Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS.51175118 OF 2021
(Arising out of SLP(Civil) Nos. 879880/2016)
The State of Kerala & Ors. .…Appellant(s)
Versus
M/s Joseph & Company …. Respondent(s)
With
CIVIL APPEAL NO.5120/2021 @ SLP(C) No.9661/2017
CIVIL APPEAL NO.5119/2021 @ SLP(C) No.18760/2016
J U D G M E N T
A.S. Bopanna,J.
Leave granted.
1.
2. The appellantState of Kerala is assailing the order
Signature Not Verified
Digitally signed by
VISHAL ANAND
Date: 2022.05.14
12:39:02 IST
Reason:
dated 10.07.2015 passed by the High Court of Kerala at
Page 1 of 33
Ernakulam in W.A. No.369/2011 and W.A. No. 375/2011.
The said appeals had arisen out of the proceedings in Writ
Petition No.1207/2005 wherein through the order dated
17.01.2011, the petition was disposed of to the extent of
quashing the order declining value of usufructs (Ex.41). The
order (Ex.39) by which the lease in favour of Respondent
had been terminated was upheld. It is in that view, the writ
petitionerM/s. Joseph & Company as also the respondent
State of Kerala had filed the Writ Appeals to the extent they
were aggrieved. The learned Division Bench of the High
Court through the impugned order dated 10.07.2015 has
allowed the appeal filed by M/s. Joseph & Company, thereby
setting aside the order terminating the lease and the appeal
filed by State of Kerala was dismissed. It is in that light, the
appellantState of Kerala claiming to be aggrieved is before
this court.
The genesis of the case is that erstwhile Travancore
3.
Cochin Government had by a notification in the year 1953
auctioned certain abandoned portions of Beatrice estate.
One Mr. P.I. Josephresponded to the said notification and
offered his bid to an extent of 246.26 acres out of the South
Page 2 of 33
Block and took possession on 10.05.1955. However, no lease
agreement was entered into between him and the
government. In the meanwhile, the said Mr. P.I. Joseph
assigned the said property in favour of Mr. K.K. Joseph.
Pursuant to such transaction dated 28.02.1974 between Mr.
P.I. Joseph and Mr. K.K. Joseph, the Government of Kerala,
executed a lease deed dated 15.12.1979 in favour of Mr. K.K.
Joseph. Though the lease deed was executed in favour of Mr.
K.K. Joseph, it is contended by the lessee that Mr. K.K.
Joseph was representing the partnership firm registered in
the name and style M/s. Joseph & Company, of which he
was the Managing Partner.
4. The said Mr. K.K. Joseph thereafter executed a
registered sale deed dated 16.12.1983 transferring an extent
of 50 acres from the land leased in his favour, to one Mr.
Raghavan. Subsequent thereto, Mr. K.K. Joseph is stated to
have retired from the partnership firm after which Ms. Meera
Scaria had become the Managing Partner representing the
firm. The said Ms. Meera Scaria as the Managing Partner
had addressed a letter dated 26.06.1990 seeking leave to
rectify the defect of transferring a portion of the lease land to
Page 3 of 33
Mr. Raghavan. The said request had not been considered
since the government through their letter dated 27.05.1989
had indicated the intention to terminate the lease.
Subsequent thereto the notice dated 19.02.1992 intimated
the lessee about the order to terminate the lease and to
prepare the inventory to take over possession.
5. But the same was kept in abeyance as certain events of
a general consideration regarding regularisation of all leases
in the area was under process. However, said process had
come to an end on 26.02.1999 whereby the government had
cancelled its earlier proposal of a general regularisation
which was under consideration. In that background, the
notice dated 15.11.1999 was issued to Mr. K.K. Joseph to
show cause why the lease in respect of the whole area of
246.50 acres should not be terminated as contemplated
under clause 14 of the lease deed. Mr. K.K. Joseph replied to
the same on 29.11.1999 indicating that he has retired from
the partnership firm and that Ms. Meera Scaria is the
present Managing Partner who is to be notified. In the said
process, the first round of litigation commenced challenging
the action of the State Government to terminate the lease.
Page 4 of 33
The Writ Petitions bearing O.P. No. 20508/2002 and O.P.
No. 30224/2002 filed by M/s. Joseph & Company and Mr.
