Mohammed v. Rukkiya — 1994 DIGILAW 341 (KER)

Judgment :- The defendant is the appellant. The suit filed by the respondent was for recovery of possession of the plaint schedule property. According to the plaintiff, the property was held by the defendant under an entrustment by the plaintiff. The plaintiff claimed title to the property and in para.4 of the plaint specifically pleaded that while she was in possession, the defendant had been entrusted with the property for the purpose of cultivation in Makaram 1144 M.E. (January - February 1969) with the liability to pay 40 paras of paddy to the plaintiff on an undertaking that he will surrender the property on demand. Notwithstanding the expiry of the period, the defendant continued in possession. It was pleaded in para. 7 of the plaint that the defendant had paid the profits due for the years inclusive of 1147 M.E. (1972) and had thereafter failed to pay the same. The plaintiff claimed recovery of possession with past profits for two years prior to the suit. In para.8 of the plaint it was pleaded that since the entrustment in favour of the defendant was in January-February 1969, the defendant was not entitled to any protection on the basis that he is a tenant under the Kerala Land Reforms Act. The plaint did not indicate if and when the entrustment was terminated and whether any notice was issued in that behalf. The defendant resisted the suit by pleading that the transaction really amounted to an assignment and in fact was not a lease. The defendant put the plaintiff to proof of her title and put forward a case that it was really a case of an assignment of the tenancy right of the plaintiff in favour of the defendant. The liability to pay profits and to surrender possession were denied. It was claimed that the defendant had tenancy right over the property and he had applied to the concerned Land Tribunal claiming an assignment of the right, title and interest of the landlord. He sought a reference of the question as to whether he is a tenant entitled to fixity of tenure or not under the Kerala Land Reforms Act to the Land Tribunal in terms of S.125(3) of the Kerala Land Reforms Act. In short, the defendant denied any liability to be evicted. 2. He sought a reference of the question as to whether he is a tenant entitled to fixity of tenure or not under the Kerala Land Reforms Act to the Land Tribunal in terms of S.125(3) of the Kerala Land Reforms Act. In short, the defendant denied any liability to be evicted. 2. The trial court refused to refer the question of tenancy to the Land Tribunal under S.125(3) of the Kerala Land Reforms Act. The trial court held that the defendant was a tenant and satisfied the definition of a tenant contained in S.2(57) of the Kerala Land Reforms Act. But the trial court held that since the tenancy originated in the year 1969, the same was hit by S.74 of the Kerala Land Reforms Act and hence the defendant was not entitled to fixity of tenure under that Act. The trial court further found that the plaintiff had failed to prove her title to the plaint schedule property, that the oral assignment set up by the defendant was not true, that the suit was one on an entrustment and even though no notice under S.106 of the Transfer of Property Act was issued terminating the tenancy since the defendant had no case that he was holding over on tenancy, the absence of a termination of tenancy would not matter. The trial court ultimately dismissed the suit on its finding that the plaintiff has failed to prove her title. On appeal by the plaintiff, the lower appellate court held that the finding of the trial court that the defendant had no fixity of tenure under the Kerala Land Reforms Act was correct though it erroneously stated that the said finding had become final 'since the defendant had not filed any appeal against that finding. Since the suit was dismissed there was no need for the defendant to file any appeal. The lower appellate court held that the trial court was in error in holding that the plaintiff has not proved her title to the property. In the view of the lower appellate court since there was no fixity of tenure available to the defendant under the Kerala Land Reforms Act the plaintiff was entitled to recover possession on the strength of title. In that view the lower appellate court reversed the decree of the trial court and decreed the suit. In the view of the lower appellate court since there was no fixity of tenure available to the defendant under the Kerala Land Reforms Act the plaintiff was entitled to recover possession on the strength of title. In that view the lower appellate court reversed the decree of the trial court and decreed the suit. The lower appellate court did not consider the question whether the defendant had not been let in by the plaintiff as a tenant and whether the tenancy did not require to be terminated before the plaintiff could claim recovery of possession. It also did not consider the other aspects that arose in its view that the prayer for recovery should not be disallowed on'flimsy technical grounds'. It is this decree mat is challenged before me by the defendant. 