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John Augustine Peter Mirande And Another, v. N. Datha Naik, .
Comprehensive Summary of the Opinion
Factual and Procedural Background
The revision petitioners are tenants; the respondent is the landlord. The landlord filed an eviction application under Sections 21(1)(c), (h) and (j) of the Mysore Rent Control Act, 1961. The landlord's case alleged that the premises were reasonably and bona fide required for his own occupation, for reconstruction, and that the tenants had erected a permanent structure without consent. Before the trial court the claim under Section 21(1)(c) was given up, and before this Court the landlord's counsel disclaimed reliance on Section 21(1)(j). Thus, the remaining claimed ground was eviction under Section 21(1)(h) — that is, the landlord's reasonable and bona fide need to occupy the premises after reconstructing the building.
Prior to instituting eviction proceedings the landlord served a termination notice dated 17-3-1966 (Exhibit A-3) ending the tenancy with effect from 15-5-1966, on the basis that the tenancy was monthly and a 15-day notice was therefore valid. The trial judge upheld the landlord's eviction claim and ordered eviction. That order was affirmed by the lower appellate court. The correctness of those orders was challenged in this revision petition.
The revision court confined its hearing to the single substantive issue of the validity of the termination notice. The court addressed the applicability of Sections 106 and 107 of the Transfer of Property Act, 1882 (T.P. Act) in determining whether the lease was a lease for manufacturing purposes — which, if established, would change the notice period required.
Legal Issues Presented
- Whether the landlord's remaining claim under Section 21(1)(h) of the Mysore Rent Control Act should be sustained — though the Court limited its inquiry to the validity of the notice of termination.
- Whether the termination notice dated 17-3-1966 (15 days notice) was valid, in light of Sections 106 and 107 of the Transfer of Property Act, specifically: whether the lease was a lease for "manufacturing" purposes so as to be deemed a lease from year to year requiring a longer notice period.
- Whether the orders of the trial and lower appellate courts upholding eviction should be upheld or set aside in view of the legal requirements as to notice for manufacturing leases.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Krishna Das v. Bidhanchandra (AIR 1959 Cal 181) | Supports the proposition that Section 107 (registration requirement) does not control the application of Section 106 (deeming certain leases to be year-to-year or month-to-month for notice purposes). | Cited to justify that Section 106 applies to manufacturing leases whether the lease deed is registered or unregistered, and thus controls the duration/period of notice irrespective of Section 107. |
| Joyanti Hosiery Mills v. Upendra Chandra Das (AIR 1946 Cal 317) | Interpretation of the word "manufacture" and illustration that manufacturing may include processes like knitting and cutting even if raw material processing occurs elsewhere. | Quoted at length to explain the meaning of "manufacture" and to support the view that the carrying out of essential manufacturing operations on the premises makes the lease a manufacturing lease (deemed year-to-year requiring a longer notice). |
| Rupeswari Debi v. Lokenath Hosiery Mills (AIR 1962 Cal 608) | Holding that where a lessee runs a hosiery factory, incidental residential occupation by an officer does not convert the purpose into residential; if premises are used for manufacturing to landlord's knowledge, six months' notice is necessary. | Relied on to support the proposition that the overall use of premises for manufacturing controls the required notice period even if some rooms have different incidental uses. |
| Brahmananda Das v. Nagendra Chandra Sarkar (AIR 1954 Cal 224) | Consideration whether a sweetmeat shop that prepares sweets on the spot (or brings them) is a manufacturing purpose; the court held the lease was for sale as well as preparation and not solely manufacturing. | Noted by the court; the opinion states this decision did not help the respondent (landlord) in the present case. |
| Rameshchandra Dutta v. Surya Properties Ltd. (AIR 1957 Cal 198) | Where a lease was for multiple purposes the benefit of the longer six months' notice for manufacturing may not apply. | Noted by the court as not being of much assistance to the respondent, since that case involved multiple purposes. |
Court's Reasoning and Analysis
The Court limited its consideration to the validity of the termination notice and framed the legal inquiry around Sections 106 and 107 of the Transfer of Property Act:
- Section 106: In the absence of contract/local usage, a lease for manufacturing purposes is deemed a lease from year to year, terminable by notice expiring with the end of a year (implying a longer notice period — in practice six months as recognised by the precedents cited).
