Madras High Court
V.N.Selvaraj vs Dr.B.Padmanaban : 1St on 26 April, 2012
Author: R.S.Ramanathan
Bench: R.S.Ramanathan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 26-04-2012
CORAM
THE HONOURABLE MR.JUSTICE R.S.RAMANATHAN
S.A.No.1511 of 2010
and
M.P.No.1 of 2010
V.N.Selvaraj : Appellants/1st respondent/1st defendant
vs.
1.Dr.B.Padmanaban : 1st Respondent/Appellant/Plaintiff
2.M/s.Bharat Petroleum Corporation Ltd.,
Having their Regional Office (Retail)
at B.P.C.L. Rowther Post & Via.,
Irugur,
Coimbatore-641 103. : 2nd respondent/2nd respondent/2nd defendant
Prayer: This second appeal is filed under section 100 of the Civil Procedure Code, against the judgment and decree passed in A.S.No.164 of 2007 on the file of the I Additional District Judge, Coimbatore dated 14.12.2009 reversing the judgment and decree passed in O.S.No.58 of 2004 on the file of 2nd Additional Sub-Judge, Coimbatore, dated 17.04.2007.
For appellant : Mrs.Hema Sampath
Senior Counsel
for Mr.K.Kalyanasundaram
For 1st Respondent : Mr.M.S.Krishnan
Senior Counsel
for M/s.Sarvabhauamn Associates
For 2nd Respondent : Mr.O.R.Santhanakrishnan
JUDGMENT
The first defendant is the appellant. The first respondent filed a suit for recovery of possession and for damages.
2.The case of the first respondent is that the first respondent/plaintiff is the owner of the lands and the appellant approached the first respondent for the lease of a portion of his land to start a retail outlet business in petrol stating that he secured an agency from the 2nd respondent and the first respondent agreed to grant lease on condition that the appellant should take his son as equal partner in the retail outlet business. The appellant also agreed and therefore, an extent of 18.34 cents of land was given on lease to the appellant, under a registered lease deed, dated 22.03.1996. Simultaneously, the appellant entered into a partnership with the son of the first respondent on the same day agreeing to take the son of the first respondent as a partner in the retail outlet and also promised that after getting necessary permission from the 2nd respondent, the dealership would be transferred in the name of the partnership. The son of the first respondent was also attending to the outlet business and after some time, the appellant did not take any steps to transfer the dealership in favour of the partnership and the appellant also did not pay the rent. Latter, the first respondent came to know that the appellant without the consent of the first respondent granted lease of the scheduled property to the 2nd respondent under a lease deed, dated 25.09.1998 and the appellant was not authorized to sub-lease or grant any lease in favour of the second respondent under the lease deed, dated 22.03.1996 and the lease deed, dated 25.09.1998 entered into between the appellant and the 2nd respondent was illegal and not binding on the first respondent. Therefore, the first respondent issued a notice, dated 25.05.2003 to the second respondent to hand over the vacant possession of the property and the second respondent in reply stated that the appellant was entitled to be in possession of the property till 2016 and therefore, the 2nd respondent also entitled to be in possession till such time, and the second respondent was not aware of the partnership deed entered into between the appellant and the first respondent and the second respondent was not bound by the terms of the partnership deed. Thereafter, the appellant with an intention to create the records as if he was paying the rents, sent a draft for Rs.5,000/- stating that the said sum represented rent for the month of May 2003 followed by another draft for a sum of Rs.5,000/- representing the rent for June 2003 and that was duly returned by the first respondent stating that the appellant had not paid the past rents and the appellant also failed to pay the correct rent as per the agreement and thereafter, the appellant filed R.C.O.P.No.189 of 2003 under the provisions of Tamil Nadu Buildings and Lease Control Act and was depositing a sum of Rs.5,000/- per month into that account and as the appellant, sublet the premises without the consent of the first respondent and as the appellant has committed willful default in the payment of rent, lease deed, dated 22.03.1996 was forfeited by the first respondent by issuing notice stating that the lease deed was terminated by forfeiture and the suit was filed for recovery of possession and damages towards arrears of rent.
3.The appellant admitted the lease agreement entered into between him and the first respondent and also stated that he was forced to enter into such partnership deed, failing which the lease would not have been given to him and the first respondent was informed about his inability to transfer the dealership in favour of the partnership as the second respondent refused to transfer the dealership in the name of the partnership and the lease in favour of the second respondent was also known to the first respondent and the first respondent also permitted the second respondent to put up construction by giving consent letter to the Municipal Corporation and the appellant was regularly paying the rent and in the year 2003, the first respondent refused to receive the rent and therefore, the appellant was forced to send the rent by draft and that was returned and thereafter, the appellant deposited the rent by filing R.C.O.P.No.189 of 2003 and therefore, contended that the lease deed cannot be forfeited as there is no default in the payment of rent and there was no sub-lease and the appellant was authorized to grant lease to the 2nd respondent as per the lease deed and therefore, the suit is not maintainable.
