Case Title:
Bhuneshwar Prasad & Anr Vs United Commercial Bank & Ors
Date of Order:
25.08.2000
Judge(s):
Justices S. S. M. Quadri and Y.K. Sabharwal
Parties:
Petitioner : Bhuneshwar Prasad & Anr.
Respondents : United Commercial Bank & Ors.
Subject
Payment of rent by tenant and acceptance by the landlord after the expiry of the lease and thereby leading to the creation of fresh month-to-month tenancy shall be inferred by the conduct of the parties.
IMPORTANT PROVISIONS
Section 116 of the Transfer of Property Act, 1882
116. Effect of holding over.—If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, 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, as specified in section 106.
BRIEF FACTS
The appellants and respondents were owners and landlords of the premise in the issue. United Commercial Bank was the respondent and tenant. A suit for eviction was filed by the owners against the bank. The plaint alleged that the bank was given tenancy for a fixed period of 5 years from 1 April, 1981 till 31 March, 1986. The bank had an option to renew the lease in two terms of five years each with a one-month prior notice from the expiration of the lease. The bank one month before 31 March, 1986 availed this option and the lease was renewed for a monthly rent of Rs. 10,876 from 1st April, 1986 to 31st March, 1991. No renewal rights were exercised by the bank before 31 March, 1991. In a letter dated 22 April, 1991, the bank was asked to vacate before the end of May of the same year. Two days later, the bank in a letter requested the plaintiffs to renew the lease but the plaintiffs disagreed and requested them to vacate the property.
ARGUMENTS ADVANCED BY THE PLAINTIFF
The plaint also stated that after the expiry of the lease on 31 March, 1991 the bank deposits the rent in the plaintiff’s account without their consent. Mere payment and deposition of rent without consent shall not create a fresh tenancy. Subsequently, the owners sent an eviction notice to the bank on grounds of expiry of the lease period as under Section 11 (1) (e) of Bihar Buildings (Lease, Rent and Eviction) Control Act, 1982.
ARGUMENTS ADVANCED BY THE DEFENDANT
The bank is against the suit pleaded that the bank was a tenant in the premise in dispute since 1963 and has paid the rent duly even when it was enhanced. The rent deposited by the bank was withdrawn by the plaintiffs every month after 31 March, 1991 at a rate of Rs.13, 595 instead of Rs. 10,876. The bank contended that the amount was paid monthly as per the letter dated 7 September, 1991 where the plaintiffs agreed to receive the enhanced rent and withdrew the same. Hence, the bank argued that it is a tenant month-to-month and not for any fixed period.
JUDGMENT
A decree of eviction was passed by the trial court ordering the bank to vacate the premises and deliver the possession back to the plaintiffs. The plaintiffs filed for an appeal in the High Court.
The High Court set aside the decree in a revised petition. The High Court, on appeal, discovered that the enhanced rent was deposited by the bank to the plaintiff’s account even after the expiry of the lease, and the plaintiff has withdrawn the same. The plaintiffs in a letter dated 5 September, 1992 requested the defendant bank to deposit the enhanced rent of Rs.13, 595 for the premises which was obliged by the bank and the plaintiffs received it. The High Court has held that "it is admitted position that the plaintiffs accepted 25% increased amount of monthly rent of the premises in question which is evident from Exs. B-3 and B-4."
The issue was not regarding the effect of enhanced rent payment by the bank and whether such payment creates a fresh tenancy every month as per Section 116 of the Transfer of Property Act or not. The appellants however contended that mere acceptance of rent does not amount to the creation of tenancy month-to-month and provide protection from eviction under the act. The issue was not regarding the stipulated rent and its payment or acceptance. It was neither about the payment of standard rent fixed by any authority. The issue was in light of the facts in the letter to pay enhanced rent, its payment, and acceptance by withdrawing it. The issue was whether the monthly tenancy as per Section 116 of the Transfer of Property Act, 1882 shall come into existence or not.
