Mrs. Daman Kaur Sethi And Ors. vs Indian Bank
2001 Latest Caselaw 1435 Del

ORDER

A.K. Sikri, J.

1. By this order I purpose to decide this application filed by the plaintiff under Order XII Rule 6 CPC for passing of decree on the basis of alleged admissions made by the defendant.

2. The suit filed by the plaintiff is for possession, recovery of rent, recovery of mesne profit etc. The plaintiffs are the co-owners/landlords of the first and second floors of the suit property, namely, G-6, New Delhi South Extension Part-1 (Market), New Delhi-49. This suit property was let out to the defendant-Bank vide Lease Deed 27-1-89 which was duly registered with the Sub-Registrar, Delhi. The premises were let out from 14-2-89 at a monthly rent of Rs. 25.50 per sq. ft. for a period of 5 years. The total area of the tenanted premises is 4167 sq. ft. Five years period expired on 13-2-94. There was a renewal clause in the Lease Deed as per which lease could be renewed at the option of the defendant-Bank for a further period of four years after enhancing the rent by 15%. After the expiry of the Lease Deed on 13-2-94, no further Lease Deed was executed or registered. However, defendant-bank started paying rent at the enhanced rate i.e. at the rate of Rs. 29.33 per sq. ft. per month.

3. The case of the plaintiffs is that tenancy came to an end by efflux of time on 13-2-94. Thereafter, at the most, it became tenancy from month to month. Even if it is presumed that the lease stood extended by another four years, that four years period also came to an end by efflux of time on 13-2-98 and defendant became, on its own admission, monthly tenant w.e.f. 14-2-98. Although no notice was required to be served on the defendant-Bank yet by way of abundant precaution plaintiffs served on defendant legal notice dated 28-5-99 through their advocates terminating monthly tenancy w.e.f. the mid-night of 13-7-99 and/or at such other date as the defendant considered the monthly tenancy was to end. Thus the present suit for possession was filed as the defendant Bank did not vacate the premises and rather filed suit against all the plaintiffs being Suit No. 69/99 in the Court of Civil Judge, Delhi seeking permanent injunction relief against the defendants.

4. In the written statement the defendant Bank has taken a number of preliminary objections. It is submitted that the suit is not maintainable in its present form; notices under Section 106 of the Transfer of Property Act are not valid as the parties had mutually agreed to extend the period of notice i.e. as per these Lease Deeds dated 27-1-89 six months notice was required for termination of tenancy; the plaintiffs have come to the Court with uncleaned hands and are not entitled to any relief; the defendant has now become a tenant by holding over as per Section 116 of the Transfer of Property Act. It is further submitted by the defendant that on the expiry of the initial 5 years period as per the first Lease Deed dated 27-1-89, the plaintiffs had executed a new Lease Deed in 1994 for a further option period of 4 years with escalation of rent of 15%. This Lease Deed expired in February, 1998 and on the request of the defendant to extend the lease with further enhancement in rent of 15% the plaintiffs were agreeable to extend the lease for a further period of three years but the plaintiffs were adamant on enhancing the rent exorbitantly which the defendant was unable to agree as the same was difficult within the rules. The plaintiffs started harassing the defendant in one way or the other and also threatened to disconnect the water supply, power supply and usage of lift and defame the defendant by putting up a banner.

5. From the pleadings of the parties, following admitted position emerges:

1. The relationship of landlords and tenant between plaintiffs and defendant stands admitted.

2. Rent of the premises is more than Rs. 3,500/-PM. In fact even if the rent is apportioned among 9 plaintiffs, the rent receivable by each plaintiffs is also more than Rs. 3,500/-PM.

3. Lease Deed dated 27-1-1989 which is a registered document and was made effective from 14-2-89 was for a period of 5 years. This period expired on 13-2-94. Thereafter another Agreement dated 14-8-94 was executed but was not registered. Even as per this Lease Agreements the lease was for a period of 4 years starting from 14-2-94 and expiring on 13-2-98. This period also expired before filing the suit. Admittedly, thereafter there is no agreement between the parties. As per defendant's own averments made in the written statement parties could not agree for further renewal as defendant was willing to give further enhancement in rent by 15% whereas plaintiffs were demanding much exorbitant increase. Receipt of legal notice dated 28-5-99 sent by plaintiffs were demanding much exorbitant increase. Receipt of legal notice dated 28-5-99 sent by plaintiffs through their advocates under Section 106 of the transfer of Property Act is admitted by the defendant.

