BHAWANJI LAKHAMSHI & ORS. versus HIMATLAL JAMNADAS DANI & ORS.

BHAW ANJI LAKHAMSID & ORS.

HIMATLAL JAMNADAS DANI & ORS.

December 14, 1971

[C.~ A. VAIDIALINGAM AND K. K. MATHEW, JJ.]

Transfer oj Property Act. s. 116 arrd Bombay Rems, Hotel and Lodging House Rates (Control) Aci, 1947-Contractual renGncy deter-mined by ¢lux of time-Tene1ncy thereafter protected by statute-Tenant continuing in possession and landlord accepting rent-Without proof that both parties had the necessary intention r.here is no 'holding over' by the tenant within meaning of s. 116 oj Transfer of Property Act.

The appe1lants were lessees of plot of land in Bombay. The lease w~ granted in 1948 and was determined by efflux of time on Septem-ber 30, 1958. However the appellants continued to occupy the land and to pay rent to the ~essors. On August 7, 1959 the lessors gave notice purporting to terminate the tenancy in the land by the end of September 1959 on the ground inter alia that the lessors required the plot for the purpose of putting up construction on it. Since the appellants did not vacate the premises the bssors filed suit on October 22, 1959 in the Small Causes Court, Bombay. The appellants contended in defence that the land was not required by the lessors bona fide for purposes of con-struction. They further .contended that they were tenants holding over within the meaning of s. 116 · of the Transfer of Property· Act, and that since the landlord had accepted rent after the tenancy had determined by effiux of time n~w lease had come into being and as the original lease was for manufacturing purpose the new lease was by implication for the same purpose and consequently six months' notice was required for its termination by the lessors. The Trial Court held that the plaintiff required the plot bona fide for constructing new building within the meaning of clause (i) of sub-section (1) of sc~tion 13 of the Bombay Rents, Hotel and Lodging House Rates (Comrol) Act, 1947. The Court also helc[1 ]that the tenancy tcrmin3.ted by efftux of time, but that the )cssecs continued in possession .hy virtue of the immunity from -eviction conferred by the aforesaid Bombay Act and so they were not holding over within the meaning of s. 116 of the Transr~·r of Property· Act. The Trial Court '3CCordingly d~crced the suit. In appeal the ~lppell:ltc Court confirmed the d-ecree. The High Court rejected the appellants' petition under Art. 227 of the Constitution. ln appe~l to this Co,.trt by special lc<~.vc.

HELD : The act of holding over after the expiration of the term dres not create. tenanc~ of any kind. Tf tenant remains in possession after the determination of the L:!ase the common law rule is thLlt he is tenant on sufferance. distinction should be drawn between tenant con-tinuing in possession after the determination of the term with the consent of the landlord and tenant doing so without1 his consent. The forme·r i~ tenant on suffe'rence in English law nnd the latter lr!n::mt holding over tenant-at-will. In view of the concluding words of s, 116 of the Transfer of Property Act lease holding over is in bett.cr position than tenant-at-will. The assent of the landlord to the continuance of pos-session after the determination of the tenancy will create new tenancy. What the section contemplates is that on one side there should be an offer of taking new lease evidenced by the lcs~ce dr sub-lessee rcm!linin!!

in possession of the property after his term was over and on the otb:r side there must be definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise. The basis. of the section is thus bilateral contract between the erstwhile landlord and the erstwhile tenant. If the tenant has the statutory right to remain in possession, and if he pays the rent, that will not normally be referable to an offer for his continuing in possession which can be converted into contract by acceptance thereof hy the landlord. 1894 B-D; 897 0-H)

In the case of normal tenancy landlord is entitled where he does. not accept th~ rent after the notice to quit, to file suit in ejectment and obtain dceree for possession, and so his acceptance of rent is an Un-equivocal act referable only to his desire to assent tl> the. tenant con-tinuing in possession. T.hat is not so where Rent Act e"-ists; and if the tenant says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant's continuing in pos-c session it is for the tenant to establish it. [898 B-C]

In the present case neither the landlord's desire that the appellants should continue in possession ndr the necessary animus on the part of the tenant had been proved. The parties had not been shown to be ad ~dem. !898 D]

Ac.k:ordingly it must be held that there was no holding over by the-D appellants and the appeal must be dismissed.

Ganga Dutt Murarku v. Kartjk Chandra Das, L19611 3 S.C.R. 813~ re-affirmed .

