Case: RAGHUNATH(D) BY LRS Vs. RADHA MOHAN (D) THR. LRS

shall lose such, right unless within two months from the date of the service of such notice, he or his agent pays or tenders the price specified in the notice given under section 8 to the person so proposing to sell: Provided that the right of pre-emption shall not be so lost if the immovable property in question is actually sold for an amount smaller than that mentioned in the notice or to a person not mentioned in the notice as purchaser. 17. A reading of the Section shows 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. The moot point is 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. 18. In our view, 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. The loss of right mandated under Section 9 of the Act is absolute. A 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, if one may say, 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 co- sharer 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. 19. We are in agreement with the consistent view taken in the judgments earlier of the Rajasthan High Court. So far as the case of Kutina Bibi (supra) is concerned, the factual basis of that decision does not fit with the legal controversy involved in this proceeding. In that case, by a previous transaction the entire land had been sold. It was held in that perspective, that the plaintiffs right as a co-sharer had become disputed in absence of challenge to the previous transaction. We are of opinion 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. The aforesaid being the position, this would itself be an impediment in exercise of the right of pre- emption in a subsequent transaction. This is so since, we find the right of waiver under section 9 of the said Act is relatable to the transaction and also the person. These provisions may not impede the right of pre-emption in that particular transaction by a particular pre-emptor and the factum of not having exercised such a right to an earlier transaction would amount to the surrender of the right of substitution to such intended pre-emptor. 20. The judgments referred to by the respondent of Bishan Singh (supra) and Barasat Eye Hospital (supra) are only for the proposition that the right of pre-emption is a right of substitution – no doubt exists over this proposition. The question is whether this right of substitution can be exercised recurringly or only once. Our answer to the query is only once. 21. We may also notice another judgment of this Court in Indira Bai vs. Nand Kishore (1990) 4 SCC 668 . Once again in relation to the said Act (it appears that there is a frequent exercise of this right in Rajasthan apart from West Bengal & Bihar!) The question which was framed for decision in the case was: Is estoppel a good defence to archaic right of pre- emption which is a weak right and can be defeated by any legitimate method? In the aforesaid context, in para 5, it has been observed that the Act does not debar the pre-emptor from giving up his right. Rather in case of its non-exercise within two months, may be for the financial reasons, the right stands extinguished. It does not pass on to anyone. It was further observed, No social disturbance is caused. It settles in purchaser. Giving up such right, expressly or impliedly cannot therefore be said to involve any interest of community or public welfare so as to be in mischief of public policy. These observations, once again, in our view, are based on the right being weak. Conclusion: 22. We suppose that the aforesaid answers the dilemma, i.e. whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the first time. We opine 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. We also wonder what really remains of this right of pre-emption after so many years in the facts of this case when the purchaser has been enjoying it for more than four decades!

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]The pre-emptor has been held by the judicial pronouncements to have two rights. Firstly, 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. In our view, it is relevant to note this observation and we once again emphasise that 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.We may notice the observation in the Ghanshyam case (supra) which deals with the scenario where at the first instance the right was not exercised apparently on account of lack of financial means and that was held to be no ground to permit exercise of that right at the second stage. The consistent view taken by the Rajasthan High Court, as reflected in not only Ghanshyam case (supra) but also in Rukmani Devi (supra) and Prahlad Kumar (supra) has been that the right of substitution is capable of being invoked only at the first instance and does not continue to substitution is capable of being invoked only at the first instance and does not continue to permeate for an indefinite period of time for each sale transaction. In the case of Ghanshyam (supra), finding of the High Court was that the plaintiffs claiming pre-emption had waived their rights. In the case of Rukmani Devi (supra), where the plaintiff raised the plea of pre- emption on second sale transaction, evidence was led by the defendant that the same plaintiff had earlier refused to purchase the subject property and had on the other hand participated in the sale process. In the case of Prahlad Kumar (supra), it was found that the plaintiff himself had waived his right of pre-emption in respect of an earlier sale transaction involving the same property. Thus, to this extent, the view taken in the impugned order seems to charter a new course. The view of the Assam High Court in Kutina Bibi (supra) was consistently followed by the Rajasthan High Court.The stipulation in Section 21 is 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. Since the period has to be as per Article 97, the wordings of the Article show that it is one year from the date when the sale is registered (in case such registration takes place as is in the present case). It is this expression, which is sought to be construed by the respondent No. 1 as well as by the High Court to mean that it is a recurring right for every sale. The loss of right of pre- emption on transfer has been defined under Section 9 of the said Act17. A reading of the Section shows 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.17. A reading of the Section shows 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.18. In our view, 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. The loss of right mandated under Section 9 of the Act is absolute. A 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, if one may say, 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 co- sharer 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.19. We are in agreement with the consistent view taken in the judgments earlier of the Rajasthan High Court. So far as the case of Kutina Bibi (supra) is concerned, the factual basis