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Debendra Lal Khan v. F.M.A Cohen

Calcutta High Court
Feb 25, 1927
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Judgment Summary — Page, J.

Factual and Procedural Background

This is a suit for possession of a block of buildings at the corner of Wellington Street and Dhurrumtolla Street in Calcutta (referred to as No. 149-1, Dhurrumtolla Street). On 3 August 1906 the predecessor of the plaintiff let the premises to Sassoon Ezra Cohen for 50 years at a monthly rent of Rs. 416-10-8. The lease contained (inter alia) a general covenant by the lessee to keep the premises in good and substantial repair and a separate covenant to carry out repairs within two months after written notice by the landlord.

The plaintiff sued for ejectment alleging (i) non-payment of rent and (ii) breach of the general covenant to repair. The defendant admitted there had been arrears of rent and that a forfeiture had occurred for non-payment. The Official Receiver had, before the action, sent a cheque (16 June 1925) for part of the arrears (August 1921 to January 1925) and the full arrears prior to filing the suit (filed 17 June 1925) were not tendered until 23 June 1925. The plaintiff refused the tenders on the ground that he had given notice on 10 June 1925 that the tenancy stood determined and required possession.

The defendant sought relief from forfeiture under section 114 of the Transfer of Property Act, deposited the amount of rent due up to the date of a written statement filed on 4 August 1925 and offered to pay interest and costs. The defendant had not formally tendered the sum required under section 114 at the hearing, but the Court for the purpose of judgment assumed the defendant had complied with section 114 and could be considered for relief under that section.

Legal Issues Presented

  1. Whether the tenant is entitled to relief from forfeiture under section 114 of the Transfer of Property Act where rent in arrear has been paid or deposited as argued by the defendant.
  2. Whether the general covenant to keep the premises in good and substantial repair extends to additional buildings subsequently erected by the tenant during the currency of the lease.
  3. On the facts, whether the defendant breached the general covenant to repair such as to entitle the plaintiff to determination of the lease and possession.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff sought ejectment and relied upon (i) non-payment of rent and (ii) breach of the general covenant to repair as grounds for determination of the lease and recovery of possession.
  • The plaintiff refused tenders of rent made on 16 June 1925 and 23 June 1925 because notice had been given on 10 June 1925 that the tenancy was determined and possession was required.

Defendant's Arguments

  • The defendant admitted the rent arrears and the resulting forfeiture but sought relief under section 114 of the Transfer of Property Act, depositing amounts in Court and offering to pay interest and costs.
  • The defendant contended that the additional erections made by the lessee during the term were not covered by the covenant to repair, relying on lease provisions that permitted additions and alterations.
  • Learned counsel for the defendant argued that if the sum required under section 114 had been paid or tendered to the lessor at the hearing, the Court would have no discretion and must grant relief to the tenant (invoking equitable practice).

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Newbolt v. Bingham Old equity rule: where conditions for relief against forfeiture are complied with and no intervening third-party interests exist, the Court ought to grant relief; discretion is effectively bound by settled practice in such circumstances. Quoted to explain the equitable practice and to contrast it with the Court's discretionary power under section 114; the Court accepted the principle as persuasive but emphasised Indian Courts need not be strictly bound by English Chancery practice.
Stanhope v. Haworth Cited within the Newbolt v. Bingham discussion as authority on intervention of third-party rights preventing relief. Referenced by the Court as an example of a case where relief would be refused because intervening rights made relief unjust; used to illustrate limits to equitable practice.
Doed. Worcester Trustees v. Rowlands Authority for the rule that a general covenant to repair will attach to new buildings subsequently erected on demised premises during the term. Relied on to support the proposition that the general covenant in the lease extended to buildings subsequently erected by the tenant.
Cornish v. Cleife Also cited as authority on construction of covenants to repair and their application to subsequent erections. Used with other authorities to establish the legal principle that general repair covenants attach to later erections when they form part of the demised premises.
Smith v. Mills Another authority concerning the extent of a covenant to repair vis-à-vis later additions. Included in the group of cases to support the legal rule that general repair covenants can extend to new buildings erected during the tenancy.
Lurcott v. Wakely (per Buckley L.J.) Test for distinguishing repair from rebuilding: whether the act is renewal/replacement of defective parts or the renewal/replacement of substantially the whole. The Court adopted this test to decide whether the tenant's work amounted to proper repair or an impermissible renewal/replacement; it informed the factual assessment of the condition and works.
Anstruther-Gough-Calthorpe v. McOscar Cited alongside Lurcott v. Wakely as relevant authority on the repair/rebuilding distinction. Used to support the Court's adoption of the established test for determining whether the lessee had complied with the covenant to repair.

