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Thursday, March 4, 2021

the FIR was rightly relied upon by the courts below as dying declaration on part of Ganeshram.- if the testimony of PW1-Sajan Bai is eschewed from consideration, the deposition of PW2-Saman Bai, along with the dying declaration of Ganeshram, completely clinch the matter against the appellants. Additionally, the recoveries of the weapons in question viz., lathi, sword and axe also lend sufficient corroboration to the case of the prosecution.

the FIR was rightly relied upon by the courts below as dying declaration on part of Ganeshram.- if the testimony of PW1-Sajan Bai is eschewed from consideration, the deposition of PW2-Saman Bai, along with the dying declaration of Ganeshram, completely clinch the matter against the appellants. Additionally, the recoveries of the weapons in question viz., lathi, sword and axe also lend sufficient corroboration to the case of the prosecution.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Reportable

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO. 989 OF 2007

DEVILAL AND OTHERS …APPELLANTS

VERSUS

STATE OF MADHYA PRADESH …RESPONDENT

J U D G M E N T

Uday Umesh Lalit, J.

1. This appeal, at the instance of Devilal son of Chetaram Gujar

and his two sons Gokul and Amrat Ram, is directed against the

judgment and order dated 14.09.2006 passed by the High Court1

Criminal Appeal No.700 of 1999.

1 High Court of Madhya Pradesh, Bench Indore

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

2. The appellants along with one Gattubai, wife of accused

Devilal, were tried in Special Offence Case No. 88 of 1998 in the

court of Special Judge (SC/ST), Mandsaur, Madhya Pradesh under

Sections 302 read with 34 of the Indian Penal Code (for short, ‘IPC’)

and Sections 3(1)(10) and 3(2)(5) of the Scheduled Castes and the

Scheduled Tribes (Prevention of Atrocities) Act, 1989 (‘SC/ST Act’,

for short).

3. The instant crime arose out of F.I.R. No.212 of 1998 registered

at 11.10 p.m. on 19.07.1998 with Police Station Manasa, District

Neemach, Madhya Pradesh. The reporting made by one Ganeshram

was to the following effect:-

“I am resident of village Khera Kushalpura. On

14.7.98, there had been quarrel between Devilal

son of Jetram Gurjar and me in village Khera

Kusalpura. Today, in the evening I was coming

from Binabas after doing my work and going by

walk to my house. At about 8 p.m., while going

towards my house on public road when I had

reached in front of the house of Devilal Gurjar

then after seeking me Devilal armed with

Kulhari, his son Gokul armed with Talwar and

Amritlal armed with lathi had come there.

Devilal had abused me and called me as Chamar

and stated that Chamars have advanced too

much. He told me that he shall finish me. He

had attacked me from sharp side of Kulhari with

intention to kill me. The first blow hit me on the

bone (calf) of right leg. Gokul had given second

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

sword blow on my bone (calf) of left leg. My

both legs were cut and I fell down there itself.

Then Amritram had given lathi blow on my right

fist and left hand and my right fist was fractured.

These persons had again called me Chamar and

told me that if I shall fight with them again.

They had kicked me on my face below both eyes

and there is swelling. Then I shouted for help.

My mother Gattu Bai, wife Sajan Bai and sisterin-law Saman Bai had run from home and

reached there, they protected me. When Saman

Bai was protecting me then Devilal had given

blow on her left elbow. Later, my mother, wife

and sister-in-law lifted me and taken me to

home. Kanhaiyalal had brought tractor from

Barbua. …Satyanarain, my sister-in-law Saman

Bai have put me in the tractor and brought me to

police station. I am lodging report, I have heard

the report, it is correct. Action may be taken.

My hand is fractured and I cannot sign. I have

put my thumb impression.”

4. The aforesaid FIR was recorded by PW8-Shankar Rao, who,

then took Ganeshram along with Tehsildar to Community Health

Centre, Manasa, where PW9-Dr. Kailash Chandra Kothari examined

injured Ganeshram. It was found that the general condition of the

injured was not good; that he was unable to speak; and that his blood

pressure could not be recorded. The injuries found on the person of

Ganeshram were recorded in report Exhibit P/23 and Ganeshram was

referred to Surgical Specialist, District Hospital, Mandasaur vide

Reference Form Exhibit P/25 at about 12.45 a.m. on 20.07.1998.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

However, while PW9-Dr. Kothari was completing the formalities,

Ganeshram expired at 1.00 a.m.. PW9-Dr. Kothari, therefore,

recorded the information of death in Exhibit P/26 under his signature.

5. At about 9.45 a.m. on 20.07.1998, application Exhibit P/17

was received by PW9-Dr. Kothari, pursuant to which post-mortem

was conducted on the dead body of Ganeshram. The observations

with respect to external and internal injuries suffered by the deceased

were as under:-

“16. The following external injuries were

present on his person –

1. Incised wound with dimension of five

X four and a half X three and a half

cm. which is present on left leg in

which broken pieces of Tibia and

Fibula bone were found. Much of

blood was found to have coagulated

near about the wound.

2. Incised wound with dimension of four

and a half X three and a half X two and

a half cm. which was present on right

leg through which tibia and Febula

bone was clearly visible and in which

much blood was found coagulated.

3. Cyanosed mark on lower part of right

hand four and half X two and a half

cm. dimension.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

4. Cyanosed mark on left hand three and

a half X two and a half cm. dimension.

5. Incised wound on left eyebrow two X

one X half cm dimension.

17. All the said injuries were ante mortem.

18. The internal examination found that –

1. Skull – The front right part of the skull

was found broken. Membrane was

contracted and much of blood was found

coagulated. Blood lumps were stuck in the

brain and brain was found contracted.

Tympanium, rib, pleura, Trachea and throat

were found contracted. Both the lungs

were found dry and contracted. After

cutting the lungs blood etc. yeast etc. did

not come out.

2. Heart – left chamber of the heart was

found empty. Right side chamber was full

of blood. The velum membrane of the

intestine morsel pipe all were pale and

contracted Membrane in the stomach was

contracted and was pale and stomach was

empty small intestine and large intestine

were contracted and was having paleness.

Liver, spleen, Kidney all were contracted.

3. Bladder was empty.

4. The following bones inside the body

were found fractured –

1. Front skull bone, right side skull

bone, Tibia, Febulas left and right

both were found broken. Right

radius ALNA was found fractured.

Left numerous was found broken.”

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

The cause of death was stated to be excessive bleeding from

the injuries suffered by the deceased.

6. During the course of investigation, PW8-Shankar Rao

prepared site map Exhibit P/18 and arrested accused Devilal, Gokul

and Amrat Ram vide Exhibits P/5 to 7.

Pursuant to disclosure statement made by accused Gokul vide

Exhibit P/8, a sword was recovered. Similarly, pursuant to the

disclosure statement made by accused Amrat Ram, vide Exhibit P/9,

a lathi was recovered, while pursuant to disclosure statement made by

accused Devilal, vide Exhibit P/10, an axe was recovered.

Statements of Sajan Bai (PW1), Saman Bai (PW2),

Kanhaiyalal (PW3) Satya Narayan (PW4), Amarlal (PW6) and Gatto

Bai were also recorded by PW8-Shankar Rao.

7. After completion of investigation, the appellants along with

Gattubai wife of accused Devilal were tried in Special Offence Case

No. 88 of 1998 as stated above.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

8. In support of its case, the prosecution relied upon the

eyewitness account through PW1-Sajan Bai, PW2-Saman Bai and

PW7-Lakshminarayan.

a) PW1-Sajan Bai, wife of the deceased, in her

examination-in-chief stated:-

“2. The event is of 19th of Seventh month.

The time was evening between 7 to 8 o’clock. I

had returned after doing labour and myself, my

mother-in-law and Devrani were sitting on otla

outside the house. I heard the call of my

husband that rush I am being beaten.

3. All the three of us rushed and reached in

front of Devi Lal’s house. We saw there that

Gokul, Amrit Ram and Devi Lal were beating

my husband and Gatto Bai was standing there.

Gokul was having sword, Amrit Ram was

having lathi. Devilal was having axe in his

hand. My husband’s hands and legs had been

cut. His hands were broken and legs were cut.

While beating these were telling DHED Caste

CHAMARS have become arrogant (DHED JAT

CHAMARON KE BHAV BADH GAYE

HAIN).

4. I, my mother-in-law, my Devrani lifted

Ganeshram and brought to our house. My

husband was having injury on eye and head also.

Then my Jeth Kanhiyalal came at home.

5. My Jeth went to Badkua to bring tractor

wherefrom he came with Ratan Ba’s tractor.

Then Ganeshram was put in tractor and brought

to Manasa Police Station. My husband lodged

report at the police station, myself, my Jeth, my

Devrani, two Devars, mother-in-law and Devi

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Lal of Badkuan also went to manage in the

tractor. My husband could read and write but

hands had been broken, therefore did not sign

had put thumb impression.

6. They were taken to the hospital from the

Police Station. Treatment was given there.

Ganeshram breathed his last within 2 to 3 hours

there itself.”

In her cross-examination the witness stated:-

“10. The police had taken my statement which

was read over to me yesterday. Then said did

not read over yesterday. Had read over to all the

three of us separately. We were made to

understand what statement we have to make in

the court. The Government Advocate who

examined today had read over.”

b) PW2-Saman Bai, sister-in-law of the deceased, stated:-

“2. On dated 19th of seventh month, at about

7-8 p.m., we had come from our work and we

were sitting on Otley. My sister-in-law, motherin-law and I all three were sitting there. At the

time of fight, Ganeshram had shouted for help.

After hearing shout, we all the three had run and

reached there in front of the house of Devilal.

3. All the four accused persons were beating

Ganeshram and they were telling that they shall

kill him. They were continuously calling him

Chamar. Gokul was armed with Talwar, Devilal

was armed with Kulhari, Amritram was armed

with lathi and Gattubai was having Mogri of

washing cloth.”

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

c) PW7-Laxminarayan, brother of the deceased, in his

examination-in-chief stated:-

“3. This incident has taken place nearly 7

months ago. Ganeshram was coming to house

by motor. Motor comes at 7 p.m. This incident

has taken place during the evening. Ganeshram

was coming. On the way, a quarrel started in

front of the house of Devilal. I was standing

outside my house on the “Otle”. I heard shouts

on which I have gone to see what is happening.

I saw that Gokul, Amritram, Devilal were

beating my brother. Devilal had an axe, Gokul

had a sword and Amritram had a truncheon.

Gatthubai had a “Tenpa” (a piece of wood). I

was standing slightly away. I was standing at a

distance of around 15-20 steps away.

4. I could not see that who has inflicted

injury on which part.

5. Devilal exclaimed for me that, “kill this

‘Chamate Rampe’ also”, on which I have ran

away to my house.

6. I have ran away to my house from there,

on which my mother, my sister-in-law Sajanbai

and my wife Samanbai went to the place where

quarrel was taking place. Then, all three of them

brought Ganeshram to the house.

7. Hands and legs of Ganeshram have been

incised.

8. Then, my brother Kanhaiyyalal went to

Badkuan and brought a tractor from there. We

took Ganeshram to Manasa by tractor.

