A pre-emptor can challenge a transaction that appears to be an exchange but is in reality a sale to defeat the pre-emptive right, but the court will strictly construe the pre-emption law and uphold the transaction as an exchange if it meets the legal definition of an exchange.

A.S.BAINS, J.

1. The facts from which this reference to Full Bench has arisen are as follows :-

Than Singh, plaintiff (since deceased) brought a suit for possession by pre-emption of the land which was given in exchange by Smt. Saraswati to Nandu, claiming himself to be the brother of the deceased husband of Smt. Saraswati, alleging that the transaction was virtually a sale in the guise of an exchange and that it was done to defeat his pre-emptive right, because on the same day Smt. Saraswati executed a sale-deed, Exhibit D-2, in favour of Gordhan, brother of Nandu, in respect of the land she got in exchange from Nandu and the sale money mentioned in the sale deed was Rs. 2,000.00. Nandu defendant contested the suit and controverting the allegations in the plaint, pleaded that the transaction in question was in fact an exchange and not sale and that the plaintiff had no right of pre-emption. The parties contested on the following issues:-

1. Whether the plaintiff has superior right of pre-emption?

2. Whether the transaction is a sale or an exchange and, if an exchange, to what effect?

3. Relief.

Issue No. 1 was decided by the trial Court in favour of the plaintiff and it was held that he had a superior right of pre-emption. On issue No. 2 the trial Court held that the transaction, dated 22nd April, 1964, Exhibit D-1, was in fact a sale and not an exchange and the plaintiff was, therefore, entitled to claim possession on the basis of pre-emption in respect of this transaction. Consequently, the suit of the plaintiff was decreed. Defendant No. 1, Nandu, went in appeal, and the learned Additional District Judge, Rohtak reversed the finding of the trial Court on issue No. 2 and held that the transaction, Exhibit D-1, was an exchange and not a sale, and allowing the appeal dismissed the plaintiff s suit. Hence this second appeal by Than Singh plaintiff, who is now dead and is represented by his legal representatives in this appeal.

2. When this second appeal came before me on 27th April, 1977. I thought it necessary to refer it to a Full Bench in view of the fact that there appeared to be conflict of authorities reported as Gul Muhammad V/s. Sabz Ali Khan, AIR 1919 Lah 127, on one hand and Narain Singh V/s. Waryam Singh, AIR 1921 Lah 192 and Rati Ram V/s. Mam Chand, AIR 1959 Punj 117, on the other, and while referring the case to a Full Bench, it was observed as under:-

"Since there is conflict of views in the above three Division Bench authorities, and in the context of the modern changed socio-economic conditions, the pre-emption law is being considered as an outmoded law because it creates a clog on the right of the owner to alienate his property to a person of his own choice, it has, therefore, to be strictly construed. Moreover, according to the definition of the term sale as well as that of the term exchange as given in Ss. 54 and 118 respectively of the T. P. Act, the document Exhibit D-1, on plain reading, clearly answers the definition of exchange. I am, therefore, of the view that the law as laid down in Gul Muhammads case (supra) needs reconsideration by a larger Bench."

3. Mr. P. S. Jain, learned counsel for the appellant, contends that the transaction in question is in fact a sale and not exchange and it has been given the colour of exchange in order to defeat the right of the pre-emptor.

4. The sole question for determination in this second appeal before us is whether in a pre-emption suit the Court can enquire into the true nature of a transaction which is apparently an exchange in order to determine that in fact it is a sale and not an exchange and allow the pre-emptor to lead evidence to prove the same. There is no dearth of authorities and the basic authority on this point is Tara Chand V/s. Baldeo, 117 PR 1890. As early as in 1889 in a pre-emption case a question arose whether a certain transaction in the form of a gift was really a sale and whether the Court could go behind the document and it was held b