1. The points which arise for decision in this appeal have practically been settled by my judgment in F.A.F.O. No. 108 of 1923 decided on 28th of January, 1924 (3). The facts with which we are concerned here are briefly as follows:
There was litigation in the year 1915 between Shaikh Fazal-ud-din, the plaintiff in the present case, and two defendants, Nawab Ali and Musammat Bilauri Bibi, who were husband and wife.
2. It appears that Fazal-ud-din is the son of Nawab Ali's sister.
3. It further appears that Nawab All's daughter is married to Shaikh Fazal-ud-din.
4. The dispute in the court of the Munsif was with regard to a family house and the suit terminated in a compromise by which a half share of this house was awarded to the plaintiff and the remaining half share to the defendants. It was agreed under the terms of the compromise that if either party wanted to transfer his share in the property, an offer was to be made to the other party in the first instance in order that he might secure the share by right of pre-emption. A decree was passed in terms of this compromise. The present suit was brought by Fazal-ud-din in order to enforce the contract of pre-emption which arose out of this compromise and decree.
5. The first defendant in the suit was Mirza Muhammad Jan. This man is the brother of Musammat Bilauri Bibi now deceased. When she died she left as heirs her four daughters and this brother Muhammad Jan who got a one-third share of her property.
6. It appears that on the 11th of July, 1921, Muhammad Jan transferred his one-third share of his interest in this house to the second defendant Fazal Husain by a deed which purports to be a deed of gift. This man Fazal Husain is the. daughter's son of Musammat Bilauri Bibi.
7. It wag the case for the plaintiff that the document, although drawn in the form of a document of gift, was in fact a deed of sale, and it has been found by the courts below that the transaction was a sale and not a gift. There can be no doubt that on the evidence afforded by the document itself this is a correct conclusion.
8. Fazal-ud-din, therefore, claimed to pre-empt this transfer on the basis of the contract for pre-emption which had been entered into at the time of the compromise and decree above referred to.
9. The suit was resisted on various grounds. The first court dismissed the suit, but the lower appellate court has reversed the decree of the court of first instance and remanded the case to the court of first instance for disposal on the issues which were left undecided.
10. It is contended here in the first ground of appeal that the lower appellate court has put a wrong construction on the deed of transfer in this case. That question is really not open. The finding is a finding of fact, and, as has already been said, the transaction was clearly a transaction of sale and not of gift.
11. The second ground taken is that the contract for pre-emption was bad inasmuch as it could not for all time to come bind the representatives of the covenantor.
12. I have dealt with a similar question in the case above mentioned which has only been recently decided and I have held and still hold that a contract for pre-emption can be enforced against the representatives of the parties to the contract. The previous case arose out of a contract embodied in a wajib-ul-arz which was drawn up at the time of settlement. This contract was described as being a binding contract for the period of the settlement.
13. In the present case, however, it is pointed out that there is no limit of time and it has, therefore, been sought to be argued that because no time was limited for the performance of the contract entered into under this compromise and decree, the contract is unenforceable.
14. In the judgment in the earlier case I expressed the opinion that a contract for pre-emption is enforceable between the representatives to the parties if the parties have died before performance. I further held that having regard to the provisions of Section 40 of the Transfer of Property Act a contract for pre-emption is enforceable against a person who has taken the property affected by the contract with notice of the contract or who has taken that property gratuitously.
15. It has, however, been argued in the present case that the con tract with which we are here concerned differs from the contract in the earlier case just mentioned by reason of the fact that here no time for performance has been limited, whereas in the earlier case the contract was expressly declared to be binding only for the period of the settlement, that is to say, a period of about thirty years.
16. The argument is that because no time is limited for the performance of this contract of pre-emption, the contract is not enforceable because it is uncertain. I am unable to accept this argument. The only section of the Contract Act which deals with agreements which are void for uncertainty is Section 29 which lays down that agreements, the meaning of which is not certain or capable of being made certain, are void.
17. There can be no question whatever as to any ambiguity or uncertainty about the meaning of the contract with which we are dealing in this case. There is absolutely no uncertainty as to the meaning and therefore Section 29 cannot be appealed to for the purpose of arguing that the contract is entirely void. Further, I am of opinion that no contract is void merely because no time for performance is specified. There are many kinds of contracts in which no time for performance is fixed and with respect to which no argument could possibly be entertained that they are void. Take, for example, the case of a promissory note by which the executant undertakes to pay money on demand. Here no time is fixed for performance and yet it has never to my knowledge been argued that a contract of this kind is void because of uncertainty. Or take again the class of contracts referred to in chapter III of the Indian Contract Act, namely, contingent contracts. Section 31 defines a contingent contract as being a contract to do or not to do something if some event collateral to such contract does or does not happen. Section 32 declares that contracts to do or not to do anything if an uncertain event happens cannot be enforced bylaw unless and until that event has happened. In a contract of this latter description it is clear that no time for performance can possibly be fixed and yet such a contract is recognized as being a perfectly good contract under the law.
