T. Gnanaselvam vs K. Rajamma and Devaki Amma

K. Sampath, J.—The second defendant in the suit is the appellant in the Second Appeal. The first respondent herein filed suit

O.S.No.522/80 before the Additional District Munsif, Kuzhithurai, for declaration of her right of pre-emption against the second respondent herein

and the appellant. Her case as set out in the plaint was as follows:

The respondents were sisters and children of one Kumara Pillai Raman Filial. They had another sister by name Krishnamma and brother by name

Bhaskaran Nair. The suit property belonged to their father Raman Pillai. There was a residential building in the suit property constructed by the

father, where the family resided. The father executed a settlement deed in the year 1951 under the original of Ex.A-1, conveying the suit property

in favour of all the children including the respondents herein. As per the terms of the settlement deed, the suit property was divided into four plots,

east-west and the easternmost was allotted in favour of the second respondent. The next western plot and the residential building were allotted in

her favour, the next adjacent western plot in favour of Bhaskaran Nair and the Westernmost plot in favour of Krishnamma. There was a provision

in the deed that the donees should not alienate their respective plots to strangers and if at all they intended to do so, the other allottees were given

the right to purchase. As the transaction was a family settlement, the clause was valid in law and binding on all the donees under the settlement

deed. Moreover, the donees who had accepted the gift were bound to receive and give effect to the said intention of the donors. Any alienation

made by any of them in violation of the said provision was invalid in law and the same was liable to be set aside at the option of the others who

were also entitled to exercise the right of pre-emption. Bhaskarapillai, one of the brothers of the first respondent, and the second respondent

intended to sell his share and the first respondent purchased the same in 1974 in the name of her husband. Their sister Krishnamma likewise sold

away a portion of her share in favour of Bhaskara Pillai and the remaining extent in favour of the first respondent. The said alienations were made in

conformity with the directions in the settlement deed. The first respondent learnt that the second respondent had in violation of the said provisions

in the gift deed executed a sale of her portion in 1980 in favour of the appellant. The said sale included another property also and the total sale

consideration was Rs.7000/-. The proportionate sale consideration for the second respondent''s share in the suit property came to Rs.4500/-. The

said calculation was made taking into account the total extent sold for Rs.7000/-. The amount of sale consideration was also inclusive of mortgage

amount. The portion sold away by the second respondent contained a well left for the use of the residential building. Hence, the building situate in

the plot of the first respondent could not be conveniently enjoyed without the well in the plot alienated by the second respondent. The first

respondent was ready and willing to purchase the plot of the second respondent if only she had made the offer. But, the second respondent had

not even informed the first respondent and executed the sale deed in favour of the appellant. The first respondent came to know about the sale only

on 15.9.1980. The sale by the second respondent in favour of the appellant, an utter stranger to the family, was a voidable one as it was concluded

against the express provisions of restraint on alienation provided in the settlement deed. The appellant had in law the right to get the sale deed set

aside and substitute herself in the place of the appellant on payment of the proportionate sale consideration of Rs.4500/- less the mortgage amount.

As the appellant was not prepared to execute the sale deed in favour of the first respondent, the suit had to be filed.

The second respondent filed a written statement resisting the suit, raising the following contentions:

The first respondent was not entitled to the right of pre-emption. Ex-A-1 dated 26.6.1951 was a gift deed and not a settlement. As per the terms

of the gift, the donees were conferred absolute title which included the right of alienation. The subsequent clause restraining alienation was void in

law and was unenforceable. At the most it could amount to a pious wish on the part of the donor that the donees should alienate the property only

among themselves. The said provision amounted to restrain them from alienation after conferring absolute estate. More over, after the said gift the

respondents and others entered into a partition in 1974 under Ex.B-1 and as per the terms of the partition, each of them was conferred with

absolute right of alienation of their respective shares. Hence, in any event, the second respondent had power to alienate her share. Even if it was

assumed that the clause in the earlier document executed by the father amounted to conferring right of pre-emption, the same had been waived by

all the parties concerned by entering into partition in 1974. Moreover, the said clause regarding sale of the plots by one of the donees to any other

donee did not infact create a right of pre-emption. The first respondent''s husband took sale of the share of Bhaskaran Nair with his own funds and

for his benefit. The allegation that the said sale was taken with her funds in the name of her husband was made only to give support to her case.

