P L D 1953 Lahore 199 (PLP)

KAIKAUS, J.‑

The suit out of which this regular second appeal arises is the outcome of a previous suit for pre‑emption. In 1941 Allah Bakhsh appellant and Tagia respondent effected between themselves, what purported to be an oral exchange, Tagia transferring 30 kanals 3 marlas and Allah Bakhsh 32 kanals and 5 marlas of land. The land transferred by Allah Bakhsh appellant to the respondent was, however, already under a mortgage with Ahmad, brother of Allah Bakhsh appellant, for a sum of Rs. 2,125 and this amount too was to be paid by Tagia respondent. Ahmad, the brother of the appellant, filed a suit for pre‑emption to acquire the land transferred by the appellant, characterizing the exchange as a fraudulent device to defeat his rights. He alleged, in the first instance, that in fact the parties had struck a bargain of sale at Rs. 270 per bigha, the total coming to Rs. 2,176‑14‑0, and as the land was already mortgaged with him (Ahmad) for Rs. 2,125, Tagia respondent had paid Allah Bakhsh only Rs. 52 in cash and got the land transferred and that the alleged transfer of 30 kanals and 3 marlas by Tagia respondent to Allah Bakhsh appellant was fictitious. He pleaded, in the alternative, that even if Tagia respondent had in fact transferred 30 kanals and 3 marlas of land to the appellant, that land being worth in all Rs. 40, was a very small part of the total consideration which should be regarded as Rs. 2,176‑14‑0 because the value of the whole land and not the equity of redemption: J should be considered. The trial Court dismissed his suit but on appeal, the learned District Judge held the transfer to be a sale, and decreed the suit for pre‑emption on payment of Rs. 50, Ahmad being himself the mortgagee. Tagia respondent took the matter in appeal to the High Court but the finding was regarded as one of fact and on the 8th May 1945 the appeal was dismissed. Allah Bakhsh appellant, it may be mentioned, was a party to the case and had been supporting the respondent against his brother, alleging that the transfer was one of exchange. On the 3rd January 1946 the respondent filed the present suit for recovery of possession of 30 kanals and 3 marlas of land of which mutation had been sanctioned in the name of the appellant on account of the exchange and of which possession too was with the appellant. The respondent alleged in the plaint that in fact he bad purchased the land for a sum of Rs. 1,000 in addi tion to the amount he had to pay for redeeming the mortgage. The appellant denied these allegations and stated that it was a transaction of exchange, only the respondent had to pay the mortgage mount too. The issues, in so far as we are concerned with them now, were: (1) Was the exchange alleged by the plaintiff fictitious and was it made with a view to defeat the right of the pre‑emptor Ahmad? (2) What is the effect of the judgment in Ahmad's pre‑emp tion suit on issue No. 1? Both parties led evidence as to the nature of the transaction. The learned Subordinate Judge, who tried the suit, held, on the basis of the judgment of the learned District Judge in the previous suit, and without going into the evidence of the parties, that the so‑called exchange was fictitious. He decreed the suit. On appeal it was urged before the learned District Judge that the finding in the previous suit was not that any amount in cash had been paid but that the land given in exchange was worth a small amount and that was the reason why the transaction was regarded as one of sale. The learned District Judge regarded this argument as ingenious but unsound and dismissed the appeal. Allah Bakhsh has come up in second appeal. A careful perusal of the judgment of the learned District Judge in the previous case, particularly when read with the reported case on which the learned District Judge relied, leaves no doubt that what he gave effect to was the second alternative Pleaded by Ahmad in that case, viz., that as the land transferred was worth only Rs. 40 and the total consideration should have been deemed in law to include the amount of the previous mortgage, the transaction was one of sale in spite of the transfer of land too. The learned District Judge said it was "in substance" a sale. He said too that Daryao Singh v. Bharat Singh and others (I L R 32 All. 19 (FB)) was a case very analogous to the case before him. That was a case where it was held that when equity of redemption of land is sold, the sale is to be regarded as a sale of the land itself and Court‑fee in to be paid on the value of the whole land. That the lower Courts have not correctly interpreted the judgment is to a great extent due to the absence of clear words but when studied with care no doubt is left as to the intention of the learned Judge. The learned District Judge nowhere found the transfer by the respondent to be fictitious and did not fix Rs. 52 as price which amount had been stated by the witnesses of Ahmad to have been paid. He regarded the consideration to be Rs. 2,125 plus the land transferred by Tagia respondent and directed payment of Rs. 50 on the basis of assessment of market value. With this finding about the interpretation of