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Jhagru Rai Vs. Basdeo Rai and anr. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad
Decided On
Judge
Reported in(1924)ILR46All333
AppellantJhagru Rai
RespondentBasdeo Rai and anr.
Excerpt:
pre-emption - wajib-ul-arz--contract--contract for term of settlement--uncertainty--rule against perpetuities--contract enuring for benefit of successors in title to original parties--act no. ix of 1872 (indian contract act), section 37--act no. iv of 1882 (transfer of property act), section 14, 40 and 54--'interest in immovable property.' - - ' 17. it seems to me that a contract giving rise to a right of preemption clearly falls within this category. 18. the promisee in such a contract is clearly entitled to the benefit of the obligation entered into by the promisor, namely, that when he proposes to sell the land, he will give the promisee the first offer. i am of opinion, therefore, that the obligation which springs from a contract giving rise to a right of pre-emption is clearly one.....lindsay, j.1. the material facts are set ont in the order of my learned colleague.2. on the evidence furnished by the 'zamima khewat' which was drawn up in the year 1886, it has already been decided that there was a contract entered into in that year providing for a right of pre-emption. the period of the contract was the period of the settlement and that, as my learned brother has pointed out, was to come to an end on the 30th of june, 1919. it was, therefore, a contract for a definite period, and admittedly the sale now sought to be pre-empted was made on the 10th of may, 1919, that is, within the period of the contract.3. it is this sale which according to the plaintiff gives him his cause of action, and the question is whether he is entitled to enforce his right of pre-emption,.....
Judgment:

Lindsay, J.

1. The material facts are set ont in the order of my learned colleague.

2. On the evidence furnished by the 'zamima khewat' which was drawn up in the year 1886, it has already been decided that there was a contract entered into in that year providing for a right of pre-emption. The period of the contract was the period of the settlement and that, as my learned brother has pointed out, was to come to an end on the 30th of June, 1919. It was, therefore, a contract for a definite period, and admittedly the sale now sought to be pre-empted was made on the 10th of May, 1919, that is, within the period of the contract.

3. It is this sale which according to the plaintiff gives him his cause of action, and the question is whether he is entitled to enforce his right of pre-emption, arising out of the contract, against the vendor and the purchaser.

4. It is found that the father of the plaintiff and the grandfather of the vendor signed the wajib-ul-arz and were, therefore, parties to the contract.

5. It has been argued before us that the contract for preemption cannot be enforced on the ground that it is void for uncertainty. A second argument is that such a contract should be held to be void because it is opposed to public policy. A third argument is that the contract is void for remoteness, or, to put it in other words, because it is obnoxious to the rule against perpetuities. And lastly it is contended that in no case could such a contract bind the representatives of the original parties.

6. With regard to the first argument I agree with my learned brother that no uncertainty attaches to the contract under consideration. As he points out, the intention was to contract for a definite period, namely, the period of the settlement.

7. As for the second argument it is quite untenable in a Province where pre-emption is recognized and encouraged.

8. As for the fourth argument, namely, that a contract of this nature can in no case bind the representatives of the parties, that is a matter to be decided by the enactment contained in Section 37 of the Indian Contract Act. It is nothing to the point to say that a man cannot bind his representatives by entering into a contract giving rise to a right of pre-emption. Whether a person purports to bind his representatives or not, they will be bound by operation of law if the law declares them to be so bound, and such a declaration is contained in Section 37 above referred to:-- 'Promises bind the representatives of the promisors in case of the death of such promisors before performance unless a contrary intention appears from, the contract.'

9. As is evident from illustration (b) to this section, the only exception to the rule arises in those cases in which the personal skill or the special competence of the promisor is relied upon. No such question can possibly arise in a contract giving rise to a right of pre-emption. A. contract of that nature is within the general rule and can be enforced against the representatives of the promisor after his death.

10. There can be no difficulty in holding here that the promise can be enforced against the vendor, the grandson of the prosmisor and his representative within the meaning of Section 37.

11. It remains then to be considered whether the plaintiff can enforce his right under the contract of pre-emption against the purchaser from the vendor. The law is that the liability under a contract cannot pass by an assignment which is the act of one of the parties to the contract. It may of course be transferred by agreement between the promisee and promisor in circumstances which amount to novation or the making of a fresh contract.

12. But the liability may be transferred by operation of law and it has to be seen, therefore, if the law, as we have it, declares that a contract giving rise to a right of pre-emption can be enforced against a third party, e.g., an assignee who was no party to the original contract.

13. We are thus brought to a discussion of the question whether a contract of this nature binds an assignee on the ground that it contains a covenant which, according to the phraseology of the English law, 'runs with the land.' In this connection the law to be considered in India is the law contained in Section 40 of the Transfer of Property Act which lays down what rights or obligations may be enforced against a transferee of immovable property.

