Calcutta High Court (Appellete Side)
By His Legal Heirs Smt. Sipra Majumdar ... vs Gopal Chandra Bhattacharjee on 24 December, 2024
Author: Sabyasachi Bhattacharyya
Bench: Sabyasachi Bhattacharyya
In the High Court at Calcutta
Civil Appellate Jurisdiction
Appellate Side
The Hon'ble Justice Sabyasachi Bhattacharyya
And
The Hon'ble Justice Uday Kumar
F.A. No. 67 of 2012
Sri Debabrata Mazumdar, since deceased, represented
by his legal heirs Smt. Sipra Majumdar and Another
Vs.
Gopal Chandra Bhattacharjee, since deceased, represented
by his legal heirs Smt. Shila Bhattacharjee and Others
For the appellants : Mr. Sarajit Sen,
Mr. Aniruddha Lahiri,
Mr. Sasanka Kumar Mandal
For the respondent nos.2 & 3 : Mr. Arik Banerjee,
Ms. Debjani Sengupta, Ms. Paulomi Ghosh Hearing concluded on : 19.12.2024 Judgment on : 24.12.2024 Sabyasachi Bhattacharyya, J.:-
1. The present first appeal has been filed against a judgment and decree directing the defendant no.5/appellant to transfer the suit-property in favour of the plaintiff/original respondent no.1 for a consideration of Rs.2,50,000/- on the strength of a prior purchase clause contained in a partition deed executed between the plaintiff and the defendant nos.1 to 4. During pendency of the suit, the original appellant and respondent no.1 died and their heirs have been substituted in the appeal.2
2. The brief facts of the case are that one Biraj Laxmi Devi, the original owner of the suit-property, executed a Will on July 14, 1959, bequeathing the suit-property to her five sons, including the plaintiff and the predecessor-in-interest of the defendant nos.1 to 4. Probate of the Will was granted on December 15, 1988, after the demise of the testatrix.
3. On December 13, 1989, the legatees of Biraj Laxmi entered into a registered partnership deed among themselves, which contained, in Clause 10 thereof, a provision that none of the parties shall be entitled to sell or transfer his/her allotment to a stranger without offering the same first to the other parties.
4. It is alleged by the plaintiff that a sale deed was executed by defendant nos.1 to 4 in favour of defendant no.5/appellant in respect of their respective exclusive portions of the property on February 15, 1999.
However, no prior offer was given to the plaintiff to purchase the property. A letter dated January 10, 1999 incorporating such an offer was posted only on February 16, 1999, a day after the sale in favour of the defendant no.5/appellant took place, and the plaintiff received the same only on February 22, 1999.
5. By the impugned judgment and decree, the plaint case was upheld and the plaintiff was directed to deposit the consideration amount of Rs. 2.5 lakh, upon which the suit property would stand transferred in favour of the plaintiff. Being thus aggrieved, the defendant no. 5 has preferred the instant appeal.
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6. Learned counsel appearing for the defendant no. 5/appellant, the stranger purchaser, argues that the prior purchase clause in the partition deed was bad in law and not enforceable, since it went against the grain of the main partition deed. It is argued that since the partition deed absolutely transferred the rights of the parties exclusively in favour of each other, thereby segregating the property into different portions, over each of which the respective parties acquired absolute title, the prior purchase/pre-emption clause restricted the right of disposition of the properties in favour third- parties, thereby curtailing the absolute nature of the transfer.
7. Learned counsel places reliance on The Trichinopoly Varthaga Sangam Ltd., by its Secretary A. Arulanandam Pillai v. T.N. Shanmughasundaram, a Full Bench judgment of the Madras High Court reported at AIR 1939 Mad 769, where it was held that the restriction imposed by the deed under consideration amounted to an absolute restriction on alienation within the meaning of Section 10 of the Transfer of Property Act and therefore must be disregarded.
8. Learned counsel cites Smt. Rajrani Sehgal v. Dr. Parshottam Lal and others, a judgment of a learned Single Judge of the Delhi High Court reported at AIR 1992 Del 134 where, in the context of a Will, it was held that any restrictive clause against alienation contrary to the bequest was to be treated as void.
9. Learned counsel appearing for the appellant next cites Gautam Paul v.
Debi Rani Paul and others, reported at AIR 2001 SC 61, for the 4 proposition that there is no law which provides that a co-sharer must only sell his/her share to another co-sharer.
