INDIAN OIL CORPORATION LTD VERSUS SUDERA REALTY PRIVATE LIMITED

INDIAN OIL CORPORATION LTD VERSUS SUDERA REALTY PRIVATE LIMITED


Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.6199 OF 2022
(Arising out of SLP(C)No.15587 of 2022)
(Diary NO.16519/2019)
INDIAN OIL CORPORATION LTD. … APPELLANT(S)
VERSUS
SUDERA REALTY PRIVATE LIMITED … RESPONDENT(S)
WITH
CIVIL APPEAL NO.6200 OF 2022
(Arising out of SLP(C)No.15588 of 2022)
(Diary NO.16517/2019)
INDIAN OIL CORPORATION LTD. … APPELLANT(S)
VERSUS
SUDERA REALTY PRIVATE LIMITED … RESPONDENT(S)
J U D G M E N T
K.M. JOSEPH, J.
Delay condoned. Leave granted.
1. The appellant is the defendant in the suit. By
the impugned judgment, the division bench of the High
2
Court has partly allowed the appeal filed by the
appellant and modified the decree granted by the
learned Single Judge in a suit filed by the
respondent seeking mesne profits.
2. The respondent-plaintiff instituted the suit on
the following basis. The respondent demised the
centrally air-conditioned 2
nd, 3
rd and 4th floors of
premise no. 1, Shakespeare Sarani, Kolkata and a nonair-conditioned guest house on the 9th floor. The
lease was to subsist for a term of 21 years
commencing from the date when the said floors were
handed over to the appellant lessee. The respondent
further claimed that there is a supplementary
agreement which is also duly registered on
12.09.1969, which had brought about certain
modifications in the original lease dated 21.11.1968.
It was further the case set up by the respondent that
the 2
nd and 3
rd floors came to handed over on
12.09.1969 and the possession of the 4th floor was
made over to the appellant on 18.12.1969. It was
alleged that there was failure on the part of the
appellant to join and cooperate with the respondent
3
in the matter of finalisation, execution, and
registration of an appropriate document of lease in
regard to the 2
nd, 3rd and 4
th floors. There is
reference to an earlier suit which was filed in the
year 1978, and which was not followed to its logical
culmination but ended in a compromise. More of it
later. Suffice it to notice at this stage that the
proximate cause for the litigation was the failure of
the appellant to hand over vacant possession of the
2
nd, 3rd and 4
th floors, upon the expiry of the lease.
Possession was handed over to the respondent only on
31.05.1994. Resultantly, the respondent alleged that
the appellant was in wrongful possession of the 2
nd,
3
rd and 4
th floors after the expiry of the lease on
11.09.1990 i.e., for the 2
nd and 3
rd floors and for the
4
th floor on 17th December, 1990 or alternatively on
the expiry of the 3
rd or 4th of November, 1991 till
31.05.1994. Even in terms of the computation of the
period of 21 years by the appellant, this illegal
possession continued till 31.05.1994. The respondent
claimed mesne profits in respect of 57105 sq. feet at
the rate of Rs.31 per sq. feet per month.
4
3. In the written statement filed by the appellant
the case inter alia set up was that the period of
lease was to be computed from the date of delivery of
possession. The document dated 21st November, 1968
constituted the actual demise of the property. By
notice dated 7th December, 1977, the respondent had
determined the lease and there was a suit filed by
the respondent which was dismissed as not pressed and
appellant had constructed a new office building. It
took some time to vacate. There was a clause for
premature termination of the lease at the option of
the appellant. Appellant was entitled to the
protection of the West Bengal Tenancy Act, 1956
(hereinafter referred to as the ‘Tenancy Act’). The
case of wrongful possession was denied. In the
alternative, it was contended that respondent
accepted monthly rent after the determination of the
tenancy by notice dated 7th December, 1977. The
tenancy is also protected therefore under the Tenancy
Act.
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4. The learned Single Judge found the plaintiff
entitled to mesne profits. A referee was appointed to
quantify the mesne profits. Both the appellant and
the respondent filed appeals.
THE FINDINGS IN THE IMPUGNED JUDGMENT
5. The impugned judgment would show that the
appellant addressed the following contentions.
Mere reference to a document as a lease could not be
a ground to find that the document dated 21.11.1968
was a lease deed. The nature of the document required
examination. The effect of the withdrawal of the suit
filed by the respondent in the year 1986 and the
impact of the Tenancy Act was not properly assessed.
There was holding over. Therefore, a decree of mesne
profits was without warrant. The Court found that the
appellant had not pleaded the case that a fresh
tenancy was created after the expiry of the lease by
efflux of time, and found itself unable to accept the
said contention. The receipt of occupation charges by
the respondent as evident from the letter of the
respondent dated 02.01.1991 was without prejudice. It
6
did not create a fresh tenancy. Mere continuation in
occupation of the demised premises after the expiry
of the lease, notwithstanding the receipt of an
amount by the landlord, would not create a tenancy.
The appellant was to be treated as a tenant at
sufferance and akin to a trespasser. The lease did
not contain any renewal clause and it was determined
upon the expiry of the fixed period. However, the
division bench took the view that in the absence of
any other evidence, as to the exact date when the
appellant took possession of the 2
nd and 3
rd floors, it
was safe to accept 16th September, 1969 as the
starting point of the lease in regard to the 2
nd and
3
rd floors. Accordingly, the division bench modified
the judgment in regard to the starting point, by
finding that the starting point of the lease for the
2
nd and 3
rd floors would be 17.09.1969. Whereas, in
regard to the 4th floor, the finding of the learned
Single Judge that the lease commenced on 04.11.1970
was affirmed. Accordingly, it was that appeal (APD
no. 494 of 2014) was allowed in the aforesaid manner.
This is after dismissing the appeal (APO no. 207 of
7
2015). It is against the said judgment, namely, the
judgment in APO No.207/2015 and APD No.494/2014, that
the appeals have been carried by the appellant.
6. We heard the Ms. Madhavi Diwan, learned ASG on
behalf of the appellant and Dr. A.M. Singhvi, learned
Senior Counsel on behalf of the respondent.
7. Ms. Madhavi Divan, Additional Solicitor General
raised the following contentions. The agreement of
lease dated 21.11.1968 contemplated that the term of
21 years would commence from the date when the
premise was handed over. The lease was terminable at
any time after the expiry of 8 years of the term of
21 years. The construction of the premises was
ongoing. On 21.11.1968, none of the floors to be
leased to the defendant had been completed. Even on
12.09.1969, when the supplementary agreement as also
the deed of mortgage was executed, the possession did
not change hands. The mortgage deed, it is pointed
out, records that the 2
nd and 3
rd floors were in the
course of construction. Advances were given under the
mortgage to the respondent as it was in need of money
8
to complete construction of the building, in
particular, the 2
nd, 3rd and 4th floors. The parties
contemplated a formal lease deed being executed at a
later date. The premises were admittedly not ready
for effective occupation till 04.11.1970. Reliance is
placed on the letter dated 12.09.1969, the deed of
mortgage and the minutes, dated 05.06.1980, by which
the suit, and the cross-suits came to be withdrawn
and the respondent agreed to forego the rent prior to
1970, on account of late possession. The appellant
continued to occupy the premises after the issuance
of the notice to quit and the filing in the year 1977
of the cross-suits. Payment of monthly rent and
acceptance without demur is pointed out. The letter
dated 19.10.1990, required the tenant to vacate the
premises by 11.09.1990, as far as the 2
nd, 3rd floors
are concerned and the 4
th floor was to be vacated by
17.12.1990. This was short of 21 years from the date
of effective possession. It is pointed out that the
claim for mesne profits commenced from these very
dates, namely, 12.09.1990 and 18.12.1990. The
appellant has paid rent for the entire period. The
9
claim for mesne profits is in excess of 45 crores. It
is pointed out that the respondent entered into the
lease agreement with another company where the rate
was Rs.15 per sq. feet about 13 years thereafter
namely in 2008 whereas Rs.31 per sq. feet is said to
be the rate at which mesne profits is calculated qua
the appellant.
8. The appellant contends that having regard to the
definition of the mesne profits in Section 2(12) of
the CPC, it is indispensable for the respondent to
establish wrongful possession. The respondent has
agreed that effective possession could not be
reckoned even from 15.09.1969 and, therefore, the
question of the term of 21 years expiring based on
11.09.1969 could never have arisen. The impugned
judgment, having been accepted by the respondent, the
21 years lease could not have come to an end as early
as on 11.09.1990 as the division bench has found that
in regard to the 2
nd and 3
rd floors, 17.09.1969 as the
date of the appellant being put in possession. It is
contended that the period of 21 years had not expired
when notice dated 19.10.1990 had been issued. It was
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the respondent which curtailed the expiry period of
21 years by issuance of notice dated 19.10.1990. The
notice dated 19.10.1990 met the requirement of
Section 106 of the Transfer of Property Act. On
account of the determination prior to the expiry of
the lease, the appellant became entitled to the
protection under the Tenancy Act. Section 13 of the
said act proscribed any order or decree for recovery
of possession of any premise against a landlord
except on a ground set out in the said enactment. The
provisions of the said act were not complied with.
The court should reject the contention of the
respondent that the notice dated 19.10.1990 was not a
notice to quit.
9. It is further contended that having regard to the
notice issued by the respondent, dated 12.12.1977,
the appellant became entitled to the protection of
the Tenancy Act. Reliance is placed on the judgment
reported in Calcutta Credit Corporation Ltd., &
Another v. Happy Homes (P) Ltd.1. Reliance is also
1 1968 2 SCR 20
11
placed on the decision in Tayleur v. Wildin2 to
contend that the withdrawing of the notice and the
contention of the parties would not avail the
landlord. Section 113 of the Transfer of Property Act
is invoked to contend that there is no waiver. A new
tenancy has come into existence thereupon in view of
the quit notice, and what is more, of the suit,
despite the arrangement arrived between the parties.
The decision reported in Ranjit Chandra Chowdhury v.
Mohitosh Mukherjee3 relied upon by the respondent is
sought to be distinguished both on the basis that the
earlier judgment in Calcutta Credit Corporation Ltd.
(supra) was rendered by a bench of three learned
judges and the later judgment was pronounced by a
bench of a lesser strength, and furthermore, on the
basis that the earlier judgment had not been analysed
by the later bench. It is further contended that the
respondents are equally misplaced in relying on
Tayabali Jaffarbhai Tankiwala v. Messrs. Asha and Co.
and another4. It is described as a judgment rendered
2 (1867- 68) LR 3 Ex Cases 303
3 (1969) 1 SCC 699
4 (1970) 1 SCC 46
12
per incuriam. It is also contended that it is
otherwise distinguishable. The petitioner, it is
pointed out was a monthly tenant from November, 1968.
In an argument raised in the alternative and without
prejudice to the earlier argument, it is further
contended that a large portion of the claim for mesne
profits was barred by limitation. Article 51 of the
Limitation Act applies. The claim for the entire
period prior to three years before the filing of the
suit, i.e., for the period prior to 10.04.1992, would
be barred.
