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D.N. Cooper v. Shiavax Cowasji Cambata

Bombay High Court
Jul 19, 1948
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Opinion Summary — Chagla, C.J.

Factual and Procedural Background

The plaintiffs (landlords) appealed from the judgment of Desai, J.; the core dispute was whether the plaintiffs were entitled to eject their tenants (defendants). The tenants were monthly tenants of the plaintiffs and on 23 July 1947 the tenants sub-let their tenement. The plaintiffs gave notice terminating the tenancy, and Desai, J. passed a decree for ejectment in favour of the plaintiffs. The present appeal challenges that decree.

Legal Issues Presented

  1. Whether the notice of termination given by the plaintiffs was valid when it was one month's notice whereas the written agreement included a clause providing for two months' notice.
  2. Whether the tenants, having sub-let the premises without the landlords' previous written consent, remained protected under Section 9 of Act VII of 1944 (the Bombay Rent Restriction Act).
  3. Whether Section 10 of the same Act should be read so as to permit a tenant to sub-let notwithstanding an express contractual prohibition against sub-letting (i.e., whether S.10 overrides contractual terms between landlord and tenant).

Arguments of the Parties

Tenants' Arguments (Mr. Parpia)

  • The notice terminating the tenancy was invalid because the tenancy agreement required two months' notice, whereas the landlords gave only one month's notice.
  • The tenants contended that they remained protected under the Bombay Rent Restriction Act (specifically S.9), despite having sub-let the premises.

Advocate-General's Arguments

  • The Advocate-General argued that Section 10 of Act VII of 1944 permits a tenant to sub-let notwithstanding any contractual prohibition, and therefore S.10 should be read as effective even against express contractual terms to the contrary.
  • He submitted that the words "notwithstanding anything to the contrary in any law for the time being in force" in S.10 should be read broadly to include "notwithstanding anything to the contrary in any contract between the parties", thereby giving S.10 the effect of protecting a tenant who sub-lets in breach of a contract clause forbidding sub-letting.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Lazarus Franck v. Solomon A. Zulaikha (O.C.J. Suit No. 637 of 1944, decided 18 Aug 1944) Construction of Section 10 (consideration whether S.10 applied to sub-letting). The court notes Coyajee, J.'s observations were obiter because the case turned on a finding of complete assignment (not sub-letting), so S.10 had no application in that case.
Kaikhushroo Bazonji Kapadia v. Dhanjishaw Hormusji Joshi (O.C.J. Suit No. 1983 of 1945, decided 2 Feb 1947) Construction of Section 10. The opinion records that Bhagwati, J.'s views were obiter.
Suleman Haji Ahmed Oomer v. J.E. Tattersall (O.C.J. Suit No. 965 of 1944, decided 11 Oct 1944) Whether S.10 applies to sub-letting the whole or part of premises; whether S.10 protects tenant notwithstanding a lease condition against sub-letting. Chagla, C.J. recalls his own earlier view that S.10 applied to whole as well as part sub-letting, but that judgment proceeded on a concession by counsel that S.10 applied notwithstanding a contractual prohibition; the earlier expression of view is noted as having arisen on that concession.
Piarelal Tahoar v. Pestonji Kooverji Sethna (Civil Revision Appln. No. 109 of 1946, decided 26 Mar 1946) Construction of the phrase "notwithstanding any law to the contrary" in S.10 and whether it extends to contracts. The opinion records that Weston, J.'s observations (also obiter) supported the view taken in the present case: that "notwithstanding any law to the contrary" cannot be read to mean "notwithstanding any contract to the contrary".

Court's Reasoning and Analysis

The court's analysis proceeds in two principal parts: (A) the validity of the notice of termination; and (B) whether the tenants retained statutory protection under S.9 despite sub-letting without consent, in light of S.10 and the ordinary law in S.108 of the Transfer of Property Act.

