Case: Badrilal Vs. Municipal Corporation Of Indore

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 effectOpinion 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 possessionOn 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 land3. 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 land4. 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.

Reasoning:
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.