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T.N. Ramachandra Naidu Vs. T.R. Parameswaran Nair - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtChennai High Court
Decided On
Reported in(1970)1MLJ578
AppellantT.N. Ramachandra Naidu
RespondentT.R. Parameswaran Nair
Cases ReferredCity Tenants Protection Act. (Vide Sundareswarar Devasthanam v. Marimuthu
Excerpt:
- k.s. ramamurti, j.1. the defendant who is the landlord is the appellant. about the year 1945, the plaintiff became a tenant of the defendant, of a small piece of vacant land 47' x 21 1/2 and carried on business in sale of firewood, to quote his own words, ' after putting up a firewood depot with zinc sheets covering the top and the sides and with casuarina poles but without any foundation nor walls.' the plaintiff was paying rs. 25 per month as rent for the site. by march, 1961, the arrears of ground rent came to rs. 375 and the tenant passed a letter exhibit b-2 dated 29th march, 1961, acknowledging that the arrears amounted to rs. 375., that the same would be paid before the end of april, that in default the landlord should take and become the owner of the zinc shed and that the tenant.....
Judgment:

K.S. Ramamurti, J.

1. The defendant who is the landlord is the appellant. About the year 1945, the plaintiff became a tenant of the defendant, of a small piece of vacant land 47' x 21 1/2 and carried on business in sale of firewood, to quote his own words, ' after putting up a firewood depot with zinc sheets covering the top and the sides and with casuarina poles but without any foundation nor walls.' The plaintiff was paying Rs. 25 per month as rent for the site. By March, 1961, the arrears of ground rent came to Rs. 375 and the tenant passed a letter Exhibit B-2 dated 29th March, 1961, acknowledging that the arrears amounted to Rs. 375., that the same would be paid before the end of April, that in default the landlord should take and become the owner of the zinc shed and that the tenant would not raise any objection. The language employed in the letter is to make the landlord the owner of the superstructure if the tenant defaulted to pay the arrears by the end of April. The tenant did not pay the arrears by the 30th of April, 1961, but he passed a letter Exhibit B-1 dated 1st May, 1961, in favour of the landlord. That letter expressly recites that the arrears of Rs. 375 had not been paid as per Exhibit B-2, that the zinc shed was put in possession of the landlord on that day in discharge of the arrears of Rs. 375 and that the zinc shed, therefore, became the property of the landlord and the tenant would have no kind of right whatsoever with regard to the zinc shed. It is common ground that on the same day, i.e., 1st May, 1961, the plaintiff became a tenant of the land together with the superstructure, agreeing to pay Rs. 25 per month, that for two months he paid Rs. 50, that from July to October he was in arrears, that the landlord, therefore, issued a notice Exhibit B-3 dated 9th November, 1961, claiming the arrears of rent from the month of July to October, 1961 and also threatening the tenant with proceedings for eviction. The tenant sent a reply Exhibit B-4 dated 9th January, 1962, in which he admitted all the aforesaid facts and in particular, his having taken the land together with the shed on a rent of Rs. 25 on 1st May, 1961, his being in arrears from July to October. The tenant prayed for some time and also pleaded for reduction of rent to Rs. 15 per month thereafter. In this reply the tenant has assured the landlord that he would pay the arrears July to October as claimed within a very short time and prayed that in the interim no Court proceedings be taken against him and that he was passing that letter B-4 as proof of his bona fides. The tenant, however, did not keep up his promise and the landlord took proceedings under the Rent Control Act for evicting the tenant; the latter put forward a claim of title to the superstructure and the proceedings before the Rent Controller became infructous as the Rent Controller took the view that there was a bona fide dispute as to title. Shortly thereafter, the plaintiff, the tenant, brought the suit (out of which this second appeal arises) for a declaration that Exhibits B-2 and B-1 were signed by him without knowledge of their contents, that he is a Malayalee and did not know Tamil, that he never intended to give up his rights to the superstructure and his rights under the City Tenants Protection Act (hereafter referred to as the Act) and that in any event, the aforesaid documents would not operate as a conveyance of his rights over the superstructure as the document are unregistered. Both the Courts concurrently found that the two letters were passed by the tenant fully knowing the contents and their implications. The Trial Court dismissed the plaintiff's suit holding that the two documents. Exhibits B-2 and B-1 did not require registration in the view that the zinc shed had no foundation and had no walls and no part of it was imbedded to earth. On this aspect, however, the lower appellate Court took the view that the zinc shed would amount to a building within the definition of Section 2, Sub-clause (6) of the Registration Act. It also took the view that the lease-hold right of the plaintiff was immoveable property and for that reason also the two documents required registration. In this view of the law, the lower appellate Court reversed the decision of the trial Court and upheld the claim of the tenant that the tenant's leasehold as well as his right to the superstructure would not in any manner be affected by the two letters. Hence the present appeal by the landlord.

2. The finding of the Courts below that the tenant passed all the three letters with full knowledge of their contents and their implications was not challenged, the only point stressed by Counsel on both sides related to the effect of the transaction as evidenced by Exhibits B-1 and B-2, whether they required registration and as to what exactly took place on 1st May, 1961. It is not in dispute that at the time of Exhibits B-1 and B-2, the tenant was entitled to protection under the Madras City Tenants Protection Act.

