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Shanker Lal and anr. Vs. Narendra Bahadur Tandon - Court Judgment

LegalCrystal Citation
CourtAllahabad High Court
Decided On
Case NumberSpecial Appeal No. 92 of 1960
Reported inAIR1967All405; [1967]37CompCas773(All)
ActsCompanies Act, 1913 - Sections 212 and 221; Evidence Act, 1872 - Sections 115; Transfer of Property Act, 1882 - Sections 53A
AppellantShanker Lal and anr.
RespondentNarendra Bahadur Tandon
Appellant AdvocateG.N. Kunjru and ;A.N. Kaul, Advs.
Respondent AdvocateK.C. Saxena, Adv.
DispositionAppeal allowed
(i) property - lease deed - section 105 of transfer of property act, 1882 - lessee obtained lease of plot from lessor - non-payment of rent for three consecutive years - lease forfeited - death of lessee without heirs - whether the lease-hold rights vested with lessor or was escheated by the government - lease given back to owner - lease was permanent - held, right of lessee capable of being merged with that of lessor. (ii) property - suit for possession - section 53-a of transfer of property act, 1882 - whether suit giving rise to present appeal barred by section 53-a - plaintiff-appellants are pre-emptor not successor-in-interest and not bound by act of liquidator - right of pre-emptor independent of right of person whom he out by filling pre-emption suit - held, section 53-a not.....jagdish sahai, j.1. this special appeal by leave granted by bishambhar dayal, j. is directed against his judgment dated 31-12-1959 dismissing with costs second appeal no. 485 of 1952, filed by the appellants, shanker lal and pyare lal, sons of one lala kundan lal agarwal.the facts giving rise to this special appeal in short are:in the city of saharanpur lies the disputed plot (plot bearing khasra no. 766 of khewat no. 171). this plot belonged to hulas chand and bilas chand. in may 1930 these persons granted a permanent lease of this plot to the patel mills ltd., who were to pay rs. 75/- per year as rent. in the terms of the lease it was provided that the lease could use it for any purpose including the construction of building and that it would not be liable for ejectment, except that in.....

Jagdish Sahai, J.

1. This special appeal by leave granted by Bishambhar Dayal, J. is directed against his judgment dated 31-12-1959 dismissing with costs Second Appeal No. 485 of 1952, filed by the appellants, Shanker Lal and Pyare Lal, sons of one Lala Kundan Lal Agarwal.

The facts giving rise to this special appeal in short are:

In the City of Saharanpur lies the disputed plot (plot bearing Khasra No. 766 of Khewat No. 171). This plot belonged to Hulas Chand and Bilas Chand. In May 1930 these persons granted a permanent lease of this plot to the Patel Mills Ltd., who were to pay Rs. 75/- per year as rent. In the terms of the lease it was provided that the lease could use it for any purpose including the construction of building and that it would not be liable for ejectment, except that in the case of non-payment of rent for three consecutive years, the lease could be forfeited.

On 1st November 1932 Hulas Chand and Bilas Chand sold their rights in the plot in dispute to Budh Sen and Jia Lal. Jia Lal died on 27th April 1943 and his heirs on 11th May 1943 transferred their rights in favour of Jugal Kishore. Before this Budh Sen had already transferred his rights in favour of Jugal Kishore with the result that he became the owner and lessor of the whole plot in dispute.Shanker Lal and Pyare Lal, the appellante, filed a suit for pre-emption in 1944 which was decreed. On 30th August 1945 they obtained possession over the plot in dispute through thecourt.