3. The lower appellate court was obviously in error when it refused to reconsider the findings entered by the trial court against the defendant on the question of fixity of tenure and on the question of the oral assignment. Since the suit was dismissed wholly in favour of the defendant the defendant was not obliged to file any appeal against the findings against him in the judgment of (he trial court and was entitled to challenge them with a view to support the decree in his favour. But in my view nothing much turns on this aspect since the contention that the defendant is entitled to fixity of tenure is clearly untenable in the light of S.74 of the Kerala Land Reforms Act and on the materials available it cannot be held that there was an oral assignment of the leasehold in favour of the defendant by the plaintiff, even assuming that such an oral assignment can be recognised as valid. 4. Two more important aspects arises for decision. Though the plaint is not worded in such a way as to suggest that it is a suit for recovery on the strength of title, the plaintiff has valued the suit on the basis that it is one for recovery of possession on the strength of title. A reading of prayer A in the plaint would suggest that the recovery is claimed on the basis of the letting. A reading of prayer A in the plaint would suggest that the recovery is claimed on the basis of the letting. In view of these prayers the question whether the plaintiff is entitled to recover possession of the property without terminating the tenancy in favour of the defendant by issuance of a notice under S.106 of the Transfer of Property Act would arise for adjudication. Alternatively, if the lease in favour of the defendant is treated as wholly invalid in view of S.74 of the Kerala Land Reforms Act and hence no question of any termination of that tenancy would arise, then the further question whether the plaintiff having been herself a party to the creation of an illegal transaction could come to court for recovery of possession in the light of the maxim 'ex dolo malo non oritur actio'. Or, in other words, whether the principle stated by Lord Mansfield CJ. in Holman v. Johnson (1775-1802 Al1.E.R. reprints 98) that "no court will lend its aid to a man who founds his cause of action on 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 that he has no right to be assisted" would apply to the facts of this case. This will depend upon the scope of S.74 of the Kerala Land Reforms Act and the nature of the cause of action set up. If on an interpretation of S.74 of the Act it could be postulated that the transaction entered into between the parties is void then the plaintiff may not have an obligation to terminate the alleged tenancy in favour of the defendant by the issuance of a notice under S.106 of the Transfer of Property Act. But this in turn will usher in a question whether having put the defendant in possession by way of a transaction in the teeth of S.74 of the Kerala Land Reforms Act the plaintiff will be assisted by the court to get back the property from the other party to the illegality. 5. Section 74 of the Kerala Land Reforms Act reads thus: "74. Prohibition of future tenancies: - (1) After the commencement of this Act, no tenancy shall be created in respect of any land. 5. Section 74 of the Kerala Land Reforms Act reads thus: "74. Prohibition of future tenancies: - (1) After the commencement of this Act, no tenancy shall be created in respect of any land. (2) Any tenancy created in contravention of the provisions of sub-section (1) shall be invalid". It is interesting to note that prior to the amendment of this section by S .56 of the Kerala Land Reforms (Amendment) Act, Act 35 of 1969 mere was a proviso to sub-section 1 of S.74 of the Act enabling certain landlords who could be said to be suffering from some sort of disability from the rigour of this section with a further provision that the tenant under a transaction created by those persons would not be entitled to any right conferred on a tenant by Chapter II of the Kerala Land Reforms Act. In other words, certain persons labouring under some disability specified in the proviso could grant a lease without it becoming invalid but without the said transaction conferring fixity of tenure on the tenants under such tenancies. Obviously the policy of the law that mere shall be no tenancy created in respect of any land after 1-4-1964 has been clearly manifested by the Legislature by omitting the proviso which saved certain tenancies from the rigour of the rule. The scope of this section fell to be considered by His Lordship Mr. Subramonian Poti, Acting Chief Justice in the decision in C.M. A.No.199 of 1980 short noted in Kannan v. Kunhabdulla (1981 KLT SN. 95 Case No. 169). His Lordship held that the provision in S.74 is a provision reflecting a wholesome