2019 (10) TMI 1560 - SC - Indian Laws

Right of pre-emption - the right sought on the ground of vicinage - Respondent sought to dispute the apparent consideration set out in the Sale Deed vide this application by alleging that only a sum of Rs. 2,50,000/- had been paid as consideration for sale, and that an inflated sum had been set out in the Sale Deed as a result of collusion and conspiracy between the transferor and the transferee, being the Appellants herein. HELD THAT - The historical perspective of this right was set forth by the Constitution Bench of this Court, as far back as in 1962, in the Bhau Ram 1962 (3) TMI 132 - SUPREME COURT case. The judgment in the Bishan Singh and Ors. supra case preceded the same, where different views, expressed in respect of this law of preemption, have been set out, and thereafter the position has been summarized. There is no purpose in repeating the same, but, suffice to say that the remedial action in respect of the right of pre-emption is a secondary right, and that too in the context of the right being a very weak right. It is in this context that it was observed that such a right can be defeated by all legitimate methods, such as a vendee allowing the claimant of a superior or equal right to be substituted in its place. This is not a right where equitable considerations would gain ground. The second aspect of importance is that given the aforesaid position, even the time period for making the deposit, Under Section 8(1) of the said Act, has been held to be sacrosanct, in view of the judgment of this Court in the Gopal Sardar 2004 (3) TMI 743 - SUPREME COURT case. The very provision of Section 8(1) of the said Act came up for consideration and, as held in that case, if the time period itself cannot be extended and if Section 5 of the Limitation Act would not apply, while interpreting Section 8 of the said Act, then the requirement of deposit of the amount along with the application, within the time stipulated is sacrosanct. The amount to be deposited is not any amount, as that would give a wide discretion to the pre-emptor, and any pre-emptor not able to pay the full amount, would always be able to say that, in his belief, the consideration was much lesser than what had been set out. Now turning to Section 9 of the said Act, from which, apparently, some judgments of the Calcutta High Court have sought to derive a conclusion that an inquiry into the stated consideration is envisaged. However, the commencement of Sub-section (1) of Section 9 is with on the deposit mentioned in Sub-section (1) of Section 8 being made Thus, for anything further to happen Under Section 9 of the said Act, the deposit as envisaged Under Section 8 of the said Act has to be made. It is only then that the remaining portion of Section 9 of the said Act would come into play. The question now is as to what would be the nature of inquiry which has been envisaged to be carried out by the Munsif. If Section 9, as it reads, is perused, then first, the amount as mentioned in the sale transaction is to be deposited, as per Sub-section (1) of Section 8 of the said Act. Once that amount is deposited, the next stage is for the Munsif to give notice of the application to the transferee. The transferee thereafter, when enters appearance within the time specified, can prove the consideration money paid for the transfer and other sums. Such other sums, if any, are as properly paid by him in respect of the land including any sum paid for annulling encumbrances created prior to the day of transfer and rent or revenue, cesses or taxes for any period. The inquiry, thus envisaged, is in respect of the amount sought to be claimed over and above the stated sale consideration in the document of sale because, in that eventuality further sums would have to be called for, from the pre-emptor - when the inquiry is being made by the Munsif, whether in respect of the stated consideration, or in respect of any additional amounts which may be payable, the pre-requisite of deposit of the amount of the stated consideration Under Section 8(1) of the said Act would be required to be fulfilled. Thus, the pre-requisite to even endeavour to exercise this weak right is the deposit of the amount of sale consideration and the 10% levy on that consideration, as otherwise, Section 8(1) of the said Act will not be triggered off, apart from making even the beginning of Section 9(1) of the said Act otiose - thus the impugned order and the view adopted would make a weak right into a 'speculative strong right', something which has neither historically, nor in judicial interpretation been envisaged. Whether the Respondent can now be granted time to deposit the balance amount? - HELD THAT - When the direction was so passed, in pursuance of the order of the appellate court, the Respondent still assailed the same. The requirement of exercising the right within the stipulated time, in respect of the very provision has been held to be sacrosanct, i.e., that there can be no extension of time granted even by recourse to Section 5 of the Limitation Act. Once the time period to exercise a right is sacrosanct, then the deposit of the full amount within the time is also sacrosanct. The two go hand-in-hand. It is not a case where an application has been filed within time and the amount is deficient, but the balance amount has been deposited within the time meant for the exercise of the right - there cannot be any extension of time granted to the Respondent now, to exercise such a right. This is, of course, apart from the fact that this speculative exercise on behalf of the Respondent has continued for the last fourteen years, by deposit of 50% of the amount. The Respondent is entitled to the refund of the amount deposited by him, together with interest, if any, earned on the same, in case it has been kept in an interest bearing deposit - Appeal allowed.

