INDIAN OIL CORPORATION LTD. versus SUDERA REALTY PRIVATE LIMITED on 6 September 2022

SUPREME COURT REPORTS

[2022] 19 S.C.R.

AINDIAN OIL CORPORATION LTD.

v.

SUDERA REALTY PRIVATE LIMITED

[Civil Appeal No. 6199 of 2022]

BSEPTEMBER 06, 2022

[K. M. JOSEPH AND PAMIDIGHANTAM SRINARASIMHA, JJ.]

Lease – Tenant at sufferance – Liability to pay mesne profits– Held: A tenant continuing in possession after the expiry of theClease may be treated as a tenant at sufferance, which status is ashade higher than that of a mere trespasser, as in the case of atenant continuing after the expiry of the lease, his original entrywas lawful – But a tenant at sufferance is not a tenant by holdingover – While a tenant at sufferance cannot be forcibly dispossessed,Dthat does not detract from the possession of the erstwhile tenantturning unlawful on the expiry of the lease – In the present case,the appellant while continuing in possession after the expiry of thelease became liable to pay mesne profits.

West Bengal Tenancy Act, 1956 – Whether there was a priorEdetermination of the lease of 21 years by the respondent-lessor, ifso, whether the appellant-lessee is entitled to protection of theTenancy Act – Held : No reason to disagree with the High Courtthat the term of lease was 21 years from the date on which the threefloors in question were handed over – In regard to the 2nd and 3rdfloors, possession was handed over to the appellant on 16.09.1969F– As far as the 4th floor is concerned, the possession was handedover only on 04.11.1970 – The lease agreement in 1968 along withthe supplementary agreement in 1969 did constitute a lease – Inthis case it is no doubt true that there was pre-determination clausewhich gave an option to the appellant to determine the lease after aGperiod of 8 years – From the evidence and the stand taken by theappellant as emerging from the documents, it is clear that theappellant continued for the full length of 21 years in terms of thelease – Its possession was never ruffled – Appellant also filed a suit– During the entire period after the execution of the deed in 1968and the supplementary lease deed in 1969, till the period of 21H

years ran out, appellant never took up the case based on its rightunder the West Bengal Premises Tenancy Act in view of the option ithad to determine the lease under Clause 9 – The presence of theclause in question is not to be confused with the issue relating tothe effect of the notice dated 07.12.1977 purported to have beensent to the respondent – Therefore, the appellant may not succeedon the strength of the option it claimed under the agreement to lease.

Transfer of Property Act, 1882 – s. 106 – Was letter dated19.10.1990, a notice u/s. 106 – Held : On the terms of the letterdated 19.10.1990 it cannot be held that it amounted to terminationof the lease – There was a lease for a term of 21 years commencingin the case of the 2nd and 3rd floors from 17.09.1969 – Therefore,the period of 21 years had already run out by the time the letterdated 19.10.1990 came to be issued – In other words, it was a caseof a lease qua the 2nd and 3rd floors which had expired by efflux oftime, in September, 1990.

Limitation Act, 1963 – Article 51 – Plea was that a suit ofmesne profits is governed by Article 51 of Limitation Act – Suit waslaid on 10.04.1995, it was contented that for the period beyond 3years before the date of the suit, the suit would be barred – Held :Landlord by the suit seeks to realise, what in law is described asdamages for unauthorised occupation by the tenant after the expiryof the lease – It is not to be conflated to the profits received withinthe meaning of Article 51 of the Limitation Act, as it involves findingout the rate at which the landlord could have let out the premises –It would be the residuary Article, namely, Article 113, which shouldapply – Therefore, on facts it may not be possible to hold that thesuit filed by the respondent, should still be found to fall under Article51 of the Limitation Act and barred as regards part of the cause ofaction.

Dismissing the appeals, the Court

Conclusion

Dismissing the appeals, the Court

HELD: 1.1 Whether the documents styled as agreementdated 21.11.1968 and the supplementary agreement for leasedated 12th September, 1969 constituted a lease? The agreementof lease dated 21.11.1968 on its own operated as a lease. It was ademise and operated as such. Admittedly, it was a registereddocument. Further, as correctly contended by the respondent, A

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Athe appellant in its pleadings proceeded to contend that theagreement of lease dated 21.11.1968 operated as a lease. Therewas indeed a written agreement of lease dated 21.11.1968. Theterm of the lease was 21 years which was to begin from the dateon which demised premises was handed over to the lessee. Therent for the demised premises was also fixed. [Paras 12, 14][478-BF; 480-B]

1.2 Whether the possession of 2nd and 3rd floors werehanded over on 17.09.1969 and 4th floor stood handed over on04.11.1970?

CThe Division Bench has found in modification of thejudgment of the learned Single Judge that as there are nodocuments to show the exact date. Appellant was put inpossession of the 2nd and 3rd floors and fixed 17.09.1969 as thestarting point. Court can safely proceed on the basis that the 4thfloor was handed over on 04.11.1970. As far as the 4th floor isDconcerned, in view of the findings by the High Court that thepossession of the 4th floor was handed over on 04.11.1970 andthe same not being questioned before us, this Court can safelyproceed on the basis that the 4th floor was handed over on04.11.1970. The findings rendered by the High Court is a plausibleEview and we would, therefore, take the view that possession of2nd and 3rd floors was handed over on 17.09.1969 and 4th floorstood handed over on 04.11.1970. [Paras 15,17 & 22][480-C, G;483-C]

1.3 Whether the appellant is a monthly tenant fromFNovember, 1969?

The contention that the appellant should be treated as amonthly tenant even from the very beginning is without any merit.The agreement dated 12.9.1969 is admittedly a registereddocument. No force in law or on facts to permit the appellant toGcontend that the appellant be treated as a monthly tenant since1968. The period of the lease is to be calculated from the datewhen the possession was handed over. Possession, in fact, washanded over on the dates when it is handed over as found in theimpugned judgment. The cases of the appellant is also in theteeth of the correspondence dated 21.08.1990 and 03.11.1990,Hinter alia. [Paras 24, 25][483-E; 484-B, C-D]

1.4 No reason to disagree with High Court that the term oflease was 21 years from the date on which the three floors inquestion was handed over. In regard to the 2nd and 3rd floors,possession must be found handed over to the appellant on16.09.1969. As far as the 4th floor is concerned, we affirmed thefinding of the High Court that possession was handed over onlyon 04.11.1970. There is also no dispute that the parties namelythe appellant and the respondent could determine the lease priorto the expiry of 21 years. It cannot be in the region of disputethat the respondent did issue a notice dated 12.12.1977. Therespondent followed it up by filing a suit, C.S. No. 20 of 1978,claiming possession. There was also a cross suit filed by theappellant. Both these suits finally came to be compromised. IfClause 26 read with the proviso is considered, right to forfeit andto determine the lease stood conditioned by the requirement ofthe payment of the amounts to the appellant under the mortgage.There is no pleading at all in this regard. The notice of terminationby the respondent is not tendered in evidence as pointed out bythe respondent. We have noticed the contents of the letter dated08.03.1990 which clearly indicate that the appellant had in mindthe proviso to Clause 26. In paragraph 12 of the written statement,the case which was set up was that under the terms of the leaseagreement and supplementary agreement, the lease has beenmade expressly terminable before its expiry at the option of theappellant. This appears to be the case with reference to Clause9. As regards the case based on the effect of the waiver withinthe meaning of Section 113 of Transfer of Property Act, thefollowing aspects are noticed. The notice of termination is itselfnot produced. The judgment of this Court in Calcutta CreditCorporation Ltd. was rendered under Section 113 of the Transferof Property Act. Waiver of forfeiture within the meaning of Section111 (g) of the Transfer of Property Act is provided in Section 112of the Transfer of Property Act. The considerations relevant forthe operation of the Section 112 is different from that of Section113 of the Transfer of Property Act. Since the notice itself is notbefore the Court, things are not clear. There is no adjudicationabout the notice of termination in the earlier suit. We have alsonoticed the proviso to clause 26. We have seen the standof the appellant even in the year 1990 as made clear from the AB

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Aletter dated 21.08.1990 addressed by it to its solicitors. There isno case as to when the appellant stood paid. This is also relevantfor the reason that the notice of termination referred to by theappellant dated 07.12.1977 if not legally permissible at the timewhen it was issued, it would not in law have the effect ofdetermining the lease which was for a period of 21 years. In theBcircumstances of this case, there is no merit in the case of theappellant based on the decision of this Court in Calcutta CreditCorporation Ltd. as regards the effect of waiver under Section111 of the Transfer of Property Act resulting in the creation ofthe new tenancy. [Paras 41, 53, 54][498-H; 499-A-C; 506-C-H;C507-A-B]

Calcutta Credit Corporation Ltd., & Another v. HappyHomes [P] Ltd [1968] 2 SCR 20 – referred to.

1.5 In this case it is no doubt true that there is pre-determination clause which gave an option to the appellant toDdetermine the lease after a period of 8 years. From the evidenceand the stand taken by the appellant as emerging from thedocuments, it is clear that the appellant continued for the fulllength of 21 years in terms of the lease. Its possession was neverruffled. The appellant also filed a suit. During the entire periodEafter the execution of the deed in 1968 and the supplementarylease deed in 1969, it would appear that till the period of 21 yearsran out, appellant never took up the case based on its right underthe West Bengal Premises Tenancy Act in view of the option ithad to determine the lease under Clause 9. The presence of theclause in question is not to be confused with the issue relating toFthe effect of the notice dated 07.12.1977 purported to have beensent to the respondent which we have separately dealt with.Therefore, in terms of Pabitra Kumar Roy, the appellant may notsucceed on the strength of the option it claimed under theagreement to lease.[Para 57][509-C-F]GPabitra Kumar Roy and Another v. Alita D’Souza [2006]8 SCC 344 : [2006] 6 Suppl. SCR 678 – referred to.1.6 IS LETTER DATED 19.10.1990, A NOTICE UNDERSECTION 106 OF THE TRANSFER OF PROPERTY ACT?

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On the terms of the letter dated 19.10.1990 it cannot beheld that it amounted to termination of the lease. There was alease for a term of 21 years commencing in the case of the 2ndand 3rd floors from 17.09.1969. Therefore, the period of 21 yearshad already run out by the time the letter dated 19.10.1990 cameto be issued. In other words, it was a case of a lease qua the 2ndand 3rd floors which had expired by efflux of time, in September,1990. The argument of the appellant in this regard is rejected.[Para 58][510-B-C]

1.7 MESNE PROFITS: WAS THE POSSESSION OF THEAPPELLANT WRONGFUL ON THE EXPIRY OF THE LEASE?

Section 111[a] of the Transfer of Property Act, 1882provides that the lease is determined by efflux of time. On theexpiry of the lease, the lease ends. A tenant continuing inpossession after the expiry of the lease may be treated as a tenantat sufferance, which status is a shade higher than that of a meretrespasser, as in the case of a tenant continuing after the expiryof the lease, his original entry was lawful. But a tenant atsufferance is not a tenant by holding over. While a tenant atsufferance cannot be forcibly dispossessed, that does not detractfrom the possession of the erstwhile tenant turning unlawful onthe expiry of the lease. Thus, the appellant while continuing inpossession after the expiry of the lease became liable to paymesne profits. [Paras 59 & 60][510-D, G-H; 511-A]

1.8 LIMITATION: WHETHER THE SUIT IS BARREDIN RELATION TO MESNE PROFITS BEYOND 3 YEARS OFTHE SUIT?

The plea is based on the case that a suit of mesne profits isgoverned by Article 51 of the Limitation Act, 1963. The suit waslaid on 10.04.1995. The contention is that for the period beyond3 years before the date of the suit, the suit would be barred.Article 51 contemplates a period of three years from the date onwhich the profits from the immovable property is received by thedefendant. If it is to be understood as profits actually received bythe defendant, then, it is obvious that Article 51 may not apply. Ifa Suit for mesne profits of the kind involved in this case would AB

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Afall more appropriately under Article 113 of the Limitation Act,which is the residuary Article, the Suit must be instituted withina period of three years from the date on which the right to sueaccrue. This Article is in stark contrast with Article 58 of theLimitation Act, under which, the period of limitation is three yearsbut from the date on which the cause of action first arises. If aBclaim for mesne profits is one, which accrues from day-to-dayand it is a continuing one and if the suit for mesne profits wouldfall to be decided under Article 113 of the Limitation Act, then,since the cause of action is a continuing one, the suit may not bebarred as regards any part of the claim as contended by theCappellant. In this case, there is another dimension. The case setup by the respondent plaintiff in the plaint, as noticed, was that, itby virtue of the acknowledgment and admission of the juralrelationship in letter dated 24th May, 1994, there is no bar oflimitation for any part of its cause of action. In their submissionbefore this Court also, the respondent has laid store by the standDthat the respondent was awaiting a decision by the Chairman. Itis true that a pure question of law which does not involve anyinvestigation of facts, and if the plea of limitation in a given caseis such, there can be no taboo in this court dealing with it even ifraised for the first time. This is however not a case where theEplea was not raised. It was raised and an issue was framed. But itwas expressly given up before the Single Judge and not pursuedbefore the Division Bench. [Para 63, 66-68][511-G-H; 512-B-C;513-F-H; 514-A-D]

1.9 An acknowledgment, as far as the admission of the jural Frelationship is concerned, need not be express. It would becomenecessary to probe the surrounding circumstances. This mayinclude going into the facts. [Para 73][516-E]

1.10 Mesne profits, as defined in Section 2[12], CPCincludes not only the profits which a person in wrongfulGpossession of such property actually receives but also those profitswhich he might with ordinary diligence have received therefromtogether with interest on such profit. What is excluded is onlythe profit due to improvement made by the person in wrongfulpossession. However, Article 51 of the Limitation Act deals with H

a suit for profits of the immovable property belonging to theplaintiff which have been wrongfully received by the defendant.The time no doubt for such a suit begins to run when the profitsare received. [Para 78][518-G-H]

Sri Raja Inuganti Venkata Rajagopala RamaSuryaprakasa Rao Garu v. Maharaja of Pithapuramand Another AIR 1948 PC 175; Phiraya Lal Alias PiaraLal and Another v. Jia Rani and Another AIR [1973]Del 186; Rattan Lal v. Girdhari Lal and Another AIR[1972] Del 11; Bhawanji Lakhamshi and Others v.Himatlal Jammnadas Dani and Others [1972] 1 SCC388 : [1972] 2 SCR 890 – referred to.

