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Regular Second Appeal No. 552 of 1955, decided on 15th February, 1960.
S. S‑Whether a particular structure is shop or not is to be decided after taking into consideration all aspects of case‑Sale of shop‑Not pre -emptible.
Nandu Mal v. Municipal Committee A I R 1925 Lah. 252 ; Munshi Lal v. Emperor A I R 1933' All. 657 ; Marotrao v. Municipal Committee A I R 1926 Nag. 281 and Jhabban Lal v. Muhammad Umar A I R 1925 Lah. 544 ref.
S. 100‑Suit for possession by pre‑emption‑ Question whether two sale‑deeds constituted one transaction or more is question of law‑Punjab Pre‑emption Act (I of 1913), S. 4.
The question whether on the facts found the two sale‑deeds constituted one transaction or more is a question of law, because it calls for the determination of the legal effect of the proved facts. The question whether the legal effect of the two sales was that they should be regarded as one transaction is a question that is capable .of being agitated in second appeal.
Bhamba Ram v. Allah Bakhsh 1915 P R 294 ; Labh Singh v. Taj Din and others A I R 1931 Lah. 436 ; Nadir Shah v. Lai Shah P L D 1954 Lah. 447 and Wali Muhammad v. Muhammad Bakhsh I L R 11 Lah. (P C) 191, 207 ref.
S. 4‑Device and Disguise‑Distinction.
It is not correct to contend that the device of splitting into two or more sales the sale of a property that may be capable of being split up reasonably and consistently with its utility, structural character and situation is unrealistic and, therefore, ineffective for defeating the right of pre‑emption.
There is a distinction between a device and a disguise and the Courts have the power to look to the real nature of the transaction. A sale, for instance, may be disguised as a mortgage or hiba‑bil-iwaz. When this is done, evidence can be led to reveal the real nature of the transaction by taking off the mask from the face of the transaction, so that the Court may discover whether the right of pre‑emption has been successfully eluded or not. This, however, does not mean that a legitimate device becomes a disguise merely because the object is to defeat the right of pre‑emption. The essential difference between a disguise and device is that a disguise is utilized to hide the reality by a counterfeit appearance. A false exterior is given to conceal the inner reality. In a device, the appearance is not false, but a method is invented or adopted to evade the ordinary or normal consequences of a situation and thus to achieve an object. In a device, there is always a scheme, a design or a stratagem which is real and not false. In the present case, the purchaser was aware that there were chances of his losing the property if he made one transaction of sale and, therefore, he adopted the legitimate method of separating that portion of the plot of land on which a kacha shop existed, by purchasing that portion first and then the rest of the plot of land. Both the sales were reasonable, capable of standing apart and genuine. They were therefore, effective to defeat the right of pre‑emption. If the device adopted in this case is rejected merely on the ground that there was a scheme behind it, then no device cap succeed. Held, that the right of the pre‑emptor was evaded, eluded or defeated by legitimate means.
Asadullah Khan for Appellant.
S. M. Zafar for Respondents.
Date of hearing : 27th January, 1960.
Regular Second Appeal No. 552 of 1955, and Regular Second Appeal No. 553 of 1955, will be disposed of by this judgment.
2. The facts are that Ahmad was the proprietor of a plot of land measuring 900 square yards situated by the side of a metalled road, known as Circular Road, in Pakpattan. He intended to sell the entire plot of land. Chaudhry Ghulam Ahmad Khan, Advocate, expressed his willingness to buy it provided that portion of the plot of land on which there stood a superstructure, alleged to be a shop, was sold to him first and the rest of the plot was sold afterwards. Ahmad agreed to do so and, therefore, two sale deeds were executed. Exh. D. 3, dated the 23rd of January, 1953, is the sale deed by which a portion of the land measuring 30 square yards with the "shop" standing thereon was sold by Ahmad to Ch. Ghulam Ahmad Khan for Rs. 50. Exh. D. 4 is the second sale‑deed dated the 26th of January, 1953, by which the remaining portion of the plot of land was sold by Ahmad to the same purchaser for Rs. 600. Sheikh Ghulam Qutab‑ud‑Din thereupon brought two suits to take possession of the two pieces of land which had been sold by these two documents in exercise of his right of pre‑emption. One of them was Suit No. 8 ‑of 1954, and the other Suit No. 9 of 1954. Issues were separately framed in the suits, but subsequently the two suits were tied together and were disposed of by the Senior Civil Judge, Montgomery, on the 22nd of February, 1955. The learned Judge dismissed both the suits leaving the parties to bear their own costs. Two appeals were preferred, being Appeals Nos. 49 and 50 of 1955. The appeals were accepted and the suits were decreed on the ground that the superstructure was not a ‑shop and that the two sale deeds in reality constituted one transaction that was split up into two as a disguise to conceal the genuine object of making one transaction.
