Karnataka High Court
M/S Naveen Hotels Ltd vs Canara Bank on 16 April, 2025
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 16TH DAY OF APRIL, 2025
PRESENT
THE HON'BLE MRS. JUSTICE ANU SIVARAMAN
AND
THE HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
REGULAR FIRST APPEAL NO.849 OF 2008 (SP)
C/W
REGULAR FIRST APPEAL NO.847 OF 2008 (RES)
REGULAR FIRST APPEAL NO.848 OF 2008 (EJE)
BETWEEN:
M/s. NAVEEN HOTELS LTD.,
CORPORATE OFFICE
'NAVEEN COMPLEX', 7TH FLOOR
No.14, M.G.ROAD
BENGALURU-560 001
REP. BY ITS CHAIRMAN
... APPELLANT COMMON
(BY SRI. K. SHASHI KIRAN SHETTY, SENIOR ADVOCATE FOR
SRI. JEEVAN GOPAL, ADVOCATE FOR
M/s. SHETTY AND HEGDE ASSTS.)
AND:
CANARA BANK
HEAD OFFICE AT No.112
J.C. ROAD
BENGALURU-560 002
REP BY ITS PRINCIPAL OFFICER AND
DEPUTY GENERAL MANAGER
SRI. MOHAN PARAMESWARAN
...RESPONDENT COMMON
(BY SRI. UDAYA HOLLA, SENIOR ADVOCATE FOR
SRI. SHARAN KUKREJA, ADVOCATE,
SMT. TANISHA SUNIL, ADVOCATE &
2
SRI. BHAIRAV CHARANTIMATH, ADVOCATE)
THESE RFAs ARE FILED U/S.96 OF CPC AGAINST THE
JUDGMENT AND DECREE DATED 26.05.2008 PASSED IN
O.S.No.670/2006 DECREEING THE SUIT FOR SPECIFIC
PERFORMANCE AND O.S.No.5975/2004 AND O.S.No.1459/2006
ON THE FILE OF THE IX ADDL. CITY CIVIL AND SESSIONS
JUDGE, BENGALURU (CCH-10), DISMISSING THE SUIT FOR
EJECTMENT.
THESE APPEALS HAVING BEEN HEARD AND RESERVED FOR
JUDGMENT ON 24.01.2025 AND COMING ON FOR
PRONOUNCEMENT OF JUDGMENT THIS DAY, ANU SIVARAMAN
J., PRONOUNCED THE FOLLOWING:
CORAM: HON'BLE MRS. JUSTICE ANU SIVARAMAN
and
HON'BLE MR. JUSTICE VIJAYKUMAR A. PATIL
CAV JUDGMENT
(PER: HON'BLE MRS. JUSTICE ANU SIVARAMAN) Regular First Appeal No.849/2008 is filed by the appellant/defendant against the judgment and decree dated 26.05.2008 of the IX Additional City Civil and Sessions Judge, Bengaluru (for short 'the trial Court') in Original Suit No.670/2006 and Regular First Appeals No.847/2008 and 848/2008 are filed by the appellant/plaintiff being aggrieved by common judgment and decree dated 26.05.2008 of the trial Court in Original Suits No.5975/2004 & 1459/2006. 3
2. Brief facts of the case are as follows:-
O.S.No.5975/2004 and O.S.No.1459/2006 were filed by the appellant - M/s. Naveen Hotels Ltd., against the respondent - M/s. Canara Bank for ejectment from the schedule premises. The schedule premises in O.S.No.5975/2004 was ground plus five floors of a building constructed by the plaintiff bearing No.14, M.G. Road, Bengaluru, while the schedule premises in O.S No.1459/2006 was the 6th floor of the same building. The said two suits were dismissed with costs, which are the subject matter of RFA No.847/2008 and RFA No.848/2008.
3. O.S.No.670/2006 was filed by Canara Bank against M/s.Naveen Hotels, seeking specific performance of two Lease Agreements:-
(i) Lease Agreement dated 17.05.1985 (Ex.P1), under which ground plus five floors was taken on lease by the Bank; and
(ii) Lease Agreement dated 20.12.1986 (Ex.P5), under which the 6th floor of the building was taken on lease.4
4. The parties are being referred to as 'the appellant' and 'the Bank' for the sake of convenience in this judgment.
5. The learned senior counsel appearing for the appellant contends that the lease deeds in question were 'present demises' and being for a period of 99 years, they were compulsorily registerable. It is submitted that a deposit premium was also provided in the lease agreements. Since the lease agreements were admittedly not registered, the tenancy, if any, continued as a monthly tenancy after 11 months and the suit for specific performance of the unregistered agreements was not maintainable. It is submitted that the Bank is occupying the schedule premises paying only a meager rent and the plaintiff requires the premises for its own use. Further, the plaintiff had informed the defendant by letters dated 08.06.2002 and 29.07.2002 that no lease agreements would be registered as agreed between the parties and that the lease can be registered only if the modified terms are agreed to. Further, notice of termination of the tenancy in respect of ground plus five 5 floors was issued on 17.05.2004 and in respect of the sixth floor on 10.04.2004. The respondent sent a reply notices dated 01.06.2004 admitting the tenancy but declined to vacate. Thereafter, the suits for eviction were filed on 10.08.2004 and 18.02.2006, respectively.
