BADRI LAL versus MUNICIPAL CORPORATION OF INDORE

BADRI LAL

MUNICIPAL CORPORATION OF INDORE December 6, 1972

[A. ALAGIRISWAMl, I. D. DUA AND C. A. VAID!ALlNGAM, JJ.]

Madh,va Pradesh Municipal Corporation Act, s. SO-Terms of leas• accepted by Commissioner-Resolution of Corporation not to grant lease -Effect of.

Tenant by sufferance-It should be given n·otice before eviction.

The appellant was lessee of plot of land belonging to the respon· dent-corp~ration. When the respondent issued notice t0 the appe1lant dir· ecting him to vacate the land on the date of expiry of the lease, the appel· !ant applied for grant to him of lease for 99 years or at least for 10 years. The respondent passed resolution that the land would be given to the appellant if he deposited certain amount as upset price and paid higher rent, and that otherwise possession of the -land should be taken back. The appellant did ll<lt comply with the terms but made counter offer., Having failed in his appeal to the Minister, 7 years after the resolu· tion passed by the respondent, he offered to pay part of the amount fixed by the resolution and the balance in instalments. This was accep-ted by the Municipal Commissioner. The appellant did not pay any amount and the respondent filed suit for eviction. During the pendency of the suit the appellant offered to pay the full upset price, the rent that may be found due, as well as costs of the suit and requested that perma• nent lease for 9!> years may be granted to him, He also sent cheque for part of tho amount (tho rent having been calculated at the old rate) but after receiving reminders from the Commissioner paid the balance few days later. The respondent however passed another resolution refusing to grant the lease to the appellant.

The trial court and the first appellate court dismissed the suit holding that the appellant was tenant holding over. The High Court in second appeal decreed the suit of the respondent-Corporation.

Dismissing the appeal to this Court,

HELD: ( 1) No contract was concluded between the parties as res-ult of the payments by the appellant. [18 G]

The Commissioner cannot enter into contract by himself and can do so only if it is sanctioned by the Corporation under s. 80 of the Madhya Pradesh Municipal Corporation Act. Nor was it open to the Commis~ sioner to make any offer to the appellant or to accept any offer from the sppellant in respect of the land except with the sanction of the muni· cipal council. Even the offer made by the respondent·Corpo•ation by its resolution came to an end with the filing of the suit by the Corporation and the Corporation cannot be deemed to have kept it open. The appel· !ant's offer, after the suit was filed, was new offer and it was rejected by the only authority competent to accept it namely, the Corpora-tion. [18 G-H; 19 D-G]

(2) The deposit of the rent by the appellant and acceptance of it by the Commisssioner cannot be deemed to make the sppellant tenant hold· ing over. (20 BJ

The payment was at the old rate by the appellant and its acceptance by the Commissioner was not an acceptance of rent as .such and in clear recognition of the tenancy right of the appellant. It cannot amount to the Corporation consenting to the appellant continuing as tenant by paying the old rates of rent. T_here is thus no question of the appellant being tenap.t holding over. He had become only tenant by suffer-ance and hence there was no need for any notice before he could be evicted. f20 A-CJ

Kai Khusl1roo Bezonjee Cavadia v. Bai .Terhai Hirjibhoy Warden & Anr. [1949-50] F.C.R. 262 at 270 and Bhawanji Lakhmshi v. Himat/a/ Jamtl£o'das Dani [1972] I S.C.C. 388 followed.

CIVIL APPELLATE JURISDICTION : Civil Appeal No, 1243 of 19~.

Appeal by special leave from the judgment and decree dated May 7, 1966 of the Madhya Pradesh High Court, Indore Bench in Second Appeal No. 475 of 1962.

S. V. Gupte and Rameshwar Nath for the appellant.

V. M. Tarkunde, P. C. Bhartari, J. B. Dadacharji and Ravinder Narain .. for the respondent.

The Judgment of the Court was delivered by

Alagiriswami, J. This is an appeal by special leave against the judgment of the High Couri of Madhya Pradesh in Second Appeal No. 475 of 1962 on the files of that Court.

