* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) No.641/2009 & CM Appl. No.18506/2009
Judgment reserved on : 24.01.2011
Judgment delivered on : 30.03.2011
%
M/s. INDIAN ASSOCIATES .... APPELLANT
Through: Mr.R. Mukherjee and Mr.Jayant K.
Mehta, Advocates
Versus
THE STATE AND OTHERS .... RESPONDENTS
Through: Mr.Lalit Gupta, Advocate for
respondent No.3.
Mr. Rahul Gupta, Advocate for
Respondent No. 2, 7, 8.
CORAM:
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE M.L. MEHTA
1. Whether reporters of Local papers be Yes
allowed to see the judgment?
2. To be referred to the reporter or not? Yes
3. Whether the judgment should be reported Yes
in the Digest?
M.L. MEHTA, J.
*
1. This is an appeal against the order dated 9th October, 2009 of the
learned Single Judge whereby Test Case No.43/1987 and IAs
FAO(OS) No.641/2009 Page 1 of 33
No.5054/1999, 6581-6582/2005 and 3097/2009 pending therein
were dismissed.
2. During the pendency of the Test Case No.43/1987, there has
been various round of litigation between the parties on different
issues relating to the estate of late Rani Padmawati Devi
(hereinafter referred to as “the estate”). It would be useful to
recite relevant facts as referred to by learned counsel for the
parties during the course of arguments in the present appeal.
3. Late Rani Padmawati Devi died intestate on 12.04.1987 leaving
behind her husband, Raja Birendra Bahadur Singh; two sons,
namely, Shivendra Bahadur Singh (SBS) and Ravindra Bahadur
Singh (RBS) and two daughters, namely, Usha Devi and Sharda
Devi. SBS filed Test Case No.43/1987 seeking Letters of
Administration (hereinafter referred to as “LOA”) under Section
278 of the Indian Succession Act (hereinafter referred to as “the
Act”). The other heirs of late Rani Padmawati Devi were
respondents in the said petition as Respondent No. 2 (Birender
Bahadur Singh), Respondent No. 3 (Usha Devi), Respondent No.
4 (Sharda Devi) and Respondent No. 5 (RBS). On 18th March,
1988, the following issue was framed in the aforesaid petition by
the learned Single Judge:
FAO(OS) No.641/2009 Page 2 of 33
“(i) Is the petitioner entitled to and should he be granted the
Letters of Administration exclusively or should the letters
of administration be granted in two or more names in
respect of the estate of the deceased Rani Padmawati
Devi?”
4. Vide order dated 10th May, 1988, the learned Single Judge
granted Letters of Administration appointing the petitioner/SBS
as the administrator of the estate. The said order reads as
follows:-
“Pr. 42/97
This is a petition under section 278 of the Indian Succession Act
forgrant of Letters of Administration without will.
Rani Smt. Padmawati Devi, hereinafter referred to as the
deceased, died instestate at Bhopal on 12th April, 1987. She
was the mother of the petitioner and of respondents 3 to 5. It is
alleged that respondents 2 to 4 have executed a power of
attorney in favour of the petitioner in respect of all movable and
immovable properties left by the deceased.It is further alleged
that respondents 2 and 3 have relinquished their rights and
responsibilities in favour of the petitioner.
The deceased had left behind properties, details of which have
been set out in Schedules B1 and B2. The total value of the
assets comes to approximately Rs.15,40,000/-. Schedule C gives
particulars about the liabilities of the deceased. The total
liabilities mentioned therein come to Rs.36,87,828/-, the
liabilities being only due to the demands raised by the Income-
tax and wealth-tax authorities.
Notice of the application was issued. In the application it is
prayed that as the petitioner is the owner of 3/5th property andFAO(OS) No.641/2009 Page 3 of 33
also holds a power of attorney of respondent No.4, letters of
administration should be granted in his favour. It is further
contended that respondent No.5 has weak eye sight and is not
physically or otherwise capable of administering the estate.
Reply has been filed by all the respondents. Respondents 2 to 4
do not oppose the grant of letters of administration in favour of
the petitioner. The opposition to the grant of letters of
administration is only from respondent No.5.
Parties were required to file affidavits by way of evidence. It is
only the petitioner who has filed the affidavit. No affidavit by
way of evidence has been filed by respondent No.5 nor is any
counsel present on his behalf.
The petitioner in this case, as would be evident from what has
been stated by respondents 2 to 4, appears to be the owner of
3/5th of the estate left behind by the deceased. Furthermore,
out of the 5 legal heirs, 4 of them have agreed, including the
petitioner, that the estate should be administered by the
petitioner. It is important to note that one of the legal heirs who
has so agreed is respondent No.2, who was the husband of the
deceased and father of the petitioner and respondent No.5. The
petitioner is also holding an important position in life being a
Member of Parliament and in the absence of any evidence being
led by way of affidavits or otherwise by respondent No.5, I see
no reason as to why the petitioner should not be granted the
letters of administration as prayed for.
