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

2. On April 10, 1943, D. B. Ghaisas and his mother Ramabai entered into two contracts of sale with the appellant, one in regard to Survey Nos. 5, 14 and 16 for a sum of Rs. 10,000/ out of which Rs. 2,000/ was paid as earnest money and the other in regard to Survey No. 15/1 for Rs. 8,500/- out of which Rs. 500 was paid as earnest money. On April 16, 1943 the vendors executed a registered sale deed in regard to Survey Nos. 5, 14 and 16 and the balance of the price was paid before the Registrar. On April 22, 1943, the vendors executed a lease of Survey No. 15/1 for 14 years in favour of Kisanlal and Sitaram who were defendants No. 2 and 3 in the suit and are respondents Nos. 2 and 3 in this appeal. On April 24, 1943, the vendors executed a fresh agreement of sale in respect of the same field which according to the agreement was to be diverted to non-agricultural purposes and thereafter a sale deed was to be executed when it was so diverted. The appellant was to pay the costs of the diversion as well as the premium. In pursuance of this agreement the vendors applied to the Deputy Commissioner, Akola, on August 12, 1943 for diversion under S. 58 of the Code and sanction was accorded on January 22, 1944, subject to payment of premium of Rs. 9, 222/ -and other conditions. The appellants case is that as agreed the vendors were paid this money for deposit and it was deposited in the Treasury under Challan No. 68 but there is no finding in favour of the appellant although the trial court and the District Judge seem to have proceeded on the premises that this amount was deposited but in the circumstances of this case it is not necessary to go into this matter. On February 1, 1944 the sale deed was executed by the vendors in favour of the appellant and the consideration in the sale deed was Rs. 17,On September 11, 1943, i. e. before the sale deed was executed the respondent, Sridhar, brought a suit for pre-emption against the appellant on the allegation that he had a co-occupancy in the survey number in dispute - being the owner of Survey Number 15/2 . In the plaint it was alleged that the transaction of contract under the documents of April 10, 1943 and April 24, 1943 constituted a sale and therefore it was subject to respondent Sridhars prior right of pre-emption. It was also alleged that the price was not fixed in good faith. Theses allegations were denied. Both the trial court and the District Judge held that respondent Sridhar was entitled to pre-empt and determined the fair consideration to be Rs. 3, 306/- The suit was therefore decreed by the trial court and on appeal by the District Judge. The appellant took an appeal to the High Court which also confirmed the decree of the subordinate courts.4. The High Court has held that the transaction was a sale which was subject to pre-emption and that the failure to executed and register a sale deed was a subterfuge to defeat the right of pre-emption. It also held that the proceedings taken for conversion of agricultural land into non-agricultural land were pendente lite and as the right of pre-emption had already accrued by subsequent acts of the vendors and the vendee it could not be defeated. The High Court further held that as the other of the Sub-Divisional Officer allowing conversion was a conditional one the land could not be said to have been irrevocably diverted to non-agricultural purposes. The decree of the subordinate courts was confirmed and against the judgment the appellant has come to this court in appeal by special leave.

Court's reasoning:
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)