3. I may at once say that the decision of the lower appellate Court is wrong and unsustainable inasmusch as it has not considered the question for decision from a correct perspective and has not correctly appreciated the legal effect of the agreement evidence by Exhibit B-2 dated 1st May, 1961, and as to what took place on that date and the precise legal implications thereof.

4. Learned Counsel for the respondent urged (1) that the superstructure (zinc shed) which belonged to the tenant is immoveable property of value exceeding Rs. 100 and therefore without registration no title would pass to the landlord; (2) that the right of the tenant under the City Tenants Protection Act to get a conveyance of the land which undoubtedly would exceed Rs. 100 in value as well as the right of the tenant to claim compensation by his agreeing to the landlord taking the superstructure are rights and interests over immoveable property in two aspects and as under Exhibits B-1 and B-2 those rights had been relinquished and/or conveyed to the landlord, the two documents require registration as dealing with rights in and interest over immoveable property. I see no substance in these contentions as they rest upon a truncated and restricted view of the two letters Exhibits B-1 and B-2 besides ignoring the true significance as to the manner in which the parties implemented that arrangement and the consequences of the change in the character of the tenant's possession of the property on and from 1st May, 1961.. In my view, the events that took place on 1st May, 1961, clearly amount to an express, surrender or in any event an implied surrender within the meaning of section, in, Sub-clause (e) and (f) of the Transfer of Property Act and the tenant, after 1st May, 1961, would be estopped from contending that the landlord had not become the owner of the superstructure and he had no power to grant a lease of the building; and the site treating himself as the owner of the same. The position will be the same even if the tenancy was one in which the tenant had the protection of a special tenancy legislation. The doctrine of surrender by operation of law or implied surrender are expressions used to describe the situation like the present where the law implies a surrender from unequivocal conduct of both parties which is inconsistent with the continuance of the existence of the prior tenancy. Such a surrender is an act of the law and takes place independently of and even in spite of the intention of the parties. It is presumed to have preceded the act to which the tenant is a party. The doctrine of implied surrender applies alike to contractual tenancies as well as tenancies protected by tenancy legislations meant for the protection of the tenants.

5. The rights of the landlord and the tenant will have to be determined with reference to the provisions of the Transfer of Property Act and the City Tenants : Protection Act, the provisions of the latter Act prevailing wherever there is specific provision therein. Under the Transfer of Property Act, when land alone is leased, the lessee has no other right over the land except as a lessee and on the determination of the lease, the lessor becomes entitled to possession of the land. Under Section 108 (h) of the Transfer of Property Act, on the determination of the lease, the lessee whilst in possession of the property leased can at any time remove the superstructure which the lessee has put on the land and leave the property in the state in which the lessee received it. The lessee the owner of the building put up by him on the land, and even so, his only right is to-remove the superstructure. He has no right to compel the landlord to take the superstructure and pay the value thereof. (Vide Sundareswarar Devasthanarn v. Marimuthu) I.L.R. : AIR1963Mad369 . Even with regard to this limited right of the lessee to remove the superstructure, there can be a contract to the contrary by which the lessee may agree not to exercise his right to remove the superstructure with or without any claim for compensation therefor. Vide Dr. K.A. Dhairyawan v. J.R. Thakur : [1959]1SCR799 . What is important to notice is that if the lessee does not exercise his right to remove the superstructure on the determination of the lease, the superstructure becomes part of the demised premises and thereafter if the lessee continues in possession as a tenant, he will be a tenant of the land as well as of the building. In other words, if en the determination of the lease, the lessee does not remove the superstructure it becomes part of the land and the property of the landlord, without any further conveyance or formal transfer of the superstructure from the lessee to the lessor.

