Calcutta High Court
Jagannath Marothia And Ors vs Norman William Wilson And Ors on 22 July, 2025
Author: Sugato Majumdar
Bench: Sugato Majumdar
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
Present:
The Hon'ble Justice Sugato Majumdar
CS/576/1990
IA NO: GA/1/1995(Old No:GA/1899/1995),
GA/4/1996(Old No:GA/69/1996),
GA/6/1996(Old No:GA/969/1996),
GA/10/2003(Old No:GA/297/2003),
GA/16/2011(Old No:GA/2431/2011),
GA/23/2024
JAGANNATH MAROTHIA AND ORS
VS
NORMAN WILLIAM WILSON AND ORS
WITH
CS/11/1994
IA NO: GA/1/2011(Old No:GA/2432/2011)
JAGANNATH MAROTHIA AND ORS
VS
NORMAN WILLAM WILSON AND ORS
For the Plaintiffs : Mr. Rupak Ghosh, Adv.
Mr. Varun Kothari, Adv.
Mr. Nikunj Berlia, Adv.
Ms. Urvashi Jain, Adv.
Ms. Srija Chakraborty, Adv .
For the Defendant no.3 : Mr. Shyamal Sarkar, Sr. Adv.
Mr. Sudip Deb, Sr. Adv.
Mr. Vivek Basu, Adv.
Mr. Pramod Kr. Bagaria, Adv.
S.H. Saraf, Adv.
Hearing concluded on : 08/07/2025
Judgment on : 22/07/2025
Page |2
Sugato Majumdar, J.:
CS 576 of 1990 is taken up for passing judgment on a preliminary point as to
whether the suit is barred by Section 31 of the FERA, 1973.
During pendency of the suit, an application was filed under Order VII Rule 11
of the Code of Civil Procedure by the Defendant, praying for rejection of the plaint. A
Co-ordinate Bench, in terms of the Order dated 4th May, 2021 rejected the
application itself. An appeal was preferred against the said order. The Division
Bench in APOT 159 of 2021 in terms of Order dated 17th November, 2021 directed
that the issue of maintainability of the suit shall be decided as a preliminary point.
Accordingly, the suit is taken up for passing the judgment on preliminary issue. On
4th January, 2023, Co-Ordinate Bench framed preliminary issue and proceeded with
witness action. Thereafter, the suit was taken up for hearing argument on
preliminary issue,
The sum and substance of the plaint case is that the original Plaintiff being the
deceased father of the Plaintiff nos. 1 to 3 instituted the instant suit against the
original Defendant, praying for decree of specific performance of the agreement for
sale dated 22nd January, 1989 in respect of premises no. 6, Chowringhee Lane,
Kolkata-700016 along with other prayers. The prayers made in the plaint are decree
for specific performance of the agreement; decree directing the Defendants their
servants, agents and representatives and assigns to execute and register in due form
of law in favour of the substituted Plaintiffs of their nominee or nominees, deed or
deeds of conveyance in respect of the premises no. 6, Chowringhee Lane, Kolkata-
700016, in default, deed of conveyance may be executed by the Learned Registrar,
Original Side of this Court; decree for Rs.5,00,000/-; in case, decree for specific
performance of the agreement dated 2nd January, 1989 is granted, a decree for a sum
of Rs.6,35,000/-, along with other prayers.
Page |3
Originally Mrs. Helen Wilson was absolute owner seized and possessed of
and/or otherwise well and sufficiently entitled to all the six storied brick built
building along with annexures outhouses and others, located at 6, Chowringhee
Lane, Kolkata-700016 which is the suit premises. The said Mrs. Helen Wilson
executed an agreement for sale on 2nd January, 1989 with one Ratan Marothia being
the original Plaintiff for sale of the suit premises. The original Plaintiff, since
deceased, paid to the original Defendant Mrs. Helen Wilson, since deceased a sum of
Rs.1,00,000/- as an earnest money. The said Mrs. Helen Wilson was a foreigner.
