Report No. 70
Determination of Lease
96.1. Determination of lease.-
Section 111 provides that a lease of immovable property determines:
"(a) by afflux of the time limited thereby;
(b) where such time is limited conditionally on the happening of some event-by the happening of such event;
(c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event-by the happening of such event;
(d) in case the interests of the lessee and the lessor in the whole of the property becomes vested at the same time in one person in the same right;
(e) by express surrender; that is to say, in case the lessee yields up his interest under the lease, to the lessor by mutual agreement between them;
(f) by implied surrender;
(g) by forfeiture; that is to say-(1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may reenter on the happening of such event; and in any of these cases the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease;
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duty given by one party to the other."
The illustration to clause (f) provides as follows:-
"A lessee accepts from his lessor a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon."
96.2. Section 111 (a).-
Clause (a) of the section is limited to a lease which is determined by efflux of the time "limited thereby". In, such a case, no notice to quit is necessary. It has to be noted that in the scheme of the Act, there is a dichotomy between leases for a fixed period-described in sections 110 and 111 with reference to the expression "time limited" or "time limited thereby"-and leases from year to year or month to month falling within section 106. In the former case, clause (a) supplies, while in the latter case, clause (h) applies. Where a lease expires by afflux of the time limited thereby, no notice is necessary.1
On the other hand, where the lease is governed by section 106, notice is necessary, because the lease is not for a "time limited thereby". This position is clear enough. It is therefore surprising that occasionally in situations where section 106, read with section 111 (h) applies, arguments are addressed contesting the requirement of notice.2-3 Conversely, it is often overlooked by litigants that where there is a tenancy for a fixed term, eviction cannot be claimed by a mere notice before expiry of the term.4
1. Dellanpant v. Vithalrao, AIR 1975 SC 1111 (1114), para. 14.
2. Bose v. Syed Nayyar, AIR 1967 All 209.
3. Ramasami v. Venkataramaniulu, AIR 1914 Mad 301.
4. 1969 BLJR 850, cited in the Yearly Digest.
96.3. Section 111(b).-
Clause (b) contemplates the case where the time limited by the lease is limited conditionally on the happening of some event. In clause (a), the question was merely of "efflux" of time, while in clause (b), on the happening of the specified event the lease determines.1 Then, there is clause (g) relating to forfeiture for certain defaults. There seems to be some obscurity as to the precise line of demarcation between clause (b) and clause (g). The line becomes obscure when the "event" mentioned in this regard in the lease is, in some manner or another, connected with some wrongful act or default on the part of the lease.
For example, in a Calcutta case,2 there was a lease for 99 years and there was a condition in the lease that on liquidation of the lessee company, the lease shall cease to be operative and the company shall forthwith make over possession to the proprietor. This was held to be a provision for forfeiture, falling within clause (g), since there was a duty cast on the lessee to make over possession on liquidation which was construed as a clause for re-entry.
In an Orissa case,3 the lease was for a fixed period of 40 years, but there was a condition of defeasance that if the lessees carried on any other business than the manufacture or sale of its by products, then the lease shall stand cancelled automatically. It was held that the lease was not governed by clause (b), but fell within clause (g). Both the Calcutta and the Orissa judgments show that the matter was strenuously argued.
1. As to tenancy at will, see para. 96.18, infra.
2. Srinath (in re:), AIR 1952 Cal 207 (209, 210), paras. 20-31 (Sambhu Nath Banerjee, J.).
3. Krishna Chandra v. N.C. etc. Works, AIR 1957 Ori 35.
96.4. Recommendation as to clause (b).-
It appears to us that while the principle is clear enough, the somewhat cryptic language of clause (b) has been, or is likely to be the cause of unnecessary controversy. The best course would be to make it clear in clause (b) that the "event" mentioned therein must be some event unconnected with any wrongful act or default on the part of the lessee. We recommend that clause (b) should be suitable amended.
It is sufficient to add, after the words "limited conditionally on the happening of some event", the words "not connected with any wrongful act or default on the part of the lessee" in clause (b). The termination of a lease for wrongful act or default of the, lessee would be possible under clause (g) by way of forfeiture, if its conditions are satisfied.
