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Date : 26/12/2024

(2019) 09 SC CK 0078
In the Supreme Court Of India
Case No : Civil Appeal Nos. 7630, 7631 Of 2019

Narayanamma & Anr. Etc. Etc APPELLANT

Vs
Sri Govindappa & Ors. Etc. Etc RESPONDENT

Date of Decision : 26-09-2019

Acts Referred:
Karnataka Land Reforms Act, 1961 — Section 48A(4), 48A(5), 48A(5A), 61, 61(2),
77
Companies Act, 1956 — Section 3
Revenue Administration And Ryotwari Land Revenue And Tenancy Act, Samvat
2007 — Section 73, 74, 75, 76, 78
Citation : (2019) 9 JT 566:(2019) 13 Scale 110:AIR 2019 SC 4654:(2019) 6 ALT 44
Hon'ble Judges : Arun Mishra, J;M. R. Shah, J;B.R. Gavai, J
Bench : Full Bench
Advocate : Shailesh Madiyal, Ankur S. Kulkarni, Mahesh Thakur, Sheffali
Chaudhary, Vipasha Singh, Sudhanshu Parkash, Kartik Anand, S. N. Bhat
Final Decision : Allowed

Judgement
B.R. Gavai, J
1. Leave granted.
2. The present appeals arise out of the common judgment and order passed by the
Single Judge of the Karnataka High Court in Regular Second Appeal No. 1925 of
2008 and Regular Second Appeal No. 1834 of 2008 thereby dismissing both the
appeals.
3. For the sake of convenience, the parties shall be referred hereinafter as per
their status shown in the plaint before the trial court. The suit O.S. No. 93/1999
was filed by the plaintiff Govindappa, who is the son of Bale Krishnappa. Originally
the suit property belonged to one Bale Venkataramanappa, who was the brother of
Bale Krishnappa. Said Bale Venkataramanappa has entered into an agreement to
sell with the plaintiff, specific performance of which is sought in the present suit.
The son of the Bale Venkataramanappa, M.V. Nagaraj was defendant No. 1, who
has been represented through Legal representatives in the appellate courts since
deceased. The wife and daughter of Anjanappa, who was another son of
Venkataramanappa are the defendant Nos. 2 & 3 to the suit respectively. The
daughter and wife of Bale Venkataramanappa are defendant Nos. 4 & 5 to the suit
respectively. The R.S.A. No. 1925/2008 is filed by the original defendant Nos. 4 &
5, who are daughter and wife of Bale Venkataramanappa. The R.S.A. No.
1834/2008 has been filed by the legal representatives of the original defendant No.
1, M.V. Nagaraj and the original defendant Nos. 2 & 3, who are wife and daughter
of Anjanappa. The suit was filed inter alia contending that the defendants did not
come forward to execute the sale deed in respect of the agreement to sell. After
the notice was issued by the Civil Judge (Junior Division) & JMFC, Hoskote, the
defendants appeared before the Court. However, they did not file the written
statement. The power of attorney holder of the plaintiff is examined as PW1. The
plaintiff also examined two witnesses in support of his case, i.e., PW2 and PW3. He
produced documentary evidence Exhibits P1 to P34 in support of his case. The
defendants did not crossexamine the plaintiff. The trial court, upon appraisal of
Exhibit P1, i.e., the agreement to sell dated 15.05.1990, held that the suit property
was granted in favour of the defendant and as per the grant certificate, there was a
15 years bar on alienation of the suit property. The period of the said bar was to
expire on 13.10.1988. It was, therefore, held by the trial Judge that since the said
agreement was executed during the nonalienation period of 15 years, the
agreement was void and nonexecutable. It was held that since the said agreement
was contrary to the statutory bar, it was void in law and as such the suit for specific
performance of the contract was not maintainable.
