Case: Badrilal Vs. Municipal Corporation Of Indore

Alagiriswami, J. 1. This is an appeal by special leave against the judgment of the High Court of Madhya Pradesh in Second Appeal No. 475 of 1962 on the files of that Court. 2. The appellant became a lessee of a plot of land measuring 10,375 sq. feet (721/2 Chasmas) situate at 28, Parsi Mohalla Street No. 5, Sanyogitaganj, Indore belonging to the Municipal Corporation for a period of 10 years in 1919. This lease was renewed from time to time and the last of such renewals was in the year 1939 for a period of 10 years. The lease expired on 30th September, 1949. On 24-5-1949 the respondent, Municipal Corporation of Indore, issued a notice to the appellant directing him to vacate the land on 30-9-1949. Thereupon he applied to the Municipal Commissioner either to grant him a lease for 99 years and if it was not possible to renew it at least for a period of 10 years. On 19-12-1949 the Municipal Council passed a resolution to the following effect. Opinion of the Lease Committee is accepted. The land situated in Parsimohalla Sanyogitaganj, be given to applicant Badrilal Bholaram only in case he is ready to deposit Rupees 16,212/- of the lease rent and upset price as per Schedule rate in accordance with letter No. 3239 dated 26-10-49 sent to him by the Municipal Commissioner otherwise the said land be taken back into possession. On 31-12-1949 the Municipal Commissioner wrote Ex. P. 20 to the appellant informing him that the land would be given to him on long lease on condition that he paid an upset price of Rs. 16,212 and an annual lease rent at Rs. 9/- per Chasma. He was further informed that if he accepted the said condition he should deposit the upset price within 15 days and submit an application giving his consent, and that otherwise steps would be taken to take back possession of the land. The appellant wrote (Ex. P. 19 on 9-1-1950) that the upset price and rent claimed by the Municipal Council was too much and requested that the rent and upset price be modified and during the pendency of his petition proceedings before the Commissioner be stayed. He then seems to have filed a petition for revision before the Minister incharge of Municipalities and this was dismissed on 7-9-1952. Almost 4 years later on 14-5-1956 he wrote Ex. D 2 to the Commissioner requesting that an amount of Rupees 8212 may be accepted and he may be permitted to pay the balance in annual instalments of Rupees 1000/- each. On 20-6-1956 the appellant was informed by the Commissioner by letter Ex. D-3 that he should deposit the sum of Rupees 8212 within two days and thereafter the balance would be realised in instalments. The appellant not having paid the amount the Municipal Commissioner again wrote on 30-7-1956 giving him two days time to deposit the amount of Rupees 8212. On 20-2-1957 the Commissioner again wrote to the appellant directing him to deposit the whole of Rupees 16,212 within two days telling him that on his failure to do so steps would be taken for evicting him from the land. 3. The suit out of which this appeal arises was filed on 16th September, 1957. The appellant filed his written statement on 20th January, 1958 and issues were framed on 24th March, 1958. At this stage the defendant wrote Ex. D. 4 on 17-3-1959 in the following terms : I beg to say that it has been approved by you to give me the plot of land at H. N. 85 Parsi-Mohalla on permanent lease of 99 years after having received the upset price from me. I agree to pay whatever lease rent found due against me upto 31-3-1954 besides reasonable costs of the suit and I have deposited today vide cheque number E/2/104221 dated 17-3-59 in the Indore Bank, Sanyogitaganj and I undertake to pay in cash any amount found due against me at the time of execution of the lease deed. The Commissioner wrote Ex. D 5 to the defendant on 23-4-1959 asking him to deposit the upset price of Rupees 16,212, rent according to the new rates after deducting a sum of Rupees 824-6-0 already paid by the appellant up to 31-3-54, as also the Court expenses. Along with his letter dated 17-3-59 the appellant had apparently sent a cheque for Rupees 16,601.93. The balance not having been paid, as demanded in the letter Ex. D 5, the Commissioner wrote again on 28-5-1959 and sent a further reminder on 19-8-1959 giving the appellant four days time for paying the balance which was actually paid only on 22-9-1959. The Municipal Council passed a resolution on 31-5-1960 refusing to grant the lease to the appellant and directing the Municipal Commissioner to take back possession of the land. 4. Curiously the appellant somehow pleaded that he was a permanent lessee of the land but that claim obviously could not be and was not seriously pressed before this Court by Mr. Gupte, learned Counsel appearing for him. The Trial Court surprisingly held that he became a permanent tenant. The Trial Court as well as the 1st Appellate Court held that the appellant was a tenant holding over. Both of them decided in favour of the appellant. The High Court observes at one place that the appellants position after 30-9-1949 was that of a lessee holding over and not that of a trespasser, but there is no discussion as to why it considers that the appellant was a lessee holding over. We shall later point out that the appellant cannot be deemed to be a lessee holding over. The High Court also held that there was no compromise of the suit by any person authorised to do so on behalf of the Corporation. It also held that there was no acceptance of rent with the sanction of the Council. As a consequence it allowed the appeal and decreed the plaintiffs suit. 5. Before this Court Shri Gupte appearing for the appellant did not contended that there was a compromise of the suit. His contention on the other hand was that a concluded contract emerged when the appellant paid a sum of Rupees 5697.93 on 22-9-59 pursuant to the letter of the Commissioner and therefore the suit could not continue. He also argued that appellant would be entitled to the benefit of the provisions of Section 53-A of the Transfer of Property Act and that in any case he was a tenant holding over and would be entitled to the benefit of the provisions of Sections 