# INDIAN OIL CORPORATION LTD v. SUDERA REALTY PRIVATE LIMITED

- **Citation:** [2022] 19 S.C.R. 462
- **Court:** Supreme Court of India
- **Decided:** 2022-09-06
- **Case number:** Civil Appeal No. 6199 of 2022
- **Bench:** K. M. Joseph, Pamidighantam Sri Narasimha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/indian-oil-corporation-ltd-v-sudera-realty-private-limited-36237
- **Pages:** 61

## Headnote

Lease - Tenant at sufferance - Liability to pay mesne profits
- Held: A tenant continuing in possession after the expiry of the
lease may be treated as a tenant at sufferance, which status is a
shade higher than that of a mere trespasser, as in the case of a
tenant continuing after the expiry of the lease, his original entry
was lawful - But a tenant at sufferance is not a tenant by holding
over - While a tenant at sufferance cannot be forcibly dispossessed,
that does not detract from the possession of the erstwhile tenant
turning unlawful on the expiry of the lease - In the present case,
the appellant while continuing in possession after the expiry of the
lease became liable to pay mesne profits.
West Bengal Tenancy Act, 1956 - Whether there was a prior
determination of the lease of 21 years by the respondent-lessor, if
so, whether the appellant-lessee is entitled to protection of the
Tenancy Act - Held : No reason to disagree with the High Court
that the term of lease was 21 years from the date on which the three
floors in question were handed over - In regard to the 2nd and 3rd
floors, possession was handed over to the appellant on 16.09.1969
- As far as the 4th floor is concerned, the possession was handed
over only on 04.11.1970 - The lease agreement in 1968 along with
the supplementary agreement in 1969 did constitute a lease - In
this case it is no doubt true that there was pre-determination clause
which gave an option to the appellant to determine the lease after a
period of 8 years - From the evidence and the stand taken by the
appellant as emerging from the documents, it is clear that the
appellant continued for the full length of 21 years in terms of the
lease - Its possession was never ruffled - Appellant also filed a suit
- During the entire period after the execution of the deed in 1968
and the supplementary lease deed in 1969, till the period of 21
[2022] 19 S.C.R. 462
462
A
B
C
D
E
F
G
H
463
years ran out, appellant never took up the case based on its right
under the West Bengal Premises Tenancy Act in view of the option it
had to determine the lease under Clause 9 - The presence of the
clause in question is not to be confused with the issue relating to
the effect of the notice dated 07.12.1977 purported to have been
sent to the respondent - Therefore, the appellant may not succeed
on the strength of the option it claimed under the agreement to lease.
Transfer of Property Act, 1882 - s. 106 - Was letter dated
19.10.1990, a notice u/s. 106 - Held : On the terms of the letter
dated 19.10.1990 it cannot be held that it amounted to termination
of the lease - There was a lease for a term of 21 years commencing
in 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 letter
dated 19.10.1990 came to be issued - In other words, it was a case
of a lease qua the 2nd and 3rd floors which had expired by efflux of
time, in September, 1990.
Limitation Act, 1963 - Article 51 - Plea was that a suit of
mesne profits is governed by Article 51 of Limitation Act - Suit was
laid on 10.04.1995, it was contented that for the period beyond 3
years before the date of the suit, the suit would be barred - Held :
Landlord by the suit seeks to realise, what in law is described as
damages for unauthorised occupation by the tenant after the expiry
of the lease - It is not to be conflated to the profits received within
the meaning of Article 51 of the Limitation Act, as it involves finding
out the rate at which the landlord could have let out the premises -
It would be the residuary Article, namely, Article 113, which should
apply - Therefore, on facts it may not be possible to hold that the
suit filed by the respondent, should still be found to fall under Article
51 of the Limitation Act and barred as regards part of the cause of
action.
Dismissing the appeals, the Court
HELD: 1.1 Whether the documents styled as agreement
dated 21.11.1968 and the supplementary agreement fo

## Text

_Characters 0–39,990 of 137,859. This is a partial read: ask again with offset=39990 for what follows._

A
B
C
D
E
F
G
H
462
SUPREME COURT REPORTS
[2022] 19 S.C.R.
INDIAN OIL CORPORATION LTD.
v.
SUDERA REALTY PRIVATE LIMITED
[Civil Appeal No. 6199 of 2022]
SEPTEMBER 06, 2022
[K. M. JOSEPH AND PAMIDIGHANTAM SRI
NARASIMHA, JJ.]
Lease - Tenant at sufferance - Liability to pay mesne profits
- Held: A tenant continuing in possession after the expiry of the
lease may be treated as a tenant at sufferance, which status is a
shade higher than that of a mere trespasser, as in the case of a
tenant continuing after the expiry of the lease, his original entry
was lawful - But a tenant at sufferance is not a tenant by holding
over - While a tenant at sufferance cannot be forcibly dispossessed,
that does not detract from the possession of the erstwhile tenant
turning unlawful on the expiry of the lease - In the present case,
the appellant while continuing in possession after the expiry of the
lease became liable to pay mesne profits.
