( 1 ) THE plaintiff who is the respondent filed a suit out of which this second appeal arises for the refund of Rs. 5000 paid by him to the defendant who is the appellant as consideration for the sale of 4 acres out of the land measuring 5 acres 11 guntas situated in Kuttakati village, Gadag Taluk, under the registered deed of sale dt. 1-5-1961. In pursuance to the sale, the plaintiff put the defendant in possession of the property. The sale transaction was held to be void by the Assistant Commissioner under S. 9 of the Bombay Prevention of Fragmentation and Consolidation of Holdings act, Act 62 of 1947, hereinafter referred to as the Act. Since the sale was of 4 acres out of 5 acres 11 guntas, the remaining area being 1 acre 11 guntas which is less than the standard area which is fixed at 3 acres for the locality and since such a transfer is prohibited and treated as void under Ss. 8 and 9 of the said Act, and the sale was held to be void by the Assistant Commissioner, both the lower Courts have decreed the suit. ( 2 ) THE writ petition filed by the plaintiff in WP. 2527/1963 challenging the order of the Assistant Commissioner was also dismissed. The present suit was filed on 28-11-1964. ( 3 ) IT is contended on behalf of the appellant by Sri V. Krishnamurthy, his learned Counsel, firstly, that since the contract is illegal and not merely void under Ss. 8 and 9 of the Act and the illegal object has been carried out, both parties being in pan delicto, restitution is not permissible under S. 65 of the Indian Contract Act, and secondly even otherwise, since the contract is void ab initio, the cause of action for the suit arose on 1-5-1961 and therefore the suit is barred under Art. 24 of the limitation Act, 1963 which corresponds to Art. 62 of the Limitation Act, 1908. ( 4 ) S. 8 of the Act provides that no land in any local area shall be transferred or partitioned so as to create a fragment. S. 9 (1) provides that transfer or partition of any land contrary to the provisions of this act shall be void. ( 4 ) S. 8 of the Act provides that no land in any local area shall be transferred or partitioned so as to create a fragment. S. 9 (1) provides that transfer or partition of any land contrary to the provisions of this act shall be void. Under S. 9 (2) the owner of any land so transfered or partitioned shall be liable to pay a fine which shall be recovered as an arrear of land revenue. S. 9 (3) provides that any person unauthorisedly occupying, or wrongfully in possession of any land, the transfer or partition of which, either by the act of parties or by the operation of law is void under the provisions of this Act, may be summarily evicted by the collector. Under S. 2 (6) local area means any area notified as such in the Official Gazette under S. 3. Under S. 2 (4) 'fragment' means a plot of land of less extent than the appropriate standard arela determined under this Act. Under S. 2 (10) 'standard area' means the area determined by the Government under S. 5 as the minimum area necessary for profitable cultivation in any particular local area. The standard area in respect of the suit land is 3 acres. ( 5 ) IN Dyaviah v. Shivamma, 1959 Mys. L. J. 496 the sale deed was executed by a minor. It was held that the first part of S. 65 of the Contract Act which contemplates cases where "an agreement is discovered to be void" indicates that the parties were unaware of the void nature of the agreement until the date of discovery, and that in such class of cases, the agreement is void when it was made, but it is discovered to be void at a later date. The observations in Ram Nagina v. Governor General, AIR 1952 Cal. 306 that Sec. 65 applies to cases where the benefit or advantage is derived under an agreement before it is discovered to be void and what S. 65 embodies and is an expression of the principle of restitution and of prevention of unjust enrichment, was referred to with approval. The observations in Ram Nagina v. Governor General, AIR 1952 Cal. 306 that Sec. 65 applies to cases where the benefit or advantage is derived under an agreement before it is discovered to be void and what S. 65 embodies and is an expression of the principle of restitution and of prevention of unjust enrichment, was referred to with approval. It was held that the grant of restitution in the case of a void contract does not amount to enforcing that contract and that while directing the restitution, the Court has to adjust the equities between the parties and that the minor cannot be allowed to retain the benefit he has acquired under the very contract which he seeks to set aside and to allow him to do so would be to give him a double advantage to which he is not entitled. It was also held that the benefits under S. 65 of the Contract Act cannot be claimed if the party claiming them had received the benefit after the agreement or transaction was discovered to be void on the equitable principle that if a party deliberately received benefits knowing full well that it is illegal