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PETITIONER: P.M.C. KUNHIRAMAN NAIR

       Vs.

RESPONDENT: C.R. NAGANATHA IYER AND ORS.

DATE OF JUDGMENT15/05/1992

BENCH: AGRAWAL, S.C. (J) BENCH: AGRAWAL, S.C. (J) THOMMEN, T.K. (J)

CITATION:  1993 AIR  307            1992 SCR  (3) 371  1992 SCC  (4) 254        JT 1992 (4)   235  1992 SCALE  (1)1216

ACT:      Transfer of Property Act, 1882: Section 111(f).      Lease-Determination   of-Implied   surrender-Agreement- Implied  surrender of leasehold rights in property-Suit  for recovery  of  possession  not  maintainable  subsequent   to surrender of right.      Doctrine  of  Merger-Trial  Court-Judgment   of-Appeal- Decision  of High Court-Held Judgment of Trial  Court  stood merged in the judgment of High Court.

HEADNOTE:      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 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, pay the rent of the building, conduct the  business  and  if necessary file  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, whereby he assigned the property  to  the appellant for a  sale  consideration  with liberty to the appellant to manage the 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 provided that TM would not have any right  or liability thereafter.      Subsequently,  respondent Nos. 1,3 and 5 filed  a  suit against  respondent  Nos.2, 4 and 6 as well as  against  the appellant and TM seeking                                                        372 partition  and  separate possession of their shares  in  the suit  properties, and for possession of the mill  contending

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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 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, respondent  Nos.  1  to 6 filed a suit  for  redemption  and recovery of possession 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  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.      In  appeal to this Court, on the question  whether  the respondents  had  a  subsisting leasehold  interest  in  the property  in  question, it was contended 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  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 have any 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; thereafter  a fresh  tenancy was created in favour of TM by executing  the agreement  dated March 22, 1955; thereafter a fresh  tenancy was  created  in favour of TM which was assigned by  him  in favour of the appellant.      Allowing  the appeal and setting aside the judgment  of the High Court, this Court,                                                     373      HELD  :  1. The judgment of  Additional  Sub-Judge  had merged  in  the judgment of the High Court on  appeal  which shows  that  the earlier suit was confined to the  Oil  Mill only, treating it as movable property and the said suit  did not relate to the land and building in which the oil mill is installed  and  the  plea raised in that suit  can  have  no bearing  in  the subsequent suit relating to  possession  of land and building. [380A-B]      2. It was permissible for the appellant to  raise  the plea  that  the plaintiffs have  no  subsistitng  leasehold interest  in  the  suit property and  the  appellant  is  in possession  of  the  same as a tenant of the  owner  of  the property. [380-C]      3.  Under Clause (f) of Section 111 of the Transfer  of Property  Act,  1882,  implied  surrender  is  a  mode   for determination of a lease of immovable property.  In  English Law, delivery of possession by tenant to a landlord and  his acceptance of possession effects a surrender by operation of law.     It   is   also   called   implied   surrender    in contradistinction to express surrender which must be  either

