The facts that gave raise to institution of this revision petition, are that the document, namely, agreement of sale dated 1.11.2006, which was sought to be marked, was written on the white paper affixed with adhesive stamps and was not executed by impressed stamp paper. When the same was sought to be marked the defendant raised an objection. The said objection was sustained by the trial Court holding that Section (11) of the Indian Stamp Act, 1899 (for short 'the Act') defines 'duly stamped'. Section 2(13) defines 'impressed stamp'. Rule 17 of the Indian Stamp Rules, 1925 (for short 'the Rules') defines Special Adhesive stamps to be used in certain cases and what instrument they can be used. The document in question, being an agreement of sale, is not included in the said Rule where adhesive stamps can be used. Further Rule 13 of the Rules provides as to and for what instrument adhesive stamps can be used, but the said Rule also do not include the agreement of sale, which is coming within the Article 6 of Schedule-1A of the Act. Therefore, the objections have to be sustained giving an opportunity to the plaintiff to send it to the Collector for proper certification as required under Section 37 read with 18 of the Act. Sri N. Siva Reddy, learned counsel for the petitioner contends that sub-section 26 of Section 2 of the Act defines 'stamp', which means any mark, seal or endorsement by ay agency or person duly authorized by the State Government, and includes an adhesive or impressed stamp, for the purpose of duly chargeable under this Act. The said provision was inserted with effect from 10.09.2004. Therefore, the same can be treated as stamp as defined under Section 2 (13) of the Act. Section 11 of the Act provides use of adhesive stamps. Rule 6 of the Rules provides every other instrument chargeable with duty shall, except as provided by Section 11 or by (Rules 10, 12 and 13), be written on paper on which a stamp of the proper value, not bearing the work "hundi" has been engraved or embossed. Rule 13(d) of the Rules provides instruments chargeable with duty under Articles 5(a) and (b) and 43 of Schedule I, Articles 5(a) and (b) and 38 of Schedule IA of Andhra Pradesh Stamp Rules. In view of the same, the adhesive stamps affixed on the agreement of sale comply with the statutory requirement, and rejection of the same by the lower Court is not at all correct. To appreciate the above said contention, it is necessary to see the definitions of 'duly stamped', and 'impressed stamp'. Section 2(11) of the Act reads as under. "Duly Stamped" :- "Duly stamped", as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in [India]. Section 2(13) of the Act reads as under: "Impressed stamp":- "Impressed stamp" includes, -- a) labels affixed and impressed by the proper officer, and b) stamps embossed or engraved on stamped paper; c) impression by franking machine or any other such machine as the State Government or the Central Government, as the case may be, by notification in the Official Gazette, specify] Rule 13(d) of the Rules as applicable in Andhra Pradesh, specifies use of adhesive stamps on certain instruments. Under Article 5(a), (b), 13 and 43 of Schedule-I are equivalent to Article 5 (a), (b) and 38 of Schedule-IA of the A.P. Act. Article 5(a) and (b) of Schedule-IA deals with agreement or memorandum of an agreement - a) if relating to the sale of a bill of exchange, b) if relating to the sale of a government security or share in an incorporated company or other body corporate. Whereas Article 6 of Schedule-IA deals with Agreement or memorandum of an agreement not otherwise provided for. Article 38 of Schedule-IA deals with note or memorandum sent by a broker or agent to his principal intimating the purchase or sale on account of such principle. Therefore, use of adhesive stamps under Rule 13(d) of Rules on an agreement covered by Article 6 of Schedule-IA has not been included for use of adhesive stamps. Rule 17 of the Rules provides use of special adhesive stamps in certain cases as enumerated under Rule 17(a) to (g), which do not include agreement of sale for use of special adhesive stamps. Section 11 of the Act provides for use of adhesive stamps on the instrument enumerated therein, under a, b, c, d, and e which does not include agreement of sale. In view of the same, the contention advanced by the learned counsel for the petitioner that once Rule 13(d) of the Rules provides use of adhesive stamps and the instrument chargeable with duty, cannot be sustained. The scheme enumerated as above specifically provide for use of adhesive stamps and impressed stamps on the document as aforementioned. In view of the same the lower Court rightly sustained the Objection. Merely because the definition 'stamp' under Section 2(26) of the Act has been amended by Act 2 of 2006, which came into force with effect from 10.09.2004, it does not fall under 'impressed stamp'. Similarly, Section 2(13) the definition 'impressed stamp' does not include 'adhesive stamps'. THE HON'BLE SRI JUSTICE A. GOPAL REDDY Civil Revision Petition No.885 of 2010 13-08-2010 Tadi Jaganmohana Reddy S/o. Sri Peda Pereddy, R/o. Pasalapudi Village, Rayavaram Mandal, East Godavari District. Karri Satyanarayana Reddy, S/o. Sri Subbi Reddy, R/o. Pasalapudi Village, Rayavaram Mandal, East Godavari District. Counsel For The Petitioner: Sri N. Siva Reddy Counsel For Respondent: Smt. K. Sesharajyam :ORDER: The petitioner/plaintiff filed this revision petition, under Article 227 of the Constitution of India, against the order dated 16.02.2010 passed in O.S.No.304 of 2006 by the Senior Civil Judge, Ramachandrapuram, sustaining the objection taken by the defendant with regard to marking of agreement of sale dated 1.11.2006 based on which the suit for specific performance of agreement of sale was filed. The facts that gave raise to institution of this revision petition, are that the document, namely, agreement of sale dated 1.11.2006, which was sought to be marked, was written on the white paper affixed with adhesive stamps and was not executed by impressed stamp paper. When the same was sought to be marked the defendant raised an objection. The said objection was sustained by the trial Court holding that Section (11) of the Indian Stamp Act, 1899 (for short 'the Act') defines 'duly stamped'. Section 2(13) defines 'impressed stamp'. Rule 17 of the Indian Stamp Rules, 1925 (for short 'the Rules') defines Special Adhesive stamps to be used in certain cases and what instrument they can be used. The document in question, being an agreement of sale, is not included in the said Rule where adhesive stamps can be used. Further Rule 13 of the Rules provides as to and for what instrument adhesive stamps can be used, but the said Rule also do not include the agreement of sale, which is coming within the Article 6 of Schedule-1A of the Act. Therefore, the objections have to be sustained giving an opportunity to the plaintiff to send it to the Collector for proper certification as required under Section 37 read with 18 of the Act. Sri N. Siva Reddy, learned counsel for the petitioner contends that sub-section 26 of Section 2 of the Act defines 'stamp', which means any mark, seal or endorsement by ay agency or person duly authorized by the State Government, and includes an adhesive or impressed stamp, for the purpose of duly chargeable under this Act. The said provision was inserted with effect from 10.09.2004. Therefore, the same can be treated as stamp as defined under Section 2 (13) of the Act. Section 11 of the Act provides use of adhesive stamps. Rule 6 of the Rules provides every other instrument chargeable with duty shall, except as provided by Section 11 or by (Rules 10, 12 and 13), be written on paper on which a stamp of the proper value, not bearing the work "hundi" has been engraved or embossed. Rule 13(d) of the Rules provides instruments chargeable with duty under Articles 5(a) and (b) and 43 of Schedule I, Articles 5(a) and (b) and 38 of Schedule IA of Andhra Pradesh Stamp Rules. In view of the same, the adhesive stamps affixed on the agreement of sale comply with the statutory requirement, and rejection of the same by the lower Court is not at all correct. To appreciate the above said contention, it is necessary to see the definitions of 'duly stamped', and 'impressed stamp'. Section 2(11) of the Act reads as under. "Duly Stamped" :- "Duly stamped", as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in [India]. Section 2(13) of the Act reads as under: "Impressed stamp":- "Impressed stamp" includes, -- a) labels affixed and impressed by the proper officer, and b) stamps embossed or engraved on stamped paper; c) impression by franking machine or any other such machine as the State Government or the Central Government, as the case may be, by notification in the Official Gazette, specify] Rule 13(d) of the Rules as applicable in Andhra Pradesh, specifies use of adhesive stamps on certain instruments. Under Article 5(a), (b), 13 and 43 of Schedule-I are equivalent to Article 5 (a), (b) and 38 of Schedule-IA of the A.P. Act. Article 5(a) and (b) of Schedule-IA deals with agreement or memorandum of an agreement - a) if relating to the sale of a bill of exchange, b) if relating to the sale of a government security or share in an incorporated company or other body corporate. Whereas Article 6 of Schedule-IA deals with Agreement or memorandum of an agreement not otherwise provided for. Article 38 of Schedule-IA deals with note or memorandum sent by a broker or agent to his principal intimating the purchase or sale on account of such principle. Therefore, use of adhesive stamps under Rule 13(d) of Rules on an agreement covered by Article 6 of Schedule-IA has not been included for use of adhesive stamps. Rule 17 of the Rules provides use of special adhesive stamps in certain cases as enumerated under Rule 17(a) to (g), which do not include agreement of sale for use of special adhesive stamps. Section 11 of the Act provides for use of adhesive stamps on the instrument enumerated therein, under a, b, c, d, and e which does not include agreement of sale. In view of the same, the contention advanced by the learned counsel for the petitioner that once Rule 13(d) of the Rules provides use of adhesive stamps and the instrument chargeable with duty, cannot be sustained. The scheme enumerated as above specifically provide for use of adhesive stamps and impressed stamps on the document as aforementioned. In view of the same the lower Court rightly sustained the Objection. Merely because the definition 'stamp' under Section 2(26) of the Act has been amended by Act 2 of 2006, which came into force with effect from 10.09.2004, it does not fall under 'impressed stamp'. Similarly, Section 2(13) the definition 'impressed stamp' does not include 'adhesive stamps'. The lower Court rightly sustained the objection. No illegality or infirmity is discernible in the impugned order passed by the lower Court warranting interference of this Court under Article 227 of the Constitution of India. Accordingly, the Civil Revision Petition is dismissed. . |
LawforAll
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- since 1985 practicing as advocate in both civil & criminal laws
WELCOME TO LEGAL WORLD
Thursday, October 29, 2020
WHETHER THE AGREEMENT OF SALE CAN BE EXECUTED ON WHITE PAPER WITH ADHESIVE STAMPS
Friday, October 16, 2020
A contractor's employee - there was no employer - employee relationship - no interim order restraining to appoiint fresh contract complyee
A contractor's employee - there was no employer - employee relationship - no interim order restraining to appoiint fresh contract complyee
a contractor’s employee and there was no employeremployee relationship between the original writ petitioner and the appellant Corporation. It is submitted that even there is no regular sanctioned post of Computer Operator in the appellant Corporation and, therefore, the appellant Corporation gave the work order to the contractor for providing the services of the Computer Operator etc., the High Court ought not to have passed such an interim order. Having heard the learned counsel appearing on behalf of the respective parties, we are of the opinion that the High Court has committed a grave error in passing such an interim order restraining the appellant Corporation from appointing new set of contractual employees in place of original writ petitioners. No reasons, whatsoever have been assigned by the High Court while passing the impugned interim order. The High Court has failed to appreciate and consider the fact that according to the appellant Corporation, there was no regular sanctioned post of Computer Operator in the appellant Corporation and that there was no employeremployee relationship between the original writ petitioner and the appellant Corporation and that the original writ petitioner was a employee appointed by the contractor on contractual basis and worked with the appellant Corporation on contractual basis. 5 As the writ petition is pending before the High Court, we refrain ourselves from making any further observations on merits. However, we are of the opinion that in the facts and circumstances of the case narrated hereinabove, the High Court ought not to have passed such an interim order. Under the circumstances, the impugned interim order passed by the High Court requires to be quashed and set aside.
1
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3489 OF 2020
[Arising out of SLP (C) No. 95 of 2020]
Rajasthan State Road Development and
Construction Corporation Ltd. .. Appellant
Versus
Piyush Kant Sharma & Ors. .. Respondents
O R D E R
M. R. Shah, J.
Leave granted.
2. Feeling aggrieved and dissatisfied with the impugned interim
Order dated 23.09.2019 passed by the High Court of Judicature for
Rajasthan at Jaipur in S.B. Civil Writ Petition No. 1924 of 2019, the
original respondent Rajasthan State Road Development and
Construction Corporation Ltd. has preferred the present appeal.
3. That the respondent No. 1 herein was appointed as Computer
Operator on contractual basis. Respondent No. 1 – original
2
petitioner filed the writ petition before the High Court for grant of
regular payscale and to regularize his services on the ground that
he is serving the appellant Corporation for the last three years. It
was the specific case on behalf of the appellant Corporation that
respondent No. 1 was never appointed by the appellant Corporation
and there was no employeremployee relationship between
respondent No. 1 and the appellant Corporation. It was the specific
case on behalf of the appellant Corporation that the original writ
petitioner was hired through one M/s Sahara Supreme Security
Service, Jaipur. It was also the case on behalf of the appellant
Corporation that even there was no regular sanctioned post of
Computer Operator existed in the appellant Corporation. That,
during the pendency of the aforesaid writ petition, another etender
was issued by the appellant Corporation for hiring the Computer
Operators etc. and the contract was awarded to one firm, namely,
M/s Rakshak Security (P) Ltd. for providing Computer Operators
and other posts for a period of 12 months. That, thereafter, by the
impugned interim order dated 23.09.2019, the High Court has
3
restrained the appellant Corporation from appointing new set of
contractual employees in place of the original writ petitioner.
4. Feeling aggrieved and dissatisfied with the impugned interim
order passed by the High Court, the original respondent No. 1 –
Corporation has preferred the present appeal.
5. We have heard the learned counsel appearing on behalf of the
respective parties at length.
5.1 Learned counsel appearing on behalf of the original writ
petitioner has submitted that considering the fact that other
similarly situated Computer Operators were continued and there
was a requirement of Computer Operator and, therefore, the High
Court is justified in passing the impugned interim order.
5.2 On the other hand, it is submitted by the learned counsel
appearing on behalf of the appellant Corporation that, as such, no
reasons have been assigned by the High Court while passing the
impugned interim order. It is submitted that in fact the original
writ petitioner was a contractor’s employee and there was no
employeremployee relationship between the original writ petitioner
and the appellant Corporation. It is submitted that even there is no
4
regular sanctioned post of Computer Operator in the appellant
Corporation and, therefore, the appellant Corporation gave the work
order to the contractor for providing the services of the Computer
Operator etc., the High Court ought not to have passed such an
interim order.
6. Having heard the learned counsel appearing on behalf of the
respective parties, we are of the opinion that the High Court has
committed a grave error in passing such an interim order
restraining the appellant Corporation from appointing new set of
contractual employees in place of original writ petitioners. No
reasons, whatsoever have been assigned by the High Court while
passing the impugned interim order. The High Court has failed to
appreciate and consider the fact that according to the appellant
Corporation, there was no regular sanctioned post of Computer
Operator in the appellant Corporation and that there was no
employeremployee relationship between the original writ petitioner
and the appellant Corporation and that the original writ petitioner
was a employee appointed by the contractor on contractual basis
and worked with the appellant Corporation on contractual basis.
5
As the writ petition is pending before the High Court, we refrain
ourselves from making any further observations on merits.
However, we are of the opinion that in the facts and circumstances
of the case narrated hereinabove, the High Court ought not to have
passed such an interim order. Under the circumstances, the
impugned interim order passed by the High Court requires to be
quashed and set aside.
7. In view of the above and for the reasons stated above, the
present appeal is allowed and the impugned interim order passed
by the High Court in S.B. Civil Writ Petition No. 1924 of 2019
restraining the appellant Corporation from appointing new set of
contractual employees in place of the original writ petitioners is
hereby quashed and set aside. No costs.
……………………………J.
(ASHOK BHUSHAN)
……………………………J.
(R. SUBHASH REDDY)
……………………………J.
(M. R. SHAH)
New Delhi,
October 15, 2020
whether the limitation shall commence from the first sale deed after coming into force of the Rajasthan Pre-Emption Act, 1966 or from any other subsequent sale on the basis of Article 97 of the Limitation Act, 1963.
whether the limitation shall commence from the first sale deed after coming into force of the Rajasthan Pre-Emption Act, 1966 or from any other subsequent sale on the basis of Article 97 of the Limitation Act, 1963.
Reportable
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1442 OF 2016
RAGHUNATH (D) BY LRS. ….APPELLANTS
VERSUS
RADHA MOHAN (D) THR. LRS & ORS.….RESPONDENTS
J U D G M E N T
SANJAY KISHAN KAUL, J.
1. The singular question this Court had framed for consideration in this
appeal was whether the limitation shall commence from the first sale deed
after coming into force of the Rajasthan Pre-Emption Act, 1966 or from
any other subsequent sale on the basis of Article 97 of the Limitation Act,
1963. This question arises in this proceeding in a situation where the
1
original plaintiff sought to enforce such right after three sale transactions
had taken place in the past involving the subject immovable property in the
years 1945, 1946 and 1966. The last transaction was effected on 5th
November that year, after the 1966 Act had become operational. The
factum of the plaintiff’s entitlement otherwise claim right of pre-emption in
terms of Section 6 of the 1966 Act is not in dispute in this proceeding. In
the suit out of which this appeal arises, the plaintiff’s suit for pre-emption
over a transaction effected on 21st January 1974 was resisted on the ground
of being barred by limitation.
2. In order to determine the aforesaid question of law framed by this
Court in terms of the order dated 05.01.2016, it is necessary to discuss the
nature of the right of pre-emption. In this behalf, we had discussed the
right of pre-emption in a recent judgment in Barasat Eye Hospital & Ors.
v. Kaustabh Mondal1
. The said judgment, authored by one of us (Sanjay
Kishan Kaul, J.), in its initial paragraph itself discusses this aspect and it
would suffice to quote the same.