and void, he does not come to Court with clean hands and therefore he will not be entitled to any equitable relief. In the present case, the finding of both the lower Courts is that both parties to the transaction were unaware that the transaction was one prohibited under the Act. This is a finding of fact based on the statements made by the parties before the assistant Commissioner during the proceedings under the Act. Hence, the principle enunciated in Dyaviah v. Shivanna applies to the facts of the case, and since the benefit was derived by the defendant before the parties discovered that the transaction was void, the plaintiff is entitled to the benefit of S. 65 of the Contract Act and is entitled to succeed. ( 6 ) THE appellant relies on the observations in Valaji Mothiji v. Ebrahim Sait, 1964 Mys. L. J. Supp. 364 in which the plaintiff claimed retfund of the excess amount of rent paid by him contrary to the provisions of the Mysore house Rent Control Order 1942. ( 6 ) THE appellant relies on the observations in Valaji Mothiji v. Ebrahim Sait, 1964 Mys. L. J. Supp. 364 in which the plaintiff claimed retfund of the excess amount of rent paid by him contrary to the provisions of the Mysore house Rent Control Order 1942. It was observed that the plaintiff was a party to the contravention of the law and the illegal transaction having been executed, the Court would not assist the party to obtain the relief. It was contended on behalf of the plaintiff that even in cases where both the parties to an illegal agreement have acted with knowledge of illegality and are therefore participants in it, the Courts could act and do grant relief to the party who is less guilty. That contention of the plaintiff was accepted. Hence, this decision proceeds on the basis that both parties to the agreement knew of the illegal nature of the agreement at the time of the transaction; whereas, in the present case both parties were not aware of the illegal nature of the transaction. ( 7 ) THE appellant next relied on Bapulal v. Laxmi Bharat Trading co. , AIR 1966 Raj. 14 . In that case, the President of the association which was required to be registered under S. 4 of the Companies Act, but was not so registered, filed a suit for recovery of a loan advanced by the said Association. The suit was held to be not maintainable. On the alternative claim of the plaintiff for the benefit of Ss. 65 and 70 of the Contract Act, it was held that where a party entering into a contract has no legal capacity whatever to enter into it, its very functioning amounts to a criminal offence, and no benefit of either Section 65 or 70 of the Contract Act could be given for the enforcement of such contracts, since it would amount to rendering S. 4 of the Companies Act entirely nugatory. ( 8 ) THE appellant next relied on Venkata Subbayya v. Attar Sheik mastan, AIR. 1949 Mad. 252. That was a case where toddy shops had been purchased benami for another contrary to the provisions of the Madras Abkari Act. It was held that under S. 65 of the Contract Act, money paid to the benamidar by the proposed real purchaser to purchase the shops cannot be recovered. 1949 Mad. 252. That was a case where toddy shops had been purchased benami for another contrary to the provisions of the Madras Abkari Act. It was held that under S. 65 of the Contract Act, money paid to the benamidar by the proposed real purchaser to purchase the shops cannot be recovered. The relief was refused since the transaction was inherently illegal and opposed to public policy, and the parties being in pari delicto, the Court cannot assist in enforcing it. The observations in Madura Mun. v. Alagirisami, AIR 1939 Mad. 957, were followed. The observations in Madura Municipality v. Alagirisami are as follows:"the language of S. 65, Contract Act, has been held by their lordships of the Privy Council in 45 All. 179 to include agreements which are destitute of legal effect from their inception, and would therefore cover a case like the present where the agreement in pursuance of which the defendant took delivery of the rubbish and night-soil has been discovered to be of no legal effect from the beginning. There are certain cases which appear to hold that S. 65 would have no application where the void character of the agreement was known to the party: See 43 Cal. 115; 15 CWN. 408. But these cases were decided on the principle that the contracts being either immoral or opposed to public policy were inherently illegal and the parties being in pari delicto the Courts could not render any assistance in enforcing them. "thus, the cases in which it was held that S. 65 would not apply, were cases where the void character of the agreement was known to the party. Hence, these two decisions do not apply to the facts of the present case. ( 9 ) THE respondent relied on the decision in Dominion of India v. Preety Kumar, AIR 1958 Pat. 203 . That was a case where the plaintiffs supplied goods to the Military Department under an oral agreement and the provisions