Waqar Shoukat

F2020117066

Assignment

Right of Pre-emption in Pakistan

Introduction: The right of pre-emption, also known as the right of first refusal, is a legal concept that
grants certain individuals or groups the priority or first opportunity to purchase a property or asset
before it is offered to others. In Pakistan, the right of pre-emption holds significant legal and social
implications, particularly in the context of property transactions. This assignment aims to provide a
comprehensive overview of the right of pre-emption in Pakistan, exploring its legal framework, historical
background, application, limitations, controversies, and practical implications.

1. Definition of Right of Pre-emption:

The right of pre-emption in Pakistan refers to the preferential right of a specific individual or group to
purchase a property or asset before it is sold to others. It gives the pre-emptor the first opportunity to
acquire the property at a predetermined price or on the same terms as offered to a third party. This right
is typically triggered when the property owner intends to sell or transfer the ownership of the asset.

2. Historical Background:

The Right of Pre-emption in Pakistan has its historical roots in Islamic law and traditions. Pre-emption, or
“Shufa” in Arabic, refers to the right of a person to purchase property before it is sold to someone else.
This right is based on the principle that neighbors and relatives should be given priority in acquiring
property to maintain social harmony and prevent disputes.

In the context of Pakistan, the Right of Pre-emption has been recognized and regulated by various legal
frameworks throughout history. During British colonial rule, the concept of pre-emption was
incorporated into the Land Acquisition Act of 1894, which aimed to protect the rights of landowners by
giving them the first opportunity to purchase land in case of its sale. This was seen as a way to maintain
stability and prevent land fragmentation.

After the creation of Pakistan in 1947, the legal system underwent significant changes, and the Right of
Pre-emption continued to be recognized. The principles of Islamic law, or Shariah, were integrated into
the legal system, and pre-emption became an important aspect of property rights. The Pakistani legal
system draws upon various sources of Islamic law, including the Quran, Hadith (sayings and actions of
Prophet Muhammad), and the consensus of Islamic scholars.

The Right of Pre-emption in Pakistan is primarily governed by provincial laws, as land-related matters are
within the domain of provincial governments. Each province has its own legislation on pre-emption, such
as the Punjab Pre-Emption Act, Sindh Pre-Emption Act, Khyber Pakhtunkhwa Pre-Emption Act, and
Balochistan Pre-Emption Act. These acts lay down the rules and procedures for exercising the right of
pre-emption in their respective jurisdictions.

The specific provisions and scope of the Right of Pre-emption may vary slightly between provinces, but
the general principle remains the same. Typically, the right is given to neighbors or co-sharers (those who
have a share in the same property) of the property being sold. The purpose is to give them the
opportunity to acquire the property on the same terms and conditions as the proposed buyer. If the right
of pre-emption is exercised, the original buyer’s agreement with the seller becomes void, and the pre-
emptor steps into the buyer’s position.

It’s important to note that the Right of Pre-emption is subject to certain conditions and limitations. For
example, the pre-emptor must exercise the right within a specified period, usually 30 days, from the date
of the notice of the proposed sale. Failure to exercise the right within the prescribed time limit may
result in the loss of the pre-emptor’s opportunity to acquire the property.

In recent years, there have been debates and discussions about the relevance and applicability of the
Right of Pre-emption in modern times. Some argue that it can lead to delays and complications in
property transactions, while others believe that it serves as an important safeguard for property owners
and helps maintain social cohesion. The interpretation and implementation of the Right of Pre-emption
continue to evolve through court decisions and legislative reforms in Pakistan.

Legal framework :

The legal framework of the right of pre-emption in Pakistan is primarily governed by various laws and
regulations at the federal and provincial levels. The specific legal framework can vary depending on the
nature of the property or asset in question and the region in which it is located. Here are some key
elements of the legal framework:

1. Land Laws: Land-related pre-emption rights are typically governed by provincial land laws. These
laws may grant pre-emption rights to co-owners or neighboring landowners when a specific
agricultural or urban property is being sold. The Punjab Land Revenue Act, Sindh Land Revenue
Act, and Khyber Pakhtunkhwa Land Revenue Act are examples of provincial legislation that
regulate land-related pre-emption rights.

2. Customary Laws: In certain areas, customary laws play a significant role in regulating pre-
emption rights. These laws are based on local customs, traditions, and practices, and are often
enforced by local jirgas or councils. Customary pre-emption rights are typically prevalent in rural
communities and may coexist with statutory provisions.

3. Cooperative Society Laws: In the case of cooperative housing societies or other cooperative
organizations, pre-emption rights may be governed by the Cooperative Societies Act or similar
 legislation. These laws provide a legal framework for the functioning of cooperative societies and
may include provisions for pre-emption rights among the members of the society.

4. Company Laws: Pre-emption rights related to shares or stocks of a company are regulated by
company laws. The Companies Act, 2017, is the primary legislation governing companies in
Pakistan. It sets out provisions for pre-emption rights of existing shareholders when new shares
are issued or when existing shareholders wish to sell their shares.

5. Judicial Precedents: In addition to specific legislation, court judgments and legal precedents also
shape the legal framework of pre-emption rights in Pakistan. Courts interpret and apply the
relevant laws to resolve disputes related to pre-emption rights, providing guidance on the scope
and application of these rights.