Senior Counsel Shri. Sanyal, appearing on behalf of the appellants contended that Section 116 of the Transfer of Property Act, 1882 shall not come into play on mere acceptance of rent.
The court cited the case of Kai Khushroo Bezonjee Capadia Vs Bai Jerbai Hirjibhoy Warden and relied on the judgment given by the Federal Court which read as:
“On the determination of a lease, it is the duty of the lessee to deliver up possession of the demised premises to the lessor. If the lessee or a sub-lessee under him continues in possession even after the determination of the lease, the landlord undoubtedly has the right to eject him forthwith; but if he does not, and there is neither assent nor dissent on his part to the continuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has no lawful title to the land but holds it merely through the laches of the landlord. If now the landlord accepts rent from such person or otherwise expresses assent to the continuance of his possession, a new tenancy comes into existence as is contemplated by Section 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of Section 116 of the Act.”
Section 116 shall take effect to being new tenancy into existence only when there is an agreement that contemplates an offer of the fresh demise of evidence by the pertinent occupation of lessee even after the expiry of the lease and presence of assent by lessor or landlord to continue such possession. The assent however cannot be assumed where Rent Restriction Acts applies to tenancies concerning the immunity of eviction of tenant post the expiry of the lease. In cases where such restriction act applies, the landlords can evict the tenant only on grounds mentioned in the act, and acceptance of rent by the landlord from a tenant whose lease had expired shall not be construed as evidence of a new agreement of tenancy and does not amount to the creation of fresh acceptance arising out of acceptance of rent. In light of the Rent Restriction Acts, without the existence of grounds of eviction, the lessor cannot seek the same against the lessee, and the creation of tenancy on monthly basis shall not arise, nor is the lessor expected to not accept the rent.
Section 116 of the Transfer of Property Act will not be attracted on mere acceptance of rent or standard rent. Lessor’s assent to the lessee to continue possession is absent. The conduct of parties can be inferred to give an implied meaning of creating fresh tenancy under the section. In citing Ganga Dutt Muraka Vs Kartik Chandra Das (1961) 3 SCR 813 which upheld the Khushroo case and held that apart from the express contract, the conduct of parties also can be inferred to justify the determination of contractual tenancy, and the landlord and tenant have made a fresh contract for tenancy except the conduct is to be justified in light of circumstances of the facts of the case.
In Bhawanji Lakhamshi and Ors Vs Himatlal Jamnadas Dani and Ors. [1972 (1) SCC 388], the question again arose as to the creation of new tenancy b acceptance of rent by lessor after the termination of tenancy by efflux of time. It was held that acceptance of rent or equivalents by the landlord from the tenant after the expiry of contractual tenancy does not amount to acceptance of rent under Section 116 of the Transfer of Property Act, 1882.
The present case is also related to the acceptance of enhanced rent after the expiry of the lease and not about the quantum of rent as such. The Court, in this case, observed that the operation of Section 116 is not always excluded irrespective of circumstances when rent paid by the tenant is accepted by the owner. The objective of Section 116 is to entitle the landlord to file an ejectment suit and obtain a decree of possession. Hence, the acceptance of rent after the expiry of the lease is an unequivocal act referring to his consent and desire for the tenant’s continuance of possession. This would however cease to exist when the restriction on rent laws apply. Therefore the onus is on the tenant to establish the assent of the landlord in accepting the rent from him as a legal tenant and not a statutory tenant, thereby allowing him to continue possession.
The bank had established the conduct of owners is accepting the increased rent as an ode to letting the bank continue its possession after the expiry of the lease and creating a month-to-month lease within Section 116 of the Transfer of Property Act. The High Court reversed the decree passed by the trial court rightfully. As the quantum and date of payment of rent were not the subject matter of appeal, the statutory authorities in the law shall decide that matter. The appeal was dismissed and parties were left to bear the costs.
