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Ramasami Pattar Vs. Chinnan Asari - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai
Decided On
Judge
Reported in(1901)ILR24Mad449
AppellantRamasami Pattar
RespondentChinnan Asari
Cases ReferredLondon and South Western Railway Co. v. Gomm L.R.
Excerpt:
transfer of property act - act iv of 1882, sections 54, 60--mortgage with right of pre-emption in favour of mortgagee -assignment of equity of redemption--non-exercise of pre-emptive right for over twenty years--suit for redemption-- validity of defence based on pre-emptive right--specific relief act--act i of 1877, section 27--limitation. - - ] except for the covenant above set out the defendants, who are representatives in interest of the mortgagee, clearly have no answer to the suit and must submit to be redeemed. whereas covenants of the latter sort are only enforceable under section 40 of the same act against transferees who have taken without consideration or with notice it would be strange if the person claiming under such a covenant were put in a better position than a person.....shephard, j.1. the facts, which are imperfectly stated in the judgment of the subordinate judge, are as follows: [his lordship set out the facts as above, and proceeded:] except for the covenant above set out the defendants, who are representatives in interest of the mortgagee, clearly have no answer to the suit and must submit to be redeemed.2. as between the mortgagor appavu and his mortgagee, samu, the only question which could arise would be whether the covenant was invalid as being made in restriction of appavu's right of redemption or for any other reason. samu's right was to have appavu's interest in the property conveyed to him in 1873, when he meditated selling it to vedanayakam. if the covenant is to be read as giving a right which was to subsist for all time and even after the.....
Judgment:

Shephard, J.

1. The facts, which are imperfectly stated in the judgment of the Subordinate Judge, are as follows: [His Lordship set out the facts as above, and proceeded:] Except for the covenant above set out the defendants, who are representatives in interest of the mortgagee, clearly have no answer to the suit and must submit to be redeemed.

2. As between the mortgagor Appavu and his mortgagee, Samu, the only question which could arise would be whether the covenant was invalid as being made in restriction of Appavu's right of redemption or for any other reason. Samu's right was to have Appavu's interest in the property conveyed to him in 1873, when he meditated selling it to Vedanayakam. If the covenant is to be read as giving a right which was to subsist for all time and even after the redemption of the mortgage by Appavu, then I am of opinion that the covenant would be invalid because it would be a clog on the equity of redemption in the sense that Appavu would not have bean able to get his property back free from all hold on it by Samu. See Rice v. Noakes & Co. [1900] 2 Ch. 445.

3. If however the covenant is to be read, as probably it ought to be road, as a covenant operative only as long as the mortgage might remain unredeemed, different considerations arise. It would then be necessary to consider whether a covenant to sell not at the market price of the day, but at a price fixed beforehand, was not objectionable on the ground of unfairness [see In re Edwards's Estate in Fisher on 'Mortgages,' fifth edition, paragraph 1397]. That is how the matter stands as between the original parties to the mortgage. I should not ha prepared to decide the point without further inquiry.

4. The defendant however is seeking to use this covenant against a person who bought in 1893 from one who himself bought in 1873. Under the covenant the defendant has no interest in the property. That is clear, for Section 54 of the Transfer of Property Act expressly says that a contract of sale creates no interest in the property to which it relates. His right can be no other than a right to specific performance available under Section 27 of the Specific Relief Act against a transferee who has taken with notice of the covenant. Of what can the plaintiff be said to have had notice? By reading the mortgage instrument he must have learnt that his vendor's vendor might on the defendant being informed of his intention to sell have insisted on the property being transferred to him. He would have learnt that there was a covenant and that the occasion when it should have been enforced had happened twenty years ago. In my opinion, notice of a contract such as is required to satisfy the section must be notice of an existing obligation. When a transferee, hearing of a contrast, is also informed that the time for performance has long passed without anything being done, the inference ha would naturally draw is that the right has been waived or otherwise discharged. It is not pretended that any fact was brought to the plaintiff's knowledge except the fact that the mortgage contained a covenant for pre-emption and that notwithstanding it the vendor had sold his interest to Samu Ayyar. I find therefore that the plaintiff is not a transferee who took with notice of the contract now sought to be enforced.

