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Deo Dat v. Ram Autar

Allahabad High Court
Jun 22, 1886
Smart Summary (Beta)

Structured Summary of the Opinion (Mahmood, J.)

Factual and Procedural Background

The opinion concerns an appeal by the defendant (appellant) raising three specific contentions about entitlement to interest and costs in a dispute involving a mortgage effected by conditional sale and a subsequent action of pre-emption. Key facts and procedural events, as presented in the opinion, are:

  • A mortgage/conditional sale was executed on 30th August, 1882 (the "bye-bil-wafa mortgage") in favour of Har Prasad (the original conditional vendee).
  • The defendant enforced his pre-emptive decree by depositing Rs. 699, described as the principal consideration money of the conditional sale, on 23rd August, 1883.
  • The decree enforcing pre-emption was made on 5th February, 1883 (referred to in the opinion as the decree under which the defendant later paid to enforce pre-emption).
  • The plaintiff made a deposit under s. 83 of the Transfer of Property Act which, as stated at different places in the opinion, amounted to Rs. 743 on 21st August (the opinion contains references to both 21st August, 1881 and 21st August, 1884; the opinion later describes a principal deposit on 6th June, 1884 and an additional deposit of Rs. 44 on 21st August, 1884, making the total Rs. 743).
  • The Courts below found that Rs. 743 was all that was due on the mortgage on the date of that deposit, and that the defendant had due notice of that deposit.
  • The appeal raises three questions: entitlement to interest for the period between 30th August, 1882 and 23rd August, 1883; entitlement to interest after the plaintiff's deposit under s. 83; and entitlement to costs.

Legal Issues Presented

  1. Whether the defendant was entitled to claim interest on the mortgage-money for the period between 30th August, 1882 (date of the mortgage) and 23rd August, 1883 (when he enforced his pre-emptive decree by depositing Rs. 699).
  2. Whether the defendant was entitled to claim any interest after 21st August (the opinion records this date in two places: once as 21st August, 1881 and later as 21st August, 1884) when the plaintiff's deposit under s. 83 of the Transfer of Property Act amounted to Rs. 743.
  3. Whether, in the circumstances of the case, the defendant was entitled to costs.

Arguments of the Parties

Defendant/Appellant's Arguments

  • The appellant contended that, having succeeded to or being substituted for the original conditional vendee (Har Prasad) by virtue of successful pre-emption, he was entitled to the benefit of all conditions of the mortgage — including interest — for periods antecedent to the date on which he enforced his pre-emption (i.e., he claimed interest from the date of the mortgage on 30th August, 1882).
  • In short, the appellant argued that substitution by pre-emption confers on the pre-emptor the same rights (including retrospective benefits) as the original vendee.

The opinion does not contain a detailed account of the plaintiff-respondent's arguments in opposition; the plaintiff's position is described primarily through the deposits made and the factual findings made by the Courts below.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Gobind Dayal v. Inayatullah Accepted conclusions as to the nature of the pre-emptive right (pre-emption as substitution). Used to support the proposition that a successful pre-emptor stands in the shoes of the original vendee as to rights and obligations arising from the sale, but the court limits the temporal scope of those rights to the time after substitution is effected.
Uodan Singh v. Muneri Khan (1813) Held that, if C establishes pre-emption, C is entitled to lands at price paid by B and B must refund the profit accrued during his possession to C (a ruling apparently based on old Muhammadan law). The court noted this old ruling but stated it contained no authority and was erroneous as opposed to authoritative Muhammadan law texts; it was not followed as binding authority.
Manik Chand v. Rameshur Rae In a wajib-ul-arz suit, the pre-emptor could have no preferential right till he tendered the full price; intermediate possession by purchaser could not be regarded as illegal. Adopted as supportive authority for the proposition that a pre-emptor has no preferential right until he tenders full price; used to justify denying retrospective benefits to pre-emptor.
Buldeo Pershad v. Mohun After referring to Muhammadan law of pre-emption, held it equitable that purchasers who have paid purchase-money should not lose profits due to a later pre-emptor who delayed in paying. Followed as supporting the equitable principle that a purchaser who paid cannot be deprived of profits accrued during his possession because a pre-emptor delayed in exercising his right.
Ajudhia v. Baldeo Singh Latest case on the subject (at the time) confirming the principle that the pre-emptor is not entitled to profits before tender or payment; Straight, J. laid down the rule. The court concurred with the principle as laid down in this case and relied on it in rejecting the appellant's claim for antecedent interest.
Ashik Ali v. Mathura Kandu Held that the pre-emptor, in the case of a mortgage by conditional sale which has become absolute, is bound to pay as the price of the property the entire amount due on such mortgage at the time it became absolute. Applied analogically to show that the price payable on enforcement should have included principal plus interest due up to the enforcement date; used to criticize the decree which allowed the defendant to pre-empt by payment of less than the full amount properly payable.

