Dalip Singh and others vs Hardev Singh and others

Harbans Singh, J. (16.11.1967)

This case has arisen out of a suit filed for possession by pre-emption of a sale, which was pur-ported to have been made for a sum of Rs. 40.876. The Court, in the first instance, ordered the plaintiffs on 25th of July, 1964 to deposit a sum of Rs. 8,175 20 P, being; l/5th of the sale consideration, upto 7th of August, 1984. On an application made the same day, the Court extended the time upto 25th of August, 1964. On 12th of August, 1964, an application was made on behalf of the plaintiffs that the plaintiffs were minor and it was difficult for them to arrange for this huge amount of money, that has been directed to be deposited and that consequently the plaintiffs may be allowed to furnish security for the amount, which has been directed to be deposited, Counsel appeared before the Court on 13th of August, 1964 and stated that he did not press this application. The same was consequently filed. Another application, was put in by the plaintiffs on 14th of August, 1964. This application was similar to the one that had been filed earlier and not pressed, except for the fact that in addition to the prayer that a security may be allowed to be furnished for 1/5th of the sale consideration, it was prayed that the time for furnishing security may also be extended. On the same date, the Court passed the following order:

Security of Rs. 40,000 be filed now by 21st September, 1964.

Date 25th of August, 1964 is extended till 21st of September, 1964.

Security, as directed above, was tiled on 29th of August, 1984, and the Court accepted the same. On 21st of September. 1964, an application was made by the defendants to the effect that security could not be allowed to be furnished by the plaintiffs and 1/5th not having been deposited, the suit of the plaintiffs should be dismissed and security should not be taken. As stated above, the security had already been furnished on 29th of August, 1964 and this application was dismissed by the Sub Judge on 25th of September, 1964.

Thereafter, issues were settled, some evidence was led and the case was adjourned to 9th August, 1965 for some settlement between the parties but no compromise was reached between them. The same day, respondents made another application, in which the objection in substance was the same as had been taken by them in the earlier application to the effect that no security could be taken and that 1/5th not having been deposited, the suit should have been dismissed. On this the Court passed an order, from which the present appeal has arisen. It appears that at the time of the arguments before the Court, it was urged that the previous order allowing option to the plaintiffs to furnish security instead of deposit of cash, was a nulity. Though, this point was not mentioned in the application, which was under consideration by the Court it was apparently argued before the Court that the application for getting the permission was not filed by any authorised person and that the security bond was not on a properly stamped paper. The Court came to the following conclusions:

(1) Security could not be ordered to be furnished.

(2) That even if it was ordered to be furnished, it was not properly complied with because-

(a) the application which was made to the Court for allowing security instead of cash deposit being made, was filed by Shri Peshora Singh, Advocate who was never appointed counsel for the plaintiffs;

(b) that the sale consideration being Rs. 40,876 the furnishing of security for Rs. 40,000 is not in compliance with the provisions of law, and

(c) that the security bond was only on a nonjudicial stamped paper of the value of Rs. 10 and, therefore, it was not on a duly stamped paper.

In view of the above, the suit was dismissed. The pre emptors went up in appeal and the lower appellate Court found-

(a) that Shri Peshora Singh bad been appearing not only on one hearing, but on a number of hearings thereafter without objection and that even if there was no owner of attorney on the record, he should have been ordered to file a proper power of attorney;

(b) that if the security was on a non-judicial stamped paper and not on an adequate stamped paper, the pre emptors should have been asked to make good the deficiency; and

(c) that the Court could change the order of deposit of cash to that for furnishing security, and, therefore, accepted the appeal and sent the case to the Senior Sub Judge, Kapurthala with the direction that he would call upon the plain tiffs to make good the deficiency of the stamp on the security bond and on their doing so, would decide the case in accordance with law. The vendees have come up in appeal to this Court.

Apart from the question about the deficiency of the stamp fee or the authority of Peshora Singh to present the application and the effect thereof, two other important points arise in this case, which are likely to arise in a number of coses:

(1) If the Court once orders 1/5th of the sale consideration to be deposited in cash, has the Court authority subsequently to change this order and direct that security for the sale consideration be furnished ? and

(2) If the Court fixed the time for deposit of cash, can it subsequently extend the time ?

