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“THE LIMITATION ACT, 1963, VIS-A-VIS SECTION 22 OF THE HINDU SUCCESSION ACT, 1956”

 

By: C.S. Raghu Raman, Senior Lecturer, Pendekanti Law College, Himayt Nagar, Hyderabad – 500 029.

 

 

In this legal notes, I wish to critically examine the legal provisions of the Limitation Act, 1963 (hereinafter referred to as ‘LT Act’ in this regard) which are applicable in bringing forwards a suit and/or an application by a Class I Legal Hair for claiming the legal right to acquire any interest in immovable property under Pre-Emptive/Preferential Rights given in S. 22 of the Hindu Succession Act, 1956 (hereinafter referring to as ‘The Act’ in this regard) from any other Class 1 legal heirs of the Joint Hindu Family who are intested in transferring their shares in such property not to the claimant but to outside purchasers.

 

  The full text of S.22 is as follows:-

Section 22 Preferential Right to Acquire Property in Certain Cases:

 

1)  Where, after the commencement of the Act, an interest in any immovable property of an intestate, or in any business can on by him or her, whether solely or in a junction with others, devolves upon two more heirs specified in Class I of the Schedule, and any of the such heirs proposed transfer his or her interest in the property or business, the other heirs, shall have preferential right to acquire the interest proposed to be transferred. 

 

2)  the consideration for which any interest in the property of the deceased to be transferred under this section shall be absence of any agreement between the parties, be determined by the Court on application being made to it is 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 situate 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. 

 

I can locate only one ruling of the Calcutta High Court in Tarak Dash Ghosh1 appeal regarding the application of L.T. Act, 1963 to any claim brought under S. 22 of the Act. 

 

The respondent argued that the application under S. 22 (2) of the Act was filed beyond the period of limitation but the appellant argued that it was not so.2

 

In the lower Court, the Sub-Judge declared that as “the right given in S. 22 was a right of PRE-EMPTION” he was inclined to apply “Article 97 of L.T. Act, 1963” in giving his order that “the application was filed beyond the period of limitation”3 in dismissing the claim.

 

But in the 1st appeal, the Dist. Judge has declared that “as it was a preferential right to acquire property in certain4 cases” he has applied “Article 137 of L.T. Act, 1963” to declare that “the application was not filed beyond the period of limitation5 in allowing the appeal.

 

Hon’ble Justice Sri J.D Chakravarti in High Court confirmed the order of Sub-Judge. his Lordship said that “the right in question is a right of pre-emption when one or several persons on whom an interest in any immovable property devolves on teh death of a person dying intestate as heirs specified in class I and when any one of such heirs proposes to transfer his or her interest in the property, the other heirs are given a preferential right to acquire the interest proposed to be transferred. Here the right in question is one enabling a person to purchase the property in preference to others”6.

 

Therefore the respondent was successful in his argument that Art. 97 of Lim. Act, 1963 has to be applied to the facts of this case. 

 

The Sub-Judge applied Art. 977 as “it applies to enforce a right of pre-emption whether the right is founded in law or general usage or on special contract” in coming to his decision. The High court too came to the same opinion. 

 

Article 97 gives “one year” as the period of limitation in bringing legal claims before Court.

 

On the other hand, the Dist. Judge “appeared to have been influenced by the Title to S. 22 and thought it was a Preferential Right but not Pre-emptive Right” to go in for Art. 137 in coming8 to his decision.

 

It appears to me that Dist. Judge “applied Art, 137 because it was an application9 submitted by appellant” as this article prescribes a different period of limitation for filing other applications.

 

A longer period of “3 years” is prescribed in Art. 137 of Lim. Act, 1963.

 

Which of these two articles shall apply to proceedings brought under S. 22 of the Act is a very important point. 

 

Is it a Pre-Emptive or Preferential Right is also another point having legal nexus with the above point. 

 

The High Court also appeared to be some what unsure “as the Court started with a declartion that it is a right of pre-emption but came down to the opinion that “it is preferential right to acquire property in preference to others.”

 

Then what exactly was the nature of this right. 

 

When an application is filed by a legal heir under S. 22 (2) to make a request to the Court to fix the amount of consideration on failure of efforts to fix the consideration by mutual agreement10, then it may be argued that Art. 137 can be invoked as this article speaks about other applications to find out whether it was submitted within the period of limitation.

 

But the period of 3 years prescribed in Art. 137 is unreasonably a very long period in the above circumstances. 

 

The legal heir who wants to transfer his share had to wait for 3 years whether an application may be submitted under this section or not.

 

Then coming to S. 22 (1) of the Act, it may be argued that it is Art. 9711 that has to be applied as it was a “suit” that has to be instituted under this sub-section.

