Karnataka High Court
M/S Auto World vs Smt. K.V. Sathyavathi on 16 February, 2015
Equivalent citations: AIR 2015 KARNATAKA 128, (2015) 2 KCCR 1688, (2015) 2 ICC 135, (2015) 4 CIVILCOURTC 209
Author: Anand Byrareddy
Bench: Anand Byrareddy
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
®
DATED THIS THE 16TH DAY OF FEBRUARY 2015
BEFORE:
THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY
REGULAR FIRST APPEAL No.198 OF 2015
BETWEEN:
M/s. Auto World,
No.12, now No.62,
Situated at J.C.Road,
Bangalore - 560002,
Represented herein by its
Partner, Mr. Imran Sayeed,
Son of Late Mr. M.S.Sait,
Aged about 37 years,
At No.12, J.C.Road,
Bangalore - 560 002.
... APPELLANT
(By Shri. Arun Kumar .K, Advocate for M/s. Crest Law Partners)
AND:
Smt. K.V.Sathyavathi,
Wife of Late T.L.Ramaiah,
Major, residing at No.13,
Venkatswamappa Lane,
Lalbagh, Upperahalli,
Bangalore - 560 004.
2
Represented herein by her
G.P.A. Sri. T.R.Ranganatha,
Son of Late T.L.Ramaiah,
Aged about 50 years,
Residing at No.13,
Venkatswamappa Lane,
Lalbagh, Upperahalli,
Bangalore - 560 004.
...RESPONDENT
(By Shri. K.V. Narasimhan, Advocate for Caveator/Respondent)
*****
This Regular First Appeal filed under Section Order 41
Rule 1 read with Section 96 of the Code of Civil Procedure, 1908,
against the judgment and decree dated 6.11.2014 passed in
O.S.No.4950/2009 on the file of XII Additional City Civil and
Sessions Judge, Bangalore, partly decreeing the suit for ejectment
and recovery of arrears of rent.
This Regular First Appeal having been heard and reserved
on 10.02.2015 and coming on for pronouncement of Judgment
this day, the Court delivered the following:-
3
JUDGMENT
This is a defendant's appeal. A significant point of law arises in this appeal and hence by consent of parties, the appeal is heard on merits even at the stage of admission and is disposed of by this judgment.
2. The parties are referred to by their rank before the trial court for the sake of convenience.
3. The suit was for ejectment of the defendant, from the property under its occupation. The defendant is a registered partnership firm. It was said to have been inducted into the premises, more than three decades ago, by the plaintiff's husband. The defendant carries on its business of sale of automobile spares and accessories from the premises.
It is not in dispute that the parties did choose to reduce the terms of the lease into writing in the year 2004, dated 21.5.2004. The term was shown as being for a period of four and a half years. It was renewable at the option of the parties.
4
The plaintiff is said to have issued a notice of termination of tenancy dated 21.8.2008, on the expiry of the term of the lease. The defendant claims that though the plaintiff had thereafter agreed to renegotiate a renewed lease deed, the plaintiff had filed a suit for ejectment. The same was said to have been decreed ex- parte. The defendant is then said to have taken steps to have the decree recalled and is said to have contested the suit.
Apart from the contentions in the written statement, a crucial circumstance that was urged by the defendant - as to the suit having been rendered infructuous, is the conduct of the plaintiff in having received rents in respect of the premises subsequent to the termination of the tenancy and during the pendency of the suit. It is, in fact, not in dispute that the defendant has paid the rents and the plaintiff has received the same up to date, even as on the date of hearing of this appeal. The defendant had contended that by virtue of such receipt of rents, after termination of the tenancy and during the pendency of the suit, the plaintiff had waived the notice to quit, issued prior to the 5 suit. And hence the suit for ejectment based on such notice was no longer maintainable.
It is also pointed out that the trial court has negated the above contention on the basis of a judgment of the apex court which, however, did not refer to and consider - earlier judgments by larger benches, wherein the view expressed was otherwise.
It is also contended that the notice of termination, issued by the plaintiff dated 21.8.2008, stood waived by virtue of a second notice of termination of the tenancy, dated 12.5.2009, thereby treating the tenancy as subsisting between the period of the first notice and the second.
The trial court having negated the above contentions of the defendant and the suit having been decreed as prayed for, the present appeal is filed.
