Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988 Equivalent citations: 1988 AIR 1470, 1988 SCR (3) 811, AIR 1988 SUPREME COURT 1470, 1988 (3) SCC 44, 1990 HRR 11, 1988 ALL CJ 524, (1988) 2 JT 429 (SC), 1988 2 JT 429 Author: Sabyasachi Mukharji Bench: Sabyasachi Mukharji PETITIONER: BURMAH SHELL OIL DISTRIBUTING NOW KNOWN AS BHARAT PETROLEUMC Vs. RESPONDENT: KHAJA MIDHAT NOOR AND OTHERS DATE OF JUDGMENT03/05/1988 BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S. CITATION: 1988 AIR 1470 1988 SCR (3) 811 1988 SCC (3) 44 JT 1988 (2) 429 1988 SCALE (1)1074 ACT: Transfer of Property Act, 1882 : Sections 106 and 107- Lease-Absence of a registered instrument-Monthly lease- Notice of termination of lease-Has to be read and construed in context of facts of each particular case and to the parties to whom it is addressed-Valid termination of lease- Sublessee need not be made party in ejectment suit. HEADNOTE: On 16th January, 1958 a lease deed was executed between the lessee and the lessor-respondent in respect of the demised land for a period of ten years, with a right of renewal for a further period of five years, and with permission to sub-lease the same. The lessee sub-leased the Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  1 premises to the petitioner for running a petrol pump. After the expiry of the lease period on 16th January, 1968, the lessor continued to accept the rent from month to month. However, no fresh instrument was executed by the parties. The lessor issued on 30th November, 1972 a notice to the lessee terminating the lease and for giving vacant possession of the land on the expiry of 15th January, 1973 after removing the structures by the 16th January, 1973. No notice was given separately to the petitioner. The lessee did not contest the suit filed on the basis of the notice. The petitioner contested the proceedings and contended that it was holding over after the expiry of the lease, that no notice terminating tenancy was received by it, and that the notice was invalid. The trial Court dismissed the suit holding that the notice terminating the lease was necessary and the notice in this case was invalid. The Court also rejected the lessor's plea that the tenancy expired by afflux of time. The trial Court, however, held that the lease was not extended for a fixed period of five years in absence of any written instrument. The 1st Additional Sub Judge allowed the lessor's appeal and held the notice valid. The High Court upheld the appellate order. 812 Dismissing the special leave petition, it was, ^ HELD: (1) In view of paragraph 1 of section 107 of the Transfer of Property Act, 1882 a lease of immovable property from year to year, or for any term exceeding one year, or reserving an yearly rent, can be made only by a registered instrument. In the absence of a registered instrument, it must be a monthly lease. [815G-H] (2) The High Court was right in holding that the lessee and the sub-lessee, in the facts of this case, continued to remain in possession as a tenant from month to month. [816A- B] (3) The High Court was right that the tenancy was automatically determined on the expiry of ten years. The lease was thereafter renewed from month to month which could only be terminated by giving a valid notice. [816E-F] (4) The notice of termination must be read in the context of the facts of each particular case having regard to the situation of the parties to whom it is addressed. If all the paragraphs of the notice in the instant case are read together in harmony it would be manifest that the lessee was directed to handover the lease-hold property on 16th January, 1973, and hence the notice was a valid notice of termination of the lease under section 106 of the Act. [817C;818F] (5) Law does not require that the sub-lessee need be made a party, if there was a valid termination of the lease. In all cases where the landlord instituted a suit against Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  2 the lessee for possession of the land on the basis of a valid notice to quit served on the lessee and did not implead the sub-lessee as a party to the suit, the object of the landlord is to eject the sub-lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub- lessee. [818H;819A-B] Harihar Banerji v. Ramsashi Roy, 45 Indian Appeals 222;Mangilal v. Suganchand Rathi, [1964] 5 SCR 239;Subadini v. Durga Charan Law, I.L.R. 28 Cal 118;Gobinda Chandra Saha v. Dwarka Nath Patita, A.I.R. 1915 Cal. 313 and Roop Chand Gupta v. Raghuvanshi (Pvt.) Ltd., AIR 1964 SC 1889, referred to. JUDGMENT: CIVIL APPELLATE JURISDICTION: Special Leave Petition (Civil) No. 15667 of 1987. From the Judgment and Order dated 11.11.1987 of the Patra High Court in Appellate Decree No. 133 of 1983. G.L. Sanghi, S.K. Mehta, M.K. Dua, S.M. Sarin and Aman Vachher for the Petitioner. Salman Khurshid, Irshad Ahmad, V.D. Phadke and L.R. Singh for the Respondents. The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J. This is a petition for leave to appeal against the judgment and order dated 11th November, 1987 of the High Court of Patna. On 16th January, 1958 a lease deed was executed between the lessee Latifur Rehman and lessor Khaja Midhat Noor (hereinafter called the respondent) with permission to sub-lease the same. The said Latifur Rehman sub-leased the premises to Burmah Shell Oil Distributing Company (the petitioner herein) for running a petrol pump and making necessary constructions thereon. The lease was for a period of ten years which expired on 16th January, 1968. It appears further that after the lease period had expired, the sub-lessee, petitioner continued to pay the rent which was being accepted continuously from month to month by the respondent, the lessor. A notice was issued by the respondent to the lessee terminating the lease and for giving vacant possession of the land by the 15th January, 1973 and also requiring the removal of the buildings, plant, etc., by the 16th January, 1973. In the last two paras of the said notice, it was stated that the lessee was to surrender the lease-hold land on the expiry of 15th January, 1973. No notice was given separately to the petitioner terminating its lease. A suit for ejectment was filed thereafter. The lessee Latifur Rehman did not contest the suit for ejectment. The petitioner, however, contested that proceeding. The learned Munsiff I, Gaya, by his judgment dated 8th May, 1979 dismissed the suit holding that the notice terminating the lease was necessary and the notice in this case was invalid. The plea of the landlord that the tenancy expired by afflux of time, was rejected. On 22nd February, 1983 the 1st Additional Sub Judge, Gaya allowed the appeal of the landlord and held that the notice terminating the tenancy and asking the petitioner to surrender by the 15th January, 1973 was a valid notice. Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  3 The main question involved is, whether there was a valid termination of the lease and as such the sub-lessee, the petitioner herein was bound to deliver vacant possession. A written statement had been filed by the petitioner, the sub-lessee, wherein it was, inter alia, stated that it was holding over the lease hold property after the expiry of the lease by paying rent. No notice terminating tenancy was received by it. The validity of the notice to the lessee was also challenged. The trial Court held that the lease was not extended for a fixed period of five years in absence of any written instrument. The following two questions of law were re-formulated by the High Court: (1) In absence of any registered instrument executed by both the parties i.e. the lessor and the lessee after the period stipulated in Ext. 4 i.e. the period of ten years, can it be said that the lease was extended automatically for a period of five years in terms of Ext. 4 or further whether the lessee was holding the suit property as tenancy from month to month? (2) If the first part of question (1) is held in negative and second part in the affirmative, as a consequence of which it must be held that the lease was required to be determined, whether the notice as contained in Ext. 7 validly terminated the lease of the lessee? Indubitably, the lessee came in possession of the property in question on 16th January, 1958. The lease was for a period of ten years with a right of renewal for a further period of five years. After the expiry of ten years, no instrument was executed by the parties and the lessee continued to remain in possession of the suit property. The lessor accepted the rent and allowed the lessee to continue. It is relevant in this connection to refer to the provisions of the Transfer of Property Act, 1882 (hereinafter called 'the Act'). Section 106 of the Act deals with the duration of certain leases in absence of written contract or local usage and section 107 deals how leases are to be made. These sections read as follows: "106. In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of the tenancy. Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants, at his residence, or if such tender or delivery is not practicable affixed to a conspicous part of the property. Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  4 107. A lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession. Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee: Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession." In view of the paragraph 1 of section 107 of the Act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of registered instrument, the lease shall be deemed to be "lease from month to month". It is clear from the very language of section 107 of the Act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. In the absence of registered instrument, it must be a monthly lease. The lessee and the sub-lessee in the facts of this case continued to remain in possession of the property on payment of rent as a tenant from month to month. The High Court so found. We are of the opinion that the High Court was right. Section 116 of the Act which was placed before the High Court deals with the effect of holding over and provides as follows: "116. If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106." It was submitted before the High Court that this was not a case of continuing of old tenancy for a period of five years but in view of the clear provisions of section 107 which we have noted hereinbefore and in the absence of a registered instrument, it must be held that it was holding over and not continuation of old tenancy for a further period of five years. That would be the harmonious construction of section 107 read with section 116 in the facts of this case. We are of the opinion that the High Court was right that the tenancy was automatically determined on the expiry of ten years which was stipulated in Ext. 4. Thereafter the lessee continued to hold the property and the lessor accepted the rent. The lease was, therefore, renewed from month to month because it was not the Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  5 case of any party that it was for agricultural purposes. In that view of the matter, the termination of the lease could only be by giving a valid notice. Such notice was given to the lessee but not to the sub-lessee. The respondent's case is that a notice to sub-lessee was not necessary. It was contended on behalf of the appellant that by Ext. 7 the lessee was asked to quit the lease hold premises on the expiry of 15th June, 1973. Admittedly, in this case, the lease was executed on 16th January, 1958 and from that date the lease came into existence. For computing the period of ten years the 16th January, 1958 had to be excluded. The tenancy was, therefore, terminated on the expiry of 16th of the month. The notice in the instant case of the quit which was Ext. 7 before the Court dated 30th November, 1972, was given on behalf of the respondent to Latifur Rehman- lessee. In paragraph 4 of Ext. 7 it was stated that the lessee was to deliver the possession of the lease hold property by 16th January, 1973. In paragraph 5 of Ext. 7 the lessee and sub-lessee were required to remove the buildings, plants etc. by the 16th January, 1973. In the last but one and the last paragraph of Ext. 7 it was stated that the lessee was to surrender the properties of the lease hold land on the expiry of 15th January, 1973. The question is whether there was a valid