1. The failure to notice the obviously preposterous nature of many if not most of the claims made in the civil Courts is perhaps the cause and perhaps the effect of the success of many of them, or perhaps both. In 1923 the father of the two plaintiffs sold their two-thirds share in joint family property, along with his own one-third share, to the defendant Khushal Teli for Rs. 40,000. It was not pretended in the plaint that there was anything wrong with the transaction beyond certain technical flaws in the conveyance, and the plaintiffs' claim, which has partly succeeded, was that, because of those flaws only, the whole of the pro-party, including the share belonging to their father whom they joined as defendant 2, should be returned to them and they should be allowed to keep the Rs. 40,000 Khushal paid them for it. If it were not of almost daily occurrence that similar and even more preposterous claims are allowed to succeed, as this has been in part, it would be amazing that a Court should even consider this claim seriously.
2. It has been found in the lower Court that plaintiff 1, Babhan Rao Maratha, was born on 18th January 1907 and, therefore, his 18th birthday was on 18th January 1925. The truth of this is doubtful, but the finding is no longer contested. Plaintiff 2 is Babhan Rao's younger brother Lal Saheb, who was born in the year 1920. On 27th February 1918, before Lal Saheb was born, Gulab Rao, for himself and for Labhan Rao, then just 11 years old, executed a mortgage of their ancestral village of Sangli in favour one Sudarshan Prasad, as security for the repayment of a sum of Rs. 12,999 with which it was proposed to purchase the village of Kamhli. The village was purchased with that money and is still in the possession of the joint family. On 20th July 1923, a sale-deed was executed in favour of defendant 1, Khushal Teli of the whole of the village of Sangli, excepting the cultivating rights in the sir land, for Rs. 25,000. The deed was executed by Gulab Rao for himself and for his younger son Lal Saheb and by Labhan Rao for himself, though, according to his present statement, he was then only 16½ years of age. Of the Rs. 25,000 paid by Khushal for Sangli, Rs. 21,000 went to pay off Sudarshan Prasad's mortgage on the village.
3. Three days later the same persons, that is, Gulab Rao for himself and his younger son and Labhan Rao for himself, executed in consideration of Rs. 15,000 a deed of surrender of their occupancy rights in the whole of what had been their sir land in Sangli till three days before. This sum of Rs. 15,000 they owed to Khushal as the consideration for a sale-deed of the village of Dandesara executed by him on 20th July along with their sale-deed of Sangli. The real nature of this transaction is, of course, that, without the sanction of a revenue officer, the village of Sangli was sold without reservation of the right to occupy the sir land for Rs. 40,000, on which Rs. 36,000 went in paying off Sudarshan Prasad's mortgage and buying the village of Dandesara. It has not been stated that there was any sir land in Dandesara, presumably there was none, or else cultivating rights in it were reserved.
4. On 31st March 1925, less than two years after the sale of Sangli and less than three months after what has been found to be Labhan Rao's 18th birthday, he filed the suit out of which the present appeal arises, for himself and as next friend of his younger brother against Khushal Tali and his father Gulab Rao. Their claim was that both the sale-deed and the deed of surrender should be set aside and the whole of the property returned to them, and (though this was not expressly stated at the beginning) that they should be allowed to retain the Rs. 40,000, Khushal had paid them for it. How they could claim their father's share in the property against him was also not stated.
5. In support of this claim a number of obviously false and irrelevant statements were made. It was said that Khushal “fraudulently” described Labhan Rao as a major in the sale-deed and the deed of surrender and compelled him to sign those documents. It is hard to imagine anything more ridiculous, though the finding of the learned Judge of the lower Court on this point is equally impossible. It is that the representation of Labhan Rao as of full age was made by his father, not by him and not even in his presence, but if it was made in his presence he “might not have been aware of his real age” and is, therefore, “not guilty of suppressing any fact by his silence.”
6. There was next the allegation that in 1923, Labhan Rao, aged 16, and Lal Saheb, aged 2 or 3 had already separated from their father. This was followed by the totally irrelevant and contradictory pleas that Gulab Rao was much addicted to opium eating and that he had entered into the transaction of 1918 without consideration. The plaintiffs have not gone to the length of saying that Gulab Rao spent Rs. 13,000 on the purchase of opium, without which the allegation that he was addicted to this vice is no more relevant than one that he wasted most of his time in playing cards without stakes.