The residential building and the well were situate in the plot allotted in favour of the first respondent. There were survey stones and mud bunds

separating the plot of the first respondent from that of the second respondent. The well in the plot of the second respondent was used by the family

and in course of time it had fallen into disuse''. The first respondent was well aware of the intended sale by the second respondent. As she

happened to be her sister, the second respondent made the offer to the first respondent for selling the plot. But, the first respondent was not willing

and prepared to purchase the same. She also did not have funds with her. The second respondent therefore sold away the two properties for

Rs.10,500/- and the proportionate price for the suit plot was fixed at Rs.7000/- and the other at Rs.3500/-. The suit was not maintainable and was

liable to be dismissed.

The appellant filed her written statement raising similar contentions as the second respondent. The clause restricting power of alienation was

absolute restraint on alienation and was void in law and unenforceable. This fact was ''also known to the donees as was seen from the subsequent

conduct in entering into partition regarding the property whereby each of them was conferred with absolute power 01 alienation, The said right also

did not amount to conferring right of pre-emption. The document executed by the father is only a gift as he was the absolute owner of the property.

The well in the plot was purchased by the appellant and it had fallen into disuse and hence the first respondent had sunk a new well near her

residential building. Both plots lay as distinct plots with well defined boundaries and survey stones on all sides. The plot purchased by her was in

higher level. It was not correct to say that the residential building in the first respondent''s plot could not be conveniently enjoyed without the plot

purchased by the appellant. The first respondent ''also did not have the necessary funds to purchase the plot from the second respondent. The

appellant offered the highest price to the second respondent and therefore, the second respondent sold the property to the appellant. The price for

the property was Rs.7000/-. The suit filed without a consequential relief was not maintainable. The appellant was a bona fide purchaser for value

without notice and entitled to protection. Her title was absolute and indefeasible. Subsequent to the purchase, the appellant had constructed a

building and was residing there. The sale deed in her favour was liable to be set aside on any account.

The trial court framed the following issues:

(1) Is the provision in the settlement deed dated 26.6.1951 regarding right of pre-emption valid and binding on the parties?

(2) Is the plaintiff entitled to enforce the provisions in the settlement deed?

(3) Whether the provisions regarding right of pre-emption has been waived by the parties?

(4) Is the suit not maintainable?

(5) Is the plaintiff entitled to get the declaration as prayed for?

(6) Is the plaintiff entitled to get the sale deed executed for the suit property in her name? and

(7) Reliefs and costs?

After considering the oral and documentary evidence and other materials on record, the trial Court found that Ex.A-1 was a gift deed and not a

settlement deed and the provisions in Ex.A-1 was a subsequent provision, which was not valid and binding on the parties, that the said provision

regarding right of pre-emption had been waived by the parties by executing Ex.B-1 partition with full power with regard to the properties subject

matter of EX.A-1 and therefore, the first respondent/plaintiff was not entitled to enforce the provision in the settlement deed.

The trial court also found that the plaintiff had sued for a mere declaration and did not seek for any consequential relief and therefore, the suit

was not maintainable. All the issues were found in favour of the second respondent and the appellant and the suit was dismissed by judgment and

decree dated 4.12.1982.

The first respondent filed appeal A.S.No.78/83 before the Subordinate Judge, Kuzhithurai. The learned Subordinate Judge by his judgment and

decree dated 24.2.1984 reversed the decision of the trial Court holding as follows:

EX.A-1 was a settlement deed at least regarding the extent in the suit survey number. Ex.A-1 was a registered instrument and a casual check of

the prior encumbrance by the appellant would have revealed the existence of a clause for pre-emption and hence the first respondent was entitled

to the right of pre-emption against the appellant, who was the owner of the property pursuant to his purchase from the second respondent.

The clause in Ex.A-1 restraining partial alienation had been waived by the parties in entering into Ex.B.1 partition; The extent conveyed -was

20.875 cents in the suit survey number and according to the first respondent, proportionate consideration on calculation came to Rs.4500/- which

she was prepared to pay; Ex.A-2 sale was valid only regarding an extent of 9 cents and regarding the remaining extent, the appellant''s vendor has

no title. The appellant was therefore entitled to a decree for pre-emption on deposit of Rs.4500/- and consequently allowed the appeal and

decreed the suit as prayed for with costs.

