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G. Kesarichand and anr. Vs. T.A. Sankunni Maistry - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1972)1MLJ358
AppellantG. Kesarichand and anr.
RespondentT.A. Sankunni Maistry
Cases ReferredRameshwarlal v. Butto Kristo Rai
Excerpt:
- .....i shall have to refer to in detail in the course of the judgment. after the purchase of the suit property under exhibit a-1 and after determining the tenancy, the present suit was instituted by the appellants herein for recovery of possession of the suit site, for arrears of rent upto the date of the termination of the tenancy and also for damages for use and occupation subsequently. various defences were put forward on behalf of the respondent herein and ultimately the substantial defences boiled down only to two. one was that the suit was not maintainable in a civil court, because the lease was granted admittedly for putting up a wooden shed at the cost of the respondent for carrying on his timber depot on the suit site and therefore on the basis of the decision of this court in.....
Judgment:

M.M. Ismail, J.

1. The plaintiffs in O.S. No. 1 of 1963 on the file of the Court of the Subordinate Judge, Nilgiris at Ootacamund, who lost before the trial Court as well as before the 1st appellate Court are the appellants before this Court. They are purchasers of the suit property from the previous owner, by name, the Nilgiri Gowder Corporation Limited, Coonoor, under Exhibit A-1, dated 30th June, 1961. Admittedly, prior to the sale in favour of the appellants, the Nilgiri Gowder Corporation Limited, leased out the suit site in favour of the respondent herein, in connection with the two lease deeds which were not produced before the Court and which were executed between the parties, the respondent had paid a sum of Rs. 1,000 by way of advance whose character I shall have to refer to in detail in the course of the judgment. After the purchase of the suit property under Exhibit A-1 and after determining the tenancy, the present suit was instituted by the appellants herein for recovery of possession of the suit site, for arrears of rent upto the date of the termination of the tenancy and also for damages for use and occupation subsequently. Various defences were put forward on behalf of the respondent herein and ultimately the substantial defences boiled down only to two. One was that the suit was not maintainable in a civil Court, because the lease was granted admittedly for putting up a wooden shed at the cost of the respondent for carrying on his timber depot on the suit site and therefore on the basis of the decision of this Court in Palaniappa Chetti v. Babu Sahib : (1964)1MLJ110 , the provisions of the Madras Buildings (Lease and Rent Control) Act, 1960 will apply and therefore the appellants could not recover possession of the suit site from the respondent herein by means of a suit in a civil Court. The second was that in any event as a condition precedent to the direction to the respondent to put the appellants in possession of the suit site, the appellants should pay the sum of Rs. 1,000 which the respondent had paid to the predecessor-in-interest of the purchaser herein. The Courts below accepted, both these contentions and dismissed, the suit. Hence, the present second appeal by the plaintiffs in the suit.

2. As far as the first point is concerned, the ground on which the suit was dismissed no longer survives. The Supreme Court in A.R. Salary Mohamed Sait, etc. v. Jaffar Mohammed Sait's Memorial Dispensary Charity and Ors. (1969) 1 A.W.R. 16 : (1969) 1 S.C.J. 63 : (1969) M.L.J. 16, has disapproved of the decision of this Court on the basis of which alone the suit was dismissed in this case. In view of this, the learned Counsel for the respondent had no option but to concede that the conclusion of the Courts below in this behalf is no longer tenable.

3. It is the second of the questions that has given rise to some discussion before this Court. The argument of the respondent before the Courts below was that under the provisions of Section 109 Transfer of Property Act, the appellants herein being the assignees or transferees of the leased premises were bound to discharge the obligations of the lessor, their predecessors-in-interest and it is this argument which found favour with the Courts below. For the purpose of considering this argument, it is necessary to refer to the section itself. Section 109 of the Transfer of Property Act provides:

If the lessor transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the lessor as to the property or part transferred so long as he is the owner of it; but the lessor shall not, by reason only of such transfer, cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him.

