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2007 DIGILAW 4228 (MAD)

G. Kailasam v. G. Muthuchandran, Chennai & Others

2007-12-17

R.BANUMATHI

body2007
Judgment : R. Banumathi, J. Seeking to exercise the right of pre-emption, the plaintiff has filed the Suit for a declaration that he has pre-emption right of first option to purchase the Suit schedule property and for a consequential injunction re-straining the defendant from in any manner alienating the Suit schedule property to any Third Party. The applicant/plaintiff has also obtained an ex parte injunction restraining the respondent/defendant from selling/alienating the Suit schedule property. For convenience, the Parties are referred in their original rank in the Suit. 2. The uncontroversial facts are these .(i) The plaintiff and the defendant are the only two sons/children of their father Late R. Gopalan. The Grandfather of the plaintiff viz., Late Ramachandra Sastri purchased the Suit, schedule property in the year 1918 from the Mambalam Co-op. Society by virtue of a Sale Deed No.2951 of 1918 dated 210. 1918, of an area of 11200 sq.ft. situated at .T. Nagar, Chennai. After his death, his only son Late R. Gopalan inherited the Suit schedule property. .(ii) In the year 1981, Late R. Gopalan, the plaintiff and the defendant partitioned the Suit schedule property by virtue of a registered Partition Deed No. 1593 of 1981 dated 23. 1981. The property was divided into two schedules viz., Schedule-I and II. Schedule-I property measuring two grounds and 1040 sq.ft., was allotted to the defendant. Schedule-II property measuring one ground and 2217 sq.ft. was allotted to the plaintiff. Vide the said Partition Deed, late R. Gopalan and his wife G. Rukmani, who are the father and mother of both plaintiff and defendant, were given the absolute right of residence and enjoyment of the whole of the property till their and/or any one of their life time. (iii) It is one of the conditions amidst various others, laid down in the said Partition Deed. The Suit schedule property, if for any reason sought to be sold by anyone of the parties viz., plaintiff or the defendant, the Party which seeks to sell the Suit schedule property shall give the first option to the other party to purchase the same at the value entered In the Partition Deed or as may be mutually agreed upon. 3. The case of the plaintiff is that he has a legal right to purchase the property as per the recitals in the Partition Deed. 3. The case of the plaintiff is that he has a legal right to purchase the property as per the recitals in the Partition Deed. The defendant had taken steps to alienate his share to some Third Party without providing the first option of purchase to the plaintiff. There were exchange of communications between the Parties beginning from 30.3.2006 till about October 2006. The communication between the brothers did not fructify and their mother also died on 18. 2007. 4. The plaintiff has alleged that after the death of mother, the defendant is making serious attempts to sell the Suit property to a Third party without complying with the condition of offering the first option to purchase the Suit property to the plaintiff and thereby enabling the plaintiff to exercise his right of pre-emption, which amounts to breach of the terms of the Partition Deed. After issuing the Legal Notice, asserting his pre-emption right to purchase the Suit property the plaintiff has filed the Suit. 5. Resisting the Suit and the Application in O.A. No. 1037 of 2007, the defendant has filed the Counter contending as follows: The plaintiff has commercially exploited the property and did not mend his ways and made the life of the defendant miserable. The defendant had executed a Settlement Deed in respect of undivided half share in favour of his wife on 28. 2002 and 14. 2006. The plaintiff having exercised the right of preemption does not have a prima facie case to seek for enforcement of the right. Though, the exchange of communication began at the earliest in 30.3.2006, the plaintiff had not exercised the right within one year from the said date. The plaintiffs mere expression that he is willing to exercise the pre-emptive right is not sufficient and he has to match the offer, which a Third party has already offered through a Registered Document for Rs. 8,65,00,000/-. Without a payer for Specific Performance of the exercise of alleged pre-emptive right, the plaintiff cannot have the benefit of injunction. 6. Taking me through the Plaint and various letter correspondences between the Parties, the learned counsel for the plaintiff has submitted that inspite of the offer and readiness of the plaintiff to purchase the property, plaintiffs pre-emptory right has been defeated the defendant. 6. Taking me through the Plaint and various letter correspondences between the Parties, the learned counsel for the plaintiff has submitted that inspite of the offer and readiness of the plaintiff to purchase the property, plaintiffs pre-emptory right has been defeated the defendant. It was submitted that the Settlement Deed in favour of defendants wife is a clandestine one and in none of the letter correspondences the defendant has stated that he has already settled the property in favour of his wife. The learned counsel for the plaintiff has submitted that the defendant has created sham documents only to boost up the claim. It was further urged that if injunction is vacated, Third Party right must intervene and the plain-tiff would be subjected to irreparable loss and hardship 7. Submitting that the right of pre-emption is a weak right of its character, because, it restrains the lawful owner from alienating the property, the learned counsel for the plaintiff Mr. Kannan has submitted that inspite of letters, the plaintiff has not come out with a specific plea of his readiness. It was further submitted that once a price is fixed with the Third Party, the plaintiff, who claims pre-emptory right has to match the offer. Placing reliance upon Radhakrishnan v. Sridhar AIR 1960 SC 1368 and other decisions, it was submitted that there are no equities in favour of a pre-emptor, whose sole object is to disturb a valid transaction by virtue of the rights created in the lawful owner. The learned counsel also raised objection as to the frame of Suit contending that the plaintiff has not come forward to seek enforcement of his right by seeking for Specific Performance and in the absence of concrete proposal to purchase the property, no relief could be granted. 