By consent of both the counsel, the second appeal itself is taken up for final disposal, since both agreed that the issue involved in the second appeal is mainly covered by the Judgment reported in Bharat Petroleum Corporation Ltd.… v. V. Ashvinraj…. (AIR 1996 Madras 285).
2. The unsuccessful defendant before the courts below is the appellant herein. The first respondent herein has filed the suit O.S 628/85 on the file of the City Civil Court, Madras against the appellant herein for recovery of possession. The plaintiff's case is that the suit property originally belonged to one G. Renganayaki Ammal who executed a will on 30.9.70, pursuant to which the plaintiff became the owner of the property. Originally the Burmah Shell Oil Storage and Distributing Company of India Ltd., bad taken the suit property on lease in the year 1938 from the said Renganayaki Ammal. Periodically the lease has been renewed, contemplating the increase in the rent from time to time. Lastly the lease was renewed with the said company on 13.5.66 which was to expire on 31.8.84 In the meanwhile, under the Burmah Shell (Acquisition of Undertakings in India) Act, 1976 (Act 2 of 1976), the said company was taken over by the Government of India and from 24.1.76 it has been deemed to be the Government Company. The assets and liabilities of the said company vested with the Government of India in accordance with Section 5 of the said Act. From 12.2.76 the name of the company is also changed as Burmah Shell Refineries and later as Bharat Refineries. Subsequently on 1.8.77 the Government has changed the name of the company as Bharat Petroleum Corporation Ltd. the appellant herein. By virtue of the provisions of the said Act, the appellant herein became the tenant under the first respondent about which there is no dispute.
3. After the expiry of the period of lease, pursuant to the lease agreement, the plaintiff issued a notice on 18.1.84 to vacate the premises. Under the said notice, the defendant was given nine months time. The appellant herein issued a reply bating that as per the provisions of Sections 5 and 7 of the said Act, the appellant is entitled for renewal. Though the appellant is entitled for the renewal as per Sections 5 and 7 of the said Act, the appellant did not take any steps to renew the lease and as such they have lost the right of renewal and liable to vacate the premises.
4. The appellant herein filed written statement disputing the claim of the plaintiff for recovery of possession. There is no denial with regard to the title of the plaintiff. It is further contended that even though the lease deed between the original owner Renganayaki Ammal and the original (sic-lessee did) not contain any clause for renewal, still the appellant is entitled for renewal pursuant to Sections 5(2) and 7(3) of the said Act. Hence the plaintiff's contention that the lease cannot be renewed, cannot be countenanced. The appellant is a tenant holding over, since they continue to be the tenants, even though the lease period was over and as such they should be deemed to be the tenant under the plaintiff.
5. No oral evidence was let in by both the parties. On the basis of the documentary evidence produced by the parties, the trial court found that the plaintiff is entitled to get recovery of possession and on that basis decreed the suit by judgment and decree dated 8.10.91 As against this, the appellant herein filed an appeal in A.S 281/92 on the file of the City Civil Court, Madras. The lower appellate court also concurred with the findings of the trial court and dismissed the appeal by its judgment and decree dated 19.3.93 Aggrieved by the same, the present second appeal has been filed by the appellant herein.
6. The learned counsel for the appellant contended that they are entitled for the renewal of lease, since the appellant had exercised their option to renew the lease under Ex. A2, the reply sent by the appellant to the respondent's notice Ex. A1 to vacate the premises. It is admitted that the lease period came to an end as early as 31.8.84 and there is no clause for renewal in the earlier lease deed dated 13.5.65 After coming into force of the Burmah Shell (Acquisition of Undertaking in India) Act, 1976 (Act 2 of 1976) the Burmah Shell Company became a Central Government Undertaking in India. Section 5(1) of the said Act enunciate that where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shall be deemed to have become the lease or tenant. Section 5(2) gives a right to the Central Government to get the lease or the tenancy to be renewed on the same terms and conditions on which the lease or tenancy was held by Burmah Shell immediately before the Act came into force. Section 7(3) of the said Act makes it clear that Section 5(2) shall apply to a lease or tenancy which vests in a government company as they apply to a lease or tenancy vests with the Central Government. In view of the above provisions and especially provision of Section 7(2) of the Act, the lease is deemed to have been renewed immediately after the expiry of the earlier lease and as such it is not open to the plaintiff to file the suit for ejectment.
