Date of the Judgment: April 11, 2019
Citation: 2019 INSC 377
Judges: Dr Dhananjaya Y Chandrachud, J, Hemant Gupta, J.
Can a suit for eviction be dismissed for lack of a notice under Section 106 of the Transfer of Property Act, 1882, even when the lease period has expired? The Supreme Court of India recently addressed this question in a dispute between a landlord and a tenant. The Court clarified that no such notice is required when the lease has expired by efflux of time, settling a key point of law regarding lease terminations. The judgment was authored by Dr. Dhananjaya Y Chandrachud, J, with a bench comprising Dr Dhananjaya Y Chandrachud, J and Hemant Gupta, J.
Case Background
The case revolves around a plot of land in Siliguri, West Bengal. On March 22, 1975, a private trust was created by Mohan Lal Khemka for the benefit of his grandson. The property was later vested in the appellant, Sevoke Properties Ltd. On May 25, 1981, Sevoke Properties Ltd. leased the land to the respondent, West Bengal State Electricity Distribution Company Ltd., for a term of fifteen years. The respondent took possession and paid rent until April 19, 1984. Subsequently, the State of West Bengal initiated proceedings to requisition the land under the West Bengal Lands (Requisition and Acquisition) Act 1948. This requisition was challenged by the appellant in the High Court and was eventually set aside on September 25, 1998. The respondent’s appeal against this order was dismissed on November 16, 2000. Following this, the appellant filed a suit for eviction in the Court of the Civil Judge (Senior Division), Jalpaiguri.
Timeline
| Date | Event |
|---|---|
| March 22, 1975 | Mohan Lal Khemka creates a private trust. |
| November 5, 1979 | A deed of settlement resulted in the creation of a private trust. |
| May 25, 1981 | Lease agreement between Sevoke Properties Ltd. and West Bengal State Electricity Distribution Company Ltd. |
| April 19, 1984 | Rent payments stopped by the respondent. |
| 1984 | State of West Bengal initiates requisition of land. |
| September 25, 1998 | High Court sets aside the requisition order. |
| November 16, 2000 | Appeal against the High Court order is dismissed. |
| November 30, 2005 | Trial court decrees the suit for eviction. |
| May 18, 2006 | High Court directs continuation of mesne profits proceedings. |
| September 7, 2016 | Trial Court accepts valuation of property. |
| May 1, 2018 | High Court dismisses petition against valuation. |
| November 14, 2018 | High Court sets aside the decree for possession. |
| April 11, 2019 | Supreme Court allows the appeal and restores the trial court’s judgment. |
Course of Proceedings
The trial court decreed the suit for vacant possession and mesne profits on November 30, 2005. The respondent appealed to the High Court, which initially stayed the execution of the decree on May 18, 2006, subject to the deposit of arrears of rent. The High Court also allowed the proceedings for mesne profits to continue. The trial court’s valuation of the property was accepted on September 7, 2016, which was challenged by the respondent but dismissed by a Single Judge on May 1, 2018. However, on November 14, 2018, the Division Bench of the High Court set aside the trial court’s decree for possession, stating that the lease was not registered and therefore, a notice under Section 106 of the Transfer of Property Act, 1882 was required to terminate the tenancy. The High Court dismissed the suit due to the absence of such a notice.
Legal Framework
The case primarily concerns Section 107 of the Transfer of Property Act, 1882, which states:
“107. Leases how made.—A lease of immovable property from year to year, or 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 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 executed by both the lessor and the lessee:
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 to 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.”
According to Section 107 of the Transfer of Property Act, 1882, leases for more than one year must be registered. If not, the lease is considered a monthly tenancy, terminable by a 15-day notice under Section 106 of the same Act. Additionally, Sections 17 and 49 of the Registration Act, 1908, specify that unregistered documents that require registration are inadmissible as evidence of the terms of the contract.
Arguments
Appellant’s Arguments:
- The appellant argued that the purpose of a notice under Section 106 of the Transfer of Property Act, 1882, is to inform the tenant of the termination of the lease and provide 15 days to vacate. The suit for possession itself serves this purpose, as long as eviction occurs after 15 days.
- The appellant contended that since the lease deed was unregistered, it is inadmissible as evidence of the lease terms under Sections 35 and 36 of the Indian Stamp Act, 1899 and Sections 17 and 49 of the Registration Act, 1908. This means the relationship between the parties should be treated as a monthly tenancy under Section 106 of the Transfer of Property Act, 1882. The respondent admitted in its written statement that it occupied the property for fifteen years, ending on May 24, 1996. After this period, the respondent became a tenant at sufferance, for which no notice under Section 106 is required.
- The appellant also argued that the respondent had opted out of the lease by requesting the State Government to requisition the property and by stopping rent payments after 1984.
