INDIRA BAIversusNAND KISHORE

                                    INDIRA BAI
                                                                                      A
                                           v.
                                  NAND KJSHORE

                               SEPTEMBER 5, 1990

           [K. JAGANNATHA SHETTY AND R.M. SAHA!, JJ.]                                 B

            Indian Evidence Act,. 1872: Section 115-Estoppel-Basis of the
     principle-Applicability in regard to right of pre-emption-Exception in
     case it involves public right or interest.

          Rajasthan Pre-emption Act, 1966: Section 8-Rights of pre-                   C
     emptor-Operation of rule of estoppel or waiver against such rights-
     Non-service of notice by vendor-Effect of

           The appellant purchased certain properties by way of registered
     sale deeds. She constructed therein a godown and a two-storeyed build-
     itJg with the knowle4ge and assistance of the respondent, who did not            D
     §ay ~nY.thing about (he commo!l passage and had never expressed his
     intentfon to pre-empt the sales.

           Soon after the constructioIJ was over, the respondent sent a notice
     to the appellant claiming his right to pre-empt the sale. The appellant
     gave a reply to the notice. However, respondent filed a suit for pre-            E
     emption in reh1tion to (he sai4 properties. The appellant pleaded that
     the respondent was es(opped from cll!iming the pre-emption. Principle

-·   of waiver was also pleaded, rite Trial Court dismissed the suit of the
     respon!!en!, !!!ld he preferre!l an appeal ltefore tile District J!l!lge which
     w;is a!so <!is!l!!sse!l- -
                                                                                      f
           ~espondent preferred a regular second appeal before lite High
     court. The High Court allowed the appeal holding that the principles of
     estoppel and waiver had no application against the pre-emptor to pre-
     empt the suit, and set aside tile orders of the Courts llelow,

           Aggrieved against the High Court's order the appellant has pre-            G
     ferred this appeal, by special leave.

           Allowing the appeal, this Court,

           HELD: I. I Estoppel is. a rule of equity t1•nvi11g out of fl!irne~
     s\rildng on behavi()ur deficient in good faith. I! operates as a check on        H

                                          349
    350          SUPREME COURT REPORTS                 I1990) Supp. 1 S.C.R.

A   spurious conduct by preventing the inducer from taking advantage and
    assailing forfeiture already accomplished. It is invoked and applied to
    aid the law in administration of justice. Bu! for it great many injustice
    may have been perpetrated. [162D-E)

          1.2 Legal approach of the High Court, that no estoppel could arise
B   unless notice under Section 8 of the Rajasthan Pre-emption Act was
    given by the seller and pre-emptor should have had occassion to pay or
    tender price ignores the fallacy that Estoppel need not be specifically
    provided as it can always be used as a weapon of defence. [162G-H)

          2. There can be no estoppel against statute. Equity usually
    follows law. Therefore, that which is illegal cannot be enforced by
c   resorting to rule of estoppel. Such an extension may be against public
    policy. The distinction between validity and illegality or the transaction
    being void is clear and well known. The former can be waived by
    express or implied agreement or conduct. But not the latter. [163D & F-G]

D         Shalimar Tar Products Ltd. v. H.C. Sharma, AIR 1988 SC 145;
    Equitable Life Assurance Society of the United States v. Reed, 14 AC
    587; Bishan Singh v. Khazan Singh, AIR 1958 SC 838 and Radha
    Kish an v. Shridhar, AIR 1960 SC 1369, referred to.

          3. The provision in the Pre-emption Act requiring a vendor to
E   serve notice on persons having right of pre-emption is condition of
    validity of transfer, and therefore a pre-emptor could waive it. Failure
    to serve notice as required under the Act does not render the sale made
    by vendor in favour of vendee ultra vires. The test to determine the
    nature of interest, namely, private or public is whether the right which
    is renunciated is the right of party alone or of the public also in the sense
F   that th'e general welfare of the society is involved. If the answer is latter
    then it may be difficult to put estoppel as a defence. The Act does not
    provide that in case no notice is given the transaction shall be void. The
    objective is to intimate the pre-emptor who may be interested in getting
    himself substituted. It does not debar the pre-emptor from giving up
    this right. Rather in case of its non-exercise within two months, may be
G   for financial reasons, the right stands extinguished. It does not pass on
    to anyone. No social disturbance is caused. It settles in purchaser.
    Giving up such right, expressly or impliedly cannot therefore be said to
    involve any interest of community or public welfare so as to be in
    mischief of public policy. [163H; 164A-C]

H          Jethmal v. Sajanumal, [1947] Mewar Law Reports 36, overruled.
               INDIRA BAI v. NAND KISHORE [SAHA!. J.]                  351