4. Being aggrieved thereby, the plaintiff filed Regular Appeal No. 86 of 2004 before
the Principal District & Session Judge, Bangalore. Before the appellate court,
though the defendants had put in their appearance, the Advocate did not appear to
argue the matter. The first appellate court held that the father of Original
defendant No. 1, namely, Bale Venkataramanappa, had mortgaged the suit
property by a registered mortgage deed on 23.04.1990. It further held that on
15.05.1990 he had also entered into an agreement to sell with the plaintiff. It was
further held that, the entire sum of Rs. 46,000/ agreed to be paid to Bale
Venkataramanappa was received by him. It was further found that the plaintiff had
already been put in possession of the suit property. The first appellate court held
that, the reasoning of the trial court that the nonalienation clause prohibits
alienation was not apt. On this reasoning, the appeal was allowed.
5. Being aggrieved by the judgment and order passed by the first appellate court,
the original defendant Nos. 4 and 5 had filed Regular Second Appeal No. 1925 of
2008 whereas, legal representatives of defendant No. 1 and original defendant
Nos. 2 and 3 have filed Regular Second Appeal No. 1834 of 2008. Two points were
raised before the High Court on behalf of the defendants. Firstly, that the suit
which was filed in the year 1999 for specific performance of agreement to sell
entered into on 15.05.1990 was beyond limitation. Secondly, that in view of
provisions of Section 61 of the Karnataka Land Reforms Act, 1961 (hereinafter
referred to as “the Reforms Act”), the agreement was not enforceable. The High
Court observed that, as a matter of fact, the trial court ought not to have framed
such an issue. It further observed that, though in the suit for specific performance
of contract it was necessary to frame the issue with regard to readiness and
willingness of the plaintiff to perform his part of the contract along with other
issues, neither the trial court nor the first appellate court had framed such an issue.
According to the High Court, in the absence of the defendants neither filing the
written statement nor contesting the suit, the finding as recorded by the first
appellate court was correct in law. The High Court concurred with the finding of the
first appellate court that since the entire amount was received by Bale
Venkataramanappa, father of defendant No.1, and also from the recital of the
agreement to sell, it was clear that the possession was also handed over. As such,
the High Court held that the finding of the first appellate court was correct. Being
aggrieved thereby, defendants have approached this Court.
6. Mr. Shailesh Madiyal, learned counsel appearing on behalf of the defendants
(appellants herein), submitted that in view of the provisions of Section 61 of the
Reforms Act, the predecessorininterest of the defendants, i.e., Bale
Venkataramanappa could not have transferred the said land, as such, the
agreement to sell was void in law and, therefore, not enforceable. He submitted
that the finding as recorded by the trial Judge was correct in law, which ought not
to have been interfered with by the first appellate court. It is further submitted
that the High Court was also not correct in law in upholding the finding of the first
appellate court.
7. The original plaintiff (respondent(s) herein), on the contrary, submitted that the
provisions of Section 61 of the Reforms Act would prohibit only the sale, gift,
exchange, mortgage, lease or assignment and would not prohibit an agreement to
sell. It is submitted that once the period of restriction of 15 years is over, the
agreement to sell, though executed during the period of 15 years, becomes
enforceable in law. It is submitted that, in the present case, Bale
Venkataramanappa had received the entire consideration and had also handed
over the possession as per the agreement to sell. It is further submitted that, the
pleadings in the plaint were not controverted by either filing written statement nor
leading any evidence and in this view of the matter, the first appellate court and
the High Court were justified in decreeing the suit.
8. The facts in the present case are not in dispute. On 20. 10.1976, the suit
property, i.e., 1 acre 6 guntas bearing Survey No. 57 situated at Mutkur Village,
Angondanahalli Hobli, Hoskote Taluk, Bangalore District, was given as a grant in
favour of Bale Venkataramanappa. The said grant was under the provisions of the
Reforms Act. On 13.09.1983, the premium was paid by Bale Venkataramanappa
and the grant was confirmed in his favour with a nonalienation clause of 15 years.
On 15.09.1983, there was a mutation entry in the revenue records entering the
name of said Bale Venkataramanappa with an endorsement that the land shall not
be alienated for a period of 15 years. On 23.04.1990, Bale Venkataramanappa, by
a registered mortgage deed, mortgaged the suit land in favour of the plaintiff for a
sum of Rs. 20,000/. The mortgage deed recites about the receipt of the entire
mortgaged amount by Bale Venkataramanappa. Under the mortgage deed, Bale
Venkataramanappa had agreed to repay the loan within a period of one year.
