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Sudhir Kumar Majumdar v. Dhirendra Nath Biswas
Structured Summary of the Opinion (Bachawat, J.)
Factual and Procedural Background
This Second Appeal arises from a suit seeking recovery of khas possession, mesne profits, demolition of structures erected on the suit property, and an injunction. The plaintiffs alleged that defendant No. 1 had no existing interest in the land, that on 5 August 1948 defendant No. 1 wrongfully trespassed on the land and thereafter constructed some temporary structures. Defendant No. 1 pleaded that he had taken settlement of the suit land from the plaintiffs in Magh 1354 B.S. at an annual rent of Rs. 5/-, and that he had, with the plaintiffs' knowledge and consent, constructed pucca structures with brick walls and tiled roof. Defendant No. 1 asserted that the plaintiffs had no right to eject him and, alternatively, claimed Rs. 2,500/- as compensation for the value of the structures if ejectment were decreed.
Both courts below had concurrently found that in Magh 1354 B.S the plaintiffs granted an oral lease at yearly rent of Rs. 5/- and allowed defendant No. 1 to raise permanent structures; on that finding both courts dismissed the plaintiffs' suit. The trial court characterized the oral lease as invalid as a bemeadi lease but held it was a valid lease for one year and dismissed the suit on limitation/temporal grounds. The lower appellate court held that, because the plaintiffs had let the land and permitted erection of pucca structures, they were not entitled to sue for ejectment. The present court (Bachawat, J.) reviews those conclusions and delivers the second appeal judgment.
Legal Issues Presented
- Whether an oral lease reserving a yearly rent (i.e., a lease from year to year) is valid in the absence of a registered instrument under section 107 of the Transfer of Property Act.
- Whether, in the absence of payment and acceptance of rent, a tenancy from month to month can be implied from possession under an oral lease.
- Whether section 53A of the Transfer of Property Act applies where there is no contract to grant the lease in writing.
- Whether an oral agreement to grant a lease is a defence to a suit for ejectment, or whether the defendant must seek specific performance (and whether equitable estoppel can be invoked where permanent structures were built in reliance on an invalid oral lease).
- Whether permissive occupation under an invalid lease gives rise to a tenancy-at-will and, if so, what are the consequences for termination and the necessity of a demand for possession (or notice to quit) before instituting ejectment proceedings.
- Whether the plaintiffs' failure to plead or prove a demand for possession precludes their suit for ejectment.
Arguments of the Parties
Plaintiffs' Allegations
- The plaintiffs asserted that defendant No. 1 had no existing interest in the land.
- They alleged that defendant No. 1 wrongfully trespassed on 5 August 1948 and built temporary structures thereafter.
- The plaint alleged (but did not plead evidence of) that defendant No. 1 was requested to pull down the existing structures; this allegation was disputed by the defendant and not proved.
Defendant No. 1's Assertions
- Defendant No. 1 claimed that the plaintiffs granted him an oral lease in Magh 1354 B.S. at annual rent of Rs. 5/-.
- He asserted that the plaintiffs allowed him to erect pucca/permanent structures with their knowledge and without objection.
- He claimed that the plaintiffs had no right to eject him; alternatively, he sought Rs. 2,500/- as compensation for the value of the structures if ejected.
