Divyesh A. Joshi, J
1. Rule returnable forthwith. Learned advocate Mr. R.J. Goswami waives service of notice of rule for and on behalf of the respondent Nos.1 and 2.
The respondent Nos.3, 4 and 5, although served with the notice issued by this Court, have chosen not to appear before this Court either in person or
through an advocate and oppose the present applications.
2. Since the challenge in both the applications are to the selfsame common judgment and order arising out of the same proceedings, those were heard
analogously and are being disposed of by this common judgment and order.
3. For the sake of convenience, the Criminal Revision Application No.50 of 2021 is treated as the lead matter.
4. This Civil Revision Application filed under Section 115 of the Code of Civil Procedure, 1908 is arising out of the common judgment and order
12.01.2021 passed by the learned 3rd Additional Senior Civil Judge, Surat, whereby the applications submitted by the applicants-original defendant
Nos.1,2 and 5 to 8 under Order VII Rule 11(d) of the Civil Procedure Code, 1908 (for short ‘CPC’) in the suit came to be rejected.
5. The facts emanating from Civil Revision Application No.50 of 2021 are that the applicants herein are the original defendant Nos.1,2 and 5 to 8 and
the respondent Nos.1 and 2 herein are the original plaintiffs and the respondent Nos.3 to 5 are the original defendant Nos.3,4 and 9. For the sake of
convenience, the parties herein shall be referred to in terms of their rank and status before the Trial Court.
6. The original plaintiffs preferred the suit being Special Civil Suit No.101 of 2019 against the defendant Nos.1,2 and 5 to 8 as well as against the
defendant Nos.3, 4 and 9, seeking specific performance of contract, declaration, permanent injunction as also for cancellation of the sale deed, inter
alia, contending therein that the land bearing Survey No.345/1 of village Rander, Taluka: Choryasi, District: Surat admeasuring 1010 square meters,
which upon implementation of the Town Planning Scheme No.23, came to be reconstituted as Final Plot No.95 (for short ‘suit land’) was
alleged to have been purchased by the original plaintiffs from the predecessor of the defendant Nos.1,2, and 5 to 8, for which, an unregistered
agreement to sell dated 29.03.2001 came to be executed in favour of the original plaintiffs, whereby the possession of the suit property was also
handed over to the original plaintiffs.
7. It is further alleged in the suit that the suit land was a new tenure land, and it was agreed upon between the parties at the time of execution of the
agreement to sell that after getting permission from the competent government authority for conversion of the land from new tenure to old tenure, the
sale deed would be executed in favour of the original plaintiffs, and the proposed expenses towards the said procedure had to be incurred by the
predecessor of the defendant Nos.1,2 and 5 to 8. It is alleged that, despite the aforesaid understanding, the defendant Nos.1,2 and 5 to 8 failed and
neglected to get the permission from the competent authority, and after lapse of some period of time, when the original plaintiffs smacked of
something wrong, upon inquiry being made from the revenue office, they came to know that the suit land had also been sold to the defendant No.9 in
the year 2018 after getting it converted into old tenure. As soon as the original plaintiffs came to know about the same, they immediately filed the suit,
seeking decree for specific performance of contract as well as for declaration, permanent injunction and cancellation of the sale deed.
8. On being subpoenaed by the concerned trial court, the defendant Nos.1,2 and 5 to 8 appeared and filed an application Exh.17 under Order VII Rule
11 of the CPC, for rejection of the plaint, However, by a brief order, without proper application of mind, the said application came to be rejected vide
impugned order dated 12.01.2021. Similarly, identical application under Order VII Rule 11 filed by the defendant No.9, i.e., the applicant of cognate
application also came to be rejected on the same day by passing order below Exh.22, which order is the subject matter of Civil Revision Application
No.51 of 2021.
9. Being aggrieved, the defendant Nos.1,2 and 5 to 8 are here before this Court with the present application.
10. Learned senior advocate Mr. Percy Kavina assisted by learned advocate Mr. Viral K. Salot appearing for the defendant Nos.1,2, and 5 to 8 has
vehemently contended that this filing of civil suit i.e. Regular Civil Suit No. 101 of 2019 is nothing but a glaring example of abuse of the process of law
since the suit has been filed after almost a period of more than 18 years, seeking specific performance of the unregistered agreement to sell executed
29.03.2001, and as such, the suit is hopelessly time barred and to allow adjudication of such hopelessly time barred suit would tantamount to be an
abuse of the process of law. It has been further contended that the learned trial judge, at the time of deciding the application Exh.17, has recorded the
clear cut findings that when the alleged agreement to sell came to be executed, the suit land was a new tenure land being hit by the provisions of
Section 43 of the Tenancy Act, 1948, and there is no dispute about the same. The said findings of the learned trial judge is unchallenged, and as such,
can be said to be attained finality so far as the issue pertaining to bar of Section 43 of the Tenancy Act is concerned. He has also contended that the
said fact was also well within the knowledge of the original plaintiff while entering into the agreement to sell. Thus, if the agreement itself is invalid, no
decree for specific performance can be granted by the learned trial court and, therefore, the learned trial court ought to have allowed the application
filed by the defendant Nos.1,2, and 5 to 8.
11. Learned senior advocate Mr. Kavina has further contended that the issue involved in the present matter has been elaborately discussed and
decided by the Division Bench of this Court (Coram: Hon’ble Mr. Justice J.B. Pardiwala & Hon’ble Mr. Justice A.C. Rao) in the case of
Ganpatlal Manjibhai Khatri vs. Manguben Babaji Thakor, First Appeal No.4979 of 2018, decided on 02.08.2019, wherein it has been held that the
plaint is liable to be rejected on the ground that the suit for specific performance based on illegal or invalid agreement is not maintainable, and as such,
contract is not enforceable. He has, therefore, contended that thus an agreement to sell with respect to a new tenure land being hit by the restriction
of Section 43 of the Bombay Tenancy Act is not enforceable in law and, therefore, a suit for specific performance based on such an invalid
agreement is not maintainable in law. Learned senior advocate Mr. Kavina has also contended that while rejecting the application Exh.17, the learned
trial judge has recorded the findings that in view of the alternative relief being prayed by the plaintiffs in the suit for compensation in lieu of the amount
paid by them as earnest money, the suit no longer remains to be only for specific performance of contract, but is also for seeking compensation of the
loss incurred by the plaintiffs, and on this ground also, rejected the application Exh.17, which is illegal, unjust, improper, perverse and, therefore,
required to be interfered with in view of the principles enunciated by the Division Bench of this Court (Coram: Hon’ble Mr. Justice J.B. Pardiwala
& Hon’ble Ms. Justice Vaibhavi D. Nanavti) in the case of Vijaybhai Shambhubhai Patel vs. Sushilaben Dayalbhai, First Appeal No.1556 of 2021,
decided on 21.06.2021, wherein also, in an identically situated facts, seeking compensation by way of an alternative prayer, the Division Bench has
dismissed the appeal by confirming the order passed by the learned trial court, rejecting the plaint. He has, therefore, contended that the aforesaid
findings recorded by the trial court is erroneous because when the agreement itself is invalid and suit for specific performance is not maintainable,
there is no question to grant an alternative relief of compensation.
12. In the last, learned senior advocate Mr. Kavina has put reliance upon the recent Division Bench decision of this Court (Hon’ble Mr. Justice
Biren Vaishnav & Hon’ble Ms. Justice Nisha M. Thakore) in the case of Ashokbhai Madhubhai Patel vs. Madhubhai Jagubhai Patel & Ors., First
Appeal No.2346 of 2024, decided on 10.07.2024, and has submitted that where the party himself is aware about the illegality on the maxim of pari
delicto, such a person cannot claim the relief of even compensation on being wronged at the hands of the plaintiffs. Herein, in the case on hand, when
the alleged agreement to sell was executed in the year 2001, the plaintiffs were very well aware that the land is of a new tenure land, and they being
the non-agriculturists, there are restrictions under the statute itself on such type of transactions. Despite the same, the plaintiffs entered into the
alleged agreement, and thus, the principle of pari delicto would come into play.
13. In such circumstances, referred to above, learned senior advocate Mr. Kavina prays that there being merit in this application, the same be allowed
and the impugned order be quashed and set aside.
14. To counter the submissions made by learned Senior advocate for the applicants, learned advocate Mr. Lakshit Patel for learned advocate Mr. R.J.
Goswami, representing the contesting respondents i.e. respondent Nos.1 and 2, who are original plaintiffs, vehemently opposed the revision
applications and has submitted that there is no error committed by the court below in passing the impugned order. It has been submitted by Mr. Patel
that a bare reading of the applications is suggesting that except the issue of limitation and bar of Section 43 of the Tenancy Act, there are no other
contentions raised and, therefore, the applicants have have very deliberately tried to obtain the order in their favour keeping aside the other important
issues of locus standi and cause of action, which are now not possible to be agitated by the applicants at this stage of the proceedings. He has further
submitted that it is an admitted position of fact that the plaintiffs entered into an agreement to sell either with the defendant Nos.1,2 and 5 to 8 herein
or their predecessor in the year 2001, and at that point of time, a very handsome amount was paid by the plaintiffs to the applicants on the assurance
that they would convert the said land into old tenure land, as the land was new tenure land. It is agreed upon between them that, after the land being
converted into old tenure land, the defendant Nos.1,2, and 5 to 8 would execute the registered sale deed in favour of the plaintiffs. The said restrictions
under Section 43 of the Tenancy Act were removed by the order of the Collector in the year 2018, and as soon as the said restrictions were removed,
immediately the plaintiffs contacted the defendant Nos.1,2 and 5 to 8 to get the sale deed executed. However, they have rescind from their earlier
version, and on the contrary created third party rights over the suit land by executing registered sale deed in favour of the defendant No.9, behind the
back of the plaintiffs, which compelled the plaintiffs to file the suit seeking specific performance of the contract or to get back the earnest money.
Learned advocate Mr. Limbani has submitted that he is not raising any objections so far as the issue of bar of Section 43 of the Tenancy Act is
concerned in view of the recent decision of the Hon’ble Full Bench of this Court passed in Second Appeal No.208 of 2021, decided on
12.01.2024. However, so far as the alternative prayer for compensation is concerned, he is relying upon Section 65 of the Contract Act, and has
submitted that as per the provisions of Section 65 of the Contract Act, the plaintiffs are entitled to get back the earnest money. He has submitted that
as per the said Section 65, the vendor is liable to refund the amount received by him from the vendee as an earnest money at the time of execution of
the agreement to sell. In support of his submissions, learned advocate Mr. Patel has put reliance upon the following decisions;
(i) In the case of Tulsibai Wd/o Ramkrishna Avatde vs. Rajani Wd/o Rajkumar Punyani & Anr., reported in 2010 (6) Mh.L.J, 371;
(ii) In the case of Basavantappa vs. Irappa (Dead) by legal representatives & Ors., reported in (2015) 16 SCC 124;
15. In such circumstances, referred to above, learned advocate Mr. Patel prays that there being no merit in this application, the same be rejected.
16. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for my
consideration is whether the plaint is liable to be rejected on the ground that the suit for specific performance of contract based on an illegal or invalid
agreement to sell hit by Section 43 of the Act, 1948 is not maintainable?.
17. I should not delve deep into facts of the present case as the issue involved in the present has already been dealt with and decided by the Division
Bench of this Court in the cases relied upon by the learned senior counsel appearing for the applicants.