14. Two classes of rights are referred to in the section. The first class consists of rights to restrain the enjoyment of land or to compel its enjoyment in a particular manner. These are the rights which arise under the 'restrictive covenants' which are enforced in equity in England on the ground that the person entitled to the right has an ' equitable interest ' in the land or a right in the nature of an equitable easement.

15. This class of rights obviously does not include a right to enforce pre-emption.

16. The second class of rights is defined in the second clause of Section 40 of the Transfer of Property Act:--' Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property but not amounting to an interest therein or easement thereon.'

17. It seems to me that a contract giving rise to a right of preemption clearly falls within this category.

18. The promisee in such a contract is clearly entitled to the benefit of the obligation entered into by the promisor, namely, 'that when he proposes to sell the land, he will give the promisee the first offer. The obligation of the promisor is annexed to the ownership of the land, for it is in his quality as owner that he undertakes the obligation and the obligation concerns the land, for it is an obligation to offer the land in the first instance to the promisee in case a sale is being contemplated.

19. And, lastly, the benefit of the obligation which arises out, of a contract for pre-emption is neither an interest in the land nor an easement thereon. It is obviously not an easement, and regard being had to the language of Section 54 of the. Transfer of Property Act, it cannot amount to an interest in the land. The section says that a contract for the sale (and therefore for the re-sale) of immovable property does not of itself create 'any interest in or charge on such property.' The words are 'any interest,' and, in my opinion, preclude the notion that an interest even of an equitable nature arises out of such a contract. I am of opinion, therefore, that the obligation which springs from a contract giving rise to a right of pre-emption is clearly one which falls within the second clause of Section 40 of the Transfer of Property Act and that the benefit of such an obligation, though it amounts neither to an interest in nor to an easement on land, is enforceable against the persons specified in the section, that is, transferees with notice or gratuitous transferees.

20. In England the doctrine appears to be that pre-emptive covenants or covenants for re-purchase give rise to an equitable interest in the land. The result is the creation of privity of estate between the person entitled to pre-empt and subsequent transferees and it is on this basis that covenants for preemption are enforced in equity against gratuitous transferees or transferees who take with notice of the covenant.

21. In India the right to enforce the covenant is given by statute, Section 40 of the Transfer of Property Act where the right does not amount to an interest in land. I agree, therefore, with my learned brother when he points out that cases such as the one we have before us are not to be decided upon the doctrines of the English law but must be decided upon the law as enacted in India. I am satisfied that in the present case the right is enforceable against the transferee by purchase who cannot be allowed to plead want of notice of a contract contained in the wajib-ul-arz of the village in which the property is situated. There remains the argument about remoteness. It is said that such a contract offends against the rule relating to perpetuities as laid down in Section 14 of the Transfer of Property Act.

22. But clearly that rule can only be applied in cases where there is an attempt to create an interest in property. A contract for a right of pre-emption or re-purchase does not give rise to any interest in immovable property. The language of Section 54 of the Transfer of Property Act is clear upon that point. It follows that the rule against perpetuities cannot be invoked for the purpose of arguing that the contract with which we are concerned in this case is void for remoteness.

23. I have abstained from comment upon the numerous cases which have been cited before us in argument. They are all set out and discussed in the judgment of my learned colleague. I would only observe that it seems to me that in most, if not all, of the cases in India to which our attention has been drawn the provisions of Section 40 of the Transfer of Property Act have not received due consideration. In my opinion this appeal fails and should be dismissed.

Sulaiman, J.

24. This is a defendants' appeal arising out of a suit for pre-emption based on a sale-deed, dated the 10th of May, 1919. The suit was originally based on an alleged custom prevailing in the village, which was denied by the vendees. The court of first instance, finding that no custom had been established and that the entry in the zamima khewat relied upon by the plaintiff was one of contract, dismissed the suit. On appeal the lower appellate court came to the conclusion that even if no custom existed, the plaintiff was entitled to succeed on the ground of a contract of pre-emption. It may be noted that the zamima khewat relied upon by the plaintiff was prepared at the time of the settlement of 1886, and according to the Gazetteer of the District of Basti, page 120, this settlement was to expire on the 30th of June, 1919. Thus the settlement' was still in force at the time when the sale-deed in question was executed and when the alleged cause of action in the plaintiffs favour arose. The lower appellate court accordingly set aside the decree of the first court and remanded the case for trial on the merits. An appeal by the defendants was disposed of by a Bench of this Court of which the judgment is reported in I.L.R. 44 All. 571. This Court modified the order to this extent that it sent the case back to the first court with direction to the plaintiff to amend his plaint so as to base. his claim on the ground of contract also. As a result it may now be taken to be finally settled for the purposes of this case, that no custom of pre-emption has been proved to exist.