4.The second respondent herein/the second defendant in the suit filed a separate statement stating that the dealership was granted to the appellant under 'physically handicapped' category and therefore, that dealership cannot be transferred in favour of the partnership entered into between the appellant and the first respondent and that was also informed to the first respondent and the first respondent was also aware of the lease executed between the appellant and the second respondent and as per the clauses contained in the lease deed, dated 22.03.1996, the appellant granted lease to the 2nd respondent and the 1st respondent was also aware of the lease in favour of the second respondent and the first respondent also gave his consent to the second respondent to put up construction and also sent a letter to the Municipal Corporation stating no objection to the second respondent to put up construction and therefore, the second respondent is in lawful possession of the property and as per lease deed entered into between the appellant and the first respondent, the second respondent is entitled to be in possession of the property till 2011 and there is a clause for renewal for a further period of five years and therefore, the appellant and the second respondent are entitled to remain in possession till 2016 and therefore, the suit filed by the first respondent is not maintainable.
5.The learned Subordinate Judge dismissed the suit holding that there is no arrears of rent payable by the appellant to the first respondent and till 2003, rents were paid and thereafter, lease rents were deposited in R.C.O.P.No.189 of 2003 and as per various clauses in the lease deed, dated 23.03.1996, the appellant was permitted to sub-lease the property to the second respondent and in exercise of the power, the appellant entered into a lease agreement with the second respondent and the first respondent was also aware of the same and the appellant has got power to sub-lease the property to the second respondent and therefore, the sub-lease in favour of the second respondent is not illegal and the tenancy cannot be forfeited as there is no clause for re-entry in case of breach of any condition in the lease deed and as there was no arrears of rent and the appellant was permitted to sub-lease, the lease cannot also be forfeited by the first respondent and therefore, the first respondent was not entitled to the relief of recovery of possession and for damages.
6.The first appellate court reversed the finding of the trial court and held that there was arrears of rent and no proof was adduced by the appellant that the rent was paid from the inception of tenancy and the payment of Rs.5,000/- in the year 2003 and the subsequent deposit of amount into the court in R.C.O.P.No.189 of 2003 will not cure the default committed by the appellant as Rs.5,000/- cannot represent the rent as per the terms of lease deed between the parties and the income tax returns filed by the appellant would also make it clear that Rs.5,000/- cannot represent the rent and to create evidence, the appellant has sent rents for May and June 2003 and subsequently, is depositing rent before the Rent Controller and that the appellant has committed default in the payment of rent and also committed breach by sub-letting the property to the 2nd respondent and the first respondent was entitled to forfeit the lease and as per the agreement of lease between the appellant and the first respondent, the appellant has no power to sub-lease the property to the second respondent and that right was reserved only with the first respondent and without the consent from the first respondent, the appellant sub-leased the property to the second respondent and therefore, the lease was liable to be forfeited and was rightly forfeited and decreed the suit and allowed the appeal. Hence, the second appeal.
7.The following substantial questions of law were framed at the time of admission:-
01.Whether the lower appellate court is right in reversing the well considered judgment of the trial court overlooking Ex.A1, Ex.B1 and the admission of P.W.1 in the evidence for sublease and payment of rent?
02.Whether the court below is right in decreeing the suit on the basis of the Exs.A16 and A17 when there is no clause in Ex.A1 agreement for the lessor to re-enter by forfeiture of tenancy?
03.Whether the finding of the lower appellate court with regard to non-payment of rent and sub-lease is contrary to the evidence and perverse for non consideration of material evidence on record?
4.Whether the lower appellate court is right in applying sections 106 and 111(h) of Transfer of Property Act for the lease of fixed period and decree possession on the basis of notice Exs.A16 & A17 when the plaintiff failed to establish his case under section 111(g) and 114 of the Transfer of Property Act?
