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Subbaraya Kamti v. Krishna Kamti

Madras High Court
Nov 13, 1882
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Structured Summary of the Provided Opinion

Factual and Procedural Background

The plaint and issues show that the suit concerns recovery of rent and mesne profits for the periods called "Pramadi and Vikrama" (April 1879 to end of March 1881) and recovery of land alleged to have been forfeited for non-payment of rent since Iswara (1877) and for forfeiture by reason of alienation on 9 October 1877 in execution of the decree in Original Suit 169 of 1877. There was an earlier suit, Suit 263 of 1877, which related to arrears for the years 1874–1876. The District Munsif overruled the defendant's objection that the present suit was barred by reason of the former suit, and the matter proceeded through appeal (including reference to Second Appeal 80 of 1879). The court below had decreed for the plaintiff; the present opinion reviews those decrees and determines whether forfeiture clauses in the lease should be enforced and whether the later suit is barred by the rule that a suit must include the whole of the claim arising out of the cause of action (Section 7, Act VIII of 1859 / Code provision).

Legal Issues Presented

  1. Whether the present suit is barred by the earlier Suit 263 of 1877 under the rule that "every suit shall include the whole of the claim arising out of the cause of action" (Section 7, Act VIII of 1859 / Code provision), i.e., whether the forfeiture now relied on arises out of the same cause of action as in the earlier suit.
  2. Whether the forfeiture stipulation for non-payment of rent (including forfeiture of improvements) is penal or otherwise unenforceable for being grossly inequitable or not intended by the parties.
  3. Whether a covenant against alienation is broken by an involuntary alienation effected by process of execution (assignment by operation of law), and whether such an alienation justifies forfeiture under the lease.
  4. What relief is appropriate if forfeiture is not enforced — whether the plaintiff is nevertheless entitled to possession or only to rent/mesne profits and what form a proper decree should take.

Arguments of the Parties

Defendant's Arguments

  • The defendant objected that the present suit was barred by the former Suit 263 of 1877 on the basis that the cause of action and whole claim arising therefrom should have been included in the earlier suit (invoking Section 7 of Act VIII of 1859 / Code provision).
  • The defendant tendered the rent claimed (the rent due since Iswara (1877) up to the commencement of the suit) before suit and later lodged the tendered amount in Court; this was advanced as showing there was no refusal or neglect to pay rent and therefore no forfeiture had accrued.

Plaintiff's Arguments

  • The plaintiff sought enforcement of forfeiture on two grounds: (a) non-payment of rent (variously pleaded for different years) and (b) alienation (sale under execution on 9 October 1877) as breaching a covenant against alienation.
  • The plaint claims rent for Pramadi and Vikrama and prays for recovery of possession on the basis that the lease had been forfeited; in respect of Vikrama the plaint treated the claim as mesne profits rather than ordinary rent.
  • The plaintiff assigned the decree obtained against his tenant for rent and, after attachment and sale, gave notice that he would insist on forfeiture.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Act VIII of 1859, Section 7 (referred to as Section 7 of the Code of 1859) Every suit must include the whole of the claim arising out of the cause of action; omission bars a subsequent suit for omitted portion. Cited to assess whether the present suit (for forfeiture/rent/mesne profits) was barred by the earlier Suit 263 of 1877 which dealt with earlier arrears. Court analyzed accruals and held that different arrears can constitute distinct causes of action such that the earlier suit did not necessarily bar the later one.
Code of 1877, Section 211 Provides that in suits for land the Court may decree payment of rent or mesne profits from institution of suit until delivery of possession (or up to three years) with interest. Used by Kernan, J. to explain available relief (decree for mesne profits with interest) and to support the form of decree the Court considered appropriate if rent arrears existed.
Kottal Uppi v. Edavalath Thathan Nambudri, 6 M.H.C.R. 258 (6 M.H.C.B. 258) Authority for relieving against enforcement of forfeiture where great hardship (loss of improvements) would follow; supports construing such stipulations as not intended to be enforced. Relied upon by the court (Innes, J.) to refuse enforcement of forfeiture for non-payment of rent because enforcement would cause great hardship by loss of improvements; Kernan, J. also cites it as supporting an alternate form of relief (payment then conditional delivery of possession).
Second Appeal 80 of 1879 (referred) Case where by terms of a razinama (compromise) defendant was liable to be ejected for non-payment; enforcement there would have been to give effect to the compromise. Cited to distinguish: the court said that the Second Appeal is not authority for enforcing ordinary stipulations occurring in documents because that case enforced a compromise's specific terms.
Bebello v. Luis (referenced) Shows that stipulations against alienation have often been upheld when alienation was voluntarily effected by private sale. Used to support the proposition that covenants against alienation can be enforced in cases of voluntary alienation, but contrasted with the present involuntary execution-sale situation.
Davis v. Eyton, 7 Bing. 154 Contained an express stipulation allowing re-entry in case of tenant committing an act of bankruptcy or execution issuing against him (i.e., provided for forfeiture on such events). Distinguished by the court: in Davis there was an express provision covering transfer by operation of law; the present lease had no equivalent express provision, so Davis was not applicable to justify forfeiture for the execution-sale.
Weatherall v. Geering, 12 Vesey 504 Authority that assignment by operation of law is not per se a breach of a covenant against alienation. Quoted by the court to support the conclusion that an involuntary assignment (by operation of law/execution) is not automatically a breach of covenant against alienation.
Doe v. Garter, 8 T.B. 57 Further authority distinguishing involuntary alienation by process of law from voluntary acts that procure alienation. Relied on to hold that involuntary alienation by execution is not necessarily within a covenant against alienation; contrasted with cases where the tenant voluntarily procures execution to effect alienation.
Roe v. Galliers, 8 T.E. 133 Case cited by Kernan, J.; held inapplicable here because there were special provisions in that case for forfeiture on transfers by operation of law. Kernan, J. noted Roe v. Galliers did not apply because the present lease contained no special provision authorizing forfeiture for transfers by operation of law.
Timmarsa Puranik v. Badiya Kuppagudu, 2 Bom. H.C.E. 66 Example from Bombay practice of decreeing payment of rent with conditional possession on default as an alternative to strict enforcement of forfeiture. Cited by Kernan, J. to support the appropriate form of decree when rent is in arrears: require payment within a limited time, and on default grant possession, rather than immediate enforcement of forfeiture.
Transfer of Property Act, 1882, Section 114 Directs a similar course (payment then conditional delivery of possession) in cases of forfeiture for non-payment of rent to which that Act applies. Referenced by Kernan, J. to show statutory support for the remedy short of strict forfeiture: payment with conditional possession in default.

