ALI HUSSAIN QAZILBASH, J.---Cross Ci\il Appeals bearing No. 132 of 1989 filed by Muhammad Siddique defendant/appellant and No. 539 of 1990 filed by Mst. Aziz Begum etc. Successor-in- interest of Maj. Abdul Ghafoor plaintiffs/appellants arising from a judgment and decree of the Lahore High Court dated 20-2-1989 are being disposed of by this Judgment.
2. The facts in brief are that Plot No. 17-A situate in Peoples Colony, Faislabad measuring about 4 kanals was allotted to Maj. Abdul Ghafoor, predecessor-in-interest of the appellants in Civil Appeal No. 539/90 on 6-9-1953 (hereinafter called the respondents, and its possession was delivered to him on 14-1-1957. Late Major Abdul Ghafoor got a plan prepared for the construction of a bungalow by an approved architect on 6-11-1956 an4P the same was sanctioned on 27-2-1959. Thereafter the Urban Rehabilitation Department, Government of West Pakistan, Lahore executed the sale-deed in favour of the of the said Major on 21-2-1966.
3. Major Abdul Ghafoor deceased remained in government service and posted outside Faisalabad till the year 1962. He asked Muhammad Siddique, appellant in Civil Appeal No. 132/89 (hereinafter called the appellant) who was his close friend to raise construction on the plot according to the building plan for the deceased. It is alleged that the respondent used to make payments to the appellant for the purpose of construction of the house. The appellant after raising superstructure started living in the house. Apprehending mischief at his hands, the respondent asked for the handing over of the possession of the house and on its refusal by the appellant a civil suit was filed by the respondent in 1967, it was followed by another suit with the permission of the Court on 22-1- 1.979 for a declaration that the respondent was owner in possession of the plot as well as the building raised thereon, rendition of accounts and also brayed for a permanent injunction restraining the appellant from interfering with his possession.
4. The suit was resisted and the ground taken by Muhammad Siddique appellant was that he was allotted a plot measuring kanals by the Urban Rehabilitation Department but he was interested in obtaining a larger plot. Since the respondent was his old friend, the latter offered that he would get the plot transferred to him from the department and that he (Muhammad Siddique) should make the requisite construction of a house therein which would entitle him to obtain the sale-decd.
Reference in this connection was made to Ex. D. 6 dated 15-5-1954 which is an application filed by Muhammad Siddique for the transfer of Plot No.17-A and Ex. D-4 an affidavit filed by Major Abdul Ghafoor. Thereafter he (Muhammad Siddique) took possession of the land and constructed a house thereon at his own expenses. It was alleged in the written statement that the market price of the plot was Rs. 9,000 but the value of the house that the appellant built for him was over Rs.1,00,000 and that the present suit is based on mala rides. In the meantime, Major Abdul Ghafoor died and the present respondents were brought on the record as his legal heirs.
5. The suit remained pending decision before the Civil Judge, Faisalabad and learned District Judge, Faisalabad on various issues. In the final round the trial Court vide its judgment dated 3-7- 1982 found that the plot was abandoned by the respondent in favour of the appellant who raised a building thereon at his own expenses at the cost of Rs.1,09,400 and that the successors-in-interest of Major Abdul Ghafoor were entitled to the cost of plot amounting to Rs.9,335.40, the rest of the suit was dismissed. In appeal filed by the respondents the learned District Judge as per his judgment dated 8-1-1985 took a contrary view and decreed the suit of the respondents on the condition that they would be liable to pay Rs.1,09,400 to Muhammad Siddique appellant. They were directed to pay the said amount within two months which they have already done.
6. The above decision compelled the appellant to file a Regular Second Appeal in the High Court which was allowed as per the impugned judgment wherein it was held that the deceased /plaintiff was bound to convey the plot to the defendant i.e., Muhammad Siddique appellant at the payment of then market value thereof, viz. Rs. 9,335.40 but then on the willingness shown by appellant to compensate plaintiffs/respondents by offering them ex gratia a sum of Rs. 20 lacs for the plot, the learned Judge accepted the appeal filed by Muhammad Siddique, set aside the judgment of District Judge, Faisalabad and instead decreed the suit of the plaintiffs/respondents only to the extent that they shall be given Rs. 20 lacs as compensatory price of the plot.
7. Leave in this case was granted to examine the conflict in legal provisions of section 51 of the Transfer of Property Act, 1882 and section 2 of the Mesne Profits and Improvements Act, 1855.
Further the competency of the present appeal on the question of its being time-barred was also to be examined.
8. We have heard the arguments of the learned counsel for the parties and have also gone through their written arguments.
