Judgment:
- 1 - WP No.21118 of 2021 R IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE24H DAY OF MAY, 2023 BEFORE THE HON'BLE MR JUSTICE SREENIVAS HARISH KUMAR WRIT PETITION No.21118 OF2021(GM-CPC) Between:
1. . Mukunda Rao S/o. Shekoji Rao, Aged about 51 years, R/o. Kerebeeranahalli Village, Bhadravathi Taluk-577245 Shivamogga District. 2 . Venkatesh Rao S/o. Shekoji Rao, Aged about 49 years, R/o. Old Kodihalli, Bhadravathi Taluk-577245 Shivamogga District. ...Petitioners (By Sri S.B.Halli, Advocate) And: Ramachandra Rao Dead by his LR’s 1 . Smt. Nirmala Bai, W/o. Late Ramachandra Rao, Aged about 73 years, 2 . R.Vinayakumar S/o. Late Ramachandra Rao, Aged about 56 years, - 2 - WP No.21118 of 2021 3 . R.Vinodha Kumar S/o. Late Ramachandra Rao, Aged about 48 years, 4 . Manasa D/o Late Ramachandra Rao, Dead by her LR’s 4(a) M anjunath Rao, S/o. Nagaraj Rao, Aged about 42 years, 4(b) Pranam, S/o. Manjunath Rao, Aged about 8 years, 4(c) Vaibhav S/o. Manjunath Rao, Aged about 6 years, 4(b) and (c) are the Minors represented by their Father 4(a) Respondents No.1 to 4(a)-(c) are R/at C.N. Road, Old Town, Bhadravathi, Shivamogga District-577245 (Respondents No.4(a)-(c) amended vide court order dated 6.9.2022) …Respondents (By Sri Karthik S.Tayur, Advocate for R1; Sri Manjunath Pattana Shetty, Advocate for R2 and R3; v/o dated 16.08.2022 service of notice to R4(a) to 4(c)) is held sufficient) This Writ Petition is filed under Article 227 of the Constitution of India praying to quash the order passed by the learned Principal Senior Civil Judge at Bhadravathi in FDP - 3 - WP No.21118 of 2021 No.3/2002 on I.A.No.35 dated 25.10.2021 vide Annexure-A and etc. This Writ Petition having been heard and reserved on 27.03.2023 coming on for pronouncement this day, the court pronounced the following: ORDER
This writ petition is directed against order dated 25.10.2021 on I.A.No.35 filed in FDP32002 on the file of Principal Senior Civil Judge, Bhadravathi.
2. I.A.No.35 was filed by the respondents under section 151 CPC read with sections 3 and 4 of the Partition Act for considering their applications I.A.23 and 24. Given the brief background, in the FDP proceeding the petitioners applied for auction sale of the suit property as it was not feasible to be divided into three parts. The court obtained valuation of the property through Assistant Engineer of the City Municipal Council, Bhadravathi and ordered for spot sale on 12.4.2006 and court sale on 19.4.2006. At the spot sale the highest bidder was Ramachandra Rao, the original judgment debtor, for Rs.12,05,000/-. But on 19.4.2006 the court sale was not - 4 - WP No.21118 of 2021 held and it was postponed to three dates 20.4.2006, 21.4.2006 and 22.4.2006. At last one Mujeeb offered to purchase the property for Rs.12,10,000/- and the court accepted his offer and directed him to deposit 1/4th of the bid amount immediately; but he did not. He made the deposit of 1/4th of bid amount on 31.5.2006 and the balance on 26.6.2006. The first respondent who is the legal representative of Ramachandra Rao questioned the auction sale by preferring W.P.11666/2011 before this court. The writ petition was allowed with a direction to proceed in accordance with the provisions of the Partition Act. Then the respondents filed an application under section 3 of the Partition Act as per I.A.No.23 seeking permission to deposit 2/3rd of Rs.12,10,000/- and another application under section 4 of the Partition Act seeking permission to exercise right of pre-emption. The petitioners also requested the court to release their 2/3rd share. The trial court by its order dated 25.10.2021, partly allowed I.A.35 and directed the respondents to deposit Rs.16,57,058/- being 2/3rd share of the petitioners - 5 - WP No.21118 of 2021 in the total value of suit property and permitted them to purchase the share of the petitioners. This is the order challenged here.
3. I heard the argument of Sri S.B.Halli, learned advocate for the petitioners, and Sri K.S.Tayur for respondent No.1 and Sri Manjunath Pattana Shetty for respondents 2 and 3.
