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Appeal from Appellate Decree No. 1644 of 1946, decided on 20th May 1955.

Ss. 106 and 107 --Whether a lease is yearly or one from month to month a matter of contract between lessor and lessee‑Harsana lease a yearly lease‑Reservation of yearly rent not by itself sufficient to prove that lease was a yearly one.

It is not correct to say that there cannot be a yearly lease for the purpose of a shop. Whether a lease is monthly or yearly, depends primarily upon the contract by which it was made. No doubt section 106 of the Transfer of Property Act draws a line of division between leases for agricultural or manufacturing purposes on one side and the rest on the other ; but it does not interfere with the freedom of contract ; it makes provision for a case where there is neither any contract nor local law nor usage to determine whether the lease is from month to month or from year to year. Whether the lease will be monthly or yearly, is a concern of the lessor and lessee, and, if they agree to make a yearly lease for any purpose, the law does not prevent them.

A Harsana lease is a yearly lease.

Reservation of an annual rent is not by itself sufficient to prove in every case that the lease is from year to year. That a lease reserving an annual rent is not necessarily a yearly lease, is made evident by section 107 of the Transfer of Property Act.

The mode in which rent is expressed to be reserved may afford a presumption that the tenancy is of a character corresponding thereto. The rule, however, is not of universal application.

The lessee took a lease of certain premises at annual rent of Rs. 60 payable monthly at the rate of Rs. 5, subject to the condition chat the lessee would be liable to be evicted if he did not pay the rent within the 30th of Chaitra every year. The lease was made by a registered deed, in which it was described as Harsana. The premises consisted of a piece of land with structures thereon within the Municipal area of Chittagong town.

Held, that the lease was a yearly lease and a fifteen day's notice was insufficient. The parties had reserved an annual rent with a provision for forfeiture, fixing the 30th of Chaitra, every year, as the fatal date of default. Although the rent was payable monthly, this did not show that a monthly tenancy was intended; the rent was fixed at an annual sum in spite of the fact that it was made payable monthly. The default of monthly installment had no adverse consequence until the end of the year, and this fact was of importance, as it showed that the tenant was not to be disturbed, even though he had failed to pay the rent, until the end of the year.

Nirmal Chandra Nandi for Appellants.

K. M. Hasan for Respondents.

Syed Modaris Ali for Deputy Registrar for Minor Respondents.

‑The predecessor of the defendants took lease of the premises in suit in 1819 from the predecessor of the plaintiff (he is dead and his heirs have been substituted) at annual rent of Rs. 60 payable monthly at the rate of Rs. 5, subject to the condition that the lessee would be liable to be evicted if he did not pay the rent within the 30th of Chaitra every year. The lease was made by a registered deed, in which it was described as Harsana. The premises consist of a piece of land with structures thereon within the Municipal area of Chittagong town. The purpose of the lease was not stated in the deed ; but admittedly the premises are situated in a trading quarter of the town and are used as a shop. The defendants fell into arrears, and the plaintiff' instituted this suit for rent and eviction after service of a fifteen days' notice to quit. Ejectment was claimed on two grounds (i) forfeiture for non‑payment of rent ; (ii) termina tion of the tenancy by the notice served.

The defendants have been relieved by the learned Munsif against forfeiture on the first ground under section 114 of the Transfer of Property Act. The only question now is whether the defendants can be ejected on the second ground. Their case is that they are entitled to six months' notice. The controversy, therefore boils down to the single issue as to whether it is a lease from month to month, or from year to year. The learned Munsif held that it is a yearly lease. The learned Subordinate judge has taken the contrary view. He says

"As this tenancy in respect of the disputed property is for a shop in the house in question, which is within the Chittagong town Municipality his tenancy in respect of the disputed property will be a monthly tenancy and not a yearly tenancy.

