THE STATE OF KERALA & ORS versus M/S JOSEPH & COMPANY on 3 September 2021

[2021] 11 S.C.R. 601

THE STATE OF KERALA & ORS

v.

M/S JOSEPH & COMPANY

(Civil Appeal Nos. 5117-5118 of 2021)

SEPTEMBER 03, 2021

[HEMANT GUPTA AND A. S. BOPANNA, JJ.]

Transfer of Property Act, 1882 – ss. 111(g) & 112 – Sale of aportion of land – Allegation of breach of lease deed – The erstwhileTravancore-Cochin Government in 1953 auctioned certainproperties – One ‘P.I’ offered his bid to an extent of 246.26 acresand took possession in the year 1955 – No lease agreement wasentered between them – Then ‘P.I’ assigned the said property infavour of one ‘KKJ’ – Pursuant to such transaction, the Stateexecuted a lease deed dated 15.12.1979 in favour of ‘KKJ’ – ‘KKJ’was representing a partnership firm – In 1983, ‘KKJ’ executed asale deed and transfered an extent of 50 acres to one ‘R’ – Thereafter,the Partnership firm sought to rectify the defect of transferring aportion of lease land to ‘R’ – The said request was not considered –The Government by notice dated 19.02.1992 intimated the lesseeabout the order to terminate the lease – After the first round oflitigation, again by the order dated 26.11.2004, termination of leasein respect of the entire 246.26 acres was confirmed – Writ petition –The Single Judge of the High Court did not interfere with the orderterminating lease – However, the Division Bench of the High Courtset aside the order of terminating lease – Before the Supreme Court,inter alia, it was contended that lessee had sought to rectify thedefault under clause 12 of the lease deed – Held: Clause 14 of thelease deed provided that lessee shall not be entitled to sublet orassign his interest in the said lease except with the prior permissionin writing obtained with the lessor – Clause 12 of the lease deedindicates that the issue of notice is contemplated in the event of thelessee committing default and liberty to terminate the lease isexercised – The concession provided is to rectify the default beforethe notice is issued – The ‘default’ meaning is failure to fulfil theobligation, while ‘breach’ is an act of breaking a law, agreement orcode of conduct – If the said distinction is kept in view, the breachif committed by sub-letting or assigning as provided in clause 14, Athe same would lead to its consequences and the liberty to remedyis not mandatory – Clause 12 contemplates that cause of terminationwill be default and permitting to remedy the same is only anindulgence to be shown – The reading of the lease deed as a wholewould indicate that the right reserved to the lessor under clause 14is independent of clause 12 and if breach of that nature occurs, it isBirreversible and it will be taken to its logical conclusion unless thelessor waives its right – The sale deed executed by ‘KKJ’ in the year1983 would indicate the intention of the parties and also the factthat possession was parted without consent of the lessor which wasthe clear breach of clause 14 – The breach was not of the natureCcontemplated for rectification as provided under clause 12 of thedeed – Further, under clause 14, it does not matter as to whetherthe breach committed is by assigning a portion of the leased landor the whole when such interest was transferred without previouspermission of the lessor – Therefore, the order passed by the DivisionBench of the High Court is set aside.D

Disposing of the appeals, the Court

Conclusion

Disposing of the appeals, the Court

HELD: 1. From a perusal of the relevant clauses in thelease deed it is seen that clause 14 thereof provides that thelessee shall not be entitled to sublet or assign his interest in theEsaid lease except with the previous permission in writing obtainedfrom the lessor. In that backdrop, the breach alleged against therespondent is that the lessee has assigned the interest in theleased land to an extent of 50 acres in favour of ‘R’ without theprevious permission of the lessor. The fact that such sale hastaken place cannot be in dispute nor is it in dispute. The saidFassignment has been made under the registered sale deed dated16.12.1983. The question therefore is; whether the same wouldconstitute breach of the terms in the lease deed so as to entailtermination of the lease. [Para 13][611-B-D]

2. If in that context, Clause 12 is taken note, it indicatesGthat the issue of notice is contemplated in the event of the lesseecommitting default and the liberty to terminate the lease isexercised. The concession provided is to rectify the default beforethe notice is issued. If there is failure of the lessee to remedysuch default that may be reported to the lessor from time to timeH

by the Chief Conservator of Forests. Before termination of thelease a notice is to be issued and be heard about the default if thedefault has not been remedied. The same would clearly indicatethat the default referred to, the issue of notice there for and thefact that the same is based on the report to the lessor (State ofKerala) from Chief Conservator of Forests is that the rectificationpermitted is in respect of the default relating to deviation fromthe obligations contained in the covenants relating to maintainingthe nature of the property and default should be of rectifiablenature. The Dictionary meaning of ‘default’ is; failure to fulfil anobligation, while the meaning of ‘breach’ is an act of breaking alaw, agreement or code of conduct. If the said distinction is keptin view, the breach if committed by subletting or assigning asprovided in Clause 14, the same would lead to its consequencesand the liberty to remedy the same is not mandatory. All thatClause 12 signifies is that if default is reported and if such defaultis not remedied then termination can be made after issue of noticeand hearing. The cause for termination will be the default andpermitting to remedy the same is only an indulgence to be shown.Therefore, the Division Bench of the High Court was not justifiedin its conclusion that the non-issue of notice and not providingopportunity to remedy the default is fatal. In the instant facts, thereading of the lease deed as a whole would indicate that the rightreserved to the lessor under Clause 14 is independent of Clause12 and if the breach of that nature occurs, it is irreversible and itwill have to be taken to its logical conclusion unless the lessorwaives the right thereunder. [Para 16][612-E-H; 613-A-B]