I accordingly grant Letters of Administration without will
attached to the petitioner. The formal Letter will be issued in the
form set forth in Schedule 7 after the petitioner has furnished a
bond to the Registrar of this Court with one surety for a sum of
Rs.5 lacs.”
5. RBS (respondent No.5 in the said petition and respondent No. 2
herein) being the heir of her pre-deceased mother and claiming
to have 1/5th share in the estate, filed application under Order IX
FAO(OS) No.641/2009 Page 4 of 33
Rule 13 of the Code of Civil Procedure being IA No.4065/1988 on
18th July, 1988 for setting aside the order dated 10th May, 1988
granting LOA. This application came to be heard on 13 th
August, 1988 when the petitioner‟s counsel appeared and
accepted the notice. It is noted that IA No. 4065/1988 under
Order IX Rule 13 and IA No.3393/1989 under Section 5 of the
Limitation Act, 1963 of the respondent/RBS remained pending till
the passing of the impugned order. Pending this application,
the petitioner under the authority of LOA negotiated and entered
into a sale transaction with the appellant, Indian Associates. The
purpose of transaction as claimed by the petitioner as
administrator was utilisation of the sale consideration to meet
the liabilities relating to wealth tax and income tax of the estate.
6. According to Indian Associates (appellant herein), the agreement
to sell was entered into on 9th September, 1988 and a sale deed
was executed by the administrator on 11th October, 1988, but
the same was not registered by the sub-Registrar. Since the sub-
Registrar, Raipur, did not register the sale deed in favour of the
appellant, the appellant filed a petition being Miscellaneous
Petition No.2173/1989 before the Madhya Pradesh High Court.
The said writ petition came to be dismissed by the Madhya
FAO(OS) No.641/2009 Page 5 of 33
Pradesh High Court vide Order dated 12th October, 1992. The
relevant portion of the order of the Hon‟ble High Court of Madhya
Pradesh is as under:
“7. It cannot also be overlooked that the respondent Sub
Registrar has not so far refused registration and has kept
the matter pending. This Court is of the opinion that, it
was wholly justified. If and when the registration is
refused, the petitioners will have alternative remedy of
appeal and suit provided under the Act. There is
therefore no justification for invoking extraordinary
jurisdiction of this Court under Article 226 of the
Constitution.”
7. Before proceeding further, it is noted that a case regarding
excess land than the prescribed limited under the Urban Land
Ceiling Act was pending against Rani Padmawati Devi since 1977
before the competent authority at Raipur (M.P.). Vide Order
dated 18th May, 1983 certain conditions/restrictions on use and
sale of lands had been imposed on Rani Padmawati Devi by the
concerned authority of Madhya Pradesh Government. Later, vide
Order dated 20th September, 1988, the concerned authority
granted permission to sell the lands. This was challenged by
respondent/(RBS) in Madhya Pradesh High Court by way of writ
(No. 3328/1988). This writ was allowed and the order dated
20th September, 1988 whereby permission was granted to sell
the land was quashed. It is noted that this order came to
FAO(OS) No.641/2009 Page 6 of 33
be passed on the submissions made by the parties that on the
death of Rani Padmawati Devi, the property ceased to be within
the prescribed limits of the provisions of Ceiling Act. The Madhya
Pradesh High court, however, did not see any illegality in the
order of 18th May, 1983 of the Government of Madhya Pradesh
imposing conditions/restrictions regarding use and sale of lands.
It was held by the Madhya Pradesh High court vide separate
order dated 12th October, 1992 that the order dated 20th
September, 1988 granting permission to sell the land cannot be
said to modify the conditions/restrictions imposed vide order
dated 18th May, 1983 on Rani Padmawati Devi. On this
reasoning, the Court held that the administrator/SBS (respondent
No. 2 therein) did not have the authority to sell the lands covered
by the order of 18th May, 1983 and to that extent the sale in
favour of investors (Indian Associates) must be held to be illegal
and inoperative. From the decision of Madhya Pradesh High
Court, as noted above, it is clear that the conditions/restrictions
regarding use and sale of lands on Rani Padmawati existed since
18th May, 1983 and that though the permission to sell was
granted on 20th September, 1988, but the conditions/restrictions
regarding sale and use of the lands still continued.
FAO(OS) No.641/2009 Page 7 of 33
8. On 12th October, 1988, in an application being IA No.8566/1988
filed by RBS, this Court had restrained the administrator/SBS
from transferring, alienating or parting with the possession of the
properties, which formed subject matter of the estate. On
21.12.1988, the administrator/SBS filed a statement of account
in the Court, reflecting the receipt of Rs.35.00 lakhs by the
estate on account of sale of Padma Bhavan to the appellant by
virtue of sale deed dated 11th October, 1988.
9. Against the orders of MP High Court dated 12th October, 1992,
the appellant/Indian Associates and also administrator/SBS filed
SLPs before the Hon‟ble Supreme Court being SLP No.1152/1993
and 396-97/1993. Both the SLPs came to be dismissed by the
Hon‟ble Supreme Court vide order dated 10th May, 1993.