Raghavan respectively were set in motion. The said process
after the Writ Appeal had resulted in the proceedings before
this Court in C.A. No. 4169/2004. This Court through the
order dated 16.07.2004 permitted the appellantState of
Kerala to issue fresh show cause notice regarding proposed
termination of lease and the respondents were permitted to
file their reply to the show cause notice. In the above
background, the present round of proceedings commenced
with the issue of the notice dated 29.07.2004 and
conclusion of the process.
6 . In the said notice the appellantState of Kerala referred
to two aspects to allege breach of terms of the lease. The main
aspect alleging breach is in relation to entire leased property.
It is alleged that Mr. K.K. Joseph had transferred his
leasehold right to M/s. Joseph & Company without the
approval of the lessor with the intention to nullify the effect of
clause 14 of the lease deed and he has thereafter retired from
the firm in 1988. The other aspect alleging breach of the term
is that an extent of the leased land measuring 50 acres has
Page 5 of 33
been sold without consent of the lessor, to one Mr. Raghavan.
It is in the said premise, the lease was sought to be
terminated. The respondentM/s. Joseph & Company
submitted a detailed reply dated 14.08.2004 seeking to justify
their action and to contend that they had not committed
breach of the terms of lease deed. The respondent was also
provided the opportunity of hearing, pursuant to which an
order dated 26.11.2004 was passed whereby the termination
of the lease in respect of the entire extent measuring 246.26
acres of reserve forest land was confirmed.
. The respondent being aggrieved by the same had
7
preferred the Writ Petition as indicated supra. The learned
Single Judge did not interfere with the order terminating the
lease and the writ petition was dismissed to that extent.
Insofar as the aspect relating to the breach alleged regarding
the transfer of lease to M/s. Joseph & Company by Mr. K.K.
Joseph, the various circumstances were referred more
particularly the documents which were at exhibits P10, P11,
P12, P13 and P16 to P20 to indicate that the government had
for all intents and purposes treated M/s. Joseph & Company
as the lessee under the lease deed which was Exhibit P7 to
Page 6 of 33
the Writ Petition. However, in respect of the transfer of 50
acres in favour of Mr. Raghavan, the learned Judge was of the
opinion that the finding relating to breach due to such
transaction being a finding of fact, did not call for interference
in the Writ Petition.
8 . The learned Division Bench had negatived the
challenge to the first part by the State of Kerala and the
conclusion of the learned Single Judge that M/s Joseph &
Company is the lessee was held to be valid and was not
interfered. Further, insofar as the sale in favour of Mr.
Raghavan, the learned Division Bench had taken note of
Clause 12 contained in the lease deed between the appellant
State of Kerala and M/s Joseph & Company which provided
that the default if any committed could be remedied if the
lessee is put on notice. The default can be confirmed only if
the same is not remedied despite notice. It is in that view, the
learned Division Bench was of the view that the requirement
in Clause 12 of the lease agreement had not been complied
with by the appellantState of Kerala. Therefore, the learned
Division Bench set aside the order terminating the lease.
Page 7 of 33
9 . We have heard Mr. Jaideep Gupta, learned senior
counsel for the appellantState of Kerala, Mr. Joseph Markos,
learned senior counsel and Mr. Thomas P Joseph, Learned
Senior Advocate on behalf of the respondents and perused
the appeal papers including the writ appeal records which
had been secured from the High Court.
10 . On the first aspect relating to the breach alleged in
view of the transfer of lease in favour of M/s Joseph &
Company by Mr. K.K. Josephthe lessee, Mr. Jaideep Gupta,
learned senior counsel has taken us through the documents
to indicate the sequence that the property in fact was
auctioned in favour of Mr. P.I. Joseph who had transferred
the lease in favour of Mr. K.K Joseph through the sale deed
dated 28.02.1974. Though the government has subsequently
validated the said transaction by executing a lease deed in
favour of Mr. K.K. Joseph, the subsequent transfer by Mr.
K.K Joseph to M/s Joseph & Company, a new lessee without
prior consent of the government would constitute breach is
his contention.
. Having noted the contention, we find that the said
11
issue need not detain us for long. At the outset, a perusal of
Page 8 of 33
the lease deed dated 15.12.1979 would no doubt disclose that
Mr. K.K. Joseph in his individual name is referred to as the
lessee of the other part. The recital in the lease deed however
depicts that the earlier transaction in favour of Mr. P.I.
