Holding

Because the competent authority expressly refused the statutory sanction required for the sale, the contract was frustrated and specific performance could not be ordered; the plaintiff is entitled only to refund of the advance and damages, and the High Court's interference with the discretionary jurisdiction under Section 20 was erroneous.

Summary

The defendants, owners of excess land under the Urban Land (Ceiling & Regulation) Act, 1976, entered into a sale agreement with the plaintiffs that was expressly conditioned on obtaining a statutory sanction. The competent authority refused the sanction, stating that no 1,000 sq. metres of vacant land were available for sale. The plaintiffs sued for specific performance; the trial court denied it and ordered refund of the advance plus damages, a decision upheld by the single judge but reversed by the High Court Division Bench, which granted specific performance. The Supreme Court held that, because the required sanction was expressly denied, the contract was frustrated and specific performance could not be ordered; the plaintiffs were only entitled to the refund and damages. The Court also ruled that the Division Bench erred in interfering with the discretionary jurisdiction under Section 20 of the Specific Relief Act and in examining the validity of the competent authority’s order, which was not a party to the suit.

Issues considered

Whether specific performance can be granted when the contract is contingent upon a statutory sanction that has been expressly refused under the Urban Land (Ceiling & Regulation) Act, 1976.
Whether the High Court Division Bench could entertain the validity of the competent authority's order and interfere with the discretionary jurisdiction exercised by the trial court and single judge under Section 20 of the Specific Relief Act, 1963.
Whether a void or ineffective order of a statutory authority can be set aside in a collateral proceeding.
Whether a letters patent appeal permits the appellate court to review findings of fact and law of a single judge in this context.

Legislation cited

Specific Relief Act, 1963s. 20
Urban Land (Ceiling & Regulation) Act, 1976s. 10, s. 26

Subjects

specific performanceurban land ceilingdiscretionary jurisdictionSection 20 Specific Relief Actcontract frustrationvoid orderletters patent appealstatutory sanction

Judgment

M. MEENAKSHI AND ORS. A
v.
METADIN AGARWAL(D) BY LRS. AND ORS.

AUGUST 29, 2006

(S.B. SINHA AND DAL VEER BHANDARI, JJ.] B

Specific ReliefAct, 1963-Section 20-Excess land of defendants vesting
with the government by virtue of Land Ceiling Act-During pendency of
proceedings, defendants entering into agreement to sell a portion of vacant C
land subject to sanction by competent authority-Sanction not granted-
Plaintiff seeking specific performance of contract-Held: Plaintiff cannot
seek specific pe1formance of contract as defendants could not pe1form their
part of contract in the absence of sanction-Plaintiff only entitled to refund
of advance money along with damages-Urban Land (Ceiling & Regulation)
Act, 1976. D
Order-Void order-Challenge to-Held: Can only be set aside by a
competent court of law in appropriate proceedings-Void order is necessarily
not non-est-It cannot be declared to be void in a collateral proceeding.

Jurisdiction-Discretionary jurisdiction-Exercised by the courts E
be/ow-Scope of interference by appellate Court in Letters Patent appeal.

By virtue of proceedings initiated under the Urban Land (Ceiling &
Regulation) Act, 1976, excess land owned by the defendant and his other co-
owners were directed to be vested in the Central Government. They were
allowed to retain only 1000 sq. metres of land each. Defendant entered into F
an agreement with the Plaintiff to sell the land allotted to him. As on the said
date, proceedings unde.r the 1976 Act were pending, the agreement to sell
was subject to the grant of permission by the competent authority under the
said Act. The defendant filed application under Section 26 of the 1976 Act
for seeking permission to sell the said land, which was rejected by the G
competent authority.

The plaintiff thereafter filed suit for specific performance of contract.
The Trial Court decreed the suit in part. While rejecting the prayer for grant
of specific performance of contract, the Trial Court directed the defendant to
505 H
506 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A refund the amount of advance as also pay damages. The Single Judge of High
Court dismissed the appeal filed by the plaintiff. However, the Division Bench
of High Court allowed the Letters Patent Appeal filed by the plaintiff.

