1. This appeal is filed by the first defendant in O.S. No. 520 of 1983 on the file of the Additional Subordinate Judge, Ranga Reddy, district against the judgment and decree dated 28-7-1988 granting a decree for specific performance of the suit agreement dated 7-12-1979. In brief, the pleadins are as follows :
Plaintiff originally filed the suit against D. 1. Subsequently D. 2 and D. 3 have been added as additional defendants. Defendants 2 and 3 remained ex parte. The defendant is the absolute owner of Acs. 12.35 guntas of agricultural land bearing Survey Nos. 14 to 16 situated at Sikandarguda (Bandlaguda). Defendant executed an agreement of saleEx.A. 1 dated 7-12-1979 in favour of the plaintiff to sell the suit land for consideration of Rs. 39,000/-. Rs. 2,000/- was paid as advance by the plaintiff and the defendant delivered phyicial possession of the property on the date of the agrenient. It was agreed that the defendant shall execute the sale deed and get the same registered within three months. The plaintiff requested the defendant to receive the balance of sale consideration and execute the sale deed. D. 1 pleaded that he could not make ready the necessary documents to enable him to execute the sale deed and on 5-3-1980, by mutual consent, time was extended up to 7-6-1980. In spite of the extension, D. I did not obtain the necessary documents and failed to complete the transaction. D. I informed the plaintiff that he was going to Dehradun and requested the plaintiff to pay Rs. 5,000/- to his wife and this amount has to be adjusted towards the balance of sale consideration. Plaintiff paid the amount by way of a crossed cheque bearing No. 102212 drawn on the Andhra Bank on 7-6-1980. The cheque was drawn in favour of the defendant's wife. She gave a stamped receipt. After D. 1 returned from Dehradun, the plaintiff again requested him to complete the transaction. D. 1 assured the plaintiff that there is no necessity for any apprehensions and that he would complete the transaction as per the contract. On 14-7-1980, D. I made an endorsement in his own handwriting acknowledging receipt of Rs. 5,000/- by his wife and by mutual consent, the time for completion of the transaction was extended up to 7-6-1981. D. I failed to take steps to complete the transaction. Every time a request was made, he was postponing things. The plaintiff has always been ready and willing to perform his part of the contract. As D. I failed to obtain the necessary documents to complete the sale transaction, the plaintiff obtained the Encumbrance Certificate on 30th December, 1980. He filed an application on behalf of D. 1 before the Hyderabad Urban Development Authority for issue of land use certificate and obtained the cerlificate dated 3-1-1981. He delivered the copies of those two documents to D. 1. The plaintiff purchased the stamp papers and got an affidavit prepared forobtaining necessary clearance and permission from the Special Officer and Competent Authority, Urban Land Ceiling, Hyderabad. He also obtained the revenue pass-book from the Village Officer. The certificate issued by the Urban Development Authority clearly mentions that the land is earmarked for residential purpose and if it is intended to be sold for non-agricultural purpose, approval for the lay-out shall be obtained from the competent authority and permission to sell for non-agricultural purpose shall be obtained from the authority under the Act. The plaintiff wanted to purchase the land for agricultural purposes. D. I wanted to sell the land to others due to escalation in prices. He failed to execute the sale deed and got it registered. Then the plaintiff issued a notice on 24-1-1981 and asecond notice on 5-2-1981. D. 1 gave a reply on 9-2-1981 with various false allegations. The plaintiff is in physical possession of the land from the date of the contract. D. I claimed in his reply notice that he could not obtain permission from the Urban Land Ceiling Authority as the Master Plan has been extended to the lands which are covered by the sale agreement. D. 1 failed to obtain the permission from 7-12-1979. This clearly indicates that the defendant is trying to resile from the contract. He failed to file the declaration under S. 6 of the Urban Land (Ceiling & Regulation) Act, 1976. He only applied for permission after receiving the plaintiffs notice. It was rejected by the department and the first defendant was directed to file a declaration immediately. The first defendant illegally cancelled the contract and sent a demand draft for Rs. 7,000/- to the plaintiff. The unilateral cancellation of the contract is not binding on the plaintiff. The plaintiff is always ready to perform his part of the contract. He has deposited the balance of sale consideration in the Court. Hence the suit may be decreed for specific performance and a mandatory injunction may be granted directing the defendant to obtain exemption and clearance under the provisions of the Urban Land (Ceiling & Regulation) Act, 1976.