6. O.S.No.670/2006 was filed on 21.01.2006 by the Bank seeking specific performance of the agreements dated 17.05.1985 and 20.12.1986. The Bank raised contentions in the plaint that the agreements were not 'present demises' and were only executor contracts. It was contended that the agreement between the parties was that the possession of the schedule premises would be handed over after the construction is complete. It was submitted that the Bank had fulfilled its part of the obligations and had paid a substantial amount as advance and was also paying the rent as agreed between the parties.
7. The trial Court based on the pleadings framed the following issues in Original Suits No.5975/2004 and 1459/2006:
6
In O.S.No.5975/2004:
1. Whether the quit notice dated 17.05.2004 is valid?
2. Whether the defendant is entitled to protection u/s.
53-A of the TP Act?
3. Whether the plaintiff is entitled to vacant possession of the schedule property?
In O.S.No.1459/2006:
1. Whether the termination of tenancy is valid?
2. Whether the plaintiff is entitled to the possession of the schedule property?
8. The plaintiff-M/s.Naveen Hotels Limited, in support of its claim examined one witness as PW.1 and got marked 18 documents as Exs.P1 to P18. On the contrary, defendant-Bank has examined one witness as DW.1 and got marked 40 documents as Exs.D1 to D40.
9. In Original Suit No.670/2006, the following issues were framed:
1. Whether the plaintiff is entitled to specific performance of the agreements dated 17.05.1985 and 20.12.1986?
2. Whether the agreements dated 17.05.1985 and 20.12.1986 are void and ineffective?
3. Whether the suit is barred by limitation?7
4. Whether the plaintiff is entitled to mandatory injunction sought for?
10. The parties had examined a witness each and the Bank had produced Exs.P1 to P44 documents while the appellant produced Exs.D1 to D7.
11. The Trial Court found that the quit notice dated 17.05.2004 was invalid and that the Bank was entitled to protection under Section 53-A of Transfer of Property Act, 1882 ('the TP Act' for short). It was also found that the agreements were not 'present demises' and that the non-
registration did not make them void and unenforceable. It was further found that it was only when the quit notice was issued on 17.05.2004 that the time for filing the suit for specific performance started to run.
12. In the result, the trial Court, based on the pleadings and the oral and documentary evidence on record, dismissed the O.S.No.5975/2004 and O.S.No.1459/2006 filed by the appellant and decreed the suit for specific performance filed by the Bank, directing the appellant/defendant to perform its obligations as per the 8 originals of Exs.P1 and P5 and to execute separate lease deeds or a consolidated lease deed in terms of the same within three months from the date of decree and restrained the appellant from preventing, obstructing or interfering with the Bank from laying or completing the necessary ancillary work and drawing additional electrical load from BESCOM and from interfering with the peaceful possession and enjoyment of the schedule premises by the Bank.
13. The learned Senior Counsel appearing for the appellant submits that the judgment dated 26.05.2008 in O.S.No.670/2006 is liable to be set aside and the suit for specific performance of agreement is liable to be dismissed. It is contended that:
(i) The lease agreement dated 17.05.1985 (Ex.P1) and the lease agreement dated 20.12.1986 (Ex.P5) were 'Present Demises' and required registration. Since the agreements were not registered, after 11 months, the relationship between the parties was in the nature of a monthly tenancy and the agreements lost their efficacy. Therefore, the suit for specific performance was hopelessly belated, even if all 9 the arguments of the respondent- Bank are accepted.
(ii) It was asserted by the plaintiff that no present demise is created under the agreements and the agreements only agreed to create a lease in future. If that be so, the defense under Section 53-A of the TP Act could not have been applied by the Trial Court since part performance applies only to a concluded contract and not in respect of an agreement to enter into a lease. Having held that the agreements are not present demise, the doctrine of part performance would not arise at all.
(iii) Further, the suit for specific performance filed after notice of termination was given to the Bank was not maintainable without seeking a declaratory relief that the termination was bad in law. Further, there was no evidence to show the readiness and willingness on the part of the Bank to execute the registered lease deeds. It is contended that Exs.P14 to P19 correspondence between the parties does not amount to readiness and willingness of the Bank since a conjoint reading of those documents with Exs.D1 to D3, would show that the Bank refused to execute the Lease Deeds on the original terms.10
(iv) Further, it is contended that the cause of action for specific performance would have arisen:
i. During the four months from the date of the respective agreements within which the lease deeds had to be executed;
ii. After four months of handing over the possession;
iii. On the expiry of 15 days from 16.08.1997 (Ex.P19) when the plaintiff required the registration of the Lease Deeds and the defendant allegedly did not respond to the same.