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by   deed  or  in  writing.   Directing  the   occupier   to acknowledge  the landlord as his landlord, i.e.,  to  attorn to  the landlord, is a sufficient delivery of possession  by the  tenant to the landlord.  Receipt of rent from a  person in  possession may be evidence of the landlord’s  acceptance of him as tenant, whether he is a stranger or whether he was already in possession as sub-tenant. [380F-G]      Under the illustration to clause (f) of Section 111  of the  Transfer  of Property Act, there would  be  an  implied surrender  of the former lease if a lessee accepts from  his lessor  a  new lease of the property leased to  take  effect during  the  continuance of the existing  lease.   The  said illustration  is, however, not exhaustive of cases in  which there  may  be an implied surrender of the lease.   Just  as under  the  English Law, there can be an  implied  surrender under  the  law  of transfer of property in  India,  if  the lessor grants a new lease to a third person with the  assent of  the  lessee under the existing lease  who  delivers  the possession  to such person or where the lessee  directs  his sub-tenant to pay the rent directly to a lessor.  [380H,381- A-B]      Konijeti  Venkayya  &  Anr. v.  Thammana  Peda  Venkata Subbarao  & Anr., AIR 1957 A.P.619; Noratmal  v.   Mohanlal, AIR 1966 Raj. 89, referred to.      Halsbury’s Laws of England, 4th end. Vol.27, paras 444, 445, 446 and                                                       374 450, referred to.      4.  By  executing  the agreement  dated  March22,  1955 respondent Nos.  1 to 5 surrendered their leasehold interest in  favour  of  TM  inasmuch as in  clause  4  of  the  said agreement they have clearly stated that respondents will not have  any  responsibility or objection for  TM  paying   the amount due to the appellant after the stipulated period  and take  up the management by himself and pay the rent  of  the building and conduct its business.                                                      [382-F]      5. After the execution of the agreement dated March 22, 1955,  TM entered into an agreement with the landlord for  a fresh lease on a higher rent and by Deed of Assignment dated December  11, 1956, TM impliedly surrendered  his  leasehold rights in the suit property. [383A-C]      6.  On the date of the filing of the present  suit  the respondents had no subsisting leasehold interest in the suit property.   The suit for the recovery of the  possession  of the  suit property field by them on the basis that they  are the lessees thereof was, therefore, not maintainable and  is liable to be dismissed. [383-E]

JUDGMENT:      CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2460(N) of 1977.      From  the  Judgment and Order dated  10.3.1977  of  the Kerala High Court in S.A. No. 1206 of 1976.      T.R.G. Wariyar, Smt. Shanta Vasudevan and P.K.  Manohar for the Appellant.      S.Balakrishnan and G. Srinivasan for the Respondents.      The Judgment of the Court was delivered by      S.C.  AGRAWAL.J.  This appeal is directed  against  the judgment  and decree dated March 10, 1977 of the High  Court of  Kerala.   It arises out of a suit filed  by  respondents Nos.  1 to 6 against the appellant and respondent No. 7  for redemption and recovery of possession of property consisting

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of 25 cents of land in Valiyaveetuparamba in Nagaram  Amson, district  Kozhikode, and the buildings and the machinery  of the Flour Mill standing  on the said land.                                                 375      The  land and buildings belong in Jenm to  the  vetteth Tarwad who leased out the same in or about 1939 to  Sivarama Iyer,  respondent  No. 2 on a rent of Rs.   40  per  mensem. Late  C.N. Rama Iyer, father of respondents Nos. 1 to 5  and husband  of respondent No. 6 started a flour mill  known  as ‘Sivaram  Mills’ on the said premises in or about  1940  and for that purpose, he installed an engine and necessary plant and machinery and also made some further constructions  over the  land. C.N.Rama Iyer died on May 2, 1953 and  after  his death,, repondents No.1 to 5 entered into an agreement  with the  appellant on February 7, 1954 whereunder the  appellant advanced   Rs.  4,500  to  respondents  Nos.  1  to  5   and respondents Nos. 1 to 5 agreed to entrust the appellant with the  management  of the mill for a period of one  year  from March  5, 1954 on a monthly payment of Rs.300 out  of  which Rs.  125  was  to be appropriated every  month  towards  the advance  given.  Respondents Nos. 1 to 5 could  not  entrust the management of Mill to he appellant on or before March 5, 1954  and they could do so only in the middle of  April  13, 1954, a fresh agreement (Ex. B2) modifying the terms of  the previous agreement was entered into between respondents Nos. 1  to 5 and the appellant.  Under the said  agreement  dated April  13, 1954 a further sum of Rs. 1,900 (in  addition  to the  sum  of  Rs. 4,500) was advanced by  the  appellant  to respondents  Nos. 1 to 5 and it was agreed by respondents  1 to 5 that the total sum of Rs. 6,400 which had been advanced by  the appellant to respondents Nos. 1 to 5 will  not  bear any  interest from the date of the said agreement  and  that the appellant shall run the mill for one year and after  the stipulated  period, respondents Nos. 1 to 5 would  get   the possession of the mill back from the appellant.  It was also agreed that a sum of Rs.40 which is the rent of the building where the mill is situate and current charges for each month of  the  electric lights of the mill should be paid  by  the appellant to respondent Nos. 1 to 5 and a sum of Rs. 100 per month  would be paid by the appellant as rent for the  mill, out  of  which  a sum of Rs. 50 shall  be  adjusted  by  the appellant  towards Rs.6,400 paid inadvance and  the  balance amount  of Rs. 50 should be paid to respondents Nos. 1 to  5 every  month.  It was also agreed that on the expiry of  the period  of one year, respondents Nos. 1 to 5 would get  back the  possession of the mill after paying the balance  amount of  Rs.  5,800 to the appellant.  Before the expiry  of  the period of one year fixed under the agreement dated April 13, 1954,  the plaintiffs-respondents  Nos. 1 to 5 entered  into an agreement (Ex. B3) dated March                                                   376 22,  1955  with one T.M. Rama Iyer (who happened to  be  the father-in-law of  respondent No. 2). In the said  agreement, reference  has  been made to the agreement dated  April  13, 1954 with the appellant and it was stated that a sum of  Rs. 5,600 is to be paid as balance amount to the appellant after adjusting the sum of Rs. 800 which has already been paid  to him.   It  was further stated that a sum of  Rs.  5,072  and annas 2 was payable to T.M.Rama Iyer towards the arrears  of rent for the building belonging to the said T.N. Rama  Iyer, which has been taken rent by respondent Nos. 1 to 5 and that since  there was difficulty for respondents Nos. 1 to  5  to clear  the said liability, they have decided to  assign  the Company (named ‘Sivaram Mills & Co.) to T.M. Rama Iyer for a consideration  of Rs. 10,672 and annas 2, out of  which  Rs.