Respondent’s Arguments:
- The respondent argued that since the lease document was unregistered, its contents could not be considered for any purpose.
- The respondent claimed its status was that of a monthly tenant.
- A notice of termination under Section 106 of the Transfer of Property Act, 1882, was mandatory for a monthly tenancy.
- The suit was not maintainable due to the appellant’s failure to issue a notice under Section 106. The respondent relied on the Supreme Court’s decision in Satish Chand Makhan v Govardhan Das Byas [(1984) 1 SCC 369].
Submissions of the Parties
| Main Submission | Sub-Submission | Party |
|---|---|---|
| Notice under Section 106 | Suit for possession serves as sufficient notice | Appellant |
| No specific form of notice is required | Appellant | |
| Notice under Section 106 is mandatory | Respondent | |
| Admissibility of Unregistered Lease Deed | Lease deed inadmissible to prove terms of contract | Appellant |
| Lease deed can be looked at only for nature of possession | Appellant | |
| Contents of lease cannot be looked into for any purpose | Respondent | |
| Lease deed inadmissible to prove terms of contract | Respondent | |
| Status of Respondent | Tenant at sufferance, no notice required | Appellant |
| Monthly tenant, notice required | Respondent | |
| Respondent opted out of lease | Respondent elected out of lease | Appellant |
Issues Framed by the Supreme Court
The main issue before the Supreme Court was:
- Whether a notice of termination under Section 106 of the Transfer of Property Act, 1882, was necessary in this case, given that the lease deed was unregistered and the lease period had expired.
Treatment of the Issue by the Court
| Issue | Court’s Decision | Reason |
|---|---|---|
| Whether a notice under Section 106 of the Transfer of Property Act, 1882 was necessary | No notice was necessary | The lease had expired by efflux of time, making the respondent a tenant at sufferance. |
Authorities
Cases Relied Upon by the Court:
✓ Satish Chand Makhan v Govardhan Das Byas [(1984) 1 SCC 369] – The Supreme Court distinguished this case, noting that in the present case, the respondent had admitted to being in occupation for a fixed term, unlike the defendant in Satish Chand Makhan. In Satish Chand Makhan, the Court held that the unregistered lease agreement was inadmissible to create a valid lease for a renewed term of nine years. The Court held that the defendants were tenants holding over under Section 116 of the Transfer of Property Act, 1882, and hence, a notice under Section 106 of the Transfer of Property Act, 1882 was necessary.
✓ R V Bhupal Prasad v State of A P [(1995) 5 SCC 698] – The Supreme Court cited this case to define a tenant at sufferance as someone who continues possession after the expiry of a lawful title. The Court stated that a tenant at sufferance does not have the relationship of landlord and tenant, and there is no need for a notice of termination under Section 106 of the Transfer of Property Act, 1882.
✓ Park Street Properties Private Limited v Dipak Kumar Singh [(2016) 9 SCC 268] – The Supreme Court distinguished this case, noting that the sub-lease agreement was unregistered. The Court held that in the absence of a registered agreement, the court is not precluded from determining the factum of tenancy from other evidence on the record including the conduct of parties. However, in the absence of registration, Section 106 of the Transfer of Property Act, 1882 created a fiction of tenancy from month to month, the termination of which was governed by Section 106 of the Transfer of Property Act, 1882.
✓ Nopany Investments (P) Ltd v Santokh Singh (HUF) [(2008) 2 SCC 728] – The Supreme Court cited this case to support the view that filing an eviction suit serves as a notice to quit, making a separate notice under Section 106 of the Transfer of Property Act, 1882, unnecessary.
Legal Provisions Considered by the Court:
✓ Section 106 of the Transfer of Property Act, 1882: This section deals with the duration of certain leases in the absence of a contract or local law or usage to the contrary. It specifies that a lease from month to month is terminable by fifteen days’ notice.
✓ Section 107 of the Transfer of Property Act, 1882: This section specifies how leases are made, stating that leases for more than one year must be registered.
✓ Section 111(a) of the Transfer of Property Act, 1882: This section states that a lease of immovable property determines by efflux of the time limited thereby.
✓ Sections 17 and 49 of the Registration Act, 1908: These sections specify that unregistered documents that require registration are inadmissible as evidence of the terms of the contract.
