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1998 Supreme(Del) 281
High Court Of Delhi
CANARA BANK - Appellant
Versus
SHANTI VAISH - Respondent
R.F.A. 132 of 1997
Decided On : 04/01/1998
PRADEEP DEWAN, RAJIV NAYAR, RAVI GUPTA
A stipulation as to time in a lease deed should be regarded as of the essence of the contract.
Headnote:
LEASE - RENEWAL - OPTION - EXERCISE - TIME LIMIT - ESSENCE OF CONTRACT - DETERMINATION OF LEASE - EFFLUX OF TIME - NOTICE TO QUIT - NOT NECESSARY - MESNE PROFITS - AWARD - REASONABLE - ARREARS OF RENT - RECOVERY.
Fact of the Case:
The appellant, a bank, leased a property from the respondents for a term of five years with an option to renew the lease for a further period of five years. The appellant exercised the option for renewal by serving a notice on the respondents within the stipulated time. However, the respondents sent a notice to the appellant terminating the tenancy before the expiry of the renewed lease period.
Finding of the Court:
The court held that the appellant was not entitled to a renewal of the lease as it had not exercised the option within the time limit specified in the lease deed. The court further held that the notice to quit served by the respondents was not necessary as the lease had already determined by efflux of time. The court also awarded mesne profits to the respondents at the rate of Rs. 30,000/- per month from the date of expiry of the lease till the date of possession.
Issues: 1. Whether the appellant was entitled to a renewal of the lease? 2. Whether the notice to quit served by the respondents was valid? 3. Whether the respondents were entitled to mesne profits?
Ratio Decidendi: 1. The court held that the appellant was not entitled to a renewal of the lease as it had not exercised the option within the time limit specified in the lease deed. The court relied on the principle that a stipulation as to time in a lease deed should be regarded as of the essence of the contract. 2. The court held that the notice to quit served by the respondents was not necessary as the lease had already determined by efflux of time. The court relied on Section 111 of the Transfer of Property Act, which provides that a lease of immovable property determines by various modes, including efflux of time. 3. The court held that the respondents were entitled to mesne profits at the rate of Rs. 30,000/- per month from the date of expiry of the lease till the date of possession. The court relied on the evidence of the respondents' witness, who had testified that the market rate of rent for the suit premises was Rs. 40,000/- per month.
Final Decision: The court partly allowed the appeal and modified the impugned judgment and decree. The court directed the appellant to pay to the respondents Rs. 60,000/- instead of Rs. 1,20,000/- as arrears of rent for the period prior to the date of filing of the suit.
( 1 ) THIS appeal is directed against the judgment and decree dated 27. 2. 1997 passed by the Additional District judge, Delhi in Civil Suit No. 53/95 decreeing the respondents suit for appellant s eviction from suit premises bearing No. C-I/a, mehrauli Road, Green Park Ext. New Delhi and also for. recovery of mesne profits. The backdrop of facts is this. By an indenture of lease dated 18. 12. 1990, the respondents leased to the appellant the suit premises for a term of five years commencing from 6. 10. 1989. Clause (2) of the lease deed (Ex. P. W. 1/2) provided for a renewal of the lease and was in the following terms:
( 2 )
"this lease shall be in force for a period of Five Years certain from 6. 10. 1989. The lessee shall, however, have the option to continue the lease thereafter for a further period of Five years upto 5. 10. 1999, provided the option is exercised by serving a registered notice in writing 6 months prior to the expiry of the lease period, on the same terms and conditions expect rent which will be enhanced by 35% as agreed hereto. The lessee shall be at liberty to vacate the said premises any time during the period of occupation on giving three months notice. "2. On 9th May, 1994, the appellant bank sent to the respondents the notice (Ex. P. W. 1/d-1) exercising its option for renewal of the lease for a period of 5 years from 6. 10. 1994 till 5,10. 1999. On 23. 7. 1994, respondents sent a registered notice (Ex. P. W. 1/3) to the appellant,. Bank terminating its tenancy w. e. f 5. 10. 1994. Despite service of the notice to,quit (Ex. P. W. 1/3), appellant did not vacate the suit premises. Thereafter, respondents filed the present suit for appellant s eviction from the suit premises.
( 3 ) THE appellant/defendant contested the respondents/plaintiff s claim, on various grounds. The defendant pleaded, inter alia, that it had exercised the option of renewal of lease by serving the notice dated 9. 5. 1994 upon the respondents as a result whereof the lease was renewed for a period of 5 years w. e. f. 6. 10. 1994 till 5. 10. 1991 and the respondents had also accepted rent from the defendant for periods subsequent the said notice in accordance with the terms and conditions of the lease deed dated 18. 12. 1990. The defendant further pleaded that the respondents are not entitled to terminate the lease prior to the expiry of the period of 5 years for which the renewal was promised and agreed to by the respondents under the terms and conditions of the lease deed dated 28. 12. 1990 and as such the alleged termination of the lease by the respondents vide notice dated 23. 7. 1994 is illegal and of no consequence.
( 4 ) THE learned Additional Distt. Judge upheld the respondents claim that the lease had been validly determined by service of a quit notice under Section 106 of the Transfer of Property Act and accordingly decreed their suit.
( 5 ) LEARNED counsel for the appellant canvassed the following - contentions before us:
(I) the appellant having exercised the option of renewal within the time limited by Clause (2) of the lease deeddated 18. 12. 1990 is entitled to a renewal of lease and as such an action in ejectment is not maintainable. (ii) the notice to quit dated 23. 7. 1994 is invalid and ineffective as it did not expire with the end of the tenancy month of the appellant. (iii) the learned Additional Distt. Judge has erred, in awarding damages/mesne profits @ Rs. 30,000/- per month by ignoring the terms and conditions of the lease deed dated 28. 12. 1990.
( 6 ) ON a perusal of the impugned judgment, it appears that the learned Additional district Judge has confined his attention to the question whether any valid quit notice under Section 106 of the Transfer of Property act had been served upon the appellant without entering into the controversy whether such a notice was necessary or not. The learned Additional District Judge completely overlooked the fact that the lease was for a term of 5 years
