Smt. Niranjan Kaur And Others vs The Financial Commissioner

CWP No.5662 of 1986 -1-

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

CWP No.5662 of 1986 Date of decision: 16.07.2010

Smt. Niranjan Kaur and others ....Petitioners

Versus

The Financial Commissioner, Revenue & Secretary to Government, Punjab and others ....Respondents

CORAM: HON'BLE MR. JUSTICE MUKUL MUDGAL, CHIEF JUSTICE HON'BLE MR. JUSTICE JASBIR SINGH HON'BLE MR. JUSTICE VINOD K. SHARMA

1.Whether Reporters of local papers may be allowed to see the judgment? 2.Whether to be referred to the Reporters or not? 3.Whether the judgment should be reported in the Digest?

Present: - Mr. Rajbir Wasu, Advocate, for petitioners No.1, 6, 9, 13 & 14. Mr. Rupinder Khosla, Addl. A.G., Punjab. Mr. Som Nath Saini, Advocate, for the private respondents.

VINOD K. SHARMA, J.

The petitioners have invoked the jurisdiction of this Court

under Articles 226 and 227 of the Constitution of India, praying for

issuance of a writ of certiorary quashing the order dated 12.8.1986,

passed by the Financial Commissioner, Revenue & Secretary To

Government, Punjab, in exercise of powers conferred under Section 33

of the Displaced Persons (Compensation & Rehabilitation) Act, 1954

(hereinafter referred to as 'the Act').

The facts leading to the filing of the writ petition are that

Budha Singh son of Jaimal Singh, father of respondents No.2 and 3, i.e.

Malook Singh and Daljit Singh, was allotted 14 Std. acres 1¾ units of

land in village Beri, Tehsil and District Gurdaspur, in lieu of the land

abandoned by him in West Pakistan.

CWP No.5662 of 1986 -2-

Sh. Budha Singh died on 10.1.1956 and respondents No.2 and

3 came in possession of the allotted land, but did not acquire the

proprietary rights, as the area allotted in village Beri, Tehsil and District

Gurdaspur, was not of good quality, as required under Section 10 of the

Act.

An application was moved by the legal heirs of Budha Singh,

to the Rehabilitation Department at Jalandhar, seeking allotment in lieu

of the land abandoned by their father in Pakistan. The application was

allowed, and they were allotted 14 Std. acres 1¾ units in the following

villages of Kapurthala District in the year 1962-63: -

i) Village Budha Pindar/199: 7-12 ¼ S.As.

ii) Village Dhilwan/96: 1-7 ½ S.As.

iii)Village Subhanpur/1: 2-5 ¼ S.As.

iv)Village Bhandal Bet/37: 2.8 S. S.As. Total: 14.1 S.As.

They were also conferred with the proprietary rights under

Section 10 of the Act, in the form of grant of compensation in lieu of the

land left by their father in Pakistan. After acquiring proprietary rights in

the land, they sold the land for valuable consideration, without notice to

the petitioners, vide registered deeds executed by them on 23.11.1962,

24.7.1963, 2.11.1963 and lastly on 29.8.1967. The possession of the

land was handed over to the vendees i.e. the petitioners.

Subsequently, during the check of allotments, made to the

various land allottees, the Rehabilitation Department found that

respondents No.2 and 3 had secured double allotment, whereupon the

Managing Officer (Directory), found that the land allotment in village CWP No.5662 of 1986 -3-

Beri, Tehsil and District Gurdaspur, was not followed by the grant of

proprietary rights in favour of respondents No.2 and 3. Whereas, with

respect to the allotment made in the Kapurthala District, respondents

No.2 and 3, were granted proprietary rights, therefore, he cancelled the

allotment made in the name of Budha Singh, father of respondents No.2

and 3, in village Beri, Tehsil and District Gurdaspur, on 21.5.1976.

Respondents No.4 and 5, who had purchased the land in

village Beri, Tehsil and District Gurdaspur, from respondents No.2 and 3

vide four registered sale deeds challenged the order of cancellation

passed by the Managing Officer (Directory), by filing appeal before the

appellate authority. The appellate authority set aside the order dated

21.5.1976, and remanded the case to Assistant Registrar-cum-Managing

Officer with the direction, that the allotment made to respondents No.2

and 3 in Kapurthala District, should be got cancelled. This order was

passed on 24.2.1978.

In view of the order passed by the appellate authority, the

Assistant Registrar-cum-Managing Officer, made a reference dated

16.6.1978 to the Chief Settlement Commissioner, for cancellation of

Kapurthala District land allotment, made to respondents No.2 and 3.

The Chief Settlement Commissioner, accepted the reference and

cancelled the allotment, vide order dated 5.2.1979, which is claimed by

the petitioners to have been done in mechanical manner.

The petitioners claimed, that they were never associated by the

Managing Officer, Settlement Commissioner or the Chief Settlement

Commissioner, while passing orders affecting their rights. The case of

the petitioners is, that on coming to know about the last order i.e. CWP No.5662 of 1986 -4-

5.2.1979, passed by the Chief Settlement Commissioner, four revision

petitions were filed, as vendees of four villages in Kapurthala District.

The Chief Settlement Commissioner accepted the revision petitions and

restored the allotment of Kapurthala District vide order dated 1.10.1980

attached as Annexure P-4 to this petition. The revision petitions were

accepted, by holding, that the sale in respect of the land allotted in the

Kapurthala District was made after acquisition of proprietary rights

under Section 10 of the Act, whereas the allotment made in the

Gurdaspur District, was only quasi-permanent not conferring the

proprietary rights, on respondents No.2 and 3, thus, they had no legal

right to sell.

Respondents No.4 to 15, challenged the order passed by the

Chief Settlement Commissioner under Section 33 of the Act.

