Karnataka High Court
Sri. Venkatanarayanappa S/O ... vs Sri. Siddappa S/O Venkatappa on 8 February, 2007
Equivalent citations: 2007(2)KARLJ37
Author: N. Kumar
Bench: N. Kumar
JUDGMENT N. Kumar, J.
Page 0887
1. This is plaintiff's second appeal.
2. Defendant is the owner of the suit property bearing Sy. No. 576 (Old S. No. 319/2) measuring 1 acre 22 guntas situated at Venkatapura, Kasaba hobli, Pavagada taluk, Tumkur District. Plaintiff entered into an agreement Page 0888 of sale to purchase the said land from the defendant for a sale consideration of Rs. 2500/- on 28.4.1987. It is his case that a sum of Rs. 1000/- was paid as advance on the date of the agreement which the defendant received to discharge the loan due to one VSSN Venkatapura, a Society, when the said society has brought the property for sale. However, the sale agreement was reduced into writing on 29.4.87. A sum of Rs. 1,200/- was paid under the aforesaid agreement on 18.8.87 which is endorsed on the agreement in front of the witnesses. The balance sale consideration of Rs. 300/ - was to be paid before the Sub-Registrar at the time of registration of the sale deed. All the documents pertaining to the suit schedule property were delivered by the defendant to the plaintiff The plaintiff contended that he is in possession of the property raising crops. The plaintiff requested the defendant to execute the sale deed. When the defendant did not comply with their demand he was constrained to issue notice on 6.10.90. However, the plaintiff received suit summons in O.S. No. 333/90 from the court where the defendant had filed a suit for a decree of permanent injunction against the plaintiff. It is his case that by virtue of injunction order granted, the plaintiff was dispossessed from the suit schedule property. In those circumstances, plaintiff was constrained to file a suit in O.S. No. 201/91 for specific performance of the agreement of sale, and for possession.
3. Defendant after service of notice entered appearance, filed written statement denying the execution of the agreement of sale and receipt of consideration. He admitted filing of the suit by him and he sought for dismissal of the suit. Defendant's suit O.S. No. 333/90 was clubbed together with the plaintiffs suit O.S. No. 201/91. Separate issues were framed in both the suits. However, a common trial was held. Both the parties adduced oral and documentary evidence. The trial court decreed the suit of the defendant for permanent injunction reserving liberty to the plaintiff to take possession in pursuance of the decree passed in O.S. No. 201/91. In the plaintiffs suit the trial court held, suit agreement is established, payment of consideration as set out in the plaint under the agreement is also established, balance sale consideration payable is only Rs. 300/ - and plaintiff was ready and willing to perform his part of the contract. It is the defendant who avoided to execute the sale deed and therefore it held, the plaintiff is entitled to a decree for specific performance. The trial court also noticed that the suit schedule property is a granted land to the defendant who belonged to scheduled caste. Therefore in view of the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of Transfer of Certain Lands) Act 1978, for short hereinafter referred to as the Act, permission of the Government is required before sale deed could be executed. Therefore the decree of specific performance was subject to such permission being granted by the Government. It was also made clear, if the defendant fails to apply and Page 0889 obtain such permission it is open to the plaintiff to get a Commissioner appointed through court and the Commissioner would seek permission from the Government and after getting such permission sale deed is to be executed. The suit of the defendant for permanent injunction was also decreed. The plaintiff accepted the judgment and decree of the trial court in O.S. No. 333/90 and did not challenge the same. However, it is the defendant who preferred an appeal against the judgment and decree in O.S. No. 201/91.
4. The lower Appellate Court on consideration of the entire material on record after formulating the points for consideration held that the agreement of sale executed between the parties is contrary to Section 4 of the Act and therefore it is unenforceable. In that view of the matter it reversed the judgment and decree of the trial court and dismissed the suit of the plaintiff. Aggrieved by the said judgment and decree the plaintiff is in second appeal.
5. The substantial question of law that arise for consideration in this second appeal is as under:
Whether the finding of the lower Appellate Court that the agreement of sale entered into between the parties after the Act came into force is void ab initio and unenforceable, even though Section 4(2) provides for grant of permission by the Government for sale of granted lands?
6. Learned Counsel for the appellant/plaintiff contended, without permission from the Government no transfer can take place, but an agreement of sale under which no possession is granted stands on a different footing. It is not void ab initio. After entering into an agreement of sale, before the sale deed could be executed, it is open to both the parties to obtain permission of the Government and give effect to the terms of the agreement. Therefore the trial court was justified in decreeing the suit for specific performance subject to the permission to be granted by the Government. But the lower Appellate Court was in total error in holding that the agreement of sale entered into without previous permission of the Government is void ab initio and therefore he submits that the judgment and decree of the lower Appellate Court requires to be set aside and the judgment of the trial court is to be restored.
7. Per contra, learned Counsel for the respondent contends, having regard to the object and the circumstances under which the Act came to be passed coupled with the categorical declaration contained in Section 4(1) and 4(2) of the Act, no transfer is valid without previous permission of the Government. 'Transfer' as defined under the Act includes an agreement of sale and therefore, though after obtaining a permission under Section 4(2) of the Act, a granted land could be transferred, if a transfer as defined under the Act takes place without prior permission, it is void and unenforceable.
