http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8

PETITIONER:

RAJA KAMALA RANJAN ROY

Vs.

RESPONDENT:

BAIJNATH BAJORIA.

DATE OF JUDGMENT:

01/12/1950

BENCH:

DAS, SUDHI RANJAN

BENCH:

DAS, SUDHI RANJAN

KANIA, HIRALAL J. (CJ)

SASTRI, M. PATANJALI

CITATION:

1951 AIR 1 1950 SCR 840

ACT:

Contract-- Specific performanance--Offer to purchase lease-

hold right-- Stipulation that lesses should obtain consent

of lesser--Lessor unreasonably refusing consent--Lessee,

whether relieved of liability to assign--Suit for specific

performance by purchaser--Maintainability--Lease

deed--Covenant prohibiting assignment of lease without

lessor's consent, "such consent, however, not to be unrea-

sonably withheld in case of respectable person "--Meaning

and effect of covenant.

(1) 47 Cal. 485, at p. 494.

841

HEADNOTE:

The defendant had obtained certain premises on lease

under a deed which contained a covenant by the lessee "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 unreasonably withheld in the

ease of respectable or responsible person ". After some

offers and counter offers the plaintiff finally made an

offer to purchase the defendant's leasehold interest on

certain terms one of which was that "the consent of the

landlord will be obtained by you before the completion of

the sale "; and the offer was unconditionally accepted by

the defendant. The defendant subsequently refused to assign

on the ground that the lessor had withheld his consent, and

the plaintiff sued for specific performance of the agree-

ment:

Held, (i) that the agreement was not, for its coming

into being, conditional or contingent on the obtaining of

the lessor's consent, the obligation to obtain the lessor's

consent being only a term of the agreement which the defend-

ant had to fulfil; (ii) the words "such consent, however,

not to be unreasonably withheld in the case of a respectable

or responsible person" in the leasedeed did not amount to a

separate or independent covenant by the lessor that he would

not refuse consent except on reasonable grounds in the case

of a respectable or responsible person, but only limited or

qualified the leesee's covenant not to assign with. out the

lessor's consent, by relieving him from the burden of the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8

covenant if the lessor withheld his consent unreasonably in

the case of proposed assignment to a respectable or respon-

sible person ; (iii) that, as the plaintiff was admittedly a

respectable and responsible person and on the facts of the

case the lessor's refusal to give consent was unreasonable,

the defendant could validly assign the lease without such

consent; (iv) that the court could come to a decision on

this matter even though the lessor was not a party to the

suit and the decision might not bind him; (v) that the

defendant could not under these circumstances plead the

absence of the lessor's consent as relieving him from the

obligation to perform his part of the agreement if the

plaintiff insisted on his carrying out the agreement even

though the lessor had not given his consent; and the plain-

tiff was therefore entitled to a decree for specifie per-

formance of the agreement.

JUDGMENT:

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

Appeal from the High Court of Judicature of Calcutta

(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.

108

842

N.C.Catterjee (Samarendra Nath Mukherje, with him) for

the appellant.

P.L. Banerjee (Upendra Chandra Mullick, with him) for

the respondent.

1950. December 1. The Judgment of the Court was deliv-

ered by

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 Hatties C.J. and Mukherjea J.) dated May 30, 1948,

dismissing his appeal and confirming, with certain modifica-

tions, the judgment and decree for specific performance

passed by Ormond J. on January 24, 1947. There is no sub-

stantial dispute as to the facts leading up to tim 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 Cal-

cutta (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 management of the Court of Wards demised tim

said premises to one Madan Gopal Daga for a term of 51 years

commencing from May 1, 1931, at and for the monthly rent of

Rs. 1,083-5-3 and upon terms and conditions contained there-

in. 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 unreasonably withheld in the case of respectable

or responsible person ......... " There was the usual

proviso 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 resi-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8

due of the lease to the defendant who

843

was accepted as the lessee by the lessor. By an agreement

said to have been arrived at by correspondence exchanged

between the plaintiff and the defendant and their respective

solicitors between January 27, 1945, and February 2, 1945,

the defendant is alleged to have agreed to assign the said

lease to the plaintiff for the unexpired residue of the term

with effect from February 1, 1945, at and for the price of

Rs. 1,80,000 and upon terms and conditions contained in the

correspondence to which reference will be made in greater

detail hereafter. On February 21, 1945, the defendant wrote

a letter to the lessor intimating that he had agreed to

assign his interest in the lease to the plaintiff and re-

questing 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 plain-

tiff's solicitors that the defendant had approached 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 ob-

tained, 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 sub-

ject 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 respectable or

responsible person which the plaintiff undoubtedly was. It

is not necessary to refer to the further correspondence that

followed in which each

844

party maintained his own contention. On March 17, 1945, the

lessor filed a suit (being suit No. 425 of 1945) in the High

Court against the defendant for the recovery of the demised

premises on the ground that the lease had been determined.

