Holding

The order under Section 27(1) and the sale deed are void; the suit is governed by Article 65 of the Limitation Act and is within time, and the plaintiff is entitled to possession.

Summary

The plaintiff, the legal heirs of the deceased Pravin Jethalal Kamdar, had entered into a sale agreement for his urban land within the ceiling limit and applied for permission under Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976. The competent authority rejected the application and exercised its pre‑emptive right, ordering the State to purchase the land for the same consideration, leading to a sale deed dated 23 August 1976 and possession taken by the State. The plaintiff filed a suit for declaration that the order and sale deed were void and for possession of the land. The Supreme Court held that Section 27(1) is invalid to the extent it restricts transfer of land within the ceiling, rendering the order and sale deed null and void. The suit was deemed a suit for possession, governed by Article 65 of the Limitation Act, 1963, giving a 12‑year limitation period, so it was timely. No equitable bar existed despite the plaintiff having retained the consideration, and the appeal by the State was dismissed, granting possession to the plaintiff.

Issues considered

The appropriate limitation period for a suit seeking declaration and possession – whether Article 58 (three years) or Article 65 (twelve years) of the Limitation Act, 1963 applies.
Whether the order exercised under Section 27(1) of the Urban Land (Ceiling and Regulation) Act, 1976 and the consequent sale deed are void ab initio.
Whether the plaintiff is barred from relief of possession on equitable grounds having accepted the sale consideration and executed the sale deed.

Legislation cited

Limitation Act, 1963s. Article 58, s. Article 65
Urban Land (Ceiling and Regulation) Act, 1976s. 27(1)

Subjects

Urban Land CeilingSection 27 pre‑emptionLimitation ActArticle 65Void orderPossessionEquitable reliefDeclaration suit

Judgment

A STATE OF MAHARASHTRA
v.
PRAVIN JETHALAL KAMDAR (DEAD) BY LRS.

MARCH7, 2000

B [S. SAGHIR AHMAD AND Y.K. SABHARWAL, JJ.]

Urban Land (Ceiling and Regulation) Act, 1976 : Section 27(1).

Landowner-Agreement of sale by-Property within ceiling limit-Per-
mission under section 27( 1) sought by landowner-Refusal by State Govern-
c ment-State instead exercising right ofpre-emption-Consequently order passed
by competent authority to buy the landowner's property-Pursuant to said
order sale deed obtainedfrom landowner and possession of land taken by State
Government-Suit filed by landowner for declaration and possession-limita-
tion period and maintainability of-Held order ofcompetent authority was void
D ab initio-Sale deed executed pursuant thereto was consequently null and
void-Held period of limitation applicable to suit was 12 years as prescribed
in Article 65 ofthe Limitation Act-Held no separate claim for declaration was
necessary-Filing of suit for declaration by landowner was not signijicant-
Held on facts there was no equitable consideration against the landowl]!!r.

E Limitation Act, 1963 :

Articles 65 and 58-Applicability of

The respondent-plaintiff, owner of suit property, entered into an
agreement of sale with his relations and acquaintances for a consideration
F of Rs. 2,60,000. His application for grant of permission under S.27(1) of
the Urban Land (Ceiling and Regulation) Act, 1976 was rejected by the
competent authority. Instead the competent authority passed an order
dated 26th May, 1976 exerdsing its right of pre-emption with a view to
buying the property on behalf of the State. The respondent-plaintiff was
G offered the same consideration which was to be paid to him by the prospec-
tive purchaser. Consequently a sale deed dated 23rd August, 1976 was
obtained from the respo~dent and possession of land was also taken by
State Government.

On 22nd August, 1988 the respondent-plaintiff filed a suit for decla-
H ration and possession claiming that as the suit property was within the
134
.. ST ATE v. PRAVIN JETHALAL KAMDAR 135
ceiling limit the order 26th May, 1976 and the sale deed executed pursuant A
thereto on 23rd August 1976 were null and void and thus conferred no
right of ownership on State. He relied on the decision of the Supreme
Court in Maharao Sahib Shri Bhim Singhji v. Union ofIndia & Ors., [1981] 1
SCC 166 wherein section 27(1) of the Urban Land (Ceiling and Regula-
tion) Act, 1976 was held invalid to the extent it sought to affect the right of
B
a person to dispose of his urban property within the ceiling limit.

