Shanmugasunderam v. Mohamed
Shanmugasunderam v. Mohamed and another
COURT OF APPEAL.
WIMALARATNE, P. AND TAMBIAH, J.
c. a. (s. c.) 64/76—m. c. Colombo 4377/ed.
OCTOBER 19, 1979.
Landlord and tenant—Partnership—Whether admission of new partner
makes him also tenant—Payment of rents by third party—Effect-
(1) Where persons carry on business in partnership in premises let tothem, a third party who becomes a partner subsequent to the commence-ment of the tenancy does not thereby become a tenant of the premisesand, unless the landlord has agreed to accept such new partner as histenant', this is so even if the landlord is aware of the position.
Sri Lanka Law Reports (1978-79) 2 S. L. R.
(2) Payment of rents by a third party on behalf of a tenant thoughpermissible in law, did not create privity of contract between him andthe landlord unless the landlord in addition recognized such third partyas a tenant in place of the original tenant.
Per Tambmh, J.
“a tenant in occupation of the leased premises which has
changed hands becomes the tenant of the new purchaser by operation oflaw if he chooses to continue with the lease. "
Cases referred to
Perera v. Liyanagama, (1955) 58 N.L.R. 454.
David Silva v. Madanayake, (1967) 69 N.L.R. 396.
Quyn v. Ibrahim, (1968) 72 N.L.R. 103.
APPEAL from the Magistrate’s Court, Colombo.
C. de S. Wijeratne, for the petitioner-appellant.
N. R. M. Daluwatte, for the respcndents-respondents.
Cur. adv. vult.
November 19, 1979.
TAMBIAH, J.The appellant instituted an action in the Magistrate’s Court ofColombo, by way of summary procedure, against the respondentsand sought a declaration that he is the lawful tenant of premisesNo. 25, Gabos Lane, Colombo 11, under the 1st respondent. Healso asked for restoration to possession of the premises anddamages-
The appellant stated in his petition that one Jacob Nadar andY. Ponniah were the tenants of the premises and that they carriedon business in partnership under the name of “ Ponniah & Jacoband Co. ” in the said premises. He became a partner in the saidbusiness in 1955 and in 1961 he purchased the shares of Ponniahin the firm and continued with Jacob Nadar as a partner in thefirm. Jacob Nadar left for India and he continued in the business,paying rent to the 1st respondent. The 1st respondent collectedrents from him up to February 1973. Some time later, he learntthat the 2nd respondent had become the tenant of the premisesunder the 1st respondent. As the 1st respondent had refusedto accept rent from him, since March 1973, he has been makingthe payments to the authorised officer. He alleged that the 1stand 2nd respondents have and are acting fraudulently and incollusion to deprive him of his tenancy rights and to establish the2nd respondent as tenant of the said premises.
The appellant did not give evidence. However, whilst therespondents were giving evidence, certain documents wereproduced and marked in evidence—the certificate of registrationof the business dated 10.8.55 (PI) showing the appellant aspartner along with Jacob Nadar and Ponniah ; Deed of Transfer
CAShanrmigasunderam v. Mohamed (Tambiah, J.)27 J
No. 612 of 21.12.61 (P2) by which Ponniah transferred to theappellant 1/3 share in the business ; Certificate of Registrationof the businessi (P3) dated 30.6.62 showing the present partnersof the firm as Jacob Nadar and the appellant; rent receipts issuedby the 1st respondent in the names of Jacob Nadar and Ponniah(P4 of 10.3.73, P6 of 10.5-65, P7 of 10.7.65, P8 of 10.11.72) ; letterdated 10.3.76 (P5) from the Electricity Board to the appellantcertifying that the appellant has been registered as a consumerfor the supply of electricity to the said premises from 19.12.63tc 2-5.73.
