Madras High Court
Radha Lakshmanan vs M.S.Gurusamy on 5 November, 2014
Author: T.Raja
Bench: T.Raja
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 05.11.2014
CORAM:
THE HONOURABLE MR.JUSTICE T.RAJA
S.A. No.1303 of 2013
Radha Lakshmanan : Appellant
Vs.
M.S.Gurusamy : Respondent
Second Appeal is filed under Section 100 of the Code of Civil Procedure against the judgment and decree of the Court of the District and Sessions Judge, Thiruvallur, dated 06.08.2013 passed in A.S.No.35 of 2012, confirming the Judgment and decree of the Court of the Subordinate Judge, Poonamalee dated 12.07.2012 passed in O.S.No.48 of 2006.
For Appellant : Mr.M.K.Kabir
Senior Counsel for
Mr.G.Krishnakumar
For Respondents : Mr.AR.L.Sundaresan
Seniior Counsel for
Mr.A.Vivekanandhan
(Judgment reserved on 02.09.2014 and
delivered on ......................)
JUDGMENT
****** The unsuccessful plaintiff whose suit for specific performance to execute and register sale deed in respect of plot No.212 Periyar Nagar, Korattur, Madras, by enforcing the agreement of sale dated 25.09.1993 entered with the defendant having been dismissed, again getting another dismissal from the appellate Court, has brought the appeal.
2. This Court, while entertaining the second appeal, has framed the following 3 substantial questions of law for consideration:
1.Whether on the admission of the respondent that he had remitted the entire sale consideration for the plot by 11.03.1992 and because of the delay in registration by TNHB in favour of the respondent and his intention to remain in Coimbatore, the agreement of sale dated 25.10.1993 would not fall under the mischief of the prohibition stated under the Lease cum Sale Agreement?
2.Whether the respondent is estopped by conduct in pleading that the agreement of sale dated 25.10.1993 is void because he had entered into the said Agreement with full knowledge of its authenticity and with an intention to transfer the same absolutely after remitting the entire sale consideration to TNHB and hence the concept of contra profendum would apply?
3.Whether the courts below should have held that the entire sale consideration for the purchase of the plot having been remitted to TNHB by the defendant long prior to entering into the Agreement of Sale, the said transaction cannot be termed as speculative in nature to fall within the mischief of Section 23 of the Indian Contract Act.
3. The brief facts leading to the filing of the present second appeal is given as under:
The plaintiff Mrs.Radha Lakshmanan has entered into a sale agreement with the defendant on 25.10.1993 for purchase of a suit property for a sum of Rs.1,50,000/-. After executing the sale agreement, a sum of Rs.50,000/- as advance was paid and the remaining balance amount of Rs.1 lakh was agreed to be paid within three months from the date of agreement. It was further claimed by the plaintiff/appellant that the time for the performance of agreement was not specified in the agreement considering the fact that the defendant has to pay all the installments or pay the entire consideration to the Tamil Nadu Housing Board to get the sale deed registered in his favour, since the suit property was allotted to the defendant by Tamil Nadu Housing Board. It has been further claimed by the appellant that Rs.50,000/- was paid by way of cheque on 25.10.1993 on the date of agreement, another sum of Rs.50,000/- was paid by cheque on 28.10.1993. One another payment of Rs.1 lakh was paid by way of cheque on 02.02.1994. Again Rs.35,000/- was paid by way of cheque on 02.02.1994 in favour of the defendant and yet another sum of Rs.25,000/- was paid by way of cheque in favour of the defendant on 10.02.1994 and as such a total sum of Rs.2,60,000/- was paid. While claiming the payment of the above said amount, the plaintiff also claimed that he has been in possession of the suit property for the last 13 years as on the date of filing the suit and maintaining the property for the purpose of construction of a superstructure. It was further complained that the defendant did not come forward to take steps to get the property registered in his favour from the Tamil Nadu Housing Board by causing delay of more than 13 years. Again complaining the defendant that in order to defeat the plaintiff, the defendant has been taking urgent steps to get the sale deed registered to third party for more financial gain. Hence, he was constrained to file a suit for specific performance.
