BURMAH SHELL OIL DISTRIBUTING NOW KNOWN AS BHARAT PETROLEUM CORPORATION LTD. v. KHAJA MIDHAT NOOR AND OTHERS

The Judgment of the Court was delivered by •.·

SABY ASA CHI MUKHARJI, J. This is a petition for leave to appeal against the judgment and order dated 11th November, 1987 of the High Court of Patna. On 16th January, 1958 a lease deed was C executed between the lessee Latifur Rehman and lessor Khaja Midhat No.or (hereinafter called the respondent) with permission to sub-lease the same. The said Latifur Rehman sub-leased the premises to Burmah Shell Oil Distributing Company (the petitioner herein) for running a petrol pump and making necessary constructions thereon. D The lease was for a period of ten years which expired on 16th January,

1968. It appears further that after the lease period had expired, the sub-lessee, petitioner continued to pay the rent which was being accepted continuously from month to month by the respondent, the lessor. A notice was issued by the respondent to the lessee terminating the lease and for giving vacant possession of the land by the 15th E January, 1973 and also requiring the removal of the buildings, plant, etc., by the 16th January, 1973. In the last two paras of the said notice, it was stated that the lessee was to surrender the lease-hold land on the expiry of 15th January, ·1973. No notice was given separately to the petitioner terminating its lease. A suit for ejectment was filed there- after. The lessee Latifur Rehman did not contest the suit for eject- F ment. The petitioner, however, contested that proceeding. The learned Munsiff.I, Gaya, by his judgment dated 8th May, 1979 dismis- sed the suit holding that the notice terminating the lease was necessary and the notice in this case was invalid. Thh plea of the landlord that the tenancy expired by afflux of time, was rejected. On 22nd February, 1983 the 1st Additional Sub Judge, Gaya allowed the appeal of the G landlord and held that the notice terminating the 'tenancy and asking the petitioner to surrender by the 15th January, 1973 was a valid notice.

The main question involved is, whether there was a valid termi- nation of the lease and as such the sub-lessee, the petitioner herein was H

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bound to deliver vacant possession. A written statement had been filed by the petitioner, the sub-lessee, wherein it was, inter alia, stated that it was holding over the lease hold property after the expiiy of the lease by paying rent. No notice terminating tenancy was received by it. The validity of the notice to the lessee was also challenged. The trial Court held that the lease was not extended for a fixed period of five years in absence of any written instrument.

The following two questions of law were re-formulated by the High Court: ~

~ (1) In absence of any registered instrument executed by c both the parties i.e. the lessor and the lessee after the period stipulated in Ext. 4 i.e. the period of ten years, can it be said that the lease was extended automatically for a ~ period of five years in terms of Ext. 4 or further whether the lessee was holding the suit property as tenancy from month to month? D (2) If the first part of question (1) is held in negative and second part in the affirmative, as a consequence of which it must be held that the lease was required to be determined, whether the notice as contained in Ext. 7 validly termi- nated the lease of the lessee? ~ E Indubitably, the Jessee came in possession of the property in question on 16th January, 1958. The lease was for a period of ten years with a right of renewal for a further period of five years. After the expiry of ten years, no instrument was executed by the parties and the lessee continued to remain in possession of the suit property. The p lessor accepted the rent and allowed the lessee to continue. It is rele- ?" vant in this connection to refer to the provisions of the Transfer of Property Act, 1882 (hereinafter called 'the Act'). Section 106 of the Act deals· with the duration of certain leases in absence of written contract or focal usage and section 107 deals how leases are to be made. These sections read as follows: G "106. In the absence of a contract or local law or usage to ,l the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with th~ end of a H year of the tenancy; and a lease of immovabic , operty for

.J. BHARAT PETROLEUM CORPN. v. K.M. NOOR IMUKHARJI, J.] 815

any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of the tenancy.

Every notice under this section must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of .his family or servants, at his residence, or if such tender or delivery is not practicable affixed to a conspicous part of the property.

107. A lease of immovable property from year to year, or c for any term exceeding one year,' or reserving a yearly rent. can be made only by a registered instrument.

All other leases of immovable property may be made either by a registered instrument or by oral agreement D accompanied by delivery of possession.

Where a lease of immovable property is made by a .~· registered instrument, such instrument or, where there are more instruments than one, each such instrument-shall be executec' by both the lessor and the lessee: E

Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year t9 year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession."

In view of the paragraph 1 of section 107 of the Act, since the lease was for a period exceeding one year, it could only have been extended by a registered instrument executed by both the lessor and the lessee. In the absence of registered instrument, the lease shall be deemed to be "lease from month to month''. It is clear from the very language of section 107 of the Act which postulates that a lease of immovable property from year to year, or for any term exceeding one year, or reservbg a yearly rent, can be made only by a registered instrument. In the absence of registered instrument, it must be a H

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monthly lease. The lessee and the sub-lessee in the facts of this case A continued to remain in possession of the property on payment of rent as a tenant from month to month. The High Court so found. We are of the opinion that the High Court was right.

Section 116 of the Act which was placed before the High Court B deals with the effect of holding over and provides as follows:

"116. 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 representa- tive accepts rent from the lessee or under-lessee, or other- wise assents to his continuing in possession, the lease is, in c 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."