4. Having heard the learned counsel for the parties and having considered the authorities furnished in support of their contentions, the point of law raised above is considered. 6
5. It is seen that the trial court had framed the following issues:
"1. Whether the notice of termination is valid?
2. Whether the plaintiff is entitled for damages? If so, at what rate?
(Issue No.2 is modified vide order on I.A.8 dated 27.4.2013)
3. What decree or order?
Additional Issue:
"1. Whether the defendant proves that the plaintiff has waived notice as pleads in para - 2.3 of written statement? "
The issue, which is relevant to the above defence, is the Additional Issue. The trial court, in its wisdom, has thought it fit to deal with Issue nos.1, 2 and the Additional Issue together. It is also of some concern that the trial court having referred to the judgments in Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjihboy Warden, (1949) Federal Court Reports 262, decided by a majority of four judges, of the five judge bench, and Karnani Industrial Bank Ltd. v. Province of Bengal, 1951 SCR 560, a three judge bench decision, has proceeded to place reliance on a later 7 decision of the apex court in the case of Sarup Singh Gupta v. S.Jagdish Singh, (2006)4 SCC 205, in dismissing the suit.
Further, the learned counsel for the respondent - plaintiff has now drawn attention to a decision rendered by a learned single judge of this court, wherein the ratio laid down in the aforesaid judgments of the larger benches have been distinguished in taking a view that receipt of rents subsequent to termination of the lease and during the pendency of the suit would not result in a waiver of the quit notice - issued prior to the suit. (See: Vasanthkumar D. Shah v. Sugandha Raman, 2007(2) KLJ 1) It is hence the endeavour in this appeal to re-examine the legal position.
We may first take stock of the law as interpreted by the Federal Court in Kai Khushroo Bezonjee Capadia's case, supra. It was an appeal from the High Court of Judicature at Bombay. The facts of that case were as follows:
The appellant therein, who was the plaintiff before the trial court, was admittedly the owner of a residential premises, known 8 as 'Capadia House', Gowalia Tank Road, Bombay. The appellant had executed a lease deed dated 12.8.1932 in favour of defendant no.1, in respect of the entire premises, for a period of 5 years commencing from 1.9.1932. The lessee is said to have exercised the option of renewal and the lease is said to have been continued up to 31.8.1942 and had come to an end by efflux of time.
During the period of lease, the defendant no.1 is said to have created a sub-lease in favour of defendant no.2 in September 1932, in respect of the upper floor of the demised premises, at a rental of Rs.210/- per month. And on 1.5.1940, defendant no.1 is said to have created a sub-lease in respect of the ground floor to defendant no.3, at a monthly rent of Rs.172/-.
The plaintiff had issued a notice demanding delivery of vacant possession of the property by 31.8.1942, when the lease period came to a close. Defendant no.1 is, in turn, said to have passed on the notice to defendants nos.2 and 3, requesting the latter to comply with the direction. A reminder is said to have been issued to defendant no.1, wherein it was, inter alia, stated 9 that the premises were required by the government for war purposes and that the military authorities would take possession of the same on 1.9.1942.
Defendants 2 and 3 did not choose to vacate the portions under their occupation. The defendant no.1, however, is said to have vacated the portions under his occupation and informed the plaintiff that the sub-tenants had refused to vacate the portions under their occupation and that they were, either rightly or wrongly, claiming protection under the Bombay Rent Act.
On 30.9.1942, the second defendant is said to have sent a cheque for Rs.210/- to the plaintiff - stating it to be the rent for the month of September in respect of the upper floor of the premises.
On 6.10.1942, the third defendant is also said to have sent a cheque to the plaintiff for Rs.172/- as the rent for the ground floor.
Both the cheques are said to have been returned to the defendants by the plaintiff and they were said to have been told that they were trespassers pure and simple and had no right to pay rents or demand recognition as tenants from the plaintiff.10
On 2.11.1942, the second defendant is again said to have issued two cheques for Rs.210/-, each as rents for the month of September and October, 1942. Defendant no.3 had also issued two cheques for Rs.172/-, each - as rent for a similar period, on 9.11.1942. The plaintiff had received the said cheques and without any protest, deposited the same into his bank account.
