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PETITIONER:

ANTHONY

Vs.

RESPONDENT:

KC ITTOOP AND SONS AND OTHERS

DATE OF JUDGMENT: 01/07/2000

BENCH:

D.P.Mohapatro, K.T.Thomas, R.C.Lahoti

JUDGMENT:

J U D G M E N T Thomas J. A dispute which constantlycaused many litigations to pro

long in the past (whether a

lease could be made by an unregistered instrument when such

deed is compulsorily registerable) has once again been

raised and that dispute has lengthened the longevity of this

litigation through a chequered career. The successor of the

party who was mainly responsible for not registering the

instrument has now been benefited of it as the impugned

judgment gave a decree for eviction of the person who was

admittedly inducted into possession of the building by the

former. Though appellant claimed protection under the

provisions of the Rent Control legislation the High Court

discountenanced it on the premise that the document executed

by the parties regarding the transaction is void under law.

The simple question now is whether appellant can claim

protection as a tenant under Kerala Buildings (Lease and

Rent Control) Act 1965 (for short the Rent Act).

Facts, mostly undisputed, are the following: The

building which is the subject matter of this litigation is

described as a shed which originally belonged to a family

the senior member of which inducted the appellant in

possession thereof as per a lease deed dated 4.1.1974 which

was ostensibly meant for a period of five years. The

monthly rent of the building has been fixed at Rs.140/-.

Appellant paid rent of the building at the said rate till

October 1974. Sometime during this period ownership of the

building happened to be allotted to a female member of the

family (Devaki) as per a partition effected between its

members. Thereafter rent of the building was paid by the

appellant to the aforesaid Devaki. Subsequently ownership

of the building was transferred by Devaki to the respondent

who filed the suit as plaintiff (for the sake of convenience

respondent can be referred to as the plaintiff). The

trial court decreed the suit by repelling the contention of

the appellant that the suit was not maintainable as he is

protected from eviction under the provisions of the Rent

Act. The trial court found that the appellant is not a

tenant as the lease was void on account of non-registration

of the lease-deed. In the first appeal filed by the

appellant a District Judge held that in spite of non-

registration of the instrument there was a valid tenancy of

the building and hence appellant could not be evicted except

in accordance with the provisions of the Rent Act.

In a second appeal filed by the respondent a single

judge of the High Court of Kerala set aside the judgment of

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the District Court and remanded the first appeal to that

court by holding that the plaintiff was inducted into

possession under a void lease and hence the court should

consider whether, independent of this lease the defendant

was in possession as a lessee from month to month. Learned

single judge pointed out that since it is a question of fact

the same has to be decided on the evidence on record. After

the remand the District Court entered upon a finding that

despite the defect of non-registration of the instrument

the facts and circumstances of this case and the evidence

discussed above could clearly show that the parties intended

to create a lease. The District Judge further held that

appellant is the tenant as defined in the Rent Act and hence

the plaintiff is not entitled to a decree in this case and

his remedy is to apply before the Rent Control Court.

When the matter went up to the High Court again in a

second appeal a learned single judge did not agree with the

approach made by the District Judge after remand and the

following observations, inter alia, have been made by the

High Court:

It has to be noted that if the conclusion of this

court on the earlier occasion were that payment and

acceptance of rent pursuant to the void contract itself

would bring about the relationship of landlord and tenant

between the parties protected under the Kerala Buildings

(Lease and Rent Control) Act this court would have certainly

dismissed the suit filed by the plaintiff by so finding and

would not have remanded the appeal to the lower appellate

court in the manner in which it was done. The lower

appellate court has ignored this aspect while purporting to

record a finding that the first defendant would be a tenant

protected by the Kerala Buildings (Lease and Rent Control)

Act even if he had paid rent only under the void lease. The

said approach by the appellate court appears to me to be

totally unsustainable.. I am therefore

constrained to set aside the finding of the lower appellate

court that the first defendant is a tenant protected by the

Kerala Buildings (Lease and Rent Control) Act. I hold that

the first defendant has not proved that independent of the

void lease, a relationship of landlord and tenant has come

into existence between the parties. In view of this

finding, the plaintiffs will be entitled to a decree for

recovery of possession of the plaint schedule property.

In this appeal by special leave a bench of two judges

heard this matter and after noticing a conflict of opinions

expressed by benches of equal strength it was felt that this

appeal should be decided by a larger bench.