Joseph and the document executed by Mr. P.I Joseph in
favour of Mr. K.K Joseph to assign the lease is referred in the
document. In that backdrop, a reference to the sale deed
dated 28.02.1974 by which the sale was made by Mr. P.I.
Joseph to Mr. K.K. Joseph indicates that the purchaser Mr.
K.K. Joseph has been described as the Managing Partner,
M/s Joseph & Company, a registered partnership firm. The
said aspect would exfacie indicate that the contention of the
appellant that M/s Joseph & Company had come into
existence subsequently as a ploy to overcome and defeat the
bar contained in Clause 14 to the lease deed cannot be
accepted. Further, as already taken note, the learned Single
Judge as also the learned Division Bench has referred to the
various other documents more particularly at Exhibits P10,
P11, P12, P13 and P16 to P20 in the writ proceeding records
to indicate that the Government, for all intents and purposes
had treated M/s. Joseph & Company as the lessee. Therefore,
Page 9 of 33
to the said extent on the first aspect, the same does not
constitute breach. Hence the conclusion reached by the High
Court on that aspect does not call for interference.
. The next aspect which arises for consideration is as to
12
whether the sale to an extent of 50 acres from out of the lease
area would amount to breach of clause 14 of the lease deed.
For better appreciation, it would be appropriate to take note
of Clause 12 and 14 in the lease deed dated 15.12.1979,
which have been referred. The same read as hereunder:
“12. In the event of the lessee making default in the
observance of fulfillment of any of the covenants herein
contained the Lessor shall be at liberty at any time,
thereafter, after giving notice to the lessee and hearing
him in person or through his agent or vakil duly
appointed about the failure of the lessee to remedy such
default that may be reported to the Lessor from time to
time by the Chief Conservator of Forests, to terminate the
lease and lessee shall forthwith vacate the land hereby
leased and demised and notwithstanding such
termination of this lease, the lessee shall be liable for any
loss which the lessor may sustain by reasons of such
default and all such improvements made by the Lessee
on the land hereby leased and demised as exist at the
time of vacating the same must be left intact and no
compensation can be claimed by the lessee for such
improvements.”
“14. The lessee shall not be entitled to sublet or assign
his interest in the said lease except with the previous
permission in writing of the lessor.”
Page 10 of 33
13 . From a perusal of the relevant clauses in the lease
deed it is seen that clause 14 thereof provides that the
lessee shall not be entitled to sublet or assign his interest in
the said lease except with the previous permission in writing
obtained from the lessor. In that backdrop, the breach
alleged against the respondent is that the lessee has
assigned the interest in the leased land to an extent of 50
acres in favour of Mr. Raghavan without the previous
permission of the lessor. The fact that such sale has taken
place cannot be in dispute nor is it in dispute. The said
assignment has been made under the registered sale deed
dated 16.12.1983. The question therefore is; whether the
same would constitute breach of the terms in the lease deed
so as to entail termination of the lease.
14 . Mr. Joseph Markos, learned senior counsel contended,
though such sale deed was executed, the possession of the
property had not been handed over to Mr. Raghavan and the
lessee M/s. Joseph & Company had continued to pay the
lease rentals in respect of the entire property. It was next
contended that even assuming that the execution of the
document had constituted default, the lessee ought to have
Page 11 of 33
been notified to remedy such default and only if the same
was not done, the lease could be terminated. In that regard,
the learned senior counsel contended that the lessee had
submitted a letter to the government on 17.03.1990 seeking
to rectify the default and if the same was accepted in terms
of Clause 12, the breach contemplated in Clause 14 would
not survive. It is his further contention that the right to
forfeit the lease, in the present circumstance, would fall
under Section 111(g) of the Transfer of Property Act (‘TP Act’
for short) which calls for strict construction against the
lessor. In that event the termination of the entire lease
would not be sustainable for breach in respect of a portion
of the leased land. Reference is also made to Section 112 of
the T.P. Act to contend that the acceptance of lease rentals
by the lessor, including for the said extent of 50 acres sold
to Mr. Raghavan would constitute waiver of forfeiture.
