Dismissed

Padma Udharam Thadani and Others v. Mazda Theatres Private Ltd. and Another

Bombay HC4 Sept 2013CRA/449/2009

Case brief

AI extract

What is this about?

The High Court dismissed a Civil Revision Application challenging an appellate order. It upheld the requirement for mandatory registration of a Deed of Assignment involving tenancy rights in immovable property under Section 17(1)(b) of the Registration Act, 1908, rejecting the argument that the transfer was incidental to a business sale.

What did the court decide?

The Civil Revision Application is dismissed. Leave granted to the applicants to file a stay undertaking.

Padma Udharam Thadani and Others Vs Mazda Theatres Private… — Property and Title | Bombay HC (2013)

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1 / 6 CRA/449/2009

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Tapadia RR/B.903

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL REVISION APPLICATION NO.449 OF 2009 Padma Udharam Thadani and Ors

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..Applicants

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Mazda Theatres Private Ltd and Anr

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.. Respondents

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Mr. P. S. Dani, Advocate for the Applicants. Mr. Atul G. Damle, Advocate for Respondent no.1.

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CORAM : R.G.KETKAR,J. DATE : 04/09/2013

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PC:

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Heard Mr. P.S.Dani, learned counsel for the applicants and Mr. A.G.Damle, learned counsel for respondent no.1 at length.

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By this application under Section 115 of the Code of Civil Procedure, 1908 (for short, 'C.P.C.') the original defendant nos 2A to 2C have challenged the Judgment and decree dated 8.5.2009 passed by the Appellate Bench of the Court of Small Causes in Appeal No.559 of 2004. By that order, the Appellate Court allowed the Appeal preferred by the first respondent and quashed and set aside the Judgment and decree dated 12.4.2004 passed by the learned trial Judge in R.A.E Suit No.392/894/1993 and decreed the suit instituted by the first respondent.

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In support of this Application, Mr. Dani invited my attention to the case made out by the first respondent in the Plaint. Respondent no.1 contended that since about September, 1991 the plaintiffs started receiving rent in respect of the suit premises

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2 / 6 CRA/449/2009

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by cheque along with covering letter written on the letter-head of M/s Vinod Films, of which defendant no.1 was the proprietor. The said cheques and covering letters were not signed by defendant no.1. The plaintiffs, through their Advocate, addressed a letter dated 18.1.1992 to defendant no.1 and sought information. Defendent no.1, by reply dated 20.2.1992, informed the plaintiffs that he had assigned the business of his firm M/s Vinod Films together with its goodwill, stock-in-trade etc., and the benefits of the tenancy rights in respect of the suit premises as incidental to sale of the said business from 1.10.1987 to defendant no.2. Mr. Dani invited my attention to the Deed of Assignment dated 20.10.1987 and in particular the following recitals :

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“... .. the said business being carried on by the Assignor in the said firm, name and style of M/s Vinod Films as the sole proprietor thereof AND WHEREAS the Assignor being the absolute owner of the said business etc. having agreed to transfer and assign unto the Assignee the said business etc, together with the distribution rights of the films “Gauri Pooja” and “Raj Kanya” for Bombay Presidency as known in the Film Trade, together with the goodwill thereof, stock-in-trade, telephone, electric connections, all other benefits, rights, advantages, privileges etc., furniture, fixtures, fittings etc, being three cupboards, chairs, tavles etc, of and concerning the said business and including benefits of tenancy rights in respect of the said business premises in which the said business is carried on but excluding all liabilities including Sales Tax, Income Tax and any other outstanding liability and outstanding debts, at or for the consideration of

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3 / 6 CRA/449/2009

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Rs.85,000/- (Rupees Eighty Five Thousand only) AND WHEREAS the Assignor has agreed with the Assignee to assign and transfer the benefits of tenancy rights in respect of the said business premises as incidental to the sale of the said business as a going concern unto the Assignee (no separate consideration moving from the Assignee to the Assignor in respect thereof) but in consideration of the Assignee executing a covenant in favour of the Assignor for payment of the rents in respect of the said business premises to the landlords, Mazda Theatres Private Limited and the observance and performance of the terms and conditions and stipulations of the said tenancy rights in respect of the said business premsies in the manner hereinafter appearing AND WHEREAS the said consideration of Rs.85,000/- has been apportioned as under :

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Rs.25,000/- for stock-in-trade, furniture,

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fixtures, fittings etc.