8. In the light of contentions the points falling for consideration are as follows: .(i) Whether on the basis of the recitals in the Partition Deed the plaintiff’s pre-emptory right is to be upheld? and .(ii) Whether the plaintiff has shown a prima facie case entitling him to the temporary injunction till the disposal of the Suit? 9. No doubt under the Partition Deed, the plaintiff has the right of pre-emption viz., to have the first offer of intended sale. The right of preemption of either party is reflected in the Partition Deed in the following recitals. "…. 9. No doubt under the Partition Deed, the plaintiff has the right of pre-emption viz., to have the first offer of intended sale. The right of preemption of either party is reflected in the Partition Deed in the following recitals. "…. (3) In the event of either party of the second part or the party of the third part finding it necessary to 1. R. Gopalan 2. Muthuchandran 3. G. Kailasam sell his portion, the other party shall have the first option to purchase the same. The value entered herein in this deed or on such other terms as may be mutually agreed upon...." 10. In order to have a correct idea of right of pre-emption, a little analysis of its nature becomes necessary. In Narayana v. Karthiayani, AIR 1962 Ker. 122 , Ottidar/defendant claimed right of preemption to purchase the property, over which, Othi was created. Observing that the defendant failed to establish all conditions for enforceability of right of pre-emption and referring to various decisions the Kerala High Court analyzed the nature of right of pre-emption and held as follows: "The right of pre-emption has apparently two distinct phases: .(i) the primary or substantive right and .(ii) the secondary or remedial right. The primary right of pre-emption is the right to have the first offer of an intended sale; so that a sale to a stranger, without making the first offer to the pre-emptor, would be an infringement of this right. The remedial right of pre-emption is a right to be substituted in the place of the vendee who made the of-fending purchase. The primary right exists before the sale takes place; the remedial right arises when the sale has taken place, The primary right avails against the owner of the pre-emotional property. The remedial right avails against the purchaser of the pre-emotional property The primary right is inherent to the pre-emptive property, and passes along with it to the assignee thereof; in other words it runs with the pre-emptive property. The remedial right avails against the purchaser of the pre-emotional property The primary right is inherent to the pre-emptive property, and passes along with it to the assignee thereof; in other words it runs with the pre-emptive property. The remedial right inheres only in the person who is the owner of the pre-emptive property and the time of the sale which gives rise to the exercise of pre-emption; it is more or less personal to him; a transfer of the pre-emptive property after the offending sale has taken place will not transfer the right to enforce pre-emption to the transferee (see Sheo Narain v. Hira, ILR 7 All 535 (PB) and Jasudin v. Sakharam Ganesh, ILR 36 Bom. 139). Thus the two rights are entirely distinct rights, though sometimes they are loosely described as two aspects of the same right. To make the distinction obvious, certain authors call the primary right as "the right of pre-emption", while the remedial right is called "the right to pre-empt" (see the LAW OF PRE-EMPTION by Dr. M.L. Agarwala, 6th Edn. P.35) (20) The distinction between the primary right and remedial right was noticed by our Supreme Court in Bishan Singh v. Khazan Singh AIR 19S6 SC 838. In defining "the material incidents of the right of pre-emption" their Lordships quoted "the concise but lucid statements of the law" given by PIOWDEN, J. in these words: "A preferential right to acquire land, belonging to another person upon the occasion of a transfer by the latter, does not appear to me to be either a right to or a right in that land. It is jus ad rem alienum acquirendum and not a jus in re aliena... A right to the offer of a thing about to be sold is not identical with a right to the thing itself, and that is the primary right of the pre-emptor. The secondary right is to follow the things sold, when sold without the proper offer to the pre-emptor, and to acquire it, if he thinks fit, inspire of the sale made in disregard of his preferential right and held: The aforesaid passage indicates that a pre-emptor has two rights: (1) inherent or primary right, i.e., right to the offer of a thing about to be sold and (2) secondary or remedial right to follow the thing sold. (21) When our Supreme Court in Audh Behari Singh v. Gajadhar Jaipuria AIR 1954 SC 417 at p. 423 observed: "The right of pre-emption... is an incident of property and attaches to