2. The suit is resisted by D. 1 raising the plea that possession was not delivered to theplaintiff and the amount of Rs.7,000/- which was paid by the plaintiff was returned through a demand draft and the plaintiff received it. The amount was returned as the request of the defendant for permission was rejected by the competent authority under the Urban Land (Ceiling & Regulation) Act, 1976. This defendant took all necessary steps for completing the sale transaction. He applied and obtained the revenue records and submitted them before the competent authority. The authority rejected the request of the defendant by Memo No. 77 dated 31-1-1991. This fact was intimated to the plaintiff through a notice and the amount paid by him was returned to him. It is not correct to allege that D. 1 is postponing the matters from time to time. It is not in the hands of this defendant to execute the sale deed without obtaining necessary permission from the competent authority. The contract entered into with the plaintiff is void as it violates the provisions of the Urban Land (Ceiling & Regulation) Act, 1976, and unless necessary exemption is granted, it is impossible for this defendant to execute the sale deed in favour of the plaintiff. This defendant has taken all necessary steps to obtain the permission but as the permission was rejected, the contract has become impossible of performance.
3. After the suit agreement was entered into, Government issued G.O. No. 391 dated 23-6-1980 extending the Master Plan to non-municipal areas of Hyderabad and the suit land is earmarked for non-agricultural purposes in the Master Plan. As it is earmarked for non-agricultural purposes, permission to alienate was rejected. So D. 1 duly cancelled the agreement of sale and returned the amounts received as advance. The defendant alone is in possession of the suit land. Plaintiffs name is nowhere mentioned in the revenue records. The suit of the plaintiff has to be dismissed.
4. On the basis of the above pleadings, the following issues were settled for trial :
(1) Whether the plaintiff is entitled for specific performance of suit contract dt. 7-12-1979.
(2) Whether the cancellation of suit contract by the defendant is legal and valid?
(3) Whether the permission of the competent authority under Urban Land (Ceiling and Regulation) Act, 1976 is necessary for transfer of agricultural lands for agricultural purpose?
(4) Whether the suit contract has become impossible of performance?
(5) Whether the suit contract is violative of provisions of Urban Land (Ceiling and Regulation) Act, 1976. If so void?
(6) To what relief?
The following additional issue is framed :
(1) Whether the plaintiff is entitled for recovery of possession of the suit land as prayed for?
4-A. The trial Court considered issues 1, 2 and 4 together and came to the conclusion that the plaintiff is entitled for the specific performance of the suit contract dated 7-12-1979 and the cancellation of the suit contract by D. 1 is neither legal nor valid and the suit contract has not become impossible of performance. The Court dealt with issues 3 and 5 which are interrelated and came to the conclusion that as the suit land is agricultural land and as there is no prohibition for alienating the same as agricultural land, the transaction is not hit by the provisions of the Urban Land (Ceiling and Regulation) Act, 1976 and that the contract in favour of the plaintiff is enforceable in law. On Additional Issue No. 1, the Court recorded that the Pahani Palrika discloses that the defendant is in possession though in Ex. A. 1, it is recited that possession was delivered to the plaintiff. It held that the plaintiff is entitled for recovery of possession as issues 1 to 5 are held in favour of the plaintiff. It accordingly decreed the suit as prayed for.
5. In this appeal Sri V. Raji Reddy contended that the learned Additional Subordinate Judge never understood the legal aspects involved in the case and he wrongly concluded that the suit land is agricultural land and that it is not hit by the provisions of the UrbanLand (Ceiling & Regulation) Act, 1976. Under the Urban Land (Ceiling & Regulation) Act, 1976, the ceiling limit is 1200 sq. yards only. The contract is in violation of the term$ of the Act which came into force in 1976. The terms of the agreement of sale have become impossible of performance because they have come within the definition of vacant land and as alienation is prohibited by S. 27 of the Act. The judge failed to see that when the terms of the agreement of sale are opposed to public policy an'd that the contract is void, the contract has become impossible of performance. D. 1 made every effort to obtain permission for alienation but as the competent authority rejected the request of the first defendant. D. 1 could not execute the sale deed. The various legal aspects urged by D. 1's counsel were not at all considered by the Court.
