Shyam
Sunder & Ors Vs. Ram Kumar & Anr [2001] Insc 347 (30 July 2001)
N.S.Hegde,
Y.K.Sabharwal, S.V.Patil V. N. Khare, J.
Leave
granted.
"What
is the effect of substituted Section 15 introduced by the Haryana Amendment
Act, 1995 (hereinafter referred to as the Amending Act 1995) in the parent Act
i.e. The Punjab Pre-emption Act (hereinafter referred to as the parent Act) as
applicable to the State of Haryana whereby the right of a co-sharer to pre-empt
a sale has been taken away during the pendency of an appeal filed against a
judgment of the High Court affirming the decree passed by the trial Court in a
preemption suit".
That
is the short question which we are required to answer in this group of appeals
which has come on reference before us.
When
Civil Appeal No.4680/93 came up for hearing before a Bench of this Court, the
Bench, on the question of the effect of the amendment made in 1995 in the
parent Act, found that there is conflict in the view taken in the decisions of
two three-Judges' Bench of this Court ,which are Didar Singh etc. etc. vs. Ishar
Singh (dead) by Lrs. etc. etc. [1995 (1) Scale 1] (wherein it was held that in
a suit for pre-emption, the pre-emptor must prove his right to preempt upto the
date of decree of the first court and any loss of right or subsequent change in
law after the date of adjudication of the suit and during pendency of appeal
would not affect the decree of the first court ) and Ramjilal & Ors. etc.
vs. Ghisa Ram etc. [JT 1996 (2) SC 649] (wherein it was laid down that appeal
being continuation of the suit, the right to claim pre-emption must be
available on the date when the decree is made and is finally to be affirmed or
needs to be modified at the time of disposal of the appeal therefrom, and since
the Amending Act came into force during pendency of appeal, the right and
remedy of the plaintiff stood extinguished and as a result suit must fail.) In
order to resolve the conflict between the aforesaid two decisions rendered by
two different Benches, the Bench referred the appeal for decision by a Bench of
five Judges. It is in this way, the matter has come before us.
Since
common question of law is involved in this group of appeals, we would notice
the facts which have given rise to Civil Appeal No. 4680/1993.
The
defendants/appellants herein purchased land measuring 54 Kanals, situated in
village Rithal Phogat, being 1/2 share of the land of Khewats Nos. 204, 205 and
206, measuring 108 Kanals for a sum of Rs. 84,000/- from vendors viz., Bharpai,
Chhoto and Pyari - daughters of Bhagwana vide sale deed dated 17.7.1985. The
plaintiffs/respondents herein claimed preferential right to pre-empt the sale
in favour of defendant-appellants on the ground that they are co- sharers by
means of a civil suit laid before the Sub-Judge, 1st Class, Gohana. In the said
suit, issues were framed and the trial court decided all the issues in favour
of the plaintiffs/respondents and consequently on 30.5.1990 the suit was
decreed. The respondents after passing of the decree by the court of the first
instance deposited the purchase money as required under Order 20 rule 14 CPC.
The appeal preferred by the appellants before the first appellate court and the
second appeal before the High Court were dismissed and the decree of the trial
court was affirmed. The appellants thereafter preferred this appeal by way of
special leave petition. During pendency of the appeal, Section 15(1)(b) of
parent Act, on the basis of which the suit was filed by the
plaintiffs/respondents was amended and was substituted by new Section 15
whereby the right of a co- sharer to preempt a sale was taken away. The
substituted Section 15 of the Act runs as under:
"15.
Right of pre-emption to vest in tenant.
The
right of pre-emption in respect of sale of agricultural land and village immovable
property shall vest in tenant who holds under tenancy of the vendor or vendors
of the land or property sold or a part thereof." Learned counsel appearing
for the appellants, on the strength of the decision of this Court in Ramjilal
v. Ghisa Ram (supra) and the amending Act of 1995 urged that the right of a
co-sharer to pre-empt sale having been extinguished by substituted Section 15
of the Act, the appeal being continuation of the suit, this Court is competent
to take into account the legislative changes and in that event the
plaintiff-respondents suit must fail. Secondly it was urged that the amending
Act being declaratory in nature, it has retrospective effect and consequently,
whatever the right a co-sharer had on the date of decree of the Court of first
instance stood extinguished after the amending Act came into force. The third
contention was that in any event, the amending Act being beneficial legislation
passed for general good of citizens, this Court while construing new
substituted Section 15 is required to apply rule of benevolent construction and
in that event amending Act would have retroactive operation. On the other hand
the contention of respondents' counsel is that in a suit for pre-emption a
claimant has to prove his right on the date of the decree of the first court
and loss of right after the date of decree by an act beyond his control or
subsequent change in law did not effect his claim in the suit and, therefore,
the amending Act subsequent to the date of decree of the first court has no
effect on the maintainability of the suit. It was also contended that assuming
the appeal being continuation of the suit, the amending Act having no
retrospective operation does not effect the decree of the first instance court.
It was also urged that in view of provisions of Order 20 rule 14 CPC the title
to the property had already been passed on to the claimant on deposit of
purchase money and, therefore, the amending Act does not affect the title
acquired by the claimant.
On the
arguments of learned counsel of the parties the questions that arise for
consideration are :
(i)
whether the appeal being continuation of the suit, the amendment in Section 15
of the parent Act whereby the right of a co-sharer to pre-empt a sale has been
taken away during the pendency of the appeal would effect the maintainability
of the suit and the rights of a co-sharer and
(ii) whether
the Amending Act has retrospective operation so as to affect the rights of
parties in litigation.
Learned
counsel for the parties in support of their arguments relied upon number of
decisions rendered by Privy Council, Federal Court, this Court and various
other High Courts. In order to have complete picture of the views expressed in
these decisions and thereafter to arrive at the conclusion, it is appropriate
to categorise the decisions cited at the Bar which shall hereinafter be
referred as first, second and third categories of decisions. The first category
of decisions are those wherein the view of law expressed is that in a suit for
pre-emption, the pre-emptor must possess his right to pre-empt right from the
date of sale till the date of decree of the first Court, and loss of that right
after the date of decree either by own act, or an act beyond his control or by
any subsequent change in legislation which is prospective in operation during pendency
of the appeal filed against the decree of the court of first instance would not
affect the right of preemptor. Second category of decisions deals with the
cases where right of a preemptor was taken away after the date of decree of the
first court and during pendency of the appeal by statutory enactment which had
retroactive operation. In such cases it was held that the appellate Court is
competent to take into account legislative changes which are retrospective and
accordingly affect the rights of the parties to the litigation. The decisions
in third category of cases are those where it has been held that appeal being
continuation of suit, the right to pre-empt a sale must be available on the
date when the decree is made and is finally to be affirmed or needs to be
modified at the time of disposal of appeal and in case of loss of right by
legislative changes during pendency of appeal, the suit for pre-emption must
fail.
The
first case in the first category of decisions is judgment by Allahabad High
Court in Sakina Bibi vs. Amiran and others [1888 ILR (10) Allahabad 472]
wherein it was held that a court of appeal is required to see what was the
decree which the court of first instance should have passed, and if the court
of first instance wrongly dismissed the claim, the plaintiff cannot be
prejudiced by her share having been subsequently sold in execution of a decree
in another suit.
Such a
sale would not affect the preemptor's right to maintain the decree if she had
obtained the decree in her favour in the court of first instance. In short, the
view of the Court was that the right of pre- emption has to be found which
existed on the date of the decree and any subsequent sale of the land in execution
proceedings during pendency of the appeal would not affect the maintainability
of the suit. In Baldeo Misir vs. Ram Lagan Shukul [1923 ILR (45) Allahabad
709], it was laid down that what is to be seen is whether the pre-emptor has
the right on the date of the decree of the first Court. Any subsequent change
of right during pendency of the appeal would not affect the right of the
pre-emptor. In Hans Nath and others vs. Ragho Prasad Singh [59 The Law Reports
(Indian Appeals) 138], the Privy Council following the decision in Baldeo Misir
vs. Ram Lagan Shukul (supra) held, that a pre-emptor's claim may be defeated by
losing his preferential qualification to pre-empt after the sale and at any
time before the adjudication of the suit. In short, it was held that a
pre-emptor must have the right to pre-empt on the date of sale, on the date of
filing of the suit and on the date of passing of the decree by the trial court.
This decision by the Privy Council related to the right of preemption
prevailing in the then Agra Province, but the same was followed and applied in
the then undivided Punjab before partition of the country by the Lahore High
Court in Madho Singh vs. Lt. James R.R.S. Kinner [1942 ILR(23) Lahore 155] and Zahur
Din and another vs. Jalal Din Noor Mohammad and others [ 1944 ILR (25) Lahore
443]. In both the cases, two Full Benches of Lahore High Court held that it is
not possible to extend the date by which a vendee in a pre-emption suit may
improve his status beyond the date of litigation of the suit by the court of
first instance and he cannot, therefore, by improving his position during pendency
of the appeal defeat the right of the pre- emptor. In Ramji Lal & anr. vs.
State of Punjab & ors. [1966 ILR 19 (2) Punjab 125] it was held that preemptor must
have his qualification to preempt on the date of sale, on the date of
institution of the suit and on the date of decree of the trial Court. The
preemptor must maintain his qualification to preempt on the date of decree of
the first court only and any subsequent loss of qualification by preemptor by
his own act or by an act beyond his control does not affect the maintainability
of the suit. In Bhagwan Das (d) by Lrs. & ors. vs. Chet Ram [1971 (2) SCR
640] a Bench of three Judges of this Court held that a preemptor must maintain
his qualification to preempt upto the date of decree for possession by
preemption. This decision approved the decision of Full Bench rendered by
Punjab & Haryana High Court in Ramji Lal vs. State of Punjab (supra). In Rikhi Ram & anr. vs.
Ram Kumar & ors. [1975 (2) SCC 318] a Bench of three Judges of this Court
reiterated that a pre-emptor who claims the right to pre-empt the sale on the
date of the sale must continue to possess that right till the date of the
decree. If the claimant loses that right before passing of the decree, no
decree for pre-emption can be granted by the Court even though he may have had
such right on the date of the suit. In Didar Singh vs. Ishar Singh (supra) a
Bench of three Judges of this Court laid down that in a suit for pre-emption,
the claimant must prove that his right to pre-empt is subsisted till the date
of the decree of the First Court and the loss of right after the date of the
decree by an act beyond his control or by statutory intervention during pendency
of the appeal against the decree of the trial Court would not disentitle the
claimant to maintain his claim of preemption already exercised and decreed. In
this case again decision by a Full Bench of Punjab & Haryana High Court in Ramji
Lal vs. State of Punjab (supra) was approved.
An
analysis of the aforesaid decisions referred to in first category of decisions,
the legal principles that emerge are these:
1. The
pre-emptor must have the right to pre-empt on the date of sale, on the date of
filing of the suit and on the date of passing of the decree by the Court of the
first instance only.
2. The
pre-emptor who claims the right to pre-empt the sale on the date of the sale
must prove that such right continued to subsist till the passing of the decree
of the first court. If the claimant loses that right or a vendee improves his
right equal or above the right of the claimant before the adjudication of suit,
the suit for pre-emption must fail.
3. A
pre-emptor who has a right to preempt a sale on the date of institution of the
suit and on the date of passing of decree, the loss of such right subsequent to
the decree of the first court would not affect his right or maintainability of
the suit for pre- emption.
4. A
pre-emptor who after proving his right on the date of sale, on the date of
filing the suit and on the date of passing of the decree by the first court,
has obtained a decree for preemption by the Court of first instance, such right
cannot be taken away by subsequent legislation during pendency of the appeal
filed against the decree unless such legislation has retrospective operation.