the land itself Their Lordships were referring to the primary right of pre-emption only. The contention before their, Lordships was that "even if there was a custom of pre-emption (in Banares) it could not be availed of in a case where neither the vendors nor the vendee were natives of or domiciled in Banares but were residents of a different province", the property concerned beings situate in Banares. Obviously, this contention relates to the existence of a right of pre-emption in respect of the property concerned and not to the enforcement of a conceded right. The right in question in such a case can only is the primary right. (22) Courts are mostly concerned with the remedial right of pre-emption only, unless the case be for an injunction to restrain a "proposed sale offending ones right of preemption." .11. It has been held in the decision in Bishan Singh v. Khazan Singh AIR 1958 SC 838 as follows: ."The right of pre-emption is not a right to the thing sold but a right to the offer of a thing about to be sold. This right is called the primary or inherent right. The pre-emptor has a secondary right or a remedial right to follow the thing sold. It is a right of substitution but not or re-purchase i.e., the pre-emptor takes the entire bargain and steps into the shoes of the original vendee. It is a right to acquire the whole of the property sold and not a share of the property sold. Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place. The right being a very weak right, it can be defeated by al legitimate4 methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place." 12. Preference being the essence of the right, the plaintiff must have a superior right to that of the vendee or the person substituted in his place. The right being a very weak right, it can be defeated by al legitimate4 methods, such as the vendee allowing the claimant of a superior or equal right being substituted in his place." 12. From the above decision of the Supreme Court, it is clear that the right of preemption is not a right to the thing sold but a right to the offer of a thing about to be sold, this being the primary or inherent right and that the pre-emptor has a secondary or a remedial right to follow the things sold. 13. In Rambaran v. Ram Mohit AIR 1967 SC 744 the Supreme Court has clearly held that covenant for pre-emption is a personal covenant. As a personal contract, it is binding on the parties or their representatives. The object of the right of pre-emption is to prevent the introduction of strangers as co-sharers. By its nature, right of pre-emption is a weak piece of right. .14. The plaintiff ha to strictly prove his prima facie case for preemption, which by itself is weak piece of right. The right of pre-emption is akin to Agreement of Sale. However, they differ from the later, since the benefit cannot be assigned. The plaintiff must strictly establish that he has declared his intention to assert the right immediately on receiving information of sale from the defendant and that he has with the least practicable delay affirmed that intention. The plaintiff also must prove that he was ready with the offer and also the amount to exercise his right of pre-emption. .15. It may be noted that the plaintiffs right of pre-emption emanates from the Partition Deed. Clause 3 of the Partition Deed incorporates right of pre-emption of either party. Since, Clause 3 imposes restrictions upon alienation, there must be clear proof of the observance of the formalities prescribed. In the words of Justice VIVIAN BOSE, in Jagannath Rughanath v. Ranchhod Chansiram, AIR 1950 Madh B 40 the right of preemption is ex-pressed thus: ."The right of pre-emption is a very special right. It displaces ordinary legal rights and places restrictions upon normal rights of conveyance. In the words of Justice VIVIAN BOSE, in Jagannath Rughanath v. Ranchhod Chansiram, AIR 1950 Madh B 40 the right of preemption is ex-pressed thus: ."The right of pre-emption is a very special right. It displaces ordinary legal rights and places restrictions upon normal rights of conveyance. Consequently, a person, who wishes to avail himself of such a right must exercise that utmost vigilance and take care to see that he complies strictly with all the conditions imposed on him." 16. Thus, it is clear that to enforce a right of pre-emption it is not enough if one proves the existence of the right in one but must also prove that one has strictly observed all the conditions of its enforcement. It is thus to be seen, whether the plaintiff has strictly observed all the conditions and whether there is proof of observance of the conditions. 17. The Suit property is in prime locality in Chennai viz., T.Nagar, where the land value is very much on the higher side. On 30.3.2006, the defendant has sent the letter stating that he is not prepared to part with the property for any consideration of less than Rs.4,00,00,000/-and that the same has been conveyed to the plaintiff by one Ramamurthy. In response to that letter, the plaintiff has sent the letter on 24. 2006 stating that he did not offer Rs.3,35,00,000/-. In the said letter, the plaintiff asked for three weeks time to give his offer. But, the plaintiff did not appear to have given his offer. .18. Again the defendant wrote the letter dated 15. 2006 stating that the plaintiff had not come with any final offer pursuant to his letter dated 30.3.2006. In the said letter dated 15. 