Kerala High Court
Ajay Zachariah vs State Of Kerala on 19 January, 2021
Author: V Raja Vijayaraghavan
Bench: V Raja Vijayaraghavan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE RAJA VIJAYARAGHAVAN V
TUESDAY, THE 19TH DAY OF JANUARY 2021 / 29TH POUSHA, 1942
WP(C).No.20445 OF 2020(E)
PETITIONERS:
1 AJAY ZACHARIAH
AGED 54 YEARS
S/O.MATHEW ZACHARIAH (LATE), NEELICKAL HOUSE,
MANGANAM KARA, MANGANAM P.O., KOTTAYAM-686 018
2 JUDY ZACHARIAH
AGED 49 YEARS
W/O.AJAY ZACHARIAH, NEELICKAL HOUSE, MANGANAM KARA,
MANGANAM P.O., KOTTAYAM-686 018
BY ADVS.
SRI.AJIT JOY
SRI.ANEESH JAMES
RESPONDENTS:
1 STATE OF KERALA
REPRESENTED BY THE INSPECTOR GENERAL,
DEPARTMENT OF REGISTRATION, VANCHIYOOR P.O.,
THIRUVANANTHAPURAM-695 035
2 THE DISTRICT REGISTRAR,
KOTTAYAM, OFFICE OF THE DISTRICT REGISTRAR,
DISTRICT COLLECTORATE, KOTTAYAM-686 002.
3 THE SUB REGISTRAR
KOTTAYAM (ADDITIONAL), OFFICE OF THE SUB REGISTRAR,
COLLECTORATE, KOTTAYAM-686 002.
4 AJIT KUMAR V.
S/O.N.VASUDEVAN NAIR, MADAYIL VEEDU T.C.25/1424,
SS KOVIL ROAD, THIRUVANANTHAPURAM-695 001.
SMT MABLE C KURIAN, GOVERNMENT PLEADER
THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON
19.01.2021, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
WP(C).No.20445 OF 2020 2
"CR"
JUDGMENT
The petitioners herein, who are husband and wife respectively, are the owners in title and possession of property having an extent of 15.77 Ares and situated within the limits of Perumbaikad village. In the year 2018, the petitioners decided to construct a commercial building in the said property and based on their application, a mercantile/commercial building permit was issued by the local authority.
2. On receiving information about the commercial building project, the 4th respondent, who is a hotelier, approached the petitioners and informed them of his desire to take on lease 6000 sq. ft. of commercial space on the ground floor of the proposed commercial building for the purpose of starting a hotel therein. After deliberations, the parties entered into an understanding as per which, the petitioners offered to complete the structure of the building and hand over the space to the 4th respondent on or before 31.12.2020 and the 4th respondent agreed to take on lease the said commercial space at a monthly rent of Rs.3,30,000/- for a period of five years, and to commence from WP(C).No.20445 OF 2020 3 1.1.2021. Consequently, Ext.P1 agreement for lease was entered into on 23.12.2019. The document was presented before the SRO, Kottayam and the same was registered as document No. 2415/I/2019. A sum of Rs.2,55,700/- was paid towards stamp duty and registration fee.
3. The petitioners state that COVID-19 Pandemic struck immediately thereafter and due to the restrictions imposed, it became next to impossible to commence and carry out the construction. The workers also left and nothing further took place. The entire project was shelved by the petitioners and he decided not to go forward with the construction. This matter was informed to the 4th respondent, who also expressed his desire to withdraw from the project. In other words, the pandemic played spoilsport and the hotel project was dropped.
4. The petitioners and the 4th respondent in the said circumstances executed Ext.P2 deed of cancellation on 8.11.2020 cancelling Ext.P1 lease agreement. The deed of cancellation was executed on a non-judicial stamp paper valued at Rs.500/- and a sum of Rs.270/- was paid as registration fee. They state that stamp duty was paid in accordance with Article 15 of the Schedule to the Stamp Act and registration fee was paid under I(u) of the Table of Fees under Section WP(C).No.20445 OF 2020 4 78 of the Registration Act (Table of Fees). However, when Ext.P2 cancellation deed was presented before the 3rd respondent for registration, he refused to register the same on the ground that Ext.P2 would fall within the category of surrender of lease as provided under Article 54(a) of the Schedule 1 of the Stamp Act and registration fee would be payable under Article 1(g) of the Table of Fees. The 1st petitioner was ordered to pay the balance registration fee of Rs.2,01,978/- by Ext.P4 order.
5. According to the petitioner, Ext.P1 on the face of it would reveal that the lease is scheduled to commence only on 1.1.2021. The petitioners have not completed the construction of the building and the 4th respondent has not occupied the same, which event is yet to happen. The possession of the property is also with the petitioners. According to the petitioners, in order to term Ext.P2 as a surrender of lease, the parties ought to have acted upon the lease and the 4th respondent ought to have taken possession of the premises either by express or by implied means. In that view of the matter, there is no justification on the part of the Registrar to insist that the petitioner should pay registration fees under Article 1(g) of the Table of Fees, contends the petitioner. It is in the afore circumstances that the petitioners are before this Court seeking to quash Ext.P4 and also for a WP(C).No.20445 OF 2020 5 further direction to the 3rd respondent to register Ext.P2 as a deed of cancellation.
