M. M. RANASINGHE and another, Appellants, and C. A. C. MARIKAR, Respondent

064-NLR-NLR-V-73-M.-M.-RANASINGHE-and-another-Appellants-and-C.-A.-C.-MARIKAR-Respondent.pdf


Present: H. N. G. Fernando, C.J., Slrimane, J., Samerawickrame, J.de Kretser, J., and Wijayatilake, J.
M. M. RANASIXGHE and another, Appellants, andC. A. C. MARIKAR, Respondent
S. C. 232166 (Inly.)—D.'C. Kandy, 5709/P
Rent-controlled premises—Co-owners—Letting oj the entire premises by one co-ownerwithout consent oj the other co-owners—Sale of the premises under the PartitionAct—Rights of the purchaser as against the tenant—Partition Act (Cap. 69),ss. S, i7, 4S, 60, 54—Scope of s. 4S—“ Encumbrance ”—Rent Restriction Act(Cap. 274), as amended by Art No. JO of 1061, ss. J3, 27.
W'horo tlioro is a valid lotting of the entirety of promises to which tho RentRestriction Act applies, a sale of tho proniisos undor the Partition Act doos notextinguish tho rights of the tenant- as against tho purchaser, even if the tenant’sintorost is not expressly specified in tho interlocutory decree entorod in thopartition action. Section 13 of tho Rent Restriction Act protects any tonantof ront-controllod prom isos " notwithstanding anything in any other law ”,oxcopt- upon grounds permitted by tho Section.
Itritto v. Hcenatigala (57 X. I.. K. 327) approved.
Hccnatigala v. Bird (55 N. L. B. 277) overruled.
ltut if ront-controllod promises are owned by co-owners and one of thorn lotstho entirety of tho premises without tho consent or acquiescence of tho othorco-owners, the protection of the Rent Restriction Act is not available to thetonant as against a purcliaser who buys tho promises subsequently in terms ofan interlocutory decree for sale entered undor tho Partition Act. Xn such acase, tho tenant cannot resist an application by tho purchaser to be placod inpossession of the promises.
Obiter dicta :—
Per Fernando, C.J. and Sirimane, J.—Urgent and perhaps retrospectiveamendments of the law aro necessary in v iew of tho decision of tho Privy Council inCeylon Theatres Ltd. v. Cinemas Ltd. (7U N L. K. 337) where it was hold that ausufruct of an undivided share specified in a decree for snle under tho Partition Actattached to tho land, and not to tho proceeds of sale.
Per Sirimane, Samerawickrame and de Kretser, JJ.—Tho rights of amonthly tonant are unaffuct-od by a decree under section 4S of tho Partition Act-,whether those rights aro spocifiod in the decree or not. –
Per Fernando, C.J.—Soction 4S of tho Partition Act neither empowersa Court to declare that a monthly tenancy shall survive a docreo for partition or sale,nor by implication provides for tho continuance of such a tonancy upon a partitionor salo.
-A-PPEALi from a judgment of the District Court, Kandy.
In an action under the Partition Act for the partition and ealc ofcertain rent-controlled premises, the 2nd defendant was the owner of anundivided 9/20th share of tho premises. He had purported to rent, on
Lxxrn—161*J 15268—2,255 <lt/70)
382H.G. FERNANDO, C. J.—Jtcnosinghe v. Jfarikar
a monthly basis, tho entire!}' of the premises to the 5th defendant-. Theplaintiff, who was entitled to an undivided 6/20th share, and the 1stdefendant, who was entitled to an undivided 5/20th share, wero notparties to the contract of tenancy. The evidence indeed showed that the• 2nd defendant had rented tho premises in defiance of the other twoco-owners. The question for decision in tho present appeal was whetherthe tenant (the 5th defendant) was liable to be ejected from the premisesby a person .who bought the premises at the sale under the PartitionAct.
C. Ranganathan, Q.C., with G. P. J. Kurukulasooriya, P. Na gules tea ranand P. Kurukulasooriya, for tho 5th and 6th defendant6-pctitioncrB,
appellants:-
* >
H. W. Jayeicardene, Q.G., with Anncsley Perera, Nihal Jayawickramaand Neville de -Alu-is, for the purchaser-respondent.
.Cur. adv. vult.
August 7, 1970. H. N. G. Febnando, C.J.—
The premises to which thiB action relates are business premises whichare situated in the city of Kandy and to which the Bent Restriction Actapplies. The premises were the subject of an action in which the plaintiffprayed for a decree of partition and for the sale of the premises under thePartition Act. The Interlocutory decree declared the plaintiff to beentitled to an undivided 6/20 share, the 1st defendant to an undivided5/20 share, and the 2nd defendant to an undivided 9/20 share. TheInterlocutory decree also ordered the sale of the property by publicauction and the distribution of the proceeds of sale among theco-owners.'
The premises were accordingly put up for sale and were purchased bythe rjyspondent to this appeal, whom I will refer to as tho “ purchaser ”.
The purchaser on 27th August 1966 applied for a Certificate of saleand for an order of delivery of possession. Before the writ of possession. was issued to the Fiscal, the 5th and 6t-h defendants filed objections to theissue of writ. They claimed in these objections that the 2nd defendanthad on his own behalf and that of his co-owners let the premises to the5th defendant, who had for 4 years occupied the premises for thepurpose of a business carried on by the 4th and 5th defendants, and thatthe 6ale to the purchaser was subject to this tenancy. These objectionswere over-ruled by the learned District Judge; and the present appealis against his order that the purchaser was entitled to. take out writof ejectment.'
The argument generally for the 5th and 6th defendants has been thata sale of land under the Partition Act does not extinguish the righto of. a monthly tenant which had been in existence before the institution of
H. N. G. FEK5JAXDO, C-J.—Ranasinghe e. Marikar
363
the action for partition. This argument was supported on more thanone ground. Firstly, Counsel relied on the language.of s. 4S (1) of thoPartition Act, the terms of which it is necessary’ to set out in full:—
” 4S.(1) Save bb provided in subsection (3) of this section, the
interlocutory decree entered under section 26 and the final decreo ofpartition entered under section 36 shall, subject to the decision on anyappeal which may bo preferred therefrom, be good and sufficientevidence of the title of any person as to any right, share or interestawarded therein to him and be final and conclusive for all purposesagainst all persons whomsoever, whatever right, title or interest theyhave, or claim to have, to or in the land to which such decree relatesand notwithstanding any omission or defect of procedure or in theproof of title adduced beforo the Court or the fact that all personsconcerned arc not parties to the partition action; and the .right,share or interest awarded by any such decreo shall bo free from allencumbrances whatsoever other than those specified in that decree.