6. As against this, the provisions of the City Tenants Protection Act may be examined. The right of the tenant concerning the superstructure put up by him and the compensation thereof are to be found mainly in Sections 3 and 4 of the Act-The tenant on ejectment will be entitled to be paid compensation or the value of the building erected by him which shall be determined by the Court in a suit for ejectment filed by the landlord and when the landlord makes the payment into Court, the amount of compensation declared by the Court, the tenant must put the landlord into possession of the land with the building. This right of the tenant to compel the landlord to take the superstructure and pay the value thereof is a statutory right conferred upon the tenant under this Act which right, the tenant is not entitled to, under the provisions of the Transfer of Property Act. Even so, the tenant cannot of his own accord initiate a proceeding compelling the landlord to take the superstructure and pay the compensation therefor. This right to claim compensation can be exercised by the tenant only if the landlord initiates a proceeding to eject the tenant. Vide Mohanambal v. Selvanqyaki (1961) 2 M.L.J. 261 , where Srinivasan, J., has held that ' the provisions of the Act do not contemplate the order determining compensation, and directing its payment at any point of time anterior to the determination of the ejectment application itself.' In a proceeding to eject the tenant, the tenant can exercise the option of claiming either the compensation for the superstructure under Sections 3 and 4 or ask for a conveyance of the land itself as specified in Section 9 of the Act after paying the market value determined by the Court. The difference in the language of Section 4 and Section 9 should be borne in mind. Where the tenant exercises the option of claiming the compensation for the superstructure, no conveyance of the superstructure by the tenant to the landlord is contemplated.. All that happens is, the tenant walks out, putting the landlord into possession of the land with the building, on receipt of compensation, while, where relief is afforded, under Section 9, on payment by the tenant of the price for the land as determined by the Court, the landlord conveys to the tenant the extent of the land for which said. price had been paid by the tenant and Section 9 (3) also contemplates a regular conveyance with stamp duty and registration. The only departure which Sections 3 and 4 make from the provisions of the Transfer of Property Act is that the tenant, under the City Tenants Protection Act is entitled to compel the landlord to take the superstructure, but even so, there is no conveyance of the same to the landlord. The very act of payment of the compensation makes the superstructure a part of the land demised as belonging to the landlord. The freedom of the parties to enter into a contract to the contrary within the meaning of Section 108 of the Transfer of Property Act is, however, controlled by Section 12 of the City Tenants Protection Act.. It is unnecessary to refer to the earlier decisions on the point about the scope of the protection afforded to the tenant under Section 12 of the Act after the recent pronouncement of the Supreme Court in Vajrapani Naidu v. N.T.C. Talkies : [1964]6SCR1015 , and the recent Bench decision of this Court to which I was a party, in Subramania Iyer v. M.H.P. Fund Ltd. I.L.R. : AIR1965Mad484 . It may now be taken as settled law that any stipulation by the tenant to surrender possession of the land with the superstructure erected by the tenant or to accept as compensation any value other than the value to be determined under Section 3 of the City Tenants Protection Act, will not be valid and in a. proceeding for ejectment, the tenant will be entitled to insist upon either the conveyance of the land itself under Section 9 or payment of the compensation to be determined in accordance with Sections 3 and 4 irrespective of any contract to the contrary. So long as the tenant is in possession of the property as a lessee of the land, the tenant will be entitled to the protection under Section 12 and insist upon his rights under Sections 3 and 4 or under Section 9 at his option, even though he had entered into a. contract to the contrary. In Subramania Iyer v. M.H.P. Fund Ltd. : AIR1965Mad484 , the lessee agreed to erect the building on the site leased to him according to certain specifications and covenanted to surrender possession of the entire property including the superstructure on the expiry of the lease. The tenant agreed to receive only the value of the building then current or a sum of Rs. 5,000 whichever was less. The Bench. Held that such a stipulation would not be binding upon the tenant and deprive the tenant of his right to obtain a conveyance under Section 9 of the Act. This Bench, decision can be invoked by the tenant in the instant case if the matter had stopped with the letter, Exhibit B-2, dated 29th March, 1961, by which the tenant acknowledged the arrears in the sum of Rs. 375 and agreed that if the same was not paid by the end. of April, the landlord would be entitled to take and become the owner of the zinc shed and that the tenant would not raise any objection. For the tenant to continue to be entitled to the rights under Sections 3 and 4 or under Section 9 as the case may be, i.e., at his option, he must continue to be a tenant of the land. The tenant would lose the benefit of these provisions if he subsequently enters into a contract with the landlord either by way of entering into a new lease or by actually surrendering possession of the property to the landlord with or without compensation. The overriding right of the protection under Section 12 of the Act read with Sections 3 and 4 or Section 9 as the case may be, would avail the tenant only so long as he continues to be in possession of the land as lessee even though it may be after the expiry of the lease. What is crucial is his continuance must be as a lessee of the land. There is nothing in the City Tenants Protection Act which precludes a tenant from receiving satisfaction of his rights under the Act outside Court before any proceeding is initiated by the landlord. The tenant may not like to purchase the land and the tenant may be content to receive some compensation, even though it may be less than what may be determined under Section 4 and walk out of the land and if on the tenant so doing the landlord takes possession of the land and the superstructure, the tenant's right under the City Tenants Protection Act come to an end once for all. The landlord thereafter may lease the property, the land and the building together, to any third party or he may even grant a lease to the tenant himself and when the tenant is in possession thereafter, his possession is totally different, he is not a tenant of the mere land entitled to the protection of the Act, but he is an ordinary tenant of the land and the building to which the provisions of the Transfer of Property Act alone would apply. It is only where the terms of the tenancy are changed and a new tenancy comes into being, though in favour of the same tenant, that the doctrine of express or implied surrender comes into play. The operation or the applicability of that doctrine is not in any way controlled by the provisions of the City Tenants Protection Act.

7. The fact that the tenant continues in physical possession of the property without a break is not decisive. He may continue in possession but yet may be under a different contract of lease either with regard to the property or with regard to the -other terms of the tenancy. In this context reference may be made to the decision of the Privy Council in Ranganathan v. Ethirajulu . The landlord leased a plot of land for a period of 10 years from 1st December, 1912, with a liberty to the tenant to erect a superstructure. On 30th September, 1922, (shortly before the expiry of the ten years period) an agreement was arrived at by which the lessee was given a fresh lease at an enhanced rent, in order that further building operations may go on. A formal lease deed was executed on 1st February, 1923, in respect of the same plot of land for a further term of ten years from first October, 1922. The point raised was whether the physical possession of the tenant was attributable to a new tenancy taking effect from 1st of October, 1922, or whether the tenant was in possession under the original lease of October, 1912, because it is only in the latter case that the tenant would be entitled to the protection under the City Tenants Protection Act. The Privy Council held that the new tenancy came into being after 21st of February, 1922, when the Act came into force in the city of Madras. The argument that the possession of the tenant must be held to be attributable to the old tenancy was not accepted. The Privy Council observed as follows:

The appellants maintain that the tenancy which terminated on 30th September, 1932, was created by the lease of 1912, the lease of 1923 being merely a continuation of the earlier lease, and they refer to the verbal agreement made before the expiry of the 1912 lease in support of this argument. But their Lordships are clearly of opinion that, though the physical possession was continuous, the possession from 1st October, 192 2, was attributable to a new tenancy, which was formally embodied in the lease dated 1st February, 1923, the increased rent thereby provided having been paid by them for 1st October, 1922, in terms of the verbal agreement for a lease. Their Lordships, accordingly, concur in the view of both the Courts below, that the tenancy here in question was not created before the commencement of the Act, and that the Act does not apply.

