Are plaintiffs entitled for a declaration for the cancellation of the sale deed u/s 31 of the Foreign Exchange Regulation Act, 1973?

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9546 OF 2010

Asha John Divianathan … Appellant

versus

Vikram Malhotra & Ors. …Respondents

J U D G M E N T

A. M. KHANWILKAR, J.

1. The central issue in this appeal is in reference to Section 31of the Foreign Exchange Regulation Act, 19731. To wit,transaction (specified in Section 31 of the 1973 Act) entered into incontravention of that provision is void or is only voidable and it can be voided at whose instance?

2.The undisputed facts are that one Mrs. F.L. Raitt, widow of late Mr. Charles Raitt, a foreigner and the owner of the property inquestion, gifted it to respondent No.1 (Vikram Malhotra) withoutobtaining previous permission of the Reserve Bank of India2 underSection 31 of the 1973 Act. Further, before executing the giftdeed, she had executed an agreement of sale in favour of one Mr. R.P. David, father of appellant (Asha John Divianathan) and husband of respondent No.4 (Mrs. R.P. David, wife of Mr. R.P. David). That agreement was executed on 05.04.1976 whereunderthe title deed of the schedule property was delivered by Mrs. F.L.Raitt to late Mr. R.P. David. However, Mrs. F.L. Raitt gifted theportion of schedule property admeasuring 12,306 square feet, videgift deed dated 11.03.1977, in favour of respondent No.1 withoutseeking previous permission of the RBI under Section 31 of the1973 Act. She then executed a supplementary gift deed in favourof respondent No.1 on 19.04.1980. Even this deed was executedby Mrs. F.L. Raitt without seeking previous permission of the RBI.The respondent claimed that a power of attorney was executed inhis favour by Mrs. F.L. Raitt on 09.01.1982, which it appears, wasrevoked by Mrs. F.L. Raitt on 03.06.1982. Thereafter, Mrs. F.L.Raitt executed a ratificatory agreement to sell the schedule property in favour of Mr. R.P. David (predecessor of the appellant and respondent no.4) on 04.12.1982, followed by a power of attorney in favour of Mr. Peter J. Philip dated 26.01.1983.

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