# TILAK RAJ BAKSHI v. AVINASH CHAND SHARMA (DEAD) THROUGH LRS. & OTHERS

- **Citation:** [2019] 10 S.C.R. 251
- **Court:** Supreme Court of India
- **Decided:** 2019-08-20
- **Case number:** Civil Appeal Nos. 1524-1525 of 2019
- **Bench:** Ashok Bhushan, K. M. Joseph
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tilak-raj-bakshi-v-avinash-chand-sharma-dead-through-lrs-others-32965
- **Pages:** 40

## Headnote

Suit - Right of pre-emption - When not applicable - Father
of the appellant-plaintiff executed will of the suit scheduled property
in favour of his three sons, the plaintiff, first defendant and third
defendant - Suit for specific performance filed alleging that the
first defendant without getting plaintiff's written concurrence, sold
the suit property to the first respondent-second defendant, thus
violating Clause (5) of the agreement entered between the three
brothers - Trial court decreed the suit - Appellate Court dismissed
the second defendant's appeal - High Court dismissed the suit filed
by the plaintiff - On appeal, held: Clause in question does not
place absolute restriction on alienation in favour of a stranger -
All that it contemplates is an offer being made to the brothers, once
the first step of concurrence in writing by the brothers for the sale
is obtained - Plaintiff not justified in invoking the principle
underlying the right of pre-emption - First defendant indeed made
offer to the appellant for selling his share for Rs. 5 lakhs - Plaintiff
estopped from setting up the plea of absence of written consent of
the brothers as he led the first defendant to assume, that even without
written concurrence, the sale is permitted - First defendant acted
on that basis, otherwise, he could have certainly obtained the
concurrence - Having thus acted in the matter, and the second stage
having been reached, when the fault cannot be attributed to the
first defendant, the offer, which the plaintiff himself describes as
reasonable, was not seized upon by him, the third stage emerged -
It became open to the first defendant to sell to a stranger and he
sold the property to the second defendant - Further, plaintiff not
able to persuade the Court to hold that the assignment in favour of
the second defendant is vulnerable on the basis that it involves
fragmentation of the site, which according to the plaintiff was
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251
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prohibited under 1952 Act - Transaction cannot be impugned on
the said ground also - Indian Contract Act, 1872 - s.29 - Capital
of Punjab (Development and Regulation) Act, 1952 - Specific Relief
Act, 1963 - s.20.
Capital of Punjab (Development and Regulation) Act,
1952 - ss.2(f), (k), 3-5, 22 - Difference between 'site' and
building' - Discussed - Chandigarh (Sale of Sites and Building)
Rules, 1960 - r.14 - Chandigarh Estate Rules, 2007 - r.16 - Partition
Act, 1893 - ss.2-4.
Practice and Procedure - Plea not taken before the Appellate
Court, if can be decided by it - Permissibility of - Held: Mere fact
that the plea that the clause in question was vague, and hence,
unenforceable and void was not taken, will not stand in the way of
the Appellate Court looking into the contract and, if on its terms, it
finds it to be vague and unenforceable, it can be so held - Indian
Evidence Act, 1872 - s.93.
Dismissing the appeals, the Court
HELD : 1.1 WHETHER THERE WAS A FAMILY
SETTLEMENT?
No material has been placed by the second defendant to
establish that the alleged family settlement is a forged document.
There is no case that it is not a family settlement. The settlement
is arrived at between the plaintiff, his brother-the first defendant
and another brother-third defendant. Therefore, it is proceeded
on the basis that there is a family settlement. [Para 17]
[265-G-H]
1.2 WHETHER THE FAMILY SETTLEMENT WAS
VAGUE?
The mere fact that a plea is not taken, that the clause in
question is vague, and hence, unenforceable and void will not
stand in the way of the Appellate Court looking into the contract
and, if on its terms, it finds it to be vague and unenforceable, it
can be so held. Clause (5) in question provides that the property
in question cannot be sold without concurrence of the three
brothers in writing. If it is sold on the agreement of three brothers,
the first preference is to be given to both other brothers. When
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it is

## Text

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TILAK RAJ BAKSHI
v.
AVINASH CHAND SHARMA (DEAD) THROUGH LRS. &
OTHERS
(Civil Appeal Nos. 1524-1525 of 2019)
AUGUST 20, 2019
[ASHOK BHUSHAN AND K. M. JOSEPH, JJ.]
