ivil Appeal No 1546 of 1969
VM Tarkunde section K Dholakia and section K Bagga for appelIants Nos 1 and 3
section K Bagga for appellant No 2
D V Patel A G Parikh and B R Agarwala for the respondents
The Judgment of the Court was delivered by Mathew J
This is an appeal by special leave from the judgment of the High Court of Bombay dismissing a petition filed under Article 227 of the Constitution praying for issue of an approprivate writ or order quashing the order dated 28 2 1968 passed by the Full Bench Small Causes Court Bombay in appeal No 95 of 1963 from the order dated 21 2 1963 passed by the Judge Small Causes Court Bombay in RAE Suit No 9293 of 1959
In this appeal we are concerned with a plot of land admeasuring 2108 square yards in Survey No 171 Hissa No 7 at 892 Ghatkopar
This plot belonged to one Jamnadas Chhotalal Dani
On 15 11 1948 Jamnadas executed two leases in favour of one Bhawani Laksamsi and Maojibhai Jethabhai defendants 1 and 2
The subject matter of the first lease was two plots the one referred to above and another in the same area measuring 805 square yards
The subject matter of the second lease was a third plot in the same area
The leases were for a period of ten years and in respect of the first plot the rent payable was Rs 75 a month
In both the leases there was an option clause which entitled the lessees to surrender the leased property by 30 9 1953
The lessees surrendered the two plots other than the plot with which we are concerned in pursuance of the option clause on 15 1 1951 with the result that the lease in respect of the first plot continued
Jamnadas died on 14 8 195 1 but before his death he had made a gift of the leased property in favour of the three respondents
The lease in respect of the plot in question here determined by efflux of time on 30 9 1958
But the lessees continued to remain in possession paying rent at the rate of Rs 75 per month
On 7 8 1959 the lessors gave notice purporting to Terminate the tenancy by the end of September 1959
They stated in the notice that the lessees had sub let the premises and that the lessors required the plot for the purpose of putting up constructions on it
Since the lessees did not vacate the premises the lessors filed suit on 22 10 1959 in the Small Causes Court of Bombay
The lessees contended that they did not sub let the premises and that the lessors did not bona fide require the premises for the purpose of construction
They also contended that by the acceptance of rent by the lessors after the termination of the tenancy by efflux of time a fresh tenancy was created that the original lease was granted for erecting a saw mill a manufacturing purpose and so the lease created by holding over was by implication also for a manufacturing purpose and therefore lessees were entitled to six months  notice expiring with the end of the year of the tenancy and that the tenancy created by holding over was not validly determined by the one month s notice
The trial court held that there was no clear evidence of the subletting of the premises but that the plaintiffs required the plot bona fide for constructing a new building within the meaning of clause 1 of sub section 1 of Section 13 of the Bombay Rents Hotel and Lodging House Rates Control Act 1947 hereinafter called the Act
The court also held that the tenancy terminated by efflux of time but that the lessees continued in possession by virtue of the immunity from eviction conferred by the Act and so they were not holding over within the meaning of section 116 893 of the Transfer of Property Act notwithstanding the fact that rent was accepted by the lessors from month to month after 30 9 1958 and that it was not necessary to give the lessees six months  notice expiring with the end of the year of the tenancy for terminating that tenancy
In appeal the Full Bench of the Small Causes Court confirmed the decree of the trial court
It was to quash this decree that the petition under Article 227 was filed before the High Court
Before the High Court the main contention of the appellants was that since a fresh tenancy by holding over was created by the acceptance of rent by the lessors after the determination of the lease by efflux of time the appellants were entitled to six months  notice expiring with the end of the year of the tenancy as the lease originally granted was for a manufacturing purpose and therefore the lease created by the holding over was also for same purpose
The High Court was of the opinion that in view of the decision of this Court in Ganga Dutt Murarka vs Kartik Chandra Dasl no case was made out for new tenancy by holding over under section 116 of the Transfer of Property Act as the appel lants had obtained the status of irremovability under the Act and as there was no contractual tenancy the tenants were not entitled to any notice
The Court also held that the lease which was granted for erecting a saw mill was not a lease for manufacturing purpose