      Atam Prakash v. State of Haryana, AIR 1986 SC 859; Bishan
                                                                              A
Singh v. Khazan Singh, AIR 1958 SC 838; Radha Kishan v. Sridhar,
AIR 1960 SC 1368; Naunihal Singh v. Ram Ratan, !LR 39 All. 127; Ram
Rathi v. Mt. Dhiraji, [1947] Oudh 81; Gopinath v. R.S. Nand Kishore,
!\JR 1952 Ajmer 26; Abdul Karim v. Babula/, AIR 1953 Bhopal 26 and
Kans hi Ram Sharma v. Lahori Ram, AIR 1938 Lah. 273, approved.
                                                                              B
      Pateshwari Partab Narain Singh v. Sitaram, AIR 1929 PC 259,
referred to.

      4. In the instant case, the fact that the respondent knew of the
sale deed, assisted the appellant in raising the construction and after the
construction was completed in the month of June he gave notice in the
month Qf July for exercise of the right and filed the suit in January,        c
would itself demonstrate that the conduct of the respondent was
inequitable and the conrts in this country which are primarily the
~ourts of equity, justice and good conscience cannot permit the respon-
dent to defeat the right of appellant and invoke a right which has been
called a weak and ineqnitable right. [164D-E]                                 D

      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 105
of 1990.

      From the Judgment and Order dated 10.3.1988 of the Rajasthan
 High Court in S.B. Civil Second Appeal No. 327 of 1976.                      E

      C.M. Lodha, H .M. Singh and R.S. Yadav for the Appellant.

    S.K. Ghose, M. Qamaruddin and Mrs. M. Qamaruddin'for the
Respondent.
                                                                              F
      The Judgment of the Court was delivered by .

      R.M. SAHA!, J. Is Estoppel a good defence to 'archaic', Atam
Prakash v. State of Haryana, A.LR. 1986 SC 859, right of Pre-emption
which is a 'weak right', Bishen Singh v. Khazan Singh, A.LR. 1958 SC
838, and can be defeated by any 'legitimate' method Radha Kishan v.           G
Sridhar, A.LR. 1960 SC 1368.

        Barring High Court of Rajasthan and erstwhile, Mewar State
  Jethmal v. Sajanumal, [1947] Mewar Law Reports, 36, most of the
  other high courts, namely, Allahabad, Naunihal Singh v. Ram Ratan .
· 39 ILR 127, Oudh, Ram Rathi v. Mt. Dhiraji, [1947] Oudh 81, Ajmer           H
           352          SUPREME COURT REPORTS                I 1990] Supp. 1 S.C.R.

      A Gopinath v. R.S. Nand Kishore, AIR 1952 Ajmer 26, Bhopai, Abdul
           Karim v. Babu Lal, AIR 1953 Bhopal, and Lahore Kanshi Ram
           Sharma & Anr. v. Lahori Ram & Anr., AIR 1938 Lah. 273 have
           answered the issue in the affirmative. The Privy Council, [1929] PC
           AIR 259, too, applied this principle to non-suit a pre-emptor who
           knew that the property was in the market for long but offered to
      B    purchase, only, one out of many blocs. It had:

                       "Assuming that the prior completed purchase by the appel-
                       lant would under other circumstances, have given him the
                       right of pre-emption in respect of the blocks in suit, he,
                       must be taken by his conduct to have waived this right, and
                       that it would be inequitable to allow him now to re-assert
      c                it."

           Even in Muslim Law which is the genesis of this right, as it was
           unknown to Hindu Law and was brought in wake of Mohammedan
           Rule, it is settled that the right of pre-emption is lost by estoppel and
      D    acquiescence.

                 Estoppel is a rule of equity flowing out of fairness striking on
           behaviour deficient in good faith. It operates as a check on spurious
           conduct by preventing the inducer from taking advantage and assailing
           forfeiture already accomplished. It is invoked and applied to aid the
      ·E   law in administration of justice. But for it great many injustice may
           have been perpetrated. Present case is a glaring example of it. True no
           notice was given by the seller ·but the trial court and appellate court
           concurred that the pre-emptor not only came to know of the sale
           immediately but he assisted the purchaser-appellant in raising const-
           ruction which.went on for five months. Having thus persuaded, rather
      p·   misled, th~· purchaser by his own conduct that he acquiesced in his
           ownership he somersaulted to grab the property with constructions by
           staking his own claim and attempting to unsettle the legal effect of his
           own conduct by taking recourse to law. To curb and control such
           unwarranted conduct the courts h.ave extended the broad and para-
           mount considerations of equity, to transactions and assurances.
      G    express or implied to avoid injustice.
l'!
                 Legal approach of the High Court, thus, that no estoppel could
l          arise unless notice under Section 8 of the Rajasthan Pre-emption Act
           (In brevity 'the Act') was given by the seller >lnd pre-emptor should
ii         have had occasion to pay or tender price ignores the fallacy that Estop-
      H    pel need not be specifically provided as it can always be used as a



