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Second Appeal No. 1245 of 1965, decided on 15th April 1968.

‑ Lease‑Holding over, essentials of‑Words "in the absence of agreement to contrary" in S. 116‑Refer to an agreement as to terms of holding over‑Leased premises being used for manufactur ing purpose‑Tenant holding over after expiry of original lease and landlord accepting rent thereafter‑Original lease, held, deemed to have been renewed‑Such new lease governed by pro visions of S. 106 and terminable by six months' notice on either side.

The two essentials of holding over are that‑the' lessee or under‑lessee remains in possession of the property after determination of the lease granted to the lessee. Secondly, the lessor or his legal representative accepts rent from the lessee or under‑lessee or in the alternative assents to his tenant continuing in the possession. The second part of section 116 relates to the effect of holding over. If the conditions stated in the first part are available then the lease is renewed from year to year or from month to month according to the purpose for which the property was leased as specified in section 106. The Legislature, therefore, clearly indicates that whatever was the nature of the original contract or whatever was the limitation in the original contract the new lease would be a lease from year to year or month to month according to the purpose for which it was leased out, in accordance with the provisions of section 106 of the Transfer of Property Act,

The Legislature recognised two kinds of lease that is one kind which is agriculture or manufacturing and another kind which would be a lease for any other purpose. So far as agriculture or manufacturing purpose is concerned the lease must be deemed to be a lease from year to year terminable on the part of either lessor or lessee by six months' notice expiring with the end iii' the year of the tenancy. Section 116 also provides that the terms speci6cd in section 106 can be varied by an agreement to the contrary. In the absence of any agreement to the contrary holding over must be governed by the provisions of section 106 of the Transfer of Property Act.

At the time of the original contract there was, one may say, a marriage between the mind of the landlord and tenant as a result of which the agreement was executed by both the parties. But at the time of holding over there is no such conscious agreement. The tenant usually continues and the landlord goes on accepting the rent. But whether the old terms would be reviewed or not that is in nobody's mind. Therefore, the Legislature has thought fit that the new contract or the new relationship should be governed by the usual provisions. That the Legislature was aware of this state of affairs is indicated by repetition of the clause "in absence of any agreement to the contrary" in section 116, Transfer of Property Act in addition to what they have said in section 106, Transfer of Property Act. Therefore, when a tenant is holding over he is holding over as in a tenancy which is normally contemplated as setout in section 106, Transfer of Property Act. But this new contract also can be modified by any agreement. But if no such agreement is forthcoming then the new contract must be the ordinary contract as specified in the statute, not modified or enlarged by any contract.

Dasarath Kumar v. Sarat Chandra 37 C W N 971 and I L R 32 Cal. 123 ref.

Landlord and Tenant by Foa, para. 610 and Kai Khushno v. Bai Jarbai A I R 1949 F C 124 ref.

‑Word "manufacturing"‑Meaning‑Making of umbrellas, held, "manu facture" as contemplated by S. 106.

Sati Prasanna Mukherjee and others v. Md. Fazla A I R 1952 Cal. 320; Joyanti Hosiery Mills and another v. Upendra Chandra Das and another A I R 1946 Cal. 317 and Raiston Smith's case (1866) 11 H L C 223 ref.

Syed Azizul Haq with Sultan Hossain Khan for Appellants.

B. N. Chowdhury with S. M. Habibul Haque for Respondents.

This second appeal is by the defendant. The plaintiff landlord had filed a suit for ejectment of the defendant from the suit premises. The defendant was described to be a monthly tenant in respect of the suit premises. The defendant had executed an agreement Exh. 5 for payment of rent within the first week of next month and to perform other terms and conditions. It was alleged that the defendant No. I appellant had been running his business under the name and style of Messrs Good Luck Traders, The defendant No. 1 defaulted in paying rent and as such was an undesirable tenant. The plaintiffs in bona fide need of accommodation and required the suit premises for his own use and occupation in view of the fact that he was living in a rented house with difficulties and troubles. Defendant sublet a portion of the suit premises to defendant No. 3 without plaintiff's consent and in contravention of contract and law. Defendant was served with notice in the month of December to vacate suit premises with the expiry of the month of January 1964, and the notice was duly received by the defendant who had failed to vacate the suit premises and hence this suit.

