Bharat Bijlee Limited vs P.S. Prasad And Family (Huf)
2007 Latest Caselaw 1128 Del

JUDGMENT

J.M. Malik, J.

1. After having lost the case before both the courts below, the appellant/tenant has preferred this second appeal before this Court. The facts of the present case are these. The respondent/plaintiff is the owner of flat bearing No. 406, IVth Floor, in the building known as Milap Niketan situated at 8 A, Bahadurshah Zafar Marg, New Delhi. The appellant/defendant was inducted as a tenant in the above-said property vide agreement to lease executed on 20th September, 1980. The relevant paragraphs of the lease deed are reproduced as under:

4. That the present lease is for a period of five years and it can be renewed by the Second Party for further periods of five years after increasing the rent by 15% (Fifteen per cent) on the last rent paid each time the lease is renewed for five years.

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21. That the First Party hereby agrees to lease the said premises on the terms and conditions contained in this agreement to the nominees of the Second Party viz. Messrs Siemens India Limited as and when the Second Party decides to vacate the premises and terminates the lease. This will not constitute as subletting in terms of Clause 20 above.

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23. That in case the Second Party continues to pay the rent hereinafter reserved and observe and perform the conditions, the Second Party shall enjoy the premises for a duration of lease period or the renewed periods.

2. The lease started from 1st November, 1980, and expired on 30th October, 1985. The respondent refused to renew the lease for a further period of five years. The lease agreement dated 20th September, 1980 stood terminated by afflux of time. However, the appellant continued to be in possession of the premises as a tenant on a month to month basis. The month to month tenancy of the appellant was terminated by the respondent vide a notice dated 2nd August, 1989. The appellant responded vide reply dated 8th September, 1989. Under these circumstances, the plaintiff/respondent filed a suit for recovery of possession and recovery of damages for use and occupation of the suit premises.

3. The appellant defended the instant suit. The principal defense set up by the appellant was that the agreement dated 30th September, 1980, is an agreement to lease and not a lease agreement and as such, it does not require any registration. Again, in pursuance to the above-said agreement to lease the possession of the premises in question also stood transferred in favor of the appellant, who had performed his part of the contract. The respondent was debarred under Section 53A of the Transfer of Property Act, 1882 from bringing the instant suit. It was explained that the said agreement envisaged the execution of the lease deed at a later stage which was never executed by the respondent at that time. In view of the above said clauses of the agreement to lease detailed above, the intention of the party was apparent that the appellant was given lease of the suit premises on a permanent basis and right, if any, of termination was reserved only with the appellant/defendant. Again, the respondent has accepted the increased rent by 15% since the month of October, 1985, and therefore, he could not terminate the tenancy because the acceptance of the increased rent amounts to waiver of the said right.

4. I have heard learned Counsel for the parties. Learned Counsel for the respondent has cited an authority reported in Technicians Studio Pvt. Ltd. v. Smt. Lila Ghosh and Anr. , wherein the facts of the case were that the appellant Company was the sub-lessee of the disputed premises. A suit for eviction was decreed against it. The review application filed by the appellant having been dismissed it applied for revision before the High Court. The revision was ultimately disposed of in terms of a petition of compromise under which the appellant would become a direct tenant on payment of monthly rent and the lease would be for a period of 16 years. No deed of lease was however executed nor the petition of compromise containing the terms of settlement was registered. On the expiry of the period of lease the landlord issued notice to quit and vacate the premises. And, it was held, Here the payments can be explained, as the courts have done, as evidence of the appellant's willingness to perform their part of the contract. This does not mean however that there cannot be a relationship of landlord and tenant in any case where the transferee has taken possession of the property under a void lease or in part performance of a contract and is entitled to protection under Section 53A of the Transfer of Property Act. Such a view would be incorrect and encourage attempts to circumvent the protection of the Rent Acts given to the tenants. 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 the facts of a given that payments made by a 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 favor. The question is ultimately one of fact. In the present case the High Court has found in agreement with the courts below that the "payment of rent by the appellant to the plaintiff-respondent who accepted the same did not create any tenancy in favor of the appellant inasmuch as the said payments were made in part performance of the said contract of lease contained in the compromise petition". We cannot go behind this finding of fact on which the appeal turns. The appellant's plea of tenancy cannot therefore be accepted.

