Pre-emption in land law of Bangladesh

Pre-emption in land law of Bangladesh
10.24.2022
@[email protected]50Iiwic2V0dGluZ3MiOnsiYmVmb3JlIjoiQ29tbWVudHMgKCIsImTahmidur Rahman [email protected]

Pre-emption is a prior right of a co-sharer of a parcel of land by purchase or inheritance, the owner of adjacent property, or a land’s neighbor. When a piece of land is sold to a third party without acknowledging the land’s co-owners, the issue of pre-emption emerges, i.e., the co-owner has the right to purchase the land and claim ownership.

If he waives his right, either directly or implicitly, a stranger or a third party can purchase it. Regarding pre-emption, Bangladesh has three distinct legal approaches: I the Muslim Law Approach, (ii) the State Acquisition & Tenancy Act, 1950 Approach, and (iii) the Non-agricultural Tenancy Act, 1949 Approach. This paper will compare and contrast pre-emption under Islamic law and statute law in Bangladesh.

It will assess the current condition or approach of pre-emption in Bangladesh, identify the flaws of the existing statutory law and problems if pre-emption is applied, and propose a remedy.

Rights of Pre-emption in land law of Bangladesh:

Pre-emption is the right to acquire property before or in the presence of another. The term pre-emption was formed from the Latin words prae, which means “before,” and emptions, which means “purchasing.” According to Dr. A.R. Biswas’s Encyclopedic Law Dictionary, pre-emption is the legal right to purchase an item before anyone else.

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In Arabic, preemption is referred to as shuf’a. “Shuf’a” means conjunction; in this context, it refers to the right of the owner of a property that is adjacent to another. Haq means accurate. Therefore, haq-shufa refers to the right to acquire a property adjacent to one’s own from a new buyer. In practice, it signifies the right to displace a new purchaser and assume his position in relation to an adjacent property. One has the right to prevent strangers from entering their neighborhood.

The right of pre-emption is not a right to repurchase, but rather a right of substitution, allowing the pre-emptor to step into the shoes of the buyer. In Bishan Singh v. Khazan Singh4, where Subba Rao, J., summarized the rules of pre-emption, the supreme court of India took this viewpoint:

(1) The pre-emption right is not a right to the item being sold, but rather a right to the offer of an item that is soon to be offered. This right is known as the fundamental or inherent right.
(2) The pre-emptor has a remedial or secondary right to follow the sold item.
(3) It is a right of substitution but not of repurchase, meaning that the pre-emptor assumes the obligations of the original purchaser.
(4) This is a right to acquire the entire property sold, not a fractional interest.

(5) As preference is the heart of the pre-emption right, the pre-right emptor’s must be superior to that of the vendee or substitute.
Pre-emption is the right of a co-owner or adjacent owner of an immovable property to acquire by purchase another immovable property that has been sold to a third party. The pre-emption statute dates back to Roman law. In a purchase agreement, the Romans utilized their pre-emption right. In the Indian subcontinent, it was originally implemented during the rule of the Mugals, whose origins can be traced to Islamic law.

Sources of preemption rights:

  • Muhammadan Law
  • Local Custom

Statutes regarding Bangladesh’s pre-emption law:

i) 1950 State Acquisition and Tenancy Act

ii) Non Agricultural Tenancy Act 1949

iv) Partition Act 1893

iv) The Land Reforms Act of 1984

v) Arpito Sampatti Prottarpan Ain (Vested Property Return Act)

How State Acquisition and Tenancy Act section 96 gave for the right of preemption:

(1) If a portion or share of a holding of a raiyat is transferred, one or more co-sharer tenants of the holding may, within four months of the service of the notice given under section 89, or, if no notice has been served under section 89, within four months of the date of knowledge of the transfer, apply to the Court for the portion or share to be transferred to him or them; and if a holding or a portion or a share of a holding is transferred,

Provided, however, that no co-sharer tenant owning land adjacent to the land transferred shall have the right to purchase under this section unless he is a person to whom transfer of the holding or portion or share thereof, as applicable, may be made pursuant to sections 88 and 90.