 

Careful observation reveals that in almost all the appeals that were brought under S. 22 before different High Courts,12 the main issue happened to be regarding the availability of the right to claim back the property already transferred to outside purchasers13 in contravention of S. 22 of the Act. 

 

These claims are put forward after the third parties have entered into the picture by purchasing these properties.

 

Therefore it can be argued that a short period of limitation in bringing the claim shall be prescribed by invoking Art. 97 of Lim. Act, 1963. The longer the period, the more the danger that the property may change hands by further transfers. 

 

Then coming to Art. 137. this happened to be the last article in Lim. Act, 1963, and it can be invoked only when no specific period of limitation is prescribed inany of the preceding articles for claiming any other legal claims or rights, for which no specific provision is found, only through submission of applications. 

 

There is one more important issue associated with the above points. The declaration that a contract in violation of S. 22 is only ‘voidable’ but  not ‘void’ also tells us that “such a contract can be rescinded within a 3 years 14 period” to come out of it.

 

Hon’bel Justice Sri V. Balakrishna Eradi15 and Sri George Vadakkel have declared that “there is nothing in the said section which warrants an alienation effected in contravention of the provisions being regarded as void. Such an alienation will, at best, be only voidable at the instance of the sharer who institutes the suit for enforcement of his right under sub-section (1) and subject to the said limited contingency the sale will be operative and binding.”

 

Mrs. M. Sharma, Hon’ble Judge of the Gauhati High Court16 also held that “when an application is filed unde S. 22 after the transfer is effected the proper remedy is a separate suit to set aside the sale, as the sale is a voidable at the instance of the heirs.17”

 

Hon’ble Justice Sri R.N. Misra of the Orissa High Court18 also appeared to come to the same opinion when he said that “the transferor heir must propose or not his intention to transfer to the other Class heirs and a transfer made without following that procedure would be vulnerable19 error after it is completed on proof by the co-heirs who has the preferential right that the transfer was made without notice of proposal of transfer to him.”20

 

These 3 judgments referred above bring forth a separate category of ‘voidable contract’ and this will not come under the regular voidable contract’ as found and explain in the general principles of law of contracts. 

 

Section 2 (i) of the Indian Contract Act 1872 gives us the definition of VOIDABLE CONTRACT.

 

Section 2 (i) An agreement which is a forceable by law at the opinion of one or more of the parties thereto, but not at the opera of the others, is a voidable contract.

 

Under what circumstances a contract to be declared to be voidable contract is explained in Ss. 19. 19-A of the Indian Contract Act, 1872.

 

  Section 19 “When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party when consent was so caused.’21

 

Section 19-A When consent to an agreement is caused by undue influence, an agreement is a contract voidable at the conation of the party whose consent was a caused.”22

 

The most important distinction between Ss. 19, 19-A of Contract Act, 1872 and 22 of the Act was that “a contract fails under both the former sections will be declared as voidable only when consent of the parties to the agreement was not free since it was given under coercion,24 under influence,25 misrepresentation26 or fraud practised by the opposite party to the agreement.

 

Therefore the party whose consent is the free has legal right to avoid the contract initiating measures for rescission of the contract.

 

But “a contract between transferor heir and outside purchaser though in contravention of S. 22 does have free consent28 of both parties because they have willingly entered into the agreement and neither of them comes forward to rescind the agreement. 

 

Naturally the remaining legal heirs, though strangers to the above agreement, but interested in acquiring the property already transferred, may come forward to see that the contract is set aside by exercising the right given in S. 22 of the Act.

 

In view of above position, what could be the ideal period of limitation that can be prescribed for setting aside the contract of the made in contravention of S. 22 of the Act is very important point.

 

Shall we give a longer period of 3 years of a short period of 1 years as given in two different articles of the Limitation Act,1 963?

 

Or shall we say that it shall be a reasonable period as explained in the general principles of law of contracts and leave it to the Courts.

 

I think that 1 year is more than sufficient as challenge the agreement made in contravention of S. 22 of the Act.

 

An opportunity has to come to the Apex Court to announce a judicial ruling on this point or the legislature shall introduce suitable amendment to S. 22 of the Act.

 

Finally can a transferor heir, who has countarily entered into the agreement with misider avoid it since it was declared to be voidable contract by claiming the right to do so under the principles of the law of contracts.

 

I think definitely not. When any legal heir has willingly entered into an agreement, he or she cannot take advantage of Ss. 19, 19-A of the Indian Contract Act, 1872,29

 

His or her only hope in avoiding the agreement is to wait until the other legal heir instituting a suit for the cancellation of the contract by coming to his or her rescue. 

