1

Dr.RAM MANOHAR LOHIYA

NATIONAL LAW UNIVERSITY, LUCKNOW

Subject – PROPERTY LAW- II

SYNOPSIS & FINAL DRAFT

“DOCTRINE OF HOLDING OVER”

SUBMITTED BY-
Shubham Nider
6th Semester
Roll No-135, Section-B

UNDER THE GUIDANCE OF

MS. KIRTI SINGH
Assistant Professor (Law)
Dr. RMLNLU, LUCKNOW
2

ACKNOWLEDGEMENT

This project venture has been made possible due to the generous co-operation of various persons.

I, SHUBHAM NIDER student of B.A L.LLB (Hons.), VIth Semester would like to express my

sincere thanks and deep gratitude to MS. KIRTI SINGH (Assistant Professor), without whose

thorough and insightful guidance this project work would not have been a success.
 3

TABLE OF CONTENTS……………………………………………………. PAGE NO.

SYNOPSIS

 INTRODUCTION..............................................................................................04

 OBJECTIVE………...........................................................................................05

 HYPOTHESIS....................................................................................................05

 TENTATIVE CHAPTERISATION...................................................................05

 BIBLIOGRAPHY..............................................................................................06

FINAL DRAFT

 INTRODUCTION………………………………………………………………. 6
 HOLDING OVER………………………………………………………………. 6
 RENEWAL & EXTENSION…………………………………………………… 7 & 8
 DIFFERENCE BETWEEN RENWAL AND EXTENSION…………………… 9
 DIFFERENCE BETWEEN TENANCY OF HOLDING OVER & TENANCY-AT-
SUFFERANCE………………………………………………………………… 10
 CONCLUSION………………………………………………………………… 11
 BIBLIOGRAPHY ……………………………………………………………….12
4

SYNOPSIS

INTRODUCTION:-

Section 116 of the transfer of property act, 1882 is about effect of holding over which says that:
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 otherwise assents to his 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.
Illustrations
(a) A lets a house to B for five years. B underlets the house to C at a monthly rent of Rs. 100.
The five years expire, but C continues in possession of the house and pays the rent to A. C’s
lease is renewed from month to month.
(b) A lets a farm to B for the life of C. C dies, but B continues in possession with A’s assent. B’s
lease is renewed from year to year.

This section enunciates the effect when the lessee or an under-lessee of a property stays in the
possession after the determination of lease (also known as the termination of lease as mentioned
under section 111 of the Transfer of Property Act,1872 ) and the lessor or his legal representative
assent to the continuation in possession or accept rent thereof then the lease will be renewed as
per the provision given under section 106 of the Transfer of Property Act ,1872 in the absence of
any agreement to the contrary.

It is to be pointed here that the whole effect of this section is dependable on the assent of the
lessor or his legal representative by the way of giving assent or accepting rent both ad idem. This
clearly implies that there must be meeting of minds between the lessor or his legal representative
and the Lessee or the under-lessee concerning the continuation of possession after the
determination of lease. Hence, a mere acceptance of rent would not act as a sufficient ground to
attract this section.
5

OBJECTIVE :-

The main objective of the project is to discuss the laws that are related to the effect of holding
the property when time in the contract for lease is over and tenant is still in the possession of the
property, it’s application and importance and the laws related to it and also the precedents set by
the courts. Project also focuses on the difference between the tenancy by holding over and tenant
at sufferance.

HYPOTHESIS:-

Under the provisions of Transfer of Property Act, 1882 ('TPA'), one of the grounds for
termination of a lease is by efflux of time. To ensure clarity over their respective rights and
entitlements, both lessors and lessees must be aware of the consequences of an expiry of lease
due to efflux of time - especially of the different implications of choosing between an 'extension',
'renewal' or 'holding over' of a lease. These legal concepts apply to situations where a lessee is
desirous of continuing to lawfully occupy the leased premises, even after expiry of the original
lease period.

TENTATIVE CHAPTERISATION:-

 INTRODUCTION
 HOLDING OVER
 RENEWAL & EXTENSION
 DIFFERENCE BETWEEN RENWAL AND EXTENSION
 DIFFERENCE BETWEEN TENANCY OF HOLDING OVER & TENANCY-AT-
SUFFERANCE
 CONCLUSION
 BIBLIOGRAPHY
6

FINAL DRAFT

INTRODUCTION

“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 otherwise assents to his 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 .”1
This section enunciates the effect when the lessee or an under-lessee of a property stays
in the possession after the determination of lease (also known as the termination of lease as
mentioned under section 111 of the Transfer of Property Act,1872 ) and the lessor or his legal
representative assent to the continuation in possession or accept rent thereof then the lease will
be renewed as per the provision given under section 106 of the Transfer of Property Act ,1882 in
the absence of any agreement to the contrary.
It is to be pointed here that the whole effect of this section is dependable on the assent of
the lessor or his legal representative by the way of giving assent or accepting rent both ad idem.
This clearly implies that there must be meeting of minds between the lessor or his legal
representative and the Lessee or the under-lessee concerning the continuation of possession after
the determination of lease. Hence, a mere acceptance of rent would not act as a sufficient ground
to attract this section.