.Kai Khushroo Bezon;ee Capadia Y. Bai lcrbai Hirjibhoy Warden & Atlr., 1949-50] F.C.R. 262. Davies v. Bri~tow, [1920] 3 K.B. 428. Morriwon v. 1acobs, [1945] 1 K. B. 577 and Mangilal v. Sugan Chand, A.I.R. 1965 S.C. 101, applied.

Manujendra Dutt v. Purendu Prosad Roy Chowdhury & Ors., [1967] l S.C.R. 475, distinguished.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1546 of 1969.

V. Jo,.f. Tarkunde, S. K. Dholakia and S.- K. Bagga, for appel-lants Nos. 1 and 3.

S. K. Bagga. for appellant No. 2.

D. V. Pntel,. A. G. Parikh and B. R. Agarwalt~. for the respondents.

The Judgment __ of the Court was delivered by

Mathew, J. This is an appeal, by special leave, from the judg-ment of the High Court of Bombay dismissing petition filed under Article 227 of the Constitution praying for issue of an appro-private writ or order quashing the order dated 28-2-1968 passed by the Full Bench, Small Causes Court, Bombay, in appeal No. 95 of 1963 from the order dated 21-2-1963 passed by the Judge. Small Causes Court, Bombay, in R.A.E. Suit No. 9293 of 1959.

In this appeal we are CQncerned with plot of land admeasur· ing 2108 square yards in Survey No. 171, Hissa No. 7. at

Ghatkopar. Thjs plot belonged to one Jamnadas Chhotalal Dani. On 15-11-1948, Jamnadas executed two leases in favour of one Bhawanji Lakhamsi and Maoiibhai J~habhai, defendants 1 and 2. The subjecrrnatter.of the first lease was two plots, the one · referred ·to above and another in the same area measuring 805 square yards. The subject matter of the second lease was t4ird plot in ~the same ar.ea.

The leases were for :! period of ten years and in respect ~f the first plot~the rent payable was Rs. 7'i/- month. In both the leases there was an option clause which entitled the lessees to surrender th~ leased property by 30-9-1953. The' lessees sur:-rendered the two plots, other than the plot with which we are concerned, in pursuance of the option clause, on 15-1-19 51, with the I'~sult that the lease in respect of the first plot continued. Jamna'das died on 14-8-1951, but before his death he had made gift of the leased property in favour of the three respondentb. The lease in respect' of the p1ot in question here determined by efflux of time on 30-9-1958. But the lessees continued to remain in · possession paying- rent at the rate of Rs. 75/- per month.On 7·8-1959, the lessors gave notice purporting to terminate the tenancy by the end of September, 1959. They stated in the notice that the lessees had sub-let the premises and that the lessors reQuired the plot for the purpose of putting up constructions on it. Since the lessees did not vacate the premises, !f:he lessors filed ·the suit on 22-10-1959 in the Small Causes ·Court of Bombay.

The lessees contended that they qid not sub-let the premises and that the lessors did not bona-fide require the premises for the purpose of construction. They also contended thaf by the accept-ance of rent by the lessors after the termination of the tenancy by emux of time, fresh 1enancy was creattul, that the original lease was granted for erecting saw mill-a manufacturing purpos~ and so the lease created by fielding over was, by implication, also for manufacturing pUfpOSe, and therefore, lessees were entitled to six months' notice expiring with the end of the :Nar of the ~enancy, and that the tenancy created by holdin~ over was not validly determined by the one month's notice.

The trial court held that there was no clear evidence of the ~ub-lettin~ of the premises, but that the plairrtiffs required the plot bona fide for constructing new building within the meaning of cla\lse ( i) o.f sub-section ( 1) of Section 13 of the Bombay Rents, Hotel and Lodging }louse ~ates (Control) Act, 1947, hereinafter :c#Iled the Ac,t. '[be court also held that the tenancy termjnated ;tiY efflux of .!ime, .but .th.at tb..e J~sees continued in pos'iession :by .Vbti)~ ·of the ~-mm.unity ]rqm .~vi.c~i<?l) conferred by .the Ac.t and .s.o;·,~ey ~re .no.t )lold.i.n~ 9v~r WiOWl.t~~ ,nje~i.ng ·or ,s~~?n ~16 -' - ' -' . ~ - . -... ; 1 .

of the Transfer of Property Act, notwithstanding the fact that rent was accepted by the lessors from month to month after 30-9-1958, and that it ~as not necessary to .~ive the lessees six months' notice expjrin~ with the end of the year of -the tenancy, for terminating ihat tenancy. In appeal, the Full Bench of the Small Causes Court confirmed the dec1·ee of the trial court. It was to quash this decree that the petition under Article 227 was filed before the High Court.

