AppayyaHanamannayar16 is an important decision. This Court was dealing witha Suit for Specific Performance. One of the questions, which arose waswhether the enforcement of the contract, would defeat the provisions ofthe Bombay Tenancy and Agricultural Lands Act, 1948. The appellantbefore this Court had agreed to sell 41 acres and odd of jairayat land.BUnder Section 5 of the Act, the ceiling area, inter alia, was prescribedas 48 acres of jairayat land. Section 34 of the Act provided as follows– “Subject to the provisions of Section 35, it shall not be lawful,with effect from the appointed day, for any person to hold, whetheras owner or tenant or partly as owner and partly as tenant, land inCexcess of the ceiling area”. Section 35 declared acquisition of land inexcess of the area prescribed in Section 34, as invalid. Section 84-C,reads as follows:

“(1) Where in respect of the transfer of acquisition of any landmade on or after the commencement of the amending Act, 1955,Dthe Mamlatdar suo motu or on the application of any personinterested in such land has reason to believe that such transfer oracquisition is or becomes invalid under any of the provisions ofthis Act, the Mamlatdar shall issue a notice and hold an inquiry asprovided for in Section 84-B and decide whether the transfer oracquisition is or is not invalid.E

(2) If after holding such inquiry, the Mamlatdar comes to aconclusion that the transfer or acquisition of land is invalid, heshall make an order declaring the transfer or acquisition to beinvalid.

F(3) On the declaration made by the Mamlatdar under sub-section (2),—

(a) the land shall be deemed to vest in the StateGovernment, free from all encumbrances lawfully subsistingthereon on the date of such vesting, and shall be disposedGof in the manner provided in sub-section

(4) ; ***”

64. The contention taken by the defendant was that the plaintiffwas already holding 31 acres and 2 guntas of jairayat land and, therefore, H16 AIR 1968 SC 1358

by acquiring the plaint schedule property by way of the decree theplaintiff, would hold land in excess of the ceiling area. We may noticethe following discussion with specific reference to Section 23 of theIndian Contract Act, in particular:

“6. By Section 23 of the Contract Act, consideration or objectof an agreement is unlawful if it is forbidden by law; or is of sucha nature that, if permitted, it would defeat the provisions of anylaw; or is fraudulent.Both the parties to the contract areagriculturists. By the agreement the appellant agreed to sell jirayatland admeasuring 41 acres 26 gunthas for a price of Rs 32,000.The consideration of the agreement per se was not unlawful, forthere is no provision in the Act which expressly or by implicationforbids a contract for sale of agricultural lands between twoagriculturists. Nor is the object of the agreement to defeat theprovisions of any law. The Act has imposed no restriction uponthe transfer of agricultural lands from one agriculturist to another.It is true that by Section 35 a person who comes to hold, after theappointed day, agricultural land in excess of the ceiling, the landshaving been acquired either by purchase, assignment, lease,surrender or by bequest, the acquisition in excess of the ceiling isinvalid. The expression “acquisition of such excess land shall beinvalid” may appear somewhat ambiguous. But when the schemeof the Act is examined, it is clear that the legislature has not declaredthe transfer or bequest invalid, for Section 84-C provides that theland in excess of the ceiling shall be at the disposal of theGovernment when an order is made by the Mamlatdar. Theinvalidity of the acquisition is therefore only to the extent to whichthe holding exceeds the ceiling prescribed by Section 5, and involvesthe consequence that the land will vest in the Government.

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8. An agreement to sell land does not under the Transfer ofProperty Act create any interest in the land in the purchaser. Byagreeing to purchase land, a person cannot be said in law to holdthat land. It is only when land is conveyed to the purchaser thathe holds that land. Undoubtedly the respondent was holding somearea of land at the date of the agreement and at the date of thesuit, but on that account it cannot be inferred that by agreeing topurchase land under the agreement in question his object was to A

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Ahold in excess of the ceiling. It was open to the respondent totransfer or dispose of the land held by him to another agriculturist.The Act contains no general restrictions upon such transfers, andunless at the date of the acquisition the transferee holds land inexcess of the ceiling, the acquisition to the extent of the excessover the ceiling will not be invalid. There is nothing in the agreement,Bnor can it be implied from the circumstances, that it was the objectof the parties that the provisions of the Act relating to the ceilingshould be transgressed. The mere possibility that the respondentmay not have disposed of his original holding at the date of theacquisition of title pursuant tothe agreement entered into betweenChim and the appellant will not, in our judgment, render the objectof the agreement such, that, if permitted, it would defeat theprovisions of any law. The Court, it is true, will not enforce acontract which is expressly or impliedly prohibited by statute,whatever may be the intention of the parties, but there is nothingto indicate, that the legislature has prohibited a contract to transferDland between one agriculturist and another. The inability of thetransferee to hold land in excess of the ceiling prescribed by thestatute has no effect upon the contract, or the operation of thetransfer. The statutory forfeiture incurred in the event of thetransferee coming to hold land in excess of the ceiling does notEinvalidate the transfer between the parties.

9. We hold that a contract for purchase of land entered intowith the knowledge that the purchaser may hold land in excess ofthe ceiling is not void, and the seller cannot resist enforcementthereof on the ground that, if permitted, it will result in transgressionFof the law.”

65. We may cull out the ratio in the following terms:

Whatever may be intention of the parties, acontract which isexpressly or impliedly prohibited by a Statute, may not be enforced bythe Court. The Bombay Act did not prohibit a contract of sale ofGagricultural land between two agriculturists. The invalidity of theacquisition of land in excess, involved the consequence that the landwould vest in the Government. In the context of the said Act, the Courthas taken the view that a person can be said to hold land only when it isconveyed to him, which would not take place when there is a mereHagreement to sell. The further reasoning of the Court appears to be that it is open to the buyer to transfer or dispose of land already held by himto another agriculturist and unless at the date of acquisition, the buyerheld the land in excess of the ceiling limit, the acquisition to the extent ofthe excess over the ceiling, would not be invalid. It was further declaredthat the mere possibility that the respondent/buyer may not have disposedof his original holding on the date of acquisition of title under the agreementto sell, would not render the object of the agreement such that, if permitted,it would defeat the provisions of any law. Thus, the contract was foundto be not void.

66. This Judgment came to be followed inBhagat Ram v. Kishanand others17. In the said case, the question arose under Section 23 ofthe Delhi Rent Reforms Act, 1954, in a Suit for Specific Performance.Section 23 reads as follows:

“23. Use of holding for industrial purposes.—(1) ABhumidhar or Asami shall not be entitled to use his holding or partthereof for industrial purposes, other than those immediatelyconnected with any of the purposes referred to in Section 22,unless the land lies within the belt declared for the purpose by theChief Commissioner by a notification in the Official Gazette:

Provided that the Chief Commissioner may, on applicationpresented to the Deputy Commissioner in the prescribed manner,sanction the use of any holding or part thereof by a Bhumidharfor industrial purposes even though it does not lie within such abelt.”