“1. The right of pre-emption holds its origination to the advent
of the Mohammedan rule, based on customs which came to be
accepted in various courts largely located in the north of India. This
1 (2019) SCC Online SC 1351
2
law is stated to be largely absent in the south of India on account of
the fact that it never formed a part of Hindu law in respect of
property. However, this law came to be incorporated in various
statutes, both, prior to the Constitution of India (for short ‘the
Constitution’) coming into force, and even post that.2 The
constitutional validity of such laws of pre-emption came to be
debated before the Constitution Bench of this Court, in Bhau Ram,
3
.
There are different views expressed by the members of the
Constitution Bench of five Judges, and also dependent on the various
State legislations in this regard. Even though there were views
expressed that this right of pre-emption is opposed to the principles
of justice, equity and good conscience, it was felt that the
reasonableness of these statutes has to be appreciated in the context
of a society where there were certain privileged classes holding land
and, thus, there may have been utility in allowing persons to prevent
a stranger from acquiring property in an area which has been
populated by a particular fraternity or class of people. This aspect
was sought to be balanced with the constitutional scheme,
prohibiting discrimination against citizens on the grounds of only
religion, race, caste, sex, place of birth or any of them, under Article
15 of the Constitution, and the guarantees given to every citizen to
acquire, hold and dispose of property, subject only to the test of
reasonable restriction and the interest of general public.”
The judicial approach adopted towards this right of pre-emption was
thereafter discussed in the said judgment in the following terms:
“10. In order to appreciate the aforesaid provisions relating
to the right of pre-emption, it would be appropriate to refer to
an extremely lucid judgment of this Court by Justice K.
2 Bhau Ram v. Baij Nath Singh, AIR 1962 SC 1476
3 supra
3
Subbarao (as he then was), setting forth the contours of the
right of pre-emption in Bishan Singh v. Khazan Singh4
, in a
four Judge Bench judgement. The Bench proceeded to discuss
the view of different Courts on this right of preemption, as
found in the following:
a. Plowden, J. in Dhani Nath v. Budhu,
5
b. Mahmood, J. in Gobind Dayal v. Inayatullah,
6
.
c. Mool Chand v. Ganga Jal,
7
.
11. In view of the aforesaid elucidation, it was opined that
the preemptor has two rights: first, the inherent or primary
right, i.e., right for the offer of a thing about to be sold; and
second, the secondary or remedial right to follow the thing
sold. The secondary right of preemption is simply a right of
substitution, in place of an original vendee and the pre-emptor
is bound to show not only that his right is as good as that of
that vendee, but that it is superior to that of the vendee. Such
superior right has to subsist at the time when the pre-emptor
exercises his right. The position is thereafter summarized in
the following terms:
“11. …..(1) The right of pre-emption is not a right to the
thing sold but a right to the offer of a thing about to be
sold. This right is called the primary or inherent right. (2)
The pre-emptor has a secondary right or a remedial right to
follow the thing sold. (3) It is a right of substitution but not
of re-purchase i. e., the pre-emptor takes the entire bargain
and steps into the shoes of the original vendee. (4) It is a
right to acquire the whole of the property sold and not a
share of the property sold. (5) Preference being the essence
of the right, the plaintiff must have a superior right to that
4 AIR 1958 SC 838
5 136 P.R. 1894
6 (1885) ILR 7 All 775, 809
7 (1930) ILR 11 Lahore (F.B.) 258, 273
4
of the vendee or the person substituted in his place. (6) The
right being a very weak right, it can be defeated by all
legitimate methods, such as the vendee allowing the
claimant of a superior or equal right being substituted in his
place.”
On having set down the contours of the aforesaid right, we turn to the facts
of the present case.
Facts:
3. The Rajasthan Pre-Emption Act, 1966 (hereinafter referred to as ‘the
Act’) was brought into force on 1.2.1966. In view of the rights conferred
under the Act, a suit was filed by the predecessor-in-interest of respondent
No.1 seeking a decree of pre-emption against the predecessor-in-interest of
the appellant herein and respondent Nos. 4 to 6 herein, on 10.1.1974, which
was numbered as Civil Suit No. 40/1975. The property in question is
situated in a building bearing AMC No. XV/290 situated in Kayasth
Mohalla, Ajmer (‘suit schedule property’) and is predicated on account of
having a common portion in the said property. The plaint stated that
respondents 5 and 6 herein (original defendants 3 and 4) were owners and
in possession of the part of the property which was sold to respondent No.
4 herein (the original defendant No. 2), vide sale deed dated 10.01.1974 for
5
a consideration of Rs. 4000/-. respondent No. 4 further sold this property
to the appellant herein (original defendant No.1 being the predecessor-ininterest) on 21.01.1974 once again for the same consideration. The other
facts stated in the plaint are not required to be gone into nor pleaded,
except that there is an allegation that the two portions were part and parcel
of the same house having main entrance, lavatory and staircase in common
and that no notice, as provided for under Section 8 of the Act, had been
served, which mandates a notice to pre-emptors (forming part of the
procedure as set out in Chapter III of the Act). The suit was resisted. The
sale of the property as per the two sale deeds was not disputed. The plea
was, however, raised that there were two separate lockable premises and as
such no right of pre-emption accrued in favour of the original plaintiff.
Once again, it is not necessary to go into other defences for adjudication of
the present matter. It may, however, be noted that the written statement
stated that yet another sale agreement was entered into on 25.10.1974 and
the purchaser had not been made a party to the suit.
4. The Trial Court framed as many as eight issues including the plea of
bar of limitation. The suit was decreed in terms of the judgment dated
30.6.1977, inter alia finding that the suit had been filed within the period of
6
limitation of one year. An appeal was preferred against this order and
during the pendency of the appeal an application was filed to amend the
written statement inter alia raising the plea that there were even earlier sale
deeds of 1945, 1946 and 1966 where the respondents 5 and 6 herein had
purchased the property vide sale deed dated 5.11.1966. The earlier sale
deeds not having been challenged, the right of pre-emption could not be
exercised and was barred by time. This resulted in four additional issues
being framed arising from the plea of limitation and the matter was
remitted to the Trial Court in terms of the judgment dated 22.5.1987 of the
first appellate Court.
5. The Trial Court gave its consideration on the additional issues and
took note of the fact that the earlier two sale deeds were even prior to the
coming into force of the said Act. The court, however, noticed that even
prior to the coming into force of the said Act, laws of pre-emption did exist
in Ajmer. The sale deed dated 5.11.1966 came into existence after the said
Act came into force. It was opined by judgment dated 1.2.1988 that
without challenging that sale deed, the suit would not be maintainable and
would be barred by limitation relying upon the judgment of the Assam
7
High Court in Kutina Bibi and another vs. Baikuntha Chandra Dutta and
others8
.
6. The first appellate Court once again considered this judgment of the
Trial Court in Civil Appeal No.129/1985 on the additional issues decided in
terms of that judgment. The appellate court, in terms of the judgment dated
30.03.1989, agreed with the finding of the Trial Court on the ratio of
Kutina Bibi (supra).
7. The matter was thereafter taken upto the Rajasthan High Court vide
S.B.C.S. Appeal No. 65/1989. The High Court noticed that the only
question before it was on the point of limitation as per the provisions of
Article 97 of the Limitation Act. 1963. The High Court in terms of the
impugned judgment dated 29.06.2009 opined that the one year limitation
period is to run from the date of registration of the sale deed or the date
when physical possession of the property was given; and the sale deed
would be the sale deed in question. The High Court negated the plea that
the earlier sale deeds would have to be assailed and concluded that each
sale of such property gives a fresh cause of action. The suit was found to
have been filed within time and the matter was remitted back on merits to
8 AIR 1961 Assam 1
8
be decided by the first appellate Court. In the Special Leave Petition filed,
notice was issued on 9.10.2009 and interim stay of the impugned order was
directed. Leave was granted on 12.2.2016 and the question of law was
framed on 05.01.2016.
Rival Contentions:
8. The arguments advanced by Mr. Irshad Ahmad, learned counsel for
the appellant is on dual contours. The first argument was based on the
policy behind the right of pre-emption, i.e. that no stranger should be
allowed to thrust himself upon the co-sharer in a property against their will
and to prevent apprehended inconvenience to the co-sharer. In that context,
it was urged that the admitted position was that the predecessor-in-interest
of the appellant herein was a distant relative of the predecessor-in-interest
of respondent No.1 herein and this fact had been admitted by the original
plaintiff as also by the son of Manna Lal (the executor of the sale deed of
1946) in their depositions. The second plea advanced was that if a plaintiff
waived his right of pre-emption by conduct, no such right is available on a
subsequent sale of the same property and the plaintiff is estopped from
claiming any right of pre-emption of subsequent sale.
9
9. In support of their contention, learned counsel referred to the
following judgments:
(a) Prahlad Kumar vs. Kishan Chand & Ors.9
This judgment of the Rajasthan High Court, while rejecting the right of
pre-emption, based it on two aspects. The first was a factual one that it was
not a case of sharing a common property. The relevant portion is the
second aspect where it was held even if the right is presumed to have been
established, though not established in that case, the plaintiff was estopped
from claiming his right of pre-emption as he had waived his right when the
property was sold at an earlier date and pre-emption was not claimed then.
(b) Mangti Ram vs. Onkar Sahai10
In this case, the right of pre-emption was held to have been given up on
account of an earlier compromise deed to which the plaintiff had been a
party.
(c) Kutina Bibi & Anr. vs. Baikuntha Chandra Dutta & Ors.11
This judgment once again dealt with the plea of pre-emption against a
subsequent sale, where vide an earlier sale deed of 1950, the plaintiff9 2009 (3) RLW 2441
10 (1994) 1 RLW 55
11 Supra
10
cosharer’s share had been sold by her son and thus, it was held that not
having assailed the earlier sale deed, the right of pre-emption could not be
claimed against the subsequent sale.
(d) Ghulam Jilani vs. Hassan Khan & Ors.12
There was an earlier sale deed and a subsequent sale deed. At the stage of
the initial sale deed, the cosharer did not object. At the stage of the second
sale deed, the cosharer sought to object. The court debated the issue of
competing rights of the cosharer and the subsequent buyer in pursuance to
the first sale deed. It was opined, while agreeing with the lower court, that
the plaintiff’s suit was barred by time, having been instituted more than a
year after the earlier sale which alone he was entitled to impugn.
(e) Ghanshyam vs. Chand Bihari & Ors.13
The factual matrix shows there were many cosharers. Two of the cosharers
transferred their rights to a third party. One by sale and one by gift. Third
party, in turn, sought to transfer to another party. It is at that stage, one of
the cosharers claimed a right of pre-emption. It was found on facts that
when the said third party sought to transfer his right, plaintiff never showed
willingness to purchase the same, as they were not having sufficient means.
12 PLR 1905 (Vol.VI) 338
13 (2008) 2 RLW (Rev) 1011
11
It was opined that the plaintiff’s father never tried to assert his right in the
matter of purchasing that portion earlier and subsequently also, during his
lifetime, he never tried to enforce his right of pre-emption. As such, right of
pre-emption was said to have been waived by conduct.
(f) Rukmani Devi (Smt.) vs. Prabhu Narayan & Ors.14
The pre-emption right under Section 6 of the Act was discussed with an
explanation that the right of pre-emption is a weak right and thus if a
plaintiff pre-emptor waives or gives up his right without raising any
objection to the sale in favour of the third party, the court should not allow
substitution in the sale deed at the instance of such plaintiff pre-emptor,
who has already given up his right.
10. On the other hand, Ms. Christi Jain, learned counsel for the
respondent sought to support the impugned judgment on the plea that the
limitation to enforce a right of pre-emption under the Act is governed by
Article 97 of the Limitation Act, 1963 read with Section 21 of theAct.
Thus, each sale deed is a separate cause of action. On a reading of Section
8 of the said Act, it was contended that the seller is required to inform all
persons as to the price he is proposing to sell at and thus the language of
14 (2007) 4 RLW 2882
12
the provision is clear that it applies to all such incidents of sale. Thus, it
was pleaded that it cannot be said that if such a right is not exercised, it
would allow foreclosure for any subsequent sale, since there is no provision
in the said Act, prohibiting the right of pre-emption if the right is not
exercised. It was also contended that the question of waiver is set out in
Section 9 of the said Act, which does not provide for an eventuality that the
right of pre-emption would not be applicable for a subsequent sale. The
last aspect argued was that this right is based on substitution in place of the
vendee on payment of the price and it does not challenge the sale but seeks
substitution of the plaintiff in place of the vendee. There was, thus, no
need to challenge the earlier sales and not challenging the earlier sales
would not amount to waiver.
11. A reference was made to the following judgments:
(i) Bishan Singh & Ors. vs. Khazan Singh & Anr.15
The reference to the aforesaid judgment has been made in the context of
the observations of Mahmood, J. in Gobind Dayal case (supra) referred to
above that it is in relation to the right of substitution.
(ii) Barasat Eye Hospital & Ors. vs. Kaustabh Mondal16
15 AIR 1958 SC 838
16 supra
13
This judgment has been relied upon again on the same aforesaid
principle of right of substitution.
The view we adopt:
12. We have given our thoughtful consideration to the aforesaid issue
and in order to determine the same, we had, at the inception itself, set out
the judgment in Barasat Eye Hospital case (supra). We have, thus, referred
to the earlier judicial view in para 10 of the judgment extracted aforesaid.
The historical perspective of the right of pre-emption shows that it owes its
originination to the advent of the Mohammedan rule, based on customs,
which came to be accepted in various courts largely located in the north of
India. The pre-emptor has been held by the judicial pronouncements to
have two rights. Firstly, the inherent or primary right, which is the right to
the offer of a thing about to be sold and the secondary or remedial right to
follow the thing sold. It is a secondary right, which is simply a right of
substitution in place of the original vendee. The pre-emptor is bound to
show that he not only has a right as good as that of the vendee, but it is
superior to that of the vendee; And that too at the time when the pre-emptor
exercises his right. In our view, it is relevant to note this observation and
14
we once again emphasise that the right is a “very weak right” and is, thus,
capable of being defeated by all legitimate methods including the claim of
superior or equal right.
13. We have to examine the legal question before us in terms of the
aforesaid principles. We may notice the observation in the Ghanshyam case
(supra) which deals with the scenario where at the first instance the right
was not exercised apparently on account of lack of financial means and that
was held to be no ground to permit exercise of that right at the second
stage. The consistent view taken by the Rajasthan High Court, as reflected
in not only Ghanshyam case (supra) but also in Rukmani Devi (supra) and
Prahlad Kumar (supra) has been that the right of substitution is capable of
being invoked only at the first instance and does not continue to
substitution is capable of being invoked only at the first instance and does
not continue to permeate for an indefinite period of time for each sale
transaction. In the case of Ghanshyam (supra), finding of the High Court
was that the plaintiffs claiming pre-emption had waived their rights. In the
case of Rukmani Devi (supra), where the plaintiff raised the plea of preemption on second sale transaction, evidence was led by the defendant that
the same plaintiff had earlier refused to purchase the subject property and
15
had on the other hand participated in the sale process. In the case of
Prahlad Kumar (supra), it was found that the plaintiff himself had waived
his right of pre-emption in respect of an earlier sale transaction involving
the same property. Thus, to this extent, the view taken in the impugned
order seems to charter a new course. The view of the Assam High Court in
Kutina Bibi (supra) was consistently followed by the Rajasthan High
Court.
14. In order to now appreciate the controversy, as there appears to be no
other view of this Court on this aspect, we would first turn to the said Act
itself. Right to pre-emption is defined in Section 3 of the Act as under:
“Section 3: “Right of pre-emption” defined
The “right of pre-emption” is the right accruing under
section 4 of this Act, upon a transfer of any immovable
property, to acquire such property and to be substituted
as the transferee thereof in place of and in preference to
the original transferee and “pre-emptor” means a person
having a right of pre-emption.”
Section 6 sets out the right of persons to whom the right pre-emption
accrues and it would suffice to reproduce sub-section (1) as the other subsections deal with different classes of persons having such right.
16
“Section 6: Persons to whom right of pre-emption
accrues
(1) Subject to the other provisions of this Act, the right
of pre-emption in respect of any immovable property
transferred shall accrue to, and vest in, the following
classes of persons, namely:--
(i) co-sharers of or partners in the property transferred,
(ii) owners of other immovable property with a staircase or an entrance or other right or amenity common to
such other property and the property transferred, and
(iii) owners of property servient or dominant to the
property transferred.”
Chapter III sets out the procedure for the exercise of the right of preemption. Section 8 under the said Chapter mandates issuance of notice.
“Section 8: Notice to pre-emptors
(1) When any person proposes to sell, or to foreclose the
right to redeem, any immovable property, in respect of
which any persons have a right of pre-emption, he shall
give notice to all such persona as to the price at which he
is proposing so to sell or as to the amount due in respect
of the mortgage proposed to be foreclosed, as the case
may be.
(2) Such notice shall be given through the civil court,
within the local limits of whose jurisdiction the property
concerned is situated shall clearly describe such
property, shall state the name and other particulars of the
purchaser or the mortgagee and shall be served in the
manner prescribed for service of summons in civil suits.”
17
The limitation for exercise of the aforesaid right is stipulated in Section 21,
which reads as under:
“Section 21: Special provision for limitation
(1) Subject to the provisions contained in the proviso to
sub-section (1) of section 5, the period of limitation, in
any case not provided for by article 97 of the First
Schedule to the Limitation Act, 1963 (Central Act 36 of
1963), for a suit to enforce the right of pre-emption
under this Act shall, notwithstanding anything contained
in article 113 of the said schedule of the said Act, be one
year from the date on which,--
(a) in the case of a sale made without a registered saledeed, the purchaser takes under the sale physical
possession of any part of the property sold, and
(b) in the case of a foreclosure, the final decree for
foreclosure is passed.
(2) The period of limitation for a suit to enforce a right
of pre-emption which has accrued before the
commencement of this Act shall, notwithstanding
anything contained in the said Limitation Act, in no case
exceed one year from the commencement of this Act.”
15. In view of the fact that since Section 21 in turn refers to Article 97 of
the First Schedule of the Limitation Act, 1963 it would be appropriate to set
forth the same as under.
18
97. To enforce a right
of pre-emption
whether the right
is founded on law
or general usage
or on special
contract.
One
year.
When the purchaser takes under
the sale sought to be impeached,
physical possession of the whole
or part of the property sold, or,
where the subject-matter of the
sale does not admit of physical
possession of the whole or part of
the property, when the instrument
of sale is registered.
16. The question has to be, thus, analysed in the context of a conjoint
reading of Section 21 of the said Act and Article 97 of the First Schedule to
the Limitation Act, 1963. The stipulation in Section 21 is that the right of
pre-emption has to be exercised, in case of a sale, within one year from the
date of sale and if the sale is not by a registered deed, on the purchaser
taking the physical possession of any part of the property sold. Since the
period has to be as per Article 97, the wordings of the Article show that it is
one year from the date when the sale is registered (in case such registration
takes place as is in the present case). It is this expression, which is sought
to be construed by the respondent No. 1 as well as by the High Court to
mean that it is a recurring right for every sale. The loss of right of preemption on transfer has been defined under Section 9 of the said Act as
under:
19
“Section 9: Loss of right of pre-emption on transfer
Any person having a right of pre-emption in respect of
any immovable property proposed to be sold shall lose
such, right unless within two months from the date of
the service of such notice, he or his agent pays or
tenders the price specified in the notice given under
section 8 to the person so proposing to sell:
Provided that the right of pre-emption shall not be so
lost if the immovable property in question is actually
sold for an amount smaller than that mentioned in the
notice or to a person not mentioned in the notice as
purchaser.”
17. A reading of the Section shows that the loss is only occasioned,
when, within two months from the date of service of the notice, the price is
not tendered. However, that is the loss of the right, vis-à-vis the transaction
in question. The moot point is whether such a right of pre-emption is a
recurring right, i.e. every time the property is sold, the right would rearise,
in a case the pre-empting plaintiff himself has chosen not to exercise such
right over the subject immovable property when sold to another purchaser
earlier.
18. In our view, it would not be appropriate or permissible to adopt legal
reasoning making such a weak right, some kind of a right in perpetuity
arising to a plaintiff every time there is a subsequent transaction or sale
20
once the plaintiff has waived his right or pre-emption over the subject
immovable property. The loss of right mandated under Section 9 of the Act
is absolute. A plain reading of the said provision does not reveal that such
right can re-arise to the person who waives his right of pre-emption in an
earlier transaction. To do so would mean that a person, whether not having
the means or for any other reason, does not exercise the right of preemption and yet he, even after decades, can exercise such a right. This
would create, if one may say, some sort of a cloud on a title and uncertainty
as a subsequent purchaser would not know, when he wants to sell the
property, whether he can complete the transaction or not or whether a cosharer will jump into the scene. This is not contemplated in the 1966 Act.
This is bound to have an effect on the price offered by a purchaser at that
time because he would have an impression of uncertainty about the
proposed transaction.
19. We are in agreement with the consistent view taken in the judgments
earlier of the Rajasthan High Court. So far as the case of Kutina Bibi
(supra) is concerned, the factual basis of that decision does not fit with the
legal controversy involved in this proceeding. In that case, by a previous
transaction the entire land had been sold. It was held in that perspective,
21
that the plaintiff’s right as a co-sharer had become disputed in absence of
challenge to the previous transaction. We are of opinion that such a right is
available once - whether to take it or leave it to a person having a right of
pre-emption. If such person finds it is not worth once, it is not an open right
available for all times to come to that person. The aforesaid being the
position, this would itself be an impediment in exercise of the right of preemption in a subsequent transaction. This is so since, we find the right of
waiver under section 9 of the said Act is relatable to the transaction and
also the person. These provisions may not impede the right of pre-emption
in that particular transaction by a particular pre-emptor and the factum of
not having exercised such a right to an earlier transaction would amount to
the surrender of the right of substitution to such intended pre-emptor.
20. The judgments referred to by the respondent of Bishan Singh (supra)
and Barasat Eye Hospital (supra) are only for the proposition that the right
of pre-emption is a right of substitution – no doubt exists over this
proposition. The question is whether this right of substitution can be
exercised recurringly or only once. Our answer to the query is ‘only once’.
22
21. We may also notice another judgment of this Court in Indira Bai vs.
Nand Kishore17
. Once again in relation to the said Act (it appears that there
is a frequent exercise of this right in Rajasthan apart from West Bengal &
Bihar!) The question which was framed for decision in the case was:
“Is estoppel a good defence to ‘archaic’ right of preemption which is a ‘weak right’ and can be defeated by
any ‘legitimate’ method?”
In the aforesaid context, in para 5, it has been observed that the Act does
not debar the pre-emptor from giving up his right. Rather in case of its
non-exercise within two months, may be for the financial reasons, the right
stands extinguished. “It does not pass on to anyone”. It was further
observed, “No social disturbance is caused. It settles in purchaser. Giving
up such right, expressly or impliedly cannot therefore be said to involve
any interest of community or public welfare so as to be in mischief of
public policy.” These observations, once again, in our view, are based on
the right being weak.
Conclusion:
22. We suppose that the aforesaid answers the dilemma, i.e. whether the
right of pre-emption can be enforced for an indefinite number of
17 (1990) 4 SCC 668
23
transactions or it is exercisable only the first time. We opine that it is only
exercisable for the first time when the cause of such a right arises, in a
situation where the plaintiff-pre-emptor chooses to waive such right after
the 1966 Act becoming operational. Section 9 of the said Act operates as a
bar on his exercising such right on a subsequent transaction relating to the
same immovable property. We also wonder what really remains of this right
of pre-emption after so many years in the facts of this case when the
purchaser has been enjoying it for more than four decades!
23. The result is the impugned order is set aside and the order of the trial
court dated 01.02.1988 and the first appellate court dated 30.03.1989 are
upheld. As the original plaintiff has not challenged the sale effected by him
on 5th November, 1966, the suit of respondent No. 1 (original plaintiff, now
represented by his legal representatives) is thus barred by limitation. This
puts an end to the legal battle which began 45 years ago!
24
24. . The appeal, is accordingly, allowed leaving the parties to bear their
own costs.
……..……………………………….J.
[SANJAY KISHAN KAUL]
……..……………………………….J.
[ANIRUDDHA BOSE]
……..……………………………….J.
[KRISHNA MURARI]
NEW DELHI.
OCTOBER 13, 2020.
25
Whether the plaintiff is not entitled to purchase more than 500 sq. metres under the Tamil Nadu Urban Land Ceiling Act and whether the suit agreement is void on that account?”
Whether the plaintiff is not entitled to purchase more than 500 sq. metres under the Tamil Nadu Urban Land Ceiling Act and whether the suit agreement is void on that account?”
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.13516 OF 2015
FERRODOUS ESTATES (PVT.) LTD. … APPELLANT
VERSUS
P. GOPIRATHNAM (DEAD) & ORS. … RESPONDENTS
J U D G M E N T
R.F. Nariman, J.
1. This appeal arises from a suit for specific performance that was filed
by the appellant against four defendants who are today represented by the
respondents. By an agreement to sell dated 12.06.1980 entered into
between the appellant company and P. Nagarathina Mudaliar, P.
Gopirathnam, P. Lavakumar, and P. Basantkumar, the agreement recites:
“Whereas the property more particularly described in the
Schedule hereunder and hereinafter referred to as the
said property, originally belonged to the Hindu Undivided
Family consisting of Sri P. Nagarathina Mudaliar and his
father Sri P. Thiruvengada Mudaliar;
1
Whereas there was a partial partition in the said family as
a result of which, the first vendor has become the owner
of the said property, said deed of partition having been
registered with the Sub-Registrar, Madras-Chingleput, as
Document No. 1268 of 1944;
Whereas the vendors have mortgaged the said property
along with the other properties owned by them at
Haddows Road, Madras-1, for a sum of Rs.5,65,000/-
(Rupees Five Lakh Sixty-Five Thousand Only) by way of
a deed of mortgage registered with the Sub-Registrar, T.
Nagar, Madras, as Document No. 3429 of 1967;
Whereas the vendors have offered to sell the said
property to the purchasers, free from all encumbrances,
including the mortgage created in favour of Syndicate
Bank, Madras-1;
Whereas the vendors are making necessary
arrangements for discharging the said loan due to
Syndicate Bank, Madras-1, and also to get a letter from
Syndicate Bank, releasing their interest, if any, in the said
property offered to be sold;
xxx xxx xxx”
The material clauses of the agreement are as follows:
“3. It is agreed that the sale consideration should be paid
as follows:
(a) A sum of Rs.1,00,000/- (Rupees One Lakh
Only) deposited by the purchasers with M/s
Venkataraman & Co. on behalf of the vendors
as advance for the said sale consideration;
(b) The purchasers hereby agree to pay the
balance of the price of Rs.4,40,000/- (Rupees
Four Lakhs And Forty Thousand Only) to
Syndicate Bank in discharge of the loan
borrowed by the vendors on the mortgage of
the said property subject to the bankers giving
the certificate of discharge in respect of the
said property.
2
4. The vendor shall arrange to secure (a) Income-tax
Clearance Certificate, (b) Permission from the Competent
Authority under the Urban Land Ceiling Act, and (c) such
other orders of permits and the like as may be necessary
for completing the sale transaction at the cost of the
vendors.
5. The purchaser shall complete the transaction within six
months from the date of this agreement. This period shall
be subject to the vendors obtaining the necessary
clearance certificate from the appropriate authorities as
stated above and giving vacant possession of the said
property.”
xxx xxx xxx
“8. The vendors hereby confirm that the said property is
subject to a mortgage loan taken by them from Syndicate
Bank, Armenian Street, Madras-1, and that necessary
provision has been made to discharge the loan, in the
sale agreement itself and excepting the above, the said
property to be conveyed is not subject to any claim,
attachment, lien, charge, mortgage, lis pendens or any
other encumbrance, whatsoever.
9. The vendors undertake to deliver vacant possession of
the property, before the execution of the sale deed.
10. In the event of the vendors commit default or acts in
breach of this agreement the purchasers shall be entitled
without prejudice to the right of specific performance, to
the refund of the advance of Rs.1,00,000/- (Rupees One
Lakh Only) and damages.”
The suit property admeasured 8 grounds and 2354 sq. feet.
2. Given the fact that the necessary permissions were not obtained by
the defendants, in particular, the permission from the competent authority
3
under the Tamil Nadu Urban Land (Ceiling & Regulation) Act, 1978 [“Tamil
Nadu Urban Land Ceiling Act”], the appellant filed a suit for specific
performance on 24.02.1981, in which it was specifically pleaded as follows:
“5. The plaintiff which is a private limited company has
agreed to purchase the schedule mentioned property with
a view to construct the multi-storeyed building and the
plaintiffs are always ready and willing to perform their part
of the obligation under the agreement for completion of
the sale transaction. Further the plaintiffs are ready and
willing to deposit the balance of the sale price agreed to
be paid under the agreement in question before this
Hon’ble Court to show their bonafide in purchasing the
property and to show their readiness to perform their part
of the contract in accordance with the agreement. The
plaintiff submits that the defendants are bound to secure
income tax clearance certificate and permission from the
competent authority etc. which are prerequisite for the
completion of the sale transaction and to complete the
transactions within 6 months from the date of the
agreement.
6. The plaintiff submits that the defendants have not so far
arranged to get income tax clearance certificate and
permission from the competent authority and such other
formalities to the be observed for the completion of the
sale transaction and they have not shown any interest in
concluding the transactions. In the circumstances the
plaintiff submits that they are willing to perform their part
of the contract and it is the defendants who are evading to
completing the sale transactions within the agreed time.
The plaintiff understands and believes the same to be
true that the defendants are not willing to complete the
sale transaction and they reliably understand that the
defendants are trying to alienate the property to third
parties for higher price taking advantage of the rise in
price of the landed properties ignoring the agreement to
sell. The plaintiff submits that the conduct and attitude of
the defendants in evading and postponing the execution
4
of the sale deed is unjust and wanton and it is only with a
view to get higher price for the property ignoring the lawful
claims of the plaintiff under the agreement, the
defendants do not show any inclination to complete the
sale transaction.”
A written statement filed by P. Nagarathina Mudaliar and his two sons,
namely, P. Gopirathnam and P. Lavakumar, who were defendants no.1, 2,
and 3 respectively, denied that the total consideration for the agreement
was Rs.5,40,000/- as is stated therein. Apart from other denials made on
the merits of the case, it is important to note that no defence was taken on
any plea that the Tamil Nadu Urban Land Ceiling Act would be infracted if
the suit for specific performance were to be decreed. This was only done,
almost by way of an afterthought, by an additional written statement filed by
the self-same defendants on 16.07.1986, in which it was pleaded:
“2. In any event, these defendants submit that the plaintiff
is not entitled to any decree since the plaintiff is not
entitled to purchase more than the prescribed limit of 500
sq. metres under the provisions of Tamil Nadu Urban
Land Ceiling Act and hence the agreement is void as
violating the provisions of statues.”
3. As many as eight issues were framed in the suit. Issue no. 5 reads as
follows:
“5. Whether the plaintiff is not entitled to purchase more
than 500 sq. metres under the Tamil Nadu Urban Land
Ceiling Act and whether the suit agreement is void on that
account?”
5
4. By a judgment dated 15.03.1991, delivered by a learned Single
Judge of the Madras High Court, the learned Single Judge held that the
fixation of the sale price of Rs.1,02,000/- per ground was because the land
was low-lying and requires to be levelled. It was also held that a layout plan
had been sanctioned for the purpose of putting up flats in the suit property.
The Single Judge further held that there were circumstances to show that
there was necessity on the part of the defendants to sell the suit property,
given that a loan from Syndicate Bank was taken by mortgaging a larger
piece of land of 30 grounds, and that money was required for the defendant
no.1’s son’s marriage, which was celebrated on 23.06.1980. It was further
found that M/s Venkataraman & Co., the auditor of the defendants,
negotiated the sale of the suit property, the first defendant admitting that a
sum of Rs.65,000/- was received by him for the marriage of his son out of
the advance money of Rs.1,00,000/- paid to the aforesaid auditor, M/s
Venkataraman & Co. It was also held that the first defendant was the karta
and manager of the joint family, and that even though the fourth defendant
was not present at the time of execution of the sale agreement and did not
actually sign the sale agreement, the fourth defendant had given a letter of
authorisation, authorising the first defendant to sell the property on his
behalf. It was further held:
6
“Having signed Ex.P.2 and received Rs.65,000/- as per
Ex.P.4, it would not be fair on the part of the first
defendant to come forward and surprise the plaintiff
during trial that he does not know the contents thereof.
The inconsistent stand taken by the first defendant during
the trial, quite different from the plea in the written
statement, would lead to presume the lack of truth in his
version.”
5. Importantly, so far as obtaining of permission from the Urban Land
Ceiling authorities was concerned, it was held that the defendants did not
comply with this condition, as a result of which there would be no legal
obstacles standing in the way of the plaintiff suing for specific performance,
given the fact that the defendants were in breach of the agreement.
Insofar as the plea in the additional written statement was concerned, issue
no. 5 was answered by the learned Single Judge as follows:
“The plea of the defendants in their additional written
statement that they will not be competent to sell anything
beyond 500 sq. metres prescribed as ceiling under the
Urban Land Ceiling Act and that because Ex.P.2
envisages the sale of 8 grounds and 2354 sq. ft.
exceeding the ceiling area, Ex.P.2 must be deemed to be
invalid and unenforceable, is not sound. There is no term
in Ex.P.2 that the agreement of sale is subject to the grant
of permission by the competent authority under the Urban
Land Ceiling Act and that in the event of refusal of the
permission by the competent authority, the agreement of
sale shall fail. It has to be pointed out here, that even if
there is a clause in Ex.P.2 stating that the defendant
should arrange for securing the permission of the
competent authority and if the same has not been
obtained by the defendants, it cannot be a ground for the
7
defendants to refuse the sale of the suit property. It is
open to the plaintiff (the purchaser) to get a sale of the
entire suit property measuring 8 grounds and 2354 sq.ft.
even if it exceeds 500 sq. metres. The plaintiff may get
the sale with that risk.”
6. Thereafter, the appellant-plaintiff established that it had been ready
and willing to perform its part of the contract continuously, the balance sum
of Rs.4,40,000/- being deposited in the Court on the directions of the Court.
The result, therefore, was as follows:
“23. From the foregoing discussions, my findings on the
issues are that the suit agreement of sale dated
12.06.1980 is true, valid and enforceable, that it does not
suffer from any material alteration, that it is a concluded
contract, that the agreement of sale is binding on the 4th
defendant, that the defendants have committed breach of
the agreement, that the plaintiff is entitled to purchase the
suit property and to get a decree for specific performance
of the agreement as prayed for.
24. In the result, the suit is decreed directing defendants 2
to 6 to execute the sale deed in respect of the suit
property in favour of the plaintiff within a period of two
months, in default the sale deed shall be executed by
Court and got registered.”
