Prasad Devi & Anr Vs. Hankar Mahto & Ors  Insc 345 (11 July 2005)
M. Dharmadhikari & B. N. Srikrishna Dharmadhikari J.
appellant obtained possession on lease of the suit premises for running a
Petrol Pump under a registered lease deed dated 17.7.1962 for a period of
fifteen years. It was an annual lease but the rent at agreed rate was payable
in monthly instalments. The period of lease expired on 17.7.1977.
registered sale deed contained clauses Nos.(7) & (9) giving option of renewal
for a further period which could be exercised before expiry of the initial
period. After the period of lease expired on 19.7.1977 the lessee continued to
remit the rent till August
23.8.1977 the lessee sent a lawyer's notice exercising his option under clause
(7) and seeking renewal of the lease. The lessee thereafter remitted monthly
rent of Rs.345/- each for three months from March to May 1978. The rent was
accepted by the lessor.
(7) of the lease providing option of renewal to the lessee contained two
conditions firstly that the option has to be exercised before expiry of the
lease and secondly the terms and conditions of renewal for further period shall
be decided either by mutual consent of parties or in case of failure of mutual
consent, through the intervention of local Mukhia or Panchas of the village.
legal notice given by the lessee seeking renewal of the lease, the lessor gave
no positive response and instead filed Title Suit No.59/78 on 16.6.1978 seeking
ejectment of the lessee from the suit premises on the ground that the term of
lease had expired.
lessee filed a counter suit No.13/80 seeking specific performance of the
alleged agreement of renewal of lease on his alleged right of option of
two cross suits were tried jointly and decided by common judgment.
trial court by common judgment dated 16.3.1987 dismissed the suit for ejectment
filed by the lessor by holding that after expiry of the initial period of
fifteen years of lease, acceptance of rent by the lessor had resulted in
renewal of lease and the lessee would be held to be 'holding over' within the
meaning of Section 116 of the Transfer of Property Act. Based on the above
finding that the lessee was 'holding over' as a result of the acceptance of
rent by the lessor for the period subsequent to the expiry of lease, the trial
court came to the conclusion that the suit for ejectment could not have been
filed without terminating the lease by statutory notice under Section 106 of
the Transfer of Property Act.
trial court by the common judgment dismissed the counter suit seeking specific
performance of renewal of lease by the lessee. It was held that in accordance
with clause (9) of the lease deed, the option of renewal was not exercised before
expiry of original period.
specific performance of agreement of renewal claimed was also rejected on the
ground that the terms and conditions of renewal were vague and incapable of
enforcement. Thus, the trial court dismissed both the suits.
dismissal of two suits by the trial court gave rise to two cross appeals one at
the instance of lessor and the other at the instance of lessee. The first
appellate court allowed the appeal of the lessor and decreed the suit of ejectment.
It held that mere acceptance of rent by the lessor sent by the lessee after
expiry of lease, in view of specific terms prescribing mode of renewal, did not
result in deemed renewal of lease and the doctrine of 'holding over' under
Section 116 of the Transfer of Property Act was not attracated. According to
the first appellate court, the period of lease having expired there was no
legal requirement of terminating the alleged renewed lease by issuing a
statutory notice under Section 106 of the Transfer of Property Act.
cross appeals filed by the lessee were dismissed and the dismissal of suit for
specific performance of the alleged agreement of renewal was maintained.
lessee filed two Second Appeals in the High Court. By the impugned common
judgment the High Court upheld the common judgment of the first appellate
court. The High Court agreed with the reasoning of the first appellate court
that mere acceptance of rent by the lessor on expiry of original period of
lease, for use and occupation of the leased premises by the lessee, did not
signify 'assent' of the lessor to the continuance in possession of the lessee
so as to infer deemed renewal of the lease under Section 116 of the Transfer of
High Court agreed with the concurrent findings of the trial court and the first
appellate court that the option of renewal given to the lessee in the lease
deed was not exercised before expiry of the original period of lease. The High
Court also agreed that conditions stipulated for the renewed period of lease were
vague and incapable of specific enforcement. Thus the dismissal of suit of the
lessee for specific performance of contract of renewal of lease was also
thus lost her case in the courts below, the lessee has approached this Court in
these two appeals.
Senior Counsel Shri S. B. Sanyal reiterated the legal stand taken by the lessee
in the courts below. It is contended that on expiry of original period of
lease, acceptance of rent for the month of August and from March 1978 to May 1978
clearly showed an 'assent' on the part of the lessor to continue the lease.
