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John Nadjarian v. E.F. Trist

Bombay High Court

Jun 23, 1944

Judgment

Subsequent
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Factual and Procedural Background

The plaintiff sued for ejectment and possession. The defendant was a sitting tenant originally under Mrs. Bolton. Mrs. Bolton transferred or assigned her interest in the premises to the plaintiff; by a letter dated 24 November 1942 the defendant accepted (attorned to) the plaintiff as his landlord in substitution of Mrs. Bolton. The defendant contested the plaintiff's right to substitute himself in place of Mrs. Bolton and challenged the plaintiff's title. Issues also arose about whether the transfer by Mrs. Bolton was in breach of a covenant in the original tenancy agreement (consent required for subletting/transfers). The defendant failed to pay rent for September and October 1943. The Court delivered judgment in favour of the plaintiff and made a decree for possession.

Legal Issues Presented

Whether the estoppel under s. 116 of the Indian Evidence Act operates in every case of attornment so as to prevent a tenant from denying his landlord's title (as contended by Mr. Seervai).
Whether the attornment by the defendant to the plaintiff in this case created a new tenancy attracting s. 116, or was a mere attornment leaving the original tenancy intact.
Whether the defendant was competent to show that the plaintiff had no title at the date when the defendant attorned tenant to him.
Whether the transfer or assignment of the tenancy by Mrs. Bolton to the plaintiff (in breach of a covenant requiring the lessee's consent for subletting/transfer) was effective to vest the term in the plaintiff.
Whether the defendant's alleged payment of rent to the plaintiff in ignorance of any defect in the transfer affected the plaintiff's right to eject for non-payment of rent (specifically for September and October 1943).

Arguments of the Parties

Mr. Seervai (as set out in the opinion)

He contended that the Privy Council decision in Krishna Prosad Lal v. Baraboni Coal Concern Limited implies a broader rule: that in every case of attornment by a tenant to his landlord the provisions of s. 116 of the Indian Evidence Act must apply and the tenant would be prevented from denying his landlord's title.
He relied on two Indian cases (Shankar v. Jagannath and Krishnarao v. Ghaman) which, he submitted, supported the proposition that attornment can give rise to a new tenancy attracting s. 116.

Mr. Daphtary (as set out in the opinion)

He relied on Elliot v. Johnson to support the position that the assignment to the plaintiff was effective as between the lessee and assignee (the opinion records his reliance on that decision).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Krishna Prosad Lal v. Baraboni Coal Concern Limited (Privy Council)	Clarified that s. 116 should not be narrowly read to require that the landlord be the person who put the tenant into possession; s. 116 covers a grantee who occupies and enjoys under a grant disputing the grantor's title, but does not deal with all kinds of estoppel.	Used to show that s. 116 is wide enough in certain cases but does not apply to all instances of attornment; Court relied on Privy Council passages distinguishing cases outside s. 116 (e.g., sitting tenant attorning to a new individual).
Shankar v. Jagannath	Discussed whether a new tenancy had arisen for the purposes of s. 116; the Court in that case found attornment created a new tenancy.	Recognised as a case where, on the facts, a new tenancy arose; not treated as deciding that mere attornment necessarily creates a new tenancy.
Krishnarao v. Ghaman	Held that for the purposes of s. 116 it was not necessary that the tenant be actually put into possession by the landlord; the case found as fact that a new tenancy had arisen.	Cited as another instance where a new tenancy was found on the facts; Court distinguished these factual findings from the general proposition that mere attornment creates a new tenancy.
Chengtu v. Jaheruddin (Calcutta High Court)	Held that where tenants attorned in ignorance of the landlord's title or by fraud in execution of kabulayat, tenants are not altogether estopped and can show lack of landlord's title.	Accepted as a directly relevant authority supporting the view that tenants may show lack of title where attornment was made in ignorance or by fraud; Court said it was not impliedly overruled by the Privy Council decision.
Prakash Kaur v. Gian Chand	After the Privy Council decision, held tenants could dispute the derivative title of their landlord (i.e., dispute those claiming as heirs), though not the landlord's title at the commencement of the lease.	Referred to support the proposition that tenants may be entitled to dispute derivative titles even after an attornment.
Williams v. Earle	Illustrated that an assignment in breach of a covenant not to assign is nevertheless operative to vest the estate in the assignee; breaches give remedy against the assignor or indirectly by damages.	Relied on to support the conclusion that Mrs. Bolton's transfer to the plaintiff was effective despite breach of the covenant requiring consent.
Basarat Ali Khan v. Manirulla (decision, Sir Lawrence Jenkins C.J.)	Held assignment operative notwithstanding covenant not to assign without consent.	Referred to with approval as authority supporting effect of assignment despite covenant to the contrary.
Elliot v. Johnson	Involved an assignment without licence where the assignee entered but the lessor never recognized him as tenant; Court held assignee could not sue on the covenant between lessor and original lessees because lessor had not recognized him.	Cited by Mr. Daphtary; Court observed it did not assist the defendant's case and did not decide that the assignment between lessee and assignee was ineffective.
Halsbury's Laws of England, Vol. XX (2nd edn.), para 415	Statement that an assignment, even in breach of a condition, is effectual to vest the term in the assignee.	Used as an authoritative text supporting the conclusion that the transfer to the plaintiff vested the term notwithstanding the breach of covenant.

