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Ganges Manufacturing Co. Ltd. Vs. Smt. Radharani Dasi W/O Babu Suresh Chandra Nandi and ors. - Court Judgment

LegalCrystal Citation
SubjectProperty
CourtKolkata
Decided On
Reported inAIR1945Cal89
AppellantGanges Manufacturing Co. Ltd.
RespondentSmt. Radharani Dasi W/O Babu Suresh Chandra Nandi and ors.
Cases ReferredSouth of England Dairies Ltd. v. Baker
Excerpt:
- .....the appeal is as regards the rate of rent. the plaintiff claimed it at the rate stipulated in the head lease granted by her, while the defendant company who were in the position of sub-lessees in respect of the disputed tenancy admitted liability at the rate reserved by their sub-lease. both sides agree that the tenancy is governed by the transfer of pro. perty act,, and comprises a two annas two gandas two karas and two krants, that is to say, a 2/15ths share in three plots of niskar land, known as rudrapara lands, in mouza bansberia within police station magra in the district of hooghly. admittedly the plaintiff was and is owner of this 2/15ths share. on 21st february 1930, she granted a mourashi mokorari settlement of the same to one anadi. kumar nandi on taking from him a registered.....
Judgment:

Biswas, J.

1. This is an appeal on behalf of defendant 1, the Ganges ., and is directed against the judgment and decree of the Subordinate Judge, Second Court, Hooghly, dated 2nd September 1940, affirming those of the Munsif, First Court, Hooghly, dated 21st July 1939. Both Courts gave the plaintiff, Srimati Radharani Dasi, a decree for rent, refusing the other reliefs for joint or separate possession which she had claimed. The sole question which has been canvassed in the appeal is as regards the rate of rent. The plaintiff claimed it at the rate stipulated in the head lease granted by her, while the defendant company who were in the position of sub-lessees in respect of the disputed tenancy admitted liability at the rate reserved by their sub-lease. Both sides agree that the tenancy is governed by the Transfer of Pro. perty Act,, and comprises a two annas two gandas two karas and two krants, that is to say, a 2/15ths share in three plots of niskar land, known as Rudrapara lands, in mouza Bansberia within Police Station Magra in the district of Hooghly. Admittedly the plaintiff was and is owner of this 2/15ths share. On 21st February 1930, she granted a mourashi mokorari settlement of the same to one Anadi. Kumar Nandi on taking from him a registered kabuliyat, Ex. 1, and granted to him a registered potta, Ex. D, in corresponding terms. This is the head lease referred to above, and will be referred to as such hereinafter. The grant purported to be in respect of an area of 2 bighas and 15 cottas, representing, a 2/15ths share of a total area of 21 bighas which was stated to be the area of the three plots in full 16 annas share. The consideration was a lump sum selami of Rs. 1200, and a total yearly rent of Rs. 55 payable in one kist at the end of each Bengali year, 'which it was expressly provided, was not liable to be enhanced or reduced on any account. By the lease the lessee was given express power to transfer by way of sub-lease and otherwise, but this was subject to an important reservation that the lessee was not to grant a permanent or periodic settlement to any one at a 'nirikh' or rate of rent less than that at which the land had been settled with him, coupled with a proviso for re-entry upon breach of this condition. It is the effect of this restrictive stipulation which falls to be considered in this appeal.

2. On 24th April 1922, Anadi Kumar Nandi made a gift of the leasehold to his three sons, and on 20th August 1929, these sons again transferred their interest to one Haradeb Chatterjee, defendant 3. Then, on 9th April 1931, Haradeb in his turn sold his interest to defendant 2, Manoranjan Banerjee. It is not disputed that as a result of these successive assignments, the lessee's interest came to be vested in Manoranjan subject to all the conditions and stipulations of the head lease. Manoranjan appears to have also acquired the whole of the remaining interest in the Rudra-para lands, and entered into an agreement with the appellant company to grant them a mourashi mokorari settlement of the entire 16 annas share in all the three plots. He, however, failed to execute the lease, whereupon the company instituted a suit (T. S. NO. 75 of 1980) for specific performance of the agreement. On 6th February 1932, the suit was decreed in their favour. Thereafter, on 1st October 1932, pursuant to the decree, the company got Monoranjan to execute in their favour an indenture of permanent lease in terms of the agreement. This indenture is Ex. B, and is referred to as the sub-lease in these proceedings, as it really operated as such in respect of the 2/15ths share which was the subject-matter of the head-lease, Ex. 1. By this indenture, Ex. B, the company stipulated to pay a selami of Rs. 20,200 and a total yearly rent of Rs. 366-12-3, the selami and the rent being expressed to have been calculated at the rate of Rs. 1500 and Rs. 21 per bigha respectively on the total area of the demised lands, which was given, upon actual measurement, as the Courts have found, as 17 bighas 9 cottas and 5 chittaks, as against the area of 21 bighas given, more or less by conjecture, in the head-lease. The rent was made payable in four equal quarterly instalments, each instalment being due on the last day of the quarter according to the English calendar. It is admitted that the company paid the selami in full and duly entered into possession.

