S. Ananda Reddy, J.
1. The legal heirs of the plaintiffs are the appellants and the second appeal is directed against the judgment and decree passed by the Court of II Additional District Judge, East Godavari at Rajahmundry, in A.S.No. 126 of 1987, dated 8-8-1994 by which the judgment and decree passed in O.S. No. 21 of 1981, dated 21-4-1987 by the Court of Subordinate Judge, Peddapuram, decreeing the suit was reversed and the suit is dismissed.
2. The substantial question of law that is raised in the present second appeal is whether there is an embargo contained in Section 17 of the Land Ceiling Act, ousting the power and jurisdiction of a Civil Court to pass a decree of specific performance of an Agreement of Sale ?
3. The facts leading to the present second appeal are, the original plaintiff filed the suit for specific performance of an agreement of sale dated 10-5-1970 executed by the original defendant, who died during the pendency of the appeal, agreeing to sell the suit schedule property at Rs. 7,500/- per acre ad received Rs. 5,270/- on the date of the agreement and further agreeing to receive the balance within a period of three years with 10 1/2 % interest per annum and as soon as the remaining amount is paid, the document has to be registered. The plaintiff paid a sum of Rs. 2,000/- on 154-1972 for which an endorsement was made on the agreement, similarly paid another sum of Rs. 1,000/- on 10-5-1973; and Anr. sum of Rs. 1,000/- on 18-2-1974. The plaintiff also executed a promissory note in favour of the defendant on the date of the agreement itself, agreeing to pay the balance of Rs. 8,230/-, and in fact, the actual amount has to be ascertained after measuring the land. It is stated that the defendant admitted the execution of the agreement and delivery of possession to the plaintiff in her declaration as well as deposition in Land Ceiling Case, LCC No. 1661 of 1975. It is also stated that the plaintiff could not get the document registered because of the Ordinance and the A.P. Land Reforms (Ceiling on Agricultural Holdings) Act, 1973 (for brevity 'the Act'). It is further stated that the plaintiff is ready and willing to perform his part of the contract, but the defendant prayed for time till the disposal of LCC.No. 1661 of 1975 and the appeal thereon. The plaintiff filed the original agreement and also the tax receipts in the said LCC and now in the present proceedings filed the certified copies of the same, as the plaintiff could not take return of the agreement and other documents.
4. The defendant filed a written statement admitting the fact of execution of the agreement and also the receipt of the amounts by her as stated in the plaint and the endorsement made as to the receipt of the said amounts on the suit agreement as well as on the back of the promissory note. It is stated that the plaint schedule property is part of the property that was agreed to be sold to the plaintiff and Ors.. The defendant is the owner of Acs.8-60 of the land, which is a contiguous land having number of plots, which were agreed to be sold to different purchasers in different plots and the plaintiff is one of them. It is also stated that in spite of repeated requests by the defendant for payment of balance sale consideration and to obtain the sale deed, at their convenience the plaintiff and other agreement holders did not co-operate, finally a dispute was raised before the elders, like PW.2 and Ors., and after negotiations it was agreed by the plaintiff and other agreement holders to re-deliver the land under their respective occupation to the defendant and the profits received by them till then were agreed to be appropriated towards the amount paid to the defendant towards the part sale consideration that was paid at the time of the agreement. It is further stated that the plaint schedule property as well as the other lands covered by the agreements were re-delivered to the defendant through her son Thota Gangadhara Rao - DW.2 on 3-8-1977 along with the standing crop. Since then, the defendant is in possession and enjoyment of her property and her daughter is enjoying the suit property. It is also further stated that Thota Gangadhara Rao is looking after the cultivation and agricultural operations relating to the said land, the defendant employed her farm servants to lookafter the said land and when the plaintiff tried to interfere with the defendant's possession, proceedings under Section 145 Cr.P.C. were launched and orders were passed against the plaintiff and Ors. from interfering with the possession of the defendant in the plaint schedule property, the plaintiff has no possession whatsoever on the said land from 3-8-1977 and it is not correct to state that the plaintiff could not get the document registered because of the Ordinance issued on 2-5-1972. It is also stated that according to the recitals in the agreement, the balance sale consideration has to be paid before 10-5-1973 and they have to obtain a receipt thereon and they can obtain the sale deeds at any time, but without adhering to the stipulations of the agreement of sale and having received the entire profits on the land, the respective agreement holders began to appropriate the profits and did not pay the balance sale consideration. If the plaintiff is ready and willing to perform his part of the contract, nothing prevented him from paying the entire sale consideration within the period mentioned in the agreement of sale and could have obtained the sale deed at any time after the termination of the land ceiling proceedings or the plaintiff could have deposited the amount in any bank. It is stated that the plaintiff has no right to ask for a decree and the suit is filed with an ulterior motive, and therefore, prayed for dismissal of the suit.
