Bhau Ram Vs. B. Baijnath Singh  INSC
87 (7 March 1962)
GUPTA, K.C. DAS AYYANGAR, N. RAJAGOPALA
CITATION: 1962 AIR 1476 1962 SCR Supl. (3)
RF 1963 SC 533 (16,24) F 1965 SC 314 (2,3,4)
F 1967 SC1578 (9) R 1986 SC 859 (7,9,10) R&E 1992 SC 207 (2)
Pre-emption-Statutes entitling neighbours,
to pre-empt-Constitutionality of-If offend
right to property--Whether discriminatory-Rewa State Pre-emption Act, 1946, s.
10-Punjab Pre-emption Act, 1913(Punj. 1 of 1913), s. 16--Berar Land Revenue
Code, 1928, Ch. XIV-Constitution of India, Arts. 14, 19(1)(f), 19(5).
Section 10 of the Rewa State Pre-emption Act,
1946, conferred the right of pre-emption on the ground, inter alia of vicinage.
The proviso to S. 10 provided that among preemptors of the same class the
nearer in relationship to the vendor will exclude the more remote. There were
provisions in the Act for giving notice of an intended sale to persons having a
right of pre-emption, for the loss of the right of pre-emption in case no
action was taken on the notice and for fixation of a fair price by the Court.
It was contended 725 that s. 10 offended Art. 19(1) (f) of the Constitution and
Section 16 of the Punjab Pre-emption Act,
1913, as applied to Delhi, provided for pre-emption on six grounds, the first,
third, fourth and sixth grounds being in favour of co-sharers, owners of common
staircases, owners of common entrance from a street and owners of cortiguous
By s. 7 the operation of the Act was limited
to localities where the custom of pre-emption was prevalent. There were
provisions in the Act for giving of notice etc. as in the Rewa Act. Section 5
exempted agricultural property, shops, serai, katra, dharamsala, mosque and
other similar building from the purview of the Act. It was contended that s. 16
offended Art. 19(1)(f) and that the Act contravened Art. 14.
Chapter 14 of the Berar Land Revenue Code,
1928, created a right of pre-emption in the holder of an interest in a
survey-number when any person having an interest in any land in that
survey-number sold it to a stranger provided that the interest sold was in
unalienated land held for agricultural purposes. It was contended that this law
of pre-emption was inconsistent with Art. 19(1)(f).
Held, (per Gajendragadkar, Wanchoo and
Ayyangar,JJ., Sarkar and Das Gupta, JJ., Contra) that s. 10 of the Rewa Act
which provided for pre-emption on the ground of vicinage imposed unreasonable
restrictions on the right to acquire, hold or dispose of property guaranteed by
Art. 19(1) (f) of the Constitution and was void. It placed restrictions on the
right of the vendor to sell his property to a purchaser of his choice at a
price settled between them ; it exposed the purchaser to litigation even after
the requisite notices had been given by the vendor. There was no advantage to
the general public from such a law. The real reason behind a law of preemption
on the basis of vicinage was to prevent strangers i.e. people belonging to
different religion, race or caste, from acquiring property in any area
populated by a particular fraternity or class of people. This could not be
considered reasonable in view of the prohibition under Art.
15 of the Constitution of discrimination only
on grounds of religion, race, caste, etc.
Shri Audh Behari Singh v. Gajadhar Jaipuria,
S.C.R. 70 : Ibrahim Saib v. Muni Mir Udim
Saib, (1870) 6 Mad. H.C.R. 26 and Mohomed Beg Amin v. Narayan Meghaji Patil,
(1916) I.L.R. 40 Bom. 358, referred to.
Per Sarkar and Das Gupta, JJ. Section 10 of
the Rewa 726 Act did not offend Art. 19(1) (f). and was valid. The right of
pre-emption was not frequently exercised and the restrictions imposed by it did
not affect many persons. In a large part of the country there was customary law
of pre-emption which had been found to be reasonable before the Constitution
came into force ; nothing had happened since to make it unreasonable. The
provisions regarding notice etc.
relaxed the severity of the restriction. The
law imposed two restrictions on the vendor-first that he' may be prevented from
selling property at any price he liked and secondly, that he could not sell it
to anyone of his choice.
The first restriction was clearly reasonable
as it prevented the vendor from selling at exorbitant prices and the rich from
amassing property. The second was not a great deprivation. The law placed the
restriction on the purchaser that he could not acquire a particular property if
the adjoining owner wanted it. In view of the Indian way of life to live in
compact communities this was a reasonable restriction. It would also avoid
disputes that may arise if a stranger were allowed to come in. The reasons for
upholding pre-emption on the ground of being co-sharers were equally applicable
to pre-emption on the ground of vicinage.
The proviso to s. 10 which laid down that a
person nearer in relationship to the vendor shall have a preferential right was
not bad ; it did not create a right of pre-emption but it merely solved a
problem arising out of a valid right of pre-emption arising in favour of more
then one person.
Sardha Ram v. Haji Abdul, A.I.R. (1960) Punj.
185 and Ramchandra Krishnaji Dhagale v. Janardan Krishnappa Marwar, A.I.R.
(1955) Nag. 225, approved.
Panch Gujar Gaur Brahmins v. Amarsingh,
A.I.R. (1954) Rai.
100, Babulal v. Gowardhandas, A.I.R. (1956)
M.B.I. Sewalal Ghansham v. Param Lalanju, A.I.R. (1956) V.P. 9 and Moti Bai v.
Kand Kari Channaya, A.I.R. (1954) Hyd. 161, disapproved.
Shri Audh Behari Singh v. Gajadhar Jaipuria,
(1955) 1 S.C.R.
70 and Tyson v. Smith, (1938) 9 Ad. &
E.P. 406, referred to.
Held, further, that the first, third and
fourth grounds of pre-emption in s. 16 of the Punjab Act as applied to Delhi
did not offend Arts. 19(1) (f) and 14 and were valid. The law, under the first
ground in s. 16, providing for preemption by co-sharers imposed reasonable
restrictions in the interest of the general public on the right under Art.
19(1)(f). If an outsider was introduced as a
co-sharer in a property it would make common management extremely difficult and
destroy the benefits of ownership in common. Theadvantage of 727 excluding a
stranger in the case of a residential house was all the greater as it would
avoid all kinds of disputes.
The third ground in s. 16, which applied in a
case where the property sold had a staircase common with other properties stood
practically on the same footing as that of co-sharers.
The fourth ground in s. 16 which applied
where the property sold had a common entrance from the street with other
properties was similar to the first and the third ground.
Further, there was no discrimination in s. 16
because of the exclusion of certain properties from its operation by s. 5.
So far as agricultural property was concerned
it formed a distinct class by itself and there was no question of
discrimination on' that account. With respect to the other premises exempted by
s. 5 they formed one class, namely, those to which the public resorted which
were distinct from residential property meant for private resident. There was
no question of excluding strangers from such premises.
Uttam Singh v. Kartar Singh A. I.R. 1954 Pun.
55 and Sardha Ram v. Haji Abdul Majid Mohd. Amir Khan, A.I.R. 1960, Pun.
Per Gajendragadkar, Wanchoo and Ayyangar, JJ.
The sixth ground in s. 16 which provided for pre-emption on the ground of
vicinage was invalid for the same reasons as s. 10 of the Rewa Act was invalid.
Per Sarkar and Das Gupta, JJ. The sixth
ground of preemption in s. 16 was also valid for the same reason as s. 10 of
the Rewa Act was valid.
Held, further, that the law of pre-emption
contained in 14 of the Berar Code was valid. It applied to those who were
co-sharers or were akin to co-sharers. Such a right of preemption would result
in consolidation of holdings in a survey number which would be in the interest
of the general public.
Ramchandra v.Janardan, A.I.R. 1955 Nag. 225,
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 270 of 1955.
Appeal by special leave from the judgment and
decree dated March 21, 1952, of the former Judicial Commissioner's Court,
Vindhya Pradesh in le. A. No. 16 of 1952.
WITH Civil Appeal No. 430 of 1958.
728 Appeal from the judgment and decree dated
April 12, 1956, of the former Nagpur High Court in L.P.A. No. 116 of 55.
AND Civil Appeal No. 595 of 1960.
Appeal from the judgment and order dated
October 29, 1957, of the Punjab High Court in Civil Revision Application No. 518
D of 1956.
L. K. Jha. R. Patnaik and A. D. Mathur, for
the appellant (in C.A. No. 270 of 1955).
D. N. Mukherjee, for respondent No. 1. S. K.
Kapur and P. D. Menon, for the Intervener.