4. The argument of Sri S.B.Halli was that although the petitioners did not make an application under section 3 of the Partition Act, they being the shareholders were entitled to buy the share of the respondents. He argued that since the petitioners first made an application under section 2 of the Partition Act, they would get a right to buy the share of other shareholders. This kind of a right, he argued, would always be available to the petitioners and it was not necessary that they too should have filed an application under section 3 of the Partition Act. He emphasized the point that the trial court committed an - 6 - WP No.21118 of 2021 error in not permitting the petitioners to buy the respondents’ share.
5. On the other hand, Sri K.S.Tayur, learned counsel for respondent No.1 argued that the petitioners lost their right to buy the shares of the respondents. They made an application under section 2 of the Partition Act which was indicative of the fact they wanted the property to be sold for sharing the sale proceeds. The language of section 3 of the Partition Act is so clear that if one sharer would make an application under section 2, the other share holder would get a right to buy the share of that party who had filed an application under section 2. Here the petitioners filed the application under section 2, and they were estopped from claiming right to buy the shares of the respondents. It was also his another point of argument that the value of the property as it prevailed on the date of application under section 3 of the Act should be considered. Therefore it was his argument that the petitioners had no right to challenge the order passed by the trial court.-. 7 - WP No.21118 of 2021 6. Now if the impugned order is seen, the trial court having noticed the orders passed by this court in the writ petitions filed earlier challenging certain orders in the final decree proceedings, held that at the time when sale was ordered pursuant to application filed by the petitioners under section 2 of the Act, the respondents had not filed application under section 3 of the Partition Act and therefore the valuation of the property as it prevailed in the year 2006 could not be considered. It has further held that as per the direction of the coordinate Bench of this court in W.P.17476/2015, the valuation of the property as on 1.4.2014 had to be fixed, and observing so, it proceeded to take the valuation of the entire property which includes a dwelling house, shop/shops and vacant site on the basis of report given by the court commissioner and the City Municipal Council, Bhadravathi. The total valuation of the entire property was Rs.24,85,588.13 and deducting the respondents’ 1/3rd share from it, the trial court directed the respondents to deposit Rs.16,57,058/- which is equal to 2/3rd share of the petitioners.-. 8 - WP No.21118 of 2021 7. Before giving a finding on the trial court’s order, if the scheme of the Partition Act, 1893 is examined, section 2 provides for sale of the property instead of division. Under section 2 of the Act, if the property is found to be not possible to be divided conveniently or reasonably because of its nature or number of shareholders or any other special circumstance, the court can order for sale of that property and distribution of sale proceeds if it is found to be beneficial to all the share holders. Any of the shareholders interested individually or collectively to the extent of one moiety or upwards may request the court for ordering sale.
8. Section 3 is the next stage; it follows section 2. If one share holder applies for sale under section 2, the other shareholder may apply to the court for leave to buy the share or shares of other party or parties and in that event the court shall order for valuation of the property to be taken and then offer the shares to that shareholder who is ready to buy the share of other shareholder or - 9 - WP No.21118 of 2021 shareholders at a price ascertained. If two or more shareholders are ready to buy, whoever offers highest price should be preferred. And if no shareholder is willing to buy at the price ascertained, the applicant or applicants shall be liable to pay costs of or incident to the application.
9. Section 4 deals with a situation where a share in a dwelling house belonging to undivided family has been sold to a person who is not a member of the family. If the transferee files a suit for partition, any member of the family being the shareholder may undertake to buy the share of the transferee. In that event the court shall make a valuation of such share and then direct its sale to the shareholder who is ready to buy. If two or more shareholders are ready to buy the share of the transferee procedure contemplated in sub-section (2) of section 3 would apply.
10. Section 5 deals with a different situation. Request for sale or an application or undertaking to buy the share may be made by a person authorized to act on - 10 - WP No.21118 of 2021 behalf of a person under disability and the court can grant leave, if it finds that sale or purchase is for the benefit of a person under disability. Section 6 states that the sale is subject to reserved bidding to be fixed by the court and section 7 deals with sale procedure. According to section 8, any order for sale is deemed to be a decree. Section 8 also states that the court can order for partition of part of the property to which suit relates and sale of the reminder.
