Report No. 70
18.21. Statement of Objects and Reasons.-
In the Statement of Objects and Reasons to the Amendment Bill it was stated-
"Sections 11 and 40 of the Act refer to affirmative and negative covenants in a transfer. Section 11 refers to rights as between a transferor and transferee, while section 40 relates to the rights of third parties against transferees. The words 'to compel is enjoyment', used in the second paragraph of section 11 and in the first paragraph of section 40, indicate that affirmative covenants for the beneficial enjoyment of one piece of the property of which the other piece has been transferred can in all cases be enforced.
The paragraph seems to have been based on the observations of Lord Cottonham in 2 Ph 774, a case decided in 1848. But in later English decisions such as 8 YBD 403, the observations in that case were not approved, and it is now settled that except in certain special cases affirmative covenants cannot be specifically enforced. Thus, in (1885) 29 Ch D 750, a covenant to spend money on the land was held as not binding on the purchaser of the land, although he had notice of the same. Indian Courts have followed the same principle.1
We propose that the second paragraph of section 11 and the first paragraph of section 40 could be amended as to make it clear that, although an affirmative covenants is not, by itself, invalid as between a transferor and transferee (section 11), negative or restrictive covenants only can be specifically enforced against a third person (section 40)."2
The amendment unfortunately does not improve the second paragraph in point of precision. One cannot help observing that it makes it less precise than before.
1. 27 Born LR 73: 1925 Born 183.
2. Statement of Objects and Reasons.
18.22. Need for change.-
Having regard to what is stated above, we are of the view that section 11, second paragraph, should be amplified so as to make it clear that it applies to affirmative as well as to negative covenants.
Further, there should be an exception for charities, as in section 10, as proposed to be amended.1
1. See discussion as to section 10, supra.
18.24. Re-draft of section 11.-
In the light of the above discussion, we recommend that section 11, should be revised on the following lines:
Revised section 11
(1) Where, on a transfer of property, an interest therein is created' absolutely in favour of any person but the terms of the transfer direct that such interest shall be applied or enjoyed by him in a particular manner, he shall be entitled to receive and dispose of such interest as if there were no such direction.
(2) Where any such direction has been made in respect of one piece of immovable property for the purpose of securing the beneficial enjoyment of another piece of such property, nothing in this section shall be deemed to affect any right which, the transferor may have to enforce such direction or any remedy which he may have in respect of a breach thereof; whether such direction restrains the enjoyment of the first mentioned property in a particular manner or compels the enjoyment thereof in a particular manner.
[Also add Exception for charity,1 as amended in section 10].
1. Para. 17.39, supra.