mere continuance in occupation of the demised premises after the expiry of the lease, notwithstanding the receipt of an amount by the quondam landlord would not create a tenancy so as to confer on the erstwhile tenant the status of tenant or a right to be
Much argument was advanced on the receipt of the rent by the landlord after the cancellation of the lease. The consensus of judicial opinion in this country is that a mere continuance in occupation of the demised premises after the expiry of the lease, notwithstanding the receipt of an amount by the quondam landlord would not create a tenancy so as to confer on the erstwhile tenant the status of tenant or a right to be in possession. In this context, we may refer to judgment of this Court in Raptakos Brett & Co. Ltd. Vs. Ganesh Property, (1998) 7 SCC 184. In paragraph 13 of the said judgment, this Court held as under:
"In view of the aforesaid settled legal position, it must be held that on the expiry of the period of lease, the erstwhile lessee continues in possession because of the law of the land, namely that the original landlord cannot physically throw out such an erstwhile tenant by force. He must get his claim for possession adjudicated by a competent Court as per the relevant provisions of law. The status of an erstwhile tenant has to be treated as a tenant at sufferance akin to a trespasser having no independent right to continue in possession."
The following judgments may also be beneficially looked into in support of the above submission:
The judgment in Saleh Bros. Vs. K. Rajendran & Anr. , (supra) which deals with the receipt of rent subsequent to the notice determining lease and pending adjudication suit and as to whether receipt of rent by itself amounts to waiver. In paragraphs 12, 19,20 & 31, this Court held as under:
"Para 12 The receipt of rent may only create a presumption and cannot by its own force amount to a waiver. Section 113 consists of two limbs: (a) the express or implied consent of the person to whom notice is given and (b) "the act of the person giving the notice showing the intention to treat the lease as subsisting". In order to constitute a waiver, both the limbs must concurrently operate, which means, that an act by itself and of its own force, without reference to the intention of the parties, cannot bring about a waiver. So much is quite clear from the plain language of the section, which embodies the basic principles, and I find no justification for reading the Illustrations as being repugnant to the section. Every effort should be made to interpret the Illustration in conformity with the main section. The principle underlying Section 116 of the Act will also apply in applying Section 113 as this is also a case of continuance of the lease restoring the old tenancy.
Para 19 I shall next refer to another recent decision of the Supreme Court, in (1968) 2 Andh WR (SC) 42: (1968) 2 SCJ 291: (1968) 2 Mad LJ (SC) 42 = (AIR 1968 SC 471). In that decision, too, the Supreme Court pointed out that under Section 113 of the Transfer of Property Act the act which operates as a waiver must show an intention to treat the lease as subsisting and other party's consent, express or implied therefor. In that case the tenants, who were holding over, issued, on 12th August, 1953, a notice to the landlord of their intention to vacate the premises on 31st August, 1953. But by their letter, dated 26th August they withdrew that notice. The landlord did not agree to the withdrawal of the notice and insisted that the lease had been determined under Section 111
(h) of the Transfer of Property Act. Dealing with the question of waiver, the Supreme Court observed as follows:-
"Clearly Section 113 contemplates waiver of the notice by any act on the part of the person giving it, if such an act shows an intention to treat the lease as subsisting and the other party gives his consent. express or implied therefor. The law under the Transfer of Property Act on the question in hand is not different from the law in England. Once a notice is served determining the tenancy or showing an intention to quit on the expiry of the period of the notice, the tenancy is at an end, unless with the consent of the other party to whom the notice is given the tenancy is agreed to be treated as subsisting."
Para 20 "The question therefore is, quo animo the rent was received, and what the real intention of both parties was?"
Para 31 The decision in Kai Khurshroo Vs. Bai Jerbai, (1949) FCR 262 = (1949) FLJ 168 = AIR 1949 FC 124, turned upon the peculiar facts of that case and there was a difference of opinion, Patanjali Sastri, J., as he then was, taking a different view. There, after notice to quit, defendants 2 and 3 who claimed to be sub- tenants insisted upon continuing in possession and paid the rent month after month. The majority took the view that the landlord had obvious motive in receiving the payments of rent after a particular period i.e. the appointment of a receiver of the property of the mortgagor at the instance of his mortgagee. Having regard to the uniform view taken in all the decisions, both Indian and English, I am not inclined to interpret this decision of the Federal Court as an authority for the position that the payments and receipt of rent as such in every circumstance would amount to waiver, whatever may be the circumstances of the case and the intention of the lessor".
