DETERMINATION OF LEASE UNDER TRANSFER OF PROPERTY ACT.docx

7/27/2019 DETERMINATION OF LEASE UNDER TRANSFER OF PROPERTY ACT.docx

1/16

Chapter I

INTRODUCTION

111. Determination of lease

A lease of immovable property determines-

(a)by efflux of the time limited thereby,

(b)where such time is limited conditionally on the happening of some event-by the happening of

such event.

(c)where the interest of the lessor in the property terminates on, or his power to dispose of the

same extends only to, the happening of any event-by the happening of such event.

(d)in case the interests of the lessee and the lessor in the whole of the property become vested at

the same time in one person in the same right.

(e)by express surrender, that is to say, in case the lessee yields up his interest under the lease to

the lessor, by mutual agreement between them.

(f )by implied surrender.

(g)by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides

that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character

as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is

adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of

such event; and in any of these cases the lessor or his transferee gives notice in writing to the

lessee of his intention to determine the lease.

(h)on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the

property leased, duly given by one party to the other.


2/16

Chapter II

Clause (a): Efflux Of Time

Leases for a definite period expire on the last day of the term, and the lessor or any other person

entitled to the reversion may enter without notice or other formality provided there is no 'holding

over' within the meaning of sec. 116. Accordingly, clause (a) has to be read with sec. 116. Where

before the determination of the lease by efflux of time the lessee applies to the custodian for

confirmation of the lease under sec. 5A. East Punjab Evacuees' Administration of Property) Act,

1947 and the custodian impliedly assents to his continuing in possession, the lessee does not

become a trespasserThakar Das V Custodian1

Tenancy getting terminated by efflux of time, tenant is not entitled to any statutory notice to quit

P. S. Bcdi v Project & Equipment Corporation2. The Supreme Court has reiterated this

principle in M. Vij ayalaxmi v G. Goverdhan Reddy3.

In view of the expression 'law abhors a forfeiture', which has almost become a legal maxim, a

lessee is entitled to relief against forfeiture at the appellate stage since a 'suit' includes an 'appeal'.

But when the lease stood determined by efflux of time, the grant of relief under sec. 114 would

be entirely out of placeShyamlal v Nanda Rani4

Since a lease does not terminate until the expiry of the term, a suit for ejectment and possessionbefore the expiry of the period is premature: but the suit need not necessarily be dismissed, for

although it is not maintainable so far as it roiates to the claim for immediate possession, the

landlord is entitled to a declaration of his right Ghulam Hussain v Mahomed Hussain5.

following Sita Ram v Ram Lai6. The Madras High Court holds that such a suit is not

maintainable and must be dismissed, even though the lease expires during the pendency ol the

1AI R 1950 EP 175

2AI R 1994 Del 255

3(1997)11 SCC 358

4AI R 1988 Cal 133 (135)

56 ALJ 177

618 All 440


3/16

suit. The reason is that the rights of the parlies must be determined as on the date of the action

broughtRamanandan v Pulikutti7

No notice to quit is necessary when the action for ejectment is brought after the lease has expired

and the tenancy has come to an end by efflux of time. When it is not shown that the lessors

accepted rent after the termination of the lease, the lessees are tenants by sufferance, being in no

better stalus than trespassers and are liable to ejcctmenl without notice Chandi Charan v

Ashulosh8and Md. Fazthzzaman v Anwar H usain

9.

When the interest of a mortgagee comes to an end. the lease created by him also comes to an

end. To this there is an exception. Leases created either in exercise of statutory or express powers

are binding on the mortgagor after redemption if those are exercised in the course of prudent

management. Whether an act is prudent or improvident has to be decided in the light of the world

of the past Tara Chand v Ganga Ram10

. On redemption the tenant inducted by the

mortgagee has no right to be in possessionJadavji v Navnilbhai11

.

A clause in the lease deed recited that il the lessee remained in possession of the shop-room after

the period of lease without the consent of the lessor, he would pay one and half times rent per

season. This is not a renewal clause which must be bilateral and not unilateral because the

lessee's featrfty to pay enhanced rent is dependent on his possession without the sermssion of the

lessor. The clause only safeguards the interests of the lessor to receive the amount from the

lessee tor the use and occupation of the premises. The lessee cannot remain in possession of the

premises without execution of a fresh lease deed and that having not been done, under sec

111(a) the lessee is liable to be evicted as his tenancy has determined by efflux of timeGulam

Natx v Gulam Rasool12

and Lease to rear and catch fish was initially granted for seven years and

was later on extended for another two years during the continuance of the agreement. Sec. 106

does not apply as the period fixed in lease was more one year. Such lease is determinable under

sec 111(a) by efflux of imited by contract. Continuance of possession by temporary injunction

