RAM CHAND v.

RANDHIR SINGH AND OTHERS

OCTOBER 5, 1994

[KULDIP SINGH, MADAN MOHAN PUNCHHI AND

K. RAMASWAMY, JJ.]

Pre-emption Laws :

C Punjab Pre-emption Act, 1913-Clause Fourt/Uy in S.15(1)(a) asapplicable to Haryana-Agricultural tenant inducted by usufructuary

mortgagee-Whether has a right of pre-emptiolt-f'art of the land-Whether such tenant could pre-empt the entire sale-Held : Yes.

Certain lands belonging to MC stoods tenanted even prior to 1946.

D In 1951, MC died and his estate was mutated in favour of bis widow and two sons, one of whom was MS in whose share the tenanted land fell. He mortgaged the lands in 1951 and mutation was sanctioned and recorded in the revenue records. However, the tenancy was not affected.

At the time of crop inspection of khariff 1953, the father of the appellants was found to be the tenant of the mortgaged as also nonmortgaged land of MS. After the death of their father, the appellants were substituted as tenants by inheritance. Prior to his death, the appellants' father was shown as a tenant sometimes under the mortgagor and sometimes under the mortgagee. ·

In 1966, the mortgagor remortgaged the land with possession to the same mortgagee, and redeemed the earlier mortgage. Mutation for the subsequent mortgage was sanctioned. However, the appellants remained as tenants unaffected by the said transfers.

In 1968, the mortgagor sold the entire land to the respondents, letting the vendees keep the sum due for redeeming the existing mortgage.

Appellants sought pre-emption of the sale in its entirety. the Trial Court granted a decree for pre-emption in respect of the non-mortgaged land on payment of the proportionate amount and dismissed the suit with regard H to the mortgaged land. On appeal the District Judge, granted a pre

RAM CHAND v. RANDHIR SINGH 223

emption decree to the appellants and dismissed the cross appeal filed by A the respondents. In second appeal, the High Court restored the decree of the Trial Court. Hence this appeal.

In this appeal two questions were raised viz. (1) Whether an agricul tural tenant inducted by the usufructuary mortgagee, has a right of pro emption over the sale made by the mortgagor Vendor; and (ii) Whether B an agricultural tenant holding under tenancy of the Vendor a part of the sold land is entitled to pre empt the entire sale.

Allowing the appeal, this Court.

HELD : 1. An agricultural tenant inducted in terms of Section 76(a) of the Transfer of Property Act, by the usufructuary mortgage, bas a right of pre-emption over the sale made by the mortgagor-vendor. [228-H)

Prahbu v. Ramdeo and Ors., AIR (1966) S.C. 1721, followed.

Atam Prakash v. State of Haryana, [1864) 2 SCC 244 at page 261, D relied on.

2.1. When a tenanted part of land is involved in the sale, tl1e tenant thereof bas a right of pre-emption qua the entire land sold and the vendees cannot resist the same. [230D) E

2.2. Permitting total sale being pre-empted is to prevent fragmenta tion of the erstwhile holdings of the vendor. It does away disputes of partitioning or sharing sources ofirrigation and working out rights to take water to agricultural fields through the fields of the other which need was non-existent under the vendor's management. Likewise for passages of F ingress and egress, problems may come up. It obviates the necessity of settling other disputes such as apportionment of price of the tenanted area on the splitting of the sale, the possible design of Its being inflated to frighten the prospective tenant pre-emptor. It is attuned with the principle of bar to partial pre emption. It also avoids the lurking fear of the tenant G having to deal with a stranger. Such advantages are just some. Taking the language of the tax and its plain advantageous meaning, this Court would have such an interpretation to the provision viz. class Fourthly in s.15(1) (a) of the Punjab Pre-emption Act, 1913 which would entitle a tenant to pre-empt a sale of agricultural land in which bis tenanted land is included, on the strength of which he can claim the entire bargain in the H

A exercise of his right of substitution over the vendee. [230F to HJ

Ram Sarup v. Munshi and Others, (1963] 3 SCR 858, relied on.

Ba/want Singh and Ors. v. Mehar Singh and Ors., (1966-68) Supp. PLR 484 and Uttam Singh v. Kartar Singh, AIR (1954) Punjab 55, approved.