7. A first appeal was filed to a Division Bench of the High Court, which
then referred the matter to a Full Bench on various questions that were
submitted by it. The Full Bench, by a judgment dated 03.03.1999, set out
the reference order as follows:
8
“Section 4 of the Act states that no person shall be
entitled to hold vacant land in excess of the ceiling limit,
except as otherwise provided in the Act. Section 7 of the
Act makes it obligatory on the person holding excess land
to file statement. Under section 11 of the Act, excess land
could be acquired.
Section 17 of the Act places ceiling limit on future
acquisition by inheritance, bequest or by the sale in
execution of decrees etc. Section 19 of the Act provides
for penalty for concealment etc., of particulars of vacant
land. Even under section 6 of the Act, there is a
prohibition to transfer the excess vacant land unless such
person has filed a statement, and notification regarding
the excess vacant land held by him has been published
under sub-section (1) of section 11 of the Act. The said
section further declares that any transfer made in
contravention of the provisions of the Act, shall be
deemed to be null and void. As can be seen from the
various provisions contained in the Act, section 21 deals
with power of exemption. A plain reading of section 6
goes to show that what is prohibited is a transfer of
excess vacant land and the consequence of such transfer
in contravention of the provision contained in the said
section viz., such transfer shall be deemed to be null and
void. In other words, it speaks of a completed transaction
of transfer. It does not refer to the agreements at all. We
are not able to read any prohibition in the said provision
prohibiting the parties from entering into agreement of
sale. In the decision of the Division Bench of this Court
aforementioned, a view is taken that courts in passing a
decree for specific performance, cannot lend support to
the parties to enforce the agreement so as to defeat the
provisions of the Act, in particular section 6 of the Act. We
are unable to agree with this view. There may be a decree
for specific performance subject to certain conditions, to
be complied with provisions of section 6 itself or subject to
grant of exemption and in the light of the judgment of the
Supreme Court in the case of Jambu Rao Satappa
Kocheri v. Neminath Appayya Hanamannayyar, AIR
1968 SC 1358 : [1968] 3 SCR 706, it cannot be said that
9
such an agreement is hit by section 23 of the Act. Under
the circumstances, we are of the view that this question is
required to be decided by a larger Bench. Hence we refer
this case for hearing and disposal by a larger Bench
including the question as we have stated above.”
The Full Bench then referred to the Tamil Nadu Urban Land (Ceiling &
Regulation) Act, 1978, which came into force w.e.f. 03.08.1976. After
referring to a number of decisions, the Full Bench then concluded:
“24. From these decisions, it is clear that even if the
contract by itself may not be illegal but its enforcement if
violates any law that will be a ground to hold that the
agreement cannot be enforced. We have already
extracted preamble of state Act and also the decision
reported in AIR 1979 SC 1415 : [1979] 3 SCR 802 , why
the Act was enacted. It is to prevent concentration of
Urban Land in the hands of few persons and speculation
in profiteering therein. It is to implement this provision of
the Act, this provision under section 6 and 11(4) of the Act
are enacted. If the seller is having land in excess than the
ceiling limits and if it is ultimately found that the Act also
applies permitting such persons to execute sale deed
pursuant to the agreement of sale, it will be defeating or
circumventing the provisions of the Act. Equitable
distribution of land, which is contemplated under the
provisions may not be possible if the sale is allowed to
take place. The intention is also very clear that third party
right should not be created, which is likely to affect him
also. If by enforcement of contract, if it amounts to subvert
or circumvent law, court cannot be party to such
enforcement, Court will have to discountenance the
practice and it will have to safeguard the foundation of
Society.
25. The question whether only completed transactions are
contemplated under section 6 of the Act and therefore
enforcement of agreement for sale is not a bar is also an
10
argument without any merit. It is true that under the Act,
no person is entitled to hold more than the ceiling limit as
prescribed under section 4 of the Act. Argument is that
purchaser is not holding any land on the basis of an
agreement unless he gets some title. It still continues only
with vendor. Therefore, there is no prohibition in
enforcement of contract. Section 6 prohibits transfer by a
person holding land in excess of ceiling limits. The matter
will have to be considered taking into consideration the
rights of seller and if that person holds more land than
prescribed under section 5, such transfer shall be
deemed to be null and void. The prohibition under section
6 is for transferring the land and consequently declares
that any violation of law shall be deemed to be null and
void. Section 6 contemplates both proposed transfer and
completed transfer. An agreement of sale is also affected
by section 6 of the Act.”
xxx xxx xxx
“38. It is true that the Act is a self-contained Code with
regard to urban lands and ceiling provisions. It is also true
that there are authorities to decide as to whether
transaction is valid or invalid. Question of valid or invalid
transaction will apply only regarding completed
transaction. When section 6 prohibits even proposed
transfer, question of considering validity or invalidity does
not arise and the consequences are also already declared
by the Act as null and void. It takes as if there is no
transaction at all in the eye of law.
39. In the decision reported in Shah Jitendra Nanalal v.
Patel Lallubhai Ishverbhai, AIR 1984 Guj 145 (FB), one
of the questions that was raised before the Full Bench
was whether a decree for specific performance could be
given condition. What is the effect of section 5(3) read
with section 20 of the Central Act in the agreement of
transfer was the matter in issue. Once it is held that
section 6 is an absolute bar, question of granting
conditional decree also will not arise. The said argument
pre-supposes that agreement and sale are valid and is
invalid only as against Government.
11
40. We do not think that the decision therein could be
applied so far as Tamil Nadu Act is concerned. Exemption
under section 21 can be applied only by vendor and it is
for him exemption is granted. While considering suit for
specific performance, Court is only concerned whether
purchaser has come to Court for enforcing the agreement
in terms thereof. Asking vendor to get exemption and then
to execute the agreement will be deviating from the terms
of contract and the Court will not enforce such a contract.
That will mean that purchaser is not willing to purchase
the land as per agreement, but only with deviation, i.e.,
Vendor must get exemption and execute the sale deed.
41. In paragraph 11 of the Full Bench judgment, it is said
that,
“So long as provision declaring the transfer
under s. 5(3) as void is subject to the right to
move for exemption, obtain exemption and
transfer the property, the power of an owner is
vacant land in excess of the ceiling limit to
“alienate” such land is dormant in him and
such power could be exercised by him in case
he seeks exemption, satisfies the Government
that the grounds for exemption exist and
obtains such exemption. That being the case,
a decree cannot be defeated on the ground
that “transfer” inter-parties would not be
possible...”
We cannot subscribe the said view, for, granting decree
for specific performance of contract itself being
discretionary. Apart from the sale, when a transaction is
only after obtaining exemption or permission from another
authority, over which Court has no control, the relief of
specific performance usually is not granted. While giving
such direction, it will be going beyond contract and if
ultimately exemption is refused, in effect, the decree will
become waste paper. While exercising discretion, the
Court will have to see whether it could pass executable
decree and while exercising discretion, these factors are
also considered for granting relief. The decision reported
12
in Shoba Viswanathan v. D.P. Kinggley, 1996 (1) LW
721 of the judgment supports the view, which we have
taken.
42. Therefore, we answer the reference as follows:
Since provisions of Bombay Tenancy and Agricultural
Lands Act are entirely different from that of Tamil Nadu
Urban Land (Ceiling and Regulation) Act, 1978, various
Bench decisions of this Court, wherein it was held that a
decree for specific performance of contract cannot be
granted, if it violates section 6 of Tamil Nadu Urban Land
(Ceiling and Regulation) Act, 1978 do not require
reconsideration.
We also hold that section 6 of the Act not only prohibits
a completed transfer but also a proposed transfer.
We also hold that a decree for specific performance of
contract cannot be granted conditionally upon vendor
satisfying certain conditions, if it is not part of the
agreement.”
8. Given this declaration of law inter-parties, the matter went back to the
Division Bench. The Division Bench then referred to paragraph 22 of the
judgment of the learned Single Judge and remanded the matter to the
learned Single Judge to record a finding as follows:
“4. We have, therefore, felt it necessary to direct the
learned trial Judge to record a finding on the question as
to whether the extent of 8 grounds and 2354 sq.ft. which
is the subject matter of the agreement to sell was held by
the defendants in excess of the ceiling limit applicable to
them, and as to whether that extent could have been sold
if at all only with the permission of the authorities under
the Act.”
13
9. The learned Single Judge, by a judgment dated 30.09.2003,
ultimately recorded:
“9. However, I am to point out that the material questions
whether the plaintiff is entitled to claim the relief of specific
performance or not and the question, whether sub-section
3 of section 5 and proviso to section 5(3) and section 6
are applicable to this case or not, whether after repeal of
the Tamil Nadu Urban Land (Ceiling and Regulation) Act
the claim of the defendants under the repealed Act is no
longer available or not, whether permission was
necessary to effect alienation in pursuance of agreement
of sale involved in this case and like matters can be
decided only by the Division Bench of this court which has
called for the finding as indicated above.
10. However, the finding is recorded to the effect that the
subject matter of the suit viz., 8 grounds and 2354 sq.ft.
factually stands as excess lands within the meaning of the
Tamil Nadu Urban Land (Ceiling and Regulation) Act
before it was repealed. Accordingly, the finding is
submitted to that effect for kind consideration of the
Hon’ble Division Bench of this Court.”
10. The matter then returned to the Division Bench, which by the
impugned judgment dated 29.01.2007, reversed the judgment of the
learned Single Judge by applying the Full Bench decision relating to the
matter inter-parties. Dealing with section 5(3) and its proviso of the Tamil
Nadu Urban Land Ceiling Act, the Division Bench first held:
“28. In the present case, the land proposed to be
transferred under the agreement is 8 grounds and 2354
sq.ft. The entire land is admittedly a vacant land. For the
purpose of this case it is assumed that the plaintiff did not
have any dwelling unit or any vacant land. If, instead of
14
the agreement, the sale itself could have been affected in
respect of 8 grounds 2354 sq.ft., the plaintiff would have
become the owner of the said vacant land. In other words,
the land transferred would have exceeded the ceiling limit
of the transferee. The main provision contained in section
5(3) enables the person holding land in excess to
continue to hold such land because the sanctioned layout
is available. However, the proviso indicates that he cannot
sell such land if ultimately the lands in the hands of the
transferee would exceed the ceiling limit of such
transferee. It does not mean that wherever transferee is
without any dwelling unit or does not own any vacant
land, any extent of land could be sold to such person. The
clear intention is that the person intending to purchase
such property should not in the process acquire land in
excess of his own ceiling limit. Any other interpretation
would obviously defeat the very purpose of the proviso.
29. Therefore, in our opinion, even assuming that the
intended purchaser did not have dwelling unit or vacant
land, since the agreement of sale was in respect of
vacant land, which would have in the aggregate exceeded
the ceiling limit of the proposed transferee, the embargo
contained in section 5(3) proviso read with section 6 was
equally applicable.”
11. Referring to the argument of the appellant that the Tamil Nadu Urban
Land Ceiling Act had been repealed vide the Tamil Nadu Urban Land
(Ceiling & Regulation) Repeal Act, 1999 [“Repeal Act”] w.e.f. 16.06.1999,
the Division Bench then held:
“31. We have already extracted in extenso the different
observations made by the Full Bench, which is the
opinion rendered in a matter arising out of the present
dispute. In such Full Bench decision, the earlier views
expressed by several Division Bench decisions of this
Court holding the agreement in contravention of the
15
provisions of the Act to be invalid is obviously binding on
us. At several places it has been indicated that such
agreement is void. If the agreement was void at the
inception, the subsequent repeal of the Act possibly may
not have the effect of reviving such void agreement. Since
such agreement has been considered to be against the
Public Policy and void by the Full Bench, which opinion is
obviously binding on us and also on the parties at least
for the time being, we are unable to hold otherwise.”
Thus holding, the Division Bench then found:
“34. If this contention is accepted it would mean that
during duration of the Act, i.e., till 1999, the agreement
was not enforceable and such agreement could be
specifically performed after 1999, when the Act was
repealed. In other words, the court would be called upon
to enforce the agreement after 19 years on the basis of a
consideration which was fixed almost two decades back.
It is of course true that there are many instances where
such matters are pending before the Court for a long
period and thereafter the Court passes a decree at trial
stage or appellate stage for enforcement of the contract.
But, such a position cannot be compared to the present
case, wherein as per the opinion of the Full Bench such
agreement was contrary to the Public Policy under
section 23 of the Indian Contract Act and was not
enforceable, if not void. To enforce such an agreement
after long lapse of time because of the subsequent event,
namely, repeal of the Act, would not be equitable.
35. In this context, it would be more appropriate to
indicate that during course of hearing, the learned Senior
Counsel on the basis of the specific instructions of and in
the presence of counsel on record had submitted that
apart from Rs.4,40,000/-, which has been deposited in
court and which has been invested in fixed deposit
earning interest, the plaintiff/respondent is prepared to
pay a further sum of Rs.1.25 Crore for completing the
transaction. On the other hand, the learned Senior
Counsel appearing for the defendants/appellants
16
submitted that since the agreement itself contemplated
payment of compensation/damages in case of default by
the defendants, the court should instead of specifically
enforcing the agreement, direct payment of
compensation/damages to the plaintiff. Learned Senior
Counsel on the basis of specific instructions and in the
presence of counsel on record made a submission that
the defendants/appellants are prepared to pay a
consolidated compensation/damages of Rs. 2 crores.
36. It may be that the plaintiff, if permitted to purchase the
property, it would develop the same and earn more profit
than Rs.2 crores offered by the defendants/appellants.
However, keeping in view the fact that the defendants are
the original owners and weighing both the options, we feel
interest of justice would be served by directing the
defendants/appellants, on the basis of concession of the
counsels that the defendants/appellants shall be liable to
pay a consolidated sum of Rs. 2 crores as
compensation/damages to the plaintiff, which would
discharge their liability in full.
37. In view of the above conclusions, it is not necessary
for us to go into other questions raised by the appellants
to the effect that the plaintiff was not ready and willing to
perform its part of the contract.
38. In the result, the appeal is allowed in part. The
judgment and decree of the learned single Judge is
modified and instead of decree for specific performance
of the agreement, we direct that the
defendants/appellants shall be liable to pay a sum of Rs.2
crores to the plaintiff, in discharge of their entire liability.
Such amount should be paid or deposited in court on or
before 31.3.2007, failing which such amount shall carry
interest at the rate of 10% per annum thereafter. The
amount deposited by the plaintiff is permitted to be
withdrawn by the plaintiff along with the accrued interest.
The parties shall bear their own costs throughout.”
17
12. Shri Guru Krishnakumar, learned Senior Advocate appearing on
behalf of the appellant, has argued that every single factual finding found
by the learned Single Judge, including findings as to the dishonesty of the
defendants, had not been reversed by the Division Bench in appeal. He
argued that on a wrong application of the Full Bench judgment, the bar
contained in section 6 of the Tamil Nadu Urban Land Ceiling Act was
applied against the appellant, as a result of which the agreement would
have to be held to be void ab initio, which was incorrect, given the fact that
in this agreement, it was the defendants who were to obtain permission
from the competent authority under the Tamil Nadu Urban Land Ceiling Act,
which permission could have been obtained. He referred to the Repeal Act
and said that in any case, given the fact that a first appeal is in the nature
of a rehearing of a suit, on the date that the Division Bench passed its
decree, the Tamil Nadu Urban Land Ceiling Act stood repealed, as a result
of which none of its provisions could be used in order to hit the agreement
in the present case. He then referred to section 5(3) and its proviso, and
cited judgments to show that the Division Bench’s construction of the
proviso would render the main part of section 5(3) redundant. He argued
that on balance, it was found that the appellant-plaintiff had been ready and
willing throughout to perform its part of the agreement, whereas the
18
defendants were correctly found to be in breach, neither of which findings
has been set aside by the Division Bench. To, therefore, arrive at the
conclusion that the agreement is null and void ab initio, as a result of which
specific performance cannot be decreed, is wholly incorrect in the facts of
the present case. He also stressed the fact that it was open to the
defendants to have applied for exemption of the suit property out of the
larger property that was owned by them, and had they done so, the suit
property, being within the ceiling limit of the original four defendants in the
suit, the suit for specific performance was correctly decreed in the
appellant’s favour. The fact that the appellant, in turn, could only purchase
up to 500 sq. metres, the same being the ceiling limit, would not render the
agreement null and void ab initio, but on the contrary, would be at the risk
of the appellant, as correctly held by the learned Single Judge. In any case,
the Tamil Nadu Urban Land Ceiling Act having been repealed in 1999, by
the time the Division Bench passed its judgment, there was no impediment
in decreeing specific performance of the suit property, consequent upon the
repeal of the said Act. He cited a number of judgments to buttress his
submissions. He also attacked the Division Bench judgment stating that
the fact that litigation took 27 years by the time the Division Bench passed
19
its judgment could not be put against the appellant, as has been held by a
series of judgments of this Court.
13. Shri V. Giri, learned Senior Advocate appearing on behalf of the
respondents, argued that the Full Bench judgment was inter-parties and
bound the parties. Being res judicata between the parties, it is not now
possible to reopen what was held therein, the appellant not having
appealed from the said Full Bench judgment which, therefore, became final
between the parties. If the Full Bench judgment is to be seen, the Division
Bench was absolutely correct in its conclusion that the agreement being
void ab initio, and therefore stillborn, could not be resuscitated at any future
point of time, given the repeal of the Tamil Nadu Urban Land Ceiling Act.
