INTRODUCTION
Tenant is referred to a person who lives in or rents something from the owner or landlord. Tenant and landlords both have separate rights and duties. The rights of tenants are protected by State Legislations as well as property laws. Tenants tend to follow some of the rules and regulations till the time he lives in the property of the landlord. There are many aspects attached to the relationship between a landlord and tenant. They also constitute contractual relations. The parties are also often called lessor (landlord) and lessee (tenant).
A contract is created between the parties so that there exists no chance of fraud. By the virtue of these contracts, tenant and landlord can also sue each other. These contracts are entered into for a specific period. On expiration, it is important to renew the contract. This relationship is also driven by need and is also referred to as contentious relation. Lease is also of two types, commercial and residential. Both of them have different terms and conditions depending upon the agreement.
In the judgement passed on August 17, 2021, the position of tenant at sufferance has been clarified. The case is in relation to the renewal of the term of tenancy by way of oral agreement.
WHO IS ‘TENANT AT SUFFERANCE’?
The residential properties are given on rent for generating a source of income. The relationship is two-way and both the parties are having their own needs. The rights that a tenant enjoys over property are for a specified period. The payment can be made by the tenant either monthly, quarterly, or annually. It depends on the contract upon which both the parties agree. The deed or contract that is made is known as “lease deed”. The lease deed includes the type of lease, method of renewal and payment, conditions on which a lease can be terminated, and other important that are necessary to avoid hindrances.
A tenant at sufferance is a tenant who continues to enjoy rights over a leased property even after the expiration of the term of the lease. In this condition, the tenant retains his possession “without permission of landlord”. For example, when the lease deed for residential property is for a term of 2 years and the tenant lives there even after being denied by the landlord, he’ll be known as a tenant at sufferance. This term plays a vital role in defining the right of a landlord. A landlord holds the right of giving the property on the lease after the end of tenure. If a tenant continues to lives in that property, it will hamper the right of the landlord of using his property.
The possession of tenants at sufferance is illegal and actions can be taken by the landlord in such situations. The tenant is liable for eviction in the eyes of law. The tenancy is a bilateral agreement and the possession can be restored unilaterally. This can only happen when the landlord accepts the offer of extension of the duration of the lease and it gets included in the contract. The landlord must know the extension and the information should be passed within a reasonable period.
IMPORTANCE OF SARFAESI ACT AND RENT ACT
The recent judgment has clarified the position of a “tenant in sufferance”. However, both the acts are important to consider the rights of both parties. Every state enacts a separate Rent act to decide some of the factors of rent. The price and other rules and regulations are followed as per the state legislation. Tenants are protected by both acts and can take action accordingly. SARFAESI Act was initially enacted to provide for the rules and regulations for recovery of security by the banks. Apart from this, SARFAESI Act plays a vital role in other aspects too. This includes the tenancy and legalities associated with it.
SARFAESI Act comes into action when the tenancy is related to the land being mortgaged to the bank. When the tenancy comes into existence, the only way to evoke is as per the Rent Act or SARFAESI Act. Though both the acts operate in two different fields, there comes a situation when both can be instilled together. This is in the condition when the bank is one of the parties in tenancy. Also, the eviction cannot be carried upon by only using the provisions of the SARFAESI Act. There is a requirement of taking into consideration the provisions of the Rent Control Act too.
The abovementioned facts have been affirmed in the case of Vishal N. Kalsaria v. Bank of India and ors in the year 2016. Both the acts play a vital in deciding the legal obligations of the tenancy. These statutes only provide for the protection to “tenants” and not “tenants in sufferance”. Both are completely different and tenant in sufferance is itself an illegal term. The position has been clarified better in the case of Hemaraj Ratnakar Salian vs. HDFC Bank Ltd.
TRANSFER OF PROPERTY ACT, 1882 VIS-À-VIS TENANCY
Apart from SARFAESI Act and Rent Control Act, the property act also plays a major role in tenancy. Section 65A of the Transfer of Property Act states the powers of the mortgagor to lease. It provides for the rights of a mortgagor to lease a property. This lease also comes into existence like other lease deeds. The only difference is that the mortgagor is involved. When there exists a case in which a tenant has entered into a lease by oral agreement, this will not involve the legality of renewal as per Section 65A of the Transfer of Property Act, 1882.
All three acts are interrelated to each other. It is necessary to follow the procedures as stated to seek protection. Not only the tenant but, landlord or the borrower also needs to comply with the provisions of statutes. When one of the acts is considered, it gives rise to the consideration of other related statutes too.
Analysis of the case of Hemaraj Ratnakar Salian vs. HDFC Bank Ltd.
Recently, in the decision given by Supreme Court, rights and liabilities of “tenant at sufferance” have been specified. In the case Hemaraj Ratnakar Salian vs. HDFC Bank Ltd., it has been observed that “no protection can be granted as per Rent Act and SARFAESI to the tenant at sufferance. The facts of the case related to illegal possession of property based on an oral tenancy. Oral tenancy refers to a situation where the tenant has been living in the property only based on a conversation. The appellant here contends he has protection as Maharashtra rent Control Act, 1999. The claims of the tenant or appellant were earlier rejected based on the non-existence of any registered tenancy.
The borrowers have initiated the proceedings as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, (SARFAESI). The reference has been placed on the case of Harshad Govardhan Sondagar v. International Asset Reconstruction Co. Ltd. In this case, it was held that it is necessary to take into account a registered agreement if, the term of the tenancy is of more than one year.
Apart from the abovementioned contention, the court has placed relevance upon Section 13(2) read with 13(3) of the SARFAESI Act. It has been stated that when both the provisions are read together, it makes the position of the Rent Act clear. In the present scenario, the Rent Act cannot be taken by the appellant as an aid as per mentioned provisions of the SARFAESI Act. According to section 13(3) of the SARFAESI Act, in case of renewal of tenancy, it is necessary to issue a notice as per Section 13(2). In this, there has to be a specific mention of the terms and conditions of the renewal. This is necessary to show the “bona fide” condition of the tenant. Along with this, Section 65A of the Property Act, 1882 need to be satisfied too.
The appeal has been dismissed by the apex court stating that the appellant, in this case, fails to show bona fide cause and no evidence is present. This makes the contention of the appellant weak and cannot be relied upon. Also, the appellant fails to show the contention of the borrower as per the provisions of SARFAESI. This gives rise to doubts on the correctness of the facts stated by the appellant. Therefore, the appellant cannot be said to be protected as per the Rent Act and also SARFAESI Act.
This was not the first time that the legality of the tenant at sufferance has been questioned. However, this case by the virtue of precedents has clarified the question in a better way. Before this, the same question arose in the year 2019, the position was the same at that time too. The statues can be interrelated for betterment too.
CONCLUSION
The judgement in the recent case has made the position of the tenant at sufferance. It is necessary to exclude this category from the protection as per statutes. This will help in the betterment of tenancy laws in the country. A tenancy is not only concerned with the rent act, it includes central legislation. To grant a wider perspective, it is necessary to relate other related statues too. This will create a balance between state and central legislations.
One more important thing that has been stated in the case is the importance of evidence. It is necessary to produce evidences in order to prove one’s stance.