PETITIONER: SHRI SHIVJI Vs. RESPONDENT: SHRI RAGHUNATH (DEAD) BY L.RS. & ORS. DATE OF JUDGMENT: 20/02/1997 BENCH: K. RAMASWAMY, S. SAGHIR AHMAD ACT: HEADNOTE: JUDGMENT:
O R D E R
This appeal by special leave arises from the judgment
of the single judge of the High Court of M.P., passed on
August 28, 1985 dismissing the second appeal.
The appellant is a subsequent purchaser from Smt.
Reshambai, wife of Ramaji Gujar. The admitted facts ar that
the deceased respondent and Reshambai had purchased jointly,
an extent of 9 acres 2 decimals of land under sale deed
dated August 26, 1966. There was a contemporaneous agreement
of Sale executed by Reshambai in favour of the appellant
agreeing to convey her share in the property under the sale
deed in terms of the agreement to the respondent. Pursuant
to the sale, it is not in dispute, there was an oral
arrangement under which the parties came to be in respective
possession of the land comprised in the sale deed. When
Reshambai attempted to sell the land to the appellant,
notice was issued by the respondent on January 20, 1969
calling upon her to execute the sale deed in terms of the
agreement of sale. In her reply dated January 24, 1969, she
denied having agreed to sell the land to him and refused to
execute the sale. reshambai also denied her liability to
execute the sale deed. As a consequence, the respondent had
filed the suit for specific performance. the defence taken
in the suit was that the agreement of sale was a fraudulent
document brought into existence to defeat sale deed. The
other defence taken was that the document was void by
operation of rule against perpetuity. Further contention
raised was that since the agreement put an embargo on her
right to alienate the property, it was void. All the court
below have negatived her right and decreed the suit. Thus
this appeal by special leave.
The question is; whether the document. viz. agreement
to sell was executed by playing fraud on her? Finding of
fact recorded by all the courts is i the affirmative.
Therefore, it need not be considered by this Court. Further
the defence that the suit also puts perpetual restriction on
her right of alienation and is, therefore, void, also has no
force for the reason that once Reshambai was found to have
executed the agreement for sale and the same was found to be
a valid deed, the covenant became a contract between the
parties. As a consequence, it is not a prohibition on her
right to alienate the property to anybody except the
respondent. On the other hand, it is a fetter on her right
to deal with her share in the property and a liability
burdened with the land. When the respondent purchased the
property, being a subsequent purchaser, he purchased in wit
notice of the said agreement for sale. So her could not get
any valid title unless it is proved that the agreement was
unenforceable. So the agreement is valid and binds the
appellant and Reshambai.
The only other question is: whether it is violative of
rule against perpetuity. This controversy is no longer res
integra. This Court in Rambaran v. Ram Mohit reported in
[(1967) 1 SCR 293] has considered the effect of Sections 14,
40 and 54 of the Transfer of Property Act and held thus:
“Reading s. 14 along with s.
54 of the Transfer of Property Act
its manifest that a mere contract
for sale of immovable property does
not create any interest in the
immovable property and it therefore
follows that the rule of perpetuity
cannot be applied to a covenant of
pre-emption even though there is no
lime limit within which the option
has to be exercised. It is true
that the second paragraph of S. 40
of the transfer of Property Act
make a substantial departure from
the English law, for an obligation
under a contract which creates no
interest in land but which concerns
land is made enforceable against an
assignee of the land who takes from
the promisor either gratutiously or
takes for value but with notice. A
contract of this nature does not
stand on the same footing as a mere
personal contract, for it can be
enforced against an assignee with
notice. There is a superficial kind
of resemblance between the personal
obligation created by the contract
of sale described under s. 40 of
the Act which arise out of the
contract, and annexed to the owner
ship of immovable property, but not
amounting to an interest therein or
easement thereon and the equitable
interest of the person purchasing
under the English Law, in that both
these rights are liable to be
defeated by a purchaser for value
without notice. But the analogy
cannot be carried further and the
rule against perpetuity which
applies to equitable estates in
English Law cannot be applied to a
covenant of pre-emption because
s.40 of the statute does not make
the covenant enforceable against
the assignee on the footing that it
creates a interest in the land.
We are accordingly of the
opinion that the covenant for pre-
emption in this case does not
offend the rule against
perpetuities and cannot be
considered to be void in law.”
In the light of the above law, when a contract has been
executed in which no interest in presaenti has been created,
the rule of perpetuity has no application. As a result, the
agreement is i the nature of a pre-emptive right created in
favour of the co-owner. Therefore, it is enforceable as and
when an attempt is made by the co-owner to alienate the land
to third parties. Therefore, rule against perpetuity has no
application t the facts in this case.
The appeal is accordingly dismissed. But in the
circumstances without costs.