REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 9918 OF 2011

NAND RAM (D) THROUGH LRS. & ORS. .....APPELLANT(S)

VERSUS

JAGDISH PRASAD (D) THROUGH LRS. .....RESPONDENT(S)

J U D G M E N T

HEMANT GUPTA, J.

1. The challenge in the present appeal is to an order passed by the

High Court of Delhi on 12th November, 2010 whereby the appeal

filed by the defendant was allowed and the suit for possession of

land comprising in Khasra No. 9/19 measuring 3 Bighas 11 Biswas

was dismissed.

2. The appellants-plaintiff No. 1 and plaintiff Nos. 2 to 8, as legal heirs

of one Bhagwana, filed a suit for possession asserting that they

were owners in possession of land measuring 3 Bighas 11 Biswas

comprising  in  Khasra  No.9/19  and  land  measuring  1  Bigha  16

Biswas comprising in Khasra No. 9/20/2, total measuring 5 Bighas 7

Biswas in the revenue estate of Village Tatarpur, Delhi.  

3. The land measuring 1 Bigha 19 Biswas out of Khasra No. 9/19 and

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16 Biswas out of Khasra No. 9/20/2, in total measuring 2 Bighas 15

Biswas  was  taken on lease  for  20  years  commencing  from 23rd

September, 1954 till 22nd September, 1974 on payment of Rs.235/-

per year by Jagdish Prasad, the defendant.  It was agreed between

the parties that it will not be open to the plaintiff-lessor to seek

ejectment  of  the  defendant-lessee  from  the  leased  premises,

however,  if  the  rent  for  one  year  remained  in  arrear,  then  the

lessor  would  have the  right  to  eject  the  lessee.    The relevant

conditions read as under:

“7.  Before the expiry of said lease it shall not be within the rights of the lessor i.e., party of the First Part to seek ejectment of party of the second part from the leased premises.

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9.  If rent for one year remains in arrears, then in that eventuality  the  lessor  i.e.,  party  of  the  First  Part  will have  the  right  to  eject  the  lessee  i.e.,  party  of  the Second Part from the property leased and the party of the Second Part will remove all his malba from the land leased and deliver vacant possession to the party of the First Part.”

4. The entire leased land was acquired pursuant to the notification

dated 24th August 1959 under Section 4 of  the Land Acquisition

Act,  18941.  The Land Acquisition Collector  determined a  sum of

Rs.28,284.85 as the market value of the land acquired including

the  super  structure  upon  it.   A  dispute  arose  with  regard  to

apportionment of compensation and the same was referred to the

Reference Court.  In such proceedings, three sets of claims were

1  for short, ‘Act’

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raised, one by the appellants as owners of the land, another by

Ram Chand and Jagdish Prasad, as lessee of the land and certain

other persons in occupation of the hutments on the land acquired.

The  defendant-respondent  claimed  apportionment  of

compensation  in  lieu  of  his  lease-hold  rights  by  raising  a  claim

under Section 30 of the Act.  The relevant paras from such claim

petition filed by the defendant read as under:

“1.   That  Shri  Nand Ram and Shri  Bhagwana sons of Lakhi Ram were the owners of land comprised in Khasra Nos.9/19 and 9/20/2 situated at Mauza Tatarpur, Delhi State.

2.   That  the said  Shri  Nand Ram and Shri  Bhagwana leased  out  land  measuring  1  bigha  19  biswa  out  of Khasra No. 9/19 and 16 biswa out of Khasra No.9/20/2 to Shri Jagdish Prasad s/o Shri Daurilal, resident of Tatarpur the claimant herein for a period of twenty years by lease deed dated 22.9.54 and registered on 11.10.54.”

5. The respondent-defendant claimed share in the compensation for 2

Bighas 15 Biswas of land on the ground that they were deprived of

the right to retain possession of that land for the unexpired period

of 14 years of the lease in their favour, which was for 20 years in

total.   The  Reference  Court  framed  the  following  issues  to

determine the claim of rival claimants:

“1.   Whether  Jagdish  and  Ram  Chand  mentioned  at Items  No.27  and  28  are  entitled  to  any  share  of  the compensation awarded for land measuring 2 Bighas and 15 Biswas which was on lease with them and if so, to how much?

2.  Whether Nand Ram and Bhagwana have any lien on Rs.2263.20 for the structure belonging to Jagdish and Ram Chand.  If so, in what manner and to what extent?

3.  Whether the Jhugis on the land measuring 2 Bighas

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and 15 Biswas leased out in favour of Jagdish were built by Dharam Chand etc. at their own expenses and they are entitled to receive the compensation in respect of their Jhuggis?

4.  Relief.”

6. The learned Additional District Judge, in such reference, in its award

dated 21st October,  1961 (Ex.PW1/12),  held  that  the respondent

had  not  paid  rent  for  more  than  12  months  and,  thus,  in

accordance with clause 9 of the lease deed, the lease had come to

an end. Therefore, the defendant had no right to claim a share in

the  compensation  payable  for  the  land  leased  to  them.  The

Reference Court held as under:

“8.  Jagdish Chand as R.W.4 has admitted that he did not pay  any  rent  to  Nand  Ram  and  Bhagwan  after  the receipt of the notice for acquisition of the land.  Nand Ram as A.W.2 has state rent has not been paid to him for two years and that he served a notice also on the lessee.  Under clause 9 of the lease deed Ex.A/15, the lease is to come to an end in case rent is not paid for 12 months.  From the evidence on the record it is proved that Ram Chand and Jagdish have not paid rent for more than 12 months and thus in accordance with clause 9 of the  lease  deed  their  lease  had  come to  an  end  and therefore  they  have  no right  to  claim a  share  in  the compensation payable for the land leased out to them.  I decide  this  issue  against  Jagdish  Prasad  and  Ram Chand.”

7. It may be stated that a part of the land acquired, comprising in

Khasra No.9/19 was de-notified vide notification dated 18th June,

1961 under Section 48(1) of the Act.  Such land, measuring 1 Bigha

19 Biswas continued to be in possession of the defendant-lessee

i.e. respondent herein.   

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8. Thereafter, the plaintiffs served a notice dated 12th February, 1981

claiming  possession  of  the  land  comprising  the  aforementioned

Khasra No. 9/19, measuring 1 Bigha 19 Biswas, i.e. the land leased

that  continued  in  possession  with  the  defendant  post  the  de-

notification. The suit was filed by the plaintiffs on 13th March, 1981.