1.11 This Court has declared that in the case ofdetermination of a lease by the lease coming to an end, tenantwould be liable to pay damages for use and occupation at the rateat which the landlord could have let out the premises on beingvacated by the tenant. What the landlord is entitled is, to getdamages for the use and occupation at any rate, at which, thelandlord could have let out the premises on being vacated by thetenant. The liability of the tenant, to pay damages on the basis ofthe rate at which landlord could have let out the premises, maynot be the same as the profit the tenant might have received withordinary diligence. In the first place, equating the same mustinvolve a right with a tenant to transfer or sub-let the premises.In other words, the Court would have to find whether the tenantcould have, in law, let out the premises and derived a higheramount. [Para 82][520-F-H; 521-A-B]

1.12 Once the lease comes to an end, the erstwhile tenantbecomes a tenant at sufferance. He cannot be dispossessed,except in accordance with law. But he cannot, in law, have anyright or interest anymore. Even though, under Section 108 of theTransfer of Property Act, if there is no contract to the contrary,the tenant may have the right, under Section 108(j), to transferhis interest absolutely or even by sub-lease or mortgage, whenthe lease expires by afflux of time, his interest as lessee wouldcome to an end. Thus, on the expiry of a lease, the erstwhiletenant, who remains a tenant at sufferance, would have no right A

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Ato transfer. In this regard, this Court would have to hold thatthere is a new lease by holding over. The acceptance of the amountafter the expiration of the lease by the respondent was withoutprejudice to its case. The appellants cannot persuade the courtto hold that there is a lease by holding over. Therefore, it maynot be appropriate to allow the appellant to raise the contentionBof limitation or to allow him to succeed on the same, based on thecase falling under Article 51. This is, no doubt, despite noticingthe averment in the plaint which appears to have been made withreference to Section 2(12) of the CPC. The principle laid down inAtmaram and the principles already considered have to be bearCin mind. Landlord by the suit seeks to realise, what in law isdescribed as damages for unauthorised occupation by the tenantafter the expiry of the lease. It is not to be conflated to the profitsreceived within the meaning of Article 51 of the Limitation Act,as it involves finding out the rate at which the landlord couldhave let out the premises. It would be the residuary Article,Dnamely, Article 113, which should apply. In the factual context, itmay not be possible to hold that the suit filed by the respondent,should still be found to fall under Article 51 of the Limitation Actand barred as regards part of the cause of action. [Paras 83-86][521-C-D, E-H; 522-A-C]

EAtma Ram Properties [P] Ltd. v. Federal Motors [P]Ltd. [2005] 1 SCC 705 : [2004] 6 Suppl. SCR 843;Ranjit Chandra Chowdhury v. Mohitosh Mukherjee[1969] 1 SCC 699 : [1970] 1 SCR 16; TayabaliJaffarbhai Tankiwala v. Messrs. Asha and Co. andFAnother (1970) 1 SCC 46 : [1970] 2 SCR 554; NandRam [Dead] Through Legal Representatives andothers v. Jagdish Prasad [Dead] Through LegalRepresentatives [2020] 9 SCC 93; Shakti Bhog FoodIndustries Ltd. v. Central Bank of India and Another(2020) SCC OnLine 482; Savita Dey v. NageswarGMajumdar and Another (1995) 6 SCC 274 : [1995] 4Suppl. SCR 80; Raptakos Brett and Company Limitedv. Ganesh Property (2017) 10 SCC 643 : [2017]8 SCR 982; Messrs. Lakshmirattan Cotton Mills Co. Ltd.and Messrs. Behari Lal Ram Charan v. The Aluminium H

INDIAN OIL CORPORATION LTD. v. SUDERA REALTYPRIVATE LIMITED

Corporation of India Ltd. (1971) 1 SCC 67 – referredto.

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Ram Karan Singh and Others v. Nakchhed Ahir andOthers AIR 1931 Allahabad 429; Sudhir Kumar Paulv. Indu Prova Ghose and Others AIR 76 Cal 274;Khana Lahiri and Others v. Suniti Kumar Chatterjeeand Others (2006) SCC Online Cal 248; DullabhbhaiHansji and Another v. Gulabbhai Morarji Desai (1938)40 Bom LR 100; Dwarkas Nathamal v. BalkrishnaBaliram AIR 1964 Bom 42 – referred to.

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Tayleur v. Wildin (1867- 68) LR 3 Ex Cases 303 –referred to.

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Case Law Reference

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CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6199of 2022.

From the Judgment and Order dated 14.12.2018 of the High Courtat Calcutta in APD No. 494 of 2014.

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Civil Appeal No. 6200 of 2022.

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AMrs. Madhavi Dewan, ASG, Mrs. Priya Puri, Sharad Puri, YatiSharma, Ranjay Dubey, Sanchit Garga, Advs. for the Appellant.

Dr. Abhishek Manu Singhvi, Nakul Dewan, Sr. Advs., EjazMaqbool, Avishkar Singhvi, Ms. Nooreen Sarna, Saif Zia, Advs. for theRespondent.BThe Judgment of the Court was delivered by

K. M. JOSEPH, J.

Delay condoned. Leave granted.

1. The appellant is the defendant in the suit. By the impugnedCjudgment, the division bench of the High Court has partly allowed theappeal filed by the appellant and modified the decree granted by thelearned Single Judge in a suit filed by the respondent seeking mesneprofits.

2. The respondent-plaintiff instituted the suit on the following basis.DThe respondent demised the centrally air-conditioned 2[nd], 3[rd] and 4[th]floors of premise no. 1, Shakespeare Sarani, Kolkata and a non-air-conditioned guest house on the 9[th] floor. The lease was to subsist for aterm of 21 years commencing from the date when the said floors werehanded over to the appellant lessee. The respondent further claimedthat there is a supplementary agreement which is also duly registered onE12.09.1969, which had brought about certain modifications in the originallease dated 21.11.1968. It was further the case set up by the respondentthat the 2[nd] and 3[rd] floors came to handed over on 12.09.1969 and thepossession of the 4[th] floor was made over to the appellant on 18.12.1969.It was alleged that there was failure on the part of the appellant to joinFand cooperate with the respondent in the matter of finalisation, execution,and registration of an appropriate document of lease in regard to the 2[nd],3[rd] and 4[th] floors. There is reference to an earlier suit which was filed inthe year 1978, and which was not followed to its logical culmination butended in a compromise. More of it later. Suffice it to notice at this stagethat the proximate cause for the litigation was the failure of the appellantGto hand over vacant possession of the 2[nd], 3[rd] and 4[th] floors, upon theexpiry of the lease. Possession was handed over to the respondent onlyon 31.05.1994. Resultantly, the respondent alleged that the appellant wasin wrongful possession of the 2[nd], 3[rd] and 4[th] floors after the expiry of thelease on 11.09.1990 i.e., for the 2[nd] and 3[rd] floors and for the 4[th] floor onH17[th] December, 1990 or alternatively on the expiry of the 3[rd] or 4[th] of November, 1991 till 31.05.1994. Even in terms of the computation of theperiod of 21 years by the appellant, this illegal possession continued till31.05.1994. The respondent claimed mesne profits in respect of 57105sq. feet at the rate of Rs.31 per sq. feet per month.

3. In the written statement filed by the appellant the case interalia set up was that the period of lease was to be computed from thedate of delivery of possession. The document dated 21[st] November, 1968constituted the actual demise of the property. By notice dated 7[th]December, 1977, the respondent had determined the lease and therewas a suit filed by the respondent which was dismissed as not pressedand appellant had constructed a new office building. It took some timeto vacate. There was a clause for premature termination of the lease atthe option of the appellant. Appellant was entitled to the protection ofthe West Bengal Tenancy Act, 1956 (hereinafter referred to as the‘Tenancy Act’). The case of wrongful possession was denied. In thealternative, it was contended that respondent accepted monthly rent afterthe determination of the tenancy by notice dated 7[th] December, 1977.The tenancy is also protected therefore under the Tenancy Act.

4. The learned Single Judge found the plaintiff entitled to mesneprofits. A referee was appointed to quantify the mesne profits. Both theappellant and the respondent filed appeals.

THE FINDINGS IN THE IMPUGNED JUDGMENT

5. The impugned judgment would show that the appellantaddressed the following contentions.

Mere reference to a document as a lease could not be a ground tofind that the document dated 21.11.1968 was a lease deed. The natureof the document required examination. The effect of the withdrawal ofthe suit filed by the respondent in the year 1986 and the impact of theTenancy Act was not properly assessed. There was holding over.Therefore, a decree of mesne profits was without warrant. The Courtfound that the appellant had not pleaded the case that a fresh tenancywas created after the expiry of the lease by efflux of time, and founditself unable to accept the said contention. The receipt of occupationcharges by the respondent as evident from the letter of the respondentdated 02.01.1991 was without prejudice. It did not create a fresh tenancy.Mere continuation in occupation of the demised premises after the expiryof the lease, notwithstanding the receipt of an amount by the landlord, A

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Awould not create a tenancy. The appellant was to be treated as a tenantat sufferance and akin to a trespasser. The lease did not contain anyrenewal clause and it was determined upon the expiry of the fixed period.However, the division bench took the view that in the absence of anyother evidence, as to the exact date when the appellant took possessionof the 2[nd] and 3[rd] floors, it was safe to accept 16[th] September, 1969 asBthe starting point of the lease in regard to the 2[nd] and 3[rd] floors. Accordingly,the division bench modified the judgment in regard to the starting point,by finding that the starting point of the lease for the 2[nd] and 3[rd] floorswould be 17.09.1969. Whereas, in regard to the 4[th] floor, the finding ofthe learned Single Judge that the lease commenced on 04.11.1970 wasCaffirmed. Accordingly, it was that appeal (APD no. 494 of 2014) wasallowed in the aforesaid manner. This is after dismissing the appeal (APOno. 207 of 2015). It is against the said judgment, namely, the judgment inAPO No.207/2015 and APD No.494/2014, that the appeals have beencarried by the appellant.

D6. We heard the Ms. Madhavi Diwan, learned ASG on behalf ofthe appellant and Dr. A.M. Singhvi, learned Senior Counsel on behalf ofthe respondent.

7. Ms. Madhavi Divan, Additional Solicitor General raised thefollowing contentions. The agreement of lease dated 21.11.1968contemplated that the term of 21 years would commence from the dateEwhen the premise was handed over. The lease was terminable at anytime after the expiry of 8 years of the term of 21 years. The constructionof the premises was ongoing. On 21.11.1968, none of the floors to beleased to the defendant had been completed. Even on 12.09.1969, whenthe supplementary agreement as also the deed of mortgage was executed,Fthe possession did not change hands. The mortgage deed, it is pointedout, records that the 2[nd] and 3[rd] floors were in the course of construction.Advances were given under the mortgage to the respondent as it was inneed of money to complete construction of the building, in particular, the2[nd], 3[rd] and 4[th] floors. The parties contemplated a formal lease deed being executed at a later date. The premises were admittedly not readyGfor effective occupation till 04.11.1970. Reliance is placed on the letterdated 12.09.1969, the deed of mortgage and the minutes, dated05.06.1980, by which the suit, and the cross-suits came to be withdrawnand the respondent agreed to forego the rent prior to 1970, on accountof late possession. The appellant continued to occupy the premises afterHthe issuance of the notice to quit and the filing in the year 1977 of the

cross-suits. Payment of monthly rent and acceptance without demur ispointed out. The letter dated 19.10.1990, required the tenant to vacatethe premises by 11.09.1990, as far as the 2[nd], 3[rd] floors are concernedand the 4[th] floor was to be vacated by 17.12.1990. This was short of 21years from the date of effective possession. It is pointed out that theclaim for mesne profits commenced from these very dates, namely,12.09.1990 and 18.12.1990. The appellant has paid rent for the entireperiod. The claim for mesne profits is in excess of 45 crores. It is pointedout that the respondent entered into the lease agreement with anothercompany where the rate was Rs.15 per sq. feet about 13 years thereafternamely in 2008 whereas Rs.31 per sq. feet is said to be the rate at whichmesne profits is calculated qua the appellant.

8. The appellant contends that having regard to the definition ofthe mesne profits in Section 2(12) of the CPC, it is indispensable for therespondent to establish wrongful possession. The respondent has agreedthat effective possession could not be reckoned even from 15.09.1969and, therefore, the question of the term of 21 years expiring based on11.09.1969 could never have arisen. The impugned judgment, havingbeen accepted by the respondent, the 21 years lease could not havecome to an end as early as on 11.09.1990 as the division bench hasfound that in regard to the 2[nd] and 3[rd] floors, 17.09.1969 as the date ofthe appellant being put in possession. It is contended that the period of21 years had not expired when notice dated 19.10.1990 had been issued.It was the respondent which curtailed the expiry period of 21 years byissuance of notice dated 19.10.1990. The notice dated 19.10.1990 metthe requirement of Section 106 of the Transfer of Property Act. Onaccount of the determination prior to the expiry of the lease, the appellantbecame entitled to the protection under the Tenancy Act. Section 13 ofthe said act proscribed any order or decree for recovery of possessionof any premise against a landlord except on a ground set out in the saidenactment. The provisions of the said act were not complied with. Thecourt should reject the contention of the respondent that the notice dated19.10.1990 was not a notice to quit.

9. It is further contended that having regard to the notice issuedby the respondent, dated 12.12.1977, the appellant became entitled tothe protection of the Tenancy Act. Reliance is placed on the judgmentreported in Calcutta Credit Corporation Ltd., & Another v. HappyHomes (P) Ltd.1. Reliance is also placed on the decision in Tayleur v.

