Case BriefsSupreme Court

Supreme Court: On the question as to whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the first time, the 3-judge bench of SK Kaul, Aniruddha Bose and Krishna Murari, JJ has held that

“… it is only exercisable for the first time when the cause of such a right arises, in a situation where the plaintiff-pre-emptor chooses to waive such right after the 1966 Act becoming operational. Section 9 of the said Act operates as a bar on his exercising such right on a subsequent transaction relating to the same immovable property.”

Origin and history of right of pre-emption

The historical perspective of the right of pre-emption shows that it owes its origination to the advent of the Mohammedan rule, based on customs, which came to be accepted in various courts largely located in the north of India. The pre-emptor has two rights. The inherent or primary right, which is the right to the offer of a thing about to be sold and the secondary or remedial right to follow the thing sold. It is a secondary right, which is simply a right of substitution in place of the original vendee. The pre-emptor is bound to show that he not only has a right as good as that of the vendee, but it is superior to that of the vendee; and that too at the time when the pre-emptor exercises his right.

“… the right is a “very weak right” and is, thus, capable of being defeated by all legitimate methods including the claim of superior or equal right.”

Recurring right or a one-time right

  • Section 21 of the Rajasthan Pre-Emption Act, 1966 stipulates that the right of pre-emption has to be exercised, in case of a sale, within one year from the date of sale and if the sale is not by a registered deed, on the purchaser taking the physical possession of any part of the property sold.
  • This period has to be as per Article 97 of the Limitation Act which states that it is one year from the date when the sale is registered.
  • The loss of right of pre-emption on transfer has been defined under Section 9 of the said Act which provides that the loss is only occasioned, when, within two months from the date of service of the notice, the price is not tendered. However, that is the loss of the right, vis-à-vis the transaction in question.

On the question whether such a right of pre-emption is a recurring right, i.e. every time the property is sold, the right would rearise, in a case the pre-empting plaintiff himself has chosen not to exercise such right over the subject immovable property when sold to another purchaser earlier, the Court held,

“… it would not be appropriate or permissible to adopt legal reasoning making such a weak right, some kind of a right in perpetuity arising to a plaintiff every time there is a subsequent transaction or sale once the plaintiff has waived his right or pre-emption over the subject immovable property.”

Holding that the loss of right mandated under Section 9 of the Act is absolute, the Court further stated that the plain reading of the said provision does not reveal that such right can re-arise to the person who waives his right of pre-emption in an earlier transaction. To do so would mean that a person, whether not having the means or for any other reason, does not exercise the right of pre-emption and yet he, even after decades, can exercise such a right.

“This would create some sort of a cloud on a title and uncertainty as a subsequent purchaser would not know, when he wants to sell the property, whether he can complete the transaction or not or whether a cosharer will jump into the scene. This is not contemplated in the 1966 Act. This is bound to have an effect on the price offered by a purchaser at that time because he would have an impression of uncertainty about the proposed transaction.”

The Court, hence, held that such a right is available once – whether to take it or leave it to a person having a right of pre-emption. If such person finds it is not worth once, it is not an open right available for all times to come to that person.

[Raghunath v. Radha Mohan,  2020 SCC OnLine SC 828, decided on 13.10.2020]

Case BriefsHigh Courts

Calcutta High Court: A Single Judge Bench comprising of Asha Arora, J. dismissed a revisional application filed by the petitioner assailing the order of the learned Additional District Judge who reversed the order of the learned Civil Judge granting a decree of pre-emption in favour of the petitioner.

The petitioner filed a case under Section 8 of West Bengal Land Reforms Act 1995, for pre-emption in respect of land which was transferred in favour of the opposite party (OP) by the predecessor-in-interest under a registered sale deed. Petitioner sought pre-emption of the land in question on the ground of adjoining ownership. The application for pre-emption was contested by the OP contending that the petitioner had waived his right, if any, by becoming an attesting witness to the above-mentioned registered sale deed. The application for pre-emption was allowed by the trial court. However, the Additional District Judge reversed the order of the trial court. Aggrieved thus, the petitioner was before the High Court in revision.

The High Court perused the record and found that the petitioner was indeed the attesting witness in the registered deed of sale of the land in question in favour of the OP. The Court relied on the decision of the Supreme Court in Jagad Bandhu Chatterjee v. Nilima Rani, (1969) 3 SCC 445, wherein it was held, under the Indian law neither consideration nor an agreement would be necessary to constitute waiver. A waiver amounts nothing more than an intention not to insist upon the right. The acquiescence in the sale by any positive act amounting to relinquishment of pre-emptive right have the effect of forfeiture of such a right. The High Court was of the opinion that by being an attesting witness to the sale deed, the petitioner by his act and conduct acquiesced to the sale of land sought to be pre-empted. Such an act impliedly amounted to relinquishment of pre-emptive rights and thus the petitioner had waived his right. In such circumstances, the High Court found no irregularity with the order impugned. Therefore, the revision was dismissed. [Tusar Kanti Basu Chowdhury v. Nil Kamal Basu Chowdhury,2018 SCC OnLine Cal 3433, decided on 08-06-2018]

Patna High Court
Case BriefsHigh Courts

Patna High Court: A Division Bench set aside an order by a Single Judge of the same Court which allowed pre-emptive rights to co-sharers in a property. The appellant purchased a small piece of land from one of the respondents, who since died and was represented by his legal heirs. Other respondents who are all descendants of a common ancestor, claiming to be boundary raiyats and co-sharers in the property filed before the Deputy Collector Land Reform (“DCLR”) for pre-emption, who allowed the application under Section 16(3) of the Bihar Land Reforms (Fixation of Ceiling Area and Acquisition of Surplus Land) Act, 1961 (“the Act”), which reads:

“When any transfer of land is made after the commencement of the Act to any person other than a co-sharer or a raiyat of adjoining land, any co-sharer of the transferor or any raiyat holding land adjoining the land transferred, shall be entitled, within three months of the date of registration of the document, of transfer, to make an application before the Collector in the prescribed manner for the transfer of the land to him on the terms and conditions contained in the said deed:

Provided that no such application shall be entertained by the Collector unless the purchase money together with a sum equal to ten percent thereof is deposited in the prescribed manner within the said period.”

This decision was challenged before the Additional Collector of Saran, Chapra, the Additional Member of the Board of Revenue, Bihar and a Single Judge Bench of the Patna High Court, all of whom upheld the pre-emption.

The respondents maintained the position that since the land was agricultural land, they were entitled to pre-emption under the Act and the said land be transferred to them at the rate paid by the appellant-transferee.

The appellant contended that though the land was listed in public records as agricultural and ‘sinchit’ (irrigated), it had changed its nature over the years and that pucca houses had been built on the said piece of land and also on adjoining land, making it a residential property and hence not under the purview of Section 16(3) of the Act. This factum of permanent construction on the land in question and surrounding land was observed and reported by the amin (local official) sent to inspect the land by the DCLR but the DCLR had ruled against the appellant only because the land was originally listed as agricultural.

The Court observed that the Act was made to facilitate cultivation of larger tracts of land and to offset the fragmentation of land caused by partition within families to facilitate better cultivation. Since the evidence was presented to show that the land was now being used as a residential tract and further that the piece of land under dispute was too small to sustain cultivation, no right of pre-emption would exist for co-shareres and boundary raiyats under the Act. Hence the judgment by the lower forums was set aside, and the appeal was allowed. [Kalika Prasad Rai v. State of Bihar, 2018 SCC OnLine Pat 813, decided on 17-05-2018]