Court's Reasoning and Analysis

The Court proceeded in two main veins of analysis: (A) the defendant's application for relief from forfeiture under section 114 of the Transfer of Property Act; and (B) whether the defendant had breached the general covenant to repair in respect of the buildings (including later additions).

A. Relief under section 114

  • The Judge observed that section 114 confers a discretionary power on the Court to grant relief from forfeiture and noted learned counsel's contention that a strict compliance (payment or tender at the hearing) removes discretion. The Court quoted Newbolt v. Bingham and the accompanying statement about equitable practice, wherein if the conditions are complied with and no third-party interests intervene, the Court ought to make the order.
  • However, the Court emphasised that Courts in India are not bound to follow the practice of the English Court of Chancery slavishly and that the discretion under section 114 is not to be unduly limited. The Judge nevertheless said that in the absence of special circumstances Indian Courts should, subject to equities that may have arisen between forfeiture and the application (e.g., reletting, dealing with premises or the tenant's conduct), adopt the old Chancery rule and usually grant relief where the tenant complies with section 114.
  • For the purposes of the judgment the Court assumed the defendant had brought himself within section 114 despite the absence of a formal tender at the hearing and proceeded to consider the substantive question of breach of covenant to repair.

B. Scope of the covenant to repair and application to the facts

  • The Court analysed the lease and factual evidence relating to additional buildings erected by the lessee after taking possession. Testimony from Sassoon Cohen established that the new one-storied structures facing Dhurrumtolla Street were bonded onto and joined with the original two-storied brick house and that after completion the buildings became one whole (at least the front portion).
  • The Court recited the legal rule that a general covenant to keep premises in repair will attach to new buildings subsequently erected during the term, whereas a covenant limited to specific described buildings will not extend to separate subsequent erections unless they in fact became part of the specified demised property. The Court cited several authorities for this principle.
  • Applying the rule to the facts, the Judge found the new buildings fell within the ambit of the general covenant to repair for two reasons stated explicitly in the opinion: (i) the covenant was expressed in general terms, and (ii) even if the covenant were restricted to the originally demised upper room brickbuilt house, the additional structures were added to and became part of that building.
  • The defendant's reliance upon the lease provisions permitting alterations and additions was considered. The Court rejected the defendant's construction, holding that those provisions were inserted (i) to avoid the operation of section 108 of the Transfer of Property Act (which otherwise permits a tenant to remove improvements during the term) and (ii) to ensure that the tenant could not escape a proportionate payment of rent if additional premises were destroyed in specified ways and not rebuilt.
  • On the standard to decide whether works are repair or renewal/replacement, the Court adopted Buckley L.J.'s test in Lurcott v. Wakely (quoted): the question is whether the act is in substance renewal/replacement of defective parts or renewal/replacement of substantially the whole, and mentioned Anstruther-Gough-Calthorpe v. McOscar as also bearing on the point.
  • Turning to the evidence about the condition of the premises, the Court summarised the plaintiff's evidence (including counsel's description that the premises were "starved") and noted that the defendant called no rebuttal evidence. On the totality of the evidence, the Court accepted that the premises had not been kept in the state required by the covenant to repair for years and that there was a breach of the general covenant to repair.

