Raja Kamala Ranjan Roy v. Baijnath Bajoria.

Das J. DAs J.-This is an appeal by the defendant in a

suit for specific performance against the judgment and decree of the High Court of Judicature at Fort William in Bengal (Sir Trevor Harries C. J. and Mukherjea J.) dated May 30, 1948, dismissing his appeal and confirming, with certain modifications, the judgment and decree for specific performance passed by Ormond J. on January 24, 1947. There is no sub-stantial dispJite as to the facts leading up to the suit out of which the present appeal has arisen and they may shortly be stated :

Maharaja Sris Chandra Nandy of Cossimbazar is the owner of premises No. 374 Upper Chitpur Road in the town of Calcutta (hereinafter referred to as the "said premises"). By an Indenture of lease made on April 27, 1931, the Maharaja as manager of the Cossimbazar Raj Wards Estate which was then under the manage-ment of the Court of Wards demised the said premises to one Madan Gopal Daga for a term of 51 years com-mencing from May 1, 1931, at and for the monthly rent of Rs. 1,083-5-3 and upon terms and conditions contained therein. By sub-clause (6) of clause 2 of the said Indenture the lessee covenanted, amongst other things, ''not to assign the demised premises or any part thereof without first obtaining the written consent of the lessor, such consent, however, not to be un-reasonably withheld in the case of respectable or responsible person ......... " There was the usual pro-viso for re-entry for non-payment of rent for three months or for breach of any of the lessee's covenants, without prejudice to the lessor's right of action for such breach. On March 25, 1943, Madan Gopal Daga, with the written consent of the lessor, assigned the unexpired residue of the lease to the defendant who was accepted as the lessee by the lessor. By an agree-1950 ment said to have been arrived at by correspondence exchanged between the plaintiff and the defendant and Raja Kan1ala their respective solicitors between January 27, 1945, Rtlnjati Boy v, and February 2, 1945, the defendant is alleged to have Baijnath agreed to assign the said lease to the plaintiff for the Bajoria. unexpired residue of the term with effect from February 1, 1945, at and for the price of Rs. 1,80,000 and upon Das J. terms and conditions contained in the correspondence to which reference will be made in greater detail here-after. On February 21, 1945, the defendant wro!e a letter to the lessor intimating that he had agreed to assign his interest in the lease to the plaintiff and requesting the lessor to give his consent in writing to such assignment. On March 5, 1945, the lessor replied that the question of his giving consent to the transfer of the lease could not be entertained as he had already determined the lease and that in the circumstances the whole initiative was in the hands of the defendant.

This letter clearly indicated that the lease had been determined for non-payment of rents and it obviously implied that it was for the defendant to get the lease revived by paying up the arrears of rent so that the question of giving consent to an assignment of the lease might be considered by the lessor. On March 8, 1945, the defendant by his solicitors' letter informed the plaintiff's solicitors that the defendant had ap proached the lessor but had failed to secure his consent and that, as no valid transfer could be made without such consent and the agreement for sale was subject to such consent being obtained, the defendant was reluctantly compelled to cancel the agreement. The plaintiff by his solicitors' letter of March 10, 1945, maintained that the agreement was not subject to the alleged condition and that the defendant was. not entitled to cancel the agreement. It was pointed out that under the terms of the lease the lessor could not refuse his consent to the transfer of the lease to a res-pectable or responsible person which the plaintiff undoubtedly was. It is not necessary to refer to the further correspondence that followed in which each 1950 party maintained his own contention. On March 17,

1945, the lessor filed a suit (being suit No. 425 of 1945) Raja Kamala in the High Court against the defendant for the re-Ranjan Roy covery of the demised premises on the ground that

v.

Ba;jnath the lease had been determined. It was during the Bajoria. pendency of that suit that on July 4, 1945, the suit for

specific performance of the agreement to assign the Das J. lease out of which the present appeal has arisen was

filed by the plaintiff against the defendant.

