An Analysis of Section 22 of the Hindu Succession Act, 1956: The Preferential Right to Acquire Property

Introduction

Section 22 of the Hindu Succession Act, 1956 (hereinafter "HSA"), carves out a significant provision concerning the rights of heirs specified in Class I of the Schedule to the Act. It grants these heirs a preferential right to acquire an interest in immovable property or a business inherited from an intestate, should one of the co-heirs propose to transfer their share. The primary legislative intent behind this section is to prevent the fragmentation of family property and to preclude the introduction of strangers into the family estate or business, thereby preserving family cohesion and the integrity of the inherited property. This article seeks to provide a comprehensive analysis of Section 22, delving into its legislative framework, scope, applicability, procedural nuances, and judicial interpretations, drawing heavily upon the provided reference materials and relevant legal principles in India.

Legislative Framework of Section 22

Text and Purpose of Section 22

Section 22 of the HSA, titled "Preferential right to acquire property in certain cases," stipulates:

"(1) Where, after the commencement of this Act, 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.

(2) The consideration for which any interest in the property of the deceased may be transferred under this section shall, in the absence of any agreement between the parties, be determined by the Court on application being made to it in 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." (Text of Section 22 as per Nagammal And Ors. v. Nanjammal And Anr., Madras High Court, 1969 (Ref 10) and Babu Ram v. Santokh Singh, SC 2019 (Ref 4)).

The core components of this section are: (a) the death of a Hindu intestate after the commencement of the HSA; (b) the devolution of an interest in immovable property or a business upon two or more Class I heirs; (c) a proposal by one such heir to transfer their interest; and (d) the conferment of a preferential right upon the other Class I heirs to acquire that interest. Sub-section (2) provides a mechanism for court-determined consideration if parties cannot agree, and sub-section (3) addresses situations where multiple heirs wish to exercise this preferential right.

Object and Rationale

The Supreme Court in Babu Ram v. Santokh Singh (Deceased) Through His Legal Representatives And Others (2019 SCC ONLINE SC 376) (Ref 4, 11) elucidated the objective behind Section 22. The Court observed:

"Since the right itself in certain cases was created for the first time by the provisions of the Act, it was thought fit to put a qualification so that the properties belonging to the family would be held within the family, to the extent possible and no outsider would easily be planted in the family properties. In our view, it is with this objective that a preferential right was conferred upon the remaining heirs, in case any of the heirs was desirous of transferring his interest in the property that he received by way of succession under the Act." (Ref 11)

This underscores the legislative intent to maintain family ownership and prevent the intrusion of external parties into jointly inherited properties or businesses.

Scope and Applicability of Section 22

Applicability to Agricultural Lands

A significant question that has been subject to judicial scrutiny is whether Section 22 applies to agricultural lands. Historically, succession to agricultural land was often governed by state-specific tenurial laws, and the Federal Court in In the matter of the Hindu Women's Rights to Property Act, 1937 (AIR 1941 FC 72) (Ref 4) had held that the 1937 Act did not regulate succession to agricultural land due to the then-existing legislative competencies under the Government of India Act, 1935.

However, the constitutional framework changed with the adoption of the Constitution of India. The subject of "intestacy and succession" falls under Entry 5 of the Concurrent List (List III), granting both Parliament and State Legislatures the power to legislate. The Supreme Court in Babu Ram v. Santokh Singh (2019) (Ref 4, 11) definitively settled this issue. The Court noted the changes in legislative entries and held that the HSA, including Section 22, applies to agricultural lands. It reasoned that "the subjects ‘transfer, alienation of agricultural land’ are retained in the State List in the form of Entry 18 but the subject ‘devolution’ was taken out." (Ref 4).

