Bhau Ram vs B. Baijnath Singh

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Not extracted

Decision Date: 07 March 1962

Coram: K.N. Wanchoo, P.B. Gajendragadkar, A.K. Sarkar, K.C. Das Gupta, N. Rajagopala Ayyangar

In the matter titled Bhau Ram versus B. Baijnath Singh, a judgment was delivered on 7 March 1962 by the Supreme Court of India. The opinion was authored by Justice K.N. Wanchoo and was pronounced by a bench comprising Justice K.N. Wanchoo, Justice P.B. Gajendragadkar, Justice A.K. Sarkar, Justice K.C. Das Gupta and Justice N. Rajagopala Ayyangar. The petitioner was Bhau Ram and the respondent was B. Baijnath Singh. The decision was reported in 1962 AIR 1476 and 1962 SCR Supplement (3) 724, with subsequent citations including RF 1963 SC 533, F 1965 SC 314, F 1967 SC 1578, R 1986 SC 859, and R&E 1992 SC 207.

The case concerned several statutes that granted pre‑emptive rights to neighbours, co‑sharers and other persons. Section 10 of the Rewa State Pre‑emption Act, 1946, conferred a right of pre‑emption on the basis of vicinage. Its proviso specified that where pre‑emptors belonged to the same class, the one having a nearer relationship to the vendor would exclude a more remote pre‑emptor. The Act also required that a notice of an intended sale be given to persons holding the pre‑emptive right, that failure to act on such notice would result in loss of that right, and that a court would fix a fair price for the transaction. The petitioner argued that section 10 violated Article 19(1)(f) of the Constitution, which guarantees the right to acquire, hold and dispose of property, and that the provision should therefore be declared void.

Section 16 of the Punjab Pre‑emption Act, 1913, as it applied to Delhi, provided pre‑emptive rights on six grounds, including the interests of co‑sharers, owners of common staircases, owners of common entrances from a street, and owners of contiguous property. Section 7 limited the operation of the Act to localities where the custom of pre‑emption was prevalent. The Act also contained notice provisions similar to those in the Rewa Act. Section 5 exempted agricultural property, shops, serai, katra, dharamsala, mosque and other similar buildings from its reach. The respondent contended that section 16 infringed Article 19(1)(f) and also contravened Article 14, which requires equality before the law.

Chapter 14 of the Berar Land Revenue Code, 1928, created a pre‑emptive right for the holder of an interest in a survey‑number when any person holding an interest in land within that survey‑number sold it to a stranger, provided that the interest sold was un‑alienated agricultural land. The argument made was that this provision was inconsistent with Article 19(1)(f). The Court, speaking through Justices Gajendragadkar, Wanchoo and Ayyangar, with a dissent from Justices Sarkar and Das Gupta, held that section 10 of the Rewa Act, by imposing pre‑emptive rights on the ground of vicinage, placed unreasonable restrictions on the constitutional right to acquire, hold or dispose of property guaranteed by Article 19(1)(f). Consequently, the provision was declared void. It placed restrictions

In the matter before the Court, it was observed that the statutory provision placed a limitation on the vendor’s right to sell his land to any purchaser of his choosing at a price mutually agreed upon. The provision also exposed the purchaser to the risk of litigation even after the vendor had complied with all notice requirements. The Court noted that such a law did not confer any benefit to the general public. The genuine purpose behind a pre‑emption rule based on vicinage, the Court explained, was to keep strangers—persons of different religion, race or caste—from acquiring property in an area where a particular fraternity or class of people already lived. The Court held that this purpose could not be regarded as reasonable because it conflicted with the constitutional prohibition of discrimination on the grounds of religion, race, caste or similar categories contained in Article 15. The Court referred to the decisions in Shri Audh Behari Singh v. Gajadhar Jaipuria, (1955) 1 S.C.R. 70; Ibrahim Saib v. Muni Mir Udim Saib, (1870) 6 Mad. H.C.R. 26; and Mohomed Beg Amin v. Narayan Meghaji Patil, (1916) I.L.R. 40 Bom. 358. Contrary to the earlier view, the Court, speaking for Justice Sarkar and Justice Das Gupta, held that Section 10 of the Rewa Act did not offend Article 19(1)(f) and was therefore valid. The Court observed that the right of pre‑emption was seldom exercised and that the restrictions it imposed affected only a limited number of persons. It further observed that in many parts of the country a customary law of pre‑emption existed, which had been regarded as reasonable before the Constitution came into force and that nothing had changed since to render it unreasonable. The statutory provisions concerning notice, the Court said, mitigated the harshness of the restriction. The Court identified two particular restrictions on the vendor created by the statute. First, the vendor might be prevented from selling the property at any price he desired; second, the vendor could be barred from selling the property to a buyer of his own choice. The Court considered the first restriction to be reasonable because it prevented the vendor from demanding exorbitant prices and from allowing the rich to accumulate large parcels of land. The Court described the second restriction as not amounting to a severe deprivation. It noted that the statute also imposed a restriction on the purchaser, namely that he could not acquire the property if the adjoining owner exercised a pre‑emptive right. The Court held that, given the Indian habit of living in compact communities, such a restriction was reasonable and would help avoid disputes that could arise if a stranger were permitted to take possession. The Court further explained that the reasons supporting pre‑emption on the ground of co‑sharers applied equally to pre‑emption on the ground of vicinage. The proviso to Section 10, which gave preference to a person who was nearer in relationship to the vendor, was not invalid; it did not create a new pre‑emptive right but merely resolved a conflict that could arise when more than one person claimed a valid pre‑emptive interest. The Court approved the earlier authorities of Sardha Ram v. Haji Abdul, A.I.R. (1960) Punj. 185; Ramchandra Krishnaji Dhagale v. Janardan Krishnappa Marwar, A.I.R. (1955) Nag. 225; Panch Gujar Gaur Brahmins v. Amarsingh, A.I.R. (1954) Rai. 100; Babulal v. Gowardhandas, A.I.R. (1956) M.B.I.; Sewalun Ghansham v. Param Lalanju, A.I.R. (1956) V.P. 9; and Moti Bai v. Kand Kari Channaya, A.I.R. (1954) Hyd.

The Court disapproved the submissions and, after referring to Shri Audh Behari Singh v. Gajadhar Jaipuria (1955) 1 S.C.R. 70 and Tyson v. Smith (1938) 9 Ad. & E.P. 406, held that the first, third and fourth grounds of pre‑emption in section 16 of the Punjab Act, as applied to Delhi, did not contravene Article 19(1)(f) or Article 14 and were therefore valid. Under the first ground, which provides for pre‑emption by co‑sharers, the law imposes a reasonable restriction on the right to acquire property in the interest of the general public. Introducing an outsider as a co‑sharer would make common management extremely difficult and would destroy the benefits of ownership in common. Excluding a stranger in the case of a residential house is especially advantageous because it helps avoid all kinds of disputes. The third ground, which applies where the property sold shares a common staircase with other properties, stands on practically the same footing as the co‑sharer ground. The fourth ground, which applies where the property sold has a common entrance from the street with other properties, is similar to the first and third grounds. The Court observed that section 16 contains no discrimination because section 5 excludes certain properties from its operation. Agricultural property forms a distinct class of its own, so there is no question of discrimination on that basis. The other premises exempted by section 5 constitute a single class—those to which the public resorts—distinct from private residential property, and there is no issue of excluding strangers from such premises. The decisions in Uttam Singh v. Kartar Singh (1954) A.I.R. 55 Pun. and Sardha Ram v. Haji Abdul Majid Mohd. Amir Khan (1960) A.I.R. 196 Pun. were approved.

The Court noted a division of opinion on the sixth ground in section 16, which provides for pre‑emption on the basis of vicinage. The judgment of Justices Sarkar and Das Gupta, expressed that this sixth ground was invalid for the same reasons that section 10 of the Rewa Act had been held invalid. Conversely, the judgment of Justices Gajendragadkar, Wanchoo and Ayyangar held that the sixth ground was valid for the same reason that section 10 of the Rewa Act was valid. Additionally, the Court held that the law of pre‑emption contained in section 14 of the Berar Code was valid. That provision applies to persons who are co‑sharers or are akin to co‑sharers, and such a right of pre‑emption would lead to the consolidation of holdings within a survey number, which serves the general public’s interest. The decision in Ramchandra v. Janardan (1955) A.I.R. 225 Nag. was approved.

The judgment was delivered in the Civil Appellate Jurisdiction concerning Civil Appeal No. 270 of 1955, which was an appeal by special leave from the judgment and decree dated 21 March 1952 of the former Judicial Commissioner’s Court, Vindhya Pradesh, in Appeal No. 16 of 1952, and was heard together with Civil Appeal No. 430 of 1958, an appeal from the judgment and decree dated 12 April 1956 of the former Judicial Commissioner’s Court.

The Court recorded that the appeals originated from several lower courts: one appeal came from the former Nagpur High Court in L.P.A. No. 116 of 1955, another from the Punjab High Court in Civil Revision Application No. 518 D of 1956, with the judgment and order dated 29 October 1957, and a further appeal, Civil Appeal No. 595 of 1960, was also listed. Counsel appearing for the parties were identified as follows: L. K. Jha, R. Patnaik and A. D. Mathur represented the appellant in Civil Appeal No. 270 of 1955; D. N. Mukherjee appeared for respondent No. 1; S. K. Kapur and P. D. Menon acted for the intervener; A. V. Viswanatha Sastri and A. G. Ratnaparkhi were counsel for the appellants in Civil Appeal No. 430 of 1958; S. A. Sohoni and Ganpat Rai represented the respondents in that matter; R. S. Narula appeared for the appellant in Civil Appeal No. 595 of 1960, and S. K. Kapur together with Ganpat Rai acted for the respondent. The judgment was dated 7 March 1962. The opinion of the bench comprising Justices Gajendragadkar, Wanchoo and Ayyangar was delivered by Justice Wanchoo, while the opinion of Justices Sarkar and Das Gupta was delivered by Justice Sarkar. Justice Wanchoo noted that the three appeals were heard together because they raised the constitutionality of certain provisions of the pre‑emption statutes operating in Madhya Pradesh (specifically the Rewa‑State area), Delhi, and Maharashtra (the Berar area). The factual background involved three suits for pre‑emption that had been decreed in favour of pre‑emptors, and the current appeals were brought by the purchasers of the disputed lands. Although the appeals were consolidated for hearing due to overlapping issues, the Court found it appropriate to consider each appeal separately because each invoked different legal principles. The discussion began with Civil Appeal No. 207 of 1955, which concerned the Rewa State Pre‑emption Act, 1946, referred to as the Rewa Act, focusing particularly on section 10. Section 10 enumerated classes of pre‑emptors, stating that (1) any person who is a co‑sharer or partner in the property that has been sold and foreclosed, and (2) any person who owns immovable property adjoining the property that has been sold or foreclosed, or, in the case of a transfer of tenancy rights, the land subject to such rights, are entitled to a right of pre‑emption. The provision further provided that the first class would exclude the second, and among persons of the same class, the individual nearest in relationship to the seller would prevail over a more remote claimant. The present case concerned the second class, granting a pre‑emptive right to a person who owns land adjoining the property that is being sold or foreclosed, subject to the proviso. In the facts before the Court, both the purchaser and the pre‑emptors owned adjoining land, but the pre‑emptors were related to the vendor while the purchaser was not; consequently, the trial court had decreed in favour of the pre‑emptors based on the proviso. The substantive question for the Court was whether a pre‑emptive right based on vicinage infringed Article 19(1)(f) of the Constitution. The Court observed that different High Courts had expressed divergent views on this issue, with the High Courts of Rajasthan, Madhya Bharat, Hyderabad and the Judicial Commissioner of Vindhya Pradesh holding that such a right violated Article 19(1)(f), whereas the High Court of Punjab had taken the opposite view.

In the present discussion the Court observed that several High Courts have expressed opposite views on whether a statutory right of pre‑emption infringes the guarantee of article 19(1)(f) of the Constitution. The High Courts of Rajasthan, Madhya Bharat and Hyderabad, together with the Judicial Commissioner of Vindhya Pradesh, have held that the pre‑emptive right does offend article 19(1)(f), whereas the High Court of Punjab has reached the contrary conclusion. Before addressing the principal submissions advanced in this matter, the Court noted a reliance on its earlier decision in Shri Audh Behari Singh v. Gajadhar Jaipuria, wherein it was held that the law of pre‑emption creates a right that is attached to the land and that, on that basis, the right can be enforced against the purchaser. One line of argument therefore contended that because the pre‑emptive right is a characteristic of the property itself, it cannot be described as a restriction on the constitutional freedom to acquire, hold or dispose of property. The opposite side argued that even if the pre‑emptive right is an incident of the property, it nevertheless constitutes a statutory restriction on the fundamental right conferred by article 19(1)(f). The Court expressed the view that, irrespective of the manner in which the right attaches to the land, the enactment of a pre‑emption law introduces a limitation on the acquisition, holding or disposition of property that did not exist prior to the legislation. Consequently, the Court held that the attachment of liability to the property still amounts to a restriction on the right guaranteed by article 19(1)(f). Article 19(1)(f) confers on every citizen the liberty to acquire, hold and dispose of property, while clause (5) of the same article authorises the imposition of reasonable restrictions in the public interest. There can be no doubt, the Court said, that a pre‑emptive scheme does impose a restriction on the fundamental right guaranteed by article 19(1)(f), and the remaining issue is whether the restriction embodied in the Rewa Act is reasonable and serves the general public. Section 10 of the Rewa Act is applicable to all categories of property—urban or rural, agricultural or residential—and its reasonableness must be assessed in that broader context. The Court found no evidence that a comparable custom existed anywhere within the jurisdiction of the Rewa Act, and even if such a custom had been proved, the nature of that custom was not identified. Moreover, the Court held that the existence of a pre‑existing custom, even if previously upheld as reasonable by courts, would not be a decisive factor in determining the reasonableness of the statutory restrictions. Hence, the Court emphasized that the evaluation must be undertaken in light of the fundamental rights newly conferred by the Constitution to the people of this country.

In this case the Court observed that the Constitution‑guaranteed rights that were first conferred on the people of the country did not exist at the time when courts might have examined the reasonableness of any custom, if such a custom had existed, in the context of the conditions prevailing then. The Court further said that the mere fact that the right of pre‑emption is not actually exercised in a large number of transactions does not influence the inquiry into whether a statute that imposes such a restriction is reasonable. Accordingly, the Court turned to the provisions of the Rewa Act for analysis. Section 10, as previously noted, accords a pre‑emptive right firstly to co‑sharers and secondly to owners of adjoining lands, a right that the Court refers to as “pre‑emption by vicinage”. The Court clarified that the present appeal does not involve the situation of co‑sharers, a matter that will be addressed in a later portion of the judgment. The Court explained that, in the absence of any pre‑emption statute, a vendor would be free to sell his property to any purchaser for any price that the parties agree upon. However, the Rewa Act imposes a clear limitation on that freedom because the pre‑emption law can, in many instances, depress the price that the vendor might otherwise obtain. The Act further provides that, if both the vendor and the vendee wish to avoid a suit for pre‑emption, the vendor may give a notice to all potential pre‑emptors stating the price at which he proposes to sell the property. Such notice must be served through the court having jurisdiction over the area where the property is situated. Upon receipt of the notice, a potential pre‑emptor loses his pre‑emptive right unless, within one month of service, he or his agent pays or tenders the stated price to the vendor, as laid down in sections 12 and 13. Moreover, section 15 provides that even when a notice has been issued and the price has not been paid or tendered, a suit for pre‑emption may still be instituted after the sale on the ground that the price mentioned in the notice was not fixed in good faith. In such a suit the court examines whether the price disclosed in the notice is appropriate; if the court finds it unreasonable, it may fix a price that it considers to reflect the fair market value of the property sold. Consequently, the Court recognised that the vendor’s freedom to sell at any agreed price is restricted, and a suit for pre‑emption may be filed even when a pre‑emptor refuses to pay the agreed price, potentially resulting in a reduced price. The Court concluded that the notice required by section 12 and the failure of a pre‑emptor to comply with section 13 are of limited effect, because a pre‑emptor can always evade these provisions by contending that the price stated in the notice was not fixed in good faith.

In this case the Court observed that a pre‑emptor could claim that the price mentioned in the notice was not fixed in good faith, and that consequence meant that essentially every sale could be subjected to a claim of pre‑emption. The Court explained that this situation created a large amount of litigation for both the vendor and the purchaser. The first consequence of the pre‑emption law, therefore, was this potential for extensive disputes. The Court further stated that it saw no reason to believe that the pre‑emption law barred a vendor from demanding a price that might be considered unconscionable, because a vendor who asked for such a price would simply be unable to find a purchaser. Moreover, the Court pointed out that the price of a property was always determined by agreement between the vendor and the purchaser, and there was no basis to deem an agreed price itself unconscionable. The Court also held that the pre‑emption law was not intended to empower courts to fix a reasonable price, and consequently that purpose could not support a finding that the law represented a reasonable restriction on the vendor’s right guaranteed by Article 19(1)(f) of the Constitution. Regarding cases based on vicinage, the Court expressed the view that the restrictions imposed by pre‑emption did not influence the fairness of price fixation; rather, the predominant effect was the generation of litigation. Accordingly, the Court could not discern any public advantage derived from the pre‑emption law, and it concluded that any benefit to a limited segment of the public was far outweighed by the disadvantages created. Turning to the position of the purchaser, the Court described a scenario in which the purchaser negotiated a specific price with the vendor, the vendor gave notice under section 12, and no pre‑emptor acted under section 13. After the purchase, the purchaser would reasonably expect to retain and enjoy the property without further trouble because the price had not been paid or tendered under section 13. Nevertheless, the Court reiterated that, despite compliance with sections 12 and 13, a pre‑emptor could still institute a suit for pre‑emption by alleging that the price stated in the notice was not fixed in good faith. Consequently, a purchaser who had completed the transaction after the statutory steps could be forced into litigation on the ground that the agreed price was excessively high. This created a clear restriction on the purchaser’s right to hold the property; even if the purchaser eventually succeeded by showing that the price was not above market value, he would still be compelled to endure litigation to retain ownership. The Court therefore deemed such a restriction unreasonable because it permitted a pre‑emptor to initiate legal action even after the statutory requirements had been satisfied.