In spite of the chequered career of the litigation the

only question which has now bogged down to be decided is

whether the suit building is held by the appellant under a

lease or not. The word tenant is defined in Section 2(6)

of the Rent Act as any person by whom or on whose account

rent is payable for a building. Landlord is defined as

including the person who is receiving or is entitled to

receive the rent of a building. Now the definition of

building must be booked into. In clause (i) it is defined

as any building or hut or part of a building or hut, let or

to be let separately for residential or non-residential

purposes´ In the above context the word let has only

one meaning and that is to demise on lease.

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The above three definitions unmistakably point to the

necessity for a building to be covered by a lease under law

in order to bring such building within the purview of the

Rent Act. If there is no lease of a building the Rent Act

has no application. Thus what is important now is to know

whether there has been a lease of the building in question.

If the appellant is a lessee of the building, it is not

disputed before us that jurisdiction of the civil court

would stand evacuated and the plaintiff has to approach the

Rent Control Court if he is desirous of getting an order of

eviction on any one of the grounds recognised in the Rent

Act.

The lease-deed relied on by the plaintiff was intended

to be operative for a period of five years. It is an

unregistered instrument. Hence such an instrument cannot

create a lease on account of three pronged statutory

inhibitions. The first interdict is contained in the first

paragraph of Section 107 of the Transfer of Property Act,

1882 (for short the TP Act ) which reads thus:

A lease of immovable property from year to year, or

for any term exceeding one year, or reserving an yearly

rent, can be made only by a registered instrument.

(Emphasis supplied) (emphasis supplied) The second

inhibition can be discerned from Section 17(1) of the

Registration Act 1908 and it reads thus: (only the material

portion) Documents of which registration is compulsory.

-(1) the following documents shall be registered if the

property to which they relate is situate in a district in

which, and if they have been executed on or after the date

on which, Act No. 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: .

(d) Leases of immovable property from year to year, or

for any term exceeding one year, or reserving a yearly

rent.

The third interdict is contained in Section 49 of the

Registration Act which speaks about the fatal consequence of

non-compliance of Section 17 thereof. Section 49 reads

thus: 49. Effect of non-registration of documents

required to be registered.- No document required by Section

17 [or by any provision of the TP 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, 1877, or as

evidence of part performance of a contract for the purposes

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of section 53-A of the Transfer of Property Act, 1882, or as

evidence of any collateral transaction not required to be

effected by registered instrument.]"

No endeavour was made by the counsel to obviate the

said interdict with the help of the exemptions contained in

the proviso.

The resultant position is insurmountable that so far

as the instrument of lease is concerned there is no scope

for holding that appellant is a lessee by virtue of the said

instrument. The court is disabled from using the instrument

as evidence and hence it goes out of consideration in this

case, hook, line and sinker (vide Smt. Shantabai vs. State

of Bombay: AIR 1958 SC 532; Satish Chand Makhan vs.

Govardhan Das Byas, (1984) 1 SCC 369 and Bajaj Auto Limited

vs. Behari Lal Kohli AIR 1989 SC 1806 ).

But the above finding does not exhaust the scope of

the issue whether appellant is a lessee of the building. A

lease of immovable property is defined in Section 105 of the

TP Act. A transfer of a right to enjoy a property in

consideration of a price paid or promised to be rendered

periodically or on specified occasions is the basic fabric

for a valid lease. The provision says that such a transfer

can be made expressly or by implication. Once there is such

a transfer of right to enjoy the property a lease stands

created. What is mentioned in the three paragraphs of the

first part of Section 107 of the TP Act are only the

different modes of how leases are created. The first

paragraph has been extracted above and it deals with the

mode of creating the particular kinds of leases mentioned

therein. The third paragraph can be read along with the

above as it contains a condition to be complied with if the

parties choose to create a lease as per a registered

instrument mentioned therein. All other leases, if created,

necessarily fall within the ambit of the second paragraph.

Thus, dehors the instrument parties can create a lease as

envisaged in the second paragraph of Section 107 which reads

thus:

All other leases of immovable property may be made

either by a registered instrument or by oral agreement

accompanied by delivery of possession.

When lease is a transfer of a right to enjoy the

property and such transfer can be made expressly or by

implication, the mere fact that an unregistered instrument

came into existence would not stand in the way of the court

to determine whether there was in fact a lease otherwise

than through such deed.

