Vs. Shri Raghunath (Dead) by LRS. & Ors  INSC 205 (20 February 1997)
RAMASWAMY, S. SAGHIR AHMAD
O R D
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.
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.
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
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.
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:
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.
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.
appeal is accordingly dismissed. But in the circumstances without costs.