10. It appears that the case which was pending since 1977 before
the Court of competent authority of Urban Land Ceiling, Raipur
against Rani Padmawati Devi regarding the excess land than the
prescribed limited, both the administrator and respondent/RBS
informed the competent authority about the death of their
mother on 12th April, 1987 and also of their father Birendra
Bahadur Singh. The competent authority accepted their plea
FAO(OS) No.641/2009 Page 8 of 33
that in the given circumstances by partition of the property into
four shares, i.e., two daughters and two brothers, nobody would
be holding the land in excess to the prescribed limit. In this
factual matrix, the competent authority filed the case listed
against Rani Padmawati vide order dated 14th March, 1997.
11. Now RBS proceeded to sell a part of the property known as
Padma Bhawan (property in question) by a sale deed dated 29 th
July, 1997 to M/s.Jesper Construction Pvt. Limited (hereinafter
referred to as “Jesper”) for a consideration of Rs.21.00 lakhs.
The administrator/SBS filed application being IA No.10437/1997
wherein learned Single Judge of this Court vide order dated 19 th
February, 1998 restrained RBS and other respondents from
alienating, disposing of and/or parting with the possession of the
property in question. The situation took a new turn with the
death of administrator/SBS on 31st December, 1998. The
appellant/Indian Associates filed an application (I.A.
No.490/1999) seeking intervention/impleadment in the pending
Test Case and also filed another application (I.A. No.5054/1999)
for appointment of an administrator in place of deceased
administrator/SBS. It appears that the legal heirs of the
administrator/SBS also filed two applications (I.A. No.12147/1999
FAO(OS) No.641/2009 Page 9 of 33
and 12148/1999) for their substitution in the proceedings and for
condonation of delay.
12. Thereafter the parties to the Test Case, i.e., heirs of Rani
Padmawati and heirs of administrator/SBS filed an application
under Order XXIII Rule 3 CPC (being I.A. No.14812/1999) seeking
disposal of this case on the basis of a Memorandum of
Understanding (MOU) dated 26th August, 1999 executed amongst
themselves.
13. The application of appellant-Indian Associates for
intervention/impleadment (IA No.490/1999) was disposed by the
learned Single Judge vide order dated 17th January, 2002. By the
same order, the other application (IA No.5054/1999) filed for
appointment of administrator in place of deceased
administrator/SBS also came to be dismissed. The
appellant/Indian Associates preferred appeal against the order of
dismissal of its application for impleadment. Division Bench
disposed of the same as under:-
“(We)…allow the application (I.A. No. 490/99) to the extent that
the appellant shall be entitled to participate in the proceedings
in order to enable it in safeguarding its interests and that also to
the extent of that part of the estate of Rani Padmavati, which is
the subject matter of the sale deed dated 11.10.1988 as alleged
to have been executed by late Shivendra Bahadur Singh in favor
of the appellant, including the legal capacity of late ShivendraFAO(OS) No.641/2009 Page 10 of 33
Bahadur Singh, as an administrator pendent lite to enter into the
sale deed with the appellant, and also in relation to the legal
effect of the said transaction, making it clear that the appellant
shall not be entitled in any manner to intervene or interfere
with, or participate in the pending probate case qua the
remaining estate.”
14. The learned counsel for the appellant/Indian Associates
challenges the impugned order on various grounds. He submits
that in the aforesaid facts a very peculiar situation has arisen.
The appellant is a bonafide purchaser for value from the
administrator/SBS. The administrator executed a sale deed in
favour of the appellant, which was then presented and accepted
for registration. The administrator also filed detailed accounts of
the transaction in the Court. However, the sale deed of the
appellant was not registered by sub registrar initially on account
of certain issues of the Ceiling Act, which stood resolved by the
order dated 14.03.1997 whereby it was ordered that the
provisions of the Ceiling Act were not applicable to the estate
after the death of Rani Padmawati Devi in the year 1987.
Thereafter, the administrator expired and the respondent/RBS
played a fraud in collusion with other respondents. However, the
Ld. Single Judge has disposed of the proceedings by the
impugned Judgment and Order dated 9.10.2009, without even
considering, much less appreciating the aforesaid circumstances.
FAO(OS) No.641/2009 Page 11 of 33
He submits that the appellant/Indian Associates is the bonafide
purchaser of the property from the administrator under the
authority of grant of LOA by the Court. He argues that at the
time of agreement to sell dated 9th September, 1988, there was
no clout on the authority of the administrator/SBS and so there
was no reason for the appellant/Indian Associate to doubt the
authority of administrator more so when the sale proceeds were
to be applied by the administrator to liquidate the liabilities of
the estate. To substantiate his arguments, the learned counsel
relies on Mathuradas Vassanji v. Raimal, AIR 1935 Bombay
385, Tincowri Pramanik v. Narayan Chandra Mukherjee,
AIR 1957 CAL 364, Adeline Maude Ellanor Catchick Nee
Roberison and another v. Sunderlal Daga and others, AIR
(37) 1950 Calcutta 559.