Aggrieved the present Second Appeal has been filed by the appellant.

At the time of admission the following substantial questions of law were framed for decision in the Second Appeal:

(1) Whether the learned Subordinate Judge erred in law in his interpretation of Ex.A-1 document as a settlement deed while the intention of the

donor as gatherable from the wordings employed in the document shows that the donor intended to convey absolute title to the donees in respect

of the respective portions conveyed to them under the document? and

(2) Whether the decree for pre-emption is sustainable in law in view of Ex.B-1 partition entered into between parties by virtue of which the right of

pre-emption, if any, has been waived?

Mr. P.Ananthakrishnan Nair, learned counsel for the appellant, submitted as follows

(1) Under the gift Ex.A-1 the parties got absolute powers and the latter clause in the gift deed providing for a right of pre-emption in favour of the

sharers was repugnant to the earlier clause giving absolute right and it should be held that the parties obtained absolute powers without any

restriction on their power of alienation. In support of this contention, the learned counsel relied on two Bench decisions of this Court.

(a) The Official Receiver Vs. Samudravijayan Chettiar and Others, and.

(b) P.L.N. Paramasivam v. P.K. Ramaswami Gounder and others 1970-1 MLJ 592.

(2) Even assuming that there was a pre-emption clause restraining alienation by the sharers to anybody outside the family and to strangers, still, in

view of entering into the partition arrangement by the sharers under Ex.B-1 dated 28.6.1974, it must be deemed that the right of pre-emption had

been waived and given a go by. In support of this contention on the question of pre-emption, the learned Counsel relied on the judgment of the

Supreme Court in Indira Bai v. Nand Kishore 1990 - 4 SCC 668 = 1991-1-L.W.5.

(3) So far as the appellant was concerned, he was a bona fide purchaser for value without notice of the clog on alienation under Ex.A-1 and

therefore she was not bound by the same. On seeing Exs.B-2 and B-3, the appellant was satisfied that there was no embargo on alienation"" and

also there was no objection raised at any time as to the transfers by way of mortgages by the parties under Exs.B-2 and B-3, which are

respectively dated 5.10.1974 and 8.4.1975. The learned Counsel also relied on the judgment of the Kerala High Court in Karichori Raman Nair

v. Kodath Krishnan Nair and another 1976 Ker 22.

Countering the arguments Mr. Srikumaran Nair for Ms. O.K.Sridevi, learned counsel appearing for the contesting first respondent, submitted

as follows:

The partition Ex.B-1 was not a transfer and no rights in derogation of the rights conferred under Ex.A-1 could be brought in and that there was no

waiver. They were two different concepts and so far as the shares were concerned, there was absolutely no restraint on alienation and if any sharer

wanted to alienate his or her share, the only thing he had to do was to offer it to the other co-sharers and in that view, it cannot be said that there

was any absolute restraint on alienation. So far as Ex.A-1 was concerned, the learned counsel submitted that the language in which it was written

was Malayalam and in a translation the true spirit and the nuances of the various clauses in the document could not be got and consequently it

would be difficult to appreciate the real motive behind the document. The learned Counsel attempted to read the document in Malayalam itself and

tried to make the Court understand the spirit in which the document had been brought about. His point was that the donor wanted the property to

stay in the family itself and did not want any outsider either of the same community or other community to purchase or otherwise come into

possession of the property and disrupt the harmony in the family. If it was understood in this spirit, there could be no difficulty in appreciating the

intention of the donor in introducing a clause of pre-emption in the document. The learned counsel also relied on the judgment of the Kerala High

Court reported in Chinna Kunji v. Kesavan (1966 KLT 727) and the Commentary on the construction of a deed of settlement found in Bindra''s

Conveyancing, Draftsman and Interpretation of Deeds Volume IV, page 4060 paragraph 25. The learned Counsel also relied on the judgment of

the P.C. in Mohammad Raza and others v. Mr. Abbas Randi Bibi (AIR 1952 P.C.158) and the decision of the Supreme Court in Ramachandra

Shenoy and Another Vs. Mrs. Hilda Brite and Others,

In reply Mr Ananthakrishnan Nair-reiterated his arguments and submitted that the source of title so far as the appellant was concerned was

only the partition deed Ex.B-1, the word in the partition deed was significant and that under the partition the conditions in Ex.A-1 had been given a

go by.

