By Esha Malik, Advocate
firstname.lastname@example.org | April, 17 2021
In a recent judgement delivered by the Hon’ble High Court at Calcutta in Prabitra Kumar Maity v. Shyamali Manna and Others, an interesting, important and significant question arose for the consideration of the Hon’ble Court “whether a gift of immovable property made to a stranger to the exclusion of the other heirs of Class I of the Schedule can be regarded as a Transfer under Section 22 of the Hindu Succession Act, 1956? (“the said Act”).
The aforesaid judgement emphasizes the preferential right under Section 22 of the said Act to acquire property in certain cases where 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 undisputed and controverted facts are that the Plaintiff/Appellant filed composite suit for declaration, permanent injunction and preferential rights to acquire the property which was gifted by Defendant No. 2 in favour of Defendant No. 1 without any consideration and out of sheer love and affection.
While dealing with this point, the Hon’ble Court made it aptly clear that for a Gift to be valid, there must exist essential characteristics namely: (i) made voluntarily; and (ii) without consideration. On the other hand, section 22 of the said Act provides for a preferential right to acquire immovable property in certain cases and such preferential right is confined to the heirs specified in Class I of the Schedule of the said Act. Further, section 22 of the said Act is unambiguous and the interpretation adopted by the Hon’ble Court is to uplift the legislative intent recognizing a right of pre-emption in favour of all heirs of Class I and more particularly providing that if a person dies intestate and his interest devolves upon his heirs specified in Class I of the Schedule and if anyone of the heirs proposes to transfer his interest in the property, the other heirs within the said class have a preferential right to acquire such interest, which immediately gets activated the moment one of the heir specified in Class I of the Schedule proposes to transfer his undivided interest in immovable property or a business carried on by the predecessor to other person other than the heirs specified in Class I of the Schedule. The Hon’ble Court also conjunctively considered the expression “proposes to transfer” materially emphasizing that a concluded transfer cannot take away such a preferential right of pre-emption as created in favour of the other heirs of Class I and can be certainly impugned even after its finality unless the same is in compliance of section 22 of the said Act. Similarly, the Hon’ble Court also projected that a duty is cast upon the proposed transferor not to embark upon its journey for transferring his undivided share in the property to an outsider without first offering his share to the other co-sharer, inter alia in violation of section 22 of the said Act.
While deciding the above, the Hon’ble Court also considered the expression “Transfer” of the Transfer of Property Act, 1872?.
The word “Transfer”, being of a wider import includes sale, exchange, mortgage, gift and lease, being the usual modes of transfer under the Transfer of Property Act as also by way of trust. The main object being to prevent the heirs other than transferor from being compelled to be in joint possession/enjoyment of property or business with a stranger or other person whom they do not wish to associate themselves. Therefore, it would be proper to include “Gift” being made voluntarily and without consideration and gifted out of love and affection to a stranger as a “transfer”. With regards to concluded transfer, if the transfer has been affected without knowledge of the other co-heir, there is no restriction under section 22 of the said Act and the heir can impugn such concluded transfer by invoking the preferential right enshrined under section 22 of the said Act.
In the given case, the co-heir has in gross violation of section 22 of the said Act gifted the said property to a stranger without exercising right of pre-emption/preferential right of the other co-sharer coming in Class I of the Schedule of the said Act and therefore such a Gift being a transfer comes within the ambit of section 22 of the said Act and therefore, the heir of Class I of the Schedule of the said Act is entitled to a preferential right.