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Periodic Tenancy

The law of property is one of the most important spheres of law in India. It is the source of most of the litigation in India. The Transfer of Property Act, 1882 deals will different kinds of transfers including lease, mortgage and incorporates some of the important doctrines in law.

The concept of lease is one of the most important topics of property law. The basic concept of lease has been explained in this paper. Periodic lease or periodic tenancy has been extensively dealt with during the course of this submission. The main focus of this paper is upon the periodic tenancy dealt by Section 106 of the Transfer of Property Act, 1882. From the types of leases to the comparison between Periodic Tenancy and other Tenancies, this paper extensively covers the topic. This paper also talks about the amendment brought in Section 106. The suggestions made under 181st Law Commission Report has also been dealt. Lastly, this paper throw light upon the scope of Section 106 of the Transfer of Property Act, 1882 on different states in India.

Lease

Lease has been defined under section 105 of the Transfer of the Property Act, 1882 (herein after referred as the “Act”) is transfer of enjoyment of such property which is made for a certain time, express or implied or in perpetuity in consideration, of a price paid or promised to be paid, or of money, a share of crops, service or any other thing of value which is to be rendered periodically or on specified occasions to the transferor by the transferee who accepts the transfer on such terms.

It creates a right or an interest in enjoyment of the demised property and a tenant or a sub-tenant is entitled to remain in possession of the demised property until the lease is duly terminated and eviction takes place in accordance with the law.[1]

The relationship between landlord and tenant is the creature of a contract between the parties. The rate of rent, duration of lease, purpose of letting, etc., are all governed by the terms of the contract entered into. Thus, under the ordinary law the landlord can evict his tenant on the expiry of the period for which the premises were let out.[2]

For the transfer of a right of enjoyment of the property made for a certain time, express or implied and for consideration of the price, paid or promised that the transferee must have been put in possession of the demised property. It is also necessary that an agreement can be entered into for rendering periodical service and for consideration thereof and on transfer of the land to the transferee and acceptance thereof, either orally or in writing, the lease comes into existence.[3] An essential feature of lease is that the transfer must be for consideration, though it maybe for a limited period or perpetuity.

The mere use of word “lease” by itself does not prove that the leasehold rights vest in the person or the mere payment of rent by a person is not sufficient to establish the relationship of the landlord and tenant between the parties[4]. Similarly, the provision of interest is an indication against a lease.[5]

Under section 105 of the Act, delivery of possession of property demised is not a condition precedent for coming into operation of a lease.[6] In order to constitute a lease, it is not necessary to grant exclusive possession to the transferee.[7]a lease is not merely a contract but it is a transfer of an interest in land and creates a right in rem.[8]

A tenancy except where it is at will, may be terminated only on the expiry of the period of notice of a specified duration under the contract, custom or statute governing the premises in question. A tenant does not absolve himself from the obligations of his tenancy by intimating that as from a particular date he will cease to be in occupation under the landlord and someone else whom the landlord is not willing to accept will be the tenant. It is one of the obligations of the contract of tenancy that the tenant will, on determination of the tenancy, put the landlord in possession of the property demised.[9] Unless possession is delivered to the landlord before the expiry of the period of the requisite notice, the tenant continues to hold the premises during the period as tenant.[10] Therefore, merely by assigning the rights, the tenancy of a company did not come to an end.[11]
It is also not permissible of the court to split up the contract of tenancy in eviction proceedings.[12]

A paying guest is also not considered as a tenant and nor sub-tenancy is created by inducing a paying guest. To prove sub-tenancy there must be cogent evidence that the exclusive possession of the premises was given.[13]

The tenancy is created by contract and mere payment of rent does not establish the relationship of landlord and tenant.[14]Rent is a usual, though not an essential, incident of the relationship and payment of rent by the occupier to the owner of the premises raises a presumption that the relationship of landlord and tenant has come into existence. The presumption however is a rebuttable one and may be rebutted by showing that the acts and conduct of the parties are inconsistent with its existence.[15]

Where a landlord accepts rent without prejudice after notice for termination of tenancy has been served, in itself is not proof of the fact that tenancy continues.[16]

Types of Tenancies

The amount and type of interest in property is called an estate in land. Estates are divided into two main classifications: freehold estates and non-freehold estates. A freehold estate involves ownership (e.g., when you buy a house), and a non-freehold estate is any interest that’s less than a freehold estate - for example, renting. A non-freehold estate is created through a lease or rental agreement that can be either written or oral. The landlord maintains ownership of the property, and the tenant has the right to use the property as established in the terms of the lease or rental agreement. Non-freehold estates involve tenants, and they are often referred to as tenancies. There are four types of tenancies: tenancy for years, tenancy from period to period, tenancy at will and tenancy at sufferance.

