Pre-emptive rights are in the nature of “very weak rights”- SC

IN THE CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 1442 OF 2016 RAGHUNATHBY LRS RADHA MOHANTHR. LRS & ORS.….RESPONDENTS JUDGMENT SANJAY KISHAN KAUL J The singular question this Court had framed for consideration in this appeal was whether the limitation shall commence from the first sale deed after coming into force of the Rajasthan Pre Emption Act 1966 or from any other subsequent sale on the basis of Article 97 of the Limitation Act 1963. This question arises in this proceeding in a situation where the original plaintiff sought to enforce such right after three sale transactions had taken place in the past involving the subject immovable property in the years 1945 1946 and 1966. The last transaction was effected on 5th November that year after the 1966 Act had become operational. The factum of the plaintiff’s entitlement otherwise claim right of pre emption in terms of Section 6 of the 1966 Act is not in dispute in this proceeding. In the suit out of which this appeal arises the plaintiff’s suit for pre emption over a transaction effected on 21st January 1974 was resisted on the ground of being barred by limitation. In order to determine the aforesaid question of law framed by this Court in terms of the order dated 05.01.2016 it is necessary to discuss the nature of the right of pre emption. In this behalf we had discussed the right of pre emption in a recent judgment in Barasat Eye Hospital & Ors v. Kaustabh Mondal1. The said judgment authored by one of usin 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 1SCC Online SC 1351 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 coming into force and even post that.2 The constitutional validity of such laws of pre emption came to be debated before the Constitution Bench of this Court in Bhau Ram 3 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 2 Bhau Ram v. Baij Nath Singh AIR 1962 SC 1476 Subbaraosetting forth the contours of the right of pre emption in Bishan Singh v. Khazan Singh4 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 5 b. Mahmood J. in Gobind Dayal v. Inayatullah 6 c. Mool Chand v. Ganga Jal 7 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.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.It is a right to acquire the whole of the property sold and not a share of the property sold.Preference being the essence of the right the plaintiff must have a superior right to that 4 AIR 1958 SC 838 5 136 P.R. 1894 6ILR 7 All 775 809 7ILR 11 Lahore258 273 of the vendee or the person substituted in his place.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 On having set down the contours of the aforesaid right we turn to the facts of the present case The Rajasthan Pre Emption Act 1966was brought into force on 1.2.1966. In view of the rights conferred under the Act a suit was filed by the predecessor in interest of respondent No.1 seeking a decree of pre emption against the predecessor in interest of the appellant herein and respondent Nos. 4 to 6 herein on 10.1.1974 which was numbered as Civil Suit No. 40 1975. The property in question is situated in a building bearing AMC No. XV 290 situated in Kayasth Mohalla Ajmerand is predicated on account of having a common portion in the said property. The plaint stated that respondents 5 and 6 hereinwere owners and in possession of the part of the property which was sold to respondent No 4 hereinvide sale deed dated 10.01.1974 for a consideration of Rs. 4000 . respondent No. 4 further sold this property to the appellant hereinon 21.01.1974 once again for the same consideration. The other facts stated in the plaint are not required to be gone into nor pleaded except that there is an allegation that the two portions were part and parcel of the same house having main entrance lavatory and staircase in common and that no notice as provided for under Section 8 of the Act had been served which mandates a notice to pre emptors in their depositions. The second plea advanced was that if a plaintiff waived his right of pre emption by conduct no such right is available on a subsequent sale of the same property and the plaintiff is estopped from claiming any right of pre emption of subsequent sale In support of their contention learned counsel referred to the a) Prahlad Kumar vs. Kishan Chand & Ors.9 This judgment of the Rajasthan High Court while rejecting the right of pre emption based it on two aspects. The first was a factual one that it was not a case of sharing a common property. The relevant portion is the second aspect where it was held even if the right is presumed to have been established though not established in that case the plaintiff was estopped from claiming his right of pre emption as he had waived his right when the property was sold at an earlier date and pre emption was not claimed then. b) Mangti Ram vs. Onkar Sahai10 In this case the right of pre emption was held to have been given up on account of an earlier compromise deed to which the plaintiff had been a c) Kutina Bibi & Anr. vs. Baikuntha Chandra Dutta & Ors.11 This judgment once again dealt with the plea of pre emption against a subsequent sale where vide an earlier sale deed of 1950 the plaintiff 9 2009RLW 2441 101 RLW 55 cosharer’s share had been sold by her son and thus it was held that not having assailed the earlier sale deed the right of pre emption could not be claimed against the subsequent sale d) Ghulam Jilani vs. Hassan Khan & Ors.12 There was an earlier sale deed and a subsequent sale deed. At the stage of the initial sale deed the cosharer did not object. At the stage of the second sale deed the cosharer sought to object. The court debated the issue of