6. In view of the aforesaid admission, plaintiffs filed the instant application under Order XII Rule 6 CPC claiming decree for possession. This application is resisted by the defendant and at the time of argument following contentions were advanced by the learned counsel for the defendant:

1. The plaintiffs had prayed for a composite decree of possession and damages on the ground that the defendant had damaged the suit premises after taking the same on rent and, therefore, the defendant was obliged under law to restore back the premises in the same condition in which they were let out. Reference was made to para-17 of the plaint which reads as under:

"17. The Defendant bank has in violation of the terms of the tenancy also damaged the premises by installing computer cables, a strong room, partitions etc. The computer cables were installed under the flooring recently despite the plaintiff landlords having objected and specifically requested the defendant bank not to damage the suit premises any further particularly in view of the fact that the plaintiffs were insisting on the defendant vacating the suit premises. The defendant bank is obliged at law and in equity to restore back the suit premises to the same condition in which they were let out before delivery of possession to the plaintiffs (normal wear and tear excepted) In the alternative the defendant bank is liable to compensate the plaintiffs for the cost to restore the suit premises to the condition in which they were let (normal wear and tear excepted). The plaintiffs have had the cost of restoring the premises to such condition assessed and quantified it at Rs. 2,50,000/- (Rupees Two Lakh Fifty Thousand only) for both floors".

Thus, it was argued, when the possession of the premises was sought back in the same condition in which they were let out, unless the question of damage allegedly caused by the defendant bank is determined, decree for possession at this stage cannot be passed as the relief of possession was inextricably mixed with the relief of restoring back the leased premises in the same condition or cause of such restoration for which a decree in the sum of Rs. 2,50,000/- was prayed for.

2. Notice dated 28-5-99 was not proper in law as by agreement parties could agree for different mode of notice. In the Lease Deed parties had agreed for giving of six months notice for terminating the Agreement and as six months notice was not given by the plaintiffs the same was invalid and thus decree for possession could not be passed. Taking shelter of Section 116 of the Transfer of Property Act, it was submitted that even if the period of Lease Deed had expired, contract did not come to an end and the defendant became tenant by holding over. Therefore, Clause relating to six months notice was still operative and plaintiffs were obliged to strictly adhere to this Clause. Having not done so the entire suit was bound to fail. In support of this submission, learned counsel referred to following judgments:

1. Rawat Hardeo Singh Vs. State of Rajasthan .

2. Suraj Mal Vs. Sita Ram and other .

3. Arunachala Naicker Vs. Ghulam Mahmood Saheb .

4. K. Nasir Basha and another Vs. Turukkan Chatram Charities

5. M/s. Burma Shell Oil Storage and Distributing Co. of India Ltd. New Delhi Vs. State of Uttar Pradesh .

6. Prahladrai Chooreewalla Vs. Commissioners for the Port of Calcutta

7. Learned counsel for the defendant concluded his submissions by contending that the decree under Order XII Rule 6 CPC could be passed only when there were unambiguous and unequivocal admissions made by the defendant. Since in the instant case the defendant had raised bona fide disputes and there were contentious issues to be determined and the essential ingredients which entitle a landlord to get a decree for possession were not admitted, decree for possession at this stage could not be registration.

8. Insofar as first contention based on prayer for composite decree is concerned, it was stated by Mr. A.S. Chandhiol, learned senior counsel at the bar that the plaintiff gives up the prayer 'H' seeking possession of the premises in the same manner it was let out or in the same condition or in the alternate prayer for damages in the sum of Rs. 2,50,000/-. Therefore, this contention is no more available to the defendant and need not detain us in proceeding further.

