G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER

The Judgment of the Court was delivered by K. M. JOSEPH, J. B

1Copy pinpoint1. Leave granted.

2Copy pinpoint2. The appellants are defendant 1(a), defendant 1(b) and second defendant in a Suit filed for specific performance. Defendant 1(a) and Defendant 1(b) have filed SLP(C)No.6858/2017 while defendant No.2 C has filed SLP(C)No.6857/2017. The Trial Court while refusing specific performance, directed the return of the amount paid by the plaintiff under the contract. By the impugned judgment, the High Court allowed the plaintiffs appeal and directed the appellants to execute the sale deed relating to the plaint schedule property in favour of the plaintiffs (legal representatives of original plaintiff). The parties will be hereinafter D referred to by their status in the Trial Court. A BRIEF OVERVIEW OF FACTS

3Copy pinpoint3. On 04.04.1979, the plaint schedule property, which consisted of a site, was allotted to the first defendant (since deceased), by the E Bangalore Development Authority (hereinafter referred to as, ‘the BDA’). Based on the allotment, a lease-cum-sale agreement was entered into between the BDA and the first defendant on 04.04.1979. The first defendant was put in possession on 14.05.1979. On 17.11.1982, the first defendant entered into the agreement with the plaintiff agreeing to execute the sale deed of the site within three months from the date on which, the plaintiff obtained the sale deed from the BDA. On 01.03.1983 and 26.04.1984, the plaintiff issued letters to the first defendant, calling upon her to execute the sale deed. The first defendant issued letter dated 08.05.1984, intimating that the plaintiff was in breach. The agreement itself had lapsed and the advance amount by the plaintiff was forfeited. After issuing Notice on 14.02.1985, the plaintiff instituted the Suit in question, seeking specific performance. The first defendant, after filing Written Statement on 14.08.1986, died pending the Suit, on 18.07.1994. The plaintiff impleaded the husband of the defendant as Defendant-1(a). A sale deed came to be executed by the BDA in favour of the son of defendant no.1 and defendant-1(a), on 19.06.1996. H

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A Thereafter, the son executed sale deed of the plaint schedule property in favour of the second defendant. It is further not in dispute that the son of the first defendant and defendant-1(a) was impleaded as defendant- 1(b) in the Suit in the year 1997. The second defendant came to be impleaded as second defendant in the Suit in the year 1997. Both the defendant-1(b) and second defendant filed Written Statements. B

4Copy pinpoint4. The Trial Court did not decree the suit for specific performance but directed return of Rs.50,000/- with 9 per cent interest. The High Court found that the Suit is maintainable. It was further found that the second defendant is not a bonafide purchaser for value without notice of the Agreement to Sell dated 17.11.1982. It was further found by the C High Court that, the alienation made in favour of the second defendant, was hit by the provisions of Section 52 of the Transfer of Property Act,

1882. Answering the point, whether the plaintiff was entitled to the relief of specific performance, it was found that, in the facts, when the entire sale consideration was paid by the plaintiff to the first defendant, nothing more remained to be done by the plaintiff, and having found that the second defendant was not a bonafide purchaser for value without notice, and taking the view that Section 23 of the Specific Relief Act, 1963 did not apply at all and there being no reason to not exercise discretion in favour of the plaintiff, the Suit was decreed by directing defendant-1(a), defendant-1(b) and the second defendant to jointly convey the plaint schedule property to the plaintiff.

5Copy pinpoint5. We heard Smt. Kiran Suri, learned Senior Counsel on behalf of the second defendant and Shri R. Basant, learned Senior Counsel on behalf of the plaintiff. Mrs. Kirti Renu Mishra, AOR, appears in the Appeal filed by defendant-1(a) and defendant 1(b). F THE CONTENTIONS OF THE APPELLANTS

6Copy pinpoint6. Smt. Kiran Suri, learned senior counsel appearing on behalf of second defendant contended that the finding that the Suit was maintainable, was unsustainable. She contended that an agreement must G be lawful, in order that a court may grant specific relief. It’s her contention that the agreement is unlawful, being opposed to public policy, and also as it was a bargain, which would defeat the provisions of the law in question, within the meaning of Section 23 of the Indian Contract Act,

1872. She invited our attention to the terms of the lease-cum-sale agreement entered into between the first defendant and the BDA. She H pointed out that there was clear prohibition against the alienation of the

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 999 [K. M. JOSEPH, J.]

site or the plaint schedule property for a period of ten years. She drew support from the Bangalore Rules of Allotment, 1972 (hereinafter referred to as, ‘the Rules’). She pointed out that the court has erred in not noticing that Rule 18(2) proclaims an embargo against alienation for a period of ten years. The very agreement relied upon by the plaintiff was unlawful, and therefore, the court could not have granted specific performance. She drew support from Judgment of this Court in Kedar Nath Motani and others v. Prahlad Rai and others 1 and Narayanamma and another v. Govindappa and others 2. She further contended that the Suit itself, besides being not maintainable, was premature. She elaborated and contended that, what the agreement between the plaintiff and the first defendant contemplated, was that, the first defendant would execute the sale deed in favour of the plaintiff upon the expiry of three months from the date of conveyance of sale deed executed by the BDA. The agreement of lease-cum-sale contemplated such a conveyance in favour of the first defendant only after the expiry of ten years from the date of allotment and the date of the lease-cum-sale agreement dated 04.04.1979. The Suit is filed a good four years prior to even the expiry of ten years. She attacked the finding of the High Court that the second defendant was not a bonafide purchaser for value. She pointed out that as far as knowledge of pendency of Suit is concerned, the evidence pointed to the second defendant not being aware of the Suit, defendant-1(b) has admitted to not disclosing about the pendency of the Suit to the second defendant. The second defendant inspected the site and found it to be a vacant land except for a small shed. Regarding the finding of the High Court that the original document, evidencing delivery of possession of the plaint schedule property by the BDA to the first defendant, was not given to the second defendant and that only a photocopy was given, it is contended that second defendant was informed that the original was lost. There was already an assignment in favour of defendant-1(b). There was no need for the second defendant to make any further inquiry. All possible inquiry was conducted by the second defendant. There is no justification for the High Court to conclude that second defendant was not a bonafide purchaser for value. As far as finding of the High Court that the second defendant, a 20-years old, at the time of the sale, did not have the wherewithal to purchase the property, it could not be justified, having regard to the evidence which established 1 AIR 1960 SC 213 2 (2019) 19 SCC 42 H

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A that the second defendant was the owner of 10 acres of land. He was into the business of selling milk and he had the necessary funds and there is no occasion for the High Court to interfere with the findings of the Trial Court in this regard.

7Copy pinpoint7. Per contra, Shri R. Basant, learned Senior Counsel for the B plaintiff, reminded us that matter is appreciated by the two courts. The finding that there was a valid contract by the Trial Court was not challenged by the appellants. There is no pleading to justify the argument that the agreement in question was not lawful. He would point out that neither the lease- cum-sale agreement nor the Rules, prohibited the allotee entering into an agreement to sell the site.He pointed out that the Rule, C which is relevant to the fact, is Rule 17. Even Rule 18, relied upon by the appellants, did not stand in the way of the agreement to sell or the sale in favour of the plaintiff. He also emphasised that it does not lie in the mouth of the appellants to invoke the proposition that agreement in question was unlawful. He pointed to the findings of the High Court that by his conduct there was complete absence of bonafides in the claim. He pointed out that as correctly found by the High Court, Doctrine of Lis Pendens, applies. He further submitted that, at any rate, if the court found that Lis Pendens did not apply, the fact that the second defendant has not been found to be a bonafide purchaser for value, was sufficient for this Court to decline to interfere, particularly, in a jurisdiction, which originates from the grant of Special Leave under Article 136 of the Constitution of India. He would refute the contention that the suit was not maintainable and further that it was premature. He would point out that confronted with the definite stand of the first defendant, who he points out was the wife of an MLA and also a Minister, and having regard to Article 54 of the Limitation Act, 1963, had no choice, except to rush to the civil court and institute the Suit. He would rely upon large body of case law, including judgments of the High Court of Karnataka, to contend that an agreement to sell, in circumstances, such as obtaining in the present case, was valid and lawful. He would command for our acceptance, the findings of the High Court regarding the fact that second defendant was not a bonafide purchaser for value. He did not have the necessary capacity and he was fully aware of the pendency of the Suit. THE LAW IN QUESTION

8Copy pinpoint8. The City of Bangalore Improvement Act, 1945, going by the H Preamble, was enacted for the improvement of the city of Bangalore

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1001 [K. M. JOSEPH, J.]

and to provide space for its future expansion. It contemplated the A appointment of a Board of Trustees, which was to consist of eleven Trustees with the Chairman and six Trustees being appointed by the Government. The Act clothed the Board with the power to undertake improvement schemes. What is of relevance to the present case are the following provisions: B

9Copy pinpoint9. Section 24 read as follows: “24. Board not to sell or otherwise dispose of sites in certain cases.—The Board’ shall not sell or otherwise dispose of any sites for the purpose of constructing buildings thereon for the accommodation of person until all the improvements specified in C Section 23 [have been substantially provided for the estimates.”

