Definition:
The right of pre-emption is a right to acquire by compulsory purchase, in certain cases, immovable property in preference to all other persons.
It is the right of a third person, called the pre-emptor, to step in, when a contract is made for the sale of immovable property, and claim to take the place of the buyer, i. e„ to take property at the same price and on the same conditions as the buyer and seller have agreed upon.
Image Source: 3.bp.blogspot.com
ADVERTISEMENTS:
When Pre-Emption Arises:
The right of pre-emption arises only of a valid, complete and bona fide sale, and in the case of no other alienation, such as gift, wakf or bequest. The right can be exercised only in regard to immovable property; thus, it would not apply to a sale of crops or trees intended to be removed.
It is important to note that the right of pre-emption arises only on completion of the sale. According to Muslim law, a sale is complete even if no registered instrument is executed. But, according to Section 54 of the Transfer of Property Act, a sale of immovable property, of the value of one hundred rupees or more, must be effected by a registered instrument.
Then, for the purpose of pre-emption, by what law is the deemed to have been completed? The question is important, because the demands of pre-emption are to be made immediately on completion of sale. According to the Privy Council, the question is to be determined with reference to the intention of the vendor and the vendee, as to what law should apply, and what is to be taken as the date of sale, with reference to which the ceremonies are to be performed.
ADVERTISEMENTS:
In one case, the Calcutta High Court has held that for the purpose of pre-emption, a transfer of immovable property is complete only when the deed of transfer is registered. (Budhai v. Sonaullah, (1914) 41 Cal. 943)
On the other hand, the Bombay High Court has held that a registered sale deed is not required to give rise to a right of pre-emption. (Abdulla Avjal Mom in v. Ismail Mugal Foda, (1922) I.L.R. 46 Bom. 302)
It may be noted that a transfer of property by a husband to his wife in lieu of a dower is a sale, and is therefore subject to a claim for pre-emption. (Fida Ali v. Muzaffar Ali, (1883) I.L.R. 5 All. 95)
Moreover, the right of pre-emption arises not only out of a private sale, but also out of a sale by the Court or a receiver. (Brij Narain v. Kedar Nath, (1923). I.L.R. 45 All. 186) this has also been confirmed by the Surpreme Court in Bishan Singh v. Khazan Singh, A.I.R. 1958 S. C. 838.
ADVERTISEMENTS:
Further, where the purchaser is himself in the category of a pre- emptor, the property is to be equally divided between the purchaser and the pre-emptor. (Hamautar Singh v. Brijkishore, A.I.R. (1933) Pat. 653)
Problems:
1. A, В and С each own a one-third share in a house. A executes a mortgage in respect of his share in favour of D. D obtains a decree on his mortgage, in execution of which As share is put up for auction and purchased by B. Would С be entitled to claim pre-emption, and to what extent?
Ans:
For reasons given above, С is entitled to claim preemption of one-half of as share.