. While taking note of the contention on behalf of the
15
respondentM/s. Joseph & Company regarding the benefit
available to them under Clause 12 of the lease deed which
had not been complied by providing an opportunity to
remedy the default, it is necessary to note as to whether
Page 12 of 33
such benefit is available to rectify the breach alleged under
Clause 14 of the lease deed as well and whether Clause 12
makes it mandatory to issue notice to rectify before action is
taken. In order to, gather the intention of the parties, the
nature of the transaction and the document as a whole is
necessary to be considered. While on this aspect, what is
striking to be noted is that the word employed in Clause 12
is ‘default’ and not breach. If this aspect is taken note and
the remaining terms contained in the lease deed are taken
note, keeping in view the admitted position that the leased
land is situate in a reserve forest, the clauses in the
agreement commencing from clause No. 5 to 11 indicates
that the right reserved by the lessor and the obligations
imposed on the lessee are with regard to the compliance, to
retain the characteristics of forest area and continue such
other activities including collection of minor forest produce
and the forest officials have been granted the right to
regulate the same notwithstanding plantation was the
permitted use.
16 . If in that context, Clause 12 is taken note, it indicates
that the issue of notice is contemplated in the event of the
Page 13 of 33
lessee committing default and the liberty to terminate the
lease is exercised. The concession provided is to rectify the
default before the notice is issued. If there is failure of the
lessee to remedy such default that may be reported to the
lessor from time to time by the Chief Conservator of Forests.
Before termination of the lease a notice is to be issued and
be heard about the default if the default has not been
remedied. The same would clearly indicate that the default
referred to, the issue of notice there for and the fact that the
same is based on the report to the lessor (State of Kerala)
from Chief Conservator of Forests is that the rectification
permitted is in respect of the default relating to deviation
from the obligations contained in the covenants relating to
maintaining the nature of the property and default should
be of rectifiable nature. The Dictionary meaning of ‘default’
is; failure to fulfil an obligation, while the meaning of
‘breach’ is an act of breaking a law, agreement or code of
conduct. If the said distinction is kept in view, the breach if
committed by subletting or assigning as provided in Clause
14, the same would lead to its consequences and the liberty
to remedy the same is not mandatory. All that Clause 12
Page 14 of 33
signifies is that if default is reported and if such default is
not remedied then termination can be made after issue of
notice and hearing. The cause for termination will be the
default and permitting to remedy the same is only an
indulgence to be shown. Therefore, the learned Division
Bench was not justified in its conclusion that the nonissue
of notice and not providing opportunity to remedy the
default is fatal. In the instant facts, the reading of the lease
deed as a whole would indicate that the right reserved to the
lessor under Clause 14 is independent of Clause 12 and if
the breach of that nature occurs, it is irreversible and it will
have to be taken to its logical conclusion unless the lessor
waives the right thereunder.
17 . For better appreciation on the legal contention, we take
note of Section 111(g) and Section 112 of the T.P. Act which
was referred. They read as hereunder:
“ 111. Determination of lease — A lease of immoveable
property determines—
(a) xxxxxxx
(b) xxxxxx
(c) xxxxxx
(d) xxxxxxx
(e) xxxxxxx
(f) xxxxxxxx
Page 15 of 33
(g) by forfeiture; that is to say, (1)in case the lessee
breaks an express condition which provides that, on
; or (2) in case
breach thereof, the lessor may reenter
the lessee renounces his character as such by setting up
a title in a third person or by claiming title in himself; [or
(3) the lessee is adjudicated an insolvent and the lease
provides that the lessor may reenter on the happening of
such event]; and in [any of these cases] the lessor or his
transferee [gives notice in writing to the lessee of] his
intention to determine the lease;
112. Waiver of forfeiture —A forfeiture under section
111, clause (g) is waived by acceptance of rent which has
become due since the forfeiture, or by distress for such
rent, or by any other act on the part of the lessor showing
an intention to treat the lease as subsisting:
Provided that the lessor is aware that the forfeiture
has been incurred:
Provided also that, where rent is accepted after the
institution of a suit to eject the lessee on the ground of
forfeiture; such acceptance is not a waiver.”
. The contention of the learned senior counsel for the
18
respondent that a question of law could be raised at any
stage is well taken and we do not see the reason to refer to
the precedents relied on that proposition. Even that be so,
the provisions contained in Sections 111 and 112 of the T.P.