10Copy pinpoint10. Section 29 dealt with the power of the Board to acquire, hold and dispose of the property and it reads as follows: “29. Power of Board to acquire, hold and dispose of property.— (1) The Board shall, for the purposes of this Act, have power to acquire and hold movable and immovable property, whether within or outside the City. (2) Subject to such restrictions, conditions and limitations as may be prescribed by rules made by the Government, the Board shall have power or lease, sell or otherwise transfer any movable or immovable property which belongs to it, and to appropriate or apply any land vested in or acquire by it for the formation of open spaces or for building purposes or in any other’ manner for the purpose of any improvement scheme. (3) The restrictions, conditions and limitations contained in any grant or other transfer of any immovable property of any interest therein made by the Board shall notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882) or any other law have effect according to their tenor.]”

11Copy pinpoint11. Section 42 conferred power to make Rules. Following provisions are relevant for the purpose of this case: “42. Power of Government to make rules.—The Government may, from time to time; make rules, not inconsistent with this Act. — xxx xxx xxx H

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A (aa) regulating the allotment or sale by auction of sites by Board; (ab) specifying the conditions, restrictions and limitations subject to which the Board may sell, lease or otherwise transfer movable or immovable property;” xxx xxx xxx B

12Copy pinpoint12. Initially, bylaws regulating the allotment of sites were published on 08.01.1954. These bylaws came to be cancelled upon enactment of City of Bangalore Allotment of Site Rules, 1964. Thereafter, the City of Bangalore Improvement Disposal of Site Rules, 1971 came to be enacted. C The said Rules came to be repealed with the making of the City of Bangalore Improvement Allotment of Site Rules, 1972. These Rules came into force on the 1st Day of September, 1972. These Rules are the Rules, which would govern the fate of this case.

13Copy pinpoint13. Rule 2(b) defines the word ‘allottee’ as meaning the person to D whom the site is allotted under these Rules. The Rules define backward class. It also, inter alia, defines stray site.

14Copy pinpoint14. Rule 3 reads as follows: “3. Offer of sites for allotment.—(1) Whenever the Board has formed an extension or layout in pursuance of any scheme, the E Board may, subject to the general or special orders of the Government, offer any or all the sites in such extension or layout for allotment to persons eligible for allotment of sites under these rules. (2) Due publicity shall be given in respect of the sites for allotment specifying their location, number, the amount payable as earnest money, the last date for submission of applications and , such other particulars as the Chairman may consider necessary; by affixing a notice to the notice board of the office of the Board, and any other office as the Chairman may decide from time to time and by publication in not less than three daily .newspapers published in the City of Bangalore in English and Kannada having a wide circulation in the city.”

15Copy pinpoint15. Rule 5 dealt with the allotment of stray sites. Rules 6 contemplated disposal of sites for heritable purposes. H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1003 [K. M. JOSEPH, J.]

16Copy pinpoint16. Rule 7 proclaimed that the allottee was to be lessee and it reads as follows: “7. Allottee to be a lessee. —The site allotted under Rule 3 or Rule 5shall be deemed to have been leased to the allottee until the lease is determined or the site is conveyed in the name of the allottee in accordance with these rules. During the period of the lease, the allottee shall pay to the Board rent at the rate of rupees three per annum where the area of the site does not exceed two hundred square meters, rupees six per annum where the area of the site exceeds two hundred square meters but does not exceed five hundred square meters and rupees twelve per annum where the area of the site exceeds five hundred square meters before the commencement of each year.”

17Copy pinpoint17. Rule 8 dealt with applications. It contemplated that the applications for allotment of site was to be in Form I. Several details are to be furnished. It included the annual income of the applicant, whether the applicant already owned a house or house site in the city, outside the city and whether he had any share in such property and the value of the share. It further included the query as to whether the applicant’s wife/ husband/minor child, owned a house or house site inside or outside the city. Since, it may be relevant to the decision at hand, we may advert to the Form. E “FORM I [See sub-rule (1) of Rule 8] Form of Application for Purchase of Site To F The Chairman, City Improvement Trust Board, Bangalore 20 Sir, I wish to purchase a building site measuring ........ in ... . . . G Extension, Bangalore. I agree to abide by the conditions of allotment and sale of the site contained in Rule 17 of the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, and the terms of the lease-cum- sale agreement; copies of which are enclosed in duplicate. I also enclose the duplicate copies of the conditions of H

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A allotment and sale and lease-cum-sale agreement duly signed in token of having accepted the conditions therein. Particulars about me are given below. —

1. Namë (in Block letters)

B 2. Father’s/Husband’s name

3. Age

4. Whether the applicant belongs to Scheduled Caste or Scheduled Tribe, Nomadic Tribes, Semi-Nomadic Tribes, Backward Classes, Denotified Tribes. C

5. Whether married or single

6. (a) Residential address: Permanent (House No., Name of street, locality and Town): (b) Present address: (if different from above) for D correspondence with the Board.

7. (i) Occupation or post. (ii) Address (iii) Place of employment or business.

E 8. (a) Annual income of the applicant (both from profession and from properties if any) (b) Any other means indicating the capacity of the applicant to purchase the site applied for and to building a house thereon. F

9. Whether the applicant is ordinarily a resident in Bangalore City or in the area under the jurisdiction of the Board and the period of such residence.

10. Whether any member of the family of which the applicant is a member owns or has been allotted site or a house by G the Board or any other authority, within the area under the jurisdiction of the Board. (Furnish details).

11. (1) Whether the applicant already owns a house or a house- site:

H (a) in the City (with details)

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1005 [K. M. JOSEPH, J.]

(b) outside the city (with details) A (2) Whether he/she has any share in such property and the value of the share thereof.

12. (1) Whether the applicant’s wife/husband /minor child owns a house or a house-site: B (a) in the City (with details) (b) outside the city (with details) (2) Whether the applicant’s wife/husband/minor child has any share in such property and the value o1 the share C thereof.

13. Whether the applicant has transferred the ownership or rights in the house or house- site already allotted to him/her in any of the schemes of the Board or any other authority to somebody else (if so, himish details). D

14. Whether the applicant or any members or his/her family has already availed of any housing or loan scheme of Government local body or Co-operative Society, if so, give details.

15. Whether the applicants applied for allotment of a site or a E site with a building, in any of the scheme of the Board or and other authority and whether his/her deposit was refund (if so, furnish details).

16. Amount of earnest money deposited now (with Challan No. and date). F

I hereby solemnly declare that all the above information given by me is true. I shall furnish any additional information in my possession which you may require. If there is any delay on my part to furnish the necessary information required by the Board, it will be within the discretion of the Board to reject my application. G

If, at any time it is found that the information given by me above is incorrect, the Board can cancel the allotment, resume possession of the site and forfeit part or whole of the amount paid by me till then towards cost of the site or deposit. H

p. 1006

A I am aware that under the Rules, I have to build the house myself with my own resources. Signature of Applicant Station …………………

B Date ………………………… Attested Magistrate of the First Class Date.............................. .”

18Copy pinpoint18. Rule 10 dealt with the issue of eligibility for allotment and it reads as follows: C “10. Eligibility for allotment. —No person. (1) Nho. is not ordinarily resident (living independently or with his family members). in the area within the jurisdiction of the Board for not less than five years immediately before the last date fixed D for making applications: Provided that the persons who are domiciled in the State of Karnataka but serving in the Armed Forces of the Union outside the State of Karnataka shall be eligible for allotment of Sites under these rules. E (2) Who or any member of whose family owns or is a lessee entitled to demand conveyance eventually or has been allotted a site or a house by the Board or any other authority, within the area under the jurisdiction of the Board; or of the Corporation of the City of Bangalore, shall be eligible to apply for allotment of a site: F Provided that the Board may relax the restriction in c1ause (1) regarding residence in the case of persons. — (i) who are domiciled in the State of Mysore and who bona fide intend to reside within the area under the jurisdiction of the Board; or, (ii) who are domiciled.in the State of Mysore but have gone outside the State on business, employment, study or training and who bona fide intend to reside within the area under the jurisdiction of the board; or

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1007 [K. M. JOSEPH, J.]

(iii) who though not domiciled in the State of Mysore bona fide intend to reside within the area under the jurisdiction of the Board.”