9. Before addressing the core issue relating to the validity of notice period, it would be appropriate to first discuss the incidental issue relating to extension of tenancy after it expired initially on 13-2-1994. Here the case of the defendant is that the Lease Deed dated 27-1-89 gave option to the defendant to extend the same by further period of for years with escalation of rent at the rate of 15% during the extended period. Option was exercised by the defendant. The defendant also started paying rent at the enhanced rate w.e.f. 14-2-94. Even the Agreement dated 14-8-94 was executed. However, it was admittedly not registered. In the absence or registration of the Lease Deed, it cannot be said that the fresh lease came into existence. Section 107 of the Transfer of Property Act provides for the manner in which the Lease Deed has to be executed and stipulates and under:

"107. Leases how made.- A lease of immoveable 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 immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

[Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instrument than one, each such instrument shall be executed by both the Lesser and the lessee:]

Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immoveable 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.]"

10. Interpreting the provisions of this Section, Division Bench of this Court in M/s. Uptron Powertronics Ltd. Vs. G.R. Rawal held that any extension or renewal of an earlier lease could only be done by a registered Lease Deed keeping in view the provisions of Section 107 of the Transfer of Property Act and in the absence thereof even if the extension was in writing it would only create month to month tenancy. following observations of the Division Bench in the aforesaid case address the controversy in issue:

"The next question that arises is whether a fresh lease deed or an extension/renewal of the earlier lease deed is required to be through a registered instrument. There is no dispute that the lease was intended for a block of three years at a time. As a result, the parties entered into an agreement in 1990, 1993 and eventually in 1996. Paragraph 1 of Section 107 of the Act makes it very clear that a registered instrument can only make a lease of immoveable property exceeding one year. Admittedly, in the present case apart from the lease deed entered into between the parties on 17 July 1984 the parties drew up no registered instrument. It is, therefore, quite clear that in the absence of a registered instrument, the necessary consequences will flow. This means that the tenancy was only on a month to month basis. Consequently, the respondent could terminate the tenancy by a notice under Section 106 of the Act which in fact, he did by issuing a notice dated 2nd April, 1997 followed by another notice dated 5th November, 1997.

However, in the present case, the extension in the second and subsequent block of three years was not by a registered instrument; consequently, it was only a month to month tenancy which could be (and was) terminated in accordance with the provisions of Section 106 of the Act".

11. At this stage one may also quote the following from the decision in the case of Shukla Malhotra & Others Vs. Vyasa Bank Ltd. , echoing same view:

"Section 107 of the Act describes the mode of making leases. It lays down that a lease of immoveable property for a fixed term or for a period exceeding one year can be made "only" by a registered instrument. The use of the expression "only" in the section indicates that the specific mode prescribed therein has to be adhered to strictly, failing which any instrument purporting to lease out the premises for a period exceeding one year or extend it likewise orally or in writing would be void and presumption about duration of lease under Section 106 of the Act will apply. As per Section 106 a lease from month to month or a lease other than a lease from year to year is terminable by fifteen days notice. Thus, in the present case, continuance of defendant's possession of the property for a period exceeding one year shall be deemed to be under a tenancy from month to month.

Support is lent to this view by a decision of the Supreme Court in Burmah shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. Vs. Khaja Midhat Noor and others, and Punjab National Bank Vs. Ganga Narain Kapur, , wherein it has been held that a fixed term lease for a period exceeding on a year-oral or in writing, if not registered will be deemed to be a tenancy from month to month terminable by 15 days notice. Thus, the lease dated 1st February 1980 cannot ensure as a fixed term lease for five years and would be deemed to be one from month to month".

12. As is obvious from the aforesaid quotation, this Court followed the judgment of Supreme Court in the case of Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. Vs. Khaja Midhat Noor and Others .

13. In view of the aforesaid position in law embodied statutorily under Section 107 of the Transfer of Property Act and interpreted by the Supreme Court as well as this Court, it is not possible to accept the contention of the defendant that tenancy for a further period of four years from 14-2-94 to 13-2-98 came into existence. However, one has to keep in mind the important aspect of this case, namely, Lease Deed dated 27-1-89 gave option to the defendant for further renewal and not only this option was exercised, rent at escalated rate was paid for the period after 14-2-94 which was duly accepted by the plaintiff without any demur or protest for the entire period of four years. Be that as it may, it would only be na academic question at this stage inasmuch as four years period also expired on 13-2-98. Thereafter, rent has not been paid at enhanced rate i.e. by increasing it by 15% over and above the previous paid rent.

