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Monahar Naik and anr. Vs. Brajamohan Bhoi and anr. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtOrissa High Court
Decided On
Case NumberSecond Appeal No. 412 of 1950
Judge
Reported inAIR1952Ori239; 18(1952)CLT161
ActsTenancy Law; Central Provinces Tenancy Act - Sections 46(1); Hindu Law; Transfer of Property Act, 1882 - Sections 38, 41 and 51; Indian Penal Code (IPC) - Sections 52; Limitation Act - Sections 2(7); General Clauses Act - Sections 3(2)
AppellantMonahar Naik and anr.
RespondentBrajamohan Bhoi and anr.
Appellant AdvocateG.K. Misra, Adv.
Respondent AdvocateP. Misra and ;C. Misra, Advs.
Excerpt:
.....law]. - the courts however rejected this prayer on the ground that the defendants did not act in good faith in investing money on such improvement. misra raised the following interesting points of law in support of this second appeal. (iii) both the courts had wrongly construed the expression 'good faith' occurring in section 51 of the t. ' in a subsequent memo dated 11-8-37 the dewan required that the revenue officers while submitting proposals recommending transfers of occupancy holding should clearly state whether improvements had been made in the lands in question and if so details of such improvements should be given. (2) i am not prepared to sanction transfer as a rule unless there are very strong reasons to the contrary. but i am not satisfied that the same rule may be extended..........act. the courts however rejected this prayer on the ground that the defendants did not act in good faith in investing money on such improvement. there was some controversy between the parties about the exact area of the disputed land, the amount of criminal fine imposed on mukteswar and the expenditure actually incurred by the defendants in excavating the tank. but the finding of the trial court was that the area of the land in dispute was 4.24 cents, that the criminal fine imposed on mukteswar was rs. 30/- and that a sum of rs. 1,000/-alone was incurred in excavating the tank. this finding was very properly not challenged in this second appeal by mr. g. k. misra on behalf of the appellants.5. mr. misra raised the following interesting points of law in support of this second.....
Judgment:

Narasimham, J.

1. This appeal is by the defendants against the appellate judgment of the Additional Subordinate Judge of Shambalpur affirming the judgment of the Munsif of Sundargarh decreeing the plaintiffs' suit for setting aside the alienation of the suit land by their father in favour of the defendants on the ground of want of necessity and for recovery of possession.

2. The plaintiffs are the sons of one Mukteswar Bhoi of village Tildzega in Gangpur State. The suit land appertains to Khata No. 35 of the village. The revenue laws of Gangpur State did not permit the transfer of an occupancy holding by the rayat in favour of any other person. But with a view to get round this ban on such transfer the recognised practice in the State (prior to the merger) was for the transferor to apply to the State authorities for mutation of the name of the transferee in the Ruler's records. On such application a regular revenue case used to be started, enquiries made by the usual way through the local authorities concerned and after consulting the wishes of the heirs of the transferor the mutation would be allowed or rejected as the case may be. The transferee pays the stipulated money to the transferor which may for all purposes be treated as sale price and when mutation is allowed by the Ruler a separate Parcha is issued in the name of the transferee who is thus recognised as the new rayat.

3. On 29-10-34 Mukteswar filed a petition (Ext. 2) before the State authorities stating that he had transferred the disputed land measuring 4.24 cents to defendant No. 2, the son of defendant No. 1, for a sum of Rs. 100/- and requesting them to recognise the transfer after due enquiry. As regards the necessity for such transfer he alleged that the money was required for (1) household expenses (2) payment of arrears of rent and (3) payment of criminal fine imposed on him in a case. On receipt of that petition mutation case No. 176/361 of 1934/35 was started in the State office and after due enquiry and payment of mutation-fee to the Ruler the transfer was allowed and a new Parcha was granted in the name of the transferee on 21-11-38 (see Ext. C).