4. The defendant opposing the above prayer and pleas taken by the plaintiffs presented a detail written statement. Taking serious objections on the ground that suit schedule property was allotted to the defendant by the Tamil Nadu Housing Board vide allotment order G.O.Ms.No.1345 dated 12.11.1990 for which, the defendant had paid the entire sale consideration to the Tamil Nadu Housing Board on 11.03.1992 at the time of taking the possession of the vacant land and that during the relevant period, in order to fulfill the conditions imposed by the Tamil Nadu Housing Board that unless and otherwise a house, minimum for an extent of 300 sq. ft. is built, the sale deed would not be executed in favour of the defendant, the defendant being a permanent resident of Coimbatore appointed Mr.V.Lakshmanan her husband as his power agent under unregistered power of attorney dated 25.10.1993 enabling him to apply for sanction for the building from the appropriate authorities and also to apply for building plan for the purpose of registering the sale deed in favour of the defendant. As per the sale agreement dated 25.10.1993, the plaintiff has to pay the remaining sale consideration as per Clause (3) of the agreement within a period of three months for which the defendant agreed to proceed with the sale on receiving the balance sale consideration within three months as per Clause (8) of the agreement. It is also the claim of the defendant that the period of three months specifically mentioned in the sale agreement to pay the remaining sale consideration and to register the sale deed is the essence of the agreement. When Clause (3) of the agreement mandates the plaintiff to pay the remaining sale consideration within a period of three months, i.e. before 25.01.1994, the plaintiff had violated Clause (3) of the agreement by sending the cheque for Rs.1,00,000/- belatedly, since the cheque also bears the date 02.02.1994. Even thereafter, the plaintiff failed to contact the defendant and also never bothered about the condition imposed in the sale agreement as well as general power of attorney dated 25.10.1993. The defendant again pleaded before the trial Court in the written statement that though the entire sale consideration has been paid to the Tamil Nadu Housing Board on 11.03.1992, he was unable to get the sale deed registered in his name, since there was no house built in the suit property. Therefore, it was further alleged that the plaintiff alone was responsible for the breach committed by her and she also admitted having remained silent for all these 12 years, hence, the defendant cannot be found fault with. With regard to the notices claimed to have been sent, it was pleaded that the plaintiff has sent the letters to the defendant only after creating the document in order to fill up the lacuna of not sleeping over the matter for all these 12 years and get over her own default and breach of contract. Finally, the defendant also offered to return the amount of Rs.1,50,000/- even though the sale agreement became infructuous by letter dated 01.05.2006 on a humanitarian ground.
5. Under this background, the learned trial Court by framing the following issues:
1) Whether the defendant has a right over the suit property at the time of execution of agreement?
2) Whether the plaintiff is ready and willing to perform his part of contract as per the conditions imposed in the agreement?
3) Whether the plaintiff is entitle for the relief of specific performance?
4) To what relief the plaintiff is entitled? and examined P.Ws.1 and 2 and Exs.A1 to A20 marked on the side of the plaintiff and after examining D.W.1 along with Exs.D1 to D6 marked on the side of the defendants, taking note of the sale agreement dated 25.10.1993 marked as Ex.A1 and the date of filing of the suit on 03.04.2006, which is after the expiry of 12 years from the date of sale agreement Ex.A1, concluded that the limitation for filing the suit for specific performance by the plaintiff starts from 10.02.1994 the day on which the entire consideration has been paid, but the suit was filed only on 03.04.2006, in view of that the suit filed on 03.04.2006, namely, after 12 years from the date on which the defendant got sale deed, was barred by limitation. Again the learned trial court has found that the silence of the plaintiff for a period of 12 long years has caused inordinate delay, further the plaintiff had not acted diligently. With regard to the letters Exs.A6 to A11 claimed to have been sent by the plaintiff showing the alleged readiness and willingness insisting the defendant to complete the transaction, it was further found that no proper acknowledgment was produced by him to the effect that such letters were received by the defendant. On this basis, the suit was dismissed holding that the plaintiff was not ready and willing to complete the contract. Aggrieved by the dismissal of the suit, the unsuccessful plaintiff went on appeal before the learned first appellate Court, Thiruvallur, in A.S.No.32 of 2012.
6. The first appellate Court adding one more reason against the plaintiff that the sale agreement entered on 25.10.1993 was forbidden by law on the date of its execution held that the plaintiff cannot seek any remedy under Section 35 of the Transfer of Property Act, 1882 for the reason that the agreement Ex.A1 is a void agreement in the terms of Section 23 of the Indian Contract Act. Hence, the said agreement cannot be validated.
