Nabir Ganai v. Mohd. Ismail Ganai And Others

J.N Wazir, C.J:— This is plaintiff's first appeal and arises out of a suit instituted by him to preempt the sale made by one Mst. Asha Bibi in favour of Ismail Ganai for a sum of Rs. 3,500/-. The plaintiff's case is that his house is contiguous to the house sold by tile vendor to the vendee and that he has a prior right to purchase the property as against the defendant vendee. He further averred that defendant No. 3 by a fictitious document had exchanged his property with defendant No. 1 but that exchange was not genuine. Defendants Nos. 1 and 2 contested the suit on the ground that the plaintiff had waived his right to preempt the sale, that defendant No. 3 had become owner of the property in dispute by a deed of exchange dated 22nd Poh, 2011 and registered on 22nd Phagan, 2011 and that the plaintiff does not possess superior right of purchase in respect of the property in dispute against defendant No. 3. The trial Court after considering the evidence adduced by the parties came to the conclusion that the defendants had not proved the plea of waiver but in view of the fact that defendant No. 3 who had acquired the property by exchange from defendant No. 1 had equal right of prior purchase as that of the plaintiff, the latter could not succeed in his suit. The plaintiff's suit was accordingly dismissed. He has come up in appeal to this Court.

2. It was argued that the trial Court had not given any clear finding in regard to the fact whether the exchange was genuine or not. The case was remanded to the trial Court with the direction that it should examine the evidence adduced by the parties in respect of the exchange and record its finding whether or not the exchange was genuine. Complying with the directions of this Court the trial Court has found that the exchange was fully proved by the evidence adduced by the defendants. The plaintiff has filed his objections to the finding arrived at by the trial Court in respect of the exchange. In this appeal it is argued on behalf of the appellant that the trial court has erred in holding that the exchange was genuine. We have been taken through the evidence adduced by the parties in regard to the exchange. The exchange has been effected by virtue of a document executed on 22nd Poh 2011 which was subsequently registered on 22nd Phagan 2011. The scribe and the marginal witness of this exchange deed have been produced who deposed that the exchange was effected in their presence and the document was executed after its contents were read over to the parties. The plaintiff has not produced any evidence in rebuttal and there is nothing to show that the document was a fictitious one. Even the plaintiff in his statement has not mentioned that the exchange was not genuine. Under these circumstances the transaction of exchange is fully proved and the finding arrived at by the trial Court in this behalf cannot be disturbed.

3. It is further argued by the learned counsel for the appellant that even if defendant No. 3 acquired the property in dispute by exchange it will not affect the rights of the plaintiff pre-emptor as the transaction would be hit by the doctrine of lis pendens. In reply counsel for the respondents argued that the deed of exchange was executed prior to the suit but it was registered a few days after the suit was instituted by the plaintiff and as under Section 47 of tile Registration Act a registered document takes effect from the date of execution the exchange would be deemed to have been effected prior to the date of the suit and therefore, the doctrine of lis pendens would no apply.

4. The question for consideration is whether the exchange would be complete on the date of the registration of the exchange deed or on the data of its execution. It is true that between the parties to the exchange or between the transferor and the transferee the registered document takes effect from the date of execution, but as regards a third party the point of time at which the deed becomes effective is when it is registered. If under Section 47 of the Registration Act the registered document is held effective against a person who is not a party to the deed it will entail great hardship on that person, because he has absolutely no knowledge of the date of the execution of the document; and the document cannot be effective against him from the date of which he has no knowledge. The data of exchange in the present case so far as the plaintiff is concerned would therefore be not the date when the document was executed but the date when it was registered.

