Ajay Zachariah vs State Of Kerala
2021 Latest Caselaw 1927 Ker

               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                  PRESENT

          THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V

    TUESDAY, THE 19TH DAY OF JANUARY 2021 / 29TH POUSHA, 1942

                      WP(C).No.20445 OF 2020(E)


PETITIONERS:

      1        AJAY ZACHARIAH
               AGED 54 YEARS
               S/O.MATHEW ZACHARIAH (LATE), NEELICKAL HOUSE,
               MANGANAM KARA, MANGANAM P.O., KOTTAYAM-686 018

      2        JUDY ZACHARIAH
               AGED 49 YEARS
               W/O.AJAY ZACHARIAH, NEELICKAL HOUSE, MANGANAM KARA,
               MANGANAM P.O., KOTTAYAM-686 018

               BY ADVS.
               SRI.AJIT JOY
               SRI.ANEESH JAMES

RESPONDENTS:

      1        STATE OF KERALA
               REPRESENTED BY THE INSPECTOR GENERAL,
               DEPARTMENT OF REGISTRATION, VANCHIYOOR P.O.,
               THIRUVANANTHAPURAM-695 035

      2        THE DISTRICT REGISTRAR,
               KOTTAYAM, OFFICE OF THE DISTRICT REGISTRAR,
               DISTRICT COLLECTORATE, KOTTAYAM-686 002.

      3        THE SUB REGISTRAR
               KOTTAYAM (ADDITIONAL), OFFICE OF THE SUB REGISTRAR,
               COLLECTORATE, KOTTAYAM-686 002.

      4        AJIT KUMAR V.
               S/O.N.VASUDEVAN NAIR, MADAYIL VEEDU T.C.25/1424,
               SS KOVIL ROAD, THIRUVANANTHAPURAM-695 001.



               SMT MABLE C KURIAN, GOVERNMENT PLEADER

     THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD            ON
19.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
 WP(C).No.20445 OF 2020                 2




                                                               "CR"
                            JUDGMENT

The petitioners herein, who are husband and wife respectively,

are the owners in title and possession of property having an extent of

15.77 Ares and situated within the limits of Perumbaikad village. In the

year 2018, the petitioners decided to construct a commercial building in

the said property and based on their application, a

mercantile/commercial building permit was issued by the local

authority.

2. On receiving information about the commercial building project,

the 4th respondent, who is a hotelier, approached the petitioners and

informed them of his desire to take on lease 6000 sq. ft. of commercial

space on the ground floor of the proposed commercial building for the

purpose of starting a hotel therein. After deliberations, the parties

entered into an understanding as per which, the petitioners offered to

complete the structure of the building and hand over the space to the

4th respondent on or before 31.12.2020 and the 4th respondent agreed

to take on lease the said commercial space at a monthly rent of

Rs.3,30,000/- for a period of five years, and to commence from

1.1.2021. Consequently, Ext.P1 agreement for lease was entered into

on 23.12.2019. The document was presented before the SRO,

Kottayam and the same was registered as document No. 2415/I/2019.

A sum of Rs.2,55,700/- was paid towards stamp duty and registration

fee.

3. The petitioners state that COVID-19 Pandemic struck

immediately thereafter and due to the restrictions imposed, it became

next to impossible to commence and carry out the construction. The

workers also left and nothing further took place. The entire project was

shelved by the petitioners and he decided not to go forward with the

construction. This matter was informed to the 4th respondent, who also

expressed his desire to withdraw from the project. In other words, the

pandemic played spoilsport and the hotel project was dropped.

4. The petitioners and the 4th respondent in the said

circumstances executed Ext.P2 deed of cancellation on 8.11.2020

cancelling Ext.P1 lease agreement. The deed of cancellation was

executed on a non-judicial stamp paper valued at Rs.500/- and a sum of

Rs.270/- was paid as registration fee. They state that stamp duty was

paid in accordance with Article 15 of the Schedule to the Stamp Act and

registration fee was paid under I(u) of the Table of Fees under Section

78 of the Registration Act (Table of Fees). However, when Ext.P2

cancellation deed was presented before the 3rd respondent for

registration, he refused to register the same on the ground that Ext.P2

would fall within the category of surrender of lease as provided under

Article 54(a) of the Schedule 1 of the Stamp Act and registration fee

would be payable under Article 1(g) of the Table of Fees. The 1st

petitioner was ordered to pay the balance registration fee of

Rs.2,01,978/- by Ext.P4 order.

5. According to the petitioner, Ext.P1 on the face of it would

reveal that the lease is scheduled to commence only on 1.1.2021. The

petitioners have not completed the construction of the building and the

4th respondent has not occupied the same, which event is yet to

happen. The possession of the property is also with the petitioners.

