SMT. NARAYANAMMA & ANR. ETC. ETC. versus SRI GOVINDAPPA & ORS. ETC. ETC.

[2019] 12 S.C.R.

ASMT. NARAYANAMMA & ANR. ETC. ETC.

SRI GOVINDAPPA & ORS. ETC. ETC.

(Civil Appeal Nos. 7630-7631 of 2019)

SEPTEMBER 26, 2019

[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]

Karnataka Land Reforms Act, 1961 – ss.61, 48-A – On13.09.83, the suit property was granted under the provisions ofCthe Act in favor of the predecessor-in-title of the appellants-defendants, with non-alienation clause of 15 years – On 23.04.90,he mortgaged the suit land in favour of the plaintiff-respondents(s)for Rs.20,000/- and agreed to repay the loan within year –However, on 15.05.90, he executed an agreement to sell in favourof the plaintiff reciting that he was in need of money and hadDagreed to sell the suit property for Rs.46,000/- – Suit for specificperformance of the contract filed inter alia contending that thedefendants did not come forward to execute the sale deed in respectof the agreement to sell –Trial court held that the suit was notmaintainable as the agreement was contrary to the statutory barEof 15 years on alienation of the suit property and hence, void inlaw – First appellate court allowed the appeal of the plaintiff –Upheld by the High Court – Held: Transaction between thepredecessor-in-title of the defendants and the plaintiff is notdisputed –Initially the property was mortgaged on 23.04.90, andwithin month, he entered into an agreement to sell wherein, theFentire consideration for the transfer as well as handing over ofthe possession to the plaintiff was acknowledged –Transaction wasnothing short of transfer of property – U/s. 61, there is completeprohibition on such mortgage/transfer for 15 years from the dateof grant – Even according to the plaintiff, the grant is of the yearG1983, as such, the transfer in question in 1990 is within theprohibited period of 15 years – Both, the plaintiff and thepredecessor-in-title of the defendants equally responsible forviolation of law – Claim of the plaintiff entirely based upon theagreement to sell dtd. 15.05.90, which is hit by s.61 – No otherfoundation for the claim – Although illegality is not pleaded byH

the defendant nor sought to be relied upon him by way of defence,yet the Court itself, upon the illegality appearing upon the evidence,will take notice of it, and dismiss the action ex turpi causa non orituractio i.e. No polluted hand shall touch the pure fountain of justice– Order of the High Court set aside, while that of the trial courtdismissing the suit, upheld – Maxims – ex turpi causa non oritur actioand in pari delicto potior est conditio defendentis et possidentis.

Maxims–”ex turpi causa non oritur actio”; “in pari delictopotior est conditio defendentis et possidentis” and “ex dolo malonon oritur actio” – Applicability of – Discussed.

Practice & Procedure – Claim of the plaintiff based on illegalagreement – Defendant also participator in the illegality – Grantof relief in such cases – Suit property granted under the 1961 Act-in favor of the predecessor-in-title of the appellantsdefendants,with non-alienation clause of 15 years – In violation of the Act,he executed agreement to sell dtd. 15.05.90 in favour of theplaintiff-respondents(s) – Suit for specific performance of thecontract filed inter alia contending that the defendants did not comeforward to execute the sale deed –Trial court held that the the suitwas not maintainable – Reversed by the first appellate court –Upheld by the High Court – Held: Both the parties are commonparticipator in the illegality– Relying on Immani Appa Rao case, ifthe decree is granted in favour of the plaintiff on the basis of anillegal agreement hit by statute, it will be rendering an activeassistance of the court in enforcing an agreement contrary to law– As against this, if the balance is tilted towards the defendants,they would stand benefited even in spite of their predecessor-in-title committing an illegality – However, what the court would bedoing is only rendering an assistance which is purely of passivecharacter – First course would be patently inconsistent with thepublic interest whereas, the latter course is lesser injurious topublic interest than the former – Karnataka Land Reforms Act, 1961– Equity.

Allowing the appeals, the Court

HELD: 1.1 The facts in the present case are not in dispute.The recital in the agreement to sell reads that at the time ofexecution of the agreement, the possession of the suit propertywas handed over to the plaintiff. Further, the recital reads that

Athe plaintiff shall take the consent of the officers of the Tribunalor the concerned officers at his own cost for transferring theproperty in the name of the plaintiff. Initially the property wasmortgaged on 23.04.1990, and within period of one month theagreement to sell was executed. At the time of the agreementitself, the entire consideration amount was said to have beenBreceived by the predecessor-in-title of the defendants and alsothe possession was handed over to the plaintiff. [Paras 8, 9] [753-A-E]

1.2 perusal of the Section 61 of the Karnataka LandReforms Act, 1961 would clearly show that, notwithstandingCanything contained in any law, no land of which the occupancyhas been granted to any person under the said Chapter shall,within 15 years from the date of the final order passed by theTribunal under sub-section (4) or sub-section (5) or sub-section(5-A) of Section 48-A of the Reforms Act be transferred by sale,Dgift, exchange, mortgage, lease or assignment. However, theland may be partitioned among members of the holders of thejoint family. No doubt, that sub-section (2) of Section 61 of theReforms Act permits the registered occupant or his successor-in-title, to take loan and mortgage or create charge on hisinterest in the land in favour of the State Government, financialEinstitution, co-operative land development bank, co-operative society or company as defined in Section 3 of theCompanies Act, 1956 in which not less than 51% of the paid-upshare capital is held by the State Government or Corporationowned or controlled by the Central Government or the StateFGovernment or both. However, such loan can be taken onlyfor the purpose of development of land or improvement ofagricultural practices or for raising educational loan to prosecutehigher studies of the children of such person. It further providesthat, in the event of such person making default in payment ofsuch loan in accordance with the terms and conditions on whichGsuch loan was granted, it shall be lawful to cause his interest inthe land be attached and sold and the proceeds to be utilised inthe payment of such loan. Sub-section (3) of the said Sectionspecifically provides that any transfer or partition of land incontravention of sub-section (1) shall be invalid and such landHshall vest in the State Government free, from all encumbrances

and shall be disposed in accordance with the provisions ofSection 77 of the Reforms Act. [Para 13] [755-D-H; 756-A]

