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Tilak Raj Bakshi vs Avinash Chand Sharma(Dead) … on 20 August, 2019

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS. 1524-1525 OF 2019
(@ SLP(C)Nos.15576-15577 of 2015)

TILAK RAJ BAKSHI … APPELLANT(S)

VERSUS

AVINASH CHAND SHARMA (DEAD)
THROUGH LRS. OTHERS … RESPONDENT(S)

J U D G M E N T

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
Signature Not Verified

Digitally signed by
CHARANJEET KAUR

in the Trial Court.

Date: 2019.08.20
16:35:45 IST
Reason:

1

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.”

2

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 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.

3

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
4
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 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

5
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.

6

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, Section3 and Section4 of

the Partition Act and by ascertaining market value they

7
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. 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

8
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 Others 1 , SectionHari 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 Sectionothers 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

1 2010 (7) SCC 603
2 2006 (4) SCC 658
3 AIR 1932 PC 158

9
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 well-being
of a family.

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,

10
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

11
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. 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?

12
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 property in question under the Capital

of Punjab (Development and SectionRegulation) Act, 1952?

13
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.

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

14
pleading that family settlement is vague and unenforceable.

Section 29 of the Indian Contract Act, 1872 (hereinafter

referred to as ‘the SectionContract 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

15
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 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

16
question in SectionKeshavlal 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
4 AIR 1958 SC 512

17
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)

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. This clause cannot be described as vague. This
18
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. We have found that 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, we are of the view

19
that the finding by the High Court that contract is vague

cannot be sustained.

WHETHER OFFER WAS MADE BY DEFENDANT NO.1 TO PLAINTIFF

23. We will first ascertain from the correspondence

admittedly entered into between the plaintiff and the wife

of the first defendant, what actually transpired. Ex. P16

was written on 16.2.1996 by Shyama Mehta, wife of the first

defendant, the same reads as under:

“Dear Santosh and Tilak ji, Namaskar

I hope you people are hale and hearty. I had
received a letter with respect to Havan being
got performed by Buaji. I had also got a
Havan performed on First. God may give peace
to the sole. The almighty may give place to
her near him. She had been relieved of her
difficulties.

I am once again writing to you that if you or
Kuku is interest in purchase of our portion,
then let us finalize the deal. From our
side, the deal can be closed. From our side,
Rs.5,00,000/- is final and I am making last
request. I am sending last request and I
want that before the property goes into the
hands of children, the brother should settle.

The health of Mehtaji is deteriorating day by
day. He is not in a position to travel. I
20
hope you would also like that your son should
remain with you. You are elder and living on
the ground floor, therefore, first offer is
being made to you and second offer would be
made to Kuku and only thereafter, I would
offer the sale of my portion to outside.
What is the status of eyes of Santosh? I hope
there would be improvement. Please inform
as to what Mamta is doing these days. She
must have completed her degree. Kindly
convey my love to Mani, Lakshmita and Dhruv.
Please send photographs of Dhruv and
Lakshmita and Naini. These days, Dhruv must
be quite talkative. Please come over to
Bhilai. We could be very happy. Mehtaji
also joins me in wishing you Namaskar and love
to children.

Awaiting your reply,
Yours Shyama”

24. On 10.03.1996 by Exhibit P17, the wife of the first

defendant wrote as follows:

“Dear Tilakji and Santoshji
Namaskar
We are well here and I hope everyone would be
hale and hearty. I heard about death of
sister-in-law of Santoshji. It is very
shocking. May God giver her soul peace. I
had a talk with Tilakji and I am responding
to the points he asked :-

1. What would be the earnest money?

21

2. How the payment would be made?

3. What would be the rate?

4. Where the payment would be made and
when the sale deed would be executed?

5. How the house would be got vacated?

1 The earnest money can be paid Rs.1 lac
or two; even the entire payment can be made
and signatures can be got done.

2 Half payment would be through draft and the
remaining half would be in cash.

3 As regards the rates, we have already
quoted quite low rates and this is final.
I want to finalize the deal without telling
Manu because it we are not able to finalize,
then next offer would be to an outsider.
If the deal is finalist by 1st April, after
15th Manu would come and if he comes, then
he would not let the house be sold.

