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Aulad Ali and ors. Vs. Syed Ali Athar and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Reported inAIR1927All170
AppellantAulad Ali and ors.
RespondentSyed Ali Athar and anr.
Excerpt:
.....made that complaint it seems to me that he somewhat illogically proceeded to supply the absence of which he complained by applying the equitable rule of 'analogy to the statute' to pre-emption contracts, which, although no equitable interest was created, he held should, by analogy, be treated as offending against the rule of perpetuities, as though they did create an equitable interest, and by analogy to section 14 of the transfer of property act, must be treated as offending against the mischief prohibited in that section. justice sulaiman also is that a contract like the one before us does not offend against the rule against perpetuities, enacted in section 14 of the transfer of property act: i am clearly of opinion that a contract, which a party alleges to be a void contract, must..........to look at what the code says. the rule against perpetuity is codified in section 14 of the transfer of property act, which begins in these words 'no transfer of property can operate.' documents, and mutual rights, and obligations, contained in contracts, such as that with which we are here dealing, are not a transfer of property at all. therefore section 14 clearly has no applicability. that would be a complete answer to the argument, were it not that two experienced judges of this court in dealing on two previous occasions with this precise matter, followed a decision of the bombay high court in dinkarrao ganpatrao v. narayan vishwanath a.i.r. 1922 bom. 84 and of the madras high court in kolathu iyer v. manga vadhyar [1912] 38 mad. 114. as the matter has been expressly referred.....
Judgment:

Walsh, Ag. C.J.

1. We are of opinion that this is a clear case, and we agree with the judgment of our brother Mr. Justice Lindsay.

2. I propose to give my reasons as shortly as possible. The question arises out of a contract, which may be compendiously stated as one for exchange by the parties thereto of certain properties belonging respectively to each of them. It relates to a certain mauza, in respect of which Muhammad Razi transferred the whole of his interest, except one pie, and the parties entered into a mutual agreement as a fundamental condition of sale, that if either of them should wish to transfer the whole, or part, of his share in that mauza, that is to say as regards the transferee Nasir Uddin, what he was taking under the document, and as regards the transferrer Muhammad Razi, the single pie share which he was reserving to himself they might do so by transferring it from one to the other but if either of them desired, or in fact attempted to transfer to a third person, the other party was to have the right to pre-empt. That is a perfectly harmless and natural mutual arrangement, very common in India, quite intelligible, the object being that so long as the parties to the transaction preferred to keep out third parsons from the body of co-sharers, they should have a right of veto. In other words, it cannot be described better than creating an obligation, imposing a restriction on the use of the land by each of the parties to the contract respectively. To my mind there is no uncertainty about such a contract. It is as clear and definite as language can make a contract, and with all respect to my brother Sulaiman's view, it seems to me that is the fallacy underlying his opinion.

3. I, therefore, think that Section 32 of the Contract Act which deals with contingent contracts is a complete answer to the appellants' contentions. The right springs into existence upon the happening of a contingency. There is nothing in the contract which offends against law upon that subject. I am also clearly of opinion that Section 37 confers the benefit and imposes the obligation upon the representatives of the parties if the parties should die before the contingency occurs, and I do not understand my brother Sulaiman really to have denied that proposition.

