Calcutta High Court
Woodland Manufacturers Limited vs Sankar Prasad Garga & Ors on 14 February, 2020
Equivalent citations: AIRONLINE 2020 CAL 554
Author: Md. Nizamuddin
Bench: Md. Nizamuddin
IN THE HIGH COURT AT CALCUTTA
Civil Appellate Jurisdiction
Original Side
Present :- Hon'ble Mr. Justice I. P. Mukerji
Hon'ble Justice Md. Nizamuddin
APD 234 of 2016
CS 43 of 1989
With
APD 235 of 2016
CS 501 of 1976
With
APD 236 of 2016
CS 684 of 1986
With
APD 237 of 2016
CS 228 of 1984
With
APD 238 of 2016
CS 324 of 1987
Woodland Manufacturers Limited
VS.
Sankar Prasad Garga & Ors.
For the Appellant :- Mr. Rudradeb Choudhury,
Mr. Tapan Sil, Advocates.
For the Respondents :- Mr. Siddhartha Mitra, Sr.
Adv.
Mr. Raibat Banerji, Ms. Natasha Roy, Advocates.
Judgement On :- 14.02.2020
I. P. MUKERJI, J.:-
Five suits were tried together by the learned single judge and decreed on 12th September, 2014. Woodland Manufacturers Ltd. appeals to this court from that decree.
The property involved is Premises No.78, Rafi Ahmed Kidwai Road, Kolkata. For the purposes of the suits and this appeal, this property 2 is to be taken as having 3 lots, 1, 2 and 3. It was undivided. Woodland is the owner of 50% share in Lot 1, 75% share in Lot 2 and 50% share in Lot 3. It was already owned by them at the material point of time.
In one suit (CS 501 of 1976) Woodland claimed specific performance of an alleged agreement for sale by the Gargas made on 13th September, 1973 in their favour and of a 1/4 undivided share in Lot 2 in their favour and for partition of the property. They also claimed specific performance of the agreement dated 11th June, 1973 for transfer by members of the said family in their favour, of their shares in Lots 1 and 3 (Suit No. 43 of 1989). In another suit (CS 324 of 1987) against Shankar and Kalyani, Woodland claimed partition of Lots 1 and 3 on purchase of 1/2 of the undivided shares in Lots 1 and 3. The Gargas filed two suits (CS 228 of 1984 and CS 684 of 1986) for declaration that the conveyance of 25th July, 1978, 26th July, 1978 and 25th April, 1981 executed by members of the Garga family were void.
The learned judge ruled that Woodland was not entitled to specific performance of the agreements. The preferential right of Shankar to purchase the interest of Woodland in Lots 1 and 3 of the subject property described in the schedule to the plaint in Suit No. 324 of 1987 under Section 4 of the Partition Act, 1893 was allowed. Woodland was directed to transfer and convey its right, title and interest in those Lots to Shankar at a price to be determined by the Registrar of Assurance, Kolkata. Shankar would have to apply to the Registrar to let him know the market value of the suit premises as on the date of filing the application under Section 4 of the Partition Act. This application had to be made within 7 days from the date of the decree. Within a fortnight from receipt of the market value of the property from the Registrar, Shankar would have to notify this to 3 Woodland. Simultaneously, with the communication of the decision of the Registrar, Shankar would have to forward to Woodland the draft conveyance required to be executed by them. Woodland would have to execute the conveyance within seven days of this communication. Shankar was to make over the consideration simultaneously with registration of the conveyance. There was a default clause if Woodland made default but there was no default clause if Shankar was in default.
