Dost Mohammad Estate, Ltd. vs Maulvi Abdul Hafiz

Das Gupta, J.—The subject-matter of the present litigation is premises No. 50, Beekbagan Row, in. police-station Ballygunge, District 24-Pargands, which admittedly belonged originally to Mohammad Bedar Bakht. On October 5, 1940, he executed a conveyance by which he transferred his right, title and interest in these premises to the Appellant, Dost Mohammad Estate, Limited. On the same date another document was executed by himself and Dost Mohammad Estate, Limited, which purported to create a lease in favour of Mohammad Bedar Bakht at a rental of Rs. 90 per month. The same document also provided for a right of re-purchase by Mohammad Bedar Bakht in these words:

Provided always and it is hereby agreed and declared that if the lessee shall be desirous of purchasing the reversion in fee simple in the premises hereby demised at the price of Rs. 9,000 (rupees nine thousand only) and shall at any time before the 30th day of June one thousand nine hundred and forty-three (time being in i this respect of the essence of this contract) give to the lessor or leave for it at its registered place of business in Calcutta a notice in writing to that effect then in such case the lessor shall be bound to sell the reversion to the lessee or his nominee or nominees to be named in such notice at the said price of rupees nine thousand only within three months from the date of receipt of such notice provided tha lessee shall have up to the date of such notice duly paid all rents and observed and performed all the covenants and conditions herein contained and on his part to be observed and performed and this demise shall not meanwhile have been forfeited or surrendered and such sale shall be subject to the following conditions (namely). Firstly, the purchaser shall be bound to accept such title only as the lessors have acquired under an indenture of conveyance bearing even date herewith and made between the lessee of the one part and the lessors of the other part and the lessor shall not be required to enter into any other covenant for title save and except that it has not done any act, deed or thing whereby the premises to be sold can or may be encumbered or affected in title. Secondly, that the purchase shall be completed immediately on or before the expiration of three calendar months from the date of receipt of such notice. Thirdly, the purchaser shall pay all arrears of rent up to the date of completion of the purchase. Fourthly, upon payment of the purchase money and all arrears of rent as aforesaid the vendor shall execute a proper conveyance of the said premises to the purchaser or his nominee such conveyance to be prepared by and at the cost of the purchaser and, fifthly, all costs of the vendor of and incidental to such sale and conveyance as between attorney and client shall be paid by the purchaser to the vendor.

Rents were not paid and a suit for ejectment and for recovery of rents was instituted by the present Appellant on December 23, 1942. The Defendant, however, paid all the arrears of rent with interest and full costs of the suit and the court passed the following order:

In the circumstances and in view of Section 114 of the Transfer of Property Act it is ordered that the lessee (Defendant) is relieved against the forfeiture of the lease and he shall hold property leased as if the forfeiture had not occurred. Prayer for ejectment is rejected and the claims for arrears are dismissed on full satisfaction.

The present action was brought on the allegation that the transaction was in reality a mortgage and for redemption of the mortgage on that basis. There was an alternative prayer for specific performance of the contract to convey the premises to Mohammad Bedar Bakht or his nominee, Musammat Jlazia Khatun who died during the pendency of the suit in the trial court and her representative were brought on the record. The learned court below rejected the Plaintiffs case that the transaction was in substance a mortgage and therefore, dismissed the claim for redemption. He, however, decreed the suit for specific performance.

The Appellant''s contention is that the Plaintiffs are not entitled to a decree for specific performance. The main ground on which they base this contention is that the conditions precedent to the exercise of the rights of re-purchase were not satisfied.

From the portion of the document which has already been set out it is quite clear that there were three conditions precedent. The first was that a notice shall be given before June 30, 1943, of the desire to exercise the option. The second was that-

the lessee shall have up to the date of the notice duly paid all rents and observed and performed all the covenants and conditions contained in the lease.

