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Rattantrya Dhari JaIn and anr. Vs. S. Avtar Singh and anr. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberRegular Second Appeal No. 60D of 1963
Judge
Reported inILR1971Delhi284
ActsRegistration Act, 1908 - Sections 17
AppellantRattantrya Dhari JaIn and anr.
RespondentS. Avtar Singh and anr.
Advocates: Ravinder Sethi and; K.R. Gupta, Advs
Cases ReferredKishore Chand v. Dharam
Excerpt:
.....116 of the transfer of property act, but, as a result of special legislation. in this way, the period of lease should be read as 11 months and 24 days and the 'holding over' as being provided by the delhi rent control act.; that the lease in the present case did not require registration.; that a guarantor cannot be liable for the payment of rent for the period after the end of the period of tenancy because after the end of the tenancy, the tenant becomes protected by the delhi rent control act and the payments of rent etc. are governed by that act. - - 2 as surety, and this failure did not absolve defendant no. 2 alone failed. (3) an interesting question as to whether the rent-note requires registration arises in the present case. delivery possession of the demised premises..........substance in this submission on the facts. the clear wording of the rent-note is 'has taken on rent premises' and further, 'a memorandum of the terms of the tenancy under which we hold the aforesaid premises', which indicate that the premises were already taken on rent and the memorandum was also in relation to premises which had already been let out to the tenant. the last sentence of clause 13 also indicates that the rent has been paid from 6th april, 1958 whereas the contract was signed on 8th april, 1958, thus indicating that the premises had been taken on rent two days before the rent-note was executed. however, sec- corporation 128 of the contract act which is relied upon says that anything done or any promise made can be a sufficient consideration to the surety. this means.....
Judgment:

D.K. Kapur, J.

(1) The appellants in this Regular Second Appeal are the sons of Shri Raghbar Dial Jain. The appellant's father had let out a portion of Rattantrya Bhavan, which is a house situated in Model Basti, Jhansi-Ki-Rani Road, Delhi, to Avtar Singh, Respondent No. 1, at Rs. 80.00 per month and Deep Chand Jain, Respondent No. 2, had agreed to guarantee the regular payment of rent by the said Avtar Singh. It appears that there was some litigation between the appellants and their father which resulted in a compromise decree being passed on 4th May, I960, to the effect that the appellants' father was a Benamidar and the appellants were the real owners entitled to collect the arrears of rent from the tenants of Rattantrya Bhavan. The suit which is the subject-matter of the present appeal is for the recovery of Rs. 2,880.00 which is the rent said to be due from Avtar Singh for the period 1st June, 1958 to 31st May, 1961, at the rate of Rs. 80.00 per month. In the trial court, it was held that the plaintiffs, who are the present appellants, were entitled to a decree for the amount in suit against Avtar Singh, defendant No. 1. As regards defendant No. 2, Deep Chand Jain, it was held that there was no privity of contract between the parties as the plaintiffs were not parties to the rent- note and the surety agreement contained in the rent-note could not be availed of by the plaintiffs against defendant No. 2. Accordingly, the suit against defendant No. 2 was dismissed by the trial court.

(2) An appeal was taken by the plaintiffs to the Additional District Judge, Delhi, who came to the conclusion that the decision of the trial court holding that there was no privity of contract between the plaintiffs and defendant No. 2 was not correct as the previous litigation between the father and the plaintiffs established that the father was the trustee of the sons and thereforee, the plaintiffs being the beneficiaries under the contract were entitled to enforce the contract. It was also held that the fact that the plaintiffs did not inform defendant No. 2 of the default of defendant No. 1, did not make any difference to the liability of defendant No. 2 as surety, and this failure did not absolve defendant No. 2 from being liable on his contract. The lower appellate court, however, came to the conclusion that the rent-note relating to the lease which also contained the guarantee by the defendant No. 2, now respondent No. 2, was a document that required registration and as it was not registered, it was ineffective and hence the defendant No. 2 was not liable on the guarantee. In the circumstances, the appeal which was directed against defendant No. 2 alone failed. The plaintiffs have now come to this Court in second appeal, and urged that the judgment of Additional District Judge should be reversed on the ground that the lease, i.e., the rent-note. Exhibit P-2, did not require registration. Mr. Ravinder Sethi has made three submissions with regard to the document in question. He has submitted firstly, that there was no present demise by the rent-note which is a mere memorandum relating to a lease which had already been entered into; secondly, that it was not a lease for a term exceeding one year and hence, did not require registration, and thirdly, that qua the contract of defendant No. 2, it was a mere agreement as a surety and did not require registration and this portion of the document could be separated from the rest of the rent-note. Mr. Kulwant Raj Gupta, on the other hand, for respondent No. 2, urges that the document is a present demise and if it is not, the surety offered by the defendant No. 1 is without consideration. He also urges that the lease is for a period exceeding one year and hence the decision of the Additional District Judge on this aspect of the case is correct and, lastly he urges that the contract of surety is not available to the plaintiffs in the circumstances of the present case, particularly in view of the fact that the amount in suit relates to a period which is much longer than one year. His argument being that if the document is held to be nonregisterable it is only so because the lease is for a term less than one year and his client's liability cannot exceed this term and continue for a period of three years as claimed in the present suit.

