Delhi High Court
Ajay Ahuja & Anr. vs M/S Subhiksha Trading Services Ltd. on 3 December, 2010
Author: V.K. Jain
Bench: V.K. Jain
THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment Reserved on: 30.11.2010
Judgment Pronounced on: 03.12.2010
+ CS(OS) No. 241/2010
AJAY AHUJA & ANR. .....Plaintiff
- versus -
M/S SUBHIKSHA TRADING SERVICES LTD.
.....Defendant
Advocates who appeared in this case:
For the Plaintiff: Mr. Rajesh Yadav
For the Defendant: None.
CORAM:-
HON'BLE MR JUSTICE V.K. JAIN
1. Whether Reporters of local papers may
be allowed to see the judgment? Yes
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported Yes
in Digest?
V.K. JAIN, J
1. This is a suit for recovery of possession, arrears of
rent and mesne profit/damages for use and occupation. The
plaintiffs are the owners of plot No. 71 comprised in Khasra
No. 53 in Lal Dora of Village Nangli Puna, Delhi, which has
a constructed area of 125 sq. feet and office area of 1000 sq.
feet. The defendant was inducted as a tenant in respect of
CS(OS)No.241/2010 Page 1 of 22
the aforesaid property, vide an unregistered lease agreement
dated 20th October, 2005 at the rent of Rs 89,000/- p.m.
The month of tenancy commenced from the 15 th day of the
month and ended on the 14th day of the succeeding month.
The rent was to increase by 15% after three years. A
supplementary lease agreement was also executed between
the parties on 1st October, 2007, whereby an additional rent
of Rs 13,000/- was agreed w.e.f. 1.02.2008 till 14th
November, 2008 which was the last day of the lease. This
was to increase to Rs 14950/- p.m. after three years. The
total rent, thereby became Rs 1,02,000/- per month. The
defendant also agreed to pay a sum of Rs 3,56,000/- as
interest free security deposit, which was to be refunded at
the time of vacating the premises, subject to the all
adjustments. The rent was payable on or before the 10th day
of each month. The defendant, however, did not pay or
tender the rent w.e.f. October, 2008. It has been alleged in
the plaint that though the tenancy expired with afflux of
time on 14th November, 2008, the plaintiff as a matter of
abundant precaution terminated the tenancy of the
defendant by giving 15 day notice dated 11th November,
2009 w.e.f the midnight of 14th December, 2009. The notice
CS(OS)No.241/2010 Page 2 of 22
sent by courier was received back with the remarks
"shifted", whereas the notice sent by registered post at the
suit premises was received back with the remarks "on
repeated visits, premises found locked". The notice sent at
the registered office of defendant company was also received
back with the remarks "left without instructions". The
notice dated 11.11.2009, according to the plaintiff thus
stood served upon the defendant. Since the defendant has
neither vacated the suit premises, nor paid arrears of rent
w.e.f. October, 2008, the plaintiffs have now claimed
possession of the suit premises besides arrears of rent,
amounting to Rs 16,42,200/- at the rate of Rs 117300/- per
month. The plaintiffs have also claimed damages for use
and occupation at the rate of 10,000/- per day from the
date of the filing of the suit till the possession of the suit
premises is handed over to them.
2. The defendant was proceeded ex parte vide order
dated 26th October, 2010, as no one appeared for it, despite
service by publication and affixation in terms of the order
dated 13th July, 2010.
3. The plaintiffs have filed affidavit of plaintiff No. 1
Ajay Ahuja by way of ex parte evidence. In his affidavit Mr.
CS(OS)No.241/2010 Page 3 of 22
A. Ahuja has supported, on oath, the case set up in the
plaint. He has identified his own signatures as well as the
signatures of the plaintiff No. 2 on the lease deed Ex.PW-
1/2. He has also identified the signature of Mr. Parag
Chaturvedi, representative of defendant company at point
„C‟ on this document. He has also identified the signature of
the plaintiffs as well as the signature of Mr G. Udayan David
authorized Representative of the defendant on the
supplementary lease agreement Ex. PW-1/3. The notice
dated 11th November, 2009 sent by the plaintiffs to the
defendant through their counsel Mr Rajesh Yadav is Ex.
