Rejected the petition filed by Mukunda Rao and Venkatesh RaoSreenivas Justice Harris Kumar indicates that in favor of sale, the applicants are prohibited from exercising rights under section 3 of the Act. Section 2 of the Act provides for courts to order the sale of property if it is not possible to divide it easily or fairly. Under section 3, if a shareholder wants to sell a property, other shareholders can buy the same property.
A property in Bhadravathi township in Shivamogga district was put up for spot sale in April 2006. The highest bidder was Ramachandra Rao, an early decision debtor and a shareholder, at a price of slightly over Rs 12 lakh. After that, in a court sale process, a Mujeeb offered Rs 12.1 lakh and paid for it. Ramachandra Raolegal representatives subsequently contested the sale, and HC directed the court hearing to proceed in terms of the provisions of the Partition Act.
After that, Ramachandra Rao’s legal representative moved to court, seeking permission to deposit two-thirds of Rs 12.1 lakh. Another application under article 4 of the Separation Act requesting permission to exercise the pre-emption right was also filed. The petitioners Mukunda and Venkatesh Rao also asked the court to waive their two-thirds share.
Under section 4 of the Act, when a shareholder in an undivided family-owned home sells to an outsider, he or she can file a suit for partition and the other shareholder can purchase the outsider’s share.
On 25 October 2021, the court hearing partially permitted the defense brought by the legal representatives of Ramachandra Rao and directed them to deposit Rs 16,57,058 as two thirds for Mukunda and Venkatesh Rao.
The court allowed the Petitioners to buy the Petitioners’ shares. The petitioners then argued that as shareholders, they had the right to purchase the shares of the defendant – attorney Ramachandra Rao. According to them, since the applicant first filed an application under article 2 of the Separation Law, they have the right to buy shares of other shareholders.
Ramachandra Rao argued that the petitioners had forfeited their right to apply under section 2 indicating that they wanted the proceeds from the sale of the property.