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CASE NO.: Appeal (civil)  2023 of 2004

PETITIONER: M. Meenakshi & Ors

RESPONDENT: Metadin Agarwal (D) By LRs. & Ors

DATE OF JUDGMENT: 29/08/2006

BENCH: S.B. Sinha & Dalveer Bhandari

JUDGMENT: J U D G M E N T W I T H   CIVIL APPEAL NOS.2024 &  8265 OF 2004

S.B. SINHA,  J :

       The heirs and legal representatives of the Original Defendant in a suit  for specific performance of contract and the subsequent purchaser are before  us in these appeals which arise out of a judgment and order dated 10.09.2003  passed by a Division Bench of the Andhra Pradesh High Court in Letters  Patent Appeal Nos. 168 and 169 of 1996 whereby and whereunder the  judgment and decree passed by a learned Single Judge dated 05.11.1996  affirming a judgment and decree dated 30.04.1990 passed by the Additional  Chief Judge-cum-Spl. Judge for SPE & ACB Cases, City Civil Court,  Hyderabad, was set aside.

       The Defendant in the suit together with his other co-sharers were  owners of Survey No.71, West Marredpalli, Secunderabad.  A proceeding  under the Urban Land (Ceiling & Regulation) Act, 1976 (for short, ’the 1976  Act’) was initiated against them.  In the said proceeding at the hands of the  landholders, excess land was directed to be vested in the Central  Government.  The owners were allowed to retain 1000 sq. metres of land  each.   

Allegedly, on that premise  a piece of vacant  land bearing Plot No.2  in Survey No.71 measuring 1000 sq. metres  which had been allotted to the  defendant was  allowed to be retained by him.  On or about 27.06.1978 he  (original Owner) entered into an agreement with the Plaintiff for sale in  respect thereof on a consideration of  Rs.50/- sq. yard .  As on the said date,  a proceeding under the 1976 Act was pending, the agreement to sell was  subject to the grant of permission by the competent authority under the said  Act.  It stipulated that in the event of refusal on the part of the competent  authority to grant such permission, the advance paid to the Defendant would  be refunded.  It was further stipulated that in the event of refusal on the part  of the vendor to execute the sale deed upon obtaining  permission, if any, not  only the amount paid by way of advance was to be refunded but also  damages to the extent of Rs.15,000/- was to be paid by the Defendant to the  Plaintiff.  The  application under Section 26 of the 1976 Act filed for seeking  permission to sell the said land was rejected by the competent authority by  an order dated 24.08.1978.   

       An application was filed under Section 10 of the 1976 Act on  29.04.1980 which was again rejected by an order dated 26.06.1980 stating  that no vacant land measuring 1000 sq. metres was available, in view of the  order passed in the proceedings under the 1976 Act and as such no  permission could be granted.  A clarification of the said order was sought  for.  Allegedly, on the ground that permission to sell the vacant land had  been rejected by a notice dated 26.06.1980, the agreement was sought to be  cancelled by the Respondent on the premise that the same stood frustrated.  

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The Plaintiff-Respondent in C.A. No.2023 of 2004 thereafter filed a suit for  specific performance of contract.

       The learned Trial Judge decreed the said suit in part.  While rejecting  the prayer for grant of specific performance of contract, the Defendant was  directed to refund the amount of advance as also damages of  Rs.15,000/-  together with interest @ 6% p.a..  An appeal was preferred thereagainst by  the Plaintiff-Respondent and by a judgment and order dated 05.11.1996, a  learned Single Judge of the High Court dismissed the appeal.  Be it placed  on record that the learned Single Judge appointed a Advocate-Commissioner  for taking measurement of land in question; whereupon a report was filed.   A Letters Patent Appeal was filed by the Plaintiff-Respondent before a  Division Bench of the High Court and by reason of the impugned judgment,  the said Letters Patent Appeal had been allowed.

