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TMI Blog1942 (5) TMI 5X X X X Extracts X X X X X X X X Extracts X X X X ..... Singh was. The Deputy Commissioner held these facts proved, and accordingly declared the mortgage void and directed possession of the land to be restored to the legal representatives of the alienor. Daulat Singh then brought the present suit asking for a declaration that he was a mortgagee of the land and that the impugned Act was ultra vires the Punjab Legislative Assembly, and for an injunction restraining the Defendants from taking proceedings under the impugned Act to obtain possession of the land from him. 2. The trial Court impleaded the Punjab Province as a Defendant and held that the impugned Act was ultra vires the Punjab Legislative Assembly both under Section 292 and Section 298(1) of the Government of India Act, 1935. In appeal to the High Court it was admitted that the objection to the impugned Act based on the terms of Section 292 of the Government of India Act could not be supported in view of the decision of this Court in the case of theUnited Provinces v. Atiqa Begum [1940] F.C.R. 110. But the High Court upheld the decision of the trial Court that the impugned Act was invalid by virtue of Section 298(1) of the Government of India Act. 3. M. Saleem, A.G. of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure prohibition, namely, that those persons who are affected will not be able to hold land after the passing of the Act in question. 4. Rai Bahadur Badri Das and Sardar Sant Singh for the first Respondent. Section 298(1) of the Constitution Act confers a privilege on British Indian subjects of His Majesty entitling them to all posts under the Crown and also to acquire property. In other words it removes disabilities depriving them of the right to acquire property for reasons of descent, religion, place of birth, and colour, whether the disability is imposed by an old or a new enactment. No law debarring a person from acquiring or holding property on account of his descent can be enforced, nor can a new measure having that effect be enacted by the Legislature. 5. Under the Punjab Alienation of Land Act, 1900, a person not belonging to certain tribes cannot permanently acquire land from a person belonging to those tribes even though he resides in the same district as the alienor. To this extent the provision goes against Section 298(1) unless the alienation is covered by the exception in Section 298(2) of the Constitution Act. The Punjab Alienation of Land Act, however, gives c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions, deprived in effect the holders of beneficial interests in the property of their vested interests and to that extent offended against the, Constitution Act if the deprivation was based on descent alone. The benamidars who were being deprived of their property under the Punjab Act belonged to the non-agricultural tribes. The disqualification was due to the fact that they were not descended from an ancestor who was included in the agricultural tribe by a notification under the Punjab Land Alienation Act. Two people might be carrying on the same vocation in life but one who was descended from an agricultural tribe possessed the right to acquire agricultural land, while the other was prevented from holding certain property because of his descent from a non-agricultural ancestor. This was a clear violation of the fundamental right embodied in the Constitution Act. MAURICE GWYER, C.J. 9. I have had an opportunity of reading the judgment which is about to be delivered by my brother Varadachariar and I concur both in its reasoning and its conclusions. In these circumstances I do not think it necessary to deliver a separate judgment of my own. SRINIVASA VARADACHARIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion which under Section 3 is not to take effect as such until the sanction of the Deputy Commissioner is given thereto shall, until sanction is given or if sanction has been refused, take effect as a usufructuary mortgage in the form permitted by Section 6, for such term not exceeding 20 years and on such conditions as the Deputy Commissioner considers to be reasonable. Section 21 excludes the jurisdiction of civil courts in very comprehensive terms: and Section 20 provides that no legal practitioner shall appear on behalf of any party interested in any proceedings before a Revenue Officer under the Act. The Act was in the first instance made applicable to all the territories for the time being administered by the Lieutenant-Governor of the Punjab ; but Section 24 empowers the Provincial Government, by notification in the Official Gazette, to exempt any district or part of a district or any person or class of persons from the operation of the Act or of any of the provisions thereof. 