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Smart Summary

Factual and Procedural Background

The appellants are tenants of a building the respondents (landlords) owned. The demised building was gutted by fire. The appellants attempted to rebuild the building on their own, which prompted the respondents to file a suit seeking a permanent injunction restraining the appellants from putting up any construction on the land where the original building stood. The appellants defended by asserting a right to reconstruct the destroyed building. The lower courts rejected that defence and granted the injunction. The appellants pursued a Second Appeal challenging the injunction. The substantial question of law posed in the appeal was whether a tenant can be restrained from erecting a fresh building on land where the leased building stood and was destroyed by fire.

Legal Issues Presented

  1. Whether a tenant of a building can be restrained from constructing a new building on the land where the subject-matter of an original lease stood after that building was destroyed by fire.
  2. Whether destruction of the subject-matter of a lease (the building) brings about termination (extinguishment) of the tenancy at law.
  3. How Section 108(e), (f) and (m) of the Transfer of Property Act apply to (i) the effect of destruction of leased premises and (ii) the lessee's rights or obligations to repair or reconstruct.

Arguments of the Parties

Appellant's Arguments

  • Counsel for the appellants relied on a decision reported as George v. Peter (1990 (2) K.L.T 187) for the proposition that destruction of the leased building does not by itself terminate the tenancy at law, and therefore the landlord could not re-enter the land without evicting the tenant.
  • The appellants also relied on a decision of the Andhra Pradesh High Court in Eashwar v. Sudarsban (A.I.R. 1985 A.P. 4) to argue that a tenant who replaces roofing and doors without permission is not transgressing the law, and by extension the tenant should be entitled to reconstruct the building destroyed by fire.
  • The appellants pleaded that there was an agreement under which the lessee paid Rs. 15,000 to the landlord and the landlord agreed to reconstruct the building; they claimed that the sum had been paid and relied on that assertion as part of their case.

The opinion does not set out a detailed, separate account of the respondents' (landlord's) arguments beyond that they filed the suit seeking an injunction restraining the appellants from constructing a new building and that the courts below found the appellants' defences unacceptable.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
George v. Peter (1990 (2) K.L.T 187) Held that destruction of the subject-matter of the lease (the building) does not by itself terminate the tenancy; landlord cannot re-enter without evicting tenant. The appellants relied on this decision; the court stated it had hesitation accepting that finding because of contrary binding authority, but acknowledged the decision favoured the appellants on that aspect.
Dr. V. Sidharthan v. Pattiori Ramadasan (1984 K.L.T 538) (Division Bench) Following Calcutta High Court, held that a tenancy comes to an end when the subject-matter of the lease (the building) is destroyed; Section 108(e) does not describe the effect upon the lease itself but gives an option to the lessee. The court considered this Division Bench decision binding and noted it leads to conclusion that the lease is extinguished on total destruction of the building. Although this finding favoured the appellants in the present case, the court declined to rest its decision solely on that point.
Lister v. Lane and Nesham (1893) 2 QB 212 (Lord Esher MR) Principle that a covenant to repair a house is not a covenant to provide a different thing; repair obligation does not require making a new and different structure. Quoted to support the proposition that the expression "repairs" cannot be extended to mean an obligation or a right to reconstruct the whole building.
Lurcott v. Makely & Wheeler (1911 (1) K.B 905) (Buckley L.J.) Distinction between repair (renewal or replacement of subsidiary parts) and renewal (reconstruction of the entirety); if repair of the whole is impossible, covenant to repair does not carry obligation to renew or replace. Quoted to reinforce the court's conclusion that repair obligations do not amount to a right or duty to reconstruct an entire building.
Brow Bros. Ltd. v. Snax (Rose) Ltd. (1970, 1 Q.B 612) (Harman L.J.) Tenant is not to hand back to landlord a different thing from that which the landlord demised; supports limiting repair obligations. Used to explain that the tenant's duty is to return the premises in the same condition, not to provide a new structure for the landlord.
Eashwar v. Sudarsban (A.I.R. 1985 A.P. 4) Observed that a tenant putting up roofing and a door without permission is not necessarily a transgression of law; relied upon by appellants to extend right to reconstruct. The court found this decision did not contain a detailed discussion of the legal principle relied on, treated the example of replacing roof/door as distinguishable from erecting an entirely new building, and declined to accept it as supporting reconstruction by the tenant.
Gopalakrishnan Nair v. Joshi (1985 KLT 132) Referenced concerning the absence or presence of special covenants between landlord and tenant about repair, renovation or reconstruction. Applied to note that no special covenant for reconstruction or repair was pleaded in the present case; the courts below found against the appellants on their pleaded agreement and payment.
Decision referred to as S.A. No. 198 of 1985 (1991 (2) KLT SN 2) (K.G. Balakrishnan, J.) Referred to as a contrasting view that may not accord with the Andhra Pradesh decision cited by appellants. Cited by the court to indicate that the Andhra decision may not align with views expressed by judges of this court; used to diminish persuasive weight of the Andhra decision.

