P L D 1971 Supreme Court 162 (PLP)

"The civil law leans always in favour of freedom of contract, and security of title. The statutory law of pre-emption consti tuted a draw-back on both these principles, and its provisions must, therefore, be construed and applied strictly against the claims of pre-emptors. The discretionary power given to the trial Court by section 149, Civil Procedure Code, as it fell to be exercised in the circumstances of the present case was in effect a power to extend limitation. It must be held that, specially where the suit is one for pre-emption, the discretion conferred by section 149, Civil Procedure Code, needs to be exercised with the greatest care, where extension of limitation is also involved." In the case of Shah Muhammad and others v. Hayat and others, the High Court upheld the order of the trial Court in refusing to allow an amendment of the plaint. In that connection it was observed as under:- "It has been said by some eminent Judges that pre emption being but a predatory right, Courts should grant but little concession to a plaintiff in such a suit, and as I am in respectful agreement with that view, I see no ground for holding that by refusing to allow amendment of the plaint the learned trial Judge exercised his discretion capriciously." In the case of Abduct Wahid v. Mst. Zamrut at page 159, it was observed as under :- "Pre-emption has been described in authoritative judgments for a great many years as a predatory right, and while it must be allowed, where the necessary conditions are satisfied, the Courts hive frequently given their approval to certain modes by which rifle can be acquired, which place diffi culties in the way of pre-emptors." The learned counsel has further relied on the case of Shah Wali v. Ghulam Din alias Gaman and another (P L D 1966 S C 983). It was held in that case as under ;- "That for the respondent's default in making payment of the correct amount within the time frame by the appellate decree his suit stood dismissed and there was no question of extension of the time involved, either by the original Court or by the appellate Court thereafter, the appeal or revision from the appellate decree having already been dismissed." On the basis of these decisions the learned counsel for the appellants contended that the Courts below were not justified in allowing the adjustment of paisas 34 from the costs awarded to the respondents. The point under consideration was considered by a Division Bench of the Allahabad High Court in the case of Ishri v. Gopal Saran and another ((1884) 6 All. 351), and it was held that the pre-emptor is entitled to adjust the purchase-price towards the costs of the suit awarded to him. In this connection Mahmood, J., who was a distinguished Judge of this sub-continent, observed at p. 355, as under :- "Is there, then, anything in the Code, or any equitable consideration which would prohibit a pre-emptor-decree-holder from availing - himself of the doctrine of set-off by deducting the costs allowed to him from the purchase-money" which he has to deposit under the very decree which awards him costs ? The Civil Procedure Code, as we have pointed out, falls short of providing any specific rule to meet exactly the case before us. The doctrine of set-off, which owes its original to Roman jurisprudence, was well known to the civil law under the more comprehensive title of compensation, which, in the words of Story, J., maybe defined to be the reciprocal acquittal of debts between two persons who are indebted, the one to the other; or, as it is perhaps better stated by Pothier, compensation is the extinction of debts, of which two persons are reciprocally debtors to one another, by the credits of which they are reciprocally creditors to one another. The civil law itself expressed it in a still more concise form-compensatio est debiti et crediti inter se contributio. The civil law treated compensation as founded upon a natural equity, and upon the mutual interest of each party to have the benefit of the set-off, rather that to pay what he owed, and then to have an action for what was due to himself-(Story's Eq. Juris, ss. 1438-39). The doctrine of compensation in the civil law, of course, has never been fully adopted either in England or in this country, probably for reasons 'based upon the inconvenience and delay which would arise in the trial of suits. But in the case before us there can be no such inconvenience or delay, the decree which declares the plaintiff=pre-emptor entitled to obtain possession of the property in suit on payment of the purchase-money declares him, in the same breath, entitled to recover costs from those against whom the decree has to be enforced." He also repelled the contention that a preemptor-decree holder cannot deduct the costs from the purchase price awarded to him. In this connection he observed as under:- "But it is contended by the learned pleader for the respondents; in support of the lower appellate Court's judgment, that the pre-emptor-decree-holder-appellant's right to execute his pre-emption decree was contingent upon his depositing the full purchase-money within time, and that till such deposit was actually made he could not be held to be entitled to any costs whatsoever, and could not therefore deduct them from the purchase-money in making the deposit required by the decree. The argument, though plausible, has no force. It seems to aim at giving to mere formality the significance of a substantive effect. For it seems to us to involve a very untenable proposition, that for a pre emptor-decree-holder the only way to enforce his decree is to come into Court with the full purchase-money in the one hand, offering it to the judgment-debtors, and to stretch out the other hand asking them to give him the costs which the very decree, under which he is depositing the purchase money, awards him. The argument also involves the con tingency that a pre-emptor should pay up the purchase-money to the judgment-debtors in ready cash, and may have to wait possibly for years before recovering from them the costs awarded to him by the Court, and it is conceivable that he may never be able to recover them at all. We cannot regard such results as consonant with the principles of justice, equity and good conscience, which we are bound to administer in such cases; and holding these views, we cannot adopt the reasoning upon which the judgment of the lower appellate Court proceeds, nor the argument urged before us in support of that judgment by the learned Pleader for the respondents. The effect of our views is to apply, by analogy of sections 221 and 247, the doctrine of set-off to the case before us-a course which is consonant in principle with that followed by Jackson, J., in the case of Jugo Mohun Bukhee v. Soorendra