PURCHASE OF UNDIVIDED SHARE IN AGRICULTURAL LAND BEFORE PARTITION

One may come across scenarios where agricultural land is jointly held by multiple persons who have either collectively purchased the land or inherited the same as legal heirs of the erstwhile owner/s. In these kind of transactions, an alarming question always lingers in minds of prospective purchasers, “Whether we can purchase undivided share of one of such co-owners without the consent of the other co-owners?” In this article we attempt to reflect upon this vexed question and present the legal position governing such transactions.

To begin with reference should be made to Section 44 of the Transfer of Property Act, 1882 which deals with ‘transfer by one co-owner’. Plain reading of section 44 suggests that as such there is no legal embargo restricting a co-owner from selling his undivided share without consent of the other co-owners. But it may be noted that in such cases since no legal partition has been effected, it is not practically possible to handover possession to the purchaser as his share can’t be properly demarcated. Let us elucidate this with an example:

Suppose Mr. A and Mr. B each hold 50% undivided share in land which is not partitioned by them and are enjoying common possession thereof. Say the eastern half of the land has direct access to highway alongwith fertile soil whereas the western half is barren, rocky and uneven. In given circumstances if Mr. A sells his 50% undivided share in favour of Mr. C then will it be logical for Mr. C to receive possession of the more valuable eastern half of land without Mr. B’s consent. The answer will be an obvious no. Similar situation was addressed by the Apex Court in Ramdas v/s. Sitabai & Ors (Supra) AIR 2009 SC 2735 where under paragraph No. 17 it was laid down that:

“There could be no dispute with regard to the fact that an undivided share of co-sharer may be a subject matter of sale, but possession cannot be handed over to the vendee unless the property is partitioned by metes and bounds amicably and through mutual settlement or by a decree of the Court.”

Further concurrent views were maintained by the Bombay High Court in Suresh Babu Patil v/s. State of Mahrashtra & Ors. MANU/MH/2560/2016 where under paragraph No. 4 Justice Smt. Mridula Bhatkar observed that:

“Without there being any physical formal partition of an undivded landed property, a co-sharer cannot put a vendee in possession although such a co-sharer may have right to transfer his undivided share.”

One might wonder whether co-owner solely in possession of some specific portion of the land can handover the same to the purchaser without consent from other co-owners. This issue was dealt by the Punjab & Haryana High Court in Bhartu v/s. Ram Sarup (1981)ILR 3 P&H 356 wherein the Full Bench observed as under:

“What transferee gets is the right of the transferor to joint possession and to enforce a partition of the same irrespective of the fact whether the property sold is fractional share or specified portion, exclusively in possession of the transferor. Again, it cannot be disputed that when a co-sharer is in exclusive possession of the specified portion of the joint holding, he is in possession thereof as a co-sharer and all the other co-sharers continue to be in its constructive possession. By the transfer of that land by one co-owner, can it be said that other co-sharers cease to be co-sharers in that land or to be in its constructive possession. The answer obviously would be in the negative.”

Recently Gwalior Bench of Madhya Pradesh High Court reaffirmed the above caselaw in Parmal Singh v/s. Ghanshyam & Ors. AIR 2019 MP 131 where under paragraph No. 13 it was held:

“It is well established principle of law that unless and until the property is partitioned, the co-sharer can only sell to the extent of his share, but he cannot sell any specific portion of the land.”

Thus to put things into perspective if Mr. A and Mr. B jointly hold 99 Acres and 1 Acre out of total 100 Acres respectively, then even if Mr. A sells his 99 Acres to Mr. C, the legal possession of such 99 Acres can’t be handed over to Mr. C without formal partition been effected.

The statutory procedure for amicable partition of land in Maharashtra has been provided under Section 85 of the Maharashtra Land Revenue Code, 1966 read with the Maharashtra Land Revenue (Partition of Holding) Rules, 1967. Whereas suits for partition are governed by various provisions of Civil Procedure Code, 1908.

