1. This second appeal arises out of a suit for pre-emption instituted by the first respondent against the appellants in March 1957, in the Court of the Sub-Judge at Rajouri. Respondents 2 onwards sold the property in suit to the appellants under a deed dated 5-1-57 for Rs. 2000/- The vendees were the tenants of the property at the time of the sale. The plaintiff, first respondent, who is an owner in Mahal laid tihe present action for pre-empting the sale to exercise of the statutory right which section 14 of the Right of Prior Purchase Act conferred on him. While the pre-emption suit was pending in the trial Court, section 14 of the Right of Prior Purchase Act was amended by Act XXIII of 1959, conferring a preferential right of preemption on tenants. On the coming into force of this amendment, the vendees contended before the trial court that they had a preferential claim over the plaintiff, that the amendment of the law has improved their status and that therefore the plaintiff's suit was liable to be dismissed. The trial Court agreed with this contention and dismissed the pre-emption suit. On appeal, the Addl. District Judge at Pooncih held that the amending Act XXIII of 1959, had no retrospective operation and that, therefore, the rights of the parties were governed by the law as it stood at the time of the institution of the suit and that consequently the vendees could not validly resist the suit. The aggrieved vendees have therefore come up to this Court in second appeal.

2. The plaintiff first respondent's learned counsel did not seek to support the decision of the Court of Appeal below on the ground that the amending Act XIII of 1959, had no retrospective operation. On the other hand, he frankly conceded that this ground — on which the lower appellate court relied — was not tenable in view of the legal position that a vendee in a pre-emption action is entitled to improve his status till the passing of the decree by the first Court.

3. It is settled law that a pre-emptor must have a subsisting right of pre-emption on (1) the date of the sale, (2) the date of the institution of the suit, and (3) the date of the decree, if the plaintiff pre-emptor ceases to have the right of pre-emption at any of these points of time, his suit is bound to fail. He can also be non-suited by the vendee acquiring at any time before his suit is decreed a right of pre-emption equal or superior to his own. Authorities on this point are legion. See for instance, Madho Singh v. James R.R Skinner, AIR 1941 Lah 433 (FB); Shankar Lal v. Poonamchand, AIR 1954 Raj 231, and Nabir Ganai v. Mohd. Ismail Ganai, AIR 1980 J and K 112. It cannot reasonably fee gainsaid that a vendee can improve his status not merely by his own acts after the sale or pending the pre-emption suit, but also Page: 81by virtue of the operation of law in his favour. A subsequent legislation, therefore, can as much enable a vendee to improve his status as any voluntary act on his part. All this has been conceded by the learned counsel for the plaintiff-preemptor. This means that the only ground on which the lower appellate Court gave judgment for plaintiff is plainly unsupportable.

4. But the learned counsel for the pre-emptor strenuously urged that the appellants-vendees ceased to be tenants the moment they purchased the property leased to them from the landlord. If the vendees ceased to be tenants from the date of the sale they could not obviously invoke the benefit of the amending Act XIII of 1959 which conferred a superior right of preemption on a tenant vis-a-vis an owner in Mahal like the plaintiff-respondent. The point to be examined therefore is whether the tenancy of the appellants was extinguished on their purchasing the vendor-landlord's right under the sale-deed of 5th January, 1957. The first respondent-pre-emptor's claim that the tenancy Tights of the vendees became extinguished is based entirely on the doctrine of merger. The learned counsel for the vendees-appellants has sought to meet this contention by pointing out that in a case like the present there could be no merger of the interests of the landlord and the tenant and a consequent extinguishment of the tenancy.

5. This takes us to a consideration of the scope and applicability of the doctrine of merger. A merger ordinarily takes place when a greater estate and a less estate vest in the same person at the same time and in the same right. “A less estate is not merged in a greater if there is an express or presumed intention that it shall be kept alive. Where no intention is expressed, the intention may be presumed from the circumstances, as where the estates are held by the same person in different rights, for example, one beneficially and the other as trustee, or where it is for the advantage of the holder of the two estates that the less estate should be kept alive (Halsbury's Laws of England, 3rd Edn. Vol. 14, page 616, paragraph 1136).

6. Dealing with the merger of the interests of landlord and tenant, it is stated as follows in paragraph 1420 at page 690, Vol. 23, 3rd Edn of Halsbury's Laws of England:—

“Even when they are held by the same person in the same right, the question of merger is governed in equity by the intention of the parties, and there is no merger if it is intended that the term should be kept alive. In the absence of any direct evidence of intention, it will be presumed that merger is not intended if it is to the interest of the party, or only consistent with his duty, that merger should not take place………….”

