G.T. Girish Vs Y. Subba Raju (D) By LRs (Supreme Court of India)
1. Leave granted.
2. The appellants are defendant 1(a), defendant 1(b) and second defendant in a Suit filed for specific performance. Defendant 1(a) and Defendant 1(b) have filed SLP(C)No.6858/2017 while defendant No.2 has filed SLP(C)No.6857/2017. The Trial Court while refusing specific performance, directed the return of the amount paid by the plaintiff under the contract. By the impugned judgment, the High Court allowed the plaintiffs appeal and directed the appellants to execute the sale deed relating to the plaint schedule property in favour of the plaintiffs (legal representatives of original plaintiff). The parties will be hereinafter referred to by their status in the Trial Court.
A BRIEF OVERVIEW OF FACTS
3. On 04.04.1979, the plaint schedule property, which consisted of a site, was allotted to the first defendant (since deceased), by the Bangalore Development Authority (hereinafter referred to as, ‘the BDA’). Based on the allotment, a lease-cum-sale agreement was entered into between the BDA and the first defendant on 04.04.1979. The first defendant was put in possession on 14.05.1979. On 17.11.1982, the first defendant entered into the agreement with the plaintiff agreeing to execute the sale deed of the site within three months from the date on which, the plaintiff obtained the sale deed from the BDA. On 01.03.1983 and 26.04.1984, the plaintiff issued letters to the first defendant, calling upon her to execute the sale deed. The first defendant issued letter dated 08.05.1984, intimating that the plaintiff was in breach. The agreement itself had lapsed and the advance amount by the plaintiff was forfeited. After issuing Notice on 14.02.1985, the plaintiff instituted the Suit in question, seeking specific performance. The first defendant, after filing Written Statement on 14.08.1986, died pending the Suit, on 18.07.1994. The plaintiff impleaded the husband of the defendant as Defendant-1(a). A sale deed came to be executed by the BDA in favour of the son of defendant no.1 and defendant-1(a), on 19.06.1996. Thereafter, the son executed sale deed of the plaint schedule property in favour of the second defendant. It is further not in dispute that the son of the first defendant and defendant-1(a) was impleaded as defendant-1(b) in the Suit in the year 1997. The second defendant came to be impleaded as second defendant in the Suit in the year 1997. Both the defendant-1(b) and second defendant filed Written Statements.
4. The Trial Court did not decree the suit for specific performance but directed return of Rs.50,000/-with 9 per cent interest. The High Court found that the Suit is maintainable. It was further found that the second defendant is not a bonafide purchaser for value without notice of the Agreement to Sell dated 17.11.1982. It was further found by the High Court that, the alienation made in favour of the second defendant, was hit by the provisions of Section 52 of the Transfer of Property Act, 1882. Answering the point, whether the plaintiff was entitled to the relief of specific performance, it was found that, in the facts, when the entire sale consideration was paid by the plaintiff to the first defendant, nothing more remained to be done by the plaintiff, and having found that the second defendant was not a bonafide purchaser for value without notice, and taking the view that Section 23 of the Specific Relief Act, 1963 did not apply at all and there being no reason to not exercise discretion in favour of the plaintiff, the Suit was decreed by directing defendant-1(a), defendant-1(b) and the second defendant to jointly convey the plaint schedule property to the plaintiff.
5. We heard Smt. Kiran Suri, learned Senior Counsel on behalf of the second defendant and Shri R. Basant, learned Senior Counsel on behalf of the plaintiff. Mrs. Kirti Renu Mishra, AOR, appears in the Appeal filed by defendant-1(a) and defendant 1(b).
