& Ors Vs. Metadin Agarwal & Ors  Insc 545 (29 August 2006)
Sinha & Dalveer Bhandari
W I T
H CIVIL APPEAL NOS.2024 & 8265 OF 2004 S.B. SINHA, J :
heirs and legal representatives of the Original Defendant in a suit for
specific performance of contract and the subsequent purchaser are before us in
these appeals which arise out of a judgment and order dated 10.09.2003 passed
by a Division Bench of the Andhra Pradesh High Court in Letters Patent Appeal
Nos. 168 and 169 of 1996 whereby and whereunder the judgment and decree passed
by a learned Single Judge dated 05.11.1996 affirming a judgment and decree
dated 30.04.1990 passed by the Additional Chief Judge-cum-Spl. Judge for SPE
& ACB Cases, City Civil Court, Hyderabad, was set aside.
Defendant in the suit together with his other co-sharers were owners of Survey
No.71, West Marredpalli, Secunderabad. A proceeding under
the Urban Land (Ceiling & Regulation) Act, 1976 (for short, 'the 1976
Act') was initiated against them. In the said proceeding at the hands of the
landholders, excess land was directed to be vested in the Central Government.
The owners were allowed to retain 1000 sq. metres of land each.
on that premise a piece of vacant land bearing Plot No.2 in Survey No.71
measuring 1000 sq. metres which had been allotted to the defendant was allowed
to be retained by him. On or about 27.06.1978 he (original Owner) entered into
an agreement with the Plaintiff for sale in respect thereof on a consideration
of Rs.50/- sq. yard . As on the said date, a proceeding under the 1976 Act was
pending, the agreement to sell was subject to the grant of permission by the
competent authority under the said Act. It stipulated that in the event of
refusal on the part of the competent authority to grant such permission, the
advance paid to the Defendant would be refunded. It was further stipulated that
in the event of refusal on the part of the vendor to execute the sale deed upon
obtaining permission, if any, not only the amount paid by way of advance was to
be refunded but also damages to the extent of Rs.15,000/- was to be paid by the
Defendant to the Plaintiff. The application under Section 26 of the 1976 Act
filed for seeking permission to sell the said land was rejected by the competent
authority by an order dated 24.08.1978.
application was filed under Section 10 of the 1976 Act on 29.04.1980 which was
again rejected by an order dated 26.06.1980 stating that no vacant land
measuring 1000 sq. metres was available, in view of the order passed in the
proceedings under the 1976 Act and as such no permission could be granted. A
clarification of the said order was sought for. Allegedly, on the ground that
permission to sell the vacant land had been rejected by a notice dated 26.06.1980,
the agreement was sought to be cancelled by the Respondent on the premise that
the same stood frustrated.
Plaintiff-Respondent in C.A. No.2023 of 2004 thereafter filed a suit for
specific performance of contract.
learned Trial Judge decreed the said suit in part. While rejecting the prayer
for grant of specific performance of contract, the Defendant was directed to
refund the amount of advance as also damages of Rs.15,000/- together with
interest @ 6% p.a.. An appeal was preferred thereagainst by the
Plaintiff-Respondent and by a judgment and order dated 05.11.1996, a learned
Single Judge of the High Court dismissed the appeal. Be it placed on record
that the learned Single Judge appointed a Advocate-Commissioner for taking
measurement of land in question; whereupon a report was filed.
Letters Patent Appeal was filed by the Plaintiff-Respondent before a Division
Bench of the High Court and by reason of the impugned judgment, the said
Letters Patent Appeal had been allowed.
said suit an order of status quo was passed. Allegedly, in violation of the
said order, all co-sharers sold portions of the house property which could be
retained by them under the 1976 Act.