5. The learned Counsel for the respondent also made the following submissions. The agreement deed with the title "Agreement to lease" is misnomer. The Court should not go by the nomenclature of the deed. The concluded contract had come into existence. The above-said agreement to lease does not envisage the execution of lease deed at a later stage. Even a thorough scrutiny of the lease deed does not give any inkling that the parties had agreed to execute another document as a lease document on a future date. On the contrary, the paragraphs 10, 13 and 25 of the agreement clearly show that it was agreed between the parties as to what would be done at the time when the appellant would vacate the premises in dispute. The letters written by the appellant, that are, Ex.PW1/DZ1 dated 20.9.1985, Ex.PW1/DZ2 dated 17.10.1990 and Ex.PW1/DZ3 dated 26.9.1995, requiring the respondent to renew the lease of premises referred in the agreement dated 20th September, 1980, for a further period of five years reveal that the appellant had asked for renewal of the lease agreement, meaning thereby that after execution of so-called agreement to lease dated 20th September, 1980, nothing else was to be done except renewal of lease.

6. It was further submitted that counsel for the appellant wrongly argued that the appellant had funded the construction of the building. He pointed out that as a matter of fact, he had given only an advance rent which was adjustable towards rent. The funding of construction and demand of advance rent are two different terms. He explained that para 1 of the agreement itself shows that concluded contract had come into existence.

7. At this stage, I do not find any force in all these arguments. Counsel for the appellant has invited my attention towards the celebrated authority of the Supreme Court reported in Maneklal Mansukhbhai v. Hormusji Jamshed ji Ginwalla and Sons AIR (37) 1950 Supreme Court 1, wherein it was held, (16) The section is a partial importation in the statute law of India of the English doctrine of part performance. It furnishes a statutory defense to a person who has no registered title deed in his favor to maintain his possession if he can prove a written and signed contract in his favor and some action on his part in part performance of that contract. In order to find whether the defendant in the present case has satisfied the conditions of the section, it has to be held proved that the Talukdari Settlement Officer contracted to give a lease of the survey numbers in suit to Manilal Maganlal by a writing signed by him and that from this writing the terms of the tenancy can be ascertained with reasonable certainty. It has further to be held established that the transferee took possession of the property or did any acts in furtherance of the contract. It may be mentioned that in cases of lease the legislature has recognized that the equity of part performance is an active equity as in English law and is sufficient to support an independent action by the plaintiff. (Vide Sectin 27A, Specific Relief Act). This section however applies to contracts executed after 1st April 1930 and has no application in the present case; but there can be no manner of doubt that the defense under Section 53A is available to a person who has an agreement of lease in his favor though no lease has been executed and registered....

It was further held, ...A formal lease is not necessary to attract the application of Section 53A, T.P. Act. All that is required is that an agreement in writing signed by the transferor can be gathered from the evidence. The correspondence mentioned in Ex. 181 fully establishes that fact....

It may be mentioned that in the above-said authority it was an unregistered document. The lease was permanent. In the instant case, so far as the case of the appellant is concerned, it is a lease in perpetuity for the purpose of appellant/tenant only. The lease specifically lays down that the lease is renewable only at the instance of the appellant. The other party has no such power. It is well-settled that in India a lease may be in perpetuity. Neither the Transfer of Property Act, nor the general law abhors a lease in perpetuity. This view finds supports from Section 105 of the Transfer of Property Act and is further supported by a latest authority of the Apex Court reported in State of U.P. v. Lalji Tandon . I have also perused the above-cited authority reported in Technicians Studio Pvt. Ltd. v. Smt. Lila Ghosh and Anr. (supra), wherein it was held that protection under Section 53A is available till the fixed period of 16 years. After 16 years, it is not available. However, the case in hand shows that this is a case of tenancy in perpetuity.

8. Under these circumstances, I find that a substantial question of law arises in the present case. The same is formulated hereunder:

(i) Whether the judgment delivered by both the courts below are legally tenable?

9. Issue Notice to the respondents, on filing of process fee, for 10th December, 2007. The matter is fixed for final disposal on the date fixed. Files from both the courts below already received.