Karnataka High Court
Mrs. Sushila A. Dass vs Mrs. Mary Boiger on 14 March, 1988
Equivalent citations: ILR1988KAR1413, 1988(1)KARLJ563
JUDGMENT Bopanna, J.
1. This is a defendant's appeal against the Judgment and Decree of the trial Court in O.S. No. 216/85 decreeing the suit of the plaintiff for specific performance of the contract entered into between the parties in respect of the sale of land measuring about 12 acres situate in Kogilu village, Yelahanka Hobli, Bangalore North Taluk.
2. The facts are not in serious controversy since the sale agreement between the parties is not disputed and the subsequent agreement in the form Of a receipt modifying the earlier agreement is also not in dispute. The only plea raised in this appeal is that the trial Court was in error in exercising the discretion in favour of the plaintiff under the provisions of Section 20 of the Specific Relief Act, 1963 (in short the 'Act').
3. The parties are no strangers to each other. The plaintiff a Foreign National appears to have met the defendant earlier in Coonoor and after personal discussions it was agreed that the defendant would sell the suit property to the plaintiff for Rs. 1,10,000/. Accordingly, an agreement of sale Ext.P-1 came into existence on the 21st of November 1980. In terms of the agreement of sale, the plaintiff paid the defendant the total sale consideration of Rs. 1,10,000/- in instalments as is evidenced in Ext.P-2 i.e. the receipt executed by the defendant in favour of the plaintiff. In that receipt a recital is incorporated to the following effect :-
"The formal deed of sale shall be executed and registered immediately after the purchaser receives the required permission to purchase the land."
4. It is common ground that the plaintiff had not received the permission from the authorities as required under Section 79A of the Karnataka Land Reforms Act, 1961 (in short the 'K.L.R. Act') when she instituted the suit against the defendant. The plaintiff had admitted in her deposition before the trial Court that her application seeking permission of the authorities for purchasing the land is still pending, but all the same she had become an agriculturist in view of the fact that she had already acquired land in Tamilnadu measuring about one acre and she had already started agricultural operations in the land in question by virtue of the document-Ext.P-2 under which she was put in possession of the suit land. There is no dispute that vacant possession of the entire property was delivered to the plaintiff on the date she paid the full sale consideration as is evidenced in Ext.P-2. So the plaintiff's contention before the trial Court was that she having paid the full consideration for the suit land and she having became an Indian Citizen after the filing of the suit, she was entitled to purchase the land in terms of the agreement-Ext.P-1 notwithstanding the fact that she had not obtained the permission from the authorities concerned under the K.L.R. Act. The defendant was willing to stand by the agreement as could be seen from some of the letters which are marked as exhibits before the trial Court. In Ext.D-9, which is a letter dated 28-2-1984, written by the defendant before the suit was filed she has stated as follows :
"I have already declared the proposed sale of my land to the Income Tax Authorities and on their advice the sum of Rs. 1,10,000/- paid by you is being treated as a Loan until such time as the land is registered in your name. It is therefore, not possible for me to agree to the three plots being registered on different dates, nor is it possible for me to give a Power of Attorney to Mr. De'Souza to register the documents. I am however, prepared to come to Bangalore at any time to register the documents and I sincerely hope that this will not be delayed much longer."
So, even in the early part of 1984, the defendant was not perturbed by the fact that the plaintiff had not obtained the requisite permission from the authorities concerned for purchasing the land and that the plaintiff at the time of executing the agreement of sale was not an Indian Citizen. But, it transpires that sometime in 1982 the defendant offered to return the entire sale consideration to the plaintiff and treat the agreement as cancelled. But, subsequently the defendant had changed her mind to cancel the agreement and had agreed to execute the sale deed in favour of the plaintiff. In Ext.D-7, a letter dated 20th of December, 1982, the defendant had written to the plaintiff's husband as follows :-
"you will appreciate that I have given you sufficient time to fulfil our understanding.
