Raghuram
Rao & Ors Vs. Eric P. Mathias & Ors [2002] Insc 53 (30 January 2002)
M.B.
Shah & R.P. Sethi Shah, J.
Leave
granted.
These
appeals are filed against the judgment and decree dated 27.10.1998 passed by
the High Court of Karnataka at Bangalore in
RSA Nos.1319-22 of 1996. By the impugned judgment and decree, the High Court
set aside the judgment and decree passed by the lower appellate court and held
that plaintiffs are entitled to recover the possession of lease hold property
and decreed the suit accordingly.
Before
dealing with the contentions of both the parties, we would refer to the
relevant facts in short. One Nellikai Vyasa Rao was the owner on mulgeni right
of TS No.234 corresponding to RS No.359 of Attavar village of Mangalore City. Out of the said property, on 1.11.1903, a registered mulgeni
lease was granted for a land admeasuring approximately 35 cents (subsequently
it was found as 40 cents) by Nellikai Vyasa Rao in favour of Ammanna Maistry.
The
relevant condition of the permanent lease deed mulgeni chit dated 1.11.1903
executed by one Ammanna Maistry in favour of Nellikai Vyasa Rao, which requires
consideration is as under:- "In case I do not pay rent within time every
year or if there is any short payment I am liable to pay the said sum with
interest at 12% per annum from the date it is due till payment on the security
of the building that may be built on the property and other improvements
therein.
In the
event of my feeling that I do not require the said property, the said property alongwith
the buildings and the improvements shall have to be handed over only to you on
receiving the value of the buildings and improvements estimated by four
Gentlemen and I shall not have any right to alienate the property either the
right of permanent tenancy or the building etc., by way of sale, mulgeni or in
whatsoever manner to others. If I effect alienation contrary to this in any
manner or if I allow the property to be attached and sold by any court in
connection with my personal debt, immediately, such alienation and also this
permanent lease shall be liable to be totally cancelled and the property shall
be reverted to your possession and enjoyment." Thereafter, Nellikai Vyasa Rao
sold his mugleni rights in respect of 1.20 acres of land in favour of P.F.
Mathias which included 40 cents already leased out to Ammanna Maistry by
registered sale deed dated 24.2.1914.
On the
death of lessee Ammanna Maistry, his mulgeni holding was partitioned among his
legal heirs pursuant to the decree dated 31.3.1955 passed in partition suit
no.O.S.235 of 1950, as under: - Portion No. To
1. Amba
Bai and daughter and grand-daughter S. Jyothi of lessee.
2. Chandrashekhar
3. Gangadhar
sons of deceased Ammanna Maistry It is also admitted that by a gift-deed dated
17.11.1960 Gangadhar gifted 11 cents to his sister Amba and sold remaining 11
cents to Sanjiva Sapalya by a sale deed dated 31.3.1960. Again on 3.10.1974 Amba
transferred her holding to Sucharita.
For
the aforesaid transfers, plaintiffs did not invoke and enforce the forfeiture
clause on the ground that alienations were within the members of the family of
the deceasedlessee.
Original
Suit No.786 of 1990 On 30.3.1981, Sucharita (1) by sale deed sold some portion
of the land in favour of defendant nos.1 to 4; (2) on the same day, under
another sale deed, sold some other portion of the land in favour of defendant
nos.5 and 6; and (3) thereafter on 13.5.1982 sold remaining portion of the land
in favour of defendant no.7. On the alienation of entire mulgeni holding i.e.
11 cents, by Sucharita, the plaintiffs invoked the forfeiture clause on the
ground of breach of the condition referred to in the parental lease and,
therefore, filed Original Suit No.25/83, which was subsequently numbered as
Original Suit No.786 of 1990 for possession of the mulgeni holding.
