Calcutta High Court (Appellete Side)
M/S Paul Rubber Industries Pvt. Ltd vs Sri Amit Chand Mitra & Anr on 20 July, 2022
Author: Soumen Sen
Bench: Soumen Sen
1
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
APPELLATE SIDE
BEFORE:
The Hon'ble Justice Soumen Sen
and
The Hon'ble Justice Siddhartha Roy Chowdhury
FA 36 of 2021
M/s Paul Rubber Industries Pvt. Ltd.
Vs.
Sri Amit Chand Mitra & Anr.
For the Appellant : Mr. Aniruddha Chatterjee, Adv.,
Mr. Rupak Ghosh, Adv.,
Mr. Abhijit Sarkar, Adv.,
Mr. Shantanu Mishra, Adv.,
Mr. B. Ghosh, Adv.
For the Respondent : Mr. Jayanta Kumar Mitra, Sr. Adv.,
Mr. Anupam Dasadhikari, Adv., Mr.Krishnendu Paul Chowdhury, Adv.
Hearing concluded on : 14th July, 2022. Judgment on : 20th July, 2022.
Soumen Sen, J.: The appeal is arising out of a judgment and decree dated 16th July, 2012 in connection with the Title Suit No.115 of 2008. The suit was filed by the plaintiff for eviction and was decreed in favour of the plaintiff. The said judgment and decree is challenged, inter alia, on the ground that the lease was for manufacturing purpose and this is terminable only by 6 month's notice expiring with the end of the year of the tenancy. However, in the instant case the lease was terminated by 15 day's notice expiring with the end of the month of the tenancy. No other point was urged in support of the appeal.
2There is no dispute that the defendant was put into possession by an agreement dated 27th March, 2003 for a period of 5 years for manufacturing purpose.
The plaintiff alleged that on 31st October, 2007 the said tenancy expired and the parties did not agree for renewal thereof. The tenancy agreement shows that it is an unregistered instrument. The question that arises for consideration is whether the terms of the said unregistered tenancy agreement can be taken into consideration while deciding the invalidity of the notice and also for the purpose for which the tenancy was created. The clear answer to this issue is known.
The learned Trial Judge on consideration of the provisions of Section 106 and 107 of the Transfer of Property Act arrived at the same finding. The learned Trial Judge has also taken into consideration the fact that although DW1 during his cross-examination has stated that the said premises was taken for manufacturing purposes, no evidence was adduced to show that any kind of manufacturing activity was ever carried from the suit premises. However, as rightly pointed out by the learned Trial Judge the said evidence is not of much relevance as the terms of the said lease cannot be looked into for the purpose of determining the rights and liabilities of the parties including the nature of activity being carried out by the appellant in the suit premises pursuant to the agreement dated 27th March, 2003. Mr. Aniruddha Chatterjee the learned Senior Counsel appearing on behalf of appellant has submitted that the agreement between the parties creating tenancy would unmistakably show that the said tenancy was for manufacturing purpose. The appellant has admitted the said fact in the 3 plaint and the plaintiff in fact has relied upon the said tenancy agreement in the plaint in support of their claim for eviction of the appellant from the suit premises.
Our attention is drawn to paragraph 2, 3(i), (ii), (iii) of the plaint and recitals of the lease agreement (clause 3 and 6 of the unregistered tenancy agreement in particular).
Mr. Chatterjee drawing our attention to the evidence of DW1 of the appellant in cross-examination where the said witness has stated that he was doing a business of rubber, submits that this evidence coupled with the admission of the plaintiffs in the plaint and the recitals in the tenancy agreement adequately prove that the said property was let out for manufacturing purpose. There is a clear mention of a factory shed in the tenancy agreement.
However, the learned Trial Judge has completely misdirected his mind and on misconception of law and fact has erroneously held that in an absence of any proof of manufacturing activity it cannot be said that the appellant is carrying on any manufacturing business and hence a notice of 6 months is not required before termination of the said tenancy. Mr. Chatterjee submits that having regard to the fact that the plaintiff has admitted that the tenancy was for manufacturing purpose there is no requirement for the appellant to adduce any further evidence save and except what has been stated by the appellant during its evidence. In this regard, Mr. Chatterjee has relied upon the following decisions: 4
1.Joyanti Hosiery Mills & Anr. v. Upendra Chandra Das & Anr., reported in 1946 SCC Online Cal 28: (1945-46) 50 CWN 441: AIR 1946 Cal 317
2.Rupeswari Debi v. Lokenath Hosiery Mills reported in 1961 SCC Online Cal 166: (1961-62) 66 CWN 414: AIR 1962 Cal 608
3.Allenbury Engineers Pvt. Ltd. v. Ramkrishna Dalmia & Ors. reported in (1973) 1 SCC 7
4.Sri Iswas Sridhar Jiew v. Anup Lal Sharma reported in 1974 SCC Online Cal 62: AIR 1975 Cal 174
5.P.C. Cheriyan v. Mst. Barfi Devi reported in (1980) 2 SCC 461
6.Bank of Baroda Ltd. v. Pubjab National Bank Ltd. & Ors.
