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Smart Summary

Factual and Procedural Background

On 15 January 1920 Rani Samujh executed a sale-deed in favour of the plaintiff, Rai Bahadur Abhainandan Prasad, conveying a share in a village together with arrears of profits (in respect of sir and khudkasht lands) due from co-sharers for the Fasli years 1324, 1325 and 1326, for a total consideration of Rs. 1,000. The present defendants instituted a suit for pre-emption in respect of the share sold; the pre-emption suit resulted in a decree in favour of the pre-emptors (the present defendants Nos. 1 and 2) in respect of the share, and it is admitted that the full consideration of Rs. 1,000 was paid under that decree.

Thereafter the plaintiff sued in the Revenue Court claiming the arrears of profits against the co-sharers. The trial court (Court of first instance) granted a decree in favour of the plaintiff. On appeal the learned District Judge dismissed the suit. Before the trial court an objection was taken that the plaintiff, being a legal practitioner, had purchased an actionable claim; that objection was overruled at trial and was not pressed in the present appeal. The District Judge's primary reason for dismissal was that repayment of the whole sale consideration under the pre-emption decree destroyed the plaintiff's rights in the arrears of profits. The present opinion is the appellate judgment allowing the plaintiff's appeal, setting aside the lower appellate decree, and restoring the decree of the trial court with costs in all courts including higher scale fees.

Legal Issues Presented

  1. Whether arrears of profits that have already accrued are capable of being sold (i.e., are saleable).
  2. Whether an assignee of arrears of profits (who no longer has any interest in the underlying property because of a subsequent pre-emption) can maintain a suit in the Revenue Court to recover those arrears.
  3. Whether the repayment of the full sale consideration to a vendee pursuant to a decree for pre-emption (in respect of the pre-empted part of the sale) destroys the vendee's rights in that portion of the sale which was not capable of, or was not, pre-empted (here: the arrears of profits).

Arguments of the Parties

Appellant (Plaintiff) — Position as recorded in the opinion

  • The plaintiff maintained that the arrears of profits were part of the sale and, being saleable, vested in him under the sale-deed.
  • The plaintiff's right to sue in the Revenue Court for arrears of profits was not lost even though the share in the village was subsequently pre-empted; the pre-emption and repayment of the sale consideration did not destroy his rights in the arrears.
  • At trial an objection that the plaintiff (a legal practitioner) had purchased an actionable claim was raised and overruled; that objection was not pursued in this appeal.

Respondents (Defendants) — Position as recorded in the opinion

  • The learned Judge in the appellate court held that because the pre-emptors paid back the whole sale consideration to the vendee under the decree for pre-emption, the payment "must have the effect of destroying any rights which the plaintiff obtained under that decree" — i.e., the absence of remaining consideration for the transfer of arrears of profits meant that the plaintiff's right no longer existed.
  • It was argued (by respondents' counsel and authorities they relied on) that while an assignee of the property together with profits may be entitled to sue in the Revenue Court, a mere assignee of arrears of profits (without acquisition of the share in the village) must sue in the Civil Court and cannot maintain a suit in the Revenue Court.
  • Respondents' counsel drew attention to authorities compiled by Dr. Agarwala that inclined to the view favouring the High Court decisions under the old Rent Act (i.e., restrictive view of Revenue Court jurisdiction), and relied on decisions of the Allahabad High Court that declined Revenue jurisdiction for mere assignees in some earlier cases.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Kanhai Ram v. Sukh Deo, 22 Ind. Cas. 337; 12 A.L.J. 98 Authority (Single Judge of this Court) holding that a suit brought by an assignee of arrears of rent was cognisable by the Revenue Court (i.e., Revenue Court jurisdiction for such assignees). The Court noted this ruling as evidence that there was authority for treating suits by assigns of rent as within Revenue Court jurisdiction; it was used to show that not all earlier rulings excluded Revenue jurisdiction for assignees, though the Court also observed potential distinctions in statutory wording between sections.
Lekhraj Singh v. Rai Singh, 14 A. 381; A.W.N. (1892) 143; 7 Ind. Dec. (N.S.) 612 (Full Bench) Passage indicating nothing in the Rent Act confined suits for arrears of rent to persons who were land-holders at the time rent became due, nor confined the defendant to the person who occupied the position of tenant when the rent fell due. Authorities showing Revenue Court jurisdiction where a rent-decree had been purchased or where a sharer in possession claimed past profits. The Court relied on this passage to support the proposition that suits for arrears of rent/profits could be brought by persons who were not the original land-holder at the time the arrears accrued, and to show past instances where Revenue Court jurisdiction had been upheld for purchasers/assignees.

