Namdeo Lokman Lodhi vs Narmadabai And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 154 of 1952

Decision Date: 27 February 1953

Coram: Mehr Chand Mahajan

In the matter titled Namdeo Lokman Lodhi versus Narmadabai and Others, a judgment was rendered on the twenty-seventh day of February, 1953, by the Supreme Court of India. The opinion was authored by Justice Mehr Chand Mahajan, who sat on a bench that also included Justices Das and Sudhi Ranjan. The petitioner was Namdeo Lokman Lodhi, while the respondents were Narmadabai and the other parties named in the suit. The decision is reported in the 1953 volume of the All India Reporter at page 228 and in the Supreme Court Reporter at page 1009, and it has been cited in later reports such as D 1960 SC 260, R 1965 SC 225, R 1969 SC 1349, and R 1976 SC 588.

The central question before the Court concerned a lease condition that stipulated the lessee’s right to occupy would cease if the rent were not paid. Specifically, the Court examined whether a written notice from the lessor, as required by section 111(g) of the Transfer of Property Act of 1882, as amended in 1929, was necessary to terminate the lease for non-payment of rent. The case also raised the issue of whether a suit for ejectment could be maintained when the lessor had not given the prescribed written notice. Additionally, the applicability of the statutory provision to lease deeds that were executed before the first of April, 1930, was considered.

The Court’s headnote explained that the requirement of a written notice of the lessor’s intention to determine the lease, which is contained in section 111(g) of the Transfer of Property Act, does not rest on any principle of justice, equity, or good conscience. Consequently, the provision does not apply to leases that were executed prior to the first of April, 1930. In the present case, a lease deed that had come into force before the Act provided that the lessee’s rights would terminate upon default of rent. Because the rent had indeed not been paid, the lessor instituted an ejectment suit without serving a written notice of termination. The Court held that the ejectment suit was maintainable despite the absence of such notice.

In reaching its conclusion, the Court referred to several authorities. It disapproved the earlier decisions in Umar Pulavar v Dawood Rowther (A.I.R. 1947 Mad. 68), Brahmayya v Sundodaramma (A.I.R. 48 Mad. 275), and Tatya Savla Sudrik v Yeshwanta Kondiba Mulay (52 Bombay L.R. 909). The Court relied upon the judgments in Toleman v Portbury (L.R. 6 Q.B. 245), Prakash Chandra Das v Rajendra Nath Basu (I.L.R. 58 Cal. 1359), Rama Aiyangar v Guruswami Chetty (35 M.L.J. 129), Venkatachari v Rangaswami Aiyar (36 M.L.J. 532), and Krishna Shetti v Gilbert Pinto (I.L.R. 42 Mad. 654). It distinguished the cases of Venkatarama Aiyar v Ponnuswamy Padayachi (A.I.R. 1935 Mad. 918), Aditya Prasad v Ram Ratanlal (57 I-A 173), Muhammad Raza v Abbas Bandi Bibi (59 I-A 236), and Roberts v Davey (110 E.R. 606).

The judgment arose out of Civil Appeal No. 154 of 1952, which was an appeal from a decree dated the twenty-third of June, 1949, issued by the High Court of Judicature at Bombay, composed of Chief Justices Chagla and Gajendragadkar. That decree had affirmed the decision of the Court of Small Causes at Poona rendered on the nineteenth of March, 1945, in Civil Appeal No. 175 of 1943, which itself derived from a decree dated the thirty-first of March, 1943, by the Court of the Extra-Joint Sub-Judge of Poona in Suit No. 858 of 1941. The Solicitor-General for India, C. K. Daphtary, assisted by J. B. Dadachanji, appeared for the appellant, while V. M. Tarkunde represented the respondents. The judgment was delivered on the twenty-seventh of February, 1953, by Justice Mahajan.

