SMT. NARAYANAMMA & ANR. ETC. ETC. versus SRI GOVINDAPPA & ORS. ETC. ETC.
[2019] 12 S.C.R. 744, Supreme Court of India, 2019
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
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SMT. NARAYANAMMA & ANR. ETC. ETC.
v.
SRI GOVINDAPPA & ORS. ETC. ETC.
(Civil Appeal Nos. 7630-7631 of 2019)
 SEPTEMBER  26, 2019
  [ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
Karnataka Land Reforms Act, 1961 – ss.61, 48-A  – On
13.09.83, the suit property was granted under the provisions of
the Act in favor of the predecessor-in-title of the appellants-
defendants, with non-alienation clause of 15 years – On 23.04.90,
he mortgaged the suit land in favour of the plaintiff-respondents(s)
for Rs.20,000/- and agreed to repay the loan within a year –
However, on 15.05.90, he executed an agreement to sell in favour
of the plaintiff reciting that he was in need of money and had
agreed to sell the suit property for Rs.46,000/- – Suit for specific
performance of the contract filed inter alia contending that the
defendants did not come forward to execute the sale deed in respect
of the agreement to sell –Trial court held that the suit was not
maintainable as the agreement was contrary to the statutory bar
of 15 years on alienation of the suit property and hence, void in
law – First appellate court allowed the appeal of the plaintiff –
Upheld by the High Court – Held: Transaction between the
predecessor-in-title of the defendants and the plaintiff is not
disputed –Initially the property was mortgaged on 23.04.90, and
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 to the plaintiff was acknowledged –Transaction was
nothing short of transfer of property – U/s. 61, there is complete
prohibition on such mortgage/transfer for 15 years from the date
of grant – Even according to the plaintiff, the grant is of the year
1983, as such, the transfer in question in 1990 is within the
prohibited period of 15 years – Both, the plaintiff and the
predecessor-in-title of the defendants equally responsible for
violation of law – Claim of the plaintiff entirely based upon the
agreement to sell dtd. 15.05.90, which is hit by s.61 – No other
foundation for the claim – Although illegality is not pleaded by
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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 dismiss the action ex turpi causa non oritur
actio i.e. No polluted hand shall touch the pure fountain of justice
– Order of the High Court set aside, while that of the trial court
dismissing the suit, upheld – Maxims – ex turpi causa non oritur actio
and in pari delicto potior est conditio defendentis et possidentis.
Maxims–”ex turpi causa non oritur actio”; “in pari delicto
potior est conditio defendentis et possidentis” and “ex dolo malo
non oritur actio” – Applicability of – Discussed.
Practice & Procedure – Claim of the plaintiff based on illegal
agreement – Defendant also participator in the illegality – Grant
of relief in such cases – Suit property granted under the 1961 Act
in favor of the predecessor-in-title of the appellants-defendants,
with non-alienation clause of 15 years – In violation of the Act,
he executed agreement to sell dtd. 15.05.90 in favour of the
plaintiff-respondents(s) – Suit for specific performance of the
contract filed inter alia contending that the defendants did not come
forward to execute the sale deed –Trial court held that the the suit
was not maintainable – Reversed by the first appellate court –
Upheld by the High Court – Held: Both the parties are common
participator in the illegality– Relying on Immani Appa Rao case, if
the decree is granted in favour of
the plaintiff on the basis of an
illegal agreement hit by a statute, it will be rendering an active
assistance of the court in enforcing an agreement contrary to law
– As against this, if the balance is tilted towards the defendants,
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 – First course would be patently inconsistent with the
public interest whereas, the latter course is lesser injurious to
public interest than the former – Karnataka Land Reforms Act, 1961
– Equity.
Allowing the appeals, the Court
HELD: 1.1 The facts in the present case are not in dispute.
The recital in the agreement to sell reads that at the time of
execution of the agreement, the possession of the suit property
was handed over to the plaintiff. Further, the recital reads that
SMT. NARAYANAMMA & ANR. ETC. ETC. v.