However, within a period of one month, Bale Venkataramanappa executed an
agreement to sell dated 15.05.1990 in favour of the plaintiff. The agreement to sell
recites that he was in need of money for his legal necessities and to repay his hand
loans and for his domestic needs and, therefore, he had agreed to sell the suit
property for a sum of Rs. 46,000/. He acknowledges the receipt of entire amount
of consideration, i.e., Rs. 46,000/. The recital in the agreement to sell reads that
at the time of execution of the agreement, the possession of the suit property is
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.
9. It could thus be seen that, initially the property was mortgaged on 23.04.1990,
and within a period of one month the agreement to sell is executed. At the time of
the agreement itself, the entire consideration amount is said to have been received
by Bale Venkataramanappa and also the possession is handed over to the plaintiff.
10. It appears, that there were also parallel proceedings before the revenue
authorities. After the death of Bale Venkataramanappa, the plaintiff filed an
application on 12. 05.1997 before the Tehsildar, Hoskote, for mutating his name in
place of Bale Venkataramanappa. The Tehsildar, without any notice, carried out
the mutation and entered the name of the plaintiff in the revenue records. The
defendants challenged the same before the Assistant Commissioner,
Doddabalapura Division. The said appeal was allowed on 27. 06.2008. Accordingly,
the revenue records were corrected and the defendants’ names were entered on
24.10.2009. The said Order came to be challenged by the plaintiff before the High
Court by way of Writ Petition Nos. 2224322244 of 2011. The High Court vide Order
dated 26.07.2011, dismissed the said petitions.
11. The short question that arises for consideration in the present appeals is, as to
whether the agreement to sell dated 15. 05.1990 executed by Bale
Venkataramanappa in favour of the plaintiff would be enforceable in law or not.
12. For appreciating the said issue, it would be necessary to refer to Section 61 of
the Reforms Act, which reads thus:
“61. Restriction on transfer of land of which tenant has become occupant.—
(1) Notwithstanding anything contained in any law, no land of which the occupancy
has been granted to any person under this Chapter shall, within fifteen years from
the date of the final order passed by the Tribunal under subsection (4) or sub‐
section (5) or subsection (5A) of section 48A be transferred by sale, gift, exchange,
mortgage, lease or assignment; but the land may be partitioned among members
of the holder’s joint family,
(2) Notwithstanding anything contained in subsection (1), it shall be lawful for the
occupant registered as such or his successorintitle 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 fifty one per cent of the paidup share capital is held by the State Government
or a Corporation owned or controlled by the Central Government or the State
Government or both for development of land or improvement of agricultural
practices; or for raising educational loan to prosecute the higher studies of the
children of such person and without prejudice to any other remedy provided by any
law, in the event of his 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 to be attached and sold and the proceeds to be utilised in
the payment of such loan.
Explanation. – For the purpose of this subsection, “Higher Studies” means the
further studies after Pre university Examination or 12th Standard Examination
conducted by CBSE or ICSE or any Diploma courses.
(3) Any transfer or partition of land in contravention of Subsection (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.”
13. A perusal of the said provision 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 subsection (4) or sub section (5) or subsection
(5A) of Section 48A 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 cooperative 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 paidup 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.
14. This Court in the case of Kedar Nath Motani and Ors. vs. Prahlad Rai and Ors.
(1960) 1 SCR 861 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. This
Court has referred to various English judgments in paragraphs 11, 12 and 14,
which read thus:
“11. Coming now to the question whether the appellants' suit was rightly dismissed
by the High Court on the application of the maxim, ex turpi causa etc., we have
first to see what are the specific facts on which this contention is based. The case of
the appellants was that the property was taken benami in the names of Prahlad Rai
and others to avoid the implication of clause 16. In making the application to the
Bettiah Raj the signatures of Prahlad Rai and others were made by Radhumal or
someone under his instructions, because the relationship between Radhumal,
Prahlad Rai and others was so intimate that it was considered unnecessary to
trouble them. Inasmuch, as the matter was brought to the notice of the Assistant
Manager of the Court of Wards, all these facts were capable of being investigated,
including the making of the signatures by Radhumal. No doubt, the making of the
signatures of another person without his consent, express or implied, is an offence
under the ordinary law, but the intention was not so much to forge the signatures
but to present the application in the names of those persons. However it be, we
proceed on the assumption that there was some illegality committed by Radhumal
in approaching the Bettiah Raj and also in the execution of the B.H. forms, which
were also signed with the names of these persons. The question is whether this
illegality is sufficient to non​suit the plaintiffs on the application of the maxim.