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Rs.60,000/-For goodwill and other intangible rights.

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___________ Rs.85,000/-

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He submitted that perusal of this Deed of Assignment would clearly shows that this is not a case of unlawfully subletting but clearly assignment of a going concern along with stock-in-trade, good will etc. The tenancy rights were transferred incidentally to the transfer of business etc. effected under that document viz assignment of business. He invited my attention to Section 15 of the Bombay Rents, Hotel and Lodging Rates Control Act,1947 (for short, 'Act') as also the Notification dated 13.9.1963 and in particular clause (2) to that schedule. He submitted that under the provisions of the Act, it is not necessary that the tenancy

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4 / 6 CRA/449/2009

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agreement is required to be registered compulsorily. He also relied upon Section 107 of the Transfer of Property Act, 1882 which lays down the manner in which leases are to be made. He also invited my attention to Section 17 of the Registration Act, 1908 and submitted that since the tenancy is transferred incidentally to assignment of business, the Deed of Assignment is not required to be registered compulsorily. He invited my attention to the impugned order of the Appellate Court and in particular paragraph 16 as also paragraph 19. He, therefore, submitted that the application requires consideration.

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On the other hand, Mr. Damle supported the impugned order. He submitted that even before the purported Deed of Assignment dated 20.10.1987, D.W.1 admitted that defendant no.2 was in possession of the suit premises. He submitted that in order to cover up unlawful subletting by defendant no.1 in favour of defendant no.2, the Deed of Assignment was executed on 20.10.1987. He submitted that having regard to Section 17 of the Registration Act, 1908, the assignment is required to be compulsorily registered.

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I have considered the rival submissions made by the learned counsel appearing for the parties. I have also perused the material on record. The Appellate Court observed in paragraph 19 that even prior to execution of the Assignment

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5 / 6 CRA/449/2009

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Deed, the assignee ie defendant no.2 was in possession of the suit premises and the said fact was admitted by D.W.1. After considering the Deed of Assignment in its entirety, the Appellate Court observed in paragraph 21 that under the Deed of Assignment there is no assignment as made out by defendant no.2 but there is complete relinquishment of rights by defendant no.1 in favour of defendant no.2. Apart from that, perusal of the Deed of Assignment also shows that the tenancy rights as also furniture, fixtures were assigned by defendant no.1 in favour of defendant no.2 for consideration of Rs.85,000/-. Section 17(1)(b) reads as under :

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“17. Documents of which registration is compulsory -

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(1) xxx xxx xx

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(a) xxx xxx xx

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(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;”

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In view of this, I am of the opinion that the Appellate court was justified in holding that the Deed of Assignment in question was required to be compulsorily registered. The submission made by Mr Dani that the tenancy agreement is not required to be registered compulsorily and consequently the Deed of Assignment is not required to be compulsorily registered, has no merit, as under section 17(1)(b), extracted herein above, the

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6 / 6 CRA/449/2009

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Deed of Assignment in respect of creation of any right, title or interest of value of Rs.100 and upwards of any immovable property, is required to be registered compulsorily. In view thereof, no case is made out for invocation of powers under section 115 of C.P.C. The Application fails and the same is dismissed.

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At this stage, Mr Dani orally applies for stay of this order for a period of four months from today. He states that on or before 23.9.2013 the applicant and others who are in possession of the suit premises will file an undertaking in this court after giving advance copy to other side incorporating therein (i) that the applicants are in possession of the suit premises and that nobody else is in possession; (ii) that they have neither created any third party interests nor parted with possession; and (iii) that they will hereafter neither create third party interests nor part with possession of the suit premises and (iv) that in case they are unable to obtain suitable orders from higher Court within the stipulated period, they will hand over possession of the suit premises to the respondents. Subject to filing undertaking in this court on or before 23.9.2013, the decree shall not be executed for a period of four months.

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(R.G.KETKAR, J.)

Padma Udharam Thadani and Others v. Mazda Theatres Private Ltd. and Another

Case brief

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Padma Udharam Thadani and Others v. Mazda Theatres Private Ltd. and Another

Case brief

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