Discuss the law relating to forfeiture of lease. How can forfeiture be waived?....

Question: Discuss the law relating to forfeiture of lease. How can forfeiture be waived? What relief is provided by the Law against forfeiture for non-payment of rent? [BJS 1986]

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Answer

Forfeiture of lease refers to the premature termination of a lease by the lessor on account of a breach of condition by the lessee. The law governing this is primarily found under the Transfer of Property Act, 1882, particularly in Section 111(g).

A. Grounds for Forfeiture under Section 111(g), TPA, 1882:

A lease is determined by forfeiture when:

1. The lessee breaches an express condition of the lease which provides for re-entry on such breach;
2. The lessee denies the lessor’s title or claims title in himself or a third person;
3. The lessee is declared insolvent and the lease contains a clause allowing forfeiture in such a case;
4. The lessor gives a notice in writing to the lessee of his intention to determine the lease.

Thus, forfeiture does not happen automatically; it requires a notice of forfeiture from the lessor.

A forfeiture can be waived by the lessor either expressly or impliedly. This is governed by Section 112 of the Transfer of Property Act.

A. Modes of Waiver:

• Acceptance of Rent: If the lessor accepts rent due after the breach with knowledge of the forfeiture, it is deemed to be a waiver.
• Other Conduct: Any act that shows intention to treat the lease as subsisting, such as demanding performance under the lease terms, may be considered a waiver.
• Express Waiver: A written or oral communication waiving the forfeiture.

However, if the lessor accepts rent without knowledge of the breach or under protest, it may not amount to waiver.

The law is protective of tenants in cases of non-payment of rent. Relief is primarily provided under:

A. Section 114, Transfer of Property Act, 1882:

This section allows the lessee to seek relief against forfeiture even after the lessor has commenced proceedings to eject the lessee.

The lessee must pay or tender the rent due along with interest and full costs of the suit at the hearing.

If done, the court may relieve the lessee from forfeiture and restore the lease.

B. Judicial Discretion:

The court has discretionary power to grant relief. The principle is to prevent harsh consequences for minor or remediable defaults.

• In Namdeo Lokman Lodhi v. Narmadabai, AIR 1953 SC 228: The Supreme Court emphasised that forfeiture clauses must be strictly construed, and relief should be granted in appropriate cases.
• In Raja Mohammad Amir Ahmad Khan v. Municipal Board of Sitapur AIR 1965 SC 1923: Held that acceptance of rent after knowledge of breach amounts to waiver.
• In Rahim v. Mohamed (AIR 1932 Bom 187), the court exercised discretion under Section 114 and relieved the tenant from forfeiture for non-payment of rent.

Forfeiture is a powerful remedy available to lessors but must be exercised in accordance with the legal provisions. The law balances lessor rights with protections for lessees by:

Requiring proper notice for forfeiture,

Allowing waiver in appropriate cases, and

Granting judicial relief for non-payment of rent to avoid injustice.