(3) An interesting question as to whether the rent-note requires registration arises in the present case. The rent-note was executed by Avtar Singh in favor of the father of the plaintiffs. The relevant clauses of the said rent-note are clauses 8, 12 and 13. Clause 8 is as follows :

'I hereby furnish surety of Shri Deep Chand Jain of L. Gian Chand Jain, resident of 3C/7, Rohtak Road, Delhi, partner of M/s. Johrimull Cyan Chand, Cloth Market, Delhi, for regular payment of Rs. 80.00 per month rent and other charges to the landlord. In case I make any default Shri Deep Chand Jain is my guarantor and we shall be jointly and severally liable for any defaults made by us in the payment of rent or any other amount due and recoverable from us'.

it is clear that this clause states that in case the tenant makes a default in the payment of the rent his guarantor, Deep Chand Jain will be jointly and severally liable for the default in the payment of rent or any other amount due. At the very end of the rent-note at the bottom of the document below Avtar Singh's signatures appear the following words:-

'I hereby agree to be a surety for the regular payment of Rs.80.00 and other charges in terms of clause 8 above. (Signed) Deep Chand Jain ft is clear that Deep Chand Jain has agreed to be the guarantor of the tenant, Avtar Singh and has also made himself jointly and severally liable for the default that the tenant may make in respect to the payment of rent or any other amounts due from him. . The next two clauses which are of significance in the context of the present appeal, are clauses 12 and 13, which are as follows :- 12. Whenever I decide to vacate the premises I shall hand over the vacant and peaceful possession to the landlord. I will, on the determination of the tenancy; delivery possession of the demised premises including fittings and fixtures to the landlord in as good a condition as it was in which 287 I obtained possession, subject only to the changes caused by reasonable wear and tear. 13. The tenancy is for a period of 11 months and 24 days. If I continue to hold the premises beyond this period. I shall be deemed to do so on terms and conditions enumerated above. I have paid Rs. 144.00 as rent from 6th of April to 31st May, 1958 in cash against receipt and in witness thereof I have signed this on 8th April, 1958.'

(4) This latter clause raises the most important controversy. Though the tenancy is for a period of 11 months and 24 days, it seems also to deal with the situation if the tenant stays on after this period. It is from this portion of clause 13 that the Additional District Judge came to the conclusion that the lease is for a period of more than one. year, the view being that this showed that the tenant could stay on beyond the period of the tenancy and thereforee no other agreement was necessary to continue the period of the lease beyond one year. A similar question has been dealt with in some decided cases which have been cited before me and I will refer to some of them. Reliance has been placed on Mrs. Martha Pool v. The Secretary of State for India in Council, 1886, Punjab Record No. 68.(i) Therein, the contract of lease was for a period of one year at a yearly rent of Rs. 1800. It was provided that the house would be' taken-on rent for the year 1872 and for as long a period after that as the Government may need it. The court decided that because the Government could continue after one year as long as it liked as a tenant, the lease was for a period of more than one year and was compulsorily registerable. I think that there is a difference between the lease in that case and the present one inasmuch as there is no term in the present case saying that the lease will continue as long as the tenant likes. The words 'if I continue to hold the premises beyond this period' does not mean in my view. that the tenant has a right to continue in the premises, but, deals with a contingency which may arise if he does continue.

