IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF APRIL 2019 BEFORE THE HON’BLE MR. JUSTICE SREENIVAS HARISH KUMAR RFA No.1816 OF 2016 C/W RFA Nos. 1024 OF 2018, 1025 OF 2018, 1014 OF 2014 & 1013 OF 2014 In RFA 1816/2016 BETWEEN Smt. Barghavi, Aged about 56 years, W/o. Captain G.R.Gopinath, No.52/1, 17th Cross, 10th Main, Malleswaram, Bengaluru-560003.
(By Sri Ashok G.V., Advocate) AND Sri. B.C.Tarakesh, Aged about 44 years, S/o. B.Chandrakanth, No.52/2, 17th Cross, 10th Main, Malleswaram, Bengaluru-560003.
(By Sri K.B.S.Srinivas Bhat, Advocate) …Appellant …Respondent This RFA is filed under Section 96 of CPC against the judgment and decree dated 14.09.2016 passed in O.S.No.8844/2014 on the file of the XVII Additional City Civil and Sessions Judge, Bengaluru (CCH 16), decreeing the suit for possession.
In RFA 1024/2018 BETWEEN M/s. Monarch Self Adhesive Tapes (India) Pvt. Ltd., Represented by its Managing Director Mr. Prabhakar M. Mithrani, S/o. Late Narasingsa Metrani, Age: 83 years, No.302, Village Panchayath Road, Jalahalli Village, Bengaluru-560013.
(By Sri B.O.Chandrashekar, Advocate) AND 1. Y.M.Sriramaiah, S/o. Late Y.K.Muniyappa, Age 62 years, 2. Smt. Rathnamma, W/o. Late J.K.Seetharam, Age 74 years, 3. Smt. J.S.Asha, W/o. Y.M.Sriramaiah, Age 57 years, 4. Smt. J.S.Bhavya, D/o. Y.M.Sriramaiah, Age 34 years, 5. J.S.Apoorva, D/o. Y.M.Sriramaiah, Age 27 years, …Appellant 6. Master Ram J. Bhavya, S/o. J.S.Bhavya, Age 8 years, Since minor represented By his mother and next friend Smt. J.S.Bhavya R1 to R6 are R/at No.149, Presently at No.5, Kruthika Seetharam Industrial Estate, 1st Main Road, Jalahalli Village, Bengaluru-560013.
(By Sri Chithappa, Advocate) …Respondents This RFA is filed under Section 96 of CPC against the judgment and decree dated 25.04.2018 passed in O.S.No.1098/2016 on the file of the IX Additional City Civil and Sessions Judge, Bengaluru, decreeing the suit for vacant possession.
In RFA 1025/2018 BETWEEN M/s. Monarch Self Adhesive Tapes (India) Pvt. Ltd., Represented by its Managing director Mr. Prabhakar M. Mithrani, S/o. Late Narasingsa Metrani, Age: 83 years, No.302, Village Panchayath Road, Jalahalli Village, Bengaluru-560013.
(By Sri B.O.Chandrashekar, Advocate) AND …Appellant 1. Smt. Rathnamma, W/o. Late J.K.Seetharam, Age 74 years, 2. Y.M.Sriramaiah, S/o. Late Y.K.Muniyappa, Age 62 years, 3. Smt. J.S.Asha, W/o. Y.M.Sriramaiah, Age 57 years, 4. Smt. J.S.Bhavya, D/o. Y.M.Sriramaiah, Age 34 years, 5. J.S.Apoorva, D/o. Y.M.Sriramaiah, Age 27 years, 6. Master Ram J. Bhavya, S/o. J.S.Bhavya, Age 8 years, Since minor represented By his mother and next friend Smt. J.S.Bhavya R1 to R6 are R/at No.149, Presently at No.5, Kruthika Seetharam Industrial Estate, 1st Main Road, Jalahalli Village, Bengaluru-560013.