The appeal was filed by Defendant No 1 against the decree of the High Court of Judicature at Bombay rendered in Second Appeal No 557 of 1945. In that decree the High Court upheld the decision of the lower courts which had granted possession of the land to the respondents on the basis of forfeiture of a lease. The present appeal was limited to the question of possession of Survey No 86/2 situated at Mundhava in Poona district. Two points were framed for determination. The first and principal point concerned whether the notice required under section III(g) of the Transfer of Property Act was indispensable for the termination of a lease on account of non-payment of rent, even when the lease in question had been executed prior to the enactment of that statute. The second point sought to decide whether the High Court was correct in exercising its jurisdiction to interfere with the discretion exercised by the lower courts when they refused to grant relief against forfeiture in the factual setting of this case.

Even though the lease contained a clause declaring it void, the factual record indicated that the lessee had repeatedly failed to pay rent and could be described as a habitual defaulter. In 1913 the lessee was in arrears for six years’ rent. Consequently, the landlord, Vinayakbhat, instituted Suit No 99 of 1913 before the Second Class Sub-Judge of Poona, seeking possession of the demised premises on the ground of forfeiture. The defendants raised several defenses, among which was the argument that the forfeiture could not be enforced because they had not received any notice. The court rejected all such contentions but nevertheless granted the defendants relief against forfeiture. At that time Defendant 1 was a minor and he attained majority around 1925.

In 1928 the lessee again fell behind on rent, this time for a period of two years. Vinayakbhat commenced Civil Suit No 258 of 1928, again for possession on the ground of forfeiture. The plaintiff later waived the forfeiture by accepting the arrears of rent covering three years, together with the costs of the suit. In 1931 a further three-year rent arrear occurred; the amount was transmitted by money order and the landlord accepted it. A similar default arose in 1934 when rent for three years remained unpaid. During that year the Government initiated proceedings for the acquisition of the old Survey No 72. The landlord asserted that he was entitled to the entire compensation because the tenant’s rights had terminated by forfeiture for non-payment of rent. Defendant 1, through his pleader, issued a notice to Vinayakbhat inviting him to collect the arrears. The landlord agreed to receive the arrears and consequently the forfeiture was waived once more. As a result of that arrangement the defendants received a compensation of Rs 32,000 for the permanent tenancy rights in the old Survey No 72, while Vinayakbhat obtained Rs 1,400 as compensation for the acquisition of his rights as landlord over that land.

In 1938 the lessee again defaulted, this time for four years’ rent. Vinayakbhat responded by filing Civil Suit No 982 of 1938 in the court, thereby continuing the pattern of litigation concerning the possession of the property and the effect of repeated forfeiture and its waiver.

In this matter, a suit was filed in the I Class Sub-Judge Court at Poona against all of the present defendants seeking possession of survey numbers 86/1 and 86/2 on the ground that the lease had been terminated by forfeiture for non-payment of rent. Defendant No 1 argued that forfeiture could not be said to have occurred because no rent had ever been fixed in respect of the suit property, and further contended that the suit was for the plaintiff to recover rent, not for the defendants to go to the plaintiff and pay it. The trial court rejected those contentions, held that forfeiture had indeed taken place, and nevertheless granted relief against forfeiture. On appeal, the learned District Judge declined to disturb the trial judge’s discretion in granting that relief, but observed that the defendants had already obtained relief against forfeiture on three previous occasions, and therefore should not be permitted to obtain it a fourth time if they again fell into default. The default that gave rise to the present suit occurred on 28 January 1941, when the plaintiff alleged that rent due on that date remained unpaid despite demand. Consequently, the plaintiff instituted the suit for possession of the two survey lands, also seeking the removal of the structures standing thereon.

Defendant No 1 mounted several defenses. He claimed that, because of a partition, his share in survey 86/2 had passed to him, and that according to the terms of the rent note the plaintiff was required to approach the defendants for rent, not the other way round. He further asserted that no notice of demand had been served, that no forfeiture therefore occurred, and that he had offered the rent to the plaintiff, who had fraudulently refused to accept it. He maintained that the plaintiff ought to have issued a legal notice if he wished to enforce forfeiture, and he also prayed for relief against forfeiture. The trial court dismissed all of the defendants’ arguments and decreed the plaintiff’s suit. In awarding possession of the entire property to the plaintiff, the court imposed a condition that Defendant No 1 should retain possession of the two structures in survey 86/2 until the end of March 1950. Regarding the requirement of a notice before termination, the court held that the clause in the rent note stating that the tenant’s rights would cease upon non-payment was a nullifying clause rather than a simple forfeiture clause, and consequently the lease was terminated under section 111(b) of the Transfer of Property Act, not under section III(g). Therefore, the notice mandated by section 111(g) was not necessary for termination.

