Determination of Lease — Section 111 (Modes of Termination)

Section 111 of the Transfer of Property Act, 1882 sets out an exhaustive list of eight modes by which a lease of immovable property is determined. Sections 112 to 114A add four ancillary doctrines: waiver of forfeiture, waiver of notice to quit, relief against forfeiture for non-payment of rent, and relief against forfeiture for breach of an express condition. Together the cluster supplies the entire termination architecture of the lease chapter. Outside this scheme there are only two further routes — determination by demand or surrender of a tenancy at will, and termination under a power or option to break — both judicially recognised but not statutorily named. Once the lease is determined the lessee's right to remain in possession comes to an end and he becomes liable to mesne profits at the rate at which the lessor could have re-let the premises: Atma Ram Properties (P) Ltd v Federal Motors (P) Ltd (2005) 1 SCC 705. The lessee's possession is juridical until decreed against, mirroring the protection a person competent to transfer enjoys against extra-judicial dispossession. The eight clauses, taken in turn, are the spine of every eviction suit governed by the Act.

Section 111 — the eight clauses

Clause (a) — efflux of time

A lease for a fixed term — a year, three years, twenty-one years — expires on the last day of the term and the reversion falls in automatically. No notice to quit is needed; the lessor may re-enter as of right: Sunder Singh v Ram Saran Das AIR 1933 Lah 61. The lessee thereafter holds as a tenant at sufferance, his possession lawful only in its inception, and he is liable for mesne profits from the day after expiry until vacant possession is delivered. The clause does not apply to a lease in perpetuity, nor to a lease whose term is itself uncertain. A lease said to be "for less than one year" without specifying the term is ex facie for an indefinite period and cannot expire by efflux: Rattan Lal v Vardesh Chander AIR 1976 SC 588. A renewal clause does not extend the term automatically; the lessee must exercise the option, and absent renewal his possession after expiry is unlawful: Syed Sugara Zaidi v Laeeq Ahmad (2018) 2 SCC 21. The covenant for renewal does not offend the rule against perpetuity, for it runs with the land and creates no immediate interest until exercised. The Supreme Court in Shanti Prasad Devi v Shankar Mahto (2005) 5 SCC 543 emphasised that mere acceptance of rent after the term is over does not by itself revive the lease; something more — an unequivocal assent to continued possession — is required to attract Section 116.

Clause (b) — happening of a contingent event

If the term is limited conditionally on a future event — for example, the duration of a war, the lifetime of the lessee, the survival of a particular crop — the lease ends on the happening of that event. The Supreme Court in Juthika Mulick v M Y Bal AIR 1995 SC 1142 held that the certainty required by Section 105 is satisfied so long as the date of expiry is capable of being made certain on a future date: id certum est quod certum reddi potest. A lease for ninety-nine years to a company "unless the company goes into liquidation" is a contingent term within clause (b) — though, as the Rajasthan High Court pointed out in Chauthmal v Sardarmal AIR 1959 Raj 24, where a forfeiture clause is annexed the case may fall instead under clause (g).

Clause (c) — termination of lessor's interest or power

If the lessor himself holds a limited estate, his lease cannot endure beyond it. A lease by a tenant for life ends on his death; a lease by a Hindu widow holding a widow's estate ends on her death unless justified by legal necessity (an issue closely tied to what may be transferred by a limited owner); a lease by a mortgagee in possession ends on redemption: Jhagru Mian v Raghunath AIR 1929 Pat 630. The clause is the natural corollary of the rule nemo dat quod non habet. A sub-lease determines automatically when the head lease comes to an end, although a sub-lessee lawfully created may sometimes be protected by State rent law: Da Cunha Associates Pvt Ltd v Dilip Jhangiani (2010) 6 Mah LJ 132.