       In the said suit an order of status quo was passed.  Allegedly, in  violation of the said order, all co-sharers sold portions of the house property  which could be retained by them under the 1976 Act.

       Mr. Deepankar Gupta, the learned Senior Counsel appearing on behalf  of the Appellants, urged that : (i) The High Court acted illegally and without  jurisdiction in ignoring the orders passed by the competent authority under  the  1976 Act; (ii) The decree for specific performance granted by the  Division Bench is contrary to the statutory provisions contained in the 1976  Act; (iii) The Division Bench could not have interfered with the judgment by  the learned Trial Judge as also the learned Single Judge of the High Court  refusing to exercise their jurisdiction under Section 20 of the Specific Relief  Act, 1963, and interference therewith by the Division Bench was  unwarranted; and (v) The High Court could not have directed  cancellation  of the deed of sale in favour of the subsequent purchaser.

       Mr. L. Nageshwara Rao, the learned Senior Counsel appearing on  behalf of the Respondents, on the other hand, submitted that : (i) Although  some of the findings arrived at by the High Court cannot be supported, but  having regard to the fact that 1000 sq. metres of vacant land, which was the  subject-matter of the agreement for sale being outside the purview of the  vacant land under the 1976 Act, the learned Trial Judge and consequently  the learned Single of the High Court committed a manifest error in so far as  they failed to take into consideration that Section 20 of the 1976 Act would  not be applicable; (ii) The learned Trial Court having found that the  Defendant had been held guilty of commission of fraud, could not have  deprived the Plaintiff-Respondent from obtaining a decree for specific  performance of contract; (iii)  The Advocate-Commissioner appointed by the  Trial Judge as also the learned Single Judge having found that the subject- matter of the agreement for sale executed by the Appellant in favour of  Meenakshi and others was identical to that of the suit land, the Division  Bench cannot be said to have committed any illegality in granting the decree  for specific performance of contract;  (iv) The learned Trial Judge as also the  learned Single Judge committed a serious error in denying a decree for  specific performance of contract on a premise that the period of twelve years  have elapsed since the agreement for sale and, thus, the alternative prayer for  grant of damages would suffice;  (v) It was not a case where the contract was  a contingent one, but being a completed one, a suit for specific performance  of contract was maintainable and there was no bar on the part of the Division  Bench in passing a decree therefor; (vi)  The Division Bench of the High  Court exercised plenary jurisdiction in an intra-court appeal and thence both  question of fact as also of law could be gone into and, thus, it cannot be said  to have committed any illegality  in interfering with the judgments of the  learned Trial Court as also the learned Single Judge of the High Court.       

       It is not disputed that the parties to the agreement were aware of the  proceedings pending before the ceiling authorities.  It is also not in dispute  that the Central Government was the appropriate authority to deal with the  matter as the lands pertained to a cantonment area.  The agreement  envisaged that the Defendant would obtain necessary sanction from the

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competent authority.  It was made clear that he had not submitted any lay out  nor had he got any sanction therefor.  Clauses 8 and 9 of the said agreement read as under :

       "If the second party fails to pay the balance  consideration of Rs.44,800/- (Rupees forty four thousand   either hundred only) by the due date, and refuses to  purchase  after permission is granted, the second party  shall forfeit the advance of Rs.15,000/- (Rupees fifteen  thousand only) paid by them to the first party.  If the first  party fails to execute the sale deed by the due date, after  the  permission is granted, the first party shall not only  refund to the second party the advance sum of  Rs.15,000/- but shall also pay to the party an additional  sum of Rs.15,000 as damages.    

       In case permission to sell to the second party is  refused by the ceiling authority, then the first party shall  refund to the second party, the advance sum of  Rs.15,000/- (fifteen thousand only) within one month  from the date of refund."

       The lands in question admittedly were described in the plan annexed  to the agreement which shows that the same was lying west to a 30 ft. road.   The Respondents themselves had annexed a plan, from a perusal whereof it  appears that six co-sharers were allotted 6000 sq. metres of lands \026 four in  one block and two in another, apart from their house properties situate on the  eastern side of the said road.