(By Sri Chithappa, Advocate) …Respondents This RFA is filed under Section 96 of CPC against the judgment and decree dated 25.04.2018 passed in O.S.No.1103/2016 on the file of the IX Additional City Civil and Sessions Judge, Bengaluru, decreeing the suit for vacant possession and damages.
In RFA 1014/2014 BETWEEN Mr.M.Venkatesh Aged 72 years Appellant is substituted by the under named person vide court order dt.12.4.2018 V.Venu, Aged about 48 years, S/o. M.Venkatesh, No.410, 12th Cross, Upper Palace Orchards, Bengaluru-560080.
(By Sri.D.R.Ravishankar, Advocate) AND:
…Appellant M/s. Karnataka Engineering Works, No.165, 3rd Phase, Peenya Industrial Area, Bengaluru-560058.
Represented by its Managing Director Mr. K.V.Prabhu, (By Sri.Y.K.Narayana Sharma) …Respondent This RFA filed under Section 96 of CPC against the judgment and decree dated 26.03.2014 passed in O.S.No.735/2012 on the file of the III Additional City Civil and Sessions Judge, Bengaluru City, dismissing the suit for ejectment.
In RFA 1013/2014 BETWEEN Mr.M.Venkatesh Aged 72 years Appellant is substituted by the under named person vide court order dt.12.4.2018 V.Venu, Aged about 48 years, S/o. M.Venkatesh, No.410, 12th Cross, Upper Palace Orchards, Bengaluru-560080.
(By Sri. D.R.Ravishankar, Advocate) AND:
M/s. Concord Steel Works Pvt Ltd., No.165, 3rd Phase, Peenya Industrial Area, Bengaluru-560058.
Represented by its Managing Director (By Sri.Y.K.Narayana Sharma, Advocate) …Appellant …Respondent This RFA filed under Section 96 of CPC against the judgment and decree dated 26.03.2014 passed in O.S.No.734/2012 on the file of the III Additional City Civil and Sessions Judge, Bengaluru City, dismissing the suit for ejectment.
These appeals coming on for orders this day, the court delivered the following:
JUDGMENT All these appeals are disposed of by common judgment though they have arisen from the judgments in different suits. The point to be decided in all these appeals is same.
2. RFA 1013/2014 and RFA 1014/2014 have been preferred by common plaintiff in the suits O.S.734/2012 and O.S.735/2012 on the file of City Civil Judge, Bengaluru. RFA 1816/2016, RFA 1024/2018 and RFA 1025/2018 are filed by the respective defendant in the suits O.S.8844/2014, O.S.1098/2016 and O.S.1103/2016.
3. In all these suits defendants are the tenants and their eviction was sought by the respective plaintiff/plaintiffs from the property which was leased to him/them. For narration of the pleadings briefly, the parties are referred with respect to the position of each of them in the respective suits.
4. In O.S.8844/2014, it is the plaintiff’s case that he let out a property bearing 52/1, 17th Cross, 10th Main, Malleswaram, Bengaluru, to the defendant for her bakery business by entering into lease agreement with her on 27.3.2008. The initial period of lease was five years with effect from 1.11.2007 to 31.10.2012. The tenanted premises consists of ground floor measuring 1,200 sq.ft and a basement measuring 1,356 sq. ft. In respect of basement portion, the defendant was paying rent of Rs.21,644/- per month and in respect of ground floor portion, Rs.47,884/-. After expiry of the lease period, tenancy was not extended. However, the defendant continued to be in occupation of the tenanted premises. On 29.8.2009, the plaintiff gifted a portion of the tenanted premises to his wife and the same was informed to the defendant. The tenanted property was in a dilapidated condition. The plaintiff wanted to effect repairs to and renovate the property to start his own business; she was again requested to vacate. Ultimately the plaintiff caused a legal notice issued to the defendant on 1.10.2014 terminating the tenancy. Despite receiving the notice, defendant did not vacate the tenanted premises. Hence, the plaintiff brought the suit.