- Section 107: Requires certain leases (from year to year or for term exceeding one year or reserving yearly rent) to be in writing and registered; but the court emphasised that Section 107 does not control the application of Section 106 for determining the nature (year-to-year versus month-to-month) of a lease for notice purposes.
The Court relied on Calcutta High Court authorities to explain and apply the meaning of "manufacture." Joyanti Hosiery Mills was used to show that manufacturing encompasses operations that transform materials (or already manufactured inputs) into marketable goods — examples included knitting and cutting being sufficient to make premises a manufacturing place. Rupeswari Debi reinforced that incidental residential use does not defeat an overall manufacturing purpose, and Krishna Das supported the independence of Section 106 from Section 107's registration requirements.
Turning to the facts, the Court considered the evidentiary record bearing on whether the tenants used the premises for manufacturing:
- It was undisputed that the petitioners ran a bakery and had installed a saw mill.
- Documentary evidence showed that licenses and permissions had been obtained from a predecessor owner: Exhibits A-18 and B2; and Exhibit B-1 was a letter (dated 27-12-1957) in which the previous owner consented to installation of a 5 H.P. motor for a bench saw at the premises.
- A Commissioner appointed to inspect reported physical particulars: the saw mill building described as an open shed supported by stone pillars and the bakery building with mud-and-tile walls; the Commissioner could not definitively say whether some structures were pakka or old, but reported the observable characteristics. Photographs of the saw mill and bakery were filed as Exhibits A-6 to A-9.
- The trial judge and the appellate judge had considered whether the presence of a saw mill and bakery amounted to "manufacturing"; the trial judge had been cautious, noting installation of the saw mill was not covered by the original lease but permission for a motor pump had been granted; the appellate judge observed the onus was on the tenant to prove manufacturing and characterized bakery/firewood depot activities in a way that did not suggest manufacturing in ordinary course.
Weighing the material on record, the revision court found that bakery production and saw mill operations in the premises amounted to manufacturing. Applying the legal principle that a lease used for manufacturing purposes is deemed from year to year and requires the longer notice period, the court concluded that the 15-day notice served by the landlord was inadequate. Because the requisite notice (six months) was not given, the notice was invalid and the eviction proceedings founded on that notice were unsustainable.
Holding and Implications
Core Holding: Revision application allowed; the orders of the courts below are set aside; the eviction application filed by the respondent-landlord is dismissed.
Immediate consequences:
- The eviction order made by the trial court and affirmed by the lower appellate court was quashed in revision on the ground that the termination notice was invalid.
- The landlord's application for eviction (based on the notice dated 17-3-1966 which gave only 15 days' notice) was dismissed because the lease was held to be for manufacturing purposes and required a longer notice period.
- Costs: The parties were directed to bear their own costs.
Broader implications: The opinion reasons from established authorities about what constitutes "manufacturing" for the purpose of Section 106 and about the independence of Section 106 from Section 107. The judgment itself does not purport to lay down any novel legal proposition; it applies existing principles to the facts and does not state that it creates a new precedent beyond its application to these facts.
Revision application allowed.
1. Petitioners in the revision petition are the tenants. Respondent is the landlord. Respondent filed an application for eviction of the petitioners under Section 21(1)(c), (h) and (j) of the Mysore Rent Control Act, 1961, (hereinafter called the Act) for eviction of the tenants. The case of the landlord was that the premises are reasonably and bona fide required for his own occupation, for reconstruction and also on the ground that the tenants without the consent of the landlord has erected a permanent structure. The claim arising under Section 21(1)(c) and (j) does not arise for consideration before this Court, inasmuch as, that even in the trial court the claim made under Section 21(1)(c) has been given up and before this Court the learned counsel appearing for the respondent-landlord has clearly stated that he is not making any case based under Section 21(1)(i) of the Act. The only claim that he is making is that he wants the premises for his reasonable and bona fide need and he will occupy it after reconstructing the building. Therefore, the question that arises for consideration is the claim made by the landlord under section 21(1)(h) of the Act.
