Illustration of Pre-emption:

To elucidate pre-emption, consider the following scenario: Two adjacent residences, owned by 'A' and 'B', respectively, share a common boundary. A third party, 'C', a stranger to 'B', purchases the property belonging to 'B'. 'A', possessing the pre-emptive right, retains the legal authority to repurchase the aforementioned property from 'C', under the conditions identical to those of the original sale from 'B' to 'C'. Thus, 'A' can exercise pre-emption to prevent 'C' from becoming a long-term neighbor, thereby safeguarding against potential inconveniences associated with unfamiliarity.

Pre-emption under Muslim Law:

Property transfers play a fundamental role in the economic framework of any society. Such transfers are categorized as either gratuitous or non-gratuitous. Muslims, with regard to non-gratuitous property transfers, are not invariably bound by general legal norms but are governed by their personal laws. While the Indian legislative framework encompasses laws of overarching applicability, including those pertinent to Muslims, certain aspects, such as pre-emption, remain subject to Muslim personal laws. Consequently, Muslims retain the privilege of being governed by their respective pre-emptive statutes across various jurisdictions.

Shuffa, or the right of substitution, embodies a legal entitlement conferred upon an individual by law, custom, or agreement. This entitlement confers priority to the seller, predicated upon the terms delineated by the seller during the sale transaction. The elucidation of "pre-emption" in the case of Vijayalakshmi v. B. Himantharaja Chetty (1996) 9 SCC 376, as articulated by Mulla, underscores the acquisition of the "Shuffa," or the right of first refusal, wherein the proprietor of one parcel of real estate secures the prerogative to acquire another parcel sold to a third party.

Pre-emption, originating from Islamic jurisprudence, gained recognition in India subsequent to the advent of Mughal influence. Its applicability transcends religious boundaries, encompassing both Muslim and Hindu proprietors. The British administration later integrated pre-emption into the legal framework, emphasizing principles of equity, justice, and communal harmony, particularly concerning Muslim interests. Pre-emption rights in India are rooted in various sources, including Muslim personal laws, customary practices, legislative enactments, and contractual agreements. While perceived primarily as a customary entitlement within Hindu jurisprudence, pre-emption constitutes an integral facet of legal doctrine for Muslims.

In the landmark case of Gobind Dayal v. Inayatullah (1885), Justice Syed Mahmood delineated pre-emption as the right accorded to proprietors of movable property, enabling them to acquire, on identical terms, movable property disposed of to another party for consideration.

Constitutional Legitimacy of Pre-emption

Prior to the 44th Constitutional Amendment Act of 1978, the pre-emption statute was viewed as infringing upon the fundamental right to possess and dispose of property, as safeguarded by Article 19(1)(f) and Article 31 of the Constitution. However, subsequent to the aforementioned amendment, both articles were removed from Part III of the Indian Constitution and are now encompassed within Article 300A, constituting constitutional rights. Preceding this amendment, the judiciary, in various pronouncements, deemed the statutory provision of pre-emption predicated on vicinage as unconstitutional.

In Bhau Ram v. BajiNath, AIR 1962 SC 1476, the Supreme Court was empowered to adjudicate on the constitutionality of pre-emption. In its determination, the Supreme Court rendered pre-emption based on vicinage unlawful. Subsequently, in another case, Sant Ram v. Labh Singh, AIR 1965 SC 314, the Supreme Court reiterated the illegality of common vicinage-based pre-emption.

The enactment of the 44th Amendment, coupled with diligent oversight regarding the application of preceding laws, fundamentally altered the discourse surrounding constitutionality post-1978, delineating property ownership as a constitutional right rather than a fundamental right. Nonetheless, the legal scrutiny of pre-emption persists extensively, as the Constitution, while safeguarding the right to property, subjects it to limitations under Articles 14 and 15.

In Lrs Raghunath. 's (D) v. Radha Mohan AIR 2020 SC 5026, it was established that the right of pre-emption may only be exercised when exigent circumstances arise. Such right does not constitute an unfettered entitlement available at all times, but rather necessitates a genuine need for invocation.

Pre-emption rights vest in a controlling co-tenant, albeit subject to considerable restrictions, despite its historical familiarity within the Indian subcontinent. Its contemporary significance has markedly diminished, albeit certain individuals still exploit the prospect of invoking pre-emption rights, particularly in cases necessitating agricultural property acquisition, albeit entailing attendant legal complexities arising from subsequent land transactions and upgrades.

Procedural Aspects of Pre-emption

The formalities governing pre-emption are as follows:

- The initial demand pertains to the 'demand for jumping,' necessitating immediate assertion.

- The subsequent demand involves witnesses.

- The final demand, or 'demand for possession,' arises should the preemptor fail to fulfill the preceding requisites, thereby entitling them to pursue legal recourse.

Rights Arising from Pre-emption

The entitlement to pre-emption materializes under two distinct circumstances:

1. Sale Transaction:

Pre-emption rights become enforceable when the property is subject to a valid sale. Mere contemplation or intention of sale does not suffice to trigger pre-emption. Sale, for the purposes of pre-emption, excludes transactions involving inheritance, gifts, waqf, bequests of leases in perpetuity, and encompasses exchanges. The sale must be conducted in good faith.