It was observed that a pre‑emptor could still approach the court even after the requirements of sections twelve and thirteen had been satisfied. The Court then examined the wider context of the statutes governing pre‑emption by vicinage. It noted that the right of pre‑emption did not exist under Hindu law and was not practiced in much of the country lying south of the Vindhyas. The practice began to be recognised only after the advent of Mohammedan rule, where it was treated as a custom that courts, especially in the northern regions, accepted. In the north, the courts upheld the right of pre‑emption on the basis of custom even where no statutory provision existed, holding that the custom was compatible with justice, equity and good conscience. By contrast, courts in the southern part of the country regarded the same custom as contrary to the principles of justice, equity and good conscience, as reflected in the authorities cited, namely Ibrahim Saib v. Muni Mir Udin Saib and (1) Mohomed Beg Amin Beg v. Narayan Meghaji Patil (2). The Court emphasised that the reasonableness of a custom is not a fixed standard; what may be regarded as reasonable at one stage of societal development may become unreasonable at another. Accordingly, the law of pre‑emption needed to be assessed in the light of its later incorporation into various statutes. Prior to the commencement of the Constitution, statutes enacted by a competent authority were not amenable to challenge. However, after the Constitution came into force, those statutes must be examined for reasonableness in view of the fundamental rights guaranteed to citizens. The Court referred to the earlier decisions reported in (1) (1870) 6. Mad. H.C.R. 26 and (2) (1916) I.L.R. 40 Bom. 358, which described a society in which certain classes lived in segregated groups and discrimination on the basis of religion, race and caste was prevalent. In that historical context, there might have been some utility in allowing a person to prevent a stranger from acquiring property in an area already populated by a particular fraternity, and a right of pre‑emption that excluded a stranger could have been seen as tolerable or reasonable. The Court then pointed out that the Constitution now forbids discrimination against any citizen on grounds of religion, race, caste, sex, place of birth or any combination thereof under Article fifteen, and it enshrines a right for every citizen to acquire, hold and dispose of property, subject only to restrictions that are reasonable and serve the public interest. While the ostensible purpose of pre‑emption may be vicinage, the Court observed that the underlying motive was to prevent a stranger from acquiring property in a locality already occupied by a particular class or fraternity. In effect, the law of pre‑emption based on vicinage was intended to keep out persons belonging to different religions, races or castes. The Court concluded that such a division of society and the exclusion of strangers from any locality could not be regarded as reasonable, and that this fundamental reason undermines the validity of the pre‑emption provision.

The Court observed that a rule of pre‑emption based on vicinage, which might have been accepted in earlier times, cannot now be given effect because it imposes an unreasonable restriction on the constitutional right to acquire, hold and dispose of property protected by Article 19(1)(f). The Court explained that such a restriction cannot be regarded as reasonable or as being in the general public interest in today’s society. The parties submitted that, at least in the case of agricultural land, pre‑emption by vicinage could lead to the consolidation of farms and that this might be a benefit. The Court noted that it was unnecessary to examine the merit of that claim because the Rewa Act, whose provision is being challenged, applies not only to agricultural holdings but also to “burn” property and house property. Consequently, any alleged advantage of consolidation is irrelevant when the provision also covers urban and residential land, where no consolidation issue arises. The Court added that even if the provision were limited to agricultural land, the benefit of consolidation might be arguable, but because the law cannot be severed into a part that applies only to agriculture and another part that applies to urban property, the whole provision relating to vicinage must be struck down. The Court therefore held that the second clause of section 10 imposes an unreasonable restriction on the right guaranteed by Article 19(1)(f) and must be declared void. The proviso that accompanies the clause applies to both the first and second clauses; however, it will survive only with respect to the first clause, which is not contested in this proceeding. Accordingly, the Court allowed Civil Appeal 270 of 1955.

Turning to Civil Appeal 595 of 1960, the Court considered the Punjab Pre‑emption Act, 1913, as it is applied to the old city of Delhi. The specific provision under review was section 16 of that Act, which governs pre‑emption in respect of urban immovable property. The section provides that the right of pre‑emption shall first vest in the co‑owners of the property, if any; secondly, when the sale involves the site of a building or structure, in the owners of that building or structure; thirdly, in the owners of adjoining properties in certain circumstances. The Court began its analysis of whether section 16 of the Punjab Act was ultra vires the Constitution, treating this issue as a preliminary question. The lower court had ruled in favour of the respondent, who claimed pre‑emption on several of the grounds listed in the statute. The appellant appealed that decision, and the High Court had held that the first, third and fourth grounds in section 16 did not offend Article 19(1)(f). The Supreme Court’s discussion continued from that point, focusing on the constitutional validity of the remaining provisions.

The provision listed in section 16 of the Punjab Pre‑emption Act specifies several categories of persons who are entitled to a right of pre‑emption. The third category provides that when a sale involves a property that shares a staircase with other properties, the owners of those adjoining properties acquire the pre‑emptive right. The fourth category provides that when a sale involves a property that has a common entrance from the street with other properties, the owners of those neighbouring properties are granted the right of pre‑emption. The fifth category deals with a servient property and accords the pre‑emptive right to the owners of the dominant property, and vice‑versa. The sixth category accords the right of pre‑emption to persons who own immovable property that is contiguous to the property being sold. In the present case, the suit was instituted by the respondent, Nanak Singh, who claimed the right of pre‑emption in respect of a sale made in favour of the appellant of a house. The respondent based his claim on the first, third, fourth and sixth grounds enumerated in section 16. The preliminary question presented to the court was whether the provisions of section 16 were ultra vires the Constitution. The subordinate judge decided this preliminary issue in favour of the respondent. Consequently, the appellant filed a revision petition before the High Court. The High Court held that the first, third and fourth grounds in section 16 did not offend Article 19 (1) (f) of the Constitution, but it held that the sixth ground did offend that constitutional provision. This latter view appeared to conflict with an earlier Full Bench decision of the same High Court in Uttam Singh v. Kartar Singh. Subsequently, the High Court, sitting as a five‑Judge Bench in Sardha Ram v. Haji Abdul Majid Mohd. Amir Khan, held that the provisions contained in the “sixthly” clause of section 16 were not ultra vires, on the ground that the restrictions imposed were not unreasonable. The appellant then approached this Court on a certificate granted by the High Court, challenging the High Court’s view that the first, third and fourth grounds were constitutional. The appellant further argued that, in view of the five‑Judge decision of 1960, which had altered the earlier view on the sixth ground, the High Court’s earlier judgment should be over‑ruled. It may be noted that, under section 7 of the Punjab Act, section 16 is applicable only to a town subdivision where a custom of pre‑emption was proven to exist at the time of the Act’s commencement. There is no dispute that section 16 applies to the portion of old Delhi in which the subject property is situated. However, the fact that such a custom existed in that area before 1913, when the Punjab Act came into force, is not, by itself, a decisive factor for holding that the provisions of section 16 are necessarily reasonable. The Court has already addressed this aspect of the matter while dealing with the Rewa Act and therefore need not elaborate further. The Court has also examined the question of pre‑emption based on vicinage in the context of the Rewa Act, and, for the reasons previously expressed, holds that pre‑emption based on vicinage constitutes an unreasonable restriction on the constitutional right to hold, acquire, or dispose of property under Article 19 (1) (f).

In this matter the Court considered whether the right to hold, acquire or dispose of property, which is protected by Article 19 (1) (f), could be limited by the provisions of Section 16 of the Punjab Act. The Court briefly examined the grounds on which two earlier Punjab decisions, reported in 1954 (A.I.R. 1954 Punjab 55) and 1960 (A.I.R. 1960 Punjab 196), had reached a different conclusion. In the 1954 decision both Sections 15 and 16 of the Punjab Act were dealt with together. The Court stated that it was not concerned with Section 15 and therefore expressed no opinion on that provision. Regarding Section 16, the learned judges in the 1954 case had justified its constitutionality by stating that it would “reduce the chances of litigation and friction and to promote public order and domestic comfort, and to promote private and public decency and convenience.” The Court found it difficult to see how a rule of pre‑emption based on vicinage could advance those objectives, even if those objectives were considered to be in the public interest. The Court suggested that the reasons given in 1954 might have been influenced by the judges’ consideration of pre‑emption on grounds other than vicinage, which are also contained in Section 16. The Court concluded that, while those other grounds might be reasonable, the reasons cited could not be said to support the validity of pre‑emption on the basis of vicinage.

The Court then turned to the earlier judgment in Sardha Ram (A.I.R. 1960 Punjab 196). In that case the judges observed that “pre‑emption imposes restrictions on the right of the vendee to acquire and hold property and the right of the vendor to dispose of property. It limits the power of the vendor to sell his property to whomsoever he may please or prevents him from showing preference to anyone to whom he may wish to sell… it is a clog on the freedom of sale and tends to diminish the market value of the property.” The judges were aware of the difficulties faced by a vendor whose property was subject to a pre‑emption rule. Nevertheless, they upheld the constitutionality of the sixth ground in Section 16 for two principal reasons: first, because that ground had already been upheld in Uttam Singh’s case; and second, because what is reasonable in a particular case is often hard to determine, and the choice of measures is left to the legislature, which is presumed to have investigated the matter and acted with reason. The Court noted that an act of the legislature should be sustained unless it clearly violates constitutional limitations. The Court found that this later Punjab reasoning did not provide any additional support for the reasonableness of the restriction imposed by pre‑emption on the basis of vicinage. On the contrary, the observations made earlier demonstrated how unreasonable such a restriction could be. Consequently, the Court held that the sixth ground in Section 16 of the Punjab Act was unconstitutional, reaffirming the rationale previously expressed in the Rewa case.