PW-1/14. Ex. PW-1/15 is the certificate of posting under
which this notice was sent, whereas Ex.PW-1/16 and PW-
1/17 are the postal receipts, whereby the notice was sent by
registered post. Ex. PW-1/18 and PW-1/19 are the courier
receipts, whereby this notice was sent. The returned
envelopes are Exs. PW-1/20 to PW-1/23. According to PW-
1, the defendant neither handed over the possession to
them nor has it paid arrears of rent w.e.f October, 2008 at
the rate of Rs 1,17,300/- pm. He has also stated that the
prevailing market rate of rent for the suit premises would
not be less than Rs 3 lakhs per month on account of a
CS(OS)No.241/2010 Page 4 of 22
sharp price in the rentals and property prices in last 2-3
years.
4. A perusal of the lease agreement Ex.PW-1/2 which
is an unregistered document would show that the suit
premises was let out by the plaintiffs to the defendant at the
rate of Rs 89,000/- per month. The premises were let out
initially for a period of three years. Thereafter, for next three
years, the rent was to be increased by 15 % and thereby
become Rs 102350 per month. The rent was payable in
advance before the 10th day of each month. The total lease
period was fixed at 9 years and the rent was to become Rs
117702.50 per month on expiry of 6 years from the date of
commencement of tenancy. This document also provided
that the lessor would be entities to terminate the agreement
after giving three months written notice only in the events
specified in clause 9. One of the grounds on which the
lease could be terminated by giving three months notice was
default in payment of lease amount for more than two
months. It also provided that if the lessee fails to deliver the
vacant peaceful possession of the premises to the lessor, it
shall pay damages to the tune of Rs 10,000 /- per day to the
lessor till the date of handing over the vacant possession.
CS(OS)No.241/2010 Page 5 of 22
5. The supplementary lease agreement Ex. PW-1/3
provides for payment of additional rent of Rs 13,000/- per
month w.e.f 1st February, 2008 till 14th November, 2008
and, thereafter, at the rate of Rs 1,4950/- per months for
next three years, which was to further increase to Rs
17,192.50 after three years from the date of the first
increase. Thus, the total rent payable by the defendant
became Rs 1,02,000/- w.e.f. 1st February, 2008 to 14th
November, 2008 and Rs 1,17,300/- w.e.f 15th November,
2008.
6. A perusal of the notice Ex.PW-1/14 would show
that vide this notice, the tenancy of the defendant was
terminated w.e.f. the midnight of 14th December, 2009. It
was further stated in the notice that if the defendant felt
that the tenancy did not commence on the date stated in the
notice, the tenancy would stand terminated, on expiry of
month of tenancy, as understood by the defendant, which
would expire next after 15 days from the service of the
notice.
7. Section 107 of Transfer of Property Act, to the
extent it is relevant, provides that a lease of immoveable
property from year to year, or for any term exceeding one
CS(OS)No.241/2010 Page 6 of 22
year or reserving a yearly rent, can be made only by a
registered instrument, whereas all other leases of
immoveable property may be made either by a registered
instrument or by oral agreement accompanied by delivery of
possession
8. Neither lease agreement Ex.PW-1/2 nor the
supplementary deed of lease agreement Ex.PW-1/3 is a
registered document, though they purport to create lease for
more than one year and, therefore, were required to be
compulsorily registered.
9. Section 17(1)(b) of Registration Act provides that
non-testamentary instruments which purport or operate to
create, declare, assign, limit or extinguish, whether in
present or in future, any right, title or interest, whether
vested or contingent, of the value of one hundred rupees
and upwards, to or in immovable property shall be
compulsorily registered. Section 49 of Registration Act, to
the extent it is relevant, provides that no document required
by Section 17 or by any provision of the Transfer of Property
Act, 1882 to be registered shall affect any immovable
property comprised therein, unless it has been registered.