Section 111 (e) of the Transfer of Property Act deals with the determination of the lease by an express surrender as a result of the lessee yielding up his interest in pursuance of a mutual agreement between the lessor and the lessee and Section 111 (f) deals with an implied surrender. These provisions merely embody the provisions of the English Law except this difference that in the case of an express surrender, in England, it is required by the statute to be in writing. An express surrender consists in the yielding up of the lessee's interest to the lessor and it takes effect like an ordinary contract by mutual consent on the lessor's acceptance of this act of surrender of the lessee. No technical words are necessary to effect a surrender and any form of words which will indicate the intention will be sufficient. In India, for an express surrender no such formality of a writing is necessary and a deed of surrender need not be registered if there are facts de hors. (Vide Mulla's Transfer of Property Act, 5th Edition page 735).

8. I may now refer to some of the decisions in which it was held that either no writing is necessary for a tenant to surrender the lease or, in a case where surrender was not evidenced by a document in writing as required by a particular statute, surrender was held to have taken place on the facts where the tenant had yielded up possession to the landlord. Under Section 12 of the Madras Rent Recovery Act, Madras Act VIII of 1865, landlords are precluded from ejecting the tenants except by a decree of civil Court provided the tenants can always relinquish their lands by a writing signed by them in the presence of witnesses. In Narasimma v. Lakhmana I.L.R.(1890) Mad. 124, the tenant surrendered the unexpired portion of the lease without a document in writing and the landlord thereafter leased the property to some other tenant. The tenant filed a suit for restoration of possession on the ground that as there was no surrender in writing as required by the proviso to Section 12 of the Rent Recovery Act, the tenancy must be deemed to be subsisting. This argument was not accepted. It 'was held that the section did not render wholly void and inoperative a surrender which although not reduced to writing has in fact taken place. It was pointed out that any other view would result in serious injustice to the landlord because the tenant may refuse to give a document in writing, may not cultivate the land at all and may -give up the holding and the landlord would be helpless. In this view it was held that that it would always be open to the tenant to surrender by delivering possession to the landlord even without a document in writing. In Bengal Goal Co. v. Monoranjan A.I.R. 1919 Cal. 694, the Bench of the Calcutta High Court had held that in India, the surrender or relinquishment does not require to be in writing, but can be inferred from the actions of parties. In the same volume in Abdul Majid v. Hari Charan Halder A.I.R. 1919 Cal. 840, it was held by a Bench of that High Court that a surrender by the tenant though for consideration was operative without a registered instrument to evidence the surrender. In that case, in execution of a rent decree, the tenant--judgment-debtor, surrendered the tenancy to the landlord, the latter agreeing to forego his claim for rents due. It was held that under Section 111 of the Transfer of Property Act, under a mutual agreement, a surrender could be effected and it did not require registration. Reference may also be made to the decision of the Patna High Court in Singheshwar Jha v. Ajab Lal : AIR1941Pat142 , in which it was held that a surrender by a tenant of occupancy right was valid even though the document was unregistered when there was other evidence to show that in fact there was a surrender. The earlier decision of the Patna High 'Court in Jagdamba Prasad v Sham A.I.R. 1919 Pat. 13, in which it was held that the deed of surrender need not be registered and a surrender can be proved by facts de hors the document was followed. All these decisions apply the principle of the early decision of the Privy Council in Imampandi Begam v. Kamaleswari Pershad I.L.R.(1887) Cal. 109 where the Privy Council has pointed out that even though there was no registered document, the surrender can be given effect to when there is proof of relinquishment of the possession.

