- Bookmark
- Share
- CaseIQ
Jagdish Chand Petitioner v. Surinder Kumar
Summary of the Opinion by M.M. Kumar, J.
Factual and Procedural Background
This petition under Section 15(5) of the East Punjab Urban Rent Restriction Act, 1949 challenges concurrent findings of fact recorded by the two Courts below. The landlord-petitioner filed an ejectment petition (File No. 19 dated 10.3.1998) claiming that the tenant-respondent had taken a shop on rent to run a cloth business at a yearly rent of Rs. 16,000 plus house tax. A rent note dated 14.4.1985 (to operate from 15.4.1985) was alleged to have been executed by the tenant in favour of the landlord.
The landlord alleged that the tenant began manufacturing notebooks by installing heavy machinery in the demised shop under the name "Sumit Copy Manufacturers" and sought ejectment inter alia on the ground of change of user under Section 13(2)(ii)(b) of the Act. The tenant denied that he agreed to pay house tax over and above rent, denied that the shop was hired only for cloth business (stating it was hired for running business generally), asserted that stationery business had begun three years prior to the petition, denied installation of machinery in the shop (saying machinery for manufacturing notebooks was installed at his residence), and denied execution of the rent note (alleging the landlord obtained his signatures on blank papers and fabricated Mark 'A-2').
At trial, the Rent Controller examined admissibility of the rent note and the issue of change of user. The Rent Controller read the unregistered rent note for a collateral purpose and found that the wording did not confine use to cloth solely; therefore, switching to sale of stationery items did not amount to change of user. The Appellate Authority held the rent note inadmissible because it was not registered and independently examined the evidence, concluding there was no change of user prejudicing the landlord. The present petition challenges those concurrent findings.
Legal Issues Presented
- Whether the change of business from a cloth merchant to the sale of notebooks and stationery items constitutes a change of user within the meaning of Section 13(2)(ii)(b) of the East Punjab Urban Rent Restriction Act, 1949.
- Whether the unregistered rent note (Mark 'A-2'), being a lease for a year, is admissible in evidence or can be read for a collateral purpose given the requirement of registration under Section 17 of the Registration Act, 1908 read with Section 107 of the Transfer of Property Act, 1882.
Arguments of the Parties
Landlord-Petitioner's Arguments
- The landlord contended that the tenant had taken the shop specifically for cloth business and then deviated by manufacturing notebooks and installing heavy machinery, thereby changing the user.
- Learned counsel for the landlord (Mr. P.C. Chaudhary) argued that the rent note Mark 'A-2' could be read for the collateral purpose of proving the agreed purpose of letting out the shop, and that deviation from that purpose without written consent of the landlord entitles the landlord to ejