Moroti Shroba Sonder v. Balaprasad Govardhandas and others
1980-07-10
SHARAD MANOHAR
body1980
DigiLaw.ai
JUDGMENT - Sharad Manohar J.:-The only question of law urged in this appeal on behalf of the-plaintiff who is appellant before me is as to whether he should not be entitled to the equitable relief as per the provisions of section 65 of the Indian Contract Act at least regarding the recovery of the earnest amount of Rs. 5000 paid by him for the purchase of the suit lands. 2. The facts of the case are as follows :- The suit lands form part of the joint family property of which at one time Hiralal was the Karta. Respondent No. 3, before me, original defendant No.3, is the son of Hiralal and Respondents No.1 and 2 are the sons of defendant No.3. It is now common ground before me that quite some time before the year 1970 and during the minority of defendants No.1 and 2, Hiralal effected partition of the joint family property not only between himself and his son defendant No.3, bur also defendant No.3 on the one hand and defendants No.1 and 2 on the other. The suit properties “ere given to the share of defendants No.1 and 2 in the said partition which was an oral partition. It appears that the entries were made in the Revenue Records in pursuance of the said oral partition. There is no dispute before me that his oral partition took place before 12-6-1962 in any event. In spite of the said oral partition, Hiralal entered into an agreement with the plaintiff on 12-6-1962 for sale of the suit lands Survey No. 54-A, measuring 13 Acres and 38 Gunthas to the plaintiff for consideration of Rs. 5000. The contention of the plaintiff was that Hiralal had even received Rs. 5000 from him which represented the entire amount of sale price and that Hiralal in fact put the plaintiff in possession of the suit land. It is not disputed that subsequently he lost possession in or about the year 1967. The contention of the plaintiff was that the execution of the sale deed was postponed because sanction for the sale had to be obtained from the Tenancy Authorities under section 47 of the Hyderabad Tenancy Act.
It is not disputed that subsequently he lost possession in or about the year 1967. The contention of the plaintiff was that the execution of the sale deed was postponed because sanction for the sale had to be obtained from the Tenancy Authorities under section 47 of the Hyderabad Tenancy Act. The plaintiff contended that later on the requirement of section was obviated by virtue of change in the law and thereupon'1he plaintiff called upon defendants 1 and 2 who had attained majority by that time to complete the sale-deed. They refused to oblige and hence the instant suit was filed by the plaintiff against the defendants for specific performance of the said agreement dated 12th June 1972. Defendants No. 4 and 5 were impleaded in the following circumstances: Defendant No.4 had purchased an area of seven acres from the suit lands by a sale deed dated 8th June 1970, for a sum of Rs. 5000. Similarly defendant No.5 had purchased an area of six acres thirty gunthas from defendant No.2, by a sale deed taken on 9th June 1970, for a sum of Rs. 5000. It appears that Hiralal died sometime in the year 1964-65. 3. The suit was, therefore, filed by the plaintiff for specific performance of the agreement entered into by Hiralal acting as Karla of the joint family for sale of the suit land as guardian, of defendants Nos. 1 and 2. 4. The defence of the defendants Nos. 1, 2 and 3 was that defendants Nos. 1 and 2 were minors at the time of the alleged agreement. Hiralal was not Karta of the joint family at the time of the alIeged agreement at all, since the joint family properties were already partitioned long before the year 1962 in which partition the suit property had been given to the share of the minor defendants I and 2. They contended that from the date of the said partition the suit property was separate property of defendants l and 2 and hence Hiralal who was only the grandfather of defendants Nos. 1 and 2 had no power to deal with the said property. The contention, therefore, was that the agreement dated 12th June 1972 was even void ab initio and hence specific performance of the same could not be asked for.