iv. Atleast when the appellant refused to execute the original Lease deeds as per Exs.P1 and P5 and sought for enhancement of rent and surrender of two floors and other changes in the agreement by Exs.D2 and D3 dated 08.06.2002 and 29.07.2002, respectively.
v) It is contended that the agreements create present demises as the said documents admittedly contained all the terms and conditions of the lease and the premises have been handed over to the bank under those documents which are also admitted by the bank as they assert that they have fulfilled all the conditions under the said documents and they have given deposits and paid rents in respect of the premises under the said documents. But the documents are not 11 registered. Therefore, the documents became void documents, the period of lease mentioned in the said documents are not enforceable. That is why the plaintiff has resorted to Section 53-A of the TP Act to justify their claim in the suit.
(vi) The present tenancies are validly terminated and the tenant is bound to surrender possession of the properties to the landlord under the provisions of Section 108(q) of the Transfer of Property Act, 1882. The Bank cannot plead estoppel against the provisions of a statute. Section 53-A of being a principle of equitable estoppel is not available to the tenant after the tenancies are terminated validly. The trial Court failed to answer this question and still decreed the suit.
(vii) The trial Court ignored the fact that these documents Ex-Pl & Ex-P5, documents are not only invalid as not registered but also non- existent as the tenancy established under the documents have been terminated and the documents ceased to be effective and valid, in any event, after one year of 'the establishment of relationship of landlord and tenant there was no valid document at all.' The tenancy thereafter would only be a monthly tenancy and 12 a termination thereof already having been effected, no suit for specific performance would lie.
(viii) It is further contended that the suit was barred by limitation and the findings were bad for non- consideration of the specific contentions raised by the appellant. It is further contended that the fact refusal to register the Lease Deed as agreed having been specifically notified by the letters dated 08.06.2002 and 29.07.2002, the suit filed in the year 2006 was hopelessly belated. It is submitted that the suit was filed after a lapse of 3 years, 5 months and 20 days from the letter intimating the plaintiff that if the issues raised in the letters are not settled, the Bank has to vacate the entire premises and hand over the same.
(ix) It is further contended that the plaintiff had not proved continuous readiness and willingness to perform his part of the contract and that the agreements are bad for non-compliance of the provisions of Section 269UL, 269UC and 269UD of the Income Tax Act, 1961.
(x) Further, it is contended that the agreements, even if they are admitted to be executory 13 agreements are insufficiently stamped and were not admissible its evidence.
(xi) It is further contended that the specific relief being completely an equitable relief, the conduct of the Bank disentitles it to claim specific performance.
14. In support of his contentions, the learned senior counsel appearing for the appellant has placed reliance on the following judgments:-
• R.K. Parvatharaj Gupta v. K.C. Jayadeva Reddy, reported in (2006) 2 SCC 428;
• H.M. Krishna Reddy v. H.C. Narayana Reddy, reported in ILR 2001 KAR 3870;
• I.S. Sikandar (Dead) by LRs v. K. Subramani and Others, reported in (2013) 15 SCC 27;
• G. Kusuma Devi v. Smt. Gowramma and others, reported in AIR 2006 KAR 295; and • S.N Banerji v. The Kuchwar Lime and Stone Co.Ltd reported in AIR (1941) PC 128-HN.
• Ahmadsahab Abdul Mulla (2) (Dead) by Proposed LRs v. Bibijan and Others, reported in (2009) 5 SCC 462;14
• Sewa International v. Kalawati Mathrani and Others, reported in AIR 2016 (NOC 163) 63.
• Maniram Industrial Enterprises and Others v. B.S. Sathya Kumar reported in ILR (2006) KAR 2466;
• Atma Ram Properties (P) Ltd v. Federal Motors (P) Ltd reported in (2005) 1 SCC 705;
• M/s. Raptacos Breft & Co. v. Ganesh Property, reported in AIR 1998 SC 3085 HN;
• Kewal Chand Mimani(D) By LRs v. S.K.SEN and Others reported in AIR (2001) SC 2569;
• D.S.Parvathamma v. A.Srinivasan reported in AIR (2003) SC 3542;
• Herman D'Souza v. Pradeep and Another, reported in (2017) SCC OnLine Ker 21658;
• Bharat Singh Kanchansingh v. Kunwar Singh Hari Singh & Another, reported in 1991 SCC OnLine MP 54;
• Ramjoo Mahomed v. Haridas Mullick & Others, reported in AIR 1925 Cal 1087;
• Trivenibai v. Smt. Lilabai, reported in AIR 1959 SC 620;
• Karta Ram v. The State of Punjab and Others, reported in AIR 1966 P&H 365;15
• State of Maharashtra and Others v. Atur India Pvt. Ltd., reported in (1994) 2 SCC 497;
• Puran Singh Sahni v. Sundari Bhagwandas Kripalani and Others, reported in 1991 (2) SCC 180;
• Rajendra Pratap Singh v. Rameshwar Prasad, reported in (1998) 7 SCC 602;
• Anthony v. K.C. Ittoop and Sons & Others, reported in (2000) 6 SCC 394;
• Shri Janki Devi Bhagat Trust, Agra v. Ram Swarup Jain (Dead) by LRs., reported in (1995) 5 SCC 314;
• K.B. Saha and Sons Private Limited v.