Page 0890
8. In order to appreciate these contentions it is necessary to look into the statutory provisions contained in the Act.
Section 3(b) defines what a 'granted land' means which reads as under:
Granted Land" means any land granted by the Government to a person belonging to any of the Scheduled Castes or the Scheduled Tribes and includes land allotted or granted to such person under the relevant law for the time being in force relating to agrarian reforms or land ceilings or abolition of inams, other than that relating to hereditary offices or rights and the word "Granted" shall be construed accordingly.
Section 3(d) defines the 'Scheduled Castes and Scheduled Tribes' as under:
Scheduled Castes" and Scheduled Tribes" shall have the meanings respectively assigned to them in the Constitution.
Section 3(e) defines 'Transfer' as under:
"Transfer" means a sale, gift, exchange, mortgage (with or without possession), lease or any other transaction not being a partition among members of a family or a testamentary disposition and includes the creation of a charge or an agreement to sell, exchange, mortgage or lease or enter into any other transaction.
(Underlining by me) Section 4 prohibits transfer of granted lands which reads as under:
Prohibition of transfer of granted lands -
(1) Notwithstanding anything in any law, agreement, contract or instrument, any transfer of granted land made either before or after the commencement of this Act, in contravention of the terms of the grant of such land or the law providing for such grant, or Sub-section (2) shall be null and void and no right, title or interest in such land shall be conveyed or be deemed ever to have conveyed by such transfer.
[2] No person shall, after the commencement of this Act, transfer or acquire by transfer any granted land without the previous permission of the Government.
[3] The provisions of Sub-sections (1) and (2) shall apply also to the sale of any land in execution of a decree or order of a Civil Court or of any award or order of any other authority.
9. Learned Counsel for the appellant relied on several judgments dealing with permission which was required for completion of sale transactions and the interpretation placed on such provision. The Supreme Court in the case of Nathulal v. Phoolchand dealing with a case arising under Madhya Bharat Land Revenue and Tenancy Act, where, by virtue of Section 70(4) of the said Act a non-agriculturist cannot purchase the land without the sanction of the State Government, it was held, in the absence of any specific clause dealing with this matter, a condition that Page 0891 Nathulal will secure the sanction under Section 70(4) after paying the appropriate fee must be implied for, it is well settled that where by statute property is not transferable without the permission of the authority, an agreement to transfer the property must be deemed subject to the implied condition that the transferor will obtain the sanction of the authority concerned. Therefore it is clear that it was not a case where the agreement of transfer itself was held to be null and void under the statute but before the sale could be completed permission of the authority was required. Therefore, it has no application to the facts of this case.
10. The Bombay High Court in the case of Balu Baburao Zarole and Ors. v. Shaikh Akbar Shaikh Bhikan and Ors. AIR 200 Bombay 364 was considering Section 43 of Bombay Tenancy and Agricultural Lands Act (67/1948). It provided no land purchased by a tenant interalia under Section 32 shall be transferred by sale, gift, exchange, mortgage, lease or assignment without previous sanction of the Collector. In that context, it was held requirement of taking the previous sanction of the Collector would apply to a transfer by sale or by any of the other modes specified therein. In so far as the requirement of taking the sanction of the Collector under the provisions of Section 43 of the Bombay Tenancy and Agricultural Lands Act, 1948 is concerned, the Trial Court and the Appellate Court correctly held that the decree for specific performance would be subject to the condition of the sanction being obtained to the sale from the collector under Section 43. In the event of the Collector not granting sanction, the plaintiff would be entitled to a refund of the purchase price together with interest only as, in the absence of sanction under Section 43 the sale cannot be concluded. In fact, they relied on the aforesaid judgment of the Supreme Court in coming to the said conclusion. Therefore it is clear there was a prohibition of transfer without the previous permission of the Government but there was no provision in the enactment which declared that the agreement to sell without the previous permission itself is null and void. Therefore, it has no application to the facts of this case.
11. This Court in the case of Rame Gowda v. Assistant Commissioner dealing with a question of resumption of land by the Assistant Commissioner for violation of the terms of the grant, after quoting Section 3(e) of the Act, delivery of possession coupled with an agreement for sale, amounts to transfer, prohibition under Section 4 of the said Act comes into operation whereby transaction became null and void. Under Section 5 of the Act the Assistant Commissioner becomes competent to take possession of such land after evicting all persons in possession thereof and restore the same to the original grantee or his legal heirs. Relying on the aforesaid judgment, it was contended by the learned Counsel as Page 0892 admittedly possession was not delivered under the agreement of sale, it would not constitute a "transfer" as defined under the Act and only when an agreement of sale coupled with delivery of possession, the agreement of sale entered into between the parties falls within the definition of transfer. A bare reading of the Section makes it clear 'transfer' means not only a sale, but also an agreement to sell. It does not speak anything about delivery of possession. It speaks about delivery of possession only in case of mortgage as there can be simple mortgage or mortgage with possession. It does not make any difference between agreement to sell without possession and agreement to sell coupled with possession. In that view of the matter, the aforesaid judgment does not support the case of the plaintiff to any extent.