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the plaintiff shall take the consent of the officers of the Tribunal
or the concerned officers at his own cost for transferring the
property in the name of the plaintiff. Initially the property was
mortgaged on 23.04.1990, and within a period of one month the
agreement to sell was executed. At the time of the agreement
itself, the entire consideration amount was said to have been
received by the predecessor-in-title of the defendants and also
the possession was handed over to the plaintiff. [Paras 8, 9] [753-
A-E]
1.2 A perusal of the Section 61 of the Karnataka Land
Reforms Act, 1961 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
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and shall be disposed in accordance with the provisions of
Section 77 of the Reforms Act. [Para 13] [755-D-H; 756-A]
1.3  Supreme Court in the case of Kedar Nath Motani and
Ors. vs. Prahlad Rai and Ors. had an occasion to consider the
question of application of the maxims ex turpi causa non oritur
actio and ex dolo malo non oritur actio. It was held that what one
has to see is whether the illegality goes so much to the root of
the matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. It was
further 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 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.
Subsequently, another three-Judge Bench of Supreme Court in
Immani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi and
Ors. again had an occasion to consider the issue with regard to
applicability of the aforesaid two maxims. It was held that, which
principle is to be applied in the facts of the case would depend
upon the question, as to which principle is more consistent with
public interest. It
was further held, that if both the parties are
equally guilty and the fraud intended by them had been carried
out, the position would be that, the party raising the defence is
not asking the Court’s assistance in any active manner. [Paras
14, 16-19] [756-B; 759-C-E; 761-F; 762-A-B]
1.4 The transaction between the predecessor-in-title of the
defendants and the plaintiff is not disputed. Initially the said
predecessor-in-title of the defendants 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
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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.
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.
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, 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,
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. [Paras 23-25] [765-F-H; 766-A-G]
1.5 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. 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,
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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, 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. In the result, the appeals deserve to be allowed
and are accordingly allowed. The judgment and order passed by
the High Court of Karnataka dated 08.06.2015 and the Order
passed by the Fast Track Court-III, Bangalore Rural District,
Bangalore, dated 17.06.2008 are quashed and set aside. The
order dated 23.01.2004 dismissing the suit passed by the trial
court is upheld. [Paras 26-28] [766-G-H; 767-A-D]
Kedar Nath Motani and Ors. vs. Prahlad Rai and Ors.
[1960] 1 SCR 861 ; Immani Appa Rao and Ors. vs.
Gollapalli Ramalingamurthi and Ors. [1962] 3 SCR
739 ; Nathu Prasad vs. Ranchhod Prasad and Ors.
(1969) 3 SCC 11 : [1970] 2 SCR 643– relied on.
Story’s Equity Jurisprudence Vol. I, s. 421; English
edition by Randall, 1920, s.298 ; Taylor’s “Law
of
Evidence” Vol. 11th, Edn. p. 97, para 93 – referred
to.
Case Law Reference
[1960] 1 SCR 861
relied on
Para 14
[1962] 3 SCR 739
relied on
Para 17
[1970] 2 SCR 643
relied on
Para 21
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7630-
7631 of 2019.
From the Judgment and Order dated 08.06.2015 by the High
Court of Karnataka at Bengaluru in R.S.A. No. 1925/2008 C/W R.S.A.
No. 1834/2008 (SP)
SMT. NARAYANAMMA & ANR. ETC. ETC. v.
SRI GOVINDAPPA & ORS. ETC. ETC.
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Shailesh Madiyal, Mahesh Thakur, Sudhanshu Parkash,
Ms. Sheffali Chaudhary, Ankur S. Kulkarni and Kartik Anand, Advs.
for the Appellants.
S.N.Bhat, Adv. for the Respondent.
The Judgment of the Court was delivered by
B. R. GAVAI, J.
1. Leave granted.
2. The present appeals arise out of the common judgment and
order passed by the Single Judge of the Karnataka High Court in
Regular Second Appeal No. 1925 of 2008 and Regular Second Appeal
No. 1834 of 2008 thereby dismissing both the appeals.
3. For the sake of convenience, the parties shall be referred
hereinafter as per their status shown in the plaint before the trial court.
The suit O.S. No. 93/1999 was filed by the plaintiff Govindappa, who
is the son of Bale Krishnappa. Originally the suit property belonged to
one Bale Venkataramanappa, who was the brother of Bale Krishnappa.
Said Bale Venkataramanappa has entered into an agreement to sell with
the plaintiff, specific performance of which is sought in the present suit.
The son of the Bale Venkataramanappa, M.V. Nagaraj was defendant
No. 1, who has been represented through Legal representatives in the
appellate courts since deceased. The wife and daughter of Anjanappa,
who was another son of Venkataramanappa are the defendant Nos. 2
& 3 to the suit respectively. The daughter and wife of Bale
Venkataramanappa are defendant Nos. 4 & 5 to the suit respectively.
