Apportionment

Section 37: apportionment by estate

Section 37 deals with the reverse situation: the property is divided, and the obligation attached to it has to be shared.

Where, in consequence of a transfer, property is divided and held in several shares, and the benefit of an obligation relating to the property as a whole passes from one to several owners, the corresponding duty must, in the absence of a contract to the contrary among the owners, be performed in favour of each owner in proportion to the value of his share, provided that:

• the duty can be severed; and
• the severance does not substantially increase the burden of the obligation.

If the duty cannot be severed, or severance would substantially increase the burden, the duty is to be performed for the benefit of such one of the several owners as they jointly designate for that purpose.

Two further rules complete the section.

Notice. A proviso protects the person who owes the duty: nobody on whom the burden lies is answerable for failing to discharge it in the manner the section provides unless and until he has had reasonable notice of the severance. That is fair: a tenant cannot be blamed for paying the whole rent to the original landlord when nobody told him the property had been split.

Agricultural leases. Nothing in the section applies to leases for agricultural purposes unless and until the State Government so directs by notification in the Official Gazette.

The Act's two illustrations, which are the clearest statement of the divisible and indivisible cases:

(a) A sells to B, C and D a house in a village leased to E at an annual rent of Rs. 30 and delivery of one fat sheep, B having provided half the purchase money and C and D one quarter each. E, having notice of this, must pay Rs. 15 to B, Rs. 7.50 to C and Rs. 7.50 to D, and must deliver the sheep according to the joint direction of B, C and D.

Money divides; a sheep does not. So the rent is apportioned in proportion to the shares, and the indivisible part of the obligation is performed for whichever owner the three of them jointly designate.

(b) In the same case, each house in the village is bound to provide ten days' labour each year on a dyke to prevent inundation, and E had agreed as a term of his lease to perform this work for A. B, C and D severally require E to perform the ten days' work due on account of the house of each. E is not bound to do more than ten days' work in all, according to such directions as B, C and D may join in giving.

This is the "substantially increase the burden" limb in action. Splitting the duty three ways would turn ten days into thirty, which is not apportionment but multiplication, and the section refuses it.

A worked example

Latha owns a shop at Aurangabad let to a tenant, Mahesh, at Rs. 60,000 a year payable on 31 March. On 30 September she sells the shop to three buyers, Nitin, Omkar and Pooja, who provide half, a quarter and a quarter of the price respectively. The lease also obliges Mahesh to whitewash the building once a year.

Apportionment by time, section 36. The rent for the year is earned from day to day. Latha owned the shop for the first six months and the buyers for the last six. As between them, half the annual rent belongs to Latha and half to the buyers. Mahesh is unaffected: he pays the whole Rs. 60,000 on 31 March, the day appointed, and the parties settle between themselves.

Apportionment by estate, section 37. The buyers' half of the rent is Rs. 30,000, and the duty to pay it is severable without increasing the burden. So Mahesh, once he has reasonable notice of the severance, pays Rs. 15,000 to Nitin, Rs. 7,500 to Omkar and Rs. 7,500 to Pooja, in proportion to the value of their shares.

The whitewashing cannot be severed sensibly, and requiring it three times over would substantially increase the burden. It is therefore performed for the benefit of whichever of the three they jointly designate, and Mahesh whitewashes once.

If nobody had told Mahesh about the sale, and he had paid the whole rent to Latha, the proviso protects him. He is not answerable for failing to pay in the manner the section provides until he has had reasonable notice of the severance.

What it does NOT mean

Section 36 does not change what the tenant owes or when. The sums remain payable on the days appointed. Apportionment operates between transferor and transferee.

It is not confined to rent. Annuities, pensions, dividends and other periodical income are covered.

It is not mandatory. A contract or local usage to the contrary displaces it.

Section 37 does not multiply the obligation. Where severance would substantially increase the burden, the duty is performed once, for a jointly designated owner.

Section 37 does not bind a person who has not been told. Reasonable notice of the severance is a precondition of liability under the section.

Section 37 does not apply to agricultural leases unless the State Government notifies.

Apportionment under section 36 is not the same as the rule in section 8. Section 8 decides who gets rent that accrued before and after the transfer as whole periods; section 36 splits the single instalment that straddles the transfer date, day by day.

Distinctions

Quick revision

• Section 36: rents, annuities, pensions, dividends and other periodical income accrue from day to day and are apportionable as between transferor and transferee, but remain payable on the appointed days.
• It is subject to a contract or local usage to the contrary.
• Section 37: on a division of property into shares, the corresponding duty is performed for each owner in proportion to the value of his share.
• Two conditions: the duty must be severable, and severance must not substantially increase the burden.
• If it cannot be severed, it is performed for one owner jointly designated by them.
• The person bearing the burden is not answerable until he has had reasonable notice of the severance.
• Section 37 does not apply to agricultural leases unless the State Government notifies.
• Illustration: Rs. 30 rent split Rs. 15, Rs. 7.50 and Rs. 7.50; the fat sheep delivered on joint direction; ten days' dyke labour stays ten days in all.

Test yourself

1. A house let at Rs. 12,000 a year, payable yearly on 31 December, is sold on 1 July. How is the rent divided? As between seller and buyer the rent accrues from day to day under section 36, so each is entitled to roughly half, the seller for January to June and the buyer for July to December. The tenant still pays the whole Rs. 12,000 on 31 December.

2. Does section 36 require the tenant to pay part of the rent early? No. The section provides that the payments are apportionable but remain payable on the days appointed for their payment.

3. Which payments does section 36 cover? Rents, annuities, pensions, dividends and other periodical payments in the nature of income.

4. When is a duty not apportioned under section 37? Where the duty cannot be severed, or where severance would substantially increase the burden of the obligation. It is then performed for the benefit of one of the owners whom they jointly designate.

5. A tenant owed ten days' labour a year on a dyke. The house is sold to three buyers, who each demand ten days. What must he do? Ten days in all, according to directions the three of them join in giving. Illustration (b) to section 37: severing the duty three ways would substantially increase the burden.

6. A tenant, not knowing the property has been divided, pays the whole rent to the original landlord. Is he liable to the new co-owners? Not under section 37 until he has had reasonable notice of the severance, which the proviso makes a precondition of his answerability.