4 Payment will have to be made at Bhilai on
coming to Bhilai because Mr. Mehta is not
in a position to travel.

5 After giving the earnest money, we would
issue notice for vacating the house or
adopt any other method (not readable)…….We
will see.

I hope you have got answer to all the
points. Please reply in writing
immediately or give me a phone call.

Kindly convey my love to children and
regards to both of you.

Sd/-Shyama”

22

25. There is no response again to the letter by the

plaintiff though he claimed that he responded by a letter

dated 23.02.1996 and 22.03.1996. Again on 01.04.1996 P18

was addressed by the plaintiff to the first defendant and

his wife which inter alia read as follows:

“Fax No.0788-324339
Fax for SectionSh. V.D. Mehta,
48/6, Nehru Nagar (West)
Bhilai (MP)
Res.Tele-324651

13/19-A, Chandigarh
01.04.1996

Respected brother and Shyama Bhabi,
Namaskar, Ref. Today morning phone talks.
In response to Bhabi’s letter dated
10.03.1996, replied on 22.03.1996. Main
points are (1) Your reply pointwise received
and discussed with family and in principal
your offer is acceptable to us broadly.
Please reconsider the matter and try to visit
both of your along with Many Chandigarh.

Also we are aware of brother’s health but if
you try can come here, we will complete the
formalities in one or two working days and
give Biana one lac plus agreement to sell will
be done. At present, matrimonial talks of
Mamta are in advanced stayed with 4/5 parties
and their/our visits to each other are
likely. Our top priority is Mamta’s

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marriage and second priority is about your
portion and Naini shifting to us. Your
reasonable offer has come at such a time that
it is hard on me to take decision. From my
side, I will do my utmost best to complete the
deal. Rest it is God’s wish. I and Santosh
both are about 60 years old and are keeping
indifferent health. I am due to retire in
August this year. Please try to reduce the
total value if there is some scope. In case
you decide not to come to Chandigarh, I will
come for one or two working days to you.

Please inform convenient trains from Delhi
and for return journey try to make II sleeper
reserve up to Delhi/Ambala. Hope brother’s
health is improving and all children are
happy at their places and so are grand
children. Please reply soon or phone or fax
at my office No.0172-703603 “Attn: Tilak Raj
Bakshi” With regards, your
affectionately-Tilak Raj Bakshi.”

26. To the same P19 letter is sent by the wife of the first

defendant, the same reads as under:

“Dear Tilak,
Namaskar
I am in receipt of your letter and fax. I was
to consult my children, so there was some
delay. Manik is not ready to give you the
portion of the house. He is quite angry but
I have spoken to Rajiv. He has told me that
if your goodself are interested in
purchasing, then you are requested to come to
Bhilai with all the payment in one go and get
all the papers signed. We do not wish to
24
inform him because he is in Dubai for one
month with Anju. He has got his visa
extended by one month and if till then his job
is fixed, then he would stay otherwise he
would come back and do something here. I do
not wish to now receive earnest money.
Please make the final payment as the prices
in Chandigarh are increasing quite rapidly
and the rate settled by you is quite old.
Therefore, I have given you offer because I
wan in dire need of money. Now the need is
yours. If the deal is finalized before Manu
coming back, then it is alright because
health of Mehtaji is also very delicate. In
any case, I would handle the situation in any
manner but it would not be possible later on.
For coming to Bhilai, you can catch
Chhattisgarh Express from Ambala or you can
catch Mahamaya super fast which starts at
2.20 P.M from Delhi. There is another train
from Nizammuddin which runs three days a week
which is again good train. Please tell me on
telephone whenever you wish to come. I would
get the seat booked because during summer
vacation, there would be heavy rush.
Convey love to children. Namaskar to both of
you.

Sd/-Shyama”

27. There is no response to this letter by the plaintiff.

It is thereafter that the sale was affected in favour of

the second defendant on 12.11.1997. It is undoubtedly true

that learned counsel for the plaintiff drew our attention

25
to the telephone bills on record which go to show that

appellant was engaged in communication defendant No. 1 or

his wife in regard to their property and their interest in

purchasing the property. From the correspondence, we are

inclined to find as follows:

In letter dated 16.02.1996, he wrote that if the

plaintiff or Kuku is interested in purchasing the

portion, then let the deal be finalized.

Consideration of Rupees 5 lakhs was final and she was

making the last request before the property goes into

the hands of the children, the brother should settle.