The R.S.A. No. 1925/2008 is filed by the original defendant
Nos. 4 &
5, who are daughter and wife of Bale Venkataramanappa. The R.S.A.
No. 1834/2008 has been filed by the legal representatives of the original
defendant No. 1,  M.V. Nagaraj and the original defendant Nos. 2 &
3, who are wife and daughter of Anjanappa. The suit was filed inter
alia contending that the defendants did not come forward to execute
the sale deed in respect of the agreement to sell.  After the notice was
issued by the Civil Judge (Junior Division) & JMFC, Hoskote, the
defendants appeared before the Court. However, they did not file the
written statement. The power of attorney holder of the plaintiff is
examined as PW-1. The plaintiff also examined two witnesses in support
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of his case, i.e., PW-2 and PW-3. He produced documentary evidence
Exhibits P-1 to P-34 in support of his case. The defendants did not cross-
examine the plaintiff. The trial court, upon appraisal of Exhibit P-1, i.e.,
the agreement to sell dated 15.05.1990, held that the suit property was
granted in favour of the defendant and as per the grant certificate, there
was a 15 years bar on alienation of the suit property. The period of the
said bar was to expire on 13.10.1988. It was, therefore, held by the
trial Judge that since the said agreement was executed during the non-
alienation period of 15 years, the agreement was void and non-
executable. It was held that since the said agreement was contrary to
the statutory bar, it was void in law and as such the suit for specific
performance of the contract was not maintainable.
4. Being aggrieved thereby, the plaintiff filed Regular Appeal No.
86 of 2004 before the Principal District & Session Judge, Bangalore.
Before the appellate court, though the defendants had put in their
appearance, the Advocate did not appear to argue the matter. The first
appellate court held that the father of Original defendant No. 1, namely,
Bale Venkataramanappa, had mortgaged the suit property by a
registered mortgage deed on 23.04.1990. It further held that on
15.05.1990 he had also entered into an agreement to sell with the
plaintiff.  It was further held that, the entire sum of Rs. 46,000/- agreed
to be paid to Bale
Venkataramanappa was received by him. It was
further found that the plaintiff had already been put in possession of
the suit property. The first appellate court held that, the reasoning of
the trial court that the non-alienation clause prohibits alienation was not
apt. On this reasoning, the appeal was allowed.
5. Being aggrieved by the judgment and order passed by the first
appellate court, the original defendant Nos. 4 and 5 had filed Regular
Second Appeal No. 1925 of 2008 whereas, legal representatives of
defendant No. 1 and original defendant Nos. 2 and 3 have filed Regular
Second Appeal No. 1834 of 2008.  Two points were raised before the
High Court on behalf of the defendants. Firstly, that the suit which was
filed in the year 1999 for specific performance of agreement to sell
entered into on 15.05.1990 was beyond limitation. Secondly, that in view
of provisions of Section 61 of the Karnataka Land Reforms Act, 1961
(hereinafter referred to as “the Reforms Act”), the agreement was not
enforceable. The High Court observed that, as a matter of fact, the
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trial court ought not to have framed such an issue. It further observed
that, though in the suit for specific performance of contract it was
necessary to frame the issue with regard to readiness and willingness
of the plaintiff to perform his part of the contract along with other issues,
neither the trial court nor the first appellate court had framed such an
issue. According to the High Court, in the absence of the defendants
neither filing the written statement nor contesting the suit, the finding
as recorded by the first appellate court was correct in law. The High
Court concurred with the finding of the first appellate court that since
the entire amount was received by Bale Venkataramanappa, father of
defendant No.1, and also from the recital of the agreement to sell, it
was clear that the possession was also handed over. As such, the High
Court held that the finding of the first appellate court was correct. Being
aggrieved thereby,  defendants have approached this Court.
6. Mr. Shailesh Madiyal, learned counsel appearing on behalf of
the defendants (appellants herein), submitted that in view of the
provisions of Section 61 of the Reforms Act, the predecessor-in-interest
of the defendants, i.e., Bale Venkataramanappa could not have
transferred the said land, as such, the agreement to sell was void in
law and, therefore, not enforceable. He submitted that the finding as
recorded by the trial Judge was correct in
law, which ought not to have
been interfered with by the first appellate court. It is further submitted
that the High Court was also not correct in law in upholding the finding
of the first appellate court.
7. The original plaintiff (respondent(s) herein), on the contrary,
submitted that the provisions of Section 61 of the Reforms Act would
prohibit only the sale, gift, exchange, mortgage, lease or assignment and
would not prohibit an agreement to sell. It is submitted that once the
period of restriction of 15 years is over, the agreement to sell, though
executed during the period of 15 years, becomes enforceable in law. It
is submitted that, in the present case, Bale Venkataramanappa had
received the entire consideration and had also handed over the
possession as per the agreement to sell. It is further submitted that,
the pleadings in the plaint were not controverted by either filing written
statement nor leading any evidence and in this view of the matter, the
first appellate court and the High Court were justified in decreeing the
suit.
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8. The facts in the present case are not in dispute. On 20.10.1976,
the suit property, i.e., 1 acre 6 guntas bearing Survey No. 57 situated
at Mutkur Village, Angondanahalli Hobli, Hoskote Taluk, Bangalore
District, was given as a grant in favour of Bale Venkataramanappa.
The said grant was under the provisions of the Reforms Act. On
13.09.1983, the premium was paid by Bale Venkataramanappa and the
grant was confirmed in his favour with a non-alienation clause of 15
years. On 15.09.1983, there was a mutation entry in the revenue records
entering the name of said Bale Venkataramanappa with an endorsement
that the land shall not be alienated for a period of 15 years.  On
23.04.1990, Bale Venkataramanappa, by a registered mortgage
deed, mortgaged the suit land in favour of the plaintiff for a sum of
Rs. 20,000/-. The mortgage deed recites about the receipt of the entire
mortgaged amount by Bale Venkataramanappa. Under the mortgage
deed, Bale Venkataramanappa had agreed to repay the loan within a
period of one year. However, within a period of one month,  Bale
Venkataramanappa executed an agreement to sell dated 15.05.1990 in
favour of the plaintiff. The agreement to sell recites that he was in need
of money for his legal necessities and to repay his hand loans and for
his domestic needs and, therefore, he had agreed to sell the suit property
for a sum of Rs. 46,000/-. He acknowledges the receipt of entire
amount of consideration, i.e., Rs. 46,000/-. The
recital in the agreement
to sell reads that at the time of execution of the agreement, the
possession of the suit property is handed over to the plaintiff.  Further,
the recital reads that the plaintiff shall take the consent of the officers
of the Tribunal or the concerned officers at his own cost for transferring
the property in the name of the plaintiff.
9. It could thus be seen that, initially the property was mortgaged
on 23.04.1990, and within a period of one month the agreement to sell
is executed. At the time of the agreement itself, the entire consideration
amount is said to have been received by Bale Venkataramanappa and
also the possession is handed over to the plaintiff.
10. It appears, that there were also parallel proceedings before
the revenue authorities. After the death of Bale Venkataramanappa,
the plaintiff filed an application on 12.05.1997 before the Tehsildar,
Hoskote, for mutating his name in place of Bale Venkataramanappa.
The Tehsildar, without any notice, carried out the mutation and entered
the name of the plaintiff in the revenue records. The defendants
SMT. NARAYANAMMA & ANR. ETC. ETC. v.
SRI GOVINDAPPA & ORS. ETC. ETC. [B. R. GAVAI, J.]
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challenged the same before the Assistant Commissioner, Doddabalapura
Division. The said appeal was allowed on 27.06.2008.  Accordingly, the
revenue records were corrected and the defendants’ names were
entered on 24.10.2009. The said Order came to be challenged by the
plaintiff before the High Court by way of Writ Petition Nos. 22243-
22244 of 2011. The High Court vide Order dated 26.07.2011, dismissed
the said petitions.
11. The short question that arises for consideration in the present
appeals is, as to whether the agreement to sell dated 15.05.1990
executed by Bale Venkataramanappa in favour of the plaintiff would
be enforceable in law or not.
12. For appreciating the said issue, it would be necessary to refer
to Section 61 of the Reforms Act, which reads thus:
“61. Restriction on transfer of land of which tenant has
become occupant.—
(1) Notwithstanding anything contained in any law, no land of
which the occupancy has been granted to any person under
this Chapter shall, within fifteen years from the date of the
final order passed by the Tribunal under sub-section (4) or
sub-section (5) or sub-section (5A) of section 48A be
transferred by sale, gift, exchange, mortgage, lease or
assignment; but the land may be partitioned among members
of the holder’s joint family,
(2) Notwithstanding anything contained in sub-section (1), it
shall be lawful for the occupant registered as such 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 fifty one per cent 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 for development of land or
improvement of agricultural practices; or for raising
educational loan to prosecute the higher studies of the
children of such person and without prejudice to any other
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remedy provided by any law, in the event of his 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 to be attached
and sold and the proceeds to be utilised in the payment of
such loan.
Explanation. – For the purpose of this sub-section, “Higher
Studies” means the further studies after Pre-university
Examination or 12th Standard Examination conducted by
CBSE or ICSE or any Diploma courses.
(3) 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.”
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
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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 Act.
14. This Court in the case of Kedar Nath Motani and Ors.  vs.
Prahlad Rai and Ors.1 had an occasion to consider the question of
application of the maxims ex turpi causa non oritur actio and ex dolo
malo non oritur actio. This Court has referred to various English
judgments in paragraphs 11, 12 and 14, which read thus:
“11. Coming now to the question whether the appellants’ suit was
rightly dismissed by the High Court on the application of the
maxim, ex turpi causa etc., we have first to see what are the
specific facts on which this contention is based. The case of the
appellants was that the property was taken benami in the names
of Prahlad Rai and others to avoid the implication of clause 16.
In making the application to the Bettiah Raj the signatures of
Prahlad Rai and others were made by Radhumal or someone
under his instructions, because the relationship between
Radhumal, Prahlad Rai and others was so intimate that it was
considered unnecessary to trouble them. Inasmuch, as the matter
was brought to the notice of the Assistant Manager of the Court
of Wards, all these facts were capable of being investigated,
including the making of the signatures by Radhumal. No
doubt,
the making of the signatures of another person without his
consent, express or implied, is an offence under the ordinary law,
but the intention was not so much to forge the signatures but to
present the application in the names of those persons. However
it be, we proceed on the assumption that there was some illegality
committed by Radhumal in approaching the Bettiah Raj and also
in the execution of the B.H. forms, which were also signed with
the names of these persons. The question is whether this illegality
is sufficient to non-suit the plaintiffs on the application of the
maxim.
12. The law was stated as far back as 1775 by Lord Mansfield
in Holman v. Johnson,  (1775) 1 Cowp 341, 343 : 98 ER 1120,
1121,  in the following words:
1 (1960) 1 SCR 861
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“The principle of public policy is this; ex dolo malo non oritur
actio. No Court will lend its aid to a man who founds his cause
of action upon an immoral or an illegal act. If, from the plaintiff’s
own stating or otherwise, the cause of action appears to arise ex
turpi causa, or the transgression of a positive law of this country,
there the Court says he has no right to be assisted. It is upon
that ground the Court goes; not for the sake of the defendant,
but because they will not lend their aid to such a plaintiff. So if
the plaintiff and defendant were to change sides, and the
defendant was to bring his action against the plaintiff, the latter
would then have the advantage of it; for where both are equally
in fault, potior est conditio defendentis.”
There are, however, some exceptions or “supposed exceptions”
to the rule of turpi causa. In Salmond and William on Contracts, four
such exceptions have been mentioned, and the fourth of these
exceptions is based on the right of restitutio in integrum, where the
relationship of trustee and beneficiary is involved. Salmond stated the
law in these words at p. 352 of his Book (2nd Edn.):
“So if A employs B to commit a robbery, A cannot sue B for the
proceeds. And the position would be the same if A were to vest
property in B upon trust to carry out some fraudulent scheme: A
could not sue B for an account of the profits. But if B, who is
A’s agent or trustee, receives on A’s account money paid by C
pursuant to
an illegal contract between A and C the position is
otherwise and A can recover the property from B, although he
could not have claimed it from C. In such cases public policy
requires that the rule of turpis causa shall be excluded by the
more important and imperative rule that agents and trustees must
faithfully perform the duties of their office.”
Williston in his Book on Contracts (Revised Edn.), Vol. VI, has
discussed this matter at p. 5069, para 1785 and in paras 1771 to 1774,
he has noted certain exceptional cases, and has observed as follows:
“If recovery is to be allowed by either partner or principal in any
case, it must be where the illegality is of so light or venial a
character that it is deemed more opposed to public policy to allow
the defendant to violate his fiduciary relation with the plaintiff
than to allow the plaintiff to gain the benefit of an illegal
transaction.”
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Even in India, certain exceptions to the rule of turpi causa have
been accepted. Examples of those cases are found in Palaniyappa
Chettiar  v.  Chockalingam Chettiar  (1920) ILR 44 Mad 334]
and Bhola Nath v. Mul Chand, (1903) ILR 25 All 639.