96.5. Section 111(c).-
Under clause (c), simply paraphrased, a lease terminates if the interest of the lessor terminates. The general rule is that a person cannot confer a better title than he himself has. A lease is essentially a transfer, though of a subordinate interest and it cannot, speaking in general, travel beyond the duration for which the lessor's title endures. If his interest terminates, then any subordinate interest accorded by him must terminate. This general rule seems to be the basis of clause (c).1
This clause applies, in particular, to mortgagees who grant leases. In the absence of a statutory provision to the contrary, the lessee under a lease granted by a mortgagee cannot claim any rights beyond the term of his original lessor's (mortgagee's) interest.2 Another illustration of clause (c) is to be found in the situation of a sub-lease. Where the head-lease terminates, the sub-lessor stands in a dual capacity; with reference to his own sub-lessee, he is the lessor and clause
(c) applies fully to the sub-lease, so that within the meaning of that clause "the interest of the lessor in the property terminates" on the happening of the event-the event in this case being the determination of head-lease.
1. (a) Ravji v. Gopalji, AIR 1963 Guj 328;
(b) Kamlakar v. Ghulam Haji, AIR 1963 Born 42.
2. Sachalmal Parasram v. Ratnabai, AIR 1972 SC 637.
96.6. Section 111(d)-Recommendation.-
The principle on which section 111, clause (d) is based is that where the greater estate and the lesser interest coincide in the same person without any intermediate estate,1 there is a merger. Clause (d) incorporates the maxim Nemo potest esse tenens et dominus, that is, nobody can be both landlord and tenant at the same time in respect of the same property. For the purposes of this clause, it should be immaterial whether the vesting of the two interests in the same person is by act of parties or by operation of law.2 However, to avoid doubts, we recommend that at the end of clause (d), the words "whether by act of parties or otherwise" should be added.
1. Suraj Chandra v. Behari Lal, AIR 1939 Cal 692 (695).
2. Promothonath v. Kali Prosonno, ILR 28 Cal 744.
96.7. Limitations of clause (d).-
Two important limitations of the provision as to merger ought to be noted. In the first place, the intention of the law is that there is no merger where the separate existence of the two interests is not incompatible. On this principle, where the lessee takes a usufructuary mortgage, the lease should not be regarded as merged in the mortgage, since the two interests are coordinate and not inconsistent.1 The correct position would seem to be that in such a case tenant's rights would only be in abeyance and not totally abrogated.2
1. Lachman Dals v. Hira Lal, AIR 1966 All 323.
2. Kallu v. Diwan, ILR 24 All 487.
96.8. It is also necessary that the entire interes.-
speaking quantitatively-of the lessee and the entire interest of the lessor must vest in the same person.1
Hence, if a lessee of a portion of the property acquires fragmentary share of the proprietary interest in the property, there is no merger.2
1. Manmofha v. Mahendra, AIR 1922 Cal 284 (285).
2. Faqir Baksh v. Murli Dhar, AIR 1931 PC 63.
96.9. Section 111(e).-
Clause (c) relates to express surrender, that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them. Mutual agreement implies that there is an acceptance on the part of the lessor; a unilateral notice by the lessee surrendering the premises, if not accepted by the lessor, does not determine the lease, and the lessee still remains liable for the rent.1
Surrender implies that possession is delivered and accepted. Therefore, it is not enough that the lessee gives a notice, if the notice is not accompanied or followed by delivery of possession. These propositions, one would have thought, are fairly implicit in the language of the section, as also in the concept of surrender. However, occasionally these requirements are lost sight of2-3 resulting in avoidable controversy. Of course, we do not regard them as matters capable of improvement by amendment.
1. AIR 1962 Mad 439.
2. Amar Nath v. Har Prasad, ALR 1932 Oudh 79.
3. Dargahi Lal v. Manna, AIR 1948 Oudh 254.
96.10. Section 111(f).-
As to clause (f), the most usual illustration of an implied surrender is that given in the illustration to the section-acceptance of a fresh lease during the continuance of the old lease. The principle here is that of incompatibility between enjoyment under the prior lease and enjoyment under the later lease. The position would be the same where the new lease is granted to a third person with the consent of the lessee.1 Of course, the new lease must be a valid and effective lease.
It may, on the facts of a particular case, be difficult to determine whether there was an intention to surrender or an acceptance thereof. Such controversies could hardly be avoided by an amendment of the wording of the section and we recommend none.
1. Venkayya v. Subbarao, AIR 1957 AP 619 (625).