Ram Kumar Das vs Jagadish Chandra Deb Dhabal Deband

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 114 of 1950

Decision Date: 26 November 1951

Coram: B.K. Mukherjea, M. Patanjali Sastri, Vivian Bose

In the matter titled Ram Kumar Das versus Jagadish Chandra Deb Dhabal Deband, the Supreme Court of India delivered its judgment on 26 November 1951. The opinion was authored by Justice B K Mukherjea and the bench was comprised of Justices B K Mukherjea, M Patanjali Sastri and Vivian Bose. The case is reported in 1952 AIR 23 and 1952 SCR 269, with subsequent citations in later reports. The dispute involved the interpretation of sections 106 and 107 of the Transfer of Property Act, 1882, specifically concerning the duration of a lease, the presumption arising from payment of annual rent, the operative nature of a Kabuliyat executed for ten years, and the character of the tenant’s possession after the rent for two years had been paid. The headnote explained that the construction rule in section 106 applies not only to express leases of uncertain term but also to leases that are implied by law and can be inferred from possession, acceptance of rent and surrounding circumstances. It further noted that a contract contemplated by the provision need not be express; it may be implied provided it is a valid contract, and that if the contract is invalid the section governs the lease’s duration. The headnote added that when rent is stipulated as an annual sum a presumption arises that the tenancy is annual unless rebutted, while section 107 requires that a tenancy from year to year or a yearly rent be created only by a registered instrument.

The defendant had executed a registered Kabuliyat with the Receiver who was managing an estate pending litigation, purporting to lease a plot of land for ten years at a rental of Rs 46 per annum. The defendant paid the first year’s rent of Rs 46 on 8 March 1925 and the second year’s rent of the same amount on 16 March 1926. No further rent was paid to either the Receiver or the proprietor after those dates. Treating the defendant as a monthly tenant, the proprietor served a notice to quit on 18 July 1942, requiring vacancy by 7 August 1942, and subsequently instituted an ejectment suit in July 1943. The Court found the Kabuliyat to be inoperative under law. The defendant contended that the payments made in 1925 and 1926 created two separate one-year tenancies, that the landlord-tenant relationship terminated at the end of the second annual lease, and that because there was no holding over, the ejectment suit was barred by limitation. The Court held, in part, that from the facts a

The Court observed that, on the basis of the material before it, the tenancy could be regarded as having arisen in 1924. It further noted that because the tenant’s purpose on the land was to erect structures, Section 106 of the Transfer of Property Act required the tenancy to be presumed to continue from month to month unless a contrary agreement was shown. The Court held that no implication could be drawn that the tenancy was fixed for a certain year merely because rent for the years 1925 and 1926 had been paid; the earlier acceptance of rent (kabuliyat), though legally ineffective, demonstrated that the parties never intended to create a lease for a single year. Consequently, the Court found it appropriate to conclude that the tenancy had been month-to-month from its inception in 1924 and that the suit was therefore not barred by limitation. The Court endorsed the authorities in Debendra Nath v Shyama Prasanna (11 C.W.N. 1124) and Sheikh Akloo v Emaman (I.L.R. 44 Cal. 403), and it referred to the decisions in Aziz Abroad v Alauddin Abroad (A.I.R. 1933 Pat. 485), M.D. Moosa v Jaganand (20 I.C. 715) and Matilal v Darjeeling Municipality (17 C.L.J. 167) for support.

This appeal fell under the civil appellate jurisdiction and was filed as Civil Appeal No 114 of 1950. It challenged a judgment and decree of the Patna High Court (judges Shearer and Reuben) dated 5 November 1948, which itself arose from Appeal No 2064 of 1946 that followed a decree of the District Judge of Purulia in Title Appeal No 116 of 1945. The factual background had been fully set out in the earlier judgment. The Attorney-General for India, Mr M.C. Setalvad, appeared for the appellant, assisted by counsel, while Mr B.C. De, assisted by counsel, represented the respondent. The judgment was delivered on 26 November 1951 by Justice Mukherjee. The matter concerned a suit instituted by the plaintiff-respondent in the Subordinate Judge’s Court at Chaibassa, seeking possession of the land described in the plaint schedule on the ground that the defendant-appellant was a monthly tenant whose tenancy had been terminated by a notice to quit. The trial court had decreed in favour of the plaintiff, an order affirmed by the District Judge of Purulia and subsequently by a Division Bench of the Patna High Court. The appellant now approached this Court relying on a certificate issued under Section 110 of the Civil Procedure Code. At the outset, counsel for the appellant indicated that he would not challenge the legality or adequacy of the notice to quit, provided the Court held that, on the facts, the appellant had been a month-to-month tenant of the plaintiff. His substantive contention was that the appellant had never been a monthly tenant of the plaintiff or any predecessor, and that any tenancy that might have existed was limited to the periods for which annual rent had been paid.

