Report No. 70
Forfeiture for Non Payment of Rent
We referred in the introductory discussion if this Report to the influence of equity on the development of the law of property and on the evolution of a few of its important doctrines. The section which we now propose to deal with furnishes an illustration of one such important doctrine of equity. The development of the jurisdiction to grant relief against penalties and forfeitures is well known. The common law had treated these as technical and draconian rules.
Equity, however, readily gave relief where monetary compensation was an adequate remedy in lieu of the penalty or forfeiture provided under a contract. A distinction was drawn, as in the modern law, between penalties in terrorem and a pre-estimation of damages. When it came to forfeiture under conditions annexed to common law estates, the same criterion of compensation still applied, though technical distinctions between conditions and limitations, and conditions precedent and subsequent sometimes complicated the basis on which relief was granted.
It is a general principle of equity that wherever a penalty is provided to secure the performance of an act, the latter is considered as the principal intent of the instrument, and the penalty is deemed to be intended only to secure such performance. On this principle, relief was granted against forfeiture of leases. The principle is that where the forfeiture of a lease and re-entry for the forfeiture is stipulated for in a lease, in case of non-payment of rent, the right of re-entry is deemed merely as a security for the payment of the rent.1-2
1. Story Equity Jurisprudence, 1920 Edn., paras. 1314, 1315, 1316: AIR 1924 Lah 49.
2. Story Equity Jurisprudence, 1920 Edn., para. 1315.
100.2. Section 114.-
Section 114 deals with relief against forfeiture for non-payment of rent, in these terms:
"114. Where a lease of immovable property has determined by forfeiture for non-payment of rent, and the lessor sues to eject the lessee, if, at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrear, together with interest thereon and his full costs of the suit, or gives such security as the court thinks sufficient for asking such payment within fifteen days, the court may, in lieu of making decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee shall hold the property leased as if the forfeiture had not occurred".
100.3. Prior law.-
The principle on which this section is based was applied even before the passing of this Act.1 For example, the Bengal Rent Act2 provided for relief against forfeiture in these terms:
"In all cases of suits for the ejectment of a raiyat or the concealment of lease, the decree shall specify the amount of the arrear, and if such amount together with interest and costs of suit be paid into court within fifteen days from the date of the decree, execution shall be stayed."
1. Mohamed Ameer v. Peryag Singh, 1881 ILR 7 Cal 566 (570) (DB).
2. Section 78, second para., Bengal Rent Act (10 of 1859).
100.4. No change.- No change is needed in the section.