LPA No.184 of 2004 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH LPA No.184 of 2004 Date of decision: December 24, 2008 Subhash Chand and others ... Appellants versus The Financial Commissioner Revenue and others ... Respondents Coram: Hon'ble Mr. Justice Hemant Gupta. Hon'ble Mr. Justice Nawab Singh. Present: Mr. Akshay Bhan, Advocate and Mr. Veneet Soni, Advocate for the appellants. Mr. Salil Sagar, Additional Advocate General, Punjab with Ms. Ambika Luthra, Assistant Advocate General, Punjab. -- Hemant Gupta, J. The present appeal arises out of an order passed by the learned Single Judge of this Court on 24th May, 2004, whereby the writ petition filed by the appellants, challenging an order passed on an application filed by the appellants for protection of the sale as a bona fide transferee of the land, was rejected. The brief facts out of which the present appeal arises are that one Buta Singh was owner of land in Villages Khan Heri and Tehari, District Sialkot, now in Pakistan. He did not migrate to India after partition of the country but one Bhagat Singh, Numberdar of Village Khuda, Tehsil and District Hoshiarpur fabricated the documents and got the land LPA No.184 of 2004 [2] measuring 12-3 ¼ standard acres allotted in the name of Buta Singh in Village Khuda in lieu of the land in Village Khan Heri and land measuring 8-5¾ standard acres in Village Bassi Kikran in lieu of land left in Village Tehari. On the basis of complaint of one Jiwan Dass, and after verification of the factum of Buta Singh living in Sialkot, the allotment of land in Village Khuda was cancelled on 3.1.1962. Subsequently, the allotment in respect of Village Bassi Kikran was cancelled on 21st September, 1971. The predecessor-in-interest of the appellants purchased land situated in village Bassi Kikran vide Sale Deed on 15.03.1966 through alleged power of attorney of Buta Singh namely Bhagat Singh. The appeal filed by the appellants against the order of cancellation of the allotment was accepted and remanded to the Managing Officer vide order dated 26th June, 1973. The Managing Officer maintained the cancellation vide order dated 16th May, 1974 holding that the allotment has been made in the name of Buta Singh fraudulently. After the said cancellation, an application was filed by the appellants for purchase of the land being a bona fide transferee. The said application was rejected vide order dated 31st May, 1976. The Managing Officer has held that the appellant is a party to the fraud played by Bhagat Singh and, therefore, not entitled to any relief. The appellant has purchased the land from the allottee, who was still residing in Pakistan, therefore, his transaction with the bogus allottee could not give him a status of a bona fide vendee of the allottee. The appeal was dismissed on 10th February, 1978 and the revision on 2nd January, 1979. Subsequently, the petition under Section 33 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954 (hereinafter referred to as the '1954 Act') was dismissed on 4th September, 1984. LPA No.184 of 2004 [3] The orders passed on the application for purchase were challenged by the appellants by way of writ petition. The writ petition was dismissed vide the order impugned in the present appeal. This Court held mere fact that the name of Buta Singh was recorded in the Jamabandi as owner of the disputed land, cannot ensure to the benefit of the appellant as Buta Singh never migrated from Pakistan and land could not have been allotted by treating him to be displaced person. Since, Bhagat Singh has played fraud with the concerned authority in securing allotment, therefore, all subsequent actions and transactions including the sale made in favour of the appellant must be treated as actuated by fraud and the appellant cannot invoke under Section 41 of the Transfer of Property Act, 1882 (hereinafter referred as the 'Act') for seeking declaration that the transfer in his favour was bona fide. The argument of learned counsel for the appellants is that the land was purchased after verification of the title of Buta Singh from the revenue record and, thus, sale on behalf of Buta Singh is sale by ostensible owner and, therefore, the appellant is protected in terms of Section 41 of the Act. It is argued that the appellant is the purchaser of the land for valuable consideration and, thus, the said sale is protected. Learned counsel for the appellant has placed reliance upon unreported judgment in Damodar Dass and others v. Joginder Singh, Letters Patent Appeal No.181 of 1972, decided on