Counsel explained that the defendant had held two separate tenancies, each lasting one year, for two successive periods. The second yearly lease terminated on 7 December 1926, after which the defendant ceased to be a tenant. No new tenancy arose by virtue of holding over, as contemplated by section 116 of the Transfer of Property Act. Because there was no holding over, a monthly tenancy could not have been created under that provision. The plaintiff’s suit was instituted more than twelve years after the termination of the second yearly lease, and consequently the suit was barred by the limitation period prescribed in Article 139 of the Indian Limitation Act. The core dispute in this appeal therefore concerned whether, at the time the notice to quit was served, the defendant was in fact a monthly tenant of the plaintiff. To understand the arguments presented by counsel on both sides, it is necessary to set out the relevant facts in chronological order.

The property that is the subject of the suit consists of a plot of land measuring four bighas and twelve cuttas, identified as old Survey plot No. 578 in the village of Jugselai, district of Singhbhum. The whole village forms part of the Dhalbhum estate, of which the plaintiff is admittedly the present proprietor. Before 1913, Charan Bhumiji served as the “Prodhan” of Jugselai. On 24 July 1913, the defendant’s father obtained, by a registered Patta, a lease of approximately thirty-one bighas of land belonging to Survey plot No. 573 from this Prodhan for cultivation. It is not disputed that the land described in the suit is covered by that Patta.

At that time the proprietor of the Dhalbhum estate was Raja Satrughna, who died in 1916 leaving a will that bequeathed the entire estate to the present plaintiff. The plaintiff’s claim under the will was contested by Partap Chandra Deo Dhabal, who succeeded in having his name recorded as proprietor of the zemindari in the Singhbhum Collectorate. In response, the plaintiff filed Title Suit No. 67 of 1921 before the Subordinate Judge at Midnapore to establish his title to the zemindari, and the trial judge decreed in his favour. The defendant, Pratap Chandra Deo Dhabal, appealed the decree to the High Court of Calcutta. While that appeal was pending, the High Court appointed a Receiver who took possession of the entire estate.

On 8 December 1924, the defendant executed a registered Kabuliyat in favour of the Receiver, purporting to settle the land that is the subject of the suit for a term of ten years at an annual rent of Rs 46 and a selami of Rs 250.

The lease contained a covenant that resembled a provision for perpetual renewal. The covenant stipulated that when the term of the lease expired, if the lessor did not need the land for his own purposes and chose to re-settle it, the lessee would be entitled to a fresh settlement on a higher rent, on terms that the parties would then agree upon. The record shows that the lessee, who was the defendant, paid a selami amount of Rs. 250 to the Receiver several months before the Kabuliyat was executed on 24 December 1924. The first rental payment of Rs. 46 was made on 8 March 1925, and a second rental payment of the same amount was made on 16 March 1926. After that date, no further rent was paid either to the Receiver or to the proprietor of the estate. The High Court dismissed the appeal filed by Pratap Chandra Deo Dhabal in 1924, and that dismissal was affirmed by the Judicial Committee in May 1927. Following the affirmation, the Receiver was discharged and the plaintiff obtained possession of the entire estate in July 1927.