Original
Suit No. 929 of 1990 On the death of Chandrashekhar (son of lessee), his heirs
filed O.S. No.541 of 1980 for partition of the property held by him and a
decree was passed dividing the leased properties between the heirs who are
defendant nos.1 to 3 and 8 to 12 and they acquired proportionate leasehold
rights over the land. For this partition of the property, it is the say of the
plaintiff that the suit invoking forfeiture clause was not filed on the ground
that alienations were within the members of the family of the deceased-lessee.
Thereafter(1)
defendant no.1 by sale deed dated 14.3.1980 sold 0.25 cents 1.12 Sq. meters for
Rs.3,000/- in favour of the 6th defendant;
(2)
The 2nd defendant along with her 5 minor children by a sale deed dated
14.3.1980 sold an extent of 3½ cents of land for Rs.57,000/- in favour of the
6th defendant;
(3)
Defendant no.1 by a sale deed dated 27.4.1983 sold 0.12 cents but actually 11¼
cents for Rs.1,30,000/- in favour of the 4th defendant.
(4)
The 4th defendant in his turn executed a gift deed dated 27.4.1983 in favour of
the 5th defendant.
(5)
The 3rd defendant by a sale dated 25.2.1988 sold her portion measuring 2½ cents
of land for Rs.1,05,000/- in favour of the 4th defendant.
Hence,
Original Suit No.929 of 1990 was filed seeking possession of the above land by
invoking forfeiture clause.
Both
the suits were tried separately and the trial court arrived at the conclusion
that the lease deed does not specifically prohibit alienation of the part of
the property, but merely because in the document as there is no recital which
bars to alienate a portion of the property, would itself be not conclusive and
the Court has to read the document according to the intention of the parties.
The Court also held that if there is an express condition, not to alienate the
whole leasehold property, then portion of the leasehold property could not,
also, be transferred by implication. The Court held that the properties are
situated within the metropolitan area to which The Karnataka Rent Control Act,
1961 (hereinafter referred to as 'Rent Act') is applicable and, therefore,
plaintiff was not entitle to actual possession of the schedule property but
only to constructive possession of the land subject to payment of all
improvements thereon as provided under the lease-deed.
Being
aggrieved thereby, RA Nos.46 and 52 of 1992 were filed against the judgment and
decree dated 31.1.1992 passed in OS No.929 of 1990 and RA Nos.148 and 150 of
1994 were filed against the judgment and decree dated 30.9.1994 passed in OS
No.786 of 1990, before the District Court at Mangalore. The First Appellate
Court held that what has been alienated in both the suits was only to the
extent of 29 cents from the leasehold property which was 40 cents and the
remaining 11 cents of the leasehold property is not the subject matter of
alienation. The Court, therefore, held that as there is no condition which
prohibits partial alienation of the property in the mulgeni lease, it would not
give right to the plaintiffs to enforce the forfeiture clause. The Court
further held that the lessor has to seek the relief mainly against the lessee
even though the lessee has assigned the property in favour of his assignee as
by virtue of Section 108 of the Transfer of Property Act, 1882 (hereinafter
referred to as "the T.P. Act") the liability of the lessee will not
extinguish by mere reason of such alienation. Hence, the last recognized lessee
is a necessary party.
The lessor
can seek relief against the lessee and also the assignee and he may execute the
decree for possession only against the assignee, but the decree has to be
obtained against the lessee. Sucharita was last recognized lessee, who was
necessary party to the suit and the defendants were proper parties. Hence, the
appeals were allowed and suits were dismissed.
In
appeals against the judgment and decree of First Appellate Court, the High
Court referred to the judgments which were considered by the First Appellate
Court and which were referred to at the time of hearing of the appeals and
arrived at the conclusion that the said decisions would be applicable where
there is partial alienation of the leasehold property, but held that in the
present case there was alienation of the entire leasehold property. The High
Court observed that the decisions in A. Venkataramana Bhatt and Another v. Krishna
Bhatt and Others [AIR 1925 Madras 57], David Cutinha v.Salvadora Minazes and
others [AIR 1926 Madras 1202], Terrell v. Chatterton [(1922) 2 Ch. D. 647] and
P. Veda Bhat v. Mahalaxmi Amma [AIR (34) 1947 Madras 441] would not be applicable as there is alienation of the
entire leasehold property. The Court has not dealt with any other contention.
