Karnataka High Court
Subbireddy vs K.N. Srinivasa Murthy on 12 August, 2005
Equivalent citations: AIR2006KANT4, 2005(6)KARLJ489, AIR 2006 KARNATAKA 4, 2005 AIR KAR R 2877 2005 AIR - KANT. H. C. R. 2581, 2005 AIR - KANT. H. C. R. 2581, 2005 AIR - KANT. H. C. R. 2581 2005 AIR KAR R 2877, 2005 AIR KAR R 2877
Author: Huluvadi G. Ramesh
Bench: Huluvadi G. Ramesh
JUDGMENT Huluvadi G. Ramesh, J.
1. These appeals are arising out of the judgment and decree passed by the Civil Judge (Senior Division), Chikballapur, in R.A. Nos. 25, 27 and 24 of 1998 respectively in setting aside the judgment and decree passed by the Civil Judge (Junior Division), Bagepalli, in O.S. Nos. 214, 216 and 215 of 1991 respectively.
2. These cases have been taken together for disposal since common questions of law are involved and the matters are similar and the relief sought for is also similar in nature. The parties are referred according to their rank before the Trial Court.
3. R.S.A. No. 159 of 2001 is arising out of O.S. No. 214 of 1991 and R.A. No. 25 of 1998 respectively. The plaintiff in O.S. No. 214 of 1991 filed a suit against defendants for specific performance on the basis of the agreement dated 23-1-1982 said to have been executed by the defendants in favour of the plaintiff. The suit schedule property said to be l/3rd share of defendants to the western side of garden land in Survey No. 9 of Kurubarahalli Village, Bagepalli Taluk. The same was agreed to be sold for Rs. 6,000/- and the defendants said to have been received the entire sale consideration as on the date of agreement and plaintiff is in possession of the suit property. The suit property is the subject matter of service inam land and it was regranted in favour of defendants as per the provisions of the Karnataka Village Offices Abolition Act, 1961. According to the plaintiff, in view of the prohibition in the said Act to alienate the property during the non-alienation period, the defendants had agreed to execute the sale deed in "favour of the plaintiff after completion of the prohibition period. Stating that during the subsistence of agreement between the parties, the defendants tried to deal with the property with some third person and as such, he had to approach the Trial Court even before the expiry of non-alienation period, stating that he is seeking for an order of specific performance and stating further that there remains nothing to perform the contract on the part of the plaintiff except to bear the expenses of stamp duty and registration. The said suit was contested by the defendants stating that the said agreement was not genuine and it was obtained by practicing tricks by the plaintiffs and denied entire averments made in the plaint. It is contended further that the plaintiff is not in possession of the suit property rather than the defendants are in actual physical possession and enjoyment of the suit property and there is no cause of action. It is further submitted that defendants and plaintiffs are from the same village and the plaintiffs brother Chowdareddy used to give financial assistance and that Chowdareddy used to secure documents, pronotes and other securities during the course of said transactions. He had obtained signatures on the blank stamp papers and those documents are converted into sale agreement with the help of attestors and scribe. The defendants have never agreed to sell the suit property and also plaintiff never paid the sale consideration. The agreement cannot be enforced as there is a clear bar of 15 years as per the regrant order. Further, it is submitted that the suit is also barred by limitation as the agreement was dated 23-1-1982 and the suit is filed after expiry of the limitation period. Thus sought for dismissal of the suit.
4. Based on the pleadings as many as nine issues were raised. After the evidence was let in and after hearing the parties, the Trial Court has decreed the suit of the plaintiff by his order dated 31-1-1998. Being aggrieved by the same, the appeal was preferred before the Civil Judge (Senior Division), Chikballapur, in R.A. No. 25 of 1998 wherein, the learned Civil Judge, by the order dated 17-1-2001 has allowed the appeal filed by the defendants and set aside the judgment and decree passed by the Trial Court. Being aggrieved by the same, this second appeal RS.A. No. 159 of 2001 is filed.