1 and 2 had no power to deal with the said property. The contention, therefore, was that the agreement dated 12th June 1972 was even void ab initio and hence specific performance of the same could not be asked for. It was further contended that the plaintiff was not entitled even to alternative relief of compensation or refund of the purchase money. 5. It is unnecessary to refer the defence of the other defendants because no question in their behalf arises or has been urged in this appeal. Both the Courts have recorded the following as the findings of fact which findings are no longer under challenge: viz. that- (a) That suit lands were given to the share of defendants Nos. rand 2 in the partition effected by Hiralal in respect of the entire joint family property. (b) Defendants I and 2 were minors at the time of the said partition. (c) Necessary entries were made in the Revenue Records showing ,. that the minors defendants Nos. 1 and 2 were holding the suit property as their separate property with effect from the date of the oral partition. (d) Defendant No.3, as father of defendants Nos. 1 and 2, was their natural guardian at the time of the agreement dated 12th June 1972 and Hiralal as such had no power to deal with the suit property which was the separate property of defendants Nos. 1 and 2. In this view of the matter there is no subsisting dispute that the agreement dated 12th June 1972 was void ab initio and hence no question arises of its specific performance being granted by the Court against any of the defendants. The only question that remains is as to whether the plaintiff is entitled to recover back the amount of the earnest money of Rs. 5,000 from any of the defendants or not. 6. At the outset it may be stated that there is no evidence before the Court to show that although Hiralal received the amount of a sale price Rs. 5,000 defendants Nos. 1 and 2 received the same from Hiralal or were benefited from the same through Hiralal. The agreement is produced at Exhibit 119 in these proceedings and the agreement clearly shows that Hira]al agreed to sel1 the land belonged to defendants Nos. 1 and 2, as Karta of the family.
5,000 defendants Nos. 1 and 2 received the same from Hiralal or were benefited from the same through Hiralal. The agreement is produced at Exhibit 119 in these proceedings and the agreement clearly shows that Hira]al agreed to sel1 the land belonged to defendants Nos. 1 and 2, as Karta of the family. However there is no dispute that there existed no joint family as such on the date cf the agreement and hence the statement to the above effect made in the said agreement is patently erroneous. It therefore foI!ows -that defendants Nos. 1 and 2 who were minors at the time of the agreement would be under no personal obligation to the plaintiff to refund the said amount of Rs. 5,000 even if it is accepted that the provisions of section 65 of the Contract Act .,applied to these transactions. 7. Mr. Dabir, the learned Advocate appearing for the plaintiff contended that defendant No.3 was the son of Hiralal. Hiralal was liable to pay an amount of Rs. 5,000 to the plaintiff during his life time and his said liability must, be deemed to have devolved upon his estate which must be deemed to have been represented by defendant No.3 after his death. Mr. Dabir contended that the decree could be passed against defendant No.3 to the extent to which he had received the estate of Hiralal after his death. I find no reason why I should not agree with this reasoning. If Hiralal was under the liability to refund the amount of Rs. 5000 to the plaintiff for any reason, there is no reason to hold that the said liability would die with him and that it would not devolve upon his heirs. Admittedly defendant No.1 is 'the heir of Hiralal. I therefore find no reason why defendant No. I representing the estate of Hiralal should not be directed to pay the amount of Rs. 5,000 {- to the plaintiff from out of the estate of Hiralal received by him by inheritance provided of course he has received some estate in fact upon the death of Hiralal. However this question would arise only if it is held that the provisions of or analogous to section 65 of the Contract Act were held applicable to the facts of the case.