10. Learned counsel further argues that P.W.1, who adduced evidence on behalf of the plaintiff, deposed on the strength of a Power of Attorney executed by the plaintiff. It is contended that a constituted attorney having no direct knowledge of the facts is not entitled in law to adduce evidence on behalf of a party. As such, the evidence of the said witness should be disregarded.
11. Learned counsel for the appellant also contends that the restrictive pre- emption clause is violative of Article 300A of the Constitution of India.
12. Learned counsel for the plaintiff/respondent no.1 (since substituted by his heirs) argues that no absolute fetter on further disposition was created by the prior purchase clause and, as such, the same is not barred by law. It is argued that no prior offer was given to the plaintiff before the sale in favour of the defendant no.5/appellant, thereby vitiating the sale due to contravention of the prior purchase clause.
13. It is argued that the pre-emption/prior purchase clause was agreed to by all the parties to the partition deed and none of the vendors of the defendant no.5 challenged the said clause at any point of time. Thus, in view of the vendors having waived their rights to challenge the said clause, the defendant no.5/appellant, who claims through such vendors by purchase and stepped into their shoes, cannot raise any objection as to the said Clause.
14. The partition deed, it is argued, was in the nature of a family settlement between the co-sharers which operates as estoppel against the parties 5 to the partition deed. In support of such contention, learned counsel cites Thulasidhara and another v. Narayanappa and others, reported at (2019) 6 SCC 409 and Kale and others v. Deputy Director of Consolidation and others, reported at (1976) 3 SCC 119.
15. Learned counsel for the plaintiff/respondent no.1 next cites Lachoo Mal v. Radhey Shyam, reported at (1971) 1 SCC 619, for the proposition that there can be waiver by a party of an advantage of law/rule.
16. Learned counsel further cites a Full Bench decision of this Court in the matter of Moulvi Ali Hossain Mian and others v. Rajkumar Haldar and others, reported at AIR 1943 Cal 417, for the proposition that a pre- emption clause in an agreement cannot be said to be an unlawful consideration for the agreement within the contemplation of Section 23 of the Contract Act.
17. Lastly, learned counsel for the plaintiff/respondent no. 1 cites Vijayalakshmi (Smt) v. B. Himantharaja Chetty and another, reported at AIR 1996 SC 2146, where the Supreme Court recognized that a right of pre-emption may be conferred either by statute, custom or contract. Accordingly, learned counsel for the plaintiff/respondent no.1 seeks dismissal of the appeal.
18. Heard learned counsel for the parties.
19. Before getting to the meat of the matter, it must be noted that the appellant has, inter alia, argued that the evidence of P.W.1, the principal witness of the plaintiff, ought to be overlooked since the said witness did not have authority to adduce evidence merely on the strength of the Power of Attorney executed by the plaintiff. However, 6 such argument is merely academic and irrelevant for the present purpose. The P.W.1 had primarily deposed to the effect that the first offer of purchase to the plaintiff was posted on February 16, 1999, one day after the execution of the sale deed in favour of the defendant no.5 on February 15, 1999. The relevance of such evidence would be to show that no prior purchase offer as per the partition deed was made by the vendors to the plaintiff.
20. Even if we choose to disregard such evidence, there is no independent evidence adduced on behalf of the defendant no.5 to the effect that any prior purchase offer was given to the plaintiff before the sale took place in favour of the defendant no.5, nor was any suggestion put to the plaintiff's witness to the effect that any such purchase offer was made to the plaintiff prior to the sale in favour of the defendant no. 5//appellant. Hence, the position does not alter even if we are to overlook the evidence of P.W.1, since the burden was on the defendant no.5/appellant to show that any prior offer was given.
21. The plaintiff, in paragraph no.23 of the plaint, alleges that the defendant no.5/appellant was fully aware of the right of pre-emption as contained in the deed of partition. The defendant no.5, in paragraph no.22 of his written statement which dealt with paragraph no. 23 of the plaint, merely made bald and evasive denials as to the contents of paragraph no.23 of the plaint, apart from making a positive statement that the right of pre-emption contained in the deed of partition is not available to the plaintiff inasmuch as after a partition is effected between the co-sharers in a joint family and separate allotment is made 7 to the respective co-sharers, the right of pre-emption cannot be invoked by either of the co-sharers.
