Commercial tenants sought a 99-year lease and resisted ejectment based on goodwill payments and periodic rent increases. The Court rejected perpetual tenancy and waiver of the quit notice, upheld termination of the monthly tenancy, and dismissed both appeals, leaving the ejectment decree and refusal of specific performance intact.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 23RD DAY OF DECEMBER 2021
BEFORE
THE HON’BLE Dr. JUSTICE H.B.PRABHAKARA SASTRY
R.F.A.No.2084 OF 2016
C/w. R.F.A.No.2085 OF 2016
BETWEEN:
( By Sri P.D.Surana, Advocate )
AND:
Sri B.R.Shankar, S/o Ramaswamappa, Aged about 54 years, R/at No.55, D.K.Lane, Bengaluru-560 053. .. Respondent (common in both Appeals) ( By Sri Ramachandra, Advocate )
RFA.No.2084/2016 is filed under Section 96 of Code of Civil Procedure, praying to set aside the judgment and decree dated
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17.10.2016 as per the common judgment made in O.S.No.2008/2013 and O.S.No.2004/2015 so far it relates to O.S.No.2008/2013 on the file of the Court of the XXXI Addl.City Civil & Sessions Judge, Bengaluru City (CCH-14) and reverse the same in the interest of justice.
RFA.No.2085/2016 is filed under Section 96 of Code of Civil Procedure, praying to set aside the judgment and decree dated 17.10.2016 as per the common judgment made in O.S.No.2008/2013 and O.S.No.2004/2015 so far it relates to O.S.No.2004/2015 on the file of the Court of the XXXI Addl.City Civil & Sessions Judge, Bengaluru City (CCH-14) and reverse the same in the interest of justice.
These Appeals having been heard through Physical Hearing/Video Conferencing Hearing and reserved on 17.12.2021, coming on for pronouncement of Judgment this day, the Court delivered the following:
JUDGMENT
RFA.No.2084/2016 is the plaintiffs' appeal and
RFA.No.2085/2016 is the defendants' appeal. Both these appellants are the same individuals. The present appellants, as plaintiffs, had instituted a suit in O.S.No.2008/2013 against the present respondent in the Court of learned XXXI Addl.City Civil & Sessions Judge, Bengaluru City (CCH-14) (hereinafter for brevity referred to as trial Court'), for the relief of specific performance by seeking a direction to the defendant therein to execute a registered Lease Deed in their favour for a period of 99 years incorporating the terms that the rent payable from 01.01.2012 is 7,935/- and the same has to be
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increased by 15% once in three years in respect of suit schedule shop premises.
The suit schedule property (henceforth for brevity referred to as `suit schedule property') in both the suits are one and the same, which is a portion of commercial premises comprising ground and mezzanine floors of property bearing old No.45, new No.55, situated at D.K.Lane, Bengaluru560 053, measuring East to West 23 ft. and North to South 17 ft., with a height of 15.75 ft., with basic amenities.
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was transferred and made over to the Court of learned XXXI Addl.City Civil & Sessions Judge, Bengaluru City (CCH-14) (the trial Court) and was renumbered as O.S.No.2004/2015.
Lessor') was that he is the absolute owner of the suit property which was acquired by his father through a Partition Deed. After the demise of his father, he has become the absolute owner of the property and is in possession and enjoyment of the property with his family members. The said property comprises the suit schedule property as a part of it. The defendants (henceforth for brevity referred to as Lessees') in order to run their business in garments, requested him to lease out the suit property. Accordingly, the Lessor agreed to let out the suit premises on a monthly rental basis, in which regard, both Lessor and Lessees entered into a Lease Agreement on 17.05.2000. At the time of executing the Lease Agreement, the Lessees agreed to pay a sum of 1 lakh as a Security Deposit and monthly rent of 3,750/-. It was further agreed under the Agreement that the rent at 10% on theRFA.No.2084/2016 C/w. RFA.No.2085/2016 5
existing rent has to be enhanced once in three years. The Lessor who was the plaintiff in the said suit was residing in the second floor of the same building. The Lessor further contended that he required the schedule premises for his personal use and occupation and wanted to convert the hind portion of the schedule premises as room for his daughters and he wanted to establish his own business in the remaining portion. As such, he requested the Lessees to vacate the schedule premises in the first week of February 2011. However, the Lessees denied to vacate the premises which made the Lessor to issue a quit notice on the date 23.02.2011 to the Lessees terminating the tenancy.
