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British India Corporation Ltd. Vs. Secretary of State - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtAllahabad
Decided On
Reported inAIR1945All425
AppellantBritish India Corporation Ltd.
RespondentSecretary of State
Excerpt:
.....preferred an appeal to this court. this also means that the title, which has been conveyed by the lessor to the lessee, is a good title and that there is no infirmity in it. if this is so, we fail to see how the plaintiffs are entitled to any benefit under clause (c) of section 108. dr. charles bickerstaff (1669) vaughan 118 that 'the express covenant, like the implied covenant, protects the lessee only against lawful disturbance of strangers,'and then summarises the 'inconveniences if the law should be otherwise':1. a man's covenant without necessary words to make it such, is strained, to be unreasonable, and therefore improbable to be so intended; 180. that was a particularly strong case and there were hardly any equities in favour of the lessor. by a lease, dated 25th march 1898,..........mrs. purcell had no proprietary right in the land and nothing had been done by the secretary of state to entitle the plaintiffs to any relief against him. he came to a distinct finding thatthe land continued to be government property-and that it was never transferred by the secretary of state to mrs. purcell or anybody else, so far as proprietary rights were concerned.in his opinion the transfers by mrs. purcell and her successors only amounted to transfers of the materials of the house and these transfers were from time to time recognised by government and the transferees admitted as mere tenants-at-will. the plaintiffs have come before us in first appeal. the parties went to trial in the court below-indeed, at all stages of this protracted litigation-on the basis of section 108,.....
Judgment:

Sinha, J.

1. This is a plaintiffs' appeal and arises out of a suit for damages for breach of a covenant for quiet enjoyment in a lease obtained by them from the defendant-respondent on 2nd March 1920. This case has had a chequered career and its history may be given in a few words. The land in dispute consists of 6 1/4 bighas in Kathgodam in the District of Naini Tal. On 22nd October 1885, one Mrs. Purcell sold a house and the compound to the Bishop of Patna. On 30th March 1892,' the Bishop sold the rights to one Lalta Prasad for a sum of Rs. 3500. Lalta Prasad, in his turn, granted a simple mortgage of this property, along with various items of other property, on 15th May 1909, to a joint Hindu family of which Raja Moti Chand was the karta. This mortgage was for a sum of Rs. 32,914 odd. In 1919, the Raja brought a suit on the basis of his mortgage in the Court of the Subordinate Judge at Aligarh, in whose jurisdiction lay a considerable portion of the property covered by the mortgage. This suit was brought against Lalta Prasad and his two sons and resulted in a simple money decree on 15th April 1915. The mortgagees were not satisfied with the simple money decree only and preferred an appeal to this Court. During the pendency of the appeal, on 20th June 1917, Lalta Prasad and his sons sold their rights to a man named Moti Singh. The High Court modified the decree of the learned Subordinate Judge and on 14th December 1917 passed a decree for sale, On 7th February 1919, Moti Singh sold the house and the compound to Mr. Fonseca, the President of the Naini Tal Motor Transport Co. The covenant in the sale was in these terms:

This indenture further certifies that the property hereby sold and conveyed to the said vendee is absolutely free from all liens, mortgages and charges save and except the usual Government rates, revenue and taxes for which the said property is or may hereafter be liable.

2. On 2nd March 1920, the Motor Transport Co. obtained the lease, which is now under consideration, from the Secretary of State. The company went into liquidation and the Official Liquidator sold its rights to the British India Corporation, the plaintiffs-appellants before us. This sale was made on 26th July 1921. During the years 1921 to 1925, the British India Corporation made constructions on the land at a cost of about a lac of rupees. In execution of his decree Raja Moti Chand and the other members of his family purchased the mortgaged property on 24th November 1925. They obtained the sale certificate on 29th May 1926, and an order for possession was passed on 18th December 1926. Thereafter Suit No. 1 of 1927 was brought by the British India Corporation for a declaration that they were the proprietors of the property, viz., garages, workshop and' residential quarters of the Motor Transport Company. The trial Court passed a decree in their favour conditional on payment by them to the defendant, within two months, of Rs. 8000 and proportionate costs. Raja Moti Chand came in appeal and this Court passed a decree declaring the proprietary right of the British India Corporation over (1) the property mentioned in Schedule A (excluding therefrom the land marked blue in the amin's map and the residential bungalow) and (2) the end room adjoining the main building, the office and the kitchen which were built after 1919. It was also declared that the properties which were secured to the plaintiffs by the decree were not subject to the mortgage and sale in favour of Raja Moti Chand. The order of the Subordinate Judge and Deputy Commissioner, Naini Tal, so far as it affected the properties decreed to the plaintiffs, was set aside. Thereafter the British India Corporation sent a notice to the defendant-respondent on 21st July 1932, and a reminder on 8th October 1932. No reply was received. On 22nd October 1932, an application on behalf of the Corporation was made to the Deputy Commissioner of Naini Tal with a prayer that

notice be issued to Government and its title be enquired into before going further in the matter of this execution.

