SINNETAMBY, J.—Tharnu Ponniahv. Velupillai Ponniah
1056 Present: Sinnetamby,J., and L. W. de Silva, AJ.TTTA1WTT PONNIAH, Appellant, and VELUPILIAI PONNIAH et al,
S. G. 522—D. G. Point Pedro, 4717fL
Thesavalamai—Pre-emption—Sale of property in guise of exchange—Ordinance
No. 59 of 1947.
Where a oo-owner purports to transfer his share of the common property to astranger in exchange for property belonging to the latter, the Court is* entitledto look into the circumstances of the transaction and decide whether or notthe alleged exchange is in fact a sale, for the purpose of pre-emption undo: thelaw of Thesavalamai.
Quaere, whether even a genuine exchange can be regarded as a sale within themeaning of Ordinance No. 59 of 1947.
-^.PPEAL from a judgment of the District Court, Point Pedro.
H. W. Jayewardene, Q.G., with B. Manihlcavasagar, for Plaintiff*
8. J. V. Chelmnayakam, Q.G., with 8. Thangarajah, for Defendants-
Cur. ado. milt.
October 30,1966. Sinnetamby, J.—
Plaintiff and the 1st defendant are the co-owners of the two allotments•of land described in schedule 1 and 2 of the plaint in extent 6 3/8 lachamSV.C and 7 kulis V. C. respectively. In relation to the 6 3/8 lachams calledMarakai the 3rd defendant owns a property to the north known asOpiarseemah and another to the south of it. The 7 kulis is to the east ofthe 3rd defendant’s land where she resides and which land is to thesouth of the 6 3/8 lachams belonging to the plaintiff and his co-owners.The 3rd defendant is not a co-owner of the plaintiff and the 2nd defendantis her husband.
According to the plaintiff’s evidence he and' the 1st defendant who is ■his cousin have not been on good terms for about 12 years. There•appears to have been some litigation between them and in about 1951 or1952 the plaintiff suggested to the 1st defendant through third partiesthat there should be an amicable division of the lands which formed thesubject matter of the action. He was unsuccessful and on the 15thSeptember; 1953, he sent to the 1st defendant a notice 1D1 through hisproctor asking for an amicable partition and in default he threatened toinstitute a partition action. He received no reply and on the 22nd October,1953, be instituted Partition Case No. 4365. In the meantime, on the
SINNBTAMBY, J,^-Thamu Ponniah tr. Velupillai Ponniah
27th September, 1953, the 1st defendant transferred his interest in thelands in question to the 2nd and 3rd defendants and obtained from 2ndand 3rd defendants a share of their land which lies to the north of the landreferred to in schedule 1 of the plaint wherein the 1st defendant residesand which has been stated to be 6 3/8 lachams in extent. The deedpurported to be a deed of exchange. The consideration is given asBs. 2,000 on the basis of the value of all the lands dealt with. Plaintiffthereupon instituted tire present action for pre-emption. His claim wasresisted on the ground that the deed P2 is in fact a deed of exchange andnot a deed of sale to which the provisions of Ordinance No. 59 of 1947can be said to apply. The learned District Judge-upheld this contentionand the appeal is against his finding.
Ordinance No. 59 of 1947 was introduced “ to amend and consolidatethe law of pre-emption governing the sale of the immovable property towhich the Thesavalamai now applies The word “ sale ” is not defined inthe Ordinance and must be deemed to have the same meaning as wasgiven to it before the passing of tins Ordinance.
hr his petition of appeal the plaintiff submitted that an exchangeconstituted in reality two sales and that the provisions of the Ordinancewould be easily defeated if an exchange is not held to be a sale. Counselon either side was unable to refer to either any decided case or to astatement in any of the textbooks wherein an exchange has been heldnot to be a sale for the purpose of pre-emption under the Law of Thesa-valamai ; but both Counsel were agreed—and for this proposition thereis ample authority—that the Court is entitled to look into the circum-stances of the transaction and decide whether an alleged exchange is infact a sale or not. In view of our finding in regard to the nature of thetransaction in this case it is not necessary for us to decide specificallywhether a genuine exchange is or is not a sale within the meaning ofOrdinance N°- 69 of 1947, but as Counsel for the respondents havereferred to certain Indian authorities I propose briefly to deal with hiscontention.