A. Notice of Termination

The lease was in printed form with clause 9 providing for two months' notice if the tenancy were for a fixed period. The court observed that the typed insertion made this an indeterminate monthly tenancy and that the printed provision for fixed-period tenancies (clause 9) was abrogated by the parties' agreement to a monthly tenancy. The court stated the definition of a monthly tenancy implies it may be determined by a month's notice. Consequently, the one month's notice given by the plaintiffs was held to be valid in the context of a monthly tenancy.

B. Sub-letting, S.9 and S.10

The lease contained an express covenant forbidding sub-letting without the lessor's previous written consent; the tenants sub-let without obtaining such consent. Desai, J. had held that this amounted to failure to perform a condition of tenancy and therefore the tenants were not protected under S.9(1) of Act VII of 1944. The Advocate-General argued S.10 should give tenants the right to sub-let notwithstanding contractual prohibitions.

The court examined S.108 of the Transfer of Property Act (noting sub-clause (j) gives an unrestricted right to transfer or sub-lease) and observed the operation of S.108 is subject to contract or local usage to the contrary — meaning parties can alter rights by agreement. The court emphasised a controlling principle of statutory construction: courts should not read statutes so as to interfere with contractual sanctity unless the statute expressly permits such interference.

The court therefore rejected the Advocate-General's proposed construction that the phrase "notwithstanding anything to the contrary in any law for the time being in force" in S.10 should be read to include "any contract between the parties." Instead, it reconciled Ss.9 and 10 by construing S.10 as addressing rights provided by general law (e.g., S.108) and not as abrogating express contractual terms between landlord and tenant. The court further observed that S.10, properly construed, actually circumscribes the tenant's common-law/right-under-S.108 ability to sub-let by imposing two conditions: (1) the tenant must forthwith intimate in writing to the landlord that he has sub-let, and (2) the tenant must inform the landlord of the rent at which he has sub-let.

The court reviewed legislative history: the 1942 Order and its 1943 Notification made sub-letting without written permission a ground for ejection; the 6 Jan 1944 Notification relaxed that rule (and was similar to S.10's terms); and the later Act LVII of 1947 contained provisions (S.15 and S.13) that indicated a legislative tendency towards restricting or prohibiting sub-letting. The court used this history to support the conclusion that the statute was not plainly intended to override contractual prohibitions.

The court also noted earlier judicial observations (single-judge decisions) on the point and characterized many as obiter or based on concessions; one such earlier decision of Chagla himself had proceeded on counsel's concession that S.10 applied notwithstanding a lease condition, and thus could not control the present construction.

Given the explicit lease covenant forbidding sub-letting without prior written consent and the tenants' act of sub-letting without that consent, the court concluded the tenants breached a condition of their tenancy. Because S.9(1) conditions tenant protection upon performance of such conditions (including payment of rent and performance of other tenancy conditions), the court held the tenants were not entitled to the protection of S.9(1).

Holding and Implications

Holding: The court affirmed the decree for ejectment entered by Desai, J. and dismissed the appeal. The core ruling is:

Appeal dismissed; the decree for ejectment in favour of the plaintiffs is affirmed.

Implications:

  • Direct effect: Because the tenants sub-let the premises without the prior written consent of the landlords, they failed to perform a condition of their tenancy and consequently are not protected under S.9(1) of Act VII of 1944; the plaintiffs are entitled to ejectment and the decree for ejectment stands.
  • The court construed S.10 as not overriding express contractual prohibitions against sub-letting; rather, S.10 operates in relation to general law rights (such as those in S.108) and imposes conditions on any such statutory right of sub-letting. Thus, S.10 does not authorise a tenant to ignore an express covenant against sub-letting.
  • The opinion does not purport to establish a broad new doctrine beyond the consequences for the parties: it affirms the lower court's result and reasons, relying on statutory construction principles and legislative history to resolve conflicts between S.9, S.10 and the common law embodied in S.108.

