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Jagdeo Singh vs Mahabir Singh And Ors.

High Court Of Judicature at Allahabad|23 April, 1938


JUDGMENT Iqbal Ahmad, J.
1. This is an appeal by a plaintiff whose claim for pre-emption has been dismissed by both the Courts below. On 2nd August 1933, defendants 1 to 3 executed a document purporting to be a deed of usufructuary mortgage in favour of defendant 4, for a sum of Rs. 1000. The plaintiff's case was that the transaction evidenced by the said document was really one of sale, and that the document was described as a deed of mortgage simply with; a view to defeat the plaintiff's right of pre-emption. The plaintiff further alleged that, the real consideration was Rs. 500 and not Rs. 1000. Defendant 4 contested the suit inter alia on the allegation that the, transaction sought to be pre-empted was really one of mortgage and not of sale, and as such the plaintiff had no right of preemption. Secondly, defendant 4 maintained that the consideration entered in the deed was the real consideration. On the question of consideration both the Courts have recorded findings in favour of defendant 4, and that point does not arise in the present appeal. The Courts below however differed on the question as to, whether the transfer in favour of defendant 4 was by means of sale or by way of mortgage. The trial Court held that defendant 4 was a mere mortgagee and accordingly the suit for pre-emption was not maintainable. In view of this finding, the trial Court dismissed the plaintiff's suit.
2. On appeal by the plaintiff the lower Appellate Court held that the transaction evidenced by the deed dated 2nd August 1933 was really one of sale and not of mortgage. The lower Appellate Court however relying on the decision of the. Oudh Chief Court in Sarfaraz Singh v. Baleshwar Prasad (1928) 15 A.I.R. Oudh 103 dismissed the plaintiff's suit. In that case it was held that it is permissible to defeat the right of pre-emption by executing a. deed of mortgage instead of a deed of sale. The lower Appellate Court accordingly held that though the transfer in favour of defendant 4 was by means of sale, the plaintiff was not entitled to pre-empt that sale as defendants 1 to 3 had executed a deed of mortgage and not a sale deed. With all respect, I am unable to agree with the decision of the Oudh Chief Court, The right of a plaintiff to pre-empt a transaction of sale cannot be defeated by mere collusion between the vendor and the vendee and by giving to a transaction of sale the guise of a mortgage or that of a gift. The determination of the question whether or not a particular transfer gives rise to a right of pre-emption depends on the real nature of the transfer and not on the form in which the transfer may be couched. To this effect is the decision of the Punjab Chief Court in Gul Muhammad v. Sabz Ali Khan (1919) 6 A.I.R. Lah. 127. It was held in that case that where in a suit for pre-eruption it is alleged that a transaction which purports on the face of it to be an exchange is in reality a sale, it is the duty of the Court to determine what the real intention of the parties was as opposed to their apparent intention.
3. The view taken by the Oudh Chief Court in the case noted at the inception of this judgment was departed from by that Court in Mohammad Ishaq v. Fahim-un-Nissa (1928) 15 A.I.R. 1918, and it was held that though under the Mahomedan law devices are permissible for the purpose of defeating pre-emption, the right of pre-emption cannot be defeated by disguising a transaction of sale as that of a mortgage. In my judgment, it is always open to a plaintiff in a pre-emption suit to prove by evidence the real nature of the transaction sought to be pre-empted. Section 92, Evidence Act, has no application to such a case for the simple reason that the plaintiff in a pre-emption suit is not a party to the document which embodies the transaction sought to be preempted. For the reasons given above, I hold that the plaintiff was entitled to a decree. Accordingly I allow this appeal, set aside the decrees of the Courts below and pass a decree for pre-emption in the plaintiff's favour conditional on the payment by the plaintiff to defendant 4 of a sum of Rs. 1000 within three months from today's date. If the amount is paid within the time allowed, the plaintiff will get his costs from defendant 4 in all the Courts; otherwise the plaintiff's suit shall stand dismissed with costs in all Courts. Leave to appeal under the Letters Patent is granted.
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Jagdeo Singh vs Mahabir Singh And Ors.


High Court Of Judicature at Allahabad

23 April, 1938