State Of Kerala vs M/S Joseph And Company on 3 September, 2021


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Supreme Court of India

State Of Kerala vs M/S Joseph And Company on 3 September, 2021

Author: A.S. Bopanna

Bench: Hon’Ble The Justice, Surya Kant, A.S. Bopanna

                                                                REPORTABLE


                                       IN THE SUPREME COURT OF INDIA

                                        CIVIL APPELLATE JURISDICTION

                                    CIVIL APPEAL NOS.5117­5118 OF 2021
                                 (Arising out of SLP(Civil) Nos. 879­880/2016)



                         The State of Kerala & Ors.              .…Appellant(s)

                                                      Versus

                         M/s Joseph & Company                  …. Respondent(s)


                         With

                         CIVIL APPEAL NO.5120/2021 @ SLP(C) No.9661/2017

                         CIVIL APPEAL NO.5119/2021 @ SLP(C) No.18760/2016




                                                 JUDGMENT

A.S. Bopanna,J.

1. Leave granted.

2. The appellant­State of Kerala is assailing the order
Signature Not Verified

Digitally signed by
Vishal Anand
Date: 2021.09.03
16:34:17 IST
Reason:

dated 10.07.2015 passed by the High Court of Kerala at

Page 1 of 33
Ernakulam in W.A. No.369/2011 and W.A. No. 375/2011.

The said appeals had arisen out of the proceedings in Writ

Petition No.1207/2005 wherein through the order dated

17.01.2011, the petition was disposed of to the extent of

quashing the order declining value of usufructs (Ex.41). The

order (Ex.39) by which the lease in favour of Respondent

had been terminated was upheld. It is in that view, the writ

petitioner­M/s. Joseph & Company as also the respondent­

State of Kerala had filed the Writ Appeals to the extent they

were aggrieved. The learned Division Bench of the High

Court through the impugned order dated 10.07.2015 has

allowed the appeal filed by M/s. Joseph & Company, thereby

setting aside the order terminating the lease and the appeal

filed by State of Kerala was dismissed. It is in that light, the

appellant­State of Kerala claiming to be aggrieved is before

this court.

3. The genesis of the case is that erstwhile Travancore­

Cochin Government had by a notification in the year 1953

auctioned certain abandoned portions of Beatrice estate.

One Mr. P.I. Joseph­responded to the said notification and

offered his bid to an extent of 246.26 acres out of the South

Page 2 of 33
Block and took possession on 10.05.1955. However, no lease

agreement was entered into between him and the

government. In the meanwhile, the said Mr. P.I. Joseph

assigned the said property in favour of Mr. K.K. Joseph.

Pursuant to such transaction dated 28.02.1974 between Mr.

P.I. Joseph and Mr. K.K. Joseph, the Government of Kerala,

executed a lease deed dated 15.12.1979 in favour of Mr. K.K.

Joseph. Though the lease deed was executed in favour of Mr.

K.K. Joseph, it is contended by the lessee that Mr. K.K.

Joseph was representing the partnership firm registered in

the name and style M/s. Joseph & Company, of which he

was the Managing Partner.

4. The said Mr. K.K. Joseph thereafter executed a

registered sale deed dated 16.12.1983 transferring an extent

of 50 acres from the land leased in his favour, to one Mr.

Raghavan. Subsequent thereto, Mr. K.K. Joseph is stated to

have retired from the partnership firm after which Ms. Meera

Scaria had become the Managing Partner representing the

firm. The said Ms. Meera Scaria as the Managing Partner

had addressed a letter dated 26.06.1990 seeking leave to

rectify the defect of transferring a portion of the lease land to

Page 3 of 33
Mr. Raghavan. The said request had not been considered

since the government through their letter dated 27.05.1989

had indicated the intention to terminate the lease.

Subsequent thereto the notice dated 19.02.1992 intimated

the lessee about the order to terminate the lease and to

prepare the inventory to take over possession.

5. But the same was kept in abeyance as certain events of

a general consideration regarding regularisation of all leases

in the area was under process. However, said process had

come to an end on 26.02.1999 whereby the government had

cancelled its earlier proposal of a general regularisation

which was under consideration. In that background, the

notice dated 15.11.1999 was issued to Mr. K.K. Joseph to

show cause why the lease in respect of the whole area of

246.50 acres should not be terminated as contemplated

under clause 14 of the lease deed. Mr. K.K. Joseph replied to

the same on 29.11.1999 indicating that he has retired from

the partnership firm and that Ms. Meera Scaria is the

present Managing Partner who is to be notified. In the said

process, the first round of litigation commenced challenging

the action of the State Government to terminate the lease.

