P L D 2005 Supreme Court 775 (PLP)

MUHAMMAD NAWAZ ABBAS1, J.

This appeal by leave of the Court has been directed against the judgment dated 18-5-2001 passed by Lahore High Court, Lahore in a civil revision arising out of suit for declaration.

2. The relevant facts giving rise to this appeal are that two separate leases of two squares of land each, were given by the Government to Muhammad Zaman and Ghulam Muhammad sons of Allah Bakhsh under Horse Breeding Scheme and dispute in the suit out of which this appeal has arisen, related to the two squares of land pertaining to the lease of Muhammad Zaman, the above named two lessees, real brothers, along with their father and another brother, namely, Ahmad having jointly purchased two mares for the purpose of grant of land under Horse Breeding Scheme, equally shared the expenses on the breeding of mares and after obtaining the grant of land under the Scheme in question, executed a registered document dated 22-5-1911 in the form of an agreement/association deed by virtue of which they agreed for joint cultivation of land and for joint ownership on acquisition of proprietary rights of the land by the lessee. They also agreed for the equal distribution of the produce of the land and for sharing the liability of expenses on the development and cultivation of land. The Horse Breeding Scheme was abandoned in the year 1940 and the lease holder under the said Scheme, were allowed to acquire the proprietary rights subject to the payment of certain amount and consequently, the above named two lessees acquired the proprietary rights of their respective leases. The land subject-matter of grant of Ghulam Muhammad, on acquisition of proprietary rights, was distributed amongst the parties to the agreement in terms thereof whereas the lease of two squares of land pertaining to the grant of Muhammad Zaman after his death was transferred in the name of his widow and on her death, according to the rule of primogeniture in the name of Muhammad Afzal grandson of Ahmed, real brother of Muhammad Zaman, (original lessee), who died issueless. The successor lessee obtained proprietary rights in 1946 in the Revenue Record but the land continued in the joint possession of respondents under the association deed in question and subsequently Muhammad Afzal sold it to the present appellants in 1967. The predecessor-in-interest of the respondents who were the paternal cousin of Ahmed Khan grandfather of Muhammad A fzal, filed a suit seeking declaration that land was their joint property which was not exclusively owned by Muhammad Afzal and the sale was ineffective to their rights. Muhammad Afzal (vendor) respondent No.10 in the present appeal and the appellants (vendees) filed a joint written statement, wherein they without denying the execution and correctness of association deed referred to above, denied the claim of the plaintiffs of joint ownership and pleaded that after the conferment of the proprietary rights, the association deed would no more be operative, therefore, the land was exclusive property of the vendor and the suit was barred by time. The learned trial Judge in the light of the pleadings of the parties and the evidence brought by them in support of their respective claim decreed the suit vide judgment dated 23-2-1981 with the conclusion that the suit was within time and the parties to the agreement in terms thereof would be deemed to be the joint owners of the land subject-matter of dispute. The decree was further maintained by a learned Additional District Judge in appeal and by the High Court in the civil revision filed by the appellants. Leave was granted in the present appeal, vide order dated 5-7-2001, to consider the following questions: (i) Whether in view of the order passed by the Collector, Shahpur, District Sargodha dated 29-5-1935 whereby Muhammad Afzal was held successor of the estate left by Muhammad Zaman, has the learned High Court not erred in ignoring the said order which had attained finality and held the field? (ii) Where the Courts below have not fallen into error by ignoring the agreement entered into by Allah Bakhsh and his three sons on 22-5-1891 which was acted upon in the life time of Allah A Bakhsh and his three sons and whether it was not binding on the successor in interest of Zaman, Ghulam Muhammad and Ahmad, son of Allah Bakhsh? (iii) Whether after the death of Allah Bakhsh his son Zaman died issueless while Ghulam Muhammad survived by his son Dost Muhammad and Ahmad survived by Sardara and after their death, the property would not devolve upon Muhammad Afzal under sections 20 to 23 of the Colonization of Government Lands (Punjab) Act, 1912 as held by the Collector in his order dated 29-5-1935."

