Bhuneshwar Prasad & Anr vs United Commercial Bank & Ors on 25 August, 2000

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Supreme Court of India
Bhuneshwar Prasad & Anr vs United Commercial Bank & Ors on 25 August, 2000
Author: Y.K.Sabharwal
Bench: S.S.M.Quadri, Y.K.Sabharwal



DATE OF JUDGMENT:	25/08/2000

S.S.M.Quadri, Y.K.Sabharwal



The appellants and respondents 3 to 7 are owners and
landlords of the premises in question. United Commercial
Bank-respondent No.1 is the tenant. Respondent No.2 is an
officer of the bank.

A suit seeking a decree of eviction of the bank from
the premises was filed by the owners. It has been, inter
alia, alleged in the plaint that the bank was inducted as a
tenant in the premises for a fixed period of five years
commencing from 1st April, 1981 to 31st March, 1986 through
a registered deed of lease. The bank was given an option to
get the lease renewed for two terms of five years each
provided it gives notice for renewal of the lease each time
one month prior to the expiration of the period of lease.
The bank exercised this option one month prior to 31st
March, 1986 and accordingly the lease was renewed for the
period from 1st April, 1986 to 31st March, 1991 at a monthly
rent of Rs. 10,876/-. It seems that before 31st March,
1991, the bank did not exercise option for renewal of the
lease. The bank was asked to vacate the premises by 31st
May, 1991 under plaintiff’s letter dated 22nd April, 1991.
Now, the bank by letter dated 24th April, 1991 requested the
plaintiffs for renewal of lease but the plaintiffs did not
agree and requested for vacation of the premises. It has
also been stated in the plaint that after expiry of lease on
31st March, 1991, the bank used to deposit the rent in the
account of the plaintiffs in their branch but that was
without their consent and mere payment of rent without
consent would not create any fresh tenancy. Under the
aforesaid circumstances, the owners sought eviction of the
bank on the sole ground of expiry of the period of the lease
under clause (e) of sub-section (1) of Section 11 of Bihar
Buildings (Lease, Rent and Eviction) Control Act, 1982 (for
short `the Act’).

The suit was resisted by the bank, inter alia,
pleading that the bank has been in occupation of the
premises as tenant since 1963 and from time to time the rent
has been enhanced. The bank has claimed to be a tenant
month to month. The bank pleaded that it regularly
deposited the rent in the account of the plaintiffs and they
were withdrawing the rent so deposited every month after
31st March, 1991 at the enhanced rate of rent of Rs.
13,595/- per month in place of Rs. 10,876/-. The bank
pleaded that the amount is being paid as monthly rent as per
its letter dated 7th September, 1991 addressed to the owners
and after discussion, they agreed to receive the said
enhanced rent and are withdrawing the same. It has thus
been claimed that the bank is not tenant for any fixed term
period but is a monthly tenant.

A decree for eviction on the ground above stated was
passed by the trial court directing the bank to deliver
vacant possession of the premises to the plaintiffs. In
revision petition, however, judgment and decree of the trial
court has been set aside by the High Court. The said
judgment is under challenge in this appeal.

The High Court has recorded the finding of fact that
even after expiry of period of lease, rent of the premises
at the increased rate, as per request of the plaintiffs, was
regularly deposited by the defendant in their bank in the
accounts of the plaintiffs which have been subsequently
withdrawn by them. Admittedly, the rent under the lease for
the period up to 31st March, 1991 was Rs. 10,876/- per
month. The High Court has further held that the plaintiffs
asked the bank as per their letter dated 5th September, 1992
to deposit the rent of the premises at the increased rate
and the bank deposited rent at the enhanced rate which
amount was withdrawn by the plaintiffs. The amount being
deposited by the bank after 31st March, 1991 was at the rate
of Rs. 13,595/- per month. The High Court has held that
“it is admitted position that the plaintiffs accepted 25%
increased amount of monthly rent of the premises in question
which is evident from Exs. B-3 and B-4.” The question to be
considered, therefore, is as to the effect of payment of
enhanced rent by the bank to the owners. Does it create or
not a fresh tenancy from month to month within the meaning
of Section 116 of the Transfer of Property Act? Learned
counsel for the appellants contends that mere acceptance of
rent does not create tenancy from month to month because of
the protection from eviction available to the bank under the
provisions of the Act.