(5) The present contract must be interpreted in the light of the special laws that govern landlords and the tenants in Delhi as a result of the enactment of the Delhi Rent Control Act, 1955. A tenant is now protected after the termination of his tenancy and does normally continue to hold over. This holding over is not the result of a conscious act of the landlord under Section 116 of the Transfer of Property Act. but as a result of special legislation. In my view the contract in this case should be interpreted in the light of the existeding state of the law in a practical manner. Hence the tenancy should be read as being for a period of Ii months and 24 days and ther ealier as being subject to the Delhi Rent Control Act. I do not agree with the counsel for the respondents that this lease should be read as a perpetual lease merely because it provides for the contingency of 'holding over' which the law has imposed on the landlord by a special Act. The contract in my view should be interpreted in the light of the Latin Maxim: Ut rest magis quam vel pereat in such a way as to make it valid. In this way the period of the lease should be read as 11 months and 24 days and the 'holding over' should be as provided by the Delhi Rent Control Act. I can fairly assume that the parties intended to bind themselves by this contract and wanted to make an effective written contract when they entered into it and did not register it only because they thought then that it did not require registration. They must, thereforee, have viewed the contract in the way that I have sought to interpret it. If they had meant the lease to be for a period of more than one year, there was nothing to prevent them from saying so and I see no other reason why the period should have been fixed as 11 months and 24 days. I regret I cannot read it, as the counsel for the respondents wants me to, as a mere device to avoid registration. In any case, the words which appear in the second sentence of clause 13 can be read as Mr. Sethi suggests as being superfluous, because this situation is already provided for by Section 116 of the Transfer of Property Act. In any case, my view is that Mrs. Martha Pool's case does not help the respondents. Another authority cited by the counsel for the respondents is Kishore Chand v. Dharam /W. , in which lease used the following words :

Pay rent month by month; if rent is paid continuously,. then I will not be liable to ejectment. . .

(6) This term clearly envisages the tenant remaining in the premises under the lease for as long as he continues to pay the rent which naturally leads to the conclusion that the tenancy is for more than one year. There is no term in the present case to the effect that if the tenant continues to pay rent for more than one year the lease would continue to run. There are a number of other authorities cited in the Punjab authority, but none of them deal with clauses similar to the ones involved in the present case. I, thereforee, come to the conclusion that all the judgments relied upon by the respondent do not really help in the construction of the terms of the lease involved in the present case.

(7) The question then posed by Mr. Gupta is : Is it possible under the terms of the lease as set out in the rent note, for the defendant to stay on beyond 11 months and 24 days? In my view, the answer to this question is provided by clause 12 which I have quoted above and particularly its second sentence. The relevant words of which are. . .'I will, on the determination of the tenancy; delivery possession of the demised premises including fittings and fixtures to the landlord.' The world 'delivery' appears to be a typing error and should be 'deliver'. This clause shows that on the determination of the lease the tenant will hand over possession to the landlord. The question is: when does this determination take place? Obviously, the only part of the lease providing for determination is the period of 11 months and 24 days, otherwise, the lease does not determine at all. I have examined the other clauses of the lease and there is no forfeiture clause whatsoever, Clause 12 is the only clause which deals with the ending of the lease. There are only two ways in which the lease can end, either. by the tenant vacating the premises, or, by determination of the lease. Mr. Gupta. however, contends that I should read the determination mentioned in clause 12 also as referring to the possibility of the aban- doning of the lease by the tenant. I, however, do not agree that this is the intention of the parties. If the lease is a perpetual lease as submitted by Mr, Gupta, I do not see any reason why the tenant should abandon the premises and this cannot be the reasonable meaning of the second sentence in clause 12. In my iew, the first sentence deals with the situation when the tenant decides to vacate the premises and the second sentence deals with the situation when the term ends. In the circumstances, I come to the conclusion that the intention of the parties was that the lease would determine at the end of the term fixed by clause 13, i.e, after Ii months and 24 days and the words following this fixation of the term of the lease deal only with the situation when the tenant continues to remain in the premises at the end of the term by reason of the Delhi Rent Control Act. This is the only reasonable way in which this lease can be interpreted and I cannot accept the submission of the respondents' counsel that this lease 'by its own force enables the tenant to remain for ever in the premises. In this view of the matter, I come to the conclusion that the lease does not require registration and on this aspect of the case I reverse the decision of the Additional District Judge.

(8) I, now come to the question as to what is the liability of defendant No. 2, now respondent No. 2, under the terms of the guarantee contained in clause 8. On this aspect of the case it appears to me that one of the conditions of the lease was that the tenant would provide a guarantor and that under the terms of clause 8 and the writing at the end of lease reproduced above, defendant No. 2 has undertaken to be jointly and severally liable for the default in the payment of rent by the tenant. Mr. Gupta says that this guarantee is not for consideration because the memorandum in the present case was made after the tenancy had been entered into. There is some substance in this submission on the facts. The clear wording of the rent-note is 'has taken on rent premises' and further, 'a memorandum of the terms of the tenancy under which we hold the aforesaid premises', which indicate that the premises were already taken on rent and the memorandum was also in relation to premises which had already been let out to the tenant. The last sentence of clause 13 also indicates that the rent has been paid from 6th April, 1958 whereas the contract was signed on 8th April, 1958, thus indicating that the premises had been taken on rent two days before the rent-note was executed. However, Sec- corporation 128 of the Contract Act which is relied upon says that anything done or any promise made can be a sufficient consideration to the surety. This means that the fact that the tenancy had been already created is a sufficient consideration for the surety. Hence, I do not agree with the contention of the respondents that this surety agreement is not for consideration.