In the written statement filed by the defendant, it  was asserted

that the land which was in possession of  the defendant did not

form a part of the alleged lease deed and that the defendant was

in possession of this land in his own legal right.  The defendant

contended  that  if  the  plaintiffs  had  any  right  in  the  land  in

possession of the defendant, then the defendant had become the

owner  of  the  land  in  question  by  adverse  possession.   It  was

pleaded as under:

“10.  That the land in possession of defendant does not lie in the alleged khasra no. and is not covered by any alleged lease deed.   Without prejudice to this  plea in alternative  it  is  submitted  that  the  lease,  if  any,  has already  come  to  an  end,  about  more  than  22  years back, and defendant is owner in possession in his own rights.”

9. The learned trial court decreed the suit after evidence was led by

the  parties.   The  certified  copy  of  the  original  lease  deed  was

produced  as  PW1/1  in  respect  of  Khasra  No.  9/19  and  Khasra

No.9/20.  The notice regarding termination of lease as well as the

revenue  record  was  produced  to  prove  the  ownership  of  the

plaintiffs-appellants.   The  trial  court  also  referred  to  the  award

passed by the Reference Court (Ex.PW1/12) wherein the defendant-

respondent had claimed himself to be a tenant.  The learned trial

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court returned the following findings:

“Thus,  the entire available record proves,  conclusively that the plaintiffs are the owners of the suit land and that  the  suit  land  falls  in  Khasra  No.9/19  Village Tatarpur,  Delhi  as  the land in suit  is  no longer  under acquisition, and neither is the land in possession of the D.D.A.  as  is  indicated  by  Ex.PW1/13.   DW2 has  been unable to deny that  there has been a notification for issuance  of  denotification  of  acquisition  of  Khasra No.9/19  Village  Tatarpur,  Delhi  Ex.PW1/12,  Ex.PW5/1, Ex.PW1/13,  are  all  indications  of  admissions  by  the defendant that the plaintiffs are owners of the suit land and that the defendant was a lessee of the same under a registered lease deed dt.22.9.54 under Nand Ram and Bhagwana.

Thus, issue No. 3 is decided in favour of the plaintiff and it  is  hereby held  that  the land in  suit  falls  in  Khasra No.9/19 Village Tatarpur, Delhi and that the plaintiffs are the  owners  of  the  same,  as  mere  receipt  of compensation  for  acquisition  of  land  which  has  been denotified  from  acquisition  does  not  in  any  manner make the plaintiff any less the owners of the land in suit. In any event the plaintiffs are certainly the landlords of the land in suit in terms of Ex.PW1/14 the lease deed, executed between Bhagwana and Nand Ram, and the defendant, and execution thereof having been admitted in the claim of the defendant in Ex.PW5/1.”

10. In  appeal  against  the  said  judgment and decree,  the  defendant

moved an application under Order VI Rule 17 of the Civil Procedure

Code, 19082 to amend his written statement and asserted that the

suit was barred by limitation under Article 66 of the Schedule to the

Limitation Act, 19633. The defendant asserted that the lease had

come to an end when a notice for forfeiture of termination of the

lease  dated  23rd  September,  1954  was  issued  by  the  plaintiffs

which is Ex.A-3 in the proceedings before the Reference Court.  In

2  for short, ‘Code’ 3  for short, ‘Limitation Act’

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reply to such application, the stand of the plaintiffs was that the

termination of tenancy is not possible vide the said notice in view

of Sections 111 and 106 of the  Transfer of Property Act, 18824 as

the  lease  is  said  to  be  terminated  w.e.f.  23rd September,  1959

whereas the notice is required to be served for at least 15 days’

time expiring on the last date of tenancy month.  The learned First

Appellate Court did not permit the defendant to amend the written

statement but the question of limitation was allowed to be raised

on the basis of material available on record.   

11. The learned First Appellate Court affirmed the findings recorded by

the trial court.  It did not find any merit in the argument raised by

the  defendant  that  the  award  passed  by  the  Reference  Court

(Ex.PW1/12) produced by the appellants operated as  res judicata.

The  First  Appellate  Court  found  that  the  plea  of  forfeiture  was

totally inconsistent and contradictory to the averments made in the

original statement.  Further, that the plea of limitation was nothing

but an ingenuity of the counsel for the defendant.   

12. Thereafter,  the  defendant  preferred  a  second  appeal.  The  High

Court framed the following two substantial questions of law:

“1.   Whether  the  judgment  rendered  by  the  Land Acquisition  Court  on  21st August,  1961  (Ex.PW-1/12) operates as res judicata between the parties as regards the title of the suit property?

2.   If  the  first  question  is  answered  in  the  negative, whether the suit filed by the Respondent for possession is barred by time?”

4  for short, ‘TP Act’

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13. The High Court allowed the second appeal holding that the finding

recorded in the award (Ex.PW1/12) that upon non-payment of rent

for 12 months, the lease had come to an end, had attained finality.

Therefore, such finding would operate as  res judicata.  The High

Court held as under:

“17.   Ex.PW1/12 having  been rendered  by a  court  of competent jurisdiction had returned a finding that the lease  between  the  parties  stood  determined  as  rent since  the  last  12  months  had  not  been  paid  by  the appellant/defendant.  Reference  to  the  notice  dated 13.9.1960 terminating the lease had also been made. There is no dispute to this factual submission which is even  otherwise  a  part  of  the  record.  In  these circumstances,  it  cannot  be  said  that  this  finding Ex.PW1/12 was only an incidental or obiter observation made by  the  Land Acquisition  Court/ADJ  which  is  not binding on the parties. Ex.PW1/12 had while adverting to  the  notice  dated  13.9.1960 categorically  held  that lease between the parties stood determined in terms of clause 9.”

14. The High Court further held that period of limitation under Article

67  of  the  Limitation  Act  is  12  years,  the  period  for  which

commences from the date when the tenancy is determined.  Since

the tenancy was determined on 23th September, 1960, the suit filed

on              13th March, 1981 was beyond the period of limitation.