3. The Trial Judge dismissed the suit of the appellants on the under standing that the appellants were not tenants of the mortgagor-vendor. The lower Appellate Court took the view that between the date of the second mortgage and date of the mutation in July 21, 1966, the first mortgage had been redeemed and from that moment onwards the appellants become C direct tenants of the vendor and thus the land for the second time, when mortgaged, stood tenanted. That view was taken possibly on the under standing that till mutation was effected, the second mortgage was not operative. There was an obvious fallacy in that reasoning which the High Court corrected in upsetting that view. The High Court seemed otherwise D aware that on redemption of mortgage, the lease created by the mortgagee, such as the present one, would have to be taken as if created by the mortgagor. This outcome was circumvented taking the view that the second mortgage was created at a time when the first one was subsisting during which period the lease in favour of the appellants was created; the lease which continued uninterrupted under the second mortgage. The High E Court should have drawn the inference that the second mortgage was nothing but al. implicit act of ratification ilf the deeds of the mortgagee, who was no other than the creator of the lease. At that time, no objection as to the existence of the lease was raised. By bis conduct the mortgagor revealed that be bad taken the created lease as bis own, lending qualifica p tion to the appellants in being the vendor's tenants over bis holding. [231-E to H, 232A]

[This Court directed the appellants to deposit the sum as required by the lower appellate Court on terms on or before 31.12.1994 failing which the law as settled would remain, but the appellants would have denied to G themselves the relief of a positive decree.] [232-D]

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 45 of 1987.

From the Judgment and Order dated 1.2.83 of the Punjab & Haryana H High Court in R.S.A No. 1611 of 1973.

Ms. Indra Sawhney for the Appellant.

Prem Malhotra for the Respondents.

The Judgment of the Court was delivered by

PUNCHHI, J. This appeal, directed against the judgment and order B of a learned Single Judge of the Punjab and Haryana Court dated February 1, 1983, passed in Regular Second Appeal No. 1611 of 1973, raises two questions of importance, on the true interpretation of clause Fourthly in section 15(1) (a) of The Punjab Pre-emption Act, 1913 as applicable to the State of Haryana being :

(i) whether an agricultural tenant inducted by the usufructuary mortgagee, has a right of pre-emption over the sale made by the mortgagor-vendor? and

(ii) whether an agricultural tenant holding under tenancy of the vendor a part of the sold land is entitled to pre-empt the entire sale?

Following are the facts as gathered from one or the other judgment of the three courts below : -

Some land including 50 Kanals 6 Marlas of land in Khasra numbers 294/9(9-12), 1 (6-16), 2 (3·2), 10 (7·8), 12 (8-0) and 13 (8-0) situated in E village Bhattukalan, Tehsil Fatehabad, District Hissar was owned by one Moo! Chand. As per revenue records adduced in evidence before the learned trial Judge, the land stood tenanted even prior to the year 1946 and was so in the year 1950 with one Net Ram Qosain. In i951, Moo] Chand died and his estate was mutated in favour of his widow and two F sons, one of whom was Mitter Sen and in whose share the above land fell.

Mitter Sen mortgaged six Khasra numbers barring 294/9 (9-12), from his inherited land on 16-12-51 in favour of Amin Chand for Rs. 2400 and mutation No. 1548 in that regard was sanctioned and recorded in the . revenue papers. The tenancy however was not affected. Under the tenancy G laws, as applicable to Haryana, the agricultural year commences from 15th June, whereafter time arrives to sow the Kharif Crop. At the time of the crop inspection of Kharif 1953, done on maturity of crops between October to December as per departmental instructions, Ratna Ram, the father of the present appellants herein, was found to be the tenant of the mortgaged as also non-mortgaged land of Mitter Sen on payme~, of one third H . ,-'

A produce, and was recorded as such. The records are silent however as to whether Raina was inducted as a tenant by Mitter Sen, owner of the land or Amin Chand, mortgagee. By that as it may, the cultivation of the land by Raina, father of the appellant continued till his death, whereafter the appellants were substituted as tenants by inheritance. Revenue records of

B intervening years kept showing the appellants or their father, as the case may be, sometimes as tenants under the owner, Mitter Sen and sometimes under Amin Chand, the mortgagee. While so, Mitter Sen, owner mortgagor on 6-5-1966 re-mortgaged the disputed land with possession to the same Amin Chand for Rs. 1500 by a Registered Mortgage Deed. Fifteen days later, on 21-5-1966, he redeemed the former mortgage of 16-12-1951. The C appellants remained unaffected by these transfers. Mutation for the subsequent mortgage dated 6-5-1966 was sanctioned on 21-7-1966.