19Copy pinpoint19. Rule 11 provided for the principles for selection of applicants for allotment of sites. The following principles have been set out in Rule 11(1): B “11. Principles for selection of applicants for allotment of sites. —(1) The Board shall consider the case of each applicant on its merits and shall have regard to the following principles in making selection. — (i) the status of the applicant, that is whether he is married or single and has dependent children; (ii) the income of the applicant and his capacity to purchase a site and build a house thereon for his residence: Provided that this condition shall not be considered in case of applicants belonging to Scheduled Castes, Scheduled Tribes, Wandering Tribes, Nomadic Tribes and other Backward Classes. (iii) the number of years the applicant has been waiting for allotment of a site and the fact that he did not secure a site earlier though he is eligible and had applied for a site; E (iv) persons who are ex-servicemen or members of the family of the deceased servicemen killed in action, during the last ten years.”

20Copy pinpoint20. The sites were to be allotted among different classes of persons which included wandering tribes, scheduled tribes, scheduled castes, ex- F servicemen, persons domiciled in Karnataka but serving in the Armed Forces of the Union outside the State, State Government servants, Central Government servants and servants of Corporation. 51 per cent was reserved, in other words, in specific percentage terms for these categories. 49 per cent was made available for the general public. Non-availability of applicants was also dealt with. G

21Copy pinpoint21. Rule 13 provided for selection of an applicant. The Board was empowered to reject any application without assigning any reason.

22Copy pinpoint22. Rule 17 provides for conditions of allotment. Since, much turns on the impact of this Rule, we would refer to the same. H

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A “17. Conditions of allotment and sale of site. - The allotment of a site under these rules shall be subject to the following conditions. — (1) The allottee shall within a period of fifteen days from the date of receipt of the notice of allotment, pay to the Board B twelve and a half per cent of the price of the site and if no such payment is made the allottee shall be deemed to have declined the allotment. (2) The balance of the value of the site (less than a sum of rupees thirty where the area of the site does not exceed two hundred square meters, rupees sixty where the area exceeds two hundred square meters and does not exceed five hundred square meters and rupees one hundred and twenty where the area exceeds five hundred square meters) shall be paid within ninety days from the date of receipt of the notice of allotment, or such extended period not exceeding one year as the Chairman may specify. Interest at [fifteen per cent]] shall be paid on the said amount for the extended period. If the said amount is not paid within the period of ninety days or the extended period the earnest money paid by the allottee shall be liable to forfeiture and the allotment may be cancelled: [Provided that where an allottee is a person. — (i) whose annual income does not exceed [three thousand and six hundred rupees], he may choose to pay the balance value of the site in quarterly, half yearly or annual installments and the rate of interest on the said amount for the extended period for quarterly payment will be two per cent for half yearly payments will be three per cent and annual payments four per cent; G (ii) whose annual income exceeds [three thousand and six hundred rupees] but does not exceed seven thousand and two hundred rupees interest at twelve per cent per annum shall be paid on the said amount for de extended period: H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1009 [K. M. JOSEPH, J.]

Provided further that where an allottee is a person belonging to a Scheduled Caste or Scheduled Tribe or other Backward Classes or a nomadic tribe or a wandering tribe, or a denotified tribe or a family of Defence personnel killed or disabled during the recent war and whose annual income from all sources does not exceed rupees five thousand, the balance of the value of the site required to be paid under this sub-rule shall be paid by him without interest within a period of six years from the date of receipt of the notice of allotment.] (3) Until the site is conveyed to the allottee the amount paid by the allottee for the purchase of the site shall be held by the C Board as security deposit for the due performance of the terms and conditions of the allotment and the lease-cum- sale agreement entered into between the Board and the allottee. (4) After payment under sub-rule (2) is made the Board shall intimate the allottee the actual measurements of the site and the particulars thereof and a lease-cum-sale agreement in Form II shall thereafter be executed by the allottee and the Board and registered by the allottee. If the agreement is not executed within forty-five days after the Board has intimated the actual measurements and particulars of the site to the allottee, the earnest money paid by the allottee may be forfeited, the allotment of the site may be cancelled, and the amount paid by the allottee after deducting the earnest money refunded to him. Every allottee shall construct a building on the site in accordance with the plans and designs approved by the Board. If in any case it is considered necessary to add any additional conditions in the agreement the Board may make such additions. Approval of the City of Bangalore Municipal Corporation for the plans and designs shall be necessary when the layout in which the site is situated is transferred to the control of the said Corporation. (5) The allottee shall comply with the conditions of the agreement executed by him and the buildings and other bye- laws of the Board or the Corporation, as the case may be, for the time being in force. H

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A (6) The allottee shall construct a building within a period of two years from the date of execution of the agreement or such extended period ‘[as the Chairman may] in any specified case by written order permit. If the building is not constructed within the said period the allotment may, after reasonable notice to the allottee, be cancelled, the agreement revoked, the lease determined and the allottee evicted from the site by the Board, and after forfeiting twelve and a half per cent of the value of the site paid by the allottee, the Board shall refund the balance to the allottee. (7) (a) On the expiry of the period of ten years and if the allotment has not been cancelled or the lease has not been determined in accordance with these brutes or the terms of the agreement in the meanwhile the Board shall by notice call upon the allottee to get the sale deed of tire site executed at his own cost within the time specified in the said notice. D (b) If the allottee fails to get the sale deed executed within the time so specified the Board shall itself execute the same and recover the cost and other charges, if any, incidental thereto from the allottee as if the same are amount due to the Board.] E (8) The allottee shall ordinarily reside or himself make use of the building constructed on the site allotted to him. (9) With effect from the date of taking possession of the site the allottee or his heirs and successors shall be liable to pay the taxes, fees and cesses payable in respect of the site and any building erected thereon. If the particulars furnished by the applicant in the prescribed app1icaüon form for allotment of site are found incorrect or false subsequently, twelve and half per cent of the site value, shall be forfeited after the site is resumed by the Board and the balance amount of site value refunded to the applicant.”

23Copy pinpoint23. Rule 18, likewise, speaks about restrictions, conditions and limitations on sale of sites and we refer to the same: “18. Restrictions, conditions and limitation on sales of sites.— (1) H Notwithstanding’ anything contained in. —

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1011 [K. M. JOSEPH, J.]

(i) these rules or any other rules, bye- laws or orders governing the allotment, grant or sale of sites by the Board for construction of buildings; or (ii) any instrument executed in respect of any site allotted, granted or sold by the Board for construction of buildings, the Chairman may at the request of the allottee grantee or purchaser of a site, execute a deed of conveyance subject to the restrictions, conditions and limitations specified in sub-rule (2). (2) The conveyance by the Chairman of a site in favour of an allottee, grantee or purchaser of a site (hereinafter referred to as “the purchaser”) shall be subject to the following restrictions, conditions and limitations, namely.— (a) in the case of a site on which a building has not been constructed. — (i) the purchaser shall construct a building on the site within such period as may be specified by the Board, as per plans, designs and conditions to be approved by the Board or in conformity with the provisions of the City of Bangalore Municipal Corporation Act, 1949 and the Bye-laws made thereunder; E (ii) the purchaser shall not without the approval of the Board, construct on the site any building other than a building for the construction of which the site was allotted, granted or sold; (iii) the purchaser shall not alienate the site within a period of ten years from the date of allotment except by mortgage in favour of the Government of India, the Government of Mysore, the Life Insurance Corporation of India or the Mysore Housing Board, or any 1[any company or Co-operative Society approved by the Board] or any Corporation set up, owned or controlled by the State Government or the Central Government to secure moneys advanced by such Government, 2[Corporation, Board, CompanyJ, Society or Corporations, as the case may be, for the construction of the building on the site; H

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A (b) in the case of a site on which a building has been constructed, the purchaser shall not alienate the site and the building constructed thereon within a period of ten years from the date of allotment, except. — (i) by mortgage in favour of the Government of India, B the Government of Mysore, the Life Insurance Corporation of India or the Mysore Housing Board or any Co-operative Society approved by the Board to secure moneys advanced by such Government, 3[Corporation, Board, Company] or Society for the construction of the building on the site; or C (ii) with the previous approval of the Board; (c) in the event of the purchaser committing breach of any of the conditions in clause (a) or clause (b), the Board may at any time, after giving the purchaser reasonable notice, D resume the site free from all encumbrances. The purchaser may remove all things which he has attached to the earth: ‘Provided he leaves the site in the state in which he received it. All transaction entered into in contravention of the conditions specified in clauses (a) and (b) shall be null and void ab initio. E ‘Explanation. — In this rule, references to the Board shall be deemed to include the Chairman when authorised by the Board by a general resolution to exercise any power vested in the Board. 1 [(3) Notwithstanding anything in sub-rule (2), but without F prejudice to the provisions of Rule 17 where the lessee applies that for reasons beyond his control he is unable to reside in the City of Bangalore or by reasons of his insolvency or impecuniosity it is necessary for him to sell the site or site and the building, if any, he may have put up thereon, the Bangalore Development Authority may, with the previous approval of the State Government, G either. — (a) require him to surrender the site, where there is no building, in its favour; or (b) where there is a building put up, permit him to sell the vacant H site and building:

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1013 [K. M. JOSEPH, J.]