15. Mr. Vishwanathan, learned senior counsel for the appellants raised

two-fold arguments. First, that Harpal Singh, one of the plaintiffs,

died on 4th December,  1997 during the pendency of  the appeal

before the First  Appellate Court.   Since his  legal  representatives

were  not  brought  on  record,  the  appeal  stood  abated.

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Consequently,  the  High  Court  could  not  have  entertained  the

second appeal and reversed the judgment and decree passed by

the First Appellate Court.  Second, that clause 9 of the lease did not

mean that if the rent for one year was not paid, the lease will stand

terminated but only that the lessor would get a right to eject the

lessee.  It was further argued that the defendant had not placed on

record the pleadings of the previous litigation which alone would

determine whether the subsequent proceedings were barred by the

principles of res judicata.   It was argued that the issue before the

Reference Court was restricted to the entitlement of payment of

compensation on acquisition of lease hold rights.  The right of the

landlord to claim possession was not a subject matter of reference

nor could it be a subject matter of such reference.  Therefore, the

decision  of  the  Reference  Court  was  neither  res  judicata nor

constructive  res judicata within the meaning of Explanation IV to

Section 11 of the Code.   

16. It was also argued that the suit was within the period of limitation

as neither Article 67 nor Article 66 would be applicable but that the

plaintiffs had a right  to seek possession under Article  65 of  the

Limitation  Act,  which  confers  a  right  on  the  plaintiffs  to  seek

possession from a person who is in possession, by virtue of his title.

It  is  for  the  defendant  to  prove  that  his  possession  is  open,

continuous and uninterrupted so as to ripen the adverse possession

into ownership. It was argued that the defendant had not denied

the tenancy prior to the filing of the present suit for possession.

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Since the defendant continued to be in possession after the expiry

of  lease  without  any  payment  of  rent,  the  possession  of  the

defendant  was  not  that  of  a  tenant  holding  over  but  that  of  a

tenant at sufferance. In terms of Section 116 of the TP Act,  the

acceptance  of  rent  by  the  appellants  will  alone  create  a  new

tenancy or the status of the tenant as tenant holding over.  It was

open to  the appellants  to  seek  eviction  on account  of  the  non-

payment of rent, but the possession of the respondent could not

ripen into title as his possession was that of a tenant at sufferance.

It  was,  thus,  argued  that  the  possession  of  the  defendant  was

merely permissive possession under a lease deed, therefore, the

plea of adverse possession was not available to the defendant.   

17. The  defendant-respondent  contended  that  in  the  award  of  the

Reference Court (Ex.PW1/12), there was a finding to the effect that

the  lease  stood  determined.  The  reliance  is  placed  upon  the

findings  recorded  by  the  High  Court  that  the  tenancy  stood

terminated  vide  notice  dated  13th September,  1960  (sic 23rd

September, 1960).  Therefore, the period of limitation commenced

from the date of the notice terminating the lease or in any case

from the date of the award of the Reference Court, thus, the suit

filed by the plaintiffs was barred by limitation.   

18. We have heard the learned counsel for the parties.  The question

that  is  required  to  be  examined  is  as  to  which  Article  of  the

Limitation Act would be applicable in the present case i.e. Article

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65, as asserted by the appellants or Articles 66 or 67, as asserted

by the respondent and that from which date the period of limitation

would commence.  For convenience, the Articles are reproduced

hereunder:

Description of Suit Period  of limitation

Time  from  which period begins to run

65. For  possession  of  immovable property or any interest therein based on title.

Twelve years

When  the  possession of  the  defendant becomes  adverse  to the plaintiff.

66. For  possession  of  immovable property when the plaintiff has become entitled to possession by reason of  any forfeiture or breach of condition.

Twelve years

When the forfeiture is incurred  or  the condition is broken.

67. By  a  landlord  to  recover possession from a tenant.

Twelve years

When  the  tenancy  is determined.

19. Section 111 of the TP Act provides for determination of lease in the

eventualities mentioned therein.  Section 111 of the TP Act reads

thus:

“111.  Determination of lease. - A lease of immoveable property determines-

(a)  by efflux of the time limited thereby:

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(g)  by forfeiture; that is to say, (1) in case the lessee breaks  an  express  condition  which  provides  that,  on breach thereof, the lessor may re-enter; or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the lessor may re-enter on the happening of such event; and in any of these cases the lessor or his transferee gives  notice  in  writing  to  the  lessee  of  his intention to determine the lease;

(h)  on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased,

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duly given by one party to the other.”

20. In a judgment reported as Sajjadanashin Sayed Md. B.E. Edr. v.

Musa Dadabhai Ummer5 this Court held that if a matter was only

“collaterally  or  incidentally”  in  issue  and  decided  in  an  earlier

proceeding, the finding therein would not ordinarily be res judicata

in a latter proceeding where the matter is directly and substantially

in issue. This Court found that the statement of law delineated by

Mulla6 is the correct one, that if the issue was  “necessary” to be

decided for adjudicating on the principal issue and was decided, it

would  have  to  be  treated  as  “directly  and  substantially”  in

issue and if  it  is  clear that the judgment was in fact based upon

that decision, then it would be res judicata in a latter case. Such is

the test for deciding into which category a case falls. One has to

examine  the  plaint,  the  written  statement,  the  issues  and  the

judgment to find out if the matter was directly and substantially in

issue  (Ishwer Singh v. Sarwan Singh7  and Syed Mohd. Salie

Labbai v. Mohd.  Hanifa8 ).  Which  matters  are  directly  in  issue

and which are only  collaterally  or  incidentally  in issue,  must  be

determined on the facts of each case. A material test to be applied

is  whether  the  court  considers  the  adjudication  of  the

issue material and essential for its decision.

21. This Court in  Sajjadanashin Sayed approved a decision by the

5  (2000) 3 SCC 350 6  15 Edn., P. 104 7  AIR 1965 SC 948 8  (1976) 4 SCC 780

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Privy  Council  reported  as  Run  Bahadur  Singh v. Lucho

Koer9 wherein claim of rent from a tenant on the basis survivorship

of  Joint  Hindu Family  property  was raised by “c”  brother of  the

deceased.  Two issues were framed in  such suit  (1)  whether the

deceased  alone  received  the  whole  rent  of  the  property  in  his

lifetime, or whether the rent was received by him jointly with his

brother C; (2) whether any rent was due and if so, how much was

due from B. The finding on the first issue was that the deceased

alone received the whole rent in his lifetime. Subsequently, C sued

the widow for declaration that he and his brother were joint, and he

claimed the property by right of survivorship. The question arose

whether  the  deceased and C were  joint  or  separate.  The  earlier

finding was held not res judicata inasmuch as the matter was not

“directly and substantially” in issue in the earlier suit.  It  was in

issue in the earlier suit only “collaterally or incidentally”, as it did

not cover the entire question of C's title but related merely to the

joint or separate receipt of rent.

