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Ram Badan Lal and ors. Vs. Kunwar Singh and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1938All229
AppellantRam Badan Lal and ors.
RespondentKunwar Singh and ors.
Excerpt:
.....and the vendees would be entitled to recover rs. but in case of sale of grove the vendees would have no right to claim the return of the grove for failure of consideration of the other..........for pre-emption of the property sold by defendants 4 and 5 to defendants 1 to 3 under a sale deed dated 12th june 1933. re. 7000 was entered as the sale consideration in the deed. the plaintiff's case was that only rs. 4000 were paid to the vendors and the price had been inflated in the sale deed to defeat the right of pre-emption. the vendees contended that subsequent to the purchase of the property, they became cosharers in the mahal by reason of the deed of exchange dated 8th july 1933 and that the real sale consideration was rupees 7000. they also contended that the deed under which they purchased the property in dispute was not a sale deed but was a deed of exchange and consequently the plaintiff was not entitled to preemption. the learned civil judge has found that the.....
Judgment:

Ganga Nath, J.

1. This is a defendant's appeal and arises out of a suit brought against them by the plaintiff-respondent for pre-emption of the property sold by defendants 4 and 5 to defendants 1 to 3 under a sale deed dated 12th June 1933. Re. 7000 was entered as the sale consideration in the deed. The plaintiff's case was that only Rs. 4000 were paid to the vendors and the price had been inflated in the sale deed to defeat the right of pre-emption. The vendees contended that subsequent to the purchase of the property, they became cosharers in the mahal by reason of the deed of exchange dated 8th July 1933 and that the real sale consideration was Rupees 7000. They also contended that the deed under which they purchased the property in dispute was not a sale deed but was a deed of exchange and consequently the plaintiff was not entitled to preemption. The learned Civil Judge has found that the real sale consideration is Rs. 7000, that the vendees have not acquired an indefeasible right under the deed of exchange dated 8th July 1933 and that the deed in suit was a sale deed and not a deed of exchange. The most important point for consideration in this case is whether the deed in suit is a sale deed or a deed of exchange. The parties entered into an agreement on 29th November 1932 under which the vendors were to sell their property for Rs. 7000 to the vendees. The vendees paid Rs. 2500 to the vendors and the balance was to be paid subsequently. The vendees could not arrange for Rs. 500 out of the balance of Rs. 4500 sale consideration. The parties therefore agreed that in consideration of this sum of Rs. 500 the vendees would transfer a grove to the vendors. The sale deed which is the basis of the suit was executed on 12th June 1933 under which the grove was transferred by the vendees to the vendors in consideration of Rs. 500 and the vendors sold their property to the vendees for Rs. 7000. It has been urged and has also been found by the lower Court that the two transactions were separate, that they were two independent sales and consequently the deed in suit was not a deed of exchange. On behalf of the appellants, it has been urged that the two transactions formed part and parcel of the same transaction and they amounted to a deed of exchange.

2. The difference between sale and exchange is that sale is a transfer of owner, ship in exchange for a price paid or promised or part paid and part promised, while an exchange is a transfer of ownership of one thing for the ownership of another, neither thing or both things being money only. The other difference is that under the sale the title in the property sold is conveyed to the vendee and in case of failure of consideration or dispossession of the vendee from the property purchased on account of any defect in the title of the vendor the vendee has a right to get back the sale consideration with such damages as he might have sustained, while in the case of exchange the person who is deprived of the property given to him has at his option a right for the return of the thing given by him in exchange to the other party if it be still in his possession or in that of his legal representatives or a transferee from him without consideration. No hard and fast sale can be laid down as to when two transactions would amount to a sale or an exchange. There can be cases in which on the same day and at the same time the parties may enter into two independent sales. But if the two transactions which purport to be two independent sales have been made without payment of consideration in cash and form part and parcel of the same transaction, they would amount to an exchange because apparently their consideration is nothing but a transfer of ownership in property by one party to the other. The terms of the sale deed itself show that the two transactions relied on by the vendees were part and parcel of the same transaction and amounted to an exchange. The most important conditions in the sale deed are as follows:

We the first party have to sell of the proprietary rights in the said zamindari for legal family necessity in the Interest of all the members of the family but as the second party is unable to provide in cash the remaining consideration money, and we first party too do not intend to be completely disconnected with the said villages there fore it was settled between the parties that we the first party should execute a sale deed of the proprietary rights In the said zimindari for Rs. 6500 (six thousand five hundred rupees) and also a grove (kita bagh) situate In the said village Pasai in favour of the second party, and the second party after setting off Rs. 2600, the advance money, should pay Rs. 4000 in cash to the first party and should transfer his grove detailed below situate in mouza. Fasai pargana Narwan district Benares in lieu of consideration to the first party, Whereby we the first party with our free will and consent and after careful consideration and thought and without any coercion or force make a complete sale of the proprietary rights in the zamindari in favour of second party in lieu of Rs. 6500 half of which is Rs. 3260, and also the said grove; and the second party make an absolute sale of the grove bearing number as given below owned and possessed by themselves to the first party. Both the parties agree to abide by the following conditions... second, that the full consideration of this sale deed has been received from the vendees thus: Set of rupees two thousand and five hundred the advance money which was received by us from the first party through the Satta dated 29th November 1932 and Rs. 200 have been received by us, the first party, through pro-note dated 16th April 1932 and the remaining Rs. S800 in cash is to be received by us before the Sub-Registrar at the time of registration and the grove detailed below situate In mouza Pasai has been transferred by the second party to the first party through this sale deed.

3. This will show that Rs. 7000, the sale consideration, was paid by payment of Rs. 6500 in cash and by the transfer of a grove for the balance that is Rs. 500. The transfer of the grove was thus evidently in part consideration of the sale deed. There can thus be no doubt that there was a transfer of ownership of the grove by the vendee in part consideration of the transfer of ownership of the proparty by the vendors. Though the word 'sale' was used in connexion with these transactions to show that they were independent of each other yet they were 30 connected with each other as they formed part and parcel of the' same transaction. No cash consideration except Rs. 6500 was paid for these transactions. It has been urged that the price of the grove was fixed at Rs. 500 and therefore the transfer of the grove was in consideration of the payment of Rs. 500. In every exchange the values of the properties exchanged have to be ascertained and fixed because without doing so there can be no exchange. The mere fact that the value of the property transferred has been fixed does not convert the transaction into one of sale when it really is one of exchange. It is not; the name or form of the transaction but the nature of the consideration paid for the transfer which determines the nature of the transfer itself. If the consideration for the transfer is not paid in cash but is paid by transfer of the ownership of some property, it would be only an exchange and not a sale. There is intrinsic evidence in the sale deed which leaves no room for doubt that the transaction was one of exchange. The parties agreed:

Fifth, that the proprietary rights of the zamindari sold is free from all encumbrances and no one else has any right in the properties; these are sold free from all incumbrances. The vendees second party have purchased the properties on the assurance of the vendors first party, so in future if any defect Is found In the property and also by the wrongful action of the first party, the vendees second party is dispossessed, the vendors the first party add their properties would be liable to pay as damages, costs, etc., together with all consideration money and interest at 1 per cent, and the exchanged grove will be considered to have been returned.

4. If the two transactions had been quite independent of each other, there should have been no condition of return of the grove. In case the vendees were deprived of the property purchased by them, there would certainly be a failure of consideration and the vendees would be entitled to recover Rs. 7000 from the vendors. But in case of sale of grove the vendees would have no right to claim the return of the grove for failure of consideration of the other sale. The very fact that a provision was made in the sale deed for the return of the grove in case the vendees were deprived of the property purchased by them shows that the grove was a part of the sale consideration with whose return the provision dealt. This fact by itself goes to show that the transaction was one of exchange and not of two independent sales. Besides, the words 'exchanged grove' in the above provision further dearly shows that the parties were contemplating an exchange and not two independent sales. We therefore hold that the transaction in question was one of exchange and not of sale. It being so, the plaintiff is not entitled to pre-emption. In Krishen Lal v. Ram Lal (1927) 14 A.I.R. All. 696 was held:

Where it was found that the two sale transactions, which appeared as independent transactions, were, only one transaction of exchange, a suit foe pre-emption did not lie.

5. In Fateh Singh v. Pithi singh : AIR1930All426 a part of the consideration given by the vendee was proprietary interest in land and part was cash consideration for the land acquired from the vendor. It was held that the transaction was not one of sale bat was one of exchange and the plaintiff was not entitled to pre-emption. It is not necessary to go into the question of the exchange on which reliance was placed by the vendees to show that they had become cosharers and the plaintiff had no preferential right. It is therefore ordered that the appeal be allowed with costs, the decree of the lower Court be set aside and the plaintiff's suit be dismissed with costs.


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