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Smart Summary

Factual and Procedural Background

The plaintiff, claiming to be a tenant of the 4th floor of the “Allahabad Bank Building,” filed a suit seeking specific performance of an agreement of lease renewal up to November 30, 1998, with a right of renewal thereafter, and a mandatory injunction for maintenance of common areas in the building. The tenancy originally began in 1965 under an unregistered lease deed and was renewed periodically. In 1989, the defendant agreed by letter dated April 29, 1989, to renew the plaintiff’s tenancy up to November 30, 1998, with an option for further renewal by mutual consent. Despite repeated requests, the defendant did not execute a registered lease deed and issued a quit notice terminating the plaintiff’s tenancy on December 21, 1995. The plaintiff initiated the present suit following this notice. Subsequently, the plaintiff sought to amend the plaint to include a new relief for settlement of terms for renewal after November 30, 1998, which the defendant opposed.

Legal Issues Presented

  1. Whether the suit for specific performance of the lease renewal agreement is maintainable in its present form.
  2. Whether the letter dated April 29, 1989, constitutes a valid agreement for lease renewal requiring registration under the Registration Act.
  3. Whether the plaintiff’s application for amendment of the plaint under Order 6 Rule 17 CPC to include relief for renewal after November 30, 1998, is permissible.

Arguments of the Parties

Plaintiff's Arguments

  • The letter dated April 29, 1989, amounts to an agreement to lease and forms the basis for the suit for specific performance.
  • The letter is admissible under the proviso to Section 49 of the Registration Act to prove the terms of the lease agreement.
  • The suit should be allowed to be amended under Order 6 Rule 17 CPC to include a new relief for settlement of renewal terms after November 30, 1998.

Defendant's Arguments

  • There was no concluded contract for renewal of the lease up to November 30, 1998, making the suit in its present form not maintainable.
  • Since the lease period exceeded one year, renewal required a registered instrument under the Transfer of Property Act and Registration Act; the absence of such registration renders the lease renewal invalid.
  • The plaintiff’s tenancy was validly terminated by the notice dated December 21, 1995, and thus the suit is not maintainable.
  • The plaintiff’s proposed amendment to the plaint is an attempt to nullify the effect of the termination notice and would cause injustice to the defendant.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
D.D.A v. Durga Chand Kaushik, AIR 1973 SC 2609 Renewal of lease is effectively a grant of a fresh lease requiring registration if exceeding one year. The court held that the lease renewal for a period exceeding one year required registration, making the letter dated 29.4.1989 inadmissible to prove creation of lease.
Satish Chand v. Goverdhan Das, AIR 1984 SC 413 Proviso to Section 49 of the Registration Act applies only to collateral purposes, not to terms of lease agreements. The court ruled that the letter dated 29.4.1989 was inadmissible under Section 49 for proving the renewal clause as it was not collateral but a substantive term.
Delhi Motor Co. v. U.A Basrurkar, AIR 1968 SC 794 Section 53A of the Transfer of Property Act is a defence for lessee, not a basis to claim rights against lessor. Applied to hold that the plaintiff cannot claim rights on the basis of possession under Section 53A to override the requirement of registration.
Biswabani (Pvt.) Ltd v. Santosh Kumar Dutta, AIR 1980 SC 226 Similar principle as Delhi Motor Co. regarding Section 53A of the Transfer of Property Act. Supported the court’s conclusion that possession alone does not confer lease rights without a registered instrument.

Court's Reasoning and Analysis

The court examined the letter dated April 29, 1989, which purported to extend the lease up to November 30, 1998, and found that since the lease renewal was for a period exceeding one year, it required registration under Section 17 of the Registration Act and Section 107 of the Transfer of Property Act. The letter was unregistered and therefore inadmissible as evidence to prove the creation of a lease. The plaintiff’s contention that the letter was admissible under the proviso to Section 49 of the Registration Act was rejected because the renewal clause was a substantive term of the lease and not a collateral matter. The court relied on precedents establishing that renewal of lease is effectively a fresh lease requiring registration, and possession under Section 53A of the Transfer of Property Act cannot be used to claim lease rights in the absence of registration. Consequently, the suit for specific performance based on the letter was held not maintainable. Further, the plaintiff’s attempt to amend the plaint to claim renewal after November 30, 1998, was seen as an attempt to circumvent the termination notice dated December 21, 1995, and was disallowed to prevent injustice to the defendant. The suit had therefore become infructuous and liable to be dismissed along with the amendment application.