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(2) In an application made under subsection (1) by a co-sharer tenant or co-sharer tenants, all other co-sharer tenants of the holding and the transferee shall be made parties, and in an application made by a tenant holding land adjacent to the land transferred, all co-sharer tenants of the holding and all tenants holding lands adjacent to the land transferred shall be made parties.

(3)

(a) An application made under subsection (1) is dismissed unless the applicants, at the time of making the application, deposit with the Court the amount of the consideration money or the value of the transferred holding or portion or share of the holding as stated in the notice under section 89 or in the deed of transfer, as applicable, along with compensation at the rate of ten percent of such amount.

(b) Upon receipt of such application accompanied by such deposit, the Court shall give notice to the transferee and to the other persons made parties thereto under subsection (2) to appear within such period as it may fix and shall require such persons to state the consideration money actually paid for the transfer and shall also require the transferee to state what other sums he has paid in respect of rent since the date of transfer and what expenses he has incurred in a suit against the transferor.

The transferee shall not, under any circumstances, be entitled to claim consideration money in excess of the amount specified in the transfer deed.

(4) When an application under subsection (1) has been made, any of the remaining co-sharer tenants, including the transferee, if one of them, and the tenants holding lands contiguous to the land transferred may, within the period referred to in subsection (1) or within two months of the date of service of the notice of the application under clause (b) of subsection (3), whichever is earlier, apply to join in the said application; any co-sharer tenant or tenant holding lands contiguous to the land transferred

(5) (a) (a). If I a co-sharer tenant whose interest has accrued by inheritance, (ii) a co-sharer tenant whose interest has accrued by purchase, and (iii) a tenant holding land contiguous to the land transferred apply under this section and comply with the provisions herein contained, the applicant or applicants shall have the prior right to purchase under this section in the order specified above.

(b) If more than one tenant holding land next to the transferred land applies under this section, the court shall decide the order of priority among such tenants by considering:

(i) the total amount of land owned by each of the tenants applying;

(ii) if the tenant’s contiguous land is homestead land or another type of land;

(iii) amount of adjacentness;

(iv) the extent to which the petitioner must be in possession of the contiguous land; and

(v) the applicants’ easement rights, if applicable.

(6) (a) Upon expiration of the period within which a petition may be submitted pursuant to subsection (4), the Court shall, in accordance with the requirements of this section, determine which of the petitions filed pursuant to subsection (1) or subsection (4) shall be granted.

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(b) If the Court finds that an order allowing the applications made under this section is to be made in favour of more than one applicant, the Court shall determine the amount to be paid by each of such applicants and, after apportioning the amount, shall order the applicant or applicants who joined in the original application under subsection (4) to deposit the amounts payable by him or them within such period as the Court deems reasonable; and if the deposit is not made within such period, the Court shall order the applicant or applicants to pay

(7) (a) On the expiry of the period within which a deposit, if any, is to be made in accordance with clause (b) of sub-section (6), the Court shall pass orders allowing the application or applications made by the applicant or applicants who are entitled to purchase under and have complied with the provisions of the section and, when such orders are passed in favour of more than one applicant, shall apportion the holding or the portion or share of the holding among them in such manner as the Court.

(b) The Court shall simultaneously pass an order directing that the transferee be paid out of the deposits made under subsection (3) the amount of consideration money paid by him for the transfer along with compensation at the rate of ten percent of such amount, the amount, if any, paid by him on account of rent of the holding, portion, or share transferred since the date of transfer, and the amount, if any, incurred by him in annulling encumbrances obstructing the transfer.

(8) A apportionment order issued pursuant to subsection (7) does not constitute a partition of the holding.