14. Having said so, we come to the core issue in this case. i.e. whether plaintiffs were required to give six months notice as per stipulation contained in Lease Deed dated 27-1-89. The term on which the defendant relies upon in support of its contention, the term in the Lease Deed dated 27-1-89 reads as under:

"...with an option on the Lessee's part to have the term of the lease extended by a further period of four years with an escalation in rent @ 15% during the option period and other terms and conditions remaining unaltered and terminable thereafter by six calendar months notice in writing on either side paying therefore the sum of Rs. 11700-68 (Rupees eleven thousand seven hundred and sixty eight paise only) per mensem".

15. At this stage it would also be useful to refer to the provisions of Section 106 of the Transfer of Property Act prescribing the manner in which notice has to be given. It reads as under:

"106. During of certain leases in absence of written contract or local usage.- In the absence of a contract of local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes shall be deemed to be lease from year to year, terminable, on the part of either Lesser or lessee, by six months notice expiring with the end of a year of the tenancy; and a lease of immoveable property for any other purpose shall be deemed to be a lease from month to month, terminable on the part of either lesson or lessee, by fifteen days' notice expiring with the end of a month of the tenancy.

Every notice under this section 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".

16. Admittedly, the plaintiffs have given 15 days notice expiring with the end of tenancy month i.e. 13-7-99 and six months notice as stipulated in the aforesaid clause of Lease Deed dated 27-1-89 is not given. Mr. Rajiv Nayyar, learned senior counsel appearing for the defendant-Bank submitted that the provisions of 15 days notice would apply only in the absence of a contract or legal law or usage to the contrary as stipulated in opening words of Section 106 of the Transfer of Property Act. In the present case as there is a specific contract between the parties in the form of Lease Deed dated 27-1-89 and it contained a clause of six months notice for termination of the tenancy, notice had to be necessarily given and thus notice dated 28-5-99 is invalid. It was submitted that even if the period of lease had expired, the clause relating to six months notice would still be operative in view of the provisions of Section 116 of the Transfer of Property Act as the defendant had become tenant by holding over. This Section 116 reads as under:

"116. Effect of Holding over.- If a lessee or under - lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the Lesser or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106".

17. It was submitted that property had remained in possession of the defendant after the period of lease was over and even in the absence of agreement, renewed from month to month as specified in Section 106. Emphasising the words "as specified in Section 106" occurring in Section 116 of the Transfer of the Transfer of Property Act and on reading this Section one will have to fall back on the Agreement. As there was a contract between the parties, the parties were bound by the same which contained termination clause by giving six months notice. To buttress this submission further, the learned counsel referred to judgments cited above. It would be appropriate to refer to the Full Bench judgment of Allahabad High Court alone for this purpose wherein the Full Bench succinctly laid down the following proposition of law:

"6. In the case of Radha Ballabh, (supra) a Division Bench of this Court clearly held.-

"Renewal of a lease from year to year or from month to month, according to the purpose for which the property is leased, is to be presumed only when there is no "agreement to the contrary". The agreement referred to in S. 116 may be an original lease or it may be in the original lease itself. (Emphasis provided). This Division Bench of our High Court, therefore, also clearly lays down that the contract regarding the period of notice could be either in the original lease itself or may be arrived at between the parties after the determination of the original lease.

7. A Full Bench of this Court in Shiva Nath, (supra) had also the occasion to interpret the meaning of the words "in the absence of a contract to the contrary" occurring in S. 116. In paragraphs 28, 28 (a) and 29 of the judgment the decisions given in the cases of Suiti Devi (supra) and Radha Ballabh (supra) have been approved. The Full Bench has also approved a case of Oudh High Court reported in Lalman V. Mt. Mullo, (1) in which it was held that where a new tenancy is created by reason of the landlord allowing the tenant to hold over after the original lease terminates, then, in the absence of any terms in respect of the new tenancy the terms governing the original lease will be deemed to have been accepted by the parties and if there was a provision in the original tenancy dispensing with a notice to quit, the same applies with regard to the new tenancy.