THE SUBMISSIONS OF THE PLAINTIFF
10. The dispute spread over 30 years is on account of
conduct of the appellant. The respondent has been
unable to recover any mesne profits due to it. As on
the date of the registered agreement for lease
21.11.1968, the construction of the 2nd, 3rd and 4th
floors were ongoing. It is submitted that there was
indeed a valid lease deed between the parties. It was
the admitted case and the appellant cannot be
13
permitted to resile from the said position. It is
next contended that the case that the lease deed was
determined in 1977 is untenable. The alleged
termination notice is dated 07.12.1977. The lease ran
uninterrupted for 21 years and expired by the efflux
of time. The decision on Pabitra Kumar Roy and
Another v. Alita D’Souza5 is relied upon. It is
pointed out that the termination notice dated
07.12.1977 did not result in the actual determination
of lease prior to expiry and the appellant continued
to occupy the premise “as before”. Notice was not
even tendered in evidence by the appellant in these
proceedings. The parties never acted upon the
termination notice. The respondent did not go so far
as to seek the appellant’s eviction. The respondent
brought a suit seeking rent for the period 15.09.1969
to 04.11.1970. In the meeting held on 05.06.1980, the
litigation ended in view of the binding settlement.
It was understood that the parties have no further
5 (2006) 8 SCC 344
14
claim. It is contended that neither party admitted to
the other’s entitlement for the claims raised.
11. As regards the termination prior to the expiry is
alleged to have taken place consequent upon the
communication dated 19.10.1990, it is described as a
letter of inquiry and not a notice of termination as
contended by the appellant. It is contended that as
far as the attempt by the appellant to evolve a new
case before this Court that there was a fresh tenancy
created as a result of the waiver, it is countered
contending that the argument of the appellant is de
hors the facts in the present case. The decision of
this Court in Calcutta Credit Corporation Ltd. &
Another v. Happy Homes (P) Ltd.6 was not dealing with
the question whether the waiver of the determination
notice results in a fresh tenancy. That is not the
ratio. The observations that consent to waive the
notice results in a new agreement are only obiter.
Reliance is placed on subsequent judgments to contend
that there would be revival of the old tenancy, when
there is waiver [(1969) 1 SCC 99, (1970) 1 SCC 446,
6 (1968) 2 SCR 20
15
AIR 1976 Cal 274, (2006) SCC Online Calcutta 248].
On facts, it is pointed out that appellant continued
to make rent payments. The statement in paragraph 14
filed by the appellant that it occupied premises and
paid monthly rent “as before” is emphasised. The
respondent lay store by contemporaneous communication
wherein appellant continues with the stand that lease
has not expired. Regarding the alleged termination by
letter dated 19.10.1999, it is complained that the
appellant never raised such a case in response to
communication or even in defence before the Court.
The letter of inquiry is not a determination. The
appellant itself understood that the respondent had
sought vacation of the premises on the basis of the
expiry of the lease period alone. The argument is a
mere afterthought. The acceptance of the occupation
charges by the respondent after the expiry of the
lease did not create monthly tenancy. The payments
were received on a “without prejudice basis” “as on
account payment”. The judgment of this Court in Nand
Ram (Dead) Through Legal Representatives and others
v. Jagdish Prasad (Dead) Through Legal
16
Representatives7 did not consider the consequence of
the payment being collected. The suit for mesne
profits is not barred by limitation. Mesne profits
accrues from day to day and the cause of action is a
continuing one. Being a continuing breach of contract
and a fresh cause of action arising on each day, the
appellant wrongfully occupied the property. Reliance
is placed on the judgment of this Court in Shakti
Bhog Food Industries Ltd. v. Central Bank of India
and Another8 to contend that limitation does not bar
the suit. The inconsistency in the stand of the
appellant at various stages is underlined.
ANALYSIS
The following points arise:
Point No.01: - Whether the documents styled as
agreement dated 21.11.1968 and the
supplementary agreement for lease dated 12th
September, 1969 constituted a lease?
Point No.02: - 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?
7 (2020) 9 SCC 93
8 (2020) SCC OnLine 482
17
12. An agreement for lease was executed between the
appellant and the respondent on 21.11.1968 in regard
to the 2
nd, 3rd and 4th floors of the premises. While
it is true that it contained a clause which did
contemplate that the respondent as the lessor put in
place a formal deed of lease in favour of lessee, if
the lessee would require the same, we are of the view
that 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. In paragraph 4 of the written statement,
the appellant states as follows:
“4. With reference to paragraph 9 of the
plaint, it is denied that the defendant
failed and neglected to join or co-operate
with the Plaintiff in execution or
registration of the formal deed of lease. It
is denied that there was any question of any
finalization of the deed of lease. All the
terms and conditions of the lease were
finalized and set out in the document
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described as agreement for lease dated 21st
November, 1969. The document envisaged that
the possession would be given to the
defendant upon completion of the building.
The period of lease was to be computed from
the date of delivery of possession. The said
document dated 21st November, 1968
constituted the actual demise of the property
and operated as deed of lease. Since the
Plaintiff and the defendant treated the said
document dated 21st November, 1968 as deed of
lease as modified by the Supplementary deed
dated 12th September, 1969, neither the
Plaintiff nor the defendant insisted upon
execution of a formal deed of lease as
requisite stamp duty as applicable to lease
had been paid and the said documents had been
registered.”
(Emphasis supplied)
Therefore, we cannot permit the appellant to draw
support from the aforesaid clause which gave the
appellant the right to require that a formal lease of
deed be executed.
13. A perusal of the agreement of lease dated
21.11.1968 would reveal the following:
The 2
nd, 3rd and 4th floors of the premises along
with the guest house which is collectively referred
to as ‘demised premises’ was the subject matter of
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the lease of 21 years. The term of the lease has been
described as commencing from the date when the
demised premises would be handed over. It is true
that construction of the premises may not have been
over but at the same time, the term of the lease has
been specified as period of time (21 years) from the
date on which the demised property would be handed
over. We have no hesitation in repelling the argument
of the appellant that the fact that the construction
of the building was not over, would in the facts as
mentioned, detract from a transfer by lease coming
into being. As already noticed, the provision was for
a formal deed and that too, if the tenants so
requested. It will not stand in the way of the
transfer by way of a lease taking place. As already
noticed, there is a supplementary agreement of lease
on 12.9.1969. It would appear that there were certain
financial transactions, as amounts were advanced by
the appellant towards the construction of the
building. The interest of the appellant was sought to
be secured by a mortgage. The supplementary agreement
made certain modification to the original agreement.
20
Additional obligations were undertaken by the lessor
and certain rights were conferred on the lessee inter
alia. But what is relevant to notice is the term of
the original agreement dated 21.11.1968 that the
lease for a term of 21 years (Agreement to create the
lease for 21 years) would commence from the date of
handing over the premises.
14. Thus, we find that 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.
15. The next question which would arise is, as to
when the possession was handed over? As we have
noticed, the dispute which is raised pertains to the
2
nd, 3rd and 4th floors of the building in question. As
already noticed by us, 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, the appellant was put in possession of
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the 2
nd and 3rd floors and fixed 17.09.1969 as the
starting point.
16. It is found that appellant was put in possession
of 4th floor on 04.11.1970. The case of the appellant
is that the possession of all the three floors in
question was handed over to it on 04.11.1970. The
respondent, on the other hand, would reiterate that
the 2nd and 3rd floors were handed on or before
September, 1969 and the security deposit for those
floors already handed over, was made by 27.09.1969.
17. According to the appellant, a perusal of the
mortgage deed, which is also executed on the same day
as the supplementary lease deed, would reveal that as
on the date of execution of documents, that is,
12.09.1969, the 2nd, 3rd and 4th floors were described
as “now in the course of construction on the said
leasehold land”. It is as the respondent was in need
of money to complete the construction of the building
that funds were given by the appellant. These facts
are borne out by the mortgage deed and the appellant
would contend that premise was handed over only on
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04.11.1970. Now let us cull out the consequences of
accepting the different dates of handing over
possession. 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, we can safely proceed on the basis that the 4th
floor was handed over on 04.11.1970. In regard to the
2
nd and 3rd floors are concerned, the High Court has
laid store by Exhibit 2 to find that the possession
was handed over on 17.09.1969. Exhibit-2 is a letter
dated 16.09.1969 from the respondent to the
appellant. In the said letter it is stated as
follows:
“Dear Sir
It is to inform you that we have spent
Rs.8,54,265.60 being the payment in terms of
Indenture of Further Charge and Modification
dated 12.9.1969.
we are sorry to inform you that we have not
yet received payment as Security Deposit for
the floors already handed over to you. As
such, you are requested to kindly inform the
department concerned for the payment of
Security Deposit.”
23
18. In this regard, we may notice the relevant
clauses in the original agreement dated 21.11.1968.
There is reference to loans advanced or to be
advanced by the Lessee (appellant) to the respondent
remaining unpaid entitling the lessee to deduct 50%
of the monthly rent and appropriating the same to the
satisfaction of the loan with interest. In other
words, apparently the lessee (appellant) advanced
money. The building was to be constructed. The
appellant which advanced money to be inducted as
tenant, was liable to pay rent. The parties agreed
that 50% of the rent need not be paid to the landlord
(respondent) and it could be appropriated towards the
loan or loans with interest. Clause 8 of the
agreement contemplated that the appellant will
deposit to the account of the respondent a sum of
Rs.1,68,300/- which is equivalent of three months’
rent together with air conditioning and service
charges. The amount was to be held as security
deposit and to be refunded to the appellant without
interest on the termination of the period of the
lease or determination earlier. In regard to the 2
nd,
24
3
rd and 4
th floors, clauses 17, 18 and 19 may be
noticed.
“17. The Lessor shall complete
construction of the second floor in all
respects, make it fully equipped with all
electrical and sanitary fixtures and
installations and air-conditioned and hand
over the same to the Lessee immediately upon
expiration of six months from the date
hereof. With the making over possession of
the second floor to the Lessee the Lessor
shall also arrange for providing space of
accommodation to the Lessee sufficient for
parking 20 curs in a convenient place to be
selected mutually by the Lessor ·and the
Lessee.
18. The Lessor complete construction of the
third floor in all respects and make it fully
equipped with all electrical and sanitary
fixtures and installations and airconditioned and handover the same to the
Lessee immediately upon expiration of eight
and a half months from the date hereof and
with the making over possession of the third
floor to the Lessee the Lessor shall also
arrange for providing space or accommodation
to the Lessee sufficient for parking 10 more
cars in the convenient space to be selected
mutually by the Lessor and the Lessee.
19. The Lessor shall complete construction of
the Fourth floor in all respect and make it
fully equipped with all electrical and
sanitary fixtures and installations and airconditioned and hand over the same to the
Lessee immediately upon expiration of eleven
months from the date hereof and with the
making over possession of the fourth floor to
the Lessee the Lessor shall also arrange for
providing space or accommodation to the
25
Lessee sufficient for parking 10 more cars in
a convenient place to be selected by the
Lessor and the Lessee mutually...”
19. In other words, under the said agreement, in
regard to the 2nd floor, the respondent-Lessor
undertook to hand over possession to the Lessee upon
the passage of six months from the date of the
agreement. It was also obliged to make space for
parking. Likewise, in Clause 18, the possession was
to be handed over immediately upon the expiration of
eight and half months.
