Case: Calcutta Credit Corporation Limited &amp; Another Vs. Happy Homes Private Limited

1. A building in the town, of Calcutta belonging to the Chitpore Golabari Company (private) Ltd., was lot out under a written lease for a period of twelve years commencing from January 1, 1939, to Messrs Allen Berry and Co. Ltd.hereinafter called "Allen Berry". Under the terms of the leaseg or parting with the possession of the demised premises or any part thereof by the tenants without the previous consent in writing of the landlord was expressly prohibited. After the expiry of the period Allen Berry continued to hold over the premises. On August 12, 1958 Allen Berry served a notice in writing upon the landlord intimating their intention to vacate the premises "on August 31, 1953, at0 P. M." and requested the landlord to arrange to take delivery of possession. By letter dated August 26, 1953, Allen Berry informed the landlord that they did not intend to vacate the premises on August 31, 1953, as originally intimated or at all, and that the notice dated August 12, 1953, be treated as cancelled. By letter dated August 28, 1953, attorney of the landlord informed Allen Berry that the earlier notice dated August 12, 1953, could not be withdrawn except by mutual consent, and since the landlord had agreed to lease the premises to Messrs. Dunlop Rubber Co. (India) Ltd. with effect from September 1, 1953, the landlord was unable to give his consent to such withdrawal, and that it would insist upon Allen Berry vacating the premises as already intimated. Allen Berry addressed a letter to the landlord on September 14, 1953, intimating that they were holding over the premises on the expiry of the leave "according to the provisions of the Rent Control Act". On February 20, 1954, the landlord called upon Allen Berry to vacate and deliver possession of "the premises on the expiry of March 31, 1954". Allen Berry failed to carry out the requisition, and on May, 7, 1954, theysubleta part of the ground floor measuring approximately 2100 sq. ft. to Happy Homes (P) Ltd.respondent in this appeal2. The landlord then instituted a suit against Allen Berry claiming a decree in ejectment in respect of the demised premises and for mesne profits and other reliefs. This suit was settled on March 28, 1955, and a consent decree was passed. The important recitals in the decree were that (1) Allen Berry had surrendered the tenancy by notice dated August 12, 1953; (2) that they had handed over possession of the portion ofthe premises in their occupationto the landlord; (3) that the landlord will be at liberty either to retain thesubtenantor to eject him; and (4) that they had been created without the knowledge and consent of the landlord3. The landlord then sued Messrs. Happy Homes (P) Ltd.hereinafter called the respondentin the High Court of Calcutta for a decree for possession of the premises in its occupation and for mesne profits. The suit was resisted by the respondent principally on two grounds: (i) that the tenancy of Allen Berry was not determined before theg in their favour and (ii) that even if it be held that the tenancy of Allen Berry was determined before May 7, 1954, by virtue of the provisions of the West Bengal Rent Control (Temporary Provisions) Act, 1950, the respondent became a direct tenant of the landlord and was entitled to the benefits of that Act4. S. P. Mitra, J. decreed the claim of the landlord for possession of the premises in the occupation of the respondent and for mesne profits at the rate of Rs. 495 per month from March 1, 1955 till delivery of possession5. During the pendency of the appeal against the decree passed by S. P. Mitra, J., the landlord transferred the premises to Messrs. Calcutta Credit Corporation Ltd. The Landlord and the transferee will collectively be referred to hereinafter as the landlord. A Division Bench of the High Court reversed the decree passed by S. P. Mitra, J., and ordered that the claim of the landlords be dismissed.

Court's reasoning:
Clearly Section 113 contemplates waiver of the notice by any set on the part of the person giving it, if such an act shows an intention to treat the lease as subsisting and the other party gives his consentexpress or implied therefor. The law under the Transfer of Property Act on the question in hand is not different from the law in England. Once a notice is served determining the tenancy or showing an intention to quit on the expiry of the period of the notice the tenancy is at an end, unless with the consent of the other party to whom the notice is given the tenancy is agreed to be treated as subsisting.It was held in (1868.) 3 Ex 303 that a notice determining a tenancy cannot be withdrawn. In (1868) 3 Ex 303 an annual tenancy of a farm under a written lease commencing on Lady Day i. e. March 25, was determined by a notice by which the landlord called upon the tenant to quit the farm at the expiration of the current years tenancy. Before the expiry of the year of tenancy the arrears of rent were paid up by the tenant, and the notice was withdrawn and the tenant continued in occupation of the farm under the terms of the original agreement. It was held by the Court of Exchequer that the tenancy was determined by the notice to unit and a surety for payment of rent under the original lease was not liable for rent falling due after the expiry of the notice Kelly, C. B., observed that whether the notice is given by the landlord or the tenant the party to whom it is given is entitled to insist upon it, and it cannot be withdrawn without the consent of both. The consent of the parties makes a new agreement, and the rent became due under a new agreement. In our judgment, that principle applies to the law of landlord and tenant in India. Therefore on the expiration of the period of notice dated August 12, 1953, the tenancy of Allen Berry stood determinedIt is not necessary to decide for the purpose of this case whether the month of the tenancy of Allen, Berry expired on the midnight of the first day of every calendar month, for, in our judgment a notice which is defective may still determine the tenancy, it is, accepted by the landlord. A notice which complies with the requirements of Sec. 106 of the Transfer of Property Act operates to terminate the tenancy, whether or not the party served with the notice assents thereto. A notice which does not comply with the requirements of Section 106 of the Transfer of Property Act in that it does not expire with the end of the month of the tenancy, or the end of the year of the tenancy, as the case may be, or of which the duration is shorter than the duration contemplated by Section 106, may still be accepted by the party served with the notice and if that party accepts and acts upon it, the party serving the notice will be estopped from denying its validity. The defect in the notice served by one party may undoubtedly be relied upon by the other party and he may plead that the tenancy does not stand