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Smart Summary

Factual and Procedural Background

This is a suit by the plaintiff for recovery of Rs. 1,017-13 as rent or minimum royalty arising from a mining lease of mauza Chandakua. One Raghunoy (Raghumooy/Raghuboy in the text) Marwari originally held the lease from Parbati Charan Chatterit (defendant No. 3). Defendants Nos. 1 and 2 purchased Raghunoy Marwari's rights in 1915. On 6 June 1918 Parbati Charan mortgaged the village to the plaintiff, the agreement being that the plaintiff was to realize the royalty payable by defendants Nos. 1 and 2 in lieu of interest.

The plaintiff demanded rent from defendants Nos. 1 and 2 on 31 December 1918 and again on 26 April 1919, but defendants refused, asserting that on 17 September 1918 they had paid five years' rent in advance to Parbati Charan. The plaintiff sued to recover the rent for the Chait kist of 1325 and the Aswin kist of 1326 which fell due after the date of the mortgage.

The suit was dismissed in the court of first instance; that dismissal was upheld on appeal by the District Judge. The plaintiff appealed to this Court. The District Judge additionally made a finding concerning a small part of bari land in another village being mortgaged to enable registration and suggested sinister motive; this finding was noted by the appellate bench.

Legal Issues Presented

  1. Whether defendants Nos. 1 and 2 can successfully plead advance payment of royalty to defendant No. 3 (Parbati Charan) so as to defeat the plaintiff's claim, given that the mortgage to the plaintiff was executed on 6 June 1918 and the alleged advance payment occurred thereafter on 17 September 1918.

Arguments of the Parties

Plaintiff's Arguments

  • The plaintiff claimed entitlement to recover Rs. 1,017-13 as rent or minimum royalty which fell due after the date of the mortgage (Chait kist of 1325 and Aswin kist of 1326).
  • The plaintiff relied on the mortgage dated 6 June 1918 under which he was to realize royalties payable by defendants Nos. 1 and 2 in lieu of interest; therefore subsequent payments to the mortgagor should not discharge the defendants' liability to the plaintiff.

Defendants' Arguments

  • Defendants Nos. 1 and 2 asserted that on 17 September 1918 they had paid five years' rent in advance to Parbati Charan, and therefore they refused the plaintiff's demands for the later instalments.
  • Implicit in this defence was the contention that their advance payment to the landlord discharged their liability for the relevant rents.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
DeNicholls v. Saunders As cited by the court for the established principle concerning advance payment of rent and the effect of a landlord's assignment before rent falls due. The court relied on this authority to support the view that advance payment before rent is due does not discharge the tenant when the landlord has assigned the right to receive rent before the rent became payable.
Cook v. Guerra Also cited for the same principle regarding advance payment and assignment by the landlord. The court treated this case together with DeNicholls v. Saunders as establishing the principle that payment in advance will not save a tenant from liability where the landlord has assigned his rights before the rent fell due, and noted that the principle has not been departed from.

Court's Reasoning and Analysis

The court analyzed the dispute in light of the Transfer of Property Act, section 50, and established common-law authority. It first observed that section 50 protects a tenant against being made to pay his rent twice if payment is made in good faith to a person entitled to receive it. However, the court explained that payment made before it is due is only an advance to the landlord and does not constitute payment in fulfilment of the tenant's obligation.

The court then reasoned that if the landlord assigns his right to receive rent before the rent falls due, the original landlord has parted with the power to give a discharge for that rent. Consequently, a receipt given by the assignor after assignment but before the rent is due cannot be treated as discharging the tenant's liability to the assignee. The court noted that, even if the tenant is unaware of the transfer, the tenant could have ascertained it by waiting, and therefore an advance payment will not protect the tenant from liability to the assignee.

Relying on DeNicholls v. Saunders and Cook v. Guerra, the court held that the principle just described is well established and has not been departed from. On that basis the learned District Judge's contrary legal conclusion was deemed incorrect.