For the purpose of this appeal it is necessary to describe in detail the various incidents that took place during the pendency of that mutation case. It is sufficient to note that the Tahsildar who made a preliminary enquiry reported to the State authorities on 18-4-35 that Mukteswar had transferred the disputed land because he had run into debts (see Ext. E). The defendants after thus getting the transfer recognised and obtaining a Parcha in their names applied to the State authorities for permission to excavate a tank in a portion of the holding and permission was also granted in due course (see Ext. D). A tank was also excavated after incurring expenditure to the extent of Rs. 1,000/-.

4. Mukteswar is still alive, but he has discretely kept himself in the background. His two sons filed the suit for setting aside the alienation of their father alleging that there was no legal necessity for the transfer. Both the Courts concurrently held that out of the sale price of Rs. 100/-, Rs. 30/-was utilised towards payment of the fine imposed on Mukteswar on his conviction in a criminal case and as such fine was an avyavaharika debt; payment for such purpose would not be legal necessity as recognised in the Hindu Law. They further held that no payment was made towards arrears of rent and that there was no other evidence showing legal necessity. The alienation was therefore set aside as invalid.

The defendants had alternatively prayed for reimbursing them of the expenditure incurred, in excavating the tank in accordance with the principles of Section 51 of the Transfer of Property Act. The Courts however rejected this prayer on the ground that the defendants did not act in good faith in investing money on such improvement. There was some controversy between the parties about the exact area of the disputed land, the amount of criminal fine imposed on Mukteswar and the expenditure actually incurred by the defendants in excavating the tank. But the finding of the trial Court was that the area of the land in dispute was 4.24 cents, that the criminal fine imposed on Mukteswar was Rs. 30/- and that a sum of Rs. 1,000/-alone was incurred in excavating the tank. This finding was very properly not challenged in this second appeal by Mr. G. K. Misra on behalf of the appellants.

5. Mr. Misra raised the following interesting points of law in support of this second appeal.

(i) Under the revenue laws in force in Gangpur State before the merger the right of an occupancy rayat in his holding was a personal right and his sons had no right of survivorship or any right by birth so as to challenge the alienations made by their father.

(ii) Both the Courts had committed a serious error of record on the question of legal necessity and had they carefully scrutinised the evidence adduced in the case they would have found that a substantial portion of the sale price was applied for legal necessity.

(iii) Both the Courts had wrongly construed the expression 'good faith' occurring in Section 51 of the T. P. Act as including not only honest belief but also absence of due care in making the enquiry as regards legal necessity for the transfer.

6. 'Point No. (i).' The revenue laws in force in Gangpur State prior to the merger are not easy to ascertain: But the parties appear to have fought out this litigation on the ground that the record of rights of Gangpur State, a copy of which was sent to this Court by the Board of Revenue, contains most of the provisions of the revenue laws. The residue remained presumably as the prerogative of the Ruler which was exercised frequently by issue of orders on appropriate occasions. Paras 1, 4 and 11 of the record-of-rights may be quoted in full.

' 'Para 1.' A rayat has a right of occupancy in all lands entered in his name at the present settlement.

'Para 4.' No transfer by a rayat of a right in his holding or any portion thereof by mortgage, sale, gift or any other contract or agreement shall be valid to any extent.

'Para 11.' The consent of the Chief or Zamindar must be obtained to make tank or bandha or to construct a pucca building.....'

The said record-of-rights contains no provision whatsoever for application by a rayat to the ruler for recognition of his transfer in favour of another party. But this practice has been recognised (as already pointed out) and such applications were registered as mutation cases by the revenue authorities of the State and instructions were also issued from time to time by the Dewan about the nature of local enquiries that should be made before recommending the recognition of such transfers. In particular, I would quote memo. No. 850-851 dated 12-2-1937.

'MEMO.

I notice that several transfers of agriculture holdings come before me, which is against Record-of-rights. In all enquiries regarding transfer of land, the following points should carefully be enquired into :

(a) What area of land a man wants to transfer and why and for what amount?

(b) After transfer what area will be left in his possession and will it be sufficient for his maintenance?

(c) Does the Gountia of the village agree to the transfer?

(d) Cannot the transfer be stopped and the applicant directed to settle his need in some other ways. What hardship it will cost?

(e) Are the applicant's heirs willing to accept the transfer?