25. When the case went back to the original court, the suit was again dismissed on the ground that there was no evidence on the record to show that either the plaintiff and his predecessors or the defendants and their predecessors had signed the zamima khewat which was prepared in place of the ordinary wajib-ul-arz. The lower appellate court, however, admitted a complete copy of the whole record of rights and found that Gropal Rai, the father of the plaintiff Jhagru, and Dudhnath, the grandfather of the vendor Munna Rai, apparently signed it and were assenting parties to the contract. Belying on two cases of this Court, it held that in any case there was a prima facie presumption that the contract was made by all the then co-parceners and was binding upon them, and even an absence of their signatures would not justify an inference that they had not agreed to it. It accordingly sent the case back once again for disposal of the remaining issues.

26. The defendants have come up again in appeal to this Court and urge that the suit should have been dismissed. I may note that in the course of the argument no suggestion has been made that the plaintiff's father and the vendor's grandfather had not signed the zamima khewat. The points which the learned advocate for the appellants has strongly urged may be enumerated as follows:--Firstly, that the contract of pre-emption was void for uncertainty. Secondly, that it was against public policy. Thirdly, that it offended the rule against perpetuities. And, fourthly, that in any case it cannot bind the representatives of the original parties to the contract.

27. The wajib-ul-arz or the zamima khewat does not embody the contract itself but is merely a prima facie evidence that such a contract was entered into by the. co-sharers at the time of the settlement. In the absence of anything to the contrary, such a contract must be presumed to have been intanded to hold good for the whole period of the settlement and not longer. In cases of districts which are not permanently settled, such settlements are ordinarily for fixed periods of 30 years. It cannot, therefore, be said that this contract of pre-emption was for such an unknown or indefinite period as to make it void for uncertainty. The intention of the co-sharers obviously was to enter into a contract for the period of the settlement. There is no uncertainty as to their intention. Section 29 of the Contract Act can, therefore, have no application. In the case of Bimal Jati v. Biranji Kuar (1900) I.L.R. 22 All. 238, both Sir Arthur Strachey, C.J., and Banerji, J., remarked that such 'a covenant for pre-emption was not void for vagueness or uncertainty.' I may add that if the contract had been for an unlimited period of time, it might well have been contended that it was unenforceable against the heirs and the representatives as being too vague and uncertain.

28. So far as these provinces are concerned, it is not possible to contend that a contract of pre-emption is against public policy. It is well known that for a large number of years suits for pre-emption on the basis of contracts have been decreed by this Court. Furthermore, when in numerous villages even a custom of pre-emption has grown up and has been enforced, it cannot be said that a contract of pre-emption is against public policy.

29. Nor can, in my opinion, the rule of perpetuities apply under the Indian law. It may be conceded that in England the view has been expressed that a covenant for re-purchase ''without any definite limit as to the period of time within which the covenant was to have effect'' could not be enforced; vide the case of London and South Western Railway v. Gomm (1882) 20 Ch. Div., 562 and subsequent cases. It must, however, be borne in mind that the rules of English law have to be applied to Indian cases with great caution-. In Gomm's case the ratio decidendi was that a contract of sale did create an equitable interest in land and was, therefore, within the rule of perpetuities. Cases in India, however, are governed by the Contract Act, the Transfer of Property Act and the Specific Relief Act. Section 54 of the Transfer of Property Act (which came into force before Gomm's case was decided) expressly provides that a contract for the sale of immovable property does not of itself create 'any interest in or charge on such property.' In the face of an express statutory provision of this kind, it is impossible to urge that a contract of that kind creates any interest, legal or equitable, in the property at all. The rule against perpetuities is embodied in Section 14 of the Transfer of Property Act and under it no transfer of property can operate to create an interest which is to take effect beyond the legal limit prescribed therein. When a contract of pre-emption is entered into by the proprietors of a village, there is no transfer of any property effected at all. Section 14, therefore, in terms cannot apply to it. If it be conceded that a contract of pre-emption does not create any interest in land, it would be very difficult to contend that such a contract comes within the rule against perpetuities. Such a rule cannot apply unless an interest in land purports to have been created.

30. The learned advocate for the appellants has strongly relied on a number of cases in support of his contention.

31. The earliest case is that of Tripoora Sunduree v. Juggur Nath Butt (1875) 24 W.R.C.R., 321. That case was decided long before the Transfer of Property Act was passed and can, therefore, be easily distinguished.