3. Meanwhile, it appears, the plaintiff had recovered a decree for rent under the head-lease against Haradeb and Manoranjan for the years 1337 and 1338 B.S., and on 12th April 1933, she herself purchased the leasehold at the execution sale, the sale being confirmed in due course on 17th May 1933. The plaintiff thereupon claimed to recover rent in respect of her 2/15ths share direct from the appellant company, and actually served upon them a letter of demand, Ex. C, dated 11th September 1934, calling upon them to pay her, and not to Manoranjan, their immediate lessor, the rent due to the extent of such share under their sub-lease. On 8th July 1938, she sent them a second letter of demand, Ex. C1, in which, however, she made the claim, not on the basis-of their sub-lease, but at the rate of Rs. 55 per year, with interest on the arrears at 183/4 % per annum, as under the head-lease. On 4th February 1939, the plaintiff then commenced the present action in which she went further and asserted the right to re-enter upon determination of the head-lease under the forfeiture clause contained therein. Her case was that Manoranjan had broken the condition whereby the lessee had bound himself not to sub-let the land at a lower rate of rent than that which he had himself agreed to pay. It was alleged that the rent reserved by the head-lease was Rs. 55 per year, whereas Manoranjan had let the land to the company at Rs. 21 per bigha on a total area of 17 bighas 9 cottas and 5 chittaks, which, in respect of a 2/15ths share of that area, worked out at a total yearly rent of Rs. 48-13-9 only, which was less than the head-rent. This, it was said, he was not competent to do, and worked a forfeiture of the lease. The plaintiff accordingly sued for recovery of joint possession of her said 2/15ths share of the Rudrapara lands, or, if necessary, for separate possession upon partition. In any event, she maintained that the company were bound to pay her rent at the rate stipulated in the head lease, and on that basis, she made an alternative claim against them, asking for rent for the years 1339 to 1344 B. S. at the rate of Rs. 55 per year, with interest at 183/4 %, as provided therein.

4. The appellant company alone contested the suit. They denied any breach of the restrictive covenant in the head-lease, and also denied the alleged forfeiture, pleading further that the forfeiture, if any, had been waived. As for the alternative claim, their defence was that there was no privity of contract or privity of estate between them and the plaintiff, and they were, therefore, not bound by the stipulations in the head-lease. The plaintiff was accordingly not entitled to rent from them at the rate claimed, but only at the rate of Rs. 48-13-9 per year as provided for in their sublease, and that by virtue of her purchase of the leasehold at the rent sale and with effect from after the date of her purchase, namely, from the year 1340 B.S. onwards, the rent for the previous year having been due to Manoranjan, their original lessor.

5. The learned Munsif, who tried the suit in the first instance, negatived the plaintiff's right to re-enter, holding that though there was a breach of the forfeiture clause in the head-lease, the plaintiff was still not entitled to enforce forfeiture, firstly, because she had not served any notice in writing as required by Section 114A, T. P. Act, and secondly, because she had waived the forfeiture by her demands of rent under Exs. C and C1, and otherwise. The trial Court, however', took the view that as the company took the sub-lease with constructive notice of the head-lease, the head-lease being in fact one of the documents specifically mentioned in the schedule to their indenture, the company must be held to be bound by all the covenants of the head-lease, and in that view, made a decree for rent against them at the rate stipulated therein, namely, at Rs. 55 per year, with interest on the arrears at 183/4 % per annum. The claim was, however, allowed for the years 1340 to 1344 B. S. only, as contended for by the company. The rent for the previous year was decreed ex parte against defendants 2 and 3. The company appealed, but there was no appeal or cross-objection by the plaintiff. The only question before the appellate Court, therefore, was the one which has been agitated before us: whether the company were bound to pay rent to the plaintiff at the rate of Rs. 55 per year as demanded by her, or at the rate of Rs. 48-13-9 per year as admitted by them. On this question, the learned Subordinate. Judge took the same view as the trial Court, and in the result dismissed the appeal with costs. The company have now appealed to this Court.

