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Ladhabhai Lakhmsi Vs. Sir Jamsetji Jijeebhoy Bart - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 379 of 1917
Judge
Reported inAIR1917Bom111; (1917)19BOMLR813; 42Ind.Cas.882
AppellantLadhabhai Lakhmsi
RespondentSir Jamsetji Jijeebhoy Bart
Excerpt:
lease, assignment of-option given to the lessee to purchase the land leased enures to the benefit of the assignee-estoppel by conduct.;on the 1st of march 1912, the defendants leased a plot of land for ninety-nine years. clause 7 of the indenture of lease gave the lessee an option to purchase the plot at a certain price within eighteen years. on 22nd may 1916, the lessee assigned the lease for the remaining period to the plaintiff. the plaintiff communicated to the defendants his intention of purchasing the plot under the provisions of clause 7. the defendants called upon the plaintiff to submit for their approval a draft conveyance of the plot and the plaintiff forwarded the same to the defendants. a difference of opinion arose between the parties as to the insertion of certain recitals..........mr. kanga for the defendants contends that the plaintiff is not entitled to the benefits of the option to purchase as he is not the original lessee but only an assignee of the lessee and as the option to purchase is a personal covenant and not a covenant which runs with the land it does not enure to the benefit of the assignee. in other words he contends that a covenant which is merely personal or collateral to the thing demised does not run with the land or the reversion and therefore assignees are not bound even though they be expressly named and a covenant to give the lessee the option to purchase the land demised is a personal covenant and relies on woodall v. clifton (1905) 92 l. t. 892. but in my opinion it has no application to the facts of the present case. it must be borne in.....
Judgment:

Kajiji, J.

1. By an indenture dated 1st March 1913 the defendants leased to one Bomanji Pestonji Vatcha for a term of ninety-nine years a plot of land situated at Tardeo. By an Indenture of Assignment dated 22nd May 1916 the lessee assigned the lease for the then residue of the said term to the plaintiff, Ladhabhoy Lakhamsey, for the sum of Rs. 39500. By Clause 7 of the Indenture of Lease dated 1st March 1913 it is provided as follows. [The clause is set out above].

2. The plaintiff being anxious to purchase the said plot intimated to the defendants by a notice in writing dated 25th September 1916 his intention of purchasing the said plot under the provisions of the said Clause 7 and the defendants by their solicitors' letter, dated 29th September 1916, called upon the plaintiff to submit for their approval a draft conveyance of the said plot. On or about 14th November 1916, the plaintiff forwarded to the defendants the draft conveyance called for by them. The draft conveyance contained recitals which are particularly set forth in the 6th paragraph of the plaint. The plaintiff contended that such recitals should be inserted in the proposed conveyance for the purpose of tracing the title of the vendors; but the defendants object to the insertion of the said recitals. The defendants, however, seek to incorporate in the said conveyance the covenants set forth in the 8th paragraph of the plaint which the plaintiff contends that on a true construction of Clause 7 of the Indenture of 1st March 1913 the defendants are not entitled to insert the said covenants or any of them. The following two questions were submitted for the determination of the Court:-

1. Whether the recitals set forth in paragraph 6 of the plaint should be struck out of the proposed conveyance?

2. Whether the covenants set forth in paragraph 8 of the plaint or any and if so which of them should be inserted in the said conveyance?

3. As there was dispute as to facts the Originating Summons was adjourned into Court for hearing. The conclusion I have come to is that the recitals if inserted in the conveyance-would certainly amount to representations by the defendants which would be binding on them but as the plaintiff under the 4th condition above referred to is bound to accept such title as the vendors have, I consider these recitals unnecessary and direct that the recitals set forth in paragraph 6 of the plaint should be struck out of the proposed conveyance. Mr. Kanga for the defendants in the course of argument very fairly con-; ceded that on the authorities he could not at this stage insist on the covenants set forth in paragraph 8 of the plaint being inserted in the proposed conveyance and that they could only be asked for by the owners of the neighbouring plots in a separate suit. I, therefore, direct that the covenants set forth in paragraph 8 of the plaint should be struck out. But Mr. Kanga for the defendants contends that the plaintiff is not entitled to the benefits of the option to purchase as he is not the original lessee but only an assignee of the lessee and as the option to purchase is a personal covenant and not a covenant which runs with the land it does not enure to the benefit of the assignee. In other words he contends that a covenant which is merely personal or collateral to the thing demised does not run with the land or the reversion and therefore assignees are not bound even though they be expressly named and a covenant to give the lessee the option to purchase the land demised is a personal covenant and relies on Woodall v. Clifton (1905) 92 L. T. 892. But in my opinion it has no application to the facts of the present case. It must be borne in mind that this contention has been for the first time taken by the defendants at the hearing and that the plaintiff is not an under-lessee but is an assignee for the full term who has perfected his title by a legal document and thus stands in the shoes of the original lessee. Further, Clause 7 of the original lease, one relating to option to purchase, is recited in the Indenture of Assignment which further recites that the original lessors have signified their consent to the assignment intended to be made by a writing dated 8th March 1916 and the assignment has been registered with the lessors. From the passage at the end of p. 587 of Vol. XVIII of Halsbury's Laws of England, we find that the benefit of stipulations in the lease in favour of the lessee and his assignees, such as an option to purchase, passes only to the legal assignees of the whole term: see Friary Holroyd and Healey's Breweries, Limited v. Singleton [1899] 1 Ch. 86 the head note of which is:-

The equitable assignee of a lease who has omitted to perfect his title by a legal assignment, although in possession of the premises and paying the rent reserved..., is not entitled to the benefit of an option to purchase given to the lessee, his Executors, administrators and assigns.

4. This part of the judgment has been affirmed by the Court of Appeal in Friary Holroyd and Healey's Breweries, Limited v. Singleton [1899] 2 Ch. 261. In the present case the plaintiff is a legal assignee and in my opinion he is entitled to the benefit of the option to purchase. The correspondence between the parties to my mind clearly shows that the parties proceeded on the assumption that the plaintiff though an assignee of the lessee was entitled to exercise the option of purchase under the lease and that the defendants had acquiesced in it and are now bound to sell it; therefore it is not now open to the defendants to contend that the covenant being a personal covenant the benefit thereunder does not pass to the assignee. The plaintiff's attorneys by their letter of 25th September 1916 gave the necessary notice to the attorneys for the defendants who by their letter dated 29th September 1916 ask for a cheque for Es. 200 on account of their client's costs which are payable under Clause 7 of the lease by the plaintiff. By a letter of the 4th October 1916 plaintiff's attorneys agree to pay the costs. From this it seems to me quite clear that the defendants never intended to take up the attitude which they now do; and I think that it would not only be unfair and unjust but inequitable to allow them to do so now. I therefore hold that even if in law the plaintiff is not entitled to exercise the option the defendants are now estopped from disputing it. The result is that the plaintiff is entitled in the circumstances of his case to exercise the option to purchase and as the defendants have failed in this most important defence to this suit they must pay plaintiff's costs of this suit.


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