It transpires that the premises in question was subject to a mortgage executed by the plaintiff in favour of one Sakina Bai and another, as on 7.4.1941. In exercise of power reserved to them by the mortgage deed, the mortgagees are said to have appointed a Receiver of the rents and profits of the mortgaged property. On 3.12.1942, defendant no.2 sent a further cheque for Rs.210/- to the plaintiff as rent for the month of November. The plaintiff received the cheque and sent it to his banker on 5.1.1943. On the same day, the plaintiff is said to have addressed two letters to the two defendants, and in identical words, is said to have informed them that he was receiving the cheques as part deposit towards his claim for compensation for illegal use and occupation by them 11 since 1.9.1942. And that the acceptance is without prejudice to his rights under the Rent Act and the claim for ejectment.
From December 1942 to September 1943, the rents paid by the defendants were accepted by the Receiver, appointed by the mortgagees, who had issued receipts again reiterating that the same were issued without prejudice to the right of the plaintiff. The Receiver is said to have given up possession from September 1943. After which the defendants 2 and 3 continued to pay rents to the plaintiff, every month and the plaintiff issued receipts on similar lines as aforesaid. This state of affairs had continued till the suit was instituted on 7.12.1945. It was alleged that the defendants were trespassers and their interest, if any, had come to an end as soon as the lease in favour of defendant no.1 expired. 12
The defendants took up several pleas in defence. The main controversy between the parties centered around two points :
a. Whether defendants 2 and 3 could claim immunity from eviction by reason of their being "tenants" within the meaning of the Bombay Rent Act; and b. Whether the plaintiff having accepted rents from defendants 2 and 3, who remained in occupation of the premises after the determination of the lease by lapse of time, Section 116 of the Transfer of Property Act, 1882 (Hereinafter referred to as the 'TP Act', for brevity) came into operation and created a tenancy from month to month in favour of each one of the defendants which could be terminated only by a proper notice to quit.
The learned single judge of the Bombay High Court, who heard the case decided both the points in favour of the plaintiff and decreed the suit. The appeals by the respective defendants, were consolidated and heard together by a Division Bench, which 13 allowed the appeals on the ground that the defendants 2 and 3 acquired the status of tenants by "holding over" under the provisions of Section 116 of the TP Act and so long as these new tenancies were not lawfully determined, the suit for ejectment was bound to fail. The division bench did not enter upon the second question, namely, whether the defendants enjoyed any protection under the Rent Act.
The point for consideration before the Federal Court was whether on the facts admitted and proved, a case of "holding over" within the meaning of S.116 of the TP Act had been made out by defendants 2 and 3 and whether they could claim the status of tenants as contemplated by that Section.
The Federal Court held thus:
"......it may be convenient to examine the language of Section 116 of the Transfer of Property Act. Section 116 runs as follows:
"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 14 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."
On the determination of a lease, it is the duty of the lessee to deliver up possession of the demised premises to the lessor. If the lessee or a sub-lessee under him continues in possession evenafter the determination of the lease, the landlord undoubtedly has the right to eject him forthwith; but if he does not, and there is neither assent nor dissent on his part to the continuance of occupation of such person, the latter becomes in the language of English law a tenant on sufferance who has no lawful title to the land but holds it merely through the laches of the landlord. If now the landlord accepts rent from such person or otherwise expresses assent to the continuance of his possession, a new tenancy comes into existence as is contemplated by Section 116, Transfer of Property Act, and unless there is an agreement to the contrary, such tenancy would be regarded as one from year to year or from month to month in accordance with the provisions of Section 116 of the Act. As Section 116, Transfer of Property Act, expressly mentions an under-lessee, the defendants 2 and 3 would obviously come within the purview of the section, and it is not disputed that they did continue in possession after the lease expired by lapse of time. If, therefore, it is established on the facts of this case that the plaintiff 15 assented to the continuance of possession of defendants 2 and 3 in respect to the demised premises by acceptance of rent or otherwise, these defendants would certainly acquire the status of tenants under Section 116, Transfer of Property Act.
The learned Judges of the Bombay High Court who heard the appeal are of opinion that the plaintiff in the present case must be held to have accepted rents which were paid by defendants 2 and 3 when he sent the cheques remitted by the latter to his banking account on 23rd November, 1942. It is held that these monies were paid as rents by defendants 2 and 3 and they being received as rents by the plaintiff, the requirements of Section 116 were fully complied with; and it was immaterial that the plaintiff had in his earlier correspondence refused to recognize these persons as tenants or in the letter addressed to them on 5th of January, 1943, asserted that these monies were received as part deposits towards his claim for compensation for wrongful use and occupation of the premises in question.