14. Recently, the Court of Appeal in Bowmakers Ltd. v. Barnet
Instruments, Ld.  (1945) 1 KB 65] reviewed the law on the
subject, and laid down that every illegality did not entitle the Court
to refuse a judgment to a plaintiff. Du Parcq, L.J., observed as
follows:
“In our opinion, a man’s right to possess his own chattels
will as a general rule be enforced against one who, without
any claim of right, is detaining them, or has converted them
to his own use, even though it may appear either from the
pleadings, or in the course of the trial, that the chattels in
question came into the defendant’s possession by reason of
an illegal contract between himself and the plaintiff, provided
that the plaintiff does not seek, and is not forced, either to
found his claim on the illegal contract or to plead its illegality
in order to support his claim.”
We are aware that Prof. Hamson has criticised this case
in (1949) 10 Cambridge Law Journal, 249, and has forborne
its application, except in the clearest possible circumstances.
The law has been also considered by Pritchard, J.,
in Bigos v. Bousted (1951) 1 All ER 92, where all the
authorities are referred to.”
15. The three-Judge Bench of this
Court, after referring to the
aforesaid judgments, speaking through M. Hidayatullah, J. (as His
Lordship then was), observes thus:
“15. The correct position in law, in our opinion, is that what one
has to see is whether the illegality goes so much to the root of
the matter that the plaintiff cannot bring his action without relying
upon the illegal transaction into which he had entered. If the
illegality be trivial or venial, as stated by Williston and the plaintiff
is not required to rest his case upon that illegality, then public
policy demands that the defendant should not be allowed to take
advantage of the position. A strict view, of course, must be taken
of the plaintiff’s conduct, and he should not be allowed to
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circumvent the illegality by resorting to some subterfuge or by
mis-stating the facts. If, however, the matter is clear and the
illegality is not required to be pleaded or proved as part of the
cause of action and the plaintiff recanted before the illegal purpose
was achieved, then, unless it be of such a gross nature as to
outrage the conscience of the Court, the plea of the defendant
should not prevail.”
16. It could thus be seen, that this Court has held that the correct
position of law is that, what one has to see is whether the illegality goes
so much to the root of the matter that the plaintiff cannot bring his action
without relying upon the illegal transaction into which he had entered.
This Court further held, that if the illegality is trivial or venial and the
plaintiff is not required to rest his case 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 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.
17.
Subsequently, another three-Judge Bench of this Court in
Immani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi and
Ors.2 again had an occasion to consider the issue with regard to
applicability of the aforesaid two maxims. This Court speaking through
P.B. Gajendragadkar, J. (as His Lordship then was) observed thus:
“12. Reported decisions bearing on this question show that
consideration of this problem often gives rise to what may be
described as a battle of legal maxims. The appellants emphasised
that the doctrine which is pre-eminently applicable to the present
case is ex dolo malo non oritur actio or ex turpi causa non
oritur actio. In other words, they contended that the right of
action cannot arise out of fraud or out of transgression of law;
and according to them it is necessary in such a case that
possession should rest where it lies in pari delicto potior est
conditio possidentis; where each party is equally in fraud the
2 (1962) 3 SCR 739
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law favours him who is actually in possession, or where both
parties are equally guilty the estate will lie where it falls. On the
other hand, Respondent 1 argues that the proper maxim to apply
is nemo allegans suam turpitudinum audiendum est, whoever
has first to plead turpitudinum should fail; that party fails who
first has to allege fraud in which he participated. In other words,
the principle invoked by Respondent 1 is that a man cannot plead
his own fraud. In deciding the question as to which maxim should
govern the present case it is necessary to recall what Lord
Wright, M.R. observed about these maxims in Berg  v. Sadler
and Moore, (1937) 2 KB 158 at p. 62. Referring to the maxim ex
turpi causa non oritur actio Lord Wright observed that “this
maxim, though veiled in the dignity of learned language, is a
statement of a principle of great importance; but like most
maxims it is much too vague and much too general to admit of
application without a careful consideration of the circumstances
and of the various definite rules which have been laid down by
the authorities”. Therefore, in deciding the question raised in the
present appeal it would be necessary for us to consider carefully
the true scope and effect of the maxims pressed into service by
the rival parties, and to enquire which of the maxims would be
relevant and applicable in the circumstances of the case. It is
common ground that the approach of the Court
in determining
the present dispute must be conditioned solely by considerations
of public policy. Which principle would be more conducive to,
and more consistent with, public interest, that is the crux of the
matter. To put it differently, having regard to the fact that both
the parties before the Court are confederates in the fraud, which
approach would be less injurious to public interest. Whichever
approach is adopted one party would succeed and the other would
fail, and so it is necessary to enquire as to which party’s success
would be less injurious to public interest.
