Can one brother sell the property to a stranger if there is a preferential offer clause in the family settlement?

The question is to whether clause (5) in question is vague and unenforceable. We noticed that it provides that the property in question cannot be sold without concurrence of the three brothers in writing. If it is sold on the agreement of three brothers, the first preference is to be given to both other brothers. When it is stated that the property cannot be sold without concurrence of the three brothers in writing, there cannot be any doubt about its meaning. It means what it says which is that should a brother want to sell the property, the other two brothers must agree in writing. This clause cannot be described as vague. This is different from the aspect as to whether it is a clog on ownership or whether it is otherwise unenforceable but it cannot be described as being vague. The second contention is that when a decision is taken by the brothers permitting sale by a third brother, then, first preference is to be given to both the other brothers. What is intended is that after the written concurrence is obtained for selling in order that property is not sold to a third party/stranger, the other two brothers are given an opportunity to buy that property. This portion of the clause cannot also be described as vague as such. No doubt, it could be argued that the price at which the offer is to be made is not expressly mentioned. We have found that the clause is part of a family settlement between brothers. Courts ordinarily lean in favour of family settlement. Clause (5) itself does not contain an agreement to sell. It only contemplates a preferential offer being treated as a condition precedent to a brother affecting a sale outside of a family to a stranger. The price can only be understood as market price which would be the fair price. Therefore, we are of the view that the finding by the High Court that contract is vague cannot be sustained.

51. The first defendant has sold his share to the second defendant. Under the clause, can the first defendant sell to a stranger? He can sell provided there was a written concurrence by the other brothers for a sale and the offer is made to the other brothers and it does not fructify into a sale for reasons which are not attributable to the brother who wishes to sell. We find that there was an offer to the appellant by the first defendant. He has failed to act upon it. The other brother has no case about offer not being made and he has not raised any dispute over the sale to the second defendant. The perusal of the plaint reveals that the following case has been set up by the plaintiff: “7. that the defendant no.1 was interested in disposing his share in House no.19-A, Chandigarh and the plaintiff was already and willing to purchase the portion of the defendant no.1 and the plaintiff has been expressing his readiness willingness to purchase the share of the defendant no.1 through number of Regd. Letters, telephone and even on FAX. 8. That the defendant no.1 as well as his wife and son has been corresponding and discussing on behalf of the defendant no.1 promising to sell the property to the plaintiff as defendant no.3 did not show any interest to purchase the share of defendant no.1 nor he was interested at all to purchase the 1/3rd share of the defendant no.1 in the property.

9. that the plaintiff was shocked and surprised to learn that the defendant no.1 has sold his 1/3rd share of the property to defendant no.2 a tenant who was already occupying the said portion in a totally secret manner without informing the plaintiff and against the terms and conditions of agreement of family partition and minutes dated 31.3.1982 arrived between plaintiff, defendant no.1 and defendant no.3. the site plan showing the portion sold by the defendant no.1 to defendant no.2 (in red) is attached with this plaint.” (Emphasis supplied)

52. Thus, what is sought is specific performance. The appellant proceeded in the suit on the basis that there is a contract. A contract presupposes an offer which is accepted which means that there was an offer from the defendant. The correspondence, which we have referred to, fortifies us in holding that there was an effective offer and it did not materialize on account of any default on the part of the plaintiff.

53. Now, if the clause is broken down, it involves the following steps. A brother announces his desire to sell his share. He seeks written concurrence of the other brothers. A written concurrence is given. Then, the next step is reached. The selling brother offers to sell it to the other brothers. If they take the offer and the price is agreeable to the parties, sale follows. If the brothers do not wish to buy, the sale to the strangers is permitted. In the above process, in the facts of this case, it is clear that the appellant and the first defendant, without insisting on the written concurrence, went to the stage of offer to brothers. The appellant has led the first defendant to assume, even without a written concurrence, that the sale is permitted. The first defendant has acted clearly on the basis that the requirement of the first stage was not being insisted upon. Otherwise, he could have certainly obtained the concurrence. Having thus acted in the matter, and the second stage having been reached, when for reasons where the fault cannot be attributed to the first defendant, the offer, which the appellant himself describes as reasonable, was

not seized upon by the appellant, the third stage emerged. This meant that it became open to the first defendant to sell to a stranger and which is what he did by it selling it to the second defendant. Even proceeding to enforce the clause, we find that the appellant is clearly estopped from setting up the plea of absence of written consent of the brothers. It would be inequitable, particularly when we are considering the matter in an appeal sourced under Article 136 of the Constitution of India.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 1524-1525 OF 2019

TILAK RAJ BAKSHI Vs  AVINASH CHAND SHARMA

Author: K.M. JOSEPH, J.

Dated: AUGUST 20, 2019.

Citation: (2020) 15 SCC 605.

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Whether the gift of a immovable property to a stranger to the exclusion of the other heirs of Class-I can be regarded as a transfer ?

There is no ambiguity that the gift is a transfer without consideration. The legislature never conceptualised the gift for consideration or adequate consideration but it is a gratuitous transfer out of love and affection and sometimes for the spiritual benefit of the donor. It is incongruous to say that the gift is not a transfer. It has all the incident of transfer and the right, title and interest of the donor passes to the donee upon execution, registration and acceptances thereof.

 The element of “transfer” divest the executant of the deed of all his right which came to be vested upon the recipient thereof may be by way of a gift which does not contain the consideration. Such right of the recipient cannot be taken without the payment of the consideration and precisely for such reason sub-Section(2) has been incorporated. The vested right can only be divested by well recognised mode of transfer. The hypothetical example can be made in this regard when ‘A’ gifted his immovable property to ‘B’ out of love and affection. B in turn wanted to sale the said property to any stranger as such deed of gift is not conditional one. He is entitled to receive the consideration although he acquired the right, title and interest by way of a gift which admittedly does not contain consideration.

