1. This is plaintiffs first appeal against a judgment and decree passed by the District Judge, Poonch on 10-7-1969.
2. Brief facts are that the appellants' father Abdul Rashid executed what purports to be an agreement dated 22-12-1960 to sell in favour of respondent No. 1 whereby he sold 2 kanals of land for a consideration of Rs. 500. The entire sale price was received by him at the time of executing the agreement and possession of the land was handed over to respondent No. I at the same tine but for some reasons, not apparent from the record, instead of executing a sale deed out-right, an agreement to sell was executed stipulating that a sale deed would be executed in due course of time which not having been executed, for reasons not traceable from the record, the transferee brought a suit in the Court of Sub-Judge, Rawalakote for specific performance. On 9-4-1964 a compromise was arrived at as a result of which a decree for specific performance of the contract was passed in favour of the plaintiff i.e., respondent No. 1 in this appeal. Consequently on 11-4-1964 Abdul Rashid executed a registered sale deed in favour of the transferee where in the above facts have been narrated and it has also been stated that the transferee had already effected improvements in the suit land.
3. The appellants who are sons of the vendor brought a suit for pre-emption on 18-1-65 seeking to pre-empt the land on payment of Rs. 500. In his written statement the vendee specifically claimed costs of improvements to the extent of Rs. 4,000. At the time of the framing of issues, the vendee admitted the plaintiff's right of pre-emption. So the only point that remained for determination was as to whether the vendee was entitled to the costs of improvements? He examined Mohammad Akbar and Shabab-ud-Din whereas the plaintiff led no evidence. Both the witnesses have stated that the transferee had built two houses on the land in dispute and laid a fruit garden of nearly 150 to 200 trees and that he had also constructed retaining walls because the area is hilly. According to Shahab-ud-Din the cost of the houses is about Rs. 2,000. It is common ground that these improvements were made after the agreement to sell but before the passage of the consent decree. The Sub-Judge vide his judgment dated 8-11-1967 disallowed the improvements on the following grounds:-
(1) The improvements had been effected before the sale deed was executed.
(2) The exact costs of improvements had not been established.
4. The District Judge accepted the vendee's appeal and remanded the case back to the trial Court with the direction to appoint a commission to determine the costs of improvements. The learned District Judge was of the opinion that the improve--ments had been effected in good faith and, therefore, the transferee was entitled to its costs. It is against this judgment that the plaintiffs have come in appeal to this Court.
5. The learned counsel for the appellants strenuously argued that since a vendee was not entitled to improvements effected even after actual sale but before the expiry of the period of one year, he could not be held entitled to such compensation when they had been effected even before the acquisition of such perfect title.
6. The questions for determination, therefore, in this case are as follows :-
(1) Can a vendee be compensation for improvements made during the period of one year from sale-time allowed for pre-emption?
(2) If so, can he in case of an agreement to sell be allowed costs of improvements made before the execution of the sale deed but after the execution of the agreement to sell?
7. The question is riot free from difficulty. There is conflict of authority and the controversy has centred round tare interpretation of certain words in section 51 of the Transfer of Property Act which is reproduced below :- "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 there from 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 the 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 the value of such improvement."
8. "The amount to be paid or secured in respect of such improvement shall be the estimated value thereof at the time of the eviction.
9. When, under the circumstances aforesaid, the transferee has planted or sown on the property crops which are growing when he is evicted there from, he is entitled to such crops and to free ingress and egress to gather and carry them."
10. Under this section a transferee of immovable property is entitled to costs of improvements effected by him if it is found that he made these improvements believing in good faith that he was absolutely entitled to the said property. However, before proceedings to discuss the application of the section or the principle embodied therein to the facts of the present case, let us examine briefly the state of law on the point.
11. "He, however, was guilty of the blunder of asking for the pre-emption suit to be stayed without issue of process to the defendant. What lie should have done was to have the defendant served with the summons and then to ask for the suit to be stayed. In that case the defendant would have had no justification in claiming compensation for improvements begun after institution of the suit. But since it is not shown that the defendant knew anything about this pre-emption suit before he erected his buildings be is in equity entitled to compensation and the fact that the other suit was in progress does not appear to us to be material at all."
12. This shows that in the opinion of their Lordships costs of improvements effected after the expiry of the period of limitation fixed for the institution of such suits, can be granted provided it can be shown that the vendee had no knowledge of the institution of such a suit against him. Conversely it would mean that if he has knowledge of the institution of the suit, he is not entitled to costs of improvements because they would be treated as having been effected mala fide.