A. Tenancy for Years

A tenancy for years specifies a definite term for the agreement, such as one month or one year. The lease terminates automatically at the specified end date without the need for notice by either the landlord or tenant.


B. Periodic Tenancy/ Tenancy from Period to Period

A tenancy from period to period specifies a definite initial time that’s automatically renewable unless terminated by either the landlord or tenant. The lease could be week to week, month to month or year to year, and is renewable indefinitely for a like period of time.

C. Tenancy at Will

A tenancy at will exists “at the pleasure” of the landlord and tenant. In other words, it’s in force until either the landlord or tenant terminates the agreement. In theory, a tenancy at will can be terminated instantly whenever notice is given by either party. In practice, however, landlords typically provide a reasonable amount of time for the tenant to vacate the property.

D. Tenancy at Sufferance

A tenancy at sufferance is never intentionally created and exists as the result of circumstances. This type of non-freehold estate happens when a tenant remains on a property after a lease has been terminated or the agreement has expired. The only difference between a tenant at sufferance and a trespasser is that the former had a right to occupy the property at some point.

Periodic Tenancy

As the name suggests, Periodic Tenancy implies the tenancy which changes its tenure periodically. Section 106 of the Act mainly talks about the duration of certain leases in absence of any written document. No section under the Transfer of Property Act, 1882 directly talks about the concept of Periodic Tenancy but legislature throughs light upon this topic by means of the provision given under section 106 of the Act.

It is very evident from the language of the Section about the application of the Section 106 that it is applicable only when the term is not fixed. Thus, when the term is fixed, the section, does not apply on its determination,[17] nor to a tenancy which commenced before the Act.[18]

The incorporation of the Section 106 is to mandate the equitable provision so that a tenant may not be taken as surprise. It is parties’ discretion to avoid the application of the Section 106 by entering into the contract to the contrary. Where there was no contract to the contrary as required under Section 106 of the Act, notice under Section 106 was a condition precedent to the suit and the suit for ejectment was held as not maintainable.[19]

Comparison between Periodic Tenancy and Fixed Term Tenancy

The most important difference between a periodic tenancy and a tenancy for a fixed term is that the latter terminated at the end of such term, without any requirement of notice as in the former. A periodic tenancy does not terminate automatically at the end of any particular term, but continues to renew itself until it is terminated at the end of one of the periods by proper notice by either the landlord or tenant. If there is an agreement as to a termination date, the tenancy is for a term and is not a tenancy at will.


Periodic Tenancy: Relation to Tenancy at Will

A periodic tenancy is sometimes called a tenancy at will, regarding it as a tenancy of will with restraint on the exercise of the will. A tenancy from year or from month to month arises by express agreement, or in absence of contract, by presumption of law under Section 106 of the Act. A tenancy at will implied from holding over, or from entry under a void lease, becomes on payment of rent a tenancy from month to month or from year to year or from week to week.

Legislative Changes

This section has been amended and altered several times.

A. Transfer of Property Amendment Act, XX of 1929-
By the amendment act of 1929, “either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party” has been substituted with “tendered or delivered personally to the party who is intended to be bound by it.

The English Law has been followed here.[20]

B. By local acts, the following two changes have been brought in the section. Firstly, ‘expiring with the end of a year of the tenancy’ and ‘expiring with the end of a month of the tenancy’ have been omitted. Secondly, the words ‘fifteen days’ and ‘notice’ have been substituted by the words ‘thirty days’ and ‘notice’.

C. Transfer of Property (Amendment) Act, 2002 (3 of 2003)

Section 106 of the Act contains that the lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, which may be concluded either by the lessor or lessee by six months’ notice expiring with the end of the year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, which may be terminated either by the lessor or lessee by fifteen days’ notice expiring by the end of the month of the tenancy.

The new sub-sections (2) and (3) provide that, the period mentioned in sub-section (1) shall commence from the date of receipt of notice, and a notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the expiry of the period specified under the sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.

Reason for Amendment

The amendment of section 106 of the Act was proposed in the 181st Law Commission Report in May, 2002. I The amendment was proposed in order to eliminate litigation in so far as it relates to computation of period of notice and to relax some of the rigid principles laid down in some judgements which have led to serious injustice and multiplicity of litigation thereby often causing hardship to litigants.

While referring to the amendments made by the UP Act 24 of 1954 in Section 106, the Law Commission emphasized inter-alia, that by virtue of the amendments proposed, the notice issued by the plaintiff would not be invalidated even if the time falls short of the prescribed period, provided the suit is filed by plaintiff after expiry of the period prescribed in the section. In tenancies which are not yearly, the period of notice is proposed to be increased from fifteen days to sixty days. Further, it was made clear that the period shall count from the date of receipt of notice.