In this subsection ‘ encumbrance ’ means any mortgage, lease,usufruct, servitude, fideicommissum, life interest, trust, or any interestwhatsoever howsoever arising except a constructive or charitable trust,a lease at will or for a period not exceeding one month, and therights of a proprietor of a nindagama.”
Tho scheme of this sub-section appears to be that all encumbrancesaffecting a land will bo extinguished by a partition or sale unless they arespecified in the decree. In this way the Court is impliedly empowered tospecify in tho decree those encumbrances which will remain valid after-entry of the interlocutory decreo, and a person having the right of anencumbrance is impliedly entitled to ask that the encumbrance be sospecified ; if however he does not so ask or tho Court does not so specifytho encumbrance in the decree, then the title to tho shares or interestsdeclared in the decreo will be free of tho encumbrance.
The definition of the term “ encumbrance ” in tho second part of thesub-section includes certain iutcrests such as mortgage, lease and fidei-commissum ; but "a constructive or charitable trust, a lcaso at will orfor a period not exceeding one month, and the rights of a proprietor of anindagama ”, are excluded from the meaning of the term. Therefore), itis argued, a right of any one of these three kinds was not intended by thosubstantive part of the 6ub-section to be regarded as being a defined“ encumbrance ”, and the phrase which earlier occurs “free from allencumbrances ” docs not operate to free the land from such a right.
On this construction such an excluded right will continue to beeffective, oven though it is not- c-xpressly protected by being specifiedin the decree.
3GI rH. X. G. FERXAXDO, C.J.—Ranasinghe v. Marikar
This construction gains tnuch support when ono considers tho caso ofland which is subject to a constructive or charitable trust-, for it is a quitoacceptable argument that tho Legislature could not have intended that acharitable trust will be extinguished by a decree for partition. Agains. 54 (2) ofthe Act provides that the rights of a proprietor of a nindagamashall in no way be affected by a partition or sale and that ho shall boentitled to exercise his rights as though the partition or sale hadnot occurred. Here again, there is an expression of the intention of theLegislature that the rights of a nindagama proprietor will continue toexist- despite, the fact that those rights are not conserved in a partitiondecree. If two of the three rights of the description which are excludedin tho definition of “encumbrance “ should clearly survive despito theentry of a decree of partition, there is much reason to suppose' that thosame will bo a case of the third right, namely that under a lease at' will or for a period not exceeding one month.
In examining the validity of this construction, it is useful to consider theposition concerning leases which prevailed under tho old PartitionOrdinance. Section 13 of that Ordinance in effect enacted that, after apartition has been effected, a lease of an undivided share would applyexclusively tg the divided portion allotted in severalty to the lessor. Itwould follow that if before partition there had been a lease of the entireland, then the rights of the lessee would attach to all the portionsseparately allotted to each of the co-owners. But there was nothing in theOrdinance which dealt expressly with the effect- of a lease, in a case wherea land is sold under a decree for sale.in an action for partition. Thisomission in the Partition Ordinance was the subject- of consideration by afull Bench in Peiris v. Peiris.1 Both Wendt J. and Middleton J. were ofopinion that for the purposes of s. 8 of the Ordinance a lease could not beregarded as an encumbrance, and that accordingly a sale of land underthat section would wipe out all lenses, other than those saved by s. 13 ofthe Ordinance. In the result the full Beneh decided that where there is asale under the Partition Ordinance, a person who previously held a lease ofan undivided share lost his leasehold rights, and could only receive com-pensation for the value of the lease at tho distribution of the sale proceeds.The decision in Peiris v. Peiris was followed in Samaraweera v.CunjiMoosa.* £>e Sampayo J. stated quite definitely “ that a lease isnot an * encumbrance ’ within the meaning of the Partition Ordinance,but- creatcB an interest in the land. It must be claimed in time in thepartition action at the risk of the lessee losing it for ever., ” He furtherstated that “ when a land is sold under a partition decree, the lease isextinguished, and the lessee can only get his interest assessed and anequivalent in money in the distribution of the proceeds out of the shareof the lessor. ” This decision under the old Partition Ordinance clearlyestablished that even a formal lease would be extinguished upon the saleof land in a partition action. If then all that such a lessee could claimwas to participate in the distribution of the proceeds of sale, the rights of
* {1906) 0 2*. L. R. 231.'* {1916) IS -V. L. R. 10S.
H. N.'G. FERNANDO, C.J.—Jtanasinghe v. Marikar
303
a monthly tenant must a fortiorari also be extinguished in the event ofsuch a 6ale. What is now to be ascertained i3 whether because of theconsideration relied upon in the argument which I have summarised, itmust be held that the Legislature has in s. 4S of the Partition Actchanged the former law and thus conserved the rights of a monthlytenant in the event of a sale under the Act.
It seems to me necessary to appreciate the purpose of the Legislaturein bringing a lease within the connotation of the term “encumbrance”in s. 4S. Section 4S of the Partition Act- was designed to secure as far aspracticable that the finality attaching to partition decrees could not bedoubted except in the events referred to in sub-sect ion (3) of that Section.One expedient adopted for this purpose of securing such finality was tomake express provision in sub section (1) as to the interests which maybe conserved in an interlocutory decree by their being specified therein.If the decisions under the old Ordinance which I have already cited(holding that a formal lease is not an encumbrance) had continued toapply, then the Court would have had no power in entering decree'underthe new Act to protect such a lease b_y specifying it in a decree, and con-sequently the actual protection sought to be afforded to leases by s. 50 ofthe new Act may have been ineffective. This difficulty in m3' opinionwas overcome by making it clear in s. 4S that a formal lease fell withinthe terra “ encumbrance ” and could according!}' be specified in a decree.After thus including a lease within the meaning of the term “ encum-brance ”, the Legislature no doubt did (in the exception clause at the endof the definition) exclude a lease at will or for a period not exceeding onemonth. Such an exclusion was of course necessary if the intention wasthat only formal leases may bo specified in a decree. Here again one hasto bear in mind that the decided cases under the old Ordinance relatedonly to instances of formal leases, and it is therefore reasonable tosuppose that the Legislature in enacting s. 4$ of the Act also had in mindonly such leases. Accordingly (although the matter is not free ofdifficult}'), I much prefer the construction that s. 4S was intended only toprotect formal leases, and not to extend to monthly tenancies a protectionwhich had not seriously been claimed for them before. I hold for thesereasons that s. 48 neither empowers a Court to declare that a monthlytenancy shall survivo a decree for partition or sale, nor by implicationprovides for the continuance of such a tenancy upon a partition orsale.
