Vs. Kc Ittoop and Sons & Ors  INSC 352 (1 July 2000)
J U D
G M E N T Thomas J. A dispute which constantlycaused many litigations to
prolong in the past (whether a lease could be made by an unregistered instrument
when such deed is compulsorily registerable) has once again been raised and
that dispute has lengthened the longevity of this litigation through a chequered
career. The successor of the party who was mainly responsible for not
registering the instrument has now been benefited of it as the impugned
judgment gave a decree for eviction of the person who was admittedly inducted
into possession of the building by the former. Though appellant claimed
protection under the provisions of the Rent Control legislation the High Court
discountenanced it on the premise that the document executed by the parties
regarding the transaction is void under law.
simple question now is whether appellant can claim protection as a tenant under
Kerala Buildings (Lease and Rent Control) Act 1965 (for short the Rent Act).
mostly undisputed, are the following: The building which is the subject matter
of this litigation is described as a shed which originally belonged to a family
the senior member of which inducted the appellant in possession thereof as per
a lease deed dated 4.1.1974 which was ostensibly meant for a period of five
years. The monthly rent of the building has been fixed at Rs.140/-.
paid rent of the building at the said rate till October 1974. Sometime during
this period ownership of the building happened to be allotted to a female
member of the family (Devaki) as per a partition effected between its members.
Thereafter rent of the building was paid by the appellant to the aforesaid Devaki.
Subsequently ownership of the building was transferred by Devaki to the
respondent who filed the suit as plaintiff (for the sake of convenience
respondent can be referred to as the plaintiff). The trial court decreed the
suit by repelling the contention of the appellant that the suit was not
maintainable as he is protected from eviction under the provisions of the Rent
Act. The trial court found that the appellant is not a tenant as the lease was
void on account of non-registration of the lease-deed. In the first appeal
filed by the appellant a District Judge held that in spite of non- registration
of the instrument there was a valid tenancy of the building and hence appellant
could not be evicted except in accordance with the provisions of the Rent Act.
In a second
appeal filed by the respondent a single judge of the High Court of Kerala set
aside the judgment of the District Court and remanded the first appeal to that
court by holding that the plaintiff was inducted into possession under a void
lease and hence the court should consider whether, independent of this lease
the defendant was in possession as a lessee from month to month. Learned single
judge pointed out that since it is a question of fact the same has to be
decided on the evidence on record. After the remand the District Court entered
upon a finding that despite the defect of non-registration of the instrument
the facts and circumstances of this case and the evidence discussed above could
clearly show that the parties intended to create a lease. The District Judge
further held that appellant is the tenant as defined in the Rent Act and hence
the plaintiff is not entitled to a decree in this case and his remedy is to
apply before the Rent
the matter went up to the High Court again in a second appeal a learned single
judge did not agree with the approach made by the District Judge after remand
and the following observations, inter alia, have been made by the High Court:
to be noted that if the conclusion of this court on the earlier occasion were
that payment and acceptance of rent pursuant to the void contract itself would
bring about the relationship of landlord and tenant between the parties
protected under the Kerala Buildings (Lease and Rent Control) Act this court
would have certainly dismissed the suit filed by the plaintiff by so finding
and would not have remanded the appeal to the lower appellate court in the
manner in which it was done. The lower appellate court has ignored this aspect
while purporting to record a finding that the first defendant would be a tenant
protected by the Kerala Buildings (Lease and Rent Control) Act even if he had
paid rent only under the void lease. The said approach by the appellate court
appears to me to be totally unsustainable.. I am therefore constrained to set
aside the finding of the lower appellate court that the first defendant is a
tenant protected by the Kerala Buildings (Lease and Rent Control) Act. I hold
that the first defendant has not proved that independent of the void lease, a
relationship of landlord and tenant has come into existence between the
parties. In view of this finding, the plaintiffs will be entitled to a decree
for recovery of possession of the plaint schedule property.
this appeal by special leave a bench of two judges heard this matter and after
noticing a conflict of opinions expressed by benches of equal strength it was
felt that this appeal should be decided by a larger bench.
spite of the chequered career of the litigation the only question which has now
bogged down to be decided is whether the suit building is held by the appellant
under a lease or not. The word tenant is defined in Section 2(6) of the Rent
Act as any person by whom or on whose account rent is payable for a building.
