Case: Sivayogeswara Cotton Press,Devangere And Others Vs. M. Panchaksharappa And Another

2. The facts leading up to this appear are as follows :-3. One N. J. Gamodia of Bombay took on lease a piece of agricultural land measuring about 41/2 acres belonging to one Gurupadappa of Devangere City for the purpose of erecting a Ginning and Pressing Cotton Factory. The terms of the registered lease deed dated October 26, 1914, in so far as they are material for the determination of this appeal are better stated in the relevant portions of the deed itselfFor the 1st period of 20 (twenty) years commencing from the 1st October, 1914, and ending on the 30th day of September, 1934, you shall pay to me Rs. 350/(three hundred and fifty rupees) being the annual rent reserved every year in advance and obtain proper receipts of the payment from me. If before the expiration of the said period of 20 (twenty) years you will remove your factory from the said land hereby leased, you, are bound to pay me annually the rent of Rs. 350 (three hundred and fifty rupees) for the (torn) 20 (twenty) years but you are entitled to retain in possession of and the road till the 30th September, 1934.2. After the expiration of the said period of 20 (twenty) years mentioned in the 1st clause hereby you shall be at liberty to continue the lease of the said land and the said road and keep the said land and the said road in your possession as long as you may desire to do. In case of your thus continuing the lease of the said land and the said road you shall pay to me annually the sum of Rs. 400 (four hundred rupees) as rent of the said land and the said road for 1st ten years beginning from the 1st October, 1934, and ending on the 30th September, 1944, and after the expiration of the period of ten years the annual rent payable by you for the said land and the said road will be Rs. 500 (five hundred rupees) per annum but, you shall always be at full liberty to give up the said land the said road and terminate this lease at any time you may desire so to do after the 1st October, 1934, and the rent payable in respect of the said land and the said road shall cease to be paid by you from the time you may give up the said land and the said road after the 1st October, 1934. But I agree and bind myself not to call upon you at any time to give up the possession of the said land and the said road as long as you may desire to keep the same for your purposes observing the terms of this agreement.3. ...................................4. ...................................5. You are at full liberty to erect, as many buildings, godowns, factories, bungalows and other structures etc. as you may desire on the land hereby leased and to pull down, re-erect and make any alterations in the same as you may desire. I shall not noise any objection to your erecting any such structures on the land or to your use, and enjoyment of the land in any way or for any purpose as you may desire.6. ...........................7. I hold myself liable to pay always the annual assessment of the land hereby leased to Government; you shall not be liable for such land assessment. But you shall be liable to pay all fines and other taxes which the Government will hereafter impose for having converted the arable or cultivable land into land for factories and building purposes.8. ...............................9. ...............................10. You shall be always entitled and have full liberty to sublet or re-let the said land together with the said road for any purpose to any other person or persons on any conditions you like but without affecting in the least any of the conditions or terms of this lease.11. ................................12. ................................13. ................................14. This lease is binding on me, my heirs, executors, administrators, successors and assigns as well as on your heirs, executors, administrators, successors and assigns. I have hereby by this writing granted you this lease by my own free will and in my full serves and I bind myself to abide by its terms and conditions mentioned above".The said lessee, N. J. Gamodia died in 1916 leaving a will appointing executors to look after his affairs. The executors assigned the lease to the second defendant, Gamodia Factories Limited by a deed dated November 27, 1933. The assignee like the original tenant continued to pay the stipulated rent to the lessor Gurupadappa till his death which occurred in May, 1939. The second defendant in its turn assigned its leasehold interest to the first defendant by a deed dated May 30, 1944. It is common ground that the leasehold property, contains factory, buildings and residential quarters. After the lessors death his two widows continued to receive rent from the lessees as usual. The plaintiff is the adopted son of the original lessor and was a minor till some time in 1949. The plaintiff sought to terminate the tenancy by issuing notices to the defendants on the ground (1) that the lease had created a tenancy at will in the events that had happened; and (2) that the original lessee had in contravention of the terms of the lease assigned the benefits under the lease in favour of the defendants. As the defendants did not vacate the premises and deliver possession of them to the plaintiff, in terms of the notice aforesaid, he instituted the suit giving rise to the present appeal for a declaration that the defendants were tenants-at-will and that their possession after service of notice was wrongful. The suit was resisted by the first defendant principally on the ground that the lease created not a tenancy at will as claimed by the plaintiff but a permanent tenancy, hence there is no question of the defendant being ejected on the grounds alleged in the plaint.5. The courts below have decreed the suit and ordered the defendant-appellant to give up possession. In the trial court, a number of issues were struck between the parties. The most important issue upon which the result of the litigation largely depended was the one relating to the nature of the lease created by the lease deed aforesaid. The trial court held that it was a lease for 20 years certain, and on the efflux of that period on October 26, 1934, the second defendant became a tenant at will and as such the tenancy could be terminated at the will of either party, the second defendant and the first defendant were liable to be ejected on service of the necessary notice which is found to have been properly served. In the result, the plaintiffs suit was decreed with costs and the defendants were directed to quit the land and the road annexed to the land, and to restore possession of the premises to the plaintiff after removing the iron and steel machinery and other appurtenances of the factory, but leaving intact the residential quarters and the appurtenances of those quarters. On appeal by the defendants, the lower appellate court affirmed the finding of the trial court and dismissed the appeal with this modification that the defendants were given six months time to restore possession to the plaintiff after removing their machinery etc. The lower appellate court made some other modifications also which are not material to this appeal. On second appeal by the first defendant, the High Court dismissed the appeal with costs, but modified the findings of the two courts below in so far as it held that after the lapse of the first 20 years of the lease, the tenancy was not a tenancy at will, but a tenancy for an indefinite period which would be valid for the lifetime of the lessee himself is also of the transferees of the lessee namely the second defendant, which is the company, inasmuch as the original lessor in his lifetime had accepted the assignment of the lease in favour of the second defendant. The High Court also held that as the second defendant was admittedly no longer in possession of the leasehold and as there has been an assignment to the first defendant, the transfer was not binding on the plaintiff and therefore the first defendant did not become the plaintiffs tenant. In that view of the matter, the judgment and decree of the courts below were confirmed with the modification that the appellants were given four months time to vacate and deliver possession of the premises to the plaintiff.6. The first defendant made an application to the High Court for the necessary certificate of fitness for coming up in appeal to this court, but the High Court by its order dated March 29, 1961, refused to grant the certificate. As time was running against the first defendant, he hurried up to this court by a petition for special leave to appeal dated April 10, 1961. On April 20, 1961, this court granted special leave to appeal. That is how the matter comes before us.

