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Case Number

Insolvency No. 17 of 1944

Advocates

Y.B Rege, for the insolvent.
S.R Billimoria, Official Assignee in person.

Judges

Mr. Bhagwati, J.

Acts

s. 62 of the Presidency Towns Insolvency Act
s. 63 of the Presidency-towns Insolvency Act
s. 66 of the Presidency-towns Insolvency Act.
s. 167 of the Bankruptcy Act, 1914,
Bombay Rent Restriction Act, 1939,
Bombay Rent (War Restrictions) Act
Rent Restriction Acts

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Smart Summary

Legal Opinion Summary (Bhagwati, J.)

Factual and Procedural Background

This petition was filed by the Official Assignee under s. 63 of the Presidency-towns Insolvency Act seeking leave to disclaim a sub-tenancy of a portion of premises at Sassoon Dock, Bombay, which was occupied by the insolvent. The insolvent was adjudicated on his own petition on January 20, 1944. At adjudication the insolvent occupied part of house No. 112 at Sassoon Dock as a sub-tenant of J. Rodrigues, paying monthly rent of Rs. 55, and was in arrears of rent. The insolvent did not give vacant possession; J. Rodrigues brought suit No. 4706 of 1944 in the Small Causes Court for ejectment and arrears.

While that suit was pending, J. Rodrigues requested the Official Assignee to disclaim the sub-tenancy so that he could file a notice of disclaimer in those proceedings. Before the Official Assignee disclaimed, the insolvent's attorneys (Messrs Dinkarrau & Parekh) challenged the right to disclaim, contending the sub-tenancy was a mere personal right and not "property" that could vest in the Official Assignee. The Official Assignee, relying on the decision In re Abubaker (Sir Norman Macleod), served a notice of intention to disclaim on September 13, 1944. The insolvent's attorneys replied on September 22, 1944 requesting the matter be brought before the Insolvency Court; the Official Assignee then filed the present petition.

Legal Issues Presented

Whether the statutory tenancy to which the insolvent became entitled under the Bombay Rent Restriction Act, 1939 is "property" within the meaning of s. 62 of the Presidency-towns Insolvency Act and thereby vests in the Official Assignee on adjudication.
Whether the Official Assignee is entitled to disclaim that statutory tenancy under s. 63 of the Presidency-towns Insolvency Act.
Whether the court, being of coordinate jurisdiction with Sir Norman Macleod who decided In re Abubaker, is bound to follow that decision or may dissent in light of subsequent appellate authority (notably Sutton v. Dorf) that overruled Parkinson v. Noel on which In re Abubaker was based.

Arguments of the Parties

Insolvent's Arguments (Mr. Rege)

The statutory tenancy arising under the Bombay Rent Restriction Act, 1939 is not "property" within the meaning of s. 62 of the Presidency-towns Insolvency Act.
Because it is not "property" within s. 62, the statutory tenancy did not vest in the Official Assignee by the adjudication order and therefore there was no interest to disclaim.

