Supreme Court of India
P.M.C. KUNHIRAMAN NAIRversusC.R. NAGANATHA IYER AND ORS.
- Citation
- 1992 INSC 169
- Decided
- 15 May 1992
- Disposal
- Appeal(s) allowed
- Bench
- T K THOMMEN
Holding
The respondents had impliedly surrendered their leasehold rights, had no subsisting leasehold interest, and the suit for possession was not maintainable.
Summary
The appellant, Kunhiraman Nair, claimed possession of land, building and mills after a series of agreements that transferred management and lease rights to him. The respondents, originally lessees of the property, entered into a March 22, 1955 agreement with T.M. Rama Iyer, surrendering their leasehold rights, and T.M. later assigned the mills to the appellant. The Supreme Court examined whether the respondents retained any subsisting leasehold interest and whether the earlier trial court judgment had merged into the High Court judgment. Relying on Section 111(f) of the Transfer of Property Act, the Court held that the respondents had impliedly surrendered their leasehold rights, leaving them without any leasehold claim. Consequently, the suit for possession filed by the respondents was not maintainable, and the appeal was allowed, setting aside the High Court’s decision.
Issues considered
- Whether the judgment of the Additional Sub‑Judge merged into the High Court judgment and is therefore not separately operative.
- Whether the respondents retained a subsisting leasehold interest in the land and building at the date of the suit.
- Whether the agreement of 22 March 1955 effected an implied surrender of the respondents' lease under Section 111(f) of the Transfer of Property Act, 1882.
- Whether the appellant could be treated as a tenant of the landlord and claim protection under the Kerala Building (Lease and Rent Control) Act.
Legislation cited
Subjects
implied surrenderleasehold interestTransfer of Property Actsubsisting leaselandlord‑tenant relationshipmerger of judgmentspossession suitKerala Building Actassignment
Judgment
{
- ~ P.M.C. KUNHIRAMAN NAIR
v.
C.R. NAGANATHA IYER AND ORS.
A
MAY 15, 1992
[DR. T.K. THOMMEN AND S.C. AGRAWAL, JJ.] B
>--y Transfer of Property Act, 1882: Section 111 (f).
Lease-Detennination of-Implied surrender--Agreement-lmplied
_.. su"ender of leasehold rights in property-Suit for recovery of possession not c
-
t
----" maintainable subsequent to surrender of right.
Doctrine of Merger--Trial Court-Judgment of-Appeal-Decision of
High Court-Held judgment of Trial Court stood merged in the judgment of
~ High Court.
D
Respondents No. 1 to 5 entered into an agreement with the appellant
whereunder the appellant advanced money to the respondents and the
respondents entrusted the management of their property, consisting of,
land and the buildings and the machinery of mills standing thereon, to the,
appellant for a period of one year. The agreement provided that on the,
E
expiry of period of one year, respondents would get back possession of,
their property after paying the amount due to the appellant. However, ·
before the expiry of the period of one year fixed under the agreement the
respondents entered into another agreement, dated March 22, 1955 with ·
one TM which provided that on paying the amount due to the appellant
after the stipulated period" TM could take up the management by himself, · F
pay the rent of the building, conduct the business and if necessary fale a
suit against the appellant and get the Mill vacated and do anything as per-
his. will and pleasure. Thereafter, TM executed a Deed of Assignment,
dated December 11, 1956, whertby he assigned the property to the appel-
lant for a sale consideration with liberty to the appellant to manage the
G
mills, to enter into rental agreement with the Jenmi of the building· by
paying the rent directly, to effect alienation etc. The said agreement also
-" provi~ed that TM would not have any right or liability thereafter.
Subsequently, respondent Nos. 1, 3 and 5 filed a suit against respon-
dent Nos. 2, 4 and 6 as well as against the appellant and TM seeking H
371
372 SU\lREME COURT REPORTS (1992] 3 S.C.R.
A partition and separate possession of their shares in the suit properties,
and for possession of the mill contending that the agreement dated March
22, 1955 executed by respondent Nos. 1 to 5 in favour of TM was a sham
transaction and no rights were conferred on TM under the said agreement.