Page 4 of 33
The Writ Petitions bearing O.P. No. 20508/2002 and O.P.

No. 30224/2002 filed by M/s. Joseph & Company and Mr.

Raghavan respectively were set in motion. The said process

after the Writ Appeal had resulted in the proceedings before

this Court in C.A. No. 4169/2004. This Court through the

order dated 16.07.2004 permitted the appellant­State of

Kerala to issue fresh show cause notice regarding proposed

termination of lease and the respondents were permitted to

file their reply to the show cause notice. In the above

background, the present round of proceedings commenced

with the issue of the notice dated 29.07.2004 and

conclusion of the process.

6. In the said notice the appellant­State of Kerala referred

to two aspects to allege breach of terms of the lease. The main

aspect alleging breach is in relation to entire leased property.

It is alleged that Mr. K.K. Joseph had transferred his

leasehold right to M/s. Joseph & Company without the

approval of the lessor with the intention to nullify the effect of

clause 14 of the lease deed and he has thereafter retired from

the firm in 1988. The other aspect alleging breach of the term

is that an extent of the leased land measuring 50 acres has

Page 5 of 33
been sold without consent of the lessor, to one Mr. Raghavan.

It is in the said premise, the lease was sought to be

terminated. The respondent­M/s. Joseph & Company

submitted a detailed reply dated 14.08.2004 seeking to justify

their action and to contend that they had not committed

breach of the terms of lease deed. The respondent was also

provided the opportunity of hearing, pursuant to which an

order dated 26.11.2004 was passed whereby the termination

of the lease in respect of the entire extent measuring 246.26

acres of reserve forest land was confirmed.

7. The respondent being aggrieved by the same had

preferred the Writ Petition as indicated supra. The learned

Single Judge did not interfere with the order terminating the

lease and the writ petition was dismissed to that extent.

Insofar as the aspect relating to the breach alleged regarding

the transfer of lease to M/s. Joseph & Company by Mr. K.K.

Joseph, the various circumstances were referred more

particularly the documents which were at exhibits P10, P11,

P12, P13 and P16 to P20 to indicate that the government had

for all intents and purposes treated M/s. Joseph & Company

as the lessee under the lease deed which was Exhibit P7 to

Page 6 of 33
the Writ Petition. However, in respect of the transfer of 50

acres in favour of Mr. Raghavan, the learned Judge was of the

opinion that the finding relating to breach due to such

transaction being a finding of fact, did not call for interference

in the Writ Petition.

8. The learned Division Bench had negatived the

challenge to the first part by the State of Kerala and the

conclusion of the learned Single Judge that M/s Joseph &

Company is the lessee was held to be valid and was not

interfered. Further, insofar as the sale in favour of Mr.

Raghavan, the learned Division Bench had taken note of

Clause 12 contained in the lease deed between the appellant­

State of Kerala and M/s Joseph & Company which provided

that the default if any committed could be remedied if the

lessee is put on notice. The default can be confirmed only if

the same is not remedied despite notice. It is in that view, the

learned Division Bench was of the view that the requirement

in Clause 12 of the lease agreement had not been complied

with by the appellant­State of Kerala. Therefore, the learned

Division Bench set aside the order terminating the lease.

Page 7 of 33

9. We have heard Mr. Jaideep Gupta, learned senior

counsel for the appellant­State of Kerala, Mr. Joseph Markos,

learned senior counsel and Mr. Thomas P Joseph, Learned

Senior Advocate on behalf of the respondents and perused

the appeal papers including the writ appeal records which

had been secured from the High Court.

10. On the first aspect relating to the breach alleged in

view of the transfer of lease in favour of M/s Joseph &

Company by Mr. K.K. Joseph­the lessee, Mr. Jaideep Gupta,

learned senior counsel has taken us through the documents

to indicate the sequence that the property in fact was

auctioned in favour of Mr. P.I. Joseph who had transferred

the lease in favour of Mr. K.K Joseph through the sale deed

dated 28.02.1974. Though the government has subsequently

validated the said transaction by executing a lease deed in

favour of Mr. K.K. Joseph, the subsequent transfer by Mr.

K.K Joseph to M/s Joseph & Company, a new lessee without

prior consent of the government would constitute breach is

his contention.