In the case of Bhawanji Lakhamshi & Ors. Vs. Himatlal Jamnadas Dani & Ors. (supra), this Court observed as under:
"The act of holding over after the expiration of the term does not create a tenancy of any kind. If a tenant remains in possession after the determination of the lease, the common law rule is that he is a tenant on sufferance. A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent. The former is a tenant at sufferance in English Law and the latter a tenant holding over or a tenant at will. In view of the concluding words of section 116 of the Transfer of Property Act, a lessee holding over is in a better position than a tenant at will. The assent of the landlord to the continuance of possession after the determination of the tenancy will create a new tenancy. What the section contemplates is that on one side there should be an offer of taking a 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 a definite consent to the continuance of possession by the landlord expressed by acceptance of rent or otherwise. 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 the majority said, that the tenancy which is created by the "holding over" of a lessee or under-lessee is a 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 a new tenancy into existence, there must be a 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. Patanjali Sastri J., in his dissenting judgment, has substantially agreed with the majority as regards the nature of the tenancy created by section 116 of the Transfer of Property Act, and that is evident from the following observations:-
"Turning now to the main point, it will be seen that the section postulates the lessee remaining in possession after the determination of the lease which is conduct indicative, in ordinary circumstances of his desire to continue as a tenant under the lessor and implies a tacit offer to take a 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 continuing in possession, he tacitly accepts the latter's offer and a fresh tenancy results by the implied agreement of the parties. When, further, the lessee in that situation tenders rent and the lessor accepts it, their conduct raises more readily and clearly the implication of an agreement between the parties to create a fresh tenancy."
In the case of R.V. Bhupal Prasad vs. State of A.P. & Ors., (1995) 5 SCC 698, in paragraphs 8 & 9 this Court observed as under:
"Para 8 Tenant at sufferance is one who comes into possession of land by lawful title, but who holds it by wrong after the termination of the term or expiry of the lease by efflux of time. The tenant at sufferance is, therefore, one who wrongfully continues in possession after the extinction of a lawful title. There is little difference between him and a trespasser. In Mulla's Transfer of Property Act (7th Edn.) page 633, the position of tenancy at sufferance has been stated thus: A tenancy at sufferance is merely a fiction to avoid continuance in possession operating as a trespass. It has been described as the least and lowest interest which can subsist in reality. It, therefore, cannot be created by contract and arises only by implication of law when a person who has been in possession under a lawful title continues in possession after that title has been determined, without the consent of the person entitled. A tenancy at sufferance does not create the relationship of landlord and tenant. At page 769, it is stated regarding the right of a tenant holding over thus: The act of holding over after the expiration of the term does not necessarily create a tenancy of any kind. If the lessee remaining in possession after the determination of the term, the common law rule is that he is a tenant on sufferance. The expression "holding over" is used in the sense of retaining possession. A distinction should be drawn between a tenant continuing in possession after the determination of the lease, without the consent of the landlord and a tenant doing so with the landlord's consent. The former is called a tenant by sufferance in the language of the English law and the latter class of tenants is called a tenant holding over or a tenant at will. The lessee holding over with the consent of the lessor is in a better position than a mere tenant at will. The tenancy on sufferance is converted into a tenancy at will by the assent of the landlord, but the relationship of the landlord and tenant is not established until the rent was paid and accepted. The assent of the landlord to the continuance of the tenancy after the determination of the tenancy would create a new tenancy. The possession of a tenant who has ceased to be a tenant is protected by law. Although he may not have a right to continue in possession after the termination of the tenancy, his possession is juridical.
Para 9 The question then is what is the meaning of the expression "lawful possession". This was considered by this Court in a leading decision on the right to grant licence under the Cinematographic Act and the Madras Cinemas Rules in M.C. Chockalingam Vs. V. Manickavasagam. Rule 13 of the Madras Rules required the licensee in lawful possession, when he had applied for renewal after the expiry of the lease of the licensee. The Court observed thus: (SCC p. 57, para 15).
"Turning to Rule 13, even in the first part if the applicant for the licence is the owner of the property he has to produce before the licensing authority the necessary records not only relating to his ownership but also regarding his possession. It is implicit, that the owner having a title to the property, if he can satisfy the licensing authority with regard to his possession also, will indeed be in 'lawful possession', although the word 'lawful' is not used in the first part. It is in that context that the word 'possession' is even not necessary to be qualified by 'lawful' in the first part of Rule 13. If, however, the applicant for the licence is not the owner, there is no question of his showing title to the property and the only requirement of the law is to produce to the satisfaction of the authority documentary evidence with regard to his lawful possession of the property. The word 'lawful', therefore, naturally assumes significance in the second part while it was not even necessary in the first part. The fact that after expiry of the lease the tenant will be able to continue in possession of the property by resisting a suit for eviction, does not establish a case in law to answer the requirement of lawful possession of the property within the meaning of Rule 13. Lawful possession cannot be established without the concomitant existence of a lawful relationship between the landlord and the tenant. This relationship cannot be established against the consent of the landlord unless, however, in view of a special law, his consent becomes irrelevant. Lawful possession is not litigious possession and must have some foundation in a legal right to possess the property which cannot be equated with a temporary right to enforce recovery of the property in case a person is wrongfully or forcibly dispossessed from it. This Court in Lallu Yeshwant Singh case had not to consider whether judicial possession in that case was also lawful possession. We are clearly of opinion that juridical possession is possession protected by law against wrongful dispossession but cannot per se always be equated with lawful possession."