However this question would arise only if it is held that the provisions of or analogous to section 65 of the Contract Act were held applicable to the facts of the case. In other “words the question is as to whether the agreement entered into by Hiralal with the plaintiff could be said to have been ,discovered as void within the meaning of section 65 of the Indian Contract Act. In the alternative it will have to be seen whether independent of the provisions of section 65 of the Indian Contract Act, there existed some equitable right which could be claimed by the plaintiff ,on the analogy of the provisions of section 65 of the Indian Contract Act. 8. Mr. Dabir relied upon three Authorities with a view to contend that even assuming that this agreement in question was void .ab initio still in the context of the facts of the case it could 1I10tbe said that the agreement was not “discovered” to have been involved. In this connection he invited my attention to three Authorities mentioned above. The first Authority is in the case of (Thalwrain Harn'ath Kaur v. Thakur Indar Bahadur Singh).1 In that case the agreement that was sought to he enforced was the agreement to sell the right of reversioner. Their Lordship of the Judicial Committee found that the right of ,the reversioner is nothing but mere expectancy and as such not a transferable property at all. It was thus clear that the agreement to transfer such reversionary rights was void ab initio. In this context the Judicial Committee 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 section 2. By clause (c) every promise and every set of promises forming the consideration f0r each other is an agreement, and by clause (h) an .agreement enforceable by law is a contract. Section 65, therefore, deals with (a) agreements enforceable by law and (b) with agreements not so enforceable. By clause (g) an agreement not enforceable by law is said to be void.
Section 65, therefore, deals with (a) agreements enforceable by law and (b) with agreements not so enforceable. By clause (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. Though this aspect of the case has not been satisfactorily presented or developed in the pleadings and the proceedings before the lower Courts, their Lordships think there are materials on the record from which it may be fairly inferred in the peculiar circumstances of this case that there was a misapprehension as to the private rights of Indar Singh in the villages which he purported to sell by the instrument of the 2nd January, 1880, and that the true nature of those rights was not discovered by the plaintiff or Rachpal Singh earlier than the time at which his demand for possession was resisted, and that was well within the period of limitation. It was thus that the agreement was discovered to be void, and the discovery in their Lordships view was one within the words and the meaning of section 65 of the Contract Act. The plaintiff, therefore, though not entitled to recover possession of the villages, is entitled to recover compensation, and in assessing that compensation their Lordships consider it should include the sum of Rs. 25,000 found by both Courts to have been paid to lndar Singh, and also, in the circumstances of this case, interest, not at the rate or for the period claimed by the plaintiff, but at 6 per cent from the date of the institution of this suit.” 9. The next Authority relied upon by Mr. Dabir is (Govind Keshav L andal'ate and others v. Yeshwant Pandharinath Shete)2. In that case the Village Panchayat was the plaintiff. It was held therein that the village Panchayat was incompetent to form out the right to collect ground rent tax at weekly markets and the agreement to do so was ultra Vires.
The next Authority relied upon by Mr. Dabir is (Govind Keshav L andal'ate and others v. Yeshwant Pandharinath Shete)2. In that case the Village Panchayat was the plaintiff. It was held therein that the village Panchayat was incompetent to form out the right to collect ground rent tax at weekly markets and the agreement to do so was ultra Vires. All the same it was held that Village Panchayat was entitled to recover the money claimed by it in the Suit under the terms of section 65 of the Contract Act and for the purpose of coming to this conclusion the above mentioned Authority reported' in A.I.R. 1922 P. C. page 403, Was relied upon. This Court also followed its own previous judgment reported in AIR 1933 Bom. page 132 for coming to the said conclusion. 10. The third Authority relied upon by Mr. Dabir is the judgment of the Madras High Court, in Madura Municipality v. Raman Servoi and others3. In that case it was held that agreements void ab initio are covered by the provisions of section 65 of the Contract Act, because the words “discovered to be void” in the said section 65 include also cases where agreements were void ab initio, and for coming to this conclusion the above mentioned Authority reported in AIR 1922 P. C. page 403 was strongly relied upon. Mr. Dabir also strongly relied upon the judgment of the Kerala High Court in Ayissa v. Prabhakaran4. The facts of this case appear to be somewhat similar to the facts of the present case. In that case the agreement was entered into by the brother of the three minors for sale of the property to the plaintiff. At the time of the agreement both the father as well as mother of the minor girls were alive. It was therefore evident that under the provisions of section 6 read with section II of the Hindu Minority and Guardianship Act, brother had no power to enter into an agreement on behalf of his minor sisters and hence the agreement was void ab initio. The question was whether the plaintiff was entitled to refund the amount of Rs. 1,500 paid by him as earnest money.