18. It is true that the law of limitation may intervene and declare that, for example in the case of a contract under a promissory note to pay on demand, the contract must be enforced within a particular time, but the fact that the law of limitation insists upon a suit for performance being brought within a specified time cannot mean that the contract is void. On the contrary the validity of the contract is clearly recognized and all that is insisted upon is that performance of it must be sought within the time limited by the law.
19. I do not see how it is possible to argue that any contract unlimited in point of time is a void contract. This question was raised in a well known English case which has been cited before us, and which was cited before us at the hearing of the earlier case, namely, London and South Western Railway Co. v. Gomm (1882) 20 Ch. D. 562. The learned Judge who presided over the court of first instance in that case pointed out that a covenant to pay 1,000 when demanded with interest meanwhile, if not barred by the statute of limitation, might be enforced by an action of covenant at any time. Similarly in the Court of appeal it was pointed out by Jessel, M.R., that the contract with which the Court was there concerned was a contract unlimited in point of time. The learned Judge observed at page 580 of the report as follows:
Now that is unlimited in point of time, and it does not appear to me to be possible to insert a limit of time, because to put in the words 'within a reasonable time' or any other words limiting the time, would be exactly contrary to the intention of the parties. It is not only unlimited in point of time but it is obviously intended so to be. The Railway Company do not want the land now and they do not know that they ever will want it, but their bargain is that whenever it may be required for the works of the company, the owners or owner for the time being of the land are or is to convey to the company. The very essence of the contract is that it shall be indefinite in point of time.
20. There is no suggestion in these remarks that a contract can in any way be deemed to be void because it is indefinite in point of time, and it was not because of any uncertainty in the contract that performance of it was refused by the Court. The ground upon which that case was decided was that the contract for pre-emption gave rise to an interest in land and was, therefore, obnoxious to the rule against perpetuities.
21. The obligation which arises under a contract subsists until the contract is performed or until non-performance of it is excused or justified under operation of law.
22. I have already pointed out that in the case of a promise to pay money on demand, although the law of limitation lays down certain limits within which performance must be sought, the contract is not treated as void. I need only further refer to Article 10 of the schedule to the Indian Limitation Act, Act IX of 1908, which in the case of a suit to enforce a right of pre-emption, where the right is founded on law, general usage or special contract, lays down that the suit must be brought within one year from the time when the purchaser takes, under the sale sought to be impeached, physical possession of the property sold or, in cases where the subject of the sale does not admit of physical possession, one year from the date when the instrument of sale is registered.
23. In my opinion, therefore, it is impossible to contend that a contract for pre-emption in which no time is limited for performance is void and unenforceable.
24. I am aware that in coming to this decision I am dissenting from the view which was taken by a Bench of this Court in Balli Singh v. Raghubar Singh (1923) I.L.R. 45 All. 478 and Gopi Ram v. Jeot Ram (1923) I.L.R. 45 All. 478. I must, however, assume whatever responsibility attaches to the course I am taking. It seems to me that if I were to follow the principles laid down in the rulings referred to, I should have to hold that every contract for payment of money on demand or every contingent contract was void ab initio.
25. The only point which remains for consideration in this case is this: I have already mentioned that in the earlier case to which I was a party I held that a contract for pre-emption was enforceable against a transferee with notice or a gratuitous transferee.
26. In the case before us no plea of notice was taken and indeed no plea of notice could have been properly taken by the second defendant Pazal Husain who put forward the case that the transfer to him was a gratuitous transfer, namely, a transfer by way of gift. It has, however, been held by the courts below and the finding is accepted, that the transfer was a transfer for consideration and amounted to a sale. In my opinion the contract cannot be enforced against the second defendant Fazal Husain unless he is shown to be affected with notice of it. This is a question which has not been gone into and I think, therefore, that in dismissing this appeal it ought to be laid down for the guidance of the first court that the contract should not be enforced against the second defendant unless it is shown to the satisfaction of the court that he had notice of it.