18. In Ganpatlal Manjibhai Khatri (supra), the Division Bench of this Court, while dealing with the similarly situated issue, has observed thus;
“14. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question
that falls for our consideration is whether the plaint is liable to be rejected on the ground that the suit for specific performance of contract
based on an illegal or invalid agreement to sell hit by Section 43 of the Act, 1948 is not maintainable?.
15. The law is well settled that for the purpose of rejecting the plaint under Order 7 Rule 11 of the CPC, the relevant facts, which need to be
looked into for deciding an application thereunder are the averments made in the plaint. The defence of the defendant is inconsequential.
The averments made in the written statement are also inconsequential. The trial Court can exercise the power under Order VII Rule 11 of
C.P.C. at any stage of the suit i.e. before registering the plaint or after issuing summons to the defendant at any time before the conclusion
of the trial. For the purposes of deciding an application under Clauses (a) and (d) of Rule 11 of Order VII Code of Civil Procedure, the
averments in the plaint are germane; the pleas taken by the defendant in the written statement would be wholly irrelevant to decide the
application filed under Order VII Rule 11 of C.P.C. But curiously in T.Arivandandam v. T.V.Satyapal and Anr. (referred supra) the Apex
Court has held as follows:
“5. ...The learned Munsif must remember that if on a meaningful - for formal - reading of the plaint it is manifestly vexatious, and
meritless, in the sense of not disclosing a clear right to sue, he should exercise his power under Order VII, Rule 11 Code of Civil Procedure
taking care to see that the ground mentioned therein is fulfilled. and if clever drafting has created the illusion of a cause of action nip it in
the bud at the first hearing by examining the party searchingly under Order X, Code of Civil Procedure An activist Judge is the answer to
irresponsible law suits. The trial Courts would insist imperatively on examining the party at the first hearing so that bogus litigation can be
shot down at the earliest stage. The Penal Code is also resourceful enough to meet such men, (Cr.XI) and must be triggered against
them....“
16. It is clear that if the allegations are vexatious and meritless and not disclosing a clear right or material(s) to sue, it is the duty of the trial
Judge to exercise his power under Order VII Rule 11. If clever drafting has created the illusion of a cause of action as observed by Krishna
Iyer J., in the above referred decision, it should be nipped in the bud at the first hearing by examining the parties under Order X of the
Code.
17. To apply the principle laid down in T.Arivandandam v. T.V.Satyapal and Anr. (referred supra), the Court can reject the plaint only at
the time of first hearing by examining the parties under Order X of C.P.C. but not based on any application filed under Order VII Rule 11 of
C.P.C. Therefore, it is obligatory on the part of the Court to find out whether the allegations made in the plaint would give rise to any cause
of action or the plaint discloses any cause of action for the suit.
18. What is cause of action has been succinctly explained by the Supreme Court in the case of A.B.C. Laminart Pvt. Ltd. & Ane. vs. A.P.
Agencies, Salem, reported in 1989 AIR 1239, wherein the Supreme Court observed as under:
“Cause of action is a bundle of facts which taken with the law applicable to them gives the Plaintiff a right to relief against the
Defendant. It must include some act done by the Defendant since in the absence of such an act no cause of action can possibly accrue.â€
19. In Bloom Dekor Ltd. v. Subhash Himatlal Desai and Ors., reported in 1994 SCC (6) 322 the word cause of action is defined as follows:
“Cause of action means every fact, which, if traversed, it would be necessary for the Plaintiff to prove in order to support his right to a
judgment of the Court.“
20. Having regard to the averments made in the plaint, more particularly, the averments with regard to the cause of action, as pleaded in
the plaint, we are of the view that the plaint could not have been rejected on the ground that the suit for specific performance is time
barred. However, we are of the view that the court below should have taken into consideration the submission with regard to the
maintainability of the suit for specific performance based on an illegal agreement to sell being hit by Section 43 of the Act, 1948. One of us
(J.B. Pardiwala, J.) had the occasion to consider this issue in the case of Hasvantbhai Chhanubhai Dalal (supra). The final conclusions
drawn by this Court in Hasvantbhai (supra) are as under:
“[1] The suit for specific performance of contract based on an invalid agreement of sale hit by Section 43 of the Tenancy Act, 1948, is
not maintainable in law. If the agreement is rendered invalid under Section 43 of the Bombay Tenancy and Agricultural Lands Act, 1948,
such agreement is incapable of being specifically enforced. If the agreement of sale itself is invalid, no decree for specific performance can
be passed by the Trial Court. Section 14(1)(c) of the Specific Relief Act provides inter alia that a contract, which is in its nature
determinable, cannot be specifically enforced. In such circumstances, the suit for specific performance of agreement of sale has rightly not
been decreed.
[2] Even otherwise, independent of the issue of Section 43 of the Act, 1948, the plaintiff has not been able to make out any case for grant of
decree of specific performance of contract based on an invalid agreement of sale.â€
21. Mr. Joshi, the learned counsel appearing for the plaintiff vehemently submitted that the decision of this Court in the case of
Hasvantbhai (supra) could be termed as per incurium as this Court has not taken into consideration the decision of the Supreme Court in
the case of Nathulal (supra). Nathulal (supra) has been referred to and relied upon by the Bombay High Court in the case of Balu Babulal
Zarole (supra). Justice D.Y. Chandrachud (as his Lordship then was) had the occasion to consider Section 43 of the Act, 1948 as applicable
for the Bombay area of the State of Maharashtra. His Lordship was called upon to decide whether a decree for specific performance,
subject to the condition of sanction being obtained for the sale from the Collector, is a valid and legal decree or not. His Lordship observed
as under:
“[2] The trial Court decreed the suit holding that the agreement to sell was duly proved and that the plaintiff who had paid the entire
consideration had established his readiness and willingness to perform the contract. The trial Court held that the plaintiff was entitled to
specific performance of the contract subject to the sanction by the Collector under section 43 of the Bombay Tenancy and Agricultural
Lands Act, 1948. The trial Court held that in the event of the Collector not granting sanction, the plaintiff would be entitled to a refund of
the amount of Rs. 20,000/ - paid by him together with interest at 12% per annum from the date of the institution of the suit. The Appellate
Court has affirmed the judgment of the trial Court. The Appellate Court has held that possession was given to the plaintiff. The plaintiff had
paid the entire purchase price and had also deposited the land revenue in respect of the land. Nothing further remained to be done by him
and the readiness and willingness of the plaintiff has been established on the evidence before the courts below. These findings of the
Appellate Court do not suffer from any infirmity. They are based on the evidence on the record and do not call for any interference in a
Second Appeal.
[3] Section 43 of the Act provides, in so far as is material that no land purchased by a tenant inter alia under section 32 ""shall be
transferred by sale, gift, exchange, mortgage, lease or assignment without the previous sanction of the Collector"". The requirement of
taking the previous sanction of the Collector would apply to a transfer by sale or by any of the other modes specified therein. In so far as
the requirement of taking the sanction of the Collector under the provisions of section 43 of the Bombay Tenancy and Agricultural Lands
Act, 1948 is concerned, the trial Court and the Appellate Court correctly held that the decree for specific performance would be subject to
the condition of the sanction being obtained to the sale from the Collector under section 43. In the event of the Collector not granting
sanction, the plaintiff would be entitled to a refund of the purchase price together with interest only as, in the absence of sanction under
section 43 the sale cannot be concluded. In taking this view, no error has been committed by the trial Court and by the Appellate Court. In
(Nathulal v. Phoolchand), reported in A.I.R. 1970 S.C. 546, a Bench of the Supreme Court, consisting of Mr. Justice J.C. Shah (as the
Learned Chief Justice then was) and Mr. Justice K.S. Hegde held that where by a statute property is not transferable without the permission
of an authority, an agreement to transfer the property must be deemed to be subject to the implied condition that the transferor will obtain
the sanction of the authority concerned. While laying down the aforesaid proposition in paragraph 5 of its judgment, the Supreme Court
referred to the judgment of the Privy Council in (A.I.R. 1930 P.C. 187) and the judgment of the Supreme Court in (Chandnee Widya Vati
Madden v. Dr. C.L. Katial) 3, A.I.R. 1964 S.C. 978.
[4] Section 43 of the Act would be attracted at the stage of execution of the conveyance since upon the execution of the sale deed, the
property is transferred by sale. An agreement to sell does not create any interest in property. In this regard, a reference may be made to a
judgment of a Learned Single Judge of this Court, D.K. Deshmukh, J., delivered on 1st October, 1997, in Appeal from Order No. 713 of
1977. The earlier judgment delivered by M.F. Saldanha, J., reported in (Parshuram Kathod Gaikar v. Pandu Mahadu Hard)4, 1994(I)
Bom.C.R. 715 which was subsequently referred to in the judgment of V.H. Bhairavia, J., reported in (Lotan Ramchandra Shimpi v. Shankar
Ganpat Kayasth)5, 1994(4) Bom.C.R. 575 will have to be construed with reference to the observation of the Learned Judge in para 9 of the
judgment where the learned Judge clarified that the observations which were made in the order were for the limited purpose of the petition
before the Court, which arose against an interim order. Since the suit was pending before the trial Court, the learned Judge held that it
would be open to the parties in the said case to urge all contentions before the trial Court ""without being prejudiced even in the least by
any of the observations made"" in that judgment. In view of the subsequent judgment of a learned Single Judge, D.K. Deshmukh, J., it would
be clear that the provisions of section 43 of the Act would be attracted at the stage of the execution of the conveyance. Before the
conveyance is executed in pursuance of a decree for specific performance the previous sanction of the Collector under section 43 would
have to be sought and the execution of the conveyance can only take place after and subject to the grant of sanction by the Collector. If the
Collector grants sanction, the terms and conditions laid down therein have to be observed. If sanction is refused, no conveyance can be
executed. Section 43 would unquestionably be attracted to the execution of the conveyance in respect of the land and it is, therefore, that
both the courts in the present case came to the conclusion that the decree will have to be subject to the condition that permission of the
Collector would have to be sought under the provisions of section 43. The judgments of both the Courts below do not suffer from any
infirmity. There is, therefore, no merit in the Second Appeal.â€
22. In Nathulal (supra), the Supreme Court had observed as under:
“7. The High Court proceeded to decide the case largely upon the view that Nathulal committed breach of contract. But the question
whether Nathulal had committed the breach is not of much significance. Nathulal was the owner of the land:he had executed no conveyance
in favour of Phoolchand in the land or the factory. Nathulal had sued for possession relying upon his title, and Phoolchand could defeat
that claim if he established his; defence of part-performance under Section 53A of the Transfer of Property Act.
8. The argument raised by counsel for Nathulal, that by virtue of Section 70(8) of the Madhya Bharat Land Revenue and Tenancy Act, the
plea of part performance is not available to a person put in possession of the property under a contract of sale, has, in our judgment, no
force. Section 70(8) provides :
“No sale under this section shall be deemed to be valid until the sale deed effecting such a sale has been registered in accordance with
the law of registration in force for the time being.â€
But this clause only requires that not only the conditions prescribed by Section 70, but registration of sale deed in accordance with the law
of registration for the time being in force is a condition required to be complied with before a sale is deemed valid. There is no sale in the
present case, and Phoolchand is not relying upon any sale. He is relying upon a contract of sale and equity which he may set up to defend
his possession against the claim made by Nathulal. To the making of such a claim, relying upon the doctrine of part performance in Section
53A of the Transfer of Property Act, there is nothing in Section 70(8) of the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950
which may operate as a bar.
