Partly allowed

Kiran Dhawan v. Vivek Mittal and Another

Allahabad HC19 Dec 2018SCCR/35/2018

Case brief

AI extract

What is this about?

The court dismissed the revision challenging a decree for eviction. Relying on Supreme Court precedents, the court held that an unregistered lease for a term exceeding one year cannot be enforced, deeming the tenancy month-to-month terminable by a month's notice. Eviction was allowed but the revisionist was granted a four-month grace period to vacate upon payment of arrears.

What did the court decide?

Revision dismissed; eviction confirmed; revisionist granted 4-month period to vacate, subject to payment of arrears and mesne profits.

Kiran Dhawan Vs Vivek Mittal and Another — Landlord and Tenant | Allahabad HC (2018)

AFR

Court No. - 19

Case :- S.C.C. REVISION No. - 35 of 2018

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Revisionist :- Kiran Dhawan Opposite Party :- Vivek Mittal And Another Counsel for Revisionist :- Shree Prakash Giri Counsel for Opposite Party :- Dr. Akhilesh Kumar

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Hon'ble Manoj Kumar Gupta,J.

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Heard counsel for the revisionist Sri SP Giri and counsel for plaintiff-respondents Dr. Akhilesh Kumar Sharma.

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The instant revision has been filed under Section 25 of the Provincial Small Cause Courts Act, 1887, challenging the judgement and decree dated 17.2.2018 passed by Additional District & Sessions Judge, Court No.12, Agra decreeing SCC Suit No.65 of 2014 for eviction and recovery of arrears of rent and mesne profits.

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The suit was instituted by the plaintiff-respondents for eviction of the revisionist from property No.11B/96 Foundry Nagar, Hathras Road, Agra comprising of one hall and a tin shed. It was alleged that the rent was Rs.10,000/- per month, consequently, the provisions of U.P. Act No.13 of 1972 were not applicable to the building; that tenancy of the revisionist was terminated by one month's notice dated 25.7.2014; that the revisionist failed to vacate even after the expiry of the period specified in the notice. The revisionist contested the suit alleging that the rent was Rs.5000/- per month; that the tenanted premises was given on lease for running a karkhana; that notice dated 25.7.2014 does not validly

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terminate his tenancy in as much as lease being for manufacturing purpose, six months notice was required; that there was no default in payment of rent and that the suit was liable to be dismissed.

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The trial court framed four points for determination. On the first point, it held that the rent of the premises was Rs.5000/- per month. It also held while deciding the second point that rent being more than Rs.2000/-, the provisions of U.P. Act No.13 of 1972 were not applicable. The third point related to the validity of the notice and while deciding the said issue the trial court held that one month's notice was sufficient to terminate the tenancy. It held that in the absence of any registered lease deed, even if the tenancy was for manufacturing purpose, six months' notice was not required for terminating the tenancy. For coming to such conclusion, it placed reliance upon the judgements of the Supreme Court in Samir Mukherjee vs. Davinder Kumar Bajaj, AIR 2001 SC 1696 and Shri Janki Devi Bhagat Trust, Agra vs. Ram Swarup Jain, AIR 1995 SC 2482 . Accordingly it held that notice of thirty days given by the plaintiff-respondents resulted in valid determination of the tenancy. While deciding issue no.4, the trial court held that the plaintiff had not waived the notice by accepting rent and consequently decreed the suit.

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The sole submission of learned counsel for the revisionist is that the lease was for manufacturing purpose, consequently, the tenancy was terminable by a six months' notice as provided under Section 106 of the Transfer of Property Act, 1882 (for short 'the Act'). He submitted that in

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view of U.P. Amendment to Section 107 the decisions of the Supreme Court, on which reliance was placed by trial court, would not apply. He also placed reliance on the rent agreement Paper No. 37-Ga in submitting that the tenancy was a yearly tenancy and thus it could only be terminated by a six months' notice.

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On the other hand, learned counsel for the plaintiff-respondents supported the judgement of the trial court and submitted that the decisions of the Supreme Court, on which reliance has been placed, would fully apply.

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The agreement between the parties is dated 8.3.1984. Thereby one hall and open land enclosed by a boundary wall was let out to the revisionist for carrying on business of sheet metal. Under Clause 1, the tenancy was stated to be of one year, during which the rent agreed was Rs.1100/- per month. Clause 2 of the agreement provided that in case the tenancy continues after one year, rent would be Rs.2200/- per month and during the third year it would be Rs.2600/- per month. Clause 12 of the agreement stipulated that the tenancy could be terminated by a three months notice but not before expiry of one year.