22. In  Asgar  &  Ors.  v. Mohan  Varma  and  Others10, the

predecessors-in-interest  of  the appellant  relied  upon the  sale  of

land by M/S K. J. Plantations. The predecessor-in-interest of M/s. K.

J. Plantation was the lessee for a period of 75 years vide lease deed

dated                 25th November, 1897.  The lease expired by efflux

of time in 1972. In the meantime, the land was transferred by the

lessee to different persons. The High Court held the assignees were

9  ILR (1885) 11 Cal 301 : 12 IA 23 (PC) 10  Civil Appeal No. 1500 of 2019 decided on 05.2.2019

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tenants  at  sufferance  and  were  not  entitled  to  any  estate  or

property.  Before  this  Court,  the  argument  was  raised  that  they

were entitled to remain in possession until the compensation was

paid for the improvements made in terms of provisions of Kerala

Land Conservancy Act, 1957. Such claim was resisted by the land

owners inter alia on the ground that the lease had come to an end,

therefore, the assignees from the lease were tenant at sufferance

and the finding in proceedings under Order XXI Rule 97 of the Code

would operate as res judicata. This Court held as under:  

“40. We are not inclined to decide this question on a pri-

ori consideration,  for  the  simple  reason  that  under  the

CPC, both res judicata (in the substantive part of Section

11) and constructive res judicata (in  Explanation IV)  are

embodied as statutory principles of the law governing civil

procedure. The fundamental policy of the law is that there

must be finality to litigation. Multiplicity of litigation en-

sures to the benefit, unfortunately for the decree holder,

of those who seek to delay the fruits of a decree reaching

those to whom the decree is meant. Constructive res judi-

cata, in the same manner as the principles underlying res

judicata, is intended to ensure that grounds of attack or

defence in litigation must be taken in one of  the same

proceeding. A party which avoids doing so does it at its

own peril. In deciding as to whether a matter might have

been urged in the earlier proceedings, the court must ask

itself as to whether it could have been urged. In deciding

whether the matter ought to have been urged in the ear-

lier proceedings, the court will have due regard to the am-

bit  of  the earlier  proceedings and the nexus which the

matter bears to the nature of the controversy. In holding

that a matter ought to have been taken as a ground of at-

tack or defence in the earlier proceedings, the court is in-

dicating that the matter is of such a nature and character

and bears such a connection with the controversy in the

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earlier case that the failure to raise it in that proceeding

would debar the party from agitating it in the future.”

(emphasis supplied)

23. The issue in the proceedings under Section 30 of the Act, before

the  Reference  Court  was  restricted  to  the  apportionment  of

compensation,  consequent to the acquisition of the leased land.

The argument was raised that the lessee had another 14 years of

the lease period,  therefore,  the lessee claimed compensation  in

lieu of the unexpired lease period.  The issue was restricted to the

payment of compensation on account of the unexpired period of

lease.   The issue in question was not the title of the appellants or

the  eviction  of  the  respondent.   Still  further,  the  finding  of  the

Reference Court, as reproduced above, is that the respondent had

no right to claim a share in the compensation.  The entitlement of

the  appellants  to  claim possession from the tenant  was  not  an

issue in the previous proceedings.  

24. Before the award was announced by the Reference Court, part of

the land acquired was de-notified.  After denotification of the land,

the respondent continued to be in possession and the title of the

appellants as owners stood restored. De-notification under Section

48 of the Act is possible only when possession has not been taken

and the land has not been vested in the State.  The effect of de-

notification is that the land comprising Khasra No. 9/19 was never

deemed to be acquired.  Once the land was de-notified, the status

of the parties as they existed prior to notification under Section 4 of

the Act stood revived.  

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25. The  High  Court  has  relied  upon  the  findings  recorded  by  the

Reference Court that the tenancy stood terminated so as to deny

the apportionment of the compensation in respect of acquisition of

land.  The issue examined by the Reference Court was whether the

defendant was entitled to any share of compensation awarded for

the land acquired.  Such issue was decided against the defendant.

It is this finding that the defendant is not entitled to any share of

the  compensation  awarded  which  operates  as  res  judicata in  a

subsequent suit and not the reasonings recorded by the Court for

arriving at such a finding.  In a judgment reported as  Union of

India  v.  Nanak Singh11, it has been held that what operates as

res judicata is the decision and not the reasons given by the Court

in support of the decision.

26. In another judgment reported as Mathura Prasad Bajoo Jaiswal

& Ors.  v.  Dossibai N.B. Jeejeebhoy12,  a three-Judge Bench of

this  Court  held  that  the  previous  decision  on a  matter  in  issue

alone is  res  judicata,  the  reasons for  such decision  are not  res

judicata.  This Court held as under:

“5… A decision of a competent Court on a matter in issue may be res judicata in another proceeding between the same parties: the “matter in issue” may be an issue of fact,  an issue of law, or one of mixed law and fact.  An issue of fact or an issue of mixed law and fact decided by a  competent  Court  is  finally  determined  between  the parties  and  cannot  be  re-opened  between  them  in another proceeding. The previous decision on a matter in issue alone is res judicata: the reasons for the decision are not res judicata. A matter in issue between the parties

11  AIR 1968 SC 1370 12  (1970) 1 SCC 613

16

is the right claimed by one party and denied by the other, and the claim of right from its very nature depends upon proof of facts and application of the relevant law thereto. A pure question of law unrelated to facts which give rise to  a right,  cannot  be deemed to  be a matter  in  issue. When it is said that a previous decision is res judicata, it is meant that the right claimed has been adjudicated upon and cannot again be placed in contest between the same parties. A previous decision of a competent Court on facts which are the foundation of the right and the relevant law applicable to the determination of the transaction which is the source of the right is res judicata. A previous decision on a matter in issue is a composite decision: the decision on law cannot be dissociated from the decision on facts on which the right is founded. A decision on an issue of law will  be as  res judicata  in  a  subsequent  proceeding between the same parties, if the cause of action of the subsequent proceeding be the same as in the previous proceeding, but not when the cause of action is different, nor  when  the  law  has  since  the  earlier  decision  been altered by a competent authority, nor when the decision relates to the jurisdiction of the Court to try the earlier proceeding, nor when the earlier decision declares valid a transaction which is prohibited by law.”