The trial court dismissed the suit. On appeal the High Court re-
versed the decision of the trial court and passed a decree for possession in
favour of the respondent-plaintiff. The High Court held that (i) the order
of competent authority dated 26th May, 1976 and the sale deed dated 23rd C
August, 1976 being null and void have no existence in the eyes of law; (ii)
the plea about the invalidity of these documents can be raised in any
proceedings and no separate declaration was necessary to be sought; and
(iii) suit was governed by Article 65 of the Limitation Act, 1963 and not by
Article 58.
D
In appeal to this Court it was contended on behalf of the State that
(i) the suit filed by the respondent-plaintiff was time barred because under
Article 58 of the Limitation Act, 1963 the period of limitation prescribed
for a suit for declaration was three years; (ii) the respondent was not ,-
entitled to equitable relief because he accepted the sale consideration and
E
executed the sale deed.

Dismissing the appeal, the Court

HELD : .1. The contention that the suit was time barred has no merit.
The suit has been rightly held to have been filed within the period pre- F
scribed by the Limitation Act. In Bhim Singh's case* S.27(1) of the Urban
(Ceiling and Regulation) Act, 1976 insofar as it imposes a restriction on
transfer of any urban or urbanisable land with a building or a portion of
such building, which is within the ceiling area, has been held to be invalid.
Thus, it cannot be disputed that the order dated 26th May, 1976, was
without jurisdiction and nullity. Consequel)tly, sale deed executed pursu~. ·· G
ant to the said order would also be a nullity. It was not necessary to seek ft.
declaration about the invalidity of the said order and the sale deed. Th~ 1
fact of plaintiff having sought such a declaration is of no consequence. · '
When possession has been taken by the appellants pursuant to void docu-
ments, Article 65 of the Limitation Act will apply and the limitation to file H
136 SUPREME COURT REPORTS (2000) 2 S.C.R.
A the suit would be 12 years. When thl',se · documents are null and void,
ignoring them a suit for possession simpliciter could be filed and in the
course of the suit it could be contended that these documents are nullity.
(139-C-D]

*Maharao Sahib Shri Bhim Singhji v. Union of India & Ors., (1981] 1
B SCC 166 and Ajudh Raj & Ors. v. Moti S!o. Mussadi, (1991] 3 SCC 136,
relied on.

2. It cannot be said that the plaintiff has not suffered any prejudice
or loss. It is not a case of voluntary sale. The plaintiff had to execute the
sale deed on account of an illegal and without jurisdiction order made
c under S. 27(1) of the Act in respect of property within the ceiling limit. H
he has retained the consideration all these years, at the same time, defend-
ants have also retained the possession of the property. Consequently, it
cannot be said that there are any equitable considerations against the
plaintiff to warrant the denial of relief of possession granted to him by the
D High Court. [140-C-D]

Mafatlal Industries Ltd. & Ors. v. Union ofIndia & Ors., (1997] 5 SCC
536, held in~pplicable. ·

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 7291 of 1995.
E

in P.A. No. 366 of 1992.
.
-From the Judgment and Order dated
.
26.4.95 of the Bombay High Court

S.K. Dholakia, B.R. Naik, K. Madhav Reddy, P.G. Palshikar, S.M.
Jadhav, D.M. Nargolkar, S.S. Shinde, M.D. Adkar, G.B. Sathe, S.V. Deshpande,
F C.G. Solshe, Pramit Saxena and R.R. Paranjpe for the appearing parties.

The Judgment of the Court was delivered by

Y.K.SABHARWAL J. The respondent, now represented through his
legal heirs, is the original plaintiff in a suit for declaration and possession filed
G against the appellant - State of Maharashtra and others. The suit was filed on
.22nd August, 1976, seeking a declaration that the order dated 26th May, 1976
by which the right of pre-emption was exercised by defendants 1 and 2 (State
of Maharashtra and. Deputy Collector and Competent Authority Urban Land
Ceiling, Nagpur respectively) to purchase the propeJty in question and the
H sale deed dated 23rd August, 1976, obtained from the plaintiff in pursuance
STATE v. PRAVIN JETHALAL KAMDAR [Y.K. SABHARWAL, J.] 137
of the said order was null and void and do not confer any right, title or interest A
in the property in favour of defendants. A decree for possession was also
sought against refund of Rs.2,60,000 received by the plaintiff under the sale
deed dated 23rd August, 1976. The facts in brief and in respect whereof, there
is hardly any dispute are.