It was during the pendency of that suit that on July 4,

1945, the suit for specific performance of the agreement to

assign the 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 per-

formance 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 dis-

posed of on January 23, 1947, when Ormond J. passed a decree

against the defendant for specific performance of the agree-

ment. The decree provided that in the event of the defend-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8

ant 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 defend-

ant appealed. After two days' hearing, "in order to clear up

the matter" the appeal Court "gave the plaintiff an opportu-

nity 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 hear-

ing the appeal Court dismissed the defendant's appeal and

confirmed the decree for specific performance of the agree-

ment

845

without the need for obtaining the consent of the lessor

prior to the execution of the deed of assignment in favour

of the plaintiff. This decree was subsequently amended by

inserting therein a provision enabling the plaintiff to set

off from the purchase price the amount of rent payable as

and from February 1, 1945, until the date of conveyance less

all outgoings and interest on the purchase price at four per

cent. per annum from that date to the date of the convey-

ance. The defendant 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 defendant 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 ascertainment of the meaning and import of the

correspondence by which the agreement is said to have been

arrived at. It was on January 9.7, 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 Maharaja 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 expressed his

willingness to transfer the lease to the plaintiff on terms

contained therein. Clauses 3 and 4 of this letter were as

follows:

846

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

ceived within 30th January current and if I am able to

obtain the consent of Maharaja Cossimbazar for transfer of

the leasehold interest wi. thin the first week of February,

1945, I agree to your para 3.

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

the persons to be mentioned in the sale deed for whom per-

mission is to be taken from Maharaja Cossimbazar should be

clearly stated with their respective addresses."

It is quite clear that no agreement was concluded by

these two letters for the defendant's letter was not an

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8

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 plaintiff 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 acceptance was received within

January 30, 1945, and the defendant was able to obtain the

lessor's consent within 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 obtaining 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 contingent on his obtaining the les-

sor'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:

847

"(a) That the earnest money will be Rs. 5,000 (Rupees five

thousand) instead of Rs. 30,000.

(b) Our client will have the conveyance in his own

favour. The consent of the landlord will be obtained by you

before the completion of sale.

(c) That your client will complete the conveyance within

a month after the receipt by us of all the original title

deeds with you.

(d) That the transfer of the property in favour of our

client will take effect on and from the 1st February, 1945,

irrespective of the date of the conveyance, he being enti-

tled 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 Solici-

tor'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 agree-

ment 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 reserva-

tion 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 defendant as a term of the agreement. In our

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8

judgment the Court below was right in holding that the

agreement

848

itself was not contingent as contended for by the appellant.

The contentions next advanced by learned counsel for the

appellant relate to the lessee's covenant contained in sub-

clause (6) of clause 2 of the lease to which reference has

already been made. The legal incidents of such a covenant

are now well established 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 consent, 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 independent

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

respectable or responsible person. In this view of the

matter, the plaintiff contended that he being a respectable

and responsible person the lessor had unreasonably withheld

his consent to the proposed assignment 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 plain-

tiff insisted on the defendant obtaining the lessor's

consent and that he should not have been permitted 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, particularly 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 this point was in a manner indicated in

the plaint

849

itself for in paragraph 11 thereof it was pleaded that the

plaintiff was a responsible and respectable person and that

if consent to assign in his favour was withdrawn such with-

drawal would be unreasonable and would not be valid and

binding. In view of such pleading we are unable to say that

the point raised by the plaintiff at the trial was an en-

tirely new point or that the defendant was taken by sur-

prise.

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 circumstances, directed

the agreement for assignment to be specifically enforced.

The Court, therefore, had also to consider, for the purposes

of this case, as to whether 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 unrea-

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8

sonably 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 fur-

ther 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

109

850

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

on this point ". The matter, therefore, is fully covered by

Order XLI, rule 27 of the Code of Civil Procedure and no

objection can be taken to the course adopted by the appeal

Court on that ground. We do not think there is any reason

to interfere in the exercise of the Court's discretion.

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 objection 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 defend-

ant 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 sue the defendant for damages for breach of

that

851

covenant and the Court should not, by decreeing specific

performance, have put the defendant in that perilous posi-

tion, There appear to us to be two answers to this argu-

ment, namely, (1) that the defendant should have, by proper

language, made his obligation to transfer dependent or

conditional upon his being able to obtain the lessor's

consent which he did not do and (2) that the plaintiff being

a respectable and responsible person of means, the measure

of damages could only be a problematic conjecture. Indeed,

it may have been precisely for this very consideration that

the defendant had unconditionally agreed to obtain the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8

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 withheld 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 discre-

tion properly and no ground has been made out for our inter-

fering 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.

852