- It is recorded that defendant No. 1 did not allege payment and acceptance of rent in his written statement, and no rent receipts or evidence of payment/acceptance of rent were produced.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ram Kumar v. Jagadish Chandra (A.I.R. 1952 Supreme Court) | That the Court cannot make a new bargain between parties; an oral agreement reserving yearly rent (a lease from year to year) must comply with section 107 and cannot be treated as a valid one-year lease by judicial reconstruction. | The court relied on this principle to reject the trial court's construction that the invalid oral bemeadi lease could be treated as a valid one-year lease. |
| Ariff v. Jadunath Majumdar (L.R. 58 I.A. 91) | A court may, in a proper case, specifically enforce an oral agreement to grant a lease by specific performance (subject to limitation), and pending such suit may stay an action for ejectment; also, estoppel requires factual statements on which estoppel can be grounded. | The court used this authority to explain that an oral agreement alone is no defence to ejectment (absent a suit for specific performance) and to hold that mere reliance on an invalid lease does not establish equitable estoppel in the present case. |
| Forbes v. Ralli (L.R. 52 I.A. 178) | Referenced in the Ariff decision and discussion distinguishing cases on estoppel and verbal contracts. | The decision was cited as part of the body of authorities explaining limits of estoppel and enforcement of verbal contracts; the court relied on the distinction made in Ariff to deny estoppel here. |
| Ramsden v. Dyson (1866) 1 H.L. 129 | Referenced in the Ariff decision and considered in the context of whether estoppel or other equitable doctrines apply where acts are done under verbal contracts. | Ramsden was cited (via Ariff) to support the conclusion that no estoppel arose from the defendant's acts done under an unenforceable verbal contract in this record. |
| (6) A.I.R. 1940 Cal. 89 | Authority for the proposition that a tenancy at will is not a lease. | The court cited this case to support the statement that a tenancy at will is not a lease and does not create an interest protected as a lease under the Transfer of Property Act. |
| Deo Nandan Pershad v. Meghu Mahton (11 C.W.N 225) | When possession is by consent of the owner it is not ordinarily wrongful until at least after a demand for possession; the owner’s right to dispossess arises only after notice to quit or demand for possession where there is privity of relation. | The court applied this authority to hold that where occupation was permissive, ejectment proceedings are premature in the absence of proof of prior demand/notice; this supported dismissal of the suit for ejectment. |
| C.J. Phillips v. Nund Coomar Banerjee (8 Sutherland Weekly Reporter 385 (1867)) | Permissive possession should be terminated by a notice to quit (demand for possession); absent such notice the permissive occupant may have a complete defence to a wrongful entry/ejectment action. | The court used this authority to reinforce that a demand for possession (notice to quit) was necessary before bringing an action for ejectment against a permissive occupant. |
| Radha Kishore Roy v. Sittoo Sirdar (24 Sutherland Weekly Reporter 172 (1875)) | A tenant-at-will is entitled to remain until his tenancy is terminated by a notice to quit; an owner cannot eject without proving that a prior notice was given. | The court relied on this case to hold that a “notice to quit” must be understood as a demand for possession and that such a demand was absent in the present record. |
| Canadian Pacific Railway Company v. King (1931 A.C. 414) | Even a bare licensee is entitled to reasonable notice of revocation of the license before institution of proceedings to evict. | The court cited this case to support the principle that a permissive occupant (or licensee) must ordinarily be given reasonable notice/demand before ejectment is pursued. |
| Minister of Health v. Bellotti (1944 1 K.B. 298) | The licensor is bound to give a reasonable time when revoking a license; if he takes proceedings before reasonable time has elapsed he may lose his action. | The court applied this principle analogically to underscore that the plaintiffs failed to prove any demand/notice and thus prematurely instituted ejectment proceedings. |
| (7) A.I.R. 1925 Cal. 1225; (8) A.I.R. 1916 All. 219 | Authorities cited for the proposition that permissive occupation gives rise to an agreement to pay reasonable compensation for use and occupation (not rent), and that tenancy at will is a license not amounting to an interest in property. | The court invoked these authorities when explaining the legal nature of tenancy at will, including that it does not create a tenant's interest protected under tenancy statutes and does not make the occupant liable as a tenant for rent. |
Court's Reasoning and Analysis
The court proceeded step-by-step, grounding each step in the facts found and in legal principles cited in the record:
- Factfinding: Both lower courts had found (and this finding was accepted) that in Magh 1354 B.S the plaintiffs granted an oral lease at yearly rent of Rs. 5/- and permitted defendant No. 1 to erect permanent structures. The present court agreed that this factual finding is supported by the evidence and is not challenged.
- Legal effect of an oral lease reserving yearly rent: The court observed that a lease purporting to reserve yearly rent must, by section 107 of the Transfer of Property Act, be made by registered instrument. Therefore the oral lease reserving yearly rent is invalid for that form requirement.
- Rejection of judicial re-characterization: The court rejected the trial court's view that, despite invalidity as a bemeadi lease, the court could treat the agreement as a valid lease for one year. Relying on Ram Kumar v. Jagadish Chandra, the court held that it cannot create a new bargain between the parties to save the oral agreement by construing it as a one-year lease.
- Implied month-to-month tenancy: The court explained that leases other than those from year to year or for a term exceeding one year, or reserving yearly rent, may be made by oral agreement accompanied by delivery of possession. Further, payment and acceptance of rent would imply an oral agreement for a lease, and in that situation possession under a void lease accompanied by payment and acceptance of rent is presumed to be a lease from month to month.