Coming
to the second category of decisions it may be noted that while the view of law laid
down in first category of decisions held the field, the Federal Court in the
case of Lachmeshwar Prasad Shukul & Ors. vs. Keshwar Lal Chaudhuri &
Ors. [AIR 1941 Federal Court 5] while interpreting Section 7 of the Bihar
Money-lenders Act, 1939 which was found retrospective held that once the decree
of the High Court had been appealed against, the matter becomes sub-judice
again and thereafter the appellate Court had seisin of the whole case, though
for certain purposes, e.g., execution, the decree was regarded as final and the
Courts below retained jurisdiction. The principle of law laid down by the
Federal Court has to be understood in the context of the provisions of the Act
which the learned Judges were interpreting. The Chaudhuri (supra) was followed
in Ram Lal vs. Raja Ram & anr. [1960 Punjab Law Reporter 291]. The High Court was of the view that appeal being
continuation of original proceedings and re-hearing the suit, the amending Act
being retrospective has to be taken into consideration and given effect to not
only in the fresh suit filed or suit pending but also in cases where appeal is
pending and not decided. In nut-shell, the High Court was of the view that
appeal being continuation of a suit, the appellate court is entitled to take
into account the change in law which is retrospective. The decision of Punjab
& Haryana High Court in Ram Lal vs. Raja Ram (supra) was Constitution Bench
of this Court in Ram Sarup case (supra) held that Section 31 of amending Act 10
of 1960 being retrospective, the right to pre-empt a sale which had accrued
before coming into force of the amending Act stood defeated. The Constitution
Bench also noted and explained that in Lachmeshwar Prasad Shukul vs. Keshwar Lal
(supra), the Federal Court was construing Section 7 of the Bihar Money-lenders Act which had retrospective operation.
The
decision in Ram Sarup vs. Munshi (supra) was followed by another Constitution
Bench of this Court in Amir Singh & Anr. vs. Ram Singh & Ors. [1963 (3)
SCR 884] wherein, this Court while interpreting section 31 introduced by the
Punjab Amending Act 1960 reiterated that retrospective operation of section 31
necessarily involves effect being given to the substantive provisions of
amended section 15 by the appellate court, whether the appeal before it is one
against a decree granting preemption or one refusing that relief.
The
legal position that emerges on review of the second category of decisions is
that the appeal being continuation of suit the appellate court is required to
give effect to any change in law which has retrospective effect.
We
shall now proceed to notice the third category of decisions cited at the Bar.
The first decision in this category of cases is decision in Karan Singh &
Ors. vs. Bhagwan Singh (dead) by L.Rs. & ors.[1996 (7) SCC 559] wherein it
was held that an appeal being continuation of the suit, the right to claim
preemption must be available on the date when the decree is finally to be
affirmed and needs to be modified at the time of disposal of the appeal and
since substituted Section 15 of the Act came into force during pendency of the
appeal, the right and remedy of the preemptor stood extinguished.
This
decision was followed in Ramjilal vs. Ghisa Ram (supra) wherein it was held
that since substituted section 15 introduced by amending Act of 1995 having
come into force during pendency of appeal which is continuation of the suit,
the right and remedy of the plaintiff stood extinguished and as a result of
which the suit for pre- emption was not maintainable.
The
legal principle that emerges out of the aforesaid decisions is that an appeal
being continuation of suit, the right to pre-empt must be available on the date
when the decree is made and is finally to be affirmed or needs to be modified
at the time of disposal of the appeal and where right and remedy of plaintiff
has been taken away statutorily during pendency of appeal, the suit must fail.
After
having heard counsel for the parties and carefully gone into the decisions
cited at the Bar we are in respectful agreement with the statement of law
expressed in the first and second categories of decisions. However, we regret
to express of our disagreement with the decisions in third category of
decisions for the reasons hereinafter stated.
In
modern time, the right of pre-emption based on statutes is very much a maligned
law. During hearing of these appeals such rights have been characterised as
feudal, archaic and outmoded and so on. But its origin which was based on
custom and subsequently codified was out of necessity of the then village
community and society for its preservation, integrity and maintenance of peace
and security. In changed circumstances, right of pre-emption may be called
outmoded, but so long it is statutorily recognised, it has to be given the same
treatment as any other law deserves. The right of pre- emption of a co-sharer
is an incident of property attached to the land itself. It is some sort of
encumbrance carrying with the land which can be enforced by or against the
co-owner of the land. The main object behind the right of pre-emption either
based on custom or statutory law is to be prevent intrusion of stranger into
the family holding or property. A co-sharer under law of pre-emption has right
to substitute himself in place of stranger in respect of portion of the
property purchased by him meaning thereby where a co-sharer transfers his share
in holding, the other co-sharer has right to veto such transfer and thereby
prevent the stranger from acquiring the holding in an area where law of
pre-emption prevails. Such a right at present may be characterised as archaic,
feudal and out-moded but this was law for nearly two centuries either based on
custom or statutory law. It is in this background the right of pre-emption
under statutory law has been held to be mandatory and not mere discretionary.
The Court has no option but to grant decree of pre- emption where there is a
sale of a property by another co-sharer.
And
for that reason the Courts consistently have taken view that where there is a
sale of holding or property by a co-sharer, the right of a pre-emption is
required to be settled at the earliest either on pre- emptor's proving his
qualification to pre-empt on the date of the sale, on the date of filing of
suit, and on the date of the decree of the Court of the first instance or
vendee improving his status till the adjudication of suit for pre-emption and
after adjudication of suit any loss of qualification by the pre-emptor or
vendee improving his status equal or above to right of pre-emptor is of no
consequence. In Zahur Din vs. Jalal Din (supra) a full Bench of Lahore High Court
while expressing necessity for settlement of rights of the parties at the
earliest, held thus:
"It
seems to be essential that a line should be drawn at some stage when the race
between a pre-emptor and a vendee ought to come to an end and after having the
well-known landmark of the date of the sale behind - as one now must - the
farthest limit that can be granted to a vendee is that of the time of
adjudication of the suit by the trial court." (emphasis supplied) As
noticed earlier, in Hans Nath vs. Ragho Prasad Singh (supra) Privy Council held
that a pre-emptor to maintain a suit for pre- emption is required to prove his
right of pre-emption on three important dates. The claimant must possess right
of pre-emption on the date of sale. The claimant must possess the same right on
the date when the suit is instituted and that right should continue to exist on
the date of adjudication of the suit. However, it is matter of no consequence
whether the trial court decrees or dismisses the suit. It has also been the
consistent view of Privy Council and various High Courts that a pre-emptor must
possess qualification to pre-empt a sale on the date of decree of the Court of
first instance only for maintainability of the suit although it is immaterial
that pre-emptor looses the right of pre-emption after the adjudication of suit
either by his own act or vendee improving his status equal to pre-emptor during
pendency of appeal filed against the decree of the trial court. This view of
law is in consonance with the object behind the right of pre- emption and held
the field for over a century with which we are in respectful agreement, as
nothing has been shown to us which may persuade us to take a contrary view and
disturb the settled law.
