KARUNAKARAN NAIR v. SEKHARAN NAIR — 1982 DIGILAW 205 (KER)

Judgment :- 1. The trial court dismissed the 1st respondent's suit for eviction of the defendants from the suit building on the ground that no quit notice was given to the 3rd defendant. The lower appellate court reversed the same and decreed the suit. Hence this second appeal by the 3rd defendant. 2. Two questions of law arise in this appeal, namely, (i) whether demand for rent coupled with or without acceptance of rent by the lessor from the assignee of the lessee would create privity of contract between the lessor and the assignee; and (ii) if it would, whether in the absence of a quit-notice to the assignee, the lessor can evict him on the basis of such a notice given only to the original lessee. Incidentally, it also falls to be decided as to whether Ext. Al lease-deed contains 'a contract to the contrary dispensing with giving such a notice. 3. The relevant facts are: The Ist defendant executed Ext. Al lease-deed on 18-8-1958 in favour of the plaintiff and took on rent the shop building mentioned in the schedule thereto, the rent being Rs. 7-50 per month. The 1st defendant assigned the leasehold to the second defendant as per Ext. B3 assignment deed dated 21-10-1961 and left for Malaya. The 1st defendant informed the plaintiff of this assignment as per the original of Ext. BI notice dated 21-10-1961 sent by registered post, which notice, the plaintiff admits that he has received. The second defendant assigned the leasehold to the 3rd defendant (who is the appellant before us) as per Ext B4 assignment deed dated 13-9-1963. The 3rd defendant is plaintiff's uncle's (karnavan's) son and the shop building is very near the plaintiff's house. Admittedly rent upto 18-11-1965 has been paid. Ext B7 is a chit or note dated 9-3-1965 (which the plaintiff admits he has sent to the 3rd defendant) demanding payment of Rs. 5/-towards the rent for February 1965 both the lower courts refused to accept the explanation given by the plaintiff as pw.1 that Ext. B7 demand relates to another building and have found that it contains a demand for payment of Rs 5/-towards the rent of the shop building in question. The plaintiff has not given any quit notice to the 3rd defendant, though he sent Ext. A2 notice to the 1st defendant. 4. Taking note of Ext. B7 demand relates to another building and have found that it contains a demand for payment of Rs 5/-towards the rent of the shop building in question. The plaintiff has not given any quit notice to the 3rd defendant, though he sent Ext. A2 notice to the 1st defendant. 4. Taking note of Ext. B3 assignment in 1961 in favour of the 2nd defendant, Ext. BI notice to the plaintiff by the 1st defendant informing the former of Ext. B3 assignment the second defendant's assignment in 1963 evidenced by Ext. B4 in favour of the 3rd defendant, and the circumstances revealed by the evidence such as that the 1st defendant left for Malaya immediately after Ext. B3 assignment in favour of the second defendant, that the plaintiff and the 3rd defendant are very close relations and that the shop building is near the plaintiff's house, the learned Munsiff held that defendants 2 and 3 have paid rent to the plaintiff and that the latter has accepted the same. In so doing the learned Munsiff relied on the admitted case in the plaint that rent upto 18-11-1965 has been paid and took the view that the 1st defendant would not have paid rent after B3 assignment and Ext. BI notice, and that, likewise, the 2nd defendant would not have paid rent after Ext. B4 assignment in favour of the 3rd defendant. He also relied on Ext. B7 demand for portion of rent for February 1965. The lower appellate court took the view that it has not been proved that defendants 2 and 3 have paid rent to the plaintiff. 5. We are inclined to agree with the learned Munsiff. Plaintiff admits that he has received Ext. BI notice. By Ext. BI notice the 1st defendant informed the plaintiff of Ext. B3 assignment and told him that he (the 1st defendant) has no more any liability under Ext. Al lease deed. The 1st defendant also by that notice asked the plaintiff to look to the 2nd defendant as lessee. The plaintiff did not object to this. Admittedly he has received rent after Ext. BI notice. Such rent would not have been paid by the 1st defendant and it would have been paid only by the 2nd defendant. So also Ext. The 1st defendant also by that notice asked the plaintiff to look to the 2nd defendant as lessee. The plaintiff did not object to this. Admittedly he has received rent after Ext. BI notice. Such rent would not have been paid by the 1st defendant and it would have been paid only by the 2nd defendant. So also Ext. B7 demand would indicate that the plaintiff was treating the 3rd defendant as liable therefor, as otherwise, he would not and could not, ask him to pay rent or portion thereof. By Ext. B7 the plaintiff asked for portion of rent for February 1965 which means, that rent upto and inclusive of that for January 1965 had been paid. Both the lower courts refused to believe the plaintiff when he sought to explain away Ext, B7 as a demand for payment of rent of another building. Viewed in that backdrop and taken along with the plaintiff's admitted case that rent upto and inclusive for January 1965 has been paid it has to be held that the 3rd defendant paid Rs. 5/-pursuant to the demand in Ext. B7 as stated by the defendant as dw,1. After Ext. B4 assignment, the 2nd defendant would not have, and only the 3rd defendant would have, paid rent. Hence we accept the finding entered by the learned Munsiff that defendants 2 and 3 have paid the plaintiff the rent that fell due after the respective assignments in their favour and that the plaintiff has received such payments. 