Case Note & Summary
The dispute arose from a family settlement dated 31.03.1982 among three brothers, including the appellant Tilak Raj Bakshi (plaintiff), the first defendant (Avinash Chand Sharma), and a third brother. The settlement governed their jointly inherited property in Chandigarh. Clause (5) of the settlement provided that no brother could sell his share without the written concurrence of the other two, and if sold, first preference must be given to the other brothers. In 1997, the first defendant sold his one-third share to the second defendant (a tenant) without obtaining the plaintiff's written concurrence. The plaintiff filed a suit in 1998 seeking declaration that the sale deed was void and for specific performance directing the first defendant to execute a sale deed in his favour for the one-third share. The trial court decreed the suit, holding the family settlement genuine and the sale void. The first appellate court affirmed, also ordering possession to the plaintiff. The High Court, in second appeal, reversed, holding clause (5) vague and void, and that the plaintiff had lost his pre-emptive right by not acting on an offer. The Supreme Court allowed the appeal, restoring the decrees of the trial court and first appellate court. The Court held that family settlements are treated differently from commercial contracts and courts lean in favour of upholding them. Clause (5) was valid and binding, requiring written concurrence before sale to a third party. The High Court erred in holding it vague. The plaintiff was ready and willing to purchase, but the first defendant's insistence on payment at Bhilai (where he resided) while the property was in Chandigarh created difficulties. The sale to the second defendant violated the settlement. The Court also noted that Rule 16 of the Chandigarh Estate Rules, 2007 prohibits fragmentation, and the sale would lead to fragmentation. The judgment of the High Court was set aside, and the appeals were allowed with costs.
Headnote
A) Family Settlement - Validity of Pre-emptive Clause - Clause requiring written concurrence of all co-sharers before sale to third party is valid and binding - Family settlements are governed by special equity principles and courts lean in favour of upholding them - The clause is not vague or void as held by the High Court (Paras 12-14, 18-20). B) Specific Performance - Readiness and Willingness - Plaintiff must demonstrate readiness and willingness to perform his part - Correspondence between parties showed plaintiff was ready but first defendant insisted on payment at Bhilai while property was in Chandigarh - Plaintiff's conduct did not disentitle him to relief (Paras 13, 15-17). C) Property Law - Fragmentation - Rule 16 of Chandigarh Estate Rules, 2007 prohibits fragmentation of sites - Sale to third party would result in fragmentation, which is impermissible - High Court's reliance on Partition Act and Hindu Succession Act was misplaced (Paras 13, 18). D) Contract Law - Certainty of Terms - Clause (5) is not vague or indefinite - It clearly provides for pre-emptive right and written concurrence - High Court erred in holding it void for uncertainty (Paras 8, 18-20).
Issue of Consideration
Whether clause (5) of the family settlement dated 31.03.1982, requiring written concurrence of all three brothers before sale of property to a third party, is valid and binding; and whether the plaintiff is entitled to specific performance of the agreement.
Final Decision
Appeals allowed. Impugned judgment of High Court set aside. Judgment and decrees of trial court and first appellate court restored. Respondent (second defendant) to pay costs.
Law Points
- Family settlement
- Pre-emptive right
- Written concurrence
- Specific performance
- Validity of agreement
- Fragmentation of property
- Chandigarh Estate Rules