Act though taken note, in our opinion, the same cannot be
considered in abstract without reference to the factual
foundation. So far as the contention that the lessee had
continued to pay the lease rentals in respect of the entire
property despite the sale of 50 acres to Mr. Raghavan,
whether such acceptance of the lease rentals by the lessor
Page 16 of 33
was with knowledge of default by condoning the breach, is a
question of fact which will have to be urged in the original
proceedings and the material will have to be placed on
record so as to enable the original authority to take a
decision on that aspect and render a finding on fact so that
the Court at a later stage in the process of judicial review
can reassess the same and determine as to whether the
benefit of Section 112 T.P.Act will be available. Therefore, in
the instant case, the contention that the lease rentals were
being paid in respect of the entire extent cannot be accepted
outright as no contention was urged and details were not
laid in the original proceedings. Further, in a matter of the
present nature when the entire lease area measured vast
extent of 246.26 acres and the allegation is of parting with
the lease hold right of 50 acres from such lease area and in
that circumstance when the lease rental in any event was
being paid to the remaining extent of 196.26 acres, the
lumpsum payment of lease rental cannot be taken
advantage of to contend that the lease rental was continued
to be paid and seek waiver of forfeiture.
Page 17 of 33
19 . When there was breach providing the right to
terminate the lease in respect of the entire leased land, even
if the lease rental paid by the lessee has been accepted by
the appellantlessor, it has not been shown that the
requirement of the conditions in the proviso to Section 112
of the T.P. Act is satisfied. In the present situation, the land
is leased by the government and when the breach had
occurred the competent authority had issued the notice and
the proceedings was initiated. Once the proceedings had
been initiated even if the lease rental was received the same
is saved under the second proviso. Further the situation is
also that the payment of the rental made to the government
would in any event be accepted as different functions are
performed by different offices and any amount tendered will
be received. That cannot give any advantage to the lessee
merely because the rent has been tendered in the
government office and the same has been innocuously
accepted without there being specific reference to waiver.
20 . On the question of waiver, it would be profitable to
refer to the decision of this court in the case of
Sarup
Page 18 of 33
Singh Gupta vs. S. Jagdish Singh and Others (2006) 4
SCC 205 wherein the contention relating to waiver due to
acceptance of rent was considered, though in the context of
Sections 111(h) and 113 of the T.P. Act, wherein it was held
as hereunder:
“6. Learned Senior Counsel also relied upon a decision
of a learned Single Judge of the Calcutta High Court,
reported in AIR 1926 (Calcutta) 763, wherein It was held
that where rent is accepted after the notice to quit,
whether before or after the suit has been filed, the
landlord thereby shows an intention to treat the lease as
subsisting and, therefore, where rent deposited with the
Rent Controller under the Calcutta Rent Act is withdrawn
even after the ejectment suit is filed, the notice to quit is
waived. In our view, the principle laid down in the
aforesaid judgment of the High Court is too widely stated,
and cannot be said to be an accurate statement of law. A
mere perusal of Section 113 leaves no room for doubt
that in a given case, a notice given under Section
111 , Clause (h), may be treated as having been
waived, but the necessary condition is that there
must be some act on the part of the person giving the
notice evincing an intention to treat the lease as
subsisting. Of course, the express or implied consent
of the person to whom such notice is given must also
be established. The question as to whether the person
giving the notice has by his act shown an intention to
treat the lease as subsisting is essentially a question
of fact. In reaching a conclusion on this aspect of the
matter, the Court must consider all relevant facts and
circumstances, and the mere fact that rent has been
tendered and accepted, cannot be determinative.
7. A somewhat similar situation arose in the case in
Shanti Prasad Devi v. Shankar Mahto. That was a case
where the landlord accepted rent even on expiry of the
period of lease. A submission was urged on behalf of the
tenant in that case that Section 116, Transfer of Property
Act was attracted and there was a deemed renewal, of the
Page 19 of 33
lease. Negativing the contention, this Court observed
that mere acceptance of rent for the subsequent
months in which the lessee continued to occupy the
premise even, after the expiry of the period of the
lease, cannot be said to be a conduct signifying his
assent to the continuing of the lease even after the
expiry of the lease period. Their Lordships noticed
the conditions incorporated in the agreement itself,
which provided for renewal of the lease and held that
those conditions having not been fulfilled, the mere
acceptance of rent after expiry of period of lease did
not signify assent to the continuance of the lease.”
(Emphasis supplied)
In that view, the waiver as contended by the learned senior
counsel for the respondentlessee is unsustainable.
