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Randhir Singh v. Rajpal Misir

Allahabad High Court
Dec 18, 1923
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Structured Summary of the Opinion

Factual and Procedural Background

This matter is a defendant's appeal arising out of a suit for pre-emption. The appeal was heard by a Bench (Mr. Justice Sulaiman and another judge) and, because of the course the case took in the lower appellate court, the matter was referred for decision to a Full Bench by an order dated 22 November (year not restated in the opinion).

The substantive question concerns the construction of a particular form of wajib-ul-arz (an entry in a village record) that is common in the Azamgarh district. The core dispute is whether the particular wajib-ul-arz entry relied on by the plaintiff constitutes a record of customary law (a record of custom) permitting pre-emption, or whether it is in truth a record of a private agreement/contract among co-sharers and therefore not a customary record.

Legal Issues Presented

  1. Whether the wajib-ul-arz relied upon by the plaintiff is properly to be treated as a record of custom (specifically a "custom of pre-emption") or whether internal features of the entry (including provisions conferring a right of redemption on persons who are strangers to the mortgage and provisions fixing rates/prices) negate the presumption that it records an existing custom.
  2. Whether a clause in a wajib-ul-arz that confers a right of redemption upon a person who has no proprietary interest in the mortgaged property can possibly be a record of custom.
  3. Whether fixed pricing provisions (recitals prescribing rates at which purchases or mortgages are to be calculated) in such an entry can constitute or be evidence of customary rules of pre-emption, or whether they indicate that the entry records a contract/agreement rather than custom.
  4. Whether the Full Bench decision in Majidan v. Hayatan Weekly Notes (1897) operates as binding authority contrary to the principles applied by later Pre-emption Bench decisions (notably Surajbali Singh v. Mohammad Nasir (1918)) and, if so, whether it should be regarded as authoritative.

Arguments of the Parties

Defendant's Arguments (as reported)

  • The defendant's learned advocate pointed to two specific matters in the clause of the wajib-ul-arz: (1) a provision that, in the event of a mortgage by conditional sale where the mortgagor cannot redeem and foreclosure is imminent, entitles a co-sharer (by reason of pre-emption rights) to pay off the mortgagee and take possession of the property until redeemed by the mortgagor; and (2) provisions in the same clause that lay down fixed rates/prices at which purchases and mortgages are to be calculated.
  • By reference to those matters, the defendant contended that the clause cannot properly be treated as a record of custom: either because it contains provisions that could not possibly be matters of custom (fixed prices) or because it purports to confer rights (redemption by a stranger to the mortgage) that undermine the character of pre-emption and therefore cannot originate as customary rules enforceable by the courts.

