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Alkhu Rai and ors. Vs. Lachhman Upadhiya - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Judge
Reported inAIR1924All324; (1924)ILR46All274
AppellantAlkhu Rai and ors.
RespondentLachhman Upadhiya
Excerpt:
.....by conditional sale. - - now if their suit were to succeed, they would get both the mortgagee right in respect of which their remedy has become time-barred, as well as the equity of redemption. here, no price had been paid for the equity of redemption by the respondents, and obviously the wajib-ul-arz had no application to a case like the present. where these conditions are not satisfied, an appellant, or a respondent, relying upon previous rulings of the court and putting them forward as guides to the correct interpretation of the particular document on which the case under appeal actually turn's, can do nothing more than ask the court to take into consideration the general principles which have been applied by other hon'ble judges in similar cases and to derive from them..........patti in which the property is situated.7. the courts below have relied on a number of division bench cases of this court in which it has been laid down that unless the wajib-ul-arz recites a custom expressly applicable to the enforcement of a right of pre-emption on the passing of a foreclosure decree it would be impossible to extend that right to such cases.8. on behalf of the appellants it is not disputed that the recent trend of authorities has been against the view contended for. we need only refer to the cases of kamta parshad v. gulzar singh (1914) 12 a.l.r. 611, suba singh v. mahabir singh (1917) i.l.r. 39 all. 544, sundar kunwar v. ram ghulam (1918) i.l.r. 40 all. 626, ram bharosa v. kabutra (1919) 17 a.l.r. 452.9. all these are decisions of the special pre-emption bench.10......
Judgment:

Lindsay and Sulaiman, JJ.

1. This is a plaintiffs' appeal arising out of a suit for pre-emption. A mortgage by conditional sale was executed in the year 1861, but no suit for preemption was brought then. Recently a suit for foreclosure was instituted and after the preliminary decree for foreclosure the decree was made absolute on the 12th of April, 1919. On the 15th of September, 1920, the present suit was instituted on the ground that the defendant, who was originally the mortgagee and in whose favour the mortgage had since been foreclosed, was a stranger to the mahal. Reliance was placed on behalf of the plaintiffs mainly on an extract from the wajib-ul-arz which contained a clause to the effect : 'In the mahal if any one of the co-sharers would wish to make a mortgage by conditional sale or an absolute sale he would do so, on the same price as the price offered by others, to pattiwala karibi, next to other hissedar patti, and when they would not take, to his hissedar karibi who may be in the other patti, and if they too would not take, to hissedar mahal and then to a stranger.'

2. On behalf of the defendant it was, However, pleaded inter alia that he was a co-sharer in the same mahal and patti in which the property sought to be pre-empted was situated; the existence of the custom was also denied and it was further alleged that there was no custom of a right of pre-emption on the foreclosure of a mortgage by conditional sale.

3. The court of first instance came to the conclusion that in view of the decree absolute for foreclosure the plaintiffs had no right to pre-empt. It further expressed the opinion that the defendant too had a share in the same patti and mahal in which the property was situated and that therefore no question of preference inter se arose.

4. On appeal by the plaintiffs the learned District Judge dismissed the suit on the sole ground that there was no right of pre-emption after a foreclosure decree had been passed. He did not go into the question as to whether the defendant was or was not on the same footing as the present plaintiffs.

5. In order to have clear findings on all the questions of fact before going into the questions of law raised in the appeal we thought it necessary to send an issue down for a definite finding as to whether the defendant was or was not a co-sharer in the same patti and mahal. The finding has now been returned and it is to the effect that the plaintiffs are co-sharers in the same patti and mahal in which the property sought to be preempted is situated, but the defendants are not co-sharers in the same patti though they are co-sharers in the same mahal. No objections have been taken to this finding which we must therefore accent as correct.

6. It is clear, therefore, that if the wajib-ul-arz records a custom of pre-emption under which the plaintiffs are entitled to bring a suit for pre-emption on the passing of a foreclosure decree, they would have a preferential right as against the defendant who is not a co-sharer in the patti in which the property is situated.

