1. The appellant is the defendant in a suit for recovery of plaint schedule item 1 with arrears of rent and future rent and for a permanent injunction to restrain the defendant from entering upon plaint schedule item 2, filed by the respondent-plaintiff.
2. On 1-3-1962 plaint schedule item 1 consisting of 30 cents of land was taken by the appellant-defendant on an agreement to pay a monthly rent of Rs. 100/- for a period of three years for the purpose of installing a saw mill, and Ext. P1 rent deed was executed by the defendant to evidence the transaction. In terms of Ext. P1, the defendant was to construct she necessary buildings to install the machinery for conducting the saw mill and pay rent every month without default; in case of default, the appellant-defendant had to pay interest on the arrears of rent at 12% per annum and surrender the property, demolishing and removing the building on expiry of the period without dispute. It is averred in the plaint that the defendant had paid rent up to and inclusive of May, 1965 and the plaintiff had passed receipts to him for such payments; rent from June, 1965 was in arrears; a plot of 10 cents, touching the property given on rent to the defendant, was in the possession of the plaintiff, but the defendant had put logs of timber in the property including the plot in the possession of the plaintiff, and had destroyed the fence separating the properties causing inconvenience to the plaintiff and members of his family; hence prayer for injunction restraining the defendant from trespassing upon plaint schedule item 2 besides recovery of possession of item 1 with arrears of rent.
3. In his written-statement the defendant raised various contentions, stating inter alia that he had invested Rs. 30,000/- for the mill and the machinery; the plaintiff had agreed to allow him to conduct the mill for as many years as he wanted; the defendant was a tenant entitled to fixity of tenure; and in case of eviction he was entitled to value of improvements.
4. The trial Court dismissed the suit holding that there was no quit notice as required under S. 106 of the Transfer of Property Act, without deciding the other issues on their merits. The 1st Appellate Court, in appeal, set aside the decree and judgment of the trial Court holding that no notice under S. 106 of the Transfer of Property Act was required in the nature of the transaction; and also holding that the defendant was not entitled to any relief under S. 106 of the Kerala Land Reforms Act. Aggrieved by the decision of the 1st Appellate Court that this second appeal has been preferred by the defeated defendant. No contention was advanced before me with respect to that part of the decree of the trial Court injuncting the appellant-defendant from trespassing upon item II in the plaint schedule.
5. On behalf of the appellant it was submitted by the counsel that the 1st Appellate Court was in error in holding that no notice to quit under S. 106 of the T.P Act was required in this case. According to him Ext. P1 ‘vadaka chit’ was for a period of 3 years, which expired on the 28th Feb., 1965, and thereafter by accepting the rent and passing receipts for such payments, for the months of Mar., Apr. and May 1965, the plaintiff had consented to the defendant holding over the property on the same terms as stipulated in Ext. P1, and therefore the tenancy created under Ext. P1 deed continued even after the 28th day of Feb., 1965. It is therefore his submission that the plaintiff could not have brought a suit without terminating the tenancy by the issue of a proper and sufficient notice according to the provisions of S. 106 of the T.P Act.
6. The counsel for the respondent-plaintiff on the other hand contended that there was a stipulation in Ext. P1 deed itself that in case rent was kept in arrears, the plaintiff was entitled to evict the appellant-defendant, and that it amounted to a contract to the contrary so much so that the provisions of S. 106 of the T.P Act are not attracted to the case. S. 106 of the T.P Act reads as follows:—
“106. 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, terminable, on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy, and a lease of immovable 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.”
Inasmuch as Ext. P1 provided that in the event of rent being kept in arrears for any period, the defendant was bound to surrender the property, it has to be construed that it amounts to a contract to the contrary so as to exclude the operation of the provisions of S. 106 of the T.P Act in so far as the present transaction is concerned. For this view I take, I find support in the decision of a Full Bench of this Court in Jacob Philip v. State Bank Of Travancore & Others (AIR 1973 Ker 51). I am therefore of the opinion that the 1st Appellate Court was right in holding that there was no need for issuing a quit notice in the present case.
7. The counsel for the appellant then submitted that in any event the appellant-defendant is entitled to the benefits under S. 106(1) of the Kerala Land Reforms Act which reads as follows:—
“106. Special provisions relating to leases for commercial or industrial purposes. — (1) Notwithstanding anything contained in this Act or in any other law, or in any contract, or in any order or decree of Court, where on any land leased for commercial or industrial purpose, the lessee has constructed buildings for such commercial or industrial purpose before the 20th May, 1967, he shall not be liable to be evicted from such land, but shall be liable to pay rent under the contract of tenancy, and such rent shall be liable to be varied every twelve years. Explanation:— For the purposes of this section—
(a) ‘lessee’ includes a legal representative or an assignee of the lessee; and
(b) ‘building’ means a permanent’ or a temporary building and includes a shed.”