9. The conditions necessary for making out the defence of part performance to an action in ejectment by the owner are (1) that the
transferor has contracted to transfer for consideration any immovable property by writing signed by him or on his behalf from which the
terms necessary to constitute the transfer can be ascertained with reasonable certainty;
(2) that the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee,
being already in possession continues in possession in part performance of the contract;
(3) that the transferee has done some act in furtherance of the contract; and
(4) that the transferee has performed or is willing to perform his part of the contract. If these conditions are fulfilled then notwithstanding
that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer
has not been completed in the manner prescribed therefore by the law for the time being in force, the transferor or any person claiming
under him is debarred from enforcing against the' transferee any right in respect of the property of which the transferee has taken or
continued in possesion, other than a right expressly provided by the terms of the contract.
10. There is in this case a contract to transfer for consideration immovable property by writing signed by Nathulal from which the terms
necessary to constitute the transfer can be ascertained with reasonable certainty. In part performance of the contract, Phoolchand has
taken possession of the property and he had in pursuance thereof paid an amount of Rs. 22,011/-. The argument raised by counsel for
Nathulal that the act done in pursuance of the contract must be independent of the terms of the contract cannot be accepted. The first three
conditions for the defence of part performance to be effectively set up by Phoolchand exist. Mr. Shroff for Nathulal however contends that
Phoolchand was not willing to perform his part of the contract.
11. Nathulal had expressly undertaken to have the revenue records rectified by securing the deletion of Chittarmal's name, and it was an
implied condition of the contract that Nathulal will secure the sanction of the Collector to the transfer under Section 70(4) of the Madhya
Bharat Land Revenue and Tenancy Act 66 of 1950. The first condition was not fulfilled till October 6, 1952 and the second condition was
never fulfilled. We are unable to agree with Mr. Shroff that the repeal of the Madhya Bharat Act 66 of 1950 by the Madhya Pradesh Land
Revenue Code, 1959, has retrospective operation.
12. In considering whether a person is willing to perform his part of the contract the sequence in which the obligations under a contract are
to be performed must be taken into account. The argument raised by Mr. Shroff that Nathulal was bound to perform the two conditions only
after the amount of Rs. 21,000 was paid is plainly contrary to the terms of the agreement. By virtue of Section 4 of the Transfer of Property
Act the chapters and sections of the Transfer of Property Act which relate to contracts are to be taken as part of the Indian Contract Act,
1872. If, therefore, under the terms, of the contract the obligations of the parties have to be performed in a certain sequence, one of the
parties to the contract cannot require compliance with the obligations by the other party without in the first instance performing his own
part of the contract which in the sequence of obligations is performable by him earlier.
13. In view of the arrangement made by Phoolchand it was clear that he had at all relevant times made necessary arrangements for paying
the amount due, but so long as Nathulal did not carry out his part of the contract, Phoolchand could not be called upon to pay the balance
of the price. It must, therefore, be held, that Phoolchand was at all relevant times willing to carry out his part of the contract.â€
23. Section 43 of the Act, 1948, as applicable for the Bombay area of the State of Maharashtra reads as under:
“Section 43 Restriction on transfer of land purchased or sold under land (1) No land purchased by a tenant under section 32, SECTION
32F, [32I, 320,[33C or 43-ID]] or sold to any person under 32P or 64 shall be transferred by sale, gift, exchange, mortgage, lease or
assignment* * * *without the previous sanction of the Collector, [such sanction shall be given by the Collector in such circumstances, and
subject to such conditions, as may be prescribed by the State Government:
Provided that, no such sanction shall be necessary where the land is to be mortgaged in favour of the Government or a society registered or
deemed to be registered under the Bombay Co-operative Societies Act, 1925, for raising a loan for effecting any improvement of such land.
(2) Any transfer of land in contravention of sub-section (1) shall be invalid.â€
24. On the other hand, Section 43 of the Act, 1948 applicable for the Bombay area of the State of Gujarat reads as under:
“43. Restriction on transfers of land purchased or sold under this Act. - [(1) No land or any interest therein purchased by a tenant under
section 17B, 32, 32F, 321, 320, [32U, 431D or 88E] or sold to any person under section 32P or 64 shall be transferred or shall be agreed
by an instrument in writing to be transferred, by sale, gift, exchange, mortgage, lease or assignment, without the previous sanction of the
Collector and except in consideration of payment of such amount as the State Government may by general or special order determine; and
no such land or any interest, therein shall be partitioned without the previous sanction of the Collector.]
Provided that no previous sanction of the Collector shall be required, if the partition of the land is among the members of the family who
have direct blood relation or among the legal heirs of the tenant:
Provided further that the partition of the land as aforesaid shall not be valid if it is made in contravention of the provisions of any other law
for the time being in force.
Provided also that such members of the family or the legal heirs shall hold the land, after the partition, on the same terms, conditions and
restrictions as were applicable to such land or interest therein purchased by the tenant or the person.
[(1A) The sanction under sub-section (1) shall be given by the Collector in such circumstances and subject to such conditions, as may be
prescribed by the State Government.,]
[(1AA) Notwithstanding anything contained in sub-section (1), it shall be lawful for such tenant or a person to mortgage or create a charge
on his interests in the land in favour of the State Government in consideration of a loam advanced to him by the State Government under the
Land Improvement Loans Act, 1983 (XIX of 1983), the Agriculturists' Loans Act, 1984 (XII of 1983), or the Bombay Non-agriculturists'
Loans Act, 1928 (Bombay Ill of 1928), as in force in the State of Gujarat, or in favour of a bank or cooperative society, and without
prejudice to any other remedy open to the State Government, bank or co- operative society, as the case may be, in the event of his making
default in payment of such loan in accordance with the terms, on which such loan was granted, it shall be lawful for the State Government,
bank or co-operative society, as the case may be, to cause his interest in the land to be attached and sold and the proceeds to be applied in
payment of such load.
Explanation. - For the purposes of this sub-section,"" bank"" means-
(a) the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955);
(b) any subsidiary bank s defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959);
(c) any corresponding new bank as defined in clause (d) of section 2 of the Banking Companies (Acquisition and Transfer of Undertakings)
Act, 1970 (5 of 1970);
(d) the Agricultural Refinance and Development Corporation, established under the Agricultural Refinance and Development Corporation
Act, 1963 (10 of 1963).]
(1B) Nothing in sub-section (1) [Or (1AA) shall apply to land purchased under section 32, 32F, 320 or 64 by a permanent tenant thereof, if
prior to the purchase, the permanent tenant, by usage, custom, agreement or decree or order of a Court, held transferable right in the
tenancy of the land.]
[(1C) The land to which sub-section (1) applies and for which no permission is required under sub-section (1) of section 65B of the Bombay
Land Revenue Code, 1879 (Bombay V of 1879) for use of such land for a bona fide industrial purpose may, notwithstanding anything
contained in sub-section (1) of this section, be sold without the previous sanction of the Collector under sub-section (1) but subject to
payment of such amount as may be determined by the State Government under sub-section (1).]
(2) [Any transfer or partition, or any agreement of transfer, or any land or any interest therein] in contravention of sub-section (1) [or sub-
section (1C)] shall be invalid.] “
25. One pertinent feature of Section 43 of the Act, 1948 applicable for Bombay area of the State of Gujarat is the amendment by which even
an agreement by an instrument in writing to be transferred came to be prohibited. Such restriction is not to be found in Section 43
applicable for the Bombay area of the State of Maharashtra. Section 43(2) for the Bombay area of the State of Gujarat reads as under;
“Any transfer or partition, or any agreement of transfer, or any land or any interest therein in contravention of sub-section (1) or sub-
section (2) shall be invalid.â€
26. The principle which the Supreme Court has laid down in Nathulal (supra) and which has been referred to and relied upon by the
Bombay High Court in the case of Balu Baburao Zarole (supra) is that if a property is not transferred under a statute without the permission
of an authority, an agreement to transfer the property must be deemed to be subject to the implied condition that the transferor will obtain
the sanction of the authority concerned.
27. This decision, in our opinion, has no application to the facts of the instant case because in our opinion, under Section 43 of the Act,
1948 applicable to the Bombay area of the State of Gujarat, there is a total prohibition of even entering into an agreement in writing for the
purpose of sale. Section 43 of the Act applicable for Bombay area of the State of Gujarat makes it very clear that any transfer or partition
or any agreement of transfer or any land or any interest therein in contravention of sub-section (1) or subsection (1)(c) shall be invalid.
Thus, the decision of the Supreme Court in the case of Nathulal (supra) has no application in the present case. If that be so, the decision in
Hasvantbhai (supra) cannot be termed as per incurium.
28. It is not in dispute that the agreement to sell dated 27th January, 2010 could be termed as invalid or void as the same was entered into
without the prior permission or sanction of the Collector. The suit for specific performance of contract based on an invalid agreement to sell
hit by Section 43 of the Tenancy Act, 1948 applicable for the Bombay area of the State of Gujarat is not maintainable in law. If the
agreement is rendered invalid under Section 43 of the Act, 1948, such agreement is incapable of being specifically enforced. If the
agreement to sell itself is invalid, no decree for specific performance can be passed by the Trial Court.
29. It is well settled that the jurisdiction to order specific performance of contract is based on the existence of a valid and enforceable
contract. Where a valid and enforceable contract has not been made, the Court will not make a contract for them. Specific performance will
not be ordered if the contract itself suffers from some defect which makes the contract invalid or unenforceable. The discretion of the Court
will not be there even though the contract is otherwise valid and enforceable. (See Satish Kumar vs. Karan Singh & Anr., Civil Application
No.7385 of 2013, decided on 21st January, 2016).
30. The Supreme Court in Mayawanti vs. Kaushalya Devi, (1990) 3 SCC 1 held thus:
“8. In a case of specific performance it is settled law, and indeed it cannot be doubted, that the jurisdiction to order specific
performance of a contract is based on the existence of a valid and enforceable contract. The Law of Contract is based on the ideal of
freedom of contract and it provides the limiting principles within which the parties are free to make their own contracts. Where a valid and
enforceable contract has not been made, the court will not make a contract for them. Specific performance will not be ordered if the
contract itself suffers from some defect which makes the contract invalid or unenforceable. The discretion of the court will be there even
though the contract is otherwise valid and enforceable and it can pass a decree of specific performance even before there has been any
breach of the contract. It is, therefore, necessary first to see whether there has been a valid and enforceable contract and then to see the
nature and obligation arising out of it. The contract being the foundation of the obligation the order of specific performance is to enforce
that obligation.â€
31. We shall now deal with the second contention of Mr. Joshi as regards Sections 85 and 85A of the Act. Section 85 of the Act reads as
follows:-
“Section 85 Bar of jurisdiction
(1) No Civil Court shall have jurisdiction to settle, decide or deal with any question [(including a question whether a person is or was at any
time in the past a tenant and whether any such tenant is or should be deemed to have purchased from his landlord the land held by him)
which is by or under this Act required to be settled, decide or dealt with by the Mamlatdar or Tribunal, a Manager, the Collector or the
[Maharashtra Revenue Tribunal] in appeal or revision or the [State] Government in exercise of their powers of control.
(2) No order of the Mamlatdar, the Tribunal, the Collector or the [Maharashtra Revenue Tribunal] or the [State] Government made under
this Act shall be questioned in any Civil or Criminal Court.
Explanation:- For the purposes of this section a Civil Court shall include a Mamlatdar's Court constituted under the Mamlatdar's Courts
Act, 1906.â€
32. Section 85A of the Act reads as follows:
“Section 85A Suits involving issues required to be decided under this Act
(1) If any suit instituted in any Civil Court involves any issues which are required to be settled, decided or dealt with by any authority
competent to settle, decide or deal with such issues under this Act (hereinafter referred to as the ""competent authority"") the Civil Court shall
stay the suit and refer such issues to such competent authority for determination.