TM died during the pendency of the suit. In the suit all disputes between
the parties and the legal representatives of TM were settled out of Court
B and the only dispute requiring adjudication was that relating to the
property in question which was claimed by the appellant as the assignee
from TM. The said suit was dismissed by the Trial Court. Respondents 1
to 6 filed an appeal in the High Court against the said judgment which
was dismissed. While the said appeal was pending before the High Court,
C respondent Nos. 1 to 6 filed a suit for redemption and recovery of posses·
sion of property and decree for possession of the suit property excluding
the plant and machinery was passed in favour of the respondents. The
appeal filed by the appellant was dismissed by the First Appellate Court
and the second appeal filed by the appellant was also dismissed by the
D High Court. Relying upon the judgment of the Additional Sub-Judge in the
earlier suit the High Court rejected the contention urged by the appellant
that there was relationship of landlord and tenant between the plaintiff-
respondents and him and he was entitled to protection of the Kerala
Building (Lease and Rent Control) Act.
E In appeal to this Court, on the question whether the respondents had
a subsisting leasehold interest in the property in question, it was con·
tended on behalf of the appellant that the judgment of the Additional
Sub-Judge, having merged in the judgment of the High Court on appeal,
the said judgment of the High Court alone was operative and as per that
F judgment the earlier suit only related to transfer of movable property,
namely, the Oil Mill. As regards the leasehold rights in the suit property
it was submitted that the respondents ceased to havyny subsisting right
in the property as lessee since they impliedly surrendered their leasehold
rights in favour of TM by executing the agreement dated March 22, 1955;
G thereafter a fresh tenancy was created in favour ef TM by executing the
agreement dated March 22,1955; thereafter a fresh tenancy was created in
favour of TM which was assigned by him in favo~r of the appellant.
>--
Allowing the appeal and setting aside the judgment of the High
H Court, this Court, ·
KUNHIRAMAN NAIR v. NAGANATIIA IYER 373
HELD : 1. The judgment of Additional Sub-Judge had merged in the A
judgment of the High Court on appeal which shows that the earlier sµit
was confined to the Oil Mill only, treating it as movable property and ._.e
said suit did not relate to the land and building in which the oil mill. is
installed and the plea raised in that suit can have no bearing in the
subsequent suit relating to possession of land and building. [380A-B]
B
2. It was permissible for the appellant to raise the plea that the
plaintiffs have no subsisting leasehold interest in the suit property and the
appellant is in possession of the same as a tenant of the owner of the
property. (380-C]
c
- 3. Under Clause (f) of Section 111 of the Transfer of Property Act,
1882, implied surrender is a mode for determination of a lease of immov-
able property. In English Law, delivery of possession by 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 D
occupier to acknowledge the landlord as his landlord, i.e.; to attom to the
landlord, is a sufficient delivery of possession by the tenant to the landlord.
Receipt of rent from a person in possession may be evidence of th~
landlord's acceptance of him as tenant, whether he is a stranger or whether
he was already in possession as sub-tenant. [380F-G] E
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 cases in which there may be an implied surrender of the F
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. [380H, 381-A-B]
G
Konijeti Venka_wa & Anr. v. Thammana Peda Venkata Subbarao & .
Anr., AIR 1957 A.P. 619; Noratmal v. Mohan/al, AIR 1966 Raj. 89, referred
to.
. . .
Halsbury's Laws of England, 4th end. Vol. 27, paras 444, 445, 446 and H
374 SUPREME COURT REPORTS
A 450, referred to.
4. By executing the agreement dated March 22, 1955 respondent Nos.
1 to 5 surrendered their leasehold interest in favour of TM inasmuch as
in clause 4 of the said agreement they have clearly stated that respondents
will not have any responsibility or objection for TM paying the amount
B due to the appellant after the stipulated period and take up the manage-
ment by himself and pay the rent of the building and conduct its business.
(382-F]
5. After the execution of the agreement dated March 22, 1955, TM
entered into an agreement with the landlord for a fresh lease on a higher
C rent and by Deed of Assignment dated December 11, 1956, TM impliedly
surrendered his leasehold rights in the suit property. [383A-C]
6. On the date of the filing of the present suit the respondents had
--
no subsisting leasehold interest in the suit property. The suit for the
D recovery of the possession of the suit property filed by them on the basis
that they are the lessees thereof was, therefore, not maintainable and is
liable to be dismissed. (383-E]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2460(N)
of 1977.
E
From the Judgment and Order dated 10.3.1977 of the Kerala High
Court in S.A. No. 1206 of 1976.
