The case came before Bayley and Macpherson, JJ., who, differing in opinion, referred the point to a Full Bench, with the following remarks:—

Macpherson, J.:— The question to be decided in this case is whether a right of pre-emption can arise on the making of a mortgage by unconditional sale of a bai-bil-wafa.

In my opinion, the lower Court was right in deeming it unnecessary to enquire as to what occurred when the mortgage was first created. It is laid down by Macnaghten on “Mahomedan Law”(1) that “the right of pre-emption cannot take effect until the sale is complete, as far as the interest of the seller is concerned;” and the principle of the law seems to be that the right can arise and be given effect to only when the seller is parting with his property finally. In the case of a mortgage, the mortgagor cannot be said, in the first instance, to part finally with his property. What takes place (although the transaction may be called a conditional sale, and whether it be or be not on the face of it an out-and-out sale) is in fact not a sale at all. It is a mere pledge or giving of the laud by way of security for the repayment of a sum of money. If, however, it be looked upon as a sale, it appears to me quite impossible to consider it a sale which, at the time of making it, falls within the terms of the rule which I have quoted above, and is “complete so far as the interest of the seller is concerned.” It has been argued that inasmuch as Sir William Macnaghten lays down that the right of pre-emption arises on a “sale” taking place, and inasmuch as he, in another part of his work(2), says that “sales are either absolute, or conditional, or imperfect, or void,” he must have intended to say that the right arises alike in an absolute and in a conditional sale. But I see no force in this argument, which, if it convinced me, would necessitate my supposing that his intention further was to declare that the right arose on the making of a “void” sale. I can find nothing which leads me to think that Sir William Macnaghten, when writing of pre-emption arising on “sales,” had any sales before his mind save those which are absolute; and it is worthy of remark (although it of course does not conclude the question one way or other) that the only case among his “Precedents” which at all approaches the present case is one(3) in which the right was claimed not at the time the conditional sale was made, but subsequently when an absolute sale took place in order to raise money to pay off the original mortgagee, who had been for some time in possession under the conditional sale to him. Moreover, the claimant of the right of pre-emption must pay the purchaser a sum equal to the purchase-money which the purchaser has paid. But at the time of giving lands in mortgage, it is impossible to say what will be the precise sum due on the date on which the conditional sale comes to be made absolute: and the sale cannot be made absolute until that sum is ascertained. It is, therefore, impossible for the persons claiming the right of pre-emption to pay, until the sale is made absolute, the whole sum which becomes eventually due on the mortgage, which sum is in fact the price which the purchaser pays. The Hedaya appears to support the view which I take of this question. It is there said: “If a man sell his house under a condition of option (i.e, reserving to himself the power of hereafter dissolving the sale), the privilege of shaffa cannot take place with respect to that house, the power reserved by the seller being an impediment to the extinction of his right of property; but when he relinquishes that power, the impediment ceases, and the privilege of shaffa takes place, provided the shafee prefer his claim immediately.”

So in a recent case, Mussamut Jankee Kooer v. Mussamut Lekranee Kooer, decided, 18th June 1864, in which it was contended that the suit to establish the right of pre-emption was premature, because, although the year of grace had expired, there had been no actual transfer of possession,— it was held by this Court that the absolute right of the mortgagee and consequent right of pre-emption arise from the time when the sale becomes absolute. There seem to be no reported cases in which the question has been raised. The special appellant himself did not launch his case relying only on his having claimed and done all that was necessary when the conditional sale was made. His case was that he had claimed and gone through the prescribed forms on no less than four occasions: when he heard of the conditional sale, when the application for foreclosure was made, on the expiry of the year of grace, and subsequently on hearing of the result confirming the purchaser's title and declaring it to be bona fide. This alleged frequent repetition of his claim does not argue much confidence in the effectiveness of that originally made by him. The conclusion at which I have arrived is that the right of pre-emption did not arise, and could not be given effect to on the mere giving of these lands in mortgage, and therefore that the appeal ought to be dismissed with costs.

Bayley, J.:— I regret that I differ from the view expressed by Mr. Justice Macpherson in this case. I think that, taking the deed to be one of conditional sale, as found below, the formal demand necessary to secure the right of pre-emption can be made then.

The words used on the subject by Macnaghten are these:— “It is necessary that the person claiming this right should declare his intention of becoming the purchaser, immediately on hearing of the sale, and that he should, with the least practicable delay, make affirmation by witness of such his intention, either in the presence of the seller, or of the purchaser, or on the premises.” Then turning to the Chapter on Sales, it is stated that “sales are either absolute, or conditional, “or imperfect, or void.” Again, turning to Baillie's “Mahomedan Law of Sale,” I find in page 302, on the bye-al-waffa (or, as it is usually called bye-bil-waffa), this passage — “And the form of the transaction is this: the seller says to the purchaser, ‘I have sold you this thing for the debt due to you by me, on condition that, when I pay the debt, the thing is mine;’ or thus — ‘I have sold you this for so much, on condition that, when I give up to you the price, you will give up to me the thing.’ Again occurs this passage(4) — “And what is valid is that the contract which passes between them, if it be in words of sale, is not a pledge. It is then to be considered if the two parties have mentioned a condition of cancellation in the sale, and if so, the sale is invalid. And even if they should not have mentioned this in the sale, but have both, in expressing themselves, used the word ‘sale’ with a condition of wufa, or have expressed themselves as in the case of a lawful sale, but with the meaning that the sale is not to be binding or obligatory, the result is the same. Where, again, sale is mentioned without any condition, and the stipulation is then mentioned after the manner of a mutual promise, the sale is lawful, and the wufa binding as a promise.” At page 303 occurs this passage:—

