RAMACHANDRAN PILLAI v. JOSEPH JOHN — 1975 DIGILAW 325 (KER)

Judgment :- 1. The second defendant in a suit for eviction is the appellant. The two points urged in support of the appeal are: (1) there was no necessity for the lower appellate court to have entered a finding on the question whether the second defendant was entitled to the benefits of S 106 of Act 1 of 1964; and (2) on the materials on record the lower appellate court should have found that the second defendant is a tenant entitled to the benefits of S.106 of Act 1 of 1964, which will hereinafter be referred to as the Act. 2. The suit was instituted on the allegations that the first defendant to whom the land describe J in the plaint schedule was leased out for erecting necessary structures for the purpose of carrying on business committed default in the payment of rent and also permitted the second defendant to be in possession of a portion of the building in violation of the terms of the agreement. The defendants contended that they are not liable to be evicted as they are entitled to the benefits of S.106 of the Act. 3. The trial court found that the defendants are entitled to the benefits of S.106 of the Act and are not liable to be evicted, and that the first defendant alone is liable for the arrears of rent claimed in the plaint as there is no privity of contract between the plaintiff and the second defendant. 4. On appeal filed by the plaintiff, the lower appellate court confirmed the finding of the trial court that the first defendant is entitled to the benefits of S.106 of the Act and that there is no privity of contract between the plaintiff and the second defendant. But the finding of the trial court that the second defendant is entitled to the benefits of S.106 of the Act was set aside. 5. It was attacking the decree and judgment of the lower appellate court that the learned advocate appearing for the appellant raised the points mentioned above. At the very outset, I may say that both the points are devoid of any merit. 5. It was attacking the decree and judgment of the lower appellate court that the learned advocate appearing for the appellant raised the points mentioned above. At the very outset, I may say that both the points are devoid of any merit. Taking me through a passage at p. 706 of Mulla's Transfer of Property Act, 6th Edn., and also inviting my attention to O. XX, R.4 (2) of the Code of Civil Procedure, the counsel strenuously contended that the second defendant is really an assignee, that a sub-lease includes an assignment, that the courts are expected to deal with in the judgments only the points for determination and the findings thereon, that in this case the real fight was between the plaintiff and the first defendant and there was no necessity to enter a finding on the issue whether the second defendant is a tenant not liable to be evicted. Order XX R.4(2) states only what all should be contained in judgments in suits other than Small Causes. This sub-rule states that the judgments in suits other than Small Causes shall contain a concise statement of the case, the points for determination, the decision thereon and the reasons for such decision. I have gone through the judgments of the courts below and I do not find anything in them to indicate or hold that these judgments have in any way violated sub-rule (2) of R.4 of Order XX of the Code of Civil Procedure. The issues in a suit are to be framed on the basis of the pleadings. The second defendant in his written statement has specifically stated that the first defendant is entitled to the benefits of S.106 of the Act and himself claiming under the first defendant is also not liable to be evicted. The trial court framed an issue (Issue No 3) on the basis of the pleadings, whether the defendants are entitled to the benefits of S.106 of the Act and not liable to be evicted; and has given its decision thereon and the reasons for such decision. It was the finding on this issue that both the defendants are entitled to the benefits of S.106 of the Act which was challenged before the lower appellate court by the plaintiff The lower appellate court was therefore bound to consider these points and give its considered decision thereon. It was the finding on this issue that both the defendants are entitled to the benefits of S.106 of the Act which was challenged before the lower appellate court by the plaintiff The lower appellate court was therefore bound to consider these points and give its considered decision thereon. When a specific question or point is raised for consideration, it is the duty of the court to go into its merits and give a decision thereon. It may be noted in this respect, that of the three grounds taken in the memorandum of appeal, the first ground, as usual, is general, the second ground is that the lower appellate court ought to have found that the second defendant is a