The appellant became lessee of plot of land measuring 10,375 sq. feet (72! Chasmas) situate at 28, Parsimohalla Street No. 5, Sanyogtaganj, Indore belonging to the Municipal Corpora-tion for period of 10 years in 1919. This lease was renewed from time to time and the last of such renewals was in the year 1939 for period of 10 years. The lease expired on 30th Sep-tember, 1949. On 24-5-1949 the respondent, Municipal Corpora-tion of Indore, issued notice to the appellant directing him to vacate the land on 30-9'-1949. Thereupon he applied to the Munici-pal Commissioner either to grant him lease for 99 years and if it was not possible to renew it at least fdr period of I 0 years. On 19-12-1949 the Municipal Council passed resolution to the fol-lowing effect :

"Opinion of the Lease Committee is accepted. The land, situated in Parsimohalla, Sanyogitaganj, be given to applicant Badrilal Bholaram only in case he is ready .to deposit Rs. 16,212 of the lease refit and upset price as per Schedule rate in accordance with letter No. 3239 dated 26-10-49 sent to him by the Municipal Commissioner otherwise the said land be taken back into possession."

On 31-12-1949 the Municipal Commissioner wrote Ex. P.20 to the aypellant informing him that the land would be given to him on long lease on condition that he paid an upset price of Rs. 16,212 and an annual lease rent at Rs. 9 per Chasma. He was further informed that if he accepted the said condition. he should deposit the upset price within 15 days an4 submit an application giving his consent, ana that otherwise steps would be taken to take back pos-session of the land. The appellant wrote (Ex. P.18 on 9-1-1950) that the upset price and rent claimed by the Municipal Council was too much and requested that the rent and upset price be modi-fied and during the pendency of his petition proceedings before the Commissioner be stayed. He then seeffi to have filed petition for revision before the Minister incharge of municipalities and this was dismissed on 7-9-1952. Almost 4 years later on 14-5-1956 he.wrote Ex. D. 2 to the Commissioner requesting that an amount of Rs. 8212 may be accepted and he may be permitted to pay the balance in annual instalments of Rs. 1000 each. On 20-6-1956 the appellant was informed by the Commissioner .by letter Ex. D.3 that he should deposit the sum of Rs. 8212 within two days and thereafter the balance would be realised in instalments. The appel-lant not having paid the amount the Municipal Commissioner · again wrote on 30-7-1956 giving him two days time t9 deposit the amount of Rs. 8212. On 20-2-1957 the Commissioner again wrote to the appellant directing him to· deposit the whole of Rs. 16,212 within two days telling him that on his failnre to do so steps would be taken for evicting him from the land

The suit out of which this appeal arises was filed on 16th Sep-tember, 1957. The appellant filed his written statement on 20th January, 1958 and the issues were framed on 24th March, 1958. At this stage the defendant wrote Ex. D.4 on 17-3-1959 in the fol-luwing terms :

"I lx'g to say that it has been approved by you to give me the plot of land at H.N. 85 Parsimohalla on permanent lease of 99 years after having received the upset price from ine. I agree to pay whatever lease rent found due against nie upto 31-3-1951 besides reason-able costs of the suit and I have depOSited tJday vide cheque number E/2/104221 dated 17-3-59 fo the Indore Bank, Sanyogitaganj and I undertake to pay in cash any amount found due against me at the time of execution of the lease deed."