11. Having noted the contention, we find that the said

issue need not detain us for long. At the outset, a perusal of
Page 8 of 33
the lease deed dated 15.12.1979 would no doubt disclose that

Mr. K.K. Joseph in his individual name is referred to as the

lessee of the other part. The recital in the lease deed however

depicts that the earlier transaction in favour of Mr. P.I.

Joseph and the document executed by Mr. P.I Joseph in

favour of Mr. K.K Joseph to assign the lease is referred in the

document. In that backdrop, a reference to the sale deed

dated 28.02.1974 by which the sale was made by Mr. P.I.

Joseph to Mr. K.K. Joseph indicates that the purchaser Mr.

K.K. Joseph has been described as the Managing Partner,

M/s Joseph & Company, a registered partnership firm. The

said aspect would ex­facie indicate that the contention of the

appellant that M/s Joseph & Company had come into

existence subsequently as a ploy to overcome and defeat the

bar contained in Clause 14 to the lease deed cannot be

accepted. Further, as already taken note, the learned Single

Judge as also the learned Division Bench has referred to the

various other documents more particularly at Exhibits P10,

P11, P12, P13 and P16 to P20 in the writ proceeding records

to indicate that the Government, for all intents and purposes

had treated M/s. Joseph & Company as the lessee. Therefore,

Page 9 of 33
to the said extent on the first aspect, the same does not

constitute breach. Hence the conclusion reached by the High

Court on that aspect does not call for interference.

12. The next aspect which arises for consideration is as to

whether the sale to an extent of 50 acres from out of the lease

area would amount to breach of clause 14 of the lease deed.

For better appreciation, it would be appropriate to take note

of Clause 12 and 14 in the lease deed dated 15.12.1979,

which have been referred. The same read as hereunder: ­

“12. In the event of the lessee making default in the
observance of fulfillment of any of the covenants herein
contained the Lessor shall be at liberty at any time,
thereafter, after giving notice to the lessee and hearing
him in person or through his agent or vakil duly
appointed about the failure of the lessee to remedy such
default that may be reported to the Lessor from time to
time by the Chief Conservator of Forests, to terminate the
lease and lessee shall forthwith vacate the land hereby
leased and demised and notwithstanding such
termination of this lease, the lessee shall be liable for any
loss which the lessor may sustain by reasons of such
default and all such improvements made by the Lessee
on the land hereby leased and demised as exist at the
time of vacating the same must be left intact and no
compensation can be claimed by the lessee for such
improvements.”

“14. The lessee shall not be entitled to sublet or assign
his interest in the said lease except with the previous
permission in writing of the lessor.”

Page 10 of 33

13. From a perusal of the relevant clauses in the lease

deed it is seen that clause 14 thereof provides that the

lessee shall not be entitled to sublet or assign his interest in

the said lease except with the previous permission in writing

obtained from the lessor. In that backdrop, the breach

alleged against the respondent is that the lessee has

assigned the interest in the leased land to an extent of 50

acres in favour of Mr. Raghavan without the previous

permission of the lessor. The fact that such sale has taken

place cannot be in dispute nor is it in dispute. The said

assignment has been made under the registered sale deed

dated 16.12.1983. The question therefore is; whether the

same would constitute breach of the terms in the lease deed

so as to entail termination of the lease.

14. Mr. Joseph Markos, learned senior counsel contended,

though such sale deed was executed, the possession of the

property had not been handed over to Mr. Raghavan and the

lessee M/s. Joseph & Company had continued to pay the

lease rentals in respect of the entire property. It was next

contended that even assuming that the execution of the

document had constituted default, the lessee ought to have

Page 11 of 33
been notified to remedy such default and only if the same

was not done, the lease could be terminated. In that regard,

the learned senior counsel contended that the lessee had

submitted a letter to the government on 17.03.1990 seeking

to rectify the default and if the same was accepted in terms

of Clause 12, the breach contemplated in Clause 14 would

not survive. It is his further contention that the right to

forfeit the lease, in the present circumstance, would fall

under Section 111(g) of the Transfer of Property Act (‘TP Act’

for short) which calls for strict construction against the

lessor. In that event the termination of the entire lease

would not be sustainable for breach in respect of a portion

of the leased land. Reference is also made to Section 112 of

the T.P. Act to contend that the acceptance of lease rentals

by the lessor, including for the said extent of 50 acres sold

to Mr. Raghavan would constitute waiver of forfeiture.