27. Thus, the finding returned in the award of the Reference Court (Ex.

PW1/12)  that  the  lease  stood  determined  on  account  of  non-

payment of rent was a finding made by the reference Court for a

limited  purpose  i.e.  not  to  accept  the  defendant’s  claim  for

compensation. Such finding cannot be binding on the parties in a

suit for possession based on title or as a lessor against a lessee.

Section 11 of the Code bars the subsequent Court to try any suit or

issue which has been directly and substantially issue in a former

suit.  The issue before the Reference Court was apportionment of

compensation  and  such  issue  having  been  decided  against  the

defendant, the reference to notice for termination of tenancy does

not operate as res judicata. Therefore, the finding recorded by the

17

High Court that the order of the Reference Court operates as  res

judicata was clearly not sustainable.  The first substantial question

of law has been, thus, wrongly decided.

28. In respect of second question of law examined by the High Court

that the plaintiff’s suit was barred by limitation is based upon the

notice dated 23rd September, 1960 produced in proceedings before

the Reference Court as Ex.A-3. The reference to such notice was

made in an application for amendment of the written statement

under Order VI Rule 17 of the Code filed before the First Appellate

Court.  The First Appellate Court allowed the defendant to raise a

plea of limitation without amending the written statement.  Thus,

the notice (Ex.A-3) in proceedings before the Reference Court was

never produced in  evidence in the suit  for  possession and such

primary evidence was not before the Court. In terms of Section 62

of  the Evidence Act,  primary evidence means a document itself

produced for inspection by the Court.  Section 64 of the Evidence

Act stipulates that documents must be proved by primary evidence

except in certain cases when secondary evidence can be led.  The

defendant has not led any evidence, including secondary evidence

of the alleged notice said to be served by the plaintiffs.  In the

absence of primary or secondary evidence available in the suit for

possession, the reference to such notice as the starting point of

limitation is clearly erroneous and not sustainable.   

18

29. The defendant was inducted as a lessee for a period of 20 years.

The lease period expired on 23rd September,  1974.  Even if  the

lessee had not paid rent, the status of the lessee would not change

during the continuation of the period of lease.  The lessor had a

right to seek possession in terms of clause 9 of the lease deed.

The mere fact that the lessor had not chosen to exercise that right

will not foreclose the rights of the lessor as owner of the property

leased.  After the expiry of lease period, and in the absence of pay-

ment of rent by the lessee, the status of the lessee will be that of

tenant at sufferance and not a tenant holding over.  Section 116 of

the TP Act confers the status of a tenant holding over on a yearly

or monthly basis keeping in view the purpose of the lease, only if

the lessor accepts the payment of lease money.  If the lessor does

not accept the lease money, the status of the lessee would be that

of tenant at sufferance.  This Court in the judgments reported as

Bhawanji Lakhamshi and Others v. Himatlal Jamnadas Dani

and  Others13,  Badrilal  v. Municipal  Corpn.  of  Indore14 and

R.V. Bhupal Prasad  v. State of A.P and Others15 and also a

judgment  in  Sevoke  Properties  Ltd.  v. West  Bengal  State

Electricity Distribution Company Ltd.16 examined the scope of

Section 116 of the TP Act and held that the lease would be re-

newed as a tenant holding over only if the lessor accepts the pay-

13  (1972) 1 SCC 388 14  (1973) 2 SCC 388 15  (1995) 5 SCC 698 16  Civil Appeal No. 3873 of 2019 decided on 11.04.2019

19

ment  of  rent  after  the  expiry  of  lease  period.    This  Court  in

Bhawanji Lakhamshi held as under:

“9. The act of holding over after the expiration of the term does not create a tenancy of any kind. If a tenant remains in  possession  after the  determination  of  the lease,  the common law rule is that he is a tenant on sufferance. A distinction should be drawn between a tenant continuing in possession after the determination of the term with the consent of the landlord and a tenant doing so without his consent. The former is a tenant  at sufferance in English Law and the latter a tenant holding over or a tenant at will. In view of the concluding words of Section 116 of the Transfer of Property Act, a lessee holding over is in a bet- ter position than a tenant at will. The assent of the land- lord to the continuance of possession after the determina- tion of the tenancy will create a new tenancy. What the section contemplates is that on one side there should be an offer of taking a new lease evidenced by the lessee or sub-lessee remaining in possession of the property after his term was over and on the other side there must be a definite consent to the continuance of possession by the landlord expressed by acceptance of  rent  or  otherwise. ….”   

30. The same view was reiterated in Badrilal v. Municipal Corpn. of

Indore, as  well.  In  R.V.  Bhupal  Prasad,  this  Court  held  that

possession of the licencee on the expiry of the licence period was

that of a tenant at sufferance and was liable to ejectment in due

course  of  law.  His  possession was not  legal  nor  lawful.  He may

remain in possession until he is ejected in due course in execution

of the decree in the suit filed by the respondent. His possession

cannot be considered to be settled possession. The Court held as

under:

“8. Tenant at sufferance is one who comes into possession

of land by lawful title, but who holds it by wrong after the

termination of the term or expiry of the lease by efflux of

20

time.  The  tenant  at  sufferance  is,  therefore,  one  who

wrongfully continues in possession after the extinction of

a lawful title. There is little difference between him and a

trespasser. In Mulla's Transfer of Property Act (7th Edn.) at

page 633, the position of tenancy at sufferance has been

stated thus: A tenancy at sufferance is merely a fiction to

avoid continuance in possession operating as a trespass.

