The bank believed its lease ran until 2061. Because it paid rent directly to the owner, it was only a monthly tenant
Justice Arun R. Pednekar upheld the eviction of State Bank of India from its Vile Parle staff quarters, holding that paying rent to the landowner for decades worked an implied surrender up an unregistered chain of sub-leases.
The State Bank of India built staff quarters at Irla in Vile Parle on land it believed it held until 2061, the residue of a ninety-seven-year lease granted in 1964. The Bombay High Court has held that it never held anything of the kind. Every transfer in the chain that brought that lease to the Bank was unregistered, and because the Bank paid its rent straight to the landowner for decades, it became a monthly tenant whose tenancy could be ended by notice. Justice Arun R. Pednekar dismissed the Bank's revision and left the eviction decree standing.
A lease, and a chain of unregistered transfers
The land is a plot of about 3,502 square yards at Irla village, Vile Parle. Its owner, Francis Manuel Gonsalves, leased it by a registered lease deed of 24 January 1964 to Ishak, Suleman and Ahmed Dadi for ninety-seven years — a term that runs until 23 January 2061.
The lessees agreed on 27 May 1966 to sub-lease to M/s Dadi Builders. After the building called Dil Phazir was put up and sold, the rest of the land passed through several hands, among them a Mrs Jhamb, and reached M/s Fairdeal Development Corporation. Under an agreement of 22 May 1975 Fairdeal transferred that remaining portion, along with the rest of the 1964 term, to the State Bank of India. The Bank built quarters on it.
The weakness in the chain was registration. Mrs Jhamb held under a registered lease. The transfer from her to Fairdeal was not registered, and neither was the transfer from Fairdeal to the Bank.
The Bank's own conduct is what decided the case. It paid rent directly to Francis Gonsalves, then to his heir Ignatious Gonsalves through the family's solicitors, M/s Markand Gandhi and Co. It never paid Fairdeal, and Fairdeal never claimed any right over the land.
The builder, the notice, and two contradictory decisions below
On 28 June 2005 Ignatious Gonsalves conveyed the property to Amum Builders, a partnership firm. The solicitors then stopped accepting rent from the Bank. Amum demanded the rent on 24 August 2007 and, by a notice of 23 October 2007, terminated the tenancy and called on the Bank to remove its structure and hand over vacant possession. The Bank answered with three replies through its advocate, did not leave, and in 2008 Amum filed a suit for eviction, arrears of rent and mesne profits in the Small Causes Court.
The Bank pleaded that it was an assignee of the 1964 lease for the balance of its term, so Amum's ownership was subject to that lease and the Bank could not be treated as a monthly tenant. It also said the plaint did not describe the property with the boundaries and survey numbers that Order VII Rule 3 of the Code of Civil Procedure requires.
The Small Causes Court gave each side a partial win. On 2 May 2016 it held that unregistered transfers could create no more than monthly sub-leases, so the Bank was not a protected tenant. But it dismissed the suit anyway. Its reasoning was that privity of contract existed between Gonsalves and the Dadis as head lessees, not between the landowner and the Bank. Without the head lessees and their successors before it, the court held, the head lease could not be determined, and until it was, nobody further down the chain could be evicted.
On 26 February 2021 the Appellate Bench of the Small Causes Court reversed that decision. It held that the property had been adequately described and that the tenancy had been validly terminated, and it decreed eviction with arrears and mesne profits. The Bank then filed this civil revision application.
A late attack on ownership
In revision the Bank's principal argument was a new one. Amum, it said, had not bought all the land that Francis Gonsalves owned, the areas in the ownership documents and the conveyance did not match, and the strip the Bank occupies fell outside what Ignatious Gonsalves had conveyed. On that argument Amum was not the Bank's landlord at all.
Justice Pednekar would not allow the argument to be raised at that stage. Throughout its written statement the Bank had claimed a right to stay until the 1964 lease expired, which accepts that Amum owns the land subject to that lease. The Bank had paid rent to Amum after asking for and checking the conveyance deed, and it had never objected to Amum's ownership. Title appeared neither in the pleadings nor in the issues framed at trial nor in the points argued in appeal. The most the Bank had ever raised was the identity of the property, and both courts below had rejected that. The Bank had never denied that it was Amum's tenant.
Implied surrender under Section 111(f)
The real question was the one that had decided the case at trial: could the suit succeed without the head lessees?
The Bank argued that its rights came down through a chain of sub-lessees from the head lessees, so it had no privity of contract with Amum, and that no sub-lease can be ended without first ending the head lease. Amum's answer relied on Section 111 of the Transfer of Property Act, 1882. Where a lessee sub-lets under an unregistered deed and the sub-lessee pays rent directly to the landlord, the head lessee is taken to have surrendered the tenancy, and the sub-lessee becomes the landlord's direct lessee.
The Court accepted Amum's answer. Section 111(f) lists implied surrender as a way in which a lease of immovable property comes to an end. In P.M.C. Kunhiraman Nair v. C.R. Naganatha Iyer the Supreme Court held that an implied surrender can arise where the lessee directs a sub-tenant to pay rent directly to the lessor, and that a landlord's receipt of rent from the person in possession can show that the landlord has accepted that person as tenant. Tarachand v. Sagarbai adds that implied surrender can come about either through a new relationship or through giving up possession, that because it rests on estoppel the parties' intentions count for little, and that physically taking possession is not essential.
Applied to the facts, the Bank had paid rent to Francis Gonsalves and then to his heir for a long period, and never to Fairdeal, and Fairdeal had never objected. That operated as a surrender by the head lessees and every sub-lessee in favour of the original owner, and the Bank became his direct tenant. Mrs Jhamb's rights had ended separately under consent terms filed after the suit began. Because no registered deed transferred the leasehold to the Bank, it held from month to month. That kind of tenancy can be ended by the landlord, and nothing entitled the Bank to the rest of the 1964 term.
Order
The termination of the lease was held valid, the Appellate Bench's eviction decree was left undisturbed, and the revision application was dismissed.
After the judgment was pronounced, counsel for the Bank asked for the interim order to be extended so that the Bank could challenge the ruling, and said the Bank would keep paying the interim compensation fixed by the Appellate Bench. The judgment has been kept in abeyance for twelve weeks on that condition, and the Bank must file the usual undertaking to surrender the premises within two weeks.
Ms Sonal appeared for the Bank with Mr Ankit Tripathi and others. Mr Prasad Dani, Senior Advocate, appeared for Amum Builders, instructed by Neel Gala. The matter was reserved on 16 July 2026 and the judgment pronounced on 12 October.