Official Assignee's Arguments

The Official Assignee relied upon the decision in In re Abubaker (Sir Norman Macleod), which treated a statutory tenancy under the Bombay Rent (War Restrictions) Act, 1918 as the property of the tenant within the meaning of s. 62, vested in the Official Assignee on adjudication, and terminable by disclaimer, allowing the landlord to obtain possession under s. 66.
On that basis the Official Assignee contended the statutory tenancy under the Bombay Rent Restriction Act, 1939 in the present case similarly constituted property that vested in him and which he was entitled to disclaim.
The Official Assignee further urged that, as a decision of a Court of coordinate jurisdiction, In re Abubaker should be followed.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
In re Abubaker (Sir Norman Macleod)	Held that a statutory tenancy under the Bombay Rent (War Restrictions) Act, 1918 was "property" within s. 62 of the Presidency-towns Insolvency Act; vested in the Official Assignee on adjudication; disclaimer by the Official Assignee ended the tenancy and allowed landlord to obtain possession under s. 66.	The Official Assignee relied on this decision to justify disclaiming the sub-tenancy. The court examined its basis and ultimately dissented from In re Abubaker because it rested on Parkinson v. Noel which had been overruled.
Parkinson v. Noel (Greer J.)	Held that a statutory tenancy under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, was "property" of the tenant within s. 167 of the Bankruptcy Act, 1914, passed to the trustee, and could be disclaimed, after which landlord could obtain judgment/possession.	Identified as the foundational authority relied on in In re Abubaker. The court noted that Parkinson v. Noel had been overruled and therefore its proposition no longer represented the law.
Sutton v. Dorf (Court of Appeal; judgment by Acton J.)	Overruled Parkinson v. Noel; held that rights of statutory tenants under the Rent Restriction Acts are not an "estate" or "property" but only a personal right to retain possession, not assignable or transmissible, and do not pass to a trustee on bankruptcy.	The court accepted Sutton v. Dorf as laying down the correct position in law and followed it, treating it as decisive against the proposition in In re Abubaker.
John Lovibond & Sons Ltd. v. Vincent	One of the later cases cited as supporting the proposition that statutory tenancy is not estate/property but a personal right (cited by Acton J. in Sutton v. Dorf).	Referenced by the court as part of the body of subsequent decisions which led to the overruling of Parkinson v. Noel and supporting Sutton v. Dorf.
Tyabji Dayabhai & Co. v. Jetha Devji & Co. (Appeal Court)	Observations endorsing the practice that a judge of coordinate jurisdiction should normally follow decisions of another judge of coordinate jurisdiction for uniformity and to avoid uncertainty.	Quoted to explain the principle of judicial comity and the usual practice of following coordinate decisions, while recognizing its conditional nature.
Hafizaboo v. Mahomed Cassum (obiter by Sir Lawrence Jenkins)	Approves the practice of following decisions of coordinate judges (cited in Tyabji Dayabhai).	Referred to in support of the general proposition of judicial comity and the expectation of uniformity among co-ordinate courts.
Parkin v. Thorola (Lord Romilly M.R.)	Discusses the importance of uniformity of decisions and when a judge might nonetheless depart from an earlier decision if it is contrary to principles of equity or settled decisions.	Quoted to illustrate that even when uniformity is important, a judge may decline to follow a prior decision if he considers it contrary to settled principles.
Osborne v. Rowlett (Jessel M.R.)	States that only the principle of a prior decision is binding; if that principle is not a right principle, a subsequent judge may lay down the true principle and reverse the prior decision.	Relied upon to justify the court's ability to dissent from In re Abubaker if the principle underlying it was shown to be wrong.

Court's Reasoning and Analysis

The court undertook a step-by-step analysis grounded in precedent and commentary as follows:

The Official Assignee's position was based on In re Abubaker, which in turn rested upon the decision in Parkinson v. Noel that a statutory tenancy was "property" passing to a trustee and terminable on disclaimer.
The court examined the subsequent appellate authority and later decisions and authorities (including Sutton v. Dorf and John Lovibond & Sons Ltd. v. Vincent) which, the court observed, had moved decisively away from Parkinson v. Noel. Acton J.'s judgment in Sutton v. Dorf held that statutory tenancy under Rent Restriction Acts is not an "estate" or "property" but a personal right not assignable or transmissible and not passing on bankruptcy.
The court referred to secondary authorities (Williams on Bankruptcy and Halsbury's Laws of England) summarising the accepted position that a statutory tenancy under the Rent Restriction Acts is not "property" of the statutory tenant for the purposes of the relevant bankruptcy/insolvency provisions.
The court then considered the doctrine of precedent among courts of coordinate jurisdiction. It discussed the principle of judicial comity—normally a judge follows decisions of coordinate judges—but emphasised, citing Salmond, Parkin v. Thorola, Osborne v. Rowlett and relevant local appellate observations, that such authority is conditional. If the prior decision is based on a principle shown to be wrong by superior authority, a judge of coordinate jurisdiction may dissent and adopt the correct principle.
Because Parkinson v. Noel had been overruled by Sutton v. Dorf and the weight of later authority supported Sutton v. Dorf's principle, the court held that it was not bound to follow In re Abubaker. The court considered the principle underlying In re Abubaker to be wrong and therefore concluded it could lawfully dissent from that coordinate decision.
Applying the accepted principle (as laid down in Sutton v. Dorf and supported by authoritative texts), the court concluded that the statutory tenancy under the Bombay Rent Restriction Act, 1939 was not "property" within s. 62 of the Presidency-towns Insolvency Act and therefore did not vest in the Official Assignee on adjudication.

