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Tirumala Chhtti Rangayya Vs. Kandalla Srinivasa Raghava-charlu and ors. - Court Judgment

LegalCrystal Citation
CourtChennai
Decided On
Judge
Reported in121Ind.Cas.753
AppellantTirumala Chhtti Rangayya
RespondentKandalla Srinivasa Raghava-charlu and ors.
Cases ReferredMaharaj Bahadur Singh v. Balchand Chowdhury
Excerpt:
transfer of property act (iv of 1882), section 60 - mortgagor agreeing to sell property to mortgagee at concession rate and in default, to pay enhanced rate of interest from date of document--agreement, whether void for indefiniteness--whether clog against redemption--whether amounts to pre-emption agreement. - ramesam, j.1. this appeal arises out of a suit for specific performance of an agreement to sell. the agreement was executed by the 1st defendant for himself and as guardian of his younger brother, the 2nd defendant. the 3rd defendant was the divided brother of the plaintiff and the two brothers were on bad terms for sometime. he obtained a sale deed from defendants nos. 1 and 2 on the 6th january, 1921, (ex. vii). the plaintiff alleges that this sale-deed was obtained with the knowledge of plaintiff's agreement, which is ex. a dated the 25th december, 1920. defendants nos. 4 and 5 are the undivided sons of the 3rd defendant. the 3rd defendant died during the tendency of the case in the court below. the subordinate judge of chittoor dismissed the plaintiff's suit for specific performance,.....
Judgment:

Ramesam, J.

1. This appeal arises out of a suit for specific performance of an agreement to sell. The agreement was executed by the 1st defendant for himself and as guardian of his younger brother, the 2nd defendant. The 3rd defendant was the divided brother of the plaintiff and the two brothers were on bad terms for sometime. He obtained a sale deed from defendants Nos. 1 and 2 on the 6th January, 1921, (Ex. VII). The plaintiff alleges that this sale-deed was obtained with the knowledge of plaintiff's agreement, which is Ex. A dated the 25th December, 1920. Defendants Nos. 4 and 5 are the undivided sons of the 3rd defendant. The 3rd defendant died during the tendency of the case in the Court below. The Subordinate Judge of Chittoor dismissed the plaintiff's suit for specific performance, but gave him a decree for refund of the advance of Rs. 2,500 which was received by the 1st defendant at the time of the plaintiff's agreement, with interest. The plaintiff appeals.

2. The 3rd defendant pleaded, in his turn, that his sale-deed, Ex. Vll, was obtained in pursuance of an agreement executed by the 1st defendant in his favour, namely, Ex. II dated 27th June, 1918, and that, as the plaintiff obtained his agreement, Ex. A, with the knowledge of the 3rd defendant's agreement, he is not entitled to specific performance. Six days prior to Ex. 11, the 1st defendant executed a deed of mortgage in favour of the 3rd defendant for Rs. 14,000 (Ex. VI dated the 21st June, 1918). The language of Ex. II shows, and the Court has also found, that Exs. II and VI are connected and form part of one transaction. The Subordinate Judge says 'Ex. II was executed between the date of the execution of Ex. VI and the date of its registration. Io was clearly the consideration for the low rate of interest provided in Ex. VI and the low rate of interest in Ex. VI was the consideration for it.' The appeal was argued before us by the learned Advocate for the appellant and the learned Advocate-General for the respondents on the footing: that the two documents form part of the same transaction. I shall later on refer to the argument of the respondents based on the fact that they were executed on different dates. In pursuance of Ex. II, Ex, VII was obtained by the 3rd defendant. The Subordinate Judge also finds that Ex, A was obtained by the plaintiff with the knowledge of Ex. II and this finding has not been challenged in appeal.

3. When the appeal originally came on for hearing before us, an objection was taken by the learned Advocate for the respondents that Ex. A was inadmissible in evidence on account of the recent decision of the Privy Council in Dayal Singh v. Indar Singh : (1926)28BOMLR1372 The appellant attempted to meet this objection by arguing, first, that the point cannot be raised in appeal and secondly, that there was part performance of the contract by delivery of possession and, therefore, specific performance can be decreed. We, therefore, called for a finding on the question whether the plaintiff was put in possession of the suit lands by the 1st defendant or under his direction and, if so, when? A finding has been returned.[See Infra p. 760--Ed.] In the interval, the Indian Legislature has amended the Indian Registration Act by providing that an unregistered agreement for sale even reciting payment of consideration is not inadmissible in evidence and making this provision declaratory of the law and retrospective in its operation. The result of this amendment of the Registration Act is that the objection as to the admissibility of Ex. A ceased to be of any importance. This was conceded by both sides and the appeal was argued on the footing that Ex. A is admissible.

