Holding

The lease expired after ten years, thereafter becoming a month‑to‑month tenancy, and the notice served to the lessee was a valid termination of the lease, binding the sub‑lessee.

Summary

In 1958 a ten‑year lease was executed between Khaja Midhat Noor (lessor) and Latifur Rehman (lessee) with a right to sub‑lease, which was sub‑leased to Burmah Shell Oil Distributing Co. (petitioner). After the lease expired in 1968 the lessee continued to occupy the premises and pay rent month‑to‑month, which the lessor accepted. In 1972 the lessor served a notice to the lessee terminating the lease, requiring vacant possession by 16 January 1973, but no separate notice was given to the sub‑lessee. The petitioner contested the suit for ejectment, arguing that the notice was invalid and that it was holding over under a renewed lease. The Supreme Court held that, because the lease exceeded one year, it could be extended only by a registered instrument; in the absence of such an instrument the tenancy became a month‑to‑month tenancy after the ten‑year term expired. Consequently, the lease could be terminated only by a valid notice, which the court found to be valid despite not being served on the sub‑lessee. The court affirmed that a sub‑lessee need not be impleaded when the landlord has a valid termination notice to the lessee. The petition was dismissed.

Issues considered

In the absence of a registered instrument after the expiry of the ten‑year lease, did the lease automatically extend for a further five years or did the lessee hold the premises on a month‑to‑month tenancy?
If the lease was not automatically extended, was the notice of termination served on the lessee valid and sufficient to bind the sub‑lessee?

Legislation cited

Madhya Pradesh Accommodation Control Act, 1953s. 4(a)
Transfer of Property Act, 1882s. 106, s. 107, s. 116

Subjects

leasetermination noticeTransfer of Property Actmonth-to-month tenancysub‑leaseholding overregistered instrumentejectment

Judgment

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

MAY 3, 1988
B
~.~
ISABYASACHI MUKHARJI AND S. RANGANATHAN, JJ.]

Transfer of Property Act, 1882: Sections 106 and 107-Lease-

~
Absence of a registered instrument-Monthly /ease-Notice of tetmina-
tion of lease-Has to be read and construed in context of facts of each
particular case and to the parties to whom it is addressed-Valid termi- c
nation of lease-Sub lessee need not be made party in ejectment suit.

On 16th January, 1958 a lease deed was executed between the
lessee and the lessor-respondent in respect of the demised land for a
period of ten years, with a right of renewal for a further period of five
D
years, and with permission to suh'lease the same. The lessee sub-leased
the premises to the petitioner for running a petrol pump. Aller the
expiry of the lease period on 16th January, 1968, the lessor continued to
accept the rent from month to month. However, no fresh instrument
was executed by the parties.
>-· The lessor issued on 30th November, 1972 a notice to the lessee
E
terminating the lease and for giVing vacant possession of the land on the

- expiry of 15th January, 1973 after removing the structures by the 16th
January, 1973. No notice was given separately to the petitioner. The
lessee did not contest the suit filed on the basis of the notice. The
-~ petitioner contested the proceedings and contended that it was holding
F
over after the expiry of the lease, that no notice terminating tenancy
was received by it, and that the notice was invalid.

The trial Court dismissed the suit holding that the notice termi-
nating the lease was necessary and the notice in this case was invalid.
The Court also rejected the lessor's plea that the tenancy expired by
G
affiux of time. The trial Court, however, held that the lease was not
...._ extended for a iixed period of five years in absence of any written
instrument.

The 1st Additional Sub Judge allowed the lessor's appeal and held
the notice valid. The High Court upheld the appellate order.
H

811
• 812 SUPREME COURT REPORTS (1988] 3 S.C.R.

A Dismissing the special leave petition, it was,',

HELD: (1) In view of paragraph 1 of section 107 of the Transfer
of Property Act, 1882 a lease of immovable property from year.to.year,
or for any term exceeding one year, or reserving an yearly rent, can be
made only by a registered instrument. In the absence of a registered
B
instrument, it must be a monthly lease. [815G-H]

(2) The High Court was right in holding that the lessee and the
sub-lessee, in the facts of this case, continued to remain In possession as
a tenant from month to month. [816A·BI .

c '(3) The High Court was rightthat the tenancy was automatically
determined on the expiry of ten years. The lease was thereafter renewed
from month to month which could only be terminated by giving a valid
notice. [816E-F)