reported in 1942 SCC Online Cal 179: AIR 1942 Cal; 562 Mr. Chatterjee relied upon the judgment of the Hon'ble Supreme Court in Allenbury Engineers Pvt. Ltd. v. Ramkrishna Dalmia & Ors., reported in 1973 (1) SCC 7 paragraph 3 in particular to argue that there may not be any requirement to prove independently manufacturing process. Mr. Chatterjee submits that admittedly the tenancy was for manufacturing purpose and the notice of termination falls short of four days for the six months period as required under Sec. 106 of the Transfer of Property Act even if the date of filing of suit is taken into consideration. In view of the stringent provision of the Act any such defective notice shall be held in favour of a tenant and in support of such submission Mr. Chatterjee has relied upon the decision of Hon'ble Supreme Court in Duli Chand (Dead) By LRS. vs. Jagmender Dass reported in 1990 (1) SCC 169. Per contra, Mr. Mr. Jayanta Kumar Mitra, learned Senior Counsel representing the respondent and decree holder has submitted that there is no pleading in the written statement making any assertion that the suit 5 premises was let out for manufacturing purpose and any such activity is being carried by the appellant during the subsistence of the tenancy agreement. Mr. Mitra reminds us all of the elementary principle of pleading which is usually taught to the juniors, that a defence has to be specifically pleaded in the written statement. If a litigant wants to make the court believe the existence of any particular fact there has to be a foundation of such fact in the pleading and in absence of any such foundation in the pleading no amount of oral evidence can be looked into or adduced at the trial. Mr. Mitra submits that in fact no issue was raised due to lack of pleading by the defendant before the trial court with regard to any manufacturing activity being carried by the defendant/appellant from the suit premises. Mr. Mitra submits that the plaintiff has all throughout contended that it was a monthly tenancy and the averments in the plaint would not show that the plaintiffs have ever admitted that the lease was given for a manufacturing purpose. Even if it is assumed for the sake of argument that it was one for such purpose, in the absence of any manufacturing activity being carried from the premises in question it cannot be said that the lease was for a manufacturing purpose.
Mr. Mitra has in this regard relied upon a Division bench judgment of our Court presided over by the then Chief Justice D.N. Sinha in Messrs. Shree Nursing Timber Works and Messrs. Shee Nursing Electric Stores v. Sm. Amala Bala Dassi reported in 73 C.W.N.522 paragraph 16 which reads:
"16. It was faintly argued on behalf of the appellant in Appeal No. 251 of 1961 that the lease was for manufacturing purpose. This obviously was 6 done to support the contention that the defendant was entitled to a longer notice. There is however, no evidence that the tenancy was for a manufacturing purpose. As is well known, it is not enough to prove that the tenant manufactures certain commodities or that the tenant uses the premises for such manufacture. The intention of the tenant or even the actual user of the tenant after the taking out of the tenancy are immaterial. What must be pleaded and proved is that the tenancy agreement itself was for manufacturing purpose. There is no evidence on record on this point and we have no hesitation in rejecting this contention of the appellant." (emphasis supplied) The decision of the Hon'ble Supreme Court in C. Mackertich v.
Steuart & Co. Ltd. Reported in 1971 (3) SCC 39 paragraph 3 has been placed for the same proposition which reads:
"3. In support of these appeals it was submitted on behalf of the appellant that the High Court was in error in holding that the tenancy was for manufacturing purpose and that six months' notice terminable with a year of tenancy was required. It was said that the onus of proving that the tenancy was for manufacturing purpose was upon the defendant and as that point was not raised in the written statement the High Court should not have allowed the respondent to raise the question. In our opinion there is substance in this argument. But we shall assume in favour of the respondent that such an objection could have been taken by it even without a specific plea in the written statement. Even upon that assumption we are of opinion that there is no evidence in the case to support the finding of the High Court that' the purpose of the lease was dominantly for manufacturing purpose. Exhibit W is the Memorandum and Articles of Association. The objects of the company are given in paragraphs 3 and 4 and are to the following effect:
(3) To carry on the business of motor-cab, motor-car, motor-omnibus, motor-boat and motor-van proprietors, motor-engineers, manufacturers, builders, painters, decorators, and repairers of motor cars, cabs, omnibuses, vans and other vehicles of every description so constructed as to progress whether on land or water or in the air.
