1

® IN THE HIGH COURT OF KARNATAKA AT BENGALURU

DATED THIS THE 16TH

DAY OF FEBRUARY 2015

BEFORE:

THE HONOURABLE MR. JUSTICE ANAND BYRAREDDY

REGULAR FIRST APPEAL No.198 OF 2015

BETWEEN:

M/s. Auto World,

No.12, now No.62,

Situated at J.C.Road,

Bangalore – 560002,

Represented herein by its

Partner, Mr. Imran Sayeed,

Son of Late Mr. M.S.Sait,

Aged about 37 years,

At No.12, J.C.Road,

Bangalore – 560 002.

… APPELLANT

(By Shri. Arun Kumar .K, Advocate for M/s. Crest Law Partners)

AND:

Smt. K.V.Sathyavathi,

Wife of Late T.L.Ramaiah,

Major, residing at No.13,

Venkatswamappa Lane,

Lalbagh, Upperahalli,

Bangalore – 560 004.

2

Represented herein by her

G.P.A. Sri. T.R.Ranganatha,

Son of Late T.L.Ramaiah,

Aged about 50 years,

Residing at No.13,

Venkatswamappa Lane,

Lalbagh, Upperahalli,

Bangalore – 560 004.

…RESPONDENT

(By Shri. K.V. Narasimhan, Advocate for Caveator/Respondent)

*****

This Regular First Appeal filed under Section Order 41

Rule 1 read with Section 96 of the Code of Civil Procedure, 1908,

against the judgment and decree dated 6.11.2014 passed in

O.S.No.4950/2009 on the file of XII Additional City Civil and

Sessions Judge, Bangalore, partly decreeing the suit for ejectment

and recovery of arrears of rent.

This Regular First Appeal having been heard and reserved

on 10.02.2015 and coming on for pronouncement of Judgment

this day, the Court delivered the following:-

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J U D G M E N T

This is a defendant’s appeal. A significant point of law

arises in this appeal and hence by consent of parties, the appeal is

heard on merits even at the stage of admission and is disposed of

by this judgment.

2. The parties are referred to by their rank before the trial

court for the sake of convenience.

3. The suit was for ejectment of the defendant, from the

property under its occupation. The defendant is a registered

partnership firm. It was said to have been inducted into the

premises, more than three decades ago, by the plaintiff’s husband.

The defendant carries on its business of sale of automobile spares

and accessories from the premises.

It is not in dispute that the parties did choose to reduce the

terms of the lease into writing in the year 2004, dated 21.5.2004.

The term was shown as being for a period of four and a half years.

It was renewable at the option of the parties.

4

The plaintiff is said to have issued a notice of termination of

tenancy dated 21.8.2008, on the expiry of the term of the lease.

The defendant claims that though the plaintiff had thereafter

agreed to renegotiate a renewed lease deed, the plaintiff had filed

a suit for ejectment. The same was said to have been decreed ex-

parte. The defendant is then said to have taken steps to have the

decree recalled and is said to have contested the suit.

Apart from the contentions in the written statement, a

crucial circumstance that was urged by the defendant – as to the

suit having been rendered infructuous, is the conduct of the

plaintiff in having received rents in respect of the premises

subsequent to the termination of the tenancy and during the

pendency of the suit. It is, in fact, not in dispute that the

defendant has paid the rents and the plaintiff has received the

same up to date, even as on the date of hearing of this appeal. The

defendant had contended that by virtue of such receipt of rents,

after termination of the tenancy and during the pendency of the

suit, the plaintiff had waived the notice to quit, issued prior to the

5

suit. And hence the suit for ejectment based on such notice was no

longer maintainable.

It is also pointed out that the trial court has negated the

above contention on the basis of a judgment of the apex court

which, however, did not refer to and consider – earlier judgments

by larger benches, wherein the view expressed was otherwise.

It is also contended that the notice of termination, issued by

the plaintiff dated 21.8.2008, stood waived by virtue of a second

notice of termination of the tenancy, dated 12.5.2009, thereby

treating the tenancy as subsisting between the period of the first

notice and the second.

The trial court having negated the above contentions of the

defendant and the suit having been decreed as prayed for, the

present appeal is filed.

4. Having heard the learned counsel for the parties and

having considered the authorities furnished in support of their

contentions, the point of law raised above is considered.

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5. It is seen that the trial court had framed the following

issues:

“1. Whether the notice of termination is valid?

2. Whether the plaintiff is entitled for damages? If so,

at what rate?

