RAM CHANDversusRANDHIR SINGH AND OTHERS

A                                RAM CHAND
                                        v.
                      RANDHIR SINGH AND OTHERS

                               OCTOBER 5, 1994

B          [KULDIP SINGH, MADAN MOHAN PUNCHHI AND
                       K. RAMASWAMY, JJ.]

          Pre-emption Laws :

C         Punjab Pre-emption Act, 1913-Clause Fourt/Uy in S.15(1)(a) asap-
    plicable to Haryana-Agricultural tenant inducted by usufructuary
    mortgagee-Whether has a right of pre-emptiolt-f'art of the land-Whether
    such tenant could pre-empt the entire sale-Held : Yes.

          Certain lands belonging to MC stoods tenanted even prior to 1946.
D In 1951, MC died and his estate was mutated in favour of bis widow and
    two sons, one of whom was MS in whose share the tenanted land fell. He
    mortgaged the lands in 1951 and mutation was sanctioned and recorded
    in the revenue records. However, the tenancy was not affected.

          At the time of crop inspection of khariff 1953, the father of the
E
    appellants was found to be the tenant of the mortgaged as also non-
    mortgaged land of MS. After the death of their father, the appellants were
    substituted as tenants by inheritance. Prior to his death, the appellants'
    father was shown as a tenant sometimes under the mortgagor and some-
    times under the mortgagee.                                   ·
F
          In 1966, the mortgagor remortgaged the land with possession to the
    same mortgagee, and redeemed the earlier mortgage. Mutation for the
    subsequent mortgage was sanctioned. However, the appellants remained
    as tenants unaffected by the said transfers.
G          In 1968, the mortgagor sold the entire land to the respondents,
    letting the vendees keep the sum due for redeeming the existing mortgage.
    Appellants sought pre-emption of the sale in its entirety. the Trial Court
    granted a decree for pre-emption in respect of the non-mortgaged land on
    payment of the proportionate amount and dismissed the suit with regard
H   to the mortgaged land. On appeal the District Judge, granted a pre·
                                       222
                      RAM CHAND v. RANDHIR SINGH                            223

    emption decree to the appellants and dismissed the cross appeal filed by A
    the respondents. In second appeal, the High Court restored the decree of
    the Trial Court. Hence this appeal.

          In this appeal two questions were raised viz. (1) Whether an agricul·
    tural tenant inducted by the usufructuary mortgagee, has a right of pro·
    emption over the sale made by the mortgagor· Vendor; and (ii) Whether          B
    an agricultural tenant holding under tenancy of the Vendor a part of the
    sold land is entitled to pre· empt the entire sale.

         Allowing the appeal, this Court.

          HELD : 1. An agricultural tenant inducted in terms of Section 76(a)      c
    of the Transfer of Property Act, by the usufructuary mortgage, bas a right
    of pre-emption over the sale made by the mortgagor-vendor. [228-H)

          Prahbu v. Ramdeo and Ors., AIR (1966) S.C. 1721, followed.

          Atam Prakash v. State of Haryana, [1864) 2 SCC 244 at page 261,          D
    relied on.

          2.1. When a tenanted part of land is involved in the sale, tl1e tenant
    thereof bas a right of pre-emption qua the entire land sold and the vendees
    cannot resist the same. [230·D)
                                                                                   E
           2.2. Permitting total sale being pre-empted is to prevent fragmenta·
    tion of the erstwhile holdings of the vendor. It does away disputes of
    partitioning or sharing sources ofirrigation and working out rights to take
.   water to agricultural fields through the fields of the other which need was
    non-existent under the vendor's management. Likewise for passages of F
    ingress and egress, problems may come up. It obviates the necessity of
    settling other disputes such as apportionment of price of the tenanted area
    on the splitting of the sale, the possible design of Its being inflated to
    frighten the prospective tenant pre-emptor. It is attuned with the principle
    of bar to partial pre· emption. It also avoids the lurking fear of the tenant G
    having to deal with a stranger. Such advantages are just some. Taking the
    language of the tax and its plain advantageous meaning, this Court would
    have such an interpretation to the provision viz. class Fourthly in
    s.15(1) (a) of the Punjab Pre-emption Act, 1913 which would entitle a tenant
    to pre-empt a sale of agricultural· land in which bis tenanted land is
    included, on the strength of which he can claim the entire bargain in the H
    224                   SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.

