Case Comment: B.R. Koteswara Rao v. Rameshwari Bai
Introduction
The case of B.R. Koteswara Rao v. Rameshwari Bai[1] was decided by the Andhra Pradesh High Court, before a division bench comprising of Justice(s) G. Bikshapathy and C.Y. Somayajulu on April 22, 2003. The case had emerged as a ‘Letters Patent Appeal’ from a previous ruling in the case by a single judge bench of the same Court. The phrase ‘Letters Patent Appeal’ is used to describe an appeal which is filed by an aggrieved party against the judgement of a single judge bench. In such an appeal, the decision is challenged before a larger bench of the same Court. Similarly, in the present case, the appellants had filed an appeal against the previous ruling in the case pronounced by Justice L.N. Reddy of the Andhra Pradesh High Court on March 05, 2002[2].
In fact, this judgement brought an end to a long running chain of litigation in the matter which was initiated way back in the year 1983 in the Additional Subordinate Judge’s court. The case concerned several substantial questions of law, the pertinent one being the validity of the agreement of sale entered into between the parties, in light of the Andhra Pradesh Agricultural Lands (Prohibition of Alienation) Act, 1972 and the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973. The Court also considered several ancillary questions such as whether the defendant was entitled to specific performance of the agreement in his favour as an equitable relief and if the defendant was ready and willing to perform his part of the contract.
In this case, the Court also had to discern the demeanour of the defendant in as much as he had tampered with evidence, set up a false plea and approached the Court with unclean hands. In a nutshell, the Court had a lot of issues its plate to contemplate upon in this case. Besides, the long drawn legal battle between the parties had reached its zenith and the Court must have been aware of the looming responsibility upon its shoulders to close this chapter with a sense of finality for all involved.
Background/Facts
The facts of this case are quite convoluted, especially since the dispute stretched out in various courts for around twenty years. Rameshwari Bai, the original plaintiff, claimed to be the absolute owner of a parcel of land in Survey №101 of the Gundla Pochampally Village in Medchul Taluq, Ranga Reddy District. This land, the schedule property of the plaint, was 11 acres and 9 guntas in size and had been purchased by the plaintiff in the year 1965 from B. Padmavathi Bai through a registered sale deed after obtaining the due permissions from the Tahsildar of Medchul Taluq. She had been in possession of this property from that time through her husband, G.V. Reddy.
When her husband died in the year 1981, she discovered that the defendant, B.R. Koteswara Rao, had been occupying the land parcel and had even put up fencing of barbed wire and stone pillars. The defendant had also carried out certain construction activities in the property. Upon enquiry, the defendant informed the plaintiff that he would vacate the property if she were to pay him appropriate compensation for all the improvements which he had brought about in the scheduled property. However, whenever the plaintiff tried to get an estimate of the compensation to be paid, the defendant did not co-operate with her. Therefore, she issued a legal notice to the defendant asking him to vacate the property. In response, the defendant claimed that he was occupying the property in his right arising out of an agreement of sale entered into between the parties in the year 1974. The defendant also asserted that the agreement had already been executed by the plaintiff as she had received the consideration of Rs. 5,000.
The plaintiff denied the receipt of Rs. 5,000 and also the purported execution of any such agreement. Subsequently, she approached the trial court and filed a suit seeking a declaration that the receipt dated December 05, 1974 produced by the defendant, as being forged and thus, void and inoperative. She also prayed for consequential relief in the form of a permanent injunction which would restrain the defendant and his men from setting up obstacles in her peaceful possession and enjoyment of the property.
On the other hand, the defendant puts forth his case in quite a different vein. He alleges that the plaintiff’s husband informed him that he would sell the schedule property at a rate of Rs. 1,800 per acre. Having reached a consensus, the defendant paid upright, a sum of Rs. 5,000 and also obtained a receipt of the payment from Rameshwari Bai. He further maintains that he paid an amount of Rs. 13,205 to the plaintiff’s husband, but did not collect a receipt for this payment. With regards to the balance of Rs. 2,000 he vouches that he has always been ready and willing to pay the plaintiff this sum. Also, the defendant contends that in case the payment of Rs. 13,208 cannot be believed, he would be willing to pay this amount to the plaintiff once again.
Therefore, as a counter-claim, the defendant sought a decree of specific performance of the agreement of sale for the schedule property. The defendant also proceeded to file a suit in the Court of the District Munsif, Medchal, whereby he sought an injunction to restrain the plaintiff and her men from interfering in his possession and occupation of the land.
