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Sewak Ram and ors. Vs. Municipal Board - Court Judgment

LegalCrystal Citation
SubjectFamily
CourtAllahabad
Decided On
Reported inAIR1937All328
AppellantSewak Ram and ors.
RespondentMunicipal Board
Excerpt:
.....instance, when the covenant expressly states that the lease is to be renewed for ever, otherwise the agreement is satisfied and exhausted by a single renewal. even if the point relating to the perpetual renewal of the lease had been found in favour of the defendant, his defence would have failed on another ground......civil judge and he has returned his findings upon them. issue no. 8 was in these terms : 'are the plaintiffs entitled to recover any mesne profits? if so, to what extent?' the learned civil judge has held that the plaintiffs are entitled to mesne profits at the rate of rs. 598-7-0 a month, less a deduction of 10% for collection charges. he has found that the total mesne profits due to the plaintiffs from 1st april 1929 to 31st january 1930 (the date of the suit) amounts to rs. 5,385-15-0. both the plaintiffs and the defendants filed objections and it has been argued before us on behalf of the plaintiffs that a deduction of 10% should not have been made for collection charges. there is authority of this court and of their lordships of the privy council that no deduction should be made.....
Judgment:

1. This is a plaintiffs' first appeal arising out of a suit to eject the defendant, the Municipal Board of Meerut, from a market styled 'Qaiserganj market' and to recover a sum of Rs. 6,091, on account of mesne profits together with profits and interest. The facts which have given rise to this suit can briefly be stated as follows : On 12th March 1887, one Pt. Ganga Ram, a brother of the plaintiff's father, granted a lease to the Municipal Board of Meerut, for a period of 21 years in respect of the properties specified in the plaint. Under the terms of the lease, the lessee was allowed 20% on gross-rental realized by him. The lease further had a covenant for its renewal for a further period of 21 years. On 23rd September 1895, Pt. Ganga Ram died and one Mt. Sundar Kunwar, his widow succeeded to his estate as a Hindu female. On 16th May 1908, Mt. Sundar Kunwar executed a fresh lease under the terms of which the lessee was to get 25% of the gross-rental instead of 20%. This lease also contained a covenent for its renewal for a further term of 21 years. In 1912 Mt. Sundar Kunwar died. The plaintiff is one of the rever. sion'ers of Ganga Ram and under a partition-decree in a suit for partition between him and other reversioners of Ganga Ram he got 3/10th share in the estate of Ganga Ram and further became the owner of 1/15th share more by purchase. The period of the lease executed by Mt. Sundar Kun. war on 15th May 1908 terminated on 31st March 1929.

2. The plaintiff alleges that the defendant was anxious to obtain a renewal of the lease created by Mt. Sundar Kunwar, but he did not agree to the terms. He gave a notice to the defendant, the Municipal Board of Meerut, to give up possession over the premises leased; but the defendant failed to comply with his demand. The plaintiff, therefore, instituted a suit against the defendant for ejectment and for mesne profits. He alleged that the defendant had no right to claim the renewal of the lease and that further the covenant for renewal of the lease by Mt. Sunder Kunwar, who was in possession of the estate of Ganga Ram as a Hindu widow, was not binding upon the reversioners. The claim was resisted by the defendant on various grounds. It was pleaded that the plaintiff was, not entitled to eject the defendant. It was also asserted that the plaintiff and other reversioners not having raised any objection to the renewal of the lease by Mt. Sunder Kunwar, in 1908, were estopped from objecting to the terms of the lease. Defendants' case was that the covenant in the lease created by Mt. Sundar Kunwar, entitling the defendant to renew the lease for another term of 21 years, was binding on the plaintiff and other reversioners of Ganga Earn. The correctness of the amount claimed by the plaintiff as damages was also challenged.

3. The learned Subordinate Judge, who tried the case came to the conclusion that under the terms of the lease, which Ganga Ram had executed, the defendants were entitled to claim a right of a renewal perpetually and therefore the plaintiff could not eject them. The plea of estoppel raised by the defendants was not accepted by the Court below. The amount of mesne profits was left undetermined. The defendant had also asserted that they had acquired a permanent right and were entitled to get a renewal of the lease according to the terms of the lease created in 1887 and 1908. The suit of the plaintiff was dismissed on the ground that the defendants, under the terms of the lease executed by Ganga Ram, could always claim a right to the renewal of the lease whenever the period of lease expired. The plaintiff has come up in appeal to this Court, against the decision of the learned Subordinate Judge. The lease executed by Ganga Ram, on 12th March 1887, is printed at pp. 49, 50 and 51. The decision of the case before us depends to a very great extent on the interpretation of the terms of this lease. A perusal of it shows that the lease was created for a period of 21 years commencing from the date of its registration. The lessee was to realize the rent of the said premises and to pay the same up six monthly to the lessor, Pt. Ganga Ram, after a deduction of 20 per cent. The important covenant over which the parties are at variance before us is contained in Clause 8 of the lease which runs as follows:

That the said Municipal Board shall be entitled on the expiration of the term of this agreement to renew it on the same conditions for 21 years or for such further period as the said Board may deem expedient, not being more than 21 years.

4. After a consideration of the terms of this lease, we find it impossible to accept the contention raised on behalf of' the defendant that under its terms, the defendant is entitled to go on getting fresh leases on the expiry of each term of 21 years. In our opinion, there is nothing in the terms of the deed which would warrant us in accepting the contention raised on behalf of the defendant. Although the term of the lease shows that after the expiry of the first period of 21 years, the defendant is given the right 'if he so chooses' to get a lease for a further term of 21 years or for a lesser period, it however cannot be said that after the expiry of second period, it will still be open to the defendant to go on claiming the renewal of the lease whenever the term of 21 years expired. The learned Subordinate Judge, in one portion of the judgment, came to a correct conclusion when he said that:

The lease itself also is not so framed as to signify that the Board will have a permanent interest.

5. Having come to this conclusion, the learned Subordinate Judge goes on to say in his judgment:

When it is considered in the light of circumstances under which it was granted and was intended for a bonded-warehouse which necessarily implied erection of structures of a more or less substantial character it is only appropriate and in perfect harmony with the avowed object of grant to hold that the covenant for renewal runs with the land. The intention of the parties clearly was for perpetual renewal, and on the same understanding the Board undertook to lay expenditure and make improvements.

6. In our judgment, the learned Subordinate Judge, clearly went wrong in taking into consideration the circumstances under which the lease was granted. When the terms of an agreement are reduced to writing, then the rights of the parties are governed by the terms agreed upon and the Court is not entitled to look into the circum-, stances under which the lease was created. Nor is the Court justified in going into the history of the negotiations which led to the formation of a completed contract between the parties. In order to decide the rights of the parties, the Court has to look only to the terms agreed upon and not to the previous negotiations which resulted in the formation of a completed contract. As regards the expression used by the learned Subordinate Judge, 'That the covenant for renewal runs with the land', it is not easy to understand what he means. Section 111, T.P. Act, enacts that the lease of immoveable property determines by efflux of the time limited thereby. A lease for a definite period expires on the last day of the term and the lessor or person entitled to reversion may enter without notice or other formality. There, however, may be cases in which leases may contain a covenant to grant a re-newal of the lease at the end of the term. In a case of that type the covenant for renewal confers an immediate right to a further term. We see that under the terms of the lease executed by Ganga Ram, in 1887, there was a renewal clause entitling the lessee to renew the lease, after the expiry of the period of 21 years, for a further period of 21 years. After the expiry of the period of 21 years from the date of the lease, the defendant could have compelled Ganga Ram and his heirs to grant a lease for a further term of 21 years. The defendant in the case before as however urges that under the terms of the lease executed by Ganga Ram, he (the defendant) has a perpetual right to the renewal of the lease on the expiry of each period. In our opinion this contention is not correct. Woodfall, in his Law of Landlord and Tenant, Edn. 21, at p. 467, observes that the leaning of the Courts is against perpetual renewals and that therefore in order to establish this construction, the intention must be unequivo-cally expressed. The leading case on the point is Swinburn v. Milburn (1885) 9 A.C. 844 Mulla, in his Transfer of Property Act, at p. 586, remarks:

The chief difficulty about a covenant for renewal is to distinguish a covenant for one renewal from a covenant for perpetual renewal. This is a matter of construction of the covenant and the leaning of the Courts always has been against perpetual renewal, and unless the intention is clearly shown, the agreement is exhausted by one renewal.

7. In Secy. of State v. A.H. Forbes (1912) 16 C.L.J. 217 the following opinion was expressed on the point in issue:

Similarly, Earl of Selborne, observed in Swinburn v. Milburn (1885) 9 A.C. 844 that though there is no sort of legal presumption against a perpetual renewal, yet the authorities certainly do impose upon anyone claiming such a right the burden of strict proof and are strongly against inferring it from any equivocal expressions which may fairly be capable of being otherwise interpreted. The substance of the matter therefore is that the covenant will not be construed as a covenant for perpetual renewal unless intention on that behalf is clearly shown, for instance, when the covenant expressly states that the lease is to be renewed for ever, otherwise the agreement is satisfied and exhausted by a single renewal....