On 4-3-1968, Mitter Sen sold the entire 50 Kanals 6 Marlas of land for a total consideration of Rs. 10,000 to the respondents. In the sale, a provision was made in letting the vendees keep the sum due for redeeming D the existing mortgage. The appellants sought pre-emption of the sale in its entirety. The Trial Court granted them a decree for pre-emption in respect of the non-mortgaged Khasra no. 294/9 (9 Kanals and 12 Marlas) only on the payment of proportionate price of Rs. 2122.30 paise and dismissed the suit with regard to the mortgaged land, now in dispute.

The appellants as well as the respondents filed cross appeals before the District Judge, Hissar who allowed the appeal of the pre-emptor-appellants granting them a pre-emption decree and dismissed the appeal of the respondents regarding the other part, in which the appellants had been successful qua one Khasra No. before the Trial Judge. The respondents' regular second appeal before the High Court was allowed and the judgment and decree of the Trial Court was restored with the result (hat the appellants were denied the relief of pre-empting sale of the land which was under mortgage. The question, therefore, has arisen whether the appellants had such a right of pre-emption as claimed by them and on what basis.

Section 15(1) (a) Fourthly would, when properly arranged and culled out from the text, read as follows :

"The right of pre-emption in respect of agricultural land shall vest ----- where the sale is by a sole owner ----- in the tenant who holds under tenancy of the vendor, the land sold or a part thereof."

The first question is raised on the premise that the appellants (before A them their father) had been inducted in the disputed land in 1953. The land in dispute was already tenanted when mortgaged for the first time in

1951. It remained tenanted thereafter throughout. There was only a change of tenants in the process of time. From this, it was sought to be urged that deriving usufruct of the land by tenanting was the accepted mode B evidenced from the conduct of parties. It was also urged that there was no prohibition in terms of the mortgage to the induction of tenants by the mortgagee. It was stressed that within the terms of section 76(a) of the Transfer of Property Act, a mortgagee has a right to manage the property as a person of ordinary prudence would manage, if it were his own. It was also pointed out that since tenants were given some security from eviction C under the provisions of the Punjab Security of Lands Tenancy Act, 1953 with effect from 15th April, 1953, the appellants as tenants by legal fiction had become the tenants of the vendor in so far as the mortgaged property was concerned.

D The words "if it were his own" in section 76(a) of the Transfer of Property Act make the mortgagee, unless prohibited from doing so, the second self of the mortgagor, when he as a prudent owner leases out agricultural land. It is well known and settled that in case of lease of agricultural land, the lessee, by the very process of cultivation, has to bring in inputs, effort and as a termed measure fertilization of the soil, pursuing E constant and continuous agricultural activity and vigil to attain acceptable results. His effort is not that of one time but a continuous one with a future in view and that is why there is a presumption that agricultural leases are from year to year and not of monthly or daily duration. In the instant case, when there was no prohibition to lease out the mortgaged land in the event F of the then tenant vacating, what better could be an instance of good management by the mortgagee in putting another tenant, whose existence on the land, as future tells us, was never questioned at any time by Mitter Sen, and more so, at the time of the execution of the second mortgoge.

The legal position with regard to the agricultural leases, has also been G

settled by a five-judgment bench of this Hon'ble Court in Prabhu v.

Ramdeo & Ors., AIR (1966) S.C. 1721 by holding that persons inducted into agricultural lands as tenants by a usufructory mortgagee, who become entitled to protection under the tenancy laws, cannot be ejected by the . mortgagor on the ground that the mortgage of the land had been H

A redeemed. Even though that was a case in which the right of tenure accrued to the tenants after the creation of the lease but on principle it would not make a difference in so far as the present case is concerned, where the Punjab Security and Land Tenure Act giving protection to the tenants from ejectment, except on grounds mentioned in the statute, be-

B came available from 15th April, 1953 onwards, and the lease herein has been shown to have commenced with the agricultural year starting from 15th June, 1953, Within a span of two months of that Act being enforced.