Additionally in case of Hindus, if immovable property has been inherited by two or more class I heirs then provisions of Section 22 of Hindu Succession Act, 1956 become applicable. Section 22(1) states that:

“Where, after the commencement of this Act, an interest in any immovable property of an intestate, or in any business carried on by him or her, whether solely or in conjunction with others, devolves upon two or more heirs specified in class I of the Schedule, and any one of such heirs proposes to transfer his or her interest in the property or business, the other heirs shall have a preferential right to acquire the interest proposed to be transferred.”

The preferential right under section 22 is akin what is commonly termed as ‘right of pre-emption’ for which limitation is one year from physical possession been taken over by the purchaser as provided under Article 97 under Schedule to the Limitation Act, 1963. Right to pre-emption means the preferential right of co-owners to purchase share of the other co-owner should he decide to sell it. Section 22 exclusively applies in case legal heirs of previous owner/s and not when co-owners have jointly purchased the property. Essence of section 22 has been explained in Nagammal and Ors. vs. Nanjammal and Ors. (1970 )1MLJ 358 in following words:

“In the, light of the foregoing discussion it follows that the right of a person to transfer his interest in property inherited along with other Class I heirs is subject to the preferential right of his co-heirs to take the transfer, and that any transfer in derogation of that right would be voidable at the instance of the co-heirs, who are denied their preferential right.”

It must be ensured that the other class-I heirs are informed, preferably in writing, about the proposed transaction else the transaction can be avoided by other heirs under section 22. The same position of law was embossed by the Orissa High Court in Ganesh Chandra Pradhan vs Rukmani Mohanty And Ors. 36 (1970) CUT 988 which states that:

“The transferor heir must propose or notify his intention to transfer to the other class I co-heirs and a transfer made without following that procedure would be vulnerable even after it is completed on proof by the co-heir who has the preferential right that the transfer was made without notice of the proposal of transfer to him.”

There have been cases where question was raised as to whether section 22 can be invoked only prior to the sale or even after the sale is complete. The question is no more res integra in light of Arati Das v/s. Smt. Bharati Sarkar and Ors. AIR 2009 Cal 9 where paragraph No. 16 stated:

“Our considerate view is that even if the transfer has taken place, the right of the pre-emptor under this section is not lost. It is absurd to suggest that the right conferred upon an heir as provided in Sub-section 1 of Section 22 can be frustrated by merely completing the transfer without disclosing the intention of the transfer to the persons who have the right of pre-emption.”

There was gordian’s knot regarding applicability of section 22 in case of agricultural lands which was brought to dictum on number of occasions. Several High Courts including Bombay High Court in matter of Tukaram Genba Jadhav & Ors. v/s. Laxman Genba Jadhav & Anr. 1994 MhLJ 991 held that section 22 is also applicable to agricultural lands. The same proposition was however held in negative by High Courts of Punjab & Haryana, Allahabad, Madhya Pradesh and Rajasthan. There was blatant disagreement in stance held by various High Courts on this issue. But fortunately Supreme Court in recent case of Babu Ram v/s. Santokh Singh & Ors. AIR 2019 SC 1506 while answering this substantive question of law sided with the Bombay High Court and concluded that:

“The preferential right given to an heir of a Hindu under Section 22 of the Act is applicable even if the property in question is an agricultural land. In the end, we must also declare that various decisions of the High Courts, some of which are referred to above, which have held contrary to what we have concluded, stand overruled.”

Before parting, it must be noted that in Maharashtra the restriction under section 8 of Maharashtra Prevention of Fragmentation and Consolidation of Holdings Act, 1947 cannot be disregarded while selling undivided share in agricultural land i.e. transaction must not result in creation of fragments (tukdas) or else such sale will be in contravention of the above Act. Furthermore, if undivided share in house property is sold to some stranger then section 4 of the Partition Act, 1893 will also come into play. Section 4 provides that if some stranger purchases undivided share from co-owner in house property and seeks partition of the same then the court will give an option to other family members (being co-owners) to purchase such share from the stranger at valuation fixed by the court. The rationale here is to ensure that as far as possible strangers must not be allowed common possession of a house property with other persons belonging to one family.