Kerala High Court
Thaikandiyil Parambath Assiya vs Mannamchalil Rajeevan And Anr. on 13 August, 1993
Equivalent citations: II(1993)DMC490
JUDGMENT K.P. Balanarayana Marar, J.
1. The second appeal arises from a suit for recovery of possession. While plaintiffs were minors the plaint schedule property which belonged to them was assigned by their mother as guardian to defendant for a consideration of Rs. 6000/-. Alleging that the sale was effected without obtaining the permission of the District Court and that no benefit was obtained by the minors, relief of recovery of possession was sought in the plaint. Of the two minors one has attained majority and the other was still a minor at the time of suit. She was represented by the 1st plaintiff as the next friend.
2. Defendant resisted the suit on various grounds. The sale is alleged to have taken place after obtaining permission from the District Court. Defendant was made to understand that the mother had obtained permission from the Court whereas the permission was really obtained by the father. When this was noticed subsequent to the sale deed, defendant wanted the father the minors to get the defect rectified, but defendant is alleged to have been told that the assignment by the mother is valid. No action was therefore taken by the defendant. The property was sold for raising consideration to purchase another property in the name of the minors. A property was purchased in the name of the minors utilising this consideration. Defendant therefore disputed the rights of plaintiffs to question the validity of the transaction and to get recovery of possession.
3. The Trial Court granted a decree for recovery finding that Ext. B2 assignment executed by the mother as guardian of defendant is void ab initio since the permission required under Section 8 of the Hindu Minority and Guurdianship Act was not obtained by the mother. On appeal the lower appellate Court concurred with that decision and dismissed the appeal. The lower Appellate Court permitted the defendant to remove the house constructed by him before surrendering possession. Hence the second appeal by the defendant which was admitted on the following substantial questions of law formulated in the appeal memorandum :
(a) Where sanction under Section 8 of the Hindu Minority and Guardianship Act for the sale of the property at the price indicated is obtained by the legal guardian of the minors and the deed of sale is executed by the mother who had made the original acquisition on behalf of the minors and the transaction is attested by the guardian, is such transaction void in law ?
(b) Whether the lower Appellate Court has not misinterpreted the scope of Section 8 of the Hindu Minority and Guardianship Act and whether the finding that Ext. B2 assignment deed is void ab initio sustainable in law ?
(c) Whether in any view the plaintiffs are not bound to disgorge the benefits derived by them by the utilisation of the consideration obtained by the sale of Ext. B2 and is the lower Appellate Court justified in law in not making the decree conditional on such disgorging of the benefit ?
(d) Whether the lower Appellate Court has not gone wrong in law in not awarding the value of the building put up by the appellant in the property ?
(e) Whether the suit as laid is maintainable in law ?
4. Heard Counsel on both sides.
5. The validity of the assignment deed Ext. B2 was questioned mainly on the ground that the permission required under Section 8 of the Hindu Minority and Guardianship Act was not obtained. Admittedly the mother who executed the document as guardian of the minors had not obtained the permission of the District Court. It is seen that the father of the minors had moved the District Court, Koshikode by O.P. 157/1978 and by Ext. B5 order dated 1-1-1978 the District Court granted permission to sell the property. The assignment deed was executed three days later wherein the mother figured as the guardian. The father participated in the document as one of the attesting witnesses as well as the identifying witness. It is therefore contended that the father was fully aware of the transaction and that he had played a fraud on the defendant in not executing the document as the guardian of the minors. Whatever that be, the sale deed was executed by the mother and not by the father. Since no permission was obtained by the mother as contemplated under Section 8 of the Hindu Minority and Guardianship Act, the transaction is void. Minors can treat the document as invalid and inoperative and are competent to seek recovery of the property. Both the Courts below were therefore right in finding that the document executed by the mother is void and that the minors had a right to g"t recovery of possession.
6. The main aspect that arises for consideration in this second appeal is whether the benefit acquired by the minors is liable to be restored to defendant. A property was acquired in the name of the minors on 8.8.1978 by Ext. B1 utilising the consideration received from the defendant. It is in evidence that plaint schedule property was sold by the mother for the purpose of raising funds to purchase Ext. B1 property. It was for that purpose that permission of the District Court was sought for by the father of the minors. Appellant would therefore request for restoration of that property to her, that being a benefit which the minors had received from the sale of the property. On the other hand, learned Counsel for the respondents would contend that what is liable to be returned is only the money paid by the defendant and not the property acquired by utilising that money. Counsel on both sides argued the matter at length. Several authorities were also cited on both sides. The short point that arises for consideration is whether plaintiffs are liable to restore the benefit that they have received viz. Ext. B1 property to the defendant or whether they are liable to pay only the amount of Rs. 6000/- received as consideration for Ext. B2 assignment.
