Supreme Court clarifies the date of partition under Punjab Land Revenue Act for Pre-emption rights in Property Law: Ram Kishan & Anr vs. Daya Nand (2023) INSC 926 (10 October 2023)

Case Background

This case involves a dispute over pre-emption rights arising from the sale of land by a co-owner. The plaintiffs, Daya Nand and others, filed a suit seeking to exercise their right of pre-emption after co-owner Rajinder sold his share of the land to Ram Kishan and others. The core issue revolves around determining the precise moment when the status of co-sharers ceases to exist, which is crucial for determining the validity of pre-emption rights.

The High Court of Punjab and Haryana had previously upheld the first appellate court’s decision, which decreed the suit for pre-emption in favor of the plaintiffs. The High Court’s decision was based on the understanding that co-sharer status persists until the final partition is completed with the execution of a partition deed under Section 121 of the Punjab Land Revenue Act, 1887.

Timeline

Course of Proceedings

The trial court initially dismissed the suits for pre-emption on 31.10.1990. However, the first appellate court reversed this decision and decreed the suits on 03.10.1991. The High Court of Punjab and Haryana upheld the first appellate court’s decision on 31.08.2018, leading to the present appeals before the Supreme Court by the defendant-purchasers. The High Court’s view was that the status of co-sharers continues until the final partition is effected by the execution of the instrument of partition under Section 121 of the Punjab Land Revenue Act, 1887.

Legal Framework

The case primarily revolves around the interpretation of the Punjab Land Revenue Act, 1887, specifically Sections 118 and 121, concerning the partition of land.

• Section 118 of the Punjab Land Revenue Act, 1887: This section deals with the procedure for the division of property. The court noted that the order under this section decides the shares and entitlement to division and separate possession.
• Section 121 of the Punjab Land Revenue Act, 1887: This section pertains to the finalization of the partition, including the preparation of the partition deed and its registration. The court clarified that this is a follow-up action and not the date of actual partition.

The Supreme Court also drew an analogy from Order XX, Rule 18, Sub Rule 1 of the Code of Civil Procedure, 1908, which states that a preliminary decree of partition decides the share and entitlement to division and separate possession.

Arguments

The appellants (purchasers) contended that the right of pre-emption should be determined based on the date of the order under Section 118 of the Punjab Land Revenue Act, 1887 (Naksha Bey), which signifies the severance of the joint status. They argued that the subsequent registration of the partition deed under Section 121 of the Punjab Land Revenue Act, 1887 (Naksha Zeem) is merely a follow-up action and does not affect the cessation of the co-sharer status.

The respondents (plaintiffs) argued that the right of pre-emption continues until the final partition is effected by the execution of the instrument of partition under Section 121 of the Punjab Land Revenue Act, 1887. They contended that the co-sharer status remains until the final partition deed is registered.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. When does the status of co-sharers cease to exist for the purpose of exercising the right of pre-emption under the Punjab Land Revenue Act, 1887? Is it upon the order under Section 118 or the execution of the partition deed under Section 121 of the Punjab Land Revenue Act, 1887?

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

Judgment

Shyam Sunder and Others v. Ram Kumar and Another [2001] 8 SCC 243: The Supreme Court reiterated the principle that for the exercise of the right of pre-emption, the pre-emptor should possess the right on the date of sale and also on the date of the decree by the court of the first instance.

Jhabbar Singh (Deceased) Through Legal Heirs and Others v. Jagtar Singh [2023] SCC OnLine SC 431: The Supreme Court relied on this recent decision, which laid down the legal proposition that joint status ceases when an order for division of the property under Section 118 of the Revenue Act is passed.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the need to provide clarity on the point at which the status of co-sharers ceases for the purpose of pre-emption rights. The Court emphasized that the order under Section 118 of the Punjab Land Revenue Act, 1887, is the crucial point that determines the division of property and the cessation of joint status. The Court also stressed that the subsequent actions under Section 121 of the Punjab Land Revenue Act, 1887, are merely follow-up actions and do not affect the date of partition.

The Court’s reasoning is based on the interpretation of the Punjab Land Revenue Act, 1887, and the need to provide certainty in property matters. The court emphasized that the order under Section 118 of the Punjab Land Revenue Act, 1887, is the decisive point for determining the division of property. The Court stated, “The date on which the order under Section 118 of the Revenue Act is passed or the Naksha Bey is directed, is the date of partition.” The Court further clarified, “The rights and status of the parties stands decided. The joint status is severed on the date of the decision.” The Court also pointed out that, “The date on which an order under Section 121 of the Revenue Act is passed or Naksha Zeem is prepared and deed of partition is registered, is the follow up action, and not the date of actual partition.”

Key Takeaways

• The joint status of co-sharers ceases when an order for division of the property under Section 118 of the Punjab Land Revenue Act, 1887 is passed.
• The date on which an order under Section 121 of the Punjab Land Revenue Act, 1887 is passed is a follow-up action and not the date of actual partition.
• For exercising the right of pre-emption, the pre-emptor should possess the right on the date of sale and also on the date of the decree by the court of the first instance.
• This judgment clarifies the legal position regarding the determination of co-sharer status in the context of pre-emption rights.

Directions

The Supreme Court set aside the impugned judgment and decree of the High Court. The suits for pre-emption were dismissed. The Court directed that any amount deposited by the respondents can be withdrawn by them along with interest, if any, accrued thereon.

Development of Law

The ratio decidendi of this case is that the joint status of co-sharers ceases when an order for division of the property under Section 118 of the Punjab Land Revenue Act, 1887 is passed, and not when the final partition deed is registered under Section 121 of the Punjab Land Revenue Act, 1887. This clarifies the legal position and sets aside the previous understanding of the High Court, which held that the status of co-sharers ceases to exist only after the final partition is affected on the execution of the instrument of partition under Section 121 of the Punjab Land Revenue Act, 1887.

Conclusion

The Supreme Court’s decision in Ram Kishan & Anr vs. Daya Nand clarifies that the joint status of co-sharers ceases when an order for division of the property under Section 118 of the Punjab Land Revenue Act, 1887 is passed. This ruling provides much-needed clarity on the determination of co-sharer status in the context of pre-emption rights and will have a significant impact on property law in the region. The court allowed the appeals and dismissed the suits for pre-emption.