The Apex Court in the case namely R. Ramamurthi Iyer vs Raja V. Rajeswara Rao reported as AIR 1973 SC 643 dealt with the law relating to partition i.e. how the nature and incidents a Partition Suit and consequences which ensue once the provisions of the Partition Act are invoked or sought to be applied.
It was observed that Partition Act was enacted to amend the law relating to partition. The scheme of the Act as provided for in Sections 2 and 3 indicates 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 shareholders interested individually or collectively to the extent of one moiety or upwards direct a sale of the property and distribute the proceeds among the shareholders.
When a court is requested under Section 2 to direct a sale ‘any other shareholder can apply for leave to by at a valuation the share or shares of the party or parties asking for sale. In such a situation it has been made obligatory that the court shall order a valuation of the share or shares and 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 the 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 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 shares in question and offer to sell the same to the shareholder undertaking or applying to buy it at a valuation.
The purpose underlying the section is to prevent the property falling into the hands of third parties if that can be done in a reasonable manner.
In a situation where after a shareholder has applied for leave to buy at a valuation under Section 3 the other shareholder who has requested the court to exercise its power under section 2 of ordering sale can withdraw the suit under Order 23, Rule 1 of the Civil Procedure Code. The answer to this question will depend on the nature of the right or privilege which vests in the co-sharer to seek to derive benefit of the provisions of Section 3.
The Court observed following as various stages in the proceedings under Sections 2 and 3 of the Partition Act
1. In a suit for partition if, it appears to the Court that for the reasons stated in Section 2 a division of the property cannot reasonably and conveniently be made and that a sale of property would be more beneficial it can direct sale. This can be done, however, only on the request of the shareholders interested individually or collectively to the extent of one moiety or upwards.
2. When a request is made under Section 2 to the court to direct a sale any other shareholder can apply under S. 3 for leave to buy at a valuation the share of the other party asking for a sale.
3. The court has to order valuation of the share of the party asking for sale.
4. After the valuation has been made the court has to offer to sell the share of the party asking for sale to the shareholder applying for leave to buy under S. 3.
5. If two or more shareholders severally apply for leave to buy, the court is bound to order a sale of the share or shares so the shareholder who offers to pay the highest price above the valuation made by the court.
6. If no shareholder is willing to buy such share or shares at the price so ascertained the application under section 3 shall be dismissed, the applicant being liable to pay all the costs.
To a question as to at what stage the other shareholder acquires a privilege or a right under section 3 when proceedings are pending in a partition suit and a request has been made by a co-owner owning a moiety of share that a sale be held it was observed that one of the essential conditions for the applicability of section 2 of the Partition Act is that it should appear to the court that a division of the property cannot reasonably or conveniently be made. To attract the applicability of s. 3 all that the law requires is that the other shareholder should apply for leave to buy at a valuation. Once that is done the other matters mentioned in s. 3(1) must follow and the court is left with no choice or option. In other words when the other shareholder applies for leave to buy at a valuation the share of the party asking for a sale the court is bound to order valuation of his share and offer to sell the same to such shareholder at a price so ascertained.
On the issue of withdrawal of a suit in which the provisions of Sections 2 and 3 of the Partition Act have been invoked it was noted that as soon as a shareholder applies for leave to buy at a valuation the share of the party asking for a sale under section 3 of the Partition Act he obtains an advantage as the court is then bound to order a valuation and after getting the same done to offer to sell the same to such shareholder at the valuation so made. This advantage, which may or may not fulfill the juridical meaning of a right, but is a privilege or a benefit which the law confers on the shareholder.