Court's Reasoning and Analysis

The court proceeded in two main analytical strands.

  1. On the effect of destruction on the tenancy:
    • The court acknowledged the lower appellate finding (George v. Peter) that destruction of the leased building does not automatically terminate the tenancy, but the court expressed hesitation in accepting that conclusion because a Division Bench decision of this court (Dr. V. Sidharthan v. Pattiori Ramadasan) had held otherwise.
    • The Division Bench had analyzed Section 108(e) of the Transfer of Property Act and concluded that clause (e) gives the lessee an option to avoid the lease but does not itself describe the ultimate legal effect on the lease; the Division Bench concluded that a total destruction of the building extinguishes the lease because a demise must have a subject-matter.
    • The present court considered the Division Bench decision binding and therefore found it not possible to accept the lower appellate court's contrary finding that the lease had not come to an end. Nonetheless, because that conclusion favored the appellants, the court did not rely solely on that point to decide the appeal.
  2. On whether a tenant may reconstruct the building without landlord's consent:
    • The court examined Section 108(e), (f) and (m) of the Transfer of Property Act. It found that Section 108(e) does not create any right in the lessee to deal with the property; it merely enables the lessee to avoid the lease in specified circumstances.
    • Section 108(f) permits the lessee to make repairs which the lessor neglects to make after notice and to deduct the cost from rent; Section 108(m) binds the lessee to keep and on termination to restore the property in the same condition subject to reasonable wear and tear and irresistible force. The court held these provisions do not confer a right on the lessee to reconstruct a destroyed building nor impose an obligation to reconstruct in the event of destruction caused by irresistible force.
    • The court relied on established authorities to construe the meaning of "repairs": Lord Esher MR in Lister v. Lane and Nesham (repair covenant not to create obligation to make a different thing), Buckley L.J. in Lurcott v. Makely & Wheeler (distinguishing repair from reconstruction/renewal), and Harman L.J. in Brow Bros. Ltd. v. Snax (Rose) Ltd. (tenant not required to hand back a different thing). These authorities were applied to conclude that "repairs" cannot be extended to mean reconstruction of the entire building.
    • The court considered the Andhra decision relied upon by the appellants (Eashwar v. Sudarsban) and found it distinguishable and insufficient: replacing a decayed roof or door is different from erecting a new building. The Andhra decision was not viewed as persuasive authority to support a tenant's right to reconstruct.
    • The court noted there was no pleaded special covenant in the lease obliging the landlord to reconstruct or permitting the lessee to reconstruct (the pleaded agreement and payment of Rs. 15,000 were found against the appellants by the courts below), and relied on Mulla's Commentary that a tenant cannot make structural additions and alterations without the landlord's consent.

Holding and Implications

HOLDING: The Second Appeal is dismissed; the decree of injunction granted by the courts below restraining the appellants (tenants) from putting up a new building on the site where the original demised building stood is upheld.

Implications:

  • The direct legal effect is that the tenants are restrained from reconstructing a new building on the leased site without the landlord's consent; the injunction previously granted remains justified in law.
  • The court articulated and applied principles limiting a tenant's rights under Section 108(e), (f) and (m) of the Transfer of Property Act and relied on established authorities to hold that "repairs" do not include a right or obligation to reconstruct an entire building destroyed by fire or other irresistible force.
  • The opinion does not purport to lay down a novel precedent beyond applying binding Division Bench authority and existing authorities on the meaning of "repairs"; it affirms the result reached by the courts below rather than creating a new legal rule for free reconstruction by tenants.