Court's Reasoning and Analysis

The Court began by addressing the relationship between attornment, estoppel and s. 116 of the Indian Evidence Act. It noted earlier Indian authorities that had suggested s. 116 estoppel arose only where a landlord put the tenant into possession, but observed the Privy Council in Krishna Prosad Lal corrected that narrow reading and confirmed s. 116 covers cases where a grantee occupies and enjoys under a grant disputing the grantor's title.

The Court then considered Mr. Seervai's broader contention that every attornment must invoke s. 116 and prevent the tenant from disputing the landlord's title. The Court explained that a mere attornment ordinarily does not create a new tenancy: its effect is substitution of the landlord while the tenancy continues on the same terms. Whether a new tenancy has arisen is a question of fact in each case.

Applying that framework, the Court examined the November 24, 1942 letter and found that in that transaction the defendant accepted the plaintiff as landlord in substitution for Mrs. Bolton and the tenancy continued on the same terms — i.e., the attornment was, in substance, a substitution of landlord without creation of a new tenancy. Consequently the defendant was positioned as a sitting tenant attorning to a new individual as entitled to receive rent.

The Court distinguished the estoppel created by mere attornment from the statutory estoppel of s. 116: although attornment creates an estoppel in favour of the assignee, that estoppel is not necessarily the same as s. 116 and does not bar a tenant from showing that he attorned in ignorance of the assignee's lack of title. The Court relied on the Privy Council passages (quoted in the opinion) which recognized many attornment/acceptance-of-rent cases fall outside s. 116, and on Chengtu v. Jaheruddin to support the proposition that tenants who attorned in ignorance or due to fraud may be permitted to show the assignee had no title.

The Court therefore held it was competent for the defendant to show the plaintiff had no title at the date of attornment. The Court then addressed the plaintiff's asserted title: Mrs. Bolton's transfer to the plaintiff. The Court applied s. 108(j) of the Transfer of Property Act, 1882 (lessee may transfer his interest; transferee may again transfer), and considered the written tenancy terms (letter of 4 November 1941 and printed conditions on rent bills) which contained a covenant that the premises shall not be sub-let or transferred without Gupta's consent. Evidence showed Mrs. Bolton never obtained Gupta's consent.

Noting authorities (Halsbury, Williams v. Earle, Basarat Ali Khan v. Manirulla), the Court held that although the transfer was in breach of the consent condition, the assignment was nevertheless effective to vest the term in the assignee (the plaintiff). The Court observed that Elliot v. Johnson, cited by Mr. Daphtary, did not aid the defendant because that case did not hold an assignment to an assignee was ineffective as between lessee and assignee.

Having concluded that Mrs. Bolton effectively transferred her interest to the plaintiff and that the defendant attorned to a person with sufficient interest to substitute himself as landlord, the Court determined that whether the defendant paid rent in ignorance of any defect in the transfer was immaterial. Finally, on facts, because the defendant had failed to pay rent for September and October 1943, the Court found he had no answer to the plaintiff's suit for ejectment.

Holding and Implications

Holding: The Court entered a decree in favour of the plaintiff for possession.

Implications: The direct effect of the decision is that the plaintiff's transfer from Mrs. Bolton was held effective to vest the tenancy in the plaintiff despite the absence of the tenant's consent, and the defendant's attornment to the plaintiff did not prevent the plaintiff from asserting his rights as landlord; the defendant's non-payment of rent for September and October 1943 warranted ejectment. The opinion does not purport to lay down a novel rule beyond applying established principles (it distinguishes situations where s. 116 applies from other estoppels arising by attornment and confirms that questions of new tenancy depend on the facts). No broader or new precedent beyond these applications is announced by the Court in the text of the opinion.

Case Administration Details (as recorded)

Attorneys for plaintiff: Messrs Eastley, Lam & Co.

Attorneys for defendant: Messrs Crawford, Bayley & Co.

Decree in favour of the plaintiff for possession.

Show all summary ...