6. The learned counsel for the plaintiff -1 st respondent argued that there is no evidence of receipt of rent by the plaintiff from defendants 2 and 3. though as concurrently found by the lower courts, Ext. B7 demand made by the plaintiff to the 3rd defendant for payment of portion of rent relates to the building in question. On that premise he further submits that by a mere demand for rent no privity of contract arises between the plaintiff and the 3rd defendant. According to the learned counsel, even if it be that the plaintiff has received rent pursuant to such demand, such receipt of rent is not sufficient to create privity of contract as between the plaintiff and the 3rd defendant. According to the learned counsel, even if it be that the plaintiff has received rent pursuant to such demand, such receipt of rent is not sufficient to create privity of contract as between the plaintiff and the 3rd defendant. The argument is that the original lessee's liability ceases only when the lessor releases him, and till such release of the original lessee by the lessor, no privity of contract arises as between the lessor and the assignee from the original lessee, though as between the lessor and the assignee there exists privity of estate; and, on that account the assignee is liable to the lessor; and for that reason, that is, by reason of privity of estate, the lessor can enforce payment of rent from the assignee. So, it was argued that neither demand for rent by the plaintiff to the 3rd defendant nor receipt of rent pursuant to such demand nor receipt of rent prior thereto by the plaintiff would evince privity of contract between the plaintiff (lessor) and the 3rd defendant (assignee of the lease) 7. This argument found favour with the lower appellate court. Virtually this is the substantial question of law on which this second appeal has been admitted and this is the question of law that has been referred to the Division Bench, though, however the said question has been inaccurately expressed in the second appeal memorandum as: 'is there not an adornment by the third defendant and a recognition of his tenancy by plaintiff. (We venture to point out that'attornment' is the agreement by the lessee to continue as lessee and to hold the leasehold under the transferee of the original lessor. Rights of lessor's transferee is governed in India by S.109 of the T.P. Act, 1882, and adornment is not necessary thereunder. See Mulla's T.P. Act, 5th Edn. P. 724). 8. No doubt, on the lessee transferring his rights to another, he does not 'by reason only of such transfer, cease to be subject to any of the liabilities attaching to the lease'. (S.108 0) of the T P. Act, 1882). The liability of the original lessee comes to an end only when the lessor releases him. Till such release by the lessor of the original lessee, as between the lessor and the transferee from the lessee there exists only privity of estate. (S.108 0) of the T P. Act, 1882). The liability of the original lessee comes to an end only when the lessor releases him. Till such release by the lessor of the original lessee, as between the lessor and the transferee from the lessee there exists only privity of estate. However, 'the lessee ceases to be liable and the privity of contract is extinguished when the lessor accepts rent from the assignee or otherwise recognizes him as bis tenant in circumstances implying that the lessor has released the lessee' Mulla's T. P. Act, 5th Edn pp. 700-01. This is the settled law both in England and in this country. 9. In Swansea Corporation v. Thomas (1883) 10 Q. B.D. 48 (50) Baron Pollock said: "On the part of the defendant it was contended, first, that the plaintiffs, upon the facts stated, must be taken to have recognised Watson & Overend as their tenants, and therefore that they could not now maintain an action against the defendant for the rent sued for. If the plaintiffs had received rent from the defendant's assignees this might have been so, because by so doing they would be taken to have accepted the assignees as their tenants, and so privity of contract between the plaintiffs and the defendant would have been extinguished, in accordance with the well-known doctrine laid down in Walker's case (Co. Rep. Part 111 22 A. B.)" 10. As early as in 1918 in Thethahn v. Eralpad Rajah (AIR. 1918 Madras 425) Sir John Wallis C. J. construed S.1080) as follows: "One effect of this provision is, that the lessee does not cease to be liable on the lease by reason only of an out and out assignment, but he will, as in England, cease to be liable if the lessor accepts rent from the assignee and thereby creates a privity of contract between them". 11. 11. Rajamannar C J. has stated the law on this point, if we may say so, with respect, succinctly in Krishna Bhatta v. Narayana Achary (A. I. R. (36) 1949 Madras 618 at 619) as follows: "The generally accepted view in England and India appears to be that if after a transfer the lessor recognises the transfer and collects rent from the transferee, not only is the lessee's liability to the lessor under the original contract at an end but there is a further privity of contract established between the lessor and the transferee. It follows from this rule of law that when after the transfer is favour of the mother of the respondents the plaintiff continued to demand and collect the rent from her, privity of contract was established between them. The mother of the defendants became herself a mulgeni tenant." 