Landlord is defined as including the person who is receiving or is entitled to
receive the rent of a building. Now the definition of building must be booked
into. In clause (i) it is defined as any building or hut or part of a building
or hut, let or to be let separately for residential or non-residential
purposesī In the above context the word let has only one meaning and that is to
demise on lease.
above three definitions unmistakably point to the necessity for a building to
be covered by a lease under law in order to bring such building within the
purview of the Rent Act. If there is no lease of a building the Rent Act has no
application. Thus what is important now is to know whether there has been a
lease of the building in question.
appellant is a lessee of the building, it is not disputed before us that
jurisdiction of the civil court would stand evacuated and the plaintiff has to
approach the Rent
Control Court if he
is desirous of getting an order of eviction on any one of the grounds recognised
in the Rent Act.
lease-deed relied on by the plaintiff was intended to be operative for a period
of five years. It is an unregistered instrument. Hence such an instrument
cannot create a lease on account of three pronged statutory inhibitions. The
first interdict is contained in the first paragraph of Section 107 of the
Transfer of Property Act, 1882 (for short the TP Act ) which reads thus:
lease of immovable property from year to year, or for any term exceeding one
year, or reserving an yearly rent, can be made only by a registered instrument.
supplied) (emphasis supplied) The second inhibition can be discerned from
Section 17(1) of the Registration Act 1908 and it reads thus: (only the
material portion) Documents of which registration is compulsory.
the following documents shall be registered if the property to which they
relate is situate in a district in which, and if they have been executed on or
after the date on which, Act No. XVI of 1864, or the Indian Registration Act,
1866, or the Indian Registration Act, 1871, or the Indian Registration Act,
1877, or this Act came or comes into force, namely: .
Leases of immovable property from year to year, or for any term exceeding one
year, or reserving a yearly rent.
third interdict is contained in Section 49 of the Registration Act which speaks
about the fatal consequence of non-compliance of Section 17 thereof. Section 49
reads thus: 49. Effect of non-registration of documents required to be
registered.- No document required by Section 17 [or by any provision of the TP
Act, 1882,] to be registered shall (a) affect any immovable property comprised
therein, or (b) confer any power to adopt, or (c) be received as evidence of
any transaction affecting such property or conferring such power, unless it has
that an unregistered document affecting immovable property and required by this
Act, or the Transfer of Property Act, 1882, to be registered may be received as
evidence of a contract in a suit for specific performance under Chapter II of
the Specific Relief Act, 1877, or as evidence of part performance of a contract
for the purposes of section 53-A of the Transfer of Property Act, 1882, or as
evidence of any collateral transaction not required to be effected by registered
instrument.]" No endeavour was made by the counsel to obviate the said
interdict with the help of the exemptions contained in the proviso.
resultant position is insurmountable that so far as the instrument of lease is
concerned there is no scope for holding that appellant is a lessee by virtue of
the said instrument. The court is disabled from using the instrument as
evidence and hence it goes out of consideration in this case, hook, line and
sinker (vide Smt. Shantabai vs. State of Bombay: AIR 1958 SC 532; Satish Chand Makhan
Das Byas, (1984) 1 SCC 369 and Bajaj Auto Limited vs. Behari Lal Kohli AIR 1989
SC 1806 ).
the above finding does not exhaust the scope of the issue whether appellant is
a lessee of the building. A lease of immovable property is defined in Section
105 of the TP Act. A transfer of a right to enjoy a property in consideration
of a price paid or promised to be rendered periodically or on specified
occasions is the basic fabric for a valid lease. The provision says that such a
transfer can be made expressly or by implication. Once there is such a transfer
of right to enjoy the property a lease stands created. What is mentioned in the
three paragraphs of the first part of Section 107 of the TP Act are only the
different modes of how leases are created. The first paragraph has been
extracted above and it deals with the mode of creating the particular kinds of
leases mentioned therein. The third paragraph can be read along with the above
as it contains a condition to be complied with if the parties choose to create
a lease as per a registered instrument mentioned therein. All other leases, if
created, necessarily fall within the ambit of the second paragraph.
the instrument parties can create a lease as envisaged in the second paragraph
of Section 107 which reads thus:
other leases of immovable property may be made either by a registered
instrument or by oral agreement accompanied by delivery of possession.
lease is a transfer of a right to enjoy the property and such transfer can be
made expressly or by implication, the mere fact that an unregistered instrument
came into existence would not stand in the way of the court to determine
whether there was in fact a lease otherwise than through such deed.
it is admitted by both sides that appellant was inducted into the possession of
the building by the owner thereof and that appellant was paying monthly rent or
had agreed to pay rent in respect of the building, the legal character of appellants
possession has to be attributed to a jural relationship between the parties.
