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Pre-emptive rights are in the nature of “very weak rights”- SC

In the case of Raghunath (D) By Lrs. v. Radha Mohan (D) Thr. Lrs. &Ors, (CIVIL APPEAL NO. 1442 OF 2016), the Supreme Court had held that the right of pre-emption is a very weak right and it would not be appropriate or permissible to adopt legal reasoning that would make 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 of pre-emption over the subject immovable property. The judges, in this case, were Justice Sanjay Kishan Kaul, Aniruddha Bose & Krishna Murari.

The facts of the case primarily focus on the question of 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 such a  proceeding in a situation where the original plaintiff sought to enforce such right after three sale transactions which had taken place in the past involving the subject immovable property in the years 1945, 1946, and 1966. On 5th November that year, the last transaction was effected., after the 1966 Act had become operational.  The factum of the plaintiff’s entitlement otherwise claims the right of pre-emption in terms of Section 6 of the 1966 Act is not in dispute in this proceeding. 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.

Thus in this case first and foremost it was felt necessary by the court to decide the nature of the pre-emptive rights. On this behalf, the court had discussed the right of pre-emption in a recent judgment in Barasat Eye Hospital & Ors. v. Kaustabh Mondal,(2019) SCC Online SC 1351.

The court held that the “We have given our thoughtful consideration to the aforesaid issue and in order to determine the same, we had, at the inception itself, set out the judgment in Barasat Eye Hospital case (supra).  We have, thus, referred to the earlier judicial view in para 10 of the judgment extracted aforesaid. 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.  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.  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.  In our view, it is relevant to note this observation and we once again emphasise 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.”

“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.

We suppose that the aforesaid answers 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. We opine 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. 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. We also wonder 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!

The result is the impugned order is set aside and the order of the trial court dated 01.02.1988 and the first appellate court dated 30.03.1989 are upheld. 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. This puts an end to the legal battle which began 45 years ago!

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