7. The courts below have relied on a number of Division Bench cases of this Court in which it has been laid down that unless the wajib-ul-arz recites a custom expressly applicable to the enforcement of a right of pre-emption on the passing of a foreclosure decree it would be impossible to extend that right to such cases.

8. On behalf of the appellants it is not disputed that the recent trend of authorities has been against the view contended for. We need only refer to the cases of Kamta Parshad v. Gulzar Singh (1914) 12 A.L.R. 611, Suba Singh v. Mahabir Singh (1917) I.L.R. 39 All. 544, Sundar Kunwar v. Ram Ghulam (1918) I.L.R. 40 All. 626, Ram Bharosa v. Kabutra (1919) 17 A.L.R. 452.

9. All these are decisions of the special Pre-emption Bench.

10. In these cases the view has been laid down that a plaintiff who comes into court to enforce a right of pre-emption has to establish the custom under which he is entitled to succeed. If all that he is able to produce in proof of this custom is an entry contained in the wajib-ul-arz which merely says that if a co-sharer wishes to make a mortgage or sale of property he should offer it to so and so, that evidence is insufficient to prove that there is a custom prevailing in the village in which the right of pre-emption exists' in respect of foreclosure decrees.

11. The learned vakil for the plaintiffs appellants, however, contends that these cases were decided contrary to the principles laid down in certain earlier Full Bench cases which have not been either referred to or not properly distinguished. His reliance mainly is on the Full Bench cases of Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610, Ali Abbas v. Kalka (1892) I.L.R. 14 All. 405, Batul Begam v. Mansur Ali Khan (1898) I.L.R. 20 All. 315, and on a decision of their Lordships of the Privy, Council in Batul Begam v. Mansur Ali Khan (1901) I.L.R,. 24 All. 17.

12. There are also some Division Bench cases prior to 1911. It is to be noted that in all these Full Bench cases the mortgages had been executed when the old Regulations were in force and notice for foreclosure had been issued under Section 7 of the old Begulations. It was held that in such cases the cause of action to bring a suit for pre-emption arose on the expiry of the year of grace fixed in the notice. It was also held that a suit for pre-emption after foreclosure was governed by Article 120 of the Limitation Act and should be brought within six years from the date of the expiry of the notice. In some of these cases it was pointed out that the mortgage was extinguished and absolute rights vested in the mortgagee on the date of the expiry of the notice automatically. The issuing of the notice was not a judicial act but a mere ministerial act and that therefore it was the default of the mortgagor himself which was the direct cause of the rights of the mortgagee maturing into absolute rights.

13. There are other Division Bench cases, viz:

Anwar-ul-Haq v. Jwala Prasad (1898) I.L.R. 20 All. 358, and Raham Ilahi Khan v. Ghasita (1898) I.L.R. 20 All. 375, which certainly go the length of laying down that a new cause of action in favour of a pre-emptor arises on the passing of a decree absolute for foreclosure. There are also certain observations in the Full Bench cases referred to above on which great reliance has been placed on behalf of the appelants. It is contended on behalf of the appellants that the principle underlying all these cases is that the right of preemption accrues only when an out-and-out transfer comes into effect. It is urged that no right of pre-emption, as distinct from a right of pre-mortgage, could have arisen while the equity of redemption was still with the mortgagor and the mortgagee had not acquired proprietary rights. On the same analogy it is contended that the right to pre-empt a transfer arises after the final decree for foreclosure is passed, which alone extinguishes the equity of redemption. The learned advocate for the respondents contends that all the previous Full Bench cases are distinguishable on the ground that they turned on the interpretation of the old Begulations.

14. It is true that for the last 12 years a consistent opinion has been expressed by the Special Bench which is very much against the contention of the appellants. At the same time there has been no final pronouncement by a Full Bench of this Court, and we are of opinion that in order to set the dispute at rest it is desirable that there should be an authoritative pronouncement by a Full Bench of this Court. The point raised in this appeal is a substantial question of law and one of considerable importance inasmuch as cases of pre-emption on foreclosure frequently arise in these provinces.