Chagla, J.:—

[After setting out the facts of the case, the judgment proceeded.] It was held at one time by some of the Courts in India that the estoppel under s. 110 of the Indian Evidence Act, 1872, only arises in favour of a landlord who puts the tenant into possession, but if the tenant had already been in possession, the estoppel did not arise, and it was competent to the tenant to show that his landlord had no title. The decision of the Privy Council in Krishna Prosad Lal v. Baraboni Coal Concern Limited, has made it clear that there is no warrant for reading into s. 116 the qualifying words that the landlord contemplated there is the landlord who put the tenant into possession or that the beginning of the tenancy referred to in that section means only the tenancy begun by the tenant being put into possession. The estoppel under s. 116 of the Indian Evidence Act is wide enough to cover any case of a grantee who occupies and enjoys under a grant disputing the grantor's title. But Mr. Seervai contends that what the Privy Council decided goes much further than what I have just stated. He submits that in every case where there is an attornment by a tenant to his landlord, the provisions of s. 116 of the Indian Evidence Act must apply and the tenant would be prevented from denying his landlord's title. Now it is clear that a mere attornment does not create a new tenancy. The only effect of a mere attornment is the substitution of a new landlord in place of the old and the tenancy continues on the same terms. It may be that in some cases the attornment is not a mere attornment and as a result of the attornment a new tenancy is created. The question, therefore, that I have to determine in this case is whether a new tenancy was created when the defendant attorned tenant to the plaintiff. It is clear from the terms of the letter of November 24, 1942, that the effect of that transaction was that the defendant accepted the plaintiff as his landlord in substitution of Mrs. Bolton and the tenancy continued the same as was constituted when the defendant became Mrs. Bolton's tenant. Therefore in one sense what the defendant is challenging is not really the title of his landlord but the right of the plaintiff to substitute himself in place of Mrs. Bolton.

It is true—and the authorities make this clear—that even a mere attornment does create an estoppel against the tenant, but that estoppel is not the same as is given statutory effect by s. 116 of the Indian Evidence Act. There are other kinds of estoppel between tenant and landlord which fall outside the scope of s. 116 of the Indian Evidence Act. Although the fact of the defendant having attorned tenant to the plaintiff creates an estoppel in favour of the plaintiff, it still does not prevent the defendant from showing that he attorned tenant in ignorance of the fact that the plaintiff had no title.

What I have just stated is in no way inconsistent with the statement of the law to be found in the latest decision of the Privy Council in Krishna Prosad Lal v. Baraboni Coal Concern Limited. At p. 1038 their Lordships of the Privy Council observed:—

“The section does not deal or profess to deal with all kinds of estoppel or occasions of estoppel which may arise between landlord and tenant…. Whether during the currency of a term the tenant by attornment to A who claims to have the reversion, or the landlord by acceptance of the rent from B who claims to be entitled to the term is estopped from disputing the claim which he has once admitted are important questions, but they are instances of cases which are outside s. 116 altogether…. The principle does apply to disentitle a tenant to dispute the derivative title of one who claims to have since become entitled to the reversion, though in such cases there may be other grounds of estoppel, e.g, by attornment, acceptance of rent, etc. In this sense it is true enough that the principle only applies to the title of the landlord who ‘let the tenant in’, as distinct from any other person claiming to be reversioner.”

Again at p. 1040, after referring to two Indian cases, their Lordships said:—

“… both cases are really outside s. 116, not being concerned with title at the beginning of the tenancy, but with the common case of a sitting tenant attorning to a new individual as entitled to receive rent.”

Similarly in this case the defendant is not challenging the title of his landlord at the beginning of his tenancy, but he is in the position of a sitting tenant attorning to the plaintiff as entitled to receive rent.

Mr. Seervai has relied on two cases of our Court in Shankar v. Jagannath and Krishnarao v. Ghaman. In Shankar v. Jagannath the defendants attorned tenant to the plaintiff. There was an oral agreement of tenancy and kabulayats were passed by the defendants. Mr. Justice Patkar at p. 744 states:—

“The question … to be decided in each case under s. 116 would be whether a new tenancy had arisen and not whether the tenant had been let into possession by the landlord.”

In that case the Court held that the attornment created a new tenancy. In Krishnarao v. Ghaman the tenant who was let into possession passed a rent note to his landlord acknowledging that a new tenancy had arisen; and on that Mr. Justice N.J Wadia observed that for the purposes of s. 116 of the Indian Evidence Act it was not necessary that the tenant should have been actually put into possession by the landlord. I do not think that either of these cases helps Mr. Seervai because in both the cases the Court found as a fact that a new tenancy had arisen by reason of the attornment which attracted the application of s. 116 of the Indian Evidence Act. But as I read them, these cases do not decide that a mere attornment necessarily creates a new tenancy.