15. Referring to Sections 211(1), 216, 220, 273 and 307 of the Act,
the learned counsel submits that the administrator is the sole
representative of the deceased and the estate vests in him. The
administrator is possessed with all the rights in relation to the
assets of the estate of the deceased as if he were the owner.
The powers of the administrator u/s 307 are wide and
comprehensive and that the LOA granted shall be conclusive to
FAO(OS) No.641/2009 Page 12 of 33
the representative title and further that the administrator has
absolute power to dispose of the property of the deceased in
such manner as he may deem fit. He submits that the
administrator had complete authority to deal with the property in
any manner he deemed most appropriate and that if for some
reason the LOA is revoked, the revocation has prospective effect,
thus saving any intervening transactions. Reliance is placed on
the judgments of A.L.A.R firm v. Maung Thwe, AIR 1923
Rangoon 69, Smt. Babuain Chandrakala Devi v. Smt.
Pokhraj Kuer and others, AIR 1963 PATNA 2, Namberumal
Chetti v. Veeraperumal Pillai, AIR 1930 MAD 956, G.F.F.
Foulkes and others v. A.S. Suppan Chettiar, AIR (38) 1951
MAD 296 and P.H. Alphonoso v. Mrs. Irene Dias & others,
1967 (2) Mysore LJ 465 and Crystal Developers v. Asha Lata
Ghosh, 2005 (9) SCC 375.
16. Further referring to Section 307 of the Act, learned counsel
submits that this Section authorises validly appointed
administrator to transfer and sell the property of a deceased. He
submits that expression “may” in Section 307(2) signifies that
there is no bar in the exercise of such power and the court can
be approached for permission. He urges that the lack of prior
FAO(OS) No.641/2009 Page 13 of 33
permission from the court in a case of such transfer does not
vitiate the sale but merely renders it voidable, which in turn
means that the party aggrieved has to approach the court of law,
to avoid or challenge such a transaction. The learned counsel
relies upon the cases of Sita Sundari Barmani and another v.
Barada Prosad Roy Chowdhary and others, AIR 1924 CAL
636, Gotiram Nathu Mendre v. Sonabai w/o Savleram
Kahane and others, AIR 1970 Bom 73 and V. Zollikofer and
Co. v. O.A.O.K.R.M. Chettyar Firm, AIR 1931 Rangoon 277.
Learned counsel also submits that the sale deed already having
been executed in favour of the appellant/Indian Associates by
the administrator/SBS for a valuable consideration,
respondent/RBS was neither authorised nor competent to sell a
part of the property in question to M/s.Jesper in 1997. The said
sale is alleged to be illegal and not binding on the estate of the
deceased.
17. With regard to filing of application under Order IX Rule 13 of the
Code of Civil Procedure by respondent/RBS for recalling the grant
of LOA, learned counsel submits that the pendency of this
application did not amount to any impediment on the part of the
administrator, who was validly appointed by the Court. He
FAO(OS) No.641/2009 Page 14 of 33
argues that this application was neither argued nor pressed all
the while by respondent/RBS and so much so even no evidence
was led.
18. Based on the aforesaid submissions, the learned counsel argues
that in view of these facts and circumstances and developments,
this Court alone has jurisdiction to issue orders pertaining to
administration of estate of late Rani Padmawati Devi and that
consequent upon the death of the validly appointed
administrator/SBS, an administrator was required to be
appointed by the court. He further argues that for the proper
and complete administration of the estate, the Court was
required to protect the rights of such third parties who had
bonafidely dealt with the administrator.
19. On the other hand learned counsel appearing for Respondent
Nos. 2 (RBS), 7 and 8 submits that the administrator had no
authority to transfer the property in question without the
permission of the Court in view of mandatory provision under
sub-section (2) of Section 307 of the Act. The learned counsel
argues that the transfer made by the administrator created
suspicion, especially when there were other heirs to the estate
and no permission of the Court was obtained. Learned counsel
FAO(OS) No.641/2009 Page 15 of 33
tries to demonstrate the duties and responsibilities of the
administrator while dealing with the property under the grant of
LOA. The administrator was only in possession as a trustee and
is supposed to deal with the estate in larger interest of the estate
and the other heirs. He submits that when the administrator was
aware that the application for setting aside the order granting
him LOA was filed by the respondent/RBS and notice had also
been accepted by him on 13th August, how can it be said that
agreement to sell on 9th September 1988 (with the appellant)
was with bonafide intention. Not only that, no permission was
obtained as contemplated under Section 307(2) of the Act, the
administrator even did not inform the Court about the
transaction. The learned counsel submits that the entire factual
matrix and the conduct of the administrator would lead to a
conclusion about his malafide intention adversely affecting the
estate to its interest. The learned counsel for respondents next
submits that the administrator was well aware of the fact that
there existed conditions/restrictions on sale and transfer of the
estate of Rani Padmawati Devi since May 1983. He submits that
though by order dated 20th September, 1988, permission was
granted by the Competent Authority, Madhya Pradesh to sell the
land, but the conditions/restrictions as imposed continued to
FAO(OS) No.641/2009 Page 16 of 33
exist. He emphasis that the administrator knew about the
pendency of Petition No.3328/1988 filed by respondent/RBS
against the order of grant of permission to sell and also about
the Sub Registrar, Raipur, having declined to register the sale
deed. He further submits that the appellant-Indian Associates
also knew all this as it had become a party in the aforesaid
petition (No.3328/1988) pending before the Madhya Pradesh
High Court. In this regard he relies on Mindnapur Zamindari
Co v. Ram Kanal Singh AIR 1926 Pat 130, re-Estate of
Indrani AIR 1931 All 212, Gotiram v. Sona Bai AIR 1970 Bom
73, R.K. Mohammad Ubaidullah and others v. Hajee C.
