Sheo Nand and Another vs Shrimati Sunhero and Another

Falshaw & Grover, JJ.—Mst. Sohna widow of Pirthi transferred her land measuring 68 kanals 8 marlas in area by means of a registered document dated 13th June 1958 purporting to create a permanent lease in favour of defendants 1 and 2. Mst. Sunehro, who is a daughter of Pirthi, instituted a suit for possession by pre-emption alleging that the transfer was in fact a sale and not a lease and that she was entitled to pre-empt that sale. The suit was resisted by the defendant-vendees on various grounds, but the principal controversy revolved round the question whether the transaction was one of permanent lease or sale. The trial Court came to the conclusion that it was a sale but dismissed the suit on account of the finding given on issue No. 3. On appeal, the learned Additional District Judge set aside the finding of the trial Court on issue No. 3 and found that the plaintiff was the daughter of Pirthi and Mst. Sohna and after finding that the transaction was a sale, the suit was decreed. The matter was brought in second appeal by the vendees to this Court and Mahajan, J. affirmed the finding that the plaintiff was a daughter of Mst. Sohna and Pirthi. He was further of the view that the question as to what the intention of the parties was in the matter of the transaction was one of fact and a finding on a question of fact by the Courts below could not be interfered with in second appeal. The appeal was consequently dismissed, with the result that an appeal under clause 10 of the Letters Patent was preferred by the vendees which is before us for disposal.

The learned counsel for the appellants has pointed out that the view of the learned Single Judge that the question with regard to the nature of the transaction was one of fact, is erroneous and contrary to well-settled law. In Rati Ram v. Mam Chand AIR 1959 Punj. 117, my Lords Falshaw and Dua JJ. observe that the burden lay heavily on the plaintiff in a preemption suit to establish affirmatively that the transaction which he wanted to pre-empt was a sale and nothing else. In that case it was held from proved facts that no proper inference in favour of the transaction being a sale could be drawn and the finding of the Courts below was sat aside on the point. According to Tek Chand and Dalip Singh JJ. in Hafizabad Municipality v. Gopal Das AIR 1941 Lah. 62, the general rule is that where intention is to be inferred from the terms of a document the question is one of law, or mixed question of fact and law; where the intention is to be inferred from the other facts and circumstances tending to show what was the real intention, the question may be either a a question of pure fact or, again a question of mixed fact and law. According to the decision i Meenakshi Mills, Madurai Vs. The Commissioner of Income Tax, Madras, when the point for determination is the construction of a statute or document of title, it is a pure question of law. A decision as to the legal effect of findings of fact is also a question of law. There can be no doubt that the law, as laid down by their Lordships of the Privy Council in Nafar Chandra Pal v. Shukur AIR 1918 P.C. 92, has held the field and the proper legal effect of proved facts is essentially a question of law. It is not possible to say in the present case that the finding given by the learned Additional District Judge related only to the intention of the transferor as gathered from the document and the surrounding and attendant circumstances. It will be seen presently that the grounds on which the trial Court and the lower appellate Court proceeded to hold that the transaction was one of sale, were based on a wrong application of legal principles and omission to consider the true legal effect of proved facts It would not be correct therefore, to treat the finding of the lower appellate Court as final with regard to the nature of the transaction.

