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1922 (3) TMI 2

of Pratt J. in an Originating Summons. 2. The facts are that, on the 18th September 1878, one Vishvanath Narayan Mandlik conveyed to one Ganpatrao Bhaskar Kothare a plot of vacant land measuring 2843 square yards at Altamont Road for the consideration of ₹ 5,664. This plot formed part of a larger piece of land belonging to the vendor. The sale-deed was in Marathi and contained certain covenants purporting to reserve for the vendor, his heirs, Vahivatdars and donees certain rights of pre-emption, which covenants have given rise to the present dispute. 3. Vishvanath died in 1889 leaving the first defendant his adopted son as his sole heir and legal representative. Ganpatrao built a large bungalow on the land he had bought. The following pedigree will be useful as showing the descendants of Ganpatrao:- 4. Ganpatrao by his will devised the suit property together 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 b .....

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ayan Mandlik and Ganpatrao Bhaskerji Kothare. 9. The Summons was admitted by me on the 22nd March 1921 but if I had realised how many intricate questions of law were involved within the apparently simple question propounded I should have referred the plaintiffs to a regular suit. 10. The Summons came on for argument before Pratt J. 11. The first points taken by the first defendant were (1) that the Summons was premature, and (2) that the Court had no jurisdiction to grant a declaratory decree in an Originating Summons. How the Summons could possibly be premature is not quite clear, as obviously the plaintiffs were entitled to endeavour to clear their title to this property. 12. On the second point the jurisdiction of the Court to grant declaratory decrees is determined by Section 42 of the Specific Relief Act. The proper procedure 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 .....

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ght to dispute the validity of the contract, while the provisions of Section 40 of the Transfer of Property Act which do not seem to have been considered in the Court below might cause trouble to their purchaser if it was asserted that he took with notice of the covenants. It was suggested by the Court that the passage in the judgment holding that the covenant was a valid personal contract might be expunged leaving that question to be decided, if necessary, by a future suit, but the plaintiffs were anxious to have the question decided in the Summons and as it was not contended by the respondent that it was necessary to take evidence we decided to hear the argument. 18. The sale-deed of 1878 is in Marathi and the covenants are very badly drafted. Still they may be called covenants for preemption, 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 .....

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ract to sell Immovable property, and their Lordships held that i required registration on the ground that it created an interest in inmoveable property, and it does not seem to have been considered wheather the English law might not be applicable to a contract for the sale of land between Hindus. 23. Under Section 17(2)(v) of the Indian Registration Act of 1877 any document not in its the creating, declaring etc. any interest in Immovable property admerely creating a right to obtain another document which would create etc. such interest was not compulsorily registrable 24. Then by Section 27 of the Specific belief Act of 1877 an agreement for the sale of land could be specifically enforced, not only against the person making the contract but against any person 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 a .....

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operty Act had no interest in the property. His only right was a right to enforce specific performance of the contract against a transferee who had taken with notice of the covenant. Plaintiff was not a transferee with notice of the contract, the time for the performance of which had long since passed without anything being done, and the inference was that the right arising under it had been waived or otherwise discharged. Bhashyam Ayyangar J. at p. 467 said :- Another question which arises in the case but which has not been 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 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 th .....

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ving the value stated, and if any building should be erected thereon the cost thereof, but in case they did not desire it she could sell it. away to others according to her pleasure. The suit for the enforcement of the covenant was instituted against the heirs of the covenantor. The first question was whether the agreement was enforceable against the heirs of the covenantor. Their Lordships said (p. 115) :- We are of opinion that if no time is fixed within which the agreement to convey is to be performed the contract must be held to be invalid as infringing the rule against perpetuities. This is undoubtedly the rule...in England. A mere personal contract cannot be questioned on the ground that it is obnoxious to the rule 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 .....

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Transfer of Property Act the agreement could be read as creating an interest of such a nature as to bring the agreement itself within the rule against perpetuities. 33. It is regrettable that so much confusion should still exist owing on the one hand to the fact that the law in India does not recognize equitable interests in land, while on the other hand it recognises that contracts with regard to land can be specifically enforced against third parties in certain cases. The result is that the law in England and India is substantially the same with regard to the enforcement of the contract. The only difference is that in England the owner of the equitable interest is considered as the owner of the property 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 entitle .....

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laration by a suit, under Rule 214 of the High Court Rules, they are entitled to ask for the same by an Originating Summons. 40. In Evans v. Levy [1910] 1 Ch. 452. a declaration was made under Order 54A, Rule 1, of the Rules of the Supreme Court on an Originating Summons that a condition which a lessor had imposed with regard to a licence to assign was unreasonable and that the lessee was entitled to assign without any further consent of the lessor. Order 54A, Rule 1, is exactly in the same terms as Rule 214 of the High Court Rules, 41. Now it is clear that the covenant of pre-emption in this case is not a covenant which runs with the land at law : see Spencer's case 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 rul .....

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ng to Section 55(5) of the Transfer of Property Act the risk of destruction is borne by the buyer only from the date the ownership passes to him and the ownership according to Section 55(1)(d) of the Transfer of Property Act passes on execution of a conveyance by the seller. The illustration cannot be applied in cases where the Transfer of Property Act is applicable. 48. Under the Indian Registration Act XX of 1866 an agreement of sale of Immovable property between Hindus was held to be an agreement creating an equitable interest in land and requiring registration under Section 17, Clause (2), of that Act: see Futteh Chund Sahoo v. Leelumber Singh Doss (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 t .....

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of Property Act does not exhaust the relations which flow from a contract for the sale of Immovable property according to Indian statute law and the obligation of which a person who has contracted to buy Immovable property has the benefit and which he may enforce against his vendor or transferee with notice is fiduciary and can be enforced as though the person bound was a trustee The benefit of an equitable interest is in substance given to a person who has contracted to buy Immovable property: see Kolathu Ayyar v. Ranga Vadhyar I.L.R. (1912) Mad. 114. In my opinion the law laid down in London and South Western Railway Co. v. Gomm (1882) 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 .....

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