    Damodaran And Another v. Yesoda And Another

    1. The defendants are the appellants. They are the tenants of a building under the respondents. The subject-matter of the lease, the building was gutted in a fire. It appears that the appellants, the tenants, attempted to rebuild the building on their own and this resulted in the respondents-landlords filing the present suit for a permanent injunction restraining the appellants - tenants of the building from putting up any construction on their own in the land on which the demised building stood. The appellants resisted the suit by contending that they have got a right to reconstruct the building that was destroyed. This defence has been found to be unacceptable by the courts below and the suit for injunction has been decreed restraining the appellants from putting up any construction in the property where the original building stood. The appellants have come up with this Second Appeal challenging the said decree. The substantial question of law that is sought to be raised in the Second Appeal is as to whether a tenant of a building could be restrained from putting up a fresh building in the land on which the subject-matter of the origin lease stood and which had been destroyed by fire.

    2. The learned counsel for the appellants rested his arguments court following a decision of this court reported in George v. Peter on the plank of the finding by the lower appellate (1990 (2) K.L.T 187) to the effect that the destruction of the subject matter of the lease namely the building does not by itself bring about a termination of the tenancy is the eye of law and that it is not open to the landlord to ro-enter the land on which the building stood without evicting the tenant from the said land. This finding though is in favour of the appellants. I have considerable hesitation in accepting that finding as correct in the light of the decision of a Division Bench of this court reported in Dr. V. Sidharthan… v. Pattiori Ramadasan…. (1984 K.L.T 538).

    3. The Division Bench following the decision of the Calcutta High Court had clearly laid down that the tenancy comes to an end when the subject-matter of, the lease namely the building is destroyed. The Division Bench after noticing Section 108(e) of the Transfer of Property Act had observed:

    “This clause only provides that in the circumstances detailed therein the lease shall be void at the option of the lessee. The reason behind this option appears to be, if the leasehold is destroyed or rendered unfit for the purpose of the lease it would be pointless for the lessee to pay the rent but if he chose, he could continue to pay it. This clause is one of the clauses dealing with the rights and liabilities of the lessee and does not describe the effect of the destruction of the subject of the leas upon the lease itself”.

    4. Thereafter the Division Bench noticed the various decisions referred to therein and came to the conclusion that if there is a total destruction of the building the lease was extinguished since a demise must have a subject-matter and if it is destroyed the lease comes to an end. I consider that this Division Bench decision is binding on me and therefore it is not possible to agree with the finding of the lower appellate court that the lease itself has not come to an end. But since the finding on this aspect is in favour of the appellants, I do not want to rest my decision in this case on that aspect.

    5. The question that arises for consideration assuming that the and on which the building stood is continued to be held by the appellants as tenants of the building is as to whether the tenants are entitled to construct a new building in the site where the subject-matter of the demise in their favour originally stood, without the consent or against the volition of the landlord. The relevant clauses of Section 108 of the Transfer of Property Act to be noticed in this connection are Section 108(e), (f) and (m) Clausse (f) and (m) read as follows:

    “108. Rights and liabilities of lessor and lessee. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immoveable property, as against one another, respectively possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:

    (A) Rights and Liabilities of the Lessor

    …………………………………………………………

    (B) Rights and Liabilities of the Lessee

    (e) if by fire, tempest or flood, or violence of any army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantially and permanently unit for the purposes for which it was let, the lease shall, at the option of the lessee, be void:

    Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;

    (f) if the lessor neglects to make, within a reasonable time after notice, any repairs which he is bound to make to the property, the lessee may make the same himself, and deduct the expense of such repairs with interest from the rent, or otherwise recover it from the lessor:

    …………………………………………………………….

    (m) the lessee is bound to keep, and on the termination of the lease to restore, the property in as good condition as it was in at the time when he was put in possession, subject only to the changes caused by reasonable wear and tear or irresistible force, and to allow the lessor and his agents, at all reasonable times during the term, to enter upon the property and inspect the condition thereof give or leave notice of any defect in such condition; and, when such defect has been caused by any act or default on the part of the lessee, his servants, or agents he is bound to make it good within three months after such notice has been given or left:

    6. As noticed by this Division Bench decision referred to earlier, Section 108(e) of the Transfer of Property Act does not create any right in the lessee to deal with the property. It only enables him to avoid the leased Section 108(f) refers to repairs to the subject - matter of the lease which a lessor is bound to make and if after notice the lessor fails to effect the repairs it enables the lessee to make the repairs himself and to deduct the expense of such repairs from the rent or to otherwise recover it from the landlord. Section 108(m) casts an obligation on the tenant to keep the property in good condition and his obligation to return it in the same condition in which he received it when it was let out to him. It is not possible to postulate that Section 108(f) of the Act enables a lessee to put up a new building in the place of the old or that Sec. 108(m) obliges him to reconstruct and deliver a building to the landlord at the time of surrender when the building is destroyed by causes beyond his control.