3. The learned counsel for the appellants has contended that in the normal circumstances, the document having the status of an agreement, on the basis of which respondents claimed their ownership in the land may have legal force but in the present case, the lease of the land subject-matter of dispute, was given to Muhammad Zaman under Horse Breeding Scheme and as per terms of the Scheme, lease would be governed by the rule of primogeniture, therefore, notwithstanding the execution of the agreement in question by the predecessor-in-interest of the respondents, the last lessee having acquired the proprietary rights in his own right would not be bound by this agreement. to share the ownership in the land with respondents. The learned counsel argued that at the most, this agreement without conferring title would be operative to the extent of joint cultivation of the land, and equal share in its produce but it would have no legal recognition to be treated as a document of title or to create right of ownership under the law. The learned counsel in the alternate argued that the agreement having been not given effect within reasonable time, would be deemed to have lost its legal force and the respondents having waived their right under the agreement, were estopped by their conduct to subsequently file the suit for declaration and permanent injunction. The learned counsel next contended that agreement under discussion was declared void by the Collector through an order passed by him in 1935 in the ejectment proceedings initiated by Muhammad Zaman against Ahmed, .his real brother and grandfather of Muhammad Afzal, respondent herein (vendor) and this order of Collector having been not set aside by any higher forum, attained finality which would operate as res judicata to the suit. Lastly, learned counsel argued that in any case, the proprietary rights were acquired by Muhammad Afzal in the year 1948 whereas the suit was filed in 1968 which was hopelessly barred by time and while placing reliance on Muhammad Nawaz Khan v. Muhammad Khan and 2 others 2002 SCMR 2003 contended that the appellants being bona fide purchasers for value, woutd, be entitled to the protections of section 41 of the Transfer of Property Act, 1882.

4. Mr. Gulzarin Kiani, Advocate Supreme Court learned counsel for the respondents on the other hand argued that the predecessor-in -interest of the respondents, executed the agreement referred to above in the form of an association deed for joint cultivation of land and ultimate joint ownership on acquisition of its proprietary rights which was also acted upon in the spirit in which it was executed. The learned counsel argued that the predecessor-in-interest of the respondents (four brothers and their father) with a view to avail the benefit of Horse Breeding Scheme, jointly purchased two mares to obtain the lease of land but in view of the condition that lease could be given to an individual, they with mutual consent, nominated their two brothers namely, Muhammad Zaman and Ghulam Muhammad to obtain grants, with the understanding that the grant for all intents and purposes, including the ultimate ownership would be treated as joint property of all brothers and their father. In consequence to the above settlement, they jointly brought the land under cultivation by sharing the expenses on its management, development and cultivation and in pursuance thereof, also executed the agreement in question to avoid any subsequent dispute. The learned counsel contended that this registered deed pertaining to the two different grants of two squares of land each was given proper effect to the extent of grant of Ghulam Muhammad whereas the dispute was raised in respect of the two square of land of the grant of Muhammad Zaman and since the respondents were in possession of the land in terms of the agreement in question in their own right, therefore, notwithstanding the entries appearing in the column of ownership in the Revenue Record in the name of Muhammad Afzal, they would be deemed to be the joint owners of the land and cause of action for filing the suit would accrue to them on the sale of land in 1967 and not from the date of acquisition of proprietary rights. Learned counsel lastly argued that the appellants having the knowledge regarding the possession of respondents in 'their own right and vendor was not the sole owner, entered into the transaction of sale without taking due care of making an inquiry regarding the interest of respondents in the land, therefore, they were not bona fide purchasers to claim the benefit of section 41 of the Transfer of Property Act, 1882.

5. We have heard the learned counsel for the parties at length and perused .the record with their assistance. The execution and existence of registered association deed or the agreement as the case may be, with its contents in respect of the land subject-matter of grant was not disputed. The instrument provided in clear words that the parties would equally share the benefit of the grant and would be deemed to be the joint owners of land on the acquisition of its proprietary rights. The execution and existence of document being not disputed, the conclusion drawn by the Court of first instance and the Appellate Court with respect to the right of respondents was based on the consideration of its genuineness and the perusal of it would not suggest any ambiguity or suspicion in its contents. The document was executed jointly by the original lessees and their brothers and father by virtue of which they agreed for the joint cultivation of the land treating it as a joint property of the family with ultimate right of ownership, therefore, notwithstanding the grant of proprietary rights in the name of last lessee in the order of succession, the right of ownership of the respondents in the land created by virtue of the association deed, would not be extinguished. It is appropriate to, reproduce the contents of the document, hereunder to ascertain the intention of its executants and to understand the proposition in better manner:--

