Case BriefsHigh Courts

Chhattisgarh High Court: A Division Bench of P.R. Ramachandra Menon, CJ and Parth Prateem Sahu, J., addressed an issue with regard to the alienation of Government Land.

Petitioner approached the Court challenging the course and proceedings being taken by the respondents in connection with the alienation of the Government Land, allegedly without any regard to the relevant provisions of law.

Further, it has been stated that the land in question is being allotted to a particular political party through respondents 3 and 4.

Petitioners Counsel, Sharad Mishra submitted that the property was allotted to the respondent concerned. At present, it has been sought to be allotted in the name of Pramod Sahi — Respondent 6 vide the resolution on a lease for 30 years.

Counsel further submits that, no prior sanction of the Government land has been obtained which is clearly in violation of Section 109 of the Municipalities Act, 1961.

As respondent 6 has been allotted a plot already for the purpose of setting up an office, by virtue of the clear mandate under Rule 3B (ii) (b) & (c) of the Rules, 1996, no further allotment shall be made again in their name.

Dy. Advocate General, Chandresh Shrivastava on behalf of the State submitted that the present petition is not maintainable, so far as the petitioner is having a private interest being the leader of a political party.

It was also pointed out that Rule 3B of the Act of 1996 enables allotment of the Government land to the political parties for the construction of their offices.

High Court on perusal of the above held that a prima facie case has been made out by the petitioner and hence the case stands admitted.

Bench has issued notices to the State Government and directed them to file their reply.

Matter to be posted for further consideration on 20-09-2020. [Bhanu Chandrakar v. State of Chhattisgarh, 2020 SCC OnLine Chh 183, decided on 01-09-2020]

Op EdsOP. ED.

1. Chapter V (Sections 105 to 117) of the Transfer of Property Act, 1882[1] (for short ‘TPA’) embodies the provisions relating to the leases of immoveable property. Section 105 of TPA defines a lease as:

105. Lease defined.—  A lease of immoveable property is a transfer of a right to enjoy such property, made for a certain time, express or implied, or in perpetuity, in consideration of a price paid or promised, or of money, a share of crops, service or any other thing of value, to be rendered periodically or on specified occasions to the transferor by the transferee, who accepts the transfer on such terms.

Lessor, lessee, premium and rent defined.— The transferor is called the lessor, the transferee is called the lessee, the price is called the premium, and the money, share, service or other thing to be so rendered is called the rent.”

2. The above definition of the lease under TPA postulates that besides other essential elements of a lease i.e. the parties being the lessor and the lessee; the subject-matter being an immoveable property; demise being a transfer of a right to enjoy; and the consideration being a price paid or promised being the premium or the rent, the time or the term or period of the said lease is an essential requisite of a valid lease. A valid lease may be granted for a certain time, express or implied, or in perpetuity. A lease which is silent as to the duration of its term will not be lease within the meaning of Section 105 of TPA.

3. The commencement of a lease must be certain or capable of being ascertained with certainty afterwards, so that both the time when it begins and the time when it ends, is fixed. A provision in the lease relating to duration thereof may be implied by law or usage. Even Section 106 of TPA, inter alia provides that in absence of a contract or local law or usage to the contrary, a lease of immoveable property for agricultural or manufacturing purposes shall be deemed to be lease from year to year and that a lease of immoveable property for any other purpose shall be deemed to be lease from month to month.

4. Section 107 of TPA provides as to how the leases of immoveable property shall be made in law. The said section reads as under:

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.”

5. This section prescribing the procedure for making of a lease between the parties classifies them into two”

One, a lease of immoveable property from year to year, or for a term exceeding a year, or lease reserving a yearly rent, can only be made by a registered document; and

Second, all other leases other than the above, can either be made by registered instrument, or the said lease to be made by an oral agreement accompanied by delivery of possession.

6. Therefore, it is manifest that all the leases of immoveable property not covered in the second classification shall have to be necessarily made by a registered document only. Needless to state that all the leases not covered by the first above have to be made either by registered document or by an oral agreement accompanied by delivery of possession.

 Effect of non-registration

7. Section 17(1)(d) of the Registration Act, 1908[2] provides that leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent have to be necessarily registered.

8. Section 49 of the same Act, inter alia provides that no instrument which is compulsorily required to be registered shall affect any immovable property comprised therein, or confer any power to adopt, or be received as evidence of any transaction affecting such property or conferring such power, unless it has been registered. However, an unregistered document affecting immovable property and required by the Registration Act or the TPA to be registered, may be received as evidence of any collateral transaction not required to be effected by registered instrument.

9. As already noted, period of tenancy is an essential requisite of a valid lease. Therefore, an unregistered lease deed cannot be looked into for purposes of period of tenancy. It thus follows that in respect of the leases classified in One under Section 106 TPA which require compulsory registration for making of a lease in law under Section 107 of TPA and is not so registered, the said instrument cannot be used for the purpose of establishing that it created, declared, assigned, limited or extinguished any right to the property comprised in the said document, and the said document will only create a month to month tenancy or year to year depending upon the purpose thereof. Therefore, if Sections 106 and 107 TPA are read accordingly, there shall be no conflict between the two.

