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A upon that illegality, then public policy demands that the defendant should not be allowed to take advantage of the position. It has further been held, that a strict view 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. However, if the matter is clear and the illegality is not required to B be pleaded or proved as part of the cause of action and the plaintiff recanted before the illegal purpose is 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.”

52Copy pinpoint52. In Narayanamma (supra), this Court further held as follows: C “24. The transaction between the late Bale Venkataramanappa and the plaintiff is not disputed. Initially the said Bale Venkataramanappa had executed a registered mortgage deed in favour of the plaintiff. Within a month, he entered into an agreement to sell wherein, the entire consideration for the transfer as well as D handing over of the possession was acknowledged. It could thus be seen, that the transaction was nothing short of a transfer of property. Under Section 61 of the Reforms Act, there is a complete prohibition on such mortgage or transfer for a period of 15 years from the date of grant. Sub-section (1) of Section 61 of the Reforms E Act begins with a non-obstante clause. It is thus clear that, the unambiguous legislative intent is that no such mortgage, transfer, sale, etc. would be permitted for a period of 15 years from the date of grant. Undisputedly, even according to the plaintiff, the grant is of the year 1983, as such, the transfer in question in the year 1990 is beyond any doubt within the prohibited period of 15 F years. Sub-section (3) of Section 61 of the Reforms Act makes the legislative intent very clear. It provides, that any transfer in violation of sub-section (1) shall be invalid and it also provides for the consequence for such invalid transaction.

25. Undisputedly, both, the predecessor- in-title of the defendant(s) G as well as the plaintiff, are confederates in this illegality. Both, the plaintiff and the predecessor-in-title of the defendant(s) can be said to be equally responsible for violation of law.

26. However, the ticklish question that arises in such a situation is:”the decision of this Court would weigh in side of which party”? H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1037 [K. M. JOSEPH, J.]

As held by Hidayatullah, J. in Kedar Nath Motani [Kedar Nath A Motani v. Prahlad Rai, (1960) 1 SCR 861 : AIR 1960 SC 213] , the question that would arise for consideration is as to whether the plaintiff can rest his claim without relying upon the illegal transaction or as to whether the plaintiff can rest his claim on something else without relying on the illegal transaction. B Undisputedly, in the present case, the claim of the plaintiff is entirely based upon the agreement to sell dated 15- 5-1990, which is clearly hit by Section 61 of the Reforms Act. There is no other foundation for the claim of the plaintiff except the one based on the agreement to sell, which is hit by Section 61 of the Act. In such a case, as observed by Taylor, in his “Law of Evidence” which has been approved by Gajendragadkar, J. in Immani Appa Rao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , although illegality is not pleaded by the defendant nor sought to be relied upon him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take notice of it, and will dismiss the action ex turpi causa non oritur actio i.e. no polluted hand shall touch the pure fountain of justice. Equally, as observed in Story’s Equity Jurisprudence, which again is approved in Immani Appa Rao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370], where the parties are concerned with illegal agreements or other transactions, courts of equity following the rule of law as to participators in a common crime will not interpose to grant any relief, acting upon the maxim in pari delicto potior est conditio defendentis et possidentis.”

53Copy pinpoint53. This Court in Narayanamma (supra) finally found as follows: F “28. Now, let us apply the other test laid down in Immani Appa Rao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] . At the cost of repetition, both the parties are common participator in the illegality. In such a situation, the balance of justice would tilt in whose favour is the question. G As held in Immani Appa Rao [Immani Appa Rao v. Gollapalli Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , if the decree is granted in favour of the plaintiff on the basis of an illegal agreement which is hit by a statute, it will be rendering an active assistance of the court in enforcing an agreement which is contrary H

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A to law. As against this, if the balance is tilted towards the defendants, no doubt that they would stand benefited even in spite of their predecessor-in-title committing an illegality. However, what the court would be doing is only rendering an assistance which is purely of a passive character. As held by Gajendragadkar, J. in Immani Appa Rao [Immani Appa Rao v. Gollapalli B Ramalingamurthi, (1962) 3 SCR 739 : AIR 1962 SC 370] , the first course would be clearly and patently inconsistent with the public interest whereas, the latter course is lesser injurious to public interest than the former.” CASES OF CONDITIONAL DECREE OF SPECIFIC C PERFORMANCE

54Copy pinpoint54. The decision, which first comes to mind and is oft quoted, is the decision of the Privy Council in Motilal v. Nanhelal5. The Court, in the said case, affirmed the decision of the Judicial Commissioner, decreeing a Suit for Specific Performance, taking note of Section 50 of the Central Provinces Act of 1920, which read as follows and the Court, inter alia, held as follows thereafter: “If a proprietor desires to transfer the proprietary rights in any portion of his sir land without reservation of the right of occupancy specified in s. 49, he may apply to a revenue-officer and, if such revenue- officer is satisfied that the transferor is not wholly or mainly an agriculturist, or that the property is self-acquired or has been acquired within the twenty years past preceding, he shall sanction the transfer.” In view of the above mentioned construction of the agreements of September 4, 1914— namely, that Sobhagmal agreed to transfer the cultivating rights in the sir land—there was, in their Lordships’ opinion, an implied covenant on his part to do all things necessary to effect such transfer, which would include an application to the revenue- officer to sanction the transfer.”

55Copy pinpoint55. In other words, in an agreement wherein the vendor agrees to convey property, which is permissible only with the permission of some Authority, the Court can, in appropriate cases, grant relief. We need only notice two recent Judgments which have reiterated the principle,

5 H AIR 1930 PC 287

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1039 [K. M. JOSEPH, J.]

the first of which is reported in Vishwa Nath Sharma v. Shyam Shanker A Goela and another6, which is relied upon, in fact, by the respondents. The decision of this Court, again relied upon by the respondents in Ferrodous Estates (Pvt.) Limited v. Gopiratnam (Dead) and others 7 also reiterates the said view. In Ferrodous Estates (supra), the matter arose under the Tamil Nadu Urban Land (Ceiling and Regulation) Act, B

1978. The High Court, in the impugned Judgment, had dismissed the Suit for Specific Performance, taking the view that till 1999, when the Tamil Nadu Urban Ceiling Act was repealed, the agreement was not enforceable. That apart, under the agreement of sale, vacant land, in the aggregate, exceeding the ceiling limit of the plaintiff, would have to be conveyed to him, attracting the VETO contained in Section 5(3) read with Section 6 of the State Act. It was this view, which was reversed by this Court, following the Judgments, which we have referred to which relate to conditional decrees. This result was arrived at by this Court, after finding that agreement to sell contemplated transfer of the land only after getting exemption. Clause (4) of the Agreement contemplated that the vendor was to obtain permission from the Competent Authority under the Urban Land Ceiling Act. We need not multiply authorities. All that is necessary to notice and find is that when an agreement to sell is entered into, whereunder to complete the title of the vendor and for a sale to take place and the sale is not absolutely prohibited but a permission or approval from an Authority, is required, then, such a contract is, indeed, enforceable and would not attract the shadow of Section 23 of the Indian Contract Act, 1872. CERTAIN OTHER DECISIONS

56Copy pinpoint56. We may examine some of the decisions, which have been referred to by the respondents. In the decision reported in T. Dase Gowda F v. D. Srinivasaiah8, a Division Bench of the High Court of Karnataka was considering the Suit for Specific Performance in the context of the very Rules, which arise before us. The defendant/appellant in the said case, entered into an oral agreement with the plaintiff therein on 01.09.1981, to sell the Suit site along with an incomplete structure. The G defendant received certain amounts thereafter. This was followed by a written agreement on 01.10.1981 wherein the defendant agreed to sell.