1.3 Supreme Court in the case of Kedar Nath Motani andOrs. vs. Prahlad Rai and Ors. had an occasion to consider thequestion of application of the maxims ex turpi causa non orituractio and ex dolo malo non oritur actio. It was held that what onehas to see is whether the illegality goes so much to the root ofthe matter that the plaintiff cannot bring his action without relyingupon the illegal transaction into which he had entered. It wasfurther held, that strict view must be taken of the plaintiff’sconduct and he should not be allowed to circumvent the illegalityby resorting to some subterfuge or by misstating the facts.However, if the matter is clear and the illegality is not requiredto be pleaded or proved as part of the cause of action and theplaintiff recanted before the illegal purpose is achieved, then,unless it be of such gross nature as to outrage the conscienceof the Court, the plea of the defendant should not prevail.Subsequently, another three-Judge Bench of Supreme Court inImmani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi andOrs. again had an occasion to consider the issue with regard toapplicability of the aforesaid two maxims. It was held that, whichprinciple is to be applied in the facts of the case would dependupon the question, as to which principle is more consistent withpublic interest. It was further held, that if both the parties areequally guilty and the fraud intended by them had been carriedout, the position would be that, the party raising the defence isnot asking the Court’s assistance in any active manner. [Paras14, 16-19] [756-B; 759-C-E; 761-F; 762-A-B]

1.4 The transaction between the predecessor-in-title of thedefendants and the plaintiff is not disputed. Initially the saidpredecessor-in-title of the defendants had executed registeredmortgage deed in favour of the plaintiff. Within month, heentered into an agreement to sell wherein, the entireconsideration for the transfer as well as handing over of thepossession was acknowledged. It could thus be seen, that thetransaction was nothing short of transfer of property. UnderSection 61 of the Reforms Act, there is complete prohibitionon such mortgage or transfer for period of 15 years from the

Adate of grant. Sub-section (1) of Section 61 of the Reforms Actbegins with non-obstante clause. It is thus clear that, theunambiguous legislative intent is that no such mortgage, transfer,sale etc. would be permitted for period of 15 years from thedate of grant. Undisputedly, even according to the plaintiff, thegrant is of the year 1983, as such, the transfer in question inBthe year 1990 is beyond any doubt within the prohibited periodof 15 years. Sub-section (3) of Section 61 of the Reforms Actmakes the legislative intent very clear. It provides, that anytransfer in violation of sub-section (1) shall be invalid and it alsoprovides for the consequence for such invalid transaction.CUndisputedly, both, the predecessor-in-title of the defendant(s)as well as the plaintiff, are confederates in this illegality. Both,the plaintiff and the predecessor-in-title of the defendant(s) canbe said to be equally responsible for violation of law.Undisputedly, in the present case, the claim of the plaintiff isentirely based upon the agreement to sell dated 15.05.1990,Dwhich is clearly hit by Section 61 of the Reforms Act. There isno other foundation for the claim of the plaintiff except the onebased on the agreement to sell, which is hit by Section 61 ofthe Act. In such case, as observed by Taylor, in his “Law ofEvidence” which has been approved by Gajendragadkar, J. inEImmani Appa Rao, although illegality is not pleaded by thedefendant nor sought to be relied upon him by way of defence,yet the Court itself, upon the illegality appearing upon theevidence, will take notice of it, and will dismiss the action exturpi causa non oritur actio i.e. No polluted hand shall touch thepure fountain of justice. Equally, as observed in Story’s EquityFJurisprudence, which again is approved in Immani Appa Rao,where the parties are concerned with illegal agreements or othertransactions, courts of equity following the rule of law as toparticipators in common crime will not interpose to grant anyrelief, acting upon the maxim in pari delicto potior est conditioGdefendentis et possidentis. [Paras 23-25] [765-F-H; 766-A-G]

1.5 The trial Judge upon finding that the agreement of salewas hit by Section 61 of the Reforms Act, had rightly dismissedthe suit of the plaintiff. Both the parties are common participatorin the illegality. In such situation, the balance of justice wouldHtilt in whose favour is the question. As held in Immani Appa Rao,

if the decree is granted in favour of the plaintiff on the basis ofan illegal agreement which is hit by statute, it will be renderingan active assistance of the court in enforcing an agreement whichis contrary to law. As against this, if the balance is tilted towardsthe defendants, no doubt that they would stand benefited evenin spite of their predecessor-in-title committing an illegality.However, what the court would be doing is only rendering anassistance which is purely of passive character. As held byGajendragadkar, J. in Immani Appa Rao, the first course wouldbe clearly and patently inconsistent with the public interestwhereas, the latter course is lesser injurious to public interestthan the former. In the result, the appeals deserve to be allowedand are accordingly allowed. The judgment and order passed bythe High Court of Karnataka dated 08.06.2015 and the Orderpassed by the Fast Track Court-III, Bangalore Rural District,Bangalore, dated 17.06.2008 are quashed and set aside. Theorder dated 23.01.2004 dismissing the suit passed by the trialcourt is upheld. [Paras 26-28] [766-G-H; 767-A-D]

Kedar Nath Motani and Ors. vs. Prahlad Rai and Ors.[1960] 1 SCR 861 ; Immani Appa Rao and Ors. vs.Gollapalli Ramalingamurthi and Ors. [1962] 3 SCR739 ; Nathu Prasad vs. Ranchhod Prasad and Ors.(1969) 3 SCC 11 : [1970] 2 SCR 643– relied on.

Story’s Equity JurisprudenceVol. I, s. 421; Englishedition by Randall, 1920, s.298 ; Taylor’s “Law ofEvidence” Vol. 11th, Edn. p. 97, para 93 – referredto.