Disposition in the text: "The appeal fails and must be dismissed with costs." (Final line of the opinion.)

Show all summary ...

Chagla, C.J:— This is an appeal from the judgment of Desai, J., and the question that arises for determination is whether the plaintiffs who are the landlords are entitled to eject their tenants, the defendants. The defendants were the monthly tenants of the plaintiffs and on 23rd July, 1947, they sub-let their tenement. The plaintiffs gave a notice to the defendants terminating the tenancy.

2. The first contention that has been raised by Mr. Parpia on behalf of the tenants is that the notice to terminate was not a valid notice inasmuch as only a month's notice was given, whereas the agreement between the parties required that the notice should be of two months' duration. The agreement between the parties provides that the lessors shall let to the lessees the tenement in question for their use and occupation on a monthly tenancy, and then states the rent which has got to be paid. Clause 9 of the lease provides that either party desiring to terminate the tenancy at or after the expiration of the aforesaid period was to give two months' previous notice ending with the calendar month. Now, it is clear that this particular clause was intended to operate only if the tenancy was for a fixed period. The agreement to lease is in a printed form, and the print with regard to cl. 1 which sets out the period of the tenancy and the rent clearly shows that a tenancy for a fixed period was intended and the blank was to be filled in to show what was the period of the tenancy. As this particular tenancy was a monthly tenancy, the print in cl. 1 is struck off and & typed statement is incorporated which states that the tenancy between the parties is not a tenancy for a fixed period, but a monthly tenancy. It is, therefore, clear that cl. 9 was abrogated as soon as the parties agreed that the tenancy was to be a monthly tenancy. It is impossible to con-tend that although the tenancy was a monthly tenancy, the notice that was to be given was a notice of two months. The very definition of the monthly tenancy is that it is a tenancy for an indeterminate period which can be determined by a month's notice.

3. But the more substantial point which has been urged both by Mr. Parpia and by the Advocate-General is whether the tenant continues to be protected under the Bombay Rent Restriction Act, and whether Desai, J. was in error when he passed a decree for ejectment against the tenants. One of the terms of the tenancy agreement is that the lessee shall not sub-let or part with the possession of the demised premises or any part thereof to any other party or parties without the previous written consent of the lessors and subject to all the covenants and conditions contained in the agreement. Now, it is not disputed in this case that to the tenants have sub-let their premises without the previous written consent of the landlords, and Desai, J. held that in doing so the tenants had failed to perform the conditions of their tenancy, and, therefore, they were not protected under S. 9 of Act VII[7] of 1944. As against this, the Advocate-General contends that under S. 10 the tenant is entitled to sub-let, notwithstanding the fact that the tenancy agreement does not permit him to do so without the previous consent of the landlord, and that an additional right is given to the tenant, the exercise of which protects him from ejectment, although in doing so he may commit a breach of the tenancy agreement. Now, S. 10 permits a tenant to sub-let any portion of his premises to a sub-tenant provided he satisfies two conditions. He must forthwith intimate in writing to his landlord the fact of his having so sub-let the premises and also he must inform the landlord as to the rent at which the premises have been sub-let and this right is given to the tenant notwithstanding anything to the contrary in any law for the, time being in force. The law with regard to sub-letting is contained in Section 108 of the Transfer of Property Act, and that section deals with the rights and liabilities of lessor and lessee and in sub-cl. (j) the lessee is given the right to transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property, and any transferee of such interest or part may again transfer it. Now, it is to be noted that the right given to the lessee under sub-cl. (j) is an unrestricted right. It is not conditioned by either the lessee having to inform the lessor that he has sub-let the premises or the rent at which he has done so. But the whole of S. 108 in subject to this important proviso that S. 108 only applies provided there is no contract or local usage to the contrary, which means that the law as embodied in S. 108 applies to lessors and lessees unless they choose to make their own law, as it were, and embody it in their own personal contract. If the lessor and lessee choose to make a contract and lay down their rights and obligations, then S. 108 says that the law incorporated in S. 108 shall not apply to the lessor and lessee, but what will apply to them is their own contract and they would be governed by the conditions of that con-tract.

