MRS. MALATI RAMCHANDRA RAUT AND ORS.versusMAHADEVO VASUDEO JOSHI AND ORS.

       MRS. MALATI RAMCHANDRA RAUT AND ORS.
                                                                               A
                        v.
         MAHADEVO VASUDEO JOSHI AND ORS.

                          DECEMBER 20, 1990

          [DR. T.K. THOMMEN AND R.M. SAHAI, JJ.]                               B

      Partition Act, 1893: Sections 2 and 3-Partition suit-Properties
incapable of division by metes and bounds-Plaintiffs prayer for its sale
and distribution of the proceeds-Defendants willing to buy.             ·

      Plaintiffs' shares-Determination of valuation of plaintiffs shares       C
-What is relevant date-ls it when the defendants sought leave of the
court to buy plaintiffs' shares or the date of the preliminary decree
declaring the shares of the parties?

         The respondents filed a suit for partition claiming together 2/3rd
 share while admitting !hat the defendants together held l/3rd share in        D
 the suit properties. It was pleaded by the plaintiffs that the suit proper-
  ties could not be reasonably and conveniently divided and therefore had
  made a prayer for its sale and distribution of the proceeds amongst the
 shareholders. The defendants proposed to buy at a valuation the 2/3rd
 shares held by the plaintiffs and accordingly made a request to the court
  under section 3. of the A.ct to direct a valuation of the same. The          E
  plaintiffs tried to backtrack by asking for amendment of their plaint to
  delete their averment that the properties could not be reasonably and
  conveniently divided and for its sale and distribution of the proceeds.
· This was disallowed by the trial court and appeal preferred against this
  rejection was unsuccessful.
                                                                               F
      The learned single judge of the High Court after noticing that
there was no dispute between the parties as regards their shares nor was
there dispute any longer that the properties were incapable of division
by metes and bounds they had to be sold and the proceeds distributed
according to their shares. ButJ!t~ defendants being willing and actually
having sought leave of the court to purchase the shares of the plaintiffs G
at a valuation, those shares had to be valued as on the date leave to
purchase was sought by them. He, therefore, directed valuation of the
properties so that shares of the plaintiffs could be sold to defendants.
The plaintiffs took an appeal before the Division Bench which held that
the present appellants who claimed to be the legal representatives of the
original defendants, had first to obtain probate or letters of administra- H

                                    577
    578          SUPREME COURT REPORTS                [1990] Supp. 3 S.C.R.

A tion and thereafter a preliminary decree declaring the shares or the
  parties has to be passed and the valuation or the properties would have
    to be made with reference to the date of such preliminary decree.

           The defendants have come In appeal challenging the correctness
B   of this decision. Allowing the appeal, setting aside the judgment of the
    Division Bench and restoring that of the single judge, this Court,

          HELD: It is the duty of the Courts to order the valuation of the
    shares of the party askinJ? for a sale of the property under Section 2 and
    to offer to sell the shares or such party to the shareholders applying for
    leave to buy them In terms of section 3 at the price determined upon
C   such valuation. As soon as a request for sale is made by a shareholder
    under Section 2, any other shareholder becomes immediately entitled to
    make an application under Section 3 for leave to buy the shares of the
    former. The right to buy having thus arisen and become crystallised,
    the date with reference to which valuation of the shares In question has
    to be made is the date on which the right arose. [581C-D]
0
          The fact that legal representatives representing the estate of a
    deceased defendant had not yet obtained probate or letters of administ-
    ration did not mean that the right which arose In favour of that
    defendant during his life when he sought leave under section 3 did not
    accrue to the benefit of his estate, but was postponed till they obtained
E   probate or letter of administration. This right came to be vested in bis
    estate. The valuation of the shares has to be made as on the date of
    accrual of the right and valuation being a fact finding process must be
    resorted to as soon as possible after such accrual. [58 lE-G]

          Whenever the shares In question In the properties come to be sold
F   to the persons entitled to buy them under section 3, the price of those
    shares will have to be determined on the basis of _the valuation made
    with reference to the time of accrual of the right. [582C]

          R. Ramamurthi Iyer v. Raja V. Rajeswara Rao, [1972] 2 SCC 721
    at p. 727, followed.
G
          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6190
    of 1990.

