Holding Over under Section 116 of the Transfer of Property Act, 1882: Contemporary Judicial Contours

Holding Over under Section 116 of the Transfer of Property Act, 1882: Contemporary Judicial Contours

Abstract

Section 116 of the Transfer of Property Act, 1882 (hereinafter “TPA”) embodies the doctrine of “holding over”, under which a lease determined in law may, by consensual conduct, metamorphose into a fresh periodic tenancy. The provision, though linguistically concise, has generated considerable jurisprudence concerning its prerequisites, interaction with rent-control statutes, impact on ancillary lease terms, heritability, registration, and termination. This article critically evaluates these facets through an integrated analysis of leading Supreme Court and High Court authorities, with particular emphasis on Bhawanji Lakhamshi v. Dani[2], Shaha Ratansi Khimji v. Kumbhar Sons[11], and allied cases.

1. Legislative Framework

Section 116 reads:

“If a lessee or under-lessee of property remains in possession thereof after the determination of the lease … and the lessor … accepts rent … or otherwise assents to his continuing in possession, the lease 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.”[1]
The provision must be read conjunctively with (i) Section 111 (modes of determination), (ii) Section 106 (duration/notice for periodic leases), and (iii) Section 107 (formalities for “making” leases). Section 116, unlike Section 107, operates ex lege; the new tenancy arises by operation of law upon bilateral conduct and therefore requires no registered instrument[10].

2. Essential Ingredients

2.1 Continuance in Possession after Determination

The first sine qua non is that the erstwhile tenant remains in lawful possession after the original lease is terminated in any manner recognised by Section 111. Possession following expiry by efflux of time (Shanti Devi v. Banerjee[12]) or forfeiture may equally qualify, provided it is not unauthorised trespass.

2.2 Assent of the Lessor

Assent may be manifested either by acceptance of rent or by other unequivocal conduct—e.g., negotiation of fresh terms, delivery of rent receipts, or omission to evict with knowledge of occupation. The Delhi High Court in Surjit Sachdev[7] emphasised that absence of rent-payment or other assent is fatal to a plea of holding over. Conversely, the Patna High Court in Digambar Narain Chaudhary[8] recognised that the dual conditions—continued possession and acceptance of rent/assent—statutorily convert the erstwhile tenancy into a periodic one.

3. Contractual v. Statutory Tenancy: The Bhawanji Lakhamshi Paradigm

The doctrinal fulcrum is the Supreme Court’s decision in Bhawanji Lakhamshi v. Dani[2]. The Court held that where rent-control legislation confers “statutory immunity” from eviction upon expiry of the contractual lease, the tenant’s protected status does not by itself create a new tenancy under Section 116; mutual animus contrahendi remains indispensable. Acceptance of rent is thus evidentiary, not conclusive. This reasoning aligns with earlier precedent in Ganga Dutt Murarka v. Kartik Chandra Das[3] and the Federal Court’s exposition in Kai Khushroo Capadia[4].

4. Scope of Terms Imported into the Renewed Tenancy

Once a tenancy by holding over arises, the terms of the expired lease—so far as they are consistent with a yearly or monthly tenancy—are generally implied into the new contract. Madras authority in G.M. Ali v. Rosary Ammal[18] and Kerala authority in Moothorakutty v. Ayissa Bi[19] adopt this position, also endorsed by the Supreme Court in Manujendra Dutt v. Roy Chowdhury[5]. However, clauses incompatible with a periodic tenancy—e.g., a fixed 15-year term or option to purchase—do not ipso facto revive (Satish Chand Makhan[17]).

5. Registration and Formalities

Because the lease created under Section 116 is born of statute and not “made” by the parties, Section 107’s registration requirement does not apply (Rasiklal Mehta[10]). Nevertheless, parties may consciously execute a subsequent registered deed to crystallise additional terms; absent such deed, the relationship is judged by Sections 106/116 and implied terms.

6. Heritability and Transferability

A tenancy from month to month resulting from holding over is heritable and transferable unless otherwise contracted (Arshad Waliullah v. CED[20]). This differentiates it from mere “statutory tenancies” under rent-control regimes, which may be purely personal and non-heritable (Peer Gulam[21]).

7. Termination of a Tenancy Created by Holding Over

The renewed lease can be terminated only in accordance with Section 106 (proper notice). Failure to serve such notice renders an ejectment suit premature (Shanti Devi v. Banerjee[12]). Where the landlord repudiates renewal but accepts rent under protest, courts have differed. The Federal Court majority in Kai Khushroo Capadia[4] treated protest-rent as indicative of absence of consensus, while several High Courts have scrutinised factual matrix to infer or reject assent (Bomisetti Ramachandra Rao[11a]).

