Badrilal Vs. Municipal Corporation of
Indore  INSC 292 (6 December 1972)
CITATION: 1973 AIR 508 1973 SCR (3) 15 1973
SCC (2) 388
R 1984 SC 143 (5)
Madhya Pradesh Municipal Corporation Act, s.
80-Terms of lease accepted by Commissioner-Resolution of Corporation not to
grant lease Effect of.
Tenant by sufferance-It should be given
notice. before eviction.
The appellant was a lessee of a plot of land
belonging to the respondent-corporation. When the respondent issued notice to
the appellant directing him to vacate the land on the date of expiry of the
lease, the appellant applied for a grant to him of a lease for 99 years or at
least for 10 years. The respondent passed a resolution that the land would be
given to the appellant if he deposited certain amount as upset price and paid a
higher rent, and that otherwise possession of the land should be taken back.
The appellant did pot comply with the terms but made a counter offer., Having
failed in his appeal to the Minister, 7 years after the resolution passed by
the respondent, he offered to pay a part of the amount fixed by the resolution
and the balance in installments. This was accepted by the Municipal Commissioner.
The appellant did not pay any amount and the respondent filed a suit for
eviction. During the pendency of the suit the appellant offered to pay the full
upset price, the rent that may be found due, as well as costs of the suit and
requested that permanent lease for 99 years may be granted to him. He also sent
a cheque for part of the amount (the rent having been calculated at the old
rate) but after receiving reminders from the Commissioner paid the balance a
few days later. The respondent however passed another resolution refusing to
grant the lease to the appellant.
The trial court and the first appellate court
dismissed the suit holding that the appellant was a tenant holding over.
The High Court in second appeal decreed the
suit of the respondent-Corporation.
Dismissing the appeal to this Court,
HELD:(1) No contract was concluded between
the parties as a result of the payments by the appellant. [18 G] The
Commissioner cannot enter into a contract by himself and can do so only if it
is sanctioned by the Corporation under s. 80 of the Madhya Pradesh Municipal
Corporation Act. Nor was it open to the Commissioner to make any offer to the
appellant or to accept any offer from the appellant in respect of the land
except with the sanction of the municipal council. Even the offer made by the
respondent corporation by its resolution came to an end with the filing of the
suit by the 'Corporation and the Corporation cannot be deemed to have kept it
open. The appellant's offer,' after the suit was filed, was a new offer and it
was rejected by the only authority competent to accept it namely, the
Corporation. [18 G-H; 19 D-G] (2) The deposit of the rent by the appellant and
acceptance of it by the Commissioner cannot be deemed to make the appellant a
tenant holding over. [20 B] 16 The payment was at the old rate by the appellant
and its acceptance by the Commissioner was not an acceptance of rent as such
and in clear recognition of the tenancy right of the appellant. It cannot
amount to the Corporation consenting to the appellant continuing as a tenant by
paying the old rates of rent. There is thus no question of the appellant being
a tenant holding over. He had become only a tenant by sufferance and hence
there was no need for any notice before he could be evicted. [2O A-C] Kai
Khushroo Bezonjee Capadia v. Bai jerbai Hirjibhey Warden Anr. [1949-50] F.C.R.
262 at 270 and Bhawanji Lakhmshi v. Himatla Jamnadas Dani  1 S.C.C. 388
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1243 of 1967.
Appeal by special leave from the judgment and
decree dated May 7, 1966 of the Madhya Pradesh High Court, Indore Bench in
Second Appeal No. 475 of 1962.
S. V. Gupte and Rameshwar Nath for the
V. M. Tarkunde, P. C. Bhartari, J. B.
Dadacharji and Ravinder Narain, for the respondent.
The Judgment of the Court was delivered by
Alagiriswami, J. This is an appeal by special leave against the judgment of the
High Court of Madhya Pradesh in Second Appeal No. 475 of 1962 on the files of
The appellant became a lessee of a plot of
land measuring 10,375 sq. feet (721 Chasmas) situate at 28, Parsimohalla Street
No. 5, Sanyogtaganj, Indore belonging to the Municipal Corporation for a period
of 10 years in 1919.