Before leaving this matter, I must refer to the recent decision of thePrivy Council in Ceylon Theatres Ltd. v. Cinemas Ltd.l. The questionwhich arose in that ease was whether the Court has power, when orderingthe sale of land under the Partition Act, to declare that such a sale willbe subject to a life interest subsisting in au undivided part or parts of theland sold, and whether the sale will in such a case be subject to the lifeinterest so declared. In answering that question in the affirmative,Their Lordships were impressed by the fact that s. 5 requires persona to
* (IMS) TO X. L. It. SZ7.
i 18238(11/70)
. 300
JT. X. G. l'EKXAXDO, C.J.—Itanusinghe v. ^larilar
be made parlies to a partition action if they are entitled or claim to beentitled “ to any right-, share or interest to, of, or in the land to which theaction relates, whether vested or contingent, and whether by way ofmortgage, lease, usufruct, servitude, trust, fidcicommissum, life interest orotherwise.” They then pointed out that the Act returns to a similar listin a later important-section (section 4S). Prirua facie they were disposedto the opinion— _£
" that recognition having been given by the Act to the possibilitythat encumbrances may exist, those must be assumed-to continueunless, provision is expressly. made, for their discharge and. satisfaction.” •
The judgment- at a later stage proceeds to appfy- the test set out in thisopinion with reference to the provisions of ss. 4S and 50.
Sub-section (2) of s. 50 declares t hat’m thc case of a decree for sale, therights of.a mortgage or lessee of an undivided share shall bo limited totho mortgagor’s or lessor’s share cf the proceeds of the sale. ‘ Their Lord-ships thought that- this sub-section gave strong support for the argumentthat ail encumbrance of a kind not dealt with in the sub-section willcontinue to attach to the land.*
“ Comparison, between this section, with its reference to mortgagesand leases, and section4S (1) with its listed reference to encumbrances- generally, strongly points llie contrast between those encumbranceswhich remain attached to the land, or to shares in it, and thosh which" exceptionally attach to the proceeds of sale.”' ” ,
. . The judgment in the Cinemas case1, docs not, in my opinion;^ assistthe argument of Counsel for the appellants. What that judgmentprincipally rejected was the contention that the declaration in s. 46 “thecertificate (of sale) shall be conclusive evidence of the purchaser’s title tothe land” has the effect of freeing the land from all other interestsdespite the fact that such an interest has been duly specified in the inter-locutory decree in terms of s. 38. But where, as in the instant case, thereis merely a monthly tenancy which is not specified in the decree becauseit is not an, “ encumbrance ” as defined in s. 4S, there is nothing to.bederived from e. 4S in support of the claim that the tenancy will surviveafter a sale.
*r,
As has already been shown, Their Lordships relied heavily oh sub*section (2) of s. 50 for'the proposition that an “encumbrance” dulyspecified in an interlocutory decree, which is neither-a mortgage nor alease, will continue to attach after a saje of land. . But that propositiondoes not cover the case of some interest, which is not an " encumbrance ” asdefined in s. 48. But even if it be assumed that a monthly tenancy mayproperly be specified in an interlocutor decree, it seems to me that the
1 {J9CS) TO N. L. It. 337.
H. N. G. FERXAKDO, C.J.—Rnnaainght v. blarikar367
nature of the protection that such a tenant might claim is implicit in theprovisions of sub section (2) of s. 50. Having regard to the fact that, inthe event of a sale, sub section (2) limits the right of a lessee under aforma] lease to the lessor’s share of the proceeds of sale, It is reasonableto ascribe to the Legislature an intention that the right of a monthlytenant in the ease of a decree for sale shall be at least equally limited,and shall not continue to encumber the land after the sale.
Counsel for the Respondent in this appeal submitted that the Cinemascase was wrongly decided in that the decision failed to take account ofjudgments holding that a sale under the old Partition Ordinance freedland from interests such as fideicommissm or usufruct. But therewere similarly judgments holding that leases and mortgages will notcontinue to attach after sales in partition actions, and it was on!}' theselatter judgments which were given statutory recognition in s. 50 of theAct. The omission of the Legislature to give similar recognition to theformer judgments leads to the quite justifiable inference that thelegislature intended that they will no longer apply.
Section 4S of the Partition Act clearly intends that certain " encum-brances ” may be specified in an interlocutory decree, and thus manifestsan intention to protect in some manner the interests of those persons inwhose favour those encumbrances subsist. The Act then proceeds, in s. 50,to define and limit the manner in which two such interests, namely mort-gages and leases, arc to be protected, in the event of a sale under theAct. But the Act docs not in any way define or limit the rights whichmight accrue by virtue of other “ encumbrances ” actually specified intho docrcc, such as a “usufruct, servitude or fidei commissum ”. Totake the simple case of a servitude, such as a right of way, the construc-tion that the Legislature intended that a sale in a partition action willext inguish a right of way specified under s. 48 in the decree for Eale is soabsurd that rccscns need not be stated for the rejection of such a construc-tion. But even where a right of usufruct or fidei commissum is specifiedin a decree in terms of s. 4S, then.in the absence of any provision in theAct (such as s. 50 which limits the rights of a mortgagor or lessee to aninterest in the proceeds of sale), there is in tho Act no warrant for theopinion that the Legislature intended only that such a right-, when con-served by the decree, will attach only to the proceeds of sale, and not tothe land itself. If the true intention of tho framers of the Partition Actwas to maintain the applicability of former judgments relating to therights underJiilehommissum or usufruct, it is lamentable that the actualprovisions of tire Act arc so easily susceptible to the construction thatthese judgments no longer apply.
