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Caltex (India) Ltd. Vs. Kejriwal and Sons and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal No. 2999 of 1971
Judge
Reported inAIR1973All275
ActsTransfer of Property Act, 1882 - Sections 111
AppellantCaltex (India) Ltd.
RespondentKejriwal and Sons and ors.
Appellant AdvocateRaja Ram Agarwal, Adv.
Respondent AdvocateRajeshwari Prasad and ;T.P. Singh, Advs.
DispositionAppeal allowed
Excerpt:
.....act, 1882 - non payment for sixty days or more or breach of a covenant whether amounted to automatic termination of lease - held, nothing in lease deed to show that lessor could enter in possession without giving a notice and a chance to lessee to make good the violation of terms of the lease. - - therefore, in my view, the clause 'whether legally demanded or not' does not show that the clause requiring a notice to the lessee from the lessor terminating the lease in case the omission on the part of the lessee was not made good ordinarily within ninety days or during the period specified in the notice, will not be applicable where the lessee omits or fails to pay any rent within sixty days after the same became due to the lessor. there is nothing in the lease-deed to show..........(whether legally demanded or not)' the courts below have held that the clause requiring a ninety days' notice or where it is prejudicial to wait for that period, a notice for a lesser period before the lease could be determined was necessary only in respect of any omission to perform or observe any covenant or condition on the part of the lessee as contained in the lease deed, and not to the clause terminating the tenancy when the rent fell in arrears for more than sixty days and the lessor entered into possession of the property.9. after carefully considering the relevant portions of the lease-deed as quoted above and hearing the learned counsel for the parties, i find myself unable to agree with the courts below and in my view the clause 'and shall continue for ninety days after.....
Judgment:

S. Malik, J.

1. This is a plaintiff's appeal against the judgment dated 7-12-1971 of the 2nd Additional Civil Judge, Varanasi, dismissing the plaintiff's appeal and confirming the judgment and decree of the trial court dismissing the plaintiff's suit with costs.

2. The relevant facts are that defendant-respondent No. 2 Eishwa Nath Kejriwal executed the lease (Ex. 1) in favour of the plaintiff, Caltex (India) Ltd., in respect of Plot No. 101/2 situate in village Shujavad, Pargana Ralhupur, Tehsil Chandauli, District Varanasi and buildings standing thereon for a period of ten years on a monthly rent of Rs. 220/- with an option to have the lease renewed for a further period of ten years for setting up a service station to deal in petrol, diesel and petroleum products manufactured by the plaintiff-company. The plaintiff spent money on the land and installed petrol and diesel pumps etc. The plaintiff subsequently on 15-5-1965 entered into an agreement with the partnership firm Kejriwal and Sons, of which the partners were defendant No. 2 Bishwa Nath Kejriwal and his two sons, defendants Nos. 3 and 4, Krishna Kumar Kejriwal and Mohan Lal Kejriwal. Under this agreement the firm defendant No. 1 of defendants Nos. 2 to 4 was given a licence by the plaintiff to carry on business on the premises leased out to the plaintiff by defendant No. 1. The licenses under the agreement was to use the service station set up by the plaintiff and deal in petrol, diesel and petroleum products marketed by the plaintiff and pay Rs. 378/- per month. Under the terms of the licence the defendant-firm could not deal in products of any company other than the plaintiff. The plaintiff received from defendant No. 2, the landlord, the notice dated 14-3-1970 stating that the plaintiff had not paid rent from December, 1969, to February, 1970 and, therefore, under the terms of the lease, the leasehad come to an end by forfeiture and defendant No. 2 had entered into possession of the demised premises on the 10th of March, 1970. The plaintiff thereupon wrote back stating that cheques were duty sent each month as usual and as they do not appear to have reached defendant-respondent No. 2, they were enclosing a cheque for Rs. 660/-to clear off the arrears. Defendant-respondent No. 2 accepted payment for the months of December, January and February but refused to accept the rent for March, 1970.

3. The plaintiff brought the suit in the year 1970 for a permanent injunction restraining the defendants from interfering with the plaintiff's possession over the property in suit comprising the land, buildings, petrol pumps etc., from removing the petrol pumps and other fixtures and fittings existing on the land and from carrying on any other business or dealing in petroleum products of any other Company on the premises in suit on the allegation that the defendants were threatening to deal in products of other Oil Companies on the premises and to disturb the possession of the plaintiff over the same though under the terms of licence the defendants could not deal in the products of any other Company. It was further pleaded that the lease was still subsisting.

4. The defendants contested the suit and the pleas taken by them relevant for the purposes of this appeal were that in view of the terms of the lease, the lease had come to an end by forfeiture when rent payable to defendant No. 2 by the plaintiff fell in arrears by more than 60 days and after the lease came to an end, the licence automatically stood cancelled. It was also pleaded that defendant No. 2 had already taken possession of the premises and the plaintiff was not entitled to the relief claimed. It may be mentioned here that after the plaintiff filed the suit, the respondents by serving a notice on the plaintiff in accordance with the terms of the licence purported to terminate the licence.