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7630-7631 of 2019.

From the Judgment and Order dated 08.06.2015 by the HighCourt of Karnataka at Bengaluru in R.S.A. No. 1925/2008 C/W R.S.A.No. 1834/2008 (SP)

AShailesh Madiyal, Mahesh Thakur, Sudhanshu Parkash,Ms. Sheffali Chaudhary, Ankur S. Kulkarni and Kartik Anand, Advs.for the Appellants.

S.N.Bhat, Adv. for the Respondent.

BThe Judgment of the Court was delivered by

B. R. GAVAI, J.

1. Leave granted.

2. The present appeals arise out of the common judgment andCorder passed by the Single Judge of the Karnataka High Court inRegular Second Appeal No. 1925 of 2008 and Regular Second AppealNo. 1834 of 2008 thereby dismissing both the appeals.

3. For the sake of convenience, the parties shall be referredhereinafter as per their status shown in the plaint before the trial court.DThe suit O.S. No. 93/1999 was filed by the plaintiff Govindappa, whois the son of Bale Krishnappa. Originally the suit property belonged toone Bale Venkataramanappa, who was the brother of Bale Krishnappa.Said Bale Venkataramanappa has entered into an agreement to sell withthe plaintiff, specific performance of which is sought in the present suit.

EThe son of the Bale Venkataramanappa, M.V. Nagaraj was defendantNo. 1, who has been represented through Legal representatives in theappellate courts since deceased. The wife and daughter of Anjanappa,who was another son of Venkataramanappa are the defendant Nos. 2& 3 to the suit respectively. The daughter and wife of BaleVenkataramanappa are defendant Nos. 4 & 5 to the suit respectively.FThe R.S.A. No. 1925/2008 is filed by the original defendant Nos. 4 &5, who are daughter and wife of Bale Venkataramanappa. The R.S.A.No. 1834/2008 has been filed by the legal representatives of the originaldefendant No. 1, M.V. Nagaraj and the original defendant Nos. 2 &3, who are wife and daughter of Anjanappa. The suit was filed interGalia contending that the defendants did not come forward to executethe sale deed in respect of the agreement to sell. After the notice wasissued by the Civil Judge (Junior Division) & JMFC, Hoskote, thedefendants appeared before the Court. However, they did not file thewritten statement. The power of attorney holder of the plaintiff isHexamined as PW-1. The plaintiff also examined two witnesses in support

of his case, i.e., PW-2 and PW-3. He produced documentary evidenceExhibits P-1 to P-34 in support of his case. The defendants did not cross-examine the plaintiff. The trial court, upon appraisal of Exhibit P-1, i.e.,the agreement to sell dated 15.05.1990, held that the suit property wasgranted in favour of the defendant and as per the grant certificate, therewas 15 years bar on alienation of the suit property. The period of thesaid bar was to expire on 13.10.1988. It was, therefore, held by thetrial Judge that since the said agreement was executed during the non-alienation period of 15 years, the agreement was void and non-executable. It was held that since the said agreement was contrary tothe statutory bar, it was void in law and as such the suit for specificperformance of the contract was not maintainable.4. Being aggrieved thereby, the plaintiff filed Regular Appeal No.86 of 2004 before the Principal District & Session Judge, Bangalore.Before the appellate court, though the defendants had put in theirappearance, the Advocate did not appear to argue the matter. The firstappellate court held that the father of Original defendant No. 1, namely,Bale Venkataramanappa, had mortgaged the suit property by aregistered mortgage deed on 23.04.1990. It further held that on15.05.1990 he had also entered into an agreement to sell with theplaintiff. It was further held that, the entire sum of Rs. 46,000/- agreedto be paid to Bale Venkataramanappa was received by him. It wasfurther found that the plaintiff had already been put in possession ofthe suit property. The first appellate court held that, the reasoning ofthe trial court that the non-alienation clause prohibits alienation was notapt. On this reasoning, the appeal was allowed.

5. Being aggrieved by the judgment and order passed by the firstappellate court, the original defendant Nos. 4 and 5 had filed RegularSecond Appeal No. 1925 of 2008 whereas, legal representatives ofdefendant No. 1 and original defendant Nos. 2 and 3 have filed RegularSecond Appeal No. 1834 of 2008. Two points were raised before theHigh Court on behalf of the defendants. Firstly, that the suit which wasfiled in the year 1999 for specific performance of agreement to sellentered into on 15.05.1990 was beyond limitation. Secondly, that in viewof provisions of Section 61 of the Karnataka Land Reforms Act, 1961(hereinafter referred to as “the Reforms Act”), the agreement was notenforceable. The High Court observed that, as matter of fact, the

ABC

Atrial court ought not to have framed such an issue. It further observedthat, though in the suit for specific performance of contract it wasnecessary to frame the issue with regard to readiness and willingnessof the plaintiff to perform his part of the contract along with other issues,neither the trial court nor the first appellate court had framed such anBissue. According to the High Court, in the absence of the defendantsneither filing the written statement nor contesting the suit, the findingas recorded by the first appellate court was correct in law. The HighCourt concurred with the finding of the first appellate court that sincethe entire amount was received by Bale Venkataramanappa, father ofdefendant No.1, and also from the recital of the agreement to sell, itCwas clear that the possession was also handed over. As such, the HighCourt held that the finding of the first appellate court was correct. Beingaggrieved thereby, defendants have approached this Court.

