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Issues: (i) whether the lease arrangement continued to subsist and bind the transferee bank after amalgamation and surrender of the building key; (ii) whether, in the circumstances, a suit for arrears of rent could be maintained or whether the proper remedy was for damages for breach of contract.
Issue (i): whether the lease arrangement continued to subsist and bind the transferee bank after amalgamation and surrender of the building key.
Analysis: The tenancy was created under a written lease for a fixed period of 20 years. Although the amalgamation of the transferor bank with the transferee bank attracted statutory transfer of rights and liabilities, the premises had been taken specifically for the residence of the branch manager of the former bank. After amalgamation, that purpose could no longer be performed in the same form. The record also showed surrender of the key by the defendant, establishing that the premises was no longer being used by it.
Conclusion: The lease could not be treated as continuing for the purpose asserted by the plaintiff, and the defendant was not liable to be compelled to remain in occupation.
Issue (ii): whether, in the circumstances, a suit for arrears of rent could be maintained or whether the proper remedy was for damages for breach of contract.
Analysis: Once the contractual purpose had become incapable of performance and the defendant had surrendered possession, the plaintiff could not insist upon recovery of rent as if the tenancy continued. The appropriate consequence was breach of contract, for which the plaintiff's remedy lay in damages. The courts below failed to address this legal effect and treated the claim as one for arrears despite the altered contractual position.
Conclusion: A decree for arrears of rent was unsustainable, and the plaintiff's remedy, if any, was limited to damages for breach of contract.
Final Conclusion: The decree for arrears of rent was set aside because the contract had become incapable of performance after amalgamation and surrender, leaving only a claim for damages in the proper forum.
Ratio Decidendi: Where a lease is created for a specific purpose and that purpose becomes incapable of performance after amalgamation, and the lessee has surrendered possession, the lessor cannot recover rent as though the tenancy continues; the remedy lies in damages for breach of contract.
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