Subramonia Iyer v. Madhavi Amma & Others

The Judgment of the Court was delivered by

Mathew, J.:— This is an appeal by the plaintiff against the decree dismissing his suit for recovery of possession of the plaint schedule property with arrears of rent. The lease deed on the basis of which the suit was filed was executed by deceased Sankara Panicker, the husband of the 1st defendant and father of defendants 2 and 3, on 7-8-1925 in favour of the 6th defendant's karnavan, Parameswaran Namboothiri, and was for a term of three years on an annual rent of Rs. 15/-. It is stated in the lease deed that the plaint schedule property belonged in jenm to Guruvayoor Devaswom and that the Devaswom had granted an ‘Anubhavam’ right in respect of the property to the 6th defendant's Mana. It is further stated there that the lease is being taken for the purpose of enabling the lessee to construct a shop building for carrying on his trade in Ayurvedic drugs. The plaintiff had taken a mortgage in respect of the property on 5-4-1946 with authority to collect the arrears of rent and future rent and also to recover possession of the property from the lessee. The plaintiff's suit was to recover possession of the property, alleging that defendants had committed default in the payment of rent subsequent to 7th August, 1942.

2. The defendants contended that the suit was not maintainable, that they have no knowledge of the partition in the illom of the 6th defendant or of the mortgage in favour of the plaintiff and that the suit was bad for want of proper notice to quit. They also raised other contentions which are not material for the purpose of deciding this appeal. The main question which arose for consideration in the courts below was whether the suit was sustainable on account of want of a proper notice to quit. The trial court held that notice to quite was unnecessary as in Ext. A1 there was a contract to the contrary and that even if a notice was necessary, Ext. A3 notice was sufficient to determine the lease. The judge below in appeal by the defendants came to the conclusion that the notice to quit given by the plaintiff was not proper. It took the view that the lease was from year to year and 6 months' notice expiring with the end of the year of the tenancy was essential to determine the tenancy and that Ext. A3 was not a proper notice even if the tenancy was one from month to month. In this view, it dismissed the suit without considering the other points raised in the appeal. It is the correctness of this decree that is challenged in this appeal.

3. The main question therefore that arises for consideration in this appeal is whether the view of the court below that 6 months' notice was required to terminate the tenancy is correct and whether Ext. A3 dated 28-5-1946 issued by the plaintiff to defendants 1 to 3 was sufficient to determine the tenancy.

4. To decide the first question the terms of Ext. A1 the lease deed are relevant. Ext. A1 specifies a term of three years and then it went on to say:

5. It was argued for the respondents on the strength of this clause that the tenancy created under Ext. A1 was for a period certain and that when that period expired by efflux of time, if the tenant containued in possession of the property and the landlord accepted rent or otherwise assented to his continuing in possession, the tenant was holding over and that the lease thereafter must be presumed to be one from year to year on the ground that an yearly rent was stipulated for in the lease deed. It was also submitted that the conduct of the parties would show that a tenancy from year to year was created after the expiry of the period by the landlord accepting the rent on an yearly basis. On the other hand, it was argued for the appellant that the tenancy evidenced by Ext. A1 was a tenancy at will and although it was certain for a period of 3 years, thereafter the tenancy was one at will and therefore the notice given by the appellant although not expiring with the end of the year or of the month of the tenancy, was a proper notice and that determined the tenancy.

6. It is clear that neither the landlord not the tenant could have terminated the tenancy within the 3 years specified in Ext. A1. To that extent there can be no dispute that the tenancy created under Ext. A1 was a tenancy for a period certain. Thereafter, if the tenant continued in possession, we think that he was holding the property as a tenant at will. The clause in Ext. A1 that the tenant was to surrender possession of the property on demand by the landlord would indicate that the tenant if he continued in possession after the period fixed in Ext. A1 would be a tenant at will who could be evicted at any time at the will of the landlord. Therefore, it is not correct to say that the tenancy created by Ext. A1 is a tenancy for a period certain. As we understand it, the tenancy was one for a period certain and thereafter a tenancy at will.

7. It was submitted for the respondents that there could be no tenancy at will if the tenancy that was created could be determined only at the will of the landlord and not at the will of the tenant. We agree that it is so. Here, we think that the tenant had also the right to determine the tenancy at any time after the three years as a right to do so would be implied by law so long as there was no contract to the contrary binding on the tenant. A tenacy at will has been defined in Halsbury's Laws of England, 3rd Ed. Vol. 23 page 505 as follows:

“A tenancy at will is a tenancy under which the tenant is in possession, and which is determinable at the will of either landlord or tenant; and although upon its creation it is expressed to be at the will of the landlord only or at the will of the tenant only, yet the law implies that it shall be at the will of the other party also; for every lease at will must in law be at the will of both parties. As in other tenancies, a tenancy at will arises by contract binding both landlord and tenant, and the contract may be express or implied.”

