RAMJI LAL RAM LAL Vs. STATE OF PUNJAB

JUDGEMENT

(1.) IN this reference, arising out of a petition under Articles 226 and 227 of the Constitution, these three questions are for consideration- (i) Whether a pre-emptor in whose favour a pre-emption decree has been given in the first Court should retain superior right of preemption till the hearing of the appeal by the vendee against the decree, and whether the impugned notification issued during the pendency of the appeal against the decree in the present case, successfully takes away the already exercised right of pre-emption of the petitioners (pre-emptors) so as to defeat their suit in appeal? (ii) Whether Section 8 (2) of Punjab Act 1 of 1913 confers arbitrary, unguided and uncanalised power on the State Government to take away the right of pre-emption, and is on that ground constitutionally invalid; or whether when that provision is read with Section 9 of the very Act, it provides sufficient statement of policy and guidance by the Legislature for the exercise of the power of the State Government under Section 8 (2) of that Act and thus that sub-section is not an invalid piece of legislation on the ground already stated above? (iii) Whether the impugned notification of September 3, 1962, is ultra vires the power of the State Government under Section 8 (2) of Punjab Act 1 of 1913 and whether it is invalid because it has been issued mala fide to the injury of the petitioners and to the advantage of respondents 2 and 3? The facts out of which this reference has arisen are these. On May 9, 1958, Khillu, Mohan Lal, and Radhey Lal, sold 13 Kanals and 19 Marlas (8,440 square yards) land to Surrinder Kumar and Virander Kumar, respondents 2 and 3. The petitioners, Ramji Lal and Khazan, on January 9, 1959, instituted a suit to pre-empt that sale claiming a preferential right of pre-emption in them. The suit was resisted by respondents 2 and 3. During the pendency of the suit on November 16, 1961, was published notification No. 4965-RIV-61/ 7577 of November 9, 1961, under Section 8 (2) of the Punjab Pre-emption Act, 1913 (Punjab Act 1 of 1913), hereinafter to be referred to as the Act, in this form-"in exercise of the powers conferred by Sub-section (2) of Section 8 of the Punjab Pre-emption Act, 1913, the Governor of Punjab is pleased to declare that no rights of pre-emption shall exist with respect to urban or village immovable property or agricultural land when purchased by any person for setting up or extension of any industry in the State with the permission of the Director of Industries, Punjab. " An issue was settled in the suit after that in regard to the effect of that notification on the right of the petitioners claiming preferential right of pre-emption. Respondents 2 and 3 made efforts to obtain from the Director of Industries permission in the terms of the notification, but they did not succeed during the trial. On April 16, 1962, the learned trial Judge decreed the claim of the petitioners for possession by pre-emption of the land in question with a usual condition in the decree in regard to the payment of the amounts stated in it by a certain date, otherwise directing that the suit shall stand dismissed if the condition was not complied with. The learned trial Judge gave a finding of fact that it was not proved that respondents 2 and 3 intended to establish industry on the land in question.

(2.) ON May 16, 1962, respondents 2 and 3 filed an appeal against the decree, of the trial Court. On May 19, 1962, respondent 2 made an affidavit and delivered it on the same day in the Department of Industries, in which affidavit he affirmed that he would only set up a factory in the land in question and will not use it for any other purpose. There was consideration of the matter in the Industries Department and correspondence between that department and the Revenue Department, to all of which detailed reference will be made later, and in the end on September 4, 1962, the State Government, respondent 1, issued notification No. 4444-RIV-62/4011 of September 3, 1962, copy Annexure 'd', in the Gazette Extraordinary of that date, and it says-" in exercise of the powers by Sub-section (2) of Section 8 of the Punjab Pre-emption Act, 1913, the Governor of Punjab is pleased to order that no right of pre-emption shall exist with respect to the sale of land, described in the Schedule to this notification, made on the 9th May, 1958, in favour of Messrs. Surrinder Kumar and Virander Kumar, opposite Railway Station, Faridabad, for the establishment of a factory for manufacturing cork products. Schedule District -- Gurgaon Tehsil -- Ballabgarh Revenue Estate with Hadbast No.------------- Majesar, Hadbast No. 79, Khasra Nos. 2/16 (1 Kanal 12 Marlas), 17 (2 Kanals 1 Maria), 24 (2 Kanals 12 Marlas), and 25 (7 Kanals 14 Marlas), all totalling to 13 Kanals 19 Marlas. ' This notification was issued during the pendency of the appeal of respondents 2 and 3 against the decree of the trial Court decreeing the preemption suit of the petitioners. It was then that on October 1, 1962, the petitioners filed the petition under Articles 226 and 227, and, as stated, this reference arises out of that petition.