The propriety of this decision has been challenged by Mr. Daphtary who appeared in support of the appeal and his contention is that the appellate Judges of the High Court misdirected themselves as to the elements necessary to create a tenancy of "holding over" under Section 116, Transfer of Property act, and that their approach to the evidence has not been a proper one.
16
It is argued that the tenancy contemplated by Section 116, Transfer of Property Act, is a new tenancy which is brought into being after the expiry of the old, if and when the conditions laid down in the section are fulfilled. The essential thing in a new tenancy is that the parties must be ad idem as to its terms. If this agreement or consensus is wanting, no tenancy can possibly come into existence, and the position of the lessee, whose lease has expired, must be considered to be that of a trespasser. It is said by the learned counsel that this is exactly what has happened in the present case. On the one hand, the defendants 2 and 3 when they remitted rents to the plaintiff did so, not for entering into a fresh agreement with the plaintiff but only to discharge what they conceived to be their existing legal obligation as statutory tenants under the provision of the Bombay Rent Restriction Order. On the other hand, the plaintiff did not accept the rents paid by defendants as rents at all, but only as compensation for wrongful use and occupation of the premises by the latter. Thus the parties were not ad idem upon the basis of which a new tenancy could be founded.
This argument, though plausible at first sight, does not appear to me to be sound. It is perfectly right that the tenancy which is created by the 'holding over" of a lessee or under-lessee is a new tenancy in law even though many of the terms of the old lease might be continued in it, by Implication; and it cannot be disputed that to bring a new 17 tenancy into existence, there must be a bilateral act. What Section 116, Transfer of Property Act, contemplates is that on one side there should be an offer of taking a renewed or fresh demise evidenced by the lessee's or sub-lessee's continuing in occupation of the property after his interest has ceased and on the other side there must be definite assent to this continuance of possession by the landlord expressed by acceptance of rent or otherwise. It can scarcely be disputed that the assent of the landlord which is founded on acceptance of rent must be acceptance of rent as such and in clear recognition of the tenancy right asserted by the person who pays it. But, while all this may be conceded, I do not think that these principles are really of any assistance to the appellant in the present case.
With regard to the first part of the argument of the learned counsel for the appellant, it may be pointed out that in cases of tenancies relating to dwelling house to which the Rent Restriction Acts apply, the tenant may enjoy a statutory immunity from eviction even after the lease has expired. The landlord cannot eject him except on specified grounds mentioned in the Acts themselves. In such circumstances, acceptance of rent by the landlord from a statutory tenant, whose lease has already expired, could not be regarded as evidence of a new agreement of tenancy, and it would not be open to such a tenant to urge, by way of defence, in a suit for ejectment brought against him, under the provisions of Rent Restriction Act that by 18 acceptance of rent a fresh tenancy was created which had to be determined by a fresh notice to quit. As authorities for this proposition, reference may be made among others to the decisions of the English Courts in Davies v. Bristow, (1920)3 K.B.428 and Morrison V. Jacobs, (1945) 1 K.B.577."
xxx "From the evidence adduced in this case it is just probable that when the plaintiff was refusing to accept rents from defendants 2 and 3 and threatening to eject them as trespassers, the latter were advised by their legal advisers to claim protection under the Rent Restrictions Act. This seems to be the idea entertained by defendant No.1 when he wrote to the plaintiff on 3rd September, 1942. The claim, however, was never put forward specifically by defendant no.3 and so far as defendant No.2 is concerned, the statements of her solicitor, as referred to above, were nothing else but a lawyer's protest against the continued assertion of the plaintiff that the defendant No.2 was a trespasser out and out whose possession of the premises was entirely unlawful. In my opinion, the mere fact that additional protection was sought for under a particular statute with or without just grounds could not by itself stand in the way of anybody's claiming a tenancy right if such tenancy was established by proper evidence. The real point for consideration is what was the offer implicit in the payment of rents made by defendants 2 and 19
3. In my opinion, what these defendants wanted was to continue on the same terms as before with this difference that instead of being sub-lessees under defendant No.1, they would occupy the position of lessees directly under the plaintiff. This is the specific case made by defendants 2 and 3 in their written statements and it is fully borne out by the letters which they and their solicitors addressed to the plaintiff when the cheques in payment of rent were sent to him. The rents were paid as rents for the new tenancies which these defendants wanted to have under the plaintiff. But as the plaintiff had refused to accept rents on a previous occasion and was likely to refuse them again, a claim for protection under the Rent Act was thought of only as a second string to the bow which they might fall back upon, in case the plaintiff did not recognize them as tenants or accept rents from them. This is the case which the defendants seem to have made consistently throughout and this is exactly what has been pleaded in their written statements in the present case. In my opinion, the first part of Mr.Daphtary's contention must fail.