6. Sri T. Seshagiri Rao, appearing for the contesting first defendant argued that the agreement is for sale of agricultural lands for agricultural purposes. There is no prohibition under the Urban Land (Ceiling & Regulation) Act, 1976, (hereinafter called 'the Act'). Mr. Seshagiri Rao contends that the lands covered by the agreement of sale do not come within the definition of 'vacant land' or 'ur-banisable land' and there is no prohibition for plaintiff purchasing the agricultural lands after the Act came into force. He also contends that subsequently various G.Os. have been issued by the Government as G.O. No. 451 dated 7-5-1987 and G.O. No. 733 dated 31-10-1988. Under these G.Os., as a matter of policy, exemption up to maximum limit of 10,000 sq. yards is to be given if the lands are lying in the peripheral areas. The suit land is admittedly in the peripheral area. Hence there is no legal objection for the first defendant executing the sale deed conveying the lands as agricultural lands. Mr. Seshagiri Rao contends that the provisions of the Urban Land Ceiling Act are no bar for the Court granting a decree. The trial Court rightly granted the decree for specific performance.
7. The points for consideration are :
(1) Whether Ex. A. 1 agreement is hit by theprovisions of the Urban Land (Ceiling & Regulation) Act, 1976 (Act No. 33 of 1976)
(2) Whether the contract has become impossible of performance as it is void and is opposed to public policy?
POINTS 1 and 2 :
8. A reading of the judgment clearly indicates that the Court did not consider the provisions of the Urban Land (Ceiling & Regulation) Act, 1976, and their applicability to the suit contract Ex. A.1. Though the judgment mentions about certain provisions of the Act, the Subordinate Judge never tried to find out the ingredients of the various definitions and their applicability or otherwise to the suit contract. There are various observations in the judgment to the effect that the suit land is agricultural land and that the agricultural land is sought to be sold for agricultural purposes and hence permission of the competent authority is not required for executing the sale deed and registering it. To say the least, these observations are based on a very superficial view of the provisions of the Act and the terms of the agreement. Before we deal with the provisions of the Act, it would be pertinent to have a clear view of the terms of the agreement and whether the Court correctly understood the purport of the agreement.
9. Ex.A. 1, the agreement dated 7-12-1979, is an agreement which has been executed after the Urban Land Ceiling Act came into force. The agreement clearly mentions that the vendor is desirous of disposing of the property and that the vendee is willing to purchase it for Rs. 39,000/-. The terms of Ex.A. 1 contemplate that the property should be sold free of all encumbrances. The vendor should pay all (sic) up to the date of transfer. The vendor should get the land surveyed and the area should be correctly fixed before the sale deed is executed, and that the vendor should not cut any trees or remove any poles and other structures existing in the land and that an earnest money of Rs. 2,000/- has been paid and acknowledged. It was stipulated that the balance of sale consideration of Rs. 37,000/- should be paid at the time ofregistation of the sale deed. The sale deed should be executed and got registered within three months. There is a recital in clause (8) to the effect that the vendor has put the prospective purchaser in actual physical possession of the property. Clause (9) is a default clause and it mentions that if the transaction does not materialise, then the earnest money of Rs.2,000/- is liable to be forfeited. If the transaction fails to materialise due to the vendor, then the prospective purchaser shall have the right to enforce the agreement through the intervention of the Court. The period for execution and registration of the sale deed was extended till 7th June, 1981. Ex.A. 3 is the receipt issued by the wife of the first defendant for her having received Rs. 5,000/- by way of a crossed cheque. She promised to see that proper receipt is issued by her husband after his return from Dehradun.
10. If we carefully analyse this agreement, there is absolutely no mention about the responsibility of D. 1 to obtain any exemption from the competent authority under the Act nor is there any stipulation to the effect that he (vendor) should take steps to obtain permission or exemption from the statutory authorities. In the judgment, a lot of comment has been made about the defendant's failure to apply and obtain permission etc. Obviously the various comments are made on the basis of the different statements elicited during the course of oral evidence. In this case, we find that P.W. 1 and R.W. 1 spoke about several matters which go far beyond the wording of the agreement and various other extraneous matters have been spoken to by the two witnesses. Act 33 of 1976 popularly known as the Urban Land Ceiling Act came into force on 28th January 1976, the date on which the bill was intoduced in the Parliament. It is quite clear that the suit agreement was executed after Act 33 of 1976 came into force. I shall now deal with the relevant provisions of the Act to find out if, in view of the provisions of the Act, it is open to a Court to grant a decree for specific performance of Ex.A. 1 agreement.
