Back
SUPREME COURT OF INDIA
V. RAMASWAMI V. BHARGAVA, AND RAGHUBAR DAYAL JJ.
Ram Baran Prasad Appellant
Versus
Ram Mohit Hazra and others Respondents.
Civil Appeal No. 609 of 1964,D/-6-9-1966.
Advocates appeared
Mr. Bishan Narain, Senior Advocate, (Mr. B. P. Maheswari, Advocate, with him), for Appellant; Mr, N. C. Chatterjee, Senior Advocate, (Mr. Sukumar Ghose, Advocate, with him), for Respondents Nos. 1 and 2.
– the concept and creation of duality of ownership legal and equitable, on the execution of an agreement to convey immovable property, as understood in England is alien to Indian law which recognizes one owner i.e. the legal owner, vide Ram Baran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 = 1977 (II) SCR 293 and Narandas Karsondas v. S.A. Kamtam, AIR 1977 SC 774 = 1977(2) SCR 341, which have been incorporated in various Indian Statutes like the Specific Relief Act and this concept has been followed in Bai Dosabai v. Mathurdas, AIR 1980 SC 1334. Thus, the equitable ownership in property recognized by Equity in England is translated into Indian Law as an obligation annexed to the ownership of property, not amounting to an interest in the property, but an obligation which may be enforced against a transferee with notice or a gratuitous transferee. The obligation of the lessor to sell the land by public auction and pay the excess price to the lessee is an obligation annexed to the ownership of the property, not amounting to an interest in the property, that it is an obligation in the nature of a trust, and, therefore, an obligation which may be specifically enforced.
– it is true as in the case of Ram Baran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744, that the pre-emption clause does not expressly state that it is binding upon the assignees or successors in interest, but, having regard to the context and the circumstances in which the award was made, it is manifest that the pre-emption clause must be construed as binding upon the assignees or successor-in-interest of the original contracting party. In substance the statutory provisions as contained in Sections 15 and 19 (of the 1963 Act and corresponding to Sections 23 and 27 of the repealed Act), lay down that subject to certain exceptions, a contract in the absence of a contrary intention express or implied will be enforceable by or against the parties and their legal heirs and legal representatives including assignees and transferees.
– the rule against perpetuities is not concerned with contracts as such or with contractual rights and obligations as such. Thus a contract to pay money to a person, his heirs or legal representatives upon a future contingency, which may happen beyond the period prescribed would be perfectly valid. The rule does not apply to personal contracts which do not create interest in property – See decision in Ram Baran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 = 1967(1) SCWR 535 = 1967(1) SCR 273.
– the rule against perpertuities is not concerned with contracts as such or with contractual rights and obligations as such. Thus a contract to pay money to a person, his heirs or legal representatives upon a future contingency, which may happen beyond the period prescribed would be perfectly valid. The rule does not apply to personal contracts which do not create interest in property – See decision in Ram Baran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 = 1967(1) SCWR 535 = 1967(1) SCR 273.
– as understood in England is alien to Indian Law which recognizes one owner i.e. the legal owner vide Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 = 1967(1) SCR 273 = Narandas Karsondas v. S.A. Kamtam, AIR 1977 SC 774 = 1977(2) SCR 341. The ultimate paragraph of Section 54 expressly enunciates that a contract for the sale of immovable property does not, of itself, create any interest in or charge on such property. But the ultimate paragraphs of Section 40 make it clear that such a contract creates an obligation annexed to the ownership of immovable property, not amounting to an interest in the property, but which obligation may be enforced against a transferee with notice of the contract or a gratituous transferee of the property. Thus, the equitable ownership in property recognized by Equity in England is translated into Indian Law as an obligation annexed to the ownership of property, not amounting to an interest in the property, but an obligation which may be enforced, but an obligation which may be enforced against a transferee with notice or a gratuitous transferee – See decision in Bai Dosabai v. Mahturdas Govinddas, AIR 1980 SC 1334 = 1980(3) SCC 545 = 1980 UJ(SC) 655.
