2005 Supreme(SC) 760

2005(4) Supreme 4
Supreme Court of India
(From Patna High Court)
R.C. Lahoti, CJI, G.P. Mathur & P.K. Balasubramanyan, JJ.
Pramod Kumar Jaiswal & Ors. —Appellants
versus
Bibi Husn Bano & Ors. —Respondents
Civil Appeal No. 336 of 2004
Decided on 3-5-2005
Counsel for the Parties :
For the Appellant : M.K.S. Menon and K. Rajeev, Advocates.
For the Respondents : Anil Nauriya, Mrs. Hemantika Wahi and Ms. Sumita Hazarika, Advocates.

Important point
A lessee who has taken assignment of the rights of a co-owner lessor, cannot ­successfully raise the plea of determination of tenancy on the ground of merger of his lessee’s estate in that of the estate of the landlord because unless the interests of the lessee and that of the lessor in the whole of the property leased, become vested at the same time in one person in the same right, a determination of the lease cannot take place.

Headnote:Transfer of Property Act, 1882—Sections 105, 109 and 111—Bihar Buildings (Lease, Rent and Eviction) Control Act—Determination of lease—Doctrines of ‘statutory attornment’ and of ‘merger’—Applicability—Tenants having taken an assignment of rights of certain co-owners, being the heirs of original landlord—Eviction suit on grounds of non payment of rent and bona fide need of landlords for their own occupation—Trial Court directed tenants to deposit rent—Effect of purchase of rights of certain co-owner landlords by tenants of the building, on the lease originally taken by them—Whether taking of an assignment of a fraction of the reversion, or the rights of a co-owner landlord, can bring about a determination of the lease in terms of Section 111(d) of the Transfer of Property Act—(No)—A merger takes place and the lease gets determined only if the entire reversion or the entire rights of the landlord are purchased by the tenant—Appellants, tenants are bound to comply with the requirements of the Rent Control Act under which order for deposit has been passed against them.

       As per P.K. Balasubramanyan, J.

       In a case where a tenant takes an ­assignment of the rights of the landlord or the reversion, the lease is determined, only in a case where by such assignment, the interests of the lessee and the lessor in the whole of the property, become vested in the tenant. The emphasis in the Section is clearly on the coalescing of the entire rights of the lessor and the lessee in the whole of the property in the hands of the lessee. The above provision incorporates the doctrine of merger at common law. (Para 5)

       Thus, the ingredients are that two immediate estates should come into the hands of the same person at the same time and it must be rights in the whole of the property. A merger is prevented if there is an intermediate estate outstanding with another at the relevant time. Obviously, the taking of an assignment of a fraction of the reversion, or the rights of a co-owner landlord, does not and cannot bring about a determination of the lease in terms of Section 111(d) of the Transfer of Property Act. That a lease is not extinguished because the lessee purchases a part of the reversion. (Paras 5 and 6)

       When an owner of property grants a lease to another, he retains with himself the reversion and transfers the right as a lessee to the transferee. When that transferee, the first lessee, leases out the building or a part thereof further, that lessee retains with him the reversion of that sub-lease and transfers to the sub-lessee only the rights of a lessee under him. Even in spite of the transfer of the reversion of the first lease by the ultimate landlord to the sub-lessee, the original lessee, on the strength of the tenancy created by him, is entitled to seek eviction of his tenant, namely, the sub-tenant on the strength of his letting. The fact that the sub-tenant had acquired the ultimate reversion, might not stand in the way since so long as the tenancy in favour of the original lessee is not terminated in the mode known to law, that lessee would continue to enjoy the rights of the transfer in his favour by way of lease. The merger takes place in terms of Section 111(d) of the Transfer of Property Act, only in a case where the interests of the lessee and that of the lessor in the whole of the property, become vested at the same time in one person, in the same right. In Nalakath Sainuddin vs. Koorikadan Sulaiman (supra) such a sub-tenant had rightly approached the Rent Control Court for eviction of his lessor, the lessee from the landlord, by invoking the relevant provisions of the Rent Control Act on the strength of the transfer of ownership in his favour by the head lessor. The rights under the original lease still continued with the original lessee and the right in the property to possess, outstanding with the lessee had not come into the hands of the sub-lessee merely on the strength of the assignment of the ultimate reversion. It could not, therefore, be said that there was a coalescing of the interest of the lessee and the lessor in the assignee landlord, (the sub-tenant) in respect of the original lease in the whole of the property as contemplated by Section 111(d) of the Transfer of Property Act. The decision in Nalakath Sainuddin vs. Koorikadan Sulaiman (supra) is of no avail to the appellants. It is clear from the facts of the case in Nalakath Sainuddin vs. Koorikadan Sulai­man (supra) that when the sub-tenant of a part took an assignment of the reversion of the head-lease, an intermediate estate in the form of the original lease was still outstanding not only as regards the room or portion in the possession of the lessee himself but also as regards the portion or room in his possession as a sub-lessee. (Paras 10 and 11)

