Case Note & Summary
The dispute arose from a lease of land containing a covenant that in the event of default in payment of rent for two consecutive years, the tenancy rights would stand forfeited. The landlord filed a suit for eviction of the tenants, claiming arrears of rent and compensation, alleging that rent had remained due and in arrears for two years. The tenants sought relief against forfeiture under Section 114 of the Transfer of Property Act, 1882, and deposited in court an amount which was less than the total amount due. The trial court decreed the suit in favour of the landlord, holding that the conditions for relief against forfeiture—namely, deposit of rent in arrears, interest thereon, and costs of the suit—had not been complied with by the tenants. On appeal, the tenants expressed willingness to pay the balance of the rent due together with costs of the suit and of the appeal, and interest, and deposited a sum much larger than the amount due. The appellate court allowed the appeal, holding that the tenants were entitled to the benefit of Section 114, noting that they were ready and willing to pay more than what was due, that there were valuable constructions on the plots, and that the tenants’ dispossession would cause them great loss. The landlord’s further appeal to the High Court was dismissed. In appeal before the Supreme Court, the landlord contended that the jurisdiction under Section 114 to relieve against forfeiture could only be exercised by the court of first instance; that since the tenants had failed to avail of the opportunity given by the trial court, the appellate court had no jurisdiction to grant another opportunity; and that the discretion in any event was not properly exercised. The Supreme Court repelled these contentions. It observed that a covenant of forfeiture of tenancy for non-payment of rent is regarded by the courts as merely a clause for securing payment of rent, and unless the tenant has by his conduct disentitled himself to equitable relief, the courts will grant relief. The Court held that the appellate court had jurisdiction to grant relief against forfeiture under Section 114, and that the power was not limited to the trial court. The exercise of discretion by the appellate court, considering the valuable constructions and the potential loss to the tenants, was held to be proper. The Supreme Court dismissed the landlord’s appeal, upholding the decision granting relief against forfeiture to the tenants.
Headnote
A) Transfer of Property - Relief against Forfeiture - Nature of Forfeiture Clause - Transfer of Property Act, 1882, Section 114 - A covenant of forfeiture of tenancy for non-payment of rent is regarded as merely a clause for securing payment of rent. Courts will grant equitable relief against forfeiture unless the tenant has by his conduct disentitled himself to such relief. Held that the clause is not an absolute penalty but a security device for rent. B) Civil Procedure - Appellate Jurisdiction - Power of Appellate Court - Transfer of Property Act, 1882, Section 114 - The appellate court has jurisdiction to grant relief against forfeiture under Section 114 even if the trial court had given an opportunity to the tenant to pay arrears, costs, and interest, and the tenant failed to comply. The power to relieve against forfeiture is not confined to the court of first instance. C) Equity - Discretionary Relief - Factors for Exercise of Discretion - Transfer of Property Act, 1882, Section 114 - In exercising discretion to relieve against forfeiture, courts may consider factors such as the existence of valuable constructions on the land and the risk of great loss to the tenant upon dispossession. The appellate court’s exercise of discretion in favour of the tenant was not improper.
Issue of Consideration
Whether the jurisdiction under Section 114 of the Transfer of Property Act to relieve against forfeiture is exercisable only by the court of first instance, and whether the appellate court had jurisdiction to grant another opportunity when the tenant failed to avail of the opportunity given by the trial court; whether the discretion under Section 114 was properly exercised.
Final Decision
The Supreme Court held that the covenant of forfeiture for non-payment of rent is merely a clause for securing payment of rent; equitable relief under Section 114 can be granted unless the tenant has disentitled himself. The appellate court has jurisdiction to grant relief against forfeiture, and the discretion was properly exercised considering the valuable constructions and potential loss to the tenant. The landlord's appeal was dismissed.
Law Points
- covenant of forfeiture of tenancy for non-payment of rent is regarded merely as a clause for securing payment of rent
- equitable relief under Section 114 of the Transfer of Property Act can be granted unless the tenant has by conduct disentitled himself
- appellate court has jurisdiction to grant relief against forfeiture even if trial court gave an opportunity
- exercise of discretion may consider valuable constructions and potential loss to tenant