The court limited its analysis to the precedents and commentary cited in the opinion and explicitly based its conclusion on the appellate authorities which had overruled the earlier contrary decision.

Holding and Implications

Holding: The court held that the statutory tenancy to which the insolvent became entitled under the Bombay Rent Restriction Act, 1939 was not "property" within the meaning of s. 62 of the Presidency-towns Insolvency Act; it did not vest in the Official Assignee by the adjudication order, and the Official Assignee was not entitled to disclaim it.

Disposition: The petition of the Official Assignee was rejected.

Implications: The direct consequence of the decision is that the Official Assignee could not disclaim the statutory sub-tenancy in question and the petition to disclaim was dismissed. The opinion reasons from appellate authority and authoritative texts; it declines to follow a prior decision of a coordinate judge (In re Abubaker) because the appellate authority (Sutton v. Dorf) had overruled the foundational precedent (Parkinson v. Noel). The opinion does not state that it is establishing any broader rule beyond applying the cited appellate authority to the present facts.

Attorneys for the insolvent (as recorded in the opinion): Messrs Dinkarrau & Parekh.

A.J.P

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Re Peregrino Antonio Francisco Pedro Rodrigues Insolvent v. Ex-Parte The Official Assignee Of Bombay Petitioner

Bhagwati, J.:—

This is a petition filed by the Official Assignee for leave under s. 63 of the Presidency-towns Insolvency Act to disclaim the sub-tenancy of the portion of the premises at Sassoon Dock, Bombay, occupied by the insolvent. The insolvent was adjudicated on his own petition on January 20, 1944. At the time of his adjudication he was occupying a portion of the house No. 112 at Sassoon Dock, Bombay, as a sub-tenant of one J. Rodrigues paying a monthly rent of Rs. 55. The insolvent was in arrears of rent and did not give vacant possession of the said premises to J. Rodrigues, with the result that J. Rodrigues filed a suit in the Small Causes Court, being suit No. 4706 of 1944, for ejectment and claiming the arrears of rent from the insolvent. While the said suit was pending, J. Rodrigues requested the Official Assignee to disclaim the sub-tenancy of the said premises to enable him to file the notice of disclaimer in the proceedings of the said suit. Before, however, the Official Assignee proceeded to disclaim the sub-tenancy of the said premises, Mr. Dinkarrau of Messrs Dinkarrau & Parekh, attorneys for the insolvent, attended upon the Official Assignee and raised various contentions challenging the right of the Official Assignee to disclaim the sub-tenancy of the premises occupied by the insolvent. It was contended that the sub-tenancy in question was not “property” but a mere personal right and as such could not vest in the Official Assignee, and therefore the question of disclaiming the sub-tenancy did not arise at all. The Official Assignee, however, felt bound by the decision of Sir Norman Macleod in In re Abubaker which has not been overruled or dissented from, and stated that he had no other alternative but to follow the principle laid down in that case and treat the sub-tenancy as having vested in him. He accordingly sent on September 13, 1944, a notice of his intention to disclaim the sub-tenancy to J. Rodrigues and to the insolvent. In reply to the said notice Messrs Dinkarrau & Parekh, attorneys for the insolvent, wrote to the Official Assignee by their letter dated September 22, 1944, that he could not disclaim the sub-tenancy and requested him to bring the matter before the Insolvency Court to enable them to appear on behalf of the insolvent and make their submissions in the matter. The Official Assignee thereafter filed the present petition.

