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TMI Blog1996 (4) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries (India) Ltd., for accommodating the office-cum-residence of its director and Secretary, and he came to occupy the premises from February, 1977. The initial period of tenancy with the company was for three years. The company terminated the lease with effect from 31.7.1981 and the plaintiff also ceased to be in the service of the company. With the consent of the defendant, plaintiff continued to be the tenant of the house on the same terms and conditions which were then subsisting between the defendant and the company. Sometime in the year 1978, the company enquired with the defendant whether the Schedule premises will be sold to it, and the defendant agreed for the same. It is said that the defendant also was requested to furnish details of the property. However, the idea of purchasing the property by the company fell out, though as per Engineer's valuation, at that time the value of the property was ₹ 2,15,062. It is further alleged that the defendant's husband came to India in the middle of 1980 and he called on the plaintiff. He expressed his desire that the property be sold to the plaintiff and not to the company. The price offered at that time was 2,70, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntiff that the defendant also sent a cable enquiring about the willingness of the plaintiff to purchase the house, for which the defendant also sent a reply to the plaintiff. Ex.D-6 letter dated 16.6.1981, written by plaintiff to the defendant, makes mention of the same. In that letter, plaintiff has stated that he is interested in purchasing the house and that the transaction must be completed sometime before the end of that year. That letter was further followed up by Ex.D-17 dated 7.7.1981. It is said that in that letter, plaintiff has offered a price of ₹ 3,40,000, being an average of the valuation made under Ex. P-4 and P-5. He wanted the defendant to inform her acceptance about it. He also stated that if the same is not acceptable to the defendant, he has to look after an alternate accommodation. Ex. D-17 was replied by the defendant on 18.7.1981 wherein the defendant accepted the offer. It is said mat on the basis of the said letter, there is a concluded contract. It is further averred by the plaintiff that pursuant to the same, he was ready and willing to purchase the property. He wanted the documents to be prepared, and during the end of that year, defendant's hu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claration of his title over the property from 1.12.1981. She said that the suit is an abuse of process of Court, and that the same has been instituted with a mala fide intention to defeat the rights of the defendant. She prayed for dismissal of the suit. 7. The learned Judge before whom evidence was taken, passed a decree in terms of the plaint. But in paragraph 26 of the judgment, the learned Judge said that the relief of declaration of title cannot be maintained. It is better to extract that portion of the judgment wherein the learned Judge has said thus:- ...The further relief claimed in the suit is for declaration that plaintiff is the owner of the house and premises at No. 106, Harrington Road, Madras-31 from 1.12.81. The claim for this relief, if I may say so, is preposterous. Sale deed in his favour is yet to be executed. While so, it is meaningless to claim that plaintiff has become the owner of the suit property from 1.12.81. If the plaintiff continues to be in possession of the suit property, he will have to pay either rent or damages for use and occupation to the defendant till his possession becomes that of the owner of the property. He has not parted with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner fully entitled to the possession in his own right and ownership of the suit property from 1.12.1981. The same is answered in paragraph 16 of the written statement. Defendant has said that there was no such conversation as alleged and that her husband was sent only to finalise the transaction, the terms of which were never agreed between the parties. It is further stated that there was no understanding that the sale should be deemed to have been completed before the end of December, 1981 and the plaintiff should be the absolute owner fully entitled to the ownership of the property from that date. 12. We have already extracted the finding of the learned Judge who did not accept the case of the plaintiff in this regard. We may say that the said statement also cannot be correct in view of Ex.D-5 dated 29.5.1981. It is a letter written by the plaintiff to the defendant wherein he has said thus:- I am writing this letter in haste to inform you that I am interested in continuing the tenancy of your premises atleast upto 30th June, 1982. In case any of you is likely to visit India, it will be possible for me to discuss matters relating to the purchase of the property from you a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 1.12.1981 the defendant had not paid rent. The defence in that proceeding also was that he was in possession as owner. The said R.C.O.P. was allowed against the plaintiff, against which he preferred an appeal before the Appellate Authority as R.C.A. No. 893 of 1993. Even in that proceeding, the plaintiff has taken a contention that he is not bound to pay the rent and that whatever he pays after 1.12.1981 is towards sale consideration. That shows the conduct of the plaintiff. He wanted the entire rent to be appropriated towards the sale consideration and thus get the property free of price. Such a conduct cannot be accepted by a Court of law while exercising equitable and discretionary jurisdiction. 