The question was whether the plaintiff was entitled to refund the amount of Rs. 1,500 paid by him as earnest money. While dealing with this question it was held as follows :- “On the facts of the case, there is no difficulty in deciding the question as to whether the void character of the agreement was known to the parties on the date of the agreement or it was discovered subsequently. Even at the time when parties issued notices to each other each trying to hold the other liable for the default, they had, apparently not discovered the fact that defendant was not in a position to execute the sale deed because he was not competent to convey the interests of the other minors. This was natural because it was understood that under the Hindu Law, a de facto ,guardian can, under justifying circumstances, alienate the properties of the minor, unlike in the case of minors governed by the Mohammadan Law or such other general laws which defined the powers of the guardian. The decision in (Hunnomanpershad Pandey v. Mr. Babooce Mundraj Koonweree)5, was followed 0S0 far as Hindu minors were concerned for more than a century and on the basis of this decision an exception has been recognized in the case of Hindu minors. Possibly that is the reason why parties to Ext. A-I agreement took it that the defendant could transfer the interests of the minors. But in 1956 the Hindu Minority and Guardianship Act, 1956 had come into force. That Act restricted the powers of the guardian to alienate the properties of a Hindu minor governed by that Act. That restriction was that a valid sale could be effected only with permission of the Court and such permission could only be obtained by the natural guardian of the minor. Of course, a person who was appointed as a guardian by Will or a person who was declared to be so by a Court or appointed guardian by the Court could also exercise the powers of the guardian subject to certain restrictions and limitations. It is, of course, not (he case of either party that the defendant was declared as such guardian. Therefore, as it was, the defendant could not have alienated the properties of the minors and he could not have also obtained any certificate authorising any such transfer on behalf of the minors.
It is, of course, not (he case of either party that the defendant was declared as such guardian. Therefore, as it was, the defendant could not have alienated the properties of the minors and he could not have also obtained any certificate authorising any such transfer on behalf of the minors. It is natural that in the circumstances neither party was aware of this fact. They might have become aware of this when they came to Court or possibly sometime after the date of the agreement. If so, this would be a case where the parties would not have known that the act agreed to was impossible on the date of Ext. A-I, but could have discovered the fact later. That would be sufficient to attract section 65 of the Indian Contract Act, 1872 and if it is so attracted, then this is a case where plaintiffs will be entitled to call upon the defendant to pay back the amount received by him under Exhibit A-I and that is the claim made in the suit. Hence I find that the claim is well founded.” All the above mentioned Authorities take the view that even though the agreement is void ab initio still it cannot be said that void character of the agreement was necessarily known to the party of the second part paying the monies under the Contract at the time of the agreement itself. All these Authorities have taken a realistic view namely that in these circumstances it could be safely inferred that the parties paying monies under the Contract had no knowledge that the agreement was void at that time on account of the fact that party of the first part namely the recipient of the monies had no power to enter into the agreement on behalf of the minors. 11. To my mind this view would be justified on the ground that it is a realistic view. It is well known that ignorance of law is no excuse; but sti11 it is well settled by now that the courts of law recognise the fact that the parties to the contract are not seldom ignorant of the various private rights relating to or arising out of the contracts.