In examining the first ground, the Court considered the provision that granted a pre‑emptive right to a co‑sharer when a share in the property was being sold. The Court observed that numerous High Courts had examined the constitutionality of such a pre‑emptive right in favour of a co‑sharer and had consistently upheld it. The Court expressed confidence that a statute conferring this right imposed a reasonable restriction that served the public interest. It explained that allowing an outsider to become a co‑sharer would create serious difficulties in the joint management of the property and would undermine the benefits that co‑ownership normally provides. The Court further noted that the effect of a pre‑emptive right favouring a co‑sharer is that, after a sale, the entire property may eventually be consolidated in the hands of a single co‑sharer, who would then become the sole owner. This outcome was described as particularly advantageous in the context of residential houses, which are the subject of section 16 and pertain to urban property; the introduction of an outsider into a residential house, the Court explained, would give rise to a range of complications. The Court held that the advantages of the pre‑emptive scheme were evident and, in its view, outweighed any disadvantages that a vendor might experience because the vendor could not sell the property to an arbitrary purchaser. The Court also found that the purchaser (vendee) suffered little, since the only loss was the inability to obtain an undivided share of the property. Overall, the Court concluded that a pre‑emptive right based on co‑sharership represented a reasonable restriction on the right to acquire, hold, and dispose of property and that it served the general public’s interest. Applying the same reasoning, the Court affirmed that the third ground—where the sale concerned a property that shared a staircase with other properties—was equally a reasonable restriction and likewise furthered the public interest.

When turning to the fourth ground, the Court addressed the situation in which the sale involved a property that shared a common entrance from the street with other properties. The Court observed that this ground was analogous to the third ground, the primary distinction being that the former involved a shared staircase while the latter concerned a shared private passage from the public street. The Court explained that the rationale behind this ground appeared to be that the buildings were situated within a common compound, possibly originally erected by members of a single family or a cohesive group, and that they possessed a common private passage leading from the street. In such circumstances, the owners of the individual buildings would, in effect, occupy a position similar to that of co‑sharers, even though there might be no formal co‑sharership relationship in the specific house being sold. The Court reiterated its earlier reasoning, indicating that, for the reasons previously articulated concerning co‑sharers, the pre‑emptive right provided for under the fourth ground of section 16 should be upheld as a reasonable restriction that aligns with the interests of the general public.

The Court observed that the situation covered by the fourth ground of section 16 is essentially the same as the situation involving a common staircase and co‑sharers. Consequently, for the reasons articulated in the earlier co‑sharer decision, the Court affirmed the validity of the pre‑emption right guaranteed by the fourth ground of section 16. The Court then distinguished cases falling under the fourth ground from those involving katras, which are expressly exempted from the provisions of the Act by section 5, as indicated in Karim Ahmad v. Rahmat Elahi. A contention was also raised that section 16 violates Article 14 of the Constitution, relying on the exemption clauses of section 5 and the claim that the provision does not apply to agricultural land. The Court noted that agricultural properties constitute a separate class, and therefore no discrimination can arise solely on the basis of their agricultural character. Exemptions listed in section 5, such as shops, serai katras, dharamsalas, mosques and similar buildings, are clearly distinct because they are generally places to which the public is invited. Particular emphasis was placed on the exemption of katras; although the Act does not define the term, its primary meaning is an enclosure and its secondary meaning is a market, as explained in the same case. Thus a katra is ordinarily a commercial locality, although purely residential katras may exist, but even those consist of numerous houses attracting large numbers of people. Accordingly, premises exempted under section 5 form a single class of public‑use properties, which is fundamentally different from private residential premises intended for individual occupancy. In view of this classification and the explicit exemptions of section 5, the Court concluded that section 16 cannot be said to infringe Article 14 of the Constitution. Consequently, the appeal was dismissed, and the matter was remitted for disposal in accordance with the law, with a request that the decision be expedited.

The Court then turned to the matter recorded as Civil Appeal No. 430 of 1958, which involved a pre‑emption suit filed by the respondents under Chapter XIV of the Berar Land Revenue Code, 1928. The suit concerned survey number 285, subdivision I, while the pre‑emptors possessed subdivision II of the same survey and based their claim upon section 174 of the Code. Section 174 provides that a right of pre‑emption arises only for unalienated lands held for agricultural purposes, in favour of occupants of the same survey number, when a transfer of interest occurs within that survey number. The Code defines an ‘occupant in a survey number’ in section 173 as a person who holds an occupancy right, either solely or jointly with others, in that particular survey number or any part thereof. The purpose of this statutory provision is to protect the interests of those already occupying agricultural land from being displaced by subsequent transfers that might otherwise alter the character of the holding. Thus, any person who, either alone or together with others, enjoys the status of an occupant in the specified survey number falls within the protective scope of section 174. The appeal therefore raised the question whether the respondents, as pre‑emptors, were entitled to enforce this statutory right against the alleged transfer of interest in the agricultural portion of survey number 285.

In this case the Court observed that a pre‑emptive right does not arise when a portion of a survey number is transferred to another occupant of the same survey number, nor does it arise when the transfer is made with the consent of all occupants of that survey number. The sole issue that was presented for consideration was whether the pre‑emptive right created by section 174 of the Berar Land Revenue Code constitutes an unreasonable restriction on the fundamental right to acquire, hold, or dispose of property that is guaranteed by article 19(1)(f) of the Constitution. The Court noted that the suit had been decreed by the trial court and that the High Court had upheld that decree on appeal. The appellant, before the High Court, had argued that the law of pre‑emption was void because it conflicted with article 19(1)(f) of the Constitution. That argument was rejected, relying on an earlier decision of the Nagpur High Court in Ramchandra v. Janardan, reported in A.I.R. 955 Nag. 225, wherein the pre‑emptive right contained in Chapter XIV of the Code was held to be constitutionally valid. The present appeal therefore challenged the correctness of the view expressed in that earlier case. The Court further explained that the pre‑emptive right granted by Chapter XIV is narrowly confined. Firstly, it is limited to occupants of a specific survey number. A “survey number” is defined as a portion of land that has been identified as a survey number either at the last preceding revenue survey or subsequently recognized as such by the Deputy Commissioner, with its area and land revenue entered separately under an indicative number in the land records. A “sub‑division of a survey number” is a portion of such a survey number whose area and land revenue are entered separately in the land records under a subordinate indicative number. Generally, survey numbers serve as the basic units of assessment at the time of revenue settlement and are created under section 86 of the Code; no new survey numbers may be created under the rules after settlement except in special circumstances, such as when land is acquired for public purposes, when waste land is allotted for cultivation, or when large survey numbers exceeding thirty acres are divided to reduce their size. In all other instances, only sub‑divisions of an existing survey number are formed. Sub‑divisions are created under section 88 of the Code together with the applicable rules, and it is permissible to amalgamate two or more adjoining sub‑divisions within the same survey number when they are held by the same occupants under the same tenure. When a survey number is sub‑divided, the assessment of the original survey number is distributed among its sub‑divisions as agreed by the occupants. Consequently, the assessment of a survey number is effectively shared among its sub‑divisions, illustrating the limited scope of the pre‑emptive right under Chapter XIV.

A survey number constitutes a single unit of assessment, and under section 132, when more than one person occupies that survey number, each occupant is jointly and severally liable for the land‑revenue assessed on the whole. Consequently, the holders of a survey number are, in effect, co‑sharers. During the period that the settlement remains in force, if those co‑sharers decide to subdivide the original survey number, the land‑revenue assessment is apportioned among the resulting subdivisions. Each subdivision then becomes a separate holding that is individually assessed for land‑revenue.

The right of pre‑emption created under Chapter XIV is limited strictly to the original survey number, which, as noted, is a single assessment unit whose occupants are co‑sharers jointly and severally responsible for the revenue. In practice, when a survey number is subdivided while the settlement is still operative, the newly formed subdivisions receive separate revenue assessments, yet the owners of those subdivisions, although not technically co‑sharers, are essentially analogous to co‑sharers. Therefore, the pre‑emption provision in rule 174 of Chapter XIV operates as a pre‑emption right in favour of the original co‑sharers prior to any subdivision and continues to apply after subdivision to persons who, while not strictly co‑sharers, stand in a position akin to co‑sharers.

The Rules indicate that a distinct survey number is ordinarily expected to cover approximately thirty acres, although larger sizes may occur in particular circumstances. Accordingly, the pre‑emption law embodied in section 174 of the Code applies to those who are co‑sharers or persons akin to co‑sharers and tends to consolidate holdings up to roughly thirty acres, which corresponds to the usual extent of a survey number.

Section 184 further limits the pre‑emption right by providing that no pre‑emption arises when land is exchanged with the occupant of a different survey number. In effect, the Code creates a pre‑emptive right for the holder of an interest in a survey number only in specific situations: when an occupant with an interest in that survey number sells the interest, when there is a foreclosure, when a usufructuary mortgage is effected, or when a lease exceeding fifteen years is granted to a stranger, provided that the land remains unalienated agricultural land.