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5,072  and  annas 2 had been adjusted and from  the  balance amount  due to them the sum Rs. 5,600 due to be paid to  the appellant may be paid to him.  In the said agreement, it was also  stated  that  the said T.M. Rama Iyer  on  paying  the amount  due  to the appellant after the   stipulated  period could take up the management by himself, pay the rent of the building,  conduct the business and if necessary to  file  a suit  against the appellant and get the company vacated  and do  anything  as  per his will and pleasure.   In  the  said agreement,  respondents  Nos. 1 to 5   further  agreed  that either  after  his taking the possession of the  company  or whenever demanded by T.M. Rama Iyer, they would execute  the sale  deed  and get the same registered.   On  December  11, 1956, the said T.M. Rama Iyer executed a Deed of  Assignment (Ex. B4) in favour of the appellant and his younger brother, Gopalan Nair, whereby the assigned the Sivaram Oil Mill  and Flour  Mill  to the appellant and his younger brother  on  a sale consideration of Rs. 8,000.  The sum of Rs. 6,000  that was  payable  to  the appellant inclusive  of  interest  was adjusted  against  the said consideration  and  the  balance amount  of Rs. 2,000 was paid by the appellant to  the  said T.M.  Rama Iyer.  In the said document, it was  stated  that after execution of the agreement dated March 22, 1955,  T.M. Rama  Iyer  had  taken  the building  where  the  mills  are situated  on  a monthly rent of Rs. 75 for a period  of  one year from Vettathu Tharavad under an oral agreement.  In the said document, it was further mentioned that the   appellant and  his younger brother had the liberty to mange the mills, to  enter  into  rental agreements with  the  Jenmi  of  the building  by paying the rent directly, to effect  alienation etc.  as per their wishes and he (T.M. Rama Iyer) would  not have  any  right  or  liability  hereafter.   In  the   said document, it is also                                                       377 mentioned  that the rent receipts for the rent paid  to  the Jenmi were being handed over with the document.      Respondents Nos. 1, 3 and 5 filed a suit (O.S.No. 3  of 1964) against respondents Nos. 2, 4 and 6 as well as against the  appellant  and T.M. Rama Iyer.  In the said  suit,  the plaintiffs, while seeking partition and separate  possession of their shares in the suit properties, had also prayed  for possession of the oil and flour mills and had asserted  that the  agreement dated March 22, 1955 executed by  respondents Nos.  1  to  5  in favour of T.M.  Rama  Iyer,  was  a  sham transaction  and no rights were conferred on T.M. Rama  Iyer under the said agreement.  T.M. Rama Iyer, who was defendant no.  1  in the said suit, died during the  pendency  of  the suit.   In  the  suit all disputes  between  the  plaintiffs (respondents  Nos. 1, 3  and 5) and Defendants nos. 2  to  4 (respondents Nos. 2, 4 and 6) and the legal  representatives of  T.M.  Rama Iyer were settled out of court and  the  only dispute  requiring  adjudication was that  relating  to  the property in question in these proceedings which was  claimed by  the appellant as the assignee from T.M. Rama Iyer.   The said  suit  was  dismissed  by  the  Additional   Sub-Judge, Kozhikode  by judgment (Ex.A1) dated January 25,  1968.   It was  held  that the agreement dated March 22, 1955  was  not sham,  nominal and void and it operates as an outright  sale of  plant   and machinery.  It was, however, held  that  the tenancy  right  of the plaintiffs had not been  affected  by either  the  agreement dated March 22, 1954 or the  Deed  of Assignment  dated December 11, 1956 and that the  plaintiffs would be entitled to possession of the site and buildings in which  the  plant  and machinery  were  installed.   It  was further  held  that  the appellant had  been  inducted  into

