Case: Bhawanji Lakhamhi &amp; Ors Vs. Himatlal Jamnadas Dani &amp; Ors

2. In this appeal we are concerned with a plot of land admeasuring 2108 square yards in Survey No. 171, Hissa No.7, at Ghatkopar. This plot belonged to one Jamnadas Chhotalal Dani. On 15-11-1948, Jamnadas executed two leases in favour of one Bhawanji Lakhamsi 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 years. The subject matter of the second lease was a third plot in the same area.3. The leases were for a period of ten years and in respect of the first plot, the rent payable was Rupees 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 14-8-1951, 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 Rupees 75/- per month.4. 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 sublet 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 the suit on 22-10-1959 in the Small Causes Court of Bombay.5. 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 one months notice.6. The trial Court held that there was no clear evidence of the sub-letting of the premises, but that the plaintiff required the plot bona fide for constructing a new building within the meaning of Clause (i) 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 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.7. 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 v. Kartik Chandra Das, (1961) 3 SCR 813   = (AIR 1961 SC 1067  ) no case was made out for new tenancy by holding over under Section 116 of the Transfer of Property Act as the appellants 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.

Court's reasoning:
9. 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 contemplated 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 peoperty 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 orthe 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 lesse) six months notice to the lessee was necessary. The lessee exercised his option to renew the lease and offered to fulfil the condition therefor. In the meanwhilethe 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 v. Sugan Chand, AIR 1965 SC 101   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, namely, 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 Act. In other words, the question here is whether the conditions for the application of Section 116 of the Transfer of Property Act areare 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 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 AIR 1961 SC 1067 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 tenants 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 AIR 1961 SC 1067   which followed the principles laid down by the Federal Court in 1949 FCR 262 = (AIR 1949 FC 124) is correct and does not require re-consideration.13. 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.