5. The trial Court framed the following issues and additional issues.
Issues:
(1) Whether the plaintiff is entitled for the specific performance of the agreement of sale dated 10-54970 ?
(2) Whether the said agreement was rescinded on 3-8-1977 as contended by the defendant ?
(3) Whether the possession of the land was re-delivered to the defendant on 3-8-1977 ?
(4) To what relief ?
Additional Issue:
(1) Whether the plaintiff was ready and willing to perform his part of the contract from 3-8-1977?
6. On behalf of the plaintiff, PW.1 was examined and Exs.A.1 to A.5 were marked. On behalf of the defendant, one of the alleged mediator was examined as DW.1 and the defendant's son Thota Gangadhara Rao was examined as DW.2, and no documentary evidence was adduced. The trial Court after considering the evidence on record as well as the contentions that were advanced, decided all the issues in favour of the plaintiff and against the defendant, therefore, the suit was decreed granting two months time to the plaintiff to deposit the amount and directing the defendant to execute the sale deed within three months from the date of deposit of the balance sale consideration. Aggrieved by that the defendant's legal heirs carried the matter in appeal.
7. The lower appellate Court after considering the rival contentions and the material on record, framed the following issues.
(1) Whether the suit is barred by limitation ?
(2) Whether the suit agreement is rescinded by the defendant as alleged ?
(3) Whether the plaintiff was always ready and willing to perform his part of contract ?
(4) Whether the plaintiff is entitled for specific performance ?
8. The learned lower appellate Judge held in favour of the plaintiff on the first two issues, while with reference to the third issue, though there is no clear and categorical finding, but however, observed that absolutely there is no evidence or even a plea to this effect in the plaint and thereafter proceeded to consider the effect of Section 17 of the Act, and thereafter relying upon a judgment of this Court in C. Ramaiah v. Mohammadunnisa Begum : AIR1981AP38 held that the Civil Court has no jurisdiction in view of the said prohibition of alienation of the holdings by a person whose holding is in excess of the ceiling area as on 24-1-1971 or at any time thereafter. Therefore, set aside the decree that was granted by the trial Court and dismissed the suit. Aggrieved by that, the legal heirs of the plaintiff, who came on record during the pendency of the appeal, have come up with the present second appeal.
9. Learned Counsel for the appellants/ plaintiffs contended that the lower appellate Court has committed grave error in holding that there is a complete bar to grant a decree for specific performance of an agreement of sale in view of Section 17 of the Act. The learned Counsel contended that the lower appellate Court relied upon a judgment, which was overruled by a subsequent Larger Bench decision of this Court. The learned Counsel also contended that the prohibition or the restriction imposed by Section 17 of the Act is not absolute, but is only restricted to the extent of protecting the interest of the State. It is the contention of the learned Counsel that an agreement or sale entered into between the parties, even if it is prohibited under the provisions of Section 17 of the Act, insofar as private parties are concerned, the same is not effected and the purpose and the object of the said provision is only to protect the interest of the State to see that persons holding the land in excess of the ceiling shall not disposed of so as to reduce the holding to avoid the effect of the Act. The learned Counsel also contended that insofar as two private individuals are concerned, there is no such bar, as in any case, the declarant is entitled to a standard holding and the land which was sold can be allocated or adjusted to the extent of the holding to which the declarant is entitled. Alternatively, even if a situation arise to avoid the agreement or the sale that was entered into or executed by the declarant, the State can always ignore or avoid the said sale as it is hit by the provisions of the Act, but that does not mean that every transaction, even if does not come in the way or effecting the right of the State for taking possession of the alleged excess land from the declarant, still such agreements or sales are to be declared as void. The learned Counsel further contended that these issues were considered elaborately by a Full Bench of Punjab and Haryana High Court in Chet Ram v. Amin Lal and also referred to the decisions of the Supreme Court in Muralidhar v. State of U.P. : [1975]1SCR575 and in Nirmala Anand v. Advent Corporation Pvt. Ltd. 2002 (6) ALD 54 (SC) : 2002 SC 2290. The learned Counsel also relied upon the judgments of this Court in E.I.D. Parry (India) Ltd. v. Savani Transports AIR 1980 AP 30; Shankerlal v. Jagadishwar Rao : AIR1980AP181 K. Venkateswarlu v. K. Pedda Venkaiah : 2001(5)ALD845 and P. Parameswar Yadav v. Government of A.P. 1989 (2) ALT 32 and contended that in view of the above decisions, the restriction contained in Section 17 of the Act has to be construed in such a way so as to avoid any hardship to the persons who have entered into an agreement to purchase the land from the declarants, but at the same time, without causing or effecting the rights of the State so as to take possession of the excess land from the declarant. Therefore, the learned Counsel sought to set aside the judgment of the lower appellate Court.