2. Several contentions have been raised by the tenants and I do not propose to consider any one of the other contentions excepting the one i.e, as to whether the notice issued in the present case is valid or not. Before instituting the proceedings for eviction, the landlord gave a notice dated 17-3-1966 which is marked as Exhibit A-3 terminating the tenancy of the petitioners with effect from 15-5-1966 on the ground that the tenancy was a monthly tenancy and notice given was a valid notice. The learned trial Judge upheld the claim of the landlord and passed an orded for eviction. This order passed by the learned trial Judge has been confirmed by the lower appellate Court.
3. It is the correctness of these orders that are challenged in this revision petition.
4. As already stated. I have heard the learned advocate for the parties only on the aspect of the question relating to the validity of the notice as in my view the entire proceedings are liable to be set aside on the ground. The relevant provisions with which we are concerned are Sections 106 and 107 of the Transfer of Property Act.
5. Section 106 of the T.P Act reads as under.—
“106. In the 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 a lease from year to year, terminable, on the part of either lessor or lessee, notice expiring with the end of a year, of the tenancy, and a lease of immoveable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days notice expiring with the end of a month of the tenancy.”
6. Section 107 of the T.P Act provides that:
“107. 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.”
7. It is necessary to note that the provisions of Section 107 of the T.P Act does not control Section 106 of the Act. Notwithstanding what is contained in Section 107, the provisions of Section 106 will apply to manufacturing lease whether the lease deed is registered or unregistered so as to make it a lease from a year to year for the purpose of that section i.e, to control duration of the period of notice. This is also the view taken by the High Court of Calcutta in the case of Krishna Das v. Bidhanchandra (AIR 1959 Cal 181).
8. The word “manufacture” has been explained in Wharton's Law Lexicon as “Anything made by art”. The dictionary meaning of the word and the very provision which I am considering in this revision petition were considered by a Division Bench of the Calcutta High Court in Joyanti Hosiery Mills v. Upendra Chandra Das, (AIR 1946 Cal 317). In that case the question was as to whether the termination of tenancy was valid. Dealing with that question that is what B.K Mukherjea, J. (as he then was) has stated:
“………The learned Subordinate Judge seems to be of opinion that as the raw materials are not worked up into hosiery articles in the disputed premises, it cannot be said that the lease was taken for manufacturing purposes even though the knitting and cutting were done in that building. We do not think that we can accept this view as sound. To manufacture, according to its Dictionary meaning means “to work up materials into forms suitable for use”. The word “Material” does not necessarily mean the original raw material for a finished article may have to go through several manufacturing processes before it is fit and made ready for the market. What is itself a manufactured commodity may constitute a “material” for working it up into a different product. “Thus, for example for the tanner, the material would be the raw hide, but the leather itself a manufactured article would constitute the material for the shoemaker's business, and we cannot say that the shoe-makers are not manufacturers because they do not work on raw hides.
So far as the hosiery manufacture is concerned, undoubtedly articles have got to be made from raw cotton as it is picked from the bush. From the cotton, certain yam or sheets are prepared, and they are knitted into hosiery goods. It is immaterial that the yarn is not produced in the premises in suit. It is enough to make the house a manufacturing house if knitting and cutting operations are gone through in this premises, and that is an essential part of the manufacturing business. We are, therefore, of the opinion that the lease was really taken for manufacturing purposes, and consequently, it must be deemed to be a lease from year to year terminable by six months' notice expiring with the end of year of the tenancy. The result, therefore, is that we allow this appeal……………”
9. It may be seen that the court has fully explained in that case as to what would constitute manufacture.
10. The question again came up for consideration before the Calcutta High Court in Rupeswari Debi… v. Lokenath Hosiery Mills… (AIR 1962 Cal 608) and the Court held that “where the lessee is running a hosiery factory in the premises the mere fact that one of the rooms is being occupied by one of his officers for residence would not make the purpose of the tenancy a residential purpose. It would still be a manufacturing purpose.” It was further stated that “though the original purpose may not be a manufacturing purpose, if the premises are required and used for manufacturing purposes to the knowledge of the landlord or the lessor six months' notice would be necessary.”
11. In common parlance “to manufacture goods” means “to bring goods into being”. The essence of manufacture is the changing of one object into another for the purposes of making it marketable. Therefore, the proper approach for ascertaining the meaning or expression of the word “manufacture” is to see in the context in which it is used.