Holding and Implications

Core Ruling: The Court entered a decree in favour of the plaintiff. Specifically:

  • There will be a declaration that the lease has been determined.
  • There will be a decree for possession in favour of the plaintiff.
  • There will be a decree for arrears of rent up to the date when the lease was determined (15 June 1925).
  • There will be a decree for mesne profits thereafter until possession is delivered, at the rate at which rent is payable.
  • Costs were awarded to the plaintiff on Scale No. 2.

Implications:

  • On the specific facts, the tenant's erection of additional buildings which were bonded to and became part of the demised structure fell within the scope of a general covenant to repair; the tenant failed to keep the premises in good and substantial repair and thereby breached the covenant permitting determination of the lease.
  • The Court provided guidance on the exercise of discretion under section 114: while Indian Courts are not strictly bound by English Chancery practice, in the absence of special circumstances they should generally follow the old Chancery rule and grant relief where a tenant complies with section 114, subject to equities that may have arisen between forfeiture and application (for example, reletting or other dealings with the premises). This is an explanatory statement of approach rather than the creation of a new, rigid rule.
  • No broader or novel legal principle was laid down beyond the application of established tests and principles to the facts of this case; the decision directly effects the parties by terminating the lease and awarding possession, arrears, mesne profits and costs.

Attorneys recorded in the opinion: for the plaintiff — J.K. Sarkar; for the defendant — Dutt & Sen.

Show all summary ...

Page, J.:— This is a suit brought to recover possession of a block of buildings lying at the corner of Wellington Street and Dhurrumtolla Street in Calcutta. I shall refer to the buildings generally as No. 149-1, Dhurrumtolla Street, the parcels being get-out in the lease in suit.

On the 3rd August 1906 the predecessor of the plaintiff let the said premises to one Sassoon Ezra Cohen (through whom the defendant claims title) for a term of 50 years. The rent reserved was Rs. 416-10-8, payable on the 25th day of each month succeeding the month for which it became due. The lessee covenanted inter alia that he “will at all times during the said term keep the said premises in good and substantial repair, and the same in good and substantial repair deliver up to the lessor his heirs or assigns at the expiration or sooner, determination of the said term”. The lessee further covenanted that he would repair the said premises within two months after a notice in writing of the necessary repairs was served upon him by the landlord. No such notice was given, but it was conceded by the defendant that the covenant to carry out specific repairs after notice was an independent covenant, and did not restrict or affect the defendant's liability under the general covenant to repair. It was further provided that

“If the said monthly rent, Rs. 416-10-8 or any part thereof, shall be in arrear for the space of three months next after any of the days whenever the same ought to be paid as aforesaid, whether the same shall or shall not have been legacy demanded, or if there shall be any breach or non-observance by the said lessee, his executors, administrators, or assigns, of any of the covenants hereinbefore on his or their part contained, or the lessee becoming insolvent, then, and in any of the said cases, it shall be lawful for the said lessor, his heirs or assigns, at any time thereafter, into or upon the said demised premises or any part thereof, in the name of the whole to re-enter and the same to have repossess and enjoy as in his or their former estate, and to hold the same free and discharged from the covenants and agreements herein contained and to hold the said lessee liable for all loss and damages that may be sustained, by the said lessor for such breach of covenant on the part of the said lessee”.

The plaintiff based his cause of action in ejectment upon a breach of (i) the covenant to pay rent, (ii) the general covenant to repair.

It was conceded by the defendant that before action brought he had committed a breach of the covenant to pay rent, and that, although on the 16th June 1925 the Official Receiver of the High Court (who was then in possession of the premises pursuant to a decree which had been obtained in a mortgage suit against the defendant) sent to the solicitor of the plaintiff a cheque for Rs. 2,500 in payment of arrears of rent from August 1921 to January 1925, the full rent that was in arrear prior to the filing of the suit on the 17th June 1925 was not tendered until the 23rd June 1925. The plaintiff refused to accept the rent tendered on the 16th June 1925, and also that tendered on the 23rd June 1925, upon the ground that he had given notice to the defendant on the 10th June 1925 that the tenancy stood determined, and that he required possession of the premises to be delivered to him.