The 1st and 2nd respondents gave evidence at the trial. Theposition taken by the 2nd respondent in his evidence is that in1957, he occupied a portion of the premises with the permissionof Jacob Nadar ; at that time, the latter was doing business withthe appellant in the balance portion of the premises. Jacob Nadarwhen he left for India, rented out the premises to the appellantat Rs. 100 per month. In 1965, one Arumugam took the premiseson rent from the appellant and when Arumugam left thepremises, he took over the entirety of the premises. On 22.3.73,the appellant attempted to take over the premises by force overwhich he complained to the Police (Dl) ; he discussed the ques-tion of tenancy with the 1st respondent who accepted him as atenant, in proof of which he produced rent receipts for April andMay 1973 (D2 and D3). On 19.5.73 the appellant again attemptedto forcibly take possession of the premises; he complained to thePolice (D4) and since then, the Police have locked up thepremises. He also tendered in evidence letter dated 17.7.69 (D6)from the Telecommunication Department acknowledging hisapplication for a telephone to be installed in the premises andtelephone bills for May and December 1972 (D7 and D8).
The 1st respondent in his evidence stated that up to 1973, thecontract of tenancy was between him and Jacob Nadar andPonniah and that he issued the rent receipts P6 to P3 in thenames of Jacob Nadar and Ponniah. He did not know at any timethat there was a partnership business carried on in the saidpremises. In April 1973 he gave the premises on rent to the 2ndrespondent and rent receipts D2 and D3 were issued by him. Hehas seen the appellant at the premises. He had a rent collectorto collect rents and at times he personally went to the premisesto collect rent; he was uncertain as to whether the appellant paidrents to him on the occasions ho went to collect rents.
The learned Magistrate came to the finding that the appellantwas not tenant of the 1st respondent at any time and thereforethe appellant was not entitled to a declaration that he is thetenant of the premises and to an order for restoration to possesssion of the premises.
Sri Lanka Law Reports (1978-79) 2 S.L.R.
The two questions that arise for our determination are: (1)Where premises are let to 2 persons who carry on business inpartnership in the premises, doss a 3rd party by virtue of his- becoming a partner in the business subsequent to the commence-ment of the tenancy, become a tenant of the premises under thelandlord ? (2) Do payments of. rents by a 3rd party on behalf ofthe tenant, make such 3rd party a tenant of the premises ?
The position that emerges from the pleadings filed by theappellant is, that the tenancy of the premises was in the namesof Jacob Nadar and Ponniah who carried on a partnershipbusiness in the premises. He became a partner in the said businessin 1955, and that by virtue of the fact that he is a partner inthe business, he became a tenant of the premises. It is not hisposition that he had a contractual tenancy with the landlord, the1st respondent.
In Perera v. Liyanagama (1) after the death of the tenant whocarried on a bakery business on the premises, the defendantsclaiming to be partners of the business carried on by the deceasedbrother, remained in occupation of the premises. Their offer toattorn was rejected by the plaintiff landlord. The latter broughtan action to eject the defendants on the ground that they weretrespassers. De Silva, J. in the course of his judgment stated(p. 455) : —
“ The tenancy arises from a contractual relationship exist-ing between the landlord and tenant. Even if the landlord isaware before he let his premises to the tenant that a partner-ship business was to be carried on in the premises by theperson taking on the premises on rent and others, no contractof tenancy arises between the landlord and the partners thatthe latter were to be the tenants. The 1st defendant statedthat even during the lifetime of Charles Liyanagama he (1stdefendant) paid the rent to the plaintiff and asked forreceipts in the name of Charles Liyanagama. This is clearproof that the plaintiff was unwilling to accept any personsother than Charles Liyanagama as his tenant. The learnedCommissioner was wrong in holding that the partnershipwas a tenant because a partnership is not a “ legal persona. ”Although the partners in their individal capacity can enterinto a contract yet a partnership as such cannot do so. There-fore, on the death of Charles Liyanagama the contract oftenancy ceased to exist and the plaintiff is entitled to treatthe other partners who remained in occupation of thepremises as trespassers-.”