10. The Calcutta High Court in the decision reported as Debendra Nath Bhowmick v. Syama Prosanna Bhowmick[3],  laid down the following dicta:

 “Then assuming that this case is governed by the Transfer of Property Act, I should like to notice the argument that because an annual rent was mentioned, the tenancy must be taken to be a yearly one. The lease was not for agricultural or manufacturing purposes and therefore must, in the absence of a contract to the contrary, be deemed to be a tenancy from month to month. It is said here that there was such a contract, for a yearly tenancy is to be implied from the mention of an annual rent. But when Section 106 speaks of a contract I think it means a valid contract. But in the present case there is no such contract and under Section 107 a lease such as is argued, for in this appeal can only be created by a registered instrument and there is none here. The notice was therefore sufficient so far as the tenancy is concerned.”

 11. Whether tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be ‘month to month’ tenancy even where the tenant has paid annual/yearly rent to the landlord has been answered in a three-Judge Bench decision of the Supreme Court reported as Ram Kumar Das v. Jagdish Chandra Deo[4]. The facts of said case were that the landlord had not executed a registered instrument for lease of land in favour of tenant. The tenancy created was neither for agricultural or manufacturing purpose. On two occasions, the tenant had tendered annual rent to the landlord. The landlord had terminated the tenancy by giving 15 days’ notice in terms of the second paragraph of Section 106 of TPA by treating the tenancy as from month to month. The question which had arisen before the Supreme Court was whether the tenancy was a monthly tenancy as treated by the landlord or a yearly tenancy since the tenant had paid annual rent to the landlord. It was argued on behalf of the tenant that in view of the fact that rent paid by the tenant was annual rent, it can be inferred that the intention of the parties was certainly not to create monthly tenancy but yearly tenancy, which argument was negatived by the Court in the following terms:

“….It is conceded that in the case before us the tenancy was not for manufacturing or agricultural purposes. The object was to enable the lessee to build structures upon the land. In these circumstances, it could be regarded as a tenancy from month to month, unless there was a contract to the contrary. The question now is, whether there was a contract to the contrary in the present case? Mr. Setalvad relies very strongly upon the fact that the rent paid here was an annual rent and he argues that from this fact it can fairly be inferred that the agreement between that parties was certainly not to create a monthly tenancy. It is not disputed that the contract to the contrary, as contemplated by Section 106 of the Transfer of Property Act, need not be an express contract; it maybe implied, but it certainly should be a valid contract. If it is no contract in law, the section will be operative and regulate the duration of the lease. It has no doubt been recognised in several cases that the mode in which a rent is expressed to be payable affords a presumption that the tenancy is of a character corresponding thereto. Consequently, when the rent reserved is an annual rent, the presumption would arise that the tenancy was an annual tenancy unless there is something to rebut the presumption. But the difficulty in applying this rule to the present case arises from the fact that a tenancy from year to year or reserving a yearly rent can be made only by registered instrument, as laid down in Section 107 of the Transfer of Property Act (vide Debendra Nath v. Syama Prosanna[5]. The Kabuliyat in the case before us is undoubtedly a registered instrument but ex concessis it is not an operative document at all and cannot consequently fulfil the requirements of Section 107 of the Transfer of Property Act.

  1. This position in fact is not seriously controverted by Mr. Setalvad; but what he argues is that a lease for one year certain might fairly be inferred from the payment of annual rent, and a stipulation like that would not come within the mischief of Section 107 of the Transfer of Property Act. His contention is that the payment of an annual rent, as was made in the present case, is totally inconsistent with a monthly lease. We are not unmindful of the fact that in certain reported cases, such inference has been drawn. One such case has been referred to by Reuben, J. in his judgment [Aziz Ahmad v. Alaudd in Ahmad[6] , where reliance was placed upon an earlier decision of the Calcutta High Court (Md. Moosa v. Jaganund[7])]. A similar view seems to have been taken also in Matilal v. Darjeeling Municipality[8].
  2. But one serious objection to this view seems to be that this would amount to making a new contract for the parties. The parties here certainly did not intend to create a lease for one year. The lease was intended to create a lease for one year, but as the intention was not expressed in the proper legal form, it could not be given effect to. It is one thing to say that in the absence of a valid agreement, the rights of the parties would be regulated by law in the same manner as if no agreement existed at all; it is quite another thing to substitute a new agreement for the parties which is palpably contradicted by the admitted facts of the case.
  3. It would be pertinent to point out in this connection that in the second appeal preferred by the plaintiff against the dismissal of his earlier suit by the lower appellate court, the High Court definitely held that the defendant’s tenancy was one from month to month under Section 106, Transfer of Property Act, and the only question left was whether payment to the Receiver amounted to payment to the plaintiff himself. In this suit the defendant admitted in his written statement that payment to the Receiver had the same effect as payment to the plaintiff, and the trial Judge took the same view as was taken by the High Court on the previous occasion, that by payment too and acceptance of rent by the Receiver, the defendant become a monthly tenant under Section 106, Transfer of Property Act. In his appeal before the District Judge which was the last court of facts, the only ground upon which the defendant sought to challenge this finding of the trial Judge was that the Receiver was an unauthorised person because of the decision of the Judicial Committee which set aside his appointment and consequently acceptance of rent by such person could not create a monthly tenancy. This shows that it was not the case of the defendant at any stage of this suit that because one year’s rent was paid a tenancy for one year was brought into existence. We think, therefore, that on the facts of this case it would be quite proper to hold that the tenancy of the defendant was one from month to month since its inception in 1924. This view finds support from a number of reported cases (vide Debendra Nath v. Syama Prasanna[9] ; Sheikh Akloo v. Emaman[10]), and in all these cases the rent payable was a yearly rental. On this finding no other question would arise and as the validity of the notice has not been questioned before us, the plaintiff would be entitled to a decree in his favour. The appeal thus fails and is dismissed with costs.”