4. There is a proviso to this section. But for the purpose of this case, it is unnecessary to refer to the same. The plain language of this section is that once the lessor transfers the property leased, the transferee of the property practically becomes surrogated to the position of the lessor-transferor in respect of the rights and liabilities as to the property so transferred. I am using the word 'practically' because the section itself makes a distinction between the rights of the lessor and the liabilities of the lessor. As far as the rights are concerned, they are automatically transferred to the transferee and by virtue of the transfer of the demised premises, the transferee became entitled to exercise those rights against the lessee in the absence of a contract to the contrary. As far as the liabilities are concerned the transferee does not automatically become liable to the lessee for those liabilities unless the lessee himself chooses to look to the transferee for the discharge of those obligations. This is based on the general equitable principle that a man cannot assign his obligations, that is, he cannot substitute someone else as the performer of his duty, without the consent or authority of these to whom the duty is owing. However, one thing is clear and definite. Whether they are the rights or obligations, they must pertain to and concern with the property demised or transferred. If the rights and obligations though resulting from a contractual relationship between the lessor and the lessee, do not concern with or touch upon or pertain to the property demised or transferred they will not be covered by Section 109 of the Transfer of Property Act. It is in this context we have to see what exactly was the nature of the payment of Rs. 1,000 made by the respondent herein to the predecessors-in-interest of the appellants. As I have pointed out already the lease deeds themselves have not been produced before the Court and they have not been marked. The respondent-defendant in his written statement has stated with regard to the amount of Rs. 200 as follows:

A refundable, advance of Rs. 200 was-also paid by the defendant.

Afterwards, another sum of Rs. 800 was paid by the respondent to the predecessor-in-interest of the appellants, making the total to Rs. 1,000 and with regard to this Rs. 1,000, the respondent has stated in his written statement:

The advance of Rs. 1,000 was refundable on the termination of the lease.

A gain in the written statement the respondent has referred to the sum of Rs. 1,CCO as 'advance deposit of Rs. 1,000'. Beyond this description of the amount of Rs. 1,000 found in the written statement of the respondent no other material was placed before the Court to show the terms on which the amount was paid and the terms on which the amount was returned or discharged or dealt with as between the parties. Under these circumstances, the question that arises for consideration is, whether the obligation to return the sum of Rs. 1,000 by the predecessors-in-interest of the appellants to the respondent herein on the termination of the lease can be said to be liability contemplated by Section 109 of the Transfer of Property Act. I have already pointed out the crucial point with reference to Section 109 of the Transfer of Property Act that the rights and liabilities must be 'as to the property that has been transferred'. If the rights, and liabilities do not refer to or concern without touch upon the property transferred they will be outside Section 109 of the (Transfer of Property Act and there will be no obligation on the assignee or transferee from the lessor to discharge the obligation or return the amount to the original lessee and the lessee will have to look to his own lessor, namely, the transferor, for repayment of the amount. This position is clear from the language of Section 109 of the Transfer of Property Act itself. In addition to this, the general principle on which Section 109 of the Transfer of Property Act is based also clearly shows that with regard to a sum like the present one, the appellants are under no obligation to pay the same to the respondent herein.

5. In re, Hunder's leaser - Giles v. Hutchings (1942) 1 Ch. 124, the lease deed provided that on the expiration of the term of five years granted by the lease, the lessor came under an obligation to pay the lessee . 500 subject to the qualification that, if the lessor did not for any reason wish to pay that sum and the lessee was willing to acquiesce in nonpayment, the lessee might continue in occupation, whereupon the lessor became bound to grant the lessee a further lease of the demised property for a further term of five years, such new lease to contain all the provisions of the original lease. With reference to such a provision in the lease, Uthwatt, J., stated:

I have no doubt that, if the covenant in the present case had been merely a covenant by the lessor to pay a sum of 500 on the expiration or sooner determination of the lease, the burden of it would not have fallen on the assignee of the reversion. The interest included in the demise would not be affected by such a covenant. Valuable as such a covenant might be to the lessee, it would not in any sense touch and concern the interest which is the subject-matter of the lease.