5. The next question which arises for consideration is whether defendant No. 3, who by virtue of exchange during the pendency of the suit improved his position, could non-suit the plaintiff pre-emptor. It is argued that the transaction of exchange is hit by the doctrine of lis pendens and, therefore, it will not affect the right of prior purchase vested in the plaintiff. The doctrine of lis pendens is embodied in Section 52 of the Transfer of Property Act. The relevant portion of Section 52 of the Transfer of Property Act reads as under:

“During the pendency in any Court …… of any suit or proceeding which is not collusive and in which any right to immovable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the lights of any other party thereto under any decree or order which may be made therein ……. It is argued by counsel for the respondents that the rule of lis pendens comes into play when a, suit is instituted in which any right to immovable property is directly or specifically in question. It is contended that a suit for pre-emption is not a suit of this character as the pre-emptor has no right to any immovable property at the time when, he institutes the suit and, therefore, the doctrine of lis pendens does not apply. This contention in our opinion has no force. It is well settled that the rule of lis pendens does apply to suits for preemption.

6. In his commentary on the Transfer of Property Act (Edn. 2) Mulla at page 231 says on the authority of a large number of judgments both of the Punjab Chief Court and the Lahore High Court that a suit for pre-emption involves a right to specific immovable property and therefore falls within Section 52 of the Transfer of Property Act. In Moolchand v. Canga Jai, ILR 11 Lah 258 : AIR 1930 Lah 356) (FB), their Lordships held that Section 52 of the Transfer of Property Act was applicable to pre-emption suits. The same view was taken in a case decided by their Lordships of Privy Council in Hans Nath v. Ragho Prasad Singh, ILR 54 All 189 : (AIR 1932 PC 57). Although the rule of lis pendens is applicable to pre-emption suits yet certain transfers made dining the pendency of pre-emption suit are not hit by this rule, for instance, if after the institution of a suit for pre-emption another pre-emptor had asserted his right of pre-emption privately and the vendee in recognition of his right had transferred the property to him, the rule of lis pendens would not apply to such a case.

7. In ILR 11 Lah 258 : AIR 1930 Lah 356) (FB), the rule was not applied to a resale effected by the vendee during the pendency of a pre-emption suit to a person possessing equal rights with the pre-emptor. The principle underlying such cases is that the transfer during the pendency of the suit is not made to a total stranger but it is made to a person in recognition of his right of pre-emption and therefore the rule is not applicable to such transfers. In the instant case the vendee defendant No. 1 transferred the property in favour of defendant No. 3 in recognition of his right of prior purchase. Under these circumstances the exchange made in favour of defendant No. 3 would not be affected by the rule of lis pendens.

8. The learned counsel for the appellant has relied upon a ruling of the Board of Judicial Advisors reported in 3 J and K L.R 210 and has argued that the acquisition made by the vendee at any time after the sale which is sought to be pre-empted, whether before or after the suit, cannot be set up by him to defeat the right of prior purchase accruing on the date of the sale. It is true that the Board of Judicial Advisers have held in the above mentioned, case that acquisition made by the vendee at any time after the sale which is sought to be pre-empted, whether before or after the suit, cannot be set up by him to defeat the right of prior purchase accruing on the date of the sale and the priority is to be determined with reference to the date of the sale and not with reference to the date of the institution or the decision of a suit for pre-emption subsequently brought by one of the claimants. But there is no other authority in support of the view taken by the Board either of the Punjab where the Preemption Act is very much similar to the Pre-emption Act obtaining in our State or in any other State, where pre-emption is allowed on the basis of custom.

9. There is a Full Bench decision of the Lahore High Court reported in AIR 1941 Lah 433, Madho Singh v. James R.R Skinner in support of the view that a vendee can by improving his status at any time before the decree defeat the pre-emptor's right. In this Full Bench decision their Lordships have examined Sections 14, 17, 19, 20, 21, 23 and 25 of the Punjab Pre-emption Act and have held that all these sections are rather intended to circumscribe the rights of pre-emptors within certain limits than to confer any privilege on them. Their Lordships have remarked that Sec. 21 merely indicates the stage at which a suit for pre-emption can be brought and Sec. 23 is complementary to section 14.