As you have failed to do so, I will appreciate if you will return my documents and collect your deposit made by you to me."
In the postscript found in that Ext.D-7 the defendant had brought to the notice of the plaintiff's husband that she had not received any reply to many of her letters or telephone calls to the plaintiff requesting her to expedite the registration of the land. In that letter she had further stated that the plaintiff had informed her that she had got the Indian Citizenship. But, at no stage in the course of correspondence between the parties regarding the sale transaction, defendant had made a grievance about the plaintiff's inability to obtain the necessary permission from the authorities concerned for completing the sale transaction and regarding the plaintiff's incapacity to acquire the land being a Foreign National without the permission of the Reserve Bank of India as required under Section 31 of the Foreign Exchange Regulation Act (in short the 'F.E.R. Act). However, as noticed earlier, the defendant had again gone back on her promise under the suit agreement and therefore the plaintiff was constrained to file the suit for specific performance of the contract.
5. Prior to the filing of the suit, the plaintiff issued a legal notice to the defendant as per Ext.D-14 dated 3-8-84 and in that notice the plaintiff had informed the defendant that she had also sent a draft sale deed as soon as she became eligible to purchase the land for the purpose of obtaining clearance certificate under Section 230A of the Income Tax Act. In that notice the plaintiff had called upon the defendant to execute and register the deed of sale in her favour within 10 days from the date of receipt of the notice, failing which she had proposed to institute legal proceedings against the defendant. This notice was suitably replied by the defendant and only in that reply she offered to refund the sale consideration received by her provided the plaintiff returned all the original documents pertaining to the suit land.
6. As noticed earlier, the sale agreement is not in dispute and the receipt of the consideration is not in dispute. The only point that is raised in this appeal is that the Court below was in error in exercising its discretion in favour of the plaintiff under Section 20 of the Act.
7. Mr. John D'Souza, learned Counsel for the defendant-appellant submitted that the plaintiff had obtained the draft sale deed by mis-representation of facts and that is evident from the fact that in the draft sale deed Ext.P-17 there was no mention of the fact that the plaintiff was qualified to hold the suit land, that the plaintiff has supressed the fact that her husband was not an Indian Citizen and he does not want to become an Indian Citizen; that it is on record that the plaintiff paid the sale consideration from the amounts received from her husband from time to time from England; that taking into consideration the entire scheme of the K.L.R. Act alienation of agricultural land by a person who is not an agriculturist is not permitted as the K.L.R. Act is a beneficial piece of legislation designed to protect the interest of persons belonging to poorer-section of the society; that the trial Court ought not to have exercised the discretion by making a decree for specific performance in favour of the plaintiff; that the document in question is a benami document since the evidence discloses that the plaintiff had no sums of her own to pay the suit transaction, but she got the money from her husband and as gifts from her brother and sister and paid the sale consideration and therefore that fact ought to have been taken into consideration by the trial Court in the exercise of the discretion in favour of the plaintiff ; that the application seeking permission from the Assistant Commissioner said to have been filed by the plaintiff on 3-8-1981 still remains pending with the authorities and therefore even on the date of the suit, the plaintiff was not competent to acquire the agricultural land in terms of the provisions of Section 79 of the K.L.R. Act ; that the trial Court failed to take into consideration the scope of amendment to Section 80 of the K.L.R. Act ; that in Section 80(b) of the K.L.R. Act the legislature has substituted the word 'lawful' for the word Valid' ; that the meaning of the word 'lawful' is more comprehensive than the meaning of the word Valid' and that only shows that the trial Court should have given full effect to the amendment made to Section 80(b) of the K.L.R. Act and given a finding against the plaintiff on the ground that the plaintiff being a Foreign National, and not an agriculturist and having not obtained the permission from the authorities for purchasing the agricultural land, she was not entitled to the equitable relief of specific performance. Aditionally Mr. John D'Souza contended that on a plain reading of Section 31 of the F.E.R. Act the plaintiff at the time of entering into the suit transaction was not a Indian Citizen and therefore she could not have been put in possession of the suit land in contravention Of Section 31 of the F.E.R. Act and hence the equitable relief of specific performance could not have been granted in her favour. One more ground Mr. John D'Souza urged against the finding of the trial Court on the question of discretion is that the trial Court having negatived the plea of the plaintiff that the defendant had asked for a higher price but the plaintiff had refused to pay the same, the trial Court should have found that the plaintiff did not come out with truth in her evidence before the trial Court and therefore on that ground alone she was not entitled to the equitable relief of specific performance. He submitted that the plaintiff had deliberately made false assertions in her evidence and that there was no proof of bona fides either in her plaint or in her deposition and thus the trial Court did not exercise the discretion in a judicious manner as required under Section 20 of the Act.