Patel Mills Limited went into voluntary liquidation and Sri Ram Gopal Mehra, an Advocate of Saharanpur, was appointed as the Liquidator. Banaras Bank Limited being the largest creditor of the Patel Mills Limited, Sri Mehra entered into negotiations for the sale of the entire assets of the Patel Mills Ltd. to the Banaras Bank Ltd. and on 23rd February 1933 executed an agreement for sale of the entire assets of the Patel Mills Ltd., including the leasehold rights over the plot in dispute, in favour of the Banaras Bank Limited. On 4th of May 1939 a meeting of the creditors of the Pate] Mills Ltd. was held to consider the final report of the Liquidator, stating inter alia that the entire assets of the Patel Mills Ltd. including the lease-hold rights in the plot in dispute had been transferred to the Banaras Bank Ltd. for a sum of Rs. 70,000 which sum had been received by the Liquidator from the Banaras Bank Ltd. The report of the Liquidator was accepted in the meeting and was sent to the Registrar, Joint Stock Companies for registration. It was registered on 9th September 1939. On 1st March 1940, the Banaras Bank Ltd. went into Liquidation. The Official Receiver, who took charge of the assets of the Banaras Bank Ltd., not finding a properly stamped and registered deed of transfer of the lease-hold rights of the plot in dispute, called upon Sri Mehra, the Ex-Liquidator of the Patel Mills Ltd. to execute a proper document of sale. Sri Mehra did so on 28th January 1941 by executing a properly stamped registered sale deed in favour of the Banaras Bank Ltd. (under liquidation). On 9th March 1943 the Official Liquidator Banaras Bank Ltd., transferred the leasehold rights over this plot to Sri Narendra Bahadur Tandon, respondent.

Suit No. 54 of 1946 which has given rise to this special appeal, was filed by Shanker Lal and Pyare Lal, the appellants, against Narendra Bahadur Tandon, the respondent, for possession over the plot in dispute, on the allegation that the lease hold rights in favour of the Patel Mills Ltd had come to an end and the land had reverted to the proprietor that is the lessor. The suit was contested on several pleas including that of the bar of estoppel, the non-impleadment of necessary parties, the bar of limitation and the plea that the suit was barred by Sections 171 and 183 of the Indian Companies Act. The learned Munsif of Saharanpur, who tried the suit, dismissed it with costs on 7-10-1948. The plaintiff-appellants appealed to the District Judge of Saharanpur. That appeal was heard by the First Civil Judge of Saharanpur, who dismissed it on 27-10-1951, whereupon second appeal No. 485 of 1952 was filed in this Court but was dismissed by Bishambhar Dayal, J. as already stated earlier.

On behalf of the plaintiff-appellants, the following submission was made before Bishambhar Dayal, J. :

The lease came to an end on the dissolution of the Patel Mills Ltd. and the lease-hold rights reverted to the lessors, who were entitled to get back possession of the plot to dispute. Bishambhar Dayal, J. recorded the following findings:

1. That it being the case of a permanent lease, the lessor's rights could not revert to the lessor and they stood escheated to the Government.

2. Sri Mehra was competent to execute the sale-deed on 28th January 1941 even though he had ceased to be the Liquidator of the Patel Mills Ltd. with effect from 9th December 1939 as a consequence of the dissolution of the aforesaid Mills.

3. The plaintiff-appellants were estopped from obtaining possession over the plot in dispute on account of certain representations made, on which the defendant-respondent or his predecessor in interest had acted.

4. That the suit was barred by Section 53A of the Transfer of Property Act.

Mr. Gopi Nath Kunzru, who has appeared for the plaintiff-appellants, has assailed all the findings recorded by Bishambhar Dayal, J.

We would first like to consider the question whether in the case of a permanent lease, on the death of the lessee, without leaving any heirs or successors, the lease-hold rights would revert to the lessor or would escheat to the Government. Following the decision in Collector of Masulipatam v. Cavaly Vencata Narrainapah, (1859-61) 8 Moo Ind App 500 (PC), Bishambhar Dayal J. has held that a right of escheat in favour of the Crown (Govt.) exists in India in respect of property of which no other owner remain under the personal law. This point is well settled and need not detain us.

Bishambhar Dayal J. placed reliance on Sonet Kooer v. Himmut Bahadur (1875-76) ILR 1 Cal 391 (PC), Mt. Raman Bibi v. Mathra Prasad 75 Ind Cas 621: (AIR 1923 All 374) and Tulshi Ram Sahu v. Gur Dayal Singh, (1911) ILR 33 All 111 to hold that when the lessee of a permanent lease dies without heirs or successors in interest, the Crown to the exclusion of the lessor succeeds to the lease-hold rights. We have carefully examined these cases and are of opinion that all of them are distinguishable.

