Ram Roop vs D.D.C. & Others
2017 Latest Caselaw 6882 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

Court No. - 33                                                                      AFR
 
Case :- WRIT - B No. - 32284 of 2010
 
Petitioner :- Ram Roop
 
Respondent :- D.D.C. & Others
 
Counsel for Petitioner :- T.P. Yadav, Anil Kumar Rai, J.K. Srivatava,Vishnu Singh
 
Counsel for Respondent :- C.S.C., C.P. Dwivedi, Radhey Raman Mishra
 

 
Hon'ble Manoj Misra, J.

Heard Sri Vishnu Singh for the petitioner; learned Standing Counsel for the respondents 1 and 2; and Sri K.M. Tripathi, holding brief of Sri Radhey Raman Mishra, for the contesting respondents 3 to 7.

With the consent of the learned counsel for the parties, this petition is being finally decided at the admission stage itself.

Briefly stated facts giving rise to the present petition are as follows:-

The petitioner, along with others, vide sale deed dated 30.04.1974, purchased tenancy land from Prayag (the predecessor in interest of the respondents 3 to 7) during the course of consolidation operations. He thus filed an application under Section 12 of U.P. Consolidation of Holdings Act (in short the C.H. Act) for mutation of his name in place of the vendor in the Khata concerned.

By order dated 08.12.1976 the Consolidation Officer directed mutation of the name upon finding that there existed a sale deed in favour of the applicant and permission was obtained for its execution.

Aggrieved by the order of the Consolidation Officer, the predecessor in interest of the respondents 3 to 7 filed appeal before the Settlement Officer of Consolidation under Section 11 of the C.H. Act.

The Settlement Officer of Consolidation vide order dated 01.12.2004 set aside the order dated 08.12.1976 passed by the Consolidation Officer on two grounds: (a) that the sale deed dated 30.04.1974 was in respect of land mortgaged with the State Land Development Bank and being in violation of the terms of mortgage was void; and (b) that the sale deed was also void for the reason that no permission of the Settlement Officer of Consolidation was obtained as required by Section 5 (1)(c)(ii) of the C.H. Act.

Aggrieved by the order of the Settlement Officer of Consolidation, the petitioner preferred revision before the Deputy Director of Consolidation which was dismissed by order dated 20.01.2010.

While dismissing the revision, the Deputy Director of Consolidation observed that the land sold was mortgaged with State Land Development Bank vide mortgage deed dated 07.03.1973 and the mortgage deed provided that mortgagor could transfer only with prior permission of the mortgagee, whereas there appeared no document to show that permission was taken therefore the transfer made on 30.04.1974 was void. The Deputy Director of Consolidation further observed that no permission of the Settlement Officer of Consolidation was obtained for execution of the sale deed even though the consolidation operations were on, therefore the sale was void also on that count.

Assailing the orders passed by the Settlement Officer of Consolidation and the Deputy Director of Consolidation, Sri Vishnu Singh, learned counsel for the petitioner, submitted that under the provisions of Transfer of Property Act a mortgagor can transfer the equity of redemption and therefore transfer would not be void though shall be subject to the mortgage. He submitted that since, admittedly, the dues, in connection with which the land was mortgaged, were paid off, the sale deed would be operative and binding on the vendor and his successors. It was submitted that since the State Land Development Bank, now, known as Gram Vikas Bank or Sahkari Gram Vikas Bank (in short the Bank), had given a 'No Dues Certificate' the sale became operative and stood ratified therefore the Consolidation Authorities were bound to give effect to the sale deed.

Sri Vishnu Singh submitted that even assuming that the sale deed was against the terms of the mortgage, since a no dues certificate was subsequently issued by the Bank, the defect in title, if any, of the vendor, upon happening of subsequent events, got cured therefore, by virtue of Section 43 of the Transfer of Property Act (in short the T.P. Act), the transferee could enforce the transfer against the transferor and his successors.