The opinion does not set out a detailed account of the plaintiff's precise legal arguments in the text provided.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Surajbali Singh v. Mohammad Nasir (1918) A.L.J. 879 (also cited as 16 A.L.J. 879) Held that where a wajib-ul-arz clause confers a right of redemption on a person who has no interest in the mortgaged property, that clause contains matter which cannot properly be the subject of custom; internal evidence can overturn the prima facie presumption that an entry is a record of custom. The court relied on this decision as establishing the correct principle: the last clause in the present wajib-ul-arz (conferring redemption on a stranger) negates the presumption of a customary record and shows the entry to be not a record of custom.
Majidan v. Hayatan Weekly Notes (Full Bench, 1897) p. 3 In the Full Bench's view (as reported), a wajib-ul-arz with a clause similar in language to the present one did set out a record of custom. The judges in the present case considered this Full Bench decision but observed that the particular point (whether a recital of that kind could be treated as a recital of custom) was not argued before that Full Bench. The present court held that Majidan cannot be authoritative against the subsequent approach of the Pre-emption Bench and, if it purports to lay down a contrary rule, it ought to be overruled.
Fazal Husain v. Muhammad Sharif (1914) I.L.R. 36 All. 471 Established the principle that where a wajib-ul-arz, in the very same clause which makes reference to pre-emption, contains references to other matters which could not possibly be matters of custom, the record ought to be held not to be a record of custom at all. The present court treated Fazal Husain as laying down the relevant guiding principle and applied that principle to conclude that the present wajib-ul-arz was not a record of custom.
Ashik Ali v. Mathura Kandu (1882) I.L.R. 5 All. 187 Two judges remarked that co-sharers might have a right to enforce pre-emption at several stages: on execution of the mortgage, by redemption during the year of grace after notice of foreclosure, or after sale became absolute. Referenced by the court (Sulaiman, J.) as historical authority showing that earlier judges had assumed or referred to the possibility of such rights; used to assess whether a right to redeem by co-sharers was historically recognized and therefore could conceivably be the basis of a custom.
Gaya Bharthi v. Lakhnath Rai (1897) I.L.R. 20 All. 103 (Full Bench) At least three judges assumed a right in co-sharers to claim pre-emption at two stages: (1) when mortgage by conditional sale was executed, and (2) after a suit for foreclosure was instituted but before a decree for foreclosure had been passed. Used by the court (Sulaiman, J.) to show that several learned Judges historically assumed the possibility of enforcement of such rights; this informed the court's analysis as to whether the redemption-right provision could be inherently absurd or illegal so as to preclude characterization as custom.

Court's Reasoning and Analysis

The court's analysis proceeds by examining the presumption and its possible rebuttal, then assessing relevant authorities and the internal content of the wajib-ul-arz entry in question.

1. Presumption of Custom: The court began with the established prima facie presumption that an entry in the wajib-ul-arz headed "custom of pre-emption" is to be treated as the record of a custom. That presumption, however, is qualified: if the entry itself contains matter that could not possibly be a matter of custom then the presumption is rebutted.

2. Relevant Authorities: The court identified a line of authority beginning with Surajbali Singh v. Mohammad Nasir (1918) and drawing on Fazal Husain v. Muhammad Sharif (1914) as establishing the principle that a clause which, in the same clause as reference to pre-emption, contains matters that could not possibly be matters of custom, must be held not to be a record of custom. The lower appellate court had relied on an older Full Bench decision, Majidan v. Hayatan (1897), which had treated an identical clause as a record of custom; but the present court observed that the particular point (whether such a clause could properly be treated as recital of custom) was not argued before that Full Bench.

3. Examination of the Clause: The court closely examined the particular clause in Clause 13 of the wajib-ul-arz of 1872. Two features were decisive:

  • Provision conferring a right of redemption on a co-sharer who has no proprietary interest in the mortgaged property. Several judges (Lindsay, Piggott, Sulaiman) held that such a right effectively allows a co-sharer to step into a position that is neither that of the mortgagor nor that of the mortgagee: the co-sharer would obtain possession akin to an ordinary usufructuary mortgagee and be liable to be redeemed by the mortgagor, which "offends against the very essence of a right of pre-emption" and could not be created by custom.
  • Provisions fixing rates/price (e.g., computing purchase money at 6% per annum for out-and-out sales and 12% for other transfers). The court found that an entry laying down fixed rates at which sales and mortgages are to be made "could not possibly be a record of custom" because it would create an unreasonable and inflexible restraint on alienation (for example, permitting co-sharers to claim property at a prescribed, potentially inadequate price even where higher-market offers existed).

4. Statutory Interaction and Historical Practice: The court considered whether the redemption-right provision necessarily contravened existing statutory law (Regulation 17 of 1806) and the Transfer of Property Act. Sulaiman, J. noted he could not say the right necessarily overrode Regulation 17 of 1806 and observed historical cases where judges assumed the possibility of co-sharers enforcing pre-emption at various stages (citing Ashik Ali and Gaya Bharthi). Thus, standing alone, the redemption provision might conceivably have been a customary rule.

