Bombay High Court
Ecgc Limited vs Suresh Mathew Thomas And Anr on 3 July, 2024
Author: Sharmila U. Deshmukh
Bench: Sharmila U. Deshmukh
2024:BHC-AS:26015
CRA-599 & 600.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL REVISION APPLICATION NO. 599 OF 2023
ECGC Limited. ]
A Company incorporated under the ]
Companies Act, 1956 ]
Having its Registered office at : ]
ECGC Bhavan, CTS 393, 393/1 to 45, ]
MV Road, Andheri (E), ]
Mumbai - 400069 ]...Petitioner/Applicant.
Versus
1. Suresh Mathew Thomas. ]
Occupation : Business ]
Having address at 59, ]
Mumbai Samachar Marg, 2nd Floor, ]
Mumbai 400023. ]
2. Mrs. Gracy Thomas. ]
Occupation : Housewife ]
Having address at 59, ]
Mumbai Samachar Marg, 2nd Floor, ]
Mumbai 400023. ]...Respondents.
WITH
CIVIL REVISION APPLICATION NO. 600 OF 2023
ECGC Limited. ]
A Company incorporated under the ]
Companies Act, 1956 ]
Having its Registered office at : ]
ECGC Bhavan, CTS 393, 393/1 to 45, ]
MV Road, Andheri (E), ]
Mumbai - 400069 ]...Petitioner/Applicant.
Versus
1. Suresh Mathew Thomas. ]
Occupation : Business ]
Having address at 59, ]
Mumbai Samachar Marg, 2nd Floor, ]
Mumbai 400023. ]
Patil-SR (ch) 1 of 63
CRA-599 & 600.doc
2. Mrs. Gracy Thomas. ]
Occupation : Housewife ]
Having address at 59, ]
nd
Mumbai Samachar Marg, 2 Floor, ]
Mumbai 400023. ]
3. M/s. Suresh Estates Private Limited ]
A Company having office at 59, ]
nd
Mumbai Samachar Marg, 2 Floor, ]
Mumbai 400023. ]...Respondents.
------------
Mr. R. Venkataramani, Attorney General of India a/w Mr. Anandh
Venkataramani, Mr. Rohan Cama, Mr. Naval Sharma, Mr. Saket Satapathy, Mr.
Nabeel Malik, Mr. Adithya Athreya and Ms. Adyasha Das i/b Tuli & Co. for the
Applicants.
Mr. Rafiq Dada, Sr. Advocate, a/w Mr Simil Purohit, Zubair Dada, Faran Khan,
Vishal Roman i/b Mr. H. K. Sudhakara i/b Mr. D. S. Mhaispurkar for the
Respondents.
------------
Coram : Sharmila U. Deshmukh, J.
Reserved on : May 8, 2024
Pronounced on : July 3, 2024.
JUDGMENT:
1. Rule. Rule made returnable forthwith and taken up for final hearing with consent of the parties.
2. The revisional jurisdiction of this Court under Section 115 of the Code of Civil Procedure, 1908 [for short "CPC"] has been invoked by the original Defendant who has suffered decree of ejectment. Vide two impugned judgments dated 6th May 2023, the Appellate Bench has dismissed the Appeals confirming the judgment and decree of eviction dated 7th July, 2016 passed by the Trial Court in TE Suit No.74/81/2007 Patil-SR (ch) 2 of 63 CRA-599 & 600.doc and TE Suit No.128/145/2007. As the Revisions arises out of common facts and raise common issues, they were heard together and are being decided by this common judgment. For the sake of convenience the parties are referred to by their status before the Trial Court. FACTUAL MATRIX:
3. Upon execution of three Indentures dated 15 th May, 1980, 7th February, 1981 and 1st July, 1981 by and between Suresh Estates Private Limited, Thomas Mathew and Chatur Lokumal Mirchandani as Trustees of P.T.M Family Trust and The Export Credit and Guarantee Corporation Limited- the Defendant, three office premises Nos.21, 22 and 31 admeasuring 5,000 square feet situated at "Dalamal House", Nariman Point, Bombay came to be occupied by the Defendant. By three Power of Attorney's dated 27 th June, 1980, 7th February, 1981 and 4th July, 1981 executed by the Trustees of P.T.M Family Trust, the Defendant as the constituted attorney of the Trustees was interalia granted the power to execute the lease of the said property in the form of lease previously approved on 15 th May, 1980 and attached thereto with such alterations as may be mutually agreed upon by the parties.
4. On 31st March, 1982, P.T.M Family Trust and Idichandy Family Trust entered into an Agreement for Sale of premises No.31 subject to the agreement to lease executed with the Defendant and letter of attornment was addressed to the Defendant on 19 th January, 1983. The Patil-SR (ch) 3 of 63 CRA-599 & 600.doc rent of the said premises was thereafter paid by the Defendant to Idichandy Family Trust upto July, 1989.
5. In 1985, the beneficiaries of P.T.M. Family Trust and the Idichandy Family Trust filed Suit No.2031 of 1985 in this Court seeking declaration that the Lease Agreements and the reversionary rights granted therein are void and detrimental to the interest of the beneficiaries. The interim relief was rejected by order dated 5th February, 1988 and subsequently the suit was dismissed for non-prosecution.
6. On 8th July, 1992, the Defendant unilaterally executed and lodged for registration three Lease Deeds, one in respect of Unit Nos.21 and 22, second in respect of Unit No.31 (500 sq feet) and third in respect of Unit No.31 (2,000 square feet) in the capacity as the Constituted Attorney of P.T.M. Trust. The lease deeds came to be registered in the year 2009.
7. In September, 1992 RAN application was filed by the Plaintiffs seeking payment of society charges and other taxes due to the Society which was withdrawn in the year 2004.
8. In the year 1993, Dalamal Society filed Dispute before the Co- operative Court against the Plaintiffs and the Defendant seeking recovery of arrears of society dues and possession of the suit premises wherein the Defendant was directed to pay the maintenance and society charges as against which the Appeal filed by the Defendant was rejected. The Defendant in compliance of the order of Co-operative Patil-SR (ch) 4 of 63 CRA-599 & 600.doc Court paid Rs 45,78,791/ either directly to the Society or in form of deposit in the Co-operative Court. From August, 1989 the Defendant stopped payment of rent to the Plaintiffs setting off the same against the amount paid under orders of Co-operative Court.
9. On 15th May, 2000, the lease period expired by efflux of time. On 16th May, 2000, the Defendant addressed a communication to P.T.M. Family Trust and Idichandy Family Trust exercising its right to purchase the reversionary rights in respect of the suit premises at the agreed price of Rs 100/ per square feet and called upon the Plaintiffs to effect transfer of the suit premises. It was stated that the Defendant was entitled to set off the purchase price of reversionary right and rent against the payment/deposits made in compliance of orders of Co- operative Courts. There was no response from the Plaintiffs to the said notice.
10. On 23rd March, 2001, notice to quit was issued to the Defendant which was responded by reply dated 20th April, 2001 contending that the right to purchase the reversionary right has been exercised.
11. Suit No.2178 of 2001 and Suit No.2177 of 2001 was filed by the Defendant in this Court seeking specific performance of the agreements dated 15th May, 1980, 7th February, 1981 and 1 st July, 1981 and lease deeds dated 8th July, 1992. Vide order dated 26 th September, 2006, the interim relief sought by the Defendant to restrain the Plaintiffs from instituting/ filing and/or proceeding with any Patil-SR (ch) 5 of 63 CRA-599 & 600.doc proceedings under the Maharashtra Rent Control Act, 1999 for recovery of possession was rejected.
12. T. E. Suit No.74/81 of 2007 was filed seeking ejectment of the Defendant by Idichandy Family Trust and T.E. Suit No.128/145 of 2007 was filed by P.T.M. Family Trust in the Small Causes Court.
13. On 22nd February, 2011, Division Bench of this Court in Appeals against the order dated 26th September, 2006 rejecting the interim relief of restraining orders against the Plaintiffs from initiating proceedings for eviction of the Defendant dismissed the Appeals. Special Leave Petition against the rejection orders came to be dismissed by the Apex Court.
14. The Plaintiffs filed an application under Order VII Rule 11 of CPC in the specific performance suits seeking rejection of the plaint on ground of absence of cause of action which came to be dismissed by order dated 4th March, 2014. Appeals against the rejection of interim applications came to be dismissed vide order dated 25 th September, 2014.
PROCEEDINGS BEFORE THE SMALL CAUSES COURT:
PLAINTS:
15. T.E. Suit No.74/81 of 2007 filed for eviction of the Defendant in respect of Premises No.31 and T.E. Suit No.128/145 of 2007 filed in respect of Premises Nos.21 and 22 contained identical pleadings. It was pleaded that the agreements dated 15 th May, 1980, 7th February, 1981 Patil-SR (ch) 6 of 63 CRA-599 & 600.doc and 1st July, 1981 were agreements to lease and not agreements of lease. The then trustees had granted power of attorneys to the Defendants which were not registered and were subsequently revoked and there is neither valid lease deed executed between the parties nor any registered document in that regard. The Defendant from the inception has been monthly tenant of the Plaintiff and in any event the lease period had expired by efflux time without any renewal of lease. The tenancy of the Defendant is not protected under the rent control legislation. The tenancy was terminated by communication dated 23 rd March 2001 to which a false reply was sent and despite termination, the Defendant is wrongfully holding over the premises. The relief of recovery of possession and consequential relief of mesne profits was sought.
WRITTEN STATEMENTS:
16. The Defendant raised an objection to the maintainability and jurisdiction of the Small Causes Court to entertain the suits. It was contended that for purchase of suit premises , funds were provided by Defendant to PTM Family Trust, which were given on 20 years lease to Defendant with a right to purchase the reversion at a prefixed rate of Rs.100 per square feet at the end of lease, in all the agreements except in one agreement where it was not incorporated due to mistake / oversight. An oral agreement in that behalf has been entered into Patil-SR (ch) 7 of 63 CRA-599 & 600.doc between the parties which has also been pleaded in the specific performance suit pending in the High Court. In 1983, Premises No.31 was sold by PTM Family Trust to Idichandy Trust subject to the agreements executed with the Defendant. As the lessors neglected to pay Society dues, dispute was filed in Co-operative Court and Defendant had made huge payment under the orders of Co-operative Courts to the society and also deposited huge amounts in the Court which the two trusts are bound to pay. After the expiry of period of 20 years, the Defendant exercised the option to purchase the premises by two notices dated 16th May 2000. Reference was made to the various litigation between the parties and the orders passed therein.