15. We accordingly direct that this case be laid before the Hon'ble Chief Justice for the purpose of constituting a Full Bench to decide the case. We may point out that in two of the Full Bench cases referred to by us the court was constituted of five Judges. This fact might be taken into consideration in determining the number of Judges to sit on the Bench to be appointed.

16. Pandit Uma Shankar Bajpai, (with M.L. Agarwala), for the appellants, submitted that a right to pre-empt arose on the foreclosure of the mortgage. No doubt, in the case of a mortgage by conditional sale, a cause of action for a pre-mortgage did arise at once, but if no suit was brought then, it was still open to a co-sharer to bring a suit after the foreclosure of the mortgage. The sale giving rise to a right of pre-emption contemplated by the wajib-ul-arz was not necessarily a voluntary sale; it did include a transfer of equity of redemption consequent on the foreclosure of the mortgage. No doubt, the Pre-emption Bench had taken a contrary view, but that view was in conflict with the earlier decisions of this Court, some of them Full Bench decisions. The following cases were cited and relied on: Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610, Ashik Ali v. Mathura Kandu (1882) I.L.R. 5 All. 187, Ali Abbas v. Kalka (1892) I.L.R. 14 All. 405, Batul Begam v. Mansur Ali Khan (1898) I.L.R. 20 All. 315, Anwar-ul-Haq v. Jwala Prasad (1898) I.L.R. 20 All. 358, Raham Ilahi Khan v. Ghasita (1898) I.L.R. 20 All. 375, Ran Bahadur Rai v. Parmeshar (1902) I.L.R. 24 All. 493 and Bahadur Singh v. Ram Singh (1904) I.L.R. 27 All. 12. A different view was taken, by the Pre-emption Bench, in the following cases: Kamta Parshad v. Gulzar Singh (1914) 12 A.L.J. 611, Suba Singh v. Mahabir Singh (1917) I.L.R. 39 All. 544, Sundar Kunwar v. Ram Ghulam (1018) I.L.R. 40 All. 626 and Ram Bharosa v. Kabutra (1919) 17 A.L.J. 452.

17. Maulvi Iqbal Ahmad, (with him Munshi Haribans Sahai), for the respondents, submitted that in the matter of interpretation of documents decided cases furnished no guide unless the document to be interpreted was identical. Of the earlier cases of this Court, the only case which could be said to be in point was that of Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610. But it was distinguishable on the broad ground that there the mortgage was foreclosed under the provisions of Regulation No. XVII of 1806, proceedings under which were purely ministerial proceedings, as held by the Privy Council in the case of Forbes v. Ameeroonissa Begam (1865) 10 M.I.A. 340, (850). In the present case the foreclosure was effected by a decree of court in judicial proceedings under the Code of Civil Procedure.

18. The contention of the appellants, if upheld, would lead to startling results. Their right to a pre-mortgage, which could have been enforced as soon as the mortgage was made, has long become time-barred. Now if their suit were to succeed, they would get both the mortgagee right in respect of which their remedy has become time-barred, as well as the equity of redemption.

19. The wajib-ul-arz contemplated a right of pre-emption on a. transfer. But by the foreclosure of the mortgage the equity of redemption had not been transferred to the respondents. The effect of the foreclosure decree was to extinguish it and not to transfer it to any one. Purther, the wajib-ul-arz provided that the pre-emptor was to get the property at the price paid by the vendee. Here, no price had been paid for the equity of redemption by the respondents, and obviously the wajib-ul-arz had no application to a case like the present. If the suit were decreed it would lead to this anomalous result that the plaintiffs would get both the mortgagee right and the equity of redemption by paying only the mortgage money and no price for the equity of redemption. In short, by not bringing a suit when the mortgage was made, the plaintiffs were to be gamers by their own default.

20. Uma Shankar Bajpai, replied.

Piggott, J.