So far as Ex.A-1 dated 26.6.1951 was concerned, the donor divided an extent of 60 cents among the four children giving to each 15 cents.

The extent of 4 cents containing building and well were kept in common for all the four and the translation of the document runs as follows:

The properties included in the Schedule shall be taken absolutely and for ever as gift by the allottees of the properties set out in the respective

schedule.

The later ""part of the gift deed contains the following clause:

that in respect of the said 64 cents, if the donees desire to alienate, they shall alienate it only among themselves and it should not be alienated to

strangers or persons belonging to other communities.

The argument of the learned counsel for the appellant is that the later clause which created a restraint on alienation was repugnant to the earlier

portion and the same must be ignored.

In The Official Receiver Vs. Samudravijayan Chettiar and Others, , a Bench of this Court dealing with an instrument of gift held as follows:

while the Court must examine the entire instrument in order to see what its effect is the examination must be carried out in the light of Section 11

T.P.Act, when the instrument is one transferring immovable property. If the examination discloses that the transferor has used words creating an

absolute interest these words must be given effect to, notwithstanding that later words are used which restrict the right of full ownership.

In that case the donor provided that her sons should take the property dealt with in the document absolutely. However, there was a provision

inserted in the document to prevent the donees selling the property during the donor''s life time. This was done with a view to prevent deprivation

of the income from the property to the donor during her life time. The Bench held that the words ""prohibiting alienation"" must be disregarded

because they limited the absolute estate which the donor conveyed to the donees with effect from her death. The restriction on alienation must be

ignored to give effect to the intention of the donor to convey the properties to her sons absolutely and the instruction by the donor was worded to

give effect to that intention.

In Paramasivam v. Ramaswami Goundar and others (1970-I-MLJ 592) the facts were as follows:

One Narayana Pillai had some ancestral properties. They were sold and the small amount which was received by him by the said sale was also

spent for family expenses then itself and only after that Narayana Pillai acquired properties by doing business. The said Narayana Pillai and the

members-of his family entered into a registered partition deed. The question that arose was whether the deed was a partition deed as styled in the

document or a deed of family arrangement. The further question that arose for consideration was whether the restrictions as to alienation imposed

in the partition deed were valid.

It was held by the Bench as follows:

Under the partition deed Narayana Pillai had reserved a life interest in the suit properties and given absolute vested interest in favour of the plaintiff

and defendants 3 to 6 in the said properties and specified their shares. After giving absolute vested interest in the suit properties to the plaintiff and

defendants in the suit, Narayana Pillai had imposed an absolute restraint prohibiting them from alienating their shares by way of sale, etc. The

words ""all persons"" in the relevant clauses refers not only to the plaintiff and defendants 3 to 6, but also to their sons, grandsons, etc., who were to

succeed to their properties. Even if it was construed as restricting alienations by the plaintiff and defendants 3 to 6, it was an absolute restraint

which was invalid. The restraint imposed was clearly an absolute restraint which was void u/s 10 of the Transfer of Property Act.

In AIR 1932 158 (Privy Council) cited by the learned counsel for the contesting respondent, the Privy Council held that,

Where a person had been allowed to take property upon the express agreement that it should not be alienated outside the family, those who

sought to make title through a direct breach of that agreement could hardly support their claim by an appeal to the high sounding principles such as

justice, equity and good conscience.

In that case it was held that,

the terms of the compromise between the parties were binding, that the restriction as to alienation was only partial and that such a partial restriction

was neither repugnant to law nor to justice, equity and good conscience.

It does not appear from a reading of the Privy Council decision whether there was any clause in the earlier portion of the arrangement between

the parties giving absolute rights. What was decided by the Privy. Council was that it was a matter of contract between the parties regarding

restriction on alienation and that restriction was a valid restriction and the same could not be flouted by the parties. The Privy Council case did not

deal with a document, in which the earlier portion gave absolute rights and the later portion purported to restrict those absolute rights.