The health of Mehtaji (first defendant) was

deteriorating day by day. He was not in a position to

travel. Plaintiff being elder and living on the

ground floor, offer was made to him and second offer

made to Har Krishan Lal alias Kuku (the other brother

of the first defendant) and only thereafter the offer

would go to outside.

26

28. In the second letter dated 10.03.1996, she wrote to the

plaintiff and his wife. It was mentioned that earnest money

could be paid Rupees one lakh or two, half payment was to

be through draft and remaining half was to be in cash. It

is specifically stated that as regards the rates they have

already quoted low rates and it is final. It was pointed

out that if the deal is not finalized by 1st April, after

15th, if Manu, apparently, the son of the first defendant

came, he will not allow the property to be sold. Payment

was to be made at Bhilai on going to Bhilai, as first

defendant was not in a position to travel.

29. 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. Next he

pointed out matrimonial talks of Mamta’s (daughter) that

was in an advanced stage and 4/5 parties were in talks, the

marriage was the top priority and second priority was about

the portion of the first defendant. Thereafter, it is

stated that a reasonable offer of the first defendant has

come at such a time that it is hard for him to take a
27
decision. He promised to do his best to complete the deal.

Next, he would say that an attempt may be made to reduce

the total value if there is some scope.

30. 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. It is

quite clear that the first defendant had made offer to the

appellant for selling his share for Rupees Five Lakhs. It

is also quite clear that 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 payment be made

as prices in Chandigarh were increasing quite rapidly and
28
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.

31. We may also notice that in his deposition as PW4,

plaintiff has stated that it is correct that three brothers

had partitioned amongst themselves, the house in question,

by making three portions A, B, and portion. He then says,

it is wrong to suggest that each owner came into possession

of its respective portion which fell to him on partition.

Portion A fell to apparently the plaintiff. He does not

remember to whom portion B felt. He does not remember who
29
became owner of portion C. He claims to be in possession

of the entire house after partition. The first defendant

let out his share of portion 15-16 years before to the second

defendant, he deposes. He deposes that it is correct that

he was offered to purchase first defendant’s one-third

share vide Exhibit P16. The agreement could not be executed

as per the offer because defendant never turned up in

Chandigarh. He was ready to make the entire payment while

coming at Chandigarh, since the property is in Chandigarh.

An amount of Rs.5 lakh was settled as consideration amount.

(It may be noted that plaintiff, in P18 letter writes

“please try to reduce the total value, if there is some

scope). He further says, it is correct that he had offered

in that letter-Exhibit P19 to get the payment at Bhilai and

after the payment, the documents will be executed. He

volunteered and stated that since the documents could not

be executed at Bhilai as the property in question is at

Chandigarh, he never made any final payment to the first

defendant in Bhilai.

30

32. 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, we cannot for a moment but hold that

they had made an attempt to comply with the condition in

the family settlement providing for preference.

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?

33. Next question we must pose and answer is 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.

34. In this regard, the question would arise in the first

place as to which is the contract which is sought to be

enforced. It is pleaded in the plaint that first defendant

was interested in disposing of his share and the plaintiff

31
was ready and willing to purchase the share of first

defendant. It is specifically averred that the third

defendant (the other brother) did not show any interest in

purchasing share of the fist defendant. Finally, the relief

sought is by way of decree for specific performance

directing the defendant to sell by the sale of one-third

share in the house to the plaintiff and handover vacant

possession of the demised portion to the plaintiff. This

is apart from the relief against the sale in favour of the

second defendant.

35. Now, let us see the judgment of the Trial Court. The

Trial Court proceeds to hold inter alia that there is a

family settlement, there is correspondence and there are

telephone bills. They made out the case that the plaintiff

was never offered to purchase the share of the first

defendant as per the terms and conditions of the family

settlement. The sale in favour of the second defendant is

null and void, he not being the bonafide purchaser. The

plaintiff has the right of first preference to purchase.

The sale consideration in favour of the second defendant
32
is Rs.4.80 lakhs, but the first defendant is not bound to

sell his share for that amount. However, he is bound to offer

the plaintiff and defendant no.3 for purchase of that share

before selling it to anybody else as no specific amount was

mentioned as sale consideration in the family settlement.