The Urban Land (Ceiling and Regulation) Act, 1976 (for short, 'the
B
Act') came into force for the State of Maharashtra w.e.f. 17th February, 1976.
The plaintiff claims that he was not holding any land in excess of the ceiling
limit prescribed under the Act and, therefore, was under no obligation to file
a return under Section 6(1) of the Act before the competent authority. The
plaintiff wanted to sell the suit property to his relations and business acquaint- c
ances with whom he entered into an agreement of sale dated 31st March, 1976
for sale of the suit property for consideration of Rs. 2,60,000. Section 27(1)
of the Act required the plaintiff and the prospective purchaser to obtain
pennission from the competent authority under the Act to sell the suit
property. According to the plaintiff, the application for grant of the said
D
pennission to sell the property to prospective purchaser was rejected by the
competent authority by order dated 26th May, 1976 and further by the same
order, the competent authority exercised option to buy the property on behalf
of the State of Maharashtra. The plaintiff was offered the same consideration
which was to be paid to the plaintiff by the prospective purchaser, i.e.,
E
... Rs.2,60,000. Thus, pursuant to the order dated 26th May, 1976, passed under
Section 27 of the Act, a sale deed dated 23rd August, 1976 was executed
between the plaintiff and the State of Maharashtra and possession was also
taken over by defendant no. 3, namely, Deputy Commissioner of Sales Tax,
Eastern Division, Nagpur. Since then, the suit property is in possession of
defendant no. 3.
F
In Maharao Sahib Shri Bhim Singhji v. Union of India and Ors., (1981]
1 SCC 166, this Court upheld the validity of the Act except Section 27(1)
insofar as the said provision imposed a restriction on transfer of any urban
or urbanisable land with a building or a part of on such building, which was
within the ceiling limit. Section 27(1) to the extent it sought to affect the right G
of a person to dispose of his urban property within the ceiling limit was held
invalid. In view of this decision, the plaintiff claimed in the suit that the order
dated 26th May, 1976 and sale deed executed pursuant thereto on 23rd
August, 1976 were null and void since what was sought to be sold to the
prospective purchaser was the property within the ceiling limit and the H
138 SUPREME COURT REPORTS
'
' [2000] 2 S.C.R.
A plaintiff was entitled to a decree of declaration that the impuin.ed order and
the sale deed are illegal and invalid and do not confer right of ownership on
defendants. The possession taken pursuant to above was claimed to be illegal
and thus the plaintiff is entitled to recovery of possession besides damages
for wrongful use and occupation at the average market rental value of the
property. It has also been pleaded that the plaintiff was ready and willing to
B return the amount of Rs.2,60,000 paid to him under the sale deed dated 23rd
August, 1976.

The suit was dismissed by the trial court. In tlie appeal reversing the
decision of the trial court, the High Court has passed a decree for possession
c in favour of the plaintiff on his deposit of sum of Rs.2,60,000 which has been
directed to be paid to the defendants/appellants. Under these circumstances,
the State ~f Maharashtra has filed the present appeal.