6 (2007) 10 SCC 595 7 AIR 2020 SC 5041 8 (1990) SCC Online Karnataka 613 H

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A According to the plaint averments, the plaintiff was put in possession and he completed the construction. It was the plaintiff’s further case that he was dispossessed by the defendant. The High Court, under Point 6, considered the question whether agreement was legally enforceable. The Court has referred to Rule 18 of the Rules, which, apparently, was invoked by the defendant. Answering the point, the Court took the view B that there was no transfer of interest, which results from an agreement to sell and, therefore, Rule 18(2)(a)(iii), did not apply, as there was no alienation on a mere agreement to sell being executed. The Court distinguished the decision, which was relied upon by the defendant in the said case and, interestingly, the appellant before us, viz., the decision of C a learned Single Judge in K. Chandrashekar Hegde v. Bangalore City Corporation and N.B. Menon v. Bangalore Development Authority9. We may further notice that the high court in the said case took the view that a period of ten years had expired even during 1985 and there was no impediment with reference to the enforceability, it was further found. It was next found that the plaintiff in the said case was, on evidence, D found residing in a rented house and that he had purchased the plaint schedule property for self- occupation. It was found that the building which was constructed was a residential one. It was, therefore concluded that the element of public policy (public interest) was also not affected. The court granted decree for specific performance. In Yogambika V. E Narsingh10, a Division Bench, followed the decision in T. Dase Gowda (supra), noting further that the earlier decision had been affirmed by this Court by the dismissal of the SLP by Order dated 17.07.1991. We may notice also that, in its discussion, the Division Bench, has laid store by the line of decisions commencing with Motilal (supra).

57Copy pinpoint57. In Subbireddy v. K.N. Srinivasa Murthy11, the question fell for decision under Section (3) of the Karnataka Village Offices Inam Abolition Act. The Single Judge found that under the agreement, the transfer was to be effected only after the expiry of the period of non- alienation prescribed in Section 5(3) of the Act in question. This case must be understood in the light of the Clause which contemplated the G sale being affected, after the expiry of the period, during which, the alienation was prohibited. The vendor was to take permission for the execution of the sale deed. 9 ILR 1988 KAR 356 10 ILR 1992 KAR 717 H 11 AIR 2006 Karnataka 4

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1041 [K. M. JOSEPH, J.]

58Copy pinpoint58. In Syed Zaheer and others v. C.V. Siddveerappa12, a Division A Bench decreed a Suit for Specific Performance wherein the agreement contemplated execution of sale deed, after the period of non- alienation prescribed under the grant. The Suit was filed, in fact, after the lapse of the period of fifteen years.

59Copy pinpoint59. In Balwant Vithal Kadam v. Sunil Baburaoi Kadam13, this B Court rejected the contention that the agreement, which was sought to be specifically enforced, fell foul of Section 48 of the Maharashtra Cooperative Societies Act. It was found that an agreement to sell did not create an interest in land unlike a sale.

60Copy pinpoint60. In Punjab & Sind Bank v. Punjab Breeders Ltd. and C another14, this Court was dealing with a case of the effect of violation of the conditions, under which, a one-time settlement was extended. The conditions included the stipulation that the mortgaged property should not be sold for three years without prior permission, inter alia. An agreement to sell was found not to be a sale. D

61Copy pinpoint61. In Suraj Lamp & Industries (P) Ltd. (2) Through Director v. State of Haryana and another15, this Court, while dealing with the effect of what has been described as GPA Sales in Delhi, inter alia, and considering the scope of an agreement to sale, declared that “a transfer of immovable property by way of sale, can only be by a Deed of Conveyance (Sale Deed)”. No title is transferred by a mere agreement to sell, it was further found.

62Copy pinpoint62. In K. Chandrashekar Hegde (supra), which is relied upon by the appellant, a Single Judge of the High Court of Karnataka, was dealing with batch of Writ Petitions. Among the issues, which prominently arose, was the objection taken to the construction of multi-storey buildings, wherein claims were made on the basis of allotment under the Act, as repealed by the Bangalore Development Act and the Rules. The learned Single Judge has elaborately considered the scheme of the Rules. He has further explored the impact of the Forms prescribed under the Allotment Rules, 1964 and similar provisions were found in the subsequent Rules. This Judgment has been distinguished by the Judgment in T. Dase G Gowda (supra). 12 ILR 2010 Karnataka 765 13 (2018) 2 SCC 82 14 (2016) 13 SCC 283 15 (2012) 1 SCC 656 H

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63Copy pinpoint63. Jambu Rao Satappa Kocheri v. Neminath Appayya Hanamannayar16 is an important decision. This Court was dealing with a Suit for Specific Performance. One of the questions, which arose was whether the enforcement of the contract, would defeat the provisions of the Bombay Tenancy and Agricultural Lands Act, 1948. The appellant before this Court had agreed to sell 41 acres and odd of jairayat land. B Under Section 5 of the Act, the ceiling area, inter alia, was prescribed as 48 acres of jairayat land. Section 34 of the Act provided as follows – “Subject to the provisions of Section 35, it shall not be lawful, with effect from the appointed day, for any person to hold, whether as owner or tenant or partly as owner and partly as tenant, land in C excess of the ceiling area”. Section 35 declared acquisition of land in excess of the area prescribed in Section 34, as invalid. Section 84-C, reads as follows: “(1) Where in respect of the transfer of acquisition of any land made on or after the commencement of the amending Act, 1955, D the Mamlatdar suo motu or on the application of any person interested in such land has reason to believe that such transfer or acquisition is or becomes invalid under any of the provisions of this Act, the Mamlatdar shall issue a notice and hold an inquiry as provided for in Section 84-B and decide whether the transfer or acquisition is or is not invalid. E (2) If after holding such inquiry, the Mamlatdar comes to a conclusion that the transfer or acquisition of land is invalid, he shall make an order declaring the transfer or acquisition to be invalid.

F (3) On the declaration made by the Mamlatdar under sub- section (2),— (a) the land shall be deemed to vest in the State Government, free from all encumbrances lawfully subsisting thereon on the date of such vesting, and shall be disposed G of in the manner provided in sub-section (4) ; ***”

64Copy pinpoint64. The contention taken by the defendant was that the plaintiff was already holding 31 acres and 2 guntas of jairayat land and, therefore,

16 H AIR 1968 SC 1358

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by acquiring the plaint schedule property by way of the decree the A plaintiff, would hold land in excess of the ceiling area. We may notice the following discussion with specific reference to Section 23 of the Indian Contract Act, in particular: “6. By Section 23 of the Contract Act, consideration or object of an agreement is unlawful if it is forbidden by law; or is of such B a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent. Both the parties to the contract are agriculturists. By the agreement the appellant agreed to sell jirayat land admeasuring 41 acres 26 gunthas for a price of Rs 32,000. The consideration of the agreement per se was not unlawful, for there is no provision in the Act which expressly or by implication forbids a contract for sale of agricultural lands between two agriculturists. Nor is the object of the agreement to defeat the provisions of any law. The Act has imposed no restriction upon the transfer of agricultural lands from one agriculturist to another. It is true that by Section 35 a person who comes to hold, after the appointed day, agricultural land in excess of the ceiling, the lands having been acquired either by purchase, assignment, lease, surrender or by bequest, the acquisition in excess of the ceiling is invalid. The expression “acquisition of such excess land shall be invalid” may appear somewhat ambiguous. But when the scheme of the Act is examined, it is clear that the legislature has not declared the transfer or bequest invalid, for Section 84-C provides that the land in excess of the ceiling shall be at the disposal of the Government when an order is made by the Mamlatdar. The invalidity of the acquisition is therefore only to the extent to which the holding exceeds the ceiling prescribed by Section 5, and involves the consequence that the land will vest in the Government. xxx xxx xxx

8. An agreement to sell land does not under the Transfer of Property Act create any interest in the land in the purchaser. By agreeing to purchase land, a person cannot be said in law to hold that land. It is only when land is conveyed to the purchaser that he holds that land. Undoubtedly the respondent was holding some area of land at the date of the agreement and at the date of the suit, but on that account it cannot be inferred that by agreeing to purchase land under the agreement in question his object was to H

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A hold in excess of the ceiling. It was open to the respondent to transfer or dispose of the land held by him to another agriculturist. The Act contains no general restrictions upon such transfers, and unless at the date of the acquisition the transferee holds land in excess of the ceiling, the acquisition to the extent of the excess over the ceiling will not be invalid. There is nothing in the agreement, nor can it be implied from the circumstances, that it was the object of the parties that the provisions of the Act relating to the ceiling should be transgressed. The mere possibility that the respondent may not have disposed of his original holding at the date of the acquisition of title pursuant to the agreement entered into between him and the appellant will not, in our judgment, render the object of the agreement such, that, if permitted, it would defeat the provisions of any law. The Court, it is true, will not enforce a contract which is expressly or impliedly prohibited by statute, whatever may be the intention of the parties, but there is nothing to indicate, that the legislature has prohibited a contract to transfer land between one agriculturist and another. The inability of the transferee to hold land in excess of the ceiling prescribed by the statute has no effect upon the contract, or the operation of the transfer. The statutory forfeiture incurred in the event of the transferee coming to hold land in excess of the ceiling does not invalidate the transfer between the parties.