The decision in the Cinemas case lias in my opinion revealed a seriouserror in tho Parti; ion Act. Having regard to former judgments, it has formany years been tho practice in our Courts that, upon the sale of a landin pursuance of a partition decree tho rights of persons claiming uponusufruct or Jidsicommissum arc regarded as attaching to the proeecdsofBale, and that the purchaser holds the land free of Buch rights. In the
3G3H. If. O. FERNANDO, C.J.—Jianasiiujhe v. Martfar
case of the sale of land subject to a fideicommissum for instance, thoproceeds of sale are invested by the Court, and the intcrcstenrncd by theproceeds of sale is paid to the fiduciary until the time of accrual of therights of tho fideicoromissaries, who at this later stage become entitled to'the proceeds. The decision in the Cinemhs case can well give rise tolitigation in which persons who, although they have enjoj'ed the rights. in proceeds of sale which our practice has conferred, may set up claims ofownership to lands which third parties have purchased in.the faith thatthe lands were freed from such claims. Urgent and perhaps retrospectiveamendments of the law concerning this subject matter appear to bonecessary.
. Another argument of Counsel for the appellants was tha t the protectiongiven to tenants by the Rent Restriction Act'is not extinguished by a sale,under the Partition Act-. On a similar question, as to the effect of a decreefor sale under the former Partition Ordinance, there are conflictingdecisions of this Court; and one of the purposes of the constitution of thepresent Bench was to resolve this conflict. In Ilcenaligala v. Bird1Pulle J. expressed the opinion obiter that tho certificate of sale issued(under section 8 of the Ordinance) had the effect of terminating thorelationship of landlord and tenant and of constituting (the purchaser)an independent title holder to whom the restriction contained in section13 of the Act could not apply because the certificate conferred a title whichwas not subject to the tenancy agreement. In the latter case of Brilto v.
■ Heenatigala* Gratiaen J. came to the opposite conclusion, namely that,although the contractual relationship between a tenant and his landlordmay be terminated by a decree for sale under the Partition Ordinance,nevertheless the statutory protection conferred on the tenant by theRent Restriction Act is not extinguished by the decree for sale. I canusefully add but one observation to the reasons stated by Gratiaen J. forthat conclusion. If the earlier decision in Ileenatigala v. Bird is correct, anowner of rent-controlled premises can eyade the provisions of the RentRestriction Act by the simple device of conveying any undivided share-of the land to some person and by thereafter seeking a sale in a partitionaction! The earlier decision has now to be over-ruled.*
I also find nothing in the new Partition Act upon which to hold thatthe reasons stated by Gratiaen J. are no longer applicable in a case inwhich rent-controlled premisses are sold under the Act.
I must point out however that there may be, or may appear to beanomalies flowing from the decision in Britto v. Ileenatigala.
The effect of IShat decision is that a mere monthly tenant of rent-controlled premises, whose interest is not specified in the interlocutorydecree, may nevertheless be protected in his occupation despite a saleunder the decree. . It may appear that he is thus in a better position thana lessee under a formal lease which is specified in the decree, for B; 50 (2)
V * (19S4) 55 N. L. R. 277.'* (1956) 57 N. I,. B. 327../
H. N. G. FERNANDO, C.J.—Ranasinghtt v. Marikar 7$:?£?'"S6$
of the Partition Act provides that in such a case the rights of the lesseeare limited to an interest in the proceeds of sale. But s. 13 of the RentRestriction Act protects any tenant of rent-controlled premises, '** not-withstanding anything in any other law If, therefore, the tenant ofsuch premises under a formal lease chooses to continue in occupation ofthe premises after a sale under a partition decree, instead of claiming aninterest in the proceeds of sale, s. 13 will operate notwithstanding s. 50 (2)of the Partition Act.
There is also the inconsistency, or perhaps the prejudice, arising fromthe fact that the purchaser at a partition sale may be unable to eject theoccupying tenant, despite the fact that the interlocutory decree containedno reference to the tenant’s interest. Such an inconsistency is sometimesunavoidable when statutory provision, such as is contained in 8. 13 of theRent Restriction Act, over-rides other laws. Provision somewhat similarto s. 13 was enacted in s. 4 of the Paddy Lauds Act, No. 1 of 1958, whichto a certain extent protects a “ tenant-cultivator ” of a paddy land againsteviction. In Odirisv. And ray as1 it was held that the interest of a tenantcultivator may be specified in an Interlocutory Decree for partition, onthe ground that his interest is included within the scope of the words“ any interest whatsoever, howsoever arising ” in the definition of“ encumbrance ” in s. 48 of the Partition Act. A similar construction isperhaps possible in the case of a tenancy protected by the Rent Restric-tion Act, not for the reason that it is a tenancy, but instead for the reasonthat the negative right against ejectment conferred by s. 13 is“ an interest ” contemplated in the definition of “ encumbrance ”. Thefurther consideration which I have now been able to give to this point hasrelieved me greatly of the fear expressed in the judgment in Odiris v.Andrayas. It seems to me now that even if the right of a tenant-cultivator or of a tenant protected by the Rent Restriction Act is notspecified in a decree for partition or sale, that right can continue toexist because of the over-riding effect of the statutory j>rovision whichconfers that right.
It is clear from the judgment in liritto v. Ileenatiyala that the defendantin t hat case had entered into occupation of premises by virtue of a notariallease from one co-ouncr, and by virtue of contracts of monthly tenancygranted by all the other co-owners. The defendant in that case was'thusthe tenant of the cutirety of the premises.
In the instant case, however, the learned District Judge has held thatthe 5th defendant was the tenant of these premises only under the 2nd'•■fendant, and that there was no contract of tenancy .between the 5thdefendant mul the other two co-owners, namely the plaintiff and the 1stdefendant.
One can conceive of a case in which, although a tenant occupies pro-perty under a contract of tenancy with one only of the co-owners of theproperty, that co-owncr can be regarded as the agent of all the co-owners.
1 (10GU) 72 X. L. It. 110.