20. Clause 19 provided for making available the 4
th
floor immediately after expiration of eleven months
from the date of agreement dated 17.11.1968. Clause
21 provided for complying with the schedule for
handing over possession and resultantly, making the
respondent liable for penalty or damage settled at
10% of the monthly rent inter alia. Clause 22 makes
it clear that the respondent was to complete the
construction of the entire building (multi storey
building) within 3 years from 17.11.1968.
26
21. In the Supplemental Agreement, there were certain
changes by way of additional rights being created in
favour of the appellant. Clause 8 of the original
agreement stood modified, in that, in place of the
liability of the lessee for Rs.1,68,300/-, as already
noticed, it is provided that a sum of Rs.1,64,462.40
was to be paid in three equal instalments. The first
of such instalment was to be paid when the possession
of the 2nd floor was given. Second instalment was to
be paid when possession of the 3rd floor was given.
The third instalment was to be paid when possession
of the 4th floor was given. Rs.9900/- was payable in
connection with guest house. It is in light of this
clause that the Exhibit 2 letter dated 16.9.1969 must
be appreciated. In other words, the said letter would
indicate that in terms of the agreement, as 2
nd and 3rd
floors stood handed over, the respondent was
insisting for payment of the security deposit, the
appellant was obliged under the agreement (clause 8)
as modified in the supplementary agreement to pay to
the respondent. No doubt, the case of the appellant
would appear to be that the possession was not handed
27
over in total compliance of the agreement and the
attendant facilities were not still made available.
22. We would think that 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.
Point No. 3: - Whether the appellant is a monthly
tenant from November, 1969?
23. The next question which would arise is whether
the appellant should be treated as a monthly tenant
for the reason that a formal registered deed was
contemplated. The agreement dated 17.11.1968 as also
the construction of the premises was not completed.
24. We are of the view that the contention that the
appellant should be treated as a monthly tenant even
from the very beginning is without any merit.
Accepting such a stand would in the first place run
counter to the written statement filed by the
28
appellant. In the written statement it is inter alia
stated as follows:
“..All the terms and conditions of the lease
were finalized and set out in the document
described as agreement for lease dated 21st
November, 1969. The document envisaged that
the possession· would be given to the
defendant upon completion of the building.
The period of lease was to be computed from
the date of delivery of possession. The said
document dated 21st November, 1968
constituted the actual demise of the property
and operated as deed of lease. Since the
Plaintiff and the defendant treated the said
document dated 21st November, 1968 as deed of
lease as modified by the Supplementary deed
dated 12th September, 1969, neither the
Plaintiff nor the defendant insisted upon
execution of a formal deed of lease as
requisite stamp duty as applicable to lease
had been paid and the said documents had been
registered…”
(Emphasis supplied)
25. The agreement dated 12.9.1969 is admittedly a
registered document. We do not find any force in law
or on facts to permit the appellant to contend that
the appellant be treated as a monthly tenant since
1968. We have noticed the stand taken by the
appellant that neither the appellant nor the
respondent insisted upon execution of a formal deed
of lease. The requisite stamp was paid. Thus, the
29
lease for 21 years came into being. The period of the
lease is to be calculated from the date when the
possession was handed over. We have although found
that 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.
Point No. 04: - Whether there was a prior
determination of the lease of 21 years by the
respondent, if so, whether the appellant is entitled
to protection of the Tenancy Act?
26. The next contention raised by the appellant is
that in the development in the year 1977, the
respondent put an end to the lease dated 17.11.1968
and transformed the appellant into a monthly tenant
and what is more relevant, it entitled it to the
benefits under the West Bengal Tenancy Act. This
argument is based on the notice dated 12.12.1977
issued by the respondent by which according to the
appellant, the lease was terminated. According to the
30
appellant, the matter did not stop with the mere
issuance of the notice. Parties went to court. The
respondent filed O.S. No. 20/1978. The appellant also
filed a Suit.
27. A settlement took place between the parties on
05.06.1980. The minutes of the meeting dated
05.06.1980 read as follows:
“Minutes of the meeting held between Mis.
Indian Oil Corporation Ltd. (Tenants) And
M/s. Sudera Enterprises Pvt. Ltd. (Landlord)
In respect of the office premises at 1,
Shakespeare Sarani, Calcutta. - 71 under
occupation by Indian Oil Corporation Ltd.,
Eastern Region.
PRESENT
Shri R. M. Basrur: GM (P), IOC, HO
Shri G. S. Pandya: FC, IOC, HO
Shri S. C. Ghose : GM, Eastern Region
Shri M. B. Ramgadia: RPM, Eastern Region
Shri D.B. Puri : Secretary, IOC, HO
On behalf of the landlord, Shri S. Rampuria,
Shri M. Jha and Shri B.S. Agarwal were
present.
The meeting was hold in Bombay at 10:30 AM on
5th June, 1980 in Shri Basruria Cabin.
31
1. As per Shri Rampuria, the main irritant
between the parties for a very long time has
been the non-settlement of air-conditioning
charges consequent time notified by the
Calcutta Electricity Supply Corporation
(India) Ltd. It was stated that their company
have forwarded to IOC at various points of
time the rise as and when notified by the
C.E.S.C. Similarly, service charges which are
subject to osculation with increase in
electricity charges has not been settled for
a long time. As per the lease agreement, the
osculation is provided as under: -
"The charges for the electricity to be
consumed for working the air-conditioning
machines and the said lift to be used by
the Lease exclusively shall be borne and
paid by the Lessors. If at any time in
future the rate of charge per unit of
electricity consumed JS increased. the
lessee shall pay such increased charges or
differences, the disagreement between the
Lessee and the Lessor in fixing the
proportion the opinion or decision of the
Lessor will be final and the Lessor shall
accept the proportion to be fixed by or on
behalf of the Lessee".
2. The second, point was on account of
amount approximately to Rs.83,388.53
recovered as liquidated damages from them on
account of late possession of three floors.
This amount is subject to verification.
3. It was stated that the amount found due to
them should be paid with interest.
4. On behalf of IOC, the corporation out that
in the present conditions of load-shedding
consequent power shortage, particularly in
Calcutta, the corporation intends to put up a
Generator for which they nee the help of the
landlord by way permission to do so and also
providing space for putting up the same.
32
5. The matter was discussed at length in the
morning session and various points expressed
by both the parties were taken into account
and considered by both the parties. The
parties, thereafter adjourned to most again
in the afternoon with their considered
opinion n the matter.
6. In the second session in the afternoon,
the following formula was agreed subject to:
-
(i) The Board's approval of the Board of
Directors of IOC;
(ii) That all pending disputes will stand
settled and that the parties will have no
other claims against each other for the
past on any account whatsoever;
(iii) The cross suits pending from each
side will be withdraw immediately on
implementation of these arrangement are
delayed beyond three months from the date
the parties will be free to extend time
for implementation or act otherwise as
they deem fit.
(iv) This is, however, without prejudice
to the landlords right to obtain
enhancement of rent, if any, as
permissible under the law applicable.
7. The conclusions were as follows: -
(i) In interpretation of the escalation
clause for air-conditioning charges, the
Corporation agreed offer on the basis that
the electricity component of the airconditioning charges of 30 paise per sq.
ft. per month will be taken as 1.25 unit
per sq.ft per month of the so determined
30 paise air-conditioning charges.
Landlord agreed to this in final
settlement of their claim for increase in
the air-condition charges.
33
(ii) The Corporation would be willing to
refund a sum of Rs. 83,388.53 which was
recovered by the Corporation as liquidated
damages on account of late possession of
the three floors, on clear understanding
that the landlord will withdraw his
counter claim of rent amounting to Rs.
4,76,371.14 for the 95 period from 15-09-
1969 to 4-11-1970. The amounts are subject
to verification.
(iii) The Corporation would further be
willing to refund the several sums
totaling to Rs.20,392.03 which were
deducted by the Corporation out of the
rent, service charges and air conditioning
charges at various points of time. The
amount is subject to verification.
(iv) No interest shall be payable by IOC
on any of the amount payable in terms of
para (i), (ii) and (iii) above.
(v) with regard to IOC's request for space
on the ground floor for setting up a
generator, M/s. Sudera Enterprises Pvt
Ltd. agreed to provides space (already in
IOC's occupation) in the car parking area
on ground floor sufficient enough to
install generator. IOC agreed that in lieu
of the space to be provided by M/s. Sudera
Enterprises, ICC will provide to M/s.
Sudera Enterprises equal space of the car
parking area in front. M/s. Sudera
Enterprises will extend all cooperation to
enable IOC connect the generator to IOC's
electrical circuit as well as electricity·
supply meter etc.
8. It is understood by both the parties that
in future both the parties as will cooperate
and the conditions of air conditioning and
other facilities like lift and others will
run properly to the benefit of the both. For
this purpose, as the landlord has suggested,
34
the air distribution system (i.e. ducting and
false ceiling) located in the floors occupied
by IOC will have to be modified at the cost
of IOC, whereinafter it is agreed by the
landlord that the temperature of the premises
will be maintained at 78ºF ± 2ºF.
9. On the service charges, it was agreed that
the earlier claim of Rs. 0.06 unit per sft.
per month will be the basis for the element
of electricity consumption.
10. It was also agreed by the landlord that
one bigger size lift will be exclusively
given to the corporation besides the use of
service lift in lieu of the existing
arrangement.”
28. In order to appreciate the point, before we turn
to the pleadings, we may notice the following
correspondence between the parties. On 21.08.1990,
the appellant wrote to the Solicitors. It, inter
alia, reads as follows: -
“Under the Agreement of Lease dated
21/11/1968 executed by and between M/s Sudera
Enterprises (P) Ltd. (The Lessors) and M/s
Indian Oil Corporation Ltd. (the Lessee)
which is for a period of 21 years commencing
from the date of handing over possession to
the Lessee i.e., 4th Nov., 1970 we are
entitled to continue in occupation of the
leased premises upto 3rd November, 1991.”
We may also notice the following contentions
inter alia:
35
“You may however bear in mind that it is
covenant in the agreement of lease that so
long as any loan is outstanding against them,
they cannot determine the lease. Therefore,
due care has to be taken that while releasing
the Corporation's charge over the property we
do not expose ourselves to any threat or
coercion which may affect our peaceful
occupation of the premises during the term of
the lease and even thereafter, if required,
in accordance with the agreement and/or the
law.”
29. Next, we may notice the communication by a letter
dated 19.10.1990 sent by the respondent to the
appellant.
“SUDERA
Ref:01:001:0002:1520:10 OCTOBER 19,1990.
Indian Oil Corporation Limited,
1, Shakespeare Sarani,
Calcutta-700071.
Dear Sirs/
Re: 2nd / 3rd and 4th Floors of premises
known as Airconditioned Market - being No. 1,
Shakespeare Sarani, Calcutta - 700 071.
Please refer to the Registered Agreement for
Lease dated 21st November/ 1968 and the
Registered Supplemental Agreement for Lease
dated 12th September, 1969.
The possession of the 2nd and 3rd Floors was
delivered by us and taken by you on the 12th
September/ 1969 and that in relation to the
36
4th Floor was delivered by us and taken by
you on the 18th December, 1969. The agreed
period of Lease of 21 years in relation to
the 2nd and 3rd Floors has expired by efflux
of time on the 11th September, 1990 and that
in relation to the 4th Floor such agreed
period in due to expire by efflux of time on
17th December, 1990.