3. When there was breach providing the right to terminatethe lease in respect of the entire leased land, even if the leaserental paid by the lessee has been accepted by the appellant-lessor, it has not been shown that the requirement of the conditionsin the proviso to Section 112 of the T.P. Act is satisfied. In thepresent situation, the land is leased by the government and whenthe breach had occurred the competent authority had issued thenotice and the proceedings was initiated. Once the proceedingshad been initiated even if the lease rental was received the sameis saved under the second proviso. Further the situation is alsothat the payment of the rental made to the government would in AB

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Aany event be accepted as different functions are performed bydifferent offices and any amount tendered will be received. Thatcannot give any advantage to the lessee merely because the renthas been tendered in the government office and the same hasbeen innocuously accepted without there being specific referenceto waiver. [Para 19][614-G-H; 615-A-B]

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4. A perusal of the extracted portion from the sale deeddated 16.12.1983 would indicate the outright nature of sale of aportion of the leased land. It is sold for a sale consideration despiteknowing that the property belonging to the government is grantedunder lease. The recital in fact, categorically indicates that theCabsolute right and possession has been given and it has also beenstated therein that henceforth the purchaser, ‘R’ is to pay thelease rent directly to the government and all taxes to thegovernment are also to be paid by him. Further, neither ‘KKJ’nor the partnership firm has retained any right over the propertyDsold under that document. Therefore, the document itself wouldindicate the intention of the parties and also the fact thatpossession was parted without consent of the lessor which was aclear breach of Clause 14 in the lease deed. [Para 22][617-D-F]

5. The alternate contention urged by the respondent-lesseeEis that even if the breach is held against the lessee, the entirelease cannot be forfeited in view of the provision in Section 111(g)of T.P. Act. Having noted the contention, firstly, a perusal of clause14 no doubt does not state ‘a part thereof’ as contended.However, that does not mean that a breach committed in respectof a part of the leased land cannot be construed as breach andFwould disentitle the lessor to exercise the right thereunder.Secondly, Section 111(g) does not suggest that in respect of thelease as a whole, the forfeiture should be limited only to theportion regarding which the breach is alleged. The breach is ofnot adhering to the assurance given to lessor in respect of theGproperty belonging to the lessor, be it the whole or a part of it.[Paras 25, 26][618-G-H; 619-A-C]

6. In contradistinction to the facts which arose forconsideration in the cited cases where essentially the dispute H

was inter-se between the private owners of the property and theirlessees and the nature of transaction, in the instant case, theleased land is the property which belong to the government andthe leasehold right has been auctioned so as to earn revenue forthe state, which is to the interest of its citizens and one citizen ora group is permitted to exploit the land to the exclusion of allothers. Additionally, such government property is located in anarea notified as reserve forest. In such circumstance, when thelessee is given the benefit of such property and the breach of thecondition imposed is alleged, the strict construction of theforfeiture clause against the lessor in all circumstances wouldnot arise as otherwise it would render the clause in the leasedeed otiose. The principle contained in Section 111(g) of the T.P.Act though noticed, the parties are governed by the terms in thecontract and as such the lessee cannot claim benefit under thesaid provision. Further, as already noted the consideration underSection 111(g) is based on equitable principles which will have tobe applied depending on the facts and circumstances obtained ineach case. While applying the equitable principles, the maxim hewho seeks equity must do equity cannot be lost sight of. It is said,a court will not assist a lessee in extricating himself or herselffrom the circumstances that he or she has created, in the nameof equitable consideration. In the instant facts as already notedwhen public largesse is bestowed on certain terms and conditions,a term of the lease deed is to be strictly adhered to and whenClause 14 provides that the lessee shall not be entitled to subletor assign his interest in the lease except with the previouspermission in writing of the lessor, it does not matter as to whetherthe breach committed is by assigning a portion of the leased landor the whole when such interest of the lessee has beentransferred without previous permission of the lessor. Further,in all the cases referred to by the learned senior counsel, thebreach alleged was either of creating mortgage or subletting theproperty. In the instant case, despite being a lessee therespondent has executed an absolute sale deed in respect of theleased land which belongs to the government and such breachcannot be condoned. [Para 30][621-B-G]

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ASarup Singh Gupta vs. S. Jagdish Singh and Others(2006) 4 SCC 205: 2006 (4) JT 277 – referred to.

Sh. Shiam Behari Lal Gour and Others vs. Madan SinghAIR (32) 1946 Allahabad 298; A. Venkataramana Bhattaand Ors. vs. Krishna Bhatta and Ors AIR 1925 MadrasB57; Keshab Chandra Sarkar and Ors. vs. GopalChandra ChandaAIR 1960 Calcutta 609;Swarnamoyee Debya vs. Aferaddi and Ors. AIR 1932Calcutta 787 – referred to.

