Kommineni Seetharamaiah vs Kommineni Punnaiah and Another

B. Subhashan Reddy, J.—This is the plaintiff''s appeal against dismissal of his suit for specific performance of contract for sale laid in O.S.No. 280/1979 on the file of the Court of the Subordinate Judge, Guntur. I refer the parties as arrayed in the suit.

The plaintiff had instituted the above suit claiming the relief of specific performance of the agreement of sale dated 12-11-1978. The defendants are father and son respectively. The suit schedule property is the agricultural land ad measuring 87 cts. The suit was contested and the defendants did not admit the execution of the said agreement, but on the other hand contended that there was no consensus ad idem for entering into the suit agreement and that their signatures were obtained on the blank papers and that in fact, as there were loan transactions, by way of security for repayment of the same, the said papers were obtained. The defendants are poor as compared to the plaintiff and his father, as the latter had substantial properties, both movable and immovable and were lending amounts on interest. There were loan transactions between the parties from 1974 onwards and according to the defendants, even though some amounts have been paid, abnormal interest was added up every time and the loan was shown by the plaintiff''s father from whom the borrowings were made, as if the loans were still subsisting. The fact that the agreement of sale was preceded by loan transaction is not disputed even by the plaintiff. In fact, he projects three promissory notes Ex.A-1, dated 29-3-1976, Ex.A-2 dated 28-1-1977 and Ex.A-3, dated 11-2-1978. According to the plaintiff, the amounts borrowed under said Exhibits are Rs. 6,000/-, 5,000/- and Rs. 3,900/-respectively and that Ex.A-1-pronote was got executed in favour of plaintiff''s mother - Nagendramma, Ex.A-2 in favour of the sister of the plaintiff''s father and Ex.A-3 in favour of one Dandamudi Punnamma, said to be the close relative of plaintiff and residing with them. The plaintiff had issued notice to the defendants under Ex. A-4 dated 19-10-1978 and even according to the plaintiff, as the defendants had expressed their inability to repay the debt, the contract of sale under Ex.A-10 dated 12-11-1978 was entered into by settling the accounts which came up to a total figure of Rs. 18,126/- and treating Rs. 16,126/- as consideration amount, the defendants had agreed to repay Rs. 2,000/- in cash.

The parties entered trial and while the plaintiff had examined himself as P.W.1, his father was examined as P.Ws.2 and 14 others were examined as P.Ws.3 to 16. The 1st defendant was examined as D.W.1 and the other witnesses 2 to 4 were examined on behalf of the defendants. Plaintiff had marked Exs.A-1 to A-17 and defendants Exs.B-1 to B-7, while through witnesses Exs. X-1 to X-6 were marked.

After appraisal of both oral and documentary evidence, the trial court came to the conclusion that the suit agreement of sale was hit by the provisions of A.P. Agricultural Indebtedness (Relief) Act, 1977 (A.P. Act No. 7 of 1977) (hereinafter referred to as the A.P. Act No. 7 of 1977).

Mr. P. Gopal Das, the learned counsel for the appellant, did not try to attack the judgment of the trial Court on factual finding and raised a purely legal contention stating that A.P. Act No. 7 of 1977 is inapplicable and mat the consideration amount is not unlawful or opposed to public policy and Section 23 of Indian Contract Act has got no relevance and that in view of the clinching documentary evidence under Exs. A-1 to A-3 and A-10, the execution of the said documents is beyond doubt and there is no legal embargo for the enforceability of suit agreement, Ex.A-10. He had also cited, in support of his submissions, judicial precedents of this Court in M. Veera Raghavaiah v. M. Chinna Veeraiah 1978(1) APLJ 12 and Kambam Rami Reddy v. Pallela Rami Reddy 1995 (2) APLJ 196 and an unreported judgment in C.R.P.No. 2680 of 1977 dated 15-6-1978 and a judgment of the Madras High Court in Sri Kapaleeswarar Temple, Mylapore Vs. T. Tirunavukarasu, . In so far as the propositions laid down in the above cited four judgments are concerned, there is no quarrel on the ratio laid down and followed, but the same are inapplicable to the facts of this case. In the above said judgments, the question arose as to whether undischarged loan amount under pronote can form part of consideration amount and also on related facts. But, the facts here are entirely different and revolve around the provisions of A.P. Act No. 7 of 1977 read with Section 23 of Indian Contract Act. Now, I deal with the legal contention in the context of the above said two legal provisions.

One of the requisites of a valid contract enforceable at law is the legality of its object. Section 10 of the Contract Act requires that a contract should be made for lawful consideration and with a lawful object. Otherwise, it will become unlawful agreement hit by Section 23 of the Indian Contract Act. u/s 23 of Indian Contract Act, the consideration and object of an agreement will be unlawful (a) if it is forbidden by law; (b) is of such a nature that if permitted, it would defeat the provisions of any law or is fraudulent or involves or implies injury to the person or property of another; or the Courts regard it immoral or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful and it is needless to mention that every agreement of which the object or consideration is unlawful, is void.

True, as contended by Mr. P. Gopal Das, the learned counsel for the appellant that the consideration for a contract of sale in India can be past, present and future and that it can be paid by either the promisee or anybody on his behalf unlike in England where the consideration can be only inpraesenti and can be only paid by the promisee and that as the consideration amounts under Exs.A-1 to A-3, even though loan transactions, could be treated as the consideration amounts and those amounts having been paid in past, the contract of sale is not hit by Section 23 as the consideration amount was neither unlawful, nor forbidden by law nor is fraudulent, and further that what A.P. Act No. 7 of 1977 bars is the institution of legal proceedings for recovery of the debt and that the instant suit is not of the said kind and does not come within the mischief of A.P. Act. No. 7 of 1977. I do not accede to this contention for the reason that the debts under Exs.A-1 and A-2 stood discharged because of the operation of Section 4 of A.P. Act No. 7 of 1977 and the said legal provision and the very A.P. Act No. 7 of 1977 itself being beneficial legislation enacted with a specific purpose of relieving the enumerated poorer sections of the society and by way of public policy to alleviate their hardships because of the poor financial conditions, they should be given broad and wider interpretation and to further the objects therein. When the loans, Exs. A-1 and A-2 stood discharged, there are no debts so as to treat them as part of the consideration amount and if the same is permitted it will make A.P. Act No. 7 of 1977 redundant and otiose. As such the loan amounts under Exs. A-1 and A-2 could never form part of consideration amount and the suit agreement under Ex.A-10 is unlawful and void. Merely because Ex.A-3 is not attracted by A.P. Act No. 7 of 1977, that cannot be taken as a consideration amount for the suit agreement under Ex.A-10, as under the said agreement, the loan amounts under Exs. A-1, A-2 and A-3 combinedly were taken as consideration amount and they could not be dissected and separated and as such, when part of the consideration amount was unlawful, the void contract cannot be saved merely because a small fraction of the consideration amount was not unlawful. The consideration amounts being inseparable, the whole of the contract of law under Ex.A-10 is void and falls to ground. In the instant case, the applicability of A.P. Act No. 7 of 1977 cannot be disputed before this Court in view of the finding of fact that the defendants are small farmers and come within the protection of A.P. Act. No. 7 of 1977. In the circumstances, I do not find any error or other legal infirmity in the judgment rendered by the Court-below and accordingly this appeal is dismissed, but in the circumstances without costs.