Provided that. — A (i) in case covered by clause (a), the Bangalore Development Authority shall pay to the lessee the allotted value of the site and an, additional sum equal to the amount of interest at twelve per cent per annum thereon; and in case covered by clause (b), the lessee shall pay to the Bangalore B Development Authority a sum equal to the amount of interest at twelve per cent per annum on the allotted value of the site.]”

24Copy pinpoint24. Rule 19 dealt with voluntary surrender and it read as follows: “19. Voluntary surrender. — An allottee may at any time after C allotment, surrender the site allotted to him to the Board. On such surrender the Board shall refund all amounts paid by the allottee to the Board in respect of the said site.”

25Copy pinpoint25. The Rules did not apply to disposal of corner sites and commercial sites. D

26Copy pinpoint26. We may notice in fact that the City of Bangalore Improvement Act, 1945 came to be repealed by the Bangalore Development Authority Act, 1976. There were certain amendments carried out to the 1972 Rules which need not detain us. THE PURPORT OF THE ABOVE LAW E

27Copy pinpoint27. It is clear that what is involved is the allotment of public property. The allottee was to be a lessee. The allottee, during the period of lease, was to pay rent, as provided in Rule 7. Allotment was premised on selection being carried out based on principles for selection, as provided in Rule 11 and to be carried by the Allotment Committee under Rule 12. F The value of the site is fixed. This is clear from Rule 17(1). The allottee was to pay 12 ½ per cent of the price of the site within 15 days of the receipt of notice of allotment. Within 90 days from the date of receipt of notice of allotment or extended period not exceeding one year, which may be fixed by the Chairman, the balance had to be paid. Non-payment attracted interest for the extended period. If the amount was not paid G within 90 days or the extended period, earnest money was liable to be forfeited and the allotment may be cancelled. The two provisos of Rule 17 provided for certain concessions to certain categories. The amount, which was paid by the allottee, formed the security deposit for the due performance of the obligation, under the lease-cum-sale agreement H

p. 1014

A between the Board and the allottee. This was to be so till the conveyance was executed regarding the site to the allottee. A lease-cum-sale agreement in Form 2 was to be entered into by the allottee. Every allottee was mandated to construct a building, which, we may clarify was to be a residential building, on the site in accordance with plan approved by the Board. The allottee was to comply with the conditions in the agreement. Rule 17(6) fixed the period of two years from the date of execution of the lease-cum-sale agreement or such extended period, within which the building had to be put up. Till 29.05.1980, the power to extend the period was vested with the Board. After 29.05.1980 the power to extend by a written Order was vested with the Chairman. If the building was not constructed within the period of two years or extended period, the allotment could be cancelled and the agreement revoked, the lease determined and the allottee evicted from the site by the Board. Such action was to be preceded by according a reasonable notice to the allottee against the proposed action. In the event of such action being taken, the allottee was entitled to the refund of the amount after forfeiting D 12 ½ per cent of the value. It is under Rule 17(7)(a) that on expiry of 10 years of the allotment, the time arrived for conveying the rights over the site. When 10 years expired, if the allotment had not been cancelled or lease determined, in accordance with the Rules or in terms of the agreement, the Board, after issuing a notice to the allottee, calls upon the allottee to execute the sale deed at his cost. If the allottee failed to get the sale deed executed, the Board was to execute the sale deed and recover the cost.

28Copy pinpoint28. Now, the time is ripe to advert to the statutory lease-cum-sale agreement referred to in Rule 17(4). It is in Form II and much turns on its terms and we advert to the same, which has been, admittedly, entered into by the first defendant with the BDA. “FORM II [See Rule 17(4)]

G Lease-cum-sale agreement An agreement made this . . . . . . . . . . . . . . . day of .......................................... 197.. , between the City of Bangalore Improvement Trust Board, Bangalore, (hereinafter called the “Lessor/Vendor”) which term shall wherever the context so permits, mean and include its successors in interest and assigns H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1015 [K. M. JOSEPH, J.]

of the ONE PART and ………hereinafter called Lessee/ A Purchaser (which term shall wherever the context so permits mean and include his/her heirs, executors; administrators and legal representatives) of the OTHER PART; . Whereas, the City of Bangalore Improvement Trust Board advertised for sale building sites in Extension; B And, whereas, one of such building site in Site No:……….. more fully described in the Schedule hereunder and referred to as property; And, whereas, there were negotiation between the Lessee/ Purchaser on the one hand and the Lessor/Vendor on the other C for allowing the Lessee/purchaser to occupy the property as Lessee until the payment in full of the price of the aforesaid site as might be fixed by the Lessor/Vendor as hereinafter provided; And, whereas, the Lessor/Vendor agreed to do so subject to the terms and conditions specified in the City of Bangalore D Improvement (Allotment of Sites) Rules, 1972, and the terms and conditions hereinafter contained; And, whereas, thus the Lessor/Vendor has agreed to lease the property and the Lessee/Purchaser has agreed to take it on lease subject to the terms and conditions specified in the said rules and the terms and conditions specified hereunder: Now this Indenture Witnesseth

1. ..............................................................................The Lessee/Purchaser is hereby put in possession of the property and the Lessee/Purchaser shall occupy the property as a tenant thereof for a period of ten years from (here enter the date of giving possession) or in the event of the lease being determined earlier till the date of such termination. The amount deposited by the Lessee/Purchaser towards the value of the property shall, during the period of tenancy, he held by the Lessor/Vendor as security deposit for the due performance of the terms and conditions of these presents.

2. .......................................................................... The lessee/purchaser shall pay a sum of rupees ... per years as rent on or before . . . . . . . . . . . commencing from . . . . . H

p. 1016

A 3. The Lessee/Purchaser shall construct a building in the property as per plans, designs and conditions to be approved by the Lessee/Vendor and in conformity with the provisions of the City of Bangalore Municipal Corporations Act, 1949, and the bye- laws made thereunder within two years from the date of this agreement: B Provided that where the Lessor/Vendor for sufficient reasons extends in any particular case the time for construction of such building, the Lessee/Purchaser shall construct the building within such extended period.

C 4. The Lessee/Purchaser shall not sub-divide the property or construct more than one dwelling house on it. The expression “dwelling house” means a building constructed to be used wholly for human habitation and shall not include any apartments to the building whether attached thereto or not, used as a shop or a building of ware-house or building in which manufactory operations are conducted by mechanical power or otherwise.

5. The Lessee/Purchaser shall not alienate the site or the building that may be constructed thereon during the period to the tenancy. The Lessor/Vendor may, however permit the mortgage of the right, title and interest of the Lessee/Purchaser in favour of the Government of Mysore, the Central Government or bodies corporate like the Mysore Housing Board or the Life Insurance Corporation of India, Housing Co-operative Societies or Banks to secure moneys advanced by such Governments or bodies for the construction of the building.

6. The Lessee/Purchaser agrees that the Lessor/Vendor may take over possession of the property with the structure thereon if there is any misrepresentation in the application for allotment of site. G

7. The property shall not be put to any use except as a residential building without the consent in writing of Lessor/Vendor.

8. The Lessee/Purchaser shall be liable to pay all outgoings with reference to the property including taxes due to the Government and the Municipal Corporation of Bangalore. H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1017 [K. M. JOSEPH, J.]

9. On matters not specifically stipulated in these presents the A Lessor/Vendor shall be entitled to give directions to the Lessee/ Purchaser which the Lessee/Purchaser shall carry out and default in carrying out such directions will be a breach of conditions of these presents. 10.. In the event of the Lessee/Purchaser committing default B in the payment of rent or committing breach of any of the conditions of this agreement or the provisions of the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, the Lessor/Vendor may determine the tenancy at any time after giving the Lessee/ Purchaser fifteen days’ notice ending with the month of the tenancy, and take possession of the property. The Lessor/Vendor C may also forfeit twelve and a half per cent of the amount treated as security deposit under Clause 1 of these presents.

11. At the end of ten years referred to in Clause 1 the total amount of rent paid by the lessee/purchaser for the period of the tenancy shall be adjusted towards the balance of the value of the property.

