Specific Performance – Suit for – Maintainability – Plaint property was allotted to first defendant by Bangalore Development Authority (BDA) and a lease-cum-sale agreement was entered into between BDA and the first defendant on 04.04.1979 – On 17.11.1982, the first defendant entered into the agreement with the plaintiff agreeing to execute the sale deed of the site within three months from the date on which, the plaintiff obtained the sale deed from the BDA – Failure to execute the sale deed by first defendant – Plaintiff instituted suit seeking specific performance – Trial Court did not decree the suit for specific performance – On appeal, High Court held the suit to be maintainable and directed the defendants to execute the sale deed of plaint property in favour of plaintiff – Whether the agreement to sell dated 17.11.1982 was in the teeth of s.23 of the Contract Act and led to palpable defeat of the law in question, as contained in the Statutory Rules or prohibited by the same – Held: Case herein was governed by the Allotment of Site Rules, 1972 which were statutory Rules, and contemplated a definite scheme – Allotment to first defendant was made on 04.04.1979 and he was obliged to construct a residential building within two years under Rule 17(6) – But, at the time, agreement dated 17.11.1982 was entered into, the first defendant was already in breach – Under the agreement, the parties expressly provided that the plaintiff was to be put in possession of the site on 17.11.1982 – Clear case where enforcing the agreement, as it is, would necessarily result in the first defendant not acting in accordance with lease-cum-sale agreement, which, she entered into with the BDA and importantly, against the mandate of the law, as contained in the Rules – Agreement between the parties contemplated giving a short shrift to the mandate of the law – This is clear from the fact that under the agreement, the first defendant was obliged to sell the site as it is – Construction of the building became a practical impossibility – The price, agreed upon, was qua the site alone – The consideration and the other terms of the agreement ruled out the possibility of a residential building being constructed by the first defendant, who as the allottee, was, under the law, obliged to construct the building – The agreement to sell involved clearly terms which were impliedly prohibited by law in that the first defendant was thereunder to deliver title to the site and prevented from acting upon the clear obligation under law – The contract / agreement was unenforceable for reason that it clearly defeated the objects of the Rules which were statutory in nature – The contract / agreement was patently illegal – High Court erred in holding the suit for specific performance to be maintainable – City of Bangalore Improvement Allotment of Site Rules, 1972.
Contract Act, 1872 – s.23 – Constitution of India – Art.13 – What is contemplated u/s.23 of the Contract Act is law, in all its forms, being immunised from encroachment and infringement by a contract, being enforced – Not only would a Statutory Rule be law within the meaning of Art.13 of the Constitution but it would also be law u/s.23 of the Contract Act.
Contract – A contract may expressly or impliedly, be prohibited by provisions of a law – The intentions of the parties do not salvage such a contract.
Allowing the appeals, the Court
HELD: 1. A contract may expressly or impliedly, be prohibited by provisions of a law. The intentions of the parties do not salvage such a contract. In the instant case, the Bangalore Rules of Allotment, 1972 contemplate a definite scheme. Land, which is acquired by the Public Authority, is meant to be utilised for the particular purpose. The object of the law is to invite applications from eligible persons, who are to be selected by a Committee and the sites are allotted to those eligible persons, so that the chosen ones are enabled to put up structures, which are meant to be residential houses. It is implicit in the Rules, and what is more, in the lease-cum-sale agreement, that the allottee, who is treated as a lessee under Rule 7, will remain in possession and, what is more, proceed to fulfil his obligation under the lease-cum-sale agreement and the Rules. The obligations of the allottee/lessee are unambiguous. He has held himself out to be in dire need of a plot of land for the purpose of constructing a residential building. He has to disclose his annual income and any other means indicating his capacity, not only to purchase the site applied for but also to construct the house. He has to respond to the query as to whether any member of the family, of which he is a member, owns or has been allotted a site or a house by the Board or any other Authority, within the area under jurisdiction of the Board. The applicant must, furthermore, disclose whether he already owns a house or house site in the city or outside the city. Whether the applicant’s wife, husband or minor child owns a house or house site, is another matter, he must disclose. Incorrect information in any of these matters, would entitle the Board to resume the site. Rule 11 specifically announces among the principles as relevant for selecting an applicant for allotment, the income of the applicant to build the house on the site for his residence. No doubt, it is not applicable to certain classes, which include the other backward classes. Rule 11(3) declares further that the number of years, the applicant has been waiting for allotment of a site, inter alia, as a relevant principle. [Para 74][1048-G-H; 1049-A-E]
