Case: Radhakisan Laxminarayan Toshniwal Vs. Shridhar Ramchandra Alshi and Ors

All 482 (FB), are very apposite :"If a valid and perfected sale were not a condition precedent to the exercise of the pre-emptive right, consequences would follow which the law of pre-emption does not contemplate or provide for. In this very case, supposing the so-called vendor, notwithstanding the application of the 15th August, 1882 (which cannot amount to an estoppel under the circumstances) continues or re-enters into possession of the property, it is clear that the so-called vendee would have no title under the so-called sale, to enable him to recover possession-the transaction being, by reason of S. 54 of the Transfer of Property Act, ineffectual as transfer of ownership. The right of pre-emption being only a right of substitution, the successful pre-emptors title is necessarily the same as that of the vendee and if the vendee took nothing under the sale the pre-emptor can take nothing either; and it follows that if the vendee could not oust the vendor, the pre-emptor could not do so either; because in both cases the question would necessarily arise whether the sale was valid in the sense of transferring ownership. Again, if notwithstanding a pre-emptive suit such as this, the so-called vendor, who has executed an invalid sale which does not in law divest him of the proprietary right, subsequently executes a valid and registered sale-deed in favour of a co-sharer other than the pre-emptive or in favour of a purchaser for value without notice of the so-called contract for sale it is difficult to conceive how the pre-emptor, who has succeeded in a suit like the present, could resist the claim of such purchaser for possession of the property."12. Under S. 54 of the Transfer of Property Act a contract for sale does not of itself create any interest in or charge on immovable property and consequently the contract in the instant case created no interest in favour of the vendee and the proprietary title did not validly pass from the vendors to the vendee and until that was completed no right to enforce pre-emption arose. As we have said earlier wherever the Transfer of Property Act is in force Mohammedan Law or any other personal law is inapplicable to transfers and no title passes except in accordance with that Act. Therefore when the suit was brought there was no transfer by way of sale which could be subject to pre-emption.13. It was next contended that the appellant was guilty of fraud in that in order to defeat the right of the pre-emptors a deed of sale was not executed although as a matter of fact price had been paid, possession had passed and for all intents and purposes the appellant had become the owner of the property and that conduct such as this would defeat the very law of pre-emption. The right to pre-empt the sale is not exercisable till a pre-emtible transfer has been effected and the right of pre-emption is not one which is looked upon with great favour by the courts presumably for the reason that it is in derogation of the right of the owner to alienate his property. It is neither illegal nor fraudulent for parties to a transfer to avoid and defeat a claim for pre-emption by all legitimate means. In the Punjab where the right of pre-emption is also statutory the courts have not looked with disfavour at the attempts of the vendor and the vendee to avoid the accrual of right pre-emption by any lawful means and this view has been accepted by this court in Bishan Singh v. Khazan Singh, 1959 SCR 878 at p. 884: (AIR 1958 SC 838 at p. 841), where Subba Rao, J. observed :"The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place".14. In the present case the transaction of sale had not been completed until February 1, 1944 when the sale deed was executed. Anything done previous to it could not ordinarily be said to be a fraud to deprive a pre-emptor, from the exercise of his right of pre-emption.There are no equities in favour of a pre-emptor, whose sole object is to disturb a valid transaction by virtue of the rights created in him by statute. To defeat the law of pre-emption by any legitimate means is not fraud on the part of either the vendor or the vendee and a person is entitled to steer clear of the law of pre-emption by all lawful means.15. It was then submitted that the sale deed had as a matter of fact, been executed on February 1, 1944; but respondent Sridhar brought the suit not on the cause of action arising on the sale dated February 1, 1944 but on the transaction of April 10, 1943 coupled with that of April 24, 1943 which being mere contracts of sale created no interest in the vendee and there was no right of pre-emption in respondent No. 1 which could be enforce under the Code.Mr. Chatterji urged that it did not matter if the sale took place later and the suit was brought earlier but the suit as laid was one to pre-empt, a sale of April 1943 when, as a matter of fact, no sale had taken place. If respondent Sridhar had based his right of pre-emption on the basis of the sale of February 1, 1944 the appellant would have taken such defences as the law allowed him. The defence in regard to the conversion of the land from agricultural into non-agricultural site which negatives the right of pre-emption would then have become a very important issue in the case and the appellant would have adduced proper proof in regard to it. The right of pre-emption is a weak right and is not looked upon with favour by courts and therefore the courts could not go out of their way to help the pre-emptor.