8.Mrs.Hema Sampath, the learned Senior counsel appearing for the appellant submitted that the lower appellate court, without properly appreciating the well considered judgment of the trial court, erred in holding that the appellant committed default in the payment of rent and the appellant had no right to sub-lease the premises under the lease agreement, dated 22.03.1996.aThe lower appellate court without properly appreciating the various clauses in the lease deed, dated 22.03.1996 and Ex.B1 letter sent by the first respondent to the Corporation permitting the second respondent to put up construction and also the admission of PW1 in his evidence, erred in reversing the judgment of the trial court. The learned Senior counsel further submitted that under section 111(g) of Transfer of Property Act, a lease can be forfeited only for breach of express condition of the lease deed and there must be a clause in the lease deed, permitting re-entry in the event of breach of any condition. In this case, there is no provision for re-entry in the event of any breach of condition and therefore, the lease cannot be forfeited. The learned Senior counsel further submitted that the rents are regularly deposited to the credit of R.C.O.P.No.189 of 2003 at the rate of Rs.5,000/- per month and the first respondent also claimed rent at Rs.5,000/- in the suit and therefore, it cannot be contended that Rs.5,000/- will not represent the correct rent and when there is no arrears of rent and in the absence of any clause for re-entry in the event of any breach of any express condition, lease cannot be forfeited under section 111(g) of the Transfer of Property Act and as per the lease dated, dated 22.03.1996, the appellant is entitled to remain in possession till 2011 and there is a clause for renewal and as per that clause, the appellant is entitled to renew the lease for a further period of five years and till 2016, the appellant is entitled remain in possession of the property by virtue of lease entered into with the second respondent by the appellant. The second respondent is also entitled to remain in possession till 2016 and therefore, the suit is liable to be dismissed and that has been rightly dismissed by the trial court and the first appellate court on an erroneous assumption of facts and law allowed the appeal and decreed the suit.
9.Mr.O.R.Santhanakrishnan, the learned counsel appearing for the second respondent submitted that the first respondent was aware of the lease in favour of the second respondent by the appellant and under the lease deed, dated 22.03.1996, the appellant was permitted to grant sub-lease to the 2nd respondent and the first respondent also gave consent to the second respondent to put up construction and as per the lease deed, dated 22.03.1996, the appellant is entitled to be in possession of the property till 2011 and there is a clause for renewal for a further period of five years and therefore, till 2016, the appellant and second respondent are entitled to remain in possession of the property. He further submitted that the second respondent is a Public Sector Undertaking and as per the provision of Burmah Shell (Acquisition of Undertakings in India) Act, 1974, any lease taken by the Companies like the second respondent, the Central Government automatically becomes the lessee of the property and on expiry of term of any lease, such lease or tenency shall be renewable on the same terms and conditions and when the lease or tenancy was held by the company like the second respondent, a statutory renewal for a similar period is available to the second respondent and as per the lease deed, dated 22.03.1996, the lease was for a period 15 years and as per the said Act, a statutory renewal for a further period of 15 years is permissible and therefore, the second respondent is entitled to be in possession of the property till 2026 and therefore, the suit is not maintainable.
10.He further submitted that the second respondent is in legal possession of the property under the lease deed between the appellant and the second respondent and the appellant was authorized to grant sub-lease and therefore, it cannot be stated that the appellant has no right to sub-lease the property to the second respondent and the appellant was paying the rent regularly and therefore, the suit is liable to be dismissed.
11.Mr.M.S.Krishnan, learned Senior Counsel appearing for the first respondent submitted that a reading of various clauses in the lease deed, dated 22.03.1996 would make it clear that the appellant has no right to sub-lease the premises and contrary to the clauses in the lease deed, the appellant has sub-leased the premises without the knowledge and consent of the first respondent and therefore, the appellant has committed breach of express condition and the appellant also did not pay the rent as per the lease agreement and Rs.5,000/- cannot represent the rent as contended by the appellant and the lower appellate court, after discussing the various exhibits, rightly came to the conclusion that the rents were not paid by the appellant and the deposit of Rs.5,000/- into the credit of R.C.O.P.No.189 of 2003 will not represent the correct rent and as the appellant has committed default in the payment of rent, the lease can be fortified as per the provision of 114 of Transfer of Property Act and even though, there was no clause for re-entry when the appellant committed breach of express condition, the lease can be terminated and when the appellant was entitled to terminate the lease by giving three months' notice, the first respondent was also entitled to terminate the lease by giving some period and considering all these aspects, the lower appellate court has rightly allowed the appeal and decreed the suit.
12.He further submitted that having regard to the relationship between the parties, as admitted by the appellant, it cannot be contended that the appellant was paying the rent regularly till 2003 and only in 2003, the first respondent refused to receive the rent and therefore, the appellant depositing the rents to the credit of R.C.O.P.No.189 of 2003 will not cure the willful default. The learned Senior Counsel has elaborated his argument by submitting that there was a understanding between the parties, namely the appellant and the first respondent that the son of the first respondent would be taken into the business of the appellant and on that undertaking a partnership was entered into with the first respondent and thereafter, the dealership was not transferred as promised in favour of the the partnership firm and therefore, misunderstanding arose between the parties and in such circumstances, it cannot be stated that the rents were paid by the appellant prior to 2003. He further submitted that the income tax returns would also falsify the case of the appellant that rents were paid regularly. He, therefore, submitted that having regard to the breach of the condition and also having regard to the fact that the appellant has committed default in the payment of rent, the lease can be forfeited and was rightly forfeited by the first respondent by issuing notice and therefore, the appeal is liable to be dismissed. He further submitted that as per the lease deed, dated 22.03.1996, the lease period came to an end on 21.03.2011 and even though, there is a clause for renewal that clause-right was not exercised and having regard to the breach committed by the appellant, the first respondent is not extending the lease and therefore, even by efflux of time, the lease came to an end, the appellant and the second respondent are not entitled to be in possession of the property. He also relied upon the following judgments in support of his contention:-
01.In Bharat Petroleum Corporation Ltd., Chennai having Office at 1, Ranganathan Garden, 11th Main Rd., Anna Nagar West, Chennai-40 vs. Church of South India, Trust Association, Coimbatore, Diocesan Council, Rep. by Bishop Rt. Vew. Williams Mosses, Coimbatore reported in 2003(4)CTC 408.