9. We hold that a contract for purchase of land entered into with the knowledge that the purchaser may hold land in excess of the ceiling is not void, and the seller cannot resist enforcement thereof on the ground that, if permitted, it will result in transgression of the law.”

65Copy pinpoint65. We may cull out the ratio in the following terms: Whatever may be intention of the parties, a contract which is expressly or impliedly prohibited by a Statute, may not be enforced by the Court. The Bombay Act did not prohibit a contract of sale of agricultural land between two agriculturists. The invalidity of the acquisition of land in excess, involved the consequence that the land would vest in the Government. In the context of the said Act, the Court has taken the view that a person can be said to hold land only when it is conveyed to him, which would not take place when there is a mere agreement to sell. The further reasoning of the Court appears to be that

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1045 [K. M. JOSEPH, J.]

it is open to the buyer to transfer or dispose of land already held by him to another agriculturist and unless at the date of acquisition, the buyer held the land in excess of the ceiling limit, the acquisition to the extent of the excess over the ceiling, would not be invalid. It was further declared that the mere possibility that the respondent/buyer may not have disposed of his original holding on the date of acquisition of title under the agreement to sell, would not render the object of the agreement such that, if permitted, it would defeat the provisions of any law. Thus, the contract was found to be not void.

66Copy pinpoint66. This Judgment came to be followed in Bhagat Ram v. Kishan and others17. In the said case, the question arose under Section 23 of the Delhi Rent Reforms Act, 1954, in a Suit for Specific Performance. C Section 23 reads as follows: “23. Use of holding for industrial purposes.—(1) A Bhumidhar or Asami shall not be entitled to use his holding or part thereof for industrial purposes, other than those immediately connected with any of the purposes referred to in Section 22, D unless the land lies within the belt declared for the purpose by the Chief Commissioner by a notification in the Official Gazette: Provided that the Chief Commissioner may, on application presented to the Deputy Commissioner in the prescribed manner, sanction the use of any holding or part thereof by a Bhumidhar E for industrial purposes even though it does not lie within such a belt.”

67Copy pinpoint67. This Court in Bhagat Ram (supra) held as follows: “5. Bhumidhari right is transferable and the Defendant 1 is entitled to use the land even for the purpose other than those enumerated in Section 22 if he obtains permission of the Chief Commissioner. Therefore, the agreement for transfer of land does not become invalid by itself. The Defendant 1 after obtaining the property could use it for the intended purpose on obtaining permission of the Chief Commissioner or if no such permission was obtained, he could use the land for the purposes authorised under Section 22 of the Act. In our opinion, the High Court went wrong in holding that the agreement was opposed to public policy

17 (1985) 3 SCC 128 H

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A or transfer under the agreement was hit by Section 23 of the Act. Support for our view is available from the decision of this Court in Jambu Rao Satappa Kocheri v. Neminath Appayya Hanammannaver [AIR 1968 SC 1358 : (1968) 3 SCR 706] . The suit by the plaintiff for declaration that the agreement is bad had rightly been dismissed by the trial court as also the first appellate B court and the High Court on an erroneous view reversed the same. In our opinion the suit is liable to be dismissed.”

68Copy pinpoint68. We have set out the provisions of the Rules and the lease- cum-sale agreement. Before we deal with the question as to whether the agreement in question, falls foul of Section 23 of the Indian Contract C Act, we shall deal with the contention raised by the respondent that there is no law, as understood in this case, which would be defeated by the agreement and what is holding the field is only the Rules. It is true that this Court in Union of India v. Col. L.S.N. Murthy18, has observed as follows: D “17. In Pollock & Mulla, Indian Contract and Specific Relief Acts, 13th Edn., Vol. I published by LexisNexis Butterworths, it is stated at p. 668: “The words ‘defeat the provisions of any law’ must be taken as limited to defeating the intention which the legislature has expressed, or which is necessarily implied from the express terms of an Act. It is unlawful to contract to do that which it is unlawful to do; but an agreement will not be void, merely because it tends to defeat some purpose ascribed to the legislature by conjecture, or even appearing, as a matter of history, from extraneous evidence, such as legislative debates or preliminary memoranda, not forming part of the enactment.” It is thus clear that the word “law” in the expression “defeat the provisions of any law” in Section 23 of the Contract Act is limited to the expressed terms of an Act of the legislature.”

69Copy pinpoint69. With respect, the principle laid down, does not commend itself to us. We do agree that the illegality cannot be a matter of conjecture nor the purpose divined by the Court from parliamentary debates. But that is not to say that as found by this Court in AIR 1968 SC 1358 (supra), which decision was not considered by this Court, that it cannot

H 18 (2012) 1 SCC 718

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be implied. But we must find that the Court was dealing with a Notification, A which was, in fact, a ‘letter’ written by the Government of India. We can have no quarrel with the proposition that a ‘letter’ cannot be law within the meaning of Section 23 of the Indian Contract Act. The Court, in the said case, was not dealing with Subordinate Legislation in the form of Statutory Rules. The Rules in question before us are, undoubtedly, B Statutory Rules. Therefore, we do not think it is necessary for us to refer the matter to a larger Bench on account of the observations found in the Judgment in paragraph-17. What is contemplated under Section 23 of the Indian Contract Act is law, in all its forms, being immunised from encroachment and infringement by a contract, being enforced. Not only would a Statutory Rule be law within the meaning of Article 13 of the Constitution of India but it would also be law under Section 23 of the Indian Contract Act.

70Copy pinpoint70. Section 10 of the Contract Act declares as to what agreements are contracts and all agreements are declared contracts, if they are made by the free consent of parties competent to contract with a lawful consideration and with the lawful object and not expressly declared to be void under the Contract Act. Section 23 must be read with Section

10. Without the illustrations, Section 23, reads as follows: “23. What consideration and objects are lawful, and what not. — The consideration or object of an agreement is lawful, unless— E — The consideration or object of an agreement is lawful, unless— ” it is forbidden by law; 14 or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement F is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.”

71Copy pinpoint71. The very first head under which an agreement become unlawful is, when the consideration or object of agreement is forbidden by law. In regard to the same, we may notice the view of a Bench of three learned G Judges in Gherulal Parakh v. Mahadeodas Maiya and others 19. Therein, quoting from Pollock and Mullah from their work Indian Contract Act, this Court has stated as follows:

19 AIR 1959 SC 781 H

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A “8. xxx xxx xxx An act or undertaking is equally forbidden by law whether it violates a prohibitory enactment of the Legislature or a principle of unwritten law. But in India, where the criminal law is codified, acts forbidden by law seem practically to consist of acts punishable under the Penal Code and of acts prohibited by special legislation, or by regulations or orders made under authority derived from the Legislature.” (Emphasis supplied)

72Copy pinpoint72. In regard to the Commentary by the very same Author, under the Second Head of “illegal object or consideration” in Section 23 of the Contract Act, viz., if the consideration or object is of such a nature that if permitted, it would defeat the provisions of any law, it is that, this Court took the view that law for the purpose of Section 23 would be, law made by the Legislature. Quite apart from the fact that what is involved in the said case was only a letter, the Judgment of this Court in Gherulal D Parakh (supra) and the Commentary from the very same Author, was not noticed by this Court. Therefore, it becomes all the more reason as to why we need not refer the matter to a larger Bench. We may also notice that ‘law’, for the purposes of Clauses (1) and (2) cannot be different. It is very clear that Regulations or Orders made under the E Authority derived from the Legislature referred to by this Court, are species of subordinate legislation. Statutory Rules would also, therefore, clearly be law.

73Copy pinpoint73. In the facts of this case, the question would, therefore, be, as to whether the enforcement of the agreement to sell dated 17.11.1982, expressly or impliedly, lead to palpably defeat the law in question, which is contained in the Statutory Rules or is prohibited by the same.