13. Out of the two confederates in fraud Respondent 1 wants a
decree to be passed in his favour and that means he wants the
active assistance of the Court in reaching the properties
possession of which has been withheld from him by Respondent
2 and the appellants. Now, if the defence raised by the appellants
is shut out Respondent 1 would be entitled to a decree because
there is an ostensible deed of conveyance which purports to
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convey title to him in respect of the properties in question; but,
in the circumstances, passing a decree in favour of Respondent
1 would be actively assisting Respondent 1 to give effect to the
fraud to which he was a party and in that sense the Court would
be allowed to be used as an instrument of fraud, and that is
clearly and patently inconsistent with public interest.
14. On the other hand, if the Court decides to allow the plea of
fraud to be raised the Court would be in a position to hold an
enquiry on the point and determine whether it is a case of mutual
fraud and whether the fraud intended by both the parties has been
effectively carried out. If it is found that both the parties are
equally guilty and that the fraud intended by them has been
carried out the position would be that the party raising the defence
is not asking the Court’s assistance in any active manner; all that
the defence suggests is that a confederate in fraud should not
be permitted to obtain a decree from the Court because the
document of title on which the claim is based really conveys no
title at all. It is true that as a result of permitting Respondent 2
and the appellants to prove their plea they would incidentally be
assisted in retaining their possession; but this assistance is of a
purely passive character and all that the Court is doing in effect
is that on the facts proved it proposes to allow possession to rest
where it lies. It appears to us that this latter course
is less injurious
to public interest than the former.”
18. This Court held that, which principle is to be applied in the
facts of the case would depend upon the question, as to which principle
is more consistent with public interest. The Court finds that, when both
the parties before the Court are confederates in the fraud, the Court
will have to find out which approach would be less injurious to public
interest. The Court observed that, whichever approach is adopted, one
party would succeed and the other would fail and, therefore, it is
necessary to enquire as to which party’s success would be less injurious
to public interest. The Court in the facts of the said case finds that if
the decree was to be passed in favour of respondent No. 1 (who was
the plaintiff), it would be actively assisting respondent No. 1 to give
effect to the fraud to which he was a party and it has been held that
in that sense the Court would be allowed to be used as an instrument
of fraud and that is clearly and patently inconsistent with public interest.
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19. It has further been held, that if both the parties are equally
guilty and the fraud intended by them had been carried out, the position
would be that, the party raising the defence is not asking the Court’s
assistance in any active manner. It has been held, that all the defence
suggested is that a confederate in fraud shall not be permitted to obtain
a decree from the Court because the documents of title, on which the
claim is based really conveys no title at all.  In the facts of the said
case, it was held, that though the result thereof would be assisting the
defence therein to retain their possession, for such an assistance would
be purely of passive character and all that the Court would do in effect
is that on the facts proved,  it proposes to allow possession to rest where
it lies. It has been held that, latter course appears to be less injurious
to public interest than the former one. This Court in the said judgment
has digested the English law on the issue in the following paragraphs,
which read thus:
“19. In support of the contrary view reliance is usually placed
on an early English decision in Doe, Dem. Roberts against
Roberts, Widow, 106 ER 401 . In that case it was held that “no
man can be allowed to allege his own fraud to avoid his own
deed; and, therefore, where a deed of conveyance of an estate
from one brother to another was executed, to give the latter a
colourable qualification to kill game.
The document was as
against the parties to it valid and so sufficient to support an
ejectment for the premises”. In dealing with the question raised
Bayley, J. observed “by the production of the deed, the plaintiff
established a prima facie title; and we cannot allow the defendant
to be heard in a court of justice to say that his own deed is to be
avoided by his own fraud;” and Holroyd, J. added that “a deed
may be avoided on the ground of fraud, but then the objection
must come from a person neither party nor privy to it, for no
man can allege his own fraud in order to invalidate his own deed”.
