Norman Macleod, C.J.
1. This is an appeal from the decision 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 Rs. 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:-
(died 3-5-1894) Sarasvatibai=Ganpatrao (died 29-12-1893)
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Vinayakrao Wamanrao=Sundrabai Dinkarrao Vishvasrao
(died 15-7-1903) (Plff. 2) (Plff. 1) (Deft. 2)
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Narayanrao Shamrao
(died 1910) (died 1904)
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 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 referred to above are as follows:-
In case you or your heirs have to sell the said plot, the same is to be sold back to me for the abovementioned value. It is not to be sold to any other person. In case you are informed in writing that 1 or my heirs or Vahivatdars or donees from me are not going to purchase it, then only you can sell it to another person, if you like. But I do not give this right to the purchaser from me. And similarly I do not give this right to the purchaser from any of my heirs or Vahivatdars, or from any donee from them.
When you want to sell the building that you are going to build on the said plot, you or your heirs or Vahivatdars are to accept from me or my heirs or Vahivatdars or donees the price of that building that may be settled amicably between ourselves or through Panch. The said land is sold to you on the condition that I am to pay as the price of the land only as much amount as is taken from you now.
7. It may be mentioned as common knowledge that the land which was sold in 1878 at Rs. 2 a square yard is in a neighbourhood where in recent years building land has been sold at prices ranging up to Rs. 100 a square yard.
8. The question propounded in the Summons for determination by the Court was as follows:-
Whether the first defendant is entitled as against the plaintiff and second defendant to an option to purchase the plot of land and the building thereon in the manner provided by the sale-deed of the 18th September 1878 and made between the Hon'ble Vishvanath Narayan 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, 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 personal contract and I therefore do not consider whether they are the personal representatives of the covenantor against whom the contract can bo enforced.
The only answer I make to the question is that the covenant creates no rights in rem affecting the plaintiffs' title.
16. On the judgment a decree was drawn up as follows:-
This Court doth declare that the covenant in the said deed of sale dated the 18th day of September 1878 does not create any rights in rem affecting the plaintiffs' title to the said land and building.
17. The plaintiffs were directed to pay the costs of the first defendant. The wording of the decree following the wording of the judgment is not in exact legal phraseology. I presume the learned Judge intended to hold that the covenant did not run with the land so as to be enforceable against any one asserting title thereto. Whether that was a satisfactory answer to the question in the Summons or not, both parties are agreed that the covenants do not run with the land, but the plaintiffs have appealed on the ground that the decision in the judgment that the covenant was a valid personal contract is wrong, and although that portion of the judgment is not embodied in the decree still there is a decision against them which might well stand in their way in the future. Undoubtedly the dispute between the parties has been left in a very unsatisfactory condition. If the plaintiffs sell, they may render themselves liable to an action for damages and the decision that there is a valid personal contract may be considered as barring their right 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 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 1S78 create an interest in immoveable property.
2. If they did, are the 'void as against the rule of perpetuity ?
3. If they did not, are they void under the rule of perpetuity on the general principles of Hindu or English law ?
19. According to English law these covenants would create an executory interest in the immoveable property which would be void as offending against the rule of perpetuity: London and South Western Railway Co. v. Gomm (1882) 20 Ch. D. 562. But under Hindu law, which governed the parties to the sale-deed, neither equitable interests nor executory interests in immoveable property are recognised.
20. Under Section 54 of the Transfer of Property Act contracts for the sale of land do not create an interest in the land, and it would seem to follow that a contract for pre-emption is of the nature of a contract for sale.
21. But before the Transfer of Property Act was passed contracts for the sale of land in cases to which the English law was applicable did create an interest in land.
22. By the Indian Registration Act of 1866 non-testamentary instruments purporting to create, declare, assign, limit or extiguish whether in present or in future any right, title or interest whether rested or contingent of the value of Rs. 100 or upwards to or in immoveable property were compulsorily registrable. Although there was no substantive law enacting what instruments created an interest in immoveable property, the question would naturally arise when an instrument came before the Court which it was asserted required registration. In Futteh Chund Sahoo v.Leelumber Singh Doss (1871) 14 M.I.A. 120 which was a suit between Hindus, the plaintiff sued for specific performance of a contract to sell immoveable 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 immoveable 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 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 which can be specifically enforced immediately or contracts creating a right of pre-emption which cannot be specifically enforced until the proper occasion arises in the future do not according to the law in India create an interest in land either equitable or executory, they do create rights which are capable of being enforced with regard to the land in certain circumstances against third parties and to that extent they are not ordinary personal contracts and stand in a category by themselves. The question thus arises whether the principle which underlies the rule of perpetuities made applicable to this country by a 14 of the Transfer of Property Act should be applied to this class of contracts.