Suit - Right of pre-emption - When not applicable - Father
of the appellant-plaintiff executed will of the suit scheduled property
in favour of his three sons, the plaintiff, first defendant and third
defendant - Suit for specific performance filed alleging that the
first defendant without getting plaintiff's written concurrence, sold
the suit property to the first respondent-second defendant, thus
violating Clause (5) of the agreement entered between the three
brothers - Trial court decreed the suit - Appellate Court dismissed
the second defendant's appeal - High Court dismissed the suit filed
by the plaintiff - On appeal, held: Clause in question does not
place absolute restriction on alienation in favour of a stranger -
All that it contemplates is an offer being made to the brothers, once
the first step of concurrence in writing by the brothers for the sale
is obtained - Plaintiff not justified in invoking the principle
underlying the right of pre-emption - First defendant indeed made
offer to the appellant for selling his share for Rs. 5 lakhs - Plaintiff
estopped from setting up the plea of absence of written consent of
the brothers as he led the first defendant to assume, that even without
written concurrence, the sale is permitted - First defendant acted
on that basis, otherwise, he could have certainly obtained the
concurrence - Having thus acted in the matter, and the second stage
having been reached, when the fault cannot be attributed to the
first defendant, the offer, which the plaintiff himself describes as
reasonable, was not seized upon by him, the third stage emerged -
It became open to the first defendant to sell to a stranger and he
sold the property to the second defendant - Further, plaintiff not
able to persuade the Court to hold that the assignment in favour of
the second defendant is vulnerable on the basis that it involves
fragmentation of the site, which according to the plaintiff was
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251
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prohibited under 1952 Act - Transaction cannot be impugned on
the said ground also - Indian Contract Act, 1872 - s.29 - Capital
of Punjab (Development and Regulation) Act, 1952 - Specific Relief
Act, 1963 - s.20.
Capital of Punjab (Development and Regulation) Act,
1952 - ss.2(f), (k), 3-5, 22 - Difference between 'site' and
building' - Discussed - Chandigarh (Sale of Sites and Building)
Rules, 1960 - r.14 - Chandigarh Estate Rules, 2007 - r.16 - Partition
Act, 1893 - ss.2-4.
Practice and Procedure - Plea not taken before the Appellate
Court, if can be decided by it - Permissibility of - Held: Mere fact
that the plea that the clause in question was vague, and hence,
unenforceable and void was not taken, will not stand in the way of
the Appellate Court looking into the contract and, if on its terms, it
finds it to be vague and unenforceable, it can be so held - Indian
Evidence Act, 1872 - s.93.
Dismissing the appeals, the Court
HELD : 1.1 WHETHER THERE WAS A FAMILY
SETTLEMENT?
No material has been placed by the second defendant to
establish that the alleged family settlement is a forged document.
There is no case that it is not a family settlement. The settlement
is arrived at between the plaintiff, his brother-the first defendant
and another brother-third defendant. Therefore, it is proceeded
on the basis that there is a family settlement. [Para 17]
[265-G-H]
1.2 WHETHER THE FAMILY SETTLEMENT WAS
VAGUE?
The mere fact that a plea is not taken, that the clause in
question is vague, and hence, unenforceable and void will not
stand in the way of the Appellate Court looking into the contract
and, if on its terms, it finds it to be vague and unenforceable, it
can be so held. Clause (5) in question provides that the property
in question cannot be sold without concurrence of the three
brothers in writing. If it is sold on the agreement of three brothers,
the first preference is to be given to both other brothers. When
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it is stated that the property cannot be sold without concurrence
of the three brothers in writing, there cannot be any doubt about
its meaning. It means what it says which is that should a brother
want to sell the property, the other two brothers must agree in
writing. This clause cannot be described as vague. This is different
from the aspect as to whether it is a clog on ownership or whether
it is otherwise unenforceable but it cannot be described as being
vague. The second contention is that when a decision is taken by
the brothers permitting sale by a third brother, then, first
preference is to be given to both the other brothers. What is
intended is that after the written concurrence is obtained for
selling in order that property is not sold to a third party/stranger,
the other two brothers are given an opportunity to buy that
property. This portion of the clause cannot also be described as
vague as such. No doubt, it could be argued that the price at
which the offer is to be made is not expressly mentioned. The
clause is part of a family settlement between brothers. Courts
ordinarily lean in favour of family settlement. Clause (5) itself
does not contain an agreement to sell. It only contemplates a
preferential offer being treated as a condition precedent to a
brother affecting a sale outside of a family to a stranger. The price
can only be understood as market price which would be the fair
price. Therefore, the finding by the High Court that contract is
vague cannot be sustained. In the last letter dated 01.04.1996, it
is written by the plaintiff to the first defendant and his wife. He
has shown awareness of the first defendant's health.