A exercise of his right of substitution over the vendee. [230·F to HJ
            Ram Sarup v. Munshi and Others, (1963] 3 SCR 858, relied on.

         Ba/want Singh and Ors. v. Mehar Singh and Ors., (1966-68) Supp. PLR
    484 and Uttam Singh v. Kartar Singh, AIR (1954) Punjab 55, approved.
B
          3. The Trial Judge dismissed the suit of the appellants on the under·
    standing that the appellants were not tenants of the mortgagor-vendor. The
    lower Appellate Court took the view that between the date of the second
    mortgage and date of the mutation in July 21, 1966, the first mortgage had
    been redeemed and from that moment onwards the appellants become
C   direct tenants of the vendor and thus the land for the second time, when
    mortgaged, stood tenanted. That view was taken possibly on the under·
    standing that till mutation was effected, the second mortgage was not
    operative. There was an obvious fallacy in that reasoning which the High
    Court corrected in upsetting that view. The High Court seemed otherwise
D   aware that on redemption of mortgage, the lease created by the mortgagee,
    such as the present one, would have to be taken as if created by the
    mortgagor. This outcome was circumvented taking the view that the second
    mortgage was created at a time when the first one was subsisting during
    which period the lease in favour of the appellants was created; the lease
    which continued uninterrupted under the second mortgage. The High
E   Court should have drawn the inference that the second mortgage was
    nothing but al. implicit act of ratification ilf the deeds of the mortgagee,
    who was no other than the creator of the lease. At that time, no objection
    as to the existence of the lease was raised. By bis conduct the mortgagor
    revealed that be bad taken the created lease as bis own, lending qualifica·
p   tion to the appellants in being the vendor's tenants over bis holding.         •
                                                             [231-E to H, 232·A]
          [This Court directed the appellants to deposit the sum as required
    by the lower appellate Court on terms on or before 31.12.1994 failing which
    the law as settled would remain, but the appellants would have denied to
G   themselves the relief of a positive decree.] [232-D]

            CIVIL APPELLATE JURISDICTION : Civil Appeal No. 45 of
    1987.

            From the Judgment and Order dated 1.2.83 of the Punjab & Haryana
H High Court in R.S.A No. 1611 of 1973.
          RAM CHAND v. RANDHIR SINGH [PUNCHHI, J.]                    225

      Ms. Indra Sawhney for the Appellant.                                   A
     Prem Malhotra for the Respondents.

     The Judgment of the Court was delivered by

       PUNCHHI, J. This appeal, directed against the judgment and order      B
of a learned Single Judge of the Punjab and Haryana Court dated February
1, 1983, passed in Regular Second Appeal No. 1611 of 1973, raises two
questions of importance, on the true interpretation of clause Fourthly in
section 15(1) (a) of The Punjab Pre-emption Act, 1913 as applicable to the
State of Haryana being :
                                                                             c
     (i) whether an agricultural tenant inducted by the usufructuary
mortgagee, has a right of pre-emption over the sale made by the
mortgagor-vendor? and

     (ii) whether an agricultural tenant holding under tenancy of the
vendor a part of the sold land is entitled to pre-empt the entire sale? D
      Following are the facts as gathered from one or the other judgment
of the three courts below : -

