Definition of Lease

Chapter V, of the Transfer of Property Act, 1882 (for short T.P. Act) deals with leases of immovable property. Section 105 defines lease as

“Section 105 — Lease defined –

A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.”

Rights and liabilities of lessor and lessee in the absence of a contract or legal usage to the contrary are incorporated in Section 108 of the T.P. Act. Section 108(e), of T.P. Act reads thus-

Section 108 — Rights and liabilities of lessor and lessee. –

In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased;

(e) if by fire, tempest or flood, or violence of an army or of a mob, or other irresistible force, any material part of the property be wholly destroyed or rendered substantial and permanently unfit for the purposes for which it was let, the lease shall, at the option of the lessee, be void:

Provided that, if the injury be occasioned by the wrongful act or default of the lessee, he shall not be entitled to avail himself of the benefit of this provision;

Lease is determined by any of the modes under Section 111 of the T.P. Act and notice to quit under Section 106 is one of the modes of the determination or case. Sections 112 and 113 of the T.P. Act deals with waiver of forfeiture and waiver of notice to quit.

Indisputably lease is a transfer of rights in immovable property and the T.P. Act provides the mode of transfer of such right by way of lease and also makes provision how leases are made. Once a right is created in an immovable property, by way of lease, such right and interest which has been transferred in favour of lessee only reverts to the lessor on determination of such right and interest in accordance with the provisions of T.P. Act.

Determination of Right of lease and tenancy

Right of lease and tenancy, therefore, in the leased property once transferred by lessor in favour of lessee comes to an end, and, is determined only in accordance with the provisions of the T.P. Act ordinarily and does not revert to the lessor landlord in ordinary circumstances, except upon termination of such interest in accordance with the provisions of the T.P. Act.

The aforesaid legal position has come up for consideration before various Courts. In Krishn Laxman Yadav v. Narsinghrao Vithalrao Sonawane, the issue before the Division Bench of Supreme Court  was whether as a result of the floods the house occupied by the tenant was excessively damaged and was later on removed by the Municipal Corporation as dangerous to human lives and landlord commenced to construct a new building at the site of the old house could tenants maintain a suit under Section 28 of the B.R. Act seeking the declaration that the tenancy has not been extinguished and that they were entitled to occupy as tenants in newly constructed tenatcy merits at the place equivalent to the original tenaments occupied by them.

Answering the said question, the Division Bench of Supreme Court  held that the destruction of the house did not determine the tenancy and rights of occupation was incidental to the contract of tenancy which continued to exist between the parties. A strong plea was made by the counsel in the said case that the tenanted house having collapsed and destroyed, the tenancy was extinguished but the Division Bench of Supreme Court  negatived the said plea and on consideration of various judgments thus held-

“9. With reference to the first two contentions, it is necessary to notice that there can be no dispute that a lease and a tenancy involves transfer of rights in immovable properties and the interest transferred will not revert to the landlord in ordinary circumstances except upon termination of such interests in accordance with the provisions in Section 106 read with Sections 111, 113 and the other relevant sections in Chapter 5 of the Transfer of Property Act.

There is no law preventing letting out and/or lease of broken and tumbled down and/or damaged houses. It is also well settled that contracts for transfer of immovable properties including agreements for lease are liable to be specifically enforced. In other words, parties to such contracts and agreements will be subjected to such orders as are necessary for specific performance of such contracts and agreements. These rights existed in favour of the lessees and/ or tenants in ordinary law and in that connection protection under the Rent Restriction Act was never necessary.

The protection that was given under the above Act was against the ejectment of tenants. It is important to notice that under Sections 16 and 17 to enable a landlord to rebuilt a new property ejectment of tenants was authorised. In Sections 17B and 17C provision was made for giving specific rights to tenants concerned to reoccupy the repaired and/or newly built-up premises. The provisions in the Act go to indicate that even under the Act tenants’ right to reoccupy repaired or newly constructed building-premises has been recognised.

The above discussion goes to show that even prior to the above Act and thereafter also the normal rights of a tenant for specific performance have always been recognised at Law. The only condition for specific enforcement would be such as provided in the the Specific Relief Act. In other words, for getting specific performance the tenant must be ready and willing to perform his part of the covenants in the lease and/or otherwise agreed between the parties. It is, therefore, clear that a tenant who is willing to satisfy the above condition must always be entitled to relief of specific performance in cases in which there is no physical impediment in granting such relief.

In this connection reference can be made to the two English cases on which reliance has been placed on behalf of the petitioners. In the case of Simper v. Coomba (1948) 1 All ER 306. Denning, J. as he then was, in connection with the rights of the lessee of a house destroyed in any enemy action, made the following observations:

“The position at common law is plain. She had a contractual tenancy, and that tenancy had never been determined by due notice to quit. It, therefore, continues in existence. The destruction of the house by a bomb did not determine the tenancy. It is well settled that the destruction of a house does not by itself determine the tenancy of the land on which it stands ….. No doubt, the landlord still has the contractual right to determine the tenancy ….. The tenancy, therefore, remains in being.

