Indian Institute Of Finance vs Shakti Tower (P) Ltd. And Anr.
2006 Latest Caselaw 1766 Del

JUDGMENT

T.S. Thakur, J

1. This is a defendant's appeal in a suit for possession by ejectment of the tenant-occupant, decreed by the trial court together with arrears of rent, damages and interest on the same at the rate 6% p.a. The facts giving rise to the institution of the suit and the present appeal may be summarized as under:

2. Premises No. 4, Shopping Center-II, Wazirpur Residential Scheme Phase-II, Delhi, presently known as 4CC-II, Ashok Vihar Phase-II, Delhi is a three-storeyed building with a basement. The land underneath the said property was, it appears, initially purchased by one Smt. Devika Rani from the Delhi Development Authority (DDA for short) under a perpetual lease deed dated 11th August, 1975. A building was, in due course, constructed over the said land, which was then transferred in favor of respondent No. 2, Sh. Ashok Manchanda in terms of an agreement to sell, dated 19th June, 1987. The agreement, inter alia, recorded that the seller, Smt. Devika Rani had received the entire consideration for the property in question and transferred the possession thereof to the purchaser in part-performance of the contract. Respondent No. 2 had then leased the property in favor of the appellant in terms of a lease deed dated 18th December, 1995 for a period of five years with effect from 01.01.96 at a monthly rental of Rs. 80,000/-.

3. By another agreement to sell dated 20th October, 1999, defendant No. 2 sold all his rights and interest in the suit property in favor of the plaintiff-respondent No. 2, which happens to be a company incorporated under the Companies Act. On receipt of the entire sale consideration agreed between the said two respondents, the symbolic possession of the suit property was handed over to respondent No. 1. A letter intimating the tenant-occupant about the sale was also issued by the seller, Shri Ashok Manchanda.

4. The tenant did not, however, respond to the said letter nor paid any rent to the plaintiff, who had stepped into the shoes of the erstwhile landlord. The plaintiff company then sent a letter dated 6th December, 1999, asking the appellant tenant to pay the rent for the months of November and December, 1999. The appellant did not respond to this request also, whereupon the plaintiff company terminated its tenancy with effect from 31st January, 2000, in terms of a letter of termination dated 4th January, 2000 and demanded payment of arrears of rent.

5. In response to the said letter, the tenant demanded from the plaintiff the document of title to the property, which was supplied to the appellant. Since the premises was not vacated nor the arrears paid, the plaintiff company filed original suit No.277/2003 for possession by ejectment of the occupant and for recovery of arrears of rent as also damages for unauthorised use and occupation of the suit premises. According to the plaintiff, although the market rate of rent of the premises was more than Rs. 2 lacs p.m. yet the plaintiff restricted his claim to Rs. 2 lacs p.m. only with interest at 18% p.a. pendente lite and future. A total sum of Rs. 6,98,960/- was, thus, claimed from the appellant-occupant of the premises.

6. The defendant-appellant appeared in the suit and filed a written statement, inter alia, alleging that the plaintiff had no legal or lawful right, title or interest in the suit property and that the suit was liable to be dismissed. It was further alleged that defendant was in occupation of the suit property since December, 1996 and that it had not committed any default in making payment of rent. It was alleged that the tenancy had not been validly terminated and that since the plaintiff had failed to substantiate its claim of ownership over the suit property it was not entitled to the decree for possession and arrears of rent and damages prayed for.