notice. The High Court held that in the facts of this case, there was a valid notice of termination and after the valid notice of termination of the lease to the lessee, there was no need to give a fresh notice to the sub-lessee. Notice must be read in the context of the facts of each particular case having regard to the situation of the parties to whom it is addressed. In Harihar Banerji and others v. Ramasashi Roy and others, 45 Indian Appeals 222 at page 225, the Judicial Committee observed as follows: ". . .that notices to quit, though not strictly accurate or consistent in the statements embodied in them, may still be good and effective in law; that the test of their sufficiency is not what they would mean to a stranger ignorant of all the facts and circumstances touching the holding to which they purport to refer, but what they would mean to tenants presumably conversant with all those facts and circumstances; and, further, that they are to be construed, not with a desire to find faults in them which would render them defective, but to be construed ut res magis valeat quam pereat." This is how the notices should be literally construed. This decision was relied upon by this Court in Mangilal v. Suganchand Rathi, [1964] 5 S.C.R. 239. There, however, the facts were different. There the defendant was a tenant of the plaintiffs. The defendant was in arrears of rent for one year to the extent of Rs. 1020. On April 11, 1959 the plaintiffs served a notice on the defendant requiring him to remit to them Rs.1020 within one month from the date of service of notice, failing which suit for ejectment would be filed. This notice was received by the defendant on April 16, 1959. On June 25, 1959 the defendant sent a reply to the notice enclosing with it a cheque for Rs.1320. This amount consisted of the rental arrears as well as the rent due right up to June 30, 1959. The plaintiffs accepted the cheque and cashed it and gave a fresh notice on July 9, 1959 requiring the defen- dant to vacate the premises by the end of the month of July. The defendant did not vacate the premises. Then the plaintiffs filed a suit to eject the defendant upon the ground that the latter was in Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  6 arrears of rent for one year and had failed to pay the arrears within one month of the service of the notice dated April 11, 1959 upon him. From the undisputed facts it was clear that the defendant was in fact in arrears of rent and had failed to pay it within the time prescribed by cl.(a) of section 4 of the Madhya Pradesh Accommodation Control Act, 1953. It was held that though the notice dated 11th April, 1959 could be construed to be composite notice under section 4(a) of the Accommodation Act and section 106 of the Transfer of Property Act it was ineffective under section 106 of the Transfer of Property Act because it was not a notice of 15 clear days. In that case, the defendant had only 14 clear days' notice. Reference was made to the aforesaid decision of Harihar Banerji v. Ramsashi Roy (supra) which was distinguished by this Court. This Court held that notice under section 106 of the Act must be strictly complied with. In so holding this Court relied on a decision of the Calcutta High Court in Subadini v. Durga Charan Law, I.L.R. 28 Cal. 118 which was construing a notice contemplated by section 106 of the Act and had held that in calculating the 15 days' notice the day on which the notice was served was excluded and even if the day on which it expired was taken into account it would be clear that the defendant had only 14 clear days' notice. This position was again reiterated by the Calcutta High Court in Gobinda Chandra Saha v. Dwarka Nath Patita, A.I.R. 1915 Cal. 313. This Court affirmed this view that notice must be understood in the light of Harihar Banerji v. Ramsashi Roy (supra). This Court held that the suit was actually based upon the notice dated July 9, 1959 which gave more than 15 days' clear notice to the defendant to vacate the premises. This notice was a valid notice under section 106 of the Act. In the instant case if all the paragraphs of Ext. 7 which is a notice in the instant case are read together in harmony it would be manifest that the lessee was directed to hand-over the lease hold property on 16th January, 1973. In the aforesaid view of the matter, in our opinion, there was a valid notice of termination of the lease of the lessee. In any event the lessee did not dispute this contention. The lessee accepted a valid termination of the lease hold property. In Roop Chand Gupta v. Raghuvanshi (Pvt.) Ltd. and another, A.I.R. 1964 S.C. 1889, it was held by this Court that it is quite clear that law does not require that the sub-lessee need be made a party, if there was a valid termination of the lease. This Court reiterated that in all cases where the landlord instituted a suit against the lessee for possession of the land on the basis of a valid notice to quit served on the lessee and did not implead the sub-lessee as a party to the suit, the object of the landlord is to eject the sub-lessee from the land in execution of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub- lessee. This Court noted at page 1892 of the report that this might act harshly on the sub-lessee; but this was a position well understood by him when he took the sub-lease. The law allows this and so the omission cannot be said to be an improper act. In the facts of this case these observations apply more effectively. The termination of the lease was not disputed by the lessee. There is no allegation of any collusion between the lessee and the respondent. In that view of the matter, we are of the opinion that the High Court was right. The suit in question was instituted in May, 1979 and the valid notice to quit was given long after the expiry of the period of lease. The sub- lessee had long innings. It is time for him to quit. There is no merit in this petition. The special leave petition fails and is, therefore, dismissed with costs. R.S.S. Petition dismissed. Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  7 Burmah Shell Oil Distributing Now Known ... vs Khaja Midhat Noor And Others on 3 May, 1988  8