Clause (d) — merger

Merger occurs when the lessee's interest and the lessor's reversion in the whole of the property vest in one person at the same time and in the same right. The Supreme Court in T Lakshmipathi v P Nithyananda Reddy (2003) 5 SCC 150 set out five mandatory ingredients: coalescence of the interests of lessor and lessee; in the whole of the property; at the same time; in one person; in the same right. There must be a complete fusion. The lessee buying a one-eighth share of the reversion does not extinguish his lease: Faqir Bakhsh v Murli Dhar AIR 1931 PC 63. A lease and a mortgage cannot merge, for neither is higher than the other: Tarachand v Sagarbai (2007) 5 SCC 392. The interest of the lessor and lessee must coincide without any intervening estate. The doctrine does not apply to government grants: DDA v Karamdeep Finance & Investment (India) (P) Ltd (2020) 4 SCC 136. Where the lessee purchases part only of the reversion, the lease is not determined; he becomes one of the co-sharer landlords of his own tenancy.

Clause (e) — express surrender

An express surrender is a yielding up of the term by the lessee to the lessor by mutual agreement. The lessee cannot surrender unless the term is vested in him, and the surrender must be to a person in whom the immediate reversion is vested. He cannot surrender to a receiver, to a lessor who has assigned the reversion, or to anyone other than the present reversioner. No particular form of words is necessary in India; the deed need not be registered if the de facto act of yielding is established. An express surrender takes effect at once and cannot be made for a future date. The Supreme Court in Kamlabai v Mangilal Dulichand Mantri (1987) 4 SCC 585 held that physical handing over of possession is not always essential — a clear arrangement substituting the old tenancy by a new one suffices.

Clause (f) — implied surrender

An implied surrender arises by operation of law in two situations: (i) the creation of a new and inconsistent relationship between the same parties in respect of the same subject matter, and (ii) relinquishment of possession evidenced by conduct. The illustration to clause (f) supplies the leading example — the lessee accepts from his lessor a new lease of the property to take effect during the continuance of the existing lease; the older lease is impliedly surrendered. The Supreme Court in T K Lathika v Seth Karsandas Jamnadas (1999) 6 SCC 632 explained that mere alteration or improvement of the existing relationship will not suffice — the new arrangement must be incompatible with the old, so that the latter must yield to permit the former to operate. The execution of a possessory mortgage by the landlord in favour of the sitting tenant has produced inconsistent decisions: Nenri Chand v Onkarlal (1991) 3 SCC 464 holds that no surrender follows merely because rent and interest are mutually adjusted; A Arumugam Chettiyar v Lokanayakamma AIR 1997 SC 280 takes the opposite view. The intention of the parties — as drawn from the deed and the surrounding facts — is the touchstone. Surrender of part of a tenancy does not amount to surrender of the entire tenancy: Krishna Kumar Khemka v Grindlays Bank PLC (1990) 3 SCC 669. The position is analogous to the rule against splitting apportioned rent obligations between transferees of part interests. Mere increase or reduction of rent does not imply a fresh tenancy displacing the old.

Clause (g) — forfeiture

Forfeiture is the most heavily litigated of the eight clauses. Three triggering events are recognised: (1) the lessee breaks an express condition with a proviso for re-entry; (2) the lessee disclaims the lessor's title by setting up a title in a third person or in himself; or (3) the lessee is adjudicated insolvent and the lease provides for re-entry on insolvency. Two operations together constitute the forfeiture — the triggering event, and a notice in writing by the lessor expressing his intention to determine the lease: Rattan Lal v Vardesh Chander AIR 1976 SC 588. The 1929 amendment dropped the misleading words "or the lease shall become void"; even where a condition makes the lease "void" on its breach, the lease is voidable at the lessor's option, not void: Hiranandhan Ojha v Ramdhar Singh AIR 1922 Pat 528. The lessor must elect to forfeit; he cannot re-enter extra-judicially by use of force, and the lessee's possession remains juridical until lawfully terminated: Raptakos Brett & Co Ltd v Ganesh Property AIR 1998 SC 3085; State of UP v Maharaja Dharmander Prasad Singh AIR 1989 SC 997.