12. True, mere acceptance of rent from the assignee by itself may not amount to release of the original lessee from his contract of tenancy or establish privity of contract between the lessor and the assignee, for no lessor would wish to forgo the rent due to him, and therefore, would receive such rent whosoever it may be that pays it. But, where the lessor demands rent from the assignee or goes on accepting rent from him for an appreciably long time without demurring, such conduct on the part of the lessor would, we presume, be primafacie proof of the lessor recognizing and accepting the assignee as his tenant sufficient to shift the onus to the lessor to prove that be demanded rent, or, that he accepted rent for some length of time without any objection, from the assignee, not because he so recognised and accepted him as his tenant but otherwise than so. 13. We do not think that the decisions on which the learned counsel for the plaintiff -1 st respondent strongly relied go counter to what we have said in the preceding paragraph. The decisions cited by him are Treasurer of Charitable Endowments v. S. F B. Tyabji (AIR. 1948 Bom. 349) and Kunj Behari Lal Gupta v Shri Shivji Maharaj, Birajman Mandir and another (AIR. 1973 All 217). The decisions cited by him are Treasurer of Charitable Endowments v. S. F B. Tyabji (AIR. 1948 Bom. 349) and Kunj Behari Lal Gupta v Shri Shivji Maharaj, Birajman Mandir and another (AIR. 1973 All 217). Both these cases are instances where the lessor refused to accept rent offered by the assignee at the very earliest opportunity when the assignee offered rent for the first time See para 1 of the Bombay decision and para 2 of the Allahabad decision In fact in the Bombay decision Chagla C J. said: "Both the English law and the law here, as I shall presently point out, is clear on this point that on an assignment taking place, if the lessor chooses to accept the assignee as his tenant, then as far as the obligation to pay rent is concerned, it may be that the lessee would be freed from that obligation." 14. Thus the question in all such cases is one of fact and that question is as to whether the lessor has recognised and accepted the assignee as his tenant. If he has, the original lessee is exonerated of his liability under the contract of tenancy and privity of contract is established between him (the lessor) and the assignee. Where the lessor accepts rent from the assignee for some length of time without any objection or where he makes a demand for rent as against the assignee, they are circumstances implying that be has recognised and accepted the assignee as his tenant and that he has released the original lessee. 15. Apply this rule to this case. The plaintiff-lessor has accepted and recognised the 2nd defendant in the first instance and then, the 3rd defendant as his tenant. Privity of contract has been established as between the plaintiff and the 2nd defendant and thereafter, between the plaintiff and the 3rd defendant. Admittedly no quit-notice has been given by the plaintiff to the 3rd defendant. Hence the plaintiff has not determined the lease in favour of the 3rd defendant and therefore, the 3rd defendant is not bound to put the plaintiff in possession of the suit property. Consequently the plaintiff is not entitled to recover possession of the suit property from the 3rd defendant. Hence the plaintiff has not determined the lease in favour of the 3rd defendant and therefore, the 3rd defendant is not bound to put the plaintiff in possession of the suit property. Consequently the plaintiff is not entitled to recover possession of the suit property from the 3rd defendant. The quit-notice issued by the plaintiff to the 1st defendant is of no avail to the plaintiff to contend that he has determined the lease in favour of the 3rd defendant. 16. Faced with this difficulty the learned counsel for the plaintiff-1st respondent advanced the argument that in the case on hand no quit-notice is necessary. According to him Ext. Al lease deed contains 'a contract to the contrary', that is, a contract dispensing with the necessity to give notice under S.106 of the T. P. Act, 1882. He relied on the Full Bench decision of this Court in Devaki v. Alavi (1979 KLT. 67). 17. In the above case the Full Bench held that'a stipulation to the effect that the lessee shall surrender possession of the property leased on demand made in that behalf by the lessor, is...'a contract to the contrary' as envisaged by S.106 of the Act.' (Emphasis supplied). The lease deed in that case provided that the lessee was to surrender possession of the property 'on demand'. Bhiys,Sptl/4mA . Such a provision or any provision equivalent toil like 'whenever required' or 'when wanted' is absent in Ext. Al lease deed in this case. What is relied on by the learned counsel is the following provision in Ext. Al: This stipulation does not amount to surrender of possession 'on demand' or 'whenever required' or 'when wanted'. The above provision means that after 3 months rent-accounts would be settled and paid, and thereupon, receiving back the advance amount and the lease deed, the lessee shall surrender possession of the property without any let or hindrance. There is no merit in the contention advanced as aforesaid. 18. We allow this appeal. We set aside the judgment and decree of the lower appellate court and restore the judgment and decree of the trial court. The appellant is entitled to his costs in this court and in the lower appellate court. 19. The plaintiff-1st respondent has preferred a cross-objection claiming future rent from date of suit till date of recovery of possession. We set aside the judgment and decree of the lower appellate court and restore the judgment and decree of the trial court. The appellant is entitled to his costs in this court and in the lower appellate court. 19. The plaintiff-1st respondent has preferred a cross-objection claiming future rent from date of suit till date of recovery of possession. In the view we have taken in the second appeal, there is no merit in the claim for future rent. We dismiss the cross-objection with costs. Dismissed.