(Issue No.2 is modified vide order on I.A.8 dated

27.4.2013)

3. What decree or order?

Additional Issue:

“1. Whether the defendant proves that the plaintiff has

waived notice as pleads in para – 2.3 of written statement? “

The issue, which is relevant to the above defence, is the

Additional Issue. The trial court, in its wisdom, has thought it fit

to deal with Issue nos.1, 2 and the Additional Issue together. It is

also of some concern that the trial court having referred to the

judgments in Kai Khushroo Bezonjee Capadia v. Bai Jerbai

Hirjihboy Warden, (1949) Federal Court Reports 262, decided by

a majority of four judges, of the five judge bench, and Karnani

Industrial Bank Ltd. v. Province of Bengal, 1951 SCR 560, a three

judge bench decision, has proceeded to place reliance on a later

7

decision of the apex court in the case of Sarup Singh Gupta v.

S.Jagdish Singh, (2006)4 SCC 205, in dismissing the suit.

Further, the learned counsel for the respondent – plaintiff

has now drawn attention to a decision rendered by a learned single

judge of this court, wherein the ratio laid down in the aforesaid

judgments of the larger benches have been distinguished in taking

a view that receipt of rents subsequent to termination of the lease

and during the pendency of the suit would not result in a waiver of

the quit notice - issued prior to the suit. (See: Vasanthkumar D.

Shah v. Sugandha Raman, 2007(2) KLJ 1)

It is hence the endeavour in this appeal to re-examine the

legal position.

We may first take stock of the law as interpreted by the

Federal Court in Kai Khushroo Bezonjee Capadia’s case, supra. It

was an appeal from the High Court of Judicature at Bombay. The

facts of that case were as follows:

The appellant therein, who was the plaintiff before the trial

court, was admittedly the owner of a residential premises, known

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as ‘Capadia House’, Gowalia Tank Road, Bombay. The appellant

had executed a lease deed dated 12.8.1932 in favour of defendant

no.1, in respect of the entire premises, for a period of 5 years

commencing from 1.9.1932. The lessee is said to have exercised

the option of renewal and the lease is said to have been continued

up to 31.8.1942 and had come to an end by efflux of time.

During the period of lease, the defendant no.1 is said to

have created a sub-lease in favour of defendant no.2 in September

1932, in respect of the upper floor of the demised premises, at a

rental of Rs.210/- per month. And on 1.5.1940, defendant no.1 is

said to have created a sub-lease in respect of the ground floor to

defendant no.3, at a monthly rent of Rs.172/-.

The plaintiff had issued a notice demanding delivery of

vacant possession of the property by 31.8.1942, when the lease

period came to a close. Defendant no.1 is, in turn, said to have

passed on the notice to defendants nos.2 and 3, requesting the

latter to comply with the direction. A reminder is said to have

been issued to defendant no.1, wherein it was, inter alia, stated

9

that the premises were required by the government for war

purposes and that the military authorities would take possession of

the same on 1.9.1942.

Defendants 2 and 3 did not choose to vacate the portions

under their occupation. The defendant no.1, however, is said to

have vacated the portions under his occupation and informed the

plaintiff that the sub-tenants had refused to vacate the portions

under their occupation and that they were, either rightly or

wrongly, claiming protection under the Bombay Rent Act.

On 30.9.1942, the second defendant is said to have sent a

cheque for Rs.210/- to the plaintiff - stating it to be the rent for the

month of September in respect of the upper floor of the premises.

On 6.10.1942, the third defendant is also said to have sent a

cheque to the plaintiff for Rs.172/- as the rent for the ground floor.

Both the cheques are said to have been returned to the defendants

by the plaintiff and they were said to have been told that they were

trespassers pure and simple and had no right to pay rents or

demand recognition as tenants from the plaintiff.

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On 2.11.1942, the second defendant is again said to have

issued two cheques for Rs.210/-, each as rents for the month of

September and October, 1942. Defendant no.3 had also issued

two cheques for Rs.172/-, each – as rent for a similar period, on

9.11.1942. The plaintiff had received the said cheques and

without any protest, deposited the same into his bank account.

It transpires that the premises in question was subject to a

mortgage executed by the plaintiff in favour of one Sakina Bai and

another, as on 7.4.1941. In exercise of power reserved to them by

the mortgage deed, the mortgagees are said to have appointed a

Receiver of the rents and profits of the mortgaged property. On

3.12.1942, defendant no.2 sent a further cheque for Rs.210/- to the

plaintiff as rent for the month of November. The plaintiff

received the cheque and sent it to his banker on 5.1.1943. On the

same day, the plaintiff is said to have addressed two letters to the

two defendants, and in identical words, is said to have informed

them that he was receiving the cheques as part deposit towards his

claim for compensation for illegal use and occupation by them

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since 1.9.1942. And that the acceptance is without prejudice to

his rights under the Rent Act and the claim for ejectment.