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AWildin2 to contend that the withdrawing of the notice and the contentionof the parties would not avail the landlord. Section 113 of the Transfer ofProperty Act is invoked to contend that there is no waiver. A new tenancyhas come into existence thereupon in view of the quit notice, and what ismore, of the suit, despite the arrangement arrived between the parties.The decision reported in Ranjit Chandra Chowdhury v. MohitoshBMukherjee3 relied upon by the respondent is sought to be distinguishedboth on the basis that the earlier judgment in Calcutta CreditCorporation Ltd. (supra)was rendered by a bench of three learnedjudges and the later judgment was pronounced by a bench of a lesserstrength, and furthermore, on the basis that the earlier judgment had notCbeen analysed by the later bench. It is further contended that therespondents are equally misplaced in relying on Tayabali JaffarbhaiTankiwala v. Messrs. Asha and Co. and another4. It is described asa judgment rendered per incuriam. It is also contended that it is otherwisedistinguishable. The petitioner, it is pointed out was a monthly tenantfrom November, 1968. In an argument raised in the alternative and withoutDprejudice to the earlier argument, it is further contended that a largeportion of the claim for mesne profits was barred by limitation. Article51 of the Limitation Act applies. The claim for the entire period prior tothree years before the filing of the suit, i.e., for the period prior to10.04.1992, would be barred.ETHE SUBMISSIONS OF THE PLAINTIFF

10. The dispute spread over 30 years is on account of conduct ofthe appellant. The respondent has been unable to recover any mesneprofits due to it. As on the date of the registered agreement for lease21.11.1968, the construction of the 2[nd], 3[rd] and 4[th] floors were ongoing.FIt is submitted that there was indeed a valid lease deed between theparties. It was the admitted case and the appellant cannot be permittedto resile from the said position. It is next contended that the case that thelease deed was determined in 1977 is untenable. The alleged terminationnotice is dated 07.12.1977. The lease ran uninterrupted for 21 years andGexpired by the efflux of time. The decision on Pabitra Kumar Roy andAnother v. Alita D’Souza5 is relied upon. It is pointed out that thetermination notice dated 07.12.1977 did not result in the actual 2 (1867- 68) LR 3 Ex Cases 3033 (1969) 1 SCC 6994 (1970) 1 SCC 46H5 (2006) 8 SCC 344

determination of lease prior to expiry and the appellant continued tooccupy the premise “as before”. Notice was not even tendered inevidence by the appellant in these proceedings. The parties never actedupon the termination notice. The respondent did not go so far as to seekthe appellant’s eviction. The respondent brought a suit seeking rent forthe period 15.09.1969 to 04.11.1970. In the meeting held on 05.06.1980,the litigation ended in view of the binding settlement. It was understoodthat the parties have no further claim. It is contended that neither partyadmitted to the other’s entitlement for the claims raised.

11. As regards the termination prior to the expiry is alleged tohave taken place consequent upon the communication dated 19.10.1990,it is described as a letter of inquiry and not a notice of termination ascontended by the appellant. It is contended that as far as the attempt bythe appellant to evolve a new case before this Court that there was afresh tenancy created as a result of the waiver, it is countered contendingthat the argument of the appellant is de hors the facts in the presentcase. The decision of this Court in Calcutta Credit Corporation Ltd.& Another v. Happy Homes (P) Ltd.6 was not dealing with the questionwhether the waiver of the determination notice results in a fresh tenancy.That is not the ratio. The observations that consent to waive the noticeresults in a new agreement are only obiter. Reliance is placed onsubsequent judgments to contend that there would be revival of the oldtenancy, when there is waiver [(1969) 1 SCC 99, (1970) 1 SCC 446,AIR 1976 Cal 274, (2006) SCC Online Calcutta 248]. On facts, it ispointed out that appellant continued to make rent payments. The statementin paragraph 14 filed by the appellant that it occupied premises and paidmonthly rent “as before” is emphasised. The respondent lay store bycontemporaneous communication wherein appellant continues with thestand that lease has not expired. Regarding the alleged termination byletter dated 19.10.1999, it is complained that the appellant never raisedsuch a case in response to communication or even in defence before theCourt. The letter of inquiry is not a determination. The appellant itselfunderstood that the respondent had sought vacation of the premises onthe basis of the expiry of the lease period alone. The argument is a mereafterthought. The acceptance of the occupation charges by therespondent after the expiry of the lease did not create monthly tenancy.The payments were received on a “without prejudice basis” “as onaccount payment”. The judgment of this Court in Nand Ram (Dead)6 (1968) 2 SCR 20

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AThrough Legal Representatives and others v. Jagdish Prasad (Dead)Through Legal Representatives7 did not consider the consequence ofthe payment being collected. The suit for mesne profits is not barred bylimitation. Mesne profits accrues from day to day and the cause of actionis a continuing one. Being a continuing breach of contract and a freshcause of action arising on each day, the appellant wrongfully occupiedBthe property. Reliance is placed on the judgment of this Court inShaktiBhog Food Industries Ltd. v. Central Bank of India and Another8 tocontend that limitation does not bar the suit. The inconsistency in thestand of the appellant at various stages is underlined.

ANALYSISCThe following points arise:

Point No.01: - Whether the documents styled as agreementdated 21.11.1968 and the supplementary agreement forlease dated 12th September, 1969 constituted a lease?

DPoint No.02: - Whether the possession of 2nd and 3rd floorswere handed over on 17.09.1969 and 4th floor stood handedover on 04.11.1970?

12. An agreement for lease was executed between the appellantand the respondent on 21.11.1968 in regard to the 2[nd], 3[rd] and 4[th] floors Eof the premises. While it is true that it contained a clause which didcontemplate that the respondent as the lessor put in place a formal deedof lease in favour of lessee, if the lessee would require the same, we areof the view that the agreement of lease dated 21.11.1968 on its ownoperated as a lease. It was a demise and operated as such. Admittedly,Fit was a registered document. Further, as correctly contended by therespondent, the appellant in its pleadings proceeded to contend that theagreement of lease dated 21.11.1968 operated as a lease. In paragraph4 of the written statement, the appellant states as follows:

“4. With reference to paragraph 9 of the plaint, it is denied thatthe defendant failed and neglected to join or co-operate with theGPlaintiff in execution or registration of the formal deed of lease. Itis denied that there was any question of any finalization of thedeed of lease. All the terms and conditions of the lease werefinalized and set out in the document described as agreement for 7 (2020) 9 SCC 93H8 (2020) SCC OnLine 482

lease dated 21st November, 1969. The document envisaged thatthe possession would be given to the defendant upon completionof the building. The period of lease was to be computed from thedate of delivery of possession. The said document dated 21stNovember, 1968 constituted the actual demise of the propertyand operated as deed of lease. Since the Plaintiff and the defendanttreated the said document dated 21st November, 1968 as deed oflease as modified by the Supplementary deed dated 12th September,1969, neither the Plaintiff nor the defendant insisted upon executionof a formal deed of lease as requisite stamp duty as applicable tolease had been paid and the said documents had been registered.”

Therefore, we cannot permit the appellant to draw support fromthe aforesaid clause which gave the appellant the right to require that aformal lease of deed be executed.13. A perusal of the agreement of lease dated 21.11.1968 wouldreveal the following:

The 2[nd], 3[rd] and 4[th] floors of the premises along with the guesthouse which is collectively referred to as ‘demised premises’ was thesubject matter of the lease of 21 years. The term of the lease has beendescribed as commencing from the date when the demised premiseswould be handed over. It is true that construction of the premises maynot have been over but at the same time, the term of the lease has beenspecified as period of time (21 years) from the date on which the demisedproperty would be handed over. We have no hesitation in repelling theargument of the appellant that the fact that the construction of the buildingwas not over, would in the facts as mentioned, detract from a transferby lease coming into being. As already noticed, the provision was for aformal deed and that too, if the tenants so requested. It will not stand inthe way of the transfer by way of a lease taking place. As alreadynoticed, there is a supplementary agreement of lease on 12.9.1969. Itwould appear that there were certain financial transactions, as amountswere advanced by the appellant towards the construction of the building.The interest of the appellant was sought to be secured by a mortgage.The supplementary agreement made certain modification to the originalagreement. Additional obligations were undertaken by the lessor andcertain rights were conferred on the lessee inter alia. But what is relevantto notice is the term of the original agreement dated 21.11.1968 that the AB

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Alease for a term of 21 years (Agreement to create the lease for 21years) would commence from the date of handing over the premises.

14. Thus, we find that there was indeed a written agreement oflease dated 21.11.1968. The term of the lease was 21 years which wasto begin from the date on which demised premises was handed over toBthe lessee. The rent for the demised premises was also fixed.

15. The next question which would arise is, as to when thepossession was handed over? As we have noticed, the dispute which israised pertains to the 2[nd], 3[rd] and 4[th] floors of the building in question. Asalready noticed by us, the Division Bench has found in modification ofCthe judgment of the learned Single Judge that as there are no documentsto show the exact date, the appellant was put in possession of the 2[nd]and 3[rd] floors and fixed 17.09.1969 as the starting point.

16. It is found that appellant was put in possession of 4[th] floor on04.11.1970. The case of the appellant is that the possession of all theDthree floors in question was handed over to it on 04.11.1970. Therespondent, on the other hand, would reiterate that the 2[nd] and 3[rd] floorswere handed on or before September, 1969 and the security deposit forthose floors already handed over, was made by 27.09.1969.

17. According to the appellant, a perusal of the mortgage deed,Ewhich is also executed on the same day as the supplementary leasedeed, would reveal that as on the date of execution of documents, thatis, 12.09.1969, the 2[nd], 3[rd] and 4[th] floors were described as “now in thecourse of construction on the said leasehold land”. It is as the respondentwas in need of money to complete the construction of the building thatfunds were given by the appellant. These facts are borne out by theFmortgage deed and the appellant would contend that premise was handedover only on 04.11.1970. Now let us cull out the consequences ofaccepting the different dates of handing over possession. As far as the4[th] floor is concerned, in view of the findings by the High Court that thepossession of the 4[th] floor was handed over on 04.11.1970 and the sameGnot being questioned before us, we can safely proceed on the basis thatthe 4[th] floor was handed over on 04.11.1970. In regard to the 2[nd] and 3[rd]floors are concerned, the High Court has laid store by Exhibit 2 to findthat the possession was handed over on 17.09.1969. Exhibit-2 is a letterdated 16.09.1969 from the respondent to the appellant. In the said letterit is stated as follows:H

“Dear Sir

It is to inform you that we have spent Rs.8,54,265.60 being thepayment in terms of Indenture of Further Charge and Modificationdated 12.9.1969.

we are sorry to inform you that we have not yet received paymentas Security Deposit for the floors already handed over to you. Assuch, you are requested to kindly inform the department concernedfor the payment of Security Deposit.”

18. In this regard, we may notice the relevant clauses in the originalagreement dated 21.11.1968. There is reference to loans advanced or tobe advanced by the Lessee (appellant) to the respondent remaining unpaidentitling the lessee to deduct 50% of the monthly rent and appropriatingthe same to the satisfaction of the loan with interest. In other words,apparently the lessee (appellant) advanced money. The building was tobe constructed. The appellant which advanced money to be inducted astenant, was liable to pay rent. The parties agreed that 50% of the rentneed not be paid to the landlord (respondent) and it could be appropriatedtowards the loan or loans with interest. Clause 8 of the agreementcontemplated that the appellant will deposit to the account of therespondent a sum of Rs.1,68,300/- which is equivalent of three months’rent together with air conditioning and service charges. The amountwas to be held as security deposit and to be refunded to the appellantwithout interest on the termination of the period of the lease ordetermination earlier. In regard to the 2[nd], 3[rd] and 4[th] floors, clauses 17,18 and 19 may be noticed.

“17. The Lessor shall complete construction of the second floorin all respects, make it fully equipped with all electrical and sanitaryfixtures and installations and air-conditioned and hand over thesame to the Lessee immediately upon expiration of six monthsfrom the date hereof. With the making over possession of thesecond floor to the Lessee the Lessor shall also arrange forproviding space of accommodation to the Lessee sufficient forparking 20 curs in a convenient place to be selected mutually bythe Lessor ·and the Lessee.

18. The Lessor complete construction of the third floor in allrespects and make it fully equipped with all electrical and sanitaryfixtures and installations and air-conditioned and handover the same A

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to the Lessee immediately upon expiration of eight and a halfmonths from the date hereof and with the making over possessionof the third floor to the Lessee the Lessor shall also arrange forproviding space or accommodation to the Lessee sufficient forparking 10 more cars in the convenient space to be selectedmutually by the Lessor and the Lessee.

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19. The Lessor shall complete construction of the Fourth floor inall respect and make it fully equipped with all electrical and sanitaryfixtures and installations and air-conditioned and hand over thesame to the Lessee immediately upon expiration of eleven monthsfrom the date hereof and with the making over possession of theCfourth floor to the Lessee the Lessor shall also arrange for providingspace or accommodation to the Lessee sufficient for parking 10more cars in a convenient place to be selected by the Lessor andthe Lessee mutually...”

19. In other words, under the said agreement, in regard to the 2[nd]Dfloor, the respondent-Lessor undertook to hand over possession to theLessee upon the passage of six months from the date of the agreement.It was also obliged to make space for parking. Likewise, in Clause 18,the possession was to be handed over immediately upon the expirationof eight and half months.

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20. Clause 19 provided for making available the 4[th] floorimmediately after expiration of eleven months from the date of agreementdated 17.11.1968. Clause 21 provided for complying with the schedulefor handing over possession and resultantly, making the respondent liablefor penalty or damage settled at 10% of the monthly rent inter alia.FClause 22 makes it clear that the respondent was to complete theconstruction of the entire building (multi storey building) within 3 yearsfrom 17.11.1968.

21. In the Supplemental Agreement, there were certain changesby way of additional rights being created in favour of the appellant.GClause 8 of the original agreement stood modified, in that, in place of theliability of the lessee for Rs.1,68,300/-, as already noticed, it is providedthat a sum of Rs.1,64,462.40 was to be paid in three equal instalments.The first of such instalment was to be paid when the possession of the2[nd] floor was given. Second instalment was to be paid when possessionof the 3[rd] floor was given. The third instalment was to be paid whenH

possession of the 4[th] floor was given. Rs.9900/- was payable inconnection with guest house. It is in light of this clause that the Exhibit 2letter dated 16.9.1969 must be appreciated. In other words, the saidletter would indicate that in terms of the agreement, as 2[nd] and 3[rd] floorsstood handed over, the respondent was insisting for payment of thesecurity deposit, the appellant was obliged under the agreement (clause8) as modified in the supplementary agreement to pay to the respondent.No doubt, the case of the appellant would appear to be that the possessionwas not handed over in total compliance of the agreement and theattendant facilities were not still made available.