The present is not a case of the payment and
acceptance of the rent which was stipulated in the lease
deed. It is also not the case where standard rent fixed by
any authority has been paid. The increased rent as
aforestated was deposited after 31st March, 1991. The same
was accepted by withdrawal of the amount. In terms of
letter dated 5th September, 1992, in fact, the owners asked
for payment of the rent “hitherto deposited.” It has been
established on the record that the rent demanded, deposited
and withdrawn was increased rent. In the light of these
established facts, we would examine whether in law monthly
tenancy as contemplated by Section 116 of the Transfer of
Property Act, 1882 came into existence or not.

Mr. Sanyal, learned senior counsel appearing for the
appellants contends that Section 116 of the Transfer of
Property Act would not be attracted merely on acceptance of
rent. Reliance is placed upon a decision of Federal Court
in Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy
Warden & Anr. [1949 Federal Court Reports 262]. We agree
that to bring a new tenancy into existence within the
meaning of Section 116, there should be an agreement as the
section contemplates that on one side, there should be an
offer of taking a fresh demise evidenced by lessee’s
continuing occupation of the property after the expiry of
the lease and on the other side, there must be a definite
assent to this continuance of possession by the
lessor/landlord and that such an assent of the landlord
cannot be assumed in cases of tenancies to which Rent
Restriction Acts apply on account of the immunity from
eviction which a tenant enjoys even after the expiry of
lease. In such cases, the landlord cannot eject him except
on specified grounds mentioned in the Rent Restriction Acts
and thus the acceptance of rent by the landlord from a
statutory tenant, whose lease has already expired, would not
be taken as evidence of new agreement of tenancy and it
would not be open to such a tenant to urge that by
acceptance of rent, a fresh tenancy was created. We do not
expect a lessor not to accept the rent when, in view of the
protection granted by the Rent Restriction laws, without
existence of one or the other ground, he is precluded from
seeking eviction of the lessee and in such a case, there
would be no question of creation of tenancy from month to
month. Under these circumstances, mere acceptance of amount
equivalent to rent or the standard rent would not attract
Section 116. Assent to lessee continuing in possession
would be absent in such cases. However, an agreement
creating fresh tenancy within the meaning of Section 116 can
be implied from the conduct of the parties. In Ganga Dutt
Murarka v. Kartik Chandra Das and Ors.
[(1961) 3 SCR 813],
while affirming the dictum laid down in Khushroo’s case
(supra), it was held that apart from an express contract,
conduct of the parties may undoubtedly justify an inference
that after determination of the contractual tenancy, the
landlord had entered into a fresh contract with the tenant,
but whether the conduct justifies such an inference must
always depend upon the facts of each case. In Bhawanji
Lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors.

[1972 (1) SCC 388], again the question that came up for
consideration was as to whether a fresh tenancy was created
or not by acceptance of rent by the lessor after the
termination of the tenancy by efflux of time. This Court
declined the prayer to reconsider Ganga Dutt Murarka’s case
(supra) and held that acceptance by landlord from the
tenant, after the contractual tenancy had expired, of
amounts equivalent to rent or amounts which was fixed as
standard rent did not amount to acceptance of rent from a
lessee within the meaning of Section 116 of the Transfer of
Property Act. The present is not a case of acceptance of
amounts equivalent to rent or amounts fixed as standard rent
but acceptance of increased rent. It was also observed that
“we do not say that the operation of Section 116 is always
excluded whatever be the circumstances under which the
tenant pays the rent and the landlord accepts it.” The whole
basis of Section 116 is that a landlord is entitled to file
a suit for ejectment and obtain a decree for possession and,
therefore, his acceptance of rent after expiry of lease is
an unequivocal act referable to his desire to assent to the
tenant continuing possession. It would be absent in cases
where there are the restrictions as contemplated by Rent
laws. In such cases, therefore, it is for the tenant where
it is said that the landlord accepted the rent not as a
statutory tenant but only as a legal tenant indicating his
assent to tenant’s continuing possession, to establish it.

In the present case, the bank from the conduct of the
owners has established that the acceptance of increased rent
was in token of owners assent to the bank continuing in
possession after expiry of the lease, thereby creating lease
from month to month within the meaning of Section 116 of
Transfer of Property Act, 1882. The High Court has rightly
reversed the judgment and decree of the trial court. Before
parting we may make it clear that we are not concerned with
the proceedings for fixation of the rent if pending before
the appropriate authorities under the Act, as the same are
not the subject matter of this appeal and the fixation of
the standard rent and from when it is payable is a matter to
be decided by the said authorities in accordance with law.

For the aforesaid reasons, we dismiss the appeal. The
parties are, however, left to bear their costs.

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