       The plots in question were marked with the letters ’1’, ’2’, ’3’, ’4’, ’5’  and ’6’.  A big chunk of land was held to be the excess land under the 1976  Act at the hands of the Appellants and their co-sharers.  The lands belonging  to Syed Abdul Razak was marked with the letter ’2’.   

       In the land ceiling proceedings, in response to the Defendant’s letter  dated 30.07.1980, the competent authority by its letter dated 08.08.1980    rejected the application for grant of permission under Section 26 of the 1976  Act stating :

"Out of your prescribed ceiling limit of 1000 sq. mtrs.  your individual share of urban properties including built up  area/vacant land are as under :

S.No. Name Built up area  including  appurtenant  lands in sq.  mts. Vacant  land in sq.  mtrs. 1. Mr. S.A. Razak 563.25 436.75 2. Mr. S.A. Rahman 563.25 436.75 3. Miss Hahmooda Begum 281.62

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718.38 4. Mrs. Sharafunisa 281.62 718.38

You are advised to submit a plan showing the built up area and  vacant land, as shown above, to be retained by you, as per prescribed  ceiling limit."  

No vacant land admeasuring 1000 sq. metres, according to the  authorities, was, thus, available for transfer to third parties.

The Division Bench commented that having regard to the Muslim  law of inheritance and succession, the competent authority should not have  jumped to the conclusion that the declarant  wanted to retain the built up  area and also apportioning the built up area and vacant land between the  male members and the female members of the family.  The Division Bench  made a terse comment against the competent authorities by raising a  question as to how  permission had been granted in favour of the cooperative  society while rejecting similar application in favour of the Plaintiff while  declining such permission in favour of the Respondent.  The learned Judges  purported to have addressed themselves to the question as regards the  propriety, legality and/or validity of the order passed under Section 9 of the  Act and came to the conclusion that even after alienating 26972 sq. metres  of land to the society, the family still owned excess lands which would be  about 5261 sq. metres including 2253 sq. metres of land wherever buildings  were standing.

Relying upon certain decisions, the Division Bench opined that a  decree for specific performance could have been granted, stating :

"\005In this case also the defendant having entered into  agreement to sell open land of thousand metres each to  the plaintiffs took a round about turn by selling  the vast  extent of property along with other family members  which was declared as surplus land to  Murthy Housing  Cooperative Society Limited with the active connivance  of the competent authority in obtaining a letter Ex.A-16/  B10 dated 26.6.1980 wherein the competent authority  says that area sought to be sold include built up area  which is absolutely false and the competent authority  made such a statement in collusion with the defendant  who in fact helped him in alienating about 30,000 square  metres of land which is declared as surplus land  circumventing the provisions of Urban Land Ceilings  Acts more so after the entire procedure contemplated  under the Act is over\005.Hence the order of competent  authority is only camouflage to avoid the completion of  the sale transaction.  In the light of the foregoing  discussion, we cannot agree with the reasoning given by  the trial court as well as the Learned Single Judge in  dismissing the suits, since the land offered for sale do   not contain any built up area either as per the agreement  of sale or any of the maps that were filed before various  authorities\005"

The competent authority under the 1976 Act was not impleaded as a  party in the suit.  The orders passed by the competent authority therein could  not have been the subject-matter thereof.  The  Plaintiff although being a  person aggrieved could have questioned the validity of the said orders, did  not chose to do so.   Even if the orders passed by the competent authorities  were bad in law, they were required to be set aside in an appropriate

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proceeding.  They were not the subject matter of the said suit and the  validity or otherwise of the said proceeding could not have been gone into  therein and in any event for the first time in the Letters Patent Appeal.   