THE CONTENTIONS OF THE APPELLANTS
6. Smt. Kiran Suri, learned senior counsel appearing on behalf of second defendant contended that the finding that the Suit was maintainable, was unsustainable. She contended that an agreement must be lawful, in order that a court may grant specific relief. It’s her contention that the agreement is unlawful, being opposed to public policy, and also as it was a bargain, which would defeat the provisions of the law in question, within the meaning of Section 23 of the Indian Contract Act, 1872. She invited our attention to the terms of the lease-cum-sale agreement entered into between the first defendant and the BDA. She pointed out that there was clear prohibition against the alienation of the site or the plaint schedule property for a period of ten years. She drew support from the Bangalore Rules of Allotment, 1972 (hereinafter referred to as, ‘the Rules’). She pointed out that the court has erred in not noticing that Rule 18(2) proclaims an embargo against alienation for a period of ten years. The very agreement relied upon by the plaintiff was unlawful, and therefore, the court could not have granted specific performance. She drew support from Judgment of this Court in Kedar Nath Motani and others v. Prahlad Rai and others1 and Narayanamma and another v. Govindappa and others2. She further contended that the Suit itself, besides being not maintainable, was premature. She elaborated and contended that, what the agreement between the plaintiff and the first defendant contemplated, was that, the first defendant would execute the sale deed in favour of the plaintiff upon the expiry of three months from the date of conveyance of sale deed executed by the BDA. The agreement of lease-cum-sale contemplated such a conveyance in favour of the first defendant only after the expiry of ten years from the date of allotment and the date of the lease-cum-sale agreement dated 04.04.1979. The Suit is filed a good four years prior to even the expiry of ten years. She attacked the finding of the High Court that the second defendant was not a bonafide purchaser for value. She pointed out that as far as knowledge of pendency of Suit is concerned, the evidence pointed to the second defendant not being aware of the Suit, defendant-1(b) has admitted to not disclosing about the pendency of the Suit to the second defendant. The second defendant inspected the site and found it to be a vacant land except for a small shed. Regarding the finding of the High Court that the original document, evidencing delivery of possession of the plaint schedule property by the BDA to the first defendant, was not given to the second defendant and that only a photocopy was given, it is contended that second defendant was informed that the original was lost. There was already an assignment in favour of defendant-1(b). There was no need for the second defendant to make any further inquiry. All possible inquiry was conducted by the second defendant. There is no justification for the High Court to conclude that second defendant was not a bonafide purchaser for value. As far as finding of the High Court that the second defendant, a 20-years old, at the time of the sale, did not have the wherewithal to purchase the property, it could not be justified, having regard to the evidence which established that the second defendant was the owner of 10 acres of land. He was into the business of selling milk and he had the necessary funds and there is no occasion for the High Court to interfere with the findings of the Trial Court in this regard.
7. Per contra, Shri R. Basant, learned Senior Counsel for the plaintiff, reminded us that matter is appreciated by the two courts. The finding that there was a valid contract by the Trial Court was not challenged by the appellants. There is no pleading to justify the argument that the agreement in question was not lawful. He would point out that neither the lease-cum-sale agreement nor the Rules, prohibited the allotee entering into an agreement to sell the site.
He pointed out that the Rule, which is relevant to the fact, is Rule 17. Even Rule 18, relied upon by the appellants, did not stand in the way of the agreement to sell or the sale in favour of the plaintiff. He also emphasised that it does not lie in the mouth of the appellants to invoke the proposition that agreement in question was unlawful. He pointed to the findings of the High Court that by his conduct there was complete absence of bonafides in the claim. He pointed out that as correctly found by the High Court, Doctrine of Lis Pendens, applies. He further submitted that, at any rate, if the court found that Lis Pendens did not apply, the fact that the second defendant has not been found to be a bonafide purchaser for value, was sufficient for this Court to decline to interfere, particularly, in a jurisdiction, which originates from the grant of Special Leave under Article 136 of the Constitution of India. He would refute the contention that the suit was not maintainable and further that it was premature. He would point out that confronted with the definite stand of the first defendant, who he points out was the wife of an MLA and also a Minister, and having regard to Article 54 of the Limitation Act, 1963, had no choice, except to rush to the civil court and institute the Suit. He would rely upon large body of case law, including judgments of the High Court of Karnataka, to contend that an agreement to sell, in circumstances, such as obtaining in the present case, was valid and lawful. He would command for our acceptance, the findings of the High Court regarding the fact that second defendant was not a bonafide purchaser for value. He did not have the necessary capacity and he was fully aware of the pendency of the Suit.
THE LAW IN QUESTION
8. The City of Bangalore Improvement Act, 1945, going by the Preamble, was enacted for the improvement of the city of Bangalore and to provide space for its future expansion. It contemplated the appointment of a Board of Trustees, which was to consist of eleven Trustees with the Chairman and six Trustees being appointed by the Government. The Act clothed the Board with the power to undertake improvement schemes. What is of relevance to the present case are the following provisions:
9. Section 24 read as follows:
“24. Board not to sell or otherwise dispose of sites in certain cases.—The Board’ shall not sell or otherwise dispose of any sites for the purpose of constructing buildings thereon for the accommodation of person until all the improvements specified in Section 23 [have been substantially provided for the estimates.”