32. The next important case is that of Nobin Chandra Soot v. Nabab Ali Sarkar (1900) 5 C.W.N., 343. In that case the contract was embodied in a private document and was to reconvey the land for a fixed consideration, in the event of being called upon to quit it, without specifying any period of time. The learned Judges of the Calcutta High Court quoted passages from. English cases, principally that from Gomm's case, to the effect that a covenant of this character which bound the covenantor to convey the property to the vendor 'without any definite limit as to the period of time within which the covenant was to have effect ' could not be enforced. The view expressed therein was that no limit could be imposed upon the power of alienation which extends 'beyond any definite period' and which contravenes the doctrine of remoteness.

33. This last case was considered by two learned Judges of the Calcutta High Court in the case of Kalimaddin Bhuya v. Reazuddin Ahmed (1909) 10 C.L.R. 626, and was distinguished on the ground of there having been a devolution of interest of one of the parties by inheritance. The learned Judges, however, held that the covenant by itself was not void but was valid in law and could be enforced against the covenant or as well as a purchaser with notice from him, and a case of our Court was quoted with approval.

34. The next case is that of Nabin Chandra Sarma v. Rajani Chandra Chakrabarti (1920) 25 C.W.N., 901. There too the claim for pre-emption was based on a clause contained in a private document. Mookerjee, A.C.J., remarked that it was 'firmly settled that an option to arise on any intended sale or other particular kind of alienation by the owner, e.g. a right of pre-emption or first refusal, is subject to the rules against perpetuities, and, to bind the land or property, must comply with it unless the right is conferred by statute. It may be entirely void even where limited to a proper period, if intended merely as a total check on alienation by the owner.'

35. At page 904 the learned Judge, in repelling the argument that in particular contingencies the covenant might not contravene the rule against perpetuities, remarked: 'To test whether a covenant violates the rule against perpetuities, we must look not to the particular events which may have actually happened but to all possible contingencies...In the light of this principle, it is abundantly clear that the covenant in this case is obnoxious to the rule against perpetuities.'

36. It is apparent that the learned Judge regarded such a covenant as altogether void and not only unenforceable against the representatives. This must of necessity be so; if a covenant does actually offend the rule against perpetuities, it is void ab initio. The logical conclusion to which one would then be driven would be that such a covenant cannot be enforced against even the parties to the contract. With great respect to the learned Judges of the Calcutta High Court, I think that the effect of the provision contained in Section 54 of the Transfer of Property Act was altogether overlooked and the basic principle underlying the English cases that such a contract creates an interest in land so as to bring it within the rule of perpetuities, was not fully appreciated.

Tyabji, J.

37. In a very learned judgment reported in Charamudi v. Raghavulu (1915) I.L.R. 39 Mad. 462, has most clearly brought out the great distinction which subsists between the rules of English law and the Indian Statutory law. He has pointed out that it is settled beyond argument that an agreement merely personal, not creating any interest in land, is not within the rule against perpetuities and he has shown how the English cases are on that ground clearly distinguishable and cannot apply to a case arising in India which is governed by the Contract Act, the Transfer of Property Act and the Specific Belief Act. He has also very cogently remarked that if the right that is sought to be enforced were to depend upon the existence of an interest in the land and that interest itself were void in law as offending against the rule against perpetuities, it would not matter whether the persons that are before the court are those who have themselves been parties to the transaction attempting to create the interest or are strangers or transferees. I fully agree with the view expressed by the learned Judges of the Madras High Court. In fact there is no good answer to the contention there put forward that if a covenant of this kind were to be avoided on the rule against perpetuities, the covenant must be deemed to be wholly void and not as if it were valid against the parties and invalid against their representatives.'

38. Even in the judgment of this Court in Gopi Ram v. Jeot Ram (1923) I.L.R. 45 All. 478, on which strong reliance has been placed on behalf of the appellants, it was conceded that a contract of sale of immovable property created no interest in immovable property as laid down in Section 54 of the Transfer of Property Act, and if no interest is created in' immovable property under a contract of sale, the latter caunot be vitiated by the rule against perpetuities.

39. In view of these authorities and the statutory provisions in India, I am of opinion that the contract of pre-emption cannot be held to be invalid and unenforceable on the ground that it offends the rule against perpetuities.

40. The last point urged on behalf of the defendant appellants is that even if such contract was not altogether void, it was certainly unenforceable against any persons other than the actual parties to the original contract. That at the time when the contract was entered into by the co-sharers it must have been contemplated by them that it would hold good during the whole period of the settlement cannot seriously be disputed. We all know what the intentions of the proprietors at the settlement times usually are. They enter into a number of agreements, all ultimately recorded by the settlement officer, which are intended to be binding on the whole co-parcenary body while that settlement lasts. There cannot, therefore, be much doubt that the intention of the proprietors at the time when the contract was certified before the settlement officer, clearly was that it would be binding on all proprietors, whoever they may happen to be during the whole of the coming period of settlement. The question whether in point of law such an agreement could bind their representatives is of course quite another matter.

