Case Note & Summary
The appeal before the Supreme Court of India arose from a suit for pre-emption instituted by the three sons of three vendor brothers who had sold agricultural land in Punjab. The vendors had agreed on 19 September 1961 to sell 193 kanals and 15 marlas of land to multiple vendees at the rate of Rs 840 per bigha, with Rs 7,000 received as earnest money. A formal sale deed was executed on 6 December 1961 with some variations in shares and the addition of a co-vendee, declaring a sale price of Rs 32,550 and delivery of possession. The sale deed was duly registered on 9 March 1962. The plaintiffs, claiming a statutory right of pre-emption as sons and co-sharers, filed the suit on 6 March 1963 seeking to be substituted as purchasers in place of the vendees. The vendees contested the suit, raising pleas of waiver, collusion, and limitation. The trial court found the suit collusive because the plaintiffs and vendors resided and messed together and the expenses of litigation were paid by the vendors; it held that the right of pre-emption is personal and cannot be exercised in collusion with the vendors, and thus the plaintiffs were estopped. On limitation, the trial court held that the vendors, not their tenants, were in possession of the land sold and that possession was delivered to the vendees on the date of sale, so the suit was barred by time under Article 10 of the Limitation Act, 1908. On first appeal, the District Judge reversed both findings. It held that collusion had not been proved, that the normal presumption was that the plaintiff sues for his own benefit, and that the plaintiffs could arrange finances from any source. On limitation, the District Judge found that a part of the land sold (field no.24/21) was under the cultivation of a tenant at will, as shown by Khasra Girdwari, and therefore the property did not admit of physical possession; limitation ran from the date of registration of the sale deed and the suit was within one year under Article 10. The High Court in second appeal affirmed, holding that the onus was on the vendees to prove collusion and that the findings on tenant possession and absence of collusion were findings of fact binding on second appeal; it partly allowed the appeal by enhancing the pre-emption money by Rs 4,133.50. Before the Supreme Court, the vendee-appellants challenged the concurrent findings on collusion and limitation. The Court held that collusion in judicial proceedings is normally associated with a secret arrangement between two persons for a sinister purpose, where the claim is fictitious and the contest feigned; open assistance by fathers to sons exercising a statutory right did not amount to collusion. The Court emphasised that a pre-emption plaintiff may obtain financial aid from any source. On limitation, the Court held that since the whole property sold did not admit of physical possession because part was tenant-occupied, the first part of Article 10 did not apply; the second part applied and limitation commenced from the date of registration. The argument that the entire property must be in tenant possession for the second part to apply was rejected. Accordingly, the Supreme Court dismissed the appeal and upheld the decree for pre-emption, affirming the enhanced pre-emption amount.
Headnote
A) Pre-emption - Collusion and Estoppel - Pre-emption Right of Vendor's Sons - General principles of pre-emption law - Trial court held suit collusive because vendors and plaintiffs resided and messed together and litigation expenses were paid by vendors; first appellate court and High Court reversed finding collusion not proved and onus on vendees; Supreme Court upheld that mere assistance by fathers to sons exercising statutory right of pre-emption does not amount to collusion or estoppel; Held that plaintiffs did not lose right of pre-emption (Paras 788F). B) Limitation Act, 1908 - Article 10 - Limitation for pre-emption suit where part of land in tenant possession - Where whole property sold includes land in possession of tenants, it does not admit of physical possession; limitation runs from date of registration of sale deed; second part of Article 10 applies if any part of subject of sale is not susceptible to immediate personal possession; argument that entire land must be tenant-occupied rejected; Held suit filed within one year from registration was within time (Paras 789C). C) Evidence - Onus of Proof - Collusion in pre-emption suit - Burden on vendee to show suit was for vendor's benefit; plaintiffs' open association with vendors and use of public document obtained by vendor insufficient to prove collusion; finding of fact on tenant possession and absence of collusion binding on second appeal; Held vendees failed to discharge onus and decree for pre-emption affirmed (Paras 788-789).
Issue of Consideration
Whether the pre-emption suit filed by sons of vendors was collusive and therefore barred; whether the suit was within limitation under Article 10 of the Limitation Act, 1908 when part of the land sold was in possession of tenants.
Final Decision
Supreme Court dismissed the appeal, holding that the suit was not collusive and was within limitation; the decree for pre-emption passed by first appellate court and affirmed by High Court was upheld, with pre-emption money enhanced by Rs 4,133.50 as per High Court.
Law Points
- Right of pre-emption is a personal right of substitution
- Vendor cannot pre-empt own sale through benamidar
- Collusion in judicial proceedings requires secret arrangement for sinister purpose
- Physical possession means immediate personal possession
- Part of land in tenant possession makes whole sale not admit of physical possession
- Article 10 limitation for pre-emption runs from date of registration when property does not admit of physical possession
- Onus to prove collusion lies on vendee
- Plaintiffs can arrange finances from any source
- Finding of fact on possession and collusion binding on second appeal