Consequently, we became entitled to peaceful
and vacant possession of the 2nd and 3rd
Floors on the expiry of 11th September, 1990.
Will you please let us know when you propose
to deliver possession of the 2nd and 3rd
Floor. We shall appreciate a line in
confirmation that you will deliver possession
of the 4th Floor on the expiry of the agreed
term on the 17th December/ 1990.
We have enjoyed a warm and cordial
relationship of land-lord and tenant over two
decades. We understand that your huge office
complex in South Calcutta is nearing
completion where you propose shifting. We
look forward to hear from you in the matter
immediately.
This is without prejudice to our rights and
contentions.
Thanking you,
Yours faithfully
for SUDERA, ENTERPRISES PVT. LTD.,
(B. S. BAID)
DIRECTOR”
37
30. The appellant sent the communication by a letter
dated 03.11.1990 which reads as follows: -
“INDIAN OIL CORPORATION LIMITED
1, SHAKESPEARE SARANI, CALCUTTA- 700 071
In reply, please refer to:
P&A/ER/1841
3
rd November, 1990
Messrs, Sudera Enterprises Private Ltd.
1, Shakespeare Sarani
Calcutta- 700 071
Dear Sirs
Re: 2nd, 3rd and 4th floor of premises No. 1,
Shakespare Sarani, Calcutta.
Kindly refer to your letter No.
01:001:0002:1520:10 of the 19th October, 1990.
We may mention that possession of the 2nd,
3rd and 4th Floors were delivered to us on
4th November, 1970 and not on 2nd September,
1969 as stated in your letter. The period of
the Lease has therefore not yet expired and
the question of delivering possession at this
stage does not arise.
Possession of the 2nd, 3rd and 4th Floors of
premises No. 1, Shakespeare Sarani, Calcutta,
will be delivered to you in accordance with
law.
Yours Faithfully,
FOR INDIAN OIL CORPORATION LTD.
(MARKETING DIVISION)
DY. GENERAL MANAGER, (PERSONNEL)
Regd. Office: G-9, Ali Yabar Jung Marg,
Bandra (East), Bombay- 400 051 (India)
38
Regional Office: 1, Shakespeare Sarani,
Calcutta-700 071.”
31. Next, we notice letter dated 09.11.1990 sent by
the respondent to the appellant.
November 9,1990
“The Indian Oil Corporation Ltd.
1, Shakespeare Sarani,
CALCUTTA- 700 071
Dear Sirs,
Re: Second, Third and Fourth Floors of
Premises No. 1 Shakespeare Sarani, Calcutta.
We thank you for your Letter No. P&A/ER/1841
dated the 3rd November, 1990 in reply to our
letter No.01 :001:0002:1520:10 dated the 19th
October, 1990.
We reiterate and maintain that the possession
of the 2nd and 3rd Floors were delivered to
you on the 12th September, 1969, and the
possession of 4th Floor was delivered to you
on 18th December, 1969 and not on 4th
November, 1970 as alleged.
According to us, the Lease has expired by
efflux of time and we are entitled to receive
and you are liable to make over possession of
the 2nd and 3rd floors in your occupation to
us. In respect of the 4th Floor the lease is
due to expire on 17th December, 1990, and you
are liable to make over possession to us on
the expiry of the lease.
You are aware of the astronomical increase of
prices on all counts. You are also aware of
the present prevailing market conditions as
to rent service and Air-conditioning charges.
39
For the interim period from September, 1990
in respect of 2nd & 3rd floors, until you
deliver possession of such floors in your
occupation on the alleged expiry of the Lesse
which according to you would be in November
1991, we request you to pay us mesne profits
or occupation charges having regard to the
prevailing market conditions. According to us
the prevailing rent, service and Airconditioning charges for similar or nearly
similar property in the locality would be
Rs.31/- per sq. ft.
On account of the cordial relationship
between us, we shall be obliged if you
consider and let us have your agreement for
payment of the mesne profit or occupation
charges at the aforesaid rate or such other
reasonable rate as we may arrive at mutually
and agree, for which we hereby offer to sit
across the table and discuss the same with
you.
We look forward to hear from you at the
earliest.
Yours faithfully,
For Sudera Enterprises Pvt. Ltd .
Sd/-
DIRECTOR”
32. The respondent writes on 02.01.1991, with
reference to a letter dated 11.12.1990, which is as
follows, inter alia.
“Ref: 01:001:0002:1520:16 January 2, 1991
Indian Oil Corporation Ltd.
1, Shakespeare Sarani,
40
Calcutta - 700 071
Dear Sir,
Re: 2nd, 3rd and 4th floor of premises
No.1, Shakespeare Sarani, Cal- 700 071
We acknowledge receipt of your letter dated
11th December, 1990 and note its contents
with utter surprise.
At the outset we repeat and reiterate the
statements and contents of our earlier
letters to you and state that the same are
true and correct and deny and dispute all
allegations to the contrary.
Without prejudice to our rights and
contentions and without in any manner
admitting any of the allegations contained in
your instant letter, we are accepting the
cheques for a total sum of Rs.4,41,896.58
(Rupees four lacs forty-one thousand eight
hundred and ninety-six and paise fifty-eight
only) as an on-account payment of our dues in
relation to your occupation of the second and
third floors.
This is strictly without prejudice. All
allegations contrary to the aforesaid are
denied and disputed.
Thanking you,
Yours faithfully
For SUDERA ENTERPRISES PVT. LTD.
Sd/-
(P.N. TICKOO)
CHIEF EXECUTIVE”
41
33. Next, we notice in communication letter dated
04.11.1993 sent by the appellant to the respondent.
“Ref: DGM (HR)/1
Date: 04.11.93
M/s. Sudera Enterprises (P) Ltd.
1, Shakespeare Sarani
Calcutta-700 071
Sub: Our tenanted office area at 2nd, 3rd and
4th floors of Premises No.1, Shakespeare
Sarani, Calcutta- 700 071
Dear Sir,
We have received your letters dated 20th
September, 1993 on 1.10.93 and dated 8.10.93
on 12.10.93.
We have noted that the proposal of the Flat
Deleasing Committee conveyed to you by Shri
Janakraj Gupta, has not been accepted by you
and you want to keep your claim for alleged
mesne profit alive. We make it clear that the
suggestion conveyed by you is not acceptable
to us. The premises in question is still
required by us and our valuable articles and
assets are still lying therein. We shall pay
you rent at the last rate paid so long we
continue in the possession of the aforesaid
premises and that is all that we
are obliged to pay to you and you are
entitled to get from us. There is no scope
for any genuine or real claim for mesne
profits/damages and the question of
arbitration does not arise.
The rights and obligations are governed by
the West Bengal Premises Tenancy Act. It is
totally incorrect to allege that the
42
Corporation is in possession of the premises
without any authority.
We take strong obligation to your appointing
a date for taking over possession as you have
purported to do by the above letter. We are
shocked and surprised to learn that you had
actually sent your man to take over forcible
possession of the tenanted premises but you
failed. We never gave you notice that we
would quit the tenanted area on October 1,
1993. This wrongful act of yours is serious
and pose a serious threat of damage and loss
of our valuable articles lying in the
tenanted area. Please do not
repea1 any attempt of taking over forcible
possession.
We refer to our earlier correspondences and
we reiterate that after the expiry of the
lease period we have been holding over as a
monthly tenant at a rent of Rs.2, 15,460. 77.
The monthly rent is being regularly paid to
you. We are, as conveyed to you, not liable
to pay air-conditioning charges.
We hope that we have clarified the matter and
there will be no misunderstanding any
further.
We, however, do not appreciate your objective
to get back possession of our tenanted area
and at the same time to keep alive your
unreasonable and illegal claim for mesne
profits/damages. Your stand should also be
fair and reasonable as ours.
Yours faithfully,
F/lndian Oil Corporation Ltd.
Sd/
(S. Basu)
Dy. General Manager (HR)
43
34. On 02.05.1994 the respondent refers to certain
discussions and notes. It was agreed in the
discussions that the appellant would hand over the
lease property inclusive of the furnitures, fixtures,
fittings thereon, on as is where is basis, which was
also agreed to be purchased by the respondent. It was
allegedly agreed that the claim for mesne profits
would be looked into by the chairman of the appellant
and therefore the respondent would not insist on
reference to arbitration. By letter dated 24.05.1994
the appellant wrote as follows:
“WITHOUT PREJUDICE
No.: HO:LAW:REC:1476:PT 24th May, 1994
Mis. Sudera Enterprises Pvt Ltd.
1, Shakespeare Sarani, ·
CALCUTTA- 700 001
Dear Sirs,
We refer to your letter dated 2.5.94. It is
correct that discussions were held on
27.4.94. It is not however correct to say
that any question of delivery of possession
on the ground of expiry of the lease was
raised or discussed. IOC. has repeatedly
pointed out to Sudera that IOC enjoys the
status of a monthly tenant governed by the
West Bengal Premises Tenancy Act, 1956. Be
44
that as it may, with regard to the text of
the discussions recorded in your letter our
comments are as follows:
Clauses (i), (ii) and (iii) are substantially
correct save and except that the possession
is to be taken over by you immediately and
the claim for proportionate share of
Corporation taxes however will be ascertained
on production of proof and verification by
IOC in regard to tax liability. We may
therefore, request you to produce immediately
the necessary documentary proof to evidence
the extent of the tax liability to IOC,
Eastern Region.
So far as clauses (iv) and (v) are concerned,
it was discussed that Chairman will first
decide the question of maintainability of
your claim for mesne profits.
IOC has been consistently contending by
several letters to you that there can be no
question of mesne profits in this case. If
the Chairman decides that the claim for mesne
profits is maintainable in law after hearing
the view points of both sides in the matter
only then he will go into the question of the
assessment of the amount thereof.
You were kind enough to say that you would
accept the advice of the Chairman on every
respect as final and binding. At the same
time you will appreciate that no agreement
for arbitration agreement was concluded or
entered into. A draft was never finalized and
no agreement for arbitration was ever finally
prepared nor signed by any party because
talks for arbitration fell through at the
stage of discussions.
The appropriate Deed of Re-Conveyance of
Mortgage will be registered by IOC
immediately after the possession is taken
over by you.
45
We may therefore request you to depute your
representative to take over possession of the
property including· furniture, fittings, and
fixtures etc. in consultation with Executive
Director of our Eastern Regional Office at
Calcutta on the above basis.
Yours faithfully
for INDIAN OIL CORPORATION LIMITED
Sdl-
(G.R. RAMACHANDRAN)
DY. GENERAL MANAGER (LAW)”
35. Now, we may refer to the relevant pleadings
contained in the written statement filed by the
appellant. They are as follows: -
“Paragraph 7. With reference to paragraph 11
and 12 of the plaint, it is stated that the
Plaintiff by a Notice dated 7th December,
1977 had determined the tenancy and called
upon the Defendant to forthwith vacate the
three floors of the said premises. The
Defendant did not vacate. Thereafter, the
Plaintiff filed the suit No.20 of 1978 in the
Hon'ble High Court at Calcutta claiming a
decree for possession against the Defendant.