8. In this case, the tenant was bound to surrender on demand by the landlord and although no right to determine the tenancy was expressly reserved to the tenant, the law will imply a corresponding right in him to determine the tenancy at his will after the period specified in the document. But it was argued for the respondents that the stipulation to pay the rent on an yearly basis in Ext. A1 copuled with the fact that the rent was paid till August 1942 on that basis would indicate that the tenancy was from year to year. Reliance was placed on the following observation by B.K Mukherjea, J. in Ram Kumar Das v. Jagadish Chandra Deo Dhabal Deb (A.I.R 1952 S.C 23):

“The stipulation as to payment of annual rent would no doubt raise a presumption that the tenancy was from year to year and that Section 106 lays down a rule of construction which has to be applied when there is no period agreed upon between the parties. In such cases the duration has to be determined by reference to the object of the purpose for which the tenancy is created. The rule of construction embodied in the section applies not only to leases of uncertain duration, but also to leases implied by law which may be inferred from possession and acceptance of rent or other circumstances”.

9. Therefore, the question is whether there was a contract to the contrary as envisaged in Section 106 of the Transfer of Property Act. It is not disputed that the contract to the contrary as contemplated by Section 106 of the Transfer of Property Act need not be an express contract; it may be an implied one. The Only qualification is that it must be a valid stipulation. If there is a contract to the contrary, then the presumption that the tenancy arising from the payment of annual rent was from year to year is rebutted. The question to be decided is whether the clause in Ext. A1 giving liberty to the landlord to demand surrender of possession at any time he chooses with a corresponding right to the tenant to choose is a contract to the contrary within the meaning of Section 106. We are inclined to think that it is. The fact that rent was paid on an yearly basis or that there was a stipulation to pay the rent on an yearly basis in Ext. A1 would not make the tenancy any the less a tenancy at will. Reliance was placed for the respondents in this connection on the decision in Bevi Umma v. Shamu Menon (A.I.R 1917 Mad. 141). In that case, there was a lease for an year and by consent of the landlord the tenant contained in possession after the year. It was held that the law would imply a tacit renovation of the contract and that parties must be supposed to have renewed the old agreement which was to hold for an year. It was further held that where there was a lease for one year certain which provided for payment of rent annually and for its termination on demand without specifying any particular date for making such demand, the tenant was holding over as a tenant from year to year, and that the tenancy must be determined by a six month's notice to quit. The terms of the document construed in that case are not clear from the judgment. The learned Judges relied on certain English cases for coming to the conclusion that even if at the expiry, of the first year the defendant was a tenant at will, he was holding as tenant from year to year. One of the cases referred to in the judgment is Pope v. Garland (10 L.J Exch. 13). It was not decided in that case that a tenant at will paying rent on an yearly basis is a tenant from year to year. It would appear from the report that during the course of the argument, Alderson B. made an observation that a tenant at will paying rent on an yearly basis may be a tenant from year to year. We are unable to discover in the judgment of Alderson B. any decision or even a reference to this point. In this case it is clear that after the expiry of the period of 3 years the tenant was not holding over, as the tenancy created by Ext. A1 was not determined by the landlord by making a demand for surrender.

10. Section 116 of the Transfer of Property Act would imply that it is only if a tenant remains in possession after the expiry of the tenancy that the tenant can be said to hold over. In such a case if the landlord accepts the rent or otherwise assents to the tenant continuing in possession a case of tenancy by holding over will arise. But according to Ext. A1, the tenancy could be determined after the expiry of the period of 3 years only by a demand by the landlord. So long as there is no case that demand was made, the tenant must be deemed to be in possession under the terms of the tenancy created by Ext. A1. As that tenancy has not been determined, the tenant was not really holding over but was in possession by virtue of the tenancy at will created by that document.

11. A case, more or less similar to the present one is reported in Raman Lal v. Bhagwan Das (A.I.R 1950 All. 583). The terms of the rent deed which fell for consideration there were as follows:

“I have taken the shop on rent of Rs. 15/- per month for the period of eleven months. I shall pay the rent month by month; if I fail, the landlord would have the right to eject me at once from the shop. After the expiry of eleven months, the landlord can at his will whenever he likes give me a month's notice to vacate and I will vacate without any objection, or I can myself vacate at my will whenever I like after giving a month's notice to the landlord.”

12. The period of the lease expired on 23-9-1943 and the lessee continued in possession paying rent on a monthly basis which was accepted by the lessor. One of the questions considered was whether the tenancy that created was a tenancy from month to month or only a tenancy at will. It was held after a consideration of the relevant authorities including the case in A.I.R 1917 Madras 141 that the tenancy was one at will. In answer to the argument that the tenancy was from month to month, on account of the fact that the payment of rent was on a monthly basis, the court made the following observation:

“In the present case, it is expressly stated in the rent note that the appellant could give, at his will a month's notice at any time when he wanted the shop to be vacated; the words “at his will” or “at any time when he wanted the shop to be vacated” are important; the notice to be given by the landlord was not required to expire on the last day of a month but could expire on any day. And if it could expire on any day, it follows that the tenancy was, not a month to month tenancy. When there was a special contract about the termination of the lease a month to month tenancy could not be implied under law.”