Subsequently in terms of a letter dated 14th February, 1990 the original Defendant
intimated the original Plaintiff that she was not interested to sell the premises and
cancelled the agreement. This is the genesis of the instant suit.
The original Defendant contested the suit by filing written statement. On
death of the original Defendant substitutions were made. Written statement was also
amended as the plaint was amended. The contention of the entire written statement
need not be taken into consideration at this stage. Since, the present adjudication is
confined to preliminary issue of maintainability of the suit, it is enough to notice that
in Para 14 (c) of the written statement, plea was taken that the Defendant was a
foreign citizen and under the FERA 1973, the Defendant could not sell or transfer the
immovable property without prior permission of the Reserve Bank of India. It was
further contended that there is no term in the agreement for sale stating that the
Defendant should obtain/requisite permission from the Reserve Bank of India.
On the basis of pleadings of the parties, following issues were framed by this
Court on 14/12/1992.
i) Was the Plaintiff ready and willing to perform the agreement dated
2nd January, 1989?
Page |4
ii) Is the said agreement unenforceable due to non-compliance of the
provisions of the Income Tax Act, 1961 and the Foreign Exchange
Regulation Act, 1973 as alleged in paragraphs 14(A) to 14 (D) of the
written statement?
iii) Is the Plaintiff entitled to any damage as alleged in paragraph 17
and 18 of the plaint?
iv) To what relief, if any, is the Plaintiff entitled?
Subsequently, a co-ordinate Bench by this Court in terms of Order dated
04/01/2023 framed an additional issue which is as follows:
v) Is the suit barred by Section 31 of the Foreign Exchange Regulation Act,
1973?
Mr. Ghosh, the Learned Counsel for the Plaintiff firstly argued that Section
31(1) of FERA, 1973 prohibits transfer and disposal of immovable property without
prior permission of the Reserve Bank of India. In terms of Section 54 of the Transfer
of Property Act, 1882, transfer of immovable property can take place only by
execution of registered of deed of sale. Execution of an unregistered agreement for
sale does not result in transfer or disposal of any immovable property; nor does
execution of such agreement create any interest in the property. Mr. Ghosh referred
to Rambhau Namdeo Gajre Vs. Narayan Bapuji Dhotra [(2004) 8 SCC
614]. It was contended that execution of agreement for sale did not come within
prohibition or restriction imposed by Section 31 of the FERA, 1973. In nutshell, Mr.
Ghosh argued that there was no contravention of Section 31 (1) of FERA, 1973 hither
by the Vendor or by the Vendee by executing the agreement for sale dated
02/01/1989 without prior permission of RBI.
Page |5
The second limb of argument of Mr. Ghosh was that Section 47 (2) of FERA,
1973, inter alia, provides that it shall be an implied term of every contract governed
by the law of any part of India that anything agreed to be done by any term of that
contract which is prohibited to be done by or under any of the provisions of this Act
except with the permission of the Central Government or the Reserve Bank, shall not
be done unless such permission is granted. Thus, by virtue of the statutory provision
it was mandatory for the parties to the agreement for sale to obtain RBI’s prior
permission for execution of the registered conveyance and it is for this reason that
the solicitors of the Plaintiff/purchaser wrote to the original Defendant/vendor to
enquire about the status of the permission by way of a letter dated 14/12/1989
[Ext.1].
The third limb of argument of Mr. Ghosh was that where any permission is
required for execution of a deed of conveyance, decree for specific performance of the
agreement may be granted subject to obtaining such permission. Mr. Ghosh further
submitted that requirement of Section 31 is that permission of the Reserve Bank of
India must be obtained after entering into an agreement for sale but before executing
a registered conveyance done by the predecessors of the Appellant. Mr. Ghosh
referred to the decision of the Supreme Court of India Viswa Nath Sharma Vs.
Shyam Shanker Goela & Another [(2007) 10 SCC 595]. Mr. Ghosh also relied
upon Asha John Divianathan Vs. Vikram Malhotra & Others [(2021) 19
SCC 629].