5. In the written statement, it is contended that the defendant was not informed about the gift made by the plaintiff in favour of his wife and its subsequent cancellation. The defendant denied that the lease came to an end on 31.10.2014. It is mainly contended that the plaintiff and his son met the defendant and put forward a demand for steep increase in the rent. The defendant was ready for reasonable increase but not to exorbitant demand made by the plaintiff. It is stated that the defendant is running bakery business in the tenanted premises for several years and she has established her business in that locality. Nearly 20 employees are working in the bakery. There is absolutely no justification for the plaintiff to uproot a well established business just because she did not yield to the unreasonable demand for increase in the rent.
6. The plaintiffs in O.S.1098/2016 have pleaded that the defendant is their tenant in respect of a premises which is an industrial premises bearing KS No.302 (Sy. No.71/1 ) of Seetharam Industrial Estate, BBMP katha no.2-119-5/2, I Main Road, Jalahalli Village, Bengaluru, on a monthly rent of Rs.15,280/- and refundable security deposit of Rs.50,000/-. By lease agreement dated 15.4.1998, the said premises was leased to Mr.Prabhakara N. Metrani. Later on he converted his proprietoryship concern into a private limited company. With the consent of parties, the company became the plaintiffs’ tenant. The defendant acquired an alternate accommodation for its industrial activities at sy.no.12/1B, Abbigere Industrial Area, Abbigere and it shifted its entire industrial activities to the new premises, keeping the tenanted premises under lock. In addition the defendant stopped paying rent from June 2015. An amount of Rs.1,06,960/- was due up to the end of tenancy month of January 2016. The defendant failed to clear the arrears of rent in spite of repetitive demands. The period of lease also expired on 15.4.2002 and later on it was continued from month to month on mutual consent at enhanced rent of 5% per year. In the month of June 2015 the plaintiffs expressed their intention not to continue the tenancy with the defendant and requested the defendant to vacate and hand over the tenanted premises to them. Since they did not vacate, the plaintiffs got issued a legal notice to the defendant on 8.1.2016 terminating the tenancy of the defendant. Defendant replied to the notice admitting the relationship but declined to vacate. Hence, the suit followed.
7. The defendant contended that it never defaulted in paying the rent to the plaintiffs. In the month of June 2015 the first plaintiff instructed the defendant not to remit the monthly rent to their bank account as it was linked with other loan accounts. Therefore, in the month of July 2015, a representative of the defendant approached the first plaintiff to hand over the cheque towards monthly rent and at that time, the plaintiffs refused to receive the cheque and therefore the plaintiffs cannot say that there was arrears of rent to the tune of Rs.1,06,960/-. Plaintiffs intentionally refused to receive the cheque towards rent to make out a ground for evicting it illegally from the tenanted premises. Defendant has stated that termination of tenancy was illegal and not in accordance with law. It has contended further that industrial production activities are going on in the tenanted premises. Several workers are working there. It is supplying its finished products to many reputed companies such as ISRO, Bharat Electronics, BHEL, etc., It is a small scale industry. The only object of the plaintiffs is to extract higher rate of rent from the defendant. There are no bona fides in the suit and therefore it should be dismissed.
8. The plaintiffs in O.S.1098/2016 also instituted another suit O.S.1103/2016 against the very same defendant in respect of another industrial shed measuring 100 x 170’, situated at 302, present BBMP katha 2-119-5/1, Village Panchayat Road, Jalahalli Village, Bengaluru. In this suit, the pleadings are same as the pleadings in O.S.1098/2016.