Article 58 of the Limitation Act, 1963, prescribes limitation of three
years from the date when the right to sue first accrues to obtain a declaration.
D Under Article 65, the period of limitation prescribed for filing a suit for
possession of immovable property or any interest therein based on title is 12
years from the date when possession of the defendants becomes adverse to
the plaintiff. The contention urged on behalf of the State Government was
that Article 58 of the Limitation Act was applicable as the plaintiff ha~
B . sought declaration about the invalidity of the order dated 26th May, 1976 and
sale deed dated 23rd August, 1976 and that the period of limitation of three
years had to be computed from 26th May, 1976 and, therefore, the suit filed
on 22nd August, i988 was hopelessly·,barred by time. This contention was
rejected by the High Court as also by the trial coutf. The contention urged
on behalf of the plaintiff and which has been accepted is that the suit is
F basically for possession of the property based upon title and the sale deed
dated 23rd August, 1976 and the order dated 26th May, 1976 being void ab
initio and without jurisdiction, a plea about its invalidity can be raised in any
proceedings and it is not necessary to claim any declaration and thus Article
65 which deals with suit for possession based on title would be applicable
0 from the date, the possession of the defendant becomes adverse to the
plaintiff. The High Court held that in view of the order and the sale deed
being null and void and without jurisdiction, the same have no existence in
the eyes of law and the plea about invalidity of these documents can be
raised in any proceedings and no separate declaration is necessary to be
H sought. It held that the suit for possession would be governed by Article 65
STATE v. PRAVIN JETHALAL KAMDAR [Y.K. SABHARWAL, J.] 139

of the Limitation Act, 1963. It was further held that a suit is within time even A
from the date when the possession of the suit property was taken on the
execution of the sale deed on 23rd August, 1976.

As already noticed, in Bhim Singhji's case (supra), Section 27(1)
insofar as it imposes a restriction on transfer of any urban or urbanisable land
B
with a building or a portion of such building, which is within the ceiling area,
has been held to be invalid. Thus, it has not been and cannot be disputed that
the order dated 26th May, 1976, was without jurisdiction and nullity. Conse-
quently, sale deed executed pursuant to the said order would also be a nullity.
It was not necessary to seek a declaration about the invalidity of the said order
and the saie deed. The fact of plaintiff having sought such a declaration is c
of no consequence. When possession has been taken by the appellants
pursuant to void documents, Article 65 of the Limitation Act will apply and
the limitation to file the suit would be 12 years. When these documents are
null and void, ignoring them a suit for possession simpliciter could be filed
and in the course of the suit it could be contended that these documents are D
nullity. In Ajudh Raj and Ors. v. Moti Sia Mussadi, [1991] 3 SCC 136 this
Court said that if the order has been passed without jurisdiction, the same can
be ignored as nullity, that is, non-existent in the eyes of law and is not
necessary to set it aside; and such a suit will be governed by Article 65 of
the Limitation Act. The contention that the suit was time barred has no merit.
The suit has been rightly held to have been filed within the period prescribed E
by the Limitation Act. •

Next, it was contended that simply on account of Section 27(1) to the
extent stated above having been declared unconstitutional, it does not follow
that the petitioner is entitled to equitable relief particularly when he accepted F
the sale consideration and executed the sale deed. Reliance has been placed
on the decision of Mafatlal Industries /..Jd. and Ors. v. Union of India & Ors.,
[1997] 5 sec 536 holding that equitable considerations cannot be held to be
irrelevant in case of claim "tor refund under Section 72 of the Contract Act
or in a writ petition filed Under Article 226 or 32 of the Constitution. That
was a case where refund was not directed despite invalidity of the provisions G
under which duties had been paid or collected as person claiming the refund
had passed on the burden of duty to others and had not suffered any prejudice
or loss and, therefore, no directions were issued for refund. It was held that
under these circumstances there is no question of reimbursement to such a
person. The principles laid down in Mafatlal Industries' case have no H
)

140 SUPREME COURT REPORTS [2000) 2 S.C.R.
A applicability to the facts of the present case. It cannot be said that the plaintiff
has not suffered any prejudice or loss. It is not a case of a voluntary sale. The
plaintiff had to execute the sale deed on account of an illegal and without
jurisdiction order made under Section 27(1) of the Act in respect of property
within the ceiling limit. If the plaintiff has retained the sum of Rs.2,60,000
all these years, at the same time, defendants have also retained the possession
B
of the property. The plaintiff on his own did not want to sell the property to
the defendants/appellants. The fact that the same amount of consideration as ,-
mentioned in the agreement of sale was paid to the plaintiff by the defendants,
is of no relevance. On the facts of the case, it cannot be held that there are

c
any equitable considerations against the plaintiff to warrant the denial of relief
of possession granted to him by the High Court. \
For the foregoing reasons, the appeal is dismissed leaving the parties
to bear their own costs.

T.N.A. Appeal dismissed.