7. Basing on the condition No.10 of the regular allotment order Ex.B2 dated 08.04.1991, that the defendant shall not part with possession, alternate, assign or otherwise encumber his rights in the above plot until the cost of the plot determined under Condition No.2 is paid in full or till the expiry of a period of five years from the date of this order of allotment or till any pending writ petitions of suits above the lands in question are disposed off, whichever is latter, without the written prior approval of the Board, the learned Appellate Court has held that Ex.B2 has clearly prohibited the defendant from alienating the property allotted under Ex.B2 within 5 years from 08.04.1991. In the instant case, it has been proved beyond all reasonable doubt that the defendant himself verified title to the suit property only on 23.03.2006. While so, the plaintiff would be aware of the fact that the defendant has not possessed the marketable title prior to 23.03.2006. Therefore, the plaintiff would not enforce Ex.A1 sale agreement prior to 23.03.2006, for the reason that the defendant was not having any title to the suit properties on the date of agreement. On this basis, the learned first appellate Court also has come to the conclusion that the plaintiff's suit was hit by Section 23 of the Indian Contract Act, 1872. Hence, the Court cannot even direct the defendant to return a sum of Rs.2,60,000/- with interest for the reason that Ex.A1 sale agreement is a void abinitio. Aggrieved by the concurrent findings of the Courts below, the appellant is before this Court with this second appeal.
8. Mr.M.K.Kabir, learned Senior counsel for the appellant/plaintiff on the admission of the defendant/respondent that since the entire sale consideration for the plot was paid on 11.03.1992, would not fall under the mischief of prohibition stated under the lease cum sale agreement.
9. Mr.Kabir, learned senior counsel for the appellant contending further argued that any bar to the transfer of land would not be a bar against or cloud on the title to the land in question. The only pre condition in respect of the transfer was expiry of five years from the date of agreement. In the present case, although the sale agreement was reached on 25.10.1993, the plaintiff filed the suit on 31.03.2006 therefore, the relief of specific performance cannot be denied to him since the above agreement is legally enforceable and binding between the parties. In support of his contention, taking reliance from a judgment of the Karnataka High Court in Subbireddy vs. K.N.Srinivasan Murthy, reported in AIR 2006 KARNATAKA 4, he has further submitted that the plaintiff' after executing a sale agreement on 25.10.1993 has taken possession as a part performance of the agreement and to overcome the bar provided, the sale deed has to be executed after the expiry of the period of non alienation. Since the plaintiff has filed the suit after the expiry of period of non alienation, neither such agreement is said to be unlawful nor forbidden by law, hence the agreement cannot be treated as oppose to public policy, on this basis, he further contended that the approach adopted by the courts below that the suit is hit by Section 23 of the Indian Contract Act is bad in law.
10. Answering the above contentions, Mr.ARL.Sundresan, learned Senior Counsel heavily contended that the defendant was only an allottee of the suit property at the time of entering the agreement in question which has been executed as if the defendant was an absolute owner of the property. Since the Tamil Nadu Housing Board is a statutory body established with an object to provide houses for the houseless, the Housing Board should not be equated with private real estators. Moreover, a mere reading of condition No.10 of Ex.B2-allotment order categorically bars the defendant to enter into any agreement to deal with the suit property for a period of five years from the date of allotment, such condition imposed by the housing board is aimed to achieve the object of removing the houseless people in the state of Tamil Nadu, but in utter violation of the housing board scheme, the parties herein entered into sale agreement Ex.A1, therefore, the learned courts below heavily relying on Section 23 of the Indian Contract Act that any contract opposed to public policy is not enforceable, rightly dismissed the suit.
11. Continuing his arguments, he has contended that when the sale agreement was entered on 25.10.1993, the plaintiff keeping quite unreasonably for 13 long years to file the suit cannot circumvent Article 54 which provides three years time for filing the suit for getting decree for specific performance.
12. Again taking support from the judgment of the Karnataka High Court in M.Rathnam vs. Smt.Susheelamma, reported in AIR 2009 KARNATAKA 79, he has further pleaded that both the plaintiff and the defendant proceeded with the transaction under the mistake as to the fact that the 1st defendant had authority under the allotment order to sell the property and entered into the sale agreement. Since the said mistake of fact was mutual between both the parties, by virtue of Section 20 of the Contract Act, the said agreement of sale became void and unenforceable in law.
13. Concluding his arguments, he has argued that a conjoint reading of sale agreement and the order of allotment made by the Housing Board imposing ban of five years for alienating the suit property clearly shows that the contract of sale entered by both the parties to the suit is against public policy, therefore, the same cannot be enforced by the court as this will amount to defeating the law.