9. In the other two suits, O.S.No.734/2012 and O.S.No.735/2012, the plaintiff being the same person sought to evict his two tenants from two different tenements situated at Peenya Industrial Area, Bengaluru. Shed No.1 was leased to the defendant in O.S.No.734/2012. The plaintiff has stated that he wanted this tenanted premises to his own use and occupation. He requested the defendant to vacate the premises by writing a letter dated 19.2.2011. Since the defendant did not respond, he caused a legal notice issued on 13.04.2011 seeking delivery of possession of tenanted premises latest by 16.07.2011. The defendant received the notice on 23.04.2011, but he did not vacate. The plaintiff thereafter caused one more legal notice issued to defendant on 15.10.2011 requiring it to vacate the tenanted premises within 15 days from the date of receipt of notice. The notice was served on the defendant on 18.10.2011. It is stated in the plaint that tenancy was from month to month commencing on 16th day of every calendar month ending on 15th day of succeeding month. Rs.13,244/- was the rent being paid by the defendant after deduction of tax as on the date of termination of tenancy and the plaintiff claimed damages of Rs.2,50,000/- per month for use and occupation of tenanted premises after termination of tenancy.
10. In O.S.No.735/2012, the plaintiff sought eviction of defendant from the tenanted premises by writing a request letter dated 19.02.2011 followed by two notices dated 13.04.2011 and 15.10.2011. The defendant received the notices. It is stated that the defendant was paying rent of Rs.11,935/- after deduction of tax at source. The plaintiff claimed Rs.2,00,000/- towards damages for use and occupation of tenanted premises.
11. The defendants in these two suits, in their written statements, admit that they are the tenants under the plaintiff, but deny the plaintiff’s requirement of the tenanted premises for his own use. They contend that the intention of the plaintiff is to compel them to agree for exorbitant increase in rent. They have also pleaded that the plaintiff had agreed to sell the premises to them for a sale price of Rs.900/- per square foot, and they are ready to buy even now.
12. In all the suits, the trial court framed issues and recorded evidence of the witnesses. On behalf of the defendant in O.S.No.8844/2014, i.e., (the appellant in RFA.No.1816/2016) it appears that a contention was taken before the trial court at the time of addressing argument that the lease in her favour was for manufacturing purpose and since that lease was from year to year, termination of lease by issuing notice less than six months was invalid. The trial court held that the lease was not from year to year and that in the defendant’s bakery, no manufacturing activity was going on so as to say that lease was from year to year. It has been further held that lease was from month to month and in that view, there was valid termination of tenancy entitling the plaintiff to a decree for ejectment of defendant.
13. In the suits O.S.No.1098/2016 and O.S.No.1103/2016, the plaintiff produced two rental agreements, both marked separately as Ex.P.8 to show the existence of tenancy. The trial court did not consider these two agreements for want of registration, as in respect of tenanted premises involved in O.S.No.1098/2016, the period of lease for 5 years and in the other suit, the tenanted premises was taken on lease for a period of 10 years. But the trial court has held that the defendants are the tenants and their tenancy was validly terminated by the plaintiff by issuing notices marked Ex.P1 in both suits. With these observations the trial court decreed the suit directing the defendants to quit and handover vacant possession of the tenanted premises to the plaintiff besides granting a decree also for damages as claimed by the plaintiff.
14. The findings in the other two suits, O.S.No.734/2012 and O.S.No.735/2012 are that both the tenanted premises were leased for manufacturing purpose, that the defendants occupied the premises in the year 1981 and that as admitted in Ex.P1, the lease was renewed for a period of ten years, but tenancy was terminated by issuing a legal notice as per Ex.P6 by giving 15 days time to vacate. Since the termination of tenancy being not in accordance with requirement of law, there cannot be a decree for evicting the tenants.
15. Assailing the findings of the trial court, the learned counsel Sri. G.V.Ashok, appearing for appellant/tenant in RFA 1816/16 argued by raising following points :
The land lord did not give notice to tenant when he executed a gift deed in favour of his wife and also when he cancelled the gift subsequently. The trial court has wrongly held that no manufacturing process takes place in a bakery. The end product in a bakery is some thing different and therefore it is a manufacturing process; the tenant is not just selling the bakery items; actually bakery items are prepared and thus a manufacturing activity is being carried on in the tenanted premises. The lease between the parties is unregistered and therefore six months termination notice as envisaged in Section 106 of Transfer of Property Act should have been given. In the absence of such a notice, the trial court should not have held that there was valid termination of tenancy.