02.Satish Chand Makhan and others vs. Govardhan Das Byas and others, reported in (1984)1 SCC 369.
03.M/s.Hindustan Petroleum Corporation Ltd., Devaraj Chordia and others reported in 2005-2-L.W.355.
13.The learned counsel for the second respondent relied upon the the judgment reported in 2001-1-L.W.789 in the case of D.Packiaraj and another vs. P.Kulanthaivel Nadar, 2. Bharat Petroleum Corporation Limited.
14.Though the arguments were advanced by the learned counsels appearing for both the parties regarding the partnership entered into between the appellant and first respondent, it was contended by the first respondent that the appellant cheated the first respondent in not transferring the dealership in favour of the partnership firm and by practicing fraud the leased was obtained by the appellant from the first defendant, I am not inclined to go into those aspects as those facts are not necessary to decide the substantial questions of law arise for consideration in this second appeal.
15.Further, having regard to the arguments advanced by the counsel and having regard to the facts of the case, the following substantial questions of law arose for consideration and the substantial question of law are re-framed as follows:-
01.Whether the appellant is permitted to grant sub-lease as per the lease deed, dated 22.03.1996?
02.Whether the lease deed dated 22.03.1996 can be forfeited in the absence of any provision for re-entry in the event of breach of condition?
3.Whether the lower appellate court is right in holding that the appellant has committed default in the payment of rent and can such be forfeited for non-payment of rent under section 114 of the Transfer of Property Act?
4.Whether the appellant is entitled to be in possession till 2016 by virtue of renewal claim in the lease deed?
16.The main contention of the appellant and the second respondent was that under the lease deed, dated 22.03.1996, the appellant was permitted to grant sub-lease in favour of the second respondent and the first respondent also consented to the sub-lease and also sent a letter to the Corporation permitting 'no objection' by the second respondent to put up construction as per Ex.B1 and there was no breach of condition and the lease in favour of the second respondent is valid. On the other hand, the contention of the first respondent was that under the lease deed, dated 23.03.1998 no right was given to the appellant to sub-lease the premises and therefore, the lease in favour of the second respondent was not valid. Therefore, to appreciate the contention of both parties, we have to see the various causes in the lease deed. The relevant clauses in the lease deed are as follows:-
1.THE LESSOR has agreed to give sub-lease of the land if required to Bharath Petroleum Corporation, Coimbatore, to enable to the LESSEE to carry on with the business which the LESSEE has has undertaken to do the business of Petrol/Diesel retail outlet station for which dealership licence has been issued to the LESSEE:
2.The LESSOR further covenants with the LESSEE that the shall use the leased out property only for the Petrol/Diesel retain outlet and Automobile Service Station and allied purpose.
3.THAT the LESSEE shall deliver vacant possession of the under mentioned property at the termination of lease deed, in case if the lessee wants to terminate he can do no by giving three months notice.
4.That the LESSEE shall be entitled to raise construction for the purpose of business activities like office, Pump Station to dig for the storage tank for storing Petrol and diesel etc., to have wooden structures and constructions necessary for the running of petrol and diesel retail outlet station in the under mentioned leased property.
5.If the Bharath Petroleum Corporation Limited requires the land for its company to operate the sales, there should be fresh lease deed has to be drawn with the LESSOR at a later date. Therefore, a conjoint reading of various clauses, in my opinion, would lead only to the conclusion that the appellant was not given any right to sub-lease the premises to the second respondent. It was the contention of the learned Senior Counsel for the appellant that sub-lease can be granted only by the lessee and as per the clause the lessor, the first respondent herein agreed to give sub-lease of the land, if required to Bharath Petroleum Corporation to enable the lessee to carry on the business and that would only mean that sub-lease can be given by the appellant. I am unable to accept the said contention of the learned Senior Counsel appearing for the appellant, because, the latter clause would make it clear that if Bharath Petroleum Corporation Limited, namely the second respondent herein requires the lease for its outlet sale, there should be fresh lease deed to be arrived at a latter date and further as per the earlier clause, it is specifically stated that the lessor has agreed to give sub-lease of the land, if required by Bharath Petroleum Corporation to enable the lessee to carry on business and that only mean that the sub-lease of the premises can be given only by the first respondent/lessor and without the consent and knowledge of the first respondent, the sub-lease cannot be given by the appellant. Therefore, a reading of the clauses in the lease deed would make clear that the appellant has no right to sub-lease the premises to the second respondent and the sub-lease is contrary to the terms of the lease deed. The 1st substantial question of law is answered against the appellant.
