Non saleable property can not be sold – Agreement of sale not enforceable = The trial court, upon appraisal of Exhibit P­1, i.e., the agreement to sell dated 15.05.1990, held that the suit property was granted in favour of the defendant and as per the grant certificate, there was a 15 years bar on alienation of the suit property. The period of the said bar was to expire on 13.10.1988. It was, therefore, held by the trial Judge that since the said agreement was executed during the non­alienation period of 15 years, the agreement was void and non­executable. It was held that since the said agreement was contrary to the statutory bar, it was void in law and as such the suit for specific performance of the contract was not maintainable.-the maxim in pari delicto potior est conditio defendentis et possidentis.- the agreement of sale was hit by Section 61 of the Reforms Act, had rightly dismissed the suit of the plaintiff.- held in Immani Appa Rao (supra), if the decree is granted in favour of the plaintiff on the basis of an illegal agreement which is hit by a statute, it will be rendering an active assistance of the court in enforcing an agreement which is contrary to law. As against this, if the balance is tilted towards the defendants, no doubt that they would stand benefited even in spite of their predecessor­in­title committing an illegality. However, what the court would be doing is only rendering an assistance which is purely of a passive character. As held by Gajendragadkar, J. in Immani Appa Rao (supra), the first course would be clearly and patently inconsistent with the 28 public interest whereas, the latter course is lesser injurious to public interest than the former.

1
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos. 7630­7631 OF 2019
(Arising out of S.L.P.(C) Nos. 29205­29206 of 2015)
SMT. NARAYANAMMA & ANR. Etc. Etc. …. APPELLANT(S)

VERSUS
SRI GOVINDAPPA & ORS. Etc. Etc. …. RESPONDENT(S)
J U D G M E N T
B.R. GAVAI, J.
Leave granted.

  1. The present appeals arise out of the common judgment
    and order passed by the Single Judge of the Karnataka High
    Court in Regular Second Appeal No. 1925 of 2008 and Regular
    Second Appeal No. 1834 of 2008 thereby dismissing both the
    appeals.
    2
  2. For the sake of convenience, the parties shall be
    referred hereinafter as per their status shown in the plaint
    before the trial court. The suit O.S. No. 93/1999 was filed by
    the plaintiff Govindappa, who is the son of Bale Krishnappa.
    Originally the suit property belonged to one Bale
    Venkataramanappa, who was the brother of Bale Krishnappa.
    Said Bale Venkataramanappa has entered into an agreement to
    sell with the plaintiff, specific performance of which is sought in
    the present suit. The son of the Bale Venkataramanappa, M.V.
    Nagaraj was defendant No. 1, who has been represented
    through Legal representatives in the appellate courts since
    deceased. The wife and daughter of Anjanappa, who was
    another son of Venkataramanappa are the defendant Nos. 2 & 3
    to the suit respectively. The daughter and wife of Bale
    Venkataramanappa are defendant Nos. 4 & 5 to the suit
    respectively. The R.S.A. No. 1925/2008 is filed by the original
    defendant Nos. 4 & 5, who are daughter and wife of Bale
    Venkataramanappa. The R.S.A. No. 1834/2008 has been filed
    by the legal representatives of the original defendant No. 1,
    M.V. Nagaraj and the original defendant Nos. 2 & 3, who are
    wife and daughter of Anjanappa. The suit was filed inter alia
    contending that the defendants did not come forward to execute
    3
    the sale deed in respect of the agreement to sell. After the
    notice was issued by the Civil Judge (Junior Division) & JMFC,
    Hoskote, the defendants appeared before the Court. However,
    they did not file the written statement. The power of attorney
    holder of the plaintiff is examined as PW­1. The plaintiff also
    examined two witnesses in support of his case, i.e., PW­2 and
    PW­3. He produced documentary evidence Exhibits P­1 to P­34
    in support of his case. The defendants did not cross­examine
    the plaintiff. The trial court, upon appraisal of Exhibit P­1, i.e.,
    the agreement to sell dated 15.05.1990, held that the suit
    property was granted in favour of the defendant and as per the
    grant certificate, there was a 15 years bar on alienation of the
    suit property. The period of the said bar was to expire on
    13.10.1988. It was, therefore, held by the trial Judge that since
    the said agreement was executed during the non­alienation
    period of 15 years, the agreement was void and non­executable.
    It was held that since the said agreement was contrary to the
    statutory bar, it was void in law and as such the suit for specific
    performance of the contract was not maintainable.
  3. Being aggrieved thereby, the plaintiff filed Regular Appeal
    No. 86 of 2004 before the Principal District & Session Judge,
    4
    Bangalore. Before the appellate court, though the defendants
    had put in their appearance, the Advocate did not appear to
    argue the matter. The first appellate court held that the father
    of Original defendant No. 1, namely, Bale Venkataramanappa,
    had mortgaged the suit property by a registered mortgage deed
    on 23.04.1990. It further held that on 15.05.1990 he had also
    entered into an agreement to sell with the plaintiff. It was
    further held that, the entire sum of Rs. 46,000/­ agreed to be
    paid to Bale Venkataramanappa was received by him. It was
    further found that the plaintiff had already been put in
    possession of the suit property. The first appellate court held
    that, the reasoning of the trial court that the non­alienation
    clause prohibits alienation was not apt. On this reasoning, the
    appeal was allowed.