10. Section 29 dealt with the power of the Board to acquire, hold and dispose of the property and it reads as follows:
“29. Power of Board to acquire, hold and dispose of property.—(1) The Board shall, for the purposes of this Act, have power to acquire and hold movable and immovable property, whether within or outside the City.
(2) Subject to such restrictions, conditions and limitations as may be prescribed by rules made by the Government, the Board shall have power or lease, sell or otherwise transfer any movable or immovable property which belongs to it, and to appropriate or apply any land vested in or acquire by it for the formation of open spaces or for building purposes or in any other’ manner for the purpose of any improvement scheme.
(3) The restrictions, conditions and limitations contained in any grant or other transfer of any immovable property of any interest therein made by the Board shall notwithstanding anything contained in the Transfer of Property Act, 1882 (Central Act 4 of 1882) or any other law have effect according to their tenor.]”
11. Section 42 conferred power to make Rules. Following provisions are relevant for the purpose of this case:
“42. Power of Government to make rules.—The Government may, from time to time; make rules, not inconsistent with this Act. —
xxx xxx xxx
(aa) regulating the allotment or sale by auction of sites by Board;
(ab)specifying the conditions, restrictions and limitations subject to which the Board may sell, lease or otherwise transfer movable or immovable property;”
xxx xxx xxx
12. Initially, bylaws regulating the allotment of sites were published on 08.01.1954. These bylaws came to be cancelled upon enactment of City of Bangalore Allotment of Site Rules, 1964. Thereafter, the City of Bangalore Improvement Disposal of Site Rules, 1971 came to be enacted. The said Rules came to be repealed with the making of the City of Bangalore Improvement
Allotment of Site Rules, 1972. These Rules came into force on the 1st Day of September, 1972. These Rules are the Rules, which would govern the fate of this case.
13. Rule 2(b) defines the word ‘allottee’ as meaning the person to whom the site is allotted under these Rules. The Rules define backward class. It also, inter alia, defines stray site.
14. Rule 3 reads as follows:
“3. Offer of sites for allotment.—(1) Whenever the Board has formed an extension or layout in pursuance of any scheme, the Board may, subject to the general or special orders of the Government, offer any or all the sites in such extension or layout for allotment to persons eligible for allotment of sites under these rules.
(2) Due publicity shall be given in respect of the sites for allotment specifying their location, number, the amount payable as earnest money, the last date for submission of applications and , such other particulars as the Chairman may consider necessary; by affixing a notice to the notice board of the office of the Board, and any other office as the Chairman may decide from time to time and by publication in not less than three daily .newspapers published in the City of Bangalore in English and Kannada having a wide circulation in the city.”
15. Rule 5 dealt with the allotment of stray sites. Rules 6 contemplated disposal of sites for heritable purposes.
16. Rule 7 proclaimed that the allottee was to be lessee and it reads as follows:
“7. Allottee to be a lessee. —The site allotted under Rule 3 or Rule 5shall be deemed to have been leased to the allottee until the lease is determined or the site is conveyed in the name of the allottee in accordance with these rules. During the period of the lease, the allottee shall pay to the Board rent at the rate of rupees three per annum where the area of the site does not exceed two hundred square meters, rupees six per annum where the area of the site exceeds two hundred square meters but does not exceed five hundred square meters and rupees twelve per annum where the area of the site exceeds five hundred square meters before the commencement of each year.”
17. Rule 8 dealt with applications. It contemplated that the applications for allotment of site was to be in Form I. Several details are to be furnished. It included the annual income of the applicant, whether the applicant already owned a house or house site in the city, outside the city and whether he had any share in such property and the value of the share. It further included the query as to whether the applicant’s wife/husband/minor child, owned a house or house site inside or outside the city. Since, it may be relevant to the decision at hand, we may advert to the Form.
“FORM I
[See sub-rule (1) of Rule 8]
Form of Application for Purchase of Site
To
The Chairman,
City Improvement Trust Board,
Bangalore 20
Sir,
I wish to purchase a building site measuring ……… in ……Extension, Bangalore. I agree to abide by the conditions of allotment and sale of the site contained in Rule 17 of the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, and the terms of the lease-cum-sale agreement; copies of which are enclosed in duplicate. I also enclose the duplicate copies of the conditions of allotment and sale and lease-cum-sale agreement duly signed in token of having accepted the conditions therein.