In Chinna Kunji v. Kesavan (1966 KLT 727) it was held that a covenant for pre-emption runs with the land and therefore Court sales or other

involuntary sales where there was no warranty of title would also come under its ambit. All that a purchaser at a Court sale would get was the right,

title and interest of the judgment debtor subject to all legal embargo thereon. It followed that the rights for pre-emption was available against the

purchasers in Court sales. There is no quarrel with the proposition of law laid down in that case. So far as the present case is concerned, the

question unanswered is as to what was to happen to the absolute right if there was a pressing necessity for a sharer to alienate and either out of

spite or for other reasons none of the sharers was willing to buy. It is however not necessary to find the answer in this case to that question in view

of what is to follow.

There was a suit for partition in O.S.No.124/55 by a third party in respect of the entire suit survey number having an area of 1 acre 64 cents

against Ramanpillai. This third party was allotted in lieu of his share in the suit survey number Plot No.5 in the plan attached to the final decree. A

stranger had indeed come into the family to possess the family property. Under Ex.B-1 all the sharers entered into a partition arrangement in

respect of all the properties including the property covered by Ex.A-1. It is recited in the document as follows:

we are brothers and sisters. Our father Raman Pillai (since deceased) executed a deed of gift with respect to his properties in the year 1951 by a

registered deed No.3146. In the said gift deed the properties described in this partition are included. One Thankayyan Nadar and others as

plaintiffs instituted a suit against our father Raman Pillai in O.S.No. 124/55 and in the final decree that was passed, Plot No.5 was allotted to

Raman Pillai. This plot belongs to us and to no others. The area is given as 54 cents, but actually it has only 47 cents in its extent. Within the plots

are situate the buildings, well, etc. We have mutually agreed to effect an outright partition. The respective owners of the schedule shall take and

enjoy their shares absolutely with full powers of disposal without any sort of any right to any sharer on the shares of the other shares and an

outright partition is effected by paying and receiving owelty in respect of building and well for the purpose of equalization of sharers.

Hereafter, the respective schedule property shall belong to the respective party alone and none of the parties shall have any kind of right

whatsoever in the property in any other schedule.

It is not necessary to refer to the schedules in the partition deed. It is sought to be argued by the learned counsel for the appellant that whether

or not the sharers were given absolute rights under Ex.A-1 by their father Raman Pillai, the parties had agreed to waive their right of pre-emption

created under Ex.A-1 by entering into Ex.B-1 and under Ex.B-1 they had waived the right of pre-emption. A reading of Ex.B-1 indeed shows that

the parties had agreed to conduct themselves in future as per the said deed of partition.

Drawing a distinction between validity and illegality or the transactions being void the Supreme Court in Indira Bai v. Nand Kishore (1990-4

SCC 668 = 1991-1-L.W.5 held that the former could be waived by express or implied agreement or conduct, but not the latter. Based on this,

Mr. Ananthakrishnan Nair, Learned Counsel for the appellant, contended that the parties had under the partition waived the so called pre-

eruption right expressly. The Supreme Court in that decision in page 671 has stated as follows:

To defeat the law or pre-emption by any legitimate means is not fraud on the part of either the vendor or the vendee and the person is entitled to

steer clear of the law of pre-emption by all lawful means.

In Gobind Dayal v. Inayathullah (ILR 7 Alla 775 (FB) referred to by the Supreme Court in Bishan Singh and Others Vs. Khazan Singh and

Another, and Indira Bai v. Nand Kishore referred to supra, it was held that the right of pre-emption was amply a right of substitution. The

Supreme Court in Bishan Singh v. Khazan Singh referred to already observed that.

Courts have not looked upon this right with great favour, presumably for the reason that it operated as a clog on the right of the owner to alienate

his property.

Even in Chinna Kunji v. Kesavan 1966 KLT 727 it has been held that,

the right of pre-emption is a weak right and may be defeated by any lawful means. The weakness in the right of pre-emption really lies in the fact

that while other rights which are favoured by law can be enforced in a suit unaffected by events subsequent to the institution of the suit, the right of

pre-emption is allowed to be defeated by transactions pendente rue.