– In India there is no equity or right in property created in favour of the purchaser by the contract between the mortgagee and the proposed purchaser. In India, there is no distinction between legal and equitable estates. The law of India knows nothing of that distinction between legal and equitable property in the sense in which it was understood when equity was administered by the court of Chancery in England. Under the Indian Law there can be but one owner that is, the legal owner. A contract of sale does not of itself create any interest in, or charge on, the property. This is expressly declared in Section 54 of the Act. See decision in Rambaran Prasad v. Ram Mohit Hazra, AIR 1967 SC 744 = 1967(1) SCR 293. The personal obligation created by a contract of sale is described in Section 40 of the Act as an obligation arising out of contract and annexed to the ownership of property, but not amounting to an interest or easement therein. In India, the word “transfer” is defined with reference to the word convey. The right of redemption which is embodied in Section 60 is available to the mortgagor unless it has been extinguished by the act of the parties. The combined effect of Section 54 of the T.P. Act and Section 17 of the Registration Act is that a contract for sale in respect of immovable property of the value of more than one hundred rupees without registration cannot extinguish the equity of redemption. In India it is only on execution of the conveyance and registration of transfer of the mortgagor’s interest by registered instrument that the mortgagor’s right of redemption will be extinguished. The conferment of power to sell without intervention of the Court in a mortgage deed by itself will not deprive the mortgagor of his right to redemption. The extinction of the right of redemption has to be subsequent to the deed conferring such power. The right of redemption is not extinguished by mere contract of sale. The mortgagor’s redeem will survive until there has been completion of sale by the mortgageee by a registered deed – See decision in Narendas Karsondas v. S.A. Kamtam, AIR 1977 SC 774 = 1977(3) SCC 247 = 1977(2) SCR 341.
Judgment
RAMASWAMI, J. : This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated November 18, 1959 in First Appeal No. 104 of 1954 affirming the judgment and decree dated February 27, 1954 for the Subordinate Judge, Fifth Court, at Alipore District 24 Paraganas in Title Suit No. 100 of 1952 decreeing the suit for pre-emption in favour of the plaintiffs-respondents Nos. 1 and 2.
2. Two brothers, Tulshidas Chatterjee and Kishorilal Chatterjee owned certain properties (Land and building) on Paharpur Road within Mouza Garden Reach, Khiderpore, in the suburbs of Calcutta. In the year 1938 Kishorilal sued for partition of the properties and eventually the matter was referred to arbitration. On December 16, 1940, the arbitrators filed their award on which a final decree was passed on March 15, 1941 in the partition suit. Under the award, two of the four blocks, A, B, C, and D, into which the properties were divided by the arbitrators, namely, blocks A and C, were allotted to Tulshidas and the remaining two blocks, B and D were allotted to Kishorilal. Two common passages marked as X and Y and a common drain Z were kept joint between the parties for their use. In the award there was a clause to the following effect:
"We further find and report with the consent of and approval of the parties that any party in case of disposing or transferring any portion of his share, shall offer preference to the other party, that is each party shall have the right of pre-emption between each other."
Thereafter, on August 20, 1941 Tulshidas sold his A block to one Nagendra Nath Ghosh. This was done after Kishorilal s refusal to pre-empt the same in spite of Tulshidas s offer to him in terms of the pre-emption clause. On April 22, 1942, Kishorilal sold, by the Kobala (Ex. I), his two blocks, B and D to Rati Raman Mukherjee and others. On June 21, 1946, the Mukerjees in their turn sold the two blocks B and D to the plaintiffs by the Kobala [Ex. 1(a)]. On September 20, 1952 Nagendra Nath Ghosh sold block A to defendant No. 1 and on December 2, 1952, the present suit was filed by the plaintiffs against the said purchaser- defendant No. 1 for pre-empting his aforesaid purchase. On April 7, 1953 while the suit was pending in the trial Court, defendant No. 1 sold the disputed property (block A) to defendant No. 2. The plaintiffs thereafter made an application for amendment of the plaint praying for a decree for pre-emption against defendants Nos. 1 and 2 and calling upon them to execute a conveyance in favour of the plaintiffs on payment of the actual consideration paid for the property in suit. On the conclusion of the trial the Subordinate Judge held that the covenant of pre-emption was binding upon the defendants who had notice of that clause and plaintiffs were entitled to enforce the right of pre-emption. He further held that the covenant of pre-emption was not hit enforceable against the assignees of the original parties to the contract. Accordingly a decree was granted to the plaintiffs asking them to deposit within one month a sum of Rs. 14,000 for the purpose of pre-empting the suit property and both defendants were directed to execute and register a Kobala in plaintiffs favour within 15 days of the deposit by the plaintiffs. The defendants took the matter in appeal to the Calcutta High Court, which dismissed the appeal and affirmed the judgement and decree of the Subordinate Judge.
3. On behalf of the appellant learned Counsel put forward the argument that the covenant for pre-emption was merely a personal covenant between the contracting parties and was not binding against successors-in-interest or the assignees of the original parties to the contract. We are unable to accept this submission as correct. It is true that the pre-emption clause does not expressly state that it is binding upon the assignees or successors-in-interest, but , having regard to the context and the circumstances in which the award was made, i
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