On 12th August, 2009 the application under Section 4 of the Partition Act, 1893 was made by Shankar. On 17th September, 2014 within five days of the judgment and decree dated 12th September, 2014, T. Banerji and Company, Solicitors and Advocates wrote to the Registrar of Assurances, Kolkata asking the latter to treat the same as an application to compute the market value of the suit premises in terms of this judgment and decree. In the decree there was no time limit upon the Registrar to make this computation. On 6th August, 2015 the said Solicitors wrote to the Registrar to dispose of that application at the earliest. On 10th August, 2015 the Registrar wrote back that the market value as on 12th August, 2009 was not available in his office and that Shankar's solicitors should contact the Inspector General of Registration and the Commissioner of Stamp Revenue, West Bengal. On 11th August, 2015 T. Banerji & Company reiterated the contents of their letter of 6th August, 2015, to the Inspector General of Registration and Commissioner of Stamp Revenue, West Bengal to the Registrar.
In 2017 a writ application was filed in this court (WP 398 of 2017) (Rajesh Poddar vs. West Bengal Information Commission and Ors.). On 24th July, 2017 this court passed an order directing the registering authority to complete the valuation process of the premises expeditiously. On 1st August, 2017 the Registrar of 4 Assurances visited the premises and determined the value thereof as Rs.9,44,69,457/- as on 12th August, 2009. This was recorded in a letter dated 7th August, 2017 of the Registrar to the advocate on record for the State of West Bengal with a copy marked to T. Banerji and Company.
The grounds in the memorandum of appeal were virtually abandoned by the appeal at the time of hearing of the appeal. A wholly different ground was taken based on post decree developments. As the grounds being founded on subsequent developments, we allowed them to be taken.
Mr. Chowdhury, learned counsel for the appellant invoked the principles of Order XX rule 14 of the Code of Civil Procedure. This provision is set out below:
14. Decree in pre-emption suit. (1) Where the Court decrees a claim to pre-emption in respect of a particular sale of property and the purchase-money has not been paid into Court, the decree shall-
(a) specify a day on or before which the purchase-money shall be so paid, and
(b) direct that on payment into Court of such purchase-money, together with the costs (if any) decrees against the plaintiff, on or before the day referred to in clause (a), the defendant shall deliver possession of the property to the plaintiff, whose title thereto shall be deemed to have accrued from the date of such payment, but that, if the purchase-money and the costs (if any) are not so paid, the suit shall be dismissed with costs. (2) Where the Court has adjudicated upon rival claims to pre- emption, the decree shall direct,-
(a) if and in so far as the claims decreed are equal in degree, that the claim of each pre-emptor complying with the provisions of sub-rule (1) shall take effect in respect of a proportionate share of the property including any proportionate share in respect of which the claim of any pre-emptor failing to comply with the said provisions would but for such default, have taken effect; and 5
(b) if and in so far as the claims decreed are different in degree, that the claim of the inferior pre-emptor shall not take effect unless and until the superior pre-emptor has failed to comply with the said provisions."
He argued that the application of Shankar under Section 4 of the Partition Act, 1893 was to be considered like a pre-emption suit under the above provision. This provision provides that the court in the decree would specify a particular time within which the purchase money would have to be paid. If the consideration is paid the defendant would have to deliver possession of the property, but if not paid, the suit would be dismissed. He attacked the decree on the ground that it was a final decree, where the court did not stipulate any time limit for payment of the consideration. It did not retain any jurisdiction to ascertain whether the consideration had been paid within a stipulated time. The court ought to have made a preliminary decree. Thereafter, on a specified reliable date, the court would ascertain whether the condition in the preliminary decree regarding payment had been complied with. Then it ought to have passed a final decree. In this case, the payment under the decree had not been made. The court would thus be obliged to dismiss the Section 4 application.