There is a decision of the Calcutta High Court directly in point in Chengtu v. Jaheruddin, where the Court consisting of Cuming and Chakravarti JJ. held that when either through ignorance of title of the landlord or by fraud in the matter of execution of the kabulayat the tenants attorned to him, then the tenants are not altogether estopped but can show that the landlord had no title either when the kabulayat was executed or attornment was made by payment of rent. I do not think that Mr. Seervai is right when he says that this decision is impliedly overruled by the decision of the Privy Council in Krishna Prosad Lal v. Baraboni Coat Concern Limited. In Prakash Kaur v. Gian Chand, which was decided subsequently to the privy Council decision, the Court held that the tenants were John entitled to dispute the derivative title of their landlord. In that case the original landlord was the mother and the daughters claimed their leasehold rights as the heirs of their mother. The Court held that the tenants could not dispute the title of the mother at the commencement of the lease, but they could dispute the title of the daughters.

I, therefore, hold that it is competent to the defendant to show that the plaintiff had no title at the date when the defendant attorned tenant to him.

The next question that I have to determine is whether in fact the plaintiff had no title as contended by the defendant. The title on which the plaintiff relies is transference of the tenancy by Mrs. Bolton to him. Under s. 108, sub-cl. (j), of the Transfer of Property Act, 1882, the lessee may 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. This right of the lessee is subject to any contract to the contrary. In the letter of November 4, 1941, written by K.L Gupta to Mrs. Bolton, which contains the terms of the tenancy, it is provided that the premises shall not be sub-let without Gupta's consent which shall not be unreasonably withheld. This tenancy was for a year certain and after that it continued as a monthly tenancy. In the rent bills submitted by Gupta to Mrs. Bolton from November 1, 1942, at the back are printed conditions of tenancy, and condition 4 states that the tenant shall use the premises for residential purposes only and shall not sub-let the premises in whole or in part to any one without the previous consent in writing of the landlord. It is clear on the evidence that Mrs. Bolton never took the consent of Gupta either orally or in writing to transfer the tenancy to the plaintiff. But the transfer or assignment of the tenancy by Mrs. Bolton, in breach, of the condition did not render the transfer or assignment void. Whatever rights Gupta might have had against Mrs. Bolton for breach of the condition as between Mrs. Bolton and the plaintiff, the transfer or assignment was perfectly valid. As pointed out in Halsbury's Laws of England, Vol. XX, 2nd edn., p. 344, para 415, an assignment, even in breach of a condition, is effectual, to vest the term in the assignee. In Williams v. Earle the lessor filed a suit against the assignee of a lease for breach of covenants in the lease. There was a covenant in the original lease by which the lessees on behalf of themselves and their assigns covenanted with the lessor that neither they nor their assigns would assign the lease without the licence of the lessor. The defendant, the assignee, assigned the lease without the consent of the lessor. In delivering the judgment Blackburn J. observed (p. 750):—

“… though there is a covenant binding on the defendant not to assign, the assignment is nevertheless operative, and the estate passed from the defendant to Banks, and the breaches of covenant which have occurred since are not breaches for which the defendant can be liable in the present form of action; anything done by the defendant on the premises since then he may he liable for in an action on the case: but the remedy on the covenants must be against the new tenant Banks. But the plaintiff is entitled to recover indirectly in the present action by way of damages for the breach of the covenant not to assign.”

This case was referred to with approval by Sir Lawrence Jenkins C.J in Basarat Ali Khan v. Manirulla. In that case the Court held that the assignment was operative notwithstanding the covenant not to assign without the consent of the lessor. Mr. Daphtary has relied on the decision in Elliot v. Johnson. In that case the lease contained a covenant by the lessees not to assign without licence, with a proviso for re-entry, and a covenant by the lessor at the expiration of the tenancy to pay for certain things at a, valuation. The lessees assigned their interest in the premises to the plaintiff without the consent of the lessor. The plaintiff entered into the occupation of the premises, but never paid rent; nor did the lessor ever recognise him as his tenant. The plaintiff, after giving six months' notice to quit, sued the lessor for the amount of the things at a valuation. What the Court held was that the plaintiff was not entitled to sue the lessor on the convenant contained in the lease between the lessor and his original lessees because the defendant had done nothing to recognise the plaintiff as his tenant. I do not think this case at all helps Mr. Daphtary because it does not decide that as between the lessee and the assignee the assignment was not valid and effectual.

I, therefore, hold that Mrs. Bolton effectively transferred her interest in the premises to the plaintiff, and in attorning tenant to the plaintiff, the defendant was attorning tenant to one who had sufficient interest in the premises to entitle him to substitute himself as landlord in place of Mrs. Bolton. In view of this decision, the question whether the defendant paid rents to the plaintiff in ignorance of the fact that the transfer of the flat was in breach of the term of the lease is not material.

[His Lordship went into questions of fact arising in the case, and said:] As the defendant has failed to pay rent for the premises for the months of September and October, 1943, to my mind he has no answer to the plaintiff's suit for ejectment.