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Judgment
Chinnappa Reddy, J.—These three appeals are against the decrees and common judgment in O.S. Nos. 2, 3 and 4 of 1969 on the file of the Additional Chief Judge, City Civil Court, Hyderabad. The appellant-Plaintiff is the Burmah Shell Oil Storage and Distributing Company of India Limited while the respondents defendants are the Estate-Officer, Hyderabad and Secunderabad and the Secretary to the Government of Andhra Pradesh, Revenue Department. The three suits were filed in regard to three separate plots of land and each suit was for a declaration that the plaintiff-Company was the lessee of the land, entitled to remain in possession of the land as a lessee for an aggregate period of 90 years, for an injunction restraining the defendants from interfering with the plaintiff''s possession and enjoyment of the land for a direction to the 2nd defendant to execute a formal lease deed. The facts of the three cases and the issues involved are more or less identical and it is, therefore, sufficient if we refer to the facts of one of the cases. We will mention the facts of O.S. No. 3/1969 which relates to the plot of land measuring 3190 sq. feet, at the junction of James Street and Distillery Road, Secunderabad. The plaintiff was granted a lease of this land initially for a Period of ten years but with an option for renewal for an aggregate period of 90 years. The lease was granted by the Secretary to the Government of Hyderabad, Revenue Department. The lease deed is Ex-A-19 dated 10-10-1949. It was executed by the Estate Officer "By order and direction of the Secretary in the Revenue Department". Clause IV of the deed of lease, with which we are concerned, primarily is to the following effect : IV. Provided also that the Secretary in the Revenue Department may resume possession of the said land or any port on thereof at any time upon giving three calender months previous notice in writing in that behalf of the lease (s) under hand of some duly authorised officers and upon praying to the lessee (s) compensation for such erections and buildings standing on the land of which possession shall be resumed as aforesaid as shall have been erected during the said term under proper authority....
The plaintiff Company applied for renewal of the lease and the lease was renewed for a period often years from 11-10-1959 by Ex-A-20 dated 9-7-1962. This lease deed also was executed by the Estate Officer. By the Order and the direction of the Secretary in the Revenue Department". It contains the identical Clause IV. On 7-8-1962 the plaintiff wrote to the Estate Officer requesting that the lease might be renewed for a period of thirty years. By his letter Ex. A-22 the Estate Officer agreed to grant a renewal for thirteen years but suggested an enhanced rent. The plaintiff Company was agreeable to the enhanced rent but the Estate Officer wrote to them saying that he had addressed the Board of Revenue about the matter and was awaiting their reply. While so, on 1-2-1967 the Estate Officer wrote to the plaintiff that the lease could not be renewed and called upon the plaintiff to vacate the site as it was proposed to lease out the site to the Indian Oil Company. By a notice dated 26-9-1967 the first defendant gave the plaintiff- Company, ten days'' time to vacate the site. The Plaintiff-Company filed W.P. No. 2424/1967 in the High Court and obtained an injunction against the defendants. Perhaps realising that the notice dated 26-9-1967 was illegal the first defendant withdraw the notice by his letter dated 11-4-1968. Thereafter, on 14-10-1968 the first defendant issued a notice Ex. A-30 to the plaintiff-Company in the following terms: This is to give you notice that the Secretary to Government in the Revenue Department Hyderabad referred to in clause IV of the above lease has directed resumption of the entire land admeasuring 16, 876 square feet referred to in the lease deed No. 2371 dated 12-7-1962 executed by you on the one hand and the Secretary to Government in the Revenue Department, Hyderabad on the other hand and more particularly describing in the schedule here to annexed under said clause IV of the lease deed and the said resumption will be effected on the expiry of a period of three months from the date of receipt of this notice by you, as the site is now required for Government purposes.
It was after the issue of this notice that the present suit was filed. All the three suits were dismissed and the plaintiff-Company has preferred these appeals.
Only two questions have been raised before us by the learned counsel for the appellant. The first submission was that the Estate Officer was incompetent to issue the notices dated 14-10-1968 as the Secunderabad Land Administration Kales of 1355 fasli under which the Estate Officer was functioning were ultra vires.
