Statutory Right of Pre-emption is Mandatory and Cannot be Defeated by Sham Subsequent Transactions

The petitioner purchased 6 decimals of land via a registered sale deed dated 27.10.2005 for ₹12,000

Shortly after, on 31.10.2005, the petitioner’s father met with an accident; to fund medical expenses, the petitioner executed a second sale deed in favor of Respondent No. 9 on 05.11.2005 for ₹50,000

On 10.11.2005, Respondent No. 5 (an adjoining Raiyat) filed a pre-emption case (L.C. Case No. 10/2005) under Section 16(3) of the Bihar Land Ceiling Act, 1961, depositing the consideration plus 10%

After a remand from the Board of Revenue to examine if the second transaction was "sham or farzee," the Additional Collector and the Member, Board of Revenue, both held that the second transaction was a fraudulent attempt to defeat the pre-emptor's statutory right

1. Whether the second transaction, executed within nine days of the first and at a significantly higher price, was a "sham" transaction intended to frustrate the statutory right of pre-emption

2. Whether the right of pre-emption under Section 16(3) of the Bihar Land Ceiling Act, 1961, is mandatory and can be defeated by a subsequent transfer

Section 16(3) of the Bihar Land Ceiling Act, 1961, which grants a co-sharer or an adjoining Raiyat the mandatory entitlement to pre-empt a transfer within three months of registration

Shyam Sunder v. Ram Kumar (2001) 8 SCC 24, which established that while pre-emption may be a "weak right," it is a mandatory statutory right, not a discretionary one

Suresh Prasad Singh v. Dulhin Phulkumari Devi (2010) 6 SCC 441, affirming that statutory pre-emption must be enforced once the conditions are met

The Court observed that the first transaction occurred on 27.10.2005 and the pre-emption application was filed within the statutory window on 10.11.2005

The court noted the suspicious timing of the second transaction—occurring only nine days after the first—and the disproportionate jump in consideration from ₹12,000 to ₹50,000

The court reasoned that this second transfer was done without the knowledge of the pre-emptor (Respondent No. 5) specifically to render the pre-emption right economically unviable

By applying the principle that statutory rights cannot be frustrated by "sham" or "farzee" documents, the court upheld the findings of the lower authorities that the second sale was an artifice to bypass Section 16(3)

The High Court dismissed the writ petition, holding that the right of pre-emption was validly exercised by Respondent No. 5 as an adjoining Raiyat and affirmed the orders of the Member, Board of Revenue, and the Additional Collector, ruling that the second transaction was sham and forged