This lease was renewed from time to time and
the last of such renewals was in the ye 1939 for a period of 10 years.
The lease expired on 30th September, 1949. On
24-5-1949 the respondent, Municipal Corporation of Indore, issued a notice to
the appellant directing him to vacate the land on 30-91949. Thereupon he
applied to the Municipal Commissioner either to grant him a lease for 99 years
and it was not possible to renew it at least for a period of 10 years. 0
19-12-1949 the Municipal Council passed a resolution to the following effect:
"Opinion of the Lease Committee is
accepted. The land, situated in Parsimohalla, Sanyogitaganj, be given to
applicant Badrilal Bholaram only in case he is ready to deposit Rs. '16,212 of
the lease rent and upset price as per Schedule rate in accordance with letter
No. 3239 dated 26-10-49 sent to him by the Municipal Commissioner otherwise they
said land be taken back into possession." 17 On 31-12-1949 the Municipal
Commissioner wrote Ex. P.20 to the appellant informing him that the land would
be given to him on long lease on condition that he-paid an upset price of Rs.
16,212 and an annual lease rent at Rs. 9 per Chasma.
He was further informed that if he accepted
the said condition he should deposit the upset price within 15 days and submit
an application giving his consent, and that otherwise steps would be taken to
take back possession of the land. The appellant wrote (Ex. P. 1 8 on 9-1-1950)
that the upset price and rent claimed by the Municipal Council was too much and
requested that the rent and upset price be modified and during the pendency of
his petition proceedings before the Commissioner be stayed. He then seem to
have filed a petition for revision before the Minister incharge of
municipalities and this was dismissed on 7-91952. Almost 4 years later on
14-5-1956 he wrote Ex. D. 2 to the Commissioner requesting that an amount of
Rs. 8212 may be accepted and he may be permitted to pay the balance in annual installments
of Rs. 1000 each. On 20-6-1956 the appellant was informed by the Commissioner
by letter Ex. D.3 that he should deposit the sum of Rs. 8212 within two days
and thereafter the balance would be realised in installments. The appellant not
having paid the amount the Municipal Commissioner again wrote on 30-7-1956
giving him two days time to deposit the amount of Rs. 8212. On 20-21957 the
Commissioner again wrote to the appellant directing him to deposit the whole of
Rs. 16,212 within two days telling him that on his failure to do so steps would
be taken for evicting him from the land.
The suit out of which this appeal arises was
filed on 16th September, 1957. The appellant filed his written statement on
20th January, 1958 and the issues were framed on 24th March, 1958. At this
stage the defendant wrote Ex. D.4 on 17-3-1959 in the following terms :
"I beg to say that it has been approved
by you to give me the plot of land at H.N. 85 Parsimohalla on permanent lease
of 99 years after having received the upset price from me.
I agree to pay whatever lease rent found due
against me upto 31-3-1951 besides reasonable costs of the suit and I have
deposited today vide cheque number E/2/104221 dated 17-3-59 in the Indore Bank,
Sanyogitaganj and I undertake to pay in cash any amount found due against me at
the time of execution of the lease deed." The Commissioner wrote Ex. D.5
to the defendant on 23-41959 asking him to deposit the upset price of Rs.
1.6,212, rent according to the new rates after deducting a sum of Rs.
824-6-0 already paid by the appellant up to
31-3-54, as also the court expenses.
63ISup.C.I./73 18 Along with his letter dated
17-3-1959 the appellant had apparently sent a cheque for Rs. 16,601.93. The
balance not having been paid, as demanded in the letter Ex. D.5, the
Commissioner wrote again on 28-5-1959 and sent a further reminder on 19-8-1959
giving the appellant four days' time for paying the 'balance which was actually
paid only on 22-9-1959. The Municipal Council passed a resolution on 315-1960
refusing-to grant the lease to the appellant and directing the Municipal
Commissioner to take back possession of the land.