5. In R.S.A. No. 160 of 2001, the facts are similar. The plaintiff is same but the defendants are different. This regular second appeal is arising out of O.S. No. 216 of 1991 and R.A. No. 27 of 1998. The subject-matter of the suit is in respect of five items, i.e., 18 guntas of garden land in Survey No. 10, 20 guntas of garden land in Survey No. 16/4 (northern side), 10 acres of garden land in Survey No. 78 (northern half), 1 acre 14 guntas of dry land in Survey No. 79, which are situated at Kurubarahalli Village, Pathapalya Hobli, Bagepalli Taluk and another is defendants' right to water in the well situated in Survey No. 9 of Kurubarahalli Village. The sale consideration is depicted as Rs. 20,000/- and it is said to have been paid by the plaintiff to the defendants and rest of the facts are similar. Herein also, the Trial Court has decreed the suit and the lower Appellate Court reversed the judgment and decree of the Trial Court in R.A. No. 27 of 1998. Hence, this second appeal.
6. R.S.A. No. 161 of 2001 is filed by one Smt. Venkatamma, W/o B. Chowdareddy, against the defendants who are same in O.S. No. 216 of 1991 and this suit. This regular second appeal is arising out of O.S. No. 215 of 1991 and R.A. No. 24 of 1998 in respect of 16 guntas of garden land in Survey No. 82 of Kurubarahalli Village.
7. In all these three appeals, similar questions of law were raised for consideration at the time of admission on 21-3-2001. The following substantial question of law was framed for consideration:
"Whether the agreements of sale dated 23-1-1982, 24-12-1981 and 27-4-1986 respectively are violative of the Karnataka Village Offices Abolition Act, and if so, not enforceable in law?"
8. At the outset, it is the argument of the learned Counsel for the appellant that these agreements marked at Ex. P. 1 in each of the suits are hit by the provisions of Section 5(3) of the Karnataka Village Offices Abolition Act, 1961, which are the subject-matter of three suits. As per the stipulations in the agreement transfer has to take place only after the expiry of non-alienation period and as such, it is not hit by the non-alienation clause or prohibition clause as provided under the said Act. Further, submitted that since the defendants were attempted to alienate the suit properties despite receiving entire consideration from the plaintiff in respect of suit properties, it made the plaintiffs to file a suit seeking for specific performance and further submitted that these decrees came to be passed only after the period of non-alienation and also in support of the argument, he has submitted that mere agreement to sell does not convey any interest or title in the suit property to term them as transfer. As such, it is submitted that in the real sense, there is no transfer and only in the event there is a transfer, such transfers are deemed as void. In support of his argument, learned Counsel for the appellant has relied upon a ruling in the case of Yogambika v. Narsingh, , Jose v. Anantha Bhat, 1987 (1) Kar. L.J. 16(DB) and also one more ruling of the Apex Court in the case of Bai Dosabai v Mathurdas Govinddas and Others, .
9. Per contra, learned Counsel for the respondents has vehemently contended that there its deemed transfer of the land in favour of the plaintiffs. As such, it is hit by the prohibition clause under the Karnataka Village Offices Abolition Act, and also in support of his argument he relied upon the meaning as to the word 'transfer' referring to Law Lexicon by Sri P. Ramanatha Aiyar. The word 'acquired' according to the Law Lexicon refers 'come into possession' or 'gain by oneself and the word 'Transfer' refers to an act of the parties, or of the law, by which the title to property is conveyed from one person to another or to convey title or interest in property to another or a transfer is an act or transaction by which property of one person is vested in another. Also word 'vest' means to place in possession, or to take possession of Further, in support of his argument, he also relied upon a ruling in the case of Mst. Jagaribai v. Ramkhilawan and Ors. , and also a ruling in the case of Sayyed Ibne Hasan Mazhar Hussain v. Mst. Mehtab Latafat Hussain, . Accordingly, submitted that the plaintiff's are not entitled for any such order of specific performance and further submitted that both the Courts below have not taken note of the fact that in the case on hand having regard to the nature of property, whether discretion to decree the suit for specific performance could be exercised or not referring to Section 20 of the Specific Relief Act, 1963.
10. Having heard the learned Counsels for the parties, one more substantial question of law that arises for consideration is:
"Whether the plaintiffs would be entitled for a decree of specific performance in their favour and whether the Courts below have considered the aspect of Section 20 of the Specific Relief Act, either in decreeing the suit or in rejecting the prayer?"
11. Now we may proceed with the substantial questions of law raised which are common and similar. In all these cases, the Trial Court has come to the conclusion that the plaintiffs were able to prove that the defendants have agreed to sell the suit property in favour of the plaintiffs for consideration as mentioned in each of the agreement at Ex. P. 1 exhibited in each of the cases and also has come to the conclusion that the defendants have also received sale consideration as per the agreement and delivered the possession of the suit property.
12. As to the issue whether the plaintiffs have made any improvements and invested considerable amount on the suit property in all these cases were held in negative. However, as to the issue whether the plaintiffs are in lawful possession and enjoyment of the suit property, it is held that the plaintiffs are in lawful possession and enjoyment. To the issue 4 as to whether defendants have interfered with the lawful possession and enjoyment of the suit property, the same was held in affirmative in all these cases.
13. Insofar as specified issue which relates to the substantial question of law as to whether the alleged agreement of sale is null and void in view of the provisions of the Karnataka Village Offices Abolition Act, the same was held in the negative while answering issue 5 in all these cases. Similarly, one more aspect regarding limitation in filing the suit is also held in the negative. Regarding maintainability, it is held that the suits are maintainable. Thereafter, the Trial Court in all the three cases has decreed the suit of the plaintiffs. So, as per the contention of the defendant, as noted therein, the suit schedule properties are regranted lands under the provisions of Karnataka Village Offices Abolition Act. After coming into force of the Amendment Act in the year 1978, the Tahsildar, Bagepalli, imposed a condition of prohibition on the alienation for a period of 15 years from the date of regrant. As such, it is the contention of the defendants that such agreements are null and void and cannot be enforced as they came to be executed during the non-alienation period. To the contrary, it is the contention of the plaintiffs that as per the terms of the agreement, the sale deed is to be executed after lapse of 15 years from the date of regrant and further that they should take permission for execution of the sale deed. As such agreements are enforceable. One of the arguments of the learned Counsel for the respondents herein is that such an agreement is hit by the provisions of Section 23 of the Indian Contract Act, 1872, i.e., stating that it is against the public policy and also to defeat the provisions of law.
14. However, it appears that the plaintiffs in all these cases have proved that these agreements at Ex. P. 1 in each of the cases have been duly executed. But, as to the enforcement of these agreements, as per the conditions stipulated in the agreements, that the sale deed has to be executed only after the expiry of non-alienation period. However, it is a case wherein, according to the plaintiffs themselves, they have been put in possession of the suit property. The same is being objected by the Counsel for the respondents on the ground that the agreement coupled with transfer is a void transfer and is against the public policy and it is hit by the provisions of Section 5(3) of the Karnataka Village Offices Abolition Act.
15. The two clauses which refers to in the agreement is in respect of execution of sale deed after expiry of prohibition period and another is seeking permission to alienate the property from the Competent Authorities.
16. As per Section 5(3) of the above said Act, there shall not be a transfer other than by way of partition among the members of Hindu Joint Family for a period of 15 years from the date of commencement of the Amendment Act, 1978. Sub-section (4) of Section 5 says that any transfer of land in contravention of Sub-section (3) shall be null and void and the land so transferred shall as penalty, be forfeited to and vest in the State Government free from all encumbrances and any person in possession thereof shall be summarily evicted therefrom by the Deputy Commissioner and the land shall be disposed of in accordance with the law applicable to the disposal of unoccupied unalienated lands. In the explanation provided to Sub-sections' (3) and (4), it is made clear that transfer includes creation of a lease. Now we may have to refer to the word 'Transfer'. Literally there is convey of possession by the defendant in favour of the plaintiffs, thereby it amounts to transfer by parting with possession of the property by the defendant in favour of the plaintiff. The consequence of such a transfer during the period of prohibition for alienation even by way of parting with possession if any, in view of Sub-section (3) of Section 5, it was for the Deputy Commissioner to evict summarily and get the land vested with the Government. It appears no such action has been taken.
