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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

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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]

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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

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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

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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