74Copy pinpoint74. A contract may expressly or impliedly, be prohibited by provisions of a law. The intentions of the parties do not salvage such a contract. [See AIR 1968 SCC 1328 (supra)]. What is involved in this case, may not be a mere case of a conditional decree for specific performance being granted as was the case in the line of decisions commencing with Motilal (supra) and ending with Ferrodous Estates (supra). The Rules contemplate a definite scheme. Land, which is acquired by the Public Authority, is meant to be utilised for the particular purpose. The object of the law is to invite applications from eligible persons, who are to be selected by a Committee and the sites are allotted

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to those eligible persons, so that the chosen ones are enabled to put up structures, which are meant to be residential houses. It is implicit in the Rules, and what is more, in the lease-cum-sale agreement, that the allottee, who is treated as a lessee under Rule 7, will remain in possession and, what is more, proceed to fulfil his obligation under the lease-cum- sale agreement and the Rules. The obligations of the allottee/lessee are unambiguous. He has held himself out to be in dire need of a plot of land for the purpose of constructing a residential building. He has to disclose his annual income and any other means indicating his capacity, not only to purchase the site applied for but also to construct the house. He has to respond to the query as to whether any member of the family, of which he is a member, owns or has been allotted a site or a house by the C Board or any other Authority, within the area under jurisdiction of the Board. The applicant must, furthermore, disclose whether he already owns a house or house site in the city or outside the city. Whether the applicant’s wife, husband or minor child owns a house or house site, is another matter, he must disclose. Incorrect information in any of these matters, would entitle the Board to resume the site. Rule 11 specifically announces among the principles as relevant for selecting an applicant for allotment, the income of the applicant to build the house on the site for his residence. No doubt, it is not applicable to certain classes, which include the other backward classes. Rule 11(3) declares further that the number of years, the applicant has been waiting for allotment of a site, inter alia, as a relevant principle.

75Copy pinpoint75. It may be true that as contended by Shri R. Basant, learned senior counsel for the respondent that despite the fact no building was put up by the allottee, the BDA has not deemed it fit to cancel the allotment. We gather the impression that the BDA has been lax in the pursuit of the lofty goals of the law. We do not pursue the matter further as BDA is not a party.

76Copy pinpoint76. If the agreement between plaintiff and the first defendant is taken as it is and it is enforced, the following would be the consequences. The allotment to the first defendant was made on 04.04.1979. In fact, the first defendant was obliged, in law, to construct a residential building within two years under Rule 17(6). No doubt, the time could be extended thereunder. But, at the time, the agreement dated 17.11.1982 was entered into, the first defendant was already in breach. The result, however, of the agreement dated 17.11.1982, is as follows: H

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A The first defendant would be liable to convey the right in the site to the plaintiff. The price would be Rs.50,000/- for the site, proceeding on the basis of the concurrent findings by the Court. This is on the supposition that the parties contemplated that the site would be conveyed after the period of ten years from the date of allotment upon the expiry of which alone, the allottee, viz., B the first defendant would be entitled to the conveyance under Rule 17(7) of the Rules. It must be noticed that in fact, under the lease-cum-sale agreement and the Rules, what is contemplated is that on events leading up to the stage where the elements of Rule 17(7) are satisfied alone, a right or duty would accrue to the allottee/ C lie upon the party. However, what is more important in the context of the facts of this case is the following facet. Under the agreement, the parties contemplated and have expressly provided that the plaintiff was to be put in possession of the site on the date of the agreement, i.e., on 17.11.1982. Did the parties contemplate the construction of the building residential in nature, for the purpose of which, the site was allotted to the first defendant? Is it not a clear case where enforcing the agreement, as it is, would necessarily result in the first defendant not acting in accordance with lease-cum-sale agreement, which, she entered into with the BDA and, what is even more crucially important, against the mandate of the law, as contained in the Rules, which contemplated that the allotment was made for the construction of a residential building by the allottee and the construction was to be completed within the period of two years or an extended period? The agreement between the parties contemplated giving a short shrift to the mandate of the law. This is clear from the fact that under the agreement, the first defendant was obliged to sell the site as it is. Construction of the building became a practical impossibility. The price, which was agreed upon, was qua the site alone. The consideration and the other terms of the agreement, in other words, ruled out the possibility of a residential building being constructed by the first defendant, who as the allottee, was, under the law, obliged to construct the building. Assuming for a moment that the construction was put up, which assumption must be premised on possession not being handed over to the plaintiff and which is contrary, not only to the terms of the agreement, but also pleading of the plaintiff and the consistent stand in the evidence

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adduced on behalf of the plaintiff and even proceeding, however, on the basis that as found by the Trial Court, that the plaintiff has failed to establish that possession was handed over to him on the date of agreement and that the possession continued with the first defendant, the terms of the agreement, which included, the price being fixed for conveying the right for the site, necessarily, would have the effect of freezing the first respondent in even attempting to put up a construction.

77Copy pinpoint77. We, therefore, reject the contention of the plaintiff that there was nothing, which could have prevented putting up a building. The argument of plaintiff involves rewriting of the contract. This is different from a situation where an allottee, without being trammelled by an agreement, is unable to put up a building even for the whole of ten years and action is not taken under Rule 17(6) and yet conveyance is made in his favour under Rule 17(7). The direct impact of the agreement is that it compelled the party to abstain from performing its obligation in law apart from breaching the agreement with BDA. In other words, taking the agreement as it is, it necessarily would be in the teeth of the obligation in law of the first respondent to put up the construction. The agreement to sell involved clearly terms which are impliedly prohibited by law in that the first defendant was thereunder to deliver title to the site and prevented from acting upon the clear obligation under law. This is a clear case at any rate wherein enforcing the agreement unambiguously results in defeating the dictate of the law. The ‘sublime’ object of the law, the very soul of it stood sacrificed at the altar of the bargain which appears to be a real estate transaction. It would, in other words, in allowing the agreement to fructify, even at the end of ten-year period of non- alienation, be a case of an agreement, which completely defeats the law for the reasons already mentioned.

78Copy pinpoint78. Going by the recital in the agreement entered into between the plaintiff and the first defendant, possession is handed over by the first defendant to the plaintiff. The original Possession Certificate is also said to be handed over to the plaintiff. The agreement, even according to the plaintiff, contemplated that within three months of conveyance of the site in favour of the first defendant, the first defendant was to convey her rights in the site to the plaintiff. It is quite clear that the parties contemplated a state of affairs which is completely inconsistent with and in clear collision with the mandate of the law. On its term, it stands out as an affront to the mandate of the law. H

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79Copy pinpoint79. The illegality goes to the root of the matter. It is quite clear that the plaintiff must rely upon the illegal transaction and indeed relied upon the same in filing the suit for specific performance. The illegality is not trivial or venial. The illegality cannot be skirted nor got around. The plaintiff is confronted with it and he must face its consequences. The matter is clear. We do not require to rely upon any parliamentary debate B or search for the purpose beyond the plain meaning of the law. The object of the law is set out in unambiguous term. If every allottee chosen after a process of selection under the rules with reference to certain objective criteria were to enter into bargains of this nature, it will undoubtedly make the law a hanging stock.

80Copy pinpoint80. To elucidate the matter a little further, let us take another example. If the agreement was entered into by the first defendant, under which, the first defendant would abide by her obligations, both under the lease-cum-sale agreement and, more importantly, the Rules and were to put up a building and the agreement contemplated, conveying the site along with the building, to a buyer after the expiry of ten years and upon getting the conveyance from the BDA, such an agreement, perhaps, being not an alienation in itself, may have passed muster.

81Copy pinpoint81. At this juncture, we must also deal with the argument of the plaintiff that the agreement to sell is not a sale and, what is prohibited under the Rules and lease-cum-sale agreement, was only alienation. There can be no quarrel with the proposition that no interest in property could be conveyed by a mere agreement to sell. But the question is, whether the agreement to sell in this case is in the teeth of Section 23 of the Contract Act. For reasons, which we have indicated, on a conspectus of the scheme of the Rules, we have no hesitation in holding that the contract was unenforceable for reason that it clearly, both expressly and impliedly, would defeat the object of the Rules, which are statutory in nature. The contract was patently illegal for reasons already indicated.