SIRIMANE, J.—Ranaiinghe. r. Mnrilccr
370
In such a cr.se, tho protection afforded l>y ;hc Rent Restriction Actmay be available as against ail V !ic co-owncrs on the ground that they Jiadacquiesced in the Jetting, and tin- protection may.be available also againstthe purchaser at. a talc-fin a partition e dibit. I Had thought that therehad been such acquiescence in ihc instant ease. But in view of thematters referred to in the judgment of my brother Sirimane, I amcontent to upheld the finding of the trial Judge- that the 5th and Gthdefendants wore not tenants tinder all the co-owncrs. That being so, theprotection of the Act is not available to them after the sale under thepartition decree.
' For these reasons, the order of. the District- Judge allowingthe application for a writ of possession is affirmed. The appeal isdismissed with Costs.
SlBIMAKE, J.;—
I have the advantage of having read the draft judgment of My Lordthe Chief Justice, and I respectfully agree with the conclusion which hehas reached, viz., that when there is a valid letting of the entirely ofpremises to which the Rent Restriction Act applies a sale under thePartition Act does not extinguish the rights of the tenant.
' I am therefore of the view that the decision in Britlo v. Heeiwligala1correctly sels out the law, and is applicable to sales held in terms of adecree for sale under the Partition Act as well..
As I am of opinion that theoth and Gth defendants, who are the appel-lants, are not protected by the Rent Restriction Act, I wish to set outbriefly the reasons for my view, and also my views on certain othermatters which were, argued before us on this appeal.
The 2nd defendant was the owner of an undivided 9/20tli share: of .
– the premises. Ho purported to rent the entirety of the premises to the5th defendant after this action was filed in circumstances which point tothe inference tliat he did so in defiance of the wishes of the other twoco-owners, viz., the plaintiff and the 1st defendant. Wo did nofcdccidetins appeal cn the short point raised by Counsel for the respondent thatthe alienation was “ pending partition ” and therefore void under theprovisions of Section 67 of the Partition Act, because counsel for theappellant protested that this point was not raised earlier,' and furtherthat there was no evidence before this Court as to tho exact date of theregistration of the lis pendens. But, it is quite clear from tho affidavitfiled by the 5th defendant himself for the purpose of claiming a stay ofexecution of the writ'of possession, that the 2nd defendant had let thepremises to him about 4 years before tha ty affidavit was filed in 19G6.This action was filed in 1960. Idonotwishtbgointo t he evidertce led atthe trial in any detail, but. there was some evidence which indicated that .the 2nd defendant had let these premises without tho consent of thei (105C) 57 If. L. R. 327.
371
SIRI3IANE, J.—Bahasinghe v. Jtfaritar
other two co-owners, «nd appropriated the rents for himself. It was‘ proved, for examplo, that there had been litigation between the plaintiffand the 2nd defendant (D.C. 921G) where the plaintiff successfully averredthat the 2nd defendant had indue jd her, when a minor, to convey some,undivided rights in this land to him. It was also proved that the 1stdefendant had successfully sued the 2nd defendant in D.C. G212 for hershare of the rents for 3 years prior to February, 1961. There is everyreason to believe that this Partition Action was filed because the 2nddefendant was keeping the plaintiff and her sister (1st defendant) out ofpossession of their legitimate shares by letting the premises withouttheir consent.
One issue which, was submitted for decision to the trial Judge in thisPartition Action, was whether the entirety of the premises had been let.It is implicit in this issue that the Judge had to find whether the lettingwas done with the knowledge and consent of the plaintiff and the 1stdefendant.
That issue was decided against the 2nd defendant. The conclusion thelearned Judge reached on the evidence was that the plaintiff and the 1stdefendant did not accept the 5th (and the Gth) defendants as their tenants,and that there was no contract of tenancy between them, though, of course,the plaintiff and the 1st defendant were aware that the 2nd defendantwas letting these premises to different persons and taking the rents himself.There was no appeal from that finding which is binding on the parlies tothis application. In Britto v. Ilectmlijula (supra) the entire premiseshad been lot to the tenant by all the co-owners.
What then'arc the rights of the 5th and Gth defendants who arc thetenants only of the 2nd defendant, and therefore only of an undivided9/20th share of the building ?
A person who takes on rent a house which is co-owned, from one co-owncr only docs so at his peril. If there are circumstances which showthat the lessor had a mandate express or implied, from the other eo-ownersto deal with the entirety of the co-owned properly, then the tenant’soccupation is secure. If not, it may si ill be argued oil his behalf thatbecause a co-owner cannot he ejected from the corpus in which lie hasundivided rights, so too, a tenant who claims under him. But, thedecree for a partition or sale under the Act puts an end to co-ownership,and the tenant is now a lessee of interests which have no physical existenceas “ premises ” within the meaning of the Rent Restriction Act (asamended by section 11 of Act 10 of 1951), and that Act can thereforegive him no protection when a purchaser seeks to rji e: liii.-s. His posit ion,i-i my view, is at best l he same as that of a l.'ssec ot ail undivided sharefir a period over one month, whose rights have been specified in the- cecrec, and by an analogy, he n:ny cltim these i it crests—perhaps theequivalent of a month’s rent—out of the share o! the proceeds of saleallot leiyto his lessor, under .Section 59 (2) of the Partition Act. Rut liecannot, in i.:y vir.v, resist an application by a purchaser to be placedhr possession.
372
SIRIMAX15, J.—Banasinghc v. ilurilar
I mil unable to subscribe to the view th’at Section-18 precludes a Courtfrom specifying in its decree that a monthly tenancy or a charitabletrust attaches to certain shares.