Defendants Nos. 1 and 2 contested the suit alleging inter alia that the suit is not maintainable in law, and that the defendants were not defaulters as they had deposited the rent with the Rent Controller in accordance with the law and there was no bona fide requirement for the landlords personal use and occupation. The main contention of the defendants that the notices served under section 106, T. P. Act was illegal and ineffective inasmuch as the defendant No. 1 was carrying on the business of manufacture of umbrellas in the suit premises and was entitled to six months' notice with the expiry of the year. The original agreement Exh. 5 it appears was for 12 months for the occupation of the premises by the defendant. The date of commencement of the lease is 1‑6‑1957. The trial Court decreed the suit holding against the defendant that he was a defaulter and that the defendant has been duly served with notice under section 106 of the T. P. Act, but holding against the plaintiff that he required the premises bona fide for his own use and occupation. On appeal the learned Subordinate Judge armed the decision of the learned Munsif. Hence the second appeal. The only question which has been argued before me is the sufficiency of notice served under section 106, T. P. Act on defendant No. 1. The original agreement Exh. 5 does not contain any recital as to the purpose of the lease. The plaintiff in his plaint alleges that defendant No. 1 carried on his business on the suit premises. Defendants Nos. 1 and 2 in the written statement categorically state that they carry on the manufacture of umbrellas. It has been argued that making of umbrellas cannot be termed "Manufacture". I shall revert to this question later, The 7th clause of the Agreement Exh. 5 reads as follows: ‑

"The 2nd party will give a month's notice to the 1st party if he wants to leave the house and the 1st party will also give the 2nd party a months notice if he wants to evict him, after twelve months of expiry of the occupation, of the premises by the second party." This clause has been interpreted by Mr. B. N. Chowdhury appearing on behalf of the respondent to indicate that the lease was for one year and that the parties agreed to accept a month's notice on either side. I f it was a monthly lease then. 15 days notice would be enough, if it was a lease for manufacture, six months" notice with the expiry of the year was required under the statute but by agreement, as allowed by the provisions of section 106, T. P. Act, the parties had agreed to a month's notice either way. Therefore, Mr. Chowdhury argued that even if it he held that the lease was for the purpose of manufacture the defendant would be bound by the covenant entered into by him in his original lease. Mr. B. N. Chowdhury has argued that the defendant had been holding over from the date of the expire of the lease and in accordance with the rulings relied on by him lie was bound by the terms of the original lease. Section 106 of the T. P. Act reads as follows: "In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a 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, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of tenancy.

Every notice under this section must be in writing signed by or on behalf of the person giving it, and 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, or to one of his family or servants at his residence, (if such tender or delivery is not practicable) affixed to a conspicuous part of property."

A plain reading of the section would show that in the absence of any contract to the contrary the period of a lease for Agriculture or manufacture would be deemed from year to year and could be terminated by six months notice with the expiry of the year. The Legislature has allowed the variation of these terms by contract, so that parties are free to fix the periods of the lease and the period of notice. Now we have to consider when the original period of the lease is over and the tenant is "holding over" as it is known how the relationship between the landlord and tenant would be governed and whether the special terms of tile original contract are to be made applicable to the lease which must be deemed to have been renewed after the period of the original lease was over. So far as the new base is concerned the law is enacted in section 116 of the Transfer of Property Act which is headed as effects of holding over and reads as follows: ‑

"If a lessee or under lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under‑lessee or assents to his tenant continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106."