On 15 April 1937, the plaintiff instituted an ejectment suit, identified as Title Suit No. 2 of 1937, against the defendant before the Subordinate Judge at Chaibassa. The plaintiff’s claim relied chiefly on the terms of the Kabuliyat executed by the defendant on 24 December 1924, and the suit sought to eject the lessee because the period provided for in the lease had expired. The only contested provision was the renewal clause contained in the Kabuliyat, which the plaintiff argued was invalid and inoperative because it was vague, indefinite, and because the Receiver had exceeded his authority in entering into such a stipulation. In the written statement, the defendant opposed the plaintiff’s claim for possession by asserting that he had acquired permanent rights in the land under the Prodhan’s Patta of 1913 and had continuously occupied the land for more than twelve years. He contended that the Kabuliyat of 1924 was executed merely to avoid trouble and harassment by the Receiver and that, being an inoperative lease, it could not affect the prior rights he obtained under the 1913 Patta. The trial judge decreed in favour of the plaintiff. However, on appeal, the District Judge reversed that judgment and dismissed the suit on the ground that the notice to quit served on the defendant was ineffective under the law for determining tenancy. The District Judge also held that the Prodhan’s Patta was void and inoperative because the Prodhan lacked authority to settle lands of this character, and consequently it could not create any rights in the defendant.

In this case, the Court noted that the Kabuliyat dated 1924 was found to be ineffective because it did not constitute a lease within the meaning of the Transfer of Property Act. Nevertheless, the District Judge observed that, apart from the Kabuliyat, a tenancy had arisen when rent was paid and accepted for the years 1925 and 1926. After 1926, the defendant continued to occupy the land as a monthly tenant under section 116 of the Transfer of Property Act, thereby holding over from month to month. The Judge explained that such a month-to-month tenancy could be terminated by giving a fifteen-day notice that expired at the end of the tenancy month. Because the notice served by the plaintiff on the defendant failed to meet this statutory requirement, the Judge concluded that the plaintiff’s suit could not succeed. Although the suit was dismissed, the District Judge nonetheless issued a declaration stating that the defendant would be liable to eviction if a proper fifteen-day notice, expiring with the end of the Bengali tenancy month, were served.

The plaintiff appealed this decision to the High Court of Patna, where the appeal was heard by Chief Justice Harries and Justice Fazl Ali. The learned Judges affirmed the lower appellate court’s finding that the Prodhan’s Patta did not create any enforceable right in the defendant and that the 1924 Kabuliyat was likewise ineffective as a lease capable of conferring tenancy rights. They further held that the defendant had not acquired any permanent right in the land either by prescription or by any other mode. By virtue of the rent paid to the Receiver in 1925 and 1926, the defendant had become a tenant from month to month. Accordingly, the High Court concurred with the District Judge that the notice to quit was insufficient to terminate the tenancy.

The Court observed that the defendant had vigorously argued before the High Court that, because both the 1913 Patta and the 1924 Kabuliyat were invalid and inoperative, he could never have been a tenant of the suit land and that the two rent payments could not create a tenancy since the Receiver lacked authority to receive them. On that basis, the defendant contended that the plaintiff remained in possession of the land as a trespasser and had thereby acquired title by adverse possession. Although the High Court definitively concluded that the defendant was a month-to-month tenant, it left unresolved the question of whether the rent paid to the Receiver could be deemed payment to the plaintiff. Ultimately, the Court held that the defect in the notice to quit was sufficient to warrant dismissal of the suit, and it confirmed the lower appellate court’s declaration that the defendant would be liable to eviction only upon service of a proper fifteen-day notice expiring with the Bengali tenancy month.

