Back
1899 Supreme(SC) 1
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
LORD WATSON, LORD HOBHOUSE, AND SIR RICHARD COUCH.
LALA BENI RAM - Appellant
Versus
KUNDAN LALL - Respondents
On Appeal From The High Court at Allahabad.
Decided On : February 16, 21, 1899 ;March 11, 1899
Solicitors for appellants:Ranken Ford, Ford & Chester. Solicitors for respondents: Barrow & Rogers.
Mere acquiescence by a landlord in a tenant's construction of permanent structures on leased land does not create an equitable estoppel against ejectment if the tenant knows their interest is limited and there is no agreement for a perpetual right of occupation.
Headnote:(A) Transfer of Property Act, 1882 - Section 108 - Ejectment of tenant - Equitable estoppel - Construction of permanent structures on leased land - Mere acquiescence of the landlord in the erection of buildings by a tenant, who is aware of the limited nature of their interest, does not create a perpetual right of occupation or prevent the landlord from seeking ejectment upon termination of the tenancy. (Para 12)
(B) Equitable Estoppel - To raise an estoppel against a lessor, it must be shown that the owner's conduct, whether by abstinence or active intervention, was sufficient to justify the legal inference that the right of tenancy was changed into a perpetual right of occupation. Mere knowledge of the construction of permanent structures without a specific agreement for renewal or extension is insufficient to establish such a right. (Para 12)
(C) Law of England - A tenant who builds on land held under a lease, knowing the extent of their interest, does not acquire a right to prevent the lessor from taking possession upon determination of the tenancy, absent special circumstances such as representations that the tenant would acquire a title. (Para 15)
Facts of the case:
Land was leased for the construction of a factory. Over time, the tenants constructed various permanent buildings and shops on the land. The landlords were aware of these constructions and continued to receive rent without objecting. Upon the termination of the lease and service of notice to quit, the landlords sought ejectment. The tenants resisted the suit on the ground of equitable estoppel, arguing that the landlords' acquiescence in the construction of the buildings prevented them from seeking ejectment.
Findings of Court:
The court found that the tenants were fully aware that they were only tenants and that the landlords were the owners of the land. The mere fact that the landlords did not prohibit the construction and continued to receive rent did not imply a contract to grant a perpetual right of occupation.
Issues: Whether a tenant who obtains possession of land under a lease can resist ejectment if they build permanent structures on the land with the acquiescence of the landlord, but without any express or implied stipulation for a renewed or extended term.
Ratio Decidendi: The court held that mere acquiescence by a lessor in the erection of permanent structures by a tenant, who knows the limited nature of their title, does not create an equitable estoppel. For such an estoppel to arise, there must be evidence that the lessor's conduct implied a contract to change the tenancy into a perpetual right of occupation. In the absence of such representations, the tenant's expenditure on buildings is their own risk.
Result: Judgments reversed and decree of ejectment granted.
Legal Category Hierarchy
-
property law
-
landlord and tenant
- ejectment
- equitable estoppel
-
transfer of property act
- section 108
-
landlord and tenant
-
equity
- estoppel
Judgement
Appeal by special leave on special terms from a decree of the High Court (Jan. 26, 1894) affirming a decree of the Subordinate Judge of Aligarh (April 21, 1892) which affirmed a decree of the Munsiff of Hathras (July 27, 1891) dismissing the appellants suit with costs.
The suit was in ejectment, and the defendants successfully resisted it on the ground of an equitable estoppel which it was contended arose under the circumstances which are fully set forth in their Lordships judgment. Special leave to appeal was given, though the value of the land was less than Rs.1000, for the reason that an important question of law was involved of general interest to all landlords and tenants—whether a tenant who obtains possession of land under a lease can con trary to the terms of his tenancy resist ejectment if he builds thereon with the acquiescence of his landlord, but without any stipulation express or implied that he should have a renewed or extended term. The appellants offered in their petition to pay the respondents costs of the appeal in any event " provided their Lordships should so direct.1
Cowell, for the appellants, submitted that the lease and subsequent tenancy had expired, and that the respondents had no claim either in law or equity to resist ejectment. He cited Ramsden v. Dyson. (L.
R. 1 H. L. 129.)
Upjohn, Q.C., and Boss, for the respondents, contended that there had been no proper notice to quit; that the lease on its true construction contained a covenant to renew for a term; that the Courts below were right in finding that the appellants predecessors had acquiesced in the erection of the buildings, and had continued to receive rent thereafter, and had rightly held them equitably estopped from bringing ejectment. Reference was made to Transfer of Property Act (IV. of 1882), s. 108, (h) (p), and to Shibdas Bandapadhya v. Bamandas Mukhapadya . (( 1871) 8 Beng. L. R, 237,) They claimed that in any event they should be allowed their costs of the appeal, having succeeded in the Courts of the country.
Cowell, in reply, submitted that this was the ninth Court in which the respondents had in two suits resisted a just claim, and that, notwithstanding the special terms mentioned above, they should pay the costs of appeal.
The judgment of their Lordships was delivered by
Lord Watson. In November, 1858, Bhawain Das and Dhani Ram, bankers of Hathras, and owners of the Mauza Ramanpur, let to five tenants, whose interests are now represented by the respondents in this appeal, six bighas of land, for the term of the current settlement, for the construction thereon of a saltpetre factory, at the annual rent of Rs.28. The conditions of the lease appear from the kabuliat, executed by the tenants, on November 17, 1858, which, so far as material, are as follows " That, until the lease money is continued to be paid, the mazulgars (persons who pay the revenue) shall not be competent to dispossess me within the aforesaid term, nor shall I be competent within it to give up the land. After the settlement, the parties shall be bound to carry out the order of the Government, if any, issued by it. I have therefore executed these presents, by way of a kabuliat, in order that they may serve as evidence, and be of use in time of need."
The appellants having acquired, by purchase, the interest of the original lessors, on August 1, 1859, served a notice upon the respondents, requiring them to quit possession of the lands let upon June 30, 1890. The respondents did not comply with the notice; and the appellants, on August 30, 1890, brought a suit for their ejectment in the Court of the Munsiff of Hathras. The plaint (inter alia) craves decree for removal of the material of the houses built by the ancestors of the respondents lying on the said lands.
The respondents, in their written statement, amongst other defences to the action, pleaded that the predecessors of the appellants, " after the completion of the saltpetre factory for which the lan