the previous judgment tables are now turned. Whereas it was the plaintiff‑respondent who was previously relying upon the judgment in the previous case as res judicata it is he who now disputes its binding character. He says he is not debarred from doing so merely because of the position he took in the Courts below and he is right. No admission on a pure question of law can bind him. The principles applicable to res judicata between co‑defendants are established by a string of Privy Council judgments, vide Mst. Munni Bibi and another v. Tirlokf Nath and others (A I R 1931 P C 114), Kishan Prasad Panday and others v. Durga Prasad Thakur and others (A I R 1931 P C 231), Maung Sein Done v. Ma Pan Nyun and others (A I R 1932 P C 161), Chandu Lal Agarwala and another v. Khalil‑ur -Rahman and others (A I R 1950 P C 17 = P L D 1949 P C 239) and Syed Muhammad Saadat All Khan v. Mirza Wiquar Ali Beg and others (A I R 1943 P C 115). The conditions necessary for the application of res judicata as between co -defendant are:‑ (1) There must be conflict of interest between the defendants concerned; (2) it must be necessary to decide this conflict in order to give the plaintiff the relief he claims; and (3) the question between the defendants must have been finally decided. Another question that will arise will be what is the effect of Allah Bakhsh appellant being only a pro forma defendant in that case. In order properly to appreciate the legal position, the exact allegations of the plaintiff and the finding of the Court may now be repeated. The plaintiff had taken up an alternative position. The first alternative was: "Allah Bakhsh has sold 30 kanals and 3 marlas of land to Tagia for a cash consideration of Rs. 52 plus the amount of the mortgage already existing, that is Rs. 2,125, the apparent transfer of 32 kanals and 5 marlas by Tagia to Allah Bakhsh is fictitious. The second alternative was:‑ Allah Bakhsh has transferred to Tagia 32 kanals and 5 marlas of land for a consideration consisting of 32 kanals and 5 marlas of land transferred by Tagia to Alla Bakhsh plus the sum of Rs. 2,125 the amount of the mortgage on the land of Allah Bakhsh which is to be redeemed by Tagia. The land transferred by Tagia to Allah Bakhsh is worth only Rs. 40, therefore, the part of consideration which is not cash being of small value the transaction remains a sale. As to the finding of the learned District Judge in that case it is sufficient to state that he accepted what is stated above in the second alternative. The first question to be decided is whether there was a conflict of interest between the defendants. Assuming without admitting, (a matter to which we will revert), that conflict of interest even with respect to property which is not the subject- matter of the suit, is also conflict within the meaning of the Privy Council judgments referred to above, with respect to the first alternative there would be a conflict of interest for if the facts stated therein be correct, the transfer of 30 kanals and 5 marlas of land by Tagia to Allah Bakhsh would be fictitious and that land would still belong to Tagia. Therefore the conflict would be there but it would be only with respect to the real or fictitious nature of the transfer of 32 kanals and 5 marlas and no further. The only way in which Allah Bakhsh could be affected was that this transfer be held fictitious. If this question was decided in his favour, he was no more interested in the findings. So far as the second alternative is concerned, there was no conflict of interest between the defendants requiring elucidation. The second alternative assumed that the transfer of land by Tagia to Allah Bakhsh was genuine. In the legal aspect of the transaction, whether it would amount, under the circumstances, to a sale or exchange, Allah Bakhsh had no interest. It was argued that the appellant had, in the pre‑emption case, supported the respondent in his written statement, and, therefore, there was no conflict. This contention has no force. What is to be considered is a conflict of interests and not that of written statements, as pointed out in Chandu Lal Agarwala and another v. Bibi Khatemonnessa and others (A I R 1943 Cal. 76), if a defendant accepts the l whole of the case put forward by a plaintiff' and allows a decree to be passed, it cannot be said that there is no conflict of interest between them. Their Lordships of the Privy Council pointed out in A I R 1950 P C 17=P L D 1949 P C 239 that to the application of the bar of res judicata between co-defendants it did not make any difference that one of the defendants did not appear and was proceeded against ex parte, provided he had notice of the conflict of interest. The second question is whether it was necessary to decide the conflict between the two defendants in order to give relief to the plaintiff. Plaintiff had alleged in his first alternative that the transfer to Allah Bakhsh was fictitious. The question, therefore, whether the transfer was fictitious or not, the learned Judge was bound to answer. Had he answered it by holding the transfer to be fictitious, the suit would have bean decreed and in that case the finding on this