It  has  been  described  as  the  least  and  lowest  interest

which can subsist in reality. It, therefore, cannot be cre-

ated  by  contract  and  arises  only  by  implication  of  law

when a person who has been in possession under a lawful

title continues in possession after that title has been de-

termined,  without the consent of  the person entitled.  A

tenancy at sufferance does not create the relationship of

landlord and tenant. At page 769, it is stated regarding

the right of a tenant holding over thus: The act of holding

over after the expiration of the term does not necessarily

create a tenancy of any kind. If the lessee remains in pos-

session after the determination of the term, the common

law rule is that he is a tenant on sufferance. The expres-

sion “holding over” is used in the sense of retaining pos-

session. A distinction should be drawn between a tenant

continuing  in  possession  after  the  determination  of  the

lease, without the consent of the landlord and a tenant

doing so with the landlord's consent. The former is called

a tenant by sufferance in the language of the English law

and the latter class of tenants is called a tenant holding

over or a tenant at will. The lessee holding over with the

consent of the lessor is in a better position than a mere

tenant at will. The tenancy on sufferance is converted into

a tenancy at will by the assent of the landlord, but the re-

lationship of the landlord and tenant is not established un-

til the rent was paid and accepted. The assent of the land-

lord to the continuance of the tenancy after the determi-

nation of the tenancy would create a new tenancy. The

possession of a tenant who has ceased to be a tenant is

protected by law. Although he may not have a right to

continue in possession after the termination of the ten-

ancy, his possession is juridical.

21

xx xx xx

13. In view of the settled position of law, the possession of

the appellant is as tenant at sufferance and is liable to

ejectment in due course of law. But his possession is not

legal nor lawful. In other words, his possession of the the-

atre is unlawful or litigious possession. The appellant may

remain in possession until he is ejected in due course in

execution of the decree in the suit filed by the respon-

dent. His possession cannot be considered to be settled

possession. He is akin to a trespasser, though initially he

had lawful entry.”

31. Sevoke Properties Ltd. was a case where the respondent contin-

ued in possession after the expiry of lease period which ended on

24th May, 1996.  A suit for possession was filed without serving a

notice under Section 106 of the TP Act. The stand of the defendant

was that he was a tenant holding over. Such argument was not ac-

cepted and it was held that after the expiry of lease period in terms

of unregistered document of lease, the possession of the respon-

dent was that of a tenant at sufferance. In view thereof, as owners,

the appellants were entitled to possession of the land in terms of

Article 65 of  the Limitation Act as the possession of respondent

was that of a tenant at sufferance.  

32. The Division Bench of Allahabad High Court in a judgment reported

as  Bisheshar Nath  v.  Kundan & Ors.17 examined a somewhat

similar question where the period of lease was three years vide a

lease  deed  dated  19th July,  1892  but  the  lessee  remained  in

possession thereafter.   The suit  was filed on 18th June, 1919 i.e.

17  ILR (1922) 44 All 583

22

after the expiry of 12 years from the determination of the lease.

The High Court considered Article 139 of the First Schedule of the

Limitation Act, 1908 which is now equivalent to Article 67 of the

First Schedule of the Limitation Act.  The Court held as under:

“…It  seems  to  me  on  the  facts  of  this  case  that  the tenancy was determined on the 19th of July, 1895. It has not been proved that any new tenancy was created. By holding over without paying rent, it seems to me that the defendants  became  what  is  known  as  tenants  by sufferance.  Their  position  in  English  law  has  been summed up  in Addison's  Law of  Contract,  10th  edition, page  618  in  the  following  words:—“The  difference, therefore, between a tenancy-at-will and what is called a tenancy by sufferance is that in the one case the tenant holds  by  right  and  has  an  estate  or  term in  the  land, precarious though it may be, and the relationship of lessor and lessee subsists between the parties; in the other, the tenant  holds  wrongfully  and  against  the  will  and permission  of  the  lord  and has  no  estate  at  all  in  the occupied premises. When the tenancy at sufferance has existed for twenty (now twelve) years, the landlord's right of entry is barred by statute, and the tenant becomes the absolute and complete owner of the property.” So far as the question of limitation is concerned, the law in India is not different, in my opinion, although it may not be good law  to  hold  that  a  tenant  holding  over  is  in  adverse possession  to  his  landlord.  In  my  opinion  this  view  is supported by Chandri v. Daji Bhau [(1900) I.L.R., 24 Bom., 504.], where the facts were similar, and which case was followed  in Farman  Bibi v. Tasha  Haddal  Hossein [(1908) C.L.J.,  648.].  In  my  opinion  the  suit  was  clearly  barred under article 139 of the Limitation Act. I would, therefore, dismiss this appeal with costs.”

33. In a separate but concurring opinion by Justice Stuart, it was held

that a tenant who has been let into possession cannot deny his

landlord’s title, however defective it may be, so long as he has not

restored possession by surrender to his landlord.  It was held that

the plaintiff is the landholder and the defendants are tenants by

23

sufferance.  It was held so:

“…Their  Lordships  of  the  Privy  Council  say:  “A  tenant who  has  been  let  into  possession  cannot  deny  his landlord's title, however defective it may be, so long as he has act openly restored possession by surrender to his landlord.” That clearly is the law, but does it in any way affect  the present  case?  I  think it  does not.  The defendants cannot be permitted to deny the plaintiff's title. They have foolishly denied it but they cannot be permitted to do so. The plaintiff is undoubtedly the land- holder  and the defendants are  tenants by sufferance, but  once  having  recognized  that  the  tenants  are  so estopped, the fact still  remains that the suit has been instituted beyond the period of limitation allowed by the law.  In  these  circumstances  I  accept  the  view  of  my learned brother and would dismiss this appeal.”

34. The Division Bench of Allahabad High Court in a judgment reported

as  Sheo Dulare Lal Sah  v.  Anant Ram & Anr.18 examined an

appeal arising out of a suit for possession against the defendants

who were inducted as tenants for a period of one year.  However,

the  tenants  did  not  make  any  payment  of  rent.   In  a  suit  for

possession, a plea was taken that the suit is barred by limitation.