It is first of all necessary to set out the main terms and conditions of the deed of permanent lease and the recitals contained therein. Part of the land was stated to be under mortgage and the lessor declared that being a woman it was not possible to cultivate the land herself which was at some distance from the village and by giving it to tenants at will there would be difficulty in realising the rent. It was for this reason that she desired to give it on permanent lease. The annual rent was to be Rs. 40/- which the lessor was entitled to realise from the lessees and their representatives-in-interest through Court, if necessary. The premium money was to be Rs. 9,000/- out of which a sum of Rs. 8,500/- was to be paid before the Sub-Registrar at the time of the registration of the deed and the balance of Rs. 500/- was to be paid by the lessees for payment to the mortgagees who could get the land redeemed by making that payment. The lessees were given the right to cultivate the land or bring it into any use by putting construction on it or planting a garden. They could also transfer their own rights. If at any time the land was acquired by the Government, then the lessees were entitled to receive out of the compensation money the amount of the premium as also the amount spent by them on improvements but the lessor was entitled to receive the balance out of that money. The land revenue was payable by the lessor. If at any time the lessees had to make payment of land revenue, they were entitled to deduct the same from the annual rent. The lessees could also get the land partitioned and if the area was less, then they could obtain possession with regard to the remaining land from the other co-sharers. If at any time the lessees were deprived of the possession over the land, then they would be entitled to be indemnified to the extent of the premium money and the improvements from the property of the lessor. What weighed with the lower appellate Court was that according to the evidence, the market value of the land appeared to be the same as the amount of premium money paid by the lessees and that the transferor had not paid any land revenue to the State alter the transfer. Apart from these facts, the terms in the deed relating to the right given to the transferees to convert the land into a garden or to build houses and the absence of any reservation of any right of reversion and the (sic) right to obtain separate possession by partition as also to get part of (sic) land redeemed, in the opinion of the lower appellate Court, showed (sic) the in reality the transaction was a sale. The reservation of the right by the transferor to receive balance of the compensation money in the event of acquisition of property by the State was disposed of by saying that as the transferor had received a large amount by way of premium there remained hardly any scope of any money becoming payable to the transferor in the event of compulsory acquisition.

The learned counsel for the appellants contends that although there is no bar to deciding whether a transfer is in fact a sale or a lease but it is pointed out that some of the material considerations which prevailed with the lower appellate Court did not have proper legal basis. Our attention was invited to a Bench decision in Bhairo Tewari Vs. Ramnath Rai delivered by Sulaiman J. (as he then was) in which a similar question came up for consideration. A perpetual lease had been created there of 5 bighas odd for a premium of Rs. 493/-, the rent reserved being Rs. 5/5/-. The lease provided that the lessee would be entitled, generation after generation, to remain in possession as pattadar and would have the right to have his name recorded in the revenue papers as tenant and perpetual pattadar; in the event of the rent falling in arrears the lessor was to have all the rights of an owner with respect to its realisation, but he was not to have any right to have the lease cancelled or to get the rent enhanced or to eject the lessee. The rent reserved was Re. 1/- per bigha. The Courts below were of the opinion that the rent reserved was a nominal one. The following observations made at page 61 are noteworthy:-

It is clear that the lessor and his representatives would, for all time to come, have the right to recover the rent reserved though it may be small. They would also under the law have the right of reversion in case the line of the lessees became extinct. As under the terms of this document the proprietary interest of the lessor has not ceased, there could possibly be no escheat to Government. The liability to pay Government revenue rests on the lessor and it is difficult to see how he can escape it. It is inconceivable how at any future time it could be open to any of the representatives of the lessee to deny that the transaction was anything other than a lease or to refuse to pay rent.

It was further emphasised that the document could not be said to amount to a deed of sale without also saying that the provision as to the payment of rent was unenforceable, but it was not permissible for the lessee to urge that as it would be tantamount to pleading an agreement in variation of the terms of the registered document which section 92 of the Indian Evidence Act prohibited. Referring to the decision in Muhammad Niaz Khan v. Muhammad Idress Khan ILR 40 All. 322 it was observed.

We do not think that it could have been intended that the relation of the premium paid to the value of the property and the smallness of the rent would in themselves be sufficient to prove that the transaction was a sale and not a lease. In England pepper corn rents are well-known.