67. This Court in Bhagat Ram(supra) held as follows:

“5. Bhumidhari right is transferable and the Defendant 1 isentitled to use the land even for the purpose other than thoseenumerated in Section 22 if he obtains permission of the ChiefCommissioner. Therefore, the agreement for transfer of land doesnot become invalid by itself. The Defendant 1 after obtaining theproperty could use it for the intended purpose on obtainingpermission of the Chief Commissioner or if no such permissionwas obtained, he could use the land for the purposes authorisedunder Section 22 of the Act. In our opinion, the High Court wentwrong in holding that the agreement was opposed to public policy A

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Aor transfer under the agreement was hit by Section 23 of the Act.Support for our view is available from the decision of this Court inJambu Rao Satappa Kocheri v. Neminath AppayyaHanammannaver [AIR 1968 SC 1358 : (1968) 3 SCR 706] . Thesuit by the plaintiff for declaration that the agreement is bad hadrightly been dismissed by the trial court as also the first appellateBcourt and the High Court on an erroneous view reversed the same.In our opinion the suit is liable to be dismissed.”

68. We have set out the provisions of the Rules and the lease-cum-sale agreement. Before we deal with the question as to whetherthe agreement in question, falls foul of Section 23 of the Indian ContractCAct, we shall deal with the contention raised by the respondent thatthere is no law, as understood in this case, which would be defeated bythe agreement and what is holding the field is only the Rules. It is truethat this Court in Union of India v. Col. L.S.N. Murthy[18], has observedas follows:D“17. In Pollock & Mulla, Indian Contract and Specific ReliefActs, 13th Edn., Vol. I published by LexisNexis Butterworths, it isstated at p. 668:

“The words ‘defeat the provisions of any law’ must be takenas limited to defeating the intention which the legislature hasEexpressed, or which is necessarily implied from the express termsof an Act. It is unlawful to contract to do that which it is unlawfulto do; but an agreement will not be void, merely because it tendsto defeat some purpose ascribed to the legislature by conjecture,or even appearing, as a matter of history, from extraneous evidence,such as legislative debates or preliminary memoranda, not formingFpart of the enactment.”

It is thus clear that the word “law” in the expression “defeat theprovisions of any law” in Section 23 of the Contract Act is limitedto the expressed terms of an Act of the legislature.”

G69. With respect, the principle laid down, does not commend itselfto us. We do agree that the illegality cannot be a matter of conjecturenor the purpose divined by the Court from parliamentary debates. Butthat is not to say that as found by this Court in AIR 1968 SC 1358(supra), which decision was not considered by this Court, that it cannot H18 (2012) 1 SCC 718

be implied. But we must find that the Court was dealing with a Notification,which was, in fact, a ‘letter’ written by the Government of India. Wecan have no quarrel with the proposition that a ‘letter’ cannot be lawwithin the meaning of Section 23 of the Indian Contract Act. The Court,in the said case, was not dealing with Subordinate Legislation in theform of Statutory Rules. The Rules in question before us are, undoubtedly,Statutory Rules. Therefore, we do not think it is necessary for us torefer the matter to a larger Bench on account of the observations foundin the Judgment in paragraph-17. What is contemplated under Section23 of the Indian Contract Act is law, in all its forms, being immunisedfrom encroachment and infringement by a contract, being enforced. Notonly would a Statutory Rule be law within the meaning of Article 13 ofthe Constitution of India but it would also be law under Section 23 of theIndian Contract Act.

70. Section 10 of the Contract Act declares as to what agreementsare contracts and all agreements are declared contracts, if they aremade by the free consent of parties competent to contract with a lawfulconsideration and with the lawful object and not expressly declared tobe void under the Contract Act. Section 23 must be read with Section10. Without the illustrations, Section 23, reads as follows:

“23. What consideration and objects are lawful, and what not. —The consideration or object of an agreement is lawful, unless—— The consideration or object of an agreement is lawful, unless—” it is forbidden by law; [14 ]or is of such a nature that, if permitted,it would defeat the provisions of any law; or is fraudulent; orinvolves or implies, injury to the person or property of another; orthe Court regards it as immoral, or opposed to public policy. Ineach of these cases, the consideration or object of an agreementis said to be unlawful. Every agreement of which the object orconsideration is unlawful is void.”

71. The very first head under which an agreement become unlawfulis, when the consideration or object of agreement is forbidden by law. Inregard to the same, we may notice the view of a Bench of three learned19Judges in GherulalParakh v. Mahadeodas Maiya and others.Therein, quoting from Pollock and Mullah from their work Indian ContractAct, this Court has stated as follows:

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An act or undertaking is equally forbidden by law whether itviolates a prohibitory enactment of the Legislature or a principleof unwritten law. But in India, where the criminal law is codified,acts forbidden by law seem practically to consist of acts punishableBunder the Penal Code and of acts prohibited by special legislation,or by regulations or orders made under authority derived from theLegislature.”

(Emphasis supplied)

72. In regard to the Commentary by the very same Author, underCthe Second Head of “illegal object or consideration” in Section 23 of theContract Act, viz., if the consideration or object is of such a nature thatif permitted, it would defeat the provisions of any law, it is that, thisCourt took the view that law for the purpose of Section 23 would be, lawmade by the Legislature. Quite apart from the fact that what is involvedin the said case was only a letter, the Judgment of this Court inGherulalDParakh(supra) and the Commentary from the very same Author, wasnot noticed by this Court. Therefore, it becomes all the more reason asto why we need not refer the matter to a larger Bench. We may alsonotice that ‘law’, for the purposes of Clauses (1) and (2) cannot bedifferent. It is very clear that Regulations or Orders made under theEAuthority derived from the Legislature referred to by this Court, arespecies of subordinate legislation. Statutory Rules would also, therefore,clearly be law.

73. In the facts of this case, the question would, therefore, be, asto whether the enforcement of the agreement to sell dated 17.11.1982,expressly or impliedly, lead to palpably defeat the law in question, whichFis contained in the Statutory Rules or is prohibited by the same.

