When Both Parties Are Equally At Fault, Law Will Leave Them Alone: J&K High Court Dismisses Appeal In Land Compensation Case
LIVELAW NEWS NETWORK
27 Jun 2025 1:05 PM IST
Reiterating the doctrine of pari delicto, the High Court of Jammu and Kashmir and Ladakh has held that where both parties are equally at fault in entering into an illegal agreement, the law will not intervene to determine their inter se rights and liabilities.
The Division Bench comprising Justice Sindhu Sharma and Justice Rajesh Sekhri thus dismissed a Letters Patent Appeal filed by one Pawan Kumar Sharma, challenging the dismissal of his writ petition related to compensation awarded for land acquired for the Delhi-Amritsar-Katra Expressway.
Sharma, the appellant, claimed ownership over a parcel of land and in 1997 he executed a notarized Agreement to Sell, agreeing to sell one kanal of land to Respondent No. 4 for ₹50,000, paid via cheque. Six months later, a Lease Deed was executed for the same land, and the initial sale consideration was treated as advance rent under a perpetual lease.
In 2022, part of the said land was acquired by the government for constructing a national highway. Despite Sharma being recorded as the owner, the compensation was awarded to Respondent No. 4 based on the leasehold rights. Sharma challenged the award through a writ petition, asserting that respondent had no ownership rights and that the lease merely granted a right of use and occupation.
The writ petition was dismissed on the ground of maintainability. The Single Judge noted that disputes over compensation under the National Highways Act must be adjudicated by the competent authority, and further held that the lease deed's clauses vested full entitlement of compensation to the lessee.
Division Bench Observations:
The Division Bench began by affirming that when a petition is dismissed on grounds of maintainability, courts may still examine merits if exceptional circumstances warrant. It upheld that under Section 3H(3) of the National Highways Act, the authority concerned not the writ court has the jurisdiction to decide rival claims for compensation.
However, the Court extensively analyzed the underlying transaction and interpreted the contractual documents to uncover the true nature of the arrangement between the appellant and respondent.
The Court observed,
“If the covenants of the sale deed and lease deed are read in conjunction, there is no doubt that the transaction between the parties is nothing short of alienation of the subject land.”
It noted that the Agreement to Sell was followed by the delivery of possession and that the perpetual lease treated the initial sale consideration as final rent. Clause 7 of the Lease Deed clearly provided the lessee the right to claim compensation for the land acquired, in addition to any structures erected, the court pointed.
Rejecting the appellant's reliance on Section 13 of the J&K Alienation of Land Act, 1995, which bars leases exceeding 21 years of agricultural land by agricultural class members, the Court invoked the doctrine of pari delicto. It ruled,
“Nobody can be allowed to plead his own fraud and right of action cannot arise out of transgression of law. It embodies the doctrine of pari delicto, potior est conditio defendentis et possidentis—where both the parties to the contract are equally at fault, law will leave them alone and will not intervene to determine their inter se rights and liabilities.”
The Bench placed reliance on the Supreme Court judgment in Smt. Narayanamma and Another v. Govindappa and Others, AIR 2019 wherein both parties were found to have colluded in circumventing statutory restrictions, and the apex court refused to grant relief. Applying the same principle. The Division Bench stated,
“It is evident that if both the parties are confederates in illegality, courts will not interpose to grant any relief, and the law favours him who is actually in possession.”
The High Court concluded that the appellant, being a signatory and participant in an agreement that violated statutory provisions, could not now seek to invalidate it to his advantage. His appeal was dismissed, and the Single Judge's judgment was upheld.
“Since the appellant not only executed the lease deed in question in favour of respondent No.4, but a signatory to the same and is a confederate to the illegality that alienation of agricultural land was prohibited by Section 13 of Land Alienation Act, he cannot be allowed to turn around and question the legality of the lease deed”, the court remarked and dismissed the petition.
Case Title: Pawan Kumar Sharma Vs UT Of J&K
Citation: 2025 LiveLaw (JKL)