15. While taking note of the contention on behalf of the

respondent­M/s. Joseph & Company regarding the benefit

available to them under Clause 12 of the lease deed which

had not been complied by providing an opportunity to

remedy the default, it is necessary to note as to whether

Page 12 of 33
such benefit is available to rectify the breach alleged under

Clause 14 of the lease deed as well and whether Clause 12

makes it mandatory to issue notice to rectify before action is

taken. In order to, gather the intention of the parties, the

nature of the transaction and the document as a whole is

necessary to be considered. While on this aspect, what is

striking to be noted is that the word employed in Clause 12

is ‘default’ and not breach. If this aspect is taken note and

the remaining terms contained in the lease deed are taken

note, keeping in view the admitted position that the leased

land is situate in a reserve forest, the clauses in the

agreement commencing from clause No. 5 to 11 indicates

that the right reserved by the lessor and the obligations

imposed on the lessee are with regard to the compliance, to

retain the characteristics of forest area and continue such

other activities including collection of minor forest produce

and the forest officials have been granted the right to

regulate the same notwithstanding plantation was the

permitted use.

16. If in that context, Clause 12 is taken note, it indicates

that the issue of notice is contemplated in the event of the

Page 13 of 33
lessee committing default and the liberty to terminate the

lease is exercised. The concession provided is to rectify the

default before the notice is issued. If there is failure of the

lessee to remedy such default that may be reported to the

lessor from time to time by the Chief Conservator of Forests.

Before termination of the lease a notice is to be issued and

be heard about the default if the default has not been

remedied. The same would clearly indicate that the default

referred to, the issue of notice there for and the fact that the

same is based on the report to the lessor (State of Kerala)

from Chief Conservator of Forests is that the rectification

permitted is in respect of the default relating to deviation

from the obligations contained in the covenants relating to

maintaining the nature of the property and default should

be of rectifiable nature. The Dictionary meaning of ‘default’

is; failure to fulfil an obligation, while the meaning of

‘breach’ is an act of breaking a law, agreement or code of

conduct. If the said distinction is kept in view, the breach if

committed by subletting or assigning as provided in Clause

14, the same would lead to its consequences and the liberty

to remedy the same is not mandatory. All that Clause 12
Page 14 of 33
signifies is that if default is reported and if such default is

not remedied then termination can be made after issue of

notice and hearing. The cause for termination will be the

default and permitting to remedy the same is only an

indulgence to be shown. Therefore, the learned Division

Bench was not justified in its conclusion that the non­issue

of notice and not providing opportunity to remedy the

default is fatal. In the instant facts, the reading of the lease

deed as a whole would indicate that the right reserved to the

lessor under Clause 14 is independent of Clause 12 and if

the breach of that nature occurs, it is irreversible and it will

have to be taken to its logical conclusion unless the lessor

waives the right thereunder.

17. For better appreciation on the legal contention, we take

note of Section 111(g) and Section 112 of the T.P. Act which

was referred. They read as hereunder: ­

“111. Determination of lease — A lease of immoveable
property determines—

(a) xxxxxxx

(b) xxxxxx

(c) xxxxxx

(d) xxxxxxx

(e) xxxxxxx

(f) xxxxxxxx

Page 15 of 33

(g) by forfeiture; that is to say, (1)in case the lessee
breaks an express condition which provides that, on
breach thereof, the lessor may re­enter; or (2) in case
the lessee renounces his character as such by setting up
a title in a third person or by claiming title in himself; [or
(3) the lessee is adjudicated an insolvent and the lease
provides that the lessor may re­enter on the happening of
such event]; 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;

112. Waiver of forfeiture —A forfeiture under section
111
, clause (g) is waived by acceptance of rent which has
become due since the forfeiture, or by distress for such
rent, or by any other act on the part of the lessor showing
an intention to treat the lease as subsisting:

Provided that the lessor is aware that the forfeiture
has been incurred:

Provided also that, where rent is accepted after the
institution of a suit to eject the lessee on the ground of
forfeiture; such acceptance is not a waiver.”

18. The contention of the learned senior counsel for the

respondent that a question of law could be raised at any

stage is well taken and we do not see the reason to refer to

the precedents relied on that proposition. Even that be so,

the provisions contained in Sections 111 and 112 of the T.P.