The condition on which forfeiture is grounded must be express. A bare covenant against assignment is not broken by sub-letting unless the proviso for re-entry is annexed to it: Tamaya v Timapa (1883) ILR 7 Bom 262. The lessee's right to assign or sub-let is itself an incident of the operation of transfer under Section 108(j) and exists subject to any express bar. A condition restraining alienation without a re-entry clause is unenforceable as forfeiture; the breach gives only damages or injunction. The general scheme of conditions restraining alienation under Sections 10 to 12 is the doctrinal frame within which lease-condition forfeitures are construed. Where rent control statutes apply, the contractual forfeiture under section 111(g) does not by itself entitle the lessor to evict — the grounds in the rent statute must independently be made out: Sheela v Firm Prahlad Rai Prem Prakash (2002) 3 SCC 375. Disclaimer of the lessor's title is the second limb. The classic definition is that of Tindal CJ in Doe d Williams and Jeffery v Cooper (1840) 1 Man & G 135 — "a renunciation by the party of his character of tenant, either by setting up a title in another, or by claiming title in himself". The Supreme Court in Raja Mohammad Amir Ahmad Khan v Municipal Board of Sitapur AIR 1965 SC 1923 applied the doctrine and held that a mere refusal to pay rent or a query about title is not disclaimer; there must be a clear and unequivocal repudiation. The disclaimer must be before the suit; a denial in the written statement does not suffice in that suit, though it grounds a fresh suit: Magjati Subbarao v PVK Krishna Rao AIR 1989 SC 2187.

Clause (h) — expiry of notice to quit

A periodic tenancy is determined by the expiry of a notice to quit under Section 106. The clause is the bridge between Sections 106 and 111. No notice is needed for tenancies determined by efflux of time, by surrender, by forfeiture (except as required under section 111(g) itself), or for a tenant at sufferance. A lease in perpetuity cannot be ended by notice to quit, for there is no periodic recurrence to terminate. The lessor may give notice through counsel, in writing, signed, and served by one of the four modes prescribed by section 106(4). The Supreme Court in Bhagabandas Agarwalla v Bhagwandas Kanu (1977) 2 SCC 646 directed that the notice be construed liberally, neither pedantically nor as if every comma were load-bearing.

Section 112 — waiver of forfeiture

Once forfeiture is incurred under section 111(g), the lessor has three choices, identified by Bramwell B in Croft v Lumley (1858) 6 HLC 672 — elect to determine the lease, elect not to determine, or make no election. Section 112 deals with the second. A forfeiture is waived by acceptance of rent that has fallen due since the forfeiture, by distress for such rent, or by any other act on the part of the lessor showing an intention to treat the lease as subsisting. Two provisos qualify the rule — the lessor must be aware of the forfeiture (waiver presupposes knowledge of the right being relinquished), and acceptance of rent after the institution of an eviction suit grounded on forfeiture does not amount to waiver. Acceptance of rent under protest does not save the lessor; nor does crediting the amount to a suspense account: Croft v Lumley (supra). A demand for rent due after the breach, even one made "without prejudice", may operate as waiver: Segal Securities v Thoseby [1963] 1 QB 887. Khaitan India Ltd v Birla Cotton Spinning & Weaving Mills Ltd AIR 1962 SC 482 supplies the Indian touchstone — waiver must be inferred from a positive act of unequivocal recognition of the lease as subsisting. Lying by — passive observation of the breach without acting — is no waiver: Western Engineering Works v State of West Bengal AIR 2022 Cal 324.

Section 113 — waiver of notice to quit

Waiver of a notice to quit, unlike waiver of forfeiture, is bilateral. It depends on the consent of both lessor and lessee. The classical statement is by Maule J in Blyth v Dennett (1853) 13 CB 178 — in the case of a notice to quit, the tenancy is put an end to by the agreement of the parties, and the determination cannot be waived without the assent of both. The Supreme Court in Calcutta Credit Corp v Happy Homes AIR 1968 SC 471 and Tayabali v Ahsan & Co AIR 1971 SC 102 confirmed that a second notice to quit, served after the first has expired and the tenant has remained in possession, may operate as waiver of the first. Two conditions must coincide — express or implied consent of the recipient, and a positive act of the giver showing an intention to treat the lease as subsisting. Mere acceptance of rent after the notice has expired is not enough; intention is the touchstone. Where the rent is accepted as compensation for use and occupation, or as standard rent under a rent control Act, no waiver follows. Illustration (b) — the giving of a second notice to quit — is the most-tested limb, and is the one that produces the recurring MCQ on the difference between waiver of forfeiture and waiver of notice.