41. The line adopted by the learned advocate for the defendants appellants has been that such a contract was in substance a contract entered into by the then proprietors for themselves as well as on behalf of their future heirs and representatives. The contention, therefore, is that these proprietors had no power whatsoever to enter into a contract on behalf of their future heirs and representatives, and if they did, that contract could not bind the latter. I am of opinion that this is not a correct appreciation of the position of the proprietors. They did not enter into any contract acting as agents of their future heirs or representatives, but they by virtue of their position as proprietors entered into a contract themselves. If a contract entered into by them is held to be enforceable against their heirs or representatives also, it is not necessarily tantamount to holding that the proprietors had authority to enter into a contract as agents of their heirs and representatives. A contract of pre-emption in substance is a contract that before any share in the village is transferred to a stranger, an offer would be made to the other co-sharers, or to put it in a negative way, a contract that no transfer shall be effected to a stranger without an offer having first been made to the other co-sharers. Such a contract is made by the then proprietors in respect of the property which they hold at the time. No one says that it creates any interest in or charge or easement on that property. Nevertheless it is an agreement made in respect of their property and by virtue of their position as proprietors. If the law makes such a contract of the then owners enforceable against their representatives, that necessarily does not confer on them a power to act as the agents of their representatives. In my opinion there is a clear distinction between the contract of A being enforceable under the law against his representatives and the power of A to enter into a contract on behalf of his representatives. The latter position cannot be maintained, but the former may well be consistent with the provisions of Statute. As a matter of fact it is well known that claims of pre-emption are brought after the property has been transferred, and they are enforced against the strangers transferees, who were no parties to the contract.

42. If the contract entered into by the proprietors was not void on the ground of uncertainty or as being against public policy or as offending the rule against perpetuities, then the question is why could it not be enforced against his legal representatives? Section 37 of the Indian Contract Act provides generally that 'promises bind the representatives of the promisors unless a contrary intention appears from the 'contract.' I have already remarked that there can be no doubt that a contract of pre-emption when entered into by the proprietors for the time being is intended to be binding on all the co-sharers whoever they may be during the whole period of the settlement. In such a contract there is nothing to show a contrary intention not to bind the representatives. If a contract of pre-emption be treated as nothing more nor less than a contract of sale, then under Section 27 of the Specific Belief Act such a contract can, under certain circumstances, be enforced against the representatives of the original parties to the contract.

43. Again, Section 40 of the Transfer of Property Act lays down a statutory provision which requires a careful consideration. I am aware that in none of the cases cited before us Section 40 was applied to a contract of pre-emption. Nevertheless I have come to the conclusion that such a contract must come within the wide scope of that section. That section provides that ' where for the more beneficial enjoyment of his own immovable property, a third person has, independently of any interest in the immovable property of another or of any easement thereon, a right to restrain the enjoyment of the lat'ter property or to compel its enjoyment in a particular manner, or where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected thereby, but not against a transferee for consideration and without notice of the right or obligation, nor against such property in his hands.'

44. I concede that a right of pre-emption, which may be described as a right of first refusal, cannot be described to be a right to restrain the enjoyment of the other's property or to compel its enjoyment in a particular manner. There is really no restraint on the enjoyment of the property at all. The occasion for the right arises when the owner wishes to exercise his right to dispose of it and is most often enforced after the disposition has been actually made. I am however distinctly of opinion that such a contract does come within the second part of the section. When all the proprietors enter into an agreement by which they bind themselves by virtue of their position as proprietors that within a time fixed no transfer shall be effected without a first offer having been made to the other co-sharers, they are entering into a contract out of which an obligation arises on each, to the benefit of the other co-sharers, and which obligation is annexed to the ownership of the immovable property (not annexed to the property itsalf) and does not amount to an interest therein or easement thereon. The section speaks of the benefit of an obligation arising out of contract and not only arising out of a breach of contract. It follows that the section would apply when a contract subsists, even though no occasion has arisen for its performance, and even though no breach has actually taken place. In cases other than that of pre-emption, there may be a suit to restrain an apprehended infringement. The only other words in the section which require some consideration are the words 'annexed to the ownership.' This latter expression can not be understood to mean ' creating any interest or charge in the land 'but simply' relating to the ownership,' or 'by virtue of the right of proprietorship.' It is apparent to my mind that a contract of pre-emption entered into by the proprietors, though a personal one, in the sense that it creates no interest in land, is also entered into by virtue of their position as proprietors and is entered into in respect of their property and must from its very nature be deemed to have been annexed to their ownership. Having regard to the true conception of such a contract of pre-emption, I am of opinion that, though not amounting to an interest in or easement on land, it certainly creates a benefit of an obligation in favour of the other parties and is attached to their proprietorship. Such a contract, therefore, under the law can be enforced against all gratuitous transferees and even against transferees for consideration with notice. A fortiori such a contract could not be held to be unenforceable against the heirs of the contracting parties. If my interpretation of the section is correct then we have a statutory provision which makes contracts of pre-emption enforceable against the representatives of the original parties. No question of its offending against any supposed rule of perpetuities or its being against public policy would then arise. On the other hand, if the Calcutta view were carried to its logical conclusion, then not only a covenant for pre-emption, but even a contract for sale or a contract for reconveyance within a fixed period would become unenforceable as soon as any of the original parties dies. That is to say, if A sells his property to B absolutely and B enters into a separate and independent contract with A for consideration and undertaking that the property would be reconveyed if the amount is repaid, within, say a year, and, unfortunately for A, B dies within that time, the former can never get back the property. I find myself unable to accept this view.