(9) Commencing on the date of issuance of the order under subsection (7) –

(a) the right, title, and interest in the holding or portion or share thereof accruing to the transferee from the transfer shall, subject to any orders passed under the said sub-section, be deemed to have vested free of all encumbrances created after the date of transfer in the co-sharer tenants or in the tenants holding lands contiguous to the land transferred, as the case may be, whose applications to purchase have been approved under sub-section (7);

(b) the transferee’s liability for the rent of the holding or portion or share from the date of the transfer shall cease; and the co-sharer tenants or tenants holding lands contiguous to the land transferred whose applications to purchase have been approved shall be liable for any such rent due from the transferee; and

c) Upon further application of such applicant or applicants, the Court may place him or them in possession of the property vested in him or them.

(10) This subsection does not apply to:

(a) a transfer to a co-tenant whose interest has accrued through means other than acquisition; or

b) a transfer through exchange or partition; or

(c) a transfer by bequest or gift (including Heba but excluding Heba-Bil-Ewaj for any pecuniary compensation) in favor of the husband or wife or the testator or donor, or any consanguineous connection within three degrees of the testator or donor; or

(d) a simple or complete usufructuary mortgage, or a mortgage by conditional sale, until a decree or order of absolute foreclosure is issued; or

e) a Waqf established in line with the Muhammadan Law; or

(f) a donation made for religious or philanthropic reasons without any monetary gain being reserved for an individual.

Explanation: For the purposes of this provision, a son adopted under Hindu law shall be considered a consanguineous relation.

(11) Nothing in this section shall abrogate a person’s right of preemption under the Muhammadan Law.

(12) An application under this section must be filed with the court that would have jurisdiction to hear a suit for possession of the land in question.

(13) An order of a court issued pursuant to this section may be appealed to the regular Civil Appellate Court, and, notwithstanding anything to the contrary in any other legislation now in effect, there shall be no second appeal from an order of the first Appellate Court.

Partition Act 1893 in regards to Pre-emption in land law of Bangladesh:

Section 4 of the Partition Act grants the co-sharer of an intact family the right of pre-emption.Suit for partition by the transferee of a stake in a dwelling:

(1) Where a share of a dwelling-house belonging to an undivided family has been transferred to a person who is not a member of such family, and such transferee sues for partition, the court shall, if any member of the family being a shareholder undertakes to buy the share of such transferee, make a valuation of such share in the manner it deems appropriate, direct the sale of such share to such shareholder, and may give all necessary and proper direction in that behalf.

(2) If, in any situation specified in subsection (1), two or more family members, each of whom is a shareholder, promise to purchase such a share separately, the court shall follow the procedure outlined in subsection (2) of the preceding section.

(2) Section 3 stipulates that if two or more shareholders petition separately for permission to purchase, the court shall order the sale of the share or shares to the shareholder who proposes to pay the greatest price above the court’s value.

Certain conditions must be met prior to the application of Section 4: (1) the suit must relate to the dwelling house of an undivided family; (2) the dwelling house must have been transferred to a stranger; and (3) the stranger-transferee must have filed a suit for partition. [6] Once these conditions are met, a co-sharer may apply to the court. Section 4 of this statute grants a co-sharer the right of pre-emption over a stranger’s right.

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Preemption under the SAT Act and the Partition Act:

Despite the fact that Section 4 of this Act does not contain the phrase “pre-emption,” it grants the power of pre-emption to a co-tenant. The SAT Act grants the right of pre-emption to a co-tenant and a tenant holding adjoining land, while the Partition Act guarantees this right to a co-tenant of a home.

A member of an undivided family may exercise their right of pre-emption in connection to a dwelling house under section 4 not only when a stranger-transferee is the plaintiff, but also when they are the defendant in a partition suit.

The purpose of section 96 of the SAT Act is to minimize the subdivision and fragmentation of agricultural estates, which were the primary causes of Bangladesh’s agricultural backwardness. The purpose of section 4 of the Partition Act is to prevent the intrusion of strangers into the dwelling-house in a partition suit: The right of pre-emption in relation to a dwelling-house under section 4 may be exercised by a member of an undivided family both when a stranger-transferee is a plaintiff and a defendant in a partition suit.

This purpose would be defeated if a stranger-purchaser is permitted to overcome a pre-emption claim under section 4 of the Act based on a literal and restrictive construction of the section. In a suit for partition, the parties are in the position of counter-claimants, and a defendant in a suit for partition may very well be presumed to be suing for partition.