8. Exclusions and Limitations

  • Agreement to the contrary: Parties may expressly preclude operation of Section 116 (Privy Council in Kamakhya Narayan Singh)[21].
  • Leases for life or terminable interests: Where the lessee’s estate is determinable on death, heirs cannot claim holding over (Ram Barai Singh[21]).
  • Premises destruction: If the demised property is destroyed, Section 108(B)(e) may extinguish the tenancy altogether, foreclosing any scope for holding over (Shaha Ratansi Khimji[11]).
  • Statutory/municipal restraints: Public authorities may lack capacity to assent without statutory sanction; hence, no tenancy by holding over can arise (Badrilal v. Municipal Corporation of Indore[16]).

9. Interaction with Rent-Control Regimes

Rent legislation often overlays Section 116 in two ways: (i) conferring statutory tenancy that survives determination, and (ii) regulating increases or eviction grounds so stringently that landlords’ acceptance of rent cannot be construed as contractual assent. The Supreme Court in Bhawanji Lakhamshi[2] held that statutory immunity under the Bombay Rent Act displaced common-law “holding over”. Conversely, where the rent-control statute stands repealed without saving the tenant’s protection (Qudrat Ullah[6]), Section 116 may regain primacy for subsequent occupation.

10. Recent Trends

In Union of India v. Nareshkumar Jagad[15] the Supreme Court reaffirmed the orthodox formulation of Section 116, reiterating the dual conditions of possession and assent. The Madras High Court in Kayaroganaswamy Temple[22] cautioned that “mere continuance in possession” does not create a new tenancy unless acceptance of rent is proved. These decisions illustrate judicial vigilance to confine holding over within its doctrinal limits while preventing unjust enrichment by either party.

11. Critical Appraisal

While Section 116 facilitates commercial certainty by avoiding “gap” periods between leases, its heavy reliance on factual inference of assent has produced litigation. Reform proposals include:

  • Statutory presumption against contractual renewal in rent-controlled properties.
  • Mandating written communication for assent to minimise evidentiary ambiguities.
  • Clarifying the extent to which onerous covenants (e.g., arbitration clauses, renewal options) survive in a statutory renewal.

Conclusion

Section 116 of the TPA balances the sanctity of contractual termination with pragmatic recognition of parties’ conduct. Judicial interpretation, especially post-Bhawanji Lakhamshi, underscores that holding over is not an automatic statutory windfall; it is a fresh, consensual relationship subject to proof of landlord’s assent. As Indian urban tenancy markets evolve, nuanced application of Section 116—tempered by rent-control imperatives and public-law constraints—will continue to shape landlord-tenant dynamics.

Footnotes

  1. Transfer of Property Act, 1882, s 116.
  2. Bhawanji Lakhamshi & Ors. v. Himatlal J. Dani & Ors., (1971) 1 SCC 388.
  3. Ganga Dutt Murarka v. Kartik Chandra Das, (1961) 3 SCR 813.
  4. Kai Khushroo Bezonji Capadia v. Bai Jerbai Hirjibhoy Warden, (1949-50) F.C.R. 262.
  5. Manujendra Dutt v. Purendu Prosad Roy Chowdhury, (1967) 1 SCR 475.
  6. Qudrat Ullah v. Municipal Board, Bareilly, (1974) 1 SCC 202.
  7. Surjit Sachdev v. Kazakhstan Investment Services (P) Ltd., (1997) DLT 473 (Del.).
  8. Digambar Narain Chaudhary v. Commissioner of Trihut Division, AIR 1958 Pat 190.
  9. Md. Ahmed Amolia v. Nirmal Chandra Roy, AIR 1978 Cal 312.
  10. Rasiklal M. Mehta v. Hindustan Photo Films Mfg. Co., 1975 (1) MLJ 134 (Mad.).
  11. Shaha Ratansi Khimji & Sons v. Kumbhar Sons Hotel (P) Ltd., (2014) 14 SCC 1.
  12. Smt Shanti Devi v. Amal Kumar Banerjee, (1981) 2 SCC 199.
  13. Shanti Prasad Devi v. Shankar Mahto, (2005) 5 SCC 543.
  14. Satish Chand Makhan v. Govardhan Das Byas, (1984) 1 SCC 369.
  15. Union of India v. Nareshkumar Badrikumar Jagad, (2018) 14 SCC 516.
  16. Badrilal v. Municipal Corporation of Indore, (1973) 2 SCC 388.
  17. Ram Barai Singh v. Tirtha Pada Misra, AIR 1955 Cal 403.
  18. G.M. Ali v. M. Rosary Ammal, 1970 (83) LW 550 (Mad.).
  19. Moothorakutty v. Ayissa Bi, AIR 1963 Ker 229.
  20. Arshad Waliullah v. Controller of Estate Duty, AIR 1971 All 348.
  21. Peer Gulam v. III Addl. District Judge, Etah, 1999 (1) ARC 642 (All.).
  22. Sri Kayaroganaswamy Neelayadhatchi Amman Devasthanam v. Nagapattinam Co-operative Housing Society, 2012 (5) CTC 641 (Mad.).