721 Mad 288

840 CWN 52

9AI R 1932 All 314

10AIR 1978 Delhi 58

11AI R 1987 SC 2146 (2155)

12AIR 1986 J&K


4/16

court, and ultimate permanent injunction till the defendant is evicted course of law, cannot be

held to be assent by the landlord for of lessee's possession and sec. 116 does not apply

Narayan Muni cipal Council13

Chapter III

Clause (b): Contingent Term

If the term of tho lease Is limited conditionally on the happening of some event, the lease is

determined by the happening of such event. Thus, where the term is limited for thirty years if the

lessee shall so long live, the lease is terminable at the end of thirty years or upon the death of the

lessee, which event may first happenChauthmal v Sardarmal

14

A lease for 99 years granted to a company provided inter alia that in case the company goes into

liquidation voluntarily or otherwise, it will cease to be operative. The company went into

liquidalion: Held that clause (d) die- not applySri nath Zamindary, in re AI R 1952 Cal 207.

Where a lease for 40 years contained a clause that if the lessee carried on any business other than

manufacture ol salt, the lease would stand cancelled; held that clause (b) did not apply

Kr ishna Chandra v National Chemical15

Where an employee of the landlord occupying a building is liable to be evicted on ceasing to be

in employment, the tenancy is governed by sec. 111 (b), T.P. Act and no notice under sec. 106,

T.P. Act is necessary for terminating the tenancy Pratap Narain v J. K. I ron & Steel Co.16

.

When a lease is created by the mortgagee in possession, the lessee cannot claim any right beyond

the term of the original lessor's intercsl unless recognised as lessee by the mortgagor on

redemptionSachalmal Parasram v Ratna Bai17

If the maximum duration of the term is fixed (the term may be for any length of time but there

must be a definite limit), the lease may bo subject to determination within the period; and this

13AI R 1991 On 179

14AI R 1959 Raj 24

15AI R 1957 On 35

16AIR 1975 All 73

17AI R 1972 SC 637


5/16

may be provided either by a provision that Ihe lease may be determined by notice on a given

event, as for example, upon the termination ot a war [Great Nor thern Rty Co. v Arnold ]18, or

by a provision that the lease is to endure only during the continuation of a specified state of

affairs, as for instance, while the lessee remains in the lessor's employment, or continues to

occupy the premises, so that upon the state of affairs ceasing the lease automatically determines

Halsbury's Laws of England19

18(1916)33 TLR 114

194th Ed.. Vol. 27. para 207.


6/16

Chapter III

Clause (c): Termination Of Lessor's Interest Or Power

Where the lessor's interest is limited, the lease comes to an end with the extinguishment of that

interest Raghuvir Singh v Jethu20

. If the lessor holds the property for his own life or for the

life of another, the lease would terminate on the death of himself or that other person. A lease

granted by a Hindu widow would fall under this clause. Such a lease is. however, voidable and

not void on the grantor's death Ma&u Sudan v Rooke21

. Where the husband, the contracting

party, surrenders the lease, the wife has no legal right to stay on. She becomes a trespasser

Sumatilai v Monorama22

. This clause does not mean that if in the exercise of his power of due

management the mortgagee has entered into an agreement of tenancy, on the mere redemption of

the mortgage the tenancy would automatically lapse Hardie v Wahid23. A lease from year to

year granted by the manager of a temple in course of management does no: come to an end with

the expiry of the office of the manager or his successors Atyam Veerr aju v Pechetti

Venkanna24

. In the case of a lease under sec. 76(a) the lease terminates on the extinction of the

mortgage by redemptionC. K. Kuttapan v Karihiyayani25

. On redemption the tenant inducted

by the mortgagee has no nght to be in possessionJadavji v Navnidbhai26

. A tenant inducted

into possession of an urban building or premises by a usufructuary mortgagee does not retain his

status as a tenant alter redemption of Ihe mortgage. He is not entitled to protection under theRajasthan Premises (Control of Rent and Eviction) Act, 1950 Gouri Shankar v Kapoor

Chand27

20AI R 1923 Pat 130

2125 Cal 1 (PC), 24 IA 164

22(1977)18 GLR 512

23AIR 1954 All 16

24AI R 1966 SC 629

25AI R 1981 Ker 107

26AI R 1987 SC 2145

27AI R 1983 Raj 79


7/16

Chapter IV

Clause (d): Merger

The common law doctrine of merger is statutorily embodied in clause (d) ot sec. 111 of the T.P.Act. The doctrine of merger as contemplated in clause (d) conlemplates (i) coalescence of the

interest of the lessee and the interest of Ihe lessor, (ii) in the whole of the property, (iii) at the

same time, (iv) in one person, and (v) in the same right. There must be a complete union of the

whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking

into the larger interest of the lessor in the reversion T Lakshmipathi v P. Ni thyananda

Rcddy28

. In mis case the apex court has approved the following decisions which relate to

thedoctrine of merger: Badr i Narain v Rameshwar Dayal29

.