Sri Vishnu Singh further contented that the view taken by the Consolidation Authorities that the sale was void for not obtaining permission under Section 5(1)(c)(ii) of the Act is erroneous because by the sale deed dated 30.04.1974, Prayag (the vendor) had sold his entire interest in the Khata / holding and, on the date of sale i.e. 30.04.1974, the C.H. Act required permission for sale from the Settlement Officer of Consolidation only in respect of such transfers where part of the holding was put on sale. It has thus been contended that the Settlement Officer of Consolidation and the Deputy Director of Consolidation have failed to consider relevant aspects of the matter and therefore their orders are liable to be set aside.

Per contra, the learned counsel for the contesting respondents submitted that under the provisions of U.P. Cooperative Land Development Banks Act, 1964, now, known as U.P. Sahkari Gram Vikas Banks Act, 1964 (in short Act, 1964), a sale executed by the mortgagor without the permission of the Bank would be void and since it has not been brought on record that permission was obtained from the Bank before execution of the sale deed, the sale was void under Section 22 of the Act, 1964. It was submitted that since the sale was void, the provisions of Section 43 of the Transfer of Property Act would not be attracted and no question of ratification arises.

I have considered the rival submissions and have perused the record.

The Settlement Officer of Consolidation as well as the Deputy Director of Consolidation have not dealt with the provisions of the Act, 1964. They have proceeded to declare the sale deed void on the ground that though there was a clause in the mortgage deed restraining the mortgagor from transferring the land without the permission of the mortgagee but transfer was made without there being anything on record to demonstrate that permission was obtained from the mortgagee.

Ordinarily, a mortgagor has a right to transfer his right of redemption in a mortgaged property. Such transfer confers right of redemption on the transferee and is recognized by section 91 (a) of the T.P. Act though the transferee gets right subject to the mortgage. Therefore, the restrictive clause in the mortgage agreement that no transfer shall be made without the permission of the mortgagee, would not, in absence of permission, make the transfer ipso facto void though such transfer shall be subject to the mortgage and the rights of the mortgagee arising from the mortgage. Hence, the ground taken by the Consolidation Authorities to hold that the sale deed was void because it was in violation of the terms of the mortgage is not legally sustainable.

However, in this case the Consolidation Authorities have not considered as to what would be the effect of the provisions of the Act, 1964 on the sale deed.

Section 22 of the Act, 1964, as it existed at the time of execution of the sale deed in question, provided as follows:-

"22. Mortgagor's power to lease or to create other rights in the mortgaged property.- (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 or any other law for the time being in force, a mortgagor shall not, except with the prior consent in writing of the land development bank, and subject to such terms and conditions as the bank may impose, grant a lease of, or create any other rights in, the mortgaged property.

(2) Any lease granted or rights created in contravention of the provisions of sub-section (1) shall be void."

Subsequently, by U.P. Act No.3 of 1979, the afore-quoted section 22 of the Act, 1964 was substituted so as to read as under:

"22. Restriction on mortgagors' power to lease or to create other rights in the mortgaged and charged property.--Notwithstanding anything contained in the Transfer of Property Act, 1882, or any other law for the time being in force no property in respect of which a charge, hypothecation or mortgage has been made in favour of a (Gram Vikas Bank) or the (Uttar Pradesh Gram Vikas Bank) shall be sold or otherwise transferred by the person making the charge, hypothecation or mortgage until the entire amount of loan or advance taken by him from the (Gram Vikas Bank) or the Uttar Pradesh Gram Vikas Bank) together with interest thereon is paid to the Bank and any transaction made in contravention of this section shall be void:

Provided that, if a part of the amount borrowed by a member is paid, the (Uttar Pradesh Gram Vikas Bank), or as the case may be, the (Gram Vikas Bank) with the approval of the (Uttar Padesh Gram Vikas Bank) may, on application from the member release from the mortgage, charge or hypothecation created or made in favour of the bank, such part of the property or interest therein as it may deem proper with due regard to the security of the balance of the amount remaining outstanding from the member.

(2) Any lease granted or rights created in contravention of the provisions of sub-section (1) shall be void."