Considering the character of the right conferred by the Code, the Court concluded without hesitation that the pre‑emptive right is essentially a right in favour of a co‑sharer in the strict sense or of a person who is akin to a co‑sharer. The same reasoning applied to the Punjab Act concerning co‑sharers applies fully to the right created under the Code, with the additional benefit that, because the land involved is agricultural, the pre‑emption right further promotes the consolidation of holdings within a survey number, which, as previously noted, is generally about thirty acres in size.

An extent of thirty acres formed the subject matter of the dispute. The Court expressed the view that the decision in Ramchandra v. Janardan (1), which held that the pre‑emption provision contained in Chapter XIV of the Code does not violate Article 19(1)(f), was correct. Because this was the sole issue raised by the appellant, the Court concluded that the appeal could not succeed. Accordingly, Civil Appeal No. 270 of 1955 was allowed with costs, and the suit for pre‑emption was dismissed. No order as to costs was made in Civil Appeal No. 595 of 1960 or Civil Appeal No. 430 of 1958; those appeals were dismissed with costs.

Justice Sarkar noted that the three appeals originated from suits seeking to enforce pre‑emption rights over property. In each case the fundamental question was whether the statutory provision creating the pre‑emption right was invalid because it infringed Article 19(1)(f) of the Constitution. One of the appeals also raised the additional issue of whether the provision violated Article 14. The contested pre‑emption rights were founded upon three distinct statutes, each containing its own set of provisions. While certain features of the statutes were substantially similar, other aspects differed, requiring each appeal to be examined on its own statutory framework. The Court observed that although all three statutes pre‑date the Constitution, the transactions giving rise to the pre‑emption claims occurred after the Constitution came into force, thereby invoking constitutional scrutiny.

The first matter considered was Civil Appeal No. 270 of 1955, which concerned the Rewa State Preemption Act, 1946. The Court focused on Section 10 of that Act, which provided that persons belonging to the following classes were entitled to a right of pre‑emption: (1) any person who was a co‑sharer or partner in the property that was sold or foreclosed; and (2) any person who owned immovable property adjoining the property that was sold or foreclosed, or, in the case of a transfer of tenancy rights, the land that was the subject of those rights. The section further stipulated that, where both classes were applicable, the first class would exclude the second, and that, within the same class, the person who was nearer in relationship to the seller would prevail over a more remote person. In the present case, the pre‑emption decree was based on the ownership of adjoining land; however, both the purchaser and the pre‑emptor possessed adjoining lands. The decree favored the pre‑emptor because he was related to the vendor, whereas the purchaser was not, in accordance with the proviso to Section 10. The Court identified the central issue as whether a pre‑emption right predicated on proximity of land, or “vicinage,” contravened Article 19(1)(f). The Court observed that the High Courts had reached divergent conclusions on this point and deemed it unnecessary to examine each decision in detail at that stage.

In the subsequent discussion the Court examined all of the points that had been raised in the earlier authorities. It observed that the High Courts of Rajasthan, Madhya Bharat, Vindhya Pradesh and Hyderabad had each held that a right of pre‑emption violated Article 19(1)(f) of the Constitution. The Court cited the decisions in Panch Gujar Gaur Brahmins v. Amarsingh (1), Babulal v. Gowardhan das (2), Sewalal Ghanshyam v. Param Lalanju (3) – a case that dealt with the very Act presently under consideration – and Moti Bai v. Kand Kari Channaya (4). By contrast, the Court noted that the High Court of Punjab had taken the opposite view, holding that a pre‑emption right based on vicinage did not offend Article 19(1)(f); it referred to Sardha Ram v. Haji Abdul (5). The Court added that the High Court of Nagpur appeared to follow the Punjab judgment, as shown in Ramchandra Krishinaji Dhagale v. Janardan Krishnappa Marwar (6). Thus, the Court highlighted a clear split among the various High Courts on whether such a pre‑emptive right constituted an impermissible restriction on the constitutional guarantee to acquire, hold and dispose of property.

The Court then turned to the substantive arguments presented by the parties. The pre‑emptor’s counsel relied on the earlier decision in Shri Audh Behari Singh v. Gajadhar Jaipuria (7), in which the learned judges had expressed the view that “the law of pre‑emption creates a right which attaches to the property and on that footing only it can be enforced against the purchaser.” According to that position, because the pre‑emptive right is attached to the land itself, it is merely an incident of property ownership and does not constitute a restriction on the right to hold property. The purchaser’s counsel, however, argued that the pre‑emptive right nevertheless operated as a restriction because a right to hold property existed independently of the pre‑emption scheme, and the law therefore adversely affected the constitutional right to property. The Court recorded the citations to the authorities relied upon by the purchaser, namely A.I.R. (1954) Raj, 100 (2) A.I.R. (1956) M.B.I. (3) A.I.R. (1956) V.P. 9 (4) A.I.R. (1954) Hyd. 161 (5) A.I.R. (1960) Punj 196 (6) A.I.R. (1955) Nag. 225 and (7) (1955) 1 S.C.R. 70, 80. While noting that the purchaser’s contention was not wholly untenable, the Court expressed that, given its view of the preceding authorities, it was unnecessary to issue a final pronouncement on that specific point. Nevertheless, the Court proceeded on the premise that even if the law of pre‑emption creates a right that is attached to the property, such a right may still amount to a restriction on the guarantee contained in Article 19(1)(f). The Constitution declares that every citizen has the right “to acquire, hold and dispose of property,” and clause (5) of the same article permits reasonable restrictions in the interest of the general public. The Court affirmed that a pre‑emption law undeniably imposes a restriction on the rights listed in Article 19(1)(f). The scope and intensity of that restriction would be examined in greater detail later, with the central question being whether the restriction is reasonable and serves the public interest. The Court indicated that, in assessing reasonableness, it must balance the disadvantage suffered by the individual affected against the advantage conferred on the community as a whole.

In this case, the Court explained that determining whether a restriction is reasonable involves weighing the disadvantage suffered by the person adversely affected against the advantage that the restriction confers on the community as a whole. The Court stated that if the benefit to the public outweighs the harm to the individual, the restriction may be deemed reasonable and therefore enforceable. While assessing reasonableness, the Court emphasized that it is not its role to engage in policy making or to speculate how it would have drafted the law if it were in a legislative position. Once the Court is satisfied that a restriction satisfies the test of reasonableness, it must uphold the restriction as valid. The Court then observed that a law of pre‑emption does not mean that every transaction will be subject to pre‑emptive claim. The right of pre‑emption cannot be exercised merely for amusement or out of malice; it requires the claimant to possess sufficient funds to exercise the right. It may be presumed that a person having the necessary money will invoke the pre‑emptive right only when such exercise is clearly advantageous. Consequently, the Court inferred that the right of pre‑emption is likely to be exercised in only a limited number of cases, meaning that the restriction it imposes will affect relatively few transactions. This circumstance, the Court held, is a legitimate factor to consider when judging the reasonableness of the restriction created by the pre‑emption law. The Court further noted another general consideration: for a long time, many parts of the country have recognised a customary right of pre‑emption, often based on the principle of vicinage. Before the Constitution, courts had upheld such customs, as illustrated by the decision in Audh Behari Singh’s case (1), where this Court affirmed a customary pre‑emption right grounded in vicinage. The Court observed that courts could not have sustained a customary pre‑emption right unless they found the custom reasonable, recalling the legal maxim that “a custom must be reasonable; if it is against reason it has no force in law,” as stated in Halsbury’s Laws of England, 3rd edition, volume 11, page 162. The Court also cited Tyson v. Smith (2), where Chief Justice Tindal remarked that a custom is not unreasonable merely because it disadvantages a private individual if it serves the public interest, echoing the language of clause (5) of Article 19. Accordingly, the Court concluded that prior to the Constitution, Indian courts had consistently regarded the customary right of pre‑emption based on vicinage as a reasonable restriction. The Court could find no justification for treating a similar restriction—whether founded on custom or statute—as unreasonable after the Constitution’s enactment, noting the absence of any substantial change in the nation’s social or economic structure that would render a previously reasonable restriction now unreasonable.