 12. The effect of a compulsorily registrable lease, if not registered, was also explained by the e Delhi High Court in Deluxe Dentelles Pvt. Ltd. v. Ishpinder Kochhar[11] as under:

“21. A lease granted for any purpose, be it residential, commercial, manufacturing or agricultural, can be made only by a registered instrument if duration of the lease is for the period stated in the first paragraph of Section 107 of the Transfer of Property Act, 1882. But, a lease for the same purpose(s) of a lesser duration can be made, under the second paragraph, either by a registered instrument or by an oral agreement accompanied by delivery of possession.

  1. If one looks to Section 106 of the Transfer of Property Act it becomes evident that the classification of leases is according to their purpose. Section 106 classifies leases of immovable property for agricultural and manufacturing purposes in one class and all other leases in different class.
  2. Sub-section (1) of Section 106 is a deeming provision as per which, in the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purposes shall be deemed to be a lease from year to year. Thus, where the parties have themselves indicated the duration of the lease relatable to agricultural or manufacturing purposes, sub-section (1) of Section 106 o f the Transfer of Property Act would be redundant. This is evident from the fact that sub-section (1) of Section 106 operates only “in the absence of a contract…..to the contrary”.
  3. Pertaining to leases, excluding leases for agricultural or manufacturing purposes, the legal fiction created in the second paragraph of sub-section (1) of Section 106 is to deem the leases to be from month to month. Of course, this deeming provision would also be ‘in the absence of a contract….to the contrary’.
  4. In the present case, the defendants have admitted the jural relationship of landlord and tenant between the plaintiff and Defendant 1. As per both plaintiff and defendants, Defendant 1 was inducted as a tenant in the suit premises by virtue of unregistered lease-deed dated November 21, 1999 for a period of eleven years and eleven months.
  5. The case (defence) set up by the defendants is that notwithstanding the fact that the lease-deed dated November 21, 1999 executed between the parties is an unregistered document, the tenancy of Defendant 1was not from month to month but for a period of eleven years and eleven months with an option to Defendant 1 to renew the lease by another period of eleven years inasmuch as Defendant. 1 had paid rent in advance to Ms. Neeta Mehra, erstwhile owner of the suit premises for a period of fourteen years approximately at the time when it was inducted in the suit premises.

                *                           *                      *

  1. In view of afore-noted authoritative pronouncement of law laid down by Supreme Court in Ram Kumar’s case (supra), the answer to the question posed above is: tenancy of immovable property for any purpose other than agricultural or manufacturing created by an unregistered instrument would be deemed to be ‘month to month’ tenancy even where the tenant has paid annual/yearly rent to the landlord.

  2. As a necessary corollary thereof, the tenancy of Defendant 1 in suit premises is deemed to be ‘month to month’ tenancy which could be terminated by giving 15 days’ notice. (We again note here that Defendant 1 has admitted the receipt of legal notice dated May 03, 2010 issued by the plaintiff terminating the tenancy of Defendant 1).” 

13. The Supreme Court in Park Street Properties (Pvt.) Ltd. v. Dipak Kumar Singh[12], held as under:

“9. A perusal of Section 106 of the Act makes it clear that it creates a deemed monthly tenancy in those cases where there is no express contract to the contrary, which is terminable at a notice period of 15 days. The section also lays down the requirements of a valid notice to terminate the tenancy, such as that it must be in writing, signed by the person sending it and be duly delivered.

