2021 Supreme(SC) 475

SUPREME COURT OF INDIA
Hemant Gupta, A.S. Bopanna, JJ.
The State of Kerala and Ors. – Appellants
Versus
M/s Joseph & Company - Respondent
Civil Appeal Nos. 5117-5118 OF 2021 (Arising out of SLP(Civil) Nos. 879-880 of 2016), Civil Appeal No.5120 of 2021 @ SLP(C) No.9661 of 2017, Civil Appeal No.5119 of 2021 @ SLP(C) No.18760 of 2016
Decided On : 03-09-2021

IMPORTANT POINTS
(1) When lessee is given benefit of such property and breach of condition imposed is alleged, strict construction of forfeiture clause against lessor in all circumstances would not arise as otherwise it would render clause in lease deed otiose.
(2) Termination of Lease – It does not matter as to whether breach committed is by assigning a portion of leased land or whole when such interest of lessee has been transferred without previous permission of lessor.
(3) Court will not assist a lessee in extricating himself from circumstances that he has created, in name of equitable consideration.

Headnote:

(A) Transfer of Property Act, 1882 – Sections 111(g) and 112 – Termination of Lease – Sub-letting by lessee – In a matter of present nature when entire lease area measured vast extent of 246.26 acres and allegation is of parting with lease hold right of 50 acres from such lease area and in that circumstance when lease rental in any event was being paid to remaining extent of 196.26 acres, lump-sum payment of lease rental cannot be taken advantage of to contend that lease rental was continued to be paid and seek waiver of forfeiture – Payment of rental made to 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 lessee merely because rent has been tendered in government office and same has been innocuously accepted without there being specific reference to waiver – Leased land is property which belong to government and leasehold right has been auctioned so as to earn revenue for State, which is to interest of its citizens and one citizen or a group is permitted to exploit land to exclusion of all others – In such circumstance, when lessee is given benefit of such property and breach of condition imposed is alleged, strict construction of forfeiture clause against lessor in all circumstances would not arise as otherwise it would render clause in lease deed otiose – It does not matter as to whether breach committed is by assigning a portion of leased land or whole when such interest of lessee has been transferred without previous permission of lessor – Despite being a lessee respondent has executed absolute sale deed in respect of leased land which belongs to government and such breach cannot be condoned – Order passed by Division Bench set aside and Order passed by Single Judge restored. (Paras 18, 19, 30 and 32)

(B) Transfer of Property Act, 1882 – Section 111(g) – Application of equitable Principles – Consideration under Section 111(g) is based on equitable principles which will have to be applied depending on facts and circumstances obtained in each case – While applying equitable principles, maxim he who seeks equity must do equity cannot be lost sight of – Court will not assist a lessee in extricating himself or herself from circumstances that he or she has created, in name of equitable consideration.(Para 30)

Facts of the case:

Appellant-State of Kerala is assailing the order dated 10.07.2015 passed by the High Court of Kerala at 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. The order by which the lease in favour of Respondent had been terminated was upheld. 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 appeal filed by State of Kerala was dismissed.

Findings of Court:

Considering that 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 said position shall continue and the High Court shall dispose of the writ proceedings in accordance with law, if already not considered and disposed of.

Result : Appeals disposed of.