Court's Reasoning and Analysis

The opinion contains two judicial analyses (Mr. Justice Innes and Kernan, J.). The court's reasoning proceeded in the following steps, stated as closely as possible to the text:

  1. Distinct causes of action and Section 7 analysis:
    • The plaint and issues indicated that the present suit seeks recovery for arrears and forfeiture relating to periods later (since Iswara 1877 and Pramadi/Vikrama periods) than those in Suit 263 of 1877 (1874–1876).
    • Both the old Act VIII of 1859 (Section 7) and the new Act of 1877 (Section 43 as mentioned in text) require that the whole claim arising out of a cause of action must be included in a suit; omission bars a fresh suit for omitted portions. However, because the arrears now relied upon accrue separately from those in Suit 263 of 1877, the present forfeiture claim arises out of a distinct cause of action (separate accrual) and is not necessarily barred by the earlier suit. Thus, the District Munsif's overruling of the defendant's objection on the ground the former suit was only for rent (not mesne profits) was vindicated on the basis that the two suits concerned different arrears.
    • Innes, J. observed an error in the first issue referring to earlier years (1874–1876) but treated the error as immaterial because the real issue was a pure question of law about construction of the lease and the subsequent arrear was admitted.
  2. Construction of the lease and intention of parties regarding forfeiture for non-payment:
    • The court undertook to determine whether forfeiture stipulations were penal and unenforceable by construing the document and considering attendant circumstances to ascertain the parties' intention at execution.
    • Looking at the clause providing for forfeiture for mere non-payment of rent in any one year together with loss of all right to improvements, Innes, J. considered that if that stipulation stood alone it would appear grossly inequitable to enforce it; thus there was strong reason to conclude the parties did not seriously intend that such a harsh result (loss of improvements) should follow enforcement. The stipulation as to alienation, however, did not have the same indicia of being unenforceable: it could reasonably be intended to secure the landlord from being saddled with an undesirable tenant.
    • Consequently the court treated the forfeiture-for-non-payment clause as possibly inserted "in terrorem" (to frighten) and not intended to be enforced to the full harsh effect of forfeiture of improvements.
  3. Alienation clause: voluntary vs involuntary alienation:
    • The court examined whether the covenant against alienation covered involuntary alienation coming about by operation of law (execution and sale) rather than voluntary alienation by the tenant.
    • The court cited authorities (Weatherall v. Geering; Doe v. Garter) to support the principle that assignment by operation of law is not per se a breach of a covenant against alienation and drew a distinction between involuntary alienation by process of execution and a voluntary procuring of execution by a defaulting tenant to bring about alienation.
    • In the present facts, the plaintiff had assigned the decree against his tenant to an assignee who proceeded to attach and sell the tenant's interest. The court observed that, since the plaintiff had assigned the decree and thus enabled the assignee to proceed to sale (and had given notice after attachment that he would insist on forfeiture), the alienation could be regarded as brought about with the plaintiff's knowledge and possibly intention. On that ground and on the legal distinction, the court held that alienation by operation of law was not within the intention of the covenant and therefore not a proper ground to enforce forfeiture in this case.
  4. Relief and appropriate decree:
    • Innes, J. concluded he would refuse to enforce the forfeiture both for non-payment (because enforcement would cause great hardship and was not intended) and for alienation (because the alienation was involuntary and not within the parties' intention). He would reverse the decrees below and dismiss the plaintiff's suit except as to rent in arrears with interest for Pramadi; noted that rent for Vikrama was not due at date of plaint and was treated as mesne profits.
    • Kernan, J. found the plaint confusing and held that if the suit were based on forfeiture for the earlier years (1874–1876) it would be barred by Section 7; he also treated the plaintiff's real claim as one for mesne profits (treating defendant as a trespasser). Kernan agreed with Innes that a decree founded on alleged forfeiture (either for non-payment after Iswara 1877 or for alienation) was wrong for the reasons Innes gave. He added that the rent due since Iswara (1877) up to commencement of suit had been tendered and lodged in Court by defendant, showing no neglect or refusal; therefore the suit should be dismissed with costs on that ground.
    • Kernan proposed the alternative form of decree, consistent with Kottal Uppi and practice in Bombay (and with Transfer of Property Act, Section 114), that the defendant should be ordered to pay rent and arrears and costs and that, in default within a limited time, possession should be delivered to plaintiff and the rent and costs be paid—rather than immediate enforcement of forfeiture.