15.1. He referred to a judgment of the Supreme Court in the case of Park Sheet Properties Private Limited Vs. Dipak Kumar Singh and Another [(2016) 9 SCC 268] to argue that as has been held in para 19 of the said judgment, the trial court should have come to conclusion from the facts and circumstances that the tenancy was not from month to month; and since the there was lease for manufacturing purpose, there was no valid termination of tenancy”.
16. Sri. B.O.Chandrashekhar, appearing for appellants in RFAs 1024/2018 and 1025/2018 argued that the lease was for industrial purpose where manufacturing process is going on. The lease agreements marked as ExP8 in both the suits show that the lease was for 5 years and it was unregistered instrument. He argued that in a circumstance like this deemed tenancy from year to years would arise and therefore in these two suits also the findings of the trial court that the tenancy was from month to month and termination notices were valid, are wrong.
17. Sri. Y.K.N.Sharma, appearing for respondents/tenants in RFA 1013/2014 and RFA 1014/2014, while emphasising the points that Sri. G.V.Ashok and Sri. B.O.Chandrashekar argued, sought to raise a new point by laying emphasis on construction of Section 106 and Section 107 of Transfer of Property Act. His argument is that Section 107 of Transfer of Property Act contains two parts, the first part deals with creation of lease of immovable property for a period of one year or exceeding one year or where yearly rent is reserved. And the second part deals with leases not covered under in the first part. He argued that Section 106 of Transfer of Property Act stands independently in that it deals with leases not covered under Section 107 of Transfer of Property Act. Where there is no contract as to period of lease, the lease must be deemed to be from year to year if the lease is for agricultural or manufacturing purpose. That means, according to him, if there is no contract between the parties or local law or usage to contrary, a lease for manufacturing or agricultural purpose must be presumed to be from year to year, and such a lease can be terminated only by issuing six months prior notice. He stresses that the ‘deeming provision’ found in Section 106 of Transfer of Property Act distinguishes that section from Section 107.
17.1. He also argued that Section 107 of Transfer of Property Act applies to leases created by contract either through a written instrument or orally, and Section 106 of Transfer of Property Act is exhaustive which includes all other types of leases to which Section 107 of Transfer of Property Act is not applicable. He emphasizes that protection given under Section 106 of Transfer of Property Act cannot be taken away by Section 107 of Transfer of Property Act.
17.2. Putting forth the above legal issues, Sri Y.K.Narayana Sharma argued that insofar as the parties in the two suits, O.S.No.734/2012 and O.S.No.735/2012, are concerned, there was no contract between the parties and the lease was for manufacturing purpose. These aspects are not disputed. The landlord did not terminate the tenancy by issuing six months prior notice. The trial Court has rightly come to conclusion to dismiss the suit noticing these aspects.
17.3. Sri Y.K.Narayana Sharma argued another point that the respondent-landlord, before instituting the suit, forcibly occupied some portion of tenanted property and he filed the suit including this portion also. His intention is to legalize the encroachment. Suit in respect of encroached portion is not maintainable.
18. The learned Advocates Sri K.B.S.Srinivas and Sri Chithappa, appearing for landlords/respondents in RFA No.1816/2016, 1024/2018 and 1025/2018 argued that the trial Courts have correctly held that these leases were validly and legally terminated. In these cases period of lease is for more than one year and the lease agreements are unregistered. There is no dispute in this regard. In such a circumstance the lease must be treated as from month to month; the notices of termination were in accordance with law. They refer to judgment of the Supreme Court in the case of Samir Mukherjee vs. Davinder K. Bajaj and others [(2001) 5 SCC 259] and this Court in the case of Hutchison Essar South Limited vs. Union Bank of India (ILR 2007 KAR 4362). They argued for dismissal of these appeals.