It will be observed that the Legislature has given its attention to a circumstance which is very much prevailing in this country, and as such has been careful to clearly enunciate the circumstances when a holding over takes place and the effect thereof. The two essentials of holding over are that the lessee or under‑lessee remains in possession of the property after determination of the lease granted to the lessee. Secondly the lessor oar his legal representative accepts rent from the lessee or under lessee or in the alternative assessment to his tenant continuing in the possession The second part or the section relates to the effect of holding over. If the condition, stated in the first part are available then the lease is renewed from year to year or from month to month according to the purpose' for which the property was leased as specified in section 106. The Legislature, therefore, clearly indicates that whatever was the nature of the original contract or whatever was the limitation in the original contract the new lease would be a lease from year to year or month to month according to the purpose for which it was leased out, in accordance with the provisions of section 106 of the T. P. Act.

I have already given the provisions of section 106, T. P. Act and have shown that the Legislature recognised two kinds of lease that is one kind, which is agriculture or manufacturing and another kind which would be a lease for any other purpose. So far as Agriculture or manufacturing purpose is concerned the lease must be deemed to be a lease from year to year terminable on the part of either lessor or lessee by six months' notice expiring with the end of the year of the tenancy. Section 116 also provides that the terms specified in section 106 can be varied by an agreement to the contrary. In the absence of any agreement to the contrary, holding over must be governed by the provisions of section 106 of the T. P. Act.

In the case of Dusarath Kumar v. Sarat Chandra 37 C W N 971 a Division Bench of the Calcutta High Court has held that the words in section 116, T. P. Act "in the absence of agreement to the contrary" must refer to an agreement as to the to the terms of holding over. This decision follows another hull Bench decision of the same High Court reported in I L R 32 Cal. 123. I respectfully follow this observation of their Lordships. Their Lordships in the case reported in 37 C W N further held: "In our opinion as soon as the rent was accepted, it was a new contract of the tenancy ant: that it was a contract of tenancy from year to year according to the purposes for which tenancy was taken."

"Foa' in his book Landlord and Tenant in paragraph 610 has stated as follows:

Effect of holding over.‑In the case of holding over, the Tenancy from year to year thus implied from the payment and acceptance of rent (e) will prima facie be subject to those terms of the expired tenancy which are applicable to a tenancy from year to year (f ), but not to the provisions of the expired lease which are not really "terms of the tenancy at all (g) for though the question of terms, like the question of the nature of the holding, is one purely of fact (h) the presumption is that the tenant holds over on the same terms as during the former tenancy (i), so far as such terms are applicable to a yearly holding (underlining* is mine).

Whatever be the state of law in England so far as we are concerned it has been embodied in an enactment namely section 116 of the T. P. Act and the provisions have been clearly interpreted in the said decision of the Division Bench of tire Calcutta High Court. The position is really very simple, and leas a good deal of commonsense in it. At the time of the original contract there was, one may say, a marriage between the mind of the landlord and tenant as a result of which the agree ment was executed by both the parties. But at the time of holding over there is no such conscious agreement. The tenant usually continues and the landlord goes on accepting the rent. But whether the old terms would be reviewed or not that is in nobody's mind. Therefore the Legislature has thought fit that the new contract or the new relationship should be governed by the usual provisions. That the Legislature was aware of this state c of affairs is indicated by repetition of the clause in absence of any agreement to the contrary" in section 116, T. P. Act in addition to what they have said in 106, T. P. Act. Therefore, when a tenant is holding over he is holding over as in a tenancy, which is normally contemplated as set out in section 106, T. P. Act. But this new contract also can be modified by any agreement. But if no such agreement is forthcoming then the new contract must be the ordinary contract as specified in the statute, not modified or enlarged by any contract. Mr. Chowdhury has referred to a case Kai Ahushno v. Bai Jerbai (A I R 1949 F C 124). He has referred to the minority judgment of Mr. Justice Patanjali Sastri. At page 132 after reviewing the law on the subject his Lordship held:

"In my opinion, the principle underlying section 116 is implied contract, and the test of renewal is the consensus between the lessor and the lessee or under lessee holding over and not an option exercisable by the lessor alone."

