Theeta Industrial Heating Equipments Private Limited v. Harvinder Singh & Others

Devinder Gupta, J.

1. This regular first appeal by the defendant arises out of judgment and decree passed on 6.7.1995 by Shri B.S. Mathur, Additional District Judge, Delhi decreeing the suit of the plaintiff-respondent for possession of premises known as 487/79, Peera Garhi, Delhi as shown in the site plan, Ext. PW 1/1 and for recovery of Rs. 42,350 as arrears of rent w.e.f. 1.8.1992 to 30.6.1993 at the rate of Rs. 3,850 per month, subject to adjustment of the rent, if any paid by defendant-appellant during the pendency of the suit or security paid, if any, and a decree for damages for unauthorised use and occupation from 1.7.1993 till delivery of possession at the rate of Rs. 20,000 p.m.

2. The defendant was let out a portion of the suit premises by Shri Pritpal Singh, the father of the plaintiff at a rental of Rs. 1,350 p.m. through lease deed dated 30.9.1976. On additional portion being let out, the rent was enhanced to Rs. 2,800 p.m. On the death of Pritpal Singh, the plaintiff became the owner of the property on the basis of Will dated 24.2.1981 executed in his favour by Pritpal Singh. It is the admitted case of the parties that through lease agreement Ext. PW 1/2 dated 1.9.1982 the plaintiff let out the premises in question to the defendant on a monthly rent of Rs. 3,500. The agreement says that the lessor grants to the lessee the entire ground floor except one room in the right side of the main entrance, first floor and second floor in the property No. 487/79, Peera Garhi, Paschim Puri, Rohtak Road, Delhi for a period of 11 months at a monthly rent of Rs. 3,500, for commercial factory purposes and the lessee shall have the option to renew the lease, on the same rent, for a further period of 11 months, on the same terms and conditions.

3. On 2.7.1992 notice Ext. PW 1/3 was served by the plaintiff on the defendant demanding enhancement in rent at the rate of 10% and calling upon the defendant to increase the rent to Rs. 3,850 p.m. while maintaining that the Delhi Rent Control Act has no application to the premises. According to the defendant enhancement was not agreed upon. The defendant continued to remit rent at the rate of Rs. 3,500 p.m. Cheques were returned by the plaintiff. It is stated that the plaintiff thereafter sent notice dated 19.12.1992 terminating the defendants tenancy w.e.f. 30.6.1993. On failure to vacate, on the basis of notice dated 19.12.1992 the suit for eviction was filed.

4. The defendant contested the suit inter alia on the grounds, that enhancement claimed by the plaintiff was unwarranted and illegal and the same was demanded merely to oust the defendant from the protective umbrella of Delhi Rent Control Act; that even if lease agreement Ext. PW1/2 dated 1.9.1982 was unregistered the same, in view of Section 49 of the Registration Act, can be looked into as regards the mode of determination of tenancy, being a collateral purpose and under the terms of the lease agreement the plaintiff had no right to terminate the lease; that the lease was for commercial factory purposes and the duration thereof will be from year to year and thus under law the plaintiff could have terminated the same only on serving six months notice; the notice Ext. PW 1/9 dated 19.12.1992 did not terminate the lease by the end of the period of tenancy.

5. The trial of the suit proceeded on the following issues:

1. Whether the tenancy of the defendant stands determined by efflux of time and/or by a notice under Section 106 of T.P. Act as alleged OPP

2. Whether the plaintiff is entitled to recover the possession of suit premises OPP

3. To what amount, if any, is the plaintiff entitled as rent/damages mesne profits and at what rate and to what amount OPP

4. Whether this Court has the jurisdiction to try the suit OPP

5. Whether there is no privity of contract between plaintiff and defendant No. 1 to pay the rent of Rs. 3,850 as alleged OPD

6. Whether the suit is barred under the D.R.C. Act OPD

7. Whether the suit has been properly valued for purposes of Court fees and jurisdiction OPD

8. Whether the suit is not maintainable being an abuse of process of law as alleged OPD

9. Relief.

6. The suit was decreed holding that on service of notice Ext. PW 1/3 the rent stood enhanced to Rs. 3,850 p.m., as such the premises in question are governed by the general provisions of Transfer of Property Act and not by Delhi Rent Control Act, the tenancy was rightly terminated by due service of notice Ext. PW 1/9, the Court had jurisdiction to try the suit and the defendant was liable to pay damages after the tenancy was terminated, which as per the prevailing rent in the locality was held to Rs. 20,000 p.m.