Ganeshram had lodged a report at Manasa P.S.

Statements were recorded over there and then

we went to hospital. Doctors have provided

treatment over there and during the course of

treatment Ganeshram had died.”

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

In his cross-examination the witness stated:-

“28. I have returned back from the place of

incident and sent my mother, sister-in-law and

wife, a fact which I have not told to the police.

Police has not held inquiry in this regard

because of which I have not told this fact.

29. The house of Devilal cannot be seen from

my house.

30. I have came back running from the house

of Devilal in 2-3 minutes.”

d) The medical evidence was unfolded through the

testimony of PW9-Dr. Kothari, who in his cross-examination

accepted:-

“24. I agree with Modi’s Medical jurisprudence

that breathing intermittently, not catching the

pulse speed, non tracing of blood pressure,

spreading of eye pupils and reacting weakly on

throwing light spreading of blackness on the

pupils and eye brows of the injured Ganesh – all

these symptoms are of immediately following

unconscious at the spot in the state of injured

and will not get consciousness till death.

25. Such type of injured persons lose their

memory at once on getting injury.

26. If the incident takes place at 8 o’clock

evening then the patient will become

unconscious at once and will not remain in the

state of speaking.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

27. All this condition was of the injured

Ganesh.”

9. After considering the evidence on record, the Trial Court

found that the FIR recorded at the instance of the deceased could be

relied upon as dying declaration and that the statements of PW1-

Sajan Bai, PW2-Saman Bai and PW7-Laxminarayan as well as the

recoveries at the instance of accused Devilal, Gokul and Amrat Ram

proved the case of prosecution. By its judgment and order dated

01.05.1999, the trial Court found that the offence under Section 302

read with 34 IPC was proved by the prosecution as against accused

Devilal, Gokul and Amrat Ram. It was, however, found that the case

was not proved against the fourth accused Gattubai. It was further

found that none of the accused could be held guilty under offences

punishable under SC/ST Act.

Thus, the appellants were convicted under Sections 342 read

with 34 IPC and by a separate order recorded on the same day they

were sentenced to suffer imprisonment for life with fine of Rs.5,000/-

each, in default whereof to undergo further imprisonment for two

years.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

10. Being aggrieved, Criminal Appeal No. 700 of 1999 was

preferred by accused Devilal, Gokul and Amrat Ram in the High

Court. It was submitted before the High Court that considering the

medical evidence on record and the statement of PW9-Dr. Kothari, it

was unlikely that the deceased could have made any statement before

the police, on the basis of which the FIR was recorded in the present

case. The further submission was that, as admitted by PW1-Sajan

Bai, in her cross-examination, the witnesses were tutored. These

submissions were not accepted by the High Court. It, however,

accepted that the version of PW7-Laxminarayan could not be relied

upon as the same was not consistent with the statement of PW2-

Saman Bai and the name of PW7-Laxminarayan was also not

mentioned in the FIR. The High Court thus affirmed the conviction

and sentence recorded against accused Devilal, Gokul and Amrat

Ram and dismissed Criminal Appeal No. 700 of 1999 by its

judgment and order dated 14.09.2006 which decision is presently

under challenge.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

11. During the pendency of this appeal, by Order dated

08.04.2009 this Court released accused Devilal and Gokul on bail as

they had undergone imprisonment for nine years and four months.

I.A. No. 4224 of 2017 was, thereafter, filed submitting inter

alia that accused Amrat Lal was a juvenile on the day the offence

was committed and that in the light of the decision of this Court in

Hari Ram vs. State of Rajasthan and another2

, the submission of

his juvenility could be raised for the first time before this Court.

12. By Order dated 3.10.2018 this Court directed the Sessions

Judge, Neemach to conduct an inquiry into the issue of juvenility of

Amrat Ram and submit a report to this Court. In the inquiry so

conducted, statements of concerned persons including Assistant

Teacher, Government Primary School, Khushalpura, were recorded

and the documents were considered, whereafter, it was found that the

date of birth of accused Amrat Ram was 23.03.1981 and that he was

16 years 11 months and 26 days on the date of offence. Accordingly,

the in-charge District and Sessions Judge, Neemach has forwarded

report dated 03.12.2018 to this Court.

2 (2009) 13 SCC 211

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

13. In this appeal, we have heard Mr. Sushil Kumar Jain, learned

Senior Advocate on behalf of the appellants and Mr. Harmeet Singh

Ruprah, learned Advocate appearing for the respondent-State.

14. At the outset, we must deal with the issue of juvenility of

Amrat Ram.

15. The incident in the present case had occurred in July, 1998

when the Juvenile Justice Act, 1986 (‘the 1986 Act’, for short) was in

force. The age of juvenility for a male juvenile under the 1986 Act

was 16 years. Since Amrat Ram was 16 years 11 months as on the

date when the offence was committed, he was certainly not a juvenile

within the meaning of 1986 Act. However, the age of juvenility was

raised to 18 years in terms of the provisions of the Juvenile Justice

(Care and Protection of Children) Act, 2000 (‘the 2000 Act’, for

short). Section 20 of the 2000 Act dealing with proceedings pending

against a juvenile on the date the 2000 Act came into force, states:-

“20. Special provision in respect of pending

cases.- Notwithstanding anything contained in

this Act, all proceedings in respect of a juvenile

pending in any court in any area on the date on

which this Act comes into force in that area,

shall be continued in that court as if this Act had

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

not been passed and if the court finds that the

juvenile has committed an offence, it shall

record such finding and instead of passing any

sentence in respect of the juvenile, forward the

juvenile to the Board which shall pass orders in

respect of that juvenile in accordance with the

provisions of this Act as if it had been satisfied

on inquiry under this Act that a juvenile has

committed the offence:

Provided that the Board may, for any adequate

and special reason to be mentioned in the order,

review the case and pass appropriate order in

the interest of such juvenile.

Explanation.- In all pending cases including

trial, revision, appeal or any other criminal

proceedings in respect of a juvenile in conflict

with law, in any court, the determination of

juvenility of such a juvenile shall be in terms of

clause (1) of section 2, even if the juvenile

ceases to be so on or before the date of

commencement of this Act and the provisions

of this Act shall apply as if the said provisions

had been in force, for all purposes and at all

material times when the alleged offence was

committed.”

16. Where an offender was more than 16 years of age on the day

when the incident had occurred (and therefore was not a juvenile

within the meaning of the 1986 Act) but was less than 18 years of age

on the day of the incident, the question as to what extent benefit can

be given in terms of the provisions of the 2000 Act, was considered

by this Court in some cases. In Mumtaz alias Muntyaz vs. State of

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Uttar Pradesh (now Uttarakhand)3

, after noting the earlier

decisions, this Court observed:-

“ 18. The effect of Section 20 of the 2000 Act

was considered in Pratap Singh v. State of

Jharkhand4

and it was stated as under: (SCC p.

570, para 31)

“31. Section 20 of the Act as quoted

above deals with the special provision in

respect of pending cases and begins with

a non obstante clause. The sentence

‘notwithstanding anything

contained in this Act, all

proceedings in respect of a juvenile

pending in any court in any area on

the date on which this Act came

into force’

has great significance. The proceedings in

respect of a juvenile pending in any court

referred to in Section 20 of the Act are

relatable to proceedings initiated before

the 2000 Act came into force and which

are pending when the 2000 Act came into

force. The term “any court” would

include even ordinary criminal courts. If

the person was a “juvenile” under the

1986 Act the proceedings would not be

pending in criminal courts. They would

be pending in criminal courts only if the

boy had crossed 16 years or the girl had

crossed 18 years. This shows that Section

20 refers to cases where a person had

3 (2016) 11 SCC 786

4 (2005) 3 SCC 551

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

ceased to be a juvenile under the 1986 Act

but had not yet crossed the age of 18

years then the pending case shall continue

in that court as if the 2000 Act has not

been passed and if the court finds that the

juvenile has committed an offence, it shall

record such finding and instead of passing

any sentence in respect of the juvenile,

shall forward the juvenile to the Board

which shall pass orders in respect of that

juvenile.”

19. In Bijender Singh v. State of Haryana5

, the

legal position as regards Section 20 was stated in

the following words: (SCC pp. 687-88, paras 8-

10 & 12)

“8. One of the basic distinctions between

the 1986 Act and the 2000 Act relates to

the age of males and females. Under the

1986 Act, a juvenile means a male

juvenile who has not attained the age of

16 years, and a female juvenile who has

not attained the age of 18 years. In the

2000 Act, the distinction between male

and female juveniles on the basis of age

has not been maintained. The age-limit is

18 years for both males and females.

9. A person above 16 years in terms of the

1986 Act was not a juvenile. In that view

of the matter the question whether a

person above 16 years becomes

“juvenile” within the purview of the 2000

5 (2005) 3 SCC 685

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Act must be answered having regard to

the object and purport thereof.

10. In terms of the 1986 Act, a person

who was not juvenile could be tried in

any court. Section 20 of the 2000 Act

takes care of such a situation stating that

despite the same the trial shall continue in

that court as if that Act has not been

passed and in the event, he is found to be

guilty of commission of an offence, a

finding to that effect shall be recorded in

the judgment of conviction, if any, but

instead of passing any sentence in relation

to the juvenile, he would be forwarded to

the Juvenile Justice Board (in short “the

Board”) which shall pass orders in

accordance with the provisions of the Act

as if it has been satisfied on inquiry that a

juvenile has committed the offence. A

legal fiction has, thus, been created in the

said provision. A legal fiction as is well

known must be given its full effect

although it has its limitations. …

11.***

12. Thus, by reason of legal fiction, a

person, although not a juvenile, has to be

treated to be one by the Board for the

purpose of sentencing, which takes care

of a situation that the person although not

a juvenile in terms of the 1986 Act but

still would be treated as such under the

2000 Act for the said limited purpose.”

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

20. In Dharambir v. State (NCT of Delhi)6

the

determination of juvenility even after conviction

was one of the issues and it was stated: (SCC p.

347, paras 11-12)

“11. It is plain from the language of the

Explanation to Section 20 that in all

pending cases, which would include not

only trials but even subsequent

proceedings by way of revision or appeal,

etc., the determination of juvenility of a

juvenile has to be in terms of clause (l) of

Section 2, even if the juvenile ceases to be

a juvenile on or before 1-4-2001, when

the 2000 Act came into force, and the

provisions of the Act would apply as if

the said provision had been in force for all

purposes and for all material times when

the alleged offence was committed.

12. Clause (l) of Section 2 of the 2000 Act

provides that “juvenile in conflict with

law” means a “juvenile” who is alleged to

have committed an offence and has not

completed eighteenth year of age as on

the date of commission of such offence.

