1. This is an application for the revision of a decree and order of the Judge of the Small Cause Court of Agra decreeing the plaintiff's suit in part. Mr. Pandey has argued the case for the plaintiff. applicant on the legal ground that in the circumstances of this particular case the Court could not assess the damages, which were payable to the plaintiff as compensation for the use and occupation of some premises but was bound to allow the plaintiff the compensation which he demanded. As the facts are not given fully in the judgment of the trial Court, it is necessary to set them forth at some length.
2. The defendant occupied some premises owned by the plaintiff-applicant at the rate of Rs. 55 per mensem. There was a lease which is admitted to have been a legal lease terminable by a month's notice. Subsequently the defendant obtained some additional premises at an additional rent of Rs. 25 per mensem. The defendant is a timber merchant and it appears that there was a rise in rentals in the neighbourhood in which the premises stand with the result that on 24th August 1931 the plaintiff sent a notice to the defendant giving him the alternative of quitting the premises, i.e., both sets of premises, by 27th September 1931, or, if he failed to give up possession of continuing his occupation at a rental of Rs. 125 per mensem for both premises, 'as rents had risen very high.' The defendant sent a reply on 20th October 1931 to the effect that he would leave the premises on 1st November 1931 but he made no reference to the proposal to increase the rent. The defendant actually vacated the place on the 25th December 1931 as the trial Court has found, and the plaintiff sued in January 1932 for arrears of rent for several months. As regards the earlier period during which the rent was Rs. 80 per mensem there is now no question before me. What I have to consider is whether the plaintiff-applicant was entitled to claim rent with effect from 27th September 1931 at the rate of Rs. 125 per mensem. The trial Court has allowed damages at the rate of Rs. 90 per mensem for the 3 months in dispute, apparently because it considered that Section 74, Contract Act, applied to the case, and this is the main bone of contention at the present stage. In his notice the plaintiff had given the defendant the alternative of quitting on 27th September 1931 or of staying on at the rental of Rs.125 per mensem, and his case was that as the defendant had failed to give up possession on the date named, he must be held to have agreed to pay rent at the rate named by the plaintiff. It does not appear that the defendant broke any contract when he failed to give up possession. He was under an obligation under Section 108(q), T.P. Act, to put the lessor into possession of the property on the determination of the lease, and there is no doubt that the lease determined on 27th September 1931, which was the date named in the notice, and which the trial Court has found to be the date of the determination of the lease. On what terms then did the defendant continue in possession of the premises? There was no renewed lease, nor does he appear to have been holding over under Section 116, T.P. Act, because the plaintiff did not accept rent from him though it may be argued, and has been argued by Mr. Pandey, that he did 'otherwise assent to the defendant's continuing in possession' within the meaning of that section. If he was holding over, the old lease would no doubt be renewed, but Mr. Pandey's argument is that owing to the terms of a suggested renewal of the lease having been named in the notice, it must be deemed that the defendant accepted the offer made, so that even if he is to be considered as a tenant holding over, and not a trespasser, he becomes liable to pay the rent claimed by the plaintiff. In the alternative however and even if he is considered as virtually a trespasser after the termination of the lease, there is some authority for holding that he is liable. I have been referred to an English case : Roberts v. Hayward (1828) 3 Car. & P. 432, in which the facts are very similar. The Chief Justice remarked:
The tenancy under the agreement expired at Midsummer, 1826. Immediately after that time, the plaintiff was a trespasser; but the landlord was not obliged to treat him as such, but might make proposals to him, to renew the relation of landlord and tenant between them. This he did, and the plaintiff did not say, 'I will go out directly.' His silence on the subject is tantamount to his saying. 'I will continue in on the terms of your proposal.'