D It was submitted before the High Court that this was not a case of continuing of old tenancy for a period of five years but in view of the clear provisions of section 107 which we have noted hereinbefore and in the absence of a registered instrument, it must be held that it was holding over and not continuation of old tenancy for a further period of five years. That would be the harmonious construction of section E 107 read with section 116 in the facts of this case. We are of the opinion that the High Court was right that the tenancy was automatically de- termined on the expiry of ten years which was stipulated in Ext. 4. Thereafter the lessee continued to hold the property and the lessor accepted the rent. The lease was, therefore, renewed from month to month because it was not the case of any party that it was for ag- F ricultural purposes.

In that view of the matter, the termination of the lease could only be by giving a valid notice. Such notice was given to the lessee but not to the sub-lessee. The respondent's case is that a notice to sub-lessee was not necessary. It was contended on behalf of the appellant that by G Ext. 7 the lessee was asked to quit the lease hold premises on the expiry of 15th June, 1973. Admittedly, in this case, the lease was executed on 16th January, 1958 and from that date the lease came into existence. For computing the period of ten years the 16th January, 1958 had to be excluded. The tenancy was, therefore, terminated on the expiry of 16th of the month. The notice in the instant case of the H quit which was Ext. 7 before the Court dated 30th November, 1972,

. )- BHARAT PETROLEUM CORPN. v. K.M. NOOR [MUKHARJI, J.J 817

was given on behalf of the respondent to Latifur Rehman-lessee. IA A paragraph 4 of Ext. 7 it was stated that the lessee was to deliver the possession of the lease hold property by 16th January, 1973. In paragraph 5 of Ext. 7 the lessee and sub-lessee were required to remove the buildings, plants etc. by the 16th January, 1973. In the last but one and the last paragraph of Ext. 7 it was stated that the lessee was to surrender the properties of the lease hold land on the expiry of B 15th January, 1973.

The question is whether there was a valid notice. The High Court held that in the facts of this case, there was ·a valid notice of termina- tion and after the valid notice of termination of the lease to the lessee, there was no need to give a fresh notice to the sub-leSsee. Notice must be read in the context of the facts of each particular case having regard c to the situation of the parties to whom it is addressed. In Harihar Banerji and others v. Ramasashi Roy and others, 45 Indian Appeals 222 at page 225, the Judicial Committee observed as follows:

" ... that notices to quit, though not strictly accurate or consistent in the statements embodied in them, may still be good and effective in law; that the test of their suffi- ciency is not what they would mean to a stranger ignorant of all the facts and circumstances touching the holding to which they ·purport to refer, but what they would mean to tenants presumably conversant with all those facts and circumstances; and, further, that they are .to be construed, not with a desire to find faults in them which would render them defective, but to be construed ut res magis valeat quam pereat."

This is how the notices should be literally construed. This deci-. F sion was re.lied upon by this Court in Mangilal v. Suganchand Rathi, [1964] 5 S.C.R. 239. There, however, the facts were different. There the defendant was a tenant of the .plaintiffs. The defendant was in arrears of rent for one year to the extent of Rs.1020. On April 11, 1959 the plaintiffs served a notice on the defendant requiring hirr 'o remit to them Rs.1020 within one month from the daie of service of notice, G failing which suit for ejectment would be filed. This notice was received by the defendant ori April 16, 1959. On June 25, 1959 the defendant sent a reply to the notice enclosing with it a cheque for Rs.1320. This amount consisted of the rental arrears as well as the rent due right up to June 30, 1959. The plaintiffs accepted the cheque and cashed it and gave a fresh notice on July 9, 1959 requiring the defen- H

In the aforesaid view of the matter, in our opinion, there was a valid notice of termination of the lease of the lessee. In any event the lessee did not dispute this contention. The lessee accepted a valid termination .of the lease hold property.

In Roop Chand Gupta v. Raghuvanshi (Pvt.) Ltd. and another, A.LR. 1964 S.C. 1889, it was held by this Court that it is quite clear that law does not require that the sub-lessee need be made a party, if there was a valid termination of the lease. This Court reiterated that in

BHARAT PETROLEUM CORPN. v. K.M. NOOR {MUKHARJI, J.{ 819

all cases where the landlord instituted a suit against the lessee for possession of the land on the basis of a valid notice to quit served on the lessee and did not implead the sub-lessee as a party to the suit, the object of the landlord is to eject the sub-lessee from the land in execu- tion of the decree and such an object is quite legitimate. The decree in such a suit would bind the sub-Jessee. This Court noted at page 1892 of the report that this might act harshly on the sub-lessee; but this was a position well understood by him when he took the sub-lease. The law allows this and so the omission cannot be said to be an improper act. In the facts of this case these observations apply more effectively. The termination of the lease was not disputed by the lessee. There is no allegation of any collusion between the lessee and the respondent. c In that vie)V of the matter, we are of the opinion that the High Court was right The suit in question was instituted in May, 1979 and the valid notice to quit was given Jong after the expiry of the period of lease. The sub-lessee had long innings. It is time for him to quit. There is no merit in this petition. The special leave petition fails and is, D therefore, dismissed with costs.

R.S.S . Petition dismissed.