Section 20 also enables the court to

consider and determine the juvenility of a

person even after conviction by the

regular court and also empowers the

court, while maintaining the conviction,

to set aside the sentence imposed and

forward the case to the Juvenile Justice

6 (2010) 5 SCC 344

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Board concerned for passing sentence in

accordance with the provisions of the

2000 Act.”

21. Similarly in Kalu v. State of Haryana7

, this

Court summed up as under: (SCC p. 41, para 21)

“21. Section 20 makes a special provision

in respect of pending cases. It states that

notwithstanding anything contained in the

Juvenile Act, all proceedings in respect of

a juvenile pending in any court in any

area on the date on which the Juvenile Act

comes into force in that area shall be

continued in that court as if the Juvenile

Act had not been passed and if the court

finds that the juvenile has committed an

offence, it shall record such finding and

instead of passing any sentence in respect

of the juvenile forward the juvenile to the

Board which shall pass orders in respect

of that juvenile in accordance with the

provisions of the Juvenile Act as if it had

been satisfied on inquiry under the

Juvenile Act that the juvenile has

committed the offence. The Explanation

to Section 20 makes it clear that in all

pending cases, which would include not

only trials but even subsequent

proceedings by way of revision or appeal,

the determination of juvenility of a

juvenile would be in terms of clause (l) of

Section 2, even if the juvenile ceased to

be a juvenile on or before 1-4-2001, when

the Juvenile Act came into force, and the

7 (2012) 8 SCC 34

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

provisions of the Juvenile Act would

apply as if the said provision had been in

force for all purposes and for all material

times when the alleged offence was

committed.”

22. It is thus well settled that in terms of Section

20 of the 2000 Act, in all cases where the

accused was above 16 years but below 18 years

of age on the date of occurrence, the proceedings

pending in the court would continue and be

taken to the logical end subject to an exception

that upon finding the juvenile to be guilty, the

court would not pass an order of sentence against

him but the juvenile would be referred to the

Board for appropriate orders under the 2000 Act.

What kind of order could be passed in a matter

where claim of juvenility came to be accepted in

a situation similar to the present case, was dealt

with by this Court in Jitendra Singh v. State of

U.P.8

in the following terms: (SCC pp. 210-11,

para 32)

“32. A perusal of the “punishments”

provided for under the Juvenile Justice

Act, 1986 indicate that given the nature of

the offence committed by the appellant,

advising or admonishing him [clause (a)]

is hardly a “punishment” that can be

awarded since it is not at all

commensurate with the gravity of the

crime. Similarly, considering his age of

about 40 years, it is completely illusory to

expect the appellant to be released on

probation of good conduct, to be placed

8 (2013) 11 SCC 193

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

under the care of any parent, guardian or

fit person [clause (b)]. For the same

reason, the appellant cannot be released

on probation of good conduct under the

care of a fit institution [clause (c)] nor can

he be sent to a special home under

Section 10 of the Juvenile Justice Act,

1986 which is intended to be for the

rehabilitation and reformation of

delinquent juveniles [clause (d)]. The

only realistic punishment that can

possibly be awarded to the appellant on

the facts of this case is to require him to

pay a fine under clause (e) of Section

21(1) of the Juvenile Justice Act, 1986.”

23. In Jitendra Singh v. State of U.P.8

, having

found the juvenile guilty of the offence with

which he was charged, in accordance with the

law laid down by this Court as stated above, the

matter was remanded to the jurisdictional

Juvenile Justice Board constituted under the

2000 Act for determining appropriate quantum

of fine. The view taken therein is completely

consistent with the law laid down by this Court

and in our opinion the decision in Jitendra

Singh v. State of U.P. 8 does not call for any

reconsideration. The subsequent repeal of the

2000 Act on and with effect from 15-1-2016

would not affect the inquiry in which such claim

was found to be acceptable. Section 25 of the

2015 Act makes it very clear.”

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

17. Recently, in Satya Deo alias Bhoorey vs. State of Uttar

Pradesh9

, this Court observed:-

“19. This position of law and principle in Mumtaz

case3 was affirmed by this Court for the first time

in Hari Ram v. State of Rajasthan2

in the following

words: (SCC p. 223, para 39)

“39. The Explanation which was added in

2006, makes it very clear that in all pending

cases, which would include not only trials but

even subsequent proceedings by way of

revision or appeal, the determination of

juvenility of a juvenile would be in terms of

clause (l) of Section 2, even if the juvenile

ceased to be a juvenile on or before 1-4-2001,

when the Juvenile Justice Act, 2000, came

into force, and the provisions of the Act would

apply as if the said provision had been in force

for all purposes and for all material times

when the alleged offence was committed. In

fact, Section 20 enables the court to consider

and determine the juvenility of a person even

after conviction by the regular court and also

empowers the court, while maintaining the

conviction, to set aside the sentence imposed

and forward the case to the Juvenile Justice

Board concerned for passing sentence in

accordance with the provisions of the Juvenile

Justice Act, 2000.”

20. In light of the legal position as expounded above

and in the aforementioned judgments, this Court at this

stage can decide and determine the question of

9 (2020) 10 SCC 555

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

juvenility of Satya Deo, notwithstanding the fact that

Satya Deo was not entitled to the benefit of being a

juvenile on the date of the offence, under the 1986 Act,

and had turned an adult when the 2000 Act was

enforced. As Satya Deo was less than 18 years of age

on the date of commission of offence on 11-12-1981,

he is entitled to be treated as a juvenile and be given

benefit as per the 2000 Act.”

18. It is thus clear that, even if it is held that Amrat Ram was

guilty of the offence with which he was charged, the matter must be

remitted to the jurisdictional Juvenile Justice Board for determining

appropriate quantum of fine that should be levied on Amrat Ram.

19. We now turn to the basic issue whether the appellants were

rightly held guilty by the courts below.

20. Mr. Sushil Kumar Jain, learned Senior Advocate for the

appellants has submitted that given the cross-examination of PW9-Dr.

Kothari, it would be impossible to believe that Ganeshram could have

made any reporting to the police as alleged. It is submitted that,

according to the FIR, the incident had occurred around 8.00 p.m.,

while the FIR was recorded after more than three hours. Mr. Jain has

further submitted that, as accepted by PW1-Sajan Bai, witnesses were

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

clearly tutored and, as such, the value of the testimony of PWs 1 and

2 stands diminished to a great extent. Relying on the crossexamination of PW7-Laxminarayan, it is submitted that the front of

the house of accused Devilal where the incident was stated to have

occurred was not visible for the alleged eye witnesses.

The submissions are countered by Mr. Harmeet Singh Ruprah,

learned Advocate for the State. It is submitted that the testimonies of

PWs 1 and 2 are quite consistent; their presence was recorded right

from the initial stage of reporting of the crime; that the distance

between the houses was just about 100 feet and; that there was no

effective cross-examination on the issue whether they had enough

opportunity to witness the incident.

21. The testimony of PW9-Dr. Kothari, shows that Ganeshram

was alive when the initial examination was undertaken by PW9-Dr.

Kothari. According to the witness, when he examined Ganeshram,

the blood pressure could not be detected. However, that by itself does

not mean that Ganeshram was not in a physical condition to make any

reporting to the police two hours earlier. Paragraph 24 of the

deposition of PW9-Dr Kothari shows that if the symptoms stated

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

therein were present, it could possibly be said that the concerned

person would not be in a position to speak. First of all, such assertion

is purely an opinion of an expert. Secondly, nothing is available on

record to show that Ganeshram had shown these symptoms either

soon after the incident or when his statement was recorded by PW8

Shankar Rao. No questions were put to PW1-Sajan Bai, PW2 Saman

Bai and PW8-Shankar Rao in that behalf. We, therefore, reject the

submission advanced on this score and find that the FIR was rightly

relied upon by the courts below as dying declaration on part of

Ganeshram.

22. The FIR itself referred to the presence of PW1-Sajan Bai and

PW2-Saman Bai. The substantive testimony of both these witnesses

clearly discloses that the appellants had opened an assault on

Ganeshram which led to his death. The assertion on part of PW1-

Sajan Bai that her earlier statement recorded during investigation was

read over to her does not mean that she was tutored to follow the line

of prosecution. It is relevant to note that no such questions were put

to PW2-Saman Bai.

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

Thus, even if the testimony of PW1-Sajan Bai is eschewed

from consideration, the deposition of PW2-Saman Bai, along with the

dying declaration of Ganeshram, completely clinch the matter against

the appellants.

Additionally, the recoveries of the weapons in question viz.,

lathi, sword and axe also lend sufficient corroboration to the case of

the prosecution.

23. In the premises, we affirm the view taken by the courts below

and find the appellants guilty of the offence with which they were

charged. Their appeal, therefore, deserves dismissal. The conviction

and sentence recorded by the courts below, insofar as accused Devilal

and Gokul are concerned, are, therefore, affirmed and the present

appeal insofar as these two accused are concerned is dismissed.

24. However, even while holding the appellant Amrat Ram to be

juvenile in terms of the 2000 Act and guilty of the offence with which

he was charged, we set aside the sentence of life imprisonment

imposed upon him and remit the matter to the jurisdictional Juvenile

Justice Board for determining appropriate quantum of fine that should

Criminal Appeal No.989 of 2007

Devilal and ors. vs. State of Madhya Pradesh

be levied on appellant Amrat Ram in keeping with the directions

issued by this Court in Jitendra Singh vs. State of U.P8

25. Since Devilal and Gokul were released on bail by this Court

vide Order dated 08.04.2009, they are directed to surrender before the

concerned Police Station within two weeks from today, failing which

the bail bonds furnished at the time of their release on bail shall stand

forfeited and they shall immediately be arrested by the concerned

police to undergo the sentence imposed upon them. A copy of this

Order shall immediately be transmitted by the Registry of this Court

to the jurisdictional Chief Judicial Magistrate and the concerned

Police Station for compliance.

26. The appeal is disposed of in afore-stated terms.

……………………..J.

[Uday Umesh Lalit]

……………………..J.

[Indira Banerjee]

……………………..J.

[K.M. Joseph]

New Delhi;

February 25, 2021.

Mrs. F.L. Raitt, widow of late Mr. Charles Raitt, a foreigner and the owner of the property in question, gifted it to respondent No.1 (Vikram Malhotra) without obtaining previous permission of the Reserve Bank of India under Section 31 of the Foreign Exchange Regulation Act = Section 31 of the 1973 Act is not mandatory and the transaction in contravention thereof is not void or unenforceable, is not a good law. However, transactions which have already become final including by virtue of the decision of the court of competent jurisdiction, need not be reopened or disturbed in any manner because of this pronouncement. This declaration/direction is being issued in exercise of our plenary power under Article 142 of the Constitution of India. For, there has been a paradigm shift in the general policy of investment by foreigners in India and more particularly, the 1973 Act itself stands repealed. Accordingly, we deem it appropriate to overrule 45 the decisions of the High Courts, taking contrary view, albeit, prospectively.1

Mrs. F.L. Raitt, widow of late Mr. Charles Raitt, a foreigner and the owner of the property in question, gifted it to respondent No.1 (Vikram Malhotra) without obtaining previous permission of the Reserve Bank of India under Section 31 of the Foreign Exchange Regulation Act = Section 31 of the 1973 Act is not mandatory and the transaction in contravention thereof is not void or unenforceable, is not a good law. However, transactions which have already become final including by virtue of the decision of the court of competent jurisdiction, need not be reopened or disturbed in any manner because of this pronouncement. This declaration/direction is being issued in exercise of our plenary power under Article 142 of the Constitution of India. For, there has been a paradigm shift in the general policy of investment by foreigners in India and more particularly, the 1973 Act itself stands repealed. Accordingly, we deem it appropriate to overrule 45 the decisions of the High Courts, taking contrary view, albeit, prospectively.1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9546 OF 2010

Asha John Divianathan … Appellant

versus

Vikram Malhotra & Ors. …Respondents

J U D G M E N T

A. M. KHANWILKAR, J.

1. The central issue in this appeal is in reference to Section 31

of the Foreign Exchange Regulation Act, 19731

. To wit,

transaction (specified in Section 31 of the 1973 Act) entered into in

contravention of that provision is void or is only voidable and it

can be voided at whose instance?