       Section 109 of the Transfer of Property Act also does not help the appellant. Section 109 only provides that even without an attornment by the lessee, an assignee of the rights of the lessor would be entitled to proceed against the lessee on the basis that he is his lessee, except as regards arrears of rent already accrued (unless it is specifically conveyed). This statutory attornment, so to say, does not enable the assignee of the reversion to plead that the lease has become extinguished. It would only enable the assignee from the lessor to assert his rights as a lessor notwithstanding that there is no privity of contract between him and the lessee. In a case where he is an assignee of a portion, he could enforce his right to claim eviction or that portion, on the strength of Section 109 of the Act even though the original lessor could not split up the lease himself. (Para 14)

       Here in this case, the lessee has acquired only the rights of certain co-owner landlords and may have the right to work out his rights against the others. The right to work out his rights would not enable him to plead that the two rights in the whole of the property has come to vest in him. What is involved in the present case is the question whether on the acquisition of the rights of some of the co-owner landlords by the tenant, there is an extinguishment of the tenancy by merger as postulated by Section 111(d) of the Transfer of Property Act. T. Lakshmipathi answers that question and with respect, answers that question correctly. A plain and grammatical interpretation of Section 111(d) of the Transfer of Property Act leaves no room for doubt that unless the interests of the lessee and that of the lessor in the whole of the property leased, become vested at the same time in one person in the same right, a determination of the lease cannot take place. On taking an assignment from some of the co-owner landlords, the interests of the lessee and the lessor in the whole of the property do not become vested at the same time in one person in the same right. Therefore, a lessee who has taken assignment of the rights of a co-owner lessor, cannot successfully raise the plea of determination of tenancy on the ground of merger of his lessee’s estate in that of the estate of the landlord. It is, thus, clear that there is no substance in the contention of the learned counsel for the appellants that in the case on hand, it should have been held that the tenancy stood determined and the application of the landlord for a direction to the tenant to deposit the rent in arrears should have been dismissed. The position of the appellants as tenants continue and they are bound to comply with the requirements of the Rent Control Act under which the order for deposit has been passed against them. The High Court has rightly dismissed the revision. (Paras 15 and 16)

       As per R.C. Lahoti, CJI

       I have gone through the judgment proposed by brother P.K. Balasubramanyan, J. I find myself in agreement with the conclusion arrived at by him and also with the reasonings assigned by him excepting for his opinion formed on the case of Nalakath Sainuddin v. Koorikadan Sulaiman (2002) 6 SCC 1, with which opinion I have not been able to pursuade myself to agree and in that regard I am constrained to record my separate opinion. (Para 1)

       Ownership of the property which is the subject matter of tenancy is certainly a larger estate than the tenancy itself and naturally larger than the sub-tenancy. If the sub-tenant acquires the entire interest of the owner in the whole of the estate forming the subject matter of sub-tenancy, the sub-tenancy merges into ownership and the estate of sub-tenant stands enlarged into that of a full owner. The sub-tenant cannot be the owner and the sub-tenant both at the same time. Of course, the situation would have been different if the sub-tenant would not have acquired the entire estate of the owner or the ownership interest in the entire estate forming subject matter of sub-lease. (Para 6)

       In the case of Nalakath Sainuddin the sub-tenant had acquired not a share only of the landlord-owner’s estate nor an ownership in only a part confined to sub-tenancy premises; what he had acquired under the deed dated 12-9-1988 was the full ownership in the entire premises. The right of reversion, vesting in the erstwhile owners, had come to vest fully and entirely in the sub-tenant. (Para 7)

       As per G.P. Mathur, J.

       I am in agreement with the judgment of brother Balasubramanyan, J. that the appeal be dismissed, except on a limited point on which the learned Chief Justice has written a separate opinion, with which I concur. (Para 1)