22. We would think that the findings rendered by the High Courtis a plausible view and we would, therefore, take the view that possessionof 2[nd] and 3[rd] floors was handed over on 17.09.1969 and 4[th] floor stoodhanded over on 04.11.1970.

Point No. 3: - Whether the appellant is a monthly tenantfrom November, 1969?

23. The next question which would arise is whether the appellantshould be treated as a monthly tenant for the reason that a formalregistered deed was contemplated. The agreement dated 17.11.1968 asalso the construction of the premises was not completed.

24. We are of the view that the contention that the appellant shouldbe treated as a monthly tenant even from the very beginning is withoutany merit. Accepting such a stand would in the first place run counter tothe written statement filed by the appellant. In the written statement it isinter alia stated as follows:

“..All the terms and conditions of the lease were finalized and setout in the document described as agreement for lease dated 21stNovember, 1969. The document envisaged that the possession·would be given to the defendant upon completion of the building.The period of lease was to be computed from the date of deliveryof possession. The said document dated 21st November, 1968constituted the actual demise of the property and operated asdeed of lease. Since the Plaintiff and the defendant treated thesaid document dated 21st November, 1968 as deed of lease asmodified by the Supplementary deed dated 12th September, 1969,neither the Plaintiff nor the defendant insisted upon execution ofa formal deed of lease as requisite stamp duty as applicable to A

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484SUPREME COURT REPORTS

Alease had been paid and the said documents had beenregistered…”

(Emphasis supplied)

25. The agreement dated 12.9.1969 is admittedly a registereddocument. We do not find any force in law or on facts to permit theBappellant to contend that the appellant be treated as a monthly tenantsince 1968. We have noticed the stand taken by the appellant that neitherthe appellant nor the respondent insisted upon execution of a formaldeed of lease. The requisite stamp was paid. Thus, the lease for 21years came into being. The period of the lease is to be calculated fromCthe date when the possession was handed over. We have although foundthat possession, in fact, was handed over on the dates when it is handedover as found in the impugned judgment. The cases of the appellant isalso in the teeth of the correspondence dated 21.08.1990 and 03.11.1990,inter alia.

DPoint No. 04: - Whether there was a prior determination ofthe lease of 21 years by the respondent, if so, whether theappellant is entitled to protection of the Tenancy Act?

26. The next contention raised by the appellant is that in thedevelopment in the year 1977, the respondent put an end to the leaseEdated 17.11.1968 and transformed the appellant into a monthly tenantand what is more relevant, it entitled it to the benefits under the WestBengal Tenancy Act. This argument is based on the notice dated12.12.1977 issued by the respondent by which according to the appellant,the lease was terminated. According to the appellant, the matter did notstop with the mere issuance of the notice. Parties went to court. TheFrespondent filed O.S. No. 20/1978. The appellant also filed a Suit.27. A settlement took place between the parties on 05.06.1980.The minutes of the meeting dated 05.06.1980 read as follows:

“Minutes of the meeting held between Mis. Indian Oil CorporationLtd. (Tenants) And M/s. Sudera Enterprises Pvt. Ltd. (Landlord)GIn respect of the office premises at 1, Shakespeare Sarani,Calcutta. - 71 under occupation by Indian Oil Corporation Ltd.,Eastern Region.

PRESENT

HShri R. M. Basrur:GM (P), IOC, HO

Shri G. S. Pandya:FC, IOC, HOShri S. C. Ghose :GM, Eastern RegionShri M. B. Ramgadia:RPM, Eastern RegionShri D.B. Puri:Secretary, IOC, HOOn behalf of the landlord, Shri S. Rampuria, Shri M. Jha and ShriB.S. Agarwal were present.

The meeting was hold in Bombay at 10:30 AM on 5th June, 1980in Shri Basruria Cabin.

1. As per Shri Rampuria, the main irritant between the parties fora very long time has been the non-settlement of air-conditioningcharges consequent time notified by the Calcutta Electricity SupplyCorporation (India) Ltd. It was stated that their company haveforwarded to IOC at various points of time the rise as and whennotified by the C.E.S.C. Similarly, service charges which aresubject to osculation with increase in electricity charges has notbeen settled for a long time. As per the lease agreement, theosculation is provided as under: - “The charges for the electricity to be consumed forworking the air-conditioning machines and the said lift to beused by the Lease exclusively shall be borne and paid by theLessors. If at any time in future the rate of charge per unit ofelectricity consumed JS increased. the lessee shall pay suchincreased charges or differences, the disagreement betweenthe Lessee and the Lessor in fixing the proportion the opinionor decision of the Lessor will be final and the Lessor shallaccept the proportion to be fixed by or on behalf of the Lessee”.

2. The second, point was on account of amount approximately toRs.83,388.53 recovered as liquidated damages from them onaccount of late possession of three floors. This amount is subjectto verification.

3. It was stated that the amount found due to them should be paidwith interest.

4. On behalf of IOC, the corporation out that in the presentconditions of load-shedding consequent power shortage,particularly in Calcutta, the corporation intends to put up a A

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Generator for which they nee the help of the landlord by waypermission to do so and also providing space for putting up thesame.

5. The matter was discussed at length in the morning session andvarious points expressed by both the parties were taken intoaccount and considered by both the parties. The parties, thereafteradjourned to most again in the afternoon with their consideredopinion n the matter.

6. In the second session in the afternoon, the following formulawas agreed subject to: -

(i) The Board’s approval of the Board of Directors of IOC;

(ii) That all pending disputes will stand settled and that theparties will have no other claims against each other for thepast on any account whatsoever;

(iii) The cross suits pending from each side will be withdrawimmediately on implementation of these arrangement aredelayed beyond three months from the date the parties will befree to extend time for implementation or act otherwise asthey deem fit.

(iv) This is, however, without prejudice to the landlords right toobtain enhancement of rent, if any, as permissible under thelaw applicable.

7. The conclusions were as follows: -

(i) In interpretation of the escalation clause for air-conditioningcharges, the Corporation agreed offer on the basis that theelectricity component of the air-conditioning charges of 30 paiseper sq. ft. per month will be taken as 1.25 unit per sq.ft permonth of the so determined 30 paise air-conditioning charges.Landlord agreed to this in final settlement of their claim forincrease in the air-condition charges.

(ii) The Corporation would be willing to refund a sum of Rs.83,388.53 which was recovered by the Corporation as liquidateddamages on account of late possession of the three floors, onclear understanding that the landlord will withdraw his counterclaim of rent amounting to Rs. 4,76,371.14 for the 95 period from 15-09-1969 to 4-11-1970. The amounts are subject toverification.

(iii) The Corporation would further be willing to refund theseveral sums totaling to Rs.20,392.03 which were deductedby the Corporation out of the rent, service charges and airconditioning charges at various points of time. The amount issubject to verification.

(iv) No interest shall be payable by IOC on any of the amountpayable in terms of para (i), (ii) and (iii) above.

(v) with regard to IOC’s request for space on the ground floorfor setting up a generator, M/s. Sudera Enterprises Pvt Ltd.agreed to provides space (already in IOC’s occupation) in thecar parking area on ground floor sufficient enough to installgenerator. IOC agreed that in lieu of the space to be providedby M/s. Sudera Enterprises, ICC will provide to M/s. SuderaEnterprises equal space of the car parking area in front. M/s.Sudera Enterprises will extend all cooperation to enable IOCconnect the generator to IOC’s electrical circuit as well aselectricity· supply meter etc.

8. It is understood by both the parties that in future both the partiesas will cooperate and the conditions of air conditioning and otherfacilities like lift and others will run properly to the benefit of theboth. For this purpose, as the landlord has suggested, the airdistribution system (i.e. ducting and false ceiling) located in thefloors occupied by IOC will have to be modified at the cost ofIOC, whereinafter it is agreed by the landlord that the temperatureof the premises will be maintained at 78ºF ± 2ºF.

9. On the service charges, it was agreed that the earlier claim ofRs. 0.06 unit per sft. per month will be the basis for the elementof electricity consumption.

10. It was also agreed by the landlord that one bigger size lift willbe exclusively given to the corporation besides the use of servicelift in lieu of the existing arrangement.”

28. In order to appreciate the point, before we turn to the pleadings,we may notice the following correspondence between the parties. On21.08.1990, the appellant wrote to the Solicitors. It, inter alia, reads asfollows: - AB

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A“Under the Agreement of Lease dated 21/11/1968 executed byand between M/s Sudera Enterprises (P) Ltd. (The Lessors) andM/s Indian Oil Corporation Ltd. (the Lessee) which is for a periodof 21 years commencing from the date of handing over possessionto the Lessee i.e., 4th Nov., 1970 we are entitled to continue inoccupation of the leased premises upto 3[rd] November, 1991.”BWe may also notice the following contentions inter alia:

“You may however bear in mind that it is covenant in the agreementof lease that so long as any loan is outstanding against them, theycannot determine the lease. Therefore, due care has to be takenCthat while releasing the Corporation’s charge over the propertywe do not expose ourselves to any threat or coercion which mayaffect our peaceful occupation of the premises during the term ofthe lease and even thereafter, if required, in accordance with theagreement and/or the law.”

D29. Next, we may notice the communication by a letter dated19.10.1990 sent by the respondent to the appellant.

“SUDERARef:01:001:0002:1520:10 OCTOBER 19,1990.Indian Oil Corporation Limited,1, Shakespeare Sarani,Calcutta-700071.

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Dear Sirs/

FRe: 2nd / 3rd and 4th Floors of premises known as AirconditionedMarket - being No. 1, Shakespeare Sarani, Calcutta - 700 071.

Please refer to the Registered Agreement for Lease dated 21[st]November/ 1968 and the Registered Supplemental Agreement forLease dated 12th September, 1969.

GThe possession of the 2nd and 3rd Floors was delivered by us andtaken by you on the 12th September/1969 and that in relation tothe 4th Floor was delivered by us and taken by you on the 18[th]December, 1969. The agreed period of Lease of 21 years in relationto the 2nd and 3rd Floors has expired by efflux of time on the 11[th]

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September, 1990 and that in relation to the 4th Floor such agreedperiod in due to expire by efflux of time on 17th December, 1990.

Consequently, we became entitled to peaceful and vacantpossession of the 2nd and 3rd Floors on the expiry of 11[th]September, 1990. Will you please let us know when you proposeto deliver possession of the 2nd and 3rd Floor. We shall appreciatea line in confirmation that you will deliver possession of the 4thFloor on the expiry of the agreed term on the 17th December/1990.

We have enjoyed a warm and cordial relationship of land-lord andtenant over two decades. We understand that your huge officecomplex in South Calcutta is nearing completion where youpropose shifting. We look forward to hear from you in the matterimmediately.

This is without prejudice to our rights and contentions.

Thanking you, for SUDERA, ENTERPRISES PVT. LTD.,

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E(B. S. BAID)

DIRECTOR”

30. The appellant sent the communication by a letter dated03.11.1990 which reads as follows: - F

“INDIAN OIL CORPORATION LIMITED

1, SHAKESPEARE SARANI, CALCUTTA- 700 071

In reply, please refer to:

Messrs, Sudera Enterprises Private Ltd.

1, Shakespeare Sarani

GP&A/ER/18413[rd] November, 1990

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[2022] 19 S.C.R.

ACalcutta- 700 071

Dear Sirs

Re: 2nd, 3rd and 4th floor of premises No. 1, Shakespare Sarani,Calcutta.

BKindly refer to your letter No. 01:001:0002:1520:10 of the 19[th]October, 1990.

We may mention that possession of the 2nd, 3rd and 4th Floorswere delivered to us on 4th November, 1970 and not on 2ndSeptember, 1969 as stated in your letter. The period of the LeaseChas therefore not yet expired and the question of deliveringpossession at this stage does not arise.

Possession of the 2nd, 3rd and 4th Floors of premises No. 1,Shakespeare Sarani, Calcutta, will be delivered to you inaccordance with law.

DYours Faithfully,

FOR INDIAN OIL CORPORATION LTD.

(MARKETING DIVISION)

EDY. GENERAL MANAGER, (PERSONNEL)

Regd. Office: G-9, Ali Yabar Jung Marg, Bandra (East), Bombay-400 051 (India)

Regional Office: 1, Shakespeare Sarani, Calcutta-700 071.”F31. Next, we notice letter dated 09.11.1990 sent by the respondentto the appellant.

November 9,1990

“The Indian Oil Corporation Ltd.

1, Shakespeare Sarani,

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CALCUTTA- 700 071

Dear Sirs,

Re: Second, Third and Fourth Floors of Premises No. 1Shakespeare Sarani, Calcutta.H

We thank you for your Letter No. P&A/ER/1841 dated the 3rdNovember, 1990 in reply to our letter No.01 :001:0002:1520:10dated the 19th October, 1990.

We reiterate and maintain that the possession of the 2nd and 3rdFloors were delivered to you on the 12th September, 1969, andthe possession of 4[th] Floor was delivered to you on 18th December,1969 and not on 4[th] November, 1970 as alleged.

According to us, the Lease has expired by efflux of time and weare entitled to receive and you are liable to make over possessionof the 2nd and 3[rd] floors in your occupation to us. In respect of the4th Floor the lease is due to expire on 17th December, 1990, andyou are liable to make over possession to us on the expiry of thelease.

You are aware of the astronomical increase of prices on all counts.You are also aware of the present prevailing market conditions asto rent service and Air-conditioning charges. For the interim periodfrom September, 1990 in respect of 2nd & 3rd floors, until youdeliver possession of such floors in your occupation on the allegedexpiry of the Lesse which according to you would be in November1991, we request you to pay us mesne profits or occupation chargeshaving regard to the prevailing market conditions. According tous the prevailing rent, service and Air-conditioning charges for similaror nearly similar property in the locality would be Rs.31/- per sq.ft.

On account of the cordial relationship between us, we shall beobliged if you consider and let us have your agreement for paymentof the mesne profit or occupation charges at the aforesaid rate orsuch other reasonable rate as we may arrive at mutually and agree,for which we hereby offer to sit across the table and discuss thesame with you.

We look forward to hear from you at the earliest.

Yours faithfully,For Sudera Enterprises Pvt. Ltd .

Sd/-

DIRECTOR”

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A32. The respondent writes on 02.01.1991, with reference to aletter dated 11.12.1990, which is as follows, inter alia.