11. It is also a well-settled position of law that in the absence of a registered instrument, the courts are not precluded from determining the factum of tenancy from the other evidence on record as well as the conduct of the parties…” 

14. The High Court of Delhi in  Sanjay Gupta v. Krishna Hospitality[13] , observed as under:

“11. Per Section 107 of the Transfer of Property Act, 1882, a lease of immovable property for any term exceeding one year can be made only by a registered instrument and all other leases may be made either by registered instrument executed by the lessor and lessee or by oral agreement accompanied with delivery of possession. The defendants in their written statement have pleaded lease agreement dated 23rd November, 2015, for a period of three years, executed by plaintiff and defendants and where under claim to be entitled to occupy premises till 31st October, 2018. The same is not registered and is admitted to be not registered. The same thus, under Section 49 of Registration Act, 1908, cannot be received in evidence of any transaction effecting such property. Per Section 106 of Transfer of Property Act, in the absence of registered lease deed, a lease of immovable property for any purpose other than agricultural or marketing, is deemed to be a lease from month to month, terminable by a fifteen days’ notice…”

15. The principle was reiterated by the Supreme Court in Sevoke Properties Ltd. v. West Bengal State Electricity Distribution Company Ltd.[14],  when it observed as under:

“13. In terms of the provisions of Section 107, a lease of immovable property for a term exceeding one year can only be made by a registered instrument.  Admittedly, in the present case, the indenture of lease has not been registered. In consequence, the contents of the indenture would be inadmissible in evidence for the purpose of determining the terms of the contract between the parties. This is the plain consequence of the provisions of Sections 17 and 49 of the Registration Act, 1908. The only purpose for which the lease can be looked at is for assessing the nature and character of the possession of the respondent.”

 Renewal v. Extension of lease

16. An instrument of lease may contain a provision to the effect that on the expiry of the term of the lease, it is to be renewed or extended. Such a provision may not ipso facto renew or extend the term of the lease but it entitles the lessee to obtain a new lease in his favour after the expiry of the original term. The Supreme Court in its judgment in Hindustan Petroleum Corporation Ltd.   Dolly Das[15], observed as under:

“12…Covenant for renewal is not treated as part of terms prescribing the period of lease but only entitles a lessee to obtain a fresh lease…”

 17. Renewal and extension of lease are two different concepts. They are not defined in TPA. As per Webster dictionary, ‘to renew’ means ‘to make like new’or ‘to restore to existence’; and ‘to extend’ means ‘to stretch out to fullest length’.

18. The distinction between these two concepts has often been a subject of discussion and has been considered by the Supreme Court in its judgment titled as Provash Chandra Dalui. v. Biswanath Banerjee[16] , while observing as under:

“14. It is pertinent to note that the word used is ‘extension’ and not ‘renewal’. To extend means to enlarge, expand, lengthen, prolong, to carry out further than its original limit. Extension, according to Black’s Law Dictionary, means enlargement of the main body; addition to something smaller than that to which it is attached; to lengthen or prolong. Thus extension ordinarily implies the continued existence of something to be extended. The distinction between ‘extension’ and ‘renewal’ is chiefly that in the case of renewal, a new lease is required, while in the case of extension the same lease continues in force during additional period by the performance of the stipulated act.”

19. The distinction between the said two concepts was reiterated by the Supreme Court in the judgment of State of U.P.   Lalji Tandon[17], in the following words:

“13….There is a difference between an extension of lease in accordance with the covenant in that regard contained in the principal lease and renewal of lease, again in accordance with the covenant for renewal contained in the original lease. In the case of extension it is not necessary to have a fresh deed of lease executed; as the extension of lease for the term agreed upon shall be a necessary consequence of the clause for extension..”

 20. This distinction was reiterated by the High Court of Delhi in  Aggarwal and Modi Enterprises (Cinema Project) Pvt. Ltd.   New Delhi Municipal Council[18].

21. Reiterating the distinction between the two concepts, as enunciated in Provash Chandra Dalui and Lalji Tandon (supra), the Supreme Court in its judgment titled as Hardesh Ores Pvt. Ltd. v. Hede and Company[19],  observed as under:

“25. Having regard to these decisions we must hold that in order to give effect to the renewal of a lease, a document has to be executed evidencing the renewal of the agreement or lease, as the case may be, and there is no concept of automatic renewal of lease by mere exercise of option by the lessee. It is, therefore, not possible to accept the submission urged on behalf of the appellants-plaintiffs that by mere exercise of option claiming renewal, the lease stood renewed automatically and there was no need for executing a document evidencing renewal of the lease.”

 22. The High Court of Calcutta in the judgment of Renuka Seal  Sabitri Dey[20]  has made distinction between the concepts of renewal and extension of lease in the following words:

 “24…”To extend” means to enlarge, expand, lengthen, prolong to carry out further than its original limit. In other words, “extension” means enlargement of the main body; addition of something smaller than that to which it is attached; to lengthen or prolong. Thus, extension ordinarily implies the continued existence of something to be extended. But “renewal of lease” means creation of a new lease which creates a fresh right and obligation between the contracting parties. Thus, once a renewed lease comes within the scope of Section 107 of the Transfer of Property Act, such a lease can be made only by registered instrument…

32…when renewal is effected by a bilateral process on fresh terms and conditions to be settled between the parties after the expiry of the original lease period, it creates a new lease creating fresh relationship between the parties and under such circumstances it requires registration of a deed for renewal of lease.