The impugned order was challenged by the petitioners on the

following grounds: -

(i) That the petitioners purchased the land allotted to

respondents No.2 and 3 in Kapurthala District, qua

which the vendors had acquired the proprietary rights

under Section 10 of the Act, whereas respondents

No.4 to 15 have purchased the land allotted in village

Beir, Tehsil and District Gurdapur, subsequently in the

years 1968 to 1972, from respondents No.2 and 3,

though they were only quasi-permanent allottees and

had not acquired proprietary rights. The vendors of

respondents No.4 to 15, therefore, were having no

transferable title.

CWP No.5662 of 1986 -5- (ii) That the sale in favour of the petitioners, being prior in

time, deserved to be protected under the provisions of

the Transfer of Property Act (hereinafter referred to as

'the Property Act'), whereas the land of the subsequent

vendees, was required to be retrieved.

(iii) That the petitioners being bona fide purchasers for

consideration without notice from respondents No.2

and 3, were protected under Section 41 of the Property

Act.

(iv) That the order was arbitrary and perverse being non-

speaking and having been passed without calling for

the record of allotment of Kapurthala District and

Gurdaspur District.

(v) That the petitioners having improved the quality of the

land, were entitled to compensation for improvement.

The petitioners at the time of motion hearing, challenged the

impugned order by claiming to be bona fide purchasers for value from

the original allottees, upon whom the proprietary rights had been

conferred more than two years back, therefore, they were protected under

Section 41 of the Property Act.

To support this contention, reliance was placed on four

decisions of this Court in Kali Ram and others Vs. Union of India and

others, 1976 PLR 475, Rattan Singh and another Vs. Chief Settlement

Commissioner Haryana and others, 1978 PLJ 47, Achhar Singh and

others Vs. The State of Punjab and others, 1979 RLR 360 and Sadha

Singh and another Vs. The Chief Settlement Commissioner, Haryana CWP No.5662 of 1986 -6-

and others 1981 RLR 176.

The Hon'ble Division Bench doubted, the observations made

by this Court, holding the vendees to be protected under Section 41 of

the Property Act, and accordingly made reference to the Larger Bench

for the following reasons: -

(1) The provisions of Section 41 of the Property Act are

attracted only when with the consent, express or

implied, of the persons interested in immovable

property, a person is the ostensible owner of such

property and transfers the same for consideration. It

is, therefore, obvious that before this provision can be

attracted, there has to be a real owner and an

ostensible owner who transfers the property with

express or implied consent of the former. In the case

before the Division Bench and the other cases noticed

above, the allottee upon whom the rights had been

conferred was the real owner and there was no

question of anybody being the ostensible owner.

(2) The principle involved in section 41 of the Property

Act is basically one of estoppel. It is well-established

that the principle of estoppel cannot override the

provisions of a Statute. Obviously, therefore, the

provisions of section 41 of the Property Act would not

be able to override the provisions of section 24 of the

Act which authorises the Chief Settlement

Commissioner to cancel any allotment.

CWP No.5662 of 1986 -7- (3) It is again highly doubtful if the word "persons"

would include the Union or the State Government.

Reference in this context may profitably be made to

Sarkar-E-Aali Zaria Nazim v. Athar, A.I.R. 1957

Andh. Pra. 714 and M/s Jaswant Sugar Mills Ltd. V.

Union of India and another, A.I.R. 1966 Punjab 229.

(4) Express or implied consent under section 41 of the

Property Act has to be a valid and free consent. If the

allotment has been secured by fraud or

misrepresentation and is sought to be cancelled on

such ground under Section 24 of the Act, it cannot be

said that the allottee on whom the permanent rights

were conferred was the ostensible owner with express

or implied consent, the alleged consent having been

procured by misrepresentation or fraud.

Mr. Rajbir Wasu, learned counsel for the petitioners, in

support of the plea, that the petitioners are entitled to protection under

Section 41 of the Property Act being bona fide purchasers for

consideration, contended that in order to draw protection under Section

41 of the Property Act three ingredients required to be proved are (1)

person interested in immovable property, (2) ostensible owner of the

property and (3) consent express or implied of the person interested in

the immovable property regarding ostensible ownership.

The contention raised was that if three ingredients, referred to

above, are fulfilled then the subsequent vendee gets a right to claim

protection under Section 41 of the Property Act. CWP No.5662 of 1986 -8-

The learned counsel for the petitioners contended, that

whenever allotment made in favour of the allottee, who is registered

owner in the revenue record can lead to only one conclusion that the

property owned by the Union or the State Government and the person

registered as owner in the revenue record would be an ostensible owner,

as on the date of sale by registered document he was so recorded, but

because of subsequent conclusion his title gets divested from the date of

his allotment itself. The transfer has to be held with the implied consent

of the Union or the State Government.

It was the contention of the learned counsel for the petitioners,

that the "person" would include the Union Government or the State

Government, as the definition of the "person" as given in the General

Clauses Act, as interpreted by the Courts, cannot be given restricted

meaning.

In support of the contentions referred, the learned counsel for

the petitioners relied on the well known passage from the judgment of

the Judicial Committee in Ramcoomar Koondoo and others Vs.

Macqueen and another, 1872 J.C. 40, i.e.: -

"It is a principle of natural equity, which must be universally applicable, that where one man allows another to hold himself out as the owner of an estate, and a third person purchases it for value from the apparent owner in the belief that he is the real owner, the man who so allows the other to hold himself out shall not be permitted to recover upon his secret title unless he can overthrow that of the purchaser by showing, either that he had direct notice, or something which amounts to constructive notice, of the real title, or that there existed CWP No.5662 of 1986 -9-

circumstances which ought to have put him upon an inquiry that, if prosecuted, would have led to a discovery of it."

This principle is embodied under Section 41 of the Property

Act, thereby making an exception to settled law, that a person cannot

confer a better title than he has.

Reliance was also placed on the judgment of this Court in Shri

Damodar Dass, Financial Commissioner, Chandigarh, and others Vs.

