Shukla Malhotra & Others v. Vyasa Bank Limited

D.K. Jain, J.

1. In plaintiffs suit for : (1) possession of their property being 1st floor of the premises bearing No. E-34, Connaught Place, New Delhi, measuring 2230 sq. ft., let out to the defendant bank, vide unregistered agreement of lease dated 1st February, 1980 at a rental of Rs. 10 per sq. ft, initially for a period of five years with option to the defendant Bank for renewal/extension for a further period of five years on 20% enhancement in rent, extended in 1985 and 1990, but terminated by notice dated 9th January, 1995, w.e.f. midnight of 31st January, 1995, and (2) for mesne profits w.e.f. February, 1995, the plaintiffs have filed this application under Order XII, Rule 6, CPC for a decree for possession against the defendant, directing it to deliver vacant peaceful possession of the premises on the plea that the defendant, in its written statement, had admitted its possession as a tenant and the receipt of notice dated 9th January, 1995, under Section 111 of the Transfer of Property Act, 1882 (hereinafter referred to as the Act), terminating the tenancy, entitling the plaintiffs to a decree for possession of the premises.

2. Admitting letting of the premises to them by the plaintiffs as stated, their possession as tenant and the receipt of plaintiffs stated notice dated 9th January, 1995, the defendant Bank opposes the plaintiffs application on the pleas that the said notice was duly replied by them on 23rd January, 1995; the tenancy was not a monthly tenancy but for a fixed term of five years as per lease dated 1st February, 1980, with option to extend after five years; which was extended in exercise of the option in 1985 and 1990 per stipulations in the lease deed; the alleged termination of the tenancy by the plaintiffs is bad in law and the suit misconceived. The defendant claims that in April, 1991 the plaintiffs had agreed in writing to the defendants offer of enhancement in rent to Rs. 18 per sq.ft w.e.f. 1st February, 1990 for a period of five years and thereafter by 25% to commence from 1st February, 1995 on the terms in the agreement dated 1st February, 1980; the defendant had performed their part by paying enhanced rent and, therefore, the plaintiffs application is liable to be dismissed.

3. I have heard Mr. Sanjay Dua, learned Counsel for the plaintiffs and Mr. M.S. Dewan, learned Counsel for the defendant, who have taken me through the pleadings and the documents filed.

4. It is common ground that the premises were initially let out by the plaintiffs to the defendant Bank under agreement dated 1st February, 1980 executed by the parties. Clauses 5 and 25 of the said agreement, relevant to the issue raised, are extracted below:

"5. That the lease shall be initially for a period of five years from 1st February, 1980 and the same shall be renewable at the option of the Bank for a further period of five years subject to enhancement of rent by 20% of the last rent paid by the Bank to the lessor.

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25. That at the request of the bank, lessors shall execute a regular lease deed in two sets and the cost of the stamp and the registration charges shall be borne by the Bank. The original lease deed shall be kept with the lessors and the counterpart thereof with the Bank. However, the lessors shall whenever so requested produce the original lease deed to the Bank."

5. There is no gainsaying the fact that the agreement postulated property being let out initially for a period of five years w.e.f. 1st February, 1980, renewable at the option of the defendant Bank for a further period of five years on enhanced rent, and the execution of the regular lease deed at the request of defendant Bank. It appears that no such request for execution and registration of regular lease deed was made by the defendant and none was accordingly executed. Section 107 of the Act describes the mode of making leases. It lays down that a lease of immovable property for a fixed term or for a period exceeding one year can be made only by a registered instrument. The use of the expression "only" in the section indicates that the specific mode prescribed therein has to be adhered to strictly, failing which any instrument purporting to lease out the premises for a period exceeding one year or extend it likewise orally or in writing would be void and presumption about duration of lease under Section 106 of the Act will apply. As per Section 106 a lease from month to month or a lease other than a lease from year to year is terminable by fifteen days notice. Thus, in the present case, continuance of defendants possession of the property for a period exceeding one year shall be deemed to be under a tenancy from month to month.

6. Support is lent to this view by a decision of the Supreme Court in Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. v. Khaja Midhat Noor and Ors., 1988 AIR SC 1470 and Punjab National Bank v. Ganga Narain Kapur, AIR 1994 All. 221 [LQ/AllHC/1993/446 ;] ">1994 All. 221 [LQ/AllHC/1993/446 ;] [LQ/AllHC/1993/446 ;] , wherein it has been held that a fixed term lease for a period exceeding one yearoral or in writing, if not registered will be deemed to be a tenancy from month to month terminable by 15 days notice. Thus, the lease dated 1st February, 1980 cannot enure as a fixed term lease for five years and would be deemed to be one from month to month.