Curiously the appellant somehow pleaded that
he was a permanent lessee of the land but that claim obviously could not be and
was not seriously pressed before this Court by Mr.Gupte, learned counsel
appearing for him. The Trial Court surprisingly held that he became a permanent
tenant, the Trial Court as well as the 1st Appellate Court held that the
appellant was a tenant holding over. Both of them decided in favour of the
appellant. The, High Court observes at one place that the appellant's position
after 30-9-1949 was that of a lessee holding over and not that of a trespasser,
but there is no discussion as to why it considers that the appellant was a
lessee holding over. We shall later point out that the appellant cannot be
deemed to be a lessee holding over. The High Court, also held that there was no
compromise of the suit by any person authorised to do so on behalf of the
Corporation. It also held that there was no acceptance of rent with the
sanction of the Council. As a consequence it allowed the appeal and decreed the
Before this Court Shri Gupte appearing for
the appellant did not contend that there was a compromise of the suit. His
contention on the other hand was that a concluded contract emerged when the
appellant paid a sum of Rs. 5697.93 on 22-9-59 pursuant to the letter of the
Commissioner and therefore the suit could not continue. He also argued that the
appellant would be entitled to the benefit of the provisions of Section 53A of
the Transfer of the Property Act, and that in any case he was a tenant holding
over and would be entitled to the benefit of provisions of Section 106 and 116
of the Transfer of the Property Act.
We may straight away say that we find
ourselves unable to agree with the contention that there was a concluded
contract between the Municipal Council and the appellant on 22-9-1959. There is
no dispute that in this case the Commissioner cannot enter into a contract by
himself and can do so only if it is sanctioned by the Municipal Corporation
under section 80 of the Madhya Pradesh Municipal Corporation Act. The
resolution of the Corporation dated 9-12-1949 was specific that the land would
be given to the appellant if he deposited the upset price and rent in
accordance with the letter dated 26-10-1949 sent by the Municipal 19
Commissioner to the appellant and otherwise the land should be taken back into
possession. That letter is not on record. Apparently, it was on the same terms
as Ex.P. 20 dated 31-12-1949. It could not be otherwise. The appellant did not
comply with the terms of that letter. He went on to make a counter offer by Ex.
P. 19 dated 9-1-1950. He appealed to the Minister and having failed there, he
waited nearly 7 years after the Corporation s resolution to pay a part of the
amount and pay the balance in installments. This was accepted by the Municipal
Commissioner on 20-6-1956.
But we must make it clear that the Municipal
Commissioner had no power in view of the resolution of the Corporation to
accept the appellant's offer. He was given a specific mandate and was not
authorised to enter into negotiations with the appellant regarding the lease.
The amount was not paid in spite of two further letters and the suit was filed
on 16-9-1957. The Municipal Commissioner had no power to go on accepting the
offers from the appellant more than 15 days after his letter to him on
31-12-1949; nor could he accept any terms other than those mentioned in the
Corporation's resolution either within those 15 days or later. Even the offer
made by the Corporation's resolution came to an end with the filing of the
suit, which was a clear and unequivocal revocation of the resolution.
Thereafter the Corporation cannot be deemed to keep open its offer of the year
1949. Nor was it open to the Commissioner either to make any offer to the
appellant or to accept any offer from the appellant in respect of the land
except with the sanction of the Municipal Council. The appellants offer made on
17-3-59, a year and a half after the suit was filed, was a new offer and it was
rejected by the only authority competent to accept it i.e. the Corporation on
The correspondence carried on by the
Commissioner with the appellant was wholly beyond his powers.
The offer made by the appellant in 1959
cannot have anything to do with the resolution passed by the Municipal Council
in 1949. The offer was of a different set of terms and included an offer to pay
the costs of the suit and that also had in fact been deposited by the appellant
at the instance of the Commissioner. That indicates the new situation that had
come into existence and establishes beyond doubt that this was a fresh offer.