5. It may also be mentioned that the lower court has found that the constructions standing on the land leased out to the plaintiff were made in the year 1955 and therefore though the property is situate within two miles of the Nagar Mahapalika limits of Varanasi, U. P. Act No. III of 1947 will not apply to this case as the constructions in question were not made before 1951.

6. The questions agitated in this Court by the learned counsel for the parties were:--

1. Whether the terms of the lease deed (Ex. 1) show that the lease was subsisting on the date of the suit and

2. Even though it be held that the lease had come to an end by forfeiture under the terms of the lease, whether the plaintiff is entitled to the injunction prayed for on the findings of fact arrived at by the court below?

In this case in order to determine whether the lease came to an end, the terms enumerated in Ex. 1 have to be considered because U. P. Act No. III of 1947 is not applicable to this case and the provisions of Section 106 of the Transfer of Property Act are also not relevant because, admittedly, no notice was given under Section 105 of the Transfer of Property Act. It may be repeated that the case of the respondents is that the lease automatically came to an end by forfeiture when the rent payable by the plaintiff to defendant No. 2 fell in arrears by more than 60 days and defendant No. 2 entered into possession of the property under the terms of the lease entered into between the plaintiff and defendant No. 2. The relevant portion of the lease deed relied upon by both the parties is as follows:--

'If the rent shall be sixty (60) days in arrears (whether legally demanded or not) or if the lessee shall omit to perform or observe any covenant or condition on the part of the lessee herein contained and shall continue for ninety days after notice thereof to the lessee, or where it is prejudicial to wait for that period before taking action, continue for more than the time specified in the notice the lessor may re-enter forthwith upon the demised premises or upon part thereof in the name of the whole and the tenancy shall thereupon determine.....'

It is not in dispute that it was a month to month tenancy and the lessor had not received any rent from the lessee for the months of December, 1969 and January and February, 1970. From the words 'whether legally demanded or not' it is apparent that it was the duty of the lessee to pay the rent which may become due before the expiry of sixty days from the date it became due in respect of any month whether the lessor demanded the same or not. Upto this stage there is no controversy. The question to be determined is whether the lease automatically came to an end by forfeiture when the rent for the month of December, 1969 remained unpaid or in other words, remained in arrears for a period of more than sixty days.

7. From the relevant portion of the lease deed quoted above it is clear that it is nowhere provided that if the rent is in arrears for a period of sixty days the lease would ipso facto be deemed to have terminated. The document provides that on the lessor's entering into possession of the demised premises that 'the tenancy shall thereupon determine.' The portion quoted has to be read as a whole and it is clear therefrom that the lessor had to wait for ninety days or in special circumstances for the lesser period before taking action.

8. According to the appellant, the clause 'and shall continue for ninety days after notice thereof to the lessee, or where it is prejudicial to wait for that period before taking action, continue for more than the time specified in the notice also governs theclause 'if the rent shall be sixty (60) days in arrears (whether legally demanded or not)' The Courts below have held that the clause requiring a ninety days' notice or where it is prejudicial to wait for that period, a notice for a lesser period before the lease could be determined was necessary only in respect of any omission to perform or observe any covenant or condition on the part of the lessee as contained in the lease deed, and not to the clause terminating the tenancy when the rent fell in arrears for more than sixty days and the lessor entered into possession of the property.

9. After carefully considering the relevant portions of the lease-deed as quoted above and hearing the learned counsel for the parties, I find myself unable to agree with the courts below and in my view the clause 'and shall continue for ninety days after notice thereof to the lessee, or where it is prejudicial to wait for that period before taking action, continue for more than the time specified in the notice' would also govern the clause 'if the rent shall be sixty days in arrears (whether legally demanded or not)'. To my mind, unnecessary importance was attached to the clause 'whether legally demanded or not' by the courts below in deciding this question. The clause 'whether legally demanded or not' merely shows that it will be the duty, as generally is, of the lessee to pay the rent regularly to the lessor and that it will not be open to the lessee to take the plea that as the rent had not been legally demanded by the lessor, the lessee should not be made to suffer for non-payment of the rent for sixty days or more, as in the instant case though according to the lessee, the rent was sent as usual regularly through crossed-cheques in each month but the same did not reach the lessor. In view of the clause 'whether legally demanded or not,' it would not be open to the lessee to say that as he had done his part of the agreement and he had not been informed that the cheques had not reached, it could not be said that he was at fault. Therefore, in my view, the clause 'whether legally demanded or not' does not show that the clause requiring a notice to the lessee from the lessor terminating the lease in case the omission on the part of the lessee was not made good ordinarily within ninety days or during the period specified in the notice, will not be applicable where the lessee omits or fails to pay any rent within sixty days after the same became due to the lessor. The clause 'and shall continue for ninety days ..... time specified in the notice .....'would apply not only when the rent falls in arrears by sixty days but also when the lessee omits to perform or observe any covenant or condition the lessee was required to do under the terms of the lease. The view taken by me is further confirmed by the words which follow the clause requiring a notice to be served on the lessee. It may be pointed out that 'the lessor may re-enterforthwith upon the demised premises or upon part thereof in the name of the whole and the tenancy shall thereupon determine 'only after the period specified in the notice whether it be ninety days or less has expired. This is apparent from the portion quoted below:--

'and shall continue for ninety days after notice thereof to the lessee, or where it is prejudicial to wait for that period before taking action, continue for more than the time specified in the notice the lessor may re-enter forthwith upon the demised premises.....'

