Determination of a Lease, Forfeiture and Relief

Section 112: waiver of forfeiture

A forfeiture under clause (g) is waived by:

• acceptance of rent which has become due since the forfeiture; or
• distress for such rent; or
• any other act on the part of the lessor showing an intention to treat the lease as subsisting.

Two provisos. The lessor must be aware that the forfeiture has been incurred, since a man cannot waive a right he does not know he has. And where rent is accepted after the institution of a suit to eject on the ground of forfeiture, that acceptance is not a waiver, so a landlord who has already sued does not lose his case by taking rent while it is pending.

Section 113: waiver of a notice to quit

A notice under clause (h) is waived, with the express or implied consent of the person to whom it is given, by any act on the part of the person giving it showing an intention to treat the lease as subsisting.

The Act's illustrations:

(a) A gives B notice to quit. The notice expires. B tenders and A accepts rent which has become due since the expiration of the notice. The notice is waived.

(b) A gives B notice to quit. The notice expires and B remains in possession. A gives B, as lessee, a second notice to quit. The first notice is waived.

Illustration (b) is the one that catches people out: serving a fresh notice treats the tenancy as still alive, and so throws away the first.

Note the difference from section 112. Waiver of a notice to quit requires the consent, express or implied, of the person to whom the notice was given; waiver of forfeiture does not.

Section 114: relief against forfeiture for non-payment of rent

Where a lease has determined by forfeiture for non-payment of rent and the lessor sues to eject, then if at the hearing the lessee pays or tenders the rent in arrear together with interest and the lessor's full costs of the suit, or gives security the Court thinks sufficient for payment within fifteen days, the Court may, in lieu of a decree for ejectment, pass an order relieving the lessee against the forfeiture; and thereupon the lessee holds the property as if the forfeiture had not occurred.

The principle is that a forfeiture for non-payment of rent is security for the rent, not a windfall. If the landlord gets his money, his interest and his costs, he has everything the covenant was there to protect, and the tenant should not lose his lease as well.

Note the discretion: the Court may relieve. And note the two routes: payment or tender at the hearing, or security for payment within fifteen days.

Section 114A: relief against forfeiture in other cases

Where a lease has determined by forfeiture for breach of an express condition providing for re-entry, no suit for ejectment lies unless and until the lessor has served on the lessee a notice in writing:

(a) specifying the particular breach complained of; and (b) if the breach is capable of remedy, requiring the lessee to remedy it;

and the lessee fails, within a reasonable time from service, to remedy the breach, if it is capable of remedy.

The section does not apply to an express condition against assigning, under-letting, parting with possession, or disposing of the property, nor to an express condition relating to forfeiture for non-payment of rent, which is governed by section 114.

So a tenant in breach of an ordinary covenant gets a warning and a chance to put it right. A tenant who has assigned or sublet in breach gets neither, because that breach cannot be undone, and the landlord's objection is to the identity of the occupier.

Section 115: the effect on under-leases

Surrender, express or implied, of a lease does not prejudice an under-lease previously granted by the lessee on terms and conditions substantially the same, except as to the amount of rent, as the original lease. But unless the surrender is made for the purpose of obtaining a new lease, the rent payable by, and the contracts binding on, the under-lessee become payable to and enforceable by the lessor.

The rule protects the sub-tenant against a deal between his landlord and the head landlord. Two people cannot, by agreement between themselves, destroy the interest of a third.

Forfeiture, by contrast, annuls all such under-leases, except where the forfeiture has been procured by the lessor in fraud of the under-lessees, or where relief against the forfeiture is granted under section 114.

The difference is principled. Surrender is voluntary, so the parties should not be able to prejudice the sub-tenant by it. Forfeiture follows the lessee's own default, and an under-lease carved out of a lease cannot survive the destruction of the lease it came from, unless the lessor engineered it dishonestly or the lease is restored by relief.

Section 116: holding over

If a lessee or under-lessee remains in possession after the determination of the lease, and the lessor or his legal representative accepts rent from him or otherwise assents to his continuing in possession, the lease is, absent 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.

Two elements are needed and both must be stated: the tenant's continued possession, and the landlord's assent, shown by accepting rent or otherwise. Possession alone makes a tenant at sufferance, not a tenant holding over.

The Act's illustrations:

(a) A lets a house to B for five years. B underlets to C at Rs. 100 a month. The five years expire, but C continues in possession 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.

Illustration (b) shows the section 106 purpose test doing the work: a farm is an agricultural purpose, so the renewed tenancy is yearly.

Section 117: agricultural leases

None of the provisions of Chapter V apply to leases for agricultural purposes, except so far as the State Government may, by notification in the Official Gazette, declare all or any of them applicable, together with or subject to the local law in force. Such a notification does not take effect until the expiry of six months from its publication.

The exemption exists because agricultural tenancies are the subject of extensive State legislation, tenancy and land-reform statutes that would collide with this Chapter. So the field is left to the State.

A worked example

Gauri lets a shop at Chandrapur to Hemal for three years by a registered lease containing a condition that on breach of any covenant she may re-enter.

Hemal stops paying rent. Gauri gives written notice of her intention to determine the lease. The lease determines by forfeiture under clause (g)(1), the written notice being essential.

She then accepts a month's rent that fell due after the forfeiture, knowing of it. Under section 112 the forfeiture is waived.

Suppose instead she sues to eject, and accepts rent while the suit is pending. The second proviso to section 112 says that is not a waiver.