Before the Hi~h Court, the main contention of the appellants was that, since fresh tenancy by holdin_g over was created by the acceptance of rent by the lessors after the determination of the lease by effiu~ of time, the appellants were entitled to six months' notice expiring with the end of the year of the tenancy, as the Jease originally grant·~d was for manufacturing purpose, and therefore, ·the lease created by the holding over was also for same purpose. The High Court was of the opinion that in view of the decision of this Court in Ganga Dutt Murarka v. KartJk Chandra Das(l) no case was made out for new tenancy by holding over under section 116 of the Transfer of Property Act as the appel~ 1ants had obtained the status of irremovability und~r the Act, and as there was no contractual tenancy. the tenants were not entitled Lo any notice. The Court also held that the lease which was granted for erecting saw mill was not lease for manufacturing pullJose. ~ Counsel for the appellants ar_gued that the appellants were holding over as the lessors were receiving the rent from the appel-lants after the termination of the tenancy by effiux of time on 30-9-1958 and. the fact that appellants gained immunity from evic-tion by virtue of the Act was quite immaterial in deciding the question wliether the appellants were holdin~ over under section 116 of the Transfer of Property Act. He submitted that as there was new contractual tenancy created by the holding over, the appe1lan1ts were entitled to six months' notice as the purpose of the oricinal lease was for manufacturing purpose and that purpose became inco1J)orated in the new lease by implic~tion of la~v. Counsel said that certain vital ooints were omitted to be con .. sidercd in the decision of this Court in Ganga Dutt Murarka v. Kartik Chandra Das, ( [1]) and therefore, the decision requires re[4 ]consideration. In Ganga Dutt Mararka v. Kartik Chandra Das, this Court held that where contractual tenancy, 1to which rent control legislation applied, had expired by efflux of time or bJ detennination by notice to quit and the tenant continued iri posses-sion of the premises, acceptance of rent from the tenant by the landlord after the expiration or determination of the contractua 1 -tenancy will not afford ground for holding that the landlord had assented to new contractual tenancy. It was further held ----·-.. ----·

that acceptance by the landlord from the tenant after the con-tractual ten~cy had expired, of amounts· equivaient to rent, or amounts which were fixed as standard rent, did not amount to acceptan~ Q.f rent from lessee within ~the meaning of section 116 of the Transf~r of Property ACit.

. The act _gf holdin_g over after the expiration of the term does not create tenancy of any kind. If tenant remains in passes-sion afiter the determination of the lease, the common law rule is that he is tenant on sufferance. distinction should be drawn between tenant continuing ill possession after the determination of the term with the consent of the landlord and tenant doi:ng so without his consent. The former is tenant at sufferance in English Law and the latter tenant holding over or tenant at will. In view of [1]the concluding words of section 116 of the Trans· fer of Property Act, lessee holding over is in better position than tenant at will. The assent of the landlord to the continuance of possession •after the det~rmination of the, tenancy will create new tenancv. What the section contemplates is that on one side there should be an offer of taking new lease evidenced by the lessee or sub-lessee remaining in possession of the property after his 'term was over and on the other side there must be definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise. In Kai Khushroo Bezonjee Capadia v. Bai lerbai Hirjibhoy Warden and another(l), the Federal Court had occasion to consider the question of the nature of the tenancy created under section 116 of the Transfer of })ro-perty 'Act and Mukherjea J. speaking for the majority said, that the tenancy which is created by the "holding over" of Ie~see or under-lessee is new tenancy in law even though many of the terms of the old lease might be continued in it, by implication; and that to bring new tenancv into exis~ence, there must be bilateral act. It was further held that the assent ot the landlord which is founded on acceptance of rent must be acceptance of rent as such and in clear recognition of the tenancv right asserted by the person who pavs it. Pataniali Sastri J., in his dissenting iudszment, has substantially agreed with the maiority as regards the nature of the tenancy created by section 116 of the Transfer of Property A~t, and that is evident from th·~ following-observa~ tions :-"Turning n.ow to the main point, it win be seen that the s'ec'tion postulates the Jessee remaining in possess1on after the determination of the lease which is conduct indicative, in ordinary circumstances of hi~ desire to con-tinue as tenant under the lessor and implies ~acit offer to take new tenancy from the expiration of the

old on the same terms so far as they are applicable to the new situation, and when the lessor assents . to the lessee , so continuin.e; in possession, he tacitly accepts the latter's offer and fresh tenancy results by the implied agree. ment of ifue parties. When, further, the lessee in that situ· ation tenders rent and the lessor accepts it, their con-duct raises more :r~adily and clearly the implication of an a~eement between 1he parties to create fresh rtenancy.,

