to bring a new tenancy into existence within the meaning of Section 116, there should be an agreement as the section contemplates that on one side, there should be an offer of taking a fresh demise evidenced by the lessee's continuing occupation of the pr

C. Albert Morris vs K. Chandrasekaran & Ors on 26 October, 2005
Author: . A Lakshmanan
Bench: Dr. Ar. Lakshmanan, Altamas Kabir
           CASE NO.:
Appeal (civil)  1027 of 2005

PETITIONER:
C. Albert Morris                                       

RESPONDENT:
K. Chandrasekaran & Ors.                                  

DATE OF JUDGMENT: 26/10/2005

BENCH:
Dr. AR. Lakshmanan & Altamas Kabir

JUDGMENT:
J U D G M E N T Dr. AR. Lakshmanan, J.

 It is abundantly clear from the recitals in the plaint, the schedule to the notice and to the plaint and also of the lease deed that word "leased out" was only a vacant site to put up a petrol bunk with accessory constructions thereon. The mention of a small shed in the current lease is undoubtedly belonged to the tenant himself and, therefore, the building put up by the tenant situated in the vacant site belongs to the landlord cannot be said to be the building of the landlord in order to attract the statutory protection of the Rent Control Act. This issue is, therefore, answered against the tenant. This Court in the case of Bhuneshwar Prasad & Anr. vs. United Commercial Bank & Ors. (supra) considered the case of an agreement creating a fresh tenancy within the meaning of Section 116 of the Transfer of Property Act and held that it can be inferred from the conduct of the parties. This Court approved the judgment in Kai Khushroo Bezonjee Capadia vs. Bai Jerbai Hirjibhoy Warden & Anr. (supra) and distinguished on facts the judgment of this Court in Bhawanji Lakhamshi & Ors. Vs. Himatlal Jamnadas Dani & Ors. (supra). In paragraph 7 of the said judgment, this Court observed as under:

"Para 7 Mr. Sanyal, learned Senior Counsel appearing for the appellants contends that Section 116 of the Transfer of Property Act would not be attracted merely on acceptance of rent. Reliance is placed upon a decision of the Federal Court in Kai Khushroo Bezonjee Capadia Vs. Bai Jerbai Hirjibhoy Warden. We agree that to bring a new tenancy into existence within the meaning of Section 116, there should be an agreement as the section contemplates that on one side, there should be an offer of taking a fresh demise evidenced by the lessee's continuing occupation of the property after the expiry of the lease and on the other side, there must be a definite assent to this continuance of possession by the lessor/landlord and that such an assent of the landlord cannot be assumed in cases of tenancies to which the rent Restriction Acts apply on account of the immunity from eviction which a tenant enjoys even after the expiry of lease. IN such cases, the landlord cannot eject him except on specified grounds mentioned in the Rent Restriction Acts and thus the acceptance of rent by the landlord from a statutory tenant, whose lease has already expired, would not be taken as evidence of a new agreement of tenancy and it would not be open to such a tenant to urge that by acceptance of rent, a fresh tenancy was created. We do not expect a lessor not to accept the rent when, in view of the protection granted by the rent restriction laws, without existence of one or the other ground, he is precluded from seeking eviction of the lessee and in such a case, there would be no question of creation of tenancy from month to month. Under these circumstances, mere acceptance of amount equivalent to rent or the standard rent would not attract Section 116. Assent to the lessee continuing in possession would be absent in such cases. However, an agreement creating fresh tenancy within the meaning of Section 116 can be implied from the conduct of the parties. In Ganga Dutt Murarka Vs. Kartik Chandra Das while affirming the dictum laid down in Khushroo case it was held that apart from an express contract, conduct of the parties may undoubtedly justify an inference that after determination of the contractual tenancy, the landlord had entered into a fresh contract with the tenant, but whether the conduct justifies such an inference must always depend upon the facts of each case. In Bhawanji Lakhamshi Vs. Himatlal Jamnadas Dani again the question that came up for consideration was as to whether a fresh tenancy was created or not by acceptance of rent by the lessor after the termination of the tenancy by the efflux of time. This Court declined the prayer to reconsider Ganga Dutt Murarka case and held that acceptance by the landlord from the tenant, after the contractual tenancy had expired, of amounts equivalent to rent or an amount which was fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of Section 116 of the Transfer of Property Act. The present is not a case of acceptance of amounts equivalent to rent or amounts fixed as standard rent but acceptance of increased rent. It was also observed that: (SCC p. 394, para 13) "We do not say that the operation of Section 116 is always excluded whatever might be the circumstances under which the tenant pays the rent and the landlord accepts it."

The whole basis of Section 116 is that a landlord is entitled to file a suit for ejectment and obtain a decree for possession and, therefore, his acceptance of rent after expiry of lease is an unequivocal act referable to his desire to assent to the tenant continuing possession. It would be absent in cases where there are restrictions as contemplated by rent laws. In such cases, therefore, it is for the tenant where it is said that the landlord accepted the rent not as a statutory tenant but only as a legal tenant indicating his assent to the tenant's continuing possession, to establish it.