Full Judgment Text
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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
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,
^
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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
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.
813
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
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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.
The main question involved is, whether there was a
valid termination of the lease and as such the sub-lessee,
the petitioner herein was
814
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
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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
815
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.
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
816
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
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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 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,
817
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
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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-
818
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 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
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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
819
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.
820