From December 1942 to September 1943, the rents paid by

the defendants were accepted by the Receiver, appointed by the

mortgagees, who had issued receipts again reiterating that the

same were issued without prejudice to the right of the plaintiff.

The Receiver is said to have given up possession from September

1943. After which the defendants 2 and 3 continued to pay rents

to the plaintiff, every month and the plaintiff issued receipts on

similar lines as aforesaid. This state of affairs had continued till

the suit was instituted on 7.12.1945. It was alleged that the

defendants were trespassers and their interest, if any, had come to

an end as soon as the lease in favour of defendant no.1 expired.

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The defendants took up several pleas in defence. The main

controversy between the parties centered around two points :

a. Whether defendants 2 and 3 could claim immunity from

eviction by reason of their being “tenants” within the meaning of

the Bombay Rent Act; and

b. Whether the plaintiff having accepted rents from

defendants 2 and 3, who remained in occupation of the premises

after the determination of the lease by lapse of time, Section 116

of the Transfer of Property Act, 1882 (Hereinafter referred to as

the ‘TP Act’, for brevity) came into operation and created a

tenancy from month to month in favour of each one of the

defendants which could be terminated only by a proper notice to

quit.

The learned single judge of the Bombay High Court, who

heard the case decided both the points in favour of the plaintiff

and decreed the suit. The appeals by the respective defendants,

were consolidated and heard together by a Division Bench, which

13

allowed the appeals on the ground that the defendants 2 and 3

acquired the status of tenants by “holding over” under the

provisions of Section 116 of the TP Act and so long as these new

tenancies were not lawfully determined, the suit for ejectment was

bound to fail. The division bench did not enter upon the second

question, namely, whether the defendants enjoyed any protection

under the Rent Act.

The point for consideration before the Federal Court was

whether on the facts admitted and proved, a case of “holding

over” within the meaning of S.116 of the TP Act had been made

out by defendants 2 and 3 and whether they could claim the status

of tenants as contemplated by that Section.

The Federal Court held thus:

“……it may be convenient to examine the language

of Section 116 of the Transfer of Property Act. Section 116

runs as follows:

“If a lessee or under-lessee of property

remains in possession thereof after the

determination of the lease granted to the lessee,

and the lessor or his legal representative accepts

rent from the lessee or under-lessee, or otherwise

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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.”

On the determination of a lease, it is the duty of the

lessee to deliver up possession of the demised premises to

the lessor. If the lessee or a sub-lessee under him continues

in possession evenafter the determination of the lease, the

landlord undoubtedly has the right to eject him forthwith;

but if he does not, and there is neither assent nor dissent on

his part to the continuance of occupation of such person,

the latter becomes in the language of English law a tenant

on sufferance who has no lawful title to the land but holds

it merely through the laches of the landlord. If now the

landlord accepts rent from such person or otherwise

expresses assent to the continuance of his possession, a

new tenancy comes into existence as is contemplated by

Section 116, Transfer of Property Act, and unless there is

an agreement to the contrary, such tenancy would be

regarded as one from year to year or from month to month

in accordance with the provisions of Section 116 of the Act.

As Section 116, Transfer of Property Act, expressly

mentions an under-lessee, the defendants 2 and 3 would

obviously come within the purview of the section, and it is

not disputed that they did continue in possession after the

lease expired by lapse of time. If, therefore, it is

established on the facts of this case that the plaintiff

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assented to the continuance of possession of defendants 2

and 3 in respect to the demised premises by acceptance of

rent or otherwise, these defendants would certainly acquire

the status of tenants under Section 116, Transfer of

Property Act.

The learned Judges of the Bombay High Court who

heard the appeal are of opinion that the plaintiff in the

present case must be held to have accepted rents which

were paid by defendants 2 and 3 when he sent the cheques

remitted by the latter to his banking account on 23rd

November, 1942. It is held that these monies were paid as

rents by defendants 2 and 3 and they being received as

rents by the plaintiff, the requirements of Section 116 were

fully complied with; and it was immaterial that the plaintiff

had in his earlier correspondence refused to recognize

these persons as tenants or in the letter addressed to them

on 5th

of January, 1943, asserted that these monies were

received as part deposits towards his claim for

compensation for wrongful use and occupation of the

premises in question.

