Sewalal Ghanshyam vs Param Lal anju and others

Jagat Narayan, J.C.

This is a purchaser''s second appeal in a suit for pre-emption brought by Parmu and Gaya pre-emptors against them in respect of a sale of plot Nos. 1403, 1404, 1405 and 1406 which was effected by a registered sale deed dated 28-5-1954 which was decreed by both the Courts below.

Section 10, Rewa State Pre-emption Act,1946, which governs the case runs as follows :

Classes of pre-emptors: Persons of the following classes shall have a right of pre-emption :

(1) Any person who is a co-sharer or partner in the property sold or foreclosed.

(2) Any person who owns any immovable. property adjoining the property sold or foreclosed, or in case of transfer of tenancy rights, the land which is the subject of such rights.

Provided that among the above mentioned classes the first in order will exclude the second and among persons of the same class, the nearer in relationship to the person whose property is sold or foreclosed will exclude the more remote.

The lower appellate Court found that both the pre-emptors and the purchaser owned land adjoining plots 1403 and 1406 and that both are co-sharers in plot 1404. As for plot 1405 if found that the purchaser is a co-sharer in it but the pre-emptors are not co-sharers. It also found that the pre-emptors were nearer in relationship to the seller than the purchaser.

On behalf of the appellant the constitutionality of the relevant provision of law was challenged on the ground that it puts unreasonable restrictions on the right to acquire and hold property which has been guaranteed under Art. 19 (l)(f) of the Constitution. On behalf of the respondent it was argued that the restrictions placed are reasonable and in public interest.

As observed by the Supreme Court in - ''Audh Behari Singh v. Gajadhar'', 1954 SO 417 (AIR V 41) (A) the law of pre-emption was introduced in this country by the Mahomedans, and was administered as a rule of common law of land in those parts of the country which came under their domination, in course of time the Hindus of some localities came to adopt pre-emption as a custom.

Since the establishment of the British rule in India the Mahomedan law ceased to be the general law of the land and as pre-emption is not one of the matters respecting which Mahomedan law is expressly declared to be the rule of decision where the parties to a suit are Mahomedans the Courts in British India administered the Mahomedan law of pre-emption as between Mahomedans entirely on grounds of justice, equity and good conscience.

Here again there was no uniformity of views expressed by the different High Courts in India; and the High Court of Madras definitely held that the law of pre-emption by reason of its placing restrictions upon the liberty of transfer of property could not be regarded to be in consonance with the principles of justice, equity and good conscience : vide - ''Krishna Menon v. Kesavan'', 20 Mad 305 (B). Hence the right of pre-emption is not recognized in the Madras Presidency at all even amongst Mahomedans except on the footing of custom.

Rights of pre-emption have in some provinces like Punjab, Agra and Oudh been embodied in statutes passed by the Indian Legislature which are applicable even to persons other than Mahomedans. The grounds of pre-emption under these enactments are however not so wide as they are under the Mahomedan law.

Under the Hanafi law pre-emption may be claimed by the Sharik (owner of an undivided share in the property to be pre-empted), the khalit (owner of the property to which is annexed or on which is imposed the same private right of way or of water or other easement or appendage as that annexed to the property to be pre-empted and by the jar (owner of property adjoining the subject of pre-emption). The right of pre-emption on the last ground namely that of vicinage does not extend to estates of large magnitude such as villages and zamindaris, but is confined to houses, gardens and small parcels of land.

Under the Shafi law pre-emption may be claimed only by co-sharers and not by participators in appendages, nor by neighbours.

Under the Shia law pre-emption may be claimed only where two persons are co-sharers in undivided property and one of them sells his share. It cannot be claimed by any other than the co-sharer, nor if there are more co-sharers than two.

Pre-emptors equal in degree are, under the Hanafi law entitled to preemption in equal shares notwithstanding that they are co-sharers holding unequal shares in the land. under Shafi law the rights of co-sharers are in proportion to their respective shares. The Hanafi rule has been applied to pre-emption under the wajibularz.

Whatever the custom of pre-emption is prevalent it is founded on and is generally co-extensive with the Hanafi law on the subject, the Mughal sovereigns being Sunnis of the Hanafi sect.

The Punjab Pre-emption Act 1 of 1913 and the Oudh Laws Act 18 of 1876 regulate the pre-emption in Punjab and Oudh.