Court's Reasoning and Analysis

The court proceeded through a series of legal propositions grounded in the facts and statutory context presented in the opinion:

  1. On the effect of pre-emption and repayment of consideration: the Court rejected the learned District Judge's view that repayment of the whole sale consideration under a pre-emption decree necessarily destroyed the vendee's rights in that part of the sale that was not capable of being pre-empted. The Court reasoned by analogy: where a sale-deed conveys two distinct items (one pre-emptible and one not), the pre-emption of the pre-emptible item does not divest the vendee of rights in the non-pre-emptible item. The non-pre-emptible property remains vested in the vendee irrespective of whether the vendee received back the consideration. The Court observed that apportionment of consideration could have been sought but failure by the pre-emptor to seek apportionment cannot destroy the vendee's rights in the non-pre-empted property.
  2. On whether arrears of profits are saleable: the Court stated that it could find no law making accrued arrears of profits incapable of sale, and observed that "there is considerable authority" for the view that such arrears are saleable. This supports treating the arrears in this case as property that could vest in the vendee under the sale-deed.
  3. On Revenue Court jurisdiction for an assignee of arrears: the Court identified the central and difficult question whether an assignee of arrears of profits can maintain a suit in the Revenue Court when he no longer has any interest in the underlying property. The Court reviewed the prior divergence under the old Rent Act between the Board of Revenue (which tended to allow Revenue Court jurisdiction for assignees) and the Allahabad High Court (which took a stricter view that assignees were not "land-holders or co-sharers" and hence must proceed in Civil Court).
  4. The Court then examined the present Tenancy Act and noted the introduction of Section 166 (a new provision not in the old Act). Section 166 broadens the definition in Chapter XI to include "the heirs, legal representatives, executors, administrators and assigns" of a "co-sharer." The Court read that addition as intended to resolve the earlier conflict and regarded it as prima facie entitling an assignee of a co-sharer to maintain a suit for settlement of account and his share of the profits under Section 165.
  5. Addressing the specific contention that a mere assignee of arrears (without acquisition of the share itself) cannot sue in Revenue Court, the Court analyzed the nature of suits for profits. It distinguished two scenarios: (a) where an assignee sues for profits accruing after assignment (in which event he sues as a co-sharer in respect of the period he is a share-holder), and (b) where an assignee sues for arrears transferred that accrued while the assignor was the co-sharer. The Court accepted the latter description as the position but rejected the respondents' contention that a distinction should be drawn (for jurisdictional purposes) between an assignment that included both property and arrears, and an assignment of arrears only. On principle the Court found no sound basis for such a distinction.
  6. Applying these conclusions to the facts, the Court held that the plaintiff's right to sue for arrears of profits (accruing prior to assignment and transferred to him by the sale) was not extinguished by the subsequent pre-emption of the share; nor was the appropriate forum altered. The plaintiff could maintain his suit in the Revenue Court for the arrears despite the fact that he had subsequently lost the share itself by pre-emption and had received back the sale consideration.

Holding and Implications

Holding: The appeal is allowed. The Court set aside the decree of the lower Appellate Court and restored the decree of the Court of first instance in favour of the plaintiff. The plaintiff is awarded costs in all Courts, including fees on the higher scale.

Implications (as stated or necessarily entailed by the opinion):

  • The Court explicitly held that arrears of profits which have already accrued are capable of being sold; they may vest in a vendee under a sale-deed.
  • The Court concluded that an assignee of such arrears can maintain a suit in the Revenue Court to recover them even if the assignee no longer has an interest in the underlying property (for example, because the property was subsequently pre-empted and the sale-consideration repaid). The repayment of consideration to the vendee under a pre-emption decree does not, in itself, destroy the vendee's rights in the portion of the sale that was not capable of pre-emption (here, the arrears of profits).
  • By construing the Tenancy Act (specifically Section 166) to include "assigns" within the definition of "co-sharer" in Chapter XI, the Court accepted a statutory basis for Revenue Court jurisdiction in suits by assignees for arrears of profits under Section 165.

