Azizur Rahman Vs. Abdus Sakur, 36 DLR (AD) (1984) 195

Case No: Civil Appeal No. 112 of 1982

Judge: F.K.M.A. Munim,

Court: Appellate Division ,,

Advocate: Dr. Kamal Hossain,Mr. M.H. Khondkar,,

Citation: 36 DLR (AD) (1984) 195

Case Year: 1984

Appellant: Azizur Rahman

Respondent: Abdus Sakur

Subject: Law of Contract,

Delivery Date: 1983-6-29

 
Supreme Court
Appellate Division
(Civil)
 
Present:
FKMA Munim, CJ.
Badrul Haider Chowdhury, J.
Shahabuddin Ahmed, J.
Chowdhury ATM Masud, J.
SM Mohsen Ali, J.
 
Azizur Rahman & ors
....................................Appellants
Vs.
Abdus Sakur and ors
…..................................Respondents
 
Judgment
June 29, 1983
 
Contract Act, 1872
Section 56
Transfer of Property Act, 1882
Section 108 (e)
Clause (e) of section 108 of the Transfer of Property Act provides for instances in which a material part of a property is wholly destroyed or rendered substantially and permanently unfit for use for the purpose it is let, in which case the tenant has as option to terminate the lease. Section 108 (e) of the Transfer of Property Act does not deal with the case of a total destruction of the subject-matter of the lease.
 
Cases Referred to-
Golam Rahman Vs. Mrs. Imratannessa (1970) 22 DLR 126; Raja Dhruv Vs. Raja Harmohinder AIR 1968 (SC) 1024: Mahadeo Vs. Calcutta Dyeing and Cleaning Co. AIR 1961 Cal. 70; Kshitish Ch. Mondal Vs. Shiba Rani AIR 1950 Cal 441; Jiwnalal and Co. Vs. Manot and Co. 64 CWN 932; Abdul Mutaleb Vs. Razia Begum (1970) 22 DLR SC 134; National Carriers Ltd. Vs. Panalpina (1981) 2 WLR 45.
 
Lawyers Involved:
M. H. Khondker, Senior Advocate instructed by A. F. Hasan Arif, Advocate-on-Record-For the Appellants.
Kamal Hossain, Senior Advocate instructed by Kazi Shahabuddin Ahmed, Advocated-on-Record- For the Respondents.
 
Civil Appeal No. 112 of 1982.
(From the Judgment and decree passed by the High Court Division in First Appeal No. 33 of 1974 dated 19-1-82.)
 
JUDGMENT
 
Fazle Munim CJ.
 
This appeal arises from First Appeal No. 3 of 1974 passed by the High Court Division decided on January 19, 1982.
 
2. The defendants are the appellants be­fore this Court. Plaintiff-respondents institu­ted other Suit No. 65 of 1969 in the 1st court of Subordinate Judge, Chittagong for declaration of title and recovery of possession after removal of the structures by the defendant-appellants. Allegations were that the suit premises originally belonged to Haji Neamat Ali, predecessor of the plaintiff-respon­dents in occupancy right. He constructed the shop houses, godowns, C. I. sheet huts and a small pucca house which was kept in khas possession of the plaintiffs. Other structures were late out to two groups of defendants on monthly rent, namely, defendant Nos. 1 and 2 in one group and defendant Nos. 3 and 4 in the other. While they were in possession of the house and godown as monthly bharatia tenants, an accidental fire broke out in the night following November 9, 1969 and the suit premises were burn down.
 
3. As the subject matter of the tenancy was destroyed by fire the relationship of landlord and tenant, it was claimed, came to an end. The suit premises, however, remained vacant and in possession of the plaintiff-respondents. Defendant-appellants in collusion with each other and ignoring the plaintiff’s protest and also the lawyer’s notice, wrongfully reconstructed new huts and houses on the premises and refused to deliver possession of the land on November 28, 1969.
 
4. Defendant-appellants 1 and 4 jointly contested the suit and filed a joint written statement. Their contention was that defendant No. 1 constructed a small pucca house on the suit premises at his own costs some time in 1950. Since then it was being used as washing house, known as Bhatigar for coloring spices. This house was not constructed by the plaintiff’s predecessor. Rent was enhance from TK. 60/- to 75/- for the construction of pucca house. Some kutcha houses only were partly damaged by the fire. But they were repaired by the defendants and made habitable. There was no extinction of the subject-matter of tenancy due to the conflagration as alleged by the plaintiffs. Defendants were continuing as monthly tenants in respect of the suit premises. As the plaintiff’s refused to accept rent from November, 1969 the defendants have been depositing it with the House Rent Controller.
 