“Ref: 01:001:0002:1520:16 January 2, 1991

Indian Oil Corporation Ltd.

B1, Shakespeare Sarani,Calcutta - 700 071

Dear Sir,

Re: 2nd, 3rd and 4th floor of premises

CNo.1, Shakespeare Sarani, Cal- 700 071

We acknowledge receipt of your letter dated 11th December, 1990and note its contents with utter surprise.

At the outset we repeat and reiterate the statements and contentsof our earlier letters to you and state that the same are true andDcorrect and deny and dispute all allegations to the contrary.

Without prejudice to our rights and contentions and without in anymanner admitting any of the allegations contained in your instantletter, we are accepting the cheques for a total sum ofRs.4,41,896.58 (Rupees four lacs forty-one thousand eightEhundred and ninety-six and paise fifty-eight only) as an on-accountpayment of our dues in relation to your occupation of the secondand third floors.

This is strictly without prejudice. All allegations contrary to theaforesaid are denied and disputed.

F

Thanking you,

For SUDERA ENTERPRISES PVT. LTD.

Sd/-

G

(P.N. TICKOO)

CHIEF EXECUTIVE”

33. Next, we notice in communication letter dated 04.11.1993 sentby the appellant to the respondent.H

“Ref: DGM (HR)/1A

Date: 04.11.93

M/s. Sudera Enterprises (P) Ltd.

1, Shakespeare Sarani

B

Calcutta-700 071

Sub: Our tenanted office area at 2nd, 3rd and 4th floors of PremisesNo.1, Shakespeare Sarani, Calcutta- 700 071

Dear Sir,

We have received your letters dated 20th September, 1993 on1.10.93 and dated 8.10.93 on 12.10.93.

CD

We have noted that the proposal of the Flat Deleasing Committeeconveyed to you by Shri Janakraj Gupta, has not been acceptedby you and you want to keep your claim for alleged mesne profitalive. We make it clear that the suggestion conveyed by you is notacceptable to us. The premises in question is still required by usand our valuable articles and assets are still lying therein. Weshall pay you rent at the last rate paid so long we continue in thepossession of the aforesaid premises and that is all that we areobliged to pay to you and you are entitled to get from us. There isno scope for any genuine or real claim for mesne profits/damagesand the question of arbitration does not arise.

E

The rights and obligations are governed by the West BengalPremises Tenancy Act. It is totally incorrect to allege that theCorporation is in possession of the premises without any authority.

F

We take strong obligation to your appointing a date for takingover possession as you have purported to do by the above letter.We are shocked and surprised to learn that you had actually sentyour man to take over forcible possession of the tenanted premisesbut you failed. We never gave you notice that we would quit thetenanted area on October 1, 1993. This wrongful act of yours isserious and pose a serious threat of damage and loss of our valuablearticles lying in the tenanted area. Please do not repea1 any attemptof taking over forcible possession.

G

We refer to our earlier correspondences and we reiterate thatafter the expiry of the lease period we have been holding over as H

A

B

a monthly tenant at a rent of Rs.2, 15,460. 77. The monthly rent isbeing regularly paid to you. We are, as conveyed to you, not liableto pay air-conditioning charges.

We hope that we have clarified the matter and there will be nomisunderstanding any further.

We, however, do not appreciate your objective to get backpossession of our tenanted area and at the same time to keepalive your unreasonable and illegal claim for mesne profits/damages. Your stand should also be fair and reasonable as ours.

C

Yours faithfully,

F/lndian Oil Corporation Ltd.

Sd/

(S. Basu)

D

Dy. General Manager (HR)

34. On 02.05.1994 the respondent refers to certain discussionsand notes. It was agreed in the discussions that the appellant wouldhand over the lease property inclusive of the furnitures, fixtures, fittingsEthereon, on as is where is basis, which was also agreed to be purchasedby the respondent. It was allegedly agreed that the claim for mesneprofits would be looked into by the chairman of the appellant and thereforethe respondent would not insist on reference to arbitration. By letterdated 24.05.1994 the appellant wrote as follows:

F“WITHOUT PREJUDICE

No.: HO:LAW:REC:1476:PT 24th May, 1994

Mis. Sudera Enterprises Pvt Ltd.

1, Shakespeare Sarani, ·GCALCUTTA- 700 001

Dear Sirs,

We refer to your letter dated 2.5.94. It is correct that discussionswere held on 27.4.94. It is not however correct to say that anyquestion of delivery of possession on the ground of expiry of the H

lease was raised or discussed. IOC. has repeatedly pointed out toSudera that IOC enjoys the status of a monthly tenant governedby the West Bengal Premises Tenancy Act, 1956. Be that as itmay, with regard to the text of the discussions recorded in yourletter our comments are as follows:

Clauses (i), (ii) and (iii) are substantially correct save and exceptthat the possession is to be taken over by you immediately and theclaim for proportionate share of Corporation taxes however willbe ascertained on production of proof and verification by IOC inregard to tax liability. We may therefore, request you to produceimmediately the necessary documentary proof to evidence theextent of the tax liability to IOC, Eastern Region.

So far as clauses (iv) and (v) are concerned, it was discussed thatChairman will first decide the question of maintainability of yourclaim for mesne profits.

IOC has been consistently contending by several letters to youthat there can be no question of mesne profits in this case. If theChairman decides that the claim for mesne profits is maintainablein law after hearing the view points of both sides in the matteronly then he will go into the question of the assessment of theamount thereof.

You were kind enough to say that you would accept the advice ofthe Chairman on every respect as final and binding. At the sametime you will appreciate that no agreement for arbitrationagreement was concluded or entered into. A draft was neverfinalized and no agreement for arbitration was ever finally preparednor signed by any party because talks for arbitration fell throughat the stage of discussions.

The appropriate Deed of Re-Conveyance of Mortgage will beregistered by IOC immediately after the possession is taken overby you.

We may therefore request you to depute your representative totake over possession of the property including· furniture, fittings,and fixtures etc. in consultation with Executive Director of ourEastern Regional Office at Calcutta on the above basis.

A

BC

D

E

F

G

H

Afor INDIAN OIL CORPORATION LIMITEDSdl-

(G.R. RAMACHANDRAN)

DY. GENERAL MANAGER (LAW)”

B35. Now, we may refer to the relevant pleadings contained in thewritten statement filed by the appellant. They are as follows: - “Paragraph 7. With reference to paragraph 11 and 12 of the plaint,it is stated that the Plaintiff by a Notice dated 7th December,1977 had determined the tenancy and called upon the DefendantCto forthwith vacate the three floors of the said premises. TheDefendant did not vacate. Thereafter, the Plaintiff filed the suitNo.20 of 1978 in the Hon’ble High Court at Calcutta claiming adecree for possession against the Defendant. The said suit No.21of 1978 was ultimately not pressed and was dismissed on 20thDJune, 1986. The Defendant contained to occupy the said threefloors of the said premises as before and paid monthly rents andother charges as before to the Plaintiff and the Plaintiff continuedto accept the same month by month. Thereafter, by the letterdated 19th October, 1990 the Plaintiff again called upon theDefendant to make over. possession of the said 2nd, 3rd and 4thEfloors of the said premises to which a reply was given by theDefendant on 3rd November, 1990. Since the possession of thesaid 2nd, 3rd and 4th floors of the said premises was delivered tothe Defendant on 4th November, 1970 the period of 21 years ofthe said lease had not expired on 19th October, 1990 and theFDefendant had no obligation to give possession. It is denied thatthe contention raised in the letter dated 3rd November, 1990 arewrongful, it is denied that by the said letter dated 3rd, November,1990 the Defendant gave notice to quite on the expiry of the periodof 21 years as alleged.”

“Paragraph 8. With reference to paragraph 13 of the plaint it isGstated that the period of 21 years expired on 4th November, 1991and all allegations to the contrary are denied and disputed.”

36. In paragraph 10, the appellant purported to offer reasons fordelay in vacating.

H

37. In paragraph 11, it is, inter alia, stated with reference toparagraph 15 of the plaint that the contractual tenancy of the appellantstood terminated on 31[st] May, 1994 and possession was delivered on31[st] May, 1994.

38. In answer to paragraph 16 of the plaint, it is stated as followsin paragraph 12.

“Paragraph 12. With reference to paragraph 16 of the plaint, it isdenied that the defendant was over in wrongful possession of thesaid three floors of the said premises as alleged in the saidparagraph or at all. Each and all the allegations in the saidparagraph are denied and disputed. The defendant was the lesseeof the said three floors of the said premises for a term of 21 yearswith option to determine the said lease and deliver possessionbefore the expiry of the said period of 21 years. The provisions ofthe west Bengal Premises Tenancy Act, 1956 were applicableand the possession of the defendant of the said three floors of thesaid premises was protected by the said Act. Alternately, theDefendant was a monthly tenant in respect of the said three floorsof the said premises. The defendant has paid monthly rent to thePlaintiff month by month and the Plaintiff has accepted rent andissued rent receipts to the defendant regularly. Such tenancy ofthe defendant was all along protected and governed by the WestBengal premises Tenancy Act, 1956. No decree for delivery ofpossession of the said three floors has been obtained by the Plaintiffagainst the defendant. The Plaintiff purported claim of mesneprofit is totally misconceived in law and in the facts of the case.”

39. We may also notice Paragraph 13 and Paragraph 16.

“Paragraph 13. In further alternative, Plaintiff has afterdetermination of the tenancy by the Notice dated 7th December,1977 accepted monthly rent from the defendant month by monthand have issued rent receipt and accordingly, the Defendantbecame a monthly tenant in or after January, 1978. The saidtenancy of the defendant was also protected and governed by theprovisions of West Bengal Premises Tenancy Act, 1956.”

“Paragraph 16. With reference to paragraph 19 of the plaint it isdenied that the Defendant was ever in wrongful possession ofany of the floors of the said premises after the expiry of 3rd /4th A

BC

D

E

F

G

H

ANovember, 1991 or at all. The defendant was a tenant within themeaning of West Bengal Premises Tenancy Act, 1956 till 31stMay, 1994, when possession was delivered back to and acceptedby the Plaintiff as mentioned before. The defendant has not beenin wrongful occupation or possession of any portion of the saidpremises even for a single day. The purported claim for mesneBprofit as made in the suit is wholly misconceived and notmaintainable.”

A

40. The learned Single Judge drew inspiration from the judgmentof this Court inPabitra Kumar Roy(supra), that when the party allowsthe lease to run its full course and it cannot thereafter take shelter underCthe clause for earlier determination to contend that the lease is governedby the ‘Tenancy Act’.

41. As far as the case based on the Calcutta Credit CorporationLtd.(supra), the learned Single Judge went on to find that the appellantcontinued to remain in possession of the 3[rd]/ 4[th] floors till it vacated theDsame in 1994. It was further found that the parties did not act on thebasis of the notice of termination. The cross suits were withdrawn onagreement. The parties decided to refer the question of quantum ofmesne profits to be pronounced upon by the chairman. All these facts, itwas found, taken together would show that the notice of terminationEwas not acted upon. In regard to this aspect, we may now also noticethe findings in the impugned judgment. The Division Bench found that itis not open to a party to set up a new case in departure from the pleadingsrelying onPabitra Kumar Roy(supra). It was found that mere inclusionof a prior determination clause will not alter the character of the leasefor a fixed period unless the option is exercised. No evidence on recordFwas found to show that the appellant took steps to exit the lease beforeMay, 1994. In not choosing to exercise the option of prior determinationand instead of allowing the lease to run its full course, the appellantcannot take refuge under the ‘Tenancy Act’. Dealing with the argumentthat a fresh tenancy was created after the expiry of the efflux of time, itGwas found that the appellant had not pleaded such a case and that therespondent had assented to the appellant continuing in possession of thelease premises. The occupation charges were accepted by the respondentwithout ‘prejudice’ which did not lead to the creation of a new tenancy.We have found that we see no reason to disagree with the High Courtthat the term of lease was 21 years from the date on which the three H

floors in question was handed over. We further found that in regard tothe 2[nd] and 3[rd] floors, possession must be found handed over to theappellant on 16.09.1969. As far as the 4[th] floor is concerned, we affirmedthe finding of the High Court that possession was handed over only on04.11.1970. There is also no dispute that the parties namely the appellantand the respondent could determine the lease prior to the expiry of 21years. It cannot be in the region of dispute that the respondent did issuea notice dated 12.12.1977. The respondent followed it up by filing a suit,C.S. No. 20 of 1978, claiming possession. There was also a cross suitfiled by the appellant. We have noticed how both these suits finally cameto be compromised. The argument which we are called upon to pronounceon is as follows.

42. It is contended that with the issuance of the notice of terminationof the lease by the respondent dated 12.11.1977, the original lease at anyrate came to an end. The result of the settlement between the partieswould not be to revive the original lease. In other words, upon the issuanceof a notice for determination of the lease under Section 106 of theTransfer of Property Act, without anything more, the law operates andthe lease is at an end. The effect of the waiver of the notice underSection 113 of the Transfer of Property Act can only be if at all to createa new tenancy. It is in this regard, that the appellant has placed relianceon judgment of this Court inCalcutta Credit Corporation Ltd. (supra).The judgment was rendered in the said case by a bench of three learnedjudges. In the said case, after the expiry of the period of the originallease, the tenant continued to hold over the premises. While so, it is thetenant who served a notice intimating its intention to vacate the premiseson 12.08.1953. By a subsequent letter dated 26.08.1953, the tenantpurported to resile from the notice and requested that the earlier noticebe treated as cancelled. The landlord pointed out that the earlier noticecould be withdrawn by mutual consent and the landlord was unable togive his consent. The tenant invoked the Rent Control Act and claimedthey were holding over the premises in terms of the Act. The tenantsub-let the premises after it was called upon to vacate the premises.The landlord instituted the suit against the original tenant. There was aconsent decree which inter alia declared that portion of the premiseswas handed over to the landlord and the landlord would have the optionto eject the sub tenant. It is thereupon that the suit came to be filedagainst the sub tenant. This Court proceeded to hold, inter alia, asfollows:- A

B

C

D

E

F

G

H

A“Clearly Section 113 contemplates waiver of the notice by anyact on the part of the person giving it, if such an act shows anintention to treat the lease as subsisting and the other party giveshis consent express or implied thereto. The law under the Transferof Property Act on the question in hand is not different from thelaw in England. Once a notice is served determining the tenancyBor showing an intention to quit on the expiry of the period of thenotice, the tenancy is at an end, unless with the consent of theother party to whom the notice is given the tenancy is agreed tobe treated as subsisting. It was held in Tayleur v. Wildin [(1867-68) LR 3 Ex Cases 303] that a notice determining a tenancy cannotCbe withdrawn. In Tayleur v. Wildin [(1867-68) LR 3 Ex Cases303] an annual tenancy of a farm under a written leasecommencing on Lady Day i.e. March 25, was determined by anotice by which the landlord called upon the tenant to quit thefarm at the expiration of the current year’s tenancy. Before theexpiry of the year of tenancy, the arrears of rent were paid up byDthe tenant, and the notice was withdrawn and the tenant continuedin occupation of the farm under the terms of the original agreement.It was held by the court of Exchequer that the tenancy wasdetermined by the notice to quit, and a surety for payment of rentunder the original lease was not liable for rent falling due after theEexpiry of the notice. Kelly C.B., observed that whether the noticeis given by the landlord or the tenant, the party to whom it is givenis entitled to insist upon it, and it cannot be withdrawn without theconsent of both. The consent of the parties makes a newagreement, and the rent became, due under a new agreement. Inour judgment, that principle applies to the law of landlord & tenantFin India.Therefore, on the expiration of the period of notice datedAugust 12, 1953, the tenancy of Allen Berry stood determined.

