Void, Voidable & Illegal Actions and Sham Transactions

Saji Koduvath, Advocate, Kottayam.

Contents in a Nutshell.

The expression ‘VOID’ has several facets. It does not mean, in law, absolutely null and void for everything.
Where acts, transactions, decrees, etc. are wholly without jurisdiction or ab initio void, no declaration is needed as a preliminary or introductory step to obtain the substantive relief of injunction or recovery.
Even where the order/decree is void, the party aggrieved cannot decide that the same is not binding upon him. Such order/decree has to be got set-aside.
A ‘voidable’ transaction should be got declared or set aside, before seeking the substantive relief.
Section 92 of the Indian Evidence Act directs exclusion of evidence as to the terms of any contract. But, under the first proviso, evidence can be led into to assert that a document was sham.
If a Tribunal abuses its power, or does not act in conformity with the Act or act in violation of its provisions, the jurisdiction of the civil court will not stand excluded.
If no prejudice, an impugned action will not be nullity on the ground of breach of natural justice.
Objection as to the place of suing should have been taken in the Court of first instance at the earliest possible opportunity unless there has been a consequent failure of justice.

Prepositions as to Questioning a Deed Where One is NOT a Party: Where one person is not a party to a deed, following propositions can be laid down:

Where a deed is ‘null and wholly void‘(e.g., unregistered sale/gift), he can simply avoid the deed and advance with other reliefs.
- Limitation statute will have no application in such cases.
If it is not ‘null and wholly void‘, he cannot simply avoid the deed and advance with other reliefs.
- But, in such cases, it is not mandatory to seek ‘annulment’ of the deed – by ‘setting it aside’ or ‘cancelling it’.
- It will be sufficient – to resort to “appropriate proceeding”, for avoiding the same, before a court of law, seeking proper declaration or otherwise.
- It must be done within the limitation period prescribed.

PART – I
‘Void’, ‘Void ab initio’ and ‘Voidable‘

Black’s Law Dictionary defines ‘void’ and ‘void ab initio’ as under:

Void.
- Null; ineffectual; nugatory; having no legal force or binding effect; unable, in law, to support the purpose for which it was intended. Which means there is no legal obligation therefore there will be no breach of contract since the contract is null.
Void ab initio.
- A contract is null from the beginning if it seriously offends law or public policy in contrast to a contract which is merely voidable at the election of one of the parties to the contract.
‘Voidable’
- An action or transaction is ‘voidable’ if it can remain valid, until it is avoided trough a legal action.

Indian Contract Act, 1872

Sec. 2(g) of the Indian Contract Act reads as under:
- “An agreement not enforceable by law is said to be void“.
Sec. 2(i) of the Indian Contract Act reads as under:
- “An agreement which is enforceable by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract”.

Provisions of Contract Act that deals with VOID contracts are:

Sec. 20 Agreement void where both parties are under mistake as to matter of fact.—
- Where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void.
Sec. 23What considerations and objects are lawful, and what not.—
- The consideration or object of an agreement is lawful, unless—
  it is forbidden by law ; or
  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 Court regards it as immoral, or opposed to public policy.
- In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.
Sec. 24. Agreement void, if considerations and objects unlawful in part.—
If any part of a single consideration for one or more objects, or any one or any part of any one of several considerations for a single object, is unlawful, the agreement is void.
Sec. 25. Agreement without consideration, void, unless it is in writing and registered or is a promiseto compensate for something done or is a promise to pay a debt barred by limitation law.—
- An agreement made without consideration is void, unless—
- (1) it is expressed in writing and registered under the law for the time being in force for the registration of [documents], and is made on account of natural love and affection between parties standing in a near relation to each other ; or unless
- (2) it is a promise to compensate, wholly or in part, a person who has already voluntarily done something for the promisor, or something which the promisor was legally compellable to do; or unless;
- (3) it is a promise, made in writing and signed by the person to be charged therewith, or by his agent generally or specially authorized in that behalf, to pay wholly or in part a debt of which the creditor might have enforced payment but for the law for the limitation of suits.
- In any of these cases, such an agreement is a contract.
Sec. 26. Agreement in restraint of marriage, void.—
- Every agreement in restraint of the marriage of any person, other than a minor, is void.
Sec. 27. Agreement in restraint of trade, void.—
- Every agreement by which any one is restrained from exercising a lawful profession, trade or business of any kind, is to that extent void.
Sec. 28. Agreements in restraint of legal proceedings, void.—
- [Every agreement,
- (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
- (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.]
Sec. 29. Agreements void for uncertainty.—
- Agreements, the meaning of which is not certain, or capable of being made certain, are void.
Sec. 30. Agreements by way of wager void.—
- Agreements by way of wager are void; and no suit shall be brought for recovering anything alleged to be won on any wager, or entrusted to any person to abide the result of any game or other uncertain event on which any wager is made.
Sec. 36.Agreement contingent on impossible events void.—
- Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the impossibility of the event is known or not to the parties to the agreement at the time when it is made.

Provisions of Contract Act that deals with VOIDABLE contracts are:

Sec. 19.Voidability of agreements without free consent.—
- When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused.
- A party to a contract whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract shall be performed, and that he shall be put in the position in which he would have been if the representations made had been true.
Sec. 19A.Power to set aside contract induced by undue influence.—
- When consent to an agreement is caused by undue influence, the agreement is a contract voidable at the option of the party whose consent was so caused.
- Any such contract may be set aside either absolutely or, if the party who was entitled to avoid it has received any benefit thereunder, upon such terms and conditions as to the Court may seem just.
Sec. 53.Liability of party preventing event on which the contract is to take effect.—
- When a contract contains reciprocal promises, and one party to the contract prevents the other from performing his promise, the contract becomes voidable at the option of the party so prevented; and he is entitled to compensation from the other party for any loss which he may sustain in consequence of the nonperformance of the contract.
Sec 55. Effect of failure to perform at fixed time, in contract in which time is essential.—
- When a party to a contract promises to do a certain thing at or before a specified time, or certain things at or before specified times, and fails to do any such thing at or before the specified time, the contract, or so much of it as has not been performed, becomes voidable at the option of the promisee, if the intention of the parties was that time should be of the essence of the contract.
Sec. 64. Consequences of rescission of voidable contract.—
- When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is promisor. The party rescinding avoidable contract shall, if he have received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.

Void – Different Shades or Facets

Ab initio void.
Order without jurisdiction.
Sham transactions.
Illegal, for action without following the principles of natural justice.
Illegal, for not following the fundamental principles of judicial procedure.
Illegal, for non-compliance of the provisions of the statute.

In Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552, it is held as under:

“Thus the expressions void and voidable have been subject matter of consideration on innumerable occasions by courts. The expression void has several facets.
One type of void acts, transactions, decrees are those which are wholly without jurisdiction, ab initio void and for avoiding the same no declaration is necessary, law does not take any notice of the same and it can be disregarded in collateral proceeding or otherwise.
The other type of void act, e.g., may be transaction against a minor without being represented by a next friend. Such a transaction is good transaction against the whole world. So far the minor is concerned, if he decides to avoid the same and succeeds in avoiding it by taking recourse to appropriate proceeding the transaction becomes void from the very beginning.
Another type of void act may be which is not a nullity but for avoiding the same a declaration has to be made. Voidable act is that which is a good act unless avoided, e.g., if a suit is filed for a declaration that a document is fraudulent and/or forged and fabricated, it is voidable as apparent state of affairs is real state of affairs and a party who alleges otherwise is obliged to prove it.
If it is proved that the document is forged and fabricated and a declaration to that effect is given a transaction becomes void from the very beginning. There may be a voidable transaction which is required to be set aside and the same is avoided from the day it is so set aside and not any day prior to it. In cases, where legal effect of a document cannot be taken away without setting aside the same, it cannot be treated to be void but would be obviously voidable.”

When Declaration Needed in a Civil Suit

As Introductory/preliminary to grant (1) Injunction or (2) Recovery:
- Unnikrishnan Vs. Ponnu Ammal: 1999 1 KLT 298: AIR 1999 Ker 405.
When serious denial or cloud on title (or right):
- Anathula: AIR 2008 SC 2033.
Asserted title or civil right is not clear, simple and straight-forward;
- or, not well-established (lawful possession).
Make clear what is doubtful – as to legal character and title.
- ILR 1970-2 (Del) 433: Eg. Suit by trespasser claiming adverse possession: Darshan Kumari Vs. Kaushalya Devi: 1990 JKLR 208; 1991 KashLJ 1 (R.P. Sethi, J) for dispelling cloud: AIR 1953 Gau 162.
Complicated or complexquestions of fact and law to be ‘adjudicated’.
- (Anathula: 2008 SC 2033)
Insurmountable obstacle
- Md. Noorul Hoda v. Bibi Raifunnisa : (1996) 7 SCC 767.

Disposal of property by Natural Guardian against S. 8, Hindu M&G Act – Voidable

In Saroj v. Sunder Singh, 2013 (15) SCC 727, it is held as under:

“As per clause (a) of sub-section (2) of Section 8 (of Hindu Minority and Guardianship Act, 1956) no immovable property of the minor can be mortgaged or charged, or transferred by sale, gift, exchange or otherwise without the previous permission of the Court. Under sub-section (3) of Section 8 disposal of such an immovable property by a natural guardian, in contravention of sub-section (1) or sub-section (2) of Section 8, is voidable at the instance of the minor or any person claiming under him.”

See also: Murugan v. Kesava Gounder, (2019) 20 SCC 633; Vasantkumar v. State of Maharashtra, 2022 SCC OnLine Bom 712.

In Sukhdev Singh v. Jangir Singh, 1976 RLR 101 it is held that the plaintiff had to get the sale set aside and then only he could claim possession.(Referred to in Surta Singh Vs Pritam Singh,AIR 1983 P&H 114 : (1983) 1 ILR (P&H) 344 (FB)

Transfer by Sister – Ab-initio void, not required to be set aside by filing a suit

In Madhegowda v. Ankegowda, (2002) 1 SCC 178. it is held by our Apex Court as under

“25………Undoubtedly Smt Madamma, sister of the minor, is not a “guardian” as defined in Section 4(b) of the Act (Hindu Minority and Guardianship Act, 1956). Therefore, she can only be taken to be a “de facto guardian” or more appropriately “de facto manager”. To a transfer in such a case Section 11 of the Act squarely applies. Therefore, there is little scope for doubt that the transfer of the minor’s interest by a de facto guardian/manager having been made in violation of the express bar provided under the section is per se invalid. The existence or otherwise of legal necessity is not relevant in the case of such invalid transfer. A transferee of such an alienation does not acquire any interest in the property. Such an invalid transaction is not required to be set aside by filing a suit or judicial proceeding. The minor, on attaining majority, can repudiate the transfer in any manner as and when occasion for it arises. After attaining majority if he/she transfers his/her interest in the property in a lawful manner asserting his/her title to the same that is sufficient to show that the minor has repudiated the transfer made by the de facto guardian/manager.”

When a person is NOT PARTY to a suit or a document, no need to annul

It is held in Y. G. Gurukul v. Y. Subrahmanyam, AIR. 1957 AP. 955, as under:

“When a person is not eo nomine a party to a suit or a document, it is unnecessary for him to have the deed or the decree annulled, and he can proceed on the assumption that there was no such document or decree.
(Followed in Sankaran V. Velukutty, 1986 Ker LT 794.)

In Usman Kurikkal VS Parappur Achuthan Nair, ILR 2012-3 Ker 343; 2012 3 KHC 89, it is held as under:

“Plaintiff is neither a party to the sale deed nor a party to the resolution empowering the Board to execute the sale deed. The prayer in the plaint is essentially for a declaration that the sale deed is not valid and binding on the plaintiff. The plaintiff has not sought for a cancellation of the sale deed obviously because he was not an executant thereto. The plaintiff can very well ignore the sale deed and need not seek its annulment as has been held in Sankaran v. Velukutty (1986 KLT 794).”

The Supreme Court observed in V. Kalyanaswamy v. L. Bakthavatsalam, 2020 3 RCR(Civ) 404; 2020 9 Scale 367, as under:

“Plaintiffs-appellants in OS No. 36 of 1963 were not parties to the suit in 1958 and the compromise in OS No. 71 of 1958 will not bind the appellants.”

If Title of Plaintiff (Auction Sale) is Nullity, Defendant need Not file a Substantive Suit.

In Bajaranglal Shivchandrai Ruia v. Shashikant N. Ruia, AIR 2004 SC 2546, the defendants contended that the plaintiff’s title, on the basis of the alleged auction sale ‘was a nullity, as it was ultra vires the legal provisions and on the ground of lack of jurisdiction, non-service of demand notice on all the heirs and co-owners’. It was contended from the part of the (original) plaintiff that the sale proceedings could be challenged only by way of a substantive suit, and that the High Court was right in characterising the challenge to the suit by the defendant as a ‘backdoor method’. The Apex Court held as under:

“If the title claimed by the plaintiff was a nullity and wholly void, there was no need for any of the defendants including Bajranglal to challenge it by way of a substantive suit. They could always set up nullity of title as a defence in any proceeding taken against them based upon such title. If, in fact, the sale was a nullity, it was non est in the eye of law and all that defendant had to do was point this out. (See in this connection: Ajudh Raz and Ors. v. Moti S/o Mussadi, [1991] 3 SCC 136 and the opinion of the Full Bench of the Bombay High Court in Abdulla Mian v. Government of Bombay, (1942) 44 Bom LR 577.
In Vidyadhar v. Manikrao and Anr., [1999] 3 SCC 573, the plaintiff had filed a suit on the basis of a sale deed executed by D-2 in his favour and sought the relief of possession of the property from defendant no. 1 who was an absolute stranger to the sale deed. The question which arose was whether defendant No. l, who was in possession, could justify his possession by urging the nullity of sale transaction between the plaintiff and defendant No. 2. In these circumstances, this Court held (vide para 21):
- ‘The above decisions appear to be based on the principle that a person in his capacity as a defendant can raise any legitimate plea available to him under law to defeat the suit of the plaintiff. This would also include the plea that the sale deed by which the title to the property was intended to be conveyed to the plaintiff was void or fictitious or, for that matter, collusive and not intended to be acted upon. Thus, the whole question would depend upon the pleadings of the parties, the nature of the suit, the nature of the deed, the evidence led by the parties in the suit and other attending circumstances.’
Here, the plaintiffs suit is for ejection of the defendant and for possession of the suit property. She must succeed or fail on the title that she establishes. If she cannot succeed in proving her title, the suit must fail notwithstanding that the defendant in possession may or may not have title to the property. (See in this connection: Brahma Nand Puri v. Neki Puri, [1965] 2 SCR 233 at p. 237).”

See Blog (Cllick): Declaration and Injunction

Where title claimed by plaintiff is a nullity, Need not be Challenged

It is held in Bajaranglal Shivchandrai Ruia v. Shashikant N. Ruia, AIR 2004 SC 2546, that where the title claimed by the plaintiff was a nullity and wholly void, there was no need for any of the defendants including Bajranglal to challenge it by way of a substantive suit and that they could always set up nullity of title as a defence in any proceeding taken against them based upon such title.

Where title claimed is not a nullity, and not wholly void – it should be challenged

It comes out from the decision, Bajaranglal Shivchandrai Ruia v. Shashikant N. Ruia, AIR 2004 SC 2546 (taking converse postulation of the proposition laid down), that where the title claimed by the plaintiff was not a nullity and not wholly void, the defendants should have challenged the title by way of a substantive suit, ‘recourse to appropriate proceeding’ (as observed in Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552).

There may be several instances where “recourse to appropriate (legal) proceeding” may be necessitated in ‘void’ transactions. Two among such instances are pointed out in Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552, as under:

“The other type of void act, e.g., may be transaction against a minor without being represented by a next friend. Such a transaction is good transaction against the whole world. So far the minor is concerned, if he decides to avoid the same and succeeds in avoiding it by taking recourse to appropriate proceeding the transaction becomes void from the very beginning.
Another type of void act may be which is not a nullity but for avoiding the same a declaration has to be made. Voidable act is that which is a good act unless avoided, e.g., if a suit is filed for a declaration that a document is fraudulent and/or forged and fabricated, it is voidable as apparent state of affairs is real state of affairs and a party who alleges otherwise is obliged to prove it.”

It goes beyond doubt that such suits (including that by by minor) should be filed within the limitation period.

Prepositions as to Questioning a Deed WHERE ONE is NOT a Party:

In Noorul Hoda v. Bibi Rafiunnisa, 1996 (7) SCC 767, our Apex Court held as follows:

“When the plaintiff seeks to establish his title to the property which cannot be established without avoiding the decree or an instrument that stands as an insurmountable obstacle in his way which otherwise binds him, though not a party, the plaintiff necessarily has to seek a declaration and have that decree, instrument or contract cancelled or set aside or rescinded.”

In such cases the plaintiff need not pay Court Fee for ‘cancellation’ of a deed; it will be sufficient to pay the fee for ‘declaration’.

