Lease – Tenant at sufferance – Liability to pay mesne profits – Held: A tenant continuing in possession after the expiry of the lease may be treated as a tenant at sufferance, which status is a shade higher than that of a mere trespasser, as in the case of a tenant continuing after the expiry of the lease, his original entry was lawful – But a tenant at sufferance is not a tenant by holding over – While a tenant at sufferance cannot be forcibly dispossessed, that does not detract from the possession of the erstwhile tenant turning unlawful on the expiry of the lease – In the present case, the appellant while continuing in possession after the expiry of the lease became liable to pay mesne profits.
West Bengal Tenancy Act, 1956 – Whether there was a prior determination of the lease of 21 years by the respondent-lessor, if so, whether the appellant-lessee is entitled to protection of the Tenancy Act – Held : No reason to disagree with the High Court that the term of lease was 21 years from the date on which the three floors in question were handed over – In regard to the 2nd and 3rd floors, possession was handed over to the appellant on 16.09.1969 – As far as the 4th floor is concerned, the possession was handed over only on 04.11.1970 – The lease agreement in 1968 along with the supplementary agreement in 1969 did constitute a lease – In this case it is no doubt true that there was pre-determination clause which gave an option to the appellant to determine the lease after a period of 8 years – From the evidence and the stand taken by the appellant as emerging from the documents, it is clear that the appellant continued for the full length of 21 years in terms of the lease – Its possession was never ruffled – Appellant also filed a suit – During the entire period after the execution of the deed in 1968 and the supplementary lease deed in 1969, till the period of 21 years ran out, appellant never took up the case based on its right under the West Bengal Premises Tenancy Act in view of the option it had to determine the lease under Clause 9 – The presence of the clause in question is not to be confused with the issue relating to the effect of the notice dated 07.12.1977 purported to have been sent to the respondent – Therefore, the appellant may not succeed on the strength of the option it claimed under the agreement to lease.
Transfer of Property Act, 1882 – s. 106 – Was letter dated 19.10.1990, a notice u/s. 106 – Held : On the terms of the letter dated 19.10.1990 it cannot be held that it amounted to termination of the lease – There was a lease for a term of 21 years commencing in the case of the 2nd and 3rd floors from 17.09.1969 – Therefore, the period of 21 years had already run out by the time the letter dated 19.10.1990 came to be issued – In other words, it was a case of a lease qua the 2nd and 3rd floors which had expired by efflux of time, in September, 1990.
Limitation Act, 1963 – Article 51 – Plea was that a suit of mesne profits is governed by Article 51 of Limitation Act – Suit was laid on 10.04.1995, it was contented that for the period beyond 3 years before the date of the suit, the suit would be barred – Held : Landlord by the suit seeks to realise, what in law is described as damages for unauthorised occupation by the tenant after the expiry of the lease – It is not to be conflated to the profits received within the meaning of Article 51 of the Limitation Act, as it involves finding out the rate at which the landlord could have let out the premises – It would be the residuary Article, namely, Article 113, which should apply – Therefore, on facts it may not be possible to hold that the suit filed by the respondent, should still be found to fall under Article
51 of the Limitation Act and barred as regards part of the cause of action.
Dismissing the appeals, the Court
HELD: 1.1 Whether the documents styled as agreement dated 21.11.1968 and the supplementary agreement for lease dated 12th September, 1969 constituted a lease? The agreement of lease dated 21.11.1968 on its own operated as a lease. It was a demise and operated as such. Admittedly, it was a registered document. Further, as correctly contended by the respondent, the appellant in its pleadings proceeded to contend that the agreement of lease dated 21.11.1968 operated as a lease. There was indeed a written agreement of lease dated 21.11.1968. The term of the lease was 21 years which was to begin from the date on which demised premises was handed over to the lessee. The rent for the demised premises was also fixed. [Paras 12, 14][478F; 480-B]
1.2 Whether the possession of 2nd and 3rd floors were handed over on 17.09.1969 and 4th floor stood handed over on 04.11.1970?