15. The learned Judge who tried the suit himself has held that the claim put forward by the plaintiff is preposterous. Having entered such a finding on the basis of false allegations, the discretionary remedy in favour of the plaintiff should not have been granted. The first submission made by the learned counsel for the defendant therefore, deserves acceptance. In this connection, learned counsel also relied on a decision reported in S. Sankaran (died) and 4 Ors. v. N.G. Radhakri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is entitled to a decree compelling the 1st respondent to convey the property to him, ignoring the position of the 4th respondent except so far as the return of the consideration paid by him is concerned? There are, therefore, two main reasons why specific performance should not be granted in this case. One is that the appellant has given false testimony in the witness box, and the other is that to grant him the relief which he asks for would be doing an injustice to the 4th respondent. (Italics supplied) 17. In Ramaswamy Gounder v. K.M. Venkatachalam and Ors. (1976) 1 MLJ 243, M.M. Ismail, J., as he then was, held thus:- ... the falsity of the case put forward by the plaintiff disentitled him from obtaining the discretionary relief of specific performance of agreement. 18. In Parakunnan Veetil Joseph's son Mathew v. Nedumbara Kuruvila's son and Ors., AIR1987 SC 2328, their Lordships held thus;- Section 20, Specific Relief Act, preserves judicial discretion to Courts as to decreeing specific performance. The Court should meticulously consider all facts and circumstances of the case. The Court is not bound to grant specific performance merely because it is l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t governed by the law of any part of India that anything agreed to be done by any term of that contract which is prohibited to be done by or under any of the provisions of this Act except with the permission of the Central Government or the Reserve Bank, shall not be done unless such permission is granted. 22. Section 50 of PERA says that if any person contravenes any of the provisions of the Act, he shall be liable for penalty. The said Section reads thus:- If any person contravenes any of the provisions of this Act (other than Section 13, clause (a) of sub-section (1) of section 18, section 18A, and clause (a) of sub-section (1) of section 19 or of any rule, direction or order made thereunder, he shall be liable to such penalty not exceeding five times the amount or value involved in any such contravention of five thousand rupees, whichever is more as may be adjudged by the Director of Enforcement or any other officer of Enforcement not below the rank of an Assistant Director of Enforcement specially empowered in this behalf by order of the Central Government (in either case hereinafter referred to as the adjudicating officer). Rules have also been framed under FERA f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngland III Edition Vol. VII paragraph 245, at page 141, as follows: Where a penalty is imposed by statute upon any person who does a particular act, this may or may not imply a prohibition of that act. It is a question of construction in each case whether the legislature intended to prohibit the doing of the act altogether, or merely to make the person who did it liable to pay the penalty. If the penalty is recurrent, that is to say, if it is imposed not merely once for all but as often as the act is done, this amounts to a prohibition. Where the object of the legislature in imposing the penalty is merely the protection of the revenue the statute will not be construed as prohibiting the act in respect of which the penalty is imposed, but where the penalty is imposed with the object of protecting the public, though it may also be for the protection of the revenue, the act must be taken to be prohibited and no action can be maintained by the offending party on a contract which is made in contravention of the statute. Anson has stated the law on the points in the following words:- The statute may impose a penalty on the parties to a contract without declaring it to be ille ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the legislature intended to prohibit the contract. This must be decided upon a construction of the Statute. If the object of the enactment or one of its objects in imposing penalty is to protect the general public or any class thereof it will be construed in the absence of any other indication expressed in the statute as implying a prohibition of the contract. On the other hand, if the object of imposing the penalty is merely the protection of the revenue the contract will (not Y) be regarded as prohibited by implication. In that case, the Full Bench held that merely because a penalty is imposed, that should not be taken as something prohibited by law. Their Lordships were of the view: .. If the object of penalty is only to protect the revenue, the contract will not be regarded as prohibited by implication. 