KRISHNA DASS AGARWALversusKANHAIYALAL

                      KRISHNA DASS AGARWAL                                   A

                             KANHATY ALAL

                               JULY 19, 1996
                                                                             B
            IB.P. JEEVAN REDDY AND SUHAS C. SEN, .JJ.]

      Gwalior Pre-Emption Act (Samvat) 1992: Section 23 (As it stood p1ior
to repeal of Act in 1968)-Scope and inte1prctation of-Expression ''.At the
time of decree"-Meaning of
                                                                             c
        M.P. General Clauses Act, 1957: Section J(}-Applicability of

       Pre-emption-Suit-House purchased by respondent-Suit instituted by
appellant for enforcement of pre-emption right-Suit decreed by Trial
Cowt-Appeal by respondent-Repeal of pre-emption Act during pendency of D
appeal-Appeal prefencd by respondent allowed by Appellate Co1111-Second
appeal prefen-ed by appellant-High Cowt holding that inasmuch as an
appeal was filed against the decree of the tlial court in this case, the decree
contemplated by Section 23 is the decree to be passed in the appeal, and if
a second appeal is filed, the decree to be passed by the High Court as the E
case may be-Accordingly, it held that the 1ighl of pre-emption must subsist
on the date of the appellate decree/second appellate decree-Since the Act
was repealed dwing the pendency of the appeal, it held, the right was not
subsisting on the date of the appellate decree-Appeal before Supreme
Cowt-Held it is possible to take two views on the scope of expression "at the F
time of decree"-However having regard to the fact that the 1ight of pre-emp-
tion is a weak 1ight and is generally looked upon with distaste and because
the High Court has taken a pOlticular view of the matter on the inte1pretation
of a local enactment (which was no longer in force) Supre,;ne Court was not
inclined to take a different view.
                                                                             G
     Bishan Singh v. Khazan Singh, AIR (1958) SC 838 = (1959] S.C.R.
878 and Nimwla Devi v. Km. Renuka, (1972) 21 J.LJ. 453, referred to.

        CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9383 of
1996.                                                                        H
                                     671
    672                   SUPRl'1YIE COURT REPORTS [1996] SUPP. 3 S.C.R.

A        From
         .                                                     . Pradesh
               the Judgment and Order dated 27.8.92 of lhe Madhva
    High Court in C.S.A. No. 283 of 1974.

            Salish Chandra, A.P. Dhamija and Sushi! Kumar Jain for the Appel-
    lant.

B           K. Parasaran, Vivek Gambhir and S.K. Gambhir for the Respondent.

            The Judgment of the Court was delivered by

            B.P. JEEVAN REDDY, J. Leave granted. Heard the counsel for the
C parties.

          This appeal is preferred against the judgment of the learned Single
    Judge of the Madhya Pradesh High Court dismissing the second appeal
    preferred by the appellant-plaintiff herein.

D        On December 5, 1960, the respondent Kanhaiyalal, purchased the
  suit-house from Ram Chander and others under a sale deed, which was
  registered on December 10, 1960, for a consideration of Rupees eight
  thousand. On December 5, 1961, the appellant- plaintiff instituted a suit
  seeking to enforce his right of pre- emption on two grounds, viz., (1) an
  agreement said to have been executed by Nath Mal, father of Ram Chander
E agreeing to give the plaintiff the right of first purchase in the event of sale
  of the said house and (2) the Gwalior Pre-emption Act which created a
  right of pre-emption in favour of dominant-heritage holder vis-a- vis ser-
  vient-heritage holder. The plaintiff also relied upon an alleged customary
  right of pre-emption. The defendant disputed the plaintiff's claim inter alia
F on the ground that the Gwalior Pre-emption Act is unconstitutional and is
  unenforceable with effect from the date of the commencement of the
  Constitution of India. The Trial Judge decreed the suit on July 31, 1967.
  The respondent, Kanhaiyalal, preferred an appeal which was allowed by
  the learned District Judge. The grounds on which the learned District
  Judge allowed the 'appeal are : (i) inasmuch as the Gwalior pre-emption.
G Act has been repealed pending the said appeal (i.e., on June 28, 1968), the
  right of pre-emption claimed by the plaintiff can no longer be enforced.
  The plaintiff cannot also fall back upon customary right of pre-emption
  inasmuch as the said right came to an end with the enactment of the
  Gwalior Pre- emption Act in Samvat 1992. The said custom does not and
H cannot revive on the repeal of the said enactment. (ii) The alleged agree-
       K.D. AGAl<WAL v. KANHAIYALAL[B.P.JEEVANREDDY,J.]                    673

