Second Appeal No.201 of 2013

12th October, 2014

Petitioner Counsel: Mr. L.A. MOHTA
Respondent Counsel: Mr. A.M. GHARE

Cases Cited:
State of U. P. Vs. Singhara Singh & Ors., AIR 1964 SC 358 [Para 11]
Nazir Ahamad Vs. King-Emperor, AIR 1936 PC 253 [Para 11]
Allenbury Engineers Pvt. Ltd. Vs. Shri Ram Krishna Dalmia & Ors., AIR 1973 SC 425 : 1973 (1) SCC 7 [Para 11]
Dina Ji & Ors. Vs. Daddi & Ors., AIR 1990 SC 1153 [Para 12]
Satish Chand Mukhan & Ors. Vs. Goverdhandas Byas & Ors., AIR 1984 SC 143 [Para 12]
Rai Chand Jain Vs. Miss Chandra Kanta Khosla, AIR 1991 SC 744 [Para 12]
Pieco Electronics and Electricals Ltd. Vs. Smt. Tribeni Deve, AIR 1990 Cal. 135 [Para 12]
M/s. Bajaj Auto Ltd. Vs. Bahari Lal Kolhi, AIR 1989 SC 1806 [Para 12]
Ishwar Dutt Vs. Sunder Singh, AIR 1961 J&K 45 [Para 12]
M/s. Jagajit Industries Ltd. Vs. Rajiv Gupta, AIR 1981 Delhi 359 [Para 12]
Zarif Ahmad & Anr. Vs. Satish Kumar & Anr., AIR 1983 All. 164 [Para 12]
Haran Chandra Chakravarti Vs. Kaliprasanna Sarkar, AIR 1932 Cal. 83 [Para 12]
K.B.Saha and Sons Pvt. Ltd. Vs. Development Consultant Ltd., 2008(5) ALL MR 485 (S.C.)=(2008) 8 SCC 564 [Para 13]
Anthony Vs. K.C. Ittoop & Sons, (2000) 6 SCC 394 [Para 14]

JUDGMENT

JUDGMENT :- The Second Appeal is admitted on the following substantial questions of law :

i) Can the learned lower Appellate Court legally upset the finding of the learned trial Court dismissing the suit of the plaintiff on the ground that the impugned lease is for the period of five years and the same requires compulsory registration under Section 17 (1) (d) of the Registration Act in spite of observing that the unregistered document cannot be admitted for proving the relationship of Landlord and tenant and duration of the lease and allow the appeal ?

ii) Is the learned Appellate Court right in law to allow the appeal relying on the proviso to Section 49 of the Registration Act that the lease document can be used for collateral purposes ?

2. This Second Appeal is filed by the appellant (Original Defendant) against the Judgment and Order, dated 21.12.2012 passed by District Judge, Akola in Regular Civil Appeal No.94 of 2005, which was allowed and the suit was decreed. The said appeal arose from the Judgement and Order, dated 29.7.2005 passed by the trial Court (Civil Judge (Jr. Dn., Murtizapur) in Regular Civil Suit No.21 of 2004. The suit for eviction, possession and damages was dismissed by the trial Court. The parties are referred to by their nomenclature in the trial Court.

3. Brief facts are as under :-

The plaintiff is owner of Nazul plot nos.28 and 29, sheet no.26-D admeasuring about 100 square feet situated in Tanga Chowk, Murtizapur. In the year 1998, the defendant was given the plot on lease for a term of five years under the Lease deed, dated 29.8.1998. As per the agreement, the plaintiff had agreed to spend a sum of Rs. 10,000/- for construction of the shop on the said plot. The defendant had deposited the sum of Rs. 15,000/- for the said purpose, agreeing to bear expenses exceeding Rs 10,000/- if spent by the plaintiff for construction upon the suit plot. Defendant had agreed to vacate the plot after expiration of the lease term of five years, but did not. The tenancy stood terminated by efflux of time as also by notice served upon the defendant by Registered Post A/D. with effect from 15.10.2003. The defendant also did not pay the rent from October 2000 to October 2003. The defendant continued to hold over unlawfully. The defendant admitted the fact that he had approached the plaintiff and requested him to give the plot on lease. The defendant denied the suit claim. The trial Court negatived the suit claim of possession and dismissed the suit. Ownership of the suit plot with the plaintiff was not disputed by the defendant. The fact of lease of the suit plot was not disputed. Only term of the lease was disputed. The document of lease was unregistered.