The Division Bench has found in modification of the judgment of the learned Single Judge that as there are no documents to show the exact date. Appellant was put in possession of the 2nd and 3rd floors and fixed 17.09.1969 as the starting point. Court can safely proceed on the basis that the 4th floor was handed over on 04.11.1970. As far as the 4th floor is concerned, in view of the findings by the High Court that the possession of the 4th floor was handed over on 04.11.1970 and the same not being questioned before us, this Court can safely proceed on the basis that the 4th floor was handed over on 04.11.1970. The findings rendered by the High Court is a plausible view and we would, therefore, take the view that possession of 2nd and 3rd floors was handed over on 17.09.1969 and 4th floor stood handed over on 04.11.1970. [Paras 15,17 & 22][480-C, G; 483-C]
1.3 Whether the appellant is a monthly tenant from November, 1969?
The contention that the appellant should be treated as a monthly tenant even from the very beginning is without any merit. The agreement dated 12.9.1969 is admittedly a registered document. No force in law or on facts to permit the appellant to contend that the appellant be treated as a monthly tenant since 1968. The period of the lease is to be calculated from the date when the possession was handed over. Possession, in fact, was handed over on the dates when it is handed over as found in the impugned judgment. The cases of the appellant is also in the teeth of the correspondence dated 21.08.1990 and 03.11.1990, inter alia. [Paras 24, 25][483-E; 484-B, C-D]
1.4 No reason to disagree with High Court that the term of lease was 21 years from the date on which the three floors in question was handed over. In regard to the 2nd and 3rd floors, possession must be found handed over to the appellant on 16.09.1969. As far as the 4th floor is concerned, we affirmed the finding of the High Court that possession was handed over only on 04.11.1970. There is also no dispute that the parties namely the appellant and the respondent could determine the lease prior to the expiry of 21 years. It cannot be in the region of dispute that the respondent did issue a notice dated 12.12.1977. The respondent followed it up by filing a suit, C.S. No. 20 of 1978, claiming possession. There was also a cross suit filed by the appellant. Both these suits finally came to be compromised. If Clause 26 read with the proviso is considered, right to forfeit and to determine the lease stood conditioned by the requirement of the payment of the amounts to the appellant under the mortgage. There is no pleading at all in this regard. The notice of termination by the respondent is not tendered in evidence as pointed out by the respondent. We have noticed the contents of the letter dated 08.03.1990 which clearly indicate that the appellant had in mind the proviso to Clause 26. In paragraph 12 of the written statement, the case which was set up was that under the terms of the lease agreement and supplementary agreement, the lease has been made expressly terminable before its expiry at the option of the appellant. This appears to be the case with reference to Clause
9. As regards the case based on the effect of the waiver within the meaning of Section 113 of Transfer of Property Act, the following aspects are noticed. The notice of termination is itself not produced. The judgment of this Court in Calcutta Credit Corporation Ltd. was rendered under Section 113 of the Transfer of Property Act. Waiver of forfeiture within the meaning of Section
111 (g) of the Transfer of Property Act is provided in Section 112 of the Transfer of Property Act. The considerations relevant for the operation of the Section 112 is different from that of Section
113 of the Transfer of Property Act. Since the notice itself is not before the Court, things are not clear. There is no adjudication about the notice of termination in the earlier suit. We have also noticed the proviso to clause 26. We have seen the stand of the appellant even in the year 1990 as made clear from the letter dated 21.08.1990 addressed by it to its solicitors. There is no case as to when the appellant stood paid. This is also relevant for the reason that the notice of termination referred to by the appellant dated 07.12.1977 if not legally permissible at the time when it was issued, it would not in law have the effect of determining the lease which was for a period of 21 years. In the circumstances of this case, there is no merit in the case of the appellant based on the decision of this Court in Calcutta Credit Corporation Ltd. as regards the effect of waiver under Section
111 of the Transfer of Property Act resulting in the creation of the new tenancy. [Paras 41, 53, 54][498-H; 499-A-C; 506-C-H; 507-A-B]
Calcutta Credit Corporation Ltd., & Another v. Happy Homes [P] Ltd [1968] 2 SCR 20 – referred to.
1.5 In this case it is no doubt true that there is predetermination clause which gave an option to the appellant to determine the lease after a period of 8 years. From the evidence and the stand taken by the appellant as emerging from the documents, it is clear that the appellant continued for the full length of 21 years in terms of the lease. Its possession was never ruffled. The appellant also filed a suit. During the entire period after the execution of the deed in 1968 and the supplementary lease deed in 1969, it would appear that till the period of 21 years ran out, appellant never took up the case based on its right under the West Bengal Premises Tenancy Act in view of the option it had to determine the lease under Clause 9. The presence of the clause in question is not to be confused with the issue relating to the effect of the notice dated 07.12.1977 purported to have been sent to the respondent which we have separately dealt with. Therefore, in terms of Pabitra Kumar Roy, the appellant may not succeed on the strength of the option it claimed under the agreement to lease.[Para 57][509-C-F]
Pabitra Kumar Roy and Another v. Alita D’Souza [2006]