21 . That apart, the contention that the lessee M/s. Joseph
& Company had continued in possession of the said extent of
50 acres even after sale and therefore there is no default
cannot be accepted for more than one reason. To decipher
this aspect, a perusal of the sale deed dated 16.12.1983
which was produced as exhibit R3(b) in the writ proceedings
would indicate the relevant recitals as follows:
“I have absolute right to sell the property in the
schedule. I have decided to sell you 50 acres of the
land in the schedule below along with the right to
travel through the rest of the land in my possession.
The amount decided as the price of he said land is Rs.
45000. Having received the full payment of Rupees
forty five thousand, I give you absolute right and
possession over the aforesaid land in the schedule
Page 20 of 33
along with the rights of transportation through the
rest of the property .
The property described in the schedule below belongs
to the Cochin Government and I have leasehold right over
the same.
From today on I have no objection in you keeping
in possession and enjoying the absolute right of the
property described in the schedule together with the
right of transport. Hereon you shall pay the lease rent
directly to the Government. All taxes to the
Government may henceforth be paid by you. Myself, the
company or any of our successors may have no right
over schedule property.
I affirm that I will not obstruct your travelling
through the rest of Beatrice Estate. By this deed you
have the right to avail yourselves of the right to such
transport.
I hereby assure you that I have the right for the sale of
this property and that there are no arrears of lease rent due
to the Government as any other dues or attachment of civil or
revenue nature relating to the property and in case any loss
against this assurance. I shall
is sustained by the purchaser
be responsible for such loss.”
(Emphasis supplied)
22 . A perusal of the extracted portion from the sale deed
dated 16.12.1983 would indicate the outright nature of sale
of a portion of the leased land. It is sold for a sale
consideration despite knowing that the property belonging to
the government is granted under lease. The recital in fact,
categorically indicates that the absolute right and possession
has been given and it has also been stated therein that
henceforth the purchaser, Mr. Raghavan is to pay the lease
rent directly to the government and all taxes to the
Page 21 of 33
government are also to be paid by him. Further, neither Mr.
K.K. Joseph nor the partnership firm has retained any right
over the property sold under that document. Therefore, the
document itself would indicate the intention of the parties
and also the fact that possession was parted without consent
of the lessor which was a clear breach of Clause 14 in the
lease deed.
23 . In addition, in the reply dated 29.11.1999 from Mr.
K.K. Joseph, to the notice dated 15.11.1999 from the
Divisional Forest Officer, he has stated that even after he had
retired from the firm, the firm was pursuing its efforts to get
the said 50 acres assigned to Mr. Raghavan, reassigned to the
firm and thereby remedy the default as contemplated in
Clause 12 of the lease deed. Therefore, the fact that there was
a breach committed was also within the knowledge of the
lessee though they were seeking to take shelter under Clause
12. That apart, the letter dated 26.06.1990 addressed to the
government by M/s. Joseph & Company through Ms. Meera
Scaria, interalia states as follows:
“If this reconveyance is effected,
the entire property
included in the lease deed executed by Sh. K.K. Joseph and
registered as document No.1983 of 1979 of Nenmara, Sub
Page 22 of 33
Registry Office will come back to the possession of M/s.
.”
Joseph & Company which is the original lessee
(Emphasis supplied)
The said statement would clarify that the possession had
been parted and it was only being indicated that on re
conveyance being made, the possession would come back to
the lessee. Therefore, the contention put forth by the learned
senior counsel for the respondent that the possession had not
been parted and the lease rental was being paid by them
cannot be accepted as a mitigating factor in the facts and
circumstances of this case.
24 . Though an attempt is made to contend that an
opportunity ought to have been granted to remedy the default
in view of the provision contained in Clause 12 of the lease
deed in which event the default would stand remedied, the
same cannot come to the aid of the respondent for the reason
stated supra. Further, factually also it is to be noted that
except addressing the letter dated 26.06.1990, the lessee
M/s. Joseph & Company did not take any concrete steps to
either cancel the sale deed or to physically indicate that the
possession is back with the lessee and the transaction has
Page 23 of 33
been nullified. Be that as it may, even otherwise in the
instant facts the breach was not of the nature which was
contemplated for rectification as provided under Clause 12 of
the lease deed. Therefore, it is too late in the day for the
respondent to contend that there was noncompliance of
Clause 12 before the right of the lessor to terminate the lease
as provided under Clause 14 is exercised.