The Court noted two earlier authorities, namely the 1955 decision reported in volume 1 of the Supreme Court Reports at pages 70 and 80, and the 1938 decision reported in the Ads. & Ed. at page 406,‑42 1‑751. It observed that since the adoption of the Constitution there has been a vast change in the social and economic structure of the country, a change that could justify the view that a restriction which was reasonable before 26 January 1950 might now be unreasonable. The Court acknowledged that the courts of Madras had previously refused to apply the Mahomedan law of pre‑emption on grounds of justice, equity and good conscience, but it clarified that the present discussion was not concerned with Mahomedan law or with considerations of justice, equity or good conscience. Even in Madras, a local custom conferring a right of pre‑emption had been upheld, as recorded in Tulla’s Mahomedan Law, 15th edition, page 202. The Court pointed out that the restriction created by the law of pre‑emption has different implications when viewed from the standpoint of a vendor and from that of a vendee, and it first turned to the position of the vendor. The reports, the Court said, show that a vendor has rarely approached the courts to complain that the law of pre‑emption has placed an unreasonable burden on his right to dispose of his property. Under the Rewa Act, section 12 authorises a person who proposes to sell immovable property to give notice of his intention to sell, together with the proposed price, to the person or persons who hold the right of pre‑emption under the Act. Section 13 provides that any person holding the right of pre‑emption shall lose that right unless, within one month of the notice, he pays or tenders the stated price to the vendor. The effect of these provisions, the Court explained, is that the vendor can, unless he is demanding an unreasonably high price, determine in advance whether any pre‑emptor is likely to exercise the right. If the pre‑emptors do not insist on their right, the vendor is then free to sell the property to anyone he chooses and at any price, a situation the Court considered likely to arise in many cases. To a person possessing the right of pre‑emption, the law compels the purchase at a reasonable price. Consequently, the Rewa law of pre‑emption imposes on a vendor two distinct restrictions. The first restriction prevents the vendor from selling the property at any price he wishes; the second restriction prevents him from selling the property to any person of his choosing. The Court held that the first restriction is clearly a reasonable one. No one can complain if he is required to accept a fair market price for the property he wishes to sell and is denied the opportunity to extract an unconscionably high price. Such a measure, the Court observed, helps to control prices, checks speculation in land, contributes to stabilising the country’s economy and prevents a wealthy individual with abundant monetary resources from outbidding a poorer individual for a property that would be of great advantage to the poorer party.

The Court further observed that by preventing a richer person from acquiring a property when it would be advantageous for a poorer neighbour to own it, the law of pre‑emption does not amass wealth in a single ownership but rather serves the opposite purpose. For the reasons already mentioned, the Court concluded that the law does not impose an unreasonable restriction on a vendor by barring him from selling at an exorbitant price. Regarding the second restriction, which bars a vendor from selling his property to anyone he prefers, the Court could not conceive of this as a great deprivation. In its view, the freedom to sell to any chosen buyer carries perhaps no more significance than a sentimental preference. Conversely, the benefit accruing to the neighbouring owner is the ability to enlarge the property previously held by him. Balancing the two sides, the Court indicated that the scales tip decisively in favour of the policy underlying the pre‑emption law.

In the matter before the Court, it was observed that a person who already held adjoining land might possess a right of pre‑emption by reason of his vicinity to the property, a right that could be of little value to a richer individual seeking to acquire the same land. It was submitted that the law of pre‑emption tended to concentrate wealth in the hands of a single owner. The Court, however, held that the effect of the statute was actually to restrain a richer person from obtaining property when it was advantageous for a poorer neighbour to possess it. The Court further regarded the provision that prevented a vendor from demanding an exorbitant price as a reasonable limitation; it did not consider this restriction to be unreasonable. The Court also noted that the same law barred a vendor from selling his land to any buyer of his choosing. This restriction, the Court said, did not amount to a serious deprivation, because the freedom to sell to anyone was at most of sentimental value. By contrast, the neighbouring owner gained the benefit of being able to enlarge the land already in his possession, and the Court found that, when the two sides were balanced, the advantage lay heavily with the pre‑emptor. The Court indicated that there were additional reasons supporting this view, which would be set out later. One argument presented was that the law of pre‑emption generated extensive litigation. The Court rejected this contention, holding that the statute itself did not necessarily give rise to disputes; rather, litigation stemmed from the avarice of persons seeking to evade the law, a defect attributable to human nature rather than to the legislation. Consequently, the Court refused to accept the occurrence of litigation, whether arising from enforcement or evasion of the pre‑emption right, as a basis for deeming the restriction unreasonable. Moreover, the Court emphasized that the tendency of a law to produce litigation was an irrelevant factor when assessing whether it imposed unreasonable restraints. Assuming a law imposed a restriction, the question of reasonableness would arise independent of the volume of consequent litigation. Turning to the purchaser’s position, the Court explained that the right of pre‑emption was understood to be a right that substituted the purchaser, a principle affirmed in Audh Behari Singh’s case. Under Section 4(i) of the Rewa Act, the right of pre‑emption was expressly described as a right to be substituted in place of the purchaser. Accordingly, the Court concluded that the sole restriction placed on the purchaser was the limitation on acquiring that particular parcel of land, and that the statute did not impair his general right to hold property once it was lawfully acquired.

In the Court’s view, once a purchaser complied with the law of pre‑emption, nothing prevented him from retaining the property for an unlimited period. The Court then examined whether the limitation imposed by the provision cited from the 1955 Supreme Court Reports (pages 70 and 80) on the right to acquire property constituted an unreasonable restriction. It asked whether it was unreasonable to forbid a purchaser from acquiring a particular parcel when an adjoining owner expressed a desire to buy it. The Court observed that the restriction did not bar the purchaser from acquiring any property at all; many other parcels, roughly equivalent in value, remained available for purchase. The Court also recalled its earlier observation that the circumstances in which the right of pre‑emption would be exercised, thereby restricting a stranger’s purchase right, were relatively few.

The Court noted that, in the case of agricultural land, the right of pre‑emption based on vicinage unquestionably aided the consolidation of holdings. Weighing the benefits of such consolidation against the minor inconvenience imposed on a stranger by the loss of a chance to buy a particular parcel, the Court concluded that the disadvantages were minimal. The Court mentioned that the advantages arising from the consolidation of agricultural holdings would be discussed later in the case relating to Berar. However, the Court emphasized that the Rewa Act was not limited to agricultural land; it also granted a right of pre‑emption over other types of property.

Turning to the situation of house property in towns or villages, the Court described the traditional Indian habit of living in compact communities, a pattern that offered significant benefits. Although contemporary economic conditions sometimes prevented people from living in such close‑knit settings, the Court held that this did not negate the inherent advantages of communal living, such as maintaining homogeneity, comfort, and peace. The Court observed that property disputes commonly arose concerning boundaries, easements, and other related rights, often stemming from differing lifestyles, and that most of these disputes involved adjoining owners.

The Court explained that a right of pre‑emption founded on vicinage could help avert many of these disputes before they originated. Moreover, the Court expressed concern that it would cause considerable discomfort for long‑standing residents to accept an outsider who might not integrate into the community or could be undesirable. The Court further argued that giving a resident preference to acquire neighboring property would enable more effective management of one’s holdings and better preserve the privacy of the home.

Against these numerous advantages, the Court identified only a single drawback for the purchaser: the inability to acquire a specific parcel that an adjoining owner preferred. The Court noted that, in most cases, the purchaser could obtain another property of comparable quality, thereby mitigating the impact of the restriction.

In this case, the Court observed that it cannot be said that when the law favours one of two competing persons because that person already owns adjoining land, the law therefore imposes an unreasonable restriction on the other person. The Court noted that none of the reported decisions has ever held that the right of pre‑emption granted to a co‑sharer creates an unreasonable restriction on a purchaser. The Court expressed the view that such a conclusion would be impossible to sustain. The Court explained that a co‑sharer who is given a preference to purchase the land inevitably increases his own holding. Moreover, the co‑sharer also prevents an outsider from being forced into joint ownership with him; this is the only distinction between the co‑sharer’s situation and that of an adjoining owner. The Court further stated that this difference does not, in principle, lead to a different assessment of the reasonableness of the restriction in the two circumstances. The Court added that a co‑sharer who is dissatisfied with a new co‑owner can always partition his share. The Court emphasized that no authority has ever held that, on this ground, a statute conferring a right of pre‑emption on a co‑sharer imposes an unreasonable restriction on another person’s right to acquire property. Accordingly, the Court concluded that, on the same principle, a law that gives a right of pre‑emption on the basis of vicinage must also be regarded as imposing a reasonable restriction. The Court then turned to the advantages of a pre‑emption law based on vicinage, particularly the preservation of the privacy of homes. The Court observed that some submissions argued that the disappearance of the purdah system removed any need to protect residential privacy. The Court rejected that argument, stating that even if the purdah system has vanished, it cannot be said that the value of privacy in one’s home has become nil in the present day. The Court affirmed that the pre‑emption law serves to protect that privacy and thereby benefits the community. The Court further rejected the notion that privacy is valuable only to those who observe purdah. The Court also addressed the claim that compact, homogeneous communities have disappeared because many people now live in flats. The Court refused to accept the suggestion that community living no longer has any advantages or that apartment living is an ideal alternative. The Court held that there remain strong arguments in favour of living in compact and homogeneous communities, and that such advantages are likely to persist. Finally, the Court considered the allegation that the restriction created by a pre‑emption law is unreasonable because it might promote discrimination on the basis of religion, race or caste, which Article fifteen of the Constitution prohibits. The Court rejected a reading of the Constitution that would forbid persons of different religions, races or castes from living together. The Court noted that compact communities are not necessarily homogeneous in terms of caste, religion or race; the benefit derives from a shared way of life, common thought and long‑standing familiarity rather than from any particular identity.

The Court observed that the purpose of the pre‑emption rule is to promote bonds not only among neighbours but also among the families of those neighbours. In view of this objective, the Court held that a restriction imposed by the law of pre‑emption on the basis of vicinage constitutes, in its opinion, a reasonable limitation on the constitutional right to acquire and dispose of property.