8. There is no dispute that the illustrations given under Section 20 of the Act are only illustrative and not exhaustive. So, even if those illustrations do not cover the factors which are found on record against the plaintiff viz., the absence of permission from the authorities concerned for purchasing agricultural land and the want of capacity to acquire the land at the time of entering into the suit agreement since she admittedly had not obtained the Indian Citizenship, could be taken into consideration by the trial Court for exercising its discretion.
9. We will take up the first contention based on the provisions of Sections 79 and 80 of the K.L.R. Act since it raises a legal contention and there is no need to go into the facts of the case for recording a finding on that issue. What all Section 79A(1) states is that :
"On and from the commencement of the Amendment Act, no person who or a family or a joint family which has an assured annual income of not less than rupees twelve thousand from sources other than agricultural lands shall be entitled, to acquire any land whether as land owner, landlord, tenant or mortgagee with possession or otherwise or partly in one capacity and partly in another."
Sub-section (3) of Section 79A states that :
"Every acquisition of land otherwise than by way of inheritance or be quest in contravention of this section shall be null and void.
But, Sub-section (4) of Section 79A stipulates that :
"Where a person acquires land in contravention of Subsection (1) or acquires it by bequest or inheritance he shall, within ninety days from the date of acquisition, furnish to the Tahsildar having jurisdiction over the Taluk where the land acquired or the greater part of it is situated a declaration containing the following particulars, namely :-
(i) particulars of all lands ;
(ii) the average annual income of himself or the family ;
(iii) such other particulars as may be prescribed."
Sub-section (5) of Section 79A states that:
"The Tahsildar shall, on receipt of the declaration under Sub-section (4) and after such enquiry as may be prescribed send a statement containing the prescribed particulars relating to such land to the Deputy Commissioner who shall, by notification declare that with effect from such date as may be specified in the notification, such land shall stand transferred to and vest in the State Government without further assurance free from all encumbrances. From the date specified in such notification the Deputy Commissioner may take possession of such land in such manner as may be prescribed."
Section 79-B(1) states that :
"With effect on and from the date of commencement of the Amendment Act, except as otherwise provided in this Act :-
(a) no person other than a person cultivating land personalty shall be entitled to hold land ;
(b) xx xx xx Section 80 of the K.L.R. Act states that :
"(1)(a) No Sale (including sales in execution of a decree of a civil Court or for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue), gift or exchange or lease of any land or interest therein, or
(b) no mortgage of any land or interest therein, in which the possession of the mortgaged property is delivered to the mortgagee, shall be lawful in favour of a person :-
(i) who is not an agriculturist, or ;
(ii) who being an agriculturist holds as owner or tenant or partly as owner and partly as tenant land which exceeds the limits specified in Section 63 or 64; or
(iii) who is not an agricultural labourer ; or
(iv) who is disentitled under Section 79-A or Section 79-B to acquire or hold any land :
Provided that the Assistant Commissioner having jurisdiction over the area or any officer not below the rank of an Assistant Commissioner authorised by the State Government in this behalf in respect of any area may grant permission for such sale, gift or exchange, to enable a person other than a person disentitled to acquire or hold land under Section 79-A or Section 79-B who bona fide intend taking up agriculture to acquire land on such conditions as may be prescribed in addition to the following conditions, namely :-
(i) that the transferee takes up agriculture within one year from the date of acquisition of land, and
(ii) that if the transferee gives up agriculture within five years, the land shall vest in the State Government subject to payment to him of an amount equal to eight times the net annual income of the land or where the land has been purchased, the price paid for the land, if such price is less than eight times the net annual income of the land.