Where one person is not a party to a deed, following propositions can be laid down:

Where a deed is ‘null and wholly void‘ (e.g., unregistered sale/gift), he can simply avoid the deed and advance with other reliefs.
- Limitation statute will have no application in such cases.
If it is not ‘null and wholly void‘, he cannot simply avoid the deed and advance with other reliefs.
- But, in such cases, it is not mandatory to seek ‘annulment’ of the deed – by ‘setting it aside’ or ‘cancelling it’.
- It will be sufficient – to resort to “appropriate proceeding”, for avoiding the same, before a court of law, seeking proper declaration or otherwise.
- It must be done within the limitation period prescribed.

PART – II

‘VOIDABLE’ Transaction – Declared or Set Aside Before Seeking Substantive Relief

A voidable transaction is to be impeached or set aside before seeking substantive relief. In Narayan v. Babasaheb, (2016) 6 SCC 725, our Apex Court has observed as under:

“24. When once a transaction takes place in the name of the minor which is in contravention of the 1956 Act and which is not done for legal necessity, such transaction is voidable and unless such a transaction is sought to be impeached or set aside, the question of recovery of possession of that property does not arise.”

See also:

Ranga-nayak-amma v. K.S. Prakash, (2008) 15 SCC 673.
Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552, (2001) 6 SCC 534.
Sultan Sadik v. Sanjay Raj Subba, AIR 2004 SC 1377, Referred to in Inderjit Singh Grewal v. State Of Punjab (2011) 12 SCC 588.

‘VOID’ does not mean absolutely null and void for everything

In State of Kerala v. M.K. Kunhikannan Nambiar, AIR 1996 SC 906, it is held as under:

“In our opinion, even a void order or decision rendered between parties cannot be said to be non-existent in all cases and in all situations. Ordinarily, such an order will, in fact be effective inter parties until it is successfully avoided or challenged in higher forum. Mere use of the word “void” is not determinative of its legal impact. The word “void” has a relative rather than an absolute meaning. It only conveys the idea that the order is invalid or illegal. It can be avoided. There are degrees of invalidity, depending upon the gravity of the infirmity, as to whether it is, fundamental or otherwise.” (See also: Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552.)

Void act or transaction: When No declaration needed. It can be attacked at any time, in any court, either directly or collaterally, such as:

A void judgment
- entered by a court which lacks jurisdiction over the parties or the subject matter, or
- lacks inherent power to enter the particular judgment, or
- an order procured by fraud
  - Long v. Shorebank Development Corp., (182 F.3d 548 (C.A. 7 III. 1999).
  - Referred to by Kerala High Court in Sulochana Gupta v. RBG Enterprises Pvt. Ltd. dt. 09 Sep 2020.
Void acts, void transactions, void decrees –
- wholly without jurisdiction, ab initio void.
  - 2009-4 KLT 840; (2002) 9 SCC 28; 2013 SC 1226; 2009 4 KLT 840.
  - Dhurandhar Prasad Singh v. Jai Prakash University AIR 2001 SC 2552, T. Arivanandanam v. T. V. Satyapal, (1977) 4 SCC 467; N. V. Srinivasa Murthy v. Mariyamma, (2005) 5 SCC 548, Manoharlal Chatrath v. Municipal Corporation of Delhi, AIR 2000 Delhi 40.
Void document,
- then suit for recovery of possession simpliciter can be filed, without the need to seek a declaration about invalidity of the documents.
  - Rajasthan State Industrial Development and Investment Corporation v. Subhash Sindhi Cooperative Housing Society, (2013) 5 SCC 427; State of Maharashtra v. Pravin Jethalal Kamdar: 2000 SC 1099; Sanjay Kaushish v. D.C. Kaushish, AIR 1992 Delhi 118.
- A void document is not required to be avoided, whereas a voidable document must be.
  - Ranga-nayak-amma v. K.S. Prakash, (2008) 15 SCC 673.
Sale which was entirely without jurisdiction,
- is non est in the eye of law, and such a nullity does not, from its very nature, need setting aside.
  - Mahadeo Prasad Singh v. Ram Lochan, (1980) 4 SCC 354;
- In case the alienation was void, the plaintiff need not get a declaration that the transaction was void, but could institute a suit for possession straightway.
  - Sukhdev Singh v. Jangir Singh, 1976 RLR 101.
When a document is void ab initio,
- a decree for setting aside the same would not be necessary as the same is non-est in the eye of law, as it would be a nullity.
  - Prem Singh v. Birbal, (2006) 5 SCC 353
Order without jurisdiction obtained by collusion
- Not necessary to bring an independent suit for setting it aside.
  - Gram Panchayat of Village Naulakha v. Ujagar Singh, AIR 2000 SC 3272.
If declaration surplusage
- Appanna v. Jami Venkatappadu, 1953 Mad.611.
Cannot be & cannot be required to be set aside.
- Ishar Singh Kripal Singh and Co., 1956 Cal. 321

Void act or transaction – When Required to be Set Aside

There are instances where it is not permissible for a party to treat the judgment and order as null and void without getting it set aside from the competent court, such as:

When an order is void to one but valid to another.
- “It is well settled principle of law that even a void order is required to be set aside by a competent Court of law, inasmuch as an order may be void in respect of one person but may be valid in respect of another. A void order is necessarily not non-est. An order cannot be declared to be void in collateral proceedings and that too in the absence of the authorities who were the authors thereof.”
  - M. Meenakshi v. Metadin Agarwal, 2006-7 SCC 470; Quoted in Inderjit Singh Grewal v. State Of Punjab (2011) 12 SCC 588. Also See: Anita International v. Sugar Works Mazdoor Sangh, 2016-9 SCC 44
Where legal effect cannot be taken away without setting aside
- In cases where legal effect of a document cannot be taken away without setting aside the same, it cannot be treated to be void but would be obviously voidable.
  - Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552, (2001) 6 SCC 534.
If an order is void; but, not non-est.
- It is required to be set aside.
  - Tungabadra Sugar Works Mazdoor Sangh, 2016-9 SCC 44.
- For setting aside such an order, the party has to approach the appropriate forum resorting to appropriate proceedings.
  - Inderjit Singh Grewal vs State Of Punjab (2011) 12 SCC 588. Referred: State of Kerala v. M.K. Kunhikannan Nambiar, AIR 1996 SC 906, Tayabbhai M. Bagasarwalla v. Hind Rubber Industries, AIR 1997 SC 1240,
Fraud on Character of document (not contents).
- E.g.: A sale deed was got executed as if it was a lease.
  - See: Prem Singh v. Birbal -(2006) 5 SCC 353; 2014 (3) KLJ 55.
When a declaration cannot be obtained in collateral proceedings
- Even if a decree is void ab initio, declaration to that effect has to be obtained by the person aggrieved from the competent court. More so, such a declaration cannot be obtained in collateral proceedings.
  - Inderjit Singh Grewal v. State Of Punjab (2011) 12 SCC 588 Relied on in: Shyam Sundar Singh v. Smt. Sulochana Devi on 23 November, 2021

When Declaration Sufficient; Need NOT be Set Aside

“An order may be void for one and voidable for the other. An invalid order necessarily need not be non est; in a given situation it has to be declared as such.”
- Sultan Sadik v. Sanjay Raj Subba, AIR 2004 SC 1377, Referred to in Inderjit Singh Grewal v. State Of Punjab (2011) 12 SCC 588
A party aggrieved by an invalid, void or ultra vires order, he has to approach the court for the relief of declaration that the order is inoperative and therefore, not binding upon him. It can be avoided automatically, simply seeking a declaration. It need not be set aside.
- State of Punjab v. Gurdev Singh, Ashok Kumar, AIR 1991 SC 2219, (1991) 4 SCC 1.

Nullity can be raised in Execution or in Collateral proceedings

Order without Jurisdiction
- With respect to a matter over which an authority has no jurisdiction is a nullity and is open to collateral attack, an order passed by an authority which has jurisdiction over the matter, but has assumed it otherwise than in the mode prescribed by law, is not a nullity. It may be liable to be questioned in those very proceedings, but subject to that it is good, and not open to collateral attack.
  - Central Potteries Ltd. v. State of Maharashtra AIR 1966 SC 932
If possible in execution or collateral proceedings to establish – null and void
- Orders of Courts have to be obeyed unless and until they are set aside in appeal/revision. Alternatively in any proceedings for execution or in a collateral proceedings where an order is sought to be enforced or relied on, it is possible for a party to establish that the order is null and void. Then the Court considering the matter, if satisfied, will hold that the order is null and void and therefore not executable or enforceable…………………..”
  - S. Balasubramaniyam v. P. Janakaraju, AIR Kant R 2099. Referred to by Kerala High Court in Sulochana Gupta v. RBG Enterprises Pvt. Ltd. dt. 09 Sep 2020.