The Court then addressed an argument that, when a person acquires a parcel of land by exercising the right of pre‑emption, the purchaser may subsequently lease that land to an outsider. The argument claimed that such leasing would defeat the goal of creating compact, cohesive communities, because the presence of a stranger would undermine the intended social advantage. The Court accepted that this could occur in some isolated cases, but it emphasized that the landlord retains the power to select the tenant at the time the lease is created. Moreover, the landlord exercises control over the tenant through the ordinary provisions of tenancy law. The Court explained that a dispute between landlord and tenant would arise only under the tenancy statutes, and that if the tenant proves to be undesirable, the landlord may lawfully remove the tenant. Consequently, the contention merely shows that the pre‑emption rule does not guarantee every possible benefit it seeks to promote, yet it undeniably secures a substantial portion of those benefits; it would be inaccurate to say that the rule provides none at all.

The Court turned to another issue raised in the appeal. It was asserted that section 10 of the Rewa Act is defective because it accords a preferential right of pre‑emption on the ground of personal relationship. The Court found this interpretation to be mistaken. According to the Court, the purpose of the provision is to confer a right of pre‑emption primarily on the basis of vicinage, together with any additional ground expressly mentioned in the section. Inevitably, the statute may create situations in which several persons—such as co‑owners or owners of adjoining parcels—are entitled to invoke the pre‑emption right under the same provision.

The Court reminded that it was already assuming that the pre‑emption right itself imposes a reasonable restriction on the property‑ownership right. To ensure that a duly enacted statute granting such a right is not rendered ineffective in particular circumstances, the statute must provide a mechanism for determining the order of priority among the competing pre‑emptors. The Court explained that this mechanism is supplied by the proviso to section 10 of the Rewa Act, which stipulates that a person who is more closely related to the vendor shall enjoy a preferential pre‑emptive right over other claimants. The Court clarified that the proviso does not create a separate pre‑emptive right based solely on relationship; rather, it resolves a problem that arises when the primary pre‑emptive right, validly granted on the basis of co‑ownership or vicinage, would otherwise be contested by multiple parties.

The Court described the proviso as a logical corollary of the main pre‑emption right. If the main right is constitutionally sound, then a supplementary provision designed to prevent that right from being defeated should likewise be regarded as valid. Accordingly, the Court concluded that section 10 of the Rewa Act, which confers the right of pre‑emption on the ground of vicinage, is a perfectly valid statutory provision that does not contravene article 19(1)(f) of the Constitution. The proviso, being an integral part of that section, is therefore also valid. This determination resolves the civil aspect of the appeal.

The Court first dealt with Appeal No 270 of 1955 and ordered its dismissal. It then proceeded to consider Civil Appeal No 595 of 1960, which raised questions under the Punjab Pre‑emption Act of 1913. The dispute involved a residential house located in Old Delhi. The provision governing the right of pre‑emption in the case is Section 16 of the Punjab Act, which reads as follows: “The right of pre‑emption in respect of urban immovable property shall vest— firstly, in the co‑sharers in such property, if any; secondly, where the sale is of the site of the building or other structure, in the owners of such building or structure; thirdly, where the sale is of a property having a staircase common to other properties, in the owners of such properties; fourthly, where the sale is of property having a common entrance from the street with other properties, in the owners of such properties; fifthly, where the sale is of a servient property, in the owners of the dominant property, and vice versa; sixthly, in the persons who own immovable property contiguous to the property sold.” The Punjab Act, similarly to the Rewa Act, also contains provisions for giving notice of an intended sale to the person holding a right of pre‑emption, for the loss of that right when the person fails to act on the notice, and for the fixation of a fair price by the court, as set out in Sections 19, 20, 22, 25 and 27 of the Punjab Pre‑emption Act. As observed in the Rewa case, such provisions serve to temper the harshness of the restriction placed upon the seller. In the present proceedings the pre‑emptor based his claim on the first, third, fourth and sixth categories listed in Section 16. The High Court held that the provision did not offend Article 19(1)(f) of the Constitution with respect to the first, third and fourth categories, but that it did offend the same article with respect to the sixth category. The High Court’s judgment is reported in A.I.R. (1958) Punj. 44. The view taken by that judgment on the sixth category was contrary to the Full Bench decision of the same High Court in Uttam Singh v. Kartar Singh (1) and Sardharam v. Haji Abdul (2), the latter case expressly overruling the former view. It is noteworthy that Section 7 of the Punjab Act provides that a right of pre‑emption in respect of urban immovable property in any town, that is, the right contemplated by Section 16, shall exist only if a custom of pre‑emption was already established in that town at the commencement of the Act and not otherwise. (1) A.I.R. (1954) Punj. 55. (2) A.I.R. 1960 Punj. 196. It is evident that in the city of Delhi such a custom of pre‑emption had indeed prevailed; had it not, the issue would have been taken and the case would have been decided against the pre‑emptor. The existence of a customary right of pre‑emption is, therefore, a question of fact that must be determined from the evidence.

In evaluating the facts and examining the record, the Court proceeded on the assumption that a customary right of pre‑emption had existed in Delhi. The Court explained that, if such a custom had been operative, it must have persisted because it was regarded as a reasonable rule despite the limitation it placed on either the vendor or the purchaser. The Court had previously observed that the presence of a customary pre‑emptive right signals that the restriction it imposes is reasonable, and it applied that observation with greater force to the present matter, since the custom was specifically found to exist in the locality under consideration. The Court noted that the pre‑emptive right based on vicinage, which is mentioned in the sixth ground of section 16, had already been examined in the Rewa decision, where the provision of section 16 was held to be a valid piece of legislation for the reasons previously articulated. Having dealt with that ground, the Court turned to the remaining grounds enumerated in section 16.

The first ground confers a right of pre‑emption on a co‑sharer of a property. The Court expressed no doubt that a statute granting such a right imposes a reasonable restriction on the freedom of alienation guaranteed by Article 19(1)(f). Introducing an outsider as a co‑sharer, the Court observed, would likely render common management of the property difficult and could substantially undermine the advantages of ownership. Effective and profitable management, the Court explained, requires a unified policy; when more than one person owns a property, it is essential for the profitable enjoyment of that property that the owners cooperate. Consequently, if the mechanism of pre‑emption based on co‑ownership ultimately results in the property vesting in a single hand, that outcome would constitute a considerable advantage for the owners. The Court further reasoned that a law providing such a benefit to all owners would be in the public interest.

The Court continued that, until the property consolidates in a single owner, it would remain in the hands of two or more persons who have possessed it for many years and have co‑existed peacefully; otherwise, they would have already partitioned it. In a situation where one joint owner departs and the remaining owners are compelled to admit a stranger as a new co‑owner, the Court forewarned that reasonable apprehensions of irritation and mismanagement could arise. When the property involved is a residential house—a class of property that section 16 primarily concerns—the Court emphasized that the admission of an unfamiliar person could create an undesirable and potentially disastrous situation.

The Court listed the advantages of a co‑ownership based pre‑emptive right, noting that it helps avoid the problems associated with introducing strangers into jointly owned residences. The disadvantages, according to the Court, included the limitation on the selling co‑owner’s ability to sell to any chosen buyer or at an inflated price, and the purchaser’s inability to acquire an undivided share of the property. The Court concluded that neither of these disadvantages amounted to a substantial deprivation, and therefore the restriction imposed by the first ground of section 16 was deemed reasonable.

The Court observed that the disadvantage to a selling co‑owner under the first ground of section 16 of the Punjab Act is minor compared with the benefit obtained by the remaining joint owner. Consequently, the Court concluded that the limitation on a co‑owner’s right to dispose of or acquire property imposed by that ground represented a reasonable restriction. The Court further held that the rights created under the third and fourth grounds of the same section were also acceptable and did not violate any principle. Under the third ground, a property owner acquires a pre‑emptive right when a neighboring dwelling that shares a common staircase is offered for sale. The Court explained that where several houses share the same staircase and one of them is sold, the remaining owners would face serious inconvenience. They would be unable to stop a stranger from acquiring the sold portion and thus gaining rights to the shared staircase. Allowing a stranger to acquire such a portion would effectively grant the stranger a right to use the shared staircase, thereby introducing an unwanted occupant into the existing domestic environment. The Court found that the disadvantage created by admitting a stranger far outweighed any benefit that the purchaser might obtain from acquiring the individual unit. The fourth ground confers a pre‑emptive right when any one of several houses that share a common entrance from a public street is proposed to be sold. The Court noted that the public street is common to all owners, and for this ground to apply there must be a shared doorway leading from that street to each of the adjoining properties. This provision therefore relates to situations where owners of adjacent houses are obliged to use a common passage, creating a tightly knit residential community often resembling an extended family. The Court held that a statute granting such co‑owners the option to purchase the selling owner’s share before it passes to an outsider does not impose an unreasonable limitation on any party. In the Court’s view, the benefit enjoyed by a co‑owner exercising the pre‑emptive right significantly outweighs any inconvenience suffered by either the vendor or the external purchaser. Counsel for the appellant submitted that several statutes had progressively eliminated the common law right of pre‑emption, and specifically cited the 1960 Punjab Act which repealed section 16 in its entirety. The 1960 Act replaced the former provision with a rule granting only a tenant the right to pre‑empt the landlord’s property when the landlord intends to sell. However, the Court observed that this amendment had not been extended to Delhi, and consequently the original 1913 Punjab Pre‑emption Act continued to operate within the Delhi territory. Accordingly, the restriction under the first ground was deemed to be a proportionate means of safeguarding communal living arrangements without unduly infringing on the seller’s freedom to transfer his interest. The Court also emphasized that protecting the existing co‑owners’ peaceful enjoyment of the property outweighed any commercial advantage that a purchaser might claim in acquiring a solitary share.

