Determination of Lease

In a country like India, the transfer of property is not possible for every individual because of economical issue. The permanent or absolute transfer is a luxury for some people, but a temporary transfer is something that has given every citizen the right of enjoying any property. One of the modes of transferring property for a particular period of time is Lease.

The lease[1] is a transfer of an interest in the property for a stipulated period of time without transferring the ownership of that property. In a lease, right of possession is transferred instead of the right of ownership. Transferor here is called the lessor and the transferee i.e. the one enjoying the property for a period is called the lessee.

At the same time, it is important to recognize the conditional precedents essentials for ending the lessor and lessee relationship, so that a relationship based on equity can be sustained and when it’s not, can be repudiated. Such repudiation can be expressly or impliedly be done subject to the occurrence or non-occurrence of an event. Determination of lease means termination or end of the contract of lease. After the determination of the lease, the legal relationship between them came to an end.[2].

S.111 of The Transfer of Property Act 1882 provides the condition when the legal relationship between parties recognized under S.105 0f TPA 1882 can be terminated. One of the conditions provided under the same section is “by forfeiture’’ which is vulnerable to be waived by the satisfactory fulfilment of S.112 of TPA.

Determination of lease: –

A lease of immovable property determines-

(a) by efflux of the time-limited thereby,

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

(c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event-by the happening of such event.

(d) in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right.

(e) by express surrender, that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them.

(f) by implied surrender.

(g) by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming the title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases, the lessor or his transferee gives notice in writing to the lessee of his intention to determine the lease.

(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.[3]

Clause (a): Efflux Of Time

Leases for a definite period expire on the last day of the term, and the lessor or any other person entitled to the reversion may enter without notice or other formality provided there is no ‘holding over’ within the meaning of sec. 116. Accordingly, clause (a) has to be read with sec. 116. Where before the determination of the lease by efflux of time the lessee applies to the custodian for confirmation of the lease under sec. 5A. East Punjab Evacuees’ Administration of Property) Act, 1947 and the custodian impliedly assents to his continuing in possession, the lessee does not become a trespasser — Thakar Das V Custodian [4]

Tenancy getting terminated by efflux of time, the tenant is not entitled to any statutory notice to quit — P. S. Bcdi v Project & Equipment Corporation[5]. The Supreme Court has reiterated this principle in M. Vijayalaxmi v G. Goverdhan Reddy[6].

In view of the expression ‘law abhors a forfeiture’, which has almost become a legal maxim, a lessee is entitled to relief against forfeiture at the appellate stage since a ‘suit’ includes an ‘appeal’. But when the lease stood determined by efflux of time, the grant of relief under sec. 114 would be entirely out of place — Shyamlal v Nanda Rani[7]

No notice to quit is necessary when the action for ejectment is brought after the lease has expired and the tenancy has come to an end by efflux of time. When it is not shown that the lessors accepted rent after the termination of the lease, the lessees are tenants by sufferance, being in no better status than trespassers and are liable to ejectment without notice — Chandi Charan v Ashulosh[11] and Md. Fazthzzaman v Anwar Husain[12].

Clause (b): Contingent Term

If the term of the lease Is limited conditionally on the happening of some event, the lease is determined by the happening of such event. Thus, where the term is limited for thirty years if the lessee shall so long live, the lease is terminable at the end of thirty years or upon the death of the lessee, which event may first happen — Chauthmal v Sardarmal[17]

A lease for 99 years granted to a company-provided inter alia that in case the company goes into liquidation voluntarily or otherwise, it will cease to be operative. The company went into liquidation: Held that clause (d) die- not apply — Srinath Zamindary, in re AIR 1952 Cal 207. Where a lease for 40 years contained a clause that if the lessee carried on any business other than the manufacture of salt, the lease would stand cancelled; held that clause (b) did not apply — Krishna Chandra v National Chemical[18]

Where an employee of the landlord occupying a building is liable to be evicted on ceasing to be in employment, the tenancy is governed by sec. 111 (b), T.P. Act and no notice under sec. 106, T.P. Act is necessary for terminating the tenancy — Pratap Narain v J. K. Iron & Steel Co.[19]. When a lease is created by the mortgagee in possession, the lessee cannot claim any right beyond the term of the original lessor’s interest unless recognised as lessee by the mortgagor on redemption — Sachalmal Parasram v Ratna Bai[20]

