P L D 1967 Supreme Court 411 (PLP)

HAMOODUR RAHMAN, J.‑This appeal, by special leave, from the judgment of a Division Bench of the High Court of West Pakistan Bahawalpur Circuit in a first appeal arising out of al, suit for pre‑emotion, raises the question as to whether a tran saction of sale entered into a violation of section 54 of the Transfer of Property Act is pre‑emptible. The suit for pre‑emotion was brought by the respondent herein to pre‑empt a transfer made by one Imam Bakhsh of some 164 kanals of land situated in Mauza Mudmunthar, district Rahimyar Khan, by a mutation No. 147 attested on the 25th April 1960. The respondent claimed pre‑emotion on the basis of his preferential right as a collateral of the vendor. The appellant herein, who is a total stranger, claimed to have purchased the same for Rs, 26,

406. The pre‑emptor, however, alleged in his plaint that though the consideration for the tran saction was shown as Rs. 26,000 or so the actual consideration paid was only Rs. 10,

000. According to the plaint the possession of the properties in dispute was also said to have been taken over by the purchaser on the 20th of March 1960, a few days before the attestation of the mutation. The appellant contested the suit by filing a written statement in which he took up the defence that the suit filed on 10‑3‑61 was barred by limitation, as he had actually taken over possession of the lands in dispute on 4‑3‑

60. He also maintained that the consideration paid by him was Rs. 26,406 and that in addition thereto he had spent about Rs. 2,600 in improving the land. His further case was that the pre‑emptor was not entitled to maintain the suit, as he had previous to the transaction sought to be pre‑emoted waived his right by declining the offer to purchase the land for the said price. But neither his preferential right to pre‑empt was disputed nor was the sale denied nor its validity questioned. The appellant, it appears, was subsequently directed by the Court either to deposit the entire consideration of Rs. 26,000 or to furnish security for the same. He furnished security as directed by the Court. On these pleadings certain issues were raised but none of them related to the question now under consideration. At the hearing of the suit, however, the learned Senior Civil Judge, Rahimyar Khan, allowed this question to be raised without insisting upon any formal amendment of the pleadings or raising any specific issue relating to this particular point, as in his opinion there was no necessity for doing so in view of a decision of the Baghdadul Jadid High Court in the case of Jangi v. Jhanda (P L D 1961 B J 34). Upon the authority of this decision he came to the conclusion that the suit for pre‑emotion was bound to fail, as the sale of property situated at a place where the Transfer of Property Act applied and valued over Rs. 100, by an unregistered document, being not in accordance with the provisions of section 54 of the Transfer of Property Act was unpre‑emptible. The suit was, accordingly, dismissed on this ground alone. On appeal, however, the High Court held that the decision relied upon by the trial Court did not support the view taken by it, as, in that case the validity of the sale itself was disputed while in the present case the sale was clearly admitted and no objection had been raised in the pleadings to its validity. The High Court also pointed out that the above‑mentioned case had been distinguished in the subsequent case of Gullan v. Muhammad Ramzan (P L D 1962 B J 33) by another Division Bench of the same High Court on the ground that the case of Jangi v. Jhanda had neither decided the question as to whether the sale there sought to be pre‑emoted was pre‑emptible nor could the said decision be construed "as laving down the proposition that a pre‑emptor whose title is otherwise perfect cannot pre‑empt a sale of some other land on the ground that the vendee's title was imperfect on account of the absence of a registered document''. In the latter case the High Court, relying upon two decisions of the Allahabad High Court in the cases of Janki v. Girjadat (I L R 7 All. 482) and Begum v. Muhammad Yaqub (1 L R 16 All. 344), came to the conclusion that "the Legislature when enacting section 54 of the Transfer of Property Act could not have intended to add this provision of law to other laws dealing with the sale of property and in force in the same area. No doubt, a sale made in violation of the provisions of section 54 of the Transfer of Property Act would not be a valid sale, but if the law of pre‑emption permits that a sale, which is otherwise complete, can be pre‑empted and if the pre‑emptor is prepared to take over the defective title of the vendee, he cannot be prevented from doing so, simply because the vendor and the vendee have colluded with each other to deprive him of his rights". A request was, in the circumstances, made to the High Court to refer the case to a Full Bench in view of this conflict of decision between two Division Benches of the same High Court but the High Court did not consider it necessary to do so, as in its view the authorities were overwhelmingly against the view taken in the case of Jangi v. Jhanda. The High Court also referred to two other Division Bench decisions in the cases of Niaz Ahmed and others v. Mian Abdur Rahman and others (P L D 1961 B J 1) and Abdul Khaltq v. Sher Muhammad (P L D 1961 B J 79) in support of its view. In the last‑mentioned case it appears that the same learned Judges who decided the case of Jangi v. Jhanda decreed a suit to pre empt certain lands transferred by attestation of mutation on the deposit of Rs. 20,000 as sale price. Similarly in the case of Niaz Ahmad v. Mian Abdur Rahman the Bench, of which one of the learned Judges who decided the case of Jangi v. Jhanda was also a member, upheld a pre‑emption decree in a suit to pre‑empt lands transferred by attestation of mutation in August 1951, of which the value was, according to the pre‑emptor, Rs. 9,000 but according to the vendor Rs. 18,