PART – III

Judgment or Order Without Jurisdiction

It is trite law that a decree passed by a Court totally without jurisdiction is a nullity. The law on the point can be summarised as under:

Lack of jurisdiction hits a Judgment or Order by, lack of jurisdiction:
- over the parties, or
- as to territorial limit,
- pecuniary limit or
- the subject matter.
Lack of Jurisdiction is also visited by:
- ‘lack of inherent power’ to enter the particular judgment, or
- an order procured by fraud or collusion.
It is not permissible to treat a Judgment or an Order of a Court/Authority as null and void without setting it aside or declared by the competent court.
- A judgment of nullity would operate erga omnes i.e. for and against everyone concerned if only it is so declared by the Court.
- It is not permissible for any person to ignore the same merely because in his opinion the order is void.
- Or, it cannot be determined by the parties.
If only patent and latent invalidity, or inherent lack of jurisdiction/competence, then only such a declaration is permissible.
Where a decree is passed by a Court without jurisdiction was a nullity, its invalidity could not be corrected, even by the consent of the concerned parties.

Though the principle that a decree passed by a Court without jurisdiction is a nullity was applied strictly in earlier times, there is a slow change in the attitude of the courts as regards the rigidity to see the Orders and Judgments as without jurisdiction, inasmuch as the courts began to apply the doctrines of prejudice, acquiescence, patent and latent invalidity, etc, in this matter.

Fraud Vitiates all solemn act; Order obtained by practicing fraud is a Nullity

In Jai Narain Parasurampuria v. Pushpa Devi Saraf, it is observed as under:

“58. It is now well settled that fraud vitiated all solemn act. Any order or decree obtained by practicing fraud is a nullity.
{See – (1) Ram Chandra Singh vs. Savitri Devi & Ors. [(2003) 8 SCC 319]
followed in (2) Vice Chairman, Kendriya Vidyalaya Sangathan & Anr. vs. Girdhari Lal Yadav [(2004) 6 SCC 325];
(3) State of A.P. & Anr. vs. T. Suryachandra Rao [(2005) 6 SCC 149];
(4) Ishwar Dutt vs. Land Acquisition Collector & Anr. [(2005) 7 SCC 190];
(5) Lillykutty vs. Scrutiny Committee, SC & ST Ors. [(2005 (8) SC 283];
(6) Chief Engineer, M.S.E.B. & Anr. vs. Suresh Raghunath Bhokare [(2005) 10 SCC 465];
(7) Smt. Satya vs. Shri Teja Singh [(1975) 1 SCC 120];
(8) Mahboob Sahab vs. Sayed Ismail & Ors. [(1995) 3 SCC 693]; and
(9) Asharfi Lal vs. Smt. Koili (Dead) by LRs. [(1995) 4 SCC 163].}”

Pecuniary & Territorial Jurisdiction, and Jurisdiction in the Subject Matter

Generally speaking, the defect on the basis of pecuniary and territorial jurisdiction is not so serious compared to the defect for lack of jurisdiction in the subject matter or inherent lack of jurisdiction. It is reflected in Sec. 21, 21A, 99 and 99A, CPC.

Section 21, 21A, 99 and 99A CPC reads as under:

21. Objections to jurisdiction. (1)] No objection as to the place of suing shall be allowed by any appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity and in all cases where issues or settled at or before such settlement, and unless there has been a consequent failure of justice.
(2) No objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice.
(3) No objection as to the competence of the executing Court with reference to the local limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the executing Court at the earliest possible opportunity, and unless there has been a consequent failure of justice.]

21A. Bar on suit to set aside decree on objection as to place of suing. No suit shall lie challenging the validity of a decree passed in a former suit between the same parties, or between the parties under whom they or any of them claim, litigating under the same title, on any ground based on an objection as to the place of suing.
Explanation.-The expression “former suit” means a suit which has been decided prior to the decision in the suit in which the validity of the decree is questioned, whether or not the previously decided suit was instituted prior to the suit in which the validity of such decree is questioned.
99. No decree to be reversed or modified for error or irregularity not affecting merits or jurisdiction. No decree shall be reversed or substantially varied, nor shall any case be remanded in appeal on account of any misjoinder or non-joinder of parties or causes of action or any error, defect or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court.
Provided that nothing in this section shall apply to non-joinder of a necessary party.
99A. No order under section 47 to be refused or modified unless decision of the case is prejudicially affected. Without prejudice to the generality of the provisions of section 99, no order under section 47 shall be reversed or substantially varied, on account of any error, defect or irregularity in any proceeding relating to such order, unless such error, defect or irregularity has prejudicially affected the decision of the case.

Section 21A CPC takes-in Objection as to Pecuniary Jurisdiction also

In Subhas Mahadevasa Habib v. Nemasa Ambasa Dharmadas, AIR 2007 SC 1828, it is held as under:

“Though Section 21A of the Code speaks of a suit not being maintainable for challenging the validity of a prior decree between the same parties on a ground based on an objection as to “the place of suing“, there is no reason to restrict its operation only to an objection based on territorial jurisdiction and excluding from its purview a defect based on pecuniary jurisdiction.“

Lack of ‘Subject-Matter-Jurisdiction‘

Decision on a Labour Dispute by a Civil Court and pronouncement on a civil matter by the Rent Controller are the common examples of lack of ‘subject-matter jurisdiction’.

Our Apex Court held in P. Dasa Muni Reddy v. P. Appa Rao, AIR 1974 SC 2089, that there will be no res judicata if the former suit was filed in a court where it had no jurisdiction over the subject matter. The Court held as under:

“The appellant proved that the appellant made a mistake of fact in regard to the building, being outside the mischief of the Act. The appellant instituted the-suit before the Rent Controller in mistake about the underlying and fundamental fact that the building was outside the ambit of the Act. The Civil Court has jurisdiction in the subsequent suit which is the subject of this appeal. The appellant is not disentitled to any relief on the grounds of res judicata or estoppel or waiver. As one cannot confer jurisdiction by consent similarly one cannot by agreement waive exclusive jurisdiction of courts. The Civil Court and not the Rent Control possesses jurisdiction over the building in question.”

In Chief Engineer Hydel Project v. Ravinder Nath, AIR 2008 SC 1315, it was held that the civil court had no jurisdiction to decide the dispute of termination of service of a workman as the labour Court alone had the jurisdiction with respect to the same. The Supreme Court held as under:

“Once the original decree itself has been held to be without jurisdiction and hit by the doctrine of coram non judice, there would be no question of upholding the same merely on the ground that the objection to the jurisdiction was not taken at the initial, First Appellate or the Second Appellate stage. It must, therefore, be held that the civil court in this case had no jurisdiction to deal with the suit and resultantly the judgments of the Trial Court, First Appellate Court and the Second Appellate Court are liable to be set aside for that reason alone and the appeal is liable to be allowed.”

With respect to jurisdiction of courts, it is held in Harshad Chiman Lal Modi v. DLF Universal Ltd., AIR 2005 SC 4446, as under:

“The jurisdiction of a court may be classified into several categories. The important categories are
- (i) Territorial or local jurisdiction;
- (ii) Pecuniary jurisdiction; and
- (iii) Jurisdiction over the subject matter.
So far as territorial and pecuniary jurisdictions are concerned, objection to such jurisdiction has to be taken at the earliest possible opportunity and in any case at or before settlement of issues. The law is well settled on the point that if such objection is not taken at the earliest, it cannot be allowed to be taken at a subsequent stage. Jurisdiction as to subject matter, however, is totally distinct and stands on a different footing. Where a court has no jurisdiction over the subject matter of the suit by reason of any limitation imposed by statute, charter or commission, it cannot take up the cause or matter. An order passed by a court having no jurisdiction is nullity.

No Jurisdiction, and No Territorial or Pecuniary Jurisdiction & Prejudice

In Hasham Abbas Sayyad v. Usman Abbas Sayyad, AIR 2007 SC 1077, it is held by the apex Court as under:

“ We may, however hasten to add that a distinction must be made between a decree passed by a court which has no territorial or pecuniary jurisdiction in the light of Section 21 of the CPC; and a decree passed by a court having no jurisdiction in regard to the subject matter of the suit. Whereas in the former case, the appellate court may not interfere with the decree unless prejudice is shown, ordinarily the second category of the cases would be interfered with.”