Furthermore, the Court highlighted the omission of Section 4(2) of the HSA by the Hindu Succession (Amendment) Act, 2005. Section 4(2) originally saved laws relating to the prevention of fragmentation of agricultural holdings, fixation of ceilings, or devolution of tenancy rights. The Supreme Court observed, "However, with the deletion of Section 4(2) of the Act, now there is no exception to the applicability of Section 22 of the Act." (Ref 4). Consequently, the Court concluded: "the preferential right given to an heir of a Hindu under Section 22 of the Act is applicable even if the property in question is an agricultural land," thereby overruling several High Court decisions that held to the contrary (Ref 4, 11). This was an affirmation of the Himachal Pradesh High Court's view in the same case (Babu Ram v. Santokh Singh, 2018 SCC OnLine HP 2153 (Ref 14)).

Nature of the Right

The right conferred by Section 22 is often described as a right of pre-emption. The Supreme Court in Babu Ram (2019) (Ref 4) characterized it as "a sort of right of pre-emption." The Madras High Court in Gandhi Ammal (Died) v. Ammatchi @ Koothadichi (2022) (Ref 22), citing Nagammal and others Vs Nanjammal and another [1970 1 MLJ 358] (Ref 10), emphasized that the right of pre-emption under Section 22 of the Hindu Succession Act is "statutory in character" and should not be dismissed as a weak right, distinguishing it from pre-emptive rights under other enactments like the Berar Land Revenue Code.

When Does the Right Arise?

Section 22(1) states that the preferential right arises when "any one of such heirs proposes to transfer his or her interest". This wording suggests that the right is triggered at the stage of the intention or proposal to transfer, ideally before the transfer is finalized. This has implications for the procedure to be followed, as discussed below.

Procedural Aspects and Enforcement

Invoking the Right

The statute envisages that the heir proposing to transfer their interest should ideally notify the other Class I co-heirs of this intention, allowing them to exercise their preferential right. If there is no agreement on the consideration, Section 22(2) allows for an application to the Court to determine the consideration. As observed in Nagammal And Ors. v. Nanjammal And Anr. (1969) (Ref 10), "Section 22 does not provide as to what is to happen if one of the co-heirs sells his or her interest without informing the other co-heirs who have preferential right, the section not providing for any notice being given." This lacuna often leads to litigation after a sale has been effected to a third party.

Completed Transfers

A contentious issue is whether the preferential right under Section 22 can be enforced after a transfer has already been completed without offering it to the other Class I heirs.

Some judicial pronouncements suggest that an application under Section 22(2) is maintainable only when a transfer is proposed, not after it has been effected. The Himachal Pradesh High Court in Madan Lal & Anr. v. Braham Dass & Anr. (2008) (Ref 20), citing the Division Bench decision of the Kerala High Court in Valliyil Sreedevi Amma v. Subhadra Devi (AIR 1976 Kerala 19), noted the view that "an application under Section 22(2) of the Act cannot be regarded to be maintainable after transfer has been effected. It is maintainable only at a stage where transferor-heir proposes to transfer his or her interest in the property." In such cases, the remedy for other co-sharers would be to file a suit.

Conversely, the Orissa High Court in Smt. Kamala Kumari Bohara v. Harekrishna Ghadei And Others (1998 SCC ONLINE ORI 2) (Ref 16, 21) held that Section 22 was attracted even in a situation involving a completed sale, where the plaintiff had specifically prayed for re-purchasing the property in the suit. The Court distinguished cases which held that a mere application could not enforce the right after a completed transaction, noting that in the instant case, "a regular suit has to be filed. As already indicated, in the present suit, there was a specific prayer for repurchasing the property". This suggests that a suit for enforcing the preferential right post-completion of sale is a viable remedy.

The Punjab and Haryana High Court in Smt. Shobha Rani v. Parshotam Dass (1996 SCC ONLINE P&H 1207) (Ref 17) dealt with the maintainability of a petition under Section 22, where the trial court had decided that the court was competent to entertain the petition but held against the petitioners on the form of the petition.

