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PETITIONER: BURMAH SHELL OIL DISTRIBUTING NOW KNOWN AS BHARAT PETROLEUMC

       Vs.

RESPONDENT: KHAJA MIDHAT NOOR AND OTHERS

DATE OF JUDGMENT03/05/1988

BENCH: MUKHARJI, SABYASACHI (J) BENCH: MUKHARJI, SABYASACHI (J) RANGNATHAN, S.

CITATION:  1988 AIR 1470            1988 SCR  (3) 811  1988 SCC  (3)  44        JT 1988 (2)   429  1988 SCALE  (1)1074

ACT:      Transfer of  Property Act,  1882: Sections 106 and 107- Lease-Absence  of  a  registered  instrument-Monthly  lease- Notice of  termination of lease-Has to be read and construed in context  of facts  of each  particular case  and  to  the parties to  whom it is addressed-Valid termination of lease- Sublessee need not be made party in ejectment suit.

HEADNOTE:      On 16th January, 1958 a lease deed was executed between the lessee  and the  lessor-respondent  in  respect  of  the demised land  for a  period of  ten years,  with a  right of renewal for  a  further  period  of  five  years,  and  with permission to  sub-lease the same. The lessee sub-leased the premises to  the petitioner for running a petrol pump. After the expiry  of the  lease period  on 16th January, 1968, the lessor continued  to accept  the rent  from month  to month. However, no fresh instrument was executed by the parties.      The lessor  issued on  30th November,  1972 a notice to the lessee  terminating the  lease  and  for  giving  vacant possession of  the land  on the expiry of 15th January, 1973 after removing  the structures by the 16th January, 1973. No notice was  given separately  to the  petitioner. The lessee did not  contest the  suit filed on the basis of the notice. The petitioner  contested the proceedings and contended that it was  holding over  after the expiry of the lease, that no notice terminating  tenancy was received by it, and that the notice was invalid.      The trial  Court dismissed  the suit  holding that  the notice terminating the lease was necessary and the notice in this case  was invalid. The Court also rejected the lessor’s plea that  the tenancy  expired by afflux of time. The trial Court, however,  held that  the lease was not extended for a fixed period  of  five  years  in  absence  of  any  written instrument.      The 1st  Additional  Sub  Judge  allowed  the  lessor’s appeal and  held the notice valid. The High Court upheld the appellate order. 812      Dismissing the special leave petition, it was, ^

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    HELD: (1)  In view of paragraph 1 of section 107 of the Transfer of Property Act, 1882 a lease of immovable property from year  to year,  or for  any term exceeding one year, or reserving an  yearly rent,  can be made only by a registered instrument. In  the absence  of a  registered instrument, it must be a monthly lease. [815G-H]      (2) The High Court was right in holding that the lessee and the  sub-lessee, in the facts of this case, continued to remain in possession as a tenant from month to month. [816A- B]      (3) The  High Court  was right  that  the  tenancy  was automatically determined  on the  expiry of  ten years.  The lease was thereafter renewed from month to month which could only be terminated by giving a valid notice. [816E-F]      (4) The  notice of  termination must  be  read  in  the context of  the facts  of each particular case having regard to the  situation of the parties to whom it is addressed. If all the  paragraphs of  the notice  in the  instant case are read together  in harmony  it would  be  manifest  that  the lessee was  directed to  handover the lease-hold property on 16th January,  1973, and hence the notice was a valid notice of termination  of the  lease under  section 106 of the Act. [817C;818F]      (5) Law  does not  require that  the sub-lessee need be made a party, if there was a valid termination of the lease. In all  cases where  the landlord  instituted a suit against the lessee  for possession  of the  land on  the basis  of a valid notice  to quit  served on  the  lessee  and  did  not implead the sub-lessee as a party to the suit, the object of the landlord  is to  eject the  sub-lessee from  the land in execution  of  the  decree  and  such  an  object  is  quite legitimate. The  decree in  such a  suit would bind the sub- lessee. [818H;819A-B]      Harihar Banerji  v. Ramsashi  Roy,  45  Indian  Appeals 222;Mangilal v.  Suganchand Rathi, [1964] 5 SCR 239;Subadini v. Durga  Charan Law, I.L.R. 28 Cal 118;Gobinda Chandra Saha v. Dwarka  Nath Patita,  A.I.R. 1915 Cal. 313 and Roop Chand Gupta v. Raghuvanshi (Pvt.) Ltd., AIR 1964 SC 1889, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Special  Leave  Petition (Civil) No. 15667 of 1987. 813      From the  Judgment and  Order dated  11.11.1987 of  the Patra High Court in Appellate Decree No. 133 of 1983.      G.L. Sanghi,  S.K. Mehta, M.K. Dua, S.M. Sarin and Aman Vachher for the Petitioner.      Salman Khurshid,  Irshad Ahmad,  V.D. Phadke  and  L.R. Singh for the Respondents.      The Judgment of the Court was delivered by      SABYASACHI MUKHARJI, J. This is a petition for leave to appeal against  the judgment  and order dated 11th November, 1987 of  the High  Court of  Patna. On  16th January, 1958 a lease deed  was executed  between the  lessee Latifur Rehman and  lessor   Khaja  Midhat  Noor  (hereinafter  called  the respondent) with  permission to sub-lease the same. The said Latifur Rehman  sub-leased the  premises to Burmah Shell Oil Distributing Company  (the petitioner  herein) for running a petrol pump  and making necessary constructions thereon. The lease was  for a  period of  ten years which expired on 16th January, 1968.  It appears  further  that  after  the  lease period had  expired, the sub-lessee, petitioner continued to