He has rested this decision on Durgi Nikarini v. Goberdhan Base (20 C L J 448), Gobinda Chandra Sha and another v. Dwarka Nath Patita (20 C L J 455), and Sarat Chandra Datta v. Jadav Chandra Goswami (21 C W N 206). In none of these cases it has been held that there cannot be any yearly lease for the purpose of a shop; and I must say that it is not at all correct to say that there cannot be a yearly lease for the purpose of a shop. Whether a lease is monthly or yearly, depends, primarily upon the contract by which it was made. It is only in the absence of any contract or local law or usage that the question of its purpose arises, and the rule is that a lease for any purpose, other than agriculture or manufacture, must be deemed to be a lease from month to month. No doubt section 106 of the Transfer of Property Act draws a line of division between leases‑ for agricultural or manufacturing purposes on one side and the rest on the other ; but it does not interfere with the freedom of contract ; it makes provision for a case where there is, neither any contract nor local law nor usage to determine whether the lease is from month to month or from year to year. Whether the lease will be monthly or yearly, is a concern of the lessor and lessee, and, if they agree to make a yearly lease for any purpose, the law does not prevent them.

In the present case the lessor and lessee clearly stated that they made a Harsana lease, i.e., yearly lease [See Chandi Charan Nath v. Samla Bibi (22 C W N 179)]. It is also not disputed that "Harsana" means yearly, and the lease must be held to be so. The fact that the lease was taken for a shop is, immaterial.

Another question of importance, which has been argued at length, is whether the reservation of an annual rent does or does not afford any indication that the intention was to create a yearly lease. It must, of course, be conceded that, the reservation of an annual rent is not by itself sufficient to, prove in every case that the lease is from year to year. That a lease reserving an annual rent is not necessarily a yearly, lease, is made evident by section 107 of the Transfer of Property Act, which treats them as being distinct. A mere reservation of an annual rent would not make a lease a lease from year to year unless the deed is registered (See Gobinda Chandra Saha's case and section 107 of the Transfer of Property Act) or where a contrary intention is deducible from the contract between the parties. In Morton v. Woods ((1869) 4 Q B 293) the lease was for a term of ten years at a yearly rent ; but it provided that, notwithstanding anything therein contained and without any notice or demand or possession, it would be lawful for the lessor to determine the term of the lease and to eject the lessee. It was held that the lessee was a tenant at‑will. In Ramdhan Gope v, C. V. Scot (A I R 1925 Pat. 256) an annual rent was reserved ; but the lease contained this clause : "So long as I shall remain in possession of the said land with the consent of the said landlord on payment of fixed annual rent, I shall continue to pay the same." It was held that the lessee was a tenant‑at‑will, for "in the present case, the express words limiting the duration to the will of the lessor cannot be ignored." This, however, does not mean that the fact of reservation of an annual rent has no importance on the question as to whether the lease is from year to year or from month to month. In Durgi Nikarini's case Mookerjee, J. observed

''It may possibly be accepted as a proposition generally true that, as indicated in Wilkinson v. Hall ((1837) 3 Bing. N C 508) the mode in which rent is expressed to be reserved affords a presumption, that the tenancy is of a character corresponding thereto. The rule, however, is not of a universal application. . .. ."

This, in my judgment, is a correct statement of the posi tion. In the present case an annual rent has been reserved with a provision for forfeiture, fixing the 30th of Chaitra, every year, as the fatal date of default. True the rent is payable monthly; but this does not show that a monthly tenancy was intended, the rent was fixed at an annual sum inspite of the fact that it was made payable monthly. The default of monthly instalment has no adverse consequence until the end of the year, and this fact is of importance, for, it goes to show that the tenant is not to be disturbed, even though he has failed to pay the rent, until the end of the year.

The appeal is allowed. The judgment and decree of the lower appellate Court are set aside and those of the trial Court are restored. Considering the circumstances, I direct that the parties shall bear their own costs in this

Leave under clause 15 of the Letters Patent is asked for but refused.

A. H. Appeal allowed.

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