PETITIONER:
PIAREY LAL
Vs.
RESPONDENT:
HORI LAL
DATE OF JUDGMENT07/02/1977
BENCH:
SHINGAL, P.N.
GOSWAMI, P.K.
CITATION:
1977 AIR 1226 1977 SCR (2) 915
1977 SCC (2) 221
ACT
U.P. Consolidation of Holdings Act, 1953, s.
30(b)--Whether agreement for sale creates liability for
tenure-holder "in" original holding for the purpose of
HEADNOTE
The appellant Piarey Lal had agreed to sell his original
holding to Hori Lal but later refused to do so on the ground
that his property which was the subject matter of the con-
tract had been consolidated under the U.P. Consolidation of
Holdings Act, 1953, and it was impossible to perform the
agreement. Hori Lal filed a suit for specific performance
contending that the agreement for sale had created a liabil-
ity for Piarey Lal for the purpose of section 30(b) of the
Act, and the same was transferred to the new plot or "chak"
allotted to him as a result of the consolidation. The suit
was decreed by the Trial Court and Piarey Lal’s appeals
before the District Court and the High Court were dismissed.
Allowing the appeal by Special Leave the Court,
HELD: By virtue of s. 54 of the Transfer of Property
Act, the agreement for sale did not give rise to any inter-
est "in" the original holding of the defendant as the ten-
ure-holder. There could thus be no occasion for the
transfer of any such ,’liability" in his new land or "chak"
so as to attract clause (b) Of s. 30 of the Act. When he
lost that property as a result of the scheme of consolida-
tion, the agreement for sale became void. [918 C-E]
Sagna & Anr. v. Kali Ram & Ors. 1966 A.L.J. 1004, approved.
Shanti Prasad v. Akhtar & Anr. 1972 A.L.J. 549 and
Chettan Singh & Ors. v. Hira Singh & Ors. 1969 A.L.J. 189.
overruled.
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1252 of
1976.
Appeal by special Leave from the Judgment and Order
dated 13-8-1975 of the Allahabad High Court in Second Appeal
No. 179/ 75.
K. Gupta, for the Appellant.
S.T. Desai and R.B. Datar for the Respondent. The Judgment
of the Court was delivered by.
SHINGHAL, J.--This appeal, by special leave, is directed
against the summary dismissal of defendant Piarey Lal’s
second appeal on August 13, 1975. As the leave has been
limited to the question of interpretation of clauses (a) and
(b) of section 30 of the U.P. Consolidation of Holdings Act,
1953, (hereinafter referred to as the Act), "for the pur-
pose of deciding whether the liability of the petitioner to
specifically perform the contract of sale of the old hold-
ing was transferred to the new ’chak’ allotted to him on
consolidation," it will be enough to state the facts which
bear on it.
916
Respondent Hori Lal raised the suit for specific per-
formance of an agreement dated March 6, 1966, for the sale
of six plote of land measuring nine high and six biswas in
village Hathiawali, Tehsil Gannaur. It was alleged in the
plaint that Rs. 3000/- were paid by the plaintiff Hori Lal
in advance, and the balance of Rs. 2000/was to be paid at
the time of the execution of the sale deed, within one year
of the agreement. It was also pleaded that as defendant
Piarey Lal refused to execute the’ sale deed, the plaintiff
was driven to the necessity of filing the suit for specific
performance of the agreement for sale and, in the alterna-
tive, for the recovery of Rs. 3000/which had been paid as
advance. Defendant Piarey Lal denied the execution of the
agreement for sale and the receipt of Rs. 3,000/-, and
pleaded that as new plots had been allotted as a result of
the consolidation of his holding under the Act, he could not
perform the agreement for sale. The trial court framed
issues, inter alia, on questions relating to the execution
of the agreement for sale, payment of Rs. 3000/- to the
defendant, and the inability of the defendant to perform
the contract. That court held that the plaintiff had proved
the agreement for sale and the payment of Rs. 3000/’-. It
also held that the agreement for sale could be "enforced for
plots allotted to the defendant in lieu of plot mentioned in
the agreement in consolidation." It therefore decreed the
suit for specific performance by its judgment dated August
23, 1973. The Second Additional District Judge, Badaun,
upheld the decree, and as the High Court has dismissed the
second appeal as aforesaid, defendant Piarey Lal has come to
this Court for a redress of his grievance by special leave.