5. Assuming that there was notice of the contract and that it was otherwise a valid contract, I further hold that inasmuch as no suit to enforce it could now be brought the defendant cannot be allowed to use it as an answer to the plaintiff's suit. The cases relating to covenants in leases for renewal are exactly in point; and having regard to them I think we may disregard the recent case Krishna Menon v. Kesavan I.L.R. 20 Mad. 305 which is in the main founded on Kanharankutti v. Uthotti I.L.R. 13 Mad. 490. In these cases moreover it seems to have been assumed that the right of pre-emption involved an interest in the property. If that was the case the covenant would, according to the ruling in London and South Western Railway Co. v. Gomm I.L.R. 20 Mad. 562 be open to the objection that it is an attempt to create a perpetuity. Such distinction as can be made between a covenant in a lease to renew and a covenant in a deed of mortgage or sale to convey by way of sale is in favour of the defendant. For a covenant to renew is a covenant which according to the English law, runs with the land and which, according to Section 109 of the Transfer of Property Act creates a liability enforceable against the lessor's transferees; whereas covenants of the latter sort are only enforceable under Section 40 of the same Act against transferees who have taken without consideration or with notice It would be strange if the person claiming under such a covenant were put in a better position than a person claiming under a covenant to renew.

6. Modifying the decree by substituting the figure 98 for 48 and striking out the words 'which is the difference of the mortgage amount of Rs. 100 and the rent due Rs. 49 with Rs. 3 awarded to plaintiff for removing the path C and putting up the bund,' I would otherwise dismiss the appeal with costs.

Bhashyam Ayyangar, J.

7. The two grounds which have been chiefly relied upon in support of this appeal are: (1) that the right of preemption conferred upon the mortgagee by the instrument of mortgage is not 'a clog upon the right of redemption'' as held by the lower Appellate Court, and (2) that the suit ought to be dismissed inasmuch as the plaintiff claims to redeem under a title which was derived in contravention of the mortgagee's right of pre-emption and which therefore is invalid as against the mortgagee and his legal representatives.

8. The validity of the first contention depends, in my opinion, upon the right construction to be placed upon the usufructuary mortgage deed (exhibit I). If the mortgage deed had conferred upon the mortgagee a right of pre-emption which could be exercised even after the mortgagor should redeem the mortgage; such a right would be 'a clog upon redemption' for though such a stipulation may not bar a suit for redemption, yet it precludes the mortgagor from redeeming the mortgaged property in the same unfettered state in which he held it when he mortgaged the property, inasmuch as after redemption he will have to hold it subject to a right of preemption which the mortgagee had secured under the instrument of mortgage. That such a collateral advantage bargained for by the mortgagee is really a clog upon the right of redemption is clearly established by the recent case of Rice v. Noakes & Co. [1900] 2 Ch. 445. In that case Rigby, L.J., lucidly expressed himself as follows: 'The property which comes back to the mortgagor must not be worse than it was when it was mortgaged and the mortgagee must not either expressly or by implication reserve to himself any hold upon the property after the time for redemption has arrived and the right of redemption has been put in force. Now, if those maxims are still in force to their full extent--and I do not doubt that they are--it would be idle to talk about not clogging the equity of redemption when a house is to be taken back as a tied house which was mortgaged as a free house. The equity of redemption is clogged to an extent which it would almost be impossible to exaggerate in the case of a public house in London.'

9. As I understand exhibit I, the right of pre-emption is secured to the mortgagee only in respect of the equity of redemption and will not exist after the mortgage is redeemed. The provision contained in the instrument that if the mortgagee exercises the right of pre-emption, the mortgagor is to receive '50 fanams more' from the mortgagee and sell the land for that amount plus the mortgage debt of Rs. 100 places the matter beyond doubt.