7. Thus, the question of merger, so far as English law is concerned, is essentially one of intention of the parties. The difference which once existed in England between the Common Law and the rule of equity on this matter has been removed by the enactment of section 185 of the English Law of Property Act, 1925. We have now to see whether the English rule can be applied to the instant case.

8. Section III(d) of the Transfer of Property Act has enacted that a lease of immovable property determines in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right. The section does not in terms leave any scope for the intention of the parties to come into play. It has therefore been argued that the law in India is different from the English Law on the subject. I do not consider it necessary to go into this question in the present case, because the lease in question before me is admittedly a lease for agricultural purposes within the meaning of Section 117 of the Transfer of Property Act and as such none of the other provisions of Chapter V of that Act which includes section 111 applies to it. I am not aware of any notification by the State Government nor has any been brought to my notice by which section 111 has been made applicable to agricultural leases. It follows that the question of merger in the present case has to be dealt with independently of section 111(d) of the Transfer of Property Act, that is to say outside the purview of the Transfer of Property Act.

9. In Dulhin Lacchanbati v. Bodh Nath, AIR 1922 PC 94. Lord Shaw said as follows on a question of merger:

“Merger is not a thing which occurs ipso jure upon the acquisition of what may be called the superior with the inferior right. There may be many reasons conveyancing reasons, reasons arising out of the object of the acquisition of the one right being merely for a temporary purpose, family reasons and others in the course of which the expediency of avoiding the coalescence of the interest and preserving the separation of title may be apparent. The question to be settled in the application of the doctrine, is, was such a coalescence of right meant to be accomplished as to extinguish that separation of title which the records contain.”

10. In Suraj Chandra v. Beharilal, AIR 1939 Cal 692, the facts were that an owner of land after having leased it to the defendant hypothecated it to the plaintiff. While the hypothecation was subsisting, the tenant purchased the equity of redemption from the landlord. Subsequently, the mortgagee sued to enforce his mortgage and obtained a decree. In execution he sold the property and purchased it himself. After having obtained symbolical possession of the property through Court, he attempted to take actual possession and was resisted by the defendant-tenant, and therefore, a Suit for possession was laid by him.

11. One of the main grounds on which the plaintiff's case was rested was that by the purchase of the landlord's interest by the tenant the tenancy was extinguished, the less estate having merged in the greater estate. The lease in that case fell outside the ambit of the Transfer of Property Act and was governed by the Bengal Tenancy Act. The appeal from the suit was heard by a Division Bench of the Calcutta High Court consisting of B.K Mukherjea and Roxburgh, JJ. Page: 82In his leading judgment Mr. Justice B.K Mukherjea (as he then was) observed at page 696:

“A man is presumed to intend that which is for his benefit, and judged by that test it would obviously be to the advantage of the defendant to keep the two interests separate. His interest as a lessor is affected by the mortgage and if he allows his lessee's interest to be merged in the superior one he would be hit by the mortgage decree and the sale, and his rights would be extinguished. The existence of a mortgage on the superior right when, the defendant purchased it, even if it cannot be held to be an intermediate estate which would prevent) merger would, in my opinion, certainly constitute a criterion to determine the intention of the lessee; and the defendant could not have intended a coalescence of the two rights which was manifestly to his prejudice.”

12. It is perhaps unnecessary to say more to show that in considering a question of merger de hors the provisions of the Transfer of Property Act, intention of the parties concerned is of crucial importance.

13. We have now to turn to the facts and circumstances of the instant case to ascertain whether there has been a merger of the tenants' interest in that of the landlord.