7. The exercise of option by the defendant for renewal in 1985 and 1990, or later, did not ipso facto extend the term of lease beyond one year. At best it only entitled the lessee to obtain a fresh lease, which again required registration. No document of "regular deed" contemplated in Clause 25 of the agreement or a "fresh" lease deed for the stated extensions was executed. Similarly no registered instrument has been placed on record to support defendants plea of further extension w.e.f. 1st February, 1995. The plaintiffs letter dated 13th April, 1991 agreeing to the said extensions, not being a registered document cannot create a tenancy for five years. The requirements of Section 107 of the Act having not been complied with, the stated renewals were invalid and of no consequence and the tenancy continued to be a monthly tenancy right from inception in February, 1980, determinable under Section 106 of the Act by 15 days notice expiring by the end of a month of tenancy.

8. Faced with this situation Mr. Dewan, learned Counsel for the defendant, pressed into service the doctrine of part performance, stipulated in Section 53A of the Act and urged that the defendant having taken possession under lease agreement dated 1st February, 1980, executed by the parties; and being in possession as such, the plaintiff landlords are debarred from enforcing any right to evict the defendant. Mr. Dua, learned Counsel for the plaintiffs, controverted the contention with equal vehemence on the grounds; (i) that Section 53A of the Act does not apply to lease agreement, and (ii) in any case the defendant lessee having failed to perform its obligations, envisaged in the lease agreement dated 1st February, 1980, is not entitled to protection under the said section. According to the learned Counsel the defendant having never moved for execution of a regular registered lease deed in terms of Clause 25 of the lease agreement (supra) is not entitled to protection under Section 53A of the Act. He maintains that there is no plea of the defendant having been or being ready and willing or to have called upon the plaintiffs to execute a regular lease deed in terms of Clause 25 of the agreement dated 1st Fehruary, 1980 or any alleged subsequent arrangement being completed or formalised under Section 107 of the Act, the defendant is not entitled to seek protection under Section 53A of the Act.

9. To appreciate the contentions of the parties it would be convenient to reproduce Section 53A of the Act. It lays down:

"Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty:

and the transferee has, in part performance of the contract, taken possession of the property any part thereof, or the transferee, being already in possession, continue in possession in part performance of the contract and has done some act in furtherance of the contract,

and the transferee has performed or is willing to perform his part of the contract,

then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract.

Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract of the part performance thereof.

10. A perusal of the section would show that the three essential conditions precedent for applicability of the section are:

(i) contract to transfer immovable property for consideration;

(ii) transferee entering in possession of the property in part performance; and

(iii) the transferee performing or willing to perform his part of contract.

11. On the first question whether the doctrine of part performance in Section 53A of the Act is applicable to the lease agreement there has been a conflict of opinion in various High Courts. The term "transfer of property" postulated in the first condition is defined in Section 5 of the Act to mean an act by a living person to convey a property, (emphasis added). The term convey is not defined in the Act. The meaning of the term in Blacks Law Dictionary is to transfer or deliver to another; to pass or transmit title to property from one to another; to transfer property or the title to property by deed, bill of sale or instrument under seal. Used popularly in sense of "assign", "sale" or "transfer".

12. "Lease" is defined in Section 105 of the Act as "transfer of a right to enjoy the property", which in common parlance is distinguished from the transfer of interest in the property to the transferee, like in sale, mortgage, exchange or gift, dealt with in Chapters III, IV, VI and VII of the Act respectively. The transfer of property envisages transfer of corpus or its part conveying proprietary status to a transferee. Looked at from that angle, it appears that, lease of an immovable property, strictly speaking, may not fall within the ambit of the term transfer of property, envisaged in Section 53A of the Act, making the said section inapplicable to a lease. But the matter is not free from doubt.

13. A similar view has been expressed by the Allahabad High Court in Panjab National Bank v. Ganga Narain Kapur (supra). The learned Judge, deciding the said case, observed that in case of agreement to lease, the agreement to transfer being only of the right to enjoy the property, and not in fact a transfer of ownership alongwith corpus of immovable property, as in the case of sale, it is doubtful if protection of Section 53A is available to a lessee. It was, however, held that even if the said sections were applicable, it would not be of any avail in case of a fixed term tenancy made in violation of provisions of Section 107 of the Act, as in the present case.