The learned counsel for the appellants strenuously contends that there are several factors which are apparent from the deed which show that the transaction was one of lease and not sale. It is pointed out that the condition with regard to receiving the balance of compensation money in case of acquisition is consistent only with a lease and not with a sale. The area where the land is situated in Tehsil Ballabgarh is admittedly developing fast and it would be purely conjectural to say that at some future time when the acquisition may take place the market value of the land will not be very much more than Rs. 9,000/-. If the price rises considerably, then the lessees would be entitled only to the amount of premium money and the cost of their improvements and the lessor or her representatives in interest would be entitled to the balance. This shows that the intention was to create a lease. The other important indication of the document being a lease is that although no right of reversion has been expressly reserved but it is implied by law; in other words, on the line of the lessees becoming extinct the land will not escheat to the State but will revert to the line of the lessor. The learned counsel for the plaintiff-respondent urges that there is no-clause relating to forfeiture in the deed and, therefore, the so-called perpetual lease can never be forefeited. This cannot be accepted as correct because sub-clause (g) of section 111 of the Transfer of Property Act which has been held to apply to permanent leases also Mohammad Hafiz Ullah and Another Vs. United Provinces and Another, gives the various contingencies which bring about forefeiture. One of these is where the lessor renounces his character as such by setting up a title in a third person or by claiming title in himself, forefeiture would be incurred. In Kally Dass Ahiri v. Manmohini Dasee ILR 24 Cal 440 Jenkins J. (as he their was) endorsed the aforesaid view.

As regards the right of reversion, the position taken up on behalf of the plaintiff is that in a permanent lease unless the right of reversion is expressly reserved, no such right can be implied in law. The decision of the Privy Council in Sonet K''ooer v. Himmut Bahadoor ILR Cal. 391 is pressed into service wherein it was laid down that lands belonging to a zamindari granted by the zemindar under an absolute hereditary mokurrari tenure did not, on the death of the grantee without heirs, revert to the zemindar; nor did the zemindar, under such circumstances, take by escheat a tenure subordinate to and carved out of his zamindari. The statement of law by Jenkins J. in Kally Dass Ahiri''s case was approved by their Lordships of the Privy Council in Abhiram Goswami v. Shyama Charan Nandi ILR 36 Cal. 1003. The same may be reproduced in the words of the learned Judge:

Because at the present day, a conveyance in fee simple leaves nothing in the grantor, it does not follow that a lease in perpetuity here has any such result...............The law of this country does undoubtedly allow of a lease in perpetuity..........................A man who being owner of land, grants a lease in perpetuity carves a subordinate interest out of his own, and does not annihilate his own interest. This result is to be inferred by the use of the word ''leave'', which implies an interest still remaining in the lessor.

In Venkatesh Krishna Khasbag v. Bhujaballi Annappa Gargatti ILR 57 Bom. 194 the landlord was held entitled to redeem a mortgage effected by his permanent tenant who died leaving no heirs. Referring to the decision in Sonet Kooer v. Himmut Bahadoor ILR 1 Cal. 391, the Bombay Court observed that the mokurrari lease in that case appeared to be a transfer of an absolute interest and it could not have been forefeited for non-payment of rent. The following observations of Murphy J. at page 201 are pertinent:-

If, as in the Privy Council case, the inferior holding had been carved out of and permanently separated from the superior one, so that it can only revert to the superior holder by inheritance or a purchase, he can, I think, have no interest left in it, and cannot redeem the permanent tenants'' mortgage. If, on the other hand, he can resume in a certain contingencies, for failure to pay rent or denial of title, he appears to me to retain some interest in the inferior holding and in that case he can, I judge, redeem.

In the presence of the distinction that has been pointed out, the Privy Council decision in Sonet Kooer v. Himmut Bahadoor ILR Cal. 391 can have no applicability to the present case. The view, therefore, expressed in Bhairo Tewari Vs. Ramnath Rai , by Sulaiman J. that on the extinction of the line of the lessee the demised property would revert to the line of the lessor even in case of a permanent lease must, with respect, be followed.