of S. 175 of the Government of India Act were not complied with. It was held that in view of S. 2 (h) of the Contract Act, there was no contract at all. It was only when the written statement was filed it was discovered that the agreement was void and that it was not enforceable under S. 2 (e) of the Contract Act. It was held that in view of S. 2 (h) of the Contract Act, there was no contract at all. It was only when the written statement was filed it was discovered that the agreement was void and that it was not enforceable under S. 2 (e) of the Contract Act. Following the decision in Harnath Kuar v. Indu bahadur Singh, LR. 58 IA. 69, it was held that S. 65 of the Contract Act applies also to an agreement which was not enforceable by law including an agreement that was void from its inception as distinguished from a contract that becomes void. The observation in Arunachala v. Srivilliputtur Mun. , AIR 1934 Mad. 480 , that it would be dangerous to ignore the plain statutory provision of S. 65 and argue as though the matters were entirely dependant upon English Rules of Equity as laid down in the English cases was referred to with approval. The following observation in AIR. 1928 Privy Council 2, AIR 1928 PC. 2, was also referred to with approval:"it has often been pointed out by this Board that when there is a positive enactment of the Indian Legislature the proper course is to ascertain its proper meaning uninfluenced by any consideration derived from the previous state of the law or of the English Law upon which it may be founded. " ( 10 ) IN this connection, the following comments of Pollock and Mulla on S. 65 in Indian Contract and Specific Relief Act, VIII Edition, at p. 387 are also partinent. "the matter corresponding to this and the last foregoing section, besides S. 39, is scattered about English books in the shape of technical rules and exceptions unintelligible, as usually stated, to any one who is not acquainted, not only with modern English law, but with the formulas of the ancient common law system of pleading which has long been obsolete in England and survives only in some American jurisdictions. "the appellant relied on the observation in Gherulal Parakh v. Mahadeodas, AIR 1959 SC. 781 . In that case it was held that though a wagering contract is void and unenforceable under S. 30 of the Indian Contract Act, it was not either forbidden by law or opposed to public policy or immoral and that the object was not unlawful within the meaning of S. 23 of the said Act. 781 . In that case it was held that though a wagering contract is void and unenforceable under S. 30 of the Indian Contract Act, it was not either forbidden by law or opposed to public policy or immoral and that the object was not unlawful within the meaning of S. 23 of the said Act. But that was not a) case under S. 65 of the Indian Contract Act. In krishnan v. Shankara Varma, ILR 9 Mad. 441 by an agreement in writing the defendants, trustees of a temple, representing to the plaintiff that money was required to pay off the debts incurred for the benefit of the temple, obtained an advance of money and in consideration thereof, granted to the plaintiff on lease the right to manage the temple lands. The lease was held to be void for illegality in a suit filed by the plaintiff against the tenant of the lands. The defendants subsequently resumed the management and the plaintiff sued them to recover the money advanced by him. It was found that the agreement was entered into by both the parties under a mistake as to the validity of the lease. The agreement provided that the plaintiff could enjoy the property on lease for 96 years and that he would repay himself out of the profits derived from the lands it was observed that the mistake is a mutual mistake of law in regard to the validity of the transfer but that it was unnecessary for the plaintiff to rely on the transfer for the purpose of showing that the defpndants were under an obligation to repay the amount advanced; the agreement to transfer prescribed only a special mode of satisfying that obligation; that since the agreement could not take effect because it was tainted with illegality, the obligation of the defendants to repay cannot on that ground be taken to be satisfied. It was held that an agreement that an obligation which is contracted shall be discharged in some particular mode is collateral to the primary contract which created the obligation, though the two agreements may be mixed up in one contract. It was held that an agreement that an obligation which is contracted shall be discharged in some particular mode is collateral to the primary contract which created the obligation, though the two agreements may be mixed up in one contract. It was further held that:"assuming S. 65 of the Contract Art was not intended to vary the rule that a mistake of law is no ground for relieving a party from his own contract, we are still of the opinion that the respondent is entitled to recover back the amount advanced on the ground that the collateral agreement which provided for its repayment failed. "in the case of a sale there is an implied covenant of title and quiet enjoyment undertaken bv the vendor which constitutes a collateral agreement. On the failure of this agreement the plaintiff is entitled to recover the purchase money. 