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Studies in Ancient Hindu Polity (Based on the Arthashastra of Kautilya), Vol. I c14: Chapter X. The Law of Contract

Studies in Ancient Hindu Polity (Based on the Arthaśāstra of Kauṭilya), Vol. I c14

Language
English

Contents

Chapter X. The Law of Contract

§ 1.—General

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To understand the full significance of contract (व्यवहार) as it obtained over two thousand years ago, it is essential that we should free our minds from the modern associations of the institution.

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We shall begin with a general statement of the requisites of a valid contract, and then follow out each of those requisites in detail.

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A contract¹ was of course a two-sided

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¹ (X) तस्मात् साक्षिमत्यत्रं कुर्यात् सम्यग्भाषितम् ।

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से परे वा जने कार्यं देशकालापवर्जितः ।
—Bk. III, औपनधिकम्, p. 181.

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(Y) से से तु वर्ते देसे काले च सकरचकृता

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सम्पूर्णचारात्प्रददेशा दहरूपजपत्र-प्रमाणमुखात्सर्वं
व्यवहारा सिध्येयुः ।
(पश्चिमं लेखं करणामादेशाधिवर्षं भवेयुः)
—Bk. III, व्यवहारस्थापना, p. 148.

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In (Y), सकरच may be taken to refer to the free exercise of act, and the parties thereto could be both individuals as well as groups; *e.g.* a body of persons engaged in a common concern (समूह समुत्थान) was entitled to be a party to a contract.

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Secondly, a contract had to conform to the following restrictions, viz. (*a*) that the agreement between the parties should be

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one’s will, though a technical meaning (=document) may be attached to करण (vide Manu, VIII, 51, 52, 154).

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I quote here Manu, VIII, 51:—

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अर्थेऽपव्ययमानन्तु करणेन विभावितम् ।
दापयेदधिकार्थं दण्डलेशञ्च शक्तितः ॥

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But whichever meaning is taken, the reference to the unfettered exercise of the will of the parties is apparent in both the cases. करण in the second sentence in (Y) seems to bear the meaning of “document.” अर्थ refers to the object or the अर्थ्य of the contract, and रूप to the circumstances under which a contract is made. This meaning of रूप (circumstances as opposed to the time and place of a contract) is found in Manu, VIII, 45—

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सत्यमर्थं च सम्प्रोक्तामानमथ साक्षिवः ।
देशं रूपं च कालं च व्यवहारविधी स्थितः ॥

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प्रमाण = authority. It seems to refer to capacity of the parties, witnesses, etc. सम्पूचार refers to all the technicalities that are to be complied with. अदरेम, however, seems to be a needless repetition of what is implied by एमे that goes before.

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clearly expressed (समभिव्याहृत), (b) that it should not be made in secret (रहस्य), and (c) that it should be in the presence of witnesses (साक्षिमत).

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Thirdly, it should comply with certain conditions as to time (काल), place (देश) and वर्ण (i.e. caste, class, etc.).

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Fourthly, the object (विषय) for which the contract was made and the circumstances (रूप) attending it must be such as not to offend against law in any way; e.g. there must be no undue influence, etc. (अपमपञ्च).

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Fifthly, the consideration (वेतन) must not be illegal and improper; the parties, witnesses and agents must be competent (प्रमाणभूतयुक्त). In short, the contract must conform to all the technicalities of law, i.e. it must be सम्यग्व्यवहार [see passages (x) and (y), f.n.].

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The first requirements, as I have already stated, are that the agreement of the two parties should be expressed properly and that there must be no secrecy about it. Witnesses have to be called when a contract is formed. It appears that instruments (करण) are used in contracts, and when the terms of a contract are entered on an instrument, the witnesses can be dispensed with.¹ We find its parallel in some of the Saṃhitâs. But witnesses were a necessity in oral contracts.² We find, however, an exception to this general rule. A suit was not dismissed on the ground that no witnesses were forthcoming to testify to a point at issue. In a dispute, for instance, regarding the non-payment of the wages of a labourer, the employer could be sued even if

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¹ An analogy to this rule is found in Colebrooke's *Digest*, vol. i, p. 16, third edition, where the contract of loan is dealt with:—

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² It has been pointed out, while dealing with legal procedure, that three witnesses either approved by both parties (अनुमताः), trustworthy (प्रात्ययिकाः), or pure (शुचयः) served the purpose best. In a suit for debt, however, two witnesses approved by the parties might be sufficient, but never one. For a parallel rule as to the number of witnesses, see Yājñ., II, 69, 70; Manu, VIII, 60, 77.

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“Bṛhaspati, quoted by Bhavadeva, Vâchaspati and Chandesvar: A prudent lender should always deliver the thing, but, on receiving a pledge of adequate value either to be used by him or merely kept in his hands; or with a sufficient surety and either with a written agreement or before credible witnesses.”

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Yājñavalkya, II, 91.—“But every document which is in the handwriting of the party himself is considered as sufficient evidence even without witnesses, unless obtained by force or fraud.” For the passage of Manu on this point, see *supra*. For references to documents in contracts, see the passage (Y) quoted above; see also the last sentence, p. 176, पत्रादानम्, which runs thus: वादिप्रतिभियोर्वा दुःश्रुतं दुर्लिखितं प्रेताभिनिवेशं वा समीक्ष्य साक्षिप्रत्ययमेव स्यात् । the former could adduce no witnesses.¹ Other instances of this exception will be furnished by the class of contracts called तिरोहित, to which we shall have occasion to turn presently. The presence of witnesses was repugnant to the object of a तिरोहित contract; it was entered into in secret. A document may sometimes be used in such a case in lieu of witnesses, but sometimes there may be neither a document nor any witnesses.² Under such circumstances a dispute was decided by examination of the parties themselves, by a reference to any custom that might govern the transaction, by taking the opinion of experts (प्राश्निकाः), by utilizing other resources that the court commanded, e.g. the information given by the "agents" attached to the law courts, and by looking to some form essential to the transaction, e.g. the seal in the case of a sealed deposit. So we see that, as a general rule, openness and publicity were required for the formation of a contract, which had to be entered into in the presence of witnesses. The absence of witnesses could be made up for by an instrument or otherwise.¹

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¹ साक्षकरः, कर्मकरकस्यः । Bk. III, p. 184.