(2) On receipt of such reference from the Civil Court, the competent authority shall deal with and decide such issues in accordance with the
provisions of this Act and shall communicate its decision to the Civil Court and such Court shall thereupon dispose of the suit in accordance
with the procedure applicable thereto.
Explanation:- For the purpose of this section a Civil Court shall include a Mamlatdar's Court constituted under the Mamlatdar's Court Act,
1906.]â€
33. In our opinion, it would be within the jurisdiction of the Civil Court alone to determine whether the agreement on the basis of which the
suit for specific performance is instituted is a valid agreement or not. To put it in other words, the jurisdiction exercisable for the
determination of the enforceability of the agreement of sale clearly resided in the Civil Court which alone had the jurisdiction to make an
adjudication on that question.
34. In the aforesaid context, we may refer to a Division Bench decision of the Karnataka High Court in the case of Neminath Appayya
Hanamannanavar vs. Jamboorao Satappa Kocheri, reported in 1966 AIR (Kar.) 154, wherein the Court observed as under:
“89] Section 70(mb) authorises and empowers the Mamlatdar to decide the validity of a transfer or acquisition and to make that decision
under Section 84B or section 84C. Section 848 among other matters authorises a Mamlatdar when he has reason to believe that a transfer
or acquisition made on or after June 15, 1955, contravenes sections 63 or 64 of the Act as it stood before the commencement of the
amending Act, 1955. to make an enquiry and decide whether the transfer or acquisition was or was not valid.
[90] Section 84C empowers the Mamlatdar to hold an enquiry by the option of the procedure prescribed in section 84B whether a transfer
or acquisition made after the commencement of the amending Act,1955. was valid.
[91] Since the agreement of sale in the case before us was made after the commencement of the amending Act,1955, the relevant statutory
provision under which the Mamlatdar can make the enquiry authorised by section 70(mb) is section 84C. But. what is authorised by section
84C is an enquiry into the validity of a transfer or acquisition made after the commencement of the amending Act 1955. So. the condition
precedent for the exercise of jurisdiction by the Mamlatdar is a transfer or acquisition made in that way and that Judge is unavailable until
the transfer or acquisition actually comes into being.
[92] In this case, no such transfer or acquisition had yet been made by any one. The acquisition which the plaintiff wanted to make was an
acquisition which he could make only after he obtained a decree for specific performance and the invalidity of the acquisition if it was in
contravention of section 35 would attack itself to the acquisition only after delivery of possession to the plaintiff of an area of land in
excess of what is permitted by the law.
[93] In that view of the matter, the jurisdiction exercisable for the determination of the enforceability of the agreement of sale clearly
resided in the Civil Court which alone had the jurisdiction to make an adjudication on that question. Surely, the Mamlatdar could not have
at a stage when the acquisition or transfer had not yet been made and all that the plaintiff wanted to do was to enforce an agreement of sale
so that he could make the acquisition or obtain a transfer under the terms of the agreement exercised power under S.70(mb) or under
section 84C and made one he would have this exercised his jurisdiction prematurely and that adjudication would have invited the criticism
that it was one without competence.
94 In my opinion, when a question arises in a suit for specific performance whether the agreement on which that suit is based is void on the
ground that any acquisition made pursuant thereto would contravene or transgress the provisions of Section 35 of the Bombay Tenancy and
Agricultural Lands Act, the Civil Court Is the only forum in which an adjudication is possible and the Mamlatdar cannot make any such
adjudication. The power to make any adjudication under section 84C arises and accrues to the Mamlatdar only after the acquisition or the
transfer as the assessee may be is completed and not before.â€
35. In the overall view of the matter, we are of the view that the impugned order passed by the Civil Court, rejecting the plaint on the
ground that the suit is time barred, may not be sustainable in law, but at the same time, no interference is warranted in the present first
appeal, because in our opinion, the plaint is liable to be rejected mainly on the ground that the suit for specific performance based on an
illegal or invalid agreement to sell is not maintainable as, such a contract is not enforceable.â€
19. The law is well settled that for the purpose of rejecting the plaint under Order 7 Rule 11 of the CPC, the relevant facts, which need to be looked
into for deciding an application thereunder are the averments made in the plaint. The defence of the defendant is inconsequential. The averments
made in the written statement are also inconsequential. The trial Court can exercise the power under Order VII Rule 11 of C.P.C. at any stage of the
suit i.e. before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of
deciding an application under Clauses (a) and (d) of Rule 11 of Order VII Code of Civil Procedure, the averments in the plaint are germane; the pleas
taken by the defendant in the written statement would be wholly irrelevant to decide the application filed under Order VII Rule 11 of C.P.C. But
curiously in T. Arivandandam v. T.V.Satyapal and Anr. 1977 AIR 2421, the Hon’ble Apex Court has held as follows:
“The learned Munsif must remember that if on a meaningful-not formal-reading of the plaint it is manifestly vexatious, and meritless, in
the sense of not disclosing a clear right to sue, he should exercise his power under Or. VII r. 1 1 C.P.C. taking care to see that the ground
mentioned therein is fulfilled. And, if clever, drafting has created the illusion of a cause of action, nip it in the bud at the first hearing by
examining the party searchingly under Order X C.P.C. An activist Judge is the answer to irresponsible law suits. The trial court should insist
imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest stage. The Penal Code (Ch.
XI) is also resourceful enough to meet such men, and must be triggered against them...â€
20. Now the second decision which covers the entire controversy in the case on hand is in the case of Ashokbhai Madhubhai Patel (supra), wherein
the Division Bench of this Court has held as under;
“6.5 Analyzing the arguments of the learned counsels for the respective parties, the Full Bench set out to examine these issues and in
doing so relied upon several decisions of the Hon’ble Supreme Court as well as of this Court and even of the other High Courts qua the
analysis of the arguments as set out in question (vii) of the Full Bench. It will be in the fitness of things to reproduce paragraphs 90 to 108
on the appreciation of the restriction on transfer in context of the Contract Act. Paras 90 to 108 read as under:
“90 To deal with the above submission, we find that the words “invalidâ€, “forbidden by law†and “void†have to be
understood in the context of the provisions of the Indian Contract Act, 1872. Section 23 of the Contract Act provides as to when
consideration or object of an agreement is said to be lawful. It prescribes that the consideration or object of an agreement is lawful, unless
it is forbidden by law. Meaning thereby, that an agreement of which the consideration or object is forbidden by law is unlawful. It further
provides that every agreement of which the object or consideration is unlawful is void. The interpretation clause in Section 2(c) of the
Contract Act states that “an agreement not enforceable by law is voidâ€. The Contract, within the meaning of Section 2(h) of the
Contract Act is an agreement enforceable by law. Section 2(i) states that an agreement, which is enforceable by law at the option of one or
more of the parties thereto, but not at the option of the other or others, is a voidable contract. Section 2(j) states that a contract which
ceases to be enforceable by law becomes void when it ceases to be enforceable. Section 23 of the Indian Contract Act, 1872 is relevant to
be noted as under:-
“23. What consideration and objects are lawful, and what not.-The consideration or object of an agreement is lawful, unless It is
forbidden by law; or is of such a nature that, if permitted, it would defeat the provisions of an law; or is fraudulent; or involves or implies,
injury to the person or property of another; or the court regards it as immoral, or opposed to public policy. In each of these cases, the
consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.â€
91 The Allahabad High Court in the case of Nutan Kumar32 considering the provisions of Section 2(h)(g) and Section 23 of the Contract
Act, has noted that every agreement made for or about any matter or thing which is either forbidden by any Statute or would defeat the
provisions of any law, or the Court regards it as opposed to public policy, is unlawful and ipso facto void. It was held that an agreement
offending a Statute or public policy or forbidden by law is not merely void, but it is invalid from nativity. It cannot become valid even if the
parties thereto agree to it. The concept that an agreement may be void in relation to a specified person and may be valid or voidable within
the parties thereto is not applicable to an agreement, the very foundation whereof law interdicts; or which is of such a character that, if
permitted, it would frustrate the provisions of any law; or is fraudulent; or involves or implies injury to the person or property of another;
or the Court regards it as immoral or opposed to public policy. Neither party can enforce such an agreement. No legal relations come into
being from an agreement offending a statute or public policy. It was held that void agreements are destitute of all legal effects and force.
They are totally ineffectual rather cipher. No legally enforceable relationship, right or liability emanates therefrom. The distinction between
‘illegal’ and ‘void’ contracts has been highlighted in paragraphs No.’72’,’73’ and ’74’ therein as
under:
“72. In Deep Narain Singh v. Nageshwar Prasad, AIR 1930 AH 1 at p. 3 (FB) : (1930 All LJ 45), it has been observed as under :
There is a clear distinction between an agreement which may be forbidden by law and one which is merely declared to be void. In the
former case, the legislature penalises it or prohibits. In the latter case, it merely refuses to give effect to it.
73. It may be observed that the distinc-tion between illegal and void contracts may be very thin but it is there. Sir William Anson in his Book
On Law of Contracts"" has very succinctly stated the legal position as thus : ""..... The law may either forbid an agreement to be made, or it
may merely say that,if it is made the Courts will not enforce it. ""In the former case, it is illegal, in the latter only void , but inasmuch as
illegal contracts are also void, though void contracts are not necessarily illegal, the distinction is for most purposes not important and even
Judges seem sometime to treat the two terms as interchangeable."" See Gherulal Parekh's case, AIR 1959 SC 781 at p. 786.
74. In Manna Lal Khetan v. Kedar Nath Khetan (1977) 2 SCC 424 : (AIR 1977 SC 536) at p. 430 para 11, it has been observed by the
Supreme Court as under.
A contract is void if prohibited by statute under a penalty, even without express declaration that the contract is void, because such a
penalty implies a prohibition."" The above authorities lead to a conclusion that although for all practical purposes, illegal contracts and
void contracts are taken at par with each other nevertheless the dis tinction between the two is there. Illegality of a contract arises as a
result of infraction, contravention or breach of any express or implied provisions of law properly so -called that is a constitutionally valid
enactment made by the legislature or of a subordinate legislation i.e. rules, bye-laws, regulations or orders -- or even usages and
customsâ€" having the force of law. On the other hand, the void contract is one which is declared as such by virtue of sections 23 to 30 etc.
of the Contract Act or by a provision of any other enactment.â€
92 In the case of Mannalal Khetan33 while interpreting the language employed in Section 108 of The Companies Act, 1956, wherein words
“ shall not register†has occurred, it was observed that the mandatory character is strengthened by the negative form of the language.
The prohibition against transfer without complying with the provisions of the Act is emphasized by the negative language. Negative
language is worded to emphasis the insistence of compliance with the provisions of the Act. Negative words are clearly prohibitory and are
ordinarily used as a legislative devise to make a statutory provision imperative.
