Thursday 3 May 2012

Right of Pre-emption in Bahria Town



Right of Pre-emption is a right practiced in many parts of the world. It has special importance in Islamic law. That is one of the reasons because of which it is part of Pakistani legal system. Right of pre-emption existed in Indo Pak Sub-continent even before partition of India and Pakistan. However, it was having status of a local law in those times. In the province of Punjab the pre-emption law was Punjab Pre-emption Act 1913 that was later repealed by a judgment of Supreme Court of Pakistan declaring it repugnant to the Provisions of Islam. A new act was promulgated in the province in with the name Punjab Pre-emption Act 1991.
There is no statutory law of Pre-emption in the provinces of Baluchistan and Sindh in Pakistan. In the province of KPK the act of pre-emption was NWFP pre-emption act 1950. Certain provisions of this act were declared repugnant to the injunctions of Islam and a new act was promulgated in the province of NWFP in 1987.
Right of pre-emption is only exercisable in cases where sale is an absolute one. This very fact is mentioned in section 2(d) of Punjab Pre-emption Act, 1991.
2-(d) Sale means permanent transfer of the ownership of an immovable property in exchange for a valuable consideration and includes transfer of an immovable property by way of Hiba-bil-Iwaz or Hiba ba Shart-ul-Iwaz, but does not include_____
                (i) transfer of an immovable property through inheritance or will or gift, other than Hiba-bil-Iwaz or Hiba-ba shart-ul-Iwaz,
                (ii) a sale in execution of a decree for money or of any order of a civil, criminal, revenue or any other Court or a Revenue Officer or any local authority;
                (iii) exchange of agricultural land; and
                (iv) Transfer of an immovable property for a consideration other than valuable consideration, such as the transfer of an immovable property by way of dower or composition in a murder or hurt case.”

Bare perusal of above provision of law shows that sale is a permanent transfer of ownership of immovable property in exchange for a valuable consideration. Sale is complete when permanent transfer of ownership of immovable property is affected in exchange of a valuable consideration.


Section 5 of the said act further clarifies this concept in the following manner.

 5.Right of pre-emption.__ (1) the right of pre-emption shall arise in case of sale of immovable property.”
The perusal of said provision of law will show the right of preemption arises in case of sale of immovable property only and where there is no sale of immovable property the right of pre-emption is not available. It is an established proposition of law that right of pre-emption is not a right of free purchase either from the vendor or from the vendee involves in the new contract of sale but it is simply a right of substitution. It means the pre-emptor in the event of success of his claim, stand in the shoes of the vendee with respect to all rights and obligations arising from the sale of property under the pre-emption. It is, in fact, as if in a sale deed the vendee’s name were rubbed out and the pre-emptor’s name inserted in its place. In other words the pre-emptor does not get a better title then the vendor.


The right of pre-emption rests in three kinds of persons. This very fact is mentioned in section 6 of Punjab Pre-emption Act.

6. Persons in whom the right of pre-emption vests.__ (1) The right of pre-emption shall vest__
                (a) firstly, in shafi sharik;
                (b) secondly, in shafi-khaleet; and
                (c) Thirdly, in Shafi jar.

Explanation.__ (I) Shafi Sharif means a person who is a co-owner in the corpus of the undivided immovable property sold.
(II) “Shafi Khaleet means a participator in the special rights attached to the immovable property sold, such as right of passage, right of passage of water or right of irrigation.
(III) Shafi Jar means a person who has a right of pre-emption because of owning an immovable property adjacent to the immovable property sold.
(2) Notwithstanding anything in subsection (1), the right of pre-emption shall be exercisable only in case of Zaroorat or to avoid „Zarar.”

The right of pre-emption is generally not exercisable in the urban areas. There are various reasons for that. One of the big reasons is that the statutes do not allow this right to be exercisable in the urban areas. For example in the definition clause of Punjab Pre-emption Act, 1991 the immovable property is defined as:


Immovable property means immovable property situated in any area other than an urban area or within cantonment limits as declared by any law relating to Local Bodies or Cantonments, as the case may be, for the time being in force.”

That provision of law very clearly excludes the urban property that is present in the non-cantonment areas from the sphere of Pre-emption. That means no court in Punjab has jurisdiction to entertain suits of pre-emption for properties that are present in urban areas generally. As far as NWFP pre-emption Act 1987 is concerned it is silent over the issue.

Right of Pre-emption in Bahria Town
Bahria Town (Pvt) Ltd. Is a private limited company having its housing projects all over Pakistan. It is there in some of the major cities of Pakistan with having various phases. A fact is that the local laws of provinces affect Bahria Town wherever it is located. For example laws in Sindh that are applicable on Bahria Town Karachi might not be applicable on Bahria Town Rawalpindi.
According to the provisions of Registration Act, 1908 any immovable property having value of more than 100 rupees should be registered. That registration is made with the registrar of the concerned district in which the property falls. In practice there are two ways of transferring ownership in Pakistan. One way is by registration and the other way is by mutation. In cases of agricultural land generally the buyers prefer mutation over registration. However many buyers choose both the ways in general.
Whenever Bahria Town acquires any land it gets registration and mutation both of the same in its name. It develops the same into a housing project and further allots it to its customers. The point is that Bahria Town Private Limited Company remains the owner of land it purchases. The people that purchase Bahria Town plots enjoy the status of being allottees.
There are certain factors that make right of pre-emption non-enforceable in Bahria Town.  For example:-
·         Right of pre-emption only rests in case of absolute sale. This thing is discussed in detail in a reported judgment of Lahore High Court 2011 LHC 2663. Absolute sale in cases of plots of Bahria Town is not clear as the plots are only allotted not registered or mutated at the office of registrar or tehsildar.
·         In certain situations Bahria town rests the right of cancelling allotment of the allottee. That clarifies the status of an allottee as an owner always has the right of disposing of property himself.
·         Bahria Town is an urban area having urban population. It doesn’t fall under cantonment areas. That makes it excluded from the right of Pre-emption. That means right of Pre-emption is not exercisable in Bahria Town in general.
·         There are strict rules of Bahria town which an allottee is bound to follow. In cases of disputes the allottees of Bahria Town plots are bound to take the disputes to management committee of Bahria Town. Their decision is considered final and the buyers always give consent to that provision which purchasing any property in Bahria Town.
Right of pre-emption is only exercisable against Bahria town in one condition. For example if Bahria Town Private Limited purchases a land in a rural area without having status of shafi sharik, Shafi Khaleet and Shafi Jar the people having any of such status can exercise their right of pre-emption. That means Bahria Town Private Limited can be sued by an outsider having land in the area where it makes a purchase. No one can exercise right of pre-emption inside Bahria Town in that way.

Salman Yousaf Khan(Golra)
Advocate High Court Islamabad
lawyersisb@gmail.com


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