These rules were made under S. 172 (M) of the Hyderabad Land Revenue Act by the Secretary to Government in the Revenue Department, The objections to the Rules were that S. 172 (M) of the Land Revenue Act had nothing whatever to do with the lease of Government lands in Secunderabad Cantonment and that the Secretary to Government in the Revenue Department was, incompetent to make the rules as ''Government'' under the Hyderabad General Clauses Act meant the Prime Minister-in-Council. We do not think that it is necessary to go into the question of the vires of the rules for the simple reason that the claim of the plaintiff to be a lessee is it self based on leases executed by the very Estate Officer and, if therefore, the Estate Officer was incompetent to execute leases because the Secunderabad Land Administration Rules were ultra vires it would necessarily follow that the plaintiff''s suits for declaration that he was the lessee of the lands would have to be dismissed straight away on that ground. It is clear from the several documents in the case that it was with the Estate Officer that the plaintiff was dealing throughout: it was the Estate Officer that executed the deeds of lease and the renewals of lease in favour of the plaintiff; it was to the Estate Officer that the plaintiff was applying for renewals ; it was the Estate Officer that was sanctioning renewals. When the learned Counsel realised that his argument would entail an immediate dismissal of the suits the argument was not pursued further.
The second submission of the learned counsel was that even subsequent to the issue of the notices on 14-10-1968 rent was accepted by the Housing Board who was authorised to collect the rents on behalf of the Government. Our attention was invited to Exs. A-64 to 66, A-78 to 81 and A-83 to 89. These receipts undoubtedly show that rent was paid by the plaintiff and it was accepted by the Housing Board. Though it was argued by the learned Government Pleader that the Housing Board was not competent to receive the rents on behalf of the Government we have no doubt that the Housing Board had been authorised by the Government at some anterior point of time to collect the rents on its behalf Ex. A. 38 which is a letter dated 18-9-1964 from the Estate Officer to the plaintiff-Company shows that the plaintiff-Company which had applied for a renewal of one of the leases was asked to produce a clearance certificate from the Housing Board showing that no arrears of rent were outstanding Pursuant to Ex. A-38 the plaintiff also obtained such a clearance certificate from the chairman of the Housing Board. Apart from the payments made subsequent to the issue of notices we have also several prior receipts showing that even in 1961, 1963, 1964, 1966 and 1967 rents were always being paid to the Housing Board. The real question for consideration, therefore, is whether acceptance of rent by the Housing Board amounted to a waiver of the notice issued on 14-10-1968.
Before referring to the statutory provisions and the law in India we may refer to the law in England on the subject. In Davis v. Bristow 1920 (3) KB 428, Lash J., observed :
When once the notice to quit has expired the position of the parties is precisely the same as it would be if the original lease had provided for the determination of the term on the date mentioned in the notice. There is in that case no room for election by the landlord. The landlord and the tenant may of course agree that a new tenancy shall be created on the old terms, and that is what in effect they do when they agree that the notice to quit shall be waived but the agreement to continue the tenancy must be proved. It must be shown that the parties were adidem as to the terms.
In Clarke v. Grant 1949 (1) All. E.R. 768, which though a case where the rent was accepted in the mistaken belief that it was for a period prior to the notice terminating the lease, Lord Goddard C.J., explained generally the consequence of the receipt of rent as follows :--
If one may say so with respect to the learned Deputy Judge, he fell into the error of confusing an acceptance of rent after notice that an act of forfeiture has been committed. If the landlord seeks to recover possession of property on the ground that breach of covenant has entitled him to a forfeiture, it has always been held that acceptance of rent after notice waives the forfeiture, the reason being that in the case of a forfeiture the landlord has option of saying whether or not he will treat the breach of covenant as a forfeiture. The lease is voidable not void, and if the landlord accepts the rent after notice of a forfeiture it has always been held that he thereby acknowledges or recognises that the lease is continuing. With regard to the payment of rent after a notice to quit, however, that result has never followed. If a proper notice to quit has been given in respect of a periodic tenancy, such as an yearly tenancy, the effect of the notice is to bring the tenancy to an end just as effectually as if there has been a term which has expired. Therefore, the tenancy having been brought to an end by a notice to quit, a payment of rent after the termination of the tenancy would only operate in favour of the tenant if it could be shown that the parties intended that there should be a new tenancy.