It was further argued by Mr. Ghosh that even though it is assumed that the
agreement for sale cannot be specifically enforced, coming within ban of section 31 of
the FERA, 1973, that by itself does not stand on the way of maintainability of the suit.
The Plaintiff is still entitled to other reliefs in the suit like refund of the earnest
money given to the Defendant. No provision of FERA, 1973 bars intuition of a civil
Page |6
suit for of the present nature. Section 31 of FERA, 1973 put embargo on conveying
the title of a property when permission of the RBI is absent. Section 31 contemplates
transfer of property or disposition of property. Interpretation is to be given following
the principle of ejusdem generis. Agreement for sale does not come within the ambit
of the words transfer or disposition so that it would attract the rigors of Section 31 of
the FERA, 1973. Section 31 has to be read but ejusdem generis inasmuch as
agreement for sale does not tantamount to “otherwise” disposing of a property. It is
neither sale nor mortgage, lease, gift or settlement as contemplated in Section 31 of
FERA, 1973. Mr. Ghosh referred to M/s. Siddehwari Cotton Mills (P) Ltd. Vs.
Union of India and Another [(1989) 2 SCC 458].
It was argued that the bar under Section 78 of FERA, 1973 is not on institution
of suit in any civil court. The FERA, 1973 did not put any bar on filing of any civil
suit unlike some other special statutes like SARFESI Act, 2002, the Companies Act,
2013, the Income Tax Act, 1961 of the Central Goods & Services Tax Act, 2017. A civil
suit in respect of any agreement for sale is of course not barred by the FERA, 1973.
That was not the avowed object of the law-makers.
Mr. Ghosh also distinguished the judgments relied on by the Defendant by the
Learned Counsel for the Defendant in his reply argument.
Mr. Deb, the Learned Senior Counsel led by Mr. Sarkar, the Learned Senior
Counsel argued first that Section 31 of the FERA 1973 provided that no person who
was not a citizen of India, except with previous permission of the RBI, could acquire,
sale, transfer or dispose of by sale, mortgage, lease, gift, settlement or otherwise any
immovable property in India. Section 47 of the FERA, 1973 provided that no person
should enter into any contract or agreement which would directly or indirectly evade
or avoid in any way the operation of any provision of the FERA, 1973 or any rule or
order made thereunder. Section 50 of FERA, 1973 provided for penalty in case of any
Page |7
contravention of the provisions of the FERA, 1973 or any rule or direction or order
made thereunder. From a combined reading of Section 31, 47 and 50, it is clear that
unless and until any permission be granted by the Reserve Bank of India, any
agreement for sale or document dealing with any immovable property by a foreign
national was a forbidden transaction and was an unlawful agreement being void and
barred under Section 23 of the Indian Contract Act, 1872. Such a contract was not or
is not enforceable. The fact that permission could have been after execution of the
agreement for sale did not make any such agreement less forbidden from the
inception. The Learned Counsel referred to Asha John Divianathan Vs. Vikram
Malhotra & Others [(2021) 19 SCC 629]. It was argued by Mr. Sarkar that the
term “or otherwise” appeared in Section 31 must be given a meaning and should be
construed to include any form of disposition. It is settled law that no part of a statute
should be interpreted in such a manner which will make provisions of the statute
otiose or superfluous, Mr. Sarkar also referred to LICI Vs. Escorts Limited
[(1986) 1 SCC 264].
It was next argued by Mr. Sarkar that Asha John Divianathan‘s case laid
down that agreement for sale is also barred under Section 31 read with Section 47
and 50 of the FERA, 1973 is also offensive to Section 23 of the Indian Contract Act,
1872. “Ejusdem generis” rule being one of the rules of interpretation only serves as
an aid to discover the legislative intent; it is neither final nor conclusive and is
attracted only when the specific words enumerated, constituted a class which is not
exhausted and are followed by general terms and when there is no manifestation of
intent to give broader meaning to the general words. Mr. Sarkar referred to
Tribhuban Parkesh Nayyar Vs. Union of India [(1969) 3 SCC 99]. He
further argued that on perusal of object of Section 31 of FERA, 1973 as explained in
Asha John Divianathan‘s case it is clear that the intention of FERA, 1973 is to
Page |8
give widest meaning to the term “or otherwise” and hence the rule of (ejusdem
generis) is not applicable.