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

Where the lessor’s interest is limited, the lease comes to an end with the extinguishment of that interest — Raghuvir Singh v Jethu[23]. If the lessor holds the property for his own life or for the life of another, the lease would terminate on the death of himself or that other person. A lease granted by a Hindu widow would fall under this clause. Such a lease is. however, voidable and not void on the grantor’s death — Ma&u Sudan v Rooke[24]. Where the husband, the contracting party, surrenders the lease, the wife has no legal right to stay on. She becomes a trespasser — Sumatilai v Monorama[25]. This clause does not mean that if in the exercise of his power of due management the mortgagee has entered into an agreement of tenancy, on the mere redemption of the mortgage the tenancy would automatically lapse — Hardie v Wahid[26]. A lease from year to year granted by the manager of a temple in course of management does no: come to an end with the expiry of the office of the manager or his successors — Atyam Veerraju v Pechetti Venkanna[27]. In the case of a lease under sec. 76(a) the lease terminates on the extinction of the mortgage by redemption — C. K. Kuttapan v Karihiyayani[28]. On redemption, the tenant inducted by the mortgagee has no right to be in possession — Jadavji v Navnidbhai[29]. A tenant inducted into possession of an urban building or premises by a usufructuary mortgagee does not retain his status as a tenant alter redemption of the mortgage. He is not entitled to protection under the Rajasthan Premises (Control of Rent and Eviction) Act, 1950 — Gouri Shankar v Kapoor Chand [30]

Clause (d): Merger

The common law doctrine of merger is statutorily embodied in clause (d) of sec. 111 of the T.P. Act. The doctrine of merger, as contemplated in clause (d) contemplates (i) coalescence of the interest of the lessee and the interest of The lessor, (ii) in the whole of the property, (iii) at the same time, (iv) in one person, and (v) in the same right. There must be a complete union of the whole interests of the lessor and the lessee so as to enable the lesser interest of the lessee sinking into the larger interest of the lessor in the reversion — T Lakshmipathi v P. Nithyananda Rcddy[31]. In this case, the apex court has approved the following decisions which relate to the doctrine of merger: Badri Narain v Rameshwar Dayal[32].

Clause (e): Express Surrender

Section 111 provides for various circumstances when the lease of immovable property comes to an end. It contemplates surrender — either express as under clause (e) or implied under clause (f)Kamalabai v Mangilal[40]. For a valid and binding surrender, it is not always essential for the lessee to deliver possession of leasehold property to the lessor.

Clause (f): Implied Surrender

An implied surrender takes place either by the creation of a new relationship between the lessor and lessee, such as the acceptance of a new lease, or in other ways based on the consent of the parties, or by the relinquishment of possession by the lessee and taking over of possession by the lessor which would lead to the inference of an implied surrender of my lease — Amar Krishna v Nazir Hasan 14 Luck 723[52].

An implied surrender can be inferred from the conduct of the parties — Konejeti v Thammana[53].

The principle which governs the doctrine of the implied surrender of a lease is that when certain relationship existed between two parties in respect of subject-matter and a new relationship has come into existence regarding the same subject-matter, the two sets cannot co-exist, being inconsistent and incompatible between each other i.e. if the latter can come into effect only on termination of the former, then it would be doomed to have been terminated in order to enable the latter to operate. A mere alteration or improvement or even impairment of the former relationship would not ipso facto amount to implied surrender. It has to be ascertained on the terms of the new relationship vis-a-vis the erstwhile demise and then judging whether there was a termination of the old jural relationship by implication — T.K. Lathika v Seth Karsandas[54]

Clause (g): By Forfeiture

By forfeiture; that is to say,

(1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter or

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

(3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event and in 3[ any of these cases] the lessor or his transferee

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

Case: Yashpal Lala Shiv Narain vs Allatala Tala Malik Waqf Ajakhan

Clause (h): Notice To Quit

A breach of a condition, as explained earlier, only makes the lease voidable. It is to be remembered that the forfeiture is not complete unless and until the lessor gives notice that he has exercised his option lo determine the lease — Asghar v U.P, Government[60]. The Supreme Court has ruled that the requirement of written notice is a statutory formality and this requirement cannot be said to be based on any general rule of justice, equity and good conscience. Hence it is not applicable to leases executed before April 1930 when the Amending Act of 1929 came into force — Namdeo Lokman Lodhi v Narmadabai[61].