Holding and Implications

Core Ruling: The judges determined that the decrees of the lower courts should be reversed. Innes, J. would reverse and dismiss the plaintiff's suit except as to the rent in arrears with interest for Pramadi; Kernan, J. would reverse the decrees and dismiss the suit with costs, and directed that money lodged in Court by the defendant, if drawn out, be credited to rent.

Implications and consequences:

  • The court refused to enforce forfeiture for non-payment of rent where enforcement would result in grave hardship (loss of all right to improvements) and where the clause could be construed as having been inserted in terrorem and not intended to be literally enforced; the opinion cites Kottal Uppi as authority for relieving against such enforcement.
  • The court held that covenants against alienation do not necessarily cover involuntary alienation effected by operation of law (execution and sale), particularly where the plaintiff's actions (assigning the decree and enabling sale) made the outcome probable; hence a sale under execution in those circumstances did not justify enforcing forfeiture under the covenant.
  • Where rent in arrear has been tendered and lodged in Court, that fact may defeat a claim of forfeiture for non-payment and justify dismissal of a suit seeking possession on that basis.
  • The appropriate remedial course, where a strict forfeiture is inappropriate, is to award payment of rent and arrears and costs, with a conditional order for delivery of possession if payment is not made within a short specified time—rather than automatic forfeiture. This course is supported by the cited practice and statutory rule (Transfer of Property Act, Section 114) and authorities cited from Bombay practice.
  • No novel legal principle was announced beyond application and reconciliation of existing authorities (as the opinion relies on prior cases and statutory provisions to reach its result); the decision reverses the lower courts' decrees and prescribes relief tailored to the facts of this case.

Direct effect on the parties: Plaintiff's decree in the lower courts is to be reversed; plaintiff's suit is to be dismissed except as to rent in arrears for Pramadi (Innes, J.), and under Kernan, J.'s view the suit is dismissed with costs and funds lodged in Court are to be credited to rent if withdrawn. Proportionate costs were directed by Innes, J., and Kernan, J. directed costs in favour of defendant.

Show all summary ...

1. It appears from the plaint and the issues that the suit is for the recovery of rent and mesne profits for Pramadi and Vikrama (April 1879" to end of March 1881) for recovery of the land forfeited by reason of non-payment of the rent since Iswara (1877) and for forfeiture by reason of alienation on 9th October 1877 in execution of the decree in Original Suit 169 of 1877. It appears, therefore, that the non-payment of rent giving rise to the forfeiture, which it is now desired to enforce, is a non-payment distinct from that which formed the cause of action in Original Suit 263 of 1877. Both the old Act VIII of 1859 in Section 71 and the new Act of 1877 in Section 43 require, though in somewhat different language, that the whole of the claim, arising out of the cause of action shall be included in a suit on pain of the plaintiff not being afterwards allowed to bring a fresh suit for the portion of the claim omitted. Had the arrear of rent, upon which the right to insist on forfeiture is based, been the same as that sued for in Suit 263 of 1877, the right to insist on the forfeiture would be a claim arising out of the same cause of action and the defendant might maintain that the suit was barred by the provisions of Act VIII of 1859, Section 7.