6. Mr. Shailesh Madiyal, learned counsel appearing on behalf ofDthe defendants (appellants herein), submitted that in view of theprovisions of Section 61 of the Reforms Act, the predecessor-in-interestof the defendants, i.e., Bale Venkataramanappa could not havetransferred the said land, as such, the agreement to sell was void inlaw and, therefore, not enforceable. He submitted that the finding asrecorded by the trial Judge was correct in law, which ought not to haveEbeen interfered with by the first appellate court. It is further submittedthat the High Court was also not correct in law in upholding the findingof the first appellate court.7. The original plaintiff (respondent(s) herein), on the contrary,submitted that the provisions of Section 61 of the Reforms Act wouldFprohibit only the sale, gift, exchange, mortgage, lease or assignment andwould not prohibit an agreement to sell. It is submitted that once theperiod of restriction of 15 years is over, the agreement to sell, thoughexecuted during the period of 15 years, becomes enforceable in law. Itis submitted that, in the present case, Bale Venkataramanappa hadGreceived the entire consideration and had also handed over thepossession as per the agreement to sell. It is further submitted that,the pleadings in the plaint were not controverted by either filing writtenstatement nor leading any evidence and in this view of the matter, thefirst appellate court and the High Court were justified in decreeing theHsuit.

8. The facts in the present case are not in dispute. On 20.10.1976,the suit property, i.e., 1 acre 6 guntas bearing Survey No. 57 situatedat Mutkur Village, Angondanahalli Hobli, Hoskote Taluk, BangaloreDistrict, was given as grant in favour of Bale Venkataramanappa.The said grant was under the provisions of the Reforms Act. On13.09.1983, the premium was paid by Bale Venkataramanappa and thegrant was confirmed in his favour with non-alienation clause of 15years. On 15.09.1983, there was mutation entry in the revenue recordsentering the name of said Bale Venkataramanappa with an endorsementthat the land shall not be alienated for period of 15 years. On23.04.1990, Bale Venkataramanappa, by registered mortgagedeed, mortgaged the suit land in favour of the plaintiff for sum ofRs. 20,000/-. The mortgage deed recites about the receipt of the entiremortgaged amount by Bale Venkataramanappa. Under the mortgagedeed, Bale Venkataramanappa had agreed to repay the loan within aperiod of one year. However, within period of one month, BaleVenkataramanappa executed an agreement to sell dated 15.05.1990 infavour of the plaintiff. The agreement to sell recites that he was in needof money for his legal necessities and to repay his hand loans and forhis domestic needs and, therefore, he had agreed to sell the suit propertyfor sum of Rs. 46,000/-. He acknowledges the receipt of entireamount of consideration, i.e., Rs. 46,000/-. The recital in the agreementto sell reads that at the time of execution of the agreement, thepossession of the suit property is handed over to the plaintiff. Further,the recital reads that the plaintiff shall take the consent of the officersof the Tribunal or the concerned officers at his own cost for transferringthe property in the name of the plaintiff.

9. It could thus be seen that, initially the property was mortgagedon 23.04.1990, and within period of one month the agreement to sellis executed. At the time of the agreement itself, the entire considerationamount is said to have been received by Bale Venkataramanappa andalso the possession is handed over to the plaintiff.

10. It appears, that there were also parallel proceedings beforethe revenue authorities. After the death of Bale Venkataramanappa,the plaintiff filed an application on 12.05.1997 before the Tehsildar,Hoskote, for mutating his name in place of Bale Venkataramanappa.The Tehsildar, without any notice, carried out the mutation and enteredthe name of the plaintiff in the revenue records. The defendants

Achallenged the same before the Assistant Commissioner, DoddabalapuraDivision. The said appeal was allowed on 27.06.2008. Accordingly, therevenue records were corrected and the defendants’ names wereentered on 24.10.2009. The said Order came to be challenged by theplaintiff before the High Court by way of Writ Petition Nos. 22243-22244 of 2011. The High Court vide Order dated 26.07.2011, dismissedBthe said petitions.

11. The short question that arises for consideration in the presentappeals is, as to whether the agreement to sell dated 15.05.1990executed by Bale Venkataramanappa in favour of the plaintiff wouldbe enforceable in law or not.C

12. For appreciating the said issue, it would be necessary to referto Section 61 of the Reforms Act, which reads thus:

“61.Restriction on transfer of land of which tenant hasbecome occupant.—

D(1) Notwithstanding anything contained in any law, no land ofwhich the occupancy has been granted to any person underthis Chapter shall, within fifteen years from the date of thefinal order passed by the Tribunal under sub-section (4) orsub-section (5) or sub-section (5A) of section 48A beEtransferred by sale, gift, exchange, mortgage, lease orassignment; but the land may be partitioned among membersof the holder’s joint family,

(2) Notwithstanding anything contained in sub-section (1), itshall be lawful for the occupant registered as such or hisFsuccessor-in-title to take loan and mortgage or create acharge on his interest in the land in favour of the StateGovernment, financial institution, co-operative landdevelopment bank, co-operative society or company asdefined in Section 3 of the Companies Act, 1956 in whichnot less than fifty one per cent of the paid-up share capitalGis held by the State Government or Corporation ownedor controlled by the Central Government or the StateGovernment or both for development of land orimprovement of agricultural practices; or for raisingeducational loan to prosecute the higher studies of theHchildren of such person and without prejudice to any other

remedy provided by any law, in the event of his makingdefault in payment of such loan in accordance with theterms and conditions on which such loan was granted, it shallbe lawful to cause his interest in the land to be attachedand sold and the proceeds to be utilised in the payment ofsuch loan.

Explanation. – For the purpose of this sub-section, “HigherStudies” means the further studies after Pre-universityExamination or 12[th] Standard Examination conducted byCBSE or ICSE or any Diploma courses.

(3) Any transfer or partition of land in contravention of Sub-section (1) shall be invalid and such land shall vest in theState Government free from all encumbrances and shall bedisposed in accordance with the provisions of Section 77.”