Particulars about me are given below. —
1 . Name (in Block letters)
2. Father’s/Husband’s name
3. Age
4. Whether the applicant belongs to 15
Scheduled Caste or Scheduled Tribe, Nomadic Tribes, Semi-Nomadic Tribes, Backward Classes, Denotified Tribes.
5. Whether married or single
6. (a) Residential address: Permanent (House No., Name of street, locality and Town):
(b) Present address: (if different from above) for correspondence with the Board.
7. (i) Occupation or post.
(ii) Address
(iii) Place of employment or business.
8. (a) Annual income of the applicant (both from profession and from properties if any)
(b) Any other means indicating the capacity of the applicant to purchase the site applied for and to building a house thereon.
9. Whether the applicant is ordinarily a resident in Bangalore City or in the area under the jurisdiction of the Board and the period of such residence.
10. Whether any member of the family of which the applicant is a member owns or has been allotted site or a house by the Board or any other authority, within the area under the jurisdiction of the Board. (Furnish details).
11. (1) Whether the applicant already owns a house or a house-site:
(a) in the City (with details)
(b) outside the city (with details)
(2) Whether he/she has any share in such property and the value of the share thereof.
12. (1) Whether the applicant’s wife/ husband/minor child owns a house or a house-site:
(a) in the City (with details)
(b) outside the city (with details)
(2) Whether the applicant’s wife/husband/minor child has any share in such property and the value o1 the share thereof.
13. Whether the applicant has transferred the ownership or rights in the house or house-site already allotted to him/her in any of the schemes of the Board or any other authority to somebody else (if so, himish details).
14. Whether the applicant or any members or his/her family has already availed of any housing or loan scheme of Government local body or Co-operative Society, if so, give details.
15. Whether the applicants applied for allotment of a site or a site with a building, in any of the scheme of the Board or and other authority and whether his/her deposit was refund (if so, furnish details).
16. Amount of earnest money deposited now (with Challan No. and date).
I hereby solemnly declare that all the above information given by me is true. I shall furnish any additional information in my possession which you may require. If there is any delay on my part to furnish the necessary information required by the Board, it will be within the discretion of the Board to reject my application.
If, at any time it is found that the information given by me above is incorrect, the Board can cancel the allotment, resume possession of the site and forfeit part or whole of the amount paid by me till then towards cost of the site or deposit.
I am aware that under the Rules, I have to build the house myself with my own resources.
Signature of Applicant
Station ……..
Date ……….
Attested
Magistrate of the First Class
Date….. ”
18. Rule 10 dealt with the issue of eligibility for allotment and it reads as follows:
“10. Eligibility for allotment. —No person.
(1) Nho.is not ordinarily resident (living independently or with his family members).in the area within the jurisdiction of the Board for not less than five years immediately before the last date fixed for making applications:
Provided that the persons who are domiciled in the State of Karnataka but serving in the Armed Forces of the Union outside the State of Karnataka shall be eligible for allotment of Sites under these rules.
(2) Who or any member of whose family owns or is a lessee entitled to demand conveyance eventually or has been allotted a site or a house by the Board or any other authority, within the area under the jurisdiction of the Board; or of the Corporation of the City of Bangalore, shall be eligible to apply for allotment of a site:
Provided that the Board may relax the restriction in c1ause (1) regarding residence in the case of persons. —
(i) who are domiciled in the State of Mysore and who bona fide intend to reside within the area under the jurisdiction o/ the Board; or,
(ii) who are domiciled.in the State of Mysore but have gone outside the State on business, employment, study or training and who bona fide intend to reside within the area under the jurisdiction of the board;
(iii) who though not domiciled in the State of Mysore bona fide intend to reside within the area under the jurisdiction of the Board.”
19. Rule 11 provided for the principles for selection of applicants for allotment of sites. The following principles have been set out in Rule 11(1):
“11. Principles for selection of applicants for allotment of sites. —(1) The Board shall consider the case of each applicant on its merits and shall have regard to the following principles in making selection. —
(i) the status of the applicant, that is whether he is married or single and has dependent children;
(ii) the income of the applicant and his capacity to purchase a site and build a house thereon for his residence:
Provided that this condition shall not be considered in case of applicants belonging to Scheduled Castes, Scheduled Tribes, Wandering Tribes, Nomadic Tribes and other Backward Classes.
(iii) the number of years the applicant has been waiting for allotment of a site and the fact that he did not secure a site earlier though he is eligible and had applied for a site;
(iv) persons who are ex-servicemen or members of the family of the deceased servicemen killed in action, during the last ten years.”