In this case the trial judge held that a notice was not required under section 111(g) to terminate the lease that was the subject of the suit. The trial judge further observed that relief against forfeiture could have been granted to the lessee under section 114 if the defendants had not forfeited their own right to such relief by their contumacious conduct. The judge pointed out that the lessee had never paid the nominal rent on time for the preceding twenty years, and that after Defendant No I attained majority and assumed control of the estate in 1922-23 he consistently defaulted on rent payments. The judge added that the defendants repeatedly raised wholly false defences in every suit and manufactured fictitious excuses in an attempt to justify the arrears of rent. Accordingly, the trial court issued a decree granting the plaintiff possession of all the suit lands in April 1943, except for one acre which the plaintiff took possession of on 13 September 1943. Defendant No I was allowed to remain in possession of the two structures situated on survey No 86/2. Dissatisfied with the trial judgment, Defendant No I alone appealed to the District Judge of Poona. The appellate court affirmed the trial decree but introduced two modifications: it permitted Defendant No I to demolish the buildings standing on survey No 86/2 and to remove the trees therewithin within a period of three months. Regarding the necessity of a notice, the appellate court concluded that the lease terminated not under section 111(b) but under section 111(g) of the Transfer of Property Act, and it held that no notice of forfeiture was required because the lease had been executed before the Transfer of Property Act came into force. The appellate court found no valid ground to disturb the trial judge’s finding on relief against forfeiture. From that appellate decree Defendant No I filed a second appeal before the High Court of Judicature at Bombay. The plaintiff raised cross-objections concerning the trees and the costs involved. The High Court dismissed the appeal and allowed the plaintiff’s cross-objections. An application for leave to appeal to the Supreme Court was subsequently granted, the reference being to survey No 86/2. The law governing the determination of a lease by forfeiture is codified in section III(g) of the Transfer of Property Act. Under that provision a lease is deemed forfeited when the lessee breaches an express condition that authorises the lessor to re-enter, or when the lessee repudiates his status by asserting a title in a third person or in himself, or when the lessee is adjudicated insolvent and the lease contains a clause permitting re-entry upon that event, provided the lessor performs a further act as specified therein. Prior to its amendment by Act XX of 1929, this sub-section

The provision originally read that “And in any of these cases the lessor or his transferee does some act showing his intention to determine the lease.” By Act XX of 1929 that subsection was amended, and the amended wording now required that “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.” Section 111(g) consequently made the additional act an essential condition of forfeiture. In effect, without that act the forfeiture could not be considered complete. Under the earlier version of the law an overt act demonstrating the required intention was necessary. The present law, as amended, stipulated that a written notice from the landlord became a condition precedent to both forfeiture and the landlord’s right to re-enter. Section 63 of Act XX of 1929 limited the operation of this amendment to property transfers made after 1 April 1930. The lease involved in this case had been executed before the Transfer of Property Act itself came into force in 1882. Because the amendment introduced by Act XX of 1929 was not retrospective, it could not affect the lease in question, and the lease was also excluded from the scope of the Transfer of Property Act by virtue of section 2. The High Court and this Court did not seriously dispute that the statutory provisions of section 111(g) could not govern a lease that had been executed in 1870. Nevertheless, it was strongly contended that the 1929 amendment to section 111(g) embodied a principle of justice, equity and good conscience, and that, despite section 2, this principle should apply to the present case, so that no forfeiture could occur unless the landlord had given written notice to the lessee of his intention to determine the lease. It was asserted as a fundamental truth that courts must apply the principles of justice, equity and good conscience to transactions before them, even when the statutory provisions of the Transfer of Property Act are not applicable to those transactions. Accordingly, the provision of the Act was viewed as a statutory recognition of the rules of justice, equity and good conscience, and therefore as governing such transfers. If the Court were satisfied that the principle now given effect by the amendment to section 111(g) truly represented a principle of justice, equity and good conscience, the case would have to be decided according to the rule set out in that section, even though the amendment expressly did not apply to leases executed before 1929 or before the Transfer of Property Act became operative. The central issue for consideration, therefore, was whether the provision introduced in sub-section (g) of section 111 of the Transfer of Property Act in 1929 was merely a statutory acknowledgment of a principle of justice, equity and good conscience, or whether it was simply a procedural rule without such foundational equity.