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Under Section 107, a lease of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. The second paragraph of Section 107, as applicable in the State of U.P. provided that all other leases of

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immovable property may be made either by a registered instrument or, by an agreement oral or accompanied by delivery of possession. Section 106, provides that in the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice. Under the U.P. Amendment, the period of notice stood substituted to thirty days. Later on, by virtue of Central Amendment by Act 3 of 2003, the earlier position stood restored, however, nothing turns upon the same as the notice is not being challenged on the said ground.

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In Samir Mukerjee (supra), upon which reliance has been placed by the court below, an identical plea was considered. The tenancy in that case was created by an oral agreement. The Supreme Court, after considering the interplay between Section 106 and Section 107 held that Section 106 lays down a rule of construction which would apply only when the parties had not specifically agreed upon as to whether the lease is yearly or monthly. It was held that in case there was a valid agreement between the parties regarding the duration of a lease, section 106 would

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have no application. On the other hand, Section 107 prescribes the procedure for execution of lease. Thus, where the lease is from year to

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year or for any term exceeding one year or reserving yearly rent, it can be made only by a registered instrument and not otherwise. The Supreme Court held that since there was no registered lease agreement but only an oral agreement, it would not result in creation of a valid lease from year to year in view of the inhibition contained in first paragraph of Section 107 nor the rule of construction embodied in Section 106 would come into play. The relevant observations made in this regard in the said judgement are quoted below :-

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“ 5. Section 106 lays down a rule of construction, which is to apply when the parties have not specifically agreed upon as to whether the lease is yearly or monthly between the parties. On a plain reading of this section it is clear that legislature has classified leases in two categories according to their purposes and this section would be attracted to construe the duration of a valid lease in the absence of a contract or local law or usage to the contrary. Where the parties by a contract have indicated the duration of a lease; this section would not apply. What this section does is to prescribe the duration of the period of different kinds of leases by legal fiction-leases for agricultural or manufacturing purposes shall be deemed to be lease from year to year and all other leases shall be deemed to be from month to month. Existence of a valid lease is a pre-requisite to invoke the rule of construction embodied in Section 106 of Transfer of Property Act.

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6. Section 107 prescribes the procedure for execution of a lease between the parties. Under the first paragraph of this section a lease of immovable property from year to year or for any term exceeding one year or reserving yearly rent can be made only by registered instrument and remaining classes of leases are governed by the second paragraph that is to say all other leases of immovable property can be made either by registered instrument or by oral agreement accompanied by delivery of possession.

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7. In the case in hand we are concerned with an oral lease which is hit by the first paragraph of Section 107 of the Transfer of Property Act. Under Section 107 parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease

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in respect of any immovable property from year to year or for any term exceeding one year, or reserving yearly rent, such a lease has to be only by a registered instrument. In absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be created. If the lease is not a valid lease within the meaning of the opening words of Section 106 the rule of construction embodied therein would not be attracted. The above is the legal position on a harmonious reading of both the sections.

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10. In the present case though the appellant has claimed that it was a lease for manufacturing purpose, admittedly there was no registered written lease. Therefore, rule of construction as envisaged in Section 106 would not be applicable as the statutory requirement of Section 107 of the Act has not been satisfied. The plea of the appellant that 15 days notice terminating the present tendency is bad in law would not be sustainable ”

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(emphasis supplied)

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The Supreme Court also considered a Four Judges Bench judgement

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in Ram Kumar Das vs. Jagdish Chandra Deo, Dhabal Dev and Another, 1952 (1) SCR 269 and observed thus :-

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“In Ram Kumar Das (supra), Section 106 was considered by a bench of four judges of this court. This court held that this Section 106 lays down the rule of construction which is to be applied when there is no period agreed upon between the parties and in such cases duration has to be determined by the reference to the object for purpose for which tenancy is created. It was also held that rule of construction embodied in this section applies not only to express leases of uncertain duration but also to leases implied by law which may be inferred from possession and acceptance of rent and other circumstances. It was further held that it is not disputed that a contract to the contrary as contemplated by Section 106 of the Transfer of Property Act need not be an express contract; it may be implied, but it certainly should be a valid contract. On the facts of that case, the court held that ' the difficulty in applying this rule to the present case arises from the fact that tenancy from year to year or reserving an yearly rent can be made only by registered instrument as lays down in Section 107 of the Transfer of Property Act'. (emphasis supplied)”