Joginder Singh and others, LPA No.181 of 1972 decided on 18.9.1975,

wherein the Hon'ble Division Bench, held that the vendee from the

allottee is entitled to protection under Section 41 of the Property Act to

protect the land.

The Hon'ble Division Bench was pleased to lay down as

under: -

"We feel that it is also necessary to deal with another important aspect of this case. Even if the Rehabilitation Authorities had sought the remedy in the Civil Court, that would not have been granted to them in view of the provisions of section 41 of the Transfer of Property Act, 1882, which are fully attracted in this case. That section reads as under: -

"41. Where, with the consent, express or implied, of the persons interested in immoveable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care to ascertain that the transferor CWP No.5662 of 1986 -10-

had power to make the transfer, has acted in good faith."

The land in dispute being evacuee property had vested in the Central Government. Hence, the Central Government which were interested in that property, gave its express consent when that property was given to the Muslim owners in lieu of their land which had been erroneously treated as evacuee property and then allotted as such to some displaced persons. Thus, the Muslim owners, the predecessors-in-interest of respondents Nos. 1 to 6, who were the ostensible owners of that land with an express consent of the Central Government which were interested in the land, sold the same in that capacity to the petitioner-respondents Nos.1 to 5, and one Chanan Singh, the predecessor-in-interest of Smt. Devi, petitioner-respondent No.6, for consideration of Rs.30,000/- by means of the registered sale-deed, dated 21st June, 1965. That being so, the transfer of the land in question made in favour of respondents Nos.1 to 6 could not be got declared voidable by the Rehabilitation Authorities on the ground that the transferors were not empowered to make it because it appears that the transferees, after taking reasonable care to ascertain from the revenue record that the transferors being the ostensible owners had the power to make the transfer, had acted in good faith while purchasing the land for consideration as stated above. In view of this matter, respondents Nos.1 to 6, could not be ousted from the land in dispute even if the Rehabilitation Authorities had sought the remedy in the Court of law, because the provisions of section 41 of the Transfer of Property Act, would have been attracted and created a hurdle in the way of the Rehabilitation Department if it had sought relief of getting the land in CWP No.5662 of 1986 -11-

dispute retrieved from the transferees in the Court of law."

The learned counsel for the petitioners also placed reliance on

the judgment of this Court in Kali Ram and others Vs. Union of India,

1976 PLR 475, wherein the Hon'ble Single Bench of this Court, by

placing reliance on the judgment of the Hon'ble Division Bench in Shri

Damodar Dass, Financial Commissioner, Chandigarh, and others Vs.

Joginder Singh and others (supra), held the subsequent vendee to be

entitled, to protection of Section 41 of the Property Act.

Reliance was also placed on the judgment of this Court in

Rattan Singh and another Vs. Chief Settlement Commissioner

Haryana and others, 1978 PLJ 47, wherein again the Hon'ble Single

Bench of this Court held, that the bona fide purchaser for consideration

after due enquiry could claim protection/benefit under Section 41 of the

Property Act. It was also held that Sections 19 and 24, of the Act and

the Scheme of the Act empowering the cancellation of allotments did not

bar invoking the benefit of Section 41 of the Property Act. In support of

this reliance was placed on the Hon'ble Division Bench judgment of this

Court in Shri Damodar Dass, Financial Commissioner, Chandigarh,

and others Vs. Joginder Singh and others (supra).

Reliance was also placed by the learned counsel for the

petitioners on the judgment of this Court in Achhar Singh and others

Vs. The State of Punjab and others, 1979 Revenue Law Reporter 360,

holding that: -

"3. The only question that arises for determination is as to whether Respondents 5 to 11 are protected under Section 41 of the Act. This matter is now settled by this CWP No.5662 of 1986 -12-

Court in Rattan Singh and another Vs. Chief Settlement Commissioner Haryana and others, wherein the following observations may be read with advantage: -

"(a) when a situation is created by the Union of India, acting through its important functionaries under the provisions of the Displaced Persons (Compensation and Rehabilitation) Act and the Rules framed thereunder, by transferring ownership for a sufficiently long time during which transfers are made by the transferees from the Union of India, the bona fide purchasers for consideration from these transferees cannot be left to suffer. Such a situation calls for the invoking of section 41 of the Transfer of Property Act for the rights acquired by the innocent purchasers from ostensible owners."

Reliance was thereafter placed on the judgment of this Court

in Sadha Singh and another Vs. The Chief Settlement Commissioner,

Haryana and others, 1981 Revenue Law Reporter 176. In this case

again the vendee from the allottee was held entitled to protection of

Section 41 of the Property Act. The Hon'ble Single Bench of this Court

had relied upon the judgment of this Court in Shri Damodar Dass,

Financial Commissioner, Chandigarh, and others Vs. Joginder Singh

and others (supra) and Kali Ram and others Vs. Union of India and

others (supra).

The learned counsel for the petitioners also placed reliance on

the judgment of this Court in Ved Kumari Vs. Union of India and

others, 1989(1) PLR 375. In this judgment again the benefit of Section

41 of the Property Act was given to the vendees by relying upon the CWP No.5662 of 1986 -13-

judgment of this Court in Shri Damodar Dass, Financial

Commissioner, Chandigarh, and others Vs. Joginder Singh and others

(supra) and Kali Ram and others Vs. Union of India and others (supra).

Reliance was thereafter placed on the judgment of this Court

in Mohinder Singh Vs. State of Punjab and others, 1996(2) PLR 225,

wherein this Court held that where the property has been allotted before

the land was transferred to the State Government and the original allottee

had sold the land by way of registered sale deed, the bona fide purchaser

for consideration could not be made to suffer.