14. Again, taking support from the Full Bench judgment of this Court in P.Gopirathnam and four others vs. Ferrodous Estate (Pvt.) Ltd., rep. by its Power of Attorney Holder Sri.G.John Arthur, reported in 1999 (II) CTC 181, he urged this Court to dismiss the second appeal on the ground that a decree for specific performance of contract cannot be granted even conditionally upon the vendor satisfying certain conditions which were not part of original agreement.
15. In this context, it is pertinent to extract Clause X of the regular allotment order dated 08.04.1991 marked as Ex.B2 and Section 35 of the Transfer of Property Act.
16. Condition Nos. 7 and 10:
7.You shall construct a building for which purpose the plot is allotted within a period of three years from the date of first intimation of handling over of the plot.
...
10.The allotment is made to you on the specific understanding that you shall not part with possession, alternate, assign or otherwise encumber your rights in the above plot until the cost of the plot determined under Condition No.2 is paid in full or till the expiry of a period of five years from the date of this order of allotment or till any pending writ petitions or suits of the above lands in question are disposed off, whichever is latter, without the written prior approval of the Board.
17. To answer the first substantial question of law, it is necessary to see Section 35 of the Transfer of Property Act, 1882, which is given below:
35.Election when necessary Where a person professes to transfer property which he has no right to transfer, and as part of the same transaction confers any benefit on the owner of the property, such owner must elect either to confirm such transfer or to dissent from it; and in the latter case he shall relinquish the benefit so conferred, and the benefit so relinquished shall revert to the transferror or his representative as if it had not been disposed of, subject nevertheless, where the transfer is gratuitous, and the transferor has, before the election, died or otherwise become incapable of making a fresh transfer, and in all cases where the transfer is for consideration, to the charge of making good to the disappointed transferee the amount or value of the property attempted to be transferred to him.
...
18. With a conjoint reading of both the above Section and the letter of allotment, it may be mentioned herein that as per the regular allotment order dated 08.04.1991 plot No.212 at Korattur having an extent of 2300 sq. ft. was allotted in favour of M.S.Gurusamy, the defendant/respondent herein subject to various conditions and one of the conditions, mentioned supra, if closely would read amply prove the case of the defendant that the allotment order of the suit property was made to the defendant on a specific understanding that he shall not part with possession or alternate, assign or otherwise encumber his rights in the above plot until the cost of the plot determined under Condition No.2 is paid in full or till the expiry of a period of five years from the date of this order of allotment or till any pending writ petitions or suits of the above lands in question are disposed off, whichever is latter, without the written prior approval of the Board. This condition dated 08.04.1991 imposing a ban of five years period not to part with possession or alienate the suit property was in existence on the date of sale agreement dated 25.10.1993 Ex.A1 came to be executed between the plaintiff and the defendant for alienating the property in favour of the defendant. Therefore, the learned appellate Court taking into account the prohibition existed against Ex.A2 dated 25.10.1993 rightly came to the conclusion that the said prohibition not only existed for five years from the date of allotment under Ex.A2 and such prohibition continued till the defendant has become the absolute owner of the suit property on 23.03.2006, therefore, the plaintiff cannot seek any remedy under Section 35 of the Transfer of Property Act.
19. For the reason that the agreement Ex.A1 is a void agreement within the meaning of Section 23 of the Indian Contract Act, the said agreement cannot be validated by the Act of parties. Admittedly, in the present case, the regular order of allotment dated 08.04.1991 alleging the suit property in favour of the defendant was allotted was subject to a specific and explicit condition that the defendant shall not part with possession of the suit property until the expiry of a period of five years from the date of order of allotment without the written prior approval of the Board. Surprisingly, even during the currency of the prohibitory Clause No.10, the sale agreement was entered between the parties on 25.10.1993. Therefore, when the sale agreement dated 25.10.1993 was executed during the existence of the prohibition, the view taken by the learned Appellate Court confirming the reasoning given by the trial Court refusing to decree the suit for specific performance, in my considered view, is in order. Therefore, the first substantial question of law is answered against the appellant/plaintiff.
