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Report No. 70

Chapter 101

Forfeiture for Breach of Other Covenants

Section 114A

101.1. Introductory.-

Forfeiture of a lease on ground of breach of a covenant other than one for payment of rent is subject to certain restrictions. The relevant section 114A was introduced in 1929, and because of its somewhat1 incomplete content, the section has been the cause of considerable obscurity and practical difficulties. These difficulties are, in part, due to the fact that worded negatively, the section fails to tell us what happens when the restrictions imposed thereby are complied with.

It is framed in terms of a bar against a suit (a suit for ejectment), but it is totally silent about the status of the lessee in the meantime. In the order of section, it follows section 114 and, is to some extent, coloured by the concepts which form the basis of that section, but even in that regard it fails to adhere fully to the scheme of section 114. For example, unlike section 114, it does not enact that if the notice given by the lessor under the section is complied with, the lease continues.

On a literal reading, section 114A would give the impression that all that it is concerned with is the fate of a suit for ejectment. It is non-committal about the fate of the lease, read literally. This position is juristically unsatisfactory, since the parties' substantive rights ought to be as much the concern of the law of forfeiture as their judicial remedies. This is how the section reads:-

"114A. Where a lease of immovable property has determined by forfeiture for a breach of an express condition which provides that on breach thereof the lessor may re-enter, no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing-

(a) specifying the particular breach complained of; and

(b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and the lessee fails, within a reasonable time from the date of the service of the notice, to remedy the breach, if it is capable of remedy.

Nothing in this section shall apply to an express condition against the assigning, under-letting, parting with the possession, or disposing, of the property leased, or to an express condition relating to forfeiture in case of non-payment of rent."

1. See paras. 101.3 and 101.4, infra.

101.2. Notice.-

If one goes by the questions that appear on the surface, one may note that considerable difficulty has been caused by the provisions relating to notice under section 111(g) and notice under section 114A. That the object of the two notices is different, is well-established. The notice under section 111(g) is intended to communicate the intention of the lessor to terminate the lease on the specified ground, while the notice under section 114A is intended to give an opportunity to the lessee to avoid forfeiture in cases where a breach of condition is committed and such a breach is capable of being remedied. In this sense, a notice under section 111(g) is a different notice from that under section 114A.1

There has arisen some controversy on the question whether two notices are required for these two purposes, or whether one notice should do. After stating that the law was not beyond doubt, two eminent judges-Rajamannar, C.J. and Venkatarama Aiyar, J.-in a Madras case,2 observed that they were inclined to agree with a Calcutta decision3 that two notices were not necessary. Actually, however, in the Madras case, there were two notices-one of the 7th July, 1948 and the other of the 27th August, 1948-and the High Court read the two notices together and held them to have satisfied the requirements of both the sections.

There is, however, an Assam case specifically holding that one notice is enough.4

1. Chandra Nath v. Chulai Pashi, AIR 1960 Cal 40 (S.K. Sen, J.).

2. Margaret v. G.A.R. Stain, AIR 1953 Mad 313 (315), para. 7.

3. Pravat Chandra v. Bengal Central Bank Ltd., AIR 1938 Cal 589.

4. Kshiroda Sundari v. Bhupendra, AIR 1961 Assam 70 (Deka, C.J. & Mehrotra, J.).

101.3. Relationship.-

We are not so much concerned with the question whether two notices are required or whether one notice is enough-although it may be not always be easy for a layman to draft the notice in such a way that one single notice would combine the requirements of section 111(g) and those of section 114A. Our intention is to deal with a more fundamental question, namely, what ought to be the exact relationship, in point of time between the action taken under section 111 (g) and the action required under section 114A?

To frame our query in still more fundamental terms, what exactly is the time when the termination of lease ought to take place where the case falls under section 114A. Should the lease come to end by the notice given under section 111(g), so that the notice given under section 114A and the proceedings contemplated by that section should merely deal with matters of procedure, such as enforcing the remedy of ejectment? Or, do considerations of fairness require that the lease should not come to an end until the requirements of section 114A and the formalities therein have been gone through?

This query is not merely academic, because on the view which one takes depends how the section ought to be redrafted. Apparently these matters were not fully thought of when the amendment of 1929 was initiated. The observations in the Report of the Special Committee merely refer to the English statutory provision-section 146, Law of Property Act 1925-without going into the juristic questions which have now been put forth above. We describe these questions as juristic, because on them depends the fundamental issue, namely, when does the lease come to an end and what is the proper terminology to be adopted in the two sections-111(g) and 114A from the juristic point of view.

101.4. Under-leases.-

The difficulty caused by the present unsatisfactory position becomes more acute when one comes to consider the effect of forfeiture on under-leases. The general rule which find specific recognition in section 115, is that if the lease is terminated by forfeiture, then the under-lease is also annulled, except in certain specific cases.

Now take forfeiture governed by section 114A. If the lease is taken as determined as soon as the requisite notices are given, then the date of consequential annulment of the under-leases is the date of such notices. The, savings in section 114A, which protects the lessee to a limited extent a suit for ejectment, does not, by its terms, give any protection to the under-lessee. What, then, is to happen if the lessee complies with the notice and remedies the breach? Are the under-leases which are to be taken as terminated (under section 115) to be taken as revived?

If so, where is the express provision in that regard? We are raising this query to show how it is very necessary for the purposes of section 114A (leases) as well as for the purposes of section 115 (under leases) to take a definite stand as regards the date of effectiveness of the forfeiture to which section 114A applies. The existing provisions, it cannot be disputed, are incomplete, since they leave the position ambiguous.

