Boutique Litigation Law Firm - Retain Lawyers - Research based Law Firm - Complete legal services

Pre-Emption is a “very weak right” and is, thus, capable of being defeated by all legitimate methods: SC

The SC on October 13, 2020 {RAGHUNATH (D) BY LRS. vs RADHA MOHAN (D) THR. LRS & ORS.} held that 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. It was held that 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. It was held that 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. It was held 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.

It was held by the Bench, comprising of Justice Sanjay Kishan Kaul, Justice Aniruddha Bose & Justice Krishna Murarithat 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. It was held that the loss of right mandated under Section 9 of the Act is absolute. It was also held that 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. It was held that 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. It was held that this would 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 co-sharer will jump into the scene.

The singular question was framed for consideration in this appeal by the SC i.e.  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 the present 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 SC held that such a right is available once - whether to take it or leave it to a person having a right of pre-emption. It was held that if such person finds it is not worth once, it is not an open right available for all times to come to that person. It was held that this would itself be an impediment in exercise of the right of preemption in a subsequent transaction. It was held that 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 question was whether this right of substitution can be exercised recurringly or only once. It was held by the SC that answer to the query is ‘only once’.

It was held that 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. It was held 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. It was held that 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. It was held that 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.

Resultantly, the impugned order was set aside by the SC and the order of the trial court dated 01.02.1988 and the first appellate court dated 30.03.1989 were upheld. It was held that 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. It was held that this puts an end to the legal battle which began 45 years ago.

The appeal, was accordingly, allowed.

Leave a comment

Please note, comments must be approved before they are published