It was argued by Mr. Rege, who appeared for the insolvent, that the statutory tenancy to which the insolvent became entitled by virtue of the Bombay Rent Restriction Act, 1939, was not “property” within the meaning of s. 62 of the Presidency-towns Insolvency Act, and did not vest in the Official Assignee by the adjudication order, and it was therefore not necessary for the Official Assignee to disclaim any interest therein. The Official Assignee, on the other hand, relied upon the said decision of Sir Norman Macleod in In re Abubaker, where the learned Judge had held that the statutory tenancy to which the insolvent became entitled, under the Bombay Rent (War Restrictions) Act No. II of 1918, was his property within the meaning of s. 62 of the Presidency-towns Insolvency Act,—had vested by the adjudication order in the Official Assignee and had come to an end by the disclaimer of the Official Assignee, and therefore the landlord was competent to obtain an order for possession of the premises by a motion before the Insolvency Court under s. 66 of the Presidency-towns Insolvency Act. The Official Assignee contended that in accordance with the said decision of Sir Norman Macleod, the statutory tenancy to which the insolvent became entitled under the Bombay Rent Restriction Act, 1939, in the present case was the property of the insolvent within the meaning of s. 62 of the Presidency-towns Insolvency Act which vested in him by the adjudication order and that therefore he was entitled to disclaim the said property.

It was urged by the Official Assignee that the said decision of Sir Norman Macleod being a decision of a Court of co-ordinate jurisdiction, I was bound to follow the same. Mr. Rege, however, pointed out that the said decision of Sir Norman Macleod was based on the decision in Parkinson v. Noel where Greer J. had held that a statutory tenancy under the Increase of Rent and Mortgage Interest (Restrictions) Act, 1920, was “property” of the tenant within the meaning of s. 167 of the Bankruptcy Act, 1914, and (on the tenant being adjudicated bankrupt) passed under s. 53 to the trustee in bankruptcy, that on disclaimer thereof by the trustee that interest in the premises ceased to exist and was no longer available for the benefit of the tenant and consequently that the landlords were entitled to judgment. In that case Greer J. held that ss. 5 and 15 of the Increase of Rent, etc. (Restrictions) Act, 1920, involved an obligation on the part of the landlord to permit his ex-tenant's possession to continue and by implication conferred on the ex-tenant a right to retain possession on the terms of the expired tenancy. He thought that the ex-tenant had an interest or profit in the property and the landlord was subject to an obligation in favour of the tenant, that the said interest, profit or right to the obligation imposed on the landlord was “property” within the meaning of the Bankruptcy Act which passed on the bankruptcy of the tenant to the trustee and ceased to exist on his disclaimer and was no longer available for the benefit of the tenant. He also thought that the said rights of the ex-tenant were valuable or profitable in so far as the tenant could sublet part of the premises, and he could bargain with his landlord for some consideration for giving up possession. He accordingly held that the statutory tenant had an interest or profit in land which passed to his trustee in bankruptcy and that, if the trustee disclaimed, the right or interest was lost and the landlord could assert his right to possession and was freed from the restrictions of the Increase of Rent, etc. (Restrictions) Act, 1920. Mr. Rege pointed out that the said decision of Greer J. in Parkinson v. Noel was, however, overruled in Sutton v. Dorf. The judgment of the Court in that case was read by Acton J. who stated that since the decision in Parkinson v. Noel had been delivered in 1922 the tendency of all the later decisions was in the opposite direction. Acton J. referred to several cases which had been decided since 1922, the last of such cases being the case of John Lovibond & Sons Ld. v. Vincent. In all of the said cases it had been decided that the right of a statutory tenant was no “estate” or “property” at all but was a purely personal right to retain possession of the premises and could neither be assigned nor transmitted by will, and unless the statute expressly authorised him to pass it on to another person, must cease the moment he parted with the possession or died. Acton J., therefore, held that it was impossible to reconcile with the principles clearly enunciated in the said decisions of the Court of Appeal subsequent to Parkinson v. Noel, the proposition that a statutory tenancy under the Rent Restrictions Acts was “property” of a tenant within the meaning of s. 167 of the Bankruptcy Act, 1914, and as such passed to the trustee in bankruptcy of the statutory tenant. He further stated that the said conclusion was inevitable, even after a careful consideration of the observations upon Parkinson v. Noel made obiter by Greer L.J in John Lovibond & Sons Ld. v. Vincent. This decision of the Appeal Court in Sutton v. Dorf. overruling the decision of Greer J. in Parkinson v. Noel has been now accepted as laying down the correct position in law. It is accordingly stated in Williams on Bankruptcy, 15th edn., at p. 376, that:

“A statutory tenancy under the Rent Restriction Acts is not ‘property’ of the statutory tenant within the meaning of s. 167, and therefore does not pass to his trustee and cannot be disclaimed.”