Correspondence indeed establish, therefore, that the health of
the first defendant was poor and it was deteriorating and he was
in urgent need for money. The first defendant had made offer to
the appellant for selling his share for Rupees Five Lakhs. The
plaintiff himself acknowledged in the letter dated 01.04.1996 that
the offer of Rupees five lakhs was reasonable. Appellant, quite
clearly, has articulated his pressing priority to be to conduct the
marriage of his daughter. This means that he was hard pressed
for money. Otherwise there was no need for him after finding the
offer to be reasonable to request the first defendant and his wife
to try to reduce the value. Letter dated 15.04.1996 written by
the first defendant's wife shows that she did not wish to then
receive earnest money and she finally demanded that final
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payment be made as prices in Chandigarh were increasing quite
rapidly and rate settled by the plaintiff was quite old. She
emphasized that the offer was given because she was in dire need
of money. Now the need is of the plaintiff. This correspondence
also tends to show that the rate of five lakhs was, in fact, even
acceptable to the plaintiff as the letter referred to the rate settled
by the plaintiff being quite old. But nothing was happening on the
ground. This leads the first defendant wife to state that she would
only handle the situation in any manner but it will not be possible
later on. The sale took place after more than a year. One thing is
clear that an offer was made on behalf of the first defendant to the
plaintiff. [Paras 21, 22, 29 and 30] [268-A-F; 273-D-H; 274-A-B]
1.3 Apparently, in keeping with the family settlement, a
preference was indeed shown. The price was reasonable and
acceptable even to the plaintiff though he wanted a reduction.
Having regard to the health of the first defendant and the dire
stage at which first defendant and his wife were placed, they had
made an attempt to comply with the condition in the family
settlement providing for preference. [Para 32] [274-G-H]
1.4 WHETHER THE HIGH COURT WAS RIGHT IN
HOLDING THAT THE COURTS WOULD NOT EXERCISE
DISCRETION UNDER SECTION 20 OF THE SPECIFIC
RELIEF ACT, 1963 AS THE CONTRACT WAS NOT
SPECIFICALLY ENFORCEABLE?
The Appellate Court finds that the plaint schedule property
was owned by the father. It is found that the three sons get equal
shares. The Trial Court finds that no offer was made by the first
defendant to the plaintiff. It decrees specific performance by
directing so on the basis that first defendant will have to make an
offer to the plaintiff and the third defendant after finding that the
first defendant was not bound to make an offer to sell at Rs.4.80
lakhs. The Appellate Court, on the other hand, has gone to decree
specific performance by even directing possession of the property
to be given to the plaintiff by the second defendant. On the basis
of the terms and conditions of the agreement dated 31.03.1982,
there are clearly two palpable flaws in the findings and directions.
Admittedly, the second defendant was already occupying the
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property as a tenant. He can be evicted only in accordance with
law even if everything is held in favour of the plaintiff. In other
words, even if it is found that the assignment by the first defendant
in favour of the second defendant is null and void, he has the
right to continue in possession unless he is evicted under the
relevant law for the eviction of tenants. Therefore, the direction
to deliver possession is clearly unsustainable. The second flaw
which vitiated the judgment of the first Appellate Court is that it
has proceeded to hold that plaintiff is entitled to specific
performance as per the terms and conditions of the agreement
dated 31.03.1982. The Appellate Court was in error in decreeing
specific performance on the basis that the family settlement
without anything more, embodied a contract for sale of immovable
property. The terms of the agreement, viz., the price at which
the property is to be sold and purchased, are not spelt out in the
family settlement, as correctly noticed by the Trial Court. The
Appellate Court has not proceeded to hold that the plaintiff is
entitled to purchase the property at Rs.4.80 lakhs at which price
the first defendant has sold to the second defendant. If the decree
is treated as confirming the decree of the Trial Court, then, the
price at which it is to be purchased would only have been
ascertained on the basis of an offer which is made in pursuance of
the Trial Court's judgment, and therefore, no decree for specific
performance, as passed by the First Appellate Court, could
certainly have been passed. [Para 37] [276-A-H; 277-A-E]
1.5 Right to preemption is ordinarily born out of custom or
in terms of a statutory provision. This case does not concern
with the statutory right of preemption or custom. There is no
case expressly set up in the plaint that what appellant is seeking
to enforce is a right of preemption. If the suit involved a right of
preemption, and proceeding on the basis that the appellant was
pursuing his secondary right to follow the property sold, then,
the relief would have been to substitute himself in place of the
buyer/second defendant. The right of preemption is not right of
re-purchase. Even proceeding on the basis of it being a case of
preemption, as held by the High Court and by this Court, first
preference was given to the plaintiff. In this case, the concerned
clause, certainly does not place an absolute restriction on
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alienation in favour of a stranger. All that it contemplates is an
offer being made to the brothers, once the first step of concurrence
in writing by the brothers for the sale is obtained. Therefore, the
appellant would not be justified in invoking the principle
underlying the right of preemption in this case. [Paras 43, 44]
[279-F-G; 280-D-G]
1.6
IMPACT
OF
ABSENCE
OF
WRITTEN
CONCURRENCE BY BROTHERS FOR SALE
The controversial clause, according to the appellant, falls
in two parts. Firstly, there must be a written concurrence from
the two brothers, if the third brother wishes to sell his share.
