JUDGMENT
M.N. Rao, J.
1. This Letters Patent Appeal by the plaintiff is from the judgment and decree of a learned single Judge of this Court in A.S.No.2120 of 1990 reversing the decree for specific performance with certain conditions granted by the learned II Additional Subordinate Judge, Vijayawada in O.S.No. 459 of 1981. The parties are referred to in this judgment for the sake of convenience as they are arrayed in the suit. The suit was laid by the plaintiff (appellant herein) against defendants 1 and 2 (respondents 1 and 2 herein) for specific performance of a contract of sale dated 2-9-1977, Ex.A-1, in respect of an urban house-site admeasuring 3,000 sq. yards situate in Ward No. 28, Labbipet, Vijayawada. The defendants are natural brothers each owning an extent of 3,394 square yards of Urban Land in N.T.S.No. 147 Patamata Village within the urban agglomeration of Vijayawada and each of them is entitled to retain under the provisions of the Urban Land (Ceiling and Regulation) Act, 1976 (for short “the Act”) only an extent of 1,500 sq. yards and as such the excess land in possession of each of them is 1,894 sq. yards. The first defendant is the General Power of Attorney holder of the second defendant. In and by the contract of sale, Ex. A-1, dated 2-9-1977, the defendants agreed to sell 3,000 sq. yards from out of the aforesaid urban land in favour of the plaintiff at the rate of Rs. 70/- per sq. yard and as consideration for the same, they received Rs. 30,000/- in cash on that very day. Ex. A-1 recites that the defendants should apply for permission at their own expense to the Vijayawada Town Urban I ,and Ceiling Competent Authority and after obtaining permission inform the same in writing to the plaintiff and within one week thereafter a registered sale deed should be executed in favour of the plaintiff at the expense of the latter. The balance sale consideration should be paid at the time of the registration. Ex. A-1 also recites that if within two months from the date of the agreement, the defendants do not obtain permission from the Urban Land Ceiling authority and allow time to lapse, they should return the amount of Rs. 30,000/- with interest at the rate of 18% per annum with effect from 2-11-1977 till the date of execution of the sale deed. A further relevant clause in Ex. A-1 is that if for any reason permission is not granted by the Urban Land Ceiling Authority, the defendants shall refund the said amount of Rs. 30,000/- to the plaintiff with interest at 18% per annum and until such payment was made, the site in question shall constitute, the first charge.
2. It was alleged in the plaint that the first defendant backed out of the contract with an evil idea and addressed a letter Ex. A-2 dated 17-1-1980 to the plaintiff informing that the State Government by Memo No. 2041/UC- 2/77-2 dated 27-9-1978, Ex.B-1, rejected the request for exemption under Section 20 of the Urban Land Ceilings Act. The plaintiff sent Ex.A-3 reply on 23-1-1980 stating that the defendants informed him that they sent representations for re-consideration of the order of the Government in the light of certain new guidelines issued and, therefore, the defendants had no right to resile from the contract. This was replied to by the first defendant by a lawyer’s notice Ex. A-4 dated 12-2-1980 stating that Ex.A-1, the contract of sale, stood cancelled by 27-9-1978 when Ex.B-1 memo was issued by the Government rejecting the request for exemption. It was alleged in the plaint that the defendants deliberately were attempting to wriggle out of the obligations under Ex. A-1 and that as each of them could retain 1,500 sq. yards, there was no difficulty for them to convey 3,000 sq. yards in accordance with Ex. A-1. The plaintiff, therefore, sought a decree against the defendants based upon Ex. A-1 directing them to execute a sale deed in his favour and deliver vacant possession of the plaint schedule house site.
3. Resisting the plea of the plaintiff, it was asserted, inter alia, by the defendants in their written statement that the material term in Ex. A-1 is that the failure on their part (defendants) to get exemption from the Government should result in automatic cancellation of the contract and as a consequence of which, the money received by them should be returned to the plaintiff with interest at 18% per annum. They are not bound to convey 3,000 sq. yards from out of the land which they are entitled to retain under the provisions of the Urban Land Ceilings Act.