In appeals to this Court, the questions which have arisen for
consideration are: whether in the absence of sanction by the competent
B authority, defendant could execute the deed of sale in favour of any person;
whether the Division Bench of High Court erred in going into the question of
validity of orders of competent authority for the first time in Letters Patent
appeal and also in interfering with the discretionary jurisdiction exercised
by the Trial Judge and the Single Judge of High Court under Section 20 of
C the Specific Relief Act, 1963.

Allowing the appeals, the Court

HELD: I.I. The parties to the agreement were aware of the proceedings
pending before the ceiling authorities. The agreement envisaged that the
D Defendant would obtain necessary sanction from the competent authority. The
competent authority had refused to grant sanction on the ground that 1000
sq. metres of vacant lands which had been the subject-matter of agreement
were not available, in view of the fact that the Defendant and their co-sharers
were permitted to retain only their residential houses and the lands
appurtenant thereto. It was, therefore, not a case where a notice under Section
E 26 of the 1976 Act could have served the purpose and in the event, the
competent authority did not exercise its statutory right of perception within
the period stipulated thereunder, the Defendant was free to execute a deed of
sale in favour of any person he liked. [511-F; 516-A-Cf

HPA International etc. v. Bhagwandas Fatehchand Daswani and Ors.
F etc., [200416 sec 537, referred to.

-
New Zealand Shipping Co. Ltd v. Scoiete Des Ateliers Et. Chantiers
De France, (1918-19) AER 552, referred to.

I.2. The plaintiffs had annexed a plan, from a perusal whereof it appears
G that six co-sharers were allotted 6000 sq. metres of lands - four in one block
and two in another, apart from their house properties situate on the eastern
side of the said road. By the deed of sale, all the six co-sharers have sold
portions of their house properties and lands appurtenant thereto. The total
land sold to the purchasers by all the six co-sharers was below 900 sq. metres.
H No vacant land admeasuring 1000 sq. metres, according to the competent
M. MEENAKSHI v. METADIN AGARWAL(D) BY LRS. 507
authority, was, thus, available for transfer to third parties. The Plaintiff had A
not questioned the validity of the order of competent authority. The orders
passed by the competent authorities were not the subject matter of the said
suit and thus, the validity or otherwise of the said proceeding could not have
been gone into therein and in any event for the first time in the Letters Patent
Appeal; 1512-C; 513-B; 514-CI
B
1.3. The Trial Judge had concluded that the Defendant was guilty of
fraud; but the said finding had been arrived at on the premise that he could
not have entered into an agreement for sale of 1000 sq. metres of vacant land
when the same was not available. It was, therefore, not a case where the Trial
Court found that the Defendant had committed a fraud on the statutory C
authorities or on the court. The expression 'fraud' was improperly used.
Admittedly when the agreement was entered into, the proceedings under the
1976 Act were pending. The parties might have proceeded under a
misconception. It is also possible that the Defendant had made
misrepresentation to the Plaintiff. Hence during pendency of the proceedings
pending before the competent authority under the 1976 Act, the Defendant D
could not have performed his part of the contract.1515-E-G)

2.1. It is a well-settled principle of law that even a void order is required
to be set aside by a competent court of law inasmuch as an order may be void
in respect of one person but may be valid in respect of another. A void order
is necessarily not non-est. An order cannot be declared to be void in a E
collateral proceeding and that too in absence of the authorities who were the
authors thereof. The order passed by the authorities was not found to be wholly
without jurisdiction. They were not, thus, nullities. 1514-DI

2.2. The Division Bench proceeded on a rather curious premise. It took F
into consideration extraneous and irrelevant facto..S. It not only went into the
legality of the orders passed by the competent authority made under the 1976
Act but also made comments about their alleged personal involvement therein.
It had no jurisdiction to make such comments and pass strictures against
the said authority. Once it is held that the orders passed by the competent
authority could not have been the subject-matter of a decision in the suit, it G
must be held that the entire approach of the Division Bench was unsound in
law. It posed unto itself wrong questions leading to wrong answers. The High
Court, also committed a manifest error in opining that the Appellants should
have questioned the orders passed by the competent authority. If they have not
done so, the same would not mean that the Division Bench could go thereinto H
508 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A suo motu. [514-E-G; 518-E-FI

