Jamini Bala Dasi vs Administrator-General of West Bengal

Das, J.—This is an appeal by the Defendant. It is directed against a judgment of Sarkar J. dated August 4, 1950, decreeing the Plaintiff''s suit for specific performance of an agreement for sale dated December 7, 1943.

The facts are as follows:

The agreement for sale concerns a moiety share of premises No. 40, Weston Street.

On February 27, 1924, the then owners of the property, viz., Kedar Nath De and Panchkowrhi De leased out the said premises to Rustom Miah for a term of twenty years expiring on February 15, 1944. The lease contained a convenant that the lessee will build structures on the land at his own cost and that, on the expiry of the lease, the lessor will pay to the lessee half the value of building and one-third of the value of privy and water taps if so constructed by the lessee.

One Balaram Datta purchased on December 18, 1933, a moiety share of the reversion. Balaram died on June 9, 1935, leaving a widow and three minor sons. On April 30, 1936, letters of administration were granted to the Plaintiff, Administrator-General of Bengal, in respect of the estate of late Balaram Datta.

On July 28, 1943, this Court granted leave to the Administrator-General to purchase the remaining half share of the premises on certain terms. Pursuant thereto, the Administrator-General entered into the said agreement'' for purchase of the remaining undivided half share in the said premises which had then vested in the Defendant on certain terms. The earnest money was paid but disputes arose as to the effect of the terms and conditions of the agreement for sale. The main dispute; with which we are now concerned in this appeal, related to the question, whether the purchaser or the vendor was liable to pay to the lessee the value of the constructions made by the latter.

The purchaser insisted that the vendor was liable to pay. The vendor asserted the contrary.

The correspondence which was carried on by the solicitors of the parties dragged on from August 6, 1943, till February 6, 1945, but to no effect. On March 27, 1945, the purchaser Administrator-General of Bengal filed this suit for specific performance of the agreement of sale.

In the plaint, the Plaintiff stated inter alia that the lease in favour of the tenant had expired and that the latter has become entitled to the value of the constructions as mentioned in the lease; that the Plaintiff expressed his willingness to complete the contract all along and that the Defendant has been wrongfully neglecting to complete the sale.

The Plaintiff accordingly prayed for specific performance of the agreement for sale.

In the alternative, the Plaintiff prayed for recovery of damages.

In the written statement, the main defence with which we are now concerned was that the Plaintiff was not ready and willing to complete the agreement for sale, as the Plaintiff insisted upon the fulfilment by the Defendant of an unreasonable condition, viz., that the Defendant should arrange for payment to the lessee of his dues under the lease.

On the above pleadings certain issues were framed. The material issue which was agitated in this appeal is that covered by issue No. 3.

Issue No. 3 runs as follows:

Was the Plaintiff all along and is he ready and willing to purchase the property in terms of the agreement dated December 17, 1943?

The suit was heard by Sarkar J. and was decreed.

In his judgment, Sarkar J. observes that "the main dispute "is whether the Plaintiff was ready and willing". The learned Judge proceeds to say that "a very important question in this "case therefore is who was liable to pay the lessee."

This is the point which was pressed in Appeal.

Sarkar J. held that the convenant in the lease was a personal covenant and did not bind the Plaintiff and that as the covenant was a purely personal covenant, it was not an encumbrance and the purchaser was not entitled to insist on the vendor paying the lessee. The learned Judge decreed the suit on other ground.

Mr. Hazra, learned Counsel for the Appellant, has challenged the above findings of the learned Judge.

I may mention that Sarkar J. dealt with certain other matters in his judgment but these points have not been agitated before us.

The lease dated December 27, 1924, was not produced in the court below. The Defendant Appellant has referred us to the said document and this has not been objected to by the Plaintiff Respondent.

The lease has been printed on pp. 115 to 120 of the Paper Book. The material portion of the lease states that the lessee will-

build a pucca building on the demised premises at his own cost according to the plan to be submitted by him to the Calcutta Corporation * * * provided always that it has been agreed by and between the parties to these presents that the lessor will pay half the price of the building erected by the lessee at the expiry of the said term of twenty years which will be ascertained according to the market rate prevailing at the time * * * * *

The lease further provided that if the lessee constructs a new privy and puts up water taps, the lessor will on the expiration of the full period of the lease, pay to the lessee one-third of its then value.

The above terms are substantially set out in para. (3) of the written statement. The parties differ as to the effect of the above covenants. The Appellant contended that the above covenants ran with the land demised and bound the purchaser who accordingly became liable to pay the said sums to the lessor. The Respondent''s contention on the other hand, was that the covenants were purely personal and the purchaser did not become liable on the said covenants and was not obliged to pay the said sums.

Sarkar J. was of the opinion that the covenants did not run with the land and were purely personal covenants and, as such, the Plaintiff was not liable to pay the said sums.

Sarkar J. relied on the decision In Re: Hunter''s lease (1942) Ch. 124. That case is clearly distinguishable. In that case, the lease provided that-

the lessee could determine the lease by three months'' notice in writing, and that, at the expiration or sooner determination of the term, the lessor should forthwith pay 5001 to the lessee. Should the lessor be unwilling to pay that sum, the lessee might continue in occupation if he wished, in which case the lessor was to grant him a new lease for five years with the like conditions as to determination and as to payment of 500 I.