93 The decision of the Apex Court in the case of Raza Buland Sugar Co. Ltd.34 has been noted in paragraph â€17†therein to record that
the prohibitions and negative words can rarely be directory, in the following manner:-
“17. In Raza Buland Sugar Co. Ltd. v. Municipal Board Rampur(4) this Court referred to various tests for finding out when a provision
is mandatory or directory. The purpose for which the provision has been made, its nature, the intention of the legislature in making the
provision, the general inconvenience or injustice which may result to the person from reading the provision one way or the other, the
relation of the particular provision to other provisions dealing with the same subject and the language of the provision are all to be
considered. Prohibition and negative words can rarely be directory. It has been aptly stated that there is one way to obey the command and
that is completely to refrain from doing the forbidden act. Therefore, negative, prohibitory and exclusive words are indicative of the
legislative intent when the statute is mandatory. (See Maxwell on Interpretation of Statutes 11th Ed. p. 362 seq.; Crawford Statutory
Construction, Interpretation of Laws p. 523 and Seth Bikhraj Jaipuria v. Union of Indiaâ€
94 It was held that where a contract, express or implied, is expressly or by implication forbidden by Statute, no Court will lend its assistance
to give it effect. A contract is void if prohibited by a Statute under penalty, even without express declaration that the contract is void. It was
observed in paragraph
“20†as under:- “20. It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is
void. The legal maxim 'A pactis privatorum publico juri non derogatur means that 'private agreements cannot alter the general law. Where a
contract, express or implied, is expressly or by implication forbidden by statute, no court can lend its assistance to give it effect. (See Mellis
v. Shirley L.B.) (Supra) . What is done in contravention of the provisions of an Act of the Legislature cannot be made the subject of an
action.â€
95 Justice Subba Rao in the case of ChandraSreenivasa Rao while dealing with a question pertaining to Section 23 of the Indian Contract
Act has considered the question as to the connotation of the word “object†in Section 23 in contradistinction to the word
“considerationâ€. It was noted that the word “object†in Section 23 of the Contract Act is distinct from the word “considerationâ€
and meant as “purpose†or “designâ€. If the “purpose†of the parties is to defeat the provisions of the law, the “object†of
the agreement is unlawful. In other words, an agreement designed to defeat the “object†and “purpose†of a law is an agreement
forbidden by law within the meaning of Section 23 of the Indian Contract Act. The question would be as to whether the agreement, which is
forbidden by law, can be enforced by a Court of law. 96 In light of the above position of law, considering the language employed in Section
43(1) of the Tenancy Act, 1948 this Court in Hasvantbhai Chhanubhai Dalal (supra) has considered the difference between the
‘void’ and ‘illegal’ agreement in paragraphs “61â€,“62â€,“64†and “65†as under:-
“• DIFFERENCE BETWEEN “VOID†AND “ILLEGAL†AGREEMENT:
61. The Indian Contract Act, 1872 has made it clear that there is a thin line of difference between void and illegal agreement. A void
agreement is one which may not be prohibited under law, while an illegal agreement is strictly prohibited by law and the parties to the
agreement can be penalized for entering into such an agreement. A void agreement has no legal consequences, because it is null from the
very beginning. Conversely, the illegal agreement is devoid of any legal effect, since it is started. All illegal agreement are void, but the
reverse is not true. If an agreement is illegal, other agreements related to it are said to be void. An agreement that violates any law or whose
nature is criminal or is opposed to any public policy or immoral is an illegal agreement. These agreements are void ab initio, and so the
agreements collateral to the original agreement are also void. Here the collateral agreement refers to the transaction associated or
incidental to the main agreement. The difference between void and illegal agreement can be drawn clearly on the following grounds:
[1] An agreement which loses its legal status is a void agreement. An illegal agreement is one which is not permissible under law.
[2] Certain void agreements are void ab initio while some agreements become void when it loses its legal binding. On the other hand, an
Illegal agreement is void since the very beginning. A void agreement is not prohibited by Penal Code, 1860 (IPC), but IPC strictly prohibits
an illegal agreement.
[3] The scope a void contract is comparatively wider than an illegal contract as all agreements which are void may not necessarily be
illegal, but all illegal agreements are void from its inception.
[4] A void agreement is not punishable under law whereas an illegal agreement is considered as an offence, hence the parties to it are
punishable and penalised under Penal Code, 1860 (IPC).
[5] Collateral agreements of a void agreement may or may not be void i.e. they may be valid also. Conversely, collateral agreements of an
illegal agreement cannot be enforceable by law as they are void ab initio.
62. It is quite clear that the void and illegal agreement are very different. One of the factors that make an agreement void is the illegality of
the contract, such as contract whose object or consideration is unlawful. Moreover, in both the two agreements loses its enforceability by
law. xxx xxx xxx
64. In the case of Rajasthan Housing Board v. New Pink City Niarman Sahkari Samiti Limited reported in (2015) 7 SCC 601, the Supreme
Court had the occasion to consider the provisions of the Rajasthan Tenancy Act, 1955. The litigation before the Supreme Court had
something to do with the land acquisition proceedings. In the said case, the parcels of land were transferred by the Scheduled Caste
khatedars in favour of a person who was not the member of the Scheduled Caste. The Supreme Court held that the agreement of sale of
land by the Scheduled Caste khatedars to the Housing Society could be termed as void ab initio. The Supreme Court took the view thatthe
decree for specific performance of the agreement obtained by the society being prohibited under Section 42 of the Rajasthan Tenancy Act,
1955 and opposed to public policy could be termed as a nullity and unenforceable. of course, it is true that the word used in Section 42 of
the Rajasthan Tenancy Act, 1955 is “voidâ€, whereas the word used in Section 43(2) of the Tenancy Act, 1948 is “invalidâ€.
However, if the transaction is found to be opposed to public policy, the same cannot be enforced. This principle would be applicable
irrespective of the fact whether the transaction is invalid or void. Section 43 of the Tenancy Act has its own importance. There is a fine
distinction between a restricted tenure and old tenure. If a person derives land in accordance with the provisions of the Tenancy Act, such
acquisition is one of a restricted tenure land. The land is given for a specific purpose keeping in mind the object of the Act, 1948. I may
quote the observations made by the Supreme Court in paras 26, 27, 28 and 30 as under:
“26. In the instant case, the transaction is ab initio void that is right from its inception and is not voidable at the volition by virtue of the
specific language used in section 42 of the Rajasthan Tenancy Act. There is declaration that such transaction of sale of holding “shall
be voidâ€. As the provision is declaratory, no further declaration is required to declare prohibited transaction a nullity. No right accrues to
a person on the basis of such a transaction. The person who enters into an agreement to purchase the same, is aware of the consequences
of the provision carved out in order to protect weaker sections of Scheduled Castes and Scheduled Tribes. The right to claim compensation
accrues from right, title or interest in the land. When such right, title or interest in land is inalienable to non-SC/ST, obviously the
agreements entered into by the Society with the Khatedars are clearly void and decrees obtained on the basis of the agreement are violative
of the mandate of section 42 of the Rajasthan Tenancy Act and are a nullity. Such a prohibited transaction opposed to public policy, cannot
be enforced. Any other interpretation would be defeasive of the very intent and protection carved out under section 42 as per the mandate
of Article 46 of the Constitution, in favour of the poor castes and downtrodden persons, included in the Schedules to Articles 341 and 342
of the Constitution of India.
27. In State of Madhya Pradesh v. Babu Lal [(1977) 2 SCC 435] : (AIR 1977 SC 1718), the provisions contained in section 165(6) of M.P.
Land Revenue Code, 1959 came up for consideration before this Court. The High Court directed the State to file a suit for declaring the
decree null and void. The decision was set aside. It was held that the case was a glaring instance of violation of law as such the High Court
erred in not issuing a writ. The decision of the High Court was set aside. The transfer which was in violation of proviso to section 165(6)
transferring the right of Bhuswami belonging to a tribe, was set aside.
28. This Court in Lincal Gamango v. Dayanidhi Jena [(2004) 7 SCC 437 : AIR 2004 SC 3457] while considering the provisions of Orissa
Scheduled Areas Transfer of Immovable Property (by Scheduled Tribes) Regulation, 1956 which prohibited alienation of rural property by
a tribal to a non-tribal, declared such transaction to be null and void. This Court while relying upon the decision in Amrendra Pratap Singh
v. Tej Bahadur Prajapati [(2004) 10 SCC 65 : AIR 2004 SC 3782] has laid down that no right can be acquired by adverse possession on
such inalienable property. Adverse possession operates on an alienable right. It was held that non- tribal would not acquire a right or title
on the basis of adverse possession.
30. This Court in Amrendra Pratap, ((2004) 10 SCC 65 : AIR 2004 SC 3782) (supra) has laid down that the expression ‘transfer’
would include any dealing with the property when the word ‘deal with’ has not been defined in the statute.Dictionary meaning as the
safe guide can be extended to achieve the intended object of the Act. The transaction or the dealing with alienable property to transfer title
of an aboriginal tribe and vesting the same in non-tribal was construed as transfer of immovable property. Extending the meaning of the
expression ‘transfer of immovable property’ would include dealing with such property as would have the effect of causing or
resulting in transfer of interest in immovable property. When the object of the legislation is to prevent a mischief and to confer protection on
the weaker sections of the society, the court would not hesitate in placing an extended meaning, even a stretched one, on the word, if in
doing so the statute would succeed in attaining the object sought to be achieved. When the intendment of the Act is that the property should
remain so confined in its operation in relation to tribals that the immovable property to one tribal may come but the title in immovable
property is not to come to vest in a non-tribal the intendment is to be taken care by the protective arm of the law and be saved from falling
prey to unscrupulous devices, and this Court concluded any transaction or dealing with immovable property which would have the effect of
extinguishing title, possession or right to possess such property in a tribal and vesting the same in a nontribal, would be included within the
meaning of ‘transfer of immovable property’.
65. In Ram Karan v. State of Rajasthan [(2014) 8 SCC 282], the Supreme Court has laid down that the transfer of holding by a member of
Scheduled Caste to a member not belonging to the Scheduled Caste by virtue of Section 42 of the Rajasthan Tenancy Act is forbidden and
unenforceable. Such a transaction is unlawful even under Section 23 of the Contract Act and an agreement or such transfer would be void
under Section 2(g) of the Contract Act. This principle of law, as explained by the Supreme Court in Ram Karan (supra) fortifies the view
taken by the learned Single Judge of this Court in the case of Hardik Harshadbhai Patel (supra). Keeping this principle in mind, I have
arrived to the conclusion that the word “invalid†or the word “voidâ€, so far as the Section 43 of the Tenancy Act is concerned,
would not make by difference. The true test is whether the transaction is unlawful, as opposed to the public policy. Whether such
transaction would defeat the very object with which such restriction has been imposed in Section 43 of the Tenancy Act.â€
97 With reference to the provisions of Section 43 of the Tenancy Act, it was observed in Paragraph “67†therein that:-
“67. The language of Section 43 of the Tenancy Act is plain and simple. There is no absolute bar or an embargo as regards the transfer
of a new tenure land or entering into an agreement of sale with respect to a new tenure land. Section 43 only says that the parties cannot
enter into such agreement without the prior permission of the Collector and if the parties have entered into such agreement without the
permission of the Collector, such transaction would be invalid. Thus, it is for the Collector to decide whether permission should be granted
or not. It is for the Collector to consider whether such transfer would be in consonance with the Constitutional Scheme in Part IV of the
Directive Principles. The Collector may also consider whether the agreement is void under Section 23 of the Contract Act as opposed to the
public policy. Before the permission is given, the Collector is enjoined, by operation of Article 46 of the Constitution, to inquire whether
such alienation is void under law or violates the provisions of the Constitution and whether the permission could be legitimately given. In
that behalf, the competent authority is enjoined to look to the nature of the property, subject matter of the proposed conveyance and
preexisting rights flowing thereunder and whether such alienations or encumbrances violate the provisions of the Constitution or the law. If
the answer is in the positive, then without any further inquiry the permission straightway would be rejected. Even in case the permission is
granted, it would be decided on the anvil of the relevant provisions of the Constitution and the law [Murlidhar Dayandeo Kesekar v.