Availability of Alternative Forum Objection be taken at the Earliest,

It is held by our Apex Court Kiran Singh v. Chaman Paswan: AIR 1954 SC 340. as under:

“The policy underlying sections 21 and 99 of the Civil Procedure Code and section 11 of the Suits Valuation Act is the same, namely, that when a case had been tried by a Court on the merits and judgment rendered, it should not be liable to be reversed purely on technical grounds, unless it had resulted in a failure of justice, and the policy of the Legislature has been to treat objections to jurisdiction both territorial and pecuniary as technical and not open to consideration by an appellate Court, unless there has been a prejudice on the merits.”(Quoted in: Bahrein Petroleum v. P.J. Pappu, AIR 1966 SC 634)

It is held by our Apex Court in Ramesh Chand Ardawatiya v. Anil Panjwani, AIR 2003 SC 2508, as under:

“Where there is a special tribunal conferred with jurisdiction or exclusive jurisdiction to try a particular class of cases even then the civil court can entertain a civil suit of that class on availability of a few grounds. An exclusion of jurisdiction of the civil court is not to be readily inferred. (See Dhulabhai v. State of M.P, (1968) 3 SCR 662) An objection as to the exclusion of the civil court‘s jurisdiction for availability of alternative forum should be taken before the trial court and at the earliest, failing which the higher court may refuse to entertain the plea in the absence of proof of prejudice.”

Lack of Jurisdiction – 3 Categories

As shown above, defects on pecuniary and territorial jurisdiction are not so fatal as compared to inherent lack of jurisdiction or jurisdiction on the subject matter of the suit. The objections as to the first category has to be raised in the pleadings at the earliest opportunity. If it is not done the party concerned is loses his chance.

The objections to the second category (inherent lack of jurisdiction or jurisdiction on the subject matter) can be raised without pleading and at any stage of the suit or even in execution or collateral proceedings.

The third category in this line is the objection that can be raised in any stage, including appeal or revision, without pleading, but not in execution or collateral proceedings (eg. bar by limitation). Ittyavira Mathai v. Varkey Varkey, AIR 1964 SC 907; Bhawarlal Bhandari v. M/s. Universal Heavy Mechanical Lifting Enterprises, AIR 1999 SC 246.

It is held by our Apex Court in Kiran Singh v. Chaman Paswan, AIR 1954 SC 340. as under:

“It is a fundamental principle well established that a decree passed by a Court without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the Court to pass any decree, and such a defect cannot be cured even by consent of parties.” (Referred to in : Foreshore Co-operative Housing Society Limited v. Praveen D. Desai (Dead) AIR 2015 SC 2006.)

Suit Barred by Limitation – Decree Overlooking the same is only Illegal, Not Void

Objection need not be pleaded; But, cannot be raised in Execution or Collateral proceedings.

In Dhurandhar Prasad Singh v. Jai Prakash University, AIR 2001 SC 2552, the Supreme Court held as under:

“In the case of Ittyavira Mathai v. Varkey Varkey and another, AIR 1964 SC 907, the question which fell for consideration before this Court was if a Court, having jurisdiction over the parties to the suit and subject matter thereof passes a decree in a suit which was barred by time, such a decree would come within the realm of nullity and the Court answered the question in the negative holding that such a decree cannot be treated to be nullity but at the highest be treated to be an illegal decree.”

No Estoppel, Waiver, Acquiescence or Res judicata on any Order Without Jurisdiction

In Hasham Abbas Sayyad v. Usman Abbas Sayyad, AIR 2007 SC 1077, our Apex Court held as under:

“The core question is as to whether an order passed by a person lacking inherent jurisdiction would be a nullity. It will be so. The principles of estoppel, waiver and acquiescence or even res judicata which are procedural in nature would have no application in a case where an order has been passed by the Tribunal/ Court which has no authority in that behalf. Any order passed by a court without jurisdiction would be coram non judice being a nullity, the same ordinarily should not be given effect to. (see Chief Justice of Andhra Pradesh and another v. L.V.A. Dikshitulu and others, AIR 1979 SC 193 & M.D. Army Welfare Housing Organization v. Sumangal Services (P) Ltd. (2004) 8 SCC 619).”

Parties to a lis not to determine at their own – that an Order of a Court is void.

Modern trend in decisions emphasise that it is not permissible to treat a Judgment or an Order of a Court/Authority as null and void without setting it aside from the competent court. In Krishnadevi Malchand Kamathia v. Bombay Environmental Action Group, AIR 2011 SC 1140; (2011) 3 SCC 363 , it was held as under:

“17. It is settled legal proposition that even if an order is void, it requires to be so declared by a competent forum and it is not permissible for any person to ignore the same merely because in his opinion the order is void.
18. In
- State of Kerala v. M.K. Kunhikannan Nambiar Manjeri Manikoth Naduvil (dead) & Ors., AIR 1996 SC 906;
- Tayabbhai M. Bagasarwalla & Anr. v. Hind Rubber Industries Pvt. Ltd. etc, AIR 1997 SC 1240;
- M. Meenakshi & Ors. v. Metadin Agarwal (dead) by L.Rs. & Ors. (2006) 7 SCC 470; and
- Sneh Gupta v. Devi Sarup & Ors., (2009) 6 SCC 194,
this Court held that whether an order is valid or void, cannot be determined by the parties. For setting aside such an order, even if void, the party has to approach the appropriate forum.
19. In
- State of Punjab & Ors. v. Gurdev Singh, AIR 1991 SC 2219,
this Court held that a party aggrieved by the invalidity of an order has to approach the court for relief of declaration that the order against him is inoperative and therefore, not binding upon him. While deciding the said case, this Court placed reliance upon the judgment in Smith v. East Ellore Rural District Council, [1956] 1 All ER 855 wherein Lord Radcliffe observed:-
- “An order, even if not made in good faith is still an act capable of legal consequences. It bears no brand of invalidity on 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.”
20. In
- Sultan Sadik v. Sanjay Raj Subba , AIR 2004 SC 1377,
this Court took a similar view observing that once an order is declared non-est by the Court only then the judgment of nullity would operate erga omnes i.e. for and against everyone concerned. Such a declaration is permissible if the court comes to the conclusion that the author of the order lacks inherent jurisdiction/competence and therefore, it comes to the conclusion that the order suffers from patent and latent invalidity.
21. Thus, from the above it emerges that even if the order/notification is void/voidable, the party aggrieved by the same cannot decide that the said order/notification is not binding upon it. It has to approach the court for seeking such declaration. The order may be hypothetically a nullity and even if its invalidity is challenged before the court in a given circumstance, the court may refuse to quash the same on various grounds including the standing of the petitioner or on the ground of delay or on the doctrine of waiver or any other legal reason. The order may be void for one purpose or for one person, it may not be so for another purpose or another person.”

In Anita International v. Sugar Works Mazdoor Sangh, 2016-9 SCC 44 our Apex Court held as under:

“45. We are also of the considered view, as held by the Court in the
- Krishnadevi Malchand Kamathia case, AIR 2011 SC 1140,
that it is not open either to parties to a lis or to any third parties, to determine at their own, that an order passed by a Court is valid or void. A party to the lis or a third party, who considers an order passed by a Court as void or non est, must approach a Court of competent jurisdiction, to have the said order set aside, on such grounds as may be available in law. However, till an order passed by a competent Court is set aside, as was also held by this Court in the
- Official Liquidator, Uttar Pradesh and Uttarakhand, 2013 4 SCC 381, and
- the Jehal Tanti, AIR 2013 SC 2235, (2013) 14 SCC 689, cases,
the same would have the force of law, and any act/action carried out in violation thereof, would be liable to be set aside. We endorse the opinion expressed by this Court in the
- Jehal Tanti case, AIR 2013 SC 2235,
In the above case, an earlier order of a Court was found to be without jurisdiction after six years. In other words, an order passed by a Court having no jurisdiction, had subsisted for six years. This Court held, that the said order could not have been violated while it subsisted. And further, that the violation of the order, before it is set aside, is liable to entail punishment, for its disobedience. For us to conclude otherwise, may have disastrous consequences. In the above situation, every cantankerous and quarrelsome litigant would be entitled to canvass, that in his wisdom, the judicial order detrimental to his interests, was void, voidable, or patently erroneous. And based on such plea, to avoid or disregard or even disobey the same. This course can never be permitted.
46. To be fair to learned counsel for the appellants, it needs to be noticed, that reliance was also placed on behalf of the appellants on the
- Kiran Singh (AIR 1954 SC 340),
- the Sadashiv Prasad Singh (2015-5 SCC 574), and
- the Jagmittar Sain Bhagat (2013- 10 SCC 136) cases,
to contend, that a decree passed by a Court without jurisdiction was a nullity, and that, its invalidity could not be corrected, even by the consent of the concerned parties. We are of the considered view, that the proposition debated and concluded in the judgments relied upon by learned counsel for the appellants (referred to above) are of no relevance, to the conclusions drawn in the foregoing paragraph. In our determination hereinabove, we have not held, that a void order can be legitimized. What we have concluded in the foregoing paragraph is, that while an order passed by a Court subsists, the same is liable to be complied with, till it is set aside.”