It was
argued by learned counsel for the appellant that an appeal being continuation
of suit, the appellate court is required to notice and consider the subsequent
event, namely, loss of qualification by the pre-emptor during pendency of an
appeal. In fact, argument is that where a co-sharer looses the right to
pre-empt during pendency of appeal the pre-emptor's suit must fail. It is no
doubt true that in certain context an appeal is continuation of suit and
appellate court is rehearing the suit, but such wide appellate power has not
shown to be exercised to affect the vested right of a pre-emptor. It is not
disputed that a claimant's right to get the property in preference to the
vendee is an inchoate one upto the date of adjudication of the suit but it
becomes effective as soon as a decree is passed in his favour. Order 20
sub-rule (1) of Rule 14 CPC provides that where a court decrees a claim to
pre-empt in respect of a particular sale of property and a decree holder has
deposited the purchase money along with the cost of the suit in the Court, the
vendee is required to deliver possession of the property to the decree holder
and title to the property stands transferred in favour of claimant. In view of
said provision, on deposit of purchase money in the Court by the claimant the
right and title to the property vest in pre-emptor and it becomes vested right
of the pre-emptor. The right of pre-emption prior to decree may be weak but
after it becomes vested right, it can only be taken away by known method of
law. The loss of qualification of pre-emptor or vendee acquiring status above
to pre-emptor during pendency of appeal cannot be allowed to influence the
Court as a Court of Appeal is mainly concerned with the correctness of the
judgment rendered by the Court of first instance. As earlier noticed that an
appellate court is entitled to take into consideration subsequent event taking
place during pendency of appeal and a Court in an appropriate case permits
amendment of plaint or written statement as the case may be but such amendment
is permitted in order to avoid multiplicity of proceeding and not where such
amendment causes prejudice to the plaintiff's vested right rendering him
without remedy. It is thus only those events which have taken place or rights
of the parties prior to adjudication of pre-emption suit and which the trial
court was entitled to dispose of, can only be taken into consideration by the
appellate court. We find support of our view from decision in Sakina Bibi vs. Amiran
(supra) wherein the High Court of Allahabad held that a Court of Appeal was
only required to see whether the trial court had wrongly dismissed the claim of
pre-emptor and it is irrelevant that during the pendency of appeal land was
sold in an execution proceeding in another suit. In a pre-emption case where an
appeal is filed against the decree of court of first instance, the scope of
appeal is confined to the question whether the decision of the trial court is
correct or not. This being the legal position which held the field for over a
century any subsequent event taking place during pendency of appeal cannot be
allowed to be taken into consideration by the appellate court otherwise it may
displace the case of a pre-emptor.
It was
next contended on behalf of appellants that the view of law
(i) that
subsequent event taking place or change in law during the pendency of appeal
filed against the decree in a pre-emption suit cannot be looked into by the
appellate court and that
(ii)
all that is required to be seen by the appellate court whether decree passed by
the court of first instance on the basis of rights of the parties on the date
of adjudication, has ceased to be good law in view of decision of Choudhuri
(supra) wherein it was laid down that an appeal is rehearing of suit and
appellate court is entitled to consider any subsequent change in law which has
come into existence during pendency of appeal. On the strength the said
decision it was vehemently argued that the powers of appellate court are not
restricted only to see whether the decision of the first court was correct on
basis of rights of the parties on the date of adjudication of suit but also to
consider and give effect to subsequent change in law whereby a co- sharer's
right of pre-emption has been taken away during pendency of appeal. It is true
that in Lachmeshwar Prasad Shukul (supra) in the context of the provisions of
Bihar Money-lenders Act, it was laid down that once the decree had appealed
against, the matter became sub-judice again and thereafter the appellate court
had seisin of the whole case and therefore, the appellate court is entitled to
take into consideration any change in law taking place during pendency of
appeal and in such a situation the power of appellate court is not confined
only to find out whether the judgment of the Court of first instance was
correct.
It was
also argued that the amending Act being retrospective whatever the right the
plaintiff possessed on the date of adjudication of suit, the same stood
extinguished during pendency of appeal and therefore, the plaintiff suit must
fail. Since both the arguments are overlapping we shall consider the effect of
decision in Lachmeshwar Prasad Shukul vs. Keshwar Lal Choudhuri (supra)
slightly later.
Before
that it is necessary to consider the effect of substituted Section 15 introduced
by the amending Act of 1995 on the substantive rights of the parties. We would
now proceed to examine whether said provision of the amending Act is
retrospective as urged by learned counsel for the appellant.
In
Maxwell on the Interpretation of Statutes, 12th Edn. the statement of law in
this regard is stated thus:
"Perhaps
no rule of construction is more firmly established than thus - that a
retrospective operation is not to be given to a statute so as to impair an
existing right or obligation, otherwise than as regards matters of procedure,
unless that effect cannot be avoided without doing violence to the language of
the enactment. If the enactment is expressed in language which is fairly
capable of either interpretation, it ought to be construed as prospective
only.' The rule has, in fact, two aspects, for it, "involves another and
subordinate rule, to the effect that a statute is not to be construed so as to
have a greater retrospective operation than its language renders
necessary." In Francis Bennion's Statutory Interpretation, 2nd Edn, the
statement of law is stated as follows:
"The
essential idea of a legal system is that current law should govern current
activities.
Elsewhere
in this work a particular Act is likened to a floodlight switched on or off,
and the general body of law to the circumambient air. Clumsy though these
images are, they show the inappropriateness of retrospective laws. If we do
something today, we feel that the law applying to it should be the law in force
today, not tomorrow's backward adjustment of it.
Such,
we believe, is the nature of law.
Dislike
of ex post factor law is enshrined in the United States Constitution and in the
Constitution of many American States, which forbid it. The true principle is
that lex prospicit non respicit (law looks forward not back). As Willes, J.
said retrospective legislation is 'contrary to the general principle that
legislation by which the conduct of mankind is to be regulated ought, when
introduced for the first time, to deal with future acts, and ought not to
change the character of past transactions carried on upon the faith of the then
existing law." In Garikapati Veeraya s. N.Subbiah Choudhry 1957 SCR 488
this Court observed as thus:
"The
golden rule of construction is that, in the absence of anything in the
enactment to show that it is to have retrospective operation, it cannot be so
construed as to have the effect of altering the law applicable to a claim in
litigation at the time when the Act was passed." In Smt. Dayawait and
another vs. Inderjit and others 1966 (3) SCR 275, it is held thus:
"Now
as a general proposition, it may be admitted that ordinarily a court of appeal
cannot take into account a new law, brought into existence after the judgment
appealed from has been rendered, because the rights of the litigants in an
appeal are determined under the law in force at the date of the suit.