74. A contract may expressly or impliedly, be prohibited byprovisions of a law. The intentions of the parties do not salvage such acontract. [See AIR1968 SCC 1328(supra)]. What is involved in thiscase, may not be a mere case of a conditional decree for specificGperformance being granted as was the case in the line of decisionscommencing with Motilal(supra) and ending with Ferrodous Estates(supra). The Rules contemplate a definite scheme. Land, which isacquired by the Public Authority, is meant to be utilised for the particularpurpose. The object of the law is to invite applications from eligibleHpersons, who are to be selected by a Committee and the sites are allotted

to those eligible persons, so that the chosen ones are enabled to put upstructures, which are meant to be residential houses. It is implicit in theRules, and what is more, in the lease-cum-sale agreement, that theallottee, who is treated as a lessee under Rule 7, will remain in possessionand, what is more, proceed to fulfil his obligation under the lease-cum-sale agreement and the Rules. The obligations of the allottee/lessee areunambiguous. He has held himself out to be in dire need of a plot of landfor the purpose of constructing a residential building. He has to disclosehis annual income and any other means indicating his capacity, not onlyto purchase the site applied for but also to construct the house. He hasto respond to the query as to whether any member of the family, ofwhich he is a member, owns or has been allotted a site or a house by theBoard or any other Authority, within the area under jurisdiction of theBoard. The applicant must, furthermore, disclose whether he alreadyowns a house or house site in the city or outside the city. Whether theapplicant’s wife, husband or minor child owns a house or house site, isanother matter, he must disclose. Incorrect information in any of thesematters, would entitle the Board to resume the site. Rule 11 specificallyannounces among the principles as relevant for selecting an applicantfor allotment, the income of the applicant to build the house on the sitefor his residence. No doubt, it is not applicable to certain classes, whichinclude the other backward classes. Rule 11(3) declares further that thenumber of years, the applicant has been waiting for allotment of a site,inter alia, as a relevant principle.

75. It may be true that as contended by Shri R. Basant, learnedsenior counsel for the respondent that despite the fact no building wasput up by the allottee, the BDA has not deemed it fit to cancel the allotment.We gather the impression that the BDA has been lax in the pursuit of thelofty goals of the law. We do not pursue the matter further as BDA isnot a party.

76. If the agreement between plaintiff and the first defendant istaken as it is and it is enforced, the following would be the consequences.The allotment to the first defendant was made on 04.04.1979. In fact,the first defendant was obliged, in law, to construct a residential buildingwithin two years under Rule 17(6). No doubt, the time could be extendedthereunder. But, at the time, the agreement dated 17.11.1982 was enteredinto, the first defendant was already in breach. The result, however, ofthe agreement dated 17.11.1982, is as follows:

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Under the agreement, the parties contemplated and haveexpressly provided that the plaintiff was to be put in possession ofthe site on the date of the agreement, i.e., on 17.11.1982. Did theDparties contemplate the construction of the building residential innature, for the purpose of which, the site was allotted to the firstdefendant? Is it not a clear case where enforcing the agreement,as it is, would necessarily result in the first defendant not acting inaccordance with lease-cum-sale agreement, which, she enteredinto with the BDA and, what is even more crucially important,Eagainst the mandate of the law, as contained in the Rules, whichcontemplated that the allotment was made for the construction ofa residential building by the allottee and the construction was tobe completed within the period of two years or an extended period?The agreement between the parties contemplated giving a shortFshrift to the mandate of the law. This is clear from the fact thatunder the agreement, the first defendant was obliged to sell thesite as it is. Construction of the building became a practicalimpossibility. The price, which was agreed upon, was qua the sitealone. The consideration and the other terms of the agreement, inother words, ruled out the possibility of a residential building beingGconstructed by the first defendant, who as the allottee, was, underthe law, obliged to construct the building. Assuming for a momentthat the construction was put up, which assumption must bepremised on possession not being handed over to the plaintiff andwhich is contrary, not only to the terms of the agreement, but alsoHpleading of the plaintiff and the consistent stand in the evidence D

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adduced on behalf of the plaintiff and even proceeding, however,on the basis that as found by the Trial Court, that the plaintiff hasfailed to establish that possession was handed over to him on thedate of agreement and that the possession continued with the firstdefendant, the terms of the agreement, which included, the pricebeing fixed for conveying the right for the site, necessarily, wouldhave the effect of freezing the first respondent in even attemptingto put up a construction.

77. We, therefore, reject the contention of the plaintiff that therewas nothing, which could have prevented putting up a building. Theargument of plaintiff involves rewriting of the contract. This is differentfrom a situation where an allottee, without being trammelled by anagreement, is unable to put up a building even for the whole of ten yearsand action is not taken under Rule 17(6) and yet conveyance is made inhis favour under Rule 17(7). The direct impact of the agreement is thatit compelled the party to abstain from performing its obligation in lawapart from breaching the agreement with BDA. In other words, takingthe agreement as it is, it necessarily would be in the teeth of the obligationin law of the first respondent to put up the construction. The agreementto sell involved clearly terms which are impliedly prohibited by law inthat the first defendant was thereunder to deliver title to the site andprevented from acting upon the clear obligation under law. This is aclear case at any rate wherein enforcing the agreement unambiguouslyresults in defeating the dictate of the law. The ‘sublime’ object of thelaw, the very soul of it stood sacrificed at the altar of the bargain whichappears to be a real estate transaction. It would, in other words, in allowingthe agreement to fructify, even at the end of ten-year period of non-alienation, be a case of an agreement, which completely defeats the lawfor the reasons already mentioned.

78. Going by the recital in the agreement entered into betweenthe plaintiff and the first defendant, possession is handed over by thefirst defendant to the plaintiff. The original Possession Certificate is alsosaid to be handed over to the plaintiff. The agreement, even accordingto the plaintiff, contemplated that within three months of conveyance ofthe site in favour of the first defendant, the first defendant was to conveyher rights in the site to the plaintiff. It is quite clear that the partiescontemplated a state of affairs which is completely inconsistent withand in clear collision with the mandate of the law. On its term, it standsout as an affront to the mandate of the law.

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A79. The illegality goes to the root of the matter. It is quite clearthat the plaintiff must rely upon the illegal transaction and indeed reliedupon the same in filing the suit for specific performance. The illegality isnot trivial or venial. The illegality cannot be skirted nor got around. Theplaintiff is confronted with it and he must face its consequences. Thematter is clear. We do not require to rely upon any parliamentary debateBor search for the purpose beyond the plain meaning of the law. Theobject of the law is set out in unambiguous term. If every allottee chosenafter a process of selection under the rules with reference to certainobjective criteria were to enter into bargains of this nature, it willundoubtedly make the law a hanging stock.C

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80. To elucidate the matter a little further, let us take anotherexample. If the agreement was entered into by the first defendant, underwhich, the first defendant would abide by her obligations, both under thelease-cum-sale agreement and, more importantly, the Rules and were toput up a building and the agreement contemplated, conveying the siteDalong with the building, to a buyer after the expiry of ten years and upongetting the conveyance from the BDA, such an agreement, perhaps,being not an alienation in itself, may have passed muster.

81. At this juncture, we must also deal with the argument of theplaintiff that the agreement to sell is not a sale and, what is prohibitedEunder the Rules and lease-cum-sale agreement, was only alienation.There can be no quarrel with the proposition that no interest in propertycould be conveyed by a mere agreement to sell. But the question is,whether the agreement to sell in this case is in the teeth of Section 23 ofthe Contract Act. For reasons, which we have indicated, on a conspectusof the scheme of the Rules, we have no hesitation in holding that theFcontract was unenforceable for reason that it clearly, both expressly andimpliedly, would defeat the object of the Rules, which are statutory innature. The contract was patently illegal for reasons already indicated.