The second part is that the offer must be made to the other
brothers before transfer is effected to a stranger. In this case,
the title to the share in the property of the first defendant is
traceable to the will executed by the father. The plaint reveals
that the legatees, viz., the brothers applied to the Estate Office
and the property was transferred in favour of the brothers on the
terms and conditions in Memo dated 10.07.1981. One of the
conditions was that there will be no fragmentation of the site. It
is thereafter that the controversial agreement was entered into
between the brothers. Thus, the family arrangement was entered
into by the brothers when their rights as owners had crystallized.
It was not subject to any condition. Being brothers, they could to
promote harmony and avoid future disputes, enter into a family
settlement. The first defendant has sold his share to the second
defendant. Under the clause, can the first defendant sell to a
stranger? He can sell provided there was a written concurrence
by the other brothers for a sale and the offer is made to the other
brothers and it does not fructify into a sale for reasons which are
not attributable to the brother who wishes to sell. There was an
offer to the appellant by the first defendant. He has failed to act
upon it. The other brother has no case about offer not being made
and he has not raised any dispute over the sale to the second
defendant. [Paras 45, 50 and 51] [280-H; 281-A; 284-B-F]
1.7 Thus, what is sought is specific performance. The
appellant proceeded in the suit on the basis that there is a contract.
A contract presupposes an offer which is accepted which means
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that there was an offer from the defendant. The correspondence,
which fortifies in holding that there was an effective offer and it
did not materialize on account of any default on the part of the
plaintiff. Now, if the clause is broken down, it involves the
following steps. A brother announces his desire to sell his share.
He seeks written concurrence of the other brothers. A written
concurrence is given. Then, the next step is reached. The selling
brother offers to sell it to the other brothers. If they take the
offer and the price is agreeable to the parties, sale follows. If the
brothers do not wish to buy, the sale to the strangers is permitted.
In the above process, in the facts of this case, it is clear that the
appellant and the first defendant, without insisting on the written
concurrence, went to the stage of offer to brothers. The appellant
has led the first defendant to assume, even without a written
concurrence, that the sale is permitted. The first defendant has
acted clearly on the basis that the requirement of the first stage
was not being insisted upon. Otherwise, he could have certainly
obtained the concurrence. Having thus acted in the matter, and
the second stage having been reached, when for reasons where
the fault cannot be attributed to the first defendant, the offer,
which the appellant himself describes as reasonable, was not
seized upon by the appellant, the third stage emerged. This meant
that it became open to the first defendant to sell to a stranger
and which is what he did by it selling it to the second defendant.
Even proceeding to enforce the clause, the appellant is clearly
estopped from setting up the plea of absence of written consent
of the brothers. It would be inequitable, particularly when the
matter is considered in an appeal sourced under Article 136 of
the Constitution of India. [Paras 52, 53] [285-D-H; 286-A-B]
1.8
EFFECT
OF
PROHIBITION
AGAINST
FRAGMENTATION OF PROPERTY IN QUESTION UNDER
THE CAPITAL OF PUNJAB (DEVELOPMENT AND
REGULATION) ACT, 1952
The Capital of Punjab (Development and Regulation) Act,
1952 (hereinafter referred to as 'the 1952 Act' for short) defines
"site" in Section 2(f) as meaning "any land which is transferred
by the Central Government under Section 3. Section 4 of the
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1952 Act confers power upon the Central Government and the
Chief Administrator to issue directions in respect of any site or
building in regard to the matters which are mentioned therein.
The word "transferee" is defined in Section 2(k) of the Act. Section
5 of the 1952 Act forbids erection or occupation of any building at
Chandigarh in contravention of Building Rules made under subSection (2). The word "site" means any land which is transferred
under Section 3 of the 1952 Act. When it comes to the terms of
Section 3, it contemplates power with the Central Government
to transfer by auction, allotment or otherwise any land or building
belonging to the Government in Chandigarh on such terms and
conditions as may subject to any Rules that can be made under
the Act, the Government thinks fit to impose. Thus, though it is
open to the Central Government to transfer either land or building
belonging to the Government in Chandigarh under Section 3 of
the 1952 Act, the word "site" is confined to only the land which
is transferred by the Central Government under Section 3. In
fact, the word "building", as defined in the Act, points to any
construction or part of construction transferred under Section 3.
