NOCHULLIYIL EUZHUVAN THEETHI S SON THETHALAN Vs. ERALPAD RAJAH STYLED ELAYA RAJAH AVARGAL OF PATINHARA KOVILAGAM IN CALICUT AND FIFTY ORS

JUDGEMENT

(1.) The question raised in this appeal is whether mortgagees with possession from lessees are liable to the lessor for rent. The Subordinate Judge has held that they are liable on the ground that privity of estate exists between them. In this, I think, he is clearly wrong. "Privity of estate" is a technical term of English Law, and it is clear that under that law no such privity arises unless the whole of the lessee s interest is assigned over. Where a subsidiary interest is carved out of the lessee s interest no fresh privity arises. For instance there is no privity of estate between a lessor and a sub-lessee. Where the lessee mortgages his whole leasehold interest privity arises in English Law, because there the mortgage is by conveyance with a right to a reconveyance, and therefore the whole interest of the lessee is assigned to his mortgagee; but, as this is not considered a desirable state of things, conveyancers prevent such privity of estate from arising by making the mortgage by way of sub-lease of something less than the whole interest of the lessee. In India a mortgage such as this is not an out and out transfer of the mortgagor s interest (Section 57, Transfer of Property Act) and therefore on the English doctrine no privity of estate can arise.

(2.) We have, however, to consider the provisions of the Transfer of Property Act as to leases which should be followed in India in preference to English decisions even where it does not in terms apply, as to agricultural leases. Section 108(j) provides: The lessee may transfer absolutely or by way of mortgage or sub-lease the whole or any part of his interest in the property. The lessee shall not, by reason, only of such transfer, cease to be subject to any liability attaching to the lease.

(3.) One effect of this provision is that the lessee does not cease to be liable on the lease by reason only of an out and out assignment, but he will, as in England, cease to be liable if the lessor accepts rent from the assignee and thereby creates a privity of contract between them. It is also to be noted that the liabilities of the transferee arise as in England on and by reason of the transfer, and do not depend on the question whether the transferee has obtained possession; Monica Kitheria Saldanha v. Subraya Hebbara (1907) I.L.R. 30 Mad. 410 and Kunhi Sou v. Mulloli Chathu (1915) I.L.R. 38 Mad. 86. If the transfer is absolute, it has been held that the transferee becomes liable to the lessor--Kunhamian v. Anjelu (1894) I.L.R. 17 Mad. 296 as in that case privity of estate arises under the English decisions. The section, however, says nothing about privity of estate and the question really is what is the intention of the legislature as regards transfers by the lessee by way of mortgage in the Indian form or by sub-lease, in which cases there would clearly according to the English decisions be no privity of estate on which the liability could be rested. Kunhamian v. Anjelu (1894) I.L.R. 17 Mad. 296 does not afford much assistance, for that was a case of an assignment or absolute transfer of the lease, and all that was held was that there was nothing in the section to prevent the transferee being liable on the doctrine of privity of estate as in England. It is quite another thing to hold that in the case of a mortgage or sub-lease by the lessee the transferee becomes liable directly to the lessor, as such liability cannot be based on any recognized doctrine of privity of estate. The decision in Kannye Lull Sett v. Nisloriny Dossee (1884) I.L.R. 10 Calc. 443 appears to have proceeded on the footing that the mortgage in that case amounted to an assignment or transfer of the leasehold interest in which case privity of estate would arise, and is of no assistance in the present case where the transfer by mortgage did not amount to an assignment or out and out transfer. This is clearly pointed out by Farran, C.J., in Timmappa v. Rama Venkanna (1897) I.L.R. 21 Bom. 311at. p. 313 where, however, as has been pointed out in Vithal Narayan v. Shriram Savant (1905) I.L.R. 29 Bom. 391 that the word contract both in the headnote and the judgment is a slip, what was meant being not privity of contract but privity of estate: A sub-lease differs from the assignment of a lease in that it creates no privity of contract (read, estate) between the sub-tenant and the landlord. The landlord has to deal with his lessee and not with the sub- tenants of the latter. The English authorities show conclusively that a landlord putting an end by a proper notice to the tenancy of his tenant thereby determines the estate of the under-tenants of the latter. This is undoubted law.