8 SCC 344 : [2006] 6 Suppl. SCR 678 – referred to.
1.6 IS LETTER DATED 19.10.1990, A NOTICE UNDER SECTION 106 OF THE TRANSFER OF PROPERTY ACT?
On the terms of the letter dated 19.10.1990 it cannot be held that it amounted to termination of the lease. There was a lease for a term of 21 years commencing in the case of the 2nd and 3rd floors from 17.09.1969. Therefore, the period of 21 years had already run out by the time the letter dated 19.10.1990 came to be issued. In other words, it was a case of a lease qua the 2nd and 3rd floors which had expired by efflux of time, in September, 1990. The argument of the appellant in this regard is rejected. [Para 58][510-B-C]
1.7 MESNE PROFITS: WAS THE POSSESSION OF THE
APPELLANT WRONGFUL ON THE EXPIRY OF THE LEASE? Section 111[a] of the Transfer of Property Act, 1882 provides that the lease is determined by efflux of time. On the expiry of the lease, the lease ends. A tenant continuing in possession after the expiry of the lease may be treated as a tenant at sufferance, which status is a shade higher than that of a mere trespasser, as in the case of a tenant continuing after the expiry of the lease, his original entry was lawful. But a tenant at sufferance is not a tenant by holding over. While a tenant at sufferance cannot be forcibly dispossessed, that does not detract from the possession of the erstwhile tenant turning unlawful on the expiry of the lease. Thus, the appellant while continuing in possession after the expiry of the lease became liable to pay mesne profits. [Paras 59 & 60][510-D, G-H; 511-A]
1.8 LIMITATION: WHETHER THE SUIT IS BARRED
IN RELATION TO MESNE PROFITS BEYOND 3 YEARS OF THE SUIT?
The plea is based on the case that a suit of mesne profits is governed by Article 51 of the Limitation Act, 1963. The suit was laid on 10.04.1995. The contention is that for the period beyond
3 years before the date of the suit, the suit would be barred. Article 51 contemplates a period of three years from the date on which the profits from the immovable property is received by the defendant. If it is to be understood as profits actually received by the defendant, then, it is obvious that Article 51 may not apply. If a Suit for mesne profits of the kind involved in this case would fall more appropriately under Article 113 of the Limitation Act, which is the residuary Article, the Suit must be instituted within a period of three years from the date on which the right to sue accrue. This Article is in stark contrast with Article 58 of the Limitation Act, under which, the period of limitation is three years but from the date on which the cause of action first arises. If a claim for mesne profits is one, which accrues from day-to-day and it is a continuing one and if the suit for mesne profits would fall to be decided under Article 113 of the Limitation Act, then, since the cause of action is a continuing one, the suit may not be barred as regards any part of the claim as contended by the appellant. In this case, there is another dimension. The case set up by the respondent plaintiff in the plaint, as noticed, was that, it by virtue of the acknowledgment and admission of the jural relationship in letter dated 24th May, 1994, there is no bar of limitation for any part of its cause of action. In their submission before this Court also, the respondent has laid store by the stand that the respondent was awaiting a decision by the Chairman. It is true that a pure question of law which does not involve any investigation of facts, and if the plea of limitation in a given case is such, there can be no taboo in this court dealing with it even if raised for the first time. This is however not a case where the plea was not raised. It was raised and an issue was framed. But it was expressly given up before the Single Judge and not pursued before the Division Bench. [Para 63, 66-68][511-G-H; 512-B-C; 513-F-H; 514-A-D]
1.9 An acknowledgment, as far as the admission of the jural relationship is concerned, need not be express. It would become necessary to probe the surrounding circumstances. This may include going into the facts. [Para 73][516-E]
1.10 Mesne profits, as defined in Section 2[12], CPC includes not only the profits which a person in wrongful possession of such property actually receives but also those profits which he might with ordinary diligence have received therefrom together with interest on such profit. What is excluded is only the profit due to improvement made by the person in wrongful possession. However, Article 51 of the Limitation Act deals with a suit for profits of the immovable property belonging to the plaintiff which have been wrongfully received by the defendant. The time no doubt for such a suit begins to run when the profits are received. [Para 78][518-G-H]
Sri Raja Inuganti Venkata Rajagopala Rama
Suryaprakasa Rao Garu v. Maharaja of Pithapuram and Another AIR 1948 PC 175; Phiraya Lal Alias Piara Lal and Another v. Jia Rani and Another AIR [1973] Del 186; Rattan Lal v. Girdhari Lal and Another AIR [1972] Del 11; Bhawanji Lakhamshi and Others v. Himatlal Jammnadas Dani and Others [1972] 1 SCC
388 : [1972] 2 SCR 890 – referred to.
