Bombay High Court
400 038. vs Byramjee Jeejeebhoy Pvt. Ltd. ... on 22 October, 2012
Bench: R. V. More
Sr.No. Cra 617.08
SSK IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL REVISION APPLICATION NO.617 OF 2008
The National Textile Corporation Ltd., )
a Public Sector Undertaking having )
its regional office at NTC House, )
3rd Floor, Ballard Estate, Mumbai )
400 038. ) ....Petitioner
Versus
Byramjee Jeejeebhoy Pvt. Ltd. having )
its registered office at 83, Jolly Maker )
Chambers-II, Nariman Point, )
Mumbai- 400 021. ) ...Respondent
Mr. E.P. Bharucha, senior counsel along with Mr. Zubin Behramkamdin
and Mr. Som Sinha, advocates i/b. Mr. D. H. Shah, advocate for the
petitioner.
Mr. P. K. Dhakephalkar, senior counsel with Mr. S. S.Patwardhan and Mr.
Mohd. Akram, advocates i/b. M/s. Harilal Thakkar, advocate for the
respondent.
CORAM : RANJIT MORE, J.
DATE OF RESRVING : 14TH AUGUST, 2012
DATE OF PRONOUNCEMENT : 22nd OCTOBER, 2012.
P.C.:
By consent of learned counsel appearing for the respective
parties, the revision is taken up for final hearing.
2. Heard Mr. Bharucha and Mr. Dhakephalkar, learned senior
counsel for the respective parties.
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3. By the present revision filed under Section 115 of the Code of
Civil Procedure, 1908, the petitioner challenges the legality, validity and
propriety of the judgment and decree dated 15 th September, 2008,
passed by the Appellate Bench of the Small Causes Court at Bombay in
Appeal No.88 of 2007 in T.E.R. Suit No.428/451/2001. By the said
judgment and decree, the petitioner's appeal was dismissed and the
order passed by the learned Trial Judge in T.E.& R. Suit
No.428/451/2001 dated 22nd November, 2006, is confirmed and the
petitioner was directed to handover the vacant and peaceful possession
of the suit premises to the respondent.
4. The brief facts giving rise to the present revision are as
follows:
The respondent is a company and is the owner of the suit plot
of land admeasuring 45,022 square yards and another portion
admeasuring 153 square yards bearing Survey No.17 of Parel Sewri
Division at Parel, Lalbaug, Mumbai - 400 012 together with spinning and
weaving mill and other buildings standing thereon (hereinafter referred to
as "the suit plot") as a successor in interest of one Byramjee Jeejeebhoy
Trust Settlement 1872 (hereinafter called as "the said Trust"). The said
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Trust had executed an indenture of lease dated 1st November, 1900, in
favour of the predecessor in interest of the petitioner viz. Maneckjee Petit
Manufacturing Company Ltd.. The petitioner is a successor in interest of
the original lessee and the respondent is a successor in interest of the
original lessor. Under the lease, the suit plot was demised in favour of
the lessee for a period of 99 years on the terms and conditions contained
in the indenture of lease with renewal clause providing for renewal of the
lease for further period of 99 years. The lease dated 1st November, 1900
expired on 31st October, 1999. ig Prior to the expiry of this period, the
respondent had filed a suit against the petitioner being R.A.E.Suit
No.758/2049/1991. The said suit was filed in the year-1991 on the
ground that the petitioner had breached the terms of the indenture of
lease dated 1st November, 1900. The said suit was decreed ex-parte but
the decree was set-aside on an application being made by the petitioner
and the suit is still pending. After the expiry of the term of lease on
31st October, 1999, by efflux of time, the respondent called upon the
petitioner to handover the vacant and peaceful possession of the suit plot
by issuing notice dated 6th March, 2001. The respondent, thereafter,
filed the present suit for eviction on 17 th July, 2001, against the petitioner.
The petitioner after the receipt of writ of summons in the present suit,
issued a notice to the respondent on 1st January, 2002, demanding
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renewal of the lease and filed a civil suit in the City Civil Court, Bombay
being Short Cause Suit No.6244 of 2002 for specific performance of the
terms and conditions of the indenture of lease dated 1st November, 1900
for renewal of the lease for a further term of 99 years. The respondent's
T.E. & R. Suit No.428/451/2001 was decreed by the learned Single
Judge of the Small Causes Court by judgment and decree dated
22nd November, 2006. The petitioner challenged this decree by filing
Appeal No. 88 of 2007 before the Appellate Bench of the Small Causes
Court. As stated above, this appeal was also dismissed by the judgment
and decree impugned in the present revision.
