The main legal point established in the judgment is the application of the principle of implied surrender in determining the relationship between the parties after the execution of a mortgage deed following a lease deed. The court emphasized the importance of interpreting the terms of the document in light of the surrounding circumstances and the inadmissibility of extraneous evidence when the terms of the document are plain and unambiguous.

1. The suit is for the redemption of a mortgage with possession, Ext. B dated August 14,1931 A. D. corresponding to Karkadakom 29,1106 M.E. in favour of Tharappan, represented in this suit by his sons, defendants 1 to 3, and grandsons defendants 4 to 9. The principal question for decision is whether a prior lease, Ext. A dated Karkadakom 28, 1091, in favour of Tharappan subsisted after Ext. B, or must be deemed to have been surrendered impliedly on the date thereof Ext. A was a 'verumpattom' lease with no premium & no right in the lessee to make improvements, and was for a term of one year. It stipulated the payment of tax by the lessee amounting to Rs. 48-8-1 annually, and the payment of pattern or rent at 670 paras-2 edangazhees-2 nazhees of paddy in the months of Kanni and Makaram, and a perquisite of 'vazhakula' at eight arenas per annum. Ext. B is called 'kaivasapanayadharam' (mortgage with possession), the mortgage amount being Rs. 2500. The mortgaged properties were, the three items of properties described as such in the schedule appended to it, which were stated to be then outstanding with Tharappan under Ext. A lease. Ext. B recited, that the possession of the mortgaged properties was given on that day to the mortgagee, and it directed him to enjoy them directly or indirectly, on payment of tax of Rs. 48-8-1. The balance of the income from the mortgaged properties after payment of tax was stated to be 720 paras of paddy, out of which, 50 paras of paddy per month or 300 paras of paddy for six months, were to be appropriated towards interest on the mortgage amount, the term of the mortgage being six months> the balance of the yearly income amounting to 420 paras of paddy being payable to the mortgagor, before the expiry of the term on Makarom 30,1107, when the mortgagor was to pay the mortgage amount and take a release of the properties. Ext. B further provided, that if the mortgage amount was not paid as aforesaid, the mortgagee may continue to appropriate interest at the rate of 50 paras of paddy per mensem from the paddy payable to the mortgagor, and the mortgage money would be paid on demand by the mortgagee, when all accounts relating to the mortgage transaction would be settled. If the mortgage money was not paid on such demand, the properties scheduled and the mortgagor were answerable, and the mortgage money may be realised by the sale of the properties.

2. It cannot be disputed, that one of the modes in which a lease may be terminated, is by surrender, which may be either express or implied. S.111, clause (f) of the Transfer of Property Act has only codified this principle and illustration to that clause provides that:

"a lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon."

This is not exhaustive. The principle of implied surrender is founded in English law, upon the rule of estoppel, which precludes a lessee from disputing the validity of the second lease which he has accepted and which cannot coexist with the first lease. In India, the principle has been stated very clearly, if I may say so, in Raman Velu v. Lekshmi,1953 KLT. 442, in these terms:

"The principle is that whenever a certain relationship exists between two parties in respect of a subject-matter and a new relationship arises as regards the identical subject-matter if the two sets of relationships cannot co-exist as being inconsistent and incompatible, that is to say, if the latter can come into effect only on termination of the earlier that would be deemed to have been terminated in order to enable the latter to operate."

This principle was applied by Ramaswamy, J., in Meenakshi Amma v. Kizhakke Valath Narayani, AIR. 1957 Madras 212, distinguishing Kallu v. Diwan, ILR. 24 Allahabad 487 and was restated in more or less similar terms by Viswanatha Sastri, J., in Konijeti Venkayya v.