7. Almost on identical facts a Division Bench of this Court in Cheriathu Varkey v. Meenakshi Amma (1964 KLT 952) observed that in equity the property purchased by utilising the consideration of the impugned alienation has to be held as a benefit that accrued to the estate of the plaintiffs under the impugned alienation and that plaintiffs should be directed to give that benefit to the disappointed alienees. The Division Bench has applied the equitable principle embodied in three Sections viz. (1) Section 35 of the Transfer of Property Act. (2) Section 64 of the Indian Contract Act, and (3) Section 41 of the Specific Relief Act, 1877 corresponding to Section 33 of the Specific Relief Act, 1963. Section 35 of the Transfer of Property Act reads :
"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 concerned, and the benefit so relinquished shall revert to the transferor or his representative as it had not been disposed of,............"
8. The same is the principle in Section 64 of the Contract Act, the relevant portion of which reads :
"The part, rescinding a voidable contract shall, if he has received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received."
9. Reference was also made to Section 41 of the Specific Relief Act, 1877 which provides :
"On adjudging the cancellation of an instrument, the Court may require the party to whom such relief is granted to make any compensation to the other which justice may require."
That Section corresponds to Section 33 of the Specific Relief Act, 1963. Under the Old Act a plaintiff who obtained cancellation of a document could be asked to make compensation to the defendant. That provision has now been expanded by virtue of Section 33 which reads :
"(1) On adjudging the cancellation of an instrument, the Court may require the party to whom such relief is granted, to restore, so far as may be, any benefit which he may have received from the other party and to make any compensation to him which justice may require.
(2) Where a defendant successfully resists any suit on the ground--
(a) that the instrument sought to be enforced against him in the suit is voidable, the Court may, if the defendant has received any benefit under the instrument from the other party, require him to restore, so far as may be, such benefit to that party or to make compensation for it;
(b) that the agreement sought to be enforced against him in the suit is void by reason of his not having been competent to contract under Section 11 of the Indian Contract Act, 1972 (9 of 1972), the Court may, if the defendant has received any benefit under the agreement from the other party, require him to restore, so far as may be, such benefit to that party, to the extent to which he or his estate has benefited thereby."
In the present provision the following matters are provided for :
1. The plaintiff may be required by the Court to restore any benefit which he may have obtained under the document.
2. The principle of restoring the benefit can be applied in favour of a plaintiff in a case where the defendant successfully resists a suit on the ground that the instrument is void or that it is voidable and that he has avoided it, and
3. In a case where the contract is void by reason of the defendant being incompetent to contract, the defendant has to restore any benefit which he has actually received under the contract. In that case there is no liability to pay any compensation.
This Section is applicable to void and voidable instruments and the principle underlying the Section is that he who seeks equity must do equity.
10. Ordinarily the benefit which a party receives when he sells his property will be the price paid by the purchaser. As observed by the Privy Council in Muralidhar Chatterjee v. International Film Co., Ltd. (AIR PC 34) Sections 64 and 65 of the Indian Contract Act do not refer by the words "benefit" and ''advantage" to any question of "profit" or "clear profit" nor does it matter what the party receiving the money may have done with it. Relying on this decision it is strongly contended on behalf of the respondents that the remedy of the defendant is only to get back the consideration paid by him for the purchase. That was not a case where the consideration was utilised for purchase of a property whereby the seller was benefited. This question was considered by the Madras High Court and as early as 1918 in Chinnaswami Reddi v. Krishnaswami Reddi (AIR 1919 Madras 650) the law was laid down thus :
"Ordinarily, the benefit which a party receives when he sells the property is the price which the vendor pays. Any profits which the vendor might make with the moneys would be too remote in estimating what be has to return in case he is entitled to avoid the sale and elects to do so. Where however for the protection of a purchaser contracting with a guardian or a qualified owner, a particular dealing with the money was in the direct contemplation of the parties, such as the purchase of other lands with the consideration, and the money is so applied, the benefit which the other party obtains will be the land or other property acquired with the consideration."