6. The 3rd respondent has filed a statement as directed by this Court. It is stated that the rights created under the lease for a period of 5 years is an interest in immovable property and the said deed is compulsorily registrable under Section 17 of the Registration Act, 1908. According to the respondent, by Ext.P2 what is contemplated is the act of surrendering the possession of leasehold premises in favour of the lessee and refund of security deposit from lessor to lessee. It is further stated that for releasing the right with respect to the premature lease period, stamp duty is liable to be paid under Article 54(a) of the Schedule to the Kerala Stamp Act, 1959. It is further stated that the stamp duty paid as per Ext.P2 was only Rs.500/-, the Registrar is bound to initiate action under Section 33(1) of the Kerala Stamp Act. However, in order to initiate proceedings under Section 33(1), the amount by way of registration fee will have to be paid by the petitioner as required under Section 80 of the Registration Act, 1908. Since the petitioner refused to pay the stipulated fees, the Sub Registrar has refused to accept the document in accordance with the Registration Rules and have issued Ext.P4 memo calling upon the petitioner to cure the defect and resubmit the deed for registration.
WP(C).No.20445 OF 2020 6
7. I have considered the submissions advanced by Sri. Ajit Joy, the learned counsel appearing for the petitioner and Smt. Mable C. Kurian, the learned Government Pleader.
8. Ext.P1 is the lease agreement dated 23.12.2019 entered into between the petitioners and the tenant. As per the schedule to the lease agreement, what has been leased out is 6000 sq. ft. commercial space in the ground floor of a proposed commercial building having a total extent of 2134.01 sq.m. together with parking area and all attached facilities. It is apparent from the agreement that lease has been granted to use the demised building for the purpose of running a restaurant for a term of five years commencing from 1.1.2021.
9. The petitioners assert that they dropped their plan to construct the commercial building due to various circumstances. According to them, the entire project has been shelved and the subject matter of the agreement is not in existence. Even the respondents have no case that the petitioners have completed the construction of the building or that the possession of the building has been handed over to the lessee.
10. The question is whether it is a case of cancellation of lease agreement or a surrender of lease.
11. Chapter V of the Transfer of Property Act deals with the leases WP(C).No.20445 OF 2020 7 of Immovable property. This chapter consists of Section 105 to 117.
12. A lease of an immovable property is a contract between the lessor and the lessee. Their rights are governed by Sections 105 to 117 of Transfer of Property Act read with the respective Rent Control laws.
13. Lease has been defined under Section 105 of the TP Act which reads this:-
Section 105. A lease of immovable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.
Lessor, lessee, premium and rent defined. --The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.
14. Section 106 defines the duration of lease.
106. Duration of certain leases in absence of written contract or local usage (1) In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year, terminable, on the part of either lessor or lessee, by six months' notice; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, WP(C).No.20445 OF 2020 8 on the part of either lessor or lessee, by fifteen days' notice. (2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.
(3) A notice under sub-section (1) shall not be deemed to be invalid merely because the period mentioned therein falls short of the period specified under that sub-section, where a suit or proceeding is filed after the expiry of the period mentioned in that sub-section.
(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.]
15. The manner of making a lease is defined under Section 107. Section 107 Leases how made A lease of immovable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.
All other leases of immovable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
Where a lease of immovable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee WP(C).No.20445 OF 2020 9 Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immovable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.
16. Section 111 of the TP Act deals with the determination of lease. Section 111 reads thus :
Section 111 - Determination of lease A lease of immovable property determines-
(a) by efflux of the time limited thereby:
(b) where such time is limited conditionally on the happening of some event-by the happening of such event:
(c) where the interest of the lessor in the property terminates on, or his power to dispose of the same extends only to, the happening of any event-by the happening of such event:
(d) in case the interests of the lessee and the less or in the whole of the property become vested at the same time in one person in the same right:
(e) by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them:
(f) by implied surrender:
(g) by forfeiture; that is to say, WP(C).No.20445 OF 2020 10 (1) in case the lessee breaks an express condition which provides that, on breach thereof, the lessor may re-enter or (2) in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicated an insolvent and the lease provides that the less or may re-enter on the happening of such event; and in any of these cases the lessor his transferee gives notice in writing to the lessee of his intention to determine the lease:
(h) on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.
Illustration to clause (f) A lessee accepts from his less or a new lease of the property leased, to take effect during the continuance of the existing lease. This is an implied surrender of the former lease, and such lease determines thereupon.
17. An examination of the provisions would leave no manner of doubt that determination of lease can only happen for the reasons mentioned in section 111 of the Act.
18. If it is a case of surrender of lease, it can only be by way of express or implied surrender as provided under (e) and (f) of Section 111 of the Act.
WP(C).No.20445 OF 2020 11
19. In Shah Mathuradas Maganlal & Co. v. Nagappa Shankarappa Malage and Ors., [(1976) 3 SCC 660], the Apex Court had occasion to consider the scope of Clauses (e) and (f) of Section 111 of the TP Act and laid down the following principle in Para 19 as under.