20. The sites were to be allotted among different classes of persons which included wandering tribes, scheduled tribes, scheduled castes, ex-servicemen, persons domiciled in Karnataka but serving in the Armed Forces of the Union outside the State, State Government servants, Central Government servants and servants of Corporation. 51 per cent was reserved, in other words, in specific percentage terms for these categories. 49 per cent was made available for the general public. Non-availability of applicants was also dealt with.
21. Rule 13 provided for selection of an applicant. The Board was empowered to reject any application without assigning any reason.
22. Rule 17 provides for conditions of allotment. Since, much turns on the impact of this Rule, we would refer to the same.
“17. Conditions of allotment and sale of site. – The allotment of a site under these rules shall be subject to the following conditions. —
(1) The allottee shall within a period of fifteen days from the date of receipt of the notice of allotment, pay to the Board twelve and a half per cent of the price of the site and if no such payment is made the allottee shall be deemed to have declined the allotment.
(2) The balance of the value of the site (less than a sum of rupees thirty where the area of the site does not exceed two hundred square meters, rupees sixty where the area exceeds two hundred square meters and does not exceed five hundred square meters and rupees one hundred and twenty where the area exceeds five hundred square meters) shall be paid within ninety days from the date of receipt of the notice of allotment, or such extended period not exceeding one year as the Chairman may specify. Interest at [fifteen per cent]] shall be paid on the said amount for the extended period. If the said amount is not paid within the period of ninety days or the extended period the earnest money paid by the allottee shall be liable to forfeiture and the allotment may be cancelled: [Provided that where an allottee is a person. —
(I) whose annual income does not exceed [three thousand and six hundred rupees], he may choose to pay the balance value of the site in quarterly, half yearly or annual installments and the rate of interest on the said amount for the extended period for quarterly payment will be two per cent for half yearly payments will be three per cent and annual payments four per cent;
(II) whose annual income exceeds [three thousand and six hundred rupees] but does not exceed seven thousand and two hundred rupees interest at twelve per cent per annum shall be paid on the said amount for de extended period:
Provided further that where an allottee is a person belonging to a Scheduled Caste or Scheduled Tribe or other Backward Classes or a nomadic tribe or a wandering tribe, or a denotified tribe or a family of Defence personnel killed or disabled during the recent war and whose annual income from all sources does not exceed rupees five thousand, the balance of the value of the site required to be paid under this sub-rule shall be paid by him without interest within a period of six years from the date of receipt of the notice of allotment.]
(3) Until the site is conveyed to the allottee the amount paid by the allottee for the purchase of the site shall be held by the Board as security deposit for the due performance of the terms and conditions of the allotment and the lease-cum-sale agreement entered into between the Board and the allottee.
(4) After payment under sub-rule (2) is made the Board shall intimate the allottee the actual measurements of the site and the particulars thereof and a lease-cum-sale agreement in Form II shall thereafter be executed by the allottee and the Board and registered by the allottee. If the agreement is not executed within forty-five days after the Board has intimated the actual measurements and particulars of the site to the allottee, the earnest money paid by the allottee may be forfeited, the allotment of the site may be cancelled, and the amount paid by the allottee after deducting the earnest money refunded to him. Every allottee shall construct a building on the site in accordance with the plans and designs approved by the Board. If in any case it is considered necessary to add any additional conditions in the agreement the Board may make such additions. Approval of the City of Bangalore Municipal Corporation for the plans and designs shall be necessary when the layout in which the site is situated is transferred to the control of the said Corporation.
(5) The allottee shall comply with the conditions of the agreement executed by him and the buildings and other bye-laws of the Board or the Corporation, as the case may be, for the time being in force.
(6) The allottee shall construct a building within a period of two years from the date of execution of the agreement or such extended period ‘[as the Chairman may] in any specified case by written order permit. If the building is not constructed within the said period the allotment may, after reasonable notice to the allottee, be cancelled, the agreement revoked, the lease determined and the allottee evicted from the site by the Board, and after forfeiting twelve and a half per cent of the value of the site paid by the allottee, the Board shall refund the balance to the allottee.
(7) (a) On the expiry of the period of ten years and if the allotment has not been cancelled or the lease has not been determined in accordance with these brutes or the terms of the agreement in the meanwhile the Board shall by notice call upon the allottee to get the sale deed of tire site executed at his own cost within the time specified in the said notice.
(b) If the allottee fails to get the sale deed executed within the time so specified the Board shall itself execute the same and recover the cost and other charges, if any, incidental thereto from the allottee as if the same are amount due to the Board.]