22. In fact, the above statement has been the common refrain of the appellants' arguments before this Court as well.
23. Thus, it is virtually an admitted position that defendant no.5/appellant was aware of the partition deed, including its pre-emption clause, before purchasing the property and that no prior offer was made to the plaintiff before execution of the sale deed in favour of the defendant no.5. The plinth of the defence case, however, is not compliance of the pre-emption clause but the defendant no.5 throws a challenge to the very legality of the pre-emption clause itself.
24. The defendant nos.1 to 4, the co-sharers/vendors of the defendant no.5, did not contest the suit.
25. Before proceeding further, the relevant pre-emption clause is required to be looked into. The same is set out below:
"10. T H A T none of the parties shall be entitled to sell or transfer his allotment to a stranger without offering the same to the other parties and will be bound to sell or transfer the same to any of the Parties who will offer the heighest market value prevailing at that point of time. In case the other Parties refuse to accept the same then only the intending party will be able to sell or transfer his allotment in favour of a stranger."
26. A partition, by its very nature, is a transfer inter vivos, although not contemplated as one of the modes of transfer in the Transfer of Property Act. The effect of partition, from the focal point of each of the co- 8 sharers, is that the other co-sharers transfer their joint rights in the portion allotted to the acquirer-co-sharer in exchange of similar transfer by the acquirer in favour of the others. Thus, what each of the parties to a partition deed gets is the joint title of the other co-sharers in his exclusive portion of the property. Hence, for all practical purposes, the incidents of a transfer are generally applicable to a partition by metes and bounds as well.
27. The appellant argues from such perspective that the pre-emption clause is in contravention of Article 300A of the Constitution of India. The said Article provides that no person shall be deprived of his property save by authority of law. The expression "his property" in the said provision is noteworthy. It indicates present existing property, as opposed to property which may be acquired in future by the person deprived.
28. In the present case, the fetter put in by way of the pre-emption clause was a part of the partition deed and, as such, operated simultaneously with the transfer itself. Thus, as on the date when such clause was incorporated, the vendors of the defendant no.5 did not have exclusive and absolute title existing in the property in praesenti. However, Article 300A only contemplates situations where a person already has exclusive title in a property which is being deprived, as opposed to the present case, where the absolute title was created by virtue of the same document which contained the restrictive clause. Hence, Section 300A is not applicable at all.
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29. As to bars incorporated in other statutes regarding pre-emption clauses, two such provisions might have been comparable - Section 4 of the Partition Act and Section 22 of the Hindu Succession Act.
30. At the outset, we can rule out the applicability of Section 4 of the Partition Act, since, in order to attract Section 4 of the Partition Act, 1893, the property has to be a dwelling house belonging to an undivided family and the transfer has to be in respect of a share of one of the co-sharers in the property. Moreover, Section 4 applies only in case the stranger purchaser sues for partition.
31. As opposed thereto, in the present case, none of the said criteria apply, since the properties involved do not comprise of an exclusive family dwelling house, nor does it arise from a suit by a stranger for partition. Importantly, the transfer in favour of the defendant no.5 is not of a "share" in the property but of exclusive separate properties of the vendors, to which they acquired absolute title by virtue of the partition deed prior to the sale in favour of the defendant no.5/appellant.
32. Section 22 of the Hindu Succession Act, 1956 is the other statutory pre-emption provision. However, the same operates only in respect of intestate succession, for first-degree transfers when one of the heirs on whom interest in the property devolves by intestate succession transfers his/her interest to a stranger. In the present case, the original owner bequeathed the property by way of a Will to the initial co-owners, as opposed to intestate succession. Moreover, the first- degree transfer took place by virtue of the partition deed between the co-owners themselves. It is only subsequently that the sale in favour of 10 the appellant was effected, where the question of violation of the pre- emption clause arises.
33. In any event, the parties are ad idem that the right of pre-emption, if any, flows not from any statute but from Clause 10 of the partition deed executed and registered between the co-owners.
34. Thus, ruling out the above statutory provisions, we are to look at Section 10 of the Transfer of Property Act, which is relevant in the context. Section 10 provides that where a property is transferred subject to a condition or limitation absolutely restraining the transferee or any person claiming under him from parting with or disposing of his interest in the property, the condition or limitation is void.