000. Both these cases related to lands in the area which was formerly comprised in the Babawalpur State but in fairness it must be pointed out that in neither of them was this specific question raised or argued. In the case of Gullan v. Muhammad Ramzan this question was, however, specifically raised and fully considered. It was also found in this case that section 54 of the Transfer of Property Act bad been made applicable to this part of the Province of West Pakistan in the year 1931 but nevertheless relying upon the Allahabad decisions the view was taken that the definition of "sale" given in the Transfer of Property Act could not be imported into the provisions of other laws and particularly the law of pre‑emption, for, a pre‑emptor who succeeds in such a suit only acquires whatever rights vest in the vendee and if the vendee's title is defective the pre‑emptor will get that defective title. Furthermore that even under the Transfer of Property Act itself a person, who has obtained possession of the property purchased by him by an unregistered document may, notwith standing that the contract though required by law to be registered has not been registered, still by reason of the provisions of section 53‑A of the said Act successfully resist a suit to oust him from the land and may even sue the transferor for specific performance of the contract. It found it difficult, therefore, to uphold the contention that the transaction of sale of property valued at more than Rs. 100 in an area to which the Transfer of Property Act applies does not give any one the right to pre‑empt the transaction. In the Allahabad Full Bench case of Janki v. Girjadat and another, which was relied upon by the High Court, four learned Judges (Mahmood, J. dissenting), had held that where a tran saction transferring possession of lands to a stranger for Rs. 300 by mutation of names effected in the revenue department had been made and no registered deed of sale had been executed in order to avoid the right of pre‑emption the nature of the transaction or its effect was not altered and it gave a person qualified to pre‑empt full right to do so. In that case the right of pre emption was claimed under custom which was established by the Wajibul Arz. Mahmood, J. in his dissenting judgment, however, observed that "the right of pre‑emption being only a right of substitution the successful pre‑emptor's title is necessarily the same as that of the vendee , and if the vendee took nothing under the sale, the pre‑emptor can take nothing either; and it follows that if the vendee could not oust the vendor, the pre‑emptor could not do so either, because in both cases the question would necessarily arise whether the sale was valid in the sense of transferring ownership". In his view a perfected sale was a condition precedent to the exercise of the pre‑emptive right. A subsequent Full Bench of the Allahabad High Court consisting of six learned Judges in the case of Begum and others v. Muhammad Yaqub reaffirmed their previous decision but again with one learned Judge, namely, Banerji, J. dissenting. In this case a Sunni Mohamedan had transferred immovable property exceeding Rs. 100 in value by delivering possession after payment of the consideration but before any sale‑deed was executed. The sale was held to be pre‑emptible, as the validity of the sale had, it was said, to be determined under the Mohamedan Law and under that law the sale was a complete sale. Banerji, J., however, adopted the view earlier taken by Mahmood, J. while the other learned Judges were clearly of the opinion that the definition of the word "sale" and the restrictions to the transfer of ownership contained in section 54 of Act No. IV of 1882 (Transfer of Property Act), could not be allowed to alter the Mohamedan Law of pre‑emption or "to afford to fraudulent persons a means of avoiding successfully the obligations under that law, the object of which was to enable co‑sharers and near neighbours, if they so desired, to exclude strangers from the enjoyment of immovable property to which the Mohamedan Law of pre emption applied". It may here be pointed out that the decision of the Allahal High Court in the case of Begum v. Muhammad Yaqub was subsequently approved by the Privy Council in the case of Silaram Bhaurao Deshmukh v. Jiaul Hasan Sirajul Khan ( 48 1 A 475). In that case too the Judicial Committee while upholding the decision of the Bombay High Court to the effect that a tran saction entered into by the parties under a document described as an "agreement of sale" which contemplated the subsequent execution of "a pucca deed of sale"; obviously registered; was for all intents and purposes a full sale and .was capable of being pre‑empted. The Privy Council observed that "the effect of the document is an intimation, an admission, that there is a law of pre‑emption which is doubtless, from the way in which