Counsel for the appellants argued that the appellants were holding over as the lessors were receiving the rent from the appellants after the termination of the tenancy by efflux of time on 30 9 1958 and the fact that appellants gained immunity from eviction by virtue of the Act was quite immaterial in deciding the question whether the appellants were holding over under section 116 of the Transfer of Property Act
He submitted that as there was a new contractual tenancy created by the holding over the appellants were entitled to six months  notice as the purpose of the original lease was for a manufacturing purpose and that purpose became incorporated in the new lease by implication of law
Counsel said that certain vital points were omitted to be considered in the decision of this Court in Ganga Dutt Murarka vs Kartik Chandra Das1 and therefore the decision requires re consideration
In Ganga Dutt Mararka vs Karlik Chandra Das this Court held that where a contractual tenancy to which rent control legislation applied had expired by efflux of time or by determination by notice to quit and the tenant continued in possession of the premises acceptance of rent from the tenant by the landlord after the expiration or determination of the contractual tenancy will not afford ground for holding that the landlord had assented to a new contractual tenancy
It was further
held 1  894 that acceptance by the landlord from the tenant after the contractual tenancy had expired of amounts equivalent to rent or amounts which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 1 1 6 of the Transfer of Property Act
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 vs 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 Mukberiea 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 brine 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 1 895 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
 Mere acceptance of amounts equivalent to rent by a landlord from a tenant in possession after a lease had been determined either by efflux of time or by notice to quilt and who enjoys statutory immunity from eviction except on well defined grounds as in the Act cannot be regarded as evidence of a new agreement of tenancy
In Ganga Dutt Murarka vs Kartik Chandra Das1 this Court observed as follows   By the Rent Restriction Statutes at the material time Statutory immunity was granted to the appellant against eviction and acceptance of the amounts from him which were equivalent to rent after the contractual tenancy had expired or which were fixed as standard rent did not amount to acceptance of rent from a lessee within the meaning of section 116 Transfer of Property Act
Failure to take action which was consequent upon a statutory prohibition imposed upon the courts and not the result of any voluntary conduct on the part of the appellant did not also amount to otherwise assenting to the lessee continuing in possession
Of course there is no prohibition against a landlord entering into a fresh contract of tenancy will a tenant whose right of occupation is determined and who remains in occupationtion by virtue of the statutory immunity
Apart from an express contract conduct of the parties may un doubtedly 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
Occupation of premises by a tenant whose tenancy is determined is by virtue of the protection granted by the statute and not because of any right arising from the contract which is determined
The statute protects his possession so long as the conditions which justify a lessor in obtaining an order of eviction against him do not exist
Once the prohibition against the exercise of jurisdiction by the 1  896 Court is removed the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of the lessor s right to evict the tenant will not unless the statute provides otherwise be conditioned
 In Davies vs Bristow1 the Court held that where a tenant of a house to which the Increase of Rent  c War Restrictions Acts apply holds ever after the expiry of a notice to quit and pays rent the landlord is not to be taken by accepting it to assent to a renewal of the tenancy on the old terms for he has no choice but to accept the rent he could not sue in trespass for mesne profits for those Acts provide that the tenant notwithstanding the notice to quit shall not be regarded as a trespasser so long as he pays the rent and performs the other conditions of the lease
In Morrison vs Jacobs2 Scott LJ said  The sole question before the court is whether after the expiration of the contractual tenancy the mere fact of the landlord receiving rent for the dwelling house from the tenant affords any evidence that the landlord had entered on a new contractual tenancy to take the place of the tenancy which had expired
In my opinion it does not
The true view is that the landlord takes the rent knowing that the tenant is granted a statutory tenancy by the Rent Restrictions Acts and that his right to gain possession of his dwelling house depends entirely on his establishing that he brings himself within the conditions laid down by the Acts