However, the Hon'ble Division Bench of this Court in

Subhash Chand and others Vs. The Financial Commissioner Revenue

and others, LPA No.184 of 2004 decided on 24.12.2008, took a

different view to hold as under: -

"Learned counsel for the respondents rely upon the judgment of Hon'ble Supreme Court in Jote Singh (dead) by L.Rs. v. Ram DasMahto and others, AIR 1996 SC 2773. It has been held that plea of bonafide purchaser under Section 41 of the Act is not applicable to the involuntary transfers. There is no question of the Court ever playing the role of an ostensible owner or representative owner of the property when selling so as to attract the provisions of Section 41 of the Act. Reference is also made to Ramrao Jankiram Kadam vs. State of Bombay and others, AIR 1963 Supreme Court 827; Kashmir Singh and others vs. Panchayat Samiti, Ferozpur and others, (2004) 6 Supreme Court Cases 207; Shankar and another vs. Daooji Misir and others, AIR 1931 Privy Council 118; Kanhiya Lal minor through his mother Mt. Raj Raji vs. Deep Chand and another, AIR 1947 Lahore 199 (Division Bench);

CWP No.5662 of 1986 -14- Shamsher Chand v. Bakhshi Mehr Chand and others, AIR 1947 Lahore 147 (Full Bench); Gurcharan Singh and others vs. Punjab State Electricity Board and others, AIR 1989 Punjab 127; Gurcharan Singh vs. Roori alias Jito and others; 1984 PLR 68; and Jagar vs. Mst. Chhoto and others, 1963 Current Law Journal,

425. Reliance is also placed upon Hardev Singh vs. Gurmail Singh (dead) by LRs, (2007) 2 Supreme Court Cases 404, wherein ingredients for applicability of the provisions of Section 41 of the Act have been delineated. It is, thus, argued that that on account of the aforesaid judgments, and the fact that the earlier judgments of predecessor Court of this Court were not even referred to in the judgments relied upon by the appellant, therefore, the judgments relied upon by the learned counsel for the appellants do not lay down binding precedent. Before considering the respective contention of the parties, it may be noticed that the provisions of Section 41 of the Act are not applicable to the States of Punjab, Haryana and U.T., Chandigarh, i.e. In respect of the area over which this Court exercises territorial jurisdiction. It is equally well settled that even if the provisions of the Act are not applicable, the principles of the Act which are in consonance with equity, justice and good consciousness will be applicable. With the said background, Section 41 of the Act reads as under :-

"Where, with the consent, express or implied, of the persons interested in immovable property, a person is the ostensible owner of such property and transfers the same for consideration, the transfer shall not be voidable on the ground that the transferor was not authorised to make it: provided that the transferee, after taking reasonable care CWP No.5662 of 1986 -15-

to ascertain that the transferor had power to make the transfer, has acted in good faith."

Thus, the following are the ingredients of Section 41 of the Act, which are required to be satisfied before the benefit of purchase in the case of sale by a person who is not the owner is given to the purchaser :-

(i) that the transferor is the ostensible owner;

(ii) he is so by the consent, express or implied, of the real owner;

(iii) the transfer is for consideration; and

(iv) that transferee has acted in good faith, taking reasonable care to ascertain that transferor had power to transfer.

Even if the benefit of 3rd and 4th ingredient is granted to the purchaser in the present appeal, the question is whether the 1st and 2nd ingredient is satisfied by the appellant. The first and foremost ingredient is that the transferor is ostensible owner. The allotment in favour of transferor has been set aside. The cancellation of allotment can be on account of fraud or for any other reason. The transferor loses title from the date of allotment and not from the date of order. The transferor by virtue of the original alltoment can be said to be permissible user of the land before the allotment was cancelled but such transferor cannot be said to be ostensible owner as the ownership itself has been set side either as a result of fraud or for some other irregularity. The transfer in favour of the transferor was invalid and void from the date of transfer though factum of fraud or irregularity came to the notice of the real owner (Central Government) subsequently. Therefore, it cannot be said that the transferor of the appellant was the ostensible owner.

Once the allotment is cancelled, such cancellation is not CWP No.5662 of 1986 -16-

prospective i.e., from the date of order, but as if allotment was never made. A Full Bench of this Court in Balwant Kaur v. Chief Settlement Commissioner(Lands) Punjab, 1963 Punjab Law Report, 1141, has held that the Chief Settlement Commissioner is competent to cancel or set aside the order of transfer if the sanad is granted or the sale deed has been executed. It has been held that on such order being made, sanad or sale deed will automatically fall with it. The majority has upheld the earlier judgment of Division Bench of this Court reported as Bara Singh vs. Joginder Singh, 1959 PLR 127. The majority opinion reads as under:-

"49. As regards the second additional ground, the learned Judges have not given any reasons for the same. Moreover, I have already held above that the sale-deed was not, in any way, independent of the order of transfer. If the order of transfer is reversed, the sale-deed must automatically go with it. Of course, title is created by the execution of the sale-deed, but if the transaction behind the deed is set aside, the deed has got no value in the eye of law. Just as under the Code of Civil Procedure when the sale is set aside, the sale certificate automatically goes and is a waste paper, similar is the case of a sale-deed or a sanad, when the order of transfer, on the basis of which the sale deed or sanad was granted, is reversed.

55. It was conceded by the learned counsel for the petitioners that the order of transfer could be reversed by the Chief Settlement Commissioner if the sanad was not granted or the sale-deed was not executed. I have CWP No.5662 of 1986 -17-

already held above that the grant of a sanad or the execution of a sale deed does not make any difference. If the order of transfer is set aside by the Chief Settlement Commissioner, the sanad or the sale-deed will automatically fall with it. Whatever powers the Chief Settlement Commissioner had for setting aside the order of transfer before the grant of sanad or the execution of the sale deed, the same powers will be exercised by him even after the issuance of the sanad or the sale-deed. These powers are to be sought in the Act, itself, and not from any other enactment. Various officers have been given powers under the Act and the rules framed thereunder for dealing with different kinds of properties. All these orders are liable to be revised by the Chief Settlement Commissioner under section 24 of the Act. If there has been an infringement of any rule or law, the Chief Settlement Commissioner will set aside those orders........."