(2) Nothing in Sub-section (1) shall apply to lands granted under Section 77."
10. What is the effect of Section 79A if the same is read with Section 80 of the K.L.R. act. A similar question came up for consideration before a Division Bench of this Court in NEMINATH APPAYYA HANAMANNAVAR v. JAMBURAO SATAPPA KOCHERI, 1965(1) Mys. L.J. 442. Though Section 80 in terms did not come up for consideration before the Division Bench, Sections 34 and 35 of the Bombay Tenancy and Agricultural Lands Act which contained a provision prohibiting the sale of land in violation of the ceiling limit came up for consideration before the Division Bench of this Court. In that case the plaintiff sued for specific performance of an agreement of sale executed by defendant under which defendant agreed to convey to plaintiff jirayat lands measuring 41 acres and 26 guntas. It was admitted that the plaintiff was on the date of suit in possession of 11 acres and 1 gunta of jirayat land. If to this area, the area of suit lands is added, the plaintiff would be in possession of 52 acres and 27 guntas of jirayat land which would exceed the ceiling area of 48 acres of jirayat land. The Civil Judge held that the agreement if permitted would defeat the pro visions of Sections 34 & 35 BTAL Act and was therefore void under para 3 of Section 23 Contract Act. The finding of the trial Court that the contract could not be enforced was reversed in appeal by the Division Bench. Somnath Iyer J. as he then was speaking for the Division Bench observed as :-
"All these possibilities demonstrate that the performance of the agreement does not necessarily involve the transgression of the 35th Section of the Bombay Tenancy and Agricultural Lands Act, it being plain that performance of that agreement otherwise than by disobedience to the law is equally possible. If that be the true position, the suit agreement does not fall within the 23rd Section of the Contract Act and cannot, therefore, be pronounced void."
The Division Bench further observed as :-
"In the view that we should in my opinion take, it follows that the argument advanced that every agreement of sale executed in favour of a person for the sale of property the area of which when added to the area already in the possession of the person in whose favour the agreement of sale stands, would exceed the ceiling area must necessarily result in transgression or disobedience to the provisions of Section 34 or Section 35 of the Bombay Tenancy and Agricultural Lands Act cannot therefore succeed. We should not, in my opinion accede to the argument that in every such case there would necessarily be an illegal acquisition to which Section 35 refers. The agreement would fall within the third paragraph of Section 23 of the Contract Act only if it was possible to say that such illegal acquisition was the inevitable and necessary consequence of the performance of the agreement. If, as already demonstrated, such is not the position and by reason of many things which are possible the plaintiff who wishes to sue on the agreement can ask for delivery of possession of the property which had been agreed to be sold to him without such delivery of possession producing any illegal acquisition to which Section 35 refers, the performance of the agreement would not defeat the provisions of the law."
This decision of the Division Bench was challenged by the unsuccessful defendant before the Supreme Court and the Supreme Court has affirmed the ruling of this Court in JAMBU RAO SATAPPA KOCHERI v. NEMINATH APPAYYA HANAMANNAVAR, . The very same principle would be applicable to the interpretation of the provisions of Section 79A and 80 of the K.L.R. Act. It is for the authorities conferred with the powers under the K.L.R. Act to examine the legality of the transactions and not for the Civil Court.