Abdul Wahab, (2000) 6 SCC 402 and Usha Sinha v. Dina Ram
and others, (2008) 7 SCC 144.
20. The learned counsel next argues that contrary to the assertions,
not only during the lifetime of the administrator, but right upto
1997, the appellant/Indian Associates did not make any attempt
to apprise this Court about the transaction much less seeking
prior permission of the transaction. He argues that the alleged
transaction was void ab initio and illegal, firstly, because of the
fact that there existed restrictions on the sale and transfer since
May 1983; secondly, because of absence of permission of the
FAO(OS) No.641/2009 Page 17 of 33
Court under Section 307(2) of the Act and; thirdly, because of
manifest lack of bonafide of the administrator to enter into this
transaction in view of the subsisting objections by
respondent/RBS. He vehemently submits that overall conduct in
rushing through the process of striking a deal on 9th September,
1988 when the notice of setting aside the LOA was already
served on him a few days back, would clearly demonstrate that
the administrator/SBS was not honest in dealing with the estate.
21. He argues that the question of validity of the sale transaction
was directly involved in the proceedings before MP High Court
which were decided against the administrator/SBS and appellant-
Indian Associates on 12th October 1992 and that SLP filed against
it was also dismissed and thus those decisions are res-judicata
against all including the appellant/Indian Associates. He submits
that the same issues are sought to be reagitated by them in
these proceedings. In this regard he relies upon the case of
Gulabchand Chhotalal Parikh v. State of Gujarat, AIR 1965
SC 1153 and Union of India v. Nanak Singh, AIR 1968 SC
1370.
22. Learned counsel appearing for M/s. Jesper (Respondent No. 3
herein) argues that the Division Bench of this Court while dealing
FAO(OS) No.641/2009 Page 18 of 33
with the applications of the appellant/Indian Associates (IAs
No.490/1999 and 5054/1999) vide order dated 17th January, 2002
had allowed the appellant/Indian Associates only to participate in
the proceedings in order to enable it to safeguard its interest to
the extent of that part of the estate which was the subject
matter of the sale deed dated 11th October, 1988 executed by the
administrator/SBS in favour of appellant. In other words, the
submissions are that the requests of the appellants for its
impleadment in place of deceased administrator or for the
appointment of some other person as the administrator in place
of deceased administrator were rejected and they were only
permitted to participate in the proceedings to safeguard their
interest. He submits that the said order has become final and
binding on the parties.
23. We have given our thoughtful consideration to the submissions
made by the learned counsel for the parties. For the reasons to
be recorded hereinafter we do not find any infirmity or illegality
in the impugned order of the learned Single Judge. Almost all the
submissions, which have been made before us, by the learned
counsel for the parties, were made before the learned Single
FAO(OS) No.641/2009 Page 19 of 33
Judge and are seen to have been dealt with by him with cogent
reasons.
24. We may recall that undisputedly the Competent Authority of
Madhya Pradesh had imposed certain conditions/restrictions on
the use and sale of the lands of Rani Padmawati Devi way back
in May 1983. The proceedings under the Urban Land Ceiling Act
regarding lands were pending against Rani Padmawati Devi
since 1977. As the conditions were there at that time the lands
in question apparently appeared to be within the ambit of Ceiling
Act, being more than the prescribed limit in the hands of Rani
Padmawati Devi. That is a different issue that after her death
the land devolved in the hands of four legal heirs and thereby
came out of the purview of the Ceiling Act. But, the fact remains
that there existed restrictions on the use and disposal of the
lands since May 1983. The petitioner i.e., administrator/SBS was
well aware of those proceedings and also the restrictions. He
was appointed LOA in May 1988. Respondent/RBS filed an
application under Order IX Rule 13 CPC (I.A. No.4065/1988) on
18th July, 1988 for setting aside the order granting the LOA. The
administrator/SBS was well aware of this application since notice
had already been accepted by him. The said application was
FAO(OS) No.641/2009 Page 20 of 33
pending for adjudication. In such circumstances, the bonafide of
the administrator/SBS in dealing with the estate becomes
doubtful and suspicious since he took hardly any time to enter
into an agreement to sell on 9th September, 1988 with the
appellant. In R.K. Mohammad Ubaidullah and others v.