Even
before the days of Coke whose maxim - a new law ought to be prospective, not
retrospective in its operation - is off-quoted, courts have looked with dis-favour
upon laws which take away vested rights or affect pending cases. Matters of
procedure are, however, different and the law affecting procedure is always
retrospective. But it does not mean that there is an absolute rule of
inviolability of substantive rights. If the new law speaks in language, which,
expressly or by clear intendment, takes in even pending matters, the court of
trial as well as the court of appeal must have regard to an intention so
expressed, and the court of appeal may give effect to such a law even after the
judgment of the court of first instance." In Hitendra Vishnu Thakur &
ors. vs. State of Maharashtra & ors. [1994 (4) SCC 602] this
Court laid down the ambit and scope of an amending act and its retrospective
operation as follows:
"(i)A
statute which affects substantive rights is presumed to be prospective in
operation unless made retrospective, either expressly or by necessary
intendment, whereas a statute which merely affects procedure, unless such a
construction is textually impossible, is presumed to be retrospective in its
application, should not be given an extended meaning and should be strictly
confined to its clearly defined limits.
(ii)
Law relating to forum and limitation is procedural in nature, whereas law
relating to right of action and right of appeal even though remedial is
substantive in nature.
(iii)
Every litigant has a vested right in substantive law but no such right exists
in procedural law.
(iv) a
procedural statute should not generally speaking be applied retrospectively
where the result would be to create new disabilities or obligations or to
impose new duties in respect of transactions already accomplished.
(v) a
statute which not only changes the procedure but also creates new rights and
liabilities shall be construed to be prospective in operation unless otherwise
provided, either expressly or by necessary implication." In K.S.Paripoornan
vs. State of Kerala & others [1994 (5) SCC 593 @
p.636], this Court while considering the effect of amendment in the Land
Acquisition Act in pending proceedings held thus:
"....In
the instant case we are concerned with the application of the provisions of
sub-section 1 (1-A) of S.23 as introduced by the Amending Act to acquisition
proceedings which were pending on the date of commencement of the Amending Act.
In relation pending proceedings, the approach of the courts in England is that
the same are unaffected by the changers in the law so far as they relate to the
determination of the substantive rights and in the absence of a clear
indication of a contrary intention in an amending enactment, the substantive
rights of the parties to an action fall to be determined by the law as it
existed when the action was commenced and this is so whether the law is change
before the hearing of the case at the first instance or while an appeal is
pending (See Halsbury's Laws of England, 4th Edn., Vol.44, para 922)".
From
the aforesaid decisions the legal position that emerges is that when a repeal
of an enactment is followed by a fresh legislation such legislation does not
effect the substantive rights of the parties on the date of suit or
adjudication of suit unless such a legislation is retrospective and a court of
appeal cannot take into consideration a new law brought into existence after
the judgment appealed from has been rendered because the rights of the parties
in an appeal are determined under the law in force on the date of suit.
However, the position in law would be different in the matters which relate to
procedural law but so far as substantive rights of parties are concerned they
remain unaffected by the amendment in the enactment. We are, therefore, of the
view that where a repeal of provisions of an enactment is followed by fresh
legislation by an amending Act such legislation is prospective in operation and
does not effect substantive or vested rights of the parties unless made
retrospective either expressly or by necessary intendment. We are further of
the view that there is a presumption against the retrospective operation of a
statute and further a statute is not to be construed to have a greater
retrospective operation than its language renders necessary, but an amending
Act which affects the procedure is presumed to be retrospective, unless
amending Act provides otherwise. We have carefully looked into new substituted
section 15 brought in the parent Act by Amendment Act 1995 but do not find it
either expressly or by necessary implication retrospective in operation which
may effect the right of the parties on the date of adjudication of suit and the
same is required to be taken into consideration by the appellate Court. In Shantidevi
(Smt) and another vs. Hukum Chand [1996 (5) SCC 768] this Court had occasion to
interpret the substituted section 15 with which we are concerned and held that
on a plain reading of section 15 it is clear that it has been introduced
prospectively and there is no question of such section affecting in any manner
the judgment and decree passed in the suit for pre-emption affirmed by the High
Court in the second appeal. We are respectfully in agreement with the view
expressed in the said decision and hold that the substituted Section 15 in the
absence of anything in it to show that it is retrospective, does not effect the
right of the parties which accrued to them on the date of suit or on the date
of passing of the decree by the Court of first instance. We are also of the
view that present appeals are unaffected by change in law in so far it related
to determination of the substantive rights of the parties and the same are
required to be decided in light of law of preemption as it existed on the date
of passing of the decree.
Coming
to decision in Lachmeshwar Prasad Shukul vs. Keshwar Lal Choudhuri (supra),
which is the sheet anchor of the argument on behalf of appellants, it is
necessary to notice the facts of the said case and the provisions of law which
were interpreted by the Federal Court. In the said case, the plaintiff brought
a suit for recovery of money by sale of mortgaged property. The suit was partly
decreed. There was an appeal and cross-appeal to the High Court.
