Court’s Decision
The Supreme Court dismissed a civil appeal challenging the Bombay High Court’s decision that had upheld a sale transaction of agricultural land despite the existence of a charge in favour of a cooperative society. The Court held that although such a transaction may technically violate Section 48 of the Maharashtra Cooperative Societies Act, 1960, the right to challenge the same lies only with the society in whose favour the charge was created. Since the society did not challenge the sale and had released the charge upon repayment, the original plaintiff—who had committed the breach—could not be allowed to take advantage of his own wrong. The Court ruled:
“The law cannot, and does not, reward a person for his/her own wrongs.”
The appeal was dismissed with no order as to costs.
Facts
The dispute concerned agricultural land bearing Survey No. 30 admeasuring 15 acres and 17 gunthas in village Kendal Bk., Taluka Rahuri, Ahmednagar, Maharashtra. The original plaintiff had taken a loan from a cooperative society and declared the land as charged under Section 48 of the Maharashtra Cooperative Societies Act, 1960. While the charge was subsisting, he executed a registered sale deed on 02.11.1971 in favour of defendant no.1—his nephew and son-in-law—against a loan of ₹5,000. On the same date, a separate document titled ‘Ram Ram Patra’ was also executed, purportedly signifying a reconveyance deed allowing for return of the property upon repayment.
Subsequently, defendant no.1 sold a portion of the land to defendant no.2 on 15.07.1972 for ₹30,000. The plaintiff then filed a suit for possession and reconveyance. While the Trial Court initially held in favour of the plaintiff and declared the sale void under Section 48(e), subsequent rounds of appeals and remands eventually led to the dismissal of the suit by the High Court. The plaintiff’s appeal to the Supreme Court followed.
Issues
- Whether the Sale Deed dated 02.11.1971 and subsequent Sale Deed dated 15.07.1972 were void under Section 48 of the Maharashtra Cooperative Societies Act, 1960.
- Whether the subsequent release of charge by the Society on 27.08.1973 would retrospectively validate the earlier alienation.
- Whether the plaintiff could invoke the illegality of his own transaction to claim relief.
- Whether the reconveyance deed (‘Ram Ram Patra’) had legal sanctity.
Petitioner’s Arguments
The appellants contended that the sale of the charged property without the Society’s prior consent was void under Sections 47(3) and 48(e) of the Act. They submitted that the sale dated 15.07.1972 was carried out without any sanction from the Society and while the charge was still valid. It was further argued that the Society’s later act of releasing the charge could not have retrospective effect to validate an otherwise void transaction.
It was submitted that defendant no.2 could not claim to be a bona fide purchaser without notice, especially when evidence showed his awareness of the prior charge. The plaintiff had executed a reconveyance deed on 02.11.1971 indicating that the sale was in essence a mortgage, redeemable upon payment.
Respondent’s Arguments
Respondents submitted that the plaintiff had failed to prove that the transaction was in the nature of a mortgage or that it was a loan disguised as a sale. The Sale Deed dated 15.07.1972 was a registered document executed for valid consideration. The Society had never challenged the transaction and had voluntarily released the charge after the loan was repaid.
They argued that the plaintiff could not seek relief for a wrong committed by himself, i.e., executing the sale of charged property. Furthermore, no reliable evidence had been submitted by the plaintiff to substantiate claims of undervaluation or lack of consent from the Society.
Analysis of the Law
The Court examined Section 48 of the Maharashtra Cooperative Societies Act, 1960, especially sub-clauses (d) and (e), which prohibit alienation of charged property and declare any such transaction void unless permitted by the Society.
However, the Court reasoned that such “voidness” is not absolute but conditional—enforceable only at the instance of the aggrieved party, i.e., the Society. The Court drew a distinction between a transaction being “void” and “voidable”, noting that:
“Unless the society comes forward to seek its nullification/setting aside, the same would at best be a voidable action and not void ab initio.”
Precedent Analysis
- Sindav Hari Ranchhod v. Jadev Lalji Jaymal, (1997) 7 SCC 95
Held that a cooperative society must be a party to challenge a sale in violation of Section 48; absent such challenge, relief cannot be granted. - Dhurandhar Prasad Singh v. Jai Prakash University, (2001) 6 SCC 534
Explained the distinction between “void” and “voidable” acts. - Ram Pyare v. Ram Narain, (1985) 2 SCC 162
Established that courts should not allow parties to profit from their own wrongdoing. - Kusheshwar Prasad Singh v. State of Bihar, (2007) 11 SCC 447
Affirmed that a party cannot take advantage of their own wrong; the maxim ex injuria sua nemo habere debet applies.
Court’s Reasoning
The Court found that the plaintiff’s execution of a registered sale deed despite the charge, and his subsequent attempt to invalidate it, amounted to a self-serving act. The reconveyance document lacked registration and legal sanctity. Furthermore, defendant no.2 had purchased the property relying on a registered title, making him a bona fide purchaser.
The Society’s charge was released on 27.08.1973 after full repayment, and the Society never challenged the sale. The Court held that:
“It would not be proper for a Court of law to assist or aid such person who states that the wrong he committed be set aside and a relief be granted de hors the wrong committed.”
Conclusion
The Supreme Court upheld the High Court’s dismissal of the plaintiff’s suit. It ruled that:
- The plaintiff could not seek to nullify a transaction based on his own breach of statutory obligation.
- The Sale Deeds were not void ab initio in absence of a challenge from the Society.
- The reconveyance deed lacked legal enforceability.
- Defendant no.2 was a bona fide purchaser and entitled to protection.
The appeal was dismissed.
Implications
This judgment clarifies the limited applicability of Section 48(e) of the Maharashtra Cooperative Societies Act, 1960. It affirms that:
- Violations of statutory embargoes on sale of charged property can only be acted upon at the instance of the aggrieved cooperative society.
- Parties cannot seek to nullify their own illegal acts to gain relief.
- The principle ex turpi causa non oritur actio remains central in equitable jurisprudence.
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