Direct effect on the parties: the plaintiff's trial court decree for arrears of profits is restored and the plaintiff is awarded costs in all Courts (including higher scale fees). The opinion resolves the central dispute in favour of the plaintiff on the jurisdictional and substantive points raised in this case.

    R.B. Abhainandan Prasad v. Bhagwan Datt Pathak And Anr.

    1. This is a plaintiff's appeal arising out of a suit for arrears of profits. The position has arisen in a curious way. On the 15th of January 1920 one Rani Samujh executed a sale-deed in favour of the plaintiff Rai Bahadur Abhainandan Prasad under which he sold a certain share in village together with the arrears of profits in respect of sir and khudkasht lands due from the co-sharers on account of the previous years 1324, 1325 and 1326 Fasli, for a total sum of Rs. 1,000. A suit for pre-emption was brought by the present defendants with regard to the share sold and was ultimately decreed. The judgment in the pre-emption suit is not on this file but it is admitted that the decree for pre-emption was with regard to the share and it was on payment of the full consideration of Rs. 1,000.

    2. The plaintiff instituted the present suit in the Revenue Court claiming arrears of profits against the co-sharers. The Court of first instance granted the plaintiff a decree but on appeal the learned District Judge has dismissed the suit. In the First Court a point was raised that the plaintiff being a legal practitioner had purchased an actionable claim, but that objection was overruled by that Court and the matter was not pressed any further, nor has that point been argued before me in this appeal.

    3. The main ground on which the learned Judge dismissed the suit was that under the pre-emption decree the whole of the sale consideration which had been advanced by Rai Bahadur Abhainandan Prasad had been paid back to him by the pre-emptors who happen to be the present contesting defendants Nos. 1 and 2, and the payment "must have the effect of destroying any rights which the plaintiff obtained under that decree". The learned Judge thought that inasmuch as there remained no consideration for the transfer of the arrears of profits that right no longer existed.

    4. I am unable to agree with the view taken by the learned Judge. If two properties are sold under a sale-deed one of which is capable of pre emption and the other is not and the property capable of pre-emption is pre-empted the vendee cannot lose his rights in the property which was not capable of pre-emption. That property must be deemed to remain vested in the vendee. It is immaterial whether the plaintiff did pay the whole or only a part of the total sale consideration. It would have been open to the plaintiff to ask the Court to apportion the consideration and reduce the amount in view of the fact that part of the property sold was not being pre-empted, but if for some reason or other a pre-emptor omitted to do so and submitted to a decree for pre-emption of a part of the property on payment of the whole amount, that could not destroy the rights of the vendee in the property which had not and could not have been pre-empted. It follows, therefore, that if the arrears of profits were capable of being sold separately and were not capable of being pre-empted and have not been pre-empted, then they remain vested in the vendee quite irrespective of the fact that the vendee has received back the entire consideration which he had originally paid for the sale. The effect of the decree for preemption cannot be said to destroy his rights in the arrears of profits which also he had purchased.

    5. I can find no law under which arrears of profits which have accrued due already are not capable of being sold. As a matter of fact there is considerable authority for the view that such arrears are saleable.

    6. The main question however to consider in this case is whether the assignee of such arrears can maintain a suit in Revenue Court for these profits although he has no longer any interest left in the property itself. This question is certainly of considerable difficulty and curiously enough there appears to be no reported case under the new Tenancy Act which has decided this ponit, at least none has been brought to my notice by Counsel on either side.

    7. It cannot be denied that under the old Rent Act there was some divergence of opinion between the Board of Revenue on the one hand and the Allahabad High Court on the other. Although the rulings in either Court were not absolutely unanimous yet it may be said broadly that the Board of Revenue inclined to the view that assignees of rent or profits carl maintain a suit in the Revenue Court because such suits were suits for rents or profits and-came exclusively within the jurisdiction of the Revenue Court. On the other hand the Allahabad High Court took a strict view of the sections of the Rent Act and held that assignees of such lease or profits were neither land-holders nor co-sharers within the meaning of those sections and that their remedy, therefore, lay only in the Civil Court.