matter would have been the basis of the decision, and, therefore, a matter "necessary to decide". However, he found the transfer genuine and then on the question of law still held the transfer to be a sale. His finding on this question had no effect on the ultimate decision for, under the circumstances, whether he found the transfer fictitious or real, he would find the transaction to be a sale. The point for our decision has assumed this form: if there be a question before a Court which is material because if decided in one way it would be decisive but the Court decides in the other way so that it does not ultimately affect the decision, will the finding on that question be res judicata? When we are considering what is res judicata, should we consider what matters the Judge was bound to decide or should we consider the ultimate decision and find out what findings were necessary to support the judgment? Although the words used by their Lordships are `necessary to decide', we do not consider that their Lordships meant anything other than what is meant by `necessary for decision' or similar words when used in ordinary cases of res judicata between plaintiffs and defendants. We are of opinion that in order to determine what was `necessary to decide' it is the ultimate decision that is to be looked to and it is the findings essential to support the judgment that will be res judicata. The Court has, in order to determine a cause, to give its findings on a number of points which if decided one way would decide the fate of the case and yet being decided the other way they do not ultimately influence the decision. If findings on such questions were res judicata all material findings against a defendant when a suit is dismissed would become res judicata. The defendant pleads estoppel and asserts his own title. The issue of title is found against him but suit is dismissed on the ground of estoppel. If `necessary to decide' meant a question which the Court was bound to answer, the finding on the question of title would be binding. The rule that an adverse finding against a successful party is not binding is based on the ground that that finding is not necessary for the decision. There is abundant authority for the proposition that only findings essential to support a judgment are res judicata. Hafiz Muhammad Fateh Nasim v. Sir Swarup Chand Hukum Chand Firm and another (A I R 1942 Cal. 1), Run Bahadur Singh v. Lucho Koer (I L R 11 Cal. 301 P C), Jhanda Singh and another v. Kesar Singh and another (A I R 1930 Lah. 149), Rajab‑un‑Nissa v. Habib Bakhsh and others (57 P R 1907) and Midnapur Zamindari Co., Ltd. v. Naresh Narayan Ray (A I R 1922 P C 241). A judgment is conclusive only as to matters necessarily inconsistent with it vide Manmohan Das v. Shib Chandra Saha and another (A I R 1931 Cal. 253) which relies on Bigelow on Estoppel. In Halsbury, Volume 13, p. 440, the proposition that a party is not estopped from alleging that which is consistent with the record is regarded a truism. I L R 11 Cal. 301 (P C) in fact fully covers the point involved in the present case. Their Lordships pointed out in that case that if the decree is not based on a particular finding but is given in spite of that finding, such finding cannot be res judicata (p. 306). In the pre‑emption case with which we are dealing, the decree in favour of the plaintiff was not based on the finding that the transfer of property by Tagia to Allah Bakhsh was genuine but was given in spite of it. We will consider now the effect of Allah Bakhsh appellant being only a pro forma party in the pre‑emption case. There is no doubt that their Lordships of the Privy Council had, in A I R 1931 P C 114, laid down that it did not make any difference whether the party against whom res judicata was pleaded was a necessary or proper party in the suit. But as pointed out by Chagla, J. in Gobindram Bros., Ltd. v. Commissioner of Income‑tax Central Bombay (A I R 1947 Bom. 247), their Lordships never held that even against a pro forma defendant a decision could be res judicata. Considered: little closely the matter does not present much difficulty. Tile reason why their Lordships had held even a proper party to be hound by the judgment was, as explained by their Lordships at page 117 that he was entitled to be heard. If the rights of a party are to be adjudicated upon and he has a right to be heard the matter ought, if no exception applies to is res judicata against that party. So the question to be decided is whether Allah Bakhsh appellant who was impleaded pro forma in the pre‑emption case, had a right to be heard. Suppose in that case Tagia (the alleged vendee) had put in a written statement that in fact the transfer of land to him was fictitious and the transaction was a sale, could the present appellant have contested the suit on the ground that the land had in fact been transferred to him by Tagia and that the transaction was one of exchange? Ahmad was asking for a decree for the land transferred to Tagia, in which land admittedly Allah Bakhsh bad no rights, and if Tagia accepted Ahmad's claim there could not be a contest. The suit would have to be decreed for the only