4. The main question argued before us is whether Ex.11 was void and, therefore, even if plaintiff had notice of it, his knowledge of it does not disentitle him from obtaining specific performance of his agreement, Ex. A. The main grounds on which the appellant argues that Ex. 11 is void are two: (1). That it ia indefinite and, therefore, incapable of specific performance and (1904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276 it operates sas a tie on the property which was the subject of the mortgage and is, therefore, invalid. For the purpose of considering these two points, I set forth, the terms of Ex II. After describing the properties, it proceeds as follows : ' As you have advanced this amount as loan at a concession rate of 11 annas percent, per menses and suffered a loss of Rs. 500 per annum which would be got if advanced to others for interest at the rate of 12 per cent, per annum, in consideration for the same we shall aellpatteda, etc., to you only at a concession rate. In case we happen to sell the same, we will not sell the same to others. In case we sell it so, it will not become valid. If we are to act contrary to the same, not only we shall pay interest calculated at the rate of 5 annas per cent, per menses for the said amount of Rs. 14,000 along with the 11 annas interest mentioned in the document from the date of the document, but also we shall pay the costs also in-currred by you.' I may here mention that, under the terms of Ex. VI which was dated the 21st June, 1918, the time fixed for payment of the principal was 30th December, li>25, but interest was payable every year on the 20th June. The respondents contended that the clause providing for the additional interest of 5 annas in addition to the original interest provided for in the mortgage-bond, Ex. VI applied only to the installments of unpaid interest and does not apply to the amount of interest already paid and received. If, for instance, the first year's interest was paid on the 20th June, 19iy, and the covenant to sell the properties to the 3rd defendant was broken some time after, the compensation by payment of additional interest of 5 annas does not apply to the first year's interest. But I cannot accept this construction of that clause in the face of the express provision in it for the payment of additional interest on the amount of Rs. 14,000 from the date of the document. It is, therefore, clear that the word 'along with' in the clause really means 'in addition to'. The respondents next contended that this clause shows that the earlier clause compelling the 1st and 2nd defendants to sell the property to the 3rd defendant only was intended to be operative only up to the time of the redemption of the mortgage and not bye and redemption; and, therefore, was perfectly valid as a clause of pre-emption, and, if the mortgage is redeemed by payment of the debt, the property goes back to the mortgagors without any tie. But I am unable to accept this construction of the agreement to sell. The clause relating to compensation by payment of additional interest does not necessarily show that the earlier clause binding the 1st defendant to sell to the 3rd defendant only was intended to be operative only before redemption. Just as the 1st defendant was bound to pay an additional rate of 5 annas even in respect of the period for which interest has been paid under the terms of the mortgage bond, similarly even where the whole amount of the debt is paid off, it was intended that the 1st defendant should pay an additional compensation of 5 annas if he broke the covenant regarding the sale to the 3rd defendant only. How far such a clause is valid is another matter, but at present I am merely trying to construe the meaning of the two clauses and it seems to me that the meaning of the clause according to the plain intention is not to be modified or cut down with reference to the consideration that the construction according to the plain intention may render the clauses invalid. I am, therefore, of the opinion that the covenant compelling the 1st defendant to sell to the 3rd defendant only has nothing to do either with the date fixed for payment in Ex. VI or with the date of redemption which, it seems to me, may be either subsequent to the date fixed for payment or before it, for Ex. VI, though it prevents the mortgagee from bringing a suit for sale on the covenant to pay before the 31th December, 1925, does not prevent the mortgagor from paying the debt at any time before that date. The mortgagor might redeem the mortgage at any time prior to the 30th December, 1925, or after the 30th December, 1925. If, for instance, the mortgagor redeemed it in it)19, I do not think it can be said that the clause compelling the 1st defendant to sell to the 3rd defendant only was inoperative after such redemption in 1919. Thus, even after redemption, if the property returns to the mortgagor's hands, there would be a tie on the property and such a tie would make the whole agreement invalid. It is enough to refer to Samuel v. Jarrah Timber and Wood Paving Corporation Ltd. (2)(1904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276.