7. But the village on which Gulab Rao did spend the money is still in his possession, and anyhow, if he never got it from Sudarshan Prasad, he could not have spent it on debauchery of any kind. There is no suggestion that the purchase of Kamhli was a bad bargain. Even if it had been it could hardly be called illegal and immoral so as to relieve Gulab Rao's sons of the liability of repaying the money borrowed for it and if the borrowing was by their father alone for his own evil purposes, or the debt is for any other reason not binding on them, the village belongs to him alone and they have no share in it. In that case, there can be no doubt about his having to repay Rs. 21,000 to Khushal or about the money being recoverable by attachment and sale of the village.
8. It was finally urged that as the sale of the proprietary rights in Sangli and the surrender of the occupancy rights in what had been sir land up to the time of that sale (which is miscalled by the impossible name of a surrender of sir all through the case) were really one single transaction, which they undoubtedly were, and as the latter was in clear violation of the law,” both should be Set aside or at least the surrender should be set aside and the plaintiffs should be given back all the sir land. There was again no suggestion of their giving back the Rs. 15,000 or the village of Dandesara if they got back this land, nor does it seem to have been appreciated that if they did get it back without the village it would not be sir land but an occupancy holding. Even the decree of the lower Court describes it as sir, though it orders that the sale of the proprietary rights in the village, which of course include those in the sir land, is to hold good.
9. Another of the many obvious points in the case which have escaped notice is that the plaintiffs on their own allegation could not possibly claim more than two-thirds of the village. Indeed, on the only plea put forward in the beginning which approaches relevancy, which was that Labhan Rao was a minor when he executed the two deeds, he could claim only one-third. Apart, however, from the question of the validity under the Tenancy Act of what is called the surrender of the sir, the case was tried on the plea never really taken that Gulab Rao had no right to transfer his sons' shares for that consideration, though even that was regarded as covering his one-third share as well. That way of treating the case, to which neither party has objected, happens to be based on a correct view of it, though nobody seems to have realized the fact. That view is that the two documents were really executed by Gulab Rao as manager of the joint Hindu family, and the signature of them by Labhan Rao as well makes no difference either way.
10. In spite of the correct finding that there was only one transfer, a sale of the village without reservation of the cultivating rights in the sir land which had act been sanctioned by a revenue officer, the judgment treats the transaction as the two of which the parties tried to give it the appearance and examines them separately. In regard to the sale of the proprietary rights in the village the findings are as follows: Of the Rs. 25,000 paid to Gulab Rao for the village of Sangli Rs. 21,000 went to satisfy the debt due to Sudarshan Prasad and Rs. 1,000 in repayment to another person who had agreed shortly before to buy the same property for the same price and had paid that sum as earnest-money but had backed out of the bargain. There is no evidence of what became of the remaining Rs. 3,000. The sum of Rs. 22,000, therefore, constituted an antecedent debt due by Gulab Rao about which there was no immorality or illegality. The sale of the village cannot, therefore, be set aside, but the purchaser must pay to the plaintiffs the sum of Rs. 3,000 which he had already paid to their father without “legal necessity.”
11. In respect of what is called the surrender of the sir land, it is held in the judgment that “it is in clear violation of the law prohibiting sale of sir land without proper sanction,” because the agreements to sell the village and to surrender the land were made at the same time and are one transaction amounting to a sale of the sir land, although the deed of surrender was executed a few days later than the sale-deed; the land must, therefore, be restored to the plaintiffs, and according to the ruling of a Bench off this Court in Bhagwat v. Anandrao(1), the defendant Khushal is not entitled to a refund of the Rs. 15,000 he paid for it.