West Bengal Tenancy Act, 1956 - Whether there was a prior
determination of the lease of 21 years by the respondent-lessor, if
so, whether the appellant-lessee is entitled to protection of the
Tenancy Act - Held : No reason to disagree with the High Court
that the term of lease was 21 years from the date on which the three
floors in question were handed over - In regard to the 2nd and 3rd
floors, possession was handed over to the appellant on 16.09.1969
- As far as the 4th floor is concerned, the possession was handed
over only on 04.11.1970 - The lease agreement in 1968 along with
the supplementary agreement in 1969 did constitute a lease - In
this case it is no doubt true that there was pre-determination clause
which gave an option to the appellant to determine the lease after a
period of 8 years - From the evidence and the stand taken by the
appellant as emerging from the documents, it is clear that the
appellant continued for the full length of 21 years in terms of the
lease - Its possession was never ruffled - Appellant also filed a suit
- During the entire period after the execution of the deed in 1968
and the supplementary lease deed in 1969, till the period of 21
[2022] 19 S.C.R. 462
462
A
B
C
D
E
F
G
H
463
years ran out, appellant never took up the case based on its right
under the West Bengal Premises Tenancy Act in view of the option it
had to determine the lease under Clause 9 - The presence of the
clause in question is not to be confused with the issue relating to
the effect of the notice dated 07.12.1977 purported to have been
sent to the respondent - Therefore, the appellant may not succeed
on the strength of the option it claimed under the agreement to lease.
Transfer of Property Act, 1882 - s. 106 - Was letter dated
19.10.1990, a notice u/s. 106 - Held : On the terms of the letter
dated 19.10.1990 it cannot be held that it amounted to termination
of the lease - There was a lease for a term of 21 years commencing
in 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 letter
dated 19.10.1990 came to be issued - In other words, it was a case
of a lease qua the 2nd and 3rd floors which had expired by efflux of
time, in September, 1990.
Limitation Act, 1963 - Article 51 - Plea was that a suit of
mesne profits is governed by Article 51 of Limitation Act - Suit was
laid on 10.04.1995, it was contented that for the period beyond 3
years before the date of the suit, the suit would be barred - Held :
Landlord by the suit seeks to realise, what in law is described as
damages for unauthorised occupation by the tenant after the expiry
of the lease - It is not to be conflated to the profits received within
the meaning of Article 51 of the Limitation Act, as it involves finding
out the rate at which the landlord could have let out the premises -
It would be the residuary Article, namely, Article 113, which should
apply - Therefore, on facts it may not be possible to hold that the
suit filed by the respondent, should still be found to fall under Article
51 of the Limitation Act and barred as regards part of the cause of
action.
Dismissing the appeals, the Court
HELD: 1.1 Whether the documents styled as agreement
dated 21.11.1968 and the supplementary agreement for lease
dated 12th September, 1969 constituted a lease? The agreement
of lease dated 21.11.1968 on its own operated as a lease. It was a
demise and operated as such. Admittedly, it was a registered
document. Further, as correctly contended by the respondent,
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED
A
B
C
D
E
F
G
H
464
SUPREME COURT REPORTS
[2022] 19 S.C.R.
the appellant in its pleadings proceeded to contend that the
agreement of lease dated 21.11.1968 operated as a lease. There
was indeed a written agreement of lease dated 21.11.1968. The
term of the lease was 21 years which was to begin from the date
on which demised premises was handed over to the lessee. The
rent for the demised premises was also fixed. [Paras 12, 14][478F; 480-B]
1.2 Whether the possession of 2nd and 3rd floors were
handed over on 17.09.1969 and 4th floor stood handed over on
04.11.1970?
The Division Bench has found in modification of the
judgment of the learned Single Judge that as there are no
documents to show the exact date. Appellant was put in
possession of the 2nd and 3rd floors and fixed 17.09.1969 as the
starting point. Court can safely proceed on the basis that the 4th
floor was handed over on 04.11.1970. As far as the 4th floor is
concerned, in view of the findings by the High Court that the
possession of the 4th floor was handed over on 04.11.1970 and
the same not being questioned before us, this Court can safely
proceed on the basis that the 4th floor was handed over on
04.11.1970. The findings rendered by the High Court is a plausible
view and we would, therefore, take the view that possession of
2nd and 3rd floors was handed over on 17.09.1969 and 4th floor
stood handed over on 04.11.1970. [Paras 15,17 & 22][480-C, G;
483-C]
1.3 Whether the appellant is a monthly tenant from
November, 1969?