The fact that a new house has been erected on the site does not make any alteration to the legal position ….. That house is substantially the same as the old one. It is annexed to and part of the land which was let under the tenancy and, therefore, it is now included in the tenancy which has never been determined. The tenant, Mrs. Simper, is still the tenant of the premises, and is entitled to possession of them.”

It appears from the observations in the case cited that in the appeal against the decision of Denning, J. before the House of Lords, the above legal proposition have not been questioned. The case of (1948) 2 All ER 141 also related to a dwelling house which was destroyed by enemy action and was let out on a monthly tenancy. The landlord erected a new house on the site of the old one and when the new house was fit for occupation, the tenant’s attempt to reoccupy the same was defeated by the landlord. The landlord then served a notice to quit on the tenant determining the contractual tenancy and the tenant filed his action for specific performance of his right as a tenant and claimed possession.

The Court found that at the date when the house was destroyed by enemy action the tenancy had not been determined and the Court would not permit the landlord to exclude the tenancy from the protection of the Rent Restriction Act by taking advantage of his wrongful act in refusing the tenant physical occupation and then terminate the tenancy by notice to quit. The Court observed that the rights created in a tenant could not come to an end by frustration.

The contract of tenancy continued between the parties inspite of the destruction of the house and as already stated above granted specific performance to tenant plaintiff by directing the landlord to deliver possession. In that connection, Lord Justice Tucker observed-

“….. I think it is clear from all the authorities ….. that broadly speaking the proposition has long been recognised that only an occupying tenant can claim the protection of the Rent Restriction Acts but, in my view, the tenant here is not primarily claiming protection under the Acts. He is claiming to be put into possession of premises of which, at the material date, Feb. 17, he was the contractual tenant. It is the landlord who is really seeking to make use of Rent Restriction Act by saying “Because at a date subsequent to Feb. 17 I gave you a notice to quit and you are, through my own act not the occupying tenant, I am entitled to claim the benefit of the notice to quit and you on your part are not entitled to claim the benefit of your tenancy.”

I think that that would be a position which would be contrary to one’s ideas of justice and equity and that any Court must have power in circumstances such as the present to order that the landlord shall put the tenant back into the position in which he should have been on Feb. 17. He having been put into that position, the subsequent rights of the parties can, no doubt, be worked out in the appropriate proceedings to ascertain how they stand under the provisions of the Rent Restriction Act. …..”

In Article 592, of American Jurisprudence relied on by Mr. Sakhardande the following statement is made –

“592. Complete destruction. The common-law rule that a lessee is not relieved of his obligation to pay rent through the accidental destruction of the buildings demised to him presupposes that some part of the premises remains in existence for occupation by the tenant, irrespective of the destruction. If the destruction of the premises is complete — nothing remaining, the subject matter or thing leased no longer existing then the liability of the tenant for rent cases. This is because rent is a profit issuing out of the lands or tenements as compensation for the use of occupation. Hence, if the principal is gone, the interest or incident cannot continue to exist. Thus, it has been held that the destruction of the property extinguishes the liability for rent, as under a lease of a river front and landing consisting of a narrow footing at the base of a bluff without any wharf, dock, or pier, where the unprecedented ravages of the river effectually took away the use of the landing by washing away all but a shallow fragment of the lot. Likewise, the liability of a tenant for renl subsequently to accrue under a lease of a building, which does not include the freehold, is terminated upon the destination of the building.

Upon the termination of a lease in advance of the expiration of the term, by reason of the destruction of the leased premises, the lessor is entitled to recover such part of the rent for the entire terms as is proportionate to the period of occupancy by the lessee.”

In Hind Rubber Industries Pvt Ltd v. Tayebhai Mohammadbhai (1996) the Supreme Court said,

“In my view, the correct legal position in this country appears to be that the destruction of the tenanted structure does not extinguish the tenancy and the right of occupation of the tenant under the contract of tenancy continues to exist between the parties. Merely because the tenanted structure has been destroyed or demolished, the right transferred under the lease cannot be said to have come to an end, and the relationship of lessor and lessee continues to exist. The destruction of the tenanted premises does not destroy the tenancy rights nor does it bring to an end the relationship of lessor and lessee or for that matter landlord and tenant.

The lessee continues to be lessee in the property leased even after its destruction by fire or such like event unless the lessee exercises his option of treating such lease as void. It may be observed that Section 108 of the T.P. Act deals with the rights and liabilities of lessor and lessee and Part-B and clause (e) of Section 108 provides that if the property leased in wholly destroyed or rendered substantially and permanently unfit for the purposes for which it was leased by fire, tempest or flood or violence of any army or of a mob or other irresistible force, such lease may be rendered void at the option of the lessee provided of course that such injury to the lease property has not been occasioned by the wrongful act or default of the lessee.

That means that right of the lessee in the leased property subsists even if the leased properly has been destroyed by fire, tempest or flood or violence of an army or of a mob or other irresistible force unless the lessee exercises his option that on happening of such events the lease has been rendered void. By necessary corollary, therefore, if the leased property is destroyed wholly by fire, the lease cannot be said to be extinguished, nor can it be said that lessee’s right in the leased property has come to an end unless the lessee exercises such option.”