The Court further observed that the legislature’s decision to modify or repeal pre‑emptive provisions in other jurisdictions did not bind the judiciary to deem the surviving provision unreasonable in the present context. Each restriction had to be examined on its own merits, weighing the public interest in orderly residential coexistence against the individual’s right to alienate his property. The Court therefore concluded that the legislative history showing a trend toward abolition of pre‑emptive rights did not prove that the surviving rights in Delhi were unreasonable. Such rights remained compatible with the fundamental right to acquire property. The Court further observed that the legislative history indicating a trend toward abolition of pre‑emptive rights did not demonstrate that such rights, as retained in Delhi, constituted an unreasonable restriction on the fundamental right to acquire property. The Court also noted that the legislature’s decision to modify or repeal pre‑emptive provisions in other jurisdictions did not bind the judiciary to deem the surviving provision unreasonable in the present context.

In discussing the scope of the pre‑emption law, the Court observed that the fact that certain statutes had abolished the right of pre‑emption in various jurisdictions could not be taken as proof that the legislature considered the pre‑emption provision to impose an unreasonable restriction on the rights guaranteed in Article 19(1)(f) of the Constitution. The Court noted that if the legislature had truly believed the restriction to be unreasonable, it would have repealed the Delhi provision, and the continued existence of the law in Delhi indicated that the legislature did not regard it as unreasonable. The Court therefore rejected the argument that legislative silence or selective repeal could resolve the question of reasonableness, stating that such reasoning led nowhere. Instead, the Court said that it must independently assess the reasonableness of the restriction, and that the legislature’s expressed opinion on the matter was of little relevance to that assessment. The Court then turned to the contention that section 16 of the Act infringed Article 14 of the Constitution. It recorded that the objection rested on three points: the absence of a pre‑emption right in respect of agricultural land, the non‑application of the law to areas outside the urban limits of Delhi, and the exemption of shops and katras from its operation. Regarding agricultural land, the Court observed that agricultural land constituted a distinct class of property, separate from urban land, and that the Union Territory of Delhi contained very little agricultural land. With respect to shops and katras, the Court acknowledged that section 5 of the Act expressly exempted them, and it further held that these also formed their own class, different from other properties. A shop, the Court explained, was essentially a business premise, while a katra, though not defined in the Act, was understood from case law—see Karim Ahmed v. Rehmat Alahi (1)—to denote primarily an enclosure used as a market, and secondarily a place that also provided residential accommodation for persons engaged in the shop activities within the katra. The Court reasoned that business premises necessarily involve interaction with strangers, requiring the premises to be open to the public and to serve community needs, and that no special advantage could be claimed from any form of communal living in such premises. Because shops and katras were valuable properties that served distinct commercial functions, the Court concluded that they could be placed in a separate class and did not require the protection of the pre‑emption law in the same way as other properties. For these reasons, the Court found that section 16 of the Act did not violate Article 14 of the Constitution. Consequently, the Court held that the first, third, and fourth grounds upon which a right of pre‑emption was founded under section 16 of the Punjab Act were valid legislation.

The Court held that the first, third, fourth and sixth grounds on which a right of pre‑emption is founded under section sixteen of the Punjab Act constitute valid legislation, and consequently the appeal was dismissed with costs. The Court then turned to the final matter, namely Civil Appeal number four hundred thirty of the year nineteen fifty‑eight, which involved the Berar Land Revenue Code of nineteen twenty‑eight. Chapter fourteen of that Code creates a class of pre‑emptive rights, and the Court indicated that it would presently examine one of those rights. Chapter fourteen comprises sections one hundred seventy‑three through one hundred eighty‑seven, and, like the two statutes previously considered, it contains provisions dealing with the notice of an intended sale, the loss of the pre‑emptive right where such notice is not acted upon, and the determination of a fair price; these matters are set out in sections one hundred seventy‑six, one hundred eighty and one hundred eighty‑two. The Court observed that, as earlier noted, these provisions substantially mitigate the strictness of the restriction that a pre‑emptive right ordinarily imposes on sellers of property. The right is limited to lands that remain unalienated and are held for agricultural purposes, as provided in section one hundred seventy‑four clause two. The right arises when an occupant holding an interest in a Survey Number proposes to sell the whole or any portion of that interest to a stranger, and the right is then extended to the other occupants of the same Survey Number under sections one hundred seventy‑six and one hundred eighty‑two. The Court explained that a Survey Number is defined in section two clause thirteen as a portion of land recognized as such at a revenue survey, for which the area and the land revenue payable are recorded separately under an indicative number in the land records. A subdivision of a Survey Number, according to section two clause twelve, is a portion of a Survey Number for which the area and the land revenue payable are entered separately under an indicative number that is subordinate to the number of the parent Survey Number. Section one hundred eighty‑four provides that when an occupant of a Survey Number exchanges his interest for land elsewhere, such an exchange does not give rise to any pre‑emptive right in favour of the other persons interested in that Survey Number or in any part thereof. Accordingly, the substance of the matter is that the Berar Code creates a pre‑emptive right in the holder of an interest in a Survey Number only when any person possessing an interest in land within that Survey Number sells that interest for monetary consideration to a stranger, provided that the interest sold is in unalienated land held for agricultural purposes. In the case before the Court, the vendor owned subdivision number one in Survey Number two hundred eighty‑five, while the respondents jointly owned subdivision number two in the same Survey Number, and they asserted a claim to pre‑empt the vendor’s sale. There was no dispute that the lands involved were unalienated and used for agriculture. Counsel for the respondents submitted that, under the Berar Code of nineteen twenty‑eight and the previous land statutes it superseded, an occupant is a person who obtains land from the Government in accordance with the terms specified in the Code.

In this case the Court observed that the Berar Code speaks only of occupants as defined in the Code, and that the right of pre‑emption created by the Code applies only against such occupants. The counsel for the respondents argued that, because the right to property was created on the condition that it could be subject to pre‑emption, the right was not a restriction on the property but rather an attribute of the property itself, and therefore there was no infringement of Article 19(1)(f). The Court noted that, since it was inclined to allow the respondents to succeed in their appeal for reasons that would be discussed later, it was unnecessary to rule on that contention. The Court further observed that no material before it showed when the ownership right in the land in dispute was first created; the ownership could have arisen under a law other than the Berar Code or its predecessors, and in that situation the respondent’s argument would lose its principal force. Moreover, the Court said that it had not before it all the earlier land statutes of Berar, and that, given the evidence presently before it, it would not be appropriate to investigate and decide the question raised by the counsel. The Court reiterated that the lands covered by a single survey number are contiguous, and that a right of pre‑emption arises only when an interest in such lands is sold, as provided by the Berar Code. Consequently, the effect of exercising that right is inevitably the consolidation of holdings, which the Court described as being of great benefit to the cultivator and to the community. The Court noted that the problem of fragmentation of agricultural holdings in the country is well known and needs no detailed discussion. In short the Court explained that allowing a cultivator to extend his holdings makes agricultural operations more economical and productive, which benefits the nation as a whole. A law that promotes consolidation therefore has important advantages. The Court referred to the decision in Ramchandra Krishnaji Dhagale v. Janardhan Krishnappa Marwar, a Full Bench judgment of the Nagpur High Court that dealt with pre‑emption under the Berar Code. That Bench, presided over by the present Chief Justice, upheld the validity of the Code’s pre‑emption provisions. Regarding consolidation, Justice Kaushalendra Rao observed that while the Central Provinces had to enact special legislation—the Central Provinces Consolidation of Holdings Act, 1928—to address fragmentation, Berar had not felt the same necessity, presumably because the pre‑emption law already served that purpose. The Court regarded that observation as authoritative and noted that no suggestion had been made that it was unjustified, although it had been said that

The Court observed that the current legislative trend was to fix a ceiling on the amount of land that could be held by any person, and that this trend was presented as indicating that the consolidation of holdings was no longer regarded as desirable. The Court stated that it could not agree with that viewpoint. It explained that the purpose of fixing a ceiling on land holdings was to enable an equitable distribution of the land that was available, while at the same time ensuring that each holding remained economical. In other words, the law prescribing a ceiling was not intended to discourage the consolidation of holdings; rather, it was intended to prevent the undue acquisition of land by persons who possessed the means to do so. The Court noted that Section 184, by providing that no right of pre‑emption would arise on the exchange of lands, clearly disclosed that the object of the Berar Code, as cited in A.I.R. (1955) Nag 225, in providing for the right of pre‑emption, was to achieve consolidation of holdings. The Court further expressed that it was convinced that the benefits arising from consolidation far outweighed any disadvantage that might be caused by the restriction on the right to property guaranteed by Article 19(1)(f) of the Constitution. Consequently, the Court concluded that the provisions contained in Chapter 14 of the Berar Land Revenue Code, which create a right of pre‑emption on the sale of land, were valid and fully within the constitutional framework. Accordingly, the appeal was dismissed with costs. By the Court’s order, in accordance with the majority opinion, Civil Appeal No. 270 of 1955 was allowed without an order as to costs; Civil Appeal No. 27 of 1955 was allowed; and Civil Appeals No. 430 of 1958 and No. 595 of 1960 were dismissed.