Uttam Chand v. Har Kishan Lal & Ors.

The plaintiff-respondent no. 1 filed a suit for declaration that the sale deed dated 2.08.1995, is void, as he was a minor on the date of its execution. It was also pleaded that R.S.A.NO.3767 of 2005 2 he was forced to execute the sale deed as his father owed money to the appellants. In addition the plaintiff-respondent no. 1 prayed for a decree for possession of the suit land. In response, the appellant and the other respondents, except respondent no. 1, denied that the appellant was a minor on the date of the execution of the sale deed. On the basis of the pleadings, the trial court framed the following issues:- “1. Whether the plaintiff was minor on

2.8.1995?OPP

2. Whether the sale deed dated 2.8.1995 is illegal, null and void and not binding upon the rights of the plaintiff?OPP

3. If issue no. 2 is proved, whether the plaintiff is entitled to be declared as owner of the suit land?OPP

4. Whether the suit is barred by time?OPD

5. Whether the suit has not been properly valued for the purposes of court fee and jurisdiction?OPD

6. Relief.” After considering the pleadings, the evidence adduced and the arguments addressed, the trial court returned a finding that the sale deed dated 2.08.1995, is void, as on the date of its R.S.A.NO.3767 of 2005 3 execution, respondent no. 1 was a minor. The prayer for refund of the consideration amount of Rs. 1,65,000/- was partly allowed as Rs. 65,000, paid before the sub registrar was ordered to be refunded. The prayer for refund of Rs. 1,00,000/- paid prior to the execution of the sale deed was rejected by holding that the appellant had failed to adduce any evidence to prove its payment. In addition, a decree was passed directing the appellant and respondents no. 2 to 11 to deliver possession of the suit land to respondent no. 1. Aggrieved by the aforementioned judgment and decree, the appellant and respondents no. 2 to 11, filed an appeal. Vide judgment and decree dated 2.09.2005, passed by the Additional District Judge, Sirsa, dismissed the appeal and affirmed the findings recorded by the trial court. Counsel for the appellant, confines his arguments, to a plea that as the sale deed records the payment of Rs. 1,65,000/-, the courts below could not have ordered refund of the entire amount. It is argued that in view of the provisions of Section 65 of the Indian Contract Act 1872 and Section 33 of the Specific Relief Act, the courts below were obliged to direct refund of the entire consideration amount reflected in the sale deed. The recital, in the sale deed that Rs. 1,00,000/- was received prior to the execution of the sale deed and Rs. 65,000/- was paid before the sub registrar, binds respondent no. 1 for the purpose of restitution of the amount so received and therefore, the courts below committed an error of law in holding to the contrary. R.S.A.NO.3767 of 2005 4 Counsel for the respondent no. 1, on the other hand, submits that as the sale deed is a nullity, its recitals are also null and void. The appellant has failed to prove, by clear and cogent evidence, the payment of Rs.1,00,000/- prior to the execution of the sale deed. It is however, submitted that respondent no.1 is ready to pay a sum of Rs.1,00,000/- provided, the appellant and respondents no. 2 to 11 are ready to deliver possession. Counsel for the parties are ad idem that as records have been summoned, the appeal may be disposed of on merits at the state of motion hearing. Counsel for the appellant has framed the following substantial questions of law:- “1. Whether a minor is required to restitute any advantage received under a void contract?