In the case of Karmani Industrial Bank Ltd. Vs. The Province of Bengal & Ors. (supra), this Court held as under:
"Apart from the fact that the appellants did not set up in any of their letters a case of holding over, we have to see whether the plea can be said to have been successfully made out by them. There is no doubt that the appellants have established that the rent was paid on their behalf up to 31.3.1938, & it was accepted by respondent 1. It has also been established that this payment was made by a cheque & that cheque has been cashed by the Government. Section 116, T.P. Act, on which reliance was placed on behalf of the appellants runs as follows:
"If a lessee or underlessee of property remains in possession thereof after the determination of the lease granted to the lessee, & the lessor or his legal representative accepts rent from the lessee or underlessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased."
The section was construed by the F.C. in K.B. Capadia Vs. Bai Arbai, 1949 O.C.R. 262, & it was held that where rent was accepted by the landlord after the expiration of the tenancy by efflux of time, S.116 applied even though the landlord accepted the amount remitted to him as "part deposit towards his claim for compensation for illegal use & occupation, & without prejudice to his rights". It is to be noted that in that case rent had been accepted after the expiry of the tenancy. In our judgment, the present case cannot be governed by that decision, because of the fact, which in our opinion is important, that here the payment of rent up to 31.3.1938, was made not after the date of expiry of the lease, but on 5.4.1937, nearly a year before the expiry of the lease. A reference to S. 116, T.P. Act, will show that for the application of that section, two things are necessary: (1) the lessee should be in possession after the termination of the lease; & (2) the lessor or his representative should accept rent or otherwise assent to his continuing in possession. The use of the word 'otherwise' suggests that acceptance of rent by the landlord has been treated as a form of his giving assent to the tenant's continuance of possession. There can be no question of the lessee "continuing in possession" until the lease has expired, & the context in which the provision for acceptance of rent finds a place clearly shows that what is contemplated is that the payment of rent & its acceptance should be made at such a time & in such a manner as to be equivalent to the landlord assenting to the lessee continuing in possession."
In the case of Konchada Ramamurty Subudhi (dead) by his L.Rs. vs. Gopinath Naik & Ors., AIR 1968 SC 919, this Court held as under: "Where the suit for ejectment of tenant after termination of tenancy, having been dismissed, a compromise decree was passed in the appellate court, enabling the decree-holder, by its terms to execute the decree if the judgment-debtor failed to pay "rent" for any three consecutive months.
Held the compromise deed did not create a lease but a license. It was difficult to impute to the decree-holder an intention to create a fresh tenancy while the fact that he brought the suit showed that his intention was to eject the judgment-debtor after having purported to terminate the tenancy. The fact that the word 'rent' had been used in the compromise deed was not conclusive as in its wider sense rent meant any payment made for the use of land or buildings and thus included the payment by a licensee in respect of the use and occupation of any land or buildings. The period of five years granted under the deed to the judgment-debtor for continuation of the possession also did not militate against the construction that the compromise only created a license for the decree-holder had lost in the trial court and it was only in the court of appeal that the compromise was arrived at".
It is also seen from Annexure R-6 (page 33 of the paper book Vol.II) which is a notice sent by the landlord's advocate to the tenant-the appellant herein on 21.2.1997 wherein it has been clearly stated in paragraphs 2,3 & 4 which read as under: "You were a tenant under my client in the property described in the schedule hereunder. My client states that as the period of lease expired on 30.9.1996 by agreement, my client had issued a notice dated 24.8.1996 determining the lease and directing you to vacate and handover possession of the schedule mentioned property. My client states that after the determination of lease your possession amounts to that of a trespasser and you are liable to pay compensation which is to be determined after your vacating the premises.
My client states that subsequent to the notice dated 24.8.1996, you have chosen to send three Banker's cheques dated 30.11.1996, 24.12.1996 and 29.1.1997, each for Rs. 4500/-. My client states that he had not consented for your continued possession of the schedule mentioned property in any manner. Hence my client apprehends that the banker's cheques being sent are a ruse to create the appearance of continuation of tenancy.
Hence take notice that my client will encash the banker's cheques already sent by you and any that might be sent in future under protest and that the payments made by way of such cheques will be adjusted towards the compensation payable by you and take notice that encashments of any cheques already issued and that might be issued in future should not be treated or considered as consent from my client for your occupying the schedule mentioned property."
We are, therefore, of the opinion that mere acceptance of rent by the landlord-Ist respondent herein from the tenant in possession after the lease has been determined either by efflux of time or by notice to quit would not create a tenancy so as to confer the erstwhile tenant the status of a tenant or a right to be in possession. We answer this issue accordingly.