14. When the landlord executed the sale deed, the vendees were holding the land as protected tenants with a large measure of fixity of tenure under the Jammu and Kashmir Tenancy Act. At the time of the purchase and for a long number of years prior to it there has been in force in the State the Right of Prior Purchase Act. The right of pre-emption has been exercised in the State for many years now and it has been very widely known throughout the State. The very circumstance that about two months after the sale in question the plaintiff laid a suit to enforce his right of pre-emption is itself an indication that the inhabitants of the locality where the parties to this litigation have been residing and where the suit property is situated were quite familiar with the right of pre-emption and the liability of a person who purchases property in disregard of this right to part with it in favour of the pre-emptor. It cannot, therefore, be said that the vendees when they purchased the property were ignorant of their liability to a claim of right of pre-emption. Indeed, it cannot be assumed that a person was ignorant of the law. So we have to proceed on the basis that the vendees knew about the right of pre-emption residing in the plaintiff or persons like him, when they purchased the property from the landlord. Furthermore, at the time of purchase the vendees did not have any right of pre-emption equal to that of the plaintiff or persons occupying similar status. There is absolutely nothing to indicate that the vendees could have reasonably thought or did in fact imagine that the plaintiff could not or would not exercise his right of pre-emption in respect of the land in suit. The vendees, as any other reasonable persons, would have known that if their tenancy determined on account of their purchase of the landlord's interest, the prospective pre-emptor would claim to take the entire property rid of the encumbrance of a protected tenancy. All these factors militate against the vendees having intended to merge their tenancy in the landlord's estate to the extinction of the former.

15. Therefore, if the question is to be decided on an ascertainment of the intention of the vendees, it appears to be clear beyond doubt that they could not possibly have intended to extinguish their valuable tenancy rights; they cannot be presumed to have intended something so much to their detriment. On the other hand, they must be presumed to have intended what was to their benefit, namely, keeping the two estates separate. If the plaintiff's contention prevails in this case, the result will be that the defendants-appellants shall have to part with not only what they purchased from the landlord, but also what they originally held in their own right. And for losing the latter right they will get no compensation whatsoever. This aspect only serves to emphasize that the vendees would not have intended determination of their tenancy by purchasing the landlord's interest.

16. By purchasing a property to which a right of pre-emption attaches, the vendee gets only a defeasible title. The property vests in him only subject to the liability of his being divested of it. In other words, the state is subject to the right of pre-emption. The benefit as well as the burden of the Tight of pre-emption runs with the land. A vendee of such property cannot be said to acquire absolute title to that property. An infirmity attaches to the title of the vendor himself in the matter of selling the property to the vendee who is not entitled to a right of pre-emption. A sale in these circumstance's stands on a different footing from other sales. I venture to think that such a sale will not vest title in the vendee in, the same sense as other sales would in the ordinary course.

17. The burden, of making over the property to the pre-emptor or which is annexed to the property itself and which is undoubtedly an incident of the sale projects into the bargain a supervening right of an outsider, namely, the prospective pre-emptor, and stands between the vendee and the property which he has purported to acquire. So far as the vendee is concerned, the sale is subject to the condition of his title being lost to the pre-emptor. In such a case the J vesting of title in the vendee is only of a precarious 1-ind and of a fleeting nature. It would remain so until the liability of the sale to pre-emption ceases to exist and the vendee obtains-a perfect, stable and permanent title. Such a precarious and short-lived vesting of title in the vendee does not to my mind appear to be sufficient to bring about a permanent merger of the pre-existing interest he held in the new interest he acquires.

18. And looking at it from the point of view of the pre-emptor, his right is only one of substitution and not of re-purchase. As held by Mr. Justice Mahmood in Govinda Dayal v. Inayatullah, ILR 7 All 775 (FB):

“It is simply a right of substitution, entitling the pre-emptor, by reason of a legal incident to which the sale itself was subject, to stand in the shoes of the vendee in respect of all the rights and obligations arising from the sale under which he has derived his title. It is in effect, as if in a sale deed the vendees' name was rubbed out and the pre-emptor's name was substituted in its place.” See also Audh Behari v. Gajadhar, AIR 1954 SC 417.

19. If this be the pre-emptor's right, how can he get anything more than what was sought to be conveyed to the vendee under the sale which he seeks to pre-empt. If the sale was originally in favour of the pre-emptor himself he would not have got the tenant's rights. Merely because he steps into the shoes of the vendee as a result of a pre-emption suit, why should lie obtain a larger interest than what the vendor sold. This aspect of the matter also seems to point to the propriety of holding that the tenant's rights were kept separate and were not merged in the landlord's rights which the plaintiff has now sought to pre-empt.

20. On a consideration of the various aspects, I have come to the conclusion that the interest of the landlord and the interest of the tenants did not coalesce in the present case and that each estate was kept separate from the other and that therefore the tenants remained tenants and could legitimately invoke the benefit of the amending Act XXIII of 1959, and thereby improve their status and non-suit the plaintiff who has put forward only an inferior right of pre-emption. In the result I allow this appeal with costs, and restore the decision of the trial Court dismissing the suit.

FF/R.G.D

21. Appeal allowed.