Development Consultant Limited, reported in (2008) 8 SCC 564;
• Satish Chand Makhan & Ors. v. Govardhan Das Byas and Others, reported in (1984) 1 SCC 369;
• Bajaj Auto Limited v. Behari Lal Kohli, reported in (1989) 4 SCC 39;
• Hitkarini Sabha, Jabalpur v. Corporation of the City of Jabalpur and Others, reported in (1972) 2 SCC 325;
• G.M. Shahul Hameed v. Jayanthi R. Hegde, reported in (2024) 7 SCC 719;
16• Samir Mukherjee v. Davinder K Bajaj reported in AIR (2001) SC 1696;
• Chaliagulla ramachandrayya v. Boppana Satyanarayana reported in AIR (1964) SC 877; • C Ramachandrayya v. S. Sathyanarayana reported in AIR (1964) SC 877;
• Rambau namdeo gajre v. Narayan Bapuji Dhotra reported in AIR (2001) SC 4342;
• GHC Ariff v. Jadunath majumdar reported in AIR (1931) PC 79;
• Mayawati v. Kaushalya Devi reported in (1990) 3 SCC 1;
• Sohan Lal v. Union of India reported in (1991) 1 SCC 438;
• Speech and Software Technologies (India) Pvt. Ltd v. NEOS Interactive Ltd reported in (2009) 1 SCC 475;
• Ranchhoddas Chhaganlal v. Devaji Supdo Dorik reported in AIR (1977) SCC 1517;
• Delhi Motor Company and Ors v. U.A. Basrurkar and Ors reported in AIR (1968) SC 794;
• Sheth Maneklal Mansukhnhai v. Messrs. Hormusji Jamshedji reported in AIR (1950) SC 1 17 • K. Amamath v. Puttamma reported in ILR 1999 KAR 4634;
15. Sri Uday Holla, learned Senior Counsel appearing for the respondent - Bank, on the other hand, contends that the agreements which were sought to be specifically enforced were entered into in pursuance of the negotiations between the parties. It is submitted that the appellant had offered outright sale of the first 4 floors of the building under construction on the schedule property at Rs.325/- per sq.ft., which is evidenced by Ex.P2. It was thereafter that the agreement dated 17.05.1985 was entered into, agreeing to grant lease of the ground plus 5 floors for a period of 99 years. It is stated that Clause (4) of the agreement specifically states that the building will be completed and possession will be delivered to the Bank on or before 30.06.1986. Clause (6) stipulates that the Bank will pay rent at Rs.32.75/- per sq. ft. The deed also stipulates that the lease shall be for a period of 99 years from the date on which possession is delivered to the Bank. 18
16. It is contended that no demise was created in presenti. It is submitted that the same was the case with Ex.P5 as well. On 05.02.1987, Ex.P6 - letter was written by the appellant to the plaintiff stating that 6 floors are ready and the Bank can take possession. On 30.03.1992, Ex.P14 letter was written by the appellant undertaking to obtain necessary permission from the Income Tax Authorities for execution and registration of the lease deed. Thereafter, Ex.D2 letter was written on 08.06.2002 seeking redrafting of the agreement with enhanced rental value and surrendering of two floors. Thereafter, on 29.07.2002, the appellant had sought for enhancement of rent to Rs.30/- per sq. ft. and stated that they are not wiling to register the lease agreement, unless the issues are sorted out and calling upon the Bank to appoint an arbitrator, if the Bank is not in a position to sort out the issue. Even thereafter, rent was being paid by demand draft which was accepted by the appellant.
17. On 17.05.2004, a legal notice was issued by the appellant and on 10.08.2004, O.S No.5975/2004 was filed 19 seeking ejectment. However, even thereafter, demand draft remitted by the Bank was being accepted and the tenancy was continued. It is submitted that it was in those circumstances, O.S. No.670/2006 was filed by the respondent on 18.02.2006 seeking specific performance of the agreements of lease seeking execution of the registered Lease Deeds and seeking permanent injunction.
18. It is further submitted that Shri K.S. Shetty who is the Group General Manager of M/s. Naveen Hotels was examined on behalf of M/s. Naveen Hotels and has clearly stated that M/s. Naveen Hotels is a lessor in perpetuity. The schedule premises were given on oral lease to Canara Bank and that possession of the premises was given under the agreement and that there is landlord tenant relationship between the parties.