A. V. Viswanatha Sastri and A. G.
Ratnaparkhi, for the appellants in (C.A. No. 430 of 1958).
S. A. Sohoni and Ganpat Rai. for the
respondents. R. S. Narula, for the appellant (in C. A. No. 595/60).
S. K. Kapur and Ganpat Rai, for the
1962. March 7. The Judgment of
Gajendragadkar, Wanchoo add Ayyangar JJ., was delivered by Wanchoo J. The
Judgment of Sarkar and Das Gupta, JJ., was delivered by Sarkar, J.
WANCHOO, J.-,These three appeals which have
been heard together raise the constitutionality of certain provisions of the
pre-emption laws prevailing in the States of Madhya Pradesh (Rewa-State area),
Delhi and Maharashtra (Berararea). Three suits for pre-emption were brought by
preemptors which were decreed, and the present appeals are by purchasers.
Though the appeals were heard together as some of the points involved were
common, it 729 would be convenient to deal with each appeal separately because
the law involved in each case is different.
We shall begin with C.A. 207 of 1955. This is
concerned with the Rewa State Pre-emption Act, 1946 (hereinafter called the
Rewa Act), and particularly with s. 10 thereof, which is in these terms: "Classes
of pre-emptors :-Persons of' the, following classes shall have a right of preemption:-(1)
Any person who is a co-sharer or partner in the property sold and foreclosed.(2)
Any person who owns any immovable property adjoining the property sold or
foreclosed or in case of transfer of tenancy rights, the land which is the
subject of such rights.
Provided that among the above mentioned
classes the first in order will exclude the second and among persons of the
same class, the nearer in relationship to the person whose property is sold or
foreclosed will exclude, the more remote." We are in the present case
concerned with the second clause by which a person owning immovable property
adjoining the property gold or foreclosed is entitled to pre-empt subject to
the order provided in the proviso. In this case, both the purchaser and the
pre-emptors hold property adjoining the property sold, but is the pre-emptors
were related to the vendor, white the purchaser was not, the suit, was decreed
in favour of the pre-emptors in view of the proviso.
The question therefore that arises is whether
a right of pre-emption by vicinage offends Art. 19(1)(f). There has been
divergence. of opinion 730 between various High Courts on this question. The
High Courts of Rajasthan, Madhya Bharat and Hyderabad and the Judicial
Commissioner, Vindhya Pradesh have taken the view that such a right of
pre-emption offends Art. 19(1)(f) while theHigh Court of Punjab has held
otherwise. Before, however, we deal with the main points urged in this case we
may notice the argument based on the decision of this Court in Shri Audh Behari
Singh v. Gajadhar Jaipuria, where it was hold that the law of preemption creates
a right which attaches to the property and on that footing only it can be
enforced against the purchaser. The argument is that since the right of
pre-emption attaches to the property sold it is an incident of property, and
therefore cannot be held to be a restriction on the right to acquire, hold and
dispose of property. On the other band it is urged that if the law of
pre-emption creates a right which is an incident of property, even so it would
be, a restriction created by law on the fundamental right guaranteed under
Art.19(1)(f) of the Constitution. We are of opinion that even if the law of
pre-emption creates a right which attaches to property it would be creating a
restriction so far as the acquiring, holding or disposing of property is concerned
which was not there before the law of pre-emption was enacted. Therefore, even
if the liability attaches to the property, it will still amount to a
restriction on the right guaranteed by Art. 19(1)(f), when it attaches to the
property by the, law of pre-emption.
Article 19 (1) (f) gives a fundamental right
to a citizen to acquire, hold and dispose of property and cl. (5) of that
Article permits reasonable restrictions to be imposed by law oil this right in
the interests of the general public.
There can be no doubt that a taxi, of
pre-emption does impose restriction on the fundamental right guaranteed
under.Art. 19 731.
(i) (f) and the question is whether the
restriction imposed in the Rewa case is reasonable and in the interests of the
general public Section 10 of the Rewa Act applies to all kinds of property,
whether urban or rural, and whether agricultural land or house property, and it
is in that context that its reasonableness will have to be judged.
There is nothing to show in this case that
there was any preexisting custom of a similar nature prevalent in any part of
the area to which the Rewa Act applies, and even if any custom was prevalent in
any area, there is nothing to show what precisely that custom was. In any case
even if any custom was prevalent in this area before the Rewa Act came into
force and it was held reasonable by courts, that would not in our opinion be a
decisive factor in considering whether the restrictions imposed by the Rewa Act
are reasonable or not. We have to' judge the reasonableness of the law in the
context of the fundamental rights which were for the first time conferred by
the Constitution on the people of this country and which were not there when
the courts might have considered the reasonableness of the custom, if any in
the context of things then prevalent. Nor do we think that the fact that the
right of pre-emption may not be actually exercised in the case of even a large
number of sales can have any bearing on the question whether the law imposing
the restriction is reasonable or not.
Let us therefore see what the Rewa Act
provides. Section 10, as we have pointed out, gives a right of pre-emption
first to co-sharers and secondly to owners of adjoining property to which we
shall refer hereafter as pre-emption by vicinage. We are not concerned in the
present appeal with the case of co-sharers, with which we shall deal in a later
part of the judgment. Ordinarily, if there was no law of pre-emption a vendor
would be entitled to sell his property to anybody for any price that may be
settled between him and the purchaser. This 732 ` right is clearly restricted
by the law of pre-emption which may in many cases result in a depression of the
price which the vendor may otherwise be able to get for his property.
Further the Act provides that if the vendor
and the vendee desire that there may be no suit for pre-emption the vendor can
give notice to possible preemptors of the price at which the vendor is willing
to sell such property. This notice is given through the court within the local
limits of whose jurisdiction the property is situate. On such notices being
given to possible preemptors. the pre-emptor will lose the right of pre-emption
unless within one month from the date of service of such notice, he or his
agent pays or tenders the pi-ice to the vendor: see ss. 12 and 13.
Further. s. 15 shows that even where such a
notice has been given and the price has not been paid or tendered, a suit for
pre-emption can be filed after the sale in spite of s.13. on the ground that
the price stated in the notice was not fixed in good faith. The court then
decides whether the price stated in the notice is the proper price, and if it
comes to the conclusion that it is not it has the power to fix such price as
appears to it to be the fair market price of the property sold. Clearly,
therefore, there is a restriction on the right of the vendor to sell the
property at any price to which the purchaser has agreed and a, suit for
pre-emption can be filed even where a preemptor is not prepared to pay the
agreed price and can have it reduced.
The notice therefore provided in s. 12 and
the failure of the pre-emptor to comply with it under s. 13 are really of not
such value, for the pre-emptor can always get over the provisions of 3 by
alleging that the price entered in the notice was not fixed in good faith. In
effect, therefore, every sale will be open to pre-emption and the law of preemption
thus provides a crop of litigation for the vendor and the vendee. This is the
first result of the law of preemption. Further we see no 733 reason to think
that the law of pre-emption prevents the sale of property at an unconscionable
price for if a vendor is demanding an unconscionable price be will not be able
to find a vendee. In any case the price is always settled by agreement between
the vendor and the vendee and there is no reason to hold that such an agreed
price would be an unconscionable price. Nor do we think that the law of preemption
in intended to provide for fixation of reasonable price by courts ; therefore
that can hardly be a reason to hold that it is a reasonable restriction in the
interests of the general public on the right of the vendor under Art 19 (1)(f).
We do not think that the restrictions placed by the law of pre-emption in a case
based on vicinage have any effect on prices being reasonably fixed, and the
main effect we can Bee is that the law may give rise to a crop of litigation.
We cannot therefore see any advantage to the general public by such a law of
pre-emption and in any case the disadvantage certainly overweighs the advantage
that may result to a small section of the public Now let us look at the matter
from the point of view of the vendee. He comes to an agreement with the vendor
to purchase the property at a certain agreed price. Let us also assume that the
vendor has given notice under s.12 and no action has been taken by the
pre-emptor under s. 13.
Thereafter the vendee purchases the property
and would be entitled to hope that as the price was not paid or tendered under
s. 13, he would be able to hold and enjoy the property without any further
trouble. But as we have pointed out already even though ss.12 and 13 are there
it is always open to a preemptor to file a suit for pre-emption after having
failed to take action under s.13 by merely alleging that the price stated in
the notice given to him was not fixed in good faith. So the vendee who may have
purchased the property after action being taken under ss.12 and 13 is forced
into litigation on the 734 ground that the price agreed is presumably too high.