3.1. Section 20 of the Specific Relief Act confers a discretionary
jurisdiction upon the courts. Undoubtedly such a jurisdiction cannot be refused
to be exercised on whims and caprice; but when with passage of time, contract
becomes frustrated or in some cases increase in the price of land takes place,
B the same being relevant factors can be taken into consideration for the said
purpose. While refusing to exercise its jurisdiction, the courts are not
precluded from taking into consideration the subsequent events. Only because
the Plaintiff-Respondents are ready and willing to perform their part of
contract and even assuming that the Defendant was not entirely vigilant in
C protecting his rights in the proceedings before the competent authority under
the 1976 Act, the same by itself would not mean that a decree for specific
performance of contract would automatically be granted. While considering
the question as to whether the discretionary jurisdiction should be exercised
or not, the orders of a competent authority must also be taken into
consideration.1518-F-H; 519-AI
D
Mrs. Chandnee Vidya Vati Madden v. Dr. Cl. Katia! and Ors., AIR
(1964) SC 978 and Nirmal Anand v. Advent Corporation (P) Ltd. and Ors.
(2002) 5 sec 481, referred to.

3.2. In exercise of its letters patent jurisdiction, the Appellate Court
E may review findings of fact as well as law arrived at by a Single Judge, but
while doing so, it must bear in mind its limitations. It is now well-settled
principle of law that the courts would not normally interfere with the
discretionary jurisdiction exercised by the courts below. (519-EI

Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa and Ors.,
F 120031 sec 390, relied on.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2023 of2004.

From the Judgment and Order dated 10.9.2003 of the High Court of
Andhra Pradesh at Hyderabad in L.P.A. No. 168/96.
G
WITH

C.A. Nos. 2024 and 8265 of2004.

Dipankar Gupta, P.S. Narasimha (for P.S.N. & Co.), Sridhar Potaraju,
H Sumerian Sharma and John Mathew for the Appellants.
M. MEENAKSHI v. MET ADIN AGARWAL (D) BY LRS. [S.B. SINHA, J.] 509

L. Nageswara Rao, R. Santhan Krishnan, Praveen K. Pandey and D. A
Mahesh Babu for the Respondents.

The Judgment of the Court was delivered by

S.B. SINHA, J. The heirs and legal representatives of the Original
Defendant in a suit for specific perfonnance of contract and the subsequent B
purchaser are before us in these appeals which arise out of a judgment and
order dated 10.09.2003 passed by a Division Bench of the Andhra Pradesh
High Court in Letters Patent Appe;:il Nos. 168 and 169 of 1996 whereby and
whereunder the judgment and decree passed by a learned Single Judge dated
05.11.1996 affirming a judgment and decree dated 30.04.1990 passed by the C
Additional Chief Judge-cum-Sp!. Judge for SPE & ACB Cases, City Civil
Court, Hyderabad, was set aside.

The Defendant in the suit together with his other co-sharers were
owners of Survey No.71, West Marredpalli, Secunderabad. A proceeding
under the Urban Land (Ceiling & Regulation) Act, 1976 (for short, 'the 1976 D
Act') was initiated against them. In the said proceeding at the hands of the
landholders, excess land was directed to be vested in the Central Government.
The owners were allowed to retain 1000 sq. metres of land each.

Allegedly, on that premise a piece of vacant land bearing Plot No.2 in
Survey No. 7 I measuring 1000 sq. metres which had been allotted to the E
defendant was allowed to be retained by him. On or about 27 .06.1978 he
(original Owner) entered into an agreement with the Plaintiff for sale in respect
thereof on a consideration of Rs.SO/- sq. yard . As on the said date, a
proceeding under the 1976 Act was pending, the agreement to sell was
subject to the grant of pennission by the competent authority under the said
Act. It stipulated that in the event of refusal on the part of the competent F
authority to grant such pennission, the advance paid to the Defendant would
be refunded. It was further stipulated that in the event of refusal on the part
of the vendor to execute the sale deed upon obtaining pcnnission, if any, not
only the amount paid by way of advance was to be refunded but also
damages to the extent of Rs. I 5,000/- was to be paid by the Defendant to the G
Plaintiff. The application under Section 26 of the 1976 Act filed for seeking
permission to sell the said land was rejected by the competent authority by
an order dated 24.08.1978.