The propriety of this decision has been challenged

by Mr. Daphtary who appeared in support of the appeal

and his contention is that the appellate Judges of the High

Court misdirected themselves as to the elements necessary

to create a tenancy of “holding over” under Section 116,

Transfer of Property act, and that their approach to the

evidence has not been a proper one.

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It is argued that the tenancy contemplated by

Section 116, Transfer of Property Act, is a new tenancy

which is brought into being after the expiry of the old, if

and when the conditions laid down in the section are

fulfilled. The essential thing in a new tenancy is that the

parties must be ad idem as to its terms. If this agreement

or consensus is wanting, no tenancy can possibly come into

existence, and the position of the lessee, whose lease has

expired, must be considered to be that of a trespasser. It is

said by the learned counsel that this is exactly what has

happened in the present case. On the one hand, the

defendants 2 and 3 when they remitted rents to the plaintiff

did so, not for entering into a fresh agreement with the

plaintiff but only to discharge what they conceived to be

their existing legal obligation as statutory tenants under the

provision of the Bombay Rent Restriction Order. On the

other hand, the plaintiff did not accept the rents paid by

defendants as rents at all, but only as compensation for

wrongful use and occupation of the premises by the latter.

Thus the parties were not ad idem upon the basis of which

a new tenancy could be founded.

This argument, though plausible at first sight, does

not appear to me to be sound. It is perfectly right that the

tenancy which is created by the ‘holding over” of a lessee

or under-lessee is a new tenancy in law even though many

of the terms of the old lease might be continued in it, by

Implication; and it cannot be disputed that to bring a new

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tenancy into existence, there must be a bilateral act. What

Section 116, Transfer of Property Act, contemplates is that

on one side there should be an offer of taking a renewed or

fresh demise evidenced by the lessee’s or sub-lessee’s

continuing in occupation of the property after his interest

has ceased and on the other side there must be definite

assent to this continuance of possession by the landlord

expressed by acceptance of rent or otherwise. It can

scarcely be disputed that the assent of the landlord which is

founded on acceptance of rent must be acceptance of rent

as such and in clear recognition of the tenancy right

asserted by the person who pays it. But, while all this may

be conceded, I do not think that these principles are really

of any assistance to the appellant in the present case.

With regard to the first part of the argument of the

learned counsel for the appellant, it may be pointed out

that in cases of tenancies relating to dwelling house to

which the Rent Restriction Acts apply, the tenant may enjoy

a statutory immunity from eviction even after the lease has

expired. The landlord cannot eject him except on specified

grounds mentioned in the Acts themselves. In such

circumstances, acceptance of rent by the landlord from a

statutory tenant, whose lease has already expired, could

not be regarded as evidence of a new agreement of

tenancy, and it would not be open to such a tenant to urge,

by way of defence, in a suit for ejectment brought against

him, under the provisions of Rent Restriction Act that by

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acceptance of rent a fresh tenancy was created which had

to be determined by a fresh notice to quit. As authorities

for this proposition, reference may be made among others

to the decisions of the English Courts in Davies v. Bristow,

(1920)3 K.B.428 and Morrison V. Jacobs, (1945) 1

K.B.577.”

xxx

“From the evidence adduced in this case it is just

probable that when the plaintiff was refusing to accept

rents from defendants 2 and 3 and threatening to eject them

as trespassers, the latter were advised by their legal

advisers to claim protection under the Rent Restrictions

Act. This seems to be the idea entertained by defendant

No.1 when he wrote to the plaintiff on 3rd September,

1942. The claim, however, was never put forward

specifically by defendant no.3 and so far as defendant No.2

is concerned, the statements of her solicitor, as referred to

above, were nothing else but a lawyer’s protest against the

continued assertion of the plaintiff that the defendant No.2

was a trespasser out and out whose possession of the

premises was entirely unlawful. In my opinion, the mere

fact that additional protection was sought for under a

particular statute with or without just grounds could not by

itself stand in the way of anybody’s claiming a tenancy

right if such tenancy was established by proper evidence.

The real point for consideration is what was the offer

implicit in the payment of rents made by defendants 2 and

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3. In my opinion, what these defendants wanted was to

continue on the same terms as before with this difference

that instead of being sub-lessees under defendant No.1,

they would occupy the position of lessees directly under the

plaintiff. This is the specific case made by defendants 2

and 3 in their written statements and it is fully borne out by

the letters which they and their solicitors addressed to the

plaintiff when the cheques in payment of rent were sent to

him. The rents were paid as rents for the new tenancies

which these defendants wanted to have under the plaintiff.