Hajee C. Abdul Wahab, (2000) 6 SCC 402, the Supreme Court
has held that unless a purchaser has made appropriate inquiry,
he cannot establish his bona fides. If such an inquiry is not made,
it would mean that the purchaser willfully refrained from making
the inquiry or grossly neglected to do so. In another case of
Usha Sinha v. Dina Ram and others, (2008) 7 SCC 144, the
Supreme Court has observed that a transferee from judgment
debtor is presumed to be aware of the proceedings before the
court of law. He should be careful before he purchases the
property which is the subject matter of litigation.
25. We do not see the relevance of the case of Mathuradas
Vassanji (supra) relied upon by the appellant in the present
case. In the cases of Tincowri Pramanik (supra) and Adeline
Maude Ellanor Catchick Nee Roberison and another
(supra), the rights and obligations of alienee from the executor
of a Will came to be considered. It was held that the alienee
FAO(OS) No.641/2009 Page 21 of 33
from an executor, who is acting as such has right to infer that the
latter is acting fairly; that immunity is, however, lost when the
alienee has notice, actual or constructive, of the fact that the
executor is acting in breach of trust. The alienee is not bound to
see to the application of money. The burden rests upon the
persons impeaching the validity of the transaction to prove the
alienee had notice of the facts. From all that we have discussed
above, we have seen that the bonafide of the administrator-SBS
in dealing with estate had become suspicious and the appellant
also knew all about the conditions and restrictions and clout on
the authority of the administrator.
26. The cases of Smt. Babuain Chandrakala Devi
(supra),Namberumal Chetti (supra), G.F.F. Foulkes and
others (supra) and P.H. Alphonoso (supra) relied upon by
the appellant deal with the powers of the executor or
administrator and the immunity enjoyed by the bonafide
purchaser in the sense that the sale cannot be questioned so as
to defeat the alienee who had no notice of the fact or the powers
of the administrator or that property could fetch a higher price.
There is no dispute with regard to any of the propositions laid
down in this regard as noted hereinabove.
FAO(OS) No.641/2009 Page 22 of 33
27. The other case relied upon by the appellant, namely Crystal
Developers (supra) was dealt with by the learned single Judge.
This case also related to a Will for which probate was granted.
The third party had purchased the property bonafide. It was in
this context that the Court had observed that the revocation of
probate is prospective and would not give effect to a third party
bonafide and valid transaction. The learned Single Judge rightly
observed that with regard to this proposition as noted
hereinbefore, the facts of Crystal Developers (supra)are quite
different from the present case.
28. The cases of Sita Sundari Barmani and another (supra),
Gotiram Nathu Mendre (supra) and V. Zollikofer and Co.
(supra) were relied upon by the learned counsel for the
appellant to substantiate that the lack of prior permission from
the court before entering into transaction will not vitiate the sale
but merely render it voidable. Though the case of Gotiram Nathu
Mendra (supra) relate to a Will, the word „restriction‟ as used in
Section 307(2) was interpreted to cover a total prohibition of
disposal of property. In this regard, it was held as under:
“I am, therefore, of the view, and I also hold, that in Section
307(2) of the Indian Succession Act the word “restriction”
includes and covers a total prohibition. The general power ofFAO(OS) No.641/2009 Page 23 of 33
disposal of property conferred by sub-section (1) is, therefore,
subject to the prohibition on disposal imposed by the will, and a
sale in contravention of such prohibition is voidable at the
instance of a person interested as provided in clause (iii) of sub-
section (2) of Section 307.”
29. The consequence of a transaction being voidable was to mean
that it could be challenged or objected to by the person
interested in the property. In the present case, RBS not only
attempted to impeach the transaction immediately by filing an
application, but also applied for injunction, which was granted.
Since the genesis of the transaction itself was doubtful and that
had been challenged by the RBS and in view of the fact that
subsequently RBS and all other LRs entered into a MOU and
asked for disposal of the proceedings, there appeared to be no
need for filing a separate suit regarding the transaction to be
voidable.
30. With regard to the binding effect of the orders of the Madhya
Pradesh High court, the learned Single Judge noted that the
correctness of the orders of the Madhya Pradesh was tested in
the Supreme Court, which dismissed the SLPs. We are in
agreement with the learned Single Judge that though the context
of the proceedings and the decisions before the Madhya Pradesh
High Court was different being under the Ceiling Act,
FAO(OS) No.641/2009 Page 24 of 33
nevertheless those proceedings ended in binding orders. The
finding of the Madhya Pradesh High Court that the
administrator/SBS having no authority to sell the land and to that
extent the sale in favour of investors, Indian Associates, must be
held illegal and invalid, has become final with the dismissal of
SLP by the Supreme Court.