12. A practice has long been common in this country for intending alienees of land to take the document of transfer in the names of their friends or relatives, sometimes with a view to defeat the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Penal Code against a non-agriculturist creditor for having brought about a mortgage of the above kind ; but the High Court quashed the charge on revision. In Shamas-ud-din v. Allah Dad(sic) Khan A.I.R. 1925 Lah. 65, the High Court held that as between the vendor and the ostensible vendee, the latter was entitled to recover possession of the property, whatever the legal position as between the ostensible vendee and the alleged non-agriculturist beneficiary might be. In Qadir Baksh v. Hakam I.L.R. (1932) Lah. 713, the High Court overruled a contention advanced by the ostensible mortgagee that in a proceeding between himself and the non-agriculturist beneficiary the latter could not pleaded the true facts and defeat a claim put forward by the former in his own right. 14. The last of the above decisions was given in 1932 by a Full Bench of five Judges of the Lahore High Court, and the impugned Act was passed in 1938 to deal with the situation created by that decision. The mortgage transaction out of which this litigation has arisen was one of those entered into during the interval, on July 4, 1933, presumably on the strength of the High Court's decision. I may add that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erlying it. The difference, as will be presently seen, has some bearing on the discussion even of the question of the extent of the operation of the enactment. Section 298(1) of the Constitution Act provides that- no subject of His Majesty domiciled in India shall on grounds only of religion, place of birth, descent, colour or any of them be ineligible for office under the Crown in India or be prohibiting on any such grounds from acquiring, holding or disposing of property or carrying on any occupation, trade, business or profession in British India. 17. It was urged on behalf of the Plaintiffs-Respondents that the Act of 1900 and the impugned Act of 1938 must be held to be inoperative in so far as they prohibit persons from acquiring or holding property on grounds of descent only; no question arises in this case of any disability founded on religion, place of birth or colour. The Appellant contended that there is nothing in the Acts contravening Section 298(1). Alternatively, it was argued on his behalf that the operation of all provisions in these Acts was saved by s.s. (2) of Section 298. It will thus be necessary to consider the precise effect of this Sub-section also. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alone. Subject to the other arguments to be presently noticed, it seems to me to be reasonably clear that the impugned Act contravenes Section 298(1) of the Constitution Act, so far as it makes it impossible for persons standing in the same position as in the illustrations given above to acquire or hold any interest in land (of the kind included in the definition in the principal Act) as beneficiaries under a benami transfer in favour of a qualified transferee, while the Act of 1900 makes it impossible for such persons to acquire a permanent interest in such land by a direct transfer to themselves. It has not been contended by the Advocate-General of the Punjab that such is not the effect of the enactments in question; but he contends- (1) that the provision in the impugned Act which is numbered as Section 13-A of the principal Act is not in terms discriminatory, and (2) that the discrimination, if any, is not based on descent alone, because the prohibition is based on the benami character of the transaction. 19. It is not easy to follow these arguments. 20. The provision in Section 13-A is clearly discriminatory, because it draws a distinction between transactions in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... One. of the other grounds specified there, namely, religion, is no doubt sometimes changeable at the will of parties; but it is hardly to be expected that parties will change their religion merely to obtain a qualification or escape from a disqualification for the purposes mentioned in the section, and certainly the law will not drive them to do so. 21. It has next been suggested that the discrimination, if any, is based on the character of the land, that is, on its being land as defined in the principal Act. I find it difficult to follow this argument as well. To take illustrations similar, to those given above, if in respect of land of that kind, the law declares that the alienation will be good if in favour of a member of a notified agricultural tribe, but bad if made in favour of one who is not a member of such a tribe, it is difficult to see how the discrimination is one based on the character of the land or that it is not one based on the status of the transferee. It has been said that it may be a matter of policy or public interest in certain parts of the country that certain kinds of lands should be secured to certain classes of people and be prevented from going into t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdinarily alenable but of permitting alienation within limits of what is normally inalienable. Again when lands were held on service tenures or under special state grants, the condition of service or the terms of the grant limited the nature of the legal interest possessed by the holders and (as in the case of the Watandars Act Bombay Hereditary Offices Act, 1874 (Bom. Act. No. III of 1874)., referred to by my brother) the Legislature has sometimes continued some of these limitations, even when the tenure was placed on a statutory basis. 