On these findings, the Trial Court decreed that the

plaintiff is entitled to specific performance as per the

terms and conditions of the agreement dated 31.03.1982 to

purchase the share of defendant no.1. Thus, it can be seen

that the family settlement has been understood as the

agreement and the plaintiff is entitled to specific

performance of the agreement.

36. The first Appellate Court finds that it is admitted

that the house belonged to the father of the plaintiff,

first defendant and third defendant. He left behind him a

registered will bequeathing properties including the

plaint schedule house. It was found that the only

controversy was whether offer was made to purchase the

one-third share and whether the plaintiff came forward to

accept the offer. It was further found that concurrence of
33
the plaintiff in writing was not taken before transferring

the property to the second defendant. The plaintiff was

ready and willing but it was the first defendant who

violated the terms of the family settlement. The Appellate

Court goes further than the Trial Court and allowed the

cross-appeal of the plaintiff and decreed that the second

defendant will handover vacant possession to the plaintiff,

finding that the relief of delivery was a consequential

relief liable to be granted. It will be remembered that the

Trial Court has decreed the suit for specific relief on the

reasoning that under the family settlement, the first

defendant has to give first preference to the plaintiff and

it was also found that the first defendant is not bound to

sell at an amount of Rs.4.80 lakhs for which first defendant

has sold to the second defendant. All that he was to do was

that he was bound to make an offer to the plaintiff before

selling to anyone else.

37. A perusal of these judgments would reveal the following

aspects:

34

1. The Appellate Court finds that the plaint schedule

property was owned by the father. It is found that the

three sons get equal shares.

2. 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 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
35
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.

36
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.

38. This brings us to yet another question. Whether the

terms of the family settlement embodied a right of

preemption and what is the distinction between the right

of preemption and right to purchase property under an

agreement to sell.

39. The decision of this Court in K. Naina Mohamed (supra)

involved a will which was executed in favour of the two

sisters of the testator. The will inter alia provided that

after the demise of both the sisters who were to enjoy the

properties during their life time, the male heirs would get

the two properties in question as absolute owners. The

37
properties were mentioned as properties ‘A’ and ‘B’. It is,

thereafter, that clause (11) provided as follows:

“(11) As and when Savithri Ammal’s male
heirs get and enjoy A property and as and
when Rukmani Ammal’s heirs get and
enjoy B property, if any one of them wants to
sell their share, they have to sell to the
other sharers only as per the market value
then prevailing and not to strangers.”

40. The learned counsel for the appellant had contended

essentially that the first defendant must honour his

obligations under the settlement and what is involved here

must be treated as a right of preemption. This is for the

reason that in the decision which we have referred to this

court, has taken the view that clause (11) was in the nature

of right of preemption which can be enforced by the male

heir of either sister in the event of sale of property by

the male heir of the other sister. The words “other sharers”

were understood to mean, “the male heirs of the other

sister”. We must, before we pronounce on this aspect,

consider the content of the right of preemption.

38

41. SectionIn Bishan Singh v. Khazan Singh 5 , this Court has

articulated the matter with clarity and we, hence, set out

the following statement of the law:

“7. Before attempting to give a
satisfactory answer to the question raised,
it would be convenient at the outset to notice
and define the material incidents of the
right of pre-emption. A concise but lucid
statement of the law is given by Plowden, J.
in 136 P.R. 1894, at page 511, thus:

“A preferential right to acquire land,
belonging to another person upon the
occasion of a transfer by the latter, does
not appear to me to be either a right to
or a right in that land. It is jus ad rem
alienum acquirendum and not a jus in re
aliena…. A right to the offer of a thing
about to be sold is not identical with a
right to the thing itself, and that is the
primary right of the pre-emptor. The
secondary right is to follow the thing
sold, when sold without the proper offer
to the pre-emptor, and to acquire it, if
he thinks fit, in spite of the sale, made
in disregard of his preferential right.”

The aforesaid passage indicates that a
pre-emptor has two rights: (1) inherent or
primary right i.e. a right for the offer of
a thing about to be sold and (2) secondary or
remedial right to follow the thing sold.”

