JUDGMENT : Narasimham, J. - This is an appeal by the Defendants against the appellate judgment of the Additional District Judge of Berhampur setting aside the judgment of the Munsif of Aska and decreeing the Plaintiff's suit for recovery of Rs. 400/- from the Defendants being the purchase-money under a registered sale-deed dated 19-12-46. 2. On 19-12-46 the-Plaintiff paid Rs. 400/- to Defendant-1 Gobinda Lenka who executed in his favour the disputed sale-deed purporting to convey 4 bharanams and 2 Nauties of Badhei service inam lands. The Plaintiff was however unable to obtain possession of the same, and he learned on enquiry that as the suit-lands were service inam lands, they were inalienable u/s 5 of the Madras Hereditary Village Officers Act, 1895 (Madras Act III of 1895). He therefore brought the suit for recovery of purchase-money. 3. Defendants 2 to 4 are the minor sons of Defendant-1 all the Defendants took the plea that the disputed property was enfranchised service inam land and as such was alienable. Both the courts congruently held that the disputed property was an unenfranchised service inam. This is a pure finding of fact which is fully justified from the evidence on record and was rightly not challenged before me. 4. The main question for consideration is whether the Plaintiff is entitled to recover the purchase money either u/s 65 of the Indian Contract Act or Section 55(2) of the Transfer of Property Act. The evidence of Defendant-1 was to the effect that while negotiations for the sale of the property was going on between him and the Plaintiff, the Plaintiff asked him about the nature of the suit-land, and that this Defendant thereupon told him that the lands were enfranchised inam lands. It may he that this-Defendant himself was under a mistaken impression about the nature of the land though acting in good faith; but his conduct in telling the Plaintiff that the property was enfranchised, though in fact it was not enfranchised, would amount to misrepresentation as defined in Section 18(3) of the Indian Contract Act. It was on his assurance of Defendant-1 that the Plaintiff agreed to purchase the land and o pay the sum of Rs. 400/-. The lower appellate court thought this was a case of mutual mistake by both the purchaser and the seller.
It was on his assurance of Defendant-1 that the Plaintiff agreed to purchase the land and o pay the sum of Rs. 400/-. The lower appellate court thought this was a case of mutual mistake by both the purchaser and the seller. This portion of the reasoning of the lower appellate court, however, appeal to be incorrect inasmuch as so far as the purchaser was concerned there wag no mistake, but he merely acted on the assurance given to him by the seller. This is a simple case of misrepresentation u/s 18. The contract for the sale of unenfranchised service inam land is clearly void inasmuch as it offends the provisions of Section 5 of the Madras Hereditary Village Officers Act of 1895. It is true that in Vengali Venkanna and Others Vs. Polamarasetti China Appala Swami, which has been referred to by the lower appellate court, it was held that such transfer of enfranchised inam lands was not void ab initio, but would enure during the lifetime of the transferor. This view however appears to be incorrect as pointed out in a latter Division Bench decision of the Madras High Court in (Kammara) Chinna Nagiah and Another Vs. Yerraguntla Pullayya and Others where the earlier Full Bench decision of the Madras High Court reported in Vaddadi Sannamma Vs. Koduganti Radhabhayi and Others, was followed. Contracts for sale of unenfranchised inam lands would be hit by the provisions of Section 5 of the Madras Act, III of 1895, and would be void ab initio. 5. The next question is whether the Plaintiff was entitled to recover the consideration money u/s 65 of the Indian Contract Act. That section says that where an agreement is discovered to b void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it, to the person from whom he received it. The question, whether the words "agreement discovered to be void" would apply to all agreements which are void ab initio including agreements based on unlawful consideration, has been the subject of divergent judicial opinions. Where both parties to the contract with the knowledge that the contract was illegal, entered into the contract, there cannot be any question of "discovery" that the contract was void so as to attract the principles of that section.
Where both parties to the contract with the knowledge that the contract was illegal, entered into the contract, there cannot be any question of "discovery" that the contract was void so as to attract the principles of that section. But where, as in this case, it is clear, so far as the Plaintiff is concerned, that he was not aware of the illegality of the contract and acted on the representation made to him by the Defendant, Section 65 of the Indian Contract Act would directly come into play, and when it is subsequently found that the contract was void as offending the provisions of the statute, the Plaintiff would be entitled to the remedy under that section. In Thakurain Haranath Kuar v. Thakur Indar Bahadur AIR 1922 P.C. 403 , it was made clear that the provisions of Section 65 of the Contract Act would apply to all agreements which are void in that sense from their inception as distinct from a contract that becomes void later on, This decision has been followed In later Privy Council decisions in AIR 1943 29 (Privy Council); Abdullah Ashgar Ali v. Ganesh Das, AIR (20) 1933 PC 63 . 6. There are also several decisions to the effect that where the contract was for the sale of a property which was inalienable, the purchaser was entitled to recover back his purchase money from the transferer. I need only refer to Haribhai Hansji v. Naihu Bhai Ratnaji and Anr. ILR 38 Bom. 249, Averbhai Jorabllai v. Gordhan Narsi and Ors. ILR 39 Bom. 358 and Bai Diwali v. Umedbhai Bhulabhai Patel I.L.R 40 Bom. 614 where cases under Bombay Act V of 1862 were considered. In the present case the contract is hit by another special Act, vis., Madras Act III of 1895, and there being nothing on Record to show that at the time of entering into the agreement the parties had knowledge that they were entering into an unlawful agreement, the Plaintiff's claim must succeed. 7. In this view, it is unnecessary to consider whether independent of Section 65 of the Indian Contract Act the Plaintiff can have a remedy u/s 55(2) of the Transfer of Property Act. I would, therefore, affirm the judgment of the lower appellate court and dismiss the appeal with costs. Final Result : Dismissed