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PETITIONER: SAVITA DEY

       Vs.

RESPONDENT: NAGESWAR MAJUMDAR AND ANR.

DATE OF JUDGMENT26/09/1995

BENCH: PUNCHHI, M.M. BENCH: PUNCHHI, M.M. AGRAWAL, S.C. (J) JEEVAN REDDY, B.P. (J)

CITATION:  1996 AIR  272            1995 SCC  (6) 274  JT 1995 (7)    63        1995 SCALE  (5)546

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T Punchhi, J.      In  furtherance  to  our  Order  dated  May  11,  1994, allowing this  appeal, setting  aside the judgment and order of the  Division Bench of the Calcutta High Court, restoring that of  the Trial  Court, we  hereby release  our  deferred reasons to complete the judgment.      The landlord-appellant  herein was  the plaintiff.  The defendants-respondents were the tenants. The appellant filed a suit  for recovery  of possession  of the demised premises and for  mense profits  in the  City Civil Court at Calcutta against the  tenants-respondents. The  suit was based on the premise that  by a  registered deed of lease dated 6-7-1964, the demised  premises were leased out to the respondents for a period of 21 years commencing from July 1, 1964 and ending on June  30, 1985  at the  agreed upon  rate of Rs.475/- per month which  subsequently  was  increased  to  Rs.501/-  per month, consequent  to the  increase in  municipal tax. Since the lease  was expiring on June 30, 1985, the appellant sent a quit  notice on  26-5-1985 requiring  the  respondents  to vacate the premises, on the efflux of time on June 30, 1985. Since the  respondents did  not vacate  the demised premises despite notice,  a suit for possession was filed against the respondents claiming  Rs.100/- per diem for wrongful use and occupation after the expiry of the period of lease.      The respondents even though contesting the suit had not much to offer in defence. They pleaded that they had wrongly been made  to pay  Rs.5,000/- as  Salami at  the time of the execution of  the lease  deed and  that rent was enhanced to Rs.501/- per  month contrary  to the terms of the lease. And this act  of enhancement  had the effect of tenancy becoming from  month   to  month,   in  substitution  of  the  lease, attracting provisions  of the  West Bengal  Premises Tenancy Act, 1956.

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    Before the  Trial Court,  the only  question raised was whether on  the terms  of  the  registered  lease  deed  the appellant was  entitled to  a decree  for possession as also for mense  profits from the date of the expiry of the lease. The Trial  Court in  its well-reasoned  judgment came to the conclusion that  the stipulated  rent of  Rs.475/- per month was rightly increased to Rs.501/- per month with effect from January 1969  because  of  increase  in  municipal  tax  and therefore  on   this  factum,  there  could  be  no  implied surrender under  Section 111(f)  of the Transfer of Property Act, there  being no novation of the lease, or any change in the terms thereof. The Trial Court further viewed that Since enhancement  in  rent  on  account  of  the  enhancement  of municipal tax  was itself  stipulated in  the lease of deed, there was  in fact  no enhancement of rent by the appellant. On that  premise, the  Trial  Court  decreed  the  suit  for possession and  for payment of mense profits at the rate and from the  date claimed  by the  appellant, The High Court on appeal by  the tenants-respondents reversed the judgment and decree of the Trial Court without demolishing the grounds on which the  judgment of  the Trial  Court was  based, but  on grounds totally different.      Section 3  of the  West Bengal  Premises  Tenancy  Act, 1956, prior  to its  amendment,  effective  from  24-8-1965, rendered the  provisions of  the  Act  inapplicable  to  any premises held  under a lease for more than 20 years, whether the purpose of the lease was residential or non-residential. By the  amendment of  1965, this  provision was retained and re-numbered as  Sub-section (1)  of Section  3 while  adding there to  Sub-section (2).  The provision as it stands 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. A bare  reading of  the provision makes it obvious that Sub- section (2)  does not  touch those leases which were entered into before  24-8-1965 which  remained  to  be  governed  by

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Section 3,  as it  stood and Section 3(1), as it now stands, whereunder the Act is not applicable to any premises under a lease for  more than  20 years.  Since the lease in hand was executed on  6-7-1964 for  a period  commencing from July 1, 1964 and  expiring on  June 30,  1985,  sub-section  (2)  of Section 3 obviously has no applicability to it.      The  learned   Judge  authoring  the  judgment  of  the Division Bench  under appeal  had  at  an  earlier  occasion authored and  delivered another  Division Bench  judgment of the High  Court in Mahindra & Mahindra vs. Sm. Kohinoor Debi [Calcutta High  Court Notes  1989(1) Reports,  Second Appeal No.142 of  1987 decided on December 1, 1988]. There the High Court Prominently  drew the  distinction  between  the  pre- amendment and  post-amendment leases.  In  para  13  of  the Report it observed as follows:      "13........ A  lease for,  say, 21 years      would not cease to be, but would remain,      such a  lease in  the eye of law even if      the lessee  has not  given an  option to      terminate it  earlier. If  a lease for a      fixed term  with the right or option for      renewal in  favour of the lessee remains      a lease  for that fixed term only, until      the option  is exercised,  a lease for a      fixed term  with the  right or option in      favour  of   the   lessee   of   earlier      termination should  also remain  a lease      for the  period fixed,  as the option in      each case  creates, enlarges,  limits or      extinguishes   no    right,   title   or      interest,  until  exercised."  (emphasis      supplied)      The High  Court seemingly  having talked for the lessee then went  on to  conclude in  paragraph 18  of  the  Report affirmingly as follows:      "18. .......  But if, while deliberately      engrafting  such  a  Proviso  to  s.3(2)      while amending  s.3 in  1965 to  provide      only for  leases executed after 24.8.65,      the   Legislature    has   conspicuously      refrained from  incorporating  any  such      provisions in  s.3(1)  governing  leases      entered into before that date, we do not      think that  it would  be open  to us  to      project the  provisions of  that Proviso      in s.3(1)  also and to hold that a lease      for a  fixed term  would cease to be so,      if  it   is  determinable   before   its      expiration even  at the  option  of  the      tenant  only.   We   would   accordingly      overrule both  the contentions  made  by      Mr. Dutt  and would  dismiss the  second      appeal." On the  strength of  the above  observations, the High Court did the  opposite in  the instant  case on  the  superficial distinction drawn  in the  case of  a tenant  who  had  been conferred the  option to  terminate  the  lease  within  the duration of  the term  of the  lease, which  in no  way  was affected by  any action  of the landlord, because the tenant had otherwise  the  right  to  continue  undeterred  in  the premises for  the period  fixed. Negatively  the case of the landlord was  put at  a different  footing. The  High  Court completely overlooked  that the  requirements of sub-section (2)  of   Section  3  could  never  be  imported  wholly  or partially, for  the tenant  or against  the tenant,  in sub-