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² Manu, VIII, 109 and 110 (S. B. E.)—"If two (parties) dispute about matters for which no witnesses are available, and the (judge) is unable to really ascertain the truth, he may cause it to be discovered even by an oath." "Both by the great sages and the gods oaths have been taken for the purpose of (deciding doubtful) matters; and Basishtha even swore an oath before King (Sudasa), the son of Pijavana."

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¹ In this connection it should be noted that a person who overheard or saw a thing by stealth could be taken as a competent witness—रहस्य व्यवहारेऽपि पुरुष उपश्रुता उपद्रष्टा वा साची स्यात् राजतापसवर्जं । p. 176—साक्ष्याधिकारः. Other rules as to witnesses, that have been pointed out in connexion with legal procedure in general, apply also to contracts under proper circumstances.

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Let us now turn to the restrictions as to time and place with which a contract had to comply. As a rule, the following contracts were void, viz. those that were (i) नक्तकृत, i.e. formed during night; (ii) अन्तरागारकृत,² entered into in the interior apartment of a house; (iii) अरण्यकृत, made in a forest; and (iv) उपधकृत, formed in any other secret place.³ The object of making these contracts void is, as already pointed out, that the law wanted to discourage clandestine contracts as far as possible. However, to remove possible hardship to particular classes of persons who might suffer by these rules, there were exceptions to the four rules. I shall speak of them here in the order of the above rules [*vide* (c), (b), (d), and (f)]:—

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² Manu takes note of the interior apartments of a house (अन्तर्वेश्म) and of forests (अरण्य): Manu, VIII, 69. Kauṭilya also particularly mentions them. Yājñavalkya mentions both नक्त and अन्तरागार contracts in Bk. II, 82.

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³ तिरोहितान्तरागार-नक्तारक्षोपधुपकृत-कृतांश्च व्यवहारात् प्रतिषेधयेयुः । कर्तुः कारयितुश्च पूर्वस्साहसदण्डः । मोहस्थाने-वेकं प्रत्यर्थदण्डः । अदेयानां तु द्रव्यपणयः । Exceptions :—
(a) परोक्षेषाधिकर्षयश्चमवञ्चयन्करा वा तिरोहितासिष्धेयुः ।

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(i) Though all clandestine contracts are void, yet those that have some connexion with or are made to ward off violence, attack and affray, those that are formed for doing anything connected with the celebration of marriage, as well as those made under orders of Government, were valid. The contracts made by the पूर्वराजव्यवहारिणः also fall under

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(b) दायनिधेपोपनिधि विवाहयुक्ता जीवमनिष्कासिनीनां बाधितानां चामुद्रसंज्ञानामकरजतासिध्येयुः ।
(c) साहसानुप्रवेश कञ्चु विवाह राजनियुक्तः पूर्वराजव्यवहारिणां च राजज्ञतासिध्येयुः ।
(d) सार्थप्रयाणम - बाधचाराणां मद्येचरचराणामखलतसिध्येयुः ।
(e) मूढाजीविषु चोपविज्ञताः सिध्येयुः ।
(f) मिथस्समवाये चोपकरकृताः सिध्येयुः । अतोऽन्यथा न सिध्येयुः ।—Bk. III, व्यवहारमातृका, pp. 147, 148.

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this exception.¹ It will be seen that all the cases mentioned here are cases of great emergency. Unless the rule is a little relaxed in respect of people trying to defend themselves from assault, etc., the protection of their life and property would be an impossibility, and it is for the same reason, as well as for its own safety, that the State reserves to itself a full contractual freedom. Again, Hindu marriages are never celebrated before dusk, and sometimes the *lagna* (propitious moment) may shift so far into the night as to touch even its small hours; hence it is a necessity that contracts conditioned by such marriages should be sanctioned. As to the exemption relating to the class of persons last mentioned, there is some haziness as to who exactly are meant. The literal meaning of the word, viz. those who usually do their business during the first half of the night, does not carry us very far.

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¹ The exceptions under (i) seem to contemplate such cases as this :—If A promises B to pay a certain sum of money in consideration of his informing a police officer of a burglary that is being committed in A's house, the contract cannot be impeached on the ground that it was made at night. पूर्व्वरात्र व्यवहारिणः—पूर्व्वरात्र is the time from dusk to midnight. The use of the word in this sense occurs in Aitareya Brāhmaṇa, Kausika Sūtra, Kātyāyana Śrauta-Sūtra, Mahābhārata, Pāṇini II, i, 45, commentary (see Monier Williams). Those who usually transact business during this time are therefore पूर्व्वरात्रव्यवहारिणः. But who exactly are meant is not clear. If we take the meaning to be any persons who enter into contract during पूर्व्वरात्र then an objection may be raised that if such a case had been contemplated some such sweeping rule as the following would not have been laid down, viz. that any नक्तकृत contracts are void; the general rule could then well have been that all अपररात्रकृत contracts are void. Again, if all contracts be allowed up to midnight, why they cannot be allowed, say, a few minutes after midnight would be difficult to explain. Removal of secrecy about the contracts is the general policy, and therefore if all sorts of contracts are allowed during the first half of the night, they will offend against and for the time negative this policy. So it is most probable that only a limited set of persons is the object of consideration of the Government in this case, in view of the hardship that they will otherwise be put to, and therefore पूर्व्वरात्र व्यवहारिणः has most likely a technical meaning and refers to a limited group of persons.

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(ii) This exception shows some consideration to diseased *pardâh* women (अभिघातिन्यः). If in a sound state of mind, they can make valid contracts relating to दाय (division of property), निक्षेप (open deposit), उपनिधि (sealed deposit), and विवाह (marriage) in the inner apartments of the house, though the general rule is that असत्कृत contracts are void.