5. Combined Effect of Provisions: The decisive point for the court was that the redemption-right provision and the fixed-price provisions are inseparably connected in the clause. Even if the redemption-right might be conceivable as a custom, its combination with a fixed-price rule produces consequences (unreasonable restraints on alienation and compelling sale at inadequate price) that cannot plausibly be the product of customary growth. Therefore, the internal evidence of the wajib-ul-arz as a whole negates the presumption of a customary record and points to the entry being a record of a private agreement among co-sharers.

6. Treatment of Precedent: The court concluded that the later line of Pre-emption Bench decisions (notably Surajbali Singh and Fazal Husain) correctly state the principle to be applied; the earlier Full Bench in Majidan had not considered the precise point and cannot be held to be authoritative against the subsequent approach. If Majidan purported to lay down a contrary rule it ought to be overruled.

Holding and Implications

Holding:

The appeal is allowed. The order of remand (the decision of the lower appellate court) is set aside, and the decree of the court of first instance is restored. Costs are awarded to the defendant throughout.

Implications:

  • Direct effect between the parties: The wajib-ul-arz entry relied upon by the plaintiff is not to be treated as a record of custom. Consequently, the alleged custom of pre-emption was not proved and the trial court's decree (in favour of the defendant as indicated by restoration) stands restored.
  • Precedential observations: The court endorsed the principle articulated in Fazal Husain and applied in Surajbali Singh that where an entry purports to record pre-emption but in the same clause includes matters that could not possibly be matters of custom, the entry is not a record of custom. The Full Bench decision in Majidan (1897) should not be applied as authoritative against that subsequent line of Pre-emption Bench decisions; if Majidan purports to lay down a contrary principle it ought to be overruled.
  • Scope: The decision resolves the construction of the particular form of wajib-ul-arz before the court and clarifies that internal clauses granting redemption to strangers or fixing rates in a manner inconsistent with the nature of customary pre-emption will rebut the presumption of customary record. The court did not formulate a broader new statutory rule beyond applying these principles to the entry at hand.

This summary is strictly confined to matters expressly stated in the provided opinion and does not introduce external facts or inferences beyond the text.

Show all summary ...

1. This is a defendant's appeal which has arisen out of a suit for pre-emption. It came before a Bench consisting of Mr. Justice Sulaman and myself, and in view of the course which the case took in the lower appellate court we found it necessary to refer it for decision to a Full Bench by our order dated the 22nd of November last.

2. The question is one of general importance, for we have to construe a wajib-ul-arz of a type which is very common in the Azamgarh district. This case, we may mention, comes from the district of Azamgarh.

3. A string of cases beginning with the case of Surajbali Singh v. Mohammad Nasir (1918) A.L.J. 879, has laid down certain principles of decision which govern the interpretation of wajib-ul-arzes which are framed in this peculiar way, and if those cases are to be followed it must be held in the case, now before us that the wajib-ul-arz relied upon by the plaintiff does not contain a record of custom.

4. In this particular case, however, the Judge of the lower appellate court considered that he was entitled to rely upon an older case than the case to which I have referred, namely, the casein the Allahabad Law Journal Reports. The case which was relied upon by the Judge in the court below was the Full Bench case of Majidan v. Hayatan Weekly Notes 1897 p. 3, decided in the year 1897. In that case, with one exception perhaps, the language of the wajib-ul-arz under consideration was identical with that of the wajib-ul-arz with which we are concerned in the present appeal and there can be no doubt whatever that the Full Bench in that case decided that the wajib-ul-arz before them did set out a record of custom.

5. The particular point upon which the controversy turns in this case is one which arises out of the concluding words of the clause relating to pre-emption. The clause begins by-reciting the general rule about pre-emption and specifying the classes of co-sharers who are entitled to preference and to take in the order of that preference. Following upon this recital there is a further recital that in the case of out-and-out sales the purchase money is to be calculated at a rate of interest equivalent to 6 per cent per annum, and in case of other transfers not being out-and-out sales the sum Which changes hands is to be calculated at the rate of 12 per cent per annum.