7. Defendant No. 2, who was the erstwhile landlord, also filed a written statement wherein he admitted the averments made by the plaintiff. It was stated by the said defendant that he had let out the suit property to defendant No. 1 for a period of six years commencing from 01.01.96 and rent had been paid to the said defendant only up to October, 1999. It is also admitted by him that he had sold the property to the plaintiff after receipt of full consideration and that symbolic possession of the property had been handed over to the purchaser. An intimation regarding transfer of the demised property was, according to this defendant, sent to the tenant-occupant, asking the tenant to attorn in favor of the plaintiff and pay the rent for the premises to it. Defendant No. 2 specifically asserted that he had no interest left in the suit property after the transfer in favor of the plaintiff. On the pleadings of the parties, the court below framed the following issues:

i) Whether the plaintiff had a right in the suit property and was entitled to terminate the tenancy of defendant No. 1? OPP

ii) Whether the tenancy of defendant No. 1 was validly terminated w.e.f. 31.1.2000? OPP.

iii) If issue No. 1 is decided in favor of the plaintiff, whether the plaintiff is entitled to a decree of possession in respect of the suit property? OPP

iv) Whether the plaintiff is entitled to a decree of arrears of rent amounting to Rs. 2,82,460.50P? OPP

v) Whether the plaintiff is entitled to damages for use and occupation of the premises after 31.1.2000, if so, at what rate and for what period? OPP

vi) Whether the plaintiff was entitled to interest over the arrears of rent and damages, if so, at what rate and for what period? OPP

vii) Whether the plaintiff has no locus standi to file the present suit? OPD

viii)Whether the suit is bad for non-joinder of Ms. Sharda Manchanda and is liable to be rejected on this ground alone? OPD

ix) Relief.

8. In support of its case the plaintiff examined Sh. Munish Singla, whereas defendant No. 1, appellant-herein put, Sh. Deepak Bansal, an administrative officer, in the witness box. By the Judgment and decree impugned in this appeal the court below has decreed the suit for possession by ejectment of the defendant. It has also passed a decree for a sum of Rs. 97,240/- in favor of the plaintiff towards rent apart from damages at the rate of Rs. 1,20,000/- p.m. with effect from February, 2000 till the date the possession of the premises is handed over to the plaintiff. Interest at the rate of 6% on the outstanding amount has also been granted.

9. Relying upon the Judgments of this Court in Asha M. Jain v. Canara Bank and Ors. and Kuldeep Singh Suri v. Surinder Singh Kalra and Anr. , the court below has held that sale by means of a power of attorney was a recognised mode of transfer of immovable property in Delhi. The court also relied upon the admission made by defendant- respondent No. 2 that he had transferred the property in favor of the plaintiff and received full sale consideration thereof. It observed that since the plaintiff had purchased the property from the erstwhile landlord who had intimated the tenant occupant about the said transfer, it was entitled to terminate the tenancy and demand eviction of the tenant occupant. Issue No. 1 was, accordingly, answered by the court below in favor of the plaintiff.

10. As regards issue No. 2, the court held that the premises having been let out for a period of five years with effect from 01.01.96, the tenancy of the occupant was a month to month tenancy, starting from 1st day of the every month and that its termination by notice marked PW-1/12 with effect from 31st January, 2000 was in accordance with law. Issue No. 2 was, on that finding, also held in favor of the plaintiff.

11. Dealing with issue No. 3, the court below was of the view that tenancy of the appellant-tenant having been validly terminated, the plaintiff was entitled to a decree for possession. On the question of arrears of rent claimed by the plaintiff, the court came to the conclusion that the defendant had, pursuant to the direction issued by a single Bench of this Court paid the rent except that due for the month of November, 1999. The Court also held that in terms of the lease deed the landlord was entitled to an increase of 5% every year which entitled him to an additional amount of Rs. 4603/-, apart from the agreed rent of Rs. 92,610/-. Issue No. 4 was, accordingly, held in favor of the plaintiff in part and to the extent of plaintiff being entitled to Rs. 97,240/-.

12. Issue No. 5, which related to the claim of the plaintiff for payment of damages, was also answered by the court below in favor of the plaintiff but only in part and to the extent of plaintiff being entitled to damages for unauthorised use and occupation of the property from February, 2000 onwards at the rate of Rs. 1,20,000/- p.m. The court held that while there was no evidence to prove that the rental value of the property was Rs. 2 lacs p.m., the plaintiff was entitled to damages at the rate stipulated in the lease agreement increased by 5% after every completed year of tenancy. Granting the said increase the plaintiff was held entitled to recover a sum of Rs. 1,20,000/-towards damages.