When it is admitted by both sides that appellant was

inducted into the possession of the building by the owner

thereof and that appellant was paying monthly rent or had

agreed to pay rent in respect of the building, the legal

character of appellants possession has to be attributed to

a jural relationship between the parties. Such a jural

relationship, on the fact situation of this case, cannot be

placed anything different from that of lessor and lessee

falling within the purview of the second paragraph of

Section 107 of the TP Act extracted above. From the

pleadings of the parties there is no possibility for holding

that the nature of possession of the appellant in respect of

the building is anything other than as a lessee.

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Shri P.Krishnamoorthy learned Senior Counsel contended

that a lease need not necessarily be the corollary of such a

situation as possession of the appellant could as well be

permissive. We are unable to agree with the submission on

the fact situation of this case that the appellants

possession of the building can be one of mere permissive

nature without any right or liabilities attached to it.

When it is admitted that legal possession of the building

has been transferred to the appellant there is no scope for

countenancing even a case of licence. A transfer of right

in the building for enjoyment, of which the consideration of

payment of monthly rent has been fixed, can reasonably be

presumed. Since the lease could not fall within the first

paragraph of Section 107 it could not have been for a period

exceeding one year. The further presumption is that the

lease would fall within the ambit of residuary second

paragraph of Section 107 of the TP Act.

Taking a different view would be contrary to the

reality when parties clearly intended to create a lease

though the document which they executed had not gone into

the processes of registration. That lacuna had affected the

validity of the document, but what had happened between the

parties in respect of the property became a reality. Non

registration of the document had caused only two

consequences. One is that no lease exceeding one year was

created. Second is that the instrument became useless so

far as creation of the lease is concerned. Nonetheless the

presumption that a lease not exceeding one year stood

created by conduct of parties remains un-rebutted.

Shri P. Krishnamoorthy learned counsel cited certain

decisions to support his contention that the court did not

treat similar transactions as lease. In HS Rikhy vs. New

Delhi Municipal Corporation: 1962 (3) SCR 604, a contention

made by a party to the suit that he had a right under the

local Rent Control Act was negatived on the ground that

there was no landlord-tenant relationship between the

parties. In that decision this court did not accept the

contention that the word letting which was contemplated in

the particular Rent Control Act included not merely a

transfer to a tenant but also to a licensee, or that the

word rent precluded the landlord from pleading that there

was no relation of landlord and tenant between the parties.

The finding made in that case against the plea of landlord

was based on the premise that the transfer was not made by

the Municipal Committee in accordance with the law and hence

there was no transfer at all. That decision has no

application to the points involved in the present case.

In Technicians Studio Pvt. Ltd. vs. Lila Ghosh

(1977) 4 SCC 324 a two judge bench considered the effect of

a compromise decree which mentioned that the defendant would

become a direct tenant on a monthly rent of Rs.1, 000 and

the lease would be for a period of sixteen years. But

compromise decree was not registered nor did the parties

execute a lease- deed pursuant thereto. The contention in

that case was two fold. First was that by payment and

acceptance of rent during the period of sixteen years the

monthly tenancy has been created. Second was that the

compromise decree can be treated as evidence of part payment

under Section 53A of the TP Act. This court noted that the

High Court has found in agreement with the finding of the

subordinate courts that payment of rent and acceptance of

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the same did not create any tenancy. The said fact finding

was not disturbed by this court in that particular case.

However, their lordships observed therein that whether the

relationship of landlord and tenant exists between the

parties depends on whether the parties intended to create a

tenancy and the intention has to be gathered from the facts

and circumstances of the case; it is possible to find on

facts of a given case that payments made by transferee in

possession were really not in terms of the contract but

independent of it and this might justify an inference of

tenancy in his favour. The question is ultimately one of

fact.

In Biswabani Pvt. Ltd. vs. Santosh Kumar Dutta:

(1980) 1 SCR 650 a two judge bench of this court found that

though a second lease-deed executed between the parties (on

the expiry of the period mentioned in the first lease-deed)

is void for want of registration, the tenant would continue

to be protected under the relevant Rent Control Act because

on the expiry of the period of first lease the tenant had

acquired the right of a statutory tenant.

None of the observations made in the above decision is

in conflict with the view expressed by us above. Appellant

occupied the building as a tenant and he paid rent to the

landlord and continued as such. Hence with the coming into

force of Rent Act he became a statutory tenant whose

eviction can be considered only when an application is moved

in that behalf before the Rent Control Court concerned. We,

therefore, allow this appeal and set aside the impugned

judgment of the High Court. The suit filed by the

respondent will stand dismissed without prejudice to the

right of the respondent to move under the provision of the

Rent Act.