An application was filed under Section 10 of the 1976 Act on 29.04.1980
which was again rejected by an order dated 26.06.1980 stating that no vacant H
510 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A land measuring IOOO sq. metres was available, in view of the order passed in
the proceedings under the 1976 Act and as such no permission could be
granted. A clarification of the said order was sought for. Allegedly, on the
ground that permission to sell the vacant land had been rejected by a notice
dated 26.06.1980, the agreement was sought to be cancelled by the Respondent
on the premise that the same stood frustrated. The Plaintiff-Respondent in
B C.A. No.2023 of2004 thereafter filed a suit for specific performance of contract.

The learned Trial Judge decreed the said suit in part. While rejecting the
prayer for grant of specific performance of contract, the Defendant was
directed to refund the amount of advance as also damages of Rs. 15,000/-
C together with interest @ 6% p.a.. An appeal was preferred thereagainst by the
Plaintiff-Respondent and by a judgment and order dated 05.11.1996, a learned
Single Judge of the High Court dismissed the appeal. Be it placed on record
that the learned Single Judge appointed a Advocate-Commissioner for taking
measurement of land in question; whereupon a report was filed. A Letters
Patent Appeal was filed by the Plaintiff-Respondent before a Division Bench
D of the High Court and by reason of the impugned judgment, the said Letters
Patent Appeal had been allowed.

In the said suit an order of status quo was passed. Allegedly, in
violation of the said order, all co-sharers sold portions of the house property
which could be retained by them und~r the 1976 Act.
E
Mr. Deepankar Gupta, the learned Senior Counsel appearing on behalf
of the Appellants, urged that : (i) The High Court acted illegally and without
jurisdiction in ignoring the orders passed by the competent authority under
the 1976 Act; (ii) The decree for specific performance granted by the Division
F Bench is contrary to the statutory provisions contained in the 1976 Act; (iii)
The Division Bench could not have interfered with the judgment by the
learned Trial Judge as also the learned Single Judge of the High Court
refusing to exercise their jurisdiction under Section 20 of the Specific Relief
Act, 1963, and interference therewith by the Division Bench was unwarranted;
and (v) The High Court could not have directed cancellation of the deed of
G sale in favour of the subsequent purchaser.
Mr. L. Nageshwara Rao, the learned Senior Counsel appearing on behalf
of the Respondents, on the other hand, submitted that : (i) Although some
of the findings arrived at by the High Court cannot be supported, but having
regard to the fact that IOOO sq. metres of vacant land, which was the subject-
H
M. MEENAKSHI v. METADIN AGARWAL(D) BY LRS. [S.B. SINHA,.I.] 511

matter of the agreement for sale being outside the purview of the vacant land A
under the 1976 Act, the learned Trial Judge and consequently the learned
Single Judge of the High Court committed a manifest error in so far as they
failed to take into consideration that Section 20 of the 1976 Act would not
be applicable; (ii) The learned Trial Court having found that the Defendant
had been held guilty of commission of fraud, could not have deprived the B
Plaintiff-Respondent from obtaining a decree for specific performance of
contract; (iii) The Advocate-Commissioner appointed by the Trial Judge as
also the learned Single Judge having found that the subject-matter of the
agreement for sale executed by the Appellant in favour of Meenakshi and
others was identical to that of the suit land, the Division Bench cannot be
said to have committed any illegality in granting the decree for specific C
performance of contract; (iv) The learned Trial Judge as also the learned
Single Judge committed a serious error in denying a decree for specific
performance of contract on a premise that the period of twelve years has
elapsed since the agreement for sale and, thus, the alternative prayer for grant
of damages would suffice; (v) It was not a case where the contract was a
contingent one, but being a completed one, a suit for specific performance D
of contract was maintainable and there was no bar on the part of the Division
Bench in passing a decree therefor; (vi) The Division Bench of the High Court
exercised plenary ,iurisdiction in an intra-court appeal and thence both questions
of fact as also of law could be gone into and, thus, it cannot be said to have
committed any illegality in interfering with the judgments of the learned Trial E
Court as also the learned Single Judge of the High Court.

It is not disputeci that the parties to the agreement were aware of the
proceedings pending before the ceiling authorities. It is also not in dispute
that the Central Government was the appropriate authority to deal with the
matter as the lands pertained to a cantonment area. The agreement envisaged F
that the Defendant would obtain necessary sanction from the competent
authority. It was made clear that he had not submitted any lay out nor had
he got any sanction therefor.