There was deemed renewal of the lease on the same terms and conditions of
original lease as an effect of 'holding over' by the lessee under Section 116
of the Transfer of Property Act. It is argued that the courts below erred in
holding that the lease, which stood renewed as an effect of 'holding over'
under Section 116 of the Transfer of Property Act, was not required to be
terminated by statutory notice under Section 106 of the Transfer of Property
Act as a pre-condition for filing a suit for ejectment.
respect of the cross suits of the lessee seeking specific performance of the
contract of renewal of the lease, it is submitted that the relevant contract
clauses (7) & (9) of the lease deed should have been construed reading them
with other clauses therein to hold that option for renewal could have been
exercised within a reasonable period which in the present case was 35 days from
the date of the expiry of the original lease. It is also argued that the suit
for specific performance of the agreement of renewal could not have been
rejected on the ground that clause of renewal was vague and incapable of
specific performance. Reliance is placed on Bhawanji Lakhamshi vs. Himatlal Jamnadas
Dani [1972 (1) SCC 388] and Kai Khushroo Bezonjee Capadia vs. Bai Jerbai Hirjibhoy
Warden [AIR 1949 FC 124].
reply, we have heard learned counsel Shri Prabhash Kumar Yadav assisted by Dr. Krishan
Singh Chauhan, advocate who supported the view taken by the High Court and the
courts below in decreeing the suit for ejectment.
116 of the Transfer of Property Act reads thus:- "Effect of holding over. If
a lessee or under-lessee of property remains in possession thereof after the
determination of the lease granted to the lessee, and the lessor of his legal
representative accepts rent from the lessee or under lessee, or otherwise
assents to his continuing in possession, the lease is, in the absence of an
agreement to the contrary, renewed from year to year, or from month to month,
according to the purpose for which the property is leased, as specified in
Section 106." [ Emphasis supplied ] We fully agree with the High Court and
the first appellate court below that on expiry of period of lease, mere
acceptance of rent for the subsequent months in which the lessee continued to
occupy the lease premises cannot be said to be a conduct signifying 'assent' to
the continuance of the lessee even after expiry of lease period. To the legal
notice seeking renewal of lease, the lessor gave no reply. The agreement of
renewal contained in clause (7) read with clause (9) required fulfillment of
two conditions; first the exercise of option of renewal by the lessee before
the expiry of original period of lease and second, fixation of terms and
conditions for the renewed period of lease by mutual consent and in absence
thereof through the mediation of local Mukhia or Panchas of the village. The
aforesaid renewal clauses (7) & (9) in the agreement of lease clearly fell
within the expression 'agreement to the contrary' used in Section 116 of the
Transfer of Property Act Under the aforesaid clauses option to seek renewal was
to be exercised before expiry of the lease and on specified conditions.
in the present case had neither expressly nor impliedly agreed for renewal. The
renewal as provided in the original contract was required to be obtained by
following a specified procedure i.e. on mutually agreed terms or in the
alternative through the mediation of Mukhias and Panchas. In the instant case,
there is a renewal clause in the contract prescribing a particular period and
mode of renewal which was 'an agreement to the contrary' within the meaning of
Section 116 of the Transfer of Property Act. In the face of specific clauses
(7) & (9) for seeking renewal there could be no implied renewal by 'holding
over' on mere acceptance of the rent offered by the lessee . In the instant
case, option of renewal was exercised not in accordance with the terms of
renewal clause that is before the expiry of lease. It was exercised after
expiry of lease and the lessee continued to remain in use and occupation of the
leased premises. The rent offered was accepted by the lessor for the period the
lessee overstayed on the leased premises. The lessee, in the above
circumstances, could not claim that he was 'holding over' as a lessee within
the meaning of Section 116 of the Transfer of Property Act.
as the cross suit for specific performance of agreement of renewal of lease filed
by the lessee is concerned, there are concurrent findings of all the courts
that the option for renewal was exercised after the expiry of the lease period.
The option for renewal exercised was, therefore, contrary to terms of clause
(9) of the lease agreement.
clauses of renewal requiring fixation of terms and conditions for renewed
period of lease mutually or in the alterntive through village Mukhia and Panchas
are uncertain and incapable of specific performance. After legal notice of
renewal, the lessor did not send any positive reply and instead filed a suit
for ejectment, therefore, there was no mutual consent for renewal. The forum
agreed to for deciding dispute was through local Mukhia and Panchas of the
village. The renewal clauses of the agreement were vague and incapable of
specific performance. The Mukhia and Panchas were not named in the agreement
and the method of choosing either of the two forums was not specified.
cross suit filed by the lessor for specific performance of the agreement of
renewal was rightly dismissed throughout. The original period of lease expired
on 19.7.1977 and the suit for ejectment on the ground of expiry of the lease
was filed on 16.6.1978 which was well within the period of limitation and
the additional reasons discussed by us above, the appeals have no force.
leased premises were in use for running a petrol pump, we grant the appellant a
reasonable period of two months from the date of this order to deliver
possession of the leased premises after removing her installations and other
above grace period to vacate is granted to the appellant only on her filing an
undertaking on affidavit to this Court, within a period of two months that she
would pay all arrears of rent and mesne profits at the originally agreed rate
for the total period of occupation of the property. The lessee shall also
undertake to deliver vacant possession of the property in the same condition in
which it was initially taken.
the aforesaid reasons, we find no merits in these appeals preferred by the
lessee, they are accordingly dismissed with costs.