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(iii) Exemption is given by the third exception to traders (सार्थ), व्रजाश्रय, *i.e.* cowherds, etc., hunters (व्याध), spies (चार), and those who have to roam in the forests frequently (मध्यचरचर). They can enter into valid contracts in the forest, though contracts by all others in that place are void.

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(iv) The fourth exception relates to the उपक्षर contracts. उपक्षर, as will appear from the text, refers to any secret place other than the private apartments of a dwelling-house or a forest. The general rule is that any contract in any such secret place is void, the exception being in favour of partners in a concern (नियतसमवाय).

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It should be noticed that in all the four excepted cases, the requirements as to witnesses, or in lieu of witnesses the requirements as to document, had to be complied with, though of course if a case occurs in which neither any witness nor any instrument is available, and which falls within any of the exceptions, it will stand on its own merits, and the judges may try such a suit if they find it possible to do so, or may dismiss it. Another point that should be noted is that if a person tries to make a contract which is void on any grounds, the proposer (कर्त्ता), the acceptor (अदेय), the witnesses (श्रोता), and the person who brings together the parties (कारयिता) are all fined.

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Now we turn to the legality of the object (उक्त) and consideration (वेतन) of a contract. The object and consideration must be legal, and be such as can be upheld by a law court according to equity and good conscience. In the case of a contract in which one party tries to take undue advantage of the other, the court will interfere in favour of the party who is at a disadvantage. A concrete example given in the Arthaśāstra will make it clear. If a person who is being carried away by flood, or is caught in a fire, or is in danger from wild animals, be rescued on his promise to give to his rescuer not only the whole of his property but also his sons, wife and himself as slaves, the proposer cannot be made to perform his promise, it being opposed to all justice and common sense, and therefore illegal.¹ The rescuer can realize only as much as is fixed by experts (क्रमशः) appointed by the law courts. Similarly, in the instance given of a contract with a public woman, improper demand made by her from her paramour or vice versa cannot succeed; the court does not support any such demand. Likewise, it will be seen from the passages already quoted that the general rule is that उपलिखित, i.e. fraudulent contracts, are void, but an exception is made in favour of the spies appointed by Government. They can in their capacity as spies achieve their object by fraudulent contracts and are not penalized for the fraud they commit. It seems to me that cases like the following are contemplated by this rule: A spy, for instance, makes friends with a person whom he suspects to be a thief, and gradually insinuating himself into his confidence, proposes to buy the goods he has stolen. After taking possession of the stolen goods, the spy refuses to pay the value promised and puts the machinery of the law against him instead. In such a case the law court punishes the thief, but it cannot punish the spy as well for the fraud he has committed; neither can the thief bring a suit against the spy on the same ground. Thus the law softens its rigour and legalizes an evil to suppress a greater evil.¹

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¹ Bk. III, p. 184,—दासकल्पः, कर्मकरकल्पः। नदीवेगप्राप्ता- चेनबालीपदं सर्वस्वं दारात्मदानेनापिजातारमात्रस्य विक्रीतंः क्रमप्रदिष्टं वेतनं दद्यात्। तेन सर्वधार्मदामामुभया व्याख्याताः॥

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¹ E.g., Katyayana says: "If a bribe be promised for any purpose it shall by no means be given although the consideration be performed." (See Colebrooke's Digest, vol. i., p. 462, third edition.)

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Now that the four kinds of valid contract, परोक्ष, परोक्षारक्ष, परोक्ष and उपपरोक्ष, which derive their validity on account of the exceptions laid down, have been dealt with, it is time that we should turn to the valid (तिरोहित) contracts. A place is तिरोहित if it be such that anything done there would be sheltered from human sight.¹ It therefore includes परोक्षार, परोक्ष as well as उपपरोक्ष. Now let us look at the matter from another standpoint. Under cover of night a place may become तिरोहित, *i.e.* may be out of view on account of darkness. Therefore a तिरोहित place which is परोक्ष has reference both to the nature and situation of the place as well as to time, *e.g.* night. The general rule is that contracts made in such a place are void, and the exception that attaches to this rule derives its validity from the objects in pursuance of which the contracts are formed. We shall consider the objects shortly, but before doing so, let us inquire whether the validation of a proper तिरोहित contract necessarily involves a deviation from the restriction that night vitiates all contracts. It seems that such a deviation takes place in this case. We see that two classes of objects are mentioned which can validate तिरोहित contracts, viz. (i) अधिकर्णप्रसङ्गम्, i.e. contracting a heavy debt, and (ii) objects which are अवक्तव्यकर, i.e. cannot be expressed and brought into others' notice owing to the delicacy attaching thereto. As to (i), it should be noticed that incurring a heavy debt detracts from the credit and reputation of the debtor and lowers him in the estimation of the people who come to know of it. Therefore, for the benefit of the debtors perhaps, such an exception has been made. Regarding (ii), a difficulty arises as to what kinds of delicate and secret matters are meant. Among the numerous instances furnished by the Arthaśāstra a valid contract between a woman of the town and her paramour seems to be, from its delicate nature, an instance in point.

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¹ परोक्षेवाधिकर्षपचमवक्षयकरा वा तिरोहितासिस्तथेयुः । Bk. III, p.

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¹⁴⁷ Here परोक्ष explains तिरोहित. A तिरोहित place is one which is परोक्ष, *i.e.* sheltered from human gaze.

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We can well see that in a contract which involves a delicate matter, the contracting parties will rather seek the covert of night for the secrecy it can afford and shun by all means the light of day. In view of this, it is in no wise strange that an express sanction is given to a deviation from the restriction as to night. It should further be stated here that a valid तिरोहित contract also contravenes the general restrictions as to चमत्कार, उपकर and चर, for it has been already pointed out that तिरोहित includes all the three places.

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One word remains to be said to mark out more distinctly the difference between a तिरोहित contract on one side and the three other contracts on the other. The principal difference lies in the objects of the contract, the objects of तिरोहित contracts being secret and delicate. There are a few minor differences, which are apparent from the statements already made.