It is well known that ignorance of law is no excuse; but sti11 it is well settled by now that the courts of law recognise the fact that the parties to the contract are not seldom ignorant of the various private rights relating to or arising out of the contracts. To this extent ignorance of lawis considered to be understandably a reality of life and when the ignorance is realised and light is thrown upon the same through the legal decision the Courts are inclined to take the view that the agreement is “discovered” by the party concerned to be a void agreement only at that point of time or, in any event, after the date of the agreement. 12. Mr. Tilekar the learned Advocate appearing for'” the respondents, however, placed strong reliance upon the judgment of the Supreme Court in (Kuju Collieries Ltd. v. Jharkhand Mines Ltd. Ors).6 That was a case wherein the Supreme Court found after examining a1l the evidence of the case that when the agreement was entered into both the parties knew that it was not lawful and therefore, void. The Supreme Court in that case held that in those circumstances it could not be said that the agreement was one which was “discovered” to be void subsequently nor it was the case of the contract becoming void due to subsequent happenings. In those circumstances, it was held that the provisions of section 65 of the Indian Contract Act did not come into play at a11 and hence the plaintiffs were held not to be entitled to recover the amount paid by them to the defendants under the said void contract. A careful reading of the said Authority would also reveal that this was a case where the Supreme Court was required to consider whether the parties to the contract were in pari-delcto or not. Upon the facts obtaining in that case the Supreme Court arrived at the conclusion that the parties were in fact in pari delicto. As mentioned above, the Supreme Court found that 'both the parties were fully aware of the legal position and in spite of the said awareness of the illegal nature of the agreement monies were paid by the plaintiff to the defendants under the so ta11ed contract. To my mind the above case can be clearly distinquished from the present case with which I am dealing.
To my mind the above case can be clearly distinquished from the present case with which I am dealing. In the instant case nothing is brought on record to show that the plaintiff was in pari delicto with Hiralal. 13. Mr. Tilekar nextly argued that the partition effected was notified to the requisite Authorities and record of right entries show that there was already a partition between Hiralal and minor defendants 1 and 2. Mr. Tilekar contended that it was the duty of the plaintiff to take inspection of the said entries. He contended that if the plaintiff failed to take appropriate precautions he must be fastened with at least constructive notice of the factum of the partition. Mr. Tilekar is right to the extent that if this was a case where the constructive notice by the plaintiff was enough to non-suit him the fact that there did exist entries in the record of rights relating to the partition would amount to constructive notice to the plaintiff. But the position is that the doctrine of constructive notice cannot have application to provisions of section 65 of the Contract Act. By invoking the principle of constructive notice at the most it could be held that the plaintiff was negligent in the matter of rushing into the agreement without verifying the powers of Hiralal to enter into the agreement. But the said negligence on his part would not make him stand in the position of a person in pari delicto with Hiralal. If it. was proved that the plaintiff had actually noticed the fact that Hiralal had no power whatsoever to enter into an agreement on behalf of the minors perhaps the position would have been different. But nothing is brought on record in this case to fasten any such actual knowledge upon the plaintiff. In this view of the matter to my mind the argument of Mr. Tilekar to the effect that the plaintiff was negligent in not inspecting the revenue entries loses its force. 14. It is fairly conceded before me by Mr. Dabir, that the minors as such would not be liable for refund of the amount of Rs. 5000 received by Hiralal because there was nothing on record to show that the minors received the benefits of such amount of Rs. 5000.
14. It is fairly conceded before me by Mr. Dabir, that the minors as such would not be liable for refund of the amount of Rs. 5000 received by Hiralal because there was nothing on record to show that the minors received the benefits of such amount of Rs. 5000. However, he rightly contended that if Hiralal was himself alive he would have been liable to refund the amount of Rs. 5000 to the plaintiff and hence after his death, Hiralal's estate is equally bound for it. There is no dispute that defendant No.3 is the son of Hiralal and as such. represents the estate of Hiralal. Further it is quite possible that by testamentary succession even defendants No.1 and 2 had received some legacy from Hiralal. It is, therefore, clear that defendants No.1, 2 and 3, would be liable to pay to the plaintiff a sum of Rs. 5000 from out of the estate of Hiralal, if any, which they received in their hands. 15. The appeal is, therefore, allowed. The decrees passed by both the Courts below are set aside and a decree is passed in favour of the plaintiff for refund of Rs. 5000 paid under an agreement dated 12t.h June 1962. It is made clear that the defendants No. I to 3 will be liable to pay the said amount of Rs. 5000 only from the estate, if any, belonging to Hiralal which they received in their hand after his death. In the circumstances of the case, there will be no order as to costs, throughout. Appeal allowed.