The aforesaid judgment was approved by the Supreme Court in Pala Singh (deceased) by LRs vs. Union of India and others, 1987 (Supp) Supreme Court Cases

201. Thus, the cancellation of the allotment has the effect of loss of title of the allottee from the date of allotment itself. Therefore, keeping in view the principle nemo dat quod non habet i.e., no one can convey a better title than what he had, no title could be created in favour of the appellants.

At this stage, reference may be made to another judgment relied upon by learned counsel for the appellants CWP No.5662 of 1986 -18-

reported as Crystal Developers vs. Smt.Asha Lata Ghosh (dead) through LRs, AIR 2004 SC 4980, wherein sale effected in pursuance of the order granting probate was held to be valid though the probate was revoked subsequently. The said judgment is not helpful. The argument raised by the learned counsel for the appellants inasmuch as the sale in the aforesaid case was in pursuance of the order granting probate. The order in probate proceedings is judgment in rem and ensures validity of an action taken on the strength of such an order, whereas in the present case, the sale is by a person in whose favour allotment was found to be fraudulent. The second ingredient is equally important i.e. the transfer by the ostensible owner is by the consent, express or implied, of the real owner. Meaning thereby, the real owner must consent to the transfer. Now if the allottee has obtained allotment by fraud or some other irregularity, can such transfer of rights in the allotment assume express or implied consent of the real owner (Central Government). Once the quasi judicial authority under the 1954 Act has cancelled the allotment and such cancellation of allotment has been upheld, therefore, it is preposterous even to allege that there was consent of the Central Government for subsequent transfer by the allottee. In fact, the Central Government is the custodian of all evacuee property and is duty bound to allot the same to the eligible displaced persons. The duty of the Central Government is onerous. Such public duty to distribute the evacuee property amongst the displaced persons cannot be compromised by giving benefit to the purchaser from an allottee who has obtained fraudulent or even irregular allotment."

(This judgment deals with involuntary transfers, therefore, cannot be a

precedent for deciding the issue involved) CWP No.5662 of 1986 -19-

On the second question, the learned counsel for the petitioners

contended, that it cannot be disputed that the principle enshrined in

Section 41 of the Property Act is basically of estoppel, but once it has

been given statutory recognition, it is declared law, and not an equitable

principle, therefore, the provisions of Section 24 of the Act cannot be

treated to be a bar to invoke the provisions of Section 41 of the Transfer

of Property Act, as was held by this Court in Rattan Singh and another

Vs. Chief Settlement Commissioner Haryana and others (supra).

On the third question referred, the learned counsel for the

petitioners contended that the word "person" would include Union or the

State Government, as the definition of a "person" cannot be given any

restricted meaning unless it so defined in the statute under consideration.

The learned counsel for the petitioners referred to the

definition of "person" as given in the General Clauses Act, which reads

as under: -

""Person" shall include any company or association or body of individuals, whether incorporated or not."

The contention, therefore, was, that any body or association,

including State, which is capable of holding the property or exercise

other rights under the law, would come within the definition of the word

"person" as there is no stipulation under the Act, the word "person"

would not include Union and the State Government.

On the fourth question, the learned counsel for the petitioners

contended, that there can be no dispute with the proposition, that an

express or implied consent under Section 41 of the Property Act is to be

valid and free consent, as it is for the person claiming benefit under CWP No.5662 of 1986 -20- Section 41 of the Property Act, to prove the consent express or implied

of the person interested in immovable property, and that the transfer was

for consideration, without notice of the defect in title of ostensible

owner.

In order to defeat this right, fraud has to be proved qua the

vendees and not the vendor, as any other interpretation would defeat the

very object of Section 41 of the Property Act as even by fulfilling the

requirement of Section 41 of the Property Act, no person can succeed, as

vendor will have no interest left.

The prayer of the learned counsel for the petitioners was that

the reference, be held in favour of the petitioners by holding that

subsequent vendee can invoke the provisions of Section 41 of the

Property Act to protect his ownership and that the provisions of Section

24 or Section 19 of the Act cannot defeat this equitable right duly

recognised by the statute i.e Property Act.

On consideration of the contentions and the reference, we are

of the view, that it cannot be disputed that in order to succeed in a plea

of bona fide purchaser, under Section 41 of the Property Act, it is to be

proved, that the transferor is ostensible owner. That he is so with the

consent express or implied of the real owner. That the transfer is for

consideration, and that the transferee has acted in good faith taking

reasonable care to ascertain that the transferor had the power to transfer.

The word "ostensible" according to dictionary means

apparently true, but not necessarily so, therefore, ostensible owner would

include even the transferee from the State Government or the Union

Government, as in certain situations, the Union or the State Government CWP No.5662 of 1986 -21-

can be held to be real owner and the allottee ostensible owner being

recorded as such in the revenue record, though he is actually not the

owner, by legal fiction, as cancellation is to relate back to date of

allotment.

Therefore, in order to attract the provisions of Section 41 of

the Property Act, it is immaterial whether the true owner is the

Government or any other person, specially when after the declaration of

benami transaction as illegal in view of coming into force the Benani

Transactions (Prohibition) Act, 1988, the consent of true owner has lost

importance, as for all intents and purposes the person registered as

owner of the property is to be treated as true owner of the property and

the true owner is otherwise debarred from claiming any interest or right

in property. The right of vendee cannot be taken away to claim the

protection under Section 41 of the Property Act. Though provisions of

Benani Transactions (Prohibition) Act, 1988 will not be applicable to

cases filed prior to enforcement of the Act.

Though in reply to the first question raised, it has to be

answered that the allottee can be treated to be an ostensible owner and

the Government as real, but, whether the benefit of Section 41 of the

Property Act would be permissible to subsequent vendee, is required to

be considered under question No.2.