A similar statement is to be found in Halsbury's Laws of England, Hailsham edition, Vol. XX, at p. 334, para 401:

“A statutory tenant has no estate or property as tenant, but merely a personal right to retain possession of the property…. He cannot assign his interest or transmit it by will. On his bankruptcy, his interest will not pass to his trustee, nor can he, by declaring that he holds as trustee for another, confer on that person any right to possession. He may not sublet the whole of the premises, though he may sublet parts if he is not restricted from so doing under the original contract of tenancy.”

The result of the above is that Parkinson v. Noel, which was followed by Sir Norman Macleod in the case of In re Abubaker, has been overruled and is no longer good law; and the position in law is quite the contrary to what had been decided in Parkinson v. Noel.

If this is the true position in law, am I bound to follow the decision of Sir Norman Macleod in In re Abubaker as a decision of a Court of co-ordinate jurisdiction, or am I entitled, by reason of the said decision in Parkinson v. Noel having been overruled by the decision in Sutton v. Dorf, to decide the point raised before me in accordance with the principle laid down in the said decision in Sutton v. Dorf, even though it would mean my dissenting from the decision of Sir Norman Macleod in In re Abubaker and coming to a contrary conclusion? The authority of judicial decisions as precedents has been thus enunciated in Salmond on Jurisprudence, 9th edn. at pp. 233-234:

“Authoritative precedents are of two kinds, for their authority is either absolute or conditional. In the former case the decision is absolutely binding and must be followed without question, however unreasonable or erroneous it may be considered to be. It has a legal claim to implicit and unquestioning obedience. Where, on the other hand, a precedent possesses merely conditional authority, the Courts possess a certain limited power of disregarding it. In all ordinary cases it is binding, but there is one special case in which its authority may be lawfully denied. It may be overruled or dissented from, when it is not merely wrong, but so clearly and seriously wrong that its reversal is demanded in the interests of the sound administration of justice. Otherwise it must be followed, even though the Court which follows it is persuaded that it is erroneous or unreasonable.

“Absolute authority exists in the following cases:—

(1) Every Court is absolutely bound by the decisions of all Courts superior to itself. A Court of first instance cannot question a decision of the Court of Appeal, nor can the Court of Appeal refuse to follow the judgments of the House of Lords.

(2) The House of Lords is absolutely bound by its own decision ‘A decision of this House once given upon a point of law is conclusive upon this House afterwards, and it is impossible to raise that question again as if it was res integra and could be re-argued, and so the House be asked to reverse its own decision.’

(3) The Court of Appeal is, it would seem, absolutely bound by its own decisions and by those of older Courts of co-ordinate authority, for example, the Court of Exchequer Chamber.

In all other cases save these three, it would seem that the authority of precedents is merely conditional.”

As regards the decisions of Courts of co-ordinate jurisdiction the position is thus stated in Halsbury's Laws of England, Hailsham edition, Vol. XIX, p. 256:

“There is no statute or common law rule by which one Court is bound to abide by the decision of another Court of co-ordinate jurisdiction; a Court of law does so on the ground of judicial comity. It is on the ground of judicial comity that an appellate Court consisting of more than one judge bows to its own decisions; for the same reason, although the ratio decidendi of a decision by a judge of first instance is not absolutely binding upon another judge of first instance of co-ordinate jurisdiction, it is the practice in the Courts of the King's Bench Division for a judge to follow the decision of another judge of that division on a question of law without saying what his own view Would have been in the matter, leaving it to the Court of Appeal to say Whether or not that decision was wrong.”