2. Whether recitals in a contract, which is void or is subsequently declared void bind the parties for the purpose of ordering restitution of any advantage received under such a contract?” As Section 11 of the Indian Contract Act, postulates that a party to a contract must have attained the age of majority, a contract executed with or by a minor is void. The courts below have held that the sale deed is void as on the date R.S.A.NO.3767 of 2005 5 of its execution, respondent no. 1 was a minor. The issue that requires adjudication is whether a minor can be called upon to restitute any advantage received by him under a void contract. The answer to this question lies in the provisions of the Section 65 of the Indian Contract Act, 1872 and Section 33 of the Specific Relief Act, 1963 which read as follows:- Section 65 of the Indian Contract Act,1872:- Obligation of person who has received advantage under void agreement, or contract that becomes void:- ”Whether an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.” Section 33 of the Specific Relief Act, 1963:- Power to require benefit to be restored or compensation to be made when instrument is cancelled or is successfully resisted as being void or voidable:- (1) On adjudging the cancellation of an instrument, the court may require the party to whom such relief is granted, to restore, so far as may be any benefit which he may have received from the other party and to make any compensation to him which justice may require. R.S.A.NO.3767 of 2005 6 (2) Where a defendant successfully resists any suit on the ground- (a) that the instrument sought to be enforced against him in the suit is voidable, the court may if the defendant has received any benefit under the instrument from the other party, require him to restore, so far as may be, such benefit to that party or to make compensation for it; (b) that the agreement sought to be enforced against him in the suit is void by reason of his not having been competent to contract under section 11 of the Indian Contract Act, 1872 (9 of 1872), the court may, if the defendant has received any benefit under the agreement from the other party, require him to restore, so far as may be, such benefit to that party, to the extent to which he or his estate has benefited thereby.” Section 65 of the Indian Contract Act, 1872, places an obligation on “any person” who has received any advantage under a void agreement or a contract to restore such advantage or to make compensation in respect thereof. Section 65 does not R.S.A.NO.3767 of 2005 7 draw any distinction between a minor or a major. Section 33 of the Specific Relief Act, 1963, empowers a court adjudging the cancellation of an instrument to require a person to whom such relief is granted to restore to the other party, the benefits received under a void contract. The doctrine of restitution has its origin in a principle of equity that requires a party to restore all ill gotten gains received under a void contract. Restitution of benefits received under a void contract, do not involve the enforcement of the contract but merely requires a court to restore the parties to the position obtaining, before the execution of a contract. Reference in this regard may be made to the majority opinion of a Full Bench of the Lahore High Court in “Khan Gul and another Versus Lakha Singh” 1929 PLR 60, and a judgment Budha Singh Versus Lakhmi Chand I.L.R. 11 Lahore 167. It is, therefore, apparent that irrespective of one of the parties being a minor, where an agreement or a contract is declared void, a court shall direct the party that has received any benefit under a void agreement or contract to restitute such benefit or make compensation in respect thereof. The first question of law is therefore, answered accordingly. The second question relates to the evidentiary value to be attached to recitals in an agreement or contract that becomes or is declared to be void. Section 65 imposes an obligation to refund any advantage received under a void contract whereas, Section 33 of the Specific Relief Act, empowers a court to order R.S.A.NO.3767 of 2005 8 restitution. A void contract, fails as a whole and no part of such a contract can be enforced. Section 65 of the Indian Contract Act, however, requires that parties to a void contract shall restitute any benefit that they may have received under the void contract. Thus, while considering a claim for restitution arising from a void contract, a court would be required to consider the recitals in a void agreement or contract so as to determine the benefit received under a void contract. The second question is answered accordingly. The courts below have applied the principle of restitution and relied upon the recitals in the sale deed but only in part. They have accepted the recital in the sale deed that relates to payment of money before the sub-registrar but have rejected, the recital that states that Rs. 1,00,000/- was paid prior to the execution of the sale deed, by holding that the appellant has failed to prove its payment. The relevant recital in the registered sale deed reads as follows: “Out of the consideration amount, a sum of Rs.1,00,000/- has been received by me from the vendees prior to the execution of the sale deed.” As held hereinbefore, recitals in a void agreement or contract are relevant for determining the benefit that a party or parties may have received under a void contract. Admittedly, the registered sale deed contains a recital that Rs. R.S.A.NO.3767 of 2005 9 1,00,000/-, was received prior to the execution of the sale deed. The onus, therefore, to establish that this recital is incorrect, lay upon respondent no. 1. Though an averment has been made in the plaint that no consideration was received, respondent no. 1 has not produced any evidence in support thereof. As the courts below have accepted the presumption attached to the recital, reflecting payment of consideration before the sub Registrar, they had no jurisdiction to reject the recital recording payment, prior to the execution of the sale deed. As a consequence, the findings recorded by the courts below that the appellant has failed to prove the payment of Rs.1,00,000/-, prior to the execution of the sale deed are set aside. It is held that respondent no.1 is entitled to refund the entire amount of Rs. 1,65,000/- reflected in the sale deed. In view of what has been stated hereinabove, the appeal is partly allowed, the judgments and decrees passed by the courts below are partly modified to the extent that instead of Rs. 65,000/-, respondent no. 1 would be required to refund a sum of Rs. 1,65,000/- to the appellant. 7th August, 2009 SKaushik [RAJIVE BHALLA] JUDGE