Being
aggrieved by the judgment of High Court, the defendants have filed the instant
appeals.
At the
outset, for the nature of Mulgeni lease, we would refer to the decision in Vyankatraya
Bin Ramkrishnapa v. Shivrambhat Bin Nagabhat [(1883) VII Bombay Series 256],
wherein the High Court of Bombay considered the same and held as under: -
"In the minute of the Revenue Board (see p.28 of a book, Exhibit A, in the
suit of Vyakunta Bapuji v. The Government of Bombay [(12 Bom. HC Rep. App.1), better known as the Kanara Case]
it is said:"The exclusive rights to the hereditary possession and usufruct
of the soil is in Kanara termed varga, meaning separate independent property in
the land, and seems originally, as in Malabar, to have been vested in the
military tribe of the Nayrs, the first and, at one time, the exclusive mulis or
landlords of that province; for, except to unclaimed waste, and to estates
escheated from want of heirs, it does not appear that the Government in Kanara
at any time possessed, or even pretended to, the smallest right to property in
the land. The Nayrs had under them a number of inferior rayats, called genis or
tenants, to whom they rented out the portions of their lands which they did not
cultivate by means of hired labourers or slaves; the genis or tenants were of
two distinct classes the mulgenis, or permanent tenants, and the chali genis or
temporary tenants. The mulgenis, or permanent tenants of Kanara, were a class
of people unknown to Malabar, who, on condition of the payment of a specified
invariable rent to the muli, or landlord, and his successors, obtained from him
a perpetual grant of a certain portion of land to be held by them and their
heirs for ever. This right could not be sold by the mulgeni or his heirs, but
it might be mortgaged by them, and so long as the stipulated rent continued to
be duly paid, he and his descendants inherited this land like any other part of
their hereditary property. This class of people, therefore, may be considered
rather as subordinate landlords than as tenants of the soil, more especially as
though many of them cultivated their lands by means of hired labourers or
slaves, others sub-rented them to the chali genis or temporary tenants."
The Court in that case traced the history of mulgeni tenure and observed thus:-
"These authorities show clearly that the mulgenis were only tenants,
although tenants in perpetuity, holding under their superior landlords, the mulgars,
whose estate, like that of tenants in fee simple in England, would appear to
have been the highest estates in the land known to the law in Kanara; and,
further, that although originally mulgeni tenants were not restricted by the
terms of their leases from alienation, the practice had grown uphow soon it
does not appear, but at any rate by the beginning of the present centuryof
leasing the land in perpetuity at a fixed rent coupled with such and other
restrictions.
Lastly,
it is not suggested that the law has either by Statute or judicial decision
defined the mulgeni tenure.
Under
these circumstances it would be impossible, we think, to hold that restriction
against alienation is so repugnant to the mulgeni tenure in the contemplation
of law, that a clause to that effect must be held to be void.
But it
was said that such a clause in a permanent lease makes the land for ever
inalienable and is, therefore, void on the ground of public policy. That view
however, would not appear to have been taken by the framers of the Transfer of
Property Act, for we find that by Section 105 it recognizes leases in
perpetuity, and that Section 10, which forbids a clause against alienation in
general, makes an exception in the case of leases where it is introduced for
the benefit of the lessor." Nothing is pointed out to take any other view
with regard to the nature of the mulgeni tenure and we, therefore, adopt the
same.
The
submissions of the learned counsel for the parties which require consideration
are: -
(I) Whether
in case of perpetual lease, the condition not to alienate the property would be
illegal and void?
(II)
Whether notice under Section 111(g) of the T.P. Act is necessary before filing
of the suit in the present case?
(III)
In any case, there is no express condition restraining partial alienation of
the leasehold property, therefore also, the judgment and decree passed by the
High Court is illegal.
(IV)
Whether the heirs of the original lessee are necessary parties in case of
determination of lease?