competing rights of the cosharer and the subsequent buyer in pursuance to the first sale deed. It was opined while agreeing with the lower court that the plaintiff’s suit was barred by time having been instituted more than a year after the earlier sale which alone he was entitled to impugn e) Ghanshyam vs. Chand Bihari & Ors.13 The factual matrix shows there were many cosharers. Two of the cosharers transferred their rights to a third party. One by sale and one by gift. Third party in turn sought to transfer to another party. It is at that stage one of the cosharers claimed a right of pre emption. It was found on facts that when the said third party sought to transfer his right plaintiff never showed willingness to purchase the same as they were not having sufficient means 12 PLR 1905 338 132 RLW1011 It was opined that the plaintiff’s father never tried to assert his right in the matter of purchasing that portion earlier and subsequently also during his lifetime he never tried to enforce his right of pre emption. As such right of pre emption was said to have been waived by conduct. f) Rukmani Devivs. Prabhu Narayan & Ors.14 The pre emption right under Section 6 of the Act was discussed with an explanation that the right of pre emption is a weak right and thus if a plaintiff pre emptor waives or gives up his right without raising any objection to the sale in favour of the third party the court should not allow substitution in the sale deed at the instance of such plaintiff pre emptor who has already given up his right 10. On the other hand Ms. Christi Jain learned counsel for the respondent sought to support the impugned judgment on the plea that the limitation to enforce a right of pre emption under the Act is governed by Article 97 of the Limitation Act 1963 read with Section 21 of theAct Thus each sale deed is a separate cause of action. On a reading of Section 8 of the said Act it was contended that the seller is required to inform all persons as to the price he is proposing to sell at and thus the language of 144 RLW 2882 the provision is clear that it applies to all such incidents of sale. Thus it was pleaded that it cannot be said that if such a right is not exercised it would allow foreclosure for any subsequent sale since there is no provision in the said Act prohibiting the right of pre emption if the right is not exercised. It was also contended that the question of waiver is set out in Section 9 of the said Act which does not provide for an eventuality that the right of pre emption would not be applicable for a subsequent sale. The last aspect argued was that this right is based on substitution in place of the vendee on payment of the price and it does not challenge the sale but seeks substitution of the plaintiff in place of the vendee. There was thus no need to challenge the earlier sales and not challenging the earlier sales would not amount to waiver. 11. A reference was made to the following judgments: i) Bishan Singh & Ors. vs. Khazan Singh & Anr.15 The reference to the aforesaid judgment has been made in the context of the observations of Mahmood J. in Gobind Dayal casereferred to above that it is in relation to the right of substitution Barasat Eye Hospital & Ors. vs. Kaustabh Mondal16 15 AIR 1958 SC 838 This judgment has been relied upon again on the same aforesaid principle of right of substitution The view we adopt 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 casewhich 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 casebut also in Rukmani Deviand Prahlad Kumarhas 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 Ghanshyamfinding of the High Court was that the plaintiffs claiming pre emption had waived their rights. In the case of Rukmani Deviwhere 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 Kumarit 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 was consistently followed by the Rajasthan High In order to now appreciate the controversy as there appears to be no other view of this Court on this aspect we would first turn to the said Act itself. Right to pre emption is defined in Section 3 of the Act as under “Section 3: “Right of pre emption” defined The “right of pre emption” is the right accruing under section 4 of this Act upon a transfer of any immovable property to acquire such property and to be substituted as the transferee thereof in place of and in preference to the original transferee and “pre emptor” means a person having a right of pre emption.” Section 6 sets out the right of persons to whom the right pre emption accrues and it would suffice to reproduce sub sectionas the other sub sections deal with different classes of persons having such right Chapter III sets out the procedure for the exercise of the right of pre emption. Section 8 under the said Chapter mandates issuance of notice “Section 6: Persons to whom right of pre emption 1) Subject to the other provisions of this Act the right of pre emption in respect of any immovable property transferred shall accrue to and vest in the following classes of persons namely: i) co sharers of or partners in the property transferred ii) owners of other immovable property with a stair case or an entrance or other right or amenity common to such other property and the property transferred and iii) owners of property servient or dominant to the “Section 8: Notice to pre emptors 1) When any person proposes to sell or to foreclose the right to redeem any immovable property in respect of which any persons have a right of pre emption he shall give notice to all such persona as to the price at which he is proposing so to sell or as to the amount due in respect of the mortgage proposed to be foreclosed as the case 2) Such notice shall