5 AIR 1958 SC 838 39

42. We also think that it would be appropriate to refer to

paragraph 11:

“11. The plaintiff is bound to show not
only that his right is as good as that of the
vendee but that it is superior to that of the
vendee. Decided cases have recognized that
this superior right must subsist at the time
the pre-emptor exercises his right and that
that right is lost if by that time another
person with equal or superior right has been
substituted in place of the original vendee
courts have not looked upon this right with
great favour, presumably, for the reason that
it operates as a clog on the right of the owner
to alienate his property. The vendor and the
vendee are, therefore, permitted to avoid
accrual of the right of pre-emption by all
lawful means. The vendee may defeat the right
by selling the property to a rival pre-emptor
with preferential or equal right. To
summarize: (1) The right of pre-emption is
not a right to the thing sold but a right to
the offer of a thing about to be sold. This
right is called the primary or inherent
right. (2) The pre-emptor has a secondary
right or a remedial right to follow the thing
sold. (3) It is a right of substitution but
not of re-purchase i.e., the pre-emptor takes
the entire bargain and steps into the shoes
of the original vendee. (4) It is a right to
acquire the whole of the property sold and not
a share of the property sold. (5) Preference
being the essence of the right, the plaintiff
must have a superior right to that of the
vendee or the person substituted in his
place. (6) The right being a very weak right,
it can be defeated by all legitimate methods,
40
such as the vendee allowing the claimant of
a superior or equal right being substituted
in his place.”
(Emphasis supplied)

43. Right to preemption is ordinarily born out of custom

or in terms of a statutory provision. We are not, in this

case, concerned with the statutory right of preemption or

custom. We would necessarily have to fall back on first

principles relating to preemption, which we feel, have been

explained in Bishan Singh (supra) which we have set out.

We will proceed on the basis that a family

settlement/contract can give rise to a right of preemption.

But is this a case which calls for the application of right

of preemption? The relief which is sought by the appellant

in his plaint, reads as follows:

“14. That the suit for the purposes of
court fee and jurisdiction for relief of
declaration is Rs.19-50 paise declaration
and accordingly court fee i.e. Rs.19-50 paise
is affixed on the plaint. The value of the
suit for the jurisdiction of court fee for
specific performance is Rs.4,80,000/- and
accordingly court i.e. Rs……. Is affixed on
the plaint.

41

It is therefore, respectfully prayed
that the decree of the declaration be passed
in favour of the plaintiff and against the
defendant no.1 and 2 declaring sale deed
dated 12.11.1997 null and void ab initio and
for setting aside the same and decree the
specific performance be also passed
directing the defendant. No to sell by the
sale deed of 1/3rd share of property bearing
House No.13, Sector 19-A, Chandigarh (shown
red in site plan) to the plaintiff and to
handover vacant possession of demised
portion to plaintiff. Any other relief
which the plaintiff under the law is held
entitled to also granted to him. The suit be
decreed with costs.”

44. We would notice that 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. As held by this

Court, 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 us, first

preference was given to the plaintiff. As far as decision

42
in K. Naina Mohamed (supra)is concerned, clause (11) of the

will in the said case tabooed alienation in favour of

strangers. In this case, the clause, we are concerned with,

certainly does not place an 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. We do not, therefore, think that the appellant

would be justified in invoking the principle underlying the

right of preemption in this case.

IMPACT OF ABSENCE OF WRITTEN CONCURRENCE BY BROTHERS FOR
SALE

45. 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. The contention is that the family

settlement was arrived at so that the stranger is not

inducted into the property.

43

46. To answer these questions, which have been posed, it

may be also necessary to look at the case law in relation

to the family settlements and restrictions which are put

on property rights under such settlements. In Muhammad

Raza (supra), which is relied upon by the appellant, under

a compromise between the two Shia Mahomedans, the defendant

agreed to marry the plaintiff. Certain rights were

conferred upon the plaintiff upon her marriage with the

defendant. The defendant was already married. Under the

compromise, it was provided inter alia that the plaintiff

would become owner of one-half of the property along with

the first wife of the defendant. However, it was provided

that the plaintiff, as also the first wife, shall not have

the power to transfer the property to a stranger. Ownership

was to devolve on the legal heirs of the two wives,

generation to generation. Dispute arose upon the first

plaintiff in earlier case/second wife, selling/mortgaging

her share before her death. One of the contentions raised

by the transferees from the wife, who was the plaintiff in

the earlier suit which resulted in the compromise, was about

44
the validity of the restriction against sale of the property

to strangers. Dealing with the said aspect, the Privy

Council had this to say:

“Their Lordships feel the weight of
these contentions, and they might have some
difficulty in holding that Sughra Bibi took
nothing more than a life estate. But assuming
in the appellants’ favour that she took an
estate of inheritance, it was nevertheless
one saddled, under the express words of the
document, with a restriction against
alienation to “a stranger.” Their Lordships
have no doubt that “stranger” means anyone
who is not a member of the family, and the
appellants are admittedly strangers in this
sense. Unless, therefore, this restriction
can for some reason be disregarded, they have
no title to the properties which can prevail
against the respondent.