25. That this question would have to be decided was foreshadowed in the judgment of Bhashyam Ayyangar J. in Ramasami Pattar V. Chinnan Asari I.L.R. (1901) Mad. 449. In that case a deed of usufructuary mortgage executed in 1892 contained the following covenant :-
If we assign our right over these properties to any one, the land delivered possession of to you for appropriating the interest shall be assigned to you alone and is shall not be assigned to anybody else. When we assign the land, we shall receive fifty Fanams more from you, and then we shall assign the land for these two amounts together.
26. The mortgagor sold his equity of redemption in 1873 and the purchaser's interest was bought at a Court-sale before 1893 by the plaintiff who in 1897 sought to redeem. The mortgagee claimed the right of pre-emption. It was held that the defendant under the covenant and by reason of Section 54 of the Transfer of Property 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 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. Then after comparing the English rule of perpetuity with the restriction under Hindu law on transfer of property the learned Judge proceeds:-
The question as to the application of this principle of Hindu law, or of the general doctrine of perpetuities, to transactions other than gifts by Hindus has not yet been judicially considered in any case except possibly in the Privy Council case (Chundi Churn Barua v. Rani Sidheswami Debi But it must be admitted that there is really no substantial difference between English and Indian Law in respect of contracts of sale of immoveable property, and it does seem reasonable and in accordance with principles of general jurisprudence that there should be some limit of time beyond which the performance of contracts for the transfer of property by way of sale, pre emption or otherwise must not be allowed to be held in suspense or postponed Although Section 14 deals only with transfers, the provisions of that section could in some cases be practically defeated if covenants are not held to be Void for remoteness on the ground that by themselves they create no interest in property...I am glad to be able to refrain from expressing any opinion on this difficult and important question of the application and the limits of the application of the doctrine of perpetuities to covenants, as it has not been really argued in this case and as in fact it is unnecessary to consider and decide it in this case.
29. In Kolathu Ayyar v. Ranga Vadhyar I.L.R. (1912) Mad. 114 there was an agreement that the c covenantor Ammaippan Ammal in the event of selling the property in question should sell it to Appa Vethiar on receiving 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 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 a site thereon for the erection of a temple, he and his heirs would grant a site free of cost. The proprietor thereafter alienated the whole hill. The Society sued the alienees for possession of a site defined by boundaries, alleging notice to the proprietor requiring that site and that they had taken possession but had been dispossessed. The High Court at Patna held that the plaintiff had failed to prove any title to the land in suit. On appeal to the Privy Council their Lordships said (p. 380) :-
For the appellants...to succeed it is essential to show that this agreement created in them some present estate or interest which would prevent the Raja from having made the grant. That could only be effected by reading the compromise as creating in the Jains Society a grant in perpetuity of the Parasnath hill. This cannot, however, be supported...Such a covenant as this does not, and cannot, run with the land, and could not be so enforced. Further, if the case be regarded in another light-namely, an agreement to grant in the future whatever land might be selected as a site for a temple as the only interest created would be one to take effect by entry at a later date, and as this date is uncertain, the provision is obviously bad as offending the rule against perpetuities, for the interest would not then vest in presenti, but would vest at the expiration of an indefinite time which might extend beyond the expiration of the proper period.
32. The case is peculiar because the plaintiff did not sue for specific performance but on title, alleging apparently that the agreement amounted to a grant. But the judgment in dicates that in spite of Section 54 of the 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 entitled to a declaration to that effect.
35. The appellants will got their costs of the appeal.
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 and that the plaintiffs were not entitled to do so by a suit, much less by an Originating Summons. He relied upon Section 42 of the Specific Relief Act and on the decision of the Privy Council in the case of Charan Das v. Amir Khan : (1920)22BOMLR1370 , P.C. By Section 42 of the Specific Relief Act it is provided :-
Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the Court may in its discretion make therein a declaration that he is so entitled....
38. In this case the plaintiffs say that they and the second defendant are entitled to the property free of any claim of the first defendant to the same, and that the first defendant is asserting a right of pre-emption and denying the plaintiffs' and the second defendant's right to sell the property to any person they like and ask for a declaration that the title of the plaintiffs is not affected by the covenant contained in the aforesaid clauses of the sale-deed. It cannot be said that the plaintiffs are able at present to seek further relief than a mere declaration of title. The plaintiffs, therefore, in my opinion, are, under Section 42 of the Specific Relief Act, entitled to sue for a declaration that the title of the plaintiffs to the land is not affected by the covenant contained in the aforesaid clauses of the sale-deed and that the first defendant is not entitled to a right of pre-emption and there is nothing in the Privy Council decision above cited disentitling the plaintiffs from suing for such a declaration.
39. If, then, the plaintiffs are entitled to ask for such a declaration 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 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 immoveable property did not of itself create any interest or charge on the property contracted to be sold.