But as the plaintiff had refused to accept rents on a

previous occasion and was likely to refuse them again, a

claim for protection under the Rent Act was thought of only

as a second string to the bow which they might fall back

upon, in case the plaintiff did not recognize them as tenants

or accept rents from them. This is the case which the

defendants seem to have made consistently throughout and

this is exactly what has been pleaded in their written

statements in the present case. In my opinion, the first part

of Mr.Daphtary’s contention must fail.

The question now is whether the rents were

accepted as such by the plaintiff when he sent the cheques

of defendants 2 and 3 to his banking account on 23rd

November, 1942? Mr.Dapthary argues that the plaintiff

did not accept the cheques as payment of rents by

defendants 2 and 3 and he did not recognize them as

tenants at all. The position taken by the plaintiff

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throughout has been that the defendants were trespassers

and he accepted the monies only as damages for use and

occupation to which he was entitled under law. It is

necessary to see how the evidence on this point stands. It

would appear from the correspondence on record that ever

since the termination of the lease of defendant No.1, the

defendants 2 and 3 were sending monies to the plaintiff as

and by way of rents for the portions of the house in their

use and occupation. There is no ambiguity whatsoever in

the conduct of these defendants, and no uncertainty as to

the character in which these payments were offered to be

made. The cheques sent by defendants 2 and 3 on 30th

of

September and 6th

of October, 1942, respectively, were

returned by the plaintiff and there is no doubt that at that

time he had no intention of treating these defendants as

tenants or accepting any rents from them. There was

obviously a change when the second set of cheques were

sent to the plaintiff in November, 1942. This time they were

not returned to the defendants and the plaintiff kept them in

his hands for some time and then sent them on to his

bankers. Curiously enough this synchronizes with the

appointment of a Receiver by the mortgagees who was to

take possession of the house on 20th

November, 1942. It

may be that it was this circumstance which brought about a

change in the mind of the plaintiff. But whatever the motive

might have been, the fact remains that the plaintiff cashed

these cheques and appropriated the monies which were

paid by the defendants as and by way of rents and rents

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only. The protest or the explanation of the plaintiff came

only on 5th

of January, 1943, when the plaintiff intimated to

defendants 2 and 3 that the monies sent by them were

received as compensation for use and occupation without

affecting in any way his rights to eject them as trespassers.

The question is whether on these facts the plaintiff can be

said to have accepted the rents as such. In my opinion, the

answer to this question must be in the affirmative.

In the first place, the facts clearly show that when

the cheques were cashed, it was done without any

reservation or condition whatsoever. The protest was not a

contemporaneous but a much subsequent event and if the

agreement was already complete by acceptance of rent on

23rd

November, 1942, the subsequent conduct of one of the

parties cannot alter its legal consequences. In the second

place, it seems to me that when money was paid as rent, it

did not lie in the mouth of the plaintiff to say that he would

receive the money but not as rent. It is a settled principle

of law that when money is paid by a debtor with an express

intimation that it is to be applied to the discharge of a

particular debt, the creditor may not accept the money at

all; but if he receives and appropriates it, he cannot be

allowed to say that he took it wrongfully on some other

account. The ordinary legal consequence of accepting

payment as indicated by the debtor would follow in such

cases, however much the creditor might attempt to

repudiate them. This being the position, it must be held on

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the facts of this case that money was not only paid as rent

by defendants 2 and 3 but was received as rent by the

plaintiff and consequently a monthly tenancy under the

provision of Section 116 of the Transfer of Property Act did

come into existence. So long as this monthly tenancy is not

determined in a manner recognized by law, the plaintiff’s

suit for ejectment must fail.

The result is that the appeal fails and is dismissed

with costs.”

It is hence clear that where rent was accepted by the

landlord after the expiration of the tenancy by efflux of time,

Section 116 applied even though the landlord accepted the amount

remitted to him as “part deposit towards his claim for

compensation for illegal use and occupation, and without

prejudice to his rights”.

We may next consider the case of Karnani Industrial Bank

Ltd., supra. The principal question in the said case before the

Apex court was, whether a certain lease had validly terminated by

efflux of time or whether there was “holding over” by the lessee

23

of the leasehold property as contemplated in Section 116 of the TP

Act. The circumstance under which this question and several

subsidiary questions to which reference was made, had arisen in

the following manner.

The Province of Bengal was the owner of an area of 1125

bighas of land in Akra village. On 17.2.1928, it had executed a

lease deed in respect of the said land for a period of 10 years, for

the manufacture of bricks in favour of the appellant, who was

before the apex court, on a yearly rent of Rs.6000/-. The lease

was to commence from 24.2.1928 and a year’s rent was payable in

advance. By the terms of the lease, the lessee was prohibited from

subletting the land or any part of it, without the consent of the

lessor.

