Kolathu Aiyar vs Ranga Vadhyar and Another

The only question of law which it is necessary to decide in this case is whether a contract of pre-emption can be forced against the heirs of the

person who entered into the contract and, if so, whether the rule against perpetuities may be relied on as rendering the contract invalid as against

the heirs. The argument in this case was that ""the covenantor Ammaippen Ammal in the event of selling the property in question, should sell it to

Abbu Vathiar Vagaira on receiving the value stated and if any building should be erected thereon the cost thereof; but in case they do not desire it

she could sell it away to others according to her pleasure."" The suit for the enforcement of the agreement was instituted against the heirs of the

covenantor. Both the Lower Courts decided that the agreement was enforceable against the defendants.

The first question is whether the agreement is enforceable against the heirs of the covenantor. Nobin Chandra Soot v. Nabob Ali Sirkar (1900)

5 C.W.N. 343, is an authority in favour of the appellant. That judgment is in accordance with Stocker v. Dean (1859) 51 E.R. 739. The Master of

the Rolls, Sir John Romilly, observed as follows:-""The words are, in case Debora Setchfield should wish to sell"".... It is manifest they anticipated

that something was to be done by Debora Setchfield, personally, when this contract was to be carried into effect, and this limits the right to the

case of her wishing to sell in her life time. This is the natural import of the words, and it would be a strained construction of the contract to say that

it applied to such a state of things as the present."" An unconditional contract to sell would no doubt ordinarily be enforceable against the heirs of

the covenantor as if he had said ""I and my heirs shall convey"" but the question is can an agreement in the words ""I promise to convey to you if I sell

the land ""be held to bind the heirs as if the promisor said ""I promise that I or my heirs shall convey to you if I or they sell""? In other words, Is an

agreement to convey enforceable where the option to sell is exercised by the heirs when the document says ""If I sell."" It seems to us that there is

much reason in the view that such a contract is not enforceable against the heirs. But we do not consider it necessary to rest our decisions on this

ground. 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 which has been laid down 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. See London and

South Western Railway Co. v. Gomm (1881) 20 Ch. D. 562, which dissented from Gilbertson v. Richards 4 H. and N. 277, and Birmingham

Canal Co. v. Cartwright (1879) 11 Ch. D. 421. See also Edwards v. Edwards (1909) A.C. 275. The doctrine was applied in this country by the

Calcutta High Court in Nobinchandra Soot v. Nabab Ali Sarkar (1900) 5 C.W.N. 343. In Haris Paik v. Jahuruddi Gazi (1897) 2 C.W.N. 575,

Maclean C.J., and Banerjee J. held that an agreement of pre-emption could be enforced against a purchaser with notice from the promisor.

According to the report of the arguments, the objection that the agreement infringed the rules against perpetuities was submitted to the Court, but

the only point decided by the learned judges was that the agreement was not unenforceable against a purchaser with notice. In Ramasami Pattar v.

Chinnan Asari ILR (1901) M. 499 , Bhashyam Aiyangar J. expressed the opinion that the rule against perpetuities was applicable to an agreement

of preemption; but it was not necessary to decide the question and the learned judge abstained from expressing a final opinion on it as it was not

argued at the Bar.

It is contended by the learned Vakil for the 1st respondent that the English rule should not be applied in this country as the Indian Law does not

recognise equitable estates except in the case of trusts. Although it is true that according to the Indian Law there are not two classes of estates,

legal and equitable, there is no substantial difference in the law to be applied to the case as the benefit of an equitable estate is in substance given to

a person in whose favour a promise to convey lands has been made. The Specific Relief Act lays down that an agreement for the sale of land may

be specifically enforced against any person claiming under the vendor''s title arising subsequently to the contract except a bona fide purchaser for

value without notice (Section 27). The Indian Trusts Act also lays down that a transferee taking with notice of a prior contract in favour of another

must hold the right obtained under his transfer as a trustee for the previous promisee (Section 91). In effect, therefore, one who has obtained a

promise for the conveyance of land has a substantial interest in it although according to the decisions of this Court, he cannot set it up in defence to

a suit by a person who has obtained a subsequent transfer he is bound to enforce his rights by a suit for specific performance. Kurri Veera Reddi

v. Kurri Bapi Reddi ILR (1906) M. 336 . Section 14 of the Transfer of Property Act, which makes the rule against perpetuities applicable in this

country does not apply to merely contractual rights. But there is, in our opinion, no reason why the principle should not be applied to contractual

rights entitling a person to the conveyance of land and giving him a substantial interest in it in the sense we have indicated above. There is no reason

for supposing that the Hindu Law encourages the perpetual tying up of landed property any more than the English law does. Possibly as pointed

out by Bashyam Aiyangar J. in Ramasami Pattar v. Chinnan Asari ILR (1901) M. 449, the Indian Law is even stricter than the English law as it

does not, according to the decided cases, recognise transfers in favour of unborn persons as valid. South Eastern Railway v. Associated Portland

Cement Manufacturers Limited (1910) 1 Ch. 12, was cited on behalf of the 1st Respondent. But that case merely decided that the contract should

be enforced against the promisor himself during his life time, although no time, might have been fixed for the purpose. The same view was held in

Kalimaddin Bhuya v. Reazuddin Ahmed (1909) 10 C.L.J. 626. This does not affect the applicability of the rule when it is sought to enforce the

contract against the heirs of the covenantor. If a man promises that he and his heirs will convey, the promise may be enforced, according to these

cases against himself, i.e., the promise maybe treated as divisible so as to make it enforceable against him, though it may not be enforceable against

the heirs. We are of opinion that the view taken in Nobinchandra Soot v. Nabob Ali Sirkar (1900) 5 C.W.N. 343, that the rule should be applied,

so far as the heirs of the covenantor are concerned, is sound. The same view was taken by Mr. Justice Markby in Sreemutty Tripoora Sundari v.

Jaggur Nath Dutt (1875) 24 W.R. 321.

The appeal therefore must succeed. We reverse the decrees of the court below and dismiss the suit with costs throughout.