The Lessees as defendants in O.S.No.2004/2015 (old No.S.C.No.1316/2012) filed their written statement admitting
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that the Lessor was the katha holder of the property and is paying the municipal taxes. However, they contended that in the suit schedule premises, they are doing the wholesale cloth business and the said business is concentrated in and around the D.K.Lane and Chickpet area. As such, it is in that area, they have to continue their business and the said business cannot be carried on if the lease period is for a shorter duration.
They further contended that there is a custom in the said area to let out the schedule premises on custom basis and tenancy will be granted after collecting the Goodwill amount. They further contended that they approached the Lessor in the year 2000 when the building was under construction and talks were concluded between them on the date 17.05.2000, wherein it was agreed that the Lessees have to pay a sum of 20 lakhs to the Lessor for leasing the schedule premises on permanent basis. In that regard, an Agreement was executed on the date 17.05.2000. The Lessor had issued a Goodwill amount receipt dated 17.05.2000. Under the said receipt, the Lessees have paid 3 lakhs and the remaining `15 lakhs was agreed to be paid before delivery of the premises. Accordingly, the said
RFA.No.2084/2016 C/w. RFA.No.2085/2016 7
amount was also paid to the Lessor which has been endorsed on the document styled as Goodwill Receipt dated 17.05.2000. The Lessees have also contended that the remaining amount of `2 lakhs was received by the Lessor under the Lease Agreement separately executed by him in favour of the Lessees. It was further contended by the Lessees that as per the understanding, the tenancy of the Lessees commenced under the plaintiff eighteen months after the date 17.05.2000 and the tenancy agreement was permanent in nature with a provision of periodical increase in the rent once in three years by 10%. The Lessees admitted that the Lessor had issued a notice dated 16.10.2004 purporting to terminate the tenancy. At that point of time, the parties further discussed and it was clarified between the parties that the tenancy has to be extended from time to time by increasing the rent at 15% once in three years. The Lessees also contended that the premise is required for the purpose of carrying on the business for the benefit of their family members.
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pendency, the Lessees filed a suit in O.S.No.2008/2013 against the Lessor for the relief of specific performance. The Lessees, as the plaintiffs in the said suit, reiterated their contentions taken up by them about the alleged facts of the case of what they have contended in O.S.No.2004/2015 in their written statement. They specifically contended that, it was agreed between the Lessor and Lessees that the Lessees have to pay from time to time, the Goodwill/Security Deposit of `20 lakhs to lease-out the suit property which was proposed to be constructed then, to them by the Lessor. Accordingly, the Goodwill amount receipt dated 17.05.2000 in favour of the first lessee, who is the wife of the second lessee, was executed by the Lessor.
The Lessees further contended in their plaint that, to establish wholesale business, it takes years together, as such, the business cannot be commenced or established in a premise taken for a shorter duration. It is impossible for the Lessees to find out any alternative accommodation in the area of Chickpet where the wholesale textile business is concentrated. The Lessees contended that the tenants who are in occupation in that area are all permanent tenants having occupied the shops
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by paying the Goodwill/Premium to the owners and the tenancy is continued by way of extension from time to time on increasing the rent by 10% to 15% once in three years. The very same procedure was adopted in their case also. They further stated that the Lessor was agreeable for the same. Accordingly, the Lessees agreed to pay a sum of 20 lakhs to the Lessor for letting out the suit property in their favour. In that regard, both of them entered into an Agreement dated 17.05.2000. The Lessor had executed a receipt titled as Goodwill amount receipt on 17.05.2000. Thereafter, the Lessees became the tenants in the suit property, wherein they established their wholesale textile business under the name and style Ratan Fashions', which business was maintained by the second lessee (2nd plaintiff) for the business of both the Lessees. They reiterated that the tenancy was for permanent duration. Accordingly, the Lessor had leased the suit property for a permanent duration, however, with a continuation clause of tenancy by enhancing the rent once in three years. Since the lease was a permanent lease, the Lessees incurred huge cost in equipping the suit property with required furniture for carrying on wholesale textile business.
