Landmark Judgement on Sale of Ancestral Property

Landmark Judgement on Sale of Ancestral Property

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Landmark Judgement on Sale of Ancestral Property
Landmark Judgement on Sale of Ancestral Property

Introduction 

Property disputes are common in our country. Disputes related to the ancestral property are even more complex. The concept of ancestral property exists only in Hindu Law and is governed by the Hindu Succession Act, 1956 (“the Act”). One of the most vexing questions under the Hindu Law is whether, in the presence of two or more heirs, can any one of them sell his/her share of the ancestral property to a third person, or can they sell the property without the permission of other legal heir or can they give their share of the property to other legal heir or can the legal heir restrain the other legal heir from selling the ancestral property to a third person by approaching the court? We will discuss these questions below with the help of a landmark judgment of The Supreme Court of India.

Types of property in India

There are two types of property that a person can acquire in India:

  • Self-acquired Property

Self-acquired property is the type of property that a person earns in his lifetime like purchased property from his own money, a property received through a gift deed, will, or transfer deed. The ancestral property, after being divided, will also be self-acquired. 

  • Ancestral Property

Ancestral property is an undivided property in which four or more generations of a single family have their share. All 4 generations must be alive at the same time. If the 4th generation example you were born after the death of your great grandfather, then you won’t have any right over the ancestral property.

Landmark Judgement of Babu Ram vs Santokh Singh (deceased)

In the case of Babu Ram vs Santokh Singh a very important issue was decided by the Hon’ble Supreme Court of India on 7th March 2019, can a legal heir sell his/her share of the ancestral property to a third person without informing or offering the property to the other legal heir of the ancestral property.

Brief facts of the case:

  1. Two brothers, Santokh Singh and Nathu Ram inherited, among others, 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 gave a legal notice to Santokh Singh and later executed a registered sale deed on 19.8.1991 in respect of his interest in the lands in favor of Babu Ram.
  2. Aggrieved by the sale of the ancestral property to a third person Santokh Singh approached the District Civil Court in his jurisdiction under Section 22 of the Act claiming that he had a preferential right in context to the sold ancestral property and his brother is not liable to sell the same without offering him to buy the property first. But the trial court dismissed the same. Subsequently, Santokh Singh filed the first appeal in the District Judge Court against the decree of the Trial Court, and the said appeal was allowed.
  3. Aggrieved by the decision of the District Court Babu Ram who had bought the property approached the Hon’ble High Court by filing a second appeal objecting that why is it necessary to ask the other legal heir before the sale of the ancestral property to a third person. But the same was dismissed and finally aggrieved by the order of the Hon’ble High Court, Babu Ram approached the Hon’ble Supreme Court, raising the same issue.
  4. The Hon’ble Supreme Court emphasized Section 22 of the Act for deciding the dispute under consideration. The relevant portion of the Section is mentioned below:

Section 22:

Preferential right to acquire property in certain cases —

(1) 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.

(2) The consideration for which any interest in the property of the deceased may be transferred under this section shall, in the absence of any agreement between the parties, be determined by the court on the application being made to it on this behalf, and if any person proposing to acquire the interest is not willing to acquire it for the consideration so determined, such person shall be liable to pay all costs of or incident to the application.

(3) If there are two or more heirs specified in class I of the Schedule proposing to acquire any interest under this section, that heir who offers the highest consideration for the transfer shall be preferred. Explanation.—In this section, “court” means the court within the limits of whose jurisdiction the immovable property is situated or the business is carried on and includes any other court which the State Government may, by notification in the Official Gazette, specify in this behalf.

Therefore, the Hon’ble Supreme Court decided the case in favor of Santokh Singh stating that the sale of the property to Babu Ram was not valid as it was the duty of Nathu Ram based on the preferential right of his brother Santokh Singh under Section 22 (1) of the Act about the ancestral property to offer the property firstly to Santokh Singh and in case he refused to buy the same then Nathu Singh was allowed to sell it to a third person.

Now the question arises how will the consideration be decided between the brothers/sisters for the sale of the property from one legal heir to another? This is explained in Section 22 (2) of the Act which mentions that the consideration can be mutually decided between the legal heirs and if they do not arrive at a mutual decision, then they can approach the civil court in their concerning jurisdiction and the court will then decide on their behalf.

Further, when there are two legal heirs offering consideration to buy the share of the ancestral property of the third legal heir then Section 22 (3) of the Act is invoked which says that the property will be sold to that legal heir who is willing to pay more consideration than the other heir.

Conclusion

To sum up, the concept of “ancestral” property is vast and complex, and any person who is a shareholder in an ancestral property and aggrieved by the sale of the share of the ancestral property of another legal heir can file suit in District Civil Court for “Cancellation of Sale Deed” for claiming his/her preferential right to the ancestral property under Section 22 of the Act when the other legal heir tries to sell the property to a third person without offering or taking permission to sell off the property from the other legal shareholders of the ancestral property.

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