- Lack of evidence of payment/acceptance of rent: The court found defendant No. 1 did not allege payment and acceptance of rent in his written statement; plaintiffs denied payment; no rent receipts were produced; none of the courts below found rent was paid or accepted. Consequently, payment and acceptance of rent was not established and no circumstances were proved from which a month-to-month tenancy could be implied.
- Inapplicability of section 53A: There was no contract in writing to grant the lease; accordingly, section 53A of the Transfer of Property Act had no application on the facts.
- Oral agreement not an absolute defence; specific performance and estoppel: The court reiterated that an oral agreement to grant a lease is not itself a defence to ejectment. Defendant No. 1 had not brought a suit for specific performance. The court noted authorities (Ariff and related cases) showing that specific performance might be available in proper cases, but the present defendant had not pursued that remedy. The court further held that the doctrine of equitable estoppel did not apply: the building of permanent structures flowed from the invalid oral agreement, and mere reliance on the invalid lease was insufficient to establish estoppel.
- Characterization of the occupant's status: The court concluded that defendant No. 1 was in possession under an invalid lease; in the absence of proof of payment of rent, his occupation was properly characterised as permissive occupation giving rise to a tenancy at will.
- Legal consequences of tenancy at will: The court explained that a tenancy at will is not a lease (citing authorities), does not create an interest in property, and therefore does not attract protections under the West Bengal Non-Agricultural Tenancy Act (the tenant-at-will is not within section 2(5) of that Act).
- Termination and necessity of demand: The court analysed authorities on the requirement of a demand for possession (or notice to quit) before terminating permissive occupation or tenancy at will. It held that service of a formal notice to quit is not necessary in all cases, but some demand for possession — express or implied — is necessary to terminate tenancy at will.
- Absence of demand in this record: Crucially, the court found that a demand for possession was not pleaded in the plaint and there was no evidence that, before institution of the suit, the plaintiffs had demanded possession. The alleged request to pull down structures was denied by the defendant and not proved. On this basis, the court held that the permissive occupation had not been terminated prior to suit.
- Conclusion as to ejectment suit: Because permissive occupation continued at the institution of the suit (no demand for possession proved), the plaintiffs were not entitled to eject defendant No. 1 and the suit for ejectment had to be dismissed.
- Scope of decision: The court expressly stated that the judgments of the courts below must be affirmed, but on the ground identified by this court (failure to terminate permissive occupation by demand prior to suit) and not on the grounds relied upon by the lower courts. The court also noted that in view of its finding it was unnecessary to decide whether an agreement to compensate defendant for the value of structures should be implied.
Holding and Implications
Holding: The appeal is dismissed with costs.
Additional orders: Leave to appeal under Clause 15 of the Letters Patent was prayed for and is refused.
Implications
- Direct effect on the parties: The plaintiffs' suit for ejectment is dismissed because the permissive occupation by defendant No. 1 had not been terminated by a demand for possession prior to instituting the suit; defendant No. 1 remains in possession (subject to legal consequences not further decided by this judgment).
- Statutory and doctrinal consequences: The court reaffirmed that an oral lease reserving yearly rent is invalid under section 107 of the Transfer of Property Act, that payment and acceptance of rent are necessary to imply a month-to-month tenancy from possession under a void lease, and that permissive occupation gives rise to a tenancy at will which requires a demand/notice before ejectment can be pursued.
- Broader precedent: The court did not purport to establish a new legal principle beyond application of existing authorities and statutory provisions; the judgment affirms the lower courts' result but on a different legal ground and does not indicate that any new precedent has been laid down beyond the reasoned application of cited authorities.
Judgment delivered by Bachawat, J.; final order: appeal dismissed with costs; leave to appeal under Letters Patent refused.
Bachawat, J.:— The Second Appeal arises out of a suit for recovery of khas possession, mesne profits, demolition of the structures built upon the suit property and an injunction. The plaintiffs allege that the defendant No. 1 has no existing interest in the land and that on the 5th of August, 1948 the defendant No. 1 wrongfully trespassed upon the land and thereafter has constructed some temporary structures thereon. The defendant No. 1 alleges that he has taken settlement of the suit land from the plaintiffs in Magh 1354 B.S at an annual rent of Rs. 5/- and has thereafter constructed pucca structures with brick walls and tiled roof thereon with the knowledge and consent of and without any objection from the plaintiffs. The defendant No. 1 claims that the plain-tins have no right to eject him and that in the alternative and in case the plaintiffs are found to be entitled to a decree for ejectment, the defendant No. 1 should be given a decree for the sum of Rs. 2,500/- by way of compensation for the value of the structures.