33. The extension of lease, however, can be made through an unilateral process,inasmuch as, such extension is made on the option of one of the parties to the lease, as the party on the other part had and/or has no option but to accept the option for renewal exercised by the said party and to extend the said lease as per the provisions contained in the original registered lease deed.”

 23. It is thus clear that a clause in the instrument of lease either for renewal or for extension of lease is its important term and therefore, it has to be clear and specific, so as to enable the Court to ascertain the same. In case of uncertainty or ambiguity in the terms and conditions of the lease, whether there is an option clause for renewal or extension of lease, has to be determined reading all other covenants of lease as also the other evidence on record, so as to determine the intention of the parties.

Procedure of Renewal

24. The renewal of a lease is a privilege and the same is required to be done within the time limited and in the stipulated manner as provided in the lease for the said purpose. In the celebrity case of Caltex (India) Ltd. v. Bhagwan Devi Marodia[21], the Supreme Court held as under:

“4. At common law stipulations as to time in a contract giving an option for renewal of a lease of land were considered to be of the essence of the contract even if they were not expressed to be so and were construed as conditions precedent. Equity followed the common law rule in respect of such contracts and did not regard the stipulation as to time as not of the essence of the bargain. As stated in Halsbury’s Laws of England, 3rd Edn., Vol. 3, Art. 281, p. 165 : “An option for the renewal of a lease, or for the purchase or re-purchase of property, must in all cases be exercised strictly within the time limited for the purpose, otherwise it will lapse.” This passage was quoted with approval by Danckwerts L. J. in Hare v. Nicoll[22]. A similar statement of law is to be found in Foa’s General Law of Landlord and Tenant, 8th Edn., Article 453, p. 310, and in Hill and Redman’s Law of Landlord and Tenant, 14th Edn., p. 54. The reason is that a renewal of a lease is a privilege and if the tenant wishes to claim the privilege he must do so strictly within the time limited for the purpose.

  1. With regard to equitable relief against the failure of the tenant to give notice of renewal within the stipulated time, the law is accurately stated in Halsbury’s Laws of England, 3rd Edn., Vol. 23, p. 626, Article 1329, footnote (u) thus :”Relief will not be given in equity against failure to give notice in time, save under special circumstances. The decided cases show that in such cases relief is not given in equity save upon the ground of unavoidable accident, fraud, surprise, ignorance not wilful or inequitable conduct on the part of the lessor precluding him from refusing to give the renewal. The limits of the equitable interference in such cases were clearly stated by the Master of the Rolls (Sir R. P. Arden) in Eaton v. Lyon[23] . He observed:

“At law a covenant must be strictly and literally performed; in equity it must be really and substantially performed according to the true intent and meaning of the parties so far as circumstances will admit; but if unavoidable accident, if by fraud, by surprise or ignorance not wilful, parties may have been prevented from executing it literally, a Court of Equity, will interfere; and upon compensation being made, the party having done everything in his power, and being prevented by means, I have alluded to, will give relief … I decide this case upon the principles on which, Lord Thurlow decided (Bayley v. The Corporation of Leominster 1792, 1 Ves. 476), and I hope now, it will be known, that it is expected, these covenants shall be literally performed where it can be done; and that equity will interpose, and go beyond the stipulations of the covenant at law, only where a literal performance has been prevented by the means, 1 have mentioned, and no injury is done to the lessor.”

6. We are of the opinion that the stipulation as to time in Clause 3(c) of the indenture of lease dated February 17, 1954 should be regarded as of the essence of the contract. The appellant not having exercised the option of renewal within the time limited by the clause is not entitled to a renewal.”

25. This principle was reiterated by the Delhi High Court in its judgments titled as Frankfinn Aviation Services Pvt. Ltd. v. B.C. Gupta[24]; Punchip Associates P. Ltd. S. Rajdev Singh[25]; Jagdish Gupta v. The State Trading Corporation of India Ltd.[26]; and MGR Holding (P) Ltd. v Loil Overseas Foods Ltd.[27].

26. It, therefore, follows that if the original registered lease deed contained an option clause for renewal, it has to be exercised strictly in accordance with the terms thereof, to be followed by execution and registration of a fresh lease deed in accordance with Section 107 of TPA, failing which the lessee cannot claim renewal of the lease or to continue in possession of the premises as a lawful lessee. The lessee continuing in possession without actual renewal only becomes a tenant holding over under a month to month tenancy, determinable by a notice in accordance with Section 106 of TPA.


*Advocate and a qualified Chartered Accountant. Author is currently a Senior Associate in Dispute Resolution Practice at L&L Partners Law Offices, New Delhi. Author’s views are personal.