2. Completion of Sale:

Pre-emption rights crystallize upon the completion of the sale transaction. In accordance with Muslim law, a sale is deemed completed upon the payment from the purchaser to the vendor, accompanied by the transfer or delivery of possession by the vendor. Compliance with the provisions of the Transfer of Property Act, 1882, specifically Section 54, which mandates the registration of sale deeds for properties valued at Rs. 100 and above, may not always be necessary for the completion of sale. However, certain High Courts, such as the Patna and Calcutta High Courts, have held that pre-emption rights do not accrue until registration is finalized as per the Transfer of Property Act.

- Loss of Pre-emption Rights

Pre-emption rights are forfeited under the following circumstances:

I. Omission or Waiver: When the entitled party either expressly or implicitly waives their right to pre-emption or fails to promptly assert their entitlement.

II. Death of Pre-emptor: The right to pre-emption extinguishes upon the demise of the pre-emptor under Hanafi law. However, under Shafi’i and Shiite law, such rights devolve upon the pre-emptor’s heirs in proportion to their inheritance.

III. Forfeiture: Pre-emption rights are forfeited if the pre-emptor releases them for consideration, attempts to transfer the subject of pre-emption to a third party, partition of the property occurs wherein pre-emption rights are exclusively claimable by co-parceners, or if statutory disability impedes the pre-emptor's ability to purchase the concerned land.

- Types of Pre-emption

Pre-emption rights are conferred upon owners of pre-emptive tenements, categorized into three forms:

I. Pre-emption Based on Co-Sharing (Shafi-i-Sharik): Pertaining to an undivided share in immovable property inherited from a deceased individual, enabling the co-owner to reclaim their share sold without offering it to the co-sharer.

II. Pre-emption Based on Participation in Immunities and Appendages (Shafi-i-Khalit): Enabling the pre-emptor to assert their rights based on ownership of either a dominant or servient heritage, or when the property sold corresponds to the pre-emptor's property, serving as a dominant heritage to a third-party's property.

III. Pre-emption Based on Vicinage or Neighborhood (Shafi-i-Jaar): Accorded to owners of adjoining immovable properties, confined to small-scale estates such as houses, gardens, or modest land parcels. Priority is accorded to pre-emptors in the first category, followed by subsequent categories in a hierarchical order.

- Who Can Exercise Pre-emption

Pre-emption rights may be invoked by the following categories of individuals, referred to as pre-emptors:

I. Co-sharers by Inheritance (Shafi-i-Sharik)
II. Participants in Immunities & Appendages (Shafi-i-Khalit)
III. Owners of Adjoining Properties (Shafi-i-Jar)

- Formal Requirements for Pre-emption Enforcement

Strict adherence to three formalities, commonly known as the "three demands," is requisite for pre-emption assertion:

I. First Demand (Talab-i-Mowasibat)
II. Second Demand (Talab-i-Ishad)
III. Third Demand (Talab-i-Tamlik)

In Shia law, Talab-I-Mowasibat and Talab-I-Ishhad are not distinguished, necessitating the fulfillment of only one demand.

- Application of Pre-emption in India

The Privy Council, in the case of Digamber Singh v. Amhad (1941), recognized four grounds for pre-emption claims in India:

I. Muslim Law: Pre-emption rights may be asserted under Muslim law, primarily when not governed by local customs or statutes, applicable specifically to Muslim vendors and vendees.

II. By Custom: Customary pre-emption rights prevail in the absence of statutory provisions, overriding Muslim pre-emption laws if inconsistent. Customary pre-emption rights may extend to Hindus in specific regions, necessitating proof of custom.

III. By Statute: Statutory pre-emption laws are enforced through legislative enactments such as the Oudh Laws Act, 1876, Punjab Pre-emption Act, 1913, Agra Pre-emption Act, 1922, C.P. Land Revenue Act, 1917, Berar Land Revenue Code, 1928, and Zabta Shikmidaran.

IV. By Contract: Pre-emption rights may arise from contractual agreements between co-sharers, prevalent in regions such as Uttar Pradesh, governed solely by contractual terms.

- Applicability of Pre-emption on Hindus

Pre-emption rights are applicable to Hindus without discrimination based on caste or creed. While Hindu law does not explicitly address pre-emption, its application to Hindus is recognized, subject to establishment and adherence to customary or statutory provisions.

- Interfaith Considerations

Pre-emption laws are applicable without regard to the religion of the parties involved. However, challenges arise in cases involving parties of differing religious affiliations, where pre-emption rights may not be universally applicable based on religious disparities between vendors, vendees, and pre-emptors.

Hindu Law

The preferential right to acquire property is regulated by Section 22 of the Hindu Succession Act in certain instances.

The remedy of "preferential right" under Section 22 of the Hindu Succession Act may be invoked prior to the completion of a sale transaction. Pursuant to this section, when one co-sharer intends to transfer their share, the other co-sharer may seek to acquire said portion. This scenario typically arises when a co-sharer enters into an oral or written agreement to sell with a third party.

Alternatively, the invocation of pre-emption rights post-finalization of sale may be pursued, a recourse acknowledged by certain state laws, customs, or precedents in the absence of statutory provisions.