As has been stated, the limited question for considera-
tion in this Court is whether the defendant was liable to
specifically perform the contract for sale of his old hold-
ing even after its consolidation and the allotment of a
’chak’ ? It appears that there was controversy in the
Allahabad High Court on the question whether an agreement
for sale, in the circumstances of a case like this, was
rendered void under section 56 of the Contract Act because
of the order of consolidation allotting new plots for the
earlier plots in respect of which the agreement for sale had
been executed. A Single Judge of that Court took the view
in Sugna and another v. Kali Ram and others(1) that the
agreement became void and impossible of performance, and was
not saved by section 30 of the Act. A different view was
however taken by another Single Judge in Chetan Singh and
others v. Hira Singh and others(1). The matter was re-
ferred to a Division Bench in Shanti Prasad v. Akhtar and
another.(2) One of the Judges in the Division Bench was the
Judge who had given the decision in Chetan Singh’s case.
The Bench held that the duty of the seller to execute the
conveyance of the property agreed to be sold, was a liabil-
ity recognised by law and was enforceable as the liability
"relates to the land mentioned in the agreement" and was
"transferred to the new ’chak’" under section 30(b) of the
Act. The decision in Shanti Prasad’s case formed the
basis of the decision of the first appellate
(1) 1966 A..L.J. 1004.
(2) 1969 A.L.J. 189.
(3) 1972 A.L.J. 549.
917
court in this case, and that appears to be the reason why
the High Court has dismissed the second appeal summarily.
The controversy therefore turns on the proper interpretation
of section 30 of the Act which deals with the consequences
which ensue on exchange of possession as a result of the
allotment of a ’chak’ to the tenure-holder.
Clauses (a) and (b) of section 30 of the Act provide
as follows,--
"30. Consequences which shall ensue on exchange of
possession.--With effect from the date on which a tenure-
holder enters, or is deemed to have entered into possession
of the chak allotted to him, in accordance with the provi-
sions of this Act, the following consequences shall ensue--
(a) the rights, title, interests and liabili-
ties--
(i) of the tensure-holder entering, or
deemed to have entered, into possession, and
(ii) of the former tenure-holder of the
plots comprising the chak, in their respective
original holdings shall cease; and
(b) the tenure-holder entering into pos-
session, or deemed to have entered into pos-
session, shall have in his chak the same
rights, title, interests and liabilities as he
had in the original holdings together with
such other benefits of irrigation from a
private source, till such source exists, as
the former tenure-holder of the plots compris-
ing the chak had in regard to them."
It would thus appear that while clause (a) deals with the
rights, title, interests and liabilities of the tenure-
holder entering into possession of the ’chak’, as well as
of the former tenure-holder of the plots comprising the
’chak’, in their respective original holdings, and provides
that those rights, title, interests and liabilities. shall
"cease", clause (b) provides that the tenure-holder entering
into possession of the ’chak’ shall have, in that ’chak’,
the same rights, title, interests and liabilities "as he had
in the original holdings." The expression ’chak’ has been
defined in section 3(1-A) of the Act to mean "the parcel of
land allotted to a tenure-holder on consolidation." The two
clauses therefore are quite simple and clear, and’ do not
raise any real problems of interpretation, but the question
is whether there is justification for the argument, in the
facts and circumstances of this case, that the expression
"liabilities" would cover the liability of the seller (i.e.
the defendant), under the aforesaid agreement for the sale
of his original holding ?