43. The appellant highlights this judgment. We have noticed thatGthe appellant did refer to this judgment both before the learned SingleJudge and the Division Bench. A Bench of two learned Judges in thedecision reported in Ranjit Chandra Chowdhury v. MohitoshMukherjee9, was dealing with a suit for ejectment filed against the tenantfor default of payment of rent. The matter was considered in light of the H9 (1969) 1 SCC 699

West Bengal Premises Rent Control (Temporary Provisions) Act, 1950.The said act came to be repealed by the ‘Tenancy Act’ with which weare concerned in this case. The court was dealing with the scope ofSection 12(1) and (14) of the Act. Under the said provisions, theprohibition against a decree for possession being granted against tenantdid not apply in a case where the tenant had fallen into arrears of rentand had not paid it within the time under the contract. The tenant claimedthe protection of Section 14 of the Act which granted power to the courtto decree the payment of arrears and allow the tenant to avoid theconsequences which otherwise would follow. The contention was thatthe action of the landlord in having accepted the rent on a subsequentdate had led to the creation of a new tenancy. The Court inter alia heldin these circumstances as follows: - “8. Mr Bhattacharji on behalf of the tenant contends that the oldtenancy was dead after the notice and on acceptance of rent anew tenancy came into existence. The other side contends thatby the acceptance of rent, the old tenancy on the old termscontinued. Each side has cited a number of rulings. We do notconsider it necessary to refer to these rulings or to discuss thequestion. In Ganga Dutt Murarka v. Kartik Chandra Das [AIR1961 SC 1067] and in Anand Nivas Private Ltd. v. Anandji KalyanjiPedhi [AIR 1965 SC 414] (particularly the first at p. 1069), it washeld in connection with a statutory tenancy that a landlord acceptingrent does not assent to a new contractual tenancy but continuesthe old tenancy. In Calcutta Credit Corporation Ltd. v. HappyHomes (P) Ltd., [(1968) 2 SCR 20] the subject has been discussedin detail. Under Section 113 of the Transfer of Property Act anotice is waived, by an act on the part of the person giving itshowing an intention to treat the lease as subsisting, provided thereis the express or implied consent of the person to whom it is given.Here the difficulty is solved by the attitude the tenant took in thiscase. His case was that the old tenancy revived and continued.According to him, the landlord acquiesced in having the old tenancycontinued. If we go by the tenant’s own case, it is obvious that theold tenancy with the default continued and the landlord was thusable to use the provisions of Section 12 (1)(i) against the tenant asalso the proviso to sub-section (3) of Section 14 of the repealedAct. There were two consecutive defaults and in the period of 18months there were more than three defaults. The benefit of Section A

B

C

D

E

F

G

H

A

B

C

D

E

F

G

H

A14 sub-section (1) of the repealed Act is not available to the tenantbecause of the operation of the proviso to sub-section (3). FurtherSection 24 of the new Act can hardly assist the tenant. That sectionis not retropective and will operate from the date on which itcame into force. Mr Bhattacharji claimed that it may be taken asa rule of decision or laying down a rule of evidence but we thinkBit impinges upon the substantive rights of landlord and tenantswhich can only be claimed after the commencement of the Actand not before. The section puts an embargo on any claim basedon default in payment of rent when the landlord accepts rent afterdefault and therefore it affects the substantive right of theClandlords. According to the accepted canons of interpretation ofstatutes, a substantive right cannot be taken away retrospectivelyunless the law expressly so states or there is a clear intendment.There are no express words in the statute making Section 24retrospective and we fail to see any intendment in it to apply tocases pending on March 31, 1956, when the new Act came intoDforce, and this suit was then pending. If it had been merely amatter of procedure or creating a rule of decision we might haveheld that the provisions applied to the suit, but that is not the casehere. As we said the section creates a change in the substantiverights and therefore must be held to be prospective in operationEand not retrospective unless we can gather retrospectivity fromthe language of the statute or by clear implication in it.

44. A Bench of three learned Judges rendered the decision reportedin Tayabali Jaffarbhai Tankiwala v. Asha & Co. and Another10. Wemay notice the following paragraphs: -F

“5. In the present case there can be no doubt that the serving ofthe second notice and what was stated therein together with theclaim as laid and amplified in the plaint showed that the landlordwaived the first notice by showing an intention to treat the tenancyas subsisting and that this was with the express or implied consentGof the tenant to whom the first notice had been given because hehad even made payment of the rent which had been demandedthough it was after the expiration of the period of one month givenin the notice.”

“6. It further appears that the rent was sent by the tenant treatingthe tenancy as subsisting and not as having come to an end byvirtue of the first notice. There is another significant fact whichshows that it was the second notice which was considered by thelandlord to be the effective notice. It was in the notice sent inOctober 1957 that the landlord, for the first time, raised the groundof personal necessity. In the suit requirement of personal necessitywas made one of the main grounds on which eviction was sought.In the first notice which was sent in June 1956 no suchrequirement or ground had been mentioned. It was not open,therefore, to the landlord to say that he did not want to rely on thesecond notice and should be allowed to base his action for evictiononly on the first notice containing the ground of the default inpayment of arrears of rent. We are satisfied that the suit of thelandlord was rightly dismissed though we have sustained itsdismissal on different reasoning.”

45. We must pause here and notice the complaint of the appellant.The learned Additional Solicitor General would point out that in theCalcutta Credit Corporation Ltd.(supra) case, the Court had declaredthe law to be that when there is a waiver of a notice within the meaningof Section 113 of the Transfer of Property Act, the old tenancy is notresurrected. With the issuance of the notice of termination, the lease isdetermined. With the consent of the parties all that happens is the creationof a new tenancy. It is the complaint of the appellant that properly readthe judgment of the later bench of two judges reported inRanjit ChandraChowdhury (supra) would show that though reference is made toCalcutta Credit Corporation Ltd.(supra), the Court proceeded on thebasis that the old tenancy was revived and continued on the basis of thestand taken by the tenant himself. It is pointed out that this Court mustproceed on the basis of law declared in Calcutta Credit CorporationLtd. (supra) and must notice also that the facts persuaded the court totake the view it took in the later judgment.

46. Still further, it is contended that as far as the judgment of thelater three judges’ bench in Tayabali Jaffarbhai Tankiwala(supra), itdoes not refer to the earlier judgment of a coordinate Bench of samestrength, namely, Calcutta Credit Corporation Ltd.(supra) and thelaw is correctly laid down inCalcutta Credit Corporation Ltd.(supra).

AB

C

D

E

F

G

H

A47. Per contra, the submission of the respondent is that theobservations relied upon by the appellant inCalcutta Credit CorporationLtd.(supra) constitute only obiter. Reliance is placed on the judgmentsin Ranjit Chandra Chowdhury(supra) and Tayabali JaffarbhaiTankiwala(supra) to contend that the waiver does not lead to a newtenancy. In this regard, reliance is also placed on the judgments of theBCalcutta High Court reported in Sudhir Kumar Paul v. Indu ProvaGhose and others11 and Khana Lahiri and others v. Suniti KumarChatterjee and others12. It is further pointed out that the partiesproceeded on the basis that the old tenancy revived. This is evident fromthe rent being paid in accordance with the lease by the appellant.C

48. We have adverted to the stand of the appellant in its writtenstatement. In paragraph 12, the appellant contended that it was a leasefor a term of 21 years with an option to determine the said lease beforethe expiry of said period of 21 years. Immediately thereafter, the TenancyAct was invoked. Thereafter, it is in the same paragraph, it is contendedDthat the appellant is a monthly tenant. It had paid monthly rent on amonth-by-month basis. Such tenancy is protected by the Tenancy Act.Further alternative argument set up is that after determination of thetenancy by notice dated 07.12.1977, the monthly rent being accepted,appellant became monthly tenant on or after January, 1998 and thetenancy was also protected under the Tenancy Act. Now it is necessaryEto refer to Section 3 of the West Bengal Premises Tenancy Act, 1956. Itconsists of two sub-sections. Sub-Section (2) was inserted in the year1965. Section 3 reads as follows:

“3. Certain provisions of the Act not to apply to certain leases.— (1) The provisions relating to rent and the provisions of SectionsF31 and 36 shall apply to any premises held under a lease forresidential purpose of the lessee himself and registered under theIndian Registration Act, 1908, where—

(a) such lease is for a period of not more than 20 years, and saveas aforesaid nothing in this Act shall apply to any premises heldGunder a lease for a period of not less than 15 years.

(2) Notwithstanding anything to the contrary contained in sub-section (1) but subject to sub-section (3) of Section 1, this Act 11 AIR 76 Cal 274H12 (2006) SCC Online Cal 248

shall apply to all premises held under a lease which has beenentered into after the commencement of the West BengalPremises Tenancy (Amendment) Ordinance, 1965:

Provided that if any such lease is for a period of not less than 20years and the period limited by such lease is not expressed to beterminable before its expiration at the option either of the landlordor of the tenant, nothing in this Act, other than the provisions relatingto rent and the provisions of Sections 31 and 36, shall apply to anypremises held under such lease.”

49. We understand the case of the appellant from the pleadingsas follows:

The lease provided for an option for appellant to determine thelease before the expiry of 21 years. Therefore, though the leasewas for a period of 21 years, the lease contained an option toterminate it with the appellant. Therefore, the provisions of theTenancy Act came into play. It is in further alternative in paragraph30 that the appellant set up the case of the impact of the notice oftermination dated 7.12.1977. It is in support of the said alternativecase that the entire debate before the court based on the judgmentof this Court in Calcutta Credit Corporation Ltd.(supra)revolved around.

50. We have held that the lease agreement in 1968 along with thesupplementary agreement in 1969 did constitute a lease. In Clause 9 ofthe agreement of lease dated 21.07.1968, it is provided as follows:

“9. That Lessee shall be at liberty to terminate the lease at anytime after the expiration of eight years of the terms of 21 years bygiving six calendar month previous notice in writing to the Lessorto that effect.”

51. We must notice Clause 26 of the said lease. It reads as follows:

“26. In case the Lessee makes default in payment of the rent forthree months or otherwise commits breach of any of the covenantsor conditions on its part to be observed and performed it shall belawful (but not compulsory) for the Lessor to determine the Leaseand to re-enter the demised premises or any part thereof in thename of the whole and to take possession thereof.”

AB

C

D

E

F

G

H

A52. The supplementary agreement dated 12.09.1969 added aproviso to Clause 26. It reads as follows:

“PROVIDED HOWEVER that notwithstanding anythingcontained in the said Agreement of Lease or these presents theLessor shall not be entitled to forfeit the Lease in respect of theBdemised premises or any part thereof or to determine the same orto re-enter thereon so long as any amount of the loan or loansadvanced and agreed to be advanced and the amount of Interestthereon are outstanding and due to the Lessee.”

53. If thus Clause 26 read with the proviso is considered, right toCforfeit and to determine the lease stood conditioned by the requirementof the payment of the amounts to the appellant under the mortgage.There is no pleading at all in this regard. The notice of termination by therespondent is not tendered in evidence as pointed out by the respondent.We have noticed the contents of the letter dated 08.03.1990 which clearlyindicate that the appellant had in mind the proviso to Clause 26 whichDwe have hereinbefore referred to. In paragraph 12 of the writtenstatement, the case which was set up was that under the terms of thelease agreement and supplementary agreement, the lease has been madeexpressly terminable before its expiry at the option of the appellant. Thisappears to be the case with reference to Clause 9.

E

E

54. As regards the case based on the effect of the waiver withinthe meaning of Section 113 of Transfer of Property Act, we notice thefollowing aspects. The notice of termination is itself not produced. Inthis regard, we must notice that the judgment of this Court in CalcuttaCredit Corporation Ltd.(supra) was rendered under Section 113 ofFthe Transfer of Property Act. Waiver of forfeiture within the meaning ofSection 111 (g) of the Transfer of Property Act is provided in Section112 of the Transfer of Property Act. The considerations relevant for theoperation of the Section 112 is different from that of Section 113 of theTransfer of Property Act. Since the notice itself is not before the Court,things are not clear. There is no adjudication about the notice of terminationGin the earlier suit. We have also noticed the proviso to clause 26. Wehave seen the stand of the appellant even in the year 1990 as made clearfrom the letter dated 21.08.1990 addressed by it to its solicitors. There isno case as to when the appellant stood paid. This is also relevant for thereason that the notice of termination referred to by the appellant datedH07.12.1977 if not legally permissible at the time when it was issued, it would not in law have the effect of determining the lease which was fora period of 21 years. In the circumstances of this case, we find no meritin the case of the appellant based on the decision of this Court inCalcuttaCredit Corporation Ltd.(supra) as regards the effect of waiver underSection 111 of the Transfer of Property Act resulting in the creation ofthe new tenancy.