The substituted section 22 of the Act, 1964 came for interpretation by this court in the case of Indra Pal v. Shankar Lal, (2002) 46 ALR 790, wherein, in paragraph 10 of the judgment, after noticing the provisions of section 22, it was held as follows:

"10. A perusal of the above provision will indicate that sub-section (1), thereof creates a bar in respect of transfers made by the person whose property has been hypothecated or mortgaged with the bank. This bar however is not absolute for all times to come in as much as the bar gets removed as soon as the entire amount of loan or advance taken by the person concerned together with interest there on is paid to the bank. As already pointed out about both the courts below have recorded concurrent findings that in the present case the mortgage made in favour of the bank stood discharged on account of entire amount of loan with interest thereon having been paid to the bank. In view of this finding bar created by Section 22 stood removed and thus there was no legal impediment in enforcing the agreement in question".

Section 22 of the Act, 1964 contains a non obstante clause and provides precedence to its provisions over the provisions of T. P. Act, 1882. Under the circumstances, what needs to be examined is whether on the date when the sale deed in question was executed by the predecessor in interest of the respondents 3 to 7 in favour of the petitioner, permission was obtained from the Bank or not and if not obtained then whether on the said date the dues payable to the Bank under the mortgage had already been paid off or not.

In case by the date of sale the dues payable under the mortgage had already been paid off, either by the mortgagor or by any person on his behalf, even if no formal permission to transfer was obtained from the Bank, the transfer would not be rendered void because the object of the mortgage is to secure the advance/ loan given to the mortgagor by the mortgagee and not to frustrate the rights of the mortgagor as are available to him under general law.

As there is no finding recorded either by the Settlement Officer of Consolidation or the Deputy Director of Consolidation as to when the dues payable under the mortgage were paid off by the mortgagor to the mortgagee Bank, the said aspect requires consideration by the Consolidation Authorities.

The contention of the learned counsel for the petitioner that even assuming that the transferor had no right to sell the property on 30.04.1974 but since subsequently the mortgage has been discharged, by virtue of Section 43 of the T. P. Act, the transfer can be enforced against the mortgagor and his successors, cannot be accepted for the following reasons. Section 43 of the Transfer of Property Act, on which reliance has been placed by the learned counsel for the petitioner, deals with a situation where a person either fraudulently or erroneously represents that he is authorized to transfer certain immovable property and professes to transfer such property for consideration, then, in that eventuality, such transfer shall, at the option of the transferee, operate on any interest which the transferor may acquire in such property at any time during which the contract of transfer subsists. The use of the words "during which the contract of transfer subsists" in section 43 of the T.P. Act is relevant. A contract which is forbidden by law or defeats the provisions of law or is against public policy is void (vide section 23 of the Contract Act). Such a contract being void ab initio, the question of its subsistence does not arise. The words "during which the contract of transfer subsists" show that the transfer must have resulted from a "contract" which as defined in the Contract Act, 1872, means an "agreement enforceable by law". A transfer which is void ab initio has no existence in law and, therefore, cannot subsist. It is like a dead embryo in which no life can be infused. Hence, where transfer made is void, being forbidden by law or would defeat the provisions of law or is against public policy, the provisions of Section 43 of the T.P. Act cannot be pressed into service. The above view finds support from a decision of the apex court in the case of Hardev Singh v. Gurmail Singh, (2007) 2 SCC 404, where, while dealing with the applicability of section 43 of the T.P. Act, in paragraphs 12 and 13 of the report, it was held as follows:

"12. In order to get the benefit of the said provision, the conditions which must be satisfied are:

(1) the contract of transfer was made by a person who was competent to contract; and

(2) the contract would be subsisting at the time when a claim for recovery of the property is made.

13. However, the provisions would have no application if the transfer was invalid as being forbidden by law or contrary to public policy, as envisaged under Section 23 of the Contract Act. Thus, no estoppel can be pleaded contrary to the provisions of a statute. The "rule of feeding the estoppel" shall apply in absence thereof.

From above, it is clear that Section 43 of the T. P. Act would have no applicability where the transfer is void as being forbidden by law or contrary to public policy.

In the instant case, if the provisions of section 22 of the Act, 1964 were applicable on the date of the transfer i.e. sale dated 30.04.1974, the transfer would defeat the provisions of law and as such would be void. More so, because section 22 of the Act, 1964 specifically provides that transfer made in contravention of the provisions of sub-section (1) of Section 22 of the Act, 1964 shall be void. Under the circumstances, if transfer is void under section 22 of the Act, 1964, then section 43 of the T. P. Act cannot be pressed into service.