5. Mr. Bharucha, learned senior counsel, took me through the
relevant clauses of the indenture of lease dated 1 st November, 1900,
prescribing procedure for renewal of the lease and submitted that the
lessee is not required to make a written request for renewal of the lease.
It was also submitted that the lease deed did not require the petitioner to
seek formal renewal of the lease, but if the petitioner had paid all the
rents and had performed all the covenants, the lease had to be extended
by the respondent without anything further having to be done by the
petitioner. He further submitted that the lease deed in the present case,
clearly shows that the only manner in which the lessee is required to seek
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extension, was by continuing to stay in the property and by tendering the
rent even after the period of 99 years was over. This was done in the
present case and in view of the peculiar and specific provisions of the
lease deed, there could never be any question of "Time Limit" for the
lessee to seek renewal of the lease. Mr. Bharucha submitted that the
lower courts below wrongly construed the lease deed and held that the
petitioner should have given notice of renewal before the expiry of the
lease. Mr. Bharucha submitted that the Lower Appellate Court committed
an error by holding that the filing of specific performance suit shows that
the petitioner knew that the lease was not one in perpetuity. He
submitted that the lower courts misconceived the ratios of the cases cited
by the respondent and failed to appreciate the ratios of decisions cited by
the petitioner. He relied upon the decisions in Vali Pattabhirama Rao
& anr. v/s. Sri Ramanuja Ginning & Rice Factory (P) Ltd. & ors.
reported in AIR 1984 AP 176 and Gardner V/s. Blaxill (1960 1 WLR
752). He lastly submitted that the impugned judgment and decree
deserves to be quashed by allowing the present revision.
6. Mr. Dhakephalkar, learned senior counsel, on the contrary,
contested the revision by supporting the impugned judgment and decree.
He submitted that in order to give effect to the renewal of lease, the
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document has to be executed evidencing the renewal of an agreement of
lease and there is no concept of automatic renewal of lease by mere
exercise of the option by the lessee. He also submitted that the right of
renewal contained in the indenture of lease is the right of lessee, and
therefore, exercise of such right has to be unilaterally exercised by the
lessee. He further submitted that this right has to be exercised within a
reasonable time before the expiry of the term of the lease. In the present
case, he submitted that the petitioner has not exercised his right of
renewal within the reasonable time. The lease dated 1 st November, 1900
has expired by efflux of time and, therefore, the respondent's suit was
rightly decreed. Mr. Dhakephalkar relied upon the Apex Court decisions
in Hardesh Ores (P) Ltd. versus Hede & Company reported in (2007)
5 SCC 614, Secretary of State for India in Council Vs. A. H. Forbes
reported in (1912) 17 I.C. 180, State of U.P. & ors. vs. Lalji Tandon
(dead) Through Lrs. And Caltex (India) Ltd. vs. Bhagwan Devi
Marodia reported in AIR 1969 SC 405.
7. Having considered the submissions advanced by the
respective senior counsel and having gone through the impugned
judgment and decree along with the compilation of the revision, indenture
of lease dated 1st November, 1900 and various decisions cited at Bar, I
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find no merit in the revision. There is no dispute about the execution of
indenture of lease dated 1st November, 1900, between predecessor-in-
interest of the petitioner and respondent. It is also not disputed that the
respondent filed an eviction suit against the petitioner in the year 1991 on
the ground that the petitioner had breached the terms of the indenture of
the said lease. This suit was decreed ex-parte. However, the ex-parte
decree was set-aside at the instance of the petitioner and the suit is still
pending. There is also no dispute that the present suit is filed by the
respondent on 17th July, 2001 and the writ of summons in the present
suit was served on the petitioner on 27 th August, 2001, and thereafter,
the petitioner issued notice on 1st January, 2002, demanding renewal of
lease. The petitioner also thereafter filed Short Cause Suit No. 6244 of
2002 for specific performance of the terms and conditions of the indenture
of the said lease.
8. The subject matter of the suit was the indenture of lease dated
1st November, 1900, and the question for consideration is whether the
said lease deed is in perpetuity or determinable by efflux of time.
I have perused the indenture of lease dated 1 st November,
1900. The said deed fixed the term of 99 years as a term of lease. It has
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been provided that a fresh document of granting lease would be executed
upon the lessee's complying with various terms and conditions provided
therein which are as follows:
i) The lessee has to deposit the rent on the first day of every
calendar month.
ii) The lessee has to pay the ground rent to the Government.
Iii) The lessee has to pay assessment or any other taxes, rates
and charges, present and future to the Municipality.
iv) The lessee shall at all times during the term on their own
costs and charges keep the said mill building, engine house
and chimney in substantial repairs.
v) The lessee shall fulfill all other obligations mentioned in the
indenture of the said lease.