10. It cannot, therefore, be said that the Act, as it stands, contemplates the date of sale as the only crucial date for the purpose of determining the right of the pre-emptor to oust the vendee or that it prohibits a vendee from defeating the rights of a pre-emptor in any legal manner that may be available to him at any later period. It has been further held that a vendee can defeat the right of the pre-emptor by improving his status at any time before the passing of the decree in the pre-emption suit by the trial Court, as the rights of the parties are adjudicated upon lay the trial Court alone.

11. In Mahomed Afzal v. Ghulam Mohammad, AIR 1944 Lah 463, Harries, C.J and Mahajan, J. held that a donee who acquires the property from the original vendee between the date of the sale sought to be pre-empted and the date of the pre-emption Suit can defeat the plaintiff's suit on the basis of his own superior qualification to pre-empt. After the Full Bench and the Division Bench decisions of the Lahore High Court referred to above the Legislature in the Punjab passed the Amending Act 1 of 1944 and it was laid down by that Statute that no acquisition made by a vendee during the pendency of a pre-emption suit can defeat the right of pre-emption existing on the date of the suit. No such amendment is made in the Prior Purchase Act of the State.

12. The Board of Judicial Advisors after examining the relevant sections of the Prior Purchase Act (II of 1993) were of the opinion that they hardly justify the view that acquisition made by the vendee at any time after the sale which is sought to be pre-empted, whether before or after the suit, can be set up by him to defeat the right of prior purchase accruing, on the date of the sale. Their Lordships laid down that the priority is to be determined with reference to the date of the sale and not with reference to the date of the institution or the decision of a suit for pre-emption subsequently brought by one of the claimants.

13. With due respects we are unable to subscribe to the proposition laid down by their Lordships in the above ruling. Their Lordships of the Board of Judicial Advisors on examination of Ss. 4, 14, 15, 18, 19 and 20 have come to the conclusion that the priority is to be determined with reference to the date of the sale. In our opinion in none of these sections has any such language been used as would lead to the conclusion that the date of the sale is the crucial date on which the priority of right is to be determined between the pre-emptor and the vendee. There is neither any provision in any of the sections of the Prior Purchase Act precluding the vendee from improving his status during the pendency of the suit in order to defeat the rights of the plaintiff pre-emptor.

14. On the other hand, there is ample authority for the proposition that the vendee or a transferee from him in whose favour transfer has been made in recognition of his pre-emptive right can show to the trial Court before a decree is made in favour of the plaintiff pre-emptor that he has as good qualifications to purchase the property as those of the plaintiff pre-emptor, and the latter is not entitled to a decree in the pre-emption suit. In AIR 1932 PC 57, it has been held that when a sale has taken place to a stranger the vendee's acquisition by gift of a share in the village, pending a cosharer's suit for pre-emption instituted before the passing of the Agra Preemption Act, 1922, defeats that cosharer's claim for pre-emption. The decisive date as regards the rights of the cosharer to pre-empt is the date of the decree.

15. The same view has been taken by the Full Bench of the Lahore High Court reported in AIR 1941 Lah 433 and the Division Bench decision of the Lahore High Court reported in AIR 1944 Lah 463. Moreover it may be observed here that the decision of the Board of the Judicial Advisors on which reliance has been placed by learned counsel for the appellant has no application to the present case. In the Board case it was held that the vendee cannot improve his status during the pendency of the suit to defeat the rights of the plaintiff pre-emptors whereas in the present case it is not the vendee who has improved his position to defeat the rights of the plaintiff pre-emptor but he by exchange has transferred the property in dispute to defendant No. 3 who possesses equal right of prior purchase as that of the plaintiff pre-emptor.

16. In order to succeed the plaintiff in the present suit had to show that he has superior right to purchase the property as against defendant No. 3. He has not been able to do so and it is conceded on his behalf that he does not possess superior right to purchase the property as compared with defendant No. 3. Under these circumstances the plaintiffs' suit has been rightly dismissed by the trial Court and we see no force in this appeal which is dismissed but in view of the fact that a complicated question of law was involved in this case we leave the parties to bear their own costs in this Court.

17. S. Murtaza Fazl Ali, J.:— I agree.

FD/K.S.B

18. Appeal dismissed.