The submission of the learned counsel for the petitioner that by issuance of "No Dues Certificate", subsequently, the sale/transfer stood ratified by the Bank is worthy of rejection because the sale deed was not executed by or on behalf of the Bank therefore its adoption by the Bank does not arise. More so, there is nothing on record or shown to the court that any such plea was taken on the strength of any document before the consolidation authorities.

The submission of the learned counsel for the petitioner that as on 30.04.1974 no permission was required from consolidation authorities in respect of sale of the entire holding or share of the transferor, is correct. Section 5(1)(c)(ii) of the C.H. Act, as it existed prior to the amendment brought by U.P. Land Laws (Amendment) Act, 1974 (U.P. Act No.34 of 1974) with effect from 07th December, 1974, is extracted here under:-

"5(1) ............

(a) ...............

(b) ..............

(c) notwithstanding contained in the U.P. Zamindari Abolition and Land Reforms Act, 1950, no tenure-holder, except with the permission in writing of the Settlement Officer, Consolidation, previously obtained shall -

(i) ............

(ii) transfer by way of sale, gift or exchange any part of his holding in the consolidation area."

A Full Bench of this Court in Smt. Ram Rati and others Vs. Gram Samaj, Jehwa and others: AIR 1974 Allahabad 106 interpreted the aforesaid provision to hold that it would not apply to a case where the entire holding is sold. Meaning thereby that where the entire holding is sold, the permission would not be required.

Subsequently, by U.P. Act, No.34 of 1974, Section 5 of (1)(c)(ii) of the C.H. Act was substituted with effect from 07th December, 1974 as under:-

"(ii) transfer by way of sale, gift or exchange his holding or any part thereof in the consolidation area."

As, in the instant case, the sale deed in question is dated 30.04.1974, that is before the substitution of sub-clause (ii) of clause (c) of sub-section (1) of Section 5 of the C.H. Act, as quoted above, what needs to be examined is whether the transferor had sold his entire holding in the consolidation area or only a part thereof. If he had sold his entire holding in the consolidation area, then the permission of the Settlement Officer of Consolidation was not required.

As the Deputy Director of Consolidation as well as the Settlement Officer of Consolidation have not considered all the relevant aspects discussed herein above, the matter requires reconsideration by the consolidation authorities.

Considering that the court of Deputy Director of Consolidation, by virtue of Explanation 3 to Section 48 of the C.H. Act, can reappreciate any oral or documentary evidence, this Court considers it appropriate to set aside the order of the Deputy Director of Consolidation and remit the matter back to the Deputy Director of Consolidation for fresh consideration. Accordingly, the order dated 20.01.2010 passed by the Deputy Director of Consolidation is hereby set aside. The Deputy Director of Consolidation shall restore the Revision No.527/572/618/634/977/1705 to its original number and shall take a fresh decision in the light of the observations made in this order after addressing the following issues:

(a) Whether the sale deed dated 30.04.1974 in favour of the petitioner was void as being in violation of the provisions of the Act, 1964 or not?.

While addressing the aforesaid question, the Deputy Director of Consolidation amongst other parameters shall also ascertain and consider as to when the entire dues, payable to the State Land Development Bank under the mortgage agreement, were paid.

(b) Whether the sale deed dated 30.04.1974 executed in favour of the petitioner required permission of the Settlement Officer of Consolidation under the provisions of Section 5(1)(c)(ii) of the Act, as it existed then.

Before addressing the aforesaid issue, the Deputy Director of Consolidation shall consider whether the sale deed had transferred the entire holding of the transferor in the consolidation area or only a part thereof. If the Deputy Director of Consolidation finds that the permission of the consolidation authorities was required to execute the sale deed, he shall ascertain whether such permission was obtained or not because from the order passed by the Consolidation Officer it appears that the permission was obtained.

It is expected that fresh decision shall be taken expeditiously, preferably, within a period of three months from the date of production of certified copy of this order before the Deputy Director of Consolidation. Needless to add that the Deputy Director of Consolidation shall give opportunity of hearing to the parties concerned and, in case required, may take fresh evidence from the parties.

The petition stands partly allowed to the extent indicated above.

Order Date :- 15.11.2017

AKShukla/-