       Some land including 50 Kanals 6 Marlas of land in Khasra numbers
294/9(9-12), 1 (6-16), 2 (3·2), 10 (7·8), 12 (8-0) and 13 (8-0) situated in E
village Bhattukalan, Tehsil Fatehabad, District Hissar was owned by one
Moo! Chand. As per revenue records adduced in evidence before the
learned trial Judge, the land stood tenanted even prior to the year 1946
and was so in the year 1950 with one Net Ram Qosain. In i951, Moo]
Chand died and his estate was mutated in favour of his widow and two F
sons, one of whom was Mitter Sen and in whose share the above land fell.
Mitter Sen mortgaged six Khasra numbers barring 294/9 (9-12), from his
inherited land on 16-12-51 in favour of Amin Chand for Rs. 2400 and
mutation No. 1548 in that regard was sanctioned and recorded in the .
revenue papers. The tenancy however was not affected. Under the tenancy G
laws, as applicable to Haryana, the agricultural year commences from 15th
June, whereafter time arrives to sow the Kharif Crop. At the time of the
crop inspection of Kharif 1953, done on maturity of crops between October
to December as per departmental instructions, Ratna Ram, the father of
the present appellants herein, was found to be the tenant of the mortgaged
as also non-mortgaged land of Mitter Sen on payme~, of one third H
                                                       .   ,-'
    226                  SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.

A   produce, and was recorded as such. The records are silent however as to
    whether Raina was inducted as a tenant by Mitter Sen, owner of the land
    or Amin Chand, mortgagee. By that as it may, the cultivation of the land
    by Raina, father of the appellant continued till his death, whereafter the
    appellants were substituted as tenants by inheritance. Revenue records of
    intervening years kept showing the appellants or their father, as the case
B   may be, sometimes as tenants under the owner, Mitter Sen and sometimes
    under Amin Chand, the mortgagee. While so, Mitter Sen, owner mortgagor
    on 6-5-1966 re-mortgaged the disputed land with possession to the same
    Amin Chand for Rs. 1500 by a Registered Mortgage Deed. Fifteen days
    later, on 21-5-1966, he redeemed the former mortgage of 16-12-1951. The
C   appellants remained unaffected by these transfers. Mutation for the sub-
    sequent mortgage dated 6-5-1966 was sanctioned on 21-7-1966.

           On 4-3-1968, Mitter Sen sold the entire 50 Kanals 6 Marlas of land
    for a total consideration of Rs. 10,000 to the respondents. In the sale, a
    provision was made in letting the vendees keep the sum due for redeeming
D   the existing mortgage. The appellants sought pre-emption of the sale in its
    entirety. The Trial Court granted them a decree for pre-emption in respect
    of the non-mortgaged Khasra no. 294/9 (9 Kanals and 12 Marlas) only on
    the payment of proportionate price of Rs. 2122.30 paise and dismissed the
    suit with regard to the mortgaged land, now in dispute.
E
          The appellants as well as the respondents filed cross appeals before
    the District Judge, Hissar who allowed the appeal of the pre-emptor-ap-
    pellants granting them a pre-emption decree and dismissed the appeal of
    the respondents regarding the other part, in which the appellants had been
    successful qua one Khasra No. before the Trial Judge. The respondents'
F   regular second appeal before the High Court was allowed and the judg-
    ment and decree of the Trial Court was restored with the result (hat the
    appellants were denied the relief of pre-empting sale of the land which was
    under mortgage. The question, therefore, has arisen whether the appellants
    had such a right of pre-emption as claimed by them and on what basis.
G
           Section 15(1) (a) Fourthly would, when properly arranged and culled
     out from the text, read as follows :

             "The right of pre-emption in respect of agricultural land shall vest
             ----- where the sale is by a sole owner ----- in the tenant who holds
H            under tenancy of the vendor, the land sold or a part thereof."
           RAM CHAND v. RANDHIR SINGH [PUNCHHI, J.]                    227