(4) To carry on the business of harness-makers and wheel-wrights, mechanical engineers and manufacturers of and dealers in lamps, 7 whips, rugs, leather goods, India-rubber goods, wheels, springs, axles, upholsterings, India-rubber tyres and all component parts of any carriage or vehicle and other articles used in the manufacture or fitting up of the above mentioned or any similar articles, and manufacturers or factors of or dealers in all products or substances which may be used in or in connection with the said business or any of them or in which it may be considered advantageous to deal." It cannot be said from these paragraphs that the object of the company was dominantly manufacturing purpose. The High Court has in this connection referred to the evidence of Mr. J.N. Ghose, the Managing Director of the defendant company. In reply to question 235 the witness said that the company had business as "Automobile engineers, coach builders, refrigerators, motor, mechanical engineer, body builders and the like and that business is continuing". In answer to question No. 247 the witness said that the company had agency to deal in Austin cars. It is true that in the registered lease deed Ex. L and L (I) there is the description of the lessee as coach-builder. But it is obvious that the defendant company cannot claim to be holding under the registered lease deed Ex. L and L (I) and so the purpose mentioned in the lease deed cannot be taken into consideration. In our opinion neither the evidence of Mr. J.N. Ghose nor the statement in Ex. W, Memorandum and Articles of Association, can be taken as sufficient evidence to prove that the purpose of the lease was exclusively or even dominantly for a manufacturing purpose. It follows, therefore, that the High Court was in error in holding that the dominant purpose of the lease was manufacture and so 15 days' notice ending with the month of each tenancy must be held to be insufficient." (emphasis supplied) Mr. Mitra, the learned Senior Counsel submits that in absence of any registered agreement between the parties the terms of the said lease would not be looked into and the said unregistered lease should be treated to be a lease month by month determinable with a notice of 15 days. Mr. Mitra in this regard has relied upon the decision of the Hon'ble Supreme Court in 8 Anthony v. K.C. Ittoop & Sons & Anr., reported in 2000 (6) SCC 394 paragraphs 11, 12 and 13 which reads:
"11. The resultant position is insurmountable that so far as the instrument of lease is concerned there is no scope for holding that the appellant is a lessee by virtue of the said instrument. The court is disabled from using the instrument as evidence and hence it goes out of consideration in this case, hook, line and sinker (vide Smt. Shantabai v. State of Bombay, Satish Chand Makhan v. Govardhan Das Byas and Bajaj Auto Limited v. Behari Lal Kohli.
12. But the above finding does not exhaust the scope of the issue whether the 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."
9In order to appreciate the submission made on behalf of the parties it is necessary to briefly refer to the pleadings and evidences. Mr. Chatterjee has relied upon paragraph 2, 3(i) (ii) and (iii) of the plaint to argue that there is an admission of the plaintiff and Clauses 3 and 6 of the Tenancy Agreement in support of his contention that the lease was for a manufacturing purpose and the said fact is admitted from the pleadings and documents. For the purpose of convenience paragraph 2 and paragraph 3 are reproduced below:
"2. By an agreement dated 27th day of March, 2003 entered into between the plaintiff therein referred to as the landlady of the one part and the defendant of the other part, whereby the defendant was inducted as a lessee/tenant in respect of the piece and parcel of land measuring about 16 cottahs be the same a little more or less together with a shed/go down space measuring about 6000 Sq. ft. approx and an office space measuring about 1000 Sq. ft. at the said premises with a 20 feet wide common passage on the north for ingress and egress more fully described in the schedule hereunder (hereinafter referred to as the said tenanted premises) for commercial purpose at a rental of Rs.20,000/- per month payable according to the English calendar month to the plaintiff.