On the assumption that Sughra Bibi took
under the terms of the document in question
an absolute estate subject only to this
restriction, their Lordships think that the
restriction was not absolute but partial; it
forbids only alienation to strangers,
leaving her free to make any transfer she
pleases within the ambit of the family. The
question therefore is whether such a partial
restriction on alienation is so inconsistent
with an otherwise absolute estate that it
must be regarded as repugnant and merely
void. On this question their Lordships think
45
that Raghunath Prasad Singh’s case29 is of
no assistance to the appellants, for there
the restriction against alienation was
absolute and was attached to a gift by will.
It is, in their Lordships’ opinion, important
in the present case to bear in mind that the
document under which the appellants claim was
not a deed of gift, or a conveyance, by one
of the parties to the other, but was in the
nature of a contract between them as to the
terms upon which the ladies were to take. The
title to that which Sughra Bibi took was in
dispute between her and Afzal Husain. In
compromise of their conflicting claims what
was evidently a family arrangement was come
to, by which it was agreed that she should
take what she claimed upon certain
conditions. One of these conditions was that
she would not alienate the property outside
the family. Their Lordships are asked by the
appellants to say that this condition was not
binding upon her, and that what she took she
was free to transfer to them.”

47. It will be noted that Privy Council took note of the

fact that plaintiff in the earlier suit got title under the

compromise, which contained the restriction against sale

to strangers. It was not a deed of gift or conveyance but

in the nature of the contract. It was upon compromise of

their conflicting claims that she agreed to certain

46
conditions one of which was the prohibition against

alienation to strangers. The court also dealt with the

matter on the basis that a partial restriction would not,

in case of the transfer inter vivos, be bad, after the

passing of the SectionTransfer of Property Act, 1882 (hereinafter

referred to as ‘the SectionTP Act’).

48. In K. Naina Mohamed (supra), the owner of the property,

by a registered will, created life interest in favour of

her two sisters. The will stipulated that after the death

of the sisters, their male heirs would acquire absolute

rights in the properties with the limitation that they shall

not sell the properties to strangers. The sisters divided

the properties amongst themselves. The property which stood

allotted to one of the sisters came to be sold by the sister

and her son in favour of the appellant. The sale was

challenged as being violative of the condition in the will.

In the course of its judgment, this Court observed as

follows:

“38. Reverting to the case in hand, we find
that by executing the will dated 22-9-1951,

47
Smt Ramakkal Ammal created life interest in
favour of her two sisters with a stipulation
that after their death, their male heirs will
acquire absolute right in A and B properties
respectively subject to the condition that if
either of them want to sell the property then
they shall have to sell it to the other
sharers only as per the prevailing market
value and not to strangers. The restriction
contained in Clause 11 was not absolute
inasmuch as alienation was permitted among
male heirs of the two sisters. The object of
incorporating this restriction was to ensure
that the property does not go out of the
families of the two sisters. The male heirs
of Savithri Ammal and Rukmani Ammal did not
question the conditional conferment upon
them of title of the properties. Therefore,
the appellant who purchased B property in
violation of the aforesaid condition cannot
be heard to say that the restriction
contained in Clause 11 of the will should be
treated as void because it violates the rule
against perpetuity.”