Holding and Implications

The court dismissed the suit for specific performance of the lease renewal agreement and also dismissed the plaintiff’s application to amend the plaint under Order 6 Rule 17 CPC. The plaintiff was directed to pay the costs of the defendant, with counsel’s fee quantified at Rs. 5,000/-. The decision directly affects the parties by denying the plaintiff’s claim to enforce the unregistered lease renewal and upholding the validity of the defendant’s termination notice. No new legal precedent was established beyond the application of existing principles regarding lease registration and admissibility of evidence.

    Kidarsons Industries Pvt. Ltd. v. Allahabad Bank

    M.S.A Siddiqui, J.— By this order, I propose to decide the following issue No. 4-A ordered to be tried as preliminary issue:

    “Whether the suit is not maintainable in the present form?”

    2. Plaintiff, claiming itself to be a tenant of the 4th floor of the building known as “Allahabad Bank Building” (hereinafter referred to as the suit premises) has filed the present suit for the following reliefs:—

    “(i) For specific performance of the Agreement of Lease/Renewal of Lease upto November 30, 1998 with right of renewal thereafter as contained in the writings contained in the Agreement stated hereinabove;

    (ii) For mandatory injunction directing the Defendant to maintain the parking areas, stair-cases, common corridors, toilets in the building in a state of reasonable repairs and cleanliness;”

    3. To appreciate the merits of the controversy, it will be necessary to give brief narrative of the material facts. In 1965, the suit premises were let out to the plaintiff under an unregistered lease deed and the plaintiff's tenancy was renewed from time to time. By the letter dated 29.4.1989, the defendant agreed to renew the plaintiffs tenancy upto 30.11.1998 with the option for further renewal by mutual consent. According to the plaintiff, despite repeated requests, the defendant did not execute the lease deed. On the contrary, the defendant wrongfully terminated the plaintiff's tenancy vide quit notice dated 21.12.1995

    4. Defendant resisted the suit contending that there was no concluded contract between the parties for renewal of lease upto 30.11.1998 and so the suit in the present form is not maintainable. It is also alleged that since the lease was for a period exceeding one year, it could only have been extended by a registered instrument. In the absence of registered instrument the lease shall be deemed to be a lease from month to month. It is further alleged that the plaintiff's tenancy stands terminated by the notice to quit dated 21.12.1995 and so the present suit is not maintainable.

    5. It is beyond the pale of controversy that in the year 1965, the suit premises were let out to the plaintiff under an unregistered lease deed and the plaintiff's tenancy was extended from time to time subject to increase in rent and service charges. According to the plaintiff, the defendant agreed to renew the tenancy upto 30.11.1998 with an option for further renewal vide letter dated 29.4.1989 The letter dated 29.4.1989 is as under:—

    BLDG/ND/OSD/148 Building Department

    Dated: 29.4.89

    Kidarsons Industries (P) Ltd.

    4th Floor,

    Allahabad Bank Building,

    Parliament Street,

    New Delhi.

    Dear Sirs,

    Enhancement of Rent & Service Charges

    We acknowledge, with thanks, receipt of your letter No. ACCTS-0121 of date enclosing the following cheques towards payment of arrears of rent and service charges w.e.f 1.12.85:

    Cheque No. Date Amount 123724 29.4.89 Rs. 1,75,000=00 123725 29.4.89 Rs. 1,31,286=00

    and we agree/accept the existing lease agreement is extended at current rates (i.e Rs. 7/- and Rs. 5/- per sq.ft) of rent and service charges upto 31.12.1993 and after that rent and service charges will be applicable by an increase of 25% for the period upto 30th November, 1998 and thereafter as may be mutually agreed.

    Thanking you,

    Yours faithfully,

    (R.V.SHARMA)

    OFFICER ON SPECIAL DUTY

    6. Learned counsel for the plaintiff contended that the letter dated 29.4.1989 amounted to an agreement to lease and as such it could be used as a basis for the present suit for specific performance of contract. The question is: Does the letter dated 29.4.1989 require registration under Section 17 of the Registration Act. In D.D.A v. Durga Chand Kaushik AIR 1973 SC 2609, it was held that “a renewal of lease is rally the grant of a fresh lease. It is called a ‘renewal’ simply because it postu-. lates the existence of a prior lease which generally provides for renewals as of right. In all other aspects, it is really a fresh lease.” BY the letter dated 29.4.1989 plaintiff's lease was extended upto 30.11.1998 subject to increase of rent @ 25%. Since renewal of the lease was for a period exceeding one year, it could only have been extended by a registered instrument. Section 107 of the Transfer of Property Act postulates that a lease of the immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent, can be made by a registered instrument. In the absence of registered instrument, the lease shall be deemed from month to month, determinable by a statutory notice under Section 106 of the Transfer of Property Act.