31. Though, it was in a different context but it may be noted that the
principal laid down by Hon‟ble Supreme Court in the case of
Usha Sinha v. Dina Ram and Others (2008) 7 SCC 144 is that
a transferee should be careful before he purchases a property
which is subject matter of litigation. The doctrine of lis pendens
recognized by Section 52 of Transfer of Property Act prohibits
dealing with the property which is the subject matter of the suit.
The lis pendens itself is stated as constructive notice to the
purchaser that he is bound by the outcome of pending litigation.
32. It appears that some efforts might have been made by the
administrator/SBS to get an order from the competent authority
of Madhya Pradesh on 20th September, 1988 for seeking
permission of sale of the property. However, in the process it
appears he seemed to have forgotten that there existed
restrictions on sale and transfer since 13th May, 1983 and further
FAO(OS) No.641/2009 Page 25 of 33
that the agreement was dated 9th September, 1988 i.e. before
the grant of permission on 20th September, 1988. Another
important fact is that the appellant also knew about all this as
having become party in the writ petition filed by the
respondent/RBS. In these circumstances, it cannot be held that
at the time of agreement dated 9th September, 1988, there was
no clout on the authority of the administrator.
33. We shall now proceed to discuss Section 307 of the Act which
reads as under:
“307. Power of executor or administrator to dispose of property.-
(1) Subject to the provisions of sub- section (2), an executor or
administrator has power to dispose of the property of the
deceased, vested in him under section 211, either wholly or in
part, in such manner as he may think fit.
(2) If the deceased was Hindu, Muhammadan, Buddhist, Sikh or
Jaina or an exempted person, the general power conferred by
sub- section (1) shall be subject to the following restrictions and
conditions, namely:–
(i) The power of an executor to dispose of immoveable
property so vested in him is subject to any restriction
which may be imposed in this behalf by the will
appointing him, unless probate has been granted to him
and the Court which granted the probate permits him by
an order in writing, notwithstanding the restriction, to
dispose of any immoveable property specified in the order
in a manner permitted by the order.
(ii) An administrator may not, without the previous
permission of the Court by which the letters of
administration were granted,–
FAO(OS) No.641/2009 Page 26 of 33
(a) mortgage, charge or transfer by sale, gift,
exchange or otherwise any immoveable property
for the time being vested in him under section 211,
or
(b) lease any such property for a term exceeding five
years.
(iii) A disposal of property by an executor or administrator in
contravention of clause (i) or clause (ii), as the case may
be, is voidable at the instance of any other person
interested in the property.
(3) Before any probate or letters of administration is or are
granted in such a case, there shall be endorsed thereon or
annexed thereto a copy of sub- section (1) and clauses (i) and
(iii) of sub- section (2) or of sub- section (1) and clauses (ii) and
(iii) of sub- section (2), as the case may be.
(4) A probate or letters of administration shall not be rendered
invalid by reason of the endorsement or annexure required by
sub- section (3) not having been made thereon or attached
thereto, not shall the absence of such an endorsement or
annexure authorise an executor or administrator to act
otherwise than in accordance with the provisions of this
section.”
34. The absolute power of disposal of property conferred on an
executor or administrator as envisaged under sub-section (1) is
subject to sub-section (2) of this Section. The question here for
consideration would be as to whether the administrator would
have absolute power to dispose of the property of the deceased
as he may think fit or would he be subjected to any conditions or
restrictions.
FAO(OS) No.641/2009 Page 27 of 33
35. Clause (i) of sub-section 2 deals with powers of executor to
dispose of immovable property and clause (ii) deals with power
of administrator. Here we are concerned with the power of
administrator and so it would be clause (ii) of sub-section (2) that
would be applicable. As per this clause, an administrator is
prohibited to mortgage, charge or transfer by sale, gift, etc. any
immovable property that was vested in him, for the time being,
under Section 211 without the previous permission of the Court
granting Letters of Administration. That being the literal and
plain reading of the provisions, it comes out to be that for
effecting any charge on the property in any of the ways as
stipulated in sub clause (a) of clause (ii), the administrator/SBS
was required to seek prior permission of the court, which granted
him LOA. Undisputedly, no such permission was ever obtained
by the administrator/SBS before entering into transaction on 9th
September, 1988 with the appellant. Not only that, even no
information of this transaction was given by him till such time an
application of restrain was filed against him by the
respondent/RBS. It was only then that he came out to give
statement of account of the administration of estate in
December 1988.
FAO(OS) No.641/2009 Page 28 of 33
36. Further clause (iii) of sub-section (2) provides as to the status of
the transaction entered into by the executor or the administrator
in contravention of clauses (i) or (ii) as the case may be. It
provides such transaction to be voidable at the instance of any
other person interested in the property. It was mandatory to
seek permission of the court granting the probate or the LOA, as
the case may be, before entering into transaction of disposal of
immovable property as vested in them in their capacity as
executor or the administrator. In the present case, admittedly
the same having not been done by the administrator, the
transaction affecting disposal of the estate of the deceased was
apparently unauthorized.