It was also provided under the lease that the lessor reserved

to itself the right to terminate the lease at any time subject to a six

months’ notice in the event of the lessee failing to observe any of

the conditions therein. The lessee was, on such termination,

required to remove all such materials brought by it or established

24

on the premises within three months from the date of termination,

failing which such material and things would become the property

of the lessor.

The lessee had, in contravention of the terms of the lease,

sublet the premises to 17 others, without the consent of the lessor.

And when the lessee failed to hand over possession on termination

of the lease on that ground, the lessor had filed a suit for ejectment

and also sought several other reliefs on account of the damage

caused to the brick field.

The suit had been contested. The defence of the lessee and

other sub-lessees was that they had held over with the implied

consent of the lessor. The trial court in its judgment held that

there was no holding over with the assent of the lessor. And

partly allowed other reliefs.

In an appeal by the lessee and others and a cross objections

by the lessor, to the High Court, the appeal was dismissed and the

cross objections was allowed in part. It was held on facts that

there was no holding over and that the clause in the lease, which

25

provided that if the lessees did not remove its machinery and

material from the field within 3 months after the termination of the

lease, they would become the property of the lessor, was not a

clause by way of penalty and should be given effect to.

In the appeal before the apex court, it was pointed out that

where as in the case of K.B.Capadia‘s case supra, rent had been

accepted after the expiry of the tenancy. In the case before it, the

payment of rent was not made after the date of expiry of the lease,

but nearly a year before the expiry of the lease. It was held as

follows :

“15……….A reference to section 116 of the

Transfer of Property Act will show that for the application

of that section, two things are necessary:(1) the lessee

should be in possession after the termination of the lease;

and (2) the lessor or his representative should accept rent

or otherwise assent to his continuing in possession. The use

of the word 'otherwise' suggests that acceptance of rent by

the landlord has been treated as a form of his giving assent

to the tenant's continuance of possession. There can be no

question of the lessee "continuing in possession" until the

lease has expired, and the context in which the provision

for acceptance of rent finds a place clearly shows that what

is contemplated is that the payment of rent and its

26

acceptance should be made at such a time and in such a

manner as to be equivalent to the landlord assenting to the

lessee continuing in possession. Both the courts below,

after dealing with the matter elaborately, have concurrently

held that in the circumstances of the case the consent of

respondent No.1 to the appellants' continuing in possession

cannot be inferred, and we agree with this finding.

16. It was pointed out to us on behalf of the

respondent that the entry relating to this payment in the

books of the plaintiff contains the words: "received without

prejudice from Karnani Industrial Bank ...... "The same

words however occur in several earlier entries, and we are

not inclined to attach any special significance to them. But

it seems to us that the very fact, that the payment was made

at a time when there was no question of the lessor

assenting to the lessee's continuing in possession and

neither party treated the payment as importing such assent,

is sufficient to take the case out of the mischief of section

116 of the Transfer of Property Act.”

In the case of Tayabali Jaffarbhai Tankiwala v. M/s Asha

& Co., 1970 (1) SCC 46, the landlord was the appellant before the

apex court. The appellant gave a notice, dated June 13, 1956, to

the respondent terminating his tenancy on the ground of non-

payment of rent. As the tenant did not vacate the premises, the

appellant sent a second notice, dated October 18, 1957, for vacant

27

possession of the premises in his occupation as a monthly tenant.

Another ground mentioned in the notice was that it was required

for personal use and occupation of the landlord. Mean while, the

tenant made a tender of the amount due, which was refused by the

landlord, who filed a suit for ejectment and compensation for use

and occupation for a certain period. The Trial Court held that by

serving a second notice and by various acts and conduct, the land-

lord showed a clear intention to waive and condone the ground of

default and dismissed the suit. The appellate court held that the

service of a second notice and other facts which were found by the

Trial Court, did not amount to a waiver of the first notice. It

further held that the demand of arrears of rent made in the first

notice was excessive and illegal which made the notice invalid.

The High Court had dismissed in limine the petition filed by the

landlord under Article 227 of the Constitution. The landlord

appealed to the Supreme Court with special leave.

