Idandas Vs. Anant Ramchandra Phadke
 INSC 193 (20 November 1981)
FAZALALI, SYED MURTAZA FAZALALI, SYED MURTAZA
MISRA, R.B. (J)
CITATION: 1982 AIR 127 1982 SCR (1)1197 1982
SCC (1) 27 1981 SCALE (3)1790
RF 1989 SC 79 (2)
Transfer of Property Act-Section
106-"manufacturing purpose" tests for deciding-Wheat changed into
flour by application of labour and machinery-Whether "manufacturing
A piece of open land belonging to the
plaintiff (respondent) was given on lease to the defendant (appellant). The
appellant installed a flour mill on that land. He did not use it for any
purpose other than running the flour mill.
In his suit for eviction of the tenant from
the land, the plaintiff claimed that the tenancy was from month to month and
that a month's notice given by him to terminate the tenancy was sufficient.
The trial court, on the basis of receipts
produced by the plaintiff, held that rent was paid on an yearly basis.
Upholding the view of the District Judge that
the lease was not for a "manufacturing purpose", the High Court held
that the tenancy was rightly terminated by giving a valid notice.
On further appeal to this Court it was
contended on behalf of the tenant that the lease was for a "manufacturing purpose”
and that under section 106 of the Transfer of Property Act it could be
terminated only by giving six months' notice.
Allowing the appeal,
HELD: The lease was from year to year and was
for a "manufacturing purpose", and, therefore, a month's notice was
not legal. The suit for ejectment should have failed on this ground. [1201 H]
When the country is making rapid strides in various spheres of industrial
activity the term "manufacturing purpose" must be given the most
liberal interpretation so as to subserve the object of the statute. So
interpreted the tests for deciding whether a lease was for a
"manufacturing purpose" are (i) that a certain commodity is produced;
(ii) that the process of production would involve either labour or machinery
and (iii) that the end product coming into existence after the manufacturing
process is complete, should have a different name and should be put to a
different use. [1200 B 1201 D-E] 1198 In the instant case all the three tests
have been satisfied because wheat was transformed into flour by the use of
labour and machinery making it fit for human consumption and, therefore, the
lease was for a manufacturing purpose". [1201 F] Allenburry Engineers
Private Ltd. v. Ramakrishna Dalmia and Ors.  2 S.C.R. 257 followed.
Joyanti Hosiery Mills v. Upendra Chandra Das,
1946 Calcutta 317 and John Augustine Peter
Mirande and Anr.
v. N. Datha Naik, A.I.R. 1971 Mysore 365
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 2383 of 1977.
Appeal by special leave from the judgment and
order dated 18th November, 1976 of the Bombay High Court in Civil Appln. No.
1741 of 1976.
Gobind Ram Bhatia, R. C. Bhatia and P. C.
Kapoor for the Appellant.
Nemo for the Respondent.
The Judgment of the Court was delivered by FAZAL
ALI, J. This appeal by special leave is directed against the judgment of the
High Court of Bombay dated December 24, 1975.
The short point of law involved in this case
is whether the lease in question granted by the landlord to the
appellant-tenant was a lease for manufacturing purposes. In case the lease was
for a purpose of manufacture then it is manifest that under section 106 of the
Transfer of Property Act the lease could be terminated only by giving six
The suit was contested by the
defendant-tenant. The plaintiff's case was that the tenancy was from month to
month and, therefore, a month's notice to terminate the tenancy was sufficient
and the provision under section 106 of the Transfer of Property Act was not
attracted. The plaintiff also denied that the lease was for a manufacturing
purpose. The High Court upheld the judgment of the District Judge holding that
the lease was not for a manufacturing 1199 purpose and held that the tenancy
was rightly terminated as the notice was valid.
Mr. Gobind Ram Bhatia, learned counsel for
the appellant tenant, has submitted a short point of law before us. He submits
that having regard to the process of manufacturing carried on by the defendant,
there can be no doubt that the lease was for a manufacturing purpose and could
be terminated only by six months notice under Section 106 of the Transfer of
Property Act. Notice was issued to the respondents. That notice was duly served
on them. There is a certificate given by the High Court of Bombay itself that
the notice on the respondents was served. Nobody has appeared for the
respondents to contest this appeal.
In the present case, the admitted facts are
1. That to begin with the lease was given to
the defendant in respect of an open piece of land;
2. That on the open piece of land the
appellant installed a flour mill and that the defendant was not using the land
for any other purpose except running a flour mill.
3. That the receipts filed by the tenant
clearly show that the lease was doubtless a yearly one.