Shanmugasunderam v. Mohamed (Tambiah, J.)
It seems to me that this decision is authority for the viewthat since a tenancy can only arise from a contractual agreementbetween the landlord and the tenant even if the landlord isaware that the tenant is carrying on a partnership businesson the premises with others, the latter do not becometenants of the premises unless the landlord has agreed to acceptthe other partners as tenants. It is the 1st respondent’s positionthat the contract of tenancy was between Jacob Nadar andPonniah on the one hand and himself on the other; he wasunaware that a partnership business was being carried on in thepremises. Even on the assumption that it was the appellant whopaid rents for which rent receipts P6 to P8 were given, thereceipts were issued in the names of Jacob Nadar and Ponniah,a clear circumstance showing that the 1st respondent was unwill-ing to accept the appella.it as a tenant. I might however add thatapart from the case of a contractual tenancy, the Rent Act No. 7of 1972 in s. 36 sets out instances of persons being deemed to betenants of the premises, in respect of both residential and businesspremises. Of particular relevance to this case is s. 36 (2) (c) (ii)which enacts that with regard to business premises a partner inthe business carried on by the deceased tenant is entitled tocontinue the tenancy upon the death of the tenant. But it is noton this basis that the appellant is seeking a declaration that heis a tenant of the premises. Moreover, the evidence in the caseis that Jacob Nadar has left for India. It would also seem thatin the light of the decision in David Silva v. Mudannayake (2)a tenant in occupation of the leased premises, which has changedhands, becomes the tenant of the new purchaser by operation oflaw, if he chooses to continue with the lease-
In Quyn v. Ibrahim (3) the tenant of the premises enteredinto a partnership with the defendant and certain others tocarry on business in the premises. He permitted the partner tooccupy or use the premises during the continuance of the partner-ship. The tenant thereafter terminated the partnership and re-quested the partner to quit the premises. Sirimane, J. said(p. 131), “ In my view, the defendant was in occupation of thepremises only as the licensee of the plaintiff so long as thepartnership subsisted. On its termination he was no longerentitled to remain there after the plaintiff had given him duenotice to quit. ” It seems to me, at the highest, the appellant wasin occupation of the premises only as a licensee of Jacob Nadar.However, in the instant case, the appellant is seeking a declara-tion that he is the lawful tenant of the premises, as a monthlytenant, under the 1st respondent, a relief which he is not entitledto be granted.
Sri Lanka Law Reports (1978-79) 2 S. L. R.
It is the appellant’s position that after Jacob Nadar left forIndia, he continued with the business in the premises, payingrent to the 1st respondent. The rent receipts P6 to P8 are in thenames of Jacob Nadar and Ponniah. There is no impediment inlaw for a 3rd party to make payment of rent on behalf of thetenant. “ In Roman Dutch Law performance may be renderedeven by a 3rd party, not an agent of the debtor, so as to dis-charge the debtor from liability, except in cases whereperformance is so personal in its nature that it can
properly be rendered only by the debtorIndeed
under Roman Dutch Law performance may be renderedby such a 3rd party, even without the knowledge oragainst the will of the debtor; and the creditor is not asa rule entitled to refuse performance from such a 3rd party,where it makes no difference to him by whom performance isrendered. ” (Weeramantry’s Law of Contracts, Vol. 2, s. 691, at p668). But it seems to me that privity of contract is not created bythe landlord, accepting rent from a 3rd party. This would beso only if, in addition to accepting the rent, the landlord recog-nises the 3rd party as tenant in place of the original tenant. Therent receipts P6 to P8 clearly show that the 1st respondentrefused to recognise the appellant as his tenant.
For reasons stated, I hold that the appellant is not entitled tothe reliefs he has sought. The learned Magistrate has correctlydismissed the appellant’s action. The appeal is dismissed withcosts.
WIMALARATNE, P.—I agree.Appeal dismissed.
J. P. de Almeida,Attorney-at-Law.