Ramesh Enterprises and Another vs Arulmigu Ekambaranathar Thirukoil

S.S. Subramani, J.—The second appeal is filed by defendants 4 and 5 in O.S. No. 6804 of 1981, on the file of V Assistant Judge, City

Civil Court Madras. The sole respondent herein is the plaintiff - Temple represented by its Executive Officer. He filed the suit for recovery of

possession, making eight defendants as parties. It is alleged in the plaint that the first defendant is a tenant of the schedule properties on his paying a

monthly rent of Rs. 200. Plaintiff - temple is exempted from the provisions of Rent Control Act and, therefore, the tenancy is governed by Transfer

of Property Act only. It is further said that defendant 2 onwards are occupying different portions of the Schedule building as sub-tenants under first

defendant. In paragraph 4, it is said that before the institution of the suit, the Trust Board was reconstituted, and first 1 defendant was informed that

it is exempted from the purview of Rent Control Act. First defendant, admitting his guilt of earning of more than Rs. 3,000 by sub-letting the

building to various tenants, agreed that he will pay Rs. 200 as monthly rent to plaintiff for the portion in which he was in occupation, and agreed

that the sub-tenants may attorn directly to plaintiff. Defendants 2 to 7 paid a rental advance for one month and this fact was communicated to the

first defendant on 5.8.1980. Plaintiff thought that the first defendant may go back from his words and, therefore, the amount collected from plaintiff

was kept in suspense account without appropriating the same in any account. As expected, first defendant issued a notice on 11.9.1980

demanding for return of the entire amount collected by plaintiff and also for reviewing the arrangement pleaded. Therefore, plaintiff issued a notice

terminating the tenancy of the first defendant and calling upon him to vacate the premises. After termination, it is alleged that the possession of the

defendants is unlawful and, therefore, they are liable to pay damages for use and occupation.

In the written statement filed by first defendant, it contended that he is the chief-tenant and defendants 2 to 8 are sub-tenants. He also denied the

arrangement pleaded in paragraph 4 of the plaint. In fact, the case put forward by first defendant was, that the Executive Officer of the plaintiff -

Temple without any reason, coerced the tenants by threat of dispossession. He said that sub-tenancy is permitted as per the original arrangement,

and he never agreed that defendants 2 to 7 may attorn the tenancy to the first defendant.

In the written statement filed by the appellants, they pleaded that they have attorned the sub-tenants'' rights in favour of plaintiff and since they

did not send any notice terminating the rental arrangement, the suit is not maintainable.

On the above pleadings, the parties went on trial.

The trial court, as per judgment dated 18.10.1985, held that the first defendant continues to be the tenant, and he has not surrendered his

tenancy right. The termination of tenancy by plaintiff is proper. Therefore, a decree was granted against all the defendants directing them to

surrender vacant possession of the property to the plaintiffs. Defendants 4 and 5 filed an appeal before the lower appellate court as A.S. No. 325

of 1987, making the plaintiff alone as respondent. The lower appellate court confirmed the decision of the trial court. It held that the circumstances

clearly show that the first defendant''s right has not been surrendered and so long as he continues to be a tenant, plaintiff cannot have any direct

relation with the sub-tenants. The appellants are only sub-tenants under the first defendant and the tenancy having been terminated, the appellants

who are claiming only under the first defendant are also bound to surrender vacant possession. The appeal was dismissed. It is against the

concurrent judgments, the defendants 4 and 5 have filed this second appeal.

At the time of admission of the second appeal, the following substantial question of law was framed for consideration:

Whether in spite of the admission made by the plaintiff in the plaint itself to the effect that the defendants 4 and 5, the appellants herein, became

direct tenants under him under an arrangement agreed to between the plaintiff, the original tenant and the appellants, are the courts below correct in

holding that the appellants are only subtenants?

The appeal preferred by defendants 4 and 5 was disposed of by the IV Additional Judge, City Civil Court, Madras, on 4.12.1987. Long after

the disposal of that appeal, first defendant preferred A.S. No. 179 of 1988, challenging the decree of the trial court. Without reference to the

appeal filed by defendants 4 and 5, the 8th Additional City Civil Judge, Madras, before whom the appeal filed by first defendant came for hearing,

allowed the appeal, setting aside the judgment and decree of the trial court. He remanded the suit to enable the plaintiff to amend the plaint. In A.S.