The said suit No.21 of 1978 was ultimately
not pressed and was dismissed on 20th June,
1986. The Defendant contained to occupy the
said three floors of the said premises as
before and paid monthly rents and other
charges as before to the Plaintiff and the
Plaintiff continued to accept the same month
by month. Thereafter, by the letter dated
19th October, 1990 the Plaintiff again called
upon the Defendant to make over. possession
46
of the said 2nd, 3rd and 4th floors of the
said premises to which a reply was given by
the Defendant on 3rd November, 1990. Since
the possession of the said 2nd, 3rd and 4th
floors of the said premises was delivered to
the Defendant on 4th November, 1970 the
period
of 21 years of the said lease had not expired
on 19th October, 1990 and the Defendant had
no obligation to give possession. It is
denied that the contention raised in the
letter dated 3rd November, 1990 are wrongful,
it is denied that by the said letter dated
3rd, November, 1990 the Defendant gave notice
to quite on the expiry of the period of 21
years as alleged.”
“Paragraph 8. With reference to paragraph 13
of the plaint it is stated that the period of
21 years expired on 4th November, 1991 and
all allegations to the contrary are denied
and disputed.”
36. In paragraph 10, the appellant purported to offer
reasons for delay in vacating.
37. In paragraph 11, it is, inter alia, stated with
reference to paragraph 15 of the plaint that the
contractual tenancy of the appellant stood terminated
on 31st May, 1994 and possession was delivered on 31st
May, 1994.
38. In answer to paragraph 16 of the plaint, it is
stated as follows in paragraph 12.
47
“Paragraph 12. With reference to paragraph 16
of the plaint, it is denied that the
defendant was over in wrongful possession of
the said three floors of the said premises as
alleged in the said paragraph or at all. Each
and all the allegations in the said paragraph
are denied and disputed. The defendant was
the lessee of the said three floors of the
said premises for a term of 21 years with
option to determine the said lease and
deliver possession before the expiry of the
said period of 21 years. The provisions of
the west Bengal Premises Tenancy Act, 1956
were applicable and the possession of the
defendant of the said three floors of the
said premises was protected by the said Act.
Alternately, the Defendant was a monthly
tenant in respect of the said three floors of
the said premises. The defendant has paid
monthly rent to the Plaintiff month by month
and the Plaintiff has accepted rent and
issued rent receipts to the defendant
regularly. Such tenancy of the defendant was
all along protected and governed by the West
Bengal premises Tenancy Act, 1956. No decree
for delivery of possession of the said three
floors has
been obtained by the Plaintiff against the
defendant. The Plaintiff purported claim of
mesne profit is totally misconceived in law
and in the facts of the case.”
39. We may also notice Paragraph 13 and Paragraph 16.
“Paragraph 13. In further alternative,
Plaintiff has after determination of the
tenancy by the Notice dated 7th December,
1977 accepted monthly rent from the defendant
month by month and have issued rent receipt
and accordingly, the Defendant became a
monthly tenant in or after January, 1978. The
48
said tenancy of the defendant was also
protected and governed by the provisions of
West Bengal Premises Tenancy Act, 1956.”
“Paragraph 16. With reference to paragraph 19
of the plaint it is denied that the Defendant
was ever in wrongful possession of any of the
floors of the said premises after the expiry
of 3rd /4th November, 1991 or at all. The
defendant was a tenant within the meaning of
West Bengal Premises Tenancy Act, 1956 till
31st May, 1994, when possession was delivered
back to and accepted by the Plaintiff as
mentioned before. The defendant has not been
in wrongful occupation or possession of any
portion of the said premises even for a
single day. The purported claim for mesne
profit as made in the suit is wholly
misconceived and not maintainable.”
40. The learned Single Judge drew inspiration from
the judgment of this Court in Pabitra Kumar Roy
(supra), that when the party allows the lease to run
its full course and it cannot thereafter take shelter
under the clause for earlier determination to contend
that the lease is governed by the ‘Tenancy Act’.
41. As far as the case based on the Calcutta Credit
Corporation Ltd.(supra), the learned Single Judge
went on to find that the appellant continued to
remain in possession of the 3rd/ 4th floors till it
vacated the same in 1994. It was further found that
49
the parties did not act on the basis of the notice of
termination. The cross suits were withdrawn on
agreement. The parties decided to refer the question
of quantum of mesne profits to be pronounced upon by
the chairman. All these facts, it was found, taken
together would show that the notice of termination
was not acted upon. In regard to this aspect, we may
now also notice the findings in the impugned
judgment. The Division Bench found that it is not
open to a party to set up a new case in departure
from the pleadings relying on Pabitra Kumar Roy
(supra). It was found that mere inclusion of a prior
determination clause will not alter the character of
the lease for a fixed period unless the option is
exercised. No evidence on record was found to show
that the appellant took steps to exit the lease
before May, 1994. In not choosing to exercise the
option of prior determination and instead of allowing
the lease to run its full course, the appellant
cannot take refuge under the ‘Tenancy Act’. Dealing
with the argument that a fresh tenancy was created
after the expiry of the efflux of time, it was found
50
that the appellant had not pleaded such a case and
that the respondent had assented to the appellant
continuing in possession of the lease premises. The
occupation charges were accepted by the respondent
without ‘prejudice’ which did not lead to the
creation of a new tenancy. We have found that we see
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 was handed over. We further
found that 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. We have noticed how both
51
these suits finally came to be compromised. The
argument which we are called upon to pronounce on is
as follows.
42. It is contended that with the issuance of the
notice of termination of the lease by the respondent
dated 12.11.1977, the original lease at any rate came
to an end. The result of the settlement between the
parties would not be to revive the original lease. In
other words, upon the issuance of a notice for
determination of the lease under Section 106 of the
Transfer of Property Act, without anything more, the
law operates and the lease is at an end. The effect
of the waiver of the notice under Section 113 of the
Transfer of Property Act can only be if at all to
create a new tenancy. It is in this regard, that the
appellant has placed reliance on judgment of this
Court in Calcutta Credit Corporation Ltd. (supra).
The judgment was rendered in the said case by a bench
of three learned judges. In the said case, after the
expiry of the period of the original lease, the
tenant continued to hold over the premises. While so,
it is the tenant who served a notice intimating its
52
intention to vacate the premises on 12.08.1953. By a
subsequent letter dated 26.08.1953, the tenant
purported to resile from the notice and requested
that the earlier notice be treated as cancelled. The
landlord pointed out that the earlier notice could be
withdrawn by mutual consent and the landlord was
unable to give his consent. The tenant invoked the
Rent Control Act and claimed they were holding over
the premises in terms of the Act. The tenant sub-let
the premises after it was called upon to vacate the
premises. The landlord instituted the suit against
the original tenant. There was a consent decree which
inter alia declared that portion of the premises was
handed over to the landlord and the landlord would
have the option to eject the sub tenant. It is
thereupon that the suit came to be filed against the
sub tenant. This Court proceeded to hold, inter alia,
as follows: -
“Clearly Section 113 contemplates waiver of
the notice by any act on the part of the
person giving it, if such an act shows an
intention to treat the lease as subsisting
and the other party gives his consent express
or implied thereto. The law under the
Transfer of Property Act on the question in
53
hand is not different from the law in
England. Once a notice is served determining
the tenancy or showing an intention to quit
on the expiry of the period of the notice,
the tenancy is at an end, unless with the
consent of the other party to whom the notice
is given the tenancy is agreed to be treated
as subsisting. It was held in Tayleur v.
Wildin [(1867-68) LR 3 Ex Cases 303] that a
notice determining a tenancy cannot be
withdrawn. In Tayleur v. Wildin [(1867-68) LR
3 Ex Cases 303] an annual tenancy of a farm
under a written lease commencing on Lady Day
i.e. March 25, was determined by a notice by
which the landlord called upon the tenant to
quit the farm at the expiration of the
current year's tenancy. Before the expiry of
the year of tenancy, the arrears of rent were
paid up by the tenant, and the notice was
withdrawn and the tenant continued in
occupation of the farm under the terms of the
original agreement. It was held by the court
of Exchequer that the tenancy was determined
by the notice to quit, and a surety for
payment of rent under the original lease was
not liable for rent falling due after the
expiry of the notice. Kelly C.B., observed
that whether the notice is given by the
landlord or the tenant, the party to whom it
is given is entitled to insist upon it, and
it cannot be withdrawn without the consent of
both. The consent of the parties makes a new
agreement, and the rent became, due under a
new agreement. In our judgment, that
principle applies to the law of landlord &
tenant in India. Therefore, on the expiration
of the period of notice dated August 12,
1953, the tenancy of Allen Berry stood
determined.
(Emphasis supplied)
54
43. The appellant highlights this judgment. We have
noticed that the appellant did refer to this judgment
both before the learned Single Judge and the Division
Bench. A Bench of two learned Judges in the decision
reported in Ranjit Chandra Chowdhury v. Mohitosh
Mukherjee9, was dealing with a suit for ejectment
filed against the tenant for default of payment of
rent. The matter was considered in light of the West
Bengal Premises Rent Control (Temporary Provisions)
Act, 1950. The said act came to be repealed by the
‘Tenancy Act’ with which we are concerned in this
case. The court was dealing with the scope of Section
12(1) and (14) of the Act. Under the said provisions,
the prohibition against a decree for possession being
granted against tenant did not apply in a case where
the tenant had fallen into arrears of rent and had
not paid it within the time under the contract. The
tenant claimed the protection of Section 14 of the
Act which granted power to the court to decree the
payment of arrears and allow the tenant to avoid the
consequences which otherwise would follow. The
9 (1969) 1 SCC 699
55
contention was that the action of the landlord in
having accepted the rent on a subsequent date had led
to the creation of a new tenancy. The Court inter
alia held in these circumstances as follows: -
“8. Mr Bhattacharji on behalf of the tenant
contends that the old tenancy was dead after
the notice and on acceptance of rent a new
tenancy came into existence. The other side
contends that by the acceptance of rent, the
old tenancy on the old terms continued. Each
side has cited a number of rulings. We do not
consider it necessary to refer to these
rulings or to discuss the question. In Ganga
Dutt Murarka v. Kartik Chandra Das [AIR 1961
SC 1067] and in Anand Nivas Private Ltd. v.
Anandji Kalyanji Pedhi [AIR 1965 SC 414]
(particularly the first at p. 1069), it was
held in connection with a statutory tenancy
that a landlord accepting rent does not
assent to a new contractual tenancy but
continues the old tenancy. In Calcutta Credit
Corporation Ltd. v. Happy Homes (P) Ltd.,
[(1968) 2 SCR 20] the subject has been
discussed in detail. Under Section 113 of the
Transfer of Property Act a notice is waived,
by an act on the part of the person giving it
showing an intention to treat the lease as
subsisting, provided there is the express or
implied consent of the person to whom it is
given. Here the difficulty is solved by the
attitude the tenant took in this case. His
case was that the old tenancy revived and
continued. According to him, the landlord
acquiesced in having the old tenancy
continued. If we go by the tenant's own case,
it is obvious that the old tenancy with the
default continued and the landlord was thus
able to use the provisions of Section 12
(1)(i) against the tenant as also the proviso
56
to sub-section (3) of Section 14 of the
repealed Act. There were two consecutive
defaults and in the period of 18 months there
were more than three defaults. The benefit of
Section 14 sub-section (1) of the repealed
Act is not available to the tenant because of
the operation of the proviso to sub-section
(3). Further Section 24 of the new Act can
hardly assist the tenant. That section is not
retropective and will operate from the date
on which it came into force. Mr Bhattacharji
claimed that it may be taken as a rule of
decision or laying down a rule of evidence
but we think it impinges upon the substantive
rights of landlord and tenants which can only
be claimed after the commencement of the Act
and not before. The section puts an embargo
on any claim based on default in payment of
rent when the landlord accepts rent after
default and therefore it affects the
substantive right of the landlords. According
to the accepted canons of interpretation of
statutes, a substantive right cannot be taken
away retrospectively unless the law expressly
so states or there is a clear intendment.