In the impugned final decree there was no time limit upon the Registrar to make the determination of market value of the property. The Registrar could not make the determination within reasonable time. At the intervention of the court in a writ the determination was finally made valuing the property at Rs.9,44,69,457/- on 7th August, 2017. In the absence of a time limit upon Shankar to make the payment of the consideration, the decree was flawed, learned counsel submitted. Woodland was not bound by the much delayed determination made in 2017. In those circumstances, Woodland was 6 entitled to partition of the property, he argued. The decisions cited by Mr. Chowdhury will be discussed at a later point of time. Mr. Siddhartha Mitra, learned senior counsel appearing for Shankar submitted that there was a difference between a partition suit and a pre-emption suit. In a suit for pre-emption, usually the plaintiff sues on the basis of a pre-emption right contained in an agreement. That is not the case here. The respondents had made an application under Section 4 of the Partition Act, 1893 in the partition suit filed by Woodland on their purchasing the undivided share of Shankar in the partition suit. In those circumstances, Order 20 Rule 14 of the Code of Civil Procedure did not apply. Going by Woodland's argument, the suit had been instituted by them. Applying the said rule on non- receipt of consideration, their suit had to be dismissed. Furthermore, Woodland had filed a separate suit (CS 267 of 2017) for partition, after filing of the appeal. In those circumstances, this appeal had become academic. Whether the appellant was entitled to partition or not in the above facts and circumstances of the case would be decided in the said suit. That was the reason, according to Mr. Mitra why Woodland had not filed the paper books in these appeals for a long time and took extension of time from this court to file the same. Shankar had also filed a suit (CS 247 of 2017) against the Registrar of Assurances and Woodland (as proforma defendant) for valuation of the undivided share in the said premises in terms of the impugned decree.
Mr. Mitra submitted that on 15th May, 2018, an application under Order 7 Rule 11 of the Code of Civil Procedure filed by his client in the suit (CS 267 of 2017) was rejected by this court. A Division Bench of this court on an appeal from the order dated 15th May, 2018 directed both the suits to be heard together, (analogously or one after the other).
7DISCUSSION AND CONCLUSIONS Black's Law Dictionary, 9th Edition defines pre-emption as "the right to buy before others". It is the purchase of something under this right. This right according to Black is contained in a contract relating to sale. This right is described as the potential buyer's contractual right to have the first opportunity to buy at a specified price in a sale within the contract period. One example is given in the dictionary. Suppose A has a right of pre-emption on B's house for 5 years at $ 1,00,000, B can keep the house for 5 years. In that case, A's right is extinguished. If B wishes to sell it within 5 years then A can either buy it for $ 1,00,000 or refuse to buy it. If A refuses to buy it, then B can sell it to someone else.
The authorities which Mr. Chowdhury cited on this point would have to be appreciated in the context of the principles in Order XX rule 14 of the Code of Civil Procedure. It conceives of a pre-emption suit filed, say, by a co-sharer of a property against a transferee of a share in it. It assumes that the transferee has acquired title to and taken possession of the property. On payment of the consideration by the co-sharer by the date specified by the court the title reverts back to him. The transferee is to deliver back possession. At this point, Section 44 of the Transfer of Property Act becomes important and needs consideration. It says that a co-owner of a property can transfer his share to an outsider. Upon such transfer, he acquires a share or interest in the property together with a right to joint possession. If the transferee is not a member of the family, the share is undivided, the property is a dwelling house and belongs to an undivided family, he cannot get joint possession. He can claim separate possession by suing for partition.
8This is provided in Section 4 of the Partition Act, 1893. If the transferee sues for partition, any member of the undivided family can buy his share upon the court making a valuation thereof and upon payment of such value as consideration. These provisions of different statutes are interconnected.
In my opinion, Order XX rule 14 is inter alia about a pre-emption suit by a co-sharer of a property which is not owned by an undivided family to buy the share of a transferee who has obtained possession under the first part of Section 44 of the said Act. The co-sharer can buy out the transferee by paying the agreed consideration. If such payment is made by the specified day he gets possession. If the payment is not made, the suit is dismissed.