It was argued that at the time of agreement both the parties knew that it was
unlawful and void, hence barred by Section 23 of the Indian Contract Act, 1872.
Court does not assist a person who comes to the court with soiled hands. Hence,
Section 65 of the Indian Contract Act, 1872 does not apply and the Plaintiffs are not
entitled to in the refund of the earnest money, and, as such, the suit is not
maintainable or damages. Mr. Sarkar referred to Loop Telecom and Trading
Limited vs. Union of India & Anr. [(2022) 6 SCC 762].
Sum and substance of the argument advanced by Mr. Sarkar is that the entire
suit is not maintainable being offensive to Section 23 of the Indian Contract Act, 1872
and being barred by the provision of the FERA, 1973.
The FERA, 1973, was enacted with a specific object in view the then Minister
of Finance stated the object of the Act was not allow foreign investments in landed
property or buildings constructed by foreigners and foreign controlled companies in
order to avoid or minimize capital repatriation to the foreign countries.
Minimization of drainage of foreign exchange by way of repatriation of income from
immovable property and sale proceeds in case of disposal of property by a non-
citizen of India. The object of the Act was not to put absolute embargo on sale,
transfer or disposal of immovable properties by a foreigner. Section 31, may be
looked into:
“31. Restriction on acquisition, holding, etc., of immovable
property in India .-
(1) No person who is not a citizen of India and no company (other than a
banking company) which is not incorporated under any law in force in India
[* * *] shall, except with the previous general or special permission of the
Page |9Reserve Bank, acquire or hold or transfer or dispose of by sale, mortgage,
lease, gift, settlement or otherwise any immovable property situate in India:
Provided that nothing in this sub-section shall apply to the acquisition or
transfer of any such immovable property by way of lease for a period not
exceeding five years.
(2) Any person or company referred to in sub-section (1) and requiring a
special permission under that sub-section for acquiring, or holding, or
transferring, or disposing of, by sale, mortgage, lease, gift, settlement or
otherwise any immovable property situate in India may make an application
to the Reserve Bank in such form and containing such particulars as may be
specified by the Reserve Bank.”
It is manifest that Section 31 does not create ban on transfer of immovable property
or acquiring, holding, transferring or disposing of any immovable property by a
foreigner; but such action must be subject to previous general or special permission
of the Reserve Bank of India. Once a permission is granted by the Reserve Bank of
India, no bar, embargo or prohibition remained and the foreigner was free to execute
any deed of transfer as contemplated in Section 31.
Execution of agreement for sale might be barred or might not be barred. This
is clarified, if the provision of Section 47 be considered. Section 47 clarified this.
Section 47 stated as follow:
“47. Contracts in evasion of the Act :-
(1) No person shall enter into any contract or agreement which would directly
or indirectly evade or avoid in any way the operation of any provision of this
Act or of any rule, direction or order made thereunder.
(2) Any provision of, or having effect under, this Act that a thing shall not be
done without the permission of the Central Government or the Reserve Bank,
shall not render invalid any agreement by any person to do that thing, if it is a
term of the agreement that, that thing shall not be done unless permission is
granted by the Central Government or the Reserve Bank, as the case may be;
and it shall be an implied term of every contract governed by the law of any
part of India that anything agreed to be done by any term of that contract
which is prohibited to be done by or under any of the provisions of this Act
P a g e | 10
except with the permission of the Central Government or the Reserve Bank,
shall not be done unless such permission is granted.
