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Srinivasa Aiyengar v. Rangasami Aiyengar

Madras High Court

Sep 9, 1914

Judgment

Subsequent
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Factual and Procedural Background

The plaintiffs are trustees of a temple who sued to recover rent for five faslis of certain lands leased to defendants Nos. 1 to 4. The trustees auctioned the lease. At the first auction, Srinivasa Aiyengar (the sixth witness for the plaintiffs) was the successful bidder and executed a registered agreement which, by authority of Syed Ajavi Sahib v. Meenatchi Devastanam, was a registered lease within the meaning of the Transfer of Property Act. A majority of the trustees were dissatisfied with that document, declared it cancelled and held a fresh auction. At that second auction the present defendants Nos. 1 to 4 became the successful bidders and executed another registered agreement in favour of the plaintiffs (July 1902, beginning of Fasli 1312).

It was disputed whether the defendants ever obtained possession in Fasli 1312. Srinivasa Aiyengar (the successful bidder at the first auction) brought suit for an injunction to restrain the defendants from interfering with his possession. The defendants undertook not to collect rents pending that suit; a Receiver was appointed for harvest time. Ultimately the earlier suit determined that Srinivasa Aiyengar was not the lessee and that the defendants were the lessees.

In the present suit the plaintiffs seek recovery of rent for Fasli 1312 and subsequent periods. The defendants rely on their being out of possession and on the lessor's implied covenant for quiet enjoyment. The litigation produced further events at the end of Fasli 1312 and into Fasli 1313 (including court petitions, letters and orders) which are described in the opinion and are significant to liability for Fasli 1313.

Legal Issues Presented

Whether the defendants are liable to pay rent for Fasli 1312 when they were out of possession because the disturbance to their occupation was caused by a person later held to be a trespasser (Srinivasa Aiyengar), and whether the lessor's implied covenant for quiet enjoyment (as described in Section 108(c) of the Transfer of Property Act) protects the lessee in these circumstances.
Whether the plaintiffs (trustees) by asking Srinivasa Aiyengar and the fourth defendant to cultivate and by obtaining and accepting delivery of the crops for Fasli 1313 thereby disturbed the defendants' possession under their lease and breached the covenant for quiet enjoyment, disentitling the plaintiffs to rent for Fasli 1313.
Whether the defendants can recover a deposit of Rs. 500 (paid prior to bidding) where the contract provided that the successful bidder's deposit would be returned after execution of lease and security bond and this payment was not made.

Arguments of the Parties

Plaintiffs' Position

The plaintiffs (the trustees) sued to recover the rent for the suit lands for multiple faslis (five faslis in total as pleaded).
The trustees treated the agreement executed by Srinivasa Aiyengar as not acceptable (the majority declared it cancelled) and conducted a fresh auction; the resulting registered agreement (with defendants Nos. 1–4) was relied on by the trustees as creating the lease in their favour.

Defendants' Arguments

The defendants relied on the fact that they were out of possession and invoked the lessor's implied covenant of quiet enjoyment (as expressed in Section 108(c) of the Transfer of Property Act, although that Section does not in terms apply to agricultural leases).
With respect to the Rs. 500 deposit, the defendants contended that the deposit became payable to them on execution of the lease and security bond and that there was a breach in not paying it; they further claimed that the plaintiffs had appropriated the deposit to satisfy a debt alleged to be due from the fourth defendant.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Syed Ajavi Sahib v. Meenatchi Devastanam, 8 Ind. Cas. 668 : 35 M. 95 : (1910) M.W.N. 766 : 8 M.L.T. 437 : 21 M.L.J. 202	That a registered agreement executed by the lessee is a registered lease within the meaning of the Transfer of Property Act and thus renders the lease effectual.	The court stated it was bound by this Full Bench decision and treated Srinivasa Aiyengar's registered agreement as a registered lease as a matter of legal principle (even though the trustees later declared that agreement cancelled and held a fresh auction).
Tayawa v. Gurshidappa, 25 B. 269 : 2 Bom. L.R. 1070	Interpretation of the scope of Section 108(c) (extent of covenant for quiet enjoyment).	The court noted that the same view as to the scope of Section 108 was taken in Tayawa v. Gurshidappa and relied on that view in discussing the covenant's limits.
Balakrishnudu v. Narayanasawmy Chetty, 24 Ind. Cas. 852 : 37 M. 175	Article 115 applies to compensation for breach of any contract, express or implied, not in writing, when a deposit payable on an event was not paid; the Article is applicable to such a deposit claim.	One of the judges had recently held this Article applicable to a deposit payable on the happening of a certain event but not paid. The court followed that decision in holding that the defendants' claim for the Rs. 500 deposit is barred.
V. Balakrishnudu v. G. Narayanasawmy Chetty, 22 Ind. Cas. 60 : (1914) M.W.N. 264	Affirmation on appeal of the application of Article 115 to the deposit issue described in Balakrishnudu v. Narayanasawmy Chetty.	The court relied on the affirmation of the earlier decision and, following it, held that the defendants' claim in respect of the Rs. 500 was barred.

