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Doctrine of Pre-emption

Pre-emption law has its origin in the saying of the prophet. Pre-emption or shufa means conjunction, which is adjacent. In the case of Govind Dayal v. Inaytullah (1885), Mahmood J describes pre-emption as, a right which the owner of certain immovable property possesses, as such, for the quiet enjoyment of that immovable property, to obtain, in substitution for the buyer, proprietary possession of certain other immovable property, not his own, on such terms as those on which such latter immovable property is sold to another person."

Illustration: A and B live adjacent to each other. X is the owner of land A and Y is the owner of land B, when X decides to sell land A, it is the legal duty of X to first offer it to Y. Only when Y shows no interest in buying the property then only X can sell land to any other person(z). And if X sells his land to Z without offering to Y, then Y has a right of pre-emption against Z and can dispossess him after paying the same price which Z paid to X. If the price appears inflated with a motive to defeat or discourage Y, the pre-emption right holder, the court will interfere and rationalize the price. The main motive behind this law is to dislodge a stranger from disturbing the tranquillity of the neighbourhood.
  • According to Hanafi law, when a property is sold there is a co-sharer, a participant in the amenities and appendages of the property, and a neighbour owning an adjoining immovable property.
  • Shia law confines pre-emption to co-owners in the undivided property.
  • Shafi' law recognizes pre-emption only among the co-sharers.

From the above illustration, it is quite evident that there are 3 parties involved.
  • Vendor: the person who owns the property and is willing to sell the property. From the illustration X is the owner of the property and he decides to sell it.
  • Vendee: the stranger to the property and who buys it. From the illustration, Z is the stranger to the property. The third person involved.
  • Pre-emptor: the neighbour, the co-sharer or heir, from the illustration Y has land adjacent to X. therefore, neighbour - pre-emption right holder.

Development through cases
Justice Mitter dealt with the case of Sk. Kudratullah v. Mahini (1869), in 2 folds; firstly, whether the right of pre-emption exists before the actual sale of the property? and secondly, whether the property which is subjected to the right of pre-emption is passed on full ownership to the purchaser?

Justice Mitter's response to both the questions was negative and affirmative respectively. And concluded that the right to pre-emption is nothing but the mere right to repurchase.

After 16 years in the case of Gobind Dayal v. Inayatullah explained the real nature of the right of pre-emption. It was observed that, first, it is unlawful to sell a property without informing the neighbour. It is up to the neighbour either to take it or leave it. Second, the concept of pre-emption exists in all joint properties. And preferential right arises if the vendor fails to inform the coparcener (neighbour). Hence, right before actual sales. Sale is not the actual cause of pre-emption.

Further, in the case of Bishan Singh v. Khazan (1958), the Supreme Court summarized the rules and nature of pre-emption:
  • The right of pre-emption is the right to offer the property to be sold. It is the inherent right or the primary right of the adjacent property's owner.
  • It is the remedial right of the pre-emptor to follow the thing sold.
  • It is not the right to repurchase; it is the right of substitution.
  • It is right to acquire the whole property, not the part of it.
  • Preference is the essence of the right.
  • The right provided is weak and can be defeated by appropriate methods.
Constitutional Validity
Before the 44th Constitutional Amendment Act, 1978
The law of pre-emption infringes the fundamental right to hold and dispose of property, guaranteed under Article 19(1)(f) of the Constitution?

Article 19(1)(f) of the Constitution of India states that all citizens have the fundamental right to acquire, hold and dispose of the property. Also, as per clause 5 reasonable restrictions can be imposed, in the interest of the general public.

Several High courts held that pre-emption on the ground of vicinage is void, being an unreasonable restriction under Article 19(1)(f), but pre-emption between co-sharers (shefi-i-Sharik) or owners of dominant and Shafi-i-khalif, is protected by clause (5) i.e., reasonable restriction. In Bhau Ram v. Baij Nath Singh (1961), the Supreme Court held that pre-emption by vicinage, restricts the right to dispose of property and not in the public interest, the restriction imposed was not reasonable. Additionally, it divided society based on caste and religion which is prohibited by Article 15 of the Constitution of India.

After the 44th Constitutional Amendment Act, 1978
After the amendment Article 19(1)(f)- right to property and Article 31 was taken away from the Constitution and it was subjected under Article 300A. The question was raised whether the judiciary can be used to implement customary rule (by vicinage) on the grounds of caste and religion prohibited under Article 15 of the Constitution.

In the case of Razzaque Sanjansaheb Bagwan v. Ibrahim Haji Mohd (1998), the right of pre-emption was claimed on the ground by vicinage, having property adjacent to the suit house. The Supreme Court observed and held that the law of pre-emption constructed on vicinage is void and unconstitutional, hence, the claim was dismissed.

Rights under pre-emption
When does the right arise

There are two circumstances under which the right of pre-emption arises:
  1. In case of sale
    The right to claim pre-emption arises when the property is subjected to a valid sale. Merely an intention to sell can't be ground for claiming the right of pre-emption. The sale excludes inheritance, gift, waqf, bequest of a lease in perpetuity and sale includes exchange. The sale must be bonafide.
  2. When the sale is complete
    Mere intention to sell can't give rise to the right to claim. The right to make a claim arises when the sale is completed. According to Muslim law, a sale is considered to be completed when the purchaser pays to the vendor and the possession is transferred/ delivered by the vendor. It might not be necessary that the execution of an instrument of sale is according to the Transfer of Property Act 1882.

    Section 54 of TPA states that, sale of property of the value of Rs. 100 and upwards is not complete unless made through a registered instrument. Further, the High Court of Patna and Calcutta stated that the right of pre-emption doesn't arise until registration is completed as per TPA.