7. On the contrary, the learned counsel for the second respondent contended that both the courts below have held that the Act did not contemplate an automatic renewal of lease on exercising the option by the appellant herein to renew the lease. In the absence of any renewal clause in the earlier lease deed, it is not open to the appellant to seek for renewal as of right. Even Section 5(2) of the Act contemplates the renewal only if the Central Government so desires and the mere desire may not contemplate the renewal by intimating their intention to seek for renewal. The Central Government has to take steps to get the lease renewed as per Section 107 of the Transfer of Property Act and in the absence of any positive action on the part of the appellant to get the lease renewed, they are not entitled for renewal. On this ground the suit has been decreed. As there is no legal infirmity in the judgment of the courts below, no interference is called for by this court. He also drew the attention of this court to the judgment reported in Bharat Petroleum Corpn. Ltd. v. V. Ashvinraj (AIR 1996 Madras 285) which is also an identical case.
8. I carefully considered the contention of both the counsel. In fact the learned counsel for the appellant had admitted that the principle laid down in the case reported in Bharat Petroleum Corpn. Ltd. v. V. Ashvinraj (AIR 1996 Madras 285) would govern this case also, as the facts are identical, in which it has been held as follows:
“Now, coming to the main question whether there would be automatic renewal of the lease, once the above said option for renewal is validly exercised, even though the defendant has not taken any steps to get the lease deed executed and registered duly and even though such a lease deed has not come into being at all. In this regard, both the trial court and the appellate court have held that there would not be any such automatic renewal and for coming to the conclusion the trial court has relied on Section 5(2) and the lower appellate court has also relied on the decision in Hindustan Petroleum Corporation Ltd. v. Vummidi Kannan (1992) 1 L.W 59: (AIR 1992 Mad 190) (DB). But the contention of learned counsel for the appellant is that in view of Section 5(2) of the Act, the appellant would get automatic renewal of the lease pursuant to its exercise of the option to get renewal, under Ex. B-1. He also submits that 1992-1 L.W 50: AIR 1992 Mad 190 (Supra) would not apply to the present facts since that case only dealt with the exercise of option for renewal of the lease, pursuant to the relevant clause contained in the contract between the parties and not pursuant to statutory provision like Section 5(2) of the Act as in the present case”.
In this connection, the relevant observation of this court in the said decision is as follows:—
“There is another contention, which, though not vehemently argued, yet has been expressed by the learned senior counsel appearing for the defendant and that is, the renewal of the lease had come into existence and force by the exercise of option for renewal by the defendant. …”
But, a bare exercise of option for renewal could not be of any avail to the defendant, because the law is well settled that a covenant for renewal contained in a lease does not ipso facto extend the tenure or term of the lease, but only entitles the lessee to obtain a fresh lease. If there is a clause for renewal in the original lease and that clause has been taken advantage of and any option pursuant thereto has been properly exercised, it only gives a lever for the lessee to obtain new lease in accordance with and in due satisfaction of the law governing the making of leases. If to the renewal lease, the requirements of the first part of S. 107 of the Transfer of Property Act are attracted, as obviously are in the present case, no valid lease would come into existence unless the said requirements are satisfied. So far as the present case is concerned, even if the defendant is stated to have exercised its option for renewal, which position we have accepted, it has not improved the lot of the defendant to say that there had been a renewed lease, which had enured in its favour, because admittedly the requirements of S. 107 of the Transfer of Property Act were not satisfied. The proposition of law has been clearly recapitulated by Ismail, J., as he then was, after tracing the authorities on the subject in R.M Mehta v. Hindustan Photo Films Manufacturing Company (1976 (1) M.L.J 115: = 89 L.W 115 = (AIR 1976 Mad 194).”