3. The said tenancy was granted on the terms and condition as follows:-
i.) The tenancy shall commence on and from the First day of November, 2002 and shall continue for a period of 5 (five) years with the provisions of further renewal of 5(five) years and thereafter for such period and on such terms and conditions as may be agreed upon by the parties. Such renewal shall only be upon the mutual agreement of both the parties herein.
ii) The plaintiff will accord her consent as and when the defendant shall apply for Electric Meter before the competent authority in its own name and/or in the name of company. The defendant shall remain responsible for payment of the energy charges consumed through such meter/meters and also of any other meter that may be used by the defendant in the tenanted premises.10
iii) The defendant shall affix all electric gadgets, plant and machinery, apparatus according to his need for which the plaintiff shall not raise any objection. Subject to the condition that the tenant shall restore the original condition of the demise at the time of vacating the same by way of surrender of tenancy and on such surrender shall deliver the vacant and peaceful possession of the demise premises to the plaintiff in the position and condition in which the demised premises had been let out and the defendant shall be liable to make all such repairs and incur all such expenses which might be necessary for restoration of such original condition of the demised premises."
It is also necessary to reproduce Clause 3 and Clause 6 of the Tenancy Agreement dated 7th March, 2003.
"3. That the Tenancy comprising of A schedule premises of which includes a factory Shed will be used by the Party of the Other Part for the purpose of his business and/or factory.
6. That the party of the OTHER PART shall affix all electric gadgets, Plant and Machinery, apparatus according to his need for which the Party of the ONE PART shall not raise any objection. Subject to the condition that the tenant shall restore the original conditition of the demised premises at the time of vacating the same by way of surrender of tenancy and on such surrender shall deliver the vacant and peaceful possession of the demised premises to the party of the ONE PART in the position and condition in which the demised premises had been let out and the party of the OTHER PART shall be liable to make all such repairs and incur all such expenses which might be necessary for restoration of such original condition of the demised premises."
The pleadings and the unregistered agreement shows that the appellant was in search of a factory's space and the tenancy was created in favour of the appellant comprising of land and factory shed fully described in Schedule 'A' to the agreement that shall be used by the appellant for setting up a factory. He was permitted to affix all electrical gadgets. The plaintiff in order to prove the relationship between the parties has made necessary 11 averments which inter alia include the aforesaid paragraphs. It was primarily on the basis of a short notice of four days that a defence was set up by the appellants in the suit and the appeal dragged for almost eight years. In the written statement the defendant has categorically stated that the agreement of lease is unregistered and the suit is not maintainable based on the said document. On the same breath the appellant contended that the defendant was assured of a renewal by the plaintiff. The defendant was a lessee under the plaintiff on the strength of the aforesaid agreement. However, there is no whisper in the said written statement or in its affidavit in chief that the appellant/defendant is carrying on any manufacturing activity from the said premises.
First, we discuss the effect of an unregistered lease agreement. Section 105 of the Transfer of Property Act defines lease. Section 107 of the Transfer of Property Act (hereinafter referred as to the "said Act") provides the manner in which a lease of an immovable property is required to be made. The said Section reads as follows:
"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 immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:
Provided that the State Government may from time to time, by notification in the Official Gazette, direct that leases of immoveable 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 12 unregistered instrument or by oral agreement without delivery of possession."
Section 106 of the Transfer of Property Act inter alia, provides that in 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 lease from year to year and that a lease of an immovable property for any other purpose shall be deemed to be lease from month to month.
The said Section prescribes the procedure for making of a lease between the parties mentioned therein. It classifies the classes of lease in two categories. Mainly, (i) A lease of immovable property from year to year, or for a term exceeding a year, or lease reserving a yearly rent, to be made by a registered document; and (ii) All other leases other than the above, to be made by registered instrument, or the said lease to be made by an oral agreement accompanied by delivery of possession.
It thus makes clear that all the leases of immovable property not covered in the second category shall have to be necessarily made by a registered instrument only.
The effect of non registration of a lease deed is inadmissible in evidence. Section 17 (1)(d) of the Registration Act, 1908 provides that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent have to be necessarily registered. Section 49 of the same Act, inter alia, provides that no instrument which is compulsorily required to be registered shall affect any immovable 13 property comprised therein, or confer any power to adopt, or be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered. However, an unregistered document affecting immovable property and required by the Registration Act or the Transfer of Property Act to be registered, may be received as evidence of any collateral transaction not required to be effected by registered instrument.
The principle was reiterated by the Supreme Court in Sevoke Properties Ltd. v. West Bengal State Electricity Distribution Company Ltd., Reported in 2020 (11) SCC 782, where it observed as under:
"13. In terms of the provisions of Section 107, a lease of immovable property for a term exceeding one year can only be made by a registered instrument. Admittedly, in the present case, the indenture of lease has not been registered. In consequence, the contents of the indenture would be inadmissible in evidence for the purpose of determining the terms of the contract between the parties. This is the plain consequence of the provisions of Sections 17 and 49 of the Registration Act, 1908. The only purpose for which the lease can be looked at is for assessing the nature and character of the possession of the respondent."