2006, the defendant has stated that three weeks time, which the plaintiff had asked for is also over and that-the defendant has not received any offer from the plaintiff and informing the plaintiff by letter dated 20.9.2006 that he is going ahead and pursuing other offers in that behalf. To the said letter, the plaintiff has sent the letter dated 20.10.2006 stating that the defendant had not obtained the consent of their mother to sell the property and asking the defendant to have a personal discussion with the plaintiff and the mother to settle the matter. The plaintiff has also stated that he has good intention of purchasing the property. 19. The plaintiff has also stated that he has good intention of purchasing the property. 19. On behalf of the plaintiff, it was contended that in the letter dated 110. 2006, the plaintiff had unequivocally expressed his desire and resolve to purchase the Suit property and thereby, kept his option open and alive. His intentions in calling for a meeting with the mother (sic) were only to ensure that the alienation shall not impair her right of residence in the Suit property. 20. Though, the plaintiff has been repeatedly corresponding with the defendant, by a reading of his letters it is seen that the plaintiff had all along expressed only his desire to purchase the property. The plaintiff had not come with the concrete offer, which is an essential condition for enforceability of the right of pre-emption. 21. Even in the Suit, there is no offer of Price. The plaintiff only seeks for declaration of his right of pre-emption, which is a substantive right. That right of pre-emption is a matter of record borne out in the recitals in the Partition Deed. As rightly contended by the learned counsel for the defendant, the prayer in the Suit is not for enforceability of the right of pre-emption. The plaintiff only seeks to restrain any alienation by the defendant. Hardly any averments as to his offer or the means to purchase. In my considered view, the conditions of pre-emption are not prima facie established. The plaintiff cannot say to have shown a prima facie case. 22. Yet another reason may be pointed out to decline the interim injunction. A person, who wishes to avail himself the right of pre-emption must exercise the utmost vigilance and take care to see that he compiles strictly with all conditions imposed on him. In Narayana v. Karthiayani AIR 1962 Ker. 122 the conditions of enforceability of the right of pre-emption in Mahomedan Law are detailed in Mullas Mohomedan Law thus "233. Ground of pre-emption must continue until the decree is passed. — The right in which, pre-emption is claimed must exist not only at the time of sale, but at the date of the Suit for pre-emption, and it must continue up to the time the decree is passed. Ground of pre-emption must continue until the decree is passed. — The right in which, pre-emption is claimed must exist not only at the time of sale, but at the date of the Suit for pre-emption, and it must continue up to the time the decree is passed. But it is not necessary that the right should be subsisting at the date of the execution of the decree or at the date of the decree of the Appellate Court. The reason is that the crucial "date in these cases is the date of the decree of the Court of first instance." 23. As discussed earlier already in September 2006 the defendant has made it clear that he has no further option except to proceed with other offers. Even then, the plaintiff had not taken immediate steps exercising his right of pre-emption, but he has filed the Suit only on 9. 2007. The defendant, his Wife and Son have entered into an Agreement of Sale on 13. 2007 agreeing to sell the Suit property. When the defendant has entered into the Agreement of Sale with the Third Party, he has to honour his commitment in the Agreement. On the basis of feeble right of pre-emption, if junction were to continue, it would cause irreparable loss and hardship to the defendant. 24. Holding that there are no equities in favour of a pre-emptor in Radhakrishnan v. Sridhar, AIR 1960 SC 1368 it has been held as follows: "There are no equities in favour of pre-emptor, whose sole object is to disturb a valid transaction by virtue of the fights created in him by statute. To defeat the law of preemption by any legitimate means is not fraud on the part of either the vendor or the vendee and a person is entitled to steer clear of the law of pre-emption by ail lawful means. Moreover, the right of pre-emption is a weak right and is not looked upon with favour with Courts and therefore the Courts cannot go out of their way to help the pre-emptor." 25. The grant of interim injunction would have serious consequence upon the right of the Party. It would restrain the owner from exercising his lawful rights. On the strength of the recitals in the Partition Deed, the defendant cannot be made to wait indefinitely for the plaintiff to come out with a matching offer. The grant of interim injunction would have serious consequence upon the right of the Party. It would restrain the owner from exercising his lawful rights. On the strength of the recitals in the Partition Deed, the defendant cannot be made to wait indefinitely for the plaintiff to come out with a matching offer. The right of pre-emption being an exceedingly feeble right, if interim injunction is to continue it would cause great hardship and loss to the defendant. This is all the more so when the Suit property is situated in prime locality in T.Nagar, where the land price is booming up. Having considered the facts and circumstances of the case and the materials on record, in my considered view the interim injunction already granted is liable to be vacated. 26. In the result, .(i) O.A. No.1037 of 2007-Interim injunction already granted is vacated and this Application is dismissed. .(ii) Consequentially, A. No.7741 of 2007 for vacating the order of interim injunction is allowed. Application dismissed.