It was held by the Apex Court that it was established that

the second notice treated the tenancy as subsisting and not only

28

the respondent was described as a monthly tenant, but also in the

plaint, even after the amendment had been allowed, the rent was

claimed up to November 1957, it was thereafter that the amount

was described as compensation for use and occupation. The

plaintiff, it was held, was thus fully alive to the distinction

between rent and damages for use and occupation and that it could

not be said that he had abandoned the second notice and asked for

the same to be treated as non-est or that had relied solely on the

first notice, dated June 13,1956. Under Section 113 of the TP Act,

all that had to be seen was whether any act had been proved on the

part of the present appellant, which showed an intention to the

lease as subsisting, provided there was an express or implied

consent of the person to whom the notice is given. It was found

that the service of the second notice and its contents and as

amplified in the plaint, indicated that the landlord had waived the

first notice by showing an intention to treat the tenancy as

subsisting and that was with the express or implied consent of the

tenant, to whom the first notice had been given, because he had

29

even made payment of the rent which had been demanded, though

it was after the expiration of the period of one month given in the

notice.

As opposed to the interpretation given in the aforesaid

judgments, a later decision of the Apex court in Sarup Singh

Gupta v. S .Jagadish Singh, supra, has summarized its view on the

facts and law applicable thus:

“ In the instant case, as we have noticed earlier, two

notices to quit were given on 10th February, 1979 and 17th

March, 1979. The suit was filed on June 2, 1979. The tenant

offered and the landlord accepted the rent for the months of

April, May and thereafter. The question is whether this by

itself constitute an act on the part of the landlord showing an

intention to treat the lease as subsisting. In our view, mere

acceptance of rent did not by itself constituted an act of the

nature envisaged by Section 113, Transfer of Property Act

showing an Intention to treat the lease as subsisting. The fact

remains that even after accepting the rent tendered, the

landlord did file a suit for eviction, and even while

prosecuting the suit accepted rent which was being paid to

him by the tenant It cannot, therefore, be said that by

accepting rent, he intended to waive the notice to quit and to

treat the lease as subsisting. We cannot ignore the fact that in

30

any event, even if rent was neither tendered nor accepted, the

landlord in the event of success would be entitled to the

payment of the arrears of rent. To avoid any controversy, in

the event of termination of lease the practice followed by

courts is to permit the landlord to receive each month by way

of compensation for the use and occupation of the premises,

an amount equal to the monthly rent payable by the tenant. It

cannot, therefore, be said that mere acceptance of rent

amounts to waiver of notice to quit unless there be any other

evidence to prove or establish that the landlord so intended.

In the instant case, we find no other fact or circumstance to

support the plea of waiver. On the contrary the filing of and

prosecution of the eviction proceeding by the landlord

suggests otherwise.”

A learned single judge of this court has also taken a similar

view, in the matter of Vasanthkumar D.Shah v. Sugandha Raman,

supra, while ironically referring to the decisions of the Apex

court, referred to above. The said decision of the apex court in

Sarup Singh Gupta and the decision of the learned single judge of

this court referred to above, are at best authorities for the cases

decided therein - and the present judgment is rendered with

31

reference to the decisions of the Apex Court referred to above,

and the position of law as expressed therein.

In the instant case on hand, there is no dispute as to the

following sequence of events. As per letter dated 21.8.2008,

Exhibit P-3, the plaintiff had intimated the defendant thus :

“This has reference to the telecon and the personal

discussions I had in the recent past. You are aware that the

lease of the aforesaid premises taken by you in terms of the

Lease Deed dated 21.05.04 for your business has come to a

close on 31.05.08 and I have already made my intention

known to you that the subject premises is required for my

family’s use and hence I requested you to vacate the premises

and hand over the possession to me. You sought a short time

to vacate and handover the possession. Now the time sought

is also over and I once again call upon you to immediately

vacate the premises and handover the possession without any

further loss of time. Further, I request you to stop payment of

rent through ECS to my designated Bank A/c. as the tenancy

have expired and I have no intention to continue the same. On

handing over the keys of the premises, verification of

accounts, deposit paid by you earlier will be returned to you

after necessary adjustments, if any.”

32

Notwithstanding the said letter, the appellant – tenant had

continued to remit the rents. At which, a notice (Exhibit P-5) was

issued through the counsel of the respondent, dated 12.5.2009,

inter-alia, to state thus :

“The lease entered by you with my client expired on

31.5.2008 itself. You should have vacated immediately

thereafter, instead of it, you did not vacate and, on the other

hand went on remitting the rent to the Bank account of my

client till July 2008, left with no option my client issued a

notice to you on 21.8.2008 calling upon you to vacate and

hand over the vacant possession of the schedule premises

to her. At that time you approached my client and told her

that you would vacate in a couple of months time. But you

did not do so. On the other hand mischievously, you sent a

demand draft for Rs.61,383/- as rent from the months of

August, September, October and November 2008, with a

covering letter dated 20.12.2008. My client was surprised

by it. When my client enquired you, you said that you

would vacate and said D.D. may be treated as payment of

damages. To that my client, asked you to give the same in

writing. You said that you would do so in, but so for you

have not done so and you have also not vacated. Hence, this

legal notice.