9. The learned Judge who was seized of the appeal, relying on the cases of Willmott v. Barber reported in (1880) 15 Ch. D. 105 and Ramsden v. Dyson reported in (18W) LR 1, extracts of which have been taken from page 311 of the Transfer of Property Act (Seventh Edition) by Sardar Muhammad Iqbal Khan Mokal, accepted the R.S.A. Filed by the appellant and granted a decree to the respondents in the following terms:---- "The conditions referred to by the author were quite squarely available in this case inasmuch as the defendant committed a mistake in having failed to obtain a formal transfer deed; the plaintiff knew of his own rights and their inconsistency with those claimed by the defendant; the defendant expended money on a mistaken faith or belief that he was doing so as owner of the house; and lastly the plaintiff encouraged him to spend the money not only overtly but by abstaining from asserting his right. The view taken was that if these conditions were fulfilled, the equitable estoppel would go far beyond section 51 of the Transfer of Property Act and would compel the party estoppcd to make good his representation to give effect to the promise or expectation aroused by him in the mind of the opposite party. By his conduct established on the record beyond any manner of doubt whatsoever, the deceased plaintiff was bound to convey the plot to the defendant at "the then market value thereof". However, the appellant Muhammad Siddiq present personally in the Court himself and his counsel Kh. Habibullah, Advocate, both showed willingness to compensate the respondents by offering them ex gratia a sum of Rs.20 lac for the plot. One of the reasons for showing this grace was that the present respondents were progeny of the deceased plaintiff and were left orphans after his demise. As against "the then market value" of the plot amounting to Rs.9,335.40, paying the respondents a huge amount of Rs.20 lac even if out of grace, was a substantial increase. Views of the respondents in this behalf could not be taker, because their counsel Ch Khurshid Ahmad, Advocate, despite notice did not turn up.
The R.S.A. Is accepted, the impugned decree is set aside and instead the respondents' suit is decreed only to the extent that they shall be given Rs.20 lac (Rupees twenty lac only) as compensatory price for the plot. This amount may be deposited with the trial Court for respondents within three months as from today. The accretion, if any, on the deposit of this amount shall go to the respondents. In case the said amount is not deposited with the trial Court within the period fixed above, the present appeal shall stand dismissed with costs throughout."
10. The appellant in spite of the offer on the basis of which the decree was granted in favour of the respondents---the offer still standing, has challenged the above judgment on the grounds that the order of the Courts below as to the ownership of the plot in dispute vesting in the respondents is against the record. The document executed on 4-2-1966 and registered on 21-2-1966, asserted by the respondents as a sale-decd, is nothing but an agreement to sell and as such no title in respect of the suit land vested in the respondents. He further submitted that what the parties intended to do in the year 1954 is borne out by the appellant's application dated 15-5-1954 and an affidavit submitted by the respondent on the same day. In the said application the appellant had expressed that the smaller plot of 2 kanals which had earlier been given to him be cancelled and his name be included against the larger plot (in dispute) alongwith the respondent which was duly supported by him as per his affidavit, and that the amount paid by the appellant be retained by the department as first instalment for the plot in dispute; the appellant was also willing to pay the remaining amount of the consideration to the department. Subsequent conduct of the appellant also shows that it was he who was entitled to the plot and the conduct of the respondent was that he did nothing to prevent the appellant from expending money and treating the property as his own. Lastly, he submitted that since the respondent has refused the offer made, it was required of the Court to have restored the judgment and decree passed by the trial Court. Reliance in support of the above was placed by him on Forbes v. Rally (87 I.C. 1925 page 318) and Ahmed Yar Khan and others v. Secretary of State for India in Council (1901) 28 Indian Appeals 211. Support was also sought by him from the authorities relied upon by the learned Single Judge.
11. As against the above the learned counsel for the respondents submitted that section 2 of the Mesne Profits and Improvements Act, 1855 applies with statutory force while only the principles of section 51 of Transfer of Property Act, 1882 are applicable. In view of this matter no relief can be granted to the appellant under section 51 of the Transfer of Property Act, 1882. Since the respondent had made improvements on the land under the bona fide claim of title, therefore, under the provisions of section 2 of the Mesne Profits and Improvements Act, 1855 he is only entitled either to remove the superstructure or to get a compensation for the construction raised. Section 2 ibid which applies with statutory force gives absolute option to the respondents to purchase the interest of the person making improvements at the value thereof, irrespective of the value of such building or improvement. Therefore, the Court has acted illegally in allowing the appeal. Reliance was placed by him on a large number of authorities some of which are: Thakoor Chandar Paramanik and others v. Ramdhan Bhuttacharjee (Sutherland Weekly Reports Vo1.6, 1866 page 228); Channan Din and another v. Mt. Taban and others (AIR 1926 Lahore 694); Kalyam Das v. Jan Bibi and another (AIR 1929 Allahabad 12); Badal Chandra Sadhukhan v. Debendra Nath Dcy (AIR 1933 Calcutta 612); Gangadhar Tukaram Akul v. Rachappa Nagappa Mnage (AIR 1929 Bombay 246); Karan Singh and another v. Budh Sen and others (AIR 1938 Allahabad 342; J. Narayana Rao v.
V.G. Basavarayappa and others (AIR 1956 Supreme Court (India) 727); Jan Muhammad v. Mst.
