TMI Blog1924 (1) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ontract. 5. It has been argued before us that the contract for preemption cannot be enforced on the ground that it is void for uncertainty. A second argument is that such a contract should be held to be void because it is opposed to public policy. A third argument is that the contract is void for remoteness, or, to put it in other words, because it is obnoxious to the rule against perpetuities. And lastly it is contended that in no case could such a contract bind the representatives of the original parties. 6. With regard to the first argument I agree with my learned brother that no uncertainty attaches to the contract under consideration. As he points out, the intention was to contract for a definite period, namely, the period of the settlement. 7. As for the second argument it is quite untenable in a Province where pre-emption is recognized and encouraged. 8. As for the fourth argument, namely, that a contract of this nature can in no case bind the representatives of the parties, that is a matter to be decided by the enactment contained in Section 37 of the Indian Contract Act. It is nothing to the point to say that a man cannot bind his representatives by entering in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ular manner. These are the rights which arise under the restrictive covenants which are enforced in equity in England on the ground that the person entitled to the right has an equitable interest in the land or a right in the nature of an equitable easement. 15. This class of rights obviously does not include a right to enforce pre-emption. 16. The second class of rights is defined in the second clause of Section 40 of the Transfer of Property Act:-- Where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property but not amounting to an interest therein or easement thereon. 17. It seems to me that a contract giving rise to a right of preemption clearly falls within this category. 18. The promisee in such a contract is clearly entitled to the benefit of the obligation entered into by the promisor, namely, 'that when he proposes to sell the land, he will give the promisee the first offer. The obligation of the promisor is annexed to the ownership of the land, for it is in his quality as owner that he undertakes the obligation and the obligation concerns the land, for it is an obligatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Transfer of Property Act. 22. But clearly that rule can only be applied in cases where there is an attempt to create an interest in property. A contract for a right of pre-emption or re-purchase does not give rise to any interest in immovable property. The language of Section 54 of the Transfer of Property Act is clear upon that point. It follows that the rule against perpetuities cannot be invoked for the purpose of arguing that the contract with which we are concerned in this case is void for remoteness. 23. I have abstained from comment upon the numerous cases which have been cited before us in argument. They are all set out and discussed in the judgment of my learned colleague. I would only observe that it seems to me that in most, if not all, of the cases in India to which our attention has been drawn the provisions of Section 40 of the Transfer of Property Act have not received due consideration. In my opinion this appeal fails and should be dismissed. Shah Mohammad Sulaiman, J. 24. This is a defendants' appeal arising out of a suit for pre-emption based on a sale-deed, dated the 10th of May, 1919. The suit was originally based on an alleged custom prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e come up again in appeal to this Court and urge that the suit should have been dismissed. I may note that in the course of the argument no suggestion has been made that the plaintiff's father and the vendor's grandfather had not signed the zamima khewat. The points which the learned advocate for the appellants has strongly urged may be enumerated as follows:--Firstly, that the contract of pre-emption was void for uncertainty. Secondly, that it was against public policy. Thirdly, that it offended the rule against perpetuities. And, fourthly, that in any case it cannot bind the representatives of the original parties to the contract. 27. The wajib-ul-arz or the zamima khewat does not embody the contract itself but is merely a prima facie evidence that such a contract was entered into by the co-sharers at the time of the settlement. In the absence of anything to the contrary, such a contract must be presumed to have been intanded to hold good for the whole period of the settlement and not longer. In cases of districts which are not permanently settled, such settlements are ordinarily for fixed periods of 30 years. It cannot, therefore, be said that this contract of pre-emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all. The rule against perpetuities is embodied in Section 14 of the Transfer of Property Act and under it no transfer of property can operate to create an interest which is to take effect beyond the legal limit prescribed therein. When a contract of pre-emption is entered into by the proprietors of a village, there is no transfer of any property effected at all. Section 14, therefore, in terms cannot apply to it. If it be conceded that a contract of pre-emption does not create any interest in land, it would be very difficult to contend that such a contract comes within the rule against perpetuities. Such a rule cannot apply unless an interest in land purports to have been created. 