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We shall next consider the restrictions as to the वर्ग of the witnesses [see passage (y)].¹ The word वर्ग appears to be very comprehensive, and signifies everything that the expressions अपवर्जतः and खे परे वा जने in passage (x) can imply. Kauṭilya does not explain clearly the restrictions, but they have to be interpreted in the light of what Manu and other such ancient lawgivers say on the point. In Manu the following rule is laid down, viz.—

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¹ The references here are to the two passages (X) and (Y) quoted in the foot-note at the beginning of this chapter.

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"Women should give evidence for women, and twice-born men for twice-born men of the same kind, virtuous Śūdras for Śūdras, and men of the lowest caste for the lowest."¹

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¹ स्त्रियां साक्ष्यं स्त्रियः कुर्युर्द्विजानां सदृशा द्विजाः। शूद्राश्च सन्तः शूद्राणामन्त्यानामन्त्ययोनयः।—Manu, VIII, 68.

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The commentary of Medhâtithi throws more light on this point. He says that "twice-born men of the same kind" means "twice-born men of the same caste, occupation, etc." The line स्त्रिये परे वा जने कार्यं (कुर्यात्) सवर्णतः² signifies that a Brâhmaṇ should choose a Brâhmaṇ for a witness, a Kshatriya a Kshatriya, and so forth; and failing that, a person belonging to another वर्ण may be taken as witness. Therefore the two passages (x) and (y) lead to this conclusion that the contracting parties should try to make their contracts in the presence of castemen of the same sex and occupation as themselves in the first instance, failing which they can take witnesses belonging to the same caste and sex but having a different occupation, and when this also fails, men of a different वर्ण may be called.

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² सवर्णतः refers to the four वर्ण, viz. Brâhmaṇ, Kshatriya, Vaiśya, and Śûdra. [See passage (Y) supra.]

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Next we consider the rules about the capacity of parties to make a valid contract. No contract can be made if any of the parties be (i) in a fit of anger (क्रुद्ध), (ii) under stress of extreme sorrow,¹ distress and danger (आर्त), (iii) intoxicated (मत्त), (iv) insane (उन्मत्त), or (v) under undue influence, duress, etc. (उपसृष्ट).

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¹ In the case of an agreement with an आर्त (man in distress), though no contract with him can hold good at law, yet we find that the law court makes him pay a sum fixed by experts (दण्डकल्पः) if he has already got any benefit from the other party. (See Arthaśāstra, Bk. III, p. 184, दण्डकल्पः.)

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Those who act in supersession of these bars are fined as already pointed out.

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In connexion with the subject of contracts made through agents, of which I shall speak presently, a few terms occur which imply some other absolute disabilities so far as the principals are concerned.² अप्राप्तव्यवहार, for instance, indicates an age below which a person cannot make a valid contract on his own account; similarly, अतीतव्यवहार³ signifies another disability, due most probably to an age-limit beyond which a person is supposed to lose the amount of discretion that is necessary for making contracts on his own behalf, though he may act as an agent under the instructions of his principal, just as a minor can. Manu and others, however, make decrepit old age (स्थविरत्व) an absolute bar. It should also be noted that an ascetic (प्रव्रजित), a person convicted (अभिशस्त), one physically deformed (पंगु), or one passionately addicted to any kind of evil practice, e.g. drinking (मद्यपी), can, according to Kauṭilya, make contracts on behalf of principals authorizing them, but Kauṭilya does not clearly state whether they can also enter into contracts on their own behalf. Some of our ancient lawgivers, however, mention a few of the above conditions as nullifying contracts.

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² अपात्रव्यवहार कृताः, पितृमता पुत्रेण, पित्रा पुत्रवता, नियुक्त्रेन भार्या, कनिष्ठेनाविभक्तेन, पतिमत्या पुत्रवत्या च स्त्रिया, दासाहितकाभ्यां, अप्राप्तातीतव्यवहाराभ्यां, अभिशस्तप्रव्रजितव्यञ्जनिभिश्चापविद्धव्यवहारेभ्यः । —Bk. III, व्यवहारस्थापना, p. 148.

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³ अतीतव्यवहार literally signifies a person who has lost his capacity to contract in any way; but most probably a limit of age is meant.

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One other disability remains to be mentioned. A woman cannot have pecuniary dealings with a man or a woman with whom she is forbidden by law or by her superiors to do so.¹ If she violates the prohibition she is punished. This rule applies also to a male.

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¹ See Bk. III, p. 156, विवाहसंयुक्ते—प्रतिषेधः. Cf. Nārada to Indra in the Harivaṃśa: "No man, O thou subduer of foes, should have pecuniary dealings with him from whom he desires much affection, nor visit his wife in his absence."—Colebrooke's Digest, vol. i, p. 16.

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We shall now consider the rules about the appointment of agents. The following persons, if authorized by the principals, can make contracts as agents:—

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(i) Dependents, for the person who supports them, (ii) son, for the father, (iii) father, for the son, (iv) a brother, for another brother though not belonging to the same joint family, (v) a younger brother belonging to the same joint family, for an elder brother, (vi) a woman, for her husband or her son, (vii) a slave, for his master,¹ (viii) a minor (अप्राप्तव्यवहार), for one who has attained majority and is otherwise competent to contract, (ix) a person who is अतीतव्यवहार (see above), (x) a person convicted (अभियुक्त), (xi) an ascetic (प्रव्रजित), (xii) a physically deformed person (पंगु), and (xiii) one addicted to passion (व्यसनी).²

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¹ For the meaning of आश्रित, see Arthaśāstra, Bk. III, p. 182, दासकल्प:.

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² For the text, see supra. The text seems to be a little faulty in its first portion, and so I interpret it subject to some doubt.

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I shall now name here the principal transactions that bear the character of contract:

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(i) ऋणादानम् (loan), (ii) विक्रय (sale), (iii) निक्षेप (open deposit), (iv) उपनिधि (sealed deposit), (v) mortgage, pledge, etc., (vi) hire, (vii) partnership, (viii) contract of service, and (ix) a few other miscellaneous contracts.