It is a  well-settled principle of law that even a void order is required  to be set aside by a competent court of law inasmuch as an order may be  void in respect of one person but may be valid in respect of another.  A void  order is necessarily not non est.  An order cannot be declared to be void in a  collateral proceeding and that too in absence of  the authorities who were   the authors thereof.  The order passed by the authorities were not found to be  wholly without jurisdiction.  They were not, thus, nullities.  

The Division Bench proceeded on a rather curious premise.  It took  into consideration extraneous and irrelevant factors, some of which we  would notice a little later.

We fail to appreciate the manner in which the Division Bench not  only went into the legality of the orders passed by the competent authority  made under the 1976 Act but also made comments about their alleged  personal involvement therein.  The High Court had no jurisdiction to make  such comments and pass strictures against the said authority.   

Once it is held that the orders passed by the competent authority could  not have been the subject-matter of a decision in the suit, it must be held that  the entire approach of the Division Bench was unsound in law.  It posed unto  itself wrong questions leading to wrong answers.

The learned Trial Judge albeit concluded that the Defendant was  guilty of fraud, but the said finding had been arrived at on the premise that  he could not have entered into an agreement for sale of 1000 sq. metres of  vacant land when the same was not available.  It was held :

"68. To sum up, it is evident that in Ex. A1, the  defendant knowingly has made a false declaration that  the 1000 sq. metres of vacant land which he has agreed to  sell under Ex.A1 is the land allowed by the competent  authority to be retained by him under the Act.  While  actually it includes a portion of the building and the  contracted land is land outside the ceiling area.  When  Ex.A1 land is not land within the ceiling limit, Section 26  of the Act does not apply\005"

It further observed :

"69.Thus, defendant by making a false declaration  in Ex.A1 has induced the plaintiff to enter into Ex.A1  contract and has not been made any efforts to perform the  contract or at least make amends for that fraud played by  him.  It may be mentioned that making a false declaration  knowing it to be false and having no intention to perform  is nothing short of fraud.

70. On account of this fraud perpetuated on the  plaintiff, plaintiff can either insist upon specific  performance or seek damages.  I have already stated  above that directing specific performance would prolong  the stalemate and uncertainty for good length of time and  that it is not interests of even the plaintiff to have such a  relief because it depends upon a contingency and the  relief may or may not ultimately materialize.  The best  remedy under the circumstances would be to grant the  alternative relief of damages asked for by the plaintiff."

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       It was, therefore, not a case where the Trial Court found that the  Defendant  had committed a fraud on the statutory authorities or on  the  court.  The expression ’fraud’ in our opinion was improperly used.  It must  be noticed that admittedly when the agreement was entered into, the  proceedings under the 1976 Act were pending.  The parties might have  proceeded under a misconception.  It is also possible that the Defendant  had  made misrepresentation to the Plaintiff; but the question which was relevant  for the purpose of determination of the dispute was as to whether having  regard to the proceedings pending before the competent authority under the  1976 Act, the Defendant could perform their part of the contract.  The  answer thereto, having regard to the order of the competent authority dated  08.08.1980, must be rendered in negative.

       Mr. Nageshwara Rao may be right in his submission that in a given  case, it is possible to pass a decree for specific performance of contract,  although there exists a clause for obtaining a sanction from the competent  authority.  But in the instant case, rightly or wrongly the competent authority  had refused to grant such sanction.  It refused to grant sanction not on the  ground that Section 26 was attracted; but on the ground that 1000 sq. metres  of vacant lands which had been the subject-matter of agreement were not  available, in view of the fact that the Defendant and their co-sharers were  permitted to retain only their residential houses and the lands appurtenant  thereto.   

       It was, therefore, not a case where a notice under Section 26 of the  1976 Act could have served the purpose and in the event, the competent  authority did not exercise its statutory right of perception within the period  stipulated thereunder, the Defendant was free to execute a deed of sale in  favour of any person he liked.