25. A reading of the decision reported in Joaquim Mascarenhas Fiuza v. Smt. Jaime Rebello and Anr., 1989 (66) Comp Case 349, shows that the provisions of FERA will have to be complied with and discretionary remedy also will have to be granted taking into consideration the penal provisions. It was held in the said decision that FERA was not basically a penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for Courts to expound and apply them to different situations, it should only be invoked in clear and incontestable cases of harm to the public; though the heads are not closed and though theoretically it may be permissible to evolve a new head under exceptional circumstances of a changing world, it is advisable in the interest of stability of society not to make any attempt to discover new heads in these days. 28. In Anson's Law of Contract' - 25th Edition (1979) - at pages 347 and 348, the learned Author has said thus:- At the present time, however, there is an increasing recognition of the positive function of the Courts in matters of public policy: 'The law relating to public policy cannot remain immutable. It must change with the passage of time. The wind of change blows upon it.' Some aspects of public policy are more susceptible to change than others, though the policy of the law has, on certain subjects, been worked into a set of tolerably definite rules. The principles applicable to the agreement in restraint of trade, for example, have on a number of occasions been modified or extended to accord with prevailing economic conditions, and this process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lation of the same will amount to breach of public policy and public interest. 32. In Rattan Chand Hira Chand v. Askar Nawaz (Dead) by L.Rs. and Ors., [1991] 1 SCR 327, their Lordships while considering 'Public policy', held thus;- A contract which has a tendency to injure public interests or public welfare is one against public policy. What constitutes an injury to public interests of welfare would depend upon the times and climes. The social milieu in which the contract is sought to be enforced would decide the factum, the nature and the degree of the injury. It is contrary to the concept of public policy to contend that it is immutable, since it must vary with the varying needs of the society. What those needs are would depend upon the consensus value judgments of the enlightened section of the society. These values may sometimes get incorporated in the legislation, but sometimes they may not. The legislature often fails to keep pace with the changing needs and values nor is it realistic to expect that it will have provided for all contingencies and eventualities. It is, therefore, not only necessary but obligatory on the courts to step into fill the lacuna. All ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia v. Escorts Ltd. 1986 (8) ECC 189 and M.G. Wagh v. Jay Engineering Works Ltd., 1987 (2) SCC 542. Keeping in view the aforesaid objects underlying FERA and the principles governing enforcement of exchange control laws followed in other countries, we are of the view that the provisions contained in FERA have been enacted to safeguard the economic interest of India and any violation of the said provisions would be contrary to the public policy of India as envisaged in Section 7(1)(b)(ii) of the Act. (Italics supplied) 36. If a specific performance decree is passed, that will amount to allowing the parties to bypass the provisions of FERA. The question whether permission has to be granted or not is matter which has to be decided only by the Reserve Bank of India, and the Court cannot supervise the exercise of such statutory powers by the Reserve Bank of India. When a transaction is permitted only after obtaining permission from a Statutory Authority over whom the Court has no control, the relief of specific performance will not be usually granted. It is not enforcing a contract alone. It has to take into consideration the rights of the Reserve Bank of India and also the nation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 398) of that judgment is relevant for our purpose. It reads thus;- A Division Bench of this Court refused to grant specific performance in Mariamma Varghese v. K. V. Balasubramanian and Ors., A.S. 862 of 1981 - judgment dated 11.1.1990. The appellant in that case was the plaintiff who prayed for a specific performance. The trial Court dismissed the suit and he preferred the appeal. But, the agreement of sale was dated 29.6.1978. The Division Bench held that there was a legal impediment to the grant of specific performance in the provisions of the Act and consequently dismissed the appeal. On the same day, i.e., 11.1.1990, the Division Bench also dismissed a writ petition (W.P.1963 of 1984) preferred by the same person, reported in Mariamma Varghese v. The Commissioner of Land Reforms and 2 Ors., 1990 W.L.R. 279. Claiming right under the agreement dated 29.6.1978, the petitioner in the writ petition wanted exclusion of the lands