The contention that the appellant should be treated as a
monthly tenant even from the very beginning is without any merit.
The agreement dated 12.9.1969 is admittedly a registered
document. No force in law or on facts to permit the appellant to
contend that the appellant be treated as a monthly tenant since
1968. The period of the lease is to be calculated from the date
when the possession was handed over. Possession, in fact, was
handed over on the dates when it is handed over as found in the
impugned judgment. The cases of the appellant is also in the
teeth of the correspondence dated 21.08.1990 and 03.11.1990,
inter alia. [Paras 24, 25][483-E; 484-B, C-D]
A
B
C
D
E
F
G
H
465
1.4 No reason to disagree with High Court that the term of
lease was 21 years from the date on which the three floors in
question was handed over. In regard to the 2nd and 3rd floors,
possession must be found handed over to the appellant on
16.09.1969. As far as the 4th floor is concerned, we affirmed the
finding of the High Court that possession was handed over only
on 04.11.1970. There is also no dispute that the parties namely
the appellant and the respondent could determine the lease prior
to the expiry of 21 years. It cannot be in the region of dispute
that the respondent did issue a 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 suit filed by the
appellant. Both these suits finally came to be compromised. If
Clause 26 read with the proviso is considered, right to forfeit and
to determine the lease stood conditioned by the requirement of
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 the respondent is not tendered in evidence as pointed out by
the respondent. We have noticed the contents of the letter dated
08.03.1990 which clearly indicate that the appellant had in mind
the proviso to Clause 26. In paragraph 12 of the written statement,
the case which was set up was that under the terms of the lease
agreement and supplementary agreement, the lease has been
made expressly terminable before its expiry at the option of the
appellant. This appears to be the case with reference to Clause
9. As regards the case based on the effect of the waiver within
the meaning of Section 113 of Transfer of Property Act, the
following aspects are noticed. The notice of termination is itself
not produced. The judgment of this Court in Calcutta Credit
Corporation Ltd. was rendered under Section 113 of the Transfer
of Property Act. Waiver of forfeiture within the meaning of Section
111 (g) of the Transfer of Property Act is provided in Section 112
of the Transfer of Property Act. The considerations relevant for
the operation of the Section 112 is different from that of Section
113 of the Transfer of Property Act. Since the notice itself is not
before the Court, things are not clear. There is no adjudication
about the notice of termination in the earlier suit. We have also
noticed the proviso to clause 26. We have seen the stand
of the appellant even in the year 1990 as made clear from the
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED
A
B
C
D
E
F
G
H
466
SUPREME COURT REPORTS
[2022] 19 S.C.R.
letter dated 21.08.1990 addressed by it to its solicitors. There is
no case as to when the appellant stood paid. This is also relevant
for the reason that the notice of termination referred to by the
appellant dated 07.12.1977 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 for a period of 21 years. In the
circumstances of this case, there is no merit in the case of the
appellant based on the decision of this Court in Calcutta Credit
Corporation Ltd. as regards the effect of waiver under Section
111 of the Transfer of Property Act resulting in the creation of
the new tenancy. [Paras 41, 53, 54][498-H; 499-A-C; 506-C-H;
507-A-B]
Calcutta Credit Corporation Ltd., & Another v. Happy
Homes [P] Ltd [1968] 2 SCR 20 - referred to.
1.5 In this case it is no doubt true that there is predetermination clause which gave an option to the appellant to
determine the lease after a period of 8 years. From the evidence
and the stand taken by the appellant as emerging from the
documents, it is clear that the appellant continued for the full
length of 21 years in terms of the lease. Its possession was never
ruffled. The appellant also filed a suit. During the entire period
after the execution of the deed in 1968 and the supplementary
lease deed 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 Bengal Premises Tenancy Act in view of the option it
had to determine the lease under Clause 9. The presence of the
clause in question is not to be confused with the issue relating to
the effect of the notice dated 07.12.1977 purported to have been
sent to the respondent which we have separately dealt with.
Therefore, in terms of Pabitra Kumar Roy, the appellant may not
succeed on the strength of the option it claimed under the
agreement to lease.[Para 57][509-C-F]
Pabitra 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 UNDER
SECTION 106 OF THE TRANSFER OF PROPERTY ACT?
A
B
C
D
E
F
G
H
467
On the terms of the letter dated 19.10.1990 it cannot be
held that it amounted to termination of the lease. There was a
lease for a term of 21 years commencing in 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 letter dated 19.10.1990 came
to be issued. In other words, it was a case of a lease qua the 2nd
and 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 THE
APPELLANT WRONGFUL ON THE EXPIRY OF THE LEASE?