Court's Reasoning and Analysis

The court's legal analysis proceeds in stages and ties each stage to legal principle or authority set out in the opinion:

  1. Nature of pre-emption and temporal scope:
    • The court accepts the established principle that a successful pre-emptor is substituted for the original transferee and, therefore, in general succeeds to the rights and obligations arising from the sale (pre-emption is a right of substitution).
    • However, the court draws an important temporal limitation: the benefits of the transfer cannot be claimed for any period antecedent to the date when substitution actually occurs (i.e., before the pre-emptor enforces his right by paying or tendering the price).
    • This limitation is explained by reference to the nature of the wajib-ul-arz pre-emptive right, which the court says resembles obligations annexed to ownership but falling short of an interest in the immovable property itself; before enforcement the pre-emptor possesses no right to enjoy the usufruct of the property.
  2. Rejection of appellant's contention:
    • The appellant's argument—that upon substitution he should receive all benefits of the mortgage even for periods before enforcement—is rejected as "wholly unsound." The court reasons it would be inequitable to allow a pre-emptor who has not yet paid to receive profits that accrue during another's possession.
    • The court supports this conclusion by analogical reference to s. 40 of the Transfer of Property Act (as describing analogous obligations), and by citing several authorities (both Muhammadan law cases and later judicial rulings) that endorse the temporal limitation on pre-emptor's rights.
  3. Application to the facts:
    • Applying the principle, the court holds that until 23rd August, 1883 (the date the defendant enforced his pre-emption by depositing Rs. 699), the defendant had no entitlement to benefits arising from the subject of pre-emption; therefore he could not claim interest on the mortgage-money for the period antecedent to that date.
    • The court raises and briefly addresses a subsidiary question — who was entitled to the interest for that antecedent period — and indicates (without deciding) that Har Prasad (the original vendee) was the proper person to receive that interest, and that the decree of 5th February, 1883 should have allowed such interest to Har Prasad in addition to principal.
    • The court observes that because the decree of 5th February, 1883 has become final it cannot now be disturbed, but that its effect was to enable the defendant to pre-empt by payment of less than the full amount properly payable; the defendant's present claim for antecedent interest is described as "wholly unconscionable and opposed to equity."
  4. Second issue — entitlement to interest after plaintiff's deposit:
    • The court relies on s. 84 of the Transfer of Property Act, which states that when a mortgagor has duly made deposit of all that is due on the mortgage under the preceding section, interest on the mortgage money is to cease.
    • The opinion records that the plaintiff deposited the principal on 6th June, 1884 (but that deposit alone was inadequate). The plaintiff then made a further deposit of Rs. 44 on account of interest on 21st August, 1884, making the total deposit Rs. 743, which the Court below found to be all that was due on the mortgage on that date and of which the defendant had notice.
    • Given these facts and the statutory rule, the Courts below were correct in not allowing further interest to the defendant after the plaintiff had deposited the whole money due and given notice.
  5. Subsidiary point on eviction and crops:
    • The court criticizes the form of the decree below insofar as it conditioned eviction by protecting the defendant until the crops he had sown were cut. The court observes that s. 51 of the Transfer of Property Act does not bar eviction but entitles the transferee to the crops sown by him and to free ingress and egress to gather them; accordingly, a decree should have been framed to grant those rights rather than to bar eviction.
    • The court notes this point but declines to elaborate because the plaintiff-respondent has not complained about that part of the decree.
  6. Costs:
    • Relying on s. 220 of the Civil Procedure Code (which confers broad discretion as to costs), the court explains that because the defendant acted wrongly by declining to accept the plaintiff's deposit and by giving up possession, the Courts below were justified in making the defendant liable for the plaintiff's costs.

Holding and Implications

Holding: The court dismissed the appeal and ordered costs against the defendant (Appeal dismissed with costs).

Direct consequences, as stated in the opinion:

  • The defendant is not entitled to claim interest on the mortgage-money for the period antecedent to 23rd August, 1883 (the date on which he enforced his pre-emption by depositing Rs. 699).
  • After the plaintiff deposited what the Court below found to be the full amount due on the mortgage (Rs. 743, by a deposit on 21st August, described in the opinion as 21st August, 1884, and also earlier referenced as 21st August, 1881), the defendant was not entitled to further interest.
  • The Courts below were correct to deny the defendant interest after the plaintiff's deposit and to make the defendant liable for costs because he refused to accept the deposit and surrendered possession.
  • The decree below should not have protected the defendant from eviction until his crops were cut; instead, s. 51 entitles a transferee to the crops and to ingress and egress to gather them but does not bar eviction. (This aspect was noted but was not made the subject of complaint by the plaintiff-respondent.)