Clauses 8 and 9 of the said agreement read as under :
G
"[f the second party fails to pay the balance consideration of
Rs.44,800/- (Rupees forty four thousand eight hundred only) by the
due date, and refuses to purchase after permission is granted, the
second party shall forfeit the advance of Rs.15,000/- (Rupees fifteen
thousand only) paid by them to the first party. If the first party fails H
512 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A to execute the sale deed by the due date, after the permission is
granted, the first party shall not only refund to the second party the
advance sum ofRs.15,000/- but shall also pay to the party an additional
sum of Rs.15,000 as damages.

In case permission to sell to the second party is refused by the
B ceiling authority, then the first party shall refund to the second party,
the advance sum of Rs.15,000/- (fifteen thousand only) within one
month from the date of refund."

The lands in question admittedly were described in the plan annexed to
the agreement which shows that the same was lying west to a 30 ft. road. The
C Respondents themselves had annexed a plan, from a perusal whereof it appears
that six co-sharers were allotted 6000 sq. metres of lands four in one block
and two in another, apart from their house properties situate on the eastern
side of the said road.

D The plots in question were marked with the letters 'l ', '2', '3', '4', '5'
and '6'. A big chunk of land was held to be the excess land under the 1976
Act at the hands of the Appellants and their co-sharers. The lands belonging
to Syed Abdul Razak was marked with the letter '2'.

In the land ceiling proceedings, in response to the Defendant's letter
E dated 30.07 .1980, the competent authority by its letter dated 08.08.1980 rejected
the application for grant of permission under Section 26 of the 1976 Act
stating :

"Out of your prescribed ceiling limit of I 000 sq. mtrs. your
·individual share of urban pr')perties including built up area/vacant
F land are as under :
S.No. Name Built up area Vacant
including land in sq.
apartment lands mtrs.
ir. sq. mts.
G
I. Mr. S.A. Razak 563.25 436.75
2. Mr. S.A. Rahman 563.25 436.75
3. Miss Hahmooda Begum 281.62 718.38

4. Mrs. Sharafunisa 281.62 718.38
H
M. MEENAKSHI v. METADIN AGARWAL(D) BYLRS. [S.B. SINHA, l] 513

You are advised to submit a plan showing the built up area and A
vacant land, as shown above, to be retained by you, as per prescribed
ceiling limit."

No vacant land admeasuring 1000 sq. metres, according to the
authorities, was, thus, available for transfer to third parties.
B
--( The Division Bench commented that having regard to the Muslim law
of inheritance and succession, the competent authority should not have
jumped to the conclusion that the declarant wanted to retain the built up area
and also apportioning the built up area and vacant land between the male
members and the female members of the family. The Division Bench made a
terse comment against the competent authorities by raising a question as to C
how permission had been granted in favour of the cooperative society while
rejecting similar application in favour of the Plaintiff while declining such
permission in favour of the Respondent. The learned Judges purported to
have addressed themselves to the question as regards the propriety, legality
and/or validity of the order passed under Section 9 of the Act and came to D
the conclusion that even after alienating 26972 sq. metres of land to the
society, the family still owned excess lands which would be about 5261 sq.
metres including 2253 sq. metres of land wherever buildings were standing.

Relying upon certain decisions, the Division Bench opined that a decree
for specific performance could have been granted, stating : E
" ... In this case also the defendant having entered into agreement to
sell open land of thousand metres each to the plaintiffs took a round
about turn by selling the vast extent of property along with other
family members which was declared as surplus land to Murthy Housing
Cooperative Society Limited with the active connivance of the F
competent authority in obtaining a letter Ex.A-16/ BI 0 dated 26.6.1980
wherein the competent authority says that area sought to be sold
include built up area which is absolutely false and the competent
authority made such a statement in collusion with the defendant who
in fact helped him in alienating about 30,000 square metres of land G
which is declared as surplus land circumventing the provisions of
Urban Land Ceilings Acts more so after the entire procedure
contemplated under the Act is over. Hence the order of competent
authority is only camouflage to avoid the completion of the sale
transaction. In the light of the foregoing discussion, we cannot agree
with the reasoning given by the trial court as well as the Learned H
514 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A Single Judge in dismissing the suits. since the land offered for sale
do not contain any built up area either as per the agreement of sale
or any of the maps that were filed before various authorities ..... "

The competent authority under the 1976 Act was not impleaded as a
party in the suit. The orders pass~d by the competent authority therein could
B not have been the subject-matter thereof. The Plaintiff although being a
person aggrieved could have questioned the validity of the said orders, did
not chose to do so. Even if the orders passed by the competent authorities
were bad in law, they were required to be set aside in an appropriate proceeding.
They were not the subject matter of the said suit and the validity or otherwise
C of the said proceeding could not have been gone into therein and in any
event for the first time in the Letters Patent Appeai.