There are no express words in the statute
making Section 24 retrospective and we fail
to see any intendment in it to apply to cases
pending on March 31, 1956, when the new Act
came into force, and this suit was then
pending. If it had been merely a matter of
procedure or creating a rule of decision we
might have held that the provisions applied
to the suit, but that is not the case here.
As we said the section creates a change in
the substantive rights and therefore must be
held to be prospective in operation and not
retrospective unless we can gather
retrospectivity from the language of the
statute or by clear implication in it.
57
44. A Bench of three learned Judges rendered the
decision reported in Tayabali Jaffarbhai Tankiwala v.
Asha & Co. and Another10. We may notice the following
paragraphs: -
“5. In the present case there can be no doubt
that the serving of the second notice and
what was stated therein together with the
claim as laid and amplified in the plaint
showed that the landlord waived the first
notice by showing an intention to treat the
tenancy as subsisting and that this was with
the express or implied consent of the tenant
to whom the first notice had been given
because he had 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.”
“6. It further appears that the rent was sent
by the tenant treating the tenancy as
subsisting and not as having come to an end
by virtue of the first notice. There is
another significant fact which shows that it
was the second notice which was considered by
the landlord to be the effective notice. It
was in the notice sent in October 1957 that
the landlord, for the first time, raised the
ground of personal necessity. In the suit
requirement of personal necessity was made
one of the main grounds on which eviction was
sought. In the first notice which was sent in
June 1956 no such requirement or ground had
been mentioned. It was not open, therefore,
to the landlord to say that he did not want
to rely on the second notice and should be
allowed to base his action for eviction only
on the first notice containing the ground of
10 (1970) 1 SCC 46
58
the default in payment of arrears of rent. We
are satisfied that the suit of the landlord
was rightly dismissed though we have
sustained its dismissal on different
reasoning.”
45. We must pause here and notice the complaint of
the appellant. The learned Additional Solicitor
General would point out that in the Calcutta Credit
Corporation Ltd. (supra) case, the Court had declared
the law to be that when there is a waiver of a notice
within the meaning of Section 113 of the Transfer of
Property Act, the old tenancy is not resurrected.
With the issuance of the notice of termination, the
lease is determined. With the consent of the parties
all that happens is the creation of a new tenancy. It
is the complaint of the appellant that properly read
the judgment of the later bench of two judges
reported in Ranjit Chandra Chowdhury (supra) would
show that though reference is made to Calcutta Credit
Corporation Ltd. (supra), the Court proceeded on the
basis that the old tenancy was revived and continued
on the basis of the stand taken by the tenant
himself. It is pointed out that this Court must
59
proceed on the basis of law declared in Calcutta
Credit Corporation Ltd. (supra) and must notice also
that the facts persuaded the court to take the view
it took in the later judgment.
46. Still further, it is contended that as far as the
judgment of the later three judges’ bench in Tayabali
Jaffarbhai Tankiwala (supra), it does not refer to
the earlier judgment of a coordinate Bench of same
strength, namely, Calcutta Credit Corporation Ltd.
(supra) and the law is correctly laid down in
Calcutta Credit Corporation Ltd.(supra).
47. Per contra, the submission of the respondent is
that the observations relied upon by the appellant in
Calcutta Credit Corporation Ltd. (supra) constitute
only obiter. Reliance is placed on the judgments in
Ranjit Chandra Chowdhury (supra) and Tayabali
Jaffarbhai Tankiwala (supra) to contend that the
waiver does not lead to a new tenancy. In this
regard, reliance is also placed on the judgments of
the Calcutta High Court reported in Sudhir Kumar Paul
60
v. Indu Prova Ghose and others11 and Khana Lahiri and
others v. Suniti Kumar Chatterjee and others12. It is
further pointed out that the parties proceeded on the
basis that the old tenancy revived. This is evident
from the rent being paid in accordance with the lease
by the appellant.
48. We have adverted to the stand of the appellant in
its written statement. In paragraph 12, the appellant
contended that it was a lease for a term of 21 years
with an option to determine the said lease before the
expiry of said period of 21 years. Immediately
thereafter, the Tenancy Act was invoked. Thereafter,
it is in the same paragraph, it is contended that the
appellant is a monthly tenant. It had paid monthly
rent on a month-by-month basis. Such tenancy is
protected by the Tenancy Act. Further alternative
argument set up is that after determination of the
tenancy by notice dated 07.12.1977, the monthly rent
being accepted, appellant became monthly tenant on or
after January, 1998 and the tenancy was also
11 AIR 76 Cal 274
12 (2006) SCC Online Cal 248
61
protected under the Tenancy Act. Now it is necessary
to refer to Section 3 of the West Bengal Premises
Tenancy Act, 1956. It consists of two sub-sections.
Sub-Section (2) was inserted in the year 1965.
Section 3 reads as follows:
“3. Certain provisions of the Act not to
apply to certain leases. — (1) The provisions
relating to rent and the provisions of
Sections 31 and 36 shall apply to any
premises held under a lease for residential
purpose of the lessee himself and registered
under the Indian Registration Act, 1908,
where—
(a) such lease is for a period of not more
than 20 years, and save as aforesaid nothing
in this Act shall apply to any premises held
under a lease for a period of not less than
15 years.
(2) Notwithstanding anything to the contrary
contained in sub-section (1) but subject to
sub-section (3) of Section 1, this Act shall
apply to all premises held under a lease
which has been entered into after the
commencement of the West Bengal Premises
Tenancy (Amendment) Ordinance, 1965:
Provided that if any such lease is for a
period of not less than 20 years and the
period limited by such lease is not expressed
to be terminable before its expiration at the
option either of the landlord or of the
tenant, nothing in this Act, other than the
provisions relating to rent and the
provisions of Sections 31 and 36, shall apply
to any premises held under such lease.”
62
49. We understand the case of the appellant from the
pleadings as follows:
The lease provided for an option for appellant
to determine the lease before the expiry of 21
years. Therefore, though the lease was for a
period of 21 years, the lease contained an
option to terminate it with the appellant.
Therefore, the provisions of the Tenancy Act
came into play. It is in further alternative in
paragraph 30 that the appellant set up the case
of the impact of the notice of termination dated
7.12.1977. It is in support of the said
alternative case that the entire debate before
the court based on the judgment of this Court in
Calcutta Credit Corporation Ltd. (supra)
revolved around.
50. We have held that the lease agreement in 1968
along with the supplementary agreement in 1969 did
constitute a lease. In Clause 9 of the agreement of
lease dated 21.07.1968, it is provided as follows:
63
“9. That Lessee shall be at liberty to
terminate the lease at any time after the
expiration of eight years of the terms of 21
years by giving six calendar month previous
notice in writing to the Lessor to that
effect.”
51. We must notice Clause 26 of the said lease. It
reads as follows:
“26. In case the Lessee makes default in
payment of the rent for three months or
otherwise commits breach of any of the
covenants or conditions on its part to be
observed and performed it shall be lawful
(but not compulsory) for the Lessor to
determine the Lease and to re-enter the
demised premises or any part thereof in the
name of the whole and to take possession
thereof.”
52. The supplementary agreement dated 12.09.1969
added a proviso to Clause 26. It reads as follows:
“PROVIDED HOWEVER that notwithstanding
anything contained in the said Agreement of
Lease or these presents the Lessor shall not
be entitled to forfeit the Lease in respect
of the demised premises or any part thereof
or to determine the same or to re-enter
thereon so long as any amount of the loan or
loans advanced and agreed to be advanced and
the amount of Interest thereon are
outstanding and due to the Lessee.”
64
53. If thus 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
which we have hereinbefore referred to. 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.
54. As regards the case based on the effect of the
waiver within the meaning of Section 113 of Transfer
of Property Act, we notice the following aspects.
The notice of termination is itself not produced.
65
In this regard, we must notice that the judgment of
this Court in Calcutta Credit Corporation Ltd.
(supra) 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
66
period of 21 years. In the circumstances of this
case, we find no merit in the case of the appellant
based on the decision of this Court in Calcutta
Credit Corporation Ltd. (supra) as regards the
effect of waiver under Section 111 of the Transfer
of Property Act resulting in the creation of the new
tenancy.
55. As regards the case based on Section 3(2) of the
Tenancy Act, namely, the presence of an option with
the appellant /lessee to terminate the 21 years
lease immaturely, it is no doubt true that Clause 9
did give an option to the appellant to terminate
lease after the expiry of 8 years and before the
period of 21 years expired. It is here that the
decision of this court in Pabitra Kumar Roy (supra)
needs to be considered. In the said case, registered
lease was dated 13.01.1969. The lease commenced from
01.01.1969 and was for a period of 21 years. The
lease, in fact, contained a clause which permitted
the parties to terminate the lease prior to its
expiry. On 29.09.1972, the lessor determined the
lease under Section 111(g) of Transfer of Property
67
Act. What is more, a suit was filed against the
lessee for eviction which was decreed on the ground
of default in paying rent. The lessee went ahead and
successfully invoked Section 114 of the Transfer of
Property Act and on payment of the rent, he was
allowed to continue. Thereafter, on completion of
the period of 21 years, the suit for ejectment was
filed. It is in this case that the tenant sought
shelter under Section 3 of the Tenancy Act. It was
the case of the tenant that the tenant was protected
under the Tenancy Act, in view of the prior
determination. We need only notice paragraphs 15,
19, 20 and 22.
“15. On a construction of the provisions of
sub-section (2) of Section 3 of the 1956 Act,
we are unable to subscribe to the view
expressed by the High Court. The intention of
the legislature in amending Section 3 appears
to have been to prevent landlords from using
long-term leases as a camouflage for
excluding them from the protection of the
1956 Act and yet retaining the right of prior
determination. Sub-section (2) appears to
have been enacted to prevent such abuse,
inasmuch as, once the lease was determined
before the fixed period, it attracted the
proviso thereof.
xxx xxx xxx
68
19. The decision in Savita Dey case [(1995) 6
SCC 274 : AIR 1996 SC 272] makes the position
clear that the mere inclusion of a clause for
prior determination of a lease, which is
otherwise for a fixed period of more than
twenty years, will not ipso facto bring it
within the exception contemplated in the
proviso to sub-section (2) of Section 3 of
the 1956 Act. The inclusion of such a clause
may be taken by the tenant as a defence in
the event the option under the said clause is
exercised. Such a defence was not set up by
the lessee in the earlier suit when it was
available to her and the same is not
available to her after the lapse of the fixed
period of the lease.
20. As was indicated by the Calcutta High
Court in Mahindra & Mahindra case [(1989) 93
CWN 773 : AIR 1989 NOC 200 (Cal) : (1989) 1
CHN 1] a lease for a fixed period does not
cease to be so by the inclusion of a clause
entitling either the lessor or the lessee to
determine the lease prior to its expiry,
unless such option is actually exercised.
xxx xxx xxx
22. The law is clear that lease deeds for
periods of twenty years or more would stand
excluded from the operation of the 1956 Act
except in matters relating to Sections 31 and
36 thereof, unless the same were terminable
before their expiration at the option either
of the landlord or of the tenant. In other
words, if such a lease is terminated before
its fixed period expired, the proviso to
69
Section 3(2) would be attracted as a defence
against eviction. If, however, the lease was
allowed to run its full course, both the
lease and the conditions contained therein
would come to an end and would cease to be
operative and the clause for prior
determination would no longer be available as
a defence against eviction.”
56. The Court also found that the tenant was
estopped having submitted to the jurisdiction of the
court under the Transfer of Property Act by seeking
relief under Section 114 of the Transfer of Property
Act. Since the Court has also relied upon the
judgment of this Court in Savita Dey v. Nageswar
Majumdar and Another13, we may advert to the same.
In the said judgment, the Court was dealing with the
lease which commenced on 01.07.1964 and ended on
30.06.1985. It was found that since lease was
executed prior to the amendment inserting subsection (2) in Section 3 in 1965, the tenant could
not succeed on the basis of the pre determination
clause. We may also notice the following discussion:
“8. Additionally, in the lease in hand,
neither the landlord nor the tenant had
13 (1995) 6 SCC 274
70
reserved to himself the unfettered right of
termination of the lease during the period of
21 years. In the first place, as are the
facts pleaded, neither of them has ever
asserted the said right of premature
termination. Perhaps no occasion arose.
Secondly, the question of the suggested
precariousness of the tenure did not arise in
the circumstances of the case because the
lessee/tenant had fully enjoyed the period of
lease of 21 years. The heart of the matter is
that the tenancy was never terminated either
by the landlord or by the tenant during the
period of the lease.”
57. In this case it is no doubt true that there is
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. 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
71
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 (supra),
the appellant may not succeed on the strength of the
option it claimed under the agreement to lease.
IS LETTER DATED 19.10.1990, A NOTICE UNDER
SECTION 106 OF THE TRANSFER OF PROPERTY ACT?
58. The appellant would contend that there was a pre
mature determination of the lease vide letter dated
19th October, 1990 and this would result in the
occupation of the appellant from the said date being
as a monthly tenant and, therefore, the Tenancy Act
applied. It is the case of the respondent that this
contention was not raised before the courts below
and the contention which was raised before the High
Court was that it became the monthly tenant in 1991
72
on the basis of holding over of possession after the
expiry of the lease. The case of the respondent
further is that it must be understood that the
letter dated 19.10.1990 was one only enquiring
whether the appellant would deliver possession of
the 2nd and 3rd floors. The letter adverts to the
lease expiring by efflux of time. We are of the view
that there is merit in the contention of the
respondent. We cannot on the terms of the letter
dated 19.10.1990 hold that it amounted to
termination of the lease. We have found that 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. We reject the
argument of the appellant in this regard.
73
MESNE PROFITS: WAS THE POSSESSION OF THE
APPELLANT WRONGFUL ON THE EXPIRY OF THE LEASE?
59. 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.
As to its effect, we may only notice the following
statement in the decision reported in Atma Ram
Properties (P) Ltd. v. Federal Motors (P) Ltd.14:
“11. Under the general law, and in cases
where the tenancy is governed only by the
provisions of the Transfer of Property Act,
1882, once the tenancy comes to an end by
determination of lease under Section 111 of
the Transfer of Property Act, the right of
the tenant to continue in possession of the
premises comes to an end and for any period
thereafter, for which he continues to occupy
the premises, he becomes liable to pay
damages for use and occupation at any rate at
which the landlord could have let out the
premises on being vacated by the tenant.…”
60. 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
14 (2005) 1 SCC 705
74
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.
LIMITATION: WHETHER THE SUIT IS BARRED IN
RELATION TO MESNE PROFITS BEYOND 3 YEARS OF THE
SUIT?
61. Order VII Rule 6 of the CPC reads as follows:
“VII (6). Grounds of exemption from
limitation law. —
Where the suit is instituted after the
expiration of the period prescribed by the
law of limitation, the plaint shall show the
ground upon which exemption from such law is
claimed:
Provided that the Court may permit the
plaintiff to claim exemption from the law of
limitation on any ground not set out in the
plaint, if such ground is not inconsistent
with the grounds set out in the plaint.”
75
62. A perusal of the plaint filed would, inter alia,
reveal, the following pleading:
“24 The defendant expressly and/or impliedly
admitted the existence of the jural
relationship between the parties by its
letter dated 24th May, 1994. By reason of the
aforesaid and by reason of the
acknowledgement contained in the letter dated
24th May, 1994 the plaintiff states that no
part of its cause of action is barred by laws
of limitation,”
Thus, the case of the appellant was that based on
the admission and acknowledgment in letter dated 24th
May, 1994, no part of the cause of action was barred.
63. In the Trial Court, the learned Single Judge
framed an issue as to whether the Suit is barred by
limitation. The Judgment would reveal that the plea
of limitation was not pressed. The learned Single
Judge also went on to find that the Suit is within
the period of limitation. Before the Division Bench,
the appellant did not raise the plea of limitation.
It is in this Court that the plea is sought to be
resurrected. The plea is based on the case that a
Suit of mesne profits is governed by Article 51 of
the Limitation Act, 1963, which reads as follows:
76
“Description of suit Period of
limitation
Time from
which period
begins to
run
51. For the profits of
immovable property
belonging to the
plaintiff which have
been wrongfully
received by the
defendant.
Three years. When the
profits are
received.
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.
64. The case of the respondent is that the plea of
limitation was not pressed before the learned Single
Judge and was also not taken up before the Division
Bench. It is further contended that a claim for mesne
profits involves a liability, which accrues on a dayto-day basis. In this regard, attention is drawn to
Ram Karan Singh and others v. Nakchhed Ahir and
others15, which has been referred to by this Court in
the Judgment reported in Raptakos Brett and Company
Limited v. Ganesh Property16 and we may notice only
15 AIR 1931 Allahabad 429
16 (2017) 10 SCC 643
77
paragraph-21 of Raptakos Brett and Company Limited
(supra):
“21. In Ram Karan Singh [Ram Karan
Singh v. Nakchhad Ahir, 1931 SCC OnLine All
39 : AIR 1931 All 429] , a Full Bench of the
Allahabad High Court while examining the
issue of maintainability of second suit for
pendente lite and future mesne profits where
earlier suit for possession and past mesne
profits has already been decided has held as
follows : (SCC Online All)
“It seems to us that the cause of action for
recovery of possession is not necessarily
identical with the cause of action for
recovery of mesne profits. The provisions of
Order 2 Rule 4, indicate that the legislature
thought it necessary to provide specially for
joining a claim for mesne profits with one
for recovery of possession of immovable
property, and that but for such an express
provision, such a combination might well have
been disallowed. A suit for possession can be
brought within twelve years of the date when
the original dispossession took place and the
cause of action for recovery of possession
accrued. The claim for mesne profits can only
be brought in respect of profits within three
years of the institution of the suit and the
date of the cause of action for mesne profits
would in many cases be not identical with the
original date of the cause of action for the
recovery of possession. Mesne profits accrue
from day to day and the cause of action is a
continuing one, and arises out of the
continued misappropriation of the profits to
which the plaintiff is entitled. …”
(Emphasis supplied)
78
65. In the said passage, what has been considered,
was the issue relating to the maintainability of the
second Suit for pendente lite and future mesne
profits, in a situation, where an earlier suit for
recovery of possession and for past mesne profits had
been decided. We notice that what the Court has
essentially held is that but for Order IV Rule 2 of
the CPC, as it stood specifically providing for
joining a claim for mesne profits with one for
recovery of possession of an immovable property, such
a joining together of claims in one suit, may have
been not allowed. It is thereafter stated that a
claim for mesne profits can only be brought in
respect of profits within three years of the
institution of the suit. Still further, it is found
that the date of cause of action for action for mesne
profits may not coincide with the date of cause of
action for recovery of possession. It is thereafter
that the statement which is relied upon by the
respondent has been made. The Court held that mesne
profits accrue from day-to-day and the cause of
action is a continuing one. It arises out of the
79
continued misappropriation of the profits, which a
plaintiff is entitled to.
66. 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,
80
the suit may not be barred as regards any part of the
claim as contended by the appellant.
67. 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.
68. 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.
81
69. While on acknowledgment under Section 18 of the
Limitation Act, this Court in Messrs. Lakshmirattan
Cotton Mills Co. Ltd. and Messrs. Behari Lal Ram
Charan v. The Aluminium Corporation of India Ltd.,
17
held, inter alia, as follows: -
“9. It is clear that the statement on which
the plea of acknowledgment is founded must
relate to a subsisting liability as the
section requires that it must be made before
the expiration of the period prescribed under
the Act. It need not, however, amount to a
promise to pay, for, an acknowledgment does
not create a new right of action but merely
extends the period of limitation. The
statement need not indicate the exact nature
or the specific character of the liability.
The words used in the statement in question,
however must relate to a present subsisting
liability and indicate the existence of jural
relationship between the parties, such as,
for instance, that of a debtor and a creditor
and the intention to admit such jural
relationship. Such an intention need not be
in express terms and can be inferred by
implication from the nature of the admission
and the surrounding circumstances. Generally
speaking, a liberal construction of the
statement in question should be given. That
of course does not mean that where a
statement is made without intending to admit
the existence of jural relationship, such
17 (1971) 1 SCC 67
82
intention should be fastened on the person
making the statement by an involved and farfetched reasoning.”
70. The case of the respondent appears to be that
there is an admission of the jural relationship by
virtue of the letter dated 24.05.1994. This is a
letter written by the appellant in reply to the
letter dated 02.05.1994. It is necessary to refer to
the relevant portion of the letter dated 02.05.1994.
After referring to a discussion held on 27.04.1994,
wherein it was alleged that certain decisions were
taken, it was, inter alia, stated as follows: -
“(iv)On the assurance that Sudera's claim of
mesne profits as to the leasehold property in
occupation of IOC will be looked into and
decided upon by IOC's Chairman, Shri Bakshi
in a reasonable, fair and judicious manner,
Sudera will not insist on reference to
Arbitration (for which the draft agreement
for reference to arbitration was sent by IOC
to Sudera and returned back to them duly
confirmed with observations and
clarifications). The amount of Rs.90,00,000/-
(Rupees Ninety Lakhs only) odd paid by IOC to
Sudera after the expiry of the Lease till
date and received by Sudera as an 'on a/c'
payment, shall be treated as payment received
83
while settling the mesne profits payable as
aforesaid.