12. While interpreting the Act and its provisions, it is also useful to notice the background of the legislation. The non-alienation clause contained in the existing Land Grant Rules and the provisions for cancellation of grants, where land is alienated in contravention of the above said provision were found not sufficient to help the Scheduled Castes and Scheduled Tribes, whose ignorance and poverty has been exploited by persons belonging to the affluent and powerful sections to obtain sales or mortgages either for a nominal consideration or for no consideration at all and they have become the victims of circumstances. To fulfill the purposes of the grant, it was thought that the land even if it has been alienated, should be restored to the original grantee or his heirs. In fact the Government of India was also urging the State Government for enacting a legislation to prevent alienation of lands granted to Scheduled Castes and Scheduled Tribes by Government, on the lines of the model legislation prepared by it and circulated to the State Government. It is in that back ground the Act was enacted providing for the prohibition of transfer and for restoration of lands granted by the Government to persons belonging to scheduled castes and scheduled tribes in the State.
13. The Act is applicable to any land granted by the Government to a person belonging to any of the scheduled castes or scheduled tribes in any manner other than that relating to hereditary offices or rights. The word 'Transfer' defined under the Act is an inclusive definition. It includes "sale" as well as "agreement to sell". The legislature in its wisdom, keeping in mind the mischief which one may indulge, has consciously included the agreement to sell also in the definition of transfer after including the word "sale". They made known their intentions clear even in respect of mortgages, whether the mortgage is with or without possession, it amounts to transfer.
14. Section 4 which deals with prohibition of transfer of granted lands starts with an non-obstante clause. It states notwithstanding anything in any law, agreement, contract or instrument, any transfer of granted land made either before or after the commencement of this Act, in contravention of the terms of the grant of such land or the law providing for such grant, or Sub-section (2) shall be null and void and no right, title or interest in such Page 0893 land shall be conveyed or be deemed ever to have conveyed by such transfer. Sub-section (2) of Section 4 provides for the permission of the Government for such transfer. But the way the said sub-section is worded makes it clear that no person shall, after the commencement of this Act transfer or acquire by transfer any granted land without the previous permission of the Government. Sub-section 4(1) deals with transfer of lands being in violation of the terms of the grant before the Act came into force. But Sub-section (2) deals with transfer of lands after the Act came into force. In other words, even if the transfer is not in contravention of the terms of the grant, but if that transfer takes place after the Act came into force, such transfer requires previous permission of the Government. Therefore for all transfers subsequent to the passing of the Act, previous permission of the Government is a must. Otherwise it would be null and void. In this context, the word 'previous' assumes importance, it is not mere permission to transfer. Keeping in mind the legislative intent, the object sought to be achieved and the simple words used in these provisions it is clear though there is no complete prohibition for alienation of the granted lands even after coming into force of this Act, a case is to be made out before the Government for granting such permission, in the Scheme of the Act, it is clear whether to sell the property by way of a sale or to enter into an agreement to purchase a granted land previous permission of the Government is a must. It is a condition precedent. If previous permission is not obtained prior to the agreement of sale, then it amounts to transfer under Section 3(d) of the Act and thus it is null and void. While interpreting this provision the courts have to keep in mind the legislative intent When the legislature declares that the transfer in contravention of Section 4(2) of the Act is null and void, no contract in the eye of law has come into existence. The legislature did not stop there. It made its intentions explicitly clear by further declaring that "no right, title or interest in such land shall be conveyed or be deemed ever to have conveyed by such transfer". An agreement to sell the granted land under the Act, is opposed to Section 4(2) of the Act, and therefore is not a contract. It is also opposed to public policy. Therefore, it is not enforceable in Court of law. The suit agreement entered into between the parties is contrary to express provision contained in law and therefore it is hit by Section 4(2) of the Act and it is void ab initio. The said agreement is not a contract which could be enforced in a court of law. In that view of the matter, granting a decree for specific performance subject to the permission to be obtained by either of the parties from the Government to complete the sale transaction would not arise. Therefore, the view taken by the lower Appellate Court is in accordance with law and do not call for interference.
17. However, in view of the concurrent finding recorded by courts below that when the agreement of sale has been executed, a sum of Rs. 2200/- has been paid under the said agreement and the said amount was paid to the defendant to save the property from being auctioned by the Society from Page 0894 whom he had borrowed the money and possession continued with the defendant, if the defendant is not directed to pay the balance amount it would amount to an unjust enrichment. In that view of the matter though the plaintiff is not entitled to a decree of specific performance, the plaintiffs suit is decreed for refund of the money paid under the agreement of sale even though there was no specific prayer sought for in the plaint. Hence I pass the following order.
Appeal is dismissed.
The suit of the plaintiff for specific performance is dismissed.
The suit of the plaintiff is decreed for a sum of Rs. 2200/-with interest at 12% p.a., from the date of suit till the date of realization.