Delhi High Court
Uptron Powertronics Ltd. vs Shri G.L. Rawal on 26 July, 1999
Equivalent citations: 1999IVAD(DELHI)861, AIR1999DELHI377, 80(1999)DLT706, 1999(50)DRJ719, AIR 1999 DELHI 377, (1999) 2 RENTLR 378, (1999) 50 DRJ 719, (1999) 80 DLT 706
Author: Madan B. Lokur
Bench: Madan B. Lokur
ORDER
Madan B. Lokur. J.
1. Admit.
2. With the consent of learned counsel for the parties, the case is taken up for final disposal.
3. Arguments in the appeal were heard on 18th March, 1999 and judgment reserved. On conclusion of arguments, it was suggested to learned counsel for the parties to explore the possibility of an out of Court settlement. It appears that such a settlement has not been arrived at. Consequently, we proceed to deliver judgment.
4. The Appellant came into possession of the suit premises, namely, Flat No.703, 7th Floor, Archana Cinema Commercial Complex, Greater Kailash PartI, New Delhi by virtue of a lease deed dated 1st May, 1981 which expired on 30th April, 1984. Thereafter, the parties entered into a registered lease deed dated 17th July, 1984 effective from 1st May, 1984. Clause 3 and Clause 4 of the lease deed have a material bearing on this appeal and these clauses read as follows:
"3. That the lease shall be of a continuous nature and shall continue till revoked by both the parties by mutual consent subject to compliance of terms & conditions of lease and that of statutory provision applicable to leased property.
4. That rent and service charges for common facilities shall automatically stand increased by 15% respectively after expiry of every three years commencing from 1st May, 1987. It is clarified that enhancement of 15% shall be computed on the rent & service charges which was being paid during earlier period of three years on the expiry of which the rent and service charges are enhanced."
5. There is no dispute about the fact that the lease was continued beyond the initial period of three years and the Appellant increased the rent of the suit premises by 15% every three years, that is in May 1990, 1993 and 1996. However, none of these extensions were through a registered instrument.
6. By a notice dated 2nd April, 1997, the Respondent terminated the tenancy of the Appellant with effect from the "last hours of 31st May, 1997 or in the alternative on the last hours of 1st June, 1997".
7. In spite of the termination of the tenancy, the Appellant continued in possession and occupation of the suit premises and the Respondent continued to accept the rent tendered by the Appellant. Therefore, to avoid any plea of waiver, the Respondent once again terminated the tenancy of the Appellant by a notice dated 5th November, 1997. This termination was with effect from the "last hours of 30th November, 1997 or in the alternative last hours of 1st December, 1997."
8. Since the Appellant did not hand over possession of the suit premises, the Respondent filed Civil Suit No.94/1998 in the Court of the learned Additional District Judge, Delhi, praying, inter alia, for a decree for possession of the suit premises and arrears of rent.
9. The suit was contested by the Appellant who filed a written statement wherein it was submitted by way of preliminary objection that the lease between the parties is continuous and is in perpetuity. As such, it was contended that the tenancy is not on a month to month basis. It was also submitted that the lease can only be terminated by mutual consent of both the parties. A reply on merits on merits was also filed.
10. The Respondent filed its replication reiterating the averments made in the plaint.
11. Before issues were struck, the Respondent moved an application under Order XII Rule 6 of the Code of Civil Procedure, 1908 (for short, CPC) wherein it was prayed, inter alia, that in view of the admissions made by the Appellant, there is no issue which is required to be determined nor is any evidence required to be led and consequently a decree of possession may be passed in favour of the Respondent and against the Appellant.
12. The application under Order XII Rule 6 of the CPC filed by the Respondent was contested by the Appellant and thereafter arguments were heard by the learned Additional District Judge.
13. By the impugned judgment and decree dated 11th December, 1998, the learned Additional District Judge came to the conclusion that the tenancy of the Appellant had been validity terminated by the notice dated 5th November, 1997. It was also held that the relationship of lessor and lessee and entry in possession of the suit premises by the Appellant as a tenant stood established and that the determination of such relationship also stood established.
14. With regard to the contention of the Appellant that the lease deed was continuous and in perpetuity, the learned Additional District Judge came to the conclusion that the lease deed was required to be extended every three years and such extension could only be done by a registered instrument in view of the provisions of paragraph 1 of Section 107 of the Transfer of property Act, 1882 (hereinafter called the Act). The learned Additional District Judge held that since the extension of the lease deed was not by virtue of a registered instrument, the Appellant continued to hold the suit premises only as a tenant on a month to month basis.
15. The Appellant has assailed the judgment and decree passed by the learned Additional District Judge.
16. It was contended by learned counsel for the Appellant that the provisions of Clauses 3 and 4 of the lease deed dated 17th July, 1984 have to be read in conjunction and a plain reading of these two clauses indicates that the lease is of a continuous and perpetual nature and can only be determined by mutual consent of the parties. It was contended that there is an automatic increase in rent by 15% every three years and this means that a fresh lease is not to be entered into between the parties every three years. The lease, it was contended, is in perpetuity providing for an automatic increase in rent years without any additional steps having to be taken by either of the parties.