it is referred to, a general law, and that the uncle holds under that general law. It is therefore to the general law that reference has to be made to see what these rights were'". There the uncle's right of pre emption was sought to be exercised by his administrator after his death and the Judicial Committee upheld the view of the High Court that in such cases one has "to look at the intention of the parties in determining what system of law was to be taken as applying and what was to be taken to be the date of the sale with reference to which the ceremonies were performed". Upon a review of these decisions it seems to us that they answer to the question raised must depend on whether there has been a sale within the meaning of the law under which the pre‑ emption is claimed and this must necessarily depend to a large extent upon the intention of the parties. Here the pre‑emption was sought under the Punjab Pre‑emption Act of 1913, which was also applicable to the Bahawalpur State and under sub section (5) of section 3 of this Act a sale has been defined as follows :‑ "3 (5) sale shall not include‑ (a) a sale in execution of a decree for money or of an order of a Civil, Criminal or Revenue Court or of a Revenue Officer, (b) the creation of an occupancy tenancy by a landlord, whether for consideration or otherwise ;" This definition of sale is obviously wider than the one under section 54 of the Transfer of Property Act, for, it is not governed by the restrictions as to the mode of transfer contained in the latter section. It cannot, therefore, in view of this definition, be said that if a sale of a property exceeding the value of Rs. 100 is made by a mutation entered in the revenue records such a sale is altogether void. This method of transfer by mutation in the revenue records was certainly recognised in the Punjab, to which the Punjab Pre‑emption Act originally applied, as a valid method of transfer of agricultural land. Thus if the parties entered into a transaction in a form recognised by this law can it be argued that they nevertheless did not intend the transaction to be governed by the incidents attaching thereto under that law. The intention of the parties is further manifested in the present case by the fact that even now the parties to the transaction not only do not repudiate the sale but actually admit its validity. There can after this be no doubt as to the intention of the parties. The contention of the appellant, nevertheless, is that after the Transfer of Property Act has been made applicable to a particular area this method of transfer cannot, in any event, be regarded as being sufficient to confer any title upon the purchaser and the sale cannot be said to be a completed sale until the title has passed. We are, however, unable to accept this con tention, because, if the right of pre‑emption is a right of substitution then certainly the person seeking to pre‑empt can be put into the shoes of the stranger purchaser and exercise all the latter's rights including those to which he became entitled under section 53‑A of the Transfer of Property Act. In exercise of this right he too could defeat the suit of either the vendor or any other person claiming through the vendor to oust him from possession even if he had entered into possession on the basis of an unregistered document of conveyance. He would be in just as good or as bad a position as the vendee himself. We see no reason, therefore, why the transfer in such circumstances should not be pre‑emptible when to hold otherwise Would amount to opening the door for fraudulent persons to defeat the law of pre‑emption, as, indeed was the endeavour of the parties in the case reported in I L R 16 All.

344. The mere failure of the parties to comply with the require ments of section 54 of the Transfer of Property Act as to the manner in which the transfer should be made cannot alter the nature of the transaction intended to be entered into between the vendor and the vendee or affect the pre‑emptor's right in respect of it. If the transaction amounts to a sale in fact then not withstanding that it is not in the form prescribed by section 54 of the Transfer of Property Act the right of pre‑emption will come into operation. Such a transaction even under section 54 is not altogether void, for, the defect is curable by getting a document drawn up and registered to perfect the inchoate title E of the vendee. This perfection can be insisted upon, for, there is at any rate an enforcible contract of sale even under the Transfer of Property Act, and even such an imperfect tran saction will give rise to equities in favour of the buyer. If he has paid the price he will have a charge of the property for the amount paid. We are, in the circumstances, in full agreement with the view expressed by the High Court and would accordingly dismiss this appeal with costs. A. H. Appeal dismissed.