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From the above we have an idea of the elements that made up व्यवहार in Chandra Gupta’s time. The elements that constituted a व्यवहार may well justify us in calling it a contract, though, of course, owing to the peculiar circumstances of the time in which it prevailed, it assumed a different complexion. We notice also that Government exercised a good deal of control over the details of the subject’s life, and therefore legal interference touched spheres now looked upon as merely moral or social. A vagueness necessarily attaches to some of the details of व्यवहार, but on the whole we see its broad features and in them a generic likeness to a modern contract.

§ 2.—Sale and Pre-emption

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We have discussed the general principles underlying Hindu contract in Chandra Gupta’s time, and shall proceed to discuss some of the more important contractual transactions.

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We begin with the sale of immoveable property. The first provision in regard to this is that the piece of property on sale has to be offered for purchase in the first instance to the kinsmen (ज्ञातयः) of the seller. If they do not propose to buy, then the property has to be offered to the neighbours, who can claim such right on the ground of vicinage or participation in the appendages (सामन्ताः); and on their refusal to purchase, the property is to be offered to the creditors of the seller (धनिनाः).¹ These rules evidently indicate that something like the right of pre-emption existed in those days. The texts concerning pre-emption are very few in Sanskrit legal literature, and even those that exist have been explained away by later commentators. I quote here Prof. Jolly’s view on this point:—

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¹ ज्ञातिसामन्तधनिनाः क्रमेण भूमिपरिग्रहान् क्रेतुमभ्याभवेयुः । —Bk. III, वास्तुविक्रयः, Arthaśāstra, p. 168. मघवाशुक्रम् ; वास्तु here means गृहं क्षेत्रमारामम् सेतुबन्ध-तडाकमाधारो वा, p. 166.

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“A trace of pre-emption in the Hindu law occurs in the text quoted in the Mitāksharā² and other standard law books. It is

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² Colebrooke’s Mitāksharā, chap. i, sect. i, 31.

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as follows—‘Transfers of landed property are effected by six formalities: by consent of fellow-villagers, kinsmen, neighbours and co-parceners, and by gift of gold and water.’ This text indicates clearly the existence in the early period of the Hindu law of a feeling that a transfer of landed property is not valid unless the neighbours, fellow-villagers and others who are but remotely concerned with it should have given their consent to its being effected. These persons might therefore be supposed, perhaps, to have been invested with a right of pre-emption. Whatever notions may have been prevalent on this subject in the early period of the Hindu law, this much is clear, that the compilers of those commentaries and digests of law on which the modern law is based did not approve of any sort of pre-emption. Thus the Mitâksharâ, in dealing with the above text, deprives it entirely of such legal significance as may have once belonged to it. The consent of fellow-villagers, according to the Mitâksharâ, is required for the publicity of the transaction merely; but the contract is not invalid without their consent. The consent of neighbours tends to obviate future disputes concerning boundaries. The consent of kinsmen and co-parceners is indispensable when they are united in interest with the vendor. If they are separate from him, their consent is useful because it may obviate any future doubt as to whether they are separate or united, but the want of their consent does not invalidate the transaction. This interpretation of the Mitâksharâ may be viewed as an instance of the way in which the Indian commentators used to dispose of obsolete laws. At the same time, it shows clearly that anything approaching to pre-emption was entirely foreign to the ideas of such an eminent authority as Vijñânesvara, the author of the Mitâksharâ.”¹

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¹ See also Vivâda Chintâmaṇi, translated by P. C. Tagore, p. 809.

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A few other texts besides the one referred to above occur also in the Mitâksharâ. They are:—

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(1) “ In regard to the immoveable estate, sale is not allowed ; it may be mortgaged by consent of parties interested.”¹ This text, like the above, is also anonymous.

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¹ Colebrooke's Mitâksharâ, chap. i, sect. i, 32.

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(2) The text of Bṛihaspati cited in the Mitâksharâ, viz. “ separated kinsmen, as those who are unseparated, are equal in respect of immoveables, for one has not power over the whole to make a gift, sale or mortgage.”

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The way in which these two texts have been explained away may be found by a reference to their respective sections in the Mitâksharâ.

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(3) In a passage in the Mahânirvâṇa² Tantra the rules of pre-emption are set out thus :—

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² दायभाग, Slk. 107 ff., Macnaghten's translation.

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“ The proprietor of immoveable property having a neighbour competent to purchase it is not at liberty to sell such property to another. Among neighbours, he who is a relation or of the same tribe is preferred. In their default, a friend and the will of the seller prevails; even though the price of immoveable property be agreed upon with another, yet if a neighbour pays the price, he is the purchaser and not another. If the neighbour be unable to pay the price or be consenting to the sale, the proprietor is then at liberty to sell it to another. O Goddess ! if immoveable property be sold in the absence of the neighbour, and he (the neighbour) pays the price immediately on hearing of the sale, he is competent to take it. But should the purchaser, having made houses or gardens, be in enjoyment of them, the neighbour is not entitled to take such immoveable property even by paying the price.”

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The Tantras have never been recognized as authorities on law; neither have these rules been quoted in any current authentic law book. So they have failed to influence the practical law of the present day, and the net result is that, except in Behar and some other provinces of India, the right or custom of pre-emption is not recognized as prevailing among the Hindus; and in the districts where the custom has not been judicially noticed the custom has to be proved in each case.

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It is generally inferred from the way in which the commentators explain, or rather explain away, the texts, that it was at the time of the Muhammadans that the right of pre-emption first came to be recognized among the Hindus. Such an inference cannot be supported if we read properly the mental attitude of the commentators. The later the legal authority, the more hostile is he to restraint on alienations of property. It cannot be denied that the rule, that a member of a joint family cannot sell his share in the joint property without the consent of his co-sharers, aimed at a result similar to that which the Muhammadan law of pre-emption intends to achieve.¹ The provision that a field cannot be sold without the consent of the whole village in particular cases, or without the consent of the family, which certainly existed in ancient times, also points to the same conclusion.²

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¹ The author of the Dāyabhāga sets aside the rule by saying that sales of undivided shares are immoral but valid in law. ² Vide E. W. Hopkins's *India Old and New*: Land Tenure in India. ³ The word प्रसाध in Manu, VIII, 399, no doubt implies a right of first-purchase or pre-emption, as Monier Williams calls it, but it is claimed by Government, and in regard to moveables (आदावि); therefore it cannot be called pre-emption proper.