12. The defendant Khushal Teli has appealed on two points only. He contends-first, that of the Rs. 3,000 he has been ordered to “refund” Gulab Rao's share was Rs. 1,000, so that he ought to have been ordered to pay Rs. 2,000 only. The slack use of the entirely inappropriate word “refund” seems to be the primary cause of the inverted way in which the matter has been considered. There could be a refund only by the plaintiffs or Gulab Rao to the defendant Khushal, and what has been ordered is that, in addition to the Rs. 22,000 he has already paid to the plaintiffs and their father jointly and the Rs. 3,000 he has already paid to their father separately for the village, he must pay them another Rs. 3,000. That is preposterous.
13. The learned Judge seems to have proceeded on a sort of converse of the principle that has long been accepted as sound, that a sale of this kind can be set aside conditionally upon the sellers, or the coparceners, other than the manager of the family, repaying so much of the consideration as was found to be proper; he has maintained the sale conditionally on the buyer paying over again so much of the consideration as was not found to be proper. The illegality of both has been explained by their Lordships of the Privy Council in Sri Krishan Das v. Nathu Ram(2), and again in Gauri Shankar v. Jiwan Singh(3). In the former case, however, the application of Section 65 of the Contract Act, if it does apply to the circumstances, would have nearly the same effect.
14. As has been said, the question of the authority of Gulab Rao to sell his sons' shares in the village arose in respect of the whole transfer, not separately in respect of either part. It has been considered in respect of the sale of the proprietary rights only, the inclusion in that sale of the right to occupy the sir land being set aside as a separate transaction for a reason which does not apply to it separately, but does apply to invalidate the whole of the transaction. But, in respect of the authority of Gulab Rao to make the alienation, it will be sufficient to examine the case of the sale of the proprietary rights separately, because the sale of the occupancy rights is manifestly justifiable on that ground. The family has the benefit of the village of Dandesara, so that the validity of the sale is proved against the plaintiffs to the extent of Rs. 15,000 out of the total consideration of Rs. 40,000, leaving for examination the Rs. 25,000 which was ostensibly paid separately for the proprietary rights.
15. The findings of the lower Court, on which the decision that the sale was improper in respect of Rs. 3,000, seem wrong both ways. The most impossible is perhaps the inclusion in the sum found to be an antecedent debt due by Gulab Rao of the Rs. 1,000 returned to the man who had previously agreed to buy the village and had paid that amount as earnest-money. That merely converted the Rs. 1,000 from earnest-money paid by him into earnest-money paid by Khushal. As to the remaining Rs. 3,000 there is good evidence of a great deal of it being proper “father's antecedent debts” or being due by the whole family, including a sum of Rs. 400 paid to a cloth merchant for goods previously supplied. But the propriety of the consideration so as to bind the whole family is established beyond doubt in respect of at least the Rs. 441-12-0 of which Rs. 375 went in purchasing the stamp for the sale-deed and Rs. 66-12-0 in getting it registered.
16. It is also beyond doubt, as it is in most cases of this kind, that the whole family got the benefit of any part of the consideration of which the application is not directly proved. It is inconceivable that Gulab Rao spent it all on himself; it went into the joint family fund and is still there or has been spent on food or clothing or agriculture or the like, to the benefit of the whole family.
17. But we are not concerned with any question of legal necessity in respect of small parts of the consideration. Though the matter has recently been explained by the Privy Council in the two cases already mentioned, the distorted view is still held in almost all Courts that legal necessity has to be proved, not for the transfer, but for each rupee of the consideration. The necessity for the transfer can in most cases be established only by proving necessity in respect of the consideration, but ordinarily proof in respect, of the greater part of the consideration is quite sufficient. In this case, for instance, if it was necessary for Gulab Rao to find only Rs. 21,000, he could not do it without selling the whole village. Nobody would give him that sum for “fourteen annas” of the village, and, therefore, it was legally necessary for him to sell the whole of it for its proper value in order to raise it.
18. In the usual way of dealing with this question it is by no means improbable that legal necessity for the transfer would have been held proved in the lower Court if the consideration paid had been only Rs. 22,000, the exact sum Gulab Rao was considered to require, as that could not be called an inadequate price for property-worth not more than Rs. 25,000. Payment of the other Rs. 3,000 of the full value of the village surely makes the transaction more, not less, valid.