Grove vs. Portal 1902 1 CH 727; Cook vs. ShoesmithC(1951) 1 KB 752 – referred to.CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.5117-5118 of 2021.

From the Judgment and Order dated 10.07.2015 of the High Courtof Kerala at Ernakulam in W.A. No. 369 of 2011 and W.A. No. 375 ofD2011.

With

Civil Appeal Nos. 5120 and 5119 of 2021.

Jaideep Gupta, Sr. Adv., G. Prakash, Ms. Priyanka Prakash, Ms.EBeena Prakash, Advs. for the appellants.

Joseph Markos, Thomas P Joseph, Sr. Advs., M. P. Vinod, AtulShankar Vinod, Abraham Markos, Prashant Padmanabhan, John JosephVettikkad, Asish Sarkar, Advs. for the respondent.The Judgment of the Court was delivered byF

A. S. BOPANNA, J.

1. Leave granted.

2. The appellant-State of Kerala is assailing the order dated10.07.2015 passed by the High Court of Kerala at Ernakulam in W.A.GNo.369/2011 and W.A. No. 375/2011. The said appeals had arisen outof the proceedings in Writ Petition No.1207/2005 wherein through theorder dated 17.01.2011, the petition was disposed of to the extent ofquashing the order declining value of usufructs (Ex.41). The order (Ex.39)by which the lease in favour of Respondent had been terminated wasupheld. It is in that view, the writ petitioner-M/s. Joseph & Company asH

also the respondent-State of Kerala had filed the Writ Appeals to theextent they were aggrieved. The learned Division Bench of the HighCourt through the impugned order dated 10.07.2015 has allowed theappeal filed by M/s. Joseph & Company, thereby setting aside the orderterminating the lease and the appeal filed by State of Kerala wasdismissed. It is in that light, the appellant-State of Kerala claiming to beaggrieved is before this court.

3. The genesis of the case is that erstwhile Travancore-CochinGovernment had by a notification in the year 1953 auctioned certainabandoned portions of Beatrice estate. One Mr. P.I. Joseph-respondedto the said notification and offered his bid to an extent of 246.26 acresout of the South Block and took possession on 10.05.1955. However, nolease agreement was entered into between him and the government. Inthe meanwhile, the said Mr. P.I. Joseph assigned the said property infavour of Mr. K.K. Joseph. Pursuant to such transaction dated 28.02.1974between 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 iscontended by the lessee that Mr. K.K. Joseph was representing thepartnership 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 registeredsale deed dated 16.12.1983 transferring an extent of 50 acres from theland leased in his favour, to one Mr. Raghavan. Subsequent thereto, Mr.K.K. Joseph is stated to have retired from the partnership firm afterwhich Ms. Meera Scaria had become the Managing Partner representingthe firm. The said Ms. Meera Scaria as the Managing Partner hadaddressed a letter dated 26.06.1990 seeking leave to rectify the defectof transferring a portion of the lease land to Mr. Raghavan. The saidrequest had not been considered since the government through theirletter dated 27.05.1989 had indicated the intention to terminate the lease.Subsequent thereto the notice dated 19.02.1992 intimated the lessee aboutthe order to terminate the lease and to prepare the inventory to takeover possession.

5. But the same was kept in abeyance as certain events of ageneral consideration regarding regularisation of all leases in the areawas under process. However, said process had come to an end on26.02.1999 whereby the government had cancelled its earlier proposal AB

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Aof a general regularisation which was under consideration. In thatbackground, the notice dated 15.11.1999 was issued to Mr. K.K. Josephto show cause why the lease in respect of the whole area of 246.50acres should not be terminated as contemplated under clause 14 of thelease deed. Mr. K.K. Joseph replied to the same on 29.11.1999 indicatingthat he has retired from the partnership firm and that Ms. Meera ScariaBis the present Managing Partner who is to be notified. In the said process,the first round of litigation commenced challenging the action of theState Government to terminate the lease. The Writ Petitions bearingO.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 saidCprocess after the Writ Appeal had resulted in the proceedings beforethis Court in C.A. No. 4169/2004. This Court through the order dated16.07.2004 permitted the appellant-State of Kerala to issue fresh showcause notice regarding proposed termination of lease and the respondentswere permitted to file their reply to the show cause notice. In the abovebackground, the present round of proceedings commenced with the issueDof the notice dated 29.07.2004 and conclusion of the process.

6. In the said notice the appellant-State of Kerala referred to twoaspects to allege breach of terms of the lease. The main aspect allegingbreach is in relation to entire leased property. It is alleged that Mr. K.K.Joseph had transferred his leasehold right to M/s. Joseph & CompanyEwithout the approval of the lessor with the intention to nullify the effectof clause 14 of the lease deed and he has thereafter retired from thefirm in 1988. The other aspect alleging breach of the term is that anextent of the leased land measuring 50 acres has been sold withoutconsent of the lessor, to one Mr. Raghavan. It is in the said premise, theFlease was sought to be terminated. The respondent-M/s. Joseph &Company submitted a detailed reply dated 14.08.2004 seeking to justifytheir action and to contend that they had not committed breach of theterms of lease deed. The respondent was also provided the opportunityof hearing, pursuant to which an order dated 26.11.2004 was passedwhereby the termination of the lease in respect of the entire extentGmeasuring 246.26 acres of reserve forest land was confirmed.

