2026 PLP 54 (SCMR)

SHAHID WAHEED, J.

These cases involve matters of pre-emption governed by the Khyber-Pakhtunkhwa Pre-emption Act of 1987 (referred to as "the Act"), and originate from a pre-emption suit. The first petition, that is, C.P.L.A. No. 4649 of 2022, has been filed by the pre-emptor, who will be referred to as the plaintiff for the sake of clarity. In contrast, the second petition, C.P.L.A. No. 561 of 2023, is brought forth by the opposing party, known here as the defendant. Both parties express dissatisfaction with the decrees drawn by the courts below, leading them to seek leave to appeal against the judgment issued on 16th of November, 2022, by the High Court in its revisional jurisdiction.

2. The dispute in these cases relates to a parcel of land measuring 24 kanals and 3 marlas, located in Khata No. 531, Khasra No. 1490, at Moza Hassam in Tehsil and District Dera Ismail Khan. This land was originally owned by Muhammad Tariq, hereinafter referred to as the owner. On 5th of November, 2008, a revenue officer sanctioned mutation No. 3437 (Ex.PW2/6) that facilitated an exchange of land between the owner and the defendant. The purpose of this exchange, as stated, was for better management of their respective properties. However, the plaintiff sought to pre-empt this transaction, asserting his superior right of pre-emption. He contended that despite the defendant presenting the mutation as an exchange, it was, in essence, a sale for all practical purposes. In response, the defendant denied the allegations made in the plaint, maintaining that the transaction was indeed an exchange of land with the owner. The trial court, considering the complexities of the case, framed a total of eight issues based on the pleadings submitted by both parties. Notably, one of these issues was whether a sale had actually occurred, or if the transaction was genuinely an exchange intended for better management this was designated as issue No.

4. It is important to highlight that this particular issue is pressed before us for resolving the two petitions under consideration. Therefore, we will focus on this matter without delving into the other issues framed by the trial court.

3. In addressing issue No. 4, the trial court, after reviewing the evidence presented during the proceedings, concluded that the transaction recorded in the mutation was out-and-out a sale. Furthermore, the trial court held that since both the plaintiff and the defendant were co-owners within the same Khata, they were entitled to equal rights to pre-emption concerning the disputed piece of land. As a result, the trial court determined that the land in question would be divided equally between the two parties. A decree was accordingly issued.

4. Both the plaintiff and the defendant were aggrieved by the Trial Court s decree, feeling that it did not adequately address the complexities of their case or reflect their perspective. Consequently, they each filed separate appeals before the Additional District Judge. Upon re-examining the evidence, the Additional District Judge upheld the trial Court's findings, determining they were free from any errors or infirmities. As a result, the appeals were dismissed by a judgment and decree dated 17th of April, 2017. Both parties then turned their attention to the High Court, where they sought a revision of the concurrent findings returned by the two lower courts. However, their efforts were in vain, as the High Court dismissed their revision application in a judgment rendered on 16th of November, 2022. Now, both parties have filed these petitions, seeking leave to appeal against the judgment of the High Court.

5. The crux of the matter that demands our careful consideration is whether the transaction recorded in Mutation No. 3437, dated 5th of November, 2008 (Ex.P.W.2/6), should be classified as an exchange or as a sale. This determination is pivotal, as the outcome of these petitions hinges on the answer to this question. According to section 5 of the Act, a right of pre-emption arises in the case of a sale, which, as defined in section 2(d) of the Act, refers to a permanent transfer of ownership of immovable property in exchange for valuable consideration. However, this definition explicitly excludes situations where agricultural lands are exchanged for purposes of better management. A nuanced aspect of this case revolved around the notion that an exchange could, in reality, constitute a sale masquerading as an exchange in order to circumvent the right of pre-emption. This was fundamentally a mixed question of fact and law, forming the basis of the plaintiff's claim; thus, it required the material facts relevant to it to be included in the plaint. As a result, at the outset of our proceedings, we asked the learned counsel representing the plaintiff to take us through the plaint, as grasping the plaintiff's assertions was vital for our deliberations. The counsel accordingly drew our attention to specific paragraphs within the plaint, particularly emphasising paragraph

