P.M.C. KUNHIRAMAN NAIR versus C.R. NAGANATHA IYER AND ORS.

Citation: [1992] 3 S.C.R. 371 · Decided: 15-05-1992 · Supreme Court of India · Bench: T.K. THOMMEN · Disposal: Appeal(s) allowed

Judgment (excerpt)

{ 
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P.M.C. KUNHIRAMAN NAIR 
A 
v. 
C.R. NAGANATHA IYER AND ORS. 
MAY 15, 1992 
[DR. T.K. THOMMEN AND S.C. AGRAWAL, JJ.] 
B 
>--y 
Transfer of Property Act, 1882: Section 111 (f). 
Lease-Detennination of-Implied surrender--Agreement-lmplied 
_.. 
su"ender of leasehold rights in property-Suit for recovery of possession not c 
t 
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maintainable subsequent to surrender of right. 
Doctrine of Merger--Trial Court-Judgment of-Appeal-Decision of 
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High Court-Held judgment of Trial Court stood merged in the judgment of 
High Court. 
D 
Respondents No. 1 to 5 entered into an agreement with the appellant 
whereunder the appellant advanced money to the respondents and the 
respondents entrusted the management of their property, consisting of, 
land and the buildings and the machinery of mills standing thereon, to the, 
appellant for a period of one year. The agreement provided that on the, E 
expiry of period of one year, respondents would get back possession of, 
their property after paying the amount due to the appellant. However, · 
before the expiry of the period of one year fixed under the agreement the 
respondents entered into another agreement, dated March 22, 1955 with · 
one TM which provided that on paying the amount due to the appellant 
after the stipulated period" TM could take up the management by himself, · F 
pay the rent of the building, conduct the business and if necessary fale a 
suit against the appellant and get the Mill vacated and do anything as per-
his. will and pleasure. Thereafter, TM executed a Deed of Assignment, 
dated December 11, 1956, whertby he assigned the property to the appel-
lant for a sale consideration with liberty to the appellant to manage the G 
mills, to enter into rental agreement with the Jenmi of the building· by 
-" 
paying the rent directly, to effect alienation etc. The said agreement also 
provi~ed that TM would not have any right or liability thereafter. 
Subsequently, respondent Nos. 1, 3 and 5 filed a suit against respon-
dent Nos. 2, 4 and 6 as well as against the appellant and TM seeking H 
371 
372 
SU\lREME COURT REPORTS 
(1992] 3 S.C.R. 
A 
partition and separate possession of their shares in the suit properties, 
and for possession of the mill contending that the agreement dated March 
22, 1955 executed by respondent Nos. 1 to 5 in favour of TM was a sham 
transaction and no rights were conferred on TM under the said agreement. 
TM died during the pendency of the suit. In the suit all disputes between 
the parties and the legal representatives of TM were settled out of Court 
B and the only dispute requiring adjudication was that relating to the 
property in question which was claimed by the appellant as the assignee 
from TM. The said suit was dismissed by the Trial Court. Respondents 1 
to 6 filed an appeal in the High Court against the said judgment which 
was dismissed. While the said appeal was pending before the High Court, 
C respondent Nos. 1 to 6 filed a suit for redemption and recovery of posses· 
sion of property and decree for possession of the suit property excluding 
the plant and machinery was passed in favour of the respondents. The 
appeal filed by the appellant was dismissed by the First Appellate Court 
and the second appeal filed by the appellant was also dismissed by the 
D High Court. Relying upon the judgment of the Additional Sub-Judge in the 
earlier suit the High Court rejected the contention urged by the appellant 
that there was relationship of landlord and tenant between the plaintiff-
respondents and him and he was entitled to protection of the Kerala 
Building (Lease and Rent Control) Act. 
E 
In appeal to this Court, on the question whether the respondents had 
a subsisting leasehold interest in the property in question, it was con· 
tended on behalf of the appellant that the judgment of the Additional 
Sub-Judge, having merged in the judgment of the High Court on appeal, 
the said judgment of the High Court alone was operative and as per that 
F judgment the earlier suit only related to transfer of movable property, 
namely, the Oil Mill. As regards the leasehold rights in the suit property 
it was submitted that the respondents ceased to havyny subsisting right 
in the property as lessee since they impliedly surrendered their leasehold 
rights in favour of TM by executing the agreement dated March 22, 1955; 
G thereafter a fresh tenancy was created in favour ef TM by executing the 
agreement dated March 22,1955; thereafte

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