20. Moving to the second substantial question of law, as to whether the respondent/defendant is estopped by conduct in pleading that the agreement of sale dated 25.10.1993 is void because he has entered into an agreement with full knowledge of its authenticity and with an intention to transfer the same absolutely after remitting the entire sale consideration to TNHB, it may be mentioned that both the plaintiff and defendant were aware of the fact that the defendant did not possess a marketable title, in view of Clause 10 of the agreement on the date the agreement dated 25.10.1993 was entered for alienating the suit property in favour of the plaintiff. In view of this prohibition staring at both parties, the first appellate Court has rightly invoked the golden rule of namo debt quad non habit and held against the plaintiff that she could not enforce agreement Ex.A1 sale agreement prior to 23.03.2006 for the reason that the defendant was not having any title to the suit properties, which has been candidly admitted by the plaintiff. That apart since the sale agreement dated 25.10.1993 itself was entered during the ban and legally prohibited period, the same cannot be validated for the reason that Ex.A1 sale agreement itself is void by virtue of Section 20 of the Indian Contract Act. Accordingly, the second and third substantial questions of law, which are interlinked are also answered against the appellant/plaintiff.
21. No doubt, the learned Senior counsel appearing for the appellant/plaintiff taking strength of the judgment of the Punjab and Haryana in LT.Colonel Jaswant Singh v. Daljit Singh and others reported in AIR 1998 P&H 254 submitted that although the agreement was entered between the parties on 25.10.1993 to sell the suit properties, the plaintiff rightly waited for more than 10 years and then filed the suit for specific performance of agreement and since the plaintiff has performed his part of the contract and he was ready and willing, the Court should have passed the conditional decree for specific performance is far from acceptance, for the reason that the plaintiff has filed the suit on 03.04.2006, i.e., 12 years after the sale agreement dated 25.10.1993, wherein three years time has been categorically mentioned for executing the sale agreement.
22. In similar and identical circumstances, this Court in B.P.Samyappan and 4 others vs. Arunthavaselvan and 3 others reported in 1994 (1) LW 399, has held that insofar as limitation is concerned Article 54 of the Limitation Act is very clear in its terms, for the period of limitation fixed for a suit for specific performance of a contract is three years from the date fixed for the performance, or if no such date is fixed, when the plaintiff has notice that performance is refused. Admittedly, in the present case, in terms of Article 54 of the Limitation Act, the plaintiff having executed the sale on 25.10.1993 mentioning the three years time for executing the sale agreement, and filed the suit on 03.04.2006 beyond the period prescribed the time limit, it is beyond the period of three years from the date fixed for performance of agreement. In view of that the suit is barred by limitation. Besides this view gets support from the above said judgment, B.P.Samyappan mentioned supra, wherein it has been held as follows:
6.... Thus, there is absolutely no whisper in the plaint that the parties either by express agreement or by implied agreement extended the time for performance of the contract. Hence, by the terms of Article 54 of the Limitation Act, the suit is filed beyond the period prescribed therefor. Admittedly, it is beyond the period of three years from the date fixed for performance in the agreement. Hence, the suit is barred by limitation. The view taken by the Court below that time is not the essence, of the contract, and therefore, the suit is in time, is unsustainable. It is one thing to say that time is not the essence of the contract and it is another thing to say that the suit is barred by limitation. In the present case, the suit is governed by Art. 54 of the Limitation Act and it is barred by limitation.
8.Learned counsel for the appellant contends that the provisions of the Act will invalidate only a transfer and will not affect an agreement of sale. According to him an agreement is not a transfer and, therefore, the Section does not come into play. We are unable to accept this argument. The plaintiff seeks to have the agreement enforced by a Court of law and get a sale deed in pursuance thereof. If the Court grants a decree in favour of the plaintiff and it leads to a sale deed in favour of the plaintiff, either by the party or by the Court, that sale is automatically void and it is deemed to be void always as per the provisions of the Act. The Court cannot be a party to a transaction which would be void in law. Hence, there is no substance in the contention that the agreements are not affected by the provisions of the Act.
23. A mere reading of the above judgment clearly shows in unmistakable terms that the Court cannot be a party to a transaction which is void in law, therefore, in view of all the above, finding no merit or substance in the challenge made against the concurrent findings of the Courts below, this appeal is liable to fall. Indeed, the reasonings given by the first appellate Court being unassailable, the second appeal is liable to be dismissed. Accordingly, the same is dismissed. No costs.
05.11.2014 Index :Yes Internet :Yes RR T.RAJA, J.
RR Pre delivery Judgment made in S.A.(MD)No.1303 of 2013 05.11.2014