The third condition precedent was that "the demise "shall not in the meanwhile have been forfeited or "surrendered". Admittedly, the first condition precedent was satisfied. As regards the third condition precedent mentioned above, viz., that the demise shall not meanwhile have, been forfeited or surrendered, it was argued before us that the consequence of the admitted default in payment of rent and in payment of municipal taxes in proper time was that a forfeiture did accrue. It is further argued that the court by passing the order in the ejectment suit that the Defendant shall hold the property leased as if the forfeiture had not accrued, cannot change the position that in fact the forfeiture did accrue. In my judgment the third condition precedent should, on a reasonable interpretation, be taken to mean that as a result of forfeiture or surrender the lease had ceased to be in operation. It must be held that in spite of the forfeiture which had taken place, the result of the order of the court was that the effects of the forfeiture were wiped out and the lease continued to be operative, am of opinion, therefore, that the third condition precedent has been satisfied.

Much more difficult is the question whether the second condition precedent has been satisfied. That all rents up to the date of notice were actually paid is not disputed. The question is whether there had been "due payment" within the meaning of the condition precedent. In my view, the proper approach to this question was indicated in the case of Starkey v. Barton (1909) 1 Ch.D. 284. That also was a case for specific performance of a contract on an agreement to sell to the lessee and one of the conditions precedent was in these words: "Provided we shall in the meantime have "duly paid the said rent hereby reserved." The quarter''s rent which became due on December 25, 1907, was paid on January 10, 1908, and the question arose for consideration whether that payment after a delay of sixteen days should be considered a fulfilment of the condition precedent. Parker, J., said that the question was whether the Plaintiff could say truly on March 20, 1908, when the notice was given, "I have since the commencement of my tenancy and up to the present time"-which I take to be the meaning of the expression "in the mean-time"-"duly paid," according to the meaning of the clause conferring the option, the "rent reserved by the tenancy agreement". In that case it was held that "due payment" did not mean "punctual payment", and the learned Judge held that the Plaintiff could truly say on March 20, 1908, that she had since the commencement of the tenancy duly paid the rent reserved by the tenancy agreement.

Should the Plaintiff Mohammad Bedar Bakht say in this case on he date he gave notice that he had from the commencement of the case and up to the date of the notice duly paid all rents. Quite clearly in strict legal sense there was no due payment. Agreeing with the view taken by Parker, J., in Starkey''s case, where he approved of the opinion that "due performance" means performance in the popular, rather than in the legal, sense, I have put myself the question whether in a popular sense it could be said that there had been due payment of the rents. It is important a remember that there had been no payment at all of the rent from the commencement of the lease on October 5, 1940, till the payment in court on June 8, 1943 Is it due payment in the popular sense when no payment is made for about three years and payment is made only when the lessor has gone into court to enforce his right? I cannot believe that the man in the street would consider this "due payment". A few days delay or even few months delay might be of little importance after some time as passed and the position may very well be that if after such delay rents have been paid in the court without the landlord having had to seek the assistance of the court, men would say in common parlance that rents have been duly paid even though that may not have been correct in a strict legal sense of the term "due". Nobody, in my opinion, would call payment into court after a suit had been brought for realisation of the rent "due payment". To say so would be to ignore the word "duly" I together and to read the document as if the condition was provided the lessee, up to the date of such notice, paid all "rents". It is not permissible for the court to ignore the word "duly". In my opinion, there was no "due payment" of the event in this case. It must consequently be held that the second condition precedent was not satisfied. It appears to us that the learned court below did not apply his mind at all to the question of "due payment" of the rent. He has analysed the condition in these words, "That there should be no arrears of rent up to the date of notice". That would have been a correct analysis if the word "duly" had not been in the document.

It may be mentioned here that the learned advocate for the Appellant argued that there was a further condition precedent, viz., that there should be tender of the full amount of Rs. 9,000 within three calendar months from the date of the notice. I read the document, this was not a condition precedent.

In view of my conclusion that the second condition precedent was not fulfilled it must be held that the Plaintiffs are not entitled to a decree for specific performance. I would, accordingly, se aside the judgment and decree of the lower court in so far as it for specific performance and order that the suit be dismissed.

The Appellant will get the costs here and in the court below

Renupada Mukhrjee, J.

I agree.