Vishwanath Pandu Bardu reported in AIR 1995 SCW 2224]. “
98 It was further held in Paragraph “84†that:-
“84. Thus, having regard to the aforesaid discussion, I have reached to the conclusion that the transaction between the parties being hit
by Section 43 of the Tenancy Act and being opposed to the public policy, as explained under Section 23 of the Contract Act, is not
enforceable in law. There is a clear bar for entering into an Agreement to Sell of the granted lands without previous the permission of the
Collector. If an agreement is entered into in respect of the granted land in violation of Section 43, it is invalid. Section 23 of the Indian
Contract Act, 1872 bars the enforcement of a contract if it is forbidden by law. An agreement offending a statute or public policy or
forbidden by law is not merely void but it is invalid from nativity. The term law’ in this Section must be understood in the sense of the
term explained in Article 13(3) of the Constitution. Thus, what is done in contravention of the provisions of any law cannot be made the
subject matter of an action. If the contract is expressly prohibited by law, it is void-ab- initio and cannot be enforced. In the circumstances,
Courts cannot grant a decree for specific performance subject to the permission, which may be obtained by one of the parties from the
Collector. I am of the view that the suit filed by the plaintiff for enforcement of the invalid agreement cannot be entertained by the Civil
Court.â€
99 The decision of the Apex Court in the case of Sita Ram (supra), has been noted in paragraph Nos. “75†and “85†therein as
under: -
“75. The Supreme Court in the case of Sita Ram v. Radha Bai reported in AIR 1968 SC 534 has very succinctly explained the law on the
subject. I may quote the relevant observations as under:
“12. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an
illegality or fraud is expressed in the maxim In pari causa potior est conditio possidentis. But as stated in Anson's ‘Principles of the
English Law of Contracts’, 22 nd Ed., p. 343:“there are exceptional cases in which a man will be relieved of the consequences of an
illegal contract into which he has entered-cases to which the maxim does not apply They fall into three classes (a) where the illegal purpose
has not yet been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it (b) where
the plaintiff is not in pari delicto with the defendant : (c) where the plaintiff does not have to rely on the illegality to make out his claim.â€
13. There was in this case no plea by the plaintiff t hat there was any illegal purpose in entrusting the jewellery to Lachhmi Narain. It was
also the plaintiffs case that Gomti Bai knew that the jewellery in dispute was entrusted by the plaintiff to Lachhmi Narain, and if the
averments made in the plaint are to be the sole basis for determining the contest, Gomti Bai did not suffer any loss in consequence of the
entrustment. Assuming that the Trial Court was competent without a proper pleading by the appellant and an issue to enter upon an enquiry
into the question whether the plaintiff could maintain an action for the jewellery entrusted by her to Lachhmi Narain, the circumstances of
the case clearly make out a case that the parties were not “in pari delictoâ€. It is settled law that “Where the parties are not in pari
delicto, the less guilty party may be able to recover money paid, or property transferred, under the contract. This possibility may arise in
three situations. First, the contract may be of a kind made illegal by statute in the interests of a particular class of persons of whom the
plaintiff is one.
* * *
Secondly, the plaintiff must have been induced to enter into the contract by fraud or strong pressure.
* * *
Thirdly, there is some authority for the view that a person who is under a fiduciary duty to the plaintiff will not be allowed to retain
property, or to refuse to account for moneys received, on the ground that the property or the moneys have come into his hands as the
proceeds of an illegal transaction†See Anson's ‘Principles of the English Law of Contract’ p. 346...â€
xxx xxx xxx
xxx xxx xxx
85. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality
has been very succinctly explained by the Supreme Court in its decision in the case of Sita Ram (supra) by applying the maxim in pari causa
potior est conditio possidentis. The Supreme Court, by referring to Anson's ‘Principles of the English Law of Contracts’, explained
that there are exceptional cases in which a person would be relieved of the consequences of an illegal contract into which he has entered
and the above referred maxim is not applied. The Supreme Court classified the three exceptional circumstances : (a) where the illegal
purpose has not yet been substantially carried into effect, (b) where the plaintiff is not in pari delicto with the defendant, and (c) where the
plaintiff does not have to rely on the illegality to make out his claim. This principle explained by the Supreme Court in Sita Ram (supra)
applies on all fours to the case on hand. The plaintiff could be said to be in pari delicto with the defendants and he has no other option, but
to rely upon the invalid agreement of sale for the purpose of seeking the discretionary relief of specific performance. It is not the case of
the plaintiff that he had been induced to enter into the contract by fraud or strong pressure.â€
100 In the case of Waman Shriniwas Kini36 the Apex Court was dealing with the question as to whether the Court would be enforcing an
agreement, which is prohibited and made illegal by the statutory provisions, turning down the plea of waiver on the agreement of the
opponent therein that under the agreement between him and the respondent, he was entitled to sub-let the premise. It was held that the plea
of waiver cannot be raised because as a result of giving effect to that plea, the Court would be enforcing an illegal agreement and, thus,
contravening the statutory provisions of Section 15, based on the public policy and produce the very result which the Statute prohibits and
makes illegal. By enforcing the contract, the consequence will be the enforcement of an illegality and infraction of the statutory provisions,
which cannot be condoned by any conduct or agreement of parties.
101 The Full Bench of the Allahabad High Court in Nutan Kumar and others (supra), has considered the question as to whether the suit for
ejectment and recovery of arrears of rent and damages etc. based on a lease agreement which is unenforceable in the eye of law, can be
maintained by the lessor against the lessee. It was observed in paragraphs “97â€,“98â€,“99â€,“100†and “101†that:-
“97. Now coming to the second question as to whether such a lease as aforesaid is enforceable and a suit of ejectment and recovery of
arrears of rent and damages etc. based on such lease can be maintained by the lessor against the lessee, the following propositions of law
enunciated by Sir William Anson in his book 'Law of Contract' (26th Edn. Edited by A. G. Guest), may usefully be quoted below as guiding
principles on the question :
It is scarcely surprising that the Courts will refuse to enforce an illegal agreement at the suit of a person who is himself implicated in the
illegality. But it is also a rule of English law that money or property transferred by such a person cannot be recovered. In the colourful
words of Wilmot C.J. : 'All writers upon our law agree in this, no polluted hand shall touch the pure fountains of justice. Whoever is a party
to an unlawful contract, if he hath once paid the money stipulated to be paid in pursuance thereof, he shall not have the help of a court to
fetch it back again.'This principle is expressed in the maxim in pari delicto potior est conditto defendant is.
98. The principle expressed in the maxim popularly known as 'pari delicto' is, however, subject to following among other exceptions under
which the man will be relieved of the consequences of an illegal contract into which he has entered (a) Where the plaintiff seeking recovery
of the property given to the defendant in an illegal transaction has withdrawn from a transaction and approached the court before the
illegal purpose of the transaction can be executed in whole or in part;
(b) Where the plaintiff is not in pari delicto with the defendant;
(c) Where the plaintiff though in pari delicto with the defendant suffered from any incapacity of the nature which vitiates a contract or was
as a matter of fact forced to be party to the illegality by reason of the compulsions of social or economic inequality having a bearing upon
the bargaining capacities of the parties; and,
(d) Where the plaintiff does not have to rely on the illegality to make out his claim.
99. The learned author has further stated the principle in the following words :
There is yet one more factor which may defeat an ostensibly valid contract. It is that of illegality. Public policy imposes certain limitations
upon freedom of contract. Certain objects of contract are forbidden or discouraged by law; and though all other requisites for the
formation of a contract are complied with, yet if these objects are in contemplation of the parties when they entered into agreement the law
will not permit them to enforce any rights under it."" (p. 292)
The nature and effects of statutory illegality may vary considerably. A statute may declare that a certain type of contract is expressly
prohibited. There is then no doubt of the intention of the legislature that such a contract should not be enforced. What is done in
contravention of the provisions of an Act of Parliament cannot be made the subject matter of an action."" (p. 293)
100. Equally useful are the following views expressed on the point by Pollock and Mulla in their book 'On Indian Contract and Specific
Relief Acts', I2th Edn. at p. 232 :
If a contract is expressly or by necessary implication forbidden by statute or it is ex facie illegal or both parties know that though ex facie
legal it can be performed by illegality or is intended to be performed illegally, the law will not help the plaintiffs in any way i.e. by direct or
indirect enforcement of rights under the contract. And for this purpose both the parties are presumed to know the law. If expressly
prohibited by law, the contract is void ab initio. If both parties have knowledge that a contract could not be carried out without a violation
of the law, the contract would be un-enforceable. But if only one party has such knowledge the innocent party is not precluded because
otherwise it would injure the innocent, bene fit the guilty and put a premium on deceit. If a contract can be performed in one of two ways,
i.e. legally or illegally it is not an illegal contract though it is un-enforceable at the suit of a party who chooses it to perform illegally.
101. In Anson's Law of Contract (supra), it has also been propounded that where the plaintiff is not relying upon the illegal contract, he
may sue the defendant for possession delivered to the latter under the illegal contract. To quote the learned Author -
It is settled law that the ownership of property can pass under an illegal contract if the parties so intend, as in the case of goods sold to a
buyer under an illegal contract of sale. Where, however, only a limited interest is transferred, as under a contract of bailment or a lease, it
is equally well established that the owner of the property can recover it from the bailee or lessee if he is not forced to found his claim on the
illegal contract, but simply relies on his title to the property.
This principle is extremely difficult of application since it is frequently hard to determine whether a plaintiff is relying upon his title, or
upon the contractual provisions of title, orupon the contractual provisions of the illegal agreement. For example, it seems probable that a
landlord can recover premises let to a tenant under an illegal agreement once the term of years has expired; but it is a matter of doubt
whether he could recover them in the meantime under a covenant which provided for forfeiture for non-payment of rent. Would he be
relying on his independent right of ownership, or (more probably) upon the contractual provisions of the illegal lease ?
102 The decision of the Apex Court in Waman Shirniwas Kini (supra) was considered in paragraph Nos. “102â€,
“103â€,“104â€,“105†and “106†in the following manner:
“102. In Waman Sriniwas v. R. B. and Company, AIR 1959 SC 689, 'A' was the tenant for about 20 years in the premises known as 'Fida
Ali Villa' situate at kalyan in Bombay. The building was purchased by 'R' who gave notice to 'A' to vacate as he wanted to construct a new
building on the site of the old building. 'A' agreed to vacate and 'R' to let to him a portion of his new building. 'A' had four sub- tenants in
the building aforesaid, three of them also shifted to the new premises which were let to 'A' by 'R'. The new premises was let to 'A' on certain
agreement regarding sub-tenancy. 'R' Brought a suit for ejectment on the ground of non-payment of rent and subletting of premises. The
defence of 'A' was that under the terms of lease, he had the right to sub-let the premises.
103. Section 15 of Bombay Hotel and Letting House Rent Control Act, 1947 prohibited sub-letting and made it unlawful for a tenant to
assign or to transfer his interest in the premises let to him. It was held by Supreme Court that an agreement contrary to the provisions of
Section 15 could be unenforceable as being in contravention of the express provisions of the Act which prohibited it; (2) that it was not
permissible to any person to rely upon the contract.
