Telangana High Court Recognizes Co-Owner's Right Of Pre-Emption In Property Partition Disputes

The Telangana High Court recently underscored the importance of considering a co-owner's right of preemption before ordering a public auction in property partition disputes. It held:

“If we look into the provisions of Sub-Section 1 and SubSection 2 of Section 3 of the Partition Act, it would reflect that there is a mandatory term which has been used by the lawmakers when they have held that the Court shall order for an appropriate valuation of the shares and may offer to sell the said Suit property at the price so ascertained. Thus, prima facie, it appears that the lawmakers were certain when they have enacted the said provisions that in the event of a claim of right to preemption, the interest of the said person who seeks right for preemption is protected as far as possible.”

The order was passed by Justice P. Sam Koshy, in a civil revision petition, that was preferred by two family members, who were parties to a partition suit. The case involved a disagreement amongst co-owners of a house regarding its division through a partition suit. The lower court, unable to divide the property due to its nature and the number of shareholders, ordered its sale by public auction.

However, two co-owners (defendant Nos. 6 & 8) holding a 1/8th share in the property challenged this decision. They argued for their right of preemption under Section 3 of the Partition Act, of 1893, citing a strong emotional attachment to the property. These petitioners expressed their willingness to pay ₹8,00,00,000, exceeding market value, and even forego their right to another property (Schedule B) included in the suit.

The High Court acknowledged the petitioners' right of preemption and the significance of such offers before resorting to public auctions. The court recognized the potential for sentimental value attached to property, particularly in co-ownership situations. This finding aligns with precedents established in Malati Ramchandra Raut (Mrs) and others vs. Mahadevo Vasudeo Joshi and others and R. Ramamurthi Iyer vs. Raja V. Rajeswara Rao, which emphasized the importance of prioritizing co-owners offers, especially when exceeding the market value, as long as it doesn't prejudice other co-owners interests.

“In the given legal position as has been laid down by the Hon'ble Supreme Court and also on due consideration of the provisions of Section 2 and Section 3 of the Partition Act, what clearly gets culled out is that, what is necessary for the Court to consider is as to what would be the most beneficial step for redressal of the grievance of the parties i.e. of the shareholders to the said property and also take a decision by which the property fetches maximum price, so that each of the shareholders fetch maximum from the said property.”

Therefore, while allowing the Revision, the Bench directed the Trial Court to set a new date for conducting the auction, and conduct the auction, only after the property is offered to the petitioners for sale, at the same price at which it was being sold to the Highest bidder.

Case no.: CRP 3099 of 2023

Counsel for petitioner B. Chandrasen Reddy (Sr)

Counsel for respondents: Vedula Chitralekha, Mohd. Murtuza Ali (Party in person)

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