1. Both courts have concurrently found that in Magh 1354 B.S the plaintiffs granted an oral lease of the property to the defendant No. 1 at a yearly rent of Rs. 5/- and that the plaintiffs allowed the defendant No. 1 to raise permanent structures on the land. On this finding both courts have dismissed the plaintiff's suit. This finding is amply supported by the evidence on the record and is not now challenged. I agree with the finding.
2. With regard to the validity of the lease the trial court held that the lease, ever though invalid as a bemeadi lease, was a valid lease for one year and that the suit being brought within one year from Magh 1354 B.S when the lease was granted, the suit was liable to be dismissed. On the other hand, the lower appellate court held that the plaintiffs having let the land to defendant No. 1 and allowed him to erect pucca structures on the land are not entitled to sue him in ejectment. I am unable to agree either with the trial court or with the lower appellate court on this point. There is no dispute that the plaintiffs are the owners of the land.
3. The oral lease purports to reserve a yearly rent. By section 107 of the Transfer of Property Act such a lease must be made by a registered instrument.
4. The oral lease having reserved a, yearly rent the parties intended that the lease would be from year to year. That intention not being expressed in the proper legal form cannot be given effect to the Court cannot make a new bargain between the parties and hold that there is a good and valid lease for at least one year, see Ram Kumar v. Jagadish Chandra (1) A.I.R 1952 Supreme Court, 23 at 27.
5. Leases other than a lease from year to year or for a term exceeding one year or reserving yearly rent may be made by oral agreement accompanied by delivery of possession.
6. Oral agreement for a lease is to be implied from payment and acceptance of rent. A lease is, therefore, made by possession under a void lease accompanied by payment and acceptance of rent, and such a lease is presumed to be a lease from month to month.
7. The defendant No. 1 did not allege payment and acceptance of rent in the written statement. The plaintiffs in their evidence deny payment of rent. The defendant No. 1 does not produce any rent receipt. None of the courts below have found that rent was paid or accepted. Payment and acceptance of rent by defendant No. 1 is not established in this case. No other circumstances have been proved from which a lease from month to month is to be implied.
8. There is no contract to grant the lease in writing. Clearly, section 53A of the Transfer of Property Act has no application.
9. An oral agreement to grant a lease by itself is no defence to a suit for ejectment. The defendant No. 1 has not brought any suit for specific performance of the oral agreement to grant a lease. Had such a suit been brought in a proper case, the court might specifically enforce the agreement provided the remedy was not barred by the law of limitation and pending the hearing of the suit stay an action for ejectment; see Ariff v. Jadunath Majumdar, (2) (L.R 58 I.A 91).
10. There is clearly no scope for application of any doctrine of equitable estoppel. The building of the permanent structure is clearly referable only to the oral agreement to grant the lease. Unfortunately for the defendant No. 1 the oral lease is invalid. The defendant No. 1 does not establish a case of estoppel merely by proving that he has built permanent structures relying upon an invalid lease. In Ariff v. Jadunath Majumdar (2) (L.R 58 I.A 91) Lord Russell explaining and distinguishing Forbes v. Ralli (3) (L.R 52 I.A 178) and Ramsden v. Dyson (4) (1866) 1 H.L 129 observed: “Their Lordships have already indicated their opinion that no act was done by the respondent otherwise than under the verbal contract which was then enforceable at this suit. No circumstances exist from which any other contract by the appellant can be implied; and as to estoppel there is no trace of any statement by him upon which any estoppel can be grounded.”
11. The true position, therefore, is that the defendant No. 1 is in posses sion of the suit land under an invalid lease and such possession has not been followed by payment and acceptance of rent.
12. A tenancy at will is to be implied from permissive occupation under a void lease; see Sir Dinshaw Mulla's Transfer of Property Act, Third Edition, page 631; (5) 42 C.L.J 71.