4. Mr. O'Conor quite rightly, having regard to the state of the authorities on the point, relied upon the contention that this contract, and other similar contracts, offended against the rules against perpetuities. Having the advantage in India of having most of our law codified, it is always useful both at the beginning and end of a discussion, to look at what the Code says. The rule against perpetuity is codified in Section 14 of the Transfer of Property Act, which begins in these words 'No transfer of property can operate.' Documents, and mutual rights, and obligations, contained in contracts, such as that with which we are here dealing, are not a transfer of property at all. Therefore Section 14 clearly has no applicability. That would be a complete answer to the argument, were it not that two experienced Judges of this Court in dealing on two previous occasions with this precise matter, followed a decision of the Bombay High Court in Dinkarrao Ganpatrao v. Narayan Vishwanath A.I.R. 1922 Bom. 84 and of the Madras High Court in Kolathu Iyer v. Manga Vadhyar [1912] 38 Mad. 114. As the matter has been expressly referred to us for the purpose, it is our duty to express our opinion about those two decisions. They do not appear to have been based on any independent reasoning of the two learned Judges themselves. They adopt the view which had been laid down after a very elaborate consideration and judgment in Bombay. With great respect to the Judges, who decided the Bombay case, it seems to me that they drifted into this fallacy. The learned Chief Judge's judgment complains that difficulty arises in India owing to the distinction that exists between the law in India and the law in England, namely that the law in India does not recognize what is called the creation of equitable interest in land arising from some inchoate transaction short of an actual transfer. Having made that complaint it seems to me that he somewhat illogically proceeded to supply the absence of which he complained by applying the equitable rule of 'analogy to the statute' to pre-emption contracts, which, although no equitable interest was created, he held should, by analogy, be treated as offending against the rule of perpetuities, as though they did create an equitable interest, and by analogy to Section 14 of the Transfer of Property Act, must be treated as offending against the mischief prohibited in that section. I am unable to agree with this view; I see nothing, either legal or equitable, offending or purporting in a way to offend against the rule in such contracts as these. I therefore am of opinion that the two cases decided in this Court, Balli Singh v. Raghubar Singh A.I.R. 1923 All. 511 and Gopi Ram v. Jeot Ram A.I.R. 1923 All. 514, having followed the Bombay case, wore wrongly decided, and must be held as no longer binding in this Province.

5. It is not immaterial to observe that in the ratio decidendi of the Bombay judgment, which was quoted by our learned brothers in both the cases they decided, to which I have just referred, the learned Chief Justice expressly stated that he regarded an obligation found in a contract of this kind as one which ran with the land, and also that it was not a mere personal contract which died with the person. If those two views are correct, and I agree with them, and the rule against perpetuities does not apply, the question we have to answer is simple.

6. I am inclined to think, though it is not necessary for the decision of this case and not having fully considered the matter, I prefer to say no more about it, that Section 40 of the Transfer of Property Act, which deals with obligations imposing restrictions on the use of land, is also a complete answer to my brother Sulaiman's view.

7. The result is that we affirm the judgment of Mr. Justice Lindsay and dismiss the appeal with costs including fees in this Court on the higher scale.

Dalal, J.

8. I agree. The view of Mr. Justice Sulaiman also is that a contract like the one before us does not offend against the rule against perpetuities, enacted in Section 14 of the Transfer of Property Act: see observations in Mahomed Jan v. Fazaluddin 22 A.L.J. 400 at page 407 of 22 A.L.J. 400. His opinion was, in that case, that if a contract was for an unlimited period of time, it might be contended that it was unenforceable against the heirs and representatives as being too vague and uncertain. An agreement, the meaning of which is not certain, or capable of being made certain, is void; and it is difficult to understand how a contract, which is valid at the time it was entered into, would become unenforceable as against heirs and representatives as being too vague and uncertain. The principles enunciated in Section 40, Clause 2 of the Transfer of Property Act would apply here. A contracts to sell Sultanpur to B. While the contract is still in force he sells Sultanpur to C, who has notice of the contract. B may enforce the contract against C to the same extent as against A. The short question for decision, therefore, before us is whether the contract of 1st February 1908 was in force or not at the date of the three sales objected to by the plaintiff. In my opinion the contract had not come to an end under any rule of law. The plaintiff was therefore entitled to enforce the agreement between Muhammad Razi and Nasiruddin.

Banerji, J.

9. I agree. The rulings referred to by the learned Chief Justice, and reported in 21 A.L.J. are really not distinguishable in principle from that decided by a Bench of this Court in the case of Basdeo Rai v. Jhagru Rai A.I.R. 1924 All. 400. The question in this case is whether the contract entered into between the parties, namely that one of the parties should have the right to pre-empt in the case of a sale is void on account of uncertainty or not. I am clearly of opinion that a contract, which a party alleges to be a void contract, must be void ab initio, and such a contract cannot be treated to be valid up to a certain time and then treated as invalid. Such a clause in the sale deed is a clause which, although not amounting to an interest in the land, entitles the parties to it to the benefit of the obligations arising out of the contract. There is no difference in principle between a case where the parties entered into such a contract, so that it was enforceable for a hundred years, and the case where the contract comes into operation upon the happening of an event which though uncertain in the sense that one does not know when one of the contracting parties will die, is certain, and arises when the property is sold. I am, therefore, of opinion that the agreement is a good agreement in law.

Kendall, J.

10. I agree.

Pullan, J.

11. I agree.

Order

12. The appeal is dismissed with costs, including fees in this Court on the higher scale.


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