ment of pre-emption offended the rule of perpetuity and because the               A
respondent, Kanhaiyalal, was a bonafide purchaser of value without notice
of the said agreement, the agreement cannot he enforced against him. The
learned District Judge, however, declined to record any finding on the
plaintiff's assertion that he is a dominant-heritage holder. The High Court
dismissed that second appeal agreeing with the learned District .T udge on        B
the effect of repeal of the Gwalior Act pending the appeal. It relied mainly
on the language employed in Section 23 of the Gwalior Pre-emption Act
for arriving at the said conclusion. The High Court also took the view that
Section 10 of the Madhya Pradesh General Clauses Act docs not come to
the rescue of the plaintiff. The correctness of the view taken by the High
Court is challengeu in this appeal.                                               C

       In Bishan Singh v. Kliazan Singh, A.LR. (1958) S.C. 838 = [1959]
S.C.R. 878, Subba Rao, J., speaking for a three-Judge Bench, obscrvcu that
"the right (of pre-emption) being a very weak right, it can be defeated by
all legitimate methods, such as the vendec allowing the claimant of a             D
superior or equal right being substituted in his place" (See Para 11)". Apart
from being a weak right, it is a claim which is generally looked upon
by co11rts with certain amount of distaste. That is because it interferes \Vith
the freedom ot the owner to sell his property to the person of his choice.

      The Gwalior Pre-emption Act, which provided for pre-emption on              E
several grounds, also provided as follows in Section 23 :

         "23. Effect of loss of right oi pre-emptor prior to decree. -

             No decree for pre-emption shall be' passed in favour of any
                                                                                  F
         person unless he has a subsisting right of pre-emption at the time
         of the decree but where a decree for pre-emption has been passed
         in favour of a plaintiff whether by a court of first instance or of
         appeal, the right of such plaintiff shall not be affected by any such
         transfer or loss of his interest accruing after the date of such
         decree. 11                                                               G

     The Act was repealeu, as stated above, by the Madhya Pradesh
Agra-Kraya-Vidhi Nirsan Adhiniyam, 1968, during the pcndency of the
appeal before the learned District Judge. Section 23 says that the right of
pre-emption must subsist "at the time of the decree". The High Court has          H
    674                    SUPREME COURT REPORTS IJ996] SUPP. 3 S.C.R.

A construed the said words as meaning the final and operative decree. In
  other words, the High Court is of the opinion that inasmuch as an appeal
  was filed against the decree of the trial court in this case, the decree
  contemplated by Section 23 is the decree to be passed in the appeal, and
  if a second appeal is filed, the decree to be passed by the High Court, as
B the case may be. On this reasoning, it held that the right of pre-emption
  must subsist on the date of the appellate decree/second appellate decree.
  Since the Act was repealed during the pendency of the appeal, it held, the
  right was not subsisting on the date of the appellate decree. The High
  Court relied upon the principle, applicable to civil courts, that appeal is
C continuation of the original suit, that once an appeal is filed, the decree
  appealed against loses its finality and that the only effective decree in such
  a case is the decree of the appellate court, whether it is one of affirmation,
  modification or setting aside. Accordingly, it held that when Section 23
  speaks of decree, it is the final decree - be it the decree of the trial court,
  first appellate or the second appellate court, as the case may be. For this
D proposition, the 1-ligh Court also placed strong reliance upon the Division
  Bench decision of the Madhya Pradesh High Court in Ninnala Devi v. Km.
  Rcnuka, [1972[ 21 J.L..l. 453. That was, of course, a case where the repeal
  of the said Act took place during the pendcncy of the suit itself and it is
  on this ground that Sri Satish Chandra, learned counsel for the appellant,
E seeks to distinguish the said decision. The said distinction is no doubt valid
  but the question still remains whether the interpretation placed by the High
  Court on Section 23 is unsustainable in law.


          Section 23 is in t\vo-parts. 'fhe first part says that 1'no decree for
F pre-en1ption shall be passed in favour of any person unless he has a
    subsisting right of pre-emption at the time of the decrec 11 , \vhile the second
    part, \vhich is in the nature of a proviso, says: 1'(B)ut \vhcre a decree for
    pre-emption has been passed in favour of a plaintiff, \Vhether by a court of
    first instance or of appeal the right of such plaintiff shall not be affected
G   by any such transfer or loss.of his interest accruing after the date of such
    decree". Sri Satish Chandra strongly relies upon the second part while Sri
    Parasaran, learned counsel for the respondent, emphasises the first part.
    In our opinion, the second part visualises the situation \Vhere, after the
    passing of the trial court's decrl:e or the first appellate court's decree, the
H plaintiff transfers his right and says that such transfer shall not affect the
       K.D.AGAflWALv. KANHAfYALAl[B.P.JEEVANREDlJY,J.]                      675

interest which has accrued to the plaintiff under the decree in his favour.        A
This provision is prc1niscd upon the assumption that the Act continues to
be in force. It does not cover a situation \Vhcrc the Act itself ceases to be
in force. Nov. coining to the first part, it is possible to take two vie\VS. It
              1
               ,



is possible to construe the \Vords "at tin1e of the decrcc'1 a~ referring to the
decree in favour of the plaintiff against \Vhich the appeal is pending; it is      B
equally possible of being construed as referring to the final decree, i.e., the
appellate (first appellate or the second appellate or for that matter any
other appellate) decree. Hal"ing regard to the fact that the right of pre-
emption is a weak right and is generally looked upon with distaste and
because the High Court has taken a particular l"icw of the matter on the
interpretation of a lncal cnactinent (\vhich is no longer in force) \VC are not
                                                                                   c
inclined to take a different vic\v. ()ur disinclination also arises fron1 the
fact that the said Pre-emption Act was repealed as far back as 1968.

      Sri Salish Chandra Placed strong reliance upon Section 10 of the
Madhya Pradesh General Clauses Act, 1957 which is in pmi malC1ia with              D
Section 6 of the Central General Clauses Act. The applicability of this
section was considered by the Di>ision Bench of the Madhya Pradesh High
Court in J'/in11ala Devi. It heh.I, after referring to a nutnber of decisions on
the subj cct, that :
                                                                                   E
         "A right of pre-emption is in the nature of an inchoate right which
         can be perfected only in accordance with the procedure laid down
         in the statute, i.e., the pre-emption Act in this case. It could not
         be treated as a right vested in the plaintiff \Vithin the meaning of
         section 10 of the :rvt.P. General Clauses Act so as to rcn1ain
                                                                                   F
         unaffected by the repeal of the Act... ..... As pointed out above, the
         right of pre-emption is a remcUial right or in other \Vords a right
         to take advantage or an cnactn1cnt for acquiring a right to land,
         or other properly. The right cannot be said to have been acquired
         or accrued until a decree is passed, and therefore, is not saved by
         the provisions of section 10 of the M.P. General Clauses Act. The         G
         Plaintiff-appellants arc, therefore, not entitled to enforce a right
         of pre-emption after the repeal of the Pre-emption Act."

     The High Court also relied upon the language in Section 23 to
support the above conclusion. V./e are not inclined to take a different vie\v H
    676                  SUPREME COURT REPORTS [1996] SUPP. 3 S.C.R.

A even if one is possible having regard the fact that High Court has taken
    one possible view on a local law which has been repealed as far back as
    1968. Indeed, it was not even a law made by Madhya Pradesh Legislature
    but a hang-over from the erstwhile princely state of Gwalior.

          The appeal accordingly fails anti is dismissed. No order as to costs.
B
    T.N.A.                                                   Appeal dismissed.