(3.) IN so far as the first question is concerned, the Privy Council held that a pre-emptor's claim may be defeated by his losing his preferential qualification to pre-empt after the sale and 'at any time before the adjudication of the suit': Bans Nath y. Ragho Prasad Singh, 59 Ind App 138: (AIR 1932 PC 57 ). It is settled that a pre-emptor must have his qualification to pre-empt on the date of the sale, on the date of the institution of the suit, and on the date of the decree of the trial Court. Although their Lordships have in terms limited their dictum in Hans Nath's case, 59 Ind App 138: (AIR 1932 PC 57) to the former Agra Province, but it has been held to apply equally in Punjab by three Full Benches of the Lahore High Court in Madho Singh v. James R. R. Skinner, ILR (1942) 23 Lah 155: (AIR 1941 Lah 433 (FB)), Zahur Din v. Jalal Din, ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB)) and Faiz Mohammad v. Fajar Ali Khan, ILR (1944) 25 Lah 473: (AIR 1944 Lah 172 (FB) ). In support of their dictum, their Lordships in Hans Nath's case, 59 Ind App 138: (AIR 1932 PC 57) rely upon the dictum of Sulaiman, J. (Lindsay, J. concurring) in Baldeo Misir v. Ram Lagan Shukul, ILR (1923) 45 All 709: (AIR 1924 All 82), in which the learned Judge observed: "it is well settled law that a plaintiff pre-emptor in order to be able to maintain a suit for pre-emption must establish his right to preempt on three important dates. He must have a right of pre-emption at the time when the sale took place; otherwise he would have no cause of action at all. He must also have the same right at the time when the suit is brought or else he would have no locus standi to sue. A possible view to take might have been that nothing which happens after the institution of a suit can alter the position of the parties. But it has been held in a number of cases by this Court that it is incumbent on the plaintiff to prove that his right to preempt continues up to the date when the decree ought to have been passed in his favour, namely, the date on which the case was disposed of by the first Court. It matters little whether the Court of first instance did actually dismiss or decree his suit. " This view has also been taken in Radhika Raman v. Shiam Sundar Lal, ILR (1923) 45 All 567: (AIR 1923 All 526 ). These two cases follow in this respect Sakina Bibi v. Amiran, (1888) ILR 10 All 472. The view of the Lahore High Court is the same, following the last mentioned case, in ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB) ). There is a dissenting note to this in Niaz Ali v. Muhammad Ramzan, 130 Pun Re 1916: (AIR 1917 Lah 135), by Chevis, J. , in so far as the dismissal of a pre-emption suit by the trial Court is concerned, the learned Judge being of the opinion that if that happens and the pre-emptor loses his qualification during the appeal, that might prove fatal to his suit; but this opinion is first obiter, and then must be taken no longer to be sound in view of the exactly contrary opinion by the Full Bench in ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB) ). It is, therefore, a settled rule in preemption law that a pre-emptor must maintain his qualification to pre-empt to the date of the decree of the first Court only, whether that decree is one dismissing the suit or decreeing it, and his loss of qualification, whether by his own act or by an act beyond his control such as the improvement of his status by the vendee so as to equal or better the status of the pre-emptor, after the date of that decree does not affect the fate of his claim in such a suit. The other cases that take the same view are Megha Ram v. Makhan Lal, 67 Pun Re 1912: 130 Pun Re 1916: (AIR 1917 Lah 135); Kaju Mal v. Salig Ram, 91 Pun Re 1919: (AIR 1919 Lah 222 (2)); Ganda Singh v. Bhan, AIR 1923 Lah 310, and Hazari v. Neki, L. P. A. No. 13 of 1965, dated 27-7-1965: (AIR 1966 Punj 348 ). The learned Advocate-General has not been able to deny that such is the rule, but what he contends is that this rule has held the field till the decision of the Federal Court in Lachmeshwar Prasad v. Keshwar Lal, AIR 1941 FC 5, in which their Lordships held that the hearing of an appeal under the procedural law of India is in the nature of re-hearing and, therefore, in moulding the relief to be granted in a case on appeal, the appellate Court is entitled to take into account even facts and events which have come into existence after the decree appealed against. Consequently, the appellate Court is competent to take into account the