10. Learned Counsel Sri P. Suresh appearing for the respondents/defendants, on the other hand, supported the judgment of the lower appellate Court and contended that in view of the express prohibition from alienating the property by a person holding the land in excess of the ceiling limit, it would not be proper and just to grant a decree which runs contrary to the statutory provision. The lower appellate Court, having taken note of the said statutory provision, has rightly rejected the claim of the plaintiff and reversed the decree which was passed without taking note of the restriction contained in Section 17 of the Act, therefore, there is no merit in the second appeal warranting interference.
11. From the above rival contentions, the issue that arise for consideration is what is the appropriate interpretation to be given to Section 17 of the Act, which contains a clause prohibiting the alienations by a declarant holding land in excess of the ceiling limit.
12. As to the facts, admittedly there is no dispute that the original defendant executed an agreement of sale in favour of the plaintiff, and in fact, received substantial sums either at the time of the agreement or subsequent thereof, though there is some more balance payable by the plaintiff to the defendant. Though the defendant pleaded that there was a settlement between the elders and thereafter possession of the land was delivered back by the plaintiff to the defendant, but both the Courts disbelieved this version. The trial Court accepted the claim of the plaintiff that he was ready and willing to perform his part of the contract, but he could not pay the balance and demand execution of the registered sale deed in view of the prohibition contained under the Land Ceiling Act and the pendency of the LCC. In fact, the Land Ceiling Act, prohibiting the alienations, came into effect on 2-5-1972, whereas the plaintiff was having time to pay the balance consideration on or before 10-5-1973. Therefore, it is clear that the Act prohibiting the alienation has come into effect before the expiry of the time that was available to the defendant for payment, therefore, the plaintiff cannot be found fault for nonpayment of the balance in spite of the prohibition and inability of the defendant to execute the sale deed. In fact, the plaint averments, as extracted even by the lower appellate Court, clearly contains the version of the plaintiff that he is ready and willing to perform his part of the contract, but however, the learned lower appellate Judge overlooking the said averment of the plaintiff, observed that the plaintiff did not even plead his readiness in the plaint. Therefore, there is no merit or justification for the lower appellate Court to make such observations, though in fact, finally reversed the judgment on the ground that there is a prohibition under Section 17 of the Act, therefore, no decree could be passed.
13. Before proceeding with the interpretation of Section 17 of the Act, it would be proper to refer to the said provision for convenience, which is extracted hereunder.
17. Prohibition of alienation of holdings :(1) No person whose holding, and no member of family unit, the holding of all the members of which in the aggregate, is in excess of the ceiling area as on the 24th January, 1971 or at any time thereafter, shall on or after the notified date, alienate his holding or any part thereof by way of sale, lease, gift, exchange, settlement, surrender, unsufructuary mortgage or otherwise, or effect a partition thereof, or create a trust or convert an agricultural land into non-agricultural land, until he or the family unit, as the case may be, has furnished a declaration under Section 8, and the extent of land, if any, to be surrendered in respect of his holding or that of his family unit has been determined by the Tribunal and an order has been passed by the Revenue Divisional Officer under this Act taking possession of the land in excess of the ceiling area and a notification is published under Section 16; and any alienation made or partition effected or trust created in contravention of this section shall be null and void and any conversion so made shall be disregarded.
(2) For the purpose of determining whether any transaction of the nature referred to in Sub-section (1) in relation to a land situated in this State, took place on or after the notified date, the date on which the document relating to such transaction was registered shall, notwithstanding anything in Section 47 of the Registration Act, 1908, be deemed to be the date on which the transaction took place, whether such document was registered within or outside the State.
