Jainarayan Ramgopal Marwadi v. Balwant Maroti Shingare

1. This is a suit for preemption. Survey No. 64/1 had two sets of cosharers each owning 8 annas in it. One-half belonged to Jainarain, defendant 4, and the other to Gulabchand and Madangopal, defendants 2 and 3. On 10th May 1933, defendants 2 and 3 orally sold their half of the field to defendant 1, Surajkaran, for Rs. 1700. This is the sale which the plaintiff seeks to preempt. After this, on 13th March 1934, defendant 1 is said to have sold, again orally, the half share he had purchased as above to defendant 4 who thus got the entire pot-hissa. This sale has been challenged by the plaintiff who says that the transaction was a fraudulent one and that it did not take place till after the institution of his suit and was then antedated. On 15th June 1934, the plaintiff instituted this suit for pre-emption. On 22nd August 1934 the plaint was amended and defendant 4, Jainarayan, who was not originally a party, was added. Both the lower Courts find that the sale to defendant 4 did not take place on 13th March 1934 but after the institution of the suit and that it was a fraudulent device to defeat the plaintiff's claim. They were particularly impressed with the evidence which established that on 16th June 1934, three months after the alleged sale to defendant 4, defendant 1 appeared before the patwari and asked for mutation in his name in respect of the sale of 10th May 1933 and said nothing about the subsequent sale to defendant 4. If the defendant's story about the sale to defendant 4 on 13th March 1934 is true, it is obvious that defendant 1 had then no interest left in the property. They also took into consideration the fact that defendants 1 and 4 are brothers. In the circumstances there is ample evidence to support these findings which are purely one of fact.

2. It is argued however that the presumption arising from the correctness of the Record of Rights entry in Ex. 4 D-1 has been ignored, but, I do not think that is of much consequence in this case. The burden of proof has been placed aright and the decisions of the lower Courts are based on the positive evidence of the patwari. The only question of importance which arises here is not what the entry says but when it was made. It is clear from Ex. 4 D. 8 that it was not made till 29th August 1934, that is to say more than two months after the present suit had been filed and at a time when both sides to the mutation had ample motive for giving the Revenue Officers false information. The fact that neither Court has referred to this document though they have referred to other documents seems to indicate that it was not relied on by the defendants during their arguments. But however that may be, I am satisfied that the omission, if omission it is, has not affected the findings. They would have been just the same even if this document had been expressly mentioned in the judgments. That, of course, means that defendant 4's rights can be ignored because apart from all else they accrued during the pendency of the his. The real difficulty in the case is one of law. The sale which the plaintiff seeks to preempt is one which according to the defendant had no binding force because it was oral, and it is contended that the word ‘transfer’ in S. 183, Berar Land Revenue Code, must be strictly construed to mean one of the transfers contemplated by Ss. 176, 177 and 178, and that the word ‘sale’ in S. 176 must be construed in the sense in which it is used in the Transfer of Property Act. Now there can be no doubt that all questions of preemption must be governed by the Code and not by the Mahomedan law on which the Code is in part based: S. 174(1) itself indicates that; but it is equally true that reference may be made to the Mahomedan law to elucidate matters upon which the Code is silent. Both these propositions are to be found in ILR (1937) Nag 4691 and ILR (1937) Nag 1082 at p. 109. Turning now to S. 183(1) we find that when no notice of transfer has been given, a right of pre-emption is conferred when an occupant …. transfers his interest, or any portion thereof by any of the transfers contemplated in Ss. 176 etc….

3. Section 176 which is the relevant Section here, deals with a case in which an occupant in a survey number “proposes to sell the whole or any portion of his interest”, and it requires the intending vendor to intimate, among other things, “the extent of the interest to be sold.” What I have to determine therefore is whether an oral sale which is ineffective as a sale for want of writing and registration nevertheless operates to transfer some portion of the vendor's interest in the holding. So far as the Transfer of Property Act is concerned I am clear that it does not.

4. Section 54 states that a sale of immovable property of the value of one hundred rupees and upwards can only be effected by a registered instrument and in no other way. Therefore, an oral sale of immovable property worth more than Rs. 100 does not transfer any interest in it: see 19 Cal 623.3 Of course an unregistered contract of sale of property is an agreement to sell and so gives rise to a right to enforce specific performance, but unlike the English law where an equitable estate is created by a mere agreement to sell, in India a mere contract of sale does not of itself create any interest in or charge upon the property when the Transfer of Property Act applies: 44 Cal 5424 at p. 552. So also the protection afforded by part performance does not apply because S. 53-A requires an instrument in writing signed by the vendor or by some one on his behalf, and here we have no writing at all but only an oral sale. There fore there can be little doubt that if the word “sale” mentioned in Sec. 176 of the Berar Land Revenue Code is to be given the interpretation which it bears in the Transfer of Property Act, no right of preemption can arise. But the learned counsel for the plaintiffs-respondents argues that as the Code is silent on this point, no definition of sale having been given, we are entitled to look to the Mahomedan law on which this part of the Code is based to gather what was meant by the word sale’, and if we do that, then it will be found that the word includes an oral as well as a registered transaction. There is, I think, considerable force in this contention. Sec. 174(1) of the Code states that:

The rights conferred by this Chapter upon the occupants in a survey number in respect of transfers of interests in that survey number shall be deemed to be rights of pre-emption within the meaning of Para, (vi) of Section 7 of the Court-fees Act, 1870, and of Article 10, Sch. 1 of the Limitation Act, 1908.

