JUDGMENT
Mukul Mudgal, J.
1. This is an application under Order VII Rule 11 of the Civil procedure Code on the premise that the statement made in the plaint as per Order VII Rule 11 sub-clause (d) indicates that the plaint is barred by any law.
2. The relevant portion of Order VII Rule 11 of the Code reads as under:
11. Rejection of plaint : The plaint shall be rejected in the following cases:-
(a) where it does not disclose a cause of action;
(b) where the relief claimed is undervalued, and the plaintiff on being required by the Court to correct the valuation within a time to be fixed by the Court, fails to do so;
(c) where the relief claimed is properly valued by the plaint is written upon paper insufficiently stamped and the plaintiff, on being required by the Court to supply the requisite stamp paper within a time to be fixed by the Court failed to do so.
(d) where the suit appears from the statement in the plaint to be barred by any law;
(e) where it is not filed in duplicate;
(f) where the plaintiff fails to comply with the provisions of Rule 9.
3. The suit is for specific performance of agreement to sell executed by the defendant with all the plaintiffs which the defendant is averred to have been reneging from for ulterior motives. The written statement was filed and issues were framed and it is at the stage of evidence that the present application under Order VII Rule 11 was moved. The main contention of Mr. L.R. Gupta, learned senior counsel for the applicant/defendant is that the suit for specific performance is an attempt to get over the consequences of Chapter XX C of the Income Tax Act so as to split up the consideration of Rs.45 lakhs into purported individual transactions below Rs. 10 lacs each. He has relied upon the pleadings in para 3 and 4 which refers to 6 agreements in respect of the family members which provided + undivided share in respect of basement, ground floor, mezanine floor, first floor and terrace rights. His plea that in each of these transactions the agreed consideration was less than Rs. 10 lacs with a view to avoid compliance of filing Form 37(I) and the compulsory requirements of Chapter XX C of the Income Tax Act. The eventual consideration was Rs.45 lacs and yet the requisite consent from the income tax authorities were not taken by splitting up the transaction into 6 separate sales. He has further relied on Section 23 of the Contract Act which as per his content read with Chapter XX C of the Income Tax Act states that any convenant forbidden by law is void. Reliance has also been placed on the judgment of the Hon’ble Supreme Court in Appropriate Authority and Commissioner, Income Tax vs. Varshaben Bharatbhai Shah (Smt.) and others, wherein it had been held in para 8 that for attracting chapter XX C is what is the property which is the subject matter of transfer and what was the apparent consideration for such transfer and the splitting up of transactions for the same property could not avoid the consequence of Chapter XX C. He has further submitted that consequently the agreement to shall was void.
4. In reply Mr. B.K. Sood, who appears on behalf of the plaintiff, has contended that the judgment of the Hon’ble Supreme Court relied upon by the learned counsel for the applicant is not applicable as in the present case there are 6 different purchasers whereas in the above case facts indicated that there was only one purchaser. Furthermore, Section 269UC of the Income Tax Act clearly provides for a bar on transfer of property and not at the stage of entering of or specific performance of agreement.
He also laid stress on the fact that Chapter XX C of the Act does not stipulate that such agreements are per se void. In this connection he has relied upon the judgment of the Hon’ble Supreme Court in Saleem Bhai vs. State of Maharashtra, AIR 2003 SC 79 wherein it has been held as under:
9. A perusal of O. VII, R 11 C.P.C. makes it clear that the relevant facts which need to be looked into for deciding an application there under are the averments in the plaint. The trial Court can exercise the power under O VII R 11 C.P.C. at any stage of the suit before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial. For the purposes of deciding an application under Cls (a) and (d) of R.11 of O. VII, C.P.C., the averments in the plaint are germane: the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage, therefore, a direction to file the written statement without deciding the application under O. 7 R. 11, C.P.C. cannot but be procedural irregularity touching the exercise of jurisdiction by the trial Court. The order, therefore, suffers from non-exercising the jurisdiction vested in the Court as well as procedural irregularity. The High Court, however, did not advert to these aspects.
5. He has therefore by placing reliance on the above judgment submitted that only averments in the plaint should be read to construe whether the plaint is barred by law as per Order VII Rule 11 (d) Code of Civil Procedure. In this regard he submits that a bare reading of the plaint does not so indicate and unless and until the pleas of the defendant whether in reply or otherwise are considered such a plea cannot even be advanced and under the law be accepted. He has placed reliance on the judgment of a learned single Judge of this Court in Shri Rajesh Aggarwal vs. Shri Balbir Singh and another where it was held by a learned single Judge of this Court, that in a suit for specific performance failure to obtain income tax clearance under S. 269UC cannot non-suit the plaintiff. In reply it has been contended by the plaintiffs that a suit for specific performance is maintainable even in the absence of the clearance under Chapter XX C of the Act. He further submitted that in any case now as of today even under the Income Tax Act no prior permission is required to give effect to an agreement to sell and the Court would apply the position of law obtaining today, particularly, in view of the judgment of the Hon’ble Supreme Court in aran Singh and others etc. vs. Bhagwan Singh (Dead) by LRs and others etc. wherein it has been held in para 7 that the amended law on the relevant date of hearing of the case will apply. The learned counsel for the plaintiff No. 1 as submitted that there are 6 purchasers. There are independent causes of action in respect of each of the six purchasers and all have paid separate court fees and have only joined in one suit for the sake of conveniance though would have fully been justified in filing separate suits.
