In the previous part, the author had explained the intersection of various provisions in the HSA, Partition Act and the TPA that relate to the right of pre-emption. The author had then advanced two arguments on why this redundancy needs to be resolved. Firstly, because a dwelling house in contemporary times does not require the additional protection that is given to them under the provisions, and secondly, such additional protection is violative of Article 14. This part argues that the redundant provisions additionally create a loophole around the Limitation Act, and adversely impact the right of the owners to alienate the property, and hence, must be amended accordingly.

The right of pre-emption is a weak right and has become obsolete

In the above case, the Court also ruled that the right of pre-emption is no longer relevant in modern times and conflicts with the current constitutional principles. The importance of maintaining family unity is no longer a significant factor. This has been consistently upheld by the Delhi HC, which has ruled that with people living in flats now, the concept of a dwelling house is mostly obsolete. The use of Section 4 of the Partition Act, an archaic statute, has diluted with this changing nature. It is widely accepted that pre-emption being a weak right, can be defeated by all legitimate methods. In such a scenario, where dwelling houses are mostly becoming non-existent and pre-emption has become a weak right, applying it twice, once pre-sale (Section 22 of the HSA) and once after-sale (Section 4 of the Partition Act) is unreasonable.

The dual protection creates a loophole around the Limitation Act

The dual protection awarded can be challenged on another ground. Article 97 of the Schedule of the Limitation Act, 1963 provides that a right of pre-emption has a limitation bar of one year. It applies to Section 22 of the HSA as well. As held in Bank of India v Lakshimani Dass, if a party has elected to pursue one remedy (Section 22), they are bound by it and cannot proceed under another provision (Section 4) upon failing. Thus, applying Section 4 of the Partition Act once the suit is time-barred under Section 22 of the HSA goes against the principle of limitation. Legal professionals exploit this loophole to bypass the limitation bar as subsequently discussed.

Further, a literal interpretation of Section 22 of the HSA demonstrates that the preferential right is exclusively applicable at the proposal stage. Despite this, some HCs have deemed that it runs with the land and therefore, binding even to a stranger. This means that it applies even to a completed transfer. As a result, the limitation period commences from the day the property is sold to a stranger rather than the day when the co-owner proposed to transfer.

While this is an anomaly to the clear words of the statute, even if it is hypothetically accepted, it neither supersedes nor bars the application of Section 4 of the Partition Act. So even after the limitation period under Section 22 HSA is over, one can still claim the same remedy under Section 4 (since it applies only after the outsider sues for partition). This undermines the purpose of the limitation bar. Furthermore, the SC has ruled that the right of pre-emption is not an open right and can only be exercised once. It has been the constant position in various precedents of the Court to demonstrate that if pre-emption has been waived once, it cannot be claimed again. This signifies that if a co-owner relinquishes such right under Section 22 of the HSA, it should not be obtainable under Section 4 of the Partition Act.

Constraining alienation: Impact of the dual application

In the example mentioned earlier, the use of both statutes places a restraint on S’s ability to freely alienate his property. Since the right of pre-emption has been exhausted, no restraint on the same ground would have been valid. Applying Section 4 of the Partition Act where the HSA is already applicable restraints S on the same ground. Moreover, the requirement of S suing, for pre-emption to accrue under Section 4 can be ignored if Section 22’s application for a completed transfer is accepted. Thus, it is argued that this constitutes an absolute restraint under Section 10 of the TPA. Even if Section 10 of the TPA is not directly applicable, its fundamental principle – that the law favours alienation over accumulation – can still be relevant. 

Although family arrangements may not strictly fall within the definition of ‘transfer’, courts have applied Section 10 or its underlying principles, in the spirit of justice, equity and good conscience. A condition limiting the sale of a property to family members is a partial restraint. However, it is only so when both the transferor and transferee are members of the same family. The question of whether Section 22 of the HSA, which confers merely a preferential right to the co-owners rather than an absolute condition, constitutes an absolute restraint is debatable. However, applying Section 4 of the Partition Act when Section 22 of the HSA has already been applied puts an absolute restraint on the stranger to sell the property back to the co-owners who already had the chance to pre-empt. This dual infringement of the principle of alienation, occurring both before and after the sale raises concerns. While pre-emption being a weak right may render the initial violation debatable, the subsequent infraction is indisputably an absolute restraint. 

Consider this: In most cases where pre-emption has been held to be a partial restraint, it was being exercised only once. While there is no proper test to determine what constitutes an absolute restraint, the courts have recognised that pre-emption, being a ‘very weak right’, can be defeated through legitimate means and should not be interpreted expansively to create perpetual encumbrances on the property. Allowing the right of pre-emption to be exercised repeatedly creates an absolute restraint on the stranger’s ability to freely alienate the property. Even if the initial application of the right under the HSA could be considered a partial restraint, the subsequent invocation of the Partition Act imposes an additional layer of restriction that cannot be justified.

This dual application is not merely theoretical. There have been multiple cases where courts have either applied both sections or have at least looked at the possibility of it. In a 1986 ruling by the Gauhati HC, an interest in a joint property was transferred in violation of Section 22 of the HSA. Instead of filing a suit claiming violation of Section 22, the plaintiff submitted for the application of Section 4 of the Partition Act which the court accordingly granted. This according to the author was an incorrect decision. Since the HSA was applicable, Section 4 should not have been applied at all as it imposed an additional layer of restraint on the property’s alienation.

This has been corroborated by other HCs as well (Calcutta HC, Bombay HC, Himachal Pradesh HC and Madras HC) which have ruled on the possibility of applying both sections together. This again reinforces the absolute restraint on the stranger’s right to alienate property. In conclusion, the dual application of Section 4 of the Partition Act where Section 22 of the HSA is already applicable does not merely create a theoretical restraint but has been demonstrated to impose an absolute restraint on the alienation rights of the stranger, as evidenced by multiple court rulings. This contravenes the general principle of law that favours alienation over accumulation, and the spirit of Section 10 of the TPA.

The Way Forward

The intersection of Section 4 of the Partition Act with Section 22 of the HSA has given rise to a complex legal scenario that necessitates a clear resolution. The concurrent application of these statutes not only introduces a discriminatory element against individuals of other religions by providing exclusive protections to those governed by the HSA, but it also infringes upon the limitation period set forth by the law. Moreover, this dual application imposes an undue restraint on the alienation rights of the stranger to the property.

To rectify these issues, the legislature needs to amend the law to exclude the application of Section 4 of the Partition Act where the HSA is applicable.

 

This article has been written by Ritesh Raj, a third-year student at NLSIU, Bangalore. The article has been edited & coordinated by Hamza Khan and posted by Baibhav Mishra from the Technical Team from our Student Editorial Team.