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1975 Supreme(J&K) 23

IN THE HIGH COURT OF JAMMU AND KASHMIR AT JAMMU
Jaswant Singh,Mian Jalal-ud-Din, JJ.
Mohd. Syed Baba - Appellant
Versus
Universal Timber Traders - Respondent
LPA No. 2/1974
Decided On : 05 March, 1975

Advocates Appeared:
Advocate For Appellant: R.S. Mehta
Advocate For Respondent: I.K. Kotwal

A transfer or assignment of right can be said to be void only if it is prohibited by law or is opposed to public policy.

Headnote:

CONTRACT ACT - SECTION 23 - TRANSFER OF LEASEHOLD RIGHTS - AGREEMENT VIOLATING LEASE COVENANT - NOT VOID - REGISTRATION OF CONTRACTORS ACT - SECTION 3 - VIOLATION - AGREEMENT UNENFORCEABLE.

Fact of the Case:

Appellant obtained a lease for timber extraction from the State Government. He entered into an agreement with the respondent giving him exclusive rights to carry out the remaining work of the lease. Appellant filed a suit for cancellation of the agreement alleging fraud and misrepresentation. The trial court decided a preliminary issue in favor of the respondent holding that the appellant could not avoid the contract by taking advantage of his own wrong.

Finding of the Court:

The court held that the impugned agreement transferring the rights in the lease in favor of the respondent in contravention of the relevant clause in the lease agreement does not offend the provisions of Section 23 of the Contract Act and therefore cannot be said to be void on that score. The court also held that the agreement is not void on the ground that there is an express covenant in the lease agreement prohibiting the transfer of lease rights and obligations in favor of any one.

Issues: Whether the agreement dated July 15, 1972, entered into between the parties is void as the same was obtained by fraud and mis-representation?

Ratio Decidendi: A transfer or assignment of right can be said to be void only if it is prohibited by law or is opposed to public policy. The impugned agreement cannot be held to be illegal as it does not violate any provision of law or is opposed to public policy. The covenant in the lease agreement prohibiting the transfer of leasehold rights is not a provision of law and therefore does not render the impugned agreement void.

Final Decision: The appeal was dismissed with costs. The appellant was allowed to raise a plea that the impugned agreement is bad as it violates Section 3 of the Registration of Contractors Act.

Per Jaswant Singh J.

1. This Letters Patent appeal is directed against an order dated April 27, 1974. Passed by Thakur J deciding issue No. 2 framed by him on April 2, 1974, in civil original suit No. 10 of 1973, in favour of the respondent.

2. The facts leading to this appeal are:

The appellant herein obtained from the State Government a lease for extraction of timber from compartments Nos. 33 to 36 of Basantgarh Range, Billawar Division, Jammu Circle, in the name of M/S Farooq and Co. On July 15, 1972, there came into existence an agreement ostensibly executed by the appellant in favour of the respondent giving exclusive right to the latter "to carry out the remaining work of the aforesaid lease. On April 26, 1973, the appellant brought a suit under Section 39 of the Specific Relief Act, for cancellation of the aforesaid agreement dated July 15, 1972, alleging inter alia that he was not conversant with the English language and had executed only a power of attorney in favour of the respondent on July 13, 1972, for carrying on the work of the aforesaid lease, that Shri Raj Kumar, partner of the respondent firm, obtained his signatures on a number of papers on the pretext that a number of copies of the power of attorney had to be prepared, that taking advantage of his simplicity and the fact that he was not conversant with the English language the said Raj Kumar and one Krishen Dutt who was in league with Raj Kumar got the aforesaid agreement dated July 15, 1972 signed by him making him believe that the deed was an agreement making the said power of attorney irrevocable and got it registered on the same day, that about April 19, 1973, the respondent made an application to the Forest Minister as well as to the Chief Conservator of Forests for transfer of his lease-hold rights in the aforesaid lease on the basis of the agreement dated July 15, 1972, that this move on the part of the respondent put him on the alert and impelled him to apply for a copy of the agreement dated July 15, 1972, that on obtaining and examining the said copy he found that the respondent had by mis-representation and fraud manipulated a complete transfer of his lease-hold rights which barred him from operating the lease under the aforesaid agreement with the State Government and that in the circumstances the agreement dated July 15, 1972, was null and void. The appellant further pleaded that the agreement was also null and void as he was not competent to affect a transfer of the lease without the concurrence of the less or in view of the following clause in the aforesaid lease deed:

"The purchaser(s) shall not be permitted to transfer his/their rights or liabilities under this agreement to any one without the previous sanction of the competent authority sanctioning the lease."

3. The appellant imp leaded the Government of Jammu and Kashmir and the Chief Conservator of Forests as pro forma defendants in the petition of plaint of the aforesaid suit.

4. The respondent denied the allegations of fraud and misrepresentation and pleaded that the appellant voluntarily executed the aforesaid agreement as well as a power of attorney on July 15, 1972 and got them registered on the same date and it was not open to him to plead that the agreement was not effective as the concurrence of a third party was not there.

5. On the pleadings of the parties, the following two issues were framed on January 11, 1974:

(1) Whether the agreement dated 15-7-1972 entered into between the parties is void as the same was obtained by fraud and mis-representation? O. P. P.

(2) In the event of Issue No 1 being found against the plaintiff is the said agreement otherwise illegal and unenforceable in law? O. P. P.

6. On March 7, 1974, an application was made on behalf of the appellant before the learned trial court praying that. Issue No. 2, which did not require any evidence to be adduced be tried and disposed of as a preliminary issue. According to the request of the appellant, the learned tria























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