It is a well-settled principle of law that even a void order is required to
be set aside by a competent court of law inasmuch as an order may be void
in respect of one person but may be valid in respect of another. A void order
D is necessarily not 11011 est. An order cannot be declared to be void in a
collateral proceeding and that too in absence of the authorities who were the
authors thereof. The orders passed by the authorities were not found to be
wholly without jurisdiction. They were not, thus, nullities.

The Division Bench proceeded on a rather curious premise. It took into
E consideration extraneous and irrelevant factors, some of which we would
notice a little later.

We fail to appreciate the manner in which the Division Bench not only
went into the legality of the orders passed by the competent authority made
under the 1976 Act but also made comments about their alleged personal
F involvement therein. The High Court had no jurisdiction to make such
comments and pass strictures against the said authority.

Once it is held that the orders passed by the competent authority could
not have been the subject-matter of a decision in the suit, it must be held that
G the entire approach of the Division Bench was unsound in law. It posed unto
itself wrong questior.s leading to wrong answers.

The learned Trial Judge albeit concluded that the Defendant was guilty
of fraud, but the said finding had been arrived at on the premise that he could
not have entered into an agreement for sale of IOOO sq. metres of vacant land
H when the same was not available. It was held :
M. MEENAKSHI v. META DIN AGARWAL (D) BY LRS. [S.B. SINHA, J.) 515

"68. To sum up, it is evident that in Ex. Al, the defendant knowingly A
has made a false declaration that the 1000 sq. metres of vacant land
which he has agreed to sell under Ex.A I is the land allowed by the
competent authority to be retained by him under the Act. While
actually it includes a portion of the building and the contracted land
is land outside the ceiling area. When Ex.Al land is not land within B
the ceiling limit, Section 26 of the Act does not apply ...... "

It further observed :

"69.Thus, defendant by making a false declaration in Ex.Al has
induced the plaintiff to enter into Ex.Al contract and has not been
made any efforts to perform the contract or at least make amends for C
that fraud played by him. It may be mentioned that making a false
declaration knowing it to be false and having no intention to perform
is nothing short of fraud.

70. On account of this fraud perpetuated on the plaintiff, plaintiff
can either insist upon specific performance or seek damages. I have D
already stated above that directing specific performance would prolong
the stalemate and uncertainty for good length of time and· that it is
not interests of even the plaintiff to have such a relief because it
depends upon a contingency and the relief may or may not ultimately
materialize. The best remedy under the circumstances would be to E
grant the alternative relief of damages asked for by the plaintiff."

It was, therefore, not a case where the Trial Court found that the
Defendant had committed a fraud on the statutory authorities or on the court.
The expression 'fraud' in our opinion was improperly used. It must be noticed
that admittedly when the agreement was entered into, the proceedings under F
the 1976 Act were pending. The parties might have proceeded under a
misconception. It is also possible that the Defendant had made
misrepresentation to the Plaintiff; but the question which was relevant for the
purpose of determination of the dispute was as to whether having reg~rd to
the proceedings pending before the competent authority under the 1976 Act, G
the Defendant could perform their part of the contract. The answer thereto,
having regard to the order of the competent authority dated 08.08.1980, must
be rendered in negative.

Mr. Nageshwara Rao may be right in his submission that in a given
case, it is possible to pass a decree for specific performance of contract, H
516 SUPREME COURT REPORTS (2006] SUPP. 5 S.C.R.

A although there exists a clause for obtaining a sanction from the competent
authority. But in the instant case, rightly or wrongly the competent authority
had refused to grant such sanction. It refused to grant sanction not on the
ground that Section 26 was attracted: but on the ground that 1000 sq. metres
of vacant lands which had been the subject-matter of agreement were not
B available, in view of the fact that the Defendant and their co-sharers were
permitted to retain only their residential houses and the lands appurtenant
thereto. ·"

It was, therefore, not a case where a notice under Section 26 of the 1976
Ac't could have served the purpose and in the event, the competent authority
C did not exercise its statutory right of perception within the period stipulated
thereunder, the Defendant was free to execute a deed of sale in favour of any
person he liked.