      The first question is raised on the premise that the appellants (before A
them their father) had been inducted in the disputed land in 1953. The
land in dispute was already tenanted when mortgaged for the first time in
1951. It remained tenanted thereafter throughout. There was only a change
of tenants in the process of time. From this, it was sought to be urged that
deriving usufruct of the land by tenanting was the accepted mode B
evidenced from the conduct of parties. It was also urged that there was no
prohibition in terms of the mortgage to the induction of tenants by the
mortgagee. It was stressed that within the terms of section 76(a) of the
Transfer of Property Act, a mortgagee has a right to manage the property
as a person of ordinary prudence would manage, if it were his own. It was
also pointed out that since tenants were given some security from eviction C
under the provisions of the Punjab Security of Lands Tenancy Act, 1953
with effect from 15th April, 1953, the appellants as tenants by legal fiction
had become the tenants of the vendor in so far as the mortgaged property
was concerned.
                                                                             D
       The words "if it were his own" in section 76(a) of the Transfer of
Property Act make the mortgagee, unless prohibited from doing so, the
second self of the mortgagor, when he as a prudent owner leases out
agricultural land. It is well known and settled that in case of lease of
agricultural land, the lessee, by the very process of cultivation, has to bring
in inputs, effort and as a termed measure fertilization of the soil, pursuing E
constant and continuous agricultural activity and vigil to attain acceptable
results. His effort is not that of one time but a continuous one with a future
in view and that is why there is a presumption that agricultural leases are
from year to year and not of monthly or daily duration. In the instant case,
when there was no prohibition to lease out the mortgaged land in the event F
of the then tenant vacating, what better could be an instance of good
management by the mortgagee in putting another tenant, whose existence
on the land, as future tells us, was never questioned at any time by Mitter
Sen, and more so, at the time of the execution of the second mortgoge.

                                                                             G
       The legal position with regard to the agricultural leases, has also been
settled by a five-judgment bench of this Hon'ble Court in Prabhu v.
Ramdeo & Ors., AIR (1966) S.C. 1721 by holding that persons inducted
into agricultural lands as tenants by a usufructory mortgagee, who become
entitled to protection under the tenancy laws, cannot be ejected by the .
mortgagor on the ground that the mortgage of the land had been H
    228                   SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.

A redeemed. Even though that was a case in which the right of tenure
    accrued to the tenants after the creation of the lease but on principle it
    would not make a difference in so far as the present case is concerned,
    where the Punjab Security and Land Tenure Act giving protection to the
    tenants from ejectment, except on grounds mentioned in the statute, be-
    came available from 15th April, 1953 onwards, and the lease herein has
B
    been shown to have commenced with the agricultural year starting from
    15th June, 1953, Within a span of two months of that Act being enforced.
    When viewed in this backdrop it becomes apparent that when the
    mortgagee changed the tenant, he had done so under his legal right and
    obligation under section 76(a) of the Transfer of Property Act and the just
C   and equitable principles involved therein. Thus his deeds in that regard are
    to be considered as deeds of the mortgagor. Having arrived at such
    conclusion, it is not difficult then to proceed on the footing that the tenancy
    created by the mortgagee was in sum and substance the tenancy created
    by and for the mortgagor and when on that basis the mortgagor gets to be
D   the vendor of the land sold during the subsistence of the mortgage, the
    tenants inducted on the land by the mortgagee for him, non-ejectible at
    will, derive the right of pre-emption. For the ultimate social goal is that the
    land must go to the tiller, whose bare feet get kissed and blessed by the
    feel of Mother Earth. In Atam Prakash v. State of Haryana, [1864] 2 SCC
    244 at page 261, Chinnappa Reddy, J. speaking for this Court had held:
E
             "The right of pre-emption vested in a tenant can also be easily
             sustained. There can be no denying that the movement of all land
             reform legislations has been towards enabling the tiller of the soil
             to obtain proprietary right in the soil so that he may not be
             disturbed from possession of the land and deprived of his
F
             livelihood by a superior proprietor. The right of pre-emption in
             favour of a tenant granted by the Act is only another instance of
             a legislation aimed at protecting the tenant. There can be no doubt
             that tenants form a distinct class by themselves and the right of
             pre-emption granted in their favour is reasonable and in the public
G            interest. 1'

         · The first question is thus answered accordingly to hold that an
    agricultural tenant inducted in terms of section 76(a) of the Transfer of
    Property Act, by the usufructuary mortgage, has a right of pre-emption
H   over the sale made by the mortgagor-vendor.
           RAM CHAND v. RANDHIR SINGH [PUNCHHI, J.]                        229

