Case Note & Summary
The case involves a lease deed dated 27th August 1956 between Burmah Shell Oil Storage & Distributing Company of India Ltd. (predecessor-in-title of the petitioner, Bharat Petroleum Corporation Ltd.) and the respondents, trustees of Mbona Hospital Trust. The lease was for a term of 20 years commencing from 1st January 1956 at a monthly rent of Rs.550. Clause 3(c) of the lease deed contained a renewal covenant requiring the lessee to give not less than two calendar months' notice in writing prior to the expiration of the term expressing a desire to renew. The lessee was required to have duly observed and performed all terms and conditions. The original term expired on 31st December 1975. The petitioner claimed that a notice dated 30th October 1975 was sent by registered post expressing desire to renew, but the respondents disputed receipt. The trial court and first appellate court held that the notice was not proved to have been served. The petitioner filed a writ petition challenging these findings. The High Court examined the evidence and found that the notice was not proved to have been served before the expiry of the lease. The court held that even if the notice was sent, it was not received by the respondents. The court further held that the option to renew must be exercised before the expiry of the original term; a notice given after expiry is invalid. The petition was dismissed.
Headnote
A) Lease - Renewal - Option to Renew - Clause 3(c) of Lease Deed - The lessee must give notice expressing desire to renew prior to expiration of the term; notice given after expiry is invalid and cannot be considered as exercise of option. (Paras 1-5) B) Contract - Interpretation - Strict Construction - Renewal Covenant - A covenant for renewal must be strictly construed; the condition precedent of giving notice before expiry must be fulfilled. (Paras 4-5)
Issue of Consideration
Whether the lessee's notice expressing desire to renew the lease, given after the expiry of the original term, is valid under Clause 3(c) of the lease deed.
Final Decision
The High Court dismissed the writ petition, upholding the concurrent findings of the courts below that the notice was not proved to have been served before the expiry of the lease term. The court held that the option to renew must be exercised prior to the expiration of the original term, and a notice given after expiry is invalid.
Law Points
- Option to renew lease must be exercised before expiry of original term
- Notice of renewal given after expiry of lease is invalid
- Covenant for renewal must be strictly construed