19. The proof of legal necessity or benefit is still more complete if we regard the transaction as what it really was, even if we disregard the benefit received by the whole family from that part of the consideration of which the application has not been directly proved. Oat of a consideration of Rs. 40,000 legal necessity or benefit has been established in respect of over Rs. 36,000, so that the balance for which the buyer has failed to account is less that 10 per cent of the total instead of 15 or 16. It is, however, admitted now that the plaintiffs are not entitled to a “refund” of anything, even if the amount in respect of which legal necessity has been proved was no more than twenty-one thousand out of twenty-five, so that the Rs. 1000 which is all that the defendant Khushal has claimed in appeal, must be given to him, though for reasons different from those on which he claimed it.
20. The other contention raised in the appeal of the defendant Khushal is that the village of Dandesara, purchased from him with the Rs. 15,000 he paid for the surrender of the occupancy rights in what had been sir land, should be returned to him now that the surrender has been found to be void. The surrender of the occupancy rights was not a void agreement at all. (Speaking of a void contract, as is so often done, is a contradiction in terms). It was not in contravention of any law, as was held in the lower Court, because there is no law that forbids the surrender of an occupancy holding by the tenant, even the day after he acquires the tenancy. Taken by itself the surrender was perfectly valid. So also was the sale of the proprietary rights in the village taken by itself.
21. But the two things combined in one transaction, that is, the sale of a village without reservation of occupancy rights in the sir land which has not been sanctioned by a revenue officer, do certainly constitute a void agreement. It is, however, the whole agreement that has to be set aside and not one or other of the two parts to which the parties tried to give the appearance of separate agreements. Further, it is under Section 23 of the Contract Act, that the while agreement is void, as was held in the lower Court in respect of the surrender, but the reason is not that it is in contravention or violation of any law, because there is no law directly forbidding such a sale. The reason is that the object of the agreement “is of such a nature that, if permitted, it would defeat the provisions” of Section 49 of the Tenancy Act, completely.
22. A fandamental mistake made in the lower Court, which has already been mentioned, is the total disregard of the fact that the plaintiffs could not possibly claim more than two-thirds of the property. It is, however, more convenient to accept that and one or two other wrong views as correct for the further consideration of the case. In that view the relief to which the plaintiffs were entitled was the return of the village, with the sir land as sir land, but under Section 65 of the Contract Act only on condition of returning to Khushal all the advantage they had got out of the agreement, that is, Rs. 40,000, or the village of Dandesara and Rs. 25,000. Now the plaintiffs have not asked in appeal for the return of Sangli on this ground at all, but Khushal prays for the return of Dandesara to him. We have then to accept the further mistake of treating the surrender of the occupancy rights as a separate transaction and as void, though it is neither, and to examine the applicability to it in that light of Section 65 of the Contract Act.
23. There is undoubtedly a very prevalent idea that the opening words of Section 65 of the Contract Act, do not refer to what is often called “a contract void ab initio or nudum pactum ab initio.” Avoiding the use of a term that contradicts itself and of a language that is not one of the languages of this Court but is not infrequently misused in it, that amounts to saying that an “agreement discovered to be void” does not mean on that was void from the beginning, though it was supposed to be a contract, but one that was a contract in the beginning and subsequently became void. That would make one or other of the alternatives stated at the beginning of the section entirely otiose, as both would mean exactly the same thing. It is difficult to imagine also how an agreement can be discovered to be void, which must mean void from the beginning, unless it was void from the beginning. It is beyond doubt that the agreement mentioned at the beginning of Section 65 of the Contract Act, is an agreement, that was void from the beginning and never was a contract.
24. The idea that one side of a void agreement can be set aside, but not the other, arose out of a casual remark outside the case made by their Lordships of the Privy Council in March 1903 in Mohori Bibee v. Dharmodas(4) to the effect that Section 65 of the Contract Act, did not apply to a case in which there was no contract at all. That was, however, corrected by their Lordships in November 1922 in Harnath Kunwar v. Indar Bahadur Singh(5). It may be mentioned that the application of the remark made by their Lordships in Mohori Bibee's case is usually restricted, for no apparent reason, to cases in which only one of the essentials stated in Section 10 of the Contract Act, that would make the agreement a contract, is lacking, the competency of both parties. Very frequently it is further restricted, for even less reason, to cases of the one kind of incompetency that arises from the minority of one of the parties.