Strong reliance has been placed by Mr. Nageshwara Rao on a decision
of this Court in HPA International etc. v. Bhagwandas Fatehchand Daswani
D and Ors. etc., [2004] 6 sec 53 7. Our attention in particular has been drawn
to the following observations :

"In the case before us, we have not found that the vendor was
guilty of rendering the suit for sanction infructuous. It did terminate
the contract pending the suit for sanction but never withdrew that
E suit. The vendee himself prosecuted it and rendered it infructuous by
his own filing of an affidavit giving up his claim for the interest of
reversioners. In such a situation where the vendor was not in any
manner guilty of not obtaining the sanction and the clause of the
contract requiring the Court's sanction for conveyance of full interest,
being for the benefit of both the parties, the contract had been
F rendered unenforceable with the dismissal of the sanction suit."

The said observations were made in the fact situation obtaining therein.

In this case, we are concerned with a situation where the sanction, it
G will bear repetition to state, has expressly been refused.

Dharmadhikari, J. in that case itself has noticed a judgment of the House
of Lords in New Zealand Shipping Co. Ltd. v. Scoiete Des Ateliers Et.
Chantiers De France, (1918-19) AER 552 wherein it was held thata man shall
not be allowed to take advantage of his own wrong which he himself brought
H about.
M. MEENAKSHI v. METADIN AGARWAL (D) BY LRS. [S.B. SINHA. J.] 517

The parties were aware of the proceedings under the 1996 Act. The A
Plaintiff-Respondents were also aware that sanction ·under the said Act is
necessary. The consequence for non-grant of such sanction was expressly
stipulated. Even the parties were clear in their mind as regards the
/

consequences of willful non-execution of a deed of sale or willful refusal on
their part to perform their part of contract.
B
We may notice that Lord Atkinson in New Zealand Shipping (supra)
took into consideration the inability or impossibility on the part of a party to
perform his part of contract and opined that the principle that man shall not
be permitted to take advantage of his own wrong, which he himself brought
about.
c
Our attention has rightly been drawn by Mr. Gupta to the deed of sale
executed by the Defendant in favour of others. By the said deeds of sale all
the six co-sharers have sold portions of their house properties and lands
appurtenant thereto. The total land sold to the purchasers by all the six co-
sharers was below 900 sq. metres. D
The comment made by the Division Bench that the competent authority
under the 1976 Act failed to take into consideration the Muslim law of
inheritance and succession is again besides the point. Each of the claim
petition by the Appellants and their co-sharers was determined having regard
to the 1976 Act. The Muslim law of inheritance and succession may not have E
any role to play. Jn any event, the same could not have been the subject-
matter of a decision at the hands of the Division Bench.

We have noticed the reports of the Commissioner appointed both by
the Trial Court and the learned Single Judge of the High Court. The
Commissioner appointed by the Trial Judge in his report stated : F

" .. .I also found some numbers were painted in black on the compound
-. wall inside the western compound wall as 3-42-67 and I also found one
small brick mound near to middle unfinished room touching western
compound wall. I also found some numbers on the gate painted in
black as 65-66-67-68-69 while I was proceeding with the execution of
G
warrant some persons brought a board and tied it to the gate which
contains some letters painted as "this land and construction area
Cantonment H. No.3-42-65 to 3-42-69 belong to Murthy Cooperative
Housing Society-Trespasser will be prosecuted."
H
518 SUPREME COURT REPORTS (2006) SUPP. 5 S.C.R.

A It was, therefore, accepted that the plots mentioned therein had already
been sold to Murthy Cooperative Housing Society. The said cooperative
society, it is beyond any cavil of doubt, purchased the land from the original
owners pursuant to or in furtherance of the exemption accorded in that behalf
by the competent authority in exercise of its power under Section 20 of the
B 1976 Act The land sold to the cooperative society which might have included
the vacant land and which was the subject-matter of the agreement but was
not the subject-matter of the suit They were not parties thereto. The sanction
accorded in their favour by the competent authority had never been put in
question.