In my view, the abovesaid, reasoning would apply to the present case also, even though in the present case, the exercise of the option for the renewal is not based on the contract between the parties, but on the abovesaid statutory provisions, viz., Section 5(2) of the Act. It has been noted already that Section 5(2) only says that the lease “shall if so desired by the Central Government, be renewed on the same terms and conditions…..” In other words, it does not say that the lease shall stand renewed or shall automatically get renewed, but it only says, “shall be renewed”. So, unless the other formalities required under Section 107 of the Transfer of Property Act are complied with and a lease deed as such is executed and registered duly, the defendant lessee would not secure leasehold interest in the property in question after the expiry of the prior lease on 31.3.1983 Admittedly, the defendant has not taken any further steps after the abovesaid exercise of option under Ex-B-1. Even though the plaintiff, under Ex-A-6, expressed his unwillingness to give a renewal of the lease, the defendant could have worked out remedies open to it under law, for compelling the plaintiff to execute and register a proper lease deed pursuant to the option exercised and pursuant to Section 5(2) of the abovesaid Act. The defendant, having not taken any such steps so far, cannot at this distance of time, contend that the possession suit initiated by the plaintiff should fail. At least when the suit notice Ex-A-1 dated 8.4.1983 terminating the lease and demanding possession was received by the defendant on 12.4.1983 (as borne out by Ex. A-2), the defendant should have taken necessary steps for working out remedies open to it in the light of Section 5(2) of the Act and the fact that it has exercised its option for renewal. But, nothing has been done by the defendant so far. In such a situation, the plaintiff is bound to succeed.”
Since the learned Judge has elaborately discussed the issue, it is unnecessary for me to once again narrate the facts and deal with the same in detail. The learned Judge has interpreted Section 5(2) in respect of the right of renewal of the lease in favour of the appellant. I am entirely in agreement with the view expressed by the learned Judge.
9. However, the learned counsel for the appellant contended that Section 11 of the said Act 2 of 1976 was not brought to the notice of the learned Judge while the case was decided.
The provisions of the said Act would override the provisions of the other laws which are inconsistent to the Act 2 of 1976. Since Section 107 of the Transfer of Property Act is inconsistent with Section 5(2) of the said Act, only Section 5(2) of the said Act would prevail than Section 107 of the Transfer of Property Act.
10. However, the learned counsel did not point out any inconsistency between Section 5(2) of the said Act 2 of 1976 and Section 107 of Transfer of Property Act. Since this point has been raised, it has become necessary to consider as to whether Section 107 of the Transfer of Property Act is inconsistent with 5(2) of the said Act 2 of 1976. Section 5 of Act 2 of 1976 reads as follows:
“5(1) where any property is held in India by Burmah Shell under any lease or under any right of tenancy, the Central Government shell, on and from the appointed day, be deemed to have become the lease 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 there upon 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 term of any lease or tenancy referred to in sub-section (1), such lease or tenancy 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.”
Section 5(1) of the said Act makes it clear that wherever any property is held by Burmah Shell under any lease or tenancy in respect of such property the Central Government shall be deemed to have become, the lessee or tenant, as the case may be, in respect of such property and such rights shall also be deemed to have been transferred in favour of the Central Government. Section 5(2) of the said Act enables the Central Government to get the lease renewed, if so desire. Section 107 of the Transfer of Property Act runs as follows:
“107. Lease how made. _ _ _ A lease of immovable properly 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 immovable property may be made either by a registered instrument or by oral agreement accompanied by a delivery of possession. Where a lease of immovable 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 immovable 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.”
As per this provision, where the lease of the immovable property is made under an instrument, such instrument shall be executed by both the lessor and the lessee. The Registration Act contemplates the compulsory registration of the lease deed where the lease exceeds more than one year. Hence it is incumbent on the part of the Central Government to get the lease deed registered after the same was executed by both the lessor and the lessee. Only if the contention of the counsel that Section 5(2) of the said Act contemplates an automatic renewal of the lease in favour of the Central Government, then the other formalities are not required as held in the case reported in Bharat Petroleum Corporation Ltd.… v. V. Ashvinraj…. (AIR 1996 Madras 285). Section 5(2) of Act 2 of 1976 does not contemplate any automatic renewal. When Section 5(2) of the said Act does not contemplate any automatic renewal, then Section 107 of the Transfer of Property Act cannot be said to be inconsistent with the said provision. Hence Section 11 of Act 2 of 1976 is not attracted on the facts of the present case.
11. For the reasons stated above, there is no merit in the Second Appeal and accordingly, the same is dismissed. However, there will be no order as to costs.
KA/RR/VCS