19. It is also admitted that the date of termination of the lease was on 17.05.2004 when the letter of termination was communicated. It is further contended that the total security deposit of Rs.3.07 Crores was paid to M/s. Naveen Hotels, which was used to discharge its liability and nothing 20 further was required to be done by the Bank in terms of the agreement since the agreed rent was admittedly being paid regularly. It is contended that it was also admitted that till issuance of legal notice by the defendant, there was no outright refusal to execute the lease deed and that since the suit for specific performance was considered along with the suits filed by the appellant for ejection raising a specific issue as to the validity of the termination, the judgment and decree is perfectly legal and sustainable.
20. It is contended that the Apex Court has held that a lease without the demise in presenti is an agreement and requires no registration. It is submitted that the entire deposit which amounted to the value of the building had been handed over at the time of execution of the agreement and the consideration was used to discharge the mortgage created by M/s. Naveen Hotels in favour of KSIDC and Vijaya Bank. The possession of ground plus five floor was given only during the first week of July, 1986, after one year of the agreement and possession of the 6th floor was given only on 05.02.1987.
21
21. It is contended that both the agreements require the appellant to execute and register the lease deed and that undertakings were given to obtain permission from the Income Tax Authorities to execute the same. It is only on 17.05.2004 the intention not to execute the deed was informed to the Bank and immediately thereafter, the suit was filed. It is therefore contended that the suit filed by the Canara Bank on 18.02.2006 is well within three years from 17.05.2004. It is contended that the deeds in question were only agreements to enter into lease deeds and therefore, no registration is contemplated.
22. It is contended that the contention raised by the appellant that Section 53-A of the TP Act is not applicable, is contradictory. Since it is their own contention that the agreements are contracts in presenti, the contention to the effect that Section 53-A of the TP Act can be pleaded only in the case of concluded contracts, is completely against their earlier stand.
23. It is further contended that as per Article 54 of the Limitation Act, the time for specific performance starts 22 to run only when the date fixed for performance expires or if no such date is fixed, when the plaintiff has noticed that the performance is refused. It is contended that clear notice of refusal having been given only on 17.05.2004, the time starts to run only then. It is submitted that after the documents were admitted in evidence, the contention that the agreements were insufficiently stamped and could not be admitted in evidence, cannot be raised at this stage of the proceedings.
24. The learned senior counsel has also placed reliance on the following judgments in support of the contentions raised:-
• Bharat Singh Kanchansingh v. Kunwar Singh Hari Singh and Another, reported in 1991 SCC OnLine MP 54;
• R. Kandasamy (since dead) & Others v.
T.R.K. Sarawathy and Another, reported in 2024 SCC OnLine SC 3377;
• Satya Narain Singh v. District Engineer, PWD Ballia & Another, reported in 1962 SCC OnLine SC 161;23
• Tolaram Relumal and Another v. The State of Bombay, reported in AIR 1954 SC 496;
• State of Maharashtra and Others v. Atur India Pvt. Ltd., reported in (1994) 2 SCC 497;
• In re Indian Stamp Act, II of 1899, reported in AIR 1952 Bombay 199;
• Trivenibai and Another v. Smt., Lilabai, reported in AIR 1959 SC 620;
• S. Kaladevi v. V.R. Somasundaram and Others, reported in (2010) 5 SCC 401;
• Mademsetty Satyanarayana v. G. Yelloji Rao and Others, reported in AIR 1965 SC 1405;
• Motilal Jain v. Ramdasi Devi (Smt) and Others, reported in (2000) 6 SCC 420;
• Lal Singh v. Hari Singh and Others, reported in AIR 1932 Lahore 36;
• Kali Das Bhanja and Others v. Giribala Dasi, reported in AIR 1914 Calcutta 155;
• Kalavakurti Venkata Subbaiah v. Bala Gurappagari Guruvi Reddy, reported in (1997) 7 SCC 114;24
• V.B. Dharmyat (Deceased) Through LRs v.
Shree Jagadguru Tontadrya and Others, reported in (1999) 6 SCC 15;
• Narayanaswamy v. Muniamma and Others, reported in AIR 1974 Mysore 13 (V S1 C 8);
• Shrimant Shamrao Suryavanshi and Another v. Pralhad Bhairoba Suryavanshi (dead) by LRs and Others, reported in AIR 2002 SC 960;
• Narasimhasetty (Deceased) by LRs v.
Padmasetty, reported in 1998 (3) Kar. L.J. 73(FB); and • Mahadeva and Others v. Tanabai, reported in (2004) 5 SCC 88.
25. In view of the rival contentions urged by the learned senior counsel for the parties, the following points would arise for our consideration:
1. Whether the trial Court was justified in decreeing the suit by directing the defendant-
M/s. Naveen Hotels Ltd., to execute the lease deed dated 17.05.1985 in favour of plaintiff- Canara Bank in O.S.No.670/2006?
2. Whether the trial Court was justified in rejecting the claim of the plaintiff- M/s. Naveen Hotels Ltd., in O.S.No.5975/2004 and 25 O.S.No.1459/2006 for eviction of the defendant- Canara Bank from the schedule premises?