35. A salient feature of the present case, however, is that Clause 10 of the partition deed dated December 13, 1989 does not create any absolute restraint on parting with or disposing of any interest in the property. The term "absolute" acquires crucial relevance in the context of the instant case.
36. In fact, Clause 10 does not put any fetter to the transfer of the properties of the defendant nos.1 to 4/vendors at all. What it does is incorporate a provision that before transfer, an offer has to be made to the other parties to the partition deed to purchase the property. Hence, the limited restraint, if at all, is not a restraint on transfer at all. In any case, if the offeree refuses to purchase the property, there is no fetter to transfer in favour of strangers and it is then open to the vendors to sell the property to a third party. In case the there are several co-sharers who want to purchase, the one paying the highest market value shall 11 be sold the property. Thus, the clause is not at all restrictive, let alone creating an absolute fetter as contemplated in Section 10 of the Transfer of Property Act.
37. The appellants' argument that since the joint estate was severed, creating absolute title of each of the co-sharers in their respective portions of the property, no right of pre-emption could be incorporated, is not tenable in the eye of law. This is for the simple reason that the pre-emption in the present case is not claimed on the basis of any statutory right as conferred under Section 4 of the Partition Act or Section 22 of the Hindu Succession Act, in which cases there either had to be a joint estate or a joint devolution of the interest in the estate on the heirs of the original owner. In case of contractual pre-emption, however, the property need not be undivided on the date of the proposed transfer in favour of a stranger. The pre-emption clause is a component of the very partition deed which effected the transfer in favour of the vendors who thereafter seek to transfer to a third party. Thus, the vendors of defendant no. 5/appellant acquired absolute title in their respective shares by the partition deed subject to such prior offer-of-purchase clause. There is no bar in law to such a clause, apart from Section 10 of the Transfer of Property Act which envisages only absolute bars, as opposed to the present prior purchase clause, as discussed above.
38. The pre-emption claimed here is contractual, flowing from Clause 10 of the partition deed and as such, the fetters of jointness are not applicable at all.
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39. In The Trichinopoly Varthaga Sangam Ltd. (supra), the Full Bench of the Madras High Court only reiterated the provision of Section 10 of the Transfer of Property Act which debars an absolute restriction on alienation. However, as adumbrated above, the restriction in the present case, if at all, is not absolute by any stretch of imagination. Thus, the bar under Section 10 of the Transfer of Property Act is not attracted at all in the case at hand.
40. Smt. Rajrani Sehgal (supra) was rendered by the Delhi High Court in the context of a Will. In the said case, a question arose as to whether a clause against alienation could be incorporated in the bequest, which would be repugnant to the absolute estate created in the earlier part of the Will.
41. However, in the instant case, nothing repugnant to the absolute transfer contemplated in the partition deed between the co-sharers was incorporated in the pre-emption clause, that is, Clause 10, but only a provision as to prior offer being given to the other original co-sharers. The Delhi High Court was also considering restrictions against the rule of perpetuity and to absolute enjoyment, which is not applicable in the present context.
42. Hence, the ratio laid down in Smt. Rajrani Sehgal (supra) is also not applicable here.
43. In Gautam Paul (supra), the Supreme Court was considering a scenario under Section 4 of the Partition Act and it was held that the said Section created no bar to sale of a property to a stranger. It is nobody's case in the present appeal that there was a statutory bar to the sale of 13 the property in favour of defendant no.5. The pre-emption clause incorporated in the partition deed being the source of the right claimed by the plaintiff/respondent no.1, it cannot be said that the said ratio is applicable here in any manner.
44. Moving on to the judgments cited by the plaintiff no.1/respondent, in Thulasidhara (supra) and Kale (supra), the Supreme Court held that a family arrangement operates as estoppel against partition. It is also contended by the plaintiff/respondent no.1 that, as held in Lachoo Mal (supra), a party can waive an advantage of law/rule. However, the said propositions are not applicable strictly in the present case.