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The Lessees as plaintiffs in their plaint have also stated that the entire agreed amount of 20 lakhs was paid by them to the Lessor, which includes payment of a sum of 1 lakh and another sum of 1 lakh in the form of cheques dated 17.05.2000. The Lessees as plaintiffs have also stated that the Lessor (defendant therein) issued a notice dated 16.10.2004 for recalculation of the rent amount, otherwise, purporting to terminate the tenancy. Thereafter, the Lessor caused another notice dated 05.12.2005 repeating the same allegations made in the previous notice. Subsequently, both the parties reached an agreement dated 30.01.2006 and reached to an understanding, which was communicated by the Lessor to the Lessee No.1 by way of letter dated 30.01.2006, wherein, the monthly rent was fixed at 6,000/- commencing from 01.01.2006 and it was also agreed for increase of the rent by 15% once in thirtysix months and the tenancy has to continue from to time by increasing the rent by 15% once in three years. The Lessees as a plaintiffs in O.S.No.2008/2013 also stated that as per their understanding, the rent was increased from 6,900/- to 7,935/- per month with effect from 01.01.2012. The rent payable from the date 01.01.2015 was
11
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9,125.25 ps. per month for another period of thirtysix months. This increase was made as per the agreement entered into by the parties which was affirmed on 30.01.2006 by the Lessor. Therefore, the Lessees having faith in the Lessor did not obtain any registered Deed of Lease from the Lessor. With this, they contended that the suit of the Lessor in S.C.No.1316/2012 (O.S.No.2004/2015) for ejectment is frivolous and the Lessor is liable to execute a Lease Deed, at least, for a period of 99 years, incorporating the terms as agreed by the parties in respect of the suit property. With this, they sought for a direction to the Lessor (defendant therein) to execute a registered Lease Deed in their favour (Lessees favour/plaintiffs therein) or in favour of the 1<sup>st</sup> plaintiff therein for a lease period of 99 years incorporating that the rent payable from 01.01.2012 is 7,935/- and the same has to be increased by 15% once in three years in respect of the suit property.
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the premises on a perpetual term on a Premium/Goodwill/ Security Deposit of 20 lakhs in favour of the Lessees. Though he admitted that the Lease Agreement dated 17.05.2000 was entered into between them, but, contended that the lease period mentioned in the said agreement was for a specific period of ten years. He further contended that as he had constructed the shop at the whims and vibes of the Lessees, they have paid the expenses of mezzanine floor asGoodwill of 1 lakh. The another sum of 1 lakh was paid as Security Deposit under the Lease Agreement dated 17.05.2000. He specifically stated that at no point of time the Lessees have paid 20 lakhs to him as Goodwill. He contended that lease was only for a period of ten years and it has stood determined thereafter. He further contended that after the receipt of the notice issued by him, the Lessees have agreed to pay a monthly rent of `6,000/- and for further enhancement of the rent at the rate of 15% on the said rent once in three years, however, he denied that the lease was in perpetuity.
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13
Issues in O.S.No.2004/2015 :
Issues in O.S.No.2008/2013 :
himself examined as PW-1 and got marked documents from
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Exs.P-1 to P-3. The lessee No.2 Sri Ramesh Kumar Punamiya got himself examined as DW-1 and got marked documents from Exs.D-1 to D-6(b). The trial Court after hearing both side, while answering issue Nos.1, 3 and 4 in the negative and issue No.2 in the affirmative in O.S.No.2008/2013 and answering issue Nos.1 and 2 in the affirmative in O.S.No.2004/2015, dismissed the suit in O.S.No.2008/2013 and decreed the suit in O.S.No.2004/2015. It directed the Lessees to hand over the vacant possession of the suit property to the Lessor within three months from the date of the judgment. It is challenging the said judgment and decree, the Lessees have preferred both these appeals.