Thus, the lessee is entitled to ask for renewal of the lease for
another term if it so desires, subject to compliance of the above terms
and conditions and upon payment of costs and charges. The renewal of
the lease, however, is not automatic and for that purpose, a fresh lease is
required to be executed in accordance with the provisions of the Transfer
of Property Act, 1882 and the Registration Act, 1908 as per the decision
of the Apex Court in Hardesh Ores (P) Ltd. (supra). The observations
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of the Apex Court in Paragraphs 31 and 39 are relevant in this regard,
which reads as under :
"31. Having regard to these decisions we must
hold that in order to give effect to the renewal of a lease,
a document has to be executed evidencing the renewal
of the agreement or lease, as the case may be, and
there is no concept of automatic renewal of lease by
mere exercise of option by the lessee. It is, therefore,
not possible to accept the submission urged on behalf of
the appellant-plaintiffs that by mere exercise of option
claiming renewal, the lease stood renewed automatically
and there was no need for executing a document
evidencing renewal of the lease."
39. We are of the view that the respondents are
right in contending that enforcement of the negative
covenants presupposes the existence of a subsisting
agreement. As noticed earlier, the law is well settled that
the renewal of an agreement or lease requires execution
of a document in accordance with law evidencing the
renewal. The grant of renewal is also a fresh grant.
..............."
9. The petitioner, two years after the expiry of the term of the said
lease, issued notice dated 1st January, 2002, to the respondent
demanding renewal of the lease and thereafter filed a suit for specific
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performance of the terms of the said lease in the City Civil Court. The
petitioner did not demand renewal of the lease prior to the expiry of the
said lease i.e before 31st October, 1999. In this regard, it must be noted
that the respondent had already filed an eviction suit against the petitioner
in the year 1991 itself under the Bombay Rent Act on the ground that the
petitioner has breached the terms of the said lease. This suit itself was
sufficient notice to the petitioner that the respondent is not willing to grant
renewal of the lease. Yet the petitioner neither demanded renewal prior
to the expiry of the term of the said lease.
10. The petitioner claimed that they are not required to seek formal
renewal of the lease and if they had paid all the rents and performed all
the covenants, the lease had to be extended by the respondent without
anything further having to be done by the petitioner. The respondent, on
the contrary, submitted that the option of renewal is a lessee's privilege
and it has to be exercised unilaterally by the lessee. In order to
appreciate these submissions, the relevant clause for renewal in the said
lease deed is required to be reproduced, which reads as follows:
"And the said lesssors do hereby for themselves their heirs
executors administrator and assigns covenant with the said
Company and their Assignee that the said Company or their
assignee duly pay, the rent herein before reserved and
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observing and performing all the covenants herein before
contained and on the part of the said company and their
assigns to be observed and performed they the said lessors
their heirs executors administrators and assigns shall and
will at the costs and charges of the said company their
successors or assigns grant another lease to the said
company their successors or assigns grant another lease to
the said company their successors or assigns for further term
of 99 years to commence from expiration of the term
hereby granted at and under the same monthly rent
contained therein like power authorities freedom and
covenants and provisos (including this covenant for renewal)
as are in these presents contained so as to end with the
lease hereby granted shall be renewed in perpetuity for the
term of 99 years (the said company for themselves and their
successors and assigns hereby covenanting with the said
lessors their heirs executors administrators and assigns to
accept every such renewed lease and to execute at time at
all times granting thereof counter part thereof."
11. Perusal of the above said renewal clause, clearly shows that
that it neither puts the onus of executing the fresh lease on lessee or
lessor. A Division Bench of the Calcutta High Court in Secretary of
State for India in Council (supra) , reviewed several English decisions
and laid down the following propositions:
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"(1) A lease, which creates a tenancy for a term of years,
may yet confer on the lease an option of renewal.
(2) If the lease does not state by whom the option is
exercisable, it is exercisable (as between the lessor and
lessee) by the lessee only, that is to say, a covenant for
renewal, if informally expressed, is enforced only in favour of
the lessee.
(3) The option is exercisable not merely by the lessee
personally but also by his representative-in-interest.
(4) If the option does not state the terms of renewal, the new
lease will be for the same period and on the same terms as
the original lease, in respect of all the essential conditions
thereof, except as to the covenant for renewal itself.
(5) There is no sort of legal presumption against a right of
perpetual renewal. The burden of strict proof is imposed
upon a person claiming such a right. It should not be
inferred from any equivocal expressions which may fairly be
capable of being otherwise interpreted. The intention in that
behalf should be clearly shown; otherwise, the agreement is
satisfied and exhausted by a single renewal.