3. Chaudhry Ghulam Ahmad Khan has preferred two second appeals from the judgments of the first appellate Court. The second appeals were heard together by me. Learned counsel for the appellant contended, firstly, that the first sale effected by Exh. D. 3 was the sale of a shop and, as such, no right of pre emption arose on account of that transaction. This being so, the vendee himself acquired an equal right of pre‑emption to that of the pre‑emptor and, therefore, the pre‑emptor did not have a superior right of pre‑emption at all. Secondly, the device of selling the plot of land by two sales was an effective And legitimate device, good by itself to defeat the whole right of the pre‑emptor.
4. The first question for determination, therefore, is whether the first sale made by Exh. D. 3 was the sale of a shop. The situation of the premises is clear from the site plan Exh. D. 6 which is on the record. It shows that the plot of land measuring 900 square yards abutted on Circular Road on one side, on its two sides open land was situated, except for a small superstructure, and on the fourth side there was a narrow public pathway. A small portion of 30 square yards situated inside this plot of land, but abutting on the Circular Road, was the subject‑matter of the first sale. On one side of this small piece of land there was thus Circular Road and on its other three sides it was surrounded by the rest of the land of the vendor. The sale deed Exh. D. 3 contains a recitation that there was a kacha shop on this small piece of land. The site plan also shows that a number of shops were situated in the locality in which the plot of land in dispute was situated. Siraj‑ud‑Din (P. W. 4), attorney of the plaintiff, has stated in his evidence that a Sabzi Mandi was situated to the locality and that there were kacha shops belonging to the pre‑emptor near about the property in suit. Amir (P. W. 3) has stated that he had constructed the shop that stood on the small piece of land of 30 square yards and that he had carried on the trade of selling milk and sweetmeat thereat. The costs of the construction, according to him, was Rs. 12 which had been repaid to him by Ahmad, the owner of the land by adjusting towards payment of cost the rent of the shop which was Rs. 4 p.m. There is, therefore, no doubt that on the piece of land which was sold by Exh. D. 3 there stood a superstructure which was used as a shop. Counsel for the respondent‑plaintiff contended that the construction was so frail and cheap that it was a misnomer to call it a shop.. The real intention of the vendor, according to counsel, was to sell the plot of land and not the worthless superstructure at all. The sale made by Exh. D. 3, therefore, could not be considered to be the sale of a shop. He pressed his argument to the extent of contending that a superstructure of such a character could not even be called a "building". Counsel for the appellant cited Nandu Mal v. Municipal Committee (A I R 1925 Lah. 252), Munshi Lal v. Emperor (A I R 1933 All. 657) and Marotrao v. Municipal Committee (A I R 1926 Nag. 281), in order to establish that permanence of. construction or the material of which it was made were not the factors on the basis of which a conclusion could be reached whether the superstructure was a building or not. The judgments cited by learned counsel are not of much help because they relate to the interpretation of definitions contained in Municipal Acts, but the following observation made in the Nagpur case is relevant to the question whether a construction should be solid and durable to be called a building:‑--
"What is a building must always be a question of degree and circumstances, and in view of the number of houses in this country, which are erected of fragile material apart from brick and stone work, there cannot be the slightest question in my opinion, but the structure in question amounted to a building for the purpose of the old Municipal Act."
Counsel for the appellant made use of similar observations made in the other judgments in order to establish his contention that it was not necessary that a shop should have any particular form, shape or be constructed of lasting material.
5. Counsel for the respondent‑plaintiff cited Jhabban Lal v. Muhammad Umar (A I R 1925 Lah. 544) to make use of a passage in which there is a list of the considerations on the basis of which the question whether a building is a house or a shop should be determined. He contended on that basis that the superstructure that existed on the piece of land measuring 30 square yards was not a shop. That passage is as follows:‑--
"The above authorities would show that in deciding whether a particular building is to be considered as a house or a shop for the purpose of pre‑emption, the primary use to which the building is put at the time, of the sale has mainly to be considered. The length of Its use is no doubt an important factor to be considered, but that is not the only consideration., That question mainly enters into consideration for the purpose of determining whether the character of the property has bona fide and definitely been established. The requisite duration of user must accordingly depend on the facts of each case and on other circumstances that may be proved. The nature of the locality in which the building is situated is another factor to be considered along with other circumstances. If the building is used for more than one purposes then the primary or more important of such purpose is to be considered. The structural appearance of the building must also be taken into considera tion."
Counsel contended that according to the evidence of P. W. 3 the superstructure had been used as a shop for two years only. Moreover, the description of the superstructure given by that witness shows that it had no doors and no windows. This criticism of the superstructure offered by counsel is, however, of comparatively lesser value than the commercial nature of the locality, the purpose of running a shop for which the super structure was made and the good faith established by the duration of two years' use of the superstructure as a shop.
6. The cost of the construction was ridiculously low when considered from the standards of the cost of shops incurred in big towns. Counsel for the respondent‑plaintiff, therefore, argued that the sale effected by Exh. D. 3 was not the sale of the superstructure but of the piece of land only: Counsel for the appellant pointed out in reply that 870 square yards of land were sold by Exh. D. 4 for Rs. 600, while 30 square yards of and were sold by Exh. D. 4 for Rs. 50. The difference in the prices was not negligible. Moreover, it could be explained only by the value of the superstructure.
7. Considering the quality of the superstructures that exist in small towns and the nature of the trade which was carried on in the shop in dispute, I am inclined to think that the sale effected by Exh. D. 3 was the sale of a shop along with the piece of land upon which it was standing and not of land only. The conclusion, therefore, is that the sale made by Exh. D. 3 was not pre‑emptible. The consequence of this finding must be that the sale effected by Exh. D. 4 should also not be pre emptible, because the pre‑emptor did not have a superior right of pre‑emption to that of the vendee.
8. I may mention here that Mr. S. M. Zafar, counsel for the respondent‑plaintiff, conceded, in view of the observations made in Bhamba Ram v. Allah Bakhsh (1915 P R 294), that the question whether upon proved facts a building be held to be a shop was one of law and constituted a good ground for second appeal, but on the basis of the following observation, that occurs in Labh Singh v. Taj Din and others (A I R 1931 Lah. 436), viz. :‑
"A number of authorities were referred to but it will serve no useful purpose to discuss them as the question whether there were two transactions or not, is one of fact and has to be determined on the circumstances of this case,"
he contended that the question whether the sale of a plot of land effected by two sale‑deeds was a legitimate device or not was a question of fact and, therefore, could not be agitated in second appeal. He argued that the District Judge having come to the conclusion that the intention of the vendor and the vendee was to sell the entire plot of and, the nature of the method adopted by them to achieve the object was finally determined as a finding of fact. Taken together as one transaction, the two sales would give rise to the right of pre emption. He referred to Nadir Shah v. Lal Shah (P L D 1954 Lah. 447) in support of his contention that inferences drawn from facts were also questions of fact. A Division Bench of the Lahore High Court has observed in that case as follows :‑--
"It is contended by Mr. Mushtaq Hussain Munir, learned counsel for the respondent, that a conclusion or inference to be drawn from the evidence is always a matter of law, the correctness of which can be called in question in second appeal. This argument is often advanced from the Bar, but there is no warrant for it. An inference as to a fact, drawn from the evidence, direct or circumstantial, remains an inference of fact which cannot be questioned in second appeal, but where the question is whether the facts found do or do not constitute a legal transaction of a particular kind, e.g., a sale, mortgage, servitude or tort, such question is clearly one of law. In the same way, where the evidence of title is a document, the question what interests, if any, it transfers is a question of law and any misconstruction of such document will maintain second appeal."
Exhibits D.3 and D.4 having been proved, the dates of their execution and the description of the property transferred by them having been brought on the record and the intention of the vendor to sell the entire plot having been established by direct evidence, it was a question of fact, according to counsel, and not a question of law whether the two sale deeds constituted one transaction or not. This contention of learned counsel appears to me to be clearly erroneous. The question whether on the facts found the two sale‑deeds constituted one transaction or B more is a question of law, because it calls for the determination of the legal effect of the proved facts. I drew the attention of counsel to the following observations made by the Privy Council in Wali Muhammad v. Muhammad Bakhsh (I L R 11 Lah. (P C) 191, at p. 207) :‑
"The proper legal effect of a proved fact is essentially a question of law, but the question whether a fact has been proved when evidence for and against has been properly admitted is necessarily a pure question of fact."
To my mind, the question whether the legal effect of the two sales was that they should be regarded as one transaction is a question that is capable of being agitated in second appeal.