(f) If the transferee is taking the transfer on account of loan, why the loan was given? if he had cultivated the land in lieu of interest, what profit he obtained from the produce year after year and what the cash value of the produce was? Cannot the cash value be set off against interest at bazar rate and the original loan? As the transferee gave loan on the security of the land without State's order, he must be made to accept the State's order.

(g) Is the transferee an agriculturist Is he a foreigner? Is he a banker?

Sd/- A. G. Khan

Diwan.

Memo. No. 850-851 Dated 12.2.1937.

Copy forwarded to Tahsildar/Naib-Tahsildar for information and guidance.

Sd. A. G. Khan,

Diwan.'

In a subsequent memo dated 11-8-37 the Dewan required that the Revenue Officers while submitting proposals recommending transfers of occupancy holding should clearly state whether improvements had been made in the lands in question and if so details of such improvements should be given. In memo. No. 1855 dated 30-3-1937 the then Dewan laid down the following principles in recognising transfers.

'No. 1855 dated 30-3-1937.

Sub-Divisional Officer,

Nagra, Kulanga.

These ten accompanying cases are returned for favour of further inquiry; in each case Transfer of land is an exception and not a rule. In all transfer cases a great deal of detailed inquiry is necessary. If transfers are promiscuously sanctioned, the rayats will become serfs, and foreigners their master. It is not the policy of the State to deprive the children of the soil of the yield from land. You are therefore requested to make inquiry in such case on the following :

(a) Cannot the transfer be obviated by suggesting some other means?

(b) Are the wishes of the Gountia consulted in favour of the transfer?

(c) Is the transferee a local rayat or a foreigner?

(d) Is the transferee the rayat of the sama caste which the transferor has got?

(e) How much land will be left for his maintenance after transfer?

(ee) Do the heirs of the transferor agree to the transfer?

(f) Transfer as a rule is not desirable for borrowing money, for marriages, purchase of bullocks or payment of rent, Is any of these involved?

(g) When the land is not transferable, why the transferee gave loan on mortgage, if there Is a question of mortgage?

(h) What caste of people live in each village? What is the predominating caste in the village? Will the transferee be a welcome rayat? It is not desirable to force a foreigner or a new caste into the existing village community.

(2) I am not prepared to sanction transfer as a rule unless there are very strong reasons to the contrary.

Sd. A. G. Khan

Dewan.'

These instructions make it clear that notwithstanding the absence of any provision in the record-of-rights the Ruler of Gangpur reserved to himself the right to sanction transfers of occupancy holding for adequate reasons and one of the reasons was whether the heirs of the transferor agreed to the transfer.

7. Mr. G. K. Misra urged that in view of the proximity between Gangpur State and Shambalpur district and the close similarity in the revenue laws of the two territories as regards ban on transfer of occupancy holdings the various case laws dealing with the right of an occupancy tenant in Shambalpur district may by analogy be applied in Gangpur state also. In particular he relied on Section 46 of the Central Provinces Tenancy Act, 1893 which is now in force in Shambalpur district and under which there is prohibition (subject to certain exceptions) to the transfer of occupancy holdings. Sub-section (1) of Section 46 of the C. P. T. Act 1898 is as follows:

'When an occupancy tenant dies his right in his holding shall devolve as if it were land.'

This sub-section has been interpreted in 'GHANYA v. UKUND RAO', 4 Nag LR 9, as indicating that the right of an occupancy tenant is a personal right and that

'the Hindu Law of succession by survivorship, and as to the vesting of a Son's interest by birth, is not applicable to a tenancy governed by the Central Provinces Tenancy Act.'