4. The trial Court dismissed the suit after it found that the plaintiff had failed to prove the requirement of the suit property for his own (Wife's) occupation. The plaintiff had proved that he was responsible for expenses of the construction done by the defendant on the suit plot to the extent of Rs. 10,000/- only. The trial Judge held that the plaintiff failed to prove termination of the tenancy and also that the tenancy term was for 5 year.

5. The first Appellate Court reversed the findings of the trial Court, allowed the appeal and decreed the suit. The question argued is as to whether the first Appellate Court was right in invoking the proviso to section 49 of the Registration Act to hold that the unregistered lease document can be used for collateral purpose and whether it is justified to reverse the Judgment and Order passed by the trial Court on the ground that, in view of Section 17(1) (d) of the Registration Act, the lease required compulsory registration of the document to prove the relationship of the Landlord and the Tenant. The appellant sought to support the Judgment and Order passed by the trial Court. The first Appellate Court held from the evidence on record that there was a relationship of lessor and lessee between the parties and the lease was for a period of five years and by efflux of time, the lease was terminated on 16.10.2003. The fact that the defendant continued to hold over and refused to vacate despite notice to vacate from the lessor would not justify refusal of the relief. Hence the appeal was allowed.

6. Mr.L.A.Mohata, learned Counsel for the Appellant submitted with reference to Section 49 of the Registration Act that the unregistered document could not have been used for a collateral purpose.

7. Mr.A.M.Ghare, learned Counsel for the respondents urged that the Lease deed in the present case was executory with effect from 15.10.1998 to 15.10.2003 for the term of five years and since it was compulsorily registrable, it was inadmissible in evidence and for this vital flaw, the suit was rightly dismissed. Unregistered Lease, however according to Shri Ghare could have been used for the collateral purpose.

8. Legal position in respect of Lease agreement for a term exceeding a year may be examined now:-

Section 107 of the Transfer of Property Act, 1882 provides the mode by which the contract of tenancy can be entered into i.e. in which the lease can be made. Section 107 of the T. P. Act reads as under :--

"Section 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."

9. A perusal of Section 106 of the Transfer of Property Act leads a rule of evidence as regards the duration of certain lease and according to letter and spirit of Section 106 of the T. P. Act, in the absence of any contract, local law or usage to the contrary, a lease of immovable properly for any purpose other than the agriculture or manufacturing purpose, is to be deemed to be lease from month to month, but so far as lease for immovable property taken for the agricultural purpose or manufacturing purpose, these leases are - unless there is anything to the contrary in the contract or local law or the usage, to be deemed to be leased from year to year. This is a rule of evidence i.e. all leases of immovable properties are to be deemed in the eye of law to be month to month and, if any, person alleges or claims to the contrary i.e. in other words, if any person alleges or as asserts lease particularly lease to be a fixed term lease or to be a yearly lease, he has to prove the same by legal, valid and reliable evidence keeping in view the provisions of Section 107 of the Transfer of Property Act as well as the provisions of the Registration Act and the Evidence Act.

10. So, in the present case, burden did lie on the defendant to prove the averments of fact made by him in the Written Statement to the effect that fixed term of the lease was for five years and the period of lease could be extended at the option and wish of the lessee.