11. Restoration of the benefit contemplated in Section 41 of the Specific Relief Act, 1877 came up for consideration before the Mysore High Court in Dyaviah v. Shivamma (AIR 1959 Mysore 188). It was held that while directing restoration the Court has to adjust the equities between the parties. It cannot allow the minor to retain the benefit he has secured under the very contract which he seeks to set aside. It is observed :
"To allow him to do so would be to give him a double advantage, to which he is not entitled."
12. I am in respectful agreement with the principles laid down, in the aforesaid decisions. The decision in Chinnaswami Reddi's case was followed by a Division Bench of this Court in Cheriathu Varkey's case (supra) wherein an identical question arose for consideration. The property of minors governed by the Travancore Nair Act was sold by their mother as guardian. With part of the consideration another property was acquired in the name of the mother and the children. The minors disowned the acquisition and sought recovery of possession. While sustaining the decree for recovery the Division Bench directed the plaintiffs to restore the benefit obtained by them, namely, three-fourth share of the property acquired in the name of the minors and their guardian. I am bound by the decision of the Division Bench. The result is that a direction for restoration of the benefit to the purchaser has to be issued while granting a decree for recovery of possession.
13. In this connection learned Counsel for the respondents has drawn attention to the decision of this Court in Chandrasekhars Pillai v. Kochu Koshi, (1961 KLT 1018) and the decision of the Punjab and Haryana High Court in Devinder Singh v. Shiv Kaur, (AIR 1970 Punjab & Haryana 549). In Chandrasekhara Pillai's case a Single Judge of this Court held that the benefit or advantage received by the plaintiffs' tavazhi under the impugned sale was only the sum that the tavazhi received as consideration for the sale and it is bound to restore the same before the property is recovered from the alienee. To hold so reliance was placed on the decision in Murlidhar' case, AIR 1943 PC 34 (supra). That was a case where a portion of the consideration was advanced for assignment of a mortgage right and not for acquisition of any property. It was in those circumstances that this Court, applying the principles laid down in the Privy Council decision directed the tavazhi only to restore the amount of consideration received under the document before the property is recovered from the alienee. That decision is therefore of no assistance to the respondents.
14. In Devinder Singh's case (supra) the Punjab and Haryana High Court held that the benefit under the contract of sale received by the minor from the vendees was only in the form of cash consideration and not the land purchased with that consideration. It is observed that the purchase of the land for the minor and the sale of the land in favour of the vendees were not one integrated transaction. It was therefore held that the land purchased cannot be said to be a benefit received by the minor for the vendees under the contract of sale. The absence of a stipulation in the sale deed enabling the purchaser to claim the land purchased with the consideration was also taken note of. On attaining majority the minor had accepted the purchase of the land and for that reason also the contract of the purchase could not be said to be a part of the voidable contract of sale with the vendees. The decisions of this Court is Chandrasekhara Pillai's case (1961 KLT 1018) and in Cheriathu Varkey's case (1964 KLT 952) were distinguished by the Punjab & Haryana High Court and it was held that the vendees are entitled to receive back only the sums paid by them to the mother of the minors. With respect I disagree with the views expressed in this decision. The provision contained in Section 33 of the Specific Relief Act, 1963 is not seen to have been considered by the Punjab & Haryana High Court There is a marked distinction between the acquisition of a property with the consideration paid by the vendee and any profit derived by the minors by utilising that consideration. I am bound by the Division Bench decision in Cheriathu Varkey's case where the law on this aspect has been laid down in clear terms. Devinder Singh's case (supra) is therefore of no assistance to respondents
15. Section 33 of the Specific Relief Act, 1963 empowers the Court to restore any benefit received by any party on adjudging the cancellation of an instrument. This cannot be claimed as a matter of right, but the Court has to exercise its discretion and grant relief which justice may require. This discretionary power of the Court to restore the benefit or to make any compensation rests on the principle of equity that parties are to be restored to the position which they occupied before the contract was entered into. The principle that he who seeks equity must do equity on which Section 30 of the Specific Relief Act, 1963 is based has therefore to be applied while granting restitution in the case of a void contract. Section 30 provides that on adjudging the rescission of a contract the Court may require the party to whom such relief is granted, to restore, so far as may be, any benefit which may have received from the other party and to make any compensation to him which justice may require. More or less similar phraseology is used in Section 33 also which empowers the Court to restore the benefit to the other party on adjudging the cancellation of an instrument. Whether the transaction is void or voidable, any party obtaining cancellation cannot therefore retain the benefit which he had secured under the contract which is seeks to set aside. As observed by the Mysore High Court in Dyaviah's case (supra) the party cannot be allowed to reap a double advantage. While exercising this discretion under Section 33 of the Specific Relief Act, the Court should have regard to all the circumstances of the case.