On the same day, the Deputy Commissioner directed notice to be sent to the Government pleader. On 17th October 1933, the Deputy Commissioner declined to accede to the prayer of the British India Corporation Jo stay the execution and directed it to proceed. The pre-sent suit was therefore instituted on 13th September 1935, for the relief mentioned above.

3. The question for consideration in this appeal is: What are the rights of the British India Corporation as against the Secretary of State? For a proper answer to this question, the case with which the plaintiffs went to Court in 1927 must be carefully followed. Their case, as disclosed in para. 1 of their plaint, was that they

acquired a bungalow with a small out-house on 6 1/4 bighas of 'kham' land at Kathgodam from Mr. M. Faulkner under the sale deed, dated 26th July 1921,

and sought a declaration

that the sale in favour of defendant 1 in November 1925, is null and void and ineffectual as against them.

The defence of Raja Moti Chand and others was that the sale in the plaintiffs' favour was subject to their mortgage. Mr. Dobbs, the Deputy Commissioner of Naini Tal, acting as a Subordinate Judge, held, in effect, that Mrs. Purcell was not the owner of the land which remained with the Secretary of State and the only title which the plaintiffs acquired under that sale was title to the constructions and not to the land. Into the other details of the decree, it is not necessary to enter at this stage. The High Court did not agree with the Court of first instance and held:

Our conclusion, therefore, is that Raja Moti Chand is entitled, unless barred in some other way, to the land marked in the amin's map by the Court below. We have now to see what rights he has in the buildings. By parity of reasoning and in view of our findings it follows that Raja Moti Chand is entitled to obtain possession over the residential bungalow exclusive of the room adjoining the bungalow and long office and a kitchen, unless some other principle of law stands in his way.

Their Lordships wiped out the distinction between the nature of the property conveyed by Mrs. Purcell and that conveyed by the Secretary of State under the lease. They, however, made it clear that:

The Secretary of State for India was no party either to the mortgage suit or to the execution proceedings and is not the successor-in-interest of Lalta Prasad and is, of course, not bound in any way by the decision of the suit.

4. The present suit was, as already mentioned, instituted in 1935. The Deputy Commissioner of Naini Tal decreed the plaintiffs' suit for a sum of Rs. 42,000. This decree was challenged in appeal and a Bench of this Court, consisting of Sir John Thorn and Ganga Nath J. by their judgment of 14th September 1939, held that the case had not been properly tried and sent it back for trial according to Jaw. They allowed the parties liberty to amend their pleas and produce such additional evidence as they desired. The learned senior Civil Judge has, on remand, dismissed the suit, on the finding principally that Mrs. Purcell had no proprietary right in the land and nothing had been done by the Secretary of State to entitle the plaintiffs to any relief against him. He came to a distinct finding that

the land continued to be Government property-and that it was never transferred by the Secretary of State to Mrs. Purcell or anybody else, so far as proprietary rights were concerned.

In his opinion the transfers by Mrs. Purcell and her successors only amounted to transfers of the materials of the house and these transfers were from time to time recognised by Government and the transferees admitted as mere tenants-at-will. The plaintiffs have come before us in first appeal. The parties went to trial in the Court below-indeed, at all stages of this protracted litigation-on the basis of Section 108, T.P. Act, and it is on this basis that Dr. Katju, the learned Counsel for the appellants, has mainly taken his stand. Dr. Asthana, however, contends that the Transfer of Property Act has no application to the facts, inasmuch as the case comes within the four corners of the Crown Grants Act (Act 15 of 1895), Section 2 of which provides that:

Nothing in the Transfer of Property Act, 1882, contained shall apply or be deemed ever to have applied to any grant or other transfer of land or of any interest therein heretofore made or hereafter to be made....