101.5. Possible alternatives.-

How can a definite stand, then, be evolved? One possible approach on the subject could be that the lessor must first give a notice of his intention to determine the lease under section 111(g), and that, after such determination, he must give, before a suit for ejectment, a notice containing the ingredients required by section 114A. On this approach, termination of the lease would come first, and the object of the notice under section 114A would be to give the lessee an opportunity, even after the termination of the lease, to remedy the breach. If this approach is to be adopted, section 114A would need change.

The provision in section 114A, unlike section 114, says nothing about the lessee holding the property as if the forfeiture had not occurred (if the breach is remediable). Some such provision would have to be inserted to make the law self-contained. It will also be necessary to deal with under-leases1 specifically. The demerit of this approach is that it is cumbersome, inasmuch as the lease is first terminated, then the termination is cancelled and then the lease is revived. The fortunes of the lessee fluctuate

1. Para. 101.4, supra.

101.6. Another alternative.-

Another possible approach is that not withstanding the present working which has a favour of procedural law the true juristic position is that the lease should not come to an end until notice is given under section 114A, (allowing time to the lessee to remedy the breach) and until the lessee fails to comply with notice to remedy the breach if it is capable of being remedied, (to avoid confusion, we are, for the moment, leaving out of discussion, the situation of "irremediable breach").1

On this approach, it is the notice under section 114A that assumes primary importance. If the breach is capable of remedy, the termination does not take place until reasonable time has elapsed. This approach takes notice of the fact that section 114A is not a mere procedural provision. It give the lessee an opportunity to remedy the breach.2 If the lessee complies with the notice and remedies the breach, the lease is not determined at all.

If he does not comply with it, the lease determines at the end of the notice period. The true juristic position is that termination of the lease, at least in the case of a breach which is remediable, does not become effective until the period of the notice expires. The lessee knows his position definitely.

We have, after careful consideration, come to the conclusion that this would be a far better and simpler approach. It would make the law neat. One, and only one, contingency rules at a time and the contingencies are not numerous, nor cumbersome. Apart from that, it would be faithful to the spirit underlying the equitable doctrine of relief against forfeiture.

1. See para. 101.9, infra.

2. Sakuntalammal v. Chandrasekar, AIR 1968 Mad 195 (198, 199).

101.7. Redrafting required.-

If this course is adopted, then it is necessary to redraft section 114A so as to the frame it in terms of the postponement of forfeiture, instead of the present working which assumes that the lease has been determined and purports, to deal with ejectment, the major defect in the present drafting of section 114A is that while it deals, in a negative manner, with the case where the lessee fails to comply with it, it does not deal in a positive manner with what is to happen if the lessee complies with the condition given in the notice under section 114A.

In our view, the proper approach should be that if the lessee complies with the notice, the lease does not terminate. If so, it is obvious that the section requires redrafting. Even If the intention is that the lease comes to an end but is capable of being revived retrospectively if the notice is complied with, the section should be more expressive than at present.1

In our opinion, however, as already stated,2 it would be simpler and better to adopt the approach that termination is not effective until the expiry of the notice period. Such an approach gives full effect to the benevolent object of the provision in section 114A, in contrast with the other approach that the lease already comes to an end, which is a narrow and unnecessarily technical approach.

1. See para. 101.5, supra.

2. Para. 101.6, supra.

101.8. Calcutta Case.-

We are basing our approach on considerations wider than mere judicial precedents, but we are happy to find that certain observations in a Calcutta case1 strongly support it.2 Ramendra Mohan Datta, J. observed as follows in that case as to the status of the lease:

"The scope of section 114A contemplates that to be a valid notice it must signify the lessor's intention to determine the lease; it must specify the breach which is capable of remedy; and reasonable time must be given to the lessee to remedy the breach by the said notice. Otherwise the notice would be bad. The cause of action to file a suit would not arise and the lease would continue as before."3

Dealing with the question whether the amount to be due during the period of the notice under section 114A could be properly described as "rent", he observed:

"In my opinion, until the expiry of the reasonable period as provided in the notice, the lessee would remain liable to pay rent4 and in receiving such rent there would be no question of the forfeiture being waived, and that is the reason why there is no express provision for waiver of forfeiture under section 114A as is provided by section 112 of the Transfer of property Act in respect of forfeiture under section 111, clause (g), of the said Act"

He also dealt with the expression "where a lease of immovable property has determined by forfeiture" in section 114A, and explained that "it conveys the meaning that so far as the lessor is concerned he is doing all that he is required to do under section 111, clause (g), but whether the lease will stand determined by forfeiture or not will depend upon whether the lessee will comply with the notice or not.5

The marginal note to section 114A has also been criticised in the same Calcutta judgment.

1. Dooni Lal v. Giniya Devi, AIR 1970 Cal 452 (458), para. 36, (Ramendra Mohan Datta, J.).

2. For draft amendment, see para. 101.15, infra.

3. Emphasis added.

4. Emphasis added

5. Emphasis added.

101.9. Irremediable breach.-

So far, we have assumed that the breach is capable of remedy. As regards the special situation where the breach is not capable of being remedied, all that is required, on a combined reading of section 111(g) and section 114A, is that the lessor must give to the lessee notice in writing specifying the particular breach. If it is his case that the breach is not capable of remedy, naturally he is not bound to allow the lessee any further time. In such a case, the law does not compel postponement of termination for any further period. Of course, there must be compliance with the relevant part of section 114A, but this involves no postponement.

101.10 Irremediable breach in England.-

In England, it has been held1 that certain breaches are, by their very nature, irremediable-for example, user of the premises for immoral purposes. That was a case of user by the tenant and that too, knowingly. In a later case,2 an innocent tenant granted a sub-lease and the sub-lessee used the premises for immoral purposes, and the breach was regarded as capable of remedy.

1. Rugby School v. Tannahill, 1934 All ER (Reprint) 187.

2. Glass v. Kencakes Ltd., (1964) 3 All ER 807.

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