The Commissioner wrote Ex. D.5 to the defendant on 23·4-1959 asking him to deposit the upset price of Rs. 16,212, rent accord-ing to the new rates after deducting sum of Rs. 824-6-0 already paid by the appellant up to 31-3-54, as also the court expenses. 3-L631Sup.C. I. 173

Along with his letter dated 17-3-1959 the appellant had apparently sent cheque for Rs. 16,601.93. The balance not having been paid, as demanded in the letter Ex. D.5, the Commissioner wrote again on 28-5-1959 and sent further reminder on 19-8-1959 giving the appellant four days" time for paying the balance which was actually paid only on 22-9-1959. The Municipal Council passed resolution on 31-5-1960 refusing to grant the lease to the appellant and directing the Municipal Commissioner to take back possession of the land.

Curiously the appellant somehow pleaded that he was perma-nent lessee of the land but ·that claim o!Wiously could npt be and was not seriously pressed before this Court by Mr. Gupte, learned counsel appearing for him. The Trial Court surprisingly held that he became permanent tenant, the Trial Court as well as the Ist Appellate Court held that the appellant was tenant holding over. Both of them decided in favour of the appellant. The High Court observes at one place that the appellant's position after 30-9-1949 was that of lessee holding over and not that of trespasser, but there is no discussion as to whv it considers that the appellant was lessee holding over. We shall later point out that the appellant cannot be deemed to be lessee holding over. The High Couri also held that there was no compromise of the suit by any person authorised to do so on behalf of the Corporation. It also held that there was no acceptance of rent with the san~tion of the Council. As consequence it allowed the appeal and decreed the plaintiff's suit.

Before this Court Shri Gupte appearing for the appellant did not contend that there was compromise of the suit. His contention on the other hand was that concluded contract emerged when the appellant paid sum of Rs. 5697.93 on 22-9-59 pursuant to the letter of the Commissioner and therefore the suit could not conti-nue. He also argued that the appellant would be entitled to the benefit of the provisions of Section 53A of the Transfer of the Property Act, and that i'n any case he was tenant holding over and would be entitled to the benefit of provisions of Section l 06 and 116 of the Transfer of the Property Act.

We may straight away say that we find ourselves unable to agree with the contention that there was concluded contract bet-ween the Municipal Council and the appellant on· 22-9-1959. There is no dispute that in this case the Commissioner cannot enter into contract by himself and can do so only if it is sanctioned by the Municipal Corporation under section 80 of the Madhya Pradesh Municipal Corporation Act. The resolution of the Corpo-ration dated 9-12-1949 was specific that the land would be given to the appellant if he deposited the upset price and rent fa accor• dance with the letter dated 26-10-1949 sent by the Municipal

Commissioner to the appellant and otherwise the land should be taken back into possession. That letter is not on record. Appa-rently, it was on the same terms as Ex.P. 20 dated 31-12-1949. It could no~ be otherwise. The appellant did not comply with the terms of that letter. He went on to make counter offer by Ex. P.19 dated 9-1-1950. He appealed to the Minister and having fail-B ed there, he waited nearly 7 years after the Corporation's resolu-~ion to pay part of the amount and pay the balance in instalments. This was accepted by the Municipal Commissiqner on 20-6-1956. But we must make it clear that the Municipal Commissioner had no power in view of the resolution of tne Corporation to accept the appellant's offer. He was given specific mandate and was not authorised to enter into negotiations with the appellant regarding the lease. The amount was not paid in spite of two further letters and the suit was filed on 16-9-1957. Tlie Municipal Commissioner had· no power to go on accepting the offers from the appellant more than 15 days after his letter to him on 31-12-1949; nor could he accept any terms other than those mentioned in the Corporation's resolution either within those 15 days or later. Even the offer made by the Corporation's resolution came to an end with the filing of the suit, which was clear and unequivocal revoca-tion of the resolution. Thereafter the Corporation cannot be deemed to keep open its offer of the year 1949. Nor was ii open to the Commissioner either to make any offer to the appellant or to accept any offer from the appellant in respect of the I.and except with the sanction of the Municipal Council. The appellanl's offer made on 17-3-59, year and half after the suit was filed, was new offer. and it was rejected by the only authority competent to accept it i.e. the Corporation on 31-5-1960. The correspondence carried on by the Commissioner with the appellant was wholly beyond his powers.