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possession  of  the  site and buildings  by  virtue  of  the agreement dated April 13, 1954, and that the appellant would be entitled to continue in possession of the same until  the right created in his favour as per agreement dated April 13, 1954  was extinguished.  Respondents 1 to 6 filed an  appeal (A.S.  No.  129/68)  in  the High  Court  against  the  said judgment and decree of the Additional Sub-Judge.  The   said appeal was dismissed by the High Court by its judgment dated April 6, 1973.  The  High Court found that according to  the averments  in  the  plaint  what  was  conveyed  under   the agreement dated March 22, 1955 was only the oil mill and  it was  not the case of the plaintiffs that immovable  property was  conveyed under the said agreement and that in  view  of the  pleadings, there was no scope for  considering  whether any  immovable property had been transferred and  therefore, no question of registration of the document arose.                                                     378      While  the   said appeal was pending  before  the  High Court, respondents Nos. 1 to 6 filed the suit giving rise to this appeal in the Court on Munsif, Kozhikode wherein it was prayed  that  the  possession of the suit  property  may  be restored   to   the  plaintiffs-respondents   by    way   of redemption and that the plaintiffs-respondents were  willing to  pay  any  amount that is found payable by  them  to  the appellant.   The said suit is based on the fotting that  the earlier  suit  was resisted by the appellant on  the  ground that he was in possession of and management of the  business of the Mill as posessory mortgagee thereof and the same  had found  favour with the court.   The  plaintiffs-respsondents have,   however,  pleaded  that  since  the  appellant   has continued in possession and management of the property  even after  the  expiry of the  term, no amount is likely  to  be payable  on  settlement of accounts.  Respondent No.  7  was impleaded  as defendant in the said suit on the ground  that the  appellant had leased the mill to him.   The  said  suit was contested by the appellant.  In the said suit, a  decree for possession of the suit property excluding the plant  and machinery was passed in favour of the plaintiffs-respondents by the Additional Munsif, Kozhikode-I by his judgment  dated June  22, 1972.  The appeal filed by the  appellant  against the   judgment  anddecree  of  the  Additional  Munsif   was dismissed by the District Judge, Kozhikode by judgment dated November  20,  1976  and  the second  appeal  filed  by  the appellant  was also dismissed by the learned Single Judge of the High Court by judgment dated March 10, 1977.      The High Court was of the view that the appellant could not come forward with a case that there was relationship  of landlord and tenant between the plaintiffs-resspondents  and him and he could not be evicted from the suit property since he  is entitled to protection of the Kerala Building  (Lease and  Rent  Control) Act.  In this regard,  the  High  Court, after referring to the judgment of the Additional  Sub-Judge in  the earlier suit (O.S. No.3 of 1964), has observed  that in  that  suit the appellant did not put foroward  the  case that as per the agreement (Ex.B2) dated April 13, 1954 there was a relationship of landlord and tenant between plaintiffs- respondents  and him and the case of the appellant  in  that suit  was  that  the plaintiffs-respondents  could  get  the possession  of  the property only on extinguishment  of  the charge  created by the said agreement.  The High Court  held that  in  the  circumstances  the  appellant  could  not  be permitted to plead in this suit what he did not plead in the earlier   suit.    According   to  the   High   court,   the consideration paid for the movables under  Deed of                                                       379