The right of the lessor to re-enter upon the demised premises clearly can be exercised after the period specified in the notice has expired and the lessee fails to make good the violation of the terms of the lease either by not paying rent for sixty days or more or by omitting to perform or observe any cove-nant or condition enumerated in the lease. There is nothing in the lease-deed to show that the lessor could have entered upon pos-session of the property without giving a notice and a chance to the lessee to make good the violation of the terms of the lease.

10. In interpreting a forfeiture clause one has to remember that equity leans against forfeiture. Moreover, the above interpretation, it may be pointed out, is in keeping with the various provisions of law. Section 111(g) of the Transfer of Property Act lays down:--

'A lease of immovable property determines- (p) by forfeiture; that is to say, (i) in case the lessee breaks an express condition which provides that, on breach thereof, the lesssor may re-enter ..... and in any ofthese cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.'

It is apparent from what has been quoted that even though it be assumed that defendant No. 2 was entitled to re-enter upon the demised premises after the rent fell in arrears by sixty days, the lease could not be determined by forfeiture till defendant No. 2 gave a notice in writing to the plaintiff of his intention to determine the lease. It is apparent that in accordance with this provision, the clause in question was added in Ex. requiring the lessor to give a notice to the lessee to pay up the rent within ninety days or within a lessor period mentioned in the notice and in case of breach thereof or in other words if the rent continued to be in arrears beyond the period mentioned in the notice, only then the lessor could have entered into possession of the property thereby determining the lease. Similarly, a perusal of Section 114 of the Transfer of Property Act will show that where the lessee continues to be in possession of the immovable property leased and the lessor has to file a suit to eject the lessee, the lessee has been given a right to pay the arrears of rent together with interest and full costs of the suitat the hearing of the suit and thereupon the court would relieve the lessee against forfeiture and the lessee would continue to hold the property as if there had been no forfeiture. It may be mentioned in this connection that the lower appellate court was wrong in holding that a lessor has a right to use force to take possession of the leased property by ejecting the lessee after the lease has been determined. The owner of a property has no right to use force even against a trespasser found to be in possession of the property of the real owner, though the owner has a right to use force to prevent his dispossession from his own property.

11. It has also to be borne in mind that the lessor-defendant No. 2 along with his two sons, defendants Nos. 3 and 4 formed the partnership firm, defendant No. 1 and were in possession as licensees of the plaintiff and one of them (defendant No. 2) could not claim to have altered the nature of his possession without due process of law and even the notice purporting to terminate the licence was not given to the plaintiff till after the present suit was filed.

12. In view of the reasons discussed, I find that the lease had not been determined as no notice as required under the terms of the lease calling upon the plaintiff to deposit the arrears within a time fixed by the lessor had been served before defendant No. 2 claimed to have entered into possession of the property and the plaintiff continued to be a lessee under the terms of the lease when he filed the suit.

13. It was conceded on behalf of the respondents that if it is found that the lease did not come fo an end, the plaintiff is entitled to the relief claimed.

14. Before parting with this judgment it may be mentioned that while the appeal was pending in this Court, an application was moved on behalf of the plaintiff-applicant (Civil Misc. Application No. 14657 of 1972) praying that it may be permitted to amend the plaint and add therein a new paragraph 20 (a) to enable the appellant to urge in this Court that even though the constructions on the land leased out to the plaintiff were made in the year 1955, ejectment of the plaintiff from the premises in suit would be governed by the provisions of U. P. Urban Buildings (Regulations of Letting, Rent and Eviction) Act, 1972 (U. P. Act XIII of 1972) in view of Section 20 of the said Act. According to the appellant, even if it be held by this Court that the lease had come to an end, the appellant continued to be in possession of the property and could not be ejected. On behalf of the plaintiff it was urged that as the plaintiff cannot be ejected legally from the premises in suit and the plaintiff in fact continues to be in possession of the property in suit, the plaintiff is entitled to the permanent injunction claimed by it. In view of the findings arrived at by me. I see no reason to allow this application and accordingly reject it.

15. I therefore, allow this appeal with costs throughout, set aside the judgment and decree passed by the lower court and decree the plaintiff's suit for permanent injunction restraining the defendants-respondents from interfering with the plaintiff's possession over the property in suit and also restraining them from removing any of the fittings or fixtures from the premises in suit and from carrying on any business on the premises in suit other than dealing in petroleum products and dicsel manufactured or marketed by any Company other than the plaintiff.


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