11. It is an admitted fact that the extent of the land is Acs. 12.35 guntas which comes to a total extent of 62,315 sq. yards i.e., far inexcess of the ceiling limit under the Act. S. 2(h) defines Master Plan. It is now held by the High Court of Andhra Pradesh in V. Sudarsan Reddy v. Government of Andhra Pradesh, 1985 (1) APLJ 182, that the Master Plan defined under S. 2(h) would also take in any plan prepared subsequent to the coming into force of the Urban Land Ceiling Act, but it should be a plan which must have been prepared in accordance with law or in pursuance of a Government's order. In the present case, the lands are situated in the peripheral area and by G. O. No. 391 dated 23-6-1980, the Government extended the Master Plan to non-municipal areas of Hyderabad and thus the suit land is covered by the Master Plan. S. 2(o) of the Act defines 'urban land'. I shall come to this important definition a little later after considering a few other definitions which are relevant. S. 2(p) defines 'urbanisable land'. It defines it as meaning land situated within an urban land. S. 2(q) defines 'vacant land' as land not mainly used for purposes of agricultural purpose in an urban agglomeration, but does not include constructions etc., made in accordance with prevailing building regulations and zonal regulations. S. 2(n) defines 'urban agglomeration'. Under this definition, Hyderabad urban agglomeration has a peripheral 5 K.Ms, and it comes under Category (B). S. 2(o) reads as follows :
' 'Urban land' means, --
(i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan; or
(ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration and situated in any area included within the local limits of a municipality (by whatever name called) a notified committee, a city and town committee, a small town committee, a cantonment board or a panchayat.
but does not include any such land which is mainly used for the purpose of agriculture.
Explanation -- For the purpose of this clause and clause (q), --
(A) 'agriculture' includes horticulture but does not include (i) raising of grass, (ii) dairy farming, (in) poultry farming, (iv) breeding of live-stock and (v) such cultivation, or the growing of such plant, as may be prescribed;
(B) land shall not be deemed to be used mainly for the purpose of agriculture, if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture;
Provided that where on any land which is entered in the revenue or land records before the appointed day as for the purpose of agriculture there is a building which is not in the nature of a farm-house, then so much of the extent of such land as is occupied by the building shall not be deemed to be used mainly for the purpose of agriculture;
Provided further that if any question arises whether any building is in the nature of a farm house such question shall be referred to the State Government and the decision of the State Government thereon shall be final;
(C) notwithstanding anything contained in clause (B) of this Explanation land shall not be deemed to mainly used for the purpose of agriculture if the land has been specified in the master plan for a purpose other than agriculture;'
12. A reading of the definition of 'urban land'clearly indicates that it includes any land that is situated within the limits of an urban agglomeration and referred to as such in the master plan. There is an explanation to this definition and the explanation consists of three clauses (A), (B) and (C). While clause (A) indicates what types of activity come within the ambit of agriculture and what activities do not come within the ambit of agriculturre, clause (B) stipulates that land shall not be deemed to be used mainly for purposes of agriculture if such land is not entered in the revenue or land records before the appointed day as for the purpose of agriculture. Clause (C) is very significant. It clearly mentions that notwithstanding anything contained in clause (B) of the Ex-______mainly used tor the purpose of agriculture if the land has been specified in the master planfor a purpose other than agriculture. By virtue of this definition, it is quite clear that the suit lands which are mentioned as agricultural lands in the revenue records are taken outside the purview of the lands mainly used for purposes of agriculture by reason of their, being earmarked in the master plan for non-agricultural purposes. It is clearly admitted by the parties that in the master plan, the suit land is earmarked for non-agricultural purposes. Hence it comes within the definition of 'urban land' and 'vacant land'. It also comes within the ambit of 'urbanisable land defined under sub-section (p) of S. 2. When once this fact is recognised, it is quite clear that the total prohibition against the transfer imposed under S. 27 of the Act comes into operation. S.27 stipulates that '(1) Notwithstanding anything contained in any other law for the time being in force but subject to the provisions of sub-sec. (3) of S. 5 and sub-sec. (4) of S. 10, no person shall transfer by way of sale, mortgage, gift, lease for a period exceeding ten years or otherwise, any urbanisable land..... except with the previouspermission in writing of the competent authority'. S. 3 of the Act stipulates that a person shall not hold any vacant land in excess of the ceiling limit. S.4 of the Act stipulates the ceiling limit. S. 10 of the Act contemplates that after the final settlement under S. 9 of the Act is made, the Government acquires the excess of the vacant land.