The judgment of the Supreme Court in Naguba Appa Vs. Namdev reported in AIR 1954 SC 50 is in that context and lays down two principles. In a suit claiming pre-emption, the moment there is default on the part of the co-sharer to deposit the sale price by the stipulated date in the decree, the suit is liable to be dismissed. This is by operation of law, that is to say, the provisions in Order XX rule 14 of the code. It is kind of a fate accompli. The court on an application for extension of time does not retain the power to extend it. Secondly, it need not to be provided in the decree that in default of payment of the sale price, the suit would be dismissed. The dismissal is by operation of law.
Sulleh Singh & Ors. Vs. Sohan Lal & Anr reported in AIR 1975 SC 1957 affirmed this principle. It added that the appeal court had the power to alter the decree. (See also Jagtar Singh & Anr. Vs. Kartar Singh & Ors. reported in AIR 1980 P&H 313).
The Supreme Court in Radhakishan Laxminarayan Toshniwal Vs. Shridhar Ramchandra Alshi & Ors. reported in AIR 1960 SC 1368 did not look upon the pre-emptor in a favourable way. He was looked 9 upon as one empowered by law to "disturb a valid transaction". It said that the right of preemption was a weak right. Subal Chandra Modak Vs. Gostha Bhhari Das reported in 60 CWN 829 is a division bench judgment of our court. It arose out of an application under Section 4 of the Partition Act. The dictum of the court was that the co-sharer claiming the right of preemption was compelling the purchaser to make a "forced sale". The valuation had to be "fixed" with great care and precision. Another division bench judgment of our Court Gopal Chandra Mitra & Ors. Vs. Kalipada Das & Ors. reported in AIR 1987 Cal 210 opined that the market value of the share in the property sought to be bought was at the time a co-sharer undertook to this court to buy the share of the transferee. Section 4(1) did not provide any time of making the undertaking or valuation. Our division bench interpreted the provision, by ruling that the date of valuation was "when such application can properly be made and can become legally effective in order to bring the provision of Section 4 into operation. Such effective date was the date of the preliminary decree determining the shares of the parties. In fact, as early as in 1910 Sir Ashutosh Mookerjee presiding over a division bench of this court said in Khirode Chandra Ghoshal Vs. Saroda Prosad Mitra reported in CDJ 1910 Cal HC 343.
"2. In so far as the first point urged in support of the Rule is concerned, it is clear that the application, under Section 4, of the Partition Act, has been made at the proper stage. Section 4 does not provide that the application contemplated by it should be made before the preliminary decree; on the other hand, it is obvious that the application cannot be made till the rights of the parties have been determined by the preliminary decree. To take one illustration it is conceivable that there may be a dispute between the parties as to whether the plaintiff has really acquired any interest in the dwelling house or not, and 10 whether, he is entitled to demand a partition of it. Such question must, clearly, be determined before a defendant can be expected to make an application under Section 4. As was pointed out by this Court in the case of Satya Kumar v. Satya Kirpal 10 C.L.J. 503 : 3 Ind. Cas. 247, the question, whether a particular property alleged to be joint really possesses that character, must be determined before the preliminary decree is made; all questions involving the title of the parties and their right to any relief within the issues, are judicial in character, and must be determined by the Court, such determination to be made ordinarily by the Court, and incorporated in the interlocutory decree before any partition is made or directed. An application, under Section 4, therefore, cannot be properly made, before it has been declared by the preliminary decree, that the plaintiff, who is not a member of the family, has acquired a valid title to a share thereof, and is entitled to claim partition. This view has been adopted in the cases of Hira Moni v. Radha Charn 5 C.W.N. 128; Kadir v. Abdul Rahiman 24 M. 639, Abdus Samad v. Abdur Razzaq 21 A. 409 and Bai Hirakore v. Trikamdas 32 B. 103 : 10 Bom. L.R. 23 : 3 M.L.T. 141, where it was ruled that an application, under Section 2 or Section 4 of the Partition Act, may be made after the preliminary decree. The case of Kali Kumar v. Brahmananda 7 C.L.J. 98, where the earlier authorities do not appear to have been brought to the notice of the Court, may, at first sight, seem to lend some support to the contrary view. The case, however, is really distinguishable, because there the parties had proceeded, not merely beyond the preliminary decree, but also be-yond execution proceedings based thereon, and had actually found it necessary to institute a suit under Section 331 of the Civil Procedure Code of 1882, by reason of an obstruction by a claimant in good faith other than the judgment-debtor. It is needless for us to express any opinion upon the question, whether, even at such stage, it may not be open to one of the parties to avail himself of the benefit of Section 4 of the Partition Act. There can, however, be no room for controversy that the application in the case before us, made immediately after the confirmation of the preliminary decree by the Court of appeal, was amply in time, and ought to have been considered on the 11 merits. We may add, further, that the mere circumstance that this matter had been mentioned in the memorandum of appeal presented against the preliminary decree, is no bar to this application. The ground could not have been entertained at that stage, and, as a matter of fact, was not considered. We hold, therefore, that the first ground urged by the learned Vakil for the petitioners in support of the Rule, must prevail."