104. While commenting on the maxim --'in pan delicto Eotiorest conditie posidentes' -- the Supreme Court in the above noted case observed
as under :
The maxim must not be understood as meaning that where a transaction is vitiated by illegality the person left in possession of goods after
its completion is always and of necessity entitled to keep them. Its true meaning is that where the circumstances are such that the court will
refuse to assist either party, the consequence must, in fact, follow that the party in possession will not be disturbed.""--(Per Du Paroq L. J. In
Dow Makess Ltd. v. Barnet Instruments Ltd. 1945-1 K. B. 65, 72). 105. The Supreme Court further held :--
The first respondent in the present case did not call upon the court to enforce any agreement at all. When the instrument of lease was
executed and possession given and sub-letting done it received its full effect; no aid of the court was required to enforce it. The
respondent's suit for ejectment was not brought for enforcement of the agreement which recognised sub-letting but he asked the court to
enforce the right of eviction which flows directly from an infraction of the Act (S. 15) and for which the Act itself provides a remedy. There
is thus a manifest distinction between this case where the palintiff asked the court to afford him a remedy against one who by contravening
Section 15 of the Act has made himself liable to eviction and those cases where the court was called upon to assist the plaintiff in an
agreement the object of which was to do an illegal act. The respondent. is only seeking to enforce his rights under the statute and the
appellant cannot be permitted to assert in a court of justice any right founded upon or growing out of an illegal transaction.
106. The Supreme Court further held --""..…
Whether Court would aid the appellant in enforcing a term of agreement which Section 15 of the Act declares to be illegal. By enforcing the
contract the consequence will be the enforcement of an illegality and infraction of a statutory provision ..…
103 The observation of the Apex Court in the case of Manna Lal Khetan (supra) was noted in the paragraph “107†as under:- “
107. The observations of the Supreme Court in Manna Lal Khetan, (1977) 2 SCC 424 : (AIR 1977 SC 536) (supra) at p. 430, para 20 may
also be quoted usefully on the point under discussion.
It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is void. The legal maxim 'A'
pactis provatorum publico juri non derogatur means that private agreements cannot alter the general law. Where a contract express or
implies, is expressly or by implication forbidden by statute, no court can fend its assistance to give it effect. (See Mellis v. Shirley LB) What
is done in contravention of the provisions of an Act of the legislature cannot be made the subject of an action.
104 In light of the above discussion, we find ourselves in complete agreement with the law laid down by this Court in Rameshbhai
Chaturbhai Prajapati (supra) and Hasvantbhai Chhanubhai Dalal (supra) in holding that the agreement being unlawfully, barred by
Section 43 of the Tenancy Act, 1948, in view of the specific bar contained about the execution of the agreement without previous sanction
of the Collector/competent authority, is unenforceable in the eye of law. The reason being that the plaintiff would have no option, but to rely
upon an illegal contract to make out his claim and the Courts will refuse an illegal agreement at the instance of a person, who is himself a
party to the illegality.
105 We find ourselves in concurrence with the decision of the Division Bench in Ganpatlal Manjibhai Khatri (supra), wherein it is held that
there is a total prohibition of even entering into an agreement in writing for the purpose of sale under Section 43 of the Tenancy Act, 1948.
The Agreement to Sell entered into without the prior permission or sanction of the Collector cannot but be termed as invalid or void as the
same was entered into without the prior permission or sanction of the Collector. The suit for specific performance of contract based on
invalid Agreement to Sell, hit by Section 43 of the Tenancy Act, 1948, is not maintainable in law. If the agreement is rendered invalid under
Section 43 of the Tenancy Act, 1948, such agreement is incapable of being specifically enforceable. If the Agreement to Sell itself is invalid,
no decree for specific performance can be passed by the trial Court. 106 We are in concurrence with the observation of the Division Bench
in Ganpatlal Manjibhai Khatri (supra) that the jurisdiction to order specific performance of a contract is based on the existence of valid
and enforceable contract. Where valid and enforceable contract has not been made, the Court will not make a contract for them. The
specific performance will not be ordered if the contract itself suffers from some defect, which makes the contract invalid or unenforceable.
107 In the case of Jayamma the question of interpretation of Section 61 of the Karnataka Land Reforms Act, 1961 fell for consideration
before the Apex Court, in a matter wherein an application purported to be under Section 276 of the Succession Act, 1985 for grant of
Letters of Administration had been filed on the basis of a will, which was converted into a suit and decreed by the trial Court holding that
the testator executed the will with full knowledge, having sound state of mind and it was not obtained by practicing fraud, misrepresentation
or duress. In appeal, the High Court set aside the decree holding that the application for grant of Letters of Administration was not
maintainable in view of Section 61 of the aforesaid Act, the subject matter of testament meant agricultural land with occupancy right could
not have been assigned. Section 61 of the aforesaid Act provided for restriction on transfer of land of which the tenant has become
occupant and reads as under:-
“61. Restriction on transfer of land of which tenant has become occupant. (1) Notwithstanding anything contained in any law, no land of
which the occupancy has been granted to any person under this Chapter shall within fifteen years from the date of the final order passed by
the Tribunal under sub-section (4) or sub-section (5) or sub -section (5-A) of Section 48 -A be transferred by sale, gift, exchange, mortgage,
lease or assignment; but the land may be partitioned among members of the holder’s joint family.
(2) …………………..
(3) Any transfer or partition of land in contravention of sub-section (1) shall be invalid and such land shall vest in the State Government
free from all encumbrances and shall be disposed of in accordance with the provisions of Section 77.â€
108 The Apex Court, having discussed the construction of the provisions of Section 61 therein has held that the statutory embargo on
transfer of land is stricter in a case where tenant has become occupant, than a land held by the tenant simpliciter. Sub-section (3) of Section
61 lays down that any transfer of land in contravention of Sub-section (1) shall be invalid, whereupon the same shall vest in the State
Government free from all encumbrances. The legislative intent that the land should not be allowed to go into the hands of a stranger to the
family is, therefore, manifest. The tenor of Section 61 is that except partition amongst cosharers, no transfer of the property, in any manner,
is permissible. It was, thus, held in paragraph No.21 as under:-
“21. It is not disputed that in view of the purport and object the Legislature sought to achieve by enacting the said provision the
expression ‘assignment’ would include a Will.
6.6 Therefore, what is evident from the extract reproduced hereinabove is that the Full Bench dealt with the discussion in context of the term
in the Contract Act being ""invalid"", ""forbidden by law"" and ""void"" as understood in context of the provisions of the Indian Contract Act.
Perusal of paragraph 96 of the decision would indicate that, it set out the difference between void and illegal agreements. Relying on a
decision in the case of Rajasthan Housing Board (supra), we find that the Hon'ble Supreme Court had the occasion to consider the
provisions of the Rajasthan Tenancy Act. Before the Supreme Court was a case in context of the land NEUTRAL CITATION C/FA/2346/2024
ORDER DATED: 10/07/2024 undefined acquisition proceedings where parcels of lands were transferred by the scheduled castes Khatedars
in favour of a person who was not a member of a scheduled caste. The Supreme Court held that such a transfer was void ab initio. Para 26
of the decision in the case of Rajasthan Housing Board (supra), reads as under:
26. In the instant case, the transaction is ab initio void that is right from its inception and is not voidable at the volition by virtue of the
specific language used in section 42 of the Rajasthan Tenancy Act. There is declaration that such transaction of sale of holding ""shall be
void"". As the provision is declaratory, no further declaration is required to declare prohibited transaction a nullity. No right accrues to a
person on the basis of such a transaction. The person who enters into an agreement to purchase the same, is aware of the consequences of
the provision carved out in order to protect weaker sections of Scheduled Castes and Scheduled Tribes. The right to claim compensation
accrues from right, title or interest in the land. When such right, title or interest in land is inalienable to non-SC/ST, obviously the
agreements entered into by the Society with the Khatedars are clearly void and decrees obtained on the basis of the agreement are violative
of the mandate of section 42 of the Rajasthan Tenancy Act and are a nullity. Such a prohibited transaction opposed to public policy, cannot
be enforced. Any other interpretation would be defeasive of the very intent and protection carved out under section 42 as per the mandate
of Article 46 of the Constitution, in favour of the poor castes and downtrodden persons, included in the Schedules to Articles 341 and 342
of the Constitution of India.
27. In State of Madhya Pradesh v. Babu Lal [(1977) 2 SCC 435] : (AIR 1977 SC 1718), the provisions contained in section 165(6) of M.P.
Land Revenue Code, 1959 came up for consideration before this Court. The High Court directed the State to file a suit for declaring the
decree null and void. The decision was set aside. It was held that the case was a glaring instance of violation of law as such the High Court
erred in not issuing a writ. The decision of the High Court was set aside. The transfer which was in violation of proviso to section 165(6)
transferring the right of Bhuswami belonging to a tribe, was set aside.
28. This Court in Lincal Gamango v. Dayanidhi Jena [(2004) 7 SCC 437 : AIR 2004 SC 3457] while considering the provisions of Orissa
Scheduled Areas Transfer of Immovable Property (by Scheduled Tribes) Regulation, 1956 which prohibited alienation of rural property by
a tribal to a non-tribal, declared such transaction to be null and void. This Court while relying upon the decision in Amrendra Pratap Singh
v. Tej Bahadur Prajapati [(2004) 10 SCC 65 : AIR 2004 SC 3782] has laid down that no right can be acquired by adverse possession on
such inalienable property. Adverse possession operates on an alienable right. It was held that non- tribal would not acquire a right or title
on the basis of adverse possession.
30. This Court in Amrendra Pratap, ((2004) 10 SCC 65 : AIR 2004 SC 3782) (supra) has laid down that the expression 'transfer' would
include any dealing with the property when the word 'deal with' has not been defined in the statute.Dictionary meaning as the safe guide
can be extended to achieve the intended object of the Act. The transaction or the dealing with alienable property to transfer title of an
aboriginal tribe and vesting the same in non-tribal was construed as transfer of immovable property. Extending the meaning of the
expression 'transfer of immovable property' would include dealing with such property as would have the effect of causing or resulting in
transfer of interest in immovable property. When the object of the legislation is to prevent a mischief and to confer protection on the weaker
sections of the society, the court would not hesitate in placing an extended meaning, even a stretched one, on the word, if in doing so the
statute would succeed in attaining the object sought to be achieved. When the intendment of the Act is that the property should remain so
confined in its operation in relation to tribals that the immovable property to one tribal may come but the title in immovable property is not to
come to vest in a non-tribal the intendment is to be taken care by the protective arm of the law and be saved from falling prey to
unscrupulous devices, and this Court concluded any transaction or dealing with immovable property which would have the effect of
extinguishing title, possession or right to possess such property in a tribal and vesting the same in a nontribal, would be included within the
meaning of 'transfer of immovable property'.
65. In Ram Karan v. State of Rajasthan [(2014) 8 SCC 282], the Supreme Court has laid down that the transfer of holding by a member of
Scheduled Caste to a member not belonging to the Scheduled Caste by virtue of Section 42 of the Rajasthan Tenancy Act is forbidden and
unenforceable. Such a transaction is unlawful even under Section 23 of the Contract Act and an agreement or such transfer would be void
under Section 2(g) of the Contract Act. This principle of law, as explained by the Supreme Court in Ram Karan (supra) fortifies the view
taken by the learned Single Judge of this Court in the case of Hardik Harshadbhai Patel (supra). Keeping this principle in mind, I have
arrived to the conclusion that the word ""invalid"" or the word ""void"", so far as the Section 43 of the Tenancy Act is concerned, would not
make by difference. The true test is whether the transaction is unlawful, as opposed to the public policy. Whether such transaction would
defeat the very object with which such restriction has been imposed in Section 43 of the Tenancy Act.