Section 111[a] of the Transfer of Property Act, 1882
provides that the lease is determined by efflux of time. On the
expiry of the lease, the lease ends. A tenant continuing in
possession after the expiry of the lease may be treated as a tenant
at sufferance, which status is a shade higher than that of a mere
trespasser, as in the case of a tenant continuing after the expiry
of the lease, his original entry was lawful. But a tenant at
sufferance is not a tenant by holding over. While a tenant at
sufferance cannot 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 lease became liable to pay
mesne profits. [Paras 59 & 60][510-D, G-H; 511-A]
1.8 LIMITATION: WHETHER THE SUIT IS BARRED
IN RELATION TO MESNE PROFITS BEYOND 3 YEARS OF
THE SUIT?
The plea is based on the case that a suit of mesne profits is
governed by Article 51 of the Limitation Act, 1963. The suit was
laid on 10.04.1995. The contention is that for the period beyond
3 years before the date of the suit, the suit would be barred.
Article 51 contemplates a period of three years from the date on
which the profits from the immovable property is received by the
defendant. If it is to be understood as profits actually received by
the defendant, then, it is obvious that Article 51 may not apply. If
a Suit for mesne profits of the kind involved in this case would
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED
A
B
C
D
E
F
G
H
468
SUPREME COURT REPORTS
[2022] 19 S.C.R.
fall more appropriately under Article 113 of the Limitation Act,
which is the residuary Article, the Suit must be instituted within
a period of three years from the date on which the right to sue
accrue. This Article is in stark contrast with Article 58 of the
Limitation Act, under which, the period of limitation is three years
but from the date on which the cause of action first arises. If a
claim for mesne profits is one, which accrues from day-to-day
and it is a continuing one and if the suit for mesne profits would
fall to be decided under Article 113 of the Limitation Act, then,
since the cause of action is a continuing one, the suit may not be
barred as regards any part of the claim as contended by the
appellant. In this case, there is another dimension. The case set
up by the respondent plaintiff in the plaint, as noticed, was that, it
by virtue of the acknowledgment and admission of the jural
relationship in letter dated 24th May, 1994, there is no bar of
limitation for any part of its cause of action. In their submission
before this Court also, the respondent has laid store by the stand
that the respondent was awaiting a decision by the Chairman. It
is true that a pure question of law which does not involve any
investigation of facts, and if the plea of limitation in a given case
is such, there can be no taboo in this court dealing with it even if
raised for the 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 up before the Single Judge and not pursued
before 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
relationship is concerned, need not be express. It would become
necessary to probe the surrounding circumstances. This may
include going into the facts. [Para 73][516-E]
1.10 Mesne profits, as defined in Section 2[12], CPC
includes not only the profits which a person in wrongful
possession of such property actually receives but also those profits
which he might with ordinary diligence have received therefrom
together with interest on such profit. What is excluded is only
the profit due to improvement made by the person in wrongful
possession. However, Article 51 of the Limitation Act deals with
A
B
C
D
E
F
G
H
469
a suit for profits of the immovable property belonging to the
plaintiff which have been wrongfully received by the defendant.
The time no doubt for such a suit begins to run when the profits
are received. [Para 78][518-G-H]
Sri Raja Inuganti Venkata Rajagopala Rama
Suryaprakasa Rao Garu v. Maharaja of Pithapuram
and Another AIR 1948 PC 175; Phiraya Lal Alias Piara
Lal 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 SCC
388 : [1972] 2 SCR 890 - referred to.
1.11 This Court has declared that in the case of
determination of a lease by the lease coming to an end, tenant
would be liable to pay damages for use and occupation at the rate
at which the landlord could have let out the premises on being
vacated by the tenant. What the landlord is entitled is, to get
damages for the use and occupation at any rate, at which, the
landlord could have let out the premises on being vacated by the
tenant. The liability of the tenant, to pay damages on the basis of
the rate at which landlord could have let out the premises, may
not be the same 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 to transfer or sub-let the premises.
In other words, the Court would have to find whether the tenant
could have, in law, let out the premises and derived a higher
amount. [Para 82][520-F-H; 521-A-B]
1.12 Once the lease comes to an end, the erstwhile tenant
becomes a tenant at sufferance. He cannot be dispossessed,
except in accordance with law. But he cannot, in law, have any
right or interest anymore. Even though, under Section 108 of the
Transfer of Property Act, if there is no contract to the contrary,
the tenant may have the right, under Section 108(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 would
come to an end. Thus, on the expiry of a lease, the erstwhile
tenant, who remains a tenant at sufferance, would have no right
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED
A
B
C
D
E
F
G
H
470
SUPREME COURT REPORTS
[2022] 19 S.C.R.