21. The facts out of which this appeal arises are sufficiently stated in the referring order. The essential point for determination is whether, under a custom described in the wajib-ul-arz, the plaintiffs appellants have or have not a right of pre-emption in, respect of a foreclosure decree which was made absolute on the 12th of April, 1919. The said decree was passed on a mortgage by conditional sale executed in the year 1861. The record of the custom in the wajib-ul-arz is in the following terms:

If one of the co-sharers desires to make a mortgage, or a mortgage by conditional sale, or an out-and-out sale, he must do so on the same adequate price as may be offered by other parties, in the first instance to a near co-sharer in the same patti, next to other co-sharers in the patti; if they will not take, then to a near co-sharer in another patti, next to any co-sharer in the mahal, and finally to a stranger.

22. If we were called upon to interpret these words, apart altogether from any decisions which have been pronounced or reported in other cases, I cannot say that I should feel any serious difficulty as to their meaning. I understand them to mean that a right of pre-emption is violated, and a cause of action given to the persons possessing pre-emptive rights in the order specified above, in the event of an ordinary mortgage in favour of a stranger, or of a mortgage by conditional sale in favour of a stranger or of an out-and-out sale to a stranger. In each of these cases the violation of the right would occur, and the cause of action would accrue, from the date of the ordinary mortgage, the mortgage by conditional sale, and the out-and-out sale, respectively. I cannot read anything into the provisions of the wajib-ul-arz, as quoted above, which-would warrant the conclusion that, in the case of a mortgage by conditional sale, a pre-emptor whose rights were violated by the mortgage contract is entitled, either to claim to be placed at once in the shoes of the mortgagee, or to wait until proceedings are taken for foreclosure and then to prefer his claim to be placed, as owner of the property, in the shoes of the mortgagee, after the latter has enforced his right to foreclosure by process of law.

23. It has, however, been contended that there is a great deal of case-law which requires to be considered before a correct interpretation can be placed upon the provisions of this wajib-ul-arz; With reference to this argument, I would take this general point, that any ruling as to the interpretation of a document can only be applied in its entirety to a document absolutely identical in language, and in a case the general circumstances of which are substantially the same. Where these conditions are not satisfied, an appellant, or a respondent, relying upon previous rulings of the Court and putting them forward as guides to the correct interpretation of the particular document on which the case under appeal actually turn's, can do nothing more than ask the Court to take into consideration the general principles which have been applied by other Hon'ble Judges in similar cases and to derive from them whatever assistance it can towards arriving at a correct conclusion.

24. Looking at the matter from this point of view, I think that, of all the cases which have been cited to us, the one most immediately in point is that of Sundar Kunwar v. Ram Ghulam (1918) I.L.R. 40 All. 626. The learned Judges who decided that case were dealing with a wajib-ul-arz the terms of which were so far analogous to those of the document we are seeking to interpret, in that a right of pre-emption was given in respect of transfers either by mortgage or by sale. Furthermore, in the decision of that case, reference is made to the previous Pull Bench ruling of this Court which has been most strongly relied upon by the plaintiff in appeal before us. This is the case of Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610. The point taken by RICHARDS, C.J., in discussing this older ruling, is, in substance, the one which I have myself ventured to make. He treats the question as being essentially one of the interpretation of a document, and he holds that he is not bound to put a particular interpretation upon a particular document because observations made by the learned Judges of the Court, in a case in which the general circumstances were not the same, and the document to be interpreted was not in identical terms, serve to suggest that, if the said Judges had had to decide the case then before the Court, they might have interpreted the document under consideration in a particular way. The decision actually arrived at in Sundar Kunwar v. Ram Ghulam (1918) I.L.R. 40 All. 626 supports the view that I should myself be disposed to take of the wajib-ul-arz now before us.