4. On the pleadings, the relevant issues framed by the learned trial judge are as follows:
“1. Whether the plaintiff is entitled to delivery of possession of the suit property and
2. Whether the suit agreement stood cancelled as contended by the defendants?”
5. The plaintiff gave evidence as P.W.I and examined two others – A. Satyanarayana Murthy, a retired Deputy Collector and S.P. Parvatheesam, a retired Assistant Secretary – as P.Ws.2 and 3 respectively, who spoke about the meeting between the plaintiff and the defendants in Hyderabad at Hotel Dwaraka where they apprised both the parties that on the ground of hardship, the defendants can renew the request for exemption and that a representation to that effect was drafted by P.W.3. The first defendant gave evidence as D.W.I. A total of 17 documents – Exs. A-1 to A-17 – were brought on record on behalf of the plaintiff and four documents – Exs. B-1 to B-4 – on the side of the defendants.
6. The learned trial Judge, after considering the evidence on record, held that Ex. A-1 agreement of sale is enforceable and the conduct of the defendants clearly indicated that they applied for review of the original application with an intention to execute the sale deed but later on they changed their mind because of the steep increase in prices of lands in Vijayawada and that they have not properly pursued the two applications by which the Government was requested to reconsider the earlier rejection as contained in Ex. B-1. The learned trial Judge, therefore, decreed the suit with costs directing the defendants to process the two applications dated 4-10-1978 and 27-6-1979 (Ex. A-11) diligently within two months from the date of the decree and execute a sale deed after obtaining the exemption but if they do not “process the applications, the plaintiff is at liberty to get a receiver appointed through Court and that the receiver shall process the applications at the expense of the defendants and obtain exemption.”
7. On appeal, the learned single Judge reversed the judgment and decree of the learned trial Judge taking the view that the intention of the parties was that the defendants should apply for exemption under Section 20 of the Act and that as the request for exemption was rejected by the Government, the defendants were bound to return the advance money with interest to the plaintiff and therefore, there was no further obligation on the part of the defendants to keep the contract alive after Ex. B-1 rejection order.
8. Sri N.V. Suryanarayana Murthy, learned Counsel for the plaintiff- appellant contends that Ex. A-1 agreement does not contain any specific clause for cancellation of the contract and as the requests made by the defendants for reconsideration of the rejection order Ex. B-1 are still pending, this Court in the interests of justice should pass a decree directing the appellant-plaintiff also to pursue the two applications pending with the Government till such time appropriate orders are passed. Such a course of action, according to the learned Counsel, is permissible in law since the memo Ex. B-1 passed by the Government rejecting the request for exemption being an administrative order, the same can be reviewed by the Government and there is no legal embargo in this regard. Further, according to the learned Counsel, Ex. B-1 is a void order since it was passed without application of mind.
9. In opposition to this, Sri Pratap Reddy, learned senior Counsel for the respondents-defendants, urges that after the rejection of the request by the Government as contained in Ex. B-1, the defendants are under no obligation to keep the contract alive, the material clause in Ex.A-1 being the obtaining of permission from the Government for execution of the sale deed.
10. The first question for consideration is: whether Ex. B-1 is void in consequence of which, the defendants can make further representation to the State Government to grant exemption?
11. Exs. A-9 and A-10 are applications dated 15-10-1977 made by the two defendants requesting the State Government to grant exemption under Section 20(1)(b) of the Act on the ground of personal hardship. By Section 20 of the Act, over-riding power is conferred on the State Government to grant exemption to any person holding vacant land in excess of the ceiling limit either on the ground of public interest (vide Section 20(l)(a) or undue hardship (vide Section 20(1)(b). Clause (b) of sub-section (1) of Section 20 is in the following terms:
“20. Power to exempt: (1) Notwithstanding anything contained in any of the foregoing provisions of this Chapter;-
(a) ……………… ………….. …….