11. Section 107 of the T. P. Act provides that lease for a fixed term or for a term of more than a year or for year to year or reserving yearly rent can be made only by a registered instrument while all other leases of immovable property can be made either by a registered instrument or by oral agreement accompanied with delivery of possession. Thus, the provisions of Section 107 of the Transfer of Property Act by use of expression 'only' indicates that the Legislature or the Parliament intended to prescribe the specific mode for making of the fixed term lease for more than one year or reserving yearly rent. It is well settled principle of law as laid down by Supreme Court in the case of State of U. P. vs. Singhara Singh and Others, reported in AIR 1964 SC 358 as well as by Privy Council in the case of Nazir Ahamad v. King-Emperor, reported in AIR 1936 PC 253 when the law prescribes a certain mode or specific mode of or for doing a thing or certain mode of exercising certain power of authority or right or for performing certain Act, then that act or thing has got to be done in that manner alone and not otherwise. Other modes in respect thereof are necessarily and by necessary implication taken to have been forbidden and closed. Apart from these general principles, further use of expression "only" after the expression "can be made" and before expression "by a registered instrument" indicates the legislative intent that legislature has intended that fixed term lease for a period of more than a year of a lease from year to year or reserving the yearly rent is to be and can be made in no other manner than by entering into the contract of tenancy by a registered lease deed. This being the legal position, there can be no lease for fixed term for a period more than a year or the like, if the same has been entered into orally or by some deed which is not registered one, and in those cases, the presumption about the duration of lease under Section 106, T.P. Act will apply. (See Allenbury Engineers Pvt. Ltd. v. Shri Ram Krishna Dalmia and Others, AIR 1973 SC 425 i.e. 1973 (1) SCC 7).

Under the Registration Act, Lease for any term exceeding one year is compulsorily registrable document.

Section 12. Documents of which registration is compulsory :

(1) The following documents shall be registered, if the property to which they relate is situated in a district in which, and if they have been executed on or after the date on which, Act XVI of 1864, or the Indian Registration Act, 1866, or the Indian Registration Act, 1871, or the Indian Registration Act, 1877, or this Act came or comes into force, namely,-

(a) Instruments of gift of immovable property;

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

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:

Provided that the State Government may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do not exceed fifty rupees...........

S. 49 of the Registration Act mention the consequence of the non-registration of the document

49. Effect of non-registration of documents required to be registered

No document required by section 17 or by any provision of the Transfer of Property Act, 1882, to be registered shall-

(a) affect any immovable property comprised therein, or

(b) confer any power to adopt, or

(c) be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered:

Provided that an unregistered document affecting immovable property and required by this Act, or the Transfer of Property Act, 1882, to be registered may be received as evidence of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, 1872, or as evidence of any collateral transaction not required to be effected by registered instrument.

12. In Dina Ji and Others vs. Daddi & others reported in AIR 1990 SC 1153, the Supreme Court had considered the effect of an unregistered document which is required to be registered under Section 17 of the Registration Act, 1908 or under any of the provision under the Transfer of Property Act. It was observed that such a document will not avail to create, declare, assign, limit or extinguish any right, title or interest in or to the immovable property made mention of in the document. In other words, an unregistered document cannot be used for the purpose of establishing that the document created or declared or assigned or limited or extinguished a right to immovable property. However, trend of the judicial decisions or trend of judicial opinion is to the effect that unregistered documents which are compulsorily registrable under Section 17 of the Registration Act can be looked into only for collateral purposes. Collateral purpose has a limited scope and meaning. It is possible to lay down some haphazard illustrations on the point in the light of judicial pronouncements.

Purposes which are collateral in nature:

a) For proving the nature and character of possession of the tenant (Per Satish Chand Mukhan and Others v. Goverdhandas Byas and Others (AIR 1984 SC 143).

b) For ascertaining whether the purpose of lease was residential or not. (Per Rai Chand Jain v. Miss Chandra Kanta Khosla (AIR 1991 SC 744).

c) For ascertaining the commencement of possession, rate of rent etc. (Per Pieco Electronics and Electricals Ltd. v. Smt. Tribeni Deve (AIR 1990 Cal. 135).