5. The Section then continues “and they shall be enforceable only in the manner and to the extent provided by this chapter.” There is thus a clear-cut distinction between the rights conferred and the manner in which they can be enforced. In the former case we are referred to the Court-fees and the Limitation Acts, in the latter to the Code itself. It seems to me therefore that when considering the rights of preemption conferred by the Code it is legitimate to interpret them in the sense in which they are used in the provisions referred to above of the Court-fees and the Limitation Acts. Section 7(vi) of the Court-fees Act, speaks of pre-emption generally and not merely of statutory pre-emption. Article 10 is even more general:

To enforce a right of pre-emption whether the right is founded on law or general usage or on special contract.

6. Column 3 then states:

When the purchaser takes under the sale sought to be impeached physical possession of the property sold, or where the subject of the sale does not admit of physical possession when the instrument of sale is registered.

7. Now the word ‘sale’ has not been used here in the strict technical sense in which it is construed in the Transfer of Property Act. Though there is a difference of opinion among the High Courts on this point, these are cases in which it has been held that the word ‘sale’ is to be understood in the sense in which it is used under the Mahomedan law of pre-emption and not in the limited sense in which it is referred to in the Transfer of Property Act, and this view has now been endorsed by their Lordships of the Privy Council in 45 Bom 1056.5. It must be remembered that the Mahomedan law of pre-emption existed and was acted on for centuries before the passing of the Transfer of Property Act and also that the law of pre-emption all over India is largely traceable to and based upon it: see Agarwala's Law of Pre-emption, p. 56. Even where it has now found statutory expression, the Legislature has done no more than codify, after such modifications as it saw fit, the already existing practice, and that is certainly true of the Berar Land Revenue Code as the cases which I have already cited show. It must also be borne in mind that the Berar Land Revenue Code of 1896 which first codified the law of pre-emption for Berar was passed long before the Transfer of Property Act had been applied there and at a time when oral sales were permissible. Therefore, it is clear that the expressions “transfer of an interest,” “sale” and the like which we find in Ss. 205 and 206 of the old Code could not have been used in the sense in which the Transfer of Property Act uses them. That Act was not applied to Berar till 1907, that is to say not till 11 years later. Of course, the Act was in force in Berar when the new Land Revenue Code of 1928 was passed, but since the chapter on pre-emption incorporates the old law with hardly any change so far as the points now under consideration are concerned, it is legitimate to assume that the expressions “transfer of an interest” and “sale” which have been incorporated bodily from the one Act into the other were used in the same sense in both the Codes. It is a recognized canon of construction that when a law is merely being codified and especially when it is being transferred almost bodily from one Code to another, departure is not to be presumed unless it is made in express terms. That is not the case here and so I can only presume that the expressions we are considering were not used in the sense in which they are used in the Transfer of Property Act. In the Allahabad Full Bench case, 16 All 344,6 Edge, C.J said at page 351:

To import into the Mahomedan law of preemption the definition of the word ‘sale’ coupled with the restriction of the transfer of ownership contained in S. 54 of Act 4 of 1882, would be materially to alter the Mahomedan law of preemption and to afford to fraudulent persons a means of avoiding successfully the obligation of that law, the object of which was to enable cosharers and near neighbours, if they so desired, to exclude strangers from the enjoyment of immovable property to which the Mahomedan law of pre-emption applied …. I cannot think that it was the intention of the Legislature in passing Act 4 of 1882 to alter directly or indirectly the Mahomedan law of pre-emption as it existed and was understood for centuries prior to the passing of Act 4 of 1882, by substituting for the sale referred to in that law, the “sale” coupled with the restriction of Sec. 54 of Act 4 of 1882.

8. These remarks are, in my opinion, peculiarly apposite here if we substitute the words “Berar Land Revenue Code of 1896” for the words “Mahomedan law”, and if we remember that the Code is based on the Mahomedan law and that the Transfer of Property Act was not in force there when the Code was made law. The latter portion of the extract which I have quoted was quoted with approval by their Lordships of the Privy Council in 45 Bom 1056 at page 1063 and so that ought to conclude the matter. In addition there are the following cases: 7 All 482,7 44 All 2398 at p. 241 and 46 Bom 302.9 It is true there are decisions to the contrary: they have been collected by Dr. Kathalay in his learned treatise on the Law of Pre-emption at pp. 61 and 62 and at pp. 135-37; but the position that the word “sale” when used in connexion with the general law of pre-emption in India is not to be construed in the narrow sense in which it is used in the Transfer of Property Act, has now, I think, been placed beyond the realm of controversy by the Judicial Committee. That being so, it must be used in that wider sense in Article 10 of the Limitation Act and in Section 7(vi) of the Court-fees Act and since Sec. 174(1), Berar. Land Revenue Code expressly states that the rights conferred by Ch. 14 of the Code in respect of transfers of interest in a survey number shall be deemed to be rights of pre-emption within the meaning of those provisions, there is no escape from the position that the word sale” as used in S. 176 must not be construed in the narrow sense for which the learned counsel for the appellant contends.

9. The next question therefore is whether “the transaction in this case amounts to a sale within the meaning of the wider definition now given to it. Here also, their Lordships of the Privy Council have laid down an important test, though it is possibly not the only test. They state that in each case the intention of the parties must form the determining factor: see 45 Bom 1056 at p. 1063 upholding 35 Cal 575.10 In the present case, there can be no doubt whatever that the intention was to sell”, to transfer all the interests which the vendor” had to the “vendee”. Possession was given and the price was paid; and the only reason why a registered sale deed was not executed was to try and frustrate the cosharers' rights of pre-emption. These are the findings of the Courts below and: being ones of fact are binding here. I need not dilate upon the question whether an intention to frustrate is necessary and whether the interest contemplated by Ss. 174 and 176 would pass even when there is no transfer of possession. It is enough to state that both these elements are present in this case and that when they are there, the rule applies. The decisions of the lower Courts are upheld and the appeal is dismissed with costs.

R.M/R.K

10. Appeal dismissed.