82Copy pinpoint82. Now, let us look at it from a different perspective. The agreement is dated 17.11.1982. We have noticed the correspondence by the plaintiff. We have also noticed the terms of the agreement between the plaintiff and the first defendant. In the first letter sent by the plaintiff which incidentally was within four months of the date of agreement, the plaintiff called upon the first defendant to execute the sale deed. There is no mention about the first defendant attempting to sell the property to anybody. It is noteworthy that the plaintiff has stated that he intends to

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sell the property to his nominee. This further indicates that he was not a A person who was in need of this site for the purposes of putting up of residential building unlike even the plaintiff in the case considered by the High Court of Karnataka and relied upon by the plaintiff, namely, T. Dase Gowda v. D. Srinivasaiah (supra). We have already noticed the command of the law as contained in Rule 18(3) of the Rules read with B Rule 17. If an allottee who is treated as a lessee for reasons which are indicated in Rule 18(3) wishes to sell the site (which is applicable in this case as no building has been put up) then he can sell the site only as was provided in Rule 18(3), that is to say, if going by the correspondence by the plaintiff wherein the first defendant was called upon to execute the sale deed of the site, this would be clearly in the teeth of Rule 18(3), the scope of which has already explained. The plaintiff could not have asked for decree commanding the first defendant to sell the site in terms of the correspondence with which he began communicating with the first defendant. In other words, a sale of a site to any other person clearly stood prohibited and unless the allottee/lessee is compelled to sell in the circumstances mentioned in Rule 18(3) the law permitted the sale of the site only to the authority itself. Therefore, if the plaintiff wanted to enforce the agreement for the sale of the site on an immediate basis it would clearly attract the embargo that it was completely prohibited. IS THE SUIT PREMATURE? SCOPE OF ARTICLE 54 OF THE LIMITATION ACT. E

83Copy pinpoint83. The further question which is raised by the second defendant is that the suit itself was pre-mature. We have found that the trial court has entered into a clear finding that there is absolutely no evidence to support the projected apprehension that first defendant was about to dispose of the property. There is no material to support the finding F otherwise. In fact, any such sale would have been completely illegal being prohibited by law as that is the inevitable and necessary implication flowing from Rule 18(3). There is absolutely no foundation for the plaintiff to have instituted the suit except perhaps the repudiation.

84Copy pinpoint84. One of the contentions, which is raised by the learned Counsel G for the second defendant is that, under Article 54 of the Limitation Act, 1963, the period of limitation would begin to run from the time of repudiation of the agreement to sell only when the contract does not provide for the time at which the contract is to be performed. In other words, the contention of the second defendant is that the agreement H

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A dated 17.11.1982, contemplated, even according to the plaintiff, in Clause 4 that the first defendant must convey the title within a period of three months from the date on which, BDA conveyed the title to her. According to the second defendant, therefore, in this case, the time for performance of the obligation by the vendor, was fixed. Therefore, there was no need for the plaintiff and, what is more, no justification for the plaintiff, to institute the Suit prematurely, almost four years prior to the appointed date.

85Copy pinpoint85. Article 54 of the Limitation Act, reads as follows: “54. Suits for Specific Performance. 3 years. The date fixed for the performance, or, if no such date is fixed, when the plaintiff has notice that performance is refused.”

86Copy pinpoint86. Article 54 contemplates that when a date is fixed for the performance of the contract, then, the period of limitation begins to run from that date. When such a date is not fixed in an agreement to sell, then, refusal or breach by the vendor will start the clock ticking.

87Copy pinpoint87. However, we may notice, in this regard, what the Court has opined. In Ramzan v. Hussaini20, a Bench of two learned Judges of this Court took the view that the word ‘date’ in Article 54, need not be expressly mentioned in an agreement and it can be found out from the other terms of the agreement. If this were so, there may be merit in the second defendant contention. In a later decision, a Bench of three learned E Judges in Ahmadsahab Abdul Mulla (2) (dead) v. Bibijan and others21, has, however, taken the view that the word ‘the date’ in Article 54, means that the specific date must be indicated in an agreement as the date of performance. No doubt, the Court, in fact, went on to distinguish the earlier decision Ramzan v. Hussaini (supra) and held as follows: “Para 5. In Tarlok Singh’s case (supra) the factual scenario was noticed and the case was decided after referring to Article 54 of the Schedule to the Act. Ramzan’s case (supra) related to the specific performance of contingent contract. It was held that the expression “date fixed for performance” “need not be ascertainable in the face of the contract deed and may be ascertainable on the happening of a certain contingent event specified in the contract”. 20 (1990) 1 SCC 104 21 H (2009) 5 SCC 462

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Para 8. The judgments in Ramzan and Tarlok Singh cases (supra) A were rendered in a different factual scenario and the discussions do not throw much light on the controversy at hand. Para 11. The inevitable conclusion is that the expression “date fixed for the performance” is a crystallized notion. This is clear from the fact that the second part “time from which period begins to run” refers to a case where no such date is fixed. To put it differently, when date is fixed it means that there is a definite date fixed for doing a particular act. Even in the second part the stress is on “when the plaintiff has notice that performance is refused”. Here again, there is a definite point of time, when the plaintiff notices the refusal. In that sense both the parts refer to definite dates. So, there is no question of finding out an intention from other circumstances.”

88Copy pinpoint88. No doubt, the Court took the view, inter alia, that the Judgment in Ramzan v. Hussaini (supra), was a case of a contingent contract. It could still be argued that the rights of the defendant were only that, if all went well, and the BDA conveyed the title to her, she was to convey her rights within a period of three months. We would think that in the facts of this case, we need not disturb the finding of the High Court particularly when we find that the contract itself is unenforceable. IS IT A NEW CASE? E

89Copy pinpoint89. Yet another objection raised by the plaintiff is that the Court must not permit the plea of the appellant that the contract was void or that it was unenforceable and that it is a new point. Quite apart from the fact and ignoring even the same that before the Trial Court, the second additional issue was, as to whether the contract was void but not ignoring the first point which was raised by the High Court, which was as to whether the Suit was maintainable, wherein the High Court has discussed the matter, it appears to us to be a question of law, which is to be applied to facts, which are not in dispute and, therefore, we reject the said contention. Even absent a plea by the defendant illegality by putting the contract side by side with the Rules is writ large. IMPACT OF ABSENCE OF PRAYER QUESTIONING REPUDIATION BY FIRST DEFENDANT?

90Copy pinpoint90. The second defendant has raised a contention that since the first defendant has repudiated the contract and as the plaintiff has not H

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A prayed for a declaration that the repudiation was bad, the Suit would not lie. Reliance is placed on the judgment of this Court in I.S. Sikandar (Dead) by Lrs. v. K. Subramani and others22. In the said judgment, we find that this Court has taken the view that when the vendor has cancelled the agreement, it is incumbent upon the vendee to seek a declaration that the cancellation was illegal. This is what the Court has B held: “Para 36. Since the Plaintiff did not perform his part of contract within the extended period in the legal notice referred to supra, the Agreement of Sale was terminated as per notice dated 28.03.1985 and thus, there is termination of the Agreement of C Sale between the Plaintiff and Defendant Nos. 1-4 w.e.f. 10.04.1985. Para 37. As could be seen from the prayer sought for in the original suit, the Plaintiff has not sought for declaratory relief to declare the termination of Agreement of Sale as bad in law. In the absence D of such prayer by the Plaintiff the original suit filed by him before the trial court for grant of decree for specific performance in respect of the suit schedule property on the basis of Agreement of Sale and consequential relief of decree for permanent injunction is not maintainable in law.”