       Strong reliance has been placed by Mr. Nageshwara Rao on a decision  of this Court in HPA International etc. v. Bhagwandas Fatehchand Daswani  and Others etc. [(2004) 6 SCC 537].  Our attention in particular has been  drawn to the following observations :

"In the case before us, we have not found that the  vendor was guilty of rendering the suit for sanction  infructuous. It did terminate the contract pending the suit  for sanction but never withdrew that suit. The vendee  himself prosecuted it and rendered it infructuous by his  own filing of an affidavit giving up his claim for the  interest of reversioners. In such a situation where the  vendor was not in any manner guilty of not obtaining the  sanction and the clause of the contract requiring the  Court’s sanction for conveyance of full interest, being for  the benefit of both the parties, the contract had been  rendered unenforceable with the dismissal of the sanction  suit."

       The said observations were made in the fact situation obtaining  therein.

       In this case, we are concerned with a situation where the sanction, it  will bear repetition to state, has expressly been refused.

       Dharmadhikari, J. in that case itself has noticed a judgment of the  House of Lords in New Zealand Shipping Co., Ltd. v. Scoiete Des Ateliers  Et. Chantiers De France [(1918-19) AER 552] wherein it was held that a  man shall not be allowed to take advantage of his own wrong which he  himself brought about.

       The parties were aware of the proceedings under the 1996 Act.  The  Plaintiff-Respondents were also aware that sanction under the said Act is  necessary.  The consequence for non-grant of such sanction was expressly

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stipulated.  Even the parties were clear in their mind as regards the  consequences of willful non-execution of a deed of sale or willful refusal on  their part to perform their part of contract.            We may notice that Lord Atkinson in New Zealand Shipping (supra)  took into consideration the inability or impossibility  on the part of a party   to perform his part of contract and opined that the principle that man shall  not be permitted to take advantage of his own wrong, which he himself  brought about.

       Our attention has rightly been drawn by Mr. Gupta to the deed of sale   executed by the Defendant in favour of  others.  By the said deeds of sale all  the six co-sharers have sold portions of their house properties and lands  appurtenant thereto. The total land sold to the purchasers by all the six co- sharers was below 900 sq. metres.

       The comment made by the Division Bench that the competent  authority under the 1976 Act failed to take into consideration the Muslim  law of inheritance and succession is again besides the point.  Each of the  claim petition by the Appellants and their co-sharers was determined having  regard to the 1976 Act.  The Muslim law of inheritance and succession may  not have any role to play.  In any event, the same could not have been the  subject-matter of a decision at the hands of the Division Bench.

       We have noticed the reports of the Commissioner appointed both by  the Trial Court and the learned Single Judge of the High Court.  The  Commissioner appointed by the Trial Judge in his report stated :          "\005I also found some numbers were painted in black on  the compound wall inside the western compound wall as  3-42-67 and I also found one small brick mound near to  middle unfinished room touching western compound  wall.  I also found some numbers on the gate painted in  black as 65-66-67-68-69 while I was proceeding with the  execution of warrant some persons brought a board and  tied it to the gate which contains some letters painted as  "this land and construction area Cantonment H. No.3-42- 65 to 3-42-69 belong to Murthy Cooperative Housing  Society-Trespasser will be prosecuted."  

       It was, therefore, accepted that the plots mentioned therein had   already been sold to Murthy Cooperative Housing Society.  The said  cooperative society, it is beyond any cavil of doubt, purchased the land from  the original owners pursuant to or in furtherance of the exemption accorded  in that behalf by the competent authority in exercise of  its power under  Section 20 of the 1976 Act.  The land sold to the cooperative society which  might have included the vacant land and which was the subject-matter of the  agreement but was not the subject-matter of the suit.  They were not parties  thereto.  The sanction accorded in their favour by the competent authority  had never been put in question.