10a. In Jijibhai Laldas v. Nagji Gulab, 11 Bom. L. R. 693 the plaintiff sued to set aside an instrument of lease executed by him in favour of the defendant contending that the transaction was void under the Bhandari and, narvadari Act (Bombay Act V of 1962 ). The auestion was a whether an order for refund of the consideration money which had passed under the impeached transaction declared to be void under S 3 of the said Act may be made. The defendant in pursuance of the ageement entered into possession of the land. After two vears, the plaintiff sued the defendant fot possession on the ground that the so-called lease was an unlawful alienation prohibited by the terms of S. 3 of the Act. The Court came to the conclusion that the lease is an unlawful alienation prohibited by the Act since the language of Section 3 provided that such a transaction shall not be lawful. Dealing with S. 65 of the Indian Contract Act, it was observed as follows:"it is to be observed that S. 65 deals with two cases: First, an agreement which is discovered to be void, and, secondly, a contract which becomes void. There is clearly a distinction between the agreement in the first case and the contract in the second case. The first deals with agreements void ab initio, the second with contracts which become void after they have become contracts. There is clearly a distinction between the agreement in the first case and the contract in the second case. The first deals with agreements void ab initio, the second with contracts which become void after they have become contracts. Among agreements void ab initio are agreements based upon an unlawful consideration, see s. 23, and under that section would fall the agreement which we have under consideration in the present case which is unlawful by reason of the provisions of the Bhagdari Act. Yet as provided by the legislature in S. 65 there is nothing improper in the person, who has paid the money in pursuance of such agreement, recovering it back on the discovery of the failure of the consideration. "the Bhagdari Act declares that an unrecognised portion of a Bagh shall not be the object of lawful alienations and the transaction was held to be not only void but illegal. Hence, the principle of the decision applies to the facts of the present case and the plaintiff is entitled to recover the sum paid by him from the defendant. ( 11 ) THE next question is whether the suit is barred by limitation the appellant relies on the decision in Shavalaji v. Md. Ebrahim, 1964 Mys. L. J. Supp. 362, where it is held, following the decision in Hansraj Gupta v. Official Liqr. Dehra Dun, Mussorie Elec. Tramway, 60 IA. 30 that in the absence of special circumstances the time at which the agreement is discovered to be void under S. 65 of the Indian Contract Act so as to give rise to a right of suit to recover consideration paid under the contract is the date of the agreement. The decision in municipal Council v. Abdul, (1965) 1 Mys. L. J. 41 and State of Mysore v. Shankar Vittal, 1964 Mys. L. J. Supp. 837, are cases where the suit was, for recovery of tax collected illegally. The decision of the Privy Council in Hanuman v. Hanuman, ILR 19 Cal. 123 lays down that in case of transactions where there is no valid consideration, Article 62 applies and that in the case of a voidable transaction Art. 97 of the Limitation Act applies. In Sanaullah v. Jai Narain, AIR 1942 All. 409 and Panchoo v. Ram, AIR 1943 All. 123 lays down that in case of transactions where there is no valid consideration, Article 62 applies and that in the case of a voidable transaction Art. 97 of the Limitation Act applies. In Sanaullah v. Jai Narain, AIR 1942 All. 409 and Panchoo v. Ram, AIR 1943 All. 294, it has been held that where the transaction is void, at its inception, limitation starts from the date of the transaction. ( 12 ) THE respondent relies on the decision in Harnath Kuar v. Indar bahadur Singh. In that case, the plaintiff sued for possession with an alternative prayer for payment of money on the basis of a sale deed executed in 1880. It was held that the transfer was inoperative as the transferor on the date of transfer had no interest capable of transfer in the property transferred. Then the claim for recovery of the purchase money with interest was considered. Since the claim was based on S. 65 of the contract Act, it was observed as follows:"so framed, the plaintiff's claim to compensation rests, not on any principle or formula of English law, but on the words of this section, and it has to be seen whether the facts of this case come within its scope. The section deals with (a) agreements and (b) contracts. The distinction between them is apparent