2020 (10) TMI 1362 - SC - Indian Laws

Pre-emption suit barred by limitation for failure to challenge sale deed, appeal allowed after 45-year legal battle.

The court held that the suit for pre-emption was barred by limitation as the plaintiff failed to challenge the sale deed of 5th November 1966. The right ... Right of pre-emption in case of sale of immovable property - time limitation - whether the right of pre-emption can be enforced for an indefinite number of transactions or it is exercisable only the first time? - HELD THAT:- 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 - A reading of the Section 9 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. 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. So far as the case of Kutina Bibi [1960 (7) TMI 68 - ASSAM HIGH COURT] 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 Plaintiff's right as a co-sharer had become disputed in absence of challenge to the previous transaction. It is opined 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 preemption in a subsequent transaction. The judgments referred to by the Respondent of Bishan Singh [1958 (5) TMI 52 - SUPREME COURT] and Barasat Eye Hospital [2019 (10) TMI 1560 - SUPREME COURT] 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 right of pre-emption 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. Appeal allowed. Issues Involved:1. Commencement of limitation period for enforcing the right of pre-emption.2. Nature and historical context of the right of pre-emption.3. Facts and procedural history of the case.4. Legal arguments and precedents regarding the right of pre-emption.5. Interpretation of relevant statutory provisions and limitation period.6. Judicial approach and conclusion on the right of pre-emption.Issue-wise Detailed Analysis:1. Commencement of Limitation Period for Enforcing the Right of Pre-emption:The primary issue was whether the limitation period for enforcing the right of pre-emption starts from the first sale deed after the Rajasthan Pre-Emption Act, 1966 came into force or from any subsequent sale based on Article 97 of the Limitation Act, 1963. The court examined whether the plaintiff's suit for pre-emption over a transaction effected on 21st January 1974 was barred by limitation, considering three prior sale transactions in 1945, 1946, and 1966.2. Nature and Historical Context of the Right of Pre-emption:The right of pre-emption originates from Mohammedan rule, based on customs accepted in northern India. It was incorporated into various statutes before and after the Constitution of India. The right of pre-emption was debated for its constitutional validity and its reasonableness in the context of preventing strangers from acquiring property in certain areas. The judicial approach, as discussed in Bishan Singh v. Khazan Singh, established that the pre-emptor has two rights: the primary right to the offer before sale and the secondary right to follow the thing sold, which is a right of substitution.3. Facts and Procedural History of the Case:The Rajasthan Pre-Emption Act, 1966 came into force on 1.2.1966. The plaintiff filed a suit on 10.1.1974 seeking a decree of pre-emption against the sale of property effected on 21.01.1974. The trial court decreed the suit, finding it within the limitation period of one year. The appellate court remitted the matter to the trial court, which found the suit barred by limitation based on earlier sale deeds. The High Court, however, opined that each sale gives a fresh cause of action, thus the suit was within time.4. Legal Arguments and Precedents Regarding the Right of Pre-emption:The appellant argued that the right of pre-emption should be exercised at the first instance and not for subsequent sales, citing various judgments like Prahlad Kumar v. Kishan Chand, Mangti Ram v. Onkar Sahai, and Kutina Bibi v. Baikuntha Chandra Dutta. The respondent contended that each sale is a separate cause of action under Article 97 of the Limitation Act, 1963, and the right of pre-emption is a right of substitution, not requiring a challenge to earlier sales.5. Interpretation of Relevant Statutory Provisions and Limitation Period:The court analyzed Section 21 of the Rajasthan Pre-Emption Act, 1966, and Article 97 of the Limitation Act, 1963, concluding that the right of pre-emption must be exercised within one year from the date of sale. The court emphasized that the right of pre-emption is a 'very weak right' and is not a recurring right for every subsequent sale. Section 9 of the Act, which mandates the loss of the right if not exercised within two months, supports this interpretation.6. Judicial Approach and Conclusion on the Right of Pre-emption:The court agreed with the consistent view of the Rajasthan High Court that the right of pre-emption is exercisable only at the first instance and does not continue indefinitely. The court concluded that the plaintiff's failure to challenge the sale deed of 5th November 1966 barred the suit by limitation. The impugned order was set aside, and the trial court's and first appellate court's orders were upheld, ending the legal battle that began 45 years ago.Conclusion:The appeal was allowed, and the suit was barred by limitation as the original plaintiff did not challenge the sale effected on 5th November 1966. The right of pre-emption can only be exercised at the first instance and not for subsequent transactions.