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]6. By S. 205 of the Berar Land Revenue Code of 1896 the right of pre-emption arose when a co-occupant in any Survey number transferred by sale, foreclosure of mortgage or relinquishment in favour of a specified person for valuable consideration and it vested in very other co-occupant of the survey number. It will thus be seen that the right of pre-emption, which under Mohammedan law attaches to sales only, was also applicable to foreclosure of mortgages and relinquishment for valuable consideration. In the year 1907 the Transfer of Property Act (Act XIV of 1882) was extended to the province of Berar. In 1928 the Code was reenacted and it further extended the provisions in regard to pre-emption in Chapterit will be seen that the right of pre-emption has been by statute extended far beyond what was contemplated under Mohammedan law and also beyond what was recognised in the Berar Settlement Rules, Berar Sub-tenancy Rules and in the Code of 1896.Under S. 54 of the Transfer of Property Act a contract for sale does not of itself create any interest in or charge on immovable property and consequently the contract in the instant case created no interest in favour of the vendee and the proprietary title did not validly pass from the vendors to the vendee and until that was completed no right to enforce pre-emption arose. As we have said earlier wherever the Transfer of Property Act is in force Mohammedan Law or any other personal law is inapplicable to transfers and no title passes except in accordance with that Act. Therefore when the suit was brought there was no transfer by way of sale which could be subject toright to pre-empt the sale is not exercisable till a pre-emtible transfer has been effected and the right of pre-emption is not one which is looked upon with great favour by the courts presumably for the reason that it is in derogation of the right of the owner to alienate his property. It is neither illegal nor fraudulent for parties to a transfer to avoid and defeat a claim for pre-emption by all legitimate means.In the present case the transaction of sale had not been completed until February 1, 1944 when the sale deed was executed. Anything done previous to it could not ordinarily be said to be a fraud to deprive a pre-emptor, from the exercise of his right of pre-emption.There are no equities in favour of a pre-emptor, whose sole object is to disturb a valid transaction by virtue of the rights created in him by statute. To defeat the law of pre-emption by any legitimate means is not fraud on the part of either the vendor or the vendee and a person is entitled to steer clear of the law of pre-emption by all lawfulrespondent Sridhar had based his right of pre-emption on the basis of the sale of February 1, 1944 the appellant would have taken such defences as the law allowed him. The defence in regard to the conversion of the land from agricultural into non-agricultural site which negatives the right of pre-emption would then have become a very important issue in the case and the appellant would have adduced proper proof in regard to it. The right of pre-emption is a weak right and is not looked upon with favour by courts and therefore the courts could not go out of their way to help thewas a case from Bihar where the right of pre-emption under Mohammedan law was judicially recognised in regard to Hindus also. The question whether the sale which was to be pre-empted was the one under S. 54 of the Transfer of Property Act or the one under the principles of Mohammedan Law does not seem to have been the point raised in that case. It may be pointed out that both in the case which went to the Privy Council 48 IA 475: (AIR 1923 PC 41), and the Calcutta case, ILR 35 Cal 575 (supra), sale deeds were executed and registered before the suits to enforce pre-emption were filed. In the latter case the kabala was on July 28, 1904 and the ceremonies were performed after thatright to pre-empt the sale is not exercisable till a pre-emtible transfer has been effected and the right of pre-emption is not one which is looked upon with great favour by the courts presumably for the reason that it is in derogation of the right of the owner to alienate his property. It is neither illegal nor fraudulent for parties to a transfer to avoid and defeat a claim for pre-emption by all legitimate means.In the Punjab where the right of pre-emption is also statutory the courts have not looked with disfavour at the attempts of the vendor and the vendee to avoid the accrual of right pre-emption by any lawful means and this view has been accepted by this court in Bishan Singh v. Khazan Singh, 1959 SCR 878     at p. 884: (AIR 1958 SC 838   at p. 841)