17.It was contended that the first respondent was aware of the sub-lease and he was also given consent to the Corporation permitting the second respondent to put up construction and therefore, the first respondent has acquiesced himself to the lease granted by the appellant in favour of the second respondent and the first respondent also admitted in the evidence that he was aware of the lease in favour of the second respondent by the appellant and he also gave consent to the second respondent to put up construction and therefore, there was no breach of condition. Ex.B1 is the letter given by the first respondent to the Coimbatore Municipal Corporation wherein it has been specifically stated that he has leased out a portion of his land to the appellant, a dealer for M/s.Bharath Petroleum Corporation, for running a Petrol Bunk and Bharath Petroleum Corporation selected the said property for developing the out-let and applied for building permit to raise some constructions and he has no objection for issuing the building permit to M/s.Bharath Petroleum Corporation Ltd. A reading of Ex.B1 would not prove that consent was given by the first respondent to the appellant to sub-lease the premises or a consent can in inferred from Ex.B1. According to me, a reading of Ex.B1 only makes it clear that the appellant was granted dealership by the second respondent and the second respondent also selected the leasehold property for developing their outlet and wanted to put up a construction and having given the property of lease, appellant/first respondent had no objection for the second respondent to put up construction during the period of the lease. Therefore, from Ex.B1 it cannot be inferred that the first respondent had given consent or first respondent was aware of the lease deed between the appellant and the second respondent. Therefore, when the lease deed prohibits the grant of sub-lease by the lessee and the lessee contrary to the terms of lease entered into sub-lease with the second respondent, the lessee/appellant has committed breach of condition and therefore, I hold that the appellant has committed breach of the conditions of the lease dated 22.03.1996 and the lease between the appellant and the second respondent is not legal and is not binding on the first respondent. Having held that the lease between the appellant and first respondent is not binding and is not valid, the next question that would arise for consideration is whether the lease can be forfeited for breach of lease condition, in the absence of any clause for re-entry in the lease agreement. Admittedly, there is no clause in the lease deed which enables the lessor to re-enter and take possession in the event of breach of condition of the lease deed. As per the section 111 of Transfer of Property Act, a lease of immovable property can be determined by forfeiture in the event of happening of the following:-
a.by efflux of the time limited thereby;
b.where such time is limited conditionally on the happening of some event-by the happening of such event;
c.where the interest of the lessor in the property terminates, on , or his power to dispose of the same extends only to, the happening of any event-by the happening of such event;
d.in case the interests of the lessee and the lessor in the whole of the property become vested at the same time in one person in the same right;
e.by express surrender; that is to say, in case the lessee yields up his interest under the lease to the lessor, by mutual agreement between them;
f.by implied surrender;
g.by forfeiture; that is to say, (1) in case the lessee breaks an express condition which provides, that on breach thereof, the lessor may re-enter; or (2)in case the lessee renounces his character as such by setting up a title in a third person or by claiming title in himself; or (3) the lessee is adjudicat6ed an involvement and the lease provides that the lessor may re-enter on the happening of such event; and [in any of these cases] the lessor or his transferee[gives notice in writing to the lessee of his intention to determine the lease;
h.on the expiration of a notice to determine the lease, or to quit, or of intention to quit, the property leased, duly given by one party to the other.
Therefore, as per the 111(g)(1) when the lessee brakes an express condition which provides that, on breach thereof, a lessor may re-enter, the lease can be forfeited. In this case, there is no provision for re-entry in the event of any breach of express condition by the lessee. Therefore, by committing breach of the condition the lessor cannot forfeit the lease unless there is clause in the lease deed which enables the lessor to re-enter in the event of any breach of conditions. Hence, having regard to the provisions 111(g) and in the absence of any provision for re-entry in the lease deed, the first respondent is not entitled to forfeit the lease on the ground that the appellant has breached the express condition of the lease by subletting the property in favour of the second respondent. Hence, the substantial question of No.2 is answered in favour of the appellant.
