Case Note & Summary
The litigation arose from a lease of forest rights executed on October 3, 1944, by the plaintiffs (along with other co-lessors) in favor of defendants 1 and 2 for a period of nine years at an annual rent of Rs. 16,000. The plaintiffs held a six annas share in the proprietary rights and were entitled to Rs. 6,000 per annum as rent. The lease deed contained a clause stipulating that the entire lease would be terminable on default of payment of rent for two consecutive years, and interest would be payable at Re. 1 per cent (interpreted as 1% per month) in case of default. The lessees' liability was described in a manner that indicated their internal contribution: defendant 1 had a twelve anna share and defendant 2 a four anna share in the lessee rights. Subsequently, defendant 3 acquired a portion of the lessees' interest from defendant 1. The plaintiffs instituted a suit on September 3, 1954, claiming arrears of rent for the Fasli years 1356 to 1360 (corresponding to approximately 1949-1953) and interest at the contractual rate. During the pendency, defendant 2 died and his heirs were substituted as defendants 2 and 2(a). The Trial Court decreed the suit in favor of the plaintiffs. On appeal, the Patna High Court modified the decree. It held that the defendants were liable only to the extent of their respective shares as mentioned in the lease deed, so defendant 2 (and his heirs) were liable for only five annas share (four annas original plus one subsequently acquired). It further held that the suit for rent for the years 1356 and 1357 Fasli was barred by limitation under Article 2(b)(i) of Schedule III of the Bihar Tenancy Act, 1885, as the lease was of forest rights. Additionally, the High Court ruled that the contractual interest rate was overridden by Section 67(1) of the Bihar Tenancy Act, which prescribed simple interest at 6 1/4% per annum on arrears of rent. Consequently, the High Court passed separate decrees against groups of defendants proportionately. The plaintiffs appealed to the Supreme Court, challenging all three findings. The Supreme Court examined the lease deed and held that the mention of shares was solely for indicating internal contributions, but the lessees were jointly and severally liable for the rent under Section 43 of the Indian Contract Act, 1872, as the lease made the entire lease terminable on default. Thus, all defendants were jointly and severally liable for the full amount. On the limitation issue, the Court upheld the High Court's view, relying on Sections 184 and 193 of the Bihar Tenancy Act and the Calcutta High Court decisions in Abdulullah v. Asraf Ali, Bande Ali Fakir v. Amud Sarkar, and Mackenzie v. Haji Syed Muhammad Ali Khan, to hold that the suit, being one for rent of forest produce, was governed by the special period of limitation under Schedule III, even though the claim was based on a registered instrument. Consequently, the claim for the years 1356 and 1357 was time-barred. On interest, the Court concurred that Section 67(1) statutorily fixed the rate at 6 1/4% per annum, overriding the contractual stipulation. In the result, the Supreme Court partly allowed the appeal, declaring the defendants jointly and severally liable for the rent for 1358 to 1360 with simple interest at 6 1/4% up to date of decree, and future interest at 6% per annum on the principal sum. The decree was made without prejudice to any payments already made, and costs were proportionately borne.
Headnote
A) Contract Law - Joint Liability of Lessees - Section 43 Indian Contract Act, 1872 - The lease deed provided that lessees were jointly liable to pay annual rent, and the entire lease was terminable on default of two consecutive years. The shares mentioned in the deed indicated internal contributions. Held that defendants 1, 2, 2(a) and 3 were jointly and severally liable for the rent, not just proportionately. B) Limitation - Bihar Tenancy Act - Sections 184, 193 and Schedule III Art.2(b)(i) Bihar Tenancy Act, 1885 - A suit for arrears of rent under a lease of forest rights is governed by the special period of limitation under the Bihar Tenancy Act, and the plea of limitation can be raised even if not pleaded in the written statement. Held that the suit for rent for Fasli years 1356 and 1357 was barred by limitation, though it was based on a registered instrument. C) Interest on Arrears of Rent - Bihar Tenancy Act - Section 67(1) Bihar Tenancy Act, 1885 - The statutory interest rate of 6 1/4% per annum on arrears of rent overrides any contractual stipulation for higher interest. Held that the plaintiffs were entitled to simple interest at 6 1/4% per annum only, and not the contractual 1% per month.
Issue of Consideration
Whether the lessees were jointly and severally liable for the rent or only liable to the extent of their shares; whether the suit for rent of forest rights was governed by the special limitation period under the Bihar Tenancy Act; and whether the contractual interest rate of 1% per annum was overridden by the statutory rate of 6 1/4% under Section 67(1) of the Bihar Tenancy Act.
Final Decision
The Supreme Court partly allowed the appeal. It declared that defendants 1, 2, 2(a) and 3 were jointly and severally liable to pay the plaintiffs’ share of rent for Fasli years 1358, 1359 and 1360 (Rs. 6,000 per annum) with simple interest at 6 1/4% per annum up to date. Future interest on the principal sum at 6% per annum from date of decree. The suit for rent for Fasli years 1356 and 1357 was dismissed as barred by limitation. The decree was without prejudice to any payments already made. Costs apportioned: defendants to pay proportionate costs in Trial Court, parties bear own costs in High Court and Supreme Court.
Law Points
- Legal points not extracted
- Joint and several liability under Section 43 Indian Contract Act
- 1872
- Limitation under Bihar Tenancy Act applies to suits for rent of forest produce
- Limitation plea can be raised though not taken in written statement under Section 184 Bihar Tenancy Act
- Interest rate on arrears of rent is 6 1/4% under Section 67(1) Bihar Tenancy Act overriding contract