According to the petitioners, in order to term Ext.P2 as a surrender of

lease, the parties ought to have acted upon the lease and the 4th

respondent ought to have taken possession of the premises either by

express or by implied means. In that view of the matter, there is no

justification on the part of the Registrar to insist that the petitioner

should pay registration fees under Article 1(g) of the Table of Fees,

contends the petitioner. It is in the afore circumstances that the

petitioners are before this Court seeking to quash Ext.P4 and also for a

further direction to the 3rd respondent to register Ext.P2 as a deed of

cancellation.

6. The 3rd respondent has filed a statement as directed by this

Court. It is stated that the rights created under the lease for a period of

5 years is an interest in immovable property and the said deed is

compulsorily registrable under Section 17 of the Registration Act, 1908.

According to the respondent, by Ext.P2 what is contemplated is the act

of surrendering the possession of leasehold premises in favour of the

lessee and refund of security deposit from lessor to lessee. It is further

stated that for releasing the right with respect to the premature lease

period, stamp duty is liable to be paid under Article 54(a) of the

Schedule to the Kerala Stamp Act, 1959. It is further stated that the

stamp duty paid as per Ext.P2 was only Rs.500/-, the Registrar is bound

to initiate action under Section 33(1) of the Kerala Stamp Act. However,

in order to initiate proceedings under Section 33(1), the amount by way

of registration fee will have to be paid by the petitioner as required

under Section 80 of the Registration Act, 1908. Since the petitioner

refused to pay the stipulated fees, the Sub Registrar has refused to

accept the document in accordance with the Registration Rules and have

issued Ext.P4 memo calling upon the petitioner to cure the defect and

resubmit the deed for registration.

7. I have considered the submissions advanced by Sri. Ajit Joy,

the learned counsel appearing for the petitioner and Smt. Mable C.

Kurian, the learned Government Pleader.

8. Ext.P1 is the lease agreement dated 23.12.2019 entered into

between the petitioners and the tenant. As per the schedule to the lease

agreement, what has been leased out is 6000 sq. ft. commercial space

in the ground floor of a proposed commercial building having a total

extent of 2134.01 sq.m. together with parking area and all attached

facilities. It is apparent from the agreement that lease has been granted

to use the demised building for the purpose of running a restaurant for a

term of five years commencing from 1.1.2021.

9. The petitioners assert that they dropped their plan to construct

the commercial building due to various circumstances. According to

them, the entire project has been shelved and the subject matter of the

agreement is not in existence. Even the respondents have no case that

the petitioners have completed the construction of the building or that

the possession of the building has been handed over to the lessee.

10. The question is whether it is a case of cancellation of lease

agreement or a surrender of lease.

11. Chapter V of the Transfer of Property Act deals with the leases

of Immovable property. This chapter consists of Section 105 to 117.

12. A lease of an immovable property is a contract between the

lessor and the lessee. Their rights are governed by Sections 105 to 117

of Transfer of Property Act read with the respective Rent Control laws.

13. Lease has been defined under Section 105 of the TP Act

which reads this:-

Section 105. A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

Lessor, lessee, premium and rent defined. --The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.

14. Section 106 defines the duration of lease.

106. Duration of certain leases in absence of written contract or local usage

(1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable,

on the part of either lessor or lessee, by fifteen days' notice.

(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.

(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.

(4) Every notice under sub-section (1) 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.]

15. The manner of making a lease is defined under Section 107.

Section 107 Leases how made

A lease of immovable 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 immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee

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

16. Section 111 of the TP Act deals with the determination of

lease. Section 111 reads thus :

Section 111 - Determination of lease

A lease of immovable property determines-

(a) by efflux of the time limited thereby:

(b) where such time is limited conditionally on the happening of some event-by the happening of such event:

(c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event-by the happening of such event:

(d) in case the interests of the lessee and the less or in the whole of the property become vested at the same time in one person in the same right:

(e) by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them:

(f) by implied surrender:

(g) by forfeiture; that is to say,

(1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter or

(2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or

(3) the lessee is adjudicated an insolvent and the lease provides that the less or may re-enter on the happening of such event; and in any of these cases the lessor his transferee gives notice in writing to the lessee of his intention to determine the lease:

(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.

Illustration to clause (f)

A lessee accepts from his less or a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon.

17. An examination of the provisions would leave no manner of

doubt that determination of lease can only happen for the reasons

mentioned in section 111 of the Act.

18. If it is a case of surrender of lease, it can only be by way of

express or implied surrender as provided under (e) and (f) of Section

111 of the Act.

19. In Shah Mathuradas Maganlal & Co. v. Nagappa

Shankarappa Malage and Ors., [(1976) 3 SCC 660], the Apex Court

had occasion to consider the scope of Clauses (e) and (f) of Section 111

of the TP Act and laid down the following principle in Para 19 as under.