In this case the Court examined whether the requirement in subsection (g) of section 111 of the Transfer of Property Act represents a principle of justice, equity and good conscience. The Court also considered whether the requirement is merely a procedural and technical rule imposed by the legislature without any foundation in established equity. The High Court had held, and the present Court agreed, that the provision concerning notice in subsection (g) does not rest on any principle of justice, equity or good conscience. The Court first observed that it is mistaken to assume that every provision of the Transfer of Property Act and every amendment to it necessarily embodies principles of justice, equity and good conscience. Each provision must be examined individually to determine whether it restates an existing equitable rule or whether it introduces a new rule that has no connection with any known equity. Regarding section 111(g) the Court noted that the statutory insistence on giving notice in writing demonstrates that the requirement is purely a statutory formality and cannot be traced to any equitable rule. Equity, the Court explained, does not concern itself with mere forms or procedural modes. If the purpose of the notice rule is merely to show the landlord’s intention to terminate the lease and to rely on the tenant’s breach, the same result could be achieved by an oral indication without disturbing the considerations of a chancery judge. Consequently the written-notice requirement cannot be said to arise from any general equitable principle. The Court further pointed out that the legislature itself had waived the written-notice requirement for leases executed before 1 April 1930, leaving those earlier leases to be governed by the unamended subsection (g) of section 111. Under the original wording the landlord only needed to demonstrate his intention to end the lease by some act indicating such intention. The Court held that principles of justice, equity and good conscience are not a variable commodity that changes on a specified legislative date; they cannot be assigned differently to leases made between 1882 and 1930 on the basis of the pre-1929 version of subsection (g) and to later leases on the basis of the post-amendment wording. The Court also raised the question whether, under English law, notice is a necessary condition to complete a forfeiture. It referred to the authority found in Foa’s General Law of Landlord and Tenant, seventh edition, page 316, for the statement of English law on the matter.

In this passage the Court explained that a lessee cannot rely on a re-entry clause to escape the lease, even when the clause is worded so that the term is said to “cease,” the lease is described as “void for all purposes,” or it is labeled “absolutely forfeited.” Such language, the Court said, merely indicates that the tenancy will terminate at the option of the landlord. Historically this situation has often been characterised as a lease being “voidable” rather than “void.” However, the Court clarified that the true rule is that the lease becomes void in all practical respects, provided that the party seeking to declare the lease invalid is not itself in default. If the party were in default, it would be taking advantage of its own breach. Consequently, when a provision makes the lease void, the landlord must perform an unequivocal act that is communicated to the lessee, showing the landlord’s intention to exercise the option granted by the clause. The Court held that serving the lessee with a writ of ejectment satisfies this requirement, as the service of such a writ clearly demonstrates the landlord’s intention to enforce the forfeiture.