The order that had been directed to be deleted was part of the judgment pronounced by the High Court on 5 May 1942. Shortly thereafter, on 18 July 1942, the plaintiff served a notice to quit on the defendant, demanding that the defendant vacate the land on 7 August of the same year. Because the defendant refused to surrender possession, the plaintiff instituted the present suit on 22 July 1943. The plaint in this suit was very simple and depended entirely on the findings recorded by the High Court in the earlier litigation. The plaintiff asserted that his right to possession did not arise from the terms of the Kabuliyat of 1924; rather, by virtue of the rent payments made on 8 March 1925 and on 16 March 1926, the defendant had become a tenant from month to month under the plaintiff, and that tenancy was properly terminated by a valid notice to quit. In his written statement, the defendant raised several pleas. He reiterated his claim to title based on the Patta of 1913 and argued that his long-term possession of the land established a permanent tenancy, which gave him a valid title. Concerning the Kabuliyat of 1924, the defendant alleged in one part of his statement that he had executed the document under a misapprehension of the facts and without knowing its contents, while in another part he contended that the Kabuliyat bound the plaintiff and that the plaintiff could not institute a suit contrary to its terms without refunding the selami money. The defendant also admitted, contrary to his earlier denial, that the payments made to the Receiver amounted to payments to the plaintiff himself, a question that the High Court had left unresolved on the previous occasion. The other pleas in the written statement were not material, except for a specific point challenging the sufficiency of the notice to quit served on the defendant. On the basis of these pleadings, several issues were framed for determination. After considering the material before him, the trial judge held that the Prodhan’s Patta was a void and inoperative document that conferred no rights on the defendant. He rejected the defendant’s claim, raised during the hearing, that the Kabuliyat had been obtained by threat and coercion. Applying the decisions of the Patna High Court, the subordinate judge concluded that the Kabuliyat could not operate as a lease under the Transfer of Property Act, and therefore the defendant did not acquire the rights of a lessee under it. Nonetheless, the judge found that by the payment and acceptance of rent a new tenancy had been created outside the Kabuliyat, and because this tenancy was for building purposes, it was a tenancy from month to month within the meaning of section 106 of the Transfer of Property Act, terminable by a fifteen-day notice.

The Court noted that the tenancy which resulted from the receipt of rent by the Receiver was a tenancy from month to month governed by section 106 of the Transfer of Property Act, and that such tenancy could be terminated by serving a notice of fifteen days. Because the notice was deemed proper and sufficient, the trial judge entered judgment in favour of the plaintiff and decreed the suit. Following this judgment, the defendant appealed to the District Court at Purulia. The District Judge dismissed the appeal and affirmed the trial-court’s decree. The defendant, before the District Judge, put forward two principal arguments to support his appeal. First, he contended that the Kabuliyat dated 1924 operated as a valid lease, and therefore the defendant could not be lawfully removed in breach of its terms. Second, he argued that no tenancy existed between him and the plaintiff because the sums he paid to the Receiver could not be characterised as payments made to the plaintiff. The District Judge rejected the first argument, observing that it conflicted with the explicit rulings of the Patna High Court, and dismissed the second argument as contrary to the defendant’s own admission in his written statement. The defendant then proceeded to a second appeal before the Patna High Court, which was heard by a Division Bench comprising Justice Shearer and Justice Reuben. Both Judges dismissed the appeal and upheld the decree of the lower courts, although they arrived at that conclusion on different bases. Justice Reuben held that the acceptance of rent by the Receiver in 1925 created, by implication, a tenancy that was intended to last for one year; when the Receiver accepted rent again in 1926, that acceptance signified the Receiver’s assent to the defendant’s continued possession, thereby converting the arrangement into a month-to-month tenancy under section 116 of the Transfer of Property Act, given the purpose for which the tenancy was created. Justice Shearer expressed difficulty in accepting this view, maintaining that if a periodic tenancy had been created at all, it would have been on a month-to-month basis rather than for a year. Nevertheless, in the latter part of his judgment, Justice Shearer observed that, based on the admitted facts, it could be reasonably inferred that two separate one-year leases had been created. He also expressed uncertainty as to whether the defendant ever actually became a tenant of the plaintiff. Justice Shearer examined the renewal clause contained in the Kabuliyat and held that it was void for uncertainty, and he rejected the defendant’s claim of title by adverse possession. In conclusion, the Judges held that, irrespective of the differing interpretations of the tenancy’s nature, the defendant possessed no valid defence against the plaintiff’s claim for eviction and consequently...

The Court observed that the lower courts had correctly decided the case and that the propriety of that decision was the only issue raised on appeal. The counsel for the appellant, identified only as Mr. Setalvad, did not introduce the Prodhan’s Patta dating from 1913, nor did he rely on the Kabuliyat executed in 1924 or the renewal covenant contained in that document. He also did not dispute that the amounts paid to the Receiver were, in fact, payments made to the plaintiffs. Moreover, he admitted that the payment of rent by his client and the Receiver’s acceptance of such rent could give rise to a tenancy by implication. Mr. Setalvad’s principal argument was that the payment and acceptance of rent in 1925 created two separate tenancies, each lasting one year, and that these tenancies covered two successive years only. According to this view, the landlord-tenant relationship terminated at the end of the second annual lease, and there was no holding over by the defendant after that date as contemplated by section 116 of the Transfer of Property Act. Consequently, the Court noted that no tenancy existed after December 1926 and that the suit filed by the plaintiff in 1943 was therefore time-barred.