8. As we have already mentioned, in our opinion, there is nothing in the terms of the lease granted by Ganga Ram from which it could be gathered that the parties were agreeing to a perpetual renewal of the lease. The interpretation which we place on the lease executed by Ganga Ram is that under its terms, the Municipal Board of Meerut was entitled to one renewal and after that the defendants' rights were exhausted. The next question for consideration is whether under the terms of the lease executed by the widow of Ganga Ram in defendants favour, the defendant got a right to renew that lease for a further period of 21 years. If the widow had been the full owner of the estate, then certainly the defendant would have been entitled, under the terms of the lease granted by the widow, to a further renewal for a period of 21 years. Mt. Sundar however was holding the estate as a Hindu female and could not make an agreement which would bind the estate beyond her lifetime. In England, the law is that a covenant, for perpetual renevral, entered into by a person having a limited interest in lands does not bind the estate : see Woodfall's Law on Landlord and Tenant, p. 466. The position of a person claiming under a lease executed by a widow is much weaker. She has, as has already been pointed by us, no power to enter into a contract which would be binding on the estate after her death.

9. The result is that we hold that the defendant has no right to claim perpetual, renewal of the lease which was granted to the defendant by Ganga Ram. Even if the point relating to the perpetual renewal of the lease had been found in favour of the defendant, his defence would have failed on another ground. On the expiry of the lease, the defendant could sue the plaintiff for the specific performance of the contract as regards the renewal of the lease. He however is incompetent to resist the claim of the plaintiff for his ejectment after the expiry of the lease in view of the provisions of Section 53-A, T.P. Act. The defendant was aware of this difficulty and that is why we find that in para. 23 of his written statement the following statements were made by him:

On the refusal of the plaintiff and Chandi Shankar, the Municipal Board of Meerut was about to bring a suit for the specific performance of contract relating to the renewal of the lease against all the co-sharers, but the plaintiff as a precautionary measure gave a notice and brought this suit for ejectment from the shops in question mentioned in the plaint against the Municipal Board, Meerut.

10. At the time of argument, learned Counsel for the appellant was not in a position to state as to whether or not any suit for specific performance had been instituted by the Municipal Board. We therefore granted him time to make inquiries on this point from his client. Learned Counsel informed us that he had written to his client but that he had received no reply. Learned Counsel for the plaintiff. appellant, after taking instructions from his client, made a definite statement before us that no such suit had been instituted by the Municipal Board of Meerut. In the above circumstances, we are justified in coming to the conclusion that no such suit had been instituted by the Municipal Board of Meerut. It must therefore be held that the defendant cannot resist the claim of the plaintiff for his ejectment. The ruling in Pir Bux v. Mahomed Tahar is dead against defendant. Their Lordships of the Privy Council made the following observations in that case:

As the law of India stood at the date of this case, it is in their Lordships' opinion no relevant defence to an action by a land-owner for ejectment to plead that the plaintiff has agreed to sell to the defendant the land of which the plaintiff seeks to obtain possession.... The defendant's proper course in the present case, as Lord Kussell of Killowen points out at p. 101 in Ariff v. Jadunath Majumdar would have been to have founded on the agreement of sale and to have applied for a stay of the proceedings in order to enable him to compel the plaintiff to execute an instrument in his favour, which he could have duly registered. The remedy-thus available to the defendant would not have depended on any recognition of the sale as is itself a defence to the action of ejectment, but rather on the principle that the Court will not grant a decree of ejectment which can at once be rendered ineffective by the same Court being required to grant a decree of specific performance resulting in reinstatement. But the defendant did not ask for a stay, and did not raise any action for specific performance.

11. This is a clear authority for holding that a claim for ejectment cannot be resisted after the expiry of the lease and that the only remedy which the defendant had was to have sued the plaintiff for the specific performance of the contract under which he asserted that he had the right to a renewal of the lease. Owing to our findings on both the abovementioned1 questions, it is clear that the plaintiff was entitled to a decree. The plaintiff had claimed mesne profits and interest. In respect of these points, the learned Subordinate Judge, has given no finding. It is, therefore, necessary to remand the case before a decree can be passed in favour of the plaintiff. For the reasons given above we remand the case to the Court below with direction that it should give its finding on Issues Nos. 8, 9 and 10. The parties will not be permitted to produce any further evidence and the Court below should submit its finding to this Court within a period of three months. After the receipts of this finding, 10 days' time will b(c) allowed to the parties to file objections against this finding, if they so desire.

