P L D 1983 Supreme Court 212 (PLP)

ZAFFAR HUSSAIN MIRZA, J. This appeal by special leave is directed against the order dated 15th May, 1975, passed by a learned Single Judge of the Peshawar High Court, Peshawar, whereby the appellant's revision petition under section 115, of the Code of Civil Procedure was dismissed in limine. .

2. The material facts for the present purposes are that on 23-10-1967 appellant Haji Rustom Khan (since deceased and substituted by his legal heirs), the appellants herein, filed suit against Bahadur Khan and others the original owner of a plot of land measuring 21 kanals 2 marlas comprising Khasra No. 4481 in Mauza Suraitai Payan, Tehsil Peshawar, for declaration that he was the owner-in-possession of the suit land. A consent decree was passed in the suit in favour of Haji Rustom Khan on 25T10-1,967.

3. As a result of the above-said consent decree Khan Sher, Dilbar and Mir Zaman, sons of Ajab Khan, filed Suit No. 108/1 of 1968 for possession of the aforesaid land by pre-emption. Another Suit No. 29/1 of 1968 was filed by Dilbar son of Hamid also claiming right of pre-emption. Both these suits were consolidated and tried by the learned Civil Judge, Second Class, Peshawar. One of the issues that arose out of the pleadings of the parties and was tried as Issue No. 3 was as under: (3) Whether the Suit No. 165/ 1 was collusive and based on fraud? The learned Civil Judge gave a finding in the affirmative on this issue, holding that there was an embargo or the alienation of lands under the "Warsak Project Act", in order to defeat the provisions of which, there 'was a general, practice of obtaining collusive decree and that in absence of evidence that the transfer in this case was effected prior to the coming into force of the aforesaid Act, the inevitable conclusion was that the transaction culminating in the consent decree was collusive, and a fraud against the law. Nonetheless the learned Judge decreed both the suits granting decrees for pre-emption to the respective plaintiffs in equal shares, vide his judgment dated 15-12-1969. These decrees were upheld by the learned Additional District Judge, Peshawar, and the appeal filed by Rustom Khan was dismissed on 2-4-1974. Haji Rustom Khan then filed a revision application before the Peshawar High Court and contended that the alienation in his favour being in violation of the prohibitions contained in Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948, was invalid and hence did not furnish any basis for the right of pre-emption claimed by the plaintiffs in the two suits in which the impugned decrees were passed. The learned Single Judge of the Peshawar High Court repelled this contention on the following reasoning: , "It is well-settled that a pre-emptor stands substituted for the vendee if he proves transfer and if the title of the vendee is defective and the plaintiff-pre-emptor still wants to enforce his right it is his own outlook and he will take whatever title the defendant-vendee has acquired." Accordingly the learned Judge dismissed the revision petition filed by the appellant in limine as per the impugned order.

4. On a petition filed by Haji Rustom Khan leave to appeal was granted in this case in order to examine the contention that "the firs A appellate Court as well as the High Court has not appreciated the true aspect of the said finding of the trial Court on Issue No. 3." ,

5. In support of this appeal the learned Advocate appearing for the appellant has reiterated his contention that if the transaction under which the appellant was claiming, was void by virtue of the provisions of Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948, there did not arise any `sale' in favour of the appellant to form the basis of a decree for pre-emption under the North-West Frontier Province Pre-emption Act, 1950. Reliance was placed in support of this contention, on the case of Dit Ram v. Hans Raj A I R 1934 Lah. 101, and in particular on the following observation;-- "It is well-established that a right of pre-emption is merely one of substitution and not of re-purchase: see Gobind Dayal v, Inayat Ullah, and when the original transfer has been found to be fictitious and has been set aside, I fail to see how the title of the present pre-emptors can be sustained." Since strong reliance has been placed on this case, it becomes necessary to state the facts of the case in some detail. The proceedings before the High Court in second appeal arose out of Insolvency proceedings in which an order of adjudication was passed against the insolvent. During the pendency of the proceedings but before the order of adjudication was passed, the insolvent sold his property to another person. The official receiver made an application under section 53, Provincial Insolvency Act, for the sale to be set aside. While these proceedings were pending two relations of the insolvent brought a pre-emption suit with respect to the sale in favour of the first purchaser from the insolvent and obtained a decree. The preemptors were, thereupon, made parties to the proceedings under section 53, Provincial Insolvency Act, and eventually the sale was set aside both against the purchaser and the pre-emptors. It was in this factual background that the contention was advanced that since the right of pre-emption arises as soon as the sale is made, its subsequent avoidance at the instance of the receiver cannot affect the right of pre-emptors. This contention was rejected on the reasoning already reproduced above.

