THE STATE OF KERALA & ORS versus M/S JOSEPH & COMPANY

Citation: [2021] 11 S.C.R. 601 · Decided: 03-09-2021 · Supreme Court of India · Bench: HEMANT GUPTA · Disposal: Disposed off

Judgment (excerpt)

[2021] 11 S.C.R. 601
601
THE STATE OF KERALA & ORS
v.
M/S JOSEPH & COMPANY
(Civil Appeal Nos. 5117-5118 of 2021)
SEPTEMBER 03, 2021
[HEMANT GUPTA AND A. S. BOPANNA, JJ.]
Transfer of Property Act, 1882 – ss. 111(g) & 112 – Sale of a
portion of land – Allegation of breach of lease deed – The erstwhile
Travancore-Cochin Government in 1953 auctioned certain
properties – One ‘P.I’ offered his bid to an extent of 246.26 acres
and took possession in the year 1955 – No lease agreement was
entered between them – Then ‘P.I’ assigned the said property in
favour of one ‘KKJ’ – Pursuant to such transaction, the State
executed a lease deed dated 15.12.1979 in favour of ‘KKJ’ – ‘KKJ’
was representing a partnership firm – In 1983, ‘KKJ’ executed a
sale deed and transfered an extent of 50 acres to one ‘R’ – Thereafter,
the Partnership firm sought to rectify the defect of transferring a
portion of lease land to ‘R’ – The said request was not considered –
The Government by notice dated 19.02.1992 intimated the lessee
about the order to terminate the lease – After the first round of
litigation, again by the order dated 26.11.2004, termination of lease
in respect of the entire 246.26 acres was confirmed – Writ petition –
The Single Judge of the High Court did not interfere with the order
terminating lease – However, the Division Bench of the High Court
set aside the order of terminating lease – Before the Supreme Court,
inter alia, it was contended that lessee had sought to rectify the
default under clause 12 of the lease deed – Held: Clause 14 of the
lease deed provided that lessee shall not be entitled to sublet or
assign his interest in the said lease except with the prior permission
in writing obtained with the lessor – Clause 12 of the lease deed
indicates that the issue of notice is contemplated in the event of the
lessee committing default and liberty to terminate the lease is
exercised – The concession provided is to rectify the default before
the notice is issued – The ‘default’ meaning is failure to fulfil the
obligation, while ‘breach’ is an act of breaking a law, agreement or
code of conduct – If the said distinction is kept in view, the breach
if committed by sub-letting or assigning as provided in clause 14,
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602
SUPREME COURT REPORTS
[2021] 11 S.C.R.
the same would lead to its consequences and the liberty to remedy
is not mandatory – Clause 12 contemplates that cause of termination
will be default and permitting to remedy the same is only an
indulgence to be shown – The reading of the lease deed as a whole
would indicate that the right reserved to the lessor under clause 14
is independent of clause 12 and if breach of that nature occurs, it is
irreversible and it will be taken to its logical conclusion unless the
lessor waives its right – The sale deed executed by ‘KKJ’ in the year
1983 would indicate the intention of the parties and also the fact
that possession was parted without consent of the lessor which was
the clear breach of clause 14 – The breach was not of the nature
contemplated for rectification as provided under clause 12 of the
deed – Further, under clause 14, it does not matter as to whether
the breach committed is by assigning a portion of the leased land
or the whole when such interest was transferred without previous
permission of the lessor – Therefore, the order passed by the Division
Bench of the High Court is set aside.
Disposing of the appeals, the Court
HELD: 1. From a perusal of the relevant clauses in the
lease deed it is seen that clause 14 thereof provides that the
lessee shall not be entitled to sublet or assign his interest in the
said lease except with the previous permission in writing obtained
from the lessor. In that backdrop, the breach alleged against the
respondent is that the lessee has assigned the interest in the
leased land to an extent of 50 acres in favour of ‘R’ without the
previous permission of the lessor. The fact that such sale has
taken place cannot be in dispute nor is it in dispute. The said
assignment has been made under the registered sale deed dated
16.12.1983. The question therefore is; whether the same would
constitute breach of the terms in the lease deed so as to entail
termination of the lease. [Para 13][611-B-D]
2. If in that context, Clause 12 is taken note, it indicates
that the issue of notice is contemplated in the event of the lessee
committing default and the liberty to terminate the lease is
exercised. The concession provided is to rectify th

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