policy, the policy of terminating feudal relationship in the State in regard to lands falling within the scope of the Kerala Land Reforms Act. It is the relationship of landlord and tenant in regard to such land that is sought to be put an end to and it is for the promotion of such a policy that while conferring rights on the tenants in respect of tenancies subsisting on the date of commencement of the Act simultaneously the Act prohibits further creation of tenancies. Therefore the prohibition in the section is absolute and operates to nullify and leases that may be purported to be created". The scope of S.74 came up for consideration before His Lordship Mr. Pareed Pillay, J. in S.A.864 of 1982. Therefore the prohibition in the section is absolute and operates to nullify and leases that may be purported to be created". The scope of S.74 came up for consideration before His Lordship Mr. Pareed Pillay, J. in S.A.864 of 1982. Therein the claim by the defendant was that even though the lease in his favour was hit by S.74 of the Act, he was entitled to value of improvements effected on the strength of that lease. His Lordship held that S.74 of the Act prohibits leases after the commencement of the Act. S.74(2) suggests that any tenancy created in contravention of sub-section 1 shall be invalid. After referring to S.23 of the Indian Contract Act, his Lordship held that the lease in that case was one which was clearly forbidden by the Land Reforms Act and hence the court could not accept it. His Lordship proceeded to observe that acceptance of such a lease would certainly amount to the court being a party to an illegal act. His Lordship referred to the principle of public policy ex dolo malo non oritur actio and held that as the very case of the defendant in that case stemped from a lease which was statutorily interdicted, the lessee could not legally claim any rights flowing from that transaction. These two decisions do indicate that no rights could be rested upon on a transaction of lease purporting to be created by the parties in violation of S.74. 6. Section 74(2) of the Act says that any transaction in contravention of S.74(1) of the Act prohibiting the creation of future tenancies shall be invalid. The word 'invalid' according to Black's Law Dictionary indicates that'the lease would be' inadequate to its purpose; not of binding force or legal efficacy; lacking in authority or obligation'. The Dictionary meaning of the word'invalid' as given in Chambers 20th Century Dictionary is Void, null having no effect, without validity, efficacy weight or cogency'. In Bouvier's Law Dictionary the meaning given is 'of no binding force'. In words and phrases permanent edition the different shades of meaning of the word 'invalid' are indicated thus: "The words "void" and "invalid", when used in regard to contracts not immoral or against public policy, usually mean voidable at the option of one of the parties or some one legally interested (herein. Doney v. Laughlin, 94 N.E. 1027,1028, 50 Ind.App.38. In words and phrases permanent edition the different shades of meaning of the word 'invalid' are indicated thus: "The words "void" and "invalid", when used in regard to contracts not immoral or against public policy, usually mean voidable at the option of one of the parties or some one legally interested (herein. Doney v. Laughlin, 94 N.E. 1027,1028, 50 Ind.App.38. The general rule is that the word "invalid" will ordinarily be interpreted to mean "irregular" or "voidable", where the failure to comply with the formal legal requirements does not involve moal turpitude or contravene the criminal law. Sturm v. Sturm, 163 A. 5, 8,111 N.J.E1.579. The term "invalid", when used in a statute providing dial, if any foreign corporation commences to do business in the suite without first filing certain statements and certificates, all acts and contracts made by it during the time it neglects to make such filing shall be void and invalid, is used interchangeably with "void", and adds no force to it, but in this instance will be construed as voidable, merely, rather than absolutely void. Mutual Ben. Life Ins. Co. v. Winne, 49 P. 446, 448, 450, 20 Mont.20". 7. Considered in the light of the avowed object of abolition of landlordism in this State, it cannot be held in the light of the aspects referred to above that the word 'invalid' occurring in S.74(2) of the Act would only mean that the transaction would be one that is binding between the parties with the only qualification that the tenant under such a transaction would not get the benefits of the Kerala Land Reforms Act. If that be so it cannot be said that any right flows from the transaction between the parties in this case entered into in the year 1969. In that case the tenant cannot raise a claim that he was entitled to have 1>is tenancy terminated by the issuance of a notice under S.106 of the Transfer of Property Act before the plaintiff could recover the property from him. 8. The next question for consideration is whether the suit on title filed by the plaintiff is in any way hit by the rule in Holman v. Johnson. 