Gupta, the learned Senior Counsel appearing on behalf of the Appellants, urged that
The High Court
acted illegally and without jurisdiction in ignoring the orders passed by the
competent authority under the 1976 Act;
The decree for
specific performance granted by the Division Bench is contrary to the statutory
provisions contained in the 1976 Act;
Bench could not have interfered with the judgment by the learned Trial Judge as
also the learned Single Judge of the High Court refusing to exercise their
jurisdiction under Section 20 of the Specific Relief Act, 1963, and
interference therewith by the Division Bench was unwarranted; and
The High Court
could not have directed cancellation of the deed of sale in favour of the
Nageshwara Rao, the learned Senior Counsel appearing on behalf of the
Respondents, on the other hand, submitted that :
Although some of
the findings arrived at by the High Court cannot be supported, but having
regard to the fact that 1000 sq. metres of vacant land, which was the
subject-matter of the agreement for sale being outside the purview of the
vacant land under the 1976 Act, the learned Trial Judge and consequently the
learned Single of the High Court committed a manifest error in so far as they
failed to take into consideration that Section 20 of the 1976 Act would not be
Trial Court having found that the Defendant had been held guilty of commission
of fraud, could not have deprived the Plaintiff-Respondent from obtaining a
decree for specific performance of contract;
appointed by the Trial Judge as also the learned Single Judge having found that
the subject- matter of the agreement for sale executed by the Appellant in favour
of Meenakshi and others was identical to that of the suit land, the Division
Bench cannot be said to have committed any illegality in granting the decree
for specific performance of contract;
Trial Judge as also the learned Single Judge committed a serious error in
denying a decree for specific performance of contract on a premise that the
period of twelve years have elapsed since the agreement for sale and, thus, the
alternative prayer for grant of damages would suffice;
It was not a
case where the contract was a contingent one, but being a completed one, a suit
for specific performance of contract was maintainable and there was no bar on
the part of the Division Bench in passing a decree therefor;
Bench of the High Court exercised plenary jurisdiction in an intra-court appeal
and thence both question of fact as also of law could be gone into and, thus,
it cannot be said to have committed any illegality in interfering with the
judgments of the learned Trial Court as also the learned Single Judge of the
not disputed that the parties to the agreement were aware of the proceedings
pending before the ceiling authorities. It is also not in dispute that the
Central Government was the appropriate authority to deal with the matter as the
lands pertained to a cantonment area. The agreement envisaged that the
Defendant would obtain necessary sanction from the competent authority. It was
made clear that he had not submitted any lay out nor had he got any sanction therefor.
8 and 9 of the said agreement read as under :
the second party fails to pay the balance consideration of Rs.44,800/- (Rupees
forty four thousand either hundred only) by the due date, and refuses to
purchase after permission is granted, the second party shall forfeit the
advance of Rs.15,000/- (Rupees fifteen thousand only) paid by them to the first
party. If the first party fails to execute the sale deed by the due date, after
the permission is granted, the first party shall not only refund to the second
party the advance sum of Rs.15,000/- but shall also pay to the party an
additional sum of Rs.15,000 as damages.
case permission to sell to the second party is refused by the ceiling
authority, then the first party shall refund to the second party, the advance
sum of Rs.15,000/- (fifteen thousand only) within one month from the date of
refund." The lands in question admittedly were described in the plan
annexed to the agreement which shows that the same was lying west to a 30 ft.
Respondents themselves had annexed a plan, from a perusal whereof it appears that
six co-sharers were allotted 6000 sq. metres of lands four in one block and
two in another, apart from their house properties situate on the eastern side
of the said road.
plots in question were marked with the letters '1', '2', '3', '4', '5' and '6'.
A big chunk of land was held to be the excess land under the 1976 Act at the
hands of the Appellants and their co-sharers. The lands belonging to Syed Abdul
Razak was marked with the letter '2'.
land ceiling proceedings, in response to the Defendant's letter dated
30.07.1980, the competent authority by its letter dated 08.08.1980 rejected the
application for grant of permission under Section 26 of the 1976 Act stating
of your prescribed ceiling limit of 1000 sq. mtrs. your individual share of
urban properties including built up area/vacant land are as under :
up area including appurtenant lands in sq. mts. Vacant land in sq. mtrs.
Mr. S.A. Razak 563.25 436.75
Mr. S.A. Rahman 563.25 436.75
Begum 281.62 718.38
are advised to submit a plan showing the built up area and vacant land, as
shown above, to be retained by you, as per prescribed ceiling limit." No
vacant land admeasuring 1000 sq. metres, according to the authorities, was,
thus, available for transfer to third parties.