6.7 Reading thereof would indicate that in light of the specific bar under the Tenancy Act, the transaction of sale was void. The Supreme
Court held that the right to claim compensation would accrue from the right, title or interest of the land and when the agreements entered
into itself were clearly void and a nullity, such a transaction being opposed to public policy cannot be enforced. The transaction being null
and void, the Supreme Court therefore held that the right to claim compensation would also not accrue. Reliance as is evident from para 99
of the decision of the Full Bench was based on a decision of the Supreme Court in the case of Sitaram Vs. Radha Bai & Ors., reported in
AIR 1968 Supreme Court 534., which reads as under:
99 The decision of the Apex Court in the case of Sita Ram (supra), has been noted in paragraph Nos. ""75"" and ""85"" therein as under: -
75. The Supreme Court in the case of Sita Ram v. Radha Bai reported in AIR 1968 SC 534 has very succinctly explained the law on the
subject. I may quote the relevant observations as under:
12. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an
illegality or fraud is expressed in the maxim In pari causa potior est conditio possidentis. But as stated in Anson's 'Principles of the English
Law of Contracts', 22 nd Ed., p. 343:""there are exceptional cases in which a man will be relieved of the consequences of an illegal contract
into which he has entered-cases to which the maxim does not apply They fall into three classes (a) where the illegal purpose has not yet
been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it (b) where the plaintiff
is not in pari delicto with the defendant : (c) where the plaintiff does not have to rely on the illegality to make out his claim.
13. There was in this case no plea by the plaintiff t hat there was any illegal purpose in entrusting the jewellery to Lachhmi Narain. It was
also the plaintiffs case that Gomti Bai knew that the jewellery in dispute was entrusted by the plaintiff to Lachhmi Narain, and if the
averments made in the plaint are to be the sole basis for determining the contest, Gomti Bai did not suffer any loss in consequence of the
entrustment. Assuming that the Trial Court was competent without a proper pleading by the appellant and an issue to enter upon an enquiry
into the question whether the plaintiff could maintain an action for the jewellery entrusted by her to Lachhmi Narain, the circumstances of
the case clearly make out a case that the parties were not ""in pari delicto"". It is settled law that ""Where the parties are not in pari delicto,
the less guilty party may be able to recover money paid, or property transferred, under the contract. This possibility may arise in three
situations. First, the contract may be of a kind made illegal by statute in the interests of a particular class of persons of whom the plaintiff is
one.* * *
Secondly, the plaintiff must have been induced to enter into the contract by fraud or strong pressure.
***
Thirdly, there is some authority for the view that a person who is under a fiduciary duty to the plaintiff will not be allowed to retain
property, or to refuse to account for moneys received, on the ground that the property or the moneys have come into his hands as the
proceeds of an illegal transaction"" See Anson's 'Principles of the English Law of Contract' p. 346...
xxx xxx xxx
xxx xxx xxx
85. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality
has been very succinctly explained by the Supreme Court in its decision in the case of Sita Ram (supra) by applying the maxim in pari causa
potior est conditio possidentis. The Supreme Court, by referring to Anson's 'Principles of the English Law of Contracts', explained that there
are exceptional cases in which a person would be relieved of the consequences of an illegal contract into which he has entered and the
above referred maxim is not applied. The Supreme Court classified the three exceptional circumstances : (a) where the illegal purpose has
not yet been substantially carried into effect, (b) where the plaintiff is not in pari delicto with the defendant, and (c) where the plaintiff does
not have to rely on the illegality to make out his claim. This principle explained by the Supreme Court in Sita Ram (supra) applies on all
fours to the case on hand. The plaintiff could be said to be in pari delicto with the defendants and he has no other option, but to rely upon
the invalid agreement of sale for the purpose of seeking the discretionary relief of specific performance. It is not the case of the plaintiff
that he had been induced to enter into the contract by fraud or strong pressure.
6.8 Reading of the aforesaid paras would indicate that where the parties are not in pari delicto, the less guilty party may be able to recover
the money paid. However, where the party himself is aware of the illegality, on the maxim of pari delicto, such a person cannot claim the
relief of even compensation on being wronged at the hands of the plaintiff.
6.9 In paragraphs 140 to 142 of the decision of the Full Bench, the question of enforceability of the agreement hit by section 43 of the
Tenancy Act has been dealt with.
Paras 140 to 142 of the Full Bench decision read as under:
140 In the end, on the issue of grant of decree of specific performance of an Agreement to Sell which is contrary to the statutory
provisions, we may refer to the decision of the Apex Court in Narayanamma (supra) wherein applying various tests, referring to the decision
of the Apex Court in Kedar Nath Motani39 it was held that if the decree is granted in favour of the plaintiff on the basis of an illegal
agreement which is hit by a statute, it will be rendering active assistance of the Court in enforcing an agreement which is contrary to law. A
ticklish question has also arisen in the situation of the said case where both the parties were common participators in the illegality.
Referring to the opinion of Hidayatulla, J in Kedar Nath Motani (supra) and the opinion of Gajendragadkar, J in Immani Appa Rao40 it
was noted that where the claim of the plaintiff is entirely based upon an agreement which is hit by the statutory provisions, although
illegality is not pleaded by the defendant nor sought to be relied upon by him in defence, yet the Court itself, upon the illegality appearing
from the evidence will take notice of it and will dismiss the action on the doctrine ex turpi causa non oritur actio, i.e. no polluted hand shall
touch the pure fountain of justice.
141 It was held therein that as against rendering active assistance of the Court in enforcing an agreement which is contrary to law, if the
balance is tilted towards the defendant, no doubt that they would stand benefited even inspite of they committing illegality, however, in such
course, what the Court would be doing is only rendering an assistance which is wholly of a passive character. As held by Gajendragadkar,
J in Immani Appa Rao (supra), the first course would be clearly and patently inconsistent with the public interest, whereas the latter course
is lesser injurious to public interest than the former.
142 The position of law is, thus, clear that any transfer in violation of the statutory provision being invalid or illegal in the eye of law
cannot be enforced by the Civil Court by granting a decree of specific performance on conditional basis, even if the defendant is benefited
to some extent by the order of the Civil Court. The arguments of the learned Advocates that the defendant-vendor having pocketed the sale
consideration cannot be permitted to claim for dismissal of the suit on the principle that ""No act of Court can prejudice a party"", does not
merit consideration.
6.10 The aforesaid paragraphs of the decision of the Full Bench would indicate that the Full Bench positively held that any transfer which
is in violation of the statutory provisions being invalid, cannot be enforced by a Civil Court by granting a decree of specific performance.
Even the argument of the learned counsels of having pocketed the sale consideration cannot be permitted in light of dismissal of the suit on
the principle that ""No act of the Court can prejudice a party"". In light of this, the submission of the learned Senior Advocate Mr.Vyas, that
the Full Bench had not dealt with the issue of the alternative relief of compensation or damages cannot be accepted. It is in light of this, that
the submission of the learned Counsel for the appellant that the plaintiff's plaint cannot be rejected in part cannot be accepted in light of
the fact that the alternative relief of compensation arose itself out of a contract which was held to be incapable and invalid to be performed
of which, the plaintiff and the defendants were very much aware of, which therefore leads us to believe that on the principle of pari delicto
and in light of the decision of the Supreme Court in the case of Sita Ram (supra), the contention that the plaint was rejected in part also
cannot be accepted.
6.12 Reading of the aforesaid decision of the Supreme Court would indicate that a person who gives money for an unlawful purpose
knowing it to be so and in such circumstances knowing of the illegality in the unlawfulness can as a finding of fact be imputed with the
knowledge of the fact that such an agreement which he had entered into was illegal. He therefore cannot be entitled to say that he should
be refunded the money arising towards damages or compensation for a transaction which was void and illegal. The Supreme Court held
that the provisions of Sec.65 and 70 made by the legislature cannot be taken advantage of where the object of the agreement was illegal to
the knowledge of both the parties at the time it was made. It is a case here that it is not on a subsequent discovery that the plaintiff came to
know of the agreement being illegal. With open eyes as it is evident from the plaint itself it was the case of the defendant that the land in
question was a restricted tenure land and would not therefore be alienable without previous permission of the Collector. Having done so, it
will not lie on the face of the plaintiff now to plead for an alternative relief of compensation and damages when he was pari delicto to the
contract itself. It will be in the fitness of things to reproduce para 50 of the decision in the case of Katta Sujata (supra), which deals with
the nature of specific relief Act. Para 50 accordingly reads as under:
50 While discussing the nature of the Specific Relief Act, in the aforesaid case, this Court had observed as under:]
16. Injunction is a form of specific relief. It is an order of a court requiring a party either to do a specific act or acts or to refrain from
doing a specific act or acts either for a limited period or without limit of time. In relation to a breach of contract, the proper remedy against
a defendant who acts in breach of his obligations under a contract, is either damages or specific relief. The two principal varieties of
specific relief are, decree of specific performance and the injunction (See David Bean on Injunctions). The Specific Relief Act, 1963 was
intended to be ""an Act to define and amend the law relating to certain kinds of specific reliefs"". Specific relief is relief in specie. It is a
remedy which aims at the exact fulfilment of an obligation. According to Dr. Banerjee in his Tagore Law Lectures on Specific Relief, the
remedy for the nonperformance of a duty are (1) compensatory, (2) specific. In the former, the court awards damages for breach of the
obligation. In the latter, it directs the party in default to do or forbear from doing the very thing, which he is bound to do or forbear from
doing. The law of specific relief is said to be, in its essence, a part of the law of procedure, for, specific relief is a form of judicial redress.
Thus, the Specific Relief Act, 1963 purports to define and amend the law relating to certain kinds of specific reliefs obtainable in civil
courts. It does not deal with the remedies connected with compensatory reliefs except as incidental and to a limited extent. The right to relief
of injunctions is contained in Part III of the Specific Relief Act. Section 36 provides that preventive relief may be granted at the discretion of
the court by injunction, temporary or perpetual. Section 38 indicates when perpetual injunctions are granted and Section 39 indicates when
mandatory injunctions are granted. Section 40 provides that damages may be awarded either in lieu of or in addition to injunctions. Section
41 provides for contingencies when an injunction cannot be granted. Section 42 enables, notwithstanding anything contained in Section 41,
particularly Clause (e) providing that no injunction can be granted to prevent the breach of a contract the performance of which would not
be specifically enforced, the granting of an injunction to perform a negative covenant. Thus, the power to grant injunctions by way of
specific relief is covered by the Specific Relief Act, 1963.
However, the conclusion in the above paragraph, taken in isolation, would not support the final outcome in the aforesaid case, wherein it
was held that an injunction order granted under Section 9 of the Arbitration and Conciliation Act would involve consideration of settled
principles under the Code of Civil Procedure or the Specific Relief Act. It was nowhere stated in the aforesaid case that the Specific Relief
Act of 1963 stricto sensu provided for only procedural mechanism. We find it difficult to read the aforesaid case in the manner alluded to by
the High Court.
21. Considering the ratio laid down in the aforesaid two decisions, I am of the view that the principles enunciated in the aforesaid decisions are
squarely applicable to the case on hand on all fours.
22. In the backdrop of the aforesaid discussion, both the applications are allowed. The impugned common order dated 12.01.2021, rejecting
applications Exhs.17 and 22 under Order VII Rule 11 is clearly unsustainable, and as such, is hereby quashed and set aside. As a consequences, the
plaint stands rejected. Rule is made absolute to the aforesaid extent.
23. After the judgment was pronounced, learned advocate Mr. R.J. Goswami has requested that the judgment may be stayed for a period of eight
weeks to enable his clients to approach the Hon’ble Apex Court. The request is granted. The operation of this order is stayed for a period of eight
weeks.