13. Issue No. 6 related to the payment of interest was answered in favor of the plaintiff holding that it was entitled to interest at the rate of 6% on account of mesne profit and rent after adjustment of the amount paid by the defendant-tenant. Issues No. 7 and 8 were also held against the defendant and the suit eventually decreed as already indicated earlier.

14. Appearing for the appellant, Mr. Rao urged a solitary contention in support of the appeal. He submitted that the trial court was in error in holding the plaintiff respondent entitled to a decree for possession of the suit property even when the plaintiff company had no document of title in its favor nor was recognized by the plaintiff as its landlord. He submitted that the property in question was owned by Smt. Devika Rani and all that the plaintiff company had in its favor was an agreement to sell which did not transfer or create any interest in the property for the benefit of the prospective purchaser. He argued on the strength of Section 54 of the Transfer of Property Act and the decisions of the Supreme Court in Lakha Ram v. Madho Ram and Narandas Karsondas v. S.A. Kamtam and Anr. , that an agreement to sell did not by itself create any interest in or charge over the property agreed to be sold and purchased. He found fault with the trial court placing reliance on the decision of this Court in Kuldeep Singh Suri's case (supra) to hold that the sales under power of attorneys was in Delhi a common mode of sale of immovable property to get over legislative restriction on the transfer of property. He argued that there was no power of attorney executed in favor of the plaintiff company by Smt. Devika Rani, the title holder nor could any such authorization have remained valid after her demise. The findings recorded by the trial court in regard to issues No. 1 and 3 were thus unsustainable, argued the learned Counsel.

15. On behalf of the respondent company, it was on the other hand urged by Mr. Garg that the trial court was perfectly justified in decreeing the suit for possession against the appellant. He argued that since the appellant had been inducted into possession as a tenant by Sh. Ashok Manchanda, respondent No. 2 in this suit, the defendant tenant could not question his title or the title of the plaintiff company who happened to be his transferee. Relying upon the decisions of this Court in Kuldeep Singh Suri's case (supra) and those in Jagdish Chander Gulati v. Ram Chand Lakram , Rameshwar Narain (Deceased) through LRs v. Sarla Sarin , Sushil Kanta Chakravarthy v. Rajeshwar Kumar , it was argued that the plaintiff could be the landlord of the tenant in occupation even without acquiring absolute ownership qua the said property as there was a distinction between the term 'owner' and 'absolute owner'. He further submitted that since Sh. Manchanda, the erstwhile landlord of the appellant had transferred all his rights and interests in the property in favor of the plaintiff company, the latter could maintain the suit for eviction. The rights held by Shri Manchanda, the erstwhile landlord did not require the execution of a registered instrument for effecting a transfer thereof in favor of the plaintiff company.

16. We have given our anxious consideration to the submissions made at the bar. The material facts relating to the determination of the question urged before us are not in dispute. It is not in dispute that the property in question has been erected upon a plot of land held by Smt. Devika Rani as a perpetual lessee in terms of a lease deed executed in her favor and registered on 27th August, 1975. It is also not in dispute that the lessee had constructed a commercial building on the said plot of land in accordance with the building bye laws. In the year 1987, the lessee had, by an agreement to sell dated 19th June, 1987, sold all her rights, titles and interest in the suit property in favor of Sh. Ashok Manchanda, defendant respondent No. 2 in this appeal. Apart from an agreement to sell, the owner of the property had also executed documents like a power of attorney in favor of Sh. Ashok Manchanda. There is also no dispute that Smt. Devika Rani had received the entire sale consideration settled for the property in question from Sh. Ashok Manchanda. The fact that Sh. Manchanda had in terms of a lease deed executed on 18th December, 1995 inducted the appellant tenant into occupation of the suit property is also admitted. That Sh. Manchanda, respondent No. 2 had then transferred all his rights and interests in favor of the plaintiff company is also a matter that is not in dispute. This transfer was in terms of an agreement to sell executed by Sh. Manchanda in favor of the plaintiff company. A reading of the said agreement reveals that the entire consideration of Rs. 40 lacs settled between the parties has been paid to Sh. Manchanda and the plaintiff company put in possession of the property in question. The relevant stipulations contained in the agreement to sell read as under:

6. The Vendor has put the Purchaser in possession of the said property and delivered the original Deed of Perpetual Lease dated 11.08.1975 and other title documents in his favor.