In Zaman Mehdi Khan v. Hayat Khan AIR 198 Lah. 452, it was he''d by Bhide J. that once there is an order for furnishing security, subsequently cash de posit cannot be ordered. Reference was also made to AIR 1938 606 (Lahore) , a Division Bench judgment of the Lahore High Court, wherein it was observed that the Court has no power to extend time Although, in that case, the trial Court had refused to extend time, yet the above-mentioned observations were made in a categorical manner. Mahajan J. in a recent judgment in Malaghar Singh and another v. Karnail Singh R.S.A. 29 of 1967, in R.S.A. 29 of 1967, decided on 16th of May, 1967, distinguished Zaman Mehdi Khan v. Hayat Khan (supra), on the ground that because of sub-section (5) (b) of section 22 of the Punjab Pre emption Act, once the Court directs security to be furnished, it can only alter that order in accordance with the above mentioned sub-section and, therefore, cannot change that order by directing that 1/5th of the price be deposited in cash and that where the Court orders in the first instance for the deposit of the cash, it is authorised to subsequently amend that order and direct that instead of deposit of cash, security may be furnished. Mr. Tirath Singh Munjral, the learned counsel, who was unsuccessful before Mr. Justice Mahajan, has informed me that the learned Judge did grant leave to file a Letters Patent appeal, but the party did not go in appeal.

These two questions require to be authoritatively decided and, therefore, I feel that it is a fit case which should be heard and decided by a larger Bench. I, therefore, direct that records of this case be placed before the Hon''ble Chief Justice for necessary orders. As this appeal is from a preliminary order and the case has not yet started, it would be in the fitness of the things, if the case is directed to be heard by a large Bench at a very early date.

ORDER

H.R. Sodhi, J.

The following two questions of law arising in S.A.O. No. 17 of 1966 have been referred to a larger Bench by a learned Single Judge by an order, dated 16th November, 1967, and it is in these circumstances that the case is before us-

If the Court once orders u/s 22(1) of the Punjab Pre-emption Act, 1913 (Act 1 of 1913) that one-fifth of the sale consideration be deposited In cash, has the Court authority subsequently to change this order and direct that security for the sale consideration be furnished?

If the Court fixed the time for deposit for cash, can it sub-sequently extend the time? The facts which led to this reference are not in dispute. Hardev Singh and others plaintiffs filed a suit on 4th July, 1964, in the Court of the Subordinate Judge, Sultanpur Lodhi, District Kapurthala, for possession by preemption of agricultural land measuring 234 Kanals 12 Marias situate in village Dauley alleged to have been sold for a consideration of Rs. 40,876/- in favour of Dalip Singh etc. defendants 1 to 4 by the other defendants 5 to 12, Joginder Singh etc. The trial Court ordered on 25th July, 1964 that the plaintiffs should deposit one fifth of the sale consideration (Zare Panjam) amounting to Rs. 8,175/20 Paise up to 7th August, 1964. On the same day, an application was made by the plaintiffs requesting the Court to extend the time for deposit of one-fifth of the sale consideration and this request was allowed, the time having been extended up to 25th August, 1964. Again another application was made on 12th August, 1964, in which it was stated that the plaintiffs were minors and it was difficult for them to arrange for the huge amount of Rs. 8,175/20 Paise which had been ordered to be deposited as one-fifth. The counsel for the plaintiffs did not press this application when it came up for hearing on 13th August, 1964 and it had consequently to be filed. There was then another application made by the plaintiffs on 14th August, 1964 which was almost in similar terms, but a further prayer was added that instead of the plaintiffs being called upon to deposit one-fifth cash, they may be permitted to give security for the payment of the sale price amounting to Rs. 40,876/-. The Court allowed this to be done by 21st September, 1964. The security was furnished on 19th August, 1964 and the Court accepted the same.

The vendees defendants Dalip Singh and others filed an application with a prayer that the plaint be rejected in terms of section 22(4) of the Punjab Pre emption Act, hereinafter called the Act, as the plaintiffs had failed to deposit the amount of one fifth within the period allowed by the Court. This application was dismissed and issues were settled.

Some evidence was led and the case adjourned to 9th August, 1965 to enable the parties to reach some compromise, as desired by them. No compromise could be arrived at and the defendants made another application on 9th August, 1965 praying that the suit be dismissed as no security could be taken instead of the cash deposit which had been directed earlier. It was pleaded that the order allowing the plaintiffs to furnish security instead of the deposit of cash was a nullity. There were other objections also taken by the vendees, namely, that the security bond was not executed on a proper stamp paper and the counsel who made the application to get the order for the deposit of cash converted into that of furnishing security had no authority to do so, since he did not hold any power of attorney from the plaintiffs it is not necessary to recapitulate all the objections and it is enough for the purpose of this reference to mention that the trial Court accepted the objections of the vendees defendants and rejected the plaint by its order, dated 12th August, 1965.