Thus there is clearly a restriction on his right to hold property, and even
though the vendee may eventually succeed on the footing that the price agreed
is not above the market value he is compelled to go through litigation in order
to hold the property. Such a restriction would thus appear to be unreasonable
for it allows the pre-emptor to go to court even after ss.12 and 13 have been
Let us further look to the broader aspects of
the provisions relating to pre-emption by vicinage. It may be stated that the
right of pre-emption was not recognised under the Hindu law and is not enforced
in large parts of this country to the south of the Vindhyas. It came to be
enforced after the advent of Mohomedan rule as based on custom which was
accepted by courts, particularly in Northern India. While in Northern India the
courts enforced the right of preemption based on custom, even where there was
no statutory law of preemption holding that it was in accordance with justice,
equity and good conscience, in Southern India the view taken was that it was
opposed to principles of justice, equity and good conscience: (see Ibrahim Saib
v. Muni Mir Udin Saib and (1) Mohomed Beg Amin Beg v. Narayan Meghaji Patil)
(2). The reasonableness of a custom is, however, not a constant factor and what
is reasonable at, one stage of the progress of society may not be so at another
stage. It is in this context that we have to judge the law of preemption as it
was later put into various statutes. Before the Constitution came into force,
the statutes if they were pawed by competent authority, could not be
challenged; but we have now to judge the reason ableness of these statutes in
the light of, the fundamental rights guaranteed to the citizens of this country
by the Constitution. In (1) (1870) 6. Mad. H.C.R. 26.
(2) (1916) I.L.R. 40 Bom. 358.
735 a society where certain classes were
privileged and preferred to live in groups and there were discriminations, on
grounds of religion, race and caste. there may have been some utility in
allowing persons to prevent a stranger from acquiring property in an area which
had been populated by a particular fraternity of class of people and in those
times a right of pre-emption which would oust a stranger from the neighbourhood
may have been tolerable or reasonable. But the Constitution now prohibits
discrimination against any citizen on grounds only of religion, race, caste,
sex, place of birth or any of them under Art. 15 and guarantees a right to every
citizen to acquire, hold and dispose of property, subject only to restrictions
which may be reasonable and in the interests of the general public. Though
therefore the ostensible reason for preemption may be vicinage, the real reason
behind the law was to prevent a stranger from acquiring property in any area
which had been populated by a particular fraternity or class of people. In
effect, therefore, the law, of pre-emption based on vicinage was really meant
to prevent strangers i.e. people belonging to different religion, race or
caste, from acquiring property.
Such division of society now into groups and
exclusion of strangers fro any locality cannot be considered reasonable, and
the main reason therefore which sustained the law of pre-emption based on
vicinage in previous times can have no force now and the law must be held to
impose an unreasonable restriction on the right to acquire, hold and dispose of
property as now guaranteed under Art. 19(1)(f ), for, it is impossible to see
such restrictions as reasonable and in the interests of the general public in
the state of society in the present day.
It is urged, however, that at any rate, in
the, case of agricultural properties, pre-emption by vicinage results in
consolidation of agricultural lands, and that at any rate is an advantage. How
far the 736 argument of consolidation can be availed of now when we find that
in most states laws are being passed which are putting ceilings on agricultural
holdings is a matter which it is unnecessary to consider in the present case,
for the Rewa Act applies not only to agricultural holdings but also to burn
property including house property. There is no question of any advantage
arising out of consolidation where one is dealing with urban property or house
property. The matter of consolidation might have had--some hearing if the Rewa
Act was applicable to agricultural lands only. But as it applies to urban lands
as well as house property where no question of consolidation of holdings
arises, the impugned provision cannot be held to be, a reasonable restriction
in the interests of the general public on the ground that it leads to
consolidation of agricultural holdings. There is no way of severing the
application of the law so far as it relates to agricultural holdings from its
application to urban or house property and therefore the entire provision as to
vicinage must fall, even if something could be said in its favour with respect
to agriculture holding on the ground of consolidation. We are therefore of
opinion that the second clause of s. 10 imposes, an unreasonable restriction on
the right to acquire, hold or dispose of property guaranteed under Art. 19(1)
(f) of the Constitution and must be struck down. So far as the proviso is
concerned it applies both to the first and the second clause and it will
survive for the purpose of the first clause only, which is not in dispute
In this view of the matter C. A. 270 of 1955
We next come to C.A. 595 of 1960. This
relates the Punjab Pre-emption Act, 1913(Punj. 1 of 1913), thereinafter
referred to as the Punjab Act), as applied to the city of old Delhi. We are 737
concerned with s. 16 of the Punjab Act, which deals with urban immovable
property and is in these terms :"The right of pre-emption in respect of
urban immovable property shall vest, .
firstly, in the co-shares in such property,
if any ;
secondly, where the sale is of the site of
the building or other structure, in the owners of such building or structure ;
thirdly, where the sale is of a property
having a staircase common to other properties, in the owners of such properties
"fourthly, where the sale is of a
property having a common entrance from the street with other properties, in the
owners of such properties ;
fifthly, where the sale is of a servient,
property in the owners of the dominant property, and vice versa sixthy, in the
persons who own immovable property contiguous to the property sold." The
suit was brought by Nanak Singh respondent who claimed pre-emption with respect
to a sale in favour of the appellant of a house and was rested on the first,
third, fourth and sixth grounds in the, section. The question whether s. 16 of
the Punjab Act was ultra vires the Constitution was tried as a preliminary
issue. The subordinate judge held in favour of the respondent.
Thereupon the appellant went in revision to
the High Court.
The High Court held that the. first, third
and fourth grounds in s. 16 did not offend Art. 19 (1) (f) ; it further held
that the sixth ground offended 738 Art. 19 (1) (f). This last view was
apparently in conflict with the earlier Full Bench decision of that Court in
Uttam Singh v. Kartar Singh (1). Later the High Court held in Sardha Ram v.
Haji Abdul Majid Mohd. Amir Khan (2) by a five-Judge Bench that the provisions
contained in clause "sixthly" of s. 16 were not ultra vires the
provisions of the Constitution inasmuch as the restrictions imposed were not
unreasonable. The appellant thereupon came to this Court on a certificate
granted by the High Court challenging the view of the High Court that the
first, third and fourth grounds were Constitutional. Further, in view of the
five Judge decision in 1960 which has shaken the view taken in the judgment
under appeal on the sixth ground,%, the appellant has urged that that decision
It may be noted that under s. 7 of the Punjab
Act, is. 16 only applies to a town sub-division of a town when a custom of
pre-emption is proved to have been in existence in such town or subdivision at
the time of the commencement of the Act and not otherwise. It is not disputed
that s. 16 applies to that area of old Delhi in which the property is situate.
The fact however that such a custom was prevalent in this area before 1913 when
the Punjab Act came into force is not a decisive factor in holding that the
provisions of s. 16 of the Punjab Act are necessarily reasonable. We have
already dealt with this aspect of the matter when dealing with the Rewa Act,
and need not add anything more. We have also dealt with the question as to the
right of pre-emption based on vicinage when dealing with the Rewa Act, and for
the reasons given earlier we hold that pre-emption based on vicinage is an
unreasonable restriction on the right to hold, acquire or dispose of property
conferred by Art. 19 (1) (f). We may however briefly notice the grounds on
which the two Punjab cases of 1954 and (1) A.I.R. 1954 Pun. 55.
(2) A.I.R. 1960 Pun. 196.
739 1960 have held otherwise. In the 1954
case both ss. 15 and 16 of the Punjab Act were dealt with together. We are not
here concerned with s. 15 and express no opinion with respect to it. As to
s.16, the reasons which impelled the learned Judges to hold that the provisions
of s. 16 were constitutional were ",to reduce the changes of litigation and
friction and to promote public order and domestic comfort, and to promote
private and public decency and convenience". We are not able to understand
how providing pre-emption on the ground of vicinage would carry out these
objects, assuming their promotion is in the interests of the general public.
Perhaps the reasons why these grounds were given in the 1954 case may be that
the learned Judges were considering not merely pre-emption by vicinage but also
with other grounds provided in s. 16. Whatever may be said about these reasons
so far as other grounds, of preemption contained in s. 16 are concerned, these
reasons have in our opinion no validity so far as pre-emption by vicinage is
concerned. Turning now to the case of Sardha Ram, (1) we may note that the learned
Judges observed that ",pre-emption imposes restrictions on the right of
the vendee to acquire and bold property and the right of the vendor to dispose
of property. It limits the power of the vendor to sell his property to
whomsoever he may please or prevents him from showing preference to anyone to
whom he may wish to sell......... it is a clog on the freedom on sale and tends
to diminish the market value of the property." They were also conscious of
the trials and tribulations of a vendor whose property is governed by the law
of pre-emption. But they seem to have upheld the constitutionality of the sixth
ground mainly for two reasons, namely (i) that it had already been upheld in
Uttam Singh's case (2) and (ii) that ,what is reasonable in any particular (1)
A.I.R. 1960 Pun. 196.