C The Advocate-Commissioner appointed by the Trial Court, observed :

"Opinion and Observation :

Taking all the aforesaid facts and circumstances I conclude that the
plot no.2 in Survey no. 71 as mentioned in agreement of sale Ex.A-
2 in the trial court and the house no. 3-9-51/A,B,C and D situated in
D
Survey no. 71/part, west Marred pally on which I conducted the local
inspection are the same."

The learned Commissioner, therefore, only inspected Plot No.2 situated
in Survey No. 71 and not the lands which were the subject-matter of sale in
E favour of the subsequent purchasers.

The High Court, in our considered view, also committed a manifest error
in opining that the Appellants should have questioned the orders passed by
the competent authority. If they have not done so, the same would not mean
that the Division Bench· could go therein to suo motu.
F
Furthermore, Section 20 of the Specific Relief Act confers a discretionary
jurisdiction upon the courts. Undoubtedly such a jurisdiction cannot be
refused to be exercised on whims and caprice; but when with passage of time,
contract becomes frustrated or in some cases increase in the price of land
takes place, the same being relevant factors can be taken into consideration
G for the said purpose. While refusing to exercise its jurisdiction, the courts are
not precluded from taking into consideration the subsequent events. Only
because the Plaintiff-Respondents are ready and willing to perform their part
of contract and even assuming that the Defendant was not entirely vigilant
in protecting their rights in the proceedings before the competent authority
H under the 1976 Act, the same by itself would not mean that a decree for
M. MEENAKSHJ v. METADIN AGARWAL (D) BY LRS. (S.B. SINHA. J.] 519
;

specific performance of contract would automatically be granted. While A
considering the question as to whether the discretionary jurisdiction should
be exercised or not, the orders of a competent authority must also be taken
into consideration. While the court upon passing a decree for specific
performance of contract is entitled to direct that the same shall be subject to
the grant of sanction by the concerned authority, as was the case in Mrs. B
Chandnee Vidya Vati Madden v. Dr. C.L. Katia! and Ors., AIR (1964) SC 978
and Nirmal Anand v. Advent Corporation (P) Ltd. and Ors., [2002] 5 SCC
481; the ratio laid down therein cannot be extended to a case where prayer
for such sanction had been prayed for and expressly rejected. On the face of
such order, which, as noticed hereinbefore, is required to be set aside by a
court in accordance with law, a decree for specific performance of contract C
could not have been granted.

Mr. Nageshwara Rao contended that the plea as regards maintainability
of the suit should not be permitted to be raised before this Court. We do not
agree with the counsel inasmuch as, inter alia, the plea which has been raised
herein by the Defendant is that it was not a fit case where the Division Bench D
should have interfered with the discretionary jurisdiction exercised by the
learned Trial Judge as also by the learned Single Judge.

There cannot be any doubt that in exercise of its letters patent jurisdiction,
the Appellate Court may review findings of fact as well as law arrived at b~
a learned Single Judge, but while doing so, it must bear in mind its limitations. E
It is now well-settled principle of. law that the courts would not normally
interfere with the discretionary jurisdiction exercised by the courts below.

In Manjunath Anandappa Urf Shivappa Hanasi v. Tammanasa and
Ors., [2003) SCC 390, it was held :
F
"There is another aspect of the matter which cannot be lost sight
of. The plaintiff filed the suit almost after six years from the date of
entering into the agreement to sell. He did not bring any material on
record to show that he had ever asked Defendant 1, the owner of the
property, to execute a deed of sale. He filed a suit only after he came G
to know that the suit land had already been sold by her in favour of
the appellant herein. Furthermore, it was obligatory on the part of the
plaintiff for obtaining a discretionary relief having regard to Section
20 of the Act to approach the court within a reasonable time. Having
regard to his conduct, the plaintiff was not entitled to a discretionary
relief." H
•

520 SUPREME COURT REPORTS [2006] SUPP. 5 S.C.R.

A It was further observed :

"It is now also well settled that a court of appeal should not
ordinarily interfere with the discretion exercised by the courts below."

The findings of the Division Bench, in our considered opinion, therefore,
B cannot be sustained.

For the reasons aforementioned, the impugned judgment cannot be
sustained which is set aside accordingly. The appeals are allowed. However,
in the facts and circumstances of the case, the parties shall pay and bear their
own costs.
c
D.G. Appeals allowed.