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Punjab Sugar Mills, Co., Ltd. Vs. Lachhman Prasad and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1930All77
AppellantPunjab Sugar Mills, Co., Ltd.
RespondentLachhman Prasad and ors.
Excerpt:
.....1993 mah.lj 74; 1993 lab ic 1858 overruled]. - 6. having regard to the fact that section 8, sub-clause (c) used the word 'land,'whereas some sections like sections 9 and 11 use the words 'interest in the land' and other sections like sections 22 and 24 use the word 'property' i would have been inclined to think that the intention of the legislature was to give protection to manufacturing industries when plots of land as distinct from fractional shares in a zamindari are acquired. the plaintiff said that the land was very good and that he should take it. the plaintiff might well have been reluctant to purchase the share of the minor proprietor and take the risk or he might not have had ready money to pay rs. the learned subordinate judge, however, has pointed out that there were..........on the ground that there was no custom of pre-emption, that the consideration mentioned in the sale-deed was the true consideration and that the deed had been executed with the knowledge and consent and after the refusal of the plaintiff. some days later the written statement was amended and a further plea was added that the share in question had been purchased for the cultivation of sugarcane for the factory which was a manufacturing industry and the plaintiff was, therefore, not entitled to preempt the same.2. the learned subordinate judge has found that the plaintiff has the right of pre-emption under the act and that the defendant is not entitled to protection on account of the purchase having been made for their factory. his view is that the acquisition of land for the purpose.....
Judgment:

Sulaiman, J.

1. This is a defendant's appeal arising out of a suit for pre-emption of shares sold in two mahals. The plaintiff is admittedly a cosharer in the mahals and the defendant company which is the vendee is a stranger. The plaintiff alleged the existence of a custom of pre-emption and a right under the Pre-emption Act, and also asserted that the ostensible consideration of Rs. 24,000 was not the true consideration but only Rs. 19,333-5-3 were paid. The defendant originally contested the claim on the ground that there was no custom of pre-emption, that the consideration mentioned in the sale-deed was the true consideration and that the deed had been executed with the knowledge and consent and after the refusal of the plaintiff. Some days later the written statement was amended and a further plea was added that the share in question had been purchased for the cultivation of sugarcane for the factory which was a manufacturing industry and the plaintiff was, therefore, not entitled to preempt the same.

2. The learned Subordinate Judge has found that the plaintiff has the right of pre-emption under the Act and that the defendant is not entitled to protection on account of the purchase having been made for their factory. His view is that the acquisition of land for the purpose of sowing sugarcane crops is for the purpose of a manufacturing industry within the meaning of Section 8, Sub-clause (c) of the Act, but he has held that inasmuch as there was no recital of the alleged purpose in the sale-deed the defendant cannot take advantage of it. As regards the plea of estoppel his finding is that there was no refusal by the plaintiff. On the question of consideration he has found in favour of the defendant and has held that the entire sum of Rs. 24,000 passed.

3. The defendant has appealed and the plaintiff has filed a cross appeal. There can be no doubt that the manufacture of sugar whether it be the extraction of sugar juice from sugarcane or the refinement of sugar is a manufacturing industry but the, question is whether the defendant is entitled to the protection given to him by the section.

4. On the question of fact the learned Subordinate Judge has found that the property in question was really purchased for sowing improved sugarcane for the factory and also for obtaining cheap labour for the factory. Speaking personally for myself I have some doubt as to whether the actual form in which the defence was raised was not an afterthought. The property acquired was not a complete village consisting of only khudkast lands. Only a fractional share of about ten annas in the rupee was acquired, so that the defendant became a mere cosharer in the mahals. That will not entitle the company to turn out all the tenants and convert the entire land into khudkast land so as to enable it to carry on sugarcane plantation on a large scale. Nor was it legally possible for the company to turn out occupancy tenants against their will or to compel them to sow sugarcane crops or for the matter of that to sell their crops to the company and to nobody else. On the other hand the purchase of a big zemindari share in a neighbouring village would undoubtedly facilitate the work of the company and increase their influence in procuring raw materials and labour easily. I, therefore have some doubt as to whether the actual purpose for which the fractional share in the village was acquired was really cultivation by the company of the sugarcane crops. It may be noted that no such purpose is recited either in the original agreement which was executed Several months earlier or in the sale-deed. Nor was it mentioned when the written statement was first filed. It is admitted that only about 50 bighas of land are sir and khudkast lands appertaining to the share, out of which a small area has already been brought under cultivation. The rest of the land is neither sir nor khudkast and has not automatically come under the direct cultivation of the vendee by virtue of the sale-deed.