The plaintiffs filed a suit on the basis of title without any averment

that defendants were indicted as tenants except to the effect that

the vendor of the plaintiff has executed a rent note and that the

defendants have denied the title of the plaintiff, therefore, they are

liable for ejectment.  The Court held that in terms of Section 108(q)

of  the  TP  Act,  the  lessee  had  a  duty  to  put  the  lessor  into

possession of the property.   If he did not do so, he was merely a

tenant whose lease had expired and who had continued to remain

in wrongful possession of the property on the expiry of the lease. It

18  AIR 1954 All. 475

24

was open to the landlord to regularise the position by giving his

assent  to  the  continuance  of  possession  and  in  that  situation,

provisions of Section 116 of the TP Act would apply.  The Court held

as under:

“10.  Taking up the third point first,  on the expiry of a lease  for  a  period,  Section  108(q)  of  the  Transfer  of Property  Act  imposes  a  duty  on  the  lessee  to  put  the lessor  into  possession  of  the  property.  Sahib  Dayal, therefore, on the expiry of the period of one year fixed under  the  lease  was  bound  to  put  Sri  Krishna  Das  in possession  of  the  property  in  accordance  with  the provisions of  Section 108(q) of  the Transfer of  Property Act. If he did not do so, he was merely a tenant whose lease had expired and who had continued to remain in wrongful possession of the property on the expiry of the lease.  It  was  open  in  such  a  case  to  the  landlord  to regularise  the  position  by  giving  his  assent  to  the continuance of possession and in that case the provision of Section 116 of the Transfer of Property Act would apply and the lessee would, in accordance with the provisions of that section, become a month to month tenant.”

35. It was further held that in order to create a tenancy at sufferance

the  tenant  should  have  lawfully  entered  into  possession  in

recognition  of  the  landlord's  superior  title  and  should  have

continued  to  remain  in  possession  in  the  same  right  after  the

termination of  the tenancy without  asserting any title  hostile  to

that of the landlord.  The Court held as under:

“12.  In order to create a tenancy at sufferance the tenant should  have  lawfully  entered  into  possession  in recognition of the landlord's superior title and should have continued to remain in possession in the same right after the termination of the tenancy without asserting any title hostile to that of the landlord and without his assent or dissent. The continuance in possession should be due to the laches of the owner in not asking for payment of the rent or vacation of the premises or taking over possession of the property. In Corpus Juris Secundum, Vol. 51, p. 780,

25

175, it is pointed out that:

“The  holding  of  a  tenant  at  sufferance  is  the most  shadowy  estate  recognized  at  common law, and practically the only distinction between such a tenant's holding and the possession of a trespasser  is  that  the land-owner may,  by his acquiescence, at any time base on the tenancy at sufferance the relation of landlord and tenant, which he cannot establish at law against a mere trespasser,  and  that  the  tenant  cannot  be subjected to an action in trespass before entry or demand for possession.”

The law thus enunciated is in line with the provisions of Section 116 of the Transfer of Property Act (No. 4 of 1882) which pointed out 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 S. 106.”

36. The Full Bench of Bombay High Court in a judgment reported as

Sidram  Lachmaya,  heir  and  legal  representative  of

deceased  Lachmaya  Shivram  Madur,  heir  of  Original

Plaintiff  v.  Mallaya Lingaya Chilaka19 rightly held that ‘it  is  a

well recognised construction of the Limitation Act that when there

is a specific article dealing with a specific subject, that article is to

be applied in preference to a general and residuary article’. The Full

Bench was examining the question as to whether the possession of

the tenant is adverse to the landlord upon the expiration of the

19  ILR 1949 Bom 135 (FB) : 1948 SCC OnLine Bom 4

26

tenancy period merely because the tenant has not paid rent.  The

second question examined was whether in a suit based upon title

by a landlord against his ex-tenant, whether Article 139 or Article

144 is applicable. In such suit filed by the tenant, the claim was

that the title of his landlord had extinguished under Section 28 of

the Limitation Act, 1908.  The Court held as under:

“Now, there can be no doubt that on the determination of the  tenancy  on  June  11,  1925,  the  plaintiff  became  a tenant at sufferance, if we might make use of an English expression, or a trespasser. Although his possession was originally lawful, and he entered by lawful demise, at the termination  of  the  tenancy  his  possession  became wrongful and he became a trespasser.  Therefore on the determination of the tenancy the right would arise in the landlord to recover possession from him of the property and the period of limitation would be governed by article 139 of the Indian Limitation Act.

xx xx xx

Our Court almost consistently has taken the view that in a case  by a  landlord  against  a  tenant  it  is  art.  139 that applies,  the  first  case  which  might  be  looked  at is Kantheppa v. Sheshnppa,  [(1897)  22  Bom.  893.]  a decision of Sir Charles Farran, Chief Justice, and Mr. Justice Candy. There at p. 897 Sir Charles Farran says:

“We are inclined to think that the termination of the period of a fixed lease where nothing further occurs, is the time from which limitation begins to run against the landlord within the meaning of article 139 of the limitation Act.”

The  expression  “where  nothing  further  occurs”  is obviously  with  reference  to  s.  116  of  the  Transfer  of Property Act,  because it  is open to the landlord on the expiration of the tenancy of accept rent from the tenant or otherwise assent to his continuing in possession and thereby create a fresh lease under the provisions of that section.  But  if  the  landlord  neither  accepts  rent  nor otherwise assents to the continuing of the possession of the  tenant,  then  it  is  clear  that  the  tenancy  expires,

27

limitation  begins to  run against  the landlord  under art. 139 and his  right  to  obtain  possession from his  tenant would be barred after the period of 12 years.

xx xx xx

As  we  have  taken  the  view  that  a  suit  by  a  landlord against his ex-tenant is always governed by art. 139 and as  we  have  indicated  earlier  in  the  judgment  that  the question whether his possession is adverse or not does not arise, we answer question No. 2 submitted to us as follows: art. 139. And with regard to question No. 1 our answer,  with  respect  to  the  learned  Judges  who  have referred this question to us, is that on the view we have now taken the question does not arise.”

37. In  another judgment by a Single  Bench of  the Delhi  High Court

reported  as  MEC  India  Pvt.  Ltd.  v.  Lt.  Col.  Inder  Maira  &

Ors.20, it has been held that in terms of Section 108(q) of the TP

Act, a lessee continues to be liable to the lessor till possession has

been actually restored to the lessor.  The continuing in possession

of the lessee is expressive of his continuing stand that the tenancy,

in whatever form, continues.  It was held as under:

“40.  Section 108(q) thus ensures that a lessee continues to be liable to the lessor till possession has been actually restored  to  the  lessor  and  a  semblance  of  relationship subsists till that contingency takes place. His continuing in possession is expressive of his continuing stand that the tenancy,  in whatever form, continues. It  is said that he does not hold it adversely to the landlord only till he has unequivocally  renounced  his  status  as  a  tenant  and asserted  hostile  title,  but  even  that  appears  to  be doubtful, for in law his possession remains permissive till it has been actually restored to the landlord.