Such a jural relationship, on the fact situation of this case, cannot be placed
anything different from that of lessor and lessee falling within the purview of
the second paragraph of Section 107 of the TP Act extracted above. From the
pleadings of the parties there is no possibility for holding that the nature of
possession of the appellant in respect of the building is anything other than
as a lessee.
learned Senior Counsel contended that a lease need not necessarily be the
corollary of such a situation as possession of the appellant could as well be
permissive. We are unable to agree with the submission on the fact situation of
this case that the appellants possession of the building can be one of mere
permissive nature without any right or liabilities attached to it.
it is admitted that legal possession of the building has been transferred to
the appellant there is no scope for countenancing even a case of licence. A
transfer of right in the building for enjoyment, of which the consideration of
payment of monthly rent has been fixed, can reasonably be presumed. Since the
lease could not fall within the first paragraph of Section 107 it could not
have been for a period exceeding one year. The further presumption is that the
lease would fall within the ambit of residuary second paragraph of Section 107
of the TP Act.
a different view would be contrary to the reality when parties clearly intended
to create a lease though the document which they executed had not gone into the
processes of registration. That lacuna had affected the validity of the
document, but what had happened between the parties in respect of the property
became a reality. Non registration of the document had caused only two
consequences. One is that no lease exceeding one year was created. Second is
that the instrument became useless so far as creation of the lease is
concerned. Nonetheless the presumption that a lease not exceeding one year stood
created by conduct of parties remains un-rebutted.
P. Krishnamoorthy learned counsel cited certain decisions to support his
contention that the court did not treat similar transactions as lease. In HS Rikhy
vs. New Delhi Municipal Corporation: 1962 (3) SCR 604, a contention made by a
party to the suit that he had a right under the local Rent Control Act was negatived
on the ground that there was no landlord-tenant relationship between the
parties. In that decision this court did not accept the contention that the
word letting which was contemplated in the particular Rent Control Act included
not merely a transfer to a tenant but also to a licensee, or that the word rent
precluded the landlord from pleading that there was no relation of landlord and
tenant between the parties.
finding made in that case against the plea of landlord was based on the premise
that the transfer was not made by the Municipal Committee in accordance with
the law and hence there was no transfer at all. That decision has no
application to the points involved in the present case.
Technicians Studio Pvt. Ltd. vs. Lila Ghosh (1977) 4 SCC 324 a two judge bench
considered the effect of a compromise decree which mentioned that the defendant
would become a direct tenant on a monthly rent of Rs.1, 000 and the lease would
be for a period of sixteen years. But compromise decree was not registered nor
did the parties execute a lease- deed pursuant thereto. The contention in that
case was two fold. First was that by payment and acceptance of rent during the
period of sixteen years the monthly tenancy has been created. Second was that
the compromise decree can be treated as evidence of part payment under Section
53A of the TP Act. This court noted that the High Court has found in agreement
with the finding of the subordinate courts that payment of rent and acceptance
of the same did not create any tenancy. The said fact finding was not disturbed
by this court in that particular case.
their lordships observed therein that 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 facts of a given case that
payments made by 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 favour. The question is ultimately one of fact.
Pvt. Ltd. vs. Santosh Kumar Dutta:
1 SCR 650 a two judge bench of this court found that though a second lease-deed
executed between the parties (on the expiry of the period mentioned in the
first lease-deed) is void for want of registration, the tenant would continue
to be protected under the relevant Rent Control Act because on the expiry of
the period of first lease the tenant had acquired the right of a statutory
None of the observations made in the above decision is
in conflict with the view expressed by us above. Appellant occupied the
building as a tenant and he paid rent to the landlord and continued as such.
Hence with the coming into force of Rent Act he became a statutory tenant whose
eviction can be considered only when an application is moved in that behalf before
the Rent Control Court concerned. We, therefore, allow this appeal and set
aside the impugned judgment of the High Court. The suit filed by the respondent
will stand dismissed without prejudice to the right of the respondent to move
under the provision of the Rent Act.