Sale of property under lease without determination of the lease by notice under sec. 111(g) would be void as in that case the lease would be subsisting and the owner of the land had no right to sell it with vacant possession and unencumbered with the lease. The consideration paid therefore failed — Chadrawati v Surendra[62]

Conclusion:

Sec 11 of Transfer of Property Act 1882 i:e Determination of Lease is a very wide topic and covers a large segment of the day to day life issues. A lease or tenancy may come to an end in the following ways. It should, however, be noted that the effect of this Section has been practically superseded by various Rent Control and Eviction Acts passed by various State Legislature fr e.g., By Lapse of time; By happening of a specified event; By the termination of lessor’s interest; By merger; By surrender; By implied surrender; By forfeiture; On the expiration of the notice to quit.

[1]. Sec 111, TPA, 1872.

[2] . R.K.Sinha ,The Transfer of Property Act 19th edition, Central Law agency 2018,Page No-467

[3] . R.K.Sinha ,The Transfer of Property Act 19th edition, Central Law agency 2018.

[4] AIR 1950 EP 175

[5] AIR 1994 Del 255

[6] (1997)11 SCC 358

[7] AIR 1988 Cal 133 (135)

[8] 6 ALJ 177

[9] 18 All 440

[10] 21 Mad 288

[11] 40 CWN 52

[12] AIR 1932 All 314

[13] AIR 1978 Delhi 58

[14] AIR 1987 SC 2146 (2155)

[15] AIR 1986 J&K

[16] AIR 1991 On 179

[17] AIR 1959 Raj 24

[18] AIR 1957 On 35

[19] AIR 1975 All 73

[20] AIR 1972 SC 637

[21] (1916)33 TLR 114

[22] 4th Ed.. Vol. 27. para 207.

[23] AIR 1923 Pat 130

[24] 25 Cal 1 (PC), 24 IA 164

[25] (1977)18 GLR 512

[26] AIR 1954 All 16

[27] AIR 1966 SC 629

[28] AIR 1981 Ker 107

[29] AIR 1987 SC 2145

[30] AIR 1983 Raj 79

[31] (2003)5 SCC 150

[32] AIR 1951 SC 186

[33] (2002)6 SCC 1

[34] AIR 1939 Cal 692 (695)

[35] (2002)6 SCC 1

[36] 139 Cal App 427

[37] 3 ClR 159

[38] Supra

[39] 28 Cal 744

[40] (1987)4 SCC 585

[41] Supra

[42] AIR 1976 SC 1565

[43] 9 CLJ 632

[44] AIR 1940 Nag 113

[45] 14 Cal 109 (119) (PC)

[46] AIR 1961 Mad 28.

[47] AIR 1950 Bom 89

[48] AIR 1978 Cal 23S

[49] AIR 1932 Oudh 79

[50] 9 Cal 671

[51] AIR 1930 Bom 329 (330).

[52] AIR 1939 Oudh 257

[53] AIR 1957 AP 619

[54] (1999)7 Supreme 601

[55] AIR 1969 SC 1291

[56] (1999)7 Supreme 601

[57] AIR 1985 Del 118

[58] AIR 1978 Cal 174

[59] AIR 1924 Cal 355

[60] AIR 1954 All 649

[61] AIR 1953 SC 228

[62] AIR 1979 All 406

[63] 1969 Mad LJ (notes) 23

[64] AIR 1976 All 221

[65] AIR 1928 All 95

[66] AIR 1974 Raj 163

[67] AIR 1979 All 406

[68] AIR 1973 SC 2256

[69] 1995 AIHC 1590 (HP)

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