P L D 1954 Lahore 471 (PLP)

KAIKAUS, J.‑This is a defendants' appeal against a decree of the learned Senior Civil Judge, Rawalpindi, dismissing an appeal against a decree in the plaintiff's favour in a pre‑emption suit The sole point involved is the amount on payment of which the pre‑emptor is to exercise his right of pre‑emption. Both, Courts have found that the ostensible sale price of Rs. 4,000 mentioned in the sale‑deed and alleged to have been paid before the Sub‑Registrar was fictitious and was not in fact paid and they have decreed the suit on payment of Rs. 1,425, the market value. The defendants claim in this appeal that they are entitled to receive a sum of Rs. 4,

000. The property sold is 9 kanals 10 marlas of land in village Bhangali Khinger, Tahsil, Gujar Khan. The sale took place by a registered deed and the whole of the ostensible price of Rs. 4,000 was paid before the Sub‑Registrar. The plain tiff alleged in the plaint that the sale took place in fact for a sum of Rs. 900 only and that the remaining consideration was fictitious. He produced two witnesses who stated that the sum of Rs. 3,050 had been returned by the vendor to the vendees after the sale in their favour. The learned Senior Civil Judge did not regard this evidence as reliable. He went on to say, however, that the mere fact that the money changed hands before the Sub‑Registrar did not debar him from considering whether there was genuine payment or whether it was only a fraud practised on the prospective pre‑emptor. He came to the conclusion after considering all the circumstances of the case that the payment before the Sub‑Registrar could not have been a genuine payment and must have been the result of some arrangement between the vendor and the vendees for a show of payment. He found that the market value of the land was in the neighbourhood of one thousand or twelve hundred rupees, even according to a witness for the defendant‑vendees. The Commissioner who had been appointed to determine the market price reported that it could not exceed Rs. 1,

425. To this report the defendant‑vendees had taken no objection. The father of the vendees (who are minors) had twice before attempted to purchase land in this village but the sales had been successfully pre‑empted. No explanation had been given by the father of the vendees as to why he had paid Rs. 3,000 more to the vendor than the true price of the land. The father of the vendees did not appear to be so rich as to waste money right and left. The vendor was a sonless proprietor and there would be no difficulty in obtaining his consent to any fraudulent arrangement. These are the facts on which he based his conclusion. Learned counsel for the vendees argues that on the finding of the learned Senior Civil Judge he is entitled to succeed. He says that payment before the Sub‑Registrar had been found to be proved and the story of return of the money had been disbelieved. On these circumstances it ought to be held that the price mentioned in the sale‑deed had been paid. Learned counsel draws my attention to section 25 of the Punjab Pre‑emption Act and lays great stress on, the absence of qualification of good faith with respect to payment. Section 25 runs :‑ "(1) If in the case of a sale the parties are not agreed as to the price at which the pre‑emptor shall exercise his right of pre‑emption, the Court shall determine whether the price at which the sale purports to have taken place has been fixed in good faith or paid, and if it finds that the price was not so fixed or paid, it shall fix as the‑ price for the purposes of the suit the market value of the land or property. (2) If the Court finds that the price was fixed in good faith or paid, it shall fix such price as the price for the purposes of the suit: Provided that when the price at which the sale purports to have taken place represents entirely or mainly a debt greatly exceeding in amount the market value of the pro perty, the Court shall fix the market value as the price of the land or property for the purposes of the suit, and may put the vendee to his option either to accept such value as the full equivalent to the consideration for the original sale or to have the said sale cancelled, and the vendor and vendee restored to their original position." Learned counsel contends that as the words 'in good faith' qualify only to fixing of price and not payment, the mere proof of payment before the Sub‑Registrar was quite sufficient to entitle the vendees to the whole sum so paid. It is not possible for me to appreciate the effect of the absence of the phrase 'in good faith' on the present case. It can hardly be argued that on account of the absence of these words, a fraudulent show of payment before the Sub‑Registrar is sufficient to constitute payment of price for the purpose of the Pre‑emption Act. Payment, even without the qualification of good faith, means a genuine and not a factitious payment. It means a real transfer of money where the parties intend that permanent interest in the money should pass from one party to the other. The learned Senior Civil Judge has found in this case that the sale price has not been paid, there being only a fraudulent show of payment in pursuance of some arrangement between the vendor and the vendees. He has made it clear that had he found payment of the sale price proved, he would have accepted the contention of the vendees. On his finding, there can be no doubt that the decision of the case is correct. It may be open to the learned counsel 'for the vendees to contend that the evidence on record cannot in law support a finding that the payment before the Sub-Registrar was fictitious; but that is a matter relating to proof and is not at all affected by the interpretation of section