13. In view of the provisions of Act 33 of 1976, Ex. A-1 agreement which was executed after the Act came into force is opposed to public policy and it is void. A transfer of the excess land can be made only with the permission of the competent authority. It may also be mentioned that G.O. No. 451 dated 7-5-1987 and G.O. No. 733 dated 31-10-1988 which are very much relied upon by the respondent's, counsel cannot come to the rescue of the plaintiff because the maximum extent to which exemption can be granted is 10,000 sq. metres. By no stretch of imagination can exemption be granted to the suit land which is an extent of 62,315 sq. yards.
14. In view of S. 27 of the Act, the provisions of this Act have overriding effect and notwithstanding anything contained in any other law for the time being in force, noalienation can be made except with the previous permission in writing of the com-petent authority. If we examine the terms of Ex. A-l agreement in the light of the provi-sions of the Act, it is quite clear that the agreement is against the provisions of the Urban Land (Ceiling and Regulation) Act, 1976, and there is a total prohibition for selling the land which is in excess of the ceiling limit. Even in the very inception, the contract to sell Ex. A-l executed on 7-12-1979 is opposed to the statute and public policy and hence it is void under S. 23 of the Contract Act.
15. Sri Seshagiri Rao argued that there is no prohibition against granting a decree for specific performance in the present case and relies upon Shah Jitendra Nanalal v. Patel Lallubhai Ishverbhai, : AIR1984Guj145 (FB). In that decision, the Court was dealing with a case of an agreement executed on 4-7-1966 and a subsequent agreement dated 1-6- 1967 to sell certain lands in excess of the ceiling limit. Long after the agreements were executed the Gujarat Vacant Lands in Urban Areas (Prohibition of Alienation) Act 1972, came into force and subsequently that Act ceased to apply and Urban Land (Ceiling and Regulation) Act, 1976, (Act 33 of 1976) came into force. In such a situation, the Court observed at paragraph 11 at page 150 as follows:
'So long as the provision declaring the transfer under S. 5(3) as void is subject to the right to move for exemption, obtain exemption and transfer the property, the power of an owner of the vacant land in excess of the ceiling limit to 'alienate' such land is dormant in him and such power could be exercised by him in case he seeks exemption, satisfies the Government that the grounds for exemption exist and obtain such exemption. That being the case, a decree cannot be defeated on the ground that 'transfer' inter parts would not be possible The possibility of obtaining exemption survived till the notification under S. 10(3) of the Act is issued. That-being the situation, until then, a plaintiff seeking specific performance cannot be fulfilled. Once it is said so, the plaintiff loses his right to get adecree for specific performance, though invoking the provisions of the very Act, based on which the plaintiff was told that he could not get conveyance of the property agreed to be sold to him, the owner of excess land obtained exemption and continues in possession of property and perhaps alienates it later.'The Court further observed that 'the decree for specific performance may be made conditional on the exemption under S. 20(1)(a) or (b) operating. Of course, it is not for us in this reference to envisage how safeguards should be built in, in such a decree.'
The Court observed in paragraph 13 that 'In this view, in answer, to the second question referred to us we hold that a conditional decree for specific performance subject to exemption being obtained under S. 20 of the Urban Land (Ceiling and Regulation) Act, 1976, (Act No. 33 of 1976) is permissible.' The principle enunciated in that decision is not applicable to the facts of our case. We are not dealing with a case of an agreement executed long prior to the statutory prohibition coming into existence, nor are we dealing with case where a decree was passed prior to the statutory prohibition came into existence. We are squarely dealing with case where the agreement itself is executed in violation of the provisions of the Act. This is not a case of a supervening difficulty that arose by reason of the Act coming into force after the agreement.