RFA.No.2084/2016 C/w. RFA.No.2085/2016
15
_18 lakhs +_ 1lakh = ` 19 lakhs?RFA.No.2084/2016 C/w. RFA.No.2085/2016
16
The witness was subjected to a detailed crossexamination and certain admissions regarding the receipt of `18 lakhs by him from the Lessees were brought out.
O.S.No.2008/2013, was examined as DW-1, who in his examination-in-chief filed in the form of affidavit evidence has reiterated the contentions of his plaint averments in O.S.No.2008/2013 and the summary of written statement in O.S.No.2004/2015. In his support, he got produced and
RFA.No.2084/2016 C/w. RFA.No.2085/2016
17
marked a notorised copy of alleged Goodwill amount receipt at Ex.D-1, a notorised true copy of the alleged letter dated 30.01.2006 shown to have been written by Lessor to Lessee No.1 at Ex.D-2, a notorised true copy of an alleged Lease Agreement dated 17.05.2000 at Ex.D-3, two legal notices dated 16.10.2004 and 05.12.2005 at Exs.D-4 and D-5. A letter by the Lessor to the Lessees dated 30.01.2006 alleged to be a settlement by the Lessor at Ex.D-6. All these Exs.D-1 to D-6 were confronted to PW-1 in his cross-examination.
DW-1 was also cross-examined in detail from the Lessor's side.
Lease Agreement’ as evidenced in Ex.D-3 with respect to suit schedule property. It is also an undisputed fact that as per the Agreement at Ex.D-3, the Lessees were paying a monthly rent at 3,750/- to the Lessor,18
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however, the Lessor contending that the leased property has got a carpet area of not just 320 sq.ft. in the ground floor and it has also got another 320sq.ft. area in mezzanine floor, demanded a monthly rent of 6,000/-commencing from 01.01.2006 for the entire premises consisting of ground floor and mezzanine floor. It is also not in dispute that subsequent to the said demand, the Lessee continue to pay the enhanced rent at 6,000/- per month commencing from 01.01.2006 to the Lessor. It is also not in dispute that the Lessor had issued two legal notices to the Lessee as per Exs.D-4 and D-5 respectively terminating the lease and asking them to vacate and handover the vacant possession of the suit property. However, these two notices were withdrawn by the Lessor under his letter dated 30.01.2006, which is at Ex.D-6. Even though a document shown to be a photocopy of a letter said to have been executed by the Lessor in favour of Lessee No.1 and dated 30.06.2006 is said to have been confronted to PW-1 and got it marked as Ex.D-2, however, the exhibited document though is a letter shown to have been written by the Lessor to the Lessee No.1, but, the said letter is not dated 30.06.2006, and it is dated 30.01.2006, the original of which is
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19
also subsequently confronted to PW-1 and got it marked as Ex.D-6. As such, Exs.D-2 and D-6 are the same documents, however, they are the copy and original respectively.
20 lakhs as Goodwill from the Lessee No.1, however, in his cross-examination he has admitted several suggestions as true regarding the receipt of a Goodwill amount of 18 lakhs. He has admitted the following amounts from the Lessees:| Date | Amount |
|---|---|
| 23.09.2000 | `2,00,000/- |
| 25.10.2000 | `2,00,000/- |
| 20.11.2000 | `25,000/- |
| 24.11.2000 | `1,75,000/- |
| 08.12.2000 | `1,25,000/- |
| 29.01.2001 | `2,00,000/- |
| 19.02.2001 | `50,000/- |
| 13.03.2001 | `3,00,000/- |
The total of the above comes to `12,75,000/-. However,
in the very next sentence, he has admitted a sentence as true that in total he has received a sum of `18 lakhs from the
20
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defendants, but, volunteered to say that he had returned the said amount and striked out the writings and requested for returning of Ex.D-1. The defendants (Lessees) informed that Ex.D-1 is required for the tax purpose. Further, PW-1 has also admitted a suggestion as true that he had received a sum of 3 lakhs on 17.05.2000. Thus, the Lessor receiving a sum of 18 lakhs as Goodwill amount has stood established by virtue of his specific admission in his cross-examination. However, the said payment of alleged amount of `18 lakhs which is shown as Goodwill amount in Ex.D-1 has not been mentioned or referred to in the Lease Agreement at Ex.D-3.