5. The trial court decreed the suit. Defendants-appellants preferred First Appeal No. 3 of 1974 before the High Court Division which affirm the judgment and decree of the trial Court. The contention of the defendants that this was a case of partial destruction the tenancy was terminable at the option of the tenant as provided by section 108 (e) of the Transfer of Property Act was rejected by the learned Judge of the High Court Division who on relaying on a decision of the High Court Division of East Pakistan in Golam Rahman vs. Mrs. Imratannessa, 22 DLR 126 held that the present, being one of complete destruction of the subject matter of a lease was govern by the general principles of laws instead of the provisions of section 108 (e) of the Transfer of Property Act.    
 
6. Leave was granted to consider whether there was any specific finding by the High Court Division that the entire subject-matter of the tenancy was destroyed by the accidental fire and whether the finding of the appel­late court was an independent one based on proper consideration of the evidence on record and if not whether section 108(e) of the Trans­fer of Property Act was applicable to the case which was one of partial destruction of the structures, thus making the tenancy subsist.
 
7. Mr. M. H. Khandkar, Counsel for the appellants, contended that the High Court Division was wrong in not holding that the provisions of section 108(e) of the Transfer of Property Act, and not the doctrine of frustra­tion as contained in section 56 of the Contract Act applied. Further, according to him, principles enunciated in Golam Rahman Sowdagar vs. Imratannessa, 22 DLR 126 did not apply. Finally, the High Court Division did not arrive at an independent conclusion after considering oral and documentary evidence on record.    
 
8. Dr. Kamal Hossain, Counsel for the plaintiff-respondents, submitted that the High Court Division, on an independent and elaborate consideration of the evidence on record, both oral and documentary, specifically recorded  the findings that the pucca house in question was not constructed by the appellant No.1, appellants were monthly tenants in respect of kutcha huts, and the entire subject-matter of the tenancy was completely destroy­ed by fire and accordingly, the learned Judges of the High Court Division rightly held that as with the complete destruction of the subject-matter of the tenancy the provisions of section 108(e) of the Transfer of Property Act did not apply.
 
9. Before considering the question invol­ved as to the applicability of section 108(e), it may be mentioned that the learned Subor­dinate Judge, after considering the evidence record, found the following facts, namely, the pucca house was not constructed by appellant No. 1, appellants had no legal claim to the land as they were monthly tenants in respect of structure on the suit land and that with the destruction of the structures on the suit land by fire, the relationship of landlord and tenants came to an end.
 
10. So far as the judgment of the High Court Division is concerned, it appears that in a very lengthy judgment, the learned Judges considered all the aspects of the case involving facts and law and after considering the submissions of the learned Counsels touch­ing upon all essential and vital points arrived at the following findings:
 
"In our opinion P Ws. 4 to 7 should be relied upon since they appear to be trustworthy and disinterested. We are in agreement with the learned Subor­dinate Judge that the discrepant version of the defense witnesses is far from satisfactory to prove that there was slight or partial damage that did not materially affect the premises in question. 

In such circumstances, we are led to hold on consideration of the oral and documentary evidence on record that the pucca house was built by the plaintiff's predecessor and not by defendant No. 1 as claimed by him. There is no dispute that the original huts before the so fire accident were constructed by the plaintiffs' predecessor. Therefore, the defendants were mere monthly tenants in respect of those huts claimed by them, In such circumstances, we may consider the question whether these huts were wholly or partly damaged, the evidence in this behalf appears to be one-sided. We have relied upon the plaintiff's witnesses on due scrutiny of their testimony. We have also noticed from the evidence of some of the D.Ws. that the fire damag­ed some huts. Some of the witnesses have stated that the structures were badly damaged. In such case we are convinced that the entire subject matter of the alleged tenancy, namely, the huts in question were completely burnt down and were reduced to ashes more or less. Therefore, the learned Subordinate Judge appears to have correctly con­cluded that the tenancy came to an end and the relationship of landlord aid tenant ceased to exist after such devas­tating fire." 
 