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pay the  rent which  was being  accepted  continuously  from month to  month by  the respondent, the lessor. A notice was issued by the respondent to the lessee terminating the lease and for  giving vacant  possession of  the land  by the 15th January,  1973   and  also  requiring  the  removal  of  the buildings, plant,  etc., by  the 16th  January, 1973. In the last two  paras of  the said  notice, it was stated that the lessee was to surrender the lease-hold land on the expiry of 15th January,  1973. No  notice was  given separately to the petitioner terminating  its lease.  A suit for ejectment was filed thereafter.  The lessee Latifur Rehman did not contest the suit  for ejectment.  The petitioner, however, contested that  proceeding.  The  learned  Munsiff  I,  Gaya,  by  his judgment dated 8th May, 1979 dismissed the suit holding that the notice  terminating the  lease  was  necessary  and  the notice in  this case  was invalid.  The plea of the landlord that the tenancy expired by afflux of time, was rejected. On 22nd February,  1983 the  1st  Additional  Sub  Judge,  Gaya allowed the  appeal of the landlord and held that the notice terminating  the   tenancy  and  asking  the  petitioner  to surrender by the 15th January, 1973 was a valid notice.      The main  question involved  is, whether  there  was  a valid termination  of the  lease and as such the sub-lessee, the petitioner herein was 814 bound to  deliver vacant possession. A written statement had been filed  by the  petitioner, the  sub-lessee, wherein  it was, inter  alia, stated  that it was holding over the lease hold property  after the expiry of the lease by paying rent. No notice  terminating  tenancy  was  received  by  it.  The validity of  the notice  to the  lessee was also challenged. The trial  Court held  that the lease was not extended for a fixed period  of  five  years  in  absence  of  any  written instrument.      The following  two questions  of law were re-formulated by the High Court:           (1)  In   absence  of  any  registered  instrument           executed by  both the  parties i.e. the lessor and           the lessee  after the  period stipulated in Ext. 4           i.e. the  period of ten years, can it be said that           the lease  was extended automatically for a period           of five  years in  terms  of  Ext.  4  or  further           whether the  lessee was  holding the suit property           as tenancy from month to month?           (2) If  the first  part of question (1) is held in           negative and  second part in the affirmative, as a           consequence of  which it  must be  held  that  the           lease was  required to  be determined, whether the           notice as  contained in  Ext. 7 validly terminated           the lease of the lessee?      Indubitably, the  lessee  came  in  possession  of  the property in  question on  16th January,  1958. The lease was for a  period of  ten years  with a  right of  renewal for a further period of five years. After the expiry of ten years, no instrument  was executed  by the  parties and  the lessee continued to  remain in possession of the suit property. The lessor accepted the rent and allowed the lessee to continue. It is relevant in this connection to refer to the provisions of the  Transfer of  Property Act,  1882 (hereinafter called ’the Act’).  Section 106  of the Act deals with the duration of certain  leases in  absence of  written contract or local usage and section 107 deals how leases are to be made. These sections read as follows:           "106. In the absence of a contract or local law or           usage  to  the  contrary,  a  lease  of  immovable