(3) Neither the provisions of this Act nor any term (whether express or
implied) contained in any contract that anything for which the permission of
the Central Government or the Reserve Bank is required by the said
provisions shall not be done without that permission, shall prevent legal
proceedings being brought in India to recover any sum which, apart from the
said provisions and any such term, would be due, whether as debt, damages
or otherwise, but-
(a) the said provisions shall apply to sums required to be paid by any
judgment or order of any Court as they apply in relation to other sums;
(b) no steps shall be taken for the purpose of enforcing any judgment or order
for the payment of any sum to which the said provisions apply except as
respects so much thereof as the Central Government or the Reserve Bank, as
the case may be, may permit to be paid; and
(c) for the purpose of considering whether or not to grant such permission,
the Central Government or the Reserve Bank, as the case may be, may require
the person entitled to the benefit of the judgment or order and the debtor
under the judgment or order, to produce such documents and to give such
information as may be specified in the requisition.
(4) Notwithstanding anything contained in the Negotiable Instruments Act,
1881, neither the provisions of this Act or of any rule, direction or order made
thereunder, nor any condition, whether expressed or to be implied having
regard to those provisions, that any payment shall not be made without
permission under this Act, shall be deemed to prevent any instrument being a
bill of exchange or promissory note.”
At the outset, it should be noted that the plea of voidness of the agreement
was not taken in the written statement. This plea emerged at the time of argument
with all its suddenness. Plea taken in the written statement, as noticed earlier, was
that the agreement is not specifically enforceable since permission of the Reserve
Bank of India had not been taken.
P a g e | 11
Each and every agreement for transfer of immovable property by a foreigner
was not offensive to Section 47. Clear and unambiguous language of Section 47,
spoke of those contracts which directly or indirectly, evaded or avoided in any way
the operation of any provision of the Act, Rule, directions or orders made
thereunder. It is usual practice that every transfer of sale is normally preceded by an
agreement for sale. An agreement for sale does not create any interest in the
immovable property nor does it convey any title in the property. Execution of such
agreement is neither banned nor barred, it will be barred when such an agreement
would tend to avoid, defeat or frustrate any of the provisions of the Act. In fact, as
the then existing Rules and the proforma of application seeking for permission under
section 31 of the Act showed, execution of agreement for sale was needed for this
purpose; a copy of the agreement was to be produced before the Reserve Bank of
India for seeking permission under section 31 of the Act.
In Asha John Divianathan‘s case the Supreme Court of India considered
interplay of section 31, section 47, section 50 and section 63 of the FERA act, 1973 at
length. It was observed that a person who is not a citizen of India, holding
immovable property situated in India was obliged to make disclosure in that behalf
to RBI. In any case, if the person intended to dispose of such property by sale,
mortgage, lease, gift, settlement or otherwise, he was expected to obtain previous
general or special permission from the Reserve Bank of India. Only then, transfer so
intended could be given effect to. It is true that the consequences of failure to seek
such previous permission have not explicitly specified in the same provision or
elsewhere in the Act but then the purported of Section 47 must be understood in the
context of the intent with which the Act was enacted.
In the case in hand, no property had been sold or transferred, offending and
without taking any permission of the Reserve Bank of India. No succinct or actual
P a g e | 12
transfer took place. Issue is the agreement for sale. Section 47 may be looked into in
this respect. Sub-section 2 is very clear. Any provision that the thing shall not be
done without permission of the Central Government or the Reserve Bank shall not
render invalid any agreement by any person to do that thing if it is a term of the
agreement that the thing shall not be done unless permission is granted by the
Central Government or the Reserve Bank of India and it shall be implied term of
every contract that anything agreed to be done by any term of the contract which is a
prohibited act unless permission is taken, shall not be done, unless such permission
is granted. This specific provision does not support the argument of Mr. Sarkar. Any
such interpretation of section 47 of the Act is opposed to the whole scheme, purport
and meaning of the Act. In Asha John Divianathan‘s case this is further
explained by in the following languages:
“22. Reverting to Section 47, sub-section (1) clearly envisages that no
person shall enter into any contract or agreement which would directly or
indirectly evade or avoid in any way the operation of any provision of the
1973 Act or of any rule, direction or order made thereunder. What is
significant to notice is that sub-section (2) declares that the agreement
shall not be invalid if it provides that thing shall not be done without the
permission of the Central Government or RBI. That would be the implied
requirement of the agreement in terms of this provision. In other words,
though ostensibly the agreement would be a conditional one made subject
to permission of the Central Government or RBI, as the case may be and if
such term is not expressly mentioned in the agreement, it shall be an
implied term of every contract governed by the law — of obtaining
permission of the Central Government or RBI before doing the thing
provided for in the agreement. In that sense, such a term partakes the
colour of a statutory contract. Notably, Section 47 of the 1973 Act applies
P a g e | 13to all the contracts or agreements covered under the 1973 Act, which
require previous permission of RBI.”