13. The next case, AIR 1926 Lah. 629 has gone a step farther. In this case a building was constructed 6 months after sale. There was no evidence that the vendee had any notice of the intention of the plaintiff to bring a suit. After the institution of the suit, an injunction was issued restraining him from making any construction. The process-server had reported that the house was under construction when he visited the spot and that the vendee defendant had refused to accept service He had not been examined as a witness and therefore his Lordship held that the report was inadmissible. As there was, therefore, no evidence that the house was constructed after the institution of the suit, it was held that he was entitled to compensation. It was held :- "It has been held by this Court on a previous occasion that the vendee of a land which is subject to the right of pre--emption is not necessarily deprived of his right to claim compensation for improvements made by him on the land by the mere fact that he erected the buildings with full knowledge of such right. His right to claim compensation depends upon the circumstances proved in each case, if it be established that he constructed the buildings bona fide, he is entitled to compensation. If, however, the building is constructed in anticipation of a suit for pre-emption then he would probably not be entitled to compensation. In the case before me the construction of the building was commenced about six months after the sale. It is not established that any building operations continued after the service of the summons or the order of injunction. The learned counsel for the plaintiff was unable to show that any notice of the plaintiff's intention to pre-empt the sale was served noon the vendee before he commenced the building operation. Under these circumstances it cannot be held that the building was constructed otherwise than bona fide. I hold, therefore, that the vendee was entitled to be compensated for the building constructed by him."
14. This ruling is of great importance in the sense that it lays down that a vendee is under no obligation to wait until the expiry of the period of limitation fixed for institution of pre-emption suits for effecting any improvements on the suit land unless he at least has notice of such intention on the part of a would-be pre-emptor. Even in that case, the learned Judge does not say categorically that the vendee would not be entitled to such cots. He has used the words "'probably". The conclusion has great force because the right of pre-emption is only an optional right. A person having a prior right of purchase as compared to the vendee may or may not bring a suit to enforce his right. There are many instances when no suits for pre-emption were filed and a study of facts and figures for any period would show that all sales are not pre-empted. Besides the vendee is the full owner of the property to the exclusion of the whole world. To hold that he must still wait for one year before effecting any improvements would amount to keeping in suspense his owner ship of the property. After all, right of pre-emption is only a right of substitution and until some-one come, forward claiming this right of substitution, he has every right to deal with the property as its owner and enjoy all incidents of ownership.
15. "It appears to me that logic and reason require that the term "transferee of immovable property" in section 51, Transfer of Property Act, be so construed as to include a person to whom immovable property has been conveyed otherwise than as required by the provisions of the Transfer of Property Act, sections 9 and 54 provided of course he fulfils the other requirements of section 51. 1, therefore, agree with the Hon'ble Judicial Commissioner that in the present case the respondents who are transferees of the property in question under an oral sale are entitled to the benefit of section 51, Transfer of Property Act provided they believed in good faith that they were absolutely entitled to the property in question."
16. "The existence of the right of pre-emption is well known in the province of Oudh and it is a legitimate presumption to hold that a person like the vendee's guardian in the present case would know of the existence of it. The vendees were not co-sharers in the village and even if he did not know all the details of the Law of Pre-emption, he would certainly know that every co-sharer in the village would have the right to pre-emption against his wards. He, I mean Sajad A.I, the guardian of the minor vendees has not shown that he took any step whatsoever to assure himself that the co- sharers would not pre-empt . . . . . . Under the circumstances, I am not prepared to hold that the vendees through their guardian can be said to have made the improvements believing in good faith that they had an absolute interest and consequently they are not entitled to any amount on account of improvements."
17. It means that improvements were allowed because at the time of making them the man was in possession of the land on account of an exchange against which no pre-emption was allowed. But it is important in the present case in this aspect that at the time of improvements, legal title had not passed to the vendee. All that had happened by then was that the parties had physically made over their lands to one another. They had yet to get the mutation sanctioned by making appearances before the mutation officer and admitting the factum of exchange. In other words it can be said that in the conventional sense the exchange was complete but in the legal sense it had yet to be completed.
18. Section 51 of the Transfer of Property Act is not strictly speaking applicable to such improvements because the vendee in such a case is in fact absolutely entitled to the property in question. So the case of a vendee is far superior and stronger than all those persons who have been given protection under section 51. Under this section it is not necessary that the transferee should in fact have a perfect title to the property, a title recognized by Law to be perfect. This section gives c protection to persons with defective title and if persons with such a title can get the costs of improvements, there is no reason why vendees who are fully and legally owners of their properties should not get such costs. The persons with defective title, in order to succeed under section 51 have to prove that they acted bona fide in that they believed themselves to be absolutely entitled to the property. They have to prove the bona fides' because their title is defective; and because their title is defective, that is why they cannot, as of right, claim compensation for improvements and have to make out a case for it by convincing the Court of their bona fides. Surely a man with a complete title to the property cannot be reduced to the level of a person with a defective title and then called upon to prove his bona fides. I think in such a case where a vendee under a registered sale deed, effects any improvements after the sale but before the expiry of the period of one year, he cannot be called upon to prove his bona fides in order to be able to get the costs of improvements. Being a full owner, the question of bona fides becomes irrelevant. Of course the pre-emptor is quite free and within his rights to, show that the vendee had notice of his intention to bring a suit for pre-emption and if he can persuade the Court that the vendee had such a notice before effecting such improvements, the; vendee then may be held not entitled to such compensation.