37. The cases of Smt. Babuain Chandrakala Devi v. Smt.
Pokhraj Kuer and others, AIR 1963 Patna 2 and Namberumal
Chetti v. Veeraperumal Pillai, AIR 1930 MAD 956 relied upon
by Appellant Indian Associates related to will imposing certain
restrictions on the powers of executor to dispose the property of
deceased. It was held that the law does not impose any duty on
the purchaser from an executor to inquire into the necessity of
the transfer and that the transfer of property should be with the
permission of the Court which granted the probate. These cases
FAO(OS) No.641/2009 Page 29 of 33
are not applicable to the facts of the present case. However, as
noted above, even in the case of probate, the executor was
required to seek the permission of the Court to dispose of the
property.
38. Similarly, the cases of Tincowri Pramanik v. Narayan
Chandra Mukherjee, AIR 1957 Calcutta 364 and Adeline
Maude Ellanor Catchick Nee Roberison and another v.
Sunderlal Daga and others, AIR (37) 1950 Calcutta 559, also
related to probate and not the LOA. In these cases also, the Will
contained limitations on the powers of the executor. In both
these cases it was held that the alienee through executor, who is
acting as such has right to infer that the latter is acting fairly. It
was held that the maxim which applies here is “let the executors
do their duty and let the authority cease when injustice begins”.
39. The case of V. Zollikofer and Co. v. O.A.O.K.R.M. Chettyar
Firm, AIR 1931 Rangoon 277 relied upon relates to mortgage by
administrator without the permission of the Court. The main
question for determination was as to whether unsecured
creditors were entitled to avoid the mortgage and whether they
were entitled to do so without making any restitution to the
mortgagee to the extent to which mortgagee had bona fidely
FAO(OS) No.641/2009 Page 30 of 33
advanced money at the instance of administrator/mortgagor
interested in the property. It was held that the right course for
the court to take is to hold that the appellant firm ought either to
make restitution to the respondent/mortgagee to the extent to
which the respondent has bona fide advanced the money for the
benefit of the estate as a condition precedent to avoiding the
mortgage, or that the respondent should be allowed to enforce
his mortgage against the estate. In the present case, in view of
the changed circumstances, the parties (legal heirs of deceased
and legal heirs of SBS) entered into a MOU and none accepted
the transaction or chose to get it avoided. During the argument,
the respondent offered not only to restitute the appellants of the
sums advanced, but also offered reasonable compensation,
which was outrightly rejected by the appellants.
40. In any case, the principal of equity cannot be made applicable in
the present proceedings against the provisions of law as
contained in Section 307 of the Act and particularly when the
appellants/Indian Associates declined to be restituted and
reasonably compensated. As we have noted that the appellant
having parted with Rs.35,00,000/- to the administrator/SBS by
way of transaction of the estate in the absence of permission of
FAO(OS) No.641/2009 Page 31 of 33
the Court the appellant-Indian Associates may have its remedy in
some other appropriate proceedings as may be advised.
41. We have also noted that as per Section 317 of the Act, the
administrator was required to exhibit in the Court the inventory
containing full account of the properties including the creditors
and debtors. However, as noticed in the present case, the
administrator SBS presented the statement of account in the
Court after seven months from the grant of administration and
that too when clout had arisen in the transaction and the
application for revocation by respondent/RBS was pending. We
have also noticed that nothing came on record that the money
which was stated to have been received from the appellant was
utilized by administrator SBS towards the benefit of the estate by
clearing liabilities of taxation.
42. In any case, what rested with the appellant was only an
Agreement to Sell and not the documents of transfer of title of
the property or possession thereof. Mere Agreement to Sell
would not entitle the appellant to have much say in the present
proceeding. Of course, the appellant may have the remedy
somewhere else in some other proceedings. As per the
judgment of the Supreme Court in S. Kaladevi v. V.R.
FAO(OS) No.641/2009 Page 32 of 33
Somasundaram and others, 2010 (5) SCC 401, unregistered
sale deed is not a complete sale. No doubt, the sale deed in the
present case was executed and presented before the Sub-
Registrar, but as noted above, same was not registered because
of persistent stay and also because of Urban Land Ceiling Act.
Section 54 of the Transfer of Property Act clearly stipulates that
the sale or transfer of immovable property or other intangible
thing is to be only by way of registered sale deed/instrument.
43. For the foregoing discussion, we do not see any reason to
interfere in the findings recorded by the learned Single Judge.
Hence, appeal and the pending applications are dismissed with
no order as to costs.
M.L.MEHTA
(JUDGE)
A.K. SIKRI
MARCH 30, 2011 (JUDGE)
„Dev‟
FAO(OS) No.641/2009 Page 33 of 33