 

Of course, if he or she can prove that the agreement was a result of coercion, undue influence etc. practised on him or her, then the Court may help in avoiding the agreement. Otherwise it is binding on the transferor heir. 

 

Towards the end of this article, I want to suggest the following amendments to S. 22 of the Act.

 

A new sub-section(4) can be brought into force:

 

“Notwithstanding anything contained in the Limitation Act, 1963.

 

Section 22 (4) – Any suit or application under S. 22 (1) or S. 22(1)  or S. 22(2), as the case may be, with an additional prayer to fix the amount of consideration for the property in the suit itself or to a claim to get back the property in the aplication itself, shall be instituted within 1 year from the date of coming into force of the legal rights given in both sub-sections of S. 22. 

 

Explanation:- A right to file a suit shall be deemed to have came into existence on the date when knowledge of the sale of property made to an outside purchaser in contravention of this section has come to the notice of plaintiff. 

 

Explanation:- The legal right to file an application to request the Court to fix the amount of consideration for the property shall be deemed to have come into existence on the date of failure of efforts to fix the consideration by mutual agreement. 

 

These two explanation will be given serial Nos.2 and 3 while the explanation already in the section will be known as Explantion 1. 

 

References

1. Tarak Das Ghosh v Sunil Kumar Ghosh, AIR 1980 Cal 53,.

2. The brief fact were that on the death of Sri Bhushan Ghosh, his properties devolved on his widow i.e., opposite partgy 4, his daughters i.e., opposite parties 5 to 8 and also on his son, Tarak Das, the present appellant Sri Tarak challenged the transfer of propertyby his mother and his sisters i.e. opposite parties 4 to 6 to outside purchasers i.e. opposite parties 1, 2, 3 respectively, by claiming the preferential right given in this section.

3. Ref. para 7 at page 55.

4. See the Title to S. 22 of the Act.

5. Ref. Paras 5, 7 at pages 54, 55.

6. Ref. Para 8 at page 55. 

7. This article is in Part IX in the 1st Division of the Limitation Act, 1963.

8. Article 137 is in Part II in the IIIrd Division of the Limitation Act, 1963.

9. “Other applications” is the heading given to Art, 137 of L.T. Act, 1963.

10. Ref. sub-section (2) of S. 22 of the Act.

11. Article 97 of L.T. act, 1963 has the heading “suits relating to miscellaneous matters.”

12. Ref. to judgments in the appeals of (a) Mrs. Nagammal (1970) 1 mad LJ 358. (b) Mrs. Sree Devi Amma. AIR 1976 Ker 19: (c) Sri Ganesh Chandra, AIR 1971 Ori 65; (d) Mrs. ghewarwala Jain, AIR 1981 Madh Pra 250: (e) Murlidhar Das, AIR 1986 Ori 119: (f) Dwijabrata Das, AIR 1994 Gau 88: 9g) Mrs. Kamala Kumari, AIR 1998 Ori 196: and (h) P. Srinivasa Murthy, AIR 2000 Mad 516 (eight judgments).

13. It is rather surprising that none of these transferor heirs, baring few are willing to transfer their shares in the properties to the other legal heirs in the joint family. the legal heir believes that he or she may not get good price for the property if it is sold to close relatives in the family rather than to outsiders, appears to be the most obvious reason for taking this step. 

14. Ref. S. 27 of the Specific Relief Act, 1963 and Art. 59 of L.T. Act. 1963.

15. Ref. Sree Devi Amma v. Subhadradevi, AIR, 1976 Ker 19 (DB) at para 9 at pages 21, 22. 

16. Sri Dwijabrata Das v. Debabrata Das AIR 1994 Gau 88.

17. Ref. para 19 of page 93.

18. Ganesh Chandra Pradhan v. Rukmini Mohanty, AIR 1971 Ori 65.

19. His Lordship instead of using the word ‘voidable’ has used the word generable’ to speak up his opinion to the agreement. 

20. Ref. para 14 at page 70.

21. the 2nd para of S. 19 is not release for this article.

22. The 2nd para of S. 19-A is not release for this article.

23. For definition of ‘free consent’ Rule 14 of the Indian Contract Act, 1872.

24. Ref. S. 15 of the Indian Contract Act 1872.

25. Ref. S. 16 of the Indian Contract Act, 1872.

26. Ref. S. 18 of the Indian Contract Act 1872.

27. Ref. S. 17 of the Indian Contract Act 1872.

28. What is ‘consent is defined in the Indian Contract Act, 1872.

29. It is very much doubtful whether the general principles of the law of contracts are applicable to an agreement made in contravention of S. 22 of the act. 

 

 

 

 

 

 

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