In (1875-76) ILR 1 Cal 391 (PC) (supra) the Zamindar had granted a permanent and hereditary muqarrari tenure and the question which the Judicial Committee had to consider was whether on the death of the muqarrari tenure holder her right reverted to the Zamindar or went by escheat to the Crown. The Subordinate Judge held that it had reverted to the Zamindar and the Calcutta High Court on appeal reversing the decree of the trial Judge, held to the contrary. The decision of the Calcutta High Court was founded on several grounds, one of them being that after the death of the original muqarrari tenure-holder, the Zamindar had received rent from her successors and for that reason some kind of tenancy had comeinto existence, Sir J.W. Colvile speaking for the Judicial Committee observed.:

'The recognition of their interest by the receipt of rent from them would constitute some kind of tenancy requiring to be determined by notice or otherwise. Their Lordships, however, are not prepared to say that this circumstance is of itself sufficient to defeat the claim of the plaintiff in this suit. They think that the ground upon which the decision of the High Court is to be supported, if supported at all, is that the plaintiff in the suit is not the person who, assuming the parties in possession to have no legal title, is entitled to recover the land by the destruction of the tenure. That of course, raises the question which the High Court has dealt with namely, whether, on the death of Shurfoonnissa without heirs, the right to the possession of the land reverted to the original grantor, or whether the tenure on such a failure of heirs should be taken to have escheated to the Crown'.

Their Lordships concluded:

'It has been argued, however, that this Mukurrari, not being an independent Zamindari, but being carved out of a Zamindari stands upon a peculiar footing, and that upon the failure of heirs, the Zamindari takes by right of reversion, or, if not strictly by right of reversion that the tenure escheats to him as the superior lord rather than to the Crown. The Mokurrari was clearly an absolute interest, it was also an alienable interest. It might have been seized and sold, as Mr. Doyne has shown, under Act X of 1859 even in a suit for rent. (It could not have been forfeited for the nonpayment of rent; for in such a case the Zamindar could only have caused it to be seized, put up for sale and sold to the highest bidder ) (Underlined by us (herein bracketed))

It cannot, their Lordships think, be successfully argued that having so passed, the estate would have determined upon the death of Shurfoonnissa (supposing it had been sold in her lifetime) without heirs, for the grant contains no provision for the lessee of the estate created in such event. There seems, therefore, to be no ground for saying that lands have reverted in the proper sense of the term to the Zaminder; and the only question is whether on the failure of heirs of the last possessor, he is entitled to take a tenure subordinate to and carved out of his Zamindari by escheat.

Their Lordships are of opinion that there is no authority upon which the power of taking by escheat can be attributed to the Zamindar'.

In this case the Judicial Committee interpreted the particular deed of muqarrari and came to the conclusion that the Zamindar had passed on to the muqarraridar an absolute and alienable interest which on a proper construction of the muqarrari deed they had no right to resume. Their Lordships were persuaded to take this view also on account of the circumstance that there was no forfeiture clause in the muqarrari deed. In the case before us there is a clear forfeiture clause; and no absolute interest has been transferred to the lessee. The right of the lessee was carved out from the right of the owner or lessor. That case, therefore, cannot provide any precedent to us.

In 75 Ind. Cas 621: (AIR 1923 All 374) (supra) the question was whether the property of a tenant-grove-holder, who died heirless but under a debt, reverted to the Zamindar or not and whether the Zamindar was liable to pay the debts of the tenant-grove-holder. A single Judge of this Court held that the trees and land reverted to the Zamindar and that he was not liable to pay the debts of that tenant-grove-holder. This case, therefore, also does not provide a precedent.

In (1911) ILR 33 All 111 (supra) it was held by a Full Bench of this Court that on the death of a fixed-rate tenant without heirs his tenancy does not escheat to the Crown but reverts to the Zamindar. (1875-76) ILR 1 Cal 391 (PC) (supra) was distinguished with the following observation:

'In that case it will be observed that the mukurraree was an absolute and alienable interest. It could not have been forfeited for the non-payment of rent. The Zamindar could only in the case of non-payment of rent have caused it to be seized, put up for sale and sold to the highest bidder. It was therefore property which might have passed to any purchaser, and having so passed the estate would not have determined upon the death of the grantee without heirs if it had been sold in her life-time. The language of their Lordships is as follows:


The grant in this case, it will be observed, that of an absolute interest and altogether unlike the interest of a fixed rate tenant' The question in this ease was also clearly different from the one before us.

In our judgment Panchubala Debi v. Jotindra Nath AIR 1926 Cal 993 is also distinguishable because there was no forfeiture clause.