The unregistered lease of an immovable property is inadmissible but for collateral purpose. The essential terms of the lease cannot be treated as for collateral purpose. The recitals of an unregistered lease cannot be used for collateral purpose and at best can be used to explain the character of possession of a person holding the property on a month to month tenancy liable to be evicted after notice under Section 106 of the Transfer of Property Act.
The Full Bench of the Calcutta High Court in Ulfatunnissa v Hosain Khan reported in 1883 ILR (9) Cal 520 has held the words 'no document 14 required by Section 17 to be registered shall be received as evidence of any transaction affecting immovable property' to mean that no document required by section 17 to be registered shall be received as evidence of any transaction so far as it affects immovable property.
An unregistered deed cannot be used to prove the term of a lease as held in Satish Chand Makhan v. Goverdhandas Byas reported in AIR 1984 SC 143.
The period of tenancy is an essential requisite of a valid lease. Accordingly, an unregistered lease deed cannot be looked into for purposes of period of tenancy. In respect of the leases classified in first category under Section 106 of the Act it requires compulsory registration for making of a lease in law under Section 107 of the said Act and if not so registered, the said instrument cannot be used for the purpose of establishing that it created, declared, assigned, limited or extinguished any right to the property comprised in the said document, and the said document can only create a month to month tenancy or year to year depending upon the purpose for which it is made.
In Samir Mukherjee v. Davinder Kumar Bajaj, reported in 2001(5) SCC 259 and AIR 2001 SC 1969 the Hon'ble Supreme Court noticed the interplay between Section 106 and 107 of the Transfer of Property Act in the following words:
"5. Section 106 lays down a rule of construction, which is to apply when the parties have not specifically agreed upon as to whether the lease is yearly or monthly between the parties. On a plain reading of this section it is clear that legislature has classified leases in two categories according to their purposes and this section would be attracted to construe the duration 15 of a valid lease in the absence of a contract or local law or usage to the contrary. Where the parties by a contract have indicated the duration of a lease; this section would not apply. What this section does is to prescribe the duration of the period of different kinds of leases by legal fiction leases for agricultural or manufacturing purposes shall be deemed to be lease from year to year and all other leases shall be deemed to be from month to month. Existence of a valid lease is a pre-requisite to invoke the rule of construction embodied in Section 106 of Transfer of Property Act. Section 107 prescribes the procedure for execution of a lease between the parties. Under the first paragraph of this section a lease of immovable property from year to year or for any term exceeding one year or reserving yearly rent can be made only by registered instrument and remaining classes of leases are governed by the second paragraph that is to say all other leases of immovable property can be made either by registered instrument or by oral agreement accompanied by delivery of possession".
In Sri Janki Devi Bhagat Trust, Agra v. Ram Swarup Jain, reported in 1995(5) SCC 314: AIR 1995 SC 2482, it has been clearly stated that a lease of immovable property from year to year or for a term exceeding one year can be made only by a registered instrument. In Shri Janki Devi Bhagat Trust, Agra (supra) a lease agreement was in existence though unregistered and where-under the monthly rent payable was of Rs.75/- p.m. The tenancy was terminated by a thirty days notice. The defendants pleaded that the lease was for manufacturing purpose consequently, six months' notice was required to terminate the lease. The High Court accepted the plea of the defendant and held that although the lease was unregistered but since it was not for a term exceeding one year, it was not compulsorily registerable under the first part of Section 107. It was also held that since the lease was for manufacturing purpose, six months notice was required to terminate the 16 tenancy. The reasoning given by the High Court was not approved by the Supreme Court, by holding thus:-
"4. Under Section 107 of the Transfer of Property Act a lease of immovable property from year to year of for any term exceeding one year can be made only by a registered instrument. Any lease of this kind would be void unless it is created by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by an oral agreement accompanied by delivery of possession. All the courts below have held that there was a valid lease. The high court has also recorded that it was not the contention of the respondent that his lease was from year to year. The contention was that the lease was for a term exceeding one year and was, therefore, compulsorily registerable under the first part of section 107 of the Transfer of Property Act. This contention has been negative by the High Court as also by both the courts below. The High Court has held that the lease was not for a term exceeding one year, and so was not compulsorily registerable under the first part of Section
107. It, however, held that since the lease was for a manufacturing purpose, six months' notice to quit was required under section 106. In its absence, termination was not valid.