18.Though a lease cannot be forfeited on the ground that the lessee brakes some express condition of the lease, unless there is a clause in the lease deed enabling the lessor to re-enter, in the event of breach committed by the lessee, a lease can be forfeited for non-payment of rent and that is made clear under section 114 of the Transfer of Property Act.
19.As per section 114, where a lease is forfeited for non-payment of rent and that lessor sues to eject the lessee, the protection is given to the lessee from eviction, if at the hearing of the suit, the lessee pays or tenders to the lessor the rent in arrears, together with interest thereon and in the event of such payment or giving such security sufficient to secure the payment, the court can refuse to pass an order of eviction. Therefore, when a lease is forfeited on the ground of non-payment of rent, the lessor has to prove that rent has not been paid as agreed. In this case, as stated supra, the trial court held that there was no arrears of rent and the lessee was paying the rent to the lessor and the lessor was not issuing any receipts and in May 2003 and June 2003, rent was paid by demand draft, when the lessor refused to receive the rents for those months and that was also proved by Exs.B4 to B7 and thereafter, the lessee/appellant is depositing the rent to the credit of R.C.O.P.No.187 of 2003. Therefore, there was no default in the payment of rent. The lower appellate court reversed the finding of the trial court and held that rent was not paid as per the agreement and no proof was adduced by the appellant for the payment of rent prior to May 2003 and the deposit of Rs.5,000/- per month will not also represent the rent, having regard to the terms of the lease and the income tax returns filed by the appellant would also falsify the case of the appellant. Therefore, we will have to see whether the appellant has committed default in the payment of rent.
20.As stated supra, as per the lease deed Ex.B1, the lessee/the appellant agreed to pay sum of Rs.2,500/- per month and also agreed to pay 25% increase once in every three years to the lessor. The lease deed is dated 22.03.1996 and therefore, in 1999, the rent is Rs.3,000/- and in 2002 the rent is Rs.3,600/-. Further, it is admitted by the appellant that there was an agreement between him and the first respondent and the appellant agreed to take the first respondent as partner in the business on condition of the 2nd respondent agreeing to transfer the outlet business in favour of the partnership firm and thereafter, even in the year 1998, the second respondent made it clear that the partnership cannot be transferred in favour of the partnership firm and the relationship between him and the first respondent also got strained. As per Ex.A6, the first respondent has written a letter to the appellant not to transfer the dealership in favour of the partnership firm and also found fault with the appellant in not informing the partnership deed with the second respondent. As per Ex.A9, dated 10.08.2001, the first respondent also made it clear that the appellant did not pay the rent as agreed and also did not transfer the dealership in favour of the partnership firm. The same was reiterated in his letter, dated 27.08.2002, Ex.A10. Therefore, when the relationship got strained between the parties and the first respondent also sent a letter to the appellant stating that the rent was not paid from the inception of the tenancy, it is highly unbelievable that the appellant was paying the rent regularly to the first respondent and only in May 2003, the first respondent refused to receive the rent and thereafter, the appellant depositing the rent into the court to the credit of R.C.O.P.No.189 of 2003.
21.Further, Rs.5,000/- cannot represent the rent as now put forth by the appellant and the reason being that, as per the lease deed, rent in the year 2003 was only Rs.3,600/- per month and therefore, the amount of Rs.5,000/- cannot represent the rent payable by the appellant. Further, under Ex.A14, the appellant attempted to send the rent for June 2003 by demand draft and in that Ex.A14, it is not stated that till June 2003 the rent was paid regularly to the first respondent and that was received by him and for the month of June 2003, when the rent was tendered that was refused by him and therefore, the rent was sent by demand draft and in the notice, dated 22.11.2003 (Ex.A17), it is stated clearly that the rent has not been paid from the inception of tenancy and the appellant sent reply, dated 18.12.2003 (Ex.A20) wherein also he makes it clear that the business was not carried on as a partnership firm and the first respondent was aware that the 2nd respondent refused to transfer the dealership and it was alleged that till March 2003, the rent was paid in cash and some other modes. The appellant has not produced any proof to prove that rent was paid in cash or through other modes till March 2003. On the contrary, the income tax returns filed by the appellant would only falsify the case of the appellant regarding the payment of rent.
22.Ex.A7 is the profit and loss account for the year ending 31.03.1997 and Ex.A8 is also the profit and loss account for the year ending 31.03.1998. In those two profit and loss accounts, there is no mention of rent paid to the first respondent. Therefore, it is proved by the first respondent that till 31.03.1998, rent was not paid as alleged by the appellant.
