Lease-created charge can bind transferees, while contractual appropriation of rent is not a set-off.

A lease may create a charge without technical words where it clearly appropriates a definite rent share or fund as security for repayment of a debt. On that footing, the burden is treated as part of the lease and binds transferees of the lessor's interest, including purchasers with constructive notice from a registered instrument. The decision also distinguishes contractual appropriation or payment from set-off: a tenant who merely relies on the lease to show that part of the demand has already been satisfied is not raising an independent cross-claim. On that reasoning, the set-off objection under the Agra Tenancy Act was not attracted.

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Issues: (i) Whether the lease created a charge on the leased property so as to bind the transferees of the lessor's interest and entitle the lessee to deduct the stipulated amount from rent. (ii) Whether the defendant's reliance on the lease terms amounted to a plea of set-off attracting Section 193, Clause C, of the Agra Tenancy Act.

Issue (i): Whether the lease created a charge on the leased property so as to bind the transferees of the lessor's interest and entitle the lessee to deduct the stipulated amount from rent.

Analysis: A charge may arise without technical words if the instrument clearly indicates that a definite fund or property is to stand as security for a specified claim. The lease expressly directed that part of the rent payable to the lessor's share should be appropriated by the lessee towards repayment of the debt due to him. This was a material term of the lease and not a mere personal covenant. A transferee under an auction purchase cannot acquire a higher interest than the transferor possessed, and where the burden is created by a registered instrument, constructive notice is imputed to the purchaser.

Conclusion: The lease created a charge binding on the transferees, and the plaintiffs were not entitled to recover the full rent free from the stipulated deduction.

Issue (ii): Whether the defendant's reliance on the lease terms amounted to a plea of set-off attracting Section 193, Clause C, of the Agra Tenancy Act.

Analysis: The defence was not one of set-off. The defendant did not seek to set up an independent cross-claim, but only asserted that part of the demand had already been satisfied under the lease arrangement. A plea that a claim has been discharged by payment or appropriation under the contract is distinct from set-off.

Conclusion: The objection based on set-off failed and Section 193, Clause C, of the Agra Tenancy Act was not attracted.

Final Conclusion: The appeal failed on both issues, and the decree in favour of the respondent was maintained with costs.

Ratio Decidendi: Where an instrument clearly appropriates a specific fund or rent towards repayment of a debt, it creates a charge binding on successors in interest and purchasers with constructive notice; a defence asserting contractual satisfaction of the claim is not a set-off.

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