6. However, an argument was advanced before the learned judge that the covenant was not merely for payment of 5C0 at the termination of the original period of five years but it also contemplated a consequence for the non-payment of the amount, namely, the renewal of the lease for a further period of five years-Uthwatt, J., pointed out that this position did not make any difference to the legal consequence and observed:

Returning to the covenant which I have to consider here, the primary obligation is the obligation of the lessor to pay 500. On the expiration or sooner determination of the lease, if he does not wish to pay it and the lessee acquiesces, the lessee may continue in possession and require a new lease but that is merely an alternative and needs the concurrence of both parties to bring it into operation. Neither party can force on the other a renewed tenancy. To hold that the burden of the covenant here in question runs with the reversion would be to extend the operation of the rule stated by the Court of Appeal to be anomalous that a covenant to renew touches and concerns the things demised. I hold, therefore, that the reversioner is net personally responsible for the payment of the 500 .

7. In Hill v. Booth (1930) 1 K.B. 381, certain premises, were let for 21 years - in consideration of (1) a premium of 1000 pounds of which200 pounds were paid on the execution of the lease and (2) a yearly rent. With regard to the balance of the premium of 800 pounds, the lease provided that the lessee would pay that portion of 800 pounds of the premium by certain instalments, provided that in the event of the term thereby granted being determined by reentry, ail the premium unpaid on the date of such re-entry shall become immediately due and payable. During the currency oft he lease and before the balance of the premium had been paid, the premises which had been mortgaged by the lessor were sold to the lessee by the mortgagees in exercise of their powers of sale. Thereupon the lessors sued the lessee to recover the unpaid balance of the premium. The lessee contended that on the determination of the lease, and as a consequence of the merger of the interest by virtue of his purchase, all his obligations under the lease including the obligation as to the premium became extinguished. The Court of Appeal declined to accept such a contention Scrutton, L.J., pointed out:

Ordinarily a premium is paid to obtain a lease and it does not matter what happens to the lease afterwards.

Having made this observation, with regard to the provision for payment of the balance of premium in instalments, the learned Lord Justice stated:

This in my view is not a grant out of the land and buildings which are leased; it reserves no interest in the land or buildings; it is a separate personal covenant to pay the premium because the lease has been granted....

As I understood his argument it was that the reversion in the land passing by the mortgage to Barclays Bank and passing by the conveyance from the Bank to purchaser passes with it the benefit of every covenant or provision having reference to the subject-matter of the lease; consequently, it passes the obligation to pay the premium, and consequently I suppose it would pass the obligation to return the furniture, as has been decided by Roche, J. Section 141 (of the Law of Property Act, 1925) does not apply to this case, inasmuch as in my view it only passes-covenant shaving reference to the subject matter of the lease, and the subject-matter of the lease is land and buildings and possibly the furniture, and not the initial grant of the lease, which if what the 1000 was to be paid for.

This view was concurred in by the other learned Judges and Greer, L.J., with reference to the relevant section of the Law of Property Act, 1925, pointed out:

This section covers matters like covenants to repair, the covenant to pay the rent and covenants which expressly relate to the subject-matter of the lease, namely, the land and buildings; it does not relate to that which is the original consideration for the granting of the lease.

8. Based on these decisions in Mullah's Transfer of Property Act, 1882, 5th Edition at page 724, the position has been summarised as follows:

On an assignment of the reversion the assignee succeeds to the rights and liabilities of the lessor in respect of covenants which run with the land. The assignee takes the benefit of the lessee's covenants, e.g., to pay rent or to repair, and the burden of the lessor's covenants e.g., for quiet enjoyment. The lessee was held liable to the assignee for rent even though he had, after the assignment made an invalid surrender of the lease to the original lessor. The Words 'as to the property' in this section no doubt refer to covenants running with the land. The assignee of the reversion, accordingly, is not liable in respect of lessor's covenants which do not run with the land. Thus a covenant by the lessor to pay a sum to the lessee on the expiration or sooner determination of the lease does not touch and concern the demised property and so does not bind the assignee of the reversion, even if the lease provides also that should the lessor be unwilling to pay the sum, the lessee may hold over and demand a new lease on the same terms including the term as to payment.