5. But, even accepting the respondents' construction of true clause, it seems to me that the clause is void for more than one reason, namely, that it will operate as a tie ana that it is indefinite. The respondents contend that it is not indefinite ana that it is merely a clause of preemption and that it would not make it invalid within the naming of the decisions on this matter. First, it seems' to me that the clause is certainly indefinite because, according to it, the 1st defendant was to sell to the 3rd defendant at a concession rate, the Telugu word used being sale suga'. Now a concession or a favorable rate must be some rate substantially less than the fair rate, the proper rate or the market rate. An agreement to sell at a moderate price or at a fair rate or at a proper rate may be perfectly valid, but an agreement to sell at a favourable or concession rate is indefinite and must be regarded as void for indefiniteness. In this respect, the present case is worse than the clause in Bromley v. Jefferies (1700) 2 Vern. 415 : 23 E.R. 867 where the agreement was to sell for 1,500 less than what any one else would, pay and the clause was held to be indefinite. The respondents argue that the word 'sales saga' is merely an expletive and may be ignored and we ought to construe the clause to be merely a covenant to sell at a proper rate, but I am unable to accept this contention. The object of this clause is to compel the 1st defendant to sell at a substantial deduction from the fair value, that is, at a rate which is not the proper rate and the contention requires me to construe the clause as the opposite of what it is. I am, therefore, unable to accept it. The Advocate for respondents also tried to argue that the clause is not indefinite because the concession expected is fairly ascertainable, for, according to him, the amount of concession is equivalent to the amount of compensation provided for by the second clause, namely, the additional interest of 5 annas. Here again, I am unable to accept this argument. The clause providing for compensation in case of breach of covenant to sell cannot throw light strictly on what the amount of concession should be. To say that the amount of concession should be exactly equivalent to the amount of compensation is to speculate on the intention of the parties and add to the terms of the document. All that the document does not that it mentions the fact of advancing the loan at 11 annas as the motive or reason for the covenant to sell but the covenant itself does not mention any definite rate and we cannot add to it. So I am not able to accept both branches of this argument for the respondents.