12. If the Lessee/Purchaser has performed all the conditions mentioned herein and committed no breach thereof the Lessor/ Vendor shall at the end of ten years referred to in Clause 1, sell the property, to the Lessee/Purchaser and all attendant expenses in connection with such sale such as stamp duty, registration charges, etc., shall be borne by the Lessee/Purchaser.

13. The Lessee/Purchaser hereby also confirms that this agreement shall be subject to the terms and conditions specified in the City of Bangalore Improvement (Allotment of Sites) Rules, F 1972, and agreed to by the Lessee/Purchaser in his/her application for allotment of the site.

14. In case the Lessee/Purchaser is evicted under Clause 9 he shall not be entitled to claim from the Lessor/Vendor and compensation towards the value of the improvements or the G superstructure erected by him on the scheduled property by virtue of and in pursuance of these presents.

15. It is also agreed between the parties hereto that Rs . . . . . . . . (Rupees . . . . . . ) in the hands of the Lessor/Vendor received by them from the Lessee/Purchaser shall be held by them as H

p. 1018

A security for any loss or expense that the Lessor/Vendor may be put to in connection with any legal proceedings including eviction proceedings that may be, taken against the Lessee/Purchaser and ,all such expenses shall be appropriated by the Lessor/Vendor from and out of the moneys of the Lessee/Purchaser held in their hands. B THE SCHEDULE Site No . . . . . . . . . . . . . . . . . . formed by the City of Bangalore Improvement Trust Board in Block No. . . . . . . . . . . . . in the. . . . . . . . . . . . Extension. Site bound on.— C East by: West by: North by: South by: D and measuring east to west . . . . . . . . . . . north to south . . . . . . in all measuring . . . . . . square feet. In witness whereof the parties have affixed their signatures to this agreement. Chairman. E The City of Bangalore Improvement Trust Board. Witnesses: 1. 2. Witnesses: F 1. 2. Lessee/Purchaser.”

29Copy pinpoint29. The question then arises, as to what is the purport of Rule 18. Rule 18, in our view, produces the following effects and is intended to apply as follows: It begins with a non obstante clause as far as Rule 18(1) is concerned. Rule 18(1) is to apply despite anything which is contained in the Rules itself. That apart, it would operate, notwithstanding any other Rules, bylaws and orders, which may occupy the field. Even an instrument executed in respect of any

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1019 [K. M. JOSEPH, J.]

site allotted, rented or sold by the Board for the construction of buildings, will not detract from the exercise of power. The power, under Rule 18, is vested with the Chairman. The scope of the power is to execute a deed of conveyance. This is premised on the request being made by the allottee grantee or purchaser of the site. Rule 18(1) further contemplates that when the power is invoked by the Chairman under Rule 18(1), the restrictions, conditions and limitations mentioned in Rule 18(2) will ipso facto apply. Rule 18(2) divides the categories into two. Rule 18(2)(a) deals with the situation where no building has been constructed on the site. Rule 18 (2)(b) deals with the situation where a building has been constructed on the site. Since, we are, in this case, concerned with the case of a site on which the building has not been constructed, within the meaning of the Rules, we may indicate that the condition that is imposed, includes the obligation on the part of the purchaser to construct the building on the site, within the period as may be specified by the Board. The purchaser is visited with the restriction that he shall not, without the approval of the Board, construct on the site, any building other than the building for which the site was allotted, rented or sold. The purchaser, who is the beneficiary of deed of conveyance in his favour under Rule 18(1), is bound by the further limitation or condition that the purchaser shall not alienate the site within a E period of 10 years from the date of allotment. The restriction against alienation, however, could not operate against a mortgage, as provided in Rule 18(2)(iii). The mortgage is, however, to be one effected for the purpose of construction of the building on the site. Rule 18(2)(c) visits the purchaser, committing breach of any F of the conditions in clause (a), inter alia, with the resumption of the site, no doubt, after a reasonable notice. Rule 18(2)(c) further declares that all transactions entered into in contravention of the conditions in Clause (a) and (b) are to be null and void ab initio. The transactions, which are referred to in Rule 18(2)(c), are the transactions which are referred to in Rule 18(2)(a)(iii) or Rule G 18(2)(b).

30Copy pinpoint30. Now, the question would arise as to the effect of the interplay of Rule 17, the lease-cum-sale agreement and the provisions of Rule 18(1) and Rule 18(2). An allottee begins his innings as a lessee. The terms of the lease are set out in the Rules itself, which we have adverted H

p. 1020

A to. The entire value of the site is to be paid at the very beginning, as already noticed, or within the extended period. However, the allottee continues as a lessee. He is obliged to observe the conditions of the lease-cum-sale agreement. He is obliged to pay rent, as provided in the Rules and also the lease-cum-sale agreement. Under Clause (5) of the lease-cum-sale agreement, the allottee, who is also described as the lessee/purchaser, is forbidden from alienating the site or the building that may be constructed during the period of the tenancy. The period of tenancy is fixed as a period of 10 years from the date of giving possession to the allottee. In other words, an allottee, who is obliged to enter into a lease-cum-sale agreement is prohibited from alienating the site or the building, which may be put up for the period of 10 years. This period of 10 years is adverted to in Rule 17(7). In other words, for a period of 10 years, the allottee, who is also described as the lessee and purchaser, cannot alienate the site or the building. It is to be understood that by virtue of Rule 7 of the Rules, the allottee is treated as a lessee. What the Rules and agreement contemplate is, though the entire amount of the value of the site is payable within a period of 90 days or extended period under Rule 17(2), the allottee/lessee becomes the purchaser of the site, only when the conveyance deed is executed in his favour under Rule 17(7). During this period, the Rules and the agreement contemplate clearly that the allottee puts up the building for his residence but he cannot alienate the property during the period of 10 years, which is the period of tenancy, and this period of 10 years begins, from the time he is put into possession, based on the agreement. Rule 18(1) and Rule 18(2), in a manner of speaking, fast tracks the conveyance. In other words, Rule 18(1) enables the Chairman, on the request of an allottee, within the meaning of Rule 17, to execute a deed of conveyance, even before the expiry of 10 years, contemplated in Rule 17(7). However, when an allottee is the beneficiary of the exercise of power under Rule 18(1) and a conveyance deed is executed to him, the Rule-maker, has still incorporated the condition against alienation for a period of 10 years, which is not to operate from the date of the conveyance. The embargo against alienation in the case of the conveyance deed being executed in favour of the allottee during the currency of the lease-cum-sale agreement in Form II will operate for a period of 10 years from the date of allotment.

31Copy pinpoint31. Thus, in a case of allotment under Rule 17, the condition against alienation is to exist for a period of 10 years from the date of allotment.

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1021 [K. M. JOSEPH, J.]

In the case of conveyance deed, which is executed in favour of the allottee, the condition against alienation will again operate for the period of ten years from the date of allotment. This is apart from the other conditions, viz., construction of the building on the site. In short, the allottee becomes the owner of the site before the expiry of 10 years upon power being invoked under Rule 18(1) but the assignment of the rights, which would have been otherwise absolute, is subjected to the conditions, as mentioned in Rule 18(2)(a), which includes the prohibition against the alienation. We must remind ourselves that under Section 29(3) of the Act of 1945, the Transfer of Property Act is eclipsed by the terms of any grant or transfer. The condition against alienation is not to be counted from the date of the execution of the conveyance deed but for the unexpired period, in the case of the lease-cum-sale agreement executed.

32Copy pinpoint32. The impact of Rule 18(3) is to be noticed. This Rule was substituted w.e.f. from 21.12.1976. The Rule contemplates two conditions for its operation. Firstly, it operates without prejudice to the provisions of D Rule 17. Secondly, Rule 18(3) applies, notwithstanding anything contained in Rule 18(2). Now, coming to the exact scope of Rule 18(3), it contemplates the existence of either of the conditions mentioned therein. They are – (1) the lessee applies pointing out that for reason beyond his control, he is unable to reside in the city of Bangalore; (2) by reason of his insolvency or impecuniosity, it has become necessary for him to sell E the site and or site and the building, if any, he may have put up thereon.

