1996 Supreme(AP) 115

Andhra Pradesh High Court
Judges : B.K.SOMASEKHARA
C.N.Vittal Rao, Secunderabad - Appellant
Versus
Srihari, Hyderabad - Respondent
Decided On : 02-19-96

Headnote:

URBAN LAND CEILING ACT, 1976 - SUIT FOR SPECIFIC PERFORMANCE OF AGREEMENT OF SALE - EXEMPTION GRANTED BY GOVERNMENT UNDER SECTION 20(1)(B) OF THE ACT - VALIDITY - JURISDICTION OF GOVERNMENT TO GRANT EXEMPTION - CONSEQUENCES OF INVALID EXEMPTION ON SUIT AGREEMENTS - APPLICABILITY OF SECTION 42 OF THE ACT - RELIEF OF REFUND OF ADVANCE PAID - INTEREST - DAMAGES.

Fact of the Case:

Plaintiff filed a suit for specific performance of the suit agreement, Ex. A-1, dated 14-1-1976 followed by another agreement, Ex. A-2, dated 12-7-1976 or in the alternative for refund of Rs. 5,000/- with interest at 18 percent per annum from the date of receipt till payment, for costs, etc. The suit property is described in the Plaint Schedule as follows: "plot No. 2 admeasuring about 350 sq. yards situated at Padmaraonagar, secunderabad bounded by North: By Plot No. 1 belonging to C. N. Vittal rao, South : Plot No. 3 belonging to C. N. Vittal Rao, By East: Land and building belonging to C. P. Natrajan and By West: Proposed 30 road." Defendant is the owner of the suit property. He entered into an agreement with the Plaintiff to sell the suit plot of land at a rate of Rs. 60/- per Square Yard, received an advance of Rs. 5,000 / -, a greed to receive the balance of the amount on the date of registration and the sale transaction was to be completed within six months from the date of taking possession, which is mentioned in the second agreement, Ex. A-2. It was also agreed that the Defendant should obtain the permission and exemption from the competent authority under the Urban ceiling Act, 1976 (in short the Act ). It appears that the Plaintiff had also applied for such a permission. The Government granted exemption under G. O. Ms. No. 729, dated 4-5-1981 as per Ex. A-5. The Plaintiff pleaded that he was always ready and willing to perform his part of the contract but the Defendant did not oblige him. A notice was issued by the Plaintiff as per Ex. A-6, dated 2-6-1981 calling upon the Defendant to execute the registered Sale Deed as agreed to an receiving the balance of the sale consideration. It is alleged that the Defendant did not respond to the notice and therefore, the Plaintiff had to file the suit. The defendant admitted the execution of the suit agreements and the terms therein, but he contended that the exemption granted to him under Ex. A-5 was conditional and the conditions imposed therein were oppressive and not acceptable to him and therefore, he has sought for review of the same. In order to get such an exemption he was to surrender the remaining portion of the excess land belonging to him. He also contended that the suit agreements were frustrated in view of the provisions of the Act and they were illegal, void and un-enforceable. He also pleaded hardship in case a decree of specific performance is being directed. He sought for the dismissal of the suit with costs, however, agreeing to refund Rs. 5,000/- to the plaintiff.

Finding of the Court:

The court held that the exemption granted by the Government under Section 20(1)(b) of the Act was void ab initio as the Government had no jurisdiction to grant such an exemption. The court further held that the suit agreements, Exs. A-1 and A-2, were invalid and inoperative as the defendant had no legal right to transfer the land in favor of the plaintiff. The court also held that the decree passed by the trial court was void by virtue of Section 42 of the Act and therefore, could not be sustained.

Issues: 1. Whether the suit agreements are void in view or Section 23 of the Indian Contract Act in view of the provisions of the Urban Land Ceiling Act 1976? 2. Whether the suit agreements Ex. A-1 and A-2 are inoperative in view of the provisions of the Act? 3. Whether the exemption accorded under Ex. A-5 by the Government being conditional is oppressive, illegal and un-enforceable 1 4. a ). Whether the Government had no power to grant exemption in the form of Ex. A-5 in view of the provisions of the Act ? b ). If so, whether such an exemption granted by the Government is without jurisdiction and therefore, it is void ab initio? c ). If so whether the suit agreements, Ex. A-l and A-2 have become illegal, inoperative and un-enforceable and deserves to be either cancelled or totally ignored ? 5. Whether Ex. A-5 if being void or illegal for the purposes of the provisions of the Act would not be void or illegal and inoperative unless it is declared by the competent authority or by the Court at the instance of one of the parties. 6. Whether the decree of the trial Court is illegal, void and inoperative by virtue of the provisions of the Urban Land Ceiling Act, 1976? 7. (a) Whether the decree of the trial Court is liable to be set aside ? (b) If so, to what extent ? and 8. What Order or decree ?

Ratio Decidendi: The court held that the Government had no jurisdiction to grant exemption under Section 20(1)(b) of the Act for the purpose of transferring the land. The court further held that such an exemption would be void ab initio and the sale deed executed by the respondent-firm in favor of the 3rd respondent-builders would be invalid and inoperative, as the respondent-firm had no legal right to transfer the land in favor of the builders.

Final Decision: The appeal was allowed. The judgment and decree of the learned trial Judge were set aside. The suit for specific performance of the suit agreements, Exs. A-1 and A-2 was dismissed. In place of such a decree, a decree was passed to the effect that the plaintiff shall be entitled to recover Rs. 5,000/- form the defendant with interest the rate of 12 percent per annum from the date of payment till the date of suit and with future interest at the rate of 6 percent per annum till the date of payment. In addition thereto, the defendant shall pay damages to the plaintiff which shall be determined by the executing Court after giving opportunity to both the parties and such an order fixing the damages shall be executed as if it is part of this decree. There shall be a charge on all the properties or any benefits like compensation, etc. of the defendant in regard to rights of the plaintiff under this decree till it is fully satisfied. The defendant shall also pay full costs to the plaintiff in regard to both the suit and this appeal.