1920 JTR(SC) 82
1922 AIR(PC) 165 ; 1920 48 LawReportsInd.App. 376 ; 1921 14 LW 254 ; 1921 25 CWN 770
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD BUCKMASTER, LORD PHILLIMORE, MR. AMEER ALI, AND SIR LAWRENCE JENKINS.
MAHARAJ BAHADUR SINGH - Appellant
Versus
BALCHAND - Respondents
On Appeal From The High Court at Patna.
Decided On : Dec. 10. 1920.
An agreement to grant land in the future upon request, where the date of vesting is uncertain and not immediate, is void for violating the rule against perpetuities and does not create an interest that runs with the land to bind assignees.
Act
Referred
:Transfer of Property Act, 1882
: S.14, S.2(d), S.54, S.40
(A) Transfer of Property Act, 1882 - Sections 14, 40, and 54 - Rule against perpetuities - Covenant running with the land - Agreement to grant land in the future - A contract to give immovable property does not of itself create any interest in the property - A covenant that does not create a present estate cannot be enforced against assignees as it does not run with the land - An agreement to grant land at an uncertain future date is void as it offends the rule against perpetuities, as the interest would not vest in presenti but at the expiration of an indefinite time.
(B) Rule against perpetuities - An interest that vests at the expiration of an indefinite time, extending beyond the proper period, is void.
Facts of the case:
A religious body claimed possession of a small parcel of land based on a compromise agreement made decades prior. The agreement provided that if the body required land for building a temple and dharamsala, the owner and his heirs would provide it free of cost, or the body could take it. Subsequently, the owner leased the land to another party, who further leased it to the respondents. The claimants sought possession, asserting the agreement bound the owner's assignees.
Findings of Court:
The agreement did not create any present estate or interest in the land. The owner retained control of the property. The covenant was not one that could run with the land and thus was not enforceable against assignees.
Issues: Whether the agreement created a present interest in the land that would prevent the owner from granting leases to others, and whether the provision for future land grants was valid or void under the rule against perpetuities.
Ratio Decidendi: The court held that the agreement was not a grant in perpetuity but a conditional promise. Since the date for the potential grant was uncertain and the interest would not vest immediately, the provision violated the rule against perpetuities. Furthermore, such a personal covenant does not run with the land and cannot bind subsequent assignees.
Result: Appeal dismissed with costs.
(B) Rule against perpetuities - An interest that vests at the expiration of an indefinite time, extending beyond the proper period, is void.
Facts of the case:
A religious body claimed possession of a small parcel of land based on a compromise agreement made decades prior. The agreement provided that if the body required land for building a temple and dharamsala, the owner and his heirs would provide it free of cost, or the body could take it. Subsequently, the owner leased the land to another party, who further leased it to the respondents. The claimants sought possession, asserting the agreement bound the owner's assignees.
Findings of Court:
The agreement did not create any present estate or interest in the land. The owner retained control of the property. The covenant was not one that could run with the land and thus was not enforceable against assignees.
Issues: Whether the agreement created a present interest in the land that would prevent the owner from granting leases to others, and whether the provision for future land grants was valid or void under the rule against perpetuities.
Ratio Decidendi: The court held that the agreement was not a grant in perpetuity but a conditional promise. Since the date for the potential grant was uncertain and the interest would not vest immediately, the provision violated the rule against perpetuities. Furthermore, such a personal covenant does not run with the land and cannot bind subsequent assignees.
Result: Appeal dismissed with costs.
Covenants - Discussed in the context of whether Section 40 of the Transfer of Property Act applies to all obligations arising out of a contract annexed to the ownership of immovable property.
Lease - Discussed regarding the applicability of its principles to agreements for leases within the Indian legal context.
Solicitors for appellant:Barrow, Rogers & Nevill. Solicitor for respondents: H. S. L. Polak.
Judgement
Appeal (No. 13 of 1919) by special leave from a judgment and decree of the High Court (May 5, 1916) reversing a decree of the Judicial Commissioner of Chota Nagpur (June 27, 1912) on appeal from the Munsif of Giridh.
The suit was brought in the Munsifs Court in 1910 by the appellant as representing the Sitambri Society of Jains for possession of a small parcel of land between two and three cottahs in extent situate on a hill called Parasnath Hill. The plaintiff claimed under an agreement made on May 16, 1872, between the society and the Raja of Palgunga, the defendants being in possession under a lease from the Rani to whom the Raja had granted the hill after the date of the agreement. The agreement had been made in compromise of litigation as to the possession of .the hill, and the material passage relied on is set out in the judgment of the Judicial Committee.
The plaintiff by his plaint alleged that on September 20, 1907, the Society had given a written notice to
59 Law. Rep. 48 Ind. App. 376 ( 1920- 1921)
Maharaj Bahadur Singh V. Balchand 160
the Raja to the effect that a site on the hill, defined in the notice, was required by them for the purpose of building a temple. They also alleged that they had taken possession of the land shortly after giving the notice.
The Munsif dismissed the suit. He held that the agreement conferred no title upon the Society. He also found that delivery of the alleged notice was not proved, and that it was not proved that the Society had obtained possession.