Section 4S of the Partition Act was enacted in order to give a personwho is allotted a .lot, in the ease of a partition, and a person who purchasesa land, in the case of a sale held in pursuance of a decree under tho Act,a clear and unfettered title. It was enacted to give effect to tho ideaearler expressed in the somewhat picturesque phrase, that a decreeunder our Partition Ordinance No. 10 of 1S63 gives a clear title " whichis binding oil tho whole world”. Section 4S provides therefore thatall encumbrances (lenses, mortgages, fidei-commissa, etc.) which werenot specified in the decree were to be extinguished, but it saved aconstructive or charitable trust-, a lease at will or for a period notexceeding one month, and the right of a proprietor of a Nindagama,from such extinction…
I do not find it profitable to speculate as to why the legislature saved amonthly tenancy when notarially executed leases for longer 'periodseven when duly registered were extinguished unless specified in thedecree. It is sufficient to note that the Partition Act was enacted afterthe Rent Restriction Act of 194S. In my view all that the Sectionprovides is that constructive and charitable trusts, leases at will, monthlytenancies, and the rights of a proprietor of a Nindagama are unaffectedby a decree under Section 4S, w hether those rights are specified in thedecree or not. Take the case, for instance, where tho Viharadhipatliiof a Buddhist temple avers that the shares of certain parties inheritedfrom a common ancestor are subject to a charitable trust in favour ofhis temple. A contest may arise, and if the Court holds in its judgmentthat there .is a charitable trust, then that finding will be specified in thedecree. The same applies to a disputed monthly tenancy if the Court- holds that such a tenancy subsists. I consider it very desirable that.when such.a right affecting the corpus is brought to the noticejof-Court,the decree which is the instrument that is registered, should refer to it.This will give notice of such rights to intending purchasers iri the caseof a decree for sale.•-‘
In the course of the argument our attention was drawn to the case ofThe Ceylon Theatres Limited v. The Cinemas Limited1 where it-was heldthat a usufruct of an undivided share specified in tho decree attachedto tho land, arid not to the proceeds of sale. But no question of eject-ment or the applicability of the Rent Restriction Act arose in that case,which therefore does not help the 5th and 6th.defendants. I agree with“My Lord the Chief Justice that this decision reveals a defect in our lawwhich must' be speedily remedied, if long established titles are not to bodisturbed or cast in doubt-
Since 1S63 when a property was sold on a decree for sdle entered underthe Partition Ordinance the proceeds were brought into Cotat, and afideicommissum or life interest attached to those /proceeds. Where» (19CS) 70 If. L. B. 337.
373
.' SIRQL4XE, J.—Jtanaainghe v. Marikar
'. there was an encumbrance such as a life interest or fideicommissumaffecting a land, sales of such lands under the Partition -Ordinancewere placed on the same footing as sales under the provisions of theEntail and Settlement Ordinance, Chapter 67, and the money realisedby such sale was dealt with in the same way as provided bj* Section 7 (c)of that Ordinance which enacts that the proceeds of sale should be appliedto—
/
“ Investments in the Loan Board or in Government securities,the interest thereof being made pa3able to the party for the timebeing otherwise entitled to the rents and profits of the landsold. ”
This practice continued after the passing of the Partition Act of 1951,tho proceeds of sale brought into Court were invested with the LoanBoard which pays interest as half yearly dividends. The interest on thoproceeds took the place of the income from the land, and fiduciaries andthose who were entitled to life interests were paid these sums. They hadno rights in the land which was thought to be free from any encumbrancewhatsoever in the hands of a purchaser. It was perhaps on account ofthis practice based on earlier decisions of this Court that the legislaturedid not attempt (in Section 47) the impossible task of prescribing how alife interest, for example, should be valued for the purpose of makinga payment from tho capital sum realised' at a-sale. It was acceptedthat fiduciaries were only entitled to tho dividends on the capital sumwhich was later paid out to the fideicommissaries, after the fidoiconnnis-sum ended. One consideration which appears to have weighed withtheir Lordships in the decision in The Ceylon Theatres Limited v. TheCinemas Limited (Supra) is that section 47 of the Partition Act docs notprovide for the valuation of rights such as fideicommissa and life interestswhich are specified in section 5 of tho Partition Act. Tho judgmentstates, at page 344—
.Section 47,fails adequately to support the respondents’
argument. It provides merely for a schedule of distribution to beprepared l»y a party and approved by the Court. If the intentionwas that encumbrances, of the varied character mentioned in section5, wen- to be compulsorily discharged out of the proceeds of sale, itappears to their Lordships inconceivable that so scanty a mechanismshould have been provided. On the one hand it can never have beenintended that the amount to be paid to cn encumbrancer shouldmerely be fixed bv the party presenting the Schedule: on theother hand no procedure for valuation—which, as has been shown,may in some cases bo complicated and controversial—is so much asindicated.”
There are in our Courts a large number of eases where sales under thePartition Act have taken place and the money kept in Court because the-hares of some co-owners are subject to a “ fideicommissum in perpetuity ”,
374SAMERAWJCKRAME, .T.—lianosinghs r. Marikar
The third generation which ^ill he ultimately entitled to the proceeds. lying in Court has not- yet'emerged to make its claim ; and the fiduciariescontinue to draw the interest half-yearly. As values of land, and therentals they command, ha ye increased almost ten-fold in recent years, it- ismere than likely that fiduciaries will find it far more advantageous toclaim rights in the properties sold, titles to which have by now passed tothird parlies on the footing that such properties arc unencumbered.
I agree with the Chief Justice that urgent and perhaps retrospectiveamendments of the law arc necessary.
As far as this ease is concerned I am of tho view that tho order of theDistrict Judge allowing the application for a writ of possession should beaffirmed, and the appeal dismissed with costs.
Samebawickbame, J.-—'
The 5th and'6th defendantB-appclIants claimed that they were tenantsof premises sold under a decree in a partition action and that they werenot liable to be ejected at the instance of the purchaser at the sale.
Section 4S (1) of tho Partition Act reads:—’
“ Save as provided in sub-section (3) of this section, the interlocutorydecree entered under section 26 and the final decree of partitionentered under section 36 shall, subject to the decision on any appealwhich may be preferred therefrom, be good and sufficient evidence ofthe title of any person as to any right, share or interest awardedtherein to him and be final and conclusive for all purposes against allpersons whomsoever, whatever right, title or interest they haro, orclaim to have, to or in the land to which such decrees relate and not-withstanding any omission or defect of procedure or in tho proof oftitle adduced before tho court or the fact that- all persons concerned arenot parties to the partition action; and the right, share or interestawarded by any such decree shall bo free from all encumbrancerwhatsoever other than those specified in that decree.
In this subsection “ encumbrance ” means any mortgage, lease,usufruct, servitude, fideiconunisum, life interest, trust, or any interestwhatsoever howsoever arising except a constructive or charitable trust,a lease at will of for a period not exceeding one month, and the rightsof a proprietor of a nindagama.”
It appears to me that in terms of the provision the rights of a' monthlytenant are not terminated by the entering of a decree in the action. Allencumbrances not specified in the decree will be wiped away but it i’bexpressly provided that a lease for a period not exceeding one month is.not an encumbrance.