6. Even assuming that the words 'concession rate' may be taken to be equivalent to 'a proper rate' and also assuming that the covenant is intended to operate within the time of redemption and by reason of these two assumptions in favour of the respondents, the clause is no more than the order nary clause of pre-emption, it is doubtful whether the clause is valid. The respondents rely on passage in Code on Mortgages, 9th Edition of page 23. We find that the expression of opinion relating to pre-emption was repeated from earlier editions and the editors of the later editions did not think fit to modify it even after the decisions in Noakes and Co. Ltd. v. Rice (1902) A.C. 24 : 71 L.J. Ch. 139 : 66 J.P. 147 : 50 W.B. 305 : 86 L.T. 62 : 18 T.L.R. 196 and in Samuel v. Jerrah Timber and Wood Paving Corporation, Ltd. 1904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276 and in Kreglinger v. New Patagonia Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114. The expression of opinion is based on two decisions mentioned in the footnote. These are Orby v. Trigg 88 E.R. 279 and In m Edward's Estate (1861) 11 Ir. Ch. Rep. 367. Then the footnote runs 'see Dawson v. Dawson (1837) 8 Sim. 346 : 59 B.E. 137 : 42 R.R. 197 and Cookson v. Cookson (1837) 8 Sim. 529 : 59 B.R. 210 and see also Krelinger v. New Patagonia Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114'. In Orby v. Trigg (1795) 9 Mod. 2 : 88 E.R. 279 it was held that the covenant was not known to the mortgagor or to the mortgagee and a decree for redemption was given to the purchaser free of the clause of pre-emption. It is not, therefore, a decision on the point, though it suggests that if the clause was known it might have been binding. The Irish Chancery case is not available. In Dawson v. Dawson (1837) 8 Sim. 346 : 59 B.E. 137 : 42 R.R. 197 there was an option to purchase in favour of a son in the devise by the father. As the son did not exercise it within the time, it was held that he could not enforce it Afterwards. In Cookson v. Cookson (1837) 8 Sim. 529 : 59 B.R. 210 there was a clause of pre-emption in a partnership deed, it was held that it expired with the term mentioned in it and could not be fexercised afterwards. In Kreglinger v. New Patagonia Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114 the reference was only to the general principles and not to a case of pre-emption. In ray opinion, therefore, the opinion in Court on Mortgages is not supported by the cases cited. On the other hand, there are the observations of Lord Macnaghten at page 326Page of (1904) A.C.--Ed.] of Samuel v. Jarrah Timber and, Wood Paving Corporation Ltd. (904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276: 'But, in my opinion, the question here depends rather upon the rule that a mortgagee is not allowed at the time of the loan to enter into a contract for the purchase of the mortgaged property.' and the observations of Lord Parker of Wad ding ton in Kreglinger v. New Patagonia Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114 'the rule ie ferred to in some of the authorities to the effect that a mortgagee cannot as a term of the mortgage eater into a contract to purchase, or stipulate for an option to purchase, any part of or interest in the mortgaged premises.' A contract for pre-emption, though not a case of absolute option... for unless a mortgagor makes up his mind to sell, the right of pre-emption does not arise--is still a contract for purchase of property though it is contingent upon the mortgagor making up his mind to sell. It is like any other contract and when the contingency happens, is capable of specific performance even against a person who purchases with notice of it. It is, therefore, like any other contract of purchase and, I think falls under the phrase 'contract to purchase1 in the dictum of Lord Parker quoted above. In Davies v. Chamberlain (1910) 26 T.L.R. 138 there was a clause giving the vendor the option of binding one-third the capital of a Company which was to be floated for the purpose of developing land. The Company was formed but the option was not given. It was held that, if the clause was contained in a mortgage, it would not have been binding, but, as it was part of the contract to sell, it was found valid and binding. It is, therefore, doubtful whether even if the clause in question is a clause of pre-emption it is valid with reference to the authorities cited above. The case in Haris Paik v. Jahuruddin Gasi 2 C.W.N. 575 was long before the above authorities and there is no discussion of any case and is of no value to the respondents. Bat I do hot think it necessary to express my final opinion on the clause of pre-emption for, as I have already said, I do not think it is a clause of preemption. A clause of pre-emption is generally a clause to sell at a price which any one else would give and which would be generally the market rate or proper rate. Here, it is for a favorable or concession rate, that is, something lees than what another would give.

7. It is also contended for the respondent that even if the clause was intended to operate beyond the time of redemption, it is not invalid. They rely on John Bros Abergaru Biewery Co. v. Holmes (1900) 1 Ch. 188 : 69 L.J. Ch. 148 : 64 J.P. 152 : 48 W.R. 236 : 81 L.T. 771 where it was held that the restrictive covenant may be limited to the period of continuance of the mortgage though not binding after re demotion. It is doubtful how fan this case can be regarded as am authority after the decision of the House of Lords in Noakes and Co, Ltd. v. Rice, (1902) A.C. 24 : 71 L.J. Ch. 139 : 66 J.P. 147 : 50 W.B. 305 : 86 L.T. 62 : 18 T.L.R. 196. The case of In re Cuban Land and Development Co. (1921) 2 Ch 147 : 90 L.J. Ch. 440 : 125 L.T. 792 : 65 S.J. 680 was also relied on. The decision in that case turned upon the fact that it was a peculiar contract and the case of Noakes and Co. Ltd. v. Rice (1902) A.C. 24 : 71 L.J. Ch. 139 : 66 J.P. 147 : 50 W.B. 305 : 86 L.T. 62 : 18 T.L.R. 196 was distinguished thus by P.C. Lawrence, J. 'In the first place it was not a case of debentures or debenture stock issued by a Limited Company, but of a mortgage between private individuals etc.' Therefore, I do not think that the case helps the respondents. As there is an interval of six days between the mortgage Ex. VI and the agreement Ex. II, the respondents also rely on the observations of Lord Halsbury in Samuel v. Jarrah Timber and Wood Paving Corporation Ltd. (1904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276: 'If a day had intervened between the two parts of the arrangement, the part of the bargain which the appellant claims to be performed would have been perfectly good and capable of being enforced.' But in the case of Brown v. Ryan (1901) 2 Ir. Rule 653 : 6 Ir. L.R. 308 which was approved by the House of Lords in Noakes and Co. Ltd. v. Rice (1902) A.C. 24 : 71 L.J. Ch. 139 : 66 J.P. 147 : 50 W.B. 305 : 86 L.T. 62 : 18 T.L.R. 196 and particularly by Lord Halsbury, the mortgage was dated the 16fch June, 1898, and the agreement was dated the 2lst June and it was found they were parts of one transaction. The true view is stated by Viscount Haldane in Kreglinger v. New Patagonial Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114: ' The question is, in my opinion, not whether the two contracts were made at the same moment and evidenced by the same instrument, but whether they were 'in substance a single and undivided contract or 'two distinct contracts.... The question is one not of form but of substance, and it can be answered in each case only by looking at all the circumstances and not by mere relianca on some abstract principle, or upon the dicta which have fallen obiter from Judges in other and different cases.' Even Lord Lindley who is supposed to have taken a more favourable view in favour of restrictive covenants on account of his decision in Santley v, Wilde (1899) 2 Ch. 474 : 68 L.J. Ch. 681 : 48 W.R. 90 : 81 L.T. 393 : 15 T.L.R. 528 says at page 329Page of (1904) A.C.--[Ed]. 'no contract between a mortgagor and a mortgagee made at the time of the mortgage and as part of the mortgage transaction, or in other, words, as one of the terms of the loan, can be valid etc.' I. therefore, trhink that the observations of Lord Halsbury do not help the respondents.