33Copy pinpoint33. We have already explained the scope of Rule 18 and the interplay between Rule 17 and Rule 18. Rule 18(3) must be read along with Rule 17. The argument to the contrary by the plaintiff is untenable. In fact, it would involve denying relief intended for persons falling under F Rule 17, as will be clear hereinafter. A perusal of Rule 18(3) would reveal the following: While a person is a lessee (which means while he is an allottee), the course open to an allottee/lessee, is to follow the Rules and lease- cum-sale agreement and put up a residential building on the site. He G may be disabled by the financial condition from fulfilling his promise under the lease-cum-sale agreement and the Rules to put up the building. In either case, i.e., when because of the dire financial straits, he finds himself in, he can apply to the Authority to permit him to sell the site, if no building has been put up or if he has put up a building on the site, the H

p. 1022

A site along with the building. The courses of action open to the BDA would be as follows: It may with the previous approval of the State Government, call upon the applicant, when he has not put up the building, to surrender the site. Thus, in a case where a lessee/allottee wishes to sell the site, the B Rules contemplate that site would have to be surrendered in favour of the Authority. The rationale appears to be, instead of permitting the site being sold to any third party, the site would go back to the Authority, which in turn, will enable it to allot it to the eligible persons waiting in the queue. Where a building has been put up, again, Rule 18(3)(b) contemplates that the lessee can be permitted to sell the vacant site and the building. When the lessee, on the basis of his request that he may be permitted to sell the site, has surrendered the site to the BDA, the further consequence contemplated is that the lessee will get back the value of the allotted site, which he has deposited under Rule 17(1) and (2). Over the above the same, the lessee is to be paid an additional sum equal to the amount of interest at the rate of 12 per cent per annum. We must, at this juncture, also do justice to the words in Rule 18(3) “but without provisions of Rule 17”. The import of this part of Rule 18(3) is as follows – under Rule 17, it is open to the Authority to cancel allotment and revoke the agreement and determine the lease. The allottee can be evicted from the site. The amount of 12 ½ per cent of the value paid, under Rule E 17(1) can be forfeited. No doubt, the Board will refund the balance to the allottee. This is a consequence which is contemplated in Rule 17(6). This power with the Board is kept preserved when an allottee does not put up the building. Thus, Rule 18(3) must be understood as a power with the Board to be exercised with the previous approval of the State F Government. Thus, an allottee, as a Rule, is expected to hold up to the promise he has made about his financial capacity to construct the building. Consequences in Rule 17 would remain alive. The power under Rule 18(3) appears to us to encompass situations of insolvency or impecuniosity, which overtake an allottee after the allotment takes place. In other words, the unplanned and uncontemplated vicissitudes of life G may visit him inter alia with insolvency or impecuniosity, leaving with him no other choice but to sell the site or even the site with the building. The fact that power under Rule 18(3) is not meant to be a mechanical exercise of power, can be discerned from the requirement that ‘previous’ approval of the State Government is the sine qua non for the BDA H exercising its power.

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1023 [K. M. JOSEPH, J.]

THE UNDISPUTED FACTS A

34Copy pinpoint34. The BDA made an allotment of the plot on 04.04.1979 to the first defendant. The lease-cum-sale agreement was also executed on the same date. It is while so that on 17.11.1982, the plaintiff entered into the agreement with the first defendant. Under the allotment, the first defendant was put in possession of the site. A perusal of the agreement B would reveal the following: “NOW THIS DEED WITNESSETH AS FOLLOWS :

1. The vendor does hereby agrees to sell the schedule site to the purchaser for a price of Rs. 50,000/- (Rs. Fifty thousand only). C

2. The purchaser has hereby agreed with the vendor to purchase the schedule site for the said price of Rs.50,000 (Fifty thousand only).

3. The purchaser has paid a sum of Rs.30,000/- (Rs.Thirty thousand only) as advance and part of the purchase money by cheque No. 81/YA. 709838 dated 17 .11.1982, drawn on Indian Bank, Malleswaram, Bangalore to the vendor, who hereby acknowledges the receipt of the said amount from the purchaser.

4. The vendor does hereby agree with the purchaser to obtain the absolute sale deed from the Bangalore Development Authority and then complete the sale transaction with the purchaser. It is agreed that the sale has to be completed on or before the expiry period of three months from the day the vendor obtains the absolute sale deed from the Bangalore Development Authority and intimates the purchaser in writing.

5. The vendor has handed over the original possession certificate to the purchaser.

6. The vendor has agreed to deliver the following documents to the purchaser : (a) Absolute sale deed after obtaining from the Bangalore Development Authority, Bangalore. (b) Katha certificate issued by the Bangalore Development Authority in favour of the vendor. H

p. 1024

A (c) N I L Encumbrance Certificate. (d) Uptodate tax paid receipt.

7. The vendor hereby aggress with the purchaser to make necessary applications to the competent authority under the Urban Land Regulations) Act, 1976 and obtain permission to transfer the schedule (Ceiling and necessary site to the purchaser. The purchaser has agreed to render necessary assistance to the vendor in this regard.

8. The vendor has put the purchaser in possession of the schedule site this day as part performance of this contract of sale. The vendor covenants with the purchaser that the purchaser is entitled to put up temporary structure on the schedule site.”

35Copy pinpoint35. Clause 5 shows that the first defendant has handed over the original possession certificate to the plaintiff. Clause 8 recites that the first defendant has put the plaintiff in possession of the site on the date of the agreement as part performance of the contract of sale. The first defendant further covenanted with the plaintiff that he is entitled to construct a temporary structure on the site. THE CORRESPONDENCE BEFORE THE SUIT

36Copy pinpoint36. The plaintiff, on 01.03.1983, i.e., within four months of agreement dated 17.11.1982, wrote to the first defendant as follows: “Y. SUBBARAJU ENGINEERING CONTRACTORS 24, 2nd CROSS, KODANDARAMAPURAM, F MALLESWARAM, ‘ BANGALORE - 560003 Date : 1.3.1983 REGISTERED POST ACK. DUE G To, Smt. Jayalakshmamma, W /o K.T. Krishnappa, Ex. M.L.A., TB Extn., H Nagamangala, Mandya District

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1025 [K. M. JOSEPH, J.]

Madam, A Sub: Agreement for the sale of Site No. 1588, Block II at Banashankari I Stage Extension - Regarding.

You have agreed for the sale of the above site, for which an agreement was made on 17.11.1982 on the condition that you will register the sale deed within 3 months from the date of obtaining all the necessary documents required in this connection from BOA. So far you. have not informed about obtaining the documents from BDA. You had promised that all the documents will be handed over to me within 2 weeks time to facilitate me for registering the property. Since 3 months are over, I am proposing to sell to my nominee for the agreed amount of Rs.50,000/- (Rupees Fifty Thousand only), as you have failed to produce the clear documents. I am forced to transfer the property to my nominee at the agreed amount of Rs.50,00,0/- with you. This is for your kind information and early necessary action. Thanking you, Yours faithfully Sd/- E (Y. Subbaraju)” (Emphasis supplied) There is no reference to any threat by the first defendant to sell to others. F

37Copy pinpoint37. The plaintiff did not rest content with the first letter and in the very next month, on 26.04.1984, complains to the first defendant, by pointing to the letter dated 01.03.1983 and pointing out that the first defendant has not replied to his letter, notifying her readiness to comply with the agreement. Thereafter, it is stated that by the letter dated G 26.04.1984, he was finally calling upon the first defendant to act in terms of the agreement, execute the sale deed in favour of the plaintiff or his nominee within one week from the date of receipt of the letter, failing which, litigation would be launched. This letter provoked the first defendant to reply through a lawyer on 08.05.1984. The first defendant admitted the agreement dated 19.11.1982. She, however, pointed out H

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A that it was not as per the terms and conditions of letters sent by the plaintiff. The plaintiff, it was pointed out, was enjoined upon to complete the sale within three months from the date of the agreement. It was pointed out that time was of the essence of the contract and the contract has lapsed and the advance was forfeited. All documents of title relating to the site, it was stated, were handed over to the plaintiff at the time of the agreement itself. In view of the breach on the part of the plaintiff to pay the balance of the consideration, there was no legally enforceable contract. It was stated that the first defendant was always willing and ready to perform her part of the contract and to execute the sale deed and convey the site. She further set up the case that she had agreed to sell the site for Rs.1,50,000/-.

38Copy pinpoint38. On 03.07.1984, the plaintiff sent a lawyer notice. Clause 4, which we have extracted, in the agreement, was invoked. The plaintiff pointed out that in terms of the said Clause, the first defendant was obliged, in the first place, to obtain the sale deed from the BDA and to inform the plaintiff in writing about having obtained the sale deed. The plaintiff was also to obtain the Khata Certificate. Period of three months would begin to run only from the said date. The claim of the first defendant that he had handed over the documents of title, was denied. The further payments, which were made, after having paid Rs.30,000/- on the date of the agreement, was stated to be unnecessary but it was pointed out that the total sum of Rs.50,000/- stood paid. It was reiterated that on the date of the sale agreement itself, the plaintiff was put in possession. The claim that the sale consideration was Rs.1,50,000/- was denied. The first defendant, it was pointed out, had committed default in not complying with the terms of the agreement, by obtaining absolute sale deed from the BDA. Legal action was spoken of by the plaintiff. Lastly, on 14.02.1985, a legal notice was sent by the plaintiff to the first defendant. Thereinafter, referring to the agreement, it was complained that though it was then more than two years that the first defendant had entered into the agreement. First defendant had given a reply on 08.05.1984, pleading excuses for execution of the sale deed. Thereafter, the first defendant was called upon to act in terms of the sale agreement and execute the sale deed within fifteen days of the receipt of the notice. It was held out that failure on the part of the first defendant would constrain the plaintiff to seek relief from the court. That the plaintiff meant business, is proved by the fact the Suit, out of which this Appeal arises, was filed on H 16.11.1985.