On appeal the Court of the Judicial Commissioner reversed the decision of the Munsif and made a decree in the plaintiffs favour. The learned Judicial Commissioner held that the Society was entitled under the agreement to take possession of the site for the purpose of building a temple, and that they had done so ; that accordingly the plaintiff was entitled to the relief sought, whether or not the notice was sufficient.
Upon a second appeal to the High Court (Chamier C.J. and Jwala Prasad J.) the decision of the Munsif was restored and the suit dismissed.
Chamier C.J., referring to the provision in the agreement set out in the judgment of the Judicial Committee, said " If that provision should be regarded as an attempt to create an interest in favour of future generations of Sitambris it is void for remoteness, whether the case is governed by general principles, or by s. 14 of the Transfer of Property Act, 1882, or by Hindu law (if the operation of s. 14 is excluded by s. 2 (d) of the Act). If however the provision was no more than a personal contract to convey land to the Sitambris it is not affected by the rule against perpetuities. In my opinion the provision was not intended to create an interest in favour of the Sitambris, and, further, such a provision cannot in India be regarded as creating an interest in favour of the other party to the transaction. Sect. 54 of the Transfer of Property Act, 1882, which, as I understand, reproduced the previously existing law on the subject, provides that a contract for the sale of immovable property does not of itself create any interest in the property, and it would seem to follow that a contract to give immovable property does not itself create any interest in the property. The plaintiff, however, contends that the contract is binding upon the Raja and his assignees, including the appellants, under s. 40 of the Transfer of Property Act, 1882. It was pointed out that Act was passed before the decision in South-Western By. Co. v. Gomm (( 1882) 20 Ch. D. 562.), and urged that s. 40 was intended to reproduce the existing English law and accordingly is not confined to restrictive covenants, but applies to every obligation arising out of a contract and annexed to the ownership of immovable property. .... Assuming that that contention was correct we have to consider next whether the plaintiff is entitled to maintain the suit. The principle of Walsh v. Lonsdale (( 1882) 21 Ch. D. 9.) has been applied in India with some misgiving ; it has never been applied to a case such as this, where there is no question of an agreement for a lease. In the absence of authority I am not prepared to apply that decision in the present case ; I doubt very much whether it should be applied in India except possibly in the Presidency towns. In my opinion the plaintiff has failed to prove any title to the land in suit."
Jwala Prasad J. delivered judgment substantially to the same effect.
1920. Dec. 10. De Gruyther K.C. and Dube for the appellant.
Dunne K.C. and Kenworthy Brown for the respondents were not called upon.
The judgment of their Lordships was delivered by
59 Law. Rep. 48 Ind. App. 376 ( 1920- 1921)
Maharaj Bahadur Singh V. Balchand 161
LORD BUCKMASTER. Their Lordships do not desire to hear counsel for the respondents in this case, for, having given full regard to the facts stated and advanced on behalf of the appellants, they find themselves unable to advise His Majesty that the appeal should be allowed.
The case is interesting it arises out of a claim by a religious body known as the Sitambri Jains to use for their worship a hill known as the Parasnath Hill, which appears to have been consecrated by use extending over many years for their rites and ceremonies. No question, however, arises in this appeal as to any title acquired by this long user, for this dispute had already arisen and was settled by an agreement made on May 16, 1872 ; it is only on the terms of this agreement that the present appeal depends. The agreement was in two parts—signed, in the one case by Raja Sri Parasnath Singh, and in the other by the honorary manager of the Sitambri Jain Society. The general effect of these documents is that the Raja for good consideration agreed that the Sitambri Jains should in no way be hindered in the conduct of their ceremonies, and that a joint arrangement should be made by which the various offerings from people who took part in those religious ceremonies should be collected and preserved, and disposed of in the manner that the agreements provide, and in order further to secure the Jains there was a special provision inserted in those agreements, which causes the present dispute, In the document that was signed by the Raja the agreement took this form " that if the Sitambri Jain Society shall require any place on Parasnath Hill and below thereof at Madhuban for erecting mandir and dharamsala, and for doing repairs and making bricks for the said purpose, in that case I and my heirs shall give for making mandir, dharamsala and bricks, land, stones from the hill and timber, free of costs; and if I and my heirs refuse to give, in that case the Sitambri Jain Society shall take the same of its own power."
In the counterpart this provision took this form that the Raja agrees to allow the Jains Sitambri Society " to build and repair temples and dharamsala on the hill, and to give us"—i.e., the Sitambri Jains—"lands free of charge, which will be required for making bricks."
The Jains have attempted to enter under those provisions, and to erect a temple, but they were confronted with certain people who claim that they have a right to the spot on which the temple was to be erected, which arises in this manner After the date of the compromise the Raja granted a lease on April 14, 1902, to the Rani, and she in turn granted, on June 7, 1910, a further lease to the defendants, the respondents in these proceedings. For the appellants, therefore, 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, because, subject to the provisions of the agreement, the Raja is left in control of the hill, and the Raja has power from time to time to dispose of such portions as he thinks fit, and it would be impossible to challenge the right of any person who took under him unless it could be shown that the covenant upon which the appellants rely was a covenant which was in the circum stances enforceable, not merely against the Raja, but against his assignees. 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.
For these reasons in their Lordships opinion this appeal fails, and they will humbly advise His Majesty that it should be dismissed with costs.