       The second question is, should the provision be interpreted confining      A
the right to the tenanted area or extending it to the entire area covered by
the sale? It has been contended on behalf of the appellants that on the
findings recorded by the courts below they were tenants over a part of the
land sold, for which they have been given a decree of pre-emption. They
claim that on a true interpretation on the provision they should get the          B
whole bargaining pre-emption, even if they are not treated as tenants of
the other part. It was also asserted that if in a sale of agricultural land,
some part of it was tenanted then the right vests in the tenant to seek
pre-emption of the sale in entirety because of the jural relationship existing.
It was emphasised that the qualification for seeking pre-emption was barely
being a tenar..t who holds land under tenancy of the vendor, not necessarily      C
the whole. The tenanted .part thereof, entitles him to have the whole
because it is involved in the sale and so connected with the vendor through
that land. We have not been made any wiser by any precedent cited at the
bar for or against the preposition raised. Even the point as such was not
raised before the Courts below but has arisen otherwise in discussion.
                                                                                  D
      A learned single Judge of the Punjab and Haryana High Court in
Ba/want Singh & Ors. v. Mehar Singh & Ors., (1966- 68) Supp. PLR 484, ·
interpreting !he provision has viewed that the word "holds" in the provision
is not to be construed in isolation but is to be read with its succeeding
words "under tenancy". This ratio of the High Court had apparently risen E
where the tenant claiming pre-emption of the suit land had, after the sale,
been ousted from physical possession and his claim for pre-emption was
being protected by the Court. It is in that context that the High Court ruled
that the ·word "holds" must be read alongwith the words "under tenancy'
and that the right of tenancy did not merely mean the act of physical F
possession but also included a bunch of incorporeal rights which are not
capable of physical possession. Qualificatory rights in that regard were thus
settled by precedent that the pre-empting tenant should merely have held
the land on the date of sale and not necessarily at any time thereafter to
satisfy the rule of maintaining the status on three occasions i.e. on the date G
of sale, on the date of the suit and on the date of the decree of the first
court. However, it has always remained unquestioned that the tenant can
pre-empt the sale with regard to the portion of the land actually in his
tenancy. To the un-tenanted portion which was part of the sale, a bar has
always been read. All the same, it would have to be gathered from the
provision whether such right of pre-emption, in respect of agricultural land, H
    230                   SUPREME COURT REPORTS [1994] SUPP. 4 S.C.R.

A has been made to vest in the tenant? It is apparent that the tenant, in
  priority has the last right for pre-emption in section 15(1) of the Act. The
  language conferring such right, as is evident, is not punctuated. All the
  words have been put together. Its languages thus is capable of more than
  one meaning. Therefore, whatever goes to further the intendrnent of the
  measure should be the basis of interpretation. It is well to remember that
B
  this right to the tenant was conferred by amendment in the Act in the year
  1960 in the post constitutional era as part of agrarian reform. Atani
  Prakash's case is a clear pointer. Unlike its other provisions, save in the
  case of a co-sharer, which have been struck down as archaic and uncon-
  stitutional in Atarn Prakash's case, this part has been kept alive, attuned as
C it is with modern thinking. Thus the provision would need a purposive
  interpretation furthering, if not expanding, the right rather than curtailing
  it. If the words "holds under tenancy" be not disjuncted as per dictum of
  Balwant Singh's case (supra), they have then as a sequator to be conjuncted
  with the words "of the vendor". If so the right thus is vested in the tenant
D who holds under tenancy of the vendor not only the land sold but even a
  part thereof, i.e. of the land sold. Thus on interpretation, this view can be
  taken that when a tenanted part of land is involved in the sale, the tenant
  thereof has a right of pre-emption qua the entire sold land and the vendees
  cannot resist the same.