(b) where any person holds vacant land in excess of the ceiling limit and the State Government, either on its own motion or otherwise, is satisfied that the application of the provisions of this Chapter would cause undue hardship to such person, that Government may, by order, exempt, subject to such conditions, if any, as may be specified in the order, such vacant land from the provisions of this Chapter:
Provided that no order under this clause shall be made unless the reasons for doing so are recorded in writing.”
In both the petitions, the defendants stated that they invested about Rs. 30,000/- in a small scale unit manufacturing pesticides (Vijaya India Pesticides) and their friends and relatives also invested some amounts and some loans were also obtained from the State Bank of India. As there was no market for pesticides, the unit sustained losses and the Bank issued notice on 18-9-1977 demanding repayment of the loan of Rs. 4,66,604-47 and they also have other debts to be cleared. As the year 1977 was a good season, they requested that they be permitted to dispose of their vacant site in excess of the ceiling limit and invest the proceeds in the unit in order to tide over the financial crisis. Rejecting these requests, the State Government passed Ex. B-1 which reads as follows:
“The Government have examined the request of the petitioners contained in their petitions 1st and 2nd cited. They see no hardship is involved in their cases. The petitions 1st and 2nd cited are accordingly rejected.”
12. It is the contention of Sri Suryanarayana Murthy learned Counsel for the appellant, that Ex. B-1 order is bereft of reasons and the recommendations made by the Special Officer, Urban Land Ceilings, Vijayawada as well as the Commissioner for Urban Land Ceilings, Hyderabad, have not at all been considered and so the same should be declared by this Court as a void order. We are not inclined to agree. The State Government is not a party to the suit and, therefore, the validity of Ex. B-1 cannot be gone into in this appeal. Realising this difficulty, Sri Suryanarayana Murthy has urged that if an order is a void one, its validity can be attacked even in collateral proceedings. This proposition of law is unexceptionable but even in collateral proceedings, the authority that passed the order is a necessary party before the validity of the order is adjudicated upon. This legal position being fairly well settled, the learned counsel could not cite any precedent suggestive of the fact that the Court can strike down an order even in the absence of the party who has passed it
13. Even if the State Government were to be a party, we do not think that Ex. B-1 is liable to be quashed on the ground that it is a void one. In the reference part of Ex.B-1, the communications received from the Special Officer and the Commissioner arc mentioned. The reason for rejecting the request is that there is no hardship involved. It cannot, therefore, be said that the order Ex. B-1, is vitiated either on the ground that it is bereft of reasons or due to non- application of mind. The ruling of the Supreme Court in Nawabkhan v. State of Gujarat, cited for the appellant is inapplicable.
14. The context induces us to refer to one aspect which repeatedly is coming up for consideration. When an order is challenged on the ground that it is a void one, often times it is asserted that it can be ignored by the party whose interests are adversely affected by it and so there is no need to test its validity in a Court of law. We think this is not a correct proposition. Unless the order is set aside by a competent Court, no one can assume that the order is ineffective and on that score, it can be ignored. Unless an order is set aside, it is presumed to be valid and all the rights accrued or liabilities incurred in relation to the order questioned cannot be over-looked. At one time, in the public law of the United Kingdom, it was believed that a void order is a nullity and could be ignored. Lord Radcliffe in Smith v. East Elloe Rural District Council, 1956 AC 736 – Also see: Director of Public Prosecutions v. Head (1959) AC 83 at 111); Reg v. Paddington Valuation Officer (1966 (1) QB 380 at 402) (Per Lord Denning, MR) observed in his speech while adverting to the question whether an order made in bad faith is a nullity in contra-distinction to an order which was erroneous but made in good faith:
“But this argument is in reality a play on the meaning of the word nullity. An order, even if not made in good faith, is still an act capable of legal consequences. It bears no brand of invalidity upon its forehead. Unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders.”