Division Bench commented that having regard to the Muslim law of inheritance
and succession, the competent authority should not have jumped to the
conclusion that the declarant wanted to retain the built up area and also
apportioning the built up area and vacant land between the male members and the
female members of the family. The Division Bench made a terse comment against
the competent authorities by raising a question as to how permission had been
granted in favour of the cooperative society while rejecting similar
application in favour of the Plaintiff while declining such permission in favour
of the Respondent. The learned Judges purported to have addressed themselves to
the question as regards the propriety, legality and/or validity of the order
passed under Section 9 of the Act and came to the conclusion that even after
alienating 26972 sq. metres of land to the society, the family still owned
excess lands which would be about 5261 sq. metres including 2253 sq. metres of
land wherever buildings were standing.
upon certain decisions, the Division Bench opined that a decree for specific
performance could have been granted, stating :
this case also the defendant having entered into agreement to sell open land of
thousand metres each to the plaintiffs took a round about turn by selling the
vast extent of property along with other family members which was declared as
surplus land to Murthy Housing Cooperative Society Limited with the active
connivance of the competent authority in obtaining a letter Ex.A-16/ B10 dated
26.6.1980 wherein the competent authority says that area sought to be sold
include built up area which is absolutely false and the competent authority
made such a statement in collusion with the defendant who in fact helped him in
alienating about 30,000 square metres of land which is declared as surplus land
circumventing the provisions of Urban Land Ceilings Acts more so after the
entire procedure contemplated under the Act is over.Hence the order of
competent authority is only camouflage to avoid the completion of the sale
transaction. In the light of the foregoing discussion, we cannot agree with the
reasoning given by the trial court as well as the Learned Single Judge in
dismissing the suits, since the land offered for sale do not contain any built
up area either as per the agreement of sale or any of the maps that were filed
before various authorities" The competent authority under the 1976 Act was
not impleaded as a party in the suit. The orders passed by the competent
authority therein could not have been the subject-matter thereof. The Plaintiff
although being a person aggrieved could have questioned the validity of the
said orders, did not chose to do so. Even if the orders passed by the competent
authorities were bad in law, they were required to be set aside in an
appropriate proceeding. They were not the subject matter of the said suit and
the validity or otherwise of the said proceeding could not have been gone into
therein and in any event for the first time in the Letters Patent Appeal.
a well-settled principle of law that even a void order is required to be set
aside by a competent court of law inasmuch as an order may be void in respect
of one person but may be valid in respect of another. A void order is
necessarily not non est. An order cannot be declared to be void in a collateral
proceeding and that too in absence of the authorities who were the authors
thereof. The order passed by the authorities were not found to be wholly
without jurisdiction. They were not, thus, nullities.
Division Bench proceeded on a rather curious premise. It took into
consideration extraneous and irrelevant factors, some of which we would notice
a little later.
fail to appreciate the manner in which the Division Bench not only went into
the legality of the orders passed by the competent authority made under the
1976 Act but also made comments about their alleged personal involvement
therein. The High Court had no jurisdiction to make such comments and pass
strictures against the said authority.
it is held that the orders passed by the competent authority could not have
been the subject-matter of a decision in the suit, it must be held that the
entire approach of the Division Bench was unsound in law. It posed unto itself
wrong questions leading to wrong answers.
learned Trial Judge albeit concluded that the Defendant was guilty of fraud,
but the said finding had been arrived at on the premise that he could not have
entered into an agreement for sale of 1000 sq. metres of vacant land when the
same was not available. It was held :
"To sum up,
it is evident that in Ex. A1, the defendant knowingly has made a false
declaration that the 1000 sq. metres of vacant land which he has agreed to sell
under Ex.A1 is the land allowed by the competent authority to be retained by
him under the Act. While actually it includes a portion of the building and the
contracted land is land outside the ceiling area. When Ex.A1 land is not land
within the ceiling limit, Section 26 of the Act does not apply" It further
defendant by making a false declaration in Ex.A1 has induced the plaintiff to
enter into Ex.A1 contract and has not been made any efforts to perform the
contract or at least make amends for that fraud played by him. It may be
mentioned that making a false declaration knowing it to be false and having no
intention to perform is nothing short of fraud.
On account of
this fraud perpetuated on the plaintiff, plaintiff can either insist upon
specific performance or seek damages. I have already stated above that
directing specific performance would prolong the stalemate and uncertainty for
good length of time and that it is not interests of even the plaintiff to have
such a relief because it depends upon a contingency and the relief may or may
not ultimately materialize. The best remedy under the circumstances would be to
grant the alternative relief of damages asked for by the plaintiff."
was, therefore, not a case where the Trial Court found that the Defendant had
committed a fraud on the statutory authorities or on the court. The expression
'fraud' in our opinion was improperly used. It must be noticed that admittedly
when the agreement was entered into, the proceedings under the 1976 Act were
pending. The parties might have proceeded under a misconception. It is also
possible that the Defendant had made misrepresentation to the Plaintiff; but
the question which was relevant for the purpose of determination of the dispute
was as to whether having regard to the proceedings pending before the competent
authority under the 1976 Act, the Defendant could perform their part of the
contract. The answer thereto, having regard to the order of the competent
authority dated 08.08.1980, must be rendered in negative.