Limitation Period

The Supreme Court in Ashutosh Chaturvedi v. Prano Devi Alias Parani Devi And Others (2008 SCC 15 610) (Ref 18), while dealing with an application for amendment of a plaint to include a relief claiming preferential right under Section 22, noted the contention that such a claim might be barred by limitation under Article 97 of the Limitation Act, 1963. Article 97 prescribes a period of one year for the enforcement of a right of pre-emption, commencing from the date the purchaser takes physical possession under the sale, or when the instrument of sale is registered. This indicates that claims under Section 22 are subject to this limitation period.

Necessary Parties

In suits or applications under Section 22, proper impleadment of parties is crucial. In Kamal Goel v. Purshotam Dass (Deceased By L.Rs) And Others (1999 SCC ONLINE P&H 333) (Ref 15, 19), a suit was filed by Chalti Devi claiming preferential right. After her death, one son was brought on record, but other legal heirs (grandchildren through a predeceased son) were not impleaded, which could be a point of contention.

Limitations and Exceptions to Section 22

Transfers among Class I Heirs

The primary objective of Section 22 is to prevent property from passing to strangers. If a Class I heir proposes to transfer their interest to another Class I heir who has also inherited an interest in the same property from the same intestate, the rationale for Section 22 (preventing outsiders) may not strongly apply against such a transferee. The phrase "the other heirs" refers to the remaining Class I heirs who inherited from the intestate. The right is to acquire the interest *proposed to be transferred*, typically to an outsider.

Effect of Partition or Family Settlement

The applicability of Section 22 may be affected if the property inherited by Class I heirs has been subsequently partitioned. In Romesh Chopra v. Anish Chopra (Delhi High Court, 2008) (Ref 12), it was argued that after an absolute division/partition of ancestral property and exclusive possession by legal heirs, the estate stood divided, and therefore, a claim under Section 22 might not survive for subsequent transfers by an heir of their demarcated share. If the property ceases to be an "interest in any immovable property of an intestate... [which] devolves upon two or more heirs specified in Class I," and instead becomes the exclusive property of an individual heir through partition, Section 22 may not apply to a transfer of that exclusively owned, partitioned share.

Testamentary Succession

Section 22 explicitly applies to the property of an "intestate." Hindu law, under Section 30 of the HSA, permits a Hindu to dispose of their property by will, including their interest in a Mitakshara coparcenary property (Ref 5, 6). If an individual disposes of their property through a valid testamentary disposition, the rules of intestate succession, including Section 22, do not apply. The devolution would be governed by the Indian Succession Act, 1925, or other applicable laws for Hindus (Ref 6, 8).

Interaction with Other Laws

While Section 22 provides a specific right of pre-emption under the Hindu Succession Act, it is distinct from pre-emptive rights that may exist under other statutes, such as Section 4 of the Partition Act, 1893 (discussed in Gautam Paul v. Debi Rani Paul And Others, SC 2000 (Ref 2) in the context of family members in partition suits). The conditions and scope of these rights differ.

As previously noted, the omission of Section 4(2) of the HSA in 2005 was a significant development, removing a potential barrier to the application of the HSA, including Section 22, to certain agricultural land matters. The Supreme Court in Babu Ram (2019) (Ref 4) emphasized this deletion as reinforcing the applicability of Section 22 to agricultural lands.

Conclusion

Section 22 of the Hindu Succession Act, 1956, serves as a vital tool for preserving family property and businesses among Class I heirs by granting them a preferential right to acquire the interest of a co-heir proposing to transfer their share. The Supreme Court's decision in Babu Ram v. Santokh Singh (2019) has provided crucial clarity on its applicability to agricultural lands, aligning the law with contemporary constitutional principles of legislative competence. However, procedural aspects, particularly concerning the enforcement of this right after a sale has been completed without due notice to other co-heirs, continue to be navigated through judicial interpretation, with a general leaning towards requiring a formal suit if the transfer is already effected. The right under Section 22, being statutory, is a substantive right aimed at furthering social objectives of family unity and preventing undue fragmentation of inherited assets. Future jurisprudence may further refine the procedural contours for the effective and timely exercise of this important preferential right.