Section 116, TPA

'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.'

Is it a continuation of the old lease?

No. It is a new tenancy brought into being by the operation of the section, though the incidents of the old lease, so far as they are consistent, apply to it

For how long?

From year to year where the property was leased for agricultural or manufacturing purposes; from month to month in every other case — section 106

On what terms?

On the terms of the old lease so far as they are applicable to the new tenancy and not inconsistent with its periodic character

How is it ended?

By a notice to quit under section 106 — six months or fifteen days according to the purpose

Can the parties exclude it?

Yes — the section operates 'in the absence of an agreement to the contrary'

Accepting rent for a period after the determination, with knowledge that the lease has ended

Strong evidence of assent; the tenancy is renewed

Accepting arrears of rent that fell due before the determination

Not an assent to continued possession; it is payment of what was already owed

Accepting money expressly as mesne profits or as damages for use and occupation

Not an acceptance of rent; the character in which the money is received governs

Accepting rent after a suit for ejectment has been filed

Does not by itself show assent to a new tenancy; and see the corresponding rule about waiver in section 112

Mere silence and inaction

Not assent. The tenant remaining without objection is a tenant at sufferance, not a tenant holding over

Negotiating for a fresh lease while the tenant remains

May or may not amount to assent; it is a question of fact on the whole of the conduct

How it arises

Possession after determination plus the lessor's assent

Possession after determination without the lessor's assent

Possession with the lessor's consent, on terms that either may end it at any time

Nature of the right

A new tenancy, periodic, created by the section

No estate and no title — possession by wrong, but not that of a trespasser ab initio

A tenancy, but one determinable at the will of either party

How it is ended

By notice to quit under section 106

Without notice — the landlord may sue for possession at once

At the will of either party, subject to any agreed formality

Liability for occupation

Rent

Mesne profits, or damages for use and occupation

Rent, or as agreed

Transferability

Transferable and heritable as a tenancy

Nothing to transfer

Personal in character

Origin

Statutory — section 116

The common law, and recognised in Indian practice

The common law, rarely met in India except by express agreement

Why the distinction decides cases

The tenant holding over must be given a notice to quit under section 106 before he can be evicted, and the tenancy continues until the notice expires. He pays rent, and his interest is an estate which he may transfer.

The tenant at sufferance may be sued for possession at once. He is liable for mesne profits rather than rent, he has no estate to transfer, and no notice is required to end what was never a tenancy.

The whole of the difference lies in the lessor's assent. A landlord who accepts rent after the lease has ended has, without meaning to, created a fresh tenancy which he must then determine by notice.

Source

Operation of the section, on possession plus assent

The contract — a covenant for renewal in the lease, exercised by the lessee

What is required

Possession after determination, and acceptance of rent or other assent

The exercise of the option in the manner and within the time the covenant provides

The resulting tenancy

A periodic tenancy — year to year or month to month

A fresh lease for the term the covenant provides, on the covenanted terms

Formalities

None; it arises by operation of law

A renewed lease for more than a year requires a registered instrument under section 107

The old terms

Apply so far as consistent with a periodic tenancy

Apply as the covenant provides, usually with the renewal clause itself omitted

📖 Bhawanji Lakhamshi v. Himatlal Jamnadas Dani, (1972) 1 SCC 388

Held: The Court considered what is required to bring section 116 into operation. Mere continuance in possession after the determination of the lease does not create a tenancy by holding over. What is essential is the consent of the landlord, shown by acceptance of rent for a period after the determination or by other conduct indicating assent to the continuance of possession. Where the landlord merely receives amounts as compensation for use and occupation, or takes steps to evict, no fresh tenancy arises and the occupant is a tenant at sufferance.

Ratio: Assent of the lessor, and not mere possession, is what turns a tenant at sufferance into a tenant holding over.

📖 Associated Hotels of India Ltd. v. R.N. Kapoor, AIR 1959 SC 1262

Held: The character of an occupant's possession is determined by the substance of the arrangement between the parties rather than by the description they give it. The same approach governs the question whether possession after the determination of a lease is by the landlord's assent or merely tolerated.

Ratio: The nature of the possession is a question of substance, decided on the conduct of the parties.