11. The provisions of Section 80 of the K.L.R. Act prior to the amendment was also considered by this Court in a number of cases and this Court has consistently taken the view that there is no bar for the Civil Court to grant the specific performance of contract of sale of agricultural land notwithstanding the provisions of Section 80(b) of the K.L.R. Act. Mr. John D'Souza submitted that those decisions were not applicable to the facts of this case since admittedly the suit transaction was entered into after the amendment to Section 80(b) of the K.L.R. Act. We do not Think so. The amendment was effected not with a view to take away the jurisdiction of the Civil Court to grant specific performance of contract of sale of agricultural land, but to enlarge the area of jurisdiction of the authorities concerned for impeaching the transaction entered into in violation of the provisions of Section 80 of the K.L.R. Act.That amendment in our view was effected to get over the Judgment of this Court in VICON LTD. & ORS. v. ASSISTANT COMMISSIONER, BANGALORE REVENUE DIVISION, 1979(1) KLJ 383. In that case Kudoor J. has taken the view that :
"There is a clear distinction between illegal transactions in contravention of the provisions of law and transactions merely declared to be void or invalid. Every illegal transaction is void but every void transaction is not illegal.
Section 80 Land Reforms Act declares that certain transactions shall not be valid in favour of certain persons. Section 80(1) does not prohibit any transaction but merely declares that the transactions referred to would not be valid. Transactions falling within Section 80 are not only not forbidden by law and therefore not illegal, but are also not really invalid, being legally effective. Transactions falling under Section 80 being legally effective, any inquiry with respect to such transactions are wholly outside the jurisdiction of the prescribed authority under Section 83 of the Act, whose function is to hold inquiry regarding illegal transactions."
To get over this ruling of this Court the amendment was effected by the legislature by substituting the word 'lawful' for the word Valid'. So the scope of the amendment should not be extended beyond what the legislature had intended in the light of the decision of this Court in the aforesaid case. The substitution of the word 'lawful' for the word Valid' would not take away the jurisdiction of the Civil Courts to grant relief in a suit for specific performance in relation to agricultural property. Therefore the decisions of this Court in SHIVANNAPPA SIDRAMAPPA PRANTUR v. VIRUPAXAPPA ALLAPPA BAGI, ILR (Karnataka) 1980(1) 702 and in JOSE v. ANANTHA BHAT, still hold the field notwithstanding the amendment to Section 80(b) of the K.L.R. Act. On the very same principle even assuming that there is a violation of Section 79A of the K.L.R. Act, the agreement in question to sell the agricultural land will not become void and consequently unenforceable.
12. The second point need not detain us for long, since the plaintiff had become an Indian Citizen after the filing the suit and it is well settled that the subsequent developments could be taken into consideration for exercising the equity jurisdiction.
13. So, the next point for consideration is whether the discretion exercised by the trial Court in favour of the plaintiff calls for interference. Mr. John D'Souza submitted that even now the defendant is prepared to execute a deed in favour of any third party for the very same price if that third party is not disqualified from purchasing the land. According to him the defendant had gone back on her commitment to execute the sale deed since plaintiff was a Foreign Citizen and the money had come from her husband and her husband had no intention of becoming an Indian Citizen. The plea of benami was not taken before the trial Court and what is not pleaded cannot be urged against the plaintiff. So the only other factor which disentitled her to enforce the suit agreement is her inability to get permission from the authorities concerned for acquiring the land. This is a matter to be adjudicated by the authorities concerned when she obtains a sale in her favour. There is sufficient evidence to hold, that after she was put in possession of the land, she had began cultivating the land and she was also cultivating the land in Ramanathpuram District in Tamilnadu before she filed the suit. So that is a matter which has to be taken into consideration in her favour when there is no dispute that she has paid the full sale consideration and that pursuant to Ext.P-2 she was put in possession of the suit property.