Contention
Nos.I and II For appreciating these contentions, we would first refer to
Section 10 of the T.P. Act which inter alia provides that "where property
is transferred subject to a condition or limitation absolutely restraining the
transferee or any person claiming under him from parting with or disposing of
his interest in the property, the condition or limitation is void, except 'in
the case of a lease where the condition is for the benefit of the lessor or
those claiming under him'." The section does not carve out any exception
with regard to perpetual or permanent lease. It applies to permanent or
temporary lease. In view of the specific exception carved out in case of lease,
in our view, there is no substance in the contention of the learned counsel for
the appellant that the condition which restrains the lessee from alienating
leasehold property is in any way illegal or void.
Similarly,
contention that notice in writing is required as contemplated under Section 111
(g) before terminating the lease is also without any substance because in the
present case, the lease deed was executed prior to the coming into force of the
Transfer of Property (Amendment) Act, 1929 (20 of 1929). The relevant part of
the amended section provides that a lease of immoveable property determines
"by forfeiture; that is to say, in case the lessee breaks an express
condition which provides that, on breach thereof, the lessor may re-enter and
the lessor or his transferee 'gives notice in writing to the lessee of' his
intention to determine the lease". The words 'gives notice in writing to
the lessee of' were substituted by the Amendment Act which came into force from
1st April 1930 for the words 'does some act showing'. So prior to the aforesaid
amendment which requires giving of notice in writing was not essential for
determining the lease and what was required was some act of showing intention
to determine the lease. This issue is concluded by the decision of this Court
in Namdeo Lokman Lodhi v. Narmadabai and others [(1953) SCR 1009] and Shri
Rattan Lal v. Shri Vardesh Chander and others [(1976) 2 SCC 103]. The First
Appellate Court, therefore, has also rightly rejected the said contention.
Contention
No.III However, the next contention which requires consideration is whether
there is express condition which prohibits partial alienation of the leasehold
property? The finding of High Court on the question of partial alienation, in
our view, is without considering the facts as discussed in detail by the trial
court as well as by the First Appellate Court. Both the courts on facts held
that there was partial alienation of the leasehold property. It appears that
the High Court took into consideration the alienations because of the partition
suits filed between the family members of the deceased lessee, but forgot the
fact that the lessor in the suit itself had stated that as the said alienations
were between family members, forfeiture clause was not invoked at that time.
Same thing is stated before this Court in written submission filed by the
learned counsel for the appellants-defendants. The First Appellate Court has
specifically arrived at the conclusion that out of the leasehold property which
was 40 cents what has been alienated in both the suits was only to the extent
of 29 cents and remaining 11 cents acquired in the partition by Sanjiva Sapalya
was not the subject matter of alienation. It appears that the High Court has
overlooked this aspect and decided the entire matter without application of
mind to the facts and contentions of the parties.
In the
present case, the aforequoted lease deed was executed by the lessee and not by
the lessor. In the lease deed it is provided that the lessee (I) will not have
any right to alienate the property, either the right of permanent tenancy or
the buildings etc. (which may be built by the lessee on the property) by way of
sale of mulgeni or in whatsoever manner to others and if such alienation is
affected, the permanent lease shall be liable to be totally cancelled and the
property shall be reverted to the possession and enjoyment of (you) lessor, on
receiving the value of the buildings and improvements estimated by four
gentlemen. Therefore, there is express condition accepted by the lessee not to
alienate the leasehold property. However, there is no express condition to the
effect that lessee will have no right to alienate part of the property. With
regard to the nature of the mulgeni tenure, it has been observed by the Bombay
High Court in Vyankatraya Bin Ramkrishnapa's case (Supra) that this class of
people may be considered rather as subordinate landlords than as tenants of the
soil more especially as though many of them cultivated their lands by means of
hired labourers or others sub-rented them to the temporary tenants.
