Smt. Narayanamma & Anr. Etc. Etc. v. Sri Govindappa & Ors. Etc. Etc.
Background
The plaintiff sued for specific performance of a 1990 agreement to sell land that one Bale Venkataramanappa had entered into with him, after the seller's legal heirs refused to execute the sale deed. The land had originally been granted to the seller's family under a scheme with a statutory 15-year bar on its transfer (under Section 61 of the Karnataka Land Reforms Act), and that bar had not yet expired when the agreement to sell was signed. The trial court dismissed the suit, holding the agreement void since it was made during the restricted period, but the first appellate court and the Karnataka High Court both reversed this and decreed the suit in the plaintiff's favour, partly because the defendants had never filed a written statement or contested the evidence.
Decision Breakdown
The Supreme Court held that an agreement to sell land executed during the statutory non-alienation period is void and unenforceable, regardless of whether the restriction period later expires before the suit is filed, because the illegality exists at the moment the agreement is made. Importantly, the Court held that even though the defendants had not specifically pleaded this illegality as a defense, a court must take notice of an illegality appearing from the evidence on its own and refuse relief: no party can get judicial assistance to enforce an illegal bargain. Applying the principle that where both parties are equally complicit in an illegal transaction the law favours leaving the parties where they stand (rather than actively enforcing the illegal contract), the Court allowed the appeals, set aside the High Court's judgment and the first appellate court's order, and restored the trial court's dismissal of the suit.
Lesson Learnt
An agreement to sell land made while a government-imposed restriction on its transfer is still in force is void from the outset and cannot later be enforced through the courts, even if the restriction period expires before the lawsuit, and courts will refuse to enforce such illegal agreements even if the other side never specifically raises the illegality as a defense.