September 18, 1975. Reliance is also placed upon Division Bench judgments reported as The State of Haryana and others v. Smt. Savitri Devi and others, 1986 P.L.J. 656; Shangara Singh v. Financial Commissioner and others, 1993 P.L.J. 712. Learned counsel has further relied upon single Bench LPA No.184 of 2004 [4] judgments reported as Kali Ram and others v. Union of India and others, 1976 Revenue Law Reporter 438; Rattan Singh and another v. Chief Settlement Commissioner, Haryana and others, 1978 Revenue Law Reporter 242; and Achhar Singh and others v. The State of Punjab and others, 1979 Revenue Law Reporter 360. The first of the reported judgments is Kali Ram (supra) in which judgment in Damodar Dass case has been extensively reproduced. It may be stated that the complete text of judgment in Damodar Dass' case is not available as the records of the said case have been destroyed in fire. As per the reproduction in Kali Ram's case, it appears that in Damodhar Dass's case (supra) the property of Muslim owners was wrongly declared as evacuee property and allotted to some displaced persons. Once it was established that the land could not have been declared evacuee, an alternative piece of land was allotted to the Muslim owner. The said Muslim owner effected sale of land so allotted for consideration. But after some time, the sale was found to be in excess of the value of the land allotted alternatively. In those circumstances, it was found that the sale effected by Muslim owner was a sale of land by ostensible owner and is protected. It is the said judgment which has been made basis of extending the principles of Section 41 of the Act to the sales by the allottees of the Central Government even if the allotment has been cancelled on account of fraud. The Single Bench judgment in Rattan Singh's case has been set aside in appeal in a judgment reported as Ranbir Singh and others v. Rattan Singh and others, 1982 Revenue Law Reporter 371. It has been found that factual basis for the plea of section 41 of the Act has not been LPA No.184 of 2004 [5] laid. In Savitri Devi's case, the allottee was Mohan Lal and allotment in whose favour was cancelled as he has obtained said allotment by fraud. The purchasers from the said Mohan Lal raised a plea of bona fide transfer which was accepted by the learned single Judge of this Court and accepted in appeal. However, the judgment of the single Bench is not available in the records of this Court whereas the order of the Letters Patent Bench is of affirmation of the judgment of the learned Single Judge. In Shangara's case, the judgments in Savitri Devi's (supra) and Ranbir Singh's (supra) case were referred at one point of time but were not pressed during the course of hearing. The Court has proceeded to decide the controversy in the aforesaid case on the basis of facts thereof. The Financial Commissioner whose order was under challenge has cancelled the allotment having obtained by fraud but found the purchaser to be bona fide vendee. Learned counsel for the respondents rely upon the judgment of Hon'ble Supreme Court in Jote Singh (dead) by L.Rs. v. Ram Das Mahto and others, AIR 1996 SC 2773. It has been held that plea of bona fide purchaser under Section 41 of the Act is not applicable to the involuntary transfers. There is no question of the Court ever playing the role of an ostensible owner or representative owner of the property when selling so as to attract the provisions of Section 41 of the Act. Reference is also made to Ramrao Jankiram Kadam vs. State of Bombay and others, AIR 1963 Supreme Court 827; Kashmir Singh and others vs. Panchayat Samiti, Ferozpur and others, (2004) 6 Supreme Court Cases 207; Shankar and another vs. Daooji Misir and others, AIR 1931 Privy Council 118; Kanhiya Lal minor through his mother Mt. Raj Raji vs. Deep Chand and another, AIR 1947 Lahore 199 (Division Bench); LPA No.184 of 2004 [6] Shamsher Chand v. Bakhshi Mehr Chand and others, AIR 1947 Lahore 147 (Full Bench); Gurcharan Singh and others vs. Punjab State Electricity Board and others, AIR 1989 Punjab 127; Gurcharan Singh vs. Roori alias Jito and others; 1984 PLR 68; and Jagar vs. Mst. Chhoto and others, 1963 Current Law Journal, 425. Reliance is also placed upon Hardev Singh vs. Gurmail Singh (dead) by LRs, (2007) 2 Supreme Court Cases 404, wherein ingredients for applicability of the provisions of Section 41 of the Act have been delineated. It is, thus, argued that that on account of the aforesaid judgments, and the fact that the earlier judgments of predecessor Court of this