13. Such a tenancy at will is not a lease; see (6) A.I.R 1940 Cal. 89, By section 105 of the Transfer of Property Act a lease of immovable property is a transfer of a right to enjoy such property for a consideration either of premium or rent. In this case there is no consideration in the shape of either rent or premium. The tenant-at-will is not liable to pay rent. An agreement for payment of reasonable compensation for use and occupation is implied from the permissive occupation. Such compensation is not rent. The tenancy at will is a license to occupy the property not amounting to an interest in property; see (7) A.I.R 1925 Cal. 1225, (8) A.I.R 1916 All. 219.
14. The tenant-as-will is not a person who “is or but for a special contract would be liable to pay rent to” the landlord and is, therefore, not a tenant within the meaning of section 2(5) of the West Bengal Non-Agricultural Tenancy Act. The tenant-at-will is, therefore, not protected by the West Bengal Non-Agricultural Tenancy Act.
15. Service of a formal notice to quit is not necessary for the termination of the tenancy at will. The tenancy at will is terminable at the will of either the landlord or the tenant. The tenancy may be terminated by a demand for possession. Such demand may be express or may be implied from any act inconsistent with the continuance of the tenancy at will; see Foa on Landlord and tenant, Seventh Edition, 576
16. A demand for possession or anything which amounts to a demand for possession is not only sufficient but also is necessary for the termination of the tenancy at will.
17. In Deo Nandan Pershad v. Meghu Mahton (9) 11 C.W.N 225 Sir Asutosh Mookerjee observed: “When possession of land has been acquired by the consent of the owner, such possession cannot ordinarily be deemed wrongful until at least after a demand for possession has been made. *** If, therefore, the entry was not wrongful in its inception or has not become so subsequently if there is privity between the parties with respect to the premises sought to be recovered, the right of the owner to institute proceedings to dispossess the occupant arises only after a notice to quit has been given or a demand for possession has been made. *** If, on the other hand, the status of the defendants is that of a mere tenant-at-will, a demand for possession would be sufficient.”
18. In Mr. C.J Phillips v. Nund Coomar Banerjee (10) (1867) 8 Sutherland Weekly Reporter 385 at 386 Mr. Justice D.N Mitter observed: “It has been found, on the other hand, that this possession was of a permissive character. Under such circumstances, the special respondent's mode of action should have been to serve the special appellant with a notice to quit the land, and thereby put an end to the permission relied upon by the latter. The special appellant was sued as a mere wrong-doer, but the facts above referred to are sufficient to constitute a complete defence to such an action.”
19. In Radha Kishore Roy v. Sittoo Sirdar (11) (1875) 24 Sutherland Weekly Reporter 172 Mr. Justice McDonell ruled: “In the present case he is treated as a tenant-at-will, and is consequently entitled to remain on the lands until his tenancy is put a stop to by a notice to quit. *** In the present case they have no right to eject without proving that a prior notice has been given”. In the last two cases the expression “notice to quit” must be understood as a demand for possession and not as a formal notice to quit.
20. Even a bare licensee is entitled to a reasonable notice of revocation of the license before the institution of the proceedings; see Canadian Pacific Railway Company v. King, (12) 1931 Appeal cases 414. In Minister of Health v. Bellotti (13) 1944 1 K.B 298 Goddard L.J observed: “The licensor is bound to give a reasonable time, and if he does not and takes proceedings before the reasonable time has elapsed, he loses his action.”
21. In the present case demand for possession is not pleaded in the plaint. There is not an iota of evidence on the record that before the institution of the suit the plaintiffs demanded possession from the defendant.
22. The allegation in the plaint that the defendant No. 1 was requested to pull down the existing structures is denied in the written statement. Even this alleged request is not proved. There is no evidence on the record to show that there was any demand for possession either express or implied before the institution of the suit.
23. The suit for ejectment must, therefore, be dismissed on the ground that the permissive occupation of the land by the defendant No. 1 has not terminated before the institution of the suit.
24. The judgments of the courts below must be affirmed on the above ground and not on the ground upon which the lower courts rested their decisions.
25. In view of the above finding it is not necessary to decide whether or not an agreement by the plaintiffs to compensate the defendant No. 1 for the value of the structures is to be implied in the circumstances of this case.
26. I pass the following order:—
The appeal is dismissed with costs.
27. Leave to appeal under Clause 15 of the Letters Patent is prayed for and is refused.
S.K.B
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