The 1984 Land Reforms Ordinance and Pre-emption in land law of Bangladesh:

According to Section 13 of the Land Reform Ordinance, the Bargadar has the right of pre-emption over sold barga property.

Section 13.Boargadar’s right to acquire

(1) If the owner plans to sell barga land, he must ask the bargadar in writing if he is interested in purchasing the land.

1) This rule shall not apply if the owner sells the land to a co-owner, his parent, his wife, his son, his son’s son, or any other member of his family.

(2) Within fifteen days of receiving the offer, the bargadar must notify the owner in writing of his decision to purchase or not purchase the land.

(3) If the bargadar decides to purchase the land, he must negotiate the price of the land with the owner and purchase the land on the terms agreed upon by the two parties.

(4) If the owner does not receive notification from the bargadar regarding his decision to purchase or not purchase the land within the specified time period, or if the bargadar notifies the owner of his decision not to purchase the land, or if the bargadar does not agree to pay the price demanded by the owner, the owner may sell the land to whomever he deems appropriate:

The owner may not sell the property to such a person at a price lower than the price offered by the bargadar.

When barga land is purchased by a party other than the bargadar, the barga contract pertaining to the land is enforceable as if the purchaser were a party to the contract.

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Pre-emption in land law of Bangladesh under the SAT Act versus The Land Reforms Ordinance of 1984:

A co-tenant of a holding and a tenant owning land next to the holding may apply to exercise their pre-emption rights under SAT. According to section 13 of the LRO, a barga land owner must request the bargadar to purchase bargaland in writing if he wishes to sell the land. This indicates that the bargadar has pre-emption rights over bargaproperty.

With the pre-emption application, the consideration funds must be deposited with the court. Under the LRO, however, the bargadar is not required to make a cash deposit; rather, he must acquire the land through a legally sanctioned process.

If the co-sharer tenant of a contiguous land owner who has received notice under section 96(1) does not apply within four months, he forfeits his right of pre-emption. However, if the Bargadar do not notify the owner within 15 days of receiving a written request to purchase Bargaland, the owner may sell the land to anyone.

If a person becomes a co-shareholder through inheritance, he excludes the others from the pre-emption right, while a co-shareholder through purchase excludes adjacent landholders. However, if the owner sells Bargaland to his parent, wife, son, daughter, son’s son, or any other family member, the Bargadar forfeit their pre-emption rights.

There is a four-month time limit under the SAT Act for pre-emption, and a fifteen-day time limit for Bargadar. The SAT Act does not give the right to a second appeal, but there is no question of a second appeal in LRO or Bargadar because he can purchase the land under the general rules and procedures for purchasing land.

Restoration of Vested Properties Act of 2001: Arpita Sampatti Prattarpan Ain

Section 27 of the 2001 Restoration of Vested Properties Act grants two individuals the right of pre-emption. Under Section 27(1), only the two individuals listed below are permitted to pre-empt.

I Co-owner of an inherited property;

ii) If no such Co-sharer exists, the individual who has continuously leased the sold property for at least the last ten years.

If the sold property is agricultural land, then the pre-emption provisions of the Land Reform Ordinance of 1984 (X of 1984) will apply.

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Comparative Analysis of Pre-emption in land law of Bangladesh under the SAT Act and the Restoration of Vested Property Act of 2001:

In accordance with Section 27 of the Restoration of Vested Properties Act of 2001, if the government wishes to sell or lease an immovable property that has no owner, the co-sharer by inheritance will be given preference. If there is no such Co-sharer, the person who has continuously leased the sold property for at least the previous ten years may pre-empt it. Section 96 of the SAT Act of 1950 establishes the pre-emption right. It grants the right of pre-emption to a co-tenant and a tenant who owns land next to the property.

The SAT Act does not name any other laws as supporting pre-emption laws. However, the Restoration of Vested Properties Statute makes reference to the LRO act for agricultural land. If the property in question is agricultural land, the Land Reform Ordinance of 1984 and its provisions will apply.

The Restoration of Vested Properties Act contains no provisions about the pre-emption procedure, simply the pre-emption privilege. However, the SAT Act contains provisions regarding the procedure for exercising the pre-emption power.

Section 96 of the SAT Act is a comprehensive section on the right of pre-emption, whereas section 27 simply mentions the right of pre-emption for two specific individuals.

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Muslim law introduced the concept of preemption to the Indian subcontinent. It is incorporated into the statutes. By applying the rules of pre-emption, a co-sharer prevents a stranger; he can extend his portion in the holding or land, but its sole purpose is to save co-sharers or neighbors from the annoyance and inconvenience of a stranger purchaser; it is not intended to increase the portion or share or property of other co-sharers of a holding or land. Consequently, it is significant, although in contemporary culture it has lost some of its significance.

Now that society is mobilized, people no longer reside in the same location forever. It does not matter to the members of a society who acquires adjacent land or a holding. Due to the mobilization of society, preemption of non-agricultural land or municipal land is now uncommon.
The significance of pre-emption in rural or agricultural areas cannot be disputed.

The inhabitants of a village dislike the intrusion of a foreigner into their domain, yet the villagers’ way of life is also evolving as a result. Consequently, the value of pre-emption decreases in the village region. In addition, the amended section 96 of the SAT Act restricts the extent of application of pre-emption in the case of agricultural land.

Only a co-sharer tenant by inheritance may seek for pre-emption; neither a co-sharer tenant by purchase nor a neighboring landowner may pre-empt. It must be brought as a civil matter and an ad valorem court fee must be paid, and the proof of pre-emption required under Muslim law is extremely difficult to establish. Notably, the provisions of statutory laws should not abrogate the power of pre-emption granted to any individual by Islamic law.

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What is the difference between ‘shuf‘a’ and Pre emption in Bangladesh?

Preemption is known in Arabic as "shuf'a." Shuf'a, which means in conjunction or next to, refers to the right of the owner of a property that is next to or in conjunction with another property in this context. Haq is Arabic for "right." Haq-shufa, then, refers to the right to later purchase a property adjacent to one's own from a new buyer. In actuality, it refers to the ability to oust a new buyer and assume his position with regard to a neighboring property. Dislodging strangers from entering one's neighborhood is a right. 

Pre-emption is not a repurchase right; rather, it is a right of substitution that entitles the pre-emptor to take the place of the buyer. In Bishan Singh v. Khazan Singh, the Indian Supreme Court upheld this position. Subba Rao, J., summarized the pre-emption rules as follows: (1) The right of pre-emption is not a right to the thing sold, but a right to the offer of a thing about to be sold. The primary or inherent right is what is known as this. 

(2) The pre-emptor has a subsequent or remedial right to pursue the sale of the thing. 

(3) It is a right of substitution rather than repurchase, meaning that the pre-emptor accepts the full agreement and stands in for the original vendee. 

(4) Rather than a share of the sold property, it is a right to purchase the entire item. 

(5) Because the fundamental component of a right is preference, the pre-emptor must possess a superior right to that of the vendee or the replacement.

Who are entitled under pre-emption rights as per muslim law?

The goal of pre-emption under Mahomedan law is to avoid the inconvenience that may result from the introduction of a disagreeable stranger as a co-partner or a close neighbor. It is founded on the principle of convenience, and its goals are to avoid potential annoyances caused by a disagreeable neighbor. 

In Muslim law, three classes of people have the right to pre-empt others: 

(a) shafi-e sharik or a co-owner of the property, 

(b) shafi-e khalit or a participant in immunities and appendages 

(c) person who has the right of easement, and "No person is entitled to pre-empt unless he takes the proper steps at the proper time, and conforms strictly to the necessary formalities."

What are the three demands of Pre-emption rights in Bangladesh?

The three demands refer to these formalities or ceremonies. 