Mere acceptance of amounts equivalent to rent by landlord from tenant in posSP..,ssion after lease had been determined, either by efflux of rtim~~ or by notice to qurt, and who enjoys statutory _immunity from eviction except on well defined ground~ as in the Act, cannot be re.e;arded as evidence of new agree-ment of tenancy. In Ganga Dutt Murarka v. Kartik Chandra. Das, ([1]) this Court observed as follows :-

"By the Rent Restriction-Statutes at the material time, ~'tatutory immunity was ~ranted to the appellant against eviction, and acceptance of the amounts from hlm which were equivalent to rent after the contractual tenancy had expired or which were fixed as standard rent did not amount to acceptano~ of rent from lessee within the meanin~ of s. 116, Transfer of Property Act. Failure to take action which was consequent upon statutory prohibition imposed upon the courts and not the re<;ult of any voluntary conduct on the part of the appellant did not a1so amount to "otherwise assenting to the lessee continuing in possession".· Of course, there is no prohibition against land!ord entering into fresh contract of ten~ncv with tenant who~ ri_ght of occupation is determin,~d and who remains in occupa-F tion by virtue of the statutory immunity. Apart from an express contract, conduct of [1]the parties may UTI· doubtedlv justify an inference lthat after detennination of the contractual tenancy, the landlord had entered into fresh contract with the tenant, but whether the con-duct justifies such an inference must always depend-G upon the facts of each case. Occupation of premises by tenant whose tenancy is determined is by virtue of the protection granted by the sta:tute and not because of any right arising from •the contract which is deter-mined. The statute protects his possession so long as the conditions which iustifv lessor in obtaining an order of eviction against him do not exist. Once the prohibition against the exercise of jurisdiction by the

(t) [1961) 3 S.C.R. 813.

Court is removed, the right to obtain possession by the lessor under 'the ordinary law springs into action and the exer~is~ of the lessor's right to evict the tenant will- not unless the statute provides otherwise, be conditioned/1

In Davies v. Bristow (I) the Court held that where tenant of house to w.hich the Increase of Rent, & c. (War Restrictions) Acts apply, holds ever after tlie expiry of notice to quit, and pays rent, the landlord js not to be taken by accepting it to assent to renewal of the tenjlllcy on the o1d tem1s, for he has no choice but to· accept the rent; he could not sue in trespass for mesne profits, for those Acts provide that the tenant, notwithstanding the notice to ...Quit, shaH not be regarded as trespasser so long as he pays llie rent and perfonns the other conditions of the lease. In Morrison v. Jacobs([2]), Scott L.J. said:

''The sole question before the court js whether after the expiration of the contractual tenancy 1he mere fact of the landlord receiving rent for the dwelling house from the tenant affords any evidence that the landlord had entered on new contractual tenancy to take the place of the tenancy which had expired. In my opinion, it does not. The true view is that the land-lord takes the rent, knowing that the tenant is granted statutory tenancy by the Rent Restrictions Acts and that his right to ~ain possession of his dwellin_g house depends entirely on his establishing tha't he brings himself within the conditions laid down by the Acts."

In the same case, MacKinnon J. srud:

"At common law, if at the expiration of tenancy landlord has acquired right to claim possession a~ainst his rtenant and instead of exercising that right he allows him to remain in the house and accepts rent from him as before, the parties by their conduct may, with reason. be held to have entered into new con-tract of demise. But the essential factor in those cir-cumstances is that the landlord vo1untarily abstains frcm turning the tenant out. When the tenant remains in poss.es~ion. not by reason of any such abstention by the ,)andlord, but because the Rent and Mortgage Inte. rest Restrictions Acts deprive the landlord of his former power of eviction, no such inference can properly be drawn.· That is the very obvious and .cogent basis of the decision ]n Davies v. Bristow".

lt was argued on behalf of the apoe11ants, on the basi5 of the {}ecision of this Cou'rt in Manujendra Dutt v. Purendu Prosad Roy ---- --3 K.B. 428. 577.

(1) {1920] 3 K.B. p. 428.

(2) [1945]1 K.B. p. 577.