19. A surrender under Clauses (e) and (f) of Section 111 of the Transfer of Property Act, is an yielding up of the term of the lessee's interest to him who has the immediate reversion or the lessor's interest. It takes effect like a contract by mutual consent on the lessor's acceptance of the act of the lessee. The lessee cannot, therefore, surrender unless the term is vested in him; and the surrender must be to a person in whom the immediate reversion expectant on the term is vested. Implied surrender by operation of law occurs by the creation of a new relationship, or by relinquishment of possession. If the lessee accepts a new lease that in itself is a surrender. Surrender can also be implied from the consent of the parties or from such facts as the relinquishment of possession by the lessee and taking over possession by the lessor. Relinquishment of possession operates as an implied surrender. There must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact. (emphasis supplied)

20. In P. Ramanatha Aiyar's 'The Law Lexicon', Fourth Edition, the

term 'Surrender' is defined to mean 'to give up in favour or for the sake

of another'. Surrender is a deed or instrument testifying that the

particular tenant for life or years, of lands and tenements, doth yield up

his estate to him that hath the immediate estate in remainder or

reversion, that he may have the present possession thereof; and

wherein the estate for life or years may merge or down by the mutual

agreement of the parties. It may be express or implied. Implied

surrenders are generally referred to as surrenders by operation of law.

Express surrenders are within the Statute of Frauds (in England) the

Stamp and Registration Acts (in India).

21. As held by the Apex Court in Shah Mathuradas Maganlal

(supra), a surrender of lease cannot happen unless the term is vested

in the lessee. There must be a taking of possession, not necessarily a

physical taking, but something amounting to a virtual taking of possession. In

the case on hand, the lease was expected to happen on a future date.

The subject matter of the lease is not in existence even now. At no point

of time was the possession of the premises handed over to the 4th

respondent as the lease premises is not in existence even now. Thus, in

the instant case, it cannot be said that Ext.P2 entered into by the

petitioners and the 4th respondent is a surrender of lease.

22. It would be apposite at this juncture to refer to Art.15 of the

Schedule to the Stamp Act which reads thus;

Art 15. Cancellation - Instrument of Two hundred and fifty (including any instrument by rupees." which any instrument previously executed is cancelled), if attested and not otherwise provided for

23. The Stamp duty for surrender of lease is provided under

Article 54 to the Schedule of the Stamp Act, 1959.

Art 54. Surrender of lease

1. When lease is surrendered before expiry of lease period Rs.1000

2. In any other case Rs 500

24. Under the Table of Fees under Section 78 of the Registration

Act, Article 1 (g) provides for fees for surrender of lease.

1 (g) Surrenders of leases shall be assessed to registration fee on the amount of consideration including the value of improvements, if any, or when no consideration or value of improvements is expressed, the fee chargeable on the original lease shall be realised.

When, however, if the consideration or consideration including value of improvements or value of improvements alone is expressed in a surrender of lease which is chargeable with a lesser fee than that of the original lease, the fee chargeable on the original lease shall be realised.

25. 1 (u) of the Table of Registration Fees provides for deed of

cancellation.

The registration fee for a deed of cancellation or revocation shall be the same as the fee leviable on the original document subject to a maximum of Rs.

26. There are provisions in the Stamp Act as well as the Registration

Act which provides for cancellation of documents. In view of the discussion

above, I am inclined to hold that Ext.P2 can be nothing but a cancellation of

lease and not a case of surrender. In that view of the matter, Article 15 of

the Schedule of the Stamp Act as well as 1(u) of the Table of Fees under

Section 78 of the Registration Act, 1908 would apply. Consequently, Ext.P4

will stand set aside and there will be a direction to the respondent

concerned to register the deed treating the same as a cancellation deed.

The entire exercise shall be completed within a period of one month from

the date of receipt of a copy of this judgment.

This writ petition will stand allowed.

Sd/-

RAJA VIJAYARAGHAVAN V

JUDGE

ps/19/1/2021

APPENDIX PETITIONER'S EXHIBITS:

EXHIBIT P1          A TRUE COPY OF THE DOCUMENT
                    NO.2415/I/2019 OF THE SRO KOTTAYAM
                    ADDITIONAL.

EXHIBIT P2          A TRUE COPY OF THE CANCELLATION DEED
                    DATED 8.11.2020 EXECUTED BETWEEN THE
                    PETITIONERS AND THE 4TH RESPONDENT

EXHIBIT P3          A TRUE COPY OF THE ACKNOWLEDGMENT DATED
                    8.9.2020 ISSUED BY THE REGISTRATION
                    DEPARTMENT, GOVERNMENT OF KERALA.

EXHIBIT P4          A TRUE COPY OF THE NOTICE DATED 8.9.2020
                    ISSUED BY THE 3RD RESPONDENT.

RESPONDENTS EXHIBITS:NIL




                                         //TRUE COPY//

                                          P.S TO JUDGE