In contrast, the counsel for the plaintiff-respondent, identified as Mr. De, argued that the tenancy arising from the payment and acceptance of rent in 1925 was, from its inception, a month-to-month tenancy governed by section 106 of the Transfer of Property Act. Alternatively, he submitted that if the 1925 arrangement was a fixed-term tenancy of one year, the defendant’s continued possession after the expiration of that term, coupled with the Receiver’s acceptance of rent in 1926, demonstrated the landlord’s assent to the tenant’s holding over, thereby creating a month-to-month tenancy under section 116. Finally, Mr. De contended that even assuming two successive one-year tenancies were created, the admitted facts showed that the tenant held over after the second lease, which gave rise to a month-to-month tenancy in accordance with section 116, despite the absence of any rent demand after 1926. The dispute therefore centered on three questions: (1) what was the nature of the tenancy created by the Receiver’s acceptance of rent on 8 March 1925; if it was month-to-month, the defendant could not claim holding over and the plaintiff would succeed; (2) if a one-year tenancy was created in 1925, could the landlord’s consent to continued possession be inferred from the acceptance of rent in March 1926; and (3) if rent was accepted in March 1926 creating another one-year tenancy, whether any tenancy existed after the second year despite the lack of any subsequent rent demand or acceptance.

In this case the Court identified three specific questions that required answers. The first question asked whether, after a tenancy of one year had been created, the landlord’s consent to the defendant’s continued possession could be inferred from the acceptance of rent in March 1926. The second question examined whether the payment and acceptance of rent in March 1926 gave rise to a new tenancy for another year, and if so, whether any tenancy existed after the expiration of that second year despite the absence of any demand for, or acceptance of, rent by the landlord thereafter. The third question considered whether a tenancy created after the second year existed at all. Regarding the first question, the lower courts had held that a registered instrument signed by the landlord was essential to create a valid lease for ten years. That view was not contested before the Court, and the Court expressly refrained from commenting on it. Consequently, the Court proceeded on the premise that, although the parties might have intended to create a ten-year lease, no operative lease had actually been formed. The only facts that were admitted were that the defendant remained in possession of the plaintiff’s land with the permission of the Receiver, who represented the plaintiff’s estate, and that the defendant paid rent to the Receiver. From these admissions, the Court concluded that a tenancy could be presumed, and the remaining issue was to determine the duration of that tenancy.

To resolve the duration, the Court referred to Section 106 of the Transfer of Property Act, which provides that, in the absence of a contract, local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes is deemed to be a “lease from year to year,” terminable by either party on six months’ notice expiring at the end of a year. For all other purposes, the lease is deemed to be a “lease from month to month,” terminable by either party on fifteen days’ notice expiring at the end of a month. The Section therefore supplies a rule of construction to be applied when the parties have not agreed on a specific term. In such circumstances the appropriate duration must be inferred from the object or purpose for which the tenancy was created. The Court noted that this rule of construction applies not only to express leases of uncertain duration but also to leases that are implied by law, which may be inferred from the possession, the acceptance of rent, and surrounding circumstances.

The Court observed that, in the present matter, the tenancy was not for agricultural or manufacturing purposes. Its purpose was to enable the lessee to erect structures on the land. Accordingly, unless a contrary contract existed, the tenancy should be treated as a month-to-month tenancy. The remaining question, therefore, was whether a contract to the contrary existed in this case. The counsel for the plaintiff argued strongly that the fact the rent was paid on an annual basis demonstrated that the parties did not intend to create a monthly tenancy. The Court recognized this argument and indicated that the issue of whether an implied contract existed, sufficient to override the statutory presumption, required further consideration.

