Preferential Right under Section 22 of Hindu Succession Act applicable even to Agricultural Land, Supreme Court

The Supreme has held that the preferential right given to an heir of a Hindu under Section 22 of the Hindu Succession Act, 1956 is applicable even if the property in question is agricultural land..The judgment was delivered by a Bench of Justices UU Lalit and MR Shah in an appeal filed against a judgment of the Himachal Pradesh High Court..Facts.Two brothers, namely, Santokh Singh and Nathu Ram, inherited, certain agricultural lands after the death of their father. According to Santokh Singh, an arrangement was arrived at, in terms of which the brothers were to be in separate enjoyment of certain specified pieces of land..Since Nathu Ram was not interested in continuing with the said arrangement he sent a legal notice to Santokh Singh and executed a registered sale deed in respect of his interest in the lands in favour of one Babu Ram..Soon thereafter, a Civil Suit was filed by Santokh Singh in the Court of Senior Sub-Judge, Hamirpur praying for permanent prohibitory injunction and declaration. It was inter alia submitted that as a co-sharer, Santokh Singh had a preferential right to acquire the land which was sought to be transferred by Nathu Ram in favour of Babu Ram..The suit was contested and the trial court dismissed said suit in 1994..Aggrieved, the plaintiff, Santokh Singh filed an appeal in the Court of District Judge, Hamirpur. The appeal was partly allowed..The Appellate Court placed reliance on the decisions reported in AIR 2000 Madras 516 and AIR 1988 Orissa 285 and held that the Plaintiff had a preferential right under Section 22 of the Act to acquire the half of the suit land. It, therefore, set aside the transfer of suit land by Nathu Ram in favour of Babu Ram..An appeal was filed before the Himachal Pradesh High Court by Defendant no. 2, Babu Ram. The High Court dismissed the same relying on its own judgment in Roshan Lal v. Pritam Singh..This led to the appeal in Supreme Court..The issue.The issue before the Supreme Court pertained to the scope and applicability of Section 22 of the Hindu Succession Act, 1956, particularly, whether a preferential right given to an heir of a Hindu under said Section 22 will be inapplicable if the property in question is agricultural land..The judgment.The Supreme Court traced the position as it existed before the enactment of the Hindu Succession Act, 1956..The Court also noted the decisions rendered by various High Courts with respect to the scope of Section 22 and observed that divergent views were given by different High Courts..While some High Courts have held that the provisions of Section 22 of the Act would apply to agricultural lands and in the process have followed the reasoning that weighed with the Orissa High Court in Laxmi Debi v. Surendra Kumar Panda and Ors. [(AIR 1957 Orissa 1)], some High Courts have held to the contrary and have followed the decisions of the Punjab High Court in Jaswant and ors. vs. Smt. Basanti Devi [(1970 Punjab Law Reporter Vol. 72 page No. 958)] and of the Allahabad High Court in Prema Devi vs. Joint Director of Consolidation (Headquarter) at Gorakhpur Camp and Ors. [(AIR 1970 Allahabad 238)]..Before independence, when the Federal Court was called upon to consider the matter, Entry 21 of List II of the Government of India Act, 1935 had inter alia dealt with “transfer, alienation and devolution of agricultural land”..It was in the exclusive domain of the provincial legislatures. The idea that the provincial legislatures were alone entitled to deal with matters relating to “transfer, alienation and devolution of agricultural land” was again made clear in Entry 7 of List III by expression “…succession, save as regards agricultural land” which dealt with concurrent powers..The provincial legislature had thus exclusive competence with regard to transfer, alienation and devolution of agricultural land. In the circumstances, the Federal Court had answered the first question that the provisions of Hindu Women’s Rights to Property Act, 1937 and Hindu Women’s Property (Amendment) Act, 1938 would not regulate succession to agricultural lands in the provinces..But this situation underwent a considerable change after the Constitution of India, was adopted, the Supreme Court noted. The following were those changes:.(i) The subjects “Transfer, alienation of agricultural land” are retained in the State List in the form of Entry 18 but the subject “devolution” was taken out..(ii) As against earlier Entry 7 of List III where the subject, “succession” came with express qualification, “…save as regards agricultural land”, that qualification is now conspicuously absent in comparable Entry 5 in the present List III. The expression in Entry 5 today is “…intestacy and succession”.Thus, the Court said that the present Entry 5 of List III shows “succession” in its fullest sense to be a topic in the Concurrent List. The concept of succession will take within its fold testamentary as well as intestate succession..Therefore, the Court stated that when it comes to “transfer, alienation of agricultural land” which are transfers inter vivos, the competence under Entry 18 of List II is with the State legislatures but when it comes to “intestacy and succession” which are essentially transfers by operation of law as per law applicable to the person upon whose death the succession is to open, both the Union as well as State Legislatures are competent to deal with the topic..Hence, the Court said that matter will have to be dealt with as per the principles of Article 254 which deals with inconsistency between laws made by Parliament and laws made by the Legislatures..In the instant case, there was no dispute that field is occupied only by Section 22 of the Hindu Succession Act with respect to State of Himachal Pradesh..“…it is nobody’s case that the matter relating to succession to an interest in agricultural lands is in any way dealt with by any State legislation operating in the State of Himachal Pradesh or that such legislation must prevail in accordance with the principles under Article 254 of the Constitution of India.”.Thus, the Supreme Court held that the High Court was, “absolutely right” in holding that Section 22 of the Act would operate in respect of succession to agricultural lands in the State..The Court then considered the next question – even if Section 22 was to apply whether the preferential right could be enjoyed by one or more of the heirs?.This issue arose because the “right in or over land, land tenures …..” are within the exclusive competence of the State legislatures as per Entry 18 of List II of the Constitution..Pre-emption laws enacted by State legislatures are examples where preferential rights have been conferred upon certain categories and classes of holders in cases of certain transfers of agricultural lands. Whether conferring a preferential right by Section 22 would be consistent with the basic idea and principles was the question..The Court said that Section 22 would step in even in such cases when persons have inherited an agricultural holding and one of them was desirous of disposing of his or her interest in the holding..The reason was that the source of title or interest of any of the heirs is purely through the succession which is recognized in terms of the provisions of the Act..Since the right or interest itself is conferred by the provisions of the Act, the manner in which said right can be exercised has also been specified in the very same legislation..Therefore, the content of preferential right cannot be disassociated from the principles of succession. They are both part of the same concept, the Court held..“When the Parliament thought of conferring the rights of succession in respect of various properties including agricultural holdings, it put a qualification on the right to transfer to an outsider and gave preferential rights to the other heirs with a designed object……Since the right itself in certain cases was created for the first time by the provisions of the Act, it was thought fit to put a qualification so that the properties belonging to the family would be held within the family, to the extent possible and no outsider would easily be planted in the family properties. .In our view, it is with this objective that a preferential right was conferred upon the remaining heirs, in case any of the heirs was desirous of transferring his interest in the property that he received by way of succession under the Act.”.The Court, therefore, held 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 agricultural land..The Court also held that all the High Court judgments which have laid down law to the contrary stand overruled..Advocate Sanchar Anand appeared for the appellant while advocate Ranjan Mukherjee appeared for heirs of Respondent No.1 – Plaintiff..Read the judgment below.