lessee as defined in S.106(1)(a) of the Act and the third one is that in the light of the other findings of the lower appellate court it should not have discharged the finding of the trial court that the second defendant is entitled to the benefits of S.106 of the Act. I do not know how, under these circumstances, it can be said that there was no necessity for the lower appellate court to consider these questions and give a finding thereon. The appellant appears to be blowing hot and cold in the same breath Having contended before the courts below that he is entitled to the benefits of S.106 of the Act and filed this appeal before this Court for upholding the finding of the trial court that the second defendant is entitled to the benefits of S.106, it is now idle for the counsel to contend that the lower appellate court should not have given a finding on this point. 6. The counsel for the appellant argued that the appellant is an assignee and therefore a lessee coming within clause (a) of Explanation to S.106 of the Act. Clause (a) of the Explanation to S.106 reads: "(a) 'lessee' includes a legal representative or assignee of the lessee;' It is interesting to note that, this contention put forward by the counsel for the appellant is neither supported by any pleading nor by any evidence in the case and on the other hand, the pleading and the evidence in the case are against this contention. The appellant in Para.3 of his written statement, after narrating the circumstances under which he came into possession of the property, has stated: "It was under such circumstances that the Ist defendant leased the western portion of the plaint premises to the 2nd defendant so that the 2nd defendant may make use of the machines and the sheds in the spot for conducting match industry " In Para.2 of the written statement, he has stated that the first defendant is not liable to be evicted as he is entitled to the benefits under S.106 of the Act and that as the second defendant is claiming under the first defendant he is also not liable to be evicted. At the stage of evidence also the case of the defendants was that the second defendant was a sub-lessee under the first defendant. dw.1. the first defendant, has deposed to this effect and dw. 2, the second defendant, himself in chief-examination has unambiguously stated that he is a sub-lessee under the first defendant. The appellant had no case in the courts below that he was an assignee. In the light of all these, I fail to understand how the contention that the appellant is an assignee can be sustained. It was then argued that a sub-lease includes an assignment, that therefore a sub-lessee is an assignee and there is no difference between a sub-lease and an assignment. The argument sounds curious and the reasoning is faulty. In support of this contention, the learned advocate referred to the following passage at p. 706 of Mulla's Transfer of Property Act, 6th Edn.: "A sublease is an assignment of a lesser term and accordingly there is no privity of estate between the lessor and the sublessee." It is under the commentaries on clause 0) of S.108 of the Transfer of Property Act that this passage occurs. Though the term 'lessee' has not been defined under Act I of 1964, the term 'tenant' has been defined. There is no warrant for drawing a distinction between a tenant and a lessee. (vide Ayissabi v. Choyi:1966 KLT. 757). Lease is defined under S.105 of the Transfer of Property Act and the rights and liabilities of the lessor and the lessee are enumerated under S.108 of the Act. Clauses (d) to (q) of S.108 deal with the rights and liabilities of the lessee. (vide Ayissabi v. Choyi:1966 KLT. 757). Lease is defined under S.105 of the Transfer of Property Act and the rights and liabilities of the lessor and the lessee are enumerated under S.108 of the Act. Clauses (d) to (q) of S.108 deal with the rights and liabilities of the lessee. A lessee can transfer his whole interest or part of his interest or a limited interest. In other words, a lessee can assign his entire leasehold rights or mortgage or sub-lease the subject-matter of the lease. In all these, a transfer of an interest is involved. There are absolute assignments or assignments of a lesser term or interest. Aa absolute assignment is an assignment of the whole interest of the lessee. Such an assignment creates privity of contract or estate between the lessor and the assignee and the assignee is entitled to all the benefits of the covenant. Clause 0) of S 108 states that the lessee may transfer absolutely or by way of mortgage or sub-lease the whole or part of his interest in the property and any transferee of such interest or part may again transfer it. The passage in Mulla's Transfer of Property Act referred to above has to be read and understood in this context. There is no privity of contract or estate between the head or original lessor and the sub-lessee or mortgagee and as such a sub-lessee or mortgagee is not liable to pay rent to the original lessor. 