Purposes which are not collateral:

a) For ascertaining whether the lessee is entitled to create a sub-lease or not. (Per M/s.Bajaj Auto Ltd. v. Bahari Lal Kolhi (AIR 1989 SC 1806).

b) For ascertaining the term of lease. (Per Ishwar Dutt v. Sunder Singh (AIR 1961 J&K 45).

c) For ascertaining the term in a lease regarding notice of eviction. (Per M/s.Jagajit Industries Ltd. v. Rajiv Gupta (AIR 1981 Delhi 359).

d) For ascertaining the date on which the tenancy began. (Per Zarif Ahmad and Another v. Satish Kumar and Another (AIR 1983 All. 164).

e) For ascertaining as to who is the tenant and on what terms he has been created a tenant (Per Haran Chandra Chakravarti v. Kaliprasanna Sarkar (AIR 1932 Cal. 83).

13. The aforesaid list is not exhaustive. The net conclusion that can be drawn from the decisions referred to above is that an unregistered lease cannot be pressed into service to create, declare, assign, limit or extinguish any right, title or interest in or to the property comprised in the document. As the term of lease imposes a limit on the interest of the parties, an unregistered document cannot be relied on for ascertaining the term of lease. This position is further clarified by the Supreme Court in K.B.Saha and Sons Pvt. Ltd. vs. Development Consultant Ltd. (2008) 8 SCC 564) : [2008(5) ALL MR 485 (S.C.)]. Therein, the Apex Court was considering a case where the eviction proceedings were based on the memorandum of lease agreement. The agreement was unregistered. There was a clause in the agreement clause (9) - which required the lessee to use the tenanted premises only for its particular named officer. The Apex Court found that it was an important term forming part of lease agreement and it cannot be looked into even for collateral purposes to come to a conclusion that the respondent was liable to be evicted because of violation of the aforesaid clause."

14. In Anthony v. K.C.Ittoop & Sons, (2000) 6 SCC 394, the question arose whether a tenant of a building could be evicted by filing a suit in the regular Court when the building is situated in an area covered by the Kerala Buildings (Lease and Rent Control) Act and when the lease was for a period of more than one year and the lease deed was not registered. The High Court held that the tenant has not proved that independent of the void lease - the relationship of the landlord and tenant has come into existence between the parties and therefore, the suit was maintainable. The Supreme Court in the further appeal held that the instrument of lease is required to be registered and the Court is disabled from using the instrument as evidence and it goes out of consideration. On the admission of the landlord that the defendant was inducted into possession of the building by the owner and thereafter, he was paying monthly rent, the legal character of the defendant has to be attributed to a jural relationship which cannot be placed in a way anything different from that of lessor and lessee. Therefore, the defendant could be evicted only under the provisions of the Rent Control Act. In that case, the Court was concerned with the status of the defendant as to whether he was a lessee or of any other legal character. That by itself will not help the revision petitioner in this case as by giving effect to the term in the sale deed that the tenant can continue in possession for ten years, he will be enforcing a term in a lease transaction, which is otherwise unenforceable in law for want of a registered document. If the original landlords were not bound by the term of the lease deed as it was not a registered document, the transferee also cannot be bound to do so. ..."

15. In the light of the discussion of the legal position as mentioned above, the conclusion follows that, in the present case, the lease for any period exceeding one year was compulsorily registrable document requiring the registration charges and the stamp duty in accordance with law. The Court was, no doubt, wrong to admit the document of lease in to evidence when it was compulsorily registrable according to the law (supra) in view of the provisions in Section 55 of the Maharashtra Rent Control Act read along with Section 17(1) (d) of the Registration Act and further read along with Section 107 of the Transfer of Property Act. But then, the document can be taken into consideration for collateral purposes, as stated above for proving the nature and character of possession of the tenant and ascertaining whether the purpose of lease was residential or not and for ascertaining the commencement of possession, rate of rent etc. as held by the first Appellate Court. Therefore, the suit was rightly decreed by the first Appellate Court.

16. In view of the above, the afore-mentioned substantial questions of law are answered in the affirmative. The Second Appeal lacks merits. Hence, it is dismissed with costs. The tenant/occupant shall within three months from today hand over possession of the suit property to the plaintiff.

Appeal dismissed.