and the learned Counsel has relied upon Jnanendra Nath v. Jadu Nath : AIR1938Cal211 . We do not think that the application of the Crown Grants Act will make any material difference, inasmuch as, even if the case is decided on the basis of Section 108, T.P. Act, we shall have to go by the 'contract or local usage to the contrary...' and look to the lease and such rights as it assured to the lessees. The first contention of Dr. Katju is that the appellants' quiet enjoyment of the land, such as had been guaranteed to them by the Secretary of State under the lease, was disturbed and they are entitled to damages, and for this he relies upon Clause (c) of the section. Clause (b) however says : 'the lessor is bound on the lessee's request to put him in possession of the property.' Strictly speaking, Clause (c) of the section, which embodies the principle of quiet enjoyment, does not come into operation, inasmuch as the lessees were never put in possession by the lessor; actual physical possession the lessees already had in; pursuance of the sale in their favour. But we do not propose to rest our decision on this aspect of the matter. We shall decide the case in the light of the principle enshrned in Clause (c) (of Section 108) of the Act. The expression

the lessor shall be deemed to contract with the lessee that... he may hold the property during the time limited by the lease without interruption,

in plain words, means that so long as the lessee fulfils his part of the contract, nothing will be done by the lessor to disturb his quiet enjoyment. This also means that the title, which has been conveyed by the lessor to the lessee, is a good title and that there is no infirmity in it. In other words, the lessor guarantees that he is the owner of the property and no one else. If it is discovered later that his title is defective and, in consequence of this defect, the possession of the lessee has been disturbed, he is liable for damages. In this case the finding that the Secretary of State is the proprietor of the land and that Mrs. Purcell had no proprietary interest in it has not been seriously challenged. If this is so, we fail to see how the plaintiffs are entitled to any benefit under Clause (c) of Section 108. Dr. Katju has, however, relied upon Tayawa v. Gurshidappa ('01) 25 Bom. 269, Uday Kumar Das v. Katyani Debi ('22) 9 A.I.R. 1922 Cal. 87, Naorang Singh v. A. J. Meik ('23) 10 A.I.R. 1923 Cal. 41, Indu Bhushan v. Moazam Ali Biswas : AIR1929Cal272 , Nandi Reddi Rama Govinda Reddi v. Lakshmi Reddi ('35) 22 A.I.R. 1935 Mad. 973 and Moti Lal v. Yar Mohammad : AIR1925All275 . In all these cases, a distinction has been drawn between the case of a person, with a superior title, disturbing the possession of the lessee and a person who is a rank trespasser. In the Bombay case, Ranade J. has also made it clear that the disturbance was caused there by the owner of the land with a paramount title. This case, therefore, is of no avail to the appellants. The Calcutta cases also hold the same. In 49 cal. 9483 Mookerjee J. at p. 957 takes the same view. The disturbance must be lawful disturbance that is by a person who has the real right or, in other words, paramount right. The case in 50 Cal. 68 4 is really against the appellants. Its facts were briefly these: A lease was granted to the defendant in 1901. A similar lease had been granted to one Myer & Co., on 22nd April 1897, of an ad-joining mine. In a suit brought for recovery of minimum royalty and other dues, the defence was that as a certain portion of the coal land had been acquired under the Land Acquisition Act, he was entitled to abatement and that as his possession of the mine had been interrupted by Myer & Co., the entire rent was suspended. Mookerjee J. held at p. 72 in these terms:

The covenant, in the unqualified form, covers the case of interruption by the superior landlord or other person claiming by title paramount, exercising a power of re-entry, or otherwise, dispossessing the lessee. But even such a covenant does not include a case of disturbance by persons having no lawful title or right of entry; for, against them the lessee has his proper remedy and does not require a covenant, nor can he, on account of being evicted by such persons, be relieved of his liability to pay rent.

The ratio in 33 C. W. N. 1065 and in A.I.R. 1935 Mad. 9738 is the same. Dr. Katju has next contended that the Secretary of State assured quiet enjoyment to his clients; it was, therefore, his duty to evict persons who were out to disturb their possession and after having evicted them secure them that quiet enjoyment. We know of no law which casts this obligation upon the Secretary of State. All that he undertook to convey to the appellants was proprietary interest in the land. Nothing has happened to indicate any infirmity in the title of the Secretary of State so far as that interest is concerned. Beyond this there was no legal obligation upon him. It was held so far back as the year 1669 by Sir John Vaughan in William Hayes v. Charles Bickerstaff (1669) Vaughan 118 that 'the express covenant, like the implied covenant, protects the lessee only against lawful disturbance of strangers,' and then summarises the 'inconveniences if the law should be otherwise':

1. A man's covenant without necessary words to make it such, is strained, to be unreasonable, and therefore improbable to be so intended; for, it is unreasonable a man should covenant against the tortious acts of strangers, impossible for him to prevent or probably to attempt preventing.

