Ethirajulu Naidu v. Ranganatham Chetti And Ors

Goddard, J.

1. The first contention of the respondents, under the Madras City Tenants Protection Act, Madras Act III. of 1922, has been disposed of by a decision of the Board adversely to them and it is unnecessary to refer to it further: Ranganatham Chetti v. N. Ethirajulu Nayudu (1939) L.R. 67 I.A. 25. As to the second, the appellant contends that the clause in question gives the respondents only a possessory lien as security for payment of the purchase price, and that as the respondents have remained in possession as though they were still lessees and have, indeed, granted a sub-lease, they have acted inconsistently with their lien and must be regarded as trespassers and held accountable for mesne profits. The respondents, on the other hand, contended in the courts below that they were entitled to hold over as tenants by virtue of the clause at the rent reserved by the lease until they were paid the present market price. On the true construction of the clause their Lordships are of opinion that the respondents contention was clearly right. Until they are paid they cannot be required to surrender possession, and are therefore entitled to remain in possession, and if they remain they stay there as tenants on the same terms as were contained in the lease. Their Lordships do not doubt that the meaning of the clause is that the respondents could hold over till they were paid. In their opinion, therefore, the judgments in both courts below were right in the result, but as they are not in agreement with some of the reasons given they will briefly refer to them. The case was first heard by Wadsworth J. On the question whether the respondents went wrongfully in possession of the property he held that it depended on whether or not the sum offered by the appellant was "ridiculously low," or whether it approximated to the true value of the superstructure, and accordingly referred the action to an official referee to ascertain the value. On the reference the referee found, on the basis which was subsequently held to be correct, that the value was Rs. 18,000, six times what had been offered and about a sixth of what had been asked. On the matter coming up for further consideration before Venkataramana Rao J., while he expressed agreement with Wadsworth J. he went on to hold that this was not a case of lien, but that the lessees could enjoy the property till the amount was paid and that they could not be treated as trespassers liable to account for mesne profits. On appeal to the appellate jurisdiction of the High Court, Leach C.J. and Horwill J. took the same view as did Wadsworth J., that the respondents were not bound to accept an offer which was ridiculously inadequate. In their Lordships opinion the case does not depend on whether an offer ought or ought not to have been accepted, unless perhaps the exact amount which was found to be the present market value had been offered. The clause contemplates that the price is to be fixed, which must mean by agreement or by valuation, and it could have been so fixed before the expiration of the term. The respondents were entitled to be paid the present market price, no less and no more, and until that price was paid, or at least tendered, they were entitled to remain in possession and enjoyment of the property. Their Lordships will humbly advise His Majesty that the appeal should be dismissed.