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1985 DIGILAW 533 (KAR)

SHEENAPPA GOWDA v. SOMAKKA

1985-11-21

NESARGI

body1985
NESARGI, J. ( 1 ) THE defendants in O. S. No. 38 of 1972 on the file of the Munsiff Magistrate Sullia, Dakshina kannada District, have preferred this appeal challenging the Judgment and decree, dated 24 11-1975 passed by the Civil Judge, Puttur, in R. A. No. 111 of 1975. ( 2 ) THE respondent - plaintiff filed the suit for a decree directing the defendants to pay her amounts paid by her to defendants as per the sale deed (Ex. P. 1) Rs. 5056-00, interest thereon at 5 1/2% per annum from 12-8-1969 uptodate (. e. the date of the suit) amounting to Rs. 557. 16 ps. and costs of lawyer's notice by registered post Rs. 25/ -. She further prayed that on the failure of the defendants to pay her claim, a decree be passed directing the sale of suit Schedule 'b' properties for realisation of the amount decreed. The suit was filed on 25-8-1971. ( 3 ) THE suit 'a' Schedule Properties consist of 5 items of lands. ( 4 ) THE plaintiff contended that the defendants sold the suit schedule 'a' properties to her on 12-8-1969 by a registered sale deed Ex. P. 1, knowing fully that they were not in a position to hand over possession to her and by misrepresentation and exercising fraud on her. And that in view of that fact the contract under Ex, P. 1 bad become vitiated in law and therefore, she was entitled to the said amount. ( 5 ) THE defendants contended that the plaintiff as well as the defendants were aware of the fact that the lands were tenanted lands and even on this knowledge on the part of the plaintiff, she entered into the transaction and they never misrepresented to the paintiff or practised fraud on the plaintiff and therefore, the suit was to be dismissed. ( 6 ) BOTH the Courts below have concurrently held proved the following facts :plaintiff and defendants bad full knowledge as to which of the items were tenanted or not when they entered into the contract under Ex. P. 1. So far as Items 1 and 5 of Schedule 'a' of the plaint are concerned, the Prescribed Authority under Section 83 of the Karnataka Land Reforms Act, has declared that part of the transaction as contrary to the provisions viz. , under Section 39 of the karnataka Land Reforms Act. P. 1. So far as Items 1 and 5 of Schedule 'a' of the plaint are concerned, the Prescribed Authority under Section 83 of the Karnataka Land Reforms Act, has declared that part of the transaction as contrary to the provisions viz. , under Section 39 of the karnataka Land Reforms Act. ( 7 ) THE Trial Court after concluding that Ex. P. 1 was entered into by the plaintiff having full knowledge that Item Nos. 1 and 5 were tenanted lands, her suit was to be dismissed. ( 8 ) IN appeal the lower Appellate Court has, proceeded on the basis that the plaintiff was entitled to damages for breach of covenant or warranty inasmuch as the defendants were not able to hand over possession of the item Nos. 1 and 5 of the suit Schedule properties in pursuance of the contract. It has in the course of its judgment referred to Section 65 of the Indian Contract Act (hereinafter to be referred to as the 'act' ). ( 9 ) EX. P. 1 does not narrate that the 5 items of lands stated in the 'a' Schedule of the plaint are tenanted. That is one important aspect. The next aspect that it states is that in case the plaintiff, viz. . the purchaser, suffers any damage by virtue of having entered into the transaction of sale in respect of items 1 and 5 of the A Schedule properties, the defendants bound themselves to make good (he damages sustained by the plaintiff. And in case they failed to do so she could proceed against the 'b' Schedule properties and recover the damage sustained by her. I am clearly of the opinion, that the other recitals in Ex. P. 1 need not be narrated as the same would be unnecessary for the purpose of this suit. ( 10 ) IT is undisputed and evidenced by Ex. P. 2 that three persons claiming to be tenants of the items 1. I am clearly of the opinion, that the other recitals in Ex. P. 1 need not be narrated as the same would be unnecessary for the purpose of this suit. ( 10 ) IT is undisputed and evidenced by Ex. P. 2 that three persons claiming to be tenants of the items 1. 