  4. Being aggrieved by the judgment and order passed by the
    first appellate court, the original defendant Nos. 4 and 5 had
    filed Regular Second Appeal No. 1925 of 2008 whereas, legal
    representatives of defendant No. 1 and original defendant Nos. 2
    and 3 have filed Regular Second Appeal No. 1834 of 2008. Two
    points were raised before the High Court on behalf of the
    defendants. Firstly, that the suit which was filed in the year
    5
    1999 for specific performance of agreement to sell entered into
    on 15.05.1990 was beyond limitation. Secondly, that in view of
    provisions of Section 61 of the Karnataka Land Reforms Act,
    1961 (hereinafter referred to as “the Reforms Act”), the
    agreement was not enforceable. The High Court observed that,
    as a matter of fact, the trial court ought not to have framed
    such an issue. It further observed that, though in the suit for
    specific performance of contract it was necessary to frame the
    issue with regard to readiness and willingness of the plaintiff to
    perform his part of the contract along with other issues, neither
    the trial court nor the first appellate court had framed such an
    issue. According to the High Court, in the absence of the
    defendants neither filing the written statement nor contesting
    the suit, the finding as recorded by the first appellate court was
    correct in law. The High Court concurred with the finding of the
    first appellate court that since the entire amount was received
    by Bale Venkataramanappa, father of defendant No.1, and also
    from the recital of the agreement to sell, it was clear that the
    possession was also handed over. As such, the High Court held
    that the finding of the first appellate court was correct. Being
    aggrieved thereby, defendants have approached this Court.
    6
  5. Mr. Shailesh Madiyal, learned counsel appearing on
    behalf of the defendants (appellants herein), submitted that in
    view of the provisions of Section 61 of the Reforms Act, the
    predecessor­in­interest of the defendants, i.e., Bale
    Venkataramanappa could not have transferred the said land, as
    such, the agreement to sell was void in law and, therefore, not
    enforceable. He submitted that the finding as recorded by the
    trial Judge was correct in law, which ought not to have been
    interfered with by the first appellate court. It is further
    submitted that the High Court was also not correct in law in
    upholding the finding of the first appellate court.
  6. The original plaintiff (respondent(s) herein), on the
    contrary, submitted that the provisions of Section 61 of the
    Reforms Act would prohibit only the sale, gift, exchange,
    mortgage, lease or assignment and would not prohibit an
    agreement to sell. It is submitted that once the period of
    restriction of 15 years is over, the agreement to sell, though
    executed during the period of 15 years, becomes enforceable in
    law. It is submitted that, in the present case, Bale
    Venkataramanappa had received the entire consideration and
    had also handed over the possession as per the agreement to
    7
    sell. It is further submitted that, the pleadings in the plaint were
    not controverted by either filing written statement nor leading
    any evidence and in this view of the matter, the first appellate
    court and the High Court were justified in decreeing the suit.
  7. The facts in the present case are not in dispute. On
    20.10.1976, the suit property, i.e., 1 acre 6 guntas bearing
    Survey No. 57 situated at Mutkur Village, Angondanahalli Hobli,
    Hoskote Taluk, Bangalore District, was given as a grant in
    favour of Bale Venkataramanappa. The said grant was under
    the provisions of the Reforms Act. On 13.09.1983, the premium
    was paid by Bale Venkataramanappa and the grant was
    confirmed in his favour with a non­alienation clause of 15 years.
    On 15.09.1983, there was a mutation entry in the revenue
    records entering the name of said Bale Venkataramanappa with
    an endorsement that the land shall not be alienated for a period
    of 15 years. On 23.04.1990, Bale Venkataramanappa, by a
    registered mortgage deed, mortgaged the suit land in favour of
    the plaintiff for a sum of Rs. 20,000/­. The mortgage deed
    recites about the receipt of the entire mortgaged amount by Bale
    Venkataramanappa. Under the mortgage deed, Bale
    Venkataramanappa had agreed to repay the loan within a
    8
    period of one year. However, within a period of one month, Bale
    Venkataramanappa executed an agreement to sell dated
    15.05.1990 in favour of the plaintiff. The agreement to sell
    recites that he was in need of money for his legal necessities
    and to repay his hand loans and for his domestic needs and,
    therefore, he had agreed to sell the suit property for a sum of
    Rs. 46,000/­. He acknowledges the receipt of entire amount of
    consideration, i.e., Rs. 46,000/­. The recital in the agreement
    to sell reads that at the time of execution of the agreement, the
    possession of the suit property is handed over to the plaintiff.