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

Where a lease has been determined by forfeiture for non-payment of rent and the lessor sues to eject, the court may, at the hearing, relieve the lessee against the forfeiture if he pays or tenders the arrears with interest and full costs of the suit, or gives such security as the court thinks sufficient for payment within fifteen days. The doctrine is equitable in origin: courts of equity in England regarded the forfeiture clause as security for the rent and granted relief whenever full compensation was possible. The Supreme Court in Pradyuman Kumar v Virendra Goyal AIR 1969 SC 1349, per Shah J, held that the forfeiture covenant for non-payment of rent is regarded as merely a clause for securing payment, and unless the tenant has by his conduct disentitled himself, the court will grant relief on the tenant paying rent due, interest, and costs. The relief is discretionary; it has been refused where the tenant has been a chronic defaulter (Namdeo Lokman Lodhi v Narmadabai AIR 1953 SC 228), where he has raised frivolous defences, or where he has withheld rent without justification. The relief is granted where the default is a one-off lapse and the tenant tenders the entire arrears at the hearing: Ram Pyare v Ram Narain (1985) 2 SCC 162. The appellate court has the same jurisdiction; failure to pay at the trial stage does not bar relief on appeal, though it may weigh against the discretion: Pradyuman Kumar (supra). The court can extend the time fixed for payment: Rakesh Wadhawan v Jagdamba Industrial Corpn (2002) 5 SCC 440.

Section 114 applies only where the lease has been determined by forfeiture for non-payment of rent under section 111(g). It does not apply where the tenancy is a periodic monthly tenancy determined by a simple Section 106 notice: Subhash Chandra v Ajay Gupta (2019) 133 ALR 454. Nor does it apply where the eviction is under a State rent control Act on the ground of default: Arun Khiamal Makhijani v Jamnadas Chetandas (1989) 4 SCC 612. The Supreme Court has cautioned in Ferozi Lal Jain v Man Mal AIR 1979 SC 794 that section 114 cannot be invoked as a backdoor route into a tenancy that has been validly terminated by other means. Where the fixed term has expired during the appeal, the lease stands determined by efflux of time and equitable relief is out of place.

Section 114A — relief against forfeiture for breach of express condition

Section 114A, inserted by Act 20 of 1929, supplies a separate relief for forfeitures grounded on breach of an express condition other than non-payment of rent. The lessor cannot maintain a suit for ejectment until he has served on the lessee a notice in writing specifying the particular breach and, where the breach is capable of remedy, requiring it to be remedied within a reasonable time. The section does not apply to express conditions against assignment, sub-letting, parting with possession or disposing of the property; nor to express conditions for forfeiture on non-payment of rent (the subject of section 114). Some breaches are by their nature irremediable — for example, user for an immoral purpose: Rugby School (Governors) v Tannahill [1935] 1 KB 87. The protection of section 114A is similar in spirit to section 114 but its ambit is narrower; it has been described by the Supreme Court in Suresh Shah v Hipad Technology (India) (P) Ltd (2021) 1 SCC 529 as an enabling provision conferring equitable jurisdiction to be exercised in appropriate cases as a matter of discretion. Where a notice under section 111(g) has been served, the requirement of a separate section 114A notice is satisfied if the same notice complies with both: Prabhat Chandra v Bengal Central Bank AIR 1938 Cal 589. A breach by a lessee of his own covenant is not ipso facto a forfeiture; the lessor must exercise his option, and until he does so the lease subsists.