(2) A.I.R. 1954 Pun. 55.
740 case is difficult of ascertainment; that
the choice of measures is for the legislature, that the legislatures are
presumed to have investigated the subject and to have acted with reason, that
an Act of the legislature should be sustained unless it violates constitutional
limitations beyond reasonable question". The last Punjab cue therefore
does not add any further reason is support of the reasonableness of the
restriction placed by the law of preemption relating to vicinage, and if
anything, the observations mentioned earlier show how unreasonable the
restriction can be, and in the circumstances we must hold that the sixth ground
in s. 16 is unconstitutional for reasons already indicated when dealing with
the Rewa Act.
This brings us to the consideration of the
first ground which gives a right of pre-emption to a co-sharer in the property
sold. The question as to the constitutionality of a law of pre-emption in
favour of a co-sharer has been considered by a number of High Courts and the
constitutionality has been uniformly upheld. We have no doubt that a law giving
such a right imposes a reasonable restriction which is in the interest of the
If an outsider it; introduced is a co-sharer
in a property it will make common management extremely difficult and destroy
the benefits of ownership in common. The result of the law of pre-emption in
favour of a co-sharer is that if sales take place the property may eventually
come into the hands of one co-sharer as full owner and that would naturally be
a great advantage the advantage is all the greater in the case of a residential
house and s. 16 is concerned with urban property; for the introduction of an
outsider in a residential house would lead to all kinds of complications. The
advantages arising from such a law of pre-emption are clear and in our opinion
outweigh the disadvantages which the vendor may 741 suffer on account of his
inability to sell the property to whomsoever he pleases. The vendee also cannot
be said to suffer much by such a law because he is merely deprived of the right
of owning an undivided share of the property. On the whole it seems to us that
a right of pre-emption based on co-sharer ship is a reasonable restriction on the
right to acquire, hold and dispose of property and is in the interests of the
The same reasoning in our opinion will apply
to the third ground, " where the sale is of a property having a staircase
common to other properties, in the owners of such properties". This ground
stands on the same footing practically as the first ground relating to
co-sharers, and for the same reason we hold that it is a reasonable
restriction, and is in the interest of general public.
Turning now to the fourth ground, ',,where
the sale is of a property having a common entrance from the street with other
properties, in the owners of such properties", this ground is in our
opinion similar to the third ground, the only difference being that in one case
there is a common staircase while in the other case there is a common private
passage from the street. The idea behind this ground seems to be that the
buildings are in a common compound and perhaps were originally put up by
members of one family or one group with a common private passage from the
public street. In such a case the owners of the buildings would stand more or
less in the position of co-sharers, though actually there may be no co-sharer ship
in the house sold.
But as we have said this case would approximate
to cases of a common staircase and co-sharer; therefore, for' reasons given in
the case of co-sharers we uphold the right of preemption covered by the fourth
ground in s. 16. The case falling under the fourth 742 ground must be
distinguished from katras which are exempt from the, provisions of the Act in
s. 5: (see Karim Ahmad v. Rahmat Elahi) (1).
A contention was also revised that s. 16
offends Art. 14 of the Constitution. This was based on s. 5 of the Punjab Act
which gives exemptions to certain properties from the application of the Act
and also on the ground that it did not apply to agricultural property. So far
as agricultural properties are concerned, they form a distinct class by
themselves and therefore there can be no question of discrimination on that
account. With regard to exemptions contained in s. 5 with respect to shop,
serai katra, dharmsala, mosque or other similar building, these are obviously
distinguishable, for they are generally places to which public resort. In
particular stress was laid on the exemption of katra. A katra is not defined in
the Act; but it appears that the primary meaning of the word "katra"
is enclosure and the secondary meaning is market; see Karim Ahmad v. Rahmat
Elahi. Generally, therefore, a katra would be a business locality though there
might be purely residential katras. However, even purely residential katras
would consist of a large number of houses to which a large number of people
will resort. In the circumstances, the premises exempted under s. 5 are
practically of one class, namely, those to which the public has to resort and
it is this class which is distinct from the rest of residential property meant
for private residence of individuals which has been exempted. In the
circumstances we do not think that s. 16 can be said to violate Art. 14 of the
Constitution in the light of s. 5 of the Punjab Act. In the result. the appeal
fails and is hereby dismissed. The case will now go back for disposal according
to law and we trust its decision will be expedited, (1) A.I.R. 1946 Lah. 432.
743 This brings us to C,A. 430 of 1958. In
this case a preemption suit was brought by the respondents under Chap. XIV of
the Berar Land Revenue Code, 1928 (hereinafter called the Code) with respect to
survey To. 285, subdivision I. The preemptors hold sub-division 2 of survey No.
285 and based their claim on s. 174 of the Code. Section 174 lays down that the
right of pre-emption there under shall arise only for unalienated lands hold
for agricultural purposes in favour of occupants in a survey number in respect
of transfers of interests is that survey number. An "occupant in a survey
number" has been defined in s. 173 to mean a person having the right of an
occupant; whether in his sole right or jointly with others, in that survey
number, or in any portion of it. But the right of pre-emption does not arise
even on a transfer of a part of a survey number when the transfer is in favour
of another occupant in that survey number or when the transfer is made with
consent of all the occupants in the survey number. The only point which has
been.raised before us is whether the right of preemption given by s. 174 of the
Code is an unreasonable restriction on the right to acquire, hold or dispose of
property guaranteed under Art. 19 (1) (f). It may be mentioned that the suit
was decreed and on appeal to the High Court the decree of the trial court was
confirmed. The appellant had contended before the High Court that the law of
pre-emption had been rendered void as it was inconsistent with Art.
19(1) (f) of the Constitution. But this
contention was negatived on the basis of art earlier judgment of the Nagpur
High Court in Ramchandra v. Janardan (1) by which the right of pre-emption
contained in Chap. XIV of the Code was held constitutional. The present appeal
challenges the correctness of the view taken in that case.
(1) A.I.R 955 Nag. 225.
744 Now it will be seen that the right of
pre-emption granted by Chap. XIV is of a very limited nature. In the first
place it is confined to occupants in a survey number. A "survey
number" means a portion of land formed into, or recognised as, a survey
number at the last preceding revenue survey or subsequently recognised as such
by the Deputy Commissioner, in respect of which the area and the land revenue
payable are separately entered under an indicative number in the land records.
"Sub-division of a survey number" is defined to mean a portion of a
survey number in respect of which the area and the land revenue payable are
separately entered in the land records under an indicative number subordinate
to that of the survey number of which it is a portion. It appears that
generally survey numbers are the units of assessment at the time of revenue
settlement and are formed under s. 86 of the Code and no new numbers can be
formed under the Rules after the settlement except in special cases, e. g.,
where land is taken up for public purposes for public buildings, threshing
floors etc., or waste land is given out for cultivation, or survey numbers
exceeding 30 acres are divided into two or more survey numbers to reduce the
area; in all other cases only sub-divisions of a survey number take place.
subdivisions are formed under s. 88 read with the rules framed there under, and
it is open to amalgamate two or more adjoining sub-divisions in a survey number
when they are held by the same occupants under the same tenure. On
sub-division, the assessment of a survey number is distributed over its
subdivisions as agreed between the occupants, It is clear therefore that the
assessment of a survey number is one and under s. 132 where there are more than
one occupant of a survey number, all such occupants are jointly and severally
liable to the payment of the land revenue assessed on it. To begin with
therefore the holders of a 745 survey number are really co-sharers. For one
reason or the other, if during the currency of the settlement co-sharers decide
to sub-divide the number, the assessment is distributed amongst the
subdivisions and each sub-divisions then becomes a holding on being thus
separately assessed to land revenue. The right of pre-emption under Chap. XIV
is confined only to the survey number which as we have pointed out earlier is
one unit of assessment, the occupants of which are co-sharers and are jointly and
severally responsible for the payment of land revenue. In effect, therefore
where, a survey number is sub-divided during the currency of a settlement and
sub-divisions are formed with separate assessment of land-revenue on such
subdivisions, the holders of various sub-divisions, though they are not
strictly co-sharers, are very much akin to co-sharers. The pre-emption
therefore as provided in r. 174 of Chap. XIV is really pre-emption in favour of
co-sharers strictly so called before there is any sub-division of a survey number
and after ' such sub-division between person,; who though not strictly
co-sharers are still akin to co-sharers. It also appears from the Rules that a
separate survey number is generally expected to be about 30 acres, though in
particular cases it may be larger. Therefore, the law of pre-emption in s. 174
of the Code applies to those who are co-sharers or akin to co-sharers and
results in consolidation of holdings generally upto about thirty acres, this
being the general extent of a survey number. The right of pre-emption is
further restricted under s. 184 which provides that no right of pre-emption
would arise on an exchange of land with the occupant of another survey number.
In effect therefore the Code creates a right
of pre-emption in the holder of an interest in a survey number only when an
occupant having an interest in that survey number sells it or there is
foreclosure or a usufructury mortgage, or a lease exceeding fifteen years is
746 created in favour of a stranger subject to the land being unalienated land
held for agricultural purposes.
Considering therefore the nature of the right
created under the Code, we have no hesitation in coming to the conclusion that
this right is in reality in favour of a co-sharer strictly so-called or someone
who is akin to a co-sharer, and the reasons which we have already indicated
when dealing with the Punjab Act relating to co-sharers will apply with full
force to the right created under the Code with this addition that this being
agricultural land there will be further advantage inasmuch as the right of
pre-emption would result in consolidation of holdings within a survey number
which as we have said is generally of an extent of thirty acres. We are
therefore of opinion that the view taken in Ramchandra v. Janardan (1) to the
effect that the law of pre-emption provided in Chap. XIV of the Code does not
infringe Art. 19 (1)(f), is correct. This being the only point urged before us
in the appeal, we are of opinion that the appeal must fail.
We therefore allow C. A. 270 of 1955 with
costs and dismiss the suit for pre-emption. No order as to costs in this appeal
C. A. 595 of 1960 and C. A. 430 of 1958 are hereby dismissed with costs.
SARKAR, J.-These three appeals arise out of
suits for preemption of properties. Broadly put, the question in each appeal is
whether the law creating the right of pre-emption with which it is concerned,
is void as offending Art.
19(1)(f) of the Constitution. One of the
appeals involves also the question whether the law is invalid as offending Art.
14 of the Constitution.
The right of pre-emption challenged is in
each case based on a statute. So there are three different statutes to deal
with. Though some of the features of these statutes are substantially (1) A.I.R
1954 Nag. 225.
747 common, there are some others which are
not so. Each appeal has therefore to be considered independently in reference
to its own statute. It may however be observed here that these statutes are all
pre-Constitution laws but the sale on which the right of pre-emption was
claimed had taken place in each case after the Constitution had come into
We shall first take Civil Appeal No. 270 of
1955. That is concerned with the Rewa State Preemption Act, 1946. We shall be
concerned with s. 10 of the Act which is in these terms:
S.10 Persons of the following classes shall
have a right of pre-emption:
(1) Any person who is a co-sharer or partner
in the property sold or foreclosed:
(2) Any person who owns any immoveable
property adjoining the property sold or foreclosed or in case of transfer of
tenancy rights, the land which is the subject of such rights.
Provided that among the above mentioned
classes the first in order will exclude the second and among persons of the
same class, the nearer in relationship to the person whose property is sold or
foreclosed will exclude the more remote.
In this case, pre-emption was decreed or the
ground of ownership of adjoining property but as both the purchaser and the
pre-emptor held lands adjoining the property sold, the pre-emption decree was
passed in favour of the preemptor under the proviso to s. 10 as he was related
to the vendor while the purchaser was not so related.
748 The question that arises in this case is
whether a right of pre-emption based on vicinage offends Art. 19(1)(f). On this
question there has been a divergence of opinion in the High Courts. It would
not be profitable to discuss these decisions in detail because in what follows
we shall deal with the various points considered in them. It may however be
stated that the High Courts of Rajasthan Madhya Bharat, Vindhya Pradesh and
Hyderabad have taken the view that such a right of pre-emption offends Art. 19:
see Panch Gujar Gaur Brahmins v. Amarsingh(1), Babulal v. Gowardhan. das (2),
Sewalal Ghanshyam v. Param Lalanju (3), (this dealt with the Act with which we
are dealing), and Moti Bai v. Kand Kari Channaya (4). On the other hand the
High Court of Punjab has held that the right of pre-emption based on vicinage
does not offened Art. 19(1)(f): see Sardha Ram v: Haji Abdul(5). It may
perhaps, be said that the High Court of Nagpur has also taken the same view as
the High Court of Punjab: see Ramchandra Krishinaji Dhagale v. Janardan
Krishnappa Marwar(6 ) .
One argument advanced on behalf of the
preemptor, which applies to all the appeals, may be noticed here. Our attention
was drawn to Shri Audh Behari Singh v. Gajadhar Jaipuria(7) where it is stated
that "In our opinion the law of preemption creates a right which attaches
to the property and on that footing only it can be enforced against the
purchaser". It was said that since the right of pre-emption is attached to
property it is an incident on which property is held and therefore it is not a
restriction on the right to hold property. On behalf of the purchaser it was
said that even so it would be a restriction because a right to hold property
existed independently of the law of preemption and this law effected adversely
the right to (1) A.I.R. (1954) Raj, 100(2) A.I.R. (1956) M.B I.
(3) A.I.R. (1956) V.P. 9.(4) A.I.R. (1954)
(5) A.I.R. (1960) Punj 196(6) A.I.R. (1955)
Nag. 225, (7) (1955) 1 S.C.R. 70, 80.
749 property. As at present advised, we are
unable to say that the contention of the purchaser is entirely without
foundation. In the view however that we have taken of these cases, we think it
unnecessary to pronounce finally on the point so raised. We shall proceed on
the basis that even if the law of pre-emption creates 'a right which attached
to property, it may amount to a restriction on the right guaranteed by Art.
19(1)(f), Article 19 (1) (f) of the Constitution states that every citizen
shall have the right "to acquire, hold and dispose of property".
Clause (5) of this Article says that reasonable restrictions on this right may
be imposed by law in the interests of the general public. There is no doubt
that a law of pre-emption does impose a restriction on the rights mentioned in
Art. 19 (1) (f). The extent of the restriction will be considered by us in more
The question is whether the restriction is
reasonable and in the interests of the general public. In deciding the question
of reasonableness, we think, we have to balance the disadvantage to the person
injuriously affected by the law and the advantage conferred by it on the
community in general. If we find that the advantage outweighs the disadvantage,
then we would be justified in holding the restriction imposed by the law to be
reasonable. In considering the question of reasonableness, we do not conceive
it any part of our duty as a Court to go into questions of policy, or to ask
whether if it was for us to make the law how we would have made it. Once we
find that the restriction imposed by the law is reasonable, we think, we are
bound to uphold it.
The first thing that we wish to observe is
that the result of a law of pre-emption is not that every sale is likely to be
preempted. One does not exercise the right of preemption for the fun of it nor
does so out of perversity.
One has to have 750 money to be able to
exercise that right. It can be presumed that given the money the right will be
exercised only when it would be decidedly advantageous to do so. We think that
it may therefore be fairly said that the right of preemption will not be
exercised in a very large number of cases. The restriction imposed by it will
not therefore affect many. This we think is a legitimate consideration in
judging the reasonableness of a restriction imposed by the law of pre-emption.
There is one other general consideration to
which we propose now to refer. In large parts of this country there has been
for a long time a customary right of pre-emption including a right to preempt
on the ground of vicinage. Before the Constitution that custom had been upheld
by courts of law.
In Audh Behari Singh's case (1), this court
itself upheld a custom giving a right of pre-emption on the ground of vicinage.
The Courts could not have upheld the customary right of pre-emption unless they
held the custom to be reasonable. It is well known that "A custom must be
reasonable. If it is against reason it has no force in law.": see
Halsbury's Laws of England, 3rd ed. vol. 11 p.
162. In Tyson v. Smith, (2) Tindal, C.J.,
observed "Nor is a custom unreasonable because it is prejudicial to the
interests of a private man, if it be for the benefit of the commonwealth".
These words, it will be noticed, are very near to the words used in cl. (5) of
Art. 19. We, then come to this: before the Constitution various courts in India
held the customary right of pre-emption on the ground of vicinage to be a
reasonable custom, that is, in the opinion of the courts the restriction
imposed by it was a reasonable restriction. We are unable to discover why after
the Constitution, the law imposing a similar restriction, customary or
otherwise, should be held to be unreasonable.