The principle underlying the doctrine ol merger has been discussed in notes under sec. 101. The

doctrine of merger stands statutorily incorporated in clause (d) ot sec. 111 and has lo be read

along with sec. 109 of the Act and not in isolation - Nalakath v Koonkadan30. Under this clause

a merger takes place when the tenant acquires the immediate reversion, and the greater estate and

the less coincide in the same person without any intermediate estate Suraj Chandra v Behari

Lal31

. Merger is largely a question of intention, dependent on circumstances, and courts will

presume against it when it operates to the disadvantage of a partyNatakalh v Koonkadan32

.

"Merger" is generally defined as the absorption of a thing of less importance by a greater,

whereby the lesser ceases to exisl but the greater is not increased, and rights are said to be

merged when the same person who is bound to pay is also entitled lo receive Pacif ic States

Savings & Loan Co. v Slr obeck33

. The maxim nemo potest esse tenons et dominu. i.e.

nobody can be both a l andl ord and tenant at the same time (in respect of the same property)

Prosonno v Jagut Chundcr34

.

Explaining the underlying principles of "merger". Lohoti J. observes:

28(2003)5 SCC 150

29AI R 1951 SC 186

30(2002)6 SCC 1

31AI R 1939 Cal 692 (695)

32(2002)6 SCC 1

33139 Cal App 427

343 ClR 159


8/16

"A merger, at law, is defined to be where a greater estate and a lesser coincide and meet in one

and the same person, in one and the same right, without any intermediate estate. The less estate is

immediately annihilated, or, in the law phrase, is said to be merged that is. sunk or drowned

in the greater. Thus, if there be a tenant for years, and the reversion in fee simple descends to

or is purchsed by him, the term of years is merged in the inhentance. The rule in equity is the

same as at law. with this modification; that at law it is invariable and inflexible; in equity it is

controlled by the expressed or implied intention ol the parly in whom the interest or estates unite.

Merger is founded on the principle that two estates one larger and one smaller cannol and

need notcoexist, if the smaller estate can in equity, and must in law. sink or merge into the

larger estate' Nalakat35

. The principle ot merger enunciated in this clause equally applies

whore the merger takes place by virtue of transfers by operation of law Prontotho Nath v

Kali Prosonno36.

35Supra

3628 Cal 744


9/16

Chapter V

Clause (e): Express Surrender

Section 111 provides for vahous circumstances when the lease of immovable property comes toan end. It contemplates surrendereitherexpressas under clause (e)or impliedunder clause

(f )Kamalabai v Mangilal37

. For a valid and binding surrender it is not always essential for

the lessee to deliver possession of leasehold property to the lessor. This will bo clear from the

following observations of the apex court in Kamalabai v Mangilal38

"It is thus clear that when the parties surrendered the tenancy and substituted it by a fresh

arrangement merely because physically the possession was not handed over is not of much

consequence. Apparently in the present case also by mutual agreement, the tenancy came to anend and by arbitration what was sought was an arrangement for time on payment of damages for

use and occupation. Admittedly, it did not either continue the old tenancy or started a new one.

This substitution of new arrangement and the determination of the old by mutual agreement

clearly indicates that the tenant surrendered his tenancy right and Ihe court below was not right

in coming lo Ihe conclusion that the surrender is not there as possession was not handed over".

In either case it is an yielding up of the term of lessee's interest to him who has the immediate

reversion or the lessor's interest. It takes effect like a contract by mutual consent on the lessor's

acceptance of the act of the lessee. The lessee cannot, therefore, surrender unless the term is

vested in him; and the surrender must be to a person in whom the immediate reversion expectant

on the term is vested. There must be a taking of possession, not necessarily a physical taking, but

something amounting to a virtual taking of possession. Whether this has occurred is a question of

fact Shah M athur a Das v Nagappa39. This clause applies only to leases which can be

surrendered; where a lease is entered into for a definite term, and there is a covenant in it

expressly forbidding surrender by the tenant before the expiry of the term, this clause has no

application Jotindra Mohan v Emam Ali40

. In cases of surrender, one has to look to the

37(1987)4 SCC 585

38Supra

39AI R 1976 SC 1565

409 CLJ 632


10/16

substance of the transaction Kashiprasad v Bedprasad41

. A formal deed of reconveyance is

not necessary to effect a valid surrenderImambandi v Kamaleswari42

.

