Effect of failure of Court to extend tenure of lease.

NAINAR SUNDARAM, J.

This appeal is directed against the judgment and decree in O.S. No. 2439 of 1981, no the file of the Second Additional City civil Judge, Madras. The defendant is the appellant and the plaintiff is the respondent. The facts leading to the appeal may be traced as follows :

On 7-8-1964, an agreement of lease, as Ex.A. 1, was entered into between the plaintiff and Esso Standard Eastern Inc., in and by which a lease of the suit land was given to the defendant. It is sufficient if we recapitulate only the relevant terms of the lease. The period of lease was from 1-7-1964 to 30-6-1974. There was a payment of an advance of Rs. 15, 600/- to be adjusted from half of the monthly rent for the first four years. Clause 3(d) of the lease contemplated the renewal for the lease and since a part of the controversy in this Appeal arises out of this clause, we feel obliged to extract the said clause as follows :-

"That the landlord will on the written request of the tenant made 2 calendar months before the expiry of the term hereby created and if there shall not at the time of the such request any existing breach of non-observance of any of the covenants on the part of the tenant hereinbefore contained grant to it a lease of the demised premises for the further term of ten years from the expiration of the said term at the rate of Rs. 910/- (Rupees nine hundred and ten only) per month and containing the like covenants and provisions as are herein contained except the renewal option clause."

On 15-2-194, as per Ex. A. 2, Esso Standard Eastern Inc. by a letter purported to exercise the option for renewal also suggesting the inclusion of the following clause, in the renewal lease document :

"The lessee shall be at liberty to determine this agreement by giving to the lessor three month's notice in writting expiring at any time during the currency of this agreement."

On 30-3-1974, as per Ex.A. 3, the plaintiff apprised the defendant that the renewal of the lease shall be on the same terms and like conditions as in the original lease excepting the renewal option clause. The plaintiff in the said letter also indicated that mutual negotiations over the terms of renewal cannot be ruled out. It must be noted here that after, Ex. A. 2 and before Ex. A. 3, the Esso (Acquisition of Undertaking in India) Act 4 of 1974 came into force on 13-3-1974. On 15-4-1974, as per Ex.A. the successor to Esoo Standard Eastern Inc., namely, Esso Standard Refining Company of India Limited, addressed a letter to the plaintiff in the following terms :

"We write with reference to our Reg. Ack. due letter 5150/MV of February 15, 1974 and your reply dated 30-3-74. Inasmuch as you are not in favour of including a 3 months notice clause determining the agreement, please treat our request as withdrawn. We will be forwarding to you our draft lease embodying the same terms and covenants as contained in our earlier registered lease. As per Clause 3(d) of the lease, we have also exercised our option for renewal of the lease for a further period of ten years commencing July 1, 1974 at a rental of Rs. 910/- p.m. on the same terms and conditions contained in the earlier agreement for lease."

On 4-6-1974, as per Ex.A. 5, the said company forwarded a draft lease in duplicate to the plaintiff. On 20-6-1974, as per Ex.A. 6, the plaintiff replied to Esso Standard Refining Company of India Limited that without the payment of advance there can be no question of renewal of the lease. On 5-7-1974, as per ExA. 7, the plaintiff be addressing a letter to the Esso Standard Refining Company of India Limited declined to accept a cheque purporting to be the rent for the month of July 1974 and pointed out that the draft renewal deed has been rejected by the plaintiff since it violated the condition precedent for the exercise of the option for renewal with regard to the payment of advance and the plaintiff wanted delivery of possession of the property. With effect from 12-7-1974, cons