16. Reliance is also placed by Mr. Sesha-giri Rao on the decision reported in United Pioneer Society v. Mrs. Chand Beebi, 1986 (2) APLJ 79. His Lordship Justice K. Rama-swamy (as he then was) dealt with a case of an agreement dated 3rd December, 1977, and the suit for specific performance of that agreement was dismissed by the trial Court and then the matter came up before the High Court by way of C.C.C.A, 33 of 1984. Dealing with the contention that the contract is void by reason of S. 27 of the Act, His Lordship, at the end of paragraph 7, observed as follows:
'I have no hesitation to hold that though S. 27(1) of the Ceiling Act imposed prohibition to alienate any urban or urbanizableland, except to the extent indicated therein, sub-section (2) thereof lifts out its rigour by giving right to a party to enter into a contract subject to obtaining the sanction from the competent authority therein. It is an incident of the contract. Therefore, the agreement is neither opposed to public policy nor is void under S. 23 of the Contract Act. It is legal and enforceable.'
17. His Lordships was dealing with a case where one of the covenants in the agreement is that the respondents have to obtain exemption from the urban Land (Ceiling and Regulation) Act, 1976. There, it was found that the vendors were trying to avoid getting order of exemption under S. 20 of the Act. In the present case on hand, there is no stipulation in Ex. A-1 to the effect that either party should strive hard and obtain permission of the statutory authority, namely, the competent authority or that they should get exemption under S. 20 of the Act. The observations of his Lordship that the agreement is neither opposed to public policy nor is void under S. 23 of the Contract Act have to be seen as referable to the specific covenant in the agreement. The principle of that decision will not apply to the facts of our case.
18. Bai Dosabai v. Mathurdas : [1980]3SCR762 is a decision which dealt with an instance of the City Civil Court dismissing the suit on July 16, 1965, but on appeal the decision was reversed and a decree was passed. Subsequently the Gujarat Vacant Lands in Urban Areas (Prohibition of Alienation) Act, 1972 and later Urban Land Ceiling Act came into force. In such a situation, the Court, tracing the history of the transaction from 1946, observed in paragraph 14 that the Act came into force subsequent to the passing of the decree by the High Court and the question for consideration is what is the effect of the Urban Land (Ceiling and Regulation) Act, 1976, on the decree passed by the High Court. The Court then observed as follows at Page 1339 :
'While it is true that events and changes in the law occurring during the pendency of an appeal are required to be taken into consideration in order to do complete justicebetween parties and so that a futile decree may not be passed. It is also right and necessary that the decree should be so moulded as to accord with the changed statutory situation. The right obtained by a party under a decree cannot be allowed to be defeated by delay in the disposal of the appeal against the decree, if it is permissible to save the decree by moulding it to conform to the statutes subsequently coming into force.'
19. In the present case on hand, land, far in excess of the ceiling limit is sought to be sold under Ex. A. 1. The certificate issued by the Hyderabad Urban Development Authority clearly states that the land under dispute is earmarked for residential purpose and if it is intended to be sold for non-agricultural purpose, the approval for the layout shall be obtained from the competent authority and permission to sell shall be obtained from the authority under Urban Land (Ceiling and Regulation) Act, 1976. It is also an admitted fact that the land is covered by the master pian which was extended to this area by G.O. No. 391 dated 23-6-1980. I have earlier indicated, while discussing the scope and ambit of S. 2(o) of the Act, how this land cannot be deemed to be land mainly used for agricultural purpose and how it comes within the ambit of Act 33 of 1976. Ex. A. 1 agreement is against the provisions of Act 33 of 1976. It is hit by S. 23 of the Contract Act.
20. The trial court is not justified in coming to the conclusion that the land is being sought to be sold as agricultural land and the trial court is not at all justified in coming to the conclusion that it is not hit by the provisions of Act 33 of 1976. The agreement is ab initio void. The judgment and decree of the trial court which are based upon erroneous assumptions have necessarily to be reversed.
21. In the result, the appeal is allowed with costs. The judgment and decree of the lower court are hereby reversed and the suit shall stand dismissed.
Appeal allowed.