Court's Reasoning and Analysis

The court addressed the facts and applied legal principles as follows:

Fasli 1312: The defendants argued non-liability due to being out of possession and relied on the lessor's implied covenant of quiet enjoyment (identified in the opinion with Section 108(c) of the Transfer of Property Act). The court explained the ordinary scope of the covenant (protecting against disturbance by the lessor or those claiming under him, but not against disturbance by a trespasser). The prior litigation established that Srinivasa Aiyengar was a trespasser. Because the disturbance to the defendants' possession in Fasli 1312 was caused by that trespasser (Srinivasa Aiyengar) and not by the plaintiffs, the disturbance did not fall within the covenant for quiet enjoyment as understood under Section 108(c). Although Section 108 does not in terms apply to agricultural leases, the court held that its rule embodies justice, equity and good conscience and should be followed analogically for agricultural leases; the court referred to the view taken in Tayawa v. Gurshidappa in support of this approach. The upshot for Fasli 1312 was that the defendants could not avoid rent liability on the ground that the disturbance was by a trespasser.
Fasli 1313: The facts showed that, towards the end of Fasli 1312, the trustees (plaintiffs) filed a counter-petition and delivered letters (Exhibits F, VII, VII(a)) indicating they had no objection to Srinivasa Aiyengar and the fourth defendant cultivating the village and they even advanced cultivation expenses. An affidavit of Srinivasa described carrying out cultivation pursuant to arrangements with the trustees rather than under the defendants' lease. The court noted that the trustees later obtained an order that the crops be gathered by Srinivasa and the trustees and that the trustees would take possession of the produce after certain deductions; the trustees accepted delivery of the produce. The court concluded that these actions — asking Srinivasa and the fourth defendant to go into possession, obtaining an order for gathering the crops, and accepting delivery — constituted interference with the defendants' right under their lease. That interference amounted to a disturbance by the lessor and thus a breach of the covenant for quiet enjoyment as to Fasli 1313, disentitling the plaintiffs to recover any rent for that fasli from the defendants.
Rs. 500 deposit: The notice for bidders required a Rs. 500 deposit; unsuccessful bidders got immediate return while the successful bidder's deposit was to be returned after execution of the lease and security bond. Under the contract the money was payable to the defendants upon execution of the lease and bond; it was not paid. The court treated the matter as a breach of contract for which Article 115 (quoted in the opinion) applies "for compensation for the breach of any contract, express or implied, not in writing registered and not herein specifically provided for." The court followed the decision in Balakrishnudu v. Narayanasawmy Chetty, and its affirmation on appeal in V. Balakrishnudu v. G. Narayanasawmy Chetty, and held that the defendants' claim in respect of the Rs. 500 was barred. Although the defendants asserted the plaintiffs had appropriated the deposit to satisfy a debt due from the fourth defendant, the court noted that, if appropriation could have availed them, the debt had become barred before such appropriation.
Memorandum of objections: The court agreed with the lower court on the question argued in the memorandum of objections; no expanded analysis is provided in the opinion beyond the statement that the lower court was right.

Holding and Implications

Holding: The court allowed the appeal in part. Specifically, the court held that the plaintiffs are disentitled to recover rent for Fasli 1313 because the plaintiffs' own actions amounted to a disturbance of the defendants' leasehold and a breach of the covenant for quiet enjoyment. As to Fasli 1312, the court's analysis indicates that disturbance by Srinivasa Aiyengar (held to be a trespasser) did not fall within the covenant for quiet enjoyment and thus did not defeat the plaintiffs' claim for rent for that fasli. The defendants' claim for the Rs. 500 deposit was held to be barred following the cited precedents.

Result stated by the court: "The appeal will be allowed so far as the claim for Fasli 1313 is concerned, and the decree modified accordingly. The party will pay and receive proportionate costs throughout. The memorandum of objections is dismissed with costs."