4. Now, the Advocate-General urges that S. 10 gives the right to a tenant to sub-let even though in the contract between him and his landlord such a right is not given to him. In other words, according to the Advocate-General S. 10 deals with not only the law as embodied in S. 108 but also with a contract arrived at between the landlord and the tenant. According to him, we must read S. 10 to mean not only ‘notwithstanding anything to the contrary in any law for the time being in force’ but also ‘notwithstanding anything to the contrary in any contract between the parties.’ Now, it is a fundamental canon of construction that a Court of Law would not permit the sanctity of obligations or of contracts to be interfered with unless the statute in express terms permits a violation of that sanctity. In the case before us, not only there are no express words in S. 10, but what is important and significant is that in S. 9 the sanctity of contract between the landlord and the tenant is fully respected and given effect to. Because the very basis of the tenant's protection under S. 9(1) is that he must pay rent to the full extent allowable by the Act and he must perform the other conditions of his tenancy. If one of the conditions of the tenancy is that he shall not sub-let without the previous consent of the landlord, then S. 9(1) says that the tenant must perform that condition if he wishes to avail himself of the protection given to him under that sub-section. Now, according to the Advocate-General, S. 10 overrides S. 9, and in effect lays down that it is open to the tenant to violate at least one term of his tenancy. The Advocate-General concedes that there is a repugnance as between S. 9 and S. 10, and he is driven to the position that the only way that repugnance can be reconciled is by giving to S. 10 the effect of overriding S. 9 at least in one material particular. In our opinion, that is not the proper way to construe Ss. 9 and 10. Again, the ordinary Canon of construction is that when there are two sections in the statute, the Court must try and reconcile both the sections, unless a subsequent section in terms provides that what is contained in that section is to operate as a proviso to the earlier section or it is to be considered as overriding the provisions of the earlier section. Section 10 does not state that what is contained in that section is to operate notwithstanding what is contained in S. 9, and, therefore, the only way to reconcile ss. 9 and 10 is that S. 10 does not deal with contracts between the parties at all. It only deals with the law as it obtains between the landlord and tenant, and provides for a tenant being able to sub-let only on certain terms even though those terms may be different from or contrary to the law regulating the relations of landlord and tenant. It is not as if S. 10 is wholly redundant. The Advocate. General says that a tenant had already a right to sub-let under S. 108; if that right was merely to be recognised, there was no need to enact S. 10. But S. 10 restricts the right of the tenant to sub-let under the ordinary law. As we have already pointed out, whereas under S. 108(j) the right of the tenant to sub-let was unrestricted, under S. 10 that right is circumscribed by two conditions: (1) that he must intimate in writing to the landlord the fact of his having sub-let the premises, and (2) he must inform him as to the rent at which the premises have been sub-let.