45. At the date of the sale-deed the Transfer of Property Act was not in force but the Specific Relief Act No. 1 of 1877 and the Indian Registration Act III of 1877 were in force. According to the Specific Relief Act 'obligation' includes every duty enforceable by law, and 'trust' includes every species of constructive fiduciary ownership, and 'trustee' includes every person holding constructively a fiduciary character (Section 3). Illustration (g) to that section runs as follows :-
A buys certain laud with notice that B has already contracted to buy it. A is a trustee within the meaning of this Act, for B, of the land so bought.
46. Section 27(b) of the Specific Relief Act provides that specific performance may be enforced against either party to a contract or any other person claiming under him by a title arising subsequently to the contract except a transferee for value who has paid his money in good faith and without notice of the original contract. By Section 13 of the same Act it is laid down that 'notwithstanding anything contained in Section 56 of the Indian Contract Act, a contract is not wholly impossible of performance because a portion of its subject matter, existing at its date, has ceased to exist at the time of the performance.' Illustration (a) to that section runs as follows :-
A contracts to sell a house to B for a lakh of rupees, The day after the contract is made the house is destroyed by a cyclone. B may be compelled to perform his part of the contract by having the purchase-money.
47. This illustration assumes that the contract for the sale of a house transfers the beneficial interest in the house to the buyer and makes him in equity the owner of the house. According 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 oases where the Transfer of Property Act is applicable.
48. Under the Indian Registration Act XX of 1866 an agreement of sale of immoveable 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 immoveable 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 immoveable 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 immoveable 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 Act an equitable interest in immoveable property which would be void as infringing the rule against perpetuities: London and South Western Railway Co. v. Gomm (1882) 20 Ch. D. 562 and Woodall v. Clifton [1905] 2 Ch. 257. But even if the law prior to the Transfer of Property Act on this point was the same as that contained in the Transfer of Property Act the result, in my opinion, would be the same.
52. No doubt the rule of English law that a contract for sale of real property makes the purchaser the owner in equity of the estate has no application to those parts of India where the Transfer of Property Act is in force: see Maung Shwe Goh v. Maung Inn (1916) 19 Bom. L.R. 179 But under Section 40 of the Transfer of Property Act an obligation arising out of a contract and annexed to the ownership of immoveable property but not amounting to an interest therein to the benefit of which a third person is entitled could be enforced against a transferee with notice thereof.
53. The illustration to Section 40 is substantially the same as illustration (g) to Section 3 of the Specific Relief Act. It is provided by Section 91 of the Indian Trusts Act that a transferee taking with notice of a prior contract in favour of another must hold the right claimed under his transfer as a trustee for the previous promisee. Section 95 of the Indian Trusts Act provides that a person holding property in accordance with that section must so far as may be perform the same duties and is subject to the same liabilities and disabilities as if he were a trustee of the property for the person for whose benefit he holds it. As pointed out by Scott C.J. in Bapu Apaji v. Kashinath Sadoba I.L.R. (1916) Bom. 438; 19 Bom. L.R. 100 F.B. Section 54 of the Transfer of Property Act does not exhaust the relations which flow from a contract for the sale of immoveable property according to Indian statute law and the obligation of which a person who has contracted to buy immoveable 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 immoveable 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 immoveable 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 Society of Jains that if the Society should require a site thereon for the erection of a temple and Daramasbala he and his heirs would grant a site free of costs. The proprietor alienated the whole hill and the Society by their representative sued the alienees for possession of a site defined by boundaries. It was held by their Lordships of the Privy Council that the covenant did not run with the land and could not be enforced and that if the covenant was regarded as an agreement to grant in the future whatever land might be selected as a site for a temple as the only interest created could be one to take effect by entry at a later date and as that date was uncertain the provision was obviously bad as offending the rule against perpetuities for the interest would not then vest in presenti but would vest at the expiration of an indefinite time which might extend beyond the expiration of the proper period. In Worthing Corporation v. Heather [1906] 2 Ch. 532 it was held by Warrington J. that though an agreement giving an option to purchase land which is unlimited in point of time is not specifically enforceable, it is not invalid at law and damages may be recovered for a breach thereof. According to the Privy Council decision in Maharaj Bahadur Singh v. Balchand such a covenant is unenforceable as a covenant since it infringes the rule against perpetuities. Perhaps it might be argued that the case of Maharaj Bahadur Singh v. Balchand was for possession of land and not for damages and that the observations of their Lordships of the Privy Council had no reference to a claim at law in damages. But even if that be so it seems to me that a contract with regard to land which is calculated to defeat the rule against perpetuities which is one of public policy is void under Section 23 of the Indian Contract Act.
55. The covenant for pre-emption contained in the sale-deed, dated the 18th day of September 1878; is void and the question for the determination of which this Originating Summons has been taken out should be answered in the negative.