At the hearing Hemal offers the arrears with interest and Gauri's full costs. Under section 114 the Court may relieve him against the forfeiture, and he then holds as if it had never occurred.

Change the breach. Suppose Hemal had instead breached a covenant to keep the shop painted. Section 114A applies: Gauri cannot sue to eject unless she has first served written notice specifying the breach and, the breach being capable of remedy, requiring him to remedy it, and he has failed to do so within a reasonable time.

Change it again. Suppose he had sublet in breach of an express covenant against sub-letting. Section 114A does not apply, so no notice specifying the breach is required.

The sub-tenant. Suppose Hemal had lawfully sublet the rear to Ila on substantially the same terms, and then surrendered his lease to Gauri. Under section 115 Ila's under-lease is not prejudiced, and, the surrender not being for the purpose of obtaining a new lease, her rent becomes payable to Gauri. But if Hemal's lease had been forfeited instead, Ila's under-lease would be annulled, unless Gauri procured the forfeiture in fraud of her, or relief were granted under section 114.

The term expires and Hemal stays on, and Gauri accepts rent. Under section 116 the lease is renewed from month to month, the purpose being neither agricultural nor manufacturing.

And if the property were farmland? Section 117 would exclude the whole Chapter unless the State Government had notified otherwise, the notification taking effect only six months after publication.

What it does NOT mean

Forfeiture is not automatic. The lessor must give written notice of his intention to determine the lease.

Accepting rent is not always a waiver. The lessor must be aware of the forfeiture, and acceptance after suit is not a waiver.

Waiver of a notice to quit needs the other side's consent, express or implied; waiver of forfeiture does not.

Relief under section 114 is discretionary, and confined to forfeiture for non-payment of rent.

Section 114A does not cover every breach. It excludes conditions against assigning, under-letting, parting with possession or disposing of the property, and conditions about non-payment of rent.

Surrender does not destroy an under-lease; forfeiture does, subject to fraud and to relief.

Holding over needs assent, not merely continued possession.

Chapter V does not apply to agricultural leases unless the State Government notifies, and then only after six months.

Distinctions

Quick revision

• s.111, eight modes: efflux of time; happening of a conditional event; termination of the lessor's interest; merger; express surrender; implied surrender; forfeiture; expiry of a notice to quit.
• Forfeiture arises on breach of an express re-entry condition, renunciation of the lessee's character, or adjudication as insolvent where the lease so provides, and requires written notice of intention to determine.
• s.112: forfeiture waived by accepting rent due since it, by distress, or by conduct treating the lease as subsisting; the lessor must know; acceptance after suit is not a waiver.
• s.113: a notice to quit is waived by conduct treating the lease as subsisting, with the consent of the person notified. A second notice waives the first.
• s.114: relief against forfeiture for non-payment of rent, on paying arrears, interest and full costs at the hearing, or giving security for payment within fifteen days. Discretionary.
• s.114A: no ejectment suit for breach of an express condition until written notice specifying the breach and, if remediable, requiring remedy, and failure to remedy in a reasonable time. Not for assigning, under-letting, parting with possession or disposing, nor for non-payment of rent.
• s.115: surrender does not prejudice an under-lease on substantially the same terms, and its rent becomes payable to the lessor unless the surrender was to obtain a new lease; forfeiture annuls under-leases, except fraud or relief under s.114.
• s.116: holding over with the lessor's assent renews the lease year to year or month to month per the section 106 purpose test.
• s.117: Chapter V does not apply to agricultural leases unless the State Government notifies, effective six months after publication.

Test yourself

1. Name the eight modes by which a lease determines. Efflux of the time limited; happening of an event on which the time was conditionally limited; termination of the lessor's interest or of his power to dispose; merger of the lessee's and lessor's interests in one person in the same right; express surrender; implied surrender; forfeiture; and expiry of a notice to determine or to quit.

2. Is a lease forfeited the moment the tenant breaches? No. The breach gives the lessor a right, and the lease determines only when the lessor or his transferee gives the lessee notice in writing of his intention to determine it.

3. How is a forfeiture waived, and what are the two provisos? By acceptance of rent which has become due since the forfeiture, by distress for such rent, or by any other act showing an intention to treat the lease as subsisting. The lessor must be aware that the forfeiture has been incurred; and acceptance of rent after a suit to eject has been instituted is not a waiver.

4. A landlord serves a second notice to quit after the first expired. What is the effect? The first notice is waived. Illustration (b) to section 113 says so, because giving a fresh notice to the occupier as lessee treats the tenancy as subsisting.

5. What must a tenant do to obtain relief under section 114? At the hearing of the ejectment suit, pay or tender the rent in arrear with interest and the lessor's full costs of the suit, or give such security as the Court thinks sufficient for making that payment within fifteen days.

6. Which breaches are outside section 114A? Breach of an express condition against assigning, under-letting, parting with the possession of, or disposing of the property, and any express condition relating to forfeiture for non-payment of rent.

7. A head lease is surrendered. What happens to a lawful under-lease? It is not prejudiced, provided it was granted on terms and conditions substantially the same as the original lease except as to rent; and unless the surrender was made to obtain a new lease, the under-lessee's rent becomes payable to the lessor.

8. What two things must be shown for holding over under section 116? That the lessee or under-lessee remained in possession after the lease determined, and that the lessor or his legal representative accepted rent or otherwise assented to his continuing in possession.