5. The history of the legislation with regard to the right of the tenant to sub-let is interesting and throws considerable light on the construction we must put upon S. 10. The Bombay Rent Registration (Restriction?) Order of 1942 was amended by a Notification D/- 13th Sept. 1943, which made a tenant liable to be ejected if he sub-let the premises without the written permission of his landlord after the date of that Notification. Therefore, this Order took away the right of the tenant which he had under the ordinary law of sub-letting without the permission of his land-lord in the absence of any contract to the contrary, and it went to the length of penalizing such sub-letting by making the tenant liable to be ejected. Then came the Notification dated 6th January, 1944, which further amended the Bombay Bent Restriction Order of 1942 and that amendment was practically in the same terms as Section 10 of the Act of 1914, although the Notification of 6th January, 1944 did not expressly render the tenant liable to be ejected if he sublet the premises without intimating in writing to his landlord the fact of his having so sub-let and also the rent at which they were sub-let. Therefore, the law was rendered less drastic as far as the tenant was concerned. He was not compelled to take the permission of his landlord in the case where there was no such term in the contract between them, but he had to comply with the two conditions to which we have referred. Now, according to the Advocate-General the tendency of the Legislature is to protect the tenant to such an extent that the Legislature intended that he should be given the right to sub-let even though he had no such right under the contract between him and his landlord; and the Advocate-General wants us to construe S. 10 in order to give effect to the tendency of modern legislation which is intended for the protection of tenants. Courts must try and not deter the Legislature from carrying out its object so long as it is possible to do so. But if the Legislature fails to carry out its object by giving proper expression to it by using adequate language for the purpose, the Court cannot violate the canons of construction merely for the purpose of assisting the Legislature for a supposed object which it might have. But in this case, it is not even clear that is the tendency of modern legislation and the Legislature intended to give the tenants an unrestricted right to sub-let. Because when we come to the latest act, viz., act lvii[57] of 1947, we find that s. 15 of that act contains a complete prohibition against the tenant to sub-let; and S. 13 goes to the length of providing the landlord with an additional ground for ejecting the tenant if the tenant sub-lets his premises. Therefore, if one is entitled to consider the object of the Legislature and the tendency of legislation, the latest Act seems intended to be against the right of the tenant to sub-let, rather than in favour of giving the tenant an unrestricted right to sublet, even contrary to the provisions contained in the contract between the landlord and the tenant.

6. Our attention has also been drawn to various judgments of single Judges which have considered this question. Coyajee, J. had to consider the construction of S. 10 in Lazarus Franck v. Solomon A. Zulaikha, O.C.J Suit No. 637 of 1944, decided on 18th August, 1944, but the views of the learned Judge were obiter because what he ultimately held was that there was a complete assignment of the premises and not sub-letting, and, therefore, S. 10 had no application. The views of Bhagwati, J. in Kaikhushroo Bazonji Kapadia v. Dhanjishaw Hormusji Joshi O.C.J Suit No. 1983 of 1945, decided on 2nd February, 1917, on the construction of S. 10 ware also obiter. I also happened to have expressed certain views in a case that came before me when I was sitting on the Original Side in Suleman Haji Ahmed Oomer v. J.E Tattersall, O.C.J Suit No. 965 of 1944, decided on 11th Octobar 1944. Mr. Tendolkar (as he then was) argued at the Bar that the tenant was not protected because he had not sub-let a part of the premises but he had sub-let the whole of the premises and in doing so he had deprived himself of the protection afforded by Section 10 of the Act. I took the view that S. 10 referred to sub-letting not only a part but the whole of the premises. But it must be admitted that it was conceded by Mr. Tendolkar that S. 10 did apply although there was a condition in the lease which, required the previous consent of the landlord before the tenant could sub-let the premises, and in coming to the conclusion that the tenant was protected and the plaintiff was not entitled to eject the defendant I took the view that S. 10 gave the protection to the tenant notwithstanding any contract to the contrary. But the point was not argued and, as we have just remarked, my judgment proceeded on the concession made by Mr. Tendolkar.

7. The same point came for consideration before Weston, J., in Piarelal Tahoar v. Pestonji Kooverji Sethna, Civil Revision Appln. No. 109 of 1946, decided on 26th March, 1946. There also the learned Judge's observations were obiter, although Weston, J. took the view which we are now taking and which Desai, J. in the Court below took that the expression “notwithstanding any law to the contrary” cannot be read to mean also notwithstanding any contract to the contrary.

8. The result, therefore, is that inasmuch as the tenant has sub-let the premises without the previous consent of the landlord, he is not protected under S. 9. He has not performed one of the conditions of his tenancy.

9. We, therefore, agree with the view taken by Desai, J. who passed a decree for ejectment in favour of the plaintiffs. The result, therefore, would be that the appeal fails and must be dismissed with costs.

10. Appeal dismissed.