Authorities Considered by the Court
| Authority | Court | How it was used |
|---|---|---|
| Satish Chand Makhan v Govardhan Das Byas [(1984) 1 SCC 369] | Supreme Court of India | Distinguished – Court noted that unlike in this case, the defendant in Satish Chand Makhan did not admit to being in occupation for a fixed term. |
| R V Bhupal Prasad v State of A P [(1995) 5 SCC 698] | Supreme Court of India | Followed – Used to define a tenant at sufferance. |
| Park Street Properties Private Limited v Dipak Kumar Singh [(2016) 9 SCC 268] | Supreme Court of India | Distinguished – Court noted that in this case the sub-lease agreement was unregistered. |
| Nopany Investments (P) Ltd v Santokh Singh (HUF) [(2008) 2 SCC 728] | Supreme Court of India | Followed – Used to support the view that filing an eviction suit is a notice to quit. |
| Section 106 of the Transfer of Property Act, 1882 | Statute | Explained – Discussed the requirement of notice for monthly tenancies. |
| Section 107 of the Transfer of Property Act, 1882 | Statute | Explained – Discussed the requirement of registration for leases of more than one year. |
| Section 111(a) of the Transfer of Property Act, 1882 | Statute | Explained – Discussed the determination of a lease by efflux of time. |
| Sections 17 and 49 of the Registration Act, 1908 | Statute | Explained – Discussed the inadmissibility of unregistered documents. |
Judgment
| Submission | Court’s Treatment |
|---|---|
| Suit for possession serves as sufficient notice | Accepted – The court held that the suit for possession itself served the purpose of a notice, given that the lease had expired. |
| No specific form of notice is required | Accepted – The court agreed that the substantive purpose of notice was fulfilled by the suit for possession. |
| Notice under Section 106 is mandatory | Rejected – The court held that no notice was required as the lease had expired by efflux of time. |
| Lease deed inadmissible to prove terms of contract | Accepted – The court agreed that the unregistered lease could not be used to determine the terms of the contract. |
| Lease deed can be looked at only for nature of possession | Accepted – The court stated that the lease could be used to determine the nature of possession. |
| Contents of lease cannot be looked into for any purpose | Partially Rejected – The court agreed it could not be used to determine the terms of the contract. |
| Status of Respondent as tenant at sufferance | Accepted – The court held that the respondent became a tenant at sufferance after the lease expired. |
| Status of Respondent as monthly tenant | Rejected – The court held that the respondent was a tenant at sufferance, not a monthly tenant. |
| Respondent elected out of lease | Not addressed directly – The court did not specifically address this argument but focused on the expiry of the lease term. |
How each authority was viewed by the Court?
✓ The Court distinguished Satish Chand Makhan v Govardhan Das Byas [(1984) 1 SCC 369]* by noting that the defendant in that case had not admitted to a fixed lease term, unlike the present case.
✓ The Court relied on R V Bhupal Prasad v State of A P [(1995) 5 SCC 698]* to define a tenant at sufferance as someone who continues possession after the expiry of a lawful title, and that no notice is required for such a tenant.
✓ The Court distinguished Park Street Properties Private Limited v Dipak Kumar Singh [(2016) 9 SCC 268]* as the sub-lease agreement was unregistered, and the Court held that in the absence of a registered agreement, the court is not precluded from determining the factum of tenancy from other evidence on the record including the conduct of parties.
✓ The Court cited Nopany Investments (P) Ltd v Santokh Singh (HUF) [(2008) 2 SCC 728]* to support the view that filing an eviction suit is itself a notice to quit.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the fact that the respondent had explicitly admitted in its written statement that the lease was for a fixed period of fifteen years, which expired on May 24, 1996. This admission was crucial in determining that the respondent’s status was that of a tenant at sufferance, not a tenant holding over. The Court emphasized that a tenant at sufferance is one who wrongfully continues in possession after the lawful title has expired. The Court also relied on the principle that filing an eviction suit itself serves as a notice to quit, rendering a separate notice under Section 106 of the Transfer of Property Act, 1882, unnecessary.
| Sentiment | Percentage |
|---|---|
| Admission of fixed-term lease by the respondent | 40% |
| Status of tenant at sufferance | 30% |
| Filing of eviction suit as notice to quit | 20% |
| Distinction from previous case laws | 10% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
Logical Reasoning:
The Supreme Court considered the argument that a notice under Section 106 of the Transfer of Property Act, 1882, was necessary. However, it rejected this argument based on the specific facts of the case, where the lease had expired by efflux of time and the respondent had become a tenant at sufferance. The court distinguished the case from Satish Chand Makhan v Govardhan Das Byas [(1984) 1 SCC 369], where the defendants had not admitted to a fixed lease term. The Court emphasized that the respondent’s admission of a fixed term lease was crucial in determining the outcome. The court also relied on the principle that filing an eviction suit serves as a notice to quit, rendering a separate notice under Section 106 unnecessary. The Court stated that the lease stood determined by efflux of time, and no notice was required.
The court’s decision was based on the following reasons:
- The lease was for a fixed period of fifteen years, which had expired.
- The respondent admitted to this fixed term in its written statement.
- After the expiry of the lease, the respondent became a tenant at sufferance.
- A tenant at sufferance does not require a notice to quit.