7. The judgment and decree passed by the Trial Court is now under challenge by the defendant primarily on the ground that there has been no valid termination of tenancy. The plaintiff could not have by his unilateral act enhanced the contractual rent from Rs. 3,500 to Rs. 3,850 and thereby debar the defendant from the protective umbrella of Delhi Rent Control Act. Judgment and decree is also under challenge with regard to the quantum of damages granted at the rate of Rs. 20,000 p.m.

8. Admittedly the lease agreement Ext. PW 1/2 dated 1.9.1982 is not registered. It is also not in dispute that through this agreement the premises in question were let out by the plaintiff to the defendant for a period of eleven months at a monthly rent of Rs. 3,500. The lease agreement contains a clause that the lessee shall have an option to renew the lease on the same terms and conditions for a further period of eleven months. It is not in dispute on behalf of the defendant that the premises were and are located within the limits of Municipal Corporation of Delhi and on the date when the lease agreement was executed the premises were governed by the Delhi Rent Control Act. Defendant has questioned the legality and validity of the plaintiffs act in serving notice Ext. PW 1/3 on the defendant enhancing the rate of rent from Rs. 3,500 to Rs. 3,850 p.m. on the ground that the protection granted under the Delhi Rent Control Act, 1958 cannot be taken away by an unilateral act on the part of the lessor and thus the rent of the premises continues to be Rs. 3,500 and the defendant is entitled to the protection of Delhi Rent Control Act. Such a contention made on behalf of the defendant deserves outright rejection, in view of the ratio of the decision of the Supreme Court in the case of D.C. Bhatia and Othersv.Union of India and Others, (1995) 1 SCC 104 [LQ/SC/1994/996] and Parripati Chandrasekharrao & Sonsv.Alapati Jalaiah, (1995) 3 SCC 709 [LQ/SC/1995/577] .

9. In Chandrasekharraos case the Apex Court held that there is a material difference between the rights which accrue to a landlord under the Common Law and the protection which is afforded to the tenant under the Rent Control legislation. In the former case the rights and remedies of the landlord and tenant are governed by the law of contract and the law governing property relations. These rights and remedies continued to govern their relationship unless they are regulated by protective legislation, in which case the said rights and remedies remain suspended till the protective legislation continues to remain in operation. Landlords normal rights, vested in him by the general law, thus, continue to exist till and so long they are not abridged by the special protective legislation. Likewise in the case of tenant the protective shield extended to him survive only so long and to the extent the special protective legislation operates. As such, in the case of a tenant, the protection does not create any vested right which can operate beyond the period of the protection or during the period the protection is not in existence. When the protection does not exist the normal relations of landlord and tenant come into operation. It was further held that the theory of vested right, which may validly be pleaded in support of the landlords case will not be available to the tenant where the tenant undoubtedly had the rights and remedies under the protective legislation, to claim reliefs against the landlord, lost the same, the moment the protection was taken away since rights and remedies being not vested ones.

10. Undoubtedly under the protective legislation, namely, the Delhi Rent Control Act, 1958 the defendant had the protected umbrella and by virtue of the said protected umbrella he could have been evicted only on the strength of an order passed by Controller appointed under the Act and that also on any of the grounds enumerated under the said Act. Right of the landlord to seek eviction of the tenant under the general law, merely on terminating the tenancy stood suspended and will be deemed to have remained under suspension so long as and to the extent the protective legislation operates. Delhi Rent Control Act, 1958 was amended by the Delhi Rent Control (Amendment) Act, 1988 (Act No. 52 of 1988). Amendment came into effect from 1.12.1988. Section 3(c) of the amended Act provided that the Delhi Rent Control Act will not apply to any premises whose monthly rent exceeded Rs. 3,500. Interpretation and constitutional validity of Section 3(c) of the Delhi Rent Control (Amendment) Act, 1988 was upheld in D.C. Bhatias case (supra).