In these circumstances the defendant admitted that a forfeiture of the lease for non-payment of rent had occurred. He seeks relief from the forfeiture, however, under section 114 of the Transfer of Property Act of 1882, and he has deposited in Court the amount of the rent due up to the date of the written, statement which was filed on the 4th August 1925, and has offered to pay interest upon the rent in arrear, and the fall costs of this suit. The defendant has not paid or tendered formally to the lessor “at the hearing of the suit” the sum fixed under section 114, but I will assume for the purpose of my judgment that he has brought himself within section 114, and that the Court is at liberty to grant the defendant relief according to the terms of that section.

Now, it is to be observed that under section 114 the Court is invested with a discretionary power to grant relief which it may or may not exercise in favour of the tenant. Learned counsel for the defendant has urged that if the sum required under the section has been paid or tendered to the lessor at the hearing of the suit the Court has no discretion in the matter, and must grant relief to the tenant. The old rule in equity is stated concisely by Lord Esher, Master of the Rolls, and Rigby L.J in Newbolt v. Bingham. Lord Esher in that case observed that:

“If, at the time relief is asked for, the position has been altered, so that relief could not be given without causing injury to third parties, I think that the case that was cited to us [Stanhope v. Haworth] applies. But if at the time of the application, the position is not altered, so that no injustice will be done, I think, if the conditions mentioned in the section are complied with, that, according to the settled practice in equity, there is no longer a discretion in the Judge, but that he ought to make the order. It does not matter whether it is called discretionary or not, if the discretion ought always to be exercised in one way. If the conditions, are complied with, and no interests of third parties have intervened, there is no longer any real discretion in the matter”.

And Lord Justice Rigby added that:—

“It was the settled practice of a Court of Equity to grant relief against forfeiture for non-payment of rent on payment of all rent in arrear and costs. Of course, the Court was not absolutely bound by its practice where it would not do justice, and if some new interest had been created before the application, the Court would refuse to interfere. That was not done to put the landlord in a better position, but because rights of third parties had intervened”.

Now, in exercising the discretion with which it is invested under section 114 a Court in India is not bound by the practice of a Court of Chancery in England, and I am not disposed to limit the discretion that it possesses. “Those who seek equity must do equity”, and I do not think merely because a tenant complies with the conditions laid down in section 114 that he becomes entitled as of right to relief. But, in my opinion, the Courts in India in exercising the discretion intrusted to them under section 114, in the absence of any special circumstances should adopt the rule that prevailed in the old Courts of Chancery, and, subject to any equities that may have arisen between the date of the forfeiture and the application for relief, e.g, where the landlord during that period has relet the premises to other persons, or otherwise has dealt with them, or where the conduct of the tenant quâ tenant has been such that it would be unreasonable that the landlord should be compelled to keep him as a tenant, the Court, provided the tenant complies with the conditions laid down in section 114, ought to exercise its discretion in the tenant's favour, and grant him relief.

I now proceed to consider the position of the tenant under the general covenant to repair into which he has entered. At the time when the premises in suit were demised to Sassoon Cohen the premises consisted of—

“All that upper room brickbuilt house and messuage together with the piece or parcel of land thereunto belonging containing by estimation rent free one bigha be the same a little, more or less, and situate between the boundaries thereafter set out in the lease”.

After Sassoon Cohen had obtained possession under the lease he proceeded to erect the buildings in respect of which it is now contended that a breach of the covenant to repair has been committed upon the parcel of land adjoining the two-storied brick house. The new buildings that were erected facing Durrnmtolla Street were one-storied structures contiguous and joined to the original house, and I am satisfied from the evidence of Sassoon Cohen that the effect of the additional work of construction that he carried out on the premises was merely to increase the area of the two-storied building that was upon the premises at the time when the lease was granted. With reference to the additional structures that he erected Mr. Cohen was asked certain questions in the course of his examination:

How long did it take you to construct this building?—6, 7 or 8 months.