6. The association deed in plain words, reflects the character of an undertaking of joint interest in the land obtained on lease which was subsequently capable of conversion into absolute title. The deed of association having created a permanent and effective right of the partners vested in them the equitable interest in the land and this purported conveyance securing their interest in the land was not void. In the light C of principle of interpretation of document and the rule of construction, the stipulation in the conveyance deed in express words and the plain meaning would certainly suggest no other intention of the parties except to treat the land joint property of the family and Court must give the true meaning to the document as intended rather to the presumed meaning. The careful perusal of deed of association would show that in fact, it contained a declaration to the effect that lessee would hold the property on behalf of the parties to the deed and their successors and this device was adopted to overcome the problem regarding prohibition of grant of joint lease under the Scheme. It was clearly stated in the association deed that the parties to the deed acting on a joint Programme to obtain lease from the Government for common use, nominated two of their brothers to take initiative and obtain lease in their name with the understanding and undertaking of common beneficial interest of all with the equitable ownership of land. It may be seen that the association deed ensured beneficial interest of the lessee as well as co-partners and ultimately on acquisition of proprietary rights of the land, the lessee would be the legal owner and the respondents by virtue of association deed would have equitable title. The inclusion of any' beneficial entitlement in the deed, would be an effective declaration of equitable ownership which would conclude the question of title. The original lessee was an active party to the deed and the last lessee having obtained lease hold rights through him on the basis of rule of primogeniture, would be liable to discharge his obligation under the deed because of privity of contract on all the covenants in the deed and would not be allowed to disown the continuing liability on the excuse that he was holding lease hold rights in his own right. It may be seen that a person can establish a good possessionary title on the basis of a document before the commencement of action even though he may have no legal title on the crucial date. The respondents have proved their uninterrupted possessionary title of the land which was not even denied by Muhammad Afzal, vendor who was last lessee and thus it was established that land in dispute was in their continuous possession under the family settlement which was sufficient to establish equitable title and in consequence thereto, the right of ownership created under the association deed would not be extinguished by afflux of time.

7. The plain reading of the deed in question would clearly show that the original parties to it agreed for the joint management of the land and ownership on acquisition of proprietary rights. This registered deed was executed subsequent to the obtaining of grant and in the light of terms contained therein, we would be quite prepared to accept that the parties to it willingly for their common interest, agreed to share all expenses on the Horse Breeding as well as on the development and cultivation of land. The stipulation in the agreement regarding the joint ownership of land on acquisition of its proprietary rights, having created an inalienable right in favour of respondents in the property, would have the binding force in consequence thereto. the first question far consideration would he regarding the character of instrument and the nature of possession of respondents and also their legal status vis-a-vis the property. The second question requiring determination would be as to whether for not giving the formal effect to the document in the Revenue Record, its legal character would be changed and silence of the respondents for a .considerable period, would subsequently estopp them from claiming any right in the land by seeking a declaration of title through the remedy of civil suit.

8. This cannot be disputed that an agreement without giving effect may not ipso facto acquire the status of a document of title but in the present case, we find that the agreement in clear terms, created certain rights including the right of joint ownership in the land, therefore, notwithstanding the objection regarding the true character of the document it having been executed by the predecessor-in-interest of the respondents with mutual consent and understanding and also admitted by their successors in interest, would be binding on them and Muhammad Afzal, the last lessee, having obtained lease hold rights in the grant through Muhammad Zaman as his successor, who was party to the C agreement containing the family settlement in respect of the land, would be bound by it and had to fulfil his obligation in terms of the conditions contained therein. In view of the claim of the respondents that they were in uninterrupted continuous possession of land in their own right through the original lessee under the association deed and did not obtain possession from the last lessee/vendor, the legal position emerged would be that notwithstanding grant of proprietary rights, after death of original lessee, the land would be treated the joint property of the respondents on the basis of agreement/association deed and the status of respondents 1 to 9 would be that of owners in possession. The appellants without disputing the instrument and its contents in the written statement, while denying the claim of respondents in general terms, admitted the existence of family settlement amongst the predecessor-in-interest of the respondents in respect of the land and this admission being binding would be treated an acknowledgement of the claim of respondents. It would be seen that the document clearly and unambiguously conveyed the intention of the parties to it in respect of the ultimate ownership of the land on acquisition of proprietary rights from the Government, therefore, the contention of the learned counsel for the appellants that the agreement was void and would not create any right in favour of respondents, was without any substance.

9. The learned counsel for the appellants placing reliance on Hussain Bakhsh and others v. Muhammad Alam and 3 others PLD 1960 (W.P.) Lah. 869 argued that the instrument in question having been executed subsequent to the allotment of land under the Horse Breading Scheme and the condition contained therein, would be in conflict to the terms of the Government grant as it was an exclusive rights of the grantee or his successor as the case may be, to obtain the proprietary rights under the Scheme. We are afraid, the agreement related to an internal arrangement of the original grantee with his brothers and father in respect of the affairs of the land and being not in conflict to the condition of lease was not violative of either of the Scheme in question or law. In the light of foregoing discussion, we having no doubt in our mind regarding the status of respondents as joint owners of the property under the agreement in question; would not take any exception to the judgment of the High Court.