Reasoning:
ut as that defence has not been raised in the pleadings of the defendant and as that point has not been canvassed in the High Court, we ruled that we shall not permit that contention to be raised here. But the substantial ground on which this appeal has been pressed upon us is that by virtue of the lease deed of the year 1914, on a proper construction of that grant, a permanent tenancy was created. If that is so, it is common ground that the suit must fail. Naturally therefore, the main argument at the bar on both sides has been devoted to theIt is manifest, therefore, on a plain construction of the terms aforesaid of the lease deed that the purpose of the transaction was a building lease, that though there was liberty reserved for the lessee or his successor to give up the lease-hold at any time after October 1, 1934, no corresponding right was reserved to the lessor. Thus there is no room for the controversy which has occupied a large portion of the judgments of the courts below, that reservation of the right to the lessee to surrender possession at any time, imported a corresponding right to the lessor to call upon the lessee to give up possession. It was an advantage specifically reserved to the lessee without any corresponding benefit to the lessor. It is equally clear that the lease was heritable and assignable. Thus there is no difficulty in holding that there is no room for the contention, on the terms of the lease, that the parties intended that after the lapse of the first 20 years of the lease, the tenancy will be merely a tenancy at will. It was clearly a tenancy for an indefinite period, at theterms of the grant in that case are set out in full at p. 402 and it is clear on a reference to those terms that the deed was not as strong as we have in the instant case. Only two things were explicit in the terms of that document, namely, (1) that it was a lease for building purposes and (2) that as long as the lessee continued to pay the stipulated rent, the lessor would not be entitled to call upon the lessee toour opinion, the presumption raised by the fact that the lease was for building purposes and therefore intended to be permanent is not weakened by the fact that the lessee had stipulated with the lessor to be entitled to give up possession if and when he decided to do so. It is a right reserved in favour of the lessee and did not confer, as already pointed out any corresponding right on the lessor. Such a right in favour of the lessee cannot be converted into a disability or an obligation which should detract from the grant of a permanent tenancy. Such a stipulation which gives a right to the tenant to surrender the leasehold at any time he decided to do so, if it is coupled with a corresponding right in the landlord to serve notice of ejectment at any time he chose to do so may have the effect of making the tenancy, a tenancy at will, but such a conclusion has been negatived by the High Court and rightlyare in complete agreement with the following observations of the court made in that case which in our opinion apply to the facts and circumstances of the case in handcould not therefore have been in the contemplation of the parties that the lease should be only for the life of the grantee or for an indefinite period which could be terminated at the will of the lessor.In order to ensure that the lessor should not eject the lessee at his sweet will, the term was specifically included in the lease that it will not be open to the lessor to do so. It must, therefore, be held that a stipulation entitling the lessee to surrender possession of the premises at his will is not wholly inconsistent with the tenancy being permanent.It is noteworthy that the lease was intended by the parties to be heritable and assignable. It was a lease for twenty years certain, and then in terms which are not wholly unequivocal in respect of the period after the lapse of the initial twenty years. That the lease was not intended to be for the life only of the grantee is clear not only from the facts already noticed, namely, that it was meant for building purposes, was heritable and assignable and had not reserved any right to the lessor to terminate the tenancy, but also from the consideration that the lessor would not gamble upon the life of his lessee when he was making sure of the term of at least twenty years. He must have known that if the factory worked for twenty years, it would go on for ever, according to humanour opinion, there is no substance in this contention. It is always open to a lessee of whatever description to surrender his leasehold interest to the lessor, by mutual consent. It is not necessary in law that the mutual consent should be at the time the surrender is being made. It is open to the parties to stipulate terms in anticipation of such a surrender. In the instant case, the surrender was to be in express terms agreed to by the parties, at any time after the lapse of the initial period of twenty years. Such a stipulation for the benefit of the lessee cannot be construed as in derogation of the permanency of the tenure, if the parties otherwise agreed to create such aFor the reasons aforesaid, it must be held that the High Court was in error in holding that the present case is governed by the decision of the Bombay High Court in ILR (1954) Bom 448  : (AIR 1954 Bom 257  ). That decision was, with all respect, entirely correct on the norms of the document then before the court. That being so, in our opinion, on a true and proper construction of the lease deed, the presumption in favour of the transaction creating a permanent lease cannot be held to have been rebutted by a stipulation in favour of the tenant having the right to surrender the lease at his choice. That being so, it must be held that the lease deed evidences an intention to create a permanent lease. In view of this finding, it is not necessary to advert to the other contentions noised on behalf of the appellants.