2 and 5 of Schedule 'a' properties had filed application under Section 83 of the Mysore land Reforms Act (hereinafter referred to as the 'land Reforms Act'), as it then was, before the assistant Commissioner, Puttur, South Kanara, bringing it to his notice that they were tenants on a portion of Survey No. 26/3a1 (Item No. 1 in Schedule 'a') and a portion of Survey No. 27/1a (Item No. 5 of Schedule 'a') on chalgeni basis under one Channappagouda father of the present defendants. The defendants bad sold these lands and other lands to the plaintiff on 12-8-1969 under document No. 259/69-70. This is Ex. P. 1 in the suit. The defendants had not given them the option to purchase as required by Section 39 of the Land Reforms Act and therefore, the transaction so far as these items are concerned, are contrary to the provisions of the Act. Ex. P. 2 further says that the Assistant Commissioner, held enquiry and recorded that the transaction of sale of suit items Nos. 1 and 5 to the plaintiff was in contravention of the provisions of the karnataka Land Reforms Act. He also declared that to that extent the transaction evidenced by the present document Ex, P. 1 was null and void. ( 11 ) IT was vehemently argued by the Learned Advocates for the appellants-defendants that the contract evidenced by Ex. P. 1 is void ab-initio in view of Section 39 of the Land Reforms Act and particularly Section 39 (5) of the said Act. This argument was further supported by a reasoning that, as the finding of fact is that, both the parties knew that these lands were tenanted lands and even with that knowledge they entered into the transaction Ex. P. 1 in so far as these two items are concerned, there was direct breach of Section 39 (5) of the Land Reforms Act and therefore the sale in so far as these two items are concerned was one forbidden by law or atleast entered into to defeat the provisions of law viz. P. 1 in so far as these two items are concerned, there was direct breach of Section 39 (5) of the Land Reforms Act and therefore the sale in so far as these two items are concerned was one forbidden by law or atleast entered into to defeat the provisions of law viz. , Section 39 of the Mysore Land Reforms Act, and therefore, it is a void transaction. ( 12 ) IT was argued that Section 55 of the Act would not have any application to the facts held proved. In my opinion, there can be no answer to this argument and in fact Sri M. Gopalakrishna shetty, Learned Counsel appearing for the respondent, did not direct to me this argument. He based bis argument on the provisions of Section 65 of the Act. ( 13 ) IT was argued on behalf of the appellants that the provisions of Section 65 of the Act would have no application to the facts of the present case in view of the fact that both the defendants and the plaintiff knew that these items of lands were tenanted lands and even then the plaintiff purchased these properties from the defendants and such a transaction would be beyond the reach of the provisions of law viz. , Section 39 of the Land Reforms Act. ( 14 ) SECTION 65 of the Contract Act, reads as follows :" when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore if, or to make compensation for it, to the person from whom he received it. " it is to be noted that the expressions used are "agreement is discovered to be void" or when a "contract becomes void. " Section 2 (g) of the Act defines 'agreement' as follows : " (g) An agreement pot enforceable by law is said to be void :" section 2 (h) defines what amounts to a contract. It reads as follows : " (h) An agreement enforceable by law is a contract :" section 10 of the Act reads as follows : "all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. It reads as follows : " (h) An agreement enforceable by law is a contract :" section 10 of the Act reads as follows : "all agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. " nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents. " section 10 occurs in Chapter II of the Act. Chapter II of the Act deals with contracts, voidable contracts and void agreements. Sections 24 to 30 occurring in Chapter II of the Act expressly lays down what agreements are void in law. Therefore, it is plain that the ingredients of Section 10 of the Act will be satisfied if on the face of the agreement entered into between the parties. Sections 24 to 30 do not apply. It should be at this stage noticed that the ingredients of Section 10 of the Act will be satisfied if it is found on the terms of the agreement that it is for lawful consideration and with a lawful object. What is lawful consideration or lawful object is enumerated in Section 23 of the Act as follows :- "the consideration or object of an agreement is lawful, unless- it is forbidden by law ; or is of such a nature that, if permitted, it would defeat the provisions of any law, or is fraudulent ; or involves or implies injury to the person or property of another ; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void. " i have already pointed out that Ex. P. 1 does not contain a narration that the suit schedule items 1 and 5 of Schedule 'a' were tenanted lands. When that is so it cannot be held that the terms of the agreement in Ex. P. 1 ex-facie showed that there was breach of any of the provisions of section 39 of the Land Reforms Act. P. 1 does not contain a narration that the suit schedule items 1 and 5 of Schedule 'a' were tenanted lands. When that is so it cannot be held that the terms of the agreement in Ex. P. 1 ex-facie showed that there was breach of any of the