17. It was contended that pursuant to the power of attorney, lease deeds dated 8th July 1992 were executed and registered by the Defendant. Upon default of the Lessor to pay society dues, the payment of lease rent was stopped and the amount withheld as well as the purchase price payable for the reversionary rights is required to be set off against the amounts paid under the orders of Co-operative Court. The Defendant has exercised the right to purchase the reversion and was no more lessee/tenant of the trust and the suit premises are not covered by the provisions of the Rent Control Act.
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CRA-599 & 600.doc
ISSUES:
18. The Trial Court framed the following issues :
1] Do the Plaintiffs prove that they have validly and legally terminated tenancy of the Defendants by their letter dt. 23-3-2001 ?
2] Whether the suit is maintainable ?
3] Whether the Court is having jurisdiction to try the suit ?
4] Do the Defendants prove that they have already exercised right to
purchase reversion and adjusted the payments made by them against the purchase price and unpaid rent and filed Suit No. 2178/01 for balance amount and various other reliefs ?
5] Do the Plaintiffs prove that they are entitled to recover vacant possession of the suit premises from the Defendants ?
6] Do the Plaintiffs prove that they are entitled to recover mesne profits of the suit premises from the Defendants ?
7] What order and decree ?
19. Pursuant to and application by the Defendant, an additional issue came to be framed vide order dated 31st July 2008 which reads thus :
"Do the Defendants prove that they have performed their part of the agreements dated 15th May 1980, 7th February 1981 and 1st July 1981 and in pursuance thereof are entitled to the protection under Section 53A of the TP Act."
EVIDENCE:
20. Suresh Thomas was examined on behalf of the Plaintiffs and on behalf of the Defendant, the Assistant General Manager of the Defendant and the former Company Secretary of the Defendant were examined.
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FINDINGS OF THE TRIAL COURT:
21. The findings of the Trial Court can be broadly summarised as under:
(a) As per Section 107 of Transfer of Property Act, 1882 (T.P. Act) the Agreements to lease dated 15th May, 1980, 7th February, 1981 and 1st July, 1981 (Exhibits- 41 to 43) were compulsorily required to be registered and being unregistered documents are inadmissible in evidence and cannot be looked into and being unregistered agreements do not confer any right on the Defendant.
(b) The unilateral registration of agreements in the year 2009 does not validate the agreements as at the time of lodging of lease deeds for registration, Chatur Mirchandani was not trustee of Idichandy Family Trust and Lease deed in respect of Premises No 31 was not registered in the name of Idichandy Family Trust. There is no privity of contract with Idichandy Family Trust.
(c) The power of attorneys stated to have been given along with covering letter dated 12th May, 1980 were neither signed not executed either on 12th May, 1980 or 15th May, 1980.
(d) Clause 4 of the Agreements of the year 1980 and 1981 refers to the terms and conditions contained in the draft lease and there is no draft lease deed. The agreements are agreements to lease and not agreements of lease.
(d) There is no oral agreement to purchase the reversionary interest in respect of the subject premises of the last agreement dated 1st July, 1981.
(e) The tenancy of Defendant is monthly tenancy as there is no valid lease.
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(f) The possession of Defendant since inception was as tenant and not as an owner. The share certificate stands in name of Plaintiffs and the Defendant continued to remain in possession as tenant.
(g) There is non-compliance of requirement of Section 53-A of T.P. Act.
(h) The lease expired by efflux of time and there was no renewal of lease. The tenancy was terminated by notice dated 23 rd March, 2001.
(g) The suit is maintainable and the Plaintiffs are entitled to recovery of possession along with mesne profits.
FINDINGS OF THE APPELLATE COURT:
22. Against the two judgments of the Trial Court dated 7 th July, 2016, the Defendant filed two Appeals i.e. P. Appeal No 407 of 2016 and P. Appeal No. 408 of 2016. The Appellate Court framed and answered the points for determination as under:
Sr. No. POINTS FINDINGS.
1. Whether Plaintiffs prove that the lease is legally Yes.
determined by efflux of time ?
2. Whether the Plaintiffs are entitled to the decree of Yes.
eviction and possession as prayed for ?
3. Whether the impugned Judgment and decree is No.
erroneous and liable to be set aside ?
4. What order ? Appeal is dismissed.
23. The Appellate Court held the suit to be maintainable in view of the order of Division Bench dated 22 nd February, 2011 wherein it was observed that the clause in the lease deed relied upon by the Patil-SR (ch) 11 of 63 CRA-599 & 600.doc Defendant does not change the nature of possession at the end of lease period and that the Plaintiffs would be entitled to institute suit for eviction in the Small Causes Court and that there is no question of conflicting decrees, which orders have attained finality upon dismissal of SLP.
24. On the issue of existence of landlord tenant relationship, the Appellate Court examined the agreements of the year 1980 and 1981 noting that the documents are admitted documents between the parties and have to be read in evidence. By reason of the agreements Exhibit 41 to 43, the premises were agreed to be leased to the Defendant and in respect of Premises No 31 there is attornment of tenancy upon which rent was paid by Defendant to the Plaintiffs till July 1989 and therefore there exists a relationship of landlord/lessor and tenant/lessee between the Plaintiff and the Defendant.
25. On the nature of the agreements, the Appellate Court noted that the Defendant in their letters dated 18th December 1989 Exhibit-44 admitted that the agreements Exhibit-41 to 43 are agreements to lease and the DW-1 has also admitted that the lease agreement Exhibit-41 was to be granted at a future point of time in favour of the Defendant.
The Appellate Court held that there was an agreement to lease executed between the parties and it was agreed to finalise the terms Patil-SR (ch) 12 of 63 CRA-599 & 600.doc and execute a final lease deed and thus the agreements are not a source of Defendant's right.
26. As regards the registered lease deeds of the year 1992, it was observed that the unilateral registration was under the unregistered power of attorneys Exhibit-78 to 80 and thus registration is invalid. The Appellate Court further noted the evidence of DW-1 that the date of their alleged execution is after the issuance of letter dated 12 th May 1980 and considering the evidence of DW-1 held that the receipt of these power of attorneys from the original owner vide letter either dated 12th May 1980 or 15th May 1980 is not probable. The Appellate Court further held that Chatur Lokumal Mirchandani was not the trustee and had passed away and the lease deed would show that Chatur Lokumal Mirchandani as the executant of document and thus the document on the basis of which the purported lease deeds are alleged to have been executed itself is invalid. The same are non est in the eyes of law.
27. The Appellate Court held that the draft lease deeds are concocted and got up documentary evidence and the purported lease deeds Exhibit-100 and 101 dated 8 th July 1992 do not create valid lease and cannot be source of Defendant's reversionary interest in the suit premises and do not create any right of the Defendant in the suit premises. The Appellate Court further held that the Defendant cannot derive the right of part performance of contract from the said lease Patil-SR (ch) 13 of 63 CRA-599 & 600.doc deed as they do not create any right of the Defendant in the suit premises and after the expiry of the initial period of lease, the Plaintiffs have legally terminated the lease. The Appellate Court dismissed the appeal confirming the judgment and decree of the Trial Court. SUBMISSIONS:
28. Mr. R. Venkatramani, learned Attorney General canvassed the following submissions:
ON JURISDICTION:
a) He submits that in view of Section 19(g) of the Presidency Small Causes Court Act, 1882 [for short "PSCC Act"], there is bar from determining the right title and interest in immoveable property.
Drawing attention of this Court to the provisions of PSCC Act, he submits that the additional fact of title to the immovable property would take the proceedings out of the jurisdiction conferred by Section 41 of the PSCC Act. Pointing out to the provisions of Section 19(d), (g) and (h), he submits that jurisdiction of the Small Causes Court is specifically ousted where the suit is for recovery of immovable property or for specific performance or for determination of any right and if the class of suits is ousted from the jurisdiction by virtue of Section 19 of PSCC Act, then the provisions of Section 41 of PSCC Act will have no application. He submits that the Small Causes Court cannot adjudicate the issues as regards the other claims, for even if the evidence has been Patil-SR (ch) 14 of 63 CRA-599 & 600.doc led it is of no value as there cannot be any jurisdiction conferred by consent. He submits that adjudication into the reversionary rights of Defendant is outside the Section 41 of PSCC Act.
29. He submits that Section 19(g), Section 41 and Section 45 of the PSCC Act have to be read together to understand the corpus of jurisdiction. He submits that the rejection of interim application in the specific performance suits will not tantamount to affirmation of jurisdiction. He submits that the Appellate Court could not have held the suit to be maintainable only by reason of the orders passed by the High Court. He submits that raising of an objection of jurisdiction amounts to an application under Section 10 of CPC and the Court has to decide as to which suit has to be first decided.
30. Drawing attention of this Court to the order dated 4 th March, 2014 passed in specific performance suits rejecting the application under Order VII Rule 11 of CPC, he submits that the Small Causes Court was bound by the observation that the nature of agreements whether agreements to lease or agreements of lease are to be decided by the High Court at the trial. He would further point out the observation of the Court as regards the differing stands taken by the Plaintiffs qua the agreements of lease. He further points out the observation of the High Court that the Defendant exercised right of reversion before the termination on 23rd March, 2001 and issue as to whether the Plaintiffs assented to the continuation of possession is a question of fact and if Patil-SR (ch) 15 of 63 CRA-599 & 600.doc assented, the lease would have to be taken to have been renewed in which case the exercise of right to purchase would be during the subsistence of lease. According to him, the issue of reversionary right would take the suit out of the scope of Section 41 in view of Section 19(d), (g) and (h) of PSCC Act.
ON AGREEMENTS:
31. He has taken this Court minutely through various clauses of the agreements of the year 1980 and 1981 and would point out the specific recital that in order to enable the lessors to acquire the office premises, an amount has been advanced at the rate of Rs.750 per sqft. He would submit that although in the third agreement of lease, the reversionary interest has not been specifically included a case of oral agreement has been set up which is required to be decided in the specific performance suit. Pointing out to the covenants by the lessor in the agreement for lease, he would submit that there is a full right and liberty given to the lessee without previous written consent of the lessor to sublet, licence, assign or transfer or part with the possession of the whole or any part of the suit premises which shows that the nature of the agreement between the parties was of an intending purchase. He submits that upon a holistic reading of the agreement it is clear that at the expiry of the period of 20 years what was granted to the lessee was a right to renewal together with the right to purchase Patil-SR (ch) 16 of 63 CRA-599 & 600.doc the reversionary rights. He has taken this Court through the pleadings of the Plaintiffs in various proceedings acknowledging the existence of lease agreements and reverionsary rights therein. He would submit that the subsequent sale to Idichandy Family Trust was subject to the lease agreement executed with the Defendant which was registered and thus the agreements to lease executed with the Defendant was not required to be registered. He submits that on 15th May 2000, the lease period of 20 years came to an end and by a communication dated 16 th May 2000 the option which was available to the lessee under the agreement of lease was exercised. He submits that there was no response to the said communication dated 16 th May 2000 and the eviction notice was issued on 23 rd March 2001 and after a period of 6 years the suit was filed.