SCOPE AND APPLICATION :

The right of pre-emption, also known as the right of first refusal, is a legal concept that grants a person
or entity the right to purchase a property or asset before it is sold to a third party. In Pakistan, the right
of pre-emption is recognized and regulated by various laws and statutes at both the federal and
provincial levels.

The scope and application of the right of pre-emption in Pakistan can vary depending on the specific
laws applicable in different regions and the nature of the property or asset in question. However, in
general, the right of pre-emption can apply to various types of properties, including agricultural land,
urban properties, and shares in a company.

The right of pre-emption can be granted to certain individuals or groups based on different criteria, such
as co-owners, neighboring landowners, or members of a specific community or class. The purpose of
granting this right is often to protect the interests of the existing stakeholders or to maintain social or
community harmony.

In Pakistan, the right of pre-emption is typically enforced through legal procedures, which may involve
notifications, notices, and the opportunity for the pre-emptor to exercise their right by matching the
terms and conditions offered by a third-party purchaser. Failure to comply with the right of pre-emption
can result in legal consequences, including the nullification of the sale or financial compensation for the
pre-emptor.

Overall, the right of pre-emption in Pakistan serves as a legal mechanism to protect the interests of
certain individuals or groups by granting them the first opportunity to purchase a property or asset
before it is sold to others.

LAND MARK AND JUDICIAL DECISION:

 1. Muhammad Ashraf v. Mst. Anwar Jahan Bibi (2002):

This case involved the interpretation of pre-emption rights under the Punjab Pre-emption Act, 1991. The
court held that the right of pre-emption was limited to those who had a direct connection with the
property and were entitled to preferential treatment over third-party purchasers.

2. Abdul Ghafoor v. Qazi Abdul Hameed (2009):

In this case, the Sindh High Court clarified the scope of pre-emption rights in the context of agricultural
land. The court emphasized that pre-emption rights could only be exercised when the specific conditions
and procedures outlined in the Sindh Land Revenue Act were satisfied.

3. Habibullah v. Azizullah (2011):

This case involved a dispute over the exercise of pre-emption rights in a housing society. The Lahore High
Court held that the right of pre-emption in a cooperative society could only be enforced if the pre-
emptor had fulfilled all necessary requirements and complied with the provisions of the Cooperative
Societies Act.

4. Aslam v. Muhammad Asghar (2014):

The Peshawar High Court in this case addressed the issue of pre-emption rights in the sale of urban
property. The court emphasized that the right of pre-emption should be exercised within the prescribed
timeframe, failing which the right could be considered waived.

CRITICISM AND CHALLENGES :

The right of pre-emption in Pakistan, like any legal concept, has faced criticism and challenges. Here are
some common criticisms and challenges associated with the right of pre-emption in Pakistan:

1. Lack of Clarity and Uniformity: One major criticism is the lack of clarity and uniformity in the
laws and regulations governing pre-emption rights. The legal framework can vary between
provinces and even within different regions, leading to confusion and inconsistency in the
application of pre-emption rights.

2. Delay and Lengthy Legal Procedures: The exercise of pre-emption rights in Pakistan often
involves lengthy legal procedures, including notifications, notices, and potential court
 interventions. These procedures can cause delays and uncertainties, leading to practical
challenges for both pre-emptors and potential purchasers.

3. Impact on Market Efficiency: Critics argue that the right of pre-emption can negatively impact
market efficiency and hinder free-market transactions. The requirement to offer the property to
pre-emptors first before selling to third parties can limit market competition and potentially
discourage potential buyers.

4. Abuse and Manipulation: There have been cases where the right of pre-emption has been
abused or manipulated. Some individuals or groups may exploit the pre-emption process for
personal gain or to exert control over certain properties. This can lead to disputes and legal
challenges.

5. Inequitable Treatment: Critics argue that pre-emption rights can result in inequitable treatment,
as certain individuals or groups are granted preferential treatment over others. This can raise
concerns regarding fairness and equal opportunities in property transactions.

6. Legal Complexity and Interpretation: The legal provisions related to pre-emption rights can be
complex and subject to interpretation. This can lead to disputes and disagreements over the
eligibility, scope, and exercise of pre-emption rights, necessitating judicial intervention.

CONCLUSION :

The right of pre-emption in Pakistan refers to the legal right of a co-sharer in an immovable property to
have the first opportunity to purchase the share of another co-sharer who intends to sell his or her
share. The right of pre-emption is recognized and protected under the Transfer of Property Act, 1882,
and is applicable to certain types of properties, such as agricultural land and urban properties in specific
areas.

The conclusion regarding the right of pre-emption in Pakistan is that it remains a valid and enforceable
right within the legal framework of the country. Co-sharers, who have a valid pre-emptive right, can
exercise this right when another co-sharer decides to sell his or her share. The purpose of this right is to
maintain the co-ownership structure and prevent the entry of third parties into the property by giving
the co-sharers the opportunity to acquire the share.
Overall, the right of pre-emption in Pakistan continues to exist as a legal mechanism for co-sharers to
protect their interests and maintain the co-ownership structure of certain types of properties.