11. In spite of the clear findings learned Counsel for the appellants tried to assert that there was no complete destruction of the huts as would be evident from the repair and renovation of the pucca house. On this question the findings of the trial court is as follows:
 
''Ext. 4 is the Advocate Commis­sioner's report which gives the measure­ment of all the structures standing on the suit premises at present. No struc­ture or house in the above mentioned exhibits are in agreement in respect of measurement and this clearly speaks of the fact that after gutting by the acciden­tal fire the present houses have been reconstructed in different measurements. The shifting of site has already been indicated while discussing the evidence of D.W. 8. As regards the pucca house the same report of disagreement regar­ding measurement applies. According to the municipal assessment list, the previous pucca house was of the measurement of 11⅛ ft.× 10 ft. whereas as per Advocate Commissioner's report the present pucca house is of the mea­surement of 12'-4" × 14'-3". This means that after extensive damage by the fire the pucca room had been renova­ted and remodeled on extension by the defendant."
 
From this, it appears that it is not a case of repair of partial damaged structure but a complete reconstruction of the house by the appellants.
 
12. Mr. Khandker, Counsel for the ap­pellants, next contended that whether the tenancy would come to an end in the case of destruction as a subject matter of the tenancy depended on the will of the tenants and not the landlord and as such if the appel­lants did not exercise the option to terminate the lease, the tenancy would continue to subsist. The provisions of section 108 (e) of the Transfer of Property Act are as follows:
 
"108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased:—

A. Rights and Liabilities of the Lessor
 (a)...............................................  
(b)...............................................  
(c)............................................... 
(B) Rights and Liabilities of the Lessee
(d)................................................
(e) if by fire, tempest or flood, or violence of an army or of a  mob or other ir­resistible force, any material part of the property be wholly destroyed or render­ed substantially and permanently unfit for the purposes for which it was let, the lease shall, at the option  of  the lessee, be void:
Provided that, if the injury be occa­sioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this pro­vision:"
 
13. The question that falls for determina­tion is whether any material part of the pro­perty was wholly destroyed or otherwise render­ed substantially and permanently unfit for the purposes for which it was let. If, instead of the destruction of the entire subject-matter of tenancy, only a material part of it is destroy­ed or otherwise rendered substantially and permanently unfit for the purposes for which it was left, the option to terminate the tenancy rests with the tenants and upon the exercise of option by him to terminate the lease tenancy will come to an end and the lease will be void. There is, however, no specific provi­sion governing the case of total destruction of the subject matter of the lease. These views expressed in the case of Golamur Rahman Sawdagar Vs. Imaratannessa Begum, (1970) 22 DLR 126, were approved by the learned Judges of the High Court Division. It was, therefore, held by the High Court Division that, as in the instant case there was no agreement in this behalf the case is governed by the princi­ples of general law.
 
14. Mr. Khondker vehemently argued against the reference to general principles of law upon which the learned Judges are seen to have relied upon in order to negative the appellants' contentions. The controversy was raised as to whether the provisions of section 56 of the Contract Act would govern the present case Mr. Khondker maintained that its provisions would not apply to govern the present case as the provisions of the Transfer of Property Act and not those of the Contract Act are applicable to it. Referring to the distinction between an executed contract and an executory contract, the learned Counsel tried to assert that since section 56 applies only to executory contract and not to executed contract, the present case, according to him, being the example of the latter, the provisions of section 56 of the Act would not be applied to it. Section 56 of the Contract Act is as follows:
 
"56. An agreement to do an act im­possible in itself is void.- A contract to do an act which, after the contract is made, becomes impossi­ble, or, by reason of some event which the promisor could not prevent, unlaw­ful, becomes void when the act becomes impossible or unlawful.
 
Where one person has promised to do something which he knew, or, with rea­sonable diligence, might have known, and which the promisee did not know to be impossible or unlawful, such promisor must make compensation to such pro­misee for any loss which such promise sustains through the non-performance of the promise." 
 
15. It appears that in a sense this section provides that an agreement to do an act which becomes impossible due to some event beyond the control of the promisor is void. As a result he is no longer under the duty to per­form this obligation. In support of his assertion he relied on the case of Raja Dhruv Dey Chand Vs. Raja Harmohinder Singh, AIR 1968 SC 1024 in which it was observed as follows:
 
"By section 4 of the Transfer of Property Act the chapters and sections of the Transfer of Property Act which relate to contracts are to be taken as part of the Indian Contract Act, 1872. That section however does not enact and cannot be read as enacting that the provisions of the Contract Act are to be read into the Transfer of Property Act. There is a clear distinction between a complete conveyance and an executory contract, and events which discharge a contractor do not invalidate a concluded transfer." 
 
''By its express terms s.56 of the Con­tract Act does not apply to cases in which there is a completed transfer. The second paragraph of section 56 which is the only paragraph material to cases of this nature has a limited application to covenants under a lease. A covenant under a lease to do an act which after the contract is made becomes impossible or by reason of some event which the promi­sor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. But on that account the transfer of property resulting from the lease granted by the lessor to the lessee is not declared void." 
 