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In the same judgement, the Supreme Court also quoted with

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approval the judgement in Shri Janki Devi Bhagat Trust, Agra (supra) in holding that a lease of immovable property from year to year or for a term exceeding one year, can be made only by a registered instrument. The facts of the case in Shri Janki Devi Bhagat Trust bears striking resemblance to the fact of the instant case. A lease agreement was in existence though unregistered and where-under the monthly rent payable was of Rs.75/- p.m. The tenancy was terminated by a thirty days notice. The defendants pleaded that the lease was for manufacturing purpose consequently, six months' notice was required to terminate the lease. The High Court accepted the plea of the defendant and held that although the lease was unregistered but since it was not for a term exceeding one year, it was not compulsorily registerable under the first part of Section 107. It was also held that since the lease was for manufacturing purpose, six months notice was required to terminate the tenancy. The reasoning given by the High Court was not approved by the Supreme Court, by holding thus:-

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“4. Under Section 107 of the Transfer of Property Act a lease of immovable property from year to year of for any term exceeding one year can be made only by a registered instrument. Any lease of this kind would be void unless it is created by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by an oral agreement accompanied by delivery of possession. All the courts below have held that there was a valid lease. The high Court has also recorded that it was not the contention of the respondent that his lease was from year to year. The contention was that the lease was for a term exceeding one year and was, therefore, compulsorily registerable under the first part of section 107 of the Transfer of property Act. This contention has been negatived by the High Court as also by

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both the courts below. The High Court has held that the lease was not for a term exceeding one year, and so was not compulsorily registerable under the first part of Section 107. It, however, held that since the lease was for a manufacturing purpose, six months' notice to quit was required under section 106. In its absence, termination was not valid.

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5. This reasoning is fallacious. It is true that Ex.12 which is not registered, cannot be looked at because it is not registered. But the factum of lease is not in dispute. All the courts have held that it was a lease from month to month and was not for a term exceeding one year. In view of this finding, the deeming provisions of the first part of section 106 of the Transfer of property Act cannot be attracted in the present case. ”

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(emphasis supplied)

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In the instant case, as noted above, the lease deed reserves a rent which was payable on monthly basis. Although the lease deed provided that the lessee could not be evicted during first year but it also stipulated that in case the lease continued beyond one year, the rent of the premises would be Rs.2200/- in the second year and Rs.2600/- in the third year. A combined reading of all clauses of the agreement would reveal that it was a lease for a period exceeding one year. Since it was unregistered, the terms and conditions laid down therein were not enforceable, nor binding upon the parties in view of Section 107 read with Section 49 of the Registration Act, 1908. On the other hand, if the lease is treated to be a lease for a period not exceeding one year, reserving a monthly rent, it could be validly terminated by a thirty days' notice as held by the Supreme Court in the case of Shri Janki Devi Bhagat Trust (supra). The U.P. Amendment to Section 107 which envisages that leases not covered by the first paragraph of Section 107 could be made either by a

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registered instrument or, by an agreement oral or accompanied by delivery of possession will hardly have any impact on the legal position. In that event, certainly, the duration of the lease would be from month to month. The lease would thus be terminable by a month's notice, irrespective of the fact that the premises was let out for manufacturing purpose.

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No other submission has been made by learned counsel for the revisionist. The revision lacks merit and is dismissed.

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At this stage, counsel for the revisionist prayed for some time being granted to the revisionist to vacate the demised premises, to which learned counsel for the plaintiff-respondents has no objection.

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Accordingly, the revisionist is permitted to remain in possession of the demised premises for period of four months from today subject to his furnishing an undertaking before the Judge Small Cause Court that he will vacate the demised premises on or before the expiry of this period. The undertaking shall be furnished within three weeks from today. The revisionist shall also pay the entire arrears of the decreetal amount and mesne profit as well as rent/damages for next four months, within three weeks from today. In case of default of any of the above conditions, the protection granted by this Court shall stand vacated automatically and it shall be open to the plaintiff-respondents to execute the decree.

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Order Date :- 19.12.2018 skv

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(Manoj Kumar Gupta, J.)

Kiran Dhawan v. Vivek Mittal and Another

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Kiran Dhawan v. Vivek Mittal and Another

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