    7. What is the content of the right to repair contained in Sec. 108(f) of the Transfer of Property Act and the obligation to restore the property in the same condition contained in Sec. 108(m) of that Act? It appears to me that the meaning of the expression ‘repairs’ cannot be extended to indicate an obligation or a right to reconstruct. As observed by Lord Esher MR in Lister v. Lane and Nesham (1893) 2 QB 212.

    “…However large the words of the covenant may be, a covenant to repair a house is not a covenant to give a different thing from that which the tenant took when he entered into the covenant. He has to repair that thing which he took; he is not obliged to make a new and different thing, and, moreover, the result of the nature and condition of the house itself, the result of time upon that stage of things, ts not a breach of the covenant to repair”.

    and by Buckley L.J in Lurcott v. Makely & Wheeler (1911 (1) K.B 905):

    “Repair is restoration by renewal or replacement of subsidiary parts of a whole. Renewal, as distinguished from repair, is reconstruction of the entirety, meaning by the entirety not necessarily the whole but substantially the whole subject-matter under discussion. I agree that if repair of the whole subject-matter has become impossible a covenant to repair does not carry an obligation to renew or replace”.

    the expression ‘repairs’ cannot be extended to indicate an obligation or a right to reconstruct. Secondly the tenant's obligation is only to hand back the demised premises in the same condition after keeping it in good repair and not to present the landlord with a new structure. In the words of Harman L.J, “you are not to hand back to your landlord a different thing from that which he demised to you” (See Brow Bros. Ltd. v. Snax (Rose) Ltd. ((1970), 1 Q.B 612).

    8. The learned counsel for the appellant relied on the decision of the Andhra Pradesh High Court in Eashwar v. Sudarsban (A.I.R 1985 A.P 4) to contend that the tenant putting up the roofing and the door which had fallen down without the permission of the landlord cannot be said to be a transgression of any provision of law and that on the extension of that principle the tenant is entitled to reconstruct the building as well which had been destroyed. Apart from the fact that the said decision does not contain any derailed discussion of the principle of law on the basis of Which the said observation is made, it also appears to me that to repair or to replace part of a roof which had decayed due to natural causes Would be something quite different from a right to put up a new building in the place of old. In the light of what I have stated earlier the argument based on the decision reported in A.I.R 1985 A.P 4 cannot be accepted. Moreover the view expressed therein may not accord with the view of this court as expressed by Mr. Justice K.G Balakrisbnan in S.A No. 198 of 1985 (1991 (2) KLT SN 2).

    9. It therefore appears to me that the tenant cannot claim a right to reconstruct the building on bis own. It is not pleaded in this case that there was any special covenant between the landlord and the tenant in this case regarding repair, renovation or reconstruction (See in this connection Gopalakrishnan Nair v. Joshi, (1985 KLT 132). What was pleaded was that subsequent to the destruction of the building there was a contract for the lessee to pay Rs. 15,000/- to the landlord and for the landlord to reconstruct the building. It was claimed that the sum of Rs. 15,000/- had been paid. Both the agreement set up and the claim of payment of Rs. 15,000/- have been found against by the courts below. There is also no reason to differ from that finding of the courts below.

    10. If as observed by Mulla in his Commentaries on the Transfer of Property Act (seventh edition, page 722) “the tenant cannot make structural additions and alterations without the consent of the landlord” the tenant cannot certainly put up a new building in the place of the old without the consent of the landlord. The courts below have only restrained the appellants from putting up a new building on their own and I find that the said decree is perfectly justified in Law.

    11. I dismiss the Second Appeal.

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    Comments

    Damodaran And Another v. Yesoda And Another
    (Mar 25, 1993)