2. The undisputed facts are that one Mrs. F.L. Raitt, widow of

late Mr. Charles Raitt, a foreigner and the owner of the property in

question, gifted it to respondent No.1 (Vikram Malhotra) without

obtaining previous permission of the Reserve Bank of India2

under

1 For short, “the 1973 Act”

2 For short, “the RBI”

Section 31 of the 1973 Act. Further, before executing the gift

deed, she had executed an agreement of sale in favour of one Mr.

R.P. David, father of appellant (Asha John Divianathan) and

husband of respondent No.4 (Mrs. R.P. David, wife of Mr. R.P.

David). That agreement was executed on 05.04.1976 whereunder

the title deed of the schedule property was delivered by Mrs. F.L.

Raitt to late Mr. R.P. David. However, Mrs. F.L. Raitt gifted the

portion of schedule property admeasuring 12,306 square feet, vide

gift deed dated 11.03.1977, in favour of respondent No.1 without

seeking previous permission of the RBI under Section 31 of the

1973 Act. She then executed a supplementary gift deed in favour

of respondent No.1 on 19.04.1980. Even this deed was executed

by Mrs. F.L. Raitt without seeking previous permission of the RBI.

The respondent claimed that a power of attorney was executed in

his favour by Mrs. F.L. Raitt on 09.01.1982, which it appears, was

revoked by Mrs. F.L. Raitt on 03.06.1982. Thereafter, Mrs. F.L.

Raitt executed a ratificatory agreement to sell the schedule

property in favour of Mr. R.P. David (predecessor of the appellant

and respondent no.4) on 04.12.1982, followed by a power of

attorney in favour of Mr. Peter J. Philip dated 26.01.1983. That a

formal permission of RBI under Section 31 of the 1973 Act was

then sought for completing the transaction in favour of Mr. R.P.

David (predecessor of the appellant and respondent no.4). The

RBI granted that permission on 02.04.1983, permitting transfer of

the immovable property No.12 (old No.10A), Magrath Road,

admeasuring 35,470 square feet in favour of Mr. R.P. David

(predecessor of the appellant and respondent no.4). Consequent

to the said permission of the RBI, a registered sale deed came to

be executed by Mrs. F.L. Raitt in favour of Mr. R.P. David

(predecessor of the appellant and respondent no.4) on 09.04.1983.

However, Mrs. F.L. Raitt filed a suit being O.S. No.10328 of 1983,

on 30.07.1983, to declare the power of attorney dated 26.01.1983

given to Mr. Peter J. Philip as null and void and for cancellation

and setting aside of the registered sale deed dated 09.04.1983

executed in favour of Mr. R.P. David (predecessor of the appellant

and respondent no.4) pertaining to the entire property

admeasuring 35,470 square feet. The said Mrs. F.L. Raitt,

however, expired on 08.01.1984 and after her death, Mrs. Ingrid L.

Greenwood was substituted as her legal representative in the

pending suit. Mr. R.P. David (predecessor of the appellant and

respondent no.4) and others then filed O.S. No.10079 of 1984 on

10.02.1984 against respondent No.1 (Vikram Malhotra) praying

that the gift deed and the supplementary deed allegedly executed

in his favour in respect of portion of the larger property to the

extent of 12,306 square feet bearing No.12 (Old No.10A) be

declared as null and void and not binding and consequentially for

relief of possession, permanent injunction and mesne profits. Mr.

R.P. David (predecessor of the appellant and respondent no.4) also

filed O.S. No.10155 of 1984 against Mrs. Ingrid L. Greenwood and

Mr. Clive Greenwood, who were claiming to be successor in title of

Mrs. F.L. Raitt, for declaration and possession of entire property

No.12 (Old No.10) admeasuring 35,470 square feet. All the three

suits were tried and decided by the City Civil & Sessions Judge,

Mayo, Bangalore3

3. As regards the suit filed by Mrs. F.L. Raitt and Mrs. Ingrid L.

Greenwood bearing suit No.10328 of 1983, the Trial Court had

framed as many as 11 issues, which read thus:

“1) Whether the plaintiffs prove that the power of

attorney dated 26.1.83 executed by the first plaintiff in

favour of the 2nd defendant was procured by fraud,

misrepresentation and undue influence and the same

was taken without her knowledge?

2) Whether the plaintiff proves that the power of

attorney dated 26.1.83 executed by the first plaintiff in

favour of the second defendant is null and void and

not binding on the first plaintiff?

3 For short, “the Trial Court”

3) Whether the plaintiffs are entitled for permanent

injunction restraining the defendant – 2 from acting in

any way on the strength of the alleged power of

attorney dated 26.1.1983?

4) Whether the plaintiff proves that the 2nd

defendant fraudulently and without any legal authority

of the first plaintiff executed the sale deed dated

9.4.1983 in favour of the 1st defendant in respect of

the suit schedule property?

5) Whether the plaintiff further proves that the said

sale deed was never intended to be registered by the

first plaintiff nor the second defendant was authorized

or empowered to act as her General Power of attorney

holder for that purpose?

6) Whether the plaintiffs are entitled for declaration

for the cancellation of the sale deed dt. 9.4.1983?

7) Whether the plaintiffs further prove that they are

in actual and lawful possession of the suit schedule

property?

8) Whether the defendants prove that the sale deed

is a genuine document and the same is binding on the

plaintiff?

9) Whether the plaintiffs are entitled for permanent

injunction as prayed for?

10) To what reliefs are the parties entitled?

11) What order or decree?”

After analysing the pleadings and evidence on record, the Trial

Court vide judgment and decree dated 31.08.2001 proceeded to

dismiss this suit. This judgment is not the subject matter of the

present appeal.

4. In the suit filed by Mr. R.P. David (predecessor of the

appellant and respondent no.4) being O.S.No.10079 of 1984, the

Trial Court framed 9 issues as follows:

“1. Do Plaintiffs prove that the late Florence L. Raitt

agreed to sell the entire suit property in favour of

deceased R.P. David?

2. Do they next prove that Florence L. Raitt

executed a ratified agreement dated 04.12.1982 after

receiving Rs.One lakh as contended?

3. Are the gift deed dated 11.03.1977 and the

supplementary deed dated 19.04.1980 in favour of the

defendant void being hit by the provisions of the

Foreign Exchange Regulation Act, 1973, as alleged?

4. Does defendant prove that the said documents

and transactions are not hit by the Foreign Exchange

Regulation Act, 1973 and they are valid in law?

5. Does defendant prove the General Power of

Attorney executed by Florence L. Raitt in favour of Mr.

Peter Philip is not true and genuine?

6. Do plaintiffs prove that deceased David

purchased the entire suit property as contended and

the same is binding on the defendant?

7. Do plaintiffs prove that they are entitled to

recover past mesne profits at the rate of Rs.200/ per

month?

8. Are plaintiffs entitled to declaration, possession

and injunction?

9. What relief or decree?”

After analysing the pleadings and evidence on record, the Trial

Court vide separate judgment and decree dated 31.08.2001 was

pleased to dismiss even this suit.

5. While dealing with the third suit filed by Mr. R.P. David

(predecessor of the appellant and respondent no.4), the Trial Court

framed 10 issues, which read thus:

“1) Whether the plaintiff proves that they are the

owner of the suit schedule property under the terms of

the sale deed dated 9.4.83?

2) Whether the plaintiff further proves that Mrs.

Florence L. Raitt executed the General Power of

Attorney dated 26.1.83 in favour of Mr. Peter Philip on

her own free will?

3) Whether the defendant proves that General

Power of Attorney dt. 26.1.1983 was procured by

fraud, misrepresentation, coercion, undue influence

and in breach of trust?

4) Whether the defendants further prove that the

suit schedule property was bequeathed to defendant –

1 under the will executed by Mrs. Florence Raitt

absolutely and unconditionally?

5) Whether the defendants further prove that

defendant 1 is the absolute owner in actual possession

of the suit schedule property?

6) Whether the second defendant is a necessary

party to the suit?

7) Whether the plaintiff is entitled for a declaration

as prayed for?

8) Whether the plaintiff is entitled for mesne

profits? If so, at what rate?

9) Whether the plaintiff is entitled to the

possession of the suit schedule property?

10) What order or decree?”

After analysing the pleadings and evidence on record, the Trial

Court vide separate judgment and decree dated 31.08.2001 was

pleased to allow the suit in the following terms:

“ORDER

The suit of the plaintiff is decreed. The plaintiff

is hereby declared that he is the absolute owner of the

suit property and he is entitled to mesne profits from

9.1.84 till the end of 1990. Separate enquiry shall be

initiated under Order 20 Rule 12 CPC for its

determination.

Having regard to the circumstances of the case,

no order as to costs.

Draw the decree accordingly.”

Even this judgment is not the subject matter of the present

appeal.

6. The appellant along with respondent No.4, however, had filed

first appeal before the High Court of Karnataka at Bangalore being

R.F.A. No.1001 of 2001 against the judgment and decree dated

31.08.2001 passed by the Trial Court in O.S. No.10079 of 1984.

In this appeal, therefore, the limited issue is about the validity of

the gift deed dated 11.03.1977 and the supplementary deed dated

19.04.1980 both executed in favour of respondent No.1 by Mrs.

F.L. Raitt in respect of portion of the larger property admeasuring

12,306 square feet. As regards the finding of fact recorded by the

Trial Court in reference to the said challenge, the High Court

concurred with the same, but proceeded to examine the solitary

legal point raised by the appellant before the High Court regarding

validity of the stated gift deeds being in violation of Section 31 of

the 1973 Act and, therefore, void and unenforceable in law. The

learned Single Judge of the High Court essentially relying on the

decision of the Punjab & Haryana High Court in the case of Piara

Singh v. Jagtar Singh and Anr.4

, proceeded to negative the said

challenge and held that lack of permission under Section 31 of the

1973 Act does not render the subject gift deeds as void much less

illegal and unenforceable. Accordingly, the first appeal jointly filed

by the appellant and respondent No.4 herein came to be dismissed

vide impugned judgment and decree dated 01.10.2009.

