1986 (8) TMI 447 - HC - FEMA

Summary

Issues:
1. Dispute over ownership and possession of property.
2. Validity of sale deed and additional agreement.
3. Allegations of breach of Foreign Exchange Regulation Act.
4. Interpretation of Section 31(1) of the Act.
5. Legalization of property purchase by Reserve Bank.
6. Applicability of subsequent events in legal proceedings.

Analysis:

1. The judgment concerns a dispute over ownership and possession of a property in Chandigarh. The plaintiffs purchased a flat from the defendant but faced issues regarding possession of certain floors, leading to a lawsuit for possession and damages.

2. The defendant contested the suit, claiming the property was sold for a higher amount and an additional agreement existed for the balance payment. However, the trial court found in favor of the plaintiffs, holding that the sale deed for Rs. 75,000 was valid and no breach of the Foreign Exchange Regulation Act was proven.

3. The defendant's argument that the additional agreement was valid was refuted by the court. The document presented as evidence was deemed questionable in terms of authenticity and execution, leading to a rejection of the defendant's claims.

4. The interpretation of Section 31(1) of the Act was crucial in determining the validity of the property purchase. The court clarified that while contravention of the Act could lead to penalties, it did not render the transaction void, especially when subsequent events, like a certificate from the Reserve Bank, legalized the purchase.

5. The Reserve Bank's certificate authorized the plaintiffs to hold the property, effectively curing any potential illegality in the purchase. The court allowed the certificate as evidence, highlighting the significance of subsequent events in legal proceedings.

6. The judgment emphasized the importance of considering subsequent events in legal matters, citing precedents that support the inclusion of such developments for a fair and just resolution. The court dismissed the appeals, affirming the lower court's decisions and upholding the plaintiffs' rights to possession and damages.