PART – IV

Civil Court can Examine ‘Non-compliance of Law’; Not, ‘Erroneous’ Orders

Even when a tribunal is provided for reddressal of remedies, the civil courts will have jurisdiction to examine the allegation of non-compliance of the provisions of the statute or of any of the fundamental principles of judicial procedure. If the challenge is only as to the ‘erroneous’ character of the order, other than ‘jurisdictional error’, the suit will not be maintainable. (South Delhi Municipal Corporation v. Today Homes and Infrastructure Pvt. Ltd. 2019-4 CivCC 150 (SC); 2019-3 CurCC 370(SC); 2019-11 Scale 33). Erroneous decisions of a tribunal can be corrected only in an appeal, if so provided.

Civil Court can adjudge plea – Order of the (Land) Tribunal is one without jurisdiction

The ultimate decision of the (Land) Tribunal can be challenged in the Civil Court and it can adjudge the plea that the order passed by the Tribunal was one without jurisdiction and was a nullity, in spite of finality and exclusionary clauses (or of provision for appeal/revision), if the order passed by the (Land) Tribunal was one illegally assuming jurisdiction, where it did not exist, and the decision was not a decision under the Act, but a nullity. (Muhammad Haji v. Kunhunni Nair, AIR 1993 Ker 104).

Tribunal violates mandatory provision – Order will be illegal, without jurisdiction and a nullity

When an order is passed by a statutory Land-Tribunal violating a mandatory provision, the order will be illegal, without jurisdiction and a nullity. The civil courts which are courts of “general jurisdiction” can decide whether a tribunal or authority exercising statutory jurisdiction has acted in excess or beyond the statutory powers. The civil courts can interfere when the order of the statutory tribunal or authority is really not an order under the Act conferring jurisdiction on it. In other words, if a tribunal abuses its power or does not act in conformity with the Act, but in violation of its provisions (Firm Seth Radha Kishan v. Ludhiana Municipality AIR 1963 SC 1547), the jurisdiction of the civil court will not be excluded (Srinivasa v. State of A.P., AIR 1971 S.C.71).

In Secretary of State v. Mask & Co. (AIR 1940 PC 105) it was held as under:

“It is settled law that the exclusion of the jurisdiction of the Civil Courts is not to be readily inferred, but that such exclusion must either be explicitly expressed or clearly implied. It is also well settled that even if jurisdiction is so excluded, the Civil Courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure”.

In Dhulabai v. State of M.P. (AIR 1969 S.C. 78), it is held as follows:

“Where the statute gives a finality to the orders of the special tribunals the civil courts jurisdiction must be held lobe excluded if here is adequate remedy to do what the civil courts would normally do in a suit. Such provision, however, dues not exclude those cases where the provisions of the particular Act have not been complied with or me statutory tribunal has not acted in conformity with the fundamental principle of judicial procedure.”

See Blog: Court’s Jurisdiction to Interfere in the Internal Affairs of a Club or Society

In Asha John v. Vikram Malhotra, AIR 2021 SC 2932, our Apex Court considered whether the requirement in Sec. 31 of the Foreign Exchange Regulation Act, 1973 (FERA) that that when a foreign citizen ‘acquire or hold or transfer or dispose of’ Immovable Property in India, he must have obtained the prior permission for the same from the Reserve Bank of India.was mandatory or only directory. The Supreme Court held that the provision is mandatory, relying on the following earlier Decisions:

Mannalal Khetan v. Kedar Nath Khetan, AIR 1977 SC 536; (1977) 2 SCC 424	Prohibition and negative words can rarely be directory. Under Section 31 read with Sections 47, 50 and 63 of the Act, it is in the nature of prohibition. When penalty is imposed by statute for the purpose of preventing something from being done on some ground of public policy, the thing prohibited, if done, will be treated as void, even though the penalty if imposed is not enforceable.
Union of India & Ors. v. A.K. Pandey, (2009) 10 SCC 552	Where a contract, express or implied, is expressly or by implication forbidden by statute, no court will lend its assistance to give it effect. A contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition.
Union of India v. Colonel L.S.N. Murthy & Anr. (2012) 1 SCC 71	The contract would be lawful, unless the consideration and object thereof is of such a nature that, if permitted, it would defeat the provisions of law. And, in such a case the consideration or object is unlawful and would become void and that unless the effect of an agreement results in performance of an unlawful act, an agreement which is otherwise legal cannot be held to be void. Further, if the effect of an agreement did not result in performance of an unlawful act, as a matter of public policy, the court should refuse to declare the contract void with a view to save the bargain entered into by the parties and the solemn promises made thereunder. The Court adverted to the exposition in the earlier decision in Shri Lachoo Mal v. Shri Radhey Shyam, AIR 1971 SC 221 as to what makes an agreement, which is otherwise legal, void is that its performance is impossible except by disobedience of law.

Void Decree or Document – Setting Aside or Declaration – Not needed

Sale deed executed by a stranger:

A sale deed executed by a stranger to the property is void an initio. It need not be cancelled or set aside.’ (See: Muppudathi Pillai v. Krishnaswami Pillai, AIR 1960 Mad 1; Kamalakshi Amma v. Sangeetha, AIR 2012 Ker 180.) A suit for declaration will be sufficient.

Title deed conveys no title – can be ignored

In Pragnya Rout V. Hemaprava Ray, AIR 2006 Ori 21, it is observed as under:

“22. Law is well settled that a decree and/or a registered document which is otherwise ab initio void need not be set aside. Such decree does not strip the right of a party who is the real owner and was not a signatory to the document in question or a party to the suit. It is not the law that merely because somebody has obtained a sale deed he has got title to the property as vendee and his title has to be declared so long as the deed has not been set aside by a competent Court of law. If the deed is void at the threshold, no steps need be taken to set it aside. The vendor may not have title to convey, and in such a case the title deed conveys no title and can be ignored as not worth the paper written on. (see (1992) 2 OLR 362 Sarbeswar v. Commissioner, Consolidation.) In view of such position of law, the argument advanced by Mr. P. Mohanty, learned counsel for the appellant, that the suit is not maintainable in the absence of a prayer to set aside the subsequent sales cannot be accepted.”

In Prem Singh v. Birbal, AIR 2006 SC 3608: (2006) 5 SCC 353, the Supreme Court held as under:

“16. When a document is valid, no question arises of its cancellation. When a document is void ab initio, a decree for setting aside the same would not be necessary as the same is non-est in the eye of law, as it would be a nullity.”

It is held in Gorakh Nath Dube vs Hari Narain Singh, AIR 1973 SC 2451, that where there is a document the legal effect of which can only be taken away by setting it aside or its cancellation, it could be urged that the consolidation authorities have no power to cancel the deed, and, therefore, it must be held to be binding on them so long as it is not cancelled by a court having the power to cancel it.

In Sukhlal v. Devilal, 1954 RajLW 136, Wanchco C.J. held as under:

“There is a difference between a suit for the cancellation of an instrument and one for a declaration that the instrument is not binding on the plaintiff, when the plaintiff seeks to establish, a title in himself and cannot establish that title without removing an insuperable obstacle such as a decree or a deed to which he has been a party or by which he is otherwise bound then quite clearly he must get that decree or deed cancelled or declared void in toto and his suit is in substance a suit for the cancellation of the decree or deed notwithstanding the fact that the suit may have been framed as a suit for a declaration. On the other hand, when the plaintiff is seeking to establish a title and finds himself threatened by a decree or a transaction between third parties, he is not in a position to get that decree or deed cancelled in toto. The proper remedy in such a case is to get a declaration that the decree or deed is invalid so far as he himself is concerned, and, therefore, he may sue for a declaration to that effect and not for the cancellation of the decree or the deed.” [See:’ Vellayya Konar v. Ramaswami Konar’ (AIR 1939 Mad 894)].

A void deed can be ignored and seek partition. It need not be set aside

The Supreme Court held in Mrs. Umadevi Nambiar vs Thamarasseri Roman Catholic Diocese (2022-3 Ker HC 113 SC )

“15. It is not always necessary for a plaintiff in a suit for partition to seek the cancellation of the alienations. There are several reasons behind this principle. One is that the alienees as well as the co sharer are still entitled to sustain the alienation to the extent of the share of the cosharer. It may also be open to the alienee, in the final decree proceedings, to seek the allotment of the transferred property, to the share of the transferor, so that equities are worked out in a fair manner. Therefore, the High Court was wrong in putting against the appellant, her failure to challenge the alienations.”