The question now is whether the rents were accepted as such by the plaintiff when he sent the cheques of defendants 2 and 3 to his banking account on 23rd November, 1942? Mr.Dapthary argues that the plaintiff did not accept the cheques as payment of rents by defendants 2 and 3 and he did not recognize them as tenants at all. The position taken by the plaintiff 20 throughout has been that the defendants were trespassers and he accepted the monies only as damages for use and occupation to which he was entitled under law. It is necessary to see how the evidence on this point stands. It would appear from the correspondence on record that ever since the termination of the lease of defendant No.1, the defendants 2 and 3 were sending monies to the plaintiff as and by way of rents for the portions of the house in their use and occupation. There is no ambiguity whatsoever in the conduct of these defendants, and no uncertainty as to the character in which these payments were offered to be made. The cheques sent by defendants 2 and 3 on 30th of September and 6th of October, 1942, respectively, were returned by the plaintiff and there is no doubt that at that time he had no intention of treating these defendants as tenants or accepting any rents from them. There was obviously a change when the second set of cheques were sent to the plaintiff in November, 1942. This time they were not returned to the defendants and the plaintiff kept them in his hands for some time and then sent them on to his bankers. Curiously enough this synchronizes with the appointment of a Receiver by the mortgagees who was to take possession of the house on 20th November, 1942. It may be that it was this circumstance which brought about a change in the mind of the plaintiff. But whatever the motive might have been, the fact remains that the plaintiff cashed these cheques and appropriated the monies which were paid by the defendants as and by way of rents and rents 21 only. The protest or the explanation of the plaintiff came only on 5th of January, 1943, when the plaintiff intimated to defendants 2 and 3 that the monies sent by them were received as compensation for use and occupation without affecting in any way his rights to eject them as trespassers. The question is whether on these facts the plaintiff can be said to have accepted the rents as such. In my opinion, the answer to this question must be in the affirmative.
In the first place, the facts clearly show that when the cheques were cashed, it was done without any reservation or condition whatsoever. The protest was not a contemporaneous but a much subsequent event and if the agreement was already complete by acceptance of rent on 23rd November, 1942, the subsequent conduct of one of the parties cannot alter its legal consequences. In the second place, it seems to me that when money was paid as rent, it did not lie in the mouth of the plaintiff to say that he would receive the money but not as rent. It is a settled principle of law that when money is paid by a debtor with an express intimation that it is to be applied to the discharge of a particular debt, the creditor may not accept the money at all; but if he receives and appropriates it, he cannot be allowed to say that he took it wrongfully on some other account. The ordinary legal consequence of accepting payment as indicated by the debtor would follow in such cases, however much the creditor might attempt to repudiate them. This being the position, it must be held on 22 the facts of this case that money was not only paid as rent by defendants 2 and 3 but was received as rent by the plaintiff and consequently a monthly tenancy under the provision of Section 116 of the Transfer of Property Act did come into existence. So long as this monthly tenancy is not determined in a manner recognized by law, the plaintiff's suit for ejectment must fail.
The result is that the appeal fails and is dismissed with costs."
It is hence clear that where rent was accepted by the landlord after the expiration of the tenancy by efflux of time, Section 116 applied even though the landlord accepted the amount remitted to him as "part deposit towards his claim for compensation for illegal use and occupation, and without prejudice to his rights".
We may next consider the case of Karnani Industrial Bank Ltd., supra. The principal question in the said case before the Apex court was, whether a certain lease had validly terminated by efflux of time or whether there was "holding over" by the lessee 23 of the leasehold property as contemplated in Section 116 of the TP Act. The circumstance under which this question and several subsidiary questions to which reference was made, had arisen in the following manner.
The Province of Bengal was the owner of an area of 1125 bighas of land in Akra village. On 17.2.1928, it had executed a lease deed in respect of the said land for a period of 10 years, for the manufacture of bricks in favour of the appellant, who was before the apex court, on a yearly rent of Rs.6000/-. The lease was to commence from 24.2.1928 and a year's rent was payable in advance. By the terms of the lease, the lessee was prohibited from subletting the land or any part of it, without the consent of the lessor.