There has not been any such (1)  1
S.C.R., 70, 80.
(2)  9 Ad. & Ed, 406,42 1.
vast change in the social or economic
structure of the country which would 'justify the view that a restriction which
was reasonable before January 26, 1950, has since then become unreasonable. It
is true that courts in Madras refused to apply the Mahomedan Law of pre-emption
as a matter of justice, equity and good conscience. But we are not concerned
with Mahomedan Law or with justice, equity and good-conscience. Even in Madras
a local custom giving a right of pre-emption had been upheld: see Tulla's
Mahomedan Law; 15th ed. p. 202.
The restriction imposed by the law of
preemption has different aspects when considered from the point of view of a
vender and a vendee. We will first take up the case of a vendor. We think it
will not be wrong to say that the reports show that a vendor has rarely come to
court complaining that the law of pre-emption has cast an unreasonable burden
on his right to dispose of property.
Now the Rewa Act provides by s. 12 that when
a person proposes to sell immovable property he may give notice of his
intention to do so to the person or persons having the right of pre-emption
under the Act in respect of the sale and of the price at which he is willing to
sell. Section 13 provides that 'any person having the right of pre-emption
shall lose such right unless within one month of the notice be pays or tenders
the price mentioned in it to the vendor.
The result of these provisions is that the
vendor can unless perhaps where he was selling for an unreasonably high price,
ascertain beforehand whether any person entitled to preempt is likely to
exercise his right. If he finds that such persons do not insist on their right,
then he can sell it to anyone he likes and' at any price. It may reasonably be
expected that there will be many cases in which this will happen. To a person
having a right 752 of pre-emption, he will be compelled to sell at a reasonable
Thus the Rewa law of pre-emption imposes on a
vendor two restrictions. The first, is that he may be prevented from selling
property at any price he likes, and the second is that he can-not sell it to
anyone of his choice. Now the first restriction is clearly a reasonable
restriction.. One cannot complain if he is made to accept a fair market pi-ice
for the property he is willing to sell and is deprived of the chance of
extracting an unconscionable price. Such a measure would control prices and
check speculation in land.
It would help to stabilize the economy of the
country. It would prevent a wealthy man with his resources in money from
outbidding a poorer man in respect of a property which is of great advantage to
the poorer man to have by reason of it,% vicinage with property he holds and
which may not have that value for the richer man. It was contended that the law
of preemption had the effect of amassing wealth in one ownership. For the
reasons just mentioned, we think it really prevents the richer man from
acquiring properties when it is to the advantage of a poorer man to have the
same. In so far as the law prevents a vendor from selling his property at an
exorbitant price it cannot, in our view, be said to impose an unreasonable
restriction on him.
Then, as we have said, the law of pre-emption
prevents a vendor from selling his property to anyone he likes. We cannot
imagine this to be a great deprivation. Really, the freedom to sell to anyone
has perhaps no more value than a sentimental one. As against this the advantage
accruing to the neighbouring owner is that he is able to enlarge the property
previously held by him. We think that balancing the two sides the scale dips
much in favour of the preemptor. There are also other reasons for this view
which we shall presently state.
753 It is said that one of the disadvantages
of the law of preemption is that it gives rise to a lot of litigation. We, do
not think that this is a legitimate argument. The law does not necessarily
gives rise to litigation. Litigation arises because through cupidity people
want to evade the law. In that way, a number of other laws may be thought of
which cause litigation. But the defect is not in law but in human nature. We are
therefore unable to agree that the fact that litigation may be caused either
because the law of pre-emption is sought to be enforced or to be evaded, can be
a reason to say that the restriction imposed by it is unreasonable. We also
think that in deciding whether a law imposes unreasonable restrictions' the
fact that it easily gives rise to litigation is a wholly irrelevant
consideration. Assuming that the law imposes a restriction if it did not, no
question of the reasonableness of the restriction would of course arise-that
restriction would not become unreasonable if it was not otherwise so because
the law caused a great deal of litigation.
Now we come to the case of a purchaser. it is
well understood that the right of pre-emption is a right to be substituted in
place of the purchaser. That is the view that was accepted in Audh Behari
Singh's case(1). So far as the Rewa Act is concerned, s. 4(i) expressly
provides that the right of preemption is a right to be substituted in the place
of the purchaser. It would, therefore, follow that the only restriction put on
the purchaser is on his right to acquire a particular property. The law of
preemption does not restrict his right to hold property. If he has acquired
property in compliance with the law of pre-emption, then there is nothing to
prevent him from holding it for as long as he likes.
The question then is whether the restriction
(1) (1955) S.C.R.70,80 754 on the right to acquire property is unreasonable. Is
it unreasonable to say that one shall not a particular property if the
adjoining owner wants it? It is not as if the purchaser is prevented from
acquiring any property. There must be many other properties more or less
equally good which he is free to acquire. As we have earlier pointed out, there
would not be many cases in which the right of preemption would be exercised
with the consequent restriction on a stranger's right to purchase. Now if the
property is agricultural land there is no doubt that the right of pre-emption
on grounds of vicinage will help consolidation of holdings. We think that
balancing the advantages of the consolidation of holdings with the
disadvantages resulting to a ,stranger by the restriction imposed on his right
of acquiring that property, there is no doubt that the disadvantages are of
small consequence. The advantages arising from the consolidation of
agricultural holdings will be discussed in the last case that we will consider
and which comes from Berar.
The Rewa Act however is not confined to
It creates a right of pre-emption in other
Let us consider the case of house property in
a town or village. In a town or village the Indian way of life has been to live
in compact communities. There is no doubt that such living has great
advantages. It is true that due to economic reasons it is not always possible
nowadays for many to have the comfort of living in compact communities. But the
fact that economic conditions are breaking up compact communities does not show
that living in such communities has not its advantages. It seems to us that
such living would help to maintain the homogeneity, Comfort and peace of the
people. It is common human experience that property leads to disputes
concerning boundaries, easement and concerning divers other rights connected
with it. Also disputes arise because of different ways of living.
755 Now most of these disputes would be with
the adjoining owners. The right of pre-emption based on the ground of vicinage
would help to avoid these disputes coming into existence. Again, it would be a
great discomfort for a number of people living together for years to have to
accept among themselves an outsider who may not, be able to fit himself into
that community or may even be an undesirable person. Furthermore, if a person
is given preference in acquiring neighbouring property it would help him better
to manage his properties. Privacy of the home would be better maintained.
Against all these advantages the only disadvantage that the purchaser suffers
is that he cannot acquire a particular property. It will often be possible for
him to get another equally good property. It cannot be said that if between to
such competing persons the law favour one who owns neighbouring property, the
law is putting unreasonable restriction on the other person.
In none of the reported cases has it yet been
held that the right of pre-emption given to a co-sharer imposes an unreable
restriction on the purchaser. It seems to us that it would be impossible to
take that view. A co-sharer increases his holding if he is given the preference
to buy the land. He of course also prevants an outsider being thrust into joint
ownership with him and this is the only difference between his case and the
case of an adjoining owner. The difference is not such as would in principle
lead to different conclusions as to the reasonableness of the restriction in
the two cases. A co-sharer it' he does not like his new co-sharer can always
separate his share.
It has not however been held that for this
reason a law giving a co-sharer a right of pre-emption puts an unreasonable
restriction on another persons right to acquire property. We think, therefore,
on the same principle it has to be held that a law giving a right of
pre-emption on 756 the ground of vicinage also imposes a restriction which is
One of the advantages of the law of
preemption based on vicinage earlier noticed is the preservation of the privacy
of homes. In regard to this, it was said that purdah system has disappeared and
therefore there is no need to protect it. It may be that purdah has disappeared
but it cannot be said that the privacy of the home is a thing which is of no
value nowadays. It is this that the law of pre-emption will protect and
therefore be of advantage to the community. We think it wrong to imagine that
privacy of a home is of value only to the people observing purdah.