Rao may be right in his submission that in a given case, it is possible to pass
a decree for specific performance of contract, although there exists a clause
for obtaining a sanction from the competent authority. But in the instant case,
rightly or wrongly the competent authority had refused to grant such sanction.
It refused to grant sanction not on the ground that Section 26 was attracted;
but on the ground that 1000 sq. metres of vacant lands which had been the
subject-matter of agreement were not available, in view of the fact that the
Defendant and their co-sharers were permitted to retain only their residential
houses and the lands appurtenant thereto.
was, therefore, not a case where a notice under Section 26 of the 1976 Act
could have served the purpose and in the event, the competent authority did not
exercise its statutory right of perception within the period stipulated thereunder,
the Defendant was free to execute a deed of sale in favour of any person he
reliance has been placed by Mr. Nageshwara Rao on a decision of this Court in
HPA International etc. v. Bhagwandas Fatehchand Daswani and Others etc. [(2004)
6 SCC 537]. Our attention in particular has been drawn to the following observations
the case before us, we have not found that the vendor was guilty of rendering
the suit for sanction infructuous. It did terminate the contract pending the
suit for sanction but never withdrew that suit. The vendee himself prosecuted
it and rendered it infructuous by his own filing of an affidavit giving up his
claim for the interest of reversioners. In such a situation where the vendor
was not in any manner guilty of not obtaining the sanction and the clause of
the contract requiring the Court's sanction for conveyance of full interest,
being for the benefit of both the parties, the contract had been rendered
unenforceable with the dismissal of the sanction suit." The said
observations were made in the fact situation obtaining therein.
this case, we are concerned with a situation where the sanction, it will bear
repetition to state, has expressly been refused.
J. in that case itself has noticed a judgment of the House of Lords in New
Zealand Shipping Co., Ltd. v. Scoiete Des Ateliers Et. Chantiers De France
[(1918-19) AER 552] wherein it was held that a man shall not be allowed to take
advantage of his own wrong which he himself brought about.
parties were aware of the proceedings under the 1996 Act. The
Plaintiff-Respondents were also aware that sanction under the said Act is
necessary. The consequence for non-grant of such sanction was expressly
stipulated. Even the parties were clear in their mind as regards the
consequences of willful non-execution of a deed of sale or willful refusal on
their part to perform their part of contract.
notice that Lord Atkinson in New Zealand Shipping (supra) took into
consideration the inability or impossibility on the part of a party to perform
his part of contract and opined that the principle that man shall not be
permitted to take advantage of his own wrong, which he himself brought about.
attention has rightly been drawn by Mr. Gupta to the deed of sale executed by
the Defendant in favour of others. By the said deeds of sale all the six
co-sharers have sold portions of their house properties and lands appurtenant
thereto. The total land sold to the purchasers by all the six co- sharers was
below 900 sq. metres.
comment made by the Division Bench that the competent authority under the 1976
Act failed to take into consideration the Muslim law of inheritance and
succession is again besides the point. Each of the claim petition by the
Appellants and their co-sharers was determined having regard to the 1976 Act.
The Muslim law of inheritance and succession may not have any role to play. In
any event, the same could not have been the subject-matter of a decision at the
hands of the Division Bench.
have noticed the reports of the Commissioner appointed both by the Trial Court
and the learned Single Judge of the High Court. The Commissioner appointed by
the Trial Judge in his report stated :
also found some numbers were painted in black on the compound wall inside the
western compound wall as 3-42-67 and I also found one small brick mound near to
middle unfinished room touching western compound wall. I also found some
numbers on the gate painted in black as 65-66-67-68-69 while I was proceeding
with the execution of warrant some persons brought a board and tied it to the
gate which contains some letters painted as "this land and construction
area Cantonment H. No.3-42- 65 to 3-42-69 belong to Murthy Cooperative Housing
Society-Trespasser will be prosecuted." It was, therefore, accepted that
the plots mentioned therein had already been sold to Murthy Cooperative Housing
Society. The said cooperative society, it is beyond any cavil of doubt,
purchased the land from the original owners pursuant to or in furtherance of
the exemption accorded in that behalf by the competent authority in exercise of
its power under Section 20 of the 1976 Act. The land sold to the cooperative
society which might have included the vacant land and which was the
subject-matter of the agreement but was not the subject-matter of the suit.