legislative changes since the decision in appeal was given and its powers are not confined only to see whether the lower Court's decision was correct according to the law as it stood at the time when its decision was made. In that case Varadachariar, J. , with whom Gwyer, C. J. concurred, observed that "once the decree of the High Court had been appealed against, the matter became sub judice again and thereafter this Court had seisin of the whole case, though for certain purposes, e. g. , execution, the decree was regarded as final and the Courts below retained jurisdiction". The learned Advocate General has urged that after this decision of their Lordships all the cases already referred to on the question now under consideration must be field no longer good law. He points out that when the dicta in those cases is scanned, the basis of the same is (i) that at the stage of the appeal subsequent events cannot be looked into and considered and (ii) that all that is to be seen at the stage of the appeal is whether the decree passed by the trial Court has or has not been passed correctly. This basis the learned Advocate-General says has been completely swept away by the decision of their Lordships of the Federal Court in Lachmeshwar Prasad Shukul's case, AIR 1941 FC 5. So, according to him, now, after the decision of that case, where a pre-emptor loses his qualification to pre-empt a sale after the decree of the first Court and at the stage of the appeal, that event must be taken into consideration, with the obvious consequence that he must fail in his pre-emption suit. In this respect the learned counsel further refers to Ram Lal v. Raja Ram, 1960-62 Pun LR 291, and Ram Sarup v. Munshi, AIR 1963 SC 553, and these two cases follow Lachmeshwar Prasad Shukul's case, AIR 1941 FC 5, but, like that case, proceed to a decision upon a statutory provision which made the new legislation retrospective. The Act was amended by the Punjab Pre-emption (Amendment) Act, 1960 (Punjab Act 10 of 1960), where under certain qualifications available for preemption have been taken away, and then by Section 6 of the amending Punjab Act 10 of 1960 new Section 31 in the Act has been added and that Section 31 reads: "no Court shall pass a decree in a suit for pre-emption whether instituted before or after the commencement of the Punjab Pre-emption (Amendment) Act, 1959 (1960), which is inconsistent with the provisions of the said Act". This new section is in terms retrospective in the sense that whether the suit for pre-emption is instituted before the date of the amending Act or after, a decree cannot be passed contrary to its provisions, that is to say, contrary to the provisions of amending Punjab Act 10 of 1960. The Federal Court having held in Lachmeshwar Prasad Shukul's case, AIR 1941 FC 5 that an appeal is a rehearing of the suit and at the stage of the appeal the suit is itself pending and is sub judice, it followed logically from that that when the appellate Court gave a decision in such) an appeal, it must be taken to be passing a decree in the suit. Consequently when the new Section 31 is read with the decision of the Federal Court in Lachmeshwar Prasad Shukul's case, AIR 1941 FC 5 it becomes obvious that in a pre-emption suit when the appellate Court decides the appeal, as in the appeal the subject-matter of the suit is sub judice, it passes a, decree at that stage, and the passing of such a decree is prohibited by the new Section 31. This is exactly what has been decided in both Ram Lal's 1960-62 Pun LR 291 and Ram Sarup's AIR 1963 SC 553 cases. As such those cases, in so far as the decisions proceed on the new Section 31, do not advance the argument urged by the learned Advocate-General, though it is correct that, as the same follow Lachmeshwar Prasad Shukul's case, AIR 1941 FC 5, there is support in them to the argument of the learned Advocate-General that an appeal is a re-hearing of the suit and consequently the appellate Court when deciding the appeal passes a decree in the suit. Otherwise those two cases, as already pointed out, like the case of Lachmeshwar Prasad Shukul, AIR 1941 FC 5, proceed on the application to a litigation pending at the stage of the appeal of retrospective statutory provision. The learned Advocate-General has further contended that the fact that a pre-emptor has, after obtaining decree in the trial Court, complied with that decree and by payment of the amount mentioned in it has gained title to the property according to Order 20, Rule 14 of the Code of Civil