Larger Bench holds West Bengal land pre-emption pleas are not maintainable without depositing the sale-deed consideration plus 10% interest upfront

The Larger Bench was constituted to answer a reference arising from proceedings concerning a pre-emption application under Section 8 of the West Bengal Land Reforms Act, 1955 (“1955 Act”).

The reference concerned a co-sharer’s application accompanied by a deposit lower than the consideration stated in the sale deed, together with 10% statutory interest, on the allegation that the deed reflected an inflated consideration and that the actual consideration was the lesser amount deposited.

The reference also contemplated the circumstance where no notice under Section 5(5) of the 1955 Act had been served on the co-sharer/pre-emptor.

One side relied on the earlier Calcutta High Court decisions permitting subsequent deposit or holding that short deposit did not render the application non-maintainable; the opposing side relied on Barasat Eye Hospital v. Kaustabh Mondal and Abdul Matin Mallick v. Subrata Bhattacharjee (Banerjee) to contend that full deposit of the sale consideration shown in the deed, together with 10%, was a condition precedent to maintainability.

1. Whether a pre-emption application under Section 8 of the 1955 Act, including one filed by a co-sharer, is liable to be rejected at the threshold as not maintainable if it is not accompanied by the entire consideration stated in the sale deed together with 10% statutory interest.

2. Whether an allegation that the consideration stated in the sale deed is inflated, and that the actual consideration was lower, permits the pre-emptor to deposit only the alleged actual consideration and defer or avoid deposit of the full amount stated in the deed.

3. Whether the principle requiring full deposit applies irrespective of the basis of the pre-emption claim, including co-sharership, contiguous ownership or bargadarship.

Section 8(1) of the 1955 Act requires an applicant seeking pre-emption to deposit the consideration money together with an additional 10% at the time of invoking the statutory right.

Section 9(1) contemplates notice and an enquiry into the consideration actually paid and other sums only after the deposit under Section 8(1) has been made; following that enquiry, the Court may direct further deposit or refund any excess.

In Barasat Eye Hospital v. Kaustabh Mondal, (2019) 19 SCC 767, the Supreme Court held that deposit of the sale consideration and 10% is a pre-condition for pursuing pre-emption under the 1955 Act and applied a literal construction to Sections 8 and 9.

In Abdul Matin Mallick v. Subrata Bhattacharjee (Banerjee), (2022) 7 SCC 147, the Supreme Court reaffirmed that the entire sale consideration shown in the deed plus 10% must be deposited along with the application before any Section 9 enquiry can occur; an assertion that the deed amount is inflated does not excuse short deposit.

These Supreme Court decisions, being binding under Article 141 of the Constitution, prevail over earlier contrary Calcutta High Court decisions.

Although earlier Calcutta High Court decisions had treated the deposit requirement as capable of subsequent compliance, the Larger Bench held that the subsequent Supreme Court decisions had settled the issue.

The Court distinguished the statutory wording of the Bihar enactment considered in Barasat Eye Hospital but held that the Supreme Court’s decision had independently and specifically interpreted Sections 8 and 9 of the 1955 Act.

The statutory sequence requires the pre-emptor first to deposit the consideration stated in the deed plus 10%; only thereafter may the transferee dispute the actual consideration and may the Munsif conduct the enquiry contemplated by Section 9(1).

If the enquiry establishes that the actual consideration was lower, the excess deposit can be refunded.

An allegation of inflated consideration therefore affects the subsequent merits enquiry, not the threshold maintainability of the application.

The rule applies uniformly to applications based on co-sharership, contiguous ownership or bargadarship, and is not dependent on the particular ground of pre-emption.

A pre-emption application under Section 8 of the 1955 Act—whether based on notified or unnotified co-sharership or any other statutory ground—must be rejected at the outset as not maintainable if it is not accompanied by the full consideration amount shown in the sale deed together with 10% thereon.

This remains so even where the applicant alleges that the deed amount is inflated and deposits only the alleged actual consideration.

Any dispute regarding the actual consideration may be examined under Section 9 only after the statutory deposit has been made.

C.O. No. 785 of 2021 was directed to be placed before the appropriate regular Bench for adjudication on merits in light of the reference answer.