to transfer. In this regard, this Court would have to hold that
there is a new lease by holding over. The acceptance of the amount
after the expiration of the lease by the respondent was without
prejudice to its case. The appellants cannot persuade the court
to hold that there is a lease by holding over. Therefore, it may
not be appropriate to allow the appellant to raise 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, despite noticing
the averment in the plaint which appears to have been made with
reference to Section 2(12) of the CPC. The principle laid down in
Atmaram and the principles already considered have to be bear
in mind. Landlord by the suit seeks to realise, what in law is
described as damages for unauthorised occupation by the tenant
after the expiry of the lease. It is not to be conflated to the profits
received within the meaning of Article 51 of the Limitation Act,
as it involves finding out the rate at which the landlord could
have let out the premises. It would be the residuary Article,
namely, Article 113, which should apply. In the factual context, it
may not be possible to hold that the suit filed by the respondent,
should still be found to fall under Article 51 of the Limitation Act
and barred as regards part of the cause of action. [Paras 8386][521-C-D, E-H; 522-A-C]
Atma 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; Tayabali
Jaffarbhai Tankiwala v. Messrs. Asha and Co. and
Another (1970) 1 SCC 46 : [1970] 2 SCR 554; Nand
Ram [Dead] Through Legal Representatives and
others v. Jagdish Prasad [Dead] Through Legal
Representatives [2020] 9 SCC 93; Shakti Bhog Food
Industries Ltd. v. Central Bank of India and Another
(2020) SCC OnLine 482; Savita Dey v. Nageswar
Majumdar and Another (1995) 6 SCC 274 : [1995] 4
Suppl. SCR 80; Raptakos Brett and Company Limited
v. 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
A
B
C
D
E
F
G
H
471
Corporation of India Ltd. (1971) 1 SCC 67 - referred
to.
Ram Karan Singh and Others v. Nakchhed Ahir and
Others AIR 1931 Allahabad 429; Sudhir Kumar Paul
v. Indu Prova Ghose and Others AIR 76 Cal 274;
Khana Lahiri and Others v. Suniti Kumar Chatterjee
and Others (2006) SCC Online Cal 248; Dullabhbhai
Hansji and Another v. Gulabbhai Morarji Desai (1938)
40 Bom LR 100; Dwarkas Nathamal v. Balkrishna
Baliram AIR 1964 Bom 42 - referred to.
Tayleur v. Wildin (1867- 68) LR 3 Ex Cases 303 -
referred to.
Case Law Reference
[1968] 2 SCR 20
referred to
Para 9
[1970] 1 SCR 16
referred to
Para 9
[1970] 2 SCR 554
referred to
Para 9
[2006] 6 Suppl. SCR 678
referred to
Para 10
(2020) 9 SCC 93
referred to
Para 11
[1970] 1 SCR 16
referred to
Para 69
[1995] 4 Suppl. SCR 80
referred to
Para 56
[2004] 6 Suppl. SCR 843
referred to
Para 59
[2017] 8 SCR 982
referred to
Para 64
(1971) 1 SCC 67
referred to
Para 69
[1972] 2 SCR 890
referred to
Para 83
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 6199
of 2022.
From the Judgment and Order dated 14.12.2018 of the High Court
at Calcutta in APD No. 494 of 2014.
With
Civil Appeal No. 6200 of 2022.
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED
A
B
C
D
E
F
G
H
472
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Mrs. Madhavi Dewan, ASG, Mrs. Priya Puri, Sharad Puri, Yati
Sharma, Ranjay Dubey, Sanchit Garga, Advs. for the Appellant.
Dr. Abhishek Manu Singhvi, Nakul Dewan, Sr. Advs., Ejaz
Maqbool, Avishkar Singhvi, Ms. Nooreen Sarna, Saif Zia, Advs. for the
Respondent.
The 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 impugned
judgment, the division bench of the High Court has partly allowed the
appeal filed by the appellant and modified the decree granted by the
learned Single Judge in a suit filed by the respondent seeking mesne
profits.
2. The respondent-plaintiff instituted the suit on the following basis.
The respondent demised the centrally air-conditioned 2nd, 3rd and 4th
floors of premise no. 1, Shakespeare Sarani, Kolkata and a non-airconditioned guest house on the 9th floor. The lease was to subsist for a
term of 21 years commencing from the date when the said floors were
handed over to the appellant lessee. The respondent further claimed
that there is a supplementary agreement which is also duly registered on
12.09.1969, which had brought about certain modifications in the original
lease dated 21.11.1968. It was further the case set up by the respondent
that the 2nd and 3rd floors came to handed over on 12.09.1969 and the
possession of the 4th 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 join
and cooperate with the respondent in the matter of finalisation, execution,
and registration of an appropriate document of lease in regard to the 2nd,
3rd and 4th floors. There is reference to an earlier suit which was filed in
the year 1978, and which was not followed to its logical culmination but
ended in a compromise. More of it later. Suffice it to notice at this stage
that the proximate cause for the litigation was the failure of the appellant
to hand over vacant possession of the 2nd, 3rd and 4th floors, upon the
expiry of the lease. Possession was handed over to the respondent only
on 31.05.1994. Resultantly, the respondent alleged that the appellant was
in wrongful possession of the 2nd, 3rd and 4th floors after the expiry of the
lease on 11.09.1990 i.e., for the 2nd and 3rd floors and for the 4th floor on
17th December, 1990 or alternatively on the expiry of the 3rd or 4th of
A
B
C
D
E
F
G
H
473
November, 1991 till 31.05.1994. Even in terms of the computation of the
period of 21 years by the appellant, this illegal possession continued till
31.05.1994. The respondent claimed mesne profits in respect of 57105
sq. feet at the rate of Rs.31 per sq. feet per month.