Under a lease of land there is a trans­fer of right to enjoy that land. If any material part of the property be wholly destroyed or rendered substantially and permanently unfit for the purpose for which it was let out, because of fire, tempest, flood, violence of an army or a mob, or other irresistible force, the lease may, at the option of the lessee, be avoided. This rule is incorporated in section 108(e) of the Transfer of Property Act and applies to leases of land, to which, the Transfer of Property Act applies, and the principle thereof to agricultural leases and to leases in areas where the Transfer of Property Act is not extended. Where the property leased is not des­troyed or substantially and permanently unfit, the lessee cannot avoid the lease because he does not or is unable to use the land for the purposes for which it is let to him.
 
16. The next case cited by him is Mahadeo Prosad Shaw Vs. Calcutta Dyeing and Cleaning Co., AIR 1961 Cal. 70, where it was observed as follows:
 
''A comparison of section 108 (e), T.P. Act with sec. 56 Contract Act would show that the doctrine of frus­tration enacted in sec. 56 is substantially incorporated in sec. 108(e) of the Trans­fer of Property Act. The latter refers to "destroyed wholly or rendered substantially and permanently unfit", but section 56 of the Contract Act refers to "an act becoming unlawful or impos­sible".
 
Hence the Contract Act covers substantially a wider field than the Transfer of Property Act does. The performance of the duties of a lessor or a lessee may become 'impossible' other­wise than by the destruction of the property; but sec. 108(e) of the Trans­fer of Property Act does not cover those cases.
 
The entire law of frustration of leases is not codified under sec. 108 (e) of the Transfer of Property Act. The result is that under the Contract Act the contract stands discharged as this is a part of positive law; whereas under the Transfer of Property Act it depends on the option of the lessee. Therefore, the result of frustration, if a lease is to be created as a contract, would contradict the result as stated in sec. 108 (e) be­cause in  one case the contract stands automatically discharged and in the other only discharged at the option of the lessee. As the Transfer of Property Act is a special provision regarding leases, the general provision as enacted in section 56 of the Contract Act would not apply in view of the  specific provision relating to lease under section 108 (e) of the Transfer of Property Act. In that view sec 56 of the Contract Act has not application to leases and instead of that section, section 108 (e) will apply so far as frustration relating to leases is con­cerned." 
 
17. In Kshitish Chandra Mondal vs. Shiba Rani Debi, AIR 1950 Cal. 441 the applicability of section 56 of the Contract Act to leases were considered. In this case a thatched shed which was let out to a monthly tenant was burnt by fire. The tenant raised another structure on the land in spite of the landlord's protest. It was held that:
 
"(1) that s. 108 (e) did not in terms apply as B neither elected to walk out even after total destruction nor was willing to suspend payment of rent and give up possession;
(2) that the doctrine of frustration applied to leases. The contract between A and B became impossible of perfor­mance through no negligence on the part of A and he was entitled to claim that the lease had come to an end by des­truction by fire;
(3) that under the tenancy B had no right to raise structures of his own, treating the lease as the lease of the land only." 
 
18. The doctrine of frustration as con­tained in section 56 of the Contract Act and its applicability to leases was considered in Jiwanlal & Co. Vs. Manot & Co. Ltd. 64 CWN 932. In the opinion of the Court, the entire law of the doctrine of frustration which may be applied to leases is to be found in sec­tion 108 (e) of the Transfer of Property Act. It was accordingly held that: 
 
"If a house is destroyed wholly, even then the lease does not determine un­less the lessee so chooses. In other words, by the, demolition of an entire house, the lease would not be destroyed or determined.
The word, 'any' in section 108 (e) of the Transfer of Property Act may be understood in two sections—one in restricted and the other in more compre­hensive sense or in other words, the word 'any' may mean 'any part of’ or “the entire whole." 
 