We would, however, like to point out that the lest laid down in these cases is answered by the case of the plaintiff-appellants rather than that of the defendant-respondent. The right of a lessee is carved out of the right of the owner and is not an absolute interest. Section 105 of the Transfer of Property Act defines 'lease' and reads:--

'A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically, or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms. The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent'.

While the lessor grants a lease of this property, he transfers an interest in that property to the lessee and not the property itself. It is well settled that even a permanent lease is only a transfer of the right of possession. The right of ownership or any interest therein is nottransferred in such a case. (See Vettkataswara v. Alagoo Moothoo, (1859-61) 8 Moo Ind App 127 (338) (PC) and Bejoy Singh v. Surendra Narayan Singh, AIR 1928 PC 234 (237).

It is also well settled that a perpetuallease even without a clause to that effect isliable to forfeiture: See Monmohini Dassi v.Kali Das Ahiri (1898) 2 Cal WN 292 (294). Thegrant of muqarrari hereditary tenure is in thenature of transfer of under-proprietary rightswhich, when transferred for a price, are to betreated as sold: see Har Bux Singh v. Ram Autar and Sant Baksh Singh v.Bhawani Prasad AIR 1924 Oudh 426 (428).The money paid for a lease is not called price,hut premium.

The circumstance that the present is a case of lease which is liable to forfeiture not only distinguishes it from the case relied upon by Bishambhar Dayal J. but also leads to the conclusion that the right of the lessee is carved out from a larger right of ownership, in which the lessee's right would again merge admittedly, in the event of rent for three years consecutively not being paid. Once that is held and the position accepted that the right of the lessee in the present case is capable of merging in that of the lessor or owner and that lease-hold-rights can be resumed by the owner, we see no reason why the right of the lessee (even though it be a permanent lease) would not revert to the owner or the lessor in the event of the lessee's dying without an heir. In the present case Patel Mills Ltd. stood dissolved on 9th September 1939 when the report of its Liquidator was registered by the Registrar, Joint Stock Companies. There was no question of there being an heir of the Patel Mills Ltd. and there was no company which took over its liabilities and assets Consequently with great respect to Bishambar Dayal, J. we are of the opinion that in the present case the right of the lessee did not escheat to the Government, but reverted to the owner or lessor.

2. We now proceed to consider whether Mr. Mehra was competent to execute the sale deed on 28th January 1941, transferring the rights of the lessee in the land in dispute to the Banaras Bank Ltd. Relying upon Pulseford v. Devenish, (1903) 2 Ch D 625, Bishambhar Dayal, J. held that even though on the date of the sale Sri Mehra was not the Liquidator of the Patel Mills Ltd., he was still competent to execute the sale-deed. He relied upon the following observation of Farwell, J. at p. 633 of the report:

'But when and so soon as under the provisions contained in the Act of 1862 the company is dissolved, so that there is no longer arty existing liquidation, then there is no longer a remedy under the Act. But the duty to pay the debts as stated above is an absolute statutory duty, without limit in point of time and with no provision for the release of the voluntary liquidator similar to that in Section 22 of the Act of 1890 for the release of other liquidators and the only peculiarity of the case is that the remedy created by the statute is not co-extensive in point of time with the duty, for the Act permits the destruction of the remedy before the duty has been performed; it has been held that the opening words of Section 142, 'as soon as the affairs of the company are fully wound up', do not amount to a condition precedent (at p. 634). Now, as I have already stated, the duty cast upon the liquidator to pay the debts, of the company is not limited in time; but the continuance of the statutory remedy depends on the act of the liquidator himself; he and he only can bring about the dissolution of the company under Sections 142 and 143 of the Act of 1862, It would be a strange result if he could thus destroy all remedy against himself. I am confirmed in my opinion by the observations of James L. J. in the case of In re London and Caledonian Marine Insurance Co. (1879) II Ch. D. 140 (144), He says there, dealing with the case of the duties, of a liquidator in a voluntary liquidation. ''When the liquidator has done all that, he can to wind up the company, when he has disposed of the assets as far as he can realize them, got in the calls as far as he can enforce them, and paid the debts as far as he is aware of them, and has done all that he can do in winding up the affairs, so that he has completed his business so far as he can, and is functus officio. Then, it is his duty to call a meeting, to give in his account of the affairs of the company, and to make a return to the registrar under the Act, '. . . . . .'. Bishambhar Dayal J.was of the opinion that Farwell J. meant to lay down that he continued to act as liquidator al-though he had become functus officio. i.e. although he had completed his official duty Bishambhar Dayal J., further observed:--

'In my opinion, this authority makes it quite clear that the liquidator of a company in a voluntary liquidation continues to have the power, and in fact, is not absolved of the duties of the liquidator simply by dissolution of the company. He continues to be bound by his duties and he has to act as such to complete whatever he has left undone or whatever he has left incomplete during the time of liquidation.'

In our opinion this case is clearly distinguishable. In (1903) 2 Ch 625 (Supra) the fads were that the licensee company went into voluntary liquidation in March 1901. Devenish was appointed the liquidator. He was authorised, when and so soon as the debts and liabilities of the licensee company had been paid and satisfied, to distribute the 52,500 fully paid-up shares amongst the contributories of the licensee company. The assets of the licensee company were sufficient to pay all, the creditors, including the plaintiffs, in full; and all the creditors, other than the plaintiffs, were paid, and by a deed dated March 25, 1901 the business, goodwill, and assets of the licensee company, and the benefit of all contracts (including the agreement of March 2, 1900) were duly assigned to and vested in the new company; and by the same deed the new company covenanted to keep the licensee company indemnified against all claims and demands by reason of the non-performance or the non-execution of the said contracts 27-00 cash was applied in paying offthe debentures of the licensee company, and the 52,500 shares were allotted to the defendant as liquidator, and by him distributed amongst the share holders of the licensee company. On August 6, 1901, the defendant as liquidator submitted to a general meeting of the licensee company an account purporting to show the manner in which the winding-up had been conducted and the property of the licensee company had been disposed of, and the next day (August 7) he made the usual return required by Section 143 of the Companies Act, 1862, to the Registrar of Joint Stock Companies, so that on the expiration of three months, i.e. on November 7, 1901, the licensee company was dissolved. The plaintiffs had no notice or knowledge of the liquidation and dissolution of the licensee company until June, 1902.

The new company refused to pay the plaintiff; and thereupon they brought this action against the defendant, alleging that the defendant wrongfully and in breach of his duty as liquidator made no provision for the claims of the plaintiffs, and had distributed the assets of the licensee company without making such provision, and they claimed by way of damage 1800 under the agreement on March 2, 1900, and 124-2s-6d., the value of the lamps. The question that Farwell, J. had to consider was whether on the ground of negligence to do his duty the liquidator was liable to pay the damages claimed or in view of the circumstance that the licensee company having been dissolved and he having ceased to be the liquidator, he could not be held liable. In that case. Farwell, J. had not to decide, as we have to decide in this case, whether the ex-liquidator could represent the company already dissolved and had the power to execute a sale deed of the property of the dissolved company even after he has ceased, to be the liquidator and the company had ceased to exist. It is elementary that if a person does not act in good faith in the discharge of his statutory duty, he is liable for damages. It is that rule that Farwell, J. invoked in 1903-2 Ch. 625 (supra). That case is not an authority for the proposition that a liquidator even after the dissolution of a company and even after he has ceased to be a liquidator can deal with the property of a dissolved company and transfer it.

James L. J., was also called upon to answer a completely different question from the one before us. The case in (1879) 11 Ch. D 140 was at the stage when the liquidator had done all that he could do to wind up the company but had not called a meeting to give the account of the affairs of the company and to make a return to the Registrar under the Act, with the result that the company bad not been formally dissolved, nor the liquidator become functus officio. Until he had called the meeting, given an account of the affairs and made a return to the Registrar under the Act, it could not be said that he was functus officio: and this if precisely what James. L. J. said. The stage before us is a very different one. Not only had the liquidator done all he was required to do to wind up the company, hehad already called a meeting, given his account of the affairs of the company arid made a return to the Registrar under, the Act. This being the position, the observations of James. L. J., cannot be of any help to us.

As Mr. Mehra had become functus officio, we are satisfied that he had no authority or power to execute the sale deed in question.