F
T.R.G. Wariyar, Smt. Shanta Vasudevan and P.K Manohar for the
Appellant.
S. Balakrishnan and G. Srinivasan for the Respondents.
-
The Judgment of the Court was delivered by
S.C. AGRAWAL. J. This appeal is directed against the judgment and
G decree dated March 10, 1977 of the High Court of Kerala. It arises out of
a suit filed by respondents Nos. 1 to 6 against the appellant and respondent
No. 7 for redemption and recovery of possession of property consisting of
25 cents of land in Valiyaveetuparamba in Nagaram Amson, District Koz-
hikode, and the buildings and the machinery of the Flour Mill standing on
H the said land.
-{_
KUNHIRAMAN NAIR v. NAGANATHA IYER [AGRAWAL, J.) 375
.. I' The land and the buildings belong in Jenm to the Vetteth Tarwad A
who leased out the same in or about 1939 to Sivarama Iyer, respondent No.
2 on a rent of Rs. 40 per mensem. Late C.N. Rama Iyer, father of
respondents Nos. 1 to 5 and husband of respondent No. 6 started a flour
mill known as 'Sivaram Mills' on the said premises in or about 1940 and
for that purpose, he installed an engine and necessary plant and machinery B
and also made some further constructions over the land. C.N.Rama Iyer
died on May 2, 1953 and after his death, respondents No. 1 to 5 entered
>-Y into an agreement with the appellant on February 7, 1954 whereunder the
appellant advanced Rs. 4,500 to r!!spondents Nos. 1 to 5 and respondents
Nos. 1 to 5 agreed to entrust the appellant with the management of the
mill for a period of one year from March 5, 1954 on a monthly payment of c
Rs. 300 out of which Rs. 125 was to be appropriated every month towards
the advance given. Respondents Nos. 1 to 5 could not entrust the manage-
ment of Mill to the appellant on or before March 5, 1954 and they could
4 do so only in the middle of April 1954 and on April 13, .1954, a fresh
agreement (Ex. B2) modifying the terms of the previous agreement was D
entered into between respondents Nos. 1to5 and the appellant. Under the
said agreement dated April 13, 1954 a further sum of Rs. 1,900 (in addition
to the sum of Rs.4,500) was advanced by the appellant to respondents Nos.
1 to 5 and it was agreed by respondents 1 to 5 that the total sum of Rs.
>-- 6,400 which had been advanced by the appellant to respondents Nos. 1 to E
5 will not bear any interest from the date of the said agreement and that
the appellant shall run the mill for one year and after the stipulated period,
--- respondents Nos. 1 to 5 would get the possession of the mill back from the
appellant. It was also agreed that a sum of Rs. 40 which is the rent of the
building where the mill is situate and current charges for each month of . F
,,.... the electric lights of the mill should be paid by the appellant to respondent
Nos. 1 to 5 and a sum of Rs. 100 per month would be paid by the appellant '
as rent for the mill, out of which a sum of Rs. 50 shall be adjusted by the
appellant towards Rs. 6,400 paid in advance and the balance amount of Rs.
50 should be paid to respondents Nos. 1 to 5 every month. It was also ·
agreed that on the expiry of the period of one year, respondents Nos. 1 G
to 5 would get back the possession of the mill after paying the balance
~ amount of Rs. 5,800 to the appellant. Before the expiry of the period of
one year fixed under the agreement dated April 13, 1954, the plaintiffs- ·
respondents Nos. 1 to 5 entered into an agreement (Ex. B3) dated March
'