41.  In law there is presumption in favour of the continuity of the tenancy and against the possession of the tenant becoming  adverse.  Furthermore,  the  doctrine  of  tenant estoppel,  which  continues  to  operate  even  after  the

20  80 (1999) Delhi Law Times 679

28

termination of the tenancy, debars a tenant who had been let  into  possession  by  a  landlord,  from  disputing  the latter's title or pleading adverse possession, without first openly  and  actually  surrendering  possession  of  the tenanted premises and restoring them to the landlord.

42.  A tenant who upon determination of the tenancy does not deliver up possession to the landlord as required by Section 108(q), cannot be heard to say that he is not a tenant—be  he  one  at  sufferance  or  be  he  one  from month-to-month. Therefore, unless the landlord is actually put  into  possession,  the  premises  remain  under  a tenancy,  which unless assented to by the landlord,  has the character of one at sufferance.

43.  Thus, a tenant at sufferance is one who wrongfully continues  in  possession  after  the  extinction of  a  lawful title and that a tenancy at sufferance is merely a legal fiction or device to avoid continuance in possession from operating as a trespass. A tenant remaining in possession of the property after determination of the lease does not become  a  trespasser,  but  continues  as  a  tenant  at sufferance till possession is restored to the landlord. The possession of an erstwhile tenant is juridical and he is a protected  from  dispossession  otherwise  than  in  due course of law. Although, he is a tenant, but being one at sufferance as aforesaid, no rent can be paid since, if rent is accepted by the landlord he will  be deemed to have consented and a tenancy from month-to-month will come into existence. Instead of rent,  the tenant at sufferance and by his mere continuance in possession is deemed to acknowledge both the landlord's  title  and his (tenant's) liability to pay mesne profits for the use and occupation of the property.

44.  To sum up the legal  position or status of a lessee whose lease has expired and whose continuance is not assented  to  by  the  landlord,  is  that  of  a  tenant  at sufferance.  If,  however,  the  holding  over  has  been assented  to  in  any  manner,  then it  becomes that  of  a tenant from month-to-month. Similar, i.e. from month-to- month,  is  the  status  of  a  lessee  who  comes  into possession tinder a lease for a period exceeding one year but unregistered. He holds it not as a lessee for a fixed term,  but  as  one  from month-to-month  or  year-to-year depending on the purpose of the lease. If upon a tenant from month-to-month (or year-to-year) and in either of the aforesaid  two contingencies,  a  notice to quit  is  served,

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then on the expiry of the period, his status becomes of a tenant at sufferance. Waiver of that notice, or assent in any form to continuation restores to him his status as a tenant from month-to-month, but capable, of once again being terminated with the expiry of any ensuing tenancy month.”

38. Thus,  the  suit  of  the  plaintiffs  filed  within  12  years  of  the

determination of the tenancy by efflux of time is within the period

of limitation.  The defendant has not proved forfeiture of tenancy

prior to the expiry of lease period.  Mere non-payment of rent does

not amount to forfeiture of tenancy.  It only confers a right on the

landlord to seek possession.   The plaintiffs  have filed a suit  for

possession against the defendant on the basis of determination of

tenancy, such suit is governed by Article 67 alone.   

 39. In view of the above, the suit for possession would not be covered

by Article 65 since there is a specific article i.e. Article 67 dealing

with right of the lessor to claim possession after determination of

tenancy.  The appellants-plaintiffs have claimed possession from

the defendant alleging him to be the tenant and that he had not

handed over the leased property after determination of the lease.

Therefore, such suit would fall within Article 67 of the Limitation

Act.  Such suit having been filed on 13th March, 1981 within 12

years  of  the  determination  of  lease  by  efflux  of  time  on  23rd

September, 1974, the same is within the period of limitation.  Thus,

the findings recorded by the High Court are clearly erroneous in

law and the same cannot be sustained and are, thus, set aside.   

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40. Though, Mr. Vishwanathan has argued that the first appeal stood

abated  as  the  legal  representatives  of  one  of  the  deceased

respondents was not impleaded but we find that it is not necessary

to decide such question as on merits, we have found the claim of

the plaintiffs to be meritorious.   

41. The respondent continued to be in possession of the land leased

vide  registered  lease  deed  dated  22nd September,  1954.   The

respondent has admitted the ownership of  the appellants before

the Reference Court.  Such plea operates as estoppel  against the

respondent in respect of the title of the appellants. However, the

claim of compensation put forward by the respondent was declined

for the reason that non-payment of rent disentitles the respondent

from compensation.  In the present proceedings, the respondent

has  denied  his  status  as  that  of  a  tenant  but  claimed  title  in

himself.  The respondent claimed adverse possession and claimed

possession as owner against a person, who has inducted him as

tenant.   The respondent was to prove his  continuous,  open and

hostile possession to the knowledge of true owner for a continuous

period of 12 years. The respondent has not led any evidence of

hostile  possession  to  the  knowledge  of  true  owner  at  any  time

before  or  after  the  award  of  the  reference  Court  nor  he  has

surrendered  possession  before  asserting  hostile,  continuous  and

open title to the knowledge of the true owner.   The question of

adverse possession without admitting the title of the real owner is

not tenable.  Such question has been examined by this Court in

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Uttam Chand (D) through LRs.  v.  Nathu Ram (D) through

LRs & Ors.21.  

42. In view of the said fact, we find that the High Court erred in law in

holding that the suit is barred by limitation in terms of Article 66 of

the Limitation Act, therefore, the order passed by the High Court is

clearly erroneous and is not sustainable in law.  The same is set

aside and the suit is decreed by restoring the decree of the First

Appellate Court.  Accordingly, the appeal is allowed.

.............................................J. (L. NAGESWARA RAO)

.............................................J. (HEMANT GUPTA)

NEW DELHI; MARCH 19, 2020.

21  Civil Appeal No. 190 of 2020 decided on 15th January, 2020 : 2020 SCC OnLine SC 37

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