7. XXXX

8. XXXX

9. That hereinafter, the Purchaser shall use and enjoy the said property as absolute owner thereof.

10. The possession delivered in the aforesaid terms shall be deemed to be the delivery of the possession in part performance of this agreement and the purchaser shall be entitled to protect his possession under the provisions of Section 53-A of Transfer of Properties Act and/or under other Laws applicable or made applicable hereinafter.

11. XXXX

12. XXXX

13. XXXX

14. That now the Purchaser has become the absolute owner of the said built up commercial property bearing No. 4, consisting of basement, Ground Floor, Mazzaning floor, First Floor, Second Floor, Third Floor, and above with further roof and terrace right Along with further construction rights up to last storey, situated at Shopping Centre-II, Wazirpur Residential Scheme (now known as Ashok Vihar) Phase-II, Delhi and has acquired the rights of ownership in the said property forever.

17. The vendor Sh. Manchanda had, at the same time, informed the appellant tenant regarding the transfer of all the rights held by him in the property in favor of the plaintiff company in terms of a letter of attornment dated 20th October, 1999. Even the plaintiff company has sent a formal communication in that regard to the occupant and furnished at the request of the appellant the documents on the basis of which it had acquired the rights held by Sh. Manchanda.

18. It is in the backdrop of the above facts that the question whether the plaintiff company acquired by transfer the rights held by the erstwhile owner has to be seen by the Court. Section 109 of the Transfer of Property Act deals with rights of the Lesser's transferee and reads as under:

109. Rights of Lesser's transferee. - If the Lesser transfers the property leased, or any part thereof, or any part of his interest therein, the transferee, in the absence of a contract to the contrary, shall possess all the rights, and, if the lessee so elects, be subject to all the liabilities of the Lesser as to the property or part transferred so long as he is the owner of it; but the Lesser shall not, by reason only of such transfer cease to be subject to any of the liabilities imposed upon him by the lease, unless the lessee elects to treat the transferee as the person liable to him:

Provided that the transferee is not entitled to arrears of rent due before the transfer, and that, if the lessee, not having reason to believe that such transfer has been made, pays rent to the Lesser, the lessee shall not be liable to pay such rent over again to the transferee.

The Lesser, the transferee and the lessee may determine what proportion of the premium or rent reserved by the lease is payable in respect of the part so transferred, and, in case they disagree, such determination may be made by any Court having jurisdiction to entertain a suit for the possession of the property leased.

19. We may also refer to the provisions of Section 105 of the Transfer of Property Act, according to which, absolute ownership over the property leased is not a condition precedent for creation of a lease qua the same. The very concept underlying a lease on the contrary is that the same is a contract between the Lesser and the lessee for the possession and profits of the leased property on one side and the recompense by rent or other consideration on the other. Resultantly, a lease may be created even by a person who himself is a lessee. Such a lease may be termed as an under lease, a sub lease or a derivative lease, and yet the same is a lease for the purposes of Section 106 of the Act. [See: The Mineral Development Ltd. v. Union of India and Anr. ]

20. Similarly, a person holding possession of immovable property on the basis of an agreement to sell in his favor would be entitled to create a lease in respect of such property even when he may not be the absolute owner of the property leased at the time of the creation of the lease or when the lease is terminated and return of possession demanded by the landlord. Mr. Rao, counsel for the appellant had no quarrel with these propositions of law nor was it his case that he could question the title of respondent No. 2 Sh. Ashok Manchanda who held the property only on the basis of an agreement to sell in his favor. Any such contention would, in any case, fly in the face of Section 116 of the Evidence Act which recognizes the well settled legal proposition that 'a beneficiary cannot during the continuance of the benefit question the title of the benefactor'. It is also noteworthy that in the lease deed executed in favor of the appellant company, the Lesser Sh. Ashok Manchanda had been described as the absolute owner of the leased property although it is common ground that Sh. Manchanda did not have till the date of transfer in favor of the plaintiff company any document of title qua the same.