The opinion does not assert that it establishes a new legal precedent; it applies established principles concerning the temporal effect of substitution by pre-emption and relies on prior authorities and statutory provisions to resolve the questions framed in the case. The immediate effect is the dismissal of the defendant's appeal and the imposition of costs against him.

Disposition

The appeal was dismissed; Oldfield, J. concurred in the proposed order.

Show all summary ...

Mahmood, J.:— The contention urged before us on the defendant's behalf raises three main points for determination:—

1. Whether the defendant was entitled to claim interest on the mortgage-money for the period between 30th August, 1882, the date of the mortgage, and the 23rd August, 1883, when he enforced his pre-emptive decree by depositing Rs. 699, the principal[505] consideration money of the conditional sale in respect of which he enforced his pre-emption.

2. Whether the defendant was entitled to claim any interest after the 21st August, 1881, when the deposit by the plaintiff, under s. 83 of the Transfer of Property Act, amounted to Rs. 743.

3. Whether, under the circumstances of this case, the defendant was entitled to costs.

I will dispose of each of these points in the order in which I have mentioned them. The first of these questions depends upon the determination of a very important point of the law of pre-emption. That a successful pre-emptor stands in the shoes of the original vendee in respect of all the rights and obligations arising from the sale under which be has derived his title, is a question which stands upon an undoubted basis, for the right of pre-emption is nothing more or less than the right of substitution. This was pointed out by me at considerable length in Gobind Dayal v. Inayatullah, where the Full Bench of this Court generally accepted any conclusions as to the nature of the pre-emptive right. This, however, is not a point which is contested on either side in the argument of the learned pleaders for the parties. All that the learned pleader for the appellant contends for here is, that his client, having succeeded to, or rather been substituted for, the original conditional vendee, Har Prasad, is entitled to claim the benefit of all the conditions of the mortgage, and is, therefore, entitled to claim interest even for the period antecedent to the 23rd August, 1883, when he enforced his pre-emptive decree, by deposit of the consideration of the conditional sale under the decree of the 5th February, 1883. I am of opinion that this contention is wholly unsound. It is perfectly true that a successful pre-emptor becomes substituted for the original transferee, and thus becomes entitled to the benefits of the transfer. But it is equally true, and stands to reason, that those benefits cannot be claimed for any period antecedent to such substitution itself. The a right of pre-emption as based upon the wajib-ul-arz partakes of the nature of those obligations which fall short of an interest in immoveable property, though they [506] are annexed to the ownership of such property. The nature of such obligations is well described in s. 40 of the Transfer of Property Act, which refer to only by way of analogical comparison. A pre-emptor, therefore, before his pre-emption is actually enforced, possesses no such right in the subject of pre-emption as would entitle him to any benefits arising out of the property, which he is only entitled to take by substitution, but has not yet actually taken. On the other hand, the original vendee cannot, whilst he is in possession, be regarded as a trespasser, who would have no right to enjoy the usufruct of the property which he has purchased, nor would it be equitable to hold that the pre-emptor, before he has actually paid the price should be entitled to the profits of the property, which he can take only upon duly making such payment.

This view of the law is supported by some cases to be found in the reports. There is a very old ruling—Uodan Singh v. Muneri Khan(2), where it was held that if A transfer lands to B by sale, and C afterwards come forward and establish his right of shufa or pre-emption, he will be entitled to the lands at the price paid for them by B, who will be compelled to refund the profit accrued during the period of his possession to C, receiving himself the purchase-money back from A. That was a case decided so long ago as 1813, and seems to have depended entirely upon the Muhammadan law of pre-emption. The judgment, however, contains no authority for the rule there laid down; and there can be no doubt that the ruling was erroneous, being opposed to the most authoritative texts of the Muhammadan Law itself. Such indeed seems to be the view taken by the Sudder Court of these Provinces in Manik Chand v. Rameshur Rae, which was a suit based upon the wajib-ul-arz, and where the learned Judges held that the “pre-emptor could have no preferential right till he had tendered the full price, and therefore the defendant's intermediate possession could not be regarded as illegal.” This ruling was followed by this Court in Buldeo Pershad v. Mohun, where the learned Judges, after referring to the rule of Muhammadan law of pre-emption, held it to be equitable, and then want on to say:—The purchaser has in most instances paid the purchase-money; is he [507] to lose all interest and profits because, at some subsequent time, the contingency occurs that a pre-emptor claims and exercises his right of pre-emption and is the pre-emptor, who has kept his money in his pocket till it suited his purpose to exercise his right, to obtain profit, which will be the greater in proportion to his delay?”