Kerala High Court in A. Baiju Vs. Sasidharan, Decided on July 30, 2019, it is observed as under:

“The defendants claim under a sale deed executed by Bhanu. As already seen, Bhanu could sell only his undivided interest. Even if he executed a sale deed selling the property as such, it would not bind the other co-owners. Those co-owners can just ignore the sale deed and seek partition. It is not at all necessary to get the sale deed set aside.”
See also: R. Ganapathi Vs. Inspector General of Registration, AIR 2020 Mad 248;
Perumal Vs. Ramasamy, 2018-3 MadLW 830,

PART – V

Statute imposing Penalty – Effect on Validity of Contract

Mannalal Khetan v. Kedar Nath Khetan, AIR 1977 SC 536, is a direct authority on this matter. It is laid down as under:

“19. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court will lend its assistance to give it effect. (See Mellis v. Shirley L.B. [(1885) 16 QBD 446 : 55 LJQB 143 : 2 TLR 360] ) A contract is void if prohibited by a statute under a penalty, even without express declaration that the contract is void, because such a penalty implies a prohibition.
The penalty may be imposed with intent merely to deter persons from entering into the contract or for the purposes of revenue or that the contract shall not be entered into so as to be valid at law. A distinction is sometimes made between contracts entered into with the object of committing an illegal act and contracts expressly or impliedly prohibited by statute. The distinction is that in the former class one has only to look and see what acts the statute prohibits; it does not matter whether or not it prohibits a contract: if a contract is made to do a prohibited act, that contract will be unenforceable. In the latter class, one has to consider not what act the statute prohibits, but what contracts it prohibits. One is not concerned at all with the intent of the parties, if the parties enter into a prohibited contract, that contract is unenforceable. (See St. John Shipping Corporation v. Joseph Rank [(1957) 1 QB 267].) (See also Halsbury’s Laws of England, 3rd Edn., Vol. 8, p. 141.)
20. It is well established that a contract which involves in its fulfilment the doing of an act prohibited by statute is void. The legal maxim A pactis privatorum publico juri non derogatur means that private agreements cannot alter the general law. Where a contract, express or implied, is expressly or by implication forbidden by statute, no court can lend its assistance to give it effect. (See Mellis v. Shirley L.B.) What is done in contravention of the provisions of an Act of the legislature cannot be made the subject of an action.
21. If anything is against law though it is not prohibited in the statute but only a penalty is annexed the agreement is void. In every case where a statute inflicts a penalty for doing an act, though the act be not prohibited, yet the thing is unlawful, because it is not intended that a statute would inflict a penalty for a lawful act.
22. Penalties are imposed by statute for two distinct purposes:
- (1) for the protection of the public against fraud, or for some other object of public policy;
- (2) for the purpose of securing certain sources of revenue either to the State or to certain public bodies. If it is clear that a penalty is imposed by statute for the purpose of preventing something from being done on some ground of public policy, the thing prohibited, if done, will be treated as void, even though the penalty if imposed is not enforceable.”
(Quoted in: Asha John vs. Vikram Malhotra, AIR 2021 SC 2932.)

PART – VI

LIMITATION

No Period for Declaration, for Void Marriage

It is observed in Swapnanjali Sandeep Patil v. Sandeep Ananda Patil, 2019 AIR SC 1500, that No period of limitation is prescribed so far as presentation of petition for declaration to declare a marriage being nullity/void marriage, under Section 24 of the Act and that once the marriage is found to be void the same is a nullity and at any time the same can be declared as null.

Dismissal of plaintiff from service

State of Punjab v. Gurdev Singh, AIR 1991 SC 2219 arose from the suit for declaration that the order dismissing the plaintiff from service was ultra vires, unconstitutional, violative of principles of natural justice and void ab initio. It is observed that such a suit must be filed with three years from the date of passing of order or when departmental appeal or revision is filed from the date of dismissal of such appeal/revision, according to the provisions of Article 113 of the Limitation Act, 1963,.

Invalidity of the order

In Pune Municipal Corporation v. State of Maharashtra, 2007 AIR SC 2414; 2007 5 SCC 211, it is held as under:

“Setting aside the decree passed by all the Courts and referring to several cases, this Court held that if the party aggrieved by invalidity of the order intends to approach the Court for declaration that the order against him was inoperative, he must come before the Court within the period prescribed by limitation. If the statutory time of limitation expires, the Court cannot give the declaration sought for”.

Cancellation of a transaction on fraud (voidable transaction)

The Supreme Court, in Prem Singh v. Birbal, AIR 2006 SC 3608, it was held that where a suit is filed for cancellation of a transaction on the ground of coercion, under influence or fraud, Article 59 of the Limitation Act would apply. (Referred to in Mohinder Singh Verma v. J P S Verma, 2015 AIR(CC) 3043).

Declaration and Recovery– Limitation, governed by Article 65 and not Article 58

A suit for declaration is governed by Article 58 of the Limitation Act and the period of limitation is three years. But, in Seshumull M. Shah v. Sayed Abdul Rashid , AIR 1991 Kar. 273, Karnataka High Court observed that a suit where possession is claimed as a consequence of the declaration, it would be governed by Article 65 and not Article 58 of the Limitation Act.

In State of Maharashtra Vs. Pravin Jethalal Kamdar, (2000) 3 SCC 460, it was held by the Supreme Court that merely for the fact that the plaintiff, besides the relief of possession, sought declaration also is of no consequence, and that in such a case the governing article of the Schedule to the Limitation Act would be Article 65. In C. Natrajan v. Ashim Bai, (2007) 14 SCC 183, the Apex Court held that in the suit which has been filed “for possession, as a consequence of declaration of the plaintiff‘s title, Article 58 will have no application.” ,

In Ashok Kumar v. Mohd. Rustam, 2016 SCC OnLine Del 466: MANU/DE/0197/2016
CS (OS) 3195/2012, it was held as under:

“16. Article 58 of the Schedule to the Limitation Act, for the relief of declaration, undoubtedly provides limitation of three years from the date when the cause of action accrues. However I am of the opinion that once the plaintiff, besides suing for declaration of title also sues for recovery of possession of immovable property on the basis of title, the limitation for such a suit would be governed by the limitation provided for the relief of possession and not by limitation provided for the relief of declaration. To hold otherwise would tantamount to providing two different periods of limitation for a suit for recovery of possession of immovable property based on title i.e. of three years if the suit besides for the said relief is also for the relief of declaration of title and of twelve years as aforesaid if no relief of declaration is claimed. A relief of declaration of title to immovable property is implicit in a suit for recovery of possession of immovable property based on title inasmuch as without establishing title to property, if disputed, no decree for the relief of possession also can be passed. Thus, merely because a plaintiff in such a suit also specifically claims the relief of declaration of title, cannot be a ground to treat him differently and reduce the period of limitation available to him from that provided of twelve years, to three years. “
(referred to in Vidur Impex and Traders Pvt. Ltd. v. Pradeep Kumar Khanna, , 241 (2017) DLT 481)

In Ashok Kumar v. Gangadhar, 2007 (2) ALD 313, 2007 (3) ALT 561 , it is held as under:

“If the contention of the defendants that Article 58 applies to the suit for possession based on title where declaration of title is also sought, is accepted, it would amount to ignoring the relief for recovery of possession and application of Article 65 to a suit for possession and taking away the right of the plaintiff to prove that the suit is within 12 years from the date when the possession of the defendant becomes adverse to the plaintiff. If such a suit were to be decided with reference to Article 58 on the ground that the declaration is sought for, application of Article 65 to the suit for possession would be rendered otiose. Such a construction would be opposed to all principles of interpretation of statutes. Therefore different Articles of the Limitation Act will have to be interpreted harmoniously. When such an interpretation is given to Articles 58 and 65 and when the suit is filed for declaration of title to the suit property with consequential relief of possession in my humble view Article 65 of the Limitation Act would apply and not Article 58 of the Limitation Act”.