7. In the instant case we are only concerned with a lessee coming within the ambit of S.106 of Act I of 1964. S.106 of Act I of 1964 gives protection to a person who has constructed a building for commercial or industrial purpose, before 20th May 1967, on a land leased out to him for such purposes. In a series of cases, this Court took the view that neither a sub-lessee nor an assignee is entitled to the benefits of this section, as it stood before amendment. In Moideen Haji v. Moosa Haji (1965 KLT. 784), Velu Pillai J. held that the benefit under S.106 is conferred on the lessee of a holding and not on any other. A Division Bench of this Court in Mammoo v. Asya (1965 KLT. In Moideen Haji v. Moosa Haji (1965 KLT. 784), Velu Pillai J. held that the benefit under S.106 is conferred on the lessee of a holding and not on any other. A Division Bench of this Court in Mammoo v. Asya (1965 KLT. 126) held that a sub-lessee cannot be considered to be a "lessee" under S.106(1) of the Act, so as to claim the protection conferred therein In Kunhiraman v. Chemmarathi (1966 KLJ. 452) Madhavan Nair J. construing S.106(1) of the Act held that it is difficult to find that the benefit conferred under this section would enure to a person who has taken an assignment of the lessee's rights, as there is no indication in the Act that it should enure to the assignee as well. Thereafter in Lakshminarayana Shetty v. Andunhi Beary (1971 KLT. 822) a Division Bench following the decision in Mammoo's case (1965 KLT. 126) and confirming the decision in Kunhiraman's case (1966 KLJ. 452) held that on the wording of sub-section (1) of S.106 it is only the person to whom a lease was granted for commercial or industrial purpose and who on the basis of the lease constructed a building for that purpose, who can claim the benefit of the subsection and a transferee from the lessee is not entitled to claim the protection of the sub-section. 8. It would appear that it was to clarify the position and to overcome the difficulties resulting from these decisions that the legislature amended S 106 of the Act and added so Explanation to sub-section (1) of the Section. The Explanation states that "for the purposes of this section, 'lessee' includes a legal representative or an assignee of the lessee." It is therefore clear that, while the body of the sub-section confers the benefit of protection from eviction, the Explanation by an inclusive definition extends this benefit to a legal representative or an assignee of the lessee. The omission of a sub-lessee in this inclusive definition is significant. The provisions in sub-section (1) of S.106 also clearly indicate that a sub-lessee is not entitled to the benefits of this section. The wordings in the sub-section make it clear that the lessee entitled to the benefits of this section must be a person who is liable to pay rent under the contract of tenancy. The provisions in sub-section (1) of S.106 also clearly indicate that a sub-lessee is not entitled to the benefits of this section. The wordings in the sub-section make it clear that the lessee entitled to the benefits of this section must be a person who is liable to pay rent under the contract of tenancy. In other words, only a lessee, who has entered into a contract of tenancy with a person who may make a claim for eviction and to whom the lessee is liable to pay rent under the contract of tenancy, is entitled to the benefits of this section. The case of the appellant is that he is not liable to pay any rent to the plaintiff. There is no agreement or contract of tenancy between the appellant and the plaintiff. The courts below rightly found that there is no privity of contract between the appellant and the plaintiff 9. The question whether a sub-lessee is entitled to the protection of S.106(1) of the Act, as it stood after amendment, came up for consideration before a Division Bench of this Court in Parameswaran Pillai v. Venkiteswara Prabhu (1974 KLT. 210). The contention urged before the Division Bench in that case was that although the second defendant in that case was only a sublessee, he was nevertheless entitled to the protection under S.106 of the Act. Construing the section the Division Bench held as follows: "The body of the section confers protection on lessee' and the explanation by an inclusive definition provides that the term 'lessee' will cover a legal representative or an assignee of the lessee. On the language of the Section, therefore, a sub-lessee is outside the purview of the Section." This decision is a complete answer to the arguments addressed by the learned advocate appearing for the appellant. It follows from the above discussion and findings that this second appeal has no merits and the same is hereby dismissed with costs. Dismissed.