5. Assuming, however, that the purpose of the acquisition was to sow sugarcane crops in order that sugarcane may be used as raw material for the consumption of the factory it still remains to consider whether such a purpose comes within the scope of Section 8, Sub-clause (c) There is no doubt that the object of the legislature in excepting sales for purposes of manufacturing industry from pre-emption claims was the encouragement of manufacturing industries not necessarily the encouragement of agriculture. It seems to me that sugar plantation or the cultivation of the sugarcane crops is an agricultural pursuit quite separate and independent from the industry of manufacturing sugar. Sugarcane crops are year to year crops sown during one season of the year and sugarcane can be had in the open market. No doubt it is raw material which is required by a sugar factory but the production of such raw material is not a purpose of manufacturing industry though undoubtedly it is of help. Although the section cannot be construed in a narrow sense so as to apply exclusively to acquisitions of land for the purpose of assisting the actual process of manufacture it seems to me that it cannot apply to a case where raw material is to be produced by cultivation on a large scale in order that it may be utilized by the company. I would, therefore, hold that the purchase of land for such purposes does not come within the meaning of the section.

6. Having regard to the fact that Section 8, Sub-clause (c) used the word 'land,' whereas some sections like Sections 9 and 11 use the words 'interest in the land' and other sections like Sections 22 and 24 use the word 'property' I would have been inclined to think that the intention of the legislature was to give protection to manufacturing industries when plots of land as distinct from fractional shares in a zamindari are acquired. I find, however, that the word 'land' is used loosely for an interest in land at least in another section, viz: Section 14. On this ground I refrain from expressing any definite opinion that the word 'land' is not applicable to shares in a zemindari.

7. I further do not agree with the view expressed by the learned Subordinate Judge that in order that benefit may be taken of the section there ought to be a clear and express recital of the purpose in the sale-deed. No doubt the difficulties pointed out by him when a contrary interpretation is put on a section are somewhat serious. If the purpose is not recited in the sale-deed it is difficult to see how the pre-emptor can judge whether the land is being used for the purpose for which it was ostensibly purchased. It is also clear that if there is no such recital the vendee can after the expiry of one year turn the land to some other use. In spite of these difficulties it is our duty to interpret the section as it stands, and I see no ground for interpolating the words 'as mentioned in the sale-deed' into the section. That these words cannot be understood is also clear from the following circumstances. Under Section 54, T.P. Act, immovable property of less than Rs. 100 can be purchased without any instrument at all, the delivery of possession alone being sufficient. Section 8, Sub-clause (c) undoubtedly contemplates such a transfer and would apply where the land is not used for the purpose for which it was ostensibly purchased. As there might be no document in such a case the recital in a deed of sale cannot be an indispensible requisite. I, therefore, hold that the omission of the recital in the sale-deed is not a fatal defect to the suit.

8. On the question of the refusal of the plaintiff the finding of the Court below must be affirmed. The case as put forward in the written statement was that She sale deed in question had taken place with the consent of and after the refusal of the plaintiff. The oral evidence which was led on behalf of the defendant company, however, was to the effect that some seven or eight months previously the company's manager Kesar Ram, who was a friend of the plaintiff consulted the latter who advised him to take the sale. The plaintiff went with Kesar Ram in a motor car to show the land to him and told him to take it. Kesar Ram in the witness box admits that at that time he was negotiating for the purchase of the entire 16 annas and that an agreement was entered into in his name personally for Rs. 29,000 though he adds that it was meant for the company. He stated that he took it in his name because till then he had not obtained the sanction of the directors. The agreement which was executed originally (p. 31) also shows that it was in favour of Lala Kesar Ram who was not described as the manager of the defendant company. This contract fell through because the company declined to take the entire property which included the share of a minor coparcener. Ultimately the interest of the two adult proprietors was purchased and the consideration was reduced to Rs. 24,000. Kesar Ram admits that he had no subsequent talk with the plaintiff about the sale in question. On 10th June 1926 the counsel for the defendant had stated that Kesar Ram had entered into the contract in his name but with the intention to give the same in the end to the company in case of the approval of its proprietors. The plaintiff stoutly denies having had any such talk with Kesar Ram. The learned Subordinate Judge, however, has preferred the statement of Kesar Ram to that of the plaintiff and we may therefore assume that some such talk did take place. Kesar Ram, however, does not state that he informed the plaintiff that the purchase was going to be made on behalf of the Punjab Sugar Mills Co. On the other hand at p. 11 he stated that he had consulted the plaintiff as his friend and as the zemindar of the land on which the factory stood and he had consulted him if he should purchase the land or not. The plaintiff said that the land was very good and that he should take it.