91Copy pinpoint91. The said view has been followed in the judgment of this Court reported in Mohinder Kaur v. Sant Paul Singh23. We do not however need to rest our decision to non-suit the plaintiff on this score in view of our finding that the agreement dated 17.12.1982 should not be enforced. LIS PENDENS F

92Copy pinpoint92. The Doctrine of Lis Pendens is based on the maxim “pendente lite nihil innovetur”. This means that pending litigation, nothing new should be introduced. Section 52 of the Transfer of Property Act, 1882 (for short, ‘the TP Act’), which incorporates the Doctrine of Lis Pendens, is based on equity and public policy. It pours complete efficacy to the G adjudicatory mechanism. This is done by finding that any disposition of property, as described in the Section by a party to the litigation will, in not any way, detract from the finality of the decision rendered by the court. It is clear that it is not based on the ground of Notice as laid down 22 (2013) 15 SCC 27 23 H (2019) 9 SCC 358

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by Lord Craanworth in Bennamy v. Sabine, which has been followed by the Privy Council in the decision in 34 Indian Appeals 102. We may notice the following discussion in this regard in “The Transfer of Property, by Mulla, 12th Edition: “The rule is, therefore, based not on the doctrine of notice, but on expediency, ie, the necessity for fine adjudication. It is immaterial whether the alienee pendente lite had, or had not, notice of the pending proceeding. This is, of course, no longer the case in England, or in Gujarat and Maharashtra, where the doctrine only affects transactions pendente lite if the lis has been duly registered.” C

93Copy pinpoint93. It is further important to notice that when a transaction is done, lis pendens or pending a case, the transaction is, as such, not annulled. The transaction is, in other words, not invalidated. In fact, as between the transferor and the transferee, it does not lie in the mouth of the transferor to set up the plea of lis pendens to defeat the disposition of property. Equally, the Principle of Lis Pendens is, not to be confounded with the aspect of good faith or bonafides. In other words, the transferee or the beneficiary of the property, which is disposed of by a party, cannot set up the case that he acted bonafide or in good faith. This enables the court and the parties in a Suit or a proceeding, which otherwise is in conformity with requirements of Section 52, to proceed in the matter on the basis that the adjudication by the court, will not, in any way, be subverted or delayed, when the day of final reckoning arrives.

94Copy pinpoint94. The cardinal and indispensable requirement, which flows both from Section 52 and the principle, it purports to uphold, is that the transfer or dealing of the property, which is the subject matter of the proceeding, is carried out by a party to the proceeding. Section 52 uses the word ‘party’ twice. It refers to the disability of a party to transfer or otherwise deal with the property, pending adjudication. This embargo is intertwined with the beneficiary of the veto against such transfer, being any other party thereto. In fact, the Special Bench of the Madras High Court in Manjeshwara Krishnaya v. Vasudeva Mallya and Four Others 24, G puts the Doctrine of Lis Pendens as an extension of the Doctrine of Res Judicata. Thus, the sine qua non for the Doctrine of Lis Pendens to apply is that the transfer is made or the property is otherwise disposed

24 AIR 1918 Madras 578 H

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A of by a person, who is a party to the litigation. The Doctrine of Lis Pendens, only subject, however, the transfer or other disposition of property to the final decision that is rendered. The person/party, who finally succeeds in the litigation, can ask the court to ignore any transfer or other disposition of property by any party to the proceeding. This is subject to the condition that transfer or other disposition is made during the pendency of the lis.

95Copy pinpoint95. The first defendant died pending the Suit on 06.08.1994. Her death was reported before the Court on 16.01.1995. The plaintiff brought on record, the husband of the first defendant by Order dated 25.08.1995, as defendant No. 1(a). Defendant No. 1(b), who is the son of the second defendant, sold the property on 19.09.1996, in favour of the appellant. It is thereafter that on 09.04.1997, the predecessor in interest of the appellant, viz., the son of the first defendant, and the second defendant were impleaded on 09.04.1997. The transfer made in favour of the second defendant was, therefore, made at a time, when the son of the first defendant was not a party to the Suit. Therefore, it is that the contention was taken before the Trial Court successfully by appellants that the transfer in favour of the appellant was not hit by Doctrine of Lis Pendens.

96Copy pinpoint96. The High Court in the impugned Judgment reversed this finding. E The High Court, in doing so, employs, inter alia, the following reasoning: “78. The position of law with regard to the rights and obligation of a dead person can be succinctly stated thus: The rights which a dead man thus leaves behind him vests in his representative. They pass to some person whom the dead man, or the law on his behalf, has appointed to represent him in the world of the living. This representative bears the person of the deceased, and therefore, has vested in him all the inheritable rights, and has imposed upon him all the inheritable liabilities of the deceased. Inheritance is in some sort a legal and fictitious continuation of the personality of the dead man, for the representative is in some sort identified by the law with him whom he represents. The rights which the dead man can no longer own or exercise in propria persona, and the obligations which he can no longer in propria persona fulfil, he owns, exercises, and fulfils in the person of a living substitute. To this extent, and in this fashion, it may be said that the legal personality of a man survives his natural personality, until, his

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obligations being duly performed, and his property duly disposed of, his representation among the living is no longer called for. Just as many of a man’s rights survive him, so also do many of his liabilities; and these inheritable obligations pass to his representative, and must be satisfied by him. As far as the estate of a dead man is concerned, there are two class of persons who are entitled to it, namely, creditors and beneficiaries. A beneficiary possesses a dual capacity, while he may benefit by inheriting the dead man’s estate is also liable to the dead man’s obligations. He survives even after his death, especially the obligations concerning immovable property. The beneficiaries who are entitled to the residue after satisfaction of the creditors, are of two classes: (1) C those nominated by the last will of the deceased and (2) those appointed by the law in default of any such nomination. They succeed respectively by testamentary succession (ex testamento) or intestate succession (ab intestate) (source: Salmond on Jurisprudence Twelfth Edition, P.J. Fitzgerald). Section 2(11) of the Code of Civil Procedure, 1908 (CPC) defines legal representative to mean a person who in law represents the estate of a deceased person, and includes any person who intermeddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of • the party so suing or sued. The aforesaid definition is both exhaustive as well as an inclusive definition. It is exhaustive in the sense that a legal representative means a person who in law represents the estate of immovable property. The beneficiaries who are entitled to the residue after satisfaction of the creditors, are of two classes: (1) those nominated by the last will of the deceased and (2) those appointed by the law in default of any such nomination. They succeed respectively by testamentary succession (ex testamento) or intestate succession (ab intestate) (source: Salmond on Jurisprudence Twelfth Edition, P.J. Fitzgerald).” G

97Copy pinpoint97. Thereafter, the High Court proceeded to consider the distinction between a legal representative as defined in Section 2(11) of the Code of Civil Procedure, 1908 and legal heirs. Still further, the Court also considered the scheme of Order XXII of the CPC and finally proceeds to find as follows: H

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A “79. … Even though defendant No. 1(b) was not arrayed along with his father as a legal heir of the deceased defendant No.1, the fact remains that the estate of defendant No.1, which also includes the suit schedule property was represented through defendant No. 1(a), the husband of defendant No.1. Therefore, the contention that the sale that was made by defendant No. 1(b) in favour of defendant No.2 when defendant No. 1(b) was not a party to the suit is not subject to any direction that may be issued in the suit, and that Sec. 52 of the Act would not apply in the instant case is not a correct understanding of the position of law. Further, in the instant case, defendant No.1(a) also did not inform the trial court that his son was also a legal representative of deceased defendant No.1 and therefore, he also ought to be brought on record as the heir of the deceased defendant No.1 when the application was filed by the plaintiff to bring only him on record as legal heir of deceased defendant No.1. Therefore, it is held that in ‘ the instant case, the estate of the defendant No.1 was represented through defendant No.1(a) in the suit and that the alienation made by defendant No.1(b) to defendant No.2, even in the absence of defendant No.1(b) being made a party to the suit has no significance. That apart, it is also noted from the evidence of defendant E No.2, who has deposed as DW-1, that when the talks for the sale of the suit property took place in June, 1996, defendant No.1(a) along with defendant No.1(b) and the broker Battanna were present. The reason as to why defendant No.1(a) did not disclose about the pendency of the suit when he was by then arrayed as the legal heir of deceased defendant No.1 in the said suit is for obvious reasons. Defendant No.1(a) did not disclose about the pendency of the suit to defendant No.2 only with an intention to deprive the right of the plaintiff in the suit property i.e., by creating third party rights in the said property. Also, it cannot be believed that defendant No.1 (b), though not arrayed as a legal representative of deceased defendant No.1 (his mother) at that point of time was totally unaware about the pendency of the suit. The legal heirs of deceased defendant No.1 namely her husband and only son resided at the same address. Therefore, constructive, if not actual, notice has to be attributed to defendant No. l(b) H regarding the pendency of the suit. By selling the same to defendant

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No.2 would result in plaintiff’s right being jeopardised. As already A noted from the evidence of DW-1 and 2, talks for the sale of the suit site by defendant Nos.1 (a) and l(b) were held with defendant No. in the first week of June, 1996. In fact, at that point of time, the BDA had not yet conveyed the site in the name of the defendant No.1(b). BOA did so only on 14/06/1996. …” B The High Court has relied on the decision of the Madras High Court in Nallakumara Goundan v. Pappayi Ammal and Another25. In the said case, after the death of the party, a legal representative disposed of the plaint schedule property within the period provided for substituting the dead person with the legal representative. It was in the said context held by the Madras High Court as under: C