20 lakhs or 18 lakhs as Goodwill. Therefore, when it is his contention that he had notRFA.No.2084/2016 C/w. RFA.No.2085/2016 21
received any such amount and when the Lessees have elicited in the cross-examination of PW-1 that Lessor had received a sum of `18 lakhs from the Lessess as Goodwill, it is in that regard, to overcome such admission on the part of the Lessor, more details were elicited in the cross examination of DW-1 to the effect that there was nothing due payable to the Lessees by the Lessor. It is in that juncture, several details were also elicited from DW-1 in his cross-examination.
20 lakhs in total by the Lessees to the Lessor, as analysed above, the Lease Agreement at Ex.D-3 speaks only about payment of a total sum of 2 lakhs through cheque, wherein 1lakh was towards security amount and another sum of1 lakh was towards Goodwill. However, the said agreement nowhere mentions about the liability of the Lessor to refund the said amount to the Lessees at any point of time.The other document which speaks about the Goodwill, as observed above, is Ex.D-1. Ex.D-1 speaks about payment of a sum of 18 lakhs as Goodwill and it does not speak about its return. PW-1 in his cross-examination has stated that he has returned the said sum of 18 lakhs to the Lessees, in which
22
RFA.No.2084/2016 C/w. RFA.No.2085/2016
regard, an endorsement made by the Lessor acknowledging the receipt of Goodwill in part payments in different sums made on the backside and continuation sheet of Ex.D-1, were cancelled. The Lessees have not denied or disputed the said striking of the entries, though called it as an act of a child of the Lessees. However, except stating so, they have not proved the same. Therefore, the evidence of PW-1 that he has repaid the entire amount, as such, not liable to pay any amount, appears to be more nearer to the truth.
23
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is required to be noticed is that no where the Lessees either in their pleading or in their evidence have stated that the alleged amount of Goodwill is a refundable amount. On the other hand, throughout they have been stating that payment of a lumpsum amount to the Lessor at the time of entering into Lease Agreement in order to occupy the leased premises has been a custom prevailing in and around Chickpet area where the suit property is also located. A suggestion to that effect to PW-1 in his cross-examination has also been admitted as true by him. Even in their plaint in O.S.No.2008/2013, the Lessees have stated that they agreed to pay a sum of 20 lakhs to the Lessor for letting out the suit schedule shop premises. However, no where they have stated that a sum of 18 lakhs which is said to have been paid in cash by them was a refundable amount. On the other hand, they themselves have called it as an amount towards Goodwill. As such, the document at Ex.D-1 is also called as Goodwill receipt, but, not either as a refundable Security Deposit amount or a refundable advance amount or even a loan which is repayable.
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24
Therefore, even though the Lessor has not produced any document to show that he has returned the said sum of `18 lakhs to the Lessees, but, he has shown that it is only after payment, the entries regarding the receipt of Goodwill amount by him in installments in Ex.D-1 were cancelled and also the original documents were returned to him by the Lessees.
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25
assured of getting the premises on a perpetual lease, is not acceptable.
Lessees’) and it mentions of Lessees having paid a Security Deposit of 1 lakh by way of cheque and a Goodwill amount of 1 lakh, which is also in the form of a cheque to the Lessor. Thus, as per Ex.D-3, the total amount paid was only a sum of 2 lakhs, but, the said document nowhere whispers about the alleged Goodwill said to have been paid under Ex.D-1 amounting to a sum of `18 lakhs which is for the reasons best known to the parties.RFA.No.2084/2016
26
" 3. PERIOD OF LEASE :
The lease shall be for a period of ten years commencing from First day of December 2000. However, by mutual consent, parties may extend the lease for such further period or periods as may be agreed upon from time to time."