16. One of the circumstances noticed during the hearing of the case is the fraud practised on the defendant by the parents of the plaintiffs. The plea of fraud raised in the written statement was not attempted to be controverted by filing a rejoinder, with the leave of the Court, nor had plaintiffs cared to produce evidence to rebut the evidence adduced on the side of the defendant. The testimony of D.W. 1 relating to the part played by the father of the plaintiffs and his undertaking that the document executed by the mother will be valid and binding on the minors stands unchallenged. The father of plaintiffs had obtained permission from the District Court, Kozhikode in O.P. No. 157/1978 whereby permission was granted to him to sell this property of his minor children. That there was an order of Court granting permission to sell finds mention in the sale deed itself which makes mention of the petition before the District Court and the order thereon. The seller had made a declaration that the permission required for sale had been obtained. A copy of the order was not handed over according to the defendant and the fraud played on her was known only on getting a copy of the order from the Court which is produced as Ext. B-5 in the suit. It was thereafter that she approached the father of plaintiffs and required him to execute another deed for validating the transaction and the representation by him that the document is valid. The fraud played by the parents of the plaintiffs and the father in particular has thus been established beyond doubt.
17. Fraudulent representation is not an ingredient of Section 33 of the Specific Relief Act though the Court may also consider that question while granting restoration of the benefit as an equitable relief. That consideration is not relevant in the present case since fraud was played not by plaintiffs, but by their parents. Fortunately for defendant the consideration received by the guardian was utilised by her for acquiring another property in the name of the plaintiffs and that has enabled the defendant to seek restoration of the benefit to her in the event of the property purchased by her is being ordered to be recovered.
18. The property now claimed by the plaintiffs is situated near the national highway, the value of which the increased considerably since the date of sale whereas the other property is at an interior place. Though that property yields considerable income, it may not fetch that much value. That might have prompted the parents of the plaintiffs to instigate the son no attaining majority to institute a suit of this nature, to see whether the property could be recovered. That intention is manifested from the conduct of the parties in filing the suit within one year of the 1st plaintiff attaining majority. The intention of the plaintiffs appears to be to retain the property purchased in their names and to get possession of the plaint schedule property whereby they can reap a double advantage. The husband of defendant, as D.W. 1, has made a generous offer during his examination to transfer the plaint schedule property in case the other property purchased in the names of the minors is transferred to her and if the value of improvements effected by her is paid. Plaintiffs were not prepared to accept that offer and they had not moved in that direction. Counsel for respondents offered to pay the amount paid by the defendant as consideration. I fail to understand as to why such an offer was made by plaintiffs when they had not received any consideration whereas has entire consideration was received by the mother who is not a party to this litigation. The question of directing the plaintiffs to return the consideration received by their mother does not therefore arise. What has to be considered is only whether any benefit has been obtained by the minors and whether they are bound to return the same. I am therefore of the view that the testimony of D.W. 1 that plaintiffs are residing in the property purchased in the names of the minors and that are in possession of the same having not been challenged in cross-examination, the liability of plaintiffs to restore the benefit to defendant can be enforced in the suit.
19. Have plaintiffs obtained any advantage is the further question that requires consideration. On this aspect there cannot be any dispute. The sale of plaint schedule property was necessitated only for the purpose of acquising another property yielding more income. It was for that purpose that the father of the minors obtained permission from District Court, Kozhikode in O.P. 157/1978. That order was passed on 1-8-1978. True, the person who executed the document in the capacity as guardian is not the father who obtained the order from the District Court, but the mother of the children. The assignment deed in favour of defendant was executed three days later on 4.8.1978. Four duge thereafter another property was purchased in the name of the minors, the mother representing as the guardian. For that document Ext. B 1 the total consideration paid is Rs. 8000/- of which Rs. 6000/- represents the amount received under Ext, B 2 and the balance amount of Rs. 2000/- was contributed by the mother. The written statement contains a specific averment that the consideration paid under Ext. B 1. It is also everred that the plaintiffs are in possession and enjoyment of that property. The husband of defendant as D.W. 1 has spoken about the payment of consideration and the acquisition of Ext. B 1 property. He would even say in cross-examination that the consideration was paid into the hands of the vendor of Ext. B1. He has further stated that plaintiffs are residing in the property purchased under Ext. B 1. That is an extensive property having an area of more than one acre where there 61 yielding coconut trees and 200 yielding pepper vines apart from other trees. According to him, the minors are benefited by that acquisition. The testimony of D.W. 1 was not attempted to be controvorted by examining the vendor of Ext. B 1 or the mother of plaintiffs who participated in the transaction as guardian. There is thus clear and satisfactory evidence on the side of the defendant to show that the purchase under Ext. B 1 was made by utilising the consideration paid under Ext. B2. That purchase was made within four days of Ext. B2. It is in evidence that the acquisition of rights under Ext. B 1 was in the contemplation of the parties at the time of sale of plaint schedule property. That should therefore be treated as part of the same transaction. The benefit derived by the plaintiffs is therefore a direct result of the sale of under Ext. B 2. Whatever benefit derived by plaintiffs under that document is therefore liable to be restored to the defendant.