Procedural History
This particular case has a long procedural history, as has already been pointed out above. The first of the multiple rounds of litigation was kick-started in the year 1983 when both the plaintiff and the defendant filed their respective suits which were thereafter heard together in the court of the Additional Subordinate Judge, Ranga Reddy District. This stage of the case took almost ten years to wind up when a common judgement was delivered by the court in 1992. By this judgement, it was observed that although the receipt of Rs. 5,000 from 1974 had duly been drawn up and signed by the plaintiff, the agreement could not be enforced by the defendant as it was found to be unlawful on account of being contrary to the provisions contained in the Andhra Pradesh Agricultural Lands (Prohibition of Alienation) Act, 1972.
Section 23 of the Indian Contract Act, 1972 mandates that “the object of an agreement is lawful, unless it is of such a nature that if permitted, it would defeat the provisions of any law.[3]” Here, since the terms of the agreement were found to be of such a nature which would defeat the provisions enacted in the above-mentioned Act, the agreement was void. The exact nature in which the terms are in contravention to the provisions of the Act will be discussed in subsequent sections. Therefore, a decree giving possession of the schedule property to the plaintiff was issued, while the defendant’s suit was dismissed.
Aggrieved by the findings of the trial court, the defendant filed two appeals in the year 1992: the first was filed in the High Court against the decree of possession passed in favour of the plaintiff, whereas the second was filed in the Court of District Judge, Ranga Reddy District against the dismissal of the defendant’s earlier suit. While the former was being heard by the single judge in the High Court, the latter was transferred from the District Court to the High Court, albeit not before the same judge. However, the single judge heard the first appeal independently and dismissed it.
The single judge, on the issue of specific performance of the agreement, reasoned that the defendant was not entitled to seek such equitable relief because: (1) He had set up a false plea of payment of the sum of Rs. 13,205; (2) He did not produce any evidence to show that he was ready and willing to pay the balance amount of Rs. 2,000 to the plaintiff; and (3) He had sought time for payment of the Court fees on the counter-claim. Upon such this dismissal, this Letters Patent Appeal was instituted by the defendant.
Issues
The Court first determined the issues and questions of law upon which it had to ponder and pass a verdict. Noting that since the decree of possession issued by the trial court had been confirmed by the single judge and that the defendant was seeking the specific performance of the agreement of sale, the only issue to be considered was whether the relief of specific performance could be granted to the defendant. In order to determine the answer, it was deemed necessary to understand whether the agreement of sale was valid in law or void, as had been held by the trial court. The single judge had not considered the issue of the validity of the agreement with regard to the A.P. Agricultural Lands (Prohibition of Alienation) Act, 1972 or the A.P. Land Reforms (Ceiling on Agricultural Holdings) Act, 1973.
Therefore, the issues before the Court were:
· Whether the agreement of sale was valid in law or void with regard to the A.P. Agricultural Lands (Prohibition of Alienation) Act, 1972 or the A.P. Land Reforms (Ceiling on Agricultural Holdings) Act, 1973?
· Whether the defendant was ready and willing to perform his part of the contract with the plaintiff?
· Whether the relief of specific performance could be granted to the defendant?
Reasoning and Decision
The Court went into great detail while deliberating upon the first issue and examining the validity of the contract. The counsel appearing for the defendant argued that the 1972 and 1973 Acts would not apply to the current case. He stated that the Acts intended to fix the ceiling area of individuals and make those who held land in excess of the prescribed ceiling, surrender the excess portion. Further, he contended that Section 07(2) of the 1973 Act and Section 05 of the 1972 Act must be applied only when the Court is considering declarations made by parties under the provisions of the 1973 Act. Since the declaration filed by the plaintiff’s husband does not show the scheduled land, it was the defendant’s contention that this must be interpreted as admission of the plaintiff as to the defendant’s possession of the land in pursuance of the agreement of sale.