Further, he cited judgments to show that where a vested right accrues on
the date of the filing of the suit, that cannot be taken away later, and the
suit must be decided as on the date the plaint is filed and not on the date of
the state of the law when the appellate decree is passed. He also argued
that in any event, this Court should not interfere under Article 136 as the
judgment under appeal is equitable – the appellant has been awarded Rs.2
crores with interest, which would come to a sum of over Rs.3 crores today,
despite the fact that specific performance could not be granted of a void
agreement. He also added that the Division Bench was right in stating that
20
after so many years, grant of specific performance, being discretionary,
was correctly refused.
14. Having heard learned counsel for the parties, it is first important to
deal with Shri Giri’s basic contention that the Full Bench judgment stands
as a roadblock to the decreeing of a suit for specific performance in the
present case. Shri Giri is right in arguing that it is not open to the appellant
to go behind the Full Bench judgment as it is inter-parties, as a result of
which the law laid down by the Full Bench judgment must apply to the
parties, res judicata clearly attaching even to issues of law based on the
same cause of action – see Mathura Prasad Bajoo Jaiswal v. Dossibai
N.B. Jeejeebhoy, (1970) 3 SCR 830 at p. 836. This being the case, it is
important now to analyse what was held by the Full Bench.
15. The Full Bench judgment, while stating that section 6 of the Tamil
Nadu Urban Land Ceiling Act prohibited even agreements to sell, as a
result of which there would be no transaction at all in the eyes of law, was
careful thereafter to point out:
“40. …… While considering suit for specific performance,
Court is only concerned whether purchaser has come to
Court for enforcing the agreement in terms thereof.
Asking vendor to get exemption and then to execute the
agreement will be deviating from the terms of contract
and the Court will not enforce such a contract. That will
21
mean that purchaser is not willing to purchase the land as
per agreement, but only with deviation, i.e., vendor must
get exemption and execute the sale deed.”
16. In paragraph 41, the Full Bench also went on to state that it is
possible to obtain exemption under the Tamil Nadu Urban Land Ceiling Act,
over which the Court has no control, but despite that, the relief of specific
performance is not usually granted as it would be going beyond the
contract. Equally, after holding that section 6 prohibits a proposed transfer,
the Full Bench went on to hold that a decree for specific performance
cannot be granted conditionally upon the vendor satisfying certain
conditions if it is not part of the agreement.
17. When these portions of the Full Bench judgment are applied to the
agreement in question, it is clear that the agreement itself contains a
specific clause, namely, clause 4, in which it is for the vendor to obtain
permission from the competent authority under the Tamil Nadu Urban Land
Ceiling Act. This agreement, therefore, cannot be said to be hit by the
decision of the Full Bench judgment as the Full Bench itself recognises that
there may be agreements with such clauses, in which case it is the Court’s
duty to enforce such clause. That is all that the learned Single Judge has
done in the facts of this case – he has correctly held that it was for the
22
defendants to obtain exemption from the authorities under the Tamil Nadu
Urban Land Ceiling Act which they did not, as a result of which they were in
breach of the agreement.
18. Viewed slightly differently, it is clear that the Full Bench judgment
cannot stand in the way of the appellant for another reason. There can be
no doubt that the suit property, admeasuring roughly 2002 sq. metres, was
part of a larger property of 30 grounds, and that the defendants, being four
in number, were entitled to retain 2000 sq. metres of the land owned by
them. It was for this reason that it was incumbent upon the defendants to
have obtained the Urban Land Ceiling permission to sell the land that was
within their ceiling limit, which they failed to do. As a matter of fact, a later
Single Judge of the Madras High Court, in Sushila v. Nihalchand Nahata,
AIR 2004 Mad 18, understood the Full Bench judgment of his own High
Court as follows:
“11. With respect to the ratio laid down in the decision of
the Full Bench of this Court, (1999) 2 CTC 181, cited
supra and the decision of the Division Bench of this Court,
(2003) 1 Mad LW 696, cited supra, there cannot be any
dispute. The ratio decidendi in both the decisions is that
any transfer by a person holding land in excess of ceiling
limit is invalid. Even proposed transfers of excess land is
invalid. The agreement for sale of excess land also is null
and void and therefore, no suit for specific performance
would lie to enforce an agreement for sale of “excess
land”. That is, what is prohibited or what is illegal and
23
hence null and void is, an agreement to sell any “excess
land” under the Urban Land Ceiling Act. If the agreement
is with respect to the “exempted” land or with reference to
the land that is likely to be exempted, such an agreement
is not invalid; such agreements are valid and enforceable
by a suit for specific performance.
12. Learned counsel for the plaintiff submitted that the
agreement itself is only for sale of the land after getting
exemption from the appropriate authorities. The terms of
the agreement make it clear that the parties never
intended to sell or purchase the land in possession of the
defendant in excess of ceiling limit, unless exemption is
granted by the authorities. Therefore, the agreement is
not in contravention of the provisions of the Urban Land
Ceiling Act. Therefore, the decisions relied upon by the
counsel for the defendant is not applicable to the facts of
this case. There is no intention among the parties to
violate the provisions of the Urban Land Ceiling Act.
Therefore, the agreement is valid and can be specifically
enforced.
13. This argument of the counsel for the plaintiff is
acceptable. The decisions relied upon by the counsel for
the defendant are with respect to agreements of intended
transaction of excess land, whereas this agreement Ex.P.
5 had been entered specifically to transfer the land only
after getting exemption. When the Act itself provides for
grant of exemption, any person can reasonably expect
that he may get the exemption, as provided under the Act.
When it is possible and permissible for the authorities to
grant exemption under the Urban Land Ceiling Act,
nothing prohibits a person from entering into a contract for
sale of such land after getting exemption. Such an
agreement is not intended to violate the provisions of the
Act. It is only in accordance with the provisions of the Act
and therefore, such an agreement cannot be said to be
invalid or void ab initio. Therefore, such an agreement is
valid and enforceable in a suit for specific performance of
the agreement.
24
14. A perusal of Ex.P. 5 shows that what is agreed by the
petitioner is that land shall be sold/purchased after getting
exemption from the Urban Land Ceiling Authority. That is,
this agreement is not for sale/purchase of the “excess”
land under the Land Ceiling Act, but only after getting
exemption under the Urban Land Ceiling Act. Nowhere in
the agreement is it stated that the parties intended to
purchase or sell the land without getting exemption under
the Act. Therefore, the judgments relied on by the
defendants are not applicable to the facts of the present
case and hence, this agreement cannot be said to be
invalid as it does not contemplate either parties to act in a
manner contrary to the Urban Land Ceiling Act. Therefore,
the agreement is not invalid and hence, it is valid and
enforceable. Issue No. 1 is answered in favour of the
plaintiff.”
19. It is clear, therefore, that the agreement to sell cannot be said to be
void ab initio, as a result of which the basis of the Division Bench judgment
under appeal goes. Resultantly, the judgments in Jacques v. Withy, 1 H.
Bl. 65, Hitchcock v. Way, (1837) 6 A & E 943 : 112 ER 360, and Ram
Kristo Mandal v. Dhankisto Mandal, (1969) 1 SCR 342 (at p. 349) cited
by Shri Giri in support of the proposition that the repeal of a statute which
makes void an agreement cannot revive such void agreement have no
application on the facts of this case. In view of this, it is unnecessary to go
into whether section 5(3) of the Tamil Nadu Urban Land Ceiling Act,
together with its proviso, applies to the facts of this case.
25
20. However, the other contention on behalf of the respondents is that
even if this were so, the appellant was not entitled to more than 500 sq.
metres, which was the ceiling limit so far as the appellant was concerned.
This being the case, no decree for specific performance could be made in
favour of the appellant.
21. That conditional decrees for specific performance have been passed
and upheld by this Court cannot be denied. Thus, in Vishwa Nath Sharma
v. Shyam Shanker Goela, (2007) 10 SCC 595 [“Vishwa Nath Sharma”],
this Court held:
“12. The Privy Council in Motilal v. Nanhelal [(1929-30) 57
IA 333 : AIR 1930 PC 287] laid down that if the vendor
had agreed to sell the property which can be transferred
only with the sanction of some government authority, the
court has jurisdiction to order the vendor to apply to the
authority within a specified period, and if the sanction is
forthcoming, to convey to the purchaser within a certain
time. This proposition of law was followed in Chandnee
Widya Vati Madden v. Dr. C.L. Katial [AIR 1964 SC 978]
and R.C. Chandiok v. Chuni Lal Sabharwal [(1970) 3 SCC
140 : AIR 1971 SC 1238]. The Privy Council in Motilal
case [(1929-30) 57 IA 333 : AIR 1930 PC 287] also laid
down that there is always an implied covenant on the part
of the vendor to do all things necessary to effect transfer
of the property regarding which he has agreed to sell the
same to the vendee. Permission from the Land and
Development Officer is not a condition precedent for grant
of decree for specific performance. The High Court relied
upon the decisions in Chandnee Widya Vati
Madden v. Dr. C.L. Katial [AIR 1964 SC 978] and Bhim
Singhji v. Union of India [(1981) 1 SCC 166 : AIR 1981
26
SC 234] to substantiate the conclusion. In Chandnee
Widya [AIR 1964 SC 978] this Court confirmed the
decision of the Punjab and Haryana High Court holding
that if the Chief Commissioner ultimately refused to grant
the sanction to the sale, the plaintiff may not be able to
enforce the decree for specific performance of the
contract but that was not a bar to the court passing a
decree for that relief. The same is the position in the
recent case. If after the grant of the decree of specific
performance of the contract, the Land and Development
Officer refused to grant permission for sale, the decreeholder may not be in a position to enforce the decree but
it cannot be held that such a permission is a condition
precedent for passing a decree for specific performance
of the contract.
13. In R.C. Chandiok v. Chuni Lal Sabharwal [(1970) 3
SCC 140 : AIR 1971 SC 1238] it was held that proper
form of decree in a case like the instant one would be to
direct specific performance of the contract between the
defendant and the plaintiff and to direct the subsequent
transferee to join in the conveyance so as to pass on the
title residing in him. This is because Defendant 2, son of
Defendant 1 cannot take the stand that he was a
transferee without notice. Admittedly, he is the son of
Defendant 1. The view in R.C. Chandiok [(1970) 3 SCC
140 : AIR 1971 SC 1238] was a reiteration of earlier view
in Durga Prasad v. Deep Chand [AIR 1954 SC 75] . This
Court has repeatedly held that the decree can be passed
and the sanction can be obtained for transfer of
immovable property and the decree in such a case would
be in the way the High Court has directed. (See Motilal
Jain v. Ramdasi Devi [(2000) 6 SCC 420], Nirmala Anand
v. Advent Corpn. (P) Ltd. [(2002) 5 SCC 481], HPA
International v. Bhagwandas Fateh Chand Daswani
[(2004) 6 SCC 537] and Aniglase Yohannan v. Ramlatha
[(2005) 7 SCC 534].)”
27
In Van Vibhag Karamchari Griha Nirman Sahkari Sanstha Maryadit v.
Ramesh Chander, (2010) 14 SCC 596 [“Van Vibhag”], this Court referred
to a suit in which specific performance was not claimed on the ground that
in view of the Urban Land (Ceiling & Regulation) Act, 1976, the appellant
could not have made such claim. This was turned down specifically by this
Court, stating:
“26. The appellant, on noticing the same, filed a suit on
11-2-1991 but he did not include the plea of specific
performance. The appellant wanted to defend this action
by referring to two facts (i) there was an acquisition
proceeding over the said land under the Land Acquisition
Act, and (ii) in view of the provisions of the Ceiling Act, the
appellant could not have made the prayer for specific
performance.
27. The aforesaid purported justification of the appellant is
not tenable in law. If the alleged statutory bar referred to
by the appellant stood in its way to file a suit for specific
performance, the same would also be a bar to the suit
which it had filed claiming declaration of title and
injunction. In fact, a suit for specific performance could
have been easily filed subject to the provision of section
20 of the Ceiling Act.
28. Similar questions came up for consideration before a
Full Bench of the Gujarat High Court in Shah Jitendra
Nanalal v. Patel Lallubhai Ishverbhai [AIR 1984 Guj 145].
The Full Bench held that a suit for specific performance
could be filed despite the provisions of the Ceiling Act. A
suit for specific performance in respect of vacant land in
excess of ceiling limit can be filed and a conditional
decree can be passed for specific performance, subject to
exemption being obtained under section 20 of the Act
(AIR paras 11-13).
28
29. We are in respectful agreement with the views of the
Full Bench in the abovementioned decision and the
principles decided therein are attracted here.”
The judgments of Immani Appa Rao v. Gollapalli Ramalingamurthi,
(1962) 3 SCR 739 and Narayanamma v. Govindappa, 2019 SCC OnLine
SC 1260 cited by Shri Giri in support of the proposition that no court will
lend its aid to a man who founds his cause of action upon an illegal act has
no application in a situation covered by the judgments contained in Vishwa
Nath Sharma (supra) and Van Vibhag (supra).
22. Even otherwise, the Repeal Act makes it clear that the Tamil Nadu
Urban Land Ceiling Act is repealed as follows:
“2. Repeal of Tamil Nadu Act 24 of 1978.–The Tamil
Nadu Urban Land (Ceiling and Regulation) Act, 1978
(Tamil Nadu Act 24 of 1978) (hereinafter referred to as the
principal Act), is hereby repealed.
3. Savings.–(1) The repeal of the principal Act shall not
affect–
(a) the vesting of any vacant land under subsection (3) of section 11, possession of which
has been taken over by the State Government
or any person duly authorised by the State
Government in this behalf or by the competent
authority;
(b) the validity of any order granting
exemption under sub-section (1) of section 21
or any action taken thereunder.
29
(2) Where -
(a) any land is deemed to have vested in the
State Government under sub-section (3) of
section 11 of the principal Act but possession
of which has not been taken over by the State
Government or any person duly authorised by
the State Government in this behalf or by the
competent authority; and
(b) any amount has been paid by the State
Government with respect to such land,
then, such land shall not be restored unless the amount
paid, if any, has been refunded to the State Government.”
It is clear that as no steps whatsoever were taken under the Tamil Nadu
Urban Land Ceiling Act, the savings clause will not apply.
23. In Gajraj Singh v. State Transport Appellate Tribunal, (1997) 1
SCC 650, this Court spoke of the effect of an Act that is repealed as
follows:
“22. Whenever an Act is repealed it must be considered,
except as to transactions past and closed, as if it had
never existed. The effect thereof is to obliterate the Act
completely from the record of Parliament as if it had never
been passed; it never existed except for the purpose of
those actions which were commenced, prosecuted and
concluded while it was an existing law. Legal fiction is one
which is not an actual reality and which the law
recognises and the court accepts as a reality. Therefore,
in case of legal fiction the court believes something to
exist which in reality does not exist. It is nothing but a
presumption of the existence of the state of affairs which
in actuality is non-existent. The effect of such a legal
fiction is that a position which otherwise would not obtain
is deemed to obtain under the circumstances. Therefore,
30
when Section 217(1) of the Act repealed Act 4 of 1939
w.e.f. 1-7-1989, the law in Act 4 of 1939 in effect came to
be non-existent except as regards the transactions, past
and closed or saved.
23. In Crawford's Interpretation of Law (1989) at p. 626, it
is stated that:
“[A]n express repeal will operate to abrogate
an existing law, unless there is some
indication to the contrary, such as a saving
clause. Even existing rights and pending
litigation, both civil and criminal, may be
affected although it is not an uncommon
practice to use the saving clause in order to
preserve existing rights and to exempt
pending litigation.”
At p. 627, it is stated that:
“[M]oreover, where a repealing clause
expressly refers to a portion of a prior Act, the
remainder of such Act will not usually be
repealed, as a presumption is raised that no
further repeal is necessary, unless there is
irreconcilable inconsistency between them. In
like manner, if the repealing clause is by its
terms confined to a particular Act, quoted by
title, it will not be extended to an act upon a
different subject.”
Section 6 of the GC Act enumerates, inter alia, that where
the Act repeals any enactment, unless a different intention
appears, the repeal shall not (a) revive anything not in
force or existing at the time at which the repeal takes
effect; or (b) affect the previous operation of any
enactment so repealed or anything duly done or suffered
thereunder; or (c) affect any right, privilege, obligation or
liability acquired, accrued or incurred under any
enactment so repealed, and any such investigation, legal
proceeding or remedy may be instituted, continued or
enforced. In India Tobacco Co. Ltd. v. CTO [(1975) 3 SCC
512 : 1975 SCC (Tax) 49] (SCC at p. 517) in paras 6 and
11, a Bench of three Judges had held that repeal
31
connotes abrogation and obliteration of one statute by
another from the statute-book as completely as if it had
never been passed. When an Act is repealed, it must be
considered, except as to transactions past and closed, as
if it had never existed. Repeal is not a matter of mere
form but is of substance, depending on the intention of
the legislature. If the intention indicated either expressly
or by necessary implication in the subsequent statute was
to abrogate or wipe off the former enactment wholly or in
part, then it would be a case of total or pro tanto repeal.”
24. It is settled law that an appeal is a continuation of a suit, as a result of
which a change in law will become applicable on the date of the appellate
decree, provided that no vested right is taken away thereby. This was
felicitously put in Rameshwar v. Jot Ram, (1976) 1 SCR 847 as follows:
“In P. Venkateswarlu v. Motor & General Traders [(1975) 1
SCC 770, 772 : AIR 1975 SC 1409, 1410] this Court dealt
with the adjectival activism relating to post-institution
circumstances. Two propositions were laid down. Firstly, it
was held that ‘it is basic to our processual jurisprudence
that the right to relief must be judged to exist as on the
date a suitor institutes the legal proceeding.’ This is an
emphatic statement that the right of a party is determined
by the facts as they exist on the date the action is
instituted. Granting the presence of such facts, then he is
entitled to its enforcement. Later developments cannot
defeat his right because, as explained earlier, had the
court found his facts to be true the day he sued he would
have got his decree. The Court’s procedural delays
cannot deprive him of legal justice or right crystallised in
the initial cause of action. This position finds support
in Bhajan Lal v. State of Punjab [(1971) 1 SCC 34].