    Further, the recital reads that the plaintiff shall take the
    consent of the officers of the Tribunal or the concerned officers
    at his own cost for transferring the property in the name of the
    plaintiff.
  8. It could thus be seen that, initially the property was
    mortgaged on 23.04.1990, and within a period of one month the
    agreement to sell is executed. At the time of the agreement
    itself, the entire consideration amount is said to have been
    received by Bale Venkataramanappa and also the possession is
    handed over to the plaintiff.
    9
  9. It appears, that there were also parallel proceedings
    before the revenue authorities. After the death of Bale
    Venkataramanappa, the plaintiff filed an application on
    12.05.1997 before the Tehsildar, Hoskote, for mutating his
    name in place of Bale Venkataramanappa. The Tehsildar,
    without any notice, carried out the mutation and entered the
    name of the plaintiff in the revenue records. The defendants
    challenged the same before the Assistant Commissioner,
    Doddabalapura Division. The said appeal was allowed on
    27.06.2008. Accordingly, the revenue records were corrected
    and the defendants’ names were entered on 24.10.2009. The
    said Order came to be challenged by the plaintiff before the High
    Court by way of Writ Petition Nos. 22243­22244 of 2011. The
    High Court vide Order dated 26.07.2011, dismissed the said
    petitions.
  10. The short question that arises for consideration in the
    present appeals is, as to whether the agreement to sell dated
    15.05.1990 executed by Bale Venkataramanappa in favour of
    the plaintiff would be enforceable in law or not.
    10
  11. For appreciating the said issue, it would be necessary
    to refer to Section 61 of the Reforms Act, which reads thus:
    “61. Restriction on transfer of land of which tenant has
    become occupant.—
    (1) Notwithstanding anything contained in any law, no
    land of which the occupancy has been granted to any
    person under this Chapter shall, within fifteen years
    from the date of the final order passed by the Tribunal
    under sub­section (4) or sub­section (5) or sub­section
    (5A) of section 48A be transferred by sale, gift,
    exchange, mortgage, lease or assignment; but the land
    may be partitioned among members of the holder’s
    joint family,
    (2) Notwithstanding anything contained in sub­section (1),
    it shall be lawful for the occupant registered as such or
    his successor­in­title to take a loan and mortgage or
    create a charge on his interest in the land in favour of
    the State Government, a financial institution, a cooperative land development bank, a co­operative
    society or a company as defined in Section 3 of the
    Companies Act, 1956 in which not less than fifty one
    per cent of the paid­up share capital is held by the
    State Government or a Corporation owned or
    controlled by the Central Government or the State
    Government or both for development of land or
    improvement of agricultural practices; or for raising
    educational loan to prosecute the higher studies of the
    children of such person and without prejudice to any
    other remedy provided by any law, in the event of his
    making default in payment of such loan in accordance
    with the terms and conditions on which such loan was
    granted, it shall be lawful to cause his interest in the
    land to be attached and sold and the proceeds to be
    utilised in the payment of such loan.
    Explanation. – For the purpose of this sub­section,
    “Higher Studies” means the further studies after Preuniversity Examination or 12th Standard Examination
    conducted by CBSE or ICSE or any Diploma courses.
    11
    (3) Any transfer or partition of land in contravention of
    Sub­section (1) shall be invalid and such land shall
    vest in the State Government free from all
    encumbrances and shall be disposed in accordance
    with the provisions of Section 77.”
  12. A perusal of the said provision would clearly show that,
    notwithstanding anything contained in any law, no land of
    which the occupancy has been granted to any person under the
    said Chapter shall, within 15 years from the date of the final
    order passed by the Tribunal under sub­section (4) or subsection (5) or sub­section (5­A) of Section 48­A of the Reforms
    Act be transferred by sale, gift, exchange, mortgage, lease or
    assignment. However, the land may be partitioned among
    members of the holders of the joint family. No doubt, that subsection (2) of Section 61 of the Reforms Act permits the
    registered occupant or his successor­in­title, to take a loan and
    mortgage or create a charge on his interest in the land in favour
    of the State Government, a financial institution, a co­operative
    land development bank, a co­operative society or a company as
    defined in Section 3 of the Companies Act, 1956 in which not
    less than 51% of the paid­up share capital is held by the State
    Government or a Corporation owned or controlled by the
    Central Government or the State Government or both. However,
    such a loan can be taken only for the purpose of development of
    12
    land or improvement of agricultural practices or for raising
    educational loan to prosecute higher studies of the children of
    such person. It further provides that, in the event of such a
    person making default in payment of such loan in accordance
    with the terms and conditions on which such loan was granted,
    it shall be lawful to cause his interest in the land be attached
    and sold and the proceeds to be utilised in the payment of such
    loan. Sub­section (3) of the said Section specifically provides
    that any transfer or partition of land in contravention of subsection (1) shall be invalid and such land shall vest in the State
    Government free, from all encumbrances and shall be disposed
    in accordance with the provisions of Section 77 of the Reforms
    Act.