H
376 SUPREME COURT REPORTS (1992) 3 S.C.R.
A 22, 1955 with one T.M. Rama Iyer (who happened to be the father-in-law
of respondenf'No. 2). In the said agreement, reference has been made to
the agreement dated April 13, 1954 with the appellant and it was stated
that a sum of Rs. 5,600 is to be paid as balance amount to the appellant
after adjusting the sum of Rs. 800 which has already been paid to him. It
B was further stated that a sum of Rs. 5,072 and annas 2 was payable to T.M. ·
Rama .Iyer towards the arrears of rent for the buildin:g belonging to the
said T.N. Rama Iyer, which has been taken on rent by respondent Nos. 1
to 5 a1 d that since there was difficulty for respondents Nos. 1to5 to clear
the said liability, they have decided to assign the Company (named
C 'Sivaram Mills & Co.) to T.M. Rama Iyer for a consideration of Rs. 10,672 ·
and annas 2, out of which Rs. 5,072 and annas 2 had been adjusted and
from the balance amount due to them the sum Rs. 5,600 due to be paid
-
to the appellant may be paid to him. In the said agreement, it was also
stated that the said T.M. Rama Iyer on paying the amount due to the
appellant after the stipulated period could take up the management by
D himself, pay the rent of the building, conduct the business and if necessary
to file a suit against the appellant and get the company vacated and do
anything as per his will and pleasure. In th~ said agreement, respondents
Nos. 1 to 5 further agreed that either after his taking the possession of the
company or whenever demanded by T.M. Rama Iyer, they would execute
E the sale deed and get the same registered. On December 11, 1956, the said
T.M. Rania Iyer executed a Deed of Assignment (Ex. 84) in favour of the
appellant and his younger brother, Gopalan Nair, whereby he assigned the
Sivaram Oil Mill and Flour Mill to the appellant and his younger brother
on a sale consideration of Rs. 8,000. The sum of Rs. 6,000 that was payable
F to the appellant inclusive of interest was adjusted against the said con-
sideration and the balance amount of Rs. 2,000 was paid by the appellant
to the said T.M. Rama Iyer. In the said document, it was stated that after
execution of the agreement dated March. 22, 1955, T.M. Rama Iyer had
taken the building where the mills are situated on a monthly rent of Rs. 75
G for a period of one year from Vettathu Tharavad under an oral agreement.
In the said document, it was further mentioned that the appellant and his
younger brother had the liberty to mange the mills, to enter into rental
agreements with the Jenmi of the building by paying the rent directly, to
effect alienation etc. as per their wishes and he (T.M. Rama Iyer) would
not have any right or liability hereafter. In the said document, it is also
H
KUNHIRAMAN NAIR v. NAGANATHA·IYER [AGRAWAL, I.] 377
mentioned that the rent receipts for the rent paid to the Jeruni were being A
handed over with the document.
Respondents Nos. 1, 3 and 5 fded a suit (O.S.No. 3 of 1964) against
respondents Nos. 2, 4 and 6 as well as against the appellant and T.M. Rama
Iyer. In the said suit, the plaintiffs, while seeking partition and separate B
possession of their shares in the .suit properties, had also prayed ,for
possession of the oil and flour mills and had asserted that the agreement
!"". dated March 22, 1955 executed by respondents Nos. 1 to 5 in favour of
T.M. Rama Iyer, was a sham transaction and no rights were conferred on
T.M. Rama Iyer under the said agreement. T.M Rama Iyer, who was
defendant no. 1 in the said suit, died during the pendency of the suit. In C
tJie suit all disputes between the plaintiffs (respont!ents Nos. 1, 3 and 5)
and Defendants nos. 2 to 4 (respondents Nos. 2, 4 and 6) and the Iesal
representatives of T.M. Rama Iyer were settled out of court and the only
dispute requiring adjudication was that relating to the property in question
in these proceedings which was claimed by the appellant as the assignee D
from T.M.· Rama Iyer. The said suit was dismissed by the Additional
Sub-Judge, Kozhikode by judgment (Ex.Al) dated Janual") 25, 1968. It was
held that the agreement dated March 22, 1955 was not sham, nominal and
void and it operates as an outright sale of plant and machinery. It was, ,
however, held that the tenancy right of the plaintiffs had not been affected
by either the agreement dated March 22, 1954 or the Deed of Assigrune~t E
dated December 11, 1956 and that the plaintiffs would be entitled to
poss~ssion of the site and buildings in which the plant and machinery were
installed. It was further held that the appellant had been inducted into
possession of the site and buildings by virtue of the agreement dated April
13, 1954, and that the appellant would be entitled to continue in possession F
of the same until the right created in his favour as per agreement dated
April 13, 1954 was extinguished. Respondents 1 to 6 fded an appeal (A.S.