(3) The provisions of Sub-section (1) shall apply to any transaction of the nature referred to therein, in execution of a decree or order of a Civil Court or of any award or order of any other authority.
14. A perusal of the said section, no doubt, gives a prima facie impression that a person holding more than the ceiling limit is prohibited from transferring by way of sale or any other mode. In fact, Sub-section (3) of Section 17 of the Act shows that the prohibition contained in Sub-section (1) shall equally applies even to the transfers in execution of a decree or order of a Civil Court or of any Award or order of any authority. But however, these provisions as well as other similar provisions have already been considered by various Courts, including our High Court.
15. In P. Parameswar Yadav (supra) a learned Single Judge of this Court considered the scope of various provisions of the Act, including Section 17 of the Act as well as the Rules made thereunder with reference to the transaction of agreement of sale and it was held that even alienation of holding by way of agreement of sale is prohibited under Section 17 and such transaction of agreement of sale is void and the declarants are liable to surrender the land covered by invalid sale agreements. But, a Full Bench of this Court is Shankerlal v. Jagadishwar Rao (supra) had an occasion to consider the similar provisions contained in A.P. Buildings (Lease, Rent and Eviction) Control Act, 1960, where there is a prohibition of creating tenancy in contravention of the provisions of Section 3(3) of the Hyderabad Act. The Full Bench after considering various decisions including the judgment of the Supreme Court in Muralidhar v. State of U.P. (supra) held that the transaction of creation of tenancy in contravention of the provisions of the Tenancy Act is not illegal and void inter se between the parties. Though it is void against the controller, it is not hit by the provisions of Section 23 of the Contract Act.
16. The lower appellate Court relied upon a decision of the Division Bench of this Court in C. Ramaiah v. Mohammadunnisa Begum (supra), where the Division Bench while considering the prohibition of alienation contained in A.P. Vacant Lands in Urban Areas (Prohibition of Alienation) Act, 1972 held that a suit for specific performance of an agreement of sale was not maintainable in view of the Doctrine of frustration of contract which became impossible of performance. But this judgment came to be considered by a Full Bench of this Court in K. Venkateswarlu v. K. Pedda Venkaiah (supra) and the judgment of the Division Bench was specifically overruled. It was specifically held by the Full Bench that the prohibition contained under the said Act does not apply to an agreement of sale. The Full Bench expressed the view following the judgment of the Supreme Court in Babulal v. Hazari Lal Kishori Lal : [1982]3SCR94 that neither a contract of sale nor a decree passed on that basis for specific performance of the contract gives any right or title to the decree holder and the right and title passes to him only on an execution of a deed of sale either by the judgment-debtor himself or by the Court itself in case he fails to execute the sale deed, therefore, the said transactions referred to above would not come within the prohibition of transfer.
17. The learned Counsel also relied upon a Full Bench judgment of the Punjab and Haryana High Court in Chet Ram v. Amin Lal (supra) where the Punjab and Haryana High Court while construing the provisions of Punjab Security of Land Tenures Act, held that a transfer or a decree of redemption in contravention of Section 19-A of the Punjab Act would be void only qua the State for the purpose of Punjab Act, but would be valid and binding between the parties inter se. Thus, even if the mortgagor becomes a big landowner by redeeming the mortgaged property, the redemption decree will be executable against the mortgagee.
18. If we consider the facts of the case in the light of the above decisions, the lower appellate Court erroneously reversed the judgment and decree of the trial Court on the premise that the agreement entered into by the plaintiff with the defendant is attracted by the prohibition contained under Section 17 of the Act, relying upon a decision of the Division Bench judgment of this Court C. Ramaiah v. Mohammadunnisa Begum, (supra) which was later overruled by a decision of the Full Bench in K. Venkateswarlu v. K. Pedda Venkaiah, (supra). Therefore, on the face of it, the judgment under appeal is not sustainable. Apart from that, the other decisions relied upon by the learned Counsel for the appellants clearly supports their case that any such agreements or decrees that are passed between the parties, though are not binding on the State, but are valid inter se between the parties. Further, the defendant having entered into an agreement and received substantial portion of the consideration, cannot be permitted to take the protection of law, which is intended for a different purpose, to defeat the rights of the purchaser under the agreement for his own benefit.
19. Under the above circumstances, the judgment of the lower appellate Court, which was rendered relying upon the decision, which was later overruled, in unsustainable and the same is accordingly set aside, and the judgment and decree of the trial Court are restored.
20. In the result, the second appeal is allowed. No costs.