19. A surrender under Clauses (e) and (f) of Section 111 of the Transfer of Property Act, is an yielding up of the term of the lessee's interest to him who has the immediate reversion or the lessor's interest. It takes effect like a contract by mutual consent on the lessor's acceptance of the act of the lessee. The lessee cannot, therefore, surrender unless the term is vested in him; and the surrender must be to a person in whom the immediate reversion expectant on the term is vested. Implied surrender by operation of law occurs by the creation of a new relationship, or by relinquishment of possession. If the lessee accepts a new lease that in itself is a surrender. Surrender can also be implied from the consent of the parties or from such facts as the relinquishment of possession by the lessee and taking over possession by the lessor. Relinquishment of possession operates as an implied surrender. There must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. Whether this has occurred is a question of fact. (emphasis supplied)
20. In P. Ramanatha Aiyar's 'The Law Lexicon', Fourth Edition, the term 'Surrender' is defined to mean 'to give up in favour or for the sake of another'. Surrender is a deed or instrument testifying that the WP(C).No.20445 OF 2020 12 particular tenant for life or years, of lands and tenements, doth yield up his estate to him that hath the immediate estate in remainder or reversion, that he may have the present possession thereof; and wherein the estate for life or years may merge or down by the mutual agreement of the parties. It may be express or implied. Implied surrenders are generally referred to as surrenders by operation of law. Express surrenders are within the Statute of Frauds (in England) the Stamp and Registration Acts (in India).
21. As held by the Apex Court in Shah Mathuradas Maganlal (supra), a surrender of lease cannot happen unless the term is vested in the lessee. There must be a taking of possession, not necessarily a physical taking, but something amounting to a virtual taking of possession. In the case on hand, the lease was expected to happen on a future date. The subject matter of the lease is not in existence even now. At no point of time was the possession of the premises handed over to the 4th respondent as the lease premises is not in existence even now. Thus, in the instant case, it cannot be said that Ext.P2 entered into by the petitioners and the 4th respondent is a surrender of lease.
22. It would be apposite at this juncture to refer to Art.15 of the Schedule to the Stamp Act which reads thus;
WP(C).No.20445 OF 2020 13
Art 15. Cancellation - Instrument of Two hundred and fifty (including any instrument by rupees." which any instrument previously executed is cancelled), if attested and not otherwise provided for
23. The Stamp duty for surrender of lease is provided under Article 54 to the Schedule of the Stamp Act, 1959.
Art 54. Surrender of lease
1. When lease is surrendered before expiry of lease period Rs.1000
2. In any other case Rs 500
24. Under the Table of Fees under Section 78 of the Registration Act, Article 1 (g) provides for fees for surrender of lease.
1 (g) Surrenders of leases shall be assessed to registration fee on the amount of consideration including the value of improvements, if any, or when no consideration or value of improvements is expressed, the fee chargeable on the original lease shall be realised.
When, however, if the consideration or consideration including value of improvements or value of improvements alone is expressed in a surrender of lease which is chargeable with a lesser fee than that of the original lease, the fee chargeable on the original lease shall be realised.
25. 1 (u) of the Table of Registration Fees provides for deed of cancellation.
WP(C).No.20445 OF 2020 14
The registration fee for a deed of cancellation or revocation shall be the same as the fee leviable on the original document subject to a maximum of Rs. 200.
26. There are provisions in the Stamp Act as well as the Registration Act which provides for cancellation of documents. In view of the discussion above, I am inclined to hold that Ext.P2 can be nothing but a cancellation of lease and not a case of surrender. In that view of the matter, Article 15 of the Schedule of the Stamp Act as well as 1(u) of the Table of Fees under Section 78 of the Registration Act, 1908 would apply. Consequently, Ext.P4 will stand set aside and there will be a direction to the respondent concerned to register the deed treating the same as a cancellation deed. The entire exercise shall be completed within a period of one month from the date of receipt of a copy of this judgment.
This writ petition will stand allowed.
Sd/-
RAJA VIJAYARAGHAVAN V JUDGE ps/19/1/2021 WP(C).No.20445 OF 2020 15 APPENDIX PETITIONER'S EXHIBITS:
EXHIBIT P1 A TRUE COPY OF THE DOCUMENT
NO.2415/I/2019 OF THE SRO KOTTAYAM
ADDITIONAL.
EXHIBIT P2 A TRUE COPY OF THE CANCELLATION DEED
DATED 8.11.2020 EXECUTED BETWEEN THE
PETITIONERS AND THE 4TH RESPONDENT
EXHIBIT P3 A TRUE COPY OF THE ACKNOWLEDGMENT DATED
8.9.2020 ISSUED BY THE REGISTRATION
DEPARTMENT, GOVERNMENT OF KERALA.
EXHIBIT P4 A TRUE COPY OF THE NOTICE DATED 8.9.2020
ISSUED BY THE 3RD RESPONDENT.
RESPONDENTS EXHIBITS:NIL
//TRUE COPY//
P.S TO JUDGE