12. The law was stated as far back as 1775 by Lord Mansfield in Holman v.
Johnson, (1775) 1 Cowp 341, 343 : 98 ER 1120, 1121, in the following words:
“The principle of public policy is this; ex dolo malo non oritur actio. No Court will
lend its aid to a man who founds his cause of action upon an immoral or an illegal
act. If, from the plaintiff's own stating or otherwise, the cause of action appears to
arise ex turpi causa, or the transgression of a positive law of this country, there the
Court says he has no right to be assisted. It is upon that ground the Court goes;
not for the sake of the defendant, but because they will not lend their aid to such a
plaintiff. So if the plaintiff and defendant were to change sides, and the defendant
was to bring his action against the plaintiff, the latter would then have the
advantage of it; for where both are equally in fault, potior est conditio
defendentis.”
There are, however, some exceptions or “supposed exceptions” to the rule of turpi
causa. In Salmond and William on Contracts, four such exceptions have been
mentioned, and the fourth of these exceptions is based on the right of restitutio in
integrum, where the relationship of trustee and beneficiary is involved. Salmond
stated the law in these words at p. 352 of his Book (2nd Edn.):
“So if A employs B to commit a robbery, A cannot sue B for the proceeds. And the
position would be the same if A were to vest property in B upon trust to carry out
some fraudulent scheme: A could not sue B for an account of the profits. But if B,
who is A's agent or trustee, receives on A's account money paid by C pursuant to
an illegal contract between A and C the position is otherwise and A can recover the
property from B, although he could not have claimed it from C. In such cases public
policy requires that the rule of turpis causa shall be excluded by the more
important and imperative rule that agents and trustees must faithfully perform the
duties of their office.”
Williston in his Book on Contracts (Revised Edn.), Vol. VI, has discussed this matter
at p. 5069, para 1785 and in paras 1771 to 1774, he has noted certain exceptional
cases, and has observed as follows:
“If recovery is to be allowed by either partner or principal in any case, it must be
where the illegality is of so light or venial a character that it is deemed more
opposed to public policy to allow the defendant to violate his fiduciary relation with
the plaintiff than to allow the plaintiff to gain the benefit of an illegal transaction.”
Even in India, certain exceptions to the rule of turpi causa have been accepted.
Examples of those cases are found in Palaniyappa Chettiar v. Chockalingam
Chettiar (1920) ILR 44 Mad 334] and Bhola Nath v. Mul Chand, (1903) ILR 25 All
639.
14. Recently, the Court of Appeal in Bowmakers Ltd. v. Barnet Instruments, Ld.
(1945) 1 KB 65] reviewed the law on the subject, and laid down that every
illegality did not entitle the Court to refuse a judgment to a plaintiff. Du Parcq, L.J.,
observed as follows:
“In our opinion, a man's right to possess his own chattels will as a general rule be
enforced against one who, without any claim of right, is detaining them, or has
converted them to his own use, even though it may appear either from the
pleadings, or in the course of the trial, that the chattels in question came into the
defendant's possession by reason of an illegal contract between himself and the
plaintiff, provided that the plaintiff does not seek, and is not forced, either to found
his claim on the illegal contract or to plead its illegality in order to support his
claim.”
We are aware that Prof. Hamson has criticised this case in (1949) 10 Cambridge
Law Journal, 249, and has forborne its application, except in the clearest possible
circumstances. The law has been also considered by Pritchard, J., in Bigos v.
Bousted (1951) 1 All ER 92, where all the authorities are referred to.”
15. The threeJudge Bench of this Court, after referring to the aforesaid judgments,
speaking through M. Hidayatullah, J. (as His Lordship then was), observes thus:
“15. The correct position in law, in our opinion, is 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. If the illegality be trivial or venial, as stated by Williston and the
plaintiff is not required to rest his case upon that illegality, then public policy
demands that the defendant should not be allowed to take advantage of the
position. A strict view, of course, 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. If, however, 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 was 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.”
