Direct rent payment to the original landlord implied surrender, creating a terminable month-to-month tenancy.

The Bank claimed rights in the suit land through an unregistered assignment from Fairdeal Development Corporation, asserting that it held the land for the balance of a 97-year head lease created in 1964.

The Respondent claimed ownership under a registered conveyance dated 28 June 2005 from the original lessor’s legal heirs.

The Bank had paid rent to the original owner and his legal heir, and later paid rent to the Respondent after verifying the conveyance.

The Respondent sued for eviction, arrears and mesne profits. The Small Causes Court dismissed the suit, principally because the head lessee had not been joined and the lease had not been validly surrendered; the Appellate Bench reversed that decision and decreed possession. The Bank challenged the appellate decree in revision.

1. Whether the Bank’s unregistered assignment gave it the right to occupy the premises for the unexpired term of the original head lease, or only as a month-to-month tenant.

2. Whether the Bank’s payment of rent directly to the original lessor and his successor amounted to an implied surrender, making the Bank a direct tenant and permitting the suit to proceed without joining the head lessee.

3. Whether the Respondent’s title and the identification of the suit premises undermined its status as landlord or the eviction decree.

Section 111 of the Transfer of Property Act, 1882 provides for determination of leases, including by express surrender under clause (e), implied surrender under clause (f), and expiry of a notice to determine or quit under clause (h).

Implied surrender may arise through the creation of a new relationship or relinquishment of possession; physical delivery of possession is not indispensable where the parties’ conduct establishes a changed legal relationship.

In P.M.C. Kunhiraman Nair v. C.R. Naganatha Iyer, AIR 1993 SC 307, the Supreme Court recognised that direct payment of rent by a sub-tenant to the lessor may evidence acceptance of a direct tenancy and implied surrender.

Tarachand v. Sagarbai Alias Chaiyalibai, (2007) 5 SCC 392, likewise explains that implied surrender may arise through a new relationship or relinquishment of possession, with the parties’ conduct relevant to the inference.

The Court also treated the Bank’s unregistered assignment as insufficient to confer the remaining term of the original lease, leaving it with a month-to-month tenancy terminable by notice.

The Court found that the Bank’s rights derived through a chain of unregistered instruments, while it had in fact paid rent directly to the original lessor and then to his legal heir for a prolonged period.

After verifying the Respondent’s conveyance, the Bank also paid rent to the Respondent.

Applying the principles of implied surrender, the Court held that this conduct established a direct tenancy with the original lessor and amounted to surrender of the intervening leasehold interests; the Bank therefore could not claim the balance of the 97-year term.

As the Respondent’s notice terminated the resulting month-to-month tenancy, the head lessee’s absence did not defeat the eviction suit.

The Court further observed that the Bank’s pleaded case had asserted continuing leasehold rights, not disputed the Respondent’s ownership; the title objection was therefore not available at that stage.

It directed that the judgment remain in abeyance for 12 weeks, subject to the Bank continuing to pay interim compensation and filing the required undertaking within two weeks.