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         property   for   agricultural   or   manufacturing           purposes shall  be deemed  to be a lease from year           to year,  terminable, on the part of either lessor           or lessee, by six months’ notice expiring with the           end of  a year  of the  tenancy; and  a  lease  of           immovable property for 815           any other  purpose shall  be deemed  to be a lease           from month  to month,  terminable, on  the part of           either lessor  or lessee,  by fifteen days’ notice           expiring with the end of a month of the tenancy.                Every notice  under this  section must  be in           writing, signed  by or  on behalf  of  the  person           giving it, and either be sent by post to the party           who is  intended to  be bound by it or be tendered           or delivered  personally to  such party, or to one           of his family or servants, at his residence, or if           such tender or delivery is not practicable affixed           to a conspicous part of the property.           107. A  lease of  immovable property  from year to           year, or  for any  term  exceeding  one  year,  or           reserving a  yearly rent,  can be  made only  by a           registered instrument.                All other leases of immovable property may be           made either  by a registered instrument or by oral           agreement accompanied by delivery of possession.                Where a  lease of  immovable property is made           by a  registered instrument,  such instrument  or,           where there  are more  instruments than  one, each           such instrument  shall be  executed  by  both  the           lessor and the lessee:                Provided that  the State Government may, from           time to  time, by  notification  in  the  Official           Gazette, direct that leases of immovable property,           other than  leases from  year to  year, or for any           term exceeding  one year,  or reserving  a  yearly           rent, or  any class of such leases, may be made by           unregistered  instrument   or  by  oral  agreement           without delivery of possession."      In view  of the  paragraph 1 of section 107 of the Act, since the  lease was  for a  period exceeding  one year,  it could only  have been  extended by  a registered  instrument executed by  both the  lessor and the lessee. In the absence of registered  instrument, the  lease shall  be deemed to be "lease from  month to  month". It  is clear  from  the  very language of  section 107  of the Act which postulates that a lease of  immovable property  from year  to year, or for any term exceeding  one year, or reserving a yearly rent, can be made only  by a  registered instrument.  In the  absence  of registered instrument, it must be a 816 monthly lease. The lessee and the sub-lessee in the facts of this case  continued to remain in possession of the property on payment of rent as a tenant from month to month. The High Court so  found. We  are of  the opinion that the High Court was right.      Section 116 of the Act which was placed before the High Court deals  with the effect of holding over and provides as follows:           "116. If  a lessee  or  under-lessee  of  property           remains   in    possession   thereof   after   the           determination of  the lease granted to the lessee,           and the lessor or his legal representative accepts           rent from the lessee or under-lessee, or otherwise           assents to his continuing in possession, the lease

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         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."      It was  submitted before  the High  Court that this was not a case of continuing of old tenancy for a period of five years but  in view  of the  clear provisions  of section 107 which we  have noted  hereinbefore and  in the  absence of a registered instrument,  it must  be held that it was holding over and  not continuation  of old  tenancy  for  a  further period  of   five  years.   That  would  be  the  harmonious construction of  section 107  read with  section 116  in the facts of  this case.  We are  of the  opinion that  the High Court  was   right  that   the  tenancy   was  automatically determined on  the expiry  of ten years which was stipulated in Ext.  4. Thereafter  the lessee  continued  to  hold  the property and  the lessor  accepted the  rent. The lease was, therefore, renewed  from month  to month  because it was not the case of any party that it was for agricultural purposes.      In that  view of  the matter,  the termination  of  the lease could  only be  by giving  a valid notice. Such notice was given  to the  lessee but  not to  the  sub-lessee.  The respondent’s case  is that  a notice  to sub-lessee  was not necessary. It  was contended on behalf of the appellant that by Ext.  7 the  lessee was  asked to  quit  the  lease  hold premises on  the expiry  of 15th  June, 1973. Admittedly, in this case,  the lease was executed on 16th January, 1958 and from that  date the lease came into existence. For computing the period  of ten  years the  16th January,  1958 had to be excluded. The  tenancy was,  therefore,  terminated  on  the expiry of  16th of the month. The notice in the instant case of the  quit which  was Ext.  7 before  the Court dated 30th November, 1972, 817 was given  on behalf  of the  respondent to  Latifur Rehman- lessee. In  paragraph 4  of Ext.  7 it  was stated  that the lessee was  to deliver  the possession  of  the  lease  hold property by 16th January, 1973. In paragraph 5 of Ext. 7 the lessee and sub-lessee were required to remove the buildings, plants etc.  by the  16th January, 1973. In the last but one and the  last paragraph  of Ext.  7 it  was stated  that the lessee was  to surrender  the properties  of the  lease hold land on the expiry of 15th January, 1973.      The question  is whether  there was a valid notice. The High Court  held that in the facts of this case, there was a valid notice  of termination  and after  the valid notice of termination of the lease to the lessee, there was no need to give a  fresh notice  to the sub-lessee. Notice must be read in the  context of  the facts of each particular case having regard to  the situation  of  the  parties  to  whom  it  is addressed. In  Harihar Banerji  and others  v. Ramasashi Roy and others,  45 Indian Appeals 222 at page 225, the Judicial Committee observed as follows:                ".  .  .that  notices  to  quit,  though  not           strictly accurate  or consistent in the statements           embodied in  them, may still be good and effective           in law;  that the test of their sufficiency is not           what they would mean to a stranger ignorant of all           the facts  and circumstances  touching the holding           to which  they purport  to refer,  but  what  they           would mean  to tenants  presumably conversant with           all those  facts and  circumstances; and, further,           that they  are to  be construed, not with a desire           to find  faults in  them which  would render  them           defective, but to be construed ut res magis valeat