Even though it is not necessary for us in this case to decide who could execute the sale deed, we would like to point out that the provision of Section 221 of the Indian Companies Act; 1913 (hereinafter referred to as the Act) even voluntary liquidation is under the supervision of the Court. That provision reads:

'221. When a company has by special or extraordinary resolution resolved to wind up voluntarily, the Court, may make an order that the voluntary winding-up shall continue, hut subject to such supervision of the Court, and with such liberty for creditors, contributories or others to apply to the Court, and generally on such terms and conditions as the court thinks just.'

Section 225 of the Act which deals with the effect of supervision order, reads:

'225. (1) Where an order is made for a winding up subject to supervision the liquidator may, subject to any restrictions imposed by the Court exercise all his powers without the sanction or intervention of the Court, in the same manner as if the company were being wound Up altogether voluntarily.

(2) Except as provided in Sub-section (1) and save for the purposes of Section 196 any order made by the Court for a winding up subject to the supervision of the Court shall for all purposes, including the staying of suits and other proceedings, be deemed to be an order of the Court for winding up the company by the Court, and shall confer full authority on the Court to make calls or to enforce calls made by the liquidators, and to exercise all other powers which it might have exercised if ah order had been made for winding up the company altogether by the Court'.

Section 235 confers jurisdiction on this Court to examine the conduct of a proraotor, director, manager, liquidator or of any officer of the company and compel him to repay or restore the money or property or any part thereof respectively mis-applied or retained by him by committing misfeasance or breach of trust in relation to the company. The period of limitation for an action provided by this section is three years from the date of the first appointment of the liquidator in the winding up or of the misapplication, retained misfeasance or breach of trust as the case may be, whichever is longer. It is settled law that even after a company has been dissolved a liquidator is amenable to the jurisdiction of the Court to answer a charge of dereliction of duty and to pay damages for negligence of duly or for dishonest dealings:

See 1903-2 Ch. 625 (supra) and (1879) 11 Ch. D. 140 (144). This would show that the control of the court is not lost even after the winding-up is over and the company dissolved. Under thesecircumstances, it appears to as that it is inherent in the scheme of the Act and the provisions mentioned above that even after a company is dissolved and the liquidator becomes functus officio, the Court would have jurisdiction to do all that is necessary to complete the winding up and to do justice, including the power to execute a proper sale deed in respect of property for the sale of which the liquidator, while he was still in office, had contracted. That being the position, in our opinion the Banaras Bank Ltd. should have approached the Court for executing the sale deed rather than Sri Mehra who had become functus officio and could not validly transfer any property belonging to the Patel Mills. Under the provisions of Section 244-B of the Act, unclaimed dividends and undistributed assets are to be paid to the company's liquidation account by a liquidator and under Sub-section (5) of that section, 'any person claiming to be entitled to any money paid into the Companies Liquidation Account in pursuance of this section may apply to the Court for any order for payment thereof and the Court, if satisfied that the person claiming is entitled, may make an order for the payment to that person of the sum due' This section clearly provides that even if liquidation is over and the liquidator has become functus officio, the Court's jurisdiction over the assets of the dissolved company is not lost. This provision, therefore, also supports our view that it is the Court alone which, under the circumstances of the case could validly perform, on behalf of the dissolved Patel Mills, the solemn act of executing the sale deed in favour of the Banaras Bank Ltd.

Bishambhar Dayal, J. has relied upon Sections 209 H (1). 243 and 244-B of the Act to conclude that 'from the Indian Companies Act itself it appears that the liquidator does not cease to be the liquidator for purposes of disposing of the assets of the company as soon as the company is dissolved.' With great respect to him, in our opinion, it is not the effect of these provisions that even after a company has been formally dissolved and the entire liquidator proceedings are over and the liquidator has become functus officio, he still retains the right of representing the dissolved company and of executing a sale deed in respect of the dissolved company's property. The stage contemplated by Section 209-H of the Act is much earlier than the one at which Sri Mehra executed the sale deed in the present case. Section 243 of the Act in our judgment, is not at all relevant to the question raised before us: and Section 244-B, as said earlier, points to a different conclusion from the one arrived at by Bishambhar Dayal, J.

For the reasons mentioned above, we are satisfied that the sale deed executed by Sri Mehra in favour of the Banaras Bank Ltd., is an invalid document.