This observation of Mr. Justice Sastri clearly is in line with the observations made by the Division Bench of the Calcutta High Court in the case of Dasarth Kumar v. Sarat Chandra as well as with the; observation of Foa and is to the effect that the tenancy ensuing from the date of the expiry of the old lease is based on a new contract implied contract. But it would be a tenancy as is an ordinary tenancy according to the purpose for which the lease was granted. The words used by the Legislature in section 116 of the Transfer of Property Act namely "according to the purpose for which the property is leased as specified in section 106".

Corroborates this view, the Legislature could have easily stated that the lease would be renewed in accordance with the terms of the original contract. It does not advisedly do so. The only thing that the Legislature provides in section 116 of the Transfer of Property Act is that when a tenant is holding over the lease is renewed but the renewal would not be in terms of the former contract but in accordance with the usual statutory provisions. In the instant case accepting for the present that the lease was for a manufacturing purpose, there was in the original contract of lease special clause that a notice of one month on either side would be required which was contrary to the provisions of section 106 of the Transfer of Property Act for leases for such purpose. But was perfectly legal as the provisions of section 106 is governed by any contract to the contrary.

But this special clause would not be available to a tenant who is holding over under the provisions of section 116 of the 'transfer of Property Act.

The claim of the defendant is that he took the premises on lease for the purpose of manufacture of umbrellas there is no evidence to the contrary that the lessor used the premises for any other purpose. Both the Courts below, however, have held that the making of umbrella cannot be classified as manufacture. I fail to understand the above finding. "Manufacture" has not been defined in the Transfer of Property Act. Mr. Chowdhury has referred to the case of Sati Prasanna Mukherjee and others v. Md. Faz1a (A I R 1952 Cal. 320). In this case the learned Single Judge of the Calcutta High Court has held that the printing of books is not manufacture and has perported to rely on a decision of the same High Court in the case of Joyanti Hosiery Mills and another v. Upendra Chandra Dasand another (A I R 1946 Cal. 317). Where Mr. Justice Makherjee has observed in connection with a hosiery business that according to dictionary meaning manufacture means "to work up materials into suitable form for use" and that such materials may not only be the original raw material but may also be partly or wholly manufactured, articles which themselves may be' used for manufacturing some other article. Mr. Justice Mukherjee then also goes on to give the observations of Lord Westbury, Lord Chancellor in Raiston Smith (1866) 11 H L C 223 at p. 246 where his Lordship says "your Lordships are well aware that by the--

Large interpretation given to the word manufacture' it not only comprehends productions, but it also comprehends means of producing them."

The learned Judge of the Calcutta High Court went on to hold:

"In my Judgment, the word "manufacturing" in section 106, T. P. Act should be given its commonly understood meaning, which is neither the etymological meaning nor the technical meaning as applied to mechanical industry or commerce.

Applying these tests and giving the popular meaning to the word "Manufacture", I am unable to hold that printing simpliciter is always manufacture."

I do not see how this decision helps Mr. Chowdhury to conclude that making of umbrellas is not manufacture. In the making of umbrellas various raw materials in the shape of black cloth, sticks, springs and spokes which are all different materials are used and combined together finally to shape an umbrella. The dictionary meaning of manufacture is "Making of articles or materials in large quantities". This definition is perfectly applicable to the process of making umbrellas as carried on by the defendant and 1, therefore, hold that making of umbrellas is "manufacture" as contemplated by section 106 of the Transfer of Property Act.

Therefore, in my opinion after the original lease had expired and the tenant was holding over under the provisions of section 116 of the T. P. Act the new lease would be governed by the provisions of section 106 of the T. P. Act and no more by the special contract originally entered into by the parties and as such six months notice expiring with the end of year of the tenancy would be necessary for the purpose of evicting the tenant. In this case admittedly only one month's notice was given and as such I find that the notice was inadequate and as such there cannot be any decree for eviction.

The appeal is therefore, allowed. The Judgment and decree of the Courts below are set aside and the suit is dismissed. But there will be no order as to costs.

Leave prayed for under clause 15 of the Letters Patent is granted.

A. E.

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