82. Now, let us look at it from a different perspective. Theagreement is dated 17.11.1982. We have noticed the correspondence byGthe plaintiff. We have also noticed the terms of the agreement betweenthe plaintiff and the first defendant. In the first letter sent by the plaintiffwhich incidentally was within four months of the date of agreement, theplaintiff called upon the first defendant to execute the sale deed. Thereis no mention about the first defendant attempting to sell the property toHanybody. It is noteworthy that the plaintiff has stated that he intends to

sell the property to his nominee. This further indicates that he was not aperson who was in need of this site for the purposes of putting up ofresidential building unlike even the plaintiff in the case considered by theHigh Court of Karnataka and relied upon by the plaintiff, namely, T.Dase Gowda v.D. Srinivasaiah (supra). We have already noticed thecommand of the law as contained in Rule 18(3) of the Rules read withRule 17. If an allottee who is treated as a lessee for reasons which areindicated in Rule 18(3) wishes to sell the site (which is applicable in thiscase as no building has been put up) then he can sell the site only as wasprovided in Rule 18(3), that is to say, if going by the correspondence bythe plaintiff wherein the first defendant was called upon to execute thesale deed of the site, this would be clearly in the teeth of Rule 18(3), thescope of which has already explained. The plaintiff could not have askedfor decree commanding the first defendant to sell the site in terms of thecorrespondence with which he began communicating with the firstdefendant. In other words, a sale of a site to any other person clearlystood prohibited and unless the allottee/lessee is compelled to sell in thecircumstances mentioned in Rule 18(3) the law permitted the sale of thesite only to the authority itself. Therefore, if the plaintiff wanted to enforcethe agreement for the sale of the site on an immediate basis it wouldclearly attract the embargo that it was completely prohibited.

IS THE SUIT PREMATURE? SCOPE OF ARTICLE 54OF THE LIMITATION ACT.

83. The further question which is raised by the second defendantis that the suit itself was pre-mature. We have found that the trial courthas entered into a clear finding that there is absolutely no evidence tosupport the projected apprehension that first defendant was about todispose of the property. There is no material to support the findingotherwise. In fact, any such sale would have been completely illegalbeing prohibited by law as that is the inevitable and necessary implicationflowing from Rule 18(3). There is absolutely no foundation for the plaintiffto have instituted the suit except perhaps the repudiation.

84. One of the contentions, which is raised by the learned Counselfor the second defendant is that, under Article 54 of the Limitation Act,1963, the period of limitation would begin to run from the time ofrepudiation of the agreement to sell only when the contract does notprovide for the time at which the contract is to be performed. In otherwords, the contention of the second defendant is that the agreement AB

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Adated 17.11.1982, contemplated, even according to the plaintiff, in Clause4 that the first defendant must convey the title within a period of threemonths from the date on which, BDA conveyed the title to her. Accordingto the second defendant, therefore, in this case, the time for performanceof the obligation by the vendor, was fixed. Therefore, there was no needfor the plaintiff and, what is more, no justification for the plaintiff, to instituteBthe Suit prematurely, almost four years prior to the appointed date.

85. Article 54 of the Limitation Act, reads as follows:

“54. Suits for Specific Performance. 3 years. The date fixed forthe performance, or, if no such date is fixed, when the plaintiffChas notice that performance is refused.”

86. Article 54 contemplates that when a date is fixed for theperformance of the contract, then, the period of limitation begins to runfrom that date. When such a date is not fixed in an agreement to sell,then, refusal or breach by the vendor will start the clock ticking.

D87. However, we may notice, in this regard, what the Court hasopined. InRamzan v. Hussaini20, a Bench of two learned Judges of thisCourt took the view that the word ‘date’ in Article 54, need not beexpressly mentioned in an agreement and it can be found out from theother terms of the agreement. If this were so, there may be merit in thesecond defendant contention. In a later decision, a Bench of three learnedEJudges in Ahmadsahab Abdul Mulla (2) (dead) v. Bibijan andothers21, has, however, taken the view that the word ‘the date’ in Article54, means that the specific date must be indicated in an agreement asthe date of performance. No doubt, the Court, in fact, went on todistinguish the earlier decision Ramzan v. Hussaini(supra) and held asFfollows:

“Para 5. In Tarlok Singh’scase (supra) the factual scenario wasnoticed and the case was decided after referring to Article 54 ofthe Schedule to the Act. Ramzan’s case (supra) related to thespecific performance of contingent contract. It was held that theGexpression “date fixed for performance” “need not beascertainable in the face of the contract deed and may beascertainable on the happening of a certain contingent eventspecified in the contract”.

20 (1990) 1 SCC 104H21 (2009) 5 SCC 462

Para 8. The judgments in Ramzan and Tarlok Singh cases (supra)were rendered in a different factual scenario and the discussionsdo not throw much light on the controversy at hand.

Para 11. The inevitable conclusion is that the expression “datefixed for the performance” is a crystallized notion. This is clearfrom the fact that the second part “time from which period beginsto run” refers to a case where no such date is fixed. To put itdifferently, when date is fixed it means that there is a definite datefixed for doing a particular act. Even in the second part the stressis on “when the plaintiff has notice that performance is refused”.Here again, there is a definite point of time, when the plaintiffnotices the refusal. In that sense both the parts refer to definitedates. So, there is no question of finding out an intention fromother circumstances.”

88. No doubt, the Court took the view, inter alia, that the Judgmentin Ramzan v. Hussaini (supra), was a case of a contingent contract. Itcould still be argued that the rights of the defendant were only that, if allwent well, and the BDA conveyed the title to her, she was to convey herrights within a period of three months. We would think that in the factsof this case, we need not disturb the finding of the High Court particularlywhen we find that the contract itself is unenforceable.

IS IT A NEW CASE?

89. Yet another objection raised by the plaintiff is that the Courtmust not permit the plea of the appellant that the contract was void orthat it was unenforceable and that it is a new point. Quite apart from thefact and ignoring even the same that before the Trial Court, the secondadditional issue was, as to whether the contract was void but not ignoringthe first point which was raised by the High Court, which was as towhether the Suit was maintainable, wherein the High Court has discussedthe matter, it appears to us to be a question of law, which is to be appliedto facts, which are not in dispute and, therefore, we reject the saidcontention. Even absent a plea by the defendant illegality by putting thecontract side by side with the Rules is writ large.

IMPACT OF ABSENCE OF PRAYER QUESTIONINGREPUDIATION BY FIRST DEFENDANT?

IMPACT OF ABSENCE OF PRAYER QUESTIONINGREPUDIATION BY FIRST DEFENDANT?