8. The next question for consideration is whether the suit on title filed by the plaintiff is in any way hit by the rule in Holman v. Johnson. There is clearly a line of authority of the English Courts as noticed by Vaughan Williams LJ in Gordon v. Metropolitan Police Chief Commissioner ((1908-1910) A11.E.R. Reprints page 192) quoting Mallish in Taylor v. Bowers (1876(1) Q.B.D. 291) that 'if money is paid or goods delivered for an illegal purpose the person who had so paid the money or delivered the goods may recover them back before the illegal purpose is earned out. But if he waits till the illegal purpose is carried out or if he seeks to enforce the illegal transaction in neither case can he maintain an action and the law will not allow that to be done'. Vaughan Williams LJ proceeded to observe in the case that: "taking all the authorities, which I do not think it necessary to quote at length into consideration, I am of opinion that it is clear that the principle that the court will not assist a plaintiff to recover money which had been obtained in an illegal transaction applies to actions for recovery of property as well as actions on contracts tainted with illegality. I am also of opinion that the principle would be applied in cases where the defendant is not a party to the original illegality. An action to recover property will not, in my opinion, be defeated by the application of the principle embodied in the maxim ex turpi causa non oritur actio, unless it is an action to recover some specific thing such as could be recovered in an action of trover or detinue. Usually the subject of the action must.have been directly acquired from the medium of a transaction which was fraudulent or illegal. It is not sufficient to induce the court to refuse its assistance to a plaintiff that he has acquired the property under a contract which is void in law. The properly must have been acquired in an illegal transaction. The fact that the property was acquired by a contract void in law may, as between parties to the transaction under which the property is alleged to have passed to the plaintiff afford a good defence but it will not be a ground upon which the court will refuse its assistance". The fact that the property was acquired by a contract void in law may, as between parties to the transaction under which the property is alleged to have passed to the plaintiff afford a good defence but it will not be a ground upon which the court will refuse its assistance". In Eure-Diam Ltd. v. Eathurst (1988(2) All.E.R.23) Kerr. L.J. summarised the principles thus: "(1) The ex turpi causa defence ultimately rests on a principle of public policy that the courts will not assist a plaintiff who has been guilty of illegal (or immoral) conduct of which the courts should take notice. It applies if, in all the circumstances, it would be an affront to the public conscience to grant the plaintiff the relief which he seeks because the court would thereby appear to assist or encourage the plaintiff in his illegal conduct or to encourage others in similar Acts: The problem is not only to apply this principle, but also to respect its limits, in relation to the facts of particular cases in the light of the authorities . (2) The authorities show that in a number of situations the ex turpi causa defence will prima facie succeed. The main ones are as follows: (i) Where the plaintiff seeks to, or is forced to, found his claim on an illegal contract or to plead its illegality in order to support his claim: (ii) Where the grant of relief to the plaintiff would enable him to benefit from his criminal conduct: (iii) Where, even though neither (i) nor (ii) is applicable to the plaintiffs claim, the situation is nevertheless residually covered by the general principle summarised in (i) above. (3) However, the ex turpi causa defence must be approach (ed?) pragmatically and with caution, depending on the circumstances. This applies in particular to cases which at first sight appear to fall within para.(2)(i) or (ii) above. Thus: (i) situations covered by para.(2)(i) above must be distinguished from others where the plaintiffs claim is not founded on any illegal act, but where some reprehensible conduct on his part is disclosed in the course of the proceedings, whether the plaintiff himself or otherwise; In such cases the ex turpi causa defence will not succeed. Thus: (i) situations covered by para.(2)(i) above must be distinguished from others where the plaintiffs claim is not founded on any illegal act, but where some reprehensible conduct on his part is disclosed in the course of the proceedings, whether the plaintiff himself or otherwise; In such cases the ex turpi causa defence will not succeed. Nor will it succeed where the defendant's conduct in participating in an illegal contraction which the plaintiff sues is so reprehensible, in comparison with that of the plaintiff, that it would be wrong to allow the defendant to rely on it. But where both parties are equally privy to the illegality the plaintiff s claim will fail, whether raised in contract or tort, for potior est condicio defendant is: (ii) In situations covered by para.