         From the Judgment and Order dated 18.11.1987 of the Bombay
H   High Court in Appeal No. 894 of 1985.
               MRS. M.R. RAUT v. M.V. JOSHI [THOMMEN, J.]               579

         R.P. Bhatt, K.J. John and Mrs. K.J. John for the Appellants.
                                                                              A
         Virender Tuljapurkar, Raian Karanjawala, Mrs. Nandini Gore
    and Mrs. Manik Karanjawala (NP) for the Respondents.

         The Judgment of the Court was delivered by
                                                                              B
         THOMMEN, J.Special leave granted.

          The defendants in Suit No. 400 of 1972, which is a suit for parti-
    tion, appeal from the judgment of the Division Bench of the Bombay
r   High Court in Appeal No. 894 of 1985 whereby the learned Judges,
    setting aside the judgment of the Single Judge, held that the valuation C
    of the shares of the plaintiffs in the two suit properties had to be made
    for the purpose of section 3 of the Partition Act, 1893 (hereinafter
    referred to as the "Act") not as on the date when the defendants sought
    leave of the Court to buy the respective shares of the plaintiffs, but as
    on the date of the preliminary decree declaring the shares of the
    parties in the properties in question.                                    D

          The suit for partition was filed by the present respondents on
    17.5.1972. They averred that the nature of the suit properties was such
    that their division could not reasonably or conveniently be made and
    that their sale and distribution of the proceeds would be more benefi-
    cial for all the shareholders. The plaintiffs, therefore, prayed that the E
    properties be sold and the proceeds distributed amongst the share-
    holders. The plaintiffs admitted that the defendants together held
    1/3rd share in the properties and the plaintiffs together held 2/3rds
    shares. On 26.6.1972 the plaintiffs took out a notice of motion for the
    appointment of a receiver and injunction. In the affidavit filed on 5th
    July, 1972 by the defendants in reply to the notice of motion, they F
    stated that they were prepared to buy at a valution the shares of the
    plaintiffs, and requested the Court to direct a valuation of the same. In
    their written statement filed on 9.10.1972, the defendants reiterated
    their willingness and sought leave of the Court to buy at a valuation
    the 2/3rds shares held by the plaintiffs in the properties.
                                                                              G
            The plaintiffs, however, took out chamber summons for amend-
     ment of the plaint to delete their averment to the effect that the pro-
      perties could not reasonably or conveniently be divided and the sale of
      the properties and distribution of the proceeds would be more benefi-
    . cial for the shareholders. The chamber summons was dismissed on
      9.11.1972. The appeal preferred by the plaintiffs against that order was H
      dismissed on 1.4.1977.
     580         SUPREME COURT REPORTS                (1990] Supp. 3 S.C.R.

A         In the mean time, the original plaintiffs and the defendants, except
    one, had died and their legal representatives were brought on record.

         The learned Single Judge noticed that there was no dispute bet-
  ween the parties as regards their respective shares in the suit proper-
  ties. It was also no longer in dispute that the properties were incapable
B of division by metes and bounds and that they had, therefore, to be
  sold. The defendants having sought leave of the Court to purchase the
  shares of the plaintiffs in the properties at a valuation, those shares
  had to be valued as on the date of their so seeking the leave and not as
  on any subsequent date. The learned Judge held that once the
  defendants exercised their right under section 3(1) of the Act, their
C rights,· as between themselves and the plaintiffs, were crystallised and
  concluded. He, however, stated that he did not pass any decree in the
  suit, but only directed the valuation of the properties with reference to
  the date on which the defendants sought leave of the Court under
  section 3 in order that, upon conclusion of the proceedings, the shares
  of the plaintiffs in the properties could be sold to the deferrdants at the
D price so determined.