11.The protection against eviction, except on proof of specified grounds, provided under the Delhi Rent Control Act, 1958, which was available to the defendant, not being a vested right, in terms of the ratio of the decision in Chandrasekharraos case (supra), it will not be permissible to uphold the contention raised on behalf of the defendant that the plaintiff could not, by his unilateral act, of serving a notice to enhance the rent, remove the protected shield available to him. On a combined reading of Sections 6A and 8 of the Delhi Rent Control Act, 1958 it cannot be disputed that the landlord will be entitled to claim increase in the rent of the premises by 10% after every three years. Section 6A of the Act says that notwithstanding anything contained in the Act the standard rent or where no standard rent is fixed under the provisions of this Act in respect of any premises, the rent agreed upon between the landlord and tenant may be increased by 10% every three years. Admittedly agreed rent was Rs. 3,500, which was fixed in the year 1981. Landlord under Section 6-A of the Act as of a right could claim increase by 10%. The mode and manner of exercising the option by the landlord to claim increase in the rent is contained in Section 8, which enjoins upon the landlord to serve a notice upon the tenant expressing and conveying his intention to make increase in the rent. The increased rent becomes due and recoverable on the expiry of 30 days from the date on which notice is given. It is not disputed that notice Ext. PW 1/2 in writing was sent on behalf of the plaintiff in the manner as provided in Section 8 of the Delhi Rent Control Act. The enhancement in rent became effective on the expiry of 30 days from the date of receipt of the letter.

12. Ext. PW1/9 is notice dated 19.12.1992 terminating the tenancy. Paras 10 and 11 of the said notice read:

10. That, in these circumstances, amongst others, my client does not wish to keep you as his tenant any longer and has instructed me to give you notice, which I hereby do, informing you that your tenancy of the said premises shall stand determined on the 30th June, 1993 and calling upon you to hand over the vacant and peaceful possession of the said premises to my client on or before the said date.

11. That in case you dispute your month of tenancy, kindly take notice that your tenancy shall stand determined on the day, at least six months after the 1st January, 1993, on which, according to your own allegations, your month of tenancy expires, In such a case, you are hereby called upon to surrender vacant and peaceful possession of the premises demised to you on the day, at least six months after the 1st January, 1993, on which, according to your own allegations, your month of tenancy expires. [Emphasis supplied]

13. Legality and validity of the notice is under challenge. According to the defendant lease being for manufacturing purposes it was but necessary for the plaintiff to have served six months notice expiring with the term of tenancy. Since six months notice was not served, notice is bad in law.

14. By lease deed monthly tenancy came into being. It being a lease for a period of 11 months at monthly rent of Rs. 3,500 and in case it is taken to be a monthly lease or a lease from month to month, there is no manner of doubt that valid notice has been served upon the defendant.

15.Submission on behalf of the defendant was that the lease was not a monthly lease or a tenancy from month to month but was a lease for a term exceeding one year, since it contained a renewal clause. In case such a submission is accepted that the lease was for a term exceeding one year, in terms of the first part of Section 107 of the Transfer of Property Act, the same would be compulsorily registrable, which says that lease of immovable property from year to year or for any term exceeding one year can be made only by registered instrument. A lease of this nature would be void unless it is created by a registered instrument. All other leases of immovable property may be made either by registered instrument or by an oral agreement accompanied by delivery of posession. Lease on the face of it is for a period of 11 months. It reserves monthly rent of Rs. 3,500. Section 106 provides, inter alia, that in the absence of a contract between the parties, lease of immovable property for manufacturing purposes shall be deemed to be a lease from year to year terminable by six months notice. In the instant case the lease was not from year to year or for a period exceeding one year. Even though the lease may be for manufacturing purposes since the same is not from year to year, six months notice was not required to be served. A monthly lease which is not from year to year does not require six months notice of termination. It will fall in the second part of Section 106 of TP Act requiring only 15 days notice of termination. A lease from month to month or a lease other than a lease from year to year is terminable by 15 days notice. It is only in the absence of contract between the parties that for termination of a lease of immovable property for manufacturing purposes that the same will be deemed to be from year to year requiring six months notice. Notice Ext. PW 1/9 as such is a valid notice to quit. For the view we have taken, we are supported fully on the ratio of decision in Janki Devi Bhagat Trust, Agrav. Ram Sarup Jain (dead) by L.Rs.,(1995) 5 SCC 314 [LQ/SC/1995/786] , which holds:

Section 106 provides, inter alia, that in the absence of a contract between the parties, a lease of immovable property for manufacturing purposes shall be deemed to be a lease from year to year terminable by six months notice. In the present case there is a clear finding to the effect that the lease in question was not from year to year or for a period exceeding one year. Therefore, even though the lease may be for a manufacturing purpose, since the lease was not from year to year, six months notice was not required. A manufacturing lease which is not from year to year does not require six monthsnotice of termination. It will fall in the second half of Section 106, requiring fifteen days notice of termination. A lease from month to month or a lease other than a lease from year to year is terminable by fifteen days notice. Hence the notice in the present case is a valid notice to quit. [Emphasis supplied]

16. Learned Single Judge of this Court in Jagat Taran Beriv. S. Sant Singh, AIR 1980 Del. 7 [LQ/DelHC/1979/188] , on an analysis of Sections 106 and 107 of the Transfer of Property Act held that there can never be a conflict between Sections 106 and 107. For, whenever, according to Section 106 a lease is deemed to exist, which could only be created by registered instrument, according to Section 107, the non-existence of a registered instrument will of itself invoke the opening words of Section 106 by implying a contract to the contrary. It was held:

Under Sec. 107 the parties have an option. They can negotiate a lease of a duration mentioned in the first paragraph. If they decide upon such a lease, they must execute a registered instrument. Alternatively, they can decide to have a lease for a shorter period. In that event they can create the lease with or without executing a registered instrument. Whenever, a lease is created without a registered instrument the inevitable conclusion must be that the parties have, so to speak, opted out of the first paragraph. They have negatived any intention of creating a lease of the duration therein mentioned. Or, to put it in positive form, they have agreed upon a lease of a duration coming within the second paragraph. This is, or must be deemed to be a conscious decision on their part. It is, therefore, indicative of a contract between them. That contract is that the lease will not be of a duration mentioned in the first paragraph of Sec. 107. Such a contract will always be a contract to the contrary envisaged by the opening words of Sec. 106. The Supreme Court has said that a contract to the contrary can be implied, and need not be express. So, from the single fact that a registered instrument is not executed, one can, and should, immediately deduce a contract to create a lease of the kind that can be created without such an instrument. Thus, if the lease is for agricultural or manufacturing purposes and there is no registered instrument, that fact itself is conclusive to establish a contract to the contrary. Considering that it was always open to the parties to execute a registered instrument but they chose not to do so, this inference accords with their intention, whether actual or ascribed.

17.Fifteen days notice terminating an unregistered lease of immovable property for manufacturing purpose, in view of the above would be valid in law. It cannot be said that as the lease was for manufacturing purposes, in view of Section 106 of the Transfer of Property Act, the same should be deemed to be an yearly lease requiring six months notice, since such a lease cannot be treated as yearly lease, inasmuch as such a lease would be required to be registered by virtue of Section 107. An unregistered lease for manufacturing purpose cannot be deemed to be an yearly lease for the purpose of notice of termination, in view of the provisions contained in Section 107 of the Transfer of Property Act. Consequently the notice terminating tenancy in the instant case cannot be held to be invalid and no interference is called for in the impugned judgment of the Trial Court holding that the tenancy of the defendant was rightly terminated.

18. For award of damages at the rate of Rs. 20,000 p.m. the Trial Court relying on the decision in P.S. Bediv.Project and Equipment Corporation India Ltd., of the Supreme Court held Rs. 25 per sq. ft. to be a reasonable market rate of the premises in South Delhi in the year 1989. Keeping in view the location of the premises and there being no difference in the property which is the subject-matter of P.S. Bedis case, the Court observed that the market rent of the premises would be Rs. 1,14,650 p.m. After having come to this conclusion, the Trial Court observed that in the facts and circumstances of the case, Rs. 20,000 p.m. would be just and equitable market rent. We find no infirmity in the reasoning of the Trial Court and for that no interference is called for in this appeal.

19. No other point was urged.

20. In view of the above discussion, we find no force in the appeal which is hereby dismissed with costs.