No. 179 of 1988, the lower appellate court held that from the pleadings, it can be inferred that there is an implied surrender and, therefore, plaintiff

is entitled to recover possession of only that portion of the property which is in the hands of first defendant, and also such of those defendants who

remained exparte during trial. Regarding other defendants, including defendants 4 and 5, the learned Judge held that there is direct tenancy with

plaintiff, and since their tenancy has not been terminated, plaintiff is not entitled to recover possession from them. He directed the trial court to

permit the plaintiff to amend the plaint so as to the identify those portions of the property which are in the possession of the respective defendant so

that a decree for ICcovery could be granted for specific portions. The order of remand is challenged by plaintiff in the connected C.M.A. No. 723

of 1990.

I will first consider the second appeal filed by defendants 4 and 5. In my opinion, that appeal itself is not maintainable. The trial court as well as

the lower appellate court has come to the conclusion that defendants 4 and 5 still continue to be the tenants under the first defendant. In such an

appeal, the question arises as to whether the appellants are the direct tenants of the plaintiff or under the first defendant. In this connection, it may

also be noted that the first defendant has a case that he has never surrendered his tenancy rights and defendants 2 to 7 are his subtenants. The

collection of any amount by plaintiff is unauthorised and the arrangement pleaded in paragraph 4 of the plaint is not true. The trial court has

accepted the case that the first defendant continues to be the tenant.

A reading of the written statement of the first defendant makes it clear that he is opposing the claim of the appellants. In such a case and when

the decision of the courts below is attacked as incorrect or illegal, the first defendant must also be a necessary party to the appeal. It is a fight

between three parties i.e., plaintiff, first defendant and defendants 4 and 5. As against the first defendant, the decision of the trial court has now

become final i.e., he continues to be the tenant. When that decision stands, the appellants cannot get a decree without the first defendant also made

as a party to the appeal. The very appeal is not properly framed. That itself is sufficient for dismissing the second appeal.

Even on the question of law that is raised, I do not think the appellants (in the second appeal) have a vase to succeed.

It is true that in the plaint, it is said that the plaint collected some amounts from sub-tenants, on the basis of a negotiation with the first

defendant. But that negotiation was given a go by first defendant as per Ex. A-2 notice. First defendant wanted refund of the entire amount

collected and he also contended that there was no such negotiation or agreement. There was only proposal for settlement, and it ended as a

proposal. The trial court as well as lower appellate court has come to the conclusion that the tenancy with the first defendant continues and the

same is not terminated in any manner known to law. So long as there is no surrender of the tenancy by first defendant, these appellants cannot have

a direct dealing with plaintiff. The findings of the courts below are, therefore, correct, and the same are accordingly confirmed. Consequently, the

second appeal is dismissed with costs.

C.M.A. No. 723 of 1990 : Coming to the civil miscellaneous appeal, I feel that the lower appellate court has acted illegally without considering

the case of the parties. The lower appellate court in that case has not properly understood the case pout forward by plaintiffs. In paragraph 4 of

the plaint, what the plaintiffs said was, that there was a negotiation whereby first defendant agreed to pay Rs. 200 for the area occupied by him and

further agreed to have a direct tenancy with the sub-tenants. The same is stoutly denied by the first defendant. The lower appellate court has not

entered a finding whether the case pleaded by plaintiff is true or not. The trial court has entered a definite finding that the first defendant has not

surrendered his tenancy rights.

The lower appellate court has taken note of only certain circumstances, namely, collection of rent from defendants 2 to 5, and the absence of

first defendant in initiating any action against the sub-tenants. These two circumstances will not be sufficient to come to the conclusion that there is

an implied surrender.

The law is now well-settled in view of the following decisions : In Venkayya v. Subbarao AIR 1957 A.P. 619 : 1956 A.W.R. 1093, a Division

Bench of that High Court considered as to what is meant by ''implied surrender'' under Indian Law, and held thus:

Implied surrender is recognised and provided for by Section 111, Clause (f) of the Transfer of Property Act and the illustration thereto, which

refers to a lessee accepting from his lessor a new lease of the property leased, to take effect during the continuance of an existing lease. The

illustration is obviously not exhaustive of cases of implied surrender.

In India, if a landlord and tenant by mutual agreement do any act or enter into any transaction which is inconsistent with the continuance of the

existing lease or tenancy, there would be an implied surrender. This is merely an application of the general principle of law that in respect of the

same subject-matter parties cannot stand to each other in two consistent and incompatible relationships. If the later transaction can come into effect

only on the termination of the earlier, the earlier transaction is deemed or assumed to have been terminated in order to enable the later to operate

according to its tenor. Even in England the principle of implied surrender by operation of law is not confined to cases of renewal of a lease in

favour of a lessee before the expiry of the term of a subsisting lease. The doctrine of implied surrender has been applied in England to cases where

the lessor grants a new lease to a third person with the assent of the tenant under an existing lease who delivers up possession to such person.