In order to answer question No.2, referred to the Full Bench, it

will be necessary to go through Sections 19 and 24 of the Act, which

read as under: -

"19. Power to vary or cancel leases or allotment of any property acquired under this Act. (1) Notwithstanding CWP No.5662 of 1986 -22-

anything contained in any contract or any other law for the time being in force but subject to any rules that may be made under this Act, the managing officer or managing corporation may cancel any allotment or terminate any lease or amend the terms of any lease or allotment under which any evacuee property acquired under this Act is held or occupied by a person, 123 Whether such allotment or lease was granted before or after the commencement of this Act.

(2) Where any person,--

(a) has ceased to be entitled to the possession of any evacuee property by reason of any action taken under sub-section (1), or

(b) is otherwise in unauthorized possession of any evacuee property or any other immovable property forming part of the compensation pool; he shall, after he has been given a reasonable opportunity of showing cause against his eviction from such property, surrender possession of the property on demand being made in this behalf by the managing officer or managing corporation or by any other person duly authorized by such officer or corporation.

(3) If any person fails to surrender possession of any property on demand made under sub-section (2), the managing officer or managing corporation may, notwithstanding anything to the contrary contained in any other law for the time being in force, eject such person and take possession of such property and may, for such purpose, use or cause to be used such force as may be necessary.

(4) Where a managing officer or a managing corporation is satisfied that any person, whether by way of allotment or lease, is, or has at any time been, in possession of any evacuee property acquired under this Act to which he CWP No.5662 of 1986 -23-

was not entitled, or which was in excess of that to which he was entitled, under the law under which such allotment or lease was made or granted, then, without prejudice to any other action which may be taken against that person, the managing officer or the managing corporation may, having regard to such principles of assessment of rent as may be specified in this behalf by the Central Government, by order, assess the rent payable in respect of such property and that person shall be liable to pay the rent so assessed for the period for which the property remains or has remained in his possession: Provided that no such order shall be made without giving to the person concerned a reasonable opportunity of being heard.

(5) Where any person is, or has at any time been, in unauthorised possession of any evacuee property acquired under this Act the managing officer or the managing corporation may, having regard to such principles of assessment of damages as may be specified in this behalf by the Central Government, assess the damages on account of the use and occupation of such property and may, by order, require that person to pay the damages within such time and in such instalments as may be specified in the order: Provided that no such order shall be made without giving to the person concerned a reasonable opportunity of being heard."

"24. Power of revision of the Chief Settlement Commissioner. (1) The Chief Settlement Commissioner may at any time call for the record of any proceeding under this Act in which a Settlement Officer, an Assistant Settlement Officer an Assistant Settlement Commissioner, a managing officer or a managing corporation has passed an order for the purpose of satisfying himself as to the legality or propriety of any such order and may pass CWP No.5662 of 1986 -24-

such order in relation thereto as he thinks fit. (2) Without prejudice to the generality of the foregoing power under sub-section (1), if the Chief Settlement Commissioner is satisfied that any order for payment of compensation to a displaced person or any lease or allotment granted to such a person has been obtained by him by means of fraud, false representation or concealment of any material fact, then notwithstanding anything contained in this Act, 129 the Chief Settlement Commissioner may pass an order directing that no compensation shall be paid to such a person or reducing the amount of compensation to be paid to him, or as the case may be, cancelling the lease or allotment granted to him; and if it is found that a displaced person has been paid compensation which is not payable to him, or which is in excess of the amount payable to him, such amount or excess, as the case may be, may, on a certificate issued by the Chief Settlement Commissioner, be recovered in the same manner as an arrear of land revenue. (3) No order which prejudicially affects any person shall be passed under this section without giving him a reasonable opportunity of being heard. (4) Any person aggrieved by any order made under sub-

section (2), may, within thirty days of the date of the order, make an application for the revision of the order in such form and manner as may be prescribed to the Central Government and the Central Government may pass such order thereon as it thinks fit."

The reading of Section 19 of the Act would show that it contains an non

obstante clause, therefore, the provisions would apply notwithstanding

anything contained in any agreement or any other Act for the time being

in force.

It cannot be disputed that the Act is a special Act, whereas the CWP No.5662 of 1986 -25- Transfer of Property Act, is a general Act. Therefore, the provisions of

the Property Act, would have no application to orders passed under

Sections 19 and 24 of the Act.

In support of this conclusion, reference can be made to the

judgment of the Hon'ble Supreme Court in Harishchandra Hegde Vs.

State of Karnataka and others, (2004)9 Supreme Court Cases 780,

wherein the Hon'ble Supreme Court while interpreting the provisions of

the Karnataka Scheduled Castes and Scheduled Tribes (Prohibition of

Transfer of Certain Lands) Act, 1978 vis-a-vis Section 51 of the Property

Act, has laid down as under: -

"13. By reason of an order passed under Section 4 of the Act, the lands are directed to be restored in the event the illegalities specified therein are discovered. The consequences contained in Section 5 of the Act apply automatically in the event an order under Section 4 of the Act is passed. Section 4 of the Act contains a non obstante clause. The said provision would, thus, apply notwithstanding anything contained in any agreement or any other Act for the time being in force. The Act is a special Act whereas the Transfer of Property Act is a general Act and in that view of the matter also Section 51 of the Transfer of Property Act will have no application and the consequences contained in Section 5 would prevail."

The Hon'ble Supreme Court in Hardev Singh Vs. Gurmail

Singh (dead) by LRs., (2007)2 Supreme Court Cases 404, while

interpreting the scope of provisions of Sections 41 and 42 of the

Property Act, has laid down as under: -

"9. Application of Section 41 of the Act is based on the CWP No.5662 of 1986 -26-

law of estoppel to the effect that if a man has represented that the transferor consents to an act which has been done and that he would not offer any opposition thereto, although the same could not have been lawfully done without his consent and he thereby induces others to do that from which they might have abstained, he could not question the legality of the act he had so sanctioned, to the prejudice of those who have so given faith to his words or to the fair inference to be drawn from his conduct.