“…The same principle should, I think, apply to a case where as here the original defendant died and the alienation was made after his death and before the filing of the application to bring his legal representative on record. The suit must be deemed to be pending against the legal persona of the deceased i.e., against his legal representative and must be deemed to continue until at least the expiration of the time limited by any law of limitation to bring him on record. Whether if an application is made long after the expiration of the time fixed for bringing the legal representative on record and an alienation is made by the legal representative and later on the plaintiff in the action seeks to set aside the abatement and to bring the legal representative on record, and that is ordered, the doctrine of lis pendens applies or not does not arise and need not be considered. There may be difficulties in such a case, but where the alienation is made within the time prescribed for bringing the legal representative on record, it is a F clear case and there can be no doubt whatever that the rule does apply…”

98Copy pinpoint98. Thereafter, the Court concluded that in the circumstances, Section 52 of the TP Act squarely applied. G

99Copy pinpoint99. It would appear that the High Court has, in arriving at the finding that the transfer in favour of the appellant is hit by lis pendens, taken into consideration the Doctrine of Notice/Constructive Notice. We have already observed that the Doctrine of Notice and Constructive 25 AIR 1945 Mad 219 H

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A Notice would be inapposite and inapplicable. Neither the fact that the transferee had no notice nor the fact that the transferee acted bonafide, in entering into the transaction, are relevant for applying Section 52 to a transaction. This is unlike the requirement of Section 19(1)(b) of the Specific Relief Act whereunder these requirements are relevant.

100Copy pinpoint100. The decision of the Madras High Court in Nallakumara Goundan (supra) turned on in its own facts as indicated by the said court itself. In other words, that was a case where even within the period of limitation for substitution of the legal representative of a deceased party in a suit, the legal representative purported to deal with the property. It was in the said context that the court proceeded to hold C that lis pendens would apply. In this case the transfer in favour of the second defendant took place on 16.09.1996. The vendor and the vendee namely defendant 1(b) and the second defendant were not parties on the date of the transaction. They were impleaded only almost one year thereafter. No doubt we are not oblivious to the role played by defendant D 1(a) namely the husband of the first defendant who gave his ‘no objection’ to the assignment of the entire rights in favour of his son namely defendant 1(b) without which BDA could not have assigned the right in favour of defendant 1(b). Though not urged by the plaintiff, could it be said that as defendant 1(a) was already a party and this must be treated as a case were defendant 1(a) as ‘otherwise dealt’ with the property within the meaning of Section 52 without which the title would not vest in defendant 1(b). A transfer which is made lis pendens it is settled law, is not a void document. It does create rights as between the parties to the sale. The right of the party to the suit who conveys his right by a sale is extinguished. All that Section 52 of the Transfer Property Act provides is that the transfer which is made during the pendency of the proceeding is subjected to the final result of the litigation. Even assuming for a moment that the conduct of defendant 1(a) the father of defendant 1(b), in giving a no objection and thereby enabling defendant 1(b) to derive the title exclusively to the property and which title stood conveyed to the second defendant attracted, the principle of lis pendens, it would still not invalidate the sale. At best, the plaintiff can contend that, should he be entitled for a decree of performance the sale in favour of the second defendant should be subjected to such decree. As far as the transfer is made by defendant 1(b) to the second defendant in his own right and in so far as defendant 1(b) was not a party and by the time the sale was effected the period of limitation for impleading defendant 1(b) had already clearly expired even

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the principle laid down in the decision of the Madras High Court would not apply and the High Court was not correct in finding that the sale by defendant 1(b) in favour of second defendant was hit by lis pendens. IS THE SECOND DEFENDANT, A BONAFIDE PURCHASER? B

101Copy pinpoint101. The Trial Court has found that the second defendant is a bonafide purchaser. The High Court holds otherwise. The purchase of the Suit site is purported to be made by the second defendant on 17.09.1996. The High Court, after going through the evidence, enters the following findings. C The negotiations took place first time in June, 1996 and, at that time, the Suit was pending. The BDA has not yet registered the conveyance in favour of defendant 1(b). Even before the BDA executed the sale deed in favour of defendant 1(b), he had decided to enter into the agreement. The conveyance in favour of defendant 1(b) was entered only on 14.06.1996 and he executed the sale deed in favour of the second defendant on 19.09.1996. The second defendant has deposed that he met not just DW2 along with the broker but he had also met the father of DW2, viz., defendant 1(a), who was arrayed as the legal representative of the first defendant. Only photocopies of documents were given to the second defendant before the sale. Defendant No.2 did not make any inquiry about the original. It must be presumed that second defendant had notice of the agreement to sell the Site in respect of which the Decree for Specific Performance was sought. The Court, then, referred to Section 3 of the TP Act and brings in the concept of constructive notice. Had the second defendant made inquiries with regard to the original possession certificate, the truth would have been revealed. Much is said about no inquiry is being made about the original possession certificate. The High Court notes that the agreement to sell with the plaintiff is not registered but, again, it draws inference from absence of inquires by the second defendant about why the original possession certificate was not handed over to him. The fact that defendant 1(a) did not reveal to the second defendant about the pendency of the Suit, is, on the one hand noted but the Court holds that even then, the second defendant ought to have made inquiry about pendency of H

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A any litigation. The fact that second defendant 1(b) as DW2 admitted that he had no material to support the fact that he had received Rs.4,50,000/-, was a very valuable in mid 1990s, if considered. The Court questions the idea that second defendant who was only 20 years of age and involved in agricultural operations and B milk vending business, who had no intention of settling in Bangalore, would have thought of purchasing a site in Bangalore. The amount of consideration was not deposited in any bank. The Court proceeds to hold that on an overall reappreciation, it was found that he was not a bonafide purchaser for value without notice. C Thereafter the High Court further proceeds to pose the question as to why the second defendant, who is the resident of Nagamangala Taluk, engaged in agricultural operation and milk vending business, should enter into an agreement in Bangalore, that too, when he is 20 years old. Betanna-the alleged broker, was not examined. Thereafter, the High Court proceeds to even find that the entire D transaction between defendant No. 1(b) and the second defendant is a sham transaction, made only to defeat the plaintiff. In the next paragraph, however, applying Sections 3 and 54 of the TP Act, it is again found that the second defendant is not a bonafide purchaser for value. Finally, it was found, by answering point No.2, E that second defendant is not a bonafide purchaser for value without notice of the agreement to sell in favour of the plaintiff.

102Copy pinpoint102. We must, in the first place, notice that on a perusal of the plaint, even after the amendment, there is no case set up by the plaintiff that the sale deed executed in favour of the second defendant, is a sham F transaction. A sale deed, which is a mere sham and a purchase, which is not bonafide, are two different things. In the case of sham transaction, no title is conveyed to the purchaser. In the case a sale transaction, which is not a sham, the title of the transfer is, indeed, conveyed to the transferee. A purchase may be bonafide or not bonafide. In a sale, which is not a bonafide, words “bonafide sale”, is used in the context of pending G Suit and from the point of view of Section 19(1)(b) of the Specific Performance Act. It is difficult to dub it as a sham transaction. A transaction cannot be a sham transaction and a sale, which is afflicted with absence of bonafides, at the same time. Even proceeding on the basis that the second defendant was not a bonafide purchaser, it is not the same thing as holding that it is a sham transaction.

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1065 [K. M. JOSEPH, J.]

103Copy pinpoint103. In the plaint, which was amended, the plaintiff has averred, inter alia, as follows: “10C. The Plaintiff submits that taking advantage of the fact that the son was not on record, the husband accorded no objection in favour of the BDA so as to ensure that the Sale Deed was executed in favour of HK Sudarshan alone and thereafter the Second legal representative sold the Schedule Property in favour of the Second Defendant. The Plaintiff submits that the Defendants are aware of the pendency of the suit and of the subsistence of the Agreement of Bale in favour of the Plaintiff. The Sale Deed en executed in favour of the said person i.e., the C Second Defendant is hit by the Doctrine of lis pendens and the Second Defendant’s title to the Schedule Property is subject to the outcome of the present suit. 10D. The Plaintiff submits that the Second Defendant is not a bonafide purchaser for value. The sale in favour of the D Second Defendant is with the sole intention of complicating the matters in controversy and to prejudice the case of the Plaintiff. Therefore, the Plaintiff submits that the Sale Deed executed in favour of the Second Defendant does not in any way restrict the right of the Plaintiff to seek E Specific Performance of the Agreement of Sale executed in favour of the Plaintiff.”