In fact, in the State of UP, by virtue of a State Amendment under the UP Act 24 of 1954, this section was amended long back.

In several cases, it happens that a lessor or a lessee gives a 15 days notice, in the case of a tenancy from month to month, terminating the tenancy. Pleas in defence are taken that the notice is defective in the sense that the period of notice falls short by one day, because the person who has given the notice has not taken into account the principle accepted in Mangilal v. Sugan Chand[21], that the day on which the notice is served must be excluded though not the day on which the tenancy is sought to be terminated.

In some other cases, there may be a dispute as to the exact date of commencement of tenancy and therefore a further dispute arises as to the date of expiry of the tenancy. The matter will be put in issue and if the date assumed or pleaded by the plaintiff, whether he is the lessor or lessee is not accepted by the court, then the notice becomes invalid, though the defendant had, in fact, more than the prescribed time by the date of filing of the suit or by the date of the judgment.

The purpose of the provision in sec. 106 is to terminate the relationship of lessor and lessee before the lessor sues for possession. He has no right of entry till the tenancy is disrupted. Further, the idea is that every lessee must have some reasonable notice before he is asked to vacate the premises.

If these were the purposes behind section 106 but in fact, the lessee had, by the date of suit or the date of dismissal of suit years later, more than the period specified, in the statute, it is nothing but injustice to the lessor if he is compelled to file a fresh suit. Any procedure that leads to multiplicity of court cases must be avoided.

Though the Privy Council decided that notice may be for a longer period[22], it has also decided in another case that “where a notice falls short of the requisite period, the mere fact that the tenant is actually allowed to hold the property for the full length of the period for which notice ought to have been given and a suit for ejectment against him is brought only afterwards, will not cure the defect in the notice so as to make it effectual for the purpose of terminating the tenancy”[23]. Thus, it was held that there was no valid and legal termination of the contractual tenancy.[24]

Realising that this method of interpretation was leading to injustice compelling the lessors to file fresh suits after several years have lapsed and after giving a fresh notice, the UP legislature had, by UP Act 24 of 1954, omitted the words “expiring with the end of a year of the tenancy” and the words “expiring with the end of a month of the tenancy”. It had also increased the period of notice of 15 days in the case of monthly tenancies to 30 days. This was w.e.f. 30.11.54.

In the two cases decided in UP after the 1954 Amendment it was held that by virtue of the aforesaid amendment carried out in U.P., the notice issued by the plaintiff will not be invalidated even if the time falls short of the prescribed period, provided the suit is filed by the plaintiff after expiry of the period prescribed in the section. A short note on judgment of the Allahabad High Court in (1980)[25], in regard to the law as amended in U.P. reads as follows: -
“Section 106 (as amended by the UP Act) - plaintiff describing cause of action to be arising two days before the expiry of 30 days time - relief claimed not invalidated as the suit was filed much after the date.”

It was proposed to give retrospectivity to the extent that the omission of these words `expiring with the end of a year of tenancy’ and `expiring with the end of a month of the tenancy’ shall be applicable to all notices issued before the date of commencement of the amending Act, where such suits or other legal proceedings have been filed by the lessor or by the lessee by the date of commencement of the amending Act, unless of course the suits have been filed before the date of commencement of the amending Act and the dismissal of the suit or proceeding has become final.

It was proposed to substitute the words ‘fifteen days’ by ‘sixty days’ in the case of monthly tenancies, in respect of notices to be issued after the commencement of the amending Act. This will be a reasonable period of notice to either party. Fifteen days period appears to be too short.

It was also recommended that proposed amendments be applied to pending proceedings.[26]

Different States Scenario

Section 106 makes mention of two kinds of leases in which the notice has to be of six months, and in all other case the notice is of 15 days ending with the month of tenancy.[27] As a normal rule except in intention being to contrary, mortgage and lease operate independent of each other and on mortgage coming to an end by redemption, tenancy would revive.[28] Where the lessee had taken the premises on rent for commercial purpose, had raised construction thereon, later on surrendered earlier lease and executed fresh lease deed, held lessee was not entitled to claim benefit of Section 106.[29]

Where the Government by certain GO had declared the Tamil Nadu Rent Control Act not applicable trusts and religious and charitable institutions, the said GO did not apply to the plaintiff a denomination temple and private religious institution, it was held that the plaintiff could file a n eviction suit under the Tamil Nadu Rent Control Act, S. 106 was not applicable in the case.[30]

Where the City of Bangalore Corporation had given land on lease to petty shopkeepers and the lessees petty shopkeepers were vacated on the termination of the lease, it was held not violative Article 21 of the Constitution of India, there was no question of deprivation of the right to livelihood. The Principle of promissory estoppel was held not attracted in the case[31].
In Delhi prior notice under S. 106 for termination of the tenancy is not required.[32] The Transfer of Property Act came into force in Union Territory of Delhi w.e.f. 01.12.1962. where tenancy commenced prior to 01.12.1962, the notice need not strictly comply with S.106 of the T.P. Act. Notice of 15 days’ time is sufficient to determine the monthly tenancy in such cases.