2. The plaint, however, shows that the two suits have distinct causes of action in separate accruals of arrears. The first issue is erroneously made to-raise the question of plaintiff's right of forfeiture with reference to the arrears of the years 1874, 1875, and 1876, to which Suit 263 related. But the subsequent arrear was admitted and the real issue being a pure question of law upon the construction of the lease, the error in the statement of the years in the first issue is immaterial.

3. The District Munsif overruled the objection taken by the defendant that the suit was barred by reason of the former suit, on the ground that a claim for land and a claim for mesne profits were distinct causes of action, but the-former suit was not a suit for mesne profits, but for rent. However, for the reasons already stated, the former constituted no bar to the second action. The question, therefore, remains whether the stipulations are, or either of them is, penal and not enforceable.

4. The question is one as to the intention of the parties at the time of the execution of the document, to be determined on the construction of the document and on a view of the attendant circumstances. I think looking at the terms of the agreement, to the effect that the lease was to be forfeited for mere non-payment of rent in any one year together with all right to improvements, (see the counterpart), that there is very strong reason for saying that, if this-stipulation stood alone, it could not be held to have been seriously intended that it should be acted upon, as it would be recognized to be grossly inequitable that improvements should be forfeited together with the lease. There is-not the same ground for saying that the stipulation against alienation was not intended to be enforced, but, I think, it may very well be that the stipulation as to the consequences of non-payment of rent was merely inserted in terrorem, while that as to alienation was intended to be acted upon, as it may be of importance to a landlord that he should not have a tenant thrust upon him.

5. Second Appeal 80 of 1879, to which we were referred, was a case in which, by the very terms of a razinama entered into in compromise of a suit, the defendant was liable to be ejected for non-payment of rent. Not to have held the parties bound by the stipulation would have been to refuse to give effect to the compromise and that case can, therefore, be no authority for the enforcement of such stipulations ordinarily occurring in documents, and Kottal Uppi v. Edavalath Thathan Navibudri 6 M.H.C.R. 258 is an authority for saying that, when, as in the present case, the great hardship of the loss of all right to improvements would follow the enforcement, the proper construction is that an enforcement of the stipulation was not intended by the parties and ought to be relieved against by the Court. With regard to the stipulation against alienation, such stipulations have often been upheld (as in Bebello v-Luis), when the alienation has been voluntarily effected by private sale. Alienation may be the means of making evidence against the landlord's title, and the landlord may have intended by the stipulation to protect himself from such consequences. But does the stipulation extend to an involuntary alienation, under an execution? In Davis v. Eyton 7 Bing. 154 to which we were referred, there was an express stipulation that, in case of the tenant committing. an act of bankruptcy or execution issuing against him, the landlord might re-enter.

6. But that an assignment by operation of law is not per se a breach of a covenant against alienation--Weatherallv. Geering (12 Vesey, 504) maybe quoted as an authority; also Doe v. Garter 8 T.B. 57. In the same case the distinction is taken between an alienation affected involuntarily by process of execution, and a voluntary procuring of execution by the defaulting tenant against himself,, in order to bring about the alienation desired. In this latter case it was held that an alienation so procured was a breach of the covenant. Here the alienation was involuntary and by operation of law. Plaintiff had assigned the decree he had obtained against his tenant for rent, and if, as. appears probable from the assignee proceeding to attach the tenant's interest in the lease, the tenant had no other available property, the plaintiff', when he assigned the decree, must have known that this result would follow. He did indeed give notice, when the property was attached, that he should insist on the forfeiture, but he had already put it in the power of the assignee to proceed as he did to a sale. Now the sole object of the stipulation against alienation being to prevent a stranger being forced upon the jenmi as tenant,, plaintiff might have effected this object by buying in the Mulgaini right himself. And the alienation may thus be regarded not merely as involuntary on the part of the tenant, but brought about with all its attendant mischiefs-intentionally by plaintiff.

7. Apart from this, I think we ought to hold that an alienation, brought about by operation of law, was not within the intention of the covenant.

8. I would refuse to enforce the forfeiture for non-payment of rent, on the ground that the case is on a footing with Kottal Uppi v. Edavalath Thathan Nambudri 6 M.H. C.B. 258, and I would also refuse to enforce it for alienation, on the ground that the alienation was not voluntary and was not within the intention of the parties at the time they contracted.

