Karnataka Land Reforms Act, 1961 – ss.61, 48-A – On 13.09.83, the suit property was granted under the provisions of the Act in favor of the predecessor-in-title of the appellantsdefendants, with non-alienation clause of 15 years – On 23.04.90, he mortgaged the suit land in favour of the plaintiff-respondents(s) for Rs.20,000/- and agreed to repay the loan within a year – However, on 15.05.90, he executed an agreement to sell in favour of the plaintiff reciting that he was in need of money and had agreed to sell the suit property for Rs.46,000/- – Suit for specific performance of the contract filed inter alia contending that the defendants did not come forward to execute the sale deed in respect of the agreement to sell –Trial court held that the suit was not maintainable as the agreement was contrary to the statutory bar of 15 years on alienation of the suit property and hence, void in law – First appellate court allowed the appeal of the plaintiff – Upheld by the High Court – Held: Transaction between the predecessor-in-title of the defendants and the plaintiff is not disputed –Initially the property was mortgaged on 23.04.90, and within a month, he entered into an agreement to sell wherein, the entire consideration for the transfer as well as handing over of the possession to the plaintiff was acknowledged –Transaction was nothing short of transfer of property – U/s. 61, there is complete prohibition on such mortgage/transfer for 15 years from the date of grant – Even according to the plaintiff, the grant is of the year 1983, as such, the transfer in question in 1990 is within the prohibited period of 15 years – Both, the plaintiff and the predecessor-in-title of the defendants equally responsible for violation of law – Claim of the plaintiff entirely based upon the agreement to sell dtd. 15.05.90, which is hit by s.61 – No other foundation for the claim – Although illegality is not pleaded by the defendant nor sought to be relied upon him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take notice of it, and dismiss the action ex turpi causa non oritur actio i.e. No polluted hand shall touch the pure fountain of justice – Order of the High Court set aside, while that of the trial court dismissing the suit, upheld – Maxims – ex turpi causa non oritur actio and in pari delicto potior est conditio defendentis et possidentis.
Maxims–”ex turpi causa non oritur actio”; “in pari delicto potior est conditio defendentis et possidentis” and “ex dolo malo non oritur actio” – Applicability of – Discussed. Practice & Procedure – Claim of the plaintiff based on illegal agreement – Defendant also participator in the illegality – Grant of relief in such cases – Suit property granted under the 1961 Act in favor of the predecessor-in-title of the appellants-defendants, with non-alienation clause of 15 years – In violation of the Act, he executed agreement to sell dtd. 15.05.90 in favour of the plaintiff-respondents(s) – Suit for specific performance of the contract filed inter alia contending that the defendants did not come forward to execute the sale deed –Trial court held that the the suit was not maintainable – Reversed by the first appellate court – Upheld by the High Court – Held: Both the parties are common participator in the illegality– Relying on Immani Appa Rao case, if the decree is granted in favour of the plaintiff on the basis of an illegal agreement hit by a statute, it will be rendering an active assistance of the court in enforcing an agreement contrary to law – As against this, if the balance is tilted towards the defendants, they would stand benefited even in spite of their predecessor-intitle committing an illegality – However, what the court would be doing is only rendering an assistance which is purely of a passive character – First course would be patently inconsistent with the public interest whereas, the latter course is lesser injurious to public interest than the former – Karnataka Land Reforms Act, 1961 – Equity.
Allowing the appeals, the Court
HELD: 1.1 The facts in the present case are not in dispute. The recital in the agreement to sell reads that at the time of execution of the agreement, the possession of the suit property was handed over to the plaintiff. Further, the recital reads that the plaintiff shall take the consent of the officers of the Tribunal or the concerned officers at his own cost for transferring the property in the name of the plaintiff. Initially the property was mortgaged on 23.04.1990, and within a period of one month the agreement to sell was executed. At the time of the agreement itself, the entire consideration amount was said to have been received by the predecessor-in-title of the defendants and also the possession was handed over to the plaintiff. [Paras 8, 9] [753A-E]
1.2 A perusal of the Section 61 of the Karnataka Land Reforms Act, 1961 would clearly show that, notwithstanding anything contained in any law, no land of which the occupancy has been granted to any person under the said Chapter shall, within 15 years from the date of the final order passed by the Tribunal under sub-section (4) or sub-section (5) or sub-section (5-A) of Section 48-A of the Reforms Act be transferred by sale, gift, exchange, mortgage, lease or assignment. However, the land may be partitioned among members of the holders of the joint family. No doubt, that sub-section (2) of Section 61 of the Reforms Act permits the registered occupant or his successorin-title, to take a loan and mortgage or create a charge on his interest in the land in favour of the State Government, a financial institution, a co-operative land development bank, a cooperative society or a company as defined in Section 3 of the Companies Act, 1956 in which not less than 51% of the paid-up share capital is held by the State Government or a Corporation owned or controlled by the Central Government or the State Government or both. However, such a loan can be taken only for the purpose of development of land or improvement of agricultural practices or for raising educational loan to prosecute higher studies of the children of such person. It further provides that, in the event of such a person making default in payment of such loan in accordance with the terms and conditions on which such loan was granted, it shall be lawful to cause his interest in the land be attached and sold and the proceeds to be utilised in the payment of such loan. Sub-section (3) of the said Section specifically provides that any transfer or partition of land in contravention of sub-section (1) shall be invalid and such land shall vest in the State Government free, from all encumbrances and shall be disposed in accordance with the provisions of Section 77 of the Reforms Act. [Para 13] [755-D-H; 756-A]