(6) A covenant for renewal runs with the land.
(7) The position of a lessee, who has been always ready and
willing to accept a renewal on proper terms, is the same in
equity as if a proper lease had been granted. Where the
covenant for renewal was still specifically enforceable at the
commencement of a suit for ejectment against the lessee, the
position of the lessee in equity is the same as if it had been
specifically enforced."
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The above propositions of law, laid down by the Division
Bench of the Calcutta High Court has been fully accepted by the Apex
Court in State of U.P. & ors. vs. Lalji Tandon (dead) Through
Lrs(supra. The observations of the Apex Court in para 13 in Lalji
Tandon (supra), in this regard, are also important, which reads as
follows:
"13. In India, a lease may be in perpetuity. Neither the
Transfer of Property Act nor the general law abhors a lease in
perpetuity. (Mulla on the Transfer of Property Act, 9th Edn.,
1999, p. 1011.) Where a covenant for renewal exists, its
exercise is, of course, a unilateral act of the lessee, and the
consent of the lessor is unnecessary. (Baker v. Merckel, also
Mulla, ibid., p.1204.) Where the principal lease executed
between the parties containing a covenant for renewal, is
renewed in accordance with the said covenant, whether the
renewed lease shall also contain similar clause for renewal
depends on the facts and circumstances of each case, regard
being had to the intention of the parties as displayed in the
original covenant for renewal and the surrounding
circumstances. There is a difference between an extension
of lease in accordance with the covenant in that regard
contained in the principal lease and renewal of lease, again in
accordance with the covenant for renewal contained in the
original lease. In the case of extension, it is not necessary to
have a fresh deed executed as the extension of lease for the
term agreed upon shall be a necessary consequence of the
clause for extension. However, option for renewal
consistently with the covenant for renewal has to be
exercised consistently with the terms thereof and, if
exercised, a fresh deed of lease shall have to be exercised
between the parties. Failing the execution of a fresh deed of
lease, another lease for a fixed term shall not come into
existence though the principal lease in spite of the expiry of
the term thereof may continue by holding over for year by
year or month by month, as the case may be."
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If the above propositions laid down by the Calcutta High Court
and approved by the Apex Court in Lalji Tandon (supra) are considered
in proper perspective, then, it is clear to my mind that it is for the lessee to
exercise the option of renewal where indenture of lease has cast
burden either on him or is silent as to who should exercise the option. As
stated above, in the present case, reading of renewal clause makes it
clear that the onus of executing fresh lease is neither on lessee nor on
lessor. The right to renew, therefore, has to be exercised by the lessee,
inasmuch as, it is his exclusive privilege. This having not been done by
the petitioner/lessee, he is not entitled to claim any right under the terms
of the said lease dated 1st November, 1900 and the impugned decree of
eviction is rightly passed.
12. Having held that it was for the petitioner to exercise the option
of renewal, the question that falls for consideration is whether the
petitioner could have exercised the said option by the notice first time
given on 1st January, 2002 i.e. two years after the expiry of the term of the
said lease. There is no dispute that the respondent has not exercised its
right and privilege prior to the expiry of the said lease i.e. before
31st October, 1999. Similar question fell for consideration before the Apex
Court in Caltrex (India) Ltd. (supra). The Apex Court held that in the
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absence of fixation of any time for the purpose of renewal of lease, the
renewal should be made within reasonable time before the expiry of the
term of the lease. The Apex Court has made relevant observations in
Paragraph No.6 which reads as under :
"6. We may add that where no time is fixed for the
purpose, an application of renewal for the lease, may be
made within a reasonable time before the expiry of the
term......"
The Apex Court, in this case, also held that common law
stipulation as to time in a contract giving option for renewal of the lease of
land were considered to be of the essence of the contract even if, they
were not expressed to be so and were considered as condition
precedent. The Apex Court, in this regard, relied upon the commentary of
Halsbury's Laws of England. The Apex Court reproduced the following
propositions of law stated in Halsbury's Laws of England, 3 rd ed, Vol.3,
Article 281 p.165 which reads as under :
"An option for the renewal of a lease, or for the purchase
or re-purchase of property, must in all cases be
exercised strictly within the time limited for the purpose,
otherwise it will lapse." This passage was quoted with
approval by Danckworts L. J. in Hare v. Nicoll, 1966-2
QB 130, 145. A similar statement of law is to be found in
Foa's General Law of Landlord and Tenant, 8th ed., Art.