55. As regards the case based on Section 3(2) of the TenancyAct, namely, the presence of an option with the appellant/lessee toterminate the 21 years lease immaturely, it is no doubt true that Clause 9did give an option to the appellant to terminate lease after the expiry of8 years and before the period of 21 years expired. It is here that thedecision of this court in Pabitra Kumar Roy(supra) needs to beconsidered. In the said case, registered lease was dated 13.01.1969.The lease commenced from 01.01.1969 and was for a period of 21years. The lease, in fact, contained a clause which permitted the partiesto terminate the lease prior to its expiry. On 29.09.1972, the lessordetermined the lease under Section 111(g) of Transfer of Property Act.What is more, a suit was filed against the lessee for eviction which wasdecreed on the ground of default in paying rent. The lessee went aheadand successfully invoked Section 114 of the Transfer of Property Actand on payment of the rent, he was allowed to continue. Thereafter, oncompletion of the period of 21 years, the suit for ejectment was filed. Itis in this case that the tenant sought shelter under Section 3 of the TenancyAct. It was the case of the tenant that the tenant was protected underthe Tenancy Act, in view of the prior determination. We need only noticeparagraphs 15, 19, 20 and 22.

“15. On a construction of the provisions of sub-section (2) ofSection 3 of the 1956 Act, we are unable to subscribe to the viewexpressed by the High Court. The intention of the legislature inamending Section 3 appears to have been to prevent landlordsfrom using long-term leases as a camouflage for excluding themfrom the protection of the 1956 Act and yet retaining the right ofprior determination. Sub-section (2) appears to have been enactedto prevent such abuse, inasmuch as, once the lease was determinedbefore the fixed period, it attracted the proviso thereof.

xxxxxx

xxx

19. The decision in Savita Dey case [(1995) 6 SCC 274 : AIR1996 SC 272] makes the position clear that the mere inclusion of A

B

C

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F

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Aa clause for prior determination of a lease, which is otherwise fora fixed period of more than twenty years, will not ipso facto bringit within the exception contemplated in the proviso to sub-section(2) of Section 3 of the 1956 Act. The inclusion of such a clausemay be taken by the tenant as a defence in the event the optionunder the said clause is exercised. Such a defence was not set upBby the lessee in the earlier suit when it was available to her andthe same is not available to her after the lapse of the fixed periodof the lease.

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20. As was indicated by the Calcutta High Court in Mahindra &Mahindra case [(1989) 93 CWN 773 : AIR 1989 NOC 200 (Cal): (1989) 1 CHN 1] a lease for a fixed period does not cease to beso by the inclusion of a clause entitling either the lessor or thelessee to determine the lease prior to its expiry, unless such optionis actually exercised.

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22. The law is clear that lease deeds for periods of twenty yearsor more would stand excluded from the operation of the 1956 Actexcept in matters relating to Sections 31 and 36 thereof, unlessthe same were terminable before their expiration at the optioneither of the landlord or of the tenant. In other words, if such aElease is terminated before its fixed period expired, the proviso toSection 3(2) would be attracted as a defence against eviction. If,however, the lease was allowed to run its full course, both thelease and the conditions contained therein would come to an endand would cease to be operative and the clause for priorFdetermination would no longer be available as a defence againsteviction.”

56. The Court also found that the tenant was estopped havingsubmitted to the jurisdiction of the court under the Transfer of PropertyAct by seeking relief under Section 114 of the Transfer of Property Act.Since the Court has also relied upon the judgment of this Court inSavitaDey v. Nageswar Majumdar and Another13, we may advert to thesame. In the said judgment, the Court was dealing with the lease whichcommenced on 01.07.1964 and ended on 30.06.1985. It was found thatsince lease was executed prior to the amendment inserting sub-section G

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(2) in Section 3 in 1965, the tenant could not succeed on the basis of thepre determination clause. We may also notice the following discussion:

“8. Additionally, in the lease in hand, neither the landlord nor thetenant had reserved to himself the unfettered right of terminationof the lease during the period of 21 years. In the first place, as arethe facts pleaded, neither of them has ever asserted the said rightof premature termination. Perhaps no occasion arose. Secondly,the question of the suggested precariousness of the tenure did notarise in the circumstances of the case because the lessee/tenanthad fully enjoyed the period of lease of 21 years. The heart of thematter is that the tenancy was never terminated either by thelandlord or by the tenant during the period of the lease.”

57. In this case it is no doubt true that there is pre-determinationclause which gave an option to the appellant to determine the lease aftera period of 8 years. From the evidence and the stand taken by the appellantas emerging from the documents, it is clear that the appellant continuedfor the full length of 21 years in terms of the lease. Its possession wasnever ruffled. The appellant also filed a suit. During the entire periodafter the execution of the deed in 1968 and the supplementary leasedeed in 1969, it would appear that till the period of 21 years ran out,appellant never took up the case based on its right under the West BengalPremises Tenancy Act in view of the option it had to determine the leaseunder Clause 9. The presence of the clause in question is not to beconfused with the issue relating to the effect of the notice dated 07.12.1977purported to have been sent to the respondent which we have separatelydealt with. Therefore, in terms of Pabitra Kumar Roy(supra), theappellant may not succeed on the strength of the option it claimed underthe agreement to lease.

IS LETTER DATED 19.10.1990, A NOTICE UNDERSECTION 106 OF THE TRANSFER OF PROPERTYACT?

58. The appellant would contend that there was a pre maturedetermination of the lease vide letter dated 19[th] October, 1990 and thiswould result in the occupation of the appellant from the said date beingas a monthly tenant and, therefore, the Tenancy Act applied. It is thecase of the respondent that this contention was not raised before thecourts below and the contention which was raised before the High Courtwas that it became the monthly tenant in 1991 on the basis of holding AB

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Aover of possession after the expiry of the lease. The case of the respondentfurther is that it must be understood that the letter dated 19.10.1990 wasone only enquiring whether the appellant would deliver possession of the2[nd] and 3[rd] floors. The letter adverts to the lease expiring by efflux oftime. We are of the view that there is merit in the contention of therespondent. We cannot on the terms of the letter dated 19.10.1990 holdBthat it amounted to termination of the lease. We have found that therewas a lease for a term of 21 years commencing in the case of the 2[nd]and 3[rd] floors from 17.09.1969. Therefore, the period of 21 years hadalready run out by the time the letter dated 19.10.1990 came to be issued.In other words, it was a case of a lease qua the 2[nd] and 3[rd] floors whichChad expired by efflux of time, in September, 1990. We reject the argumentof the appellant in this regard.

MESNE PROFITS: WAS THE POSSESSION OF THEAPPELLANT WRONGFUL ON THE EXPIRY OF THELEASE?

D59. Section 111(a) of the Transfer of Property Act, 1882 providesthat the lease is determined by efflux of time. On the expiry of the lease,the lease ends. As to its effect, we may only notice the following statementin the decision reported in Atma Ram Properties (P) Ltd. v. FederalMotors (P) Ltd.14:E“11. Under the general law, and in cases where the tenancy isgoverned only by the provisions of the Transfer of Property Act,1882, once the tenancy comes to an end by determination of leaseunder Section 111 of the Transfer of Property Act, the right of thetenant to continue in possession of the premises comes to an endFand for any period thereafter, for which he continues to occupythe premises, he becomes liable to pay damages for use andoccupation at any rate at which the landlord could have let out thepremises on being vacated by the tenant.…”

60. A tenant continuing in possession after the expiry of the leaseGmay be treated as a tenant at sufferance, which status is a shade higherthan that of a mere trespasser, as in the case of a tenant continuing afterthe expiry of the lease, his original entry was lawful. But a tenant atsufferance is not a tenant by holding over. While a tenant at sufferancecannot be forcibly dispossessed, that does not detract from the possession

of the erstwhile tenant turning unlawful on the expiry of the lease. Thus,the appellant while continuing in possession after the expiry of the leasebecame liable to pay mesne profits.

LIMITATION: WHETHER THE SUIT IS BARRED INRELATION TO MESNE PROFITS BEYOND 3 YEARSOF THE SUIT?

61. Order VII Rule 6 of the CPC reads as follows:

“VII (6). Grounds of exemption from limitation law. —

Where the suit is instituted after the expiration of the periodprescribed by the law of limitation, the plaint shall show the groundupon which exemption from such law is claimed:

Provided that the Court may permit the plaintiff to claim exemptionfrom the law of limitation on any ground not set out in the plaint, ifsuch ground is not inconsistent with the grounds set out in theplaint.”

62. A perusal of the plaint filed would, inter alia, reveal, thefollowing pleading:

“24 The defendant expressly and/or impliedly admitted theexistence of the jural relationship between the parties by its letterdated 24th May, 1994. By reason of the aforesaid and by reasonof the acknowledgement contained in the letter dated 24th May,1994 the plaintiff states that no part of its cause of action is barredby laws of limitation,”

Thus, the case of the appellant was that based on the admissionand acknowledgment in letter dated 24[th] May, 1994, no part of the causeof action was barred.

63. In the Trial Court, the learned Single Judge framed an issue asto whether the Suit is barred by limitation. The Judgment would revealthat the plea of limitation was not pressed. The learned Single Judgealso went on to find that the Suit is within the period of limitation. Beforethe Division Bench, the appellant did not raise the plea of limitation. It isin this Court that the plea is sought to be resurrected. The plea is basedon the case that a Suit of mesne profits is governed by Article 51 of theLimitation Act, 1963, which reads as follows:

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The suit was laid on 10.04.1995. The contention is that for theperiod beyond 3 years before the date of the suit, the suit would bebarred.

C64. The case of the respondent is that the plea of limitation wasnot pressed before the learned Single Judge and was also not taken upbefore the Division Bench. It is further contended that a claim for mesneprofits involves a liability, which accrues on a day-to-day basis. In thisregard, attention is drawn to Ram Karan Singh and others v. NakchhedAhir and others15, which has been referred to by this Court in theDJudgment reported in Raptakos Brett and Company Limited v. GaneshProperty16 and we may notice only paragraph-21 of Raptakos Brettand Company Limited(supra):

“21. In Ram Karan Singh [Ram Karan Singh v. Nakchhad Ahir,1931 SCC OnLine All 39 : AIR 1931 All 429] , a Full Bench of theEAllahabad High Court while examining the issue of maintainabilityof second suit for pendente lite and future mesne profits whereearlier suit for possession and past mesne profits has already beendecided has held as follows : (SCC Online All)

“It seems to us that the cause of action for recovery of possessionFis not necessarily identical with the cause of action for recoveryof mesne profits. The provisions of Order 2 Rule 4, indicate thatthe legislature thought it necessary to provide specially for joininga claim for mesne profits with one for recovery of possession ofimmovable property, and that but for such an express provision,such a combination might well have been disallowed. A suit forGpossession can be brought within twelve years of the date whenthe original dispossession took place and the cause of action forrecovery of possession accrued. The claim for mesne profits canonly be brought in respect of profits within three years of the 15 AIR 1931 Allahabad 429H16 (2017) 10 SCC 643

15 AIR 1931 Allahabad 429H16 (2017) 10 SCC 643

institution of the suit and the date of the cause of action for mesneprofits would in many cases be not identical with the original dateof the cause of action for the recovery of possession. Mesneprofits accrue from day to day and the cause of action is acontinuing one, and arises out of the continued misappropriationof the profits to which the plaintiff is entitled.…”

65. In the said passage, what has been considered, was the issuerelating to the maintainability of the second Suit for pendente lite andfuture mesne profits, in a situation, where an earlier suit for recovery ofpossession and for past mesne profits had been decided. We notice thatwhat the Court has essentially held is that but for Order IV Rule 2 of theCPC, as it stood specifically providing for joining a claim for mesneprofits with one for recovery of possession of an immovable property,such a joining together of claims in one suit, may have been not allowed.It is thereafter stated that a claim for mesne profits can only be broughtin respect of profits within three years of the institution of the suit. Stillfurther, it is found that the date of cause of action for action for mesneprofits may not coincide with the date of cause of action for recovery ofpossession. It is thereafter that the statement which is relied upon by therespondent has been made. The Court held that mesne profits accruefrom day-to-day and the cause of action is a continuing one. It arises outof the continued misappropriation of the profits, which a plaintiff is entitledto.

66. Article 51 contemplates a period of three years from the dateon which the profits from the immovable property is received by thedefendant. If it is to be understood as profits actually received by thedefendant, then, it is obvious that Article 51 may not apply. If a Suit formesne profits of the kind involved in this case would fall moreappropriately under Article 113 of the Limitation Act, which is theresiduary Article, the Suit must be instituted within a period of threeyears from the date on which the right to sue accrue. This Article is instark contrast with Article 58 of the Limitation Act, under which, theperiod of limitation is three years but from the date on which the causeof action first arises. If a claim for mesne profits is one, which accruesfrom day-to-day and it is a continuing one and if the suit for mesneprofits would fall to be decided under Article 113 of the Limitation Act, A

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Athen, since the cause of action is a continuing one, the suit may not bebarred as regards any part of the claim as contended by the appellant.

67. In this case, there is another dimension. The case set up bythe respondent plaintiff in the plaint, as noticed, was that, it by virtue ofthe acknowledgment and admission of the jural relationship in letter datedB24[th] May, 1994, there is no bar of limitation for any part of its cause ofaction. In their submission before this Court also, the respondent has laidstore by the stand that the respondent was awaiting a decision by theChairman.

68. It is true that a pure question of law which does not involveCany investigation of facts, and if the plea of limitation in a given case issuch, there can be no taboo in this court dealing with it even if raised forthe first time. This is however not a case where the plea was not raised.It was raised and an issue was framed. But it was expressly given upbefore the Single Judge and not pursued before the Division Bench.

D69. While on acknowledgment under Section 18 of the LimitationAct, this Court in Messrs. Lakshmirattan Cotton Mills Co. Ltd. andMessrs. Behari Lal Ram Charan v. The Aluminium Corporation ofIndia Ltd.,[17] held, inter alia, as follows: -

“9. It is clear that the statement on which the plea ofEacknowledgment is founded must relate to a subsisting liability asthe section requires that it must be made before the expiration ofthe period prescribed under the Act. It need not, however, amountto a promise to pay, for, an acknowledgment does not create anew right of action but merely extends the period of limitation.The statement need not indicate the exact nature or the specificFcharacter of the liability. The words used in the statement inquestion, however must relate to a present subsisting liability andindicate the existence of jural relationship between the parties,such as, for instance, that of a debtor and a creditor and theintention to admit such jural relationship. Such an intention needGnot be in express terms and can be inferred by implication fromthe nature of the admission and the surrounding circumstances.Generally speaking, a liberal construction of the statement inquestion should be given. That of course does not mean that wherea statement is made without intending to admit the existence of jural relationship, such intention should be fastened on the personmaking the statement by an involved and far-fetched reasoning.”

