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Namdeo Chintaman MaraThe Vs. Shaligram Motiram Bonde - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai High Court
Decided On
Case NumberLetters Patent Appeal No. 6 and 7 of 1961
Judge
Reported in(1963)65BOMLR229; 1963MhLJ172
AppellantNamdeo Chintaman Marathe
RespondentShaligram Motiram Bonde
DispositionAppeal dismissed
Excerpt:
.....is only for the purpose of a determination of the question as to whether the transaction amounts to a mortgage, that the agreement to reconvey assumes importance if it is contained in the same document, since section 58(c) of the transfer of property act clearly requires that before any transaction could be held to be a mortgage the agreement to reconvey must be contained in the same document......rule applies only to a transfer pendente lite and it cannot affect a pre-existing right. if the sale of property is a transfer in recognition of a pre-existing and subsisting right it would not be affected by the doctrine of lis pendens as the transfer does not create a new right pendente lite. in our view, the principle of that decision must also necessarily apply to a case which arises under section 174(4) of the berar land revenue code; if it is correct to say that the right of the original vendor arose at the same time as and by reason of the sale itself though not embodied in the same document, then the subsequent transfer in his favour by the vendee does not contravene the principle of section 174(4) and it would not give a right to the pre-emptor to avoid the reconveyance. we.....
Judgment:

Patel, J.

1. These are two appeals by the original owner who failed in all the Courts so far. The short facts are that the appellant Namdeo, who subsequently became defendant No. 2, is the original owner of the two fields which are the subject-matters of the two appeals. On July 17, 1951, by exh. P-2 he executed a sale-deed in respect of both these fields along with some other property in favour of defendant No. 1 who is Shri Akkalkot Swami Maharaj Sansthan, through its Wahiwatdar Vithalrao, and on the same day and at the same time the manager of the said Sansthan agreed to reconvey these properties if he returned the purchase price within two years from the date of that document. The plaintiffs in both the cases are the co-occupants of the sub-divisions of these fields and they instituted the respective suits in exercise of their right of pre-emption under Section 174 of the Berar Land Revenue Code, 1928.

2. During the pendency of these suits, on April 12, 1953, long before the period of two years was over, the property was reconveyed to Namdeo by the purchaser. After this, Namdeo was added as defendant No. 2 in both the suits and the suits were proceeded with. The trial Court decreed the plaintiffs' suits and these decrees were confirmed by the District Court and also by the High Court in second appeal. Badkas J., however, granted leave to defendant No. 2 under Clause 15 of the Letters Patent.

3. The only question that falls to be decided in these appeals is whether the agreement of reconveyance which was executed at the same time as the sale-deed exh. P-2 and registered immediately after the sale-deed, defeats the right of pre-emption of the plaintiffs, or, in other words, does the right of preemption of the plaintiffs defeat the agreement of reconveyance in favour of the appellant in respect of his own property? There have been a large number of eases on this question, but it is desirable, in our view, to approach this question first on fundamentals and then consider the decided cases.

4. Before we proceed to consider the question proper, some of the principles of pre-emption law enunciated by the Supreme Court may be referred to. In Bishan Singh v. Khazan Singh : [1959]1SCR878 it was said (p. 841):

.(1) The right of pre-emption is not a right to the thing sold but a right to the offer of a thing about to be sold. This right is called the primary or inherent right. (2) The pre-emptor has a secondary right or a remedial right to follow the thing sold. (3) It is a right of substitution but not of re-purchase i.e., the pre-emptor takes the entire bargain and steps into the shoes of the original vendee. (4) It is a right to acquire the whole of the property sold and not a share of the property sold. (5) Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place. (6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place.

While dealing with this question, their Lordships also observed that the Courts have not looked upon this right with great favour presumably for the reason that it operates as a clog on the right of the owner to alienate his property and that the vendor and the vendee are, therefore, permitted to avoid the exercise of the right of pre-emption by all lawful means. The same view was again emphasised in the later case of Radhakishan v. Shridhar : [1961]1SCR248 .