from S. 2; by clause (d) every promise and every set of promises forming the consideratipn for each other is an agreement, and by clause (h) an agreement enforceable by law is a contract. S. 65, therefore, deals with (a) agreements enforceable by law and (b) with agreements not so enforceable. By cl. (g) an agreement not enforceable by law is said to be void. An agreement, therefore, discovered to be void is one discovered to be not enforceable by law, and, on the language of the section, would include an agreement that was void in that sense from its inception as distinct from a contract that becomes void. The agreement here was manifestly void from its inception, and it was void because its subject matter was incapable of being bound in the manner stipulated. "it was sheld that the agreement was discovered to be void and the discovery was one within the words and meaning of S. 65 of the Contract Act. The agreement here was manifestly void from its inception, and it was void because its subject matter was incapable of being bound in the manner stipulated. "it was sheld that the agreement was discovered to be void and the discovery was one within the words and meaning of S. 65 of the Contract Act. It was further held that the plaintiff is entiled to recover compensation which should include the principal sum with interest at the reduced rate from the date of suit. The contention of the plaintiff appellant in that case that the suit is governed by Art. 97 of the Limitation Act and that time runs only from the discovery of the agreement to be void, was accepted and the contention of the respondent that Art. 62 of the Limitation Act applied and time runs from the date of payment of the money was rejected. ( 13 ) IN Hansraj Gupta v. Official Liquidator, Dehra Dun Mussorie electric Tramway Co. Ltd. it was held that in the absence of special circumstances, the time at which an agreement is discovered to be void so as to give rise to a right of suit to recover consideration paid under s. 65 of the Contract Act is the date of the agreement. The contention at the appellant in that case that special circumstances exist in the case in harnath v. Indar Bahadur, appears to have been accepted. ( 14 ) THE respondent next relied on the decision in Kashirao v. Zabu, 136 Ind. Cas. 25. The question which fell for decision was whether the starting point of limitation under Art. 116 of the Limitation Act in a suit for damages for breach of covenant of title contained in a registered deed where the property has been put in possession of the vendee and the sale is void ab initio is from the date of sale or from the date of dispossession of the vendee. Since the two covenants of title, namely, covenant of right to convey and covenant for quiet enjoyment were broken, it was held that limitation began to run from the date on which the vendee's possession was disturbed. He next relied on the decision in Narasing v. Pachu rambakas, ILR. 37 Bom. 838. Since the two covenants of title, namely, covenant of right to convey and covenant for quiet enjoyment were broken, it was held that limitation began to run from the date on which the vendee's possession was disturbed. He next relied on the decision in Narasing v. Pachu rambakas, ILR. 37 Bom. 838. In that case, the vendor though a mere mortgagee, under the bonafide belief that he was entitled to do so, sold certain land to the plaintiff and placed the plaintiff in possession. Six years later, the true owner of the land recovered possession from the plaintiff. The plaintiff sued to recover the purchase money from the defendant. The decision of the Privy Council in ILR. 19 Calcutta 123 (18) was distinguished on the ground that it was not a case in which possession had actually been given although the contract subsequently turned out to have been void ab initio, and held that the plaintiff being deprived of the possession being part of the consideration, the true character of the contract became revealed and gave rise to the cause of action for the plaintiff's suit and therefore Art. 97 of the Limitation Act applied, and that time runs from the date of loss of possession. This decision was followed in U. Talok v. Maung Tha Nyo, AIR 1937 Rang. 148. In that case, the plaintiff was put in possession on payment of a certain sum of money though there was no mortgage, and as if he was a usufructuary mortgagee. Since the property was sold in execution of a mortgage decree against the owners, he was deprived of possession. Since the transaction was entirely an oral transaction it was inoperative to create any interest in the land. It was held that possession of the land is clearly a consideration for the transaction and that consideration existed until the plantiff was deprived of possession and that Art. 97 was applicable to the suit for recovery of the money lent on the void mortgage and that time did not begin to run until the date of dispossession of the plaintiff. The respondent next relied on the decision in saraswathibai