7. The respondent being aggrieved by the same had preferred theWrit Petition as indicated supra. The learned Single Judge did not interferewith the order terminating the lease and the writ petition was dismissedto that extent. Insofar as the aspect relating to the breach alleged regardingH

the transfer of lease to M/s. Joseph & Company by Mr. K.K. Joseph,the various circumstances were referred more particularly the documentswhich were at exhibits P10, P11, P12, P13 and P16 to P20 to indicatethat the government had for all intents and purposes treated M/s. Joseph& Company as the lessee under the lease deed which was Exhibit P7 tothe Writ Petition. However, in respect of the transfer of 50 acres infavour of Mr. Raghavan, the learned Judge was of the opinion that thefinding 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 thefirst part by the State of Kerala and the conclusion of the learned SingleJudge that M/s Joseph & Company is the lessee was held to be validand was not interfered. Further, insofar as the sale in favour of Mr.Raghavan, the learned Division Bench had taken note of Clause 12contained in the lease deed between the appellant-State of Kerala andM/s Joseph & Company which provided that the default if any committedcould be remedied if the lessee is put on notice. The default can beconfirmed only if the same is not remedied despite notice. It is in thatview, the learned Division Bench was of the view that the requirementin Clause 12 of the lease agreement had not been complied with by theappellant-State of Kerala. Therefore, the learned Division Bench setaside the order terminating the lease.

9. We have heard Mr. Jaideep Gupta, learned senior counsel forthe appellant-State of Kerala, Mr. Joseph Markos, learned senior counseland Mr. Thomas P Joseph, Learned Senior Advocate on behalf of therespondents and perused the appeal papers including the writ appealrecords which had been secured from the High Court.

10. On the first aspect relating to the breach alleged in view ofthe transfer of lease in favour of M/s Joseph & Company by Mr. K.K.Joseph-the lessee, Mr. Jaideep Gupta, learned senior counsel has takenus through the documents to indicate the sequence that the property infact was auctioned in favour of Mr. P.I. Joseph who had transferred thelease in favour of Mr. K.K Joseph through the sale deed dated 28.02.1974.Though the government has subsequently validated the said transactionby executing a lease deed in favour of Mr. K.K. Joseph, the subsequenttransfer by Mr. K.K Joseph to M/s Joseph & Company, a new lesseewithout prior consent of the government would constitute breach is hiscontention.

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A11. Having noted the contention, we find that the said issue neednot detain us for long. At the outset, a perusal of the lease deed dated15.12.1979 would no doubt disclose that Mr. K.K. Joseph in his individualname is referred to as the lessee of the other part. The recital in thelease 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 ofBMr. K.K Joseph to assign the lease is referred in the document. In thatbackdrop, a reference to the sale deed dated 28.02.1974 by which thesale was made by Mr. P.I. Joseph to Mr. K.K. Joseph indicates that thepurchaser Mr. K.K. Joseph has been described as the Managing Partner,M/s Joseph & Company, a registered partnership firm. The said aspectCwould ex-facie indicate that the contention of the appellant that M/sJoseph & Company had come into existence subsequently as a ploy toovercome and defeat the bar contained in Clause 14 to the lease deedcannot be accepted. Further, as already taken note, the learned SingleJudge as also the learned Division Bench has referred to the variousother documents more particularly at Exhibits P10, P11, P12, P13 andDP16 to P20 in the writ proceeding records to indicate that the Government,for all intents and purposes had treated M/s. Joseph & Company as thelessee. Therefore, to the said extent on the first aspect, the same doesnot constitute breach. Hence the conclusion reached by the High Courton that aspect does not call for interference.E

12. The next aspect which arises for consideration is as to whetherthe sale to an extent of 50 acres from out of the lease area would amountto breach of clause 14 of the lease deed. For better appreciation, itwould be appropriate to take note of Clause 12 and 14 in the lease deeddated 15.12.1979, which have been referred. The same read asFhereunder: -

“12. In the event of the lessee making default in the observanceof fulfillment of any of the covenants herein contained the Lessorshall be at liberty at any time, thereafter, after giving notice to thelessee and hearing him in person or through his agent or vakil dulyGappointed about the failure of the lessee to remedy such defaultthat may be reported to the Lessor from time to time by the ChiefConservator of Forests, to terminate the lease and lessee shallforthwith vacate the land hereby leased and demised andnotwithstanding such termination of this lease, the lessee shall beliable for any loss which the lessor may sustain by reasons of H

such default and all such improvements made by the Lessee onthe land hereby leased and demised as exist at the time of vacatingthe same must be left intact and no compensation can be claimedby the lessee for such improvements.”