23. The contention that the discrimination in the Punjab Acts is based on the character of the land has another aspect which requires to be further considered. It was not clear to me whether the Advocate-General was prepared to go so far as to maintain that even a discrimination on the ground of descent would not offend Section 298(1), unless the prohibition in respect of acquiring, holding or disposing of property was absolute in extent, that is, it placed it beyond the man's power to acquire an inch of land any where in British India. An illustration with reference to eligibility for office, which is another of the subjects dealt with in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal incidents involved, it will be found that for all practical purposes then is little or no difference between a beneficiary under the English law and a beneficiary under the Indian Trusts Act, so far as the substance of their rights is concerned. I may first point out that so far as rights and privileges are concerned, there is little or no difference between a beneficiary under an express trust and a beneficiary under a resulting or constructive trust, it we leave alone questions arising under the Indian Limitation Act Central Act No. IX of 1908. Section 82 of the Indian Trust Act, which deals with benami transfers, occurs in the chapter beginning with Section 80, which provides that an obligation in the nature of a trust is created in certain specified cases; and Section 82 enacts that the transferee must hold the property for the benefit of the person paying or providing the consideration. Section 95 realfirms the provision implied in Section 80. In the case of express trusts, the Act describes the beneficiary's rights against the trustee as beneficial interest or interest of the beneficiary . Under Section 55, the beneficiary has, subject to the, provisions of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffect of s. s. (1) was thenceforward to remove even such disabilities as had been imposed by earlier legislation. This question was raised by the Advocate-General to serve two purposes; (1) to make up for the gap, in the saving of the operation of such enactments, arising from the fact that s. s. (2) is limited to laws prohibiting sale or mortgage of agricultural land, and (2) to use it as a step towards the argument that even Act No. X of 1938 should be regarded not as a new enactment passed subsequently to the Constitution Act, but only as an amendment to and therefore standing on the same footing as the principa! Act of 1900 and, as such, not affected by the declaration in s.s. (1). The first of the above aspects assumes importance by reason of the fact that while the Act of 1900 makes provision against all permanent alienations (which will include those by way of gift, bequest, exchange, etc.) and a variety of temporary alienations including leases, s. s. (2) of Section 298 saves the operation of such laws so far as they prohibit the sale or mortgage of agricultural land . Whatever be the reason that led Parliament thus to limit the scope of the saving clause, this difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned operation of the Act of 1900 and the impugned Act will fall outside the scope of the saving clause. In the judgment of this Court in Megh Raj v. Allah Rakhia Antea p. 52, the question has been discussed how far the definition of land contained in the Act of 1900 includes property which cannot be comprised in the ordinary connotation of the expression agricultural land . The question arose there on account of the doubt as to whether certain provincial legislation related to a matter specified in the Provincial List or to a matter falling within the Concurrent List. The question does not arise under the same circumstances in the present case ; but as s. s. (2) of a. 298 is limited in terms to agricultural land , the same question may become material in cases of the present kind. The transaction involved in this suit is however one by way of mortgage and also relates to agricultural land; these questions need not therefore be further discussed in the present case. 28. It is however material to note that Section 298(2) purports to save the operation of any law which prohibits the sale or mortgage of agricultural land, etc. What the impugned Act purports to do is not merely t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve in certain cases. That is why s. ,s. (2) of Section 298 saves the operation of such laws (see also the language of Section 111(1), which says that a British subject domiciled in the United Kingdom shall be exempt from the operation of certain kinds of laws that may be passed by the Federal or Provincial Legislature). The terms in which the conclusion has been stated by the High Court fail to take note of the fact that s.s. (1) of Section 298 of the Constitution Act can be invoked only in cases where the disability is imposed on the ground of descent alone. To revert for a moment to the illustrations given in an earlier part of this judgment, a person may be descended from a community classified as agricultural, but he may not satisfy the notifications under Section 4 of the principal Act, because his(sic) may not reside or hold property in a particular place. Again the disqualification may arise in certain cases, because, a person neither fulfils the requirement of descent not the requirement as to residence or possession of property in the locality. In these two cases it cannot be said that the Act of 1900 or the impugned Act prohibits the acquisition of the holding of property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the terms of the Punjab Alienation of Land Act, 1900 (hereinafter referred to as the principal Act) to which the impugned Act was an amendment. 