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A. Venkataramana Bhatta v. Krishna Bhatta
Factual and Procedural Background
The appellants are defendants 11 and 12, while the property in question belongs to defendants 1 to 10. Originally, defendants 1 to 10 mortgaged the property in 1910 to the plaintiffs, representatives of the Bhandaram, under an usufructuary mortgage. Subsequently, defendants 1 to 10 regained possession of the property under a 63-year lease containing a covenant for forfeiture upon alienation. Later, defendants 1 to 10 mortgaged portions of this property and other properties to defendants 11 and 12 under another usufructuary mortgage for 90 years. The plaintiffs contend that this second mortgage triggered the forfeiture covenant in the lease, entitling them to recover possession from both sets of defendants. The case reached this Second Appeal to determine the effect of the forfeiture covenant.
Legal Issues Presented
- Whether the covenant for forfeiture on alienation in the lease deed is triggered by the partial alienation effected through the second usufructuary mortgage granted by defendants 1 to 10 to defendants 11 and 12.
- Whether a partial alienation of the leased property amounts to forfeiture under the specific terms of the forfeiture covenant.
Arguments of the Parties
Plaintiffs' Arguments
- The covenant for forfeiture in the lease deed has taken effect due to the second usufructuary mortgage granted by defendants 1 to 10 to defendants 11 and 12.
- Consequently, the plaintiffs are entitled to cancel the lease term and recover possession of the property from both defendants 1 to 10 and defendants 11 and 12.
Defendants' Arguments
- The alienation effected by the second usufructuary mortgage was only of a portion of the leased property, not the entirety.
- A partial alienation does not trigger forfeiture under the covenant, which does not expressly mention partial alienations.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Grove v. Portal | A covenant against assignment does not prevent partial assignment unless expressly stated; partial alienation does not cause forfeiture unless the covenant explicitly excludes it. | The court adopted this English principle, applying it to construe the forfeiture clause strictly against forfeiture for partial alienation. |
| Vittappa Kudva v. Durgamma | Distinguished Grove v. Portal on facts; whole property surrendered, so forfeiture applied. | The court noted the distinction but accepted the underlying principle from Grove v. Portal for partial alienation cases. |
Court's Reasoning and Analysis
The court examined the wording of the forfeiture covenant, which prohibits any alienation of the defendants' rights under the lease but does not explicitly mention partial alienations. Applying the principle established in Grove v. Portal, the court held that such covenants must be construed strictly and that partial alienations do not trigger forfeiture unless expressly stipulated. The court rejected the lower courts’ view that the covenant applied to partial alienations and emphasized that the covenant concerns alienation of rights, not possession. The alienation effected by the second usufructuary mortgage, though involving a significant portion of the leased property, did not constitute forfeiture of the entire lease term. The court also referenced the distinction made in Vittappa Kudva v. Durgamma but found it inapplicable to the present facts. Consequently, the court concluded that the plaintiffs were not entitled to cancel the lease or recover possession based on the alleged forfeiture.
Holding and Implications
The suit for possession based on the forfeiture covenant is dismissed. The decree of the Court of first instance regarding arrears of rent remains unaffected. Defendants 11 and 12 are entitled to costs related to possession from the plaintiffs at all court levels, while the plaintiffs bear their own costs on that issue.
This decision directly affects the parties by denying the plaintiffs' claim to possession on the basis of forfeiture for partial alienation. No new precedent beyond the application of established principles was set.
The appellants before me are defendants 11 and 12. The property in question belongs to defendants 1 to 10. It was mortgaged by them in 1910 to the plaintiffs, who are the representatives of what is called the Bhandaram, under an usufructuary mortgage. Defendants 1 to 10 obtained the property back from them under a lease or 63 years. In that lease deed, there is a covenant for forfeiture on alienation, the effect of which is the point to be considered in this Second Appeal. Defendants 1 to J 0 subsequently mortgaged again to defendants 11 and 12 some portions of this property as well as some other properties belonging to them under a usufructuary mortgage for a period of 90 years.
It is contended by the plaintiffs that on account of that transaction the covenant for forfeiture in the lease taken by defendants 1 to 10 from them has taken effect and that the plaintiffs are, therefore, entitled to recover possession of the properties from defendants 1 to 10 as well, as from defendants 11 and 12 at once. The covenant is worded thus as translated by the lower court:—
“We shall not only deliver possession of the property to the Bhandaram alone by means of a surrender deed in case we do not enjoy the property and pay rent in conformity with the provisions of this term-lease till the expiry of the term, but we shall not alienate in any manner our rights under this term-lease. If we should, contrary to this, effect any alienation, then neither we nor our representatives in interest shall object to the Bhandaram cancelling the term and taking possession of the property and enjoying the same.”
If the clause for forfeiture applies in the circumstances of the present case, there can be no doubt that the plaintiffs are entitled to cancel the term of the lease granted to defendants and to recover possession of the property and to hold it themselves as usufructuary mortgages under defendants 1 to 10. But it is contended before me that there has been no forfeiture under this clause as the alienation by the second usufructuary mortgage was only of a portion of the property included in the lease, and such a partial alienation does not work a forfeiture under the clause in this lease deed. Both the lower courts have rejected this contention. But it seems to me that there is force in it. A clause for forfeiture must always be construed strictly, as against the person who is trying to take advantage of it; and the effect should be given to it, only so far as it is rendered absolutely necessary to do so by the wording of the clause. In this case, the clause speaks of alienation of the defendants' rights under the lease deed in any manner. It does not refer to partial alienations at all, but only to alienations as a whole. As was laid down by Mr. Justice Joyce in Grove v. Portal a covenant against assignment does not prevent the tenant from assigning for any part of the term, or from assigning a portion of the premises and unless the covenant is expressly worded to exclude a partial alienation of the premises, a partial alienation will not work forfeiture under a clause which prevents alienation of the premises. It is always open to the landlord to put into his lease a covenant against alienation either complete or partial, if he intends that forfeiture should result from a partial alienation as well; but where he does not do so, the construction adopted in England is that the covenant will not apply to a partial alienation. As this view is based upon general principles of equity, I do not see why that same view should not be adopted and followed in India. Following the view adopted in Grove v. Portal, I consider that the alienation here, even though it affected a major portion of the property leased, cannot be held to have worked a forfeiture of the period of the lease, as the covenant in the document before me does not refer to partial alienation of property. The case of Grove v. Portal was cited in Vittappa Kudva v. Durgamma; but it was distinguished there, as the property which was surrendered by the lady was the whole of the property she had then with her. But for the distinction, I take it that the learned Judges would have followed the ruling. The question here is not one of giving possession to a third party as the Lower Courts seem to think. The covenant in the document does not speak of possession at all, but of alienation of the rights under the lease. Holding that the usufructuary mortgage to defendants 11 and 12 was not sufficient to work a forfeiture of the term of the lease to defendants 1 to 10, the suit for possession must be dismissed. The decree of the Court of 1st instance, so far as it relates to arrears of rent, will not de interfered with.
As regards costs, the defendants 11 and 12 will be paid their costs as regards possession only by the plaintiffs in all the three courts. The plaintiffs will bear their own costs on that portion of the case.
W.S.SDecree varied.
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