7. In the present appeal, the sole point urged by the appellant is

that the stated gift deeds dated 11.03.1977 and 19.04.1980 in

favour of respondent No.1 are null and void and not binding on

the appellant and respondent no.4; and in any case are

unenforceable in law, in light of the mandate of Section 31 of the

1973 Act. According to the appellant, the dispensation specified

in the said provision is mandatory and no transaction in

contravention thereof would be enforceable in law. That position

4 AIR 1987 Punjab and Haryana 93

is reinforced by Section 47 of the same Act. Further, violation of

Section 31 has also been made punishable under Section 50 of the

1973 Act. In support of this submission, reliance is placed on the

dictum of Constitution Bench of this Court in Life Insurance

Corporation of India v. Escorts Ltd. & Ors.5

. Reliance has also

been placed on the observations made by threeJudge Bench of

this Court in Renusagar Power Co. Ltd. v. General Electric Co.6

and Vijay Karia & Ors. v. Prysmian Cavi E Sistemi SRL &

Ors.7

. According to the appellant, the reasons weighed with the

Punjab & Haryana High Court in Piara Singh (supra) are

manifestly wrong. That decision has not analysed the true scope

and purport of Section 31 of the 1973 Act in correct perspective.

Similar view taken by the Madras High Court in R. Sambasivam

v. Thangavelu Dhanabagyam8

, following the decision in Piara

Singh (supra), suffers from the same error. On the same lines

different High Courts have construed Section 31 to mean that the

transaction in contravention thereof is not void. (see Ajit Prashad

Jain v. N.K. Widhani & Ors.9

, Tufanu Chouhan & Ors. v. Md.

5 (1986) 1 SCC 264

6 1994 Supp (1) SCC 644

7 (2020) 11 SCC 1

8 2001 – 1 – L.W. 161

9 AIR 1990 Del 42 (para 26)

Abdur Rahman & Ors.10

, Geeta Reinboth v. Mrs. J. Clairs

Brohier through LRs. Mrs. Cheryl Brohier Gosens & Ors.11

Sivaprakasam v. Ilangovan & Ors.12 and Mathu Sree Akkabai

Ammani Charitable Trust & Ors. v. Samikannu13). None of the

decisions of the different High Courts dealing with the purport of

Section 31 of the 1973 Act have invoked principle that would

stand the test of judicial scrutiny. It is urged that any

transaction, which is in violation of Section 31 of the 1973 Act,

would be unenforceable in law until such permission is accorded

by the RBI and for that reason, the gift deeds in question cannot

be given effect to or will be of any avail to respondent No.1.

Instead, the entire property No.12 (old No.10A), Magrath Road,

admeasuring 35,470 square feet stood validly transferred in favour

of Mr. R.P. David (predecessor of the appellant and respondent

No.4 herein). It is then urged that despite the above, respondent

no.1 sought to transfer the stated property to one Dr. Thomas

Chandy under sale deed dated 15.09.2005 (which has not seen

the light of day) by wilfully disobeying the High Court’s interim

10 (1993) 1 Gau LR 306 (paras 5 and 6)

11 (2005) 1 MP LJ 122 (paras 12 to 16)

12 (2010) 3 MWN (Civil) 525 (paras 15 and 16) : 2010 SCC OnLine Mad 4245

13 (2013) 1 LW 136 (para 16) : 2012 SCC OnLine Mad 2769

order dated 07.04.2005. Hence, this transaction in any case is

nullity.

8. Per contra, respondent No.1 would urge that Section 31 is a

directory provision; and not obtaining previous permission of the

RBI would not render the gift deeds in question invalid. It is urged

that since no consequence is provided in Section 31 or any other

provision in the 1973 Act to treat the transaction in violation of

Section 31 as void, the transfer in favour of respondent No.1

cannot be regarded as ineffective or invalid. Such a transfer would

at best be voidable that too only at the instance of the RBI and

none else. The stipulation under Section 31 is only a regulatory

measure and not one of prohibiting transfer by way of gift as such.

The consequence of such violation is provided for as penalty under

Section 50, for which the concerned parties can be proceeded

against. However, no action has been taken in that regard

including by the RBI. The decision of the RBI to grant or refuse

permission for transfer is made final. The RBI is exclusively

entrusted with the task of determining the permissibility of the

transaction, being repository of management of foreign exchange

of the country.

9. Our attention was invited to the provisions of the Indian

Contract Act, 187214 and the Transfer of Property Act, 1882, to

contend that there is marked distinction between void and

voidable transaction. At best, the transfer in favour of respondent

No.1 may come within the latter category. It is further urged that

different High Courts have consistently opined that transaction in

contravention of Section 31 cannot be regarded as void and that

view needs no interference. Relying on Waman Rao & Ors. v.

Union of India & Ors.15

, the argument is that following the

principle of stare decisis, this Court ought not to countermand the

consistent view of the High Courts prevailing since 1987. It is

further urged that the 1973 Act has since been repealed and

therefore, it would be in the fitness of things not to disturb the

consistent view taken by different High Courts in that regard.

10. We have heard Mr. Navkesh Batra, learned counsel for the

appellant and Mr. C.A. Sundram, learned senior counsel for the

respondent No.1.

11. It is not in dispute that Mrs. F.L. Raitt was not a citizen of

India. She transferred right, title and interest in the larger

property (35,470 square feet) by way of sale to Mr. R.P. David

14 For short, “the Contract Act”

15 (1981) 2 SCC 362 (paras 36 to 40)

(predecessor of the appellant and respondent No.4). Around the

same time, however, portion of the larger property (12,306 square

feet) was given by her by way of gift deeds to respondent No.1. As

regards sale deed in favour of Mr. R.P. David, that was executed

only after previous permission was given by the RBI for such

transfer. However, gift deeds in favour of respondent No.1 in

respect of portion of the larger property are not backed by such

previous permission of the RBI either general or special.

Admittedly, no permission has been taken from the RBI in that

regard thus far.

12. It is in this backdrop, the appellant is questioning the validity

of the transaction or stated transfer in favour of respondent No.1

of property admeasuring 12,306 square feet, being in

contravention of Section 31 of the 1973 Act. And if that

contention succeeds, it must follow that the gift deeds, though

executed in favour of respondent No.1, would be unenforceable in

law. Resultantly, Mr. R.P. David (predecessor of the appellant and

respondent No.4), had acquired clear title of the larger property

admeasuring 35,470 square feet transferred to him vide registered

sale deed dated 09.04.1983 being backed by previous permission

by the RBI in that regard.

13. Before we analyse Section 31 of the 1973 Act, it is essential

to understand the object and purpose for which the 1973 Act was

brought into force. It was to consolidate and amend the law

relating to certain payments, dealings in foreign exchange and

securities, transactions indirectly affecting foreign exchange and

the import and export of currency, for the conservation of the

foreign exchange resources of the country and the proper

utilisation thereof in the interests of the economic development of

the country. While introducing the Bill in the Lok Sabha and

explaining the object of Section 31 of the 1973 Act, Mr. Y.B.

Chavan, the then Minister of Finance rose to state as follows:

“As a matter of general policy it has been felt that

we should not allow foreign investment in landed

property/buildings constructed by foreigners and

foreign controlled companies as such investments

offer scope for considerable amount of capital

liability by way of capital repatriation. While we

may still require foreign investments in certain

sophisticated branches of industry, there is

reason why we should allow foreigners and foreign

companies to enter real estate business.”

(emphasis supplied)

14. The avowed object of Section 31 of the 1973 Act was thus to

minimise the drainage of foreign exchange by way of repatriation

of income from immovable property and sale proceeds in case of

disposal of property by a person, who is not a citizen of India. As

is noticed from the title of Section 31, it is to put restriction on

acquisition, holding and disposal of immovable property in India

by foreigners – non citizens. We deem it apposite to reproduce

Section 31 of the 1973 Act as applicable at the relevant time, the

same reads thus:

“31. Restriction on acquisition, holding, etc., of

immovable property in India.— (1) No person who is

not a citizen of India and no company (other than a

banking company) which is not incorporated under

any law in force in India or in which the nonresident

interest is more than forty per cent shall, except with

the previous general or special permission of the

Reserve Bank, acquire or hold or transfer or dispose of

by sale, mortgage, lease, gift, settlement or otherwise

any immovable property situate in India:

Provided that nothing in this subsection shall

apply to the acquisition or transfer of any such

immovable property by way of lease for a period not

exceeding five years.

(2) Any person or company referred to in subsection (1) and requiring a special permission under

that subsection for acquiring, or holding, or

transferring, or disposing of, by sale, mortgage, lease,

gift, settlement or otherwise any immovable property

situate in India may make an application to the

Reserve Bank in such form and containing such

particulars as may be specified by the Reserve Bank.

(3) On receipt of an application under subsection

(2), the Reserve Bank may, after making such inquiry

as it deems fit, either grant or refuse to grant the

permission applied for:

Provided that no permission shall be refused

unless the applicant has been given a reasonable

opportunity for making a representation in the matter:

Provided further that if before the expiry of a

period of ninety days from the date on which the

application was received by the Reserve Bank, the

Reserve Bank does not communicate to the applicant

that the permission applied for has been refused, it

shall be presumed that the Reserve Bank has granted

such permission.

Explanation.— In computing the period of ninety

days for the purposes of the second proviso, the

period, if any, taken by the Reserve Bank for giving an

opportunity to the applicant for making a

representation under the first proviso shall be

excluded.

(4) Every person and company referred to in subsection (1) holding at the commencement of this Act

any immovable property situate in India shall, before

the expiry of a period of ninety days from such

commencement or such further period as the Reserve

Bank may allow in this behalf, make a declaration in

such form as may be specified by the Reserve Bank

regarding the immovable property or properties held

by such person or company.”

On a bare reading of subSection (1), it is crystal clear that a

person, who is not a citizen of India, is not competent to dispose of

by sale or gift, as in this case, any immovable property situated in

India without previous general or special permission of the RBI.

The only exception provided in the proviso is that of acquisition or

transfer of immovable property by way of lease for a period not

exceeding five years. This provision applies to foreign citizens and

foreign and FERA companies only. A nonresident Indian citizen

is not covered thereunder. SubSection (2) mandated such

person, who is not a citizen of India, to make an application to the

RBI in the prescribed form making necessary disclosures. SubSection (3) postulates that on receipt of such an application, the

RBI after due inquiry as it deems fit, either may grant or refuse to

grant the permission applied for. The second proviso to subSection (3) provides for a default permission, if no response is

received to the application within the specified period. What is

significant to notice is that as per subSection (4), every person,

who is not a citizen of India, holding immovable property situated

in India at the time of commencement of the 1973 Act, is obliged

to make declaration within ninety days from the commencement of

the 1973 Act or such further period as may be allowed by the RBI.

15. In other words, a person, who is not a citizen of India,

holding immovable property situated in India was obliged to make

disclosure and declaration in that behalf to the RBI; and in any

case, if he/she intended to dispose of such property by sale,

mortgage, lease, gift, settlement or otherwise, was expected to

obtain previous general or special permission from the RBI. Only

then, transfer so intended could be given effect to. It is true that

the consequences of failure to seek such previous permission has

not been explicitly specified in the same provision or elsewhere in

the Act, but then the purport of Section 31 must be understood in

the context of intent with which it has been enacted, the general

policy not to allow foreign investment in landed property/buildings

constructed by foreigners or to allow them to enter into real estate

business to eschew capital repatriation, including the purport of

other provisions of the Act, such as Sections 47, 50 and 63. Here,

we deem it apposite to reproduce Sections 47, 50 and 63 as

applicable at the relevant time, the same read thus:

“47. Contracts in evasion of the Act.— (1) No person

shall enter into any contract or agreement which

would directly or indirectly evade or avoid in any way

the operation of any provision of this Act or of any

rule, direction or order made thereunder.