  13. This Court in the case of Kedar Nath Motani and Ors.
    vs. Prahlad Rai and Ors.1
    had an occasion to consider the
    question of application of the maxims ex turpi causa non oritur
    actio and ex dolo malo non oritur actio. This Court has referred to
    various English judgments in paragraphs 11, 12 and 14, which
    read thus:
    “11. Coming now to the question whether the appellants’
    suit was rightly dismissed by the High Court on the
    1 (1960) 1 SCR 861
    13
    application of the maxim, ex turpi causa etc., we have first
    to see what are the specific facts on which this contention is
    based. The case of the appellants was that the property was
    taken benami in the names of Prahlad Rai and others to
    avoid the implication of clause 16. In making the
    application to the Bettiah Raj the signatures of Prahlad Rai
    and others were made by Radhumal or someone under his
    instructions, because the relationship between Radhumal,
    Prahlad Rai and others was so intimate that it was
    considered unnecessary to trouble them. Inasmuch, as the
    matter was brought to the notice of the Assistant Manager
    of the Court of Wards, all these facts were capable of being
    investigated, including the making of the signatures by
    Radhumal. No doubt, the making of the signatures of
    another person without his consent, express or implied, is
    an offence under the ordinary law, but the intention was
    not so much to forge the signatures but to present the
    application in the names of those persons. However it be,
    we proceed on the assumption that there was some illegality
    committed by Radhumal in approaching the Bettiah Raj
    and also in the execution of the B.H. forms, which were also
    signed with the names of these persons. The question is
    whether this illegality is sufficient to non­suit the plaintiffs
    on the application of the maxim.
  14. The law was stated as far back as 1775 by Lord
    Mansfield in Holman v. Johnson, (1775) 1 Cowp 341, 343 :
    98 ER 1120, 1121, in the following words:
    “The principle of public policy is this; ex dolo malo
    non oritur actio. No Court will lend its aid to a man who
    founds his cause of action upon an immoral or an
    illegal act. If, from the plaintiff’s own stating or
    otherwise, the cause of action appears to arise ex turpi
    causa, or the transgression of a positive law of this
    country, there the Court says he has no right to be
    assisted. It is upon that ground the Court goes; not for
    the sake of the defendant, but because they will not
    lend their aid to such a plaintiff. So if the plaintiff and
    defendant were to change sides, and the defendant was
    to bring his action against the plaintiff, the latter
    would then have the advantage of it; for where both are
    equally in fault, potior est conditio defendentis.”
    There are, however, some exceptions or “supposed
    exceptions” to the rule of turpi causa. In Salmond and
    14
    William on Contracts, four such exceptions have been
    mentioned, and the fourth of these exceptions is based on
    the right of restitutio in integrum, where the relationship of
    trustee and beneficiary is involved. Salmond stated the law
    in these words at p. 352 of his Book (2nd Edn.):
    “So if A employs B to commit a robbery, A cannot
    sue B for the proceeds. And the position would be the
    same if A were to vest property in B upon trust to carry
    out some fraudulent scheme: A could not sue B for an
    account of the profits. But if B, who is A’s agent or
    trustee, receives on A’s account money paid by C
    pursuant to an illegal contract between A and C the
    position is otherwise and A can recover the property
    from B, although he could not have claimed it from C.
    In such cases public policy requires that the rule
    of turpis causa shall be excluded by the more
    important and imperative rule that agents and trustees
    must faithfully perform the duties of their office.”
    Williston in his Book on Contracts (Revised Edn.), Vol. VI,
    has discussed this matter at p. 5069, para 1785 and in
    paras 1771 to 1774, he has noted certain exceptional cases,
    and has observed as follows:
    “If recovery is to be allowed by either partner or
    principal in any case, it must be where the illegality is
    of so light or venial a character that it is deemed more
    opposed to public policy to allow the defendant to
    violate his fiduciary relation with the plaintiff than to
    allow the plaintiff to gain the benefit of an illegal
    transaction.”
    Even in India, certain exceptions to the rule of turpi
    causa have been accepted. Examples of those cases are
    found in Palaniyappa Chettiar v. Chockalingam Chettiar
    (1920) ILR 44 Mad 334] and Bhola Nath v. Mul Chand,
    (1903) ILR 25 All 639.
  15. Recently, the Court of Appeal in Bowmakers
    Ltd. v. Barnet Instruments, Ld. (1945) 1 KB 65] reviewed the
    law on the subject, and laid down that every illegality did
    not entitle the Court to refuse a judgment to a plaintiff. Du
    Parcq, L.J., observed as follows:
    15
    “In our opinion, a man’s right to possess his own
    chattels will as a general rule be enforced against one
    who, without any claim of right, is detaining them, or
    has converted them to his own use, even though it may
    appear either from the pleadings, or in the course of
    the trial, that the chattels in question came into the
    defendant’s possession by reason of an illegal contract
    between himself and the plaintiff, provided that the
    plaintiff does not seek, and is not forced, either to
    found his claim on the illegal contract or to plead its
    illegality in order to support his claim.”