D . , (4) The notice of termination must be read in the context of the
facts of each particular case having regard to the situation of the parties
to whom it is addressed. If all the paragraphs of the notice in the instant
· case are read together in harmony it would be manifest that the lessee
was directed to handover the lease-hold property on 16th January,
1973, and hence the notice was a valid notice of termination of the lease
E under section 106 of the Act. [817C; 818F) • -~
(5) Law does not require that the sub-lessee need be made a
party, if there was a valid termination of the lease. In all cases where
the landlord Instituted a suit against the lessee for possession of the land
on the basis of a valid notice to quit served on the lessee and did not
F , implead the sub-lessee as a party to the suit, the object of the landlord is Y,
to eject the sub-lessee from the land in execution of the decree and such
an object is quite legitimate: The decree In such a suit would bind the
sub-lessee. [818H;.819A:B]-

. Harihar Banerji v. Ramsa$hi Roy, 45 Indian Appeals 222; Mangi·
la/ v. Suganchand Rathi, [1964] 5 SCR 239; Subadini v. Durga Charan
G Law, I.L.R. 28 Cal US; Gobinda Chandra Saha v. Dwarka Nath
Patita, A.I.R. 1915 Cal. 313 and Roop Chand Gupta v. Raghuvanshi
(Pvt.) Ltd., AIR 1964 SC 1889, referred to. . >-
CIVIL APPELLATE JURISDICTION: Special Leave Petition
H (Civil) No. 15667of1987.
BHARAT PETROLEUM CORPN. v. K.M. NOOR [MUKHARJI, J.[ 813

From the Judgment and Order dated 11.11.1987 of the Patra
High Court in Appellate Decree No. 133 of 1983·. A

G.L. Sanghi, S.K. Mehta, M.K. Dua, S.M. Sarin and Aman
Vachher for the Petitioner.

·"( Salman Khurshid, Irshad Ahmad, V.D. Phadke and L.R. Singh B
for the Respondents.

The Judgment of the Court was delivered by •.·

SABY ASA CHI MUKHARJI, J. This is a petition for leave to
appeal against the judgment and order dated 11th November, 1987 of
the High Court of Patna. On 16th January, 1958 a lease deed was C
executed between the lessee Latifur Rehman and lessor Khaja Midhat
No.or (hereinafter called the respondent) with permission to sub-lease
the same. The said Latifur Rehman sub-leased the premises to
Burmah Shell Oil Distributing Company (the petitioner herein) for
running a petrol pump and making necessary constructions thereon. D
The lease was for a period of ten years which expired on 16th January,
1968. It appears further that after the lease period had expired, the
sub-lessee, petitioner continued to pay the rent which was being
accepted continuously from month to month by the respondent, the
lessor. A notice was issued by the respondent to the lessee terminating
the lease and for giving vacant possession of the land by the 15th E
January, 1973 and also requiring the removal of the buildings, plant,
etc., by the 16th January, 1973. In the last two paras of the said notice,
it was stated that the lessee was to surrender the lease-hold land on the
expiry of 15th January, ·1973. No notice was given separately to the
petitioner terminating its lease. A suit for ejectment was filed there-
after. The lessee Latifur Rehman did not contest the suit for eject- F
ment. The petitioner, however, contested that proceeding. The
learned Munsiff.I, Gaya, by his judgment dated 8th May, 1979 dismis-
sed the suit holding that the notice terminating the lease was necessary
and the notice in this case was invalid. Thh plea of the landlord that the
tenancy expired by afflux of time, was rejected. On 22nd February,
1983 the 1st Additional Sub Judge, Gaya allowed the appeal of the G
landlord and held that the notice terminating the 'tenancy and asking
the petitioner to surrender by the 15th January, 1973 was a valid
notice.

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

r·-
i
814 SUPREME COURT REPORTS [1988] 3 S.C.R.

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

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

~
(1) In absence of any registered instrument executed by
c both the parties i.e. the lessor and the lessee after the
period stipulated in Ext. 4 i.e. the period of ten years, can
it be said that the lease was extended automatically for a
~
period of five years in terms of Ext. 4 or further whether
the lessee was holding the suit property as tenancy from
month to month?
D
(2) If the first part of question (1) is held in negative and
second part in the affirmative, as a consequence of which it
must be held that the lease was required to be determined,
whether the notice as contained in Ext. 7 validly termi-
nated the lease of the lessee? ~
E
Indubitably, the Jessee came in possession of the property in
question on 16th January, 1958. The lease was for a period of ten years
with a right of renewal for a further period of five years. After the
expiry of ten years, no instrument was executed by the parties and the
lessee continued to remain in possession of the suit property. The
p lessor accepted the rent and allowed the lessee to continue. It is rele- ?"
vant in this connection to refer to the provisions of the Transfer of
Property Act, 1882 (hereinafter called 'the Act'). Section 106 of the
Act deals· with the duration of certain leases in absence of written
contract or focal usage and section 107 deals how leases are to be
made. These sections read as follows:
G
"106. In the absence of a contract or local law or usage to
,l
the contrary, a lease of immovable property for agricultural
or manufacturing purposes shall be deemed to be a lease
from year to year, terminable, on the part of either lessor
or lessee, by six months' notice expiring with th~ end of a
H year of the tenancy; and a lease of immovabic , operty for
.J. BHARAT PETROLEUM CORPN. v. K.M. NOOR IMUKHARJI, J.] 815

