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PETITIONER:

BHUNESHWAR PRASAD & ANR.

Vs.

RESPONDENT:

UNITED COMMERCIAL BANK & ORS.

DATE OF JUDGMENT: 25/08/2000

BENCH:

S.S.M.Quadri, Y.K.Sabharwal

JUDGMENT:

Y.K.SABHARWAL, J.

The appellants and respondents 3 to 7 are owners and

landlords of the premises in question. United Commercial

Bank-respondent No.1 is the tenant. Respondent No.2 is an

officer of the bank.

A suit seeking a decree of eviction of the bank from

the premises was filed by the owners. It has been, inter

alia, alleged in the plaint that the bank was inducted as a

tenant in the premises for a fixed period of five years

commencing from 1st April, 1981 to 31st March, 1986 through

a registered deed of lease. The bank was given an option to

get the lease renewed for two terms of five years each

provided it gives notice for renewal of the lease each time

one month prior to the expiration of the period of lease.

The bank exercised this option one month prior to 31st

March, 1986 and accordingly the lease was renewed for the

period from 1st April, 1986 to 31st March, 1991 at a monthly

rent of Rs. 10,876/-. It seems that before 31st March,

1991, the bank did not exercise option for renewal of the

lease. The bank was asked to vacate the premises by 31st

May, 1991 under plaintiff's letter dated 22nd April, 1991.

Now, the bank by letter dated 24th April, 1991 requested the

plaintiffs for renewal of lease but the plaintiffs did not

agree and requested for vacation of the premises. It has

also been stated in the plaint that after expiry of lease on

31st March, 1991, the bank used to deposit the rent in the

account of the plaintiffs in their branch but that was

without their consent and mere payment of rent without

consent would not create any fresh tenancy. Under the

aforesaid circumstances, the owners sought eviction of the

bank on the sole ground of expiry of the period of the lease

under clause (e) of sub-section (1) of Section 11 of Bihar

Buildings (Lease, Rent and Eviction) Control Act, 1982 (for

short `the Act').

The suit was resisted by the bank, inter alia,

pleading that the bank has been in occupation of the

premises as tenant since 1963 and from time to time the rent

has been enhanced. The bank has claimed to be a tenant

month to month. The bank pleaded that it regularly

deposited the rent in the account of the plaintiffs and they

were withdrawing the rent so deposited every month after

31st March, 1991 at the enhanced rate of rent of Rs.

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13,595/- per month in place of Rs. 10,876/-. The bank

pleaded that the amount is being paid as monthly rent as per

its letter dated 7th September, 1991 addressed to the owners

and after discussion, they agreed to receive the said

enhanced rent and are withdrawing the same. It has thus

been claimed that the bank is not tenant for any fixed term

period but is a monthly tenant.

A decree for eviction on the ground above stated was

passed by the trial court directing the bank to deliver

vacant possession of the premises to the plaintiffs. In

revision petition, however, judgment and decree of the trial

court has been set aside by the High Court. The said

judgment is under challenge in this appeal.

The High Court has recorded the finding of fact that

even after expiry of period of lease, rent of the premises

at the increased rate, as per request of the plaintiffs, was

regularly deposited by the defendant in their bank in the

accounts of the plaintiffs which have been subsequently

withdrawn by them. Admittedly, the rent under the lease for

the period up to 31st March, 1991 was Rs. 10,876/- per

month. The High Court has further held that the plaintiffs

asked the bank as per their letter dated 5th September, 1992

to deposit the rent of the premises at the increased rate

and the bank deposited rent at the enhanced rate which

amount was withdrawn by the plaintiffs. The amount being

deposited by the bank after 31st March, 1991 was at the rate

of Rs. 13,595/- per month. The High Court has held that

"it is admitted position that the plaintiffs accepted 25%

increased amount of monthly rent of the premises in question

which is evident from Exs. B-3 and B-4." The question to be

considered, therefore, is as to the effect of payment of

enhanced rent by the bank to the owners. Does it create or

not a fresh tenancy from month to month within the meaning

of Section 116 of the Transfer of Property Act? Learned

counsel for the appellants contends that mere acceptance of

rent does not create tenancy from month to month because of

the protection from eviction available to the bank under the

provisions of the Act.