t
               INDIRA BAI v. NAND KISHORE [SAHAi. J.]                  353


weapon of defence. Jn the Privy Council decision, referred eatlier; ihe
court was concerned With Oudh Laws Act (18 of 1876) which too had             A
iii\ identical provision for giVing notice by seller. No rio\ice was given
Oilt since pre-emptor knew that the property was for sale and he had
even obtained details of lots he was precluded from basing his claim.on
pre-emption.
                                                                              B
      Exception, to this universal rule or its non-availability, is not due
to absence of any provision in the Act excluding its operation but
welfare of society or social and general well-being. Protection was.
consequently, sought not on the rationale adopted by the High Court
that in absence of notice under Section 8 of the Act estoppel could not
arise but under cover of public policy. Reliance was placed on
Shalimar Tar Products v. H. C Sharma, AIR 1988 SC 145, a decision             c
on waiver, and Equitable Life Assurance Society of the United States
v. Reed, 14 Appeal Cases 587, which 'laid down that there could be no
estoppel against statute. Equity, usually, follows law. Therefore that
which is statutorily illegal and void cannot be enforced by resorting to
the rule of estoppel. Such extension of rule may be against public            D
policy. What then is the nature of right conferred by Section 9 of the
Act? Jn Bishen Singh v. Khazan Singh, AIR 1958 SC 838 this Court
while approving the classic judgment of Mahmood, J. in Gubind Dayal
v. Inayatullah, !LR 7 All 775 {FB), 'that the right of pre-emption was
simply a right of substitution' observed that, 'courts have not looked
upon this iight with great favour, presumably, for the reason that it         E
operated as a clog on the ;ight of the owner to alienate his property. In
Radha Kishan v. Shridhar, AIR 1960 SC 1369 this Court again while
repelling the c'laim that the vendor and vendee by accepting price and
transferring possession without registration of sale deed adopted sub-
terfuge to defeat the right of pre-emption observed that, 'there were
no equities in favour of a pre-em.ptor, whose sole object is io disturb a     F
valid transaction by virtue of the rights created in him by statute. To
defeat ihe law of pre-emption by any legitimate means is not fraud on
the part of either the vendor ot the vendee and a person is entitled to
steer dear of the law of pre-emption by all lawful means'. Such being
the nature of right it is harsh to claim that its extinction by conduct
would amount to statutory illegality or would be opposed to public            G
policy. The distinction betw.een validity and illegality or the transac-
tion being void is clear and Well known. The former can be waived by
express or implied agreement or conduct. But not the latter. The pro-
vision in the Act requiring a vendor to serve the notice on persons
having right of pre-emption is condition of validity of transfer, and
therefore a pre-emptor could waive it. Failure to serve notice as             H
    354         SUPREME COURT REPORTS                [ 1990] Supp. 1 S.C.R.

A required under the Act does not render the sale made by vendor in
    favour of vendee ultra vires. The test to determine the nature of
    interest, namely, private or public is whether the right which is
    renunciated is the right of party alone or of the public also in the sense
    that the general welfare of the society is involved. If the answer is
    latter then it may be difficult to put estoppel as a defence. But if it is
B
    right of party alone then it is capable of being abnegated either in
    writing or by conduct. The Act does not provide that in case no notice
    is given the transaction shall be void. The objective is to intimate the
    pre-emptor who may be interested in getting himself substituted. The
    Act does not debar the pre-emptor from giving up this right. Rather in
    case of its non-exercise within two months, may be for the financial
c   reasons. the right stands extinguished. It does not pass on to anyone.
    No social disturbance is caused. It settles in purchaser. Giving up such
    right, expressly or impliedly cannot therefore be said to involve any
    interest of community or public welfare so as to be in mischief of
    public policy.
D         Even otherwise on facts found that the respondent knew of the
    sale deed, assisted the appellant in raising the construction and after
    the construction was completed in the month of June he gave the
    notice in month of July forexercise of the right and filed the suit in
    January would itself demonstrate that the conduct nf the respondent
    Was inequitable and the courts in this country which are primarily the
E   courts of equity, justice and good conscience cannot permit the
    respondent to defeat the right of appellant and invoke a right which
    has been called a weak and inequitable right.

          Jn the result this appeal succeeds and is allowed. The order of the
    High Court is set aside and that of the First Appellate Court is
F   restored. The appellant shall be entitled to his costs.

    G.N.                                                     Appeal allowed.