9. Learned Counsel for the respondent placed considerable reliance upon the Bench decision of this Court reported in Rangayya Appa Ran v. Kameswara Rau I.L.R.(1897)Mad. 367 : 7 M.L.J. 71. In that case the tenant executed an unregistered deed of relinquishment surrendering his holding in favour of the Zamindar in consideration of the latter waiving his right to claim arrears of rent. The Bench held that even though, under Section 12 of the Madras Rent Recovery Act, it would be open to a tenant to surrender his holding; by a writing signed in the presence of witnesses (though unregistered), the document would require registration if the relinquishment was for consideration, i.e., the waiver by the landlord to recover the arrears of rent. That case is easily distinguishable. The purport of the arrangement, Exhibit B-1 dated 1st May, 1961 in the instant case, is totally different. The lease is a monthly lease and all that had happened under Exhibit B-1 is to record that the 1 ease has come to an end by 30th April, 1961. Under this document he is not relinquishing any right over immoveable property as in the case of relinquishment of occupancy rights. It is a monthly lease and nothing to prevent the landlord and the tenant to agree that the tenancy came to an end on the expiry of any particular month. Further what the tenant had done under Exhibit B-1 is not with respect to the vacant site leased to him, but the tenant has only stated that he will not exercise his right to remove the superstructure and the landlord himself can take the same. The arrangement embodied in Exhibit B-i in substance is a. declaration by the tenant that he is not exercising his right to remove the superstructure. Such a document does not require registration. If the relationship between the owner of the land and a third party who had put up a superstructure on that land is anything other than the relationship of a landlord and tenant, different considerations may arise. Even then, I am of the view that the right to remove the superstructure if relinquished by a document will not require registration. The position in the case of landlord and tenant is a fortiorai and clear because under Section 108 (h) of the Transfer of Property Act, if the tenant does not remove the superstructure, whilst he is in possession, he loses the right and by force of Section 108 (A), the superstructure becomes the property of the landlord. A careful perusal of Exhibit-B-1 shows that the tenant has given up his right to remove the superstructure. The legal position; will be the same even when the City Tenants Protection Act applies.

10. In S.M. Transports (P.) Ltd. v. Sankaraswamigal : AIR1963SC864 , the Supreme Court had to consider the nature of the right of the tenant to purchase the land in question under Section 9 of the Act. In that case, the Government first issued a notification notifying the town of Tanjore as coming within the purview of the City Tenants Protection Act but by a subsequent amendment, Madras Act XIII of 1960, the protection given to tenants of non-residential buildings in the municipal towns of Tanjore and certain other towns was withdrawn. On behalf of the tenant, it was argued that by the prior notification of the Government of Madras, the tenant had acquired valuable right to property and that the subsequent Act, Madras Act XIII of 1960, which deprived the tenant of that right was unconstitutional as infringing the fundamental rights under Article 14 read with Articles 19 and 31 of the Constitution. This argument was not accepted. The Supreme Court held that this statutory right to apply for the purchase of the land is not a right to property, that this is only in the nature of a contract to purchase property and does not create an interest in immoveable-property and that this right which stems from a statute cannot expand its content or make it any the less non-proprietary right. It is sufficient to extract the following observations:

We now come to the last question, namely, whether the 1960 Act deprived the appellants of their right in property. To state it differently, the question is whether a tenant of a non-residential building in Tanjore had acquired a right of property under the 1955 Act and whether he was deprived of that right or otherwise restricted in the enjoyment thereof by the 1960 Act. The 1955 Act, as we have already noticed, conferred two rights on such a tenant, namely, (i) every tenant on ejectment would be entitled to be paid as compensation the value of any building erected by him, and (ii) such a tenant against whom a suit in ejectment has been instituted has an option to apply to the Court for an order directing the landlord to sell the land to him for a price to be fixed by the Court. We are not concerned here with the rights conferred under Section 3 of the Act, for the simple reason that neither of the appellants claimed a right thereunder. Both of them have taken proceedings only under Section 9 of the Act and they have approached the High Court for a writ of mandamus that the petition should be disposed of under the provisions of Section 9 of the Act. This Court's opinion on the question of the constitutional validity of the Act in so far as it deprived the appellants of their right under Section 3 of the principal Act is not called for : that will have to be decided in an appropriate case. The question that falls to be considered is whether the second right, namely the right of a tenant to apply to the Court for an order directing the landlord to sell the land to him for a price to be fixed by it, under Section 9 of the principal Act is a right to property. The law of India does not recognize equitable estates. No authority has been cited in support of the contention that a statutory right to purchase land is, or confers, an interest or a right in property. The fact that the right is created not by contract but by a statute cannot make a difference in the content of the incidents of the right : that depends upon the nature and the scope of the right conferred. The right conferred is a right to purchase land. If such a right conferred under a contract is not a right of property, the fact that such a right stems from a statute cannot obviously expand its content or make it any the less a non-proprietary right. In our view a statutory right to apply for the purchase of land is not a right of property. It is settled law that a contract to purchase a property does not create an interest in immoveable property. Different consideration may arise when a statutory sale has been effected and title passed to a tenant : that was the basis of the judgment , of this Court in Jayvantsinghji v. State of Gujarat : AIR1962SC821 , on which Mr. Viswanatha Sastry relied. But we are not concerned here with such a situation. It is said that the appellants have acquired a right under the 1955 Act to hold and enjoy the buildings erected by them by exercising their right to purchase the site of the said buildings and that the impugned Act indirectly deprived them of their right to hold the said buildings. This argument mixes up two concepts, namely, (i) the scope and content of the right, and (ii) the effect and consequences of the deprivation, of that right on the other properties of the appellants. Section 9 of the principal Act, extended by the 1955 Act, only confers a right in respect of the land and not of the superstructure. If that Act held the field, the appellants could have purchased the land, but by reason of the 1960 Act they could no longer do so Neither the 1955 Act conferred any right as to the superstructure under Section 9 of the principal Act nor did the 1960 Act take that right away. If this distinction between the land and the superstructure is borne in mind the untenability of the argument would become obvious.

