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Rustomji Dorabji Vs. Keshavji Damji - Court Judgment

LegalCrystal Citation
Decided On
Case NumberO.C.J. Suit No. 1733 of 1925
Reported in(1926)28BOMLR1162
AppellantRustomji Dorabji
RespondentKeshavji Damji
.....of the transfer of property act does not enable him to recover such rent from the mortgagee.;the right of possession of a mortgagee, after entry on the property mortgaged, relates baok to the time at which his legal right to enter accrued.;ocean accident and guarantee corporation v. ilford gas company [1906] 2 k.b. 493, 499, referred to.;the plaintiff purchased, on april 23, 1924, certain leasehold property sold at a public auction by the mortgagees thereof in virtue of power of sale in a mortgage deed. on july 7, 1824, the mortgagees executed a deed of assignment of the property in favour of the plaintiff wherein it was agreed upon that the plaintiff should recover the rents of snoh portions of the property as were let out to tenants from may 23, 1924. nothing was said in that..........v. boynton [1924] 1 ch. 236 the former case decides that after entry by a mortgagee of land his right of possession relates back to the time at which his legal right to enter accrued, so as to enable him to support an action against a wrong-doer for a trespass committed at a time antecedent to the entry. there at p 497 the master of the rolls says :-they [the second mortgagees] pray in aid the well known proposition of law that in an action of trespass the right to sue, as against the wrong-doer, relates back after entry to the time at which the right to enter accrued, so as to give a rights of action for trespass intermediate in point of time between the date of the right to enter and that of the actual entry. they therefore claim a right to put in suit the damages occasioned by the.....

Marten, J.

1. This is an judgment suit brought by a purchaser from the mortgagees of the suit property against the defendant, who claims under an agreement for a lease executed by the mortgagors, after the date of the mortgage, but without the consent of the mortgagees. After the suit was brought, the defendant gave up possession of the suit property, but he contends that he is entitled to set off against the compensation claimed by the plaintiff a sum of Rs. 2,400 which he has deposited with his landlords, the mortgagors, under his tenancy agreement.

2. As regards the title to the property, we are dealing with leasehold land held, under a lease of April 19, 1920, for a term of fifteen years from January 1,1920. That lease included a cinema theatre and certain other lands. It is a portion of the other lands which is the subject of this suit, and I shall refer to that portion as the suit property. On June 29, 1920, the lessees assigned their interest to one Francisco Battistessa and others for the residue of the said term, Then, by a mortgage of March 3, 1921, Franoisoo Battistessa and others mortgaged the property to Rustomji Oawasji Mehta and his wife Aimal to secure in all Rs. 50,000 and interest. This mortgage, which is Exh. B, was in the English form and was by assignment. It, accordingly, contained an express assignment of the whole of the mortgaged premises to the mortgagees for the residue of the head term of fifteen years. It also gave an express power of sale to the mortgagees in certain events. There were also the usual covenants for title on the part of the mortgagors including a covenant for further assurance by the mortgagors 'and all other persons lawfully or equitably claiming any estate right or interest in or to the mortgaged premises or any part thereof'. It is agreed by counsel that there was no express power of leasing in the mortgage either to the mortgagors or to the mortgagees,

3. What subsequently happened is as follows. The mortgaged property was put up for sale by public auction, on April 23, 1924, by the mortgagees under this power to sell, and was purchased by the plaintiff for Rs. 78,000. On July 7, 1924, the mortgagees executed an assignment of the premises to the plaintiff which is Exh. C. Under that document, the plaintiff became the assignee of the head term of fifteen years. Nothing was said in that assignment as to its being subject to any tenancies. But, in paragraph 7 (c) of the Conditions of Sale (Exh. A), the Property was expressed to be sold 'subject to all existing tenancies and incidents of tenure and all easements and rights if any.' The agreement between the vendors and purchasers apparently was that the rents should be apportioned as at May 23, 1924, and that, accordingly, the plaintiff as purchaser should take the rents from that date. It appears that the vendors had to obtain the consent of the landlords to the assignment of the premises, and that that was the reason why the assignment was not executed till July 7, 1924, after the necessary consent was obtained.

4. Then, on July 10, 1924, the plaintiff's solicitors gave the important notice (Exhibit E) to the defendant which, after setting out the plaintiffs title, required the defendant to pay to the plaintiff the rent of the property in the defendant's occupation as from May 23, 1924. Then, after stating that the plaintiff had heard that some other person had given notice requiring payment of the rent, the notice concluded by stating :-

If you do not pay the rent to our client as from May 23, 1924, or pay the rent to ... any other person, you will do so at your own risk and our client will immediately file a suit for recovering the rent and for judgment)

5. Then followed certain other correspondence (Exhibit D), in the course of which the defendant took up the attitude that he would not attorn tenant to the plaintiff, unless the plaintiff was prepared to recognise the agreement which the mortgagors had entered Into with the defendant and would treat the defendant as a tenant thereunder. I refer in particular to the defendant's solicitors' letter of January 28, 1925.