The plaintiffs preferred an appeal before the District Judge, Kapurthala, who allowed the same by his order, dated 22nd February, 1966, holding that it was competent for the trial Court to ask for security instead of the deposit of one-fifth of the sale price as previously ordered by it. The security bond was held to have been written not on a properly stamped paper, but it was directed by the appellate Court that the Subordinate Judge should have called upon the plaintiffs to make up the deficiency as laid down in section 22(5) of the Act. The case was accordingly remanded and against that order of remand, Dalip Singh etc. the vendees came up in second appeal to this Court. When the appeal came up for hearing, the learned Single Judge was of the view that the two questions of law referred to above and arising in the case be better settled by a larger Bench.

We have heard Mr. K.N. Tiwari on behalf of the appellants and Mr. J.N. Kaushal for the plaintiffs-respondents. The answer to the second question can be found in sub-section (4) of section 22 of the Act. At this stage, the whole of section 22 may be reproduced with advantage-

(1) In every suit for pre emption the Court shall at, or at any time before, the settlement of issues, require the plaintiff to deposit in the Court such sum as does not, in the opinion of the Court, exceed one fifth of the probable value of the land or property, or require, the plaintiff to give security to the satisfaction of the Court for payment, if required, of a sum not exceeding such probable within such time as the Court may fix in such order.

(2) In any appeal the Appellate Court may at any time exercise the powers conferred on a Court under sub-section (1).

(3) Every sum deposited or secured under sub-section (1) or (2l shall be available for the discharge of costs.

(4) If the plaintiff fails within the time fixed by the Court or within such further time as the Court may allow to make the deposit or furnish the security mentioned in sub section (1) or (2), his plaint shall be rejected or his appeal dismissed, as the case may be.

(5) (a) If any sum so deposited is withdrawn by the plaintiff, the suit or appeal shall be dismissed.

(b) If any security so furnished for any cause becomes void or insufficient, the Court shall order the plaintiff to furnish such security, or to increase the security, as the case may be, within a time to be fixed by the Court, and if the plaintiff fails to comply with such order, the suit or appeal shall be dismissed.

(6) The estimate of the probable value made for the purpose of sub-section (1) shall not affect any decision subsequently come to as to what is the market value of the land or property.

In view of the provision of law contained in sub-section (4) there can be no manner of doubt that it is within the discretion of the Court to extend time once or more than once as it may think just and proper in the circumstances of each case subject to the over-riding condition as laid down in section 22(1) of the Act that the deposit of the amount not exceeding one-fifth of the probable value of the land or property in dispute or the furnishing of security, at the case may be, is effected at any time before the.settlement of issues. As a matter of fact, it is conceded by Mr. Tiwari, that sub section (4) of section 22 of the Act does not prohibit the Court from extending the time for deposit to be made or security to be furnished, but contends that the trial Court did not exercise its discretion judicially. We are not going into the question as to whether the discretion was exercised judicially or not, since it is a matter which will be dealt with by the learned Single Judge.

As regards the first question relating to the power of the Court to withdraw any earlier order directing deposit of one-fifth of the sale price in cash and substituting the same by the one allowing security to be furnished to the satisfaction of the Court for payment of the sale price, it is submitted by both the learned counsel that there is no reported case bearing directly on this point except Regular Second Appeal No. 29 of 1967 Malaghar Singh v. Karnail Singh (supra) decided by Mahajan, J. on 16th May 1967, of which mention has been made by the learned Single Judge as we 1 in the referring order. Our attention has been invited by Mr. Kaushal to Civil Revision No. 148 of 1967 (Suraj Parkash v. Smt. Nina Rani Aggarwal) C.R. 148 of 1967 decided by Mahajan, J. on 5th May, 1967. The latter decision cannot be of any assistance in answering the question before us. The learned Judge has held in this case that the Court can pass a consolidated order asking for part payment in cash and for furnishing of security with respect to the remaining sale price. We doubt if it is the correct enunciation of law. But be that as it may, it is not necessary to finally pronounce on the correctness of this view taken by the learned Single Judge, since it has no relevancy in the present case, which arises out of a different set of circumstances. Section 22(1) of the Act gives a power to the Court in every suit for preemption to pass either of two orders directing the deposit in cash by the plaintiff of an amount not exceeding one-fifth of the probable value of the land or property or to inquire him to give security to the satisfaction of the Court for the payment of an amount not exceeding the probable varus of such a land or property. The object of this provision seems to be that the Court wants to make sure that the plaintiff is bona fide prosecuting his preemption suit which is sometimes collusive and may be that when a suit is decreed, the plaintiff is not in a position to get himself substituted for the vendee because of his inability to pay the sale price. Any such situation would naturally result in harassment for the vendee and the legislature in its wisdom has taken the precaution of enabling a Court to obtain some sort of security from the plaintiff The deposit of cash to the extent of one fifth is also by itself a security. There may be cases where the plaintiff, who is a bona fide pre-emptor, is not possessed of ready money to pay one fifth of the sale price, but can arrange to furnish security. The Court, in the exercise of its sound judicial discretion, is bound to consider all the relevant circumstances, decide as to whether it is a case where the plaintiff should be called upon to deposit one-fifth in cash or furnish security.