104Copy pinpoint104. Therefore, we are inclined to hold, in the first place that the High Court erred in finding that the transaction was a sham transaction. As far the question, as to whether second defendant was not a bonafide purchaser, it is the case of the second defendant that the High Court has erred in not noticing that in the evidence, the second defendant deposed that his vendor disclosed to him that the original possession certificate was lost and produced duplicate possession certificate. This evidence is incongruous with the finding of the High Court that the second defendant had not made any inquiry as to why the original possession certificate was not handed over. The second defendant had deposed about inquiry being made and being informed that the original possession certificate was lost. The second defendant further complains that the High Court itself has found that the vendor of the second defendant has admitted that no information was given to the second defendant regarding the H

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A pendency of the Suit and, therefore, the High Court has erred in reversing the finding of the Trial Court, which had found that inquiry as contemplated in Section 3 of the TP Act had been made by the second defendant for purchasing the property. Second Defendant had visited the Site. The finding based on defendant being 20-years old or the husband of the vendor, being an MLA, was pointed out to be irrelevant. It is further the B case of the second defendant that construction was made and he is living in the property since more than 17 years. The value of the property is stated to be about 2.5 crores.

105Copy pinpoint105. Per contra, the learned Senior Counsel for the plaintiff, would support the finding of the High Court. It was pointed out that the High C Court is the final fact-finding Court.

106Copy pinpoint106. We have already found that the sale in favour of the second defendant is wrongly found to be a sham transaction, a case, which even the plaintiff did not have. If it is not a sham transaction and the issue is, as to whether the second defendant, is not a bonafide purchaser, the following aspect looms large.

107Copy pinpoint107. We have already found that the agreement to sell dated 17.11.1982, is to be painted with the brush of illegality and pronounced unenforceable. It is undisputed that the plaintiff has paid Rs.50,000/- on the strength of the said agreement. It would appear to be true that a part of this amount was received on the date of the agreement. It may be true that further amount were received by defendant 1(a), the husband of the first defendant. The first defendant died pending the Suit. It is while the Suit was pending that defendant 1(b), the son of the first defendant, had executed the sale deed on 16.09.1996 in favour of the second defendant. It is again undisputed that at the time when the sale deed was executed, both the second defendant and his vendor, defendant 1(b), were not parties in the Suit. We have already found that the sale deed in favour of the second defendant, cannot be treated as a sham transaction and the finding, in fact, on point No.2 by the High Court, also that the second defendant is not a bonafide purchaser. Once we come to the conclusion that the agreement, relied upon by the plaintiff, cannot be enforced, as to whether, even proceeding on the basis that the sale in favour of the second defendant was made, not in circumstances which would entitle the second defendant to set up the case that he is a bonafide purchaser, the question of granting relief to the plaintiff must first be decided. In other words, in view of the illegality involved in enforcing the

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1067 [K. M. JOSEPH, J.]

agreement dated 17.11.1982, the question would arise, whether, on principles, which have been settled by this Court, the Court should assist the plaintiff or the defendant. We have noted the state of the evidence, in particular, as it is revealed from the deposition of PW2. We have found that the agreement, relied upon by the plaintiff, cannot be acted upon. In such circumstances, we would think that, even if we do not reverse the finding of the High Court that the second defendant is not a bonafide purchaser, it will not itself advance the case of the plaintiff. This is for the reason that his case is in the teeth of the law, as found by us, making it an unenforceable contract. The plaintiff is seeking the assistance of the Court which must be refused.

108Copy pinpoint108. We, therefore, need not explore further the complaint of the second defendant that the High Court erred in arriving at the finding that the second defendant was not a bonafide purchaser. NOT A CASE UNDER ARTICLE 136?

109Copy pinpoint109. Is it a case which should not be allowed under Article 136? D The argument of the plaintiff is that having regard to the facts as it emerges this is not a fit case for this court to exercise its jurisdiction which originated from grant of special leave under Article 136. It is undoubtedly true that at both the stages namely while granting special leave and also even after special leave has been granted under Article 136 that is when the court considers an appeal the court would not be oblivious to the special nature of the jurisdiction it exercises. It is not axiomatic that on a case being made otherwise that the court would interfere. The conduct of the parties and the question as to whether interference would promote the interests of justice are not irrelevant considerations. Being the final court, it is not without reason that this court is accordingly also clothed with the extraordinary powers under Article 142 to do compete justice between the parties.

110Copy pinpoint110. There is another aspect which is also projected by the plaintiff which must receive our attention. The plaintiff sought to persuade us should the court find the agreement to sell unenforceable for the reason that it falls foul of Section 23 of the Contract Act, it may declare the law but not interfere with the judgment of the High Court.

111Copy pinpoint111. We are of the view that on both these grounds we are not with the plaintiff. It is not a case where the condition of the plaintiff is such that the interests of justice would overwhelm our findings that the H

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A agreement relied upon by the plaintiff constituted a clear intrusion into the requirement of the law. In fact, we would consider the contract an open and brazen instance of parties entering into a bargain with scant regard for the law. If that were not enough, the very first letter addressed to the first defendant dated 01.03.1983 betrays the real purpose of the contract. The plaintiff in no uncertain terms has declared his intention to sell the property to his nominee. It is clear as day light that the plaintiff had no intention whatsoever to make use of the site for the purpose of putting up a residential building. The communications indicate that the plaintiff was a contractor. The evidence of PW 2 his son further indicated that he has been in the business since 1960. What is even more revealing is the admission relating to the properties belonging to or in the possession of the plaintiff and his family members which we have dealt with. The final nail in the coffin, as it were, is driven home in the case by showing the case of the plaintiff in its true colours when PW 2 deposed that if the suit is dismissed it would occasion ‘a monetary loss’. Thus, the bargain was to buy up precious public land which was vested with the Bangalore Development Authority by acquiring it from some person with the laudable object of housing a homeless person in Bangalore. The result of the agreement being enforced would be to clearly frustrate the object of the law and make the site the subject matter of a property deal with the object of making a profit. E

112Copy pinpoint112. The upshot of the above discussion is, we must hold that the High Court has clearly erred in holding that the Suit was maintainable. We would find that the Suit to enforce the agreement dated 17.11.1982, should not be countenanced by the Court.

113Copy pinpoint113. Then, the question would arise, as to the final Order to be passed in the facts. While, we are inclined to overturn the impugned Judgment by holding that the Suit itself, was not maintainable, we must notice that the High Court had decreed the Suit on the appeal by the plaintiff. The defendants did not challenge the Decree of the Trial Court. Therefore, the setting aside of the Judgement of the High Court would not result in dismissal of the Suit. What is more, we are of the further view that to do complete justice between the parties, while we allow the appeals, we must pass an Order, which will result in a fair amount being paid to the plaintiff. Having regard to the entirety of the evidence and the conduct of the parties, noticing even the admitted stand of the second defendant that the plaint schedule property has a value of Rs.2.5 crores H

G.T. GIRISH v. Y. SUBBA RAJU (D) BY LRs AND ANOTHER 1069 [K. M. JOSEPH, J.]

and the plaintiff has paid, in all, a sum of Rs.50,000/, which constituted the consideration for the agreement to sell several years ago, while we dismiss the Suit for Specific Performance, we should direct the appellants to pay a sum of Rs.20,00,000/- in place of the Decree of the Trial Court.

114Copy pinpoint114. Accordingly, Appeals are allowed. The impugned Judgement shall stand set aside. The Suit for Specific Performance will stand dismissed. There will be a Decree, however, for payment of Rs.20,00,000/ -(Rupees twenty lakhs) by the appellants to the respondents (the Legal Representatives of the plaintiff) within a period of three months from today. If the aforesaid amount is not paid as aforesaid, the appellants shall be liable to pay interest at the rate of 8 per cent per annum after the expiry of 3 months from today on the said amount as well. Parties are directed to bear their respective costs.

Bibhuti Bhushan Bose Appeals allowed. (Assisted by : Shevali Monga, LCRA) D