It has been pointed out by the Supreme Court in The Calcutta Credit Corporation Ltd., and Another Vs. Happy Homes (P) Ltd., that the law in India is not different from the law in England. After referring to sec. 113 of the Transfer of Property Act it was observed:
The law under the Transfer of Property Act on the question in hand is not different from the law in England. Once a notice is served determining the tenancy or showing an intention to quit on the expiry of the period of the notice, the tenancy is at an end, unless with the consent of the other party to whom the notice is given the tenancy is agreed to be treated as subsisting.
We may now refer to some of the relevant statutory provisions. Section 111 (g) and (h), S. 112 and S. 113 of the Transfer of Property Act are as follows:
III. A lease of immoveable property determines..
(a) .. (b) .. (c) .. (d) .. (e) .. (f) ..
(g) by forfeiture; that is to say--
1) in the 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 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 teased, duly given by one party to the other.
A forfeiture u/s III, Clause (g), is waived by acceptance of rent which has become due since the forfeiture, or by distress for such rent, or by any other act on the part of the lessor showing an intention to treat the lease as subsisting:
Provided that the lessor is aware that the forfeiture has been incurred.
Provided also that, where rent is accepted after the institution of a suit to eject the lessee on the ground of forfeiture, such acceptance is not a waiver.
A notice given u/s III, clause (h), is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting.
ILLUSTRATIONS
(a) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires, B tenders, and A accepts, rent which has become due in respect of the property since the expiration of the notice. The notice is waived.
(b) A, the lessor, gives B, the lessee, notice to quit the property leased. The notice expires, and B remains in possession. A gives to B as lessee a second notice to quit. The first notice is waived.
It is seen that acceptance of rent before the institution of a suit for ejectment on the ground of forfeiture, by itself, operates as a waiver of the forfeiture while on act showing an intention to treat the lease as subsisting is necessary to waive a notice to quit apart from the fact that there must be the express or implied consent of the person to whom the notice is given, Of course, illustration (a) to Section 113 shows that acceptance of rent which has become due in respect of the property since the expiration of the notice waives the notice. But this illustaration must be read in the light of the substantive provisions of section 113. So read it means the acceptance of rent as stated in the illustration, affords the best evidence of an intention on the part of the person giving the notice to treat the lease as subsisting. The difference between acceptance of rent in the case of forfeiture and in the case of notice to quit is that in the case of forfeiture acceptance of rent by itself operates as waiver, but in the case of notice to quit acceptance of rent affords evidence of waiver. In the first case, no further proof is necessary, while in the second case, such proof may or may not be necessary depending on the facts of the case. While in the case of a notice to quit it is open to the person given the notice to disprove any intention to treat the lease as subsisting depite the acceptance of rent in the case of forfeiture acceptance of rent disables the lessor from disproving an intention to treat the lease as subsisting.
The essence of Section 113 of the Transfer of Property Act is the consensus ad idem of the parties. Rent if received must be received as such. It must be received with an intention to treat the lease as subsisting. If rent is accepted without any intention to treat the lease as subsisting there is no waiver. If the rent tendered by a tenant is accepted as compensation for the use and occupation of the land or building or under some other mistaken belief or in circumstances which clearly disprove or which are inconsistent with any intention to treat the lease as subsisting there is no waiver.
Our view of the statutory provisions accords well with the views expressed by several High Courts. We shall refer to some of the observations of learned judges.