The Court then turned to English law, noting that the Law of Property Act 1925, by virtue of section 146, consolidates the relevant English principles. Under this statute, the requirement to give notice before a landlord’s right of re-entry accrues is expressly excluded by sub-section (11) in cases where re-entry is based on forfeiture for non-payment of rent. Accordingly, in England a landlord does not need to serve a notice before forfeiture can take effect when rent is unpaid. The Court therefore concluded that the rule embodied in sub-section (g) of section II 1 cannot be said to reflect a principle that English law today regards as a matter of justice, equity, or good conscience. Moreover, English law treats the filing of an action—corresponding to the institution of a suit in India—as a definitive act that evidences the landlord’s intention to terminate a lease that has been breached, as shown in cases such as Toleman v Portbury and Prakashchandra Das v Rajendranath Basu. In the Indian context, the Court observed a substantial body of precedent that, for leases granted before the Transfer of Property Act, forfeiture is incurred when there is either a disclaimer of title or non-payment of rent. Any later act by the landlord to invoke the forfeiture is not a prerequisite for the landlord’s right to bring an ejectment action. The filing of an ejectment suit itself is simply a means by which the landlord manifests his election to enforce the forfeiture. The jurisprudence rests on the principle that forfeiture becomes complete at the moment the condition is breached or the title is denied, although the landlord retains the discretion to decide whether to act upon that forfeiture.

The court observed that the election of a landlord to enforce forfeiture is not a condition precedent to the right of action; it is sufficient that the landlord institutes the suit as a manifestation of that election. This principle was supported by the authorities cited as (1) L.R. 6 Q.B. 245 and (2) (1931) 58 Cal. 1359. The same rule was applied to actions for relief on the ground of fraud, as noted in Padmabhaya v. Ranga (1) and Korapalu v. Narayana (2). In Rama Aiyangar v. Guruswami Chetty (3) the court held that where a lease was not governed by the Transfer of Property Act, the filing of a suit alone was a sufficient determination of the lease, and no prior act such as a notice to quit was required to maintain the action. The same view was reiterated in Venkatachari v. Rangaswami Aiyar (4). In Venkatarama Aiyar v. Ponnuswami Padayachi (5) the court explained that forfeiture does not arise merely from the lessee’s unilateral breach of the lease conditions; it also requires an expression of intention by the lessor to enforce the forfeiture. Accordingly, the lessee cannot, by his own wrongful act, terminate the lease or benefit from his own wrong, a principle grounded in equity. The defaulting lessee cannot rely on a written notice to complete the forfeiture he has incurred; the lessor must simply indicate his intention to avail of the forfeiture, which can be done by filing a suit, following the English law approach for leases not governed by the Transfer of Property Act. Likewise, in Ramakrishna Mallaya v. Baburaya (6) the court held that in an ejectment suit based on leases executed before the Transfer of Property Act, no additional act by the landlord showing that he had elected to enforce forfeiture for non-payment of rent was necessary.

The contrary view expressed in Nourang Singh v. Janardan Kishor (7) was that the institution of an ejectment suit could not be regarded as a requisite act to demonstrate the landlord’s intention to determine a lease within the meaning of section 111(g). This position was dissented from in Prakashchandra Das v. Rajendranath Basu (1). The court further noted that there is no special reason why the landlord’s election must occur before the filing of a suit and that it is difficult to find a rational basis for the view that the cause of action has not fully accrued if the election is made at the moment the suit is instituted, i.e., when the plaint is presented. The court therefore concluded that the cause of action for the suit can arise simultaneously with the presentation of the plaint.