But the latest trend appears to be that such a classification is not a sound one and that the expressions “void” and “voidable” are appropriate only in the realm of matrimonial matters or contracts but not in the field of Administrative Law. Lord Hailsham in his speech in Chief Constable of North Wales Police v. Evans, 1982 (1) W.L.R. 1155 high lighted this:
“Personally, I find difficulty in applying the language of “void” and “voidable” (appropriate enough in situations of contract or if alleged nullity of marriage) to administrative decisions which give rise to practical and legal consequences which cannot be reversed.”
Our Supreme Court did not disagree with the above British precedent cited before it in M/s. Dwarkadas Marfatia & Sons v. Board of Trustees, Bombay Port, .
15. One of the contentions urged by Sri Suryanarayana Murthy for the appellant is that as Ex. B-1 is only an administrative order, the Government has power to review the same any number of times even though the power of review is not specifically conferred by the Statute. This contention, we think, does not arise for consideration in this case. The validity of Ex. B-1 is not challenged before us by any one and as already stated supra, in any proceedings in which Ex. B-1 is at issue, the presence of the Government as a party is essential. We, therefore, cannot embark upon an enquiry into the question whether the absence of power of review has the consequence of conferring power on the Government to review the orders passed under Section 20 of the Act and especially when the defendants who made the representations before the Government seeking exemption have not challenged the same (Ex. B-1), the plaintiff can take up such a plea.
16. One incidental argument put forward for the appellant is that there is no time limit for the Government to review administrative orders passed by it even in exercise of statutory power and, therefore, this Court can now direct the Government to review Ex. B-1. When we cannot go into the validity of Ex. B-1 for the reasons stated supra, this contention is plainly untenable.
17. In the determination of the question as to the right of the plaintiff to seek specific performance of the contract of sale, Ex. A-1, the most material condition (of Es. A-1) which needs to be considered relates to the obligation of the defendants to obtain permission for exemption under the Act. Ex. A-1 is in Telugu and the English translation as furnished by the appellant is in the following terms:
“If in the sale of the scheduled property by the first party (defendants) to the second party (plaintiff), the first defendant fails to secure the permission, then the first party shall refund the amount of Rs. 30,000/ – with 18% interest per annum from the date till the date of repayment.”
Two related clauses in this regard in Ex. A-1 read thus:
“If from this date, within two months, the first party fails to obtain the Urban Land Ceiling permission from the Competent authority and commits default, the first party has to give credit to this amount of Rs. 30,000/- with interest at 18% thereon from 2-11-1977 till the first party executes the sale deed in favour of the second party or his nominee”.
“It is agreed that the first party should apply to the Town Urban Land Ceiling Competent Authority and obtain the permission at his own expense and communicate the said fact in writing to the second party. The second party, on receipt of the written communication from the first party about the first party having obtained the said permission, within one week must, at his own expense, obtain a regular registered sale deed from the first party.”