        On appeal by the plaintiffs, the Division Bench held that the
  present appellants, who claimed to be the legal representatives of the
  original defendants, had first to obtain probate or letters of administ-
  ration, and thereupon a preliminary decree had to be passed. It was
E with reference to the date of such preliminary decree that the valua-
  tion of the properties would have to be made.
          In R. Ramamurthi Iyer v. Raja V. Rajeswara Rao, (1972] 2 SCC
    721, this Court stated:

F               "Tne scheme of Sections 2 and 3 (of the Partition Act,
                1893) apparently is that if the nature of the property is such
               or the number of shareholders is so many or if there is any
               other special circumstance and a division of the property
               cannot reasonably or conveniently be made the court can in
               its discretion, on the request of any of the share-holders
G              interested individually or collectively to the extent of one
               moiety or upwards, direct a sale of the property and distri-
               bute the proceeds among the shareholders. Now where a
               court has been requested under Section 2 to direct a sale
               any other shareholder can apply for leave to buy at a valua-
               tion the share or shares of the party or parties asking for
H              sale. In such a situation it has been made obligatory that
                 MRS. M.R. RAUT v. M.V. JOSHI [TIIOMMEN, J.]                 581

                the court shall order a valuation of the share or shares and
                                                                                   A
                offer to sell the same to the shareholder who has applied
                for leave to buy the share at a price ascertained by the
                court. In other words if a plaintiff in a suit for partition has
     \
                invoked the power of the court to order sale instead of
                division in a partition suit under section 2 and the other
                shareholder undertakes to buy at a valuation the share of          B
                the party asking for sale the court has no option or choice
                or discretion left to it and it is bound to order a valuation of
                the share in question and offer to sell the same to the share-
                holder undertaking or applying to buy it at a valuation
                 ...... ". (p.727)

          It is the duty of the Court to order the valuation of the shares of      c
    the party asking for a sale of the property under section 2 and to offer
    to sell the shares of such party to the shareholders applying for leave to
    buy them in terms of section 3 at the price determined upon such
    valuation. As soon as a request for sale is made by a shareholder under
    section 2, any other shareholder becomes immediately entitled ·to              D
    make an application under section 3 for leave to buy the shares of the
    former. The right to buy having thus arisen and become crystallised,
1   the date with reference to which valuation of the shares in question has
    to be made is the date on which the right arose.

        The learned Single Judge rightly observed that there was no
  dispute about the extent of shares held by the defendants. The fact
  that the legal representatives representing the estate of ~ deceased
  defendant had not yet obtained probate or letters of administration did
  not mean that the right which arose in favour of that defendant, upon.
  his making an application for leave to buy under section 3, was a right
  which did not accrue to the benefit of his estate, but was postponed till
  the legal representatives obtained probate or letters of administration.
, That right was never in abeyance; it had accrued in favour of the
, deceased during his life when he sought leave under section 3 and
  came to be vested in his estate. That being a right of purchase, the
  valuation of the shares has to be made as on the date of accrual of the
  right, and valuation being a fact finding process must be resorted to as         G
  soon as possible after such accrual.

         Accordingly, the valuation, though made subsequently, has to be
    made with reference to the time at which the right arose which, in the
    present case, as found by the learned Single Judge, was on 5th July,
    1972 when the defendants filed their affidavit seeking leave to buy, or,       H
    582         SUPREME COURT REPORTS                 [1990] Supp. 3 S.C.R.
A   at any rate, on 9th October, 1972 when they filed their written state-
    ment reiterating that request. In a case such as this, where the extent
    of shares held by the plaintiffs and the defendants is not disputed, the
    fact that the proceedings continued by reason of the appeal filed by the
    plaintiffs against the order refusing to allow them to amend their
B   plaint, or for any other reason, was not relevant to the time of accrual
    of a right arising under section 3. The fact that a preliminary decree
    may have to be passed before passing a final decree and that no such
    decree has yet been made is again not relevant, on the facts of this
    case, to the question as to the time of accrual of a right under section 3.

          In the circumstances, whenever the shares in question in the
c   properties come to be sold to the persons entitled to buy them under
    section 3, the price of those shares will have to be determined on the
    basis of the valuation made with reference to the time of accrual of the
    right. This, as found by the learned Single Judge, was the price pre-
    vailing in July 1972.
D
          The learned Judges of the Division Bench have, in our view,
    erred in setting aside the judgment of the learned Single Judge.
    Accordingly, we set aside the impugned judgment and restore that of
    the learned Single Judge. The appeal is allowed in the above terms
    with costs throughout.

    R.N.J.                                                   Appeal allowed.