There are also similar observations of our Appeal Court in Tyabji Dayabhai & Co.… v. Jetha Devji & Co.…* observed (p. 863):

“The proper course, I think, for the learned Chamber Judge Would have been to have followed that decision without expressing, if he liked, any opinion of his own, and leaving it to the parties to appeal if they thought that decision was wrong. That is the undoubted practice which prevails in the English Courts, and the observations of Sir Lawrence Jenkins in Hafizaboo v. Mahomed Cassum approving of a similar course taken by Mr. Justice Batty in the Court below, show incidentally that they should be adopted here, and for this very good reason. The English system of law and procedure is different from that obtaining in continental countries. One essential element of it is that the Courts should deem themselves bound by decisions of Courts of co-ordinate jurisdictions, and that it should not be left in cases precisely on all fours for Judge A to decide points of law in one way and Judge B in another. Think for a moment of the embarrassment that would be caused to the legal profession and to the litigating public if there was no such thing as a settled point of law, and if there could be no certainty as to what the decision on any point of law would be until after judgment had been given.”

The authority, however, of the decisions of Courts of co-ordinate jurisdiction is a conditional authority as enunciated in the passage from Salmond on Jurisprudence quoted above. Even though the necessity of preserving a uniformity of decisions in the different Courts was emphasised by Lord Romilly M.R in Parkin v. Thorola, he observed (p. 63):—

“I have repeatedly stated, that in my opinion uniformity of decision was so important to be obtained, that whenever I found a decision pronounced by one of the Vice-Chancellors, I should consider myself to be bound by that decision, where it related either to a new matter or was not opposed by contradictory decisions or on some one of those principles of equity on which all decisions are founded; and that I should do so, even though, if it had originally come before me uninfluenced by any such decision, I might have come to a different conclusion… But I have not thought myself at liberty to decline giving to the plaintiffs the decree, which, after the most careful consideration of the principles of equity and the settled decisions I think they are entitled to, although it is not in accordance with the conclusion expressed by a most learned and able Judge, but which I am not able consistently, as I think with these principles, or with those decisions by which I am bound, to follow.”

It is to be observed that Lord Romilly differed from the earlier decision of Lord Cranworth in that case with considerable hesitation, considering himself bound to do so, because in his opinion the decision of Lord Cran worth, even though it was on the very same materials that were before him, was contrary to the principles of equity and the settled decisions on the point.

Similar observations were made by Jessel M.R in the case of Osborne v. Rowlett (p. 785):—

“Now, I have often said, and I repeat it, that the only thing in a Judge's decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided; but it is not sufficient that the case should have been decided on a principle if that principle is not itself a right principle, or one not applicable to the case; and it is for a subsequent Judge to say whether or not it is a right principle, and, if not, he may himself lay down the true principle. In that case the prior decision ceases to be a binding authority or guide for any subsequent Judge, for the second Judge who lays down the true principle in effect reverses the decision.”

These observations of Jessel M.R are important in so far as they permit the subsequent Judge to dissent from the prior decision and in effect reverse the same if he considered that the principle on which the prior decision was based was not the right principle and the true principle was quite the contrary. It would, therefore, follow that if the principle on which Sir Norman Macleod based his decision in In re Abubaker was not the right principle,—as has been proved by the fact that the said decision in Parkinson v. Noel has been overruled by the Appeal Court in the case of Sutton v. Dorf, it would be open to me, even though I am a Court of co-ordinate jurisdiction with Sir Norman Macleod, to dissent from the said decision of Sir Norman Macleod in In re Abubaker and in effect reverse the same by deciding this case on the true principle of law as laid down in the case of Sutton v. Dorf, which I have already observed has been accepted as laying down the true position in law.

Under the circumstances I feel myself free to follow the decision in Sutton v. Dorf and dissent from the judgment of Sir Norman Macleod in In re Abubaker. I, therefore, hold that the statutory tenancy to which the insolvent became entitled under the Bombay Rent Restriction Act, 1939, was not his property within the meaning of s. 62 of the Presidency Towns Insolvency Act and did not vest by the adjudication order in the Official Assignee and that the Official Assignee is not entitled to disclaim the same.

I, accordingly, reject the petition of the Official Assignee.

Attorneys for insolvent: Messrs Dinkarrau & Parekh.