    We are aware that Prof. Hamson has criticised this case
    in (1949) 10 Cambridge Law Journal, 249, and has forborne
    its application, except in the clearest possible
    circumstances. The law has been also considered by
    Pritchard, J., in Bigos v. Bousted (1951) 1 All ER 92, where
    all the authorities are referred to.”
  16. The three­Judge Bench of this Court, after referring to
    the aforesaid judgments, speaking through M. Hidayatullah, J.
    (as His Lordship then was), observes thus:
    “15. The correct position in law, in our opinion, is
    that what one has to see is whether the illegality goes so
    much to the root of the matter that the plaintiff cannot
    bring his action without relying upon the illegal transaction
    into which he had entered. If the illegality be trivial or
    venial, as stated by Williston and the plaintiff is not
    required to rest his case upon that illegality, then public
    policy demands that the defendant should not be allowed to
    take advantage of the position. A strict view, of course,
    must be taken of the plaintiff’s conduct, and he should not
    be allowed to circumvent the illegality by resorting to some
    subterfuge or by mis­stating the facts. If, however, the
    matter is clear and the illegality is not required to be
    pleaded or proved as part of the cause of action and the
    plaintiff recanted before the illegal purpose was achieved,
    then, unless it be of such a gross nature as to outrage the
    conscience of the Court, the plea of the defendant should
    not prevail.”
    16
  17. It could thus be seen, that this Court has held that the
    correct position of law is that, what one has to see is whether
    the illegality goes so much to the root of the matter that the
    plaintiff cannot bring his action without relying upon the illegal
    transaction into which he had entered. This Court further held,
    that if the illegality is trivial or venial and the plaintiff is not
    required to rest his case upon that illegality, then public policy
    demands that the defendant should not be allowed to take
    advantage of the position. It has further been held, that a strict
    view must be taken of the plaintiff’s conduct and he should not
    be allowed to circumvent the illegality by resorting to some
    subterfuge or by misstating the facts. However, if the matter is
    clear and the illegality is not required to be pleaded or proved as
    part of the cause of action and the plaintiff recanted before the
    illegal purpose is achieved, then, unless it be of such a gross
    nature as to outrage the conscience of the Court, the plea of the
    defendant should not prevail.
  18. Subsequently, another three­Judge Bench of this
    Court in Immani Appa Rao and Ors. vs. Gollapalli
    Ramalingamurthi and Ors.2
    again had an occasion to consider
    2 (1962) 3 SCR 739
    17
    the issue with regard to applicability of the aforesaid two
    maxims. This Court speaking through P.B. Gajendragadkar, J.
    (as His Lordship then was) observed thus:
    “12. Reported decisions bearing on this question show
    that consideration of this problem often gives rise to what
    may be described as a battle of legal maxims. The
    appellants emphasised that the doctrine which is preeminently applicable to the present case is ex dolo malo non
    oritur actio or ex turpi causa non oritur actio. In other words,
    they contended that the right of action cannot arise out of
    fraud or out of transgression of law; and according to them
    it is necessary in such a case that possession should rest
    where it lies in pari delicto potior est conditio possidentis;
    where each party is equally in fraud the law favours him
    who is actually in possession, or where both parties are
    equally guilty the estate will lie where it falls. On the other
    hand, Respondent 1 argues that the proper maxim to apply
    is nemo allegans suam turpitudinum audiendum est,
    whoever has first to plead turpitudinum should fail; that
    party fails who first has to allege fraud in which he
    participated. In other words, the principle invoked by
    Respondent 1 is that a man cannot plead his own fraud. In
    deciding the question as to which maxim should govern the
    present case it is necessary to recall what Lord Wright, M.R.
    observed about these maxims in Berg v. Sadler and Moore,
    (1937) 2 KB 158 at p. 62. Referring to the maxim ex turpi
    causa non oritur actio Lord Wright observed that “this
    maxim, though veiled in the dignity of learned language, is
    a statement of a principle of great importance; but like most
    maxims it is much too vague and much too general to admit
    of application without a careful consideration of the
    circumstances and of the various definite rules which have
    been laid down by the authorities”. Therefore, in deciding
    the question raised in the present appeal it would be
    necessary for us to consider carefully the true scope and
    effect of the maxims pressed into service by the rival
    parties, and to enquire which of the maxims would be
    relevant and applicable in the circumstances of the case. It
    is common ground that the approach of the Court in
    determining the present dispute must be conditioned solely
    by considerations of public policy. Which principle would be
    more conducive to, and more consistent with, public
    interest, that is the crux of the matter. To put it differently,
    18
    having regard to the fact that both the parties before the
    Court are confederates in the fraud, which approach would
    be less injurious to public interest. Whichever approach is
    adopted one party would succeed and the other would fail,
    and so it is necessary to enquire as to which party’s success
    would be less injurious to public interest.