(emphasis in original)
32
The impact of subsequent happenings may now be spelt
out. First, its bearing on the right of action, second, on the
nature of the relief and third, on its impotence to create or
destroy substantive rights. Where the nature of the relief,
as originally sought, has become obsolete or
unserviceable or a new form of relief will be more
efficacious on account of developments subsequent to
the suit or even during the appellate stage, it is but fair
that the relief is moulded, varied or reshaped in the light
of updated facts. Patterson [Patterson v. State of
Alabama, (1934) 294 US 600, 607] illustrates this
position. It is important that the party claiming the relief or
change of relief must have the same right from which
either the first or the modified remedy may flow.
Subsequent events in the course of the case cannot be
constitutive of substantive rights enforceable in that very
litigation except in a narrow category (later spelt out) but
may influence the equitable jurisdiction to mould reliefs.
Conversely, where rights have already vested in a party,
they cannot be nullified or negated by subsequent events
save where there is a change in the law and it is made
applicable at any stage. Lachmeshwar Prasad Shukul v.
Keshwar Lal Chaudhuri [1940 FCR 84 : AIR 1941 FC 5]
falls in this category. Courts of justice may, when the
compelling equities of a case oblige them, shape reliefs
— cannot deny rights — to make them justly relevant in
the updated circumstances. Where the relief is
discretionary, courts may exercise this jurisdiction to avoid
injustice. Likewise, where the right to the remedy
depends, under the statute itself, on the presence or
absence of certain basic facts at the time the relief is to
be ultimately granted, the Court, even in appeal, can take
note of such supervening facts with fundamental
impact. Venkateswarlu [P. Venkateswarlu v. Motor &
General Traders, (1975) 1 SCC 770 : AIR 1975 SC 1409],
read in its statutory setting, falls in this category. Where a
cause of action is deficient but later events have made up
the deficiency, the Court may, in order to avoid multiplicity
of litigation, permit amendment and continue the
proceeding, provided no prejudice is caused to the other
33
side. All these are done only in exceptional situations and
just cannot be done if the statute, on which the legal
proceeding is based, inhibits, by its scheme or otherwise,
such change in cause of action or relief. The primary
concern of the Court is to implement the justice of the
legislation. Rights vested by virtue of a statute cannot be
divested by this equitable doctrine (See Chokalingam
Chetty [54 MLJ 88 (PC)]). The law stated in Ramji
Lal v. State of Punjab [AIR 1966 Punj 374 : ILR (1966) 2
Punj 125] is sound:
“Courts, do very often take notice of events
that happen subsequent to the filing of suits
and at times even those that have occurred
during the appellate stage and permit
pleadings to be amended for including a
prayer for relief on the basis of such events
but this is ordinarily done to avoid multiplicity
of proceedings or when the original relief
claimed has, by reason of change in the
circumstances, become inappropriate and not
when the plaintiff's suit would be wholly
displaced by the proposed amendment
(see Steward v. North Metropolitan Tramways
Company [(1885) 16 QBD 178] ) and a fresh
suit by him would be so barred by limitation.”
One may as well add that while taking cautious judicial
cognisance of “post-natal” events, even for the limited and
exceptional purposes explained earlier, no court will
countenance a party altering, by his own manipulation, a
change in situation and plead for relief on the altered
basis.”
(emphasis in original)
(at pp. 851-852)
25. This judgment follows the hallowed principle that an appellate
proceeding is in continuation of an original proceeding, as laid down in
34
Lachmeshwar Prasad Shukul v. Keshwar Lal Chaudhuri, AIR 1941 FC
5, also followed in later judgments of this Court. In Dayawati v. Inderjit,
(1966) 3 SCR 275, this Court held:
“Now as a general proposition, it may be admitted that
ordinarily a court of appeal cannot take into account a
new law, brought into existence after the judgment
appealed from has been rendered, because the rights of
the litigants in an appeal are determined under the law in
force at the date of the suit. Even before the days of
Coke, whose maxim — a new law ought to be
prospective, not retrospective in its operation — is oftquoted, courts have looked with disfavour upon laws
which take away vested rights or affect pending cases.
Matters of procedure are, however, different and the law
affecting procedure is always retrospective. But it does
not mean that there is an absolute rule of inviolability of
substantive rights. If the new law speaks in language,
which, expressly or by clear intendment, takes in even
pending matters, the court of trial as well as the court of
appeal must have regard to an intention so expressed,
and the court of appeal may give effect to such a law
even after the judgment of the court of first instance. The
distinction between laws affecting procedure and those
affecting vested rights does not matter when the court is
invited by law to take away from a successful plaintiff,
what he has obtained under judgment. See Quilter v.
Maple son [(1882) 9 QBD 672] and Stovin v. Fairbrass
[(1919) 88 LJ KB 1004] which are instances of new laws
being applied. In the former the vested rights of the
landlord to recover possession and in the latter the vested
right of the statutory tenant to remain in possession were
taken away after judgment. See also Maxwell’s
Interpretation of Statutes (11th Edn. pp. 211 and 213,
and Mukerjee (K.C.) v. Mst. Ramaraton [63 IA 47] where
no saving in respect of pending suits was implied when
Section 26(N) and (O) of the Bihar Tenancy Act (as
35
amended by Bihar Tenancy Amendment Act, 1934) were
clearly applicable to all cases without exception.
Section 6 of the Relief of Indebtedness Act is clearly
retrospective. Indeed, the heading of the section shows
that it lays down the retrospective effect. This being so,
the core of the problem really is whether the suit could be
said to be pending on June 8, 1956 when only an appeal
from the judgment in the suit was pending. This requires
the consideration whether the word ‘suit’ includes an
appeal from the judgment in the suit. An appeal has been
said to be “the right of entering a superior court, and
invoking its aid and interposition to redress the error of
the court below”. (Per Lord Westbury in AttorneyGeneral v. Sillem [11 ER 1200 at 1209]. The only
difference between a suit and an appeal is this that an
appeal “only reviews and corrects the proceedings in a
cause already constituted but does not create the cause”.
As it is intended to interfere in the cause by its means, it
is a part of it, and in connection with some matters and
some statutes it is said that an appeal is a continuation of
a suit. In the present Act the intention is to give relief in
respect of excessive interest in a suit which is pending
and a preliminary decree in a suit of this kind does not
terminate the suit. The appeal is a part of the cause
because the preliminary decree which emerges from the
appeal will be the decree, which can become a final
decree. Such an appeal cannot have an independent
existence. If this be not accepted for the purpose of the
application of Section 3 of the Usurious Loans Act (as
amended) curious results will follow. The appeal court in
the appeal is not able to resort to the section but if the suit
were remanded the trial court would be compelled to
apply it. For although, in the appeal proper, that judgment
must be rendered which could be rendered by the court of
trial, but if the suit is to be reheard, then the judgment
must be given on the existing state of the law and that
must include Section 5 by reason of Section 6 of the
Punjab Relief of Indebtedness Act. It is hardly to be
suggested that this obvious anomaly was allowed to exist.
36
It would, therefore, appear that in speaking of a pending
suit, the legislature was thinking not only in terms of the
suit proper but also of those stages in the life of the suit
which ordinarily take place before a final executable
document comes into existence. The words of the section
we are concerned with, speak of a suit pending on the
commencement of the Act and it means a live suit
whether in the court of first instance or in an appeal court
where the judgment of the court of first instance is being
considered. It only excludes those suits in which nothing
further needs to be done in relation to the rights or claims
litigated, because an executable decree which may not be
reopened is already in existence. The decision of the High
Court was right in applying Section 3 of the Usurious
Loans Act (as amended) to the case.”
(at pp. 281-283)
Similarly, in Amarjit Kaur v. Pritam Singh, (1974) 2 SCC 363, this
Court held:
“4. In Lachmeshwar Prasad Shukul v. Keshwar Lal
Chaudhuri [1940 FCR 84] it was held that once the
decree passed by a court had been appealed against, the
matter became sub-judice again and thereafter the
appellate court has seisin of the whole case, though for
certain purposes, e.g., execution, the decree was
regarded as final and the courts below retained
jurisdiction. The Court further said that it has been a
principle of legislation in British India at least from 1861
that a court of appeal shall have the same powers and
shall perform as nearly as may be the same duties as are
conferred and imposed by the Civil Procedure Code on
courts of original jurisdiction, that even before the
enactment of that Code, the position was explained by
Bhashyam Iyengar, J. in Kristnama Chariar v.
Mangammal [ILR (1903) 26 Mad 91, at p. 95-96.] in
language which makes it clear that the hearing of an
appeal is under the processual law of this country in the
37
nature of a re-hearing, and that it is on the theory of an
appeal being in the nature of a re-hearing that the courts
in this country have in numerous cases recognized that in
moulding the relief to be granted in a case on appeal, the
court of appeal is entitled to take into account even facts
and events which have come into existence after the
decree appealed against.
5. As an appeal is a re-hearing, it would follow that if the
High Court were to dismiss the appeal, it would be
passing a decree in a suit for pre-emption. Therefore, the
only course open to the High Court was to allow the
appeal and that is what the High Court has done. In other
words, if the High Court were to confirm the decree
allowing the suit for pre-emption, it would be passing a
decree in a suit for pre-emption, for, when the appellate
court confirms a decree, it passes a decree of its own,
and therefore, the High Court was right in allowing the
appeal.”
In Lakshmi Narayan Guin v. Niranjan Modak, (1985) 1 SCC
270, this Court held:
“9. That a change in the law during the pendency of an
appeal has to be taken into account and will govern the
rights of the parties was laid down by this Court in Ram
Swarup v. Munshi [AIR 1963 SC 553 : (1963) 3 SCR 858]
which was followed by this Court in Mula v. Godhu [(1969)
2 SCC 653 : AIR 1971 SC 89 : (1970) 2 SCR 129]. We
may point out that in Dayawati v. Inderjit [AIR 1966 SC
1423 : (1966) 3 SCR 275 : (1966) 2 SCJ 784] this Court
observed:
“If the new law speaks in language, which,
expressly or by clear intendment, takes in
even pending matters, the Court of trial as
well as the Court of appeal must have regard
to an intention so expressed, and the Court of
appeal may give effect to such a law even
38
after the judgment of the Court of first
instance.”
Reference may also be made to the decision of this Court
in Amarjit Kaur v. Pritam Singh [(1974) 2 SCC 363 : AIR
1974 SC 2068 : (1975) 1 SCR 605] where effect was
given to a change in the law during the pendency of an
appeal, relying on the proposition formulated as long ago
as Kristnama Chariar v. Mangammal [ILR (1902) 26 Mad
91 (FB)] by Bhashyam Ayyangar, J., that the hearing of an
appeal was, under the processual law of this country, in
the nature of a re-hearing of the suit. In Amarjit
Kaur [(1974) 2 SCC 363 : AIR 1974 SC 2068 : (1975) 1
SCR 605] this Court referred also to Lachmeshwar
Prasad Shukul v. Keshwar Lal Chaudhuri [AIR 1941 FC
5 : 1940 FCR 84 : 191 1C 659] in which the Federal Court
had laid down that once a decree passed by a court had
been appealed against the matter became sub judice
again and thereafter the appellate court acquired seisin of
the whole case, except that for certain purposes, for
example, execution, the decree was regarded as final and
the court below retained jurisdiction.”
26. However, Shri Giri referred to the judgment in Keshavan Madhava
Menon v. State of Bombay, 1951 SCR 228 in order to buttress the
proposition that a repealing Act cannot be retrospectively applied so as to
destroy a fundamental right. For this purpose, he relied upon Mahajan J.’s
concurring judgment at pp. 249-250. This judgment is wholly
distinguishable given the fact that there is no fundamental right involved of
the defendants in the present case and the fact that no vested right of the
defendants has been affected by the Repeal Act. Equally, the judgment in
39
John Lemm v. Thomas Alexander Mitchell, [1912] A.C. 400 correctly lays
down the principle stated by Tindal, C.J. in Kay v. Goodwin, 130 E.R. 1403
[1830] as follows:
“I take the effect of repealing a statute to be to obliterate it
as completely from the records of the Parliament as if it
had never been passed; and it must be considered as a
law that never existed, except for the purpose of those
actions which were commenced, prosecuted, and
concluded whilst it was an existing law.”
(at p. 406)
In that case, since it was held on facts that persons had vested rights
acquired by them in actions duly determined under the repealed law, these
could not be affected. This is wholly distinguishable from the fact situation
in the present case.
27. This being the case, on the date on which the appellate decree was
passed, in any case, the Tamil Nadu Urban Land Ceiling Act having been
repealed would not stand in the way of a decree for specific performance. It
must be remembered that there is no vested right under the Tamil Nadu
Urban Land Ceiling Act in favour of the respondents. Any right, if at all, is in
favour of the State Government, which, like Pontius Pilate, has washed its
hands off this matter by a report submitted to this Court on 17.08.2015.
40
28. The Division Bench judgment is also wholly incorrect in stating that
for no fault of the appellant, since the court process has taken 27 years to
decide the specific performance suit, specific performance being a
discretionary relief ought not to be granted. Section 20 of the Specific Relief
Act, 1963, prior to its substitution by the Specific Relief (Amendment) Act,
2018, read as follows:
“20. Discretion as to decreeing specific performance.
—(1) The jurisdiction to decree specific performance is
discretionary, and the court is not bound to grant such
relief merely because it is lawful to do so; but the
discretion of the court is not arbitrary but sound and
reasonable, guided by judicial principles and capable of
correction by a court of appeal.
(2) The following are cases in which the court may
properly exercise discretion not to decree specific
performance—
(a) where the terms of the contract or the
conduct of the parties at the time of entering
into the contract or the other circumstances
under which the contract was entered into are
such that the contract, though not voidable,
gives the plaintiff an unfair advantage over the
defendant; or
(b) where the performance of the contract
would involve some hardship on the
defendant which he did not foresee, whereas
its non-performance would involve no such
hardship on the plaintiff; or
(c) where the defendant entered into the
contract under circumstances which though
not rendering the contract voidable, makes it
inequitable to enforce specific performance.
41
Explanation I.—Mere inadequacy of consideration, or
the mere fact that the contract is onerous to the
defendant or improvident in its nature, shall not be
deemed to constitute an unfair advantage within the
meaning of clause (a) or hardship within the meaning of
clause (b).
Explanation II.—The question whether the
performance of a contract would involve hardship on the
defendant within the meaning of clause (b) shall, except
in cases where the hardship has resulted from any act of
the plaintiff, subsequent to the contract, be determined
with reference to the circumstances existing at the time of
the contract.
(3) The court may properly exercise discretion to decree
specific performance in any case where the plaintiff has
done substantial acts or suffered losses in consequence
of a contract capable of specific performance.
(4) The court shall not refuse to any party specific
performance of a contract merely on the ground that the
contract is not enforceable at the instance of the other
party.”
Section 20, as it then stood, makes it clear that the jurisdiction to decree
specific performance is discretionary; but that this discretion is not arbitrary
but has to be exercised soundly and reasonably, guided by judicial
principles, and capable of correction by a court of appeal – see section
20(1). Section 20(2) speaks of cases in which the court may properly
exercise discretion not to decree specific performance. Significantly, under
clause (a) of sub-section (2), what is to be seen is the terms of the contract
or the conduct of the parties at the time of entering into the contract. Even
42
“other circumstances under which the contract was entered into” refers only
to circumstances that prevailed at the time of entering into the contract. It is
only then that this exception kicks in – and this is when the plaintiff gets an
unfair advantage over the defendant. Equally, under clause (b) of subsection (2), the hardship involved is again at the time of entering into the
contract which is clear from the expression “which he did not foresee”. This
is made clear beyond doubt by Explanation II of section 20 which states
that the only exception to the hardship principle contained in clause (b) of
sub-section (2) is where hardship results from an act of the plaintiff
subsequent to the contract. In this case also, the act cannot be an act of a
third party or of the court – the act must only be the act of the plaintiff.
Clause (c) of sub-section (2) again refers to the defendant entering into the
contract under circumstances which makes it inequitable to enforce specific
performance. Here again, the point of time at which this is to be judged is
the time of entering into the contract.
29. Given section 20, the courts have uniformly held that the mere
escalation of land prices after the date of the filing of the suit cannot be the
sole ground to deny specific performance. Thus, in Nirmala Anand v.
Advent Corporation (P) Ltd., (2002) 8 SCC 146, a three-Judge bench of
this Court held:
43
“3. The appeal was heard by a two-Judge Bench. The
learned Judges have concurred that the appellant is
entitled to specific performance of the agreement dated 8-
9-1966. There has, however, been difference of opinion
between learned Judges on the condition in respect of
additional amount that may be paid by the appellant to
Respondents 1 and 2 and, therefore, the matter has been
placed before this three-Judge Bench. The opinions of
the learned Judges are reported in Nirmala Anand v.