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

13. From a perusal of the relevant clauses in the lease deed it isseen that clause 14 thereof provides that the lessee shall not be entitledto sublet or assign his interest in the said lease except with the previouspermission in writing obtained from the lessor. In that backdrop, thebreach alleged against the respondent is that the lessee has assigned theinterest in the leased land to an extent of 50 acres in favour of Mr.Raghavan without the previous permission of the lessor. The fact thatsuch sale has taken place cannot be in dispute nor is it in dispute. Thesaid assignment has been made under the registered sale deed dated16.12.1983. The question therefore is; whether the same would constitutebreach of the terms in the lease deed so as to entail termination of thelease.

14. Mr. Joseph Markos, learned senior counsel contended, thoughsuch sale deed was executed, the possession of the property had notbeen handed over to Mr. Raghavan and the lessee M/s. Joseph &Company had continued to pay the lease rentals in respect of the entireproperty. It was next contended that even assuming that the executionof the document had constituted default, the lessee ought to have beennotified to remedy such default and only if the same was not done, thelease could be terminated. In that regard, the learned senior counselcontended that the lessee had submitted a letter to the government on17.03.1990 seeking to rectify the default and if the same was acceptedin terms of Clause 12, the breach contemplated in Clause 14 would notsurvive. It is his further contention that the right to forfeit the lease, inthe present circumstance, would fall under Section 111(g) of the Transferof Property Act (‘TP Act’ for short) which calls for strict constructionagainst the lessor. In that event the termination of the entire lease wouldnot 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 thatthe acceptance of lease rentals by the lessor, including for the said extentof 50 acres sold to Mr. Raghavan would constitute waiver of forfeiture.

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A15. While taking note of the contention on behalf of the respondent-M/s. Joseph & Company regarding the benefit available to them underClause 12 of the lease deed which had not been complied by providingan opportunity to remedy the default, it is necessary to note as to whethersuch benefit is available to rectify the breach alleged under Clause 14 ofthe lease deed as well and whether Clause 12 makes it mandatory toBissue notice to rectify before action is taken. In order to, gather theintention of the parties, the nature of the transaction and the documentas a whole is necessary to be considered. While on this aspect, what isstriking 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 termsCcontained in the lease deed are taken note, keeping in view the admittedposition that the leased land is situate in a reserve forest, the clauses inthe agreement commencing from clause No. 5 to 11 indicates that theright reserved by the lessor and the obligations imposed on the lesseeare with regard to the compliance, to retain the characteristics of forestarea and continue such other activities including collection of minor forestDproduce and the forest officials have been granted the right to regulatethe same notwithstanding plantation was the permitted use.

16. If in that context, Clause 12 is taken note, it indicates that theissue of notice is contemplated in the event of the lessee committingdefault and the liberty to terminate the lease is exercised. The concessionEprovided is to rectify the default before the notice is issued. If there isfailure of the lessee to remedy such default that may be reported to thelessor from time to time by the Chief Conservator of Forests. Beforetermination of the lease a notice is to be issued and be heard about thedefault if the default has not been remedied. The same would clearlyFindicate that the default referred to, the issue of notice there for and thefact 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 inrespect of the default relating to deviation from the obligations containedin the covenants relating to maintaining the nature of the property anddefault should be of rectifiable nature. The Dictionary meaning ofG‘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 saiddistinction is kept in view, the breach if committed by subletting orassigning as provided in Clause 14, the same would lead to itsconsequences and the liberty to remedy the same is not mandatory. AllHthat Clause 12 signifies is that if default is reported and if such default is not remedied then termination can be made after issue of notice andhearing. The cause for termination will be the default and permitting toremedy the same is only an indulgence to be shown. Therefore, thelearned Division Bench was not justified in its conclusion that the non-issue of notice and not providing opportunity to remedy the default isfatal. In the instant facts, the reading of the lease deed as a whole wouldindicate that the right reserved to the lessor under Clause 14 isindependent of Clause 12 and if the breach of that nature occurs, it isirreversible and it will have to be taken to its logical conclusion unlessthe lessor waives the right thereunder.

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

(a) xxxxxxx

(b) xxxxxx

(c) xxxxxx

(d) xxxxxxx

(e) xxxxxxx

(f) xxxxxxxx

(g) by forfeiture; that is to say, (1)in case the lessee breaksan express condition which provides that, on breach thereof,the lessor may re-enter; or (2) in case the lessee renounces hischaracter as such by setting up a title in a third person or byclaiming title in himself; [or (3) the lessee is adjudicated an insolventand the lease provides that the lessor may re-enter on the happeningof such event]; and in [any of these cases] the lessor or histransferee [gives notice in writing to the lessee of] his intention todetermine the lease;

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

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[2021] 11 S.C.R.