8. The appellant also contended that the clause in question was void for a third reason, namely, thatit offends against the rule of perpetuities and the cases of L, and S.W. Ry. v. Gomm (1882) 20 Ch. D. 562 : 51 L.J. Ch. 530 : 46 L.T. 449 : 30 W.R. 620 and Maharaj Bahadur Singh v. Balchand Chowdhury 61 Ind Cas. 702 : 48 I.A. 376; (1921) M.W.N. 157 : 2 P.L.T. 131 : 6 P.L.J. 163 : 25 C.W.N. 770 : 3 U.P.L.R. 29 : 14 L.W. 254 : 24 Bom. L.R. 623 were relied on, but it is not necessary to consider this question, which, has given rise to consider able conflict of opinion in Indian Courts, in view of my conclusion on the other grounds on which the validity of the agreement is questioned.

9. I am, therefore, of the opinion that the clause in question is void and as such the plaintiff is entitled to ignore it when its came to his knowledge. There is, there fore, no legal obstruction to the enforcement of his agreement. The plaintiff is, therefore, entitled to specific performance. The decision of the Subordinate Judge is reversed and the appeal is allowed and a decree will be passed with costs through out directing the defendants Nos. 1, 2, 4 and 5 to execute a conveyance to the plaintiff on the plaintiff depositing the balance of the consideration minus interest on Rs. 2,500 at 6 per cent, from 4th January, 1921, to the date of actual deposit by the plaintiff and to deliver possession of the suit lands to the plaintiff and the amount desposited will be allowed to be drawn by defendants Nos. 4 and 5.

Reilly, J.

10. Now that Act II of 1927 has made it clear that Ex. A though unregistered is admissible in evidence the defendants can resist the plaintiff's claim only by showing that Ex. II, the earlier agreement for sale in favour of defendant No. 3, of which it is not now disputed the plaintiff was aware when he obtained Ex. A, is valid. For the plaintiff the validity of Ex. IL is attacked on several grounds. The learned Advocate-General at one stage of his arguments as I understood him, contended that Ex. II was not part of the same transaction as the mortgage deed, Ex. VI, which was executed six as earlier. That interval of time alone is not sufficient to show that the two documents represent separate transactions. And, when we examine the wording of the two documents, I think it is impossible to dissociate them. Exhibit II recites that its executants, defendants Nos. 1 and 2 and their brother, who were also the executants of the mortgage deed, Ex. VI, had at the time of mortgage promised to sell the land now in question to defendant No. 3, the mortgagee, and by Ex. II they now agree that, as defendant No. 3 had advanced the mortgage amount at a concession rate of interest, 11 annas per Rs. 100 per mensem instead of Re. 1 which he could have obtained for his money, if they sell the land, they will sell it to him at a concession rate and that, if they break this agreement, they will pay the additional interest of 5 annas per Rs. 100 per mensem, which would make up the Re. 1 per mensem. That makes it quite clear, I think that the two transactions were so interlocked as to form parts of one transaction. We start, therefore, from the position that as part of the mortgage-transaction defendant No. 3 obtained this agreement to sell, Ex. II.