13. perusal of the said provision would clearly show that,notwithstanding anything contained in any law, no land of which theoccupancy has been granted to any person under the said Chapter shall,within 15 years from the date of the final order passed by the Tribunalunder sub-section (4) or sub-section (5) or sub-section (5-A) of Section48-A of the Reforms Act be transferred by sale, gift, exchange,mortgage, lease or assignment. However, the land may be partitionedamong members of the holders of the joint family. No doubt, that sub-section (2) of Section 61 of the Reforms Act permits the registeredoccupant or his successor-in-title, to take loan and mortgage or createa charge on his interest in the land in favour of the State Government,a financial institution, co-operative land development bank, co-operative society or company as defined in Section 3 of theCompanies Act, 1956 in which not less than 51% of the paid-up sharecapital is held by the State Government or Corporation owned orcontrolled by the Central Government or the State Government or both.However, such loan can be taken only for the purpose of developmentof land or improvement of agricultural practices or for raising educationalloan to prosecute higher studies of the children of such person. It furtherprovides that, in the event of such person making default in paymentof such loan in accordance with the terms and conditions on which suchloan was granted, it shall be lawful to cause his interest in the land beattached and sold and the proceeds to be utilised in the payment ofsuch loan. Sub-section (3) of the said Section specifically provides that

Aany transfer or partition of land in contravention of sub-section (1) shallbe invalid and such land shall vest in the State Government free, fromall encumbrances and shall be disposed in accordance with theprovisions of Section 77 of the Reforms Act.

14. This Court in the case of Kedar Nath Motani and Ors. vs.BPrahlad Rai and Ors.[1] had an occasion to consider the question ofapplication of the maxims ex turpi causa non oritur actio and ex dolomalo non oritur actio. This Court has referred to various Englishjudgments in paragraphs 11, 12 and 14, which read thus:

“11. Coming now to the question whether the appellants’ suit wasCrightly dismissed by the High Court on the application of themaxim, ex turpi causa etc., we have first to see what are thespecific facts on which this contention is based. The case of theappellants was that the property was taken benami in the namesof Prahlad Rai and others to avoid the implication of clause 16.In making the application to the Bettiah Raj the signatures ofDPrahlad Rai and others were made by Radhumal or someoneunder his instructions, because the relationship betweenRadhumal, Prahlad Rai and others was so intimate that it wasconsidered unnecessary to trouble them. Inasmuch, as the matterwas brought to the notice of the Assistant Manager of the CourtEof Wards, all these facts were capable of being investigated,including the making of the signatures by Radhumal. No doubt,the making of the signatures of another person without hisconsent, express or implied, is an offence under the ordinary law,but the intention was not so much to forge the signatures but toFpresent the application in the names of those persons. Howeverit be, we proceed on the assumption that there was some illegalitycommitted by Radhumal in approaching the Bettiah Raj and alsoin the execution of the B.H. forms, which were also signed withthe names of these persons. The question is whether this illegalityis sufficient to non-suit the plaintiffs on the application of theGmaxim.

12. The law was stated as far back as 1775 by Lord Mansfieldin Holman v. Johnson, (1775) 1 Cowp 341, 343 : 98 ER 1120,1121, in the following words:

H1 (1960) 1 SCR 861

“The principle of public policy is this; ex dolo malo non orituractio. No Court will lend its aid to man who founds his causeof action upon an immoral or an illegal act. If, from the plaintiff’sown stating or otherwise, the cause of action appears to arise exturpi causa, or the transgression of positive law of this country,there the Court says he has no right to be assisted. It is uponthat ground the Court goes; not for the sake of the defendant,but because they will not lend their aid to such plaintiff. So ifthe plaintiff and defendant were to change sides, and thedefendant was to bring his action against the plaintiff, the latterwould then have the advantage of it; for where both are equallyin fault, potior est conditio defendentis.”

There are, however, some exceptions or “supposed exceptions”to the rule of turpi causa. In Salmond and William on Contracts, foursuch exceptions have been mentioned, and the fourth of theseexceptions is based on the right of restitutio in integrum, where therelationship of trustee and beneficiary is involved. Salmond stated thelaw in these words at p. 352 of his Book (2nd Edn.):

“So if employs to commit robbery, cannot sue for theproceeds. And the position would be the same if were to vestproperty in upon trust to carry out some fraudulent scheme: Acould not sue for an account of the profits. But if B, who isA’s agent or trustee, receives on A’s account money paid by Cpursuant to an illegal contract between and the position isotherwise and can recover the property from B, although hecould not have claimed it from C. In such cases public policyrequires that the rule of turpis causa shall be excluded by themore important and imperative rule that agents and trustees mustfaithfully perform the duties of their office.”Williston in his Book on Contracts (Revised Edn.), Vol. VI, hasdiscussed this matter at p. 5069, para 1785 and in paras 1771 to 1774,he has noted certain exceptional cases, and has observed as follows:

“If recovery is to be allowed by either partner or principal in anycase, it must be where the illegality is of so light or venial acharacter that it is deemed more opposed to public policy to allowthe defendant to violate his fiduciary relation with the plaintiffthan to allow the plaintiff to gain the benefit of an illegaltransaction.”

AEven in India, certain exceptions to the rule of turpi causa havebeen accepted. Examples of those cases are found in PalaniyappaChettiar v. Chockalingam Chettiar (1920) ILR 44 Mad 334]and Bhola Nath v. Mul Chand, (1903) ILR 25 All 639.

14. Recently, the Court of Appeal in Bowmakers Ltd. v. BarnetBInstruments, Ld. (1945) 1 KB 65] reviewed the law on thesubject, and laid down that every illegality did not entitle the Courtto refuse judgment to plaintiff. Du Parcq, L.J., observed asfollows:

“In our opinion, man’s right to possess his own chattelsCwill as general rule be enforced against one who, withoutany claim of right, is detaining them, or has converted themto his own use, even though it may appear either from thepleadings, or in the course of the trial, that the chattels inquestion came into the defendant’s possession by reason ofan illegal contract between himself and the plaintiff, providedDthat the plaintiff does not seek, and is not forced, either tofound his claim on the illegal contract or to plead its illegalityin order to support his claim.”