20. The claim of appellant for restoration of the benefit is opposed by respondent on the ground that no request was made in the written statement for such restoration. The absence of such a plea will not disentitle appellant from claiming restoration of the benefit since restoration has to be made on equitable principles sanctioned by the law contained in Sections 30 and 33 of the Specific Relief Act. The written statement contains a narration in detail of all the facts and circumstances which resulted in the impugned transaction Ext. B 2 and the acquisition of the rights under Ext. B 1. It is for the Court to evaluate pleas in the circumstances and then to work out the equities. The absence of the plea is therefore immaterial.
21. What is the extent of the benefit to which the defendant is entitled to the further question that has to be answered. The total consideration paid for acquiring Ext. B 1 property is Rs. 8000/- of which the consideration paid by the defendant represents only a part i.e. to the extent of Rs. 6000/- Even according to defendant the balance amount of Rs. 2200/-was contributed by the mother of the minors. That being so, defendant can claim only the proportionate share over that property. In other words, she can claim only three-fourth share in that property. What has be restored to the defendant is not entire property, but only three-fourth. In the event of plaint schedule property being recovered from the defendant, plaintiffs have to restore possession of three-fourth of Ext. B 1 property to the defendant.
22. Defendant has claimed value of improvements. The Trial Court did not award value of improvements. The lower Appellate Court has permitted the defendant to remove the house constructed by her. According to appellant the lower Appellate Court was wrong in not awarding the value of the building put up her in the property. This contention appears to be well-founded. The Kerala Compensation for Tenants Improvements Act, 1955 enables defendant to claim the value. "Tenant" as defined in that Act includes a person who comes into possession of land belonging to another person and makes improvements thereon in the bona fide belief that he is entitled to make such improvements. It is not disputed that defendant is a person who has come into possession of this property and had made improvements thereon believing that he is entitled to do so. Section 4 of the Act directs that every tenant to whom compensation for improvements is payable shall be entitled to remain in possession until the compensation is paid. The Division Bench in Cheriathu Varkey's case (1964 KLT 952) has recognised this right of the purchaser and a direction was given to the Trial Court to determine the value of improvements effected by the purchaser and to make necessary provision in the decree. The defendant will therefore be entitled to get the value of improvements effected by her over the property since the date of Ext. B 2.
23. In the result the second appeal is allowed and in modification of the judgments and decrees of the Courts below, a decree is passed in the following lines :--
1. Plaintiffs are granted a decree for recovery of possession of the plaint schedule property from the defendant.
2. The grant of decree is subject to the condition of plaintiffs' restoring the benefits obtained by them under Ext. B 1 to the defendant.
3. While the decree is being put in execution, plaintiffs shall restore 3/4th of the benefit obtained by them under Ext. B 1. In other words, 3/4th of the property purchased under that document shall be got demarcated and transferred to defendant.
4. The demarcation of 3/4th of the property purchased under Ext. B 1 shall also be done during the proceedings in execution by which the decree for recovery of possession is sought to be executed.
5. Plaintiffs will be liable to pay the value of improvements effected by defendant in the plaint schedule property since the date of Ext. B 2. The value of improvements so payable shall also be determined in the execution proceedings.
6. The value of improvements effected by plaintiffs since the date of Ext. B 1 over that part of the property which they have to surrender to the defendant shall also be determined and directed to be paid to plaintiffs.
7. The parties will be at liberty to adjust the value of improvements payable by each towards the value of improvements to be received by them and necessary provision will be made for the payment of the balance.
8. The parties are directed to suffer their costs throughout.