(2) Any provision of, or having effect under, this

Act that a thing shall not be done without the

permission of the Central Government or the Reserve

Bank, shall not render invalid any agreement by any

person to do that thing, if it is a term of the agreement

that that thing shall not be done unless permission is

granted by the Central Government or the Reserve

Bank, as the case may be; and it shall be an implied

term of every contract governed by the law of any part

of India that anything agreed to be done by any term of

that contract which is prohibited to be done by or

under any of the provisions of this Act except with the

permission of the Central Government or the Reserve

Bank, shall not be done unless such permission is

granted.

(3) Neither the provisions of this Act nor any term

(whether express or implied) contained in any contract

that anything for which the permission of the Central

Government or the Reserve Bank is required by the

said provisions shall not be done without that

permission, shall prevent legal proceedings being

brought in India to recover any sum which, apart from

the said provisions and any such term, would be due,

whether as debt, damages or otherwise, but—

(a) the said provisions shall apply to sums

required to be paid by any judgment or order of

any court as they apply in relation to other

sums;

(b) no steps shall be taken for the purpose of

enforcing any judgment or order for the payment

of any sum to which the said provisions apply

except as respects so much thereof as the

Central Government or the Reserve Bank, as the

case may be, may permit to be paid; and

to grant such permission, the Central

Government or the Reserve Bank, as the case

may be, may require the person entitled to the

benefit of the judgment or order and the debtor

under the judgment or order, to produce such

documents and to give such information as may

be specified in the requisition.

(4) Notwithstanding anything contained in the

Negotiable Instruments Act, 1881, neither the

provisions of this Act or of any rule, direction or order

made thereunder, nor any condition, whether

expressed or to be implied having regard to those

provisions, that any payment shall not be made

without permission under this Act, shall be deemed to

prevent any instrument being a bill of exchange or

promissory note.

***

50. Penalty.— If any person contravenes any of the

provisions of this Act [other than section 13, cl. (a) of

subsection (1) of section 18 and cl. (a) of subsection

(1) of section 19] or of any rule, direction or order

made thereunder, he shall be liable to such penalty

not exceeding five times the amount or value involved

in any such contravention or five thousand rupees,

whichever is more, as may be adjudged by the Director

of Enforcement or any other officer of Enforcement not

below the rank of an Assistant Director of Enforcement

specially empowered in this behalf by order of the

Central Government (in either case hereinafter referred

to as the adjudicating officer).

***

63. Confiscation of currency, security, etc.— Any

court trying a contravention under section 56 and the

adjudicating officer adjudging any contravention under

section 51 may, if it or he thinks fit and in addition to

any sentence or penalty which it or he may impose for

such contravention, direct that any currency, security

or any other money or property in respect of which the

contravention has taken place shall be confiscated to

the Central Government and further direct that the

foreign exchange holdings, if any, of the person

committing the contravention or any part thereof, shall

be brought back into India or shall be retained outside

India in accordance with the directions made in this

behalf.

Explanation.— For the purposes of this section,

property in respect of which contravention has taken

place shall include—

(a) deposits in a bank, where the said property is

converted into such deposits;

(b) Indian currency, where the said property is

converted into that currency;

the conversion of that property.”

16. Reverting to Section 47, subSection (1) clearly envisages that

no person shall enter into any contract or agreement which would

directly or indirectly evade or avoid in any way the operation of

any provision of the 1973 Act or of any rule, direction or order

made thereunder. What is significant to notice is that subSection

(2) declares that the agreement shall not be invalid if it provides

that thing shall not be done without the permission of the Central

Government or the RBI. That would be the implied requirement of

the agreement in terms of this provision. In other words, though

ostensibly the agreement would be a conditional one made subject

to permission of the Central Government or the RBI, as the case

may be and if such term is not expressly mentioned in the

agreement, it shall be an implied term of every contract governed

by the law — of obtaining permission of the Central Government

or the RBI before doing the thing provided for in the agreement. In

that sense, such a term partakes the colour of a statutory

contract. Notably, Section 47 of the 1973 Act applies to all the

contracts or agreements covered under the 1973 Act, which

require previous permission of the RBI.

17. Section 50 reinforces the position that transfer of land

situated in India by a person, who is not a citizen of India, would

visit with penalty. Indeed, inserting such a provision does not

mean that the 1973 Act is a penal statute, but is to provide for

penal consequence for contravention of provisions, such as

Section 31 of the 1973 Act.

18. Section 63 of the 1973 Act empowers the court trying a

contravention under Section 56 which includes one under Section

51 of the 1973 Act, to confiscate the currency, security or any

other money or property in respect of which the contravention has

taken place. The expression “property” in Section 63, takes within

its sweep immovable property referred to in Section 31 of the 1973

Act. To put it differently, the requirement specified in Section 31

is mandatory and, therefore, contract or agreement including the

gift pertaining to transfer of immovable property of a foreign

national without previous general or special permission of the RBI,

would be unenforceable in law.

19. At this stage, it may be useful to keep in mind the purport of

expression “void” and “voidable”. For that, we may advert to the

exposition in the case of Dhurandhar Prasad Singh v. Jai

Prakash University & Ors.16

, which had noted the dictum of

Lord Denning in R. v. Paddington Valuation Officer, ex p

Peachey Property Corpn. Ltd.17 and also in Judicial Review of

Administrative Action by de Smith, Woolf and Jowell and in

Judicial Remedies in Public Law by Clive Lewis, the same read

thus:

“19. This question was examined by the Court of

Appeal in the case of R. v. Paddington Valuation

Officer, ex p Peachey Property Corpn. Ltd. [(1965) 2 All

ER 836 : (1966) 1 QB 380 : (1965) 3 WLR 426 (CA)]

where the valuation list was challenged on the ground

that the same was void altogether. On these facts,

Lord Denning, M.R. laid down the law, observing at p.

841 thus:

“It is necessary to distinguish between two kinds

of invalidity. The one kind is where the invalidity is

so grave that the list is a nullity altogether. In

which case there is no need for an order to quash

it. It is automatically null and void without more

ado. The other kind is when the invalidity does not

make the list void altogether, but only voidable. In

that case it stands unless and until it is set aside.

In the present case the valuation list is not, and

never has been, a nullity. At most the first

respondent — acting within his jurisdiction —

16 (2001) 6 SCC 534

17 (1965) 2 All ER 836

exercised that jurisdiction erroneously. That makes

the list voidable and not void. It remains good until

it is set aside.”

20. de Smith, Woolf and Jowell in their

treatise Judicial Review of Administrative Action, 5th

Edn., para 5044, have summarised the concept of

void and voidable as follows:

“Behind the simple dichotomy of void and

voidable acts (invalid and valid until declared to be

invalid) lurk terminological and conceptual

problems of excruciating complexity. The problems

arose from the premise that if an act, order or

decision is ultra vires in the sense of outside

jurisdiction, it was said to be invalid, or null and

void. If it is intra vires it was, of course, valid. If it is

flawed by an error perpetrated within the area of

authority or jurisdiction, it was usually said to be

voidable; that is, valid till set aside on appeal or in

the past quashed by certiorari for error of law on

the face of the record.”

21. Clive Lewis in his work Judicial Remedies in Public

Law at p. 131 has explained the expressions “void and

voidable” as follows:

“A challenge to the validity of an act may be by

direct action or by way of collateral or indirect

challenge. A direct action is one where the principal

purpose of the action is to establish the invalidity.

This will usually be by way of an application for

judicial review or by use of any statutory

mechanism for appeal or review. Collateral

challenges arise when the invalidity is raised in the

course of some other proceedings, the purpose of

which is not to establish invalidity but where

questions of validity become relevant.”

22. Thus the expressions “void and voidable” have

been the subjectmatter of consideration on

innumerable occasions by courts. The expression

“void” has several facets. One type of void acts,

transactions, decrees are those which are wholly

without jurisdiction, ab initio void and for avoiding the

same no declaration is necessary, law does not take

any notice of the same and it can be disregarded in

collateral proceeding or otherwise. The other type of

void act, e.g., may be transaction against a minor

without being represented by a next friend. Such a

transaction is a good transaction against the whole

world. So far as the minor is concerned, if he decides

to avoid the same and succeeds in avoiding it by

taking recourse to appropriate proceeding the

transaction becomes void from the very beginning.

Another type of void act may be which is not a nullity

but for avoiding the same a declaration has to be

made. Voidable act is that which is a good act unless

avoided, e.g., if a suit is filed for a declaration that a

document is fraudulent and/or forged and fabricated,

it is voidable as the apparent state of affairs is the real

state of affairs and a party who alleges otherwise is

obliged to prove it. If it is proved that the document is

forged and fabricated and a declaration to that effect is

given, a transaction becomes void from the very

beginning. There may be a voidable transaction which

is required to be set aside and the same is avoided

from the day it is so set aside and not any day prior to

it. In cases where legal effect of a document cannot be

taken away without setting aside the same, it cannot

be treated to be void but would be obviously voidable.”

20. It is well established that a contract is void if prohibited by a

statute under a penalty, even without express declaration that the

contract is void, because such a penalty implies a prohibition.

Further, it is settled that prohibition and negative words can

rarely be directory. In the present dispensation provided under

Section 31 of the 1973 Act read with Sections 47, 50 and 63 of the

same Act, although it may be a case of seeking previous

permission it is in the nature of prohibition as observed by a

threeJudge Bench of this Court in Mannalal Khetan & Ors. v.

Kedar Nath Khetan & Ors.18

. In every case where a statute

imposes a penalty for doing an act, though, the act not prohibited,

18 (1977) 2 SCC 424

yet the thing is unlawful because it is not intended that a statute

would impose a penalty for a lawful act. When penalty is imposed

by statute for the purpose of preventing something from being

done on some ground of public policy, the thing prohibited, if

done, will be treated as void, even though the penalty if imposed is

not enforceable. We may usefully reproduce paragraphs 18 to 22

of the said reported decision, which

read thus:

“18. The High Court said that the provisions contained

in Section 108 of the Act are directory because noncompliance with Section 108 of the Act is not declared

an offence. The reason given by the High Court is

that when the law does not prescribe the

consequences or does not lay down penalty for

noncompliance with the provision contained in

Section 108 of the Act the provision is to be

considered as directory. The High Court failed to

consider the provision contained in Section 629(a) of

the Act. Section 629(a) of the Act prescribes the

penalty where no specific penalty is provided

elsewhere in the Act. It is a question of construction

in each case whether the legislature intended to

prohibit the doing of the act altogether, or merely

to make the person who did it liable to pay the

penalty.

19. Where a contract, express or implied, is

expressly or by implication forbidden by statute,

no court will lend its assistance to give it effect.

(See Mellis v. Shirley L.B. [(1885) 16 QBD 446 : 55

LJQB 143 : 2 TLR 360] ) A contract is void if

prohibited by a statute under a penalty, even

without express declaration that the contract is

void, because such a penalty implies a prohibition.

