LexRAMBARAN PROSAD versus RAM MOHIT HAZRA & ORS.
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A RAMBARAN PROSAD v. RAM MOHIT HAZRA & ORS. September 6, 1966 B [V. RAMAsWAMJ, V. BHARGAVA AND RAGHT.JBAR DAYAL, JJ;] c D G H Pre-emption-Agreement between parties to give to each other righl of pre-emption-Whether binds successors-in-interest-Rule against perpe- tuities whether offended. There was a partition suit between two brothers T and K. The matter was referred to arbitration. Under the award the properties were divided into four blocks A, B, C and D. Blocks A and C went to T, and B and D to K. Further according to the award, the parties had aiireed that 'any party in case of disposing or transferring any portion of bis share, shall offer preference to the other party, that is each party i;hall have the right of pre-emption between each other'. Thereafter T wld ~lock ·A to one 0 after obtaining K 0s refusal to pre-empt the same. Next year K sold blocks B and D to certain parties who in turn sold diem to the plaintiffs. Some years later 0 sold block A to defendant No. 1. The plaintiffs !hereupon filed a suit against defendant No. 1 for pre- emptmg his aforesaid purchase. While the suit was pending in the trial court, defendant No. 1 sold block A to defendant No. 2 who was alao impleaded to the suit. The trial Judge held that the covenant of pre- emption was ·binding upon the defendants who had notice of that clauoc and the plaintiffs were entitled to the right of pre.emption. He further held that the covenant of pre-emption was not hit by the rule against perpetuities and was enforceable against the assignoos of the original parties to the contract. The defendants took the matter ill appeal lo the High Court which dismiued the appeal. 'Ibo defendants came to this Court by way of special leave to appeal. HELD : (i) 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 it was manifest that the pre-emption clause '1!USt be construed as binding upon the assignees, or successors-in-interest of the original con- tractmg parties. [295 OJ Section 23, 27(b) and 37 of the Specific Relief Act lay down that sub- ject to certain exceptions a contract in the absence of a contrary intention express or implied will be enforceable by and against the parties and their legal heirs and legal represent-alive including assignees and transferees. In tbe present case there was nothing in . the language of the pre-<!mption clause or the other clauses of the award to suggest that the parties bad any contrary intention. On the other hand a reference to the other clauses qt the award showed that the parties intended that the obligations and benefit of the contract should g0 to the assignees and successon-in- interest. [296-H] The pre.empfon clause was based on the ground of vicinage 11nd this circumstance also suggested that the intention of the parties was that the pre-emption clause should be binding upon the heirs and successors-in- llllerest and the assignees of the original parties to the contract. (298 Al (ii) The rule against perpetuities does not apply to personal contrac11s which do not create interest in property. [298 F] 294 SUPREME COURT REPORTS [1961] I S.C.R. Reading s. 14 along with s. 54 of the Transfer of Property Act it is mainfesl that a mere contract for sale of immovable property does not create any interest in the immovable property and ii therefore follows that the rule of perpetuity cannot be applied to a covenant of pre-empllOn even though there is no time limit within which the option has to be e>ercised. [301 HJ Accordingly the covenant for pre-emption in the pr~ent case did n?t offend the rule againc;t perpetuities and could not be considered 10 be void in law. [302 DJ .Case-Jaw referred to. English Jaw distinguished. av1L APPEi.i.ATE JURISD!CATION '.Civil Appeal No. 609 of 1964. Appeal by special leave from the judgment and decree dated November 11, 1959 of the Calcutta High Court in Appeal from Original Decree No. 109 of 1954. Bishan Narain and B. P. M11ltesliwari, for the appellant. N. C. Chatteriee and S11k11111ar Ghosh, for respondents No~ and 2. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Calcutta High Court dated November 18, 1959 in First Appeal ~o. 104 of 1954 affirming the judgment
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