But later division benches of this court as referred to in Gopal Chandra Mitra & Ors. Vs. Kalipada Das & Ors. reported in AIR 1987 Cal 210, maintained that the valuation had to be made on the date of the application containing the undertaking, without specifying the time of the application during the progress of the suit. Gopal Chandra Mitra & Ors. Vs. Kalipada Das & Ors. reported in AIR 1987 Cal 210 followed the 1910 decision.
All these judgements were cited by Mr. Chowdhury. In Krishnadhan Chatterjee Vs. Ajit Kumar Mitra & Ors. reported in 1977 (1) CLJ 30, this court held that in dealing with an application under Section 4 of the Partition Act, the court should follow the principles in Order 20 Rule 14(c) of the Civil Procedure Code with suitable modifications. It should direct sale of the share of the stranger transferee at a valuation made by the court and direct the pre-emptor to deposit the purchase money so fixed within a certain date. If the purchase money was not deposited according to the directions, the Section 4 application ought to be rejected and the stranger purchaser would be entitled to have the allotment in terms of the final decree. This case is very important but was not cited at the bar.
The ratio laid down by the Supreme Court in Phoolchand and Anr. Vs. Gopal Lal reported in AIR 1967 SC 1470, also not cited at the bar is important inasmuch as it provides in Paragraph 7 of the report 12 that in a partition suit the court is empowered to pass more than one preliminary decree.
In the impugned judgment and decree the learned judge has held that Shankar was entitled to exercise the right of pre-emption. This part of the finding has not been challenged in appeal. The learned judge also directed that valuation of the property be made on the date of filing of the application under Section 4 of the said Act. In my view, there is no error in this direction.
It is true that a division bench of this court in Gopal Chandra Mitra & Ors. Vs. Kalipada Das & Ors. reported in AIR 1987 Cal 210 departing from previous division bench judgments held that the relevant date for the purpose of determining the valuation under Section 4(1) of the Partition Act could only be by an undertaking after making of the preliminary decree. In my opinion, the earlier judgments of this court after Khirode Chandra Ghoshal Vs. Saroda Prosad Mitra reported in CLJ 1910 Cal HC 343 are applicable to this case. This is for the reason that Section 4 pre-supposes that the share in the dwelling house transferred to the stranger transferee is undisputed. It also assumes that the transferee sues for partition. There is no other issue like declaration of title involved in the suit, as conceptualized in section 4. In that suit, a joint shareholder of a family dwelling house can make an application giving an undertaking to the court to buy out the share of the transferee. Once the option has been exercised, the date of the application containing the undertaking would be the date for valuation, for the simple reason that while filing the application the shareholder should be willing to buy out the stranger transferee by making payment to him of the consideration to be determined by the court and the transferee obliged to take the consideration and transfer the share to the shareholder. The entire exercise has to be completed within 13 reasonable time after the undertaking is made, so that there is no material change in the value of the property. If the shareholder defaults, the Section 4 application should be dismissed following the principle laid down in Krishnadhan Chatterjee Vs. Ajit Kumar Mitra & Ors. reported in 1977 (1) CLJ 30. The transferee is entitled to partition. If the transferee defaults, the conveyance can be executed by the court in favour of the shareholder. There is no fundamental error in the decree complained of. The errors are these. The decree ought to have been a preliminary decree. The Registrar of Assurance ought to have been set a short time limit to make the valuation. The decree ought to have contained a clause that on the default of Shankar his Section 4 application would be dismissed and the property partitioned. The court ought to have directed that the suit with the section 4 application would appear on a future date for passing a further preliminary or final decree.