32. He has taken this Court to the various orders passed by this Court in the specific performance Suits. He points out the prayers in Notice of Motion No.2770 of 1986 filed in Suit No.2031 of 1985 filed by the beneficiaries of the Trusts and the Affidavit by the Trustee admitting the right of Defendants to purchase the premises. He has also taken this Court through the observations in the order dated 5 th February, 1988 passed in the said Notice of Motion that the Trustees secured finances from the Defendant and could purchase the premises and in addition could secure an interest free deposit of about Rs.76 lakh and now wants the Defendant to vacate the premises.
Patil-SR (ch) 17 of 63
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ON FINDINGS OF SMALL CAUSES COURT:
33. He submits that the Small Causes Court did not have the jurisdiction to examine the nature of the agreements and render a finding as whether the document constituted an agreement to lease or an agreement for lease. He submits that the reversionary clause is in the nature of agreement to sell and where the document provides for landlord-tenant relationship as well as intending purchaser and seller relationship, upon expiry of lease the right to purchase came into existence. He submits that Issue No.4 as regards the reversionary right could not have been framed by the Trial Court nor the additional issue of part performance. He submits that after observing that it cannot go into reversionary right and examine the issue of jurisdiction, the Trial Court looks into it for incidental purpose which is disjunctive.
34. He submits that the issues which have been gone into by the Small Causes Court are issues which would arise for adjudication in the specific performance suit. He submits that the High Court in specific performance suit while dismissing Order VII Rule 11 application has held that question of reversionary right raised triable issue. He would further submit that upon the expiry of period of lease, the right to purchase the property comes into existence and the Small Causes Court could not have gone into the nature of document in order to ascertain whether the reversionary rights had been purchased.
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35. He submits that the Trial Court after noting that the substantial suit of title is pending before this Court and after holding that the Small Causes Court is not competent to comment upon the same, has thereafter held that the agreements are unregistered documents. He would further submit that any argument on Section 53A of the TP Act or the nature of agreement is beyond the scope of Small Causes Court and the trial Court could not have held that as there was no valid lease or agreement, the Defendants are not entitled for the benefit of Section 53A of the TP Act.
36. He would further submit that the question of right in the premises being decided by the Appellate Court constitutes a jurisdictional error. In support of his submissions, Learned AG relied upon following decisions :
[1] Subbammal v. Masanamuthu Thevar [1999 (1) CTC 36]; [2] Aggarwal Hotels (P) Ltd. v. Focus Properties (P) Ltd. [1996 SCC OnLine Del 354];
[3] Bommaka Nagabhushana Reddy v W. Srinivasa Rao [(2002) 9 SCC 664];
[4] Phatu Rochiram Mulchandani v Karnataka Industrial Areas Development [(2015) 5 SCC 244];
[5] Nagindas Ramdas v Dalpatram Ichharam [(1974) 1 SCC 242]; [6] R. Kanthimathi v. Beatrice Xavier [(2000) 9 SCC 339]; [7] Chinna Thevar v. Gnanaprakasi Ammal [1978 SCC OnLine Mad 16]; [8] B. Paramashivaiah v. M.K. Shankar Prasad [2008 SCC OnLine Kar 483];
[9] Radhyeshyam Ramkaran Choube v. A.S. Mogare [2014 SCC OnLine Bom 1639];
[10] Sashi Jain v. Sandip Sarkar [2022 SCC OnLine Cal 388]; [11] Bapu Apaji Potdar v. Kashinath Sadoba Gulmire [1916 SCC OnLine Bom 26];
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[12] Smita Rajeev Sah v. Roop Narain Sah [2013 SCC OnLine Bom 474];
[13] M.S. Shetty v. Anoop Vyas [2017 SCC OnLine Bom 8876];
[14] Wilfred Lovette v. Ganesh Hemraj Karmarkar [1987 SCC OnLine Bom
373];
[15] Habib Khan v. XII Additional District Judge [2014 SCC OnLine All
4397];
[16] Premchand Mahasukhbhai v. Chamanlal Ranchhoddas [1944 SCC
OnLine Bom 123];
[17] Maneklal Mansukhbhai v. Hormusji Jamshedji Ginwalla [1950 SCC
83];
[18] R. Hemalatha v. Kashthuri [2023 SCC OnLine SC 381];
[19] Joseph Kantharaj v. Attharunnisa Begum S. [(2010) 2 SCC 619];
[20] Fajal Ahmed v. Syed Sultan Ahmed [2018 SCC OnLine MP 1889];
[21] Export Credit Guarantee Corporation of India Ltd. v. Annamma
Philips [2010 SCC OnLine Bom 1258];
[22] Chhavi Mehrotra v. Director General, Health Services [1995 Supp (3)
SCC 434];
[23] State Of Andhra Pradesh v. Raghu Ramakrishna Raju Kanumuru
[(2022) 8 SCC 156];
[24] D.K. Trivedi & Sons v. State of Gujarat [1986 Supp SCC 20];
[25] Union of India v. Jaiswal Coal Co. Ltd. [(1999) 5 SCC 733];
[26] The Court on its own motion v. National Highway Authority of India,
Nagpur [2015 SCC OnLine Bom 6353];
[27] JSW Steel Limited v. Deputy Director Directorate of Enforcement
Department of Revenue Ministry of Finance Government of India [2022 SCC OnLine Kar 1609];
[28] Kishor v. Preeti [2007 SCC OnLine Bom 102]; [29] Kiran Singh v. Chaman Paswan [1954 SCC OnLine SC 11]; [30] Jagmittar Sain Bhagat v. Director, Health Services, Haryana [(2013) 10 SCC 136];
[31] State of Maharashtra v. Atur India Pvt. Ltd. [(1994) 2 SCC 497]; [32] Gurmeet Kaur v. Harbhajan Singh [2017 SCC OnLine Del 12863]; and [33] St. Mary's Educational Society v. Dr. Qutubuddin Ahmed [2002 SCC OnLine AP 269]
37. Per Contra, Mr. Dada, Learned Senior Advocate canvassed the following submissions on behalf of the Plaintiffs:
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ON JURISDICTION:
38. He would submit that the issue of jurisdiction has to be
determined on the basis of averments in the plaint and not the defense raised in the written statement. Drawing attention of the Court to the pleadings in the plaint, he submits that considering the averments in the plaint,the suit necessarily had to be filed in the Small Causes Court in view of Section 41 of PSCC Act. Pointing out to the non obstante clause in Section 41 of PSCC Act, he submits that the same would have an overriding effect over the other provisions of the Act in case of suits relating to the recovery of possession of an immovable property situated in Greater Bombay. He submits that the Division Bench of this Court had already noted that both the proceedings are separate and distinct. He submits that on the basis of the averments made in the plaint it is only the Small Causes Court which will have the jurisdiction and in event the Defendant had proved its defence, the Plaintiff would have taken the risk of having his suit dismissed.
39. He has taken this Court to the orders of this Court and the Apex Court rejecting the application seeking restraining orders against the Plaintiffs from filing any suit for eviction and would urge that the application was rejected right upto the Apex Court and therefore the proceedings for eviction were maintainable. He submits that it is clear from Clause-1 of the agreement executed between the parties that it Patil-SR (ch) 21 of 63 CRA-599 & 600.doc was an agreement to lease. Pointing out to the order of the Division Bench in the appeal against rejection of relief of injunction, he submits that the Division Bench has held that the clause in the lease deed on which the present Defendant relies, does not change the nature of possession of the Plaintiff at the end of lease period and therefore on the expiry of lease, nature of the possession of the Plaintiff would be of a lessee holding over and the Defendant landlord would be entitled to institute suit for decree of eviction.
ON AGREEMENTS:
40. Drawing attention to various clauses of the Agreements of the year 1980 and 1981, he submits that the agreements Exhibit-41 to 43 are agreements to lease and not the agreements of lease. Pointing out to the agreement dated 15th May 1980, he would submit that Clause 4 of the said agreement provides that the agreement is subject to and upon the terms and conditions contained in the draft lease annexed thereto and to be executed by the lessors to the lessee. He submits that the agreements were an agreement to enter into an agreement which was unenforceable in law. He submits that the agreements of lease were to be executed in terms of the draft lease, however there is no draft lease annexed to the said agreement. He submits that the right to purchase the reversionary rights were contained in the first two documents and the third agreement did not even contain the said Patil-SR (ch) 22 of 63 CRA-599 & 600.doc clause. He submits that on 14th May 2000 the lease expired by efflux of time and on 16th May 2000 the Defendant exercised a right to purchase, at which time there was no renewal and as such the status of the Defendant was as a tenant holding over.
41. He submits that the evidence on record is sufficient to conclude that there is no draft lease in existence. He submits that the subsequent registration of agreement in the year 1992 was an unilateral act by the Defendant and at that point of time PTM family trust was not the owner of premises. Pointing out to the execution clause, he would submit that the deeds had been registered on the basis of power of attorney which was shown to have been executed by Chatur Lokumal Mirchandani, who had expired by that time. He submits that as there was no valid lease deed, the Petitioners were reduced to monthly tenants by mandate of law.
ON FINDINGS OF TRIAL COURT:
42. He has taken this Court in detail through the findings of the Trial Court and would support the findings of the Trial Court that the agreements Exhibit 41 to 43 are agreements to lease and not agreements of lease. He would further point out that the Trial Court has considered the provisions of Section 106 and 107 of T.P. Act to hold that as the agreements were unregistered documents the tenancy would be monthly tenancy. He submits that unregistered agreement to Patil-SR (ch) 23 of 63 CRA-599 & 600.doc lease would render the tenancy a monthly tenancy which will not be protected under Section 53A of the TP Act. He submits that it was at the insistence of Defendant that the issue under Section 53A of the TP Act came to be framed and if they would have succeeded in the said issue, the suit would have been dismissed and it is only as the issue has been held against them, the plea is sought to be raised that the Small Causes Court could not have gone into that issue. ON FINDINGS OF APPELLATE COURT :
43. Pointing out to the findings of the Appellate Court he submits that the Appellate Court has rightly held that the original lessor had no right to execute the lease deeds Exhibit 100 and 101 at that time and therefore these documents cannot be termed as source of Defendant's reversionary rights and do not create any right of the Defendant in the suit premises. He points out to the discussion of the Appellate Court on the power of attorney and submits that the Appellate Court has re- appreciated the evidence and has disbelieved the Defendant's version of the execution of power of attorney by the Plaintiffs. He submits that the findings of the Small Causes Court as regards the reversionary right of the Defendant and the interest in the suit premises will not bind the High Court in the specific performance suit.