6. Both the Courts below professed to base their decision on the ruling in Matilal Daga v, Iswar Radha Damodhar Chandra ('36) 23 A. I. R. 1936 Cal. 727:. The question in that case was whether certain persons who were held to be sub-lessees could be made liable for breaches of covenants contained in the head-lease, seeing that there was no privity of contract or of estate between them and the grantor of the head-lease. On behalf of the sub-lessees there who repudiated such liability, reliance was placed on the case in Akhoy Kumar v. Akman Molla ('15) 2 A. I. R. 1915 Cal. 154, in which Mookerjee and Beachcroft JJ. followed and applied what they described as a well settled rule of English law. That rule was stated to be that between a head-lessor and a sub-lessee there was neither privity of contract nor privity of estate, and that the sub-lessee could not, therefore, be made liable for the rent reserved by the head-lease or on the covenants contained therein; and in support of this reference was made to Berney v. Moore (1791) 2 Ridg. Parl. Rep. 310 at p. 331, Tulk v. Moxhay Holford v. Hatch (1779) 1 Doug. 1835. (1848) 2 Ph. 774, and Halsbury's Laws of England, Edn. 1, Vol. 18, Art. 865. The learned Judges, Mitter and Patterson JJ. who decided 64 C.L.J. 308, however, held that this principle might be applicable in the case of affirmative covenants, but not as regards restrictive or negative covenants, with reference to which the material question was said to be, not whether there was privity between the head-lessor and the sub-lessee, but whether the sub-lessee took with notice of the covenants.

7. In the present case both Courts found that the appellant company had constructive notice of the head-lease, and relying on the above decision, they accordingly held that the rent reserved by the head-lease was binding on the appellants. Apparently, Clause (7) of the kabuliyat, Ex. 1, was supposed to embody the stipulation regarding rent, and this was treated as a negative covenant so as to attract that ruling. It seems to us that the Courts below had no clear conception of the nature of the covenant or of the principle which they were seeking to apply. The covenant, according to the translation accepted on both sides, was expressed in these terms:

I will not be able to make permanent or periodic settlement of the land covered by the kabuliyat with any one at a rate of rent (nirikh) less than the rate of rent at which it has been settled with me, and excepting doing all acts on the said land in exercise of (mourashi) mokorari right, I will not be able to do any act prejudicial to your right. If I commit breach of this covenant, there will be cause of action for recovery of khas possession.

8. The Courts below seemed to think that if the company could be shown to be bound by the covenant in this clause, that would at once place them under an obligation to pay rent in terms of the head-lease. With all respect, this appears to us to betray a confusion of ideas. It was overlooked that the covenant was not at all a covenant to pay rent, but merely imposed a restriction as regards the terms on which the lessee might sub-let the land. To hold that such a covenant was binding on the company could mean no more than that if the company wanted to sub-let, they Would be under the same restriction as the original lessee. It could not bind them to pay the rent which the original lessee had stipulated to pay. In our opinion, therefore, the whole of the attempt made to show that the covenant was binding on the ground of notice, on the authority in 64 C. L. J. 308 because it was a negative covenant, was utterly meaningless. Assuming for argument's sake that Clause (7) could be at all read as implying an obligation to pay a specified rent, it would then be a positive or affirmative covenant, and whether the obligation was that of the original lessee or of the sub-lessee, such a covenant, as the Courts below themselves recognised, would come within the ruling in 20 C. L. J. 551, and it would, therefore, not be enforceable against the sub-lessee, there being neither privity of contract nor privity of estate between the sub-lessee and the original lessor.

9. It seems to be doubtful if regarded even as a negative covenant, the clause in question could be held to be binding on the company merely on the ground that they had notice. The principle in Matilal Daga v, Iswar Radha Damodhar Chandra ('36) 23 A. I. R. 1936 Cal. 727 is the same as had been laid down in the well known case in Tulk v. Moxhay (1848) 2 Ph. 774, and it does not appear that the covenant here satisfied all the conditions necessary for the application of that principle. Tulk v. Moxhay (1848) 2 Ph. 774, decided that if a person took land with notices of a restrictive or negative covenant, he would be bound thereby, but such a covenant was to be one restricting the user of the land and for the benefit of land in which the covenantee was interested. That was a case of an assignee, and not of a sub-lessee, and the covenant there was contained in a deed of conveyance by which the purchaser bound himself (and his heirs and assigns) to keep the land sold 'in an open state, uncovered with buildings.' On the land afterwards passing into other hands by successive assignments, the last assignee was held bound by the covenant on the ground that he had notice of it, and an injunction was granted to restrain a breach. The covenant did not 'run with the land' at law, but was held to have that effect in equity on the ground of notice. The case has been explained and expounded in numerous decisions since. It is sufficient to refer only to a few, which might be regarded as the leading authorities on the subject, where the implications as well as the limitations of the doctrine have been fully considered : see, for instance, Haywood v. Brunswick Permanent Benefit Building Society (1881) 8 Q. B. D. 403, London and South Western Railway Co. v. Gomm (1882) 20 Ch. D.562, Austerberry v. Corporation of Oldham (1885) 29 Ch. D. 750 and Lort Strathcona Steamship Co. v. Dominion Coal Co (1926) 1926 A. C. 108. Many of these decisions will in fact be found referred to and relied on in Matilal Daga v, Iswar Radha Damodhar Chandra ('36) 23 A. I. R. 1936 Cal. 727.