45. It is not the entire partition deed/family arrangement which is being challenged by the defendant no.5/appellant but only a particular clause therein which is pleaded by the appellant to militate against the purport of the rest of the document. By doing so, the appellant is not denying or challenging the partition deed; more so, since the title of the appellant through his vendors is premised on the partition deed itself. If the appellant were to challenge the partition deed as a whole, he would cut off the very source of his title. Rather, the appellant argues that the pre-emption clause in the said deed curtails the absolute transfer effected by the partition deed otherwise, thereby standing by the partition deed and not challenging it.
46. We do not find any case of waiver having been made out as well. Waiver, as understood in law, is the conscious relinquishment of a right, which, as opposed to acquiescence, has a positive assertion aspect to it. The vendors-defendant nos. 1 to 4 never asserted that 14 they are waiving their right to challenge the pre-emption clause, although they did not contest the suit. Despite the defendant nos.1 to 4/vendors having not contested the suit, by the very act of selling the property in favour of the defendant no.5 without any prior offer of sale to the plaintiff, the said vendors acted against the pre-emption clause and as such, it cannot be said that the vendors waived their rights to challenge the said clause.
47. In Moulvi Ali Hossain Mian (supra), the Full Bench of this Court had observed that an agreement for pre-emption embodied in an agreement does not render the consideration unlawful within the contemplation of Section 23 of the Contract Act. Only pre-emptions unlimited in point of time were held to be bad by English Courts since they went against the rule against perpetuities, which is also a concept incorporated in the Transfer of Property Act in India. However, in the present case, the clause-in-question does not violate the rule against perpetuities but merely opens up a window for the other owners to have a prior right of purchase, without affecting the right of the owner to sell or dispose of the property itself. Abiding by the principle laid down in Moulvi Ali Hossain Mian (supra), it cannot be in doubt that mere inclusion of a pre-emption clause in the partition deed could not have rendered the consideration unlawful in any manner, more so, as there is no law which has been violated by the said provision, as discussed above.
48. Thus, on a careful consideration of the materials on record and all the legal facets involved, we do not find any irregularity or illegality in the order of the learned Trial Judge. In view of Clause 10 of the partition 15 deed dated December 13, 1989, it was the incumbent duty of the defendant nos.1 to 4/vendors, who had bound themselves to the clause, being parties thereto, to give a prior offer of purchase to the remaining original co-sharer, that is the original plaintiff. Having not done so, the transfer in favour of the defendant no.5/appellant is subject to the right of pre-emption incorporated in Clause 10 of the partition deed, which is an enforceable contractual right, not being otherwise violative of any statute.
49. Thus, the plaintiff, and subsequently his successors who have been substituted in his place and stead in the present appeal as respondent nos.1(a) to 1(c), are entitled to a decree for declaration that the sale deed in favour of the defendant no.5/appellant is invalid and to mandatory injunction directed the defendant no.5 to transfer the property covered by the sale deed in favour of the respondent nos.1(a) to 1(c) at the original consideration of Rs.2,50,000/-.
50. However, by the impugned judgment and decree, the learned trial Judge merely directed the original plaintiff/respondent no. 1 to deposit the consideration amount which, in the absence of a formal transfer deed being executed by the substituted appellants in favour of the substituted respondent no. 1-series, would not confer valid title in favour of the substituted respondents.
51. Accordingly, F.A. No.67 of 2012 is dismissed on contest, without any order as to costs, thereby affirming the judgment and decree dated November 19, 2011 passed by the learned Judge, Second Bench, City Civil Court at Calcutta, in Title Suit No.573 of 2000. 16
52. The substituted respondent nos. 1(a), 1(b) and 1(c) shall deposit the consideration amount of Rs. 2,50,000/- in the trial court within January 15, 2025, if not already deposited. The substituted appellants shall jointly execute a transfer deed in respect of the suit property, covered by the purchase deed of late Debabrata Mazumdar (the original appellant) dated February 15, 1999, in favour of the respondent nos. 1(a), 1(b) and 1 (c) jointly within January 31, 2025, which shall be registered through the trial court. Upon execution of the said sale deed, the substituted appellants shall be at liberty to withdraw jointly the consideration amount of Rs. 2,50,000/- from the trial court and appropriate the said sum jointly between themselves in equal share.
53. Interim orders, if any, stand vacated.
54. A formal decree be drawn up accordingly.
(Sabyasachi Bhattacharyya, J.) I agree.
(Uday Kumar, J.)