The agreement for sale was executed on 2nd January, 1989 copy of which was
marked as Ext. 3. There is no specific averment in the agreement that permission
under Section 31 of FERA, 1973 should be taken from the Reserve Bank of India. It is
in the agreement that prior to execution of a deed of conveyance compliances should
be made with the West Bengal Urban Land (Ceiling and Regulation) Act, 1976 as well
as the Income Tax Act,1961. Rather Clause 11 mandates that the Vendor will do of
acts, deeds and thinks that are to be performed and “other order or permission” as
may be necessary. But there is no provision which can be interpreted as calculated to
defeat or frustrate the operation or application of the FERA, 1973. The agreement, in
fact, does not come within the mischief of Section 47. It rather contemplates and by
deeming provision of Section 47 deemed to contain provision that permission
requisite for transfer of title would have to be taken. The agreement itself as such is
not illegal, offending any of the provision of the FERA, 1973 for which the Court
would not come to the assistance by entertaining a suit. Inference of this Court,
therefore, is that the agreement itself is not illegal or void. Argument advanced by
Mr. Sarkar on void and voidable agreements, therefore, need not be considered.
Next question to be decided is bar of jurisdiction of the civil suit. As stated
above, execution of an agreement for sale is not barred by Section 31 itself. Section
31 frowned upon specific transactions mentioned therein, namely, holding, acquiring
and transferring by way of mortgaged, sale or other transactions were transferred of
title is involved except without previous permission of the Reserve Bank of India. So
far as, agreements are concerned, those are separately dealt with Section 47 of the
Act. Since, the instant agreement is not one which comes within mischief of Section
47 and prohibitory one, enforcing those agreements is not barred. A civil suit to
P a g e | 14
enforce that agreement is, of course, not barred. The question whether the
agreement is enforceable or not yet to be decided; that goes to the merit of the suit
but that itself doesn’t bar intuition of the civil suit in a civil Court. The Plaintiff can
still pursue for alternative remedy. Whether that remedy is available to him or not is
a question of adjudication to be decided later on at the time of deciding the merit of
the suit; but that cannot operate as a jurisdictional bar on this Court. Section 78 of
the FERA, 1973 in this respect can be looked into.
“78. Bar of legal proceedings. – No suit, prosecution or other legal
proceeding shall lie against the Central Government or the Reserve
Bank or any officer of Government or of the Reserve Bank or any other
person exercising any powers or discharging any functions or
performing any duties under this Act, for anything in good faith done
or intended to be done under this Act or any rule, direction or order
made thereunder.”
The Section bars jurisdiction of civil courts in some specific cases. It does not bar
jurisdiction of civil court to enforce an agreement for sale which is not otherwise
offensive to the statute or illegal or invalid.
In nutshell, this Court is of opinion for reasons stated above that neither the
agreement is offensive to the FERA, 1973 nor jurisdiction of this Court is barred to
enforce the agreement. It is made clear that enforceability of the agreement is
considered herein to decide on the maintainability of the suit; this Court is refrained
from making any comment at this stage on merit of the enforceability of the
agreement. The instant suit, therefore, is not barred by Section 31 of the Foreign
Exchange Regulation Act (FERA), 1973.
P a g e | 15
Issue No. 5 is thus decided in favour of the Plaintiff.
The preliminary issue is decided accordingly.
Fix 13th August, 2025 for further witness action in default argument.
(Sugato Majumdar, J.)