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Assignment  (Ex.B4) dated December 11, 1956 would  not  make the  appellant the tenant of the property.  The  High  Court was  of the view that the appellant could not be allowed  to put  foroward  inconsistent pleas to the  detriment  of  the opposite  side.   The High Court was also of the  view  that since there was a lease for running a business, it could not be said that the appellant is a tenant of a building and  is entitled to the protection of the Kerala Building (Lease and Rent Control) Act.      In  support of this appeal, Shri Wariyar,  the  learned counsel for the appellant, has submitted that the High court was  in error inrelying upon the observations  contained  in the judgment of the trial court in a previous suit (O.S No.3 of 1964) inasmuch as after the decision of the High Court in appeal  (A.S. No. 129/68), the  said judgment of  the  trial court  had  merged in the judgment of the High  Court  dated April  6,  1973  and  that is the  only  judgment  which  is operative and that the said judgment of the High Court shows that  the  only question which was considered  by  the  High Court  was  whether the agreement (Ex. B3) dated  march  22, 1955   was  inoperative  on  account  of   non-registration. According to Shri Wariyar, the High Court has held that  the said  agreement did not require registration inasmuch as  it related  to  transfer of movable property, namely,  the  oil mill  and that the effect of the said judgment of  the  High Court is that the plaintiffs-respondents are precluded  from claiming possession of the oil mill.  The only question that remains   is   whether  plaintiffs-respondents   can   claim possession  of the land and building in which  the  mill  is installed  and  that  involves the question  as  to  whether plaintiffs-respondents,  who were originally the  lessee  of the land and building, had a subsisting right in the same on the  date  of filing of the subsequent suit by  them.   Shri Wariyar has urged that the plaintiffs-respondents ceased  to have any subsisting right in the property as a laces in view of  the agreement (Ex.B3) dated March 22, 1955  which  shows that  there  was  an implied surrender  by  the  plaintiffs- respondents  of  their leasehold right in  the  property  in favour  of T.M. Rama Iyer which fact is further  established by  Deed  of  Assignment (Ex.B4)  dated  December  11,  1956 executed  by T.M. Rama Iyer  in favour of the appellant  and his  younger brother which indicates that a fresh lease  had been created by the landlord in favour of T.M. Rama Iyer and  T.M. Rama Iyer had surrendered his leasehold rights  in favour of the appellant.      We find considerable force in the aforesaid submissions of Shri Wariyar.                                                        380      After  the  decision of the High Court dated  April  6, 1973  in  A.S.129  of 1968 the judgment  of  the  Additional Subordinate  Judge stood merged in the judgment of the  High Court.   The  judgment  of the High  Court  shows  that  the earlier  suit was confined to the oil mill only,    treating it  as movable property independent of the property.   Since the  said  suit did not relate to the land and  building  in which  the oil mill is installed the said suit and the  plea raised by the appellant in that suit can have no bearing  in the  present  suit relating to possession of  the  land  and building.   The  learned Judge of the High Court,  with  due respect, was not right in negativing the plea raised by  the appellant  that he is in possession of property as a  tenant on  the view that the appellant did not raise this  plea  in the  earlier  suit  and he could not to be  allowed  to  put forward inconsistent pleas.  Since the question with  regard to possession of the land and building arises in the present