The offer made by the appellant in 1959 cannot have anything to do with the resolution passed by the Municipal Council in 1949. The offer was of different set of terms and included an offer to pay the costs of the suit and that also had in fact been deposited by the appellant at the instance of the CommiSBioner. That indi-cates the new situation that had come into exisrence and estab-lishes beyond doubt that this was fresh offer. We therefore hold that no contract came into existenc~ between the parties on 22-9-1959.

It was then urged bv Mr. Gupte that the appellant having deposited the rent up to 31-'.l-1954 and the Municipal Commis-sioner having accepted it he should be deemed to be tenant holding over. Leavine aside for the moment the contention put forward on behalf of the Corporation that this pay-ment was made behind its back, it has to be noted that the payment was at the rate prevailing before 30-9-1949 and on that date the

Corporation having passed resolution specifying new rate df rent of Rs. 9 per Chasma the payment at the old rate by the appel-lant and its acceptance by the Municipal Commissioner was not an acceptance of rent as such and in clear recognition of the tenancy right of the appellant. It cannot amount to the Corporation consenting to the appellant continuing as tenant by paying the old rates of rent. There is thus no question of the appellant being tenant holding over. But person who was lawfully in occupa-tion does not become trespasser, even if he does not become tenant holding over but is tenant by snfferance. The position at law was explained in Kai. Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy Warden & Anr.([1 ]) ·as follows:"On the determination of lease, it is the duty of the lessee to deliver up possession of the demised pre-mises to the lessor. If the lessee or sub-lessee under him continues in possession even after the determina-tion of ·the lease, the landlord undoubtedly has the right to e.iect him forthwith; but if he does not, and there is neither assent nor dissent on his part to the continu-ance of occupation of such person, the latter becomes in the language of English law tenant on sufferance who has no lawful title to the land but holds ii merely through the !aches of the landlord. If now the landlord accepts rent .from such person or otherwise expresses assent to the continuance of his possession, new tenancy comes into existence as is contempla~ by s. 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be re-garded as one from year to year or from month to month in accordance with the provisions of s. 116 of the Act." At page 272 it was pointed out :

"It can scarcely be disputed that the assent of the landlord which is founded on, acceptance of rent must be acceptance of rent as such and in clear recognition of the tenancy right asserted by the person who pays·it." The same position was explained in recent decision of this Court to which one of us was party in Bhawanji Lakhamshi v. Himat-la/ Jamnadas Dani('). At page 391 it was observed:

"The act of holding over after the expiration of the term does not create tenancy of any kind. If tenant remains in possession after the determination of the lease, the common law rule is that he is tenant on sufferance. distinction should be drawn between tenant continuing in possession after the determination

(1)[1949-50] F.C.R. 262 at 270.

(2) [1972) I S.C.C. 388.

of the term with the consent of the landlord and tenant doing 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 the concluding words of Section 1 J 6 of the Transfer 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 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 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 other-wise. In Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy Warden and Another, the Federal Court had occasion to consider the question of the nature of the tenancy created under section 116 of- the Transfer of Property Act and Mukherjea, J., speaking for tW: majority said that the tenancy which is created by the "holding over" of lessee or under-lessee is new ten-ancy in law even though many of the terms of the old lease might be continued in it, by implication; and that to bring new tenancy into existence, there must be bilateral act. It was further held that the assent of the landlord which is founded on acceptance of rent must be acceptance of rent as such. and in clear recognition of the tenancy right asserted by the person who pays it." The appellant being merely a· tenilllt by sufl!erance there is no need for any notice before he could be evicted. Thus the .iudgment 1.1 of the High Court is correct, in so far as it held the appellant was liable to be ·evicted.

The appeal is dismissed with costs. The petition for reception of additional evidence is also dismissed.

A. p peal dismissed.