Chowdhury & others ( [1]) !that if in the case of tenancy to which Rent Restriction Acts applied, the provision of section 106 of the Transfer of :Property Act was applicable, there is nothing in-congruous in making section 116 also applicable in the case of statutory ~nancy. In the said decision, the appellant before this Court was tenant of piece of land. The lease was for period of ten years but the lessee was given the option of renewal on his fulfilling cenain conditions. The lease deed also provided that if !the lessor required the Lessee 'to vacate the premises, whether at the time of the expiry of the lease or thereafter (in case the lessee exercised hi~ option to renew the lease) six months' notice to the lessee was necessary. The lessee exercised his option to renew the lease and offered •to fulfil the condition therefor. In the mean-c while the Calcutta Thika Tenancy Act, 1949, was passed. One of the questions which arose for consideration was whether the Thika ten~ was entitled to the notice provided under the lease. This Court held that the Act did not give right to the landlord to evict contractual tenant without first determinin~ the contrac-tual tenancy. After referrin.e; to Ute decision of this Court in .MangUal v. Sugan Chande), it was held that section 3 ol the Act in question was similar to section 4 of the Madhya Pradesh Accommodation Control Act (XXIII of 1965). It was further held that on the construction placed upon 1the section, namely, that •the provisions of the ·section are in addition to those of tile Transfer of Property Act, it follows •that, before tenant can be cvkted, landlord must· comply with both the provisions of sec-tion 106 of the Transfer of Property Act and those of section 3. In the case before us, admittedly, d1e tenancy has been deter-mined by efflux of time nnd what is contended for is that by the acceptance of rent, new tenancy has been created by virtue of the provi~ions of section 116 of the Transfer of Property Act. In other word~, the Question here is whether the conditions for the applicdion of section 116 of the Transfer of Property Act are fulfilled.Learned counsel for the appellants argued that' whenever rent is accepted by landlord from tenan~ whose tenancy has been determined, but who continues in possession, tenancy by holding over is created. The argument was that the assent of the lesso.r alone and not that of the lessee was material for the purposes of section 116. We are not inclined to accept this contention. We have alre.adv shown that the basis of the section is bilatera 1 contract betweon the erstwhile landlord and the erstwhile tenant. If the tenant has the statutory right to remain in possession and if he pavs the rent, that will not normally be referable to an' offer for his continuing in possession which can be convertJa..d into co~tr~ct by acceptance thereof by the landlord. We do not say {1) (1967] 1 S.C.R.' 475. (2) A.J.R. 1965 S.C. 101.

·1hat the bPeiation of section i 16 js . always .· excluded ··whatever

.might be· th~ circumstanc~s under which th~ tenant pays the rent -.and the. landlord acceptS it. . We have earlier re~yrred. to the observations of this Coun in· Ganga Dutt Murarka v. Kart1k Chandra Das( [1]) re~ding some of the circumstances in which fresh con~ tract of tenancy may be inferred. We have already held .the who!e basis of ·section 116 of the Transfer· of Property Act lS that, tn case of norn:lal tenancy, landlord is entitled, where he does not accept ~ rep.t a(ter the notic-e to quit, to file suit in ejectment and obtain decree for· J}()Sscssion, and so his acceptance of rent is an unequivocal act referable only to his desire to assent to the tenant continuing in possession. That is not so where Rent Act exists; and if the tenanf says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant's continuin~ in possession, it is for the tenant to estab· lish it. No attempt has been made to establish it in this case and there is no evidence, apart from the acceptance of the rent by thl! landlord, to indicate even remotely that he desired the appellants to continue in possession after ~he termination of the tenancy. Besides, as we have already indicated. the animus of the tenant in tendering the rent is also material. If he tenders the rent al\ the rent payable under the statutory tenancy, the landlord cannot~ by accepting it as rent, create tenancy by holding over. · In such case the parties would not be id idem and there will be no consen-sus.· The dec;hion in GanRa Dutt Murarka v. Kflrtik Chandra Das( [1]). which followed the principles laid down by the Federal Court in Kai Khushrllt> Bezonjee Capadia v. Bai Jerbai Hirjibhuy Warden and another(~) is correct and does not · require recon-sideration.

We. therefore, come to 111e conclusion that there was no hold· in~ over by the appellants and if that be so. the question whether the tcnancv created by holding over was for manufacturing pur· pose and therefore the landlord wns bound to give six months~ notice for the determination of the tenancy by holding over does not arise for consideration.

AppeJJant!i• cou~el prayed t~at othe appellants may be given some trme f~r vacatme the premtses. This Court, when passing tbe order on July 31. 1969, on the appli~tion for stay by the appellants had observed :

. "Pcti!ioner undertakes to vacate the premises with-In such time a! may be fb.ed by this Court."

(l) (I 'JISl)•) S.C.R.IItl

~ I I j I I ! i !

.A We accordingly arant three months' time from today to the appel~ lants to va~at~ the premises, and they have to comply with the undertakin~ given to this Court and s;eferred to above.

We dismiss the appeal with costs.

h. .. , (' ,,

Appeal dismined.