49. The court also, while dealing with the question of

preemption, held as follows:

“44. In the light of the above, we shall
now consider whether Clause 11 of the will
executed by Smt Ramakkal Ammal is violative
of the rule against perpetuity. If that
clause is read in conjunction with Clauses 4
and 10 of the will, it becomes clear that the
two sisters of the testator, namely, Savithri
48
Ammal and Rukmani Ammal were to enjoy house
properties jointly during their lifetime
without creating any encumbrance and after
their death, their male heirs were to get the
absolute rights in A and B properties. The
male heirs of the two sisters could alienate
their respective shares to other sharers on
prevailing market value. It can thus be said
that Smt Ramakkal Ammal had indirectly
conferred a preferential right upon the male
heirs of her sisters to purchase the share of
the male heir of either sisters. This was in
the nature of a right of pre-emption which
could be enforced by the male heir of either
sister in the event of sale of property by the
male heir of the other sister. If the term
“other sharers” used in Clause 11 is
interpreted keeping in view the context in
which it was used in the will, there can be
no manner of doubt that it referred to the
male heirs of the other sister. The only
restriction contained in Clause 11 was on
alienation of property to strangers.”
(Emphasis supplied)

50. In the case decided by the Privy Council, in Muhammad

Raza (supra), during the pendency of the disputes in a suit,

a compromise was arrived at, which among other things, put

an end to the dispute between the parties and recognized

the right with the plaintiff over the property, however,

49
subject to the condition that there will be no right to sell

to strangers. In this case, as already noted, 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 as was the case in

Muhammad Raza (supra) where the compromise in the suit

created the right but subject to the condition against

alienation to stranger. No doubt, being brothers, they

could to promote harmony and avoid future disputes, enter

into a family settlement.

50

51. 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. We find that 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. The perusal of the plaint reveals that the

following case has been set up by the plaintiff:

“7. that the defendant no.1 was
interested in disposing his share in House
no.19-A, Chandigarh and the plaintiff was
already and willing to purchase the portion
of the defendant no.1 and the plaintiff has
been expressing his readiness willingness to
purchase the share of the defendant no.1
through number of Regd. Letters, telephone
and even on FAX.

8. That the defendant no.1 as well as
his wife and son has been corresponding and
discussing on behalf of the defendant no.1
promising to sell the property to the
plaintiff as defendant no.3 did not show any
interest to purchase the share of defendant
51
no.1 nor he was interested at all to purchase
the 1/3rd share of the defendant no.1 in the
property.

9. that the plaintiff was shocked and
surprised to learn that the defendant no.1
has sold his 1/3rd share of the property to
defendant no.2 a tenant who was already
occupying the said portion in a totally
secret manner without informing the
plaintiff and against the terms and
conditions of agreement of family partition
and minutes dated 31.3.1982 arrived between
plaintiff, defendant no.1 and defendant
no.3. the site plan showing the portion sold
by the defendant no.1 to defendant no.2 (in
red) is attached with this plaint.”
(Emphasis supplied)

52. 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 that there was an offer from the

defendant. The correspondence, which we have referred to,

fortifies us in holding that there was an effective offer

and it did not materialize on account of any default on the

part of the plaintiff.

52

53. 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

53
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, we find that the appellant is clearly estopped from

setting up the plea of absence of written consent of the

brothers. It would be inequitable, particularly when we are

considering the matter in an appeal sourced under SectionArticle

136 of the Constitution of India.

EFFECT OF PROHIBITION AGAINST FRAGMENTATION OF PROPERTY IN
QUESTION UNDER THE CAPITAL OF PUNJAB (DEVELOPMENT AND
REGULATION) ACT, 1952

54. The further obstacle remains posed, however, that the

sale will result in contravening the law prohibiting

fragmentation. The Capital of Punjab (Development and

SectionRegulation) 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”.

54

55. Section 3 of the Act reads as follows:

“3. Power of Central Government in
respect of transfer of land and building in
Chandigarh. –
(1) Subject to the provisions of this
section, the Central Government may sell,
lease or otherwise transfer, whether by
auction, allotment or otherwise, any land or
building belonging to the Government in
Chandigarh on such terms and conditions as it
may, subject to any rules that may be made
under this Act, think fit to impose.

(2) The consideration money for any
transfer under sub-section (1) shall be paid
to the Central Government in such manner and
in such instalments and at such rate of
interest as may be prescribed.

(3) Notwithstanding anything contained
in any other law for the time being in force,
until the entire consideration money
together with interest or any other amount,
if any, due to the Central Government on
account of the transfer of any site or
building, or both, under sub-section (1) is
paid, such site or building, or both, as the
case may be, shall continue to belong to the
Central Government.”