In Navnitlal Chunilal Vs. Baburao (No. 1), Stone C.J., and Kania J., pointed out that it was not in every case that the payment and acceptance of rent of necessity waived the notice. In the circumstances of that case, it was held that there was no intention on the part of the landlord within the meaning of section 113 of the Transfer of Property Act to renew the lease or to treat the lease as still subsisting. In Manindranath v. Man Singh 1951 Cal 342 Sarkar J., (as he then was) observed :
It is, therefore, clear that, in order to establish waiver of a notice to quit, the party desiring to do so, must prove that the land lord and tenant had entered into a new agreement to treat the lease as continuing. That is also, to my mind, the way that S. 113 Transfer of Property Act, dealing with the waiver of a notice to quit must be read. That Section says that the notice to quit is waived with the consent of the person to whom it is given by an act of the person giving it showing an intention to treat the lease as subsisting. One, therefore, finds that in order to apply S. 113 a consent on the part of the person receiving the notice, to the waiver of the notice, that is to say, the continuation of the tenancy has first to be established. There has also to be established an act on the part of the person giving it showing the same intention, that is to say, an intention to continue the tenancy. That, of course, is nothing but proving an agreement : an agreement on both sides to continue the tenancy or treat the tease as subsisting.
In Sailabala Dassee v. Tappassier 1952 Cal 455 Das Gupta J, observed :
The question really is one of intention of the parties. Sec. 113 clearly indicates that there should be an intention not only on the part of the lessor but also on the part of the lessee. In order to determine the question of waiver of a notice to quit one of the questions to be decided in each case is whether from the conduct of the landlord, by acceptance of rent or otherwise, an intention to treat the lease as subsisting can be inferred and that would depend on the facts and circumstances of each case.
In Harbhajan Singh v. Munshiram AIR 1956 Pun 246 Bhandari C.J., and Bishan Narain J. observed :
The question of waiver is one of intention and acceptance of rent by the landlord after expiration of a notice is not in itself a waiver on his part of the notice given. It is merely a circumstance which must be considered along with other circumstances of the case and from which an intention to waive may or may not be drawn.
In Saleh Bros. Vs. K. Rajendran and Another, the question was considered at some great length by Ramamurthy J. The learned Judge referred to the entire case law on the subject. The learned judge observed :
The plain language of section 113 indicates that a waiver does not ipso facto result from any act of omission or commission on the part of the lessor, but the act must be such as clear evidence of the lessor''s intention to treat the lease as subsisting. It is the intention of the lessor to treat the lease as subsisting which is the predominant and deciding factor in bringing about a waiver and not any particular act by itself. Illustration (a) must, therefore, be understood and applied in consonance with the principle underlying the section with due reference to the intention of the lessor.
There is no warrant for the view that mere receipt of rent, whatever may be the intention of the lessor, should of its own force, divorced from the circumstances of the case be regarded as amounting to a waiver. Section 113 consists of two limbs ; (a) the express or implied consent of the person to whom notice is given and (b) the act of the person giving the notice showing the intention to treat the lease as subsisting." In order to constitute a waiver, both the limbs must concurrently operate, which means, that an act by itself and of its own force, without reference to the intention of the parties, cannot bring about a waiver". 18. What then is the position in the present case? The defendants issued notices on 14-10-1968 proposing to resume the land on the expiry of the period of three months from the date of notice. No question of waiver can possibly arise in regard to the rents received for the period of three months from the date of the notice. The receipt of rent for the subsequent period raises the question of waiver. But before the expiry of the period of three months the plaintiff filed the suits and on 10-1-1969 the plaintiff obtained a temporary injunction restraining the defendants from resuming the plots of land. This injunction continued till the disposal of the suits. In the counter to the application for temporary injunction and in the written statement filed in the suit the defendants stood by the notices issued on 14-10-1968. There is nothing whatever to indicate that the defendants intended to waive the notices or that the plaintiff ever understood the defendants as having waived the notices. There was not the slightest agreement between the parties. There was no consensus ad idem. The amounts paid by the plaintiff to the Housing Board appear to have been received by the latter in a routine way. The defendants had no knowledge of the receipt of rents subsequent to the issue of notices and the Housing Board never informed the Government about the receipt of such rents Apparently the Housing Board receive the rents in ignorance of the notices issued by the defendant and under a mistaken belief. In those circumstances, we do not think that it would be said that there was any waiver by the defendants. No other point was argued before us. The appeals are, therefore, dismissed with costs.