defendant interested in the subject‑matter of the suit was willing to get a decree passed against him. Or let us suppose that after contest by Tagia, a decree was passed on the basis of the finding that the transfer to Allah Bakhsh was fictitious and, therefore, the transaction was one of sale. If Tagia was satisfied with this decree, could Allah Bakhsh appeal against it? Or suppose the suit was after contest dismissed on the ground that the transfer was a true exchange, could Tagia file an appeal against Allah Bakhsh impeaching on the ground that there was no exchange but a sale and that the land which he purported to transfer never passed? As held in Jumna Singh and another v. Kumar‑un‑Nisa (I L R 3 All. 152 (F B)) and Dhian Singh v. Mst. Bilas Kaur (42 P R 1912) in such cases there would be no right of appeal against a co‑defendant. The finding with respect to the transfer of land to Allah Bakhsh (which land was not in suit) would be no part of the decree. The right to be heard referred to by their Lordships of the Privy Council in A I R 1931 P C 114 would imply a full right of hearing which would include a right of appeal in case of adverse decision. A party cannot be said to have a full right of hearing if he has not the right of appeal which other parties to the same litigation have. It may be pointed out that in the cases between co‑defendants dealt with by their Lordships of the Privy Council, there would be a right of appeal as between co‑defendants because the decree would contain an implied declaration with respect to rights. As held in K. Shrirama Row and another v. K. Bapayya (1) there is a right of appeal in such cases. The distinction between those cases and the present case is that as the conflict between the co‑defendants related in those causes to the rights in the subject‑matter of the suit, the decree would involve a declaration as to those right. In the present case the pre‑emption suit related only to property which was transferred by Allah Bakhsh to Tagia and not to that which was transferred by Tagia to Allah Bakhsh and the decree could not by implication involve a declaration as to rights in property which was not in dispute. This brings us to the question which we reserved at the beginning of discussion, whether a conflict of interest not relating to the property in dispute is within the purview of the Privy Council judgments. The Court is concerned with deciding the rights of the parties only in the subject‑matter of the dispute and though its findings may indirectly affect other property, the rights in such other property are not the subject of direct adjudication by the Court. We have shown above that if a defendant has no interest in the subject‑matter of the suit he cannot have a proper right to be heard. We hold that the conflict between defendants, which will lead to a matter becoming res judicata should relate k to the subject‑matter of the suit. In all the Privy Council cases cited above, such was the case and no case has been brought to our notice in which conflict between co‑defendants with respect to property not in dispute was made the basis of re judicata. The fact that res judicata is being claimed not against the pro forma defendant but by the pro forma defendant against the co‑defendant who was the real defendant in the suit, makes no difference. Res judicata is reciprocal. If the findings could not bind a party he cannot avail of them. In 42 P R 1912, to which reference has already been made, it was held that the question of the validity of the sale decided between a vendor and a vendee in a pre‑emption suit would not be res judicata and would not bar the trial of some question between them in a subsequent suit. The present case is stronger for the property now involved was not the subject‑matter of the previous suit. As we hold that the previous decision is not res judicata we have to give our own finding on the real or fictitious nature of the transfer to Allah Bakhsh appellant. Tagia respondent has produced a number of witnesses who support the story that the respondent paid Rs. 1,001 to the appellant, but the transfer was to be shown as a transfer of land. It is strange that people who want to commit a fraud should proclaim it to the world. The witnesses are mere chance witnesses, most of them being present at the shop of Tagia, who is a shoe‑maker, to get their shoes repaired. No receipt for this payment is alleged to have passed. Throughout the proceedings in the previous suit the respondent had stuck to the position that the transaction was an exchange. Possession of the land has admittedly been transferred to the appellant and mutation of the land has also been sanctioned (1) A I R 1924 Mad. 189 in his favour. The oral evidence led by respondent is altogether unimpressive and the circumstances all go against him. We hold that the respondent has failed to prove that the transfer of the suit land to the appellant was fictitious. We have not considered it necessary to consider whether the respondent could be allowed to plead his own fraud. This appeal is accepted and the suit dismissed but parties are left to bear their own costs throughout. A. H. Appeal accepted.