90. The second defendant has raised a contention that since thefirst defendant has repudiated the contract and as the plaintiff has not A

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Aprayed for a declaration that the repudiation was bad, the Suit would notlie. Reliance is placed on the judgment of this Court in I.S. Sikandar(Dead) by Lrs. v. K. Subramani and others22. In the said judgment,we find that this Court has taken the view that when the vendor hascancelled the agreement, it is incumbent upon the vendee to seek adeclaration that the cancellation was illegal. This is what the Court hasBheld:

“Para 36. Since the Plaintiff did not perform his part of contractwithin the extended period in the legal notice referred to supra,the Agreement of Sale was terminated as per notice dated28.03.1985 and thus, there is termination of the Agreement ofCSale between the Plaintiff and Defendant Nos. 1-4 w.e.f.10.04.1985.

Para 37. As could be seen from the prayer sought for in the originalsuit, the Plaintiff has not sought for declaratory relief to declarethe termination of Agreement of Sale as bad in law. In the absenceDof such prayer by the Plaintiff the original suit filed by him beforethe trial court for grant of decree for specific performance inrespect of the suit schedule property on the basis of Agreementof Sale and consequential relief of decree for permanent injunctionis not maintainable in law.”E91. The said view has been followed in the judgment of this Courtreported in Mohinder Kaur v. Sant Paul Singh23. We do not howeverneed to rest our decision to non-suit the plaintiff on this score in view ofour finding that the agreement dated 17.12.1982 should not be enforced.

LIS PENDENSF

92. The Doctrine of Lis Pendens is based on the maxim “pendentelite nihil innovetur”. This means that pending litigation, nothing newshould be introduced. Section 52 of the Transfer of Property Act, 1882(for short, ‘the TP Act’), which incorporates the Doctrine of Lis Pendens,is based on equity and public policy. It pours complete efficacy to theGadjudicatory mechanism. This is done by finding that any disposition ofproperty, as described in the Section by a party to the litigation will, innot any way, detract from the finality of the decision rendered by thecourt. It is clear that it is not based on the ground of Notice as laid down 22 (2013) 15 SCC 27H23 (2019) 9 SCC 358

by Lord Craanworth in Bennamy v. Sabine, which has been followedby the Privy Council in the decision in34 Indian Appeals 102. We maynotice the following discussion in this regard in “The Transfer of Property,by Mulla, 12[th ]Edition:

“The rule is, therefore, based not on the doctrine of notice, buton expediency, ie, the necessity for fine adjudication. It isimmaterial whether the alienee pendente lite had, or had not,notice of the pending proceeding. This is, of course, no longer thecase in England, or in Gujarat and Maharashtra, where the doctrineonly affects transactions pendente lite if the lis has been dulyregistered.”

93. It is further important to notice that when a transaction isdone, lis pendens or pending a case, the transaction is, as such, notannulled. The transaction is, in other words, not invalidated. In fact, asbetween the transferor and the transferee, it does not lie in the mouth ofthe transferor to set up the plea of lis pendens to defeat the dispositionof property. Equally, the Principle of Lis Pendens is, not to be confoundedwith the aspect of good faith or bonafides. In other words, the transfereeor the beneficiary of the property, which is disposed of by a party, cannotset up the case that he acted bonafide or in good faith. This enables thecourt and the parties in a Suit or a proceeding, which otherwise is inconformity with requirements of Section 52, to proceed in the matter onthe basis that the adjudication by the court, will not, in any way, besubverted or delayed, when the day of final reckoning arrives.

94. The cardinal and indispensable requirement, which flows bothfrom Section 52 and the principle, it purports to uphold, is that the transferor dealing of the property, which is the subject matter of the proceeding,is carried out by a party to the proceeding. Section 52 uses the word‘party’ twice. It refers to the disability of a party to transfer or otherwisedeal with the property, pending adjudication. This embargo is intertwinedwith the beneficiary of the veto against such transfer, being any otherparty thereto. In fact, the Special Bench of the Madras High Court inManjeshwara Krishnaya v. Vasudeva Mallya and Four Others24,puts the Doctrine of Lis Pendens as an extension of the Doctrine ofRes Judicata. Thus, the sine qua non for the Doctrine of Lis Pendensto apply is that the transfer is made or the property is otherwise disposed A

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Aof by a person, who is a party to the litigation. The Doctrine of LisPendens, only subject, however, the transfer or other disposition ofproperty to the final decision that is rendered. The person/party, whofinally succeeds in the litigation, can ask the court to ignore any transferor other disposition of property by any party to the proceeding. This issubject to the condition that transfer or other disposition is made duringBthe pendency of the lis.

95. The first defendant died pending the Suit on 06.08.1994. Herdeath was reported before the Court on 16.01.1995. The plaintiff broughton record, the husband of the first defendant by Order dated 25.08.1995,as defendant No. 1(a). Defendant No. 1(b), who is the son of the secondCdefendant, sold the property on 19.09.1996, in favour of the appellant. Itis thereafter that on 09.04.1997, the predecessor in interest of theappellant, viz., the son of the first defendant, and the second defendantwere impleaded on 09.04.1997. The transfer made in favour of thesecond defendant was, therefore, made at a time, when the son of theDfirst defendant was not a party to the Suit. Therefore, it is that thecontention was taken before the Trial Court successfully by appellantsthat the transfer in favour of the appellant was not hit by Doctrine of LisPendens.

96. The High Court in the impugned Judgment reversed this finding.EThe High Court, in doing so, employs, inter alia, the following reasoning:

“78. The position of law with regard to the rights and obligation ofa dead person can be succinctly stated thus: The rights which adead man thus leaves behind him vests in his representative. Theypass to some person whom the dead man, or the law on his behalf,Fhas appointed to represent him in the world of the living. Thisrepresentative bears the person of the deceased, and therefore,has vested in him all the inheritable rights, and has imposed uponhim all the inheritable liabilities of the deceased. Inheritance is insome sort a legal and fictitious continuation of the personality ofthe dead man, for the representative is in some sort identified byGthe law with him whom he represents. The rights which the deadman can no longer own or exercise in propria persona, and theobligations which he can no longer in propria persona fulfil, heowns, exercises, and fulfils in the person of a living substitute. Tothis extent, and in this fashion, it may be said that the legalHpersonality of a man survives his natural personality, until, his

obligations being duly performed, and his property duly disposedof, his representation among the living is no longer called for. Justas many of a man’s rights survive him, so also do many of hisliabilities; and these inheritable obligations pass to hisrepresentative, and must be satisfied by him. As far as the estateof a dead man is concerned, there are two class of persons whoare entitled to it, namely, creditors and beneficiaries. A beneficiarypossesses a dual capacity, while he may benefit by inheriting thedead man’s estate is also liable to the dead man’s obligations. Hesurvives even after his death, especially the obligations concerningimmovable property. The beneficiaries who are entitled to theresidue after satisfaction of the creditors, are of two classes: (1)those nominated by the last will of the deceased and (2) thoseappointed by the law in default of any such nomination. Theysucceed respectively by testamentary succession (ex testamento)or intestate succession (ab intestate) (source: Salmond onJurisprudence Twelfth Edition, P.J. Fitzgerald). Section 2(11) ofthe Code of Civil Procedure, 1908 (CPC) defines legalrepresentative to mean a person who in law represents the estateof a deceased person, and includes any person who intermeddleswith the estate of the deceased and where a party sues or is suedin a representative character the person on whom the estatedevolves on the death of • the party so suing or sued. The aforesaiddefinition is both exhaustive as well as an inclusive definition. It isexhaustive in the sense that a legal representative means a personwho in law represents the estate of immovable property. Thebeneficiaries who are entitled to the residue after satisfaction ofthe creditors, are of two classes: (1) those nominated by the lastwill of the deceased and (2) those appointed by the law in defaultof any such nomination. They succeed respectively bytestamentary succession (ex testamento) or intestate succession(ab intestate) (source: Salmond on Jurisprudence Twelfth Edition,P.J. Fitzgerald).”