The present is not a case of the payment and

acceptance of the rent which was stipulated in the lease

deed. It is also not the case where standard rent fixed by

any authority has been paid. The increased rent as

aforestated was deposited after 31st March, 1991. The same

was accepted by withdrawal of the amount. In terms of

letter dated 5th September, 1992, in fact, the owners asked

for payment of the rent "hitherto deposited." It has been

established on the record that the rent demanded, deposited

and withdrawn was increased rent. In the light of these

established facts, we would examine whether in law monthly

tenancy as contemplated by Section 116 of the Transfer of

Property Act, 1882 came into existence or not.

Mr. Sanyal, learned senior counsel appearing for the

appellants contends that Section 116 of the Transfer of

Property Act would not be attracted merely on acceptance of

rent. Reliance is placed upon a decision of Federal Court

in Kai Khushroo Bezonjee Capadia v. Bai Jerbai Hirjibhoy

Warden & Anr. [1949 Federal Court Reports 262]. We agree

that to bring a new tenancy into existence within the

meaning of Section 116, there should be an agreement as the

section contemplates that on one side, there should be an

offer of taking a fresh demise evidenced by lessee's

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continuing occupation of the property after the expiry of

the lease and on the other side, there must be a definite

assent to this continuance of possession by the

lessor/landlord and that such an assent of the landlord

cannot be assumed in cases of tenancies to which Rent

Restriction Acts apply on account of the immunity from

eviction which a tenant enjoys even after the expiry of

lease. In such cases, the landlord cannot eject him except

on specified grounds mentioned in the Rent Restriction Acts

and thus the acceptance of rent by the landlord from a

statutory tenant, whose lease has already expired, would not

be taken as evidence of new agreement of tenancy and it

would not be open to such a tenant to urge that by

acceptance of rent, a fresh tenancy was created. We do not

expect a lessor not to accept the rent when, in view of the

protection granted by the Rent Restriction laws, without

existence of one or the other ground, he is precluded from

seeking eviction of the lessee and in such a case, there

would be no question of creation of tenancy from month to

month. Under these circumstances, mere acceptance of amount

equivalent to rent or the standard rent would not attract

Section 116. Assent to lessee continuing in possession

would be absent in such cases. However, an agreement

creating fresh tenancy within the meaning of Section 116 can

be implied from the conduct of the parties. In Ganga Dutt

Murarka v. Kartik Chandra Das and Ors. [(1961) 3 SCR 813],

while affirming the dictum laid down in Khushroo's case

(supra), it was held that apart from an express contract,

conduct of the parties may undoubtedly justify an inference

that after determination of the contractual tenancy, the

landlord had entered into a fresh contract with the tenant,

but whether the conduct justifies such an inference must

always depend upon the facts of each case. In Bhawanji

Lakhamshi and Ors. v. Himatlal Jamnadas Dani and Ors.

[1972 (1) SCC 388], again the question that came up for

consideration was as to whether a fresh tenancy was created

or not by acceptance of rent by the lessor after the

termination of the tenancy by efflux of time. This Court

declined the prayer to reconsider Ganga Dutt Murarka's case

(supra) and held that acceptance by landlord from the

tenant, after the contractual tenancy had expired, of

amounts equivalent to rent or amounts which was fixed as

standard rent did not amount to acceptance of rent from a

lessee within the meaning of Section 116 of the Transfer of

Property Act. The present is not a case of acceptance of

amounts equivalent to rent or amounts fixed as standard rent

but acceptance of increased rent. It was also observed that

"we do not say that the operation of Section 116 is always

excluded whatever be the circumstances under which the

tenant pays the rent and the landlord accepts it." The whole

basis of Section 116 is that a landlord is entitled to file

a suit for ejectment and obtain a decree for possession and,

therefore, his acceptance of rent after expiry of lease is

an unequivocal act referable to his desire to assent to the

tenant continuing possession. It would be absent in cases

where there are the restrictions as contemplated by Rent

laws. In such cases, therefore, it is for the tenant where

it is said that the landlord accepted the rent not as a

statutory tenant but only as a legal tenant indicating his

assent to tenant's continuing possession, to establish it.

In the present case, the bank from the conduct of the

owners has established that the acceptance of increased rent

was in token of owners assent to the bank continuing in

possession after expiry of the lease, thereby creating lease

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from month to month within the meaning of Section 116 of

Transfer of Property Act, 1882. The High Court has rightly

reversed the judgment and decree of the trial court. Before

parting we may make it clear that we are not concerned with

the proceedings for fixation of the rent if pending before

the appropriate authorities under the Act, as the same are

not the subject matter of this appeal and the fixation of

the standard rent and from when it is payable is a matter to

be decided by the said authorities in accordance with law.

For the aforesaid reasons, we dismiss the appeal. The

parties are, however, left to bear their costs.