Act though taken note, in our opinion, the same cannot be

considered in abstract without reference to the factual

foundation. So far as the contention that the lessee had

continued to pay the lease rentals in respect of the entire

property despite the sale of 50 acres to Mr. Raghavan,

whether such acceptance of the lease rentals by the lessor
Page 16 of 33
was with knowledge of default by condoning the breach, is a

question of fact which will have to be urged in the original

proceedings and the material will have to be placed on

record so as to enable the original authority to take a

decision on that aspect and render a finding on fact so that

the Court at a later stage in the process of judicial review

can reassess the same and determine as to whether the

benefit of Section 112 T.P.Act will be available. Therefore, in

the instant case, the contention that the lease rentals were

being paid in respect of the entire extent cannot be accepted

outright as no contention was urged and details were not

laid in the original proceedings. Further, in a matter of the

present nature when the entire lease area measured vast

extent of 246.26 acres and the allegation is of parting with

the lease hold right of 50 acres from such lease area and in

that circumstance when the lease rental in any event was

being paid to the remaining extent of 196.26 acres, the

lumpsum payment of lease rental cannot be taken

advantage of to contend that the lease rental was continued

to be paid and seek waiver of forfeiture.

Page 17 of 33

19. When there was breach providing the right to

terminate the lease in respect of the entire leased land, even

if the lease rental paid by the lessee has been accepted by

the appellant­lessor, it has not been shown that the

requirement of the conditions in the proviso to Section 112

of the T.P. Act is satisfied. In the present situation, the land

is leased by the government and when the breach had

occurred the competent authority had issued the notice and

the proceedings was initiated. Once the proceedings had

been initiated even if the lease rental was received the same

is saved under the second proviso. Further the situation is

also that the payment of the rental made to the government

would in any event be accepted as different functions are

performed by different offices and any amount tendered will

be received. That cannot give any advantage to the lessee

merely because the rent has been tendered in the

government office and the same has been innocuously

accepted without there being specific reference to waiver.

20. On the question of waiver, it would be profitable to

refer to the decision of this court in the case of Sarup

Page 18 of 33
Singh Gupta vs. S. Jagdish Singh and Others
(2006) 4

SCC 205 wherein the contention relating to waiver due to

acceptance of rent was considered, though in the context of

Sections 111(h) and 113 of the T.P. Act, wherein it was held

as hereunder: ­

“6. Learned Senior Counsel also relied upon a decision
of a learned Single Judge of the Calcutta High Court,
reported in AIR 1926 (Calcutta) 763, wherein It was held
that where rent is accepted after the notice to quit,
whether before or after the suit has been filed, the
landlord thereby shows an intention to treat the lease as
subsisting and, therefore, where rent deposited with the
Rent Controller under the Calcutta Rent Act is withdrawn
even after the ejectment suit is filed, the notice to quit is
waived. In our view, the principle laid down in the
aforesaid judgment of the High Court is too widely stated,
and cannot be said to be an accurate statement of law. A
mere perusal of Section 113 leaves no room for doubt
that in a given case, a notice given under Section
111
, Clause (h), may be treated as having been
waived, but the necessary condition is that there
must be some act on the part of the person giving the
notice evincing an intention to treat the lease as
subsisting. Of course, the express or implied consent
of the person to whom such notice is given must also
be established. The question as to whether the person
giving the notice has by his act shown an intention to
treat the lease as subsisting is essentially a question
of fact. In reaching a conclusion on this aspect of the
matter, the Court must consider all relevant facts and
circumstances, and the mere fact that rent has been
tendered and accepted, cannot be determinative.

7. A somewhat similar situation arose in the case in
Shanti Prasad Devi v. Shankar Mahto. That was a case
where the landlord accepted rent even on expiry of the
period of lease. A submission was urged on behalf of the
tenant in that case that Section 116, Transfer of Property
Act
was attracted and there was a deemed renewal, of the

Page 19 of 33
lease. Negativing the contention, this Court observed
that mere acceptance of rent for the subsequent
months in which the lessee continued to occupy the
premise even, after the expiry of the period of the
lease, cannot be said to be a conduct signifying his
assent to the continuing of the lease even after the
expiry of the lease period. Their Lordships noticed
the conditions incorporated in the agreement itself,
which provided for renewal of the lease and held that
those conditions having not been fulfilled, the mere
acceptance of rent after expiry of period of lease did
not signify assent to the continuance of the lease.”

(Emphasis supplied)

In that view, the waiver as contended by the learned senior

counsel for the respondent­lessee is unsustainable.

