1. The question involved in this appeal is one of some difficulty and the decided eases brought to our notice certainly do not make its decision easier.
2. The material facts are the following : The plaintiff, Nibaran Chandra Das, was the owner of a one-third share in a certain occupancy holding and the remaining two-thirds share belonged to defendant 1. On 24-6-1910, the plaintiff executed a deed of sale in favour of his nephews, pro forma defendants 2 and 3, by which he purported to sell to them his share in the holding for a consideration of Rs. 50 and the deed was in due course registered. Thereafter defendant 1 made an application for preemption before the third Munsif at Alipore. The plaintiff and the pro forma defendants were all made parties to the proceeding which was contested by the plaintiff, with pro forma defendant 2 supporting him by his evidence on behalf of both himself and his brother. The ground taken by the plaintiff was that there could be no question of pre-emption, inasmuch as there had been no sale at all and the Kabala executed by him was a benami document, intended only to put away the property beyond the reach of his creditors. The learned Munsif entertained this defence, took evidence on the matter and ultimately dismissed the application for preemption on the finding that the sale was a benami transaction. On appeal by defendant 1, this decision was reversed by the First Additional Subordinate Judge of Alipore who held 4hat there had been a real transfer and on that finding allowed the application for pre-emption. The learned Judge gave his decision on 16-4-1941.
3. The present suit was brought on 31-5-1941, in the same Court before which the application for pre-emption had been filed, and, in it the plaintiff asked for a declaration that the kabala executed by him on 24-6-1940 was a benami document by which his title had not passed. Certain further reliefs were also asked for, such as recovery of possession in case defendant 1 dispossessed him during the pendency of the suit and an injunction restraining him from so doing. The defence of defendant 1 was that the kabala was not a benami document and that, in any event, the suit was barred by the principle of res judicata on account of the decision in the pre-emption proceeding. Pro forma defendant 2 again deposed in favour of the plaintiff.
4. The learned Munsiff held that although a question as to whether the transfer concerned was real or benami was not within the proper scope of a proceeding under Section 26F, Ben. Ten. Act, yet if the question was raised and decided, the decision would be binding on the parties and would operate as res judicata against them. Accordingly, he held that the plaintiff's suit was barred by res judicata and re-inforced his decision by holding further that the plaintiff could not be allowed to plead, and succeed by his own fraud. On the merits he held that the kabala was a genuine document and the plea of benami was a mere device to defraud defendant 1.
5. On appeal, the learned Second Additional Subordinate Judge of Alipore took a contrary view on all the points. He held that the issue of benami not being within the proper scope of proceedings under Section 26F, Ben. Ten. Act, a decision thereon in such proceedings could not operate as res judicata, particularly as the proceedings were of a summary character. He held further that there was no question of the plaintiff pleading his own fraud, because by the kabala executed by the plaintiff no one had been defrauded. On the merits he held that the kabala was a benami document and, in the result, decreed the suit in full.
6. Thereupon, defendant 1 preferred the present appeal. The only contention urged before us in support of it was that the decision in the pre-emption proceedings operated as res judicata, for, if it did not, the question between the parties was obviously concluded by the finding that the kabala was in fact a benami document. The learned Advocates who appeared for the parties mainly relied on certain decisions respectively cited by them, without advancing any argument of their own.
7. The cases cited before us fall into two classes, those in which the question of res judicata fell to be considered in a subsequent suit and those in which the question as to whether a particular matter was within the proper scope of a proceeding under Section 26F, Ben. Ten. Act, fell to be decided in the course of the proceeding itself. There is however, a nexus between the two groups of cases, because decisions in the former class proceed on the basis that the prior decision would be res judicata if the matter in question was properly and directly in issue in the proceeding concerned, but not res judicata if it was outside the scope of the proceeding altogether or only incidentally cognizable. But I must add that although the cases cited bear on the case before us in near or remote degrees, the exact point calling for decision here was not decided in any of them.
8. As regards the first group of cases, it was held by Nasim Ali and Blank JJ. in Prosanna Kumar Roy v. Adya Sakti Dasi : AIR1942Cal586 that an order for pre-emption made under the old Section 26P could not operate as constructive res judicata against a subsequent suit by the transferee for a declaration that the land purchased by him was really a raiyati holding at a fixed rent and that as such the order for preemption was without jurisdiction and void. The reason given was that in a proceeding under Section 26F, it was not competent to the Court to entertain or determine an issue to the character of the holding transferred, against the admission contained in the deed itself so that it was not a matter which might have been raised. Some what analogous is the decision of Mukherjea and Eoxburgh JJ. in Maha Luxmi Bank Ltd. v. Abdul Khaleque ('39) 43 C.W.N. 1046 where it was held that in spite of an order under Section 26J for payment of the balance of the landlord's transfer fee, a suit would lie for a declaration that the lands transferred were mokarari holdings, although the transferee could not recover the landlord's fees, even if he succeeded in the suit. The reason given was that although a decision as to the nature of the tenancy might be implied in the order for payment of the landlord's fees or even necessary to its making, a final decision on the matter was outside the jurisdiction of the Court in the summary proceeding before it; but, on the other hand, the payment of the money, being the immediate subject of the Court's decision could not be with drawn from the operation of its order. The learned Judges dissented from an earlier decision of Costello and Panckridge JJ. in Krishna Chandra v. Manik Lal : AIR1938Cal246 and distinguished it on the ground that whereas in that case the question of the nature of the tenancy had been sought to be finally decided, in the case before them it had been decided only tentatively.