It was also provided under the lease that the lessor reserved to itself the right to terminate the lease at any time subject to a six months' notice in the event of the lessee failing to observe any of the conditions therein. The lessee was, on such termination, required to remove all such materials brought by it or established 24 on the premises within three months from the date of termination, failing which such material and things would become the property of the lessor.
The lessee had, in contravention of the terms of the lease, sublet the premises to 17 others, without the consent of the lessor. And when the lessee failed to hand over possession on termination of the lease on that ground, the lessor had filed a suit for ejectment and also sought several other reliefs on account of the damage caused to the brick field.
The suit had been contested. The defence of the lessee and other sub-lessees was that they had held over with the implied consent of the lessor. The trial court in its judgment held that there was no holding over with the assent of the lessor. And partly allowed other reliefs.
In an appeal by the lessee and others and a cross objections by the lessor, to the High Court, the appeal was dismissed and the cross objections was allowed in part. It was held on facts that there was no holding over and that the clause in the lease, which 25 provided that if the lessees did not remove its machinery and material from the field within 3 months after the termination of the lease, they would become the property of the lessor, was not a clause by way of penalty and should be given effect to.
In the appeal before the apex court, it was pointed out that where as in the case of K.B.Capadia's case supra, rent had been accepted after the expiry of the tenancy. In the case before it, the payment of rent was not made after the date of expiry of the lease, but nearly a year before the expiry of the lease. It was held as follows :
"15..........A reference to section 116 of the Transfer of Property Act will show that for the application of that section, two things are necessary:(1) the lessee should be in possession after the termination of the lease; and (2) the lessor or his representative should accept rent or otherwise assent to his continuing in possession. The use of the word 'otherwise' suggests that acceptance of rent by the landlord has been treated as a form of his giving assent to the tenant's continuance of possession. There can be no question of the lessee "continuing in possession" until the lease has expired, and the context in which the provision for acceptance of rent finds a place clearly shows that what is contemplated is that the payment of rent and its 26 acceptance should be made at such a time and in such a manner as to be equivalent to the landlord assenting to the lessee continuing in possession. Both the courts below, after dealing with the matter elaborately, have concurrently held that in the circumstances of the case the consent of respondent No.1 to the appellants' continuing in possession cannot be inferred, and we agree with this finding.
16. It was pointed out to us on behalf of the respondent that the entry relating to this payment in the books of the plaintiff contains the words: "received without prejudice from Karnani Industrial Bank ...... "The same words however occur in several earlier entries, and we are not inclined to attach any special significance to them. But it seems to us that the very fact, that the payment was made at a time when there was no question of the lessor assenting to the lessee's continuing in possession and neither party treated the payment as importing such assent, is sufficient to take the case out of the mischief of section 116 of the Transfer of Property Act."
In the case of Tayabali Jaffarbhai Tankiwala v. M/s Asha & Co., 1970 (1) SCC 46, the landlord was the appellant before the apex court. The appellant gave a notice, dated June 13, 1956, to the respondent terminating his tenancy on the ground of non- payment of rent. As the tenant did not vacate the premises, the appellant sent a second notice, dated October 18, 1957, for vacant 27 possession of the premises in his occupation as a monthly tenant. Another ground mentioned in the notice was that it was required for personal use and occupation of the landlord. Mean while, the tenant made a tender of the amount due, which was refused by the landlord, who filed a suit for ejectment and compensation for use and occupation for a certain period. The Trial Court held that by serving a second notice and by various acts and conduct, the land- lord showed a clear intention to waive and condone the ground of default and dismissed the suit. The appellate court held that the service of a second notice and other facts which were found by the Trial Court, did not amount to a waiver of the first notice. It further held that the demand of arrears of rent made in the first notice was excessive and illegal which made the notice invalid. The High Court had dismissed in limine the petition filed by the landlord under Article 227 of the Constitution. The landlord appealed to the Supreme Court with special leave.