 In the same case MacKinnon J said At common law if at the expiration of a tenancy a landlord has acquired a right to claim possession against his tenant and instead of exercising that right he allows him to remain in the house and accepts rent from him as before the parties by their conduct may with reason be held to have entered into a new contract of demise
But the essential factor in those circumstances is that the landlord voluntarily abstains from turning the tenant out
When the tenant remains in possession not by reason of any such abstention by the landlord but because the Rent and Mortgage Interest Restrictions Acts deprive the landlord of his former power of eviction no such inference can property be drawn
That is the very obvious and cogent basis of the decision in Davies vs Bristow
It was argued on behalf of the appellants on the basis of the decision of this Court in Manujendra Dutt vs Purendu Prosad Roy 1 19203 KB p 428
2 1945 1 KB p 577
897 Chowdhury  othersl that if in the case of a tenancy to which Rent Restriction Acts applied the Provision of section 106 of the Transfer of Property Act was applicable there is nothing incongruous in making section 116 also applicable in the case of a statutory tenancy
In the said decision the appellant before this Court was a tenant of a piece of land
The lease was for a period of ten years but the lessee was given the option of renewal on his fulfilling certain conditions
The lease deed also provided that if the lessor required the lessee to vacate the premises whether at the time of the expiry of the lease or thereafter in case the lessee exercised his option to renew the lease six month notice to the lessee was necessary
The lessee exercised his option to renew the lease and offered to fulfill the condition therefore
In the meanwhile the Calcutta Thika Tenancy Act 1949 was passed
One of the questions which arose for consideration was whether the Thika tenant was entitled to the notice provided under the lease
This Court held that the Act did not give a right to the landlord to evict a contractual tenant without first determining the contractual tenancy
After referring to the decision of this Court in Mangilal vs Sigam Chand2 it was held that section 3 of the Act in question was similar to section 4 of the Madhya Pradesh Accommodation Control Act XXIII of 1965
It was further held that on the construction placed upon the section name IV that the provisions of the section are in addition to those of the Transfer of Property Act it follows that before a tenant can be evicted a landlord must comply with both the provisions of section 106 of the Transfer of Property Act and those of section 3
In the case before us admittedly the tenancy has been determined by efflux of time and what is contended for is that by the acceptance of rent a new tenancy has been created by virtue of the provisions of section 116 of the Transfer of Property article In other words the question here is whether the conditions for the application of section 116 of the Transfer of Property Act are fulfilled
Learned counsel for the appellants argued that whenever rent is accepted by a landlord from a tenant whose tenancy has been determined but who continues in possession a tenancy by holding over is created
The argument was that the assent of the lessor alone and not that of the lessee was material for the purposes of section 116
We are not inclined to accept this contention
We have already shown that the basis of the section is a bilateral contract between the erstwhile landlord and the erstwhile tenant If the tenant has the statutory right to remain in possession and if he pays the rent that will not normally be referable to an offer for his continuing in possession which can be converted into a contract by acceptance thereof by the landlord
We do not say 1  2 AIR 1965 SC 101
898 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
We have earlier referred to the observations of this Court in Ganga Dutt Murarka vs Kartik Chandra Das1 regarding some of the circumstances in which a fresh contract of tenancy may be inferred
We have already held the whole basis of section 116 of the Transfer of Property Act is that in case of normal tenancy a landlord is entitled where he does not accept the rent after the notice to quit to file a suit in ejectment and obtain a decree for possession and so his acceptance of rent is an unequivocal act referable only to his desire to assent to the tenant continuing in possession
That is not so where Rent Act exists and if the tenant says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant s continuing in possession it is for the tenant to establish it
No attempt has been made to establish it in this case and there is no evidence apart from the acceptance of the rent by the landlord to indicate even remotely that he desired the appellants to continue in possession after the termination of the tenancy
Besides as we have already indicated the animus of the tenant in tendering the rent is also material
If he tenders the rent as the rent payable under the statutory tenancy the landlord cannot by accepting it as rent create a tenancy by holding over
In such a case the parties would not be id idem and there will be no consensus
