Supreme Court Reverses Pre-emption Order Due to Non-Compliance with Deposit Rules: Abdul Matin Mallick vs. Subrata Bhattacharjee (2022)

Date of the Judgment: 05 May 2022
Citation: Not Available
Judges: M.R. Shah, J. and B.V. Nagarathna, J.
Can a pre-emption application be maintained if the applicant fails to deposit the full sale consideration plus 10% at the time of application? The Supreme Court of India recently addressed this critical question in a case concerning the West Bengal Land Reforms Act, 1955. This judgment clarifies the mandatory nature of the deposit requirement for pre-emption rights. The bench comprised Justices M.R. Shah and B.V. Nagarathna, with Justice M.R. Shah authoring the opinion.

Case Background

The case revolves around a property originally owned by Khudiram Bhattacharya, who passed away on April 17, 2001. His wife, Purnima Bhattacharya, also passed away on August 14, 2001. They were survived by three sons (Subrata, Debabrata, and Ratan, the pre-emptors) and two daughters (Kalyani and Alpana). Each of the five children inherited a 1/5th undivided share in the property. The daughters sold their combined 2/5th share to Abdul Matin Mallick (the pre-emptee) via a registered sale deed on November 23, 2011. The sons then sought to pre-empt this sale, arguing that their sisters had not given them the required statutory notice before selling to a stranger, as per Section 5(5) of the West Bengal Land Reforms Act, 1955. They filed a pre-emption case on this basis.

Timeline

Course of Proceedings

The Trial Court initially dismissed the pre-emption application, stating that since the vendors had sold their entire share, the application was not maintainable. The First Appellate Court reversed this decision, holding that pre-emption was maintainable even when a co-sharer sells their entire share. The High Court upheld the Appellate Court’s decision, granting the pre-emptors time to deposit the balance of the sale consideration plus 10%. The pre-emptee then appealed to the Supreme Court.

Legal Framework

The core of this case lies in the interpretation of Section 8 of the West Bengal Land Reforms Act, 1955. This section deals with the procedure for exercising the right of pre-emption. Specifically, it requires the applicant to deposit the full sale consideration along with an additional 10% of that amount at the time of filing the application.

Section 8 of the West Bengal Land Reforms Act, 1955 states:

“…on deposit of the consideration money together with a further sum of ten per cent of that amount…”

Arguments

Appellant (Pre-emptee) Arguments:

• The appellant argued that the pre-emptors did not comply with the mandatory requirement of depositing the entire sale consideration with an additional 10% at the time of filing the pre-emption application, as required under Section 8 of the West Bengal Land Reforms Act, 1955.
• They contended that this deposit is a condition precedent for the application to be considered and for any further inquiry under Section 9 of the West Bengal Land Reforms Act, 1955 to be conducted.
• The appellant relied on the Supreme Court’s decision in Barasat Eye Hospital and Ors. Vs. Kaustabh Mondal, (2019) 19 SCC 767, which emphasized the strict nature of pre-emption rights and the mandatory nature of the deposit.

Respondent (Pre-emptors) Arguments:

• The respondents argued that the Trial Court wrongly dismissed their application, which was rightly overturned by the First Appellate Court and the High Court, relying on the High Court’s decision in Sk. Sajhan Ali & Ors. Vs. Sk. Saber Ali & Anr. reported in 2016 (1) W.B.L.R (Cal) 133 which held that pre-emption is maintainable even if a co-sharer sells their entire share.
• They cited the Larger Bench decision in Naymul Haque and Ors. Vs. Allauddin Sk. and Ors. reported in 2019(1)CLJ(CAL)488, which affirmed the maintainability of pre-emption applications in such cases.
• The respondents claimed they did not deposit the full amount initially because they believed the sale consideration in the deed was inflated. They argued that they later complied by depositing the full amount plus 10% as per the High Court’s order.
• They also argued that the appellant’s contention regarding the non-deposit was raised for the first time before the Supreme Court.

Issues Framed by the Supreme Court

✓ Whether the pre-emption application is maintainable if the entire sale consideration along with 10% is not deposited at the time of application as required under Section 8 of the West Bengal Land Reforms Act, 1955?

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

Cases Relied Upon by the Court:

• Bishan Singh Vs. Khazan Singh, AIR 1958 SC 838 (Supreme Court of India): This case was cited to establish the nature of pre-emption rights, noting it is a “weak right” that must be strictly construed.
• Barasat Eye Hospital and Ors. Vs. Kaustabh Mondal, (2019) 19 SCC 767 (Supreme Court of India): This judgment was heavily relied upon to emphasize the mandatory nature of the deposit requirement under Section 8 of the Act.
• Gopal Sardar v. Karuna Sardar, (2004) 4 SCC 252 (Supreme Court of India): This case was cited to highlight the importance of the time period for making the deposit, emphasizing that it cannot be extended.
• Bhau Ram v. Baij Nath Singh , AIR 1962 SC 1476 (Supreme Court of India): This case was cited to show the historical perspective of the right of pre-emption.
• British India General Insurance Co. Ltd. v. Itbar Singh, AIR 1959 SC 1331 (Supreme Court of India): This case was cited for the principle that legislative provisions should be read in their plain grammatical connotation.