AProvided that the lessor is aware that the forfeiture has beenincurred:

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

18. The contention of the learned senior counsel for the respondentthat a question of law could be raised at any stage is well taken and wedo 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 theT.P. Act though taken note, in our opinion, the same cannot be consideredCin abstract without reference to the factual foundation. So far as thecontention that the lessee had continued to pay the lease rentals in respectof the entire property despite the sale of 50 acres to Mr. Raghavan,whether such acceptance of the lease rentals by the lessor was withknowledge of default by condoning the breach, is a question of factDwhich will have to be urged in the original proceedings and the materialwill have to be placed on record so as to enable the original authority totake a decision on that aspect and render a finding on fact so that theCourt at a later stage in the process of judicial review can reassess thesame and determine as to whether the benefit of Section 112 T.P. Actwill be available. Therefore, in the instant case, the contention that theElease rentals were being paid in respect of the entire extent cannot beaccepted outright as no contention was urged and details were not laidin the original proceedings. Further, in a matter of the present naturewhen the entire lease area measured vast extent of 246.26 acres andthe allegation is of parting with the lease hold right of 50 acres from suchFlease area and in that circumstance when the lease rental in any eventwas being paid to the remaining extent of 196.26 acres, the lumpsumpayment of lease rental cannot be taken advantage of to contend thatthe lease rental was continued to be paid and seek waiver of forfeiture.

19. When there was breach providing the right to terminate theGlease in respect of the entire leased land, even if the lease rental paid bythe lessee has been accepted by the appellant-lessor, it has not beenshown that the requirement of the conditions in the proviso to Section112 of the T.P. Act is satisfied. In the present situation, the land is leasedby the government and when the breach had occurred the competentauthority had issued the notice and the proceedings was initiated. OnceH

the proceedings had been initiated even if the lease rental was receivedthe same is saved under the second proviso. Further the situation is alsothat the payment of the rental made to the government would in anyevent be accepted as different functions are performed by differentoffices and any amount tendered will be received. That cannot give anyadvantage to the lessee merely because the rent has been tendered inthe government office and the same has been innocuously acceptedwithout there being specific reference to waiver.

20. On the question of waiver, it would be profitable to refer tothe decision of this court in the case of Sarup Singh Gupta vs. S.Jagdish Singh and Others (2006) 4 SCC 205 wherein the contentionrelating to waiver due to acceptance of rent was considered, though inthe context of Sections 111(h) and 113 of the T.P. Act, wherein it washeld as hereunder: - “6. Learned Senior Counsel also relied upon a decision of a learnedSingle Judge of the Calcutta High Court, reported in AIR 1926(Calcutta) 763, wherein It was held that where rent is acceptedafter the notice to quit, whether before or after the suit has beenfiled, the landlord thereby shows an intention to treat the lease assubsisting and, therefore, where rent deposited with the RentController under the Calcutta Rent Act is withdrawn even afterthe ejectment suit is filed, the notice to quit is waived. In our view,the principle laid down in the aforesaid judgment of the High Courtis too widely stated, and cannot be said to be an accurate statementof law. A mere perusal of Section 113 leaves no room fordoubt that in a given case, a notice given under Section111, Clause (h), may be treated as having been waived, butthe necessary condition is that there must be some act onthe part of the person giving the notice evincing an intentionto treat the lease as subsisting. Of course, the express orimplied consent of the person to whom such notice is givenmust also be established. The question as to whether theperson giving the notice has by his act shown an intentionto treat the lease as subsisting is essentially a question offact. In reaching a conclusion on this aspect of the matter,the Court must consider all relevant facts andcircumstances, and the mere fact that rent has beentendered and accepted, cannot be determinative.

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SUPREME COURT REPORTS

A7. A somewhat similar situation arose in the case in Shanti PrasadDevi v. Shankar Mahto. That was a case where the landlordaccepted rent even on expiry of the period of lease. A submissionwas urged on behalf of the tenant in that case that Section116, Transfer of Property Act was attracted and there was adeemed renewal, of the lease. Negativing the contention, thisBCourt observed that mere acceptance of rent for thesubsequent months in which the lessee continued to occupythe premise even, after the expiry of the period of the lease,cannot be said to be a conduct signifying his assent to thecontinuing of the lease even after the expiry of the leaseCperiod. Their Lordships noticed the conditions incorporatedin the agreement itself, which provided for renewal of thelease and held that those conditions having not beenfulfilled, the mere acceptance of rent after expiry of periodof lease did not signify assent to the continuance of thelease.”

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In that view, the waiver as contended by the learned senior counselfor the respondent-lessee is unsustainable.

21. That apart, the contention that the lessee- M/s. Joseph &ECompany had continued in possession of the said extent of 50 acreseven after sale and therefore there is no default cannot be accepted formore than one reason. To decipher this aspect, a perusal of the saledeed dated 16.12.1983 which was produced as exhibit R3(b) in the writproceedings would indicate the relevant recitals as follows: -F

“I have absolute right to sell the property in the schedule.I have decided to sell you 50 acres of the land in the schedulebelow along with the right to travel through the rest of theland in my possession. The amount decided as the price of hesaid land is Rs. 45000. Having received the full payment ofGRupees forty five thousand, I give you absolute right andpossession over the aforesaid land in the schedule along withthe rights of transportation through the rest of the property.

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

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From today on I have no objection in you keeping inpossession and enjoying the absolute right of the propertydescribed in the schedule together with the right oftransport. Hereon you shall pay the lease rent directly to theGovernment. All taxes to the Government may henceforth bepaid by you. Myself, the company or any of our successorsmay have no right over schedule property.