17. On the merits of the application under Order XII Rule 6 of the CPC, learned counsel for the Appellant relied upon a Division Bench decision of this Court in the case of Surjit Sachdev Vs. Kazakhstan Investment Services Pvt. Ltd. & Ors., 66 (1977) DLT 54 (DB). Learned counsel for the Appellant relied upon paragraph 17 of this decision to contend that before a decree for possession can be granted under the provisions of Order XII Rule 6 of the CPC , there must be an unequivocal admission of two facts, namely, (i) the existence of a relationship of lessor and lessee or entry in possession of the suit property by the Defendant as tenant; (ii) the determination of such relationship in any of the contingencies envisaged by Section 111 of the Act.
18. The submission of the learned counsel for the Appellant in this regard was that there could not be a unilateral determination of the lease by the Respondent, since the lease is in perpetuity. Consequently, the requirement of para (ii) above is not met on the facts and in the circumstances of this case with the result that the application under Order XII Rule 6 of the CPC ought to have been dismissed by the learned Additional District Judge.
19. On the other hand, learned counsel for the Respondent relied upon three decisions of the Supreme Court, namely, (i) Sunil Kumar Roy Vs. M/s Bhowra Kankanee Collieries Ltd., ; (ii) Raval & Co. Vs. K.C. Ramchandran & Ors, ; and (iii) Burmah Shell Oil Distributing now known as Bharat Petroleum Corporation Ltd. Vs. Khaja Midhat Noor & Ors., to contend that modification or variation in the rent amounts to a material alteration of the lease deed and that such an alteration can only be effected by a registered instrument.
20. After hearing learned counsel for the parties, we are of opinion that the appeal must be dismissed and the impugned order and decree dated 11th December, 1998 ought to be affirmed.
21. A plain reading of Clauses 3 and 4 of the lease deed dated 17th July, 1984 suggests that while the lease is intended to run its full course of three years, it can be revoked earlier by both the parties by mutual consent. If the parties agree to continue the lease after the expiry of three years, the rent for the suit premises is automatically (that is, without any further negotiation) increased by 15%. The terms of the lease deed are, to our mind, quite clear that the jural relationship of landlord and tenant will continue for a period of three years unless determined earlier by mutual consent. In other words, neither party can unilaterally terminate the lease within the three year period. And, on the expiry of three years, the lease will be extended, if mutually agreed upon, on the understanding that the rent and service charges for common facilities will be increased by 15%.
22. It seems to us that learned counsel for the Appellant appears to have overlooked Clause 5 of the lease deed which reads as follows:
"That on the termination of the lease as agreed under para 3 of this deed the lessee shall hand over vacant and physical possession of the demised premises to the lessor alongwith all sanitary, electrical and other fittings and fixtures therein belong-
ing to the lessor."
23. If the lease was perpetual, as submitted by the learned counsel, clause 5 of the lease deed would become redundant. However, it is well settled that no clause of an agreement should be rendered otiose. Consequently, if Clause 3 and Clause 5 of the lease deed are to be harmonized, the inescapable conclusion is that the lease is not perpetual and that it can be terminated.
24. We are, therefore, of the view that on the language of this lease deed, the intention of the parties was that after expiry of the initial period of three years, a fresh lease would be entered into for a block of three years at a time and the rent and service charges would be increased by 15%.
25. We need not examine the contention of the learned counsel for the Respondent that the clause relating to increase in rent is a material clause and in this view of the matter, a fresh lease agreement would necessarily have to be entered into. We need not examine this because this question does not arise since we are not in agreement with the learned counsel for the Appellant that the lease is perpetual.
26. Consequently, it is also not necessary for us to examine the decisions cited by learned counsel for the Respondent.
27. The next question that arises is whether a fresh lease deed or an extension/renewal of the earlier lease deed is required to be through a registered instrument. There is no dispute that the lease was intended for a block of three years at a time. As a result, the parties entered into an agreement in 1990, 1993 and eventually in 1996. Paragraph 1 of Section 107 of the Act makes it very clear that a lease of immovable property exceeding one year can only be made by a registered instrument. Admittedly, in the present case apart from the lease deed entered into between the parties on 17th July, 1984 no registered instrument was drawn up by the parties. It is, therefore, quite clear that in the absence of a registered instrument, the necessary consequences will flow. This means that the tenancy was only on a month to month basis. Consequently, the Respondent could terminate the tenancy by a notice under Section 106 of the Act, which in fact, he did by issuing a notice dated 2nd April, 1997 followed by another notice dated 5th November, 1997. The Appellant has not denied receipt of the latter notice.
28. In view of the above, we have no doubt in our minds that the lease deed dated 17th July, 1984 could not be unilaterally revoked by either party during the initial period of three years. The parties had mutually agreed to extend the lease for a period of three years at a time after expiry of the initial period. However, in the present case, the extension in the second and subsequent block of three years was not by a registered instrument; consequently, it was only a month to month tenancy which could be (and was) terminated in accordance with the provisions of Section 106 of the Act. We, therefore, hold that the second requirement mentioned in Surjit Sachdev's case is satisfied. We are of opinion that the Learned Additional District Judge, Delhi was right in allowing the Respondent's application under Order XII Rule 6 of the CPC.
29. Under the circumstances, we are of the view that the appeal is liable to be dismissed and the impugned judgment and decree dated 23rd December 1998 ought to be affirmed. Accordingly, we affirm the impugned judgment and decree dated 23rd December 1998. There shall, however, be no order as to costs.