97. Thereafter, the High Court proceeded to consider the distinctionbetween a legal representative as defined in Section 2(11) of the Codeof Civil Procedure, 1908 and legal heirs. Still further, the Court alsoconsidered the scheme of Order XXII of the CPC and finally proceedsto find as follows:

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A“79. … Even though defendant No. 1(b) was not arrayed alongwith his father as a legal heir of the deceased defendant No.1, thefact remains that the estate of defendant No.1, which also includesthe suit schedule property was represented through defendantNo. 1(a), the husband of defendant No.1. Therefore, the contentionthat the sale that was made by defendant No. 1(b) in favour ofBdefendant No.2 when defendant No. 1(b) was not a party to thesuit is not subject to any direction that may be issued in the suit,and that Sec. 52 of the Act would not apply in the instant case isnot a correct understanding of the position of law. Further, in theinstant case, defendant No.1(a) also did not inform the trial courtCthat his son was also a legal representative of deceased defendantNo.1 and therefore, he also ought to be brought on record as theheir of the deceased defendant No.1 when the application wasfiled by the plaintiff to bring only him on record as legal heir ofdeceased defendant No.1. Therefore, it is held that in ‘ the instantcase, the estate of the defendant No.1 was represented throughDdefendant No.1(a) in the suit and that the alienation made bydefendant No.1(b) to defendant No.2, even in the absence ofdefendant No.1(b) being made a party to the suit has nosignificance.

That apart, it is also noted from the evidence of defendantENo.2, who has deposed as DW-1, that when the talks for the saleof the suit property took place in June, 1996, defendant No.1(a)along with defendant No.1(b) and the broker Battanna werepresent. The reason as to why defendant No.1(a) did not discloseabout the pendency of the suit when he was by then arrayed asFthe legal heir of deceased defendant No.1 in the said suit is forobvious reasons. Defendant No.1(a) did not disclose about thependency of the suit to defendant No.2 only with an intention todeprive the right of the plaintiff in the suit property i.e., by creatingthird party rights in the said property. Also, it cannot be believedthat defendant No.1 (b), though not arrayed as a legalGrepresentative of deceased defendant No.1 (his mother) at thatpoint of time was totally unaware about the pendency of the suit.The legal heirs of deceased defendant No.1 namely her husbandand only son resided at the same address. Therefore, constructive,if not actual, notice has to be attributed to defendant No. l(b)Hregarding the pendency of the suit. By selling the same to defendant No.2 would result in plaintiff’s right being jeopardised. As alreadynoted from the evidence of DW-1 and 2, talks for the sale of thesuit site by defendant Nos.1 (a) and l(b) were held with defendantNo. in the first week of June, 1996. In fact, at that point of time,the BDA had not yet conveyed the site in the name of thedefendant No.1(b). BOA did so only on 14/06/1996. …”

The High Court has relied on the decision of the Madras High25Court in Nallakumara Goundan v. Pappayi Ammal and Another.In the said case, after the death of the party, a legal representativedisposed of the plaint schedule property within the period provided forsubstituting the dead person with the legal representative. It was in thesaid context held by the Madras High Court as under:

“…The same principle should, I think, apply to a case where ashere the original defendant died and the alienation was made afterhis death and before the filing of the application to bring his legalrepresentative on record. The suit must be deemed to be pendingagainst the legal persona of the deceased i.e., against his legalrepresentative and must be deemed to continue until at least theexpiration of the time limited by any law of limitation to bring himon record. Whether if an application is made long after theexpiration of the time fixed for bringing the legal representativeon record and an alienation is made by the legal representativeand later on the plaintiff in the action seeks to set aside theabatement and to bring the legal representative on record, andthat is ordered, the doctrine of lis pendens applies or not does notarise and need not be considered. There may be difficulties insuch a case, but where the alienation is made within the timeprescribed for bringing the legal representative on record, it is aclear case and there can be no doubt whatever that the rule doesapply…”

98. Thereafter, the Court concluded that in the circumstances,Section 52 of the TP Act squarely applied.

99. It would appear that the High Court has, in arriving at thefinding that the transfer in favour of the appellant is hit by lis pendens,taken into consideration the Doctrine of Notice/Constructive Notice.We have already observed that the Doctrine of Notice and Constructive 25 AIR 1945 Mad 219

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ANotice would be inapposite and inapplicable. Neither the fact that thetransferee had no notice nor the fact that the transferee acted bonafide,in entering into the transaction, are relevant for applying Section 52 to atransaction. This is unlike the requirement of Section 19(1)(b) of theSpecific Relief Act whereunder these requirements are relevant.

B100. The decision of the Madras High Court in NallakumaraGoundan(supra) turned on in its own facts as indicated by the saidcourt itself. In other words, that was a case where even within theperiod of limitation for substitution of the legal representative of adeceased party in a suit, the legal representative purported to deal withthe property. It was in the said context that the court proceeded to holdCthat lis pendens would apply. In this case the transfer in favour of thesecond defendant took place on 16.09.1996. The vendor and the vendeenamely defendant 1(b) and the second defendant were not parties onthe date of the transaction. They were impleaded only almost one yearthereafter. No doubt we are not oblivious to the role played by defendant D1(a) namely the husband of the first defendant who gave his ‘no objection’to the assignment of the entire rights in favour of his son namely defendant1(b) without which BDA could not have assigned the right in favour ofdefendant 1(b). Though not urged by the plaintiff, could it be said that asdefendant 1(a) was already a party and this must be treated as a casewere defendant 1(a) as ‘otherwise dealt’ with the property within theEmeaning of Section 52 without which the title would not vest in defendant1(b). A transfer which is made lis pendens it is settled law, is not a voiddocument. It does create rights as between the parties to the sale. Theright of the party to the suit who conveys his right by a sale is extinguished.All that Section 52 of the Transfer Property Act provides is that the Ftransfer which is made during the pendency of the proceeding is subjectedto the final result of the litigation. Even assuming for a moment that theconduct of defendant 1(a) the father of defendant 1(b), in giving a noobjection and thereby enabling defendant 1(b) to derive the title exclusivelyto the property and which title stood conveyed to the second defendant attracted, the principle of lis pendens, it would still not invalidate theGsale. At best, the plaintiff can contend that, should he be entitled for adecree of performancethe sale in favour of the second defendant shouldbe subjected to such decree. As far as the transfer is made by defendant1(b) to the second defendant in his own right and in so far as defendant1(b) was not a party and by the time the sale was effected the period ofHlimitation for impleading defendant 1(b) had already clearly expired even the principle laid down in the decision of the Madras High Court wouldnot apply and the High Court was not correct in finding that the sale bydefendant 1(b) in favour of second defendant was hit by lis pendens.