9. I would reverse the decrees of the Courts below and dismiss plaintiff's suit except as to the rent in arrears with interest for Pramadi. That for Vikrama. was not due at date of plaint and was treated by plaintiff as mesne profits and no other rent was claimed. There should be proportionate costs allowed throughout.

Kernan, J.

10. It is difficult to understand the plaint. It appears to contain contradictory statements. Assuming that this suit is brought on the ground of forfeiture created by non-payment of rent for 1874, 1875, and ,1876, then, no doubt, under Section 7 of the Code of 1859 (which governs the Suit 263 of 1877), the plaintiff could not now sue to recover on foot of the forfeiture arising from non-payment of the rent of 1874, 1875, and 1876. "Mesne profits" in the Code do not mean rents--see Section 2112 Therefore an action for rent and for forfeiture for non-payment of that rent constitutes the whole claim arising out of the cause of action, viz., the non-payment of the rent, and, under Section 7 of the Code, should have been included in the Suit 263 of 1877. Plaintiff, having omitted in that action to make the claim of forfeiture, cannot now maintain a suit on that forfeiture.

11. The first issue was in respect of that forfeiture and not on any forfeiture for rent accrued after 1876.

12. The plaint, no doubt, claims in terms rent for Pramadi and Vikrama, but it is plain the plaintiff did not intend to recognize the defendant as tenant, but intended to treat defendant as a trespasser who had no title. Therefore, it would appear that plaintiff did not claim any rent from the defendant, and his claim made in the plaint is plainly for mesne profits, as referred to in Section 211 of the Code of 1877.

13. Assuming, however, that the true meaning of the plaint is that plaintiff relies on forfeiture created by non-payment of rent after Iswara (1877), I agree that the decree founded on such alleged forfeiture and on the alleged forfeiture on the ground of alienation is wrong for the reasons mentioned by Mr. Justice Innes.

14. The cases of Roe v. Galliers 8 T.E. 133 and Davis v. Eyton 7 Bing. 154 do not apply. There were in those oases special provisions which provided for forfeiture in case of acts done leading to transfer by operation of law. There is no such provision in this case. The alienation intended by the parties is a voluntary alienation.

15. The plaintiff then not being entitled to a decree for possession on the ground of either forfeiture, is he on the suit as framed entitled to any and. what decree ?

16. Though the plaintiff asks in terms for payment of rent, yet the object of the suit is to recover possession and mesne profits- If the plaint is to be taken as one for rent, then the rent claimed as due since Iswara (1877) up to the commencement of the suit was tendered to the plaintiff before suit, and was afterwards lodged in Court by the defendant. It does not appear, therefore, that there was any neglect or refusal by the defendant to pay rent; and consequently there was no forfeiture. On that ground, I think, the suit should have been dismissed with costs.

17. Even if the rent was in arrears and a forfeiture had accrued the proper decree would have been that defendant should pay the rent and arrears and costs of suit and, in default of such payment within a very limited number ;of days, possession should be delivered to the plaintiff and the rent and costs be paid by the defendant. This is consistent with Kottal Uppi v. Edavalath Thathan Nambudri 6 M.H.C.R. 258, and is the course in Bombay--see Timmarsa Puranik v. Badiya Kuppagudu 2 Bom. H.C.E. 66. A similar course is directed by the Transfer of Property Act, 1882, Section 114, in cases of forfeiture for non-payment of rent to which that Act may apply.

18. I agree that the decrees of the Lower Courts should be reversed and the suit dismissed with costs. The money lodged in Court by the defendant, if drawn out, is to be credited to the rent.

In suits for land, Court may decree payment of mesne profits with interest.

1 Suit to include the whole claim. Relinquishment of part of claim.

[Section 7: Every suit shall include the whole of the claim arising out of the cause of action, but a plaintiff may relinquish any portion of his claim in order to bring the suit within the jurisdiction of any Court.. If a plaintiff relinquish or omit to sue for any portion of his claim, a suit for the portion so relinquished or omitted, shall not afterwards be entertained.] 2[Section 211: Where the suit is for land or other property yielding rent or other profit, the Court may provide in the decree for the payment of rent or mesne profits in respect of such property from the institution of the suit until the delivery of possession to the party in whose favour the decree is made, or until the expiration of three years from the date of the decree (whichever event first occurs)," with interest thereupon at such rate as the Court thinks fit.

Explanation.--Mesne profits' of property mean, those profits which the person in wrongful possession of such property actually received, or might with ordinary diligence have received, therefrom.]