be given through the civil court within the local limits of whose jurisdiction the property concerned is situated shall clearly describe such property shall state the name and other particulars of the purchaser or the mortgagee and shall be served in the manner prescribed for service of summons in civil suits.” The limitation for exercise of the aforesaid right is stipulated in Section 21 which reads as under “Section 21: Special provision for limitation 1) Subject to the provisions contained in the proviso to sub sectionof section 5 the period of limitation in any case not provided for by article 97 of the First Schedule to the Limitation Act 1963for a suit to enforce the right of pre emption under this Act shall notwithstanding anything contained in article 113 of the said schedule of the said Act be one year from the date on which a) in the case of a sale made without a registered sale deed the purchaser takes under the sale physical possession of any part of the property sold and b) in the case of a foreclosure the final decree for foreclosure is passed 2) The period of limitation for a suit to enforce a right of pre emption which has accrued before the commencement of this Act shall notwithstanding anything contained in the said Limitation Act in no case exceed one year from the commencement of this Act.” In view of the fact that since Section 21 in turn refers to Article 97 of the First Schedule of the Limitation Act 1963 it would be appropriate to set forth the same as under 97. To enforce a right of pre emption whether the right is founded on law or general usage or on special When the purchaser takes under the sale sought to be impeached physical possession of the whole or part of the property sold or where the subject matter of the sale does not admit of physical possession of the whole or part of the property when the instrument of sale is registered The question has to be thus analysed in the context of a conjoint reading of Section 21 of the said Act and Article 97 of the First Schedule to the Limitation Act 1963. 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 registeredis 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 plaintiff’s 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. The judgments referred to by the respondent of Bishan Singhare 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 Kishore17. Once again in relation to the said ActThe 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 174 SCC 668 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 The result is the impugned order is set aside and the order of the trial court dated 01.02.1988 and the first appellate court dated 30.03.1989 are upheld. As the original plaintiff has not challenged the sale effected by him on 5th November 1966 the suit of respondent No. 1is thus barred by limitation. This puts an end to the legal battle which began 45 years ago The appeal is accordingly allowed leaving the parties to bear their [SANJAY KISHAN KAUL [ANIRUDDHA BOSE OCTOBER 13 2020 [KRISHNA MURARI

Summary: In the case of Raghunath (D) By Lrs. v. Radha Mohan (D) Thr. Lrs. &amp;Ors, (CIVIL APPEAL NO. 1442 OF 2016), the Supreme Court had held that the right of pre-emption is a very weak right and it would not be appropriate or permissible to adopt legal reasoning that would make 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 of pre-emption over the subject immovable property. The judges, in this case, were Justice Sanjay Kishan Kaul, Aniruddha Bose &amp; Krishna Murari. The facts of the case primarily focus on the question of whether the limitation shall commence from the first sale deed after coming into force of the Rajasthan Pre-Emption Act, 1966, or from any other subsequent sale on the basis of Article 97 of the Limitation Act, 1963. This question arises in such a  proceeding in a situation where the original plaintiff sought to enforce such right after three sale transactions which had taken place in the past involving the subject immovable property in the years 1945, 1946, and 1966. On 5th November that year, the last transaction was effected., after the 1966 Act had become operational.  The factum of the plaintiff’s entitlement otherwise claims the right of pre-emption in terms of Section 6 of the 1966 Act is not in dispute in this proceeding. In the suit out of which this appeal arises, the plaintiff’s suit for pre-emption over a transaction effected on 21st January 1974 was resisted on the ground of being barred by limitation. Thus in this case first and foremost it was felt necessary by the court to decide the nature of the pre-emptive rights. On this behalf, the court had discussed the right of pre-emption in a recent judgment in Barasat Eye Hospital &amp; Ors. v. Kaustabh Mondal,(2019) SCC Online SC 1351. The court held that the “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).  We have, thus, referred to the earlier judicial view in para 10 of the judgment extracted aforesaid. The historical perspective of the right of pre-emption shows that it owes its originination 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 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.” “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.” “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!” “The result is the impugned order is set aside and the order of the trial court dated 01.02.1988 and the first appellate court dated 30.03.1989 are upheld. As the original plaintiff has not challenged the sale effected by him on 5th November, 1966, the suit of respondent No. 1 (original plaintiff, now represented by his legal representatives) is thus barred by limitation. This puts an end to the legal battle which began 45 years ago!”