Thus, since the lease deeds executed between the plaintiffs
CS(OS)No.241/2010 Page 7 of 22
and the defendant being for more than one year were
required to be compulsorily registered and has not been got
registered, it does not confer any right on the defendant to
continue to be a tenant for the term stipulated in these
deeds. As a result, the tenancy of the defendant in respect
of the suit premises became a month to month tenancy,
which could be terminated by giving notice to the defendant
under Section 106 of Transfer of Property Act, which to the
extent it is relevant provides that in the absence of a
contract or local law or usage to the contrary, a lease of
immovable property, for any purpose other than agricultural
or manufacturing purposes, shall be deemed to be a lease
from month to month, terminable on the part of either
lessor or lessee by 15 days notice. The above-referred
provision of Section 106 of Transfer of Property Act would
apply only if there is no contract to the contrary between the
parties. The question which comes up for consideration is
as to whether the term of tenancy stipulated in the lease
deed Ex.PW-1/2 and supplementary deed Ex.PW-1/3 can
be looked into, despite the fact that these documents,
though compulsorily registrable, were not got registered.
10. The proviso to Section 49 of Registration Act
CS(OS)No.241/2010 Page 8 of 22
provides that an unregistered document affecting
immovable property and required by that 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 next question which therefore
comes up for consideration is as to whether the term of
tenancy stipulated in the lease deed Ex.PW-1/2 and
supplementary deed Ex.PW-1/3 can be said to be a
collateral transaction not required to be compulsorily
registered or what is generally termed as a collateral
purpose.
11. The collateral transaction referred in the proviso to
Section 49 of Registration Act must necessarily be
independent of or divisional from the transaction, to effect
which the law required registration and such collateral
transaction must be a transaction which by itself is not
required to be effected by a registered document, meaning
thereby that it should not be a transaction creating any
third right, title or interest in immovable property of the
value of Rs 100/- and more. If a document is inadmissible
in evidence for want of registration, it cannot be used for the
purpose of proving an important clause contained in the
CS(OS)No.241/2010 Page 9 of 22
document. This proposition of law is well-settled and was
approved by Supreme Court in State of Punjab Vs.
Raninder Singh and Anr. 2008 (8) SCC 564.
12. The requirement of registration stipulated in
Section 106 of Transfer of Property Act for registration is
related to (i) the term of the lease and (ii) the yearly rent, if
any, reserved in the lease. Therefore, the term of tenancy is
one of the most important component of a lease. If the term
is up to one year, the lease is not required to be
compulsorily registered, unless it reserves of yearly rent,
whereas, if the term of the lease exceeds one year, it has to
be compulsorily registered irrespective of whether a yearly
rent is reserved or not. The notice of termination of tenancy
has a direct bearing on the right of the tenant to continue to
be in possession of the tenancy premises. If the notice,
wherever required is not issued or is not valid, the tenant
continues to be entitled to retain the tenancy premises in
his right as its lawful tenant. If it is valid and is properly
issued, the tenant thereafter becomes a trespasser, unless
he becomes a statutory tenant on account of the protection
provided to him by a rent control legislation. Therefore, it
can hardly be disputed that the period of a notice for
CS(OS)No.241/2010 Page 10 of 22
termination of tenancy, being an important and essential
component of the lease deed, cannot be said to be a
collateral transaction or a collateral purpose in a
transaction for leasing out an immovable property.
13. This issue also came up for consideration before
this Court in Jagatjit Industries Ltd. Vs. Sh. Rajiv Gupta
18 (1980) DLT 434, where this Court, disagreeing with the
view taken by the Allahabad High Court in Lala Fateh
Chand v. Mst. Radha Rani and Ors., 1956 Allahabad Law
Journal, 625 held that the term of the lease cannot be
looked at to find out the period of notice to quit to determine
the tenancy. It was held that the term regarding notice of
eviction is a term which affects immovable property and,
therefore, cannot be said to be a collateral transaction.