Procedure makes no difference and his position is not improved in that manner. In this respect he refers to Laxman Ramchandra v. Wasudeo Vithal; Mt. Sarjabai v. Bhagwanji Nagoji and Kisan Dewaloo v. Ganga Bai, all three cases reported in AIR 1939 Nag at pages respectively 120, 140 and 279, the substance of the decisions in those cases, so far as the present matter is concerned, being that a pre-emptor may appeal against a preemption decree without complying with that decree according to Order 20, Rule 14, and should he succeed in his appeal the appellate Court may extend time for making deposit of the amount under the decree. In this respect the approach of the learned Advocate-General is correct because the rule being that a pre-emptor has to maintain his preferential qualification to the date of the adjudication of the first Court, irrespective whether the preemption suit is dismissed or decreed, if the suit is dismissed the question of the pre-emptor gaining title by compliance with the decree according to Order 20, Rule 14, does not arise, and this factor would appear, therefore, not to be decisive in the matter. In ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB)) the suit of the pre-emptor was dismissed by the trial Court. During the pendency of the appeal by the pre-emptor against the decree, the vendee improved his status so as to be equal to that of the pre-emptor. It was then urged on the side of the vendee that the pre-emptor must fail if at the stage of the appeal he no longer held the preferential qualification to pre-empt the sale in question. The argument advanced for the vendee was precisely the same as has been advanced by the learned Advocate-General in this case and as has been substantially reproduced above. It was said that an appeal is a re-hearing of the suit and continuation of the same and in determining the rights of the pre-emptor or of the vendee the appellate Court may consider any circumstances which have arisen during the pendency of the suit in appeal even though those circumstances, may have come into being subsequent to the decree of the first Court. This argument was repelled by the learned Judges constituting the Full Bench (Harries, C. J. and Abdul Rashid and Abdur Rahman, JJ. ). It was also contended before the learned Judges that if after the decree of the trial Court and before compliance with that decree and gaining of title to the property according to Order 20, Rule 14, the vendee should either improve his status so as to equal that of the pre-emptor or the pre-emptor should lose his preferential qualification, the latter must obviously fail, and the learned Judges pointed out that reference to the compliance of the decree and its consequence because of Order 20, Rule 14, made no difference to the rule that the pre-emptor is only required to maintain his preferential qualification to the date of the adjudication by the trial Court and no further. They observed-- "there is no doubt, however, that the powers conferred on an appellate Court by Order 41, Rule 33, are very wide; but they should not be exercised so as to affect a vested right, say, for instance, by virtue of law of limitation, Chockalingam Chetty v. Seethai Achi, 54 Mad LJ 88: (AIR 1927 PC 252), and similarly a right which had been declared to be vesting in a pre-emptor by a decree passed in his favour. It may be that title to the property decreed in a suit for preemption may not actually come to vest in the pre-emptor up to the date of deposit of the whole price by him in Court. This is, however, a different matter. The right to get the property in preference to the vendee although an inchoate one up to the date of the decision of the first Court, comes into existence effectively with a decree in his favour and although that may not entitle him to the property as stated by Sir Meredyth Plowden in Dhani Nath v. Budhu, 136 Pun Re 1894 in the sense that he does not become an owner of the same until payment nevertheless entitles him to get the property on compliance with the conditions stated in the decree. The right to get the property is in short declared by the decree and can only be defeated by its terms. The question, therefore, as to when a decree-holder's title to the property would be complete seems to be besides the point. We are only concerned in a suit for pre-emption with a plaintiff's preferential right to acquire the property and to get himself substituted for the vendee in the sale which he wishes to pre-empt and not with the question as to when he