It includes outhouse, stable, cattle shed and garage and also
includes any building erected on any land transferred by the
Central Government. The construction must be intended to be
used for residential, commercial, industrial or any other purposes.
A clear distinction is maintained between "site" and "building".
The Chandigarh (Sale of Sites and Building) Rules, 1960 came to
be made. Section 22 of the 1952 Act confers power upon the
Central Government to make the Rules for various purposes,
which are mentioned in sub-Section (2). It includes Sections 2(a),
2(d), 2(e) and 2(h) of the 1952 Act. Rule 14 of the Chandigarh
Sale of Sites and Building Rules, 1960 provides that no
fragmentation of any site is permitted. Subsequently, in exercise
of powers under Sections 3 and 22 of the Act, Chandigarh Estate
Rules, 2007 came to be made. Rule 16 deals with fragmentation/
amalgamation. [Paras 54, 56, 58-60] [286-C-D; 287-B, D, G-H;
288-A-C, F]
1.9 While it may not be true that the issue of fragmentation
was not raised in the courts, the appellant is not able to persuade
the Court to hold that the assignment in favour of the second
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defendant is vulnerable on the basis that it involves fragmentation.
The deposition of the plaintiff about partition of the house into
three portions has been noticed. The fact that one-third share
has been duly transferred and mutated in the name of the first
respondent/second defendant by the Chandigarh Administration,
has been noted. The second defendant has produced the
communication dated 19.12.1997 which indicates the transfer of
rights of site in Sector 19A held by first defendant is noted in
favour of the second defendant subject to certain conditions. This
is obviously before the 2007 Rules came into force. In the light
of the aforesaid facts, the appellant cannot be permitted to impugn
the transaction on the said ground. The contentions of the
appellant are rejected. [Paras 63-66] [289-A-H; 290-A-B]
K. Naina Mohammed (Dead) Through Lrs. v. A.M.
Vasudevan Chettiar (Dead) Through Lrs.and Others
(2010) 7 SCC 603 : [2010] 7 SCR 927 ; Hari Shankar
Singhania and Others v. Gaur Hari Singhania and
Others (2006) 4 SCC 658 : [2006] 3 SCR 726 ;
Muhammad Raza (since deceased) and others v. Abbas
Bandi Bibi AIR 1932 PC 158 - referred to.
Keshavlal Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd.
AIR 1958 SC 512 : [1959] SCR 213 ; Bishan Singh v.
Khazan Singh AIR 1958 SC 838 : [1959] SCR 878
- relied on.
Case Law Reference
[2010] 7 SCR 927
referred to
Para 12
[2006] 3 SCR 726
referred to
Para 12
AIR 1932 PC 158
referred to
Para 12
[1959] SCR 213
relied on
Para 20
[1959] SCR 878
relied on
Para 41
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 15241525 of 2019.
From the Judgment and Order dated 02.02.2015 of the High
Court of Punjab and Haryana at Chandigarh in R.S.A. Nos. 3496 of
2012 (O&M) and 3497 of 2012 (O&M).
TILAK RAJ BAKSHI v. AVINASH CHAND SHARMA (D) THR.
LRS. & ORS.
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Nidhesh Gupta, Sr. Adv., Tarun Gupta, Ms. Vriti Gujral, Ms. Pallavi
Singh, Ms. Japneet Kaur, Advs. for the Appellant.
Dhruv Mehta, Sr. Adv., Siddharth Mittal, Prabhat Kumar, Advs.
for the Respondents.
The Judgment of the Court was delivered by
K. M. JOSEPH, J.
1. These appeals arise out of special leave petitions and are
directed against the impugned judgment of the High Court of Punjab &
Haryana by which the second appeal filed by the second defendant in
the suit has been allowed and the civil suit filed by the appellant herein
has been dismissed. Parties will be referred to with reference to their
position in the Trial Court.
2. The suit scheduled property located in Chandigarh was owned
by one Kirpa Ram Bakshi. He had executed a registered will on
04.09.1974 in favour of the plaintiff, the first defendant and another son
who was the 3rd defendant in the suit. Thereafter, the disputed house
was transferred in favour of the aforesaid three persons by the Estate
Officer. The plaintiff filed the present suit from which the appeal arises
alleging that on 31.03.1982 there was an agreement entered into between
the three brothers namely himself, the first defendant and the younger
brother. Clause (5) of the agreement provides as follows:
"The individual portions of New Delhi and Chandigarh and
agricultural land cannot be sold without concurrence of all three
in writing and if it is sold on agreement of three, first preference
to be given to both other brothers. Any special renovation after
expiry of joint upkeep is done by any one of us and full accounts
are maintained, then in the event of total sale of any unit, the extra
amount spent on special renovation (subject to reasonable
depreciation/appreciation) by individual will be payable to the
individual over and above 1/3rd share of the sale proceeds."