[1] Transfer of Property Act, 1882

[2] Registration Act, 1908

[3] 1906 SCC OnLine Cal 83

[4] 1952 SCR 269

[5] 1906 SCC OnLine Cal 83

[6] 1933 SCC OnLine Pat 55

[7] 20 IC 715

[8] 17 CLJ 167

[9] 1906 SCC OnLine Cal 83

[10] 1916 SCC OnLine Cal 39

[11] 2015 SCC OnLine Del 14507 

[12] (2016) 9 SCC 268

[13] 2018 SCC OnLine Del 8942

[14] 2019 SCC OnLine SC 592

[15] (1999) 4 SCC 450

[16] 1989 Supp (1) SCC 487

[17] (2004) 1 SCC 1

[18] 2005 SCC OnLine Del 898

[19] (2007) 5 SCC 614 

[20] 2007 SCC OnLine Cal 501

[21] (1969) 2 SCR 238

[22] [1966] 2 QB 130 

[23] 3 Ves. Jun. 690:30 E.R. 122

[24] 2007 (9) AD (Delhi) 449

[25] 2011 SCC OnLine Del 131 

[26] 2012 SCC OnLine Del 3315 

[27] 2015 SCC OnLine Del 11953

Case BriefsForeign Courts

Supreme Court of the United Kingdom: A Full Bench of Lord Briggs (President), Lord Carnwath, Lord Hodge, Lord Wilson and Lady Arden, JJ. allowed the appeal by a majority of three to two. Lord Briggs gives the main Judgment with which Lord Carnwath and Lord Hodge agree. Lady Arden and Lord Wilson each give a dissenting Judgment with respect to withholding consent of the landlord.

Hautford Ltd. was a tenant of a whole building in Soho under a 100-year lease. The lease is permitted that the whole property is to be used for residential purposes, however, at the time when it was granted in 1986 only the top two floors were used for residential purposes. Around 2013 the tenant developed other floors of the building into residential flats and then sought planning permission for the change of use. The lease contained a provision that the tenant must obtain the landlord’s consent not to be unreasonably withheld for any application of planning permission. The tenant sought consent from the landlord, Rotrust Nominees Ltd., which was ultimately refused. The landlord’s ground for withholding consent were on the basis that by turning the whole building into residential use, the tenant could have a strong claim under the statute for enfranchisement meaning to compel the landlord to sell the freehold to the tenant.

The High Court and the Court of Appeal both ruled that refusing consent based on the risk of enfranchisement was unreasonable when taking into account that the lease permitted use of the whole building for residential purposes.

Lord Briggs delivered the majority opinion and remarked that the case was not one with complex disputed fact nor did it deal with complicated points of law. Rather it deals with one simple question: did the landlord act was reasonable or unreasonable.

The Court summarised the established principle which is to be followed when assessing whether a party has acted reasonably:

  • The grounds for withholding consent must be to do with the relationship of landlord and tenant in regard to the subject matter of the lease. 
  • Decisions should be based on the specific facts and care must be taken “not to elevate a decision made on the facts of a particular case into a principal of law”. 
  • The conduct only has to be reasonable it does not need to be right or justifiable.

With respect to the first test, Lord Briggs held that the real risk of enfranchisement was central to a landlord and tenant relationship and in relation to the third test; he held that enfranchisement would clearly adversely affect the landlord’s reversionary interest which was an essential type of consideration that the refusal of consent was reasonable.

Lady Arden and Lord Wilson disagreed with the majority holding and upheld the reasoning of the Court of Appeal and the High Court.

The Court granted the Appeal and considers that, on the undisputed facts; the landlord was acting reasonably in protecting the value of its property.[Sequent Nominees Ltd. v. Hautford Ltd, [2019] 3 WLR 981, decided on 30-10-2019]

Case BriefsHigh Courts

Jharkhand High Court: Sujit Narayan Prasad, J. dismissed a writ petition under Article 226 of the Constitution of India whereby the petitioner sought for a direction upon the respondents to allot a shop situated at the Municipal Library in the name of the petitioner on the ground that he has been running the aforesaid shop since long. 

The petitioner was not the allottee of the shop, rather, the shop was sublet in his favour by the original allottee. As the period of lease of the original allottee had expired, the petitioner handed over the keys of the shop with an application for consideration for allotment of the shop in his favour, but the shop was allotted to someone else. The petitioner argued that he was not allotted the shop as he was not deemed fit or proper since he was a handicapped person. The petitioner further submitted that he has been running the shop for long, and therefore priority ought to have been given by the respondents in allotment of the said shop. Counsel for the State submitted that the petitioner had no right to claim the allotment of the said shop since the said shop was never allotted in his favour, rather, he was tenant of the original allottee and after expiry of the lease in favour of the original allottee, the petitioner had no right to remain in the said premises. Furthermore, the order of allotment made in favour of the other person was never assailed.