It is relying upon the said Clause, the Lessor has issued termination notice, the latest of which is at Ex.P-2 and dated 02.06.2012 and stated that since the lease period is expired, the Lessee No.2 was requested to vacate the premises and handover the vacant possession of the suit property to the Lessor. Admittedly, the Lessees have not replied to the said notice even though they have acknowledged the receipt of the same. However, the contention of the Lessees and more particularly, the argument of learned counsel for the Lessees/appellants is that, since the Lessor has admitted the enhanced rent at 6,900/- subsequent to the alleged expiry of the lease and up to 31.12.2011 and has accepted the further enhanced rent at the rate of 7,935/- per month from the date 01.01.2012, the notice of termination has come to an end.
27
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Hirjibhay Warden and another, reported AIR (36) 1949 Federal Court 124 , wherein with respect to Section 115 of Transfer of Property Act, 1882 (hereinafter for brevity referred to as `T.P.Act’) and termination of tenancy by issuing a notice, in Paragraph 19(a) of the judgment, it was observed that, when money was paid as rent, it did not lie in the mouth of the plaintiff to say that he would receive the money but not as rent. Accordingly, it was held per majority that monthly tenancy has come into existence by acceptance of the rent subsequently.
in his argument relied upon three reported judgment, which are as below :
In Sarup Singh Gupta -vs- S.Jagdish Singh and others,
reported in 2006 AIR SCW 1996, with respect to Section 13 and Section 111(b) of T.P.Act and on the concept of waiver of quit notice, was pleased to observe that, acceptance of rent by landlord for the period subsequent to quit notice would not by itself sufficient to conclude that notice was waived. The landlord even though accepting rent, filing and prosecuting eviction suit, cannot be said to have waived the notice.
28
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" The undisputed position is that the appellant is the landlord and the respondent is the tenant and the period of tenancy is over. No doubt after the termination of the tenancy, at the first instance by a notice, there were some amounts accepted by the appellant at enhanced rate but that is claimed by the appellant to be towards damages. This was followed by a second tenancy termination notice. There is no fresh tenancy created nor documents executed in that behalf. Thus, at best in our view, the respondent is a tenant on a month to month basis."
In the instant case, no doubt the term stipulated in the
Lease Agreement at Ex.D-3 has expired at the end of 30th day of November 2010, admittedly, thereafter the Lessor has been
29
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accepting the rent at the enhanced rate. However, it cannot be ignored of the fact that on 21.08.2012 itself, the Lessor filed the case in S.C.No.1316/2012 (which later came to be renumbered as O.S.No.2004/2015) and initiated a legal proceedings for ejectment of the Lessees from the suit property. Throughout in his evidence, PW-1 has shown his intention of ejecting the Lessees since the lease period which was only for ten years has been expired and that there is neither extension of the lease nor the renewal of the Lease Agreement. Therefore, the alleged payment of alleged enhanced rent made by the Lessees to the Lessor would not in any way result into a waiver of quit notice given by the Lessor to the Lessees. As such, the argument of learned counsel for the appellants/Lessees on the said point is not acceptable.
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30
extension which also has been undertaken to be granted by the Lessor by virtue of Ex.D-6, relied upon the following judgments to canvas the distinction between extension' and renewal' of an agreement in his favour.
extension' and renewal'. In Paragraph-14 of its judgment, the Hon'ble Apex Court was observed as below :" 14. It is pertinent to note that the word used is “extension” and not “renewal”. To extend means to enlarge, expand, lengthen, prolong to carry out further than its original limit. Extension, according to Black's Law Dictionary, means enlargement of the main body addition of something smaller than that to which it is attached; to lengthen or prolong. Thus extension ordinarily implies the continued existence of something to be extended. The distinction between “extension” and “renewal” is chiefly that in the case of renewal, a new lease is required, while in the case of extension the same lease continues in force during additional period by the performance of the stipulate act. In other words, the word “extension” when
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31
used in its proper and usual sense in connection with a lease means a prolongation of the lease."
32. In State of U.P. and others –vs Lalji Tandon (Dead),
reported in AIR 2004 SC 32 , the Hon’ble Apex Court had an occasion to discuss the difference between an extension of lease' and renewal of lease' in the light of Section 105 of T.P.Act. In Paragraph 13 of its judgment, the Hon’ble Apex Court was pleased to observe as below :
" 13. xxxx xxxx xxxx
There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed, as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension. However, option for renewal consistently with the covenant for renewal has to be exercised consistently with the terms thereof and, if exercised, a fresh deed of lease shall have to be executed between the parties. Failing the execution of a fresh deed of lease, another lease for a fixed term shall not come into existence though the principal lease in spite of the expiry of the term thereof may continue by holding over for year by year or month by month, as the case may be."