In this case the Court observed that the statutory requirement of a written notice as a preliminary step before instituting an ejectment suit on the ground of lease forfeiture does not rest on any principle of justice, equity or good conscience. Consequently, that requirement cannot be applied to leases that were created before the Transfer of Property Act, 1882 came into force, nor to leases that were executed before 1 April 1930. The Court held that the rights and obligations arising under such pre-Act leases must be determined according to the law that was in force at the relevant time. The only rule that applied, according to the Court, was that a tenant could not, by his own unilateral act or fault, bring the lease to an end unless the landlord gave a clear and unequivocal indication of an intention to rely on the breach. The Court further stated that equity does not give a tenant a right to receive a written notice declaring that the lease has been terminated. Accordingly, the Court found that the High Court was correct in its view of the matter and that there were no valid reasons to adopt a contrary position. The Court noted that counsel had heavily relied on the decision of Chandrasekhara Aiyar J. delivered singly in the case of Umar Pulavar v. Dawood Rowther, where the judge had held that section 111(g), as amended in 1929, embodied a principle of justice, equity and good conscience and should therefore govern even agricultural leases. In that decision it was further held that where the landlord’s title was denied and forfeiture occurred, a written notice terminating the lease was necessary. The judge in that case referred to the principle embodied in the amendment, citing (1) (1931) I.L.R. 58 Cal. 1359 and (2) A.I.R. 1947 Mad. 68, and described it as a principle of justice, equity and good conscience. The same judge relied on the earlier decision in Krishna Shetti v. Gilbert Pinto, which had held that the Transfer of Property Act was drafted by eminent English lawyers to replicate the general principles of English law and that its provisions were binding as rules of justice, equity and good conscience. The Court cautioned that this statement was overly broad. It observed that the learned judges had not considered that the provision concerning a notice for determining a lease for non-payment of rent was not part of English law. Moreover, the Court pointed out that the rule contained in sub-section (g) of section 111 before its 1929 amendment, which continues to govern leases executed before 1 April 1930, was not correctly appreciated. According to that rule, the filing of an ejectment suit itself would be a sufficient indication by the landlord that the lease was being terminated, and a written notice under the amended provision would not be a prerequisite for instituting such a suit.

The Court observed that, under the amended provision, a written notice determining the lease need not be presented before a landlord could institute a suit for possession, and that such notice was not a condition precedent to the filing of the action. The Court held that the earlier decision in this matter had been decided incorrectly and could not be upheld. Referring to the observation of Napier J. in Krishna Shetti v. Gilbert Pinto (1), the Court stressed that courts must exercise great caution when applying statutory provisions and that the Transfer of Property Act should not be invoked as a guide on matters expressly excluded from its scope, unless the relevant provisions embody principles of general application. The Court also noted that counsel had relied upon observations made in the Full Bench judgment of Brahmayya v. Sundaramma (1). In that judgment it was contended that, although section 106 of the Transfer of Property Act does not apply to agricultural leases by virtue of section 117, the rules contained in section 106 and in the other sections of Chapter V (sections 105 to 116) are founded upon reason and equity, represent principles of English law, and should therefore be treated as the law of India applicable to agricultural leases as well. The Court found this formulation to be overly broad. It explained that section 105 merely provides a statutory definition of the word “lease” and does not articulate any principle of equity; the relationship between lessor and lessee is contractual, and, as recorded in Bacon’s Abridgement, a lease is a contract whereby the lessor grants possession and profits of land in exchange for rent or other consideration. The statute merely expands on this definition. Section 107 obliges the registration of a lease and likewise does not address any principle of justice or equity. Section 108(j) permits a lessee to transfer his interest absolutely by mortgage or sub-lease, and allows any transferee to further transfer that interest. The Court observed that Indian law on this point differs from English law and that the provision does not promulgate a general principle of equity. Portions of sections 109, 110 and III contain procedural or technical rules that cannot be said to rest on equitable principles. Consequently, the Court concluded that the earlier contention that sections 105 to 116 of the Transfer of Property Act are founded upon principles of reason and equity is neither accurate nor precise. Nevertheless, to the extent that these sections confer statutory recognition to principles of justice, equity and good conscience, they may still be applicable to matters that fall outside the direct purview of the Act.

In the discussion the Court referred to a decision of the Bombay High Court in Tatya Savla Sudrik v. Yeshwanta Kondiba Mulay (1950) 52 Bom. L.R. 909. That decision stated that the principle contained in section 111(g) of the Transfer of Property Act requires a written notice determining the lease when forfeiture occurs because of denial of the landlord’s title, and that this requirement reflects justice, equity and good conscience and therefore applies even to agricultural leases. In the Bombay High Court case the plaintiffs argued that after a forfeiture had taken place a suit for eviction had been filed and that no further action was necessary on their part. To support this argument they relied on two earlier decisions of the Bombay High Court, namely Venkaji Krishna Nadkarni v. Lakshman Devji Kandar and Vidyavardhak Sang Co. v. Avvappa. The Court rejected that contention, first by invoking the decision of Justice Chandrasekhara Aiyar that had been mentioned earlier, and second by relying on a binding decision of a Division Bench of the same court in Mahiboobkhan Muradkhan v. Ghanashyam Jamnaji (unreported). The learned Chief Justice, in the judgment that was under appeal, explained how the present case differed from the earlier case and declined to follow his own prior decision. With respect, the Court expressed the view that the earlier decision had not correctly stated the law. The Court then noted that under English law a suit for ejectment has always been regarded as an unmistakable act by the landlord to take advantage of the tenant’s default and to enforce forfeiture in instances of non-payment of rent, except where a statute expressly provides otherwise.