Though the correctness of this decision has been subsequently questioned see 'TEKCHAND v. TULAI', 5 Nag LR 103 and 'BHURA v. RAMRAO', 8 Nag LR 154, it has not been dissented from mainly because of the principle of 'stare decisis' and it may therefore be taken as the settled law in Shambalpur District. But I am not satisfied that the same rule may be extended to Gangpur State on the principle of analogy. In the record-of-rights of Gangpur State there is no provision similar to Section 46 (1) of the C. P. T. Act saying that the right of an occupancy tenant after his death shall 'devolve' as if it were land. It was the word 'devolve' occurring in that section and other considerations which weighed with the learned Judge who held in 4 Nag, L. R. 9 that the Mitakshara rule of survivorship did not apply to the right of an occupancy tenant in his holding. That word 'devolves' is not found either in the record-of-rights of Gangpur State or in the subsequent instructions issued by the Dewan on behalf of the Ruler to the various revenue authorities. On the other hand, his memo. No. 1855 dated 30.3.47 which required a clear report as to whether the heirs of a transferor agreed to transfer seems to imply that the Ruler recognised the right of the heirs to question the transfer during the life-time of the father thereby impliedly accepting the Mitakshara rule of survivorship. As the parties are Hindus governed by the Mitakshara and as the right of an occupancy rayat in his holding is immovable property much stronger evidence is required before it can be held that the ordinary rule of Mitakshara survivorship would not apply. On the meagre materials available before this Court I would not stretch the rule laid down in 4 Nag L R 9 to the occupancy holdings in Gangpur State.

8. 'Point No. (ii)': In the original application of Mukteswar Bhoi to the Ruler (Ext. 2) he himself stated that the necessity for the transfer arose for three purposes, namely, (1) household expenses, (2) payment of fine in a criminal case and (3) payment of arrears of rent. As the criminal fine is indisputably an avyavaharika debt the sum of Rs. 30/-paid towards that fine must in any case be held to be not covered by legal necessity. As regards payment of arrears of rent both the Courts failed to scrutinise the rent receipts carefully. Ext. 1-E shows payment of Rs. 24/3/- on 21.12.34 and 12.3.35, that is, after the application of Mukteswar to the revenue authorities (Ext. 2) for the recognition of the transfer. The dates of the payments as noted in this receipt are themselves adequate corroboration of the defendants' evidence that a portion of the sale price was taken by Mukteswar for payment of arrears of rent. I cannot therefore understand how the Courts could hold that there was no evidence about the utilisation of a portion of the sale price for payment of arrears of rent. On the other hand the village Gountia (P.W. 2) who was examined by the plaintiffs admitted that sometime in 1935 before payment, of rent by Mukteswar defendant No. 1 made enquiries from him about arrears of rent. Subsequently the rent was paid. There was thus ample evidence on record to show that Rs. 24-3-0 out of the sale price was utilised for payment of arrear rental by Mukteswar. This sum is therefore fully covered by legal necessity.

There is however no evidence as to whether the balance of the sale price was utilised for legal necessity or else whether defendant No. 1 made bona fide enquiries on this subject before taking the land from, the plaintiffs' father. Mr. G. K. Misra on behalf of the appellants argued that in view of the admitted fact that Mubteswar was in poor circumstances at the time of the transfer as admitted by P.W. 3 in his cross-examination and as corroborated by the Tahsildar's report (Ext. E) dated 18.4.35, the Court could reasonably hold that the balance of the sale price was also used for household expenses of Mukteswar as stated by him in his original application (Ext. 2). This argument, however, does not appeal to me. There seems to be no substantive evidence of the legal necessity and a party cannot rely on the recital in Mukteswar's application for transfer (Ext. 2). Defendant No. 1 himself does not categorically say that he made enquiries and was satisfied that a portion of the purchase-money was required by Mukteswar for his household expenses. No such specific case was put forward in the written statement. His evidence in court was 'I enquired about his necessities.' But while describing what Mukteswar's necessities were he has referred only to the criminal fine of Rs. 30/-and arrears of rent. It is true that there is enough evidence to show that Mukteswar was in poor circumstances and had run into debt in 1934-35. But stringent financial circumstances are equally consistent with the specific case as put forward by defendant No. 1 himself that the sale price was required for payment of arrears of rent and the criminal fine. Merely because Mukteswar was in poor circumstances a Court cannot jump to the conclusion that the balance of the purchase money must have been applied for house-hold expenses in the absence of any substantive evidence to that effect or of any evidence of enquiry in that direction. I must therefore hold that only one-fourth of the sale price was utilised for legal necessity. The transaction is therefore not binding on the family and must be set aside.