We therefore hold that no contract came into existence between the parties on
It was then urged by Mr. Gupte that the
appellant having deposited the rent up to 31-3-1954 and the Municipal Commissioner
having accepted it he should be deemed to be a tenant holding over. Leaving
aside for the moment the contention put forward on behalf of the Corporation
that this payment was made behind its back, it has to be noted that the payment
was at the rate prevailing before 30-9-1949 and on that date the 20 Corporation
having passed a resolution specifying a new rate rent of Rs. 9 per Chasma the
payment at the old rate by the appellant and its acceptance by the Municipal
Commissioner was not an acceptance of rent as such and in clear recognition of
the tenancy right of the appellant. It cannot amount to the Corporation
consenting to the appellant continuing as a tenant by paying the old rates of
There is thus no question of the appellant
being a tenant holding over. But a person who was lawfully in occupation does
not become a trespasser, even if he does not become a tenant holding over but
is a tenant by sufferance. The position at law was explained in Kai Khushroo
Bezonjee Capadia v. Bai Jerbai Hirjibhoy Warden & Anr.(1) as follows :
"On the determination of a lease , it is
the duty of the lessee to deliver up possession of the demised premises to the
lessor. If the lessee or a sub-lessee under him continues in possession even
after the determination of the lease, the landlord undoubtedly has the right to
eject him forthwith; but if he does not, and there is neither assent nor
dissent on his part to the continuance of occupation of such person, the latter
becomes in the language of English law a tenant on sufferance who has no lawful
title to the land but holds it merely through the laches of the landlord.
If now the landlord accepts rent from such
person or otherwise expresses assent to the continuance of his possession, a
new tenancy comes into existence as is contemplated by S. 116, Transfer of
Property Act, and unless there is an agreement to the contrary, such tenancy
would be regarded as one from year to year or from month to month in accordance
with the provisions of S. 116 of the Act." At page 272 it was pointed out
:' "It can scarcely be disputed that the assent of the landlord which is
founded on acceptance of rent must be acceptance of rent as such and in clear
recognition of the tenancy right asserted by the person who pays it." The
same position was explained in a recent decision of this Court to which one of
us was a party in Bhanwnji Lakhamshi v. Himatlal Jamnadas Dani(2). At page 391
it was observed :
"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. A distinction should be drawn between a
tenant continuing in possession after the determination (1)[1949-50] F.C.R. 262
at 270. (2)  1 S.C.C. 389.
21 of the term with the consent of the
landlord and a tenant doing so without his consent. The former is a tenant at
sufferance in English Law and the latter a tenant holding over or a tenant at
will. In view of the concluding words of Section 116 of the Transfer of
Property Act, a lessee holding over is in a better position than a tenant at
The assent of the landlord to the continuance
of possession after the determination of the tenancy will create a new tenancy.
What the section contemplates is that on one side there should be an offer of
taking a new lease evidenced by the lessee or sub-lessee remaining in
possession of the property after his term was over and on the other side there
must be a definite consent to the continuance of possession by the landlord
expressed by. acceptance of rent or otherwise. In Kai Khushroo Bezonjee Capadia
v. Bai Jerbai irjibhoy Warden and Another, the Federal Court had occasion to
consider the question of the nature of the tenancy created under section 116 of
the Transfer of Property Act and Mukherjea, J., speaking for the majority said
that the tenancy which is created by the "holding over" of a lessee
or under-lessee is a new tenancy in law even though many of the terms of the
old lease might be continued in it, by implication; and that to bring a new
tenancy into existence, there must be a bilateral act. It was further held that
the assent of the landlord which is founded on acceptance of rent must be
acceptance of rent as such and in clear recognition of the tenancy right
asserted by the person who pays it." The appellant being merely a tenant
by sufferance there is no need for any notice before he could be evicted. Thus
the judgment of the High Court is correct, in so far as it held the appellant
was liable to be evicted.
The appeal is dismissed with costs. The
petition for reception of additional evidence is also dismissed.
V.P.S. Appeal dismissed.