3. It was alleged that the said clause was violated by his brother,
the first defendant and without getting his written concurrence for the
same the first defendant sold the suit scheduled property to the second
defendant. It was alleged that this will result in fragmenting the site
which is prohibited and it was also alleged that the sale was void. The
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suit came to be filed for declaring the sale deed in favour of the second
defendant void and for specific performance directing first defendant to
execute sale deed in respect of one-third share to the plaintiff.
4. The second defendant contested the matter. It was inter alia
contended that the family settlement was forged and fabricated. The
plaintiff did not have any preferential right. The second defendant was
a bonafide purchaser. The plaintiff never intended to purchase the
property. The share of the first defendant was transferred to the second
defendant by the Estate Officer of Chandigarh on his application.
5. The trial Court found that the family arrangement was indeed
executed. It is a genuine document and not forged or fabricated. The
suit filed on 03.02.1998 challenging the sale deed dated 12.11.1997 was
filed within time. The second defendant was found not to be a bonafide
purchaser. He was aware of giving preference by the first defendant to
the appellant. It was further found that the plaintiff was never offered
to purchase the share of the first defendant. The trial court found that
the plaintiff was entitled to specific relief and declared the sale null and
void. The plaintiff was entitled to specific performance as per the terms
and conditions of the agreement dated 31.03.1982 to purchase the share
of the first defendant.
6. The second defendant appealed against the judgment. The
first Appellate Court found that the family arrangement was genuine. It
referred to the correspondence between the plaintiff and the wife of the
first defendant. He proceeded to find that the only controversy was
whether the first defendant has offered to the plaintiff to purchase his
one-third share or whether the plaintiff never came forward for the
same. The first Appellate Court found that no document was produced
to show that the first defendant himself offered. The court further goes
on to find letters by the wife of the first defendant which reveals that
offer was given to the plaintiff to purchase. As per clause (5) of the
family arrangement, the concurrence of the plaintiff was not taken in
writing before selling to the second defendant. As far as the offer is
concerned the Appellate Court referred to the correspondence.
Defendant no.1 was not ready to accept earnest money. The house
was located at Chandigarh. The sale could be effected only at
Chandigarh. Plaintiff visiting Bhilai, where first defendant lived, would
not have been served any purpose. Reference is made to the telephone
bills of the plaintiff to prove communication between him and the first
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defendant regarding sale. The sale in favour of the second defendant
was effected through power of attorney. No offer was made for selling
to the plaintiff by the first defendant through a power of attorney. It is
found that though P19 shows that a deal was struck but because the
wife of the first defendant was pressing hard for the plaintiff to come to
Bhilai, it did not work. The plaintiff was found ready and willing. The
first defendant has violated the family settlement. The second defendant
was aware from the wife of the first defendant that she wanted to sell to
the plaintiff. The second defendant was a tenant who was aware of the
family arrangement. There was no notice issued to the other sharers.
The appeal of the second defendant was dismissed. That apart the
Appellate Court also allowed the cross appeal filed by the plaintiff and
directed the second defendant to hand over possession to the plaintiff.
PROCEEDINGS BEFORE THE HIGH COURT
7. The High Court after referring to the correspondence between
the parties found that the first defendant has indeed offered to sell his
share to the plaintiff. Plaintiff could have sent a draft. The precarious
condition of the first defendant, having regard to his health, was known
to the plaintiff.
8. The High Court found that there was no valid and binding
contract between the parties. No price has been fixed nor there is any
penalty clause, i.e., in case of failure, either one of the parties can enforce
the agreement (obviously clause (5) which we have already quoted). In
view of the omissions of the appellant to act on the offer, he has lost the
preemptory right to purchase the share and it led to the sale in favour of
the second defendant. The High Court proceeds to hold that clause (5)
relied upon by the plaintiff is not only vague but indefinite and void. The
plaintiff cannot be permitted to exercise belatedly after he has lost to
encash offer reflected in the letters which we will refer to hereinafter.
9. It is also found that the second defendant being the tenant
could only be evicted under the law relating to tenants.
10. The High Court noted that the fragmentation may not be
possible but solution was found in Sections 2, 3 and 4 of the Partition Act
and by ascertaining market value they could buy each other's share.
Section 22 of the Hindu Succession Act was found to have been declared
unconstitutional by this Court. Appellant had not accepted the offer.
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Reference was made to Section 20 of the Specific Relief Act and it was
found that in the circumstances, appellant was not entitled to the
discretionary relief.
11. We heard Shri Nidhesh Gupta, learned senior counsel
appearing on behalf of the appellant and Shri Dhruv Mehta, learned
senior counsel appearing on behalf of the first respondent (second
defendant).