The penalty may be imposed with intent merely to

deter persons from entering into the contract or for the

purposes of revenue or that the contract shall not be

entered into so as to be valid at law. A distinction is

sometimes made between contracts entered into

with the object of committing an illegal act and

contracts expressly or impliedly prohibited by

statute. The distinction is that in the former class one

has only to look and see what acts the statute

prohibits; it does not matter whether or not it prohibits

a contract: if a contract is made to do a prohibited

act, that contract will be unenforceable. In the

latter class, one has to consider not what act the

statute prohibits, but what contracts it prohibits. One

is not concerned at all with the intent of the parties, if

the parties enter into a prohibited contract, that

contract is unenforceable. (See St. John Shipping

Corporation v. Joseph Rank [(1957) 1 QB 267].) (See

also Halsbury's Laws of England, 3rd Edn., Vol. 8, p.

141.)

20. It is well established that a contract which

involves in its fulfilment the doing of an act

prohibited by statute is void. The legal maxim A

pactis privatorum publico juri non derogatur means that

private agreements cannot alter the general law.

Where a contract, express or implied, is expressly or

by implication forbidden by statute, no court can lend

its assistance to give it effect. (See Mellis v. Shirley

L.B.) What is done in contravention of the

provisions of an Act of the legislature cannot be

made the subject of an action.

21. If anything is against law though it is not

prohibited in the statute but only a penalty is

annexed the agreement is void. In every case where

a statute inflicts a penalty for doing an act, though the

act be not prohibited, yet the thing is unlawful,

because it is not intended that a statute would inflict a

penalty for a lawful act.

22. Penalties are imposed by statute for two distinct

purposes:

(1) for the protection of the public against fraud, or for

some other object of public policy; (2) for the purpose

of securing certain sources of revenue either to the

State or to certain public bodies. If it is clear that a

penalty is imposed by statute for the purpose of

preventing something from being done on some

ground of public policy, the thing prohibited, if

done, will be treated as void, even though the

penalty if imposed is not enforceable.”

(emphasis supplied)

The principle underlying in this decision must apply on all fours

while analysing the purport of Section 31 of the 1973 Act.

21. The appellant has invited our attention to the dictum in

Union of India & Ors. v. A.K. Pandey19

, that where a contract,

express or implied, is expressly or by implication forbidden by

statute, no court will lend its assistance to give it effect. Further,

a contract is void if prohibited by a statute under a penalty, even

without express declaration that the contract is void, because

such a penalty implies a prohibition. Similarly, in the case of

Union of India v. Colonel L.S.N. Murthy & Anr.20, the Court

opined that the contract would be lawful, unless the consideration

and object thereof is of such a nature that, if permitted, it would

defeat the provisions of law and in such a case the consideration

or object is unlawful and would become void and that unless the

effect of an agreement results in performance of an unlawful act,

an agreement which is otherwise legal cannot be held to be void

and if the effect of an agreement did not result in performance of

19 (2009) 10 SCC 552 (paras 14 and 15)

20 (2012) 1 SCC 718 (paras 16 to 19 and 21)

an unlawful act, as a matter of public policy, the court should

refuse to declare the contract void with a view to save the bargain

entered into by the parties and the solemn promises made

thereunder. The Court adverted to the exposition in the earlier

decision in Shri Lachoo Mal v. Shri Radhey Shyam21 as to what

makes an agreement, which is otherwise legal, void is that its

performance is impossible except by disobedience of law.

22. Notably, the Constitution Bench of this Court in Life

Insurance Corporation of India (supra) had an occasion to

examine the objects and reasons for enacting the 1973 Act. The

Court was called upon to consider the purport of Section 29 of the

1973 Act, which does not qualify the words “general or special

permission of the Reserve Bank of India” with word “previous” or

“prior” unlike in the case of Section 31 of the same Act. In

paragraph 63, this distinction has been noticed and reference has

been specifically made to Section 31 of the 1973 Act. That makes

it amply clear that the dispensations provided in Sections 29 and

31, must be regarded as distinct and violation whereof would visit

with different consequences. As regards Section 29, this Court

opined that the permission can be sought from the RBI at some

21 (1971) 1 SCC 619

stage for the purchase of shares by nonresident companies and

not necessarily prior permission. The Court, therefore, opined

that even ex post facto permission can be accorded by the RBI in

reference to transaction covered by Section 29 of the Act.

23. Significantly, the consequence of contravention of Section 31

of the Act as being rendering the transfer void, is also taken notice

of in the recent decision of a threeJudge Bench of this Court in

Vijay Karia (supra). It has been so noted in paragraph 88 while

distinguishing the dispensation provided in the Foreign Exchange

Management Act, 1999 (FEMA). The Court has noted that FEMA

unlike FERA — refers to the nation’s policy of managing foreign

exchange instead of policing foreign exchange, the policeman

being RBI under FERA. Indeed, it is not a decision dealing directly

with the question involved in the present appeal. Nevertheless, it

does take notice of the strict dispensation under Section 31, as it

obtained under the 1973 Act, particularly requiring “previous”

general or special permission of the RBI.

24. Another threeJudge Bench in the case Renusagar Power

Co. Ltd. (supra) while dealing with the question of enforceability of

an arbitral award, adverted to violation of FERA in reference to

Section 47 of the 1973 Act as can be discerned from paragraphs

68 to 84. We need not dilate on this judgment except to notice the

dictum in Herbert Wagg & Co. Ltd., Re22 reproduced in

paragraph 68, which reads thus:

“68. … In Herbert Wagg & Co. Ltd., Re [(1956) 1 Ch

323], Upjohn J., has said:

“It cannot be doubted that legislation

intended to protect the economy of the nation

and the general welfare of its inhabitants

regardless of their nationality by various

measures of foreign exchange control or by

altering the value of its currency, is recognised

by foreign courts although its effect is usually

partially confiscatory. Probably there is no

civilized country in the world which has not at

some stage in its history altered its currency or

restricted the rights of its inhabitants to

purchase the currency of another country. (p.

349)

In my judgment these courts must recognize

the right of every foreign State to protect its

economy by measures of foreign exchange

control and by altering the value of its currency.

Effect must be given to those measures where

the law of the foreign State is the proper law of

the contract or where the movable is situate

within the territorial jurisdiction of the State.”

(p. 351)”

It may be useful to also reproduce paragraph 69 of the judgment,

which reads thus:

“69. The following principle of Private International

Law is applicable in relation to such legislation:

“212. (1) A contractual obligation may be

invalidated or discharged by exchange control

legislation if—

(a) such legislation is part of the proper law of the

contract; or

(b) it is part of the law of the place of

performance; or

22 (1956) 1 Ch 323

statute or statutory instrument is applicable to

the contract:

Provided that foreign exchange legislation will not

be applied if it is used not with the object of

protecting the economy of the foreign State, but as

an instrument of oppression or discrimination.”

(See : Dicey & Morris, The Conflict of Laws, 11th

Edn., Vol. II, 1466.)”

25. From the analysis of Section 31 of the 1973 Act and upon

conjoint reading with Sections 47, 50 and 63 of the same Act, we

must hold that the requirement of taking “previous” permission of

the RBI before executing the sale deed or gift deed is the

quintessence; and failure to do so must render the transfer

unenforceable in law. The dispensation under Section 31

mandates “previous” or “prior” permission of the RBI before the

transfer takes effect. For, the RBI is competent to refuse to grant

permission in a given case. The sale or gift could be given effect

and taken forward only after such permission is accorded by the

RBI. There is no possibility of ex post facto permission being

granted by the RBI under Section 31 of the 1973 Act, unlike in the

case of Section 29 as noted in Life Insurance Corporation of

India (supra). Before grant of such permission, if the sale deed or

gift deed is challenged by a person affected by the same directly or

indirectly and the court declares it to be invalid, despite the

document being registered, no clear title would pass on to the

recipient or beneficiary under such deed. The clear title would

pass on and the deed can be given effect to only if permission is

accorded by the RBI under Section 31 of the 1973 Act to such

transaction.

26. In light of the general policy that foreigners should not be

permitted/allowed to deal with real estate in India; the peremptory

condition of seeking previous permission of the RBI before

engaging in transactions specified in Section 31 of the 1973 Act

and the consequences of penalty in case of contravention, the

transfer of immovable property situated in India by a person, who

is not a citizen of India, without previous permission of the RBI

must be regarded as unenforceable and by implication a

prohibited act. That can be avoided by the RBI and also by

anyone who is affected directly or indirectly by such a transaction.

There is no reason to deny remedy to a person, who is directly or

indirectly affected by such a transaction. He can set up challenge

thereto by direct action or even by way of collateral or indirect

challenge.

27. In other words, until permission is accorded by the RBI, it

would not be a lawful contract or agreement within the meaning of

Section 10 read with Section 23 of the Contract Act. For, it

remains a forbidden transaction unless permission is obtained

from the RBI. The fact that the transaction can be taken forward

after grant of permission by the RBI does not make the transaction

any less forbidden at the time it is entered into. It would

nevertheless be a case of transaction opposed to public policy and,

thus, unlawful. In this view of the matter, the appellant must

succeed and would be entitled for the reliefs claimed in O.S. No.

10079 of 1984 for declaration that the gift deed dated 11.03.1977

and supplementary deed dated 19.04.1980 in favour of

respondent No.1 are invalid, unenforceable and not binding on the

plaintiff. A fortiori, the plaintiff is entitled for possession of the suit

property from respondent no.1 and persons claiming through him,

admeasuring 12,306 square feet and also mesne profits for the

relevant period for which a separate inquiry needs to be initiated

under Order 20 Rule 12 of the Code of Civil Procedure, 1908.

28. Reverting to the judgment of Punjab & Haryana High Court

in Piara Singh (supra) relied upon in the impugned judgment, it

was held as follows:

“11. It is true that the section provides that without

the previous permission of the Reserve Bank, a person

who is not a citizen of India, cannot acquire property,

but it does not provide that if someone purchases any

property the title therein does not pass to him. What

the Act provides is that if a person contravenes S.31

and some other sections, he can be penalized under

S.50 and can also be prosecuted under S.56.

However, there is no provision in the Act which makes

transaction void or says that no title in the property

passes to the purchaser in case there is contravention

of the provisions of subsec.(1) of S.31. Section 63

contains a provision regarding confiscation of certain

properties but it does not contain any provision for

confiscation if there is breach of the provisions of subsec.(1) of S.31. Therefore, the property purchased in

contravention of subsec.(1) of S.31 is also not liable to

confiscation. In the circumstances, it cannot be held

that the plaintiffs are not entitled to obtain possession

of the property or recover damages for its use and

occupation.”

29. In the first place, provision for penalty under Section 50 for

contravention referred to in Section 31, does not mean that the

requirement of previous permission of RBI is directory or a mere

formality. It is open to the legislature to provide two different

consequences for the violation. As already noted hitherto, despite

the absence of express provision declaring the transfer void, the

intent behind enacting Section 31 and its purport renders the

transfer in contravention thereof unenforceable until permission

for such transaction is granted by the RBI.