10. That a mortgagee may stipulate for the collateral advantage of a right of pre-emption in consideration of his advancing the. mortgage loan, if such advantage does not directly or indirectly 'clog the equity of redemption' is now clearly established by authority. Orby v. Trigg 9 Mod. 2, Biggs v. Hoddinutt [1898] 2 Ch. 307 Santley v. Wilde [1899] 2 Ch. 474 Rice v. Noakes & Co. [1900] 2 Ch. 445. The principle of these-decisions is that the option of sale is still left with the mortgagor and he may redeem or sell as he likes; the only stipulation being that, in the event of his choosing to sell, he shall give the mortgagee the refusal (Patch on 'Mortgages,' page 20). This is tacitly admitted by the case of Orby v. Trigg 9 Mod. 2 though in that case the decision was against the defendant, the mortgagee, apparently on the ground of fraud, for, after getting hold of the counterpart of the mortgage, the mortgagee had frequently refused to give a copy of the mortgage to the plaintiff, the representative of the mortgagor insisting only on the principal money and interest till after the estate was sold. But for the stipulation contained in the mortgage deed (exhibit I) that the pre-emptor, the mortgagee, can exercise his option by paying, not the market price of the day nor the same price as that offered by a stranger, but the price fixed in the instrument of mortgage itself, the point would be clear in favour of the pre-emptor and covered by authority, including the recent decision of the Allahabad High Court in Bimal Jati v. Biranja, Kuar I.L.R. 22 All. 238 and a decision of the Calcutta High Court in Haris Paik v. Gahurudin Gazi 2 Calc. 575. The real question to be considered is whether a mortgagee can effectually secure a right of pre-emption if the mortgagor is tied down to price as in this case. In note (f) at page 670 of Fisher on 'Mortgages,' fifth edition, In re Edwards's Estate 11 Ir. 367 is quoted as a case in which such a covenant was disallowed. The report of the case not being available here, it cannot be relied on as an authority that such a covenant is invalid merely because the price is fixed. In Biggs v. Hoddinott [1898] 2 Ch. 307 above cited, the Master of the Rolls notices this case as follows: 'The proposition laid down by Hargreave, J., in In Re Edwards's Estate 11 Ch. Rep. 367 that where an onerous contract entered into by a mortgagor with his mortgagee is part of the arrangement for the loan and is actually inserted in the mortgage deed, it is presumed to be made under pressure, and is not capable of being enforced goes too far, though the decision of the learned Judge was correct; for the stipulation with which he had to deal was unreasonable, and one which ought not to be enforced. I think the true principle is whether the collateral advantage stipulated for himself by the mortgagee is or is not unconscionable or oppressive though it does cot clog the redemption. Romer, L.J., observes as follows in Santley v. Wilde [1899] 2 Ch. 474 already cited: I take it that it is clearly established now, in the first place, that there is no such principle as is suggested, namely, that a mortgagee shall not stipulate for any collateral advantage for himself. He may so stipulate; and if he does, he may obtain a collateral advantage; nothing can be said against it, and he can enforce it, always assuming that the bargain is not unconscionable or oppressive. In the second place, I take it also to be clear that there is now no such principle as is suggested, namely, that where a collateral advantage is stipulated for by the mortgagee as a condition for the loan, that advantage or contract is to be presumed to have been given or made under pressure. There is no such presumption; but each case must be decided according to its own circumstances. The Court will look into the circumstances of each case and see whether the bargain come to is unconscionable or oppressive.' In the present case, the collateral advantage, namely, the right of pre-emption, is one that can be enforced only by the equitable remedy of specific performance and prima facie a bargain by which the mortgagor is tied down to a price by the instrument of mortgage whenever the occasion for exercising the right of pre-emption may arise is oppressive and unconscionable. The ordinary period of limitation for a redemption suit is 60 years and the period may be extended by an acknowledgment in the meanwhile and the right of pre-emption for a fixed price can be claimed whenever the mortgagor may have occasion to sell the property before redemption. The term of the mortgage may also be a long one and in such cases the result of the bargain will be that even if the market value of the land rises enormously in the course of 40 or 50 years and a stranger is then prepared to pay twenty times the price fixed in the mortgage instrument the mortgagor should either refrain from selling his property at all or sell the property to the mortgagee for 1/20th of the market value-It is conceivable that a right of pre-emption for a fixed price may not be oppressive or unconscionable in exceptional cases and if it were necessary for the disposal of this appeal to decide whether the stipulation in exhibit I tying down the mortgagor to a fixed price is or is not an oppressive one under the circumstances of this case an issue would have to be sent to the lower Court if the appellant should insist upon it. But, as the appeal substantially fails on other grounds, it is unnecessary to remit the issue.