The Court heard both the parties and decided that the shop in question was never allotted in the favour of the petitioner, rather, he was claiming allotment of the said shop by virtue of the fact that he was in occupation by way of the tenant by the original allottee. The allotment of the shop by virtue of the expiry of the lease expired and therefore, the petitioner had no right to remain in possession of the said shop.  The petitioner had simply prayed in this writ petition for allotment of the said shop on the ground that he was handicapped and was running a shop in the said premises since long, but merely because the petitioner is handicapped, no sympathy could be shown by the Court ignoring the process of allotment of the shop. Also, the order of allotment was also never under challenge. The writ petition was dismissed. [Amarendra Kumar v. State of Jharkhand, 2019 SCC OnLine Jhar 1451, decided on 18-10-2019]

Case BriefsHigh Courts

Kerala High Court: P. Somarajan, J. allowed the second appeal in a matter related to the redemption of mortgage, against the order of dismissal by the trial court and the first appellate court.

In the present case, the dispute centred around the nature of an ‘Ottikuzhikanam Deed’ (deed) that was executed by the original owner of the property in favour of his nephew and niece. But according to the appellants, it was a mortgage whereas respondents asserted it as a lease arrangement. The trial court referred the matter to the Land Tribunal under Section 125 of the Kerala Land Reforms Act, 1963 (the Act). The Land Tribunal held that the deed was a lease arrangement and passed an order, granting fixity of tenure in favour of respondents. Both the trial court and the first appellate court accepted this finding of the Tribunal and held that ‘Ottikuzhikanam Deed’ was a lease deed and the relief of redemption of the mortgage was rejected concurrently. As a result, a second appeal was filed.

The Court noted that definition given to the expression ‘Ottikuzhikanam’ under Section 2 (39A) of the Act excluded a mortgage within the meaning of Transfer of Property Act. It observed that “A mere clause enabling the beneficiary under a deed to enjoy the property and to make improvements therein included as part of normal terms and conditions, would not bring the matter within the sweep of ‘Ottikuzhikanam’ as defined under Section 2(39A) of the Act, but it must be the essential term of the contract and for that essential term and purpose, the contract must be entered into, otherwise, it cannot be brought under the purview of ‘Ottikuzhikanam’, a lease as defined under Section 2(39A) of the Act.” Reliance was placed on the decision in Velayudhan Vivekanandan v. Ayyappan Sadasivan, 1975 KLT 1, where a document which is styled as ‘Ottikuzhikanam’ appended to the judgment found to be a mortgage and not a lease. 

The Court found, “The mortgage amount involved in the instant case comes to Rs 5,000 in the year 1962 and the property mortgaged comes to only 1 Acre 2 cents which is another indication of nature of Ext.A4 as a mortgage rather than a lease.” Thus, the decree and judgment of the trial court and the first appellate court was set aside, and order was passed for a decree of redemption of mortgage on payment of amount of Rs 5000 with interest at 12 per cent per annum from the date of suit till the date of judgment and thereafter at 6 per cent per annum to the principal sum of Rs 5000 and also the cost of defendants in the first appeal and in the second appeal, together with the improvements over the property which could be ascertained at the time of passing of the final decree.[C. Vijaya Thulasi v. D. Sudarsanan, 2019 SCC OnLine Ker 1411, decided on 02-04-2019]

Case BriefsHigh Courts

Karnataka High Court: Alok Aradhe, J. disposed of the present writ petition directing the competent authority of the State Government to decide upon the application of the petitioner.

The facts of the case are that the petitioner, Mysore Race Club Ltd., was incorporated under the provisions of the Indian Companies Act, 1956. In 1970, 139 acres of land was granted a lease to the petitioner for the purpose of the race course. This was renewed from time to time before it expired on 30-06-2016. On 11-11-2016, respondent issued show cause notice to the petitioner with regard to some irregularities and was required to file its reply within 10 days. By this, the petitioner was asked to stop all the racing activities.

Counsel for the petitioner, Shiv Shankar L. submitted that an application seeking renewal had been filed. But, no decision has been taken by the competent authority of the State Government.

Counsel for the respondent, Vijay Kumar A. Patil, AGA, submitted that the lease has expired and therefore the petitioner has no right over the land.

The Court directed the competent authority of the State Government to decide on the application submitted by the petitioner within three months from the date of receipt of a certified copy of the order. Till then the petitioner is not to be dispossessed from the land.[Mysore Race Club Ltd. v. Govt. of Karnataka, 2019 SCC OnLine Kar 680, decided on 12-06-2019]

Case BriefsHigh Courts

Allahabad High Court: This petition was filed before the Division Bench of Pankaj Kumar Jaiswal and Dr Yogendra Kumar Srivastava, JJ. challenging the order passed by District Magistrate, Banda where the claim of petitioner and other leaseholders with regard to grant of extension of mining lease for the ‘obstructed period’ was rejected.

Facts of the case were such that petitioner’s work was obstructed in absence of requisite environment clearance certificate and later the obstruction was removed on submission of the same but by then the time period of lease for three years was over. In exercise of powers under Rule 23(1) of the U.P. Minor Minerals (Concession) Rules, 1963 notification was issued by which lease was given by auction cum tender. Petitioner prayed the Court to extend the lease for the period when the mining act was obstructed but the same was rejected by District Magistrate. Hence, this writ petition was filed. Respondent had referred to a catena of cases where a petition for extension of the period of the lease were rejected. Court mentioned that no such permission to continue with mining activity can be given where lease has outlived its life. Rule 68 of the Rules mentioned above was referred to by which the State Government had the discretion to grant relaxation.

