106. Duration of certain leases in absence of written contract or local usage. (Substituted by the Transfer of Property (Amendment) Act, 2002 (3 of 2003) dated 31-12-2002.)—
1. 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 month’s notice; 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.
2. Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
3. A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub- section.
4. Every notice under sub-section (1) 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, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.
DURATION OF CERTAIN LEASES
Duration is an essential element of every lease. Section 106, deals with the duration of the certain leases mentioned therein as well as provides for termination of the leases.
In the absence of a Contract, local law or usage.—
Generally, the term of lease is provided in the lease deed itself by mutual agreement of the parties.
In the absence of any mutually agreed term in the lease, local law or custom is to be seen to determine the term of the lease.
When the lease deed or contract for lease, local law or custom is silent on the term of a lease, it is to be determined on the basis of its purpose as per section 106. The duration (period) of the lease is determined as per Section 106 only where there is no contract (agreement) expressly laid down in the lease and there is no local law or usage to provide for the same. For ascertaining the term of a lease, this section has classified leases into two categories.
1. Leases from year to year, when the lease is made for agricultural or manufacturing purposes.
2. Leases from month to month, when the lease is made for any other purpose.
In the absence of a contract or local law or usage to the contrary, the presumption of term of any lease is based on the purpose for which the lease has been effected.
Two broad purposes are given in Section 106;
(a) leases for agricultural or manufacturing purposes and
(b) leases for other purposes.
Agricultural purposes.—
Where a lease is made for agricultural or manufacturing purposes, it is deemed to be a lease from year to year.
However, although this section refers to agricultural leases but under Section 117 of this Act, such leases have been expressly exempted from the provisions of this section.
The result is that presumption of yearly tenancy under Section 106 cannot be applicable to agricultural leases.
This is so because agricultural tenants hold the land for unlimited period subject to performances of certain obligations relating to the tenure.
Manufacturing purposes.—
Leases made for manufacturing purposes too are deemed to be yearly leases.
The generally accepted meaning of the word ‘manufacture’ is that there is production of a new or a different article.
In order that a process may be treated as ‘manufacturing’ there must be involvement of labour or machinery for producing a commodity. After production, the article must have a different use.
The article being manufactured must be so transformed that it loses its original character.
The onus of proving that the lease is for manufacturing purpose is on the lessee. (Idandas v. Anant Kamchandra Phadke, AIR (1982) SC 127.)
Leases for other purposes.—
Where the purpose is neither agricultural nor manufacturing the leases are for ‘other purposes’.
Therefore, where the leases are made for residential purposes or for running hotel or shops or for any other purpose which could not be included in the category of ‘agricultural or manufacturing purpose’, may come under the category of ‘other purposes’.
Where lease itself and local law or custom are silent, the lease for ‘other purposes’ are presumed to be monthly leases i.e. they are deemed to be month to month leases.
Notice to Terminate Lease.—
This section provides for the requirement of notice by lessor or lessee whosoever wants its termination. For termination of yearly tenancy six months notice and, for monthly tenancy fifteen days notice is necessary.
Notice to quit is, therefore, a necessary preclude to legal determination of tenancy.
Formerly notice was required to have the effect of terminating the lease at the expiry of six months with the end of a year or at the expiry of fifteen days with the end of a month.
But now Section 106 has been amended by the Transfer of Property (Amdt.) Act, 2002 (Act 3 of 2003).
In the amended version of this section words, “expiring with the end of a year of tenancy” and “expiring with the end of a month of tenancy” have been omitted. The result is that now the tenancies may be terminated at any time after giving the notice.
The new section now expressly provides that such notice shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified in this section, where suit or proceeding is filed after expiry of the period as mentioned in (1).
It is also to be noted that the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
Notice to be served by lessor or lessee for termination of lease must be in writing, signed by or on behalf of the person giving it. Such notice must be definite and unconditional and must indicate a clear intention of termination of tenancy after expiry of the notice.
The terms of notice must not be conditional and vague.
SERVICE OF NOTICE.—
The notice to terminate a tenancy must be duly served on the party intended to be bound by it. Notice may be served by any of the modes given in this section.