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         quam pereat."      This is  how the notices should be literally construed. This decision  was relied  upon by this Court in Mangilal v. Suganchand Rathi,  [1964] 5  S.C.R. 239. There, however, the facts were  different. There  the defendant  was a tenant of the plaintiffs. The defendant was in arrears of rent for one year to  the extent  of Rs.  1020. On  April  11,  1959  the plaintiffs served a notice on the defendant requiring him to remit to  them Rs.1020  within one  month from  the date  of service of notice, failing which suit for ejectment would be filed. This  notice was  received by  the defendant on April 16, 1959. On June 25, 1959 the defendant sent a reply to the notice enclosing  with it  a cheque for Rs.1320. This amount consisted of  the rental  arrears as  well as  the rent  due right up  to June  30, 1959.  The  plaintiffs  accepted  the cheque and cashed it and gave a fresh notice on July 9, 1959 requiring the defen- 818 dant to vacate the premises by the end of the month of July. The  defendant   did  not  vacate  the  premises.  Then  the plaintiffs filed  a suit  to eject  the defendant  upon  the ground that  the latter  was in arrears of rent for one year and had  failed to  pay the  arrears within one month of the service of  the notice  dated April  11, 1959 upon him. From the undisputed  facts it was clear that the defendant was in fact in  arrears of rent and had failed to pay it within the time prescribed by cl.(a) of section 4 of the Madhya Pradesh Accommodation Control Act, 1953. It was held that though the notice dated  11th April,  1959 could  be  construed  to  be composite notice under section 4(a) of the Accommodation Act and section  106 of  the Transfer  of Property  Act  it  was ineffective under  section 106  of the  Transfer of Property Act because  it was  not a  notice of 15 clear days. In that case,  the   defendant  had  only  14  clear  days’  notice. Reference was  made to  the aforesaid  decision  of  Harihar Banerji v.  Ramsashi Roy  (supra) which was distinguished by this Court. This Court held that notice under section 106 of the Act  must be  strictly complied with. In so holding this Court relied  on a  decision of  the Calcutta  High Court in Subadini v.  Durga Charan  Law, I.L.R. 28 Cal. 118 which was construing a  notice contemplated  by section 106 of the Act and had held that in calculating the 15 days’ notice the day on which  the notice was served was excluded and even if the day on  which it  expired was taken into account it would be clear that  the defendant  had only  14 clear  days’ notice. This position  was again  reiterated by  the  Calcutta  High Court in  Gobinda Chandra Saha v. Dwarka Nath Patita, A.I.R. 1915 Cal.  313. This  Court affirmed  this view  that notice must be  understood in  the  light  of  Harihar  Banerji  v. Ramsashi Roy  (supra). This  Court held  that the  suit  was actually based upon the notice dated July 9, 1959 which gave more than  15 days’  clear notice to the defendant to vacate the premises.  This notice  was a valid notice under section 106 of the Act. In the instant case if all the paragraphs of Ext. 7  which is  a notice  in the  instant  case  are  read together in harmony it would be manifest that the lessee was directed to  hand-over  the  lease  hold  property  on  16th January, 1973.      In the  aforesaid view  of the  matter, in our opinion, there was  a valid notice of termination of the lease of the lessee. In  any  event  the  lessee  did  not  dispute  this contention. The  lessee accepted  a valid termination of the lease hold property.      In Roop  Chand Gupta  v. Raghuvanshi  (Pvt.)  Ltd.  and another, A.I.R.  1964 S.C.  1889, it  was held by this Court

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that it  is quite  clear that  law does not require that the sub-lessee need  be made  a party,  if  there  was  a  valid termination of the lease. This Court reiterated that in 819 all cases  where the  landlord instituted a suit against the lessee for  possession of  the land  on the basis of a valid notice to  quit served on the lessee and did not implead the sub-lessee as  a party  to  the  suit,  the  object  of  the landlord is  to  eject  the  sub-lessee  from  the  land  in execution  of  the  decree  and  such  an  object  is  quite legitimate. The  decree in  such a  suit would bind the sub- lessee. This  Court noted  at page  1892 of  the report that this might  act harshly  on the  sub-lessee; but  this was a position well  understood by him when he took the sub-lease. The law allows this and so the omission cannot be said to be an  improper   act.  In   the  facts   of  this  case  these observations apply  more effectively. The termination of the lease was not disputed by the lessee. There is no allegation of any collusion between the lessee and the respondent.      In that  view of the matter, we are of the opinion that the  High   Court  was  right.  The  suit  in  question  was instituted in  May, 1979  and the  valid notice  to quit was given long after the expiry of the period of lease. The sub- lessee had  long innings.  It is time for him to quit. There is no  merit in  this petition.  The special  leave petition fails and is, therefore, dismissed with costs. R.S.S.                              Petition dismissed. 820