No.129/68) in the High Court against the said judgment and decree of the
Additional Sub-Judge. The said appeal was dismissed by the High Court
by its judgment dated April 6, 1973. The High Court found that according G
tO' the averments in the plaint what was conveyed under the agreement
dated March 22, 1955 was only the oil mill and it was not the case of the
plaintiffs that immovable property was conveyed under the said agreement
and that in view of the pleadings, there was no scope for considering
whether any immovable property had been transferred and therefore, no,
question of registration of the document arose. H
378 SUPREME COURT REPORTS [1992) 3 S.C.R.
A While the said appeal was pending before the High Court, respon-
dents Nos. 1 to 6 file~ the suit giving rise to this appeal in the Court on "'
Munsif, Kozhikode wherein it was prayed that the possession of the suit
property may be restored to the plaintiffs-respondents by way of redemp-
tion and that the plaintiffs-respondents were willing to pay any amount that
is found payable by them to the appellant. The said suit is based on the
B footing that the earlier suit was resisted by the appellant on the ground
that he was in possession of and management of the business of the Mill
as possessory mortgagee thereof and the same had found favour with the
court. The plaintiffs-respondents have, however, pleaded that since the
appellant has continued in possession and management of the property
C even after the expiry of the. term, no amount is likely to be payable on
settlement of accounts. Respondent No. 7 was impleaded as defendant in
the said suit on the grou~d· that the appellant 'had leased the mill to him.
The said suit was contested by the appellant. In the said suit, a decree for
possession of the suit property excluding the plant and machinery was
D passed in favour of the plaintiffs-respondents by the Additional Munsif,
Kozhikode-1 by his judgment dated June 22, 1972. The appeal filed by the
appellant against the judgment and decree of the Additional Munsif was
dismissed by the District Judge, Kozhikode by judgment dated November
20, 1976 and the second appeal filed by the appellant was also dismissed
by the learned Single Judge of the High Court by judgment dated March
E 10, 1977.
· The High Court was of the view that the 11ppellant could not C!>me
forward with a case that there was relationship of landlord and tenant
between the plaintiffs-respondents and him and he could not be evicted
F from the suit property since he is entitled to protection of the Kerala
Building (Lease and Rent Control) Act. In this regard, the High Court,
after referring to the judgment of the Additional Sub-Judge in the earlier
suit (O~S. No. 3 of 1964), has observed that in that suit the appellant did
not put forward the case that as per the agreement (Ex.B2) dated April
G 13, 1954 there was a relationship of landlord and tenant between plaintiffs-
respondents and him and the case of the appellant in that suit was that the
plaintiffs-respondents could get the possession of the property only on
extinguishment of the charge created by the said agreement. The High
Court held that in the circumstances the appellant could not be permitted
to plead in this suit what he did not plead in the earlier suit. According to
H the High Court, the consideration paid for the movables under Deed of
KUNHIRAMAN NAIR v. NAGANATIIA IYER (AGRAWAL, J.] 379
Assignment (Ex. B4) dated December 11, 1956 would not make the appel- A
lant the tenant of the property. The High Court was of the view that the
appellant could not be allowed to put forward inconsistent pleas to the
detriment of the opposite side. The High Court was also of the view that
since there was a lease for running a business, it could not be said that the
appellant is a tenant of a building and is entitled to the protection of the
Kerala Building (Lease and Rent Control) Act.
B
In support of this appeal, Shri Wariyar, the learned counsel for the
appellant, has submitted that the High court was in error in relying upon
the observations contained in the judgment of the trial court in a previous
suit (O.S No. 3 of 1964) inasmuch as after the decision of the High Court C
in appeal (A.S. No. 129/68), the said judgment of the trial court had merged
in the judgment of the High Court dated April 6, 1973 and that is the only
-judgment which is operative and that the said judgment of the High Court
shows that the only question which was considered by the High Court was
whether the agreement (Ex. B3) dated March 22, 1955 was inoperative on D
account of non-registration. According to Shri Wariyar, the High Court has
held that the said agreement did not require registration inasmuch as it
related to transfer of movable property, namely, the oil mill and that the
effect of the said judgment of the High Court is that the plaintiffs-respon-
dents are precluded from claiming possession of the oil mill. The only
question that remains is whether plaintiffs-respondents can claim posses- E
sion of the land and building in which the mill is installed and that involves
the question as to whether plaintiffs-respondents, who were originally the
lessee of the land and building, had a subsisting right in the same on the
date of filing of the subsequent suit by them. Shri Wariyar has urged that
the plaintiffs-respondents ceased to have any subsisting right in the proper- F
ty as a lessee in view of the agreement (Ex.B3) dated March 22, 1955 which
shows that there was an implied surrender by the plaintiffs-respondents of
their leasehold right in the property in favour of T.M. Rama Iyer which
fact is further established by Deed of Assignment (Ex.B4) dated December
11, 1956 executed by T.M. Rama Iyer in favour of the appellant and his
younger brother which indicates that a fresh lease had been created by the G
landlord in favour ofT.M. Rama Iyer and T.M. Rama Iyer had surrendered
his leasehold rights in favour of the appellant.