provisions of section 39 of the Land Reforms Act. When that is so, the agreement embodied in Ex. P. 1 becomes a contract under Section 10 of the Act. In that view of the matter Section 65 of the Act would become applicable only if this contract becomes void. A reading of the provisions of sections 2 (g), 2 (h), 10, 23 to 30 and the allied provisions in the Act, clearly shows that the contract is to always contain an agreement in it and it is only the agreement that is void. While on the other hand a contract cannot be void, but will become void. It is in this connection that section 83 of the Land Reforms Act, requires consideration. It reads as follows :- "83. INQUIRY REGARDING ILLEGAL TRANSACTIONS : the prescribed authority shall, after a summary inquiry, determine whether the transaction reported to it under Section 82 or coming to its notice in any other manner is in contravention or is unlawful or invalid under the provisions of this Act, (as they steed before or as they stand after the date of the commencement of the Amendment Act and make a declaration accordingly. Any transaction so declared to be in contravention of or is unlawful or invalid under any provisions of this Act as they stood before or as they stand after the date of commencement of the Amendment act, shall be null and void. The land in respect of which such transaction has taken place shall, as penalty, be forfeited to and vest in the State Government free from all encumbrances. No amount is payable therefor. " ( 15 ) IN the case on hand, the said three persons claiming to be tenants of these two suit items filed applications before the Assistant Commissioner and it was numbered as C. Dis. LRY. 181/70-71 -- Ex. No amount is payable therefor. " ( 15 ) IN the case on hand, the said three persons claiming to be tenants of these two suit items filed applications before the Assistant Commissioner and it was numbered as C. Dis. LRY. 181/70-71 -- Ex. P. 2 - and in exercise of the powers conferred to hold enquiry under Section 83 of the Land Refoms Act, passed an order dated 4-11-1970 holding that so far as the transaction relating to the suit items 1 and 5 of A Schedule is concerned, the transaction is contrary to the provisions of the Land Reforms Act inasmuch as Section 39 of the Land Reforms Act came in his way. He declared that part of the transaction as null and void. In fact a plain reading of section 39 of the Land Reforms Act, shows that it would automatically lead to making that transaction null and void in law and no declaration is necessary. Hence, it follows that it was on 4-11-1970 when the Assistant Commissioner passed Ex. P. 2 that the contract between plaintiff and defendants in regard to the sale of item Nos. 1 and 5 of Suit A Schedule by defendants to the plaintiff became void. It cannot be, in view of these facts and circumstances, held that the agreement was void in view of Section 39 of the Land Reforms Act. Section 39 of the Land reforms Act does not expressly declare such a transaction envisaged by it to be void. The transaction envisaged by Section 39 of the Land Reforms Act becomes void after an enquiry is held by the prescribed authority viz. , the Assistant Commissioner, under Section 83 of the Land reforms Act and a finding is recorded that the transaction offended the provisions of Section 39 of the Land Reforms Act. ( 16 ) IN view of the foregoing I have no hesitation in holding that so far as the suit items 1 and 5 are concerned the contract became void so as to attract the 2nd expression "that a contract becomes void" contained in Section 65 of the Act and thereby making Section 65 of the Act applicable to the facts of this case. Therefore, the defendants would be bound to restore the advantage received by them from the plaintiff or compensate for it. Therefore, the defendants would be bound to restore the advantage received by them from the plaintiff or compensate for it. In regard to this aspect the lower Appellate Court has fortunately stumbled into arriving at a correct solution by finding out what was the market value of items 1 and 5 on the date of the transaction. That is a finding of fact, which cannot be interfered with by this Court. When that is the market value of items 1 and 5 of Suit Schedule 'a', it is to be held that the defendants had received that advantage under ex. P. 1 and they are bound to restore it to the plaintiff. By Ex. P. 1 itself defendants have bound themselves to make good this loss (nastha) to the plaintiff by entitling the plaintiff to proceed against the suit Schedule 'b' properties. Hence, the decree as prayed for by the plaintiff in regard to this aspect also is to be passed. ( 17 ) IT is for the foregoing reason and not for the reasons recorded by the Lower Appellate Court that the Judgment and decree passed by the Lower Appellate Court is to be upheld. In the result, this appeal fails and it is dismissed with costs.