21. That apart, the contention that the lessee­ M/s. Joseph

& Company had continued in possession of the said extent of

50 acres even after sale and therefore there is no default

cannot be accepted for more than one reason. To decipher

this aspect, a perusal of the sale deed dated 16.12.1983

which was produced as exhibit R3(b) in the writ proceedings

would indicate the relevant recitals as follows: ­

“I have absolute right to sell the property in the
schedule. I have decided to sell you 50 acres of the
land in the schedule below along with the right to
travel through the rest of the land in my possession.
The amount decided as the price of he said land is Rs.
45000. Having received the full payment of Rupees
forty five thousand, I give you absolute right and
possession over the aforesaid land in the schedule

Page 20 of 33
along with the rights of transportation through the
rest of the property.

The property described in the schedule below belongs
to the Cochin Government and I have leasehold right over
the same.

From today on I have no objection in you keeping
in possession and enjoying the absolute right of the
property described in the schedule together with the
right of transport. Hereon you shall pay the lease rent
directly to the Government. All taxes to the
Government may henceforth be paid by you. Myself, the
company or any of our successors may have no right
over schedule property.

I affirm that I will not obstruct your travelling
through the rest of Beatrice Estate. By this deed you
have the right to avail yourselves of the right to such
transport.

I hereby assure you that I have the right for the sale of
this property and that there are no arrears of lease rent due
to the Government as any other dues or attachment of civil or
revenue nature relating to the property and in case any loss
is sustained by the purchaser against this assurance. I shall
be responsible for such loss.”

(Emphasis supplied)

22. A perusal of the extracted portion from the sale deed

dated 16.12.1983 would indicate the outright nature of sale

of a portion of the leased land. It is sold for a sale

consideration despite knowing that the property belonging to

the government is granted under lease. The recital in fact,

categorically indicates that the absolute right and possession

has been given and it has also been stated therein that

henceforth the purchaser, Mr. Raghavan is to pay the lease

rent directly to the government and all taxes to the

Page 21 of 33
government are also to be paid by him. Further, neither Mr.

K.K. Joseph nor the partnership firm has retained any right

over the property sold under that document. Therefore, the

document itself would indicate the intention of the parties

and also the fact that possession was parted without consent

of the lessor which was a clear breach of Clause 14 in the

lease deed.

23. In addition, in the reply dated 29.11.1999 from Mr.

K.K. Joseph, to the notice dated 15.11.1999 from the

Divisional Forest Officer, he has stated that even after he had

retired from the firm, the firm was pursuing its efforts to get

the said 50 acres assigned to Mr. Raghavan, reassigned to the

firm and thereby remedy the default as contemplated in

Clause 12 of the lease deed. Therefore, the fact that there was

a breach committed was also within the knowledge of the

lessee though they were seeking to take shelter under Clause

12. That apart, the letter dated 26.06.1990 addressed to the

government by M/s. Joseph & Company through Ms. Meera

Scaria, inter­alia states as follows: ­

“If this reconveyance is effected, the entire property
included in the lease deed executed by Sh. K.K. Joseph and
registered as document No.1983 of 1979 of Nenmara, Sub

Page 22 of 33
Registry Office will come back to the possession of M/s.

Joseph & Company which is the original lessee.”

(Emphasis supplied)

The said statement would clarify that the possession had

been parted and it was only being indicated that on re­

conveyance being made, the possession would come back to

the lessee. Therefore, the contention put forth by the learned

senior counsel for the respondent that the possession had not

been parted and the lease rental was being paid by them

cannot be accepted as a mitigating factor in the facts and

circumstances of this case.

24. Though an attempt is made to contend that an

opportunity ought to have been granted to remedy the default

in view of the provision contained in Clause 12 of the lease

deed in which event the default would stand remedied, the

same cannot come to the aid of the respondent for the reason

stated supra. Further, factually also it is to be noted that

except addressing the letter dated 26.06.1990, the lessee­

M/s. Joseph & Company did not take any concrete steps to

either cancel the sale deed or to physically indicate that the

possession is back with the lessee and the transaction has

Page 23 of 33
been nullified. Be that as it may, even otherwise in the

instant facts the breach was not of the nature which was

contemplated for rectification as provided under Clause 12 of

the lease deed. Therefore, it is too late in the day for the

respondent to contend that there was non­compliance of

Clause 12 before the right of the lessor to terminate the lease

as provided under Clause 14 is exercised.

