Tilak Raj Bakshi vs Avinash Chand Sharma (Dead) through Lrs. & Others

Capital of Punjab (Development and Regulation) Act, 1952 – ss.2(f), (k), 3-5, 22 – Difference between ‘site’ and building’ – Discussed – Chandigarh (Sale of Sites and Building) Rules, 1960 – r.14 – Chandigarh Estate Rules, 2007 – r.16 – Partition Act, 1893 – ss.2-4.

Practice and Procedure – Plea not taken before the Appellate Court, if can be decided by it – Permissibility of – Held: Mere fact that the plea that the clause in question was vague, and hence, unenforceable and void was not taken, will not stand in the way of the Appellate Court looking into the contract and, if on its terms, it finds it to be vague and unenforceable, it can be so held – Indian Evidence Act, 1872 – s.93.

Dismissing the appeals, the Court

HELD : 1.1 WHETHER THERE WAS A FAMILY

SETTLEMENT?

No material has been placed by the second defendant to establish that the alleged family settlement is a forged document. There is no case that it is not a family settlement. The settlement is arrived at between the plaintiff, his brother-the first defendant and another brother-third defendant. Therefore, it is proceeded on the basis that there is a family settlement. [Para 17] [265-G-H]

1.2 WHETHER THE FAMILY SETTLEMENT WAS

VAGUE?

The mere fact that a plea is not taken, that the clause in question is vague, and hence, unenforceable and void will not stand in the way of the Appellate Court looking into the contract and, if on its terms, it finds it to be vague and unenforceable, it can be so held. Clause (5) in question provides that the property in question cannot be sold without concurrence of the three brothers in writing. If it is sold on the agreement of three brothers, the first preference is to be given to both other brothers. When it is stated that the property cannot be sold without concurrence of the three brothers in writing, there cannot be any doubt about its meaning. It means what it says which is that should a brother want to sell the property, the other two brothers must agree in writing. This clause cannot be described as vague. This is different from the aspect as to whether it is a clog on ownership or whether it is otherwise unenforceable but it cannot be described as being vague. The second contention is that when a decision is taken by the brothers permitting sale by a third brother, then, first preference is to be given to both the other brothers. What is intended is that after the written concurrence is obtained for selling in order that property is not sold to a third party/stranger, the other two brothers are given an opportunity to buy that property. This portion of the clause cannot also be described as vague as such. No doubt, it could be argued that the price at which the offer is to be made is not expressly mentioned. The clause is part of a family settlement between brothers. Courts ordinarily lean in favour of family settlement. Clause (5) itself does not contain an agreement to sell. It only contemplates a preferential offer being treated as a condition precedent to a brother affecting a sale outside of a family to a stranger. The price can only be understood as market price which would be the fair price. Therefore, the finding by the High Court that contract is vague cannot be sustained. In the last letter dated 01.04.1996, it is written by the plaintiff to the first defendant and his wife. He has shown awareness of the first defendant’s health. Correspondence indeed establish, therefore, that the health of the first defendant was poor and it was deteriorating and he was in urgent need for money. The first defendant had made offer to the appellant for selling his share for Rupees Five Lakhs. The plaintiff himself acknowledged in the letter dated 01.04.1996 that the offer of Rupees five lakhs was reasonable. Appellant, quite clearly, has articulated his pressing priority to be to conduct the marriage of his daughter. This means that he was hard pressed for money. Otherwise there was no need for him after finding the offer to be reasonable to request the first defendant and his wife to try to reduce the value. Letter dated 15.04.1996 written by the first defendant’s wife shows that she did not wish to then receive earnest money and she finally demanded that final payment be made as prices in Chandigarh were increasing quite rapidly and rate settled by the plaintiff was quite old. She emphasized that the offer was given because she was in dire need of money. Now the need is of the plaintiff. This correspondence also tends to show that the rate of five lakhs was, in fact, even acceptable to the plaintiff as the letter referred to the rate settled by the plaintiff being quite old. But nothing was happening on the ground. This leads the first defendant wife to state that she would only handle the situation in any manner but it will not be possible later on. The sale took place after more than a year. One thing is clear that an offer was made on behalf of the first defendant to the plaintiff. [Paras 21, 22, 29 and 30] [268-A-F; 273-D-H; 274-A-B]

1.3 Apparently, in keeping with the family settlement, a preference was indeed shown. The price was reasonable and acceptable even to the plaintiff though he wanted a reduction. Having regard to the health of the first defendant and the dire stage at which first defendant and his wife were placed, they had made an attempt to comply with the condition in the family settlement providing for preference. [Para 32] [274-G-H]

1.4 WHETHER THE HIGH COURT WAS RIGHT IN

HOLDING THAT THE COURTS WOULD NOT EXERCISE

DISCRETION UNDER SECTION 20 OF THE SPECIFIC

RELIEF ACT, 1963 AS THE CONTRACT WAS NOT

SPECIFICALLY ENFORCEABLE?

