Holding

The Explanation to Section 16(1) excludes gifts from the entire Section 16, so sub‑clause (3) on pre‑emption does not apply to transfers by gift.

Summary

The appellant, a neighbour of a parcel of land, claimed a right of pre-emption under sub‑clause (3) of Section 16 of the Bihar Land Reforms (Fixation of Ceiling Area and Acquisition of Surplus Land) Act, 1961, after the land was gifted by his brother (the third respondent) to his sister (the fifth respondent) on 11 May 1982. The Board of Revenue and the Patna High Court rejected the claim, holding that the Explanation to Section 16(1) excludes gifts from the operation of the entire Section 16, including the pre‑emption provision. The appellant argued that the Explanation should apply only to sub‑clause (1) and not to sub‑clause (3). The Supreme Court examined the language of the Explanation and the legislative scheme of Sections 16, 17 and 18, concluding that gifts are excluded from all sub‑clauses of Section 16. Consequently, the neighbour’s pre‑emption right did not arise. The Court dismissed the appeal, affirming the decisions of the Board of Revenue and the High Court.

Issues considered

Whether the Explanation to Section 16(1) of the Bihar Land Reforms Act, which excludes inheritance, bequest and gift, also excludes the application of sub‑clause (3) concerning a neighbour's right of pre‑emption.
Whether a neighbour can claim pre‑emption when the transfer of land is by gift.

Legislation cited

Bihar Land Reforms (Fixation of Ceiling Area and Acquisition of Surplus Land) Act, 1961s. 16(1), s. 16(3), s. 17, s. 18
Registration Act, 1908

Subjects

pre‑emptiongift transferBihar Land Reforms ActSection 16 interpretationneighbour's rightland ceilinglegislative scheme

Judgment

.... SHRI GOKUL MAHTO A
v.
THE STATE BANK OF BIHAR AND ORS.

FEBRUARY 24, 1999

[M. JAGANNADHA RAO AND S.N. PHUKAN, JJ.] B
...
Bihar Land Refonns Fixation of Ceiling Area and Acquisition of
Surplus Land Act, 1961; Sections 16(1) Explanation 16(3), 17 a11d 18.

Pre-emptioit-Neighbour's light of pre-emption-Applicability to land c
received in gift-Land gifted to fifth respo11dent by third respo11dent (her
brother) 011 1l.5.1982:-Appella11t a neighbour in respect of the said property
claimed a light of pre-emption under Section 16(3}--Application rejected by
Board of Revenue and High Court on the ground that Section 16(3) does
not apply to transfers by way of gift-Appeal before Supreme Court-Held D
~
view taken by Board of Revenue and High Court is right--Explanation to
,...
Section 16(1) clearly excludes from the purview of the entire Sectio11 16
trans[ers by way of inheritance, bequest or gift.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6974 of
1994. E

From the Judgment and Order dated 22.3.94 of the Patna High Court
in C.W.J.C. No. 3314 of 1987.

R.P. Kathuria, C.S. Ashri and Ms. Kailas~ Golani for the Appellant. F
~

Ms. Naresh Bakshi (NP) for the Respondents.

The following Order of the Court was delivered :

This is an appeal by the appellant from the judgment of the Patna G
High Court dated 22.3.1994 in Writ Petition No. CWJC 3314/87. By that
judgment the High Court dismissed the writ petition, filed by the appellant,
~ questioning the orders of the Board of Revenue dated 19.5.1987, allowing
the revision filed by the respondent, and setting aside the orders passed by
the authorities subordinate to the Board. H
885
886 SUPREME COURT REPORTS (1999] 1 S.CR

A The point arises under Section 16 of the Bihilr Land Reforms (Fixa-
tion of Ceiling Area and Acquisition of Surplus Land), Act, 1961. The
appellant is a neighbour in respect of the property which was gifted to the
fifth respondent by her brother, the third respondent, on 11.5.1982. The
appellant claimed a right of pre-emption under Sub-clause (3) of Section
B 16 of the abovesaid Act.

Learned counsel for the appellant has contended that gifts do come
within Sub-clause (3) of Section 16 in spite of the Explanation added below
Sub-clause (1) of Section 16. According to counsel, the Explanation which
excludes 'gifts' from the purview of Section (16) must be confined to
C Sub-clause (1) of Section (16) only and cannot be applied for purposes of
Sub-clause (3) of Section (16), which deals with the right of pre-emption
of the neighbour.

Section 16 of the Bihar Land Reforms (Fixation of Ceiling Area and
Acquisition of Surplus Land), Act 1961 reads as follows :
D
16. Restriction on JUture acquisition by transfer, etc. - (1) No
person shall after the commencement of this Act, either by himself
or through any other person, acquire or possess by transfer, ex-
change, lease, mortgage, agreement, or settlement any land which
together with the land, if any, already held by him exceeds in the
E aggregate the ceiling area.