Implications:

The direct effect is that the plaintiffs cannot recover rent from the defendants for Fasli 1313 because of the plaintiffs' own interference with the defendants' rights under the lease.
The plaintiffs remain entitled (as the opinion indicates) to pursue the rent for Fasli 1312 because the disturbance that occurred in that fasli was by a person later held to be a trespasser and thus did not fall within the covenant for quiet enjoyment.
The defendants' claim for the Rs. 500 deposit is barred in light of the court's application of Article 115 and the cited precedents; no other relief on that point was granted.
The opinion does not announce the setting of any new legal precedent beyond applying and following existing authorities; the decision modifies the decree in respect of Fasli 1313 and allocates costs as stated.

Note: This summary strictly follows the facts, arguments, authorities and conclusions as they appear in the provided opinion and does not add any information not contained in the original text.

Show all summary ...

1. In this case the plaintiffs, who are the trustees of a temple, sued for the rent for five faslis of certain lands which were leased to the defendants Nos. 1 to 4. The procedure adopted by the trustees was to auction the lease and one Srinivasa Aiyengar, the sixth witness for the plaintiffs in this case, was the successful bidder at the first auction. Under the conditions of the auction he was bound to execute an agreement in favour of the trustees on certain terms. He did execute an agreement in favour of the trustees and got it registered and according to the well-known decision of the Full Bench of this Court in Syed Ajavi Sahib v. Meenatchi Devastanam 8 Ind. Cas. 668 : 35 M. 95 : (1910) M.W.N. 766 : 8 M.L.T. 437 : 21 M.L.J. 202, by which we are bound, this registered agreement -by the lessee was a registered lease within the meaning of the Transfer of Property Act so as to render the lease effectual. However, the majority of the trustees were not satisfied with the terms of this document and said that it was not the sort of lease which they had bargained for. They accordingly declared it cancelled and held a fresh auction at which the defendants Nos. 1 to 4 in this suit were the successful bidders and they in turn executed another registered agreement, which must be regarded as a registered lease, in favour of the plaintiffs and became the lessees of the plaintiffs. This was in July 1902, at the beginning of Fasli 1312. It is disputed whether these defendants ever got into possession in Fasli 1312. In any case, the sixth witness for the plaintiffs, Srinivasa Aiyengar, the successful bidder at the first auction, within a few days after the beginning of the fasli, instituted a suit for an injunction restraining these defendants from interfering with his possession of the lease-hold premises. These defendants appeared and gave an undertaking that they weald not collect any rents pending the disposal of the suit; and, when the time came to harvest the crops, the Court appointed a Receiver. Ultimately it was held that this man Srinivasa Aiyengar was not the lessee, but that these defendants were.

2. In the present suit, among other things, the plaintiffs seek to recover from these defendants the rent of the suit lands for Fasli 1312. The defendants rely on the fact that they were out of possession and upon the lessor's implied covenant of a quiet enjoyment. Under Section 108 (c) of the Transfer of Property Act, which, however, does not apply to agricultural leases, The lessor shall be deemed to contract with the lessee that, if the latter pays the rent reserved by the lease and performs the contracts binding on the lessee he may hold the property during the time limited by the lease without interruption." That is what is generally known as the covenant for quiet enjoyment. The usual covenant for quiet enjoyment in England is a covenant for quiet enjoyment against disturbance by the lessor or those claiming through or under him, as distinct from an unconditional covenant for quiet enjoyment which also extends to disturbance by some one claiming by a title paramount to the lessor. It is, however, perfectly well settled in England that even in the more extended form the covenant for quiet enjoyment is only a covenant against disturbance by somebody claiming under a lawful title. It does not extend to disturbance by a trespasser. In the present case the result of the litigation between the parties in the suit already referred to has been that this Srinivasa Aiyengar has been found to have been a trespasser. The disturbance of these defendants was by Srinivasa Aiyengar, not by the plaintiffs. So far as this fasli is concerned, it was a disturbance by a trespasser and, therefore, it would not come within the covenant for quiet enjoyment under Section 108 (c) of the Transfer of Property Act. Although Section 108 does not in terms apply to this case, which is an agricultural lease, yet, nonetheless, we think it ought to be followed as embodying the rules of justice, equity and good conscience. It is what the Legislature thought was applicable to other leases, and there is no reason why it should not be applied as a matter of justice, equity and good conscience to agricultural leases also, as has been done in the case of several other provisions of the Transfer of Property Act relating to leases which have been applied to agricultural leases which were not directly within the scope of the Act. As regards the scope of this section the same view was taken in Tayawa v. Gurshidappa 25 B. 269 : 2 Bom. L.R. 1070.