It is necessary here to dig into the relevant provisions of the Andhra Pradesh Agricultural Lands (Prohibition of Alienation) Act, 1972 and the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973, to understand the question of validity of the agreement of sale. Section 05 of the 1972 Act prohibits the alienation of holding by certain persons. The pertinent clause has been reproduced here: “No person whose holding as on the date of commencement of this Act, or at any time thereafter exceeds the specified limit shall alienate such holding or any part thereof by way of sale, lease for a period exceeding six years, gift, exchange, usufructuary mortgage or otherwise of effect a partition or create a trust of such holding or any part thereof; and any alienation made or partition effected or trust created in contravention of this section shall be null and void.[4]”
What this clause implies is that every person whose land holding exceeds the limit determined, is prohibited from alienating such holding or any part of it through the instruments specified. It declares any alienation made in contravention of this section to be null and void in the eyes of law. The 1973 Act came into force on the 1st of January, 1975. Section 07 of this Act makes special provisions in case of transfers already made. The first clause to this section provides that when a transfer of certain holding of land has been effected after January 24, 1971 but before the notified date (i.e., 1–1–1975), the onus of proving that such transfer was not made with an intention to defeat the objects of a law related to the reduction of ceilings in agricultural lands lies on the person making the transfer. When such proof is not provided, the transfer would be disregarded[5]. The second clause mandates that when an alienation of land holding is made on or after 2nd May, 1972 but before the notified date, which is in contravention to the provisions of the 1972 Act, such alienation shall be null and void[6].
Section 17 of the 1973 Act lays down that no person, whose holding is in excess of the prescribed ceiling as of 24th January, 1971, shall on or after the notified date, alienate such holding or a part of it until and unless the concerned Revenue Divisional Officer has taken possession of the excess land and a notification to that effect is published under Section 16 of the same Act. Any alienation performed in contravention to this provision shall be deemed to be null and void[7].
The Court reasoned that the extracts of the two Acts reproduced above would apply to the transaction between the parties as by the defendant’s own admission, the agreement of sale was entered into on May 5, 1974, i.e., before coming into force of the 1973 Act. It was also cleared that in the case of an agreement of sale, the title to the property still vests with the selling party, whereas in the case of sale, the title is transferred to the purchaser. Further, relying upon the Supreme court’s findings in the case of State of Andhra Pradesh v. Mohd Ashrafuddin[8], the Court noted that the term ‘holding’ defines both classes of persons, those who have title but not possession and those who have the possession of the land. Also, an unregistered sale deed does not transfer ownership and such tracts of land must be computed as the holding of both the parties.
The judgement then goes on to explain that the determination of ceiling areas and bringing in agrarian reforms were not the only purposes behind the enactment of the two land Acts of 1972 and 1973. Rather, certain provisions in both of these enactments are essential in other matters as well, such as deciding the title to property of land acquired post the enactment of the 1972 legislation. Also, the Acts cumulatively contain provisions which declare the alienation of land in excess of the ceiling determined, to be null and void. In the current case, it is not disputed that the plaintiff and her family had a land holding which exceeded the ceiling and according to the declaration filed by the plaintiff’s husband, they were to surrender some portion of land. The defendant put forth before the court that the plaintiff had not even included the plaint schedule property in their declaration. This implies that had this portion of land been included in the declaration, then the plaintiff would have had to surrender an area of land from their property equivalent to the schedule property. Thus, for executing the agreement for sale, the plaintiff would first have to surrender the requisite portion of the land. The court observed that if the agreement were to be executed in the defendant’s favour without surrendering the land then the entire transaction will be null and void.
Therefore, for the reasons explicated above, the court held that specific performance of the agreement for sale in favour of the defendant could not be granted as the transaction would be not hold up in law. The defendant has himself argued in his written submissions to the court that the plaintiff and her husband had entered into an agreement of sale with the clear purpose of defeating the law. The court held on this point that it can never think about enforcing an agreement which was created with the intention of defeating the law. Also, the agreement itself was invalid as it went against the provisions of the Indian Contract Act, 1872. The mere fact that the schedule property had not been declared by the plaintiff was not interpreted by the court as a convincing argument to award equitable relief to the defendant.
Upon examination of various exhibits, the court arrived at the conclusion that the defendant had not come to the court with clean hands and had also set up a false plea, both of which precluded him from seeking the relief of equitable relief from the forum of the court. It was discovered that in the agreement, which was put into form by the defendant, the last line was written in an ink different from the ink used in the rest of the agreement, introducing the possibility that the defendant included the line later on to support his case in the court. The defendant’s explanation that the ink ran out did not persuade the court as the judges reasoned that if the ink were indeed running out, the rest of the agreement would show signs of the same. However, that was not the case since it was only the last line which was apparently written in a different ink. The defendant’s false plea was with regard to the payment of Rs. 13,205 to the plaintiff. The court found it startling that a person who had obtained meticulously a receipt for Rs. 5,000 did not take a receipt for an amount more than twice the previous one. This was the final nail in the coffin and proved that the defendant had approached the court with unclean hands as he had set up a false plea of payment and had also tampered with evidence.