25. The alternate contention urged by the learned senior

counsel for the respondent­lessee is that even if the breach is

held against the lessee, the entire lease cannot be forfeited in

view of the provision in Section 111(g) of T.P. Act. The learned

senior counsel in order to persuade us on this aspect has

referred to certain decisions which will be adverted to here

below.

26. Having noted the contention, firstly, a perusal of clause

14 no doubt does not state ‘a part thereof’ as contended by

the learned senior counsel. However, that does not mean that

a breach committed in respect of a part of the leased land

cannot be construed as breach and would disentitle the

lessor to exercise the right thereunder. Secondly, Section

111(g) does not suggest that in respect of the lease as a

Page 24 of 33
whole, the forfeiture should be limited only to the portion

regarding which the breach is alleged. The breach is of not

adhering to the assurance given to lessor in respect of the

property belonging to the lessor, be it the whole or a part of it.

In this regard, the decision relied on in the case of Sh.

Shiam Behari Lal Gour and Others vs. Madan Singh AIR

(32) 1946 Allahabad 298 is a circumstance where the suit

was decreed for a declaration that the lease rights of the

defendants in the leased land have been determined and the

plaintiff is entitled to possession. In that circumstance, the

point which arose for consideration is, whether the plaintiff is

in the events which have happened, entitled to such

declaration and whether in that circumstance there has been

forfeiture. No­doubt as contended by the learned senior

counsel, the issue that was settled is that the law leans

against forfeiture. Such consideration in the said suit was

after noting the nature of right that was claimed to the

property by the lessor wherein there was rival claims of

succession to the property.

Page 25 of 33

27. In the case, A. Venkataramana Bhatta and Ors. vs.

Krishna Bhatta and Ors AIR 1925 Madras 57, the High

Court no doubt considered the case against forfeiture of the

entire lease when there was partial alienation by taking a leaf

from the construction adopted in England, based on the

general principles of equity and the same was followed in

India. In the said case, the equitable principle was applied in

a circumstance where the lessee himself in fact was the

owner of the property. He had mortgaged the same and had

obtained lease of a portion of the mortgage property from his

mortgagee. From such property which was obtained on lease,

a portion thereof was again mortgaged by him to a different

mortgagee which was termed as breach of the terms of lease.

In that circumstance, the forfeiture was limited only to the

portion which was mortgaged to a third­party mortgagee after

obtaining on lease from the first mortgagee.

28. In the case, Grove vs. Portal 1902 1 CH 727, the lease

given was of fishing in certain portions of the river but with

the condition not to sublet without the consent of the lessor

in writing. When breach was alleged, the lessee contended

that he granted authority to another person only to the extent
Page 26 of 33
as provided in the lease. The lessor, however, contended that

it constituted breach as the lessee assigned it to third person.

In that situation, it was held that the covenant did not

expressly apply to any part of the premises as well as to the

whole since the lessee was not precluded from granting

license to another person (limited to two rods) to fish in the

river during the residue of the term. The consideration

therein would not be relevant in the instant case. In the case,

Cook vs. Shoesmith (1951) 1 KB­752, it was the case where

the dwelling house was let to the tenant wherein, he agreed

that he will not sublet. However, the tenant had sublet two

rooms of the house due to which the landlord filed the suit

for possession alleging breach of the agreement. The court

relied on the dictum of Lord Elson in Church vs. Brown

wherein it was held that the principle of an undertaking not

to sublet the premise was not broken since ‘the premise’

described the whole of what is demised and there are no

words such as a tenant had agreed not to sublet any part of

it. In that circumstance, it was held that there was no breach

of the agreement.

Page 27 of 33

29. In, Swarnamoyee Debya vs. Aferaddi and Ors. AIR

1932 Calcutta 787, it was a case where ejectment was sought

for unauthorised transfer by the defendant which was

contended to have broken the condition in the document

creating the tenancy. In that circumstance, it was held that

the usufructuary mortgage was not of the entire holding and

upon the covenant in the lease, no forfeiture was incurred by

the transaction. The question which was considered therein

was with regard to the construction of the lease which had

arisen in that case and a decision to that effect was taken. In

the case, Keshab Chandra Sarkar and Ors. vs. Gopal

Chandra Chanda AIR 1960 Calcutta 609, the plaintiff had

sued for recovery of possession contending unauthorised

transfer of the leased land without the consent of lessor

which amounted to breach of condition of the lease. The

general principles relating to forfeiture as had been laid down

was taken note and in that circumstance by strictly

construing the right of forfeiture against the lessor in the

absence of express stipulation had arrived at the conclusion

that the transfer made of the entire extent, though consent

Page 28 of 33
had been obtained to transfer a part would not amount to

breach. Certain other decisions relied on by the learned

senior counsel are also to the same effect and we see no need

to refer to each of them. But, what is necessary to be taken

note is that the general principles of equity as laid down in

Grove vs. Portal (supra) has been the basis for the

conclusion reached in almost all the noted cases.