25. In examining this question it surely ought to be presumed, though it seldom is, that such an obvious violation of the most elementary principles of justice as has occurred in this case could not possibly be sanctioned by any interpretation of any law that ever existed, or was allowed to exist for a day after the discovery that such an interpretation of it was possible, or by any of the maxims that are so frequently accepted as law. That impossible position is, however, quite usually accepted without question, as was done here, and some attempt was even made on behalf of the plaintiffs to support it in this Court.
26. The arguments put forward are so manifestly unsound, that it would not be worth while to mention them, but for the fact that they are the stock arguments on this question and have so often been accepted. In the first place it was said that the defendant ought to be made to suffer for entering into this illegal agreement and breaking the law. The answer is that it was no offence; if it were, it is not the duty of a civil Court to punish offences; a fine of Rs. 15,000 is a monstrously excessive punishment for anything of the sort; and the effect of imposing it is to give the plaintiffs a reward of Rs. 15,000 for being equally, if not more, guilty of exactly the same thing.
27. Reference was also made to the maxim, usually stated in Latin, that when both parties have done wrong, the Court will not interfere to restore to either of them any advantage he may have gained over the other. As to that, all that need be said is that the Court has interfered in that way in this case, as is done in most cases of the kind, but on one side only, and has refused to interfere on the other, and if there was any wrong doing of the sort to which that maxim refers it was practically all on the side in favour of which the Court has interfered; it is surely much less wrong to buy from another man something that he can sell but is forbidden, in his own interest, to sell without permission, than for him to sell it.
28. The published judgments of this Court in Mt. Muliabai v. Garud(6), Bhagwat v. Anandrao and Janardhan v. Vishwanath(7) were also cited on behalf of the plaintiffs. In the first case the question discussed at length presumably arose from the facts of the case, but not from those stated in the judgment. In the second, which was decided by a Bench, no principle or law is stated; the learned Judges merely said that in circumstances similar to those of the present case they were of opinion that, as the surrender by the plaintiffs of the occupancy rights was absolutely void, they were not bound to repay what they had received for it. In the third case a single Judge followed the ruling in Mohori Bibee's case without adverting to the later decision of the Privy Council. But anyhow all three judgments, if they could be regarded as stating the view that Section 65 of the Contract Act, does not apply to the present case, would be contrary to the judgment of the Privy Council in Harnath Kunwar v. Indar Bahadur Singh, which we are bound to follow in preference to them. As has been said, the only relief to which the plaintiffs were entitled, on the ground that the sale of the village defeated the provisions of the Tenancy Act, was the restoration to them of the village of Sangli with all the sir land in it as sir land, but on condition that they paid the defendant Rs. 40,000 or paid him Rs. 25,000 and restored the village of Dandesara to him. Even of that relief they could not get more than two-thirds. But they have accepted the decree of the lower Court refusing to give them back the village on that ground, and indeed they never asked for it on that ground, and it would seam that the other part of the single void agreement could not properly be set aside by itself. The defendant Khushal has, however, accepted the position that the plaintiffs and their father are to get back all the occupancy holding provided they give him back Dandesara. It is probable that if they had seen that they could not have both, they would have preferred the village to the land, even without realizing that it was an occupancy holding and not sir land; but up to the end they have refused to allow things to stand as they were, and they cannot be compelled to do so.
29. For all these reasons the decree of the lower Court will be set aside, and in its place a decree will issue ordering the defendant Khushal to put the plaintiffs in possession as occupancy tenants of the fields in Sangli mentioned in the plaint as sir and to pay them Rs. 2,000 and also ordering the plaintiffs and the defendant Gulab Rao to put the defendant Khushal in possession as owner of the village of Dandesara. The decree will also order the plaintiffs to pay the whole of their own and the defendant's costs in both Courts, including a pleader's fee of four hundred rupees in this Court.
30. Decree set aside.