We find considerable force in the aforesaid submissions of Shri
Wariyar. H
380 SUPREME COURT REPORTS (1992] 3 S.C.R.
A After the decision of the High Court dated April 6, 1973 in A.S. 129
of 1968 the judgment of the Additional Subordinate Judge stood merged
in the judgment of the !Iigh Court. The judgment Qf the High Court shows
that the earlier suit was confined to the oil mill only, treating it as movable
property independent of the property. Since the said suit did not relate to
B the land and building in which the oil mill is installed the said suit and the
plea raised by the appellant in that suit can have no bearing in the present
suit relating to possession of the land and building. The learned Judge of
the High Court, with due respect, was not right in negativing the plea raised
by the appellant that he is in possession of property as a tenant on the view
that the appellant did not raise this plea in the earlier suit and he could
C not to be allowed to put forward inconsistent pleas. Since the question with
regard to possession of the land and building arises in the present suit only
it was permissible for the appellant to raise the plea that the plaintiffs have
no subsisting leasehold interest in the suit property and that the appellant
is in possession of the same as a tenant of the owner of the said property.
D
As to whether the plaintiffs had a subsisting leasehold interest in the
property involves the question whether they had surrendered the said
rights. The case of the appellant is that the plaintiffs had impliedly sur-
rendered their leasehold rights when they executed the agreement (Ex.
B-3) dated March 22, 1955 and thereafter a fresh a tenancy was created in
E favour of T.M. Rama Iyer which.was assigned by T.M. Rama Iyer in favour
of the appellant.
Under clause (f) of s.111 of the Transfer of Property Act, 1908,
implied surrender is a mode for determination of a lease of immovable
F 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 attom to
the landlord, is a sufficient delivery of possession by the tenant to the
G landlord. It 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 s.111 of'
H the Transfer of Property Act, there would be an implied surrender of the
{
KUNHIRAMAN NAIR v. NAGANATIIA IYER (AGRAWAL, J.) 381
former lease if a lessee accepts from his lessor a new lease of the property A
.,- 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 a 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
B
or where the lessee directs his sub-tenant to pay the rent directly to a
lessor. [See : Konijeti Venka.Y.Ya & Anr. v. Thammana Peda Venkata Sub-
barao & Anr., AIR 1957 A.P. 619 at pp. 624 and 625; and Noratmal v.
Mohan/al, AIR 1966 Raj. 89, at VP· 90 and 91].
c
Reference may, therefore, be made to the relevant clauses in the
agreement (Ex. B3) dated March 22, 1955 and the Deed of Assignment
(Ex.B4) December 11, 1956 on which reliance has been placed by Shri
Wariyar. In the agreement (Ex. B3) dated March 22, 1955, executed by
respondents Nos. 1 to 5 in favour of T.M. Rama Iyer, it is stated:
D
"(4) We will not have any responsibility or objection for your
paying the amount due to Kunhiraman Nair after the stipulated
period and to take up the management by yourself, pay the rent
of the building, conduct the business and if necessary to file a
suit against Kunhiraman Nair and get the Company vacated; E
and to do any thing as per your will and pleasure.
(5) The Company is not charged by and other liability except
the loan mentioned above. The gift deed given to us and the ·
copy of the agreement with Kunhiraman Nair are hereby given
to you. Either after your taking possession of the Company or · F
whenever you make demand we shall execute sale deed and get
, the same registered."
In the Deed of Assignment (Ex. B4) dated December 11, 1956
executed by T.M. Rama Iyer in favour of the appellant and his younger'
brother, it is stated :
G
"(2) After this for the purpose of clearing of the loan liability
to you; the mill etc. started by the abovesaid Naganatha Iyer
and others was given. to me as per the agreement dated the
22nd of March, 1955. They belong to me and I have on oral H
382 SUPREME COURT REPORTS (1992] 3 S.C.R.
A agreement taken the building where the mills situate on a
monthly rent of Rs. 75 for a period of I year from the Vettathu
Tharavad which is the jenmi of the same.