27. It is the fact, as has been pointed out, that the second defendant is the daughter's son of one of the parties to the contract. It would not, however, be proper to infer from this circumstance alone that he was affected with knowledge of the contract. I think the court of first instance to which the suit has been referred for disposal ought to raise an issue regarding this question of notice and the parties ought to be allowed to call evidence. If the court of first instance finds that the second defendant had notice of the contract, the contract should be enforced against him. If it finds that he had not such notice, the suit should be dismissed.
28. This is a defendants' appeal arising out of a suit for pre-emption on the basis of an alleged contract. The plaintiff alleged that under a compromise decree passed in suit No. 551 of 1915 between himself and Nawab Ali and Mst. Bilauri, a covenant for pre-emption was specifically entered into so as to bind the parties and their representatives in regard to transfer of the house in question, that Muhammad Jan defendant No. 1, as heir of Mst. Bilauri Bibi since deceased, in breach of the said contract, sold the property to defendant No. 2 for Rs. 50 under a deed dated the 11th of July, 1921, which was wrongly described as a deed of gift; hence the suit for pre-emption.
29. Both the defendants contested the claim. The main defence was that the deed in question was not a deed of sale but a deed of gift without consideration and that the alleged contract of pre-emption was invalid and could not be enforced as against' the defendants. It is also to be noted that after the suit had been filed, the defendant No. 2 executed a deed of relinquishment in favour of defendant No. 1 and on the strength of it a plea was raised that the status quo ante was restored and the plaintiff was not entitled to a decree.
30. The court of first instance found that the deed in question was not a sale-deed; that the status quo ante was restored by the deed of relinquishment and so the plaintiff could not preempt the property; and it also found that the contract embodied in the compromise decree had not the effect of binding for all time to come the representatives of the parties to that decree. It did not determine the remaining issues, but dismissed the suit.
31. On appeal the lower appellate court has decreed the claim and remanded the case for the remaining issues to be determined. The lower appellate court found that the transaction in question was a sale transaction for consideration, that the deed of relinquishment pendente lite did not affect the plaintiff's right of pre-emption and that on the authority of the case of Bimal Jan v. Biranga Kuar (1900) I.L.R. 22 All. 238 the contract embodied in the decree was enforceable.
32. The defendants have come up in appeal and challenge all the three findings.
33. The finding that the transaction in question was a sale transaction and not a gift cannot now be seriously disputed. The lower appellate court has found that the transaction was really for consideration. It appears that there was a decree against Mst. Bilauri and the defendant No. 2, Fazal Husain, for about Rs. 150. Fazal Husain, however, had been impleaded merely as a surety. Musammat Bilauri was, therefore, the principal debtor. On Musammat Bilauri's death one-third share in her estate was inherited by Muhammad Jan defendant No. 1. Muhammad Jan, therefore, was liable to pay at least one-third of the decretal amount to the extent of the assets in his hands. It was Fazal Husain who paid off the decree and in lieu of a one-third share in the decretal amount so paid off, Muhammad Jan executed this deed of transfer in favour of Fazal Husain. Although, therefore, the deed was styled ostensibly as a deed of gift, there can, on the facts found, be no doubt that it was a sale transaction. It is noteworthy that the value of the property described in the deed of transfer is also stated to be Rs. 50.
34. The other finding of the lower appellate court also cannot be seriously challenged. A deed of relinquishment by itself did not amount to a reconveyance. A mere disclaimer cannot be deemed to be a transfer. Furthermore, it is manifest that a transfer of the property in dispute after the suit had been brought was subject to the doctrine of lis pendens. The defendant could not, by transferring the property sought to be pre-empted, in any way affect the right of the plaintiff pre-emptor.
35. I am, however, unable to agree with the view expressed by the lower appellate court on the third point. In fact the learned Judge of the court below did not quite appreciate what the court of first instance had held. That court had not said that the transaction was altogether void. What it had held was that it could not be enforced against the personal representatives of the original parties. This point is not at all considered by the lower appellate court and the case of Bimal Jan v. Biranya Kuar (1900) I.L.R. 22 All. 238 relied on by it, so far as appears from the judgment, was one against the original parties to the contract and their own vendees.
36. I may here correct one mistake in the judgment of the first court. The plaintiff does not claim to pre-empt the sale as a representative of the plaintiff in the former suit, but as one who himself was a party to that suit. He, however, claims against the heir of Musammat Bilauri, (who has died since) and his transferee.
37. This last question raise's a point which is somewhat similar to the one raised in F.A.F.O. No. 108 of 1923 decided by us on the 28th of January, 1924 (2). In the course of my judgment in that case I tried to review all the leading cases on the question how far a covenant; of pre-emption was enforceable against the representatives of the original parties. In view of the provision contained in Section 54 of the Transfer of Property Act that a contract of sale creates no interest in land and in view of the provisions of Section 40 of the Transfer of Property Act laying down how the benefit of an obligation, arising out of a contract annexed to the ownership of property but not amounting to an interest therein or easement thereon, could be enforced, against gratuitous transferees or transferees with notice, I there expressed the view that it was impossible to hold that a contract of pre-emption or one for reconveyance came under the rule against perpetuities. I pointed out that the English cases were distinguishable inasmuch as in England such covenants created an equitable interest in land. When under the Indian Law no interest in land was created by a mere contract, it was impossible to bring in the rule against perpetuities. I still adhere to the same view. I did, however, also indicate in my judgment in that case 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.'
38. I took pains to distinguish most of the cases referred to by me on the ground amongst others that there the contract was unlimited in point of time. The present case, however, cannot be distinguished on this latter ground as the contract for preemption here happens to be for an unspecified and indefinite time.
39. The question then is whether such a contract can be enforced after the death of one of the parties and will remain in force for all time to come, generation after generation. As no period at all is fixed for the performance of the contract, it cannot be quite clear for how long the parties intended that it should remain operative. The words 'in perpetuity' are not to be found in the clause in question, and in the case of such a trivial property I am not convinced that the intention must necessarily have been to keep such a covenant alive for all time to come and against all the successive heirs and representatives. For aught one knows, the contract might have been intended to remain in force for a period shorter than the one that has already expired. Under circumstances of such vagueness and uncertainty, I am unable to hold that it is still enforceable against the heir of the deceased party and his transferee.
40. I understand it to be of the essence of a contract that the liabilities which it imposes must be imposed on definite persons, within a definite time, and the rights created by it must of themselves be definite. By a definite time I do not mean a period which is to expire on a fixed date but merely a period not unlimited in its duration. If a contract is supposed to bind an indefinite class of persons, generation after generation and to bind them for an indefinite length of time, it completely loses its character of an obligation in personam. If no period of time is fixed by the parties themselves, the court would not be justified in filling up the gap and fixing a time which it considers reasonable. From the very nature of the contract it is apparent that no action for a performance could arise unless there was an intention to sell the property.
41. In such a case the court cannot under Section 46 of the Contract Act fix any time as being a reasonable one. Even if the contract were to be treated as a contingent contract within the meaning of Section 31 of the Act, it cannot, in my opinion, remain in force for an indefinite length of time. I am, therefore, of opinion that the contract in question, according to the terms in which it is worded, is too vague, indefinite and uncertain to be now enforced against the heir of the deceased party.
42. I should like to point out the distinction between the case of a personal representative of the original party to the contract, who is made liable under Section 37 of the Indian Contract Act, and the case of a transferee against whom the contract may be enforced under Section 40 of the Transfer of Property Act. In the case of transferees it is apparent that for all practical purposes a limit of time is indirectly imposed by the condition that he must have notice. After each succession the possibility of proving actual notice continually diminishes and transferees at a distant date may well be safe, whereas in the case of personal representatives no question of any consideration or notice arises. If, therefore, a contract for an indefinite time is to be enforced against them, it must always remain in force in perpetuity until it is either performed when the occasion arises or has been rescinded by consent of the representatives of the other parties thereto.
43. Although, therefore, I am of opinion that under the provisions of Section 37 of the Indian Contract Act a contract of pre-emption can be enforced against the personal representatives of the promisor in case of his death before performance, unless a contrary intention appears from the contract, nevertheless I hold that where a contract does not specify any period of time within which it has to remain in force against the actual parties,, it is too vague, indefinite and uncertain to be capable of being enforced except as to the contract in their life-time. I may here note that the two recent cases of this 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, are cases which I am unable to distinguish from the facts of the present case, as in both of these the time for performance was unlimited. Even if I had entertained a different opinion on the enforceability of the contract in this case, I would not have merely dissented from the previous decisions but would have suggested a reference to a larger Bench.
44. There is another point which requires mention. In the plaint there was no suggestion that the transferee (defendant No. 2) had any notice of this contract, nor was there apparently any evidence led on the point. The defendant, too, did not specifically set up want of notice as he claimed to be a donee. The claim cannot be enforced against the transferee if he had had no notice of the contract. As against defendant No. 1 there is no claim for any damages.
45. I would, therefore, allow this appeal, set aside the order of the court below and restore the decree of the court of first instance with costs.
46. The appeal is dismissed with costs.