44. He submits that the pendency of the specific performance suit will not operate as bar to the filing of suit for eviction. He would further Patil-SR (ch) 24 of 63 CRA-599 & 600.doc submit that the character of possession of the Defendant continued to be that of the tenant and the character had not changed from the tenant to that of the owner as the settled position in law is that for change of the character and nature of possession requires a bilateral act. In support of his submissions, Mr. Dada relied upon following case laws :
[1] Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale [(1995) 2 SCC 665]; [2] Central Warehousing Corporation v. M/s. Fortpoint Automotive Pvt.
Ltd. [2010(1) MhLJ 658];
[3] ING Vysya Bank Ltd. v. Modern India Ltd.[2008(2) MhLJ 653]; [4] Bombay Forgings Ltd. v. M/S Manilal & Sons [(2015) 6 Bom CR 613]; [5] Raizada Topandas v. Gorakhram Gokalchand [(1964) 3 SCR 214]; [6] Sunil Kapoor v. Himmat Singh & Ors. [2010 (115) DRJ 229]; [7] Bajaj Auto Ltd. v. Behari Lal Kohli [(1989) 4 SCC 39]; [8] Paul Rubber Industries Pvt. Ltd. v. Amit Chand Mitra [2023 SCC OnLine SC 1216];
[9] Anthony v. K.C. Ittoop & Sons [AIR 2000 SC 3523]; [10] D.S. Parvathamma v. A. Srinivasan [(2003) 4 SCC 705]; [11] Dattatraya Krishna Jangam v. Jairam Ganesh Gore [1964 SCC OnLine Bom 30]; and [12] Shamim Akhtar v. Iqbal Ahmad [(2000) 8 SCC 123].
45. Learned Counsel Mr. Purohit appearing on behalf of Plaintiffs submits that the defence taken is of the agreements being in nature of agreement of sale and doctrine of part performance. He submits that the agreements were agreements to enter into agreements and being unregistered no lease came into existence. Pointing out to the Clause 2(A)(ix) and (x), he submits that the covenant is to hand over possession after expiry of lease. As far as the reversionary clause contained in Clause 2(C)(ii) is concerned, the submits that after a period of 20 years Patil-SR (ch) 25 of 63 CRA-599 & 600.doc there was right of renewal granted together with reversionary right and there was no independent right to purchase only reversionary right.
46. By drawing attention to the proposal floated by the Defendant to obtain approval, he submits that by payment of advance rent, the Defendant has derived the benefit of a discounted rent for about 20 years i.e. Rs 3.125 ps per square feet against the market rate of rent of Rs 14.50 per square feet. He submits that as against market rent of about Rs 5.17 crores for period of 20 years, the Defendant has paid advance rent of less than Rs 1 Crore which was fully repaid by adjustment against rent in 20 years and at the end of 20 years nothing remained to be repai. Pointing out to the recitals in the agreements of the year 1980, he submits that the Lessor had already paid full consideration to the builder prior to the execution of the agreement and was already the owner of the premises. He submits that the agreements contemplated renewal of the lease together with the right to purchase the reversionary right which eventuality did not occur. He has submitted the calculation depicting the manner in which the rent of Rs 3.125 per square feet was arrived between the parties by adjusting of interest on the advance rent.
47. As regards Section 53A of TP Act, Mr. Purohit would submit that the lease expired on 14th May 2000 and between 14th May 2000 and 16th May 2000, there was no bilateral act by which the character changed Patil-SR (ch) 26 of 63 CRA-599 & 600.doc from that of a tenant to a prospective purchaser. He would submit that the communication dated 16th May, 2000 was issued on a premise that they have become owners of the property. He submits that once the revision applicants claim to have become owners of the property by purchase of reversionary rights, the provisions of section 53A of the TP Act cannot be invoked.
48. In Sur-rejoinder, learned AG distinguished the judgments cited by Mr. Dada and would submit that in all these judgments the issue was not as regards the revisionary right which was peculiar to the present agreement for lease. Pointing out to page No. 213, Clause 2 (C)(ii) of the agreement, he submits that the right to exercise the revisionary right will not cease to exist and the tenancy cannot be determined. He submits that the landlord had no right to terminate the revisionary rights and the document being unregistered cannot be said to be determination of the right given in the agreement for lease. He would further submit that there is no equivalent precedent qua the present case where the money had been lent by the Revision Applicant for the purpose of purchase of property and thus the status of Revision Applicant was that of the prospective purchaser throughout. He submits that there is no question of registration of the agreement for lease as the agreement does not fall within the purview of Section 107 of TP Act. He submits that in part performance of the agreement, in the year 1980 itself further actions were taken by the revision Applicant Patil-SR (ch) 27 of 63 CRA-599 & 600.doc and therefore the issue of Section 53A of the TP Act was put forth to protect the possession and to show lack of jurisdiction of Small Causes Court. He submits that the Small Causes Court could not have examined the issue of Section 53A and determine the issue in suit for eviction as the jurisdiction would lie with the Court deciding the issue of specific performance. Pointing out to paragraph 53 of the judgment of the appellate Court, he would further submit that the findings which have been rendered in the present case could have been rendered only while deciding the suit for specific performance.
49. He submits that the nature of Defendant's possession was that of an intending purchaser as the Defendants funds were used for purchase of the suit premises. The dominant purpose of the agreement was sale of the suit premises and the agreement is primarily an agreement of sale. He submits that while deciding the issue of jurisdiction not only the plaint but the written statement is also required to be considered.
50. He submits that demise of the property was immediate and only the sale was postponed. Pointing out to the clause in the agreements, he submits that the reversion is only a safeguard. He submits that the Small Causes Court has a limited area of operation and the totality of the agreement would show that the Defendant was owner in waiting. He submits that as regards Section 53A of the TP Act the Court has to be prima facie satisfied as to the applicability of the doctrine of part Patil-SR (ch) 28 of 63 CRA-599 & 600.doc performance in which case the Small Causes Court was required to stay its hands. He submitted that when the agreements of lease were executed there was no need of registration which requirement came in the year 2001. He submits that the reversionary clause is unaffected by non registration and can be received in evidence for collateral purpose. He submits that as per the unamended Section 53A of the TP Act there is no requirement of registration. He submits that the lack of registration is not the foundation of a right and even a suit for specific performance, considering Section 49 of the Registration Act, of the unregistered document is permissible.
51. He submits that the provisions of Section 41 of the PSCC Act cannot be given a larger meaning then what the Section requires it to be given. According to him, the overriding effect of Section 41 of PSCC Act only applies when dispute relates solely to recovery of possession or license fee and not where title is involved. He submits that the Small Causes Court could not have gone into the issue of title as it was not case of denial of title but claim of title. He distinguishes the judgment of Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale [(1995) 2 SCC 665] that the same was rendered in the context of injunction suit.
52. He submits that in the present case, the agreement to lease creates an immediate demise of the property. He submits that change in nature of possession does not require any bilateral act and by its very nature plea of part performance is taken when transferor fails to take Patil-SR (ch) 29 of 63 CRA-599 & 600.doc necessary steps. He submits that the parties have already done all acts in furtherance of the agreement including Section 53A of TP Act in the year 1980 itself.
53. In sur-sur-rejoinder Mr. Dada, pointing to the clause 2(C)(ii) of the agreements would contend that under the agreement to lease, the option which was available to the lessee was to remain as lessee together with the right to purchase the property. He submits that being so, while executing the agreement for lease, the document cannot be said to be document executed by a prospective purchaser as there was an option not to purchase the revisionary right and continue to remain as lessee. He submits that in view of the recitals in the agreement, the contention that the dominant purpose was to purchase the revisionary right is flawed. He submits that in the proceedings before the trial Court and the Appellate Court, there was no such contention raised as regards the dominant purpose being that of the purchase and for the first time in this proceedings the said issue has been raised.
54. He submits that the Defendant has admitted in its written submissions that by the agreements the Defendant was given a right to purchase the reversionary right and therefore the same cannot be said to be the dominant purpose. Pointing out to the communication dated 18th December 1989 he would submit that it was the specific case of the Defendant that what was granted under the agreement was lease of Patil-SR (ch) 30 of 63 CRA-599 & 600.doc the office premises and therefore the contention which has been now sought to be raised that the dominant purpose of the transaction is sale, is incorrect submission. He submits that the right to purchase the reversionary interest was under the lease and therefore the lease is required to be continued.
55. Written submissions were tendered by both the parties. This Court has considered only those submissions which were canvassed before the Court and has considered only those judgments which were relied upon by learned counsel during arguments. REASONS AND ANALYSIS:
56. Considering the facts of the present case, the following issues will arise for consideration:
(a) Whether the provisions of Section 41 read with Section 19(g) of the PSCC Act constitute a bar to the jurisdiction of Small Causes Court upon the question relating to right and interest in the suit premises being raised by virtue of the reversionary clause contained in the agreements dated 15 th May, 1980, 7th February, 1981 and 1st July, 1981.
(b) Whether the determination of the right and interest in the suit premises by the Small Causes Court qua the reversionary clause is an issue solely within the jurisdiction of the specific performance Court and cannot be decided by the Small Causes Court even as an incidental issue.
Patil-SR (ch) 31 of 63
CRA-599 & 600.doc
(c) Whether the Appellate Court has exceeded its jurisdiction
and determined the right and interest of the Defendant in the suit premises constituting jurisdictional error.
JURISDICTION:
57. The issue of jurisdiction can be compartmentalized into two different time period i.e. at the inception of suit and continuance of jurisdiction upon defence of having exercised right to purchase the reversionary interest raised by the Defendant. To put it simply, whether the suit could have been instituted in the Small Causes Court and whether the jurisdiction would be ousted upon a question of right and interest in the suit premises being raised by the Defendant by virtue of claim of purchase of reversionary right.
58. In the context of jurisdiction, it would be apposite to refer to the provisions of PSCC Act which was enacted to consolidate and amend the law relating to the Courts of Small Causes established in the towns of Calcutta, Madras and Bombay. The Small Causes Court has been constituted under the PSCC Act, 1882 and is deemed to be a Court subject to the superintendence of High Court. Chapter IV of the PSCC Act deals with the jurisdiction in respect of suits and Chapter VII governs the suit relating to recovery of possession of certain immovable property and certain license fees and rent. Section 19 which founds place in Chapter IV of PSCC Act exempts certain class of suits Patil-SR (ch) 32 of 63 CRA-599 & 600.doc from the jurisdiction of the Small Causes Court. Act. Relevant for our purpose are clauses (d), (g) and (h) of Section 19 of the PSCC Act, which read thus :
19. The Small Causes Court shall have no jurisdiction in-
(a)...