9. It will be noticed that the question which Nasim Ali and Blank JJ. held to be outside the purview of a proceeding under Section 26F was not a question as to whether the transfer was of a benami character. The case decided by the learned Judges is therefore not on all fours with the present case. Nor can their decision and that of Mukherjee and Eoxburgh JJ. stand together, because pre-emption is certainly the immediate subject of the Courts's decision in a proceeding under Section 26F and on the reasoning in Maha Luxmi Bank Ltd. v. Abdul Khaleque ('39) 43 C.W.N. 1046 which, by the way, was drawn from Barrs v. Jackson (1842) 1 Y. & C. (Ch.) 585 it is impossible to see how the transferee could, by a subsequent suit, get rid of the order for pre-emption itself however much he might shake the grounds. Indeed with the greatest respect, the reasoning on which the decision in Prosanna Kumar Roy v. Adya Sakti Dasi : AIR1942Cal586 is founded is not easy to follow. The learned Judges say on the one hand that in a proceeding under Section 26F, the Court has no right to try any issue as to the character of the holding, but must go by the deed. On the other hand, they say that if in fact the land transferred be not an occupancy holding as stated in the deed, but a holding of some other character, the order made under Section 26F would be void and may be declared to be so in a subsequent suit. In other words, the Legislature has placed the Court in such a position that it is precluded from deciding whether the condition necessary to give it jurisdiction exists but is, at the same time, compelled to make orders which may be utterly void and which may be declared to be void by another Court on a subsequent occasion on the ground that there was no jurisdiction to make them. A view of the section which creates such a result is not easily to be accepted and the decision in Prosanna Kumar Roy v. Adya Sakti Dasi : AIR1942Cal586 may have to be re-considered in future, when a proper occasion arises. We are unable to agree that the decision can be explained in the way it was sought to be done in Sankaracharya Mullick v. Sademani : AIR1945Cal474 .
10. Coming now to the second line of cases, some of them deal with the old Section 26P and others with the new, but from the point of view that is material to us, there is no difference between the two forms of the section. In none of the cases was the question of benami in the prer sent form involved. In Nibaran Chandra v. Hem Nalini Debi : AIR1936Cal167 the transferor and the transferee combined to say that there had been no legal and valid transfer and Henderson J. held that the Court was not entitled, in an application under Section 26F, to go into a question of that kind and dismiss the application on a finding that the contention was correct. The same learned Judge held in Sindhuram Panja v. Ambika Charan Santra ('41) 45 C. W. N. 658 that a question as to whether the sale was benami could not be gone into in an application under Section 26F, but it is not clear from the judgment what kind of benami was alleged in the case. The ground of these decisions is that in an application under Section 26F,r both the Court and the parties are limited to the matters expressly mentioned in the section itself and, particularly, the transferor's title is in no way in issue and he has no locus standi to intervene at all. The same view was taken by M.C. Ghose J. in Jogendra Nath v. Golam Samdani ('37) 65 C.L.J. 472. In Mohini Mohan Mitra v. Radha Sundari : AIR1935Cal481 however, Mitter J. doubted if this strict view of the section was correct, blithe held that a transferee was precluded by the rule of estoppel from resisting an application' under Section 26F on the ground that the subject-matter of his purchase was not an occupancy holding, as stated in the deed, but a residential tenancy, provided the applicant for pre-emption did not know that it was not an occupancy holding. The same doubt was expressed by Mukherjea J., Sharpe J. concurring, in Malti Bala v. Narendra Chandra : AIR1944Cal253 and their Lordships held an exactly similar contention of the transferee, to be barred on the same ground. In Nabendra Kishore v. Abdul Majid ('35) 62 Cal. 939 Mitter J. held, in a case under the new section, that where the transferee pleaded that he was the benamidar for one of the other co-sharers, the question not only could be but had to be, gone into, because if the plea was true and the transfer was really to a co-sharer, there could be no pre-emption at all. It was held that in such a case the transferee was not estopped from taking the plea, because there could be no estoppel against a statute. Lastly, in Santasila Dasi v. Narendra Nath ('44) 48 C.W.N. 451 Henderson J. some, what relaxing from the rigidity of his earlier decisions, held that it was essential that a question as to whether the transferee was a benamidar for one of the other co-sharers should be gone into in a proceeding under Section 26F, if it was raised, and the alleged real purchaser should be made a party to the proceeding. It may be added that in the latest of the reported cases, Hossain Ali v. Kala Chand Ghose ('47) 51 C.W.N. 415, Biswas J. held that there could be no general proposition that a question of title could not be gone into in a proceeding under Section 26F.
11. The principles that can be gathered from the two lines of cases are that if a question is within the proper scope of an enquiry under Section 26F, it can be and must be gone into and the decision thereon will operate as res judicata against a subsequent suit; further, that the matters expressly specified in Section 26F are not the only matters within the proper scope of an enquiry under the section.