During the course of judgment, it was observed that the
main purpose of the term regarding notice of eviction is as
to when the tenant can be required to deliver the possession
of the tenancy premises. In that case, one of the terms of
the lease deed provided that the lease was for a period of 11
months with two years option with the lessee and could be
terminated or extended by giving two months‟ notice by
either side after expiry of lease or option period if exercised.
CS(OS)No.241/2010 Page 11 of 22
The contention before the Court was that the lease could be
terminated by giving two months‟ notice by either side in
terms of the aforesaid clause and for this purpose the
aforesaid term in the lease deed could be looked into. This
contention was expressly rejected by this Court. I see no
good reason to take a contrary view and, therefore, hold that
the irrespective of the requirement of 3 months‟ notice
stipulated in the unregistered lease deed, the tenancy of the
defendant could be terminated by giving notice envisaged in
Section 106 of Transfer of Property Act.
14. The next question which comes up for
consideration in this case is as to whether the notice,
whereby the tenancy of the defendant was sought to be
terminated by the plaintiffs, can be said to have been duly
issued to/served on them. Admittedly, the notice was not
actually received by the defendant-company either at its
corporate office or at the suit premises. The notice sent by
courier was received back with the remarks "shifted",
whereas the notice sent by registered post at the suit
premises was received back with the remarks "on repeated
visits premises found locked". As noted earlier, the notice
sent at the registered office of defendant-company was also
CS(OS)No.241/2010 Page 12 of 22
sent with the remarks "left without instructions".
15. The contention of the learned counsel for the
plaintiff is that the plaintiffs did whatever they could
possibly have done to serve the notice upon the defendants
and if the defendants chose to lock the suit premises and
either shift its registered office or altogether stop its
functioning and close down its operations and its registered
office, without any intimation to the plaintiffs, that would
amount to deliberate avoidance to receive the notice and
consequently constitute a valid service.
16. In M/s. Madan and Co. Vs. Wazir Jaivir Chand
AIR 1989, SC 630, the notice sent by the landlord to the
tenant by registered post was received back with the
endorsement "left without address returned to sender". The
relevant statutory provision which in the case before
Supreme Court was Section 12 of J&K Houses and Shops
Rent Control Act, 1966 provided for receipt of a notice of
demand of rent by the tenant. The question which came up
for consideration before the Court was as to whether the
notice sent by registered post could be said to have been
served and the tenant could be said to have received it. It
was observed by the Court all that a landlord can do to
CS(OS)No.241/2010 Page 13 of 22
comply with the requirement of sending notice is to post a
pre-paid registered letter, containing the tenant‟s correct
address, and once he does this and the letter is delivered to
the post office, he has no control over it. It is then
presumed to have been delivered to the addressee under
Section 27 of General Clauses Act. It was further observed
that a tenant can so many manipulate the matters that the
notice gets returned to the sender with vague endorsement
such as "not found" "not in station", "addressee has left"
and so on. It was contended before the Court that a
landlord knowing that the tenant is away from the station
for some reasons, could go through the motions of posting a
letter to him which he knows will be served. Recognizing
such a possibility, the Court was of the view that if a
registered letter, addressed to a person at his residential
address does not get served in the normal course and is
returned, it can only be attributed to the addressee‟s own
conduct and that if he is compelled to be away for some
time, all that he has to do is leave necessary instructions
with the postal authorities either to detain the letters
addressed to him for some times until he returns or to
forward them to the address where has gone or to deliver
CS(OS)No.241/2010 Page 14 of 22
them to some other person authorized by him.