Then it is said that living 1n compact
communities has also disappeared and people now live in flats. But we do not
think that it can be suggested that, living in communities has not its
advantages or living in flats is an ideal system. There are therefore no
arguments against the view that living in compact and homogeneous communities
is still desirable and has still its advantages which perhaps will always
It is also said that the restriction imposed
by the law of pre-emption is unreasonable because it encourages discrimination
on the ground of religion, race and caste and this is what Art. 15 of the
Constitution forbids. We do not think that it is a reasonable reading of the
Constitution to say that it forbids people of one race, religion or caste from
living together. Furthermore, compact communities are not always of the same
race, religion or caste. The advantage is not due to identity of caste etc. but
to the identity of thought and way of living and ties generated by long
familiarity with each other and the families of each other. For all these
reasons a restriction imposed by the law of pre-emption based on vicinage is,
in our view, a 757 reasonable restriction on the right to acquire and dispose
Then it was argued that when a property is
purchased in exercise of the right of pre-emption, it will often happen that
that property will be let out to a stranger and so the objective of living in
compact communities will not be attained in many cases. This may be so in some
oases but the landlord when the occasion arises, can choose that stranger. He
further has some control over the tenant. He will have no property dispute with
the tenant except such as might arise out of tenancy laws. If the tenant is
found to be undesirable, he can be removed. All that this contention comes to
is that the law of pre-emption may not completely guarantee the advantages
which it is designed to create, but there is no doubt that it does guarantee a
very large part of it and it would be incorrect to say that it guarantees none.
A further question remains in this case. it
is said that s. 10 of the Rewa Act is bad in that it gives a preferential right
to pre-empt on the basis of relationship. This however does not seem to us to
be a correct way of reading the statue. What it aims at is to give a right of
preemption on the ground of vicinage and the other ground mentioned in the
section. But then it is unavoidable that there may be various persons entitled
as co-owners or owners of adjoining properties to the right of pre-emption
under the section. It has to be remembered that we are now proceeding on the
basis that the right imposes a reasonable restriction. In order therefore that
a statute legally made giving the right of pre-emption may not be rendered
infructuous in certain circumstances, an order of preference among the would be
pre-emptors has to be devised. This is done by the proviso to s. 10 of the Rewa
758 Act by laying down that a person nearer in relationship to the vendor will
have a preferential right of pre-emption over others.The proviso does not
purport to create a right of pre-emption only on the ground of relationship. It
solves a problem arising out of a right of pre-emption legitimately granted on
the ground of co-ownership or vicinage.It is a corollary to the main right. If
the main right, is good, a provision enacted to prevent its being defeated
would equally be good.
The result is that s. 10 of the Rewa Act
which gives the right of pre-emption on the ground of vicinage must be declared
to be a perfectly valid statutory provision which does not offend Art. 19(1)(f)
of the Constitution and so is the proviso to that section which is really a
part of it.
That disposes of Civil Appeal No. 270 of
1955. We would therefore dismiss the appeal.
We next come to Civil Appeal No. 595 of 1960
which concerns the Punjab Pre-emption Act of 1913. The property involved in
this case is a house situated in the city of Old Delhi.
Section 16 of the Punjab Act which governs
the property in dispute, is in these terms :
S. 16. The right of pre-emption in respect of
urban immovable property shall vest firstly, in the co-sharers in such
property, if any ;
secondly, where the sale is of the site of
the building or other structure, in the owners of such building or structure
thirdly, where the sale is of a property having a staircase common to other
ties, in the owners of such properties ;
fourthly, where the sale is of property
having a common entrance from the street 759 with other properties, in the
owners of such properties fifthly, where the sale is of a servant property, in
the owners of the dominant property, and vice versa ;
sixthly, in the persons who own immovable
property contiguous to the property sold.
The Punjab Act.. like the Rewa Act, contains
provisions for giving notice of an intended sale to the person having a right
of pre-emption, for loss of right of pre-emption when action is not taken to
purchase in terms of the notice and for fixation of a fair price by the court :
see ss. 19, 20, 22, 25 and 27 of the Punjab Pre-emption Act. As we have said in
the Rewa case, provisions of this kind help to relax the severity of the restriction
imposed on the seller.
The pre-emptor in this case based his claim
on the first, third, fourth and sixth grounds mentioned in the section.
The High Court held that the section did not
19(1)(f) with regard to the first, third and
fourth grounds but did so with regard to the sixth ground. The judgment of the
High Court is reported in A.I.R. (1958) Punj. 44. The view there taken in so
far as it concerns the sixth ground in the section is against the Full Bench
decision of the same High Court in Uttam Singh v. Kartar Singh (1) and
Sardharam v. Haji Abdul (2) the latter of which expressly overruled that view.
It is interesting to note that under s. 7 of
the Punjab Act a right of pre-emption in respect of urban immovable property in
any town, that is, the right contemplated by s. 16, shall exist if a custom of
pre-emption had existed in such town at the commencement of the Act and not
(1) A.I.R. (1954) Punj. 55.
(2) AIR 1960 Pun. 196, 760 It is plain that
in the city of Delhi the custom of preemption had so prevailed; if it had not,
then of course the point would have been taken and the case thereupon decided
against the pre-emptor. Custom is a question of fact, and on the state of the
records in this case we must proceed on the basis that a custom of pre-emption
had existed in Delhi.
Now that custom, if it had prevailed must
have done so because it was considered to be a reasonable rule inspite of the
restriction that it imposed on the vendor or the purchaser. We have earlier said
that the existence of a customary right of pre-emption indicates that the
restriction imposed by it is reasonable. That view applies more strongly to.
the present case because here in the very area with which we are concerned that
custom did exist.
The right of pre-emption based on vicinage
mentioned in the sixth ground in s. 16 hat; already been dealt with by us in
the Rewa case. For the reasons stated, there, we hold this provision in s. 16
to be a valid piece of legislation.
We have now to deal with the other grounds in
s. 16 referred to earlier. The first confers t right of pre-emption on a
co-,sharer in a property. We feel no doubt that a law giving such a right
imposes a reasonable restriction on the right conferred by Art. 19(1)(f). If an
outsider is introduced as a co-sharer in a property, that is likely to make
common management inconvenient and thereby destroy the benefits of ownership of
the property to a large extent.
Property cannot be managed profitably unless
one policy is followed. If there are more than one owner of a property, it is
essential for the profitable enjoyment of it that they should be able to work
in union. Therefore if by the operation of the law of pre-emption based on
co-ownership the property eventually comes to be vested in a single hand that
would be a great advantage to the owner. Such a law being for the benefit of
all 761 owners would surely be in the interests of the general public. Till the
property comes to be vested in. one, owner it would have remained in the hands
of two or more people who have been owning it for years and have been getting
on with each other smoothly, for otherwise they would have partitioned it. In'
such a case if one of the joint owners goes out and in his place the remaining
joint owner or owners have to accept a stranger, a good deal of irritation and
mismanagement may be reasonably apprehended. If the property owned is a
residential house-and s.16 will be largely concerned with such properties-the
introduction of a stranger into it would lead to an undesirable situation and
often and in disaster. Those are the advantages arising from a law of
pre-emption based on co-ownership. The disadvantages are that the selling
co-owner cannot sell it to anyone he likes or for an extortionate price, and
the purchaser is deprived of owning an undivided share in property. Neither of
these seems to us to be a great deprivation. In neither case is the
disadvantage suffered great as, compared to the advantage accruing to the remaining
joint owner. Therefore, it seems to us that the restriction imposed on the
right to dispose of or acquire properties imposed by the first ground. under s.
16 of the Punjab Act is a reasonable restriction.
The right based on the third and fourth
grounds mentioned in the section also seems to us unobjectionable. The third
ground gives to the owner of property a right of pre-emption when another
property having a common staircase with his is sold. If a number of properties
have a common staircase and one is sold, it would be most inconvenient and
greatly disadvantageous to the owners of the unsold properties if they cannot
prevent a stranger from acquiring the portion sold and thereby obtaining a
right to the common user of the staircase with them. That would in a large 762
number of cases be more or less admitting a stranger into their houses. The
disadvantage arising from such a state of affairs is clearly much more than the
advantage that would arise to the purchaser by the acquisition of the property.
The fourth ground gives a right of
pre-emption when one of several properties having a common entrance from the
street is sold. If he street is of course the public street which is common to
all. In order that this ground may apply, there has to be a common entrance
from such a street to a number of properties. This ground apparently
contemplates a case of a passage leading from a public street which is common
to all the owners of properties situate on that passage.
This ground therefore deals with owners of
properties who have to share a common passage. People living in these houses
would naturally from a very compact community.
Indeed very often they would be living like
relatives or members of a family. A law which gives them a right to buy one of
these properties when it is sold to a stranger cannot be said to impose an
unreasonable restriction on anyone. As in the last case, the advantage accruing
from such a law to the person desiring to pre-empt would far outweigh the
disadvantage occasioned either to the vendor or the purchaser.
The learned counsel for the appellant
referred to various Acts which have gradually abolished the right of preemption.