45. I think that a contract of pre-emption can be enforced against the personal representatives as well as transferees of the original parties in the same manner and to the same extent as the restrictive covenants mentioned in the earlier pant of Section 40 of the Transfer of Property Act.

46. It may, however, be contended that the application of Section 40 to a contract of pre-emption is not supported by any authority in the sense that, so far as is known, it has not been directly applied to a suit for pre-emption based on contract. Even accepting this to be so, I must say that my conception of a contract of pre-emption is quite consistent with the conception which has found favour with a number of learned Judges of this Court.

47. The earliest case that I may refer to is the Full Bench case of Isri Singh v. Ganga (1880) I.L.R. 2 All. 876. Oldfield, J., remarked in that case that 'when a wajib-ul-arz records a right of preemption by contract between the shareholders, it is evidence of a contract binding all the parties to it and their representatives, and there will be a presumption that all the share holders assented to the making of the entry and in consequence were assenting parties to the contract of which it is evidence, and it will be, however, open to those repudiating the contract to rebut the presumption.' Similarly Spankie, J., remarked that ' when such a document has been attested before the settlement officer, such a record is prima facie binding on all the co-sharers, and cannot be repudiated by any one succeeding to or acquiring a share except as permitted by Section 91' of the old Rent Act. Pearson, J., agreed with the opinion expressed by Oldfield, J., and Straight, J., agreed with the opinion expressed by Spankie, J.

48. I would next refer to another Full Bench case, Karim Bakhsh Khan v. Phula Bibi (1886) I.L.R. 8 All. 102. Petheeam, C.J., there remarked:-- 'It has always been considered--and this view has been acted upon--that an agreement of this nature runs with the land to this extent that a co-sharer wishing to purchase, and to whom the property has not been offered, can follow it in the hands of the vendee and get possession of it himself. If this is so, the agreement so far runs with the land; and if it does so to any extent, it must, in my opinion, do so to the full extent of the agreement.' Straight, J., Oldfield, J. and Broadhurst, J., agreed with that opinion, and so did Tyrrell, J.

49. The conception of a contract of pre-emption having such a connection with land as to bind representatives of the original parties can also be gathered from other Division Bench cases. In Gokal Singh v. Mannu Lal (1885) I.L.R. 7 All. 772, where the pre-emption clause was based on a contract, Mahmud, J., in a separate written judgment, which does not fully appear in the report, remarked: 'The mere apportionment of revenue and the disseverance of the liability to that revenue could not, ipso facto, defeat a covenant relating to pre-emption entered into by all the co-sharers for the time being, and which covenant ran as an incident of the tenure of the lands owned by them before such partition.'

50. In the case of Kuar Dat Prasad Singh v. Nahar Singh (1888) I.L.R. 11 All. 257, it was again remarked that 'this pre-emptive right runs with the land.'

51. In Ramjiawan Sahu v. Raturaj Singh Weekly Notes, 1889, p. 81 it was again held that 'the right of pre-emption was one created by agreement between the co-sharers of the village, and constituted a covenant which attached to and ran with the land.'