The Court also cited observations of the Privy Council in Aditya Prasad v. Ramratan Lal (1896) I.L.R. 20 Bom. 354. In that case the Privy Council considered whether a document created a charge on a village and held that the appellant could not redeem the charge without paying both the mortgage debt and the amount subsequently raised, stating that the relevant provisions of the Transfer of Property Act were identical to the principles of justice, equity and good conscience. The Court emphasized that the observation in that Privy Council decision must be confined to the facts of that case and cannot be treated as a universal rule applicable to all matters regardless of the nature of the statutory provisions involved. The Court further referred to another Privy Council decision, Muhammad Raza v. Abbas Bandi Bibi (1930) 57 I.A. 173, which dealt with section 10 of the Transfer of Property Act and recognised the validity of a partial restriction on a power of disposition in an inter- vivos transfer. That decision held that there was no authority for a different principle to have applied in India before the Act was enacted.

In this matter the Court observed that the relevant Act had been enacted and that, according to English law, a partial restriction was not regarded as repugnant even when it related to a testamentary gift. Counsel then referred the Court to the decision in Roberts v. Davey (2), a case concerning a licence. That judgment held that the licensor must have performed some act indicating an intention to terminate the licence; until such an act was demonstrated, the licence continued to operate. Littlesdale J. described the instrument in Roberts v. Davey as “a mere licence to dig, and did not pass the land.” He explained that an actual entry onto the land was not required to avoid the licence; however, by analogy with the steps required to terminate a free-hold lease that would become void for non-performance of covenants, it followed that the grantor should give notice of the intention to end the licence. The basis of that decision was that some act amounting to the exercise of the option had to be proved before the licence could be deemed terminated. The Court held that this decision did not in any way affect the High Court’s decision in the present case. Regarding whether the tenant should have been granted relief against forfeiture, the High Court had held that the issue was one of discretion and that both lower courts had exercised that discretion against the appellant. Consequently, unless the appellate court was convinced that the discretion had not been exercised judicially or had been exercised without proper material, it would not ordinarily interfere with the lower courts’ exercise of discretion on second appeal. It was observed that the tenant’s non-payment appeared to have become chronic, citing (1) 1932 59 I.A. 236 and (2) 110 E.R. 606, and that the case was not suitable for the exercise of equitable jurisdiction. Counsel argued that the High Court had failed to appreciate the rule governing the exercise of discretion in such situations. That rule, according to counsel, is that if, at the time relief is sought, the circumstances have changed so that granting relief would cause injury to third parties, the relief must be refused; however, if the circumstances have not changed and no injustice would result, there is no real discretion and the court should order the relief. Counsel also referred to the decision of Page J. in Debendralal Khan v. F. M. A. Cohen (1), which stated that the court normally grants relief against forfeiture for non-payment of rent under section 114 of the Transfer of Property Act, and that if the sum required by the section is paid or tendered to the lessor at the hearing of the suit, the court has no discretion in the matter and must grant relief to the tenant. The Court expressed the view that the learned judges did not intend to lay down any rigid rule. The learned judge was further quoted as observing that, while exercising the discretion conferred by section 114, a court in India is not bound by the practice of the English Court of Chancery, and that equity requires parties to act fairly; compliance with the conditions of section 114 does not, by itself, create an absolute right to relief.

In the present matter the Court observed that when a court in India exercises the discretion conferred by section 114, it is not bound by the practice of a court of Chancery in England, and the Court was not inclined to restrict the discretion that the statute provides. The Court affirmed the equitable principle that those who come to equity must themselves act equitably, and it held that mere compliance by a tenant with the conditions prescribed in section 114 did not, by itself, give the tenant an automatic right to relief.

