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Krishna Kumar Khemka Versus Grindlays Bank P.L.C.

1991 AIR 899, 1990 (2) SCR 961, 1990 (3) SCC 669, 1990 (3) JT 58, 1990 (1) Suppl. SCALE 70 - Civil Appeal No. 2072 of 1990 - Dated:- 2-5-1990 - REDDY, K. JAYACHANDRA AND PANDIAN, S.R. JJ. M.K. Banerjee, Subrat Rai Choudhary, Gopal Subramanium, N.P. Aggarwala, Anil Aggarwala, P.C. Sharma, L.P. Aggarwala, Ms. Indira Banerjee, R.N. Jhunjhunwala, Praveen Kumar, C.S. Vaidyanathan, P.R. Seetharaman, D.N. Mukherjee, Raj Kumar Gupta and P.C. Kapur for the appearing parties. JUDGMENT: The Judgment of the .....

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d for appointment of a receiver for the various properties mentioned in Schedule 'A' annexed to the petition, for injunction and for other reliefs. One Mr. S.C. Sen was appointed as Receiver. A declaration was also sought in the suit that the trust dated October 20th, 1948 created by late Gopi Krishna Khemka, father of the plaintiff, is void and for cancellation of the same. Premises No. 38, New Road, Alipore, building with open space was one of the properties belonging to the trust. Gri .....

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High Court contending that the receiver had no authority to create any tenancy and that the receiver has virtually created two new tenancies terminating the original tenancy of Grindlays and it was contended before the learned Single Judge of the Calcutta High Court that neither Grindlays nor Tatas were entitled to occupy the premises and they are liable to be evicted summarily. The learned Single Judge was not inclined to order summary eviction as prayed for but, however, observed that the res .....

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tenancy was created by the receiver from 1st April, 1978 and the other tenancy in favour of Tatas is beyond the powers of the receiver and that the receiver had no authority to create any tenancy either in favour of Grindlays or Tatas. Various contentions were raised before the Division Bench and ultimately the Division Bench having considered the several submissions passed an order, the operative portion of which reads as follows: "Therefore, the petitioner is entitled to get a decree for .....

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n of a tenancy should be deemed to be only for a period of three years' terminable on the expiry of the said period. In this context a further submission is that upon surrender of Flat Nos. 1 and 2 by Grindlays a fresh tenancy was created by the receiver from 1st April, 1978 for which he had no authority. Therefore, the High Court ought to have ordered summary eviction of Tatas, and Grindlays. It is not in dispute that the tenancy in respect of Flat Nos. 1 and 2 was surrendered by the Grindl .....

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ly tenant and therefore, they are entitled to protection under West Bengal Premises Tenancy Act ('Act' for short) and the appellant has no right to demand vacant possession of the said flats from the Tatas. The stand taken by the Grindlays is that the premises in question comprised of four flats and they took all the four flats for 10 years on lease from 1st June, 1958. After the expiry of the period of the said lease relationship between Grindlays and the Trust continued to be that of l .....

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was acknowledged by the receiver by his letter dated 15th May, 1978. It is contended on behalf of the appellant that after the expiry of the lease the receiver had no power to grant a lease for a period exceeding three years without the leave of this Court as envisaged in Chapter 21 Rule 5(a) of the Original side Rules and that in the instant case without obtaining any such leave receiver's granting monthly tenancies is illegal. Reliance was also placed on the injunction order passed by Jus .....

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ion and then advert to the rest. Order 40 C.P.C. which provides for the appointment of Receivers empowers the court to confer upon the Receivers all such powers, as to bringing and defending suits and for the realization, management, protection, preservation and improvement of the property. In Satyanarayan Banerji and Ors. v. Kalyani Prosad Singh Deo Bahadur and Ors., AIR 1945 Calcutta 387, a Division Bench held that the object of appointment of Receiver is not to divest the rightful owner of th .....

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in such a manner affecting the title to the property and to the detriment of the interest of the rightful owner. Section 5 of the Transfer of Property Act defines the meaning of 'transfer of property' and it is in the following terms: "In the following sections "transfer of property" means an act by which a living person conveys property, in present or in future, to one or more other living persons, or to him- self, or to himself and one or more other living persons and &q .....

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quot; is defined with reference to the word "convey". This word in English Law in its narrower and more usual sense refers to the transfer of an estate in hand; but it is sometimes used in a much wider sense to include any form of an assurance inter vivos. The definition in Sec. 205(1)(ii) of the Law of Property is "conveyance includes a mortgage, charge, lease, assent, vesting declaration, vest-. ing instrument, disclaimer, release of every other assurance of property or of any i .....