The principle of this decision was followed and applied by Natesan, J., in a decision reported in Natesa Mudaliar v. S.B.K.P.K. Bhajana Matam I.L.R.(1967)Mad. 414 : (1966) 1 M.L.J. 130 . The learned Judge has held that the right to exercise an option under the statute is merely a privilege conferred on the tenant and the tenants' right cannot be regarded as right to property--Vide observations at page 136.

11. I may also refer to the decision of the Privy Council in Abbott v. Minister for Lands L.R. (1895) Appeal Cases, 425. In that case the appellant purchased certain area of Crown land in the county of Brisbane and the sale was carried out under Section 25 of the Crown Lands-Alienation Act of 1861. Later on, under Section 22 of the Act, he applied for the sale of further extent of land adjoining the land which he purchased under Section 25.. There was a conditional purchase within the meaning of Section 22 of the Act. In 1884, the Crown Lands Act of that year was passed and by Section 2, the Crown Lands Act of 1861 was repealed subject to a saving provision. The Act of 1884 did not contain a similar provision or the counter part of Section 22 of the Act of 1861, there being no provision relating to the conditional purchase of adjoining lands by a holder in fee simple of lands granted by the Crown. It was perhaps a matter of policy and such holders were excluded from the purview of the Act of 1884. The argument on behalf of the appellant was that the following proviso in the Act of 1884 preserved the right of the appellant under the Act of 1861.

Provided always that notwithstanding such repeal:(b) All rights accrued and obligations incurred or imposed under or by virtue of any of the said repealed enactments, shall subject to any express provisions of this Act in relation thereto remain unaffected by such repeal.

The contention was that the right to make the additional conditional purchase was a right accrued at the time when the Act of 1884 was passed and remain unaffected despite the repeal of the Act of 1861. The Privy Council observed as follows:

They think that the mere right (assuming it to be properly so-called) existing in the members of the community or any class of them to take advantage of an enactment, without any act done by individual members availing himself of that right, cannot properly be deemed a ' right accrued ' within the meaning of the enactment

12. From the foregoing it will be seen that the right of the tenant which stems from the statute is merely in the nature of a privilege or merely a right to purchase property which is not immoveable property so far as Section 9 of the Act is concerned and so far as the superstructure is concerned, the right under Sections 3 and 4 of the Act is merely a right to compel the landlord to pay the tenant the value therefor and there is no question of a conveyance of the superstructure by the tenant to the landlord and when the tenant agrees to take compensation either orally or in writing, the tenant merely gives up his right to remove the superstructure. There is no notion of a conveyance involved when the tenant works out his right under Sections 3 and 4 of the Act and the Registration Act does not come into play at all. As observed already, there is nothing in the Act which precludes the tenant from entering into a final settlement with the landlord with regard to the value of the superstructure and accept some agreed compensation. After that stage is reached, the tenant cannot claim any right under the Act.

13. It only remains to deal with the aspect of implied surrender arising under Section 111 (f) of the Transfer of Property Act which completely supports the case of the landlord. Implied surrender is a surrender by operation of law which arises by the creation of a new relationship and in this is necessarily implicit in the relinquishment of possession by the tenant. There is no difference between the Indian Law and the English law on this matter. Implied surrender by operation of law is as a result of the agreement between the landlord and the tenant that the term shall be put an end to followed by a change of possession. Familiar instance of a surrender by operation of law is when the tenant takes a new lease from the landlord to commence during the term of the old lease or by consent putting an end to the old lease and the tenant taking a new lease. The landlord has no power to grant the new lease except upon the footing that the old lease is surrendered, and the tenant being a party to the grant of the new lease, would be estopped from denying the surrender. Consequently the acceptance of the new lease operates as a surrender of the old one, Vide 23, Halsbury's Laws of England, Third Edition, paragraphs 1414 and 1415. A surrender by operation of law also is implied when the tenant remains in occupation of the premises in a right and capacity inconsistent with the rights of the tenant under the prior lease. The principle is the same even in the case of a statutory tenancy. A statutory tenancy can come to an end either when the tenant gives up possession by agreement or changes the character of his occupation or enters into a new contractual tenancy--Vide 23, Halsbury's Laws of England, Third Edition paragraph 1589 at page 810. Reference may also be made to the following statement of the law, in Woodfall Landlord and Tenant, Volume I, Twentyseventh Edition (1968) at pages 862 and 863:

The principle of surrender by operation of law).

The term 'surrender by operation of law' or 'implied surrender' (there being no distinction) is the expression used to describe all those cases where the law implies a surrender from unequivocal conduct of both parties which is inconsistent with the continuance of the existing tenancy. Thus it is properly applied to cases where the owner of a particular estate has been party to some act having some object other than that of a surrender, but which object cannot be effected whilst the particular estate continues, and the validity of which act he is by law estopped from disputing. Such surrender is the act of the law, and takes place independently of, and even in spite of, the intention of the parties. It is presumed to have a preceded the act to which the tenant is a party.

Surrenders by operations of law are excepted from the requirement of a deed (Law of Property Act 1925, Section 52).