(8) The allottee shall ordinarily reside or himself make use of the building constructed on the site allotted to him.
(9) With effect from the date of taking possession of the site the allottee or his heirs and successors shall be liable to pay the taxes, fees and cesses payable in respect of the site and any building erected thereon.
If the particulars furnished by the applicant in the prescribed application form for allotment of site are found incorrect or false subsequently, twelve and half per cent of the site value, shall be forfeited after the site is resumed by the Board and the balance amount of site value refunded to the applicant.”
23. Rule 18, likewise, speaks about restrictions, conditions and limitations on sale of sites and we refer to the same:
“18. Restrictions, conditions and limitation on sales of sites.—(1) Notwithstanding’ anything contained in. —
(i) these rules or any other rules, bye-laws or orders governing the allotment, grant or sale of sites by the Board for construction of buildings; or
(ii) any instrument executed in respect of any site allotted, granted or sold by the Board for construction of buildings, the Chairman may at the request of the allottee grantee or purchaser of a site, execute a deed of conveyance subject to the restrictions, conditions and limitations specified in sub-rule (2).
(2) The conveyance by the Chairman of a site in favour of an allottee, grantee or purchaser of a site (hereinafter referred to as “the purchaser”) shall be subject to the following restrictions, conditions and limitations, namely.—
(a) .in the case of a site on which a building has not been constructed. —
(i) the purchaser shall construct a building on the site within such period as may be specified by the Board, as per plans, designs and conditions to be approved by the Board or in conformity with the provisions of the City of Bangalore Municipal Corporation Act, 1949 and the Bye-laws made thereunder;
(ii) the purchaser shall not without the approval of the Board, construct on the site any building other than a building for the construction of which the site was allotted, granted or sold;
(iii) the purchaser shall not alienate the site within a period of ten years from the date of allotment except by mortgage in favour of the Government of India, the Government of Mysore, the Life Insurance Corporation of India or the Mysore Housing Board, or any 1[any company or Co-operative Society approved by the Board] or any Corporation set up, owned or controlled by the State Government or the Central Government to secure moneys advanced by such Government, 2[Corporation, Board, CompanyJ, Society or Corporations, as the case may be, for the construction of the building on the site;
(b) in the case of a site on which a building has been constructed, the purchaser shall not alienate the site and the building constructed thereon within a period of ten years from the date of allotment, except. —
(i) by mortgage in favour of the Government of India, the Government of Mysore, the Life Insurance Corporation of India or the Mysore Housing Board or any Co-operative Society approved by the Board to secure moneys advanced by such Government, 3[Corporation, Board, Company] or Society for the construction of the building on the site; or
(ii) with the previous approval of the Board;
(c) in the event of the purchaser committing breach of any of the conditions in clause (a) or clause (b), the Board may at any time, after giving the purchaser reasonable notice, resume the site free from all encumbrances. The purchaser may remove all things which he has attached to the earth:
‘Provided he leaves the site in the state in which he received it. All transaction entered into in contravention of the conditions specified in clauses (a) and (b) shall be null and void ab initio.
‘Explanation. — In this rule, references to the Board shall be deemed to include the Chairman when authorised by the Board by a general resolution to exercise any power vested in the Board.
1[(3) Notwithstanding anything in sub-rule (2), but without prejudice to the provisions of Rule 17 where the lessee applies that for reasons beyond his control he is unable to reside in the City of Bangalore or by reasons of his insolvency or impecuniosity it is necessary for him to sell the site or site and the building, if any, he may have put up thereon, the Bangalore Development Authority may, with the previous approval of the State Government, either. —
(a) require him to surrender the site, where there is no building, in its favour; or
(b) where there is a building put up, permit him to sell the vacant site and building:
Provided that. —
(I) in case covered by clause (a), the Bangalore Development Authority shall pay to the lessee the allotted value of the site and an, additional sum equal to the amount of interest at twelve per cent per annum thereon; and
in case covered by clause (b), the lessee shall pay to the Bangalore Development Authority a sum equal to the amount of interest at twelve per cent per annum on the allotted value of the site.]”
24. Rule 19 dealt with voluntary surrender and it read as follows:
“19. Voluntary surrender. — An allottee may at any time after allotment, surrender the site allotted to him to the Board. On such surrender the Board shall refund all amounts paid by the allottee to the Board in respect of the said site.”