6. Then follows another provision that if in the case of a mortgage by conditional sale the mortgagor is unable to redeem and the property be about to be, foreclosed, a co-sharer, according to his right of pre-emption as recited above, would be entitled to pay off the mortgagee and to take possession of the property till he is himself redeemed by the mortgagor.

7. A clause framed in this latter language was in the wajib-ul-arz which was under consideration in the Pull Bench case of Majidan v. Hayatan Weekly Notes 1897 p. 3 in the year 1897 and there can be no doubt that the attention of the learned Judges composing that Bench was directed to the provisions of this clause. On the other hand, it is to be observed that there is nothing in the report of the case which would indicate that any argument was ever raised before the learned Judges as to whether a recital of this kind could properly be treated as a recital of custom.

8. Referring to the case of Surajbali v. Mohammad Nasir (1918) 16 A.L.J. 879, it is clear that this matter was argued before the Judges of the special Pre-emption Bench, and in dealing with this matter the learned Chief Justice who delivered the judgment pointed out that a clause similar to the clause we are now considering conferred a right of redemption upon a person who had no interest whatever in the mortgaged property.

9. In that case, too, there were, as in the present case, certain conditions which laid down the price at which the property could, be purchased or mortgaged.

10. We have no doubt whatever that the Case of Surajbali Singh was decided on the principle that the last clause, in the wajib-ul-arz contained matter which could not properly or possibly be the subject of custom, and that being so, the conclusion arrived at by the learned Judges was that, although prima facie the wajib-ul-arz was a record of custom, the internal evidence in the case overturned this presumption and showed that the record was not in truth a record of custom.

11. This case of Surajbali Singh v. Mohammad Nasir (1918) 16 A.L.J. 879 was decided on the principle which was laid down in the earlier case of Fazal Husain v. Muhammad Sharif (1914) I.L.R. 36 All. 471. The relevant passage, is to be found at page 473, and the principle there laid down is that where a wajib-ul-arz in the very same clause in which reference to pre-emption is made contains reference-to other matters which could not possibly be matters pf custom it ought to be held that the record is not one of custom at all.

12. It is not necessary therefore to enter into discussion of the cases decided subsequent to the case of Surajbdli Singh (1918) 16 A.L.J. 879. They have all been decided upon the principle which has just been enunciated.

13. Speaking for myself I have no doubt whatever that the decision of Richards, C.J., in Surajbdli Singh s case was perfectly correct and that a provision in a wajib-ul-arz which confers a right of redemption upon a person who is a stranger to the mortgage cannot in any sense be treated as being a record of a custom.

14. That being so, and fallowing the cursus curiae, I am of opinion that in the present case the wajib-ul-arz ought not to be treated as containing, a record of custom, and consequently the finding of the court -below ought to have-been that the custom of pre-emption was not proved.

15. There is, of course, the additional reason already mentioned, namely, that this wajib-ul-arz professes to lay down the rates at which sales and mortgages are to be made, and it is hardly necessary to say that an entry of this nature could not possibly be a record of custom.

16. It is, however, necessary to express an opinion regarding the soundness of the judgment in the Full Bench case of Majidan v. Hayatan Weekly Notes 1897 p. 3 and it was for that purpose that this reference was made to a Full Bench. Speaking for myself, I am of opinion that that case cannot be held to be authority against the view which has prevailed since the Pre-emption Bench has been constituted. As I have mentioned, the particular point with which we are dealing here was never raised before that Full Bench and in my opinion it cannot rightly be laid down that a record conferring a right of redemption upon a stranger to a mortgage can be a record of custom. If the Full Bench case of Majidan v. Hayatan purports to lay down the law in any other sense, then in my opinion it ought to be overruled and declared to be no longer good law.

Piggott, J.