10. It is now well established on these authorities: (i) that the doctrine in Tulk v. Moxhay (1848) 2 Ph. 774, applies only to restrictive or negative covenants, (ii) that it cannot be extended to positive or affirmative covenants, such as covenants compelling a man to lay out money or to do any other act which might be called of an active character. (iii) that the covenant must be one restricting or affecting the user of the land, (iv) that the covenantee must have, and continue to have, an interest in the subject-matter of the covenant, (v) that the remedy is not a remedy at law by way of specific performance under a species of implied privity, but a remedy in equity by injunction against the violation of the covenant, and (vi) that in deciding whether a covenant is an affirmative or a negative covenant, the Court must look to the substance, and not to the form. As Joyce J. put it in South of England Dairies Ltd. v. Baker (1906) 2 Ch. D. 631, the law, in substance, stands thus:

The original lessor has no right of action against the underlessee personally for breach of any positive covenant of the lessee's contained in the original lease. The original lessor's remedy in such a case is against the original lessee, who is liable for breach of the covenant. The underlessee is liable, however, in equity to be restrained from breach of a negative or restrictive covenant contained in the original lease of which he had notice, express or imputed, when the underlease was granted.

11. It is quite clear, therefore, in the present case that there could be no room for application of the doctrine on which the Courts below purported to rely, and there could be no question of enforcing the covenant in Clause (7) of the head-lease in the way in which the plaintiff sought to enforce it against the company. As a restrictive covenant, the only right of action, if any, which the plaintiff had was to enforce it by an injunction to restrain a breach.. As against the lessee, she might, and did, claim forfeiture upon breach of the covenant, but rightly or wrongly, as we have seen, this was negatived by both the Courts below. So far as the claim to rent is concerned, we do not see, therefore, why, the original lease not having been determined, the plaintiff should yet be entitled to treat the company, holding as they did under a valid sub-lease, as if they were her tenants, and not the tenants of the sub-lessor. As sub-lessees, the company will be liable on the covenants in the sub-lease and not on the covenants in the original lease. As purchaser of the lessee's interest at the rent execution sale, the plaintiff would doubtless be entitled to realise rent direct from the company, but, the rent would be the rent which the company were liable to pay under their sub-lease.

12. We may add, though it is not necessary to decide the point for the purposes of this appeal, that in our opinion the rate of rent in the. sub-lease was not really in contravention of the terms of the head-lease. As already pointed out, the covenant in the head-lease provided that the lessee shall not sub-let the land at a lower rate of rent than that which he had himself agreed to pay. The Bengali word used in the instrument of lease is 'nirikh', which means rate of rent, and has no reference at all to the total rent payable under the demise. No specific rate of rent was in fact mentioned in the document, but if a rate was to be computed at all from the total rent and the total area mentioned, there could be no question, as the learned Munsif himself observed, that the rate of rent agreed to was Re. 1 per cotta, or Rs. 20 per bigha; and the rate at which the company took their sub-lease was Rs. 21 per bigha, or Re. 1 per bigha higher. On this footing, therefore, the plaintiff could have no case either against the lessee or against the sublessee. We do not think it is possible to hold that the total rent of Rs. 55 per annum should be taken to be the 'rate' or 'nirikh' stipulated in the head-lease. In our opinion, the rent settled under the head-lease was a consolidated rent, and on that basis, there was and could be no breach of the covenant in question. The result is that the appeal must be allowed with costs in all Courts. The judgments and decrees of the Courts below are set aside as against the defendant company, and the plaintiff will get a decree for rent against them for the years 1340 to 1344 B. s. only at the rate of Rs. 48-13-9 per year, and this will carry interest at the rate of 12 per cent. per annum as stipulated in the sub-lease. The interest on the decretal amount will be at the rate of 6 per cent per annum. The decrees as regards defendants 2 and 3 will stand.

Blank, J.

13. I agree.


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