The same rule was laid down by Straight, J., in Ajudhia v. Baldeo Singh, which is the latest case upon the subject. I entirely concur in the principle upon which these rulings proceed; and if the exigencies of this case needed it, I would, by reference to the original texts of the Muhammadan Law, have shown that the principle is a necessary consequence of the very nature and incidents of the right of pre-emption itself.

Applying the principle to this case, it seems to me perfectly clear that till the 23rd August, 1883, when the defendant enforced his pre-emptive decree by depositing Rs. 699—the consideration of the conditional sale of the 30th August, 1882—he had no such interest in the subject of preemption as would entitle him to any benefits arising therefrom. And it follows that my answer to the first question in the case must be that the defendant is not entitled to claim any interest on the mortgage-money for the period antecedent to the 23rd August, 1383. This view, however, raises a subsidiary question, namely, that if the defendant is not entitled to interest for that period, who else is entitled to it? This is a question which we are not bound to determine in this case, but I think I may safely say, as a necessary consequence of the ratio decidendi adopted by me, that the proper person entitled to receive the interest for that period: was Har Prasad, in whose favour the bye-bil-wafa mortgage of the 30th August, 1882, was originally executed, and who was dispossessed under the defendant's pre-emptive decree: and I think I may add that in passing that decree, the Court should have allowed the amount of interest above mentioned in addition to the principal mortgage-money. This view is based upon the same principle as my ruling in Ashik Ali v. Mathura Kandu, where it was held that the pre-emptor, in the case of a mortgage by conditional sale which has become absolute, is bound to pay as the price of the property the entire amount due on such[508] mortgage at the time it became absolute. Here the “price” which should have been allowed to Har Prasad under the decree of the 5th February, 1883, should have been the principal mortgage-money plus such amount of interest as might have been due on the mortgage up to the period fixed by the Court for enforcement of the pre-emptive decree. That decree, having now become final, cannot of course be interfered with in this case: but its effect was to enable the defendant to pre-empt on payment of less money than he was entitled to. And I have no doubt that his present claim for interest antecedent to the 23rd August, 1883, when he executed the decree, is wholly unconscionable and opposed to equity.

The next question in the case is a very simple one, because the rule contained in s. 84 of the Transfer of Property Act (IV of 1882) furnishes a clear guidance. The section says that when a mortgagor has duly made deposit under the preceding section of all that is due on the mortgage, the interest on the mortgage money is to cease. Here the plaintiff deposited the principal sum of the mortgage-money on the 6th June, 1884, but that deposit was clearly inadequate and would scarcely entitle him to the benefit of s. 84 of the Act, even pro tanto. I will, however, not determine this point, because it is not raised here, and the plaintiff himself made a further deposit of Rs. 44 on account of interest on the 21st August, 1884, thus making the whole deposit amount to Rs. 743, which has been found by the Court below to be all that was due on the mortgage on that date, and of which the defendant had due notice. The amount so deposited of course left out of account the interest for the period antecedent to the 23rd August, 1883, and to which, as I have already shown, the defendant was not enticed. The Courts below were, therefore, in my opinion, right in not allowing interest to the defendant after the plaintiff bad, with due koowledge of the defendant, deposited the whole money due on the mortgage to the defendant. And I may also add, with reference to a subsidiary question in the case, that the Courts below did not act rightly in rendering the decree subject to the condition that the defendant was not to he evicted till the crops he had sown were cut. The rule applicable to such cases is clearly enunciated in the last paragraph of s. 51 of the Transfer of Property Act, which creates no bar to eviction in such a case, but only lays down that the transferee [509] is entitled to the crops sown by him, and to free ingress and egress to gather and carry them. The decree in this case should have been framed accordingly, but need say nothing more about the matter, because that part of the decree has not been made the subject of complaint before us by the plaintiff-respondent.

Then as to the question of costs, which has been made the subject of a separate ground of appeal by the defendant-appellant before us. S. 220 of the Civil Procedure Code gives ample power and discretion to the Court in connection with costs, and in the present case the defendant, having all along acted wrongly in declining to accept the plaintiff's deposit, and in giving up possession to, him, was properly made liable for the plaintiff's costs by the Courts below.

I would dismiss this appeal with costs.

Oldfield, J.:— I concur in the proposed order.

Appeal dismissed.