17. I concur with Mr. Justice Lindsay. We start with the general presumption that an entry in the wajib-ul-arz, and more particularly an entry such as the one before us in this case which is headed "custom of pre-emption", is to be treated as the record of a custom. This principle, however, has always been qualified by one condition, namely, that it shall not be apparent from anything in the wajib-ul-arz itself that what purports to be the record of a custom is in reality the record of a contract or agreement arrived at by the co-sharers amongst themselves at the time of the settlement. The necessity for such a qualification is obvious. You might conceivably have a wajib-ul-arz entry under the above heading which began by expressly reciting that there had hitherto been no custom of pre-emption in the village, but went on to say that the co-sharers agreed amongst themselves to be governed hereafter by such and such rules in the matter. This of course is an extreme case, but entries of this kind have actually come under the notice of this Court; it would be clearly preposterous to lay down the principle that such an entry must be regarded as the record of a custom because in the wajib-ul-arz it has been wrongly inserted in the place provided for the record of the custom relating to pre-emption. Now in the present case we have an entry which begins in the ordinary way in which one would expect the record of a custom to start. So far so good; but immediately after the words, which standing by themselves appear to be a valid record of an existing custom, there followed special provisions as to the price at which the party claiming pre-emption is to be entitled to purchase or to take up a mortgage. Immediately after this comes a provision of a special and peculiar character, permitting other co-sharers under certain circumstances to redeem a mortgage in which they have no concern whatsoever, except that they are the co-sharers of the mortgagor. What strikes me most about the right recorded in favour of co-sharers in this clause is that it offends against the very essence of a right of pre-emption. The co-sharer redeeming a mortgage under this clause does not acquire the proprietary title of the mortgagor. He does not, in any sense of the words, step into the snoes of the mortgagor. Neither does, he step into the shoes of the mortgagee; for ft is clearly not intended by the entry in the wajib-ul-arz that a co-sharer so redeeming shall acquire the right of foreclosure which the mortgagee, held under his contract of mortgage.. The effect of the transaction outlined in this clause of the wajib-ul-arz, assuming it to be carried out, would be to put the co-sharer exercising this right of redemption into possession as an ordinary usufructuary mortgagee, subject to a liability to be redeemed by the original mortgagor, presumably within the period of limitation prescribed, by law for the redemption of the original mortgage. It does not seem to me that a right of this sort can possibly be. created by custom. I therefore agree with Mr. Justice LINDSAY in holding, that the wajib-ul-arz which we are considering, in view of those entries inserted under the heading of custom of preemption to which I have referred, cannot be treated as the record of a custom existing at the time when it was drawn up, but must be regarded as the record of an agreement come to by the co-sharers amongst themselves at the time.

Sulaiman, J.

18. I have come to the same conclusion. It is true that when there is an entry of a right of pre-emption in a wajib-ul-arz there is a prima facie presumption that it is an entry of custom. At the same time if that very clause which recites such a right contains other matters relating to the transfer or devolution of property which cannot possibly be a record of custom then that presumption is negatived. It is open to the courts then to say that the evidence produced by the plaintiff in support of the alleged custom is totally insufficient even to raise a presumption that such a custom exists. The question, therefore, which we have to consider in this case is whether there are any other matters contained in Clause 13 of the wajib-ul-arz of 1872 which negative the idea that that entry was a record of custom. Two matters have been specially referred to by the learned advocate for the defendant appellant before us. The first is that that clause contains a recital that if in the case of a mortgage by conditional sale the mortgagor is unable to redeem and the property be on the point of foreclosure and a notice for foreclosure has been issued to the mortgagor, a co-sharer by virtue of his right of pre-emption would be entitled to pay off the mortgagee and to take possession of the property till he is himself redeemed by the mortgagor.