1.11 This Court has declared that in the case of determination of a lease by the lease coming to an end, tenant would be liable to pay damages for use and occupation at the rate at which the landlord could have let out the premises on being vacated by the tenant. What the landlord is entitled is, to get damages for the use and occupation at any rate, at which, the landlord could have let out the premises on being vacated by the tenant. The liability of the tenant, to pay damages on the basis of the rate at which landlord could have let out the premises, may not be the same as the profit the tenant might have received with ordinary diligence. In the first place, equating the same must involve a right with a tenant to transfer or sub-let the premises. In other words, the Court would have to find whether the tenant could have, in law, let out the premises and derived a higher amount. [Para 82][520-F-H; 521-A-B]
1.12 Once the lease comes to an end, the erstwhile tenant becomes a tenant at sufferance. He cannot be dispossessed, except in accordance with law. But he cannot, in law, have any right or interest anymore. Even though, under Section 108 of the Transfer of Property Act, if there is no contract to the contrary, the tenant may have the right, under Section 108(j), to transfer his interest absolutely or even by sub-lease or mortgage, when the lease expires by afflux of time, his interest as lessee would come to an end. Thus, on the expiry of a lease, the erstwhile tenant, who remains a tenant at sufferance, would have no right to transfer. In this regard, this Court would have to hold that there is a new lease by holding over. The acceptance of the amount after the expiration of the lease by the respondent was without prejudice to its case. The appellants cannot persuade the court to hold that there is a lease by holding over. Therefore, it may not be appropriate to allow the appellant to raise the contention of limitation or to allow him to succeed on the same, based on the case falling under Article 51. This is, no doubt, despite noticing the averment in the plaint which appears to have been made with reference to Section 2(12) of the CPC. The principle laid down in Atmaram and the principles already considered have to be bear in mind. Landlord by the suit seeks to realise, what in law is described as damages for unauthorised occupation by the tenant after the expiry of the lease. It is not to be conflated to the profits received within the meaning of Article 51 of the Limitation Act, as it involves finding out the rate at which the landlord could have let out the premises. It would be the residuary Article, namely, Article 113, which should apply. In the factual context, it may not be possible to hold that the suit filed by the respondent, should still be found to fall under Article 51 of the Limitation Act and barred as regards part of the cause of action. [Paras 8386][521-C-D, E-H; 522-A-C] Atma Ram Properties [P] Ltd. v. Federal Motors [P] Ltd. [2005] 1 SCC 705 : [2004] 6 Suppl. SCR 843; Ranjit Chandra Chowdhury v. Mohitosh Mukherjee [1969] 1 SCC 699 : [1970] 1 SCR 16; Tayabali
Jaffarbhai Tankiwala v. Messrs. Asha and Co. and Another (1970) 1 SCC 46 : [1970] 2 SCR 554; Nand Ram [Dead] Through Legal Representatives and
others v. Jagdish Prasad [Dead] Through Legal
Representatives [2020] 9 SCC 93; Shakti Bhog Food Industries Ltd. v. Central Bank of India and Another (2020) SCC OnLine 482; Savita Dey v. Nageswar
Majumdar and Another (1995) 6 SCC 274 : [1995] 4 Suppl. SCR 80; Raptakos Brett and Company Limited v. Ganesh Property (2017) 10 SCC 643 : [2017]
8 SCR 982; Messrs. Lakshmirattan Cotton Mills Co. Ltd. and Messrs. Behari Lal Ram Charan v. The Aluminium Corporation of India Ltd. (1971) 1 SCC 67 – referred to.
Ram Karan Singh and Others v. Nakchhed Ahir and Others AIR 1931 Allahabad 429; Sudhir Kumar Paul v. Indu Prova Ghose and Others AIR 76 Cal 274; Khana Lahiri and Others v. Suniti Kumar Chatterjee and Others (2006) SCC Online Cal 248; Dullabhbhai Hansji and Another v. Gulabbhai Morarji Desai (1938)
40 Bom LR 100; Dwarkas Nathamal v. Balkrishna
Baliram AIR 1964 Bom 42 – referred to.
Tayleur v. Wildin (1867- 68) LR 3 Ex Cases 303 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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