The Appellate Court finds that the plaint schedule property was owned by the father. It is found that the three sons get equal shares. The Trial Court finds that no offer was made by the first defendant to the plaintiff. It decrees specific performance by directing so on the basis that first defendant will have to make an offer to the plaintiff and the third defendant after finding that the first defendant was not bound to make an offer to sell at Rs.4.80 lakhs. The Appellate Court, on the other hand, has gone to decree specific performance by even directing possession of the property to be given to the plaintiff by the second defendant. On the basis of the terms and conditions of the agreement dated 31.03.1982, there are clearly two palpable flaws in the findings and directions. Admittedly, the second defendant was already occupying the property as a tenant. He can be evicted only in accordance with law even if everything is held in favour of the plaintiff. In other words, even if it is found that the assignment by the first defendant in favour of the second defendant is null and void, he has the right to continue in possession unless he is evicted under the relevant law for the eviction of tenants. Therefore, the direction to deliver possession is clearly unsustainable. The second flaw which vitiated the judgment of the first Appellate Court is that it has proceeded to hold that plaintiff is entitled to specific performance as per the terms and conditions of the agreement dated 31.03.1982. The Appellate Court was in error in decreeing specific performance on the basis that the family settlement without anything more, embodied a contract for sale of immovable property. The terms of the agreement, viz., the price at which the property is to be sold and purchased, are not spelt out in the family settlement, as correctly noticed by the Trial Court. The Appellate Court has not proceeded to hold that the plaintiff is entitled to purchase the property at Rs.4.80 lakhs at which price the first defendant has sold to the second defendant. If the decree is treated as confirming the decree of the Trial Court, then, the price at which it is to be purchased would only have been ascertained on the basis of an offer which is made in pursuance of the Trial Court’s judgment, and therefore, no decree for specific performance, as passed by the First Appellate Court, could certainly have been passed. [Para 37] [276-A-H; 277-A-E]

1.5 Right to preemption is ordinarily born out of custom or in terms of a statutory provision. This case does not concern with the statutory right of preemption or custom. There is no case expressly set up in the plaint that what appellant is seeking to enforce is a right of preemption. If the suit involved a right of preemption, and proceeding on the basis that the appellant was pursuing his secondary right to follow the property sold, then, the relief would have been to substitute himself in place of the buyer/second defendant. The right of preemption is not right of re-purchase. Even proceeding on the basis of it being a case of preemption, as held by the High Court and by this Court, first preference was given to the plaintiff. In this case, the concerned clause, certainly does not place an absolute restriction on alienation in favour of a stranger. All that it contemplates is an offer being made to the brothers, once the first step of concurrence in writing by the brothers for the sale is obtained. Therefore, the appellant would not be justified in invoking the principle underlying the right of preemption in this case. [Paras 43, 44] [279-F-G; 280-D-G]

1.6 IMPACT OF ABSENCE OF

CONCURRENCE BY BROTHERS FOR SALE

WRITTEN

The controversial clause, according to the appellant, falls in two parts. Firstly, there must be a written concurrence from the two brothers, if the third brother wishes to sell his share. The second part is that the offer must be made to the other brothers before transfer is effected to a stranger. In this case, the title to the share in the property of the first defendant is traceable to the will executed by the father. The plaint reveals that the legatees, viz., the brothers applied to the Estate Office and the property was transferred in favour of the brothers on the terms and conditions in Memo dated 10.07.1981. One of the conditions was that there will be no fragmentation of the site. It is thereafter that the controversial agreement was entered into between the brothers. Thus, the family arrangement was entered into by the brothers when their rights as owners had crystallized. It was not subject to any condition. Being brothers, they could to promote harmony and avoid future disputes, enter into a family settlement. The first defendant has sold his share to the second defendant. Under the clause, can the first defendant sell to a stranger? He can sell provided there was a written concurrence by the other brothers for a sale and the offer is made to the other brothers and it does not fructify into a sale for reasons which are not attributable to the brother who wishes to sell. There was an offer to the appellant by the first defendant. He has failed to act upon it. The other brother has no case about offer not being made and he has not raised any dispute over the sale to the second defendant. [Paras 45, 50 and 51] [280-H; 281-A; 284-B-F]