Court were not even referred to in the judgments relied upon by the appellant, therefore, the judgments relied upon by the learned counsel for the appellants do not lay down binding precedent. Before considering the respective contention of the parties, it may be noticed that the provisions of Section 41 of the Act are not applicable to the States of Punjab, Haryana and U.T., Chandigarh, i.e. In respect of the area over which this Court exercises territorial jurisdiction. It is equally well settled that even if the provisions of the Act are not applicable, the principles of the Act which are in consonance with equity, justice and good consciousness will be applicable. With the said background, Section 41 of the Act reads as under :- “Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make LPA No.184 of 2004 [7] the transfer, has acted in good faith.” Thus, the following are the ingredients of Section 41 of the Act, which are required to be satisfied before the benefit of purchase in the case of sale by a person who is not the owner is given to the purchaser :- (i) that the transferor is the ostensible owner; (ii) he is so by the consent, express or implied, of the real owner; (iii) the transfer is for consideration; and (iv) that transferee has acted in good faith, taking reasonable care to ascertain that transferor had power to transfer. Even if the benefit of 3rd and 4th ingredient is granted to the purchaser in the present appeal, the question is whether the 1st and 2nd ingredient is satisfied by the appellant. The first and foremost ingredient is that the transferor is ostensible owner. The allotment in favour of transferor has been set aside. The cancellation of allotment can be on account of fraud or for any other reason. The transferor loses title from the date of allotment and not from the date of order. The transferor by virtue of the original alltoment can be said to be permissible user of the land before the allotment was cancelled but such transferor cannot be said to be ostensible owner as the ownership itself has been set side either as a result of fraud or for some other irregularity. The transfer in favour of the transferor was invalid and void from the date of transfer though factum of fraud or irregularity came to the notice of the real owner (Central Government) subsequently. Therefore, it cannot be said that the transferor of the appellant was the ostensible owner. Once the allotment is cancelled, such cancellation is not prospective i.e., from the date of order, but as if allotment was never made. LPA No.184 of 2004 [8] A Full Bench of this Court in Balwant Kaur v. Chief Settlement Commissioner(Lands) Punjab, 1963 Punjab Law Report, 1141, has held that the Chief Settlement Commissioner is competent to cancel or set aside the order of transfer if the sanad is granted or the sale deed has been executed. It has been held that on such order being made, sanad or sale deed will automatically fall with it. The majority has upheld the earlier judgment of Division Bench of this Court reported as Bara Singh vs. Joginder Singh, 1959 PLR 127. The majority opinion reads as under:- “ 49. As regards the second additional ground, the learned Judges have not given any reasons for the same. Moreover, I have already held above that the sale-deed was not, in any way, independent of the order of transfer. If the order of transfer is reversed, the sale-deed must automatically go with it. Of course, title is created by the execution of the sale-deed, but if the transaction behind the deed is set aside, the deed has got no value in the eye of law. Just as under the Code of Civil Procedure when the sale is set aside, the sale certificate automatically goes and is a waste paper, similar is the case of a sale-deed or a sanad, when the order of transfer, on the basis of which the sale deed or sanad was granted, is reversed. 