The rights of a person holding a tenancy from the co-ownere, thereforewill not be wiped away on the entering of an interlocutory decree orderingthe sale of the premises but will continue to subsist thereafter. Apurchaser at a partition sale really obtains the title of the co-owners
375
declaretl in the decree. As the tenant holds under the co-owners whosetitle the purchaser obtains there doe6 not appear to me to be any reasonwhy the tenant cannot claim to attorn to and becorao the tenant of thopurchaser. Without doubt he can claim to be the statutory tenant of thepremises under the purchaser as landlord within the meaning of thoRent Restriction Act.
The 6th defendant had come ou the premises as tenant of the 2nddefendant who was one of the three co-owners of it. 'In the same way asa person who has no title to the premises may let it if he can put thetenant in occupation a co-owner may let the entirety of the co-owncdpremises and as between himself and the tenant there will he a letting ofthe whole premises but the tenant nil I not be able to assert rights oftenancy in respect of the shares of the other co-owners as against themunless'they have acquiesced in the letting or arc otherwise bound by it.The appellants have obtained no finding from the trial court that b}'reason of acquiescence or otherwise the 5th defendant-appellant wasthe tenant of the other two co-owners. Their rights must therefore bedecided on the footing that the 5th defendant was the tenant of oneco-owner alone.
Can a person who is the tenant of one co-owner alone claim to be thetenant of the premises against the purchaser at a partition sale ? At themost liis rights of tenancy prior to the sale would have been in respect ofthe undivided share which the co-owner who gave him the tenancy hadowned. The matter may be resolved by examining tho nature of the co-ownership or community of property. Cornnmnio or community ofpropert y has been defined ns a jus in re belonging to two or more personsover the same thing or things—vide Grotius 3—2ft—1. A co-owner hasthe rigid to compel a division of the common property—t»i comnninioncvrl iocirlate nemo compellitur invitu-i detineri (Van Lecuwcn’s CcnsuraI’ormisb 1—4 — 27—1). Where property could not be divided withoutinjury or if partition was impossible or inexpedient the law permitted asale of it. among the co-owners for preference—vide Jayewardene onPartition XXI. As a tenant’s rights are. derived from and dependent onthe title of the person from whom he gets Itis tenancy, the rights of atenant under one co-owner ore subject to the prior 'right of the otherco-owners to compel a division of the property by partition or sale.
Where there is a partition his rights will be restricted to the dividedportion obtained by the co-owner who gave him the tenancy. As he hadfront tint co owner a tenancy of the entire premises ho may elect tocontinue as tenant of a j>art. Where there is a sale, however, a salesubject to a tenancy in respect of an undivided sharo will depress theprice, tli it may he realized and thus adversely affect the other co-ownerswho have rights prior to that of the tenant. The latter's right, if any,niutherefore, in my viow, he re.rtrioted to tin share in the proceedsof sale to which the co-owner who let to him will become entitled. –
SAMERAW1CKRAME, J.—Ranosinghe. v. Maritar
3~0I)E KKETSER, J.—Jlanasiu-jhe c. Marik.tr
Ceylon Theatres Ltd. v. Cinemas Lid. 1 the Privy Council held thatland may be sold under the Partition Act- subject, to a usufruct in respectof an undivided share. An usufruct is a real right or a jus in re. Asa co-owner may dispose of his undivided share so he may transfer oralienate a lesser right and the purchaser or alienee may assert his rightsagainst the other co-owners. But the rights of a tenant arc subordinateto and dependent on the right of the person who lets to him.
I
I hold that the appellants’ claim that the 5th defendant-appellantwas cither the tenant or the statutory tenant of the purchaser fails.I would therefore dismiss the appeal with costs.
. be Kbetseb, J.—
I have the advantage of having read the judgments prepared by..3Iy Lord the Chief Justice and my brother Siriinanc. I. agree that- the-order of the District Judge allowing the application for a writ of possessionshould be affirmed and this appeal dismissed with costs.
The 2nd Defendant who was a co-owner together with the Plaintiffand the 1st Defendant of No. 5S Brownrigg Street, Kandy which is abusiness premises subject to rent control, had without their consentlet it to the Petitioner Appellant whom I shall refer to for the rest ofthis order as the tenant.
The 2nd Defendant in so doing, had done something which he had noright to do as a co-owner for, as Dias J. with whom Basnayakc J.agreed in Vaz v. Haniffa 2 said :
“ To enter into a lease in regard to the whole property is not oneof the things a co-owner can do.”
In that case, Dias J. referred to Vandertan v. .Vanderlan* in whichHoward C. J. and Soertsz J. discussed the rights of co-owners to deal withthe undivided property. »1
That if a co-owner lets the whole premises without the consent of theother co-owners the tenant in so far as the other co-owners are concernedis a trespasser, and those co-owners have a right to eject him was thedecision in Kalpage v. L. A. Gunaicardene *. The fact that the premiseswere rent controlled made no difference to the position was alsodecided in that case. Tambiah J, who wrote the judgment with whichSri Skandarajah J. agreed, pointed out that in Britto v. Ileenatigula5Gratiaen J. hadagreed “ with the contention that it would be quite wrongto include within the definition of a landlord any person other than theoriginal Lessor or some other person who derives his title from the originalLessor.”
i {196S) 70 2d. L. R. 337.® {1040) 41 X. L. R. 54S.
* U94S) 49 X. L. R. 2SO.* (1904) 00 X. L. R. 302.
’« (1950) 57 X. L. R. 330.
DE KRETSER, J.—Itanasinghe r. Marikar
377
Ifc was also in JBritto v. Ueenaligala that Gratiacn J. pointed out thatthe title a purchaser obtained at a sale of co-owned property orderedunder the Partition Act is, in truth, a title derived from persons declaredto be co-owncrs of the property. If therefore they had been thetenant’s “landlords” within the meaning of the Rent Restriction Act,their statutory status was transferred to the purchaser by operation oflaw.
It is for that reason that when all the co-owners have let to a tenantthe purchaser at a partition sale who takes their place as the statutorylandlord cannot eject their tenant who is now deemed his tenant.
It will then be seen why when Premises No. 5S Brownrigg Street,Kandy, was sold as decreed in this partition case and bought by Marikar,the tenant does not have the protection of Section 13 of the RentRestriction Act when Marikar seeks to have him ejected, for to Marikarhacl passed the rights of co-owncrs who were not the contractual landlordsof the tenant and therefore could not have been his statutory landlordsin terms of the Act.