30. The learned advocate for the appellants has strongly relied on a number of cases in support of his contention. 31. The earliest case is that of Tripoora Sunduree v. Juggur Nath Butt (1875) 24 W.R.C.R., 321. That case was decided long before the Transfer of Property Act was passed and can, therefore, be easily distinguished. 32. The next important case is that of Nobin Chandra Soot v. Nabab Ali Sarkar 5 C.W.N., 343. In that case the contract was embodied in a private document and was to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as altogether void and not only unenforceable against the representatives. This must of necessity be so; if a covenant does actually offend the rule against perpetuities, it is void ab initio. The logical conclusion to which one would then be driven would be that such a covenant cannot be enforced against even the parties to the contract. With great respect to the learned Judges of the Calcutta High Court, I think that the effect of the provision contained in Section 54 of the Transfer of Property Act was altogether overlooked and the basic principle underlying the English cases that such a contract creates an interest in land so as to bring it within the rule of perpetuities, was not fully appreciated. 37. Tyabji, J. -- In a very learned judgment reported in Charamudi v. Raghavulu I.L.R. 1915 Mad. 462, has most clearly brought out the great distinction which subsists between the rules of English law and the Indian Statutory law. He has pointed out that it is settled beyond argument that an agreement merely personal, not creating any interest in land, is not within the rule against perpetuities and he has shown how the English cases are on that ground clearly distinguishable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the intention of the proprietors at the time when the contract was certified before the settlement officer, clearly was that it would be binding on all proprietors, whoever they may happen to be during the whole of the coming period of settlement. The question whether in point of law such an agreement could bind their representatives is of course quite another matter. 41. The line adopted by the learned advocate for the defendants appellants has been that such a contract was in substance a contract entered into by the then proprietors for themselves as well as on behalf of their future heirs and representatives. The contention, therefore, is that these proprietors had no power whatsoever to enter into a contract on behalf of their future heirs and representatives, and if they did, that contract could not bind the latter. I am of opinion that this is not a correct appreciation of the position of the proprietors. They did not enter into any contract acting as agents of their future heirs or representatives, but they by virtue of their position as proprietors entered into a contract themselves. If a contract entered into by them is held to be enforceable against their heirs or re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... then under Section 27 of the Specific Belief Act such a contract can, under certain circumstances, be enforced against the representatives of the original parties to the contract. 43. Again, Section 40 of the Transfer of Property Act lays down a statutory provision which requires a careful consideration. I am aware that in none of the cases cited before us Section 40 was applied to a contract of pre-emption. Nevertheless I have come to the conclusion that such a contract must come within the wide scope of that section. That section provides that where for the more beneficial enjoyment of his own immovable property, a third person has, independently of any interest in the immovable property of another or of any easement thereon, a right to restrain the enjoyment of the lat'ter property or to compel its enjoyment in a particular manner, or where a third person is entitled to the benefit of an obligation arising out of contract and annexed to the ownership of immovable property, but not amounting to an interest therein or easement thereon, such right or obligation may be enforced against a transferee with notice thereof or a gratuitous transferee of the property affected the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f pre-emption, I am of opinion that, though not amounting to an interest in or easement on land, it certainly creates a benefit of an obligation in favour of the other parties and is attached to their proprietorship. Such a contract, therefore, under the law can be enforced against all gratuitous transferees and even against transferees for consideration with notice. A fortiori such a contract could not be held to be unenforceable against the heirs of the contracting parties. If my interpretation of the section is correct then we have a statutory provision which makes contracts of pre-emption enforceable against the representatives of the original parties. No question of its offending against any supposed rule of perpetuities or its being against public policy would then arise. On the other hand, if the Calcutta view were