52. It is true that these cases were referred to by Strachey, C.J., in the leading judgment which he delivered in the Full Bench case of Dalganjan Singh v. Kalka Singh (1999) I.L.R. 22 All. 1. At page 19 he remarked: 'I cannot agree...with the conception of pre-emption as a covenant running with the land...To describe pre-emption as a covenant running with the land is to mis-apply a technical term of the English real property law.' The point was not at all necessary for the decision in that case, but the remark is entitled to great weight. All that the learned Chief Justice, however, meant was that it was improper to import the technical expression 'covenant running with the land' from the English real property law and apply it to pre-emption as understood in India. No one can dispute the correctness of that observation. The expression 'covenant running with the land' is a technical expression which has a special meaning in the English real property law. It is certainly not proper to say that pre-emption is a covenant running with the land in the sense in which that expression is used in English law. What, however, had been expressed in previous cases was that the right was of such a nature as not only to affect the persons who were the actual parties to the contract but also their representatives. Even after the observations of Strachey, C.J., a Bench of this Court in Bahadur Singh v. Ram Singh (1904) I.L.R. 27 All. 12 again used the expression 'run with the land.'

53. In view of the conception of an agreement of pre-emption as entertained by so many Judges of this Court who had a vast experience of pre-emption cases, I am of opinion that its obligation must be deemed to be annexed to the ownership of land though not annexed to the land itself. Even bearing in mind that Section 40 of the Transfer of Property Act has not so far been applied to a covenant of pre-emption, I have come to the conclusion that its language covers such a right. That section was not directly considered in any of the cases which have so far held that such a right was unenforceable against the representatives.

54. Coming to the two recent cases of the Allahabad High Court, Balli Singh v. Raghubar Singh. (1923) I.L.R. 45 All. 492, and Gopi Ram v. Jeot Ram (1923) I.L.R. 45 All. 478, I must at once mention that the previous Allahabad cases to which I have referred were not at all cited before the Bench nor was the applicability of Section 40 of the Transfer of Property Act pressed. I may also add that the learned Judges were to a great extent influenced by the circumstance that in both of those cases the contract was intended to be operative for an unlimited period of time. At page 493 it was remarked, 'the village being permanently settled, no time is fixed for the revision of records, and that therefore the covenant might bind people for an indefinite period.'' Similarly in the latter case, at page 480, it was pointed out that the agreement was to re-convey the land whenever demanded to do so on the payment of a certain sum and that ''there was no limit of time in which the sale was to be re-made.' On the same page it was further remarked that it was doubtful whether the provisions of Section 37 of the Contract Act enabled an owner of an immovable property to enter into an agreement with another, imposing a restrictive covenant for an indefinite period on the disposition of the said property, so as to bind his heirs and representatives.

55. It is, therefore, possible to distinguish both these cases on the ground that the contract was intended to be enforced for an indefinite period of time. In the present case, however, it has already been noted that the contract could not have been intended to be operative beyond the period of about 30 years fixed for the settlement of 1886. The learned Judges had before them certain observations contained in the judgment of the Madras High Court in the case of Charamudi v. Raghavulu (1915) I.L.R. 39 Mad. 462, as against the Calcutta cases as well as two Bombay cases. They came to the conclusion that 'the balance of authority appears to be on the side of the vendees.' Main reliance was placed on the remarks of McLeod, C.J., in the case of Dinkarrao Ganpatrao Kothare v. Narayan Vishwanath Mandlik (1922) I.L.R. 47 Bom. 191, quoted as follows:-- 'The principle which underlies the rules of perpetuities applies to this class of contracts.' These exact words are, however, to be found in the head-note and not in the judgment itself, though they may well be taken to represent the gist of his conclusion.

56. At page 206 the learned Chief Justice remarked that contracts creating a right of pre-emption, which cannot be specifically enforced until the proper occasion arises in the future, 'do not according to the law in India create an interest in land either equitable or executory,' they do create rights which are capable of being enforced with regard to the land in certain circumstances against third parties, and then after referring to the judgment of their Lordships of the Privy Council, in the case of Maharaj Bahadur Singh v. Balchand (1920) L.R. 48 I.A. 376, remarked at page 210 'but the judgment indicates that in spite of Section 54 of the Transfer of Property Act the agreement could be read as creating an interest of such a nature as to bring the agreement itself within the rule against perpetuities.' I know of no authority for saying that where no interest in land, legal or equitable, present or future, is purported to have been created and the rule against perpetuities does not apply, the principle underlying that rule can apply. I would say with great respect that that deduction does not follow from the judgment referred to above and that in any case it would not apply to a covenant for pre-emption. In the Bombay case the agreement purported to give his heirs a right to buy the land at the original price and was unlimited in point of time. I may also add that another learned Judge of the Bombay High Court, i.e. Pratt, J., had been of opinion that 'if the intention was merely to create a personal obligation, the covenant is good and binding on the covenantor and covenantee and their personal representatives', but he held that it created no future right in rem.