1.7 Thus, what is sought is specific performance. The appellant proceeded in the suit on the basis that there is a contract. A contract presupposes an offer which is accepted which means that there was an offer from the defendant. The correspondence, which fortifies in holding that there was an effective offer and it did not materialize on account of any default on the part of the plaintiff. Now, if the clause is broken down, it involves the following steps. A brother announces his desire to sell his share. He seeks written concurrence of the other brothers. A written concurrence is given. Then, the next step is reached. The selling brother offers to sell it to the other brothers. If they take the offer and the price is agreeable to the parties, sale follows. If the brothers do not wish to buy, the sale to the strangers is permitted. In the above process, in the facts of this case, it is clear that the appellant and the first defendant, without insisting on the written concurrence, went to the stage of offer to brothers. The appellant has led the first defendant to assume, even without a written concurrence, that the sale is permitted. The first defendant has acted clearly on the basis that the requirement of the first stage was not being insisted upon. Otherwise, he could have certainly obtained the concurrence. Having thus acted in the matter, and the second stage having been reached, when for reasons where the fault cannot be attributed to the first defendant, the offer, which the appellant himself describes as reasonable, was not seized upon by the appellant, the third stage emerged. This meant that it became open to the first defendant to sell to a stranger and which is what he did by it selling it to the second defendant. Even proceeding to enforce the clause, the appellant is clearly estopped from setting up the plea of absence of written consent of the brothers. It would be inequitable, particularly when the matter is considered in an appeal sourced under Article 136 of the Constitution of India. [Paras 52, 53] [285-D-H; 286-A-B]

1.8 EFFECT

OF

PROHIBITION AGAINST

FRAGMENTATION OF PROPERTY IN QUESTION UNDER

THE CAPITAL OF PUNJAB (DEVELOPMENT AND

REGULATION) ACT, 1952

The Capital of Punjab (Development and Regulation) Act, 1952 (hereinafter referred to as ‘the 1952 Act’ for short) defines “site” in Section 2(f) as meaning “any land which is transferred by the Central Government under Section 3. Section 4 of the 1952 Act confers power upon the Central Government and the Chief Administrator to issue directions in respect of any site or building in regard to the matters which are mentioned therein. The word “transferee” is defined in Section 2(k) of the Act. Section

5 of the 1952 Act forbids erection or occupation of any building at Chandigarh in contravention of Building Rules made under subSection (2). The word “site” means any land which is transferred under Section 3 of the 1952 Act. When it comes to the terms of Section 3, it contemplates power with the Central Government to transfer by auction, allotment or otherwise any land or building belonging to the Government in Chandigarh on such terms and conditions as may subject to any Rules that can be made under the Act, the Government thinks fit to impose. Thus, though it is open to the Central Government to transfer either land or building belonging to the Government in Chandigarh under Section 3 of the 1952 Act, the word “site” is confined to only the land which is transferred by the Central Government under Section 3. In fact, the word “building”, as defined in the Act, points to any construction or part of construction transferred under Section 3. It includes outhouse, stable, cattle shed and garage and also includes any building erected on any land transferred by the Central Government. The construction must be intended to be used for residential, commercial, industrial or any other purposes. A clear distinction is maintained between “site” and “building”. The Chandigarh (Sale of Sites and Building) Rules, 1960 came to be made. Section 22 of the 1952 Act confers power upon the Central Government to make the Rules for various purposes, which are mentioned in sub-Section (2). It includes Sections 2(a), 2(d), 2(e) and 2(h) of the 1952 Act. Rule 14 of the Chandigarh Sale of Sites and Building Rules, 1960 provides that no fragmentation of any site is permitted. Subsequently, in exercise of powers under Sections 3 and 22 of the Act, Chandigarh Estate Rules, 2007 came to be made. Rule 16 deals with fragmentation/amalgamation. [Paras 54, 56, 58-60] [286-C-D; 287-B, D, G-H; 288-A-C, F]

1.9 While it may not be true that the issue of fragmentation was not raised in the courts, the appellant is not able to persuade the Court to hold that the assignment in favour of the second defendant is vulnerable on the basis that it involves fragmentation. The deposition of the plaintiff about partition of the house into three portions has been noticed. The fact that one-third share has been duly transferred and mutated in the name of the first respondent/second defendant by the Chandigarh Administration, has been noted. The second defendant has produced the communication dated 19.12.1997 which indicates the transfer of rights of site in Sector 19A held by first defendant is noted in favour of the second defendant subject to certain conditions. This is obviously before the 2007 Rules came into force. In the light of the aforesaid facts, the appellant cannot be permitted to impugn the transaction on the said ground. The contentions of the appellant are rejected. [Paras 63-66] [289-A-H; 290-A-B]

K. Naina Mohammed (Dead) Through Lrs. v. A.M.

Vasudevan Chettiar (Dead) Through Lrs.and Others (2010) 7 SCC 603 : [2010] 7 SCR 927 ; Hari Shankar Singhania and Others v. Gaur Hari Singhania and Others (2006) 4 SCC 658 : [2006] 3 SCR 726 ;

Muhammad Raza (since deceased) and others v. Abbas Bandi Bibi AIR 1932 PC 158 – referred to.

Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd. AIR 1958 SC 512 : [1959] SCR 213 ; Bishan Singh v. Khazan Singh AIR 1958 SC 838 : [1959] SCR 878

– relied on.