17. In K. Bhaskaran Vs. Sankaran Vaidhyan Balan
and Another, (1999) 7 SCC 510, the notice sent under
Section 138 of Negotiable Instruments Act, was returned
with the endorsement "addressee absent" and "intimation
served on addressee‟s house". Observing that giving of
notice is distinguished from receiving of notice, it was
observed by Supreme Court that a person gives notice to
another by taking such steps as may be reasonably required
to inform the other in the ordinary course, whether or not
such other actually comes to know of it. It was further
observed that if a strict interpretation is given that the
drawer should have actually received the notice, for the
period of 15 days to start running, no matter that the payee
sent the notice on the correct address, a trickster cheque
drawer would get the premium to avoid receiving the notice
by different strategies and he could escape from the legal
consequences of Section 138 of the Act. It was held that
when a notice is returned by the sender as unclaimed such
date would be the commencing date for reckoning the period
of 15 days contemplated in Clause (c) to the proviso of
Section 138 of the Act. Of course such reckoning would be
CS(OS)No.241/2010 Page 15 of 22
without prejudice to the right of the drawer of the cheque to
show that he had no knowledge that the notice was brought
to his address.
In the case before this Court the defendant has not
come forward to contest the suit and to claim that it had no
knowledge of the notice sent by the plaintiffs and was not in
any manner responsible for its non-service.
18. In D. Vinod Shivappa Vs. Nanda Belliappa (2006)
6 SCC 456, Supreme Court while dealing with a notice
issued under Section 138 of Negotiable Instruments Act and
sent by registered post inter alia observed as under:
"This leaves us with the third situation
where the notice could not be served on
the addressee for one or the other reason,
such as his non availability at the time of
delivery, or premises remaining locked on
account of his having gone elsewhere etc.
etc. If in each such case the law is
understood to mean that there has been
no service of notice, it would completely
defeat the very purpose of the Act. It
would then be very easy for an
unscrupulous and dishonest drawer of a
cheque to make himself scarce for
sometime after issuing the cheque so that
the requisite statutory notice can never
be served upon him and consequently he
can never be prosecuted."
In V. Raja Kumari Vs. P. Subbarama Naidu and
Anr 2004 8 SCC 774, dealing with a case where the notice
CS(OS)No.241/2010 Page 16 of 22
could not b served on account of the fact that the door of
the house of the drawer was found locked, Supreme Court
held that the principle incorporated in Section 27 of General
Clauses Act will apply to a notice sent by post and it would
be for the drawer to prove that it was not really served and
he was not responsible for such non-service.
In State of M.P. Vs. Hiralal and Ors 1996 (7) SCC
523, the respondent managed to have the notice returned
with postal remarks "not available in the house", "house
locked" and " shot closed". It was held that the notices had
been served on the respondents.
In C.C. Alavi Haji Vs. Palapetty Muhammed and
Anr. 2007 6 SCC 555, a Three-Judges Bench of Supreme
Court was called upon to re-consider an earlier decision of
Two-Judges Bench in the case of D. Vinod (supra), Supreme
Court reiterated that where the payee despatches the notice
by registered post with correct address of the drawer of
cheque, the principle incorporated in Section 27 of General
Clauses Act would be attracted. During the course of the
judgment, the Court, inter alia, observed as under:-
"Section 27 gives rise to a presumption
that service of notice has been effected
when it is sent to the correct address by
CS(OS)No.241/2010 Page 17 of 22
registered post. In view of the said
presumption, when stating that a notice
has been sent by registered post to the
address of the drawer, it is unnecessary
to further aver in the complaint that in
spite of the return of the notice unserved,
it is deemed to have been served or that
the addressee is deemed to have
knowledge of the notice. Unless and until
the contrary is proved by the addressee,
service of notice is deemed to have been
effected at the time at which the letter
would have been delivered in the ordinary
course of business."