12. Learned senior counsel for the appellant would contend that
this is a clear case of family settlement. The family settlement contained
two distinct conditions. Not only preference must be given to the other
sharers, the first defendant was obliged to obtain the written concurrence
of the other sharers. He would submit that courts lean in favour of
family settlements and uphold the same. In this case, there is no absolute
prohibition against sale of his share. It is only a partial prohibition. The
first defendant could sell his share to his brothers. The object behind
clause (5) was highlighted to be that third party is not rendered entitled
to the family property. Such a partial prohibition has been approved by
both the Privy Council and also by this Court. In this regard, he drew
our attention to the judgments of this Court in the case of K. Naina
Mohammed (Dead) Through Lrs. v. A.M. Vasudevan Chettiar (Dead)
Through Lrs.and Others1, Hari Shankar Singhania and Others v. Gaur
Hari Singhania and Others2 and also judgement of the Privy Council in
the case of Muhammad Raza (since deceased) and others v. Abbas
Bandi Bibi3. He also drew our attention to the judgment of this Court in
Hari Shankar Singhania (supra) to contend that family settlement is
treated differently from any other formal commercial settlement. This
is what the court held:
"A family settlement is treated differently from any other formal
commercial settlement as such settlement in the eye of the law
ensures peace and goodwill among the family members. Such
family settlements generally meet with approval of the courts.
Such settlements are governed by a special equity principle where
the terms are fair and bona fide, taking into account the wellbeing of a family.
1 2010 (7) SCC 603
2 2006 (4) SCC 658
3 AIR 1932 PC 158
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Technicalities of limitation, etc. should not be put at risk of the
implementation of a settlement drawn by a family, which is essential
for maintaining peace and harmony in a family. ..."
13. Next, he would contend that under Rule 16 of the Chandigarh
Estate Rules, 2007, no fragmentation or amalgamation of any of the site
is permissible. Therefore, in regard to the sale deed in favour of the
second defendant the High Court overlooked that the aforesaid rule shall
be observed in its breach. Next he was at pains to demonstrate before
us that the plaintiff was always willing and ready to take the share of the
first defendant. The correspondence, however, revealed that the wife of
the first defendant was insisting that the entire consideration must be
paid at Bhilai where the first defendant resided, whereas the conveyance
could be effected only at Chandigarh where the plaint schedule property
is located. The plaintiff was ready to accommodate the reasonable
demands of the first defendant but the property came to be conveyed to
the second defendant.
14. It was argued by Shri Nidhesh Gupta, learned senior counsel
for the appellant that even if preference was given to the plaintiff, he
must succeed on the ground that clause (5) of the family settlement
envisages written concurrence from the other sharers before a valid
sale deed was made by the first defendant.
15. Per contra, Shri Dhruv Mehta, learned senior counsel,
appearing on behalf of the first respondent, supports the order of the
High court. He also took us to the correspondence and pointed out the
plight of the first defendant whose health was in a precarious condition
and he wanted money urgently. An offer was made. The offer, he
would point out, was not unreasonable namely Rs.5 lakhs but the plaintiff
was not prepared to act on the offer leaving no option with the first
defendant except to sell the share to the second defendant. He would
further point out that the second defendant was actually a bonafide
purchaser of the property and the Trial Court and the first Appellate
Court erroneously found that he was not a bona fide purchaser on the
basis that he deposed that the wife of the first defendant told him about
the offer made to the appellant. He would point out that this conversation
did not establish that respondent was aware of the family arrangement
and therefore, the second defendant was indeed a bonafide purchaser.
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He would further complain that first Appellate Court has gone one step
further than the Trial Court and even ordered that second defendant to
put the plaintiff in possession even though undisputedly he was a tenant
who was entitled to protection of the statute against eviction except in
accordance with law.
16. The following points arise for our decision:
A.
Whether there was a family settlement?
B.
Whether the High Court was right in, without even a plea,
holding that the family settlement is vague and unenforceable
and void?
C.
Whether an offer was made by the first defendant to the
plaintiff before the sale of the property to the second
defendant?
D.
Whether the High Court was right in holding that the courts
could not exercise discretion under Section 20 of the Specific
Relief Act, 1963 as the contract is not specifically
enforceable?
E.
What is the impact of absence of written concurrence by
brothers for sale?
F.
What is the effect of the prohibition against fragmentation
of poperty in question under the Capital of Punjab
(Development and Regulation) Act, 1952?
FINDINGS
WHETHER THERE WAS A FAMILY SETTLEMENT?