11. The second ground urged on behalf of the appellant is entirely untenable and, assuming that a right of pre-emption was validly created by the mortgage instrument, the defendant was not at the date of the suit and is not now in a position to resist this suit for redemption. Though the Transfer of Property Act does not apply to this mortgage, which was executed in 1872, yet the principle of law embodied in Section 60 of the Transfer of Property Act is applicable as much to mortgages executed before the Act Kanaran v. Kuttooly I.L.R. 21 Mad. 110 as to those executed since. The mortgagor's right of redemption can be extinguished only by some act of the parties or by order of a Court subsequent to the mortgage transaction Perayya v. Venkata I.L.R. 11 Mad. 403. In the present case if the right of pre-emption secured to the mortgagee as a collateral advantage by the instrument of mortgage had subsequently resulted in the extinguishment of the right of redemption by act of the parties while the mortgagor proposed to sell the equity of redemption in 1873 to the plaintiff's vendor or by a decree of Court enforcing the right of pre-emption before or after such sale, the appellant, of course, would have a complete defence to the suit. But it is urged that though the appellant had not enforced the right of pre-emption before the suit, yet, on equitable grounds and in view to avoid multiplicity of suits, he should be allowed to enforce his right of pre-emption in this suit. In the first place, he has not offered either in the written statement or subsequent thereto to exercise his. right of pre-emption by depositing in Court the price fixed. On the contrary he relied upon the right of pre-emption as a bar to the suit and further pleaded Section 43, Civil Procedure Code, as a bar to the suit, and the latter plea prevailed in the Court of First Instance. Apart from this, there are weightier reasons why he ought not and cannot be allowed to enforce the right of preemption in this suit. In cases in which the right of pre-emption springs from a contract it rests only upon a covenant which does not run with the laud. Being only a species of contract for the sale of immoveable property the contract of preemption stands on no higher footing than a contract for the sale of immoveable property and does not of itself create any interest in or charge on the immoveable property which is subject to the right of pre-emption-- vide Section 54 of the Transfer of Property Act. Until the contract is carried out by specific performance either by act of parties or decree of Court, the pre-emptor acquires no title to or interest in such property which alone can extinguish the mortgagor's right of redemption though ha may have a right to call for a conveyance of the property. In cases in which a registered instrument is essential under the Transfer of Property Act for the acquisition of a title to or interest in immoveable property, it would be contravening the object and policy of that Act if a Court were by its own decree to establish or recognize such title or interest without the intervention of the registered instrument or treats the covenantee as having by fiction of law such title in the absence of such conveyance. The Transfer of Property Act in so far as it insists upon registration as essential to certain transfers in addition to a written instrument goes further than the Statute of Frauds, the policy of the Indian Legislature being gradually to secure a public register of title to landed property. Under the English law a covenanted has an equitable title or interest in the property; but under the Transfer of Property Act, the covenant does not itself create any interest in or charge on the property. The decisions of English Courts in analogous cases cannot therefore be implicitly followed in this country especially as some of the eminent Judges in England have expressed their regret that the provisions of the Statute of Frauds have, in no small degree, been frittered away by some decisions of the Court of Equity.