1. A meticulous examination revealed that the plaintiff asserted that, despite the defendant characterising the transaction as an exchange, it effectively functioned as a sale in every practical context. However, the plaintiff did not contradict the defendant s claim that the exchange was indeed aimed at better management. This suggests that the plaintiff s assertion was limited in scope, contending solely that the transaction recorded in the mutation, which appeared to be an exchange, was fundamentally a sale. It is crucial to acknowledge that while the law of pre-emption can be evaded through lawful means, there is nothing inherently illegal about executing an exchange when a vendee or buyer fears that a straightforward sale in his favour might be pre-empted. Given this legal framework, it is indeed challenging for anyone contesting a transaction to prove that it deviates from its stated form, especially since the parties involved often take precautions to conceal their true intentions. Nonetheless, despite these challenges, the plaintiff had the burden of presenting evidence that reasonably supported his claim regarding the nature of the transaction. On the contrary, a thorough analysis of the records indicates that the trial Court, instead of evaluating the evidence presented by the plaintiff, disproportionately focused on the evidence put forth by the defendant. This led the trial court to conclude that the transaction in question was, in fact, a sale. Such a methodology, however, was flawed. We believe that the courts below misdirected themselves in their analysis, resulting in an erroneous decree that favoured the plaintiff. They incorrectly surmised that the defendant failed to provide sufficient proof that the transaction was an exchange. The onus of proof primarily lay with the plaintiff, who asserted that the recorded mutation represented a sale rather than an exchange. The mere failure of the defendant to establish the transaction as a legitimate and bona fide exchange did not automatically validate the conclusion that it was a sale. This perspective is supported by precedents established in the case of Elahi Bakhsh through Legal Heirs and others v. Muhammad Iqbal and another1, which seems to have been overlooked by the courts below. Despite this oversight, we prompted the plaintiff's counsel to cite any evidence supporting his claim that the transaction was a sale rather than an exchange. The counsel led us to the testimony of Fazal Karim, the Patwari (PW-2). Upon scrutiny of this witness's statement, it became apparent that during his examination-in-chief, he unequivocally confirmed that Mutation No.3437 (Ex.PW2/6) documented the transaction as an exchange. This testimony bolstered the defendant s argument that the transaction was indeed an exchange. We again called on the plaintiff s counsel to identify any further evidence that might establish the transaction as a sale; however, he indicated his inability to furnish such evidence. The absence of any credible proof indicating payment of price or a promise thereof leads us to conclude that the transaction documented in the mutation was an exchange rather than the sale claimed by the plaintiff.

6. It is now well recognised that the right of pre-emption serves as a significant constraint on an owner's ability to transfer his property to whomever he likes. This right acts as a clog on the owner s freedom to alienate his property; it has therefore to be strictly construed. In a pre-emption suit, the plaintiff must not only establish that he has a preferential or superior right over the buyer (vendee) involved in the transaction, but he also bears the burden of proof to demonstrate clearly and convincingly that the transaction he seeks to pre-empt is indeed a sale, and that he has made the necessary demands for pre-emption according to law. If there exists any ambiguity surrounding the nature of the transaction in question casting doubt on whether it constitutes a sale, the plaintiff must fail. In the same vein, if the circumstances lend themselves to multiple interpretations, the courts should be disinclined to favour a reading that does not classify the transaction as a sale.

7. Upon thorough examination of the case record, we hold the view that the courts below significantly misinterpreted the evidence presented. They also misapplied the relevant legal principles. According to Section 5 of the Act, the right of pre-emption is contingent upon the occurrence of a sale; this right does not extend to transactions such as gifts or exchanges. In this case, the plaintiff failed to demonstrate that the transaction documented in mutation No.3437, dated 5th of November, 2008 (Ex.PW2/6), constituted a sale. Consequently, the plaintiff was not entitled to the decree he sought.

8. In light of these findings, we conclude that the judgments and decrees issued by the courts below are legally untenable. Therefore, we hereby convert these petitions into appeals and set aside those judgments and decrees. As a result, C.P.L.A. No. 4649 of 2022 is dismissed, while C.P.L.A. No. 561 of 2023, leading to the dismissal of the plaintiff's suit is allowed. There shall be no order as to costs. UN/M-95/SC Appeals allowed. 1 2014 SCMR 1217.