Legal Provisions Considered by the Court:

• Section 8, West Bengal Land Reforms Act, 1955: This section mandates the deposit of the entire sale consideration plus 10% for a pre-emption application to be valid.
• Section 9, West Bengal Land Reforms Act, 1955: This section provides for an inquiry into the sale consideration, but only after the deposit under Section 8 is made.

Judgment

The Supreme Court held that the deposit of the entire sale consideration along with an additional 10% is a mandatory requirement for a pre-emption application to be maintainable under Section 8 of the West Bengal Land Reforms Act, 1955.

How each authority was viewed by the Court:

• Bishan Singh Vs. Khazan Singh, AIR 1958 SC 838:* The Court used this case to emphasize that the right of pre-emption is a “weak right” and must be strictly construed.
• Barasat Eye Hospital and Ors. Vs. Kaustabh Mondal, (2019) 19 SCC 767:* The Court heavily relied on this case to reiterate that the deposit of the full amount is a mandatory pre-condition for the maintainability of a pre-emption application.
• Gopal Sardar v. Karuna Sardar, (2004) 4 SCC 252:* The Court cited this case to support the view that the time period for making the deposit is sacrosanct and cannot be extended.

What weighed in the mind of the Court?

The Supreme Court emphasized the mandatory nature of the deposit requirement under Section 8 of the West Bengal Land Reforms Act, 1955. The court’s reasoning was primarily based on the strict interpretation of the law and the precedent set by previous judgments, particularly Barasat Eye Hospital and Ors. Vs. Kaustabh Mondal, (2019) 19 SCC 767. The court was also concerned about the potential for speculative litigation if pre-emptors were allowed to initiate proceedings without depositing the full amount.

Fact:Law Ratio:

Logical Reasoning:

The court rejected the argument that the pre-emptors’ belief that the sale consideration was inflated justified non-compliance with the deposit requirement. The court clarified that such disputes can be addressed in an inquiry under Section 9 of the Act, but only after the mandatory deposit under Section 8 has been made.

The Supreme Court stated:

“Therefore, deposit of the entire sale consideration with additional 10% of the sale consideration alongwith the pre-emption application is a statutory and mandatory requirement and it is a pre-condition before any further enquiry as contemplated under Section 9 of the Act is held.”

The Court further observed:

“The aforesaid cannot be a ground not to comply with the condition of deposit as required under Section 8 of the Act, 1955. At the most, such a dispute can be the subject matter of an enquiry provided under Section 9 of the Act.”

The court also noted:

“It is an admitted position that the pre-emptors had not deposited the entire sale consideration with additional 10% of the sale consideration along with the pre-emption application as required under Section 8 of the Act in the instant case.”

Key Takeaways

✓ The deposit of the entire sale consideration along with an additional 10% is a mandatory pre-condition for a pre-emption application to be valid under the West Bengal Land Reforms Act, 1955.
✓ Failure to comply with this deposit requirement at the time of application renders the pre-emption application not maintainable.
✓ The belief that the sale consideration was inflated is not a valid reason for non-compliance with the deposit requirement.
✓ Any inquiry into the sale consideration under Section 9 of the Act can only occur after the deposit under Section 8 has been complied with.
✓ Pre-emption rights are considered “weak rights” and are subject to strict interpretation.

Directions

The Supreme Court quashed the judgments of the High Court and the First Appellate Court and dismissed the pre-emption application. The pre-emptors were permitted to withdraw any amounts they had deposited.

Development of Law

The ratio decidendi of this case is that the deposit of the entire sale consideration with an additional 10% is a mandatory pre-condition for the maintainability of a pre-emption application under Section 8 of the West Bengal Land Reforms Act, 1955. This judgment reinforces the strict interpretation of pre-emption laws and clarifies that non-compliance with the deposit requirement at the time of application will render the application invalid. This decision reaffirms the position of law as established in Barasat Eye Hospital and Ors. Vs. Kaustabh Mondal, (2019) 19 SCC 767.

Conclusion

The Supreme Court’s decision in Abdul Matin Mallick vs. Subrata Bhattacharjee clarifies the mandatory nature of the deposit requirement for pre-emption applications under the West Bengal Land Reforms Act, 1955. The judgment emphasizes that strict adherence to legal procedures is crucial for maintaining such applications. The pre-emptors’ failure to deposit the full amount at the time of application led to the dismissal of their case, reinforcing the principle that pre-emption rights are to be strictly construed.