16. It could thus be seen, that this Court has held that the correct position of law is
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. This Court further held, that if the illegality
is trivial or venial and the plaintiff is not required to rest his case upon that
illegality, then public policy demands that the defendant should not be allowed to
take advantage of the position. It has further been 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.
17. Subsequently, another threeJudge Bench of this Court in Immani Appa Rao and
Ors. vs. Gollapalli Ramalingamurthi and Ors. (1962) 3 SCR 739 again had an
occasion to consider the issue with regard to applicability of the aforesaid two
maxims. This Court speaking through P.B. Gajendragadkar, J. (as His Lordship
then was) observed thus:
“12. Reported decisions bearing on this question show that consideration of this
problem often gives rise to what may be described as a battle of legal maxims.
The appellants emphasised that the doctrine which is pre eminently applicable to
the present case is ex dolo malo non oritur actio or ex turpi causa non oritur actio.
In other words, they contended that the right of action cannot arise out of fraud or
out of transgression of law; and according to them it is necessary in such a case
that possession should rest where it lies in pari delicto potior est conditio
possidentis; where each party is equally in fraud the law favours him who is
actually in possession, or where both parties are equally guilty the estate will lie
where it falls. On the other hand, Respondent 1 argues that the proper maxim to
apply is nemo allegans suam turpitudinum audiendum est, whoever has first to
plead turpitudinum should fail; that party fails who first has to allege fraud in which
he participated. In other words, the principle invoked by Respondent 1 is that a
man cannot plead his own fraud. In deciding the question as to which maxim
should govern the present case it is necessary to recall what Lord Wright, M.R.
observed about these maxims in Berg v. Sadler and Moore, (1937) 2 KB 158 at p.
62. Referring to the maxim ex turpi causa non oritur actio Lord Wright observed
that “this maxim, though veiled in the dignity of learned language, is a statement
of a principle of great importance; but like most maxims it is much too vague and
much too general to admit of application without a careful consideration of the
circumstances and of the various definite rules which have been laid down by the
authorities”. Therefore, in deciding the question raised in the present appeal it
would be necessary for us to consider carefully the true scope and effect of the
maxims pressed into service by the rival parties, and to enquire which of the
maxims would be relevant and applicable in the circumstances of the case. It is
common ground that the approach of the Court in determining the present dispute
must be conditioned solely by considerations of public policy. Which principle would
be more conducive to, and more consistent with, public interest, that is the crux of
the matter. To put it differently, having regard to the fact that both the parties
before the Court are confederates in the fraud, which approach would be less
injurious to public interest. Whichever approach is adopted one party would
succeed and the other would fail, and so it is necessary to enquire as to which
party's success would be less injurious to public interest.
13. Out of the two confederates in fraud Respondent 1 wants a decree to be passed
in his favour and that means he wants the active assistance of the Court in
reaching the properties possession of which has been withheld from him by
Respondent 2 and the appellants. Now, if the defence raised by the appellants is
shut out Respondent 1 would be entitled to a decree because there is an ostensible
deed of conveyance which purports to convey title to him in respect of the
properties in question; but, in the circumstances, passing a decree in favour of
Respondent 1 would be actively assisting Respondent 1 to give effect to the fraud
to which he was a party and in that sense the Court would be allowed to be used as
an instrument of fraud, and that is clearly and patently inconsistent with public
interest.
14. On the other hand, if the Court decides to allow the plea of fraud to be raised
the Court would be in a position to hold an enquiry on the point and determine
whether it is a case of mutual fraud and whether the fraud intended by both the
parties has been effectively carried out. If it is found that both the parties are
equally guilty and that the fraud intended by them has been carried out the
position would be that the party raising the defence is not asking the Court's
assistance in any active manner; all that the defence suggests is that a confederate
in fraud should not be permitted to obtain a decree from the Court because the
document of title on which the claim is based really conveys no title at all. It is true
that as a result of permitting Respondent 2 and the appellants to prove their plea
they would incidentally be assisted in retaining their possession; but this assistance
is of a purely passive character and all that the Court is doing in effect is that on
the facts proved it proposes to allow possession to rest where it lies. It appears to
us that this latter course is less injurious to public interest than the former.”