The learned counsel for the plaintiff-respondent relied on Amar Singh v. Sadhu Singh 1914 P.L.R. 621. There also a suit for pre-emption was filed and the question was whether the occupancy tenancy, which had been created by a deed dated 18th November 1908, was not such a right but it was a case of sale. According to the evidence produced in that case, it was admitted by the vendor in his statement that he had actually sold the land to the vendees and that the deed had been executed by him as one of lease in perpetuity in order to enable the vendees to resist any pre-emption claim. He had also on 9th February 1908 executed a deed of agreement in favour of Atma Singh in which he agreed to sell his share in the land in three villages and then on 18th November following he executed the lease under consideration. The learned Judges considered it reasonable to presume that Lachhman Singh was carrying out his original intention of selling at least part of his property to Atma Singh. There was also a stipulation that on the death of the occupancy tenants without leaving any widows, their rights would devolve on their collaterals. The facts of this case are apparently not apposite and are quite distinguishable. In Lachhu v. Mela Ram A.I.R.1929Lah.583nfcat, Shadi Lal C.J. and Agha Hasdar J. decided a case where the alienees had paid a sum of Rs. 3,720/- as nazrana or premium and the Court found that this sum exceeded the price which the alienors had paid for acquiring the land only three months before the date of the transaction in question. The rent reserved was purely a nominal one, namely, one anna per annum for a rupee of the land revenue assessed on the land, and the alienees had been given the power to sell, mortgage or gift the property without any veto by the so-called landlords. On those facts-it was held that the transaction was one of sale and not lease. It is true that the amount of premium, if it is almost equal to the market value, is a weighty consideration but that by itself is not sufficient to establish that the transfer is a sale and not a lease as all the other conditions embodied in the deed and their effect cannot be ignored. The rent reserved was clearly a nominal one and the same cannot be said about the rent reserved in the present case. Moreover, there was no condition relating to receipt of the balance of compensation money by the transferor in the event of the land being acquired by the Government. In Maharaja Pande v. Kali Din Pande AIR 1941 Oud. 12, the vendor purported to execute a perpetual lease in respect of under-proprietary rights, but in the very preamble of the deed it was stated that the vendor wanted to sell the property in suit to pay off his debts, that is to say what the vendor really wanted was a sum of money in cash. He did not want to execute a document in. any way to bring in an annual return. The preamble went on to recite that no one was ready or willing to purchase the property for fear or pre-emption and it was only after great difficulty that the vendor was able to bring round the vendee to accept a perpetual lease of the property. These recitals by themselves were enough to show that the intention was to the effect a sale and not create a lease. The recitals in the deed in the present case lend support to the contention that in fact a lease was intended to be created as it was declared that the land was at some distance from the village and the lessor being a woman could not carry on cultivation personally there.

It now remains to be seen whether a lessee can be given a right to obtain partition of the land as was conferred by the deed in the present case. Their Lordships of the Privy Council held in Bhagwat Sahai v. Bipin Behari Mitter ILR 37 Cal. 918 (P.C.), that the right of partition existed when two parties were in joint possession of land under permanent titles, although their titles might not be identical. The plaintiffs were proprietors of a mokarari interest in the, property partition of which was sought and the defendants were owners of a fractional share in the zamindari interest in the same property. Their Lordships upheld the claim of the plaintiffs to ask for partition on the ground that their title was a permanent one, though liable to forfeiture in the event which had not occurred.

Coming now to the question of the right conferred by the deed to redeem part of the property which was under mortgage, that action cannot be inconsistent with the incidence of a permanent lease. The total premium was fixed at Rs. 9,000/-; out of which Rs. 500/- were left with the lessees for payment to the mortgagees as the lessees were entitled to possession of the area which was under mortgage. The right to redeem could be conferred on them expressly by the lessor who was the mortgager so that possession of the entire demised property may be obtained by the lessees.

In, view of what has been stated above, I am inclined to the view that on a correct appraisement of legal principles as applicable to the facts, and circumstances here, which were not present to the mind of the Courts below, the transaction must be held to be one of lease according to its apparent tenor and not of sales. Consequently the appeal must be allowed and the suit for pre-emption is hereby dismissed. Owing to the nature of the points involved, the parties will be left to bear their own costs.