E          This interpretation is advantageous from the legal as also the
    economic and social point of view in the rural society. Permitting total sale
    being pre-empted is to prevent fragmentation of the erstwhile holding of
    the vendor. It does away disputes of partitioning or sharing sources of
    irrigation and working out rights to take water to agricultural fields thrnugh
F   the fields of the other which need was non-existent under the vendor's
    management. Likewise for passages of ingress and egress, problems may
    come up: It obviates the necessity of settling other disputes such as appor-
    tionment of price of the tenanted area on the splitting of the sale, the
    possible design of its being inflated to frighten the prospective tenant pre-
G   emptor. It is attuned with the principle of bar to partial pre-emption. It
    also avoids the lurking fear of the tenant having to deal with a stranger.
    Such advantages are just some. Taking the language of the text and its plain
    advantageous meaning, we would rather give such an interpretation to the
    provision which would entitle a tenant to pre-empt a sale of agricultural
    land in which his tenanted land is included, on the strength of which he
H   can daim the entire bargain in the exercise of his right of substitution over
           RAM CHAND v. RANDI-UR SINGH [PUNCHHI, J.]                      231

the vendee. A full Bench of the Punjab High Court in Uttam Singh v. Ka1tar       A
Singh, AIR (1954) Punjab 55 had enumerated one of the grounds in
upholding the vires of section 15 as avoidance of fragmentation of holding.
This Court in Ram Sarnp v. Munshi and Others, [1963] 3 SCR 858 at page
873, testing the ground aforementioned in the case of a son observed as
follows :
                                                                                 B
        "Nor can the ground of avoidance of fragmentation of holdings
        afford assistance to sustain the claim of a son to pre-empt in the
        event of a sale by a sole owner-father, for that criterion has primary
        relevance to the right of pre-emption enjoyed by co-sharers and
        the like."                                                               C

      The word "like" was obviously used to cover up the case of someone
other than the co-sharer. And besides the co-sharer, only the tenant now
has the right of pre-emption. So the word "like" seemingly was conceived
to include that case of a tenant. The second question therefore is answered      D
accordingly to hold that an agricultural tenant holding under tenancy of
the vendor a part of the sold land is entitled to pre-empt the entire sale.

      The Trial Judge dismissed the suit of the appellants on the under-
standing that the appellants were not tenants of the mortgagor-vendor. The
lower Appellate Court took the view that between the date of the second E
mortgage and date of the mutation in July 21, 1966, the first mortgage had
been redeemed and from that moment onwards the appellants became
direct tenants of the vendor and thus the land for the second time, when
mortgaged, stood tenanted. That view was taken possibly on the under-
standing that till mutaiion was effected, the second mortgage was not F
operative. There was an obvious fallacy in that reasoning which the High
Court corrected in upsetting that view. The High Court seemed otherwise
that on redemption of mortgage, the lease created by the mortgagee, such
as the present one, would have to be taken as if created by the mortgagor.
This outcome was circumvented taking the view that the second mortgage G
was created at a time when the first one was subsisting during which period
the lease in favour of the appellants was created; the lease which continued
uninterrupted under the second mortgage. The High Court, in our view,
should have drawn the inference that the second mortgage was nothing but
an implicit act of ratification of the deeds of the mortgagee, who was no
other but the same Amin Chand, the creator of the lease. At that time, no H
    232                   SUPREME COURT REPORTS (1994] SUPP. 4 S.C.R.

A   objection as to the existence of the lease was raised. By his conduct the
    mortgagor revealed that he had taken the created lease as his own, lending
    qualification to the appellants in being the vendor's tenants over his hold-
    mg.

          We are .thus of the view that in these facts and circumstances, when
B   the appellants have been on the land for over 40 years as tenants, in the
    otherwise dying law of pre-emption, such rights in favour of them, on true
    interpretation of the statute, shall be read in the way we have answered the
    two questions afore-posed. We, therefore, allow this appeal and set aside
    the impugned order of the High Court and that of the Trial Court restoring
C   operatively that of the lower appellate court, decreeing the suit of pre-emp-
    tion of the appellants. They shall make deposit of the sum as required by
    the lower appellate court on terms on or before December 31, 1994 failing
    which the law as settled would remain, but the appellants would have
    denied to themselves the relief of a positive decree. In the circumstances,
    there shall be no order as to costs.
D
    G.N.                                                        Appeal allowed.