IS THE SECOND DEFENDANT, A BONAFIDEPURCHASER?

101. The Trial Court has found that the second defendant is abonafide purchaser. The High Court holds otherwise. The purchase ofthe Suit site is purported to be made by the second defendant on17.09.1996. The High Court, after going through the evidence, entersthe following findings.

The negotiations took place first time in June, 1996 and, at thattime, the Suit was pending. The BDA has not yet registered theconveyance in favour of defendant 1(b). Even before the BDAexecuted the sale deed in favour of defendant 1(b), he had decidedto enter into the agreement. The conveyance in favour of defendant1(b) was entered only on 14.06.1996 and he executed the saledeed in favour of the second defendant on 19.09.1996. The seconddefendant has deposed that he met not just DW2 along with thebroker but he had also met the father of DW2, viz., defendant1(a), who was arrayed as the legal representative of the firstdefendant. Only photocopies of documents were given to thesecond defendant before the sale. Defendant No.2 did not makeany inquiry about the original. It must be presumed that seconddefendant had notice of the agreement to sell the Site in respectof which the Decree for Specific Performance was sought. TheCourt, then, referred to Section 3 of the TP Act and brings in theconcept of constructive notice. Had the second defendant madeinquiries with regard to the original possession certificate, the truthwould have been revealed. Much is said about no inquiry is beingmade about the original possession certificate. The High Courtnotes that the agreement to sell with the plaintiff is not registeredbut, again, it draws inference from absence of inquires by thesecond defendant about why the original possession certificatewas not handed over to him. The fact that defendant 1(a) did notreveal to the second defendant about the pendency of the Suit, is,on the one hand noted but the Court holds that even then, thesecond defendant ought to have made inquiry about pendency of A

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Aany litigation. The fact that second defendant 1(b) as DW2 admittedthat he had no material to support the fact that he had receivedRs.4,50,000/-, was a very valuable in mid 1990s, if considered.

The Court questions the idea that second defendant who wasonly 20 years of age and involved in agricultural operations andBmilk vending business, who had no intention of settling in Bangalore,would have thought of purchasing a site in Bangalore. The amountof consideration was not deposited in any bank. The Courtproceeds to hold that on an overall reappreciation, it was foundthat he was not a bonafide purchaser for value without notice.CThereafter the High Court further proceeds to pose the question asto why the second defendant, who is the resident of NagamangalaTaluk, engaged in agricultural operation and milk vending business,should enter into an agreement in Bangalore, that too, when he is20 years old. Betanna-the alleged broker, was not examined.Thereafter, the High Court proceeds to even find that the entireDtransaction between defendant No. 1(b) and the second defendantis a sham transaction, made only to defeat the plaintiff. In thenext paragraph, however, applying Sections 3 and 54 of the TPAct, it is again found that the second defendant is not a bonafidepurchaser for value. Finally, it was found, by answering point No.2,Ethat second defendant is not a bonafide purchaser for value withoutnotice of the agreement to sell in favour of the plaintiff.

102. We must, in the first place, notice that on a perusal of theplaint, even after the amendment, there is no case set up by the plaintiffthat the sale deed executed in favour of the second defendant, is a shamFtransaction. A sale deed, which is a mere sham and a purchase, which isnot bonafide, are two different things. In the case of sham transaction,no title is conveyed to the purchaser. In the case a sale transaction,which is not a sham, the title of the transfer is, indeed, conveyed to thetransferee. A purchase may be bonafide or not bonafide. In a sale, whichis not a bonafide, words “bonafide sale”, is used in the context of pendingGSuit and from the point of view of Section 19(1)(b) of the SpecificPerformance Act. It is difficult to dub it as a sham transaction. Atransaction cannot be a sham transaction and a sale, which is afflictedwith absence of bonafides, at the same time. Even proceeding on thebasis that the second defendant was not a bonafide purchaser, it is notHthe same thing as holding that it is a sham transaction.

103. In the plaint, which was amended, the plaintiff has averred,inter alia, as follows:

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“10C.The Plaintiff submits that taking advantage of the factthat the son was not on record, the husband accorded noobjection in favour of the BDA so as to ensure that theSale Deed was executed in favour of HK Sudarshan aloneand thereafter the Second legal representative sold theSchedule Property in favour of the Second Defendant.The Plaintiff submits that the Defendants are aware ofthe pendency of the suit and of the subsistence of theAgreement of Bale in favour of the Plaintiff. The SaleDeed en executed in favour of the said person i.e., theSecond Defendant is hit by the Doctrine of lis pendensand the Second Defendant’s title to the Schedule Propertyis subject to the outcome of the present suit.

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10D.The Plaintiff submits that the Second Defendant is not aDbonafide purchaser for value. The sale in favour of theSecond Defendant is with the sole intention of complicatingthe matters in controversy and to prejudice the case ofthe Plaintiff. Therefore, the Plaintiff submits that the SaleDeed executed in favour of the Second Defendant doesnot in any way restrict the right of the Plaintiff to seekESpecific Performance of the Agreement of Sale executedin favour of the Plaintiff.”

104. Therefore, we are inclined to hold, in the first place that theHigh Court erred in finding that the transaction was a sham transaction.As far the question, as to whether second defendant was not a bonafidepurchaser, it is the case of the second defendant that the High Court haserred in not noticing that in the evidence, the second defendant deposedthat his vendor disclosed to him that the original possession certificatewas lost and produced duplicate possession certificate. This evidence isincongruous with the finding of the High Court that the second defendanthad not made any inquiry as to why the original possession certificatewas not handed over. The second defendant had deposed about inquirybeing made and being informed that the original possession certificatewas lost. The second defendant further complains that the High Courtitself has found that the vendor of the second defendant has admittedthat no information was given to the second defendant regarding the F

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Apendency of the Suit and, therefore, the High Court has erred in reversingthe finding of the Trial Court, which had found that inquiry as contemplatedin Section 3 of the TP Act had been made by the second defendant forpurchasing the property. Second Defendant had visited the Site. Thefinding based on defendant being 20-years old or the husband of thevendor, being an MLA, was pointed out to be irrelevant. It is further theBcase of the second defendant that construction was made and he isliving in the property since more than 17 years. The value of the propertyis stated to be about 2.5 crores.