33. By Section 2(3) of the principal Act, land is defined as meaning land which is not occupied as the site of any building in a town or village and is occupied or let for agricultural purposes or for purposes subservient to agriculture or for pasture, and as including certain interests which it is not necessary to specify. Permanent alienation is defined as including sales, exchanges, gifts wills and grants of occupancy rights. Sub-section (1) of Section 3 provides that a person who desires to make a permanent alienation of his land shall be at liberty to make suoli alienation where the alienor is not a member of an agricultural tribe; or the alienor is a member of an agricultural tribe and the alienee is a member of the same tribe or of a tribe in the same group. Sub-section (2) provides that except in the cases provided for in s.s. (1) a permanent alienation of land shall not take effect as such unless and until sanction is given by Deputy Commissioner. Section 4 provides that the Provincial Government shall by notification in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore had held that this practice was not illegal. 36. The impugned Act was directed to this practice and inserted in the principal Act Section 13-A, under which the present difficulty arises, and which is in the following terms: 13-A.(1) When a sale, exchange, gift, will, mortgage, lease or farm purports to be made either before or after the commencement of the Punjab Alienation of Land (Second Amendment) Act, 1938, by a member of an agricultural tribe to a member of the same agricultural tribe or of a tribe in the same group, but the effect of the transaction is to pass the beneficial interest to a person who is not a member of the same tribe or of a tribe in the same group, the transaction shall be void for all purposes, and the alienor shall be entitled to possession of the land so alienated, notwithstanding the fact that he may have himself intended to evade the provisions of this Act. Explanation.-Any alienation made in consequence of a transaction rendered void by this Sub-section shall also be deemed void for all purposes. 37. The argument of the Plaintiffs-Respondents is that the impugned Act is invalid, first because it extends the operation of the principal Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to affirm that each one of His Majesty's Indian subjects has a fundamental right to acquire any piece of land to which he may take a fancy and which the owner is, wiling to transfer to him, but which Government thinks should be held by someone of different descent. 41. The policy of the principal Act appears to be to ensure that agricultural land in the Punjab shall not be allowed to pass permanently out of the hands of the agricultural classes, in whom it was vested at the date of the Act, without the sanction of Government ; a policy which has appealed to many Governments besides that of the Punjab, and which has been applied in countries other than India. It is true that descent has been made an element in determining the persons who fall within the description of agricultural tribes, but the prohibition against alienation would seem to be based quite as much on the character of the land and the occupation of the holder, as oh his descent. In every Province in India the population is divided into different communities, who profess different religions, and some legislation must inevitably take account of these distinctions. This position was well known to Parliament when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estates in land, such as are familiar in English law, are not recognized in India, and the only actual interest in property which is affected by the impugned Act is the title of the benamidar, whose descent is not in question. It is however true that under Section 56 of the Trusts Act Central Act No. II of 1882., the beneficial owner can call upon the benamidar to transfer the property to him, and this right to acquire property is destroyed by the Act. But as the learned Advocate-General pointed out, the beneficial owner struck at by Section 13-A may come within one of three classes. First, he may be a member of an agricultural tribe, but may not hold land in the district. Secondly, he may be a a member of an agricultural tribe, but may not be a resident in the district. And thirdly, he may not be a member of an agricultural tribe. It is only in relation to the third class that the element of descent is introduced. Although I would not deny that an Act of the Legislature may be void in so far as it comes within the mischief of Section 298(1), but valid in other respects, I find a difficulty in holding that an Act which in terms make void the title of all beneficial owners under ben ..... 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