The new rooms which you allege you built they were all made part of the premises of the two-storied building?—Joined to it.

And made part of the same premises?—Yes.

Sassoon Cohen further stated:—

Did you have to bond these new buildings on to the old buildings?—Yes.

You made them part of the old building?—I joined them together.

After you completed the building, the buildings became one whole building?—Yes, the front portion.

Now, the general rule of law with respect to the construction of covenants to repair is that where the covenant to repair is in general terms to keep the premises in repair, the covenant will attach to new buildings that subsequently are erected upon the demised premises during the currency of the term. On the other hand, where the covenant to repair refers to certain specific property that is demised, such as “the said buildings” or “the said houses:”, unless the additional buildings in fact became part of the specific buildings which the tenant covenanted to repair, the covenant will not extend to such new and separate erections: Doed. Worcester Trustees v. Rowlands, Cornish v. Cleife, Smith v. Mills.

Upon the evidence in this case I am clearly of opinion that the new buildings fall within the ambit of the covenant to repair, both because of the general terms in which the covenant is couched, and also because, even if the covenant to repair was restricted to the upper room brickbuilt house, the new structures were an addition to and became part of the building that was specifically demised, and to which the covenant to repair attached. Whether or not a covenant to repair extends to any particular property depends upon the terms of the covenant and the facts proved in the case under consideration. Notwithstanding the general terms of the covenant to repair learned counsel for the defendant has contended, however, that upon a true construction of the lease the additional erections were not within the covenant to repair; and in support of his argument he relied upon the provisions in the lease that gave permission to the tenant to make such additions and alterations to the demised premises.

In my opinion, the provisions in the lease to which he refers were not introduced for the purpose for which he cited them. If a tenant makes additions or improvements upon the premises it is provided under section 108 of the Transfer of Property Act that he is entitled to remove them during the currency of the term. In my opinion, the special provisions introduced into this lease with respect to the additions and alterations which the tenant was at liberty to make to the premises were inserted for two purposes: (i) in order to avoid the provisions of section 108, of the Transfer of Property Act, and (ii) in order that it should not be open to the defendant, in the event of some part of any additional premises that he might erect being destroyed in the manner set out in the lease, to escape a proportionate payment of rent so long as the additional structures were not rebuilt or repaired. In my opinion, therefore, the general covenant to repair extended to the whole of the block including the additions thereto carried out by Sassoon Cohen.

The issue, therefore, that remains to be considered is one of fact: did the defendants at all times during the term keep the premises in good and substantial repair? Now, the test as to whether any particular renovation amounts to repair or not, in my opinion, is “whether the act to be done is one which in substance is the renewal or replacement of defective parts, or the renewal or replacement of substantially the whole” per Buckley L.J in Lurcott v. Wakely. See also Anstruther-Gough-Calthorpe v. McOscar.

[His Lordship then discussed the evidence adduced by the plaintiff and proceeded as follows:—] The defendant elected to call no evidence in rebuttal, and as the result of the evidence I am disposed to accept the somewhat picturesque phrase in which Mr. Shrosbree depicted the state of the premises by saying that “they were starved”, by which he meant, and I find, that for years they have not been kept in such repair as would comply with the conditions of the covenant to repair contained in the lease.

Under these circumstances, in my opinion, there was such a breach of the general covenant to repair as entitled the plaintiff to the relief which he claims and there will be a decree in his favour. There will be a declaration that the lease has been determined. There will be a decree for possession. There will be a decree for arrears of rent up to the date when the lease was determined, that is the 15th June 1925; and thereafter until possession is given a decree for mesne profits at the rate at which rent is payable, and costs on Scale No. 2.

Attorney for the plaintiff: J.K Sarkar.

Attorneys for the defendant: Dutt & Sen.

B.M.S