becomes the owner of the property after his suit for pre-emption has been decreed. The contention, therefore, that the vendee is entitled to improve his status even after a decree and before the pre-emptor has deposited the price in pursuance of the decree has no force and does not advance the matter any further. And if events which took place between the date when the right to pre-empt comes to be effectively recognised by a Court and the date when the deposit of the price is made by the pre-emptor in pursuance of the decree cannot be taken into consideration, much less can events that happen during the pendency of an appeal be looked at or allowed to influence ones judgment in the matter particularly as a Court of Appeal is, as observed before, mainly concerned with the correctness of the decision arrived at by the trial Court". The learned Judges further pointed out "there appears to be no principle or reason to extend the period of a vendee's acquisition beyond that dale when the plaintiff's right has been declared to have either come into an existence effectively or otherwise finally adjudicated by the trial Court and the function of a Court of Appeal is confined to an examination as to the correctness of the lower Court's decision". Earlier the learned Judges said-- "it is true that in a sense an appeal is a continuation of a suit but this is only in a limited sense. It does not, however, mean that the rights which could be pleaded and enforced before a suit was finally adjudicated by the first Court, could be pleaded as of right for the first time during the pendency of the appeal. It is also true that Courts do very often take notice of events that happen subsequent to the filing of suits and at times even those that have occurred during the appellate stage and permit pleadings to be amended for including prayer for relief on the basis of such events but this is ordinarily done to avoid multiplicity of proceedings or when the original relief claimed has, by reason of change in the circumstances, become inappropriate and not when the plaintiff's suit would be wholly displaced by the proposed amendment (see Steward v. North Metropolitan Tramways Co. , (1885) 16 QBD 178)) and a fresh suit by him would be so barred by limitation although in cases where it would not be so barred, different considerations might come into play and a different view might be possible. It cannot be, however, disputed that ordinarily an appellate Court can give effect to such rights only as had come into being before the suit had been disposed of and which the trial Court was competent to dispose of". Thereafter the learned Judges refer to Sakina Bibi's case, (1888) ILR 10 All 472 and follow" it. If I understand this case right the learned Judges have been of the opinion that when a pre-emptor establishes his preferential right to pre-empt a sale to the date of the adjudication by the trial Court, his right to get the property in preference to the vendee effectively comes into existence then, and so it becomes a vested right, which obviously can only be taken away from him by retrospective legislation as happened in the cases of Ram Lal, 1980-62 Pun LR 291 and Ram Sarup, AIR 1963 SC 553. The impugned notification of September 4, 1962, cannot have that effect, for that notification does not operate retrospectively because the Act makes no provision for retrospective operation of such a notification and it has been held in Niaz Ali's 130 Pun Re 1916: (AIR 1917 Lah 135) and Kaju Mal's 91 Pun Re 1919: (AIR 1919 Lah 222 (2)) cases that such a notification does not operate retrospectively. No doubt in Ram Lal's case, 1960-62 Pun LR 291 the Division Bench did not approve of those two cases, though those cases were also decided by Division Benches. However, the dicta in those two cases have the support of subsequent Full Bench decision in ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB)) a case which obviously appears not to have been placed before the learned Judges in Ram Lal's case, 1960-62 Pun LR 291 as it was not placed before us in the Division Bench, otherwise this first question would probably never have been referred to a larger Bench as has been done in the present case. In my opinion, ILR (1944) 25 Lah 443: (AIR 1944 Lah 319 (FB)) is a complete answer to the argument of the learned Advocate-General on this first question, and if that decision of a Full Bench of three Judges is to be overruled, in my opinion a larger Bench than the present Bench of three Judges will have to do that.