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It is often argued that the absence of a Sanskrit name for pre-emption shows the absence of the custom. Such a position is absurd on the face of it, for what is described at length need not necessarily be named. Besides, in all the cases we have noted, the subject of pre-emption has been subsumed under a more general one which has given its name to the chapter, and so we do not find a Sanskrit equivalent.³

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From the above it appears that the custom of pre-emption among the Hindus dates back to a much more ancient period than is generally supposed, and the advent of the Muhammadans only marks a particular stage in its history. The passages in the Arthaśâstra serve only as evidence of a custom which is much older than the passage itself.¹

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¹ *Vide* in this connexion Sivśaraṇlâl's *Law of Pre-emption*. ² ततोऽन्ये बाह्यास्सामन्तकुलात्पञ्चत्वारिंशत्कुल्या स्पष्टप्रतिमुखे वेश्म आवयेयुः । सामन्तग्रामवृद्धेषु क्षेत्रमारामं सेतुबन्धं तडाकमाधारं वा मर्यादासु यथासेतुभागं “ अनेनार्घेण कः क्रेता ” इति त्रिराघोषितवीतमव्याहर्त क्रेता क्रेतुम् लभेत ।—वास्तुविक्रयः, p. 168. [For सेतुबन्ध, see p. 60. . पुष्पफलवाटप्यकेदारमूलवापास्सेतुः।] ³ See f.n. above.

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Having now seen how a piece of immoveable property was offered for purchase to certain classes of persons in preference to others in the days of Chandra Gupta, let us turn to further stages in the process by which the sale was effected.

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The fact of the property being on sale has to be announced publicly in the presence of a large number of men who come from not less than forty neighbouring houses, and who have no personal interest in the sale.²

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As immoveable property includes cultivated fields,³ gardens, enclosed spaces, tanks and reservoirs, each of these kinds of property, before being put to sale, has its boundaries accurately defined in the presence of the neighbouring village-elders and elderly villagers (ग्रामवृद्धसमक्षम्).

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Then the crier (प्रतिक्रोष्टा) shouts thrice the following words: अनेनार्घ्यण कः क्रेता, i.e. “Who will buy at this price?” thus announcing the price of the property fixed by the seller. The purchaser who accepts the price then enters upon the purchase if the sale be unconditional and not objected to by any claimant.

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A tax is levied upon all such sales, and in the event of any increase of price owing to superior natural advantages, the unearned increment goes to the State.¹

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¹ सर्वसाक्षी भूमिविक्रये भूम्यर्हः ससाक्षी कोऽं भवेत् p. 168.

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The crier is responsible for the collection and payment of the tax on the sale.² Any fraudulent announcement of sale of property of which the seller is not the proprietor is punishable with a fine of 24 paṇas. No sale can be kept in abeyance for more than a week, within which time the possession must be delivered to the buyer and the sale completed. If the purchaser is by fraud passed over and the property transferred to another, the irregularity is punishable with a fine of 200 paṇas. The punishment for other sorts of fraud is 24 paṇas.

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² विक्रयप्रतिक्रोष्टा शुल्कं दद्यात् । असामिप्रतिक्रोशे चतुर्वि-शतिपणो दण्डः । क्षत्रराजाङ्कनमनिसृष्टः प्रतिश्रुतो विक्री-णीत । प्रतिश्रुतातिक्रमे वाऽनुनि द्रियतो दण्डः, अन्यत्र चतुर्वि-शतिपणो दण्डः ।—Ibid.

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The following restrictions in regard to the sale of immoveable property are also to be noticed. Tax-payers (करदाः) can sell their fields to tax-payers alone, and Brâhmaṇs can sell their ब्रह्मदेय or gifted lands to those Brâhmaṇs only who are endowed with such lands. Violation of this rule is punishable with the first amercement. Neither can a tax-payer enter on a holding exempted from the payment of taxes. If a tax-payer enters on the holding of another tax-payer, he becomes the owner of the whole property except the house (अगार) of the seller, unless it be given over by express agreement. If a non-taxpayer allows his land to lie fallow, another competent person may enjoy it for five years, after which he has to return the same to the owner after taking due compensation for the improvement made. The non-taxpayer may live elsewhere, retaining the ownership of his land.¹

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¹ विवीतचेपयचिंता, p. 171, etc.

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It may be noticed in passing that the period of prescription in respect of immoveable properties was usually twenty years, but it does not hold good in the case of the enjoyment of a piece of immoveable property by kinsmen, priests, or by heretics during political disturbances; neither does it apply in cases of mortgage.²

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² शास्त्रनिबन्ध:, p. 190 ff. Cf. Yājñ., II, 24, 25.

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We shall now consider the rules regarding moveables. In the sale of moveables, no elaborate formalities are needed. It appears that in a sale of moveables, property passed by payment of price and delivery of possession.

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A refusal to perform a contract of sale, or a refusal to sell an article put for sale by a dealer, was punished with a fine of 12 paṇas; but if the seller could prove any of the following three pleas he was exempted:—

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(1) That the article in question has defects (दोष).

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(ii) That it has been lost by उपनिपात, i.e. has been stolen, or confiscated by the State, or destroyed by flood or fire.¹

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¹ Yājñ. uses the words पणदोष and राजदैवोपघात while speaking of non-delivery of sold articles.—II, 259.

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(iii) That it has been found on examination to be unacceptable because it does not possess many of the properties originally imputed to it, or because it has been manufactured by diseased persons (अविपन्न).

