Case Title:
R. Kempraj v. Barton Son and Co.
Bench:
Grover, A.N.
Parties:
R. Kempraj– Appellant
Barton Son and Co. - Respondent
Order Date:
29 August 1969
Subject
The appellant is Kempraj Shah who gave property in Bangalore to the respondents in 1951 for ten years on lease. It was decided that the renewal of the property was on the same terms and conditions before the expiry of the current lease, for a period of ten years. In 1961 Mr. Kempraj denied the respondents of any renewal. Therefore, a specific contract suit was filed by the respondents before a trial court and it subsequently got decreed in all, the trial court, the first appellate court, and the high court. This was a case before the Supreme Court by way of Special leave by Mr. Kempraj.
Important Provisions
Article 14 of the Transfer of Property Act,1882 - Rule against perpetuity.—No transfer of property can operate to create an interest which is to take effect after the life-time of one or more persons living at the date of such transfer, and the minority of some person who shall be in existence at the expiration of that period, and to whom, if he attains full age, the interest created is to belong.
Overview
The contention put forward by the appellant was that the renewal hasn’t been in allegiance with the rule of perpetuity stated under section 14 of the Transfer of Property Act,1882. There was mischief created with clauses relating to the renewal of ‘Covenant that runs with the land’ as per an English Law Concept, the court noted. And that correct formation of renewal clauses would immediately lead to the application of section 14 but the court didn’t agree on the same.
Issues Raised
Whether the option of renewal of lease after ten years as per the lease agreement, falls under the ambit of Section 14(that states the rule against Perpetuity) under the Transfer of Property Act,1882?
Judgement Analysis
- The judgement was ruled in favour of the respondents and the plaintiff was ordered to perform the contract.
- It was stated that since there is no transfer of property or any rights in the current case for the applicability of Section 14 of the Act, the plea by the appellant in the current case does not stand. The rule against perpetuity to apply says that there should be a transfer of property and there should be a vested interest of the transferee in the property.
- But here the covenant in the lease did not create an interest of such nature on the respondent and hence did not fall under the ambit of section 14. And the lessee pays for the occupation of the land while it still belongs to the owner since there is no transfer of property.
- The court took reference of Ganesh Sonar v. Purnendu Narayan Singha and Ors, where it was noted that the choice of renewal of lease was just a personal covenant to the contract; a contractual obligation and not the creation of any interest leading to the inapplicability of Section 14 of the Act.
Conclusion
Therefore, the essence of section 14 of the Transfer of Property,1882 a standard against remoteness of vesting, without which the public will have to go through economic loss due to the stagnation of the properties. It would cause incredible hardship in the enforcement of law which will impede trade and commerce and may likewise result in the demolition of the property itself. The rule ensures both the betterment of society and of property.
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