12. Under the Transfer of Property Act a sale of tangible immoveable property of the value of Rs. 100 and upwards or of any intangible thing of what value soever can be effected only by a registered instrument and until such instrument is executed, the pre-emptor acquires no title to the property. If the appellant were in a position to enforce his contract of pre-emption by specific performance, his proper course was a suit for specific performance, and if he were legally entitled to enforce such right, the plaintiff or his predecessor in interest would have been compelled to execute a registered instrument which, of course, would have extinguished the mortgagor's right of redemption. In a suit for redemption it would be acting contrary to the express provision of Section 60 of the Transfer of Property Act not to pass a decree for redemption if the same bad not been extinguished at the date of the suit. I may here observe that the form of decree prescribed by Section 214 of the Civil Procedure Code in a suit to enforce the right of pre-emption is based on the decision of the Allahabad High Court Shaikh Ewaz v. Mokuna Bibi I.L.R. 1 All. 132 which was passed prior to the Transfer of Property Act and which followed an earlier decision of the same Court Sheo Pershad Lall v. Thakoor Rai 3 H.C.R. 254. In cases in which the right of pre-emption has to be enforced subsequent to the Transfer of Property Act, the form of decree prescribed by Section 214 has to be supplemented by directing the execution of a registered instrument of sale by the defendant. Though the contract for sale may have been entered into prior to the Transfer of Property Act, yet if the sale itself had not been effected prior thereto, no subsequent sale can be effected unless it complies with the provision of Section 54 of the Transfer of Property Act. It was urged on behalf of the appellant that the consideration fixed for the sale is 50 fanams only, which is less than Rs. 100, and therefore no instrument or registered instrument is necessary for enforcing the right of pre-emption. A reference to exhibit I would clearly show that this is not so, but that the consideration for the sale is the mortgage amount of Rs. 100 plus 50 fanams. Even if the contemplated sale can be regarded merely as a sale of the equity of redemption for less than Rs. 100, a registered instrument would be necessary for effecting such sale. The equity of redemption in a usufructuary mortgage is only an intangible thing like 'a reversion' which immediately precedes the expression 'or other intangible thing' (vide Williams on Real Property, 18th edition, pages 30, 31), and it can be transferred by sale only by a registered instrument and not by delivery of the property. Equity of redemption in a simple mortgage may be tangible immoveable property, and its sale can be effected if its value be below Rs. 100 without a registered instrument by mare delivery of the property. The right of a simple mortgagee in the property mortgaged is in my opinion only an intangible thing like a charge on immoveable property within the meaning of Section 54, and I am unable to concur in the decision of this Court reported in Subramaniam v. Perumal Reddi I.L.R. 18 Mad. 454 to the effect that a transfer by sale of a hypothecation executed to secure a debt under Rs. 100 may be made otherwise than by registered instrument.

13. Assuming that the mortgagee secured a valid right of preemption, such right was infringed in 1873 when the equity of redemption was assigned by the mortgagor to the plaintiff's vendor who, in his turn, assigned the same in 1893 to the plaintiff. The mortgage deed, which is filed in the case as exhibit I, was in the possession of the mortgagee and the clause of pre-emption finds ft place in it. The appellant will not be entitled to specific performance of the contract of pre-emption if either the plaintiff or his vendor was assignee for value without notice of the contract of pre-emption. Whether the plaintiff or his vendor was or was not an assignee without notice, the appellant's cause of action for specific performance accrued in 1873 and his right to enforce the right of pre-emption is prima facie hopelessly barred both under Article 113 or 118 of Act IX of 1871 and under Article 10, Act XV of 1877, and the learned pleader for the appellant has not been able to show on what circumstance he relies in bar of the ordinary law of limitation. The English law does not, I think, provide a period of limitation for a suit for specific performance, but a Court of Equity will refuse that relief if the party seeking it has been guilty of laches. The appellant in this case would certainly not get that relief in an English Court of Equity on such a stale claim of right of pre-emption as the one advanced by him. The fact that the appellant has ever since 1872 been in possession of the property as mortgagee cannot save him from the operation of the law of limitation if he were to sue for specific performance of the contract of pre-emption, and, under the Transfer of Property Act, he cannot acquire title as transferee by sale of the mortgaged property without a registered instrument.