30. In contradistinction to the facts which arose for

consideration in the cited cases where essentially the dispute

was inter­se between the private owners of the property and

their lessees and the nature of transaction, in the instant

case, the leased land is the property which belong to the

government and the leasehold right has been auctioned so as

to earn revenue for the state, which is to the interest of its

citizens and one citizen or a group is permitted to exploit the

land to the exclusion of all others. Additionally, such

government property is located in an area notified as reserve

forest. In such circumstance, when the lessee is given the

benefit of such property and the breach of the condition

imposed is alleged, the strict construction of the forfeiture

clause against the lessor in all circumstances would not arise
Page 29 of 33
as otherwise it would render the clause in the lease deed

otiose. The principle contained in Section 111(g) of the T.P.

Act though noticed, the parties are governed by the terms in

the contract and as such the lessee cannot claim benefit

under the said provision. Further, as already noted the

consideration under Section 111(g) is based on equitable

principles which will have to be applied depending on the

facts and circumstances obtained in each case. While

applying the equitable principles, the maxim he who seeks

equity must do equity cannot be lost sight of. It is said, a

court will not assist a lessee in extricating himself or herself

from the circumstances that he or she has created, in the

name of equitable consideration. In the instant facts as

already noted when public largesse is bestowed on certain

terms and conditions, a term of the lease deed is to be strictly

adhered to and when Clause 14 provides that the lessee shall

not be entitled to sublet or assign his interest in the lease

except with the previous permission in writing of the lessor, it

does not matter as to whether the breach committed is by

assigning a portion of the leased land or the whole when such

interest of the lessee has been transferred without previous

Page 30 of 33
permission of the lessor. Further, in all the cases referred to

by the learned senior counsel, the breach alleged was either

of creating mortgage or subletting the property. In the instant

case, despite being a lessee the respondent has executed an

absolute sale deed in respect of the leased land which belongs

to the government and such breach cannot be condoned.

CIVIL APPEAL NO.5120/2021 @ SLP(C) No.9661/2017
AND CIVIL APPEAL NO.5119/2021 @ SLP(C)
No.18760/2016

31. The Appellant­State of Kerala in both these appeals are

assailing the interim orders passed by the learned single

judge in W.P. No.35832/2015. The said order had been

confirmed by the learned Division Bench through the orders

dated 11.01.2016 and 25.01.2017. Considering that the

learned single judge had made an interim arrangement

protecting the interest of both the parties which will be

subject to ultimate result in the writ petition and also taking

note that this Court while directing notice in SLP

No.9661/2017, on 21.04.2017 had directed the parties to

maintain status quo as it existed on that day and the said

order has continued till this day, it would be appropriate that

the said position shall continue and the High Court shall

Page 31 of 33
dispose of the writ proceedings in accordance with law, if

already not considered and disposed of. We make it clear that

we have refrained from interfering with the impugned orders

since they are interim in nature. We have also not adverted to

the merits of the rival contentions arising in these

proceedings. As such the High Court shall consider the case

on its own merits.

32. For all the aforestated reasons, the following order;

(i) The order dated 10.07.2015 passed by the

learned Division Bench in W.A.No.369/2011 and

W.A.No.375/2011 is set aside.

(ii) The order dated 17.01.2011 passed by the learned

Single Judge in W.P.No.1207/2005 is restored.

(iv) The appeals arising out of SLP(C) Nos.879­

880/2016 are allowed in part with no order as to

costs.

(v) The appeals arising out of SLP (C) No.9661/2017

and SLP(C) No.18760/2016 are disposed of.

Page 32 of 33

(vi) Pending application, if any, shall stand disposed

of.

.…………………….J.

(HEMANT GUPTA)

……………………….J.

(A.S. BOPANNA)

New Delhi,
September 03, 2021

Page 33 of 33



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