3. In the written statement filed by the appellant the case inter
alia set up was that the period of lease was to be computed from the
date of delivery of possession. The document dated 21st November, 1968
constituted the actual demise of the property. By notice dated 7th
December, 1977, the respondent had determined the lease and there
was a suit filed by the respondent which was dismissed as not pressed
and appellant had constructed a new office building. It took some time
to vacate. There was a clause for premature termination of the lease at
the option of the appellant. Appellant was entitled to the protection of
the West Bengal Tenancy Act, 1956 (hereinafter referred to as the
'Tenancy Act'). The case of wrongful possession was denied. In the
alternative, it was contended that respondent accepted monthly rent after
the determination of the tenancy by notice dated 7th December, 1977.
The tenancy is also protected therefore under the Tenancy Act.
4. The learned Single Judge found the plaintiff entitled to mesne
profits. A referee was appointed to quantify the mesne profits. Both the
appellant and the respondent filed appeals.
THE FINDINGS IN THE IMPUGNED JUDGMENT
5. The impugned judgment would show that the appellant
addressed the following contentions.
Mere reference to a document as a lease could not be a ground to
find that the document dated 21.11.1968 was a lease deed. The nature
of the document required examination. The effect of the withdrawal of
the suit filed by the respondent in the year 1986 and the impact of the
Tenancy Act was not properly assessed. There was holding over.
Therefore, a decree of mesne profits was without warrant. The Court
found that the appellant had not pleaded the case that a fresh tenancy
was created after the expiry of the lease by efflux of time, and found
itself unable to accept the said contention. The receipt of occupation
charges by the respondent as evident from the letter of the respondent
dated 02.01.1991 was without prejudice. It did not create a fresh tenancy.
Mere continuation in occupation of the demised premises after the expiry
of the lease, notwithstanding the receipt of an amount by the landlord,
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED [K. M. JOSEPH, J.]
A
B
C
D
E
F
G
H
474
SUPREME COURT REPORTS
[2022] 19 S.C.R.
would not create a tenancy. The appellant was to be treated as a tenant
at sufferance and akin to a trespasser. The lease did not contain any
renewal clause and it was determined upon the expiry of the fixed period.
However, the division bench took the view that in the absence of any
other evidence, as to the exact date when the appellant took possession
of the 2nd and 3rd floors, it was safe to accept 16th September, 1969 as
the starting point of the lease in regard to the 2nd and 3rd 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 2nd and 3rd floors
would be 17.09.1969. Whereas, in regard to the 4th floor, the finding of
the learned Single Judge that the lease commenced on 04.11.1970 was
affirmed. Accordingly, it was that appeal (APD no. 494 of 2014) was
allowed in the aforesaid manner. This is after dismissing the appeal (APO
no. 207 of 2015). It is against the said judgment, namely, the judgment in
APO No.207/2015 and APD No.494/2014, that the appeals have been
carried by the appellant.
6. We heard the Ms. Madhavi Diwan, learned ASG on behalf of
the appellant and Dr. A.M. Singhvi, learned Senior Counsel on behalf of
the respondent.
7. Ms. Madhavi Divan, Additional Solicitor General raised the
following contentions. The agreement of lease dated 21.11.1968
contemplated that the term of 21 years would commence from the date
when the premise was handed over. The lease was terminable at any
time after the expiry of 8 years of the term of 21 years. The construction
of the premises was ongoing. On 21.11.1968, none of the floors to be
leased to the defendant had been completed. Even on 12.09.1969, when
the supplementary agreement as also the deed of mortgage was executed,
the possession did not change hands. The mortgage deed, it is pointed
out, records that the 2nd and 3rd floors were in the course of construction.