Holding Over

Where parties rely on 'renewal' or 'extension' clauses for lease of the premises beyond the initial
lease term, their rights and obligations arise from the written Lease Deed executed by them.
However, there are also cases where in the absence of a written contract, a fresh lease is created
by virtue of an implied agreement between the parties. It is common knowledge that on expiry of
a lease, it is the duty of the lessee to hand-over vacant and peaceful possession of the property to
the lessor.2 The expression 'holding over' applies to cases where a lessee retains possession even

1
SECTION 116 TRANSFER OF PROPERTY ACT 1882
2
http://www.mondaq.com/india/x/370288/landlord+tenant+leases/Consequences+Of+Expiry+Of+Lease
7

after expiry of the initial lease term. However, the mere act of retaining possession of the
property would not necessarily or automatically create a new tenancy. Rather, there must be a
bilateral act by the parties for creation of a new lease. The lessee's conduct of retaining
possession of the leased premises and continuing full and timely payment of rent even after
expiry of the original lease term would ordinarily indicate his desire to remain as a lessee. In
most cases, the lessor's consent was indicated by conduct such as voluntarily accepting rent from
the lessee. Upon receiving the lessor's consent, a fresh tenancy would stand created by virtue of
an implied agreement between the parties, unless there is an agreement to the contrary. Such
holding over would amount to a fresh tenancy even if the Parties decide to continue the tenancy
on the same terms and conditions of their earlier lease.

Here a distinction must be drawn between lawful and unlawful possession of the premises by
lessees after the lease term has expired. Whilst a lessee 'holding over' is a lawful occupant as he
continues to retain possession with consent from the lessor, a lessee who continues to retain
possession without consent (whether implied or explicit) from the lessor does so unlawfully and
is a 'tenant at sufferance'. As no lawful tenancy stands created in favour of a tenant at sufferance,
an aggrieved lessor is entitled to file a suit for eviction forthwith. However, to terminate an
ongoing lawful tenancy, the lessor would first be required to give the lessee prior notice for
termination and the relief of eviction may be sought when the lessee fails to vacate the premises
beyond the notice period.

Renewal

When a Lease Deed for a fixed term contains a clause for renewal of the lease for a further fixed
term, Parties erroneously assume that by having incorporated a renewal clause, the original
Lease Deed would automatically stand renewed for such additional period upon expiry of the
initial lease term. However, to give effect to a renewal clause under the original lease, a Lease
Deed has to be executed afresh by the Parties, evidencing such renewal. Further, the Lease Deed
for the renewed term should be duly stamped and registered. The nature of renewal of lease was
highlighted in Delhi Development Authority v Durga Chand Kaushish (19733),where the Hon'ble

3
1974 SCR (1) 535
8

Supreme Court of India observed that a 'renewal' of lease is called so because it postulates the
existence of a prior lease which generally contains a clause for renewal. In all other respects, a
renewal is essentially a 'fresh' grant of lease by the lessor.

An interesting issue on whether a renewed lease would automatically entitle a lessee to obtain
further renewals came up in State of Uttar Pradesh & Others v Lalji Tandon (2003)4. In this
case, the Lease Deed under dispute was for a period of 50 years and contained a clause for
renewal for a further lease term of 50 years. The State Government contended that the lease was
renewable only once for a further term of 50 years. That is, upon expiry of the renewed term, the
right of renewal under the Lease Deed stood exhausted and the lessee would not be entitled to
continue seeking further renewals. The apex court held that where an original Lease Deed
contains a clause for renewal, and the Parties do renew the lease in accordance with such clause,
whether or not the lessee would be entitled for further successive renewals shall depend on the
facts and circumstances unique to each case. In such disputes, the courts would ascertain the
intention of the parties and assess wording of relevant clauses of the Lease Deed.

Where the original Lease Deed contains a clause for renewal but the lessor fails to execute and/or
get registered the 'fresh' grant of lease for the further lease term despite requests of the lessee, the
aggrieved lessee may file a suit for specific performance of the renewal clause, provided the
lessee is not guilty of having violated or breached any material terms of the original Lease Deed.
To successfully secure a renewal of lease, lessees should exercise their option of renewal within
the time period stipulated under the original Lease Deed.

Extension

Extension clauses - a distinct category of clauses that relate to consequences of expiry of a lease
- are commonly incorporated in Lease Deeds. An extension clause entitles a lessee to opt for an
additional lease term upon expiry of the initial lease term, on the same terms and conditions of
the original Lease Deed, and is generally subject to increases in rent and security deposit.
Ordinarily a lessor is not in a position to challenge or unreasonably deny an extension of lease
which is validly sought by a lessee - the lessor is treated as having agreed to lease the property

4
(2004) 1 SCC 1
9

for the total duration contemplated under the original Lease Deed. Hence, the lessee's exercise of
its option of extension of lease would not hinge on obtaining the lessor's assent.

