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2024 Supreme(Ori) 520

IN THE HIGH COURT OF ORISSA AT CUTTACK
A.C.BEHERA, J.
Sarangadhar Dash (Dead) and Others – Appellants
Versus
Abhimanyu Pal @ Palo (Dead) and Others – Respondents
R.S.A. No. 301 of 2002
Decided On : 05-04-2024

Advocates Appeared:
For the Appellant : D.P. Mohanty
For the Respondent: S.J. Biswal

An agreement to sell government leasehold property without required permission is void under law, and unjust enrichment occurs if the advanced payment is not returned.

Headnote:(A) Contract Act, 1872 - Section 23 - Agreement to sell - The court addressed the agreement for selling leasehold land and its validity, ruling it void due to public policy, confirmed by lower courts - Permission from the Government was not obtained, thus the agreement was illegal. (Paras 19-21)

(B) Unjust Enrichment - The court highlighted that although the plaintiff was entitled to possession, retaining the advance payment of Rs. 7,000/- without returning it would amount to unjust enrichment. (Paras 25-27)

Facts of the case:
The plaintiff, after failing to obtain Government permission to sell the leasehold land, sought possession due to refusal of the sale agreement, which was executed in 1976. The defendant had received possession and payments based on this agreement. (Paras 4-7)

Findings of Court:
The possession must be returned to the plaintiff, who failed to fulfill conditions for the sale. However, the plaintiff must refund the advance payment to the defendant. (Paras 30-31)

Issues: Whether the sale agreement was void and whether the direction for possession was sustainable without addressing the advance payment issue. (Paras 17-18)

Ratio Decidendi: The agreement was ruled void since it contravened public policy, and the plaintiff’s retention of the advance without refunding would lead to unjust enrichment. (Para 21)

Result: The appeal was allowed in part, restating that possession is to be returned subject to refunding the advance payment with interest. (Para 30)

Table of Content
1. introduction of the case and parties involved (Para 1 , 2 , 3)
2. details of the plaintiff's lease agreement and its context (Para 4 , 5 , 6 , 7 , 8)
3. defendant's arguments and issues raised (Para 9 , 10 , 11)
4. trial court findings and appeal background (Para 12 , 13 , 14 , 15 , 16)
5. discussion on the validity of the leasehold sale agreement (Para 17 , 19 , 20 , 21)
6. legal principles governing unjust enrichment and refund (Para 22 , 23 , 24 , 25 , 26)
7. final directives and adjustments made by the court (Para 27 , 28 , 29 , 30 , 31)

JUDGMENT :

A.C. BEHERA, J.

1. This Second Appeal has been preferred against the confirming judgment.

2. The appellant of this Second Appeal was the defendant before the Trial Court in the suit vide T.S. No.56 of 1988 and he was the appellant before the 1st Appellate Court in the first appeal vide T.A. No.27 of 1996.

3. The respondent of this 2nd Appeal was the plaintiff before the Trial Court in the suit vide T.S. No.56 of 1988 and he was the respondent before the 1st Appellate Court in the 1st appeal vide T.A. No.27 of 1996. The suit of the plaintiff (who is the respondent in this 2nd Appeal) against the defendant (who is the appellant in this 2nd appeal) was a suit for declaration and recovery of possession.

4. The case of the plaintiff before the Trial Court in the suit vide T.S. No.56 of 1988 was that, the suit land is a residential plot belonging to Government of Orissa under the control of the General Administration Department. The suit land was allotted to the plaintiff by the Government on lease basis for a period of 90 years with effect from 6.5.1966 on payment of premium Rs. 1036.06 Paise and on the yearly rent of Rs.15.50 Paise, for his residential purpose under a registered lease deed bearing No.5055 dated 6.5.1966, as he (plaintiff) was an ex-military person. After allotment of the suit residential plot on lease basis for a period of 90 years as per lease deed No.5055 dated 6.5.1966, he (plaintiff) constructed a Pucca house thereon with Asbestos roof consisting of 2 rooms and also put boundary wall on the east-west and south side of the suit plot and took electric and water connection to the same, for the purpose of construction of his main building after collecting funds from different sources. But, he could not able to construct his main building immediately on the suit plot on account of his illness and financial difficulties in his family, for which, he (plaintiff) requested defendant to purchase the suit plot along with the houses standing thereon from him with a condition that, he (plaintiff) shall sell the same only after obtaining permission from the Government for sale. To which, the defendant agreed and the total consideration amount thereof was fixed as Rs.14,000/-. In order to sell the suit plot along with the structures/houses thereon to the defendant for a consideration amount of Rs.14,000/-, he (plaintiff) received Rs.7000/- out of Rs.14,000/- as advance from the defendant, through his father by executing an agreement for sale on dated 10.12.1976 with a condition that, he (plaintiff) shall execute and register the sale deed in favour of the defendant in respect of the suit plot along with the structures/houses thereon only after obtaining permission for sale of the same from the Government and he(plaintiff) will receive the rest amount i.e. Rs.7,000/- at the time of execution of the sale deed, but he (plaintiff) delivered possession of the suit plot along with the houses/structures thereon to the defendant at the time of execution of the agreement to sell i.e. on 10.12.1976 in favour of the defendant and since then, he (defendant) has been possessing the suit land and the houses thereon and has been letting out the houses on the suit land to different persons on rent.

5. After execution of the agreement dated 10.12.1976 by the plaintiff in favour of the defendant and delivering the possession of the suit plot to the defendant, he (plaintiff) applied before

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