26. We have given our anxious consideration to the pleadings and evidence - both oral and documentary on record in the suits. The plaint averments in O.S.No.5979/2004 were to the effect that the appellant had, by an unregistered Lease Agreement, leased out the suit premises to the Bank and that though quit notices were issued on 10.04.2004 and 17.05.2004, the Bank had refused to vacate the premises, which was the cause of action for the suit. The relief sought was to quit and deliver the vacant physical possession of the schedule premises being the 6th floor of M/s. Naveen Complex at No.40, M.G.Road, Bengaluru to the plaintiff.
27. The Bank thereafter filed O.S.No.670/2006 alleging that the appellant was constructing the multi-storied building in 1985 and pursuant to negotiation it was agreed that the appellant would demise the premises to the Bank and the conditions were mutually agreed and recorded in Ex.P1. It was contended that no present demise was 26 intended or created by the agreement. By another agreement dated 20.12.1986, the 6th floor was also agreed to be leased out on an identical terms. It was further contended that in part performance of the agreements, the deposit amounts had been paid and the occupation of the demised premises were handed over to the Bank. It was contended that with the permission of the appellant, generators were installed in the basement and the parties had exchanged drafts of the Lease Deed, which were to be executed and registered in respect of the premises. It was contended that thereafter termination notice dated 17.05.2004 was issued, which was replied to and O.S.No.5975/2004 was filed by the appellant. Issues regarding parking in the basement parking area were also raised and it was contended that the appellant was resiling from the agreements and refusing to execute and register the Lease Deeds. On these pleadings, a decree of specific performance and permanent injunction was sought for.
28. In O.S.No.670/2006, a written statement was filed admitting the lease but contending that the documents 27 dated 17.05.1985 and 20.12.1986 being unregistered could have operated only for 11 months and the tenancy thereafter was monthly tenancy. It was contended that the terms of the agreement between the parties was unconscionable, unjust and inequitable. It was further contended that all terms required for a lease were mentioned in Exs.P1 and P5 and the possession had been handed over pursuant to the same. It was therefore contended that the agreements amounted to Lease Deeds and they were compulsorily registerable, failing which, the same could not be accepted in evidence and that the suit for specific performance was not maintainable. It was also contended that the terms of the agreement had been violated by the Bank and that the appellant had communicated the termination of the Lease. It was therefore contended that the suit was liable to be dismissed.
29. Exs.P2 to Ex.P4 documents produced in O.S.No.670/2006 evidences the negotiations between the parties regarding outright sale/perpetual lease of the premises in question. In Ex.P1 agreement, the parties 28 agreed to grant a lease and to take the premises in question on lease. The duration of lease is stated to be 99 years from the date on which possession of the property is delivered. The relevant recitals in Ex.P1 are as follows:-
"xxxxx III. WHEREAS the Company offered to give on lease to the Bank for a term of 99 years the ground and five upper floors, as per letter dated 16.3.1985 followed by a clarification letter dated 30.3.1985 and this offer has been accepted by the Bank by their letter dated 30.3.85, it is necessary to reduce into a formal agreement; the terms and conditions agreed upon between the parities in this behalf.
xxxxx IV. NOW THIS AGREEMENT WITNESSES AS FOLLOWS:
The Company hereby agreed to grant and the Bank hereby agreed to take on lease the ground and first five upper floors in "NAVEEN COMPLEX" constructed in a portion of Premises No.14, Mahatma Gandhi Road, Bangalore upon the terms and conditions hereinafter mentioned.
DURATION OF LEASE:
(1) The duration of lease shall be 99 years from the date on which possession of the Schedule property is delivered to the Bank.29
PROPERTY TO BE LET:
(2) The property to be let shall consist of the ground floor and first five upper floors with a total floor area of 75,870 Sq. feet.
DEPOSIT:
(3) The Bank shall pay to the Company a deposit calculated at Rs.325/- per sq. feet of the total floor area.
The same shall be paid as follows:-
(i) Sixty percent on the date of signing this agreement:
(ii) Thirty-five per cent during the further progress and completion of the Building: and
(iii) five per cent on the date of handling over possession to the Bank.
The said deposit shall be refundable by the Company on the expiry of the lease period. The said deposit shall carry Interest at Ten per cent per annum commencing from the date of delivery of possession of the Premises. DUE DATE OF COMPLETION OF BUILDING:
(4) The building will be completed by the Company in all respects and possession shall be delivered to the Bank, on or before 30th day of June 1986. Should there be any unexpected delay in this behalf, the deposit paid by the Bank to the Company till then will carry interest to be paid by the Company at 18 per cent per annum from 1.7.1986 till date of actual delivery."
xxxxx 30 CLEARING ENCUMBRANCES:
(5) Property No.14, Mahatma Gandhi Road, Bangalore, In a portion of which the Naveen Complex Building has been constructed, is subject to three encumbrances aggregating Rupees Ninety lakhs in favour of (i) Karnataka State Finance Corporation, (ii) Karnataka State Industrial and Investment Development Corporation and (iii) Vijaya Bank (amount lent is Rs.30 lakhs by each, to the Company).