19. Sri D.R.Ravishankar, appearing for appellants/landlords in RFA Nos.1013/2014 and 1014/2014 argued as below:
Section 106 and Section 107 of Transfer of Property Act cannot be read disjunctively. Whenever there is a lease for a year or more or in which yearly rent is reserved, the lease must be created by a registered instrument only. He refers to Section 17(d) of the Registration Act. There is no dichotomy between Section 106 and Section 107 of Transfer of Property Act. He argues that if there is a lease for a year or more and if it is not through a registered instrument, lease must be considered as from month to month only. According to him the deeming provision found in Section 106 of Transfer of Property Act is applicable to ‘termination of lease’ and not for presuming existence of lease de hors Section 107 of Transfer of Property Act. This is settled law now and he refers to judgments of the Supreme Court in the case of Inder Sain Bedi (Dead) by L.Rs. vs. Chopra Electricals [MANU/SC/1127/2004], Park Street Properties Private Limited vs. Dipak Kumar Singh and Another [(2016) 9 SCC 268], Mohammad Ahmad and another vs. Atma Ram Chauhan and others [(2011) 7 SCC 755]; Delhi High Court in the case of Bandhu Machinery Private Limited vs. Om Prakash Sikka and Others (AIR 2009 DELHI 33) and Calcutta High Court in the case of Manohar Kumar Kankaria and Another vs. Sk. Md. Shawkat and Others (AIR 2006 CAL 256). Construing the law in this manner, he argued that in the instant case, though there was no contract between the parties as to termination of lease, it was from month to month and it stood validly terminated. The trial Court’s conclusion that six months prior notice was essential is opposed to law.
19.1. With regard to another point of argument put forward by Sri Y.K.Narayana Sharma about inclusion of encroached portion in the suit, he argued that this issue was not raised in the trial Court; there is no evidence in that regard and it cannot be urged now.
20. To this argument of Sri D.R.Ravishankar, Sri Y.K.Narayana Sharma, replied that the judgment of Supreme Court in Samir Mukherjee (supra) does not deal with lease created by fiction according to Section 106 of Transfer of Property Act and it also does not deal with protection given to tenants/lessees doing agriculture or carrying on manufacturing activity in the leased premises. He submitted that observation made by the Supreme Court in Para 10 of Samir Mukherjee (supra) has no force of ‘precedent’ as it is opposed to law. He argued that if the lease is for manufacturing or agricultural purpose, issuance of six months prior notice is mandatory even though monthly lease is pleaded or rent is paid every month.
21. After taking note of elaborate arguments, if the facts are first analyzed, it appears that in all the cases tenancy is admitted. Though in the two suits, it is contended that there was no notice of transfer of tenanted property by way of gift and its subsequent cancellation, evidence shows that the tenant used to pay rent to husband and wife separately. This aspect does not assume so much of importance. In another suit, O.S.No.8844/2014, the trial Court has held that running a bakery in the tenanted premises cannot be brought within the purview of manufacturing purpose. This finding in the background of facts and evidence brought on record is incorrect. If a bakery unit is run in a premises involving conversion of raw materials, like wheat flour, maida, sugar etc., into other eatable items, it is indeed a manufacturing process. If only bakery items are sold without preparation of edibles in the premises, there may not be a manufacturing activity. Another undisputed fact is that, in the suits O.S.No.8844/2014, O.S.No.1098/2016, O.S.No.1103/2016 there came into existence unregistered written instrument of leases, whereas, in O.S.No.734/2012 and O.S.No.735/2012, there is no such instrument at all.
22. The next aspect to be discussed or rather the main point emerging for discussion is about interpretation of Section 106 and Section 107 of Transfer of Property Act. It is true, as has been argued by Sri Y.K.Narayana Sharma that Section 106 of Transfer of Property Act gives a protection to tenants carrying on agricultural or manufacturing activity in the leased property. The intention is to afford sufficient time, at lease six months to enable them to prepare for vacating the leased property after termination of lease and to prevent them from facing hardship in case they are evicted with short notice. But is it possible to say that merely because a property is taken on lease for doing agricultural or carrying on manufacturing activity, six months notice is always necessary in view deeming provision found in Section 106 of Transfer of Property Act if lease for year or more is not created as envisaged under Section 107 of Transfer of Property Act? Is there scope for reading Section 106 and Section 107 disjunctively ? this is another question. These two sections are extracted below:
“106. Duration of certain leases in absence of written contract or local usage:
(1) 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.