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1027 [K. M. JOSEPH, J.]

THE PLEADINGS A

39Copy pinpoint39. In the plaint, the plaintiff, inter alia, again reiterated that he was put in possession of the site at the time of executing the agreement. After referring to the correspondence, which we have referred to, it is averred that the first defendant was not willing to perform her part of the contract. It was complained that the first defendant could not unilaterally treat the contract as cancelled and that he had unjustly repudiated her obligation. It was pleaded that he is likely to execute a sale deed in favour of some other person. To prevent the same, the Suit for Specific Performance of the agreement and for injunction, it was stated, was filed. It was further stated that the first defendant is bound and liable to obtain the absolute sale deed from the BDA and deliver the same to the plaintiff to execute the sale deed. In the amended pleadings, there is reference to the husband and the son being brought on the party array on the death of the first defendant. There is also reference to the subsequent sale by the son to the appellant. The prayer sought was a direction to execute the sale deed and to convey the title and deliver the documents of title including the sale deed, after obtaining the same from the BDA and injunction was sought against interfering with the plaintiff’s lawful possession. Such relief of injunction was also sought against the appellant also.

40Copy pinpoint40. First defendant, in her Written Statement, denied the case of the plaintiff that he was ready and willing. According to her, plaintiff had to pay the balance of Rs. 1,00,000/-, which remains after paying Rs.50,000/-. Time was pointed out to be essence of the contract. The first defendant was ready and willing to perform her part. It was further alleged that the plaintiff was not put in possession. The defendant No.1(b) son of the first defendant filed a Written Statement. He refers to the F Clause prohibiting alienation for a period of ten years from the date of allotment, and that, absolute rights were not created by the BDA by the allotment. It was further contended that the first defendant, his mother, was only the lessee of the site and she did not have any right to convey ownership rights. She was not competent to convey the property. It was G pointed out that the agreement was a void agreement and could not be enforced.

41Copy pinpoint41. The second defendant, in his Written Statement, inter alia, pleaded no knowledge about the agreement dated 17.11.1982, providing that the first defendant must obtain an absolute sale deed from the BDA H

p. 1028

A and it must be intimated in writing to the plaintiff. The allegation that the plaintiff was put in possession, was denied as false. Regarding putting the plaintiff in possession of the possession certificate, the appellant pleaded no knowledge. It was further pleaded that the first defendant was the absolute owner in possession of the site and, after her demise, in view of the death of the husband of the first defendant, the son became the owner of the property. It was pleaded that the first defendant was a site-less and houseless person and permanent resident of Bangalore City. After having made due enquiries, property was purchased by sale deed dated 19.09.1996. An additional Written Statement was filed by the appellant to the amended plaint which was largely devoted to his case about him being a bonafide purchaser. THE ORAL EVIDENCE

42Copy pinpoint42. PW2, the son of the plaintiff (the plaintiff died on 05.01.2001) deposed, inter alia, that possession of the entire property was delivered to the plaintiff. Subsequently, his legal representatives are in possession. D After the plaintiff was put in possession, he has allegedly constructed a temporary shed in it. The shed was demolished in the year 1991 during the Cauvery riots. He has never made any attempts to go to the BDA to know about the Suit property. He deposed that since he guessed that since 1960 his father commenced civil contract work he was doing so till his death. With reference to the question that the site was inalienable for a period of ten years, PW2 answered that it could have been sold to them. He confessed to ignorance of the BDA Rules regarding allotment. He did not know that the lease period was completed on the 13 th Day of May, 1989. He did not know about the non- alienation clause in the allotment by the BDA. He did not know that in the year 1985, his father did not have the right to file the Suit. He was associated with his father in construction work. He refers to Exhibit-P14, which was a show cause notice received by the plaintiff from the BDA. He deposed that plaintiff intimated the BDA about the sale agreement.

43Copy pinpoint43. The following evidence of PW2, the son of the plaintiff is very relevant. He has deposed interalia as follows:- ‘My father was contractor and real estate business since 30 years. It is not true that there are 70 to 80 cases pending in different courts. There are about 35 to 40 cases pending. My elder brother is doing construction.’ H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1029 [K. M. JOSEPH, J.]

‘I guess since 1960 my father commenced civil contract work. A He was doing same business till his death. Simultaneously, he commenced real estate business and continued till his demise.’ ‘My father was getting monthly rental income of Rs.1,00,000/-.’ ‘In the name of our mother, there is commercial complex at Shehsdripuram. We presently get monthly rent of Rs. 4,50,000/-. B The said commercial complex is joint family property.’ PW 2 has entered into an agreement to purchase 24 acres land at Tannishandra. He has negotiated to purchase the land at the rate of Rs.8,00,000/- per acre. At also Ulsoor, they have vacant site of 90,000/- sq. feet. It is quite expensive property PW2 deposes. C They are staying at a rented house. At Cunningham Road, they have got a property which is in dispute. Cunningham property is 1,20,000/- sq. feet. It is vacant land. Most importantly PW2 deposes that if decree is denied they will have loss of money.

44Copy pinpoint44. The appellant (second defendant) examined as DW1, inter alia, deposed that he owned both irrigated and non-irrigated lands to the extent of 12 acres. He did not own any site or building in Bangalore. He invested amount arrived from agriculture and milk-vending business to purchase this property. His father helped him. On the date of purchase, the possession was handed over to him. Apart from Bettanna, none acted as broker at the time of purchase. He, inter alia, further states that he went to the site. He found tin shed. He made inquiries with regard to ownership of the site and possession. He was told that one Sudershan was the owner of the site, who use to visit the site often. He, along with is elder brother, who was residing in Bangalore, went to the house of Sudershan. Sudershan wanted price of Rs.6,00,000/-. Finally, F the parties agreed for Rs.4,50,000/-. Certain xerox copies of documents, including possession certificate, was handed over to him and he consulted an Advocate who said that the title was clear. On the date of sale, the possession was handed over to the appellant. Property was mutated. The broker was not aware of the pendency of the Suit. He will be put to great hardship if the Suit is decreed. The original of the Sale Deed is G with the bank. In cross-examination, he, inter alia, deposed that he has studied up to PUC. His brothers were staying in Bangalore. His father owned 12 acres. Six acres were irrigated and six acres was dry land. His brothers were doing jewellery work in Bangalore. 12 acres was ancestral property. They used to get daily 20 litres of milk per day. They H

p. 1030

A use to get Rs.195-196/- per day by selling milk. Father had not spent any money during marriage of elder brothers. Neither father, second defendant nor his brother Mukund were income-tax assessees. He has no record to show that he had the money to the extent of Rs.4,50,000/- with him. His brothers were staying in the rented house. He knew the broker since his childhood. He invested Rs.3,00,000/- of his own. The remaining was paid by his father. He earned Rs.3,00,000/- by selling milk and vegetables. He informed the broker for the first time in June, 1996 that he intended to purchase the site at Bangalore. After seeing the site on the next day itself, he approached the defendant 1(a) and defendant 1(b) for discussion. Defendant 1(a) was MLA of their Taluk and also former Minister. The negotiations were completed on the same day. The amount was paid by cash. His Advocate did not tell him that both defendant 1(a) and defendant 1(b) had acquired title and informed him to purchase from both. The entire process of seeing the site, sale talks, were done in the first week of June, 1996. Defendant 1(a) and defendant 1(b) did not disclose regarding the pendency of the Suit. He did not inquire with the BDA as to who is the owner of the site. He denied the suggestion that till day, the legal representatives of the original plaintiff were in possession of the property. The suggestion that the possession of the site was handed over to plaintiff, was denied. Defendant 1(b) furnished xerox copy of the possession certificate at the time of negotiations. After receipt of Suit Summons, he was not on talking terms with defendant 1(a) and defendant 1(b). Defendant 1(b) disclosed to him that the original possession certificate was lost and, therefore, he gave the duplicate certificate.