2. Under the agreement, the parties contemplated and have expressly provided that the plaintiff was to be put in possession of the site on the date of the agreement, i.e., on 17.11.1982. Did the parties contemplate the construction of the building residential in nature, for the purpose of which, the site was allotted to the first defendant? Is it not a clear case where enforcing the agreement, as it is, would necessarily result in the first defendant not acting in accordance with lease-cum-sale agreement, which, she entered into with the BDA and, what is even more crucially important, against the mandate of the law, as contained in the Rules, which contemplated that the allotment was made for the construction of a residential building by the allottee and the construction was to be completed within the period of two years or an extended period? The agreement between the parties contemplated giving a short shrift to the mandate of the law. This is clear from the fact that under the agreement, the first defendant was obliged to sell the site as it is. Construction of the building became a practical impossibility. The price, which was agreed upon, was qua the site alone. The consideration and the other terms of the agreement, in other words, ruled out the possibility of a residential building being constructed by the first defendant, who as the allottee, was, under the law, obliged to construct the building. [Para 76][1050-D-G]
3. The contention of the plaintiff that there was nothing, which could have prevented putting up a building, is rejected. The argument of plaintiff involves rewriting of the contract. This is different from a situation where an allottee, without being trammelled by an agreement, is unable to put up a building even for the whole of ten years and action is not taken under Rule 17(6) and yet conveyance is made in his favour under Rule 17(7). The direct impact of the agreement is that it compelled the party to abstain from performing its obligation in law apart from breaching the agreement with BDA. In other words, taking the agreement as it is, it necessarily would be in the teeth of the obligation in law of the first respondent to put up the construction. The agreement to sell involved clearly terms which are impliedly prohibited by law in that the first defendant was thereunder to deliver title to the site and prevented from acting upon the clear obligation under law. This is a clear case at any rate wherein enforcing the agreement unambiguously results in defeating the dictate of the law. The ‘sublime’ object of the law, the very soul of it stood sacrificed at the altar of the bargain which appears to be a real estate transaction. It would, in other words, in allowing the agreement to fructify, even at the end of ten-year period of nonalienation, be a case of an agreement, which completely defeats the law for the reasons already mentioned. [Para 77][1051-C-F]
4. The illegality goes to the root of the matter. It is quite clear that the plaintiff must rely upon the illegal transaction and indeed relied upon the same in filing the suit for specific performance. The illegality is not trivial or venial. The illegality cannot be skirted nor got around. The plaintiff is confronted with it and he must face its consequences. The matter is clear. The object of the law is set out in unambiguous term. If every allottee chosen after a process of selection under the rules with reference to certain objective criteria were to enter into bargains of this nature, it will undoubtedly make the law a hanging stock. [Para 79][1052-A-C]
Vishwa Nath Sharma v. Shyam Shanker Goela and
another (2007) 10 SCC 595 : [2007] 3 SCR 268 and Ferrodous Estates (Pvt.) Limited v. Gopiratnam (Dead) and others AIR 2020 SC 5041 – relied on.
Kedar Nath Motani and others v. Prahlad Rai and others AIR 1960 SC 213 : [1960] SCR 861; Narayanamma
and another v. Govindappa and others (2019) 19 SCC 42; Sita Ram v. Radhabai and others AIR 1968 SC 534 : [1968] SCR 1 805; Balwant Vithal Kadam v. Sunil Baburaoi Kadam (2018) 2 SCC 82 : [2017] 12 SCR 44; Punjab & Sind Bank v. Punjab Breeders Ltd. and another (2016) 13 SCC 283 : [2016] 2 SCR 876; Suraj Lamp & Industries (P) Ltd. (2) Through Director v. State of Haryana and another (2012) 1 SCC 656 : [2011] 11 SCR 848; Jambu Rao Satappa Kocheri v. Neminath Appayya Hanamannayar 6 AIR 1968 SC 1358 : [1968] SCR 706; Bhagat Ram v. Kishan and others (1985) 3 SCC 128; Union of India v. Col. L.S.N. Murthy (2012)
1 SCC 718 : [2011] 13 SCR 295; Gherulal Parakh v. Mahadeodas Maiya and others AIR 1959 SC 781 :
[1959] Suppl. SCR 406; Ramzan v. Hussaini (1990) 1 SCC 104 : [1989] 2 Suppl. SCR 287; Ahmadsahab
Abdul Mulla (2) (dead) v. Bibijan and others (2009) 5 SCC 462 : [2009] 5 SCR 476; I.S. Sikandar 112 (Dead) by Lrs. v. K. Subramani and others (2013) 15 SCC 27 : [2013] 17 SCR 24 and Mohinder Kaur v. Sant Paul Singh (2019) 9 SCC 358 – referred to.
Yogambika v. Narsingh ILR 1992 KAR 717; Subbireddy v. K.N. Srinivasa Murthy AIR 2006 Karnataka 4; Syed Zaheer and others v. C.V. Siddveerappa ILR 2010 Karnataka 765; Manjeshwara Krishnaya v. Vasudeva Mallya and Four Others. AIR 1918 Madras 578;
Nallakumara Goundan v. Pappayi Ammal and Another, AIR 1945 Mad 219; T. Dase Gowda v. D. Srinivasaiah (1990) SCC Online Karnataka 613; K. Chandrashekar Hegde v. Bangalore City Corporation and N.B. Menon v. Bangalore Development Authority ILR 1988 KAR
356 – referred to.
Motilal v. Nanhelal AIR 1930 PC 287 – referred to.
Holman v. Johnson [1775 1 COWP 341] – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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