Reliance was placed by the District Judge on
the counter-foils where the plaintiff-landlord tried to make out a case of
monthly tenancy but the entry in the counter-foil being an admission in his own
favour was not admissible against the appellant. On the other hand, the trial
court has pointed out at page of its judgment that the receipts produced by the
tenant clearly show that the rent used to be paid from year to year. Exhibits
24 to 26 pertained to the rent paid on an yearly basis right from 1959 to May
31, 1961. On point of fact, therefore, we are satisfied that in the instant
case the lease was from year to year and, therefore, a month's notice was not
legal if the lease was for a manufacturing purpose.
The second point which arises for decision is
as to the purpose of the lease. This point is no longer res integra and is
concluded by a clear authority of this Court in Allenburry Engineers Private
Ltd. v. Ramakrishna Dalmia and Ors. where this Court has laid 1200 down that
the expression "manufacturing purposes" in Section 106 of the
Transfer of Property Act must be used in its popular and dictionary meaning as
the statute has not defined the word "manufacturing purposes". We
might state that in the present set up of our socialistic pattern of society
when our country has made strong strides in various spheres of industrial
activities an industrial venture must be given the most liberal interpretation
so as to sub serve the object of the statute. Of course the burden of proof
whether the purpose of the lease was a manufacturing purpose would be on the
defendant but we are satisfied that the defendant in this case has amply
discharged its onus. In the aforesaid case this Court observed as follows:
"The word 'manufacture', according to
its dictionary meaning, is the making of articles or material (now on large
scale) by physical labour or mechanical power. (Shorter Oxford English
Dictionary, Vol. I 1203). According to the Permanent Edition of Words and
Phrases Vol. 26, 'manufacture' implies a change but every change is not
manufacture and yet every change in an article is the result of treatment,
labour and manipulation. But something more is necessary and there must be
transformation; a new and different article must emerge having a distinctive
name, character or use." In coming to this conclusion this Court relied on
two of its earlier decisions in South Bihar Sugar Mills v. Union of India and
Union of India v. Delhi Cloth and General Mills. Even before the decision of
this Court, B.K. Mukherjea, J. (as he then was) who was later elevated to the
Bench of this Court and retired as Chief Justice of India observed in Joyanti
Hosiery Mills v. Upendra Chandra Das as follows:
"To manufacture, according to its
Dictionary meaning means "to work up materials into forms suitable for
use". The word "material" does not necessarily mean the original
raw material for a finished article may have to go through several
manufacturing processes before it is fit and made ready for the market. What is
itself a manufactured commodity may 1201 constitute a "material" for
working it up into a different product. "Thus, for example for the tanner,
the material would be the raw hide, but the leather itself a manufactured
article would constitute the material for the shoemaker's business, and we
cannot say that the shoe-makers are not manufacturers because they do not work
on raw hides." In the case of John Augustine Peter Mirande and anr. v. N.
Datha Naik the Mysore High Court following the Calcutta decision held that the
lease in that case, which was a case of saw mill, was for manufacturing
purposes. We might observe that so far as the present case, where the mill is a
flour mill, stands higher than the facts of the case in Mysore case (supra).
Coming now to the tests laid down by this
Court the position may be summarised as follows:
1. That it must be proved that a certain
commodity was produced;
2. That the process of production must
involve either labour or machinery;
3. That the end product which comes into
existence after the manufacturing process is complete, should have a different
name and should be put to a different use. In other words, the commodity should
be so transformed so as to lose its original character.
In the instant case what happened was that
wheat was transformed, by the manufacturing process which involved both labour
and machinery, into flour. The commodity before manufacture was wheat which
could not be consumed by any human being but would be used only for cattles or
medicine or other similar purposes. The end product would be flour which was
fit for human consumption and is used by all persons and its complexion has
been completely changed. The name of the commodity after the product came into
existence is Atta and not Gehun (wheat). Thus in the instant case all the three
tests have been fully satisfied. This being the position the irresistible
inference and the inescapable conclusion would be that the present lease was
one for manufacturing purposes. In this view of the matter, the notice of one
month must be held to be invalid and suit for ejectment should have failed on
1202 We, therefore, allow this appeal, set
aside the judgment of the High Court and dismiss the plaintiff's suit.
Before concluding we would like to add that
with due respect, that the judgment of the High Court is not very satisfactory
as it has not made any real attempt to apply its mind to the substantial
question of law that was involved in the case and seems to have rushed to its
conclusions even without considering the authorities on the subject
particularly the one referred to in the judgment as also the authoritative
decision of this Court referred to above which was pronounced five years before
the judgment of the High Court was given. From such a prestigious High Court as
Bombay we do expect a more careful and cautious approach in a matter like this.
As the respondents have not appeared before us, we make no order as to costs in
this Court. The appellant will certainly be entitled to costs in the Courts
P.B.R. Appeal allowed.