Case: Narayanamma and Ors Vs. Govindappa and Ors

* *. Section 78 provides: (1) Any person who in contravention of the provisions of this Act, obtains possession of any land by virtue of a bequest, gift sale, mortgage or sub-lease, or of any agreement purporting to be a bequest, gift, sale, mortgage or sub-lease shall be deemed to be a trespasser and shall be liable to ejectment in accordance with the provisions of Section 58. In the said case, the Plaintiff/Appellant before the Supreme Court was a recorded pattedar tenant and had granted a sublease of land to Respondent Nos. 1 and 2 for five years. The suit was filed on the ground that sub-lease was in contravention of Section 73 of the Revenue Administration and Ryotwari Land Revenue and Tenancy Act, Samvat 2007 (Act No. 66 of 1950) and that the said Respondents had trespassed in the land. The trial court had decreed the suit. The first appellate court had also confirmed the same. However, the same was reversed by the High Court in the second appeal. Allowing the appeal and reversing the judgment of the High Court, this Court held that a person inducted as a sub-lessee contrary to the provisions of Section 78 of the Tenancy Act did not acquire any right under a contract of sub-letting and his possession was not protected. 22. We have to apply the principles of law as deduced by this Court in the case of Kedar Nath and Immani Appa Rao (supra), to the facts of the present case. 23. 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 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 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 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. 24. Undisputedly, both, the predecessor-in-title of the Defendant(s) 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. 25. However, the ticklish question that arises in such a situation is: the decision of this Court would weigh in side of which party? As held by Hidayatullah, J. in Kedar Nath Motani (supra), 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. Undisputedly, in the present case, the claim of the Plaintiff is entirely based upon the agreement to sell dated 15.05.1990, 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 (supra), 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 Storys Equity Jurisprudence, which again is approved in Immani Appa Rao (supra), 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. 26. It could thus be seen that, the trial Judge upon finding that the agreement of sale was hit by Section 61 of the Reforms Act, had rightly dismissed the suit of the Plaintiff. 27. Now, let us apply the another test laid down in the case of Immani Appa Rao (supra). 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. As held in Immani Appa Rao (supra), 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 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 (supra), 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]13. A perusal of the said provision would clearly show that, notwithstanding anything contained in any law, no land of which the occupancy has been granted to any person under the said Chapter shall, within 15 years from the date of the final order passed by the Tribunal Under Sub-section (4) or Sub-section (5) or Sub-section (5-A) of Section 48-A of the Reforms Act be transferred by sale, gift, exchange, mortgage, lease or assignment. However, the land may be partitioned among members of the holders of the joint family. No doubt, that Sub-section (2) of Section 61 of the Reforms Act permits the registered occupant or his successor-in-title, to take a loan and mortgage or create a charge on his interest in the land in favour of the State Government, a financial institution, a co-operative land development bank, a co-operative society or a company as defined in Section 3 of the Companies Act, 1956 in which not less than 51% of the paid-up share capital is held by the State Government or a Corporation owned or controlled by the Central Government or the State Government or both. However, such a loan can be taken only for the purpose of development of land or improvement of agricultural practices or for raising educational loan to prosecute higher studies of the children of such person. It further provides that, in the event of such a person making default in payment of such loan in accordance with the terms and conditions on which such loan was granted, it shall be lawful to cause his interest in the land be attached and sold and the proceeds to be utilised in the payment of such loan. Sub-section (3) of the said Section specifically provides that any transfer or partition of land in contravention of Sub-section (1) shall be invalid and such land shall vest in the State Government free, from all encumbrances and shall be disposed in accordance with the provisions of Section 77 of the Reforms Act22. We have to apply the principles of law as deduced by this Court in the case of Kedar Nath and Immani Appa Rao (supra), to the facts of the present case23. 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 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 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 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 transaction24. Undisputedly, both, the predecessor-in-title of the Defendant(s) 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 law26. It could thus be seen that, the trial Judge upon finding that the agreement of sale was hit by Section 61 of the Reforms Act, had rightly dismissed the suit of the Plaintiff27. Now, let us apply the another test laid down in the case of Immani Appa Rao (supra). 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. As held in Immani Appa Rao (supra), 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 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 (supra), 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.