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section (1)  of Section 3. It could not have gone on to hold that if  in a  lease of  the pre-1965  period a  term exists entitling the  landlord to  terminate the  lease, the  lease ceases to  be the  one governed  by Section  3(1). The  High Court, rather should have appreciated that both the landlord and tenant were at par under sub-section (2) of Section 3 of the Act.  It was  unfortunate for  the High  Court  to  have observed that  in Mahindra  & Mahindra’s  case, the question about the  landlord having  reserved to himself the right to terminate the  lease at  his option,  at any time before the expiry of  the lease period, so as to make the tenure of the tenant precarious,  was not  finally decided  as  not  being necessary for  the disposal  of the matter at their end. The High Court should have kept in mind that for a pre-amendment lease the  right of termination even if kept reserved by the landlord, to  which Section 3(1) applied, could not have the consequence of  the lease  being governed under Section 3(2) of the  Act. The  High Court  should have  borne in mind the distinction  drawn   by  the  legislature.  Had  it  thought otherwise, it  could have  made provision  for the same. The High Court  could not  have  imported  the  requirements  of Section 3(2) into Section 3(1) and in so doing has committed a gross error.      Additionally,  in   the  lease  in  hand,  neither  the landlord  nor   the  tenant  had  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.      Adverting now to the lease deed, we find that Rs.5000/- had been  paid by  the lessee  as  advance  rent  which  was adjustable in  50 instalments  at the  rate of  Rs.100/- per month from  the monthly  rent of Rs.475/- payable during the period July  1964 to August 1968. In this period, the lessee was to  pay Rs.375/- per mensem because of the adjustment of Rs.100/-  per   mensem,  till  the  advance  got  exhausted. Thereafter from  September 1968 to June 1985, the lessee was to pay Rs.475/- per mensem. Under Clause, 16 both the lessee and the  lessor agreed  not to  terminate the  lease thereby created before the expiry of four years and two months, from the commencement  of the  term of the lease, i.e., from July 1, 1964 to August 31, 1968, (That period being in which rent would be  adjusted) subject  to the  proviso that if rent is not paid  and goes in arrears, the lessor shall have a right of re-entry. Subject to the afore-conditions, the lease also provided that a notice of an English calendar month shall be necessary for  the termination  of the  lease by  either the lessor or  the lessee  in accordance with the statute law of the country. No where in these terms can anything be spelled out that  the lessor  had reserved to herself the unfettered right to  terminate the tenancy at her whim and caprice. The High Court  has not  adverted to  this  fact  situation.  It erroneously proceeded  on the  assumption  that  the  lessor herein had  an unfettered  right of  bringing to  an end the tenure of the tenant termed precarious. Thus neither on law, nor on  fact does  the judgment  of the  High Court  deserve sustaining; all  the more,  when it  has not  demolished the case of  the landlord, as succeeding in the Trial Court, and on projecting one which was never canvassed before the Trial

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Court.      Now on  the trial  scene, we  find that the argument of the  tenant-respondents  about  the  increase  of  rent  and novation of  contract was  rightly  rejected  by  the  Trial Court. There is no inflexible principle that every variation at the rate of rent payable under a registered deed of lease necessarily implies surrender of the said lease and creation of a new tenancy, or that whenever rate of rent is altered a new relationship  between the  parties gets created. By mere increase or  reduction of  rent, surrender  of the  existing lease and the grant of a new one, cannot be inferred in each case. It is a question of fact to be determined. See in this regard Gappulal  vs. Shriji  Dwarkadheeshji and another [AIR 1969 SC  1291 (at  1293)]. Instantly  in  the  deed  itself, provision had been made whereby the lessee had undertaken to pay a proportionate increase in the share of municipal taxes if in  future the  rate  and  taxes  get  increased  by  the Calcutta Corporation in respect of the demised premises. The increase of  Rs.26/- per  month in  the agreed upon rent has rightly been  found to  be because of increase in taxes. And since they  were conceived  of and  stipulated in  the  deed itself, no question of novation of contract could ever arise or on  that event creation of new tenancy, so as to lift the protection to  the landlord  available under Section 3(1) of the Act.      For all  these reasons,  the judgment and decree of the High Court  stands set  aside, which reasons be supplemented to our Order dated May 11, 1994.