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(iv) Another excuse for non-performance of a contract of sale is that a fragile thing contracted for sale to a person cannot be retained longer without detriment to it, and so it has been sold to a third person.

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The time allowed for rescission of sale is one night for traders, three for cultivators, and five for cowherds. With regard to the sale of the necessaries of life, however, a period of seven nights is allowed to people of all classes.

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A person not accepting an article bought by him is fined 12 paṇas unless his case has any of the excusing grounds mentioned above.²

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² विक्रीतक्रितानुशयः, p. 187 ff.

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If diseased or unclean bipeds and quadrupeds are sold as healthy or clean, the seller is fined 12 paṇas.¹ The time for rescission of sale is three fortnights for quadrupeds, but as regards bipeds no time is expressly mentioned in the text. The rescission rule is applicable in the sale of slaves also, and a period of one year is allowed.

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¹ *Ibid.* Cf. Manu, VIII, 222, 228, on Rescission of Sale.

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The principle followed in these rescissions is that the judges should try to effect them without detriment either to the seller or the buyer as far as possible.

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As regards sale through agents (वैयाट्यविक्रय),² the following rules are laid down. Agents selling the merchandise of wholesale dealers at prices prevailing at particular localities and times shall hand over to the wholesale dealers as much of the sale-proceeds and profit as is realized by them. If, owing to the default of the selling agents to sell at the proper place and at the proper time, there be a fall in the prices, the agents shall pay the value and profit at the rate which obtained when they received the merchandise. If, however, the wholesale dealers agree to remit the profits, the agreement will be carried into effect. In case of a fall in the price, the reduced sale-proceeds would be given to the wholesale dealers. If the agents represent that the goods have been destroyed or lost by उपनिपात (explained above) or in transmission (प्रेष), and if the representation appears reasonable¹ and trustworthy, and is not contradicted by any official report, then the value of the goods need not be made good to the wholesale dealers. The profit and value of the articles would be calculated after making due allowance for all the necessary wear and tear they undergo if they are sold at a distant future, or at a distant place. If the wholesale dealers are combined in a partnership, then each will take his own share of the value and profit or loss. The rest of the rules are to be supplied from those regarding deposit (उपनिधि).

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² वैयाट्य-विक्रय:,—औपनिधिकम्, p. 179.

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¹ संव्यवहारिक—generally intelligible, i.e. reasonable.

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Some of the following rules regarding the fraudulent sale of articles² are wide enough and can cover cases in which sale does not come in; but as all of them may also apply to cases where a sale is involved, they have been put here together.

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² असामिविक्रय:, p. 189 ff.

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On the detection of a lost article in the possession of a person, the owner will cause him to be arrested by the order of the judge of a court; if, however, time or place does not permit this process, he can arrest the person himself and realize the article. The judge shall put this question: "How have you got the article?" If he narrates how he got it, but cannot produce the seller, he will be acquitted, but will lose the article. If the seller is produced, he shall pay not only the value of the article but will also be liable for theft. If the seller runs away or hides himself with the article till it is wholly consumed, he shall not only pay its value but also be liable for theft.

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After proving his title to the lost article, the owner shall be allowed to take possession of it; but on failure to prove his title, he is to pay a fine of five times the value of the thing, and the State takes the article. If the owner takes possession of a lost article without obtaining permission of a court, he shall be punished with the first amercement.

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Stolen or lost articles, on being detected by persons other than the owner, are to be deposited at शुल्कशाला, i.e. the place for the collection of tolls. If no claimant be forthcoming, such an article is taken by the State.

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He who proves his title to a lost or stolen biped shall pay 5 paṇas as ransom (निष्क्रय) before taking possession. Likewise, the ransom for a single-hoofed animal (एकखुर) is 4 paṇas; for a cow or a buffalo, 2 paṇas; for minor quadrupeds, ¼ paṇa; and for precious stones, etc., 5 per cent. of their value.¹

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¹ Cf. Yājñ., II, 171-177. ² अस्वामिविक्रयः, p.

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Whatever of the property of his own subjects the king brings from forests or countries of enemies, shall be handed over to its owner. Whatever of the property of his subjects stolen by thieves the king cannot recover, shall be made good by the State. If the king be unable to recover such a thing, he shall allow any person who volunteers to fetch it; otherwise, he shall pay an equivalent compensation to the sufferer.²

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¹⁹⁰ A parallel to the liability of the State for compensation to the injured party for loss of the sort mentioned above is to be found in Manu, VIII, 40; Yājñ., II, 37.

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Ownership in properties continues though the owner is away from the place where they lie, but the owner who neglects to question the enjoyment of his moveables by another for ten years continuously loses his right therein. The aged and the minors, the diseased and the distressed, the sojourners abroad and those who have forsaken the country for good, are exempt from this rule. The exemption also applies to cases where the assertion of title is prevented by absence due to political disturbances, as also to open and sealed deposits, pledges, treasure-troves, women, boundaries, and articles belonging to the priests and the State.¹

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¹ बस्वामिविक्रयः, सस्वामिसम्बन्धः, p. 190 ff. Cf. Manu, VIII, 145-149.

§ 3.—Loans

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We shall now discuss the subject of loans. The rules regulating loans are justly recognized to be of great importance, for on them depends

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275; and Nârada, II, 17. It is interesting to note that a similar provision has also been incorporated in the Manu-Kyay-Damathat of the Burmese law: "If cattle have been stolen, the inhabitants of that district were held liable to which the footmarks of the stolen cattle are traced."—Richardson's Transl., IV, 8, p. 117.

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to a large extent the economic welfare of the country, राजव्ययोमजेन as Kauṭilya puts it.¹

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¹ अर्थशास्त्रम्, Bk. III, p. 174.

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In those olden days the exploitation by the grinding money-lenders of the necessities of the poor and the needy was checked by a fair rate of interest. The fair rate was determined by the State, which punished all deviations from it.