.....
(d) suits for the recovery of immovable property; ....
(g) suits for the determination of any other right to or interest in immovable property;
(h) suits for the specific performance or rescission of contracts;
...."
59. Section 41 and Section 45 of PSCC Act contained in Chapter VII of PSCC Act provides as under :
"41. (1) Notwithstanding anything contained elsewhere in this Act but subject to the provisions of sub-section (2), the Court of Small Causes shall have jurisdiction to entertain and try all suits and proceedings between licensor and licensee, or a landlord and tenant, relating to the recovery of possession of any immovable property situated in Greater Bombay, or relating to the recovery of the licence fee or charges or rent therefor, irrespective of the value of the subject matter of such suits or proceedings.
(2) Nothing contained in sub-section (1) shall apply to suits or proceedings for the recovery of possession of any immovable property, or of licence fee or charges or rent thereof, to which the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947, the Bombay Government Premises (Eviction) Act, 1955, the Bombay Municipal Corporation Act, the Maharashtra Housing and Area Development Act, 1976 or any other law for the time being in force apply."
"45. Nothing contained in this Chapter shall be deemed to bar a party to a suit, appeal or proceeding mentioned therein in which a question of title to any immovable property arises and is determined, from suing in a competent Court to establish his title to such property."
60. Conjoint reading of the above three provisions especially the non obstante clause in Section 41 of PSCC Act indicates that the jurisdiction of Small Causes Court to entertain suit for determination of right and Patil-SR (ch) 33 of 63 CRA-599 & 600.doc interest in immoveable property in view of Section 19(g) of the PSCC Act is ousted, however, where the subject mater of the suit relates to the recovery of immoveable property, license fees or rent between landlord and tenant or licensor and licensee, it is only the Small Causes Court which would have jurisdiction irrespective of valuation. Where the Small Causes Court determines any question of title, the party is entitled to approach the Competent Court to establish his title. Thus the legislature has created a specialised forum for adjudication of specified class of suits and it is only this forum which will have the jurisdiction in respect of such suits.
61. In ING Vysya Bank Ltd (supra), learned Single Judge of this Court while considering the bar of jurisdiction of arbitral tribunal to entertain claim for specific performance of renewal clause in agreement of license in the context of Section 41 of PSCC Act, noted the non- obstante provision in sub-section (1) of Section 41 and held that Section 41 would prevail over all other provisions of the Act and will also prevail over Section 19 because when the suit is of description contained in the former provision that will prevail over the latter. The Court held that the primary determination which the Court must make in every such case is whether the suit in substance and in essence is a suit relating to recovery of possession or the recovery of license fee, rent or other charges between landlord and tenant or a licensor and licensee which is required to be decided by looking at the kernel and Patil-SR (ch) 34 of 63 CRA-599 & 600.doc disregarding the chaff. The Court held that if the suit relates to the recovery of possession it is a suit to which Section 41(1) applies notwithstanding the fact that some of the reliefs or portion of cause of action is structured around claim for specific performance.
62. In Raizada Topandas (supra),the Apex Court was considering the issue of jurisdiction of City Civil Court to entertain the suit seeking declaration of possession and injunction on the basis of an agreement dated 23rd June, 1955 appointing the Plaintiffs therein as commission agent. The defence raised was of sub-letting and the existence of landlord-tenant relationship. The preliminary issue of jurisdiction was decided against the Defendant by the High Court. The Apex Court noted the decision of Allahabad High Court in Ananti v. Channu [(1929) ILR 52 Allahabad 501] on the issue of jurisdiction at the inception of suit which had held as under:
"The plaintiff chooses his forum and files his suit. If he establishes the correctness of his facts he will get his relief from the forum chosen. If ... he frames his suit in a manner not warranted by the facts, and goes for his relief to a court which cannot grant him relief on the true facts, he will have his suit dismissed. Then there will be no question of returning the plaint for presentation to the proper court, for the plaint, as framed, would not justify the other kind of court to grant him the relief............... ... If it is found, on a trial on the merits so far as this issue of jurisdiction goes, that the facts alleged by the plaintiff are not true and the facts alleged by the defendants are true, and that the case is not cognizable by the court, there will be two kinds of orders to be passed. If the jurisdiction is only one relating to territorial limits or pecuniary limits, the plaint will be ordered to be returned for presentation to the proper court. If, on the other hand, it is found that, having regard to the nature of the suit, it not cognizable by the class of court to which the court belongs, the plaintiff's suit will have to be dismissed in its entirety."
Patil-SR (ch) 35 of 63
CRA-599 & 600.doc
The Apex Court held in paragraph 6 and 8 as under:
".....We do not think that the section says or intends to say that the plea of the defendant will determine or change forum......If, therefore, the plaintiff in his plaint does not admit a relation which would attract any of the provisions of the Act on which the exclusive jurisdiction given under Section 28 depends, we do not think that the defendant by his plea can force the plaintiff to go to a forum where on his averments he cannot go....."
".. The High Court has rightly said:
"A suit which is essentially one between the landlord and tenant does not cease to be such a suit merely because the defendant denies the claim of the plaintiff..."
63. In Babulal Bhuramal v. Nandram Shivram [1958 SCC Online SC 24], the Apex Court was considering the issue of jurisdiction of City Civil Court in the context of Section 28 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 in suit filed for declaration of tenancy. The Plaintiff therein was tenant to whom notice to quit was issued and was facing decree of eviction passed by Small Causes Court. The Apex Court considered the pleadings in the plaint and held that the nature of relief asked by the plaintiff was on the provisions of Rent Control Act. The Defendant therein in the City Civil Court suit denied the relationship of landlord-tenant between him and the Plaintiff. The Apex Court held that the pleadings in the plaint therein admits the relationship of tenant and landlord and was essentially a suit between landlord and tenant. The Apex Court held as under:
".....The suit did not cease to be a suit between a landlord and a tenant merely because the defendants denied the claim of the plaintiffs. Whether the plaintiffs were the tenants would be a claim or question arising out of the Act or any of its provisions which had to be dealt with by the court trying the suit." (Emphasis supplied)"
Patil-SR (ch) 36 of 63
CRA-599 & 600.doc
64. In a Full Bench decision of this Court in Dattraya Krishna Jangam (supra), the question under consideration was the jurisdiction of the City Civil Court to entertain a suit for declaration of tenancy and injunction from a proceeding under Section 41 of PSCC Act in the context of provisions of Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947. The Full Bench considered the question whether the jurisdiction of Special Court depends on the Plaintiff's case as made out in the plaint or whether the contentions raised by the Defendant are also to be taken into consideration. The Full Bench followed the decision in Raizada Topandas (supra) that the jurisdiction of the Court should ordinarily be determined at the time of institution of suit when the plaint is filed, that the plea of defendant will not determine or change the forum. The Full Bench held in paragraph 5 as under :
"The position, therefore, is that in order to determine which Court has jurisdiction to try a suit, the Court should read the plaint as a whole and ascertain the real nature of the suit and what in substance the plaintiff has asked for. Whatever may be the form of relief claimed, if on a fair reading of the plaint it becomes apparent that the plaintiff has alleged the relationship of landlord and tenant between him and the defendant and the relief claimed in substance relates to recovery of rent or possession or raises a claim or question arising out of the Rent Act or any of its provisions, then it is the special Court alone that will have jurisdiction to decide the suit. If a dispute is subsequently raised by the defendant about the existence of relationship of landlord and tenant, the continuance of the suit in the Special court will depend on the decision of the Court on that issue. Similarly if the plaint does not allege the relationship of landlord and tenant and no claim or question arises out of the Act or any of its provisions, then it will be the ordinary civil Court and not the special Court that will have jurisdiction to entertain the suit." (Emphasis supplied) Patil-SR (ch) 37 of 63 CRA-599 & 600.doc
65. In the order dated 22nd February, 2011 passed by the Division Bench of this Court in appeals against the interim orders in specific performance suits, the Division Bench held that the clause in the lease deed relied upon by the Defendant herein does not change the nature of possession of the Defendant at the end of lease period and on expiry of the lease the nature of possession would be of a lessee holding over and therefore the Plaintiffs herein would be entitled to institute a suit for eviction against the former lessee in Small Causes Court. The SLP filed by the Defendant was dismissed in limine. The Division Bench has thus upheld the right of the Plaintiffs to institute a suit for eviction against the Defendant in Small Causes Court by observing that the status of Defendant is that of a lessee holding over.
66. Apart from the fact that the order of the Division Bench concludes the issue of jurisdiction at the inception of the suit, if the averments in the plaint are looked into, the Plaintiffs case is that by virtue of agreements to lease, the suit premises were leased to the Defendants for a period of 20 years and there is no valid lease deed executed between the parties. The Defendant from the inception is the monthly tenant of the Plaintiffs and the tenancy was not protected by the provisions of Maharashtra Rent Control Act, 1999. The tenancy was terminated by communication dated 23 rd March, 2001 and relief of recovery of possession and mesne profits was sought in the suit. The plaint therefore clearly asserts that there is a landlord-tenant Patil-SR (ch) 38 of 63 CRA-599 & 600.doc relationship between the parties which has been determined by the communication dated 23rd March, 2001 and the relief sought is of recovery of possession.
67. Although the Defendant in its written statement has taken multiple pleas of having exercised the option to purchase the reversionary clause, the absence of landlord-tenant relationship, and, the pendency of the specific performance suits, the judicial pronouncements discussed above make it clear that averments in the plaint have to be read to ascertain the real nature of suit. Considering the frame of the suit, it is purely a suit instituted by a landlord against the tenant seeking the relief of recovery of possession. With these assertions, the institution of suit in the Small Causes Court under Section 41 of PSCC Act is unquestionable. If subsequently upon adjudication it is found that on the facts pleaded by the Plaintiffs, the Court does not have the jurisdiction, the Plaintiffs suffers the consequence of having his suit dismissed.
68. The submission canvassed is that once question of title is raised, in view of Section 19(g) of PSCC Act, the suit partakes the character of suit involving determination of right and interest in the suit property and consequently bars the jurisdiction of Small Causes Court. The provisions of PSCC Act makes it clear that the Small Causes Court being a specialized Court can entertain specified class of suits and its jurisdiction is confined to determination of existence of landlord-
Patil-SR (ch) 39 of 63
CRA-599 & 600.doc
tenant relationship and right of landlord to recover possession. On denial of landlord tenant relationship by raising plea of title to the suit premises, in order to test the ouster of jurisdiction, the Small Causes Court is entitled to examine the jurisdictional facts which may involve the examination of title to the suit property as an incidental issue. Merely because a right or interest in the suit premises is claimed, the suit for eviction would not assume the character of a substantial suit on title. The Small Causes Court is entitled to examine the plea and determine the continuance of jurisdiction and if upon adjudication, it is found that the Small Causes Court does not have the jurisdiction as there is no longer the existence of landlord-tenant relationship, the consequence will be dismissal of suit.