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suit only it was permissible for the appellant to raise  the plea  that  the  plaintiffs  have  no  subsisting  leasehold interest  in the suit property and that the appellant is  in possession of the same as a tenant of the owner of the  said property.      As to whether the plaintiffs had a subsisting leasehold interest in the property involves the question whether  they had surrendered the said rights.  The case of the  appellant is  that  the  plaintiffs had  impliedly  surrendered  their leasehold rights when they executed the agreement (Ex.  B-3) dated  March 22, 1955 and thereafter a fresh a  tenancy  was created  in favour of T.M. Rama Iyer which was  assigned  by T.M. Rama Iyer in favour of the appellant.      Under  clause (f) of s.111 of the Transfer of  Property Act, 1908, implied surrender is a mode for determination  of a lease of immovable property.  In English Law, delivery  of possession by the tenant to a landlord and his acceptance of possession effects a surrender by operation of law.   It  is also  called  implied  surrender  in  contradistinction   to express surrender which must be either by deed or in writing. It has been held that directing the occupier to  acknowledge the  landlord  as  his  landlord, i.e.,  to  attorn  to  the landlord,  is  a sufficient delivery of  possession  by  the tenant  to  the  landlord,  is  a  sufficient  delivery   of possession by the tenant to the landlord.  It also been held that  receipt  of rent from a person in  possession  may  be evidence  of  the landlord’s acceptance  of him  as  tenant, whether  he  is  a stranger, or whether he  was  already  in possession  as sub-tenant. [See Halsbury’s Laws of  England; 4th  Edn. Vol.27, paras 444, 445, 446 and 450; and Note  (1) to para 446]. Under the illustration to clause (f) of  s.111 of  the Transfer of Property Act, there would be an  implied surrender of the                                                    381 former lease if a lessee accepts from his lessor a new lease of the property leased to take effect during the continuance of  the existing lease.  The said illustration is,  however, not exhaustive of the cases in which there may be an implied surrender  of  the lease.  Just as under  the  English  law, there can be an implied surrender under the law of  transfer of property in India, if the a lessor  grants a new lease to a  third  person  with the assent of the  lessee  under  the existing lease who delivers the possession to such person or where  the  lessee directs his sub-tenant to  pay  the  rent directly  to  a lessor. [See : Konijeti Venkayya &  Anr.  v. Thammana Peda Venkata Subbarao & Anr., AIR 1957 A.P. 619  at pp. 624 and 625; and Noratmal v. Mohanlal, AIR 1966 Raj. 89, at pp.90 and 91].      Reference  may,  therefore,  be made  to  the  relevant clauses  in the agreement (Ex. B3) dated March 22, 1955  and the  Deed of Assignment (Ex.B4) December 11, 1956  on  which reliance has been placed by Shri Wariyar.   In the agreement (Ex. B3) dated March 22, 1955, executed by respondents  Nos. 1 to 5 in favour of T.M. Rama Iyer, it is stated :          "(4)  We  will  not   have  any  responsibility  or          objection  for  your  paying  the  amount  due   to          Kunhiraman Nair after the stipulated period and  to          take up the management by yourself, pay the rent of          the building, conduct the business and if necessary          to file a suit against Kunhiraman Nair and get  the          Company  vacated; and to do any thing as  per  your          will and pleasure.          (5)  The  Company  is  not  charged  by  and  other          liability  except  the loan mentioned  above.   The          gift deed given to us and the copy of the agreement