Section 9 of the Oudh Act provides for priorities as follows: firstly co-sharers of a sub-division in the order of the relationship to the vendor or mortgagor; secondly, co-sharers of the whole mahal in the same order; thirdly, any member of the village community; fourthly, if the property be an under-proprietary tenure, the proprietor. The object of the Act has been explained as being to protect the compactness of village communities, and in towns, to respect native feeling as regards caste exclusiveness. the seclusion of private family life, and so forth, and not to interfere with the private rights of contract or the disposal of property.

The village community has not been defined by the Act but it was held in - ''Birendra Bikram Singh v. Brij Mohan Pande'', 1934 PC 153 (AIR V 21) (C) that the pre-emption refers to persons having proprietary or under-proprietary rights in the village and does not include any one who happens to reside in the village but has no proprietary interest therein.

The Punjab Act provides for priorities under 16 detailed heads. Sections 15 and 16. The right is however confined to co-sharers as under the Oudh Act.

Where two or more persons are equally entitled to pre-empt the person to exercise the right is under the Oudh Act to be determined by law. Cases where several persons are found by the Court to be equally entitled to the right of pre-emption are under the Punjab Act (S. 17) provided for under 5 heads as follows:

(a) If they claim as co-sharers, in proportion among themselves to the shares they already had in the land or property;

(b) If they claim as heirs, whether co-sharers or not, in proportion among themselves to the shares in which, but for such sale, they would inherit the land or property, in the event of vendor''s death without other heirs;

(c) If they claim as owners of the estate or other recognized sub-division thereof, in proportion among themselves to the shares which they would take if the property were common land in the estate or the sub-division, as the case may be;

(d) If they claim as occupancy tenants, in proportion among themselves to the areas respectively held by them in occupancy right;

(e) In any other case, by such pre-emptors in equal shares.

Under the Agra Pre-emption Act, 1922 a right of pre-emption accrues only when a co-sharer or a petty proprietor sells any proprietary interest in the land forming part of any mahal or village in which a right of pre-emption exists or where any such interest is foreclosed. Persons of the following classes are successively entitled to exercise the right of pre-emption:

Class I. Where the interest is a petty proprietary interest, co-parceners in that interest.

Class II. Co-sharers in the sub-division of the mahal in which the property is situated.

Class III. Where such sub-division is a part of a larger division of the mahal, co-sharers in such larger division.

Class IV. Co-sharers in the mahal.

Class V. Co-sharers in the village.

Where there are more persons than one of the same class claiming pre-emption that person who is related to the vendor and is descended from the common ancestor but is not removed from such common ancestor by more than 4 degrees including the common ancestor is entitled to pre-emption as against other persons of the same class and among persons so related those who are nearer to the vendor shall be entitled to pre-empt as against those more remote.

During the British rule so far as the territories now forming part of Vindhya Pradesh are concerned they were all under Indian Princes all of whom were Hindus. The law of Pre-emption was not in force in any area either by statute or by custom till the enactment of the Rewa Pre-emption Act, 1946, which was made applicable to the erstwhile Rewa State. On the formation of Vindhya Pradesh this Act was applied to the whole of the State in 1950.

It will thus be seen that in the greater part of the State the law of pre-emption was first introduced comparatively recently and the people are not used to it. In Rewa State it was introduced only in 1946. The scope of the Rewa Act is. however, much wider than the scope of the statutory laws of pre-emption applicable to other parts of the country.

The right of pre-emption can be claimed under it in respect of every immovable property whether situated in a village or in a town. Immovable property as defined under the Act includes even tenancy rights of. a pattedar or Pachpan-paintalis tenant of the land. Pre-emption can be claimed by co-sharer,s and partners as well as by neighbours.

Amongst persons of the same class the nearer in relationship to the person whose property is sold or foreclosed excludes the more remote.

The law of pre-emption under which a purchaser of property is compelled to part with it to some other person is no doubt a restriction on the fundamental right of acquiring and holding property and it can only be held to be valid if it pan be shown that the restriction is reasonable and, if so, it is in the interest of the general public.

So far as the first clause of S. 10, Rewa Pre-emption Act is concerned, the restriction appears to be reasonable. Undivided property can be managed better if the number of co-sharers is less. Disputes often arise when an undivided property is owned by a large number of persons. Such disputes lead to partition and the property is fragmented into small shares so that it is no longer capable of being managed economically.

So far as the second clause is concerned however it puts an unreasonable restriction which deprives the purchaser of a property on claim by a neighbour on the sole ground that his property stood adjoining the one sold. As has been shown above the right of an adjoining owner to pre-empt property was only recognized under Hanafl law. It was not recognized either under the Shan law or the Shia law. Nor was it recognized under any of the other statutory laws, namely the Punjab Preemption Act, the Oudh Laws Act, or the Agra Preemption Act.