When viewed in this backdrop it becomes apparent that when the mortgagee changed the tenant, he had done so under his legal right and obligation under section 76(a) of the Transfer of Property Act and the just C and equitable principles involved therein. Thus his deeds in that regard are to be considered as deeds of the mortgagor. Having arrived at such conclusion, it is not difficult then to proceed on the footing that the tenancy created by the mortgagee was in sum and substance the tenancy created by and for the mortgagor and when on that basis the mortgagor gets to be D the vendor of the land sold during the subsistence of the mortgage, the tenants inducted on the land by the mortgagee for him, non-ejectible at will, derive the right of pre-emption. For the ultimate social goal is that the land must go to the tiller, whose bare feet get kissed and blessed by the feel of Mother Earth. In Atam Prakash v. State of Haryana, [1864] 2 SCC 244 at page 261, Chinnappa Reddy, J. speaking for this Court had held: E

"The right of pre-emption vested in a tenant can also be easily sustained. There can be no denying that the movement of all land reform legislations has been towards enabling the tiller of the soil to obtain proprietary right in the soil so that he may not be disturbed from possession of the land and deprived of his livelihood by a superior proprietor. The right of pre-emption in favour of a tenant granted by the Act is only another instance of a legislation aimed at protecting the tenant. There can be no doubt that tenants form a distinct class by themselves and the right of pre-emption granted in their favour is reasonable and in the public interest.

1 '

 The first question is thus answered accordingly to hold that an agricultural tenant inducted in terms of section 76(a) of the Transfer of Property Act, by the usufructuary mortgage, has a right of pre-emption H over the sale made by the mortgagor-vendor.

The second question is, should the provision be interpreted confining A the right to the tenanted area or extending it to the entire area covered by the sale? It has been contended on behalf of the appellants that on the findings recorded by the courts below they were tenants over a part of the land sold, for which they have been given a decree of pre-emption. They claim that on a true interpretation on the provision they should get the B whole bargaining pre-emption, even if they are not treated as tenants of the other part. It was also asserted that if in a sale of agricultural land, some part of it was tenanted then the right vests in the tenant to seek pre-emption of the sale in entirety because of the jural relationship existing.

It was emphasised that the qualification for seeking pre-emption was barely being a tenar..t who holds land under tenancy of the vendor, not necessarily C the whole. The tenanted . part thereof, entitles him to have the whole because it is involved in the sale and so connected with the vendor through that land. We have not been made any wiser by any precedent cited at the bar for or against the preposition raised. Even the point as such was not raised before the Courts below but has arisen otherwise in discussion.

A learned single Judge of the Punjab and Haryana High Court in Ba/want Singh & Ors. v. Mehar Singh & Ors., (1966- 68) Supp. PLR 484, interpreting !he provision has viewed that the word "holds" in the provision

is not to be construed in isolation but is to be read with its succeeding words "under tenancy". This ratio of the High Court had apparently risen E where the tenant claiming pre-emption of the suit land had, after the sale, been ousted from physical possession and his claim for pre-emption was being protected by the Court. It is in that context that the High Court ruled that the word "holds" must be read alongwith the words "under tenancy' and that the right of tenancy did not merely mean the act of physical F possession but also included a bunch of incorporeal rights which are not capable of physical possession. Qualificatory rights in that regard were thus settled by precedent that the pre-empting tenant should merely have held the land on the date of sale and not necessarily at any time thereafter to satisfy the rule of maintaining the status on three occasions i.e. on the date G of sale, on the date of the suit and on the date of the decree of the first court. However, it has always remained unquestioned that the tenant can pre-empt the sale with regard to the portion of the land actually in his tenancy. To the un-tenanted portion which was part of the sale, a bar has always been read. All the same, it would have to be gathered from the provision whether such right of pre-emption, in respect of agricultural land, H

A has been made to vest in the tenant? It is apparent that the tenant, in priority has the last right for pre-emption in section 15(1) of the Act. The language conferring such right, as is evident, is not punctuated. All the words have been put together. Its languages thus is capable of more than one meaning. Therefore, whatever goes to further the intendrnent of the

B measure should be the basis of interpretation. It is well to remember that

this right to the tenant was conferred by amendment in the Act in the year 1960 in the post constitutional era as part of agrarian reform. Atani Prakash's case is a clear pointer. Unlike its other provisions, save in the case of a co-sharer, which have been struck down as archaic and unconstitutional in Atarn Prakash's case, this part has been kept alive, attuned as C it is with modern thinking. Thus the provision would need a purposive interpretation furthering, if not expanding, the right rather than curtailing it. If the words "holds under tenancy" be not disjuncted as per dictum of Balwant Singh's case (supra), they have then as a sequator to be conjuncted with the words "of the vendor". If so the right thus is vested in the tenant D who holds under tenancy of the vendor not only the land sold but even a part thereof, i.e. of the land sold. Thus on interpretation, this view can be taken that when a tenanted part of land is involved in the sale, the tenant thereof has a right of pre-emption qua the entire sold land and the vendees cannot resist the same.