We are aware that Prof. Hamson has criticised this casein (1949) 10 Cambridge Law Journal, 249, and has forborneEits application, except in the clearest possible circumstances.The law has been also considered by Pritchard, J.,in Bigos v. Bousted (1951) 1 All ER 92, where all theauthorities are referred to.”

15. The three-Judge Bench of this Court, after referring to theFaforesaid judgments, speaking through M. Hidayatullah, J. (as HisLordship then was), observes thus:

“15. The correct position in law, in our opinion, is that what onehas to see is whether the illegality goes so much to the root ofthe matter that the plaintiff cannot bring his action without relyingGupon the illegal transaction into which he had entered. If theillegality be trivial or venial, as stated by Williston and the plaintiffis not required to rest his case upon that illegality, then publicpolicy demands that the defendant should not be allowed to takeadvantage of the position. strict view, of course, must be takenHof the plaintiff’s conduct, and he should not be allowed to

circumvent the illegality by resorting to some subterfuge or bymis-stating the facts. If, however, the matter is clear and theillegality is not required to be pleaded or proved as part of thecause of action and the plaintiff recanted before the illegal purposewas achieved, then, unless it be of such gross nature as tooutrage the conscience of the Court, the plea of the defendantshould not prevail.”

16. It could thus be seen, that this Court has held that the correctposition of law is that, what one has to see is whether the illegality goesso much to the root of the matter that the plaintiff cannot bring his actionwithout relying upon the illegal transaction into which he had entered.This Court further held, that if the illegality is trivial or venial and theplaintiff is not required to rest his case upon that illegality, then publicpolicy demands that the defendant should not be allowed to takeadvantage of the position. It has further been held, that strict viewmust be taken of the plaintiff’s conduct and he should not be allowedto circumvent the illegality by resorting to some subterfuge or bymisstating the facts. However, if the matter is clear and the illegality isnot required to be pleaded or proved as part of the cause of action andthe plaintiff recanted before the illegal purpose is achieved, then, unlessit be of such gross nature as to outrage the conscience of the Court,the plea of the defendant should not prevail.

17. Subsequently, another three-Judge Bench of this Court inImmani Appa Rao and Ors. vs. Gollapalli Ramalingamurthi andOrs.[2] again had an occasion to consider the issue with regard toapplicability of the aforesaid two maxims. This Court speaking throughP.B. Gajendragadkar, J. (as His Lordship then was) observed thus:

“12. Reported decisions bearing on this question show thatconsideration of this problem often gives rise to what may bedescribed as battle of legal maxims. The appellants emphasisedthat the doctrine which is pre-eminently applicable to the presentcase is ex dolo malo non oritur actio or ex turpi causa nonoritur actio. In other words, they contended that the right ofaction cannot arise out of fraud or out of transgression of law;and according to them it is necessary in such case thatpossession should rest where it lies in pari delicto potior estconditio possidentis; where each party is equally in fraud the

Alaw favours him who is actually in possession, or where bothparties are equally guilty the estate will lie where it falls. On theother hand, Respondent 1 argues that the proper maxim to applyis nemo allegans suam turpitudinum audiendum est, whoeverhas first to plead turpitudinum should fail; that party fails whofirst has to allege fraud in which he participated. In other words,Bthe principle invoked by Respondent 1 is that man cannot pleadhis own fraud. In deciding the question as to which maxim shouldgovern the present case it is necessary to recall what LordWright, M.R. observed about these maxims in Berg v. Sadlerand Moore, (1937) 2 KB 158 at p. 62. Referring to the maxim exCturpi causa non oritur actio Lord Wright observed that “thismaxim, though veiled in the dignity of learned language, is astatement of principle of great importance; but like mostmaxims it is much too vague and much too general to admit ofapplication without careful consideration of the circumstancesand of the various definite rules which have been laid down byDthe authorities”. Therefore, in deciding the question raised in thepresent appeal it would be necessary for us to consider carefullythe true scope and effect of the maxims pressed into service bythe rival parties, and to enquire which of the maxims would berelevant and applicable in the circumstances of the case. It isEcommon ground that the approach of the Court in determiningthe present dispute must be conditioned solely by considerationsof public policy. Which principle would be more conducive to,and more consistent with, public interest, that is the crux of thematter. To put it differently, having regard to the fact that boththe parties before the Court are confederates in the fraud, whichFapproach would be less injurious to public interest. Whicheverapproach is adopted one party would succeed and the other wouldfail, and so it is necessary to enquire as to which party’s successwould be less injurious to public interest.

13. Out of the two confederates in fraud Respondent 1 wants adecree to be passed in his favour and that means he wants theactive assistance of the Court in reaching the propertiespossession of which has been withheld from him by Respondent2 and the appellants. Now, if the defence raised by the appellantsis shut out Respondent 1 would be entitled to decree becausethere is an ostensible deed of conveyance which purports to

convey title to him in respect of the properties in question; but,in the circumstances, passing decree in favour of Respondent1 would be actively assisting Respondent 1 to give effect to thefraud to which he was party and in that sense the Court wouldbe allowed to be used as an instrument of fraud, and that isclearly and patently inconsistent with public interest.

14. On the other hand, if the Court decides to allow the plea offraud to be raised the Court would be in position to hold anenquiry on the point and determine whether it is case of mutualfraud and whether the fraud intended by both the parties has beeneffectively carried out. If it is found that both the parties areequally guilty and that the fraud intended by them has beencarried out the position would be that the party raising the defenceis not asking the Court’s assistance in any active manner; all thatthe defence suggests is that confederate in fraud should notbe permitted to obtain decree from the Court because thedocument of title on which the claim is based really conveys notitle at all. It is true that as result of permitting Respondent 2and the appellants to prove their plea they would incidentally beassisted in retaining their possession; but this assistance is of apurely passive character and all that the Court is doing in effectis that on the facts proved it proposes to allow possession to restwhere it lies. It appears to us that this latter course is less injuriousto public interest than the former.”18. This Court held that, which principle is to be applied in thefacts of the case would depend upon the question, as to which principleis more consistent with public interest. The Court finds that, when boththe parties before the Court are confederates in the fraud, the Courtwill have to find out which approach would be less injurious to publicinterest. The Court observed that, whichever approach is adopted, oneparty would succeed and the other would fail and, therefore, it isnecessary to enquire as to which party’s success would be less injuriousto public interest. The Court in the facts of the said case finds that ifthe decree was to be passed in favour of respondent No. 1 (who wasthe plaintiff), it would be actively assisting respondent No. 1 to giveeffect to the fraud to which he was party and it has been held thatin that sense the Court would be allowed to be used as an instrumentof fraud and that is clearly and patently inconsistent with public interest.