Section 115 — effect of surrender and forfeiture on under-leases

Section 115 protects the rights of a sub-lessee created on terms substantially the same as those of the head lease. A surrender of the head lease does not prejudice the sub-lease previously granted; the sub-lessee becomes the direct lessee of the head lessor on the terms of the sub-lease, unless the surrender is made for the purpose of obtaining a new lease. A forfeiture, on the other hand, annuls all sub-leases — the lessor's right to resume cannot be defeated by intermediate grants — except where the forfeiture has been procured in fraud of the sub-lessee, or relief against forfeiture is granted under section 114. The principle is that a lessee cannot derogate from his own grant by surrender, but if the lessor terminates by forfeiture in invitum the sub-lease falls with the head lease: Great Western Railway Co v Smith (1876) 2 Ch D 235. The Supreme Court in Tirath Ram Gupta v Gurbachan Singh AIR 1987 SC 770 reiterated that the lessee, having parted with a part of his interest in favour of the sub-lessee, cannot surrender that part to the lessor.

Section 116 — effect of holding over

Holding over is the bridge between determination and renewal. If after determination of the lease the lessee or under-lessee remains in possession and the lessor accepts rent or otherwise assents to his continuance, a fresh tenancy is created — yearly or monthly according to the purpose of the lease, as specified in Section 106. The Supreme Court in Bhawanji Lakhamshi v Himatlal Jamnadas Dani AIR 1972 SC 819 and Shanti Prasad Devi v Shankar Mahto (2005) 5 SCC 543 emphasised that the section requires a bilateral act — an offer by the lessee evidenced by his continued possession, and an unequivocal assent by the lessor evidenced by acceptance of rent. Anar Devi v Parmeshwari Devi (2006) 8 SCC 656 reiterates that mere continuance is not enough. A tenant under a rent control Act enjoying statutory protection cannot ground a holding over on mere acceptance of rent by the landlord, for such acceptance is referable to the statute and not to a fresh agreement. The detailed treatment of tenancy at sufferance and holding over is the subject of a separate chapter; section 111 supplies only the trigger that starts the section 116 inquiry.

Where the section does not apply — rent control overlay

Section 111 governs the contractual lease. Where a State rent control Act intervenes, the contractual determination is necessary but not sufficient — the landlord cannot evict even after determination unless he makes out a ground specified in the rent statute. The Supreme Court in V Dhanapal Chettiar v Yesodai Ammal AIR 1979 SC 1745 (Constitution Bench) held that the contractual determination by section 106 notice is in fact unnecessary in proceedings under a State rent Act. The proposition was extended in Mangat Ram v Sardar Meharban Singh AIR 1987 SC 1003 — once the rent control Act takes over, the rights and liabilities of the parties are reordered, and section 108 of the TPA is largely displaced. The lessor cannot resume possession by force; the lessee's possession is juridical until decreed against him: Krishna Ram Mahale v Mrs Shobha Venkat Rao (1989) 4 SCC 131.

Practical points for the exam-aspirant

Section 111 is a one-line MCQ engine. The eight clauses must be memorised in order, with the matching ancillary section for each: clause (a) — efflux — no notice needed; clause (b) — contingent term — happens automatically; clause (c) — limited interest of lessor — no notice; clause (d) — merger — five conditions of T Lakshmipathi; clause (e) — express surrender — bilateral, no registration needed; clause (f) — implied surrender — illustration of the new lease taking effect during the old; clause (g) — forfeiture — three triggers and a written notice; clause (h) — expiry of notice to quit — read with section 106. Section 112 is unilateral waiver by the lessor; section 113 is bilateral waiver by both; section 114 is relief against forfeiture for non-payment of rent (discretionary, equitable); section 114A is relief against forfeiture for breach of an express condition (not for assignment-type covenants). Section 115 saves the sub-lessee on surrender but not on forfeiture (subject to fraud or relief). The decisions to remember by name are T Lakshmipathi (merger), Mangat Ram (rent overlay), Shanti Prasad Devi (holding over distinguished), Khaitan India (waiver of forfeiture), Anar Devi, Ram Pyare v Ram Narain (section 114 relief), Namdeo Lokman Lodhi (relief refused to chronic defaulter), and Ferozi Lal Jain (section 114 not a backdoor). The interplay with Sections 105 and 107 on creation, with Section 108 on rights and liabilities, and with the Code of Civil Procedure in the conduct of the eviction suit, completes the doctrinal picture.