A co-owner is entitled to let his undivided share of the common property.
I agree with Sirimanc J. that the other co-owners may not be entitledto eject the person who is on the common property by virtue of such acontract. The practical result of such a contract may he that muchto the chagrin of the other co-owncrs who do not want to occupy thepremises with him in the exercise of their own rights as co-owncrs that“ the tenant ” enjoys the whole premises, but it does not mean that thatgives him the protection of the Rent Restriction Act even against theco-owner who let him into the promises by letting to him a fractionalshare, for the Rent Restriction Act does not apply to a lettingof a fractional share of a premises.
Where a sale under the Partition Act has taken place, the co-ownershipin oonscc| nonce of which he got into the premises and his contractualright in respect of the fractional share, areal an end. It follows that hehas no protection against the purchaser who wants him out of thepremises.
Apropos .Section 4X of the Partition Act, assuming that a monthlytenancy is an encumbrance that has to be specified ill the decree if itis to survive, in my opinion the failure to have it specified will not deprivetIn- tenant of rent controlled premises of the protection given bv theRent Restriction Act which is given “ notwithstanding anything inany other law ”.
The drafting and the punctuation of .Section 4S S'ub-Scctioii 3 are suchthat it does not appear to me that it is impossible to say that when thedraftsman attempts to set out what an encumbrance means, lie does notintend to convey l hat a lease at will or for a period not exceeding a monthdid not fall within that meaning. It appears to me that the words
378
DE KRETSER. J.—J}annsiHg/,c c. Munl<tr
** except a conslructivc or charitable trust ” appearing after the worcs“any interest vha1soever howsoever arising ” might well have beenintended to be read only with these words. So read, within the meaningof the word encumbrance would also be :—
Any interest whatsoever howsoever arising except a constructive
or charitable trust.
A lease at will or for one month.
The rights cf a proprietor of a Xindaguma.
The fact that Section ot makes provision for the protection of therights of the proprietor of a nimlagaina when there is a partition of a“ panguwa ”, may possibly be a pointer to tlie fact that when the corpussought to bo partitioned is not a "panguwa” or of lands in it, there isneed for a nindagama proprietor to have his rights conserved in thedecree. If the interpretation that the rights of a nindagaina proprietorare an interest in land which will not be wiped out on the entering ofa decree as they are not an encumbrance is correct, then there seems tobe no need to enact in Section G4 (2) that those rights arc not affectedby tho partition of a " panguwa ”.
In regard to a lease at will, it appears so extraordinary that it shouldnot be wiped out on the entering of a decree whereas a formal lease wouldsuffer that fate that it may be a pointer that that was not the intentionof the legislature in regard to leases at will.
While I find the construction of Section 4S set out above by no meansunattractive, the fact that the legislature clcarl}' intended that thereshould be interests in land which were not to bo considered encumbrancesas it wanted encumbrances understood when it referred to the wiping outof all encumbrances other than those specified in the decree, makes meprefer the construction that a lease at will and the rights of a nindagamaproprietor share the distinction undoubtedly enjoyed by a constructivetrust of being interests in land which are not encumbrances for thepurposes of Section 4S. I
I agree with Sirimanc J. that no useful purpose is served in speculatingas to why the legislature made a monthly tenancy such an interest, and •share his view that a constructive or charitable trust, a lease at will orfor one month, and the rights of a proprietor of a nindagama are unaffectedby a decree under Section 48, whether those rights arc specified in thedecree or not. Nothing in Section 4S precludes a Court from specifyingin its decree that a monthly tenancy or a charitable trust attaches tocertain shares, and in my opinion a Court should do so where it becomesaware of their existence in the course of a trial.
WIJ AY ATI LAKE, J.—Ranasinghe v. Marikar
WlJAYATILAKE, J.
I have had the advantage of perusing the judgments of My Lord thtChief Justice and my brother Sirinianc J. With great respect I agreewith the principle set out that in circumstances where there is proof of avalid renting out of the entirety of the premises to which the RentRestriction Act applies, a sale under the Partition Act does not wipe outrights of the tenant.
I agree that when premises to which the Rent Restriction Act appliesare let in their entirety by one eo-owncr and the other co-owners accjuicsccin tho letting and in the receipt of rent b}' the person letting the premisesS. 13 of the Rent Restriction Act protects the tenant against ejectmentat the instance of any of the co-owners ; and the purchaser of the premisesat a sale in a Partition Action is not entitled to eject such tenant exceptupon grounds permitted by S. 13 of the Act. However, I am unable toagree with the submission that there has been any acquiescence as suchin the letting of the premises in question by the other two co-owncrs.The learned District Judge observes that the plaintiff and the 1stdefendant who were the other eo-owners were aware that the premiseshad been rented out by tho 2nd defendant, but that they themselves hadnot accepted the 5th defendant as a tenant. Having made this observationthe learned District Judge categorically holds that tho 5th defendantis in occupation as a tenant of the 2nd defendant only ; and the Gthdefendant is not a tenant even of the 2nd defendant. Furthermore,even in the petition of appeal the appellants do not allege that there was“ acquiescence ”. It is also significant that the Action for a sale under thePartition Act was filed in I960 and tho letting out by the 2nd defendantwas in 19G2. This again shows that the feelings between these co-owncrsmust have been strained and the 2nd defendant was acting not as anagent of the other eo-owners or with their acquiescence but in defianceof tho other co-owners. In the circumstances, I do not think we canaccept the position that there has been an "acquiescence ” on the partof the plaintiff and the 1st defendant.
"Premises” in the Rent Restriction Act (lOof 1961) mean any buildingor part of a building together with the land appertaining thereto. It i.<quite clear that this definition would not include an undivided share oran undefined portion of a building, vide Premadasu v. AUapatJiu Padmanaba v. Jayasekera*. Thus the Rent Restriction Act will notafford any defence to a proceeding for possession of the premises inquestion, as the 2nd defendant could have validly dealt with only anundivided share.
With respect I agree that the Order of the District Judge allowing theApplication for a Writ of possession should be affirmed and iho appealdismissed with costs.
Appeal dismissed.* (10C0) 72 A*. L. R- 132.
119SS) 71 N- L. It. 62.