of that decision does not fit with the legal controversy involved in this proceeding. In that case, by a previous transaction the entire land had been sold. It was held in that perspective, that the plaintiffs right as a co-sharer had become disputed in absence of challenge to the previous transaction. We are of opinion 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. The aforesaid being the position, this would itself be an impediment in exercise of the right of pre- emption in a subsequent transaction. This is so since, we find the right of waiver under section 9 of the said Act is relatable to the transaction and also the person. These provisions may not impede the right of pre-emption in that particular transaction by a particular pre-emptor and the factum of not having exercised such a right to an earlier transaction would amount to the surrender of the right of substitution to such intended pre-emptor.20. The judgments referred to by the respondent of Bishan Singh (supra) and Barasat Eye Hospital (supra) are only for the proposition that the right of pre-emption is a right of substitution – no doubt exists over this proposition.The question is whether this right of substitution can be exercised recurringly or only once.Our answer to the query is only once.21. We may also notice another judgment of this Court in Indira Bai vs. Nand Kishore (1990) 4 SCC 668 .   Once again in relation to the said Act (it appears that there is a frequent exercise of this right in Rajasthan apart from West Bengal & Bihar!) The question which was framed for decision in the case was:Is estoppel a good defence to archaic right of pre- emption which is a weak right and can be defeated by any legitimate method?In the aforesaid context, in para 5, it has been observed that the Act does not debar the pre-emptor from giving up his right. Rather in case of its non-exercise within two months, may be for the financial reasons, the right stands extinguished. It does not pass on to anyone. It was further observed, No social disturbance is caused. It settles in purchaser. Giving up such right, expressly or impliedly cannot therefore be said to involve any interest of community or public welfare so as to be in mischief of public policy. These observations, once again, in our view, are based on the right being weak.22. We suppose that the aforesaid answers the dilemma, i.e.whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the firstWe opine 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. We also wonder what really remains of this right of pre-emption after so many years in the facts of this case when the purchaser has been enjoying it for more than four decades!In this behalf, we had discussed the right of pre-emption in a recent judgment in Barasat Eye Hospital & Ors. v. Kaustabh Mondal (2019) SCC Online SC 1351. The said judgment, authored by one of us (Sanjay Kishan Kaul, J.), in its initial paragraph itself discusses this aspect and it would suffice to quote the same.1. The right of pre-emption holds 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. This law is stated to be largely absent in the south of India on account of the fact that it never formed a part of Hindu law in respect of property. However, this law came to be incorporated in various statutes, both, prior to the Constitution of India (for short the Constitution) coming into force, and even post that. Bhau Ram v. Baij Nath Singh, AIR 1962 SC 1476   The constitutional validity of such laws of pre-emption came to be debated before the Constitution Bench of this Court, in Bhau Ram, (supra) . There are different views expressed by the members of the Constitution Bench of five Judges, and also dependent on the various State legislations in this regard. Even though there were views expressed that this right of pre-emption is opposed to the principles of justice, equity and good conscience, it was felt that the reasonableness of these statutes has to be appreciated in the context of a society where there were certain privileged classes holding land and, thus, there may have been utility in allowing persons to prevent a stranger from acquiring property in an area which has been populated by a particular fraternity or class of people. This aspect was sought to be balanced with the constitutional scheme, prohibiting discrimination against citizens on the grounds of only religion, race, caste, sex, place of birth or any of them, under Article 15 of the Constitution, and the guarantees given to every citizen to acquire, hold and dispose of property, subject only to the test of reasonable restriction and the interest of general public.The judicial approach adopted towards this right of pre-emption was thereafter discussed in the said judgment in the following terms:10. In order to appreciate the aforesaid provisions relating to the right of pre-emption, it would be appropriate to refer to an extremely lucid judgment of this Court by Justice K. Subbarao (as he then was), setting forth the contours of the right of pre-emption in Bishan Singh v. Khazan Singh AIR 1958 SC 838   , in a four Judge Bench judgement. The Bench proceeded to discuss the view of different Courts on this right of preemption, as found in the following:a. Plowden, J. in Dhani Nath v. Budhu, 136 P.R. 1894b. Mahmood, J. in Gobind Dayal v. Inayatullah, (1885) ILR 7 All 775, 809.c. Mool Chand v. Ganga Jal, (1930) ILR 11   Lahore (F.B.) 258, 273.11. In view of the aforesaid elucidation, it was opined that the preemptor has two rights: first, the inherent or primary right, i.e., right for the offer of a thing about to be sold; and second, the secondary or remedial right to follow the thing sold. The secondary right of preemption is simply a right of substitution, in place of an original vendee and the pre-emptor is bound to show not only that his right is as good as that of that vendee, but that it is superior to that of the vendee. Such superior right has to subsist at the time when the pre-emptor exercises his right. The position is thereafter summarized in the following terms:11. …..(1) The right of pre-emption is not a right to the thing sold but a right to the offer of a thing about to be sold. This right is called the primary or inherent right. (2) The pre-emptor has a secondary right or a remedial right to follow the thing sold. (3) It is a right of substitution but not of re-purchase i. e., the pre-emptor takes the entire bargain and steps into the shoes of the original vendee. (4) It is a right to acquire the whole of the property sold and not a share of the property sold. (5) Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place. (6) The right being a very weak right, it can be defeated by all legitimate methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place.12. We have given our thoughtful consideration to the aforesaid issue and in order to determine the same, we had, at the inception itself, set out the judgment in Barasat Eye Hospital case (supra).