11. Therefore the scheme of the Act makes it clear that the court is empowered to deal with a situation where division of property in accordance with decree is found to be practically not possible. The scheme provided in the Act gives into effect the decree of the court if the parties are agreeable for mutual arrangement.
12. In the case on hand, the petitioners having found that division of the property in accordance with the decree being not possible invoked section 2 of the Act. It is a fact that immediately after the application under - 11 - WP No.21118 of 2021 section 2 of the Act was filed by the petitioners the respondents did not file an application under section 3, and sometime later, i.e, after the sale was set aside by this court they made applications under sections 3 and 4 of the Act and indicated their readiness to deposit 2/3rd of the value of the property. Though it was argued by Sri K.S.Tayur that valuation of shares must be made as it prevailed on the date of making application under section 3 of the Act as has been held by the Supreme Court in the case of Malati Ramchandra Raut and Others vs Mahadevo Vasudevo Joshi and Others [1991 Supp (1) SCC321, this point of argument is not necessary to be answered here for, the respondents did not make an application under section 3 immediately after application under section 2 was filed by the petitioners. Rightly the trial court has taken the valuation as it prevailed in the month of 2014 as per the order of this court in W.P.17476/2015. The actual question is whether the petitioners having opted for sale of entire property can exercise their right under section 3 of the Act. In my - 12 - WP No.21118 of 2021 considered opinion the shareholder who prefers sale as per section 2 cannot buy the shares of other shareholders. If sections 2 and 3 of the Act are read harmoniously, the court must be first satisfied that division in accordance with decree is not possible because of one or all the reasons envisaged in section 2, and once the court directs sale to be held, the party or shareholder other than the applicant under section 2 gets right to buy. If after one share holder files an application under section 2, another share holder comes forward to buy the shares of others in accordance with section 3 and then the court proceeds further to ascertain the valuation of the property, the share holder who had made an application under section 2 cannot exercise his right under section 3, for by that time he would have lost his right to exercise right of preemption, which is implicitly present in that section. In R.Ramamurthi Iyer vs Raja V Rajeswara Rao [(1972) 2 SCC721, following is the observation of the Supreme Court : - 13 - WP No.21118 of 2021 “8. ….. The scheme of sections 2 and 3 apparently is that if the nature of the property is such or the number of shareholders is so many or if there is any other special circumstance and a division of the property cannot reasonably or conveniently be made, the court can in its discretion on the request of any of the shareholders interested individually or collectively to the extent of one moiety or upwards direct a sale of the property and distribute the proceeds among the shareholders. Now when a court has been requested under S. 2 to direct a sale 'any other shareholder can apply for leave to by at a valuation the share or shares of the party or parties asking for sale. In such a situation it has been made obligatory that the court shall order a valuation of the share or shares and offer to sell the same to the shareholder who has applied for leave to buy the share at a price ascertained by the court. In other words if a plaintiff in a suit for partition has invoked the power of the court to order sale instead of division in a partition suit under S. 2 and the other shareholder undertakes to buy at a valuation the share of the party asking for sale - 14 - WP No.21118 of 2021 the court has no option or choice or discretion left to it and it is bound to order a valuation of the shares in question and offer to sell the same to the shareholder undertaking or applying to buy it at a valuation. The purpose underlying the section undoubtedly appears to be to prevent the property falling into the hands of third parties if that can be done in a reasonable manner. It would appear from the objects and reasons for the enactment of the Partition Act that as the law stood the court was bound to give a share to each of the parties and could not direct a sale or division of the proceeds. There could be, instances where "there were insuperable practical difficulties in the way of making an equal division and the court was either powerless to give effect to its decree or was driven to all kinds of shifts and expedient in order to do so. The court was, therefore, given a discretionary authority to direct a sale where a partition could not reasonably be made and the sale would, in the opinion of the court, be more beneficial to the parties. But having regard to the strong attachment of the people in this country to their landed possessions the consent of the parties - 15 - WP No.21118 of 2021 interested at least to the extent of a moiety in the property was made a condition precedent to the exercise by the court of the new power. At the same time in order to prevent any oppressive exercise of this privilege those shareholders who did not desire a sale were given a right to buy the others out at a valuation to be determined by the court.
13. Therefore, the petitioners having rather preferred sale are precluded from exercising right under section 3 of the Act when the respondents are ready to buy the shares of the petitioners at the valuation made by the court. In this view, I find no merit in the writ petition. The order impugned does not suffer from any infirmity. Writ petition is dismissed. Sd/- JUDGE CKL List No.:
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