which were subject matter of the agreement in her favour from the proceedings under the Act and filed the writ petition against the authorities under the Act. Taking note of the rigour of the language of Section 6 of the Act, the Bench dismissed the w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... violation of sub-Section (1) of Section 7 of Exchange Control Act, 1947. While dealing with the same, their Lordships held thus:- The claim was based on nothing but the payment, which by virtue of Section 7 of the Exchange Control Act, 1947, was an illegal payment, and the statement of claim would be struck out. 43. The position of law is clear that when the enforcement of the contract is against any provision of law, that will amount to enforcement of an illegal contract. The contract per se may not be illegal. But its enforcement requires compliance of statutory conditions, failure of which will amount to statutory violation. A Court which is expected to enforce the law, cannot be a party to such a decree. 44. Learned counsel for the plaintiff submitted that no plea regarding illegality has been pleaded and, therefore, the same cannot be raised for the first time in Appeal. 45. We cannot accept the said argument, in view of the decision reported in Sm. Surasaibalini Debi. v. Phanindra Mohan Majumdar, [1965] 1 SCR 861, that if on the available evidence the illegality can be found, there need not be any pleading. In paragraph 23 of the said decision, (at page 1370), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he property. She was only in possession of the title deed, and for all purposes she was a foreigner. 49. When the plaintiff enquired the defendant whether she was interested in selling the property, she could not stipulate any price, for, she was not aware of the market value of the property in that locality. Even for fixing the price, she only requested the plaintiff to get Valuation Reports from two approved Appraisers and wanted them to be sent to her. This shows her complete ignorance about the market value of the property, and that she was solely depending on the plaintiff for the same. We must understand that their relationship was also very cordial and she had absolute faith in the plaintiff. What the plaintiff did was, he got a report under Ex.P-4. It is in evidence that the said Report Ex.P-4 was prepared by the very same valuers who were also the valuers for the company in which the plaintiff was a Director-cum-Secretary. We do not know on what basis such valuation was made. In that Report (Ex.P-4), the ground value is estimated at ₹ 50,000 per ground. Ex.P-5 is another valuation wherein the ground value is given as ₹ 80,000 per ground. So, one thing is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held thus:- .. Both the claimants and the Land Acquisition Officer merely marked the sale deeds without examining either the vendor or the venice to bring on record the circumstances in which the sale deeds came to be executed, the distance of the land to the acquired land, the nature of the respective lands and whether they would offer comparable sales to determine just and fair market value to the acquired lands. In the absence of such relevant and material evidence, it would be difficult to determine compensation in respect of the acquired lands. Even though the decision was arrived at in a land acquisition case, the same principle applies here also. When the defendant has a definite case that during the relevant time, the market value of the property in question will be not less than ₹ 10 lakhs, better evidence on the part of the plaintiff is expected. 53. It is contended by the learned counsel for the plaintiff that Ex.P-6 and P-7 are in respect of adjoining properties and they command the same facilities. The same is disputed by learned counsel for the defendant. Nobody speaks about the circumstances under which these documents came into existence. It is well- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of by him. 56. It may not be inappropriate to refer one more circumstance. P.W.2 is an Advocate. He is stated to be the person who prepared the Draft sale deed. It is said that the defendant's husband approved the draft and agreed to execute a sale deed on the basis of the Power of Attorney given to him by the defendant, after getting the Income Tax Clearance Certificate. Even when the draft was prepared, P.W.2 was not informed by the plaintiff about the price for which the house is sold. Why that was kept as a secret even with P.W.2 shocks the conscience of everyone. On submission No. 1, we have already held that the motive of the plaintiff was to get unfair advantage. The absence of evidence regarding market value also supports our view that the plaintiff was exploiting his confidential relationship which the defendant had with him. 57. Submission 4: The above submission is answered by us in the earlier portion of this judgment. This is a case where the discretionary remedy should not be granted in favour of the plaintiff. He has not come to Court with clean hands. The defendant is a foreign national. She being a non-citizen, plaintiff is well aware that the defen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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