(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.
(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.
107. Leases how made: 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.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession”.
23. In my opinion, the room for mischief lies in arrangement of both the sections. Section105 of Transfer of Property Act defines a lease. After reading the definition clause, if Section 107 is read, it gives a clear picture as to how lease can be created. It consists of two parts, the first part dealing with a lease of immovable property from year to year or for a period exceeding one year, or where yearly rent is reserved. These types of leases can be made only by a registered instrument. This can be read along with Section 17(d) of the Registration Act. The second part deals with other leases which do not fall under first part. This kind of lease may be made by registered instrument. It can come into existence through oral agreement also, but delivery of possession must be there.
24. Section 106 of Transfer of Property Act not only deals with lease of immovable property for agricultural or manufacturing purpose, but also with regard to lease of immovable property for any other purpose. But deeming provision arises with regard to period of lease when there is no contract or local law or usage to the contrary depending upon the purpose. The word ‘contrary’ here is referable to period of lease. It is also possible to say that deeming provision may be applied even where there is a contract but which is silent with regard to period. Once a period of lease arises out of fiction, its termination also finds a place in Section 106. If there is a contract as to period of lease and its termination, then Section 106 does not apply, even if it is for agricultural or manufacturing purpose. The parties are bound by the contract. The Hon’ble Supreme Court had an occasion to examine a case of this nature in the case of Samir Mukherjee (supra). In paragraphs 5 and 6, the Supreme Court has observed as below:
“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. . On a plain reading of this section it is clear that legislature has classified leases into 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.
(Underlining by me) 6. Section 107 prescribes the procedure for execution of a lease between the parties. Under the first para of this section 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 and remaining classes of leases are governed by the second para that is to say all other leases of immovable property can be made either by a registered instrument or by an oral agreement accompanied by delivery of possession”.
25. In the case of Inder Sain Bedi (supra) also, the Supreme Court has held:
“19. According to the provisions of Section 106 of the Act a lease for the manufacturing purpose is deemed to be a lease from year to year but the same is subject to the contract to the contrary between the parties. The landlord and the tenant can mutually agree to create a tenancy for manufacturing purpose for a period less than a year. Only in the absence of this kind of contract the lease for manufacturing purpose would be deemed to be a lease from year to year. The same can be created by a registered document in view of the provision of Section 105 of the Act. In the present case, admittedly the lease was created for a period of 11 months only and it was provided in clause 15 that tenancy could be terminated by either of the parties by giving two months' notice. There was a contract to the contrary between the parties providing for termination of the lease between the parties by giving a notice of less than six months and as such it was not necessary for the appellant to terminate the tenancy by giving six months' notice. In view of the terms of the contract between the parties the tenancy could be terminated by giving two months' notice. In the present case, the lease in question was not from year to year or for a period exceeding one year. Since the lease was not from year to year there was no requirement of giving six months' notice. Manufacturing lease which is not from year to year does not require six months' notice for termination. It will fall in the second half of Section 106 requiring fifteen days' notice of termination.”