56. Section 4 of the 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

55
“transferee” is defined in Section 2(k) of the Act, which

reads as follows:

“2(k)”transferee” means a person (including
a firm or. other body of individuals, whether
incorporated or not) to whom a site or
building is transferred in any manner
whatsoever, under this Act and includes his
successors and assigns;”

57. Section 4(2) of the 1952 Act reads as follows:

“4(2) Every transferee shall comply with
the directions issued under sub-section(1)
and shall as expeditiously as possible, erect
any building or take such other steps as may
be necessary, to comply with such
directions.”

58. Section 5 of the 1952 Act forbids erection or

occupation of any building at Chandigarh in contravention

of Building Rules made under sub-Section (2). The word

“building” is defined in Section 2(c), which reads as

follows:

“2(c)”building” means any construction or
part of a construction which is transferred
by the ‘[Central Government] under section 3
and which is intended to be used for

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residential, commercial, industrial or other
purposes, whether in actual use or not, and
includes any out-house, stable, cattle shed
and garage and also includes any building
erected on any land transferred by the
Central Government under section 3;”

59. From a perusal of the aforesaid provisions, it becomes

clear that 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 which his

transferred under Section 3. It includes outhouse, stable,

57
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), Section2(d), Section2(e) and

Section2(h) of the 1952 Act, which reads as follows:

“2(a) the terms and conditions on which any
land or building may be transferred by the
Central Government under this Act;

xxx xxx xxx

2(d) the terms and conditions under which the
transfer of any right in any sit or building
may be permitted;

xxx xxx xxx

2(e) erection of any building or the use of
any site;

58

xxx xxx xxx

2(h) the conditions with regard to the
buildings to be erected on sites transferred
under this Act;”

60. 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 Section22 of the Act, Chandigarh Estate Rules, 2007

came to be made. Rule 16 deals with

fragmentation/amalgamation, which reads as follows:

“16. Fragmentation/Amalgamation. No
fragmentation or amalgamation of any site or
building shall be permitted. Provided that
amalgamation of two or more adjoining sites
shall be permissible only in the case of
commercial or industrial sites subject to the
condition that the revised plans are approved
by the competent authority, prior thereto.
Provided further that fragmentation of any
site shall be allowed if such fragmentation
is permitted under any scheme notified by the
Administration.”
(Emphasis supplied)

61. It is on the strength of the provisions contained in

Rule 14 of the 1960 Rules and Rule 16 of the 2007 Rules that
59
the appellant would argue that the assignment of the share

of the first defendant occasioned a breach of the law. The

second defendant, on the other hand would point out that

there was no issue of fragmentation ever raised before the

courts and the same was not decided in the courts.

62. It is contended by the second defendant that the sale

deed in favour of the respondent no.1 specifically says that

the sale is in respect of one-third share in the residential

house no.13 of Sector 19A, Chandigarh. After the sale deed,

it is contended, one-third share of the party was duly

transferred and mutated in the name of respondent

no.1/second defendant by the Chandigarh Administration.

The High Court, in fact, tides over this objection by the

appellant by pointing out that once the second defendant

steps into the shoes of the first defendant, he became a

co-owner and his remedy is to sue for partition and while

fragmentation of property, is not ‘admissible’, the market

value of the property can be determined, and buying each

other’s share, as per the provisions of Sections 2, Section3 and

Section4 of the Partition Act, 1893.

60

63. While it may not be true that the issue of fragmentation

was not raised in the courts, we would think that the

appellant is not able to persuade us to hold that the

assignment in favour of the second defendant is vulnerable

on the basis that it involves fragmentation. We have noticed

the deposition of the plaintiff about partition of the house

into three portions. We have noted 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.

64. The second defendant has produced the communication

dated 19.12.1997 which indicates the transfer of rights of

site in Sector 19A held by Vishnu Dutt Mehta (first

defendant) is noted in favour of the second defendant

subject to certain conditions. This is obviously before the

2007 Rules came into force.

65. In the light of the aforesaid facts, we cannot permit

the appellant to impugn the transaction on the said ground.

61

66. The upshot of the above discussion is that the

contentions of the appellant are liable to be rejected. We

do so. The appeals will stand dismissed. The parties will

bear their own costs.

……………………………………J.

(ASHOK BHUSHAN)

…………………………………………J.

(K.M JOSEPH)

NEW DELHI;

AUGUST 20, 2019.

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