Explanation : For the purposes of this section 'transfer' does
not include inheritance, bequest or gift.

(2)(i) After the commencement of this Act, no document
F incorporating any transaction for acquisition or possession of any
land by way of transfer, exchange, lease, mortgage, agreement or
settlement shall be registered, unless a declaration in writing duly
verified is made and filed by the transferee before the registering
authority under the Indian Registration Act, 1908 (XVII of 1908),
G as to the total area of land held by him by himself or through any
other person anywhere in the State.

(ii) No such registering authority shall register any document
evidencing any transaction if, from the declaration made under
clause (i), it appears that the transaction has been effected in
H contravention of the provision of sub-section) (1).
GOKUL MAHTO v. STATE BANK OF BIHAR 887

.. (iii) No land shall be transferred, exchanged, leased,
mortgaged, bequeath or gifted without a document registered in
A

accordance with the provisions of the Indian Registration Act, 1908
(XVII of 1908).

Expla11atio11 - Nothing in this sub-section shall be deemed to
have any effect on the provisions of the tenancy law of the area B

- .I, relating to transfer, exchange, lease, mortgage, agreement or set-
tlement.

(3)(i) When any transfer of land is made after the commence-
ment of this Act to any person other than a co-sharer of a raiyat
or adjoining land, any co-sharer of the transferor or any raiyat c
holding land adjoining the land transferred, shall be entitled, within
three months of the date of registration of the document of
transfer, to make an application before the Collector in the
prescribed manner for the transfer of the land to him on the terms
and conditions contained in the said deed :
... D
>' Provided that no such application shall be entertained by the
Collector unless the purchase - money together with a sum equal
to 10% thereof is deposited in the prescribed manner within the
said period.

(ii) On such deposit being made, the co-sharer or the raiyat E
shall be entitled to be put in possession of the land irrespective of
the fact that the application under clause (i) is pending for
decision:

Provided that where the application is rejected, the co-sharer
-.\ or the raiyat as the case may be, shall be evicted from the land F
and possession thereof shall be restored to the transferee and
transferee shall be entitled to be paid a sum equal to 10% of the
purchase-money out of the deposit made under clause (i).

(iii) If the application is allowed, the Collector by an order
direct the transferee to convey the !~cl-in favour of applicant by
G
executing and registering a document of transfer within a period
to be specified in the order and, if he neglects orrefuses to comply
j-
with the direction, the procedure prescribed in order 21, rule 34
of the Code of Civil Procedure, 1908 (V of 1908), shall be, so far
as may be, followed. H
-{

888 SUPREME COURT REPORTS (1999] 1 S.C.R. ~
/-

A The Explanation, below sub-clause 1 of Section 16, it will be noticed, '>-
clearly excludes from the purview of the entire Section 16 transfers by way
of inheritance, bequest or gift. This is clear from the language used in the
Explanation set out above which clearly uses the words "for the purposes
of the Section". The said words would therefore mean that gifts are
excluded even from the purview of all the Sub-~ections of Section (16)
B including sub-clause 3 of Section 16. We, accordingly, reject the contention
of the learned counsel for the appellant.

Further, it appears that there is a clear legislative scheme in Section
(16) and (17) on the one hand and Section 18 on the other. While Section
>
-
c 18 deals specifically with the transfer by way of inheritance, bequest or gift,
Section 16 and 17 deal with transfers other than those by inheritance,
bequest or gift. Hencc, Sub-clause (3) of Section 16 cannot apply to cases
of gift.

D It is, therefore, obvious that the right of pre-emption, as claimed by
the appellant, as a neighbour is not attr~cted to the case of the gift by the " IC:
third respondent in favour of the fifth respondent. The facts of the case
show that the gift made on 11.5.1982 by the third respondent was to his
own sister who is the fifth respondent and the gift was for the purpose of
construction of a house.
E
Pleadings of the petition before the primary authority do not make
any allegation that the gift was benami or a sham document. There is no
doubt some discussion before the appellate authority as to whether the
document is benami or sham, but in our opinion, it was not necessary for
F ·the said authorities to go into this question as there was no pleading before ~

the primary authority. .-
We are of the view that the Board of Revenue and the High Court
were right in disallowing the application of the appellant for pre-emption
G on the ground that Sub-clause (3) of Section (16) does not apply to
transfers by way of gift. The appeal is accordingly dismissed. In the
circumstances, there will be no order as to costs.

*
-
T.N.A. Appeal dismissed.