5. This reasoning is fallacious. It is true that Ex.12 which is not registered cannot be looked at because it is not registered. But the factum of lease is not in dispute. All the courts have held that it was a lease from month to month and was not for a term exceeding one year. In view of this finding, the deeming provisions of the first part of section 106 of the Transfer of Property Act cannot be attracted in the present case."
In Payal Vision Ltd., v. Radhika Choudhary, reported in 2012(11) SCC 405 it has been held that in a suit for recovery of a possession from a tenant whose tenancy is not protected under the provisions of the said Rent Control Act, all that is required to be established by the plaintiff landlord is the existence of the jural relationship of landlord and tenant between the parties and the termination of the tenancy either by lapse of time or by 17 notice served by the landlord under Section 106 of the Transfer of Property Act.
The requirement of a registered instrument to established the right under a lease deed of an immovable property has been reiterated in Park Street Properties Pvt. Ltd v. Dipak Kumar Singh, reported in 2016(9) SCC 268 at paragraph 17 and 19 which were reproduced for better understanding of the issue involved:
"17. A perusal of Section 106 of the Act makes it clear that it creates a deemed monthly tenancy in those cases where there is no express contract to the contrary, which is terminable at a notice period of 15 days. The section also lays down the requirements of a valid notice to terminate the tenancy, such as that it must be in writing, signed by the person sending it and be duly delivered. Admittedly, the validity of the notice itself is not under challenge. The main contention advanced on behalf of the respondents is that the impugned judgment and order is valid in light of the second part of Section 107 of the Act, which requires that lease for a term exceeding one year can only be made by way of a registered instrument.
19. It is also a well settled position of law that in the absence of a registered instrument, the courts are not precluded from determining the factum of tenancy from the other evidence on record as well as the conduct of the parties. A three Judge bench of this Court in the case of Anthony v. KC Ittoop & Sons (4), held as under:
"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 18 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: "107. A lease of immoveable 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.
1[All other leases of immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.
2[Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:] Provided that the State Government may, 3[***] from time to time, by notification in the Official Gazette, direct that leases of immoveable 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.]"
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.
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 19 lease not exceeding one year stood created by conduct of parties remains un- rebutted." (emphasis laid by this court) Thus, in the absence of registration of a document, what is deemed to be created is a month to month tenancy, the termination of which is governed by Section 106 of the Act." (emphasis supplied) The effect of a compulsorily registrable lease, if not registered, was also explained by the e Delhi High Court in Deluxe Dentelles Pvt. Ltd. v. Ishpinder Kochhar reported in 2015 SCC OnLine Del 14507 as under:
"21. A lease granted for any purpose, be it residential, commercial, manufacturing or agricultural, can be made only by a registered instrument if duration of the lease is for the period stated in the first paragraph of Section 107 of the Transfer of Property Act, 1882. But, a lease for the same purpose(s) of a lesser duration can be made, under the second paragraph, either by a registered instrument or by an oral agreement accompanied by delivery of possession.
22. If one looks to Section 106 of the Transfer of Property Act it becomes evident that the classification of leases is according to their purpose. Section 106 classifies leases of immovable property for agricultural and manufacturing purposes in one class and all other leases in different class.
23. Sub-section (1) of Section 106 is a deeming provision as per which, 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. Thus, where the parties have themselves indicated the duration of the lease relatable to agricultural or manufacturing purposes, sub-section (1) of Section 106 of the Transfer of Property Act would be redundant. This is evident from the fact that sub- section (1) of Section 106 operates only "in the absence of a contract.....to the contrary".
24. Pertaining to leases, excluding leases for agricultural or manufacturing purposes, the legal fiction created in the second paragraph of sub-section (1) of Section 106 is to deem the leases to be from month to month. Of course, this deeming provision would also be 'in the absence of a contract....to the contrary'.
20
25. In the present case, the defendants have admitted the jural relationship of landlord and tenant between the plaintiff and Defendant 1. As per both plaintiff and defendants, Defendant 1 was inducted as a tenant in the suit premises by virtue of unregistered lease-deed dated November 21, 1999 for a period of eleven years and eleven months.
26. The case (defence) set up by the defendants is that notwithstanding the fact that the lease-deed dated November 21, 1999 executed between the parties is an unregistered document, the tenancy of Defendant 1was not from month to month but for a period of eleven years and eleven months with an option to Defendant 1 to renew the lease by another period of eleven years inasmuch as Defendant. 1 had paid rent in advance to Ms. Neeta Mehra, erstwhile owner of the suit premises for a period of fourteen years approximately at the time when it was inducted in the suit premises.