55. It was conceded by the learned counsel for the petitioners that the order of transfer could be reversed by the Chief Settlement Commissioner if the sanad was not granted or the sale-deed was not executed. I have already held above that the grant of a sanad or the execution of a sale deed does not make any difference. If the order of transfer is set aside by the Chief Settlement Commissioner, the sanad or the sale-deed will automatically fall with it. Whatever powers the Chief Settlement Commissioner had for setting aside the order of transfer before the grant of sanad or the execution of the sale- deed, the same powers will be exercised by him even after the issuance of the sanad or the sale-deed. These powers are to be LPA No.184 of 2004 [9] sought in the Act, itself, and not from any other enactment. Various officers have been given powers under the Act and the rules framed thereunder for dealing with different kinds of properties. All these orders are liable to be revised by the Chief Settlement Commissioner under section 24 of the Act. If there has been an infringement of any rule or law, the Chief Settlement Commissioner will set aside those orders.........” The aforesaid judgment was approved by the Supreme Court in Pala Singh (deceased) by LRs vs. Union of India and others, 1987 (Supp) Supreme Court Cases 201. Thus, the cancellation of the allotment has the effect of loss of title of the allottee from the date of allotment itself. Therefore, keeping in view the principle nemo dat quod non habet i.e., no one can convey a better title than what he had, no title could be created in favour of the appellants. At this stage, reference may be made to another judgment relied upon by learned counsel for the appellants reported as Crystal Developers vs. Smt.Asha Lata Ghosh (dead) through LRs, AIR 2004 SC 4980, wherein sale effected in pursuance of the order granting probate was held to be valid though the probate was revoked subsequently. The said judgment is not helpful. The argument raised by the learned counsel for the appellants inasmuch as the sale in the aforesaid case was in pursuance of the order granting probate. The order in probate proceedings is judgment in rem and ensures validity of an action taken on the strength of such an order, whereas in the present case, the sale is by a person in whose favour allotment was found to be fraudulent. The second ingredient is equally important i.e. the transfer by the ostensible owner is by the consent, express or implied, of the real owner. Meaning thereby, the real owner must consent to the transfer. Now if the LPA No.184 of 2004 [10] allottee has obtained allotment by fraud or some other irregularity, can such transfer of rights in the allotment assume express or implied consent of the real owner (Central Government). Once the quasi judicial authority under the 1954 Act has cancelled the allotment and such cancellation of allotment has been upheld, therefore, it is preposterous even to allege that there was consent of the Central Government for subsequent transfer by the allottee. In fact, the Central Government is the custodian of all evacuee property and is duty bound to allot the same to the eligible displaced persons. The duty of the Central Government is onerous. Such public duty to distribute the evacuee property amongst the displaced persons cannot be compromised by giving benefit to the purchaser from an allottee who has obtained fraudulent or even irregular allotment. In Ramrao Jaikiram Kadam's case (supra), Hon'ble Supreme Court held that the Government could not purchase the land in public auction at a nominal value of Re.1 and that the sale by Government having purchased the same in public auction to third person is not protected under Section 41 of the Act. It was held to the following effect:- “It was then suggested that the plaintiff was disentitled to any relief by reason of an estoppel raised by S. 41 of the Transfer of Property Act. The basis for this argument was that some time after the sale the second defendant had purchased the plot bearing Survey No.80 for Rs.2,000/- from the Government while the fifth defendant similarly purchased plots bearing Survey Nos.35 and 40 for Rs.1,750/- and that the inaction of the plaintiff without taking proceedings to set aside the sale constituted a representation to the world that the Government were properly the owners of the LPA No.184 of 2004 [11] property which they had purchased for nominal bids and this was the reasoning by which S.41 of the Transfer of Property Act was sought to be invoked. The respondent did not rely on any representation or any act or conduct on the part of the appellant but their belief that Government had acquired title by reason of their purchase at the revenue sale. If the Government had no title to convey, it is manifest the respondents cannot acquire any. They would clearly be trespassers. In the circumstances we consider there is no scope for invoking the rule as to estoppel contained in S.41 of the Transfer of Property Act.” (emphasis supplied). In Jote Singh's case (supra), sale and auction of the property by Ramdas Mahto, Donee, of land by Smt.Udwantia was subject matter of the suit filed by Smt. Ram Deiya, daughter of