9. Thus, bearing these principles in mind, the question for consideration will be, what exactly was the nature of the payment made by the respondent to the predecessor-in-interest of the appellants herein. From the description given to that payment by the respondent himself, it will be seen that it was a refundable advance, to be refunded on determination of the lease. In other words, that was an amount paid by the respondent to the predecessor-in-interest of the appellants as security for performing his obligations under the lease. But the payment does not touch upon or concern with the leased premises or leased property and therefore the obligation to repay that amount by the predecessor-in-interest of the appellants cannot be said to be an obligation or liability 'as to the property' which vv as leased to the respondent and subsequently transferred to the appellants herein.

10. Before the Courts below, two decisions of the Patna High Court appear to have been cited and relied en, on behalf of the appellants herein. But the learned IT Additional District Judge, in particular, has taken the view that those decisions had no beating On the question to be considered by him. The head note in Ramlal Warwaj v. Mahadev Marwari : AIR1922Pat339 , itself brings out the point that came up for consideration and the same is as follows:

Section 50 of the Transfer of Property Act, protect's a tenant against having to pay his rent twice over, if paid in good faith, but if he had paid rent before it was due, it is merely an advance to the landlord and is not a payment in fulfilment of an obligation to pay rent. If, then before the date on which the rent falls due, the landlord makes an assignment, the receipt of rent cannot be treated as a discharge by him, because by assignment before the rent falls due, he has parted with the power of giving such a discharge, and payment of rent before it falls due cannot free the tenant fro n further liability.

The other decision is Rameshwarlal v. Butto Kristo Rai : AIR1934Pat653 . In that case it was held:

In the case of usufructuary mortgage payment of rent to the mortgagor landlord in advance does not discharge atenant who had notice of the mortgage before the rent was due. A voluntary payment of rent is advance; it is, merely a loan by the tenant to the landlord.

Even though these two decisions are not directly in point, certainly they lend support to the proposition that a refundable advance like the present one was merely a loan advanced by the respondent to the predecessor-in-interest of the appellant herein, and the obligation to repay cannot be said to be a covenant running with the land or one touching the land or pertaining to the land, which was the subject-matter of the lease and which had subsequently been transferred so as to bring the same within the scope of Section 109 of the Transfer of Property Act. In view of all these considerations I am of the opinion that the appellants herein are not under an obligation to pay the sum of Rs.1,000 to the respondent herein, as a condition precedent for obtaining recovery of possession of the suit site from the respondent herein.

11. There is one other significant feature in this particular case, namely;

Exhibit A-1 under which alone the appellants obtained title to the property stated that the property dealt with thereunder was free from any claim or demand from anybody else. That itself will clearly show that even the assignor-lessor did not intend to transfer the present obligation to the appellants herein. I am referring to this aspect, independent of the construction of Section 109 of the Transfer of Property Act, which 1 have already arrived at.

12. Under these circumstances, the second appeal succeeds and the judgments and decrees of the Courts below are set aside and the suit for recovery of Possession instituted by the appellants herein will stand decreed. I may also point out that the Courts below themselves have granted a decree in favour of the appellants for arrears of rent. But since they were not decreeing the suit for possession they had not provided for damages for use and occupation subsequent to the determination of the tenancy. The appellants themselves have claimed damages for use and occupation only at the rate at which the rent it sell was payable and since I am decreeing the suit for recovery of possession now it naturally follows that the appellants will be entitled to damages for use and occupation at the rate at which the rent was paid by the respondent and accordingly the respondent shall pay the same from the date of the determination of the tenancy till the date of recovery of possession. The parties will bear their respective costs throughout, No leave.


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