(2)(i) and (ii) above the ex turpi causa defence will also fail if the plaintiffs claim is for the delivery up of his goods, or for damages for their wrongful conversion, and if he is able to assert a proprietary or possessory title to them even if this is derived from an illegal contract". Viewed in this light though the plaintiff is a party to an illegal transaction in this case she is not precluded from seeking recovery of the property since she is able to assert a proprietary title to the property and need not rely on the illegal transaction as a part of the cause of action. 9. The Supreme Court in KedarNath v.PrahladRai ( A.I.R 1960 SC 213) has held that in applying the maxim ex turpi causa etc., the correct position in 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. 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 plaintiffs conduct, and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by mis-stating the facts. A strict view, of course, must be taken of the plaintiffs conduct, and he should not be allowed to 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. 10. Summing up the position, the Supreme Court has held in Sitaram v. Radha Bai (A.I.R 1968 SC 534) thus: "The principle that the Courts will refuse to enforce an illegal agreement at the instance of a person who is himself a party to an illegality or fraud is expressed in the maxim "in pari delicto potior est conditio defendant is". But there are exceptional cases in which a man will be relieved of (lie consequences of an illegal contract into which he has entered - cases to which the maxim does not apply. They fall into three classes: (a) where the illegal purpose has not yet been substantially carried into effect before it is sought to recover money paid or goods delivered in furtherance of it; (b) where the plaintiff is not in pari delicto with the defendant; (c) where the plaintiff does not have to rely on the illegality to make out his claim". A Full Bench of this court in the decision reported in Appu Menon v. Narayana Ayyar (1961 KLT 620) has also discussed this principle. 11. In Chitty on Contracts 26th Edition para. 1135 it is stated: "Illegality may affect a contract in a number of ways. But it is traditional to distinguish between illegality as to formation and (2) illegalities as to performance. Broadly speaking the first refers to situation where the contract itself is illegal at the time it is formed, whereas the latter involves a contract which on its face is legal but which is performed in a manner which is illegal. In this later situation it is possible for either both or only one of the parties to intend illegal performance. In this later situation it is possible for either both or only one of the parties to intend illegal performance. Where a contract is illegal as formed, or it is indicated mat it should be performed in a legally prohibited manner, courts will not enforce the contract or provide for other remedies arising out of contract. The benefit of the public and not the advantage of the defendant being the principle upon which a contract may be impeached on account of such illegality, objection may be taken by either of the parties to the contract". 12. Viewed in the light of the principles settled, it is clear that if the plaintiff had sued for recovery merely on the basis of the letting, a transaction hit by S.74 of the Kerala Land Reforms Act, the court would not have assisted her in obtaining any relief. But the plaintiff in the present case has sued on the strength of her title. In founding the cause of action on title the plaintiff is not relying on any illegal act or any transaction prohibited by law. The property belongs to the plaintiff and the possession of the same has found its way to the defendant and the illegal transaction is not part of the cause of action of the plaintiff even though it could be said that the plaintiff lost possession on the basis of the illegal transaction. As observed by Buckley Ljin Garden (1908-10 AER Reprints 192) "It is certainly the law that the court will refuse to enforce an illegal contract or obligation arising out of an illegal contract, and I agree that the doctrine is not confined to the case of contract. A plaintiff who cannot establish his cause of action without relying upon an illegal transaction must fail and nonetheless is this true if the defendant does not rely upon the illegality. If the court learns of the illegality it will refuse to lend its aid". If the transaction of lease entered into by the plaintiff with the defendant is part of the cause of action of the plaintiff suing on title then certainly the courts will refuse to assist the plaintiff to get back that property. If the