    8. The learned Vakil for the respondents has drawn my attention to the cases collected by Dr. Agarwala under Section 182 in his learned Commentary on the Tenancy Act and has pointed out that the learned author is inclined to favour the view taken by the High Court in the earlier cases. But the author has had to note that as regards suits brought by assigns of arrears of rent there is a ruling of a Single Judge of this Court reported as Kanhai Ram v. Sukh Deo 22 Ind. cas. 337 : 12 A.L.J. 98 laying down that a suit was cognisable by the Revenue Court only, and not following the cases of the Allahabad High Court under the old Rent Act. Cases of assigns of rent however may be distinguishable because Section 102 does not specifically use the word "landlord or co-sharers" whereas Section 165 expressly contains the words "co-sharer."

    9. But even as regards the old Act there was a passage in the judgment of the learned Chief Justice in the Full Bench case of Lekhraj Singh v. Rai Singh 14 A. 381 at p. 390 : A.W.N. (1892) 143 : 7 Ind. Dec. (N.S.) 612 (F.B). to the effect that there was nothing in the Rent Act, so far as it related to suits for arrears of rent, to indicate that the section applied only where the person suing was the person who was the land-holder or landlord at the time when the rent became due, nor was there anything in the section to indicate that the person to be sued in a suit for arrears of rent must necessarily be the person who occupied the position of tenant at the time when the rent, the arrears of which were sued for, became due. Knox, J., at page 404 Page of 14 A.-[Ed.] also referred to a number of cases where the Revenue Court had been held to have jurisdiction where a rent-decree had been purchased from the landlord and the purchaser of the decree found it necessary to continue the litigation in the Revenue Court or where a sharer in possession of his share at the time of his suit was allowed to claim in the Revenue Court the profits of his share for a previous period during which he was not in possession.

    10. The present Tenancy Act, however, has a new section, Section 166, corresponding to which there was no section in the old Act. It seems to me that this section was expressly added in order to put an end to this apparent conflict of opinion. Under the new section the word "co-sharer" in Ch. XI includes also "the heirs, legal representatives, executors, administrators and assigns of such person". Prima facie it would seem that an assign of a co-sharer would be entitled to maintain a suit for settlement of account and his share of the profits under Section 165.

    11. The point which has been pressed before me very strongly is that though an assign of the property of a co-sharer has a right to maintain a suit for profits a mere assign of arrears of profits has no such right The contention is that the person who is suing must have not only acquired the arrears of profits but must have also acquired the share in the village itself before he can be called an assign of the co sharer within the meaning of Oh. XI. After careful consideration of the various sections I have come to the conclusion that this contention cannot be upheld.

    12. If an assign of a co-sharer is suing for profits which have accrued since the assignment then he is not suing as an assign of a co-sharer at all but he is suing as a co-sharer himself for the profits which have accrued during the time when he is a share-holder. On the other hand a suit for profits by an assign of a co-sharer must of necessity relate to arrears of profits for the period during which the assignor was the co-sharer and the assignee was not, and which profits have been transferred to the assignee. This position must be conceded.

    13. It is, however, further contended on behalf of the respondents that there is a distinction between the case where there has been an assignment of profits as well as the property and the case where there has been an assignment of profits only. It is argued that in the former case the arrears of profits go with the property and, therefore, the assignee may have a right to sue for them but it is urged that a mere assignee of profits must bring a suit in the Civil, Court and not in the Revenue Court. On principle I am unable to see any such distinction. In the present case if no suit for pre-emption had at all been brought it would be difficult to contend that Rai Bahadur Abhainandan Prasad would not have been entitled to maintain a suit for arrears of profits against the ether co-sharers in the Revenue Court in respect of the years prior to his assignment. He would have been suing for a period when he was not a co-sharer at all. Nevertheless his suit was bound to have been decreed. Does it make any difference that subsequent to his assignment he has lost the property, though not the profits, by virtue of the preemption decree? In my opinion his right to sue for "the profits has not been lost at all, nor has the forum where he can maintain such a suit been altered.

    14. The learned Judge has said that this was the only point argued before him. I have already come to the conclusion that the view taken by him on this point was wrong. I accordingly allow the appeal and setting aside the decree of the lower Appellate Court restore that of the Court of first instance with costs in all Courts including in this Court fees on the higher scale.

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    Comments

    R.B. Abhainandan Prasad v. Bhagwan Datt Pathak And Anr.
    (Mar 26, 1925)