3. In the case of Mohammad Noor v. Ashiq Beg, A.I.R. 1933 Oudh 465, in somewhat analogous circumstances, the Bench of the Chief Court held that where enhanced rate of rent is proposed by a landlord, and the tenant continues to occupy the leasehold property without any protest as to the proposed enhancement of rent, the latter should be deemed to have accepted the proposal; but when the tenant protests against such enhancement and the landlord does not take ejectment proceedings, he is not entitled to claim rent at the enhanced rate. It will be observed in the present case that the landlord did propose enhanced rent at a stated rate and the defendant did not protest but announced his intention of vacating by particular date which however he did not do. It has been argued by Mr. S.N. Seth on behalf of the opposite party that the plaintiff's case throughout was that the defendant was a trespasser and that there was no issue on the question of whether he was a tenant or not. If such an issue had been framed, it is argued, the defendant would have been able to prove that being a timber merchant it was not possible for him to vacate the premises at such short notice. For this reason indeed he would distinguish the present case from the one which came before the Oudh Chief Court, where the tenant had been holding over for a considerable period. The distinction however appears to me to be in degree but not in kind. Nor was the defendant really prejudiced by the absence of an issue as to the existence of a tenancy. Whether he was a tenant or a trespasser he could only claim one month's notice, which he received: and if it was not sufficient to enable him to vacate the premises he had only himself to blame.
4. It seems to me that the decision of the trial Court, which appears to be based on Section 74, Contract Act, is wrong for the reason given, viz., that the defendant did not break a contract, and his liability therefore is not one for damages for breach of contract that has to be assessed by the Court in spite of the fact that a sum has been named by the injured party. No provision of any Indian law has been shown to me that covers the entire circumstances of the case and I think that I am justified in following the English decision which is based on the Common Law of England. The defendant may have been technically trespasser, but his position really was different from that of a traspasser who has no contract with the landlord. The tenancy was, so to speak, in a state of suspended animation, and the landlord in such circumstances was not in a position to know exactly what his rights and liabilities were. When the tenant refused to vacate and remained in possession he must be held to have agreed by implication to hold over and to have accepted the proposal to pay rent at the enhanced rate proposed by the landlord in his notice, and I therefore find that the amount of the decree given to the plaintiff ought to be increased by Rs. 105 at the rate of Rs. 35 per mensem for the three months.
5. Two minor points have been argued on behalf of the applicant. The trial Court has refused to allow interest on the sum decreed for arrears of rent. No reason has been given by the trial Court. It is not argued that there was any contract to pay interest, but where interest has been allowed by the Courts as damages by way of compensation it has, I think, invariably by usage. It has not been proved in the (present case that there is any usage by which interest is allowed for arrears of rent and it has been pointed out that the 'receipts on the record show that in the past no interest had been paid or demanded for arrears of rent. The trial Court was therefore justified in refusing interest. The defendant claimed a set-off which the Court has allowed. This was for the value of the timber supplied by the defendant to the plaintiff, and it was claimed as a legal set-off under Order 8, Rule 6. It is pointed out that no court-fee was paid and therefore no legal set-off should have been allowed. If however the setoff could be claimed as an equitable set-off there is no reason why the Court should not have allowed it without payment of a court-fee. A legal set off requires a court-fee because it is a claim that might be established by a separate suit in which a court-fee would have to be paid. But there is no such fee required in the case of an equitable set-off (which is for an amount that may equitably be deducted from the claim of the plaintiff where a court-fee has been paid on the gross amount. An equitable setoff may however only be claimed by the defendant for a claim arising out of the same transaction as the plaintiff's claim. In the present case it has been proved by the defendant's evidence that there was an agreement between the parties that the value of the timber should be deducted from the rent, and in my opinion, this agreement has the effect of bringing the matter within the same transaction as the suit for arrears of rent. I do not think therefore that the trial Court has acted illegaly in disallowing interest or in allowing the set-off. On the first point argued however I consider that the applicant is entitled to succeed, and I therefore allow the application to this extent and modify the decree and order of the trial Court by directing that an additional sum of Rs. 105 be decreed to the plaintiff. The plaintiff is also entitled to pending and future interest which for some reason or other the trial Court has disallowed. Parties will receive and pay costs in proportion to their success or failure.