The Company shall arrange to see that the portion of the site on which Naveen Complex is constructed as also the said Naveen Complex building shall be freed from the mortgage created in favour of the said three Companies before the lease deed is executed between the Bank and the Company herein.
RENT (6) The Bank will pay rent to the Company at Rs.32.75 per sq.ft. per annum for the floor area let to them. The said rent shall be paid commencing from the date on which the lease begins as hereinbefore provided within tenth of the month following the year to which it relates.
xxxxx STAMP DUTTY AND REGISTRATION:
15. The Stamp duty and registration and other charges payable in respect of this Agreement and any Deed of Lease to be executed pursuant to this shall be borne and paid by the Bank."31
30. The recitals in Ex.P5 are almost identical except the dates and amounts. The first agreement states that the premises will be completed and possession will be delivered on or before 30.06.1986, while in the second agreement dated 20.12.1986. It is provided that the premises will be handed over after completion on or before 31.03.1987. The agreements also provide that the Bank will be liable to pay the rent when the lessor notifies that the building is ready for occupation. The document also provides registration of the agreement in future.
31. In Tolaram's case (supra), the Apex Court clearly holds that an instrument is construed as a lease if it contains words of present demise. It is construed as an executory agreement, notwithstanding that it contains words of present demise, where certain things have to be done by the lessor before the lease is granted, such as the completion or repair or improvement of the premises, or by the lessee, such as the obtaining of sureties. (Vide Halsbury's Laws of England, 2nd Edn., Vol. 20, pp. 37-39.) On the facts of this case therefore the Full Bench held that the oral agreement 32 made between the parties did not constitute a lease but it amounted to an agreement to grant a lease in future.
32. We notice that it is the admitted case of the parties that as on the date of the agreements, the construction of the premises was not complete. The agreement provides for payment of earnest money in installments, the last being on the date of delivery of possession. Since the agreements specifically provided for delivery of possession on future dates after construction is complete, the contention of the appellant that the Agreements are Lease Deeds which are compulsorily registerable cannot be accepted. We are therefore of the opinion that the contention raised by the respondent that the agreement between the parties is not a lease or a demise in presenti was rightly accepted by the trial Court.
33. The Apex Court in V.B. Dharmyat's case (supra), has clearly considered an identical fact situation and it has found that an agreement to lease a property for 99 years would require registration only if the lease takes effect immediately. The suit for specific performance on the basis 33 of an agreement to lease land for 99 years was allowed. It has been held that an unregistered lease deed can also be set up as proof of tenancy to seek specific performance of an agreement to enter into a registered Lease Deed in perpetuity.
34. Clause 15 of the agreements reads as under;
"15. The Stamp duty and Registration and other charges payable in respect of this Agreement and any Deed of Lease to be executed pursuant to it shall be borne and paid by the Bank."
The Clause provides for; 1) Registration of the agreements in question 2) The execution of a lease deed and its registration.
35. On an examination of the evidence on record, we notice that the agreement between the parties was to hand over the premises on completion of the construction to the Bank. The premises were so handed over. The Bank had admittedly paid the entire advance consideration as agreed between the parties in performance of their obligation under 34 the Contract. Rent was being paid as agreed. Therefore, the actual leases commenced from the date when possession was delivered. However, no lease deed was executed and registered in terms of the agreements.
36. Section 107 of the T. P. Act reads as follows:-
"107. Leases how made.--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.
[All other leases of immoveable 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 unregistered instrument or by oral agreement without delivery of possession.]"
37. From a reading of the Section, it is evident that the lease of an immovable property beyond a year has to be 35 made through a registered instrument and has to be coupled with delivery of possession unless exempted by a notification as contemplated by the Section. Though there is no such notification, the Registration Act, 1908 exempts registration if the lease is for 11 months or less. Therefore, it follows that no lease was created by the agreements in question. The parties had only agreed to create a lease on certain terms as agreed between them. The transaction between the parties would therefore have been an oral lease and a monthly tenancy awaiting the execution of the lease deed and its registration, as agreed. The plaint in the suit filed by the Bank specifically states that the parties exchanged drafts of the lease deeds in respect of the demised premises which, however, remained to be executed. This is elaborated in the proof affidavit by stating that the Bank was ready and willing to execute and register the lease deed. It is stated thus:
"25. The plaintiff at all material times, has been and continues to remain ready and willing to perform its obligations. The defendant kept on assuring the plaintiff that it would execute and registered the lease deeds in respect of the suit schedule premises in favour of the plaintiff. The plaintiff based on the assurances and representations made has invested and spent enormous amount of monies in setting up of the Computer center 36 and other allied infrastructure. The conduct of the defendant in purporting to have terminated the tenancy of the plaintiff indicates the malafides on part of the defendant to wriggle out of its obligations under the aforesaid agreement. The cause of action accrued in favour of the plaintiff is a continuing cause of action when the Defendant wrongfully purported to communicate to the Plaintiff vide its advocates' later dated May 17 2004 and the cause of action continued when the defen+9dant filed false and frivolous suit against the plaintiff seeking to illegally evict them from the portion of the schedule premises and when there was deemed refusal by the defendant in coming forward to execute and register the lease deeds in favour of the plaintiff. The cause of action is also the unlawful interference caused by the Defendants on November 27th 2005 to the work being carried out by Plaintiff in the suit premises. Accordingly, the suit of the plaintiff is filed well within the period of limitation and is not barred by limitation."