  19. Out of the two confederates in fraud Respondent 1
    wants a decree to be passed in his favour and that means
    he wants the active assistance of the Court in reaching the
    properties possession of which has been withheld from him
    by Respondent 2 and the appellants. Now, if the defence
    raised by the appellants is shut out Respondent 1 would be
    entitled to a decree because there is an ostensible deed of
    conveyance which purports to convey title to him in respect
    of the properties in question; but, in the circumstances,
    passing a decree in favour of Respondent 1 would be
    actively assisting Respondent 1 to give effect to the fraud to
    which he was a party and in that sense the Court would be
    allowed to be used as an instrument of fraud, and that is
    clearly and patently inconsistent with public interest.
  20. On the other hand, if the Court decides to allow the
    plea of fraud to be raised the Court would be in a position
    to hold an enquiry on the point and determine whether it is
    a case of mutual fraud and whether the fraud intended by
    both the parties has been effectively carried out. If it is
    found that both the parties are equally guilty and that the
    fraud intended by them has been carried out the position
    would be that the party raising the defence is not asking the
    Court’s assistance in any active manner; all that the
    defence suggests is that a confederate in fraud should not
    be permitted to obtain a decree from the Court because the
    document of title on which the claim is based really conveys
    no title at all. It is true that as a result of permitting
    Respondent 2 and the appellants to prove their plea they
    would incidentally be assisted in retaining their possession;
    but this assistance is of a purely passive character and all
    that the Court is doing in effect is that on the facts proved it
    proposes to allow possession to rest where it lies. It appears
    to us that this latter course is less injurious to public
    interest than the former.”
    19
  21. This Court held that, which principle is to be applied in
    the facts of the case would depend upon the question, as to
    which principle is more consistent with public interest. The
    Court finds that, when both the parties before the Court are
    confederates in the fraud, the Court will have to find out which
    approach would be less injurious to public interest. The Court
    observed that, whichever approach is adopted, one party would
    succeed and the other would fail and, therefore, it is necessary
    to enquire as to which party’s success would be less injurious to
    public interest. The Court in the facts of the said case finds that
    if the decree was to be passed in favour of respondent No. 1
    (who was the plaintiff), it would be actively assisting respondent
    No. 1 to give effect to the fraud to which he was a party and it
    has been held that in that sense the Court would be allowed to
    be used as an instrument of fraud and that is clearly and
    patently inconsistent with public interest.
  22. It has further been held, that if both the parties are
    equally guilty and the fraud intended by them had been carried
    out, the position would be that, the party raising the defence is
    not asking the Court’s assistance in any active manner. It has
    been held, that all the defence suggested is that a confederate in
    fraud shall not be permitted to obtain a decree from the Court
    20
    because the documents of title, on which the claim is based
    really conveys no title at all. In the facts of the said case, it was
    held, that though the result thereof would be assisting the
    defence therein to retain their possession, for such an
    assistance would be purely of passive character and all that the
    Court would do in effect is that on the facts proved, it proposes
    to allow possession to rest where it lies. It has been held that,
    latter course appears to be less injurious to public interest than
    the former one. This Court in the said judgment has digested
    the English law on the issue in the following paragraphs, which
    read thus:
    “19. In support of the contrary view reliance is usually
    placed on an early English decision in Doe, Dem. Roberts
    against Roberts, Widow, 106 ER 401 . In that case it was
    held that “no man can be allowed to allege his own fraud to
    avoid his own deed; and, therefore, where a deed of
    conveyance of an estate from one brother to another was
    executed, to give the latter a colourable qualification to kill
    game. The document was as against the parties to it valid
    and so sufficient to support an ejectment for the premises”.
    In dealing with the question raised Bayley, J. observed “by
    the production of the deed, the plaintiff established a prima
    facie title; and we cannot allow the defendant to be heard in
    a court of justice to say that his own deed is to be avoided
    by his own fraud;” and Holroyd, J. added that “a deed may
    be avoided on the ground of fraud, but then the objection
    must come from a person neither party nor privy to it, for
    no man can allege his own fraud in order to invalidate his
    own deed”.