This interpretation is advantageous from the legal as also the economic and social point of view in the rural society. Permitting total sale being pre-empted is to prevent fragmentation of the erstwhile holding of the vendor. It does away disputes of partitioning or sharing sources of irrigation and working out rights to take water to agricultural fields thrnugh the fields of the other which need was non-existent under the vendor's management. Likewise for passages of ingress and egress, problems may come up: It obviates the necessity of settling other disputes such as apportionment of price of the tenanted area on the splitting of the sale, the possible design of its being inflated to frighten the prospective tenant pre- G emptor. It is attuned with the principle of bar to partial pre-emption. It also avoids the lurking fear of the tenant having to deal with a stranger.

Such advantages are just some. Taking the language of the text and its plain advantageous meaning, we would rather give such an interpretation to the provision which would entitle a tenant to pre-empt a sale of agricultural land in which his tenanted land is included, on the strength of which he H can daim the entire bargain in the exercise of his right of substitution over

RAM CHAND v. RANDI-UR SINGH [PUNCHHI, J.] 231

the vendee. A full Bench of the Punjab High Court in Uttam Singh v. Ka1tar A Singh, AIR (1954) Punjab 55 had enumerated one of the grounds in upholding the vires of section 15 as avoidance of fragmentation of holding.

This Court in Ram Sarnp v. Munshi and Others, [1963] 3 SCR 858 at page 873, testing the ground aforementioned in the case of a son observed as follows :

"Nor can the ground of avoidance of fragmentation of holdings afford assistance to sustain the claim of a son to pre-empt in the event of a sale by a sole owner-father, for that criterion has primary relevance to the right of pre-emption enjoyed by co-sharers and

the like." C

The word "like" was obviously used to cover up the case of someone other than the co-sharer. And besides the co-sharer, only the tenant now has the right of pre-emption. So the word "like" seemingly was conceived to include that case of a tenant. The second question therefore is answered D accordingly to hold that an agricultural tenant holding under tenancy of the vendor a part of the sold land is entitled to pre-empt the entire sale.

The Trial Judge dismissed the suit of the appellants on the understanding that the appellants were not tenants of the mortgagor-vendor. The lower Appellate Court took the view that between the date of the second E mortgage and date of the mutation in July 21, 1966, the first mortgage had been redeemed and from that moment onwards the appellants became direct tenants of the vendor and thus the land for the second time, when mortgaged, stood tenanted. That view was taken possibly on the understanding that till mutaiion was effected, the second mortgage was not F operative. There was an obvious fallacy in that reasoning which the High Court corrected in upsetting that view. The High Court seemed otherwise that on redemption of mortgage, the lease created by the mortgagee, such as the present one, would have to be taken as if created by the mortgagor.

This outcome was circumvented taking the view that the second mortgage G was created at a time when the first one was subsisting during which period the lease in favour of the appellants was created; the lease which continued uninterrupted under the second mortgage. The High Court, in our view, should have drawn the inference that the second mortgage was nothing but an implicit act of ratification of the deeds of the mortgagee, who was no other but the same Amin Chand, the creator of the lease. At that time, no H

A objection as to the existence of the lease was raised. By his conduct the mortgagor revealed that he had taken the created lease as his own, lending qualification to the appellants in being the vendor's tenants over his holdmg.

We are .thus of the view that in these facts and circumstances, when B the appellants have been on the land for over 40 years as tenants, in the otherwise dying law of pre-emption, such rights in favour of them, on true interpretation of the statute, shall be read in the way we have answered the two questions afore-posed. We, therefore, allow this appeal and set aside the impugned order of the High Court and that of the Trial Court restoring C operatively that of the lower appellate court, decreeing the suit of pre-emption of the appellants. They shall make deposit of the sum as required by the lower appellate court on terms on or before December 31, 1994 failing which the law as settled would remain, but the appellants would have denied to themselves the relief of a positive decree. In the circumstances, there shall be no order as to costs.

G.N.

Appeal allowed.