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32
33. In Hardesh Ores (P) Ltd. –vs- Hede and Company,
reported in (2007) 5 SCC 614, the Hon’ble Apex Court while discussing about the renewal of contract, had referred to the distinction made between renewal’ and extension’ of existing agreement as enunciated by the Hon’ble Apex Court in Provash Chandra Dalui’s case (supra) and Lalji Tandon’s case (supra), in Paragraphs 29 and 30 of its judgment had further observed as below in Paragraph 31 of its judgment :
" 31. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellant-plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease."
another, reported in AIR 1997 Calcutta 278 , while analysing Section 106 and Section 116 of T.P.Act, the Calcutta High Court in Paragraph 13 of its judgment was pleased to observe that,
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33
the law appears to be clear on the point that ordinarily in case of renewal, a new lease is required and in case of extension, the same lease continues in force during additional period by the performance of the stipulated act.
34
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the lease agreed between the parties was only for a period of ten years and that subsequently there was neither any renewal nor any extension of the lease, but, on the other hand, there was termination of tenancy by him after issuing a notice to the Lessees. On the other hand, the contention of the Lessees is that the lease was one for perpetuity as evidenced in Ex.D-3 and Ex.D-6. As such, it is Ex.D-3 andEx.D-6 which admittedly are the primary documents regarding the lease transaction between the parties, which plays an important role.
"2. You have to increase the rent by 15% once in 36 months and monthly tenancy will continue on increase of rent by 15% once in 36 months from time to time."
35
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A reading of Ex.D-3 and Ex.D-6 together would go to show that after the initial period of ten years, there was no necessity for the Lessees to get renewal of the Lease Agreement, but, the lease period could have been extended, however, with mutual consent of both the parties. It is specifically mentioned in Clause-3 of Ex.D-3 that parties may `extend the lease'. Therefore, a specific provision for extension of the lease is provided in the very Lease Agreement at Ex.D-3. At the same time, the said extension cannot be an unilateral act, but, it has to be with mutual consent as mentioned in the very Clause-3 of the Agreement of Lease, which is at Ex.D-3.
RFA.No.2084/2016 C/w. RFA.No.2085/2016
36
Lessor which cannot be called as an extension of lease with
`mutual consent' (emphasis supplied) .
No doubt, the Lessees are shown to have paid the enhanced rate of rent initially at the rate of 6,900/- per month till 31.12.2011 and at the rate of 7,935/- per month from the date 01.01.2012. However, the mere payment of the enhanced rent, by that itself, cannot be construed as the agreement for continuation of the lease or extension of the lease in perpetuity. This is for the specific reason that, in the very same Ex.D-6, the Lessor had stated that what would be continued by such an increase is only the monthly tenancy' _(emphasis supplied)_ , but, not the yearly tenancy. Ex.D-6 nowhere whispers about the tenancy in perpetuity or at least, for a period of 99 years. On the other hand, it mandates a periodical increase of the rent at a specified rate for getting the continuation of monthly tenancy only from time to time. As such, the word from time to time' which is used both in Ex.D-3 and Ex.D-6 cannot be construed as an automatic continuation of the rent in perpetuity as contended by the lessees. Therefore, the argument of learned counsel for the appellants that Ex.D-6 is a letter of mutual consent and it
37
RFA.No.2084/2016 C/w. RFA.No.2085/2016
results in continuation of the lease in perpetuity, is not acceptable.
38
RFA.No.2084/2016 C/w. RFA.No.2085/2016
space of time falling short of his whole life, which is an uncertain span. It cannot, therefore, be said to be for any term exceeding one year and is not hit by Section 107."