105. Per contra, the learned Senior Counsel for the plaintiff, wouldsupport the finding of the High Court. It was pointed out that the HighCCourt is the final fact-finding Court.

106. We have already found that the sale in favour of the seconddefendant is wrongly found to be a sham transaction, a case, whicheven the plaintiff did not have. If it is not a sham transaction and theissue is, as to whether the second defendant, is not a bonafide purchaser,Dthe following aspect looms large.

107. We have already found that the agreement to sell dated17.11.1982, is to be painted with the brush of illegality and pronouncedunenforceable. It is undisputed that the plaintiff has paid Rs.50,000/- onthe strength of the said agreement. It would appear to be true that a partEof this amount was received on the date of the agreement. It may betrue that further amount were received by defendant 1(a), the husbandof the first defendant. The first defendant died pending the Suit. It iswhile the Suit was pending that defendant 1(b), the son of the firstdefendant, had executed the sale deed on 16.09.1996 in favour of theFsecond defendant. It is again undisputed that at the time when the saledeed was executed, both the second defendant and his vendor, defendant1(b), were not parties in the Suit. We have already found that the saledeed in favour of the second defendant, cannot be treated as a shamtransaction and the finding, in fact, on point No.2 by the High Court, alsothat the second defendant is not a bonafide purchaser. Once we comeGto the conclusion that the agreement, relied upon by the plaintiff, cannotbe enforced, as to whether, even proceeding on the basis that the sale infavour of the second defendant was made, not in circumstances whichwould entitle the second defendant to set up the case that he is a bonafidepurchaser, the question of granting relief to the plaintiff must first beHdecided. In other words, in view of the illegality involved in enforcing the agreement dated 17.11.1982, the question would arise, whether, onprinciples, which have been settled by this Court, the Court should assistthe plaintiff or the defendant. We have noted the state of the evidence,in particular, as it is revealed from the deposition of PW2. We havefound that the agreement, relied upon by the plaintiff, cannot be actedupon. In such circumstances, we would think that, even if we do notreverse the finding of the High Court that the second defendant is not abonafide purchaser, it will not itself advance the case of the plaintiff.This is for the reason that his case is in the teeth of the law, as found byus, making it an unenforceable contract. The plaintiff is seeking theassistance of the Court which must be refused.

108. We, therefore, need not explore further the complaint of thesecond defendant that the High Court erred in arriving at the finding thatthe second defendant was not a bonafide purchaser.

NOT A CASE UNDER ARTICLE 136?

109. Is it a case which should not be allowed under Article 136?The argument of the plaintiff is that having regard to the facts as itemerges this is not a fit case for this court to exercise its jurisdictionwhich originated from grant of special leave under Article 136. It isundoubtedly true that at both the stages namely while granting specialleave and also even after special leave has been granted under Article136 that is when the court considers an appeal the court would not beoblivious to the special nature of the jurisdiction it exercises. It is notaxiomatic that on a case being made otherwise that the court wouldinterfere. The conduct of the parties and the question as to whetherinterference would promote the interests of justice are not irrelevantconsiderations. Being the final court, it is not without reason that thiscourt is accordingly also clothed with the extraordinary powers underArticle 142 to do compete justice between the parties.

110. There is another aspect which is also projected by the plaintiffwhich must receive our attention. The plaintiff sought to persuade usshould the court find the agreement to sell unenforceable for the reasonthat it falls foul of Section 23 of the Contract Act, it may declare the lawbut not interfere with the judgment of the High Court.

111. We are of the view that on both these grounds we are notwith the plaintiff. It is not a case where the condition of the plaintiff issuch that the interests of justice would overwhelm our findings that the A

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Aagreement relied upon by the plaintiff constituted a clear intrusion intothe requirement of the law. In fact, we would consider the contract anopen and brazen instance of parties entering into a bargain with scantregard for the law. If that were not enough, the very first letter addressedto the first defendant dated 01.03.1983 betrays the real purpose of thecontract. The plaintiff in no uncertain terms has declared his intention toBsell the property to his nominee. It is clear as day light that the plaintiffhad no intention whatsoever to make use of the site for the purpose ofputting up a residential building. The communications indicate that theplaintiff was a contractor. The evidence of PW 2 his son further indicatedthat he has been in the business since 1960. What is even more revealingCis the admission relating to the properties belonging to or in the possessionof the plaintiff and his family members which we have dealt with. Thefinal nail in the coffin, as it were, is driven home in the case by showingthe case of the plaintiff in its true colours when PW 2 deposed that if thesuit is dismissed it would occasion ‘a monetary loss’. Thus, the bargainwas to buy up precious public land which was vested with the BangaloreDDevelopment Authority by acquiring it from some person with thelaudable object of housing a homeless person in Bangalore. The resultof the agreement being enforced would be to clearly frustrate the objectof the law and make the site the subject matter of a property deal withthe object of making a profit.E

112. The upshot of the above discussion is, we must hold that theHigh Court has clearly erred in holding that the Suit was maintainable.We would find that the Suit to enforce the agreement dated 17.11.1982,should not be countenanced by the Court.113. Then, the question would arise, as to the final Order to beFpassed in the facts. While, we are inclined to overturn the impugnedJudgment by holding that the Suit itself, was not maintainable, we mustnotice that the High Court had decreed the Suit on the appeal by theplaintiff. The defendants did not challenge the Decree of the Trial Court.Therefore, the setting aside of the Judgement of the High Court wouldGnot result in dismissal of the Suit. What is more, we are of the furtherview that to do complete justice between the parties, while we allow theappeals, we must pass an Order, which will result in a fair amount beingpaid to the plaintiff. Having regard to the entirety of the evidence andthe conduct of the parties, noticing even the admitted stand of the seconddefendant that the plaint schedule property has a value of Rs.2.5 croresH

and the plaintiff has paid, in all, a sum of Rs.50,000/, which constitutedthe consideration for the agreement to sell several years ago, while wedismiss the Suit for Specific Performance, we should direct the appellantsto pay a sum of Rs.20,00,000/- in place of the Decree of the Trial Court.

114. Accordingly, Appeals are allowed. The impugned Judgementshall stand set aside. The Suit for Specific Performance will standdismissed. There will be a Decree, however, for payment of Rs.20,00,000/-(Rupees twenty lakhs) by the appellants to the respondents (the LegalRepresentatives of the plaintiff) within a period of three months fromtoday. If the aforesaid amount is not paid as aforesaid, the appellantsshall be liable to pay interest at the rate of 8 per cent per annum after theexpiry of 3 months from today on the said amount as well. Parties aredirected to bear their respective costs.

Bibhuti Bhushan Bose

Appeals allowed.

(Assisted by : Shevali Monga, LCRA)

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