Summary
Indian Oil Corporation took three office floors in Kolkata under a registered 1968 agreement of lease for 21 years from handover, and stayed on until May 1994. The Calcutta High Court fixed the lease's start for the 2nd and 3rd floors in September 1969 and for the 4th on 4 November 1970, and decreed mesne profits. The Supreme Court dismissed IOC's appeals. The registered agreement was a lease. Having let it run its full term without exercising its early-termination option, IOC could not claim protection under the West Bengal Premises Tenancy Act. Neither a 1977 notice nor a 1990 letter determined the lease earlier. Payments taken 'without prejudice' after expiry created no holding over, so as a tenant at sufferance IOC owed mesne profits. Article 113, not Article 51, governs limitation, and that plea, given up below, failed.
Issues
- Whether the registered 1968 agreement of lease operated as a 21-year lease and when its term began
- Whether IOC could claim protection of the West Bengal Premises Tenancy Act, 1956 because of an early-termination option, a 1977 termination notice or a 1990 letter
- Whether IOC's occupation after expiry was wrongful, making it liable for mesne profits, and whether part of the claim was time-barred
Provisions considered
- Section 3(2) and proviso, West Bengal Premises Tenancy Act, 1956A lease of 20 years or more is outside the Act unless terminable early at a party's option. Where the option is never exercised and the lease runs its full course, the clause is no defence against eviction or mesne profits. (¶¶ 48, 55, 57)
- Sections 106, 111(a), 112 and 113, Transfer of Property Act, 1882The lease ended by efflux of time. The 1990 letter was not a notice of termination, and the unproduced 1977 notice, issued while a contractual bar on determination applied, could not be shown to have ended the lease. IOC's continued possession after expiry was wrongful. (¶¶ 53, 54, 58, 59, 60)
- Articles 51 and 113, Limitation Act, 1963A claim for damages for use and occupation at the rate the landlord could have obtained falls under the residuary Article 113, with a continuing cause of action, not Article 51. The limitation plea, given up below, also failed on merits. (¶¶ 63, 66, 68, 85, 86)
Held
- The registered agreement of lease, which IOC itself pleaded as the actual demise, was a lease for 21 years from handover despite a clause for a formal deed at the lessee's option. The High Court's findings on the handover dates were plausible. (¶¶ 12, 13, 14, 22, 24, 25)
- Under Pabitra Kumar Roy and Savita Dey, a lease for a fixed term over 20 years does not attract the Tenancy Act merely because it contains an early-termination clause, unless the option is exercised. IOC let the 21 years run without exercising it, so it could not claim the Act's protection. (¶¶ 55, 56, 57)
- The landlord's 1977 notice was not produced and was issued while a proviso barred determination during the currency of IOC's loans, so no new tenancy by waiver arose under Calcutta Credit Corporation. The 1990 letter merely enquired about vacating after expiry and was not a notice under Section 106. (¶¶ 53, 54, 58)
- On expiry by efflux of time the tenant becomes a tenant at sufferance, whose possession, though protected against forcible dispossession, is wrongful. Payments accepted 'without prejudice' do not create a tenancy by holding over, so IOC was liable for damages for use and occupation at the rate the landlord could have let the premises (Atma Ram Properties). (¶¶ 59, 60, 82, 83, 84)
Result
Appeals dismissed. The decree for mesne profits as modified by the Division Bench was upheld; parties to bear their own costs.