Section 106 of the Act was not applied to the State of Punjab and Courts had confined themselves to applying the principle embodied therein insofar as they can be said to be found in justice, equity and good conscience.[33]

Conclusion
Periodic Tenancy is one of the types of lease recognized under the Transfer of Property Act, 1882. In this type of lease agreement, the time of termination is not fixed. The lengths and the duration of the periodic tenancy may be determined by the contract or by the circumstances. Termination is dependent on the discretion of the parties i.e., the landlord and tenant.

However, this type of lease has the potential of leading to a lot of ambiguity and even more so owing to the presumption under Section 106 of the Act. Thus, the lease for a certain period of time may be preferable.

End-Notes
[1] Jaswant Singh Mathura Singh v. Ahemdabad Municipal Corpn., AIR 1991 SC 2130.
[2] Vijay Kumar v. Inder Sain, AIR 1982 Del 260 (263).
[3] Tulsi v. Paro, (1997) 2 SCC 706 (708).
[4] Sheodhari Rai v. Suraj Prasad Singh, AIR 1954 SC 758(760).
[5] Mool Singh v. Pokardas, AIR 1959 Raj 15(16).
[6] Basanta Kuari v. Ila Mukherjee, AIR 1972 Cal 149 (149).
[7] Eswari Amma v. M.K. Korah, AIR 1972 Mad 339 (343).
[8] R.Kempraj v. Burton Son and Co., AIR 1970 SC 1872 (1874).
[9] Kishan Lal v. Ganpat Ram, AIR 1961 SC 1554 (1555,1556).
[10] Ibid.
[11] Ibid.
[12] Lal Chand v. Radha Ballabh, AIR 1959 Raj 240 (DB).
[13] Ram Prakash v. Shambhu Dayal Agarwal, AIR 1960 All 395.
[14] Khushbir Singh New Delhi v. Ajaib Singh, New Delhi, AIR 1983 NOC 76.
[15] Gurucharan Singh v. Delhhi Improvement Trust, AIR 1955 Punj 34 (36) (DB).
[16] Rai Chand Dewan Chand v. Smt. R.K.Bhatnagar, AIR 1977 NOC HP.
[17] Bishen Sarup v. Abdul Samad, AIR 1931 All 649.
[18] Debendra Nath v. Pashupati, (1931) 35 CWN 1047.
[19] F.C. Das v. S.Rajguru, AIR 1972 Ori 26(28).
[20] Harihar v. Ramshashi Roy, (1919) 46 Cal 458.
[21] AIR 1965 SC 101.
[22] Benoy Krishna Das v. Salscicioni, AIR 1932 PC 279
[23] Gooderham & Worts Ltd. v. Canadian Broadcasting Corpn. AIR 1949 PC 90.
[24] In Dattonpant v. Vithalrao AIR 1975 SC 1111 the facts were as follows: the notice was served on the tenant on 21.11.1968 purporting to terminate the tenancy by the 8th December, 1968 treating the month of tenancy as commencing from the 9th day of a month and ending on the 8th day of the month following. It was held that the notice did not expire with the end of the month of tenancy. The end of the month of the tenancy was the 9th day and not the 8th day.
[25] UPLT(NOC)11.
[26] 181st Law Commission Report, 2002.
[27] Baldeo Prasad v. Dasrathmal, AIR 1955 Nag 27 (28) (DB).
[28] Nirmal Chandra v. Vimal Chand, AIR 2001 SC 2284 (2287).
[29] A. Sulaikha Beevi v. K.C. Mathew, AIR 2001 Ker 177 (184) (DB).
[30] Idol of Sri K.P. Amman v. Educational Trustees Co. Ltd. Madra, AIR 1990 Mad 337 (Para 6) (DB).
[31] Vidyaranyanagar Petty Shopkeepers’ Association v. City of Bangalore Corporation, AIR 1987 Kant 159.
[32] Satish Chandra Suneja, New Delhi v. Shiv Dutt Chawla, AIR 1983 NOC 13(Del).
[33] Siri Ram v. Pritam Singh AIR 1978 HP 30(30).

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