6. What had taken place between the mortgagors and the defendant is alleged by him to have been as follows: That, on December 14, 1922, which was long after the mortgage to the plaintiff's predecessors in-title of March 3, 1921, (Exhibit B), the mortgagors had agreed to lease to the defendant the suit land for a period of twelve years from December 14, 3922, at a rent of Rs. 200 per month, and that thereunder the defendant was to deposit as rent in advance the sum of Rs. 2,400 which last to be deducted from the last year's rent, and that interest at six per cent, would be paid by the mortgagors on the same. Then, he pleads that in pursuance of that agreement there was a lease of December 21, 1922, executed by the mortgagors, but which, in fact, was never registered owing to want of a full description of the property. It will be seen that this sub-lease was for nearly the whole of the head term. It would expiry (sic) occupation. His only remedy is to sue in judgment and to treat the tenant of the mortgagor as a trespasser. That will be found in the notes to Section 18 in Wolstenholme's Conveyancing Acts, 10th Edn., at pp 77 to 78, which I referred counsel to yesterday. It is also clearly stated in Woodfall's Law of Landlord and Tenant, 16th Edn., p. 57, that, although the mortgagee may treat the tenants of the mortgagor as trespassers in the case of a lease made after the mortgage, he cannot distrain or sue for rent or for use and occupation unless a new tenancy has been created as between him and the tenants in possession by an attornment or otherwise. And, if one turns to Towerson v. Jackson [1891] 2 Q. B. 484 it will be seen that the Court of Appeal there held that in a case of this description, the mere fact of the tenant remaining in possession after notice to pay rent was not evidence of an agreement that he should become tenant to the mortgagees.

7. It will of course be seen that as between the mortgagor and his tenant the tenancy might be valid until the mortgagee chose to exercise his paramount rights. The tenant, for instance, might be bound by estoppel by reason of hia having executed the tenancy agreement and so be prevented from disputing his landlord's title until, at any rate, ejectment had been brought by a third party. But that is very far from holding that such an agreement would be good as against the mortgagee. In the present case, as I have already stated, the alleged agreement was for nearly the whole of the residue of the head term. Consequently, it would prevent the mortgagee from giving vacant possession, and this might prejudice his security.

8. Giving my best consideration to the case as presented to me, in my opinion, the mortgagors had no power to effect an agreement of lease of this character so as to be binding against the mortgagees. That being my judgment on the point of law, I have declined to allow the defendant to call evidence to prove this alleged agreement, or the payment of the Rs. 2,400 under that agreement to his landlord. The agreement is admitted to be unstamped, but I pass that by. The real point is that, in my judgment, even if the agreement was proved and the payment of the Rs. 2,400 was proved, yet neither of those facts could prevail against the mortgagees. In my judgment a tenant has no right as against the mortgagee to rent paid in advance in this way to a mortgagor, and if he does so, he does it at his own risk in the event of the mortgagee intervening.

9. Accordingly, I also pass by the further point as to whether in any event the agreement could now be relied on. Admittedly, the parties, or at any rate the mortgagors, executed a formal lease, and it is only the want of registration which prevents that lease being put in evidence. Whether under those circumstances the defendant could rely on the antecedent agreement for lease, and whether, after this lapse of time, he could obtain specific performance of that agreement, are points which I leave open. Possibly in that case the doctrine of part performance might come to his aid. But I need not go into that.

10. At one period of the case some reliance was placed on Clause 7(c) of the Conditions of Sale. In answer to requisitions 12 and 13 in the Requisitions on Title (Exh. I) which asked (No. 12) in whose possession the property was at present; and who were recovering the rents ; and in No. 13 the names and addresses of the tenants; and the rents payable by them; and whether they were monthly tenants-the answer given by the mortgagee vendors to No. 12 was:

The building and compound of the Venus Cinema is in possession of the vendors. They have no knowledge or information as to the remaining premises.

11. To requisition No. 13 they replied, 'the vendors are unable to answer this'.

12. It, however, appears from the oral evidence that the plaintiff personally was taken round the property and introduced to the individual tenants. According to his evidence, which I accept, he was introduced to the defendant, and he was never told at any time that the defendant claimed to be a tenant for twelve years until some time in November 1924, long after the date of assignment to the plaintiff. Nor was he told about the payment of the Rs. 2,400 in advance. In this connection it will be borne in mind that the Rs. 2,400 was not paid to his vendors, the mortgagees, bat to the mortgagors.