Further,
Section 111(g) itself requires that for forfeiture, lessee should commit breach
of 'an express condition' which provides that on breach thereof, the lessor may
re-enter. The words 'express condition' itself stipulates that condition must
be clear, manifest, explicit, unambiguous and there is no question of drawing
any inference. In our view, as there is no express condition restraining
partial alienation of the leasehold property, it would not be open to the
transferee of the lessor's right to invoke the forfeiture clause for
determining the perpetual lease and such conditions cannot be inferred by
implication.
On
similar clause, it appears that there is uniformity of interpretation by various
High Courts that unless there is an express condition restraining partial
alienation, forfeiture clause would not apply.
In A. Venkataramana
Bhatta vs. Krishna Bhatta [AIR 1925 MADRAS 57], the Court held thus:- "A
clause for forfeiture must always be construed strictly as against the person
who is trying to take advantage of it, and effect should be given to it, only
so far as it is rendered absolutely necessary to do so by the wording of the
clause.
A
covenant against assignment does not prevent the tenant from assigning for any
part of the term or from assigning a portion of the premises and unless the
covenant is expressly worded to exclude a partial alienation of the premises, a
partial alienation will not work forfeiture under a clause which prevents alienation
of the premises. It is always open to the landlord to put into his lease a
covenant against alienation either complete or partial, if he intends that
forfeiture should result from partial alienation as well, but where he does not
do so, the covenant will not apply to a partial alienation. Grove v. Portel
(1902) 1 Ch. Dn. 727."
In
David Cutinha vs. Salvadora Minazes and others [AIR 1926 Madras 1202}, the
Court observed thus:- ".There is ample authority in the English Law and in
fact in the law here too to show that unless there is a restriction against the
assignment of any portion of the demised property, the restraint on the
alienation of the demised premises will not prevent the alienation of a
portion. I am not impressed with the reasoning of the learned District Judge as
to the grant of a mulgeni lease not being an alienation. It clearly is an
alienation. But I think that the respondents must succeed on the ground that
the restriction on alienation of a portion of the demised premises is not contained
in the words of the lease which I have set out above. It is perhaps not
necessary to multiply examples, but there are some cases which have been cited
and which lend support to the contention for the respondent, for instance in
Grove v. Portal [(1902) 1 Ch. D. 727], Joyee, J., quotes the passage already
cited from Church v.Brown [(1808) 15 Ves. 258] and says that the dictum of the
lower Court has never been disapproved of; and again in Russell v.
Beecham
[(1924) 1 K.B.525] Serutton, L.J. says quoting Lord Eldon again that a covenant
not to part with possession of premises would not restrain the tenant from
parting with a part of the premises, these covenants having been always
construed by Courts of law with the utmost jealousy to prevent the restraint
from going beyond the express stipulation.
In Chatterton
v. Terrel [(1923) A.C. 578] Lord Wrenbury says:
It is
said and said with truth, that if there be a covenant not to assign or underlet
the premises, it is not a breach to assign or sub-let part of the premises. It
was not so stipulated, if those be the words, for the words or any part thereof
are not found in the covenant." The above judgments are followed in P.
Veda Bhat v. Mahalaxmi Amma [AIR (34) 1947 Madras 441]. Same view is also taken in Keshab Chandra Sarkar and others vs. Gopal
Chandra Chanda [AIR 1937 Cal 636] and in Indraloke Studio Ltd. vs. Sm. Santi Debi
and others [AIR 1960 Cal 609].
Contention
No.IV Further, the First Appellate Court rightly held that for determining the
lease the lessees are necessary parties. Principle is privity of contract is
between the lessor and lessee and not between the lessor and the transferees.