Summary

Issues Involved:
1. Historical context and constitutional validity of the right of pre-emption.
2. Specific provisions and application of the West Bengal Land Reforms Act, 1955.
3. Interpretation and enforcement of Sections 8 and 9 of the said Act.
4. Judicial precedents and their relevance to the right of pre-emption.
5. Procedural requirements for exercising the right of pre-emption.
6. Consequences of non-compliance with procedural requirements.
7. Entitlement to refund of deposited amounts if pre-emption is not enforced.

Issue-wise Detailed Analysis:

1. Historical Context and Constitutional Validity of the Right of Pre-emption:
The right of pre-emption originated during the Mohammedan rule and was accepted in various courts, primarily in northern India. It was incorporated into various statutes both before and after the Constitution of India came into force. The constitutional validity of these laws was debated in Bhau Ram v. Baij Nath Singh and Ors. (AIR 1962 SC 1476), where differing views were expressed. Some considered the right opposed to justice, equity, and good conscience, while others saw its utility in preventing strangers from acquiring property in areas populated by a particular fraternity or class. This was balanced with Article 15 of the Constitution, which prohibits discrimination and guarantees the right to acquire, hold, and dispose of property, subject to reasonable restrictions.

2. Specific Provisions and Application of the West Bengal Land Reforms Act, 1955:
The West Bengal Land Reforms Act, 1955, is one of the few enactments where the right of pre-emption still prevails. The Preamble of the Act aims to reform land tenure laws and consolidate land reforms in the state. Key definitions include "bargadar" (a person cultivating another's land for a share of the produce) and "raiyat" (a person or institution holding land for any purpose).

3. Interpretation and Enforcement of Sections 8 and 9 of the Said Act:
Section 8 allows a co-sharer or a contiguous tenant to apply for the transfer of land within specific time frames, upon depositing the consideration money plus 10%. Section 9 outlines the procedure for the Munsif to notify the transferee and conduct an inquiry into the consideration money and other sums paid. The Munsif can direct the applicant to deposit additional amounts if necessary and order the transfer of the land to the applicant upon completion of the deposit.

4. Judicial Precedents and Their Relevance to the Right of Pre-emption:
The court referred to Bishan Singh and Ors. v. Khazan Singh and Anr. (AIR 1958 SC 838), which elucidated the primary and secondary rights of pre-emption and emphasized that it is a "very weak right." The court also cited Gopal Sardar v. Karuna Sardar (2004) 4 SCC 252, which held that the right must be exercised strictly within the statutory framework, with no room for equity considerations. Kedar Mishra v. State of Bihar (2016) 7 SCC 478 reiterated the necessity of depositing the full purchase money and an additional 10% to exercise the right of pre-emption.

5. Procedural Requirements for Exercising the Right of Pre-emption:
The court emphasized that the right of pre-emption is triggered only upon the deposit of the full stated consideration plus 10%. Section 9's inquiry into the consideration amount is secondary to the initial deposit requirement. The court rejected the argument that an application could be filed with a partial deposit, stating that such an interpretation would make parts of Sections 8 and 9 otiose.

6. Consequences of Non-compliance with Procedural Requirements:
The court held that non-compliance with the deposit requirement within the stipulated time renders the right of pre-emption unenforceable. The court emphasized that both the time frame and the amount to be deposited are sacrosanct. The Respondent's failure to deposit the full amount within the time frame meant that no extension could be granted.

7. Entitlement to Refund of Deposited Amounts if Pre-emption is Not Enforced:
The court concluded that if the right of pre-emption is not enforced, the deposited amount should be refunded to the pre-emptor. The vendee or the state should not appropriate this amount. In this case, the Respondent was entitled to a refund of the deposited amount, along with any interest earned.

Conclusion:
The appeal was allowed, and the court's interpretation aimed to put the controversy regarding the "weak right" of pre-emption to rest. The parties were directed to bear their own costs.