Nath Roy Choudhry 13 W R 106, long before the Legislature formulated the rules contained in the two sections just referred to." This view was taken in 1884 and has since been followed in this sub-continent without any dissent. It was followed in the cases of Bechai Singh v. Shami Nath Tewari and others (10 1 C 454), Bahadar and another v. Mal and others (1888 P R 70), Ram Lagan Pande and another v. Mohamed Ishaq Khan and another (A I R 1919 All. 45), Imam Din v. Jalal and another (A I R 1922 Lah. 42), Bhagwatl Devi v. Chandrika Prasad (A I R 1919 All. 45), Chandrika Prasad v. Mst. Bhagwati Devi (A I R 1939 All. 228) and Alam Din v. Muhammad Nawaz and others (P L D 1970 Azad J & K 54). Thus there is unanimous view that where a pre-emptor is directed to pay into Court a e specific sum of money and is awarded costs he is entitled to deduct the amount so awarded from the sum he is directed to pay in Court. The contention of the learned counsel for the appellants that as pre-emption is a predatory right and, therefore, equitable principles do not apply to such cases has not impressed me. The well-established rule of law that the Courts in this country are bound to administer justice in consonance with the principles of equity, justice and good conscience is fully applicable to such cases. The principle that a pre-emptor can deduct any amount due to him from the decretal amount has been recognised even by this Court in the case of Shah Wali v. Ghulam Din anti another. This is apparent from the follow ing narration of facts by Rehman, J. :- " The plaintiff-respondent held a mortgage over the suit land to the extent of Rs. 800 which he was entitled to deduct out of the money to be deposited by him but taking that fact into account the deposit is still fell short of the pre-emption money as fixed by the appellate Court by Rs. 123.75." This fact was also noticed by Hamoodur Rahman, J., as he then was, as is apparent from the following:- "In the meantime the pre-emptor had, on the 18th April 1962, made a further deposit of Rs. 4,076.25 in the hope that this sum would be suffcient to cover the enhanced amount which he was required to deposit by the appellate Court, after deducting certain sums due to hire on account of a mortgage over the suit lands. This calculation, however, turned out to be incorrect and the deposit fell short by Rs. 123.75." The view that principles of equity are attracted in suits of pre-emption can also be supported from the observation of Cornelius, C. J., in the above cited case. The learned Chiefs Justice while considering the question whether the rule of reasonable time can be applied to deposit of pre-emption money, observed as under:- "I would like here to make an observation regarding one of the judgments of the Lahore High Court, which was placed before us at the hearing. This is the case of Sukhram Das v. Nazar Muhammad I L R 6 Lah.

316. In that case the decree for pre-emption was made on the 22nd March 1916, against the vendee, who appealed successfully in the first appellate Court, but the pre-emptor succeeded by further appeal to the High Court in obtaining a decree for pre-emption on the 2nd February 1920. The money was deposited on the 26th February 1920, under an order of the trial Court grant ing extension of time, which was upheld in the first appeal, but on further appeal in the High Court by the vendee, it was held on the 19th February 1925, that the suit was liable to be dismissed for failure on the part of the pre-emptor to comply with the condition regarding payment of the pre. emption money contained in the decree of the trial Court, The learned Judges in the High Court observed that by the decree of the 2nd February 1920, the High Court simply intended to restore the decree of the trial Court, without variation therein. To enable deposit after expiry of the terminal date fixed by the trial Court in 1916, a variation of that decree would be required, and it was not in the power of the executing Court to make deny such variation. Speaking with respect, that is a conclusion with which I find myself unable to agree. The matter may have been corrected by obtaining from the High Court an order supplementing its appellate decree of the 2nd February 1920, by fixing a date for deposit of the pre-emption money. Alternatively, the rule of `reasonable time', laid down in the Nagpur case cited above, may have been applied. If power could not be derived from any other source, I conceive that under section 151, Civil Procedure Code, the High Court would have been competent to make such an order as would not only advance the justice of the case, but also have the effect of giving validity to the High Court's own decree of the 2nd February 1920." This view was also taken by Hamoodur Rahman, J., as he then was. The doctrine of equitable set-off has also been applied in p suits for specific performance of contract and suits for redemp tion. In the case of Brijnath Dass v. Juggernath Dass ((1879) 4 Cal. 742) the right to set-off the costs due to the plaintiff against the amount due by him was recognised in a redemption suit. It was held in that case that the plaintiff was entitled to redemption on paying the amount directed less the costs awarded to him. This principle was further applied by the Madras High Court in the case of Chinnammal v. Chidambara Khothanar (A I R 1936 Mad. 626). In that case, the trial Court passed the decree that on the plaintiff's depositing into Court a certain sum within a fixed time the defendant was to execute a deed of conveyance in his favour. It was further directed that the defendant was to pay the plaintiff a certain amount by way of costs. The plaintiff deposited a sum of money after deducting the amount of costs payable to him under the decree. On these facts it was held by the Madras High Court that the doctrine of equitable setoff was applicable and the plaintiff deposited the proper amount in Court. In the light of the above discussion, I am of the view that the claims of the appellants in respect of the purchase-money and the respondents in respect of the costs are in the nature of cross demands arising out of the same transaction and thf doctrine of equitable set-off as applied by the Allahabad High Court in suits of pre-emption is fully applicable to such cases. This view has been firmly established and I am not inclined to upset it after a lapse of about 80 years. In that view of the matter I am satisfied that the Courts below have applied the law correctly and there is no ground to take exception to the view taken by them. Accordingly, the appeal is dismissed. In the special circumstances of the case, the parties are directed to bear their own costs. HAMOODUR RAHMAN, C. J.-I agree. SAJJAD AHMAD, J.-I agree. M. R. Khan, J.-I agree. K. B. A. Appeal dismissed.