He pointed out that by Act X of 1960 of the Punjab Legislature s. 16 has in
fact been repealed as a whole and has been substituted by a provision creating
a right only in a tenant to pre-empt the property held by him when the landlord
desires to sell it. Punjab Act X of 1960 however has not been extended to Delhi
and here the Punjab Preemption Act of 1913, the Act with which we are
concerned, still applies. All that these subsequent pieces of legislation show
is that the Legislature has thought it fit to abolish certain rights of
pre-emption in various oases.
But this 763 cannot be used as an argument to
contend that the Legislature considers that the law of pre-emption imposes an
unreasonable restriction' on the rights mentioned in Art.
19(1)(f). If it were so, then it has to be
said that in so far as the Legislature has not thought it fit to repeal the law
of pre-emption as it exists in Delhi, it does not consider that law to impose
an unreasonable restriction.
Arguments of this kind do not lead us
Furthermore, we have to decide the question
of the reasonableness of the restriction for ourselves and whatever opinion a
legislature expresses on the matter is not of much relevance for this purpose.
Lastly we have to deal with the point that s.
16 of the Act offends Art. 14 of the Constitution. It was said that it offended
that article because there was no right of preemption in regard to agriculture
land and the law was not available outside urban areas of Delhi and that it
exempted from its operation shops and katras. Now with regard to agricultural
land, it clearly forms a distinct class by itself and so do properties outside
urban areas. Properties in urban areas have their own peculiar problems. Furthermore,
there is not likely to be much agricultural land within the Union territories
of Delhi. With regard to shops and katras, no doubt s. 5 of the Act exempts
them from its operation. But these also form a clam by themselves different
from other properties. A shop of course is essentially a business premises.
What a katra is, in not defined in the Act. But it would appear that the
primary meaning of katra is an enclosure and the secondary meaning is market:
see Karim Ahmed v. Rehmat Alahi (1). It would therefore be safe to proceed on
the basis that a katra is principally a business promises with. in an enclosure
though no doubt it also contains residential accommodation. It can be assumed
that the (1) A. 1. R. (1946) Lah. 433.
764 residential accommodation provided is for
persons working in the shops in the katra. Now clearly in business one has to
work and mix with strangers. One has to welcome and associate with, completely
unknown persons who do not live with the persons doing the business. In order
that business premises may cater to the needs of the community for which they
exist, they have to be open to all. To such premises no question of any
advantage flowing from community living arises. They are generally properties
of great value. It seems to us that they can therefore be put in a separate
class. They do not need the protection of the law of preemption in the same way
as other properties would do. For these reasons we do not think that s. 16 can
be said to violate Art. 14 of the Constitution.
In the result we hold that the first, third,
fourth and sixth grounds, on which a right of pre-emption is based by s. 16 of
the Punjab Act, are valid pieces of legislation.
Was would therefore dismiss this appeal with
We come now to the last appeal, that is,
Civil Appeal No. 430 of 1958. It concerns the Berar Land. Revenue Code of 1928.
Chapter 14 of this Code creates certain rights 'of pre-emption to one of which
we shall presently refer. That chapter consists of as. 173 to 187. This chapter
in the Code, like the two Acts we have already dealt with, contains provisions
about notice of an intended sale, loss of right to pre-empt in case the notice
is not acted upon and fixation of a fair price. These are contained in as. 176,
180 and 182. As we have earlier stated, these provisions very largely remove
the rigour of the restriction imposed by the right of pre-emption on vendors of
properties. The right is confined to unalienated lands held for agricultural
purposes : [s. 174(2)]. It arises in the case of a sale when one occupant 765
in a Survey Number proposes to sell the whole or any portion of his interest to
a stranger and the right is given to other occupants in the same Survey-Number
: s. 176 and s.
182. Now a Survey Number is defined as a
portion of land recognised as such at the revenue survey in respect of which
the area and land revenue payable are separately entered under an indicative
number' in the land records : s. 2(13).
Sub-division of a survey number means.
portion of a survey number in respect of which the area and the land revenue
payably are separately entered in the land records under an indicative number
subordinate to that of the survey-number of which it is the portion : s.2(12).
Section 184 provides that when an occupant in a survey-number exchanges his
interest in it for laud elsewhere, then this exchange would not create any
right of pre-emption in favour of the other persons interested in the
survey-number, part of or interest in, which is exchanged. The ,substance of
the matter therefore is that the Berar Code creates a right of preemption in
the holder of interest in a survey-number only when anybody having an interests
in any land in that survey number sells it for a money consideration to a
stranger provided that the interest sold is in unalienated land held for
In the present case, the vendor owned sub.
division No. 1 in survey-number 285 and the respondents jointly owned
subdivision No. 2 in the same survey-number and in that right claimed to
pre-empt the sale by the vendor. There is further no controversy that the lands
were unalienated land held for agriculture purpose.
Mr. Sovani appearing for the respondents mid
that under the Berar Code of 1928 and under the previous land laws which it
replaced, an occupant is one who obtains land from the Government on the terms
mentioned in the Code and that it is 766 only against such an occupant that a
right of preemption is created by that Code. He therefore contended that the
right to property being created on the term that it would be liable to
pre-emption, it was not a case of restriction but one of the nature of the
property itself and therefore no question of infringement of Art. 19(1)(f)
arises by the exercise of that right. As in our opinion the respondents should
succeed in this appeal for the reasons to be presently discussed, we think it
unnecessary to pronounce on this contention of Mr. Sovani. We have besides no
materials to show as to when the right of ownership in the property involved in
this case was first created. It may have been created under a law other than
the Code or its predecessors. In that case Mr. Sovani's argument would lose its
principle force. Further we have Dot all the earlier land laws of Berar before
us. It would not be right on the materials now before us to investigate and
pronounce on the question raised by Mr. Sovani.
It is clear from what we have earlier stated
that the lands included in one survey-number are contiguous. It is only when an
interest in such lands is sold that under the Berar Code a right of pre-emption
arises. It would follow inevitably that the result of the exercise of this
right would be to effect a consolidation of holdings. Such a consolidation
would undoubtedly be of a great benefit to the agriculturist and to the
community as a whole. The evils of fragmentation of agricultural holdings in
our country are too well known to need detailed discussion. ,Shortly put it
would help an agriculturist greatly if he could extend his holdings thereby
making agricultural operation economical and more productive with the resultant
benefit to the country. A law which therefore tends towards consolidation has
767 Ramchandra Krishnaji Dhagale v. Janardhan
Krishnappa Marwar(1) was a case concerning preemption under the Berar Code and
was heard by a Full Bench of the Nagpur High Court.
The Bench presided over by the present Chief
Justice of this Court found no difficulty in upholding the validity of the
provisions in that Code creating the right of pre-emption.
With regard to the question of consolidation,
Kaushalendra Rao J. observed at p. 232.
"It is not without significance that
while in a part of the State-the Central Provinces special legislation had to
be undertaken for checking the evil of fragmentation by enacting a measure like
the Central Provinces Consolidation of the Holdings Act (Act VIII, 1928) no
such necessity has so far been felt in Berar presumably because of the
operation of the law of pre-emption." This observation undoubtedly is of
great authority coming from a Judge of eminence familiar with the conditions in
Berar. It has not even been suggested that the observation was not justified.
But it was said that the present tendency of legislation is fix a ceiling as to
land that can be held by a person and that this shows that consolidation of
holdings is no longer considered desirable. We are entirely unable to agree
with this view. The idea behind fixing a ceiling for holding of land is to make
an equitable distribution of the available land possible. But this is subject
to the idea that each holding should be economical.
In other words, the law as to ceiling does
not discourage consolidation of holdings but is intended only to prevent undue
grabbing of lands by persons with the necessary means to do the game. Section
184 by providing that no right of pre emption would arise on the exchange of
lands clearly indicates that thy object of the Berar Cod (1) A.I.R. (1955) Nag
768 in providing for the right of pre-emption
are to achieve consolidation of holdings. We feel no doubt that the benefits to
arise out of consolidation far outweigh the disadvantages caused by the
restriction put by it on the right to property guaranteed by Art. 19(1)(f).
We, therefore, come to the conclusion that
the provisions in Chapter 14 of the Berar Land Revenue Code creating a right of
pre-emption on the sale of land are valid and fully within the Constitution.
This appeal therefore must also fail and we would dismiss it with costs.
By COURT : In accordance with the opinion of
the majority Civil Appeal No. 270 of 1955 is allowed ; no order as to costs.
C. A. No. 27 of 1955 allowed. C. A. No. 430
of 1958 and C. A. No.595 of 1960 dismissed.