* * *
30. In view of afore-noted authoritative pronouncement of law laid down by Supreme Court in Ram Kumar's case (supra), the answer to the question posed above is: tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be 'month to month' tenancy even where the tenant has paid annual/yearly rent to the landlord.
31. As a necessary corollary thereof, the tenancy of Defendant 1 in suit premises is deemed to be 'month to month' tenancy which could be terminated by giving 15 days' notice. (We again note here that Defendant 1 has admitted the receipt of legal notice dated May 03, 2010 issued by the plaintiff terminating the tenancy of Defendant 1)."
14. The High Court of Delhi in Sanjay Gupta v. Krishna Hospitality reported in MANU/DE/1749/2018 observed as under:
"11. Per Section 107 of the Transfer of Property Act, 1882, a lease of immovable property for any term exceeding one year can be made only by a registered instrument and all other leases may be made either by registered instrument executed by the lessor and lessee or by oral agreement accompanied with delivery of possession. The defendants in their written statement have pleaded lease agreement dated 23rd 21 November, 2015, for a period of three years, executed by plaintiff and defendants and where under claim to be entitled to occupy premises till 31st October, 2018. The same is not registered and is admitted to be not registered. The same thus, under Section 49 of Registration Act, 1908, cannot be received in evidence of any transaction effecting such property. Per Section 106 of Transfer of Property Act, in the absence of registered lease deed, a lease of immovable property for any purpose other than agricultural or marketing, is deemed to be a lease from month to month, terminable by a fifteen days' notice..."
The result and effect of all these discussions is that there is no scope for holding that the appellant is a lessee by virtue of the said unregistered agreement as felicitously expressed by Justice K.T. Thomas in Anthony (supra):
"11.......... The court is disabled from using the instrument as evidence and hence it goes out of consideration in this case, hook, line and sinker (vide Shantabai v. State of Bombay, Satish Chand Makhan v. Govardhan Das Byas and Bajaj Auto Ltd. V. Behari Lal Kohli)."
The cumulative effect of Sections 106 and 107 of the Transfer of Property Act, Sections 17 and 19 of the Registration Act is that an unregistered lease deed cannot be looked into for the purpose of deciding the rights and liabilities of the lessors and lessees and for its duration. The very lease in the instant case must be treated as month to month tenancy terminable at 15 days notice expiring with the end of the month of the tenancy.
Now we come to the question of manufacturing purpose although we feel that the said question need not to be gone into at all as the tenancy agreement is unregistered and except for the collateral purpose the lease deed cannot be looked into. The essential terms of the lease are beyond our 22 scrutiny. However, since argument has been advanced on manufacturing purpose for which the tenancy agreement is claimed to have been executed we discuss briefly our reasons for not accepting the argument of Mr. Chatterjee on this point.
In the written statement the defendant did not raise any plea or set up any defence that the lease was for manufacturing purpose. All that the tenancy agreement says is that the appellant wanted a factory space and the appellant was provided with the factory space for setting up a factory. That does not by itself make the lease a lease for manufacturing purpose unless the appellant is able to establish that a manufacturing activity is being carried from the suit premises. There is no proof of setting up any factory by the appellant for carrying on any manufacturing process. The onus of proving that the tenancy was for manufacturing purpose was upon the defendant as observed in C. Mackertich (supra). In M/s. Shree Nursing Timber (supra) the then Chief Justice Sinha in his Lordship's inimitable style has dealt with this issue in Paragraph 16. The said decision emphasizes the cardinal principle that there has to be a pleading supported by evidence to prove that there is a manufacturing purpose. The said principle was reiterated by the Hon'ble Supreme Court in Shivaji Balaram Haibatti v. Avinash Maruthi Pawar reported in 2018 (11) SCC 652 paragraph 24 which reads as:
"24. First, the Respondent (Defendant) had not raised such plea in his written statement. In other words, the Respondent did not set up such defense in the written statement. Second, the Trial Court, therefore, had no occasion to frame any issue on such plea for want of any factual foundation in the written statement. Third, the Trial Court and First 23 Appellate Court, in these circumstances, had no occasion to record any finding on this plea either way. Fourth, in the light of these three reasonings, the High Court ought to have seen that such plea really did not arise for consideration because in order that any question is involved in the case, the party concerned should lay its factual foundation in the pleading and invite finding on such plea. Fifth, the High Court failed to see the case set up by the Respondent in his written statement. As mentioned above, the defense of the Respondent was that he had denied the Appellant's title over the suit shop and then set up a plea of adverse possession contending that he has become the owner of the suit shop by virtue of adverse possession, which according to him, was from time immemorial."