Even under the Hanafl Law the right of preemption on the ground of vicinage was restricted to houses and small parcels of land. It interferes with the free play of economic forces and thereby retards the economic development of the community. It does not confer any comparable benefit as in the case of the right of pre-emption based on co-sharing. On the contrary it helps to increase disparity in wealth. Those who are already possessed of more land are able to buy all the land that is put up for sale and those who are landless are unable to buy land except at an unduly high price.

The right of pre-emption on the ground of vicinage is in my opinion arbitrary and is of an excessive nature beyond what is required in the interest of the public. There is some good in evil and there is some evil in good. If the evil outweighs the good the thing is called evil. If on the other hand the good outweighs the evil it is called a good thing.

As was observed by their Lordships of the Supreme Court in - ''Chintaman Rao v. State of Madhya Pradesh'', 1951 SC 118 (AIR V 38) (D), legislation which arbitrarily or excessively invades the right cannot be said to be reasonable. The restriction imposed by the impugned law on the freedom guaranteed under Art. 19(l)(g) should be in proportion to the public Interest served by it. This is not so in the case of the right of pre-emption on the ground of vicinage.

The proviso to S. 10 has also been challenged on behalf of the appellant. It is argued that no restriction has been placed on the degree of relationship of the person claiming preferential right on this ground and it is said that it would be difficult to decide who out of the two relations are nearer to the seller.

No actual difficulty has so far been experienced in determining as to who is nearer in relationship out of two rival claimants. It will be noticed that a person has to be co-sharer or partner in the property before he can claim preferential right of pre-emption over another co-sharer on the ground of relationship. It cannot therefore be said that the right of pre-emption is based on relationship alone. In determining as to who should preempt the property out of two persons belonging to the same class the preferential right has been given to a nearer relation.

If the right had been given in equal shares to pre-emptors of the same class the public policy behind granting this right would have been defeated as the exercise of the right of pre-emption in that case might lead to an actual increase in the number of co-sharers. In order to carry out the underlying public policy it was either necessary to determine the person by lot (as has been, done under the Oudh Laws Act) or to give the preferential right to one of the co-sharers on some ground or other,

I am unable to think of any other ground by which the public policy behind allowing a co-sharer of an undivided property to pre-empt an undivided share could have been served better. I, therefore, hold that this proviso serves a public interest and is reasonable. In the case reported in ''Siremal v. Kantilal'', 1954 Raj 195 (AIR V 41)(E), the right was based solely on relationship (see p. 197 col. 2). That case is clearly distinguishable.

The constitutionality of the Rewa Pre-emption Act was first considered in ''Civil Appeal No. 76 of 1950, D/- 18-12-1950 (Vin Pra) (F)'' by my learned predecessor in which the pre-emption of some tenancy rights was claimed on the ground of vicinage. It was held that the restriction imposed was not unreasonable and was in the interest of the general public

because pre-emption enables the property to be used in the most conducive manner and eliminates or at least reduces the chances of friction between owners of adjoining properties.

With all respect to my learned predecessor I am unable to see how pre-emption on the ground of vicinage enables the property to be used in the most beneficial manner. The chances of friction, between owners of neighbouring land are remote and are quite on a different footing than chances of friction between owners of undivided interest in the same property.

The only other reported case in which the reasonableness of the right of pre-emption on the ground of vicinage was considered is the Pull Bench case of the Rajasthan High Court reported in ''Panch-Gujar-Gaur-Brahmans v. Amarsingh'', 1954 Raj 100 (AIR V 41) (FB) (G). It was held that the custom of pre-emption which allows the owner of adjoining property to claim possession of a property sold only on the ground of being a owner of the adjoining property is invalid as being contrary to the provisions of Art. 19(l)(f) of the Constitution. Bapna J. while delivering the judgment of the Court observed:

In a society where certain classes were privileged and preferred to live in groups and there were discriminations on grounds'' of religion, race and caste there may have been some utility in allowing persons to prevent a stranger from acquiring property in an area which had been populated by a particular fraternity or class of people and in those times a right of pre-emption to oust a stranger from the neighborhood may have been tolerable or even beneficial.

Our Constitution, however, prohibits discrimination against any citizen on grounds only of religion, race, caste, sex, place of birth or any of them under Art. 115 of the Constitution and guarantees a right to every citizen to acquire, hold and dispose of property except by restriction which may be reasonable and in the interest of the general public. Prima facie, we have to lean towards the right guaranteed and keep the restriction within permissible limits and in that light the manners and customs which permitted the division of society into groups and exclusion of strangers from any locality should now be considered as unreasonable.