17. Here it appears that defendants have received the entire sale consideration as is held by the Trial Court in respect of each of the cases. So far as the contention raised, it is noted that according to the plaintiffs, they have taken possession as a part performance of agreement and to over come the bar provided, it appears one of the conditions for stipulation is to the effect that the sale deed has to be executed after expiry of period of non-alienation. To go by pleadings of the defendants themselves that they are in possession of the suit property, and such being the case, there cannot be any such parting of possession by the defendants. When once such a stand is taken by them, though it is held by the Court that the property has been delivered to the plaintiffs by the defendants, now the defendants cannot say that possession has been parted with and as such, it amount to transfer and hit by Section 5(3) of the above said Act. In that view of the above citation relied upon by the learned Counsel for the respondents is of no help to him. The word 'transfer' as per the definition under the Transfer of Property Act, conveying the title or interest in the property apart from parting with possession. Some of the cases of transfers are sale, gift, lease and mortgage. Here in all these cases are only agreement to sell and not an outright sale and except a contract by way of agreement, as come into existence, it is not a complete contract. Even according to the defendants themselves, when their pleadings is to the effect that they have not parted with possession, it did not complete requirement of transfer. Once the defendants have come up with the contention that they have not parted with possession, now they cannot say that possession has been transferred to plaintiffs and as such, it is hit by Section 5(3) of the Act, as such, Ex. P. 1 agreement cannot be enforced. What is sought to be enforced as per Ex. P. 1 is only for the execution of sale deed in favour of the plaintiffs after the period of prohibition of alienation. Under such circumstances, as rightly held by the Trial Court, the alleged Ex. P. 1 is not hit by Section 5(3) of the Karnataka Village Offices Abolition Act.
18. Similarly even to examine this aspect for the sake of Section 23 of the Indian Contract Act, as rightly noted by the Trial Court, defendants have to take permission from the Competent Authorities to transfer the land as mentioned in Ex. P. 1 before conveying the properly by way of sale deed and it is also as contemplated under the above said Act, such permissions are necessary. Under such circumstances, neither such an agreement is said to be unlawful nor forbidden by law and cannot be treated as opposed to public policy. As such, it is also not hit by Section 23 of the Indian Contract Act.
19. In a decision in Jose's case, wherein it is held that with reference to Sub-section (3) of Section 79 of the Karnataka Land Reforms Act, 1961, the bar contained in similar circumstances towards transfer of agricultural land referring to the contents of the agreement and intention of the parties and also nature of contract therein, it is held that the Civil Court cannot create a bar to itself to enforce the contract on plausible result on such enquiry under Section 83 of the Land Reforms Act, wherein the Civil Court is not competent to determine in terms of Section 132 of the Land Reforms Act as to the illegality or legality of the transaction under such provision.
20. In a decision in Bai. Dosabai's case, referring to Transfer of Property Act, 1882, in paragraph 6 it is held as under:
Paragraph 6. We do not wish to go in any detail into the question whether the English equitable doctrine of conversion of realty into personalty is applicable in India. However, we do wish to say that the English doctrine of conversion of realty into personalty cannot be bodily lifted from its native English soil and transplanted in statute bound Indian law. But, we have to notice that many of the principles of English equity have taken statutory form in India and have been incorporated in occasional provisions of various Indian statutes such as the Indian Trusts Act, the Specific Relief Act, Transfer of Property Act etc., and where a question of interpretation of such equity based statutory provisions arises we will be well-justified in seeking aid from the equity source. The concept and creation of duality of ownership, legal and equitable, on the execution of an agreement to convey immovable property, as understood in England is alien to Indian Law which recognises one owner i.e., the legal owner: Vide Ram Baran Prasad v. Ram Mohit Hazra, and Narandas Karsondas v. S.A. Kamtam, . The ultimate paragraph of Section 54 of the Transfer of Property Act, expressly enunciates that a contract, for the sale of immovable property does not of itself, create any interest in or charge on such property. But the ultimate and penultimate paragraphs of Section 40 of the Transfer of Property Act make it clear that such a contract creates an obligation annexed to the ownership of immoveable property, not amounting to an interest in the property, but which obligation may be enforced against a transferee with notice of the contract or a gratuitous transferee of the property. Thus, the equitable ownership in property recognised by equity in England is translated into Indian Law as an obligation annexed to the ownership of property, not amounting to an interest in the property, but an obligation which may be enforced against a transferee with notice or a gratuitous transferee".