106 and 116 of the Transfer of Property Act.6. We may straightway say that we find ourselves unable to agree with the contention that there was a concluded contract between the Municipal Council and the appellant on 22-9-1959. There is no dispute that in this case the Commissioner cannot enter into a contract by himself and can do so only if it is sanctioned by the Municipal Corporation under Section 80 of the Madhya Pradesh Municipal Corporation Act. The resolution of the Corporation dated 9-12-1949 was specific that the land would be given to the appellant if he deposited the upset price and rent in accordance with the letter dated 26-10-1949 sent by the Municipal Commissioner to the appellant and otherwise the land should be taken back into possession. That letter is not on record. Apparently, it was on the same terms as Ex. P. 20 dated 31-12-1949. It could not be otherwise. The appellant did not comply with the terms of that letter. He went on to make a counter offer by Ex. P. 19 dated 9-1-1950. He appealed to the Minister and having failed there, he waited nearly 7 years after the Corporations resolution to pay a part of the amount and pay the balance in instalments. This was accepted by the Municipal Commissioner on 20-6-1956. But we must make it clear that the Municipal Commissioner had no power in view of the resolution of the Corporation to accept the appellants offer. He was given a specific mandate and was not authorised to enter into negotiations with the appellant regarding the lease. The amount was not paid in spite of two further letters and the suit was filed on 16-9-1957. The Municipal Commissioner had no power to go on accepting the offers from the appellant more than 15 days after his letter to him on 31-12-1949; nor could he accept any terms other than those mentioned in Corporations resolution either within those 15 days or later. Even the offer made by the Corporations resolution came to an end with the filling of the suit which was a clear and unequivocal revocation of the resolution. Thereafter the Corporation cannot be deemed to keep open its offer of the year 1949. Nor was it open to the Commissioner either to make any offer to the appellant or to accept any offer from the appellant in respect of the land except with the sanction of the Municipal Council. The appellants offer made on 17-3-59, a year and a half after the suit was filed, was a new offer and it was rejected by the only authority competent to accept it i.e. the Corporation on 31-5-1960.The correspondence carried on by the Commissioner with the appellant was wholly beyond his powers. 7. The offer made by the appellant in 1959 cannot have anything to do with the resolution passed by the Municipal Council in 1949. The offer was of a different set of terms and included an offer to pay the costs of the suit and that also had in fact been deposited by the appellant at the instance of the Commissioner.That indicates the new situation that had come into existence and establishes beyond doubt that this was a fresh offer. We therefore hold that no contract came into existence between the parties on 22-9-1959. 8. It was then urged by Mr. Gupte that the appellant having deposited the rent up to 31-3-1954 and the Municipal Commissioner having accepted it he should be deemed to be a tenant holding over. Leaving aside for the moment the contention put forward on behalf of the Corporation that this payment was made behind its back, it has to be noted that the payment was at the rate prevailing before 30-9-1949 and on that date the Corporation having passed a resolution specifying a new rate of rent of Rupees 9/- per Chasma the payment at the old rate by the appellant and its acceptance by the Municipal Commissioner was not an acceptance of rent as such and in clear recognition of the tenancy right of the appellant. It cannot amount to the Corporation consenting to the appellant continuing as a tenant by paying the old rates of rent. There is thus no question of the appellant being a tenant holding over. But a person who was lawfully in occupation does not become a trespasser, even if he does not become a tenant holding over but is a tenant by sufferance. The position at law was explained in Kai Khushroo Bazonjee Capadia v. Bai Jerbai Hirjibhoy Warden, 1949 FCR 262 at p. 270 = (AIR 1949 FC 124) as follows : On the determination of a lease, it is the duty of the lessee to deliver up possession of the dismissed 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 sufference 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. At page 272 it was pointed out : It can scarcely be disputed 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. The same position was explained in a recent decision of this Court to which one of us was a party in Bhagwanji Lakhamshi v. Himatlal Jamnadas Dani, (1972) 1 SCC 388 = (AIR 1972 SC 819 ). At p. 391 it was observed : 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 (sic) (latter?) is a tenant at sufferance in English law and the latter (sic) (former?) 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 (AIR 1949 FC 124) 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 continue 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. 9. The appellant being merely a tenant by sufference there is no need for any notice before he could be evicted. Thus the judgment of the High Court is correct, in so far as it held the appellant was liable to be evicted.

Decision reasoning: 0[ds]The same position was explained in a recent decision of this Court to which one of us was a party in Bhagwanji Lakhamshi v. Himatlal Jamnadas Dani, (1972) 1 SCC 388   = (AIR 1972 SC 819  ). At p. 391 it was observed :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 (sic) (latter?) is a tenant at sufferance in English law and the latter (sic) (former?) 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 (AIR 1949 FC 124) 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 continue 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 it9. The appellant being merely a tenant by sufference there is no need for any notice before he could be evicted. Thus the judgment of the High Court is correct, in so far as it held the appellant was liable to be evicted.