30. Suffice it to observe that merely because no provision in the

Act makes the transaction void or says that no title in the property

passes to the purchaser in case there is contravention of the

provisions of Section 31, will be of no avail. That does not validate

the transfer referred to in Section 31, which is not backed by

“previous” permission of the RBI. Further, the Punjab & Haryana

High Court erroneously assumed that there was no provision

regarding confiscation of the immovable property referred to in

Section 31. Section 63 of the 1973 Act clearly refers to property in

respect of which contravention has taken place for being

confiscated to the Central Government. The expression “property”

therein would certainly take within its sweep an immovable

property referred to in Section 31 of the Act. The expression

“property” in Section 63 is an inclusive term and, therefore, there

is no reason to assume that consequence of confiscation may not

apply to immovable property in respect of which contravention of

the provisions of subSection (1) of Section 31 had taken place.

The basis of that judgment is tenuous and is palpably wrong. For

the same reason, the decision in R. Sambasivam (supra) of the

Madras High Court is erroneous as it has merely followed the

dictum of the Punjab & Haryana High Court. Suffice it to observe

that the transaction of gift deed without previous permission of the

RBI may not be nullity, but certainly not enforceable in law until

such permission is granted.

31. In the case of Ajit Prashad Jain (supra) discussion

regarding consequences of contravention of Section 31 of the 1973

Act is found in paragraph 26 of the reported decision. Although,

this decision is independent of the view expressed in Piara Singh

(supra) by the Punjab & Haryana High Court, there is no clear

analysis of the aspects which are germane for giving correct

interpretation to Section 31 of the 1973 Act and the effect of

consequences for its contravention. For the view taken by us

hitherto, it is unnecessary to dilate on this judgment any further.

Similarly, the Gauhati High Court in the case of Tufanu Chouhan

(supra) essentially relied upon the decision in Piara Singh (supra)

of the Punjab & Haryana High Court. For the reasons already

stated while dealing with Piara Singh (supra), even this judgment

will be of no avail to the respondent. Even the Madhya Pradesh

High Court in Geeta Reinboth (supra) relied upon Piara Singh

(supra) as well as on the dictum in the book titled Principles of

Statutory Interpretation, 8th Edition by Justice G.P. Singh and

upon the decision of the same High Court in Janki Bai v. Ratan

Melu23

, Ajit Prashad Jain (supra) and notification No. GSR 456

(E) dated 26.05.1993 of the RBI (Exchange Control Department)

23 1962 MPLJ 78 : AIR 1962 MP 117

published in 1993 MPLT 242 (109). As regards the dictum in the

book Principles of Statutory Interpretation, that is a general

observation, not specifically dealing with the purport and

interpretation of Section 31 of the 1973 Act. As aforesaid, Section

31 needs to be interpreted in light of the intent with which the

same has been enacted keeping in mind the general policy not to

allow foreigners to transact in or hold real estate in India. The

case of Janki Bai (supra) had dealt with the provisions of C.P. &

Berar Money Lenders Act, 1934. The observations made therein

are, therefore, in the context of provisions of that Act. We have

already analysed the dictum in Ajit Prashad Jain (supra) and

noted that the same is of no avail to the respondent. Reverting to

the stated notification dated 26.05.1993 issued by the RBI, that

indeed is to clarify the scope of Section 31 of the 1973 Act.

However, it is limited to transaction entered into by a foreign

citizen of “Indian origin”, to deal with real estate in India on

certain conditions. This notification has no application to

foreigners or so to say the person who is not a citizen of India,

namely, foreign citizens. In the present case, the land was owned

by a foreign citizen. For which reason, the rigours of Section 31

must apply with full force. Additionally, it must be kept in mind

that the stated notification was issued in 1993, around which time

a change in policy regarding the investment opportunities for nonresident Indians and foreigners had been crystallised, by opening

up of economy in India. In the present case, we are dealing with

the transaction effected close to the coming into force of the 1973

Act i.e., in the year 1977 when considerations were different and

governed by different policy manifested in the form of enactment of

Section 31 of the 1973 Act, spoken to by the then Finance

Minister in the Lok Sabha, forbidding foreigners from dealing with

real estate in India.

32. The two other decisions of the Madras High Court, namely,

Sivaprakasam (supra) and Mathu Sree Akkabai Ammani

Charitable Trust (supra), were pressed into service. These came

to be decided on similar reasoning adopted in the earlier decision

of the same High Court in R. Sambasivam (supra) and Piara

Singh (supra) of the Punjab & Haryana High Court. Those

decisions will be of no avail to the respondent in light of the view

taken by us on the interpretation of Section 31 of the 1973 Act.

33. We may now usefully advert to the decision of the Bombay

High Court (Goa Bench) in Joaquim Mascarenhas Fiuza v.

Jaime Rebello & Anr.24, which has taken a different view to

interpret Section 31 of the 1973 Act. That dealt with the case of

transfer of property which according to the respondent therein

could not be held by the plaintiff/petitioner, who was a foreign

national and not a citizen of India, in absence of permission given

by the RBI in that regard. The Bombay High Court took the view

that the requirement of seeking previous permission of the RBI in

Section 31 of the 1973 Act is mandatory and a foreign national

could hold the property in India, only if so permitted by the RBI.

The view so taken commends to us. Notably, the Single Judge of

the Madras High Court had followed this dictum in Sahruvan

Nachair & Anr. v. V.S. Mohammed Hussain Maracair25

34. It has been brought to our notice that the Kerala High Court

in William Babu & Anr. v. Helma Roy Alias Emily Carmel26

opined that contract in contravention of Section 31 is void, as

previous general or special permission of the RBI had not been

obtained, which in its view was mandatory. This decision had

become final consequent to dismissal of SLP (Civil) No.11591 of

2018 on 23.04.2018. Even a Division Bench of the Madras High

24 1986 SCC OnLine Bom 234 : 1986 Mah LJ 1031

25 (2001) 1 Mad LJ 188 : 2000 SCC OnLine Mad 737

26 (2018) 1 KLJ 525 : 2017 SCC OnLine Ker 25269

Court in Mrs. Shoba Viswanatha v. D.P. Kingsley27

, while

considering the purport of Section 31 of the 1973 Act, vide its

erudite judgment considered the scope of Section 23 of the

Contract Act and the principles delineated in that regard in

Pollock and Mulla Indian Contract Act, VII Edition, page 158

including the decisions in Joaquim Mascarenhas Fiuza (supra),

Beharilal Maudgi v. The Secretary to Govt. of A.P. Home

Department, Hyderabad & Ors.28 and the considerations

governing public policy as delineated in Gherulal Parakh v.

Mahadeodas Maiya & Ors.29

, Rattan Chand Hira Chand v.

Askar Nawaz (Dead) by L.Rs. & Ors.30 and other treaties, to

eventually conclude that the position of law is clear that when the

enforcement of the contract is against any provision of law, that

will amount to enforcement of an illegal contract. The contract per

se may not be illegal. But its enforcement requires compliance of

statutory conditions, failure of which will amount to statutory

violation. A court which is expected to enforce the law, cannot be a

party to such a decree. The view so taken in this judgment

commends to us. As a matter of fact, this judgment has become

27 1996 (I) CTC 620 : 1996 SCC Online Mad 319

28 1986 (2) ALT 241

29 AIR 1959 SC 781

30 1991 (3) SCC 67

final in view of dismissal of SLP (Civil) No.15024 of 1996 by this

Court vide order dated 14.08.1996.

35. For the view that we have taken, it is not possible to

countenance the argument not to disturb the consistent view of

different High Courts on the principle of stare decisis by invoking

the dictum in Waman Rao (supra), in reference to Section 31 of

the 1973 Act. For, there is conflict of opinion and is not a case of

consistent view of all High Courts, having occasion to deal with

interpretation of Section 31 of the 1973 Act. Resultantly, we had

to undertake the exercise of analysing all the decisions so as to

give proper meaning to Section 31 of the 1973 Act. In our opinion,

the requirement of seeking previous general or special permission

of the RBI in respect of transaction covered by Section 31 of the

1973 Act is mandatory. Resultantly, any sale or gift of property

situated in India by a foreigner in contravention thereof would be

unenforceable in law.

36. As the stated gift deeds dated 11.03.1977 and 19.04.1980 in

favour of respondent no.1 being unenforceable in law, respondent

no.1 had no clear title to transfer the same to Dr. Thomas Chandy

vide purported sale deed dated 15.09.2005. It is not necessary for

us to dilate on the argument of the appellant that such a sale deed

in any case could not have been executed by respondent No.1 in

favour of Dr. Thomas Chandy in contravention of interim order

passed by the High Court on 07.04.2005 and the effect thereof.

37. As noticed above, the contrary decisions of High Courts have

completely missed the legislative intent and the spirit of enactment

of Section 31, as is manifest from the statement of the then

Finance Minister while tabling the Bill in the Lok Sabha that as a

general policy foreign national cannot be allowed to deal with real

estate in India. Besides that clear indication, the legislative

scheme impels us to take a view which is reinforced from conjoint

reading of Section 31 along with Sections 47, 50 and 63. There is

little doubt that the requirement of “previous” permission of the

RBI, to be taken by a foreign national before transacting in real

estate, is mandatory. In other words, without previous permission

of the RBI, such a transaction is forbidden and if entered into,

would be unenforceable in law.

38. We hold that the condition predicated in Section 31 of the

1973 Act of obtaining “previous” general or special permission of

the RBI for transfer or disposal of immovable property situated in

India by sale or mortgage by a person, who is not a citizen of

India, is mandatory. Until such permission is accorded, in law,

the transfer cannot be given effect to; and for contravening with

that requirement, the concerned person may be visited with

penalty under Section 50 and other consequences provided for in

the 1973 Act. Hence, the Trial Court as well as the High Court

committed manifest error in dismissing the suit filed by the

plaintiff for a declaration in respect of suit property admeasuring

12,306 square feet and for consequential reliefs referred to

therein.

39. A priori, we conclude that the decisions of concerned High

Courts taking the view that Section 31 of the 1973 Act is not

mandatory and the transaction in contravention thereof is not void

or unenforceable, is not a good law. However, transactions which

have already become final including by virtue of the decision of the

court of competent jurisdiction, need not be reopened or disturbed

in any manner because of this pronouncement. This

declaration/direction is being issued in exercise of our plenary

power under Article 142 of the Constitution of India. For, there

has been a paradigm shift in the general policy of investment by

foreigners in India and more particularly, the 1973 Act itself

stands repealed. Accordingly, we deem it appropriate to overrule

the decisions of the High Courts, taking contrary view, albeit,

prospectively.

40. In view of the above, the appeal is allowed. The impugned

judgment and decree of the Trial Court, as confirmed by the High

Court, is set aside. Instead, O.S. No.10079 of 1984 filed by Mr.

R.P. David (predecessor of the appellant and respondent no.4)

stands decreed in toto in favour of the plaintiff. The appellant

(being the legal representative of the plaintiff) is entitled for

possession of the suit property being the owner thereof and also

for mesne profits for the relevant period for which a separate

inquiry be conducted under Order 20 Rule 12 of the Code of Civil

Procedure, 1908. Ordered accordingly. No order as to costs.

All pending applications stand disposed of.

..................................J.

(A.M. Khanwilkar)

...................................J.

(Indu Malhotra)

...................................J.

(Ajay Rastogi)

New Delhi;

February 26, 2021.

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