High Court was of the view that power to grant relaxation under Rule 68 could not be granted in the present case as the same can only be invoked where State Government is of the opinion that in the interest of mineral development it is necessary to do so, and passes an order in writing with reasons. Therefore, due to lack of any specific provision to extend the lease, this petition was dismissed. [Arti Dwivedi v. State of U.P., 2019 SCC OnLine All 1811, Order dated 18-02-2019]

Case BriefsForeign Courts

Supreme Court of Democratic Republic of Sri Lanka: A Bench comprising of S. Eva Wanasundera PCJ, H.N.J. Perera and Murdu Fernando, JJ., set aside the judgment of the lower courts, and granted the relief sought by the plaintiffs in the present case.

The pertinent facts of the case are that the defendant had come into the ownership of two small allotments of land by means of a title deed, which was duly attested by the notary public. She had transferred the same to a third party named Premlatha for a purchase price of Rs. 500,000, as stated by the notary public. Premlatha, by means of another deed, transferred the said property to the plaintiff. On the very same day on which this transfer took place, the plaintiff entered into a lease agreement in favour of the defendant, which was for a period of two years and the lease amount was Rs. 12000 per year, which the defendant agreed to pay in installments of Rs. 500 every month. After the expiry of the lease period, the defendant had refused to move out, as a result of which the plaintiffs filed an action for ejection against the defendant. In the trial, the defendant had presented evidence, but had not been present for cross examination. In spite of the same, the district court had reserved the case for judgment, and further dismissed the plaint but did not grant the relief prayed for by the defendant. The High Court had upheld the decision of the District Judge. The contention of the defendant was that the transfer of the property to Premlatha was in the nature of a transaction of security, for which the defendant was paying interest, and as she had failed to ‘pay the loan’, she was unable to get the property retransferred to herself. The transaction between the defendant and Premlatha was in the nature of a trust, as the defendant never intended to pass the title of the property. The defendant was a witness to the deed which was signed between Premlatha and the plaintiff, and thus it is evident that there was no intention on the part of the defendant to retain her status as owner of the property, as the deed was for the sale of the property, for a consideration of Rs. 6 lakhs. The contention that the plaintiff was holding the property in trust for the defendant was also rejected by the court, which stated that ‘holding in trust’ is a concept which cannot pass or be transferred from one person to another.

The court placed reliance on the case of Dr. Rasiah Jeyarajah v. Yogambihai Thambirajahnee-Renganathan Pillei, 2015 SCC OnLine SL SC 8, to state that the plaintiff was entitled to evict the defendants from the property upon the conclusion of the lease agreement, and that there was no need to prove title over the premises. The plaintiff was not obligated under law to provide notice of termination of lease and license, contrary to what was held by the High Court.

Accordingly the appeal was allowed with costs and the judgment of the District Court and the Civil Appellate High Court set aside. [Hallewa Mangalika Jayasinghe v. Udeni Bandara Jayasinghe, SC Appeal 183/2016, order dated 28.09.2018]

Case BriefsSupreme Court

Supreme Court: The bench of V. Gopala Gowda and A.K. Goel, JJ, while deciding the question as to whether the consent of the owner of the premises is necessary for renewal of tenant’s licence under the Section 492(3) of the Kerala Municipality Act, 1994, held that the requirement of consent of landlord is applicable only when a person intends to obtain a licence for the first time. It was held that renewal or subsequent application for obtaining licence on expiry of the period of the existing licence, during the currency of the tenancy, is not applicable for obtaining licence. However, the Court clarified that even in the case of application for obtaining licence for the first time, the tenant cannot be deprived of running lawful business merely because the landlord withheld the consent as valid tenancy itself has implied authority of the landlord for legitimate use of the premises by the tenant.

While interpreting the Section 492 (3) of the Kerala Municipality Act, 1994, the Tribunal and the single bench of Kerala High Court had said that Under Section 492(3) of the Kerala Municipality Act, a consent of the owner is needed only for obtaining licence for the first time. Since the petitioner has not applied for licence for the first time the Corporation cannot impose a condition for obtaining a consent from the landlord. It was further held that The Corporation cannot insist upon such a tenant for production of a written consent from the landlord for the purpose of issuing of the licence. A statutory tenant can be evicted from the leased premises only in accordance with the various provisions contained in the Kerala Buildings (Lease and Rent Control) Act, 1965.

The Court, noting that since the possession of the tenant is lawful, the landlord is not entitled to withhold his consent for the conduct of the business for which the premises were given on rent, agreed with the abovementioned view and hence, set aside the order of the division bench of the High Court, thereby, restoring the order of the Tribunal as affirmed by the Single Bench of the High Court. [Sudhakaran v. Corp. of Trivandrum, 2016 SCC OnLine SC 666, decided on 05.07.2016]