19. Whether the doctrine of frustration does apply only to executory contracts and not to an executed contract as, for instance, the lease of immovable property, was consi­dered by the Supreme Court of Pakistan in Abdul Mutaleb Vs. Mst Rezia Begum (1970) 22 DLR (S.C.) 134 = PLD 1970 (SC) 185. After observing that "even in England, the doctrine of frustration has not been definitely held to be applicable to a lease creating an estate in immovable property" and that "the question whether the doctrine of frustration applies to a lease does not appear to have been finally resolved so far in England by any authoritative decision of the House of Lords". The Supreme Court held that in view of the provisions of section 56 of the Contract Act which lays down a rule of positive law relating to frustration of contract and section III of the Transfer of Property Act which provides various modes for the de­termination of a lease in respect of immov­able property, there was no scope for importing the doctrine of frustration under the English Common law". Inci­dentally, the Court considered the meaning of the word "any" occurring in section 108(e). In expressing the opinion that the word does not attempt to put any narrow construction and that it is the duty of the Court to put such construction on statutory provisions as it appears to it to be most in accord with reason, justice and fairness and to avoid such construction as may cause hardship and in­justice. The Supreme Court held that section 108(e) was applicable also in the case of des­truction of the entire subject matter of a lease. Mr. MR Khan, J. in delivering the judgment of the Court observed as follows:
 
"The word "any" implies not only a part but also the whole. If the lessee has the option under section 108(e) of Transfer of Property Act to avoid a lease on the ground of partial destruc­tion of the demised property and there­by relieve himself of the liability to pay rent, it does not stand to reason why he shall not have the option to avoid the lease if the whole of the demised pro­perty is destroyed. If the option under the said section be not available to the lessee in the event of destruction of the whole of the demised property, he shall, in spite of non-existence of the subject matter of the lease, continue to remain liable for rent during the entire period of the lease and for all time to come if the lease is a perpetual one, whereas in the case of partial destruction of the demised property he can get rid of his liability to pay rent by avoiding the lease by exercising his option under section 108(e). The unjust consequences as indicated above may ensue if section 108(e) be not held to be applicable also in the case of destruction of the whole of the subject-matter of a lease."
 
20. Dr. Kamal Hossain Counsel for the landlord-respondent, referred to the case of National Carriers Ltd. Vs. Panalpina (North­ern) Ltd. (1981) 2 WLR 45 and submitted that the question whether the doctrine of frustra­tion is applicable to executed lease of immo­vable property has since been settled by the pronouncement of the majority Judges of the Court. In this case a warehouse was demised for a period of ten years. The only road leading to the warehouse was closed by the order of the local authority for about a year. As a result, the demised warehouse was ren­dered useless during this period in an action by the plaintiffs for recovery of unpaid rent, the defendants claimed that the lease has been frustrated by the events that had happened. On an appeal by the defendants against the decision of the Judges in Chamber that lease could not be the subject of frustration, the Judicial Committee, of the House of Lords, (Lord Russel of Killowen dissenting), held that the doctrine of frustration was in principle applicable to leases, though the cases in which it could properly be applied were likely to be rare while giving an illustration of the anomaly arising from the differences in an application of the doctrine of frustration in cases of contracts more than leases of immovable property, Lord Russel said as follows:
 
"The law should not be compartmentalized. In principle a common law doctrine ought not to be held capable of applying only in one field of contract but not in another. To preserve the dicho­tomy between leases on the one hand and other types of contract on the other can undoubtedly create anomalies. Thus if a ship is demise-chartered for the pur­pose of storing oil and explodes without fault of either party, the demise charter would clearly be frustrated. If the same demise charterer also leases an adjacent shore installation for the same purpose and the same explosion destroys that installation along with the demise-chartered ship, rent for that storage ins­tallation would remain payable in full  for the unexpired period of the lease though liability for demise charter hire had ceased upon the frustration of the demise charter party." 
 
Further, the noble Lord also observed:
 
"My Lords, in a matter of this kind while it is right for your Lordships to look back to the past, it is surely more important to look forward and consider what rule of aw should henceforth prevail. Historic considerations alone cannot justify the preservation of a rule if that rule has ceased to serve any use­ful purpose and is unlikely to serve any useful purpose in the years immediately ahead." 
 
In summing up, the said noble Lord said that:
 
"My Lords, it follows that on the question of principle I find it impossible to justify compartmentalization of the law or to agree that the doctrine of frustration applies to every type of con­tract save of lease. I can see no logical difference between frustration of a demise charter party and frustration of a lease. In principle the doctrine should be equally capable of universal applica­tion in all contractual arrangements." 
 
21. It must, however, be mentioned that though the doctrine of frustration was held to be applicable to leases, it was made clear that the doctrine should not, therefore, be readily applied.
 
22. I do not think that the submissions of the appellants Counsel require further consideration. The doctrine of frustration as embodied in section 56 of the Contract Act is applicable to leases of immovable property. Frustration in the present case is apparent from the facts proved in the present case. The appellant’s contentions must, therefore, fail.
 
For the reasons stated above, the appeal is dismissed without any order as to costs.
 
Ed.