13. In my opinion this clause in the Conditions of Sale in no event would enable a vendor to foist on a purchaser a property which was in fact subject to a lease for twelve years. A clause in such general words as these is usually intended to apply to monthly or other short tenancies under which the purchasers can obtain possession on giving comparatively short notice. In any event this clause does not in my opinion, amount to a recognition of this alleged agreement of lease in favour of the defendant so as to be binding as between the plaintiff and the defendant, Then there is the further point that the actual conveyance, which usually takes the place of any contract between the parties, is completely silent as to the conveyance being subject to any tenancies or other incurnbrances. Though, therefore, the clause in the Conditions of Sale might possibly protect the vendors, if any claim was made against them by the purchasers, I think that, having regard to the assignment Itself, it cannot be successfully contended that the assignees took subject to and ratified an unregistered agreement for lease of which they were unaware and had no notice.

14. I, accordingly, hold, in the first place, that at the date of the plaint the plaintiff was lawful y entitled to eject the defendant. Next comes the question as to what rent or compensation the plaintiff can recover prior to the date on which the defendant actually gave up possession, viz., July 17, 1925. It follows that, in the view I take, this agreement for lease was bad as against the mortgagees, and, consecquently, the plaintiff could not sue for any rent thereunder, and that his only remedy was to bring an action for ejectment. But his title was not complete till July 7, 1924, and, accordingly, it is now conceded that he cannot claim any compensation prior to that date. He gave his notice, Exh. E, to the defendant on July 10,1924. The real point in dispute is whether he is entitled to compensation from July 7 or 10, 1924, or from the date of the writ, viz, June 22, 1925.

15. I have not been referred to any authority in India on the point, but the matter has been since discussed at length in the English Court of Appeal in recent years. One is the ease of Ocean Accident and Guarantee Corporation v. Ilford Gas Company [1905] 2 K.B. 493 and the other is Elliott v. Boynton [1924] 1 Ch. 236 The former case decides that after entry by a mortgagee of land his right of possession relates back to the time at which his legal right to enter accrued, so as to enable him to support an action against a wrong-doer for a trespass committed at a time antecedent to the entry. There at p 497 the Master of the Rolls says :-

They [the second mortgagees] pray in aid the well known proposition of law that in an action of trespass the right to sue, as against the wrong-doer, relates back after entry to the time at which the right to enter accrued, so as to give a rights of action for trespass intermediate in point of time between the date of the right to enter and that of the actual entry. They therefore claim a right to put in suit the damages occasioned by the trespass of the defendants, which ocourred after the right to enter arose and before action.

16. Then, after saying that the question was raised whether this right applied only when the person claiming it had the legal estate, Lord Collins refers to a judgment of the Court of Exchequer delivered by Baron Parke in Harriett v. Earl of Guildford (1855) 11 Exch. 19:-

We think, therefore, upon fall consideration of this important question, that the argument that there is a relation back from the time of actual entry to the time of the legal right to enter, must prevail,-a relation created by law for the purpose of preventing wrong from being dispunishable, upon the same principle on which the law has given it in other cases.

17. The Appeal Court eventually held that the mortgagees were entitled to stand in the position of the mortgagors, and that they were entitled to recover against the trespasser, It will be observed in that case that the defendants were wrong doers inasmuch as they had wrongfully stopped up a natural stream or watercourse upon their land which resulted in a flood and a nuisance causing injury to the lands and houses of the plaintiff'.

18. Elliott v. Boynton [1924] 1 Ch. 236 was a case on the other side of the line. That was brought by a landlord against his tenant for re-entry for breach of covenant. The Appeal Court there held, distinguishing the case I have last cited, that the tenant in question was not a trespasser, that he was in under a proper lease, and that, accordingly, the mesne profits were assessable from the date of the writ and not from the date of the breach of covenant giving right to the landlord's right to re-enter, The judgment of the present Master of the Rolls refers to two particular cases, and then says (p. 248):-

These two cases appear to me to establish that the judgment in an action of judgment-now an action for the recovery of land does not, per se, relate back to the date when the plaintiff's title was laid or arose, and particularly where the defendant-the lessee-was not originally a trespasser or wrongdoer, and some act was necessary to found the plaintiff's right of action. Until that step was taken, the plaintiff's cause of action was not complete.

19. Warrington L. J. cited also the judgment of Mr. Justice Coltman where he stated (p. 251):-

There are various authorities to show that a man shall not be made a trespasser by relation in respect of an act which was lawful at the time.