It was held by the Apex Court that it was established that the second notice treated the tenancy as subsisting and not only 28 the respondent was described as a monthly tenant, but also in the plaint, even after the amendment had been allowed, the rent was claimed up to November 1957, it was thereafter that the amount was described as compensation for use and occupation. The plaintiff, it was held, was thus fully alive to the distinction between rent and damages for use and occupation and that it could not be said that he had abandoned the second notice and asked for the same to be treated as non-est or that had relied solely on the first notice, dated June 13,1956. Under Section 113 of the TP Act, all that had to be seen was whether any act had been proved on the part of the present appellant, which showed an intention to the lease as subsisting, provided there was an express or implied consent of the person to whom the notice is given. It was found that the service of the second notice and its contents and as amplified in the plaint, indicated that the landlord had waived the first notice by showing an intention to treat the tenancy as subsisting and that was with the express or implied consent of the tenant, to whom the first notice had been given, because he had 29 even made payment of the rent which had been demanded, though it was after the expiration of the period of one month given in the notice.
As opposed to the interpretation given in the aforesaid judgments, a later decision of the Apex court in Sarup Singh Gupta v. S .Jagadish Singh, supra, has summarized its view on the facts and law applicable thus:
" In the instant case, as we have noticed earlier, two notices to quit were given on 10th February, 1979 and 17th March, 1979. The suit was filed on June 2, 1979. The tenant offered and the landlord accepted the rent for the months of April, May and thereafter. The question is whether this by itself constitute an act on the part of the landlord showing an intention to treat the lease as subsisting. In our view, mere acceptance of rent did not by itself constituted an act of the nature envisaged by Section 113, Transfer of Property Act showing an Intention to treat the lease as subsisting. The fact remains that even after accepting the rent tendered, the landlord did file a suit for eviction, and even while prosecuting the suit accepted rent which was being paid to him by the tenant It cannot, therefore, be said that by accepting rent, he intended to waive the notice to quit and to treat the lease as subsisting. We cannot ignore the fact that in 30 any event, even if rent was neither tendered nor accepted, the landlord in the event of success would be entitled to the payment of the arrears of rent. To avoid any controversy, in the event of termination of lease the practice followed by courts is to permit the landlord to receive each month by way of compensation for the use and occupation of the premises, an amount equal to the monthly rent payable by the tenant. It cannot, therefore, be said that mere acceptance of rent amounts to waiver of notice to quit unless there be any other evidence to prove or establish that the landlord so intended. In the instant case, we find no other fact or circumstance to support the plea of waiver. On the contrary the filing of and prosecution of the eviction proceeding by the landlord suggests otherwise."
A learned single judge of this court has also taken a similar view, in the matter of Vasanthkumar D.Shah v. Sugandha Raman, supra, while ironically referring to the decisions of the Apex court, referred to above. The said decision of the apex court in Sarup Singh Gupta and the decision of the learned single judge of this court referred to above, are at best authorities for the cases decided therein - and the present judgment is rendered with 31 reference to the decisions of the Apex Court referred to above, and the position of law as expressed therein.
In the instant case on hand, there is no dispute as to the following sequence of events. As per letter dated 21.8.2008, Exhibit P-3, the plaintiff had intimated the defendant thus :
"This has reference to the telecon and the personal discussions I had in the recent past. You are aware that the lease of the aforesaid premises taken by you in terms of the Lease Deed dated 21.05.04 for your business has come to a close on 31.05.08 and I have already made my intention known to you that the subject premises is required for my family's use and hence I requested you to vacate the premises and hand over the possession to me. You sought a short time to vacate and handover the possession. Now the time sought is also over and I once again call upon you to immediately vacate the premises and handover the possession without any further loss of time. Further, I request you to stop payment of rent through ECS to my designated Bank A/c. as the tenancy have expired and I have no intention to continue the same. On handing over the keys of the premises, verification of accounts, deposit paid by you earlier will be returned to you after necessary adjustments, if any."32
Notwithstanding the said letter, the appellant - tenant had continued to remit the rents. At which, a notice (Exhibit P-5) was issued through the counsel of the respondent, dated 12.5.2009, inter-alia, to state thus :
"The lease entered by you with my client expired on 31.5.2008 itself. You should have vacated immediately thereafter, instead of it, you did not vacate and, on the other hand went on remitting the rent to the Bank account of my client till July 2008, left with no option my client issued a notice to you on 21.8.2008 calling upon you to vacate and hand over the vacant possession of the schedule premises to her. At that time you approached my client and told her that you would vacate in a couple of months time. But you did not do so. On the other hand mischievously, you sent a demand draft for Rs.61,383/- as rent from the months of August, September, October and November 2008, with a covering letter dated 20.12.2008. My client was surprised by it. When my client enquired you, you said that you would vacate and said D.D. may be treated as payment of damages. To that my client, asked you to give the same in writing. You said that you would do so in, but so for you have not done so and you have also not vacated. Hence, this legal notice.