v. Bhadurkar, AIR 1950 Nag. 229. It was held that the plaintiff did not know that the vendor was incompetent to transfer and that the contract was void from its inception. The respondent next relied on the decision in saraswathibai v. Bhadurkar, AIR 1950 Nag. 229. It was held that the plaintiff did not know that the vendor was incompetent to transfer and that the contract was void from its inception. It was further held that when the sale is void ab initio and the vendee is put in possession of the property sold, the limitation for a suit for damages would commence from the date of dispossession and that Art. 62 would not apply. ( 15 ) IN Rachappa Maharudrappa v. Irappa, (1967) 2 Mys. L. J. 643, the suit was for recovery of khatha balance and it was held that the plaintiffs got the cause of action for recovery of khatha dues the moment the oral agreement of lease was held by the trial Court to be void by its decree. The decisions in U. Talok v. Maung Tho Nyo (23) and Saraswathibai v. Bhadurkar (24) were distinguished on the ground that in these two cases time commences to run under Art. 97 of the Limitation Act from the date of failure to pay the consideration which was the date of dispossession, since the vendees in these cases were entitled to and were in fact in enjoyment of the lands in consideration of the amounts paid by them. ( 16 ) THE respondent next relied on the decision reported in Punjab government v. Baij Nath, AIR 1945 Lah. 164. In that case, the plaintiff's suit was for recovery of the sum paid by him to the Government under an auction sale conducted under the provisions of Punjab land Revenue Act as he had been deprived of the possession of the property after purchase because it did not belong to the person on whose account it was sold in the public auction. It was held that Art. 97 of the Limitation Act applies to a case where possession has passed on the basis of a contract void ab initio and subsequently possession is lost, and that time begins to run under Art. 97 from the date of dispossession of the plaintiffs from the property sold to them in auction. It was held that Art. 97 of the Limitation Act applies to a case where possession has passed on the basis of a contract void ab initio and subsequently possession is lost, and that time begins to run under Art. 97 from the date of dispossession of the plaintiffs from the property sold to them in auction. It was held that as soon as they were evicted the consideration so far as they were concerned totally failed, and since till that time they were in enjoyment of the property it could not be said that they had any cause of action to bring a suit on the ground of total failure of consideration. The consideration did exist for the transaction and the consideration could not fail and did not fail till the purchasers were evicted from the property and till that stage arrived, no suit on the basis of failure of consideration was maintainable. The following observations of the Privy Council in ILR. 3 Calcutta 806, were followed:"there is no doubt, a further question whether the plaintiff has shown a case which, if proved, would entitle him to recover back the purchase money as money had and received to his use as upon a total fsilure of consideration. To that their Lordships think the admitted fact of the possession by his testator for nearly two years of the property in question, and his reception, partial at least of the rents and profits might be a fatal objection. It could not in such case be said that the consideration wholly failed. But it is quite clear on the record that this objection arises, since if the sale has been treated as a nullity, the purchaser has been accountable, and may have accounted for what he received. "it was held that Art. 120 of the Limitation Act applied to the suit for a claim under S. 93 of the Punjab Land Revenue Act, and that time begins to run from the date of dispossession of the plaintiffs. ( 17 ) THE cases relied on by the appellant are not cases where possession had been delivered to the transferee and there was a subsequent dispossession. They are cases merely for recovery of money paid by the transferee. ( 17 ) THE cases relied on by the appellant are not cases where possession had been delivered to the transferee and there was a subsequent dispossession. They are cases merely for recovery of money paid by the transferee. On the other hand, the cases relied upon by the respondent are cases where the transferee had been put in possession of the immovable property in consideration of the amount paid by the transferee and in which the transferee had been dispossessed subsequently. Hence, it id art. 97 of the Limitation Act that applies to the facts of this case and time began to run only on the date of dispossession in pursuance to the order of the Assistant Commissioner which is admittedly within three years from the date of suit. Hence, it has to be held that the suit is in time. Consequently, this appeal is dismissed with costs. --- *** --- .