20. And the Lord Justice proceeds (p. 251):-

No authority has been cited which is inconsistent with this statement, and I do not believe any can be found. In my opinion, therefore, in the present case the doctrine of relation cannot be resorted to so as to antedate the wrongful possession of the defendant, and make it begin with the original breach of covenant.

21. It seems to me that here I have a case intermediate between these two authorities. The defendant is not a trespasser in the sense of his being some third party who, without the leave or license of anybody, and having no lawful or equitable title or interest in the land, holds adversely to the rightful owners. He has been granted a tenancy by the mortgagor who was lawfully in possession of the land. And, so long as the mortgagor was in that possession, the mortgagee under the ordinary law would not be able to recover from the mortgagor any back rents and profits. He would only be able to recover from him the interest under the mortgage up to the time when the mortgagee, if at all, took possession under the mortgage or called on the mortgagor to give up possession, On the other hand, as from the date of the assignment to the plaintiff and the notice, Exhibit E, the defendant, so far as the plaintiff was concerned, was a trespasser on the land, because his tenancy agreement was invalid as against the plaintiff', and yet he remained in possession and declined to attorn except on terms which he was not entitled to ask.

22. Accordingly, in my judgment, the plaintiff was entitled to bring a suit in judgment and to claim compensation from the date when his rightful title accrued and the notice, Exhibit El, was given, viz, July 10, 1924. The mere facts that the defendant chose to give up possession on July 17 of the following year, And that the notice to quit of April 27,1925, demanded possession by June 1, 1925, do not, in my opinion, prevent the plaintiff from recovering compensation for the past year.

23. Accordingly, in my judgment, the plaintiff is entitled to recover compensation from July 10, 1924, to July 17, 1925, when possession was actually given. Further, in my judgment, the defendant is not entitled to set off this sum of Rs. 2,400 which he alleges he paid to the mortgagors.

24. The case ended as it began with an application by the defend-ant in effect for delay. I was asked in any event to direct an inquiry before the Commissioner as to the amount of the compensation. There is no express point of that sort raised in the written statement. The defendant's contention there was that, though he was liable for the rent of Rs. 200 a month, he was entitled to set off the Rs. 2,400 and interest. Nothing express on the point was raised in the five issues. It is common ground that the rent which the defendant was paying was Rs. 200 a month.

25. In Halsbury, Vol X, p. 341, it is said:-

Where a trespass consists of a wrongful and unauthorised user of the plaintiffs land, the measure of damages is not the depreciation in the value of the plaintiff's land, or the amount required to repair the injury which has been suffered, but such reasonable payment in the nature of rent as would have been required for a license to make such use of the plaintiff's land during the period whilst it was so used.

26. On the facts of the present case I hold that Kb. 200 per month is the proper sum to fix as compensation, and that there is no adequate reason for occasioning any farther delay in the case by sending it to the Commissioner for further investigation.

27. My answers to the issues will accordingly be:-

(1) Condition 7(c) of the Conditions of Sale provided that the property was sold subject to all existing tenancies and all easements and rights, if any, but there was no such provision in the assignment of July 7, 1924, Exh. C. This provision in the Conditions of Sale did not bind the plaintiff to recognise the alleged agreement in favour of the defendant.

28. Answer to issue No. 2 is ' No.'

29. Answer to issue No. 3 will be: The plaintiff is entitled to compensation from July 10, 1924, to July 17, 1925, at the rate of Rs. 200 per month as mentioned in the judgment.

30. Answer to issue No. 4 is 'No.'

31. Answer to issue No. 5 is: See judgment.

32. There will accordingly be a decree for the plaintiff for Rs. 2,445-2-7 against the defendant and costs. Interest on judgment at six per cent.

33. Judge's Note. In correcting the shorthand notes I had occasion to look at the Transfer of Property Act. In my opinion counsel should have brought to my attention Section 50 which in effect protects rent paid bonafide under a defective title: Kaveriamma v. Lingappa : (1908)10BOMLR1190 But I have not thought it necessary to stop this judgment from being passed and entered, and to have a re-hearing, as 1 am satisfied that Section 50 does not protect the present defendant. The English authorities are clear that advance payments of rent are not protected if the tenanoy is created after the mortgage: see De Nicholls v. Saunders (1870) L.R. 5 C. P. 689 Ashburton (Lord) v. Nocton [1914] 2 Ch. 20. I agree with the note to Section 50 in Gour's Law of Transfer, 4th Edn., p. 487, that similar principles apply in India. Even if the expression 'rents or profits' in Section 50 can be held to include compensation as here.

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