The said observation made cannot be applied to the case
on hand for the reason that, in the instant case, the minimum initial period of the lease is mentioned as ten years as could be seen in Clause-3 of Ex.D-3. Therefore, when it is admittedly for more than one year, requiring compulsory registration as required under Section 107 of T.P.Act, the argument of learned counsel for the appellants that Ex.D-3, which is unregistered, can be recognised and enforced, is not acceptable. Even otherwise also, the said Lease Agreement at Ex.D-3 has completed its term of ten years and any extension of the lease since should be only upon the mutual consent and in the absence of any such mutual consent in the instant case, it cannot be held that the Lessees are entitled for a perpetual lease of the suit property.
39
RFA.No.2084/2016 C/w. RFA.No.2085/2016
P-2(d) corroborates the statement of PW-1 that quit notice was served upon the Lessees calling upon them to quit and deliver the vacant possession of the suit property to the Lessor. Even though the learned counsel for the appellants contended that since the Lessor had accepted the rent up to December 2014, as such, the termination of lease which was for a period of thirtysix months in its extended time, the same is not acceptable for the reason that, as analysed above, the Lessees failed to establish that the lease came to be extended periodically from time to time for a period of thirtysix months at each time. On the other hand, as analysed above, the continued tenancy of the lease after the expiry of ten years as per Ex.D-3 and Ex.D-6 had remained to be only a monthly tenancy. As such, under Section 106 of T.P.Act, the Lessor was entitled to send a termination notice of lease which he has done accordingly.
40
RFA.No.2084/2016 C/w. RFA.No.2085/2016
categorically denied and there is no reason to disbelieve the statement of PW-1 that he requires the suit property for his bona fide use and occupation. As such, the lessor has shown the requirement of the suit property for his bona fide use and occupation.
Accordingly, I proceed to pass the following order
ORDER
Both the Regular First Appeals are dismissed as devoid of merits.
Registry to transmit a copy of this judgment along with records to the concerned trial Court without delay.
SD/-
JUDGE
bk/
3 issues framed by the court
Did acceptance of enhanced rent waive the quit notice or establish a perpetual lease enforceable through execution of a 99-year lease deed?
Was the continuing monthly tenancy validly terminated under Section 106 of the Transfer of Property Act?
Were the lessees entitled to refund of the goodwill paid to the lessor?
Colour shows how this judgement treated each authority
Rajgopal (Dead) by L.Rs. -vs- Kishan Gopal and anotherDistinguished¶107
AIR 2003 SC 4319 · Who else cites this
Kai Khushroo Bezonjee Capadia -vs- Bai Jerbai Hirjibhay Warden and anotherDistinguished¶134
AIR (36) 1949 Federal Court 124 · Who else cites this
Sarup Singh Gupta -vs- S.Jagdish Singh and othersRelied on¶140
2006 AIR SCW 1996 · Who else cites this
Mr.Haneef Sait -vs- Mr.Syed AsifRelied on¶144
ILR 2011 KAR 739 · Who else cites this
K.V.Sathyavathi, through G.P.A., -vs- M/s.Auto WorldRelied on¶145
K.V.Sathyavathi, through G.P.A., -vs- M/s.Auto World, Civil Appeal No.7251/2019,
Provash Chandra Dalui and another -vsBiswanath Banerjee and anotherRelied on¶156
1989 Supp (1) SCC 487 · Who else cites this
State of U.P. and others –vs Lalji Tandon (Dead)Relied on¶161
AIR 2004 SC 32 · Who else cites this
Hardesh Ores (P) Ltd. –vs- Hede and CompanyReferred¶167
(2007) 5 SCC 614 · Who else cites this
Ranjit Kumar Dutta –vs- Tapan Kumar Shaw and anotherRelied on¶170
AIR 1997 Calcutta 278 · Who else cites this
Shanti Prasad Devi and others -vs- Shankar Mahto and othersRelied on¶175
AIR 2005 SC 2905 · Who else cites this
B.P.Sinha –vs- Som NatDistinguished¶195
AIR 1971 Allahabad 297 · Who else cites this
2 provisions across 1 enactments
Manju R. Punamiya
Ramesh Kumar Punamiya
B.R.Shankar
H.B.PRABHAKARA SASTRY
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court