A19. It has further been held, that if both the parties are equallyguilty and the fraud intended by them had been carried out, the positionwould be that, the party raising the defence is not asking the Court’sassistance in any active manner. It has been held, that all the defencesuggested is that confederate in fraud shall not be permitted to obtaina decree from the Court because the documents of title, on which theBclaim is based really conveys no title at all. In the facts of the saidcase, it was held, that though the result thereof would be assisting thedefence therein to retain their possession, for such an assistance wouldbe purely of passive character and all that the Court would do in effectis that on the facts proved, it proposes to allow possession to rest whereCit lies. It has been held that, latter course appears to be less injuriousto public interest than the former one. This Court in the said judgmenthas digested the English law on the issue in the following paragraphs,which read thus:

“19. In support of the contrary view reliance is usually placedDon an early English decision in Doe, Dem. Roberts againstRoberts, Widow, 106 ER 401 . In that case it was held that “noman can be allowed to allege his own fraud to avoid his owndeed; and, therefore, where deed of conveyance of an estatefrom one brother to another was executed, to give the latter aEcolourable qualification to kill game. The document was asagainst the parties to it valid and so sufficient to support anejectment for the premises”. In dealing with the question raisedBayley, J. observed “by the production of the deed, the plaintiffestablished prima facie title; and we cannot allow the defendantto be heard in court of justice to say that his own deed is to beFavoided by his own fraud;” and Holroyd, J. added that “a deedmay be avoided on the ground of fraud, but then the objectionmust come from person neither party nor privy to it, for noman can allege his own fraud in order to invalidate his own deed”.

20. This decision has, however, been commented on by TaylorGin his Law of Evidence. According to Taylor “it seems now clearlysettled that party is not estopped by his deed from avoiding itby proving that it was executed for fraudulent, illegal or immoralpurpose [Taylor’s “Law of Evidence”, Vol. 11th, Edn. p. 97, para93]”. The learned author then refers to the case of Roberts, 106HER 401 and adds “in the subsequent case of Prole v. Wiggins,

(1837) 3 Bing. NC 235 : 6 LJCP 2 : 43 R.R. 621, Sir NicholasTindal observed that this decision rested on the fact that thedefence set up was inconsistent with the deed”. Taylor then addsthat “the case, however, can scarcely be supported by thiscircumstance, for in an action of ejectment by the grantee of anannuity to recover premises on which it was secured, the grantorwas allowed to show that the premises were of less value thanthe annuity, and consequently, that the deed required enrolment,although he had expressly covenanted in the deed that thepremises were of greater value…” According to the learnedauthor “the better opinion seems to be that where both partiesto an indenture either know, or have the means of knowing, thatit was executed for an immoral purpose, or in contravention ofa statute, or of public policy, neither of them will be estoppedfrom proving those facts which render the instrument void abinitio; for although party will thus in curtain cases be enabledto take advantage of his own wrong, yet this evil is of triflingnature in comparison with the flagrant evasion of the law thatwould result from the adoption of an opposite rule” (p. 98).Indeed, according to Taylor, “although illegality is not pleaded bythe defendant nor sought to be relied upon by him by way ofdefence, yet the court itself, upon the illegality appearing uponthe evidence, will take notice of it, and will dismiss the action exturpi causa non oritur actio. No polluted hand shall touch the purefountain of Justice” (p. 93).

21. To the same effect is the opinion of Story [Story’s EquityJurisprudence, Vol. I, s. 421; English edition by Randall, 1920, s.298.] : “In general, where parties are concerned in illegalagreements or other transactions, whether they are mala prohibitaor mala in se, courts of equity following the rule of law as toparticipators in common crime will not interpose to grant anyrelief, acting upon the known maxim in pari delicto potior estconditio defendentis et possidentis. The old cases often gave relief,both at law and in equity, where the party would otherwise derivean advantage from his inequity. But the modern doctrine hasadopted more severely just and probably politic and moral rule,which is, to leave the parties where it finds them giving no reliefand no countenance to claims of this sort.”

ABC

A20. It could thus be seen that, although illegality is not pleadedby the defendant nor is relied upon by him by way of defence, yet thecourt itself, upon the illegality appearing upon the evidence, will takenotice of it, and will dismiss the action ex turpi causa non oritur actio.It has been held, that no polluted hand shall touch the pure fountain ofjustice. It has further been held, that where parties are concerned inBillegal agreements or other transactions, courts of equity following therule of law as to participators in common crime will not interpose togrant any relief, acting upon the maxim in pari delicto potior estconditio defendetis et possidentis.

21. In the case of Nathu Prasad vs. Ranchhod Prasad andCOrs.[3] the three-Judge Bench of this Court had an occasion to considersomewhat similar provisions which read thus:

“2. Section 73 of the Revenue Administration and RyotwariLand Revenue and Tenancy Act, Samvat 2007 (Act No. 66 of1950) provides:D

“No Pakka tenant shall sub-let for any period whatsoever anyland comprised in his holdings except in the cases provided forin Section 74.

Explanation.— * * *.”ESection 74 deals with sub-letting by disabled persons. Since theplaintiff is not disabled person, the section need not be read.Section 75 provides:

“A sub-lease of the whole or any part of the holding of aPakka tenant effected properly and legally prior to theFcommencement of this Act shall terminate after the expiryof the period of sub-lease or 4 years after the commencementof this Act, whichever period is less.”