14. The defendant did not impose a condition in Ext.P-2 when plaintiff was put in possession of the suit property that she would be dispossessed of the same in case she did not get permission under the F.E.R. Act or did not comply with Sections 79 and 80 of the K.L.R. Act. But, Mr. D'Souza Placing reliance on one of the recitals in Ext.P-2 submitted that the condition precedent for executing the sale deed was that the plaintiff should obtain the requisite permission to purchase the land and since that condition precedent was not complied with, the defendant was within her rights to back out of the suit agreement. We have already excerpted that recital in the earlier part of our Judgment. A scrutiny of this recital would show that the defendant did not impose a condition precedent on the plaintiff for executing the sale document. What all was agreed between the parties in the light of that recital is that the defendant should execute and register the sale deed immediately after the plaintiff received the required permission to purchase the land. This recital at best may show that the parties had agreed to go through the sale transaction immediately after the plaintiff acquired the necessary permission to purchase the land, but that did not create a condition precedent in favour of the defendant. As noticed earlier, even though the defendant in the month of December, 1982, had agreed to refund the sale price paid by the plaintiff she had subsequently changed her mind and what all she wanted was that the plaintiff should conclude the sale transaction as early as possible. In Ext.D-9 dated 28-2-1984 the defendant had written to the plaintiff as follows :-
"I have already declared the proposed sale of my land to the Income Tax Authorities and on their advice the sum of Rs. 1,10,000/- paid by you is being treated as a loan until such time as the land is registered in your name. It is, therefore, not possible for me to agree to the three plots being registered on different dates, nor is it possible for me to give a Power of Attorney to Mr. De'Souza to register the documents. I am however, prepared to come to Bangalore at any time to register the documents and I sincerely hope that this will not be delayed much longer."
This reply was made in connection with the request made by the plaintiff to register the suit land in three parts obviously for gaining some tax concessions. However, in Ext.D-13 dated 6th of August 1984 the defendant appears to have taken a stand that it was within her rights to go back on the suit agreement on the advice of her Lawyer who had told that she had a very strong case. The defendant has not adduced any evidence. It is not possible to find out what exactly transpired between the parties which prompted the defendant to take a stand in the latter part of 1984 that she was not bound by the terms of the suit agreement. There is nothing on record to show that the plaintiff was not willing to perform her part of the suit agreement, but the only plea of the defendant is that the plaintiff was not competent to acquire the suit land and therefore she (the defendant) was not bound by the suit agreement. We have already held that there is no force in this contention.
15. The contention of Mr, John D'Souza thai his client is prepared to execute the sale deed in favour of arty other party who is not disqualified to hold agricultural land should be considered at this stage. This offer was not made before the trial Court, but it is for the first time it is made before us. Therefore, the bona fides of the defendant should be taken into consideration for accepting this plea. In this connection learned Counsel for the plaintiff-respondent has invited our attention to Ext.P-15, which is a letter written by the defendant to the plaintiff asking certain clarifications from the plaintiff regarding the sale consideration to be mentioned in the sale deed. The defendant was worried about the higher rate of tax if the real sale consideration were to be mentioned in the document and there fore she had requested the plaintiff to consider whether a lesser figure could be mentioned in the document. To quote her own words :-
"It is necessary for me to know the exact figure quoted on the sale deed for my own income tax and wealth lax assessment for this year which is pending till my return. I do not want to pay all I received in taxes as I have already sold the property to you at a very reasonable price."
From this letter the Dona fides of the defendant's offer to sell to any other party need not be seriously considered.
16. Though the plaintiff has not proved the plea that the defendant had asked for a higher price, the trial Court has rightly exercised the discretion in favour of the plaintiff as she had become an Indian Citizen, as her application to acquire agricultural land is still pending consideration before the authorities concerned and she has adduced evidence to show that she has become an agriculturist.
17. Mr. D'Souza submitted that the plaintiff was only a benami for her husband and that ground should have been taken against her. As noticed earlier, this plea was not specifically pleaded before the trial Court though there is some material that the plaintiff obtained money from her husband. Even then this is not a matter which would go against the plaintiff since the defendant could always execute sale deed in favour of the plaintiff and her husband to avoid any claim by her husband at a future date.
18. For these reasons, this appeal fails and it is dismissed. But, in the circumstances of the case, the parties shall bear their own costs.