Before
the High Court one of the arguments raised was that section 11 of the Bihar Money-lender Act (3 of 1938) which was enacted by
the Bihar Legislature during pendency of the appeal before the High Court is
void. Accepting the arguments, the High Court held section 11 of the Act to be
void. Subsequently, the defendants preferred an appeal before the Federal
Court. While the appeal was pending Bihar Legislature repealed the Money-lender
Act of 1938 and substantially re-enacted it as the Bihar Money-lender Act 1939. Section 7 of the Act (Act
No.7 of 1939) which came for consideration before the Federal Court runs as
under:
"Notwithstanding
anything to the contrary contained in any other law or in any thing having the
force of law or in any agreement, no Court shall, in any suit brought by a
money-lender before or after the commencement of this Act or in any appeal or
proceeding in revision arising out of such suit, pass a decree for an amount of
interest for the period preceding the institution of the suit which, together
with any amount already released as interest through the Court or otherwise, is
greater than the amount of loan advanced, if the loan is based on a document,
the amount of loan mentioned in, or evidenced by such document." (emphasis
supplied) After passing of the Act 7 of 1939, it was argued before the Federal
Court that the defendants are entitled to the benefit of section 7 of the Act
1939 whereas the respondents' argument was based on the theory that hearing an
appeal the appellate court was only concerned to see whether or not , the
judgment of the Court was in conformity with the law as it stood at that time,
that judgment was given and further that as the Act of 1939 had not been
enacted at the time when the High Court decided the case, the Federal Court was
not competent to give relief to appellants in terms of Section 7 of the new
Act. In the background of the aforesaid facts, the Federal Court while interpreting
Section 7 of the Act was of the view that Section 7 has in terms been made
applicable to appeals in suits brought before the commencement of the Act and
that the decree in appeal yet remained to be passed. The Federal Court after
having found that Section 7 is retrospective held that the appellate court is
required to consider and give effect to legislative changes which have taken
place during pendency of the appeal as an appeal is continuation of suit. It is
in this context, the decision in Lachmeshwar Prasad Shukul vs. Keshwar Lal Choudhuri
has to be understood. Where a repeal of an enactment is followed by fresh
legislation, having no retrospective operation, an appellate Court is not
required to take into account the change in law but to dispose of the appeal on
the basis of right of pre- emption on the date of adjudication of suit. In that
view of the matter the decision in Lachmeshwar Prasad vs. Keshwar Lal (supra)
has no application in the present case. Subsequently, the view taken in Lachmeshwar
Prasad Shukul vs. Keshwar Lal Choudhuri was followed in Ram Lal vs. Raja Ram
(supra) by Punjab and Haryana High Court. In the said
case the plaintiff brought a suit for preemption on the ground of vicinage. The
trial Court dismissed the suit on the ground that the land fell outside the
limit of Panipat town and in that locality no custom of preemption prevailed.
On appeal the appellate Court reversed the decision of the trial Court and
decreed the suit. Second appeal was filed by the vendee before the High Court.
During pendency of appeal, the State Legislature amended the Punjab Preemption
Act by amending Act No.10 of 1960. By the said amending Act Section 15 of the
Parent Act was deleted and in its place new Section 15 was substituted whereby
the grounds on which the urban property was pre-empted was taken away. New
substituted Section 31 further provided that no court shall pass decree in a
suit for preemption whether instituted before or after the commencement of the
amending Act which is inconsistent with the provision of the Act. The High
Court applying the principles laid down in Lachmeshwar Prasad Shukul's case
held that an appeal being continuation of suit, the appellate Court is to take
into account the subsequent change in law which has retrospective operation.
The said decision of Punjab & Haryana High Court in Ram Lal vs. Raja Ram
was approved in Ram Sarup vs. Munshi & ors. (supra). In the said case, a
Constitution Bench of this Court held that section 31 of Amending Act 10 of
1960 being retrospective the right to preempt a sale which has accrued before
coming into force of the Amending Act stood defeated. The Constitution Bench
also noted and explained that in Lachmeshwar Prasad Shukul vs. Keshwar Lal Choudhuri
(supra), the Federal Court was construing Section 7 of Bihar Money-lender Act
which had retrospective operation and in that context held that appeal being
continuation of suit, the appellate court is required to take into account
subsequent change in law. It is appropriate to reproduce the following passage
from Ram Sarup's case:
"Though
we agree that there is a presumption against the retrospective operation of a
statute and also the related principle that a statute will not be construed to
have a greater retrospective operation than its language renders necessary, we
consider that in the present case the language used in section 31 is plain and
comprehensive so as to require an appellate court to give effect to the
substantive provisions of the Amending Act whether the appeal before it is one
against a decree granting pre-emption or one refusing that relief. The decision
of the Federal Court in Lachmeshwar Prasad vs. Keshwar Lal on which learned
counsel for the appellant relied fully covers this case. The question there
raised related to the duty of the Federal Court when an amending Act enacted
after the decree appealed from was passed adversely interfered with the rights
of the respondent before the Court. The learned Judges held that the provisions
of the Act were clearly retrospective and should be applied to the decree which
was the subject matter of appeal before it." (emphasis supplied) The
decision in Ram Swarup vs. Munshi (supra) was followed by another Constitution
Bench of this Court in Amir Singh & Anr. vs. Ram Singh & Ors. (supra).
In Amir Singh's case also another Constitution Bench of this Court interpreting
section 31 introduced by Punjab Amending Act 1960 reiterated that the
retrospective operation of section 31 necessarily involves effect being given
to the substantive provisions of amended section 15 by the appellate court
whether the appeal before it is one against a decree granting pre-emption or
one refusing that relief.
It may
be noticed that the phraseology and the words "before and after" used
in Section 7 of the Bihar Money-lender Act 1939 "no court shall in any
suit brought before or after the commencement of this Act" and in Section
31 of Punjab Amending Act 10 of 1960 "no court shall pass a decree in a
suit for pre-emption whether instituted before or after the commencement of the
Act" led the Constitution Bench of this Court to come to conclusion that
there is necessary intendment in the Act, that it has retroactive operation and
has to be taken into consideration by the appellate court and the powers of an
appellate court is not confined to see whether the judgment of the trial court
was correct or not.
Learned
counsel for the appellants strongly relied upon a decision of Amarjit Kaur etc.
vs. Pritam Singh & ors. etc. [1974 (2) SCC 363]. In the said case this Court
was interpreting section 3 of Punjab
Pre-emption Repealed Act 1973 which provided that on and from the commencement
of the Act no Court shall pass a decree in any suit for pre-emption. This Court
in the said case while applying principles laid down in Lachmeshwar Prasad Shukul
vs. Keshwar Lal Choudhuri (supra) held that as an appeal is rehearing, it would
follow that if the Court was to dismiss the appeal, it would be passing a
decree in a suit for pre-emption and therefore the only course open to the High
Court was to allow that appeal and that is what the High Court has done. The
said decision in Amarjit Kaur was followed in Sadhu Singh & Anr. vs. Dharam
Dev & Ors. [AIR 1980 SC 1654] wherein this Court reiterated that Section 3
of the Act interdicts the passing of the decree even in appeal as the appeal is
rehearing of the suit. In both the cases this Court without examining whether
the Section 3 of the Act is prospective or retrospective applied the principle
laid down by Federal Court in Lachmeshwar Prasad Shukul vs. Keshwar Lal Choudhuri's
case. We have not been supplied with the full text of the Act and in its absence,
we are unable to conclude that either the said Act was prospective or
retrospective in operation.