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The legal rate² of interest for a money-lender, as mentioned in the Arthaśāstra, is 1¼ p.c. per month, i.e. 15 p.c. per year. For the reasons given below, it seems that this rate of interest was chargeable on secured debts, the maximum rate allowed on unsecured ones being prescribed

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² This rate of interest, viz. 1¼ p.c. per month, is also found in the Saṃhitās. The question is whether it was charged on a secured debt or not. Vyāsa is very explicit on this point. He says: "Monthly interest is declared to be an eightieth part of the principal, if a pledge be given; an eighth part is added if there be only a surety; and if there be neither pledge nor surety, two in the hundred may be taken from a debtor of the sacerdotal class" (see Cole.'s Digest, i, 80). Yājñavalkya also makes 1¼ p.c. per month the interest on a secured loan, for he enjoins that "on a secured loan the interest every month is one-eightieth part of the principal" (II, 38, M. N. Dutt's ed.). Manu, Vasiṣṭha and Nārada are at one on this point. "A money-lender may stipulate, as an increase of his capital, for the interest allowed by Vasiṣṭha, and take monthly the eightieth part of a hundred" (Manu, VIII, 140, S. B. E.). According to the commentators Kûll., Nār., Ragh., and Nand., the rule refers to a secured debt, but Med. and Gov. think that the rule refers to cases where the creditor is able to live on this interest and is not compelled to take a higher rate for his living. However, the former is the view accepted on all hands, supported as it is by the parallel passages of Yājñ., etc. (see also Cole.'s Digest, i, 24). Vasiṣṭha's text runs thus: "Hear the interest for a money-lender declared by the words of Vasiṣṭha: 5 māshas for

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20 kārshāpaṇas may be taken every month; thus the law is not violated" (II, 51, p. 16, S. B. E.). One kārshāpaṇa being equal to 20 māshas, the rate is 1¼ p.c. per mensem. Nārada also refers to Vāsishṭha: "Let a money-lender take in addition to the principal the interest fixed by Vāsishṭha, viz. an eightieth part of a hundred in every month" (I, 99, S. B. E.). Bṛihaspati prescribes an eightieth part of the principal to be the interest on it every month (XI, 8, S. B. E.), while Gautama says: "The legal interest for money lent is at the rate of 5 māshas for 20 kārshāpaṇas per month" (XII, 29, S. B. E.). On the strength of the other Saṃhitās, these two passages would no doubt be taken to relate to the case of secured loans. Baudhāyana, however, differs from all the above authorities by prescribing a different rate of interest, viz. 1 p.c. per month. His rule is that "a sum of 25 kārshāpaṇas shall bear an interest of 5 māshas per mensem" [I, 5, 10—(22), S. B. E.]. He does not expressly apply it to cases of secured loans; but even if it be taken to apply to unsecured loans, the difference from the other Saṃhitās does not cease; for almost all the authorities quoted above, including Vishṇu and Hārita, expressly mention that the creditor may take 2, 3, 4 and 5 p.c. (and not more) as monthly interest on unsecured loans according to the order of the castes, e.g., a Brāhmaṇ debtor has to pay 2 p.c. per month, a Kshatriya debtor 3 p.c. per month, and so on. So Baudhāyana is the only dissentient authority in regard to this point.

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In view of the general correspondence of the Saṃhitās as to the rule that 1¼ p.c. per month is the interest to be charged on a secured loan, I am inclined to take the passage in Kauṭilya, "सपादपचा धर्म्या मासरद्धिः पञ्चतस," as applicable to secured loans. This view gains further support when we take into account the fact that no separate rates of interest are by the next passage as 5 p.c. per month. But the rate is allowed to increase in view of the risks to which the investment of the money lent, and consequently its realization,

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mentioned in connexion with the rules regarding pledges, upon one kind of which, viz. where the thing pledged is used by the pledgee, interests are chargeable; nor are they mentioned in regard to rules about mortgages.

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The rate of interest allowed by the Saṃhitās in the case of the Śūdra debtors, viz. 5 p.c. per month, corresponds with that given in the second passage of the Arthaśāstra (पञ्चपञ्चा व्यावहारिकी, p. 174, Bk. III): “पञ्चपञ्चा व्यावहारिकी”; and as the Saṃhitās apply the rule to unsecured loans, I am inclined to think that the passage of Kauṭilya mentions the maximum rate allowed in the case of unsecured loans.

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Laws restricting the maximum rate of interest are found in many countries both of ancient and mediæval times. In Greece, “the Seisachthira of Solon (B.C. 594), according to some ancient writers, included a reduction of the rate of interest, stated by Plutarch to have been about 16 p.c. per annum. In the opinion of Grote, however, no restriction was put by it upon interest. At Coreysa, in the second and third centuries B.C., loans on good security commanded 24 p.c., while the common rate at Athens in the time of the Orators was 12 to 18 p.c. . . . Such high rates were exceedingly oppressive to agriculturists, whose fortunes are always precarious” (Palgrave’s Dict. of Pol. Ec.).

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According to the same authority, “the ancient law of Rome allowed interest which, as usual in agricultural communities, reached an exorbitant height, and popular suffering necessitated a readjustment of debts. The law of the Twelve Tables (B.C. 451-450) first, according to Tacitus, limited the rate to one-twelfth part of the capital . . . In B.C. 347 interest was fixed at 5 p.c.; in B.C. 342 it was abolished altogether by the Lex Genucia. Although the prohibition of interest long remained law, it was found impracticable . . . The Lex Unciaria of the are exposed. Accordingly, the money borrowed by persons going to forests for trade is allowed to return an interest of 10 p.c. per month, while, on the same principle, the interest payable by the merchants who trade by sea is allowed to mount up to the maximum rate of 20 p.c. per mensem.¹

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¹ "दशपञ्च कान्तारगानां." Yājñ. uses the word कान्तारम in a similar context—

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A disregard of the maximum limits is punished with fines payable not only by the money-lender and the intermediary, but also by the witnesses to the transaction.²

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² ततः परं कर्तुः कारयितुश्च पूर्वसाहसदण्डः । मोतृवामेकं प्रत्यर्थदण्डः ।

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