Surrender by acceptance of a new lease. Of this sort are surrenders created by the acceptance of a new lease from the reversioner to begin at any time during the continuance of the first lease; for the acceptance of a valid new lease implies a surrender of the existing lease and operates as a surrender thereof by act and operation of law, but not if the second lease be void or voidable. Though an agreement for a future lease does not itself operate as a surrender by operation of law, it would seem necessarily to imply an agreement to surrender the existing lease, so that the practical result will probably be the same. The reason why such acceptance of a new lease operates as a surrender of the first is that the lessee, by accepting the new lease, has been party to an act, the validity of which he is afterwards estopped from disputing, which would not be valid if the first lease continued to exist. He would be estopped from saying that the lessor had not power to make the new lease; and as the lessor could not grant the new lease until the first lease was surrendered, the acceptance of the new lease is of itself a surrender of the first.

Such a surrender is subject to an implied condition that the new lease is good, and that if it be not so, the old lease remains in force.

I may also refer to the following statement of law in Hill and Redman's Law of Landlord and Tenant, Fourteenth Edition, page 492, paragraph 385:

By grant of new lease to tenant.

A surrender by operation of law takes place when the lessee takes a new lease from the lessor to commence during the term of the old lease, even though the new lease is for a shorter term then the residue of the old term. This surrender is founded upon estoppel, and takes place without regard to the intention of the parties. The lessor has no power to grant the new lease except upon the footing that the old lease is surrendered, and the lessee, being a party to the grant of the new lease, is estopped from denying the surrender. Consequently the acceptance of the new lease operates as a surrender of the old one; and the result is the same although the new lease is a future lease, or although the new lease is by parol and the old lease was by deed. But it is essential to such a surrender that the new lease should be valid and should take effect at 'once as a lease; hence, there is no implied surrender by the acceptance by the lessee of a new lease which is void, or which is voidable and is in fact avoided; or by a mere agreement for a new lease unless, perhaps, it is one which is capable of being specifically enforced.

Where a tenancy if contractual would have been surrendered by operation of law the fact that it is a statutory tenancy will not prevent a surrender from taking place on the grant of a new tenancy. A person in possession as statutory tenant may thus be turned by agreement into a contractual tenant.

Any arrangement between the landlord and tenant which operates as a fresh-demise will work a surrender of the old tenancy; and this may result from an agreement under which the tenant gives up part of the premises and pays a diminished rent for the remainder, provided a substantial difference is thereby made in the conditions of the tenancy. But a surrender does not follow from a mere agreement made during the tenancy for the reduction or increase of rent, unless there is. some special reason to infer a new tenancy, where, for instance, the parties make the change in the rent in the belief that the old tenancy is at an end.

It seems that a fresh demise is not essential to the surrender, and that there is a surrender by operation of law where the former tenant is allowed to occupy the premises rent free, i.e., he is granted a licence to occupy the premises rent free.

From the above discussion it will be seen that the doctrine of surrender by operation of law rests on the basic principle that acceptance of different and inconsistent interest in the demised premises cannot stand with the original lease and is further founded on estoppel which precludes the tenant from denying the title of the landlord.

14. Reference may next be made to the decision in Foster v. Robinson L.R. (1951) I K. B. 149, in which the doctrine of implied surrender by operation of law was applied even in the case of a tenancy protected by the Rent Restriction Acts in England. In that case, the owner who was managing a farm let a cottage near by to a man who was working in the farm at a particular rent per half year. Some years thereafter the tenant on account of age and infirmity could not work in the farm. The landlord and the tenant agreed that the existing tenancy would cease and that the tenant could live in the cottage rent-free till he died. The tenant lived in the cottage rent free without paying any rent till he died. The tenant's daughter was living with her father for many years and on her father's death it was contended that she was entitled to remain in the cottage paying the old rent. The landlord took proceedings to recover possession and it was held that he was entitled to possession on the ground that the original tenancy had, as a result of the arrangement in 1946, been surrended by operation of law and that this was so although the tenancy was one to which the Rent Restriction Act had applied. Evershed, Master of the Rolls, dealt with the matter in the following manner:

The question in the present case is whether, on the facts as found by the county Court Judge (leaving aside for the moment any question of the Rent Acts), there are circumstances supervening to prevent the tenant from denying that the old relationship has been superseded by the new. If there is a new arrangement which the tenant is asserting by his conduct then he is estopped from denying that the landlord was capable of entering into that new arrangement; and, if the new arrangement could not be entered into while the old agreement subsisted, it follows that the tenant is equally prevented from denying that the old agreement has gone.

* * * *It is not a question of mere agreement here; there were here an agreement and superadded acts in pursuance of the agreement sufficient to show that effect in the fullest sense was given to the agreement, the new agreement being inconsistent with the continuation of the old tenancy I therefore consider that, unless the matter is affected otherwise by the Rent Restriction Acts, there is no good ground for saying that this case on the facts as found would not suffice to produce a surrender by operation of law.

Rejecting the argument that this doctrine of implied surrender cannot be applied in the case of a building controlled by Rent Restriction Act, the learned Master of the Rolls observed as follows at page 157:

That, however, is not this case, Another instance of the sort of transaction which might occur was put by my brother Singleton early in the argument. A landlord may say to a tenant : ' You are getting on in years. I am grateful to you for all you have done and I am quite willing to have the present tenancy put an end to and to allow you to remain on as my licensee for the rest of your life without paying rent. That will give me the advantage, if I survive you, that after your death I shall be able to get vacant possession; but I shall not be able to disturb your occupancy during your life. Alternatively, you can stay on as you are. I may try to get rid of you if I can provide alternative accommodation. But otherwise the right that you will enjoy will persist in favour of your daughter or whoever else may under the Act be entitled to it after your death. Which do you prefer?' Suppose that the tenant says that he prefers the former of the two offers which will enable him to spend his life in the house without paying any more rent : if that were given effect to by a carefully drawn agreement, it is very difficult to suppose that the Court would feel bound to disregard it.