6. In rejoinder Mr. Gupta, the learned senior counsel for the applicant has submitted that all the 6 purchasers are close family members. Section 276AB of the Act indicates that the violation of Section 269UC is punishable by punitive consequences which clearly is a pointer to the fact that Section 269UC is mandatory. In this regard he has placed reliance on Liverpool and London S.P and I Association Ltd. vs. M.V. Sea Success I and another to contend that both the plaint and the documents can be looked into. However, it not in dispute that the amount paid as part consideration to the defendant was never required or offered to be returned to and on the contrary another suit was filed by the defendant claiming this amount to be rent of the premises.
7. Paras 3 and 4 of the plaint were relied upon by the applicant to contend that the suit was barred by law. The said paras are extracted here in below:
3. That subsequently in June/July, 1993 the defendant agreed to sell the entire built up property to plaintiffs No. 1 to 4 and 6 by means of separate Agreement to Sell executed by her with the respective plaintiffs No. 1 to 4 and 6 with proportiona e lease hold rights in the land underneath the said building that was to be enjoyed by each one of the plaintiffs No. 1 to 4 and 6 for their respective portions of the Suit property. The details and particulars of such transactions by the defendant with the plaintiffs are given below:-
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S.No Date of Name of Description of the
Agreement Purchaser portion of property
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01. 29-6-1993 Smt. Nisha Singh One-half undivided share of
Plaintiff No. 4 basement floor and ground floor with
proportionate leasehold rights and
common facilities per agreement.
02. 30-6-1993 Smt. Neeru Singh One-half undivided share of basement
Plaintiff No. 3 floor and ground floor with
proportionate lease hold rights
and common facilities per agreement.
03. 01-07-1993 Sh. Ajit Singh One-half undivided share of mezannine
Plaintiff No. 6 floor and floor with proportionate
leasehold rights and first common
facilities per agreement.
3A. 27-12-1993 Shri Amar Deep One-half undivided share of mezannine
Singh floor and first from Shri Ajit Singh
rights of Ajit floor with proportionate leasehold
Singh rights and from Defendant,
Plaintiff No. 5. common facilities per agreement.
4. 02-07-1993 Shri Pradeep Singh, One-half undivided share of mezannine
Plaintiff No. 1 floor and first floor with
proportionate leasehold rights and
common facilities per agreement.
5. 03-07-1993 Smt. Kaushalya Devi, Terrace rights with liberty to raise
Devi permissible construct-ion over the same
Plaintiff No. 2 with proportio-nate lease hold rights
and common facilities per Agreement.
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4. That acting upon the representations of the defendant to the effect that she held the suit property on the basis of perpetual lease deed dated 10th November, 1975 and that she was entitled to sell, transfer and convey the said property, plaintiff Nos. 1 to 4 and 6 had agreed to purchase different portions under separate agreements to sell as indicated in para 3 above. The particulars of the agreed consideration and of the part-payments made by plaintiff Nos. 1 to 4 and 6 to the defendants are as follows:-
—————————————————————————————
Name of Purchaser Date of Agreement Agreed Consideration Amount of Balance
Partpayment Consideration
due.
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1.Smt. Nisha Singh, 29-6-1993 9,25,000/- 1,00,000/- 8,25,000/-
Plaintiff No. 4
2. Smt. Neeru Singh, 30-6-93 9,25,000/- 1,00,000/- 8,25,000/-
Plaintiff No. 3
3. Sh. Amar Deep Singh, 27-12-93 9,25,000/- 1,25,000/- 8,00,000/-
Plaintiff No. 5
as nominee of
Sh. Ajit Singh
4. Shri Pradeep Singh, 2-7-93 9,00,000/- 1,00,000/- 8,00,000/-
Plaintiff No. 1
5.Ms Kaushlya Devi, 3-7-93 8,50,000/- 1,00,000/- 7,50,000/-
Plaintiff No. 2
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Note: Shri Ajit Singh Plaintiff No. 6, vide Agreement dated 1-7-1993 had agreed to purchase one half undivided share of mezannine floor and first floor with proportionate leasehold rights and common facilities per Agreement for a total consideration of s.9,00,000/- and he paid a sum of Rs.1,00,000.00 to the defendant as part payment of the sale consideration. However, on 27-12-1993 Shri Ajit Singh nominated Shri Amar Deep Singh as purchaser of the said portion of the suit property for a total consider tion of Rs.9,25,000/- out of which Shri Ajit Singh plaintiff No. 6 reimbursed himself with the amount of Rs.1,00,000/- paid to the defendant under his agreement dated 1-7-1993 and in addition Shri Ajit Singh plaintiff No. 6 took consideration of Rs.25,00/- from nominating plaintiff No. 5 as purchaser of the said portion of the property in place of plaintiff No. 6, and consequently the consideration of Rs.9,25,000/- has been shown against the Agreement of Shri Amardeep Singh, Plaintiff No. 5 indicating he same balance consideration of Rs.8,00,000/- remaining payable to the defendant. The defendant also joint the execution of Agreement to sell dated 27-12-1993 as confirming party through her duly constituted attorney Shri Ajit Singh, plaintiff No. 6.