69. In Shamim Akhtar (supra), the Apex Court was considering the issue of jurisdiction against the background facts of the tenant denying title of the landlady and the landlord-tenant relationship. The preliminary objection regarding the maintainability of suit was rejected by the Trial Court which decreed the suit and the High Court remanded the case to Trial Court for fresh decision. The Apex Court held that the question of title can be gone into incidentally while deciding the case seeking decree of eviction and was not to be finally determined in the proceeding instituted under the Act. It held that the question of title of the Plaintiff to the suit house could be considered by the Small Causes Court in the proceedings as an incidental question and final Patil-SR (ch) 40 of 63 CRA-599 & 600.doc determination of the title could be left for decision of the competent court. The tenant by merely denying the relationship of landlord and tenant could not avoid eviction proceeding.
70. The Small Causes Court in eviction suit can thus incidentally inquire into the question of title to decide the primary issue of eviction. The question is whether the Small Causes Court has essentially decided the issue of title between the parties or has determined the issue incidentally while determining the status of Defendant as lessee and right of Plaintiffs to recover possession.
71. The jural relationship stems from the agreements executed between the parties. The jurisdictional fact which the Small Causes Court was required to determine is the existence of landlord-tenant relationship premised on the agreements and status of Defendant upon determination of lease.The inquiry into the nature of agreements contemplated while adjudicating the issue before the Small Causes Court is distinct and separate from the inquiry which will be conducted in the specific performance suits. In facts of the present case, the Small Causes Court will look into the agreements for the purpose of determining the status of Defendant. On the other hand, in the specific performance suits, the Court will examine the agreements to ascertain the enforceability of the reversionary clause and the entitlement of the Defendant to decree for specific performance.
Patil-SR (ch) 41 of 63
CRA-599 & 600.doc
AGREEMENTS TO LEASE OR AGREEMENTS OF LEASE:
72. The Appellate Court has held that the three agreements dated 15th May 1980, 7th February 1981 and 1st July 1981 are agreements to lease and not agreements of lease for the reason that the Defendant has admitted in communication Exhibit 44 that the agreements are agreements to lease and that clauses of the agreement indicates that PTM Family Trust had agreed to transfer a right to enjoy the suit premises in future on terms to be incorporation in draft lease. It will be profitable to refer to the relevant clauses of the lease agreements dated 15th May, 1980 and 7th February, 1981 which reads as under:
"(2) The Lessee has, in order to enable the Lessors to acquire the said hereinbefore recited office premises more particularly described in the Schedule hereunder written on ownership basis, agreed to advance and deposit with the Lessors a sum of Rs.750/- per square foot out of which an amount representing 75% thereof has been advanced to and deposited with the Lessors on the date of the execution of this Agreement and the balance of 25% thereof shall be advanced to and deposited with the Lessors on the issue of the Municipal Certificate of occupation of the said office premises and the water and lift facilities are actually made available to the Lessee And it has been agreed between the Lessor and the Lessee that the Lessors should demise the said office premises upon their acquisition by the Lessors as aforesaid to the Lessee for a term of 20 (Twenty) years on the terms contained in these presents and that the said amount should be repaid by the Lessors to the Lessee only by adjustment thereof against the monthly rent to be paid by the Lessee to the Lessors in respect of the said lease at the rate of Rs.3.125 per square foot of the actual built up area comprised in the said premises.
(4) The Lessors being seized and possessed of the office premises in the said hereinbefore recited Dalamal House have with the consent of the said Builders- W.D. Estates Private Limited given in pursuance of Clause 27 of the said hereinbefore recited agreements both dated 15th day of May 1980 agreed to lease the said hereinbefore recited office premises to the Lessee and the Lessee has agreed to accept from the Lessors a lease of the said office premises No. 21 and 22 on the 2nd floor and No. 31 on the 3rd floor for a term of 20 (Twenty) years, commencing Patil-SR (ch) 42 of 63 CRA-599 & 600.doc on and from the date of this Agreement subject to and upon the terms and conditions contained in a draft lease hereto annexed and to be executed by the Lessors to the Lessee.
NOW IT IS HEREBY AGREED as follows :-
1. The Lessors shall grant to the Lessee and the Lessee shall accept from the Lessors a lease of all those the said office premises No. 21 and 22 on the second floor and the said office premises No. 31 on the third floor of the said building known as Dalamal House situate at Plot No. 206, Block No.III, Backbay Reclamation Scheme at Nariman Point in Bombay more particularly described in the Schedule hereunder written for the definite term of 20 (Twenty) years commencing from the date of this Agreement at a monthly rent for the said office premises of Rs.3.125 per square foot of the built up area of 9761.6 square feet on the 2nd floor and 2500 square feet on the 3rd floor subject to actual joint measurements comprised in the said office premises (but, for the Terrace on the second floor of the said Dalamal House no rent shall be paid) clear of all deductions by equal monthly payments.
2. Such lease shall contain covenants and provisos of which the following is the short effect:
(A) Covenants by the Lessee :
(i) ....
........
.......
(x) Upon expiry of the said term by efflux of time to
remove all fittings and fixtures provided by the Lessee therein, provided that the Lessee shall deliver the said premises to the Lessors in the same condition in which the said office premises were let to the Lessee fair wear and tear excepted;
(xi) To yield up the said premises at the end of the said term in tenantable repair and condition in compliance with the Lessee's covenants in that behalf.
(C) P r o v i s o s:
(i) The Lessee shall have full right and liberty without the previous written consent of the Lessors to sublet, license, assign or transfer or part with possession of the whole or any part of the said office premises, provided that no loss is caused to the Lessors by reason of such subletting, license, assignment or transfer or parting with possession;
(ii) Right to the Lessee at the end of the said term of 20 (Twenty) years to renew the Lease for further period of 10 (Ten) years at the same rent and on the same terms and conditions and thereafter to renew it for successive period of 10 (Ten) years at a time at a rent to be mutually agreed upon but not exceeding 10% of the rent charged for the previous term TOGETHER ALSO with a right to purchase the reversion at any time after the said first term of 20 (Twenty) years the Patil-SR (ch) 43 of 63 CRA-599 & 600.doc price upon such purchase being calculated at the rate of Rs.
100/- per square foot of the built up area. No price being charged or paid for the terrace area of approximately 4700 sq. ft. on the 2nd floor of the said Dalamal House;
(v) That the Lessors shall repay the said amount of the said loan to the Lessee by adjustment thereof against the monthly rent hereinbefore reserved and payable by the Lessee to the lessors herein as aforesaid and that in the event of this Lease being determined or coming to an end for any reason whatsoever or howsoever the same may arise IT IS HEREBY AGREED that the Lessee shall have a charge/ mortgage upon the said premises subject to a first charge/ mortgage in favour of Indian Overseas Bank for the Guarantee reg. payment of outstandings as mentioned for the repayment of the balance of the said loan then outstanding and repayable by the Lessors to the Lessee."
73. The third lease agreement dated 1 st July, 1981 did not contain the reversionary clause i.e. Clause 2(C)(ii) which finds place in the two agreements of 15th May, 1980 and 7th February, 1981 and instead contained the following clause:
"(ii) Right to the Lessee at the end of the said term of ten (10) years to renew the Lease for further period of 10 (ten) years at a rent to be mutually agreed upon but not exceeding 25% of the rent charged for the previous terms and at the end of the twentieth year to renew it on such terms and conditions as may be mutually agreed upon between the Lessor and the Lessee."
74. The Power of Attorney's executed by the Plaintiffs in favour of the Defendant authorises the Defendant to execute, sign and deliver inter alia:
"(i) The Lease of said property to the Lessee viz. Export Credit and Guarantee Corporation Limited in the form of Lease previously approved under our signatures on the 15 th day of May 1980 and attached hereto with the said agreement to lease with such alterations as may be mutually agreed upon between the parties thereto.
(ii) ......
(iii) To execute after the said term of 20 years conveyance
and/or assignment of demised premises in favour of Patil-SR (ch) 44 of 63 CRA-599 & 600.doc Export Credit and Guarantee Corporation Limited and/or their nominees as per the agreement to lease."
And confers on the Defendant the following power:
"(a) Power to present for registration and to register or cause to be registered the said Lease and the said mortgage or charge or assignment with the Registrar of Assurances at Bombay and to register the transfer of the said shares of the Co-operative Society or Limited Company."
75. Lease is defined under Section 105 of T.P. Act as under:
"A Lease of immoveable property is transfer of 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"
76. While construing the nature of document, it is required to be seen whether by the deed there is a present transfer of right to enjoy the property and whether the deed includes the essential terms of lease. Recital (3) of the Agreement states that the Lessors have been put in possession of the suit premises by the builder upon payment of full consideration. Recital (4) states that the lessors being seized and possessed of the suit premises with the consent of builders agree to lease the suit premises to the lessee commencing on and from date of this Agreement subject to and upon the terms and conditions contained in the draft lease deed annexed and to be executed by the lessors to the lessee. Clause 1 of the agreement states that the lessors shall grant to the lessee and the lessee shall accept from the lessor lease of the suit premises for definite terms of 20 years commencing from the Patil-SR (ch) 45 of 63 CRA-599 & 600.doc date of the agreement at a monthly rent of Rs 3.125 per square foot subject to actual joint measurements. Clause 2 of the agreement states that such lease shall contain covenants and provisos while giving the short effect of the covenants of the lessor and lessee.
77. The effect of the terms and conditions in the agreement reproduced above discloses that the period of lease commenced from the date of the agreement at the specified monthly rent. The Defendant was put in possession of the premises upon execution of the agreement about which there is no dispute. The requirement of the lease being transfer of right for certain period in consideration of determined price stands satisfied by the clauses in the agreement and what remained to be executed was a formal document. The intention to create a demise in the property is sufficiently made out from the terms of the agreement.