The decision in Ganga Dutt Murarka vs Kartik Chandra Dasl Which followed the principles laid down by the Federal Court in Kai Khushrao Bezonjee Capadia vs Bai Jerbai Hirjibhoy Warden and another1 is correct and does not require reconsideration
We therefore come to the conclusion that there was no holding over by the appellants and if that be so the question whether the tenancy created by holding over was for manufacturing purpose and therefore the landlord was bound to give six months  notice for the determination of the tenancy by holding over does not arise for consideration
Appellants  counsel prayed that the appellants may be given some time for vacating the premises
This Court when passing the order on July 31 1969 on the application for stay by the appellants had observed  Petitioner undertakes to vacate the premises within such time as may be fixed by this Court 1  2 899 We accordingly grant three months time from today to the appellants to vacate the premises and they have to comply with the undertaking given to this Court and referred to above
We dismiss the appeal with costs GC Appeal dismissed


Summary:
The appellants were lessees of a plot of land in Bombay
The lease Was granted in 1948 and was determined by efflux of time on September 30 1958
However the appellants continued to occupy the land and to pay rent to the lessors
On August 7 1959 the lessors gave notice purporting to terminate the tenancy in the land by the end of September 1959 on the ground inter alia that the lessors required the plot for the purpose of putting up construction on it
Since the appellants did not vacate the premises the lessors filed a suit on October 22 1959 in the Small Causes Court Bombay
The appellants contended in defence that the land was not required by the lessors bona fide for purposes of construction
They further contended that they were tenants holding over within the meaning of section 116 of the Transfer of Property Act and that since the landlord had accepted rent after the tenancy had determined by afflux of time a new lease had come into being and as the original lease was for a manufacturing purpose the new lease was by implication for the same purpose and consequently six months  notice was required for its termination by the lessors
The Trial Court held that the plaintiff required the plot bona fide for constructing a new building within the meaning of clause 1 of sub section 1 of section 13 of the Bombay Rents Hotel and Lodging House Rates Control Act 1947
The Court also held
that the tenancy terminated by efflux of time but that the lessees continued in possession by virtue of the immunity from eviction conferred by the aforesaid Bombay Act and so they were not holding over within the meaning of section 116 of the Transfer of Property Act
The Trial Court accordingly decreed the suit
In appeal the appellate Court confirmed the decree
The High Court rejected the appellants  petition under article 227 of the Constitution
In appeal to this Court by Special leave HELD  The act ofholding over after the expiration of the term does not create tenancy ofany 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 on sufferance in English law and the latter a tenant holding over a tenant at will
In view of the concluding words of section 116 of the Transfer of Property Act a lease 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 their should be an offer of taking a new lease evidenced by the lessee or sub lessee remaining 891 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
The bases of the section is thus a bilateral contract between the erstwhile landlord and the erstwhile tenant
If the tenant has the statutory right to remain in possession and if he pays the rent that will not normally be referable to an offer for his continuing in possession which can be converted into a contract by acceptance thereof by the landlord
894 B D 897 G H In the case of normal tenancy a landlord is entitled where he does not accept the rent after the notice to quit to file a suit in ejectment and obtain a decree for possession and so his acceptance of rent is an unequivocal act referable only to his desire to assent to the tenant con tinuing in possession
That is not so where a Rent Act exists and if the tenant says that landlord accepted the rent not as statutory tenant but only as legal rent indicating his assent to the tenant s continuing in pos session it is for the tenant to establish it
898 B C In the present case neither the landlord s desire that the appellants should continue in possession nor the necessary animus on the part of the tenant had been proved
The parties had not been shown to be ad idem
898 D Acccordingly it must be held that there was no holding over by the appellants and the appeal must be dismissed
Ganga Dutt Murarka vs Kartik Chandra Das 1961 3 SCR 813 reaffirmed
Kai Khushroo Bezonjee Capadia vs Bai Jerbai Hirjibhoy Warden KB 428 Morriwon vs Jacobs and Mangilal vs Sugan Chand AIR 1965 SC 101 applied
Manujendra Dutt vs Purendu Prosad Roy Chowdhury  Ors
   distinguished