In the light of the above, Section 2 should be interpreted when the court deprives a stranger to the property acquiring an interest by way of a gift and such right is being vested upon the heir specified in Class-I of the Schedule. It is anomalous when a co-sharer who gifted the property and the donee who received the property shall not be entitled to any consideration if the property by the operation of the law is directed to be given to the co-sharer or the heir is specified in Class-I of the Schedule. The proper meaning which can be assigned to sub- Section(2) of Section 22 is the moment the Court finds that an heir is entitled to a preferential right under sub-Section(1), in absence of any agreement, the consideration so determined shall pass to the stranger purchaser. Any other interpretation would render the provision otiose and redundant. The word ‘transfer’ has to be given a pragmatic meaning and not in conjunction with the consideration appearing in sub- Section(2) of Section 22 of the Act. If any restrictive meaning of the word transfer is given, it would be a premium to the heir divesting his right by way of a gift to wriggle out of mischief of the provision contained in sub-Section(1) of Section 22 of the Act.

We, thus, held that even a gift being the transfer comes within the ambit of Section 22 of the Act and the heir coming within Class-I of the Schedule is entitled to preferential right.

So far as the concluded transfer is concerned, we do not find any restriction having put under Section 22 to have its restricted applicability in case of proposed transfer if the transfer has been affected without his knowledge, still the heir can maintain the proceeding invoking the preferential right enshrined under Section 22 of the Act. We thus modifying the decree of the Trial Court to the extent that plaintiff has a preferential right in respect of Ka(1) Schedule Property.

 IN THE HIGH COURT AT CALCUTTA

CIVIL APPELLATE JURISDICTION

HARISH TANDON & KAUSIK CHANDA, JJ.

C.A.N 11623 OF 2017 IN F.A.T 661 OF 2017 

 Judgment On: 08.04.2021

Pabitra Kumar Maity Vs. Smt. Shyamali Manna & Ors

Harish Tandon, J.:

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What is distinction between preferential right" under S.22 of Hindu Succession Act and right of Pre-emption?

The term preferential right and pre emption are not the same.

The remedy of "preferential right" under S.22 of Hindu Succession Act  can be exercised before the sale transaction. The section says that when the co-sharer proposes to transfer his share, the other co sharer can apply for purchase of said share. This situation can arise when co sharer enters into oral or written agreement to sale with third party.

Once the sale is complete, the remedy is to apply for right of pre emption. This right is recognized by some state Acts or by custom or byprecedents. In the absence of statutory provision, the right can be exercised as civil right.

If the Court grant decree of pre emption, naturally the earlier sale deed requires to be cancelled. Because, if earlier sale deed remains in existence, it will affect the plaintiffs/pre emptor right in property. The previous vendee will be entitled for consideration amount in lieu of cancellation of his sale deed.

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Whether preferential right given U/S 22 of Hindu succession Act is applicable to agricultural land?

 When the Parliament thought of conferring the rights of succession in
respect of various properties including agricultural holdings, it put a
qualification on the right to transfer to an outsider and gave preferential
rights to the other heirs with a designed object. Under the Shastrik Law, the
interest of a coparcener would devolve by principles of survivorship to
which an exception was made by virtue of Section 6 of the Act. If the
conditions stipulated in Section 6 were satisfied, the devolution of such

interest of the deceased would not go by survivorship but in accordance with
the provisions of the Act. Since the right itself in certain cases was created
for the first time by the provisions of the Act, it was thought fit to put a
qualification so that the properties belonging to the family would be held
within the family, to the extent possible and no outsider would easily be
planted in the family properties. In our view, it is with this objective that a
preferential right was conferred upon the remaining heirs, in case any of the
heirs was desirous of transferring his interest in the property that he received
by way of succession under the Act.
21. We, therefore, conclude that the preferential right given to an heir of a
Hindu under Section 22 of the Act is applicable even if the property in
question is an agricultural land. 
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2553 OF 2019

Babu Ram Vs Santokh Singh

Dated:March 7, 2019.
Citation: AIR 2019 SC 1506

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Whether one heir can purchase property if it is proposed to be sold to other heirs as per S 22 of Hindu succession Act?

Section 22 of the Hindu Succession Act, 1956 clearly
confers additional right of pre-emption in case of interest in any
immovable property devolving upon two or more heirs specified in

clause I of the Schedule and in case any one of such heirs proposing
to transfer his or her own interest in the property or business, the other
heirs shall have a preferential right to acquire the interest proposed to be
transferred. The plaintiff being a brother of the defendant no.1 and was
having joint interest in the suit property and rightly applied for preemption
in the share of the defendant no.1 in the suit property by
exercising right under Section 22 of the Hindu Succession Act, 1956,
the learned trial Judge as well as the Lower Appellate Court have
considered the said provision of Section 22 of the Hindu Succession
Act, 1956 and have rendered a concurrent finding of fact that the
plaintiff was entitled to apply for pre-emption and purchase the share
of the defendant no.1 in the suit property before the same was sold to
the defendant no.2. Learned counsel appearing for the defendant no.2 is
unable to demonstrate before this Court as to how the said concurrent
finding of the fact rendered by both the Courts below is perverse and
contrary to Section 22 of the Hindu Succession Act, 1956.
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
 CIVIL APPELLATE JURISDICTION
SECOND APPEAL NO.450 OF 1993
 Eknath Daval Thete 
V
 Ganpat Dagdu Thete 
 CORAM : R.D. DHANUKA, J.

         Dated :   6th January 2016.
Citation: 2017(1) ALLMR236 Bom

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