1.3 Supreme Court in the case of Kedar Nath Motani and Ors. vs. Prahlad Rai and Ors. had an occasion to consider the question of application of the maxims ex turpi causa non oritur actio and ex dolo malo non oritur actio. It was held 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. It was further held, that a strict view must be taken of the plaintiff’s conduct and he should not be allowed to circumvent the illegality by resorting to some subterfuge or by misstating the facts. However, if 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 is 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. Subsequently, another three-Judge Bench of Supreme Court in Immani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi and Ors. again had an occasion to consider the issue with regard to applicability of the aforesaid two maxims. It was held that, which principle is to be applied in the facts of the case would depend upon the question, as to which principle is more consistent with public interest. It was further held, that if both the parties are equally guilty and the fraud intended by them had been carried out, the position would be that, the party raising the defence is not asking the Court’s assistance in any active manner. [Paras 14, 16-19] [756-B; 759-C-E; 761-F; 762-A-B]
1.4 The transaction between the predecessor-in-title of the defendants and the plaintiff is not disputed. Initially the said predecessor-in-title of the defendants had executed a registered mortgage deed in favour of the plaintiff. Within a month, he entered into an agreement to sell wherein, the entire consideration for the transfer as well as handing over of the possession was acknowledged. It could thus be seen, that the transaction was nothing short of a transfer of property. Under Section 61 of the Reforms Act, there is a complete prohibition on such mortgage or transfer for a period of 15 years from the date of grant. Sub-section (1) of Section 61 of the Reforms Act begins with a non-obstante clause. It is thus clear that, the unambiguous legislative intent is that no such mortgage, transfer, sale etc. would be permitted for a period of 15 years from the date of grant. Undisputedly, even according to the plaintiff, the grant is of the year 1983, as such, the transfer in question in the year 1990 is beyond any doubt within the prohibited period of 15 years. Sub-section (3) of Section 61 of the Reforms Act makes the legislative intent very clear. It provides, that any transfer in violation of sub-section (1) shall be invalid and it also provides for the consequence for such invalid transaction. Undisputedly, both, the predecessor-in-title of the defendant(s) as well as the plaintiff, are confederates in this illegality. Both, the plaintiff and the predecessor-in-title of the defendant(s) can be said to be equally responsible for violation of law. Undisputedly, in the present case, the claim of the plaintiff is entirely based upon the agreement to sell dated 15.05.1990, which is clearly hit by Section 61 of the Reforms Act. There is no other foundation for the claim of the plaintiff except the one based on the agreement to sell, which is hit by Section 61 of the Act. In such a case, as observed by Taylor, in his “Law of Evidence” which has been approved by Gajendragadkar, J. in Immani Appa Rao, although illegality is not pleaded by the defendant nor sought to be relied upon him by way of defence, yet the Court itself, upon the illegality appearing upon the evidence, will take notice of it, and will dismiss the action ex turpi causa non oritur actio i.e. No polluted hand shall touch the pure fountain of justice. Equally, as observed in Story’s Equity Jurisprudence, which again is approved in Immani Appa Rao, where the parties are concerned with illegal agreements or other transactions, courts of equity following the rule of law as to participators in a common crime will not interpose to grant any relief, acting upon the maxim in pari delicto potior est conditio defendentis et possidentis. [Paras 23-25] [765-F-H; 766-A-G]
1.5 The trial Judge upon finding that the agreement of sale was hit by Section 61 of the Reforms Act, had rightly dismissed the suit of the plaintiff. Both the parties are common participator in the illegality. In such a situation, the balance of justice would tilt in whose favour is the question. As held in Immani Appa Rao, if the decree is granted in favour of the plaintiff on the basis of an illegal agreement which is hit by a statute, it will be rendering an active assistance of the court in enforcing an agreement which is contrary to law. As against this, if the balance is tilted towards the defendants, no doubt that they would stand benefited even in spite of their predecessor-in-title committing an illegality. However, what the court would be doing is only rendering an assistance which is purely of a passive character. As held by Gajendragadkar, J. in Immani Appa Rao, the first course would be clearly and patently inconsistent with the public interest whereas, the latter course is lesser injurious to public interest than the former. In the result, the appeals deserve to be allowed and are accordingly allowed. The judgment and order passed by the High Court of Karnataka dated 08.06.2015 and the Order passed by the Fast Track Court-III, Bangalore Rural District, Bangalore, dated 17.06.2008 are quashed and set aside. The order dated 23.01.2004 dismissing the suit passed by the trial court is upheld. [Paras 26-28] [766-G-H; 767-A-D]
Kedar Nath Motani and Ors. vs. Prahlad Rai and Ors. [1960] 1 SCR 861 ; Immani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi and Ors. [1962] 3 SCR
739 ; Nathu Prasad vs. Ranchhod Prasad and Ors. (1969) 3 SCC 11 : [1970] 2 SCR 643– relied on. Story’s Equity Jurisprudence Vol. I, s. 421; English edition by Randall, 1920, s.298 ; Taylor’s “Law of Evidence” Vol. 11th, Edn. p. 97, para 93 – 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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