Udwantia. It was alleged that Udwantia being limited owner could not have gifted the property to her grandson. The said suit decreed by the trial Court and affirmed by the First Appellate Court. In appeal before High Court, the plaintiff Smt.Ram Deiya died and her son Ramdas Mahto, the donee, succeed to the estate. It was, thus, argued that any defect in title of Ramdas Mahto stood rectified and omission supplied by the thrust of the provisions of Sections 41 and 43 of the Act. The argument was accepted by High Court in respect of voluntary transfers but in respect of Court sale, in the execution of the decree against Ramdas Mahto, such treatment was not meted out. Meaning thereby that auction-sale was said to be not protected. Aggrieved against the said judgment, the auction-purchaser was in appeal before the Hon'ble Supreme Court. The Court held to the following effect:- LPA No.184 of 2004 [12] “As a doctrine, it is well established that where a person sells property of which he is not the owner but of which he afterwards becomes the owner, he is bound to make good the sale to the purchaser out of his subsequently acquired interest. See in this connection Alukmonee Dabee v. Banee Madhub Chuckerbutty, ILR (1879) 4 Cal 677. It is equally well settled that the said doctrine does not apply to a sale when made by or through court because of its very nature, it being involuntary from the sufferer's angle. It is also well understood that neither the provisions of Section 41 nor that of Section 43 of the Act are available for the benefit of the auction- purchasers, for these provisions come to the rescue of transferees from ostensible owners or of transferees who purchase property in good faith from unauthorised persons and who subsequently acquire interest in the property transferred. These two provisions logically get engaged in voluntary transfers and not in involuntary transfers, like auction sales. There is no question of the Court ever playing the role of an ostensible owner or a representative owner of the property when selling, so as to attract the provisions of Section 41 or 43 of the Act. In the face of these principles, it is difficult to hold that the High Court was in error in not giving the benefit of the aforesaid two provisions to the auction-purchaser, the appellant herein”. A perusal of the said judgment shows that the provisions of Section 41 of the Act is not applicable in respect of involuntary transfers and that there is no question of the Court ever playing the role of ostensible owner or a representative owner of the property when selling so as to attract the provisions of Section 41 of the Act. In the present case, the allotment was made in favour of the vendors of the appellants while exercising quasi- LPA No.184 of 2004 [13] judicial functions conferred under the 1954 Act. Such allotment on behalf of the Central Government is not sale by the ostensible owner or a representative owner of the property, but in pursuance of an order passed under the Act in exercise of quasi judicial functions. In Kashmir Singh's case (supra), the appellant was allotted land by Tehsildar (Sales ) assuming the land to be package deal property. The Panchayat Simiti objected to the transfer on the ground that the land is a package deal property and in fact, it vests in the Panchayat Simiti. It was found as a matter of fact, the land did not belong to the State Government but belonged to Zila Parishad-Panchayat Simiti. The appeallant raised a plea that such sale is protected under Section 41 of the Act. The Supreme Court held that protection said to be raised under Section 41 of the Act is not available to the appellant as the State Government has no power to transfer land. In Shankar's case (supra), though the real owner was a minor and the sale was effected by his father Paltu. It was held that since Paltu had no title in the house which he could transfer to the defendants, therefore, the defendants are not protected by the provisions of section 41 of the Act. In Shamsher Chand's case (supra) it was held as under:- “25. It follows, therefore, that in order effectively to deprive under the provisions of Section 41, T.P. Act, a real owner of the right that he possesses in certain immovable property it must be established that he had given his consent, either express or implied, to another person to represent himself as the owner of the said property. This consent, as remarked by their Lordships of the Privy Council, may be by word or by conduct, but some kind of consent must be established before