14. The learned pleader for the appellant principally relied upon the decisions of this Court in Kankarankutti v. Uthotti I.LR. 13 Mad. 490 and Krishna Menon v. Kesavan I.L.R. 20 Mad. 305 both of which were suits for redemption against a mortgagee who was in possession and pleaded a right of pre-emption which an ottidar has under the customary law of Malabar. In both these cases, it was held, and if I may say so rightly, that a suit by a pre-emptor is not a suit for possession of the property in respect of which he has the right of pre-emption and that therefore his right of pre-emption is not extinguished by operation of Section 28 of Act XV of 1877. In Krishna Menon v. Kesavan I.L.R. 20 Mad. 305 it appears to have been further argued that, though Section 28 might not be applicable to the case, yet, that, as a suit by the pre-emptor for specific performance would be barred by limitation, the pre-emptor could not urge his right by way of defence. This argument was overruled as follows: 'This contention is manifestly untenable. For, if, notwithstanding that an otti mortgagee's right to sue to enforce his right of pre-emption has become barred, that right of pre-emption, owing to the inapplicability of Section 28 to the case, is still unextinguished it is difficult to see on what principle such right is to be held to be unavailable by way of defence.' But in neither of those oases was the question raised or argued with reference to the stringent provisions of Section 54 of the Transfer of Property Act, nor was the attention of the Court drawn to Section 60 of the Transfer of Property Act, and in particular to the conspicuous absence therein of the usual saving clause 'in the absence of a contract to the contrary.' When a mortgagee is allowed to plead in bar of redemption a contract of pre-emption secured by the mortgage instrument itself you really import into Section 60 the above saving clause which has been deliberately omitted by the Legislature. The mortgagees in those cases, like the mortgagee in this case, have been in possession simply as mortgagees, and such possession, how long soever it may continue for less than the statutory period, cannot extinguish the right of redemption.

15. In none of these cases did the pre-emptor who was in possession as mortgagee, offer to exercise his right of pre-emption, and give notice that he would hold possession thenceforward as vendee under his right of pre-emption, ready to pay the price. I do not pause to consider whether that would really make any difference nor to consider whether an ottidar having a right of pre-emption under law would stand on a different or higher footing than a pre-emptor under a contract. I may observe that in the former case the right of pre-emption is not collateral to the mortgage, but is one which is an incident of an otti mortgage. In the latter case, the right of preemption of the mortgagee, is not qua mortgagee, but is a collateral advantage resting upon express contract, In Ukku v. Kutti I.L.R. 15 Mad. 401 which was also a suit for redemption in which the otti mortgagee pleaded a right of pre-emption based upon customary law, a decree for redemption was passed only on condition of the defendant failing to pay within two months the price he had to pay for exercising the right of pre-emption and obtaining a conveyance from the plaintiff, who was directed by the same decree to execute the conveyance on the defendant; making the payment. In this case, the Transfer of Property Act was not ignored, but specific performance was decreed as if there was a cross suit for that purpose by the defendant, it being apparently assumed upon the facts of that case that a suit for specific performance would not be barred by limitation.