9. 'Point No. (iii)' : It has been already pointed out that after getting the transfer recognised by the Ruler and obtaining a Parcha in his name, defendant No. 1 formally applied to the Ruler for permission to excavate a tank and spent Rs. 1,000/-for that purpose. He is therefore entitled to be reimbursed to the extent of that sum unless it can be held that his belief about his absolute title to the holding was not in good faith so as to disentitle him to any relief under Section 51 of the T. P. Act. Both the Courts have held (though not in clear terms) that his belief could not be in good faith because he ought to have known that criminal fine payable by a Mitakshara father is an avyavaharika debt and that he ought to have made careful enquiries about legal necessity before purchasing the property. Mr. Misra however urged that the defendants acted honestly though under a mistaken notion of law and that even though their enquiry was not to be searching and careful as it ought to be, their subsequent action in obtaining the Ruler's sanction before excavating the tank would clearly indicate their good faith.

10. The answer to this question depends mainly on the precise significance of the expression, 'good faith' occurring in Section 51 of the T. P. Act. If that expression be held to require not only mere honesty of purpose but also due care and attention as defined in Section 52, of the Indian Penal Code or Section 2 (7) of the Limitation Act the defendants have clearly no case. But I see no justification for importing the definition of 'good faith' in the aforesaid two statutes in construing that expression occurring in the T. P. Act. It is true the definition given in Section 3(20) of the General Clauses Act, 1897 would not in terms apply because the T. P. Act was passed before the commencement of the General Clauses Act, 1897. But I think there are certain indications in the T. P. Act itself, and in the case laws prior to the passing of the General Clauses Act, 1897 which afford a valuable guide. In Sections 38 and 41 of the T. P. Act the following phrases occur.

'Section 38.' 'If the transferee, after using reasonable care to ascertain the existence of such circumstances, has acted in good faith.'

'Section 41.' 'provided that the transferee, after taking reasonable care to ascertain that the transferor had power to make the transfer, has acted in good faith.'

As the Legislature cannot be presumed to be guilty of tautology the reasonable inference is that the words 'good faith' in those sections would not include reasonable care also and this necessitated the express reference to the words 'reasonable care' in those two sections. Section 51 occurs in the same chapter of the T. P. Act as the other two sections and there is no reference to 'reasonable care' at all. This significant omission lends a great support to Mr. Misra's argument that in construing Section 51 also it may be held that Want of reasonable care alone would not indicate want of good faith on the part of a transferee if he has acted honestly.

11. If the English decisions regarding the construction of the expression 'good faith' given at about the time of the passing of the T. P. Act be examined the aforesaid view gets confirmed. As early as 1836 in 'GOODMAN v. HARVEY', (1836) 111 E R 1011 at p. 1013, Lord Denman, C. J., pointed out :

'Gross negligence may be evidence of mala fides, but is not the same thing. We have shaken off the last remnant of the contrary doctrine.'

To a similar effect is the observation of Lord Blackburn in 'JONES v. GORDON', (1876) 2 A C 616 at p. 629 :

'But if the facts and circumstances are such that the jury, or whoever has to try the question, came to the conclusion that he was not honestly blundering and careless, but that he must have had a suspicion that there was something wrong and that he refrained from asking questions not because he was an honest blunderer or a stupid man, but because he thought in his own secret mind -- I suspect there is something wrong, and if I ask questions and make further inquiry, it will no longer be my suspecting it, but my knowing it, and then I shall not be able to recover -- I think that is dishonesty.'

These principles afford a valuable guide in construing the expression 'good faith' occurring in Section 51 of the T. P. Act. It is difficult to believe that in an out of the way place like Gangpur State where the Bar itself had not fully developed in 1934 and 1935 the principles of avyavaharika debt would be understood by the people. The parties seem to have proceeded on the assumption that payment of criminal fine was a legitimate expenditure and the revenue authorities also raised no difficulty in recognising a transfer made for purpose, one of which was payment of the fine. Such mistaken notion of law on the part of the transferee may be due to some negligence on his part in not consulting competent lawyers either at Shambalpur or at Cuttack. Similarly his failure to make searching enquiries before advancing money to Muketswar with a view to ascertain for what purpose the sale price was going to be utilised may show some negligence on his part. But this is not a case of no enquiry at all. On the other hand, he had made enquiries as deposed to by the village Gaontia (P.W. 2) himself. I must hold that he acted in good faith.