They were not parties thereto. The sanction accorded in their favour by the
competent authority had never been put in question.
Advocate-Commissioner appointed by the Trial Court, observed :
and Observation :
all the aforesaid facts and circumstances I conclude that the plot no.2 in
Survey no. 71 as mentioned in agreement of sale Ex.A-2 in the trial court and
the house no. 3-9-51/A,B,C and D situated in Survey no.71/part, west Marredpally
on which I conducted the local inspection are the same." The learned
Commissioner, therefore, only inspected Plot No.2 situated in Survey No.71 and
not the lands which were the subject-matter of sale in favour of the subsequent
High Court, in our considered view, also committed a manifest error in opining
that the Appellants should have questioned the orders passed by the competent
authority. If they have not done so, the same would not mean that the Division
Bench could go thereinto suo motu.
Section 20 of the Specific Relief Act confers a discretionary jurisdiction upon
the courts. Undoubtedly such a jurisdiction cannot be refused to be exercised
on whims and caprice; but when with passage of time, contract becomes
frustrated or in some cases increase in the price of land takes place, the same
being relevant factors can be taken into consideration for the said purpose.
While refusing to exercise its jurisdiction, the courts are not precluded from
taking into consideration the subsequent events. Only because the
Plaintiff-Respondents are ready and willing to perform their part of contract
and even assuming that the Defendant was not entirely vigilant in protecting
their rights in the proceedings before the competent authority under the 1976
Act, the same by itself would not mean that a decree for specific performance
of contract would automatically be granted. While considering the question as
to whether the discretionary jurisdiction should be exercised or not, the
orders of a competent authority must also be taken into consideration. While
the court upon passing a decree for specific performance of contract is
entitled to direct that the same shall be subject to the grant of sanction by
the concerned authority, as was the case in Mrs. Chandnee Vidya Vati Madden v.
Dr. C.L. Katial and Others [AIR 1964 SC 978] and Nirmal Anand v. Advent
Corporation (P) Ltd. and Others [(2002) 5 SCC 481]; the ratio laid down therein
cannot be extended to a case where prayer for such sanction had been prayed for
and expressly rejected. On the face of such order, which, as noticed
hereinbefore, is required to be set aside by a court in accordance with law, a
decree for specific performance of contract could not have been granted.
Rao contended that the plea as regards maintainability of the suit should not
be permitted to be raised before this Court. We do not agree with the counsel
inasmuch as, inter alia, the plea which has been raised herein by the Defendant
is that it was not a fit case where the Division Bench should have interfered
with the discretionary jurisdiction exercised by the learned Trial Judge as
also by the learned Single Judge.
cannot be any doubt that in exercise of its letters patent jurisdiction, the
Appellate Court may review findings of fact as well as law arrived at by a
learned Single Judge, but while doing so, it must bear in mind its limitations.
It is now well-settled principle of law that the courts would not normally
interfere with the discretionary jurisdiction exercised by the courts below.
Anandappa Urf Shivappa Hanasi v. Tammanasa and Others [(2003) SCC 390], it was held
is another aspect of the matter which cannot be lost sight of. The plaintiff
filed the suit almost after six years from the date of entering into the
agreement to sell. He did not bring any material on record to show that he had
ever asked Defendant 1, the owner of the property, to execute a deed of sale.
He filed a suit only after he came to know that the suit land had already been
sold by her in favour of the appellant herein.
it was obligatory on the part of the plaintiff for obtaining a discretionary
relief having regard to Section 20 of the Act to approach the court within a
reasonable time. Having regard to his conduct, the plaintiff was not entitled
to a discretionary relief." It was further observed :
is now also well settled that a court of appeal should not ordinarily interfere
with the discretion exercised by the courts below." The findings of the
Division Bench, in our considered opinion, therefore, cannot be sustained.
the reasons aforementioned, the impugned judgment cannot be sustained which is
set aside accordingly. The appeals are allowed.
in the facts and circumstances of the case, the parties shall pay and bear
their own costs.