In this case, counsel for the plaintiff argued that the fact the rent was paid annually allowed a reasonable inference that the parties did not intend to create a tenancy on a monthly basis. It was acknowledged that, under section 106 of the Transfer of Property Act, a contract to the contrary need not be expressed; an implied contract was permissible, but it still had to be a valid contract. The counsel maintained that if no such contract existed in law, section 106 would become operative and would govern the lease’s duration. It was further noted that several decisions had recognized a presumption that the manner of rent payment indicated the character of the tenancy, so that an annual rent created a presumption of an annual tenancy unless the presumption was successfully rebutted. The difficulty, however, lay in the requirement that a tenancy for a year or a rent stipulated on a yearly basis could be created only by a registered instrument, as mandated by section 107 of the Transfer of Property Act. The document before the Court, referred to as the Kabuliyat, was indeed a registered instrument, but, ex-concessis, it was not an operative document and therefore could not satisfy the conditions of section 107. This point was not seriously disputed by the counsel for the plaintiff, who nevertheless argued that a lease for a certain one-year term could fairly be inferred from the payment of annual rent and that such a stipulation would not fall within the mischief that section 107 intended to prevent. He contended that the payment of an annual rent, as occurred in the present matter, was wholly inconsistent with a monthly tenancy. The Court was aware that, in cases such as Debendra Nath v. Syama Prasanna and other reported authorities, similar inferences had been drawn; one such case had been cited by Justice Reuben in his judgment, relying on an earlier decision of the Calcutta High Court, and a comparable view appeared to have been adopted in Matilal v. Darjeeling Municipality. A serious objection to that approach, the Court observed, was that it would amount to creating a new contract for the parties. The parties, it was clear, had not intended to create a lease for only one year. Their intention was to have a lease lasting longer than a year, but because that intention was not expressed in the proper legal form, it could not be given effect. The Court distinguished between the proposition that, in the absence of a valid agreement, the parties’ rights would be regulated by law as if no agreement existed, and the proposition that a new agreement should be substituted for the parties, which would be plainly contradicted by the admitted facts of the case.

In this case, it was relevant to note that the second appeal filed by the plaintiff challenged the dismissal of his earlier suit by the lower appellate court. The High Court had conclusively held that the defendant’s tenancy was a month-to-month tenancy governed by section 106 of the Transfer of Property Act. The High Court indicated that the sole issue remaining was whether the payment made to the Receiver could be treated as a payment made directly to the plaintiff. In the suit before the trial court, the defendant, in his written statement, acknowledged that the payment made to the Receiver had the same effect as a payment made to the plaintiff himself. Relying on that admission, the trial judge adopted the same reasoning that the High Court had employed earlier. The trial judge concluded that by paying rent to the Receiver and by the Receiver’s acceptance of that rent, the defendant had become a monthly tenant within the meaning of section 106 of the Transfer of Property Act. The defendant appealed to the District Judge, who was the last fact-finding court. The only ground raised by the defendant in that appeal was that the Receiver was an unauthorised person. The defendant relied on the decision of the Judicial Committee in Aziz Ahmad v. Alauddin Ahmad, A.I.R. 1933 Pat. 485, and on the cases Md. Moosa v. Jaganund, 21 I.C. 715 and 17 C.L.J. 167, which set aside the Receiver’s appointment. The defendant argued that because the Receiver’s appointment had been invalidated, any acceptance of rent by that person could not give rise to a monthly tenancy. The appellate record showed that the defendant never asserted at any stage of the proceedings that the payment of one year’s rent created a tenancy for a period of one year. Accordingly, the Court found that, based on the facts, the tenancy that began in 1924 was correctly characterized as a month-to-month tenancy. This conclusion was supported by a number of reported cases, each of which involved a yearly rental amount but was decided on the basis that the tenancy was periodic rather than for a fixed term. Having resolved the character of the tenancy, the Court observed that no further question remained. The validity of the notice served to the plaintiff had not been contested before the Court, and consequently the plaintiff was entitled to a decree in his favour. The appeal therefore failed and was dismissed with costs. The appeal was dismissed. The agent for the appellant was R.C. Prasad and the agent for the respondents was S.P. Varma, as cited in Vide Debendra Nath v. Syama Prasanna, 11 C.W.N. 1124; Sheikh Akloo v. Emaman, I.L.R. 44 Cal. 403.