In ''Moti Lal v. The Govt, of the State of Uttar Pradesh'', 1951 All 257 (AIR V 38 (FB) (H), ''Bhagat Singh Hira Singh v. State of Patiala'', 1954 Pepsu 180 (AIR V 41) (I) and ''Uttam Singh v. Kartar Singh'', 1954 P&H 55 (AIR V 41) (FB) (J)'', preemption of zamindari property was claimed on the ground of co-sharing.

On behalf of the respondents it was argued that the right of pre-emption is a right attached to property and it cannot affect the fundamental rights of a citizen. Reliance was placed on the decision of the Supreme Court reported in '' 1954 S. C. 417 (AIR V 41) (A), In which it was held that the right of pre-emption is not a personal right on the part of the pre-emptor, but that it runs with the land. At the same time it was observed:

The correct legal position seems to be that the law of pre-emption imposes a limitation or disability upon the ownership of a property to the extent that it restricts the owner''s unfettered right of sale and compels him to sell the property to his co-sharer or neighbour as the case may be. The person who is a co-sharer in the land or owns lands in the vicinity consequently gets an advantage or benefit corresponding to the burden with which the owner of the property is saddled, even though it does not amount to an actual interest in the property sold.

It will thus be seen that the right does not amount to an interest in land and wherever it may reside it restricts the owner''s unfettered right of sale. The law of pre-emption is therefore a clog on thte right guaranteed under Art. 19(1) (f) and as has been shown above it is not saved by sub-cl. (5) of that Article.

I accordingly hold that sub-s, (2) of S. 10, Rewa Pre-emption Act is invalid as being contrary to the provisions of Art. 19(1)(f) of the Constitution which is not saved by sub-cl. 5 of that Article. The respondent is therefore not entitled to preempt plots 1403 and 1403.

In respect of plot No. 1405 even on the findings of the lower appellate Court the respondent has no preferential right as the appellant is a co-sharer in it whereas the respondents are not co-sharers. In plot No. 1404 both the pre-emptors and purchasers are co-sharers. I have head that sub-section (1) of S. 10 and the proviso are both valid. The pre-emptors being nearer in relationship have a preferential right of pre-emption in respect of this plot.

In the sale deed the consideration paid for different plots has not been shown separately. The question therefore arises as to what consideration is payable by the pre-emptors for pre-empting plot No. 1404 which alone they are entitled to pre-empt out of the four plots sold under the deed for Rs. 500/-.

Under S. 12, Rewa Pre-emption Act the person proposing to sell any property in respect of which any person has a right to pre-emption is bound to give notice to the persons concerned of the prices at which he is willing to sell such property. The word used in the section is "may". In the context in which it has been used it means "must". For, failure to serve a notice gives rise to a cause of action to a suit for pre-emption under S. 15(a).

Section 13 provides that a person having a right of pre-emption in respect of the property proposed to be sold shall lose such right unless within three months from the date of such notice he or his agent pays or tenders "the price aforesaid" to the person so proposing to sell.

A similar point came up for consideration before their Lordships of the Privy Council in '' 1934 P.C 153 (AIR V 21) (C)'', while dealing with a case of pre-emption under the Oudh Laws Act, the corresponding provisions of which ail similar to the provisions of Ss. 12, 13 and 15, Rewa Pre-emption Act. It was held on an interpretation of these provisions that where a person entitled to pre-empt only a part of the property sold under a sale deed for a consolidated consideration he must pay the entire consideration before he can pre-emption a part of the property.

The Allahubad High Court took a different view in ''Mt. Zainab Bibi v. Umar Hayat Khan'', 1936 All 732 (AIR V 23) (K) in a case arising out of the Agra Pre-emption Act. The corresponding provisions of that Act are however different and the reasoning underlying the Privy Council decision referred to above is not applicable. I, therefore, hold that the pre-emptors are only entitled to pre-empt the property on demand of the full consideration of the entire sale deed namely Rs. 500/-.

I accordingly allow the appeal in part as indicated above and decree the suit for pre-emption in respect of plot No. 1404 only on payment of Rs. 500/- within a month, This sum should be deposited in this Court by 28-3-55. If the sum is deposited within the time fixed parties shall bear their own costs throughout. If however such sum is not paid into Court by the above date the suit shall stand dismissed with costs against the contesting defendants. The appellant would be entitled to recover half the costs of the present appeal from the contesting respondents in the latter case.