On July 13, 1945, the lessor's suit for ejectment was settled by the defendant consenting to a decree for Rs. 59,213-11-0 for arrears of rent which was paid up. There is no dispute that the forfeiture of the lease for non-payment of rent was waived and the lease was accordingly revived. Shortly after the settlement of the ejectment suit the defendant on August 6, 1945, applied to the lessor for his consent to the assignment of the lease and on the same day the lessor in reply declined to give his consent without assigning any reason whatever. The suit for specific performance came up for disposal before Ormond J. in November 1946 when it was heard in part and was adjourned. It was eventually further heard in January 1947 and finally disposed of on January 23, 1947, when Ormcnd J. passed a decree against the defendant for specific performance of the agreement. The decree provided that in the event of the defendant being unable within a fortnight from the date of the decree to obtain the written consent of the lessor the assignment should be made without such consent. The defendant appealed. After two days' hearing, "in order to clear up the matter" the appeal Court "gave the plaintiff an oppor-tunity to examine the Maharaja as a witness in this case so that all relevant facts might be brought out and placed before the Court for the purpose of enabling it to come to a proper decision on this point." The appeal was accordingly adjourned and the lessor was examined on commission and his evidence was filed in the proceedings. After further hearing the appeal Court dismissed the defendant's appeal and confirmed the decree for specific performance of the agreement without the need for obtaining the consent of the lessor 19~0 prior to the execution of the deed of assignment in favour of the plaintiff. This decree was subsequently Raja Kamara amended by inserting therein a provision enabling the RanJ·an Roy v. plaintiff to set off from the purchase price the amount Baijnath of rent payable as and from February 1, 1945, until the - Bojoria. date of conveyance Jess all outgoings and interest on the purchase price at four per cent. per annum from Das J. that date to the date of the conveyance. The defend-ant has now come up before us in appeal from this judgment and decree of the appeal Court.

The first point urged by learned counsel appearing in support of this appeal is that, being subject to the consent of the lessor, the agreement was contingent on the defendant obtaining such consent and as the defend-ant could not secure the lessor's consent no effective agreement came into being which could be ordered to be specifically performed. The determination of this question must depend on a correct analysis and ascer-tainment of the meaning and import of the correspond-ence by which the agreement is said to have been arrived at. It was on January 27, 1945, that the plaintiff offered to purchase the defendant's leasehold interest in the said premises upon terms and conditions set forth in the plaintiff's letter of that date. Clauses 3 and 4 of those terms were as follows :

"(3). The lease will be .transferred in my favour as from the 1st February, 1945, and I shall be entitled to recover rents from the tenants as from that date and shall pay the rent to the superior landlord and municipal taxes from that date.

(4). You shall have to obtain the necessary consent for the transfer of the lease in favour of myself or my nominees from the said l\faharaja of Cossimbazar before the execution of the transfer of lease in my favour."

The defendant replied to the plaintiff's above letter on January 28, 1945. By this reply the defendant ex-pressed his willingness to transfer the lease to the plaintiff on terms contained therein. Clauses 3 and 4 of this letter were as follows:

1950 " (3) If your final acceptance as stated above is

received within 30th January current and if I am Raja Karnala able to obtain the consent of Maharaja Cossimbazar Ranjan Ro11 for transfer of the leasehold interest within the first

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Baijnath week of February, 1945, I agree to your para 3.

Bajoria (4) Your para 4 is agreed to but the name or names

of the persons to be mentioned in the sale deed for Dru J. whom permission is to be taken from Maharaja Cos-

simbazar should be clearly stated with their respec-tive addresses."

It is quite clear that no agreement was concluded by these two letters for the defendant's letter was not an unconditional acceptance of the plaintiff's offer but amounted in law to only a counter-offer. By clause 3 the defendant offered to transfer the lease to the plaint-iff as from February 1, 1945, so as to entitle the plaintiff to realize the rents from that date and to be liable to pay the rent to the lessor also from that date on two conditions, namely, that the plaintiff's accept-ance was received within January 30, 1945, and the defendant was able to obtain the lessor's consent with-in the first week of February, 1945. This clause did not make the offer itself contingent on the obtaining of the lessor's consent but made one of the terms of the offer, namely, that the lease would be transferred as from February 1, 1945, conditional on the obtain-ing of the lessor's consent within the first week of February, 1945. Likewise, subject to the name of the assignee being clearly stated the defendant by clause 4 offered to obtain the lessor's consent to the assignment of the lease. Clause 4 of the defendant's letter was not so expressed as to make the defendant's offer con-tingent on his obtaining the lessor's consent. On the contrary, clause 4 constituted one of the terms of the offer which, on the offer being accepted, would become binding on the defendant as one of the terms of the agreement. The plaintiff, however, does not appear to have accepted the defendant's counter offer but on January 29, 1945, through his solicitors made a fresh offer to purchase the defendant's leasehold interest at Rs. 1,80,000 on the following terms:

" (a) That the earnest money will be Rs. 5.000 1950 (Rupees five thousand) instead of Rs. 30,000.

(b) Our client will have the conveyance in his own Raja Kamala Ranjan Roy favour. The consent of the landlord will be obtained v, by you before the completion of sale. Bai.inn th

(c) That your client will complete the conveyance Bajoria, within a month after the receipt by us of all the J. Da.~ original title deeds with you.

(d) That the transfer of the property in favour of our client will take effect on and from the I st Febru-ary, 1945, irrespective of the date of the conveyance, he being entitled to all the rents, issues and profits and being liable for all the liabilities in respect thereof since the said date.

(e) That our client will not be liable to pay your Solicitor's Bill of cost in respect of the sale."

Again, it will be noticed that by clause (b) the offer was not made contingent on the obtaining of the lessor's consent but the plaintiff insisted on the defendant's obtaining such consent as a substantive term of his offer so that if the offer by being accepted ripened into an agreement the defendant would be bound to obtain the lessor's consent as a term of such agreement. The defendant by his solicitors' letter dated February 1, 1945, purported to accept the plaintiff's last offer with a slight reservation, namely,-

" As regards clause ( d) of your said letter, it is dis-tinctly understood that the same should be given effect to only in case the conveyance is completed in terms of clause (c) of your said letter."

On February 2, 1945, the plaintiff by his solicitors'

letter of that date unconditionally accepted this reser-vation and so a concluded agreement was arrived at between the parties. This agreement was not, for its coming into being, contingent or conditional on the obtaining of the lessor's consent. The obligation to obtain the lessor's consent was cast upon the defend-ant as a term of the agreement. In our judgment the Court below was right in holding that the agreement 1950 itself was not contingent as contended for by the

appellant.

Raja Kamala The contentions next advanced by learned counsel Ranjan Roy

v. for the appellant relate to the lessee's covenant con-Baifnnth tained in sub-clause (6) of clause 2 of the lease to Baforia which reference has already been made. The legal

incidents of such a covenant are now well established Das J. by judicial decisions referred to in the judgment of the

High Court and it is not necessary to refer to them in detail. Suffice it to say, that the words" such con-sent, however, not to be unreasonably withheld in the case of respectable or responsible person" contained in the covenant do not amount to a separate or inde-pendent covenant by the lessor that he would not refuse consent except upon reasonable grounds in the case of respectable or responsible person, but that those words limit or qualify the lessee's covenant not to assign the demised premises without the consent in writing of the lessor. In other words, those words have the effect of relieving the lessee from the burden of this covenant if the lessor withholds his consent unreasonably in case of proposed assignment to a res-pectable or responsible person. In this view of the matter, the plaintiff contended that he being a res-pectable and responsible person the lessor had unrea-sonably withheld his consent to the proposed assign-ment to him and had consequently relieved the defendant from the burden of his covenant so that the defendant could legally and validly assign the lease to him without such consent of the lessor.

The first objection taken by the appellant to this contention of the plaintiff is that in his plaint the plaintiff insisted on the defendant obtaining the lessor's consent and that he should not have been per-mitted to make this new case at the hearing. Both the trial Court and the appeal Court held that there was, strictly speaking, no element of surprise, parti-cularly because the plaintiff relied upon facts admitted and proved by the defendant himself and that it was open to him to take this point. We may also add that lthis point was in a manner indicated in the plaint itself for in paragraph 11 thereof it was pleaded that 1950 the plaintiff was a responsible and respectable person and that if consent to assign in his favour was with-Raja Kamala drawn such withdrawal would be unreasonable and &njan Roy v. would not be valid and binding. In view of such Baijnatk pleading we are unable to say that the point raised Bajoria. by the plaintiff at the trial was an entirely new point or that the defendant was ta.ken by surprise. Das J.

The next objection of the appellant was that this point should not have been allowed to be raised and no evidence should have been permitted to be adduced on this point in the absence of the lessor as a party to the suit. We do not think that there is any force in this objection. The Court had to decide whether it was a case where relief by way of specific performance should be given. The Court could not force the defendant to apply to the lessor for his consent nor could the Court force the lessor to give his consent and, if: the matter only depended on the consent, the Court would not have ordinarily, in those circum-stances, directed the agreement for assignment to be specifical1y enforced. The Court, therefore, had also to consider, for the purposes of this case, as to whe-ther the circumstances were such as would indicate that the defendant had been relieved of the burden of his covenant by reason of the lessor having unreason-ably withheld his consent. It is true that a decision on that question in this suit would not be binding on the lessor, but nevertheless the Court had to come to a decision on that question for the purposes of this suit as between the parties thereto in order to award the relief of specific performance to the plaintiff.