As is obvious, clause (a) of section 30 does not bear on
the question in controversy because it only provides for the
cessation of the rights, title, interests and liabilities
both of the tenure-holder to whom the ’chak’ has been allot-
ted, and of the former tenure-holder
918
of the plots comprising the ’chak’ in their respective
original holdings". There is no controversy that this was
so in the present case. It is also no body’s case that the
rights, title, and interests of the tenure-holder entering
into possession of his ’chak’ have any bearing on the con-
troversy relating to the specified performance of the agree-
ment for sale, for all that has been urged before us is that
the defendant, as the tenure-holder of the new holding or
’chak’ had the same "liabilities" in that ’chak’ as he had
in the original holding.What therefore remains for consider-
ation is whether, on the defendant’s entering into posses-
sion of his new land or ’chak’, there was the same liability
"in" the new land as "in" the original holding. It there-
fore to be examined whether, by virtue of the agreement for
sale, any liability accrued "in" the original holding ?
A cross-reference to section 54 of the Transfer of
Property Act shows that a contract for the sale of immovable
property is a contract that a sale of such property shall
take place on terms settled between the parties. It has
however been specifically provided in’ the section that such
a contract "does not, of itself, create any interest in or
charge on such property." It would therefore follow that
the agreement for Sale in the present case did not give rise
to any interest "in" the original holding of the defendant
as the tenure-holder. That being so, there could be no
occasion for the transfer of any such "liability in" the new
land or ’chak’ of the defendant so aS to attract clause (b)
of section 30 of the Act. In fact what the defendant, was
bound to do under section 55(1)(d) of the Transfer’ of
Property Act was to execute a proper conveyance of "the
property" which was the subject matter of the contract for
sale, and not of any other property. So when he lost that
property as a result of the scheme of consolidation and his
rights, title, interests ceased in that property by virtue
of clause (a) of section 30 of the Act, the agreement for
sale became void within the meaning of section 56 of the
Contract Act, and it is futile to urge that they were saved
by clause (a) or clause (b) of section 30 of the Act.
We have gone through the decision in Shanti Prasad’s
case (supra), but we find that while the High Court took
note of the fact that the right’s, title, interests and
liabilities of the tenure-holder "in" his original holdings
ceased, and he acquired the same rights, title, interests
and liabilities "in" the ’chak’ allotted to him, it lost
sight of the significance of the word "in", and the afore-
said provisions of section 54 of the Transfer of Property
Act, and disposed of the controversy before it by raising
the other question whether "the tenureholder" was subject to
any liability "in respect of" his old holding. That was why
it fell into the error of holding that a liability was
created in the original holding of the defendant, and was
transferred his ’chak’ on his entering into its possession.
As has been shown, that was an erroneous view which has to
be rectified.
It may be mentioned that counsel for the respondent
tried to argue that the defendant was bound to execute a
proper conveyance of his original holding, which was the
subject matter of the agreement of sale, because, that
holding had been substituted" by the ’chak’.
919
He also tried to argue that the ’chak’ allotted to the
defendant by way of consolidation of his holding was the
same as his original holding so that there was no occasion
to invoke section 30 of the Act. Counsel could not however
support his argument by reference to the law, or the facts
of the case. Moreover he was unable to show how he could
raise any such argument when the special leave had been
limited to the interpretation of clauses (a) and (b) of
section 30 of the Act.
It would thus appear that the plaintiff respondent’s
suit for specific performance of the agreement for sale was
liable to dismissal, and the High Court as well as the
courts below erred in taking a contrary view. Counsel for
the appellant has however frankly stated at the bar that the
appellant would be willing to refund the sum of Rs.
3000/- along with interest at 6 per cent per annum from the
date of payment.
The appeal is allowed with costs, the impugned judgment
of the High Court is set aside, and the suit of plaintiff-
respondent Hori Lal is dismissed in so far as it relates to
specific performance of the agreement for sale. It is
however ordered that the defendant shall repay Rs. 3000/- to
the plaintiff, along with interest at 6 per cent per annum
from the date of payment, within three months from today.
M.R. Appeal al-
lowed.
920