Advent Corpn. (P) Ltd. [(2002) 5 SCC 481] In the opinion
expressed by Brother Justice Doraiswamy Raju, the
appellant has been directed to pay a sum of Rs
40,00,000 in addition to the sum already paid to
Respondents 1 and 2 and in the view of Brother Justice
Ashok Bhan, it would be unfair to impose the condition of
payment of Rs 40,00,000 and the appellant is entitled to
specific performance of agreement to sell on the price
mentioned in the agreement.”
xxx xxx xxx
“5. The appellant is prepared and willing to take
possession of the incomplete flat without claiming any
reduction in the purchase price and would not hold
Respondents 1 and 2 responsible for anything incomplete
in the building. It has been concurrently held that she did
not commit breach of the agreement to sell. She has
always been ready and willing to perform her part of the
agreement. The appellant is ready and willing to pay to
Respondents 1 and 2 interest on the sum of Rs 25,000.
The breach was committed by Respondents 1 and 2 as
noticed hereinbefore. It is evident that the appellant is
ready to take incomplete flat and pay further sum as
noticed, most likely on account of phenomenal increase in
the market price of the flat during the pendency of this
litigation for over three decades. We see no reason why
the appellant cannot be allowed to have, for her alone,
the entire benefit of manifold mega increase of the value
of real estate property in the locality. In our view, it would
not be unreasonable and inequitable to make the
appellant the sole beneficiary of the escalation of real
estate prices and the enhanced value of the flat in
44
question. There is no reason why the appellant, who is
not a defaulting party, should not be allowed to reap to
herself the fruits of increase in value.
6. It is true that grant of decree of specific performance
lies in the discretion of the court and it is also well settled
that it is not always necessary to grant specific
performance simply for the reason that it is legal to do so.
It is further well settled that the court in its discretion can
impose any reasonable condition including payment of an
additional amount by one party to the other while granting
or refusing decree of specific performance. Whether the
purchaser shall be directed to pay an additional amount
to the seller or converse would depend upon the facts
and circumstances of a case. Ordinarily, the plaintiff is not
to be denied the relief of specific performance only on
account of the phenomenal increase of price during the
pendency of litigation. That may be, in a given case, one
of the considerations besides many others to be taken
into consideration for refusing the decree of specific
performance. As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to have, for her
alone, the entire benefit of phenomenal increase of the
value of the property during the pendency of the litigation.
While balancing the equities, one of the considerations to
be kept in view is as to who is the defaulting party. It is
also to be borne in mind whether a party is trying to take
undue advantage over the other as also the hardship that
may be caused to the defendant by directing specific
performance. There may be other circumstances on
which parties may not have any control. The totality of the
circumstances is required to be seen.”
xxx xxx xxx
“8. Having regard to the totality of the circumstances, we
would direct the appellant to pay to Respondents 1 and 2
a sum of Rs 6,25,000 instead of Rs 25,000. The amount
of Rs 40,00,000 wherever it appears in the opinion of
Justice Doraiswamy Raju, would be read as Rs 6,25,000.
All other conditions will remain.”
45
In P. D’Souza v. Shondrilo Naidu, (2004) 6 SCC 649, this Court held:
“39. It is not a case where the defendant did not foresee
the hardship. It is furthermore not a case that nonperformance of the agreement would not cause any
hardship to the plaintiff. The defendant was the landlord
of the plaintiff. He had accepted part-payments from the
plaintiff from time to time without any demur whatsoever.
He redeemed the mortgage only upon receipt of requisite
payment from the plaintiff. Even in August 1981 i.e. just
two months prior to the institution of suit, he had accepted
Rs 20,000 from the plaintiff. It is, therefore, too late for the
appellant now to suggest that having regard to the
escalation in price, the respondent should be denied the
benefit of the decree passed in his favour. Explanation I
appended to Section 20 clearly stipulates that merely
inadequacy of consideration, or the mere fact that the
contract is onerous to the defendant or improvident in its
nature would not constitute an unfair advantage within the
meaning of sub-section (2) of Section 20.
40. The decision of this Court in Nirmala Anand [(2002) 5
SCC 481] may be considered in the aforementioned
context.
41. Raju, J. in the facts and circumstances of the matter
obtaining therein held that it would not only be
unreasonable but too inequitable for courts to make the
appellant the sole beneficiary of the escalation of real
estate prices and the enhanced value of the flat in
question, preserved all along by Respondents 1 and 2 by
keeping alive the issues pending with the authorities of
the Government and the municipal body. It was in the
facts and circumstances of the case held: (SCC p. 501,
para 23)
“23. … Specific performance being an
equitable relief, balance of equities have also
to be struck taking into account all these
relevant aspects of the matter, including the
lapses which occurred and parties
respectively responsible therefor. Before
46
decreeing specific performance, it is
obligatory for courts to consider whether by
doing so any unfair advantage would result for
the plaintiff over the defendant, the extent of
hardship that may be caused to the defendant
and if it would render such enforcement
inequitable, besides taking into (sic
consideration) the totality of circumstances of
each case.”
43. Bhan, J., however, while expressing his dissension in
part observed: (SCC pp. 506 & 507, paras 38 & 40)
“38. It is well settled that in cases of contract
for sale of immovable property the grant of
relief of specific performance is a rule and its
refusal an exception based on valid and
cogent grounds. Further, the defendant
cannot take advantage of his own wrong and
then plead that decree for specific
performance would be an unfair advantage to
the plaintiff.
***
40. Escalation of price during the period may
be a relevant consideration under certain
circumstances for either refusing to grant the
decree of specific performance or for
decreeing the specific performance with a
direction to the plaintiff to pay an additional
amount to the defendant and compensate
him. It would depend on the facts and
circumstances of each case.”
44. The learned Judge further observed that delay in
performance of the contract due to pendency of
proceedings in court cannot by itself be a ground to
refuse relief of specific performance in absence of any
compelling circumstances to take a contrary view. ……
xxx xxx xxx
45. The said decision cannot be said to constitute a
binding precedent to the effect that in all cases where
there had been an escalation of prices, the court should
47
either refuse to pass a decree on specific performance of
contract or direct the plaintiff to pay a higher sum. No law
in absolute terms to that effect has been laid down by this
Court nor is discernible from the aforementioned
decision.”
In P.S. Ranakrishna Reddy v. M.K. Bhagyalakshmi, (2007) 10 SCC 231,
this Court held:
“19. Submission of Mr Chandrashekhar to the effect that
having regard to the rise in price of an immovable
property in Bangalore, the Court ought not to have
exercised its discretionary jurisdiction under Section 20 of
the Specific Relief Act is stated to be rejected. We have
noticed hereinbefore that the appellant had entered into
an agreement for sale with others also. He had, even
after 11-5-1979, received a sum of Rs 5000 from the
respondent. He with a view to defeat the lawful claim of
Respondent 1 had raised a plea of having executed a
prior agreement for sale in respect of self-same property
in favour of his son-in-law who had never claimed any
right thereunder or filed a suit for specific performance of
contract. The courts below have categorically arrived at a
finding that the said contention of the appellant was not
acceptable. Rise in the price of an immovable property by
itself is not a ground for refusal to enforce a lawful
agreement of sale. (See P. D’Souza [(2004) 6 SCC 649]
and Jai Narain Parasrampuria [(2006) 7 SCC 756].)”
In Narinderjit Singh v. North Star Estate Promoters Ltd., (2012) 5 SCC
712, this Court held:
“25. We are also inclined to agree with the lower
appellate court that escalation in the price of the land
cannot, by itself, be a ground for denying relief of specific
performance. In K. Narendra v. Riviera Apartments (P)
Ltd. [(1999) 5 SCC 77] this Court interpreted Section 20
48
of the Act and laid down the following propositions: (SCC
p. 91, para 29)
“29. Section 20 of the Specific Relief Act,
1963 provides that the jurisdiction to decree
specific performance is discretionary and the
court is not bound to grant such relief merely
because it is lawful to do so; the discretion of
the court is not arbitrary but sound and
reasonable, guided by judicial principles and
capable of correction by a court of appeal.
Performance of the contract involving some
hardship on the defendant which he did not
foresee while non-performance involving no
such hardship on the plaintiff, is one of the
circumstances in which the court may
properly exercise discretion not to decree
specific performance. The doctrine of
comparative hardship has been thus
statutorily recognised in India. However, mere
inadequacy of consideration or the mere fact
that the contract is onerous to the defendant
or improvident in its nature, shall not
constitute an unfair advantage to the plaintiff
over the defendant or unforeseeable hardship
on the defendant.”
(emphasis in original)
26. In the present case, the appellant had neither pleaded
hardship nor produced any evidence to show that it will
be inequitable to order specific performance of the
agreement. Rather, the important plea taken by the
appellant was that the agreement was fictitious and
fabricated and his father had neither executed the same
nor received the earnest money and, as mentioned
above, all the courts have found this plea to be wholly
untenable.
27. In the result, the appeals are dismissed and the
following directions are given:
(i) Within three months from today the
respondent shall pay Rs 5 crores to the
49
appellant. This direction is being given
keeping in view the statement made by Shri
Dushyant Dave, learned Senior Counsel for
the respondent on 3-5-2012 that his client
would be willing to pay Rs 5 crores in all to
the appellant as the price of the land.
xxx xxx xxx”
In Satya Jain v. Anis Ahmed Rushdie, (2013) 8 SCC 131, this Court held:
“40. The discretion to direct specific performance of an
agreement and that too after elapse of a long period of
time, undoubtedly, has to be exercised on sound,
reasonable, rational and acceptable principles. The
parameters for the exercise of discretion vested by
Section 20 of the Specific Relief Act, 1963 cannot be
entrapped within any precise expression of language and
the contours thereof will always depend on the facts and
circumstances of each case. The ultimate guiding test
would be the principles of fairness and reasonableness
as may be dictated by the peculiar facts of any given
case, which features the experienced judicial mind can
perceive without any real difficulty. It must however be
emphasised that efflux of time and escalation of price of
property, by itself, cannot be a valid ground to deny the
relief of specific performance. Such a view has been
consistently adopted by this Court. By way of illustration
opinions rendered in P.S. Ranakrishna Reddy v. M.K.
Bhagyalakshmi [(2007) 10 SCC 231] and more recently in
Narinderjit Singh v. North Star Estate Promoters Ltd.
[(2012) 5 SCC 712 : (2012) 3 SCC (Civ) 379] may be
usefully recapitulated.
41. The twin inhibiting factors identified above if are to be
read as a bar to the grant of a decree of specific
performance would amount to penalising the plaintiffs for
no fault on their part; to deny them the real fruits of a
protracted litigation wherein the issues arising are being
answered in their favour. From another perspective it may
also indicate the inadequacies of the law to deal with the
50
long delays that, at times, occur while rendering the final
verdict in a given case. The aforesaid two features, at
best, may justify award of additional compensation to the
vendor by grant of a price higher than what had been
stipulated in the agreement which price, in a given case,
may even be the market price as on date of the order of
the final court.
42. Having given our anxious consideration to all the
relevant aspects of the case we are of the view that the
ends of justice would require this Court to intervene and
set aside the findings and conclusions recorded by the
High Court of Delhi in Anis Ahmed Rushdie v. Bhiku Ram
Jain [Anis Ahmed Rushdie v. Bhiku Ram Jain, RFA (OS)
No. 11 of 1984, decided on 31-10-2011 (Del)] and to
decree the suit of the plaintiffs for specific performance of
the agreement dated 22-12-1970. We are of the further
view that the sale deed that will now have to be executed
by the defendants in favour of the plaintiffs will be for the
market price of the suit property as on the date of the
present order. As no material, whatsoever is available to
enable us to make a correct assessment of the market
value of the suit property as on date we request the
learned trial Judge of the High Court of Delhi to undertake
the said exercise with such expedition as may be possible
in the prevailing facts and circumstances.”
In K. Prakash v. B.R. Sampath Kumar, (2015) 1 SCC 597, this Court
held:
“18. Subsequent rise in the price will not be treated as a
hardship entailing refusal of the decree for specific
performance. Rise in price is a normal change of
circumstances and, therefore, on that ground a decree for
specific performance cannot be reversed.
19. However, the court may take notice of the fact that
there has been an increase in the price of the property
and considering the other facts and circumstances of the
51
case, this Court while granting decree for specific
performance can impose such condition which may to
some extent compensate the defendant owner of the
property. This aspect of the matter is considered by a
three-Judge Bench of this Court in Nirmala Anand v.
Advent Corpn. (P) Ltd. [(2002) 8 SCC 146], wherein this
Court held: (SCC p. 150, para 6)
“6. It is true that grant of decree of specific
performance lies in the discretion of the court
and it is also well settled that it is not always
necessary to grant specific performance
simply for the reason that it is legal to do so. It
is further well settled that the court in its
discretion can impose any reasonable
condition including payment of an additional
amount by one party to the other while
granting or refusing decree of specific
performance. Whether the purchaser shall be
directed to pay an additional amount to the
seller or converse would depend upon the
facts and circumstances of a case. Ordinarily,
the plaintiff is not to be denied the relief of
specific performance only on account of the
phenomenal increase of price during the
pendency of litigation. That may be, in a given
case, one of the considerations besides many
others to be taken into consideration for
refusing the decree of specific performance.
As a general rule, it cannot be held that
ordinarily the plaintiff cannot be allowed to
have, for her alone, the entire benefit of
phenomenal increase of the value of the
property during the pendency of the litigation.
While balancing the equities, one of the
considerations to be kept in view is as to who
is the defaulting party. It is also to be borne in
mind whether a party is trying to take undue
advantage over the other as also the hardship
that may be caused to the defendant by
directing specific performance. There may be
52
other circumstances on which parties may not
have any control. The totality of the
circumstances is required to be seen.”
20. As discussed above the agreement was entered into
between the parties in 2003 for sale of the property for a
total consideration of Rs 16,10,000. Ten years have
passed by and now the price of the property in that area
where it situates has increased by not less than five
times. Keeping in mind the factual position we are of the
view that the appellant should pay a total consideration of
Rs 25 lakhs, being the price for the said property.”
In Zarina Siddiqui v. A. Ramalingam, (2015) 1 SCC 705, this Court held:
“33. The equitable discretion to grant or not to grant a
relief for specific performance also depends upon the
conduct of the parties. The necessary ingredient has to
be proved and established by the plaintiff so that
discretion would be exercised judiciously in favour of the
plaintiff. At the same time, if the defendant does not come
with clean hands and suppresses material facts and
evidence and misleads the court then such discretion
should not be exercised by refusing to grant specific
performance.”
xxx xxx xxx
“36. As held by this Court time and again, efflux of time
and escalation of price of the property by itself cannot be
a valid ground to deny the relief of specific performance.
But the Court in its discretion may impose reasonable
conditions including payment of additional amount to the
vendor. It is equally well settled that the plaintiff is not to
be denied specific performance only on account of
phenomenal increase of price during the pendency of
litigation.”
xxx xxx xxx
“38. … [I]n the facts and circumstances of the case and
considering the phenomenal increase in price during the
period the matter remained pending in different courts, we
53
are of the considered opinion that the impugned order [A.
Ramalingam v. H. Siddiqui, RFA No. 265 of 1999, decided
on 1-3-2012 (KAR)] under appeal be set aside but with a
condition imposed upon the appellant-plaintiff to pay a
sum of Rs 15,00,000 (Rupees fifteen lakhs) in addition to
the amount already paid by the appellant to the
respondent.”
In Ramathal v. Maruthathal, (2018) 18 SCC 303, this Court held:
“22. The buyer has taken prompt steps to file a suit for
specific performance as soon as the execution of the sale
was stalled by the seller. From this discussion, it is clear
that the buyer has always been ready and willing to
perform his part of the contract at all stages. Moreover, it
is the seller who had always been trying to wriggle out of
the contract. Now the seller cannot take advantage of
their own wrong and then plead that the grant of decree
of specific performance would be inequitable. Escalation
of prices cannot be a ground for denying the relief of
specific performance. Specific performance is an
equitable relief and granting the relief is the discretion of
the court. The discretion has to be exercised by the court
judicially and within the settled principles of law.
Absolutely there is no illegality or infirmity in the
judgments of the courts below, which has judicially
exercised its discretion and the High Court ought not to
have interfered with the same. ……”
In Sunkara Lakshminarasamma v. Sagi Subba Raju, (2019) 11 SCC
787, this Court held:
“9. Shri A. Subba Rao, learned counsel for the appellants
was however forceful in his arguments, insofar as the suit
for specific performance is concerned. According to him,
the appellants herein (defendants in the suit for specific
performance) would be put to hardship if the decree for
specific performance is confirmed, inasmuch as there has
54
been a huge escalation in the price of the properties
since the agreement of sale. Such plea of escalation in
price cannot be accepted in view of the fact that the
appellants in the first instance do not have the right to
question the agreement of sale. As mentioned supra,
since Veeraswamy was the absolute owner of the
properties including the property involved in the suit for
specific performance, he had the right to enter into an
agreement of sale also. This property was bequeathed to
Veeraswamy under Ext. B-4 will by Padmanabhudu.
Hence, Veeraswamy was the sole owner of the property.
Consequently, he had entered into an agreement of sale
with Sagi Subba Raju, as far back as on 19-9-1974. The
suit was filed in the year 1978, which was later
transferred to another court and the same was renumbered as OS No. 72 of 1983. Since 1978, this
litigation is being fought by the prospective vendee. The
property of about three-and-a-half acres was agreed to be
sold by Veeraswamy in favour of the prospective vendee
in the year 1974 for a sum of Rs 51,000. Such price was
agreed to between the vendor as well as the prospective
vendee.