    7. That being so, the agreement for renewal of lease upto 30.11.1998 contained in the letter dated 24.4.1989 required registration under Section 17 of the Registration Act. The said letter is not admissible in evidence for showing creation of lease. Learned counsel for the plaintiff contended that the said letter is admissible under the proviso to section 49 of the Registration Act to prove the terms of the agreement of lease. In my opinion, the said document is clearly inadmissible in evidence under section 49 of the Registration Act except for the collateral purpose of proving the nature and character of possession of the plaintiff. The option for renewal or further extension of the lease is one of the terms of the original lease agreement, the proviso to section 49 of the Registration Act is not applicable to the present case inasmuch as the terms of the lease are not “collateral purpose” within its meaning. (Satish Chand v. Goverdhan Das AIR 1984 SC 413). Consequently, I hold that the renewal clause of the lease agreement being a term of an inadmissible document, the letter dated 29.4.1989 could not form the basis of the present suit for specific performance of contract. Needless to add that Section 53A of the Transfer of Property Act is only available as a defence to a lessee and not conferring a right on the basis of which the lessee can claim rights against the lessor. (Delhi Motor Co. v. U.A Basrurkar AIR 1968 SC 794; Biswabani (Pvt.) Ltd v. Santosh Kumar Dutta AIR 1980 SC 226).

    8. For the foregoing reasons. I find and hold that the present suit for specific performance of the agreement in question is not maintainable. That apart, the letter dated 29.4.1989 shows that the lease was extended upto 31.11.1998 and thus the present suit has not become infructuous.

    9. On 27.11.1998, the plaintiff filed an application under Order 6 Rule 17 CPC seeking leave to propose certain amendments in the plaint with a new relief for settlement of terms and conditions of grant of renewal of lease after 30.11.1998 This application has been opposed by the defendant. It needs to be highlighted that the present suit has been filed after receipt of the defendant's notice dated 21.12.1995 under Section 106 of Transfer of Property Act. It hardly requires any argument to show that the present suit has been initiated to nullify the effect of the defendant's notice under Section 106 of Transfer of Property Act. That apart, the letter dated 29.4.1989, which is the foundation of the present suit, provides further extension of leave by mutual consent. According to the plaintiff's own showing defendant had served the notice dated 21.12.1995 terminating its tenancy. In this view of the matter, the defendant cannot be permitted to use the judicial process as an instrument to compel the defendant to waive the said notice dated 21.12.1995 and extend the plaintiff's lease. As notice earlier, the plaintiff's suit for specific performance of the contract is not maintainable and further assuming that the suit was maintainable in the present form, the same has now become infructuous. Initially, the suit was filed for specific performance of the agreement dated 29.4.1989 and in order to save the suit from being dismissed as infructuous the plaintiff now wants to amend the plaint by adding a new relief for settlement of the terms and conditions for extension of lease after 30.11.1989 If the proposed amendment is allowed it would cause irretrievable injustice to the defendant. That apart, this is not a case where subsequent to the institution of the suit some event has happened which gives the plaintiff a new cause of action for the relief proposed to be claimed by the amendment. On the contrary, it may safely be inferred from the circumstances of the present case that under the garb of the amendment application, the plaintiff wants to take away the right accrued to the defendant on termination of its tenancy vide notice to quit dated 21.12.1995 Consequently, plaintiff's application under Order 6 Rule 17 CPC is also liable to be dismissed.

    10. For the reasons discussed above, the suit and the application filed by the plaintiff under Order 6 Rule 17 CPC are dismissed. Plaintiff shall pay costs of the defendant and bear its own. Counsel's fee is quantified at Rs. 5,000/-. A decree be drawn up accordingly.

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    Comments

    Kidarsons Industries Pvt. Ltd. v. Allahabad Bank
    (Jul 15, 1999)