25. The Rules did not apply to disposal of corner sites and commercial sites.+
26. We may notice in fact that the City of Bangalore Improvement Act, 1945 came to be repealed by the Bangalore Development Authority Act, 1976. There were certain amendments carried out to the 1972 Rules which need not detain us.
THE PURPORT OF THE ABOVE LAW
27. It is clear that what is involved is the allotment of public property. The allottee was to be a lessee. The allottee, during the period of lease, was to pay rent, as provided in Rule 7. Allotment was premised on selection being carried out based on principles for selection, as provided in Rule 11 and to be carried by the Allotment Committee under Rule 12. The value of the site is fixed. This is clear from Rule 17(1). The allottee was to pay 12 1/2 per cent of the price of the site within 15 days of the receipt of notice of allotment. Within 90 days from the date of receipt of notice of allotment or extended period not exceeding one year, which may be fixed by the Chairman, the balance had to be paid. Non-payment attracted interest for the extended period. If the amount was not paid within 90 days or the extended period, earnest money was liable to be forfeited and the allotment may be cancelled. The two provisos of Rule 17 provided for certain concessions to certain categories. The amount, which was paid by the allottee, formed the security deposit for the due performance of the obligation, under the lease-cum-sale agreement between the Board and the allottee. This was to be so till the conveyance was executed regarding the site to the allottee. A lease-cum-sale agreement in Form 2 was to be entered into by the allottee. Every allottee was mandated to construct a building, which, we may clarify was to be a residential building, on the site in accordance with plan approved by the Board. The allottee was to comply with the conditions in the agreement. Rule 17(6) fixed the period of two years from the date of execution of the lease-cum-sale agreement or such extended period, within which the building had to be put up. Till 29.05.1980, the power to extend the period was vested with the Board. After 29.05.1980 the power to extend by a written Order was vested with the Chairman. If the building was not constructed within the period of two years or extended period, the allotment could be cancelled and the agreement revoked, the lease determined and the allottee evicted from the site by the Board. Such action was to be preceded by according a reasonable notice to the allottee against the proposed action. In the event of such action being taken, the allottee was entitled to the refund of the amount after forfeiting 12 1/2 per cent of the value. It is under Rule 17(7)(a) that on expiry of 10 years of the allotment, the time arrived for conveying the rights over the site. When 10 years expired, if the allotment had not been cancelled or lease determined, in accordance with the Rules or in terms of the agreement, the Board, after issuing a notice to the allottee, calls upon the allottee to execute the sale deed at his cost. If the allottee failed to get the sale deed executed, the Board was to execute the sale deed and recover the cost.
28. Now, the time is ripe to advert to the statutory lease-cum-sale agreement referred to in Rule 17(4). It is in Form II and much turns on its terms and we advert to the same, which has been, admittedly, entered into by the first defendant with the BDA.
“FORM II
[See Rule 17(4)]
Lease-cum-sale agreement
An agreement made this . . . . . . . . . . . . . . . day of …………………………………….. 197.. , between the City of Bangalore Improvement Trust Board, Bangalore, (hereinafter called the “Lessor/ Vendor”) which term shall wherever the context so permits, mean and include its successors in interest and assigns of the ONE PART and …….. hereinafter called Lessee/Purchaser (which term shall wherever the context so permits mean and include his/her heirs, executors; administrators and legal representatives) of the OTHER PART; .
Whereas, the City of Bangalore Improvement Trust Board advertised for sale building sites in Extension;
And, whereas, one of such building site in Site No: .
more fully described in the Schedule hereunder and referred to as property;
And, whereas, there were negotiation between the Lessee/Purchaser on the one hand and the Lessor/Vendor on the other for allowing the Lessee/purchaser to occupy the property as Lessee until the payment in full of the price of the aforesaid site as might be fixed by the Lessor/Vendor as hereinafter provided;
And, whereas, the Lessor/Vendor agreed to do so subject to the terms and conditions specified in the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, and the terms and conditions hereinafter contained;
And, whereas, thus the Lessor/Vendor has agreed to lease the property and the Lessee/Purchaser has agreed to take it on lease subject to the terms and conditions specified in the said rules and the terms and conditions specified hereunder:
Now this Indenture Witnesseth
1…………………………………….. The Lessee/Purchaser is hereby put in possession of the property and the Lessee/Purchaser shall occupy the property as a tenant thereof for a period of ten years from (here enter the date of giving possession) or in the event of the lease being determined earlier till the date of such termination. The amount deposited by the Lessee/Purchaser towards the value of the property shall, during the period of tenancy, he held by the Lessor/Vendor as security deposit for the due performance of the terms and conditions of these presents.