10. The ingredients of Section 41 of the Act are:

(1) the transferor is the ostensible owner; (2) he is so by the consent, express or implied, of the real owner;

(3) the transfer is for consideration; (4) the transferee has acted in good faith, taking reasonable care to ascertain that the transferor had power to transfer.

11. Section 43, on the other hand, embodies a "rule of feeding the estoppel" and enacts that a person who makes a representation shall not be heard to allege the contrary as against a person who acts thereupon and it is immaterial whether the transferor acts bona fide or fraudulently in making the representation.

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

(1) the contract of transfer was made by a person who was competent to contract; and (2) the contract would be subsisting at the time when a claim for recovery of the property is made.

13. However, the provisions would have no application if the transfer was invalid as being forbidden by law or contrary to public policy, as envisaged under Section 23 of the Contract Act. Thus, no estoppel can be pleaded CWP No.5662 of 1986 -27-

contrary to the provisions of a statute. The "rule of feeding the estoppel" shall apply in absence thereof."

In view of the authoritative pronouncements of the Hon'ble

Supreme Court, question No.2 is answered against the petitioners, by

holding, that the provisions of the special statute, would override the

provisions of Section 41 of the Property Act.

On the third question it is held that the "person" would include

Union or the State Government, as the "person" has not been defined in

the statute, therefore, would need liberal interpretation. In support of

this finding, reference can be made to the judgment of the Hon'ble

Supreme Court in Samatha Vs. State of Andhra Pradesh and others,

AIR 1997 Supreme Court 3297, wherein it has been held as under: -

"There is no reason to consider the word 'person' in a narrowsense. It must be construed in a broader perspectivity, unless the statute,either expressly or by necessary implication, exempts the State from the operation of the Act as against the State and would include "State Government".

The maxim "reddendo singula singulis" will apply to the interpretation of the word 'person" so that the general meaning of the word "person" in its generic sense with its width would not be cut down by the specific qualification of one species, i.e., natural "person" when it is capable to encompass, in its ambit, natural persons, juristic persons and constitutional mechanism of governance in a democratic set up. It has already been held, and bears no repetition, that the State, by Cabinet form of Government, is a persona ficta a Corporate sole. Constitution empowers the State to acquire, hold and dispose of their property. The Governor in his personal responsibility is empowered to maintain peace and good government in CWP No.5662 of 1986 -28-

scheduled area. The Fifth Schedule to the Constitution empowers him to regulate allotment of the land by para 5 (2)(b) read with Section 3 of the Regulation of the land be it between natural persons, i.e., tribals and non-tribals; it imposes total prohibition on transfer of the land in scheduled area. The object of the Fifth Schedule and the Regulation is to preserve tribal autonomy, their culture and economic empowerment to ensure social, economic and political justice for preservation of peace and good government in the Scheduled Area. Therefore, all relevant clauses in the Schedule and the Regulation should harmoniously and widely be read so as to elongate the aforesaid constitutional objectives and dignity of person to the Scheduled Tribes, preserving the integrity of the Scheduled Areas and ensuring distributive justice as an integral scheme thereof. Clauses (a) and (c) of sub para (2) of para 5 of the Fifth Schedule prohibits transfers Inter vivos between tribals and non-tribal natural persons and prevents money-lenders to exploit the tribals. Clause (b) intends to regulate allotment of land not only among tribals but also prohibits allotment of the land belonging to the government to the non- tribals. In that behalf, wider interpretation of "regulation" would include "prohibition" which should be read into that clause. If so read, it subserves the constitutional objective of regulating the allotment of the land in Scheduled Areas exclusively to the Scheduled Tribes. Clause 5(2)(b) ensures distributive justice of socio-economic empowerment which yields meaningful results in reality . If purposive construction, in this backdrop is adopted, no internal or external contradiction would emerge. The word "person" would include both natural persons as well as juristic person and constitutional Government. This liberal and wider CWP No.5662 of 1986 -29-

interpretation would maximise allotment of Govern-ment land in scheduled area to the tribals to make socio- economic justice assured in the Preamble and Articles 38, 39 and 46, a reality to the tribals. The restricted interpretation would defeat the objective of the Constitu- tion. The word "person" would be so interpreted as to include State or juristic person Corporate sole or persona ficta. Transfer of land by the juristic persons or allotment of land by the State to the non- tribals would stand prohibited, achieving the object of para 5(2) of the Fifth Schedule of the Constitution and Section 3 of the Regulation. If the word 'person' is interpreted to mean only natural persons, it tends to defeat the object of the Constitution, the genus and the Regulation, its species. As a corollary, by omission in the final draft of the Fifth Schedule of the power of the State Government to transfer its land to the non-tribals with the sanction of a competent authorised officer or authority would, by interpretation brought into effect and the object of the Constitution would easily be defeated. We are, therefore, inclined to take the view that the word 'person' includes the State Government. The State Government also stands prohibited to transfer by way of lease or any other form known to law, the Government land in scheduled area to non-tribal person, be it natural or juristic person except to its instrumentality or a Co-operative Society composed solely of tribes as is specified in the second part of Section 3(1) (a). Any other interpretation would easily defeat the purpose exclusive power entrusted by the Fifth Schedule to the Governor. If the Cabinet form of Government would transfer the land of the Government to non-tribals peace would get disturbed, good governance in scheduled area would slip into the hands of the non-tribals who would drive out the tribals from CWP No.5662 of 1986 -30-

scheduled area and create monopoly to the well developed and sophisti-cated non-tribals; and slowly, and imperceptible, but surely, the land in the scheduled area would pass into the lands of the non-tribals. The letter of law would be an empty content and by play of words deflect the course of justice to the tribals and denude them of the socio-economic empowerment and dignity of their person."