25 . The alternate contention urged by the learned senior
counsel for the respondentlessee is that even if the breach is
held against the lessee, the entire lease cannot be forfeited in
view of the provision in Section 111(g) of T.P. Act. The learned
senior counsel in order to persuade us on this aspect has
referred to certain decisions which will be adverted to here
below.
26 . Having noted the contention, firstly, a perusal of clause
14 no doubt does not state ‘a part thereof’ as contended by
the learned senior counsel. However, that does not mean that
a breach committed in respect of a part of the leased land
cannot be construed as breach and would disentitle the
lessor to exercise the right thereunder. Secondly, Section
111(g) does not suggest that in respect of the lease as a
Page 24 of 33
whole, the forfeiture should be limited only to the portion
regarding which the breach is alleged. The breach is of not
adhering to the assurance given to lessor in respect of the
property belonging to the lessor, be it the whole or a part of it.
In this regard, the decision relied on in the case of
Sh.
Shiam Behari Lal Gour and Others vs. Madan Singh AIR
(32) 1946 Allahabad 298 is a circumstance where the suit
was decreed for a declaration that the lease rights of the
defendants in the leased land have been determined and the
plaintiff is entitled to possession. In that circumstance, the
point which arose for consideration is, whether the plaintiff is
in the events which have happened, entitled to such
declaration and whether in that circumstance there has been
forfeiture. Nodoubt as contended by the learned senior
counsel, the issue that was settled is that the law leans
against forfeiture. Such consideration in the said suit was
after noting the nature of right that was claimed to the
property by the lessor wherein there was rival claims of
succession to the property.
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27 . In the case, A. Venkataramana Bhatta and Ors. vs.
AIR 1925 Madras 57, the High
Krishna Bhatta and Ors
Court no doubt considered the case against forfeiture of the
entire lease when there was partial alienation by taking a leaf
from the construction adopted in England, based on the
general principles of equity and the same was followed in
India. In the said case, the equitable principle was applied in
a circumstance where the lessee himself in fact was the
owner of the property. He had mortgaged the same and had
obtained lease of a portion of the mortgage property from his
mortgagee. From such property which was obtained on lease,
a portion thereof was again mortgaged by him to a different
mortgagee which was termed as breach of the terms of lease.
In that circumstance, the forfeiture was limited only to the
portion which was mortgaged to a thirdparty mortgagee after
obtaining on lease from the first mortgagee.
28 . In the case, 1902 1 CH 727, the lease
Grove vs. Portal
given was of fishing in certain portions of the river but with
the condition not to sublet without the consent of the lessor
in writing. When breach was alleged, the lessee contended
that he granted authority to another person only to the extent
Page 26 of 33
as provided in the lease. The lessor, however, contended that
it constituted breach as the lessee assigned it to third person.
In that situation, it was held that the covenant did not
expressly apply to any part of the premises as well as to the
whole since the lessee was not precluded from granting
license to another person (limited to two rods) to fish in the
river during the residue of the term. The consideration
therein would not be relevant in the instant case. In the case,
(1951) 1 KB752, it was the case where
Cook vs. Shoesmith
the dwelling house was let to the tenant wherein, he agreed
that he will not sublet. However, the tenant had sublet two
rooms of the house due to which the landlord filed the suit
for possession alleging breach of the agreement. The court
relied on the dictum of Lord Elson in Church vs. Brown
wherein it was held that the principle of an undertaking not
to sublet the premise was not broken since ‘the premise’
described the whole of what is demised and there are no
words such as a tenant had agreed not to sublet any part of
it. In that circumstance, it was held that there was no breach
of the agreement.
Page 27 of 33
29 . In, Swarnamoyee Debya vs. Aferaddi and Ors. AIR
1932 Calcutta 787, it was a case where ejectment was sought
for unauthorised transfer by the defendant which was
contended to have broken the condition in the document
creating the tenancy. In that circumstance, it was held that
the usufructuary mortgage was not of the entire holding and
upon the covenant in the lease, no forfeiture was incurred by
the transaction. The question which was considered therein
was with regard to the construction of the lease which had
arisen in that case and a decision to that effect was taken. In
the case,
Keshab Chandra Sarkar and Ors. vs. Gopal
Chandra Chanda AIR 1960 Calcutta 609, the plaintiff had
sued for recovery of possession contending unauthorised
transfer of the leased land without the consent of lessor
which amounted to breach of condition of the lease. The
general principles relating to forfeiture as had been laid down
was taken note and in that circumstance by strictly
construing the right of forfeiture against the lessor in the
absence of express stipulation had arrived at the conclusion
that the transfer made of the entire extent, though consent
Page 28 of 33
had been obtained to transfer a part would not amount to
breach. Certain other decisions relied on by the learned
senior counsel are also to the same effect and we see no need
to refer to each of them. But, what is necessary to be taken
note is that the general principles of equity as laid down in
Grove vs. Portal (supra) has been the basis for the
conclusion reached in almost all the noted cases.