DIFFERENCE BETWEEN RENEWAL AND EXTENSION

Unlike a Lease Deed containing a renewal clause, a Lease Deed containing an extension clause
would not terminate upon expiry of the initial lease term, in case the option to extend the lease
has been duly exercised as per the terms and conditions of the original Lease Deed. In Provash
Chandra Dulai v. Bishwanath Banerjee(1989)5, Hon'ble Supreme Court of India held that a
Lease Deed is not necessarily required to be executed afresh in order to give effect to an
extension of the original lease. Rather, the original Lease Deed continues in force during the
extended lease term, since an extension of lease is only a prolongation of the original lease.
In State of Uttar Pradesh & Others v Lalji Tandon (2003)6, the apex court similarly held that the
principal lease would continue to be in force for the additional lease period agreed by the Parties.

Another vital difference between an 'extension' vis-a-vis 'renewal' of lease pertains to the stamp
duty implications. In Punjab National Bank v. Vijender Kumar & Another (2013), the Hon'ble
Delhi High Court held that parties cannot rely on an extension clause to avoid payment of
applicable stamp duty for the total lease term contemplated under the original Lease Deed,
simply by paying stamp duty calculated on the basis of the initial lease term. To give effect to an
extension clause, stamp duty is required to be paid in the first instance and calculated on the
basis of the total lease term contemplated in the original Lease Deed. In contrast, as a 'renewal' of
lease is a fresh lease in itself, the initial lease period cannot be clubbed with the renewed lease
period for the purpose of levying stamp duty. As a 'fresh' Lease Deed for a renewed term is
treated independent of the original Lease Deed, the two agreements would be chargeable to
stamp duty independently as well.

5
AIR 1989 SC 1834
6
(2004) 1 SCC 1
 10

How is tenancy by holding over determined?

The essential ingredients in determining the tenancy by holding over are as follows:
· The possession must be continued with the assent of the lessor or his legal representatives.
· The consent must be definite in pursuance to the continuation of tenancy.
· Consent or the assent must be consensus ad idem leaving no room for any loop holes and
inadequate inferences.
· Acceptance of the rent must always be in the clear recognition of the acceptance of tenancy.
Tenancy-at-sufferance
In the above scenario the possession was continued since the determination of lease with
the assent of the lessor or his legal representatives. Whereas, when a lessee or an under-lesssee
happens to continue in the possession of the property since the determination of lease without the
assent of the lessor or his legal representatives then this is termed as the tenancy at sufferance.
The tenant at sufferance does not enjoy any legal title and can be subjected to ejectment without
serving any notice.

Tenancy at will
Tenancy at will is a tenancy which is terminable at the will of either the landlord or his
tenant. A tenancy at will can arise anytime by the implication of law with the consent of owner
to continue in possession or, by an express agreement to pay compensation on day to day basis
where the period of tenancy is not defined. One of the important differences between tenancy at
will and tenancy by holding over is the power of alienation. Tenancy by holding over entitles the
tenant to alienate tenancy however the same is not true in case of tenancy at will.

Tenancy at will is terminable /determined in the following manner:

 · Terminable by either of the parties (Landlord or Tenant / lessee)
 · Death or the landlord or the tenant/lessee.
 · When a tenant puts the possession on sub lease /under lease.
 · When the Tenant/ Lessee acts inconsistent with the will to continue.
 · Alienation of tenancy.
11

Difference between tenancy by Holding over and tenancy-at-sufferance:-

Retention of possession:
Tenancy by holding over: With the consent of landlord or his legal representative
Tenancy- at-sufferance: No consent

Interest in the leasehold

Tenancy by holding over – Has some interest
Tenancy -at-sufferance – No interest

Power to alienate tenancy

Tenancy by holding over – Transferable and heritable
Tenancy-at-sufferance – Neither transferable nor heritable

Notice for ejectment

Tenancy by holding over – Notice as with respect to provision U/S 106 of the act
Tenancy –at- sufferance – No notice required

CONCLUSION

Unfortunately, courts in India are weighed down by frivolous litigation in matters of tenancy. A
simple case of arrears of rent and ejectment recently came up before the Hon'ble Supreme Court
of India in December, 2014, in Satendra Singh v Vinod Kumar Bhalotia7, where the apex court
highlighted how the process of law was sought to be abused by the lessee by repulsing the
lessor's attempts to recover possession of the premises. The lessee had continued to occupy the
suit premises even after 32 years had elapsed since the expiry of the original lease agreement
which had been executed for a lease term of only 11 months. In the words of the judiciary,
'nothing short of immediate and emergent measures are required to solve this crisis.'

7
(2014) 16 SCC 674
12

BIBLIOGRAPHY;-

SYNOPSIS & FINAL DRAFT

1. http://www.mondaq.com/india/x/370288/landlord+tenant+leases/Consequences+Of+
Expiry+Of+Lease
2. http://thelegalarticlexpress.blogspot.in/2016/06/tenancy-by-holding-over-as-
under.html
3. http://www.legalblog.in/2010/11/tenant-by-holding-over-and-sufferance.html
4. www.scconline.com