10. In our opinion, therefore, there is no conflict in so far as the law laid down by the two Division Bench decisions of this Court in the cases of Radha Ballabh Vs. Bahore Ram Chand (supra) and Zahoor Ahmad Abdul Sattar Vs. State of U.P., (supra) is concerned. The answer to the question referred therefore is that it is not necessary that there may be a contract subsequent to the termination of the original lease regarding the period of notice required under S.106 of the Transfer of Property Act. The contract could be either in the original lease or may be arrived at between the parties after the determination of the original lease".

18. It may be mentioned that other judgments cited by the defendant-Bank are also to the same effect. While these judgments categorically lay down that even if the lease had expired and the tenant is holding over the property after the expiry of the period of lease, all the conditions which existed in the original lease, which may include the condition regarding notice, would become applicable to the lease created by holding over under Section 116 of the Transfer of Property Act. Read in this manner, the conclusion could be that six months notice as stipulated in original Lease Deed dated 27-1-89 was required. However, the mater is not as simple as it looks to be. It is because we have on the other hand judgments of our High Court holding that if the original Lease Deed had expired, unless there is an extension/renewal in accordance with Section 107 of the Transfer of Property Act i.e. by registered Lease Deed, no fresh Lease Deed comes into existence and in that case the tenancy becomes month to month tenancy terminable by 15 days notice. We have already noted two judgments of this Court, namely, M/s. Uptron Powertronics Ltd. Vs. G.R. Rawal and Shukla Malhotra & Others Vs. Vyasa Bank Ltd. of our High Court. Later judgment follows the dicta of Supreme Court laid down in (supra). In that case also the Supreme Court held that in the absence of fresh registered lease deed, it must be held that it was a holding over and not continuation of old tenancy for further period of 5 years and that would be the harmonious construction of Section 107 read with Section 116 of the Transfer of Property Act. The Court also made the following observations which may be relevant for the point we are dealing with:

"Thereafter the lessee continued to hold the property and the Lesser accepted the rent. The lease was, therefore, renewed from month to month because it was not the case of any party that it was for agricultural purposes".

19. Thus, in this case also the Supreme Court held that once it is a tenancy by holding over after the expiry of the agreed period stipulated in the registered instrument, the tenancy would be treated to be renewed from month to month. Of course, it may be stated that in none of these cases, the Court was considering the effect of the longer period of notice of termination provided in the original lease deed between the parties by contract. Therefore, the Court was not interpreting the words "in the absence of a contract" occurring in Section 106 of the Transfer of Property Act. However, fact remains that in the aforesaid case it has been held that once it is a tenancy by holding over under Section 116 of the Transfer of Property Act, it would be month to month tenancy.

20. Examining the problem thus in the context of the two judgments of this Court and the judgment of Supreme Court interpreting Section 107 along with Section 116 of the Transfer of Property Act, the judgment of the Full Bench of Allahabad High Court and the judgments cited by learned counsel for the defendant interpreting Section 106 and 116 of the Transfer of Property Act and particularly the opening words of Section 106 i.e. "in the absence of a contract" following questions immediately arise in mind:

A. Whether the view of Full Bench of Allahabad High Court is contrary to the view of this Court contained int eh aforesaid two judgments as well as Supreme Court contained in (supra)?

B. Whether the clause in the original lease deed containing six months notice for termination of lease would still apply even after the expiry of the contract when the tenancy has become month to month tenancy by holding over? Put it differently, even where the tenancy is month to month, is it proper to apply the clause of an agreement already expired and to hold that the monthly tenancy has to be determined by a notice of much longer period i.e. six months notice?

C. Whether the two sets of cases can be construed harmoniously holding that the tenancy would be treated as month to month as contained in Section 106 of the Transfer of Property Act only in the absence of a contract and once the contract stipulates longer notice like six months in the present case then it has to be terminated by serving notice as per the contract as held in (supra).

21. The aforesaid questions are of utmost importance and keeping in view that the judgment of Allahabad High Court taking a particular view is by Full Bench, it would be appropriate if these questions are decided by the Full Bench or at least by the Division Bench of this Court. Accordingly, I direct the Registry to place the matter before Hon'ble the Chief Justice to consider the constitution of larger Bench and refer for answer:

1. the questions A to C formulated above and

2. whether in the facts and circumstances of this case months notice was required or the notice dated 28th May, 1999 given by the plaintiff is valid in law.