court learns of the illegality it will refuse to lend its aid". If the transaction of lease entered into by the plaintiff with the defendant is part of the cause of action of the plaintiff suing on title then certainly the courts will refuse to assist the plaintiff to get back that property. But to succeed on title the plaintiff need not rely upon the illegal transaction entered into by her with the defendant and it is the defendant who has to rely on that transaction to deny the claim for recovery by the plaintiff. Under these circumstances the principle enunciated by Lord Mansfield CJ. in Holman v. Johnson could not be applied to deprive the plaintiff of a decree if she establishes her title to the suit property and the defendant fails to establish any ground which would stand in the way of her getting recovery of possession. 13. The plaintiff has also claimed recovery of arrears of profits at a rate stipulated in the terms of the entrustment to the defendant from the year 1979 onwards till the date of suit and thereafter. Obviously the claim for recovery of rent is based on the illegal transaction of lease entered into by the plaintiff with the defendant. For recovering the arrears of rent the plaintiff has to found her cause of action on the illegal transaction. It is therefore clear that the court would not assist the plaintiff to recover the rent claimed by her on the strength of the entrustment hit by S.74 of the Kerala Land Reforms Act. That part of the claim of the plaintiff could not therefore succeed. 14. As regards claim for future profits: the plaintiff in normal circumstances having succeeded in her claim for recovery of possession on the strength of title would normally be entitled to profits from the date of suit till the date of delivery of possession in terms of 0.20 R.12 of the Code of Civil Procedure. Is the claim of the plaintiff for future profits in this case founded on any illegal transaction? The possession of the defendant was on the basis of an 'invalid lease' created by the plaintiff. To that extent the plaintiff was also in pari delicto with the defendant and I have already held that the plaintiff cannot found a cause of action on the illegal transaction. The possession of the defendant was on the basis of an 'invalid lease' created by the plaintiff. To that extent the plaintiff was also in pari delicto with the defendant and I have already held that the plaintiff cannot found a cause of action on the illegal transaction. But since the plaintiff is found entitled to recover possession of the property on the strength of her title the question is whether he will be entitled to future profits notwithstanding the fact that the defendant went into possession under an illegal transaction to which the plaintiff was also a party. The right to future profits in this case is an incident of the right to recover on the strength of title. Since in filing the suit on title the plaintiff is not obliged to rely on any part of the illegal transaction entered into by her, it cannot be said that the right to future profits would also be affected by the illegality of the lease created by her. Therefore the claim for future profits cannot be rejected on that ground. But the award of future profits is discretionary and in view of the fact that the plaintiff had lend herself to the entering into of an illegal transaction with the defendant and had put him in possession pursuant thereto, I am of the view that a decree for future profits in her favour should be granted in this case only from the date of the decree. The trial court dismissed the suit by its judgment dt. 30-1-1982. The said decree was reversed by the appellate court on 30-10-1986 on which date the plaintiff was granted a decree for recovery of possession on the strength of title. Taking note of the aspects pointed out above I deny the plaintiff a decree for future profits prior to 30-10-1986 and grant her a decree for future profits as claimed in the plaint from that date till recovery of possession or the expiry of three years in terms of O. 20 R.12 of the Code of Civil Procedure. Taking note of the aspects pointed out above I deny the plaintiff a decree for future profits prior to 30-10-1986 and grant her a decree for future profits as claimed in the plaint from that date till recovery of possession or the expiry of three years in terms of O. 20 R.12 of the Code of Civil Procedure. In the result, I allow the Second Appeal in part and modify the decree passed by the lower appellate court and grant the plaintiff a decree for recovery of possession of the plaint schedule property with future profits at the rate of 40 paras of paddy per year from 30-10-1986 till date of recovery of three years from this date whichever occurs earlier. The claim for arrears of rent and the claim for profits from the date of suit till date of decree of the lower appellate court is rejected. In the circumstances of the case I direct the parties to suffer their costs throughout.