We can therefore reasonably conclude that the right of pre-emption secured under Ex.A-1 was waived by the parties by entering into the

partition under Ex.B-1. There was therefore no restraint on the second respondent selling the property to the appellant in derogation of the pre-

emption right given under Ex.A-1. 24-A. There are other circumstances which go to show that the sharers had consciously given a go by to the

pre-emption light given under EX.A-1. Under Ex.B-2 dated 5.10.1974 a deed of othi had been executed by Bhaskaran Nair, son of Kumara Filial

and his wife Devaki, daughter of Kamalakshi, in favour of Johnson for Rs.2000/- tracing title of Ex.B-1 partition deed and stating that they had

absolute title to deal with the property and that the othi was for a period of four years and the othidhar should enjoy the property paying kist and

after the expiry of the period, property should be delivered over whenever demanded by the othidhar to do so. Under Ex.A-3 dated 7.11.1974

Bhaskaran Nair, son of Kumara Pillai and Kamalakshi executed a gift deed in favour of one Krishnan Nair, husband of Rajamma conferring on

him absolute right with all powers of alienation. Under Ex.B-3 dated 8.4.1975 there was an assignment of othi executed by Johnson in favour of

one Sukumaran Nadar, who was also a stranger to the family. Under Ex.A-4 dated 14.10.1975 Bhaskaran Nair, son of Raman Pillai, and

Krishnan Nair, son of Kumaran Pillai, purchased the property from Krishnamma tracing her title to Ex.B-1 partition deed. Thus, the parties had

consciously given a go by to the pious wish expressed by Kumara Pillai Raman Pillai in Ex.A-1 and as he has been held by the Supreme Court and

other High Courts, there could be waiver of a right of pre-emption.

So far as the appellant is concerned, she purchased the property under Ex.A-2 on 30.8.1980 from the second respondent and Bhaskaran

Nair. The learned counsel for the respondents submitted on the basis of the reasoning of the lower Appellate Court that if only he had cared to

check up the encumbrances, he would have stumbled on Ex.A-1 creating a right of pre-emption and prohibiting alienation outside the family to

strangers and people belonging to other communities. Admittedly, EX.A-1 is of the year 1951. The purchase was in the year 1980. He had come

across the several transactions including Ex.B-1 partition deed. He was led into believing that there was absolutely no difficulty with regard to the

title of the property to his vendors and he could purchase the property. There is nothing to show that the appellant had noticed the restraint on

alienation except to the family members, which could have stood in the way of his purchasing the property. It must be held that the appellant was a

transferee for consideration and without notice of the right or obligation against such property in her hands. This has the support of the decision of

the Kerala High Court in Karichori Raman Nair Vs. Kodoth Krishnan Nair and Another,

The decision of the Supreme Court in Ramachandra Shenoy and Another Vs. Mrs. Hilda Brite and Others, related to a case of a Will and the

Supreme Court held that in the matter of construction of Wills to the extent that it was legally possible effect should be given to every disposition

contained in the Will unless the law prevents effect being given to it. Ex.A-1 is not a Will and the decision of the Supreme Court has no application

to the facts of the present case.

In Bindra''s Conveyancing Draftsman and Interpretation of Deeds, Volume V, page 4060, paragraph 25, it has been observed that,

in construing deeds of settlement it should be the endeavour of the Court to ascertain the real intention of the settlers. The intention which the

document itself by express words or by implication declares and the primary duty of the Court is to ascertain from the language of entire instrument

what the intention of the settlers were, the tendency of modern decisions is to read the different clauses in the instrument referentially to each other

unless they are clearly independent and absolutely irreconcilable where the latter part must prevail.

There is no dispute regarding the proposition stated by Bindra.

I have already stated that it is not necessary to say whether the donor was justified in introducing a clause of pre-emption after giving absolute

rights to the sharers in the earlier part of the gift deed.

The parties had entered into a partition arrangement under Ex.B-1. They had consciously given a go by and waived their right, if any, of pre-

emption under Ex.A-1 and this they had started doing even prior to the partition by bringing in third parties to occupy the properties on othidhars.

The parties had executed gift deeds in respect of the property in favour of persons not members of the family. I have also held that the appellant is

a bona fide purchaser for value without notice of the pre-emption right mentioned in Ex.A-1. Having regard to the discussion above, it has to be

held that the first respondent is not entitled to the relief of pre-emption claimed by her in the suit and her suit has therefore to fail. Consequently, the

substantial questions of law raised are answered in favour of the appellant and the judgment and the decree of the lower Appellate Court are set

aside and those of the trial court dismissing the suit restored. However, there will be no order as to costs. RR/VCS