10. This Court cannot imagine the value of the property
as it stood in the year 1974 in the said area i.e. at
Bhimavaram Village in Andhra Pradesh. Be that as it may,
we find that hardship was neither pleaded nor proved by
the appellants herein before the trial court. No issue was
raised relating to hardship before the trial court. A plea
which was not urged before the trial court cannot be
allowed to be raised for the first time before the appellate
courts. Moreover, mere escalation of price is no ground
for interference at this stage (see the judgment of this
Court in Narinderjit Singh v. North Star Estate Promoters
Ltd. [Narinderjit Singh v. North Star Estate Promoters
Ltd., (2012) 5 SCC 712 : (2012) 3 SCC (Civ) 379]). Added
to it, as mentioned supra, the appellants do not have the
locus standi to question the judgment of the Division
Bench since they are not the owners of the property. As a
matter of fact, Veeraswamy, the vendor of the properties,
had entered the witness box before the trial court and
55
supported all his alienations in favour of the defendants.
Therefore, in our considered opinion, the Division Bench
has rightly concluded in favour of Sagi Subba Raju and
against the appellants and granted the decree for specific
performance.”
30. It is settled law that mere delay by itself, without more, cannot be the
sole factor to deny specific performance – See Mademsetty
Satyanarayana v. G. Yelloji Rao, (1965) 2 SCR 221 at pp. 229-230. Thus,
in K.S. Vidyanadam v. Vairavan, (1997) 3 SCC 1, this Court made it clear
that if property prices have risen dramatically within a period of two and a
half years before filing of the suit for specific performance, and it is coupled
with violation of the agreement by the plaintiff, specific performance will not
be decreed. The Court held:
“10. … In other words, the court should look at all the
relevant circumstances including the time-limit(s)
specified in the agreement and determine whether its
discretion to grant specific performance should be
exercised. Now in the case of urban properties in India, it
is well-known that their prices have been going up sharply
over the last few decades — particularly after 1973 [It is a
well-known fact that the steep rise in the price of oil
following the 1973 Arab-Israeli war set in inflationary
trends all over the world. Particularly affected were
countries like who import bulk of their requirement of oil].
In this case, the suit property is the house property
situated in Madurai, which is one of the major cities of
Tamil Nadu. The suit agreement was in December 1978
and the six months' period specified therein for
completing the sale expired with 15-6-1979. The suit
notice was issued by the plaintiff only on 11-7-1981, i.e.,
56
more than two years after the expiry of six months'
period. The question is what was the plaintiff doing in this
interval of more than two years? … The defendants’
consistent refrain has been that the prices of house
properties in Madurai have been rising fast, that within the
said interval of 2 1/2 years, the prices went up three times
and that only because of the said circumstance has the
plaintiff (who had earlier abandoned any idea of going
forward with the purchase of the suit property) turned
round and demanded specific performance. Having
regard to the above circumstances and the oral evidence
of the parties, we are inclined to accept the case put
forward by Defendants 1 to 3. We reject the story put
forward by the plaintiff that during the said period of 2 1/2
years, he has been repeatedly asking the defendants to
get the tenant vacated and execute the sale deed and
that they were asking for time on the ground that tenant
was not vacating. The above finding means that from 15-
12-1978 till 11-7-1981, i.e., for a period of more than 2 1/2
years, the plaintiff was sitting quiet without taking any
steps to perform his part of the contract under the
agreement though the agreement specified a period of six
months within which he was expected to purchase stamp
papers, tender the balance amount and call upon the
defendants to execute the sale deed and deliver
possession of the property. We are inclined to accept the
defendants’ case that the values of the house property in
Madurai town were rising fast and this must have induced
the plaintiff to wake up after 2 1/2 years and demand
specific performance.
11. Shri Sivasubramaniam cited the decision of the
Madras High Court in S.V. Sankaralinga Nadar v. P.T.S.
Ratnaswami Nadar [AIR 1952 Mad 389 : (1952) 1 MLJ
44] holding that mere rise in prices is no ground for
denying the specific performance. With great respect, we
are unable to agree if the said decision is understood as
saying that the said factor is not at all to be taken into
account while exercising the discretion vested in the court
by law. We cannot be oblivious to the reality — and the
reality is constant and continuous rise in the values of
57
urban properties — fuelled by large-scale migration of
people from rural areas to urban centres and by inflation.
Take this very case. The plaintiff had agreed to pay the
balance consideration, purchase the stamp papers and
ask for the execution of sale deed and delivery of
possession within six months. He did nothing of the sort.
The agreement expressly provides that if the plaintiff fails
in performing his part of the contract, the defendants are
entitled to forfeit the earnest money of Rs 5000 and that if
the defendants fail to perform their part of the contract,
they are liable to pay double the said amount. Except
paying the small amount of Rs 5000 (as against the total
consideration of Rs 60,000) the plaintiff did nothing until
he issued the suit notice 2 1/2 years after the agreement.
Indeed, we are inclined to think that the rigor of the rule
evolved by courts that time is not of the essence of the
contract in the case of immovable properties — evolved
in times when prices and values were stable and inflation
was unknown — requires to be relaxed, if not modified,
particularly in the case of urban immovable properties. It
is high time, we do so. The learned counsel for the
plaintiff says that when the parties entered into the
contract, they knew that prices are rising; hence, he says,
rise in prices cannot be a ground for denying specific
performance. May be, the parties knew of the said
circumstance but they have also specified six months as
the period within which the transaction should be
completed. The said time-limit may not amount to making
time the essence of the contract but it must yet have
some meaning. Not for nothing could such time-limit
would have been prescribed. Can it be stated as a rule of
law or rule of prudence that where time is not made the
essence of the contract, all stipulations of time provided in
the contract have no significance or meaning or that they
are as good as non-existent? All this only means that
while exercising its discretion, the court should also bear
in mind that when the parties prescribe certain timelimit(s) for taking steps by one or the other party, it must
have some significance and that the said time-limit(s)
cannot be ignored altogether on the ground that time has
58
not been made the essence of the contract (relating to
immovable properties).”
xxx xxx xxx
“13. In the case before us, it is not mere delay. It is a case
of total inaction on the part of the plaintiff for 2 1/2 years
in clear violation of the terms of agreement which
required him to pay the balance, purchase the stamp
papers and then ask for execution of sale deed within six
months. Further, the delay is coupled with substantial rise
in prices — according to the defendants, three times —
between the date of agreement and the date of suit
notice. The delay has brought about a situation where it
would be inequitable to give the relief of specific
performance to the plaintiff.
14. Shri Sivasubramaniam then relied upon the decision
in Jiwan Lal (Dr) v. Brij Mohan Mehra [(1972) 2 SCC 757 :
(1973) 2 SCR 230] to show that the delay of two years is
not a ground to deny specific performance. But a perusal
of the judgment shows that there were good reasons for
the plaintiff to wait in that case because of the pendency
of an appeal against the order of requisition of the suit
property. We may reiterate that the true principle is the
one stated by the Constitution Bench in Chand Rani
[(1993) 1 SCC 519]. Even where time is not of the
essence of the contract, the plaintiffs must perform his
part of the contract within a reasonable time and
reasonable time should be determined by looking at all
the surrounding circumstances including the express
terms of the contract and the nature of the property.”
Likewise, this Court, in Saradamani Kandappan v. S. Rajalakshmi,
(2011) 12 SCC 18, made it clear that given the steep rise in urban land
prices, it may not be correct now to say that time is not of essence in
performance of a contract of sale of immovable property. Thus, where time
59
can be said to be of the essence in the facts of a given case, and the
purchaser does not take steps to complete the sale within the stipulated
period and the vendor is not responsible for any delay, the steep rise in
price within the stipulated time would be a circumstance which would make
it inequitable to grant the relief of specific performance. This Court held:
“36. The principle that time is not of the essence of
contracts relating to immovable properties took shape in
an era when market values of immovable properties were
stable and did not undergo any marked change even over
a few years (followed mechanically, even when value
ceased to be stable). As a consequence, time for
performance, stipulated in the agreement was assumed
to be not material, or at all events considered as merely
indicating the reasonable period within which contract
should be performed. The assumption was that grant of
specific performance would not prejudice the vendor
defendant financially as there would not be much
difference in the market value of the property even if the
contract was performed after a few months. This principle
made sense during the first half of the twentieth century,
when there was comparatively very little inflation, in India.
The third quarter of the twentieth century saw a very slow
but steady increase in prices. But a drastic change
occurred from the beginning of the last quarter of the
twentieth century. There has been a galloping inflation
and prices of immovable properties have increased
steeply, by leaps and bounds. Market values of properties
are no longer stable or steady. We can take judicial notice
of the comparative purchase power of a rupee in the year
1975 and now, as also the steep increase in the value of
the immovable properties between then and now. It is no
exaggeration to say that properties in cities, worth a lakh
or so in or about 1975 to 1980, may cost a crore or more
now.
60
37. The reality arising from this economic change cannot
continue to be ignored in deciding cases relating to
specific performance. The steep increase in prices is a
circumstance which makes it inequitable to grant the relief
of specific performance where the purchaser does not
take steps to complete the sale within the agreed period,
and the vendor has not been responsible for any delay or
non-performance. A purchaser can no longer take shelter
under the principle that time is not of essence in
performance of contracts relating to immovable property,
to cover his delays, laches, breaches and “nonreadiness”. The precedents from an era, when high
inflation was unknown, holding that time is not of the
essence of the contract in regard to immovable
properties, may no longer apply, not because the principle
laid down therein is unsound or erroneous, but the
circumstances that existed when the said principle was
evolved, no longer exist. In these days of galloping
increases in prices of immovable properties, to hold that a
vendor who took an earnest money of say about 10% of
the sale price and agreed for three months or four months
as the period for performance, did not intend that time
should be the essence, will be a cruel joke on him, and
will result in injustice. Adding to the misery is the delay in
disposal of cases relating to specific performance, as
suits and appeals therefrom routinely take two to three
decades to attain finality. As a result, an owner agreeing
to sell a property for rupees one lakh and received rupees
ten thousand as advance may be required to execute a
sale deed a quarter century later by receiving the
remaining rupees ninety thousand, when the property
value has risen to a crore of rupees.
xxx xxx xxx
41. A correct perspective relating to the question whether
time is not of the essence of the contract in contracts
relating to immovable property, is given by this Court in
K.S. Vidyanadam v. Vairavan [(1997) 3 SCC 1] (by
Jeevan Reddy, J. who incidentally was a member of the
61
Constitution Bench in Chand Rani [(1993) 1 SCC 519] ).
This Court observed: (SCC pp. 7 & 9, paras 10-11)
“10. It has been consistently held by the
courts in India, following certain early English
decisions, that in the case of agreement of
sale relating to immovable property, time is
not of the essence of the contract unless
specifically provided to that effect. … in the
case of urban properties in India, it is wellknown that their prices have been going up
sharply over the last few decades—
particularly after 1973. …
11. … We cannot be oblivious to the reality—
and the reality is constant and continuous rise
in the values of urban properties—fuelled by
large-scale migration of people from rural
areas to urban centres and by inflation. …
Indeed, we are inclined to think that the rigor
of the rule evolved by courts that time is not
of the essence of the contract in the case of
immovable properties—evolved in times
when prices and values were stable and
inflation was unknown—requires to be
relaxed, if not modified, particularly in the
case of urban immovable properties. It is high
time, we do so.”
(emphasis in original)
42. Therefore there is an urgent need to revisit the
principle that time is not of the essence in contracts
relating to immovable properties and also explain the
current position of law with regard to contracts relating to
immovable property made after 1975, in view of the
changed circumstances arising from inflation and steep
increase in prices. We do not propose to undertake that
exercise in this case, nor referring the matter to a larger
Bench as we have held on facts in this case that time is
the essence of the contract, even with reference to the
principles in Chand Rani [(1993) 1 SCC 519] and other
cases. Be that as it may.
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43. Till the issue is considered in an appropriate case, we
can only reiterate what has been suggested in K.S.
Vidyanadam [(1997) 3 SCC 1]:
(i) The courts, while exercising discretion in
suits for specific performance, should bear in
mind that when the parties prescribe a
time/period, for taking certain steps or for
completion of the transaction, that must have
some significance and therefore time/period
prescribed cannot be ignored.
(ii) The courts will apply greater scrutiny and
strictness when considering whether the
purchaser was “ready and willing” to perform
his part of the contract.
(iii) Every suit for specific performance need
not be decreed merely because it is filed
within the period of limitation by ignoring the
time-limits stipulated in the agreement. The
courts will also “frown” upon suits which are
not filed immediately after the breach/refusal.
The fact that limitation is three years does not
mean that a purchaser can wait for 1 or 2
years to file a suit and obtain specific
performance. The three-year period is
intended to assist the purchasers in special
cases, as for example, where the major part of
the consideration has been paid to the vendor
and possession has been delivered in partperformance, where equity shifts in favour of
the purchaser.”
In Nanjappan v. Ramasamy, (2015) 14 SCC 341, the suit for specific
performance was filed many years after the agreement dated 30.09.1987,
which agreement was extended by three years twice and thereafter, by
another two years. It was only after these extensions and exchange of legal
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notices between the parties that the respondents filed a suit for specific
performance. It was in this factual background that the Court held:
“10. In a suit for specific performance, the plaintiff has to
aver and prove with satisfactory evidence that he was
always ready and willing to perform his part of contract at
all material time as mandatorily required under Section
16(c) of the Specific Relief Act, 1963. The first appellate
court and the High Court recorded findings that the
plaintiff was always ready and willing to perform his part
of the contract. By a careful reading of the recitals in the
agreement, the concurrent findings so recorded do not
seem to reflect the conduct of the parties. As per recitals
in Ext. P-1 agreement dated 30-9-1987, an amount of Rs
25,000 was paid by the respondent-plaintiffs to the
appellant-defendant. Balance amount of Rs 20,000 was
to be paid within 2½ years thereafter and get the sale
executed. In the second agreement of sale (Ext. P-2
dated 21-3-1990) it is stated that the plaintiffs were
unable to pay the balance amount within the stipulated
period and get the sale deed executed and therefore the
second sale agreement was executed extending the
period for execution of sale deed for a further period of
three years. As could be seen from the recitals from Ext.
P-2, the respondents were unable to pay the balance sale
consideration and get the sale deed executed. It is
pertinent to note that the time for performance of contract
was extended again and again totalling period of eight
years. Even though the first appellate court and the High
Court recorded findings that the respondent-plaintiffs were
ready and willing to perform their part of contract, the fact
that time was extended for eight years is to be kept in
view while considering the question whether discretion is
to be exercised in favour of the respondent-plaintiffs.”
xxx xxx xxx
“13. The first sale agreement was executed on 30-9-1987
about twenty-seven years ago. The property is situated in
Coimbatore City and over these years, value of property
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in Coimbatore City would have considerably increased.
In Saradamani Kandappan v. S. Rajalakshmi [(2011) 12
SCC 18 : (2012) 2 SCC (Civ) 104] , this Court has held
that the value of the property escalates in the urban areas
very fast and it would not be equitable to grant specific
performance after a lapse of long period of time. In the
instant case, the first agreement was executed on 30-9-
1987 i.e. twenty-seven years ago. In view of passage of
time and escalation of value of the property, grant of
specific relief of performance would give an unfair
advantage to the respondent-plaintiffs whereas the
performance of the contract would involve great hardship
to the appellant-defendant and his family members.
14. Considering the totality and the facts and
circumstances, in our view, it is not appropriate to grant
discretionary relief of specific performance to the
respondent-plaintiffs for more than one reason.
Admittedly, the suit property is the only property of the
appellant-defendant and the appellant is said to have
constructed a house and where he is currently residing
with the family. As compared to the respondents, the
appellant will suffer significant hardship if a decree for
specific performance is granted against the appellant.
Considering the circumstances, such as the construction
of the residential house over the suit property, sale
consideration, passage of time and hardship caused to
the appellant, makes it inequitable to exercise the
discretionary relief of specific performance and the
concurrent finding of the first appellate court and the High
Court decreeing the suit for specific performance is to be
set aside.”
31. The resultant position in law is that a suit for specific performance
filed within limitation cannot be dismissed on the sole ground of delay or
laches. However, an exception to this rule is where immovable property is
to be sold within a certain period, time being of the essence, and it is found
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that owing to some default on the part of the plaintiff, the sale could not
take place within the stipulated time. Once a suit for specific performance
has been filed, any delay as a result of the court process cannot be put
against the plaintiff as a matter of law in decreeing specific performance.
However, it is within the discretion of the Court, regard being had to the
facts of each case, as to whether some additional amount ought or ought
not to be paid by the plaintiff once a decree of specific performance is
passed in its favour, even at the appellate stage.
32. Shri Giri’s fervent appeal that we should not exercise our
discretionary jurisdiction under Article 136, given the fact that Rs.2 crores
plus interest is to be paid almost by way of solatium to the appellant, has
also to be rejected. As has been found earlier in this judgment, the
defendants were held to have taken up dishonest pleas and also held to
have been in breach of a solemn agreement in which they were to obtain
the Urban Land Ceiling permission which, if not obtained, would, under the
agreement itself, not stand in the way of the specific performance of the
agreement between the parties. He who asks for equity must do equity.
Given the conduct of the defendants in this case, as contrasted with the
conduct of the appellant who is ready and willing throughout to perform its
part of the bargain, we think this is a fit case in which the Division Bench
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judgment should be set aside. As a result, the decree passed by the Single
Judge is restored. Since the appellant itself offered a sum of Rs.1.25 crores
to the Division Bench, it must be made to pay this amount to the
respondents within a period of eight weeks from the date of this judgment.
33. The Civil Appeal is allowed in the aforesaid terms with no order as to
costs.
……………………… J.
(R.F. Nariman)
……………………… J.
(Navin Sinha)
New Delhi.
October 12, 2020.
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