A reading of the aforesaid conditions in Ex. A-1 makes it abundantly clear that the obligation to obtain permission from the Urban Land Ceiling Authority was on the defendants and if they fail within two months from the date of Ex. A-1 to obtain such permission, they are liable to return the advance of Rs. 30,000/- with interest at 18% per annum from the date on which the two months period expired viz., 2-11-1977 till the date of repayment. Although a time limit of two months is prescribed in the agreement, Ex. A-1, it is conceded by Sri Suryanarayana Murthy, learned Counsel for the appellant, that the plaintiff (appellant herein) is not insisting upon this time limit as it is not within the power of the defendants to obtain permission within a specified time. Ex. A-1 was executed on 2-9-1977 and on 15-10-1977, both the defendants made representations to the Government as evidenced by Exs. A-9 and A-10 and on 27-9-1978, Ex. B-1 order was passed by the Government rejecting the request for exemption. After Ex. B-1 order was passed by the Government, no further obligation was cast upon the defendants to pursue the matter any further. The fact that once again on 27-6-1979 another representation, Ex. A-11, was made by the defendants to the Government requesting to reconsider the rejection order contained in Ex. B-1 would not lend strength to the plea of the plaintiff-appellant that such a representation was made by the defendants because of the obligation cast upon them under Ex. A-1. Evidently, this representation appears to have been made by the defendants at the request of the plaintiff. But even this representation did not have the desired effect. Till now, the Government have not cancelled the order passed by them in Ex. B-1. By any stretch of reasoning, it cannot be said that the matter is still engaging the attention of the Government and that they are likely to take a decision in the matter in the near future more than 17 years after the request for reconsideration was made. So long as Ex.B-1 is not declared invalid by any competent Court, it necessarily means that it is holding the field and in the fact situation, it is our considered view that Ex.B-1 has attained finality. We, therefore, emphatically reject the contention that the matter is still pending before the Government and that there is a likelihood of a favourable order emanating from the Government in favour of the plaintiff.
18. Any enquiry into what are the recommendations made by the Commissioner for Urban Land Ceilings and the Special Officer for Urban Land Ceilings in regard to the claims of the defendants for exemption are outside the purview of this appeal as the validity of Ex. B-l is not at issue. Therefore, the precedent cited like – R.R. Verma v. Union of India, concerning the difference between administrative orders and quasi-judicial orders, exercise of power of review even in a situation where the statute does not expressly confer such a power and the right to challenge a void order are not relevant and, therefore, we do not propose to discuss them.
19. It was elicited from the first defendant who figured as D.W.I in the cross-examination:
“I do not know if those two petitions, Ex. A-11 and another are still pending or not. I have not made any attempt to know the stage of those two applications. I am not prepared to execute a sale deed in favour of the plaintiff even if the Government granted exemption on my above two applications as the plaintiff is not entitled for it.”
Sri Suryanarayana Murthy’s contention is that the defendants have absolutely no intention to honour their commitment under Ex. A-1 and this is evident from the aforesaid statement and this attitude is clearly suggestive of the intention of the defendants not to discharge their part of the duty under Ex. A-1. We do not agree with this contention. We have already held that after Ex. B-1 was passed by the Government, rejecting the request for exemption, no further obligation was cast upon the defendants to apply for reconsideration of Ex.B-1. A casual statement of the nature stated supra by D.W.I in the cross- examination would not have the effect of introducing a new condition in Ex. A-1.
20. The learned single Judge while allowing the appeal of the defendants has not stated anything as to the obligation of the defendants to refund the earnest money of Rs. 30,000/- and pay interest at the stipulated rate of 18% with effect from the date of Ex. A-1. Sri Pratap Reddy, learned senior Counsel for the respondents-defendants, has fairly conceded before us that the defendants are under an obligation to return the money of Rs. 30,000/- and pay interest at the stipulated rate of 18% with effect from the date of Ex. A-1 viz., 2-9-1977 to 23-M980, the date of reply notice (Ex.A-3)sent by the plaintiff in which he declined to receive the earnest money.
21. The plaintiff-appellant is, therefore, entitled to a money decree in a sum of Rs. 30,000/- with interest at 18% from 2-9-1977 to 23-1-1980. In all other respects, the claim of the plaintiff fails. There shall be a decree accordingly. The Judgment and decree in the suit and the first appeal – A.S.No. 2120 of 1990 – shall stand modified accordingly.
22. The Letters Patent Appeal is accordingly allowed in part. There shall be no order as to costs.
23. Soon after the Judgment is pronounced, an oral request is made by Shri N.V. Suryanarayana Murthy for leave to appeal to the Supreme Court. The case involves no substantial question of law of general importance which needs to be decided by the Supreme Court nor does it involve interpretation of any provisions of the Constitution. The request is, therefore, rejected.