11. If, Ex. II properly construed, would bind the mortgagors not only until the redemption of the mortgage but after redemption, it is obviously void. If on redemption the mortgagors would not get back the mortgaged property free not only from the mortgage-debt but from every obligation which formed part of the mortgage-transaction, there would be a clog or fetter on the equity of redemption, which the Court must refuse to recognize. The learned Advocate-General does not dispute that proposition. But he contends that the agreement to sell embodied in Ex. II does not extend beyond the currency of the mortgage. That I think is against the plain meaning of the document. There are no words in Ex. II explicitly limiting its effect to the currency of the mortgage. But it is suggested that the expressions used in regard to the payment of the additional interest at the rate of 5 annas per mensem, if the agreement to sell to defendant 3 is broken, show that that was the intention of the parties. It is provided that, if the agreement tosell is broken, the mortgagors shall pay the additional interest at the rate of 5 annas along with the interest at the rate of II annas provided in Ex. VI. The Telugu words in Ex. II which have been translated 'along with' are lithe It is argued that the additional interest cannot be paid along with the original interest after redemption and, therefore, the stipulation to pay additional interest and with it the agreement to sell cannot have been intended to take effect after redemption. But, if we examine the document a little more closely, it becomes clear that the words the kuda have not been used in this literal sense. According to the document, if the agreements broken--that is according to the learned Advocate-Generals interpretation broken at any time before redemption--the additional interest is to be paid 'the kuda' the original interest from the date of the document. But it is obvious that the breach might occur after several payments of interest though before redemption. If that happened, the additional interest, would have to be paid from the date of the document but could not be paid literally along with the interest already paid. I do not think that we can give any reasonable effect to the words the kuda, in Ex. II unless we understand them to mean 'in addition to', as they often do mean in Telugu documents. Apart from this argument based on the words the kuda I see nothing in Ex, II which restricts its effect to the currency of the mortgage, and on the ground that Ex. II would prevent the mortgagors from getting back their property on redemption free from the obligation to sell to defendant No. 3 in certain circumstances, an obligation which has been found to be part of themortgage-transaction, the agreement is clearly void.

12. Apart from this more general view of the matter it is contended for the plaintiff that Ex, II is invalid because a mortgagee is not permitted as part of his mortgage-transaction to obtain a contract for the sale of the property to him even if that contract is to give him an option to buy only until the mortgage is redeemed, We need not go further than Samuel v. Jarrah Timber and Wood Paving Corporation Ltd. (1904) A.C. 323 : 73 L.J. Ch. 526 : 52 W.R. 673 : 90 L.T. 731 : 20 T.L.R. 536 : 11 Manson 276 for an authority for that rule. The learned Advocate General contends that the rule does not apply to a contract for pre-emption where the mortgagor is not bound to sell at the option of the mortgagee but only to give the mortgagee an opportunity of buying if the mortgagor wishes to sell. Davies v. Chamberlain (1910) 26 T.L.R. 138 is by implication against that contention; audit may be remarked that a mere right of pre emption may we prove some hindrance to a sale for full value. But I prefer not to express a definite opinion on that question on this occasion, as it appears to me unnecessary for this part of the present case, Here we have something more than a contract for pre-emption and to my mind something much more objectionable. This is not a case where the mortgagor, if he happens to want to sell the property, must give the mortgagee an opportunity of buying at the price he can get from any one else. Here, even if we do not take the words 'we shall not sell to others' as meaning more than that the mortgagors will not sell to others without first giving the mortgagee his opportunity, that opportunity is, not to buy at the market-price or what can be obtained from others, but at something less, at a 'concession' price. Now, if the rule that a mortgagee cannot as part of the mortgage-transaction obtain an option to purchase at the full value is to be maintained, on what principle can he be allowed to obtain as part of the mortgage-transaction a right to tie the mortgagor's hands so as to prevent him from getting the full value from any one? In such a case it is true that the mortgagor cannot be forced to sell at the option of the mortgagee; but, if he wishes to sell at all, he can be forced to sell at less than the full value of the property. To my mind the one is as repugnant to the essence of a mortgage as the other. If by the mortgage transaction the mortgagor's right to sell the equity of redemption at its full value is cut down, we have at once something more than a mortgage, something repugnant to a mortgage. In Kreglinger v. New Patagonia Meat and Cold Storage Co. (1914) A.C. 23 : 83 L.J. Ch. 79 : 109 L.T. 802 : 58 S.J. 97 : 30 T.L.R. 114 Lord Parker suggested that one justification for the rule that a mortgagee cannot as part of the mortgage transaction obtain a contract from the mortgagor to sell the mortgaged property to him is that such a contract; is repugnant to the mortgagor's contractual right to obtain a re-conveyance on redemption, which is explicit in what in this country we call an English mortgage, and also repugnant to the equitable right to obtain a re conveyance on redemption even after the date for payment has passed. That is an illuminating explanation of the rule. But Lord Parker did not suggest that the rule applies only to what we call English mortgages nor that it is not still in full force in respect of all transactions which are really mortgages. There is no valid reason, so far as I can see, and none has been suggested before us, why the rule should not be fully applicable to a simple mortgage in this country. Apart from all questions of its historical origin or development the principle behind the rule is that the mortgagor shall not by the mortgage-transaction impair his right to the property or his right to deal with It except so far as it is made security for the mortgage-money. That principle is clearly infringed, if by the mortgage-transaction the mortgagor binds himself, even for no longer than the currency of the mortgage, to sell, if he sells at all, at something lees than the full value of the property. For this reason also I think we must find that Ex. II is invalid.