25. It has been admitted in argument that this view is in accordance, generally, with the principles of interpretation applied to evidence of custom in cases which have come before this Court on appeal since the constitution of the Pre-emption Bench. On behalf of, the appellants reliance is placed on certain older cases of this Court, and, in particular, the argument is preferred, that the Pre-emption Bench has in effect overruled older Full Bench decisions and has applied to the decision of cases before it principles inconsistent with those affirmed by their Lordships of the Privy Council in Batul Begam v. Mansur Ali Khan (1901) T.L.R. 24 All. 17. The point of their Lordships' decision in that case is to be found in the remarks at the close of the judgment, wherein they approved of the decision of this Court in Ali Abbas v. Kalka (1892) I.L.R. 14 All. 405. Now, with regard to this case, as also to the one which went before the Privy Council, it seems to me important to notice that these were cases in which a claim for pre-emption was dismissed, and was dismissed upon a finding of limitation. The actual decision, therefore, in each case amounted to no more than this, that a cause of action had accrued to the pre-emptor at least from the date on which something had happened amounting to the foreclosure of a mortgage by conditional sale. The question whether any cause of action had or had not accrued before that date was one which it was no concern of either party in the cases then before the Court to argue. The decisions in themselves are not authority for anything more than what was actually decided. The real difficulty, so far as there is any, arises out of the older case, Alu Prasad v. Sukhan (1881) I.L.R. 8 All. 610. It is to be noted that this case was decided by a Full Bench of five Judges and that there was very considerable difference of opinion. The case was one in which there had been a transfer by way of mortgage by conditional sale, and this had been followed by foreclosure proceedings under the old Regulation in force before the passing of the Transfer of Property Act, No. IV of 1882. According to the head-note, the five Judges who heard the appeal were divided into three distinct categories of opinion. PEARSON, J., held that a cause of action for a pre-emption suit had arisen from the date of the mortgage by conditional sale, and that no subsequent cause of action arose out of the foreclosure proceedings. STUART, C.J., held that no cause of action accrued to the plaintiff on the date of the mortgage, but that he had a cause of action from the date of the foreclosure proceedings. The remaining three Judges constituting the Bench were of opinion that causes of action accrued to the plaintiff pre-emptor on both dates, but that he had a right to bring a suit on the strength of the later of the two causes of action, even though he had ignored the first. Personally, after examining the judgment delivered by STRAIGHT, J., in detail, I should feel 'disposed to question the correctness of the head-note. I very much doubt if Straight, J., did intend to hold that on the terms of the particular custom which the Court held to be proved in that case, the plaintiff pre-emptor could not have brought a claim to pre-empt on the mortgage, and if so, he was in agreement with the CHIEF JUSTICE on this point. At any rate, the learned Judges were very much divided, as has above been shown. They were dealing with a record of rights the wording of which was certainly not identical with that of the wajib-ul-arz which we are considering. Moreover, they were dealing with foreclosure proceedings which had taken place under the old Regulation. In my opinion, therefore, the ruling in this case cannot be quoted as in itself determining any specific point of law in such a manner as to bind subsequent decisions. If we are asked to consider the opinions expressed by the learned Judges who then constituted the Full Bench of this Court, we are certainly bound to receive with all due respect the views upon questions of law expressed by those Judges; but so far as I am personally concerned, I can only say that the line of reasoning followed by PEARSON, J., in his dissentient judgment appeals more strongly to my mind than anything else which I can find in the report of the case.

26. To conclude, therefore, I am of opinion that, if the question now before us is to be determined, apart altogether from previous authorities of the Court, then this appeal ought to fail, because upon a plain and straightforward construction of the terms of the wajib-ul-arz, the plaintiffs' cause of action accrued to them on the date of the mortgage, and the subsequent foreclosure of that mortgage was not a transfer by a co-sharer by way of sale within the meaning of 'the custom as recorded in the wajib-ul-arz. On the question of authority, it seems to me that the balance of authority is also on the whole in favour of the same view, and that the decision of the Full Bench in Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610 may fairly be distinguished, and should not be regarded as binding us to put upon the wajib-ul-arz in this particular case the interpretation contended for by the appellants. I would, therefore, dismiss this appeal with costs.

Lindsay, J.

27. I agree.

Sulaiman, J.