3. With regard to Fasli 1313 the facts are more complicated. Towards the end of Fasli 1312, Srinivasa lyengar, who claimed to be the lessee, applied to the Court to be appointed Receiver for the ensuing fasli, and these defendants also applied to be appointed Receivers. On the 24th July 1903, when there was no Judge for the Court, the trustees put in a counter-petition, Exhibit F: "What we submit regarding the petition which the plaintiff has presented in respect of the cultivation during this year so that the cultivation business may be done hereafter without delay, is we have no objection to plaintiff and 6th defendant cultivating. In the end we are ready to admit it as the cultivation of that lessee whose lease is established." The sixth defendant in that case was the fourth of the defendants in the present case, but he was apparently acting in opposition to defendants Nos. 1 to 3. On the same day the trustees delivered a letter, Exhibit VII; to Srinivasa Iyengar and the present 4th defendant: "As mentioned in the petition we presented today in Original Suit No. 60 of 1902 of the Kumbakonam Sub-Court, we have no objection whatever to your cultivating the Mekkarimanglam village yourselves. We consent to your doing so. You should take action accordingly." And by Exhibit VII (a) they practically made an advance to these two people for the cultivation expenses. What happened is made still clearer by a paragraph in the affidavit filed by Srinivasa Iyengar, Exhibit VIII, on the 26th January 1904. All these facts he has spoken to in his evidence in this case. While matters stood thus, as no Judge was appointed to this Court till the 25th August last year, as the season was over to begin cultivation, and as the lands in the village were lying waste, the trustees (that is, the present plaintiffs) requested me and the 6th defendant to cultivate the village so that none might sustain loss and wrote and gave us varthamanams (letters) marked A and B that is, Exhibit VII and VII (a) in this case and presented herewith in support of the same. As the 6th 4efendant stated that it would not fee convenient for him to cultivate in accordance with that arrangement, I have myself solely carried out the cultivation, etc., in reference to the arrangement separately made with the trustees and not in accordance with the arrangement of the lease in question." Later on in the year, when the time came to harvest the crop, the present plaintiffs obtained an order from the Court that the crops of the plaint village, now ready for harvest, will be gathered by. the plaintiff" (that is Srinivasa Iyengar) and the trustees or by any one of them or by the agent deputed by them in writing for the purpose and that the produce gathered will be taken possession of by the trustees or any one of them or their agent after. delivery of the portion due to cultivating tenants and incidental expenses." On these facts we are of opinion that the action of the plaintiffs in asking this Srinivasa Iyengar and the present 4th defendant to go into possession not in right of the defendants' lease, and their subsequent action in obtaining an order for the gathering of the crops by Srinivasa Iyengar himself and for the delivery to them of the crops and the acceptance of such delivery, constitutes a disturbance of these defendants under their lease, and it is a breach of the covenant for quiet enjoyment and disentitles the plaintiffs to recover anything in respect of rent for this fasli from these defendants.

4. The only other question argued before us by Mr. Narasimha Aiyangar was as to a sum of Rs. 500 which was paid by these lessees prior to bidding for the lease. Under the terms of the notice all bidders were required to deposit Rs. 500. The unsuccessful bidders were entitled to get back their deposits at once. The successful bidder was to get his deposit back after executing a lease and a security bondi Under the terms of the contract between the parties the money became payable to these defendants on the execution of the lease and the security bond and there was a breach of contract in not paying it to them then and if no other Article is applicable Article 115 applies to the case which is

"for compensation for the breach of any contract, express or implied, not in writing registered and not herein specifically provided for."

Sitting on the original side one of us recently held that that was the Article applicable to a deposit of money which was payable on the happening of a certain event but had not been paid. That case, Balakrishnudu v. Narayanasawmy Chetty 24 Ind. Cas. 852 : 37 M. 175, is reported in 37 Madras 175 and that decision has been affirmed on appeal on this point in V. Balakrishnudu v. G. Narayanasawmy Chetty 22 Ind. Cas. 60 : (1914) M.W.N. 264 by the learned Chief Justice and Mr Justice Oldfield. Following that decision we must hold that the defendants' claim in respect of this Rs. 500 is barred. They claim that they had placed this money in the hands of the plaintiffs and that the plaintiffs appropriated it in satisfaction of a debt due from the 4th defendant. It appears, however, that before that appropriation, if it could avail them, the debt had become barred.

5. As regards the question argued on the memorandum of objections we think the Court below was right.

6. In the result the appeal will be allowed so far as the claim for Fasli 1313 is concerned, and the decree modified accordingly. The party will pay and receive proportionate costs throughout.

7. The memorandum of objections is dismissed with costs.