16. Assuming that it would not be irregular to adopt such a course in a suit for redemption, I have already stated that the appellant has entirely failed to show that he was at the date of the suit in a position to enforce his right of pre-emption by a suit for specific performance. Under English Law, there is authority for the position that, in certain cases and under certain circumstances, a Court of Equity would act on the supposition that what ought to be specifically performed has been performed and give relief to the party entitled thereto on such supposition. But even in that class of cases, equity would not give the relief unless the party would be entitled to specific performance if he seeks for it. The same course may be adopted even here, as in fact it is in oases in which it can be done without contravening the express and fundamental provisions of the Transfer of Property Act or of any other positive enactment. I may here quote the following passage from the judgment of the Master of the Rolls in Swain v. Ayres L.R. 21 Q.B.D. 289: 'I should therefore be disposed to say that, when there is such a state of things that a Court of Equity would compel specific performance of an agreement for a lease by the execution of a lease both in the equity and common law divisions, the case ought to be treated as if such a lease had been granted and was actually in existence. There would then be the equivalent of a lease, that is to say, the lease of which equity would compel the execution in specific performance of the agreement. That is a very different thing from saying that, where equity would not compel specific performance by the execution of a lease, the lease of which equity would not decree execution is to be considered in equity as existing. That contention seems to me quite untenable. It seems to me quite impossible to say that equity would consider a lease in existence, though it would not grant specific performance by decreeing execution of a lease. Such a contention seems to me to make the doctrine of equity on the subject self-contradictory.'

17. Another question which arises in the case but which has not bean argued is one of considerable difficulty and importance, That question is whether the covenant for pre-emption in the present case transgresses the rule against perpetuities and is therefore void. Of course if the covenant were construed as one enforceable only during the mortgagor's lifetime, though the mortgage may continue beyond his lifetime, it will not be obnoxious, at any rate to the law of perpetuities as based upon English doctrine. But if its right construction be, as I think it is, that the parties intended that the right of pre-emption is to last until the redemption of the mortgage, the covenant will, according to English Law as settled by the decision of the Court of Appeal in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 overruling the decision of Fry, J., in Birmingham Canal Company v. Cartwright L.R. 11 Ch.D. 421 and followed by Bacon, V.C. in Trevelyan v. Trevelyan 53 L.T.N.S. 853 be void for remoteness. This view was acted upon by a Division Bench of the Calcutta High Court in the recent case of Nobin Chandra Soot v. Nabab Ali Sarkar 5 W.N. 343. In that case the plaintiff sued to enforce the right of re-purchase by way of pre-emption against defendant No. 1 and other defendants claiming under a sale made by first defendant, the covenant for re-conveyance in favour of the plaintiff having been made by the first defendant's father (deceased).

18. The Division Bench, professing to follow the decision of the Court of Appeal in London and South Western Railway Co v. Gomm L.R. 20 Ch. D. 562 and of Bacon, V. C. in the case cited above and on the authority of a dictum of Markby, J., in Sreemutty Tripoora Soonduree v. Juggur Nath Dutt 24 W.R. 321 dismissed the plaintiff's suit on the ground that the first defendant was not bound by his father's covenant. The decision in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 does not proceed on the ground that the covenant cannot be enforced against the legal representative or assignee of the covenantor, but on the ground that it was void for remoteness and therefore not binding upon the covenantor himself. The Division Bench does not notice an earlier decision of the Calcutta High Court by another Division Bench in Harts Paik v. Juhurudin Gazi 2 Calc.575 already quoted, in which the covenant for pre-emption was enforced and the argument based on the decision in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 which was cited in the argument, was ignored. The decision in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 proceeds on the principle that a covenant to convey, though it does not run with the land, binds it and creates an equitable interest in the land in favour of the person entitled to call for a conveyance and that therefore the rule against perpetuity is applicable as much to executory equitable estates in land as to legal estates. In the same case as well as in the case of Borland's Trustee v. Steel Brothers & Co., Limited [1901] 1 Ch. 279 it is recognised that the rule against perpetuity has no application whatever to personal contracts and that position is incontrovertible. Under the Transfer of Property Act it is expressly provided that a contract for the sale of immoveable property does not of itself create any interest in or charge on such property and in the Indian Registration Act the same view is adopted--vide Clause (h), Section 17. Again, the English doctrine of perpetuities, which seems to be founded upon special considerations, has no place in Hindu Law though the principle underlying the English doctrine is not foreign to Hindu Law. [Vide Mayne's 'Hindu Law,' 6th edition, page 548, and the oases quoted in footnote (a).] Though the English-doctrine of perpetuities, with some modification, is enacted in Section 14, Transfer of Property Act, yet clause id) of Section 2 expressly provides that nothing in the second chapter of the Act, in which Section 14 occurs, shall be deemed to affect any rule of Hindu Law. The power of a Hindu to transfer property has therefore to be regulated by Hindu Law and, according to the decision of the Privy Council in Jatindra Mohan Tagore v. Ganendra Mohan Tagore 9 B.L.R. 377 no Hindu can, either by act inter vivos or by will, make a gift in favour of a person not in existence at the time when the gift is made or at the death of the testator as the case may be. Thus, it will be seen that in this respect the power of a Hindu is under the Hindu Law more restricted than under the English doctrine of perpetuities and the corresponding provision enacted by Section 14, Transfer of Property Act. The above rule of Hindu Law, which in terms applies only to donees, will probably be equally applicable to transferees for consideration and has, in fact, been so applied by the Privy Council in Chundi Churn Barua v. Rani Sidheswari Debi L.R. 15 IndAp 149 : I.L.R. 16 Calc. 71. The question as to the application of this principle of Hindu Law, or of the general doctrine of perpetuities, to transactions other than gifts by Hindus has not yet been judicially considered in any case except possibly in the Privy Council case Chundi Churn Barua v. Ram Sidheswari Debi L.R. 15 IndAp 149 last cited. And it will certainly be revolutionary to follow in this country the decision of the Court of Appeal in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 and the recent decision of the Calcutta High Court in Nobin Chandra Soot v. Nabab Ali Sarkar 5 Calc. W.N. 343. Both Section 14 of the Transfer of Property Act and the English doctrine of perpetuities apply to transfer of interest in property, and, on the simple ground that a contract for the sale of land does not under the Indian Law create' any interest in the land, it will be easy to hold that the decision of the Court of Appeal in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 does not apply to contracts for the sale of land in India. But it must be admitted that there is really no substantial difference between English and Indian Law in respect of contracts of sale of immoveable property, and it does seem reasonable and in accordance with principles of general jurisprudence that there should be some limit of time beyond which the performance of contracts for the transfer of property by way of sale, pre-emption or otherwise must not be allowed to be held in suspense or postponed. Although Section 14 deals only with transfers, the provisions of that section could in some oases be practically defeated if covenants are not held to be void for remoteness on the ground that by themselves they create no interest in property But the result of extending the rule against perpetuities to covenants may possibly be that, in the case of a Hindu, a covenant which would not necessarily vest the future interest contemplated to result from the covenant in a person who is in existence at the time of the covenant would be void. I am glad to be able to refrain from expressing any opinion on this difficult and important question of the application and the limits of the application of the doctrine of perpetuities to covenants, as it has not been really argued in this case and as in fact it is unnecessary to consider and decide it in this case. I shall not be surprised if ere long the decision in London and South Western Railway Co. v. Gomm L.R. 20 Ch. D. 562 is further considered and expounded more elaborately in the Court of Appeal and possibly in the House of Lords. On the ground that the right of redemption was subsisting and had not been extinguished at the date of the suit and also on the ground that the appellant has entirely failed to show that he either was at the date of the suit or is now in a position to enforce his right of pre-emption if any, I would substantially dismiss the second appeal with costs. The decree appealed against, however, has to be modified by disallowing the value of produce at seven paras per annum which became due more than six years before the date of suit. The respondent's vakil admits that he cannot claim the value of produce which became due more than six years before date of suit. The decree appealed against will accordingly be varied by substituting the sum of Rs. 98 for Rs. 48 and striking out the words 'which is the difference of the mortgage amount of Rs. 100 and the rent due Rs. 49 with Rs. 3 awarded to plaintiff for removing the path C and putting up the bund.' The decree will be confirmed in other respects.


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