5. Now, in the present case, it is clear from the circumstances of the case that the agreement to reconvey is but a part and parcel of the original transaction of sale. Both the documents have been executed at the same time and registered immediately one after the other. It would also appear doubtful if the vendor would have agreed to sell the property if the vendee had refused to enter into the agreement for reconveyance. It is clear, therefore, that the document of sale and the agreement to reconvey are not two separate transactions so as to create a hiatus between the sale and the agreement of reconvey. It is undoubtedly true that in view of Section 58(c) of the Transfer of Property Act, the transaction does not and cannot amount to a mortgage since the agreement to reconvey is contained in a separate document. But the fact, however, remains that both the transactions having been entered into at the same time there is no interval between the sale and the agreement. And it must be treated as a part and parcel of the sale transaction. Any person, therefore, who takes a sale from the vendee or who is to be placed in the shoes of the vendee would be bound by the agreement to reconvey the property to the original vendor. This is not because by the agreement an interest is created in the property itself for obviously it cannot be in view of Section 54 of the Transfer of Property Act, but by the provisions of Section 27 of the Specific Relief Act. It is only if the purchaser has no notice of the agreement to reconvey that the agreement would not be binding on him. If, therefore, the pre-emptor can be regarded as a person, who takes his title either through or from the vendee, then certainly he will be bound by this agreement, and if he is bound by the agreement, then even after obtaining the decree for pre-emption, he would be bound at the suit of the vendor for specific performance to reconvey the property to the vendor. This view was taken in Sakharam v. Dashrath [1953] Nag. 518, Can it then in principle make any difference that before the suit is decreed the original vendor has obtained a reconveyance? In our view, it cannot. The only result of that sale-deed would be that the plaintiff's suit for pre-emption must and ought to fail.

6. It is, however, very emphatically argued that the provisions of Section 27 of the Specific Relief Act are applicable only to a transfer as such and cannot apply to a case like the present where the plaintiffs obtained their right not by a voluntary transfer from the vendee but by operation of law. Section 5 of the Transfer of Property Act which defines 'transfer' includes a transfer by operation of law, and, in our view, there is nothing in the Berar Land Revenue Code to negative the plaintiffs being in the position of transferees in law.

7. The right of pre-emption is contained in Chap. XIV of the Berar Land Revenue Code which we will refer to as the Code. Section 176 prescribes the manner in which the right of pre-emption is to be exercised when an occupant who intends to sell his portion of the land gives notice. Sub-section (2) of Section 176 enables the claimant of the right to deposit with the Tahsildar the price specified in the notice within two months from the service of such notice for payment to the intending seller and thereupon he is to have the right to purchase the interest at such price. Sub-section (3) shows that the intending occupant has got a right to withdraw his intention to sell before the deposit is made. Section 177 deals with cases of foreclosure on the obtaining of a final decree for foreclosure. The mortgagee has to give notice to the other occupants intimating the extent of the interest foreclosed and the amount due under the final decree. Sub-section (2) gives the right to occupants to make the deposit within two months from the date of notice and on making the deposit they have a right to purchase the interest foreclosed. Section 178 deals with cases of pre-emption on lease or usufructuary mortgage, where similar provisions as to notice and the acquisition of the right by the intending pre-emptor are defined. Section 179 defines priorities of several pre-emptors, and Section 180 provides in what cases the right is lost under Section 176, 177 or 178. Section 182 provides for the right to pre-empt at a fair price, and Section 180 which may as well have come after Section 182 provides in what circumstances in cases governed by Section 176, 177, 178 or 182 the right of pre-emption is lost. Section 183, Sub-section (1) defines the right of pre-emption where no notice is given under the previous sections, and Sub-section (2) says that such a right may be enforced by a civil suit. Section 174, Sub-section (4), on which reliance is placed for the plaintiff says that

any transfer of such interest made subsequently to the transfer in respect of-which the right arose, shall be voidable at the instance of the occupant enforcing that right.

This section is worded practically in terms similar to Section 52 of the Transfer of Property Act in respect of lis pendens. In respect of Section 52 of the Transfer of Property Act in Bishan Singh v. Khazan Singh the Supreme Court held that the rule of lis pendens applies in Punjab as much as to any other area but the rule applies only to a transfer pendente lite and it cannot affect a pre-existing right. If the sale of property is a transfer in recognition of a pre-existing and subsisting right it would not be affected by the doctrine of lis pendens as the transfer does not create a new right pendente lite. In our view, the principle of that decision must also necessarily apply to a case which arises under Section 174(4) of the Berar Land Revenue Code; If it is correct to say that the right of the original vendor arose at the same time as and by reason of the sale itself though not embodied in the same document, then the subsequent transfer in his favour by the vendee does not contravene the principle of Section 174(4) and it would not give a right to the pre-emptor to avoid the reconveyance. We may again emphasise that this view of Section 174(4) was taken in Sakharam v. Dashrath and, with respect, it seems to us that that is the correct view.