70. The case of the respondent appears to be that there is anadmission of the jural relationship by virtue of the letter dated 24.05.1994.This is a letter written by the appellant in reply to the letter dated02.05.1994. It is necessary to refer to the relevant portion of the letterdated 02.05.1994. After referring to a discussion held on 27.04.1994,wherein it was alleged that certain decisions were taken, it was, interalia, stated as follows: - “(iv)On the assurance that Sudera’s claim of mesne profits as tothe leasehold property in occupation of IOC will be looked intoand decided upon by IOC’s Chairman, Shri Bakshi in a reasonable,fair and judicious manner, Sudera will not insist on reference toArbitration (for which the draft agreement for reference toarbitration was sent by IOC to Sudera and returned back to themduly confirmed with observations and clarifications). The amountof Rs.90,00,000/- (Rupees Ninety Lakhs only) odd paid by IOCto Sudera after the expiry of the Lease till date and received bySudera as an ‘on a/c’ payment, shall be treated as paymentreceived while settling the mesne profits payable as aforesaid.

(v) The two aspects of handing over of possession of the propertyand the determination of the claim for mesne profits of Sudera bythe Chairman of IOC shall stand delinked. While the possessionshall be made over forthwith, the claim for mesne profits shall bedecided by the IOC’s Chairman, Shri Bakshi as expeditiously aspossible, but not later than two months from date of making overpossession.”

71. In the letter written by the appellant dated 24.05.1994, whichwe have already extracted hereinbefore, the discussion being held on27.04.1994, was admitted. In regard to Clauses (iv) & (v) of letter dated02.05.1994 which we have referred to, we may notice only the following:- “So far as clauses (iv) and (v) are concerned, it was discussedthat Chairman will first decide the question of maintainability ofyour claim for mesne profits.

IOC has been consistently contending by several letters to youthat there can be no question of mesne profits in this case. If the A

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AChairman decides that the claim for mesne profits is maintainablein law after hearing the view points of both sides in the matteronly then he will go into the question of the assessment of theamount thereof.

You were kind enough to say that you would accept the advice ofBthe Chairman on every respect as final and binding. At the sametime, you will appreciate that no agreement for arbitrationagreement was concluded or entered into. A draft was neverfinalized and no agreement for arbitration was ever finally preparednot signed by any party because talks for arbitration fell throughat the stage of discussions.”

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72. It is undoubtedly true that it has been clearly stated that theChairman will take a decision on the maintainability of the claim formesne profits. In the same breath, the appellant appears to indicate inthe letter that it has been taking the stand that there can be no questionof mesne profits. But the letter further indicates that the Chairman willDtake a decision after hearing the respondent also regarding themaintainability and only then the assessment of mesne profits will becarried out.

73. We have already noticed that an acknowledgment, as far asthe admission of the jural relationship is concerned, need not be express.EIt would become necessary to probe the surrounding circumstances.This may include going into the facts. In this regard, in fact, no argumentswere addressed on behalf of the appellant and indeed even on behalf ofthe respondent with reference to the impact of Order VII Rule 6 of theCPC or Section 18 of the Limitation Act. As already noticed, even in theFletter dated 24.05.1994 it is not as if there is a categoric statement fromthe appellant admitting liability to pay mesne profits.

74. We may further notice as follows. In the plaint, it is, interalia, stated as follows:

“The plaintiff is entitled to claim and claims mesne profits in respectGof the said 57105 sq. ft. comprised of 2nd, 3rd and 4[th] floors in thepremises No.1. Shakespeare Sarani, Calcutta @ Rs. 31/- per sq.ft. per month which the defendant, remaining or continuing. inwrongful possession of the said property actually received or mightwith the ordinary diligence have received therefrom having regardto the prevalent of rent in the locality where the premises no.1,H

Shakespeare Sarani, Calcutta within the jurisdiction of this Hon’bleCourt is situate.”

75. Article 51 of the current Limitation Act corresponds to Article109 of the Limitation Act 1908. We may notice that in Dullabhbhai18Hansji and Another v. Gulabbhai Morarji Desai, the question aroseas to whether Article 109 of the Limitation Act, 1908 would apply in thefollowing facts:

One Gulab Chand stood adjudicated as an Insolvent. Onthe application of the plaintiff as Receiver the sale by the insolventwas set aside on March 13, 1929. The suit was instituted in March,1931 for mesne profits. The contention of the defendant was thatthe suit was barred for the period from 1925 to 1928. It is whiledealing with these facts the Court held as follows:

“.. It is no doubt perfectly true that the plaintiff could not havesued to recover these mesne profits until he had got the saleset aside. But Article 109 does not provide that the startingpoint of time for the recovery of mesne profits wrongfullyreceived shall be the date when the cause of action to recoverthose profits arose; the starting point is the date when the profitswere received….”

76. In Dwarkas Nathamal v. Balkrishna Baliram19, a learnedSingle Judge was dealing with essentially the question whether asubsequent suit for mesne profits for a different period would be barredby Order II Rule 2 of CPC. It was held as follows:

“10. With great respect, I am unable to agree with the view whichthe learned Judge has taken. It is clear from the passage quotedabove that the basis of the view is that “the claim for mesne profitscan arise only when the defendant wrongfully appropriates theprofits from the property in respect of which a claim is made”. Inthe first place, in order to sustain a claim for mesne profits, it isnot necessary that the defendant must wrongfully appropriate theprofits of the property in respect of which a claim is made. Whatthe plaintiff is required to establish in a suit for mesne profits isthat the defendant is in wrongful possession of the property, and ifthat fact is established then the profits which the defendant has 18 (1938) 40 Bom LR 100

19 AIR 1964 Bom 42

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Areceived or which he may with reasonable diligence have receivedmust be paid to the plaintiff. Secondly, to hold that what gives riseto a right to claim mesne profits is the appropriation of the profitsby the defendant and that “a right to claim mesne profits by a suitcan accrue only when the person in wrongful possession of theproperty had actually received such profits”, is to ignore that theBliability of the defendant to pay mesne profits is not dependentupon the actual receipt of the profits. Section 2, cl. (12) of theCode of Civil Procedure defines ‘mesne profits’ as profits whichare either actually made or which might with reasonable diligencehave been made by the person in wrongful possession of theCproperty. Then again, the reference made by the learned Judge toart. 109 of the Limitation Act is, with respect, not apposite, because,column (3) of the several articles in the 1st Schedule to theLimitation Act concerns itself with the “time from which periodbegins to run” and not with the date on which the cause of actionfor the suit accrues. The only implication of the third column ofDart. 109 is that a suit which is filed more than three years after thedate on which the defendant received the profits would be barredby limitation. As stated by Sir John Beaumont in Dullabhbhai v.Gulabhai [(1937) 40 Bom. L.R. 100, at p. 103.]”

77. It is true that Section 2(12) of the CPC defines ‘mesne profits’Eas follows:

“2(12) “mesne profits” of property means those profits which theperson in wrongful possession of such property actually receivedor might with ordinary diligence have received therefrom, togetherwith interest on such profits, but shall not include profits due toFimprovements made by the person in wrongful possession;”

78. Undoubtedly, mesne profits, as defined in Section 2(12),includes not only the profits which a person in wrongful possession ofsuch property actually receives but also those profits which he mightwith ordinary diligence have received therefrom together with interestGon such profit. What is excluded is only the profit due to improvementmade by the person in wrongful possession. However, Article 51 of theLimitation Act deals with a suit for profits of the immovable propertybelonging to the plaintiff which have been wrongfully received by thedefendant. The time no doubt for such a suit begins to run when theHprofits are received. In fact, we may notice the judgment of the Privy

Council in Sri Raja Inuganti Venkata Rajagopala Rama20Suryaprakasa Rao Garu v. Maharaja of Pithapuram and another.In the said case, the Collector recognised the respondent as land ownerof the estate. This was in accordance with the decree of the lower courtand pending an appeal therefrom. The respondent got into possessionand collected the rents and profits. The decree was reversed in appeal.The Collector cancelled the recognition at the instance of the appellant.The appellant was recognised as land holder. The Privy Council took theview that the Article which would apply is Article 120 of the LimitationAct, 1908 corresponding to Article 113 of the present Law of Limitation.We may notice only the following:

“... Their Lordships are therefore of opinion that the plaintiffs hadno right of suit for the rents or profits while the possession wasunder the order of 12[th] January, 1924. It was only after that orderwas cancelled in consequence of the decision of this Board that aright of action to recover rents and profits accrued to the plaintiffs,and that right is preserved to them by the proviso to S.67. theHigh Court’s judgment recognizes that if suits had been broughteach time that rents or profits were received they could havemade no progress, but must have been stayed till the finaldetermination of the question of title.”

79. In Phiraya Lal Alias Piara Lal and another v. Jia Raniand another21, while dealing with the case of a suit filed for possessionand damages, after finding the right to sue based on possessory titlewhile dealing with the aspect of mesne profits, it was, inter alia, held asfollows:

“..It is to be noted that though mesne profits are awarded becausethe rightful claimant is excluded from possession of immovableproperty by a trespasser, it is not what the original claimant losesby such exclusion but what the person in wrongful possession getor ought to have got out of the property which is the measure ofcalculation of the mesne profits. (Rattan Lal v. Girdhari Lal,AIR 1972 Delhi 11). This basis of damages for use and occupationof immovable property which are equivalent to mesne profits isdifferent from that of damages for tort or breach of contractunconnected with possession of immovable property.”

20 AIR 1948 PC 175

21 AIR 1973 Del 186

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A80. It is apposite in this context to refer to the decision in RattanLal v. Girdhari Lal and Another22 which is relied upon in the aforesaidjudgment. In the said case, the landlord obtained a decree for eviction.The decree became inexecutable because of a law but the decree wasexecuted. The tenant was, however, restored the possession, underinherent jurisdiction. Thereupon, the tenant claimed mesne profits, interBalia. It was, in the said facts, that the Court held, after referring toSection 2(12), as follows:

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“..the principle underlying the definition of “mesne profits” inSection 2 of the CPC is that the person in wrongful possessionmust pay to the person, who was wrongfully dispossessed, suchCprofits which the former actually receives or might with ordinarydiligence have received from the property together with intereston such profits. The test therefore is not what the tenant lost bybeing dispossessed but what the landlord got or could have gotwith reasonable diligence because of the dispossession.”D81. The Court also did not agree with the argument which appealedto the lower Court, namely, that the tenant could not have sublet thepremises and therefore there was no loss due to dispossession. Sub-letting was found legal. It is also found that the fact that the tenant wasnot paying rent during the period of dispossession was the wrong approachEto deny mesne profits. The correct approach was whether the person inpossession made profit or could have made profit. It is to be noted that,interestingly, in the said case, the roles were reversed. Mesne profitswas sought against the landlord. In the case of a landlord, there could beno question of there being any restriction on his right to deal with hisproperty and earn profit within the meaning of Section 2(12) of the CPC.F

82. We have however noticed what this Court has laid down inAtmaram (supra). This Court has declared that in the case ofdetermination of a lease by the lease coming to an end, tenant would beliable to pay damages for use and occupation at the rate at which thelandlord could have let out the premises on being vacated by the tenant.GWithout disagreeing with the said view for which we see no reason, wecannot adopt the principle which in the facts of the case commendeditself to the High Court of Delhi in Rattan Lal (supra). What the landlordis entitled is, to get damages for the use and occupation at any rate, atwhich, the landlord could have let out the premises on being vacated by H22 AIR 1972 Del 11

the tenant. Section 2(12), no doubt, includes profits, which the person, inwrongful possession, might, with ordinary diligence, have receivedtherefrom. The liability of the tenant, to pay damages on the basis of therate at which landlord could have let out the premises, may not be thesame as the profit the tenant might have received with ordinary diligence.In the first place, equating the same must involve a right with a tenant totransfer or sub-let the premises. In other words, the Court would haveto find whether the tenant could have, in law, let out the premises andderived a higher amount.

83. Once the lease comes to an end, the erstwhile tenant becomesa tenant at sufferance. He cannot be dispossessed, except in accordancewith law. But he cannot, in law, have any right or interest anymore.Even though, under Section 108 of the Transfer of Property Act, if thereis no contract to the contrary, the tenant may have the right, under Section108(j), to transfer his interest absolutely or even by sub-lease or mortgage,when the lease expires by afflux of time, his interest as lessee wouldcome to an end. In this context, we may notice the following statementof the law inBhawanji Lakhamshi and Others v. Himatlal JammnadasDani and Others23:

“9. The act of holding over after the expiration of the term doesnot create a tenancy of any kind. If a tenant remains in possessionafter the determination of the lease, the common law rule is thathe is a tenant on sufferance…”

Thus, on the expiry of a lease, the erstwhile tenant, who remainsa tenant at sufferance, would have no right to transfer.

84. In this regard, we would have to hold that there is a new leaseby holding over. The acceptance of the amount after the expiration ofthe lease by the respondent was without prejudice to its case. We do notthink that the appellants can persuade us to hold that there is a lease byholding over.

85. Therefore, it may not be appropriate to allow the appellant toraise the contention of limitation or to allow him to succeed on the same,based on the case falling under Article 51. This is, no doubt, despitenoticing the averment in the plaint which appears to have been madewith reference to Section 2(12) of the CPC. We would have to, however,bear in mind the principle laid down inAtmaram (supra) and the principles23 (1972) 1 SCC 388

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86. The result would be that, in the factual context, it may not bepossible to hold that the suit filed by the respondent, should still be foundto fall under Article 51 of the Limitation Act and barred as regards partof the cause of action.C

87. The upshot of the above discussion is that, we find no merit inthe appeals. The appeals shall stand dismissed. The parties to bear therespective costs.

DDivya Pandey

(Assisted by : Rahul Kumar, LCRA)

Appeals dismissed.

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