If there is breach of contract, that is to say, express condition of lease,
then it gives option to the lessor to determine the lease and re-enter the
properties let out. For that purpose, lessee is a necessary party and
transferees would be only proper parties. But without the presence of lessees,
lease cannot be determined and decree for possession of the property cannot be
passed in favour of the lessor. Section 108 (j) of T.P. Act specifically
provides that the lessee shall not, by reason only of such transfer, cease to
be subject to any of the liabilities attaching to the lease. In the present
case, the liability to hand over vacant possession is that of the lessee. Privity
of contract is with the lessee and not with the assignee. Further, under clause
(q) of Section 108, on determination of lease, the lessee is bound to put the lessor
into possession of the property. Therefore, the First Appellate Court rightly
relied upon the decision rendered by Chagle, C.J. in Treasurer of Charitable
Endowments vs. S.F.B. Tyabji, [AIR (35) 1948 Bombay 349], wherein dealing with
a similar contention, it was observed:- "The question that arises for
determination in this appeal is what are the rights and liabilities of the
lessee when he has transferred absolutely his interest in the property. Clause
(j) of S.108 expressly provides that the lessee shall not, by reason only of
such transfer, cease to be subject to any of the liabilities attaching to the
lease.
It is
clear that as far as the privity of contract is concerned, the only person
liable as between the lessor and the lessee is the lessee himself. There is no privity
of contract established by the assignment executed by the lessee in favour of
the assignee. But although such a privity of estate comes into existence
between the lessor and the assignee, the lessee continues to remain liable in
respect of all his covenants by reason of privity of contract which still
continues to subsist as between lessor and the lessee. In my opinion, if there
is no contract, then the provisions of S.108 would apply and all the statutory
obligations cast upon the lessee by S.108 would bind the lessee notwithstanding
his transferring his interest absolutely to another person. The latter part of cl.
(j) is in my opinion very plain. It lays down that the lessee shall not cease
to be subject to any of the liabilities attaching the lease by reason only of
the fact that he has transferred his interest. Therefore, all the liabilities
attaching to the lease to which he was subject would continue notwithstanding
the transfer or assignment. To put it in a different language, a lessee cannot
by his unilateral act, by assigning his interest in the leasehold premises, put
an end to the obligations which he has undertaken either by the contract of
lease or under the statute under S.108." Admittedly, in the present case,
the heirs of the deceased lessee are not joined as party-defendants. In second
suit O.S. No. 786 of 1990, the lessee Sucharita is not joined as a party to the
suit by contending that only defendants who were assignees are required to be
joined as party to the suit proceedings. Hence, the First Appellate Court
rightly held that on ground of non-joinder of necessary parties, the suit was
required to be dismissed.
Lastly,
the learned counsel for the appellant referred to the provisions of Section 23
of the Rent Act, which reads thus: - "23.Tenant not to sub-let or transfer
after commencement of this part.
(1)
Notwithstanding anything contained in any law, but subject to any contract to
the contrary, it shall not be lawful after the coming into operation of this
Part, for any tenant to sub-let whole or any part of the premises let to him or
to assign or transfer in any other manner his interest therein;
Provided
that the State Government may, by notification, permit in any area the transfer
of interest in premises held under such leases or class of leases and to such
extent as may be specified in the notification:
Provided
further that nothing in this Section shall apply to a tenant having a right to
enjoy any premises in perpetuity.
(2) Any
person who contravenes the provisions of sub-section (1), shall, on conviction,
be punished with fine which may extend to one hundred rupees." On the
basis of aforesaid section, the learned counsel submitted that it shall not be
lawful for any tenant to sublet or transfer the premises after commencement of
the Act. However, the said provision is not made applicable to a tenant having
a right to enjoy any premises in perpetuity. Therefore, under the 'Rent Act' lessor
is not entitled to take possession of the premises on the ground of alienation
of the part of the leasehold property from a present tenant as the Rent Act
would govern the relationship between the lessor and lessee. He submitted that
as found by first Appellate Court, Rent Act is applicable to the suit premises
and, therefore, suit for taking possession was not maintainable as subletting
by the permanent tenant is not unlawful under the Rent Act. In our view, this
contention was not raised before the High Court and hence it is not required to
be decided in this appeal.
In the
result, the appeals are allowed and the judgment and decree passed by the High
Court is set aside. The suits filed by the plaintiff(s) are dismissed. There
shall be no order as to costs.
.J.
(M.B.
SHAH) .....J.
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