4. Please take notice that your tenancy stands determined with effect from expiry of 15 days from the date 33 of receipt of this notice and you hereby called upon to quit and deliver the vacant possession of the schedule premises to my client immediately thereafter and also pay the arrears of rent, failing which my client would be constrained to initiate appropriate proceedings against you for ejectment and recovery of rent damages, in which event you would be responsible for all costs and consequences thereof, including the charges of this notice being Rs.5,000/-." However, the appellant continued to remit rents by way of demand drafts with covering letters, specifically indicating that same was being tendered as rent. The receipt and encashment of which is duly evidenced by documents exhibited. Though such deposits and receipt is not in dispute, over the years, during the pendency of the suit and the same having been received without demur and unconditionally, the specious argument that it was received only as damages for use and occupation, even if could be established would not enable the respondent to contend that there is no waiver of the quit notice. In K.B.Capadia's case, even when the rents tendered were received under protest and with repeated declarations that the same was being received only as damages, 34 the Apex court has held that it would not be a ground to deny that there was a waiver of notice, when there were initial receipts without demur and unconditionally. The Federal Court, in Capadia's case, has addressed such a contention advanced, thus:
"The propriety of this decision has been challenged by Mr. Daphtary who appeared in support of the appeal and his contention is that the appellate Judges of the High Court misdirected themselves as to the elements necessary to create a tenancy of "holding over" under Section 116, Transfer of Property act, and that their approach to the evidence has not been a proper one.
It is argued that the tenancy contemplated by Section 116, Transfer of Property Act, is a new tenancy which is brought into being after the expiry of the old, if and when the conditions laid down in the section are fulfilled. The essential thing in a new tenancy is that the parties must be ad idem as to its terms. If this agreement or consensus is wanting, no tenancy can possibly come into existence, and the position of the lessee, whose lease has expired, must be considered to be that of a trespasser. It is said by the learned counsel that this is exactly what has happened in the present case. On the one hand, the defendants 2 and 3 when they remitted rents to the plaintiff did so, not for entering into a fresh agreement with the plaintiff but only to discharge what they conceived to be their existing legal obligation as statutory tenants under the provision of the Bombay Rent Restriction Order. On the other hand, the plaintiff did not accept the rents paid by defendants as rents at all, but only as compensation for wrongful use and occupation of the premises by the latter.35
Thus the parties were not ad idem upon the basis of which a new tenancy could be founded.
This argument, though plausible at first sight, does not appear to me to be sound. It is perfectly right that the tenancy which is created by the 'holding over" of a lessee or under-lessee is a new tenancy in law even though many of the terms of the old lease might be continued in it, by Implication; and it cannot be disputed that to bring a new tenancy into existence, there must be a bilateral act. What Section 116, Transfer of Property Act, contemplates is that on one side there should be an offer of taking a renewed or fresh demise evidenced by the lessee's or sub-lessee's continuing in occupation of the property after his interest has ceased and on the other side there must be definite assent to this continuance of possession by the landlord expressed by acceptance of rent or otherwise. It can scarcely be disputed that the assent of the landlord which is founded on acceptance of rent must be acceptance of rent as such and in clear recognition of the tenancy right asserted by the person who pays it. But, while all this may be conceded, I do not think that these principles are really of any assistance to the appellant in the present case.."
It is also to be kept in view that "rent" is defined as the consideration for a lease. When that relationship is terminated, it would be incongruous to receive any further consideration, except when the law expressly enables such receipt. As for instance under Section 112 of the TP Act, or where Rent Acts permit such 36 receipt of rent even during pendency of proceedings for eviction. Further, receipt of any amount as damages unilaterally, without determination of the same at an enquiry, cannot be binding on the tenant, and would be speculative as to the possibility of any such damages being quantified at a later stage.
The trial court has rendered the impugned judgment mechanically and without any reasoning being assigned to agree with the plaintiff's arguments or how the decisions of the Apex court discussed above, are to be distinguished.
Accordingly, the appeal is allowed and the judgment of the court below is set aside. The parties are to bear their own costs.
Sd/-
JUDGE nv*