78. In Food Corporation of India v. M/s. Babulal Agrawal [AIR 2004 SC 2926], the Apex Court noted the decision in Trivenibai v.s Smt. Lilabai [AIR 1959 SC 620] which had held in paragraph 15 as under:
"In construing this document it is necessary to remember that it has been executed by laymen without legal assistance, and so it must be liberally construed without recourse to technical considerations. The heading of the document, though relevant, would not determine its character. It is true that an agreement would operate as a present demise although its terms may commence at a future date. Similarly it may amount to a present demise even though parties may contemplate to execute a more formal document in future. In considering the effect of the document we must enquire whether it contains unqualified and unconditional words of present demise and includes the essential terms of a lease. Generally if rent is made payable under an Patil-SR (ch) 46 of 63 CRA-599 & 600.doc agreement from the date of its execution or other specified date, it may be said to create a present demise. Another relevant test is the intention to deliver possession. If possession is given under an agreement and other terms of tenancy have been set out, then the agreement can be taken to be an agreement to lease. As in the construction of other documents, so in the construction of an agreement to lease, regard must be had to all the relevant and material terms; and an attempt must be made to reconcile the relevant terms if possible and not to treat any of them as idle surplusage."(Emphasis supplied).
79. The tests to be satisfied before the document is held to be a lease is settled by the Apex Court. What is required is demise of the property in praesenti, although the parties may contemplate to execute a more formal document in future. It is thus settled that it is the demise in praesenti that determines whether the agreement created a right thereby requiring registration or was an agreement to enter into an agreement. The recitals and clauses of the agreements reproduced hereinabove disclose that the agreement commences the definite period of the lease from the date of agreement at the specified monthly rent and discloses intention to effect present demise. As the agreement conveyed immediately the occupancy rights to the Defendant, it has commenced the period of lease from the date of agreement at the specified rent payable. Relevant words operated as an actual demise and, in my view, the agreements are agreements of lease and not agreements to lease. (See State of Maharashtra vs Atur India Pvt Ltd (supra).
Patil-SR (ch) 47 of 63
CRA-599 & 600.doc
80. The Appellate Court has not looked into the terms of the agreement to ascertain whether there is present demise in property but has been swayed by the fact that an agreement was agreed to be executed at a later date and the admission of the Defendant that the agreements are agreements to lease. As the terms of the agreement convey an immediate demise any admission to the contrary will not impact the legal effect of the agreement.
EFFECT OF NON REGISTRATION OF THE AGREEMENTS OF LEASE:
81. The agreements of lease granted lease for a period of 20 years with right of further renewal. Admittedly the agreements of lease were not registered. Under Section 107 of Transfer of Property Act, 1882 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. What is the effect on tenancy in event of an unregistered lease came up for consideration of Apex Court in case of Anthony v. K.C Ittoop (supra). The Apex Court was considering the issue of protection of tenancy under the Kerala Buildings (Lease and Rent Control) Act, 1965 in the context of an unregistered lease deed. The Apex Court considered Section 107 of Transfer of Property Act, 1882 and Section 17(1) and Section 49 of Registration Act, 1908 and held in paragraph 11 to 16 as under:
"11. The 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 Patil-SR (ch) 48 of 63 CRA-599 & 600.doc 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 vs. Govardhan Das Byas, (1984) 1 SCC 369 and Bajaj Auto Limited vs. Behari Lal Kohli AIR 1989 SC 1806).
12. But 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. Thus, dehors the instrument parties can create a lease as envisaged in the second paragraph of Section 107 which reads thus:
"All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession."
13. When 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.
14. When 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.
15. Shri P.Krishnamoorthy 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 Patil-SR (ch) 49 of 63 CRA-599 & 600.doc 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. When 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.
16. Taking 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 unrebutted."
82. The dictum of the Apex Court in Anthony (supra) is that non registration affects the validity of the instrument and the presumption which would arise is that that lease not exceeding one year stood created by conduct of the parties. Applying the said position settled by the Apex Court to the present case, the consequence of the non registration of the agreements dated 15 th May,1980, 7th February, 1981 and 1st July, 1981 is creation of monthly tenancy.
83. The Appellate Court has held that the mere fact that the lease deed was not executed pursuant to the agreements to lease would not come in the way to determine the jural relationship between the parties and has held that the Defendant continued to occupy the suit Patil-SR (ch) 50 of 63 CRA-599 & 600.doc premises as a lessee and it paid rent to the Plaintiffs admitting them as their lessor. The Appellate Court has as such considered the Defendant as lessee of the premises which finding is in consonance with the law laid down by the Apex Court in Anthony (supra).
84. The Appellate Court has held that the unregistered deeds can be read in evidence as the parties have admitted to their execution and once admitted can be read in evidence. The unregistered deeds can be read in evidence for the limited purposes specified by the unamended Section 49 of Registration Act i.e. as evidence of a contract in a suit for specific performance or as evidence of part performance of contract for purposes of Section 53A of T.P Act or as evidence of any collateral transaction not required to be effected by registered instrument. In Paul Rubber Industries Private Limited (supra), the Apex Court has held that the nature and character of possession contained in a flawed document can form collateral purpose when the nature and character of possession is not the main term of the lease and does not constitute the main dispute for adjudication by the Court.
85. In the present case, the Defendant has raised the plea of having exercised the right to purchase the reversionary clause and sought to protect their possession by invoking the doctrine of part performance under Section 53-A of T.P. Act. The provisions of Section 49 of Registration Act permits the unregistered lease deeds to be received in evidence for collateral purpose. In Sevoke Properties Ltd vs West Patil-SR (ch) 51 of 63 CRA-599 & 600.doc Bengal State Electricity Distribution Company Ltd [(2020) 11 SCC 782], the Apex Court held that the only purpose for which the unregistered lease can be looked into is for assessing the nature and character of the possession.
86. The non registration of the agreements of lease will result in the Defendant being reduced to monthly tenant and will not come in the way of being received in evidence for collateral purpose. Section 53-A of Transfer of Property Act, 1882 was amended w.e.f. 24 th September, 2001 and prior to its amendment even on the basis of unregistered agreements which were required to be registered, the transferor was debarred from enforcing right in respect of the property. As per the corresponding amendment to Section 49 of the Registration Act,1908 the unregistered agreements of lease could be received as evidence of part performance of contract for the purpose of Section 53A of Transfer of Property Act, 1882.
87. In Sunil Kapoor vs Himmat Singh (supra), the Defendant in the ejectment suit filed an application under Section 10 of CPC as there was specific performance suit pending. The Delhi High Court examined the plaint in the specific performance suit which claimed an oral agreement to sell. There was no agreement to sell in writing. The Delhi High Court held that plea of part performance in absence of registered document cannot thus be taken. The Court was in that case examining the amended provisions of Section 49 of Registration Act and Section 53-A Patil-SR (ch) 52 of 63 CRA-599 & 600.doc of T.P. Act. In the present case, the agreements have been executed in the year 1980 and 1981 prior to the amendment of 24 th September, 2001.
88. In the decision in M/s Bajaj Auto Limited (supra), a two judge Bench of the Apex Court was concerned with the issue of entitlement of lessee to create sub lease. In that context it was held that the creation of sub lease is term of transaction of lease. The decision does not lay down the proposition of law that unregistered lease deed cannot be looked into even for collateral purpose. REGISTERED LEASE DEEDS OF 1992:
89. Subsequently, in the year 1992, by exercising powers granted under Power of Attorneys, the lease deeds Exhibit 100 and Exhibit 101 came to be registered. The Appellate Court has reappreciated the evidence on record and has held that on the date of execution of lease deeds, the PTM Family Trust which had given the Power of Attorneys was not the owner. The Trial Court has also observed that one of the trustees Chaturmal Mirchandani was not the trustee on the date of execution of the last agreement on 1 st July, 1982 and still the lease deeds Exhibit 100 and 101 were registered in the year 2009 in the name of Chatur Mirchandani. The Appellate Court has held that the power of attorneys were executed subsequent to the receipt on 12 th May, 1980 as deposed by the Defendant's witness. Sum and substance of the findings of the Appellate Court on the basis of evidence on record is Patil-SR (ch) 53 of 63 CRA-599 & 600.doc that the lease deeds purportedly lodged for registration in the year 1992 and registered in the year 2009 were not valid lease deeds. The findings constitute findings of fact making it impermissible to be interfered with under Section 115 of CPC.
ERROR OF JURISDICTION:
90. The Plaintiffs sought the relief of recovery of possession on the ground that the lease has been determined by efflux of time and by issuance of notice to quit. The Defendant raised plea of having exercised the right to purchase the reversionary clause and protection under Section 53-A of T.P. Act.
91. Learned Division Bench of this Court in Appeals against the order dated 26th September, 2006 of Learned Single Judge in Notice of Motion No 1487 of 2001 filed in the specific performance suits has held in paragraph 6 and 7 as under:
"6. Merely because the plaintiffs have filed a suit for decree of specific performance, the right of the defendant landlord to institute a suit for decree of eviction against the former lessee does not get curtailed. There is also no possibility of their being any conflicting decree being passed in suits by two courts because in the suit in Small Causes Court the question as to whether the Defendant has a right to purchase the property is not likely to be decided where his status as a lessee would only be relevant.
7. Similarly in the present suit, the only question that will be inquired into is whether there is any agreement in favour of the plaintiffs entitling the plaintiffs to purchase the property and if the courts findings are in favour of the plaintiffs then the second question that may be decided is whether he is entitled to decree for specific performance."
Patil-SR (ch) 54 of 63
CRA-599 & 600.doc
92. The Division Bench has thus neatly drawn the distinction between the jurisdiction to be exercised by the Small Causes Court and by the specific performance Courts. Despite the clear cut distinction in the issues being drawn by the learned Division Bench, the Appellate Court has entered into the domain of specific performance courts and determined the Defendant's right and interest in the suit premises which was precisely prohibited by Section 19(g) of PSCC Act.
93. Coming to the findings of the Appellate Court, the Appellate Court has held in paragraph 29 and 43 as under:
"29. The quintessence of aforesaid discussion and observations make us to believe that there was an agreement to lease in respect of the suit premises between the original owner and the defendant. In the said agreement, it was agreed to finalise the terms and execute a final lease deed. So said agreements are not source of Defendant's right."
"40. On re-appreciation of entire evidence, we are of considered view that the purported lease deeds Exhibit 100 and 101 are not the competent documents of creating the valid lease in favour of Defendant. They cannot be source of defendant's reversionary right and interest in the suit premises. Similarly the defendant cannot derive the right of part performance of the contract from the said lease deeds. They do not create any right of the Defendant in the suit premises. Thus the above cited decisions are of no avail to the defendant."
94. The Appellate Court has held that the unregistered agreements cannot be source of Defendant's right. What was required to be considered by the Appellate Court is the extent to which the clauses in the unregistered agreements can be looked into in the context of the issues to be decided by the Small Causes Court. The unregistered lease deed could be looked into only for two purposes firstly to determine Patil-SR (ch) 55 of 63 CRA-599 & 600.doc the jural relationship between the parties and secondly for assessing the nature and character of possession of the Defendant upon determination of lease. Instead the Appellate Court has conclusively determined the Defendant's right in the suit premises. Whether the reversionary clause survived in an unregistered agreement is an issue to be decided by the specific performance Courts given Section 49 of Registration Act and not by the Small Causes Court. Similarly in the context of the registered lease deeds, the validity of the registered lease deeds was examined solely in the context of determining the rights of reversion and part performance flowing from the registered lease deeds.