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

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

22. A perusal of the extracted portion from the sale deed dated16.12.1983 would indicate the outright nature of sale of a portion of theleased land. It is sold for a sale consideration despite knowing that theproperty belonging to the government is granted under lease. The recitalin fact, categorically indicates that the absolute right and possession hasbeen given and it has also been stated therein that henceforth thepurchaser, Mr. Raghavan is to pay the lease rent directly to the governmentand all taxes to the government are also to be paid by him. Further,neither Mr. K.K. Joseph nor the partnership firm has retained any rightover the property sold under that document. Therefore, the documentitself would indicate the intention of the parties and also the fact thatpossession was parted without consent of the lessor which was a clearbreach 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 hasstated that even after he had retired from the firm, the firm was pursuingits efforts to get the said 50 acres assigned to Mr. Raghavan, reassignedto the firm and thereby remedy the default as contemplated in Clause 12of the lease deed. Therefore, the fact that there was a breach committedwas also within the knowledge of the lessee though they were seeking A

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Ato take shelter under Clause 12. That apart, the letter dated 26.06.1990addressed to the government by M/s. Joseph & Company through Ms.Meera Scaria, inter-alia states as follows: - “If this reconveyance is effected, the entire property includedin the lease deed executed by Sh. K.K. Joseph and registeredBas document No.1983 of 1979 of Nenmara, Sub Registry Officewill come back to the possession of M/s. Joseph &Company which is the original lessee.”

The said statement would clarify that the possession had beenCparted and it was only being indicated that on re-conveyance being made,the possession would come back to the lessee. Therefore, the contentionput forth by the learned senior counsel for the respondent that thepossession had not been parted and the lease rental was being paid bythem cannot be accepted as a mitigating factor in the facts andDcircumstances of this case.

24. Though an attempt is made to contend that an opportunityought to have been granted to remedy the default in view of the provisioncontained in Clause 12 of the lease deed in which event the defaultwould stand remedied, the same cannot come to the aid of the respondentEfor the reason stated supra. Further, factually also it is to be noted thatexcept addressing the letter dated 26.06.1990, the lessee-M/s. Joseph& Company did not take any concrete steps to either cancel the saledeed or to physically indicate that the possession is back with the lesseeand the transaction has been nullified. Be that as it may, even otherwisein the instant facts the breach was not of the nature which wasFcontemplated for rectification as provided under Clause 12 of the leasedeed. Therefore, it is too late in the day for the respondent to contendthat there was non-compliance of Clause 12 before the right of the lessorto terminate the lease as provided under Clause 14 is exercised.

G25. The alternate contention urged by the learned senior counselfor the respondent-lessee is that even if the breach is held against thelessee, the entire lease cannot be forfeited in view of the provision inSection 111(g) of T.P. Act. The learned senior counsel in order topersuade us on this aspect has referred to certain decisions which willbe adverted to here below.H

26. Having noted the contention, firstly, a perusal of clause 14 nodoubt does not state ‘a part thereof’ as contended by the learned seniorcounsel. However, that does not mean that a breach committed in respectof a part of the leased land cannot be construed as breach and woulddisentitle the lessor to exercise the right thereunder. Secondly, Section111(g) does not suggest that in respect of the lease as a whole, theforfeiture should be limited only to the portion regarding which the breachis alleged. The breach is of not adhering to the assurance given to lessorin respect of the property belonging to the lessor, be it the whole or apart of it. In this regard, the decision relied on in the case of Sh. ShiamBehari Lal Gour and Others vs. Madan Singh AIR (32) 1946 Allahabad298 is a circumstance where the suit was decreed for a declaration thatthe lease rights of the defendants in the leased land have been determinedand the plaintiff is entitled to possession. In that circumstance, the pointwhich arose for consideration is, whether the plaintiff is in the eventswhich have happened, entitled to such declaration and whether in thatcircumstance there has been forfeiture. No-doubt as contended by thelearned senior counsel, the issue that was settled is that the law leansagainst forfeiture. Such consideration in the said suit was after notingthe nature of right that was claimed to the property by the lessor whereinthere was rival claims of succession to the property.

27. In the case, A. Venkataramana Bhatta and Ors. vs. KrishnaBhatta and Ors AIR 1925 Madras 57, the High Court no doubt consideredthe case against forfeiture of the entire lease when there was partialalienation by taking a leaf from the construction adopted in England,based on the general principles of equity and the same was followed inIndia. In the said case, the equitable principle was applied in a circumstancewhere the lessee himself in fact was the owner of the property. He hadmortgaged the same and had obtained lease of a portion of the mortgageproperty from his mortgagee. From such property which was obtainedon lease, a portion thereof was again mortgaged by him to a differentmortgagee which was termed as breach of the terms of lease. In thatcircumstance, the forfeiture was limited only to the portion which wasmortgaged to a third-party mortgagee after obtaining on lease from thefirst mortgagee.