Shankar was not at all at fault for the delayed valuation of the property by the Registrar of Assurance.
His solicitors forwarded the decree to the Registrar within time. The delay was made in the office of the Registrar. In fact neither party was at fault.
Woodland is justified in saying that at this point of time they are not bound to take the property as valued by the Registrar, as in 2009. The question also is for absence of fault on the part of Shankar, could his application under Section 4 of the Partition Act be dismissed?
The Supreme Court in Phoolchand and Anr. Vs. Gopal Lal reported in AIR 1967 SC 1470 has opined that the court has the power to pass more than one preliminary decree.
14In my opinion, if the court has the power to make more than one preliminary decree, it is also invested with the power to alter the terms of the preliminary decree and pass consequential orders on a changed situation.
In those circumstances, the impugned judgment and decree has to be treated as a preliminary decree.
Since there was no fault on the part of either party, there is occasion in my opinion, for passing a further preliminary decree, balancing the equities.
On the date of making the application under Section 4 of the said Act by Shankar i.e. 12th August, 2009 the valuation of the property was Rs.9,44,69,457/-. According to the above reasoning, this amount was payable very contemporaneously to the date of this application. Therefore, if the valuation and payment were made within time, Woodland would have received this amount within a reasonable period after 12th August, 2009. Let this reasonable period be 3 months. So, Woodland should have been bought out by 31st December, 2009.
I would hold that Woodland was entitled to enjoy the benefit of this money from the date of receipt of the consideration till date. This is reasonably assessed at 10% per annum simple interest. In those circumstances, it would be just and proper and subserve the interest of justice if Shankar pays to Woodland the consideration of Rs.9,44,69,457/- on the valuation made by the Registrar together with 10% simple interest thereon for the period commencing from 1st January, 2010 till the date of this preliminary decree and thereafter, further 10% simple interest per annum from this date till payment which has to be tendered on 20th March, 2020, Woodland will convey their right, title and interest in the said property to Shankar, on 20th 15 March, 2020. On default by Woodland, the Registrar, High Court, Original Side shall execute the conveyance by 30th April, 2020. On the default of Shankar this suit would be placed before the learned single judge for passing of a preliminary decree of partition. I pass a preliminary decree, accordingly.
Furthermore, A) The sale deed shall be registered on the same day as the payment of consideration. Woodland shall not raise any dispute with regard to the draft conveyance submitted by Shankar. B) Shankar will continue to be in possession of the property, until further orders.
C) If there is default on the part of Shankar in making the payment of the consideration by 20th March, 2020 Woodland shall apply before the court below to pass another preliminary decree for partition. No further enquiry is to be made by the court below except with regard to the payment of consideration within the stipulated time. If it finds that the consideration has not been paid a preliminary decree for partition assuming the share of the parties to be admitted, shall be passed by it.
D) If this eventuality happens the court will proceed further to pass a final decree of partition.
E) It is made clear that under no circumstances, the time to pay the consideration is to be extended and that the above directions are peremptory.
The impugned judgment and decree dated 12th September, 2014 is modified to the above extent, treating it as the first preliminary decree.
16The appeal (APD 238 of 2016) is disposed of accordingly. No order as to costs.
I agree, (MD. NIZAMUDDIN, J.) (I. P. MUKERJI, J.)