26. Where a question as regards termination of lease for a manufacturing or agricultural purposes arises, a view has been taken that if a lease comes into existence from year to year or exceeding a year, it must be in accordance with the first category found in Section 107 of Transfer of Property Act, i.e., it must be through a registered instrument only; if not it falls under second category of Section 107. In that event issuance of six months prior notice for termination is not necessary. The settled principle is that there cannot be a lease for a period of year or more de hors the requirement found in first category or paragraph of Section 107 of Transfer of Property Act. The Supreme Court in the case of Inder Sain Bedi (supra) has endorsed the view taken by it in an earlier judgment in the case of Janki Devi Bhagat Trust, Agra Vs. Ram Swarup Jain [1995 (5) SCC 314] “20. This Court had the occasion to examine this point in Shri Janki Devi Bhagat Trust, Agra Vs. Ram Swarup Jain (dead) by Lrs., 1995 (5) SCC 314, and it was held thus:
"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 months' notice 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. The High Court, having come to the conclusion that the lease was not for a period exceeding one year, and was not a lease from year to year erred in holding that six months' notice to quit was required. Such a notice is required, provided there is no contract to the contrary, only when a manufacturing lease is, or is deemed to be, from year to year. This not being the case, the lease is terminable by fifteen days' notice even if the lease is a manufacturing lease."
21. We respectfully agree with the view taken by this Court in the above quoted case.
Since the lease was for a period of less than one year notice of six months to quit was not required to be given. In the present case there was a contract to the contrary between the parties providing that the tenancy could be terminated by giving two months notice. The tenancy had been validly terminated”.
27. Again in the case of Park Street Properties (supra), the same question arose for consideration. The Hon’ble Supreme Court, referring to some of its earlier decisions and in particular, to the case of Ram Kumar Das Vs. Jagdish Chandra Deo (AIR 1952 SC 23), came to conclusion that in the absence of registration of a document, what is deemed to be created is month to month tenancy, the termination of which is governed by Section 106 of the Act.
(underlining by me) 28. The learned counsel Sri. G.V.Ashok refers to Park Avenue to argue that when circumstances indicate creation of a lease for manufacturing purpose, termination of such lease must be preceded by a notice of six months. It is true that such an observation is there is para 19 of the judgment, but its ultimate conclusion is as observed above and therefore the argument of Sri. G.V.Ashok cannot be accepted. Sri. Y.K.N.Sharma argued that the proposition laid down is para 10 of Samir Mukherjee (supra) is not a precedent. It is difficult to accept this proposition in the light of consistent view taken by the Hon’ble Supreme Court.
29. This court had an occasion to deal with this aspect in the case of Hutchison Essar South Limited (supra) and what is held is thus :
“13. In the case of Samir Mukherjee (supra) the Hon'ble Supreme Court has taken the considered view that the existence of the valid lease is a prerequisite for the purpose of invoking rule of constructions and deeming provisions embodied in Section 106 of the Transfer of Property Act. In the 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 of the Transfer of Property Act and in the wake of non-registration of the lease agreement, it can only be said that the lease is terminable without issuing the advance notice to the petitioner by the respondent No. 2 or by the respondent No. 1, when it steps into the shoes of the respondent No. 2. I answer the first point by holding that the petitioner is a lessee in the aforesaid premises. The first respondent-Rank's contention that the petitioner is a trespasser is absolutely repellable. Even assuming that there are some irregularities in inducting the petitioner into the aforesaid premises, they do not make it an unauthorised occupant, much less a trespasser”.
30. Therefore from the foregoing discussion I come to conclusion that in all these cases, since lease for a period more than a year for manufacturing purpose was not created through a registered instrument as required under Section 107 of the Transfer of Property Act, the duration of lease was from month to month. The termination of tenancy by issuing advance notice of 15 days was valid. Hence I proceed to pass the following order:-
RFA 1816/2016, RFA 1024/2016 and RFA 1025/2016 are dismissed confirming the judgment of the trial court. All the appellants are given six months time to vacate and deliver vacant possession of the tenanted premises under their occupation.
RFA 1014/2014 and RFA 1013/2014 are allowed. The judgments of the trial court dismissing the suits O.S.No.734/2012 and O.S.No.735/2012 are set aside. The suits are decreed directing the respondents/defendants to deliver vacant possession of the tenanted premises in their occupation within six months from today. In both the suits, enquiry as contemplated under Order XX Rule 12 of CPC is ordered for determination of damages as claimed by the plaintiff.
There is no order as to cost in all the appeals.
Sd/- JUDGE ckl/sd