The Hon'ble Supreme Court in State of Punjab Vs. Okara

Grain Buyers Syindicate Ltd. and Ors., AIR 1964 Supreme Court 669,

while interpreting the provisions of the Displaced Persons (Debts

Adjustment) Act, held that the word "person" would include State

Government.

The finding of the Hon'ble Supreme Court reads as under: -

"22. We shall now proceed to detail the substantive provisions of the enactment which bear upon the question now at issue. That it was a beneficent piece of legislation enacted to afford relief to persons who had suffered displacement by reason of the partition is not in dispute. The hardship which such persons suffered either as creditors or as debtors was the subject of alleviation by the Act. In broad outline without going into minute details the substance of the remedial provisions was this: As regards displaced creditors the relief afforded to them was by permitting them an inexpensive procedure for enforcing their claims together with prescribing the forum which made substantial departures from the principles which underlay s. 20 of the Civil Procedure Code which obviously could not wholly fit into the problems created by partition. The relief afforded to displaced debtors was naturally more extensive. Besides certain special provisions in respect CWP No.5662 of 1986 -31-

of secured debts there were elaborate provisions for scaling down debts due to unsecured creditors, the principle underlying being that the debtor should be left with enough to live, while the creditors should between themselves take the entirety of the property save that which was left to the debtor. There was a sort of distribution of the assets among the proved creditors. The benefits provided for the displaced debtor and to the displaced creditor were an integrated scheme; the one running into the other.

23. Chapter 11 in which s. 13 occurs is headed 'Debt Adjustment Proceedings'. It opens with s.5 which deals with applications by displaced debtors for the adjustment of their debts. That section runs, to quote only the material words:

"A displaced debtor may make an application for the adjustment of his debts, to the Tribunal within the local limits of whose jurisdiction he actually and voluntarily resides, or carries on business or personally works for gain."

Sub-section (2) specifies what the application shall contain and among the matters to be included in the application are:

(1) a schedule containing full particulars of all his debts, whether owed jointly or individually, with the names and addresses of his creditors and his joint-

debtors.................. (2) a schedule of all his properties, both movable and immovable, including claims due to him. The purpose of these schedules would be apparent from s. 32 which deals with the manner in which the debts of a displaced debtor are to be scaled down and to which we shall draw attention later. Sections 6 to 9 lay down the procedure regarding applications made under CWP No.5662 of 1986 -32-

s. 5, the object of the procedure being the ascertainment of the total of the debts owing by a displaced debtor and the total amount of his assets, the relief which the Act grants on the basis of this ascertainment being the subject matter of later provisions. Sections 10 to 14 deal with the converse case of claims by displaced creditors first against displaced debtors and next against debtors who are not displaced debtors. In their case also the procedure is directed to the ascertainment of the genuineness and the quantum of the claims in the presence of the interested parties. The interrelation between these two sets of provisions is perhaps brought out by s. 11 which enacts:

"Procedure on creditor's petition.-

(1) Where an application under section 10 has been made, the Tribunal shall cause notice thereof to be served on the displaced debtor calling upon him either to show cause, if any,against the application or to make an application on his own behalf under section 5.

(2) If, in response to a notice under sub-

section 1 ), the displaced debtor makes an application in accordance with the provisions of section 5, the Tribunal shall proceed further in the matter as if it had commenced with an application by the displaced debtor under section 5, and all the other provisions of this Act shall apply accordingly; but, if the displaced debtor does not choose to make any such application, the Tribunal shall, after considering such evidence, if any, as may be produced before it, determine the claim CWP No.5662 of 1986 -33-

and pass such decree in relation thereto as it thinks fit.

(3) The period of limitation specified in subsection (1) of section 5 in respect of an application by a displaced debtor shall not apply to an application made under sub-

section (2)."

It was features of this type that we had in mind when we said that the provisions regarding the relief to displaced debtors and displaced creditors had to be read together since the Act dealt with them as one integrated whole-the one running into and determining the other."

As regards the question No.4 is concerned, there can be no

dispute with the question, as under Section 41 of the Property Act the

express or implied consent has to be valid and free consent. In case, the

transfer is procured by fraud and mis-representation in absence of bona

fide, the plea of bona fide purchase is not available, as it is settled law

that the fraud vitiates everything.

However, the fraud and mis-representation is to be on the part

of the vendee, or with his consent, by his vendor. In absence thereof, it

would be unfair to deny the right to contest to the subsequent vendee. It

will be for the party alleging fraud to prove the fraud and mis-

representation, as no presumption can be drawn.

It is made clear, that non-availability of protection under

Section 41 of the Property Act would not be a bar to the subsequent

vendee also being a proper party to contest the order of cancellation by

resorting to the provisions of Section 24 and 33 of the Act.

The answer to the question, as to what right the subsequent CWP No.5662 of 1986 -34-

vendee would have in view of the cancellation of the allotment which is

finally upheld, is to be found in Sections 13 and 19 of the Specific Relief

Act. The property of the real owner would be protected, and bona fide

purchaser will be entitled to get back his money along with interest and

costs etc. from his vendor.

For the reasons stated, we are of the view that Section 41 of

the Property Act, will have no application where transfer is held invalid

under Sections 19 and 24 of the Act, as no estoppel can be pleaded

against the provisions of the statute.

It would be within the right of the subsequent purchasers to

challenge the order of cancellation on merits, but sale in their favour

cannot be protected under Section 41 of the Property Act. The

subsequent vendee can only claim refund or damages from his vendor.

In view of the answers to the questions referred to above, the

matter be now placed before the Hon'ble Single Bench for decision of

the cases on merits, in accordance with law.

(Mukul Mudgal) Chief Justice

(Jasbir Singh) Judge

(Vinod K. Sharma) Judge July 16, 2010 R.S.