12. The learned counsel appearing for the respondent cited before me two judgments of the Calcutta High Court; one is the judgment reported in Brahmananda Das v. Nagendra Chandra Sarkar (AIR 1954 Cal 224), in that case the question was as to whether the premises used for the purpose of running sweetmeat shop to sell sweets by manufacture either at the spot or brought elsewhere would be manufacturing purposes. It was held by the Calcutta High Court in the said case that whatever the meaning of the word “manufacture” may be, the lease in question was at least as such for sale of sweets as for preparing the same, and therefore, it was not solely for manufacturing purposes, and therefore, lease was brought in the category of a lease for any other purpose. I am of the view that this decision does not help the respondent.
13. Similarly, the decision of the Calcutta High Court in Rameshchandra Dutta v. Surya Properties Ltd. (AIR 1957 Cal 198) is not of much assistance in the present case, as in that case, the lease was for a multiple purpose and therefore, the court held that the benefit of notice of six months' was not available.
7A. For deciding the question it is necessary to determine whether the lease in the present case is for a manufacturing purpose, whether the notice given in the present case is valid.
14. In the present case, it cannot be disputed that the petitioners have been carrying on Bakery and Saw mill business and it is their case that the lease is for manufacturing purpose. The learned trial Judge has stated as under:—
“In this case, a bakery is being run. Of late, they have installed a saw mill. The installation of a saw mill is not covered under the lease deed executed by the respondents in favour of the previous landlord. But permission has been granted for them to install a motor pump for the purpose of running a saw mill. But that by itself is not sufficient to come to the conclusion that the premises is used for manufacturing purposes.”
15. The learned appellate judge also discussed this question in paragraph 7 of his judgment and held as under:—
“The onus of proving it to be a manufacturing lease is on the tenant Whether it is for a manufacturing purpose or not, it must be ascertained in the usual way. In the case on hand, it has been in evidence that the premises were taken on lease for the purpose of running of bakery shop and a fire wood depot. All that is meaning by running a bakery shop is that bread and other articles of confectionery are sold in that particular premises. The running of a firewood depot in the ordinary sense means that some firewood is stored in that particular place and sold to the customers the running of a firewood depot or a bakery shop would not in the ordinary course suggest that there is any process of manufacturing.”
8A. Therefore, what is required to be found out is as to whether the lease in the present case, as on the date of its termination was admitted to be a lease for a manufacturing purpose was carried on with the consent of the landlord and if it is found that the manufacturing was by consent of the landlord, then it has to be held that the lease in the present case is for a manufacturing purpose, and therefore notice is invalid. The evidence on record discloses that the lease is for a manufacturing purpose and that licenses for the said purposes were obtained and that was done with the permission of the predecessor-in-title of the present landlord. This is clear from Exhibits A-18 and B2. Exhibit B-1 is a letter of consent by the previous owner to the Commissioner of the Mangalore Municipality as far back as 27th December 1957 saying that he has permitted Mrs. Prescy Machade for installation of 5 H.P for the purpose of Bench Saw in T.S No. 208.B of 20th Ward and Door No. 621. The Commissioner was also appointed in the present case to report whether the saw mill building in the petition premises is only an open shed of stone pillars and sagging bamboo, roof, and whether the bakery shop building has walls of mud and tiles. The report has been given by the Commissioner stating that “the saw mill building in the petition premises is an open shed. The roof of the shed is supported by stone pillars. They are altogether 11 pillars supporting the roof………” Similarly, the Commissioner has noticed that the walls of the bakery building have been constructed with the mud and tiles. The Commissioner has also clarified by his further report that he is not in a position to say as to whether it is a pakka one or an old one. Photographs have been filed before the Court showing the saw mill and the bakery building and they are marked as Exhibits A-6. A-7. A-8 and A-9. Having regard to the material on record. I am of the view that in the premises in dispute the petitioners are carrying on manufacturing of bakery products and also saw mill. If such work is carried on in the premises, it would amount, according to me manufacturing purpose. In view of my finding that the lease is for a manufacturing purpose that notice required was of six months duration. In the present case the notice given is for only 15 days. Therefore it is invalid.
16. The result therefore is, this revision application is allowed and orders of the courts below set aside and the application for eviction filed by the respondent-landlord is dismissed. In the circumstances of this case, the parties are directed to bear their costs.
Revision application allowed.
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