Zubaida Begum (1982 SCM R 367); and Mst. Yasmeen Akhtar v. Mukhtar Hussain 1989 CLC 2066.
12. The two provisions i.e., 51 of the Transfer of Property Act, 1882 and section 2 of the Mesne Profits and Improvements Act, 1855 are in controversy before us. The texts of both the provisions arc given below:---- SECTION 51 OF THE TRANSFER OF PROPERTY ACT, 1882.
"When the transferee of immovable property makes any improvement on the property, believing in good faith that he is absolutely entitled thereto, and he is subsequently evicted therefrom by any person having a better title, the transferee has a right to require the person causing the eviction either to have the value of improvement estimated and paid or secured to the transferee, or to sell his interest in the property to the transferee at the then market-value thereof, irrespective of the value of such improvement.
The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction.
SECTION 2 OF THE MESNE PROFITS AND IMPROVEMENTS ACT, 1855 "if any person shall erect any building or make an improvement upon any lands held by him bona fide in the belief that he had an estate in fee---simple, or other absolute estate, and such person, his heirs or assigns, or his or their under-tenants, be evicted from such lands by any person having a better title, the person who erected the building or made the improvement, his heirs or assigns, shall be entitled either to have the value of the building or improvement so erected or made during such holding and in such belief, estimated and paid or secured to him or them, or, at the option of the person causing the eviction, to purchase the interest of such person in the lands at the value thereof, irrespective of the value of such building or improvement: Provided that the amount to be paid or secured in respect of such building or improvement shall be the estimated value of the same at the time of such eviction."
13. Under both the provisions, relief is granted on the basis of equity, honesty and good conscience.
Both the provisions have two parts. The first part of both the sections invests the transferee/any person, under the threat of eviction who believing in good faith and under bona fide belief of being a rightful owner, claim and recover the value of the improvement or cost of construction made from the person causing his eviction. The compensation so paid or secured shall be on estimated value thereof at the time of eviction. The parties are not at variance so far the above is concerned.
It is only the second part of both the sections which is in conflict and has given rise to the present litigation. In the second part of section 51 of the Transfer of Property Act option to sell his interest to the transferee rests with the owner of the land whereas under the second part of section 2 of Act XI of 1855 such an option though again given to the owner but he is to purchase the interest of the person under the threat of eviction. Option in any case is with the owner of the property, he is the sole arbiter whether to sell his interest in the property at the hands of the occupant or to purchase the interest of the person in occupation irrespective of the value of such building or improvement.
14. In the present case the trial as well the second appellate Court has deprived the owner of the suit land of the exercise of such an option. Both the Courts have allowed the respondent the cost of land but the High Court had increased it to Rs.20 lac at the behest of the appellant. In doing so both the Courts have obviously applied the principle of equitable estoppel against the respondent, more particularly principles of promissory estoppel.
15. The question now to be considered is whether in the facts and circumstances of the case, the High Court was justified in applying the above principle. The perusal of record shows that it was so.
Undoubtedly the appellant and the predecessor-in-interest of the respondents were close friends.
Though the disputed land was transferred in the name of the respondent and it was he who ultimately got the document executed on 14-2-1966 and registered on 21-2-1966 in his name but the perusal of application of the appellant dated 15-5-1954 Exh.D.6 and the affidavit of the respondent of the same date Exh.D.4 go a long way to show that there existed certain arrangement between the parties as to the ownership of the suit land. The appellant on the basis of the above must have believed in good faith and in bona fide manner that he was absolutely entitled to the suit land. There is no denying the fact that the appellant had occupied the suit land, raised the construction and completed the same at his own cost. It is also established on record that the respondent did not make any contribution towards the laying out, raising of construction or the cost of construction. The construction of the building must have consumed a period of at least one year. Thus it seems that the construction raised was with the express approval of the respondent because there is not an iota of evidence that the respondent had ever objected to the raising of construction etc., verbally, through any written notice, or through the Court of law. After the construction the appellant is alleged to have installed electricity and telephone connections in the house, again without any objection from the side of the respondent. The appellant obviously incurred a huge sum of money on raising construction on the bona fide mistaken belief that he was doing so as an owner of the house. The conduct of the respondent obviously was based on bad faith. Thus the principle of equitable estoppel has rightly been held by the learned Single Judge to have gone beyond the provisions of both the Acts and non-suited the respondents for one who seeks equity must do equity.
16. As a result of the above, we uphold the findings of the learned Single Judge as per the impugned judgment. Thus Civil Appeal No.132 of 1989 is dismissed as withdrawn. The appellant (Muhammad Siddique) is directed to comply with the orders of the High Court within three months from today.
1.7. As for Civil Appeal No.539 of 1990, in view of our finding in the connected appeal, this appeal automatically fails and is dismissed with no order as to costs. Thus the question that this appeal was time-barred has become redundant and need not be dilated upon. The respondents are also allowed to withdraw the sum of Rs.1,09,400 deposited by them under the orders of the learned District Judge, Faisalabad.