Right of Pre-Emption is a Right of substitution and can be exercised only once: SC

Raghunath (D) By Lrs. v. Radha Mohan (D) Thr.Lrs and Ors, Civil Appeal No. 1442 of 2016,13 October, 2020.

Counsel for the Appellants: Irshad Ahmed.

Counsel for the Respondents: Christi Jain.

The Hon’ble Supreme Court comprising of Justice Sanjay Kishan Kaul, Justice Aniruddha Bose and Justice Krishna Murari held in a case that the right of pre-emption is a right of substitution and can be exercised only once and not recurringly.

The facts of the case are such that the original plaintiff sought to enforce such right of pre-emption 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. 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.

The question of law framed and answered by this court is 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.

The arguments advanced by Mr. Irshad Ahmad, learned counsel for the appellant was on dual contours. The first argument was based on the policy behind the right of pre-emption, i.e. that no stranger should be allowed to thrust himself upon the co-sharer in a property against their will and to prevent apprehended inconvenience to the co-sharer. The second plea advanced was that if a plaintiff waived his right of pre-emption by conduct, no such right is available on subsequent sale of the same property and the plaintiff is estopped from claiming any right of pre-emption of subsequent sale.

Ms. Christi Jain, learned counsel for the respondent, among other things, contended 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 the Act. Thus, each sale deed is a separate cause of action. 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 Court, after referring to section 3( Right of Pre-emption), section 6 (person to whom right of pre-emption accrues), section 8 ( notice to pre-emptors) , section 21(special provision for limitation) of te Rajasthan Pre-emption Act, 1966 and Article 97 of the first schedule of the Limitation Act, 1963, observed the following:

16. 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 purchase 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.

Subsequently, the Court, referred to section 9(loss of right of pre-emption on transfer) of the Rajasthan Pre-emption Act, 1966 and with that regard, held the following:

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 preemption and yet he, even after decades, can exercise such a right. This could 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 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 answered the respondent’s query that the right of pre-emption is a right of substitution and hence the same would follow on to subsequent sales in the following words:

20. The judgments referred to by the respondent of Bishan Singh and Barasat Eye Hospital 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’.

The court also referred to its judgment in Indira Bhai v. Nand Kishore and agreed to the holding in Para 5 of that judgment in the following words:

21. 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.

The appeal, is accordingly, allowed.

Kalidharun K M.

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