19. In the case before this Court also, it was for the
defendant-company, if it decided to lock the suit premises
which it had been taken on rent from the plaintiffs, to make
necessary arrangements for service of the letters, etc that
could be sent to it, either by instructing the postal
authorities to re-direct those letters to another address or to
make some other arrangement for receipt of letters, etc. on
its behalf. Same would be the position with respect to the
registered office of the defendant-company, if it had decided
to change its registered office or to altogether close down its
operations as well as its registered office, without shifting
the same to another place, (though as long as a company
exists, it must have a registered office), it ought to have
either provided an alternative address to the postal
CS(OS)No.241/2010 Page 18 of 22
authorities for re-directing its letter to that address or
should have made some alternative arrangement for receipt
of letters, etc. sent to its registered office. Another option
available to the defendant-company was to give public
notice communicating its new address to the public at large
and/or to all those with whom it had transected any
business, including its debtors and creditors as well as the
landlords of the premises which it had taken on rent. If the
defendant-company decided not to adopt any of these
courses available to it, the plaintiffs cannot be blamed for
non-receipt of the notice by the defendant-company. The
plaintiffs did the best they could have done by sending
notice by registered post not only at the suit premises, but
also at the registered office of the defendant-company and in
these circumstances, the statutory presumption under
Section 27 of General Clauses Act with respect to service of
notice sent by registered post cannot be denied to the
plaintiffs.
20. I, therefore, have no hesitation in holding that by
sending the notice dated 11 th November, 2009 which was
returned back with the remarks "shirted" "on repeated visits
premises found locked" and "left without instructions" the
CS(OS)No.241/2010 Page 19 of 22
plaintiffs have duly complied with the requirement of
Section 106 of Transfer of Property Act.
21. Since the tenancy of the defendant stands validly
terminated, the plaintiff is entitled to a decree for possession
of the suit premises. The evidence produced by the plaintiff
also proves that in view of the lease agreement Ex.PW-1/2
read with supplementary agreement Ex.PW-1/3, the rent
payable by the defendant was Rs 1,02,000/- per month with
effect from 1st February, 2008 and stood increased to Rs
1,17,300/- w.e.f 15 November, 2008. The evidence
produced by the plaintiff also proves that the arrears of rent
payable by the defendant to the plaintiff come to Rs
16,42,200/-. The plaintiffs are entitled to recover that
amount from the defendant.
22. The plaintiff has also claimed mesne
profit/damages at the rate of Rs 10,000/- per day from the
date of filing of the suit. It has come in the affidavit of
plaintiff No.1 Shri Ajay Ahuja that the prevalent market rate
of rent of the suit premises would not be less than Rs 3 lac
per month, since there has been a sharp increase in the
rental and property prices in last 2-3 years. No property
dealer has been produced by the plaintiffs to prove the
CS(OS)No.241/2010 Page 20 of 22
market rent of the suit premises, with effect from the date
the tenancy of the defendant was terminated. No lease deed
of any property in the locality or any oral evidence any has
been produced by the plaintiffs to prove the current market
rent of such properties. As noted earlier, the total rent
payable by the defendant was Rs 1,17,300/- w.e.f. 15th
November, 2008 and this rent was not to increase for three
years from the date of increase. Had the defendant
continued to pay rent regularly, the plaintiff would have
received Rs 1,17,300/- p.m. and not Rs 3,00,000/-, from it.
In these circumstances, I hold that the plaintiff is entitled to
damages for use and occupation of the suit premises, at the
rate of Rs 1,17,300/- per month w.e.f. the date of the filing
of the suit till the possession of the suit premises is
delivered to the plaintiffs.
ORDER
The suit is hereby decreed for recovery of possession of the suit premises and recovery of Rs. 16,42,200/- towards arrears of rent, with costs. The plaintiffs will also be entitled to recover mesne profits/damages for use and occupation of the suit premises, at the rate of Rs. 117300/- p.m. from the date of CS(OS)No.241/2010 Page 21 of 22 filing of this suit till they recover possession of the suit premises from the defendant.
(V.K. JAIN) JUDGE DECEMBER 03, 2010 BG CS(OS)No.241/2010 Page 22 of 22