  23. This decision has, however, been commented on by
    Taylor in his Law of Evidence. According to Taylor “it seems
    now clearly settled that a party is not estopped by his deed
    from avoiding it by proving that it was executed for a
    21
    fraudulent, illegal or immoral purpose [Taylor’s “Law of
    Evidence”, Vol. 11th, Edn. p. 97, para 93]”. The learned
    author then refers to the case of Roberts, 106 ER 401 and
    adds “in the subsequent case of Prole v. Wiggins, (1837) 3
    Bing. NC 235 : 6 LJCP 2 : 43 R.R. 621, Sir Nicholas Tindal
    observed that this decision rested on the fact that the
    defence set up was inconsistent with the deed”. Taylor then
    adds that “the case, however, can scarcely be supported by
    this circumstance, for in an action of ejectment by the
    grantee of an annuity to recover premises on which it was
    secured, the grantor was allowed to show that the premises
    were of less value than the annuity, and consequently, that
    the deed required enrolment, although he had expressly
    covenanted in the deed that the premises were of greater
    value…” According to the learned author “the better opinion
    seems to be that where both parties to an indenture either
    know, or have the means of knowing, that it was executed
    for an immoral purpose, or in contravention of a statute, or
    of public policy, neither of them will be estopped from
    proving those facts which render the instrument void ab
    initio; for although a party will thus in curtain cases be
    enabled to take advantage of his own wrong, yet this evil is
    of a trifling nature in comparison with the flagrant evasion
    of the law that would result from the adoption of an
    opposite rule” (p. 98). Indeed, according to Taylor, “although
    illegality is not pleaded by the defendant nor sought to be
    relied upon by him by way of defence, yet the court itself,
    upon the illegality appearing upon the evidence, will take
    notice of it, and will dismiss the action ex turpi causa non
    oritur actio. No polluted hand shall touch the pure fountain
    of Justice” (p. 93).
  24. To the same effect is the opinion of Story [Story’s
    Equity Jurisprudence, Vol. I, s. 421; English edition by
    Randall, 1920, s. 298.] : “In general, where parties are
    concerned in illegal agreements or other transactions,
    whether they are mala prohibita or mala in se, courts of
    equity following the rule of law as to participators in a
    common crime will not interpose to grant any relief, acting
    upon the known maxim in pari delicto potior est conditio
    defendentis et possidentis. The old cases often gave relief,
    both at law and in equity, where the party would otherwise
    derive an advantage from his inequity. But the modern
    doctrine has adopted a more severely just and probably
    politic and moral rule, which is, to leave the parties where it
    finds them giving no relief and no countenance to claims of
    this sort.”
    22
  25. It could thus be seen that, although illegality is not
    pleaded by the defendant nor is relied upon by him by way of
    defence, yet the court itself, upon the illegality appearing upon
    the evidence, will take notice of it, and will dismiss the action ex
    turpi causa non oritur actio. It has been held, that no polluted
    hand shall touch the pure fountain of justice. It has further
    been held, that where parties are concerned in illegal
    agreements or other transactions, courts of equity following the
    rule of law as to participators in common crime will not
    interpose to grant any relief, acting upon the maxim in pari
    delicto potior est conditio defendetis et possidentis.
  26. In the case of Nathu Prasad vs. Ranchhod Prasad and
    Ors.
    3
    the three­Judge Bench of this Court had an occasion to
    consider somewhat similar provisions which read thus:
    “2. Section 73 of the Revenue Administration and Ryotwari
    Land Revenue and Tenancy Act, Samvat 2007 (Act No. 66 of
    1950) provides:
    “No Pakka tenant shall sub­let for any period whatsoever any
    land comprised in his holdings except in the cases provided
    for in Section 74.
    Explanation.— * * *.”
    3 (1969) 3 SCC 11
    23
    Section 74 deals with sub­letting by disabled persons. Since
    the plaintiff is not a disabled person, the section need not be
    read. Section 75 provides:
    “A sub­lease of the whole or any part of the holding
    of a Pakka tenant effected properly and legally prior to
    the commencement of this Act shall terminate after the
    expiry of the period of sub­lease or 4 years after the
    commencement of this Act, whichever period is less.”
    Section 76 provides:
    “(1) If the sub­lessee does not hand over possession of
    the land sub­let to him after the sub­lease ceases to be in
    force under Sections 74 and 75 to the lessor or his legal
    heir … he shall be deemed to be a trespasser and shall be
    liable to ejectment in accordance with the provisions of
    this Act.
    (2) * * *.”
    Section 78 provides:
    “(1) Any person who in contravention of the provisions
    of this Act, obtains possession of any land by virtue of a
    bequest, gift sale, mortgage or sub­lease, or of any
    agreement purporting to be a bequest, gift, sale, mortgage
    or sub­lease shall be deemed to be a trespasser and shall
    be liable to ejectment in accordance with the provisions
    of Section 58.”
    In the said case, the plaintiff/appellant before the Supreme
    Court was a recorded pattedar tenant and had granted a sublease of land to respondent Nos. 1 and 2 for five years. The suit
    was filed on the ground that sub­lease was in contravention of
    Section 73 of the Revenue Administration and Ryotwari Land
    Revenue and Tenancy Act, Samvat 2007 (Act No. 66 of 1950) and
    that the said respondents had trespassed in the land. The trial
    24
    court had decreed the suit. The first appellate court had also
    confirmed the same. However, the same was reversed by the
    High Court in the second appeal. Allowing the appeal and
    reversing the judgment of the High Court, this Court held that a
    person inducted as a sub­lessee contrary to the provisions of
    Section 78 of the Tenancy Act did not acquire any right under a
    contract of sub­letting and his possession was not protected.