3. We now come to consider whether in the present case, the plaintiffs-appellants are estopped from obtaining possession over the plot in dispute on account of any alleged representations made. Bishambhar Dayal J. observed as follows on this point:

'The facts on which this plea of estoppel is based are these. The company having been completely dissolved on the 9th December, 1939, the right to take possession as lessors arose in favour of Budh Singh and Jiyalal or their heirs. On the 12th of April, 1939, Budh Singh and Jiyalal had accepted rent from the voluntary liquidator of the Mills. They had therefore full knowledge that the company was under liquidation and was about to come to an end. On the 11th of January, 1941, Shri Ghulam Ahmad, a lawyer for Budh Singh and Jiyalal sent a letter (Ext. A-13) to the liquidator of the Banaras Bank Ltd. demanding a sum of Rs. 395/- as arrears of rent for four years and asserted that on account of default for more than three years, the lease was liable to be forfeited. This claim of the lessors came for decision by the liquidator who on the 15th January, 1942, held that Budh Singh and Jiyalal had no right to forfeit the lease and to take over possession of the properly. He, however, admitted the claim for rent and made payment of the same which was accepted by Budh Singh and Jiyalal. Thereafter they never raised the question that the lease had come to an end that they had become entitled to take possession on any grounds. This decision of the liquidator was binding upon the lessors who were the predecessors-in-interest of the plaintiffs and they did not appeal against that derision On the 21st of March, 1946 Jugal Kishore who was the purchaser of the rights of Budh Singh and Jiyalal also accepted rent from the official liquidator of the Banaras Bank Ltd. It is contended by the defendant that on account of these acts on the part of the lessors, the Banaras Bank Ltd. believing itself to be the owner of the lessee rights, transferred the same to the defendant and the defendant on a perusal of the documents, letters and receipts mentioned above in the possession of the Banaras Bank Ltd. was misled into believing that the Banaras Bank Ltd. under liquidation had a valid right to pass on to them and thereby change their position by purchasing the property. The lessors are now estopped from allegation that the lessee rights did not exist and the lessors were entitled to take back possession.'

In our judgment, the circumstance that Budh Singh and Jiyalal accepted rent from Sri Mehra the voluntary liquidator, of the Patel Mills, was not relevant to determine whether or not there had been any representation, for admittedly the Patel Mills had not been dissolved till then and the right that the owner is now claiming is a consequence of the dissolution of the Patel Mills and did not accrue to him at that time.

With regard to the notice of Sri Ghulam Ahmed, it is enough to observe that any act done under a misapprehension of legal rights does not create an estoppel: see G.H.C. Ariff v. Jadunath Majumdar Bahadur . Man Mohan Das v. Janki Prasad, ; Kartar Singh Bedi v. Dayal Das and Mool Chand Moti Lal v. Ramkishan : AIR1933All249 .

It is also well settled that when the parties know the correct position, there is no questionof estoppel; see Mohori Bibee v. Dhumodas those (1903) 30 Ind App 114 (PC). In the pre-sent case the lessees, i.e., the Patel Mills or the Banaras Bank Ltd. as also the lessors (owners) knew of the existence of the forfeiture clause. Sri Mehra, the liquidator, also knew this and so did the liquidator of the Banaras Bank Ltd. Under these circumstances, in our opinion the bar of estoppel does not operate against the plaintiffs-appellants.

4. The only question that now remains to consider is whether the suit giving rise to this appeal is barred by the provisions of Section 53-A of the Transfer of Property Act. That provision reads:

'53A. Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has in part performance of the contract, taken possession of the property or any part thereof, or the trails force, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract then, notwithstanding that the contract though required to be registered, has not been registered, or, where there is an instrument of transfer that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person, claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:

Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof'.

In the present case the plaintiffs-appellants are the pre-emptors. They are not the successors-in-interest of the Patel Mills Ltd. and are not bound by any act of its liquidator Sri Mehra. They also do not derive any title from Jugal Kishore nor can they be considered to be Jugal Kishore transferee or successor. The right of a pre-emptor is independent of the right of the person whom he ousts by filing a suit for pre-emption. Under these circumstances, it appears to us that Section53A of the T. P. Act has no application to the facts before us. The cases on which reliance has been placed by Bishambhar Dayal. J., are clearly distinguishable, not being cases of pre-emptors.

The result, therefore, is that we allow this appeal with costs, set aside the judgment of Bishambar Dayal, J. as also those of the first appellate court and the trial court and decree the suit of the plaintiffs-appellants with costs.

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