Section 76 provides:

“(1) If the sub-lessee does not hand over possession of theland sub-let to him after the sub-lease ceases to be in forceunder Sections 74 and 75 to the lessor or his legal heir … heshall be deemed to be trespasser and shall be liable toejectment in accordance with the provisions of this Act.

H3 (1969) 3 SCC 11

(2) * * *.”

Section 78 provides:

“(1) Any person who in contravention of the provisions of thisAct, obtains possession of any land by virtue of bequest,gift sale, mortgage or sub-lease, or of any agreementpurporting to be bequest, gift, sale, mortgage or sub-leaseshall be deemed to be trespasser and shall be liable toejectment in accordance with the provisions of Section 58.”

In the said case, the plaintiff/appellant before the Supreme Courtwas recorded pattedar tenant and had granted sub-lease of landto respondent Nos. 1 and 2 for five years. The suit was filed on theground that sub-lease was in contravention of Section 73 of the RevenueAdministration and Ryotwari Land Revenue and Tenancy Act, Samvat2007 (Act No. 66 of 1950) and that the said respondents had trespassedin the land. The trial court had decreed the suit. The first appellatecourt had also confirmed the same. However, the same was reversedby the High Court in the second appeal. Allowing the appeal andreversing the judgment of the High Court, this Court held that personinducted as sub-lessee contrary to the provisions of Section 78 ofthe Tenancy Act did not acquire any right under contract of sub-lettingand his possession was not protected.

22. We have to apply the principles of law as deduced by thisCourt in the case of Kedar Nath and Immani Appa Rao (supra), tothe facts of the present case.

23. The transaction between the late Bale Venkataramanappa andthe plaintiff is not disputed. Initially the said Bale Venkataramanappahad executed registered mortgage deed in favour of the plaintiff.Within month, he entered into an agreement to sell wherein, the entireconsideration for the transfer as well as handing over of the possessionwas acknowledged. It could thus be seen, that the transaction wasnothing short of transfer of property. Under Section 61 of the ReformsAct, there is complete prohibition on such mortgage or transfer for aperiod of 15 years from the date of grant. Sub-section (1) of Section61 of the Reforms Act begins with non-obstante clause. It is thusclear that, the unambiguous legislative intent is that no such mortgage,transfer, sale etc. would be permitted for period of 15 years fromthe date of grant. Undisputedly, even according to the plaintiff, the grant

Ais of the year 1983, as such, the transfer in question in the year 1990is beyond any doubt within the prohibited period of 15 years. Sub-section(3) of Section 61 of the Reforms Act makes the legislative intent veryclear. It provides, that any transfer in violation of sub-section (1) shallbe invalid and it also provides for the consequence for such invalidtransaction.B

24. Undisputedly, both, the predecessor-in-title of the defendant(s)as well as the plaintiff, are confederates in this illegality. Both, theplaintiff and the predecessor-in-title of the defendant(s) can be said tobe equally responsible for violation of law.

C25. However, the ticklish question that arises in such situationis: “the decision of this Court would weigh in side of which party”?As held by Hidayatullah, J. in Kedar Nath Motani (supra), the questionthat would arise for consideration is as to whether the plaintiff can resthis claim without relying upon the illegal transaction or as to whetherthe plaintiff can rest his claim on something else without relying on theDillegal transaction. Undisputedly, in the present case, the claim of theplaintiff is entirely based upon the agreement to sell dated 15.05.1990,which is clearly hit by Section 61 of the Reforms Act. There is no otherfoundation for the claim of the plaintiff except the one based on theagreement to sell, which is hit by Section 61 of the Act. In such case,Eas observed by Taylor, in his “Law of Evidence” which has beenapproved by Gajendragadkar, J. in Immani Appa Rao (supra), althoughillegality is not pleaded by the defendant nor sought to be relied uponhim by way of defence, yet the Court itself, upon the illegality appearingupon the evidence, will take notice of it, and will dismiss the action exturpi causa non oritur actio i.e. No polluted hand shall touch the pureFfountain of justice. Equally, as observed in Story’s Equity Jurisprudence,which again is approved in Immani Appa Rao (supra), where the partiesare concerned with illegal agreements or other transactions, courts ofequity following the rule of law as to participators in common crimewill not interpose to grant any relief, acting upon the maxim in pariGdelicto potior est conditio defendentis et possidentis.

26. It could thus be seen that, the trial Judge upon finding thatthe agreement of sale was hit by Section 61 of the Reforms Act, hadrightly dismissed the suit of the plaintiff.

27. Now, let us apply the another test laid down in the case ofHImmani Appa Rao (supra). At the cost of repetition, both the parties

are common participator in the illegality. In such situation, the balanceAof justice would tilt in whose favour is the question. As held in ImmaniAppa Rao (supra), if the decree is granted in favour of the plaintiff onthe basis of an illegal agreement which is hit by statute, it will berendering an active assistance of the court in enforcing an agreementwhich is contrary to law. As against this, if the balance is tilted towardsBthe defendants, no doubt that they would stand benefited even in spiteof their predecessor-in-title committing an illegality. However, what thecourt would be doing is only rendering an assistance which is purely ofa passive character. As held by Gajendragadkar, J. in Immani AppaRao (supra), the first course would be clearly and patently inconsistentwith the public interest whereas, the latter course is lesser injurious toCpublic interest than the former.

28. In the result, the appeals deserve to be allowed and areaccordingly allowed. The judgment and order passed by the High Courtof Karnataka dated 08.06.2015 and the Order passed by the Fast TrackCourt-III, Bangalore Rural District, Bangalore, dated 17.06.2008 arequashed and set aside. The order dated 23.01.2004 dismissing the suitpassed by the trial court is upheld.

29. The parties shall bear their own costs.

Divya Pandey

Appeals allowed.