95. The Defendant moved an application before the Trial Court seeking framing of additional issue regarding applicability of Section 53-A of Transfer of Property Act, 1882 which was answered against the Defendant. The Appellate Court did not consider the plea of part performance for the reason that the Defendant did not derive any right of part performance from the registered lease deeds. The point for decision was not whether the lease agreements created an interest in the suit premises but whether it creates a right in him to possession of property for resisting claim of ejectment. There is no answer to the said issue in the impugned judgment.
96. In Maneklal Mansukhbhai (supra) and R. Hemlatha (supra), it has been held that an agreement of lease creating a present demise but Patil-SR (ch) 56 of 63 CRA-599 & 600.doc not registered is admissible under Section 49 of the Registration Act as evidence of part performance.
97. In St. Mary's Educational Society & Ors (supra), the issue for consideration was admission of unregistered lease deeds in evidence during trial. The Andra Pradesh High Court held that the unregistered lease deeds affecting immovable property and required by T.P Act or Registration Act to be registered may be received as evidence for the purposes mentioned in proviso to Section 49 of Registration Act. In Gurmeet Kaur vs Harbhajan Singh and Another (supra), the Delhi High Court held that unregistered and unstamped documents executed prior to 24th September, 2001 will have benefit of doctrine of part performance under Section 53-A of T.P. Act. The proviso to Section 49 of Registration Act makes it clear that the unregistered lease deed may be received in evidence as evidence of part performance of contact for purpose of Section 53-A of T.P. Act.
98. The Appellate Court has failed to appreciate the settled position in law and has disregarded the plea of part performance without any reasoned findings only on the basis that no right of part performance flowed from the registered lease deeds. The Appellate Court though vested with the jurisdiction to consider the plea of part performance contained in an unregistered document in the context of considering the relief of recovery of possession has failed to exercise the jurisdiction.
Patil-SR (ch) 57 of 63
CRA-599 & 600.doc
99. The issues to be decided by the Small Causes Court was the existence of lease leading to relationship of landlord tenant, the determination of the lease resulting in cessation of the relationship, the status of the Defendant upon determination of the lease whether of tenant at sufferance or tenant holding over depending on the assent of the landlord and in which case the provisions of Section 116 of T.P. Act would apply and whether the tenancy has been validly determined by notice to quit. While deciding the said issues, the Appellate Court had the jurisdiction to consider the reversionary clause in the context of change in nature and character of possession as an incidental issue. The impugned judgment discloses that the Appellate Court has not rendered any findings on the said issues which would have determined the status of Defendant as lessee and his right to remain in possession. Instead, the Appellate Court has gone into the nature of the agreements executed between the parties for purpose of adjudicating the right and interest of the Defendant in the suit premises and has essentially decided the issue of right title and interest of the Defendant in the suit premises which is specifically barred by Section 19(g) of PSCC Act.
100. For invoking the doctrine of part performance, the possession should be shown to have been continued in part performance of the contract. The Apex Court in D.S.Parvathamma v. A.Srinivasan (supra) has held in paragraph 9 as under:
Patil-SR (ch) 58 of 63
CRA-599 & 600.doc
"Secondly, the appellant had failed to allege and prove that he was delivered possession in part-performance of the contract or he, being already in possession as lessee, continued in possession in part- performance of the agreement to purchase i.e. by mutual agreement between the parties his possession as lessee ceased and commenced as that of a transferee under the contract. On the contrary, there is a finding recorded in the earlier suit that in spite of his having entered into a contract to purchase the property he had not disowned his character as lessee and he was treated as such by the parties. The judgment dated 1-9-1999 in the Civil Suit notes the conduct of the plaintiff inconsistent with his conduct as vendee-in- possession. When a person already in possession of the property in some other capacity enters into a contract to purchase the property, to confer the benefit of protecting possession under the plea of part-performance his act effective from that day must be consistent with the contract alleged and also such as cannot be referred to the preceding title. The High Court of Madhya Pradesh had an occasion to deal with the facts very near to the facts before us in Bhagwandas Parsadilal Vs. Surajmal & Anr., AIR 1961 M.P. 237. A tenant in possession entered into an agreement to purchase the house forming subject matter of tenancy. However, he failed to show his nature of possession having altered from that of a tenant into that of a transferee. In a suit of ejectment based on landlord-tenant relationship, the tenant sought to protect his possession by raising the plea of part- performance as against subsequent purchaser of the property. Referring to Section 91 of the Indian Trusts Act, the High Court held that a subsequent purchaser of the property with notice of an existing contract affecting that property must hold the property for the benefit of the person in whose favour the prior agreement to sell has been executed to the extent it is necessary to give effect to that contract. But that does not mean that till a final decision has been reached the contract creates a right in the person in possession, i.e. the tenant, to refuse to surrender possession of the premises even if such possession was obtained by him not in part performance of the contract but in his capacity as a tenant. Having entered into possession as a tenant and having continued to remain in possession in that capacity he cannot be heard to say that by reason of the agreement to sell his possession was no longer that of a tenant. (Also see Dakshinamurthi Mudaliar (Dead) & Ors. V. Dhanakoti Ammal, AIR 1925 Madras 965 and A.M.A. Sultan (deceased by LRs) & Ors. Vs. Seydu Zohra Beevi, AIR 1990 Kerala 186). In our opinion the law has been correctly stated by the High Court of Madhya Pradesh in the abovesaid decision."
101. The Defendant claims that by an unilateral act of issuing a communication dated 16th May, 2000, the Defendant has exercised the right to purchase the reversionary right in accordance with the clause in Patil-SR (ch) 59 of 63 CRA-599 & 600.doc agreements of lease. The Defendant had entered into possession upon execution of agreements of lease of the year 1980 and 1981. Clause 2(C)(ii) of two agreements dated 15th May, 1980 and 7th February, 1981 gave a right to the lessee at the end of term of 20 years to renew the lease for further period of 10 years and thereafter to renew it for successive period of 10 years at a time together also with a right to purchase the reversion at any time after the said first terms of 20 years @ Rs.100/- per square feet of the built up area. The interpretation of the said clause is relevant for the purpose of deciding the enforceability of the reversionary clause which will be decided in the specific performance suits. The question whether the transfer of reversionary interest fructified in favour of the Defendant is a question to be decided in specific performance suits.
102. There is no quarrel with the proposition of law laid down by the Apex Court. Submissions were canvassed by both parties on plea of part performance as to whether the change in the nature and character of possession from that of owner from tenant required an bilateral act. The fact remains that this Court is exercising revisional jurisdiction under Section 115 of CPC and is required to consider whether any jurisdictional error exists. This Court cannot render any finding as to whether the plea of part performance was available or not to the Defendant as the Appellate Court has rejected the plea of part performance on the ground that no right flowed from the registered Patil-SR (ch) 60 of 63 CRA-599 & 600.doc lease deeds in favour of Defendant thereby exceeding the jurisdiction vested in it. The Appellate Court has not considered the plea of part performance and has disregarded the same without any discussion for the reason that the registered lease deeds were not validly registered.
103. As regards the theory of dominant purpose advanced by Learned AG, the said submission was not advanced before the Appellate Court and for the first time this Court cannot examine the terms of the agreement to consider as to whether the agreement created an intending seller purchaser relationship. Similarly the submission that by virtue of the advanced rent paid, the Defendant availed of a discounted rent is canvassed for the first time before this Court and cannot be considered in exercise of revisional power under Section 115 of CPC.
104. The Apex Court has held in in Kiran Singh (supra), and Jagmittar Sain Bhagat (supra) that defect of jurisdiction goes to the root of the matter and strikes at the very authority of the Court to pass any decree and such a defect cannot be cured. In exercise of powers under Section 115 of CPC, it is permissible for this Court to interfere where there is jurisdictional error.
CONCLUSIONS:
105. The provisions of PSCC Act vests the jurisdiction in Small Causes Court to decide the suit between landlord and tenant relating to recovery of possession of immovable property. In event the Defendant raises the issue of title, the consequence will not be immediate ouster Patil-SR (ch) 61 of 63 CRA-599 & 600.doc of jurisdiction. The Small Causes Court is entitled to examine the plea and determine the continuance of jurisdiction and after adjudication, the landlord tenant relationship is found non existent, the result will be dismissal of suit. The Defendant had raised the plea of having exercised the right to purchase the reversionary right. In the context of determining the status of Defendant as lessee as of tenant at sufferance or tenant holding over, the said plea could have been considered incidentally by the Small Causes Court. It is only in case of a substantive suit on title that the provisions of Section 19(g) would operate as a bar of jurisdiction.
106. The issues to be determined by the Small Causes Court in suit filed under Section 41 of PSCC Act is the existence of the landlord tenant relationship, whether the lease has been validly terminated, and, the status of the Defendant as lessee upon determination of the lease to determine the entitlement of the Plaintiffs to recovery of possession of the suit premises. The Appellate Court by the impugned judgment has ventured into the rights of the Defendant flowing from the agreements executed between the parties treating the suit as one for determination of right and interest in the suit premises, which is specifically prohibited by Section 19(g) of PSCC Act. By terming the registered lease deeds as documents not competent of creating valid lease or a source of Defendant's reversionary right and interest in the suit premises and not constituting the Defendant's right to seek part Patil-SR (ch) 62 of 63 CRA-599 & 600.doc performance as they do not create any right of the Defendant in the suit premises, the Appellate Court has essentially decided the issue of title. The said findings on the Defendant's right and interest are not findings incidental to the main issue as to the status of Defendant as lessee but are substantial findings on rights flowing from the agreements executed between the parties. Further, by disregarding the unregistered lease deeds even in the context of considering the plea of part performance, the Appellate Court has not exercised the jurisdiction vested in it. By entering into the domain of specific performance Courts, the impugned judgment suffers from jurisdictional error.
107. In light of the discussion above, the impugned judgments dated 7th July, 2016 passed by the Appellate Bench of Small Causes Court in Appeal No. P-407 of 2016 and Appeal No. P-408 of 2008 are quashed and set aside. The Revision Applications stand allowed. Rule is made absolute in above terms.
[Sharmila U. Deshmukh, J.] Signed by: Sachin R. Patil Designation: PS To Honourable Judge Date: 03/07/2024 18:58:27 Patil-SR (ch) 63 of 63