(9) There are two more questions remaining for consideration in this appeal. Firstly, whether the present plaintiffs are entitled to enforce this guarantee against defendant No. 2, and secondly, whether the guarantee can continue beyond the period of the tenancy, which has been fixed as 11 months and 24 days. I shall deal with the second question first. The guarantor in my view cannot be liable for the period after the end of the period of tenancy, because after the end of tenancy as I have already stated, the tenant becomes protected by the Delhi Rent Control Act and the payment of rent etc., are governed by that Act. Where a tenant does not pay the rent he is liable to be ejected under Section 14 of that Act unless he deposits the rent. The guarantor cannot be liable for the rent which is recoverable under the Delhi Rent Control Act. However, during the period of the tenancy, which as I have already held, is Ii months and 24 days, the guarantor is liable. As the period of tenancy expired on 31st March. 1959, the only period during which the guarantee was operating for the purpose of this suit was from 1st June, 1958 to 31st March, 1959, i.e., for a period of nine months and thereforee the maximum amount that can be claimed from the guarantor is Rs. 720.

(10) I now deal with the other question, which is as to whether the decision of the learned Additional District Judge holding that the guarantee was enforceable at the instance of the plaintiffs is correct in law. On this aspect of the case, the learned Additional District Judge has held that the defendant No. 2 is liable because the father was holding the property as a trustee on behalf of the sons and he has relied for this purpose on Exhibits P-3 and P-4. Of these, Exhibit P-4 is a compromise decree whereby the plaintiffs have been given a declaration that they are entitled to recover all the arrears of the rent of the property D. and their father was restrained from interfering with the management of the property. Exhibit P-3, is the plaint in that case, there is no mention of respondent No. 2 in it. The conclusion of the learned appellate court that the father of the plaintiffs was acting as their trustee is not borne out by the decree. Exhibit P-4, which does not contain any such words. The question that was to be decided by the learned Additional District Judge was whether this decree created any liability against the present respondent No. 2. In my view the decision of the lower appellate court that the promise made by defendant No. 2 could be enforced by the present plaintiffs is based on an erroneous reading of the decree. Exhibit P-4. and also on account of the failure to take into account the terms of Section 43 of the Specific Relief Act, 1877, which is in the following terms :-

'43. Union of declaration A declaration made under this Chapter is binding only on the parties to the suit, persons claiming through them respectively and where any of the parties are trustees, on the persons for whom. if in existence at the date of the declaration, such parties would he trustees.'

(11) The respondent No. 2 not having been made a party to the , could not be bound by that declaration and could not thereforee be held to be liable to the present plaintiffs on the basis of the said declaration. The other view taken on this point by the Additional District Judge was that the defendant No. 2 could be liable to the plaintiffs as they were assignees of their father. Such an assignment can be effected only by a document in writing as provided by Section 130 of the Transfer of Properly Act. No such document in writing has been produced by the plaintiffs in the present case. The plaintiff's, case as made out in the plaint is that as a result of the decree obtained from the court as stated in para 2 of the plaint, the said decree is binding on defendant No. 2. In view of the provisions of Section 43 of the Specific Relief Act, 1877, the said decree has no effect against defendant No. 2. I, thereforee, come to the conclusion that the plaintiffs are neither the assignees nor the transferees of the guarantee which is the subject matter of the claim against defendant No. 2, Normally, this would have led to the dismissal of the appeal. However, another point arises because of the peculiar terminology of the rent-note, Exhibit P-2. The name of the landlord is given as R. D. Jain, no father's name is mentioned. The guarantee is also in favor of 'R.D. Jain'. The document is not signed by R.D. Jain but is executed in his favor. one of the plaintiffs is also R.. D. Jain. Although this is purely accidental, I see no reason why the document should not be read in his favor. The name of the house is also 'Rattantrya Bhawan' which seems to identify him as the landlord as his name is Rattantrya Dhari Jain. I thereforee conclude that the guarantee can be enforced by him.

(12) In my view, the language of the rent-note and the guarantee contained therein entitles appellant No. 1 to a decree on its basis. I have already held that the guarantor is only liable to the extent of Rs. 720. I, thereforee, accept the appeal of appellant No. 1 to that extent. As the case of appellant No. 1 is that he and appellant No. 2 are coowners, the decree can also be passed in favor of appellant No. 2. It does not make the slightest difference to respondent No. 2 whether the decree is in favor of one appellant or both. In the circumstances, I accept this appeal to the extent that a decree for Rs. 720 is passsed in favor of the appellant against respondent No. 2. This does not affect the decree already passed for the full amount against respondent No. 1. The appellants will be entitled to proportional costs against respondent No. 2 throughout.


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