It appears,
this Court proceeded on the assumption that Section 3 of the Act was
retrospective in operation and, therefore, applied the principle laid down in Lachmeshwar
Prasad Shukul vs. Keshwar Lal Choudhuri (supra). In view of such facts and
circumstances, these decisions are of no assistance to the case of the
appellants.
During
the course of argument, a half-hearted argument was raised that a substituted
section in an Act introduced by an amending Act is to be treated having
retroactive operation. According to the learned counsel for the appellant, the
function of a substituted section in an Act is to obliterate the rights of the
parties as if they never existed. This argument is noted only to be rejected. A
substituted section in an Act is the product of an amending Act and all the effects
and consequences that follow in the case of an amending Act the same would also
follow in the case of a substituted section in an Act.
Coming
to the next question, learned counsel for the appellants after characterising
the right of pre-emption as archaic and feudal, argued that substituted Section
15 being a beneficial legislation enacted for general benefit of citizens, this
Court while construing it, is required to apply rule of benevolent construction
and on application of the said rule of construction the substituted Section 15
has to be given retroactive operation. Generally rule of interpretations are
meant to assist the Court in advancing the ends of justice. It is, therefore,
true in the case of application of rule of benevolent construction also. If on
application of rule of benevolent construction, the Court finds that it would
be doing justice within the parameters of law there appears to be no reason why
such rule of construction be not applied in the present case. But there are
limitations on the powers of the Court, in a sense that Courts in certain
situations often refrain themselves to apply rule of benevolent or liberal
construction. The judicial precedents have laid down that, ordinarily, where
and when the rule of benevolent construction is required to be applied and not
to be applied. One of the situations is, when the Court finds that by
application of rule of benevolent construction it would be re- legislating a
provision of statute either by substituting, adding or altering the words used
in the provision of the Act. In such a situation generally Courts have
refrained themselves to apply rule of benevolent construction. Under the cover
of application of rule of benevolent construction a Court is not entitled to re-legislate
a provision of a statute and to do violence with the spirit of the provision of
the Act so construed. The second situation is when the words used in a statute is
capable of only one meaning. In such a situation, the courts have been hesitant
to apply the rule of benevolent construction. But if it is found that the words
used in the statute give rise to more than one meaning, in such circumstances,
the Courts are not precluded to apply such rule of construction. The third
situation is when there is no ambiguity in a provision of a statute so
construed.
If the
provision of a statute is plain, unambiguous and does not give rise to any
doubt, in such circumstances the rule of benevolent construction has no
application. However, if it is found that there is a doubt in regard to meaning
of a provision or word used in provisions of an enactment it is permissible for
court to apply the rule of benevolent construction to advance the object of the
Act. Ordinarily, the rule of benevolent construction has been applied while construing
welfare legislations or provisions relating to relationship between weaker and
stronger contracting parties. Assuming that the amending Act is for general
good of people, we do not find the presence of the aforestated situations which
may call for application of such rule while construing substituted Section 15
introduced by the amending Act. A reading of substituted Section 15 would show
that the words used therein are plain and simple and there is no ambiguity in
it. The words used in the Section do not give rise to more than one meaning.
Further,
we do not find that amending Act either expressly or by necessary implication
is retrospective. If we hold that the amending Act is retrospective in
operation, we would be re-legislating the enactment by adding words which are
not to be found in the amending Act either expressly or by necessary intendment
and it would amount doing violence with the spirit of the amending Act. For
these reasons, the application of rule of benevolent construction is wholly inapplicable
while construing substituted Section 15.
Learned
counsel then argued that since the amending Act being a beneficial legislation,
retrospectivity is implied in it. Assuming, for the sake of argument that right
of preemption being a feudal or archaic law and therefore, the amending Act is
a beneficial legislation meant for general benefit of citizens but there is no
such rule of construction that a beneficial legislation is always retrospective
in operation even though such legislation either expressly or by necessary
intendment is not made retrospective. In the case of Moti Ram vs. Suraj Bhan
& Ors. [1960 (2) SCR 896] it was held thus:
"It
is clear that the amendment made is not in relation to any procedure and cannot
be characterized as procedural. It is in regard to a matter of substantive law
since it affects the substantive right of the landlord. It may be conceded that
the Act is intended to provide relief to the tenants and in that sense is a
beneficial measure and as such its provision would be liberally constructed;
but this principle would not be material or even relevant in deciding the
question as to whether the new provision is retrospective or not. It is well
settled that where an amendment affects vested rights the amendment would operate
prospectively unless it is expressly made retrospective or its retrospective
operation follows as a matter of necessary implication. The amending Act
obviously does not make the relevant provision retrospective in terms and we
see no reason to accept the suggestion that the retrospective operation of the
relevant provision can be spelt out as a matter of necessary implication."
We are in respectful agreement with the view taken in Moti be a weak right but
nonetheless the right is recognised by law and can be allowed to be defeated
within the parameters of law. A statute which affect the substantive right has
to be held prospective unless made retrospective either expressly or by
necessary intendment.
Learned
counsel appearing for the appellants strongly relied upon a decision of this
Court in the case of Rafiquennessa vs. Lal Bahadur Chetri (dead) through His
Representatives and others [1964 (6) SCR 876 @ 883] for contention that a beneficient
provision enacted by legislation has to be given retroactive operation. In the
said case it was held thus:
"This
provision clearly indicates that the legislature wanted the beneficient
provisions enacted by it to take within their protection not only leases
executed after the Act came into force, but also leases executed prior to the
operation of the Act. In other words, leases which had been created before the
Act applied are intended to receive the benefit of the provisions of the Act,
and in that sense, the Act clearly affects vested rights of the landlords who
had let out their urban properties to the tenants prior to the date of the Act.
That is one important fact which is material in determining the scope and
effect of s.5." In the said case Section 2 of the Act provided that
notwithstanding anything contained in any contract or in any law for the time
being in force, the provisions of the said Act shall apply to all
non-agricultural tenancies whether created before or after the date on which
this Act comes into force.. Section 5 further provided protection to the tenants
who have raised construction within 5 years from the date of leases executed in
their favour on the land let out to them for residential or business purposes.
While construing Sections 2 and 5 of the Act, this Court held that Section 2
and Section 5 give an unmistakably indication of the legislative intention to
make its provisions retrospective. For the said reasons the decision relied
upon has no application to the present case.