20. This decision has, however, been commented on by Taylor
in his Law of Evidence. According to Taylor “it seems now clearly
settled that a party is not estopped by his deed from avoiding it
by proving that it was executed for a fraudulent, illegal or immoral
purpose  [Taylor’s “Law of Evidence”, Vol. 11th, Edn. p. 97, para
93]”. The learned author then refers to the case of Roberts, 106
ER 401 and adds “in the subsequent case of Prole v. Wiggins,
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(1837) 3 Bing. NC 235 : 6 LJCP 2 : 43 R.R. 621, Sir Nicholas
Tindal observed that this decision rested on the fact that the
defence set up was inconsistent with the deed”. Taylor then adds
that “the case, however, can scarcely be supported by this
circumstance, for in an action of ejectment by the grantee of an
annuity to recover premises on which it was secured, the grantor
was allowed to show that the premises were of less value than
the annuity, and consequently, that the deed required enrolment,
although he had expressly covenanted in the deed that the
premises were of greater value…” According to the learned
author “the better opinion seems to be that where both parties
to an indenture either know, or have the means of knowing, that
it was executed for an immoral purpose, or in contravention of
a statute, or of public policy, neither of them will be estopped
from proving those facts which render the instrument void ab
initio; for although a party will thus in curtain cases be enabled
to take advantage of his own wrong, yet this evil is of a trifling
nature in comparison with the flagrant evasion of the law that
would result from the adoption of an opposite rule” (p. 98).
Indeed, according to Taylor, “although illegality is not pleaded by
the defendant nor sought to be relied upon by 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. No polluted hand shall touch the pure
fountain of Justice” (p. 93).
21. To the same effect is the opinion of Story [Story’s Equity
Jurisprudence, Vol. I, s. 421; English edition by Randall, 1920, s.
298.] : “In general, where parties are concerned in illegal
agreements or other transactions, whether they are mala prohibita
or mala in se, 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 known maxim in pari delicto potior est
conditio defendentis et possidentis. The old cases often gave relief,
both at law and in equity, where the party would otherwise derive
an advantage from his inequity. But the modern doctrine has
adopted a more severely just and probably politic and moral rule,
which is, to leave the parties where it finds them giving no relief
and no countenance to claims of this sort.”
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20. It could thus be seen that, although illegality is not pleaded
by the defendant nor is relied upon by 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.
It has been held, that no polluted hand shall touch the pure fountain of
justice. It has further been held, that where parties are concerned in
illegal agreements or other transactions, courts of equity following the
rule of law as to participators in common crime will not interpose to
grant any relief, acting upon the maxim in pari delicto potior est
conditio defendetis et possidentis.
21. In the case of Nathu Prasad  vs.  Ranchhod Prasad and
Ors.3 the three-Judge Bench of this Court had an occasion to consider
somewhat similar provisions which read thus:
 “2.  Section 73 of the Revenue Administration and Ryotwari
Land Revenue and Tenancy Act, Samvat 2007 (Act No. 66 of
1950) provides:
“No Pakka tenant shall sub-let for any period whatsoever any
land comprised in his holdings except in the cases provided for
in Section 74.
Explanation.— * * *.”
Section 74 deals with sub-letting by disabled persons. Since the
plaintiff is not a disabled person, the section need not be read.
Section 75 provides:
“A sub-lease of the whole or any part of the holding of a
Pakka tenant effected properly and legally prior to the
commencement of this Act shall
terminate after the expiry
of the period of sub-lease or 4 years after the commencement
of this Act, whichever period is less.”
Section 76 provides:
“(1) If the sub-lessee does not hand over possession of the
land sub-let to him after the sub-lease ceases to be in force
under Sections 74 and 75 to the lessor or his legal heir … he
shall be deemed to be a trespasser and shall be liable to
ejectment in accordance with the provisions of this Act.
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(2) * * *.”
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 sub-lease 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
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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 Story’s 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
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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.
28. In the result, the appeals deserve to be allowed and are
accordingly allowed.  The judgment and order passed by the High Court
of Karnataka dated 08.06.2015 and the Order passed by the Fast Track
Court-III, Bangalore Rural District, Bangalore, dated 17.06.2008 are
quashed and set aside. The order dated 23.01.2004 dismissing the suit
passed by the trial court is upheld.
29. The parties shall bear their own costs.
Divya Pandey
Appeals allowed.
SMT. NARAYANAMMA & ANR. ETC. ETC. v.
SRI GOVINDAPPA & ORS. ETC. ETC. [B. R. GAVAI, J.]