In the Court’s view, the exercise of discretion under section 114 required a case-by-case assessment, taking into account factors such as any delay, the conduct of the parties, and the difficulties imposed on the landlord in relation to the tenant. This approach reflected the position taken by the Madras High Court in Appaya Shetty v. Mohammad Beari, a decision that the Court discussed in depth and with which it agreed. The Court reiterated the well-known maxim of equity that a person who seeks relief in equity must himself act with clean hands; consequently, if a tenant’s conduct disqualifies him from equitable relief, the Court’s hands are not bound to grant it. The Court also referred to the authorities in Ramakrishna Mallya v. Baburaya and Ramabrahmam v. Rami Reddi in support of this principle.

The argument that the Court possessed no real discretion and could refuse relief only when third-party interests were affected was rejected, the Court noting that this proposition was expressly denied by the House of Lords in Hyman v. Rose. In that English case, relief was sought under section 14(2) of the Conveyancing Act 1881 against forfeiture for breach of a covenant in a lease. The appellants proposed that relief be granted on the condition that a sum be deposited to ensure the premises would be restored to their original condition at the end of the term and that full restitution be made. The House of Lords considered the matter to be one of discretion and held that if the landlord could be fully recompensed, the tenant should be relieved from forfeiture.

Lord Loreburn, speaking for the House of Lords, emphasized that the discretion given by the statute was “very wide” and required the court to consider all circumstances and the parties’ conduct. He warned against imposing rigid rules on a provision that was expressly designed to give the court freedom to prevent a party from forfeiting rights that, in fair dealing, belonged to another, especially where the breach did not cause the plaintiff commensurate or irreparable damage. He acknowledged that the rules set out by the Master of the Rolls were useful general maxims, but stressed that they could be set aside where the facts of a particular case warranted a different approach, lest the statutory discretion be unduly constrained.

The Court noted that the maxims mentioned in earlier authorities, namely (1) (1914) 24 I.C. 139, (2) A.I.R. 1928 Mad. 250 and (3) [1912] A.C. 623, are generally useful and normally embody the viewpoint from which judges examine an application for relief. However, the Court emphasized that it must be clearly understood that there may be situations in which one or more of those maxims can be set aside. To do otherwise would bind the wide discretion granted by the statute with limits that have not been enacted by legislation. The Court distinguished between interpreting the true meaning of statutory language and imposing conditions on a statutory discretion that are not grounded in any legislative provision. Accordingly, it was not safe to assert that the court must invariably insist on particular requirements when the Act does not mandate them, especially where unforeseen facts might lead a court to prefer retaining its unfettered discretion. With great respect, the Court considered that the observations cited above contain sound principles of law, but it could not agree with Mr Daphtary’s contention that, although section 114 of the Transfer of Property Act confers a discretion on the court, that discretion must always be exercised in favour of the tenant except where third-party interests intervene, irrespective of the tenant’s conduct. The Court found that in the present case the tenant was recalcitrant and a habitual defaulter. For nearly twenty-five years he had never paid rent without the landlord suing him. Rent had been in arrears for periods of six years, three years, four years and other intervals, and each time the landlord was forced to commence an ejectment suit, which the tenant consistently resisted with false defences. No rule of equity, justice or good conscience could be invoked on behalf of a tenant of this description. The tenant could not be permitted to profit from his own wrongdoing by seeking relief against forfeiture on every occasion, particularly after being warned by the court of appeal on a prior occasion. He had already obtained relief on equitable grounds three times, and the Court held that it was appropriate to withhold further assistance and order his ejectment. In these circumstances the High Court was fully justified in deciding, on second appeal, not to interfere with the lower courts’ discretion in refusing to grant relief against forfeiture. Consequently, the appeal failed and was dismissed with costs. The order of dismissal was recorded, and the agents were noted as follows: Agent for appellant – R.A. Govind; Agent for respondents – Rajinder Narain.