In absence of any pleading the Trial court did not frame any issue. In order to establish that the notice is defective the onus on the defendant to prove that it was a manufacturing purpose and manufacturing activities has been carried on from the suit premises. In fact one of the judgments relied upon Mr. Chatterjee namely, Allenburry (supra) clearly emphasize the need for a pleading and proof of "manufacturing purpose" in paragraph 6 and 7 of the said report which reads:
"6. In these circumstances, two questions were sought to be raised by Mr. Chagla. The first was that there being no dispute between the parties that the relationship between them was that of landlord and tenant and the respondents having accepted all along the said rent of Rs. 1800/- a month, the Court must proceed upon the basis that the occupation of the premises by the appellant-company was in the capacity as a tenant. According to him, if the appellant-company, can establish that, that tenancy was for manufacturing purposes, the presumption laid down in Section 106 of the Transfer of Property Act, under which such tenancy has to be regarded as a tenancy from year to year terminable by a six months' notice and not by a month's notice, must apply. It is true, said he, that Under Section 107 of the Act a lease from year to year can be made only by a registered instrument, but that provision in no way controls the presumption laid down in Section 106 under which once it is proved 'that the parties were in the position of a landlord and a tenant and the tenancy was for manufacturing purposes, it 24 has to be presumed to be 'one from year to year. According to him, the two sections are independent of each other, the one dealing with the user and notice, and the presumption arising from such user, and the other dealing with compulsory registration for a lease from year to year, or for a term exceeding one year. Mr. Tarkunde, appearing for the Corporation, on the other hand, disputed the construction of these two sections suggested by Mr. Chagla. The second question raised by Mr. Chagla was that in any event the lease was for manufacturing purposes, and therefore, the said notice was not valid. Assuming that Mr. Chagla is right in the interpretation of Sections 106 and 107 suggested by him, even then the appellant-company has first to establish that the lease in its favour was for manufacturing purposes and it is then only that it can take advantage of the rule of presumption laid down in Section 106.
7. The expression 'manufacturing purposes' in Section 106 is used in its popular and dictionary meaning, the Transfer of Property Act not having supplied any dictionary of its own for that expression. The burden of proving that the lease was for manufacturing purposes, must for the purposes of Section 106 of the Transfer of Property Act, lie on the party who claims it to be so, in the present case the appellant-company. That burden is to establish that the exclusive or at least the dominant purpose of the lease was the manufacturing purpose. [C. Mackertich v. Steuart & Co. Ltd reported in AIR 1970 SC 839]."
The aforesaid judgment has discussed the meaning of the expression "manufacturing purposes" in Section 106 in great detail. The said expression was held to mean purposes for making or fabricating articles or materials by physical labour or skill or by mechanical power, vendible and useful as such. It involves transformation of an existing article into a different article or material having a distinct name, character or use of fabricating a previously known article by a novel process.
25The said paragraphs clearly have laid down the principle that the burden of proof that the lease was one of manufacturing purpose must lie on the party claiming to establish such fact. Although the appellant had the opportunity to produce evidence to show that after the appellant was put to possession it had set up a factory and carried on manufacturing activities the appellant did not adduce any evidence in this regard. The best evidence available with the appellant has been withheld and accordingly an adverse interference should be drawn against the appellant. On such consideration, we do not find any reason to interfere with the judgment and order passed by the learned Trial Judge. The decree is upheld.
During the pendency of the appeal the appellant was directed to pay occupational charges at the rate of Rs.40,000/- per month since April, 2013 till the disposal of the appeal. The appeal was, however, dismissed for default. It is alleged by the appellant that after the dismissal of the appeal the respondent/decree holder refused to accept the occupation charges in terms of the order dated 10th April, 2013. However, subsequent order of the co-ordinate bench on 27th January, 2022 directed the appellant to pay a sum of Rs.11 lacs towards arrears occupation charges for the aforesaid period. Thereafter apparently no occupation charges have been paid by the appellant. In spite of assurance being given by the appellant to furnish the period for which the said sum of Rs.11 lacs was deposited no such information, however, was furnished. Considering the fact that the occupation charges was fixed at the rate of Rs.40,000/- in the year 2013 in respect of 16 cottahs of land in a prime locality and the price of land has 26 gone up substantially we direct the appellant to pay a further sum of Rs.6 lacs towards occupation charges within four weeks from the date subject to the final determination of mesne profits.
The appeal is accordingly dismissed with the aforesaid direction.
I agree (Soumen Sen, J.) (Siddhartha Roy Chowdhury, J.)