9. The defendant cannot obviously bring his case within the scope of Section 14, Preemption Act, which requires the notice to describe the property to be sold, stating the name of the vendee and the price settled. In the present case the original agreement about which there might have been a talk with the plaintiff was with Kesar Ram for the sale of the entire 16 annas in consideration for Rs. 29,000. The sale has actually taken place of about 10 annas share in favour of the Punjab Sugar Mills Company for a sum of Rs. 24,000. Thus all the three material particulars are different.

10. It may be conceded that Sections 14 and 15 do not lay down the law of estoppel in pre-emption suits exhaustively and that the case though not falling under those sections may come within the purview of Section 115, Evidence Act, but there are no materials on the record which would show that the plaintiff intended to convey to Kesar Ram the idea that if the circumstances were changed he would not assert his right of pre-emption. The learned Subordinate Judge has pointed out that the purchase of the entire share was risky inasmuch as the share of a minor proprietor was also involved. Furthermore, the price also was a little higher. The plaintiff might well have been reluctant to purchase the share of the minor proprietor and take the risk or he might not have had ready money to pay Rs. 29,000. When the share of the minor was excluded and the price was reduced the plaintiff, if it was intended to estop him, should have been approached afresh and his refusal obtained. In the absence of such a course I am unable to hold that the plaintiff is estopped from asserting his right of pre-emption.

11. The finding as regards the amount of consideration which is challenged in the cross appeal must also be accepted. The plaintiff bases his case mainly on the ground that the original contract was for the sale of the entire share for Rs. 29,000 and therefore infers that the 2/3rds of the property must have been sold for 2/3rds of that amount. The learned Subordinate Judge, however, has pointed out that there were several circumstances which might very well have altered the situation. In the first place there was considerable delay and the previous contract fell through. In the second place the company was not prepared to take the share of the minor proprietor and wanted to safeguard itself and to take the shares of the adult proprietors only. The rateable apportionment on the basis of the former agreement is therefore not a safe criterion. The defendant has proved by the entries in the company's account book that the amount due on the pronotes to the plaintiff had really been paid. The entire consideration has been admitted before the Sub-Registrar, and a refund of any part of it has not been proved. I would therefore affirm the finding of the Court below on this point and dismiss both the appeal and the cross-objection.

Pullan, J.

12. As I am in general agreement with the judgment just pronounced I only think it necessary to add a few observations as to the interpretation of Section 8, Sub-clause (c), Agra Pre-emption Act. One of the questions which has to be, decided in this appeal is what is the meaning of the words 'purposes of a manufacturing industry?' The lower Court and the learned Counsel for the appellant consider that the growing of sugarcane is one of the purposes of the industry of making sugar. In my opinion it is not. Sugarcane growing is an ancillary industry of an entirely different nature carried on by agriculturists and not by manufacturers. The manufacturer of sugar is obliged in common with all other manufacturers to use raw material, but it is no part of his business as a manufacturer to grow that material any more than it is the part of the cotton miller to grow cotton or the flour miller to grow grain. The purpose of a manufacturing industry is the object which the industry sets out to attain. It has no reference to the materials which may be used in some form or another for the accomplishment of that result. This is particularly so in a case such as this where the raw materials are of an agricultural nature.

13. A second question which arises is the meaning to be given to the word 'ostensible' in the last line of the clause. I agree with my learned brother in holding that it is not necessary that the intention with which land is purchased should be entered in the sale deed, but if the word 'ostensibly' is to have any meaning it would appear to me that the purchaser is bound in some way to let it be known why he intends to purchases the land, if he intends to take advantage of Section 8, Sub-clause (c). If the purchaser has no means of knowing that the land is being purchased for the purposes of a manufacturing industry he is severely handicapped. Beyond this I am not prepared to go, as in the present case no doubt it may be reasonably said that where an absentee firm of sugar manufacturer buys land close to the factory, they have probably done so for some purpose connected with the factory.


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