2. ……………………………………………………………….. The lessee/purchaser shall pay a sum of rupees … per years as rent on or before ………………….. commencing from…..
3. The Lessee/Purchaser shall construct a building in the property as per plans, designs and conditions to be approved by the Lessee/Vendor and in conformity with the provisions of the City of Bangalore Municipal Corporations Act, 1949, and the bye-laws made thereunder within two years from the date of this agreement:
Provided that where the Lessor/Vendor for sufficient reasons extends in any particular case the time for construction of such building, the Lessee/Purchaser shall construct the building within such extended period.
4. The Lessee/Purchaser shall not sub-divide the property or construct more than one dwelling house on it.
The expression “dwelling house” means a building constructed to be used wholly for human habitation and shall not include any apartments to the building whether attached thereto or not, used as a shop or a building of ware-house or building in which manufactory operations are conducted by mechanical power or otherwise.
5. The Lessee/Purchaser shall not alienate the site or the building that may be constructed thereon during the period to the tenancy. The Lessor/Vendor may, however permit the mortgage of the right, title and interest of the Lessee/Purchaser in favour of the Government of Mysore, the Central Government or bodies corporate like the Mysore Housing Board or the Life Insurance Corporation of India, Housing Co-operative Societies or Banks to secure moneys advanced by such Governments or bodies for the construction of the building.
6. The Lessee/Purchaser agrees that the Lessor/Vendor may take over possession of the property with the structure thereon if there is any misrepresentation in the application for allotment of site.
7. The property shall not be put to any use except as a residential building without the consent in writing of Lessor/Vendor.
8. The Lessee/Purchaser shall be liable to pay all outgoings with reference to the property including taxes due to the Government and the Municipal Corporation of Bangalore.
9. On matters not specifically stipulated in these presents the Lessor/Vendor shall be entitled to give directions to the Lessee/Purchaser which the Lessee/Purchaser shall carry out and default in carrying out such directions will be a breach of conditions of these presents.
10.. In the event of the Lessee/Purchaser committing default in the payment of rent or committing breach of any of the conditions of this agreement or the provisions of the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, the Lessor/Vendor may determine the tenancy at any time after giving the Lessee/Purchaser fifteen days’ notice ending with the month of the tenancy, and take possession of the property. The Lessor/Vendor may also forfeit twelve and a half per cent of the amount treated as security deposit under Clause 1 of these presents.
11. At the end of ten years referred to in Clause 1 the total amount of rent paid by the lessee/purchaser for the period of the tenancy shall be adjusted towards the balance of the value of the property.
12. If the Lessee/Purchaser has performed all the conditions mentioned herein and committed no breach thereof the Lessor/Vendor shall at the end of ten years referred to in Clause 1, sell the property, to the Lessee/Purchaser and all attendant expenses in connection with such sale such as stamp duty, registration charges, etc., shall be borne by the Lessee/Purchaser.
13. The Lessee/Purchaser hereby also confirms that this agreement shall be subject to the terms and conditions specified in the City of Bangalore Improvement (Allotment of Sites) Rules, 1972, and agreed to by the Lessee/Purchaser in his/her application for allotment of the site.
14. In case the Lessee/Purchaser is evicted under Clause 9 he shall not be entitled to claim from the Lessor/Vendor and compensation towards the value of the improvements or the superstructure erected by him on the scheduled property by virtue of and in pursuance of these presents.
15. It is also agreed between the parties hereto that R s……… (Rupees……. ) in the hands of the Lessor/Vendor received by them from the Lessee/Purchaser shall be held by them as security for any loss or expense that the Lessor/Vendor may be put to in connection with any legal proceedings including eviction proceedings that may be, taken against the Lessee/Purchaser and ,all such expenses shall be appropriated by the Lessor/Vendor from and out of the moneys of the Lessee/Purchaser held in their hands.
THE SCHEDULE
Site No………………… formed by the City of Bangalore Improvement Trust Board in Block No. . . . . . . . . . . . . in the. ……………… Extension. Site bound on.—
East by:
West by:
North by:
South by:
and measuring east to west ……….. : ……………… north to south …… in all measuring … . square feet.
In witness whereof the parties have affixed their signatures to this agreement.
Chairman.
The City of Bangalore Improvement Trust Board.
Witnesses:
