PETITIONER:
INDIRA BAI
Vs.
RESPONDENT:
NAND KISHORE
DATE OF JUDGMENT05/09/1990
BENCH:
SAHAI, R.M. (J)
BENCH:
SAHAI, R.M. (J)
SHETTY, K.J. (J)
CITATION:
1991 AIR 1055 1990 SCR Supl. (1) 349
1990 SCC (4) 668 JT 1990 (4) 163
1990 SCALE (2)445
ACT:
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
preemptor-Operation of rule of estoppel or waiver against
such rights-Non-service of notice by vendor--Effect of.
HEADNOTE:
The appellant purchased certain properties by way of
registered sale deeds. She constructed therein a godown and
a two-storeyed building with the knowledge and assistance of
the respondent, who did not say anything about the common
passage and had never expressed his intention to pre-empt
the sales.
Soon after the construction 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 preemption in relation
to the said properties. The appellant pleaded that the
respondent was estopped from claiming the pre-emption.
Principle of waiver was also pleaded. The Trial Court dis-
missed the suit of the respondent, and he preferred an
appeal before the District Judge which was also dismissed.
Respondent preferred a regular second appeal before the
High Court. The High Court allowed the appeal holding that
the principles of estoppel and waiver had no application
against the pre-emptor to preempt the suit, and set aside
the orders of the Courts below.
Aggrieved against the High Court's order the appellant
has preferred this appeal, by special leave.
Allowing the appeal, this Court,
HELD: 1.1 Estoppel is a rule of equity flowing out of
fairness striking on behaviour deficient in good faith. It
operates as a check on
350
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. But for it great many injustice may have been
perpetrated. [162D-E]
1.2 Legal approach of the High Court, that no estoppel
could arise 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 resorting to rule of estoppel. Such an exten-
sion 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]
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 Kishan v. Shridhar, AIR 1960 SC 1369,
referred to.
3. The provision in the Pre-emption Act requiring a
vendor to serve notice on persons having right of pre-emp-
tion is condition of validity of transfer, and therefore a
pre-emptor could waive it. Failure to serve notice as re-
quired 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. 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
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]
Jethmal v. Sajanumal, [1947] Mewar Law Reports 36, over-
ruled.
351
Atam Prakash v. State of Haryana, AIR 1986 SC 859;
Bishan Singh v. Khazan Singh, AIR 1958 SC 838; Radha Kishan
v. Sridhar, AIR 1960 SC 1368; Naunihal Singh v. Ram Ratan,
ILR 39 All. 127; Ram Rathi v. Mt. Dhiraji, [1947] Oudh 81;
Gopinath v. R.S. Nand Kishore, AIR 1952 Ajmer 26; Abdul
Karim v. Babulal, AIR 1953 Bhopal 26 and Kanshi Ram Sharma
v. Lahori Ram, AIR 1938 Lah. 273, approved.
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 of July for exer-
cise of the right and filed the suit in January, would
itself demonstrate that the conduct of the respondent was
inequitable and the courts in this country which are pri-
marily the courts of equity, justice and good conscience
cannot permit the respondent to defeat the right of appel-
lant and invoke a right which has been called a weak and
inequitable right. [164D-E]
JUDGMENT:
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.
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.
The Judgment of the Court was delivered by
R.M. SAHAI, J. Is Estoppel a good defence to ‘archaic’,
Atam Prakash v. State of Haryana, A.I.R. 1986 SC 859, right
of Pre-emption which is a ‘weak right’, Bishen Singh v.
Khazan Singh, A.I.R. 1958 SC 838, and can be defeated by any
‘legitimate’ method Radha Kishan v. Sridhar, A.I.R. 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. Mr.
Dhiraji, [1947] Oudh 81, Ajmer
352
Gopinath v. R.S. Nand Kishore, AIR 1952 Ajmer 26, Bhopal,
Abdul Karim v. Babu Lal, AIR 1953 Bhopal, and Lahore Kanshi
Ram Sharma & Anr. v. Lahori Ram & Anr., AIR 1938 Lab. 273
have answered the issue in the affirmative. The Privy Coun-
cil, [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 purchase, only. one out of
many blocs. It had:
“Assuming that the prior completed purchase by the appellant
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 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 Mohamme-
dan Rule, it is settled that the right of pre-emption is
lost by estoppel and 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 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 construction which went
on for five months. Having thus persuaded, rather misled,
the purchaser by his own conduct that he acquiesced in his
ownership he somersaulted to grab the property with con-
structions by staking his own claim and attempting to unset-
tle the legal effect of his own conduct by taking recourse
to law. To curb and control such unwarranted conduct the
courts have extended the broad and paramount considerations
of equity, to transactions and assurances, express or im-
plied to avoid injustice.
Legal approach of the High Court, thus, that no estoppel
could arise unless notice under Section 8 of the Rajasthan
Pre-emption Act (In brevity ‘the Act’) was given by the
seller and pre-emptor should have had occasion to pay or
tender price ignores the fallacy that Estoppel need not be
specifically provided as it can always be used as a
353
weapon of defence. In the Privy Council decision, referred
earlier, the court was concerned with Oudh Laws Act (18 of
1876) which too had an identical provision for giving notice
by seller. No notice was given but 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.
Exception, to this universal rule or its non-availabili-
ty, is not due to absence of any provision in the Act ex-
cluding 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 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. Equi-
ty, usually, follows law. Therefore that which is statutori-
ly illegal and void cannot be enforced by resorting to the
rule of estoppel. Such extension of rule may be against
public policy. What then is the nature of right conferred by
Section 9 of the Act? In Bishen Singh v. Khazan Singh, AIR
1958 SC 838 this Court while approving the classic judgment
of Mahmood, J. in Gobind Dayal v. Inayatullah, ILR 7 All 775
(FB). ‘that the right of pre-emption was simply a right of
substitution’ 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. In Radha Kishan v. Shridhar, AIR 1960
SC 1369 this Court again while repelling the claim that the
vendor and vendee by accepting price and transferring pos-
session without registration of sale deed adopted subterfuge
to defeat the right of pre-emption observed that, ‘there
were no equities in favour of a pre-emptor, whose sole
object is to disturb a valid transaction by virtue of the
rights created in him by statute. To defeat the law of pre-
emption by any legitimate means is not fraud on the part of
either the vendor or the vendee and a person is entitled to
steer clear 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 policy. The distinction be-
tween 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. The
provision 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
354
required under the Act does not render the sale made by
vendor in favour of vendee ultra vires. The test to deter-
mine 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 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 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.
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 for exer-
cise of the right and filed the suit in January would itself
demonstrate that the conduct of the respondent was inequita-
ble and the courts in this country which are primarily the
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.
In 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 restored. The appellant shall be entitled
to his costs.
G.N. Appeal allowed.
355