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Mr. Arvind and Mr. Bhaskar jointly own a shop whose lease from a landowner is about to expire. Without telling Arvind, Bhaskar obtains a renewal of the lease in his own name alone and pays the premium himself. What is the legal position under the rule on obligations in the nature of trusts?

Bhaskar holds the renewed lease for the benefit of both co-owners. A co-owner who renews joint leasehold property in his own name cannot take it exclusively. Arvind benefits but must contribute his proportionate share of the premium Bhaskar paid.

  1. ABhaskar alone owns the renewed lease because he paid the premium
  2. BThe renewed lease is void because Arvind did not consent
  3. CBhaskar holds the renewed lease for the benefit of both co-owners, subject to Arvind bearing his share of the premiumCorrect
  4. DArvind may claim only a refund of his original share of the old lease

Explanation

A co-owner who obtains a renewal of a lease of the joint property in his own name holds it for the benefit of all persons interested in the original lease. Arvind's share is subject to his contributing to the cost. Option A is wrong because paying the premium does not displace the obligation; it only supports a claim for contribution.

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