Where the original lease is registered, the surrender of a portion of the tenancy with an

abatement of rent can be effected only by a registered instrument B. Ahmed Maracair v

Mathuvaliappa43. Surrender consists in the yielding up of the term by the lessee to the lessor

accompanied by delivery of possession and the acceptance of the same by the lessor. Where the

Government takes possession of the property under a requisition order, it takes the possession

from both the lessor and lessee. It cannot therefore, operate as a surrender so as to terminate the

temancy Tarabai v Padamchand44

. Where in spite of a letter by the tenant that he would

surrender tne lease by a certain date the landlord allows him to continue in possession beyond the

intimated period, the original tenancy must be held to be subsistingGosta Behah v Ramosh45

.

A relinquishment in writing without a surrender of possession on the part of the tenant does not

constitute a sufficient right in the landlord to recover possession by means of a suit in ejectment

Amar Nath v Har Prasad46

.

There can be no valid surrender unless the surrender lakes place by mutual agreement between

the lessor and lessee. Therefore, the lessee cannot make a valid surrender by merely giving

notice to his landlord that he is going to relinquish the land, and the mere fact that the landlord

silently receives the notice, which the lessee has no legal right to give, cannot be regarded as an

assent to the relinquishment Judoonath v Scheone, Ki lbum & Co47

. If the lessor has

mortgaged the land as well as the right to recover the rent, the lessee cannot make a surrender of

his lease in favour of the lessor, because it was not competent to the lessor to accept the

surrender withoul the concurrence of the mortgagee. The right to agree to the surrender of the

lease did not remain in the lessor-mortgagor but passed lo the mortgagee, and without the latter's

41

AI R 1940 Nag 113

4214 Cal 109 (119) (PC)

43AI R 1961 Mad 28.

44AI R 1950 Bom 89

45AI R 1978 Cal 23S

46AI R 1932 Oudh 79

479 Cal 671


11/16

consent the surrender was not valid. Consequently, the lessee remained liable to pay rent to the

mortgageeHavu v Ganapati48.

Chapter V

Clause (f): Implied Surrender

An implied surrender takes place either by the creation of new relationship between the lessor

and lessee, such as the acceptance of a new lease, or in other ways based on ihe consent of the

parties, or by relinquishment of possession by the lessee and taking over of possession by the

lessor which would lead to the inference of an implied surrender of me leaseAmar Kr ishna v

Nazir Hasan 14 Luck 72349.

An implied surrender can be inferred trom the conduct ot the parties Konejeti v Thammana50

.

The principle which governs the doctrine of implied surrender of a lease is that when certain

relationship existed between two parties in respect of a subject-matter and a new relationship has

come into existence regarding the same subject-matter, the two sets cannot co-exist, being

inconsistent and incompatible between each other i.e. if the latter can come into effect only on

termination of the former, then it would be doomed to have beon terminated in order to enable

the latter to operate. A mere alteration or improvement or even impairment of the former

relationship would not ipso facto amount to implied surrender. It has to be ascertained on the

terms of the new relationship vis-a-vis the erstwhile demise and then judging whether there was

termination of the old jural relationship by implicationT.K. Lathika v Seth Karsandas51

A surrender does not follow from a mere agreement made during the tenancy tor the reduction or

increase of rent, unless there is a special reason to infer a new demise Gappalal v Shi raji52

. It

is not necessary that in order to operate as a sunender. the new lease should be of the same

duration as the existing lease. If a lessee for twenly years takes a new lease lor ten years, the old

48AI R 1930 Bom 329 (330).

49AI R 1939 Oudh 257

50AI R 1957 AP 619

51(1999)7 Supreme 601

52AI R 1969 SC 1291


12/16

lease is of the new relationship vis-a-vis the erstwhile demise and then judging whothcr there

was termination of the old jural relationship by implicationT.K. Lathika v Seth Karsandas53.

On the death of a tenant the tenancy right is inherited by all his heirs who hold the same as

tenants-in-common or co-tenants and not as joint tenants. The fact that letter of attornment did

not mention the names of some of the heirs and they also did not assert their rights cannot have

the effect of determining their rights or cannot amount to an implied surrenderI ndra Sharma

v Gopal Dass54

In the absence of evidence creating a new tenancy, implied surrender of the lease originally held

cannot be presumedSushi l v Narayan55

. Where the new lease is void or voidable or does not

pass an interest according to the contract the acceptance of ii does not operate as a surrender of

the original leaseJamini Mohan v Debendra56.

