The right of pre-emption arises only in two types of transfer of property, viz., sale and exchange. It does not arise in respect of transfer of any other type. When it arises in respect of a sale, then sale must be complete, bona fide and valid.
The Allahabad High Court held that the transfer of property by a husband to his wife in lieu of dower is sale and, therefore, the right of pre-emption arises, while the Oudh Chief Courts has held that it is a hiba-bil-iwaz, and, therefore, the right of pre-emption does not exist.
Similarly, the right of pre-emption arises in respect of exchange when it is complete, bona fide and valid. Thus, the right of pre-emption will not arise in respect of an exchange of property between two persons, if the exchange is subject to an option of either of them to cancel it and take back the property at any time during their life time. But if one of the parties dies without cancelling it, the right of pre-emption will arise.
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ADVERTISEMENTS:
The right of pre-empdon does not exist in respect of a gift, sadaqah, wakf, inheritance, bequest or lease. It does not apply to a mortgage also, but if a mortgage is foreclosed, then the right of pre-emption arises. The right of pre-emption does not arise in respect of a lease even when it is in perpetuity.
It is established rule that the right of pre-emption arises out of a valid and completed sale. The question that has caused some controversy is: whether a sale should be treated as completed sale under Muslim law or under the Transfer of Property Act?
In Begum v. Muhammad, a full Bench of the Allahabad High Court held that if the sale is complete in the Muslim law sense, then the right of pre-emption will arise. In this case, Bannerji, J. expressed the opinion that it arises only when the sale is complete in the Transfer of Property Act sense.
ADVERTISEMENTS:
In Jadulal v. Janki Koer, the Calcutta High Court pronounced the test of intention of parties. In other words, the sale will be deemed to be complete when parties intended it to be completed. This test was adopted in Budhai v. Sonaullah, Kheyali v. Mullick, (per Richardson J), and in Sitaram v. Sayed Sirajul.
The decision in Sitaram’s case was affirmed by the Privy Council. The Supreme Court has resolved the controversy by holding that in those cases, where the Transfer of Property Act applies, the sale will be complete in accordance with the provisions of the Transfer of Property Act, and Muslim law or any other personal law cannot override the provisions of the Act. It may be noted that the Muslim law of sale has been superseded by the Transfer of Property Act.
It has been held in some cases that the court should look into the real nature of transaction. A deed which is called gift (sankalp), if it is in fact a sale, then the right of pre-emption will arise. Similarly, the right of pre-emption will be available in respect of an ostensible usufructuary mortgage which is in fact a sale.
It is essential that the basis, on which the right of pre-emption is claimed, must continue to subsist till the passing of the decree whatever might be the nature of the right. For instance, when a person claims the right of pre-emption as owner of contiguous property and files a suit on that basis, but sells his property after the institution of the suit, then his suit will abate, and a decree cannot be passed in his favour.
ADVERTISEMENTS:
The same will be true when a co-sharer or pre-emptor of a superior class files a suit to enforce his right of pre-emption, while the suit of a person having inferior right is pending in the court. But once the decree is passed, it can be executed even if the right of pre-emption is not subsisting at the time of the execution of the decree.
Similarly, the right of pre-emption is enforceable even if the pre-emptor’s right has been extinguished when the appellate court passes the decree. The rationale behind these decisions is that the crucial date is the date of the decree of the court of the first instance. It follows that a pre-emptor can be non-suited by the purchaser if the latter acquires a superior or equal right of pre-emption before the suit of the former is decreed.
Right of pre-emption when parties belong to different sects or schools and when some of the parties are non-Muslims:
Pre-emption involves three parties: the pre-emptor, the vendor and the vendee. When all the parties belong to the same sect or school no difficulty arises. But difficulties crop up when parties belong to different schools or to different religions. It appears to be established that the right of pre-emption can be claimed only if the law applicable to the vendor recognizes pre-emption.
The Allahabad and the Patna High Courts hold the view that the religion of vendee is of no consequence in respect of the right of pre-emption. But the Calcutta and the Bombay High Courts hold otherwise.
In Gurhan v. Chote and Pir Khan v. Fatyaz, applying the principles of reciprocity, the Allahabad High Court said that if vendee was Shia and the vendor was Hanafi, vice versa, the Shia law will apply. In both the cases pre-emption was claimed on the basis of vicinity.
The Shia law does not recognize the right of pre-emption (in the former on the basis of vicinage and in the latter on the basis of co-ownership in zamindari land), though the Hanafi law recognizes it.
Thus, there was no reciprocity between the Shia law and the Hanafi law. On the other hand, the Calcutta High Court holds the view that in such a case the Hanafi law of pre-emption will apply, since it is the Hanafi law of pre-emption which was in force in India. A full Bench of five judges of the Hyderabad High Court considered the question in Pasha Begum v. Syed Shabbu Hassan.
In this case, the right of pre-emption was claimed on the basis of vicinage. The majority pronounced the following tests : (a) If the vendor is Shia and the pre-emptor is a Sunni, then the right is not available since the Shia law does not recognize the right of the pre-emption on the basis of vicinage, (i.e., there is no reciprocity between the schools), (b) In the reverse case also, the pre-emptor will fail for the same reason, (c) If the vendee and the pre-emptor belong to the same school, then the rules of pre-emption of the school to which the parties belong will apply.
Under the Shia law, the right of pre-emption cannot be claimed by a non-Muslim pre-emptor where the vendor and vendee are Muslims. It is well established that the right of pre-emption cannot be claimed under the Muslim law if the vendor is a non-Muslim. It seems that most of the High Courts are in agreement that the pre-emptor should also be Muslim.
In Hyderabad, where the law of pre-emption is based on personal law, if the vendor and the pre-emptor are both Muslims, the right of pre-emption can be claimed. As to why the pre-emptor should also be a Muslim, the following reasons are advanced: when a Muslim wants to sell his property, he is obliged under Muslim law to sell it to his neighbour or co-sharer, before he could sell it to anybody else. But a non-Muslim vendor has no such obligation. This means that if a non-Muslim is allowed to pre-empt, it will be giving him a right without corresponding obligation.
The Calcutta High Court has opined that the vendee too should be a Muslim and has held that a Muslim cannot claim the right of pre-emption against a Hindu vendee. This view is based on the assumption that the right of pre-emption does not attach to the land, but is merely a personal right, and, therefore, cannot be claimed against a person who is a non-Muslim.
The Allahabad High Court has expressed the contrary view: it can be enforced against a Non-Muslim vendee. The Calcutta view is no longer correct, in view of the fact that the Supreme Court has held that the right of pre-emption is an incidence annexed to the property.
Where the law of pre-emption is lex loci, or arises by custom, or is created by contract, then it is immaterial that some of the parties are non-Muslims.
Right of a Shafii to claim pre-emption:
Where there are more than two shafis of the same class and a sale is made by one of them to another, then, the law, as it stands today, is that the other shafts are not entitled to claim pre-emption of their share against the shafis vendee. Where a sale is made jointly to a shaji and a stranger, the other shafts are entitled to claim the right of pre-emption.
This view is in accordance with the Hedaya which holds that where there is plurality of persons entitled to the privilege of shufaa, the right of all is equal. For instance, А, В, С and D own individually a house in a private lane common to them. A sells his house to B: In this case В, С and D are entitled to the right of way. In this case, С and D are entitled to the right of pre-emption of a third of the house.