A surrender by operation of law determines the lease and involves an extinction of the right of the lessee in respect of the properties surrendered as

from the date of surrender. On a surrender, the estate vests immediately in the lessor. If a lessee for years accepts a new lease by indenture of part

of the lands, it is a surrender for that part only and not for the whole, and though a contract for years cannot be so divided, as to be avoided for

part of the years and to subsist for the residue, either by act of the party or act in law, yet the land itself may be divided, and the tenant may

surrender one or two acres, either expressly or by act of law, and the lease for the residue will stand good and untouched....

In Noratmal v. Mohanlal AIR 1966 Raj. 89, in paragraphs 5 and 7 of the judgment, a learned Judge of that High Court held thus:

The term ""surrender by operation of law"" or ''implied surrender'' is the expression used to describe all those cases where the law implies a

surrender I from unequivocal conduct of both parties which is inconsistent with the continuance of the existing tenancy. Such a surrender is valid u/s

1ll(f). Implied surrender or surrender by operation of law may come into being in a number of ways. It may be a surrender by acceptance of a new

lease or a surrender by unequivocal giving of possession or a surrender by re-letting to another person by the landlord. Even acceptance by the

landlord of the sub-lessee as his tenant would amount to surrender. The essence of implied surrender is the doing of an act which is inconsistent,

with the continuance of the lease or tenancy. It is not a change of possession. Directing the sub-lessee to attorn to the landlord amounts to delivery

of possession to the landlord. There can be implied surrender of part of the leased property.

[Italics supplied]

Both the above decisions were approved by the Supreme Court in the decision reported in P.M.C. Kunhiraman Nair Vs. C.R. Naganatha

Iyer and others, . In paragraph 10 of the judgment, their Lordships held thus:

Under Clause (f) of Section 111 of the Transfer of Property Act, 1908, implied surrender is a mode for determination of a lease of immovable

property. In English law, delivery of possession by the tenant to a landlord and his acceptance of possession effects a surrender by operation of

law. It is also called implied surrender in contradistinction to express surrender which must be either by deed or in writing. It has been held that

directing the occupier to acknowledge the landlord as his landlord, i.e., to attorn to the landlord, is a sufficient delivery of possession by the tenant

to the landlord. It has also been held that receipt of rent from a person in possession may be evidence of the landlord''s acceptance of him as

tenant, whether he is a stranger, or whether he was already in possession as sub-tenant. (See: Halsbury''s Laws of England, 4th Edn., Vol. 27,

paras 444, 445, 446 and 450; and Note (1) to para 446). Under the illustration to Clause (f) of Section 111 of the Transfer of Property Act, there

would be an implied surrender of the former lease if a lessee accepts from his lessor a new lease of the property leased to take effect during the

continuance of the existing lease. The said illustration is, however, not exhaustive of the cases in which there may be an implied surrender of the

lease. Just as under the English law, there can be an implied surrender under the law of transfer of property in India, if the lessor grants a new lease

to a third person with the assent of the lessee under the existing lease who delivers the possession to such person or where the lessee directs his

sub-tenant to pay the rent directly to a lessor. See : Konijeti venkayya v. Thammana Peda Venkata Subbarao.

[Italics supplied]

Admittedly, in this case, a major portion of the property is in the hands of sub-lessees. There is no direction by the lessee either to the sub-

tenants or to the lessor to have a direct dealing between them. It is only an allegation in the plaint that he had a direct dealing with the sub-tenants.

That allegation has not been substantiated, and it is even now disputed by the first defendant.

Even in the appeal filed by first defendant, in the lower appellate court he disputed the allegation in the plaint. In the memorandum of appeal

filed by him, what he alleged was, that the plaintiff has illegally taken defendants 2 to 8 as direct tenants for which he had no authority. The further

ground is that it is not open to the plaintiff to collect rent directly from defendants 2 to 8. When this ground was taken in the memorandum of

grounds of appeal, without entering a finding on that, the lower appellate court said that since the plaintiff has collected rent from defendants 2 to 7,

they become direct tenants of plaintiff. When first defendant''s tenancy has not been terminated, or when the first defendant has not surrendered his

tenancy right, plaintiff cannot have a direct relationship with the sub-tenants. That is a legal impossibility. The lower appellate court failed to

consider that issue while disposing of the appeal.

