2019 (8) TMI 1899 - SC - Indian Laws

Family settlement - Prohibition against fragmentation of the site - Suit for specific performance directing first Defendant to execute sale deed in respect of one-third share to the Plaintiff - it is contended that the family settlement was forged and fabricated - enforceable contract or not - impact of absence of written concurrence by brothers for sale. Whether there was a family settlement? - HELD THAT - 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, we can proceed on the basis that there is a family settlement. Whether the High Court was right in, without even a plea, holding that the family settlement is vague and unenforceable and void? - HELD THAT - 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. It is found that 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. Whether an offer was made by the first Defendant to the Plaintiff before the sale of the property to the second Defendant? - HELD THAT - The agreement could not be executed as per the offer because Defendant never turned up in Chandigarh. He was ready to make the entire payment while coming at Chandigarh, since the property is in Chandigarh. An amount of Rs. 5 lakh was settled as consideration amount. (It may be noted that Plaintiff, in P18 letter writes please try to reduce the total value, if there is some scope). He further says, it is correct that he had offered in that letter-Exhibit P19 to get the payment at Bhilai and after the payment, the documents will be executed. He volunteered and stated that since the documents could not be executed at Bhilai as the property in question is at Chandigarh, he never made any final payment to the first Defendant in Bhilai - 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, we cannot for a moment but hold that they had made an attempt to comply with the condition in the family settlement providing for preference. Whether the High Court was right in holding that the courts could not exercise discretion Under Section 20 of the Specific Relief Act, 1963 as the contract is not specifically enforceable? - HELD THAT - 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. As held by this Court, 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, first preference was given to the Plaintiff - 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 - the Appellant would not be justified in invoking the principle underlying the right of preemption in this case. What is the impact of absence of written concurrence by brothers for sale? - HELD THAT - 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, we find that the Appellant is clearly estopped from setting up the plea of absence of written consent of the brothers. It would be inequitable, particularly when we are considering the matter in an appeal sourced Under Article 136 of the Constitution of India. What is the effect of the prohibition against fragmentation of property in question under the Capital of Punjab (Development and Regulation) Act, 1952? - HELD THAT - 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 which his 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 High Court, in fact, tides over this objection by the Appellant by pointing out that once the second Defendant steps into the shoes of the first Defendant, he became a co-owner and his remedy is to sue for partition and while fragmentation of property, is not 'admissible', the market value of the property can be determined, and buying each other's share, as per the provisions of Sections 2, 3 and 4 of the Partition Act, 1893. The second Defendant has produced the communication dated 19.12.1997 which indicates the transfer of rights of site in Sector 19A held by Vishnu Dutt Mehta (first Defendant) is noted in favour of the second Defendant subject to certain conditions. This is obviously before the 2007 Rules came into force. The Appellant cannot be permitted to impugn the transaction on the said ground - the contentions of the Appellant are liable to be rejected - appeal dismissed.

Summary

Issues Involved:
1. Whether there was a family settlement.
2. Whether the family settlement was vague, unenforceable, and void.
3. Whether an offer was made by the first Defendant to the Plaintiff before the sale of the property to the second Defendant.
4. Whether the High Court was right in holding that the courts could not exercise discretion under Section 20 of the Specific Relief Act, 1963 as the contract was not specifically enforceable.
5. Impact of the absence of written concurrence by brothers for sale.
6. Effect of the prohibition against fragmentation of property under the Capital of Punjab (Development and Regulation) Act, 1952.

Detailed Analysis:

1. Whether there was a family settlement:
The court concluded that a family settlement existed. The second Defendant failed to provide evidence that the family settlement dated 31.03.1982 was forged or fabricated. The settlement was between the Plaintiff, the first Defendant, and another brother (the third Defendant).

2. Whether the family settlement was vague, unenforceable, and void:
The High Court's finding that the family settlement was vague and unenforceable was contested. Section 29 of the Indian Contract Act, 1872, states that agreements void for uncertainty are not enforceable. The court held that the clause in question was not vague. The clause required written concurrence from all three brothers for any sale and provided a preference to the other brothers before selling to a third party. The price was implied to be the market price. Thus, the High Court's finding that the contract was vague was unsustainable.

3. Whether an offer was made by the first Defendant to the Plaintiff before the sale of the property to the second Defendant:
The correspondence between the Plaintiff and the wife of the first Defendant showed that an offer was made. The Plaintiff acknowledged the offer but did not act on it due to financial constraints and other priorities, such as his daughter's marriage. The Plaintiff's failure to act on the offer led to the first Defendant selling the property to the second Defendant.

4. Whether the High Court was right in holding that the courts could not exercise discretion under Section 20 of the Specific Relief Act, 1963 as the contract was not specifically enforceable:
The Trial Court and the first Appellate Court found that the Plaintiff was entitled to specific performance based on the family settlement. However, the High Court held that the contract was not specifically enforceable due to the lack of a fixed price and other terms. The court agreed that the family settlement did not constitute a contract for the sale of immovable property, as essential terms like the price were not specified.

5. Impact of the absence of written concurrence by brothers for sale:
The family settlement required written concurrence from all brothers before a sale. However, the Plaintiff and the first Defendant proceeded without insisting on written concurrence. The court found that the Plaintiff was estopped from raising the issue of the absence of written concurrence, as he had led the first Defendant to believe that the sale was permitted without it.

6. Effect of the prohibition against fragmentation of property under the Capital of Punjab (Development and Regulation) Act, 1952:
The Appellant argued that the sale resulted in fragmentation, which was prohibited. The court noted that the property was already partitioned into three portions and that the one-third share had been transferred and mutated in the name of the second Defendant by the Chandigarh Administration. The court held that the sale did not contravene the prohibition against fragmentation.

Conclusion:
The court dismissed the appeals, holding that the contentions of the Appellant were not sustainable. The family settlement was valid, and the offer was made to the Plaintiff, who failed to act on it. The contract was not specifically enforceable, and the absence of written concurrence was not a valid ground for challenging the sale. The prohibition against fragmentation did not invalidate the sale.