Even referring to the above ratio, having regard to the nature of Ex. P. 1, at the most it would give the right to the plaintiff to enforce the agreement subject to certain stipulations.
21. In view of the terms and conditions as mentioned in Ex. P. 1 in each of the cases, it cannot be said that it is neither enforceable nor void nor hit by the provisions of Section 5(3) of the Karnataka Village Offices Abolition Act, 1961. In view of the above, the substantial question of law raised has to be held in favour of appellant/plaintiffs. Insofar as non-consideration of Section 20 of the Specific Relief Act is concerned, it is the submission of the learned Counsel for the respondents that although no such pleading is there, it was for both the Courts below to consider this aspect and to examine whether it is feasible to exercise discretion in favour of plaintiffs or not and further submitted that such an exercise has not been done and both the Courts below have committed an error in this act. It is also the contention of the learned Counsel for the respondents that having regard to the extent of land and having regard to the consideration that is being said to have been paid, the Trial Court ought not to have decreed the suit for specific performance, thereby tried to stand by the order of the lower Appellate Court and argued that the order of the lower Appellate Court has to be confirmed.
22. Per contra, the argument of the learned Counsel for the plaintiffs is that the case of the defendants through out is that no such agreement is entered into and they did not make a mention of these aspects before both the Courts below as to the exercise of discretion in favour of defendants and not to order for specific performance.
23. Section 20 of the Specific Relief Act provides for discretion to be exercised by the Court in decreeing a suit for specific performance. There are circumstances which provides for not to exercise discretion to decree the suit for specific performance wherein the terms of the contract or the conduct of the parties gives an unfair advantage to the plaintiffs over the defendants though the contract is not voidable, where; the performance of the contract would involve some hardship on the defendant which ho did not foresee and where the defendant entered into the contract, though it is not voidable, but makes it inequitable to enforce specific performance. These are the three above conditions under which the Court would refuse to decree the suit for specific performance. Further, in the explanation provided in the said section, it also infers to 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 in this context.
24. In the instant case, although it was contended that there was no such agreement entered into and it was only the signatures are obtained in connection with the monetary transaction etc., the same was not accepted by the Trial Court and hold that the agreement is duly executed by the defendants in favour of the plaintiffs. Further, it is noted that as per the terms and conditions of the agreement, to overcome any such clause, it was only agreed to be sold, or sale deed to be executed only after the expiry of period of prohibition of non-alienation. It appears from the fact and pleadings that the defendants said to have received the full consideration in respect of each of these cases. This consideration is not part rather entire consideration for which it was entered into as per the agreement. It is not a case of the defendants that only part of the earnest money is paid and remaining amount has not been paid and the plaintiff is ever ready and willing to perform his part of the contract. As such, there is no hardship to the defendants nor it gives an unfair advantage to the plaintiff over the defendants when once entire consideration is received at the inception of the agreement. As such, no hardship would be there on the part of the defendants to convey title and to execute the sale deed. May be that the market value of the property exceeds at this length of time, but the fact remains that the entire consideration was paid as 011 the date of the sale agreement which necessarily speaks that nothing remains on the part of the plaintiff as a matter of reciprocal promise. Furthermore when the defendants attempted to dispose of the property during the period of non alienation during the subsistence of agreement between the plaintiff and the defendants. In view of the same, although both the Courts below have not considered this aspect as to whether the plaintiffs are entitled for specific performance, nonetheless in the instant case, the Trial Court rightly ordered to have exercised discretion in decreeing the suit. The lower Appellate Court committed an error in interpreting the provisions of Section 5(3) of the Karnataka. Village Offices Abolition Act to the case on hand, which is to be reversed and. set aside and accordingly it is set aside.
For the foregoing reasons, the appeals are allowed. The judgment and decree of the lower Appellate Court in all these appeals are set aside while confirming the judgment and. decree passed by the Trial Court. Parties to bear their own costs.