23.The appellant also marked Exs.B10 to B14 income tax returns filed by him and those documents would also prove that the appellant could not have paid rents and he has created false records regarding the payment of rent. Ex.B10 is the profit and loss account for the year ending 31.03.2001 and it is stated that lease rent paid was 2,46,440/-. Similarly Ex.B11 is also the profit and loss account for the year ending 31.03.2002 and it is stated that the rent paid is Rs.2,43,000/- and Ex.B12 is also the profit and loss account for the period ending with 31.03.2003 and it is stated that the rent paid is at Rs.2,40,000/- and Ex.B13 is the profit and loss account for the year ending with 31.03.2004 and the rent paid is Rs.60,000/- and Ex.B14 is profit and loss account for the year ending 31.03.2005 and the rent paid is Rs.60,000/-. Exs.B13 and 14 are the profit and loss accounts for the year ending 2004 and 2005 and in those profit and loss accounts, having regard to the deposit made in R.C.O.P.No.198 of 2003, it is stated that Rs.60,000/- was paid as rent. But for the earlier years, as evidenced by Exs.B10 to B12, rent that was paid was shown as 2,43,000/- and it is not known how such amount was paid towards rent, when the rent as per the agreement is only Rs.3,600/- per month. Therefore, the lower appellate court has rightly commented on those exhibits and rightly held that the deposit of rent in R.C.O.P.No.189 of 2003 will not justify the case of the appellant that the rent has been paid regularly and having regard to the strained relationship between the parties prior to 1998, no document was filed by the appellant to prove that rent was paid regularly and Exs.B10 and Ex.B12 would also falsify the case of the appellant that rent was paid and therefore, I hold that the appellant failed to prove that rent was paid regularly from the inception of tenancy.
24.As stated supra, under section 111 of Transfer of Property Act, a lease can be determined by forfeiture on the happening of three conditions. But having regard to section 114 of the Transfer of Property Act, a lease can also be forfeited for non-payment of rent and the only safeguard for the lessee is the lessee cannot be evicted, if the lessee pays the admitted arrears with interest within the time stipulated by this court at the first hearing of the suit. In this case, there was no proof for the payment of rent prior to March 2003 and Exs.A1, A7 and A8 would also prove that the rent was not paid for the year 1997-1998 and Exs.B10 to B12 would also prove that the amount mentioned as rent would not represent the rent, as the rent at that time was only Rs.3,000/- per month and the yearly rent would be Rs.36,000/- and it is stated that Rs.2,42,000/- was paid as rent.
25.Further, the trial court erroneously justified the deposit of rent Rs.5,000/- as rent on the ground that the first respondent also claimed Rs.5,000/- as arrears of rent and claimed the rent at the rate of Rs.5,000/- and therefore, Rs.5,000/- is the agreed rent payable by the appellant. According to me, in the suit Rs.5,000/- was claimed by way of damages and that cannot be construed as rent claimed by the first respondent and therefore, on the basis of the claim made in the plaint, the deposit of Rs.5,000/- cannot be justified as representing the rent.
26.Further, the appellant also did not pay the amount at the first hearing of the suit and therefore, as per section 114 of the Transfer of Property Act, a lease in favour of the appellant was rightly forfeited by issuing notice and therefore, the substantial question of law No.3 is answered against the appellant.
27.It is submitted by the learned Counsel for the second respondent that as per provision of Burmah Shell (Acquisition of Undertakings in India) Act 1978, any lease in favour of Petroleum Corporation shall be deemed to be a lease in favour of the Central Government and the Central Government is entitled to renewal of the lease as per the same terms and conditions on which the lease or tenancy was held by the Petroleum Corporation before the appointed day. He also relied upon the judgment reported in 2001-1-L.W.789, in the case of D.Packiaraj and another vs. P.Kulanthaivel Nadar, 2. Bharat Petroleum Corporation Ltd. He, therefore, contended that as per section 5 of the Burmah Shell (Acquisition of Undertakings in India) Act 1978, the Central Government is entitled to renewal for a further term and even as per the lease deed (Ex.A1), there is a renewal clause for a period of five years and therefore, the appellant is entitled to remain in possession of the property till 2016.
28.Section 5 of the Burmah Shell (Acquisition of Undertakings in India), Act 1978 reads as follows:-
5.Central Government to be lessee or tenant under certain circumstances.
(1)Where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government Government shall, on and from the appointed day, be deemed to have become the lessee or tenant, as the case may be, in respect of such property as if the lease or tenancy in relation to such property had been granted to the Central Government, and thereupon all the rights under such lease or tenancy shall be deemed to have been transferred to, and vested in, the Central Government.
(2).On the expiry of the terms of any lease or tenancy referred to in sub-section (1) such lease or tenancy shall, if so desired by the Central Government, be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the appointed day.
29.Further Section 11 of the Acquisition Act also reads as follows:-
11.Effect of Act on other law.
The provisions of this Act shall have effect not-withstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law other than this Act or in any decree or order of any Court, tribunal or other authority.