18. This Court 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. The Court finds that, when both the parties before the Court are
confederates in the fraud, the Court will have to find out which approach would be
less injurious to public interest. The Court observed that, whichever approach is
adopted, one party would succeed and the other would fail and, therefore, it is
necessary to enquire as to which party’s success would be less injurious to public
interest. The Court in the facts of the said case finds that if the decree was to be
passed in favour of respondent No. 1 (who was the plaintiff), it would be actively
assisting respondent No. 1 to give effect to the fraud to which he was a party and it
has been held that in that sense the Court would be allowed to be used as an
instrument of fraud and that is clearly and patently inconsistent with public
interest.
19. It has further been 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. It has
been held, that all the defence suggested is that a confederate in fraud shall not be
permitted to obtain a decree from the Court because the documents of title, on
which the claim is based really conveys no title at all. In the facts of the said case,
it was held, that though the result thereof would be assisting the defence therein to
retain their possession, for such an assistance would be purely of passive character
and all that the Court would do in effect is that on the facts proved, it proposes to
allow possession to rest where it lies. It has been held that, latter course appears
to be less injurious to public interest than the former one. This Court in the said
judgment has digested the English law on the issue in the following paragraphs,
which read thus:
“19. In support of the contrary view reliance is usually placed on an early English
decision in Doe, Dem. Roberts against Roberts, Widow, 106 ER 401 . In that case it
was held that “no man can be allowed to allege his own fraud to avoid his own
deed; and, therefore, where a deed of conveyance of an estate from one brother
to another was executed, to give the latter a colourable qualification to kill game.
The document was as against the parties to it valid and so sufficient to support an
ejectment for the premises”. In dealing with the question raised Bayley, J.
observed “by the production of the deed, the plaintiff established a prima facie
title; and we cannot allow the defendant to be heard in a court of justice to say that
his own deed is to be avoided by his own fraud;” and Holroyd, J. added that “a
deed may be avoided on the ground of fraud, but then the objection must come
from a person neither party nor privy to it, for no man can allege his own fraud in
order to invalidate his own deed”.
20. This decision has, however, been commented on by Taylor in his Law of
Evidence. According to Taylor “it seems now clearly settled that a party is not
estopped by his deed from avoiding it by proving that it was executed for a
fraudulent, illegal or immoral purpose [Taylor's “Law of Evidence”, Vol. 11th, Edn.
p. 97, para 93]”. The learned author then refers to the case of Roberts, 106 ER 401
and adds “in the subsequent case of Prole v. Wiggins, (1837) 3 Bing. NC 235 : 6
LJCP 2 : 43 R.R. 621, Sir Nicholas Tindal observed that this decision rested on the
fact that the defence set up was inconsistent with the deed”. Taylor then adds that
“the case, however, can scarcely be supported by this circumstance, for in an
action of ejectment by the grantee of an annuity to recover premises on which it
was secured, the grantor was allowed to show that the premises were of less value
than the annuity, and consequently, that the deed required enrolment, although he
had expressly covenanted in the deed that the premises were of greater value…”
According to the learned author “the better opinion seems to be that where both
parties to an indenture either know, or have the means of knowing, that it was
executed for an immoral purpose, or in contravention of a statute, or of public
policy, neither of them will be estopped from proving those facts which render the
instrument void ab initio; for although a party will thus in curtain cases be enabled
to take advantage of his own wrong, yet this evil is of a trifling nature in
comparison with the flagrant evasion of the law that would result from the adoption
of an opposite rule” (p. 98). Indeed, according to Taylor, “although illegality is not
pleaded by the defendant nor sought to be relied upon by 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. No polluted hand
shall touch the pure fountain of Justice” (p. 93).
21. To the same effect is the opinion of Story [Story's Equity Jurisprudence, Vol. I,
s. 421; English edition by Randall, 1920, s. 298.] : “In general, where parties are
concerned in illegal agreements or other transactions, whether they are mala
prohibita or mala in se, 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 known
maxim in pari delicto potior est conditio defendentis et possidentis. The old cases
often gave relief, both at law and in equity, where the party would otherwise
derive an advantage from his inequity. But the modern doctrine has adopted a
more severely just and probably politic and moral rule, which is, to leave the
parties where it finds them giving no relief and no countenance to claims of this
sort.”