17. As far as the first question is concerned, whether there was a
family settlement, at paragraph 6 of the plaint, the family settlement was
pleaded. The answer to the same, by the second defendant, is that the
alleged family settlement dated 31.03.1982 is a forged and fabricated
document. We can safely conclude that no material has been placed by
the second defendant to establish that the alleged family settlement is a
forged document. There is no case that it is not a family settlement. The
settlement is arrived at between the plaintiff, his brother-the first
defendant and another brother-third defendant. Therefore, we can
proceed on the basis that there is a family settlement.
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WHETHER THE FAMILY SETTLEMENT WAS VAGUE?
18. With regard to the finding by the High Court that whether the
family settlement is vague, unenforceable and void, the complaint of the
plaintiff is that there is no pleading that family settlement is vague and
unenforceable. Section 29 of the Indian Contract Act, 1872 (hereinafter
referred to as 'the Contract Act', for short), reads as follows:
"29. Agreements void for uncertainty.-Agreements, the
meaning of which is not certain, or capable of being made certain,
are void. -Agreements, the meaning of which is not certain, or
capable of being made certain, are void." Illustrations
(a) A agrees to sell B "a hundred tons of oil". There is nothing
whatever to show what kind of oil was intended. The
agreement is void for uncertainty."
(b)
A agrees to sell B one hundred tons of oil of a specified
description, known as an article of commerce. There is no
uncertainty here to make the agreement void."
(c)
A, who is a dealer in coconut-oil only, agrees to sell to B
"one hundred tons of oil". The nature of A's trade affords an
indication of the meaning of the words, and A has entered
into a contract for the sale of one hundred tons of coconut
oil."
(d)
A agrees to sell B "all the grain in my granary at Ramnagar".
There is no uncertainty here to make the agreement void."
(e)
A agrees to sell to B "one thousand maunds of rice at a price
to be fixed by C". As the price is capable of being made
certain, there is no uncertainty here to make the agreement
void."
(f)
A agrees to sell to B "my white horse for rupees five hundred
or rupees one thousand". There is nothing to show which of
the two prices was to be given. The agreement is void."
19. Section 93 of the Indian Evidence Act, 1872, reads as follows:
"93. Exclusion of evidence to explain or amend ambiguous
document.-When the language used in a document is, on its
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face, ambiguous or defective, evidence may not be given of facts
which would show its meaning or supply its defects. Illustrations
(a) A agrees, in writing, to sell a horse to B for "Rs. 1,000 or
Rs. 1,500". Evidence cannot be given to show which price
was to be given.
(b) A deed contains blanks. Evidence cannot be given of facts
which would show how they were meant to be filled."
20. The question is not res integra. A Bench of three learned
Judges of this Court considered the very same question in Keshavlal
Lallubhai Patel v. Lalbhai Trikumlal Mills Ltd.4 and held as follows:
"10. There is one more point which must be considered. It
was strongly urged before us by the appellants that, in the trial
court, no plea had been taken by the respondent that the agreement
for the extension of time was vague and uncertain. No such plea
appears to have been taken even in the grounds of appeal preferred
by the respondent in the High Court at Bombay; but apparently
the plea was allowed to be raised in the High Court and the
appellants took no objection to it at that stage. It cannot be said
that it was not open to the High Court to allow such a plea to be
raised even for the first time in appeal. After all, the plea raised is
a plea of law based solely upon the construction of the letter which
is the basis of the case for the extension of time for the
performance of the contract and so it was competent to the appeal
court to allow such a plea to be raised under Order 41 Rule 2 of
the Code of Civil Procedure. If, on a fair construction, the, condition
mentioned in the document is held to be vague or uncertain, no
evidence can be admitted to remove the said vagueness or
uncertainty. The provisions of Section 93 of the Indian Evidence
Act are clear on this point. It is the language of the document
alone that will decide the question. It would not be open to the
parties or to the court to attempt to remove the defect of vagueness
or uncertainty by relying upon any extrinsic evidence. Such an
attempt would really mean the making of a new contract between
the parties. That is why we do not think that the appellants can
now effectively raise the point that the plea of vagueness should
not have been entertained in the High Court."
(Emphasis supplied)
4 AIR 1958 SC 512
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21. Therefore, the mere fact that a plea is not taken, that the
clause in question is vague, and hence, unenforceable and void will not
stand in the way of the Appellate Court looking into the contract and, if
on its terms, it finds it to be vague and unenforceable, it can be so held.
22. The question is to whether clause (5) in question is vague and
unenforceable. We noticed that it provides that the property in question
cannot be sold without concurrence of the three brothers in writing. If it
is sold on the agreement of three brothers, the first preference is to be
given to both other brothers. When it is stated that the property cannot
be sold without concurrence of the three brothers in writing, there cannot
be any doubt about its meaning. It means what it says which is that
should a brother want to sell the property, the other two brothers must
agree in writing.