  27. We have to apply the principles of law as deduced by
    this Court in the case of Kedar Nath and Immani Appa Rao
    (supra), to the facts of the present case.
  28. The transaction between the late Bale
    Venkataramanappa and the plaintiff is not disputed. Initially
    the said Bale Venkataramanappa had executed a registered
    mortgage deed in favour of the plaintiff. Within a month, he
    entered into an agreement to sell wherein, the entire
    consideration for the transfer as well as handing over of the
    possession was acknowledged. It could thus be seen, that the
    transaction was nothing short of a transfer of property. Under
    Section 61 of the Reforms Act, there is a complete prohibition
    on such mortgage or transfer for a period of 15 years from the
    25
    date of grant. Sub­section (1) of Section 61 of the Reforms Act
    begins with a non­obstante clause. It is thus clear that, the
    unambiguous legislative intent is that no such mortgage,
    transfer, sale etc. would be permitted for a period of 15 years
    from the date of grant. Undisputedly, even according to the
    plaintiff, the grant is of the year 1983, as such, the transfer in
    question in the year 1990 is beyond any doubt within the
    prohibited period of 15 years. Sub­section (3) of Section 61 of
    the Reforms Act makes the legislative intent very clear. It
    provides, that any transfer in violation of sub­section (1) shall
    be invalid and it also provides for the consequence for such
    invalid transaction.
  29. Undisputedly, both, the predecessor­in­title of the
    defendant(s) as well as the plaintiff, are confederates in this
    illegality. Both, the plaintiff and the predecessor­in­title of the
    defendant(s) can be said to be equally responsible for violation
    of law.
  30. However, the ticklish question that arises in such a
    situation is: “the decision of this Court would weigh in side of
    which party”? As held by Hidayatullah, J. in Kedar Nath Motani
    (supra), the question that would arise for consideration is as to
    26
    whether the plaintiff can rest his claim without relying upon the
    illegal transaction or as to whether the plaintiff can rest his
    claim on something else without relying on the illegal
    transaction. Undisputedly, in the present case, the claim of the
    plaintiff is entirely based upon the agreement to sell dated
    15.05.1990, which is clearly hit by Section 61 of the Reforms
    Act. There is no other foundation for the claim of the plaintiff
    except the one based on the agreement to sell, which is hit by
    Section 61 of the Act. In such a case, as observed by Taylor, in
    his “Law of Evidence” which has been approved by
    Gajendragadkar, J. in Immani Appa Rao (supra), although
    illegality is not pleaded by the defendant nor sought to be relied
    upon him by way of defence, yet the Court itself, upon the
    illegality appearing upon the evidence, will take notice of it, and
    will dismiss the action ex turpi causa non oritur actio i.e. No
    polluted hand shall touch the pure fountain of justice. Equally,
    as observed in Story’s Equity Jurisprudence, which again is
    approved in Immani Appa Rao (supra), where the parties are
    concerned with illegal agreements or other transactions, courts
    of equity following the rule of law as to participators in a
    common crime will not interpose to grant any relief, acting upon
    27
    the maxim in pari delicto potior est conditio defendentis et
    possidentis.
  31. It could thus be seen that, the trial Judge upon finding
    that the agreement of sale was hit by Section 61 of the Reforms
    Act, had rightly dismissed the suit of the plaintiff.
  32. Now, let us apply the another test laid down in the
    case of Immani Appa Rao (supra). At the cost of repetition, both
    the parties are common participator in the illegality. In such a
    situation, the balance of justice would tilt in whose favour is the
    question. As held in Immani Appa Rao (supra), if the decree is
    granted in favour of the plaintiff on the basis of an illegal
    agreement which is hit by a statute, it will be rendering an
    active assistance of the court in enforcing an agreement which
    is contrary to law. As against this, if the balance is tilted
    towards the defendants, no doubt that they would stand
    benefited even in spite of their predecessor­in­title committing
    an illegality. However, what the court would be doing is only
    rendering an assistance which is purely of a passive character.
    As held by Gajendragadkar, J. in Immani Appa Rao (supra), the
    first course would be clearly and patently inconsistent with the
    28
    public interest whereas, the latter course is lesser injurious to
    public interest than the former.
  33. In the result, the appeals deserve to be allowed and are
    accordingly allowed. The judgment and order passed by the
    High Court of Karnataka dated 08.06.2015 and the Order
    passed by the Fast Track Court­III, Bangalore Rural District,
    Bangalore, dated 17.06.2008 are quashed and set aside. The
    order dated 23.01.2004 dismissing the suit passed by the trial
    court is upheld.
  34. The parties shall bear their own costs.
    …………………..J.
    [ARUN MISHRA]
    ………………….J.
    [M. R. SHAH]
    ………………….J.
    [B.R. GAVAI]
    NEW DELHI;
    SEPTEMBER 26, 2019.