13. It is also contended for the plaintiff that Ex. II is void for uncertainty. It provides that, if the mortgagors sell the property now in question, they will sell it to the mortgagee, defendant No. 3, 'at a concession rate.' The learned Advocate-General suggested at one stage that we should read the document as a contract for pre-emption and ignore this expression 'concession rate.' But the tenor of the document shows that this expression was deliberately introduced; and the explanation of its introduction is set out. It is clear that it is an important term of the document, which we should not be justified in disregarding. Then can we say or ascertain what the parties to the document meant by selling 'at a concession rate'? The only things in the document which go any way towards, giving precision to this stipulation are the statement that the reduction of interest will cause defendant No. 3 a loss of Rs. 500 a year and the provision that, if the contract to sell is broken, the executants will pay to defendant No. 3 additional interest at 5 annas per mensem from the date of the document which would make up the ordinary interest of Re. 1 per mensem. But Rs. 500 is a round sum, which is less than the annual difference between the two rates of interest, even if the interest were paid punctually as simple interest. And, if either the Rs. 600 a year or the interest actually lost by reduction of rate were intended to fix the amount of 'concession' in the sale price, surely the parties would have expressed that definitely as the measure of the 'concession' or would at least have provided for a 'proportionate concession'. Here the document sets out the reason for the concession in price and the compensation to be paid if the agreement is broke but avoids giving any precision to the word sales suga' though that might so easily have been done. I agree that the 'concession' in price in Ex. II is neither ascertained nor ascertainable and that, therefore, apart from its other infirmities the agreement for void for uncertainty.

14. The last contention for the plaintiff is that Ex. II infringes the rule against perpetuities. I agree that it is unnecessary to discuss this question, which was not argued very fully before us. I will only add that I do not think that the decision of their Lordships of the Privy Council in Maharaj Bahadur Singh v. Balchand Chowdhury 61 Ind Cas. 702 : 48 I.A. 376; (1921) M.W.N. 157 : 2 P.L.T. 131 : 6 P.L.J. 163 : 25 C.W.N. 770 : 3 U.P.L.R. 29 : 14 L.W. 254 : 1921 24 Bom. L.R. 623 on which the plaintiff relied, is of very great assistance to us in this connection, as that case did not deal with an agreement for sale of land, in respect of which in this country we have the special provision in 8.54 of the Transfer of Property Act.

15. On account of the three contentions of the plaintiff which I think must be upheld, I agree that this appeal must be allowed and a decree made for the plaintiff with costs in both Courts in the terms proposed by my learned brother.


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