8. Section 269UC of the Income Tax Act reads as under:
Restriction on transfer of immovable property.
269UC (1) Notwithstanding anything contained in the Transfer of Property Act, 1882 (4 of 1882) or in any other law for the time being in force, (no transfer of any immovable property in such area and of such value exceeding five lakh rupees, as may be pescribed) shall be effected except after an agreement for transfer is entered into between the person who intends transferring the immovable property (hereinafter referred to as the transferor) and the person to whom it is proposed to be transferred (herinafter referred to as the transferee) in accordance with the provisions of sub section (2) at least (four) months before the intended date of transfer.
(2) The agreement referred to in sub section (1) shall be reduced in writing in the form of a statement by each of the parties to such transfer or by any of the parties to such transfer acting on behalf of himself and on behalf of the other parties.
(3) Every statement referred to in sub-section (2) shall –
(i) be in the prescribed form;
(ii) set forth such particulars as may be prescribed; and
(iii) be verified in the prescribed manner;
and shall be furnished to the appropriate authority in such manner and within such time as may be prescribed by each of the parties to such transaction or by any of the parties to such transaction acting on behalf of himself and on behalf of the other parties.
(4) Where it is found that the statement referred to in sub-section (2) is defective, the appropriate authority may intimate the defect to the parties concerned and give them an opportunity to rectify the defect within a period of fifteen days from the ate of such intimation or within such further period which, on an application made in this behalf, the appropriate authority may, in its discretion, allow and if the defect is not rectified within the said period of fifteen days, or as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Chapter, the statement shall be deemed never to have been furnished.
9. In my view a bare reading of the above paragraphs of the plaint or even the documents does not disclose any illegality or bar created by any law. Even if the pleas of the defendant/applicant are accepted they do not emerge from or are discernible from a bare reading of the plaint. Furthermore, Section 269UC of the Act does not bar an agreement to sell but bars the transfer of such property. The consequence of violation of this provision leading to compulsory purchase at the stated price are also provided for in the Income Tax Act. Assuming all the pleas of the applicant/defendant to be correct including the violation of the mandate of the Supreme Court in Appropriate Authority’s case(supra) it is actually the averments in the defendants’ pleadings which would substantiate such pleas raised in the application. A look at the defendants’ written statement and consequently other pleadings such as the present application to support a plea under Order VII Rule 11(d) of the Code of Civil Procedures proscribed by the Hon’ble Supreme Court in Saleem Bhai’s case (supra). Significantly the pleas taken in this application are also to be found in paragraph 7 of the written statement. Thus in essence the defendant is relying upon the contents of the paragraph 7 of the written statement to justify its plea which is not permissible in law in view of the binding judgment of the Supreme Court in Saleembhai’s case (supra).
10. Furthermore, even if it was assumed that the pleas in this application could be looked at, section 269UC of the Act only prohibits a transfer and does not make an agreement void ab initio and per se. The provision of penal consequences for non compliance may make such provision mandatory as contended by the applicant’s counsel, but they cannot lead to the further consequential conclusion that such agreements are void ab initio. The plaintiff has contended that there were six purchasers and to straight away conclude that Section 269UC was attracted can not be accepted even though the defendants’ plea was that the sale of the joint undivided portions of property to 6 closely related family members is but a mere ruse to avoid the consequences of section 269UC. It is possible that the plea of the defendant could be eventually accepted but it would only be done after evidence is led and not at the present stage of the application under Order VII Rule 11 of the Code. The position of law laid down by the learned single Judge of this Court in Rajesh Aggarwal’s case (supra) is also very clear on this aspect that the agreement to sell said to violating Section 269UC of the Act does not come in the way of a suit for specific performance. The view taen in Rajesh Agarwal’s case by Vijender Jain, J. was also followed in Surinder Grover vs. Sheela Sahni and Ors., by N.G. Nandi, J. I am in respectful agreement with and indeed bound by these two judgments.
11. Consequently I am unable to accept Shri L.R. Gupta’s contention on behalf of the defendant that the suit is barred under Order VII Rue 11(d) of the Code and this application, therefore, must fail and is accordingly dismissed.