(v) The two aspects of handing over of
possession of the property and the
determination of the claim for mesne profits
of Sudera by the Chairman of IOC shall stand
delinked. While the possession shall be made
over forthwith, the claim for mesne profits
shall be decided by the IOC's Chairman, Shri
Bakshi as expeditiously as possible, but not
later than two months from date of making
over possession.”
71. In the letter written by the appellant dated
24.05.1994, which we have already extracted
hereinbefore, the discussion being held on
27.04.1994, was admitted. In regard to Clauses (iv) &
(v) of letter dated 02.05.1994 which we have referred
to, we may notice only the following: -
“So far as clauses (iv) and (v) are
concerned, it was discussed that Chairman
will first decide the question of
maintainability of your claim for mesne
profits.
IOC has been consistently contending by
several letters to you that there can be no
question of mesne profits in this case. If
the Chairman decides that the claim for mesne
profits is maintainable in law after hearing
the view points of both sides in the matter
84
only then he will go into the question of the
assessment of the amount thereof.
You were kind enough to say that you would
accept the advice of the Chairman on every
respect as final and binding. At the same
time, you will appreciate that no agreement
for arbitration agreement was concluded or
entered into. A draft was never finalized and
no agreement for arbitration was ever finally
prepared not signed by any party because
talks for arbitration fell through at the
stage of discussions.”
72. It is undoubtedly true that it has been clearly
stated that the Chairman will take a decision on the
maintainability of the claim for mesne profits. In
the same breath, the appellant appears to indicate in
the letter that it has been taking the stand that
there can be no question of mesne profits. But the
letter further indicates that the Chairman will take
a decision after hearing the respondent also
regarding the maintainability and only then the
assessment of mesne profits will be carried out.
73. We have already noticed that an acknowledgment,
as far as the admission of the jural relationship is
concerned, need not be express. It would become
85
necessary to probe the surrounding circumstances.
This may include going into the facts. In this
regard, in fact, no arguments were addressed on
behalf of the appellant and indeed even on behalf of
the respondent with reference to the impact of Order
VII Rule 6 of the CPC or Section 18 of the Limitation
Act. As already noticed, even in the letter dated
24.05.1994 it is not as if there is a categoric
statement from the appellant admitting liability to
pay mesne profits.
74. We may further notice as follows. In the plaint,
it is, inter alia, stated as follows:
“The plaintiff is entitled to claim and
claims mesne profits in respect of the
said 57105 sq. ft. comprised of 2nd, 3rd
and 4th floors in the premises No.1.
Shakespeare Sarani, Calcutta @ Rs. 31/-
per sq. ft. per month which the defendant,
remaining or continuing. in wrongful
possession of the said property actually
received or might with the ordinary
diligence have received therefrom having
regard to the prevalent of rent in the
locality where the premises no.1,
Shakespeare Sarani, Calcutta within the
jurisdiction of this Hon’ble Court is
situate.”
. .
86
75. Article 51 of the current Limitation Act
corresponds to Article 109 of the Limitation Act
1908. We may notice that in Dullabhbhai Hansji and
Another v. Gulabbhai Morarji Desai18, the question
arose as to whether Article 109 of the Limitation
Act, 1908 would apply in the following facts:
One Gulab Chand stood adjudicated as an
Insolvent. On the application of the plaintiff as
Receiver the sale by the insolvent was set aside
on March 13, 1929. The suit was instituted in
March, 1931 for mesne profits. The contention of
the defendant was that the suit was barred for
the period from 1925 to 1928. It is while dealing
with these facts the Court held as follows:
“.. It is no doubt perfectly true that
the plaintiff could not have sued to
recover these mesne profits until he
had got the sale set aside. But
Article 109 does not provide that the
starting point of time for the
recovery of mesne profits wrongfully
received shall be the date when the
cause of action to recover those
profits arose; the starting point is
the date when the profits were
received….”
18 (1938) 40 Bom LR 100
87
76. In Dwarkas Nathamal v. Balkrishna Baliram19, a
learned Single Judge was dealing with essentially the
question whether a subsequent suit for mesne profits
for a different period would be barred by Order II
Rule 2 of CPC. It was held as follows:
“10. With great respect, I am unable
to agree with the view which the
learned Judge has taken. It is clear
from the passage quoted above that the
basis of the view is that “the claim
for mesne profits can arise only when
the defendant wrongfully appropriates
the profits from the property in
respect of which a claim is made”. In
the first place, in order to sustain a
claim for mesne profits, it is not
necessary that the defendant must
wrongfully appropriate the profits of
the property in respect of which a
claim is made. What the plaintiff is
required to establish in a suit
for mesne profits is that the
defendant is in wrongful possession of
the property, and if that fact is
established then the profits which the
defendant has received or which he may
with reasonable diligence have
received must be paid to the
plaintiff. Secondly, to hold that what
gives rise to a right to
claim mesne profits is the
appropriation of the profits by the
defendant and that “a right to
claim mesne profits by a suit can
19 AIR 1964 Bom 42
88
accrue only when the person in
wrongful possession of the property
had actually received such profits”,
is to ignore that the liability of the
defendant to pay mesne profits is not
dependent upon the actual receipt of
the profits. Section 2, cl. (12) of
the Code of Civil Procedure defines
‘mesne profits’ as profits which are
either actually made or which might
with reasonable diligence have been
made by the person in wrongful
possession of the property. Then
again, the reference made by the
learned Judge to art. 109 of the
Limitation Act is, with respect, not
apposite, because, column (3) of the
several articles in the 1st Schedule
to the Limitation Act concerns itself
with the “time from which period
begins to run” and not with the date
on which the cause of action for the
suit accrues. The only implication of
the third column of art. 109 is that a
suit which is filed more than three
years after the date on which the
defendant received the profits would
be barred by limitation. As stated by
Sir John Beaumont
in Dullabhbhai v. Gulabhai [(1937) 40
Bom. L.R. 100, at p. 103.]”


77. It is true that Section 2(12) of the CPC defines
‘mesne profits’ as follows:
“2(12) “mesne profits” of property means
those profits which the person in
wrongful possession of such property
actually received or might with ordinary
89
diligence have received therefrom,
together with interest on such profits,
but shall not include profits due to
improvements made by the person in
wrongful possession;”
78. Undoubtedly, mesne profits, as defined in Section
2(12), 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. In fact, we may notice the
judgment of the Privy Council in Sri Raja Inuganti
Venkata Rajagopala Rama Suryaprakasa Rao Garu v.
Maharaja of Pithapuram and another20. In the said
case, the Collector recognised the respondent as land
20 AIR 1948 PC 175
90
owner of the estate. This was in accordance with the
decree of the lower court and pending an appeal
therefrom. The respondent got into possession and
collected the rents and profits. The decree was
reversed in appeal. The Collector cancelled the
recognition at the instance of the appellant. The
appellant was recognised as land holder. The Privy
Council took the view that the Article which would
apply is Article 120 of the Limitation Act, 1908
corresponding to Article 113 of the present Law of
Limitation. We may notice only the following:
“... Their Lordships are therefore of
opinion that the plaintiffs had no
right of suit for the rents or profits
while the possession was under the
order of 12th January, 1924. It was
only after that order was cancelled in
consequence of the decision of this
Board that a right of action to
recover rents and profits accrued to
the plaintiffs, and that right is
preserved to them by the proviso to
S.67. the High Court’s judgment
recognizes that if suits had been
brought each time that rents or
profits were received they could have
made no progress, but must have been
stayed till the final determination of
the question of title.”
91
79. In Phiraya Lal Alias Piara Lal and another v.
Jia Rani and another21, while dealing with the case of
a suit filed for possession and damages, after
finding the right to sue based on possessory title
while dealing with the aspect of mesne profits, it
was, inter alia, held as follows:
“..It is to be noted that though mesne
profits are awarded because the
rightful claimant is excluded from
possession of immovable property by a
trespasser, it is not what the
original claimant loses by such
exclusion but what the person in
wrongful possession get or ought to
have got out of the property which is
the measure of calculation of the
mesne profits. (Rattan Lal v.
Girdhari Lal, AIR 1972 Delhi 11).
This basis of damages for use and
occupation of immovable property which
are equivalent to mesne profits is
different from that of damages for
tort or breach of contract unconnected
with possession of immovable
property.”
21 AIR 1973 Del 186
92
80. It is apposite in this context to refer to the
decision in Rattan Lal v. Girdhari Lal and Another
22
which is relied upon in the aforesaid judgment. In
the said case, the landlord obtained a decree for
eviction. The decree became inexecutable because of a
law but the decree was executed. The tenant was,
however, restored the possession, under inherent
jurisdiction. Thereupon, the tenant claimed mesne
profits, inter alia. It was, in the said facts, that
the Court held, after referring to Section 2(12), as
follows:
“..the principle underlying the
definition of “mesne profits” in
Section 2 of the CPC is that the
person in wrongful possession must pay
to the person, who was wrongfully
dispossessed, such profits which the
former actually receives or might with
ordinary diligence have received from
the property together with interest on
such profits. The test therefore is
not what the tenant lost by being
dispossessed but what the landlord got
or could have got with reasonable
diligence because of the
dispossession.”
22 AIR 1972 Del 11
93
81. The Court also did not agree with the argument
which appealed to the lower Court, namely, that the
tenant could not have sublet the premises and
therefore there was no loss due to dispossession.
Sub-letting was found legal. It is also found that
the fact that the tenant was not paying rent during
the period of dispossession was the wrong approach to
deny mesne profits. The correct approach was whether
the person in possession made profit or could have
made profit. It is to be noted that, interestingly,
in the said case, the roles were reversed. Mesne
profits was sought against the landlord. In the case
of a landlord, there could be no question of there
being any restriction on his right to deal with his
property and earn profit within the meaning of
Section 2(12) of the CPC.
82. We have however noticed what this Court has laid
down in Atmaram (supra). 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
94
the landlord could have let out the premises on being
vacated by the tenant. Without disagreeing with the
said view for which we see no reason, we cannot adopt
the principle which in the facts of the case
commended itself to the High Court of Delhi in Rattan
Lal (supra). 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. Section 2(12), no
doubt, includes profits, which the person, in
wrongful possession, might, with ordinary diligence,
have received therefrom. 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.
95
83. 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. In this context, we may notice
the following statement of the law in Bhawanji
Lakhamshi and Others v. Himatlal Jammnadas Dani and
Others23:
“9. The act of holding over after the
expiration of the term does not create
a tenancy of any kind. If a tenant
remains in possession after the
determination of the lease, the common
law rule is that he is a tenant on
sufferance…”
23 (1972) 1 SCC 388
96
Thus, on the expiry of a lease, the erstwhile
tenant, who remains a tenant at sufferance, would
have no right to transfer.
84. In this regard, we 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. We do
not think that the appellants can persuade us to hold
that there is a lease by holding over.
85. 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. We would have to, however, bear in mind the
principle laid down in Atmaram (supra) and the
principles we have already considered. We are of the
view that 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
97
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.
86. The result would be that, 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.
87. The upshot of the above discussion is that, we
find no merit in the appeals. The appeals shall stand
dismissed. The parties to bear the respective costs.
………………………………………………………………………J.
[K.M. JOSEPH]
………………………………………………………………………J.
[PAMIDIGHANTAM SRI NARASIMHA]
NEW DELHI;
DATED: September 06, 2022.

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