8. The counsel for the respondent-plaintiff argued that to attract S. 106 of the Kerala Land Reforms Act there should be a lease in favour of the defendant created under Ext. P1 deed. He pointed out that the nomenclature of the document is only a ‘vadaka chit’ which implies only a licence, not a lease. He also submitted that there are stipulations to the effect that on the expiry of the period of three years the defendant was required to surrender possession, and the plaintiff was entitled to evict him and the defendant was only permitted to construct such buildings as he would be in a position to demolish and remove after a period of three years, that he was not entitled to claim compensation for the structures, if any, put up by him. The counsel for the appellant, however, pointed out that there is a stipulation in the document that without the consent of the plaintiff-respondent the appellant-defendant was not entitled to transfer his interest under Ext. P1 document or hand ever possession of the property to anybody else, thereby implying that in the event of the plaintiff-respondent consenting to it, he was entitled to transfer his interest in the property to another person. In other words, his submission is that it implies that the appellant-defendant had acquired some sort of an interest in immovable property, and, if that is so, the transfer by the respondent-plaintiff to the appellant-defendant was one for enjoyment of the property, implying a lease, not licence, as laid down by the Supreme Court in Associated Hotels Of India Ltd v. R.N Kapoor (AIR 1959 SC 1262). I think, there is force in this contention raised by the counsel for the appellant. I would, therefore, reject the contention of the counsel for the respondent-plaintiff that Ext. P1 evidences only a licence, not a lease.
9. The counsel for the respondent-plaintiff then contended that even assuming that Ext. P1 evidences a lease because of the clause to which reference has already been made in the previous Paragraph, for the defendant to entitle himself to the benefit of S. 106 of the Kerala Land Reforms Act he has to establish that other conditions laid down therein have been fulfilled. In particular he emphasized that the section is attracted only in case where “the lessee has instructed buildings for such commercial or industrial purpose before the 20th May, 1967”. He submitted that Ext. P1 permitted the defendant to construct only sheds which by no stretch of imagination could be called a ‘building’, and therefore, merely because the defendant had put up a shed for the purpose of carrying on the saw mill, it would not by itself entitle him to invoke the provisions of Sec. 106 of the Kerala Land Reforms Act.
10. The counsel for the appellant drew my attention to Cl. (b) of the Explanation to S. 106(1) which states that “‘building’ means a permanent or a temporary building and includes a shed”. To meet this argument the counsel for the respondent-plaintiff submitted that the suit was instituted in the year 1965 when the Explanation relied on by the counsel for the appellant was not on the statute book and therefore the defendant cannot take the advantage of the Explanation. It is the admitted case that the Explanation was incorporated by Act 35 of 1969 which came into force on 1-1-1970. We are also aware that S. 106 of the Kerala Land Reforms Act as amended by Act 35 of 1969 was struck down by this Court (vide paragraph 18 of the majority judgment of the Full Bench of this Court in Govinda Pillai v. Govinda Pillai (1971 Ker LT 87) : (AIR 1971 Ker 295)) holding that the re-enacted provision violated the fundamental right under Art. 19(1)(f) of the Constitution and could not be saved as a reasonable restriction thereon made under Art. 19(5). In paragraph 16 of that judgment it was also stated that a temporary and removable structure, such as a shed, could not be regarded as a building, and that the explanation added by the Act including a “shed” in the concept of a building could not be regarded as declaratory. It is not disputed before me that subsequent to the above said decision the Kerala Land Reforms Act as amended by Act 35 of 1969 including the relevant Explanation, to which reference has already been made, has been included in the Ninth Schedule to the Constitution. The counsel for the respondent-plaintiff submitted that even though the Act as amended by Act 35 of 1969 (by which among other things the Explanation referred to above was incorporated) had been included in the Ninth Schedule, that would not give retrospective effect to the provision conferring benefit under S. 106 inasmuch as the suit was instituted in the year 1965 and the amendment came into existence only in 1970. This probably would have been the correct position in law but for the fact that Section 108(3) of the Kerala Land Reforms (Amendment) Act, 1969, provides as follows:—
“(3) If in any suit, application, appeal, revision, review, proceedings in execution of a decree or other proceedings pending at the commencement of this section before any Court, tribunal, officer or other authority, any person claims any benefit, right or remedy conferred by any of the provisions of the principal Act or the principal Act as amended by this Act, such suit, application, appeal, revision, review proceedings in execution or other proceedings shall be disposed of in accordance with the provisions of the principal Act as amended by this Act.”
The position that emerges, therefore, is that the matter having been pending at the commencement of Act 35 of 1969, that has to be disposed of in accordance with the provisions of the amended Act; and in that view the Explanation has to be given full effect to the pending cases, thus giving that benefit to the appellant-defendant. The first Appellate Court therefore was in error in holding that the appellant-defendant was not entitled to the benefit under S. 106 of the Kerala Land Reforms Act.
For the foregoing reasons the appeal is allowed setting aside the judgment and decree of the first Appellate Court and restoring the decree of the trial Court. In the circumstances of the case I would direct the parties to bear their respective costs throughout.
Appeal allowed.