Advances were given under the mortgage to the respondent as it was in
need of money to complete construction of the building, in particular, the
2nd, 3rd and 4th floors. The parties contemplated a formal lease deed
being executed at a later date. The premises were admittedly not ready
for effective occupation till 04.11.1970. Reliance is placed on the letter
dated 12.09.1969, the deed of mortgage and the minutes, dated
05.06.1980, by which the suit, and the cross-suits came to be withdrawn
and the respondent agreed to forego the rent prior to 1970, on account
of late possession. The appellant continued to occupy the premises after
the issuance of the notice to quit and the filing in the year 1977 of the
A
B
C
D
E
F
G
H
475
cross-suits. Payment of monthly rent and acceptance without demur is
pointed out. The letter dated 19.10.1990, required the tenant to vacate
the premises by 11.09.1990, as far as the 2nd, 3rd floors are concerned
and the 4th floor was to be vacated by 17.12.1990. This was short of 21
years from the date of effective possession. It is pointed out that the
claim for mesne profits commenced from these very dates, namely,
12.09.1990 and 18.12.1990. The appellant has paid rent for the entire
period. The claim for mesne profits is in excess of 45 crores. It is pointed
out that the respondent entered into the lease agreement with another
company where the rate was Rs.15 per sq. feet about 13 years thereafter
namely in 2008 whereas Rs.31 per sq. feet is said to be the rate at which
mesne profits is calculated qua the appellant.
8. The appellant contends that having regard to the definition of
the mesne profits in Section 2(12) of the CPC, it is indispensable for the
respondent to establish wrongful possession. The respondent has agreed
that effective possession could not be reckoned even from 15.09.1969
and, therefore, the question of the term of 21 years expiring based on
11.09.1969 could never have arisen. The impugned judgment, having
been accepted by the respondent, the 21 years lease could not have
come to an end as early as on 11.09.1990 as the division bench has
found that in regard to the 2nd and 3rd floors, 17.09.1969 as the date of
the appellant being put in possession. It is contended that the period of
21 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 by
issuance of notice dated 19.10.1990. The notice dated 19.10.1990 met
the requirement of Section 106 of the Transfer of Property Act. On
account of the determination prior to the expiry of the lease, the appellant
became entitled to the protection under the Tenancy Act. Section 13 of
the said act proscribed any order or decree for recovery of possession
of any premise against a landlord except on a ground set out in the said
enactment. The provisions of the said act were not complied with. The
court should reject the contention of the respondent that the notice dated
19.10.1990 was not a notice to quit.
9. It is further contended that having regard to the notice issued
by the respondent, dated 12.12.1977, the appellant became entitled to
the protection of the Tenancy Act. Reliance is placed on the judgment
reported in Calcutta Credit Corporation Ltd., & Another v. Happy
Homes (P) Ltd.1. Reliance is also placed on the decision in Tayleur v.
1 1968 2 SCR 20
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED [K. M. JOSEPH, J.]
A
B
C
D
E
F
G
H
476
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Wildin2 to contend that the withdrawing of the notice and the contention
of the parties would not avail the landlord. Section 113 of the Transfer of
Property Act is invoked to contend that there is no waiver. A new tenancy
has come into existence thereupon in view of the quit notice, and what is
more, of the suit, despite the arrangement arrived between the parties.
The decision reported in Ranjit Chandra Chowdhury v. Mohitosh
Mukherjee3 relied upon by the respondent is sought to be distinguished
both on the basis that the earlier judgment in Calcutta Credit
Corporation Ltd. (supra) was rendered by a bench of three learned
judges and the later judgment was pronounced by a bench of a lesser
strength, and furthermore, on the basis that the earlier judgment had not
been analysed by the later bench. It is further contended that the
respondents are equally misplaced in relying on Tayabali Jaffarbhai
Tankiwala v. Messrs. Asha and Co. and another4. It is described as
a judgment rendered per incuriam. It is also contended that it is otherwise
distinguishable. The petitioner, it is pointed out was a monthly tenant
from November, 1968. In an argument raised in the alternative and without
prejudice to the earlier argument, it is further contended that a large
portion of the claim for mesne profits was barred by limitation. Article
51 of the Limitation Act applies. The claim for the entire period prior to
three years before the filing of the suit, i.e., for the period prior to
10.04.1992, would be barred.
THE SUBMISSIONS OF THE PLAINTIFF
10. The dispute spread over 30 years is on account of conduct of
the appellant. The respondent has been unable to recover any mesne
profits due to it. As on the date of the registered agreement for lease
21.11.1968, the construction of the 2nd, 3rd and 4th floors were ongoing.