25. I do not see any point in ‑the stress on the language of section

25. Learned counsel for the vendees relies in this connection on 2 P R 1918 wherein it was pointed out that as the words ' in good faith ' do not cover payment, it is not essential for the vendee to prove that money was paid in good faith if the money had been paid and that it is only in a case where, accord ing to the vendee, the price has not been paid but has only been fixed, that he is called to prove the bona fide nature of the fixing of price. In that case the lower appellate Court had rejected the vendee's claim as to price on the ground that the money had not been paid in 'good faith'. The learned Judge pointed out that there was no necessity for proof of good faith in connection with the payment. But the learned judge held at the same time that 'payment must be a real payment'. When the learned judge said that good faith was immaterial in cases of payment what he meant to say was that if a pre‑emptor deliberately and really paid a higher price so as to injure the pre‑emptor and claim a higher price for him, the vendor would still be entitled to the whole of the money paid. It should be clear that' there are two questions to be decided in the present appeal. The first is : on the findings of fact, arrived at by the learned Senior Civil judge is the decision correct ? The second is : are the findings based on evidence legally sufficient to support them ? There can be no doubt that the first question must be answered in the affirma tive. The second question I proceed to consider. The circumstances on which the learned judge has relied for an inference as to payment not being genuine are the following :‑

1. The pre‑emptors have a general tendency to resort to contrivances for defeating the pre‑emptors.

2. The father of the minor vendees purchased land twice in this village before the present purchase but had been defeated by the pre‑emptors.

3. The market price is in the neighbourhood of Rs. 1,000 or 1,200 and in no case more than Rs. 1,425. .

4. The land has no subjective or special value for‑the vendees.

5. No explanation has been given by the vendees for payment of such a high price.

6. The vendor was a sonless proprietor whose consent could be easily obtained to a fraudulent arrangement.

7. There is no difficulty in purchasing land in the market on the market rate. Can it be said that an inference of fictitious payment is not possible on this material ? I am of opinion that it is possible; Apart from the other circumstances relied upon, I will consider whether the main fact in this case, i.e., the great disparity between the ostensible price and the market price, can itself, when considered along with the absence of any explanation by the vendees, be sufficient to justify the inference that the sale price was fictitious. There is ample authority for such a proposition but quite apart from authority the conclusion can be reached by two following simple step reasoning :‑

1. The vendees would not pay Rs. 3,000 more than the' market price unless there be reason for so doing.

2. The father of the minor‑veradees (who is in fact the vendee) does not explain as to why he paid a higher price and the inference is that no reason for paying ‑ a higher price existed. No objection can be taken as to the correctness of either of these propositions and if they are accepted the result that the price was fictitious automatically follows. The first proposition just reflects the common course of human events. The second represents a reasonable inference from the facts why a person paid about four times the true price is within his special knowledge and if he does not disclose that reason when questioned before the Court it is quite legitimate to infer that the reason does not exist. As I have said there is ample authority for the proposition that inference as to fictitious nature of price can be based on great disparity between the market price and the price alleged to have been paid, when considered along with the absence of explanation by the vendee. The precise question before us, i.e., whether a disparity in price is legally sufficient evidence of the fictitious nature of price mentioned in the sale deed, arose directly in Sheopargash Dube v. Dhanraj Dube (I L R 9 All. 223.) Sir John Edge with whom Brodhurst J. concurred said: "In my opinion, looking to the fact that the defendant gave no explanation at all of the circumstances under which he was willing to give five times its market‑value for the property, there was sufficient evidence before the Judges of Gorakhpur upon which to find that the alleged contract price was a fictitious and not a genuine price." Earlier in ‑the judgment the learned Judge had said while referring to the effect of evidence of market value in such cases :‑ "In this particular case, assuming that the, judge of Gorakhpur was right in finding that the market‑price was Rs. 250, we find that the contract price was very nearly five times that amount; in other words, that instead of this property being sold at about sixteen years' purchases, it, was alleged to have been sold at something like eighty ears' purchases, I think these circumstances would naturally lead the Judge to infer that the defendant‑purchaser should be called upon to give some reason why he was willing and prepared to sacrifice his money in order to buy this property at a price apparently so extravagant." In Gulab and others v. Ram Singh (102 P R 1890,) Plowden, J. had to consider the question of onus and the kind of proof which a pre‑emptor can adduce in order to show that the price mentioned in the sale‑deed is fictitious. He said :‑ 'The most that he (pre‑emptor) can be justly called upon to do is to rebut prima facie proof of payment, when given by the vendee, and this he can generally speaking only do indirectly by evidence that the land sold is not worth the price said to have been given. He has in his favour the fact that when a person not entitled to do so, buys land, which in subject to a right of pre‑emption, he as under a strong temptation to enter an exaggerated price in the sale‑deed, in order to deter the pre‑emptor from suing and to recoup himself if he be compelled to give up his bargain, and it is a matter of common experience that this is done." Gobind Ram v. Hakim and others (A I R 1914 Lah, 404,) is very similar to the present case. There too the question for consideration was whether, the payment of money before the Sub‑Registrar having been proved and the witnesses deposing to return having been found to be unreliable the vendee was entitled to the whole of the money. Though the price alleged to have been paid was about double the market price, the learned judge said:‑ "The next point to be decided is what price plaintiff should pay for the bargain. The defendant vendee urges that Rs. 500 were paid in full before the Sub‑Registrar. Plaintiff on the other hand asserts that Rs. 400 of this were taken back and that the real price, and also the real market value, was Rs.

100. The local Commissioner values C. D. E. at Rs.

210. No doubt it is difficult to believe the witness who says that he saw Rs. 400 refunded, but at the same time I think the Court is justified 'in rejecting the vendee's assertion that Rs. 500 was fixed in good faith. It is apparently a ridi culously high price for the premises C. D. E., and it must have been well known to the vendor and vendee that the sale would be contested. It follows almost as a matter of certainty that the price has been inflated, and in these circum stances the Court was justified in looking at the market value. " The present case is stronger for here the price alleged to have been paid is four times the market value. The same, question came up for consideration before a Division Bench of the Allahabad High Court consisting of Sir Henry Richards, Chief Justice, and Mr. Justice Tudball, in a 'case reported as Ram Sarup Sahu v. Karam‑Ullah Khan and another (I L R 36 All. 464,) Rs. 399 had in that case been actually paid before the Sub‑Registrar, but the market value had been found to be Rs. 200 and the suit: had been decreed on the basis of the market value. No evidence had been led that any part of Rs. 300 was‑ returned. It was argued before the learned Judges that in these circum stances the price paid before the Sub‑Registrar should be allowed. The learned judges said: "It is argued, however, on behalf of the appellant that as Rs. 399 was actually paid before the Sub‑Registrar, and inasmuch as there was no evidence that any of this sum was given back, the Court was bound to hold that that was the true consideration. Reliance is placed upon the case of O'Conor v. Ghulam Haider. This ruling is in our opinion contrary to a series of rulings of this High Court, arid was expressly dissented from in the case of Abdul Majid v. Amolak and Ranji Lal. In our opinion when it is alleged that the sale price is fictitious and put into the deed for the purpose of defeating pre‑emption, it is open to the pre‑emptor to give evidence to show that the market price is far below that stated in the sale‑deed. If he gives such evidence to the satisfaction of the Court, the latter is quite justified in arriving at its own conclusion as to what is the real consideration, and this notwithstanding that it is proved that the amount stated in the deed was paid before the Sub‑Registrar. It is of course open to the vendee to show that there were special circumstances why he was ready to give and did give the actual price mentioned in the deed." In Sheikh Zahur Ahmad v. Sheikh Moharram Ali (54 I C 34.) on a similar question arising in a pre‑emption suit it was held that :‑ " In the absence of any special reason for paying a fancy price for property, the fact that such a fancy price has been entered in the sale‑deed, is in itself evidence of the price being fictitious." Similarly in Narain Prasad v. Durga Singh (54 I C 95.) the learned judicial Commissioners said: "In a suit for pre‑emption in order to determine whe ther the price entered in the sale‑deed has been fixed in good faith, the Court is entitled to examine whether there is any very great difference between the price and the market value of the property. If the price entered in the sale‑deed `greatly exceeds the market value, that fact would be relevant to the issue of good faith but it would be' open to the vendee to show special circumstances which induced him to pay the fancy price for the property." It is needless to multiply authorities but I may just refer to what is stated on this point in the well‑known commentary on the Law of Pre‑emption in the Punjab by T. P. Ellis, Sixth Edition, page 3`95, as under: "The test of the market value of the land is always important to determine whether the price has or has not been paid or the price fixed has been fixed in good faith, and the determination of the market value is therefore relevant to the question whether the price has been fixed in good faith or paid. Where, for example, a very high price is paid or fixed, the Court should enquire what is the market vale. If it be found that the price alleged to be paid or fixed is greatly in excess of the market value, there is at once a presumption that the price alleged to have been paid has not been fixed in good faith or paid, and the vendee must be expected to give some reasonable explanation as to why he agreed to pay so high a sum." Learned counsel for the appellants relies in this connec tion on Rati Ram v: Har Kishan Mitru and others (A I R 1927 Lah. 878.) wherein there is an observation that the fact that the price paid differed very substantially from the market value would not lead to the conclusion that it was not paid. That judg ment cannot be interpreted as laying down a general rule that the disparity between the market value and the price mentioned in the sale‑deed cannot be evidence 'of the fictitious nature of the price so entered or that the fact of the price being fictitious cannot be proved by circum stantial evidence. Of course the weight of disparity as evidence would differ with the extent of the disparity and this fact has to be considered along with the absence of an explanation by the vendee. There is an observation in the judgment which is liable to misinterpretation. It runs: "The only question arising in the first instance is: Was the price paid ? It has been held on good evidence that it was paid and there was no proof of return. In these circumstances under section 25 the price had to be taken and no question of market value arose." These observations should be regarded' as confined to the facts of .the case before the learned Judges. I do not regard it is a matter for any real argument that a proof of return is not essential in every case where a payment is shown to have taken place before the Sub‑Registrar. Suppose land worth Rs. 100 is shown to be sold for Rs. 1,00,