28. I agree that every case of pre-emption must be judged on its own merits. In such a case it is not sufficient for the plaintiff pre-emptor merely to prove that there is a general custom of pre-emption prevailing in the village. It is incumbent on him to establish such particulars of that custom as would entitle him to a decree. In the present case the plaintiffs came into court on the allegation that there was a custom in the village under which, if a mortgage by conditional sale was foreclosed by a a decree of the civil court, the co-sharers had a right to intervene and take the property by pre-emption from the successful plaintiff. In order to establish such a custom, the sole evidence produced consisted of an entry in an old wajib-ul-arz which has been recited in full by my learned brother. Independently of all authorities, I would agree that the only interpretation which can be put on the terms of that wajib-ul-arz would be to hold that that cannot apply to a case like the present. The plaintiffs claimed that they had a cause of action to bring the suit for pre-emption on the date when the foreclosure decree was passed. It cannot be said that on that date the defendant vendor was wishing to make a mortgage by conditional sale or an absolute sale in favour of the old mortgagee. I am of opinion that the terms of the wajib-ul-arz as they stand contemplate a voluntary sale and not a transfer which is effected by compulsion of law.

29. The learned vakil for the plaintiffs has relied on a number of earlier cases of this Court including those of Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610, Ali Abbas v. Kalka Prasad (1892) I.L.R. 14 All. 405 and Batul Begam v. Mansur Ali Khan (1898) I.L.R , 20 All. 315, all of which were Full Bench cases, and also on the Privy Council case of Batul Begam v. Mansur Ali Khan (1901) I.L.R. 24 All. 17. The argument before us has been that in view of the expression of opinion in these Full Bench cases the word 'sale' in the wajib-ul-arz should be given a wide meaning so as to include the extinguishment of the right of the mortgagor by foreclosure. The learned vakil does not say that the present wajib-ul-arz should be interpreted in the light of the interpretation put upon the wajib-ul-arz in the earlier cases. What he has really contended is that the word 'sale' should be taken in its general and wider meaning and not in its narrow meaning as defined by the Transfer of Property Act.

30. If the present case had arisen under the old Regulations and had been governed by those Regulations I am bound to say that on the authorities cited before us I would have felt compelled to hold that the word ' sale ' must be taken in its general meaning so as to include the extinguishment of the right of redemption on foreclosure. That, however, is not the case. It is well known that before the Regulations came into force a mortgage by conditional sale used to become absolute on the expiry of the period fixed. The object of the Regulations was somewhat to protect the right of redemption of a mortgagor, and to give him a further period of grace. It was, however, held by their Lordships of the Privy Council in Alexander John Forbes v. Ameeroonissa Begum (1865) 10 Moo. I.A. 340 that the proceedings following an application under Section 7 of the old Regulations up to the order passed under Section 8 of those Regulations were purely ministerial acts and not judicial acts. It was on this ground that the majority of the learned Judges in Alu Prasad v. Sukhan (1881) I.L.R. 3 All. 610, above referred to, came to the conclusion that the foreclosure was the consequence of the mortgagor's failure to redeem the mortgage; that it was really the result of his own act and not on account of any intervention by the court. Under the present law, however, suits for foreclosure are governed by the Code of Civil Procedure. The proceedings taken with regard to the foreclosure of a mortgage are proceedings in court and the equity of redemption is extinguished by a decree of the court. It cannot, therefore, be said that the right of redemption is extinguished by any act of the mortgagor himself. I am, therefore, of opinion that, even accepting the view which was laid down in the earlier Full Bench cases, the soundness of the opinion in one of which, namely, Ali Abbas v. Kalka Prasad (1899.) I.L.R. 14 All. 405, appealed to their Lordships of the Privy Council in the case reported in Batul Begam v. Mansur Ali Khan (1901) I.L.R. 24 All. 17, those cases are distinguishable on the main ground that suits for foreclosure are now governed by statute. I am fortified in this view by the opinion expressed by the Full Bench in the case of Gaya Bharthi v. Lakhnath Rai (1898) I.L.R. 20 All. 103, that a claim for preemption could not be enforced after the order absolute for foreclosure under the Transfer of Property Act had been passed.

31. I also would, therefore, dismiss the appeal.

32. The order of the Court is that this appeal is dismissed with costs.


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