Whether notice to quit under Section 106 of the Transfer of Property Act to a tenant holding over is or is not necessary when the original lease deed contains a term that the tenant will quit without notice after the expiry of the period fixed by the original lease?

Fact of the Case:

The defendant appellant took on lease the suit premises along with machinery, plant etc. , belonging to the plaintiff-respondent originally for a period of two years under a registered agreement dated May 27, 1037 with an option to continue as tenant for a further period of two years. The annual rent stipulated was Rs. 1150/- and the lesse was for manufacturing and industrial purposes. Another registered lease agreement under Ex. A-2 dated June 20, 1941 was executed on a rent of Rs. 1,450/- per year for a period of two years commencing from 14-7-1941 with a similar option for the appellant to continue the tenancy. The appellant-lessee exercised the option to continue the tenancy and continued to be in possession of the property after the expiry of the stipulated period. The claim for enhancement of rent on the ground that the lessor provided extra accommodation and further amenities was resisted by the lessee who took the stand that no improvement was made or extra accommodation provided entitling the lessor to any enhancement of rent. Hence, disputes arose between the parties since 1963 resulting in the institution of S. C. Suit No. 340/63 on the file of the Subordinate Judges Court, Guntur and O. S. No. 119/66 on the file of the District Munsifs Court, Guntur by the lessor for recovery of arrears of rent and other amounts said to be due and payable by the lessee, and O. S. No. 487/66 by the lessee for an injunction restraining the lessor from interfering with his possession.

Finding of the Court:

The defendant is a tenant holding over and that there being no agreement to the contrary, the term contained in the original lease deed dispensing with notice to quit cannot be imported into the tenancy created by holding over and that a notice to quit is necessary as required by Section 106 of the T. P. Act. However, in view of the fact that six months period had expired during the pendency of the suit, a decree for possession could not passed in the suit itself without driving the lessor to a fresh suit.

Issues: Whether notice to quit under Section 106 of the Transfer of Property Act to a tenant holding over is or is not necessary when the original lease deed contains a term that the tenant will quit without notice after the expiry of the period fixed by the original lease?

Ratio Decidendi: The expression "in the absence of an agreement to the contrary" used in Section 116 is referable to the terms of the tenancy created by the tenant holding over but not terms of the original lease. In the absence of any such agreement to the contrary, the statutory tenancy created under Section 110 has to be invariably determined in accordance with the provisions of Section 106. The parties are at liberty to agree with regard to the terms of the statutory tenancy such as the duration of the lease, the nature and character of the lease and the length of quit notice. Such agreement may be entered into between the parties either at the time of the original lease or at the time when the new tenancy by holding over is created. It may be oral or in writing. Where there is a specific stipulation in the original lease that a quit notice of a particular nature must be issued to determine the new lease created under Section 116 of the Act by the tenant holding over, such stipulation would be an "agreement to the contrary" within the meaning of Section 116 of the Act and would govern the rights of the parties relating to the issuance of notice determining the statutory tenancy. The real difficulty arises when there is no such specific stipulation in the original lease. In the new statutory tenancy created by the tenant holding over, some or many of the terms of the original lease such as quantum of rent, mode of its payment, access to the leased property, rights of the parties to the new additions, if made, etc. , might be continued by implication when there is no agreement to the contrary. But, however, all the terms of the original lease cannot be considered to be the terms of the tenancy by holding over. The true test is whether a particular term or stipulation can really be deemed to be one of the terms or stipulation which constituted the transaction of the new lease created under Section 116. The onus to prove that a particular term of, or stipulation, of the old lease formed part of the terms of or stipulation, of the new lease, is on the party who sets up such plea. Where the original lease deed is silent with regard to the issuance, the quit notice to determine the new tenancy, the intention of the parties which can be gathered from the correspondence between and the conduct of parties, would be material. The term regarding collateral security and a stipulation to quit without notice as required by Section 106 of the Act, which are found in the original lease, would not be imported into the statutory new lease, created under Section 116 of the Act.

Final Decision: Appeal allowed with costs throughout.