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

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

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

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

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

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

In view of the paragraph 1 of section 107 of the Act, since the
lease was for a period exceeding one year, it could only have been
extended by a registered instrument executed by both the lessor and G
the lessee. In the absence of registered instrument, the lease shall be
deemed to be "lease from month to month''. It is clear from the very
language of section 107 of the Act which postulates that a lease of
immovable property from year to year, or for any term exceeding one
year, or reservbg a yearly rent, can be made only by a registered
instrument. In the absence of registered instrument, it must be a H
816 SUPREME COURT REPORTS [1988] 3 S.C.R.

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

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

"116. If a lessee or under-lessee of property remains in
possession thereof after the determination of the lease
granted to the lessee, and the lessor or his legal representa-
tive accepts rent from the lessee or under-lessee, or other-
wise assents to his continuing in possession, the lease is, in
c the absence of an agreement to the contrary, renewed from
year to year, or from month to month, according to the
purpose for which the property is leased, as specified in
section 106."

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

In that view of the matter, the termination of the lease could only
be by giving a valid notice. Such notice was given to the lessee but not
to the sub-lessee. The respondent's case is that a notice to sub-lessee
was not necessary. It was contended on behalf of the appellant that by
G Ext. 7 the lessee was asked to quit the lease hold premises on the
expiry of 15th June, 1973. Admittedly, in this case, the lease was
executed on 16th January, 1958 and from that date the lease came into
existence. For computing the period of ten years the 16th January,
1958 had to be excluded. The tenancy was, therefore, terminated on
the expiry of 16th of the month. The notice in the instant case of the
H quit which was Ext. 7 before the Court dated 30th November, 1972,
. )- BHARAT PETROLEUM CORPN. v. K.M. NOOR [MUKHARJI, J.J 817

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

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

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

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

818 SUPREME COURT REPORTS [1988] 3 S.C.R. j.,_
A dant to vacate the premises by the end of the month of July. The
defendant did not vacate the premises. Then the plaintiffs filed a suit
to eject the defendant upon the ground that the latter was in arrears of
rent for one year and had failed to pay the arrears within one month of
the service of the notice dated April 11, 1959 upon him. From the
undisputed facts it was clear that the defendant was in fact in arrears of
B rent and had failed to pay it within the time prescribed by cl.(a) of
section 4 of the Madhya Pradesh Accommodation Control Act, 1953.
It was held that though the notice dated 11th April, 1959 could be
construed to be composite notice under section 4(a) of the Accommo-
dation Act and section 106 of the Transfer of Property Act it was
ineffective under section 106 of the Transfer of Property Act because it
C was not a notice of 15 clear days. In that case, the defendant had only
14 clear days' notice. Reference was made to the aforesaid decision of
Harihar Banerji v. Ramsashi Roy (supra) which was distinguished by
this Court. This Court held that notice under section 106 of the Act
must be strictly complied with. In so holding this Court relied on a
decision of the Calcutta High Court in Subadini v. Durga Charan Law,
D I.L.R. 28 Cal. 118 which was construing a notice contemplated by
section 106 of the Act and had held that in calculating the 15 days'
notice the day on which the notice was served was excluded and even if
the day on which it expired was taken into account it would be clear
that the defendant had only 14 clear days'. notice. This position was
again reiterated by the Calcutta High Court in Gobinda Chandra Saha
E v. Dwarka Nath Patita, A.LR. 1915 Cal. 313. This Court affirmed this
view that notice must be understood in the light of Harihar Banerji v.
Ramsashi Roy (supra). This Court held that the suit was actually based
upon the notice dated July 9, 1959 which gave more than 15 days' clear
notice to the defendant to vacate the premises. This notice was a valid
notice under section 106 of the Act. In the instant case if all the
F paragraphs of Ext. 7 which is a notice in the instant case are read
together in harmony it would be manifest that the lessee was directed
to hand-over the lease hold property on 16th January, 1973.

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

In Roop Chand Gupta v. Raghuvanshi (Pvt.) Ltd. and another,
A.LR. 1964 S.C. 1889, it was held by this Court that it is quite clear
that law does not require that the sub-lessee need be made a party, if
H there was a valid termination of the lease. This Court reiterated that in
BHARAT PETROLEUM CORPN. v. K.M. NOOR {MUKHARJI, J.{ 819

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

R.S.S . Petition dismissed.

.• ,,
'(