The third objection of the appellant is that the appeal Court should not have allowed the plaintiff to adduce further evidence. It will be recalled that the appeal Court directed the evidence of the Maharaja of Cossimbazar to be taken during the hearing of the appeal. The judgment of. the appeal Court clearly indicates that it was the appeal Court that "required"

the evidence " in order to clear up the matter " and

1950 " for the purpose of enabling it to come to a proper

decision on this point". The matter, therefore, is fully Raja Kamala covered by Order XLI, rule 27 of the Code of Civil Pro-Ran}a'lt Roy cedure and no objection can be taken to the course

v. adopted by the appeal Court on that ground. We do Baijnath Ba.ioria. not think there is any reason to interfere in the exercise

of the Court's discretion.

Das J.

The fourth objection is that the High Court was wrong in holding that the term in the agreement that the defendant must obtain the consent of the lessor before executing the assignment to the plaintiff was a term for the benefit of the plaintiff only. It will be recalled that that was a term which was introduced by the plaintiff in his offer that eventually ripened into an agreement. The term was not expressed in a manner indicating that it was inserted in the agreement for the protection of the defendant. In other words, the objection that the consent of the lessor had not been obtained was one which could be availed of by the plaintiff who could rescind the contract and claim damages for the breach thereof. We cannot see how, in view of the language used in the correspondence, the defendant could plead the absence of the lessor's consent as relieving him from the obligation of performing his part of the agreement if the plaintiff waived the objec-tion and insisted on his carrying out the agreement. The absence of consent may amount to a defect in the title of the defendant, but which the plaintiff was willing to accept.

Finally it is said that by directing the specific per-formance of the agreement the Court has exposed the defendant to the risk of an action for damages for breach of covenant. If the assignment of the lease by the defendant to the plaintiff without the lessor's consent amounted to a breach of covenant, the lessor could forfeit the lease and sue for possession. Such a course would affect only the plaintiff but not the defendant, for he had already parted with the lease for valuable consideration. It is said that the lessor could $1.le the defendant for damages for breach of that covenant and the Court should not, by decreeing 1950 specific performance, have put the defendant in that perilous position. There appear to us to be two Raja Kamala answers to this argument, namely, (I) that the defend-Ranjan Roy v. ant should have, by proper language, made his Baijnath obligation to transfer dependent or conditional upoq Bajoria. his being able to obtain the lessor's consent which he did not do and (2) that the plaintiff being a respectable Das I. and responsible person of means, the measure of damages could only be a problematic conjecture.

Indeed, it may have been precisely for this very con-sideration that the defendant had unconditionally agreed to obtain the consent of the lessor and to assign his interest in the lease. That the plaintiff was a respectable and responsible person cannot, on the evidence before the Court, be denied or disputed and, indeed, learned counsel for the appellant did not so contend. We find ourselves in agreement with the High Court that in the circumstances and on the evidence on record the lessor had unreasonably with-held his consent so as to enable the defendant to assign the lease without such consent. In the circumstances, we are satisfied that both the trial Court and the appeal Court exercised their discretion properly and no ground has been made out for our interfering with the judgment of the High Court. The appeal is accordingly dismissed. The appellant to pay the costs of this appeal.

Appeal dismissed.

Agent for the appellant ; P.K. Chatterjee.

Agent for the respondent: S.K. Ghosh.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4 of 1950.

Appeal from the High Court of Judicature of Cal. cutta (Sir Trevor Harries C.J. and Mukherjea J.) from a judgment and decree dated .May 30, 1948, in Appeal No. 21 of 1947 confirming with modifications the decree of a single Judge of the same High Court (Ormond J.) dated January 24, 1947, in suit No. 1031 of 1945.

1950 N. C. Chatterjee (Samarendra Nath f.fukherjee, with

him) for the appellant.

Rr1ja Kamala P. L. Banerjee (Upendra Chandra f.fullick, with Ranjan Roy him) for the respondent.

v.

Baijnath 1950. December 1. The Judgment of the Court Bajoria. was delivered by