Reliance has been placed by Mr. Tiwari on a case reported as Zaman Mehdi Khan v. Hayat Khan (supra), the facts of which are clearly distinguishable. In the said case, the plaintiff bad been initially ordered to furnish security u/s 22(1) of the Act but the surety withdrew and the plaintiff was then asked to deposit cash within a certain time. It was in these circumstances that the learned Single Judge held that such an order could not be passed in view of the provision of law contained in section 22 (5) (b) of the Act which is specifically intended for such cases. The security bond having become void or ineffective since the surety had withdrawn the same the Court had to act within the ambit of Clause (b) of Subjection (5) of Section 22 which is a special provision. The Court could, therefore, only call upon the plaintiff to furnish fresh security within a time to be fixed for the same. Any order directing the cash deposit of one-fifth of the sale price would have been presumably more onerous and not warranted by the language of Section 25(b). The case before us is just the converse of that case and not covered by clause (b) of Sub-section (5) of section 22 of the Act. In a case where the initial order of cash deposit of one-fifth is made but later it is sought to be changed into that of furnishing security, what we have to find out is whether there is any prohibition to that effect contained in section 22. There is, in our opinion, no such prohibition. If it was open to the Court at the initial stage to pass any such order calling upon the plaintiff to furnish security instead of making a cash deposit of one-fifth, there is no reason to hold that the Court is prohibited from deciding this matter at any subsequent stage before the settlement of issues, if the facts brought to its notice indicate that the plaintiff is really not in a position to deposit cash and security should be taken from him. Any interpretation which causes hardship must be avoided and we cannot agree with Mr. Tiwari that a pre-emptor plaintiff should be considered to be exercising a piratical right and on that score an interpretation should be placed which tends to deprive him of the exercise of his statutory right. The Court should not be led away from construing a plain provision of law in a just and equitable manner simply because of certain preconceived notions that the right of pre-emption is sometimes described as a piratical right. It is not necessary to comment on such observations or if such a right is in derogation of any freedom of contract. A right of pre-emption is a statutory right to acquire property on certain conditions which law considers to be in the interest of the society.

The contention of Mr Tiwari that the Court has no power to subsequently allow a security to be furnished when it had directed earlier the deposit in cash of one fifth of the sale price, has, therefore, no merit. In this view of the matter, it cannot also be reasonably contended that the plaintiff having failed to deposit the amount, the suit should have been dismissed u/s 22 (5)(a) of the Act. When an order directing cash deposit of one fifth is converted into one for furnishing security, it cannot be said that such a case is covered by section 22 (5)(a) In the instant case, the plaintiff deposited no amount and all that happened was that the Court in the exercise of its powers and judicial discretion, as given to it by section 22(i) of the Act, decided to give relief to the plaintiff by permitting him to furnish security for the probable value of the land in dispute rather than calling upon him to deposit cash to the extent of one-fifth which he might not be in apposition to pay. Mahajan, J. was right in observing that in many cases during the pendency of an appeal the final disposal of which is likely to take a long time, the plaintiff is usually permitted to withdraw the amount with a direction to re-deposit the same in case the ultimate decision went against him. The withdrawal of the amount contemplated by clause (a) of sub-section (5) of section 22 of the Act which must lead to the dismissal of the suit, is where the amount has been withdrawn with no alternative order made by the Court. In case of such a withdrawal, the plaintiff can certainly be penalised and his suit dismissed inasmuch as it becomes clear that he is not acting bona fide or is not otherwise serious in proceeding with the suit. Sub-section 5(a) does not over-ride the power of the court as given in sub section (1) of section 22 of the Act to pass any of the alternative orders either at the time of the institution of the suit or subsequently before, of course, the settlement of issues.

In view of the above discussion, the questions referred to this Division Bench are answered as follows:

It is open to a Court having once ordered the one-fifth of the sale consideration to be deposited in cash to subsequently change that order and direct that the security for the sale consideration be furnished; and

the Court can, from time to time, in the exercise of its sound judicial discretion extend the period for deposit of cash or furnishing of security, subject to the condition that either of these things must be done before the settlement of issues.

The case will now go back to the learned Single Judge for decision on other questions raised in the second appeal. The costs in this reference will be costs in the cause.

Mehar Singh, C.J.

I agree.