Frequently asked questions

What is the difference between waiver of forfeiture under Section 112 and waiver of notice to quit under Section 113?

Waiver of forfeiture is unilateral — it depends solely on the election of the lessor. Once he accepts rent that has fallen due since the forfeiture, or does any act showing an intention to treat the lease as subsisting, the forfeiture is waived; the consent of the lessee is irrelevant. Waiver of notice to quit, by contrast, is bilateral — it requires the express or implied consent of the recipient as well as a positive act of the giver showing an intention to treat the lease as subsisting. The Supreme Court in Calcutta Credit Corp v Happy Homes AIR 1968 SC 471 stressed this distinction.

What are the five conditions for merger under Section 111(d)?

The Supreme Court in T Lakshmipathi v P Nithyananda Reddy (2003) 5 SCC 150 laid down five mandatory ingredients: (i) coalescence of the interests of the lessor and the lessee; (ii) in the whole of the property; (iii) at the same time; (iv) in one person; (v) in the same right. There must be no intervening estate. The lessee buying part of the reversion does not extinguish his lease; nor do the interests merge if held in different rights — for example, one as trustee and the other in personal capacity. The doctrine does not apply to government grants: DDA v Karamdeep Finance & Investment (2020) 4 SCC 136.

When can a court grant relief against forfeiture for non-payment of rent under Section 114?

When the lease has been determined by forfeiture for non-payment of rent and the lessor sues to eject, the court may at the hearing pass an order relieving the lessee on payment or tender of the arrears with interest and full costs, or on furnishing security for payment within fifteen days. The relief is discretionary. The Supreme Court in Pradyuman Kumar v Virendra Goyal AIR 1969 SC 1349 held that the covenant of forfeiture is regarded as merely a security for the rent. Relief is refused to chronic defaulters: Namdeo Lokman Lodhi v Narmadabai AIR 1953 SC 228. The relief is unavailable where the eviction is under a State rent control Act, or where the tenancy is a periodic monthly tenancy ended by a Section 106 notice.

Does an implied surrender under Section 111(f) require physical handing over of possession?

Not always. The Supreme Court in Kamlabai v Mangilal Dulichand Mantri (1987) 4 SCC 585 held that the absence of physical delivery is not by itself fatal where the parties have substituted the old tenancy by a fresh and inconsistent arrangement. The principle of clause (f) is that two relationships in respect of the same subject matter cannot co-exist where they are incompatible — the older yields to allow the new to operate. Mere alteration of the rent or improvement of the premises does not amount to implied surrender; a new and inconsistent contract is required. The illustration to clause (f) — the lessee accepting from the lessor a new lease to take effect during the old — is the textbook example.

Can a lessor re-enter the premises by force after forfeiting the lease?

No. The Supreme Court in Raptakos Brett & Co Ltd v Ganesh Property AIR 1998 SC 3085 and State of UP v Maharaja Dharmander Prasad Singh AIR 1989 SC 997 categorically held that the lessor must approach a competent court for possession. The lessee's possession even after forfeiture or expiry is juridical possession, and forcible dispossession is prohibited. The expression 're-entry' in the lease deed does not authorise extra-judicial methods. The principle holds even when the lessor is the State; the government cannot appropriate to itself a right of re-entry that is not recognised by law.

Does Section 111 apply to leases governed by State rent control statutes?

It applies but with a critical overlay. The contractual lease may be determined under Section 111, but the landlord cannot evict the tenant unless he makes out a ground specified in the State rent control statute. The Constitution Bench in V Dhanapal Chettiar v Yesodai Ammal AIR 1979 SC 1745 held that the contractual determination is in fact unnecessary in proceedings under such a statute. Mangat Ram v Sardar Meharban Singh AIR 1987 SC 1003 reiterated that once the rent Act takes over, the rights and liabilities of the parties are reordered. Section 114 relief against forfeiture is not available where the eviction is under a State rent statute.