53(1999)7 Supreme 601

54AI R 1985 Del 118

55AI R 1978 Cal 174

56AI R 1924 Cal 355


13/16

Chapter VI

Clause (g): By Forfeiture

By forfeiture; that is to say,

(1) in case the lessee breaks an express condition which provides that, on breach thereof, the

lessor may re- enter or

(2) in case the lessee renounces his character as such by setting up a title in a third person or by

claiming title in himself or

(3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re- enter on

the happening of such event and in 3[ any of these cases] the lessor or his transferee

4[ gives notice in writing to the lessee of] his intention to determine the lease:

Case :Yashpal Lala Shiv Narain vs Al latala Tala Malik Waqf Ajakhan57

57http://indiankanoon.org/doc/1270013/


14/16

Chapter VII

Clause (h): Notice To Quit

A breach of a condition, as explained earlier, only makes the lease voidable. It is to beremembered that the forfeiture is not complete unless and until the lessor gives notice that he has

exercised his option lo determine the leaseAsghar v U.P, Government58

. The Supreme Court

has ruled that the requirement of a written notice is a statutory formality and this requirement

cannot be said to be based on any general rule ot justice, equity and good conscience. Hence it is

not applicable to leases executed betore April 1930 when the Amending Act of 1929 came into

forceNamdeo Lokman L odhi v Narmadabai59

.

Sale of property under lease without determination of the lease by notice under sec. 111(g)would be void as in that case the lease would be subsisting and the owner of the land had no right

to sell it with vacant possession and unecumbered with the lease. The consideration paid

therefore failedChadrawati v Surendra60.

Where a suit for eviction is instituted before the expiry of the period of the notice but the plaint is

subsequently amended by stating that the claim for possession has matured during the suit, the

suit cannot be dismissed as prematurePundlik v Mamraj61

. A notice terminating the tenancy

in part is invalidGhasi Ram v Jagat Narain62

.

If a lease is granted by a municipality, it can be terminated by the municipality according lo law.

and only by issuing a proper notice as required by the Transfer of Property Act, because the

municipality is not outside the provisions of this Act. The municipality cannot determine the

iease by simply sassing a resolution, and then and there requiring the lessee to quit Amnultah

v Emp63

.

58AIR 1954 All 649

59AI R 1953 SC 228

60AIR 1979 All 406

611969 Mad LJ (notes) 23

62AIR 1976 All 221

63AIR 1928 All 95


15/16

Where a notice under sec. 111(h) has been given, it is not necessary to give also a notice under

sec. 111(g) on the ground of forfeiture of the lease Mooi Chand v I shwar Lal64. Bui if the

lessor does not serve the requisite notice under sec 111(g) read with sec. 114A, the lease would

be deemed to be subsistingChandrawati Devi v Surendra L ai Singh65.

Landlord agreed to sell the property to the tenant on payment of the purchase money in equal

instalments and on failure to make payments the sale agreement would stand cancelled. Tenant

did not pay even the first instalment. The landlord then filed a suit for possession of the property

without giving one month's notice. Held that after the cancellation of the agreement Ihe tenant-

appellants cannot be said to have stood restored lo their original position as tenants. Hence the

suit can be filed without giving notice under the T.P. Act Arj unlal v Girish Chandra66

In a

case there was lease of a shed and not of land underneath it. When the shed had collapsed and the

tenant reconstructed the shed and continued to possess the same, the issuance of notice for

termination of the lease was not required as the subject-matter of the lease got destroyed and

with that the lease came to an endPhulan Devi v Anand Saroop67.

64AI R 1974 Raj 163

65AIR 1979 All 406

66AI R 1973 SC 2256

671995 AIHC 1590 (HP)


16/16

CONCLUSION

Sec 11 of Transfer of Property Act 1882 i:e Determination of Lease is a very wide topic and

covers a large segment of day todays life issues. A lease or tenancy may come to an end in the

following ways. It should, however, be noted that the effect of this Section has been practically

superseded by varous Rent Control and Eviction Acts passed by various State Legislature fr e.g.,

By Lapse of time; By happening of a specified event; By termination of lessors interest; By

merger; By surrender; By implied surrender; By forfeiture; On the expiration of the notice to

quit.

DETERMINATION OF LEASE UNDER TRANSFER OF PROPERTY ACT.docx

Documents

Transcript of DETERMINATION OF LEASE UNDER TRANSFER OF PROPERTY ACT.docx