8. Even if it is regarded as a case of substitution as is contended by the learned Counsel on behalf of the plaintiffs as decided in Ramdeo v. Gangubai [1951] Nag. 830 F.B as also by the Supreme Court in the case above referred to, the result must be the same. It is no doubt true that the agreement to reconvey does not create an interest in the land and does not, therefore, subtract anything from the sale-deed. Nonetheless, as part and parcel of the sale-deed there is an obligation to reconvey the property, and though it is contained in a different document, it cannot be separated from it and must be regarded as part and parcel thereof, and if that is so, the plaintiff as pre-emptor1 must be substituted in the place of the purchaser not only to the rights under the sale-deed but also as to the obligations under agreement to reconvey which is part and parcel of it. It may be in a given case possible for the pre-emptor to escape from the consequences of such an agreement if he says that he had no notice of that agreement as in the case of an ordinary purchaser from the vendee, if the agreement of reconveyance has come into existence after some interval.

9. It has been argued by the learned Counsel for the respondents that since long time it has been consistently held that a mere agreement to reconvey by the vendee executed at the same time as the document of sale does not give to the original vendor a preferential right to the property, the pre-emptor must succeed. In support of his contention he cited the case of Lataji v. Krishnajin [1929] A.I.R. Nag. 224 and Mohammad Ismail v. Ramrao Shamrao (1953) Letters patent Appeal No. 21 of 1949. In the first case the learned Additional Judicial Commissioner observed that a mere agreement to reconvey the property imports a personal contract and affects or creates no interest in property, nor does the agreement run with the land; and he inferred from this that the right of pre-emption being presumably a right of substitution cannot be taken away by any transaction reconvening the property either to the vendor or to a stranger whether the reconveyance takes place before suit or after suit or decree. This decision is inconsistent with the later decision of the Division Bench in Sakharam v. Dashrath, and, in our view, does not lay down the correct law on, the point. In Mohammad Ismail v. Ramrao Shamrao the whole discussion was on the point as to whether or not an unregistered document to reconvey the property executed at the same time as the sale-deed could be looked at to hold whether or not the transaction was a mortgage since it was contended on behalf of the original vendor that the transaction was only a mortgage. This contention was negatived. It was only in the last three lines of the judgment that it was observed that the pre-emptor had a right of pre-empting the property both in respect of the original sale by the vendor as also in respect of the reconveyance by the vendee to the original vendor. There was no discussion on the question and, therefore, it is hardly possible to regard it as a decision on the principle in question.

10. In our view, it is only for the purpose of a determination of the question as to whether the transaction amounts to a mortgage, that the agreement to reconvey assumes importance if it is contained in the same document, since Section 58(c) of the Transfer of Property Act clearly requires that before any transaction could be held to be a mortgage the agreement to reconvey must be contained in the same document. But merely because an agreement to reconvey is contained in the same document it cannot make any difference to the real principle that is involved in the present matter. If the agreement to reconvey is contained in the document of sale itself as observed in Chunchun Jha v. Ebadat Ali : [1955]1SCR174 it only means that there is a presumption that it is a mortgage. If it is a mortgage, of course no question arises because there is no sale on which the right of pre-emption can possibly operate. The right operates only in case it is a sale, in which case the mere right of reconveyance does not create an interest in the property and, therefore, is not in any way different from the right created by a separate agreement to reconvey the property. The differentiation, therefore, that is sought to be made by the learned Counsel between the present case and the case in Sakharam v. Dushrath is not, in our view, a real difference which would affect the decision of the case. We are, accordingly, of the view that the appellant is entitled to succeed.

11. We allow the appeal and dismiss the plaintiff's suit in each ease. Taking all the circumstances into account, this seems to be a proper case where the parties should bear their own costs of the trial Court and the respondents should pay the costs of the appellant in this Court in the second appeal and in the District Court.


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