It is held in Mechineni Chokka Rao v Sattu Sattamma, 2006 (1) ALD 116, as under:

“10…. It is obvious that Article 58 is in the nature of residuary provision among the declaratory suits. Indubitably the relief of declaration can be sought for in respect of an immovable property or movable property, or in respect of an instrument, or in respect of a decree, or in respect of an adoption. Thus, various types of declaratory reliefs can be sought for pertaining to those categories. Therefore, the relief of declaration alone appears to be not the criterion for prescribing the period of limitation but the subject-matter of the suit in respect of which the declaration is sought for, appears to be germane for consideration.”
“13. The problem can be viewed in a different dimension. The right over an immovable property will get extinguished as can be seen from Section 27 of the Act only after the expiry of the period prescribed for filing the suit for possession as per Articles 64 and 65 of the Act. Therefore, if the period falls short of the requisite period of 12 years the right over an immovable property will not get extinguished. When the person has a right over an immovable property which right is not extinguished as yet, he can lay the suit in respect of an immovable property even praying for the relief of declaration at any time within the period of 12 years at the end of which, his right would get extinguished. When we consider this clear mandate contained in Section 27 f the Act, it becomes manifest that a declaratory relief in respect of an immovable property can be sought for at any time within the period of 12 years after which the right will get automatically extinguished, notwithstanding the fact that Article 58, the residuary Article for filing declaratory suits, prescribes a period of three years limitation. … ….”

Declaration on VOID character of document – Limitation governed by consequential relief

In S. Krishnamma v. T.S. Viswajith : 2009 (4) KLT 840 it is held that Article 58 is not applicable for declaration that is sought only as an ancillary relief. It is held as under:

When a declaration regarding the void character of the document is sought for that is which would not govern the period of limitation for the suit. The consequential relief sought for is to be treated as main relief governing the period of limitation for the suit. (See Mrs. Indira Bhalchandran Gokhale Vs. Union of India & Another-AIR 1990 Bombay 98). Therefore declaration prayed for in this case as relief Nos. 1 and 2 were unnecessary, and even if made, need only be treated as ancillary to the main relief of partition of immovable properties and the claim that appellant is entitled to get family pension.

PART – VI

NATURAL JUSTICE: Sea Change in Application – Treating an Order ‘Nullity’

In early times, uniformly followed legal concept was that ‘denial of natural justice itself causes prejudice’. It is pointed out by the Bombay High Court in Gulab Babusaheb Bargiri Vs. Executive Engineer, Maharashtra State Electricity Board[1] that, after Maneka Gandhi Vs. Union of India,[2] the principle of natural justice has undergone a sea change.

In PD Agrawal v. State Bank of India (2006)[3] the Apex Court observed that the principles of natural justice ‘has in recent time‘ undergone a sea change. Relying on State Bank of Patiala Vs. SK Sharma (1996)[4] and Rajendra Singh Vs. State of MP (1996)[5] the Court held that principle of law was that some real prejudice must have been caused to the complainant.

Analysing previous judgments it is observed in State of UP Vs. Sudhir Kumar Singh, 2020 SCC OnLine SC 847, that the following are the tests to determine the non-observance of natural justice:

“(1)Natural justice is a flexible tool in the hands of the judiciary to reach out in fit cases to remedy injustice. The breach of the audi alteram partem rule cannot by itself, without more, lead to the conclusion that prejudice is thereby caused.
(2)Where procedural and/or substantive provisions of law embody the principles of natural justice, their infraction per se does not lead to invalidity of the orders passed. Here again, prejudice must be caused to the litigant, except in the case of a mandatory provision of law which is conceived not only in individual interest, but also in public interest.
(3)No prejudice is caused to the person complaining of the breach of natural justice where such person does not dispute the case against him or it. This can happen by reason of estoppel, acquiescence, waiver and by way of non-challenge or non-denial or admission of facts, in cases in which the Court finds on facts that no real prejudice can therefore be said to have been caused to the person complaining of the breach of natural justice.
(4)In cases where facts can be stated to be admitted or indisputable, and only one conclusion is possible, the Court does not pass futile orders of setting aside or remand when there is, in fact, no prejudice caused. This conclusion must be drawn by the Court on an appraisal of the facts of a case, and not by the authority who denies natural justice to a person.
(5)The “prejudice” exception must be more than a mere apprehension or even a reasonable suspicion of a litigant. It should exist as a matter of fact, or be based upon a definite inference of likelihood of prejudice flowing from the non-observance of natural justice.”

Natural justice is not applied in a vacuum without reference to the relevant facts and circumstances of the case. It is no unruly horse. It cannot be put in a straight jacket formula. [See: Maharashtra State Financial Corporation v. Suvarna Board Mills, 1994-5 SCC 566, Viveka Nand Sethi vs. Chairman, J. & K. Bank Ltd. & Ots. (2005) 5 SCC 337 and State of U.P. vs. Neeraj Awasthi & Ors. JT 2006 (1) SC 19. See also Mohd. Sartaj vs. State of U.P. (2006) 1 SCALE 265

EARLIER VIEW: Order in breach of Natural Justice is a Nullity

In AR Antulay Vs. RS Nayak (1988)[6] a seven Judge Bench of our Apex Court has held that when an order has been passed in violation of a fundamental right or in breach of the principles of natural justice, the same would be nullity.[7]

The Supreme Court, in SL KapurVs. Jagmohan (1981),[8] held as under:

“In our view the principles of natural justice know of no exclusionary rule dependent on whether it would have made any difference if natural justice had been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary. It ill comes from a person who has denied justice that the person who has been denied justice is not prejudiced.”

See Blog: Natural Justice – Not an Unruly Horse, Cannot be Placed in a Straight-Jacket & Not a Judicial Cure-all.

PART – VII

SHAM transactions and Section 92 of the Indian Evidence Act

Diplock LJ, in Snook v. London and West Riding Investments Ltd., [1967] 2 QB 786, it is observed as under:

“As regards the contention of the plaintiff that the transactions between himself, Auto Finance and the defendants were a ‘sham,’ it is, I think, necessary to consider what, if any, legal concept is involved in the use of this popular and pejorative word. I apprehend that, if it has any meaning in law, it means acts done or documents executed by the parties to the ‘sham’ which are intended by them to give to third parties or to the court the appearance of creating between the parties legal rights and obligations different from the actual legal rights and obligations (if any) which the parties intend to create.”
“But one thing, I think, is clear in legal principle, morality and the authorities (see Yorkshire Railway Wagon Co. v Maclure and Stoneleigh Finance Ltd. v Phillips), that for acts or documents to be a ‘sham,’ with whatever legal consequences follow from this, all the parties thereto must have a common intention that the acts or documents are not to create the legal rights and obligations which they give the appearance of creating. No unexpressed intentions of a ‘shammer’ effect the rights of a party whom he deceived. There is an express finding in this case that the defendants were not parties to the alleged ‘sham.’ So this contention fails.”

Section 92 of the Indian Evidence Act, 1872 directs exclusion of evidence or oral agreement as to the terms of any contract. But, under the first proviso to Section 92 any fact that may invalidate any document, such as fraud, intimidation, illegality, want of due execution can be led into evidence. It permits the plaintiff to assert that the document was never intended to be acted upon and the document is a sham. But, such question arises only when one party asserts that there has been a different transaction altogether than what is recorded in the document. Oral evidence is admissible in law for that purpose. [See: Placido Francisco Pinto
v. Jose Francisco Pinto, 2021 SCC OnLine SC 842. Referred: Smt. Gangabai v. Smt. Chhabubai (1982) 1 SCC 4, and Roop Kumar v. Mohan Thedani, (2003) 6 SCC 595].

Section 92 of the Evidence Act reads as under:

“92. Exclusion of evidence or oral agreement. – When the terms of any such contract, grant or other disposition of property, or any matter required by law to be reduced to the form of a document, have been proved according to the last section, no evidence of any oral agreement or statement shall be admitted, as between the parties to any such instrument or their representatives in interest, for the purpose of contradicting, varying, adding to, or subtracting from, its terms:
Proviso (1).—Any fact may be proved which would invalidate any document, or which would entitle any person to any decree or order relating thereto; such as fraud, intimidation, illegality, want of due execution, want of capacity in any contracting party, want or failure of consideration, or mistake in fact or law.”

In Roop Kumar it is held as follows:

“22. This Court in Gangabai v. Chhabubai [(1982) 1 SCC 4 : AIR 1982 SC 20] and Ishwar Dass Jain v. Sohan Lal [(2000) 1 SCC 434 : AIR 2000 SC 426] with reference to Section 92(1) held that it is permissible to a party to a deed to contend that the deed was not intended to be acted upon, but was only a sham document. The bar arises only when the document is relied upon and its terms are sought to be varied and contradicted. Oral evidence is admissible to show that document executed was never intended to operate as an agreement but that some other agreement altogether, not recorded in the document, was entered into between the parties.”

See blog: Oral Evidence on Contents of Document, Irrelevant

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