determined, but after the notice is accepted by the other party who acts upon it, the party serving the notice cannot contend that the notice served by him was defective, and on the account the tenancy was not determined. The reason of the rule is clear. A tenancy is determined by service of the notice in the manner prescribed by Section 111 (h) read with section 106 of the Transfer of Property Act. If the notice is duly given, the tenancy stands determined on the expiry of the period of the tenancy. Even if the party served with the notice does not want thereto, the notice takes effect. If the notice is defective, it does not operate to terminate the tenancy by force of the statute. But a tenancy is founded in contract, and it is always open to the parties thereto to agree that the tenancy shall be determined otherwise than by notice served in the manner provided by section 106 of the Transfer of Property Act, or by a notice of a duration shorter than the period provided by the Act. If the parties so agree, the tenancy will come to an end8. The landlord according to the teens of the agreement by its letter dated August 28, 1953, informed Allen Berry that it did not agree to the withdrawal of the notice since it had already agreed to lease out the premises to Messrs. Dunlop Rubber Co (India) Ltd., with effect from September 1, 1953. The contents of the letter clearly prove, in the absence of any evidence to the contrary, that the offer to terminate the tenancy on August 31, 1953, was accepted by the landlord and landlord had acted upon that offer. The tenancy stood determined as proposed by Allen Berry. Allen Berry could not thereafter claim, in the absence of a fresh agreement, that there was a subsisting contractual tenancy9. We are unable to agree with counsel for the respondent that in order to determine a tenancy under the Transfer of Property Act at the instance of a tenant, here must be actual delivery of possession before the tenancy is effectively determined.That contention is contrary to the plain terms of Section 111 (h) of the Transfer of Property Act. We are therefore of the opinion that by virtue of the notice dated August 12, 1953, and acceptance thereof by the landlord, the tenancy of Allen Berry was determined at0 P. M. on August 31, 1953, It is unnecessary in that view to consider whether the notice dated February 20, 1954, requiring Allen Berry to vacate and deliver possession of the premises to the landlord on expiry of March 31, 1954, was a valid noticeWe are not directly concerned in the present case withn (1) of Section 13. Thatn only deals withg by a tenant inferior to "the tenant of the firstdegree.In the present case, Allen Berry were direct tenant front the landlord and initially were "tenants of the first degree".n (2) deals with cases ofg by tenants of the first degree or by a tenant inferior to the tenant of the first degree as defined in the Explanation to subsec. (1), and such is binding on the land lord of such last mentioned tenant. It is provided thereby that if the tenancy of such tenant is lawfully determined otherwise than for personal occupation, thee will be deemed to be a tenant in respect of such premises or part thereof and will hold directly under the landlord or the tenant whose tenancy has been determinedBut the Court decided in Indra Kumar Karnanis case, (1965) 3 SCR 329   = (AIR 1966 SC 186  ) that a covenant in the lease prohibiting a tenant fromg in respect of premises governed by the West Bengal Premises Rent Control (Temporary Provisions) Act 17 of 1950 does not prevent thesubtenantunder a contractual tenant from setting up the claim that he has become entitled under Section 13 (2) of the Act to the rights of the tenant in respect of the premises or part thereofsublet15. We are unable to agree with the contention raised by counsel for the respondent. In our view, since a statutory tenant has merely a personal right to protect his possession, and has no estate or interest in the premises occupied by him, he cannot convey an estate or interest which he does not possess. A statutory tenant by parting with possession forfeits the protection of the Act, and unless the statute expressly provides or clearly implies otherwise, the person inducted by him cannot claim the protection of the Act. In our judgment, clause (c) of Section 12 (1) applies only to a case in which the tenant has an. interest in the estate which he could. Similarly, Section 13 contemplates a case in which a contractual tenant hassubletthe premises. If it be held the expression tenant in Section 13 (2) and in clause (c) of Section 12 (1) includes a statutory tenant an estate or an interest in the demised premises would be conferred by him upon a transferee which the tenant himself does not possess, and that a tenant who has acted contrary to the provisions of. Clauses (m), (o) and (p) of section 108 of the Transfer of Property Act, or has used the property for immoral or illegal purposes or has committed acts of negligence and default which may materially deteriorate the condition of the premises, or has otherwise been guilty of conduct which is a nuisance or annoyance to occupiers of adjoining or neighbouring premises including the landlord, or has failed to pay rent exceeding two months and has thereby incurred liability to forfeit the protection of the statute granted to him by section 12 (1) and whose right has been forfeited by due notices, may stillsubletthe premises and thee would then be entitled to claim the right under Section 13 (2) on the determination of the tenancy of the tenant16. Considered in the light of the scheme and object of the Act, the expression tenant in Clause (c) of Section 12 (1) or in Section 13 (2) must, in our judgment mean a contractual tenant alone and not a statutory tenant. The definition in S. 2 (11) of the expression tenant includes a statutory tenant. But the definition does not apply if there is anything repugnant in the subject or context. A statutory tenant has no interest or estate in the premises occupied by him, ant we are unable to hold at the Legislature without making an express provision to that effect intended to invest him with power to induct into the premises in his occupation a person who would be enticed to claim the right and interest of a contractual tenant. If the view which has appealed to the High Court of Calcutta be accepted, a statutory tenant whose right of occupation is determined by a notice to quit, because of conduct which entails forfeiture of the protection of the Act, may induct asubtenantso as to defeat the claim of the landlord, and presumably a tenant sued in ejectment may also exercise that privilege for the right if granted would enure till a decree in ejectment is passed. The Legislature has not made any such express provision, and no provision to that effect which makes the right of the landlord conferred by the Act to obtain a decree in ejectment against his tenant wholly illusory may be implied.