12. It is necessary now to be clear as to what the exact question in the present case is. In the reported cases where the plea of benami was raised, the alleged benami was of the form that the ostensible purchaser had merely lent his name to some other person. There had been a real transfer. The benami alleged in the present case, on the other hand, is that there was no sale at all, but only a pretence of a sale, and the ostensible purchasers were merely holding the property in their names on behalf of the transferor himself.
13. I am unable to see why the question raised by such a plea should not be within the proper scope of an enquiry under Section 26F, if a plea that the purchaser is a benamidar for one of other co-sharers is. The question raised by a plea of the latter kind has, in my opinion, been rightly held to be within the purview of a proceeding under Section 26F. The reason on which it has been so held applies with greater force to a question of the present kind. If there can be no pre-emption under the section where the transfer is really to one of the other cosharer tenants, although o external appearance it is to a stranger, still less can there be pre-emption where there is no transfer at all, but only a putting away of the transferor's title under a cover. The whole foundation of the right to preemption is that there has been a transfer and it is in my opinion, quite impossible to hold that question which goes to the root of the applicant's right to claim pre-emption and the Court's jurisdiction to grant it, is not within the proper or immediate scope of a proceeding under Section 26F.
14. Indeed, if the implications of the extreme view taken of the section are considered, some of them will be found to verge on the absurd. Under Sub-section (5) of the section, the Court is to make an order for pre-emption in favour of one or more applicants, as the case may be. Under Sub-section (6), it may apportion the pre-empted property among the successful applicants. Under Sub-section (7), the right, title and interest of the transferee, accruing from the transfer, vests in the pre-emptor; the transferee's liability for rent due from him ceases; and the Court may place the pre-emptor or pre-emptors in actual possession of the property. In view of these provisions, there can be no doubt that an order for pre-emption is intended to create a real interest in the property, carrying with it the right to possession. But according to the view taken in some of the decisions, whenever there is a transfer of an occupancy holding on paper and there is an applicant for pre-emption who fills the character required by the section and complies with its conditions, the Court must solemnly proceed to do the various things enjoined by the section, without considering and without having the power to consider whether there has been a transfer at all or whether the transfer is of the kind of property as would attract the section and that even if such questions are raised. Whatever the Court may thus do will remain exposed to attack in a future suit and may be found and declared to be void. In other words, the whole scope of a pre-emption proceeding is that the Court simply causes a devolution of the transferee's interest on the pre-emptor, whatever such interest may be, and makes an order for his substitution in the transferee's place and stead, subject to all just exceptions that may be taken in a future suit. In my opinion, such a view of the section is utterly inconsistent with the directions contained in it and not only reduces preemption proceedings to futility but also convicts the Legislature of having placed the Court in a ridiculous position.
15. It is not necessary to lay down in this case any proposition wider than what the facts require. I hold that since Section 2CP gives a right of pre-emption only to cosharers of a holding, 'a portion or share of which is transferred,' the Court, in a proceeding under the section, can and indeed must determine whether there has been a real transfer or only a benami transaction, if such a question is raised. If it is not the transferor who raises the objection, he may and ought to be made a party under the general provisions of the Civil Procedure Code.
16. I am further of opinion that such a question is not merely 'incidentally cognisable' in a proceeding under Section 26F, but directly in issue when it is raised, since the very maintainability of the application depends upon it. It is true that proceedings under Section 2GF have been called 'summary' proceedings, but having regard to the right of the Court to take evidence and the provision for an appeal, there is little to distinguish them from suits, except that they are initiated by an application. But even assuming that the proceedings are of a 'summary' character, it can hardly be disputed that a decision on a matter properly and directly within their scope will be final and will operate as res judicata, although Section 11, Civil P.C., may not be in terms applicable. And, if the 'immediate subject of the decision' cannot be 'withdrawn from its operation so as to defeat its direct object,' Barrs v. Jackson (1842) 1 Y. & C. (Ch.) 585, it is difficult to see how the order for pre-emption itself can be got rid of by a subsequent suit, since preemption is certainly the immediate subject of the decision in a proceeding under Section 2GP. It may be said that pre-emption is only a matter of preference between the pre-emptor and the transferee and a decision in respect thereof does not affect the transferor's title who at least may assert it, although the order for pre-emption may stand and may not be liable to challenge. But, in any event, the basis of an order for pre-emption is that there has been a transfer and in a case where, on a dispute being raised, a decision is given in the presence of the transferor, I do not see why the decision should not bind him on the principles of res judicata.
17. In the present case the application for pre-emption was made in the same Court where the present suit was brought. Both the transferor and the transferees were parties and it was the former who raised the question that there had been no real but only a fictitious transfer. In these circumstances the decision in the preemption proceeding does, in my opinion; operate as res judicata and bars the present suit, as the trial Court rightly held.
18. In the result the appeal is allowed, the judgment and the decree of the lower appellate Court are set aside and those of the trial Court restored. In view of the state of the authorities however, I would make no order for costs either in respect of this appeal or the appeal before the lower appellate Court.