12. The Indian decisions under Section 51 of the T. P. Act also support the same view. In 'DURGOZI ROW v. FAKEER SAHIB', 30 Mad 197, it was pointed out that a person may act in good faith though under a mistaken view of law. Similarly in 'MATHUNSA ROWTHAN v. APROBIN', 36 Mad 194 it was held that good faith does not extend beyond an honest belief in the validity of the transferee's title. This has been followed in 'RAMA AIYAR V. NARAYANASWAMI', AIR 1926 Mad 609, where it was reiterated that good faith was consistent with mistaken view of law and some degree of negligence. To similar effect are the observations in 'HARILAL v. GORDHAN', AIR 1927 Bom 611; 'LACHMI PRASAD v. LACHMI NARAYAN', AIR 1928 All 41 and 'MD. ALJ KHAN v. KANAILAL', AIR 1935 Cal 625. The Allahabad case referred to above is very similar to the present case. There the sale of a house by a father for Rs. 1,350/- was challenged on the ground of want of legal necessity. The finding was that only Rs. 425/- was covered by legal necessity. Yet it was held that the transferee acted in good faith and he was entitled to be compensated for the improvements made by him under Section 51 of the T. P. Act. It will be noticed that in that case the amount covered by legal necessity was less than one-third of the total sum whereas in the present case the proportion is about one-fourth.

13. Mr. P. Misra on behalf of the respondents urged that where the title of the transferee itself depends on his making proper enquiry about the existence of legal necessity his failure to do so must necessarily indicate want of good faith and in support of this view he relied on 'NANJAPPA GOUNDEN v. PERUMA GOUNDEN', 32 Mad 530 and 'HANSRAJ v. MST. SOMNI', AIR 1922 All 194. Those cases are clearly distinguishable. In 32 Mad 530, the finding was, that the transferee knew that the legal necessity did not exist or else he wilfully abstained from making any enquiry on the subject. In AIR 1922 All 194, the finding Was that there was no legal necessity for the transfer. Similarly in 'RAJRUP KANWAR v. GOPI', AIR 1925 All 261, there was no enquiry at all. There is a fundamental distinction between complete absence of any enquiry about legal necessity on the one hand and failure to make careful enquiry on the other. Where there is no enquiry at all and a transferee purchased property from a limited owner the negligence may be of such a gross type as to lead to an inference of want of good faith as pointed by Lord Denman C.J. in 'GOODMAN v. HARVEY', (1836) 111 E R 1011. But where some enquiry has been made and the transferee has been misled by a wrong view of law it cannot be held that he was grossly negligent. This aspect has been emphasised in 'KANDARPA NATH v. iJOGENDRA NATH', 12 Cal L J 391 at p. 398 by Mookerjee J. in the following terms :

'he must have acted in good faith, that is, under the honest belief that he has secured good title to the property in question, and is the rightful owner thereof; and for this belief, there must be some reasonable grounds such as would lead a man of ordinary prudence to entertain it.'

I am fully satisfied that the defendants acted with ordinary prudence in accordance with their conception of what the law was at the time of the transfer. The best piece of evidence on this aspect is their application to the State authorities themselves for sanctioning the improvement.

14. I would therefore modify the judgment of both the Courts as follows.

The plaintiffs are entitled to recover possession of 'A' schedule lands from the defendants on a declaration that the transfer made by their father was invalid. But they should pay Rs. 100/-, the sale price, and also the sum of Rs. 1,000/- to the defendants being the cost of excavation of the tank before they apply for ejecting the defendants from the suit lands. The plaintiffs are given the option of paying the said sums and then applying for eviction of the defendants or of selling their interest to the defendants at the market value excluding the cost of excavation of the tank. Both the parties will bear their own costs throughout.


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