       The Advocate-Commissioner appointed by the Trial Court, observed :

               "Opinion and Observation :                       Taking all the aforesaid facts and circumstances I  conclude that the plot no.2 in Survey no. 71 as mentioned  in agreement of sale Ex.A-2 in the trial court and the  house no. 3-9-51/A,B,C and D situated in Survey   no.71/part, west Marredpally on which I conducted the  local inspection are the same."

       The learned Commissioner, therefore, only inspected Plot No.2

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situated in Survey No.71 and not the lands which were the subject-matter of  sale in favour of the subsequent purchasers.   

       The High Court, in our considered view, also committed a manifest  error in opining that the Appellants should have questioned the orders passed  by the competent authority.  If they have not done so, the same would not  mean that the Division Bench could go thereinto suo motu.   

Furthermore, Section 20 of the Specific Relief Act confers a  discretionary jurisdiction upon the courts.  Undoubtedly such a jurisdiction  cannot be refused to be exercised on whims and caprice; but when with  passage of time, contract becomes frustrated  or in some cases increase in  the price of land takes place, the same being relevant factors can be taken  into consideration for the said purpose.  While refusing to exercise its  jurisdiction, the courts are not precluded from taking into consideration the  subsequent events.  Only because the  Plaintiff-Respondents are ready and  willing to perform their part of contract and even assuming that the  Defendant was not entirely vigilant in protecting their rights in the  proceedings before the competent authority under the 1976 Act,  the same by  itself would not mean that a decree for specific performance of contract  would automatically be granted.  While considering the question as to  whether the discretionary jurisdiction should be exercised or not, the orders  of a competent authority must also be taken into consideration.  While the  court upon passing a decree for specific performance of contract is entitled  to direct that the same shall be subject to the grant of sanction by the  concerned authority, as was the case in Mrs. Chandnee Vidya Vati Madden  v. Dr. C.L.  Katial  and Others [AIR 1964 SC 978] and Nirmal Anand v.  Advent Corporation (P) Ltd. and Others [(2002) 5 SCC 481]; the ratio laid  down therein cannot be extended to a case where prayer for such sanction  had been prayed for and expressly rejected.  On the face of such order,  which, as noticed hereinbefore, is required to be set aside by a court in  accordance with law, a decree for specific performance of contract could not  have been granted.   

       Mr. Nageshwara Rao contended that the plea as regards  maintainability of the suit should not be permitted to be raised before this  Court.  We do not agree with the counsel inasmuch as,  inter alia,  the plea  which has been raised herein by the Defendant is that it was not a fit case  where the Division Bench should have interfered with the discretionary  jurisdiction exercised by the learned Trial Judge as also by the learned  Single Judge.

       There cannot be any doubt that in exercise of its letters patent  jurisdiction, the Appellate Court may review findings of fact as well as law  arrived at by a learned Single Judge, but while doing so, it must bear in mind  its limitations.  It is now well-settled principle of law that the courts would  not normally interfere with the discretionary jurisdiction exercised by the  courts below.

       In Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa and  Others [(2003) SCC 390], it was held :          "There is another aspect of the matter which  cannot be lost sight of. The plaintiff filed the suit almost  after six years from the date of entering into the  agreement to sell. He did not bring any material on  record to show that he had ever asked Defendant 1, the  owner of the property, to execute a deed of sale. He filed  a suit only after he came to know that the suit land had  already been sold by her in favour of the appellant herein.  Furthermore, it was obligatory on the part of the plaintiff  for obtaining a discretionary relief having regard to  Section 20 of the Act to approach the court within a  reasonable time. Having regard to his conduct, the  plaintiff was not entitled to a discretionary relief."

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       It was further observed :

"It is now also well settled that a court of appeal  should not ordinarily interfere with the discretion  exercised by the courts below."         The findings of the Division Bench, in our considered opinion,  therefore, cannot be sustained.

       For the reasons aforementioned, the impugned judgment cannot be  sustained which is set aside accordingly.  The appeals are allowed.   However, in the facts and circumstances of the case, the parties shall pay and  bear their own costs.