This section provides that a notice may be sent by post to the party who is intended to be bound by it or, may be delivered to him personally. Such notice may also be given to his family members or servants and, ultimately, if nothing is possible, the notice may be affixed to a conspicuous part of the leased property.
In Kulkarni Patterns Pvt. Ltd. v. Vasant Baburao Ashtekar (A.I.R. (1992) S.C. 1097.) it was held by the Supreme Court that in case of a company, notice, as required by Section 106 of the Act, could be sent by registered post in the name of the company.
It is to be noted that any objection to the validity of notice to terminate tenancy under Section 106 of T.P. Act should be raised specifically and at its earliest.
In Parwati Bai v. Radhika (A.I.R. (2003) SC 5995.) the receipt by the defendant was admitted in the written statement but he has not raised any specific objection as to the validity of the notice. The Supreme Court held that any objection to the validity of the quit-notice should be “raised specifically and at earliest, otherwise the objection would be deemed to be waived.”
Where a TENANCY IS JOINT, a notice to any one of the tenants is sufficient and good for his eviction.
In Abdul Sattar v. Rameshwar (A.I.R. (1992) S.C. 2065.) the Supreme Court has held that where out of several tenants certain tenant receives notice in capacity of ‘general power of attorney holder’ on behalf of all tenants, there is service of notice on all the tenants.
Where the notice of eviction is sent by registered post with acknowledgement due and the acknowledgment is received back with recipient’s signature, there is a presumption that the addressee has received the letter in due course of business and the notice is deemed to have been served. (M/s. Green View Radio Service v. Laxmibai Ramji, A.I.R. (1990) S.C. 2156.)
Publication of a notice in newspapers or telephonic notice is no notice under Section 106 of the Act.
Contract to the contrary.—
The requirement of the notice under this section is subject to any contract to the contrary. Where there is any express contract between the parties as to giving notice to quit, the parties are governed by that contract and this section does not apply.
There may be a covenant in the lease for a term of one year that tenant must vacate the premises as soon as the lessor desires, in which case no notice would be necessary as required under Section 106.
In other words, where the tenancy is to be terminated after expiry of the term fixed by the parties themselves, the tenant is ‘not entitled’ to any statutory notice to quit.
If there is a contract giving option to the landlord to terminate the lease under specified conditions, the heirs of the landlord can determine (terminate) the lease according to the contract without giving notice.
Similarly, no notice is necessary when the lease provides for eviction in default of payment of rent for two consecutive months.
Where the lease-deed itself provides a fixed term tenancy, notice to quit cannot be given before expiry of that term.
LOCAL LAW OR CUSTOM TO THE CONTRARY.—
There are certain local laws and customs which govern tenancies as to notice to quit. Under Section 106, the presumption as to duration of leases is subject to also the local law or custom. Notice under this section is, therefore, also in the absence of any contrary local law, custom or usage.
For example, in West-Bengal leases locally named as ‘Chakaram’ or ‘Ghatwal’ may be terminated only according to local custom prevailing there, not under the provisions of this section.
Similarly, in Bombay there is local usage that month to month tenancy of houses can be terminated by giving one months notice instead of fifteen days notice as required under this section.
Rent Control Legislations.—
In view of acute housing problem, especially in the urban areas, most of the States have enacted Rent Control and Eviction Acts in order to protect the tenants from unnecessary harassment of their landlords. These Acts may be regarded as local laws.
Section 106 of the Transfer of Property Act is made applicable in the absence of any local law to the contrary.
Therefore, in cases of conflict between the provisions of Rent Control Acts and Section 106 the Rent Control legislation is to be made applicable not Section 106.
In Dhanapal Chettiar v. Vesadai Ammal (AIR (1979) S.C.) the Supreme Court has held that in order to get any decree or order for eviction against a tenant under the State Rent Control Acts it is not necessary to give notice under Section 106.
Where the tenant is bound to vacate the house under the Rent Control Act, it is not obligatory to originate the proceedings on determination of lease by notice under Section 106.
The Court further observed that the object of Section 106 is merely to terminate the contract whereas the object of the Rent Acts is to safeguard the interest of tenants by not allowing the tenancy to be terminated.