38. Exs. P15 to P21 are also produced in support of such contention. The appellant also did not deny the lease but had taken a specific contention that terms of the agreement were unreasonable and that the appellant required the premises for its own use. The witness examined on behalf of the Bank also admitted the tenancy and stated that possession of the properties were not handed over on the date of the agreements. It was further admitted that the parties had contemplated the execution of a regular lease deed and that there was no outright refusal 37 to execute the lease deeds till issuance of legal notice by the appellant.
39. It is clear that the appellant had sent letters dated 08.06.2002 and 29.07.2002 imposing conditions for the purpose of registration of the agreements. However, the clear intention to terminate the lease is communicated only by the legal notice dated 17.05.2004. Immediately thereafter, the first suit for ejection was filed. The Apex Court in the decisions mentioned below has clearly held that it is only when the clear and unequivocal intention of one party to terminate the contract is communicated that the time for filing a suit for specific performance starts to run :-
• Babu Ram Alias Durga Prasad v. Indra Pal Singh (Dead) by LRs, reported in AIR 1998 SC 3021;
• Shakuntala (Smt) v. Narayan Gundoji Chavan and Others, reported in (1999) 8 SCC 587;
• S. Brahmanand and Others v. K.R. Muthugopal (D) and Others, reported in AIR 2006 SC 40; and 38 • D.S. Thimmappa v. Siddaramakka, reported in AIR 1996 SC 1960.
The letters dated 08.06.2002 and 29.07.2002, are a part of continuing communications between the parties with regard to negotiation for registration of the lease deeds.
Ex.D2, states as follows:-
"Considering the importance of the prime location of the property and prevailing rent in and around Naveen Complex, our request is bare minimum and just. Having invested huge amount, we have not earned any monetary benefit except paying the interest on deposit given by the Bank out of meager rent paid by the Bank.
Kindly consider our humble request and communicate at an early date with a redrafted agreement with reasonable terms and conditions acceptable mutually for the registration of the same without any lapse of time.
If the Bank is not considering our request, the Bank is free to vacate the premises totally by taking back the deposit."
Ex.D3, also states as follows:-
"As per the provision of agreement, you have violated various terms and conditions and taking the advantage of our ignorance at the time of making the lease agreement which is yet to be registered we cannot wait no longer. Hence we humbly request you to instruct 39 the concerned department to come forward and settle the issues either in the same manner what we have requested in the above mentioned letter or vacate the entire premises and handover to us since the lease is not registered. We are no willing to register the Lease Agreement unless the issues are sorted out.
We also offer one more opportunity to your Bank to appoint an arbitrator-as per the terms of agreement if your Bank is not in a position to sort out the issues.
We humbly request you to intervene in this matter and instruct your department to sort out, considering our offer as you deem fit. "
40. We further notice that the suit for specific performance was filed when the first suit for ejectment was already pending between the parties. The three suits were tried together. A specific issue as to the validity of the termination was raised by the Trial Court and was answered in favour of the Bank. It is also worthwhile to note that there was no plea in the written statement filed by the appellant in the suit for specific performance that the suit is not maintainable. In A. Kanthamani's case (supra), the Apex Court has clearly held that unless an issue of maintainability is framed by the trial court, the suit cannot be held to be not 40 maintainable at the appellate stage, only because declaratory relief has not been prayed. The said decision would not be applicable in a case like the present one where the suits were tried together and the trial Court framed a specific issue on the validity of the termination and found in favour of the Bank.
41. The further contention that the document was insufficiently stamped also cannot be urged at this stage of the proceedings in the light of the embargo provided in Section 35 of the Karnataka Stamp Act, 1957. In the facts of this case, we are of the opinion that the plea in terms of Section 53A of the TP Act does not have to be discussed since we agree with the finding that the suit for specific performance was filed within time.
42. In the above factual circumstances, we are of the opinion that the appeals are devoid of merits. Therefore, the appeals fail and the same are accordingly dismissed. The 41 judgment and decree of the trial Court dated 26.05.2008 in Original Suit No.670/2006 and in Original Suits No.5975/2004 & 1459/2006, is confirmed.
Sd/-
(ANU SIVARAMAN) JUDGE Sd/-
(VIJAYKUMAR A. PATIL) JUDGE PN/cp*