20. It could thus be seen that, although illegality is not pleaded by the defendant
nor is relied upon by 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. It has been held, that no polluted hand shall touch the
pure fountain of justice. It has further been held, that where parties are concerned
in illegal agreements or other transactions, courts of equity following the rule of
law as to participators in common crime will not interpose to grant any relief,
acting upon the maxim in pari delicto potior est conditio defendetis et possidentis.
21. In the case of Nathu Prasad vs. Ranchhod Prasad and Ors. (1969) 3 SCC 11the
threeJudge Bench of this Court had an occasion to consider somewhat similar
provisions which read thus:
“2. Section 73 of the Revenue Administration and Ryotwari Land Revenue and
Tenancy Act, Samvat 2007 (Act No. 66 of 1950) provides:
“No Pakka tenant shall sublet for any period whatsoever any land comprised in his
holdings except in the cases provided for in Section 74.
Explanation.— * * *.”
Section 74 deals with subletting by disabled persons. Since the plaintiff is not a
disabled person, the section need not be read. Section 75 provides:
“A sublease of the whole or any part of the holding of a Pakka tenant effected
properly and legally prior to the commencement of this Act shall terminate after
the expiry of the period of sub​lease or 4 years after the commencement of this Act,
whichever period is less.”
Section 76 provides:
“(1) If the sublessee does not hand over possession of the land sublet to him after
the sublease ceases to be in force under Sections 74 and 75 to the lessor or his
legal heir … he shall be deemed to be a trespasser and shall be liable to ejectment
in accordance with the provisions of this Act.
(2) * * *.”
Section 78 provides:
“(1) Any person who in contravention of the provisions of this Act, obtains
possession of any land by virtue of a bequest, gift sale, mortgage or sub​lease, or of
any agreement purporting to be a bequest, gift, sale, mortgage or sublease shall
be deemed to be a trespasser and shall be liable to ejectment in accordance with
the provisions of Section 58.”
In the said case, the plaintiff/appellant before the Supreme Court was a recorded
pattedar tenant and had granted a sub lease of land to respondent Nos. 1 and 2 for
five years. The suit was filed on the ground that sublease was in contravention of
Section 73 of the Revenue Administration and Ryotwari Land Revenue and Tenancy
Act, Samvat 2007 (Act No. 66 of 1950) and that the said respondents had
trespassed in the land. The trial court had decreed the suit. The first appellate
court had also confirmed the same. However, the same was reversed by the High
Court in the second appeal. Allowing the appeal and reversing the judgment of the
High Court, this Court held that a person inducted as a sublessee contrary to the
provisions of Section 78 of the Tenancy Act did not acquire any right under a
contract of sub​letting and his possession was not protected.
22. We have to apply the principles of law as deduced by this Court in the case of
Kedar Nath and Immani Appa Rao (supra), to the facts of the present case.
23. The transaction between the late Bale Venkataramanappa and the plaintiff is
not disputed. Initially the said Bale Venkataramanappa 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. Subsection (1) of Section 61 of the
Reforms Act begins with a nonobstante 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. Subsection (3) of Section 61 of the Reforms Act makes the legislative intent
very clear. It provides, that any transfer in violation of subsection (1) shall be
invalid and it also provides for the consequence for such invalid transaction.
24. Undisputedly, both, the predecessorintitle 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.
25. However, the ticklish question that arises in such a situation is: “the decision of
this Court would weigh in side of which party”? As held by Hidayatullah, J. in Kedar
Nath Motani (supra), the question that would arise for consideration is as to
whether the plaintiff can rest his claim without relying upon the illegal transaction
or as to whether the plaintiff can rest his claim on something else without relying
on the illegal transaction. 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
(supra), 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 (supra), 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.
26. It could thus be seen that, 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.
27. Now, let us apply the another test laid down in the case of Immani Appa Rao
(supra). At the cost of repetition, 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 (supra), 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 predecessorintitle
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 (supra), 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.
28. 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 CourtIII, 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.
29. The parties shall bear their own costs.