“In the Futwa of Aboo'l Fuzl, a case is mentioned of an orchard, which was in the hands of a man and a woman, and the latter having sold her share to the former, on condition that he should restore it to her on repayment of the price, and the man having subsequently sold his own share, it was asked if the woman had a right of pre-emption, and the answer was that, if the sale was a maamilut(5) sale, she had such a right, whether her share of the orchard were in her own hands or in the hands of the man. Thus, in the Moheet. And in the Atabeeah, it is said that a bye-al-waffa and a maamilut sale are one. So in the Tatur Khaneut.” In the Hedaya(6), the time for making the formal demand is when “it is manifest that the proprietor is no longer inclined to keep his property.” It is true that the passage says also “after the sale;” but, as I have remarked, a conditional sale is one of the specific forms of sale in Mahomedan law. Now to apply these authorities to this case: We have before us a deed of absolute sale. There is in the record no ikrar, or agreement, varying it; but the lower Courts find that it is a conditional deed of sale.

On the whole, then, I think that the formal demand may be made under the Mahomedan law at the time when the pre-emptor hears of the transaction of conditional sale, or of its being recorded by a deed.

The opinions of the learned Judges of the Full Bench were delivered as follows:—

Norman, J. (Trevor, Morgan and Kemp, JJ., concurring):— We think it is clear that, in cases of mortgages which are foreclosed, the right of pre-emption does not arise till the sale becomes absolute. This is evident from the very definition given by Macnaghten of the right of pre-emption, viz., that it is a power of possessing property which has been sold by paying a sum equal to that paid by the purchaser. See also Hamilton's Hedaya, Vol. III, p. 568; Macnaghten's Precedents, p. 196; and a case of Mussamut Jankee Kooer v. Mussamut Lekranee Kooer, decided in this Court by Trevor and Campbell, JJ., 18th June 1864. It has never been contended that a right of pre-emption includes a right of paying off a mortgage, and of standing in the position of the mortgagee.

It appears from Baillie's Mahomedan Law of Sale, p. 303, edition of 1850, that, notwithstanding a mortgage by way of conditional sale to a co-sharer, the mortgagor, in right of his equity of redemption, retains his right of pre-emption in respect of other land sold by that co-sharer to a stranger. This shows that a mortgage does not in any way affect the right of pre-emption. For this purpose the mortgagor still remains, in contemplation of law, the owner of the mortgaged property. The right of pre-emption does not arise until the seller's right of property has been completely extinguished, and therefore has been said not to exist if the seller has secured to himself any condition of option, or power of dissolving the sale at a future time. If he transfers the property by an invalid sale, there is no right of pre-emption, for the property continues his notwithstanding such a sale — Hedaya, Vol. III, p. 596. We must therefore say that no right of pre-emption can arise on a mere conditional sale or mortgage, while any right of redemption remains in the mortgagor. It has been decided that a refusal to purchase before the sale is complete cannot operate to defeat a claim of right of pre-emption subsequently preferred — Macnaghten's Precedents, p. 196. We need not now discuss the question whether this proposition is universally true; hut it is certain that the mere declaration of an intention to exercise a right, which has not yet accrued, is in no sense a claim of a right of pre-emption. On these grounds we are of opinion that it was wholly immaterial whether the plaintiff had made any formal demand of pre-emption at any other time than after the sale became absolute.

Bayley, J.:— It is with much diffidence that I still differ from my former colleague in the Division Bench, Mr. Justice Macpherson, and from my four colleagues in the Full Bench. The reasons for my holding to my opinion that the case should be remanded for investigation, whether plaintiff did or did not make the necessary formal demand at the time of hearing of the execution of the deed of sale, are briefly these:—

I. — The claim of pre-emption is one under Mahomedan law, and the provision of that law requires the claim of pre-emption to be made on hearing of the sale. The plaintiff alleges that when he heard of the sale he made his claim of pre-emption. In this case the deed had the form of an absolute deed of sale. It was only discovered to be conditional some time afterwards. The Mahomedan law defines a conditional sale as one of the recognized species of sale. I have before quoted two passages where a conditional sale and an absolute one are declared to be both equally sales: Paragraph 4 of the Chapter of Sales in Macnaghten's Mahomedan Law, and Baillie's Mahomedan Law of Sale, pp. 302, 303.

Then if we look to the policy of the Mahomedan law in regard to pre-emption, it is clearly this, that co-parceners, those interested in the profits, and neighbours, in order thus enumerated, shall have the earliest opportunity of knowing of land being available to them in respect to which to assert the claim of pre-emption — Chapter V on Pre-emption in Macnaghten's work, pp. 42, 43.

Again, in this case, at the time at which plaintiffs allege they made the claim, the deed in the only form in which it appeared was an absolute sale. Can it be said, then (leaving alone for the present the question whether we are to consider the transaction a mortgage under English or Regulation law, or an equivalent to a sale under Mahomedan law), that the pre-emptor transgressed the law in making the claim when he first heard of the execution of the deed as an absolute sale? I hold that he followed the law, and is therefore entitled to have its privileges, if it be ascertained on remand (a point not yet enquired into) that he did then make the necessary formal demands. I would still, then, remand the ease for re-trial on this matter.