6. Before dealing with this case any further I might refer to some of the decisions of this Court which are pertinent to the question in issue. In Abdul Karim v. Fazal Muhammad Shah P L D 1967 S C 411, the question raised was whether a transaction of sale entered into in violation of section 54, Transfer of Property Act, 1882, was pre-emptible. It was held, in view of the definition of sale in the Punjab Pre-emption Act, 1913. which was much wider than the one under section 54 of the Transfer of Property Act, that for the purposes of pre-emption a sale will not be covered by the restrictions as to the mode of transfer contained in the latter section. The question must depend upon the intention of the parties as to the effect that was contemplated to be given to the transaction. It was finally- observed as follows: "If the transaction amounts to a sale in fact then notwithstanding that? 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 of the vendee. This perfection can be insisted upon, for, there is at any rate an enforcible contract of safe even under the Transfer of Property Act, and even such an imperfect transaction will give rise to equities in favour of the buyer. If he has paid the price he will have a charge on the property for the amount paid." In Nasim Khan v. Said Shah ?1968 S C M R 971, the following pertinent observation was made: "Nasim Khan as the pre-emptor could not challenge the validity of the transaction in dispute. The right of pre-emption, is a mere right of substitution for one of the parties to the transaction on the assumption that the transaction is a valid one. In such a case, there can be no question raised to the validity of. the transaction. The learned trial Judge, therefore, fell into error when he suo motu raised an issue about the validity of the exchange in question.". In Manghta Khan v. Mst. Hamida Begum PLD,1981 SC51, the argument advanced in support of the present appeal was directly raised with reference to the bar contained in para. 25 of the Martial Law Regulation No. 64 and in reply it was contended that this bar was not relevant for the purpose of deciding the right to pre-empt a sale. Muhammad Afzal Zullah, J. who wrote the judgment for the Court observed: "There is considerable force in this argument. The civil Court while deciding a pre-emption suit is not required to test the validity of the sale on the touchstone of para. 25 of M. L. R: 64 so long as it was not disputed that there was a `sale' which the plaintiffs sought to pre-empt." Finally in a recent pronouncement in the case of Sadla v. Khuda Bakhsh PLD1982SC53 , the view taken in Manghta Khan's case was reiterated and followed. The Court rejected the contention that the transaction in question being an invalid sale by virtue of the provisions of M. L. R. 64 a suit for pre-emption of such an "invalid sale" could not have been filed or decreed. This contention was repelled, as already stated, on the dictum laid down in the aforesaid earlier case.

7. The judgments of this Court referred to hereinabove and the rule laid down therein, sufficiently cover this case and dispose of the contention advanced in support of this appeal. The learned Single Judge was, accordingly not wrong in proceeding on the basis that the defects in the title of the vendee, if any, have no material bearing on the right of the pre-emptor in a suit for pre-emption and the Court will not in such a case be required to examine the legal validity of the transaction as a sale if the parties intended the transaction to operate as a sale.

8. Section 4 of the Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948, does not in any case place an absolute bat on the right of alienation . of a holder of any part of the project land. The bar being conditional inasmuch as the embargo was intended to operate for a period of IS years from the date of the commencement of the Act and further even during that period the Provincial Government could allow alienation of any such land in terms of the section. Therefore, the principle applied by this Court in the case of Abdul Karim v. Fazal Muhammad Shah would be fully applicable in the present case as well.

9. Reverting now to the case relied upon by the learned counsel for the appellant i. e. Dit Ram v. Hans Raj, there appears nothing in this case, inconsistent with the rule postulated in the aforementioned judgments of this Court. As already observed the defects in the title of the vendee will be transferred to the pre-emptor alongwith the subject of sale, the necessary consequence of which would be that the pre-emptor's right can be defeated in the same manner in which the vendee's right can be defeated by a person having locus standi to challenge the transaction. In the reported case the transfer in favour of the vendee was found to be fictitious and liable to be set aside under section 53, Provincial Insolvency Act, which liability could not be avoided merely because the sale was pre-empted. The receiver was, therefore, within his rights to challenge the rights acquired by the pre-emptors under such transaction in violation of section 53, Provincial Insolvency Act. It was not a , case in which section 53 was pleaded as a defence in a suit for pre-emption. The facts of the reported case are, therefore clearly distinguishable and the proposition of law relied upon is not applicable to the present case. There also perhaps the relevant authorities would be within their rights to challenge the transaction to be ineffective for the purpose of Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948. This, however, is not the controversy in the present proceedings.

10. No other-point was urged in support of this case. But before concluding this judgment it may be stated that in the plaint the plaintiffs had not taken up a plea that the alienation in favour of Haji Rustom Khan was void as being in violation of the provisions of Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948, but their plea was that he and his vendors had fraudulently and collusively effected the alienation through the means of collusive suit in which a consent decree was obtained. It was pleaded. that. in fact it was a transaction of sale under the cover of judicial proceedings on the basis of which mutation was effected. In rebuttal the plea of the appellant was that this transaction was no doubt a transaction of sale but it had taken place long time before the filing of the suit, which was filed since vendors of Haji Rustom Khan were avoiding to have the mutation effected in the Revenue Record. It was on these pleadings that Issue No. 3 mentioned above was framed by the trial Court. The question of the legal bar contained in the Kabul River Project (Control and Prevention of Speculation in Land) Act, 1948, seems to have been raised either in the evidence or at the argument stage in the trial Court. But in any case these questions were raised in order to determine whether there was in reality any sale transaction on which the preemption claimed by the .respondents could be decreed. In these circumstances, no specific plea was taken by Haji Rustom Khan in the trial Court that the suit for pre-emption was not maintainable as there was no valid sale effected in his favour. He is, therefore, clearly raising a new case outside his pleadings. This is an additional ground to be taken into consideration in this case to repell his contention.

11. For all the aforesaid reasons, this appeal fails and is accordingly dismissed. S. Q.??????????????????????????????????????????? Appeal dismissed.