When right is lost
  • Omission to claim or waiver; or excessive delay in demanding it: when the person entitled to this right, either expressly or impliedly waived it or omits to assert immediately his right.
  • Death of pre-emptor: the right to pre-emption dies with the death of pre-emptor, where the pre-emptor dies before enforcing it, under the Hanafi law. Under Shafi's and Shiite law, the right to pre-empt delegates upon the pre-emptor's heirs in the proportion of their right of inheritance.
  • Forfeiture of right: the right of pre-emption is forfeited in the following conditions:
    1. Where the pre-emptor releases it for consideration,
    2. Tries to dispose of the subject of pre-emption to a stranger,
    3. Partition is made of a property in respect of which the right of pre-emption can only be claimed by coparceners,
    4. There is some statutory disability with the pre-emptor as regards the purchase of land in question concerned.

The right of pre-emption is available to owners of pre-emptive tenements only, that is, any of the following three types of ownerships:

Pre-emption on the basis of co-sharers (Shafi-i-Sharik)
The owner of an undivided share in the immovable property previously inherited from a deceased person. In the case where the other co-owner sells his share to someone without first offering it to his co-sharer, then the co-owner has a right to claim it back from the outsider. Nothing except sale will bring to life the right of pre-emption. The right of pre-emption can't be accessed in the case of lease or mortgage. According to Shia law, pre-emption can be claimed only when there are two co-sharer.

Pre-emption on the basis of a participator in immunities and appendages (Shafi-i-Khalit)
The pre-emptor is known as a participator in immunities and appendages There are three ways in which a person may be considered to be a Shafi-i-Khalit: 1. he may be the owner of a dominant heritage; 2. he may be the owner of a servient heritage: 3. the property sold, also the property of the pre-emptor may be a dominant heritage to a third person's property.

Pre-emption on the basis of neighbourhood or vicinage (Shafi-i-Jaar)
The owner of adjoining immovable property, which is a neighbour. The right of pre-emption on the ground of the vicinage doesn't extend to the estate of large magnitude; it is confined to houses, gardens, and small pieces of land. Where more than one pre-emptor belongs to different categories, the first category or class excludes the second, and the second excludes the third.

Who can pre-empt
Pre-emption arises from the following categories of persons. The following three persons may be pre-emptor:
  • Co-sharer by Inheritance (Shafi-i-Sharik)
  • Participator in Immunities & Appendages (Shafi-i-Khalit)
  • Owner of Adjoining Property (Shafi-i-Jar)
Pre-emption enforcement requisites; There are three formalities or necessary steps that are to be followed strictly for claiming Shufa, they are known as three demands:
  • The First demand- Talab-i-Mowasibat
  • The second demand- Talab-i-ishad
  • The third demand- Talab-i-tamlik

According to Shia law, there is no distinction between Talab-I-Mowasibat and Talab-I-Ishhad and therefore, only one demand needs to be made.

Application of pre-emption in India
In the case of Dig amber Singh v. Amhad (1941), the Privy Council held that there are four grounds on which a claim for pre-emption may be based in India.

Muslim law
The right of pre-emption might be claimed under Muslim law when pre-emption is not related to customs or statutes. The right of pre-emption can be claimed under Muslim law when the vendor and the vendee are Muslims. It applies to Muslims throughout India and it is part of the personal law. In the case of Ibrahim Saib v. Muni-mi-ud-din and Mohd. Beg v. Narayan Megha Ji Patil the court observed and held that pre-emption restricts the freedom of sale/ transfer property under the Transfer of Property Act, 1882 and the Indian Contract Act.

By custom
The right may be claimed on the basis of custom, in the absence of statutory law of pre-emption. Whenever there is any inconsistency between the customs and Muslim law of pre-emption, the customs will prevail. The right of pre-emption based on custom is even applicable to Hindus, only in definite localities. For example, parts of the U.P, Bihar, Maharashtra, and Gujarat. Even among Hindus, the law of pre-emption has become customary law. The right of pre-emption is extended to Hindus but only after being established. And the burden of proving custom lies on the person who establishes it.

By statute
The law of pre-emption is applicable under the following statutes:
  • Oudh laws act, 1876
  • Punjab pre-emption act, 1913
  • Agra Pre-emption act, 1922
  • C.P. Land Revenue act, 1917
  • Berar Land Revenue Code, 1928
  • Zabta Shikmidaran

By contract
There are certain cases where the right of pre-emption arises by contract between the sharers. In the wajib-ul-arz of various villages, especially in Uttar Pradesh, contacts of pre-emption were founded. It is governed by the terms of the contract only. It is irrelevant whether the terms of the contract align with the provisions of the Muslim law of pre-emption. The terms of the contract will have an overriding effect.

Applicability of pre-emption on Hindus
Muslim law doesn't discriminate based on caste and creed regarding the applicability of pre-emption to a non-Muslim. Hindu law doesn't provide any rule related to the applicability of pre-emption on Hindus. It is very clear that the law of pre-emption applies to Hindus and they are entitled to exercise the said right.

Difference of religion
The difference in the religion of vendor, vendee and the pre-emptor or the buyer, seller and the pre-emptor. Where all the parties involved are Muslim then there is no problem and the law of pre-emption is applied. But what if all the parties involved are not Muslim? Hence in the following circumstances/ cases law of pre-emption can't be applied.
  • Where all parties are Hindu and there is no relevant custom present.
  • Where the vendor and the vendee are Hindu, the pre-emptor is a Muslim.
  • Where the vendor and the vendee are Muslim, the pre-emptor is Hindu.
  • Where vendor and pre-emptor are Hindu, the vendee is Muslim.
  • Where the vendor and pre-emptor are Muslim, vendee Hindu.
  • Where the vendor is Muslim, vendee and pre-emptor are Hindu.

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