10. This is an admitted fact that the respondents continued in possession of the land under the association deed without any interruption and their status was not that of a tenant or licensee. There is nothing on record to suggest that in the intervening period, the vendor at any stage disturbed, the possession of respondents or denied their claim of ownership in the land rather he by accepting the existence and execution of the agreement in question recognized them as joint owners of the land and acknowledged their right, therefore, the mere fact that after acquisition of proprietary rights, the land was not distributed in terms of agreement or no step was taken by the respondents for giving effect to the association deed in Revenue Record, would not be sufficient to suggest that their right of ownership created under the agreement, would be extinguished.

11. The grants of the Government land in Punjab prior to the enforcement of Colonization of Government Lands (Punjab) Act, 1912, certainly would be governed by Government Lands Tenants (Punjab) Act, 1893 read with Crown Grants Act, 1895. In the present case, the parties without bringing on record the statement of condition of lease under any of the above Acts, admitted that tenancy descended to the last lessee, in the light of rule of primogeniture and in that the claim of respondents was not based on the rule of succession rather their case was that tenancy devolved on the last tenant on the basis of order of succession amongst the descendants of original tenant and the last lessee having not obtained lease in his own independent right, would be bound by the agreement entered into by the, original lessee. We without going into the question regarding the terms of tenancy contained in the statement, of condition, hold that agreement executed by the original grantee in respect of the land, subject-matter of grant, being not against the public policy or law was valid and would be binding on his successors.

12. The next question requiring determination would be whether the order passed by the Collector in 1935 in the ejectment proceedings would be res judicata to the civil suit or not. The Collector in the above order, observed that the document had no official recognition to create relationship of landlord and tenant inter se parties and except the lessee no other person could claim any right in the lease. It would be seen that there was no conflict in the terms and conditions of Government lease with the association deed executed by the predecessor-in-interest of the respondents for the purpose of management of land as family settlement and ultimate ownership on acquisition of proprietary right. However, the association deed would neither override the terms of lease and create any right of the respondents in the lease hold rights nor would be binding on the Government for the purpose of grant of the proprietary rights in favour of any other person except the lessee. Be that as it may, the order passed by the Revenue Authorities cannot operate as res judicata to the civil suit involving the dispute of title and Collector in his limited jurisdiction, could not decide the complicated question of fact in respect of the rights created by a registered instrument in the property or declare such a document void.

13. In the light of the above discussion and the conclusion, it is clear that the cause of action for filing suit, would accrue to the respondents on the date' of sale and not on the date of acquisition of proprietary rights. It may be seen that if there is subsisting right in the property, the right to bring the suit would be continuing so long the right subsist and the date of accruing the right to sue in a suit for declaration, would be H the date of denial of such right in the property. In the present case the overt act of the denial of right of respondents in the property would be the date of sale and not the date of acquisition of proprietary right, therefore, neither the suit would be barred by limitation nor it would be hit by the principle of estoppel by waiver and the High Court has rightly affirmed the concurrent findings of the two Courts on these questions.

14. We, having considered, the question regarding the claim of vendee of bona fide purchasers and their entitlement for the protection of section 41 of Transfer of Property Act, 1882, find that they without satisfying the requirement of law of taking due care to make necessary inquiry regarding the nature of possession, the interest of respondents in the land and the defect in the title of transfer if any entered into the transaction and claimed the benefit of section 41 of Transfer of Property Act. The appellants have not expressly pleaded about the lack of knowledge regarding the continuous and undisturbed possession of respondents or their claim of ownership in the land and even a casual inquiry would have put them on notice about the correct factual position. The law is that the transferee must make necessary inquiry about the clear title and the interest of third person who is in possession of property to show his bona fide and establish that transaction was in good faith. "The equitable doctrine envisaged under section 41 of the Transfer of. Property Act, 1882, would not be attracted unless the party claiming such benefit satisfied the requirement of law. In the present case, the appellants having conscious knowledge that respondents were in possession of land in their own right have not taken care to inquire from them about the nature of their interest in the property and having shut their eyes to such an inquiry, have not been able to prove their bona fide to claim the benefit of section 41 of Transfer of Property Act, 1882.

15. We, having examined the matter in detail with the help of learned counsel for the parties, have not been able to find out any substantial question of law or any defect or error in the concurrent findings of the three Courts of misreading or non-reading Of evidence or question of fact or a mixed question of law and facts for our interference.

16. In the light of the foregoing reasons, this appeal stands dismissed. There shall be no order as to costs. M.B.A./M-285/S Appeal dismissed.