28. In the case, Grove vs. Portal 1902 1 CH 727, the lease givenwas of fishing in certain portions of the river but with the condition not tosublet without the consent of the lessor in writing. When breach was AB

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Aalleged, the lessee contended that he granted authority to another persononly to the extent as provided in the lease. The lessor, however, contendedthat it constituted breach as the lessee assigned it to third person. In thatsituation, it was held that the covenant did not expressly apply to anypart of the premises as well as to the whole since the lessee was notprecluded from granting license to another person (limited to two rods)Bto fish in the river during the residue of the term. The considerationtherein would not be relevant in the instant case. In the case, Cook vs.Shoesmith (1951) 1 KB-752, it was the case where the dwelling housewas 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 landlordCfiled the suit for possession alleging breach of the agreement. The courtrelied on the dictum of Lord Elson in Church vs. Brown wherein it washeld that the principle of an undertaking not to sublet the premise wasnot broken since ‘the premise’ described the whole of what is demisedand there are no words such as a tenant had agreed not to sublet any Dpart of it. In that circumstance, it was held that there was no breach ofthe agreement.

29. In, Swarnamoyee Debya vs. Aferaddi and Ors. AIR 1932Calcutta 787, it was a case where ejectment was sought for unauthorisedtransfer by the defendant which was contended to have broken theEcondition in the document creating the tenancy. In that circumstance, itwas held that the usufructuary mortgage was not of the entire holdingand upon the covenant in the lease, no forfeiture was incurred by thetransaction. The question which was considered therein was with regardto the construction of the lease which had arisen in that case and adecision to that effect was taken. In the case, Keshab Chandra SarkarFand Ors. vs. Gopal Chandra Chanda AIR 1960 Calcutta 609, theplaintiff had sued for recovery of possession contending unauthorisedtransfer of the leased land without the consent of lessor which amountedto breach of condition of the lease. The general principles relating toforfeiture as had been laid down was taken note and in that circumstanceGby strictly construing the right of forfeiture against the lessor in theabsence of express stipulation had arrived at the conclusion that thetransfer made of the entire extent, though consent had been obtained totransfer a part would not amount to breach. Certain other decisionsrelied on by the learned senior counsel are also to the same effect andwe see no need to refer to each of them. But, what is necessary to beH

taken note is that the general principles of equity as laid down in Grovevs. Portal (supra) has been the basis for the conclusion reached in almostall the noted cases.

30. In contradistinction to the facts which arose for considerationin the cited cases where essentially the dispute was inter-se betweenthe private owners of the property and their lessees and the nature oftransaction, in the instant case, the leased land is the property whichbelong to the government and the leasehold right has been auctioned soas to earn revenue for the state, which is to the interest of its citizensand one citizen or a group is permitted to exploit the land to the exclusionof all others. Additionally, such government property is located in anarea notified as reserve forest. In such circumstance, when the lessee isgiven the benefit of such property and the breach of the condition imposedis alleged, the strict construction of the forfeiture clause against the lessorin all circumstances would not arise as otherwise it would render theclause 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 inthe contract and as such the lessee cannot claim benefit under the saidprovision. Further, as already noted the consideration under Section 111(g)is based on equitable principles which will have to be applied dependingon the facts and circumstances obtained in each case. While applyingthe equitable principles, the maxim he who seeks equity must do equitycannot be lost sight of. It is said, a court will not assist a lessee inextricating himself or herself from the circumstances that he or she hascreated, in the name of equitable consideration. In the instant facts asalready noted when public largesse is bestowed on certain terms andconditions, a term of the lease deed is to be strictly adhered to and whenClause 14 provides that the lessee shall not be entitled to sublet or assignhis interest in the lease except with the previous permission in writing ofthe lessor, it does not matter as to whether the breach committed is byassigning a portion of the leased land or the whole when such interest ofthe lessee has been transferred without previous permission of the lessor.Further, in all the cases referred to by the learned senior counsel, thebreach alleged was either of creating mortgage or subletting the property.In the instant case, despite being a lessee the respondent has executedan absolute sale deed in respect of the leased land which belongs to thegovernment and such breach cannot be condoned.

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

31. The Appellant-State of Kerala in both these appeals areassailing the interim orders passed by the learned single judge in W.P.No.35832/2015. The said order had been confirmed by the learned DivisionBBench through the orders dated 11.01.2016 and 25.01.2017. Consideringthat the learned single judge had made an interim arrangement protectingthe interest of both the parties which will be subject to ultimate result inthe writ petition and also taking note that this Court while directing noticein SLP No.9661/2017, on 21.04.2017 had directed the parties to maintainCstatus quo as it existed on that day and the said order has continued tillthis day, it would be appropriate that the said position shall continue andthe High Court shall dispose of the writ proceedings in accordance withlaw, if already not considered and disposed of. We make it clear that weDhave refrained from interfering with the impugned orders since they areinterim in nature. We have also not adverted to the merits of the rivalcontentions arising in these proceedings. As such the High Court shallconsider the case on its own merits.

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

(i) The order dated 10.07.2015 passed by the learned DivisionBench in W.A.No.369/2011 and W.A.No.375/2011 is setaside.

(ii) The order dated 17.01.2011 passed by the learned SingleJudge in W.P.No.1207/2005 is restored.F

(iii) The appeals arising out of SLP(C) Nos.879-880/2016 areallowed in part with no order as to costs.

(iv) The appeals arising out of SLP (C) No.9661/2017 andSLP(C) No.18760/2016 are disposed of.G

(v) Pending application, if any, shall stand disposed of.

Ankit Gyan

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