Singleton, Lord Justice, repelled the argument that to infer an implied surrender by operation of law in such cases would defeat the provision of the Rent Restriction Act in the following terms:

It was urged on us that to uphold this judgment would be to open wide a door enabling people to defeat or to get round the provisions of the Rent Restriction Acts. I do not take that view. I regard this as a case in which the landlord acted perfectly properly and in the interests of the occupier. Not a word can be said against him. Although county Court Judges who have these matters before them obviously must be careful before they find an agreement of this kind, I do not think that this Court ought to hesitate to uphold this judgment in favour of a landlord who was acting, as I think, in the best interests of the occupier of the house. It is for the county Court Judge to find the facts and he has done that in a careful judgment. He came to the conclusion that from May, 1946, the occupier was not a tenant at all. I agree with that finding. The position of the defendant's father was altered by agreement between the parties; there was a complete change; the father became a licensee, and could not have been heard to say that he was anything more than that. He had had the advantage of the agreement and had paid no rent for three and a half years.

The principle of this decision was followed and applied in a later decision in Rogers v. Hyde L.R. (1951) 2 K.B. 923 , Lord Asquith stated the law in these terms:

If the preceding tenancy was contractual, this is obvious : If it was a statutory tenancy, there is recent and binding authority for the proposition that a contractual (and non-protected) tenancy can replace a statutory tenancy by a notional surrender and regnant or by other means : see, for instance, Foster v. Robinson (1951) 1 K.B. 149 a case recently decided by the Court of appeal.

In The Bungalows, Ltd. v. Mason (1954) 1 All E.R. 1002, the same view was taken that the position of a statutory tenant could by agreement be converted into that of a contractual tenant at the same time attracting the doctrine of implied surrender.

15. The principle of the abovesaid decisions was applied and followed in a later decision reported in Collins v. Claughton (1959) 1 All E.R. 95 : (1959) 1 W.L.R. 145. In that case the defendant who was a statutory tenant in a dwelling house governed by the Rent Acts, wrote a letter to the lessor that the tenant had come to an agreement with his wife that the tenancy may be changed in the rent book in her name and that the rent in future would be paid by his wife. The landlord agreed to this arrangement, the tenancy was changed in the name of the wife who paid the rent instead of the defendant. About a year later, the wife left her husband who continued in occupation of the premises. Immediately after the wife left her house the wife gave notice to the landlord that she was terminating the tenancy and thereupon the defendant, the husband, offered to pay the rent. But the landlord refused and commenced proceedings claiming possession of the premises. It was held that the arrangement by which the tenancy was changed in the name of the wife operated as implied surrender of the statutory tenancy and the creation of a new tenancy. It was also held that there was nothing in the Rent Act which made a pre-requisite for the surrender of a statutory tenancy that there should be a giving up of physical possession.

16. In a recent decision of the Andhra Pradesh High Court in Munuswamy v. Muniramiah : AIR1965AP167 , the doctrine of surrender by operation of law by a tenant taking a new lease was discussed and it is sufficient to refer to the following observations at page 169.

An express surrender effectuates the clear and unambiguous intention of the lessee to ' surrender and yield up ' his leasehold to the lessor. It is therefore a matter of intention of the parties and not a matter of implication of the law. But in an implied surrender, an intention to surrender is not expressed. It is inferred by the law. An implied surrender is an act of the law and takes place independently of, and in some cases even in spite of, the intention of the parties. The law infers such surrender from the act and conduct of the parties. ' Thus it is properly applied to cases where the owner of a particular estate has been party to some act having some other object than that of a surrender, but which object cannot be effected whilst the particular estate continues, and the validity of which act he is by law estopped from disputing'. (See Lyon v. Reed (1844) 13 M. &W.; 285, and Bessell v. Landsberg L.R. (1845) 7 Q.B. 638.

A familiar instance of a surrender by operation of law is when the tenant takes a new lease from the landlord to commence during the term of the old lease. Here the tenant does not express his intention to surrender and determine the old lease. But by his taking a new lease, the law infers a termination of the existing lease. The reason is that the landlord has no power to grant the new lease except upon the footing that the old lease is surrendered; and the tenant, being a party to the grant of the new lease, is estopped from denying the surrender. This is how surrender by operation of law comes about.

Vide also statement of law in Mulla's Transfer of Property Act, 5th edition, at page 735.

17. The principle of the above cases clearly applies to the instant case. From the foregoing it will be seen that the very fact of the respondent becoming a lessee of the superstructure involves a surrender by operation of law.

18. It may also be added that a tenant is not entitled to maintain such a suit for declaration that he is entitled to rights under Sections 3 and 4 or under Section 9 of the City Tenants Protection Act. (Vide Sundareswarar Devasthanam v. Marimuthu : AIR1963Mad369 .

19. For all these reasons the appeal is allowed and the suit is dismissed with costs in the Courts below. Appellant will be entitled to restitution if he had paid costs to the respondent. There will be no costs in the second appeal.

20. No leave.


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