453 p. 310 and in Hill and Redman's Law of Landlord
and Tenant 14th ed., p. 54. The reason is that a renewal
of a lease is a privilege and if the tenant wishes to claim
the privilege he must do so strictly within the time limited
for the purpose."
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The Apex Court further observed that the renewal of lease is a
privilege and if the tenants wish to claim the privilege, he must do so
strictly within the time limit for the purpose. In this case, the Apex Court
refused to condone the delay of even 13 days demanding a renewal of
lease in the said case, since time was said to be the essence of contract.
13. In the present case, the term of the said lease expired on
31st October, 1999. The respondent thereafter issued notice on 6 th
March, 2001 demanding possession of the demised premises from the
petitioner, and thereafter, respondent filed the present suit for eviction on
17th July, 2001. For the first time, the petitioner issued notice to the
respondent on 1st January, 2002, demanding renewal of the said lease. If
these facts are considered on the touchstone of the principle laid down by
the Apex Court in Caltrex (India) Ltd. (supra ), then, it is clear that the
petitioner is not entitled for renewal of the said lease as it failed to apply
within a reasonable time prior to the date of expiry of the lease.
14. A reference must be made to Mr. Barucha's argument that the
option of renewal was exercised by the petitioner by payment of the rent.
The allegation of the petitioner that it has paid rent after expiry of the term
of the said lease is specifically denied by the respondent. In fact, the
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respondent filed a suit in Small Causes Court in the year 1991 on the
ground that the petitioner has breached the terms and conditions of the
indenture of lease dated 1st November, 1900. There is nothing on record
to suggest that the petitioner's demand for renewal was in the form of
payment of rent. The petitioner's case, in this regard, is disclosed in the
written statement. The relevant portion of the written statement is
reproduced herein for ready reference:
" Without prejudice to the aforesaid contentions, these
defendants say that as per the provisions of the said lease
the plaintiffs are required to renew the lease from time to
time and in perpetuity in favour of these defendants. The
defendants submit that they being the lessees of plaintiffs
are entitled to the said renewal for a further term of 99
years. These defendants by their Advocate's letter dated
1st January 2002 have already called upon the plaintiffs to
renew the lease in favour of these defendants, for further
term of 99 years and continue to do so in perpetuity
thereafter."
15. Now let us consider the judgment cited by Mr. Barucha.
Mr. Barucha relied upon Vali Pattabhirama Rao & anr (supra) to
contend that where the document shows clearly that the lease is a
perpetual lease, the onus is on the lessor to show that it is not so and
this onus was not discharged by the respondent. Mr. Bharucha initially
argued that the said lease is perpetual in nature, but, at the end of the
argument when his attention was drawn to the renewal clause of the said
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lease, he agreed that the lease is not perpetual but the lease was for the
term of 99 years with clause for renewal. In these circumstances, the
ratio of this decision cannot be made applicable to the facts and
circumstances of the present case. So far as the decision of the
Queen's Bench Division in Gardner (Supra) is concerned, the same
cannot be made applicable to the facts and circumstances of the present
case, in view of the Apex Court decisions in Hardesh Ores (P) Ltd. ,
Lalji Tandon (dead) Through Lrs. And Caltex (India) Ltd. (supra).
There is also no clear evidence on record about the payment of rent by
the petitioner to the respondent after the expiry of the term of the said
lease.
16. Taking totality of the facts and circumstances of the case into
consideration, I find that the indenture of the said lease has expired on
31st October, 1999 by efflux of time and there is no fresh lease as
required under Section 107 of the Transfer of Property Act, 1882,
executed between the parties. The lower courts below have rightly
decreed the suit. I do not find any error, much less, error of jurisdiction
committed by the lower courts below, and therefore, no interference with
the impugned order is called for in the jurisdiction of this Court conferred
under Section 115 of the Code of Civil Procedure, 1908. The Rule is,
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accordingly, discharged. The civil revision application stands
dismissed.
17. It is made clear that the observations made hereinabove are
for the purpose of disposal of the revision and Short Cause Suit No.6244
of 2002 filed by the petitioner in the City Civil Court shall be decided
independently on its own merits and in accordance with law.
18. In view of the disposal of the revision application, Civil
Application No.279 of 2008 will not survive for consideration, and
therefore, the same is also disposed of.
19. Learned counsel for the petitioner, at this stage, seeks
continuation of the stay granted at the time of admission. The prayer is
opposed by learned counsel for the respondent. However, in the
interests of justice and in order to enable the petitioner to approach the
High Court the stay granted earlier shall remain in force for a period of
eight weeks from today.
(RANJIT MORE, J.)
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