E. Section 53A of the Transfer of Property Act, 1882 — While considering the issue of the validity of agreement under the 1972 and 1973 Acts, the Court also reached the conclusion that the plaintiff was wrong in not declaring the schedule property in pursuance of the two land reform Acts passed by the legislature. The counsel for the plaintiff relied on the ruling in the case of State of Andhra Pradesh v. Mohd Ashrafuddin[9], where the facts were quite similar to the present case. Initially, the Andhra Pradesh High Court had held that the schedule land could not be computed with the holding of the declarant for purposes of the agricultural land reforms Act(s). However, the Supreme Court disagreed and overturned the finding by relying upon the definition of ‘holding’ along with Section 53-A of the Transfer of Property Act, 1882.
This provision deals with the part performance of transfer agreements. According to this section, when a contract is made for the transfer of certain immoveable property and the transferee takes possession of the property in part performance of the contract (being willing to perform his part of the contract), then the transferor is barred from claiming any right over the property which the transferee is in possession of. This section attempts to protect the interests of buyers of certain property from times when a seller does not execute the transfer as laid down in the instrument of transfer. Buyers are protected by permitting them to keep possession of the property even when they have no registered title over it. Also, the jaws of sellers are kept closed by disbarring them from claiming any right over the concerned property.
The concept of part performance of instrument of transfer was incorporated into the Indian property laws from the English doctrine of part performance[10]. In the Transfer of Property Act, this concept has been branched with Section 53, which covers the subject of fraudulent transfers. The essential conditions for the applicability of this provision were laid down in the case of D. S. Parivarthamma v. A. Srinivasan[11]: first, the buyer (or transferee) must have taken possession over the property in part performance of the contract; second, it must be proved that the transferee has either performed his part of the contract or is willing to perform the same; and third, this defence of part performance cannot be allowed to a transferee when the transferor has no notice of the part performance or of the contract itself. Thus, these conditions must be fulfilled in order for a transferee to avail the protection offered by section 53-A of the Act.
Conclusion
The long chapter of litigation in the case of B.R. Koteswara Rao v. Rameshwari Bai was finally closed by the Andhra Pradesh High Court by dismissing the Letters Patent Appeal instituted by the defendant. The Court found that the defendant had come to the court with unclean hands and that the agreement between the parties was invalid in the eyes of law as it violated the clauses of the Andhra Pradesh Agricultural Lands (Prohibition of Alienation) Act, 1972 and the Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973. Thus, the Court refused to grant the equitable relief of specific performance to the defendant and allowed the plaintiff to recover possession of the plaint schedule property from the clutches of the defendant. On the fact that the plaintiff did not truthfully declare her complete land holding, the court ordered that the appropriate authorities notified under the 1973 Act initiate necessary steps and properly implement the provisions of the Act.
The court had only considered the issue of the validity of the agreement since the other issues had already been dealt with in the earlier rounds of this protracted litigation by the single judge of the A.P. High Court and the trial court. I find myself in concurrence with the conclusion arrived upon by the court that the agreement of sale itself was invalid under section 23 of the Contract Act as the terms of the agreement and the very intention with which it was entered into defeated the provisions of other enactments. Further, the court has very-well reasoned its findings on the subject of the defendant setting up a false plea of payment and also tampering with the evidence. The defendant thus breached the doctrine of clean hands whereby the person approaching the courts seeking equitable relief must do so with clean hands, which has been elucidated in the Halsbury’s Laws of England that, “he that hath committed an inequity, shall not have equity.”
Footnotes
[1] AIR 2004 AP 34.
[2] A.S. №1195 of 2002, Andhra Pradesh High Court.
[3] Section 23, Indian Contract Act, 1972.
[4] Section 05(1), Andhra Pradesh Agricultural Lands (Prohibition of Alienation) Act, 1972.
[5] Section 07(1), Andhra Pradesh Land Reforms (Ceiling on Agricultural Holdings) Act, 1973.
[6] Ibid, section 07(2).
[7] Id, section 17(1).
[8] 1982 AIR 913.
[9] Supra, note 8.
[10] Sanjeeva Row, Transfer of Property Act, (Vol. 1, edition, 2012, Universal Law Publishers) 561.
[11] (2003) 4 SCC 705.
