Author: Deepa, student at Lloyd law college, Meerut.
Citation: 2019 Latest Case law 740 SC
Date of Decision: 20-August-2019
Bench: Ashok Bhushan and K.M Joseph, JJ
Original Copy: here
Issues in Question:
If the Agriculture property is legally divided into 3 parts and one of the parties wants to sell it then the first preference should be given to the other brothers. It was alleged and violated by the first defendant without getting a written concurrence for the same.
Background of the Cases:
- This property belongs to Kripa Ram Bakshi, located in Chandigarh. He registered his property with his three sons. After which the three brothers entered into an agreement. The plaintiff is the first son and the first defendant is the younger brother. It was alleged that the first defendant, without getting his written concurrence for the same, sold the scheduled property to the second defendant. This will result in fragmenting the site which is prohibited and it was also alleged that the sale was void. The trial court found that the family arrangement must be executed.
- The second defendant contested the matter, it was found that this family matter was forged and fabricated. The plaintiff did not have any preferential rights. The plaintiff never wants to purchase the property and the transfer would be done legally by the Estate Officer of Chandigarh. The first defendant offered to the plaintiff in the very beginning but he didn’t want to purchase the property.
- The second defendant appealed against the judgement. The first Appellate Court found that the family arrangement was genuine. The defendant has offered to the plaintiff to purchase his one third share but the plaintiff never came forward with the earnest money. The court further goes on with the exchange of letters which reveals that an offer was given to the plaintiff to purchase as per clause (5) of the family arrangement. There was no final issue to be sent by the defendant about the deal with the second defendant so therefore the appeal was dismissed and directed to hand over the property to the plaintiff.
- The counsel is clear that this is a clear case of family settlement. This is not the case of preference only but to obtain the written concurrence of the other sharers. In this case, there is no absolute prohibition against sale of his shares. It is only a partial prohibition. The object behind clause (5) was highlighted to be that a third party is not rendered entitled to the family property.
- In the case of Hari Shankar, Singhania contended that family settlement is treated differently from any other formal commercial settlement to make peace and goodwill among the family members. Such settlements are governed by a special equity principle where the terms are fair and bonafide, taking into account the well-being of a family.
- The High Court, after referring to the correspondence between the parties, found that the first defendant had indeed offered to sell his share to the plaintiff. Plaintiff could have sent a draft. The precarious condition of the first defendant, having regard to his health, was known to the plaintiff. The Court noted that the fragmentation may not be possible but solution was found in Section 2, 3 and 4 of the Partition Act and by ascertaining market value they could buy each other’s share. Section 22 of the Hindu Succession Act was found to have been declared unconstitutional by the Court.
- The High Court found that there was no valid and binding contract between the parties. No price has been fixed nor there is any penalty clause, i.e., in case of failure, either one of the parties can enforce the agreement in clause(5). In view of the omissions of the appellant to act on the offer, he has lost the peremptory rights to purchase the share and it led to the sale in favour of the second defendant.
- The first appellate court ordered the second defendant to put the plaintiff in possession even though undisputedly he was a tenant who was entitled to protection of the statute against eviction except in accordance with law.
- With regard to the finding by the High Court that whether the family settlement is vague, unenforceable and void, the complaint of the plaintiff is that there is no pleading that the family settlement is vague and unenforceable according to Indian Contract Act, 1872 .
- The property in question cannot be sold without the concurrence of the three brothers in writing. The first preference is to be given to both brothers, When it is stated that the property cannot be sold without concurrence of the three brothers in writing, it means no objection certificate is in writing .
- The issue of fragmentation is that the appellant is not able to persuade us to hold that that assignment in favour of the second defendant is vulnerable on the basis that it involves fragmentation.