Uthwatt J. held that the burden of the first part of the covenant would not have fallen on the assignee of the reversion and this was not disputed by Mr. Bowles, counsel for the lessee. The contention that was raised was that the two parts of the covenant should be read together and that the latter part of the covenant was really a covenant for renewal and touched and concerned the land demised. This contention was repelled by the learned Judge on the ground that the covenant that

the lessee may continue in possession and require a new lease but that is merely an alternative and needs the concurrence of both parties to bring it into operation. Neither party can force on the other a renewed tenancy.

The covenants in the present case are akin to those in Mansel v. Norton (1883) 22 Ch. D. 769 on which reliance was placed by Mr. Hazra, learned Counsel for the Appellant.

In that case, a farm was demised for a term of seven years, the lessor agreed at the expiration of the term, to pay for the tenants'' properties in and upon the farm at a valuation.

It was held by the Court of Appeal (Jessel M.R., Lindley L.J., Boweh J.) that the covenant was binding on the successors to the reversion.

Jessel M.R. observed:

The liability attaches to the lessor''s interest in the land, it is a liability in respect of the cultivation of the land, and the tenant for life takes the land subject to that liability.

Mansel''s case is a direct authority on the point that the covenants to pay for the improvements by the lessee, attached to the reversion and to the person in which the reversion vested.

There is a wealth of authority on the question whether or not a particular covenant runs with the land.

In Rogers v. Hosegood (1900) 2 Ch. 388 Farwell J. said:

Covenants which run with the land must have the following characteristics: (i) they must be made with a covenantee who has an interest in the land to which they refer, (ii) they must concern or touch the land.

The judgment of Farwell J. was confirmed by the Court of Appeal.

In Dyson v. Foster (1909) A.C. 98 Lord Macnaghten said:

The question is: Does the covenant affect the nature, quality or value of the land, or is it a covenant simply collateral?

Judged by the above tests the covenants in the present case ran with the land and bound the lessor''s assignee.

In my opinion, the view of Sarkar J. that the covenant is a personal one cannot be sustained.

It was urged on behalf of the Appellant that as the Plaintiff was a transferee of a part of the reversion he was not bound to pay. This argument is neither sound nor does it assist the Appellant.

The reversion may be severed by an assignment of the reversion in part or by an assignment of part of the reversion. In either case covenants which run with the land run with the severed parts, and the assignee in respect of the part has the benefit of the lessee''s covenants and bears the burden of the lessor''s covenants. Ram Anant Singh v. Shanker Singh ILR (1908) All. 369. This is also the effect of Section 109, Transfer of Properties Act.

It was next contended that, as the agreement for sale Ex. A(3) contained a covenant that the purchase shall be subject to the lease, the burden of the covenant rested with the Plaintiff.

In the first place, the covenant in question which is Clause (6) of the agreement for sale, merely stated that the vendor agreed to make over the possession of the property by letter of attornment to tenants.

In the second place Clause (6) has to be read along with Clause (11) of the agreement. Clause (11) says that "The property is sold "free from all encumbrances and all claims affecting the said "property will be paid out of the sale proceeds thereof." This clause clearly made the vendor liable to pay the lessor the sums provided for in the lease.

In the first place, the convenant to pay a share of the expenses for the constructions by the lessee may be regarded as an encumbrance.

The term "encumbrance" is defined in Wharton''s Law Lexicon as "a claim, lien or liability, attached to the property."

Further, as already pointed out, the convenant in question involves a claim affecting the reversion.

The Appellant was, therefore, bound to discharge the burden of paying the lessee out of the sale proceeds.

The Plaintiff Respondent, therefore, is justified in insisting that the Defendant Appellant should pay off the said liability created by the lease.

It was also argued that the Plaintiff Respondent could not enforce the agreement for sale as the agreement went beyond the leave given to him by this Court. The order of this Court is Ex. A(2). It gave leave to the Administrator-General to purchase the disputed property

subject to the indenture of lease for a period of twenty years from the first February One thousand nine hundred and twenty-four but free from all other encumbrances at a price not exceeding Rupees fourteen thousand.

The plea was not taken in the written statement, or in the memorandum of appeal. This indicates that the parties understood the sanction as entitling the Administrator-General to enter into the agreement for sale. The sanction really means that the purchase will be of the reversion but free from all claims attaching to the reversion.

This contention has no force and must be overruled.

It was finally argued that the Plaintiff repudiated the agreement for sale and, as such, he is not entitled to enforce the same.

Reference was made to the Exs.B(13), B(19), B(25), and and B(27).

The letter Ex. B(27) was written as being "without prejudice" and cannot avail the Defendant Appellant.

The letters do not show that the Plaintiff Respondent ever repudiated the contract. On the other hand they show that the Plaintiff Respondent was insisting upon performance of the contract.

There is no substance in the contention.

The result, therefore, is that this appeal fails. The judgment of Sarkar J. is affirmed.

The Defendant Appellant will pay the costs of the Plaintiff Respondent.

Harries. C.J.

I agree.