Learned
counsel for the appellant then relied upon a decision of this Court in the case
of H. Shiva Rao & Anr. vs. Celelia Pereira & Ors. [1987 (1) SCC 258]
for the proposition that a beneficial legislation has to be given retrospective
effect. In the said decision it was held that if the expressions are ambiguous,
then the construction that fulfils the object of the legislation must provide
the key to the meaning. But that is not the case here. We have already held
that there is no ambiguity in substituted Section 15 and, therefore, this
decision has no application in the present case. We accordingly reject the
arguments of the learned counsel for the appellants.
Lastly,
it was contended on behalf of the appellants that the amending Act whereby new
Section 15 of the Act has been substituted is declaratory and, therefore, has
retroactive operation.
Ordinarily
when an enactment declares the previous law, it requires to be given
retroactive effect. The function of a declaratory statute is to supply an
omission or explain previous statute and when such an Act is passed, it comes into
effect when the previous enactment was passed. The legislative power to enact
law includes the power to declare what was the previous law and when such a
declaratory Act is passed invariably it has been held to be retrospective. Mere
absence of use of word 'declaration' in an Act explaining what was the law
before may not appear to be a declaratory Act but if the Court finds an Act as
declaratory or explanatory it has to be construed as retrospective. Conversely
where a statute uses the word 'declaratory', the words so used may not be
sufficient to hold that the statute is a declaratory Act as words may be used
in order to bring into effect new law.
Craies
on a Statute Law, 7th Edition stated the statement of law thus:
"If
a doubt is felt as to what the common law is on some particular subject, and an
Act is passed to explain and declare the common law, such an Act is called a
declaratory Act." G.P. Singh on Principles of Statutory Interpretation
quoting Craies stated thus:
"For
modern purposes a declaratory Act may be defined as an Act to remove doubts
existing as to the common law, or the meaning or effect of any statute. Such
Acts are usually held to be retrospective. The usual reason for passing a
declaratory Act is to set aside what Parliament deems to have been a judicial
error, whether in the statement of the common law or in the interpretation of
statutes. Usually, if not invariably, such an Act contains a preamble and also
the word 'declared' as well as the word' enacted". But the use of the
words "it is declared is not conclusive that the Act is declaratory for
these words may, at times, be used to introduce new rules of law and the Act in
the latter case will only be amending the law and will not necessarily be
retrospective. In determining, therefore, the nature of the Act, regard must be
held to the substance rather than to the form.
If a
new Act is 'to explain" an earlier Act, it would be Without object unless
construed retrospective. An Explanatory Act is generally passed to supply an
obvious omission or to clear up doubts as to the meaning of the previous Act.
It is well settled that if a statute is curative or merely declaratory of the
previous law retrospective operation is generally intended." In Keshavlal Jethalal
Shah vs Mohanlal Bhagwandas & Anr. [1968 (3) SCR 623], this Court while
interpreting section 29(2) of the amending Act, held thus:
"An
explanatory Act is generally passed to supply an obvious omission or to clear
up doubts as to the meaning of the previous Act. Section 29(2) before it was
enacted was precise in its implication as well as in its expression; the
meaning of the words used was not in doubt, and there was no omission in its
phraseology which was required to be supplied by the amendment." In R. Rajagopal
Reddy (dead) by Lrs. & Ors. vs. Padmini Chandrasekharan (dead) by Lrs.
[1995 (2) SCC 630], it was held thus:
"Declaratory
enactment declares and clarifies the real intention of the legislature in
connection with an earlier existing transaction or enactment, it does not create
new rights or obligations. If a statute is curative or merely declaratory of
the previous law retrospective operation is generally intended....A clarificatory
amendment of this nature will have retrospective effect and therefore, if the
principal Act was existing law when the Constitution came into force the
amending Act also will be part of the existing law. If a new Act is to explain
an earlier Act, it would be without object unless construed retrospective. An
explanatory Act is generally passed to supply an obvious omission or to clear
up doubts as to the meaning of the previous Act" From the aforesaid
decisions, the legal principle that emerges is that the function of a
declaratory or explanatory Act is to supply an obvious omission or to clear up
doubts as to meaning of the previous Act and such an Act comes into effect from
the date of passing of the previous Act. Learned counsel for the appellants
strongly relied upon a decision of two-Judges Bench of this Court in Mithilesh Kumari
& anr. vs. Prem Behari Khare [1989 (2) SCC 95] in support of his argument.
In the said decision, it was held by this Court that The Benami Transactions
(Prohibition) Act 1988 being a declaratory Act, the provisions of Section 4 of
the Act has retroactive operation. The reliance of this decision by the
appellants' counsel is totally misplaced as this decision was overruled in R.
Raja Gopal Reddy vs. Padmini Chandrasekharan (supra) wherein it was held that,
the Act was not passed to clear any doubt existed as to the common law or the
meaning of effect of any statute and it was, therefore, not a declaratory Act.
We
have already quoted substituted section 15 of the amending Act but do not find
that the amending Act either expressly or by necessary implication intended to
supply an omission or to clear up a doubt as to the meaning of previous Section
15 of the parent Act. The previous Section 15 of the parent Act was precise,
plain and simple, There was no ambiguity in it. The meaning of the words used
in Section 15 of the parent Act was never in doubt and there was no omission in
its phraseology which was required to be supplied by the amending Act.
Moreover, the amending Act either expressly or by implication was not intended
to be retroactive and for that reason we hold that the amending Act 10 of 1995
is not a declaratory Act and, therefore, it has no retrospective operation.
For
the aforestated reasons, we approve the view of law taken in Didar Singh etc.
vs. Ishar Singh (dead) by Lrs. etc. (supra) and further hold that the decision
in the case of Ramjilal vs. Ghisa Ram (supra) does not lay down the correct
view of law.
The
result of the aforesaid discussion is that the amending Act being prospective
in operation does not affect the rights of the parties to the litigation on the
date of adjudication of the pre-emption suit and the appellate court is not
required to take into account or give effect to the substituted Section 15
introduced by the amending Act.
In
view of what has been stated above, these appeals fail and accordingly are
dismissed, but there shall be no order as to costs.
..........
...........................................J.
(S.P.
BHARUCHA) ........................................J.
(V.N. KHARE
) .... ...................................J.
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