57. Now, the Privy Council case of Maharaj Bahadur Singh v. Balchand (1920) L.R. 48 I.A. 376 was of a peculiar nature inasmuch as the plaintiffs had not sued for specific performance but on title, alleging apparently that the agreement amounted to a grant, and that the plaintiffs had taken possession of the land and were then dispossessed. While referring to the plaintiffs' contention that the contract was binding upon the assigns under Section 40 of Act IV of 1882 because that Act was passed before the decision in London and South Western Railway Co. v. Gomm (1882) 20 Ch. D., 562, and was not confined to restrictive covenants but applied to every obligation arising out of contract and annexed to the ownership of immovable property, Chamier, C.J., remarked: 'Assuming that that contention was correct, we have to consider next whether the plaintiff is entitled to maintain the suit.' In his opinion the plaintiff had 'failed to prove any title to the land in suit.' Their Lordships of the Privy Council in affirming the decree pointed out that 'for the appellants, therefore, to succeed it is essential to show that this agreement created in them some present estate or interest which would prevent the Raja from having made the grant.' That could only be effected by reading the deed as a grant in perpetuity, which could not be done. The covenant in that case was to the effect that if 'the plaintiff society should require any place on the hill for erecting mandir and dharamsala, and for doing repairs and making bricks for the said purpose, in that cases the Raja and his heirs should give land, stones from the hill and timber free of cost. Their Lordships remarked that such a covenant did not and could not run with the land and could not be so enforced. Their Lordships further remarked that if the deed be regarded as an agreement to grant in the future whatever land might be selected as a site for a temple, as the only interest created would be one to take effect by entry at a latter date, and as this date is uncertain, the provision is bad as offending the rule against perpetuities, for the interest would not then vest in proesenti, but would vest at the expiration of an indefinite time which might extend beyond the expiration of the proper period.

58. It is to be noted that the deed in question had been executed on the 16th of May, 1872, long before the Transfer of Property Act came into force, and its validity had to be tested according to the rules of the English law and independently of the provisions of Section 54 and Section 40 of the Transfer of Property Act. It is also noteworthy that the covenant was quite unlimited in point of time, and was sought to be enforced against transferees from transferees. I should further like to point out that the covenant in that case is clearly distinguishable from a covenant for pre-emption which neither creates any present interest in land nor is an agreement to grant in the future any interest in land. It is not as if any legal or equitable interest, present or future, were created in the land. The right is enforced as a mere contract, and is enforced against the representatives of the original parties under the statutory provisions contained in Section 37 of the Contract Act, Section 27 of the Specific Belief Act and Section 40 of the Transfer of Property Act. When a covenant of preemption does not amount to any interest present or future in immovable property, it is difficult to see how it would come within the rule against perpetuities. And if it did, it would be void altogether and not only partially invalid.

59. The period of 30 years fixed for the ordinary settlements is after all not so unconscionably long as necessarily to exceed the legal limit prescribed under Section 14 of the Transfer of Property Act, viz., the life-time of one or more persons living at the date of such transfer (or agreement) and the minority of some persons who shall be in existence at the expiration of the period. Further, the provision in Section 40 regarding notice indirectly imposes a time-limit, as for all practical purposes the proof of actual notice will become more and more difficult with the lapse of time.

60. I am, therefore, of opinion that the contract of preemption as evidenced by the entry in the record of rights was not unenforceable against' the personal heirs of the original parties, or their transferees with notice, so long as the settlement continued. I may say that the question whether in any particular case the transferee had or had not notice is one of fact, which if raised has to be determined on the evidence.

61. The present case can also, in my opinion, be disposed of on a shorter ground. The parties to the original contract were the father of the plaintiff and the grandfather of the vendor. Both were Hindus and prima facie they formed joint Hindu families. Managers of Hindu families are the agents of those families for the purposes of contracts with other parties. They represent their respective families to the outside world. A contract which is entered into by such a manager is a contract entered into not only on his behalf but on behalf of his family of which he is a member. The contracting parties, therefore, are the two families represented by the two managers, and the contract is binding not only on the signatories to it but the families on whose behalf they are entering into the contract. In this view of the matter it is apparent that no question of this contract being enforced against the personal representatives of the original parties at all arises. The families are still the same though the members of it may have changed. The contract was by one family in favour of the other and was to hold good during the whole period of the settlement. So long as these families are existing entities and are recognized by law as such, the contracts entered into between them are binding on them. The defendants vendees cannot escape from the obligation by simply saying that the original signatories to the contract are dead. If those signatories had authority to bind their respective families, then the families are bound even after the deaths of their agents. The contract, therefore, is really being enforced against the original party to it, viz., the vendor's family, and its present transferees.

62. I am, therefore, of opinion that the order of the lower appellate court remanding the suit with direction to dispose of the other issues involved in the case was correct, and I would, therefore, dismiss the appeal.

63. The appeal fails and is dismissed with costs.


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