carried to its logical conclusion, then not only a covenant for pre-emption, but even a contract for sale or a contract for reconveyance within a fixed period would become unenforceable as soon as any of the original parties dies. That is to say, if A sells his property to B absolutely and B enters into a separate and independent contract with A for consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vendee and get possession of it himself. If this is so, the agreement so far runs with the land; and if it does so to any extent, it must, in my opinion, do so to the full extent of the agreement. Straight, J., Oldfield, J. and Broadhurst, J., agreed with that opinion, and so did Tyrrell, J. 49. The conception of a contract of pre-emption having such a connection with land as to bind representatives of the original parties can also be gathered from other Division Bench cases. In Gokal Singh v. Mannu Lal I.L.R. 1885 All. 772, where the pre-emption clause was based on a contract, Mahmud, J., in a separate written judgment, which does not fully appear in the report, remarked: The mere apportionment of revenue and the disseverance of the liability to that revenue could not, ipso facto, defeat a covenant relating to pre-emption entered into by all the co-sharers for the time being, and which covenant ran as an incident of the tenure of the lands owned by them before such partition. 50. In the case of Kuar Dat Prasad Singh v. Nahar Singh I.L.R. 1888 All. 257, it was again remarked that this pre-emptive right runs with the land. 51. In Ramjiawan Sahu v. Raturaj Singh Weekly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, Balli Singh v. Raghubar Singh. I.L.R. 1923 All. 492, and Gopi Ram v. Jeot Ram I.L.R. 1923 All. 478, I must at once mention that the previous Allahabad cases to which I have referred were not at all cited before the Bench nor was the applicability of Section 40 of the Transfer of Property Act pressed. I may also add that the learned Judges were to a great extent influenced by the circumstance that in both of those cases the contract was intended to be operative for an unlimited period of time. At page 493 it was remarked, the village being permanently settled, no time is fixed for the revision of records, and that therefore the covenant might bind people for an indefinite period.'' Similarly in the latter case, at page 480, it was pointed out that the agreement was to re-convey the land whenever demanded to do so on the payment of a certain sum and that ''there was no limit of time in which the sale was to be re-made. On the same page it was further remarked that it was doubtful whether the provisions of Section 37 of the Contract Act enabled an owner of an immovable property to enter into an agreement with another, imposing a restrictive covenant for an indefin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-emption. In the Bombay case the agreement purported to give his heirs a right to buy the land at the original price and was unlimited in point of time. I may also add that another learned Judge of the Bombay High Court, i.e. Pratt, J., had been of opinion that if the intention was merely to create a personal obligation, the covenant is good and binding on the covenantor and covenantee and their personal representatives , but he held that it created no future right in rem. 57. Now, the Privy Council case of Maharaj Bahadur Singh v. Balchand was of a peculiar nature inasmuch as the plaintiffs had not sued for specific performance but on title, alleging apparently that the agreement amounted to a grant, and that the plaintiffs had taken possession of the land and were then dispossessed. While referring to the plaintiffs' contention that the contract was binding upon the assigns under Section 40 of Act IV of 1882 because that Act was passed before the decision in London and South Western Railway Co. v. Gomm (1882) 20 Ch. D. 562, and was not confined to restrictive covenants but applied to every obligation arising out of contract and annexed to the ownership of immovable pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is enforced against the representatives of the original parties under the statutory provisions contained in Section 37 of the Contract Act, Section 27 of the Specific Belief Act and Section 40 of the Transfer of Property Act. When a covenant of preemption does not amount to any interest present or future in immovable property, it is difficult to see how it would come within the rule against perpetuities. And if it did, it would be void altogether and not only partially invalid. 59. The period of 30 years fixed for the ordinary settlements is after all not so unconscionably long as necessarily to exceed the legal limit prescribed under Section 14 of the Transfer of Property Act, viz., the life-time of one or more persons living at the date of such transfer (or agreement) and the minority of some persons who shall be in existence at the expiration of the period. Further, the provision in Section 40 regarding notice indirectly imposes a time-limit, as for all practical purposes the proof of actual notice will become more and more difficult with the lapse of time. 60. I am, therefore, of opinion that the contract of preemption as evidenced by the entry in the record of rights w ..... 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