30.According to me, provisions 5 and 11 of the Act will not be applied to facts of this case. To attract the provision of section 5, the basic requirement is that the lessee must be the Petroleum Corporation. In this case, admittedly the lessee is the appellant and the appellant sublet the property in favour of the Petroleum Corporation/second respondent and I have held while answering the substantial question of law No.1 that the sub-lease is not valid, as it is against the clauses contained in the lease deed. Therefore, when the lessee is not the Petroleum Corporation, section 5 will not apply.
31.Further, as per section 5(2), there is no automatic renewal of lease in favour of Petroleum Corporation and if the lessee wants to renew the lease, the Central Government should express its desire for renewal and in this case, no materials have been placed before this court that the Central Government has expressed its desire that the renewal of the lease deed and therefore, the lease cannot be renewed automatically.
32.In the judgment reported in 2003(4) CTC 408, in the case of Bharat Petroleum Corporation Ltd., Chennai, having Office at 1, Ranganathan Garden, 11th Main Road, Anna Nagar West, Chennai-40 vs. Church of South India,Trust Association, Coimbatore, Diocesan Council, rep. by Bishop Rt. Rev. Willian Mosses, Coimbatore, this court has held that there is no automatic renewal of lease deed by way of section 5(2) and unless the desire is expressed by the Central Government, there is no question of renewal of the lease deed.
33.In the judgment reported in 2001-1-L.W.789, in case of D.Packiaraj and another vs. P.Kulanthaivel Nadar, 2.Bharat Petroleum Corporation Limited, the same view is expressed. Therefore, the contention of the learned counsel for the second respondent that there is automatic renewal by virtue of section 5 of the Burmah Shell (Acquisition of Undertakings in India) Act 1978, cannot be accepted.
34.Further, the arguments now advanced by the learned counsel for the second respondent was not advanced before the trial court or before the first appellate court and that argument was raised only before this court in the second appeal and hence, on that score also, the argument cannot be considered.
35.It is submitted by the learned counsel appearing for the appellant that as per the lease deed Ex.A1, a lease is renewable for a further period of five years and therefore, even after the expiry of the period in the year 2011, the appellant is entitled to have five more years. The relevant clause in the lease deed is as follows:-
That the terms of the lease is for a period of 15 years agreed by both parties with on option to renew the lease mutually for another 5 years in a separate document. Therefore, as per the above clause, an option to renew the lease was given to both parties, on the basis of mutual agreement for another period of five years and that must be also by virtue of a separate document.
36.In the judgment reported in (1984)1 SCC 369 in the case of Satish Chand Makhan and others vs. Govardhan Das Byas and others, it has been held that when the lease deed was registered and when the lessee wanted to enforce the renewal clause, as per the lease deed, the same can be done only by registered document and in the absence of any registered document, it cannot be relied upon by the lessee.
37.The Hon'ble Supreme Court in the judgment reported 2005(3) CTC 550, in the case of Shanti Prasad Devi and another vs.Shankar Mahto and others, has held that renewable clause should not be vague and incapable of specific performance and when the lease is renewable for a further period of five years on the terms agreed mutually between the parties, the renewal clause is uncertain and incapable of specific performance.
38.In AIR 1976 MADRAS 194, in the case of Rasiklal M.Mehta and another and The Hindustan Photo Films Manufacturing Co. Ltd., this court has held that when the original lease was created by a registered instrument, renewed lease can be made only by a registered instrument. In the absence of any registered instrument, the lessee is not entitled to claim renewal on the basis of the renewal clause.
39.In AIR 1992 Madras 190 in the case of Hindustan Petroleum Corporation Limited vs. Vummidi Kannan, it is held that bare exercise of option does not ipso facto extend the tenure of lease, unless registered document is executed and registered as per provision of the 17 of the Registration Act.
40.In the judgment reported in 2006(5) CTC 663, in the case of Melo Leather, by its Proprietor, S.Gunasekaran vs. P.L.N.Natarajan, this court has held that when the tenancy has been forfeited on the ground of non-payment of rent, section 106 notice is not required to be sent.
41.Having regard to the Honourable Supreme Court and our High Court judgments as stated supra, there is no question of automatic renewal and the renewal must be evidenced by a registered document and a clause for renewal will not automatically renew, the lease deed for a further period and the renewal clause must also be exercised before the expiry of the lease deed and in this case, there is no written document between the parties, when the lease deed expired on 21.03.2011 and therefore, the appellant is not entitled to claim renewal of the lease deed as per renewal clause and the lease clause is also vague and uncertain incapable of specific performance. Therefore, the substantial law No.4 is also answered against the appellant.
42.In the result, the judgment and decree of the first appellate court is confirmed and the second appeal is dismissed. No costs.
er To
1.Ist Additional District Judge, Coimbatore.
2.2nd Additional Subordinate Judge, Coimbatore