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TMI Blog1922 (3) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... with other separate and self-acquired properties to his wife Sarasvatibai for her life with remainder to his four sons in equal shares subject to certain trusts for maintenance and residence. 5. In 1897, Vinayakrao conveyed inter alia his share in the suit property to his three brothers; consequently that share was held by them as purchasers and not as devisees. The suit property has remained undivided, the persons at present entitled to it being Dinkarrao, Vinayakrao, and Sundrabai as heiress of her surviving son Narayanrao. For the purposes of partition it became necessary to sell the property, so the plaintiffs filed this suit as an Originating Summons in order to have the rights of the first defendant under the sale-deed of 1878 determined by the Court. 6. By Clause 14 A of the plaint which was added under the direction of the trying Judge the plaintiff said that the first defendant on divers occasions had asserted that he was entitled to an option to purchase the suit property in accordance with the provisions of the sale-deed of 1878, and differences had arisen which they had endeavoured to settle by negotiation but without success. The provisions of the sale deed refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure to be followed is regulated by the Civil Procedure Code and the High Court Rules. 13. By High Court Rule 214 which is in the Chapter dealing with proceedings by way of Originating Summons it is clear that the Court can pass a declaratory decree in an Originating Summons provided the case falls within the provisions of Section 42 of the Specific Relief Act, and there can be no doubt that on the facts set out in the plaint the plaintiffs are entitled to ask for a declaratory decree. 14. The learned Judge then proceeded to ascertain the meaning of the covenants in the sale-deed of 1878, but he considered that the meaning depended on the intention of the parties. With due respect I do not think that was the correct view to take. The Court has to construe the words of the document as they stand according to their plain grammatical meaning, and whatever the parties may have intended they must be bound by the plain meaning of the words to which they attached their signatures. 15. In conclusion the judgment says:- I therefore construe the covenant as a valid personal contract but creating no rights in rem. Plaintiff cannot get a declaration as to rights under a pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption, but there are separate covenants in different terms with regard to the land and the buildings respectively. Nothing is said with regard to the rights of the vendor if the purchaser after erecting a building on the land sold, desired to sell land and building together, and Mr. Inverarity argued that in that event happening there was no right of pre-emption, It might be said that the parties clearly intended that if the purchaser wished to sell land and building together the vendor had a right of preemption on paying the original price of the land and the agreed value of the building and that the covenants can be read as having given effect to that intention, but covenants of this nature which cast a very onerous burden on the covenantor must be read strictly against the covenantee, a the covenant does not provide for a sale of land and building together I am inclined to think that there is considerable in the argument. However, even if we acceded to it we should still have to decide the real questions at issue which are:- 1. Did the covenants in the sale-deed of 1878 create an interest in Immovable property. 2. If they did, are the 'void as against the rule of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son claiming under the vendor's title arising subsequently to the contract, except a bona fide purchaser for value without notice, By Section 91 of the Indian Trusts Act of 1882, a transferee taking with notice of a prior contract in favour or another held the right he obtained under his transfer as a trustee for the previous purchaser, who would consequently been the position of a cestui que trust. Now the Registration Act and the Specific Relief Act enact principally adjective law, and the natural consequence of enacting adjective law on the assumption that the substantive law prevailing corresponded with the English rule of equity was to create considerable confusion. For instance, a contract which under English law created an equitable interest in land might also come within the description of the documents referred to in Section 17(2)(v) of the Indian Registration Act of 1877, and very possibly the Legislature intended to exempt such contracts from registration, but the question whether they were compulsorily registrable or not could not be said to have been definitely settled until the passing of the Transfer of Property Act. Still, although contracts for the sale of land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt were construed as one enforceable only daring the mortgagor's life-time, though the mortgage may continue beyond his life-time, 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 (1882) 20 Ch. D. 526be void, 27. Then at p. 468:- That decision 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. 28. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... But a contract which gives the promisee an executory interest in land is as much liable to the objection as a grant of the land itself, because the promisee obtains by virtue of the contract an equitable right in the land. 30. Dealing with the objection that in India there were not two classes of estates equitable and legal their Lordships thought that there was no substantial difference in the law to be applied to the case as the benefit of an equitable estate was in substance given to a person in whose favour a promise to convey lands had been made. Referring to South Eastern Railway v. Associated Portland Cement Manufacturers [1910] 1 Ch. 12 and Kalimaddin Bhuya v. Reazuddin Ahmed their Lordships thought that if a man promises that he and his heirs will convey, the promise may be enforced according to those cases against himself, i.e., the promise might be treated as divisible so as to make it enforceable against him though it may not be enforceable against the heirs. That question, however, does not arise in this appeal. 31. In Maharaj Bahadur Singh v. Balchand (1909) 10 C.L.J. 626 the proprietor of a hill agreed with a Society of Jains that if the Society should require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y contracted to be conveyed. But no such result can follow from a contract creating an executory interest. If such a contract purports to do by indirect means what the law forbids to be done directly it is void and the principle is the same in India as in England. 34. By the covenant in suit the vendor purports to give his heirs a right to buy the land at the price he got for it, and the buildings at a price to be agreed upon. In my opinion it is void and the plaintiffs are entitled to a declaration to that effect. 35. The appellants will got their costs of the appeal. J.B. Kanga, J. 36. I agree in the judgment just delivered by my Lord the Chief Justice. [His Lordship after stating the facts proceeded :-] 37. A preliminary objection to the Originating Summons was taken by the Advocate General, who appeared for the first defend. ant, to the effect that the plaintiffs and the second defendant could not in law ask for a declaration that the first defendant was not entitled to a right of pre-emption. He argued that the plaintiffs and the second defendant were by this Summons praying for a declaration that the first defendant was not entitled to a right of pre-emption ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Smith's Leading Cases, Vol. I, p. 55. 42. The covenant in this case is a contract to convey the land and the building to the covenantee or his heirs, Vahivatdars or donees in future upon the happening of an event, viz., an intended sale by the covenantor or his heirs. In other words a right of pre-emption or first refusal to arise on an intended sale is given to the covenantee or his heirs. 43. It was contended by Mr. Inverarity that such a covenant created an interest in the land and was subject to the rule against perpetuities and was void and that even if it did not create an interest in the land it was void under Section 23 of the Indian Contract Act as being opposed to the policy of the law prohibiting all devices which tended to create a perpetuity. 44. Counsel for the first defendant contended that it was merely a personal covenant and was not within the rule against perpetuities and that under Section 54 of the Transfer of Property Act and according to the law in force prior to the Transfer of Property Act a contract for the sale of Immovable property did not of itself create any interest or charge on the property contracted to be sold. 45. At the date o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (1871) 14 M.I.A. 129. By Clause (6), Section 17, of the Indian Registration Act III of 1877, documents containing an agreement of sale of Immovable property were expressly exempted from compulsory registration. It seems the intention of the Legislature was to exempt from registration agreements which created executory interests in the land and which could not displace a conveyance of the same land obtained in good faith by a transferee without notice and duly registered. 49. In seems to me that prior to the Transfer of Property Act the law assumed in illustration (a) to Section 13 of the Specific Relief Act, that a contract for the sale of Immovable property created an equitable interest in the property and made the purchaser the owner in equity, was the law in India. 50. The same opinion is expressed in the note to Section 13 in Pollock and Mulla's edition of the Specific Relief Act. 51. Now we have before us an agreement made in 1878 to convey an Immovable property upon the happening of an event which might occur at a more remote period than the lives in being and eighteen years afterwards. It is an agreement creating under the law prior to the Transfer of Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) 20 Ch. D. 562 applies to a contract for sale of Immovable property in India even where the Transfer of Property Act is in force. As pointed out by Sir Bhashyam Ayyangar J. in Ramasami Pattar v. Chinnam Asari I.L.R. (1910) Mad. 449 the power of a Hindu under the Hindu law is more restricted as regards the perpetual tying up of land or property than under the English doctrine of perpetuities. 54. It was held in Nabin Chandra Sarma v. Rajani Chandra Chakrabarti 25 C.W.N. 901 following Nobin Chandra Soot v. Nabab Ali Sarkar 5 C.W.N. 343 and Sreemutty Tripoora Soonduree v. Juggur Nath Dutt (1876) 24 W.R. 321 that a covenant for pre-emption unlimited in point of time is void on the ground that it is obnoxious to the rule against perpetuities. In Kolathu Ayyar v. Ranga Vadhyar it was held that a contract of pre-emption (with reference to lands) which fixes no time within which the agreement to convey is to be performed cannot be enforced against the heirs of the person who entered into the contract as it infringes the rule against perpetuities. In a recent Privy Council case (Maharaj Bahadur Singh v. Balchand in compromise of litigation the proprietors of a hill agreed with a Societ ..... 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