21. It follows from the above that even when Sh. Ashok Manchanda did not have absolute title to the property, he had the right to create a lease and induct a tenant. That being so, the question is whether the rights held by Sh. Manchanda as the holder of an agreement to sell in possession of the property agreed to be sold could be transferred to another individual or legal entity without the execution of a registered instrument of transfer. Our answer is in the affirmative. If the Lesser could create a lease without being the absolute owner of the leased property, then transfer of the leased property within the meaning of Section 109 of the Transfer of Properties Act would simply mean transfer of the right held by the Lesser which need not necessarily be transfer of absolute ownership in the property. If the Lesser did not have ownership rights in the property, the law cannot insist on the transfer of such rights by him as a condition precedent for the application of Section 109 of the Act. A transferor Lesser cannot in any case confer a title better than the one held by him. If the transferor does not have absolute ownership vested in him, there is no question of his conferring such ownership by way of transfer for the application of Section 109 of the Act. Transfer of the leased property referred to in Section 109 can therefore only mean transfer of the rights which the Lesser transferor held either in full or in part and no more.

22. The transferor Lesser in the instant case simply held an agreement to sell with possession of the leased property handed over in part performance of the agreement. The agreement did not in itself create any right in the immovable property having regard to the settled legal position flowing not only from Section 54 of the Transfer of Property Act but also from the pronouncements of the Supreme Court on the subject. That being so, the Lesser transferor could transfer his rights by a simple agreement as was done in the instant case accompanied by symbolic transfer of possession of the property in question. No registered instrument was necessary in such a case. That Sh. Manchanda had denuded himself of all the rights which he held qua the property by transferring them absolutely in favor of the respondent company is evident not only from a reading of the agreement to sell executed in favor of the plaintiff company but also from the written statement that has been filed by the said defendant. The erstwhile landlord does not today claim either any interest in the property or the right to recover rent from the appellant tenant. He had, on the contrary, called upon the tenant to attorn to the plaintiff as the new owner of those rights. Such being the position, there was a complete substitution of the erstwhile Lesser by the plaintiff company. All the rights earlier vested in Sh. Manchanda qua the property on the basis of the agreement to sell in his favor and the power of attorney executed by the erstwhile owner now stand transferred to the company who could under Section 109 of the Transfer of Properties Act maintain the suit filed by it. Mr. Rao's contention that the plaintiff's suit for possession was not maintainable in the absence of vesting of absolute title in the plaintiff company, therefore, must fail and is accordingly rejected.

23. In the light of the above discussion, it is unnecessary for us to go into the question whether transfer of ownership can be effected by execution of power of attorneys in favor of the transferee. There is no doubt a plethora of pronouncements on the subject to which our attention has been drawn by counsel for the parties at the hearing. These decisions hold such transfers to be recognized in Delhi. We do not wish to express any final opinion on that aspect. All that we need say is that almost all the decisions referred to us were cases where a dispute regarding ownership had arisen between the transferor and the transferee. this Court has, in those situations, recognized the right of the transferee to stay in possession and treat the transfer to be absolute qua the transferor especially when he has received the full consideration settled for the sale of the property and put the transferee in peaceful possession of the same. We have not come across a case where the transfer of ownership on the basis of a power of attorney has been recognized by the courts qua a third party. Whether or not transfer of ownership can be effected by a method other than by execution of a proper sale deed as required under the provisions of Transfer of Property Act and the Registration Act and after payment of the requisite stamp duty is a matter that we leave open to be decided in an appropriate case.

24. In the result, this appeal fails and is hereby dismissed but in the circumstances without any order as to costs.