Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Mad) 1442

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
P.B. BALAJI, J.
G.Muthaiah - Appellant
Versus
Dr.J.Rajapriya - Respondent
S.A.(MD)No.650 of 2020, C.M.P.(MD)Nos.6819 & 6820 of 2020 & 15844 of 2023
Decided On : 30-04-2026

Advocates Appeared:
For the Appellant : Mr.H.Lakshmi Shankar
For the Respondent: Mr.T.Balakumaran, Mrs.M.P.Kavia

Civil courts lack jurisdiction under FEMA Section 34 to declare sale of agricultural land to non-resident Indian void despite violation; such transactions not void, unlike under FERA, as authorities imposed penalty without confiscation.

Headnote:(A) Foreign Exchange Management Act, 1999 - Section 34 - Civil court jurisdiction - Sale of agricultural land to non-resident Indian in contravention of FEMA regulations - Adjudicating Authority imposed penalty but did not confiscate property - Section 34 bars civil court from declaring such sale deed null and void, as matter falls within domain of Adjudicating Authority, Appellate Tribunal, or Special Director (Appeals) - Transaction violating FEMA not rendered void under Section 23 of Indian Contract Act, 1872 r/w Section 6(h) of Transfer of Property Act, 1882, unlike under repealed FERA. (Paras 2, 24, 32, 37, 42)

(B) Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India) Regulations, 2000 - Regulation 3(b) - Permit transfer of any immovable property, including agricultural land, by non-resident Indian to resident Indian - Subsequent settlement to resident mother valid; FEMA provides complete code with penalties, compounding, appeals, not absolute prohibition making transaction void. (Paras 10, 35, 36)

(C) Partition suit - Ancestral property - Daughter entitled to 1/3rd share under Hindu Succession (Tamil Nadu Amendment) Act, 1989, if unmarried at commencement - No denial by defendants of her coparcenary right. (Paras 19, 20)

Facts of the case:
Suit for declaration that sale deed of agricultural land (Schedule 'B' property) to non-resident Indian and consequential partition, along with partition of ancestral Schedule 'A' property. Lower courts decreed in favour of plaintiff. Second appeal by defendants challenging declaration of sale deed as void for FEMA violation. FEMA authorities imposed penalty on buyer, confirmed in appeal, without confiscation. Buyer later settled property to his resident mother.

Findings of Court:
Sale deed not void; civil court lacks jurisdiction under Section 34 of FEMA to declare it null. Penalty imposition by authorities does not imply transaction invalidity. Subsequent transfer to resident permissible.

Issues: Whether civil courts can declare FEMA-violative sale of agricultural land to non-resident void; whether Section 34 bars jurisdiction; applicability of Sections 23 Contract Act and 6(h) TPA; daughter's share in ancestral property.

Ratio Decidendi: FEMA violations do not void transactions; civil court jurisdiction ousted by Section 34 where Adjudicating Authority empowered. Unlike FERA, no provision deems FEMA contraventions void; authorities' penalty decision final for civil relief.

Result: Second appeal partly allowed - Decree set aside for Schedule 'B' properties; confirmed for Schedule 'A' partition.

Table of Content
1. factual background of partition suit and fema violation (Para 1 , 4)
2. appellants argue fema violation does not void sale deed (Para 5 , 6 , 7 , 8 , 9 , 10)
3. respondents argue sale void under contract act and tpa (Para 11 , 12 , 13)
4. additional fema penalty orders admitted as evidence (Para 14 , 15 , 16 , 17 , 18)
5. plaintiff entitled to partition of schedule a ancestral properties (Para 19 , 20)
6. section 34 fema bars civil court jurisdiction on nullity (Para 21 , 22 , 23 , 24)
7. declaration relief prerequisite for partition under fema (Para 25 , 26 , 27 , 28)
8. fema complete code with adjudication and appeals mechanism (Para 29 , 30 , 31)
9. fema violations penalized but not rendering transactions void (Para 32 , 33 , 34 , 35 , 36)
10. civil courts excluded; fera-fema distinctions applied (Para 37 , 38 , 39 , 40 , 41)
11. appeal partly allowed; schedule b decree set aside (Para 42 , 43)

JUDGMENT

1.The defendants 3 & 4 in O.S.No.258 of 2011, on the file of the Additional Sub Court, Karur, are the appellants in the present Second Appeal.

2.The Second Appeal has been admitted by this Court on 27.03.2026, on the following substantial questions of law:

i) Whether the Courts below are correct and justified in holding that Section 34 of the Foreign Exchange Management Act, 1999 will not bar the jurisdiction of the court to consider the nullity and voidness of sale deed dated 24.10.2005, especially when the issue of contravention of any regulation under the Act is covered by Section 13 of the as per which the adjudicating authority alone is empowered to determine the same?

ii) Whether the Courts below are justified in concluding the 24.10.2005 sale deed to be illegal and invalid for contravention of the Foreign Exchange Management Regulation dated 03.05.2000, especially when the Foreign Exchange Management Act, 1999 or the regulation do not declare such a transaction to be void?”

3.I have heard Mr.H.Lakshmi Shankar, learned counsel for the appellants / defendants, Mr.T.Balakumaran, learned Counsel for the first respondent / plaintiff and Mrs.M.P.Kavia, learned Counsel for the second respondent / 1^st defendant.

4.The facts that are necessary for adjudicating the second appeal on the substantial questions of law are as follows:

4.1.The first respondent filed a suit in O.S.No.258 of 2011, seeking to declare the sale deed executed by the first defendant in favour of the third defendant in Document No.192 of 2005, as null and void, in terms of the provisions of the Foreign Exchange Management Act, 1999 [in short 'FEMA'] and for consequential relief of partition of Schedule 'B' property and allotment of 1/3^rd share to the plaintiff, besides the decree for partition in respect of Schedule 'A' property into three equal shares and allot 1/3^rd share to the plaintiff.

4.2.The 'A' Schedule property originally belonged to Ellappa Naicker, who had two sons, namely, Narayanasamy Naicker and Subba Naicker. The said Ellappa Naicker and his two sons entered into a partition deed on 04.05.1959, under which 'A' Schedule properties, amongst other properties were allotted to Narayanasamy Naicker. Narayanasamy Naicker was blessed with three sons, namely Kasthuri, Jayaraman and Rajagopal. After the demise of Narayanasamy Naicker and his wife, the above mentioned three sons, entered into a partition on 19.10.1995, under which 'B' Schedule properties, amongst other properties were allotted to the share of Jayaraman, who is the father of the plaintiff and the first defendant. The second defendant is the mother of the plaintiff. Even during the lifetime of the father of the plaintiff Jayaraman, some items of properties which fell to his share in the partition deed dated 19.10.1995 were alienated. The 'A' Schedule properties in the suit are the remaining properties which are available for partition.

4.3.The plaintiff contends that she was married only on 07.07.1996, after the commencement of the Hindu Succession Act, [Tamil Nadu Act 1 of 1990] and henc