14. Earlier, in Shyam Sundar Lal and Anr. v. Din Shah & Ors., AIR 1937 All. 10, a Bench decision, it was held that though a transfer of a right to enjoy property does not speak of the transfer of interest in the property, but in view of the fact that some sections in Chapter II of the Act speak of the lease transferring, the whole or any part of the interest in the property, the Legislature intended that lease be treated as transfer of property. Similar view has been expressed by the Patna High Court in Mahadei Haluai v. Ram Krishna Singh & Anr,. AIR 1960 Pat. 354 [LQ/PatHC/1960/32] . However, no authoritative pronouncement of the Supreme Court or of this Court on the point has been brought to my notice, I do not propose to breach the subject further as on facts it is unnecessary.

15. Assuming Section 53A of the Act was applicable, the defends herein cannot have the invalid instrument enforced under umbrella of Section 53A of the Act because Section 53A, if applicable, would be available only as a defence to it as a lessee, merely to protect his possession. At best, it can be used to show the nature and character of its possession. It does not create a title in the lessee nor confers any right on the basis of which the lessee could claim any rights against the lessor. Thc unregistered lease cannot be used to prove the terms of the lease. The section only provides a shield for protection and not a sword to attack.

16. Further, in order to be entitled to the protection of Section 53A of the Act, the lessee must perform or must be willing to perform his part of the contract. In the present case, Clause 25 of the lease agreement specifically enjoined the defendant to have a regular lease deed executed by the plaintiffs and have the same registered. This was stipulated to comply with the mandatory requirements of Section 107 of the Act. There is no allegation much less a plea or proof that the defendant did call upon the plaintiffs to do so, nor that, despite it, the plaintiffs did not respond in which case also the defendant could seek legal remedy, if any, to have obligations under Clause 25 of the lease agreement enforced. It cannot, therefore, be said that the defendant was ready and wiIIing to perform its part of the obligation under the lease agreement thus negating compliance with the third limb of Section 53A of the Act. The defendant, as such, cannot claim protection under the said section.

17. Now reverting back to the main question, viz assuming Section 53A of the Act were applicable to a case where a person entered into possession of the property pursuant to a lease agreement which was not registered, whether the presumption under Section 106 of the Act would be attracted I have no hesitation in holding it so. Though possession or the occupation of the property by that person may be lawful and permissive, but as regards duration of the tenancy, it will be governed by the provisions of Section 106 of the Act, and, as in the present case, the tenancy would be deemed to be from month to month, terminable by a notice of 15 days by either side.

18. Having come to the finding that the lease in the present case was from month to month, the only question which remains to be considered is whether it was lawfully determined. Admittedly, legal notice dated 9th January, 1995, issued on behalf of the plaintiffs by their Counsel, terminating the tenancy of the defendant w.e.f. mid-night of 31st January, 1995 and asking the defendant to deliver the vacant possession of thc subject premises, was duly served on the defendant. The defence in resistance taken in para 6 of the written statement, based on plea of fixed tenancy for 5 years and its extension is that the said notice is as such uncalled for and misconceived as communicated in defendants reply dated 23rd January, 1995, received by Counsel for the plaintiff. Nothing is pointed out in the written statement nor during the course of arguments to show that the said notice did not fulfil the requirements of Section 106 of the Act. What is stipulated in Section 106 of the Act, is that notice under the section has to be in writing which should be signed by or on behalf of the person giving it and is to be served on the party either by post or tendered or delivered in person. Consequently, I hold that notice dated 9th January, 1995, terminating the tenancy and duly served on the defendant was valid and the tenancy stood lawfully terminated w.e.f. 1st February, 1995 as envisaged under Section 111(h) of the Act.

19. The factum of tenancy and its valid determination under Section 111 of the Act not being in dispute, I am of the considered opinion that the plaintiff is entitled to a judgment under Order XII Rule 6 of the Code of Civil Procedure.

20. Consequently, I allow the application, and pass a decree for possession in favour of the plaintiffs and against the defendant, direction the defendant to put the plaintiffs in possession of the suit property within four months.

For framing of issues, if any, on the other relief prayed for, requiring trial, to come up on 8th September, 1998.