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and Ors., XXIII Vol. Indian Cases 925, a Division Bench of the Calcutta High Court held that "the term 'transfer' as used in Section 11 or Section 88 of the Bengal Tenancy Act, includes a lease, as a lease is a transfer of an interest in immovable property". It is, therefore, clear that a lease comes within the meaning of the word 'transfer' but in this case the matter does not stop there. According to the learned counsel for the respondents the receiver has not created .....

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f the receiver but the stand taken by them is. that their continuation as tenants of Flat Nos. 3 and 4 was acknowledged by the receiver and the same cannot be treated as a new lease. One of the questions is whether mere surrender of Flats Nos. 1 and 2 affects the Grindlays' tenancy of Flats Nos. 3 and 4. It is also contended by the learned counsel for the appellant that after the expiry of the stipulated period the tenancy in question turned to be a monthly tenancy and, therefore, the entire .....

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eates in the first instance a tenancy for two months certain. But as soon as the third month commences, that is not a new tenancy; it turns the original tenancy into a three months' tenancy, and when the fourth month begins, the tenancy becomes a four months' tenancy, and so on so long as the tenancy continues, until that is to say, notice to quit is given." Relying on the above passage the learned counsel contended that the monthly tenancy, therefore, is new tenancy. Even otherwise .....

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d qua the landlord they constitute one person, each constituent part of which .possesses certain common rights in the whole and is liable to discharge common obligations in its entirety." In White v. Tyndall, 13 Appeal Cases 263 it is stated that the parties to whom a demise is made hold as tenants in common but what they covenant to pay is one rent, not two rents and not each to pay is one rent, not two rents and not each to pay half a rent but one rent. There is a privity of the estate be .....

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r in leasing out in favour of Grindlays and Tatas for a period of more than three years was bad in view of Chapter 21 Rule 5(a) of the Original Side Rules. Though this point appears to have been abandoned before the Division Bench yet it is also canvassed before us. Chapter 21 of the Calcutta High Court Original Side Rules deals with Receivers. Relevant part of the Rule 5 reads thus: "5. In every order directing the appointment of a Receiver of immovable property, there shall, unless otherw .....

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arned counsel for the respondents, on the other hand, submitted that there was no new tenancy and surrender of flats Nos. 1 and 2 by the Grindlays and retaining two more flats does not amount to a new tenancy atleast so far as Grindlays is concerned and a reduction of rent also does not create new tenancy inasmuch as the rent that they had to pay was only for two flats in respect of each their tenancy continue. In Woodfall's Law of Landlord and Tenant, 25th Edn. Page 969, paragraph 2079 read .....

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the residue will stand good and untouched." In Halsbury's Laws of England, 4th Edn. Volume 27, paragraph 449 read as under: "449. Surrender by change in nature of tenant's occupation. A surrender is implied when the tenant remains in occupation of the premises in a capacity inconsistent with his being tenant, where, for instance, he becomes the landlord's employee, or where the parties agree that the tenant is in future to occupy the premsises rent free for life as a licens .....

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enant which operates as a fresh demise will work a surrender of the old tenancy, and this may result from an agreement under which the tenant gives up part of the premises and pays a diminished rent for the remainder-and it may result from the mere alteration in the amount of rent payable (c). Where one only of two or more lessees accepts a new lease, it is a surrender only of his share (d)." In Hill and Redman's Law of Landlord and Tenant, 16th Edn. on page 45 1, it is observed: " .....

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there is some special reason to infer a new tenancy, where, for instance, the parties make the change in the rent in the belief that the old tenancy is at an end." From the above passage it can be inferred that surrender of a part does not amount to implied surrender of the entire tenancy and the rest of the tenancy remains untouched. We shall now examine the cases cited. In Konijeti Venkayya and Another v. Thammana Peda Venkata Subbarao and Another, AIR 1957 A.P. 6 19, Viswanatha Sastri, .....

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variation in the quantum of rent any consequential change is made regarding the time and manner of the payment of the rent it cannot have the effect of graver consequences being imported into the change of rent than what the parties had intended and warrant a finding by the Court, that the parties had intended to create a new tenancy in supersession of the earlier one or that by operation of law a new tenancy had come into existence." From what has been considered above it emerges that surr .....

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far as the Grindlays are concerned we are unable to accede to the contention that a new tenancy is created. It is true that Justice A.N. Sen issued an injunction restraining the defendants from selling or transferring any of the properties. There is some force in the submission of the learned counsel for the appellant that the lease in favour of Tatas amounts to transfer but the same cannot be said of Grindlays. Therefore the question of evicting them summarily on this ground does not arise. Ho .....