9. Mr. S. M. Zafar next contended that the intention of the vendor to sell the entire plot of land and the intention of the vendee to buy the entire plot of land was a sufficient guarantee of the fact that it was one transaction which was disguised and camauflaged by the execution of two sale deeds. In support of his contention he again relied on Labh Singh v. Taj Din and others. In that case, a part of a house, described as a kotha, together with an adjoining open space was sold and a week later the rest of the house was sold by another sale. The learned Judges held that there was really only one transaction, but that ostensibly two sales were made to defeat the plaintiff's right of pre emption. There are observations, such as follows in the judgment which support the contention of learned counsel that the method of splitting up a transaction into two was always ineffective as a mere disguise:‑--
"We have therefore to see whether the parties really entered into two separate transactions of sale or whether there was only one transaction and it, was given the appearance of two separate sales merely to defeat the plaintiff's right of pre emption as alleged by him."
The observations do create an impression that whenever a transaction is split up into two or more with the object of defeating the right of pre‑emption, the method should be treated as a disguise and should not be allowed to defeat the right of pre emption ; but the principle which governed the ruling stands out clearly if attention is paid to the following observation :‑
"There are no doubt authorities in support of the proposition that a vendee may defeat a pre‑emptor's right by any legitimate means ; but these authorities cannot help the vendee in the present case in view of the above finding. If there had been any genuine sale of the kotha in the first instance and then the rest of the house had been sold, the vendee might have successfully defeated the plaintiff's right of pre , emption."
The learned Judges, therefore, considered the sale of the kotha to be a sham transaction. The criticism of the first sale contained in the judgment also shows that the transaction was regarded as spurious. There is a suggestion in the judgment that the portion of the property sold first, that is the kotha, could, by itself, serve no useful purpose for the vendee. The vendor explained that it was bought to be used as a stable, but this explanation was not believed to be true. The right of way that was granted to the kotha through the inside of the house was considered to be unreasonable. Further, the learned Judges pointed out that there was a charge on the property which was concealed in the sale of the kotha. In view of these circumstances, the conclusion of the learned Judges that the sale of the kotha was not genuine, carries easy conviction and the decision that the sale of the kotha could not stand independently of the sale of the rest house must be taken to be based on sound principles; but to contend that the device of splitting into two or more sales the sale of a property that may be capable of being split, up reasonably and consistently with its utility, structural character and. situation is unrealistic and, therefore, ineffective fort, defeating the right of pre‑emption, would be contrary to the principle that the right of pre‑emption can be defeated by legitimate means. There are Chapters in Hedaya and in the Baillie's Digest of Muhammadan Law on the devices by which the right of pre‑emption can be evaded. The first device mentioned in Hedaya at page 563 is as follows:‑---
"Where a man sells the whole of his house excepting only the breadth of one yard extending along the house of the Shafee, he (the Shafee) is not in this case entitled to claim his privilege, because of his neighbourhood being thus cut off. This is a device by which the Shafee may be disappointed of his right and it is still the same, if the seller grant the intervening part of 'his house as a free gift to the purchaser, and put him in possession of it."
10. There is a discussion at page 90 of the 3rd Edition of Sir Shadi Lal's Law of Pre‑emption, as revised by K. J. Rustomji, on the distinction between a device and a disguise and the attention of the Courts has been drawn to look to the real nature of the transaction. A sale, for instance, may be disguised a, a mortgage or hiba‑bil‑iwaz. When this is done, evidence can be led to reveal the real nature of the transaction by taking off the mask from the face of the transaction, so that the Court may discover whether the right of pre‑emption has been successfully eluded or not. This, however, does not mean that a legitimate device becomes a disguise merely because the object is to defeat the right of pre‑emption. The essential difference between disguise and device is that a disguise is utilised to hide the reality by a counterfeit appearance. A false exterior is given to conceal the inner reality. In a device, the appearance is not false, but a method is invented or adopted to evade the ordinary or normal consequences of a situation and thus to achieve an object. In a device, there is always a scheme, a design or a stratagem which is real and not false. In the present case, the purchaser was aware that there were chances of his losing the property if he made one transaction of sale and, therefore, he adopted the legitimate method of separating that portion of the/ plot of land on which a kacha shop existed, by purchasing than portion first and then the rest of the plot of land. Both the sales were reasonable, capable of standing apart and genuine. They were therefore, effective to defeat the right of pre‑emption. If the device adopted in this case is rejected merely on the ground that there was a scheme behind it, then no device can succeed. I am, therefore, of the opinion that the right of the pre‑emptor was evaded, eluded or defeated by legitimate means.
10. The conclusion is that the appeals succeed, both on the ground that the first sale made by Exh. D. 3 of a shop and that the device of selling the plot of land measuring 900 square yards by splitting it up into two portions and making two sales by Exhs. D. 3 and D. 4 was a valid and effective device. The judgments and decrees of the learned District Judge are, therefore, set aside and the judgments and decrees passed by the learned trial Court are restored. The present appellant is to get costs of these appeals and of the first appeals.
K.M.A Appeals accepted.
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