30 . In contradistinction to the facts which arose for
consideration in the cited cases where essentially the dispute
was interse between the private owners of the property and
their lessees and the nature of transaction, in the instant
case, the leased land is the property which belong to the
government and the leasehold right has been auctioned so as
to earn revenue for the state, which is to the interest of its
citizens and one citizen or a group is permitted to exploit the
land to the exclusion of all others. Additionally, such
government property is located in an area notified as reserve
forest. In such circumstance, when the lessee is given the
benefit of such property and the breach of the condition
imposed is alleged, the strict construction of the forfeiture
clause against the lessor in all circumstances would not arise
Page 29 of 33
as otherwise it would render the clause in the lease deed
otiose. The principle contained in Section 111(g) of the T.P.
Act though noticed, the parties are governed by the terms in
the contract and as such the lessee cannot claim benefit
under the said provision. Further, as already noted the
consideration under Section 111(g) is based on equitable
principles which will have to be applied depending on the
facts and circumstances obtained in each case. While
applying the equitable principles, the maxim he who seeks
equity must do equity cannot be lost sight of. It is said, a
court will not assist a lessee in extricating himself or herself
from the circumstances that he or she has created, in the
name of equitable consideration. In the instant facts as
already noted when public largesse is bestowed on certain
terms and conditions, a term of the lease deed is to be strictly
adhered to and when Clause 14 provides that the lessee shall
not be entitled to sublet or assign his interest in the lease
except with the previous permission in writing of the lessor, it
does not matter as to whether the breach committed is by
assigning a portion of the leased land or the whole when such
interest of the lessee has been transferred without previous
Page 30 of 33
permission of the lessor. Further, in all the cases referred to
by the learned senior counsel, the breach alleged was either
of creating mortgage or subletting the property. In the instant
case, despite being a lessee the respondent has executed an
absolute sale deed in respect of the leased land which belongs
to the government and such breach cannot be condoned.
CIVIL APPEAL NO.5120/2021 @ SLP(C) No.9661/2017
AND CIVIL APPEAL NO.5119/2021 @ SLP(C)
No.18760/2016
31. The AppellantState of Kerala in both these appeals are
assailing the interim orders passed by the learned single
judge in W.P. No.35832/2015. The said order had been
confirmed by the learned Division Bench through the orders
dated 11.01.2016 and 25.01.2017. Considering that the
learned single judge had made an interim arrangement
protecting the interest of both the parties which will be
subject to ultimate result in the writ petition and also taking
note that this Court while directing notice in SLP
No.9661/2017, on 21.04.2017 had directed the parties to
maintain status quo as it existed on that day and the said
order has continued till this day, it would be appropriate that
the said position shall continue and the High Court shall
Page 31 of 33
dispose of the writ proceedings in accordance with law, if
already not considered and disposed of. We make it clear that
we have refrained from interfering with the impugned orders
since they are interim in nature. We have also not adverted to
the merits of the rival contentions arising in these
proceedings. As such the High Court shall consider the case
on its own merits.
32. For all the aforestated reasons, the following order;
(i) The order dated 10.07.2015 passed by the
learned Division Bench in W.A.No.369/2011 and
W.A.No.375/2011 is set aside.
(ii) The order dated 17.01.2011 passed by the learned
Single Judge in W.P.No.1207/2005 is restored.
(iii) The appeals arising out of SLP(C) Nos.879
880/2016 are allowed in part with no order as to
costs.
(iv) The appeals arising out of SLP (C) No.9661/2017
and SLP(C) No.18760/2016 are disposed of.
Page 32 of 33
(v) Pending application, if any, shall stand disposed
of.
.…………………….J.
(HEMANT GUPTA)
……………………….J.
(A.S. BOPANNA)
New Delhi,
September 03, 2021
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