The court also addressed an ancillary finding of the District Judge concerning a separate mortgage of a small part of bari land in another village, stating that this matter was not in issue and that the District Judge gave no reasons for his adverse inference; accordingly that finding could not be upheld.

Holding and Implications

APPEAL ALLOWED

Holding:

  • The decree of the District Judge was set aside.
  • The appeal by the plaintiff was decreed with costs.

Implications:

  • The court applied the established rule that advance payment of rent to a landlord does not discharge a tenant's obligation to the assignee where the landlord had assigned his right before the rent fell due; accordingly, defendants Nos. 1 and 2 could not rely on their advance payment to defeat the plaintiff's claim under the mortgage.
  • The District Judge's additional finding about the separate mortgage was rejected for lack of issue relevance and absence of reasons.
  • The decision resolved the dispute between the parties in favour of the plaintiff (appellant) and awarded costs to the appellant. The opinion relied on existing authorities and did not purport to announce any new legal principle.

    Ram Lal Marwari v. Mahadeo Marwari

    Coutts, J.:— This is a suit for recovery of Rs. 1,017-13 as rent or minimum royalty. It appears that one Raghumy Marwari held a mining lease of mauza Chandakua from Parbati Charan Chatter it, defendant No. 3. The rights of Raghuroy Marwari were purchased in the year 1915 by the defendants Nos. 1 and 2. On the 6th June 1918, Parbati Charan mortgaged this village to the plaintiff, the agreement being that the plaintiff was to realize the royalty payable by defendants Nos. 1 and 2 in lieu of interest.

    2. On the 31st December 1918 and again 26th April 1919 the plaintiff demanded the rent from defendants Nos. 1 and 2, but was met with a refusal on the ground that on the 17th September 1918, that is, a little more than two months after the date of Parbati Charan's mortgage to the plaintiff, they had paid, five years' rent in advance to Parbati.

    3. The plaintiff “then brought this suit against these defendants for the rent of the Chait kist of 1325 and the Aswin kist of 1326 which fell due after the date of the mortgage.

    4. The suit was dismissed in the court of first instance, and this decision has been upheld on appeal by the District Judge. The plaintiff has again appealed to this Court.

    5. The sole question for decision in the appeal is whether the defendants Nos. and 2 are entitled to plead advance payment of royalty to the defendant No. 3. It is clear, I think, that they are not. Section 50 of the Transfer of Property Act protects a tenant against having to pay his rent twice over, if paid in good faith, but if he has paid rent before it was due, it is merely an advance to the landlord and is not a payment in fulfilment of an obligation to pay rent.

    6. If, then, before the date on which the rent falls due, the landlord makes an assignment, the receipt of rent cannot be treated as a discharge by him because by assignment before the rent falls due, he has parted with the power of giving such a discharge, and payment of rent before it falls due cannot free the tenant from further liability. It may be that the tenant does not know of the transfer, but it is clear that if he had waited he might have known, and consequently an advance payment will not save him from liability.

    7. The law on this point has been very clearly laid down in DeNicholls v. Saunders(1) and in Cook v. Guerra(2) and so far as I am aware the principle therein enunciated has never been departed from. The learned District Judge is, therefore, clearly wrong in the view which he has taken of the law on this point.

    8. This District Judge has, however, further found that a small part of bari land in another village in Pandar Pargana was mortgaged merely for the purpose of enabling the deed to be registered in Raghunathpur, and he is of opinion that this was done with some sinister motive. This, however, was not a point in issue in the suit and as the learned District Judge has given absolutely no reason for his opinion his decision on this point cannot be upheld.

    9. In the result then I would set aside the decree of the District Judge and would decree this appeal with costs.

    10. Macpherson, J.:— I agree.

    11. Appeal allowed.

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    Ram Lal Marwari v. Mahadeo Marwari
    (Aug 2, 1921)