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        with  Kunhiraman  Nair  are hereby  given  to  you.          Either after your taking possession of the  Company          or  whenever you make demand we shall execute  sale          deed and get the same registered."      In  the Deed of Assignment (Ex. B4) dated December  11, 1956  executed by T.M. Rama Iyer in favour of the  appellant and his younger brother, it is stated :          "(2) After this for the purpose of clearing of  the          loan liability to you; the mill etc. started by the          abovesaid Naganatha Iyer and others was given to me          as per the agreement dated the 22nd of March, 1955.          They belong to me and I have on oral                                                          382          agreement  taken   the  building  where  the  mills          situate on a monthly rent of Rs. 75 for a period of          1  year  from the Vettathu Tharavad  which  is  the          jenmi of the same.           (3)  I  have decided to assign the  Oil  Mill  and          Flour Mill described in the schedule below to  you.          The  sale  consideration  is  fixed  at  Rs.  8,000          inclusive of Rs. 100 given by me as advance to  the          Jenmi.   Of this Rs. 8,000 the sum of  Rs.  6,000/-          due  to you inclusive of interest is  adjusted  and          after deducting the same, the balance amount of Rs.          2,000  due  to  me  is paid  and  the  entire  sale          consideration   has  been  paid  to  me   in   full          satisfaction  in  the above said 2 counters  and  I          have handed over to you the mills described in; the          schedule  with all the quipments and all the  other          rights  pertaining to the same.  You  have  derived          the same and hereafter you are at liberty to manage          the  mills  by  yourself;  to  enter  into   rental          agreements with the Jenmi of the building by paying          the rent directly, to effect alienation etc. as per          your  wishes.  I will not have any right,  question          or  liability hereafter.  I have made  you  believe          and  hereby  certify that the  properties  are  not          charged  by  any loan liability or  alienation  and          none  except myself have any right over  the  same.          The abovesaid agreement, the gift deed obtained  by          Naganatha Iyer and others and the rent receipts for          having paid rent to the Jenmi are hereby given."      From  the  aforesaid clauses, it would appear  that  by executing  the  agreement  (Ex. B3) dated  March  22,  1955, respondents Nos 1 to 5 surrendered their leasehold  interest in  favour of T.M. Rama Iyer inasmuch as in clause 4 of  the said  agreement  they have clearly stated  that  plaintiffs- respondents  will not have any responsibility  or  objection for  T.M. Rama Iyer paying the amount due to  the  appellant after  the stipulated period and take up the  management  by himself  and  pay the rent of the building and  conduct  its business.  By empowering  T.M. Rama Iyer to pay the rent  of the  building  respondents  Nos.  1  to  5  were   impliedly surrendering  their  leasehold interest in the  premises  in favour of T.M. Rama Iyer.  This is borne out by the Deed  of Assignment  (Ex.  B4) dated December  11,  1956  wherein  in clause  2,  T.  M.  Rama Iyer had stated  "I  have  on  oral agreement  taken the building where the mills situate  on  a monthly  rent  of  Rs.  75 for a period  of  one  year  from Vettathu Tharavad which is the jenmi of the                                                       383 same."   The  original rent for the property as let  out  to respondent  No.2 was Rs. 40 per month.  The fact that  after execution  of the agreement dated March 22, 1955, T.M.  Rama Iyer entered into another agreement with the landlord on  a

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higher  majority rent of Rs. 75 would show that fresh  lease was created by the landlord in favour of T.M. Rama Iyer  and the  earlier  lease  in Favour of  respondent  No.  2  stood determined by implied surrender.  In clause 3 of the Deed of Assignment (Ex. B4) dated December 11, 1956, T.M. Rama  Iyer has empowered the appellant "to enter into rental agreements with  the Jenmi of the building by paying the rent  directly to  effect alienation".  This shows that T.M. Rama Iyer  had impliedly surrendered his leasehold rights by agreeing  that the  appellant could enter into  rental agreements with  the landlord  by  paying  the rent directly.  The  case  of  the appellant  is that ever since the execution of the  Deed  of Assignment  (Ex. B4) dated December 11, 1956, rent is  being paid by him to the landlord directly.  It is not the case of the  plaintiffs-respondents that they had paid the rent  for the premises to the landlord after March 22, 1955.  In these circumstances,  we are of the opinion that  the  plaintiffs- respondents, by executing the agreement (Ex. B3) dated March 22,  1955, had impliedly surrendered their leasehold  rights in the suit property in favour of T.M. Rama Iyer and on  the date  of  the  filing  of  the  present  suit  they  had  no subsisting leasehold interest in the same.  The suit for the recovery  of  the possession of the suit property  filed  by them  on the basis that the plaintiffs-respondents  are  the lessees  thereof  was, therefore, not  maintainable  and  is liable to be dismissed.      The  appeal is consequently allowed, the  judgment  and decree  of the High Court of Kerala dated March 10, 1977  in S.No.  1206/76-E  is set aside and  O.S.No.636/68  filed  by respondents Nos. 1 to 6 against the appellant is  dismissed. There will be no order as to costs. T.N.A.                                        Appeal allowed.                                                     384