(3) I have decided to assign the Oil Mill and Flour Mill
described in the schedule below to you. The sale consideration
B is fixeci at Rs. 8,000 inclusive of Rs. 100 given by me as advance
to the jenmi. Of this Rs. 8,000 the sum of Rs. 6,000/- due to
you inclusive of interest is adjusted and after deducting the
same, the balance amount of Rs. 2,000 due to me is paid and
the entire sale consideration has been paid to me in full satis-
c faction in the above said 2 counters and I have handed over to
you the mills described in; the schedule with all the quipments
and all the other rights pertaining to the same. You have
derived the same and hereafter you are at liberty to manage
the mills by yourself; to enter into rental agreements with the
J enmi of the building· by paying the rent directly, to effect
D
alienation etc. as per your wishes. I will not have any right,
question or liability hereafter. I have made you believe and
hereby certify that the properties are not charged by any loan
liability or alienation and none except myself have any right
over the same. The abovesaid agreement, the gift deed obtained
E by Naganatha Iyer and others and the rent receipts for having
paid rent to the Jenmi are hereby given."
From the aforesaid .clauses, it would appear that by executing the
agreement (Ex. B3) dated March 22, 1955, respondents Nos 1 to 5 sur-
F rendered their leasehold interest in favour of T.M. Rama Iyer inasmuch as
in Clause 4 of the said agreement they have clearly stated that plaintiffs-
respondents will not have any responsibility or objection for T.M. Rama
Iyer paying the amount due to the appellant after the stipulated period and
take up the management by himself and pay the rent of the building and
conduct its business. By empowering T.M. Rama Iyer to pay the rent of
G the building respondents Nos. 1 to 5 were impliedly surrendering their
leasehold interest in the premises in favour of T.M. Rama Iyer. This is
borne out by the Deed of Assignment (Ex. B4) dated December 11, 1956
wherein in clause 2, T.M. Rama Iyer had stated "I have on oral agreement
taken the building where the mills situate on a monthly rent of Rs. 75 for
H a period of one year from Vettathu Tharavad which is the jenmi of the
KUNHIRAMAN NAIR v. NAGANATHA IYER [AGRAWAL, J.] 383
same." The original rent for the property as let out to respondent No. 2 A
was Rs. 40 per month. The fact that after execution of the agreement dated
March 22, 1955, T.M. Rama Iyer entered into another agreement with the
landlord on a higher majority rent of Rs. 75 would show that fresh lease
was created by the landlord in favour of T.M. Rama Iyer and the earlie~
lease in Favour of respondent No. 2 stood determined by implied sur- B
render. In clause 3 of the Deed of Assignment (Ex. 84) dated December
11, 1956, T.M. Rama Iyer has empowered the appellant "to enter into rental
agreements with the J enmi of the building by paying the rent directly tb
effect alienation". This shows that T.M. Rama Iyer had impliedly sur-
rendered his leasehold rights by agreeing that the appellant could ent~r
into rental agreements with the landlord by paying the rent directly. The C
-- case of the appellant is that ever since the execution of the Deed of
Assignment (Ex. 84) dated December 11, 1956, rent is being paid by him
t? the landlord directly. It is not the case of the plaintiffs-respondents that
they had paid the rent for the premises to the landlord after March 22,
1955. In these circumstances, we are of the opinion that the plaintiffs- D
respondents, by executing the agreement (Ex. 83) dated March 22, 1955,
had impliedly surrendered their leasehold rights in the suit property in
favour of T.M. Rama Iyer and on the date of the filing of the present suit
they had no subsisting leasehold interest in the same. The suit for the
recovery of the possession of the suit property filed by them on the b<¥iis
that the plaintiffs-respondents are the lessees thereof was, therefore, not E
maintainable and is liable to be dismissed.
The appeal is consequently allowed,· the judgment and decree of the
High Court of Kerala dated March 10, 1977 in S. No. 12.o6n6-E is set aside
and O.S.No.636/68 filed by respondents Nos. 1 to 6 ag~t the appellant
is dismissed. There will be no order as to costs. · F
T.NA. Appeal allowed.
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