2. The covenantor, who is innocent, shall be charged, when the lessee hath his natural remedy against the wrongdoer and the covenantor made to defend a man from that from which the law defends every man, that is from wrong.

3. A man shall have double remedy for the same injury against the covenantor, and also against the wrongdoer.

4. A way is opened to damage a third person (that is, the covenantor) by undiscoverable practice between the lessee and a stranger, for there is no difficulty for the lessee secretly to procure a stranger to make a tortious entry, that he may therefore charge the covenantor with an action.

This view was affirmed after about two centuries in Neale v. Mackenzie (1836) 1 M. & W. 747 Lord Denman made the following observation:

Eviction by title paramount means eviction by a title superior to the titles both of lessor and lessee, against which neither is enabled to make a defence.

Indeed, the controversy has been set at rest by a very recent pronouncement of the House of Lords in Matthey v. Curling (1922) 2 A.C. 180. That was a particularly strong case and there were hardly any equities in favour of the lessor. The facts briefly were these: By a lease, dated 25th March 1898, Curling demised to Matthey for a term of twenty-one years from the date a house and grounds known as Offley Holes at a yearly rent of 300. The lease contained covenants by the lessee to keep the premises in repair, to yield them up in repair, and to insure against damage by fire in the joint names of himself and the lessor and, in case the premises or any part thereof should at any time during the term be destroyed by fire, to forthwith lay out the moneys to be received in respect of such insurance in reinstating the premises and in case such moneys should be insufficient, to make good the deficiency out of his own moneys. On 29th January 1918, the military authorities took possession of the house and part of the adjoining lands. On 12th February 1919, the house was destroyed by fire. On 6th June 1919, Curling brought an action for damages for breach of covenant and for the rent of the quarter ending 25th March 1919. The defence was that the performance of the covenants had become impossible in law and was excused and as to the rent that there was an eviction by title paramount from a part of the demised premises. Lord Buckmaster in delivering the judgment has summed up the law in these words:

The defences to these two branches of the claim vary. As to the first, the lessees say that they were evicted by title or by authority which they could not withstand; while as to the second, in addition to the former defence, they rely on the allegation that they were prevented by superior force from performance of the covenants. In my opinion both these defences fail. There has been throughout the case some confusion as to what constitutes a defence on the ground of eviction by title paramount. It is assumed that this means by an act which the lessee could not control; but there is no trace of such a doctrine in any of the authorities. Eviction by title paramount means eviction due to the fact that the lessor had no title to grant the term, and the paramount title is the title paramount to the lessor which destroys the effect of the grant, and with it the corresponding liability for payment of rent. Eviction by the lessor himself is with equal reason an answer to the claim upon the covenant, and in such a case, as Jervis C.J. said in Upton v. Townend (1855) 25 L.J.C.P. 44 at p. 51 the question is whether there is an eviction in fact, and whether the plaintiff (that is, the lessor) was a party to it, and again, later on in the judgment, he repeats 'it is for the jury to say whether the act was done by the landlord, and whether it was done with the intention of depriving the tenant of the enjoyment'....

There is no question here of performance having become impossible owing to its prohibition by statute, for no law has prohibited performance, though enjoyment of the premises has been interfered with by legal powers.

5. This case furnishes an answer to the contention of the learned Counsel for the appellants that notwithstanding the position that he took in the earlier litigation, which culminated in the decree of the High Court, dated 30th June 1931, he has to suffer the loss for no fault of his. It has next been contended that the disturbance of the appellants' possession by Raja Moti Chand under the sale made by Lalta Prasad must be deemed to be disturbance by a person claiming under the Secretary of State. It is difficult to follow this argument. It may be that Mrs. Purcell and her successor-in-interest were tenants and in that sense they held a title inferior to, or under, the Secretary of State. But when they purported to transfer proprietary interest which they never possessed, they did not purport to claim under him, but in defiance of him and in the teeth of his rights. Lastly, it has been contended that the High Court had in 1931 distinctly come to a finding that Mrs. Purcell held proprietary interest and that the disturbance must, therefore, be deemed to be disturbance by the rightful owner and disturbance by the Court. But the High Court itself made it plain that the Secretary of State was no party to those proceedings and the judgment and decree could not be binding upon him. The respondent has also relied upon Banka Behari Ghosh v. Madan Mohan Roy ('21) 8 A.I.R. 1921 Cal. 532. No other point has been raised before us. We, therefore, think that this appeal has no merits and the judgment and decree of the Court below are right. We, therefore, dismiss this appeal with costs.


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