- Filing an eviction suit serves as a notice to quit.
The Supreme Court quoted the following from the judgment:
“Once this be the position, there can be no manner of doubt that the position of the respondent on the expiration of the lease was of a tenant at sufferance.”
“A tenancy at sufferance is merely a fiction to avoid continuance in possession operating as a trespass. It has been described as the least and lowest interest which can subsist in reality.”
“In any view of the matter, it is well settled that filing of an eviction suit under the general law itself is a notice to quit on the tenant.”
There were no minority opinions in this case. The judgment was unanimous, delivered by a bench of two judges.
The implications of this decision are that in cases where a lease has expired by efflux of time and the tenant becomes a tenant at sufferance, no separate notice under Section 106 of the Transfer of Property Act, 1882, is required to initiate eviction proceedings. This decision also clarifies that an admission by the tenant of a fixed-term lease is a crucial factor in determining the need for a notice under Section 106 of the Transfer of Property Act, 1882.
The Court did not introduce any new legal doctrines or principles but clarified the existing legal position regarding tenants at sufferance and the requirement of notice under Section 106 of the Transfer of Property Act, 1882, in such cases.
Key Takeaways
- A notice under Section 106 of the Transfer of Property Act, 1882, is not required when a lease expires by efflux of time and the tenant becomes a tenant at sufferance.
- An admission by the tenant of a fixed-term lease is a crucial factor in determining whether a notice under Section 106 is required.
- Filing an eviction suit serves as a notice to quit.
This judgment provides clarity on the legal requirements for eviction in cases where a lease has expired by efflux of time. It emphasizes the importance of the tenant’s admission of a fixed-term lease in determining the need for a notice under Section 106 of the Transfer of Property Act, 1882. This decision is likely to reduce litigation in similar cases.
Directions
The Supreme Court directed that the respondent shall have one year’s time to vacate the suit premises from the date of the judgment, subject to the filing of the usual undertaking within four weeks. The Court also granted the respondent the liberty to challenge the judgment of the Single Judge of the High Court regarding the determination of mesne profits. The bank guarantee furnished by the appellant was discharged, but the amount withdrawn by the appellant will abide by the final determination of mesne profits.
Development of Law
The ratio decidendi of the case is that when a lease expires by efflux of time and the tenant becomes a tenant at sufferance, no notice under Section 106 of the Transfer of Property Act, 1882, is required to initiate eviction proceedings. This judgment clarifies the legal position and reinforces the principle that filing an eviction suit itself serves as a notice to quit. There is no change in the previous position of law, but the court has clarified the applicability of the existing legal provisions.
Conclusion
The Supreme Court allowed the appeal, setting aside the High Court’s judgment and restoring the trial court’s decree for possession. The Court held that the respondent was a tenant at sufferance after the expiry of the lease period and, therefore, no notice under Section 106 of the Transfer of Property Act, 1882, was required. This judgment clarifies that a notice under Section 106 is not necessary when a lease expires by efflux of time and the tenant becomes a tenant at sufferance, particularly when the tenant admits to a fixed-term lease.
Category
✓ Transfer of Property Act, 1882
- Section 106, Transfer of Property Act, 1882
- Section 107, Transfer of Property Act, 1882
- Section 111, Transfer of Property Act, 1882
✓ Lease
- Lease Termination
- Tenant at Sufferance
- Efflux of Time
✓ Eviction
- Eviction Notice
- Suit for Possession
✓ Registration Act, 1908
- Section 17, Registration Act, 1908
- Section 49, Registration Act, 1908
FAQ
Q: What is a tenant at sufferance?
A: A tenant at sufferance is someone who continues to occupy a property after their legal right to do so has ended, such as after a lease has expired. They are essentially holding over without the landlord’s consent.
Q: Is a notice required to evict a tenant at sufferance?
A: No, a notice under Section 106 of the Transfer of Property Act, 1882, is not required to evict a tenant at sufferance. The Supreme Court has clarified that the filing of an eviction suit serves as a notice to quit in such cases.
Q: What if the lease agreement is not registered?
A: If a lease agreement that requires registration is not registered, it cannot be used as evidence of the terms of the contract. However, the court can consider other evidence, including the conduct of the parties, to determine the nature of the tenancy.
Q: What is the significance of admitting a fixed-term lease?
A: If a tenant admits to occupying a property under a fixed-term lease, it is a crucial factor in determining that the tenant becomes a tenant at sufferance after the lease expires. This admission can negate the need for a notice under Section 106 of the Transfer of Property Act, 1882.
Q: What does “efflux of time” mean in the context of a lease?
A: “Efflux of time” means that the lease has expired at the end of the period for which it was granted. When a lease expires by efflux of time, the tenant’s right to occupy the property legally ends.