(After receiving the finding the following: judgment was delivered):

12. This appeal was heard1 by this Bench in January of this year andl on the 16th of January judgment was delivered and the only questions left over were matters relating to mesne profits. This present judgment is in continuation of the judgment delivered by us on 16th January 1936. We remanded the case to the Court below with directions that it should give its findings on Issues Nos. 8, 9 and 10 which had not been considered during the original trial. These issues have now been considered by the learned civil Judge and he has returned his findings upon them. Issue No. 8 was in these terms : 'Are the plaintiffs entitled to recover any mesne profits? If so, to what extent?' The learned civil Judge has held that the plaintiffs are entitled to mesne profits at the rate of Rs. 598-7-0 a month, less a deduction of 10% for collection charges. He has found that the total mesne profits due to the plaintiffs from 1st April 1929 to 31st January 1930 (the date of the suit) amounts to Rs. 5,385-15-0. Both the plaintiffs and the defendants filed objections and it has been argued before us on behalf of the plaintiffs that a deduction of 10% should not have been made for collection charges. There is authority of this Court and of their Lordships of the Privy Council that no deduction should be made for collection charges where there has been a gross and contemptuous trespass, but such is not the case here. The defendants held over after the expiry of the lease under the mistaken impression that they were entitled to a renewal of such lease. In the circumstances we think that they are entitled to deduct a sum for collection charges and we agree with the learned Civil Judge that a deduction of 10% is a reasonable one. The defendant, the Municipal Board, claimed that the deduction for collection charges should be on a mora generous scale, viz. 25%. In our view such a percentage is far too great. The property in dispute was business property, not zamindari, and a deduction of 25% for collection is wholly 1 unreasonable. In our view no case has been made out by either party for disturbing the finding of the learned civil Judge upon this issue, viz. that the plaintiffs are entitled to Rs. 5,385-15-0 as mesne profits up to the date of suit. It was unnecessary to decide Issue No. 9 as the point involved was whether any mesne profits were due. It is not suggested that there was any rent due from the defendants to the plaintiffs. Issue No. 10 was as follows:

'Are the plaintiffs entitled to get any interest? If so, to what extent?' The learned Civil Judge held that the plaintiffs were entitled to get interest at the rate of annas 8% per mensem, that is 6% per annum. The learned Civil Judge was of opinion that the plaintiffs should be given interest upon the amount found due as mesne profits and with this view we agree. The plaintiffs had been kept out of this money for a considerable time by the conduct of the defendants and in those circumstances it is only fair and proper that the defendants should pay a reasonable rate of interest upon the sum awarded. The learned Civil Judge, however, held that interest should not be payable on Rs. 2,963-13-0, part of the mesne profits awarded, by reason of the fact that a cheque for this sum had been tendered by the defendants to the plaintiffs on 31st March 1930 and that it had been improperly refused by the plaintiffs. In our judgment the plaintiffs were entitled to refuse to take this cheque because it is clear that it was offered to them in discharge of all sums due. The finding of the learned Civil Judge as to the amount of mesne profits makes it abundantly clear that a cheque for Rs. 2,963.13-0 fell far short of discharging the amount due. The cheque was accompanied by a receipt form which is printed at p. 179 of the paper book. This, in our view, makes it clear that it was not a tender of an amount which the plaintiffs could have accepted in part satisfaction of his claim, but on the other hand it was a tender of an amount which the plaintiffs could accept in full discharge or not at all. In our view the plaintiffs were entitled to refuse this cheque and that being so, there is no ground for the learned Civil Judge's finding' that interest should not run on this sum.

13. In the result therefore we hold that the plaintiffs are entitled to mesne profits amounting to Rs. 5,385-15-0 up to the date of suit together with a sum of Rs. 107 as interest up to the date of suit. The plaintiffs are also entitled to pendente lite and future interest at the rate of 6% per annum. The plaintiffs for the reasons which we have given in the previous judgment are entitled to possession of the property and mesne profits as stated in this latter judgment. The appeal therefore is allowed and the decree of the lower Court set aside and the plaintiffs' suit decreed as indicated above. The plaintiff-appellants must have their costs of this appeal and of the proceedings in the Court below.


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