In the decision reported in Sushil Krishna Roy Vs. Narayan Ch. Mukherji, , the facts are more or less similar. The learned Judge said that

mere silence on the part of the lessee in not initiating action against the sub-tenants and mere collection of rent from subtenants without the junction

of the lessee will not amount to implied surrender. In that case, their Lordships said that unless there is an agreement between the parties, a new

relationship cannot come into existence. The first defendant has no case that he has entered into any agreement with the plaintiff so as to create a

new relationship. In that decision, it was held as follows:

The defendant who was a tenant in respect of the entire premises under the plaintiff''s predecessor - in-interest, sub-let some portions of the

premises to different persons. The plaintiff after purchase of the property started realising rents from sub-tenants while the defendant continued to

pay the original rent to the plaintiff without raising any objection or taking any action against the sub-tenants.

Held, (i) that in absence of any evidence to show that there was ever any agreement between the parties from which it could be said that a new

relationship was created, it could not be said that there was implied surrender in respect of the premises sub-let and a new tenancy was created

between the plaintiff and defendant....

In ''The Transfer of Property Act'' by Mulla, 8th Edition (1995), at page 923, the learned Author says thus:

In English Law, delivery of possession by the tenant to a landlord and his acceptance of possession effects a surrender by operation of law. It is

also called implied surrender in contradistinction to express surrender which must be either by deed or in writing. Directing the occupier to

acknowledge the landlord as his landlord, i.e., to attorn to the landlord, is a sufficient delivery of possession by the tenant to the landlord. Under

the illustration to Clause (f) of Section 111 of the Transfer of Property Act, there would be an implied surrender of the former lease if a lessee

accepts form his lessor new lease of the property leased taking effect during the continues of the existing lease. This illustration is, however, not

exhaustive of the cases in which there may be an implied surrender of the lease. There can be an implied surrender if the lessor grants a new lease

to a third person with the assent of the lease of the existing lease who delivers the possession to such person or where the lessee directs his

subtenant to pay the rent directly to a lessor.

[Italics supplied]

In a very recent Bench decision of the Kerala High Court reported in A. Sulaikha Beevi v. K.C. Mathew and Ors. (1997) 1 K.L.J. 1 their

Lordships considered the question of surrender. It was held therein thus:

Surrender by operation of law or implied surrender is also founded upon estoppel. In law of Landlord and Tenant by Hill and Redmon it is said:

The lessor has no power to grant the new lease except upon the footing that the old lease is surrendered, and the lessee, being a party to the grant

of the new lease, is estopped from denying the surrender. Consequently, the acceptance of the new lease operates as a surrender of the old one.

Their Lordships further went on the say that according to Coke ''First, that every estoppel ought to be reciprocal, that is, to bind both parties.''

From the above passage also, it is clear that it is the contractual arrangement that makes the surrender either by operation of law or by implied

surrender. Both the lessor and lessee must be parties to that arrangement and when a new arrangement comes into play, that cannot be done

without the consent of the lessee. If the attornment by the sub-lessees in favour of the lessor can be had only with the consent of the lessee and

only that will operate as implied surrender. On the available evidence, the only finding that can be had is, as held by the trial court, that there is no

surrender.

Learned Counsel for the respondent submitted that to substantiate a case of surrender, it is not necessary that possession should be

transferred. I can agree with the said argument if only the respondent has any plea of surrender anywhere in his case. He cannot put forward a new

case in this civil miscellaneous appeal. He also contended that the judgment of the lower appellate court is on facts only, and, while exercising the

powers under Order 43, C.P.C., those findings should not be interfered with. I agree with this legal submission. While disposing of this appeal, I

have not interfered with the finding of fact. I am only entering a finding as to what is the legal effect on the findings of fact. That is a matter which

this Court can take note of under Order 43, C.P.C. If the lower appellate court has not considered the legal effect of the proved facts, and has

arrived at a conclusion which is not permissible in law, a conclusion could be arrived at by this Court in that regard.

I set aside the judgment of the lower appellate court and I hold that on the proved facts, first defendant continues to be a tenant and all the

other defendants are only sub-tenants under the first defendant. There is no necessity to remand the suit to the trial court. The notice issued by the

plaintiff terminating the tenancy of the first defendant is proper. The lower appellate court has also failed to take note of the judgment which went

against defendants 4 and 5 in which a specific findings has been entered that the first defendant continues to be a tenant.

The judgment of the lower appellate court is further inconsistent when it held that a decree for eviction could be passed against defendants 1 to

3 and 8. If the case of the plaintiff is accepted, even if defendants 2, 3 and 8 are set ex parte, no decree could have been passed against them.

That means, even the lower appellate court has not accepted the allegations in the plaint as true.

In the result, the civil miscellaneous appeal is allowed with costs. A.S. No. 179 of 1988, on the file of 8th Additional City Civil Court, Madras,

will stand dismissed with costs.

By dismissing the second appeal as well as by allowing the C.M.A., the net result is, the trial court judgment is restored, allowing the plaintiff -

temple to recover the entire property from all the defendants.