(i) Initial Demand (talab-e mowasibat): When notified of the sale, the pre-emptor must make a declaration known as talab-e mowsibat, stating his intention to exercise his right of pre-emption. This demand does not require witnesses or any specific language or format. It is sufficient to say, 'I have demanded or do demand pre-emption.' The pre-emptor cannot delay by claiming that he had reason to believe the true price should be much lower than that which was notified to him. 

(ii) The Second Demand (talab-e ishhad): The pre-emptor must make a second demand as soon as possible. He must I refer to his first demand; (ii) do so in the presence of the buyer or the purchaser, or on the premises subject to sale; and (iii) do so in the presence of two witnesses. This is referred to as talab-e ishhad. 

This is also known as talab-e taqrir, or the confirmation demand. A common form of demand is: "Such person has purchased such house of which I am the pre-emptor" (shafi). I have already asserted my right to pre-emption (shuf'a), and I assert it again: be ye witnesses thereof.' The pre-emptor must clearly specify the property. 

If the pre-emptor is far away and cannot be present in person, the second demand can be made through an agent or even through a letter. If there are multiple purchasers, the demand must be made to all of them, unless made on the premises or in the vendor's presence. If, on the other hand, the demand is made to only some of the purchasers, the pre-emptor may assert his right only against these purchasers and not against the others. 

(iii) The Third Requirement (talab-e tamlik): The third demand is not only a demand, but it also requires legal action, which is not always required; it is only when his claim is not conceded that the pre-emptor enforces his right by filing a suit. This type of action is known as talab-e tamlik or talab-e khusumat (the demand for possession or the demand in a dispute). If the property is corporeal, the suit must be filed within one year of the purchaser taking possession of it, or within one year of the registration of the instrument of sale if it is incorporeal. A suit or claim for pre-emption must claim the entire interest; a claim to a portion of the estate sold is insufficient. 

When a pre-emption claim is enforced, the pre-emptor stands in the shoes of the buyer and takes the property subject to prior equities. If the sale is already complete, the original buyer becomes the new vendor, and the pre-emptor becomes the new purchaser. Between the date of sale to himself and the date of transfer to the pre-emptor, the original buyer is entitled to receive or retain the rents and mesne profits.

What are the time limit for exercising pre-emption rights in Bangladesh?

Previously, an application for pre-emption could be brought within four months from the date of service of the notice or from the date of knowledge of the transfer, with no specific time limit, whereas the current section limits the time to two months, which can be exercised within three years from the date of registration of the sale deed. 
The right of pre-emption cannot be exercised after three years from the date of registration of the sale deed, whether the pre-emptor is aware of the sale or not; however, in the previous section, the pre-emptor could exercise his right at any time if he could prove that he was not aware of the transfer. 
Pre-emption, which was previously 10%, is now accompanied by a 25% compensation. There was no provision for simple interest with the application under the previous section. There is a provision in the new section for simple interest at the rate of 8% to be deposited with the application for pre-emption. 
If pre-emption is permitted, the purchaser may be directed to execute a registration deed under the new section; there is no such provision in the previous section.

What is the amended provision of Sec. 96 of the SAT Act and why it is so important?

A person could exercise the right of pre-emption at any time in practice under the previous section. Even a pre-emptor could exercise his right after ten years from the transfer if he could prove that he knew it within four months and had appeared in court by then. 

It was extremely difficult for the purchaser, who had improved the land for the previous ten years; in exchange, the compensation was insufficient. It can also be seen that the price of land has increased numerous times. The provisions in the preceding section were somewhat adaptable. 

To address these issues, a specific maximum time limit is imposed, and the amount of compensation is increased. Furthermore, as stated in the previous section, a co-sharer tenant and contiguous tenant could exercise the right of pre-emption, which was also a factor in the court hearing numerous applications for pre-emption. It was due to a court overload. 

This scope is now limited; only a co-sharer tenant may file a pre-emption application under Section 96 of the SAT Act. Section 96's current provisions are somewhat rigid; it appears that this section discourages bringing a pre-emption application where there is no strong necessity. There were drawbacks in the previous section that could cause harassment to the purchaser. It is now removed by inserting specific provisions regarding the maximum time limitation (3 years from the date of deed registration).

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