19. Now that it has been held that a vendee is entitled in the of notice, to the costs of improvements on the property after the sale but before the institution of the suit let us see if this principle can be extended to cases like the present one where the vendee is in possession of the suit property as a transferee under a defective title before the actual sale deed is executed and effects such improvements after acquiring such defective title but before the acquisition of a legal title. An analysis of section 51, Transfer of Property Act shows that it consists of the following ingredients :--
(1) The person in possession must be a transferee which means that he must have entered into possession not as a trespasser.
(2) He must have made the improvements in the belief of being absolutely entitled to the property.
(3) He must be evicted by a person who had a better title to the property as compared to his defective title.
20. The words "believing in good faith to be absolutely entitled.. Thereto" show that the Legislature has laid emphasis on the "goon faith" of the person effecting improvements and not on his being absolute owner of the property otherwise the words "believing in good faith" become unnecessary and redundant. Words "Absolutely entitled" are something distinct from the words "legally entitled".
21. The word "absolutely" is perhaps much wider. According to Webster's New International Dictionary, the word "absolute" is derived from the Latin word "absolutus" which in its term is derived from the word "absolvere". This word is composed of the words "ab meaning from and solvere meaning to loose." The word "absolute" has, therefore, been defined as something "free; disengaged; complete; free from external restraint or limitation; independent; unqualified etc. Etc." It seems to me, therefore, that the word "absolute" has been used in section 51 in a much wider and liberal sense with more of a physical rather than technical emphasis.
22. The term "good-faith" has not been defined in the Transfer of Property Act. It has been defined in section 3 subsection (20) of the General Clauses Act as follows :- "A thing shall be deemed to have been done in good faith where it is in fact done honestly, whether it is done negligently or not."
23. The Transfer of Property Act came into force in July 1882. The General Clauses Act came into force in 1897 after the enforcement of the Transfer of Property Act. The General Clauses Act in force at the time was the Act of 1868 which did not contain any definition of the term "good faith". It was for this reason that it was held in AIR 1921 All. 41 that this definition did not apply to the Transfer of Property Act. The term "good faith" is, though negatively, also defined in section 52. Penal Code which was enforced in 1860. It is as follows: --- "Nothing is said to be done or believed in good faith which is done or believed without due care of attention."
24. It will be seen that the General Clauses Act definition materially differs from the Penal Code definition. It was quite natural because the latter deals with crime. Some authorities such as AIR 1940 Oudh 256 which have laid down that due enquiry on the part of the transferee must be proved undo: section 51, seem in my view to have been influenced by this definition. It was held in AIR 1928 All. 41 that this definition was unworkable in relation to section 51.
25. The ordinary dictionary meaning of the words "good faith" is honesty of intention. Therefore, what is required under section 51, Transfer of Property Act is that the transferee must have made the improvements in the honest belief that he was absolutely entitled to the property in question.
26. Where this is proved, however defective his title may be, he is at enquiry entitled to its compensation. Equity has been defined by Spell as "something equivalent to natural justice or morality". Equity in any given situation would mean what would be fair in that situation.
27. Law presumes in favour of trust, truth, confidence and human honesty. So he can be presumed to have no reason to doubt that the sale-deed would not be executed. This confidence was not misplaced because although he had to seek the help of a Court of Law, the defendant admitted the claim.
28. An illiterate man living five thousand feet above sea-level, in surroundings where laws of Nature have an upper-hand; where present-day unbounded materialism has not yet so fully spread its shadows as to largely corrupt the basic human virtues. For such a man especially in such a situation, full payment of price and acquisition of possession in lieu thereof, cannot but be termed as having given him an honest belief that he had become owner of the land to the exclusion of the whole world. The belief may have been wrong but there is no doubt that he enter--tained it honesty; he ay have been rather negligent or careless; he, could have sought legal counsel but his failure to do so or his being negligence or careless in view of the facts of the case, do not defeat the equities in his favour. A degree of negligence and careless is inherent in human character. So proper allowance ought to be made for such essentially human defaults. It was held in AIR 1928 Mad. 609 that bona fides was not incompatible with ignorance of law and a certain degree of negligence.
29. While determining as to whether a person, seeking benefit; of section 51 was acting in good faith or not, the Judge ought to place himself in the mental, social and intellectual position of that particular person and then decide as to whether he was in the Circumstances of the case, acting in good faith or not. For a poor illiterate farmer from Poonch where average land holding per family G is barely eight kanals or so; where land is manufactured in the sense that hills or forests are broken, the stones dug and removed and then after years of hard toil, a kanal or a half brought under cultivation, a sum of Rs. 500 even in these days of inflation, is a huge amount and a farmer who pays it as price of land, has all the reason to believe himself to be absolutely entitled thereto.
30. 1, therefore, hold that the vendee is entitled to the costs of improvements and upholding the judgment and decree passed by the District Judge, dismiss this appeal. The parties shall, however, bear their own costs of this Court.