19. I concede at once that if a right is given which in any way overrides a statutory provision, such a right cannot possibly be a record of custom. The question is whether this particular right was in any way in contravention of Regulation 17 of 1806 which was in force at the time when this wajib-ul-arz was prepared. I am unable to say that such a right had necessarily the effect of overriding the provisions of that Regulation. Under that Regulation the mortgagee was, bound to submit to the property being taken away from him and the foreclosure prevented, if the amount due on the mortgage was deposited within the year of grace by the mortgagor or his legal representatives. I do not think that a custom which gave the co-sharers a right to intervene and take the place of the mortgagor and prevent foreclosure can necessarily be said to be absurd, unreasonable or illegal. Under the present law, when property is transferred to a stranger under a registered document, the -vendee obtains absolute rights under the provisions of the Transfer of Property Act. Can it be said that the right of a pre-emptor who comes into court to claim pre-emption necessarily implies an overriding of the provisions of the Transfer of Property Act? All that the co-sharers would be entitle to do would be to obtain possession of the property and remain in, possession of it as the mortgagee would have done if no proceedings for foreclosure had been taken.

20. In order, therefore, to see whether such a right could not possibly be the basis of a custom and could not possibly have been recognized by a court of law, we have to see whether in earlier cases such a right was ever referred to or assumed. I may here point out that in the case of Ashik Ali v. Mathura Kandu (1882) I.L.R. 5 All. 187 (190), two learned Judges of this Court remarked that there might be a right under which co-sharers would be able to enforce pre-emption either immediately upon the execution of the mortgage, or by redemption during the year of grace after issue of the notice of foreclosure, or after the sale became absolute. The wajib-ul-arz which was before the Full Bench in the case of Majidan v. Hayatan Weekly Notes 1897 p. 3 also clearly contained a similar provision for pre-mortgage or redemption during the year of grace. The learned Judges who disposed of that case certainly expressed the view that there was nothing in that clause which showed necessarily that the record was one of contract and not of custom, and they pointed out that the paragraphs referred to, a, practice which prevailed as to the redemption of mortgages by the sharers or the co-sharers and as to pre-emption in the case of conditional sales. Then again, in the case of Gaya Bharthi v. Lakhnath Rai (1897) I.L.R. 20 All. 103, another Full Bench case, three learned Judges of this Court at least assumed that there was a right in co-sharers to claim pre-emption at two stages, firstly when the mortgage by conditional sale was executed, and secondly after a suit for foreclosure had been instituted but before a decree for foreclosure had been actually passed. I have no doubt in my mind that if one were to search the old reports many more cases may be found. When therefore, we have an expression of opinion by at least six learned Judges of this Court who were well familiar with the customary law of pre-emption, and find that they assumed, if not recognized, the possibility of the enforcement of such a right, can it be said that such a right is so absurd or illegal that it cannot possibly be the basis of a custom? If, therefore, there had been nothing further in the clause but only this provision, I would not have been prepared to hold that the record is necessarily one of contract.

21. There is, however, a further condition in the same clause, under which the right of pre-emption can be enforced in favour of the co-sharers at a fixed price. Such a condition in any opinion is certainly absurd and cannot be the result of a growth of custom. If this condition were to be enforced the consequences would be startling. A co-sharer at all future times would be bound to offer the property at a.fixed pxice, regardless of the market value of the property, to the other co-sharers. He would be forced to submit to transfer it to co-sharers at a very inadequate price although purchasers for higher value were available. It would also follow that even if a stranger did actually pay a fancy price or even the market price, the co-sharers would be entitled to take the property from him on payment not of the price he paid but a price calculated at the smaller fixed rate. This, in my opinion, would place an unreasonable restraint on a co-sharer's power of alienation, and could not be enforced by a court of law. As this condition is inseparably connected with the alleged custom of pre-emption I am of opinion that there can be no presumption that the clause was a record of custom. I, also would therefore allow this appeal, set aside the order of the lower appellate court ant restore that of the court of first instance.

22. We allow this appeal, set aside the order of remand and restore the decree of the court of first instance with costs to the defendant throughout.