It is submitted that there was indeed a valid lease deed between the
parties. It was the admitted case and the appellant cannot be permitted
to resile from the said position. It is next contended that the case that the
lease deed was determined in 1977 is untenable. The alleged termination
notice is dated 07.12.1977. The lease ran uninterrupted for 21 years and
expired by the efflux of time. The decision on Pabitra Kumar Roy and
Another v. Alita D'Souza5 is relied upon. It is pointed out that the
termination notice dated 07.12.1977 did not result in the actual
2 (1867- 68) LR 3 Ex Cases 303
3 (1969) 1 SCC 699
4 (1970) 1 SCC 46
5 (2006) 8 SCC 344
A
B
C
D
E
F
G
H
477
determination of lease prior to expiry and the appellant continued to
occupy the premise "as before". Notice was not even tendered in
evidence by the appellant in these proceedings. The parties never acted
upon the termination notice. The respondent did not go so far as to seek
the appellant's eviction. The respondent brought a suit seeking rent for
the 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 understood
that the parties have no further claim. It is contended that neither party
admitted to the other's entitlement for the claims raised.
11. As regards the termination prior to the expiry is alleged to
have taken place consequent upon the communication dated 19.10.1990,
it is described as a letter of inquiry and not a notice of termination as
contended by the appellant. It is contended that as far as the attempt by
the appellant to evolve a new case before this Court that there was a
fresh tenancy created as a result of the waiver, it is countered contending
that the argument of the appellant is de hors the facts in the present
case. The decision of this Court in Calcutta Credit Corporation Ltd.
& Another v. Happy Homes (P) Ltd.6 was not dealing with the question
whether the waiver of the determination notice results in a fresh tenancy.
That is not the ratio. The observations that consent to waive the notice
results in a new agreement are only obiter. Reliance is placed on
subsequent judgments to contend that there would be revival of the old
tenancy, when there is waiver [(1969) 1 SCC 99, (1970) 1 SCC 446,
AIR 1976 Cal 274, (2006) SCC Online Calcutta 248]. On facts, it is
pointed out that appellant continued to make rent payments. The statement
in paragraph 14 filed by the appellant that it occupied premises and paid
monthly rent "as before" is emphasised. The respondent lay store by
contemporaneous communication wherein appellant continues with the
stand that lease has not expired. Regarding the alleged termination by
letter dated 19.10.1999, it is complained that the appellant never raised
such a case in response to communication or even in defence before the
Court. The letter of inquiry is not a determination. The appellant itself
understood that the respondent had sought vacation of the premises on
the basis of the expiry of the lease period alone. The argument is a mere
afterthought. The acceptance of the occupation charges by the
respondent after the expiry of the lease did not create monthly tenancy.
The payments were received on a "without prejudice basis" "as on
account payment". The judgment of this Court in Nand Ram (Dead)
6 (1968) 2 SCR 20
INDIAN OIL CORPORATION LTD. v. SUDERA REALTY
PRIVATE LIMITED [K. M. JOSEPH, J.]
A
B
C
D
E
F
G
H
478
SUPREME COURT REPORTS
[2022] 19 S.C.R.
Through Legal Representatives and others v. Jagdish Prasad (Dead)
Through Legal Representatives7 did not consider the consequence of
the payment being collected. The suit for mesne profits is not barred by
limitation. Mesne profits accrues from day to day and the cause of action
is a continuing one. Being a continuing breach of contract and a fresh
cause of action arising on each day, the appellant wrongfully occupied
the property. Reliance is placed on the judgment of this Court in Shakti
Bhog Food Industries Ltd. v. Central Bank of India and Another8 to
contend that limitation does not bar the suit. The inconsistency in the
stand of the appellant at various stages is underlined.
ANALYSIS
The following points arise:
Point No.01: - Whether the documents styled as agreement
dated 21.11.1968 and the supplementary agreement for
lease dated 12th September, 1969 constituted a lease?
Point No.02: - Whether the possession of 2nd and 3rd floors
were handed over on 17.09.1969 and 4th floor stood handed
over on 04.11.1970?
12. An agreement for lease was executed between the appellant
and the respondent on 21.11.1968 in regard to the 2nd, 3rd and 4th floors
of the premises. While it is true that it contained a clause which did
contemplate that the respondent as the lessor put in place a formal deed
of lease in favour of lessee, if the lessee would require the same, we are
of the view that the agreement of lease dated 21.11.1968 on its own
operated as a lease. It was a demise and operated as such. Admittedly,
it was a registered document. Further, as correctly contended by the
respondent, the appellant in its pleadings proceeded to contend that the
agreement of lease dated 21.11.1968 operated as a lease. In paragraph
4 of the written statement, the appellant states as follows:
"4. With reference to paragraph 9 of the plaint, it is denied that
the defendant failed and neglected to join or co-operate with the
Plaintiff in execution or registration of the formal deed of lease. It
is denied that there was any question of any finalization of the
deed of lease. All the terms and conditions of the lease were
finalized and set out in the document described as agreement for
7 (2020) 9 SCC 93
8 (2020) SCC OnLine 482
A
B
C
D
E
F
G
H
479
lease dated 21st November, 1969. The document envisaged that
the possession would be given to the defendant upon completion
of the building.