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w tenancy is created so far Grindlays are concerned. Regarding the contention of infraction of Rule 5 it must be noted that the tenancy continued as monthly tenancy and it cannot be said that the Receiver has created tenancy for a period exceeding three years and as observed in Utility's case it is an accretion to the old tenancy and not a new tenancy. Merely because there is change in a tenancy namely that it has become a monthly tenancy, it does not amount to a new tenancy as contended by .....

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rson continuing in possesion after the termination of his tenancy or in the event of such person's death, such of his heirs as were ordinarily residing with him at the time of his death but shall not include any person against whom any decree or order for eviction has been made by a Court of competent jurisdiction." In Darnadilal and Others v. Parashram and Others, [1976] Suppl. SCR 645 Section 2(i) of the Madhya Pradesh Accommoda- tion Control Act, 1961 which is analogous to Section 2( .....

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so further observed that: "The definition makes a person continuing in possession after the determination of his tenancy a tenant unless a decree or order for eviction has been made against him, thus putting him on par with a person whose contractual tenancy still subsists." In Biswabani (P) Ltd. v. Santosh Kumar Dutta and Ors., [1980] 1 SCR 650 it is observed that: "If thus the appellant was already in possession as a tenant of the premises an unsuccessful attempt to create a fre .....

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a void lease, he thereupon becomes tenant from year to year upon the terms, of the writing, so far as they are applicable to and not inconsistent with a yearly tenancy. Such tenancy may be determined by the usual notice to quit at the end of the first or any subsequent year, and it will determine, without any notice to quit, at the end of the term mentioned in the writing. But if the lessee does not enter he will not be liable to an action for not taking possession; nor will an action lie agains .....

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Receiver violating the order of the injunction granted lease which the Court found it to be illegal. Then the learned Judge proceeded further to consider whether such an illegality can be rectified in the proceedings before the Court and it was held that "Therefore, by acting in violation of the order of the court, no right, in my opinion, can be created in favour of a third party. Indeed the court has not acted. The action was in breach of the order of the court." The learned counsel .....

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3 and 4 inasmuch as it is an old tenancy though in a modified form. In Ashrafi Devi's, case as a matter of fact, the learned Judge observed: "There was no question of the lease being given without the power by the Receiver or in derogation or in violation of the order of the court. The lease within the competency of a Receiver cannot be impeached or affected in the summary manner as was contended." We have already noted that the Grindlays were the tenants in respect of the four fla .....

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the protection under the Act cannot be extended to the tenant of a Receiver. In that case the tenant was let into possession of a land by Receiver appointed by the Court pending the suit. The question was whether the provisions of Tamil Nadu Cultivating Tenants Protection Act, 1955 can be extended to such a tenant. It was observed in para 6 that: "So then the act of the Receiver in letting out the land in the suit is an act of the Court itself and it is done on behalf of the Court, the whol .....

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ion, the Full Bench, as a matter of fact, also observed in para 3: "If literal application of the Tamil Nadu Cultivating Ten- ants Protection Act is made, it may prima facie appear that a tenant let into possession by a Receiver would be entitled to statutory protection under the Act. A cultivating tenant in relation to any land has been defined to mean a person who carries on personal cultivation on such land under a tenancy agreement, express, or implied. A "landlord" in relatio .....

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er of the Court and he cannot create a lease which takes the pending matter beyond the purview of the Court and anyone who gets possession through such an act could only do so subject to the directions and orders of the Court. In our view the principle laid down by the Full Bench does not apply to the facts in the instant case atleast to the case of Grindlays as in our view on new tenancy is created in their favour. Even by the time the Receiver was appointed the Grindlays were the tenants in re .....

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er affecting the title. Now coming to the case of Tatas we agree with the High Court that it is a new tenancy. Such a lease comes within the meaning of 'transfer' and in view of the injunction order passed by A.N. Sen, J. creation of such a new tenancy is legally barred. In Kerr on Receivers, 12th Edn. at p. 154 it is observed: "The receiver does not collect the rents and profits by virtue of any estate vested in him, but by virtue of his position as an officer of the Court appointe .....

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emio legis for the benefit of whoever may be ultimately determined to be entitled thereto." In Kanhaiyalal v. Dr. D.R. Banali, AIR 1958 SC 725 at p. 729 it was observed: "A receiver appointed under 0.40 of the Code of Civil Procedure, unlike a receiver appointed under the insolvency Act, does not own the property or hold any interest therein by virtue of a title. He is only the agent of the Court for the safe custody and management of the property during the time that the Court exercis .....

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such transferee. If however, a valid lease or a tenancy had been created then of course, such a lease or a tenant would be protected but that, in my opinion, begs the question. Secondly, it was contended that no party should be made to suffer because of an Act of the Court, I have not been able to appreciate this contention. The court specifically prevented the transfer or creation of the tenancy. The tenancy which is created was in derogation and in violation of the order of the court. Therefor .....

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