000. The sale is' between son and father. There is no explanation as to why a sum of Rs. 1,00,000 was paid. The pre‑emptor E is unable to produce any direct evidence as to return. Could" it be said that the pre‑emptor must pay the whole sum of Rs. 1,00,000 ? That a proof of return is not necessary would be even clear from the fact that part of the money which is paid before the Sub‑Registrar may have actually been procured by the vendor. Direct evidence of the payment before the Registrar being a mere show would be available F in rare cases and generally as Plowden J. observed in 102 P. R. 1890 pre‑emptor could only rely on circumstantial evidence. I would therefore hold that there is sufficient legal evidence on the record for the inference that the learned Civil Judge has raised. No fault can be found with this finding of fact. I would dismiss this appeal with costs. AKHLAQUE HUSAIN, J.‑I agree and would, respectfully, add that in my opinion the sole question for decision in this appeal is one of pure fact and that the finding thereon of the lower appellate Court is binding on us in second appeal. That the learned lower appellate Court has not misunderstood the law applicable to this case .is clear from the following sentence in its judgment :‑ "The only question for determination is whether this sum was actually paid and no part thereof refunded .". The whole argument of the appellant before us was based upon just one sentence in the judgment, under, appeal concerning D. W. 2, which runs thus: "I however do not find anything against him and would accept his statement that so far as his knowledge went, no portion of the sale price was refunded." Learned Counsel for the appellant vehemently contended that once the Court had accepted the statement of D. W. 2 actual payment of the consideration money it was not, in law, open to it to refuse to grant a decree for the same merely on the basis of probabilities arising from the circumstances of the case. But for one misap prehension underlying it he argument might have been unassailable. The learned' judge has nowhere held, and I have very carefully read his judgment to assure myself that he slid not mean or intend to hold, that the D. W. 2 hack satisfactorily proved that the entire' consideration money had in fact actually and genuinely been paid. He only accepted the witness's statement "that so far as his knowledge went no portion of the sale price was refunded." In fact the lower appellate Court found the oral evidence of genuine payment to be unsatisfactory and, therefore, it was perfectly justified in deciding the question on the proved circumstances of the case. It is possible that the learned Counsel may have been labouring under another misapprehension viz. that proof of mere mechanical, payment is sufficient. As has been pointed out by my learned brother, only a genuine payment will satisfy the law. Genuineness of a transaction can be satisfactorily determined only by taking all the relevant circumstances into consideration. K. M. A. Appeal dismissed. .