45Copy pinpoint45. Defendant 1(b) was examined as DW2. He has deposed about the non-alienation clause and about the agreement in favour of the plaintiff for Rs.50,000/-. At the time of the agreement, there was a shed on the site. It was agreed to execute sale deed in favour of the plaintiff after getting the absolute sale from the BDA. The BDA was supposed to execute the sale deed after the 10-year lease period. The plaintiff had not taken any steps to waive-off the non-alienation clause for the period of 10 years. His father gave consent to the BDA to issue the sale deed only in his name. He knew the appellant from June, 1996. The name of the broker-Bettana, is spoken to by him. He speaks about handing over of xerox copies to DW1. The second defendant had met him twice in June, 1996. Appellant when he met DW2 for the second time, showed his interest to purchase the property in September, 1996 for Rs.4,50,000/

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1031 [K. M. JOSEPH, J.]

-. Appellant took time till September, 1996 to ascertain whether he was in possession and to mobilise funds. Entire amount of Rs.4,50,000/- was paid in cash. DW2 owned a residential house at Arti Nagar in Judges Colony. The said property was standing in the name of his father. He owned an industrial site. He did not own any residential property in Bangalore apart from the residential property. Since, plaintiff was not having any right, they did not inform the appellant regarding the pendency of the Suit. The plaintiff never asked his mother to alienate the suit property before expiry of the non-alienation period. He took duplicate Possession Certificate from BDA in June, 1996. He did not hand over the transfer agreement executed by the BDA at the time of sale in favour of the appellant. His father was present, when appellant met him twice. His mother has not given any application to the BDA to waive- off the non-alienation clause. He denied the suggestion that possession was handed over to the plaintiff on the date of agreement. There is no document to show that he has received Rs.4,50,000/- from the second defendant. There is reference to a site as Koramangala being allotted to him and it being cancelled by the High Court. He is confronted with the agreement to sell the said site in favour of another person (P-19). THE FINDINGS BY THE TRIAL COURT

46Copy pinpoint46. Seven issues were struck by the Trial Court. Thereafter, two additional issues were also raised, of which, the first additional issue was whether the second defendant, second Legal Representative of deceased defendant, ‘proved that the proved sale agreement’ is void. The Trial Court found the agreement dated 17.11.1982 as proved. It further found that the plaintiff has not proved that plaintiff was put in possession. It was further found that till the year 1989, the first defendant was unable to take an absolute sale deed from the BDA and, therefore, unable to execute the sale deed in response to the communication sent by the plaintiff. It was further found that since the first defendant was not able to get the sale deed from the BDA, she could not cancel the agreement unilaterally. It was further found that the plaintiff ought to have waited till the expiry of the lease period. It was found, however, that the plaintiff was always ready and willing, however, at the same time, the first defendant was not in breach. It was further found that there was no iota of evidence to prove that the defendant had tried to sell the property in favour of the third party. It was further found that there was no oral agreement of sale for Rs.1,50,000/- and the plaintiff H

p. 1032

A was not in breach. This aspect was found against the first defendant. It was found that the second defendant was a bonafide purchaser of the site for value without notice of the earlier agreement of sale as well as pendency of the Suit. It was further found that in view of the allotment and the lease-cum-sale agreement, the plaintiff had no right to file the Suit so as to enforce the agreement to sell during the year 1985. The B plaintiff ought to have waited till year 1989. The first defendant died on 18.07.1994 without obtaining the absolute sale deed from the BDA. After her death, property stood transferred in favour of her son and the son sold it to the appellant. On 17.09.1996, when the sale took place, the predecessor in interest of the second defendant was not a party. The C suit property was sold to the second defendant for a huge sale consideration of Rs. 4,50,000/-. There was no cause of action to institute the Suit. On these findings, inter alia, the Trial Court partly decreed the Suit by ordering return of Rs.50,000/- along with 9 per cent interest per annum by defendants 1(a) and 1(b). The relief of permanent injunction was rejected. D PARI DELICTO POTIOR EST CONDITIO DEFENDENTIS

47Copy pinpoint47. The principle of in pari delicto potior est conditio defendentis is a maxim which we must bear in mind. We need only notice the following discussion by this Court. The decision of this Court E in Kedar Nath Motani (supra) comes to mind: “9. … Where both parties do not show that there was any conspiracy to defraud a third person ought to commit any other illegal act, the maxim, in pari delito etc., can hardly be made applicable. …”

48Copy pinpoint48. This Court in Kedar Nath Motani (supra) also referred to the following statement by Lord Mansfield in Holman v. Johnson3, wherein it was held as follows: “12. The law was stated as far back as 1775 by Lord Mansfield in Holman v. Johnson [(1775) 1 Cowp 341, 343 : 98 ER 1120, G 1121] in the following words: “The principle of public policy is this; ex dolo malo non oritur actio. No Court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act. If, from

3 H [1775 1 COWP 341]

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1033 [K. M. JOSEPH, J.]

the plaintiff’s own stating or otherwise, the cause of action appears to arise ex turpi causa, or the transgression of a positive law of this country, there the Court says he has no right to be assisted. It is upon that ground the Court goes; not for the sake of the defendant, but because they will not lend their aid to such a plaintiff. So if the plaintiff and defendant were to change sides, and the defendant was to bring his action against the plaintiff, the latter would then have the advantage of it; for where both are equally in fault, potior est conditio defendentis.” There are, however, some exceptions or “supposed exceptions” to the rule of turpi causa. In Salmond and William on Contracts, C four such exceptions have been mentioned, and the fourth of these exceptions is based on the right of restitutio in integrum, where the relationship of trustee and beneficiary is involved. Salmond stated the law in these words at p. 352 of his Book (2nd Edn.): “So if employs to commit a robbery, A cannot sue B D for the proceeds. And the position would be the same if were to vest property in upon trust to carry out some fraudulent scheme: could not sue for an account of the profits. But if B, who is A’s agent or trustee, receives on A’s account money paid by pursuant to an illegal contract between E A and C the position is otherwise and A can recover the property from B, although he could not have claimed it from C. In such cases public policy requires that the rule of turpis causa shall be excluded by the more important and imperative rule that agents and trustees must faithfully perform the duties of their office.” F

Williston in his Book on Contracts (Revised Edn.), Vol. VI, has discussed this matter at p. 5069, para 1785 and in paras 1771 to 1774, he has noted certain exceptional cases, and has observed as follows: G “If recovery is to be allowed by either partner or principal in any case, it must be where the illegality is of so light or venial a character that it is deemed more opposed to public policy to allow the defendant to violate his fiduciary relation with the plaintiff than to allow the plaintiff to gain the benefit of an illegal transaction.” H

p. 1034

A Even in India, certain exceptions to the rule of turpi causa have been accepted. Examples of those cases are found in Palaniyappa Chettiar v. Chockalingam Chettiar [(1920) ILR 44 Mad 334] and Bhola Nath v. Mul Chand [(1903) ILR 25 All 639].”

49Copy pinpoint49. We may also notice the following statement by this Court in B Kedar Nath Motani (supra): “15. The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff’s conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by mis- stating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail.”

50Copy pinpoint50. In Sita Ram v. Radhabai and others4, this Court observed as follows: “11. The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a F party to an illegality or fraud is expressed in the maxim in pari deucto portior est conditio defendentis. But as stated in Anson’s Principles of the English Law of Contracts, 22nd Edn., 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 — G 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; 4 H AIR 1968 SC 534

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1035 [K. M. JOSEPH, J.]

(c) where the plaintiff does not have to rely on the illegality to make out his claim’.

51Copy pinpoint51. In Narayanamma (supra), this Court was considering a Suit for specific performance, which was resisted on the ground that the agreement to sell was contrary to the provisions of the Statute. Section 61 of the Karnataka Land Reforms Act, 1961 provided that no land for which occupancy was granted, shall within 15 years of the order of the Tribunal, be transferred by sale, inter alia. A partition was permitted. Equally, a mortgage could be effected to secure a loan. Drawing support from Judgment of this Court in Kedar Nath (supra), this Court, inter alia, as follows: C “15. The three-Judge Bench of this Court, after referring to the aforesaid judgments, speaking through M. Hidayatullah, J. (as his Lordship then was), observes thus: (Kedar Nath Motani case [Kedar Nath Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960 SC 213] , AIR pp. 218-19, para 15) D “15. The correct position in law, in our opinion, is that what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. If the illegality be trivial or venial, as stated by Williston and the plaintiff is not required to rest his case upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. A strict view, of course, must be taken of the plaintiff’s conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. If, however, the matter is clear and the illegality is not required to be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose was achieved, then, unless it be of such a gross nature as to outrage the conscience of the Court, the plea of the defendant should not prevail.” G

16. It could thus be seen, that this Court has held that the correct position of law is that, what one has to see is whether the illegality goes so much to the root of the matter that the plaintiff cannot bring his action without relying upon the illegal transaction into which he had entered. This Court further held, that if the illegality is trivial or venial and the plaintiff is not required to rest his case H