13. The further observation in the judgment which also is pertinent for the decision of this case is as follows:

“Lalio Mal's tenancy was for an indefinite term subject to a minimum of eleven months. A year to year tenancy also is a tenancy for an indefinite term but so also is a tenancy at will. Any tenancy that is not in perpetuity or for a fixed term is a tenancy for an indefinite term.”

14. The decision in Deo D. Dizie v. Davies reported in 155 English Reports 868 would show that there can be a tenancy at will even where the rent is payable on an yearly basis. Parke B. in the course of the argument referred to Co. Litt. 556 and observed that the reservation of yearly rent was not inconsistent with a tenancy at will. In the judgment of Pollock, C.B it is stated:

“The mortgagor, therefore, under this clause holds at the will of the mortgagee, but is not thereby rendered tenant at will to him; for, in order to constitute that relation, the tenancy must be determinable at the will of either party. The uncertain nature of the 2 mortgagor's interest here would rather show that he was tenant for life, if anything; but as there was no livery of seisin, that cannot be; and that clause certainly does not create any certain or definite term in the mortgagor.”

15. And then he concluded:

“Now this does not introduce any inconsistency as there can be no doubt that a tenancy at will may be coupled with an yearly rent. It follows, therefore, that the interest of the defendant in this case was neither an estate for life nor an estate for years, but a tenancy at will.”

16. In the case of Deo v. Cox (116 English Reports page 421) the provision the lease deed was:

“A agrees ‘to become tenant’ to C and D of the premises, etc., ‘at their will and pleasure, at and after the rate of 251.4s per annum, payable quarterly.’ A reamined in possession under this agreement for two years, and paid a year's rent; after which the lessors distrained for four quarter's rent. Held that A was tenant at will, and not from year to year.”

17. Coleridge, J. said:

“Mr. Lush says the rule has been to presume in favour of a yearly tenancy. But it is also a rule that documents shall be construed according to the apparent intention; which, in the present instance, clearly is to create a tenancy at will. Rent at the rate of 251.4s per annum, is to be paid quarterly; but that is, if the will continues undermined; otherwise the reservation by quarters will not take effect.”

18. Wightman, J. said:

“The meaning of the reservation is, that the tenant shall pay at such and such a rate during the time for which he may occupy.”

19. Erle, J. said:

“The intention is, that the tenant shall hold at the will of the lessors, and at will only.”

20. In Halsbury's Laws of England, 3rd Edn., Vol XXIII, page 505 it is stated:

“A tenancy expressed to be at will lakes effect according to its tenor notwithstanding that a rent at an annual rate is reserved.”

21. Therefore, we are unable to agree with the contention of the respondent that the tenancy was from year to year merely because an yearly rent was reserved in Ext. A1 or that the rent was paid on an yearly basis after the period specified therein. We are not referring to some of the rulings cited by the counsel for the respondent as they are not helpful for the decision of the case, but one ruling cited, by him as it comes close to the facts of the present case deserves notice. That is the case reported in XI T.L.T 279. There, the lease was for a period of 10 years and it provided for surrender of the property after 10 years, whenever demanded by the landlord. It was held that the relationship created by the document after expiry of the period of ten years was a tenancy from year to year. We are unable to agree with the reasoning in that case. The learned Judges there held that the principle of Section 116 of the Transfer of Property Act was applicable as the tenant continued in possession after the period specified viz. 10 years and therefore it was a case of holding over. We think that even after the expiry of 10 years, the tenancy was not determined and therefore the principle underlying Section 116 was not applicable to the facts of that case. We are therefore unable to follow that case. In view of the finding by the court below that the suit was not maintainable as no proper notice to quit was given, it did not consider the other issues arising for consideration in the appeal before it. Mr. Lakshmana Iyer appearing for the respondent submitted that in any view of the matter his clients were entitled to remain in possession of the property as the lease was for a commercial purpose and that under Section 78 of Act IV of 1961 they could not be evicted from the property. His argument was that although, by Section 2 of Act VII of 1963 the operation of Act IV of 1961 is stayed, by virtue of Section 4 of Act VII of 1963 which states that nothing in that Act will apply to lands leased for commercial purposes his clients can invoke the provision of Section 78 of Act IV of 1961. The respondent has produced in this Court certain documents to show that the plaint property is Inam land and urged that so far as Inam lands are concerned, Act IV of 1961 is constitutionally valid. We think that these questions can more appropriately be gone into by the court below. Those Acts came into force subsequent to the filing of this appeal. For a decision of the applicability or otherwise of the Act, it is necessary to decide the question of fact whether the plaint property is Inam land. We think that these questions should be decided by the court below. We therefore dismiss the C.M.P No. 7894 of 1962 praying for admission of fresh documents in evidence in this appeal and direct the court below to go into those questions after receiving the evidence. As we are reversing the judgment of the court below the other questions raised in the appeal before it also have to be decided by the court below.

22. In the result, we set aside the decree and judgment of the lower appellate court and remand the case to the court below for consideration of the other issues in the case as also the points mentioned above. The appellant will be entitled to a refund of half the court fees paid on the memorandum of appeal. The rest of the costs of this appeal as well as the costs incurred in the lower appellate court will be provided for in the decree to be passed by the lower appellate court.