Tenant At Sufferance Who Is Continuing In Possession After Expiry Of Lease Is Liable To Pay Mesne Profits: Supreme Court

CAUSE TITLE: 
Indian Oil Corporation Ltd. Vs Sudera Realty Private Limited

DATE OF ORDER:
 6 September 2022

JUDGE(S): 
HON’BLE JUSTICES K.M. JOSEPH and PS NARASIMHA

PARTIES: 
Appellant: INDIAN OIL CORPORATION LTD.
Respondents: SUDERA REALTY PRIVATE LIMITED

SUBJECT

The appellant herein was the defendant in the original suit who filed an appeal before the division bench of the High court against the order of the single judge of the High Court. The division Bench partly allowed the said appeal and modified the decree granted by the single judge in favor of the plaintiffs (respondents herein) seeking mesne profits.

Dismissing the appeal, the bench observed “While a tenant at sufferance cannot be forcibly dispossessed, that does not detract from the possession of the erstwhile tenant turning unlawful on the expiry of the lease.”

IMPORTANT PROVISIONS

Transfer of Property Act, 1882

Section 111(a)

111. Determination of lease.—A lease of immoveable property determines—

(a) by efflux of the time limited thereby: 

Section 113

113. Waiver of notice to quit.—A notice given under section 111, clause (h), is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting.

BRIEF FACTS

• The respondent-plaintiff gave on lease centrally air-conditioned 2nd, 3rd and 4th floors of premise 1   Shakespeare Sarani, Kolkata and a non-air-conditioned guest house on the 9th floor for a period subsisting for 21 years commencing from the date when possession was handed over to the appellant lessee. 
• Acc. To the respondent, some modifications were made vide an agreement dated 12.09.1969 in the original lease dated 21.11.1968. 
• It was further the case of the respondent that the 2nd and 3rd floors were handed over on 12.09.1969 and the possession of the 4th floor was made over to the appellant on 18.12.1969. Therefore, the respondent alleged that the appellant was in wrongful possession of the 2nd, 3rd and 4th floors after the expiry of the lease on 11.09.1990
• Even in terms of the computation of the period of 21 years by the appellant, this illegal possession continued till 31.05.1994. The respondent claimed mesne profits in respect of 57105 sq. feet at the rate of Rs.31 per sq. feet per month.
• The appellant in its written statement denied the case of wrongful possession and claimed the protection of the West Bengal Tenancy Act. It was however contended by the appellant that the respondent accepted monthly rent after the determination of the tenancy by notice dated 7th December 1977.
• The Ld. Single judge observed that plaintiff (respondent herein) is entitled to mesne profits and appointed a referee was appointed to quantify the same. Both the plaintiff and the defendant filed the appeal.

ARGUMENTS BY RESPONDENT (PLAINTIFF)

• The dispute has spread for over 30 years due to the conduct of the appellant and the respondent has not been able to collect any mesne profits so far due to the same.
• The 2nd, 3rd and 4th floors were under construction on the date of execution of lease agreement i.e. 21.11.1968. It was self-admitted by the appellant that there was a valid lease deed between the parties and he cannot be allowed to retract from the same.
• The respondent contended that the lease ran for a continued period of 21 years and was terminated by efflux of time.
•  It is pointed out that the termination notice dated 07.12.1977 did not result in the actual determination of lease prior to expiry and the appellant continued to occupy the premise “as before”.
• The respondent brought a suit seeking rent for the period 15.09.1969 to 04.11.1970. In the meeting held on 05.06.1980, the litigation ended in view of the binding settlement.
• The respondent described the letter dated 19.10. 1990 a letter of inquiry and not a notice of termination of lease.
• The acceptance of the occupation charges by the respondent after the expiry of the lease did not create monthly tenancy.

QUESTIONS RAISED

• Whether the documents styled as agreement dated 21.11.1968 and the supplementary agreement for lease dated 12th September 1969 constituted a lease?
• Whether the possession of the tenant (appellant) be termed unlawful on the expiry of the lease?
• Whether the possession of the 2nd and 3rd floors were handed over on 17.09.1969 and the 4th floor stood handed over on 04.11.1970?
• Whether the appellant is a monthly tenant from November 1969?
• Whether there was a prior determination of the lease of 21 years by the respondent, if so, whether the appellant is entitled to protection of the Tenancy Act?

ANALYSIS BY THE COURT

•  The hon’ble court accepted that the document dated 21.11.1968 (a registered document) operated as a lease.
• As regards the date of handing over of possession, the Hon’ble court on perusal of various documents on record accepted that possession of the 2nd and 3rd floors was handed over on 17.09.1969 and 4th floor stood handed over on 04.11.1970 to the appellant. 
• The court further observed that the appellant cannot be treated as a monthly tenant since the beginning as accepting such a stand would run contrary to written statemen filed by the appellant.
• Since the document dated 12.09.1969, there is no force in law or on facts that permit the appellant to contend that the appellant must be treated as a monthly tenant.
• Appellant had contended that the respondent in the year 1977 terminated the lease dated 17.11.1968 and converted it into a tenancy. This entitled the appellant to enjoy benefits under the West Bengal Tenancy Act. To determine this issue, the court took cognizance of the settlement that took between the parties on 05.06.1980, a letter dated 19.10.1990, letter dated 03.11.1990, letter dated 09.11.1990 and subsequent conversations.
• The court concluded that though there was a pre-determination clause in the agreement, which gave an option to determine the lease after 8 years, it can be rightly concluded from the documents on record that the appellant allowed the lease to run for a full period of 21 years and not once claimed benefit under West Bengal Tenancy Act in view of the above-mentioned option, so in the light of case of Pabitra Kumar Roy, the appellant is not entitled for the said benefits.
• On the question was the possession of the appellant was wrongful on the expiry of the lease, the court observed that a tenant in continued possession after the expiry of the lease would be a tenant in sufferance, a status which is a bit higher than that of a mere trespasser. While a tenant at sufferance cannot be forcibly dispossessed, that does not detract from the possession of the erstwhile tenant turning unlawful on the expiry of the lease. Thus, the appellant while continuing in possession after the expiry of the lease became liable to pay mesne profits.

CONCLUSION

Appeals were dismissed. 

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