The Law of Pre-emption can historically, according to the text writers,be traced to the Mohamedan law. It did not constitute part of the Hindulaw which prevailed in India. At the present moment it has in Indiabecome a territorial law applicable also to persons other than Mohamedansand is in force in Bihar, parts of the Punjab and the North Western, Provinces. Under the old Muslim law an exchange was one of the re-quirements which a co-owner must establish before he could establishthe right of pre-emption. There was no distinction drawn between a saleand an exchange presumably because in primitive times barter was theonly form of sale known. The Agra Pre-emption Act, however, limitedthe right of pre-emption to the sale as defined in section 54 ol the Transferof Property Act and a genuine exchange has been thereafter held not tobe a sale in view particularly of the definition given to a sale in theTransfer of Property Act. An exchange is defined in section 118 of theTranafar of Properly Act. The Indian decisions therefore will not be of
SDfHETAMBY, J.—Thamu Ponmah v. Velupillai Ponniah
much assistance in determining the law applicable in Ceylon and the casecited by learned Counsel for the respondents reported in A. 1, B. 1937Allahabad 663 proceeds on a consideration of the relevant provisions ofsections 54 and 118 of the Transfer of Property Act. An exchange, there-fore, though it would not amount to a sale under the Agra Pre-emptionAct may well be a sale under the law in force prior to the enactment ofthe Act. The position in Ceylon seems to me to be no different to theposition that existed in India before the enactment of that Act. Iftherefore any guidance is to be sought from the Indian authorities anexchange should not be regarded as different in any sense from a sale,vide Aggarawala, 6th edition, p. 70.
It is a general principle of the law, as Counsel have conceded, that nomatter what designation or name parties give to a transaction a. Court isrequired to inquire into the circumstances and nature of that particulartransaction and decide what its legal effect would be. The mere fae,therefore that two transactions are called an exchange would not ne-cessarily make it so. We are satisfied that the facts established in thepresent case show that the transaction in question in fact constitutestwo sales and not an exchange and that therefore plaintiff is entitled topre-empt.
The learned District Judge in arriving at his conclusion that thetransaction was an exchange based bis findings upon the followinggrounds:
First, he held that the values of the properties transferred on thedeed P2 to the first defendant by the third defendant and to the 3rddefendant by the-1st defendant are equal in value and that thereforethere was no intention to defeat the objects of the Pre-emptionOrdinance.
I do not agree that this inference is necessarily correct. There can be agenuine exchange of property of different values, the difference beingadjusted by a money payment. The fact that there is a money paymenthas been held by the Indian Courts not to affect the nature of thetransaction. (Aggarawala, 6th Ed. p. 271).
The next ground is that the exchange was effected on accqunt ofmutual advantage and purely for the sake of convenience of possession.
But this may be equally applicable to sales as well as to exchange ofproperty.
Finally he relied on the fact that parties immediately entered intopossession of the properties exchanged.
This again is something which only shows the genuineness of the trans-action. Even in a sale unless it is accompanied by delivery of possessionit ruins the risk of being regarded as fictitious.
SINNET AMB Y, J.—Thamu Ponniah v. VelwpiUai Ponniah
The learned District Judge has not addressed his mind to the relevant,facts "with which I now propose to deal. There is the admitted enmityexisting between the plaintiff and the 1st defendant. The 1st defendant was. -asked to amicably partition the lands in 1951 and 1952 and decided onthis “ exchange ” only when there was imminent danger of a partitionaction being instituted as indicated in plaintiff’s letter 1D1 of 15/9/53.Almost immediately on receipt of that letter he executed this deed ofexchange on 27/9/53. The 2nd defendant states that it was the 1stdefendant who started the talk with regard to the exchange and he couldnot say whether at that time he was anxious to buy the land. The 1stdefendant did not get into the witness box and in the circumstances itwould not be unreasonable to conclude that at least he expedited thenegotiations in question, if he did not in fact start them, when he realisedthat a partition action was imminent. Another matter not consideredby the learned District Judge is the fact that by deed 1D2 entered intoearlier the 3rd defendant had sold to the 1st defendant 2 5/6 kulis of theland to the north of 1st defendant’s land for the purpose of fixing a wellsweep to the 1st defendant’s well which was very close to the boundary.If at that time 3rd defendant was anxious to extend his northernboundary some distance away from his kitchen and well he would haveexchanged the land he sold to the 1st defendant for a share of the 1stdefendant’s land to the south of it instead of doing so now. It is there-fore difficult to accept 2nd defendant’s evidence to the effect that he'would not have parted with his wife’s share in Opiarseemah but for thetransfer of his share of Marakai and the other land of 7 kulis. Had thisevidence been accepted as true it certainly would have supported stronglythe theory of an exchange. The learned District Judge has not referredto it at all.
Having regard to the state of feelings between the parties the failure toeffect an exchange when 1D2 was executed and the execution of P2 onlyafter the threat of a partition action coupled with the fact that 1stdefendant did not enter the witness box to satisfy the Court of hisintentions makes us come to the conclusion that this deed was not agenuine exchange. We are unable therefore to agree with the findings ofthe learned District Judge. In our view the 1st defendant went throughthe subterfuge of an alleged exchange only to defeat the plaintiff’s rightof pre-emption. We hold that the transaction must be regarded as twoseparate sales embodied in one document.
We accordingly set aside the judgment of the learned District Judgeand allow the appeal with costs in both Courts.
W. de Suva, A.J.—I agree.
THAMU PONNIAH, Appellant, and VELUPILLAI PONNIAH et al., Respondents