4. Please take notice that your tenancy stands

determined with effect from expiry of 15 days from the date

33

of receipt of this notice and you hereby called upon to quit

and deliver the vacant possession of the schedule premises

to my client immediately thereafter and also pay the arrears

of rent, failing which my client would be constrained to

initiate appropriate proceedings against you for ejectment

and recovery of rent damages, in which event you would be

responsible for all costs and consequences thereof, including

the charges of this notice being Rs.5,000/-.”

However, the appellant continued to remit rents by way of

demand drafts with covering letters, specifically indicating that

same was being tendered as rent. The receipt and encashment of

which is duly evidenced by documents exhibited. Though such

deposits and receipt is not in dispute, over the years, during the

pendency of the suit and the same having been received without

demur and unconditionally, the specious argument that it was

received only as damages for use and occupation, even if could be

established would not enable the respondent to contend that there

is no waiver of the quit notice. In K.B.Capadia’s case, even when

the rents tendered were received under protest and with repeated

declarations that the same was being received only as damages,

34

the Apex court has held that it would not be a ground to deny that

there was a waiver of notice, when there were initial receipts

without demur and unconditionally. The Federal Court, in

Capadia’s case, has addressed such a contention advanced, thus:

“The propriety of this decision has been challenged

by Mr. Daphtary who appeared in support of the appeal

and his contention is that the appellate Judges of the High

Court misdirected themselves as to the elements necessary

to create a tenancy of “holding over” under Section 116,

Transfer of Property act, and that their approach to the

evidence has not been a proper one.

It is argued that the tenancy contemplated by

Section 116, Transfer of Property Act, is a new tenancy

which is brought into being after the expiry of the old, if

and when the conditions laid down in the section are

fulfilled. The essential thing in a new tenancy is that the

parties must be ad idem as to its terms. If this agreement

or consensus is wanting, no tenancy can possibly come into

existence, and the position of the lessee, whose lease has

expired, must be considered to be that of a trespasser. It is

said by the learned counsel that this is exactly what has

happened in the present case. On the one hand, the

defendants 2 and 3 when they remitted rents to the plaintiff

did so, not for entering into a fresh agreement with the

plaintiff but only to discharge what they conceived to be

their existing legal obligation as statutory tenants under the

provision of the Bombay Rent Restriction Order. On the

other hand, the plaintiff did not accept the rents paid by

defendants as rents at all, but only as compensation for

wrongful use and occupation of the premises by the latter.

35

Thus the parties were not ad idem upon the basis of which

a new tenancy could be founded.

This argument, though plausible at first sight, does

not appear to me to be sound. It is perfectly right that the

tenancy which is created by the ‘holding over” of a lessee

or under-lessee is a new tenancy in law even though many

of the terms of the old lease might be continued in it, by

Implication; and it cannot be disputed that to bring a new

tenancy into existence, there must be a bilateral act. What

Section 116, Transfer of Property Act, contemplates is that

on one side there should be an offer of taking a renewed or

fresh demise evidenced by the lessee’s or sub-lessee’s

continuing in occupation of the property after his interest

has ceased and on the other side there must be definite

assent to this continuance of possession by the landlord

expressed by acceptance of rent or otherwise. It can

scarcely be disputed that the assent of the landlord which is

founded on acceptance of rent must be acceptance of rent

as such and in clear recognition of the tenancy right

asserted by the person who pays it. But, while all this may

be conceded, I do not think that these principles are really

of any assistance to the appellant in the present case..”

It is also to be kept in view that “rent” is defined as the

consideration for a lease. When that relationship is terminated, it

would be incongruous to receive any further consideration, except

when the law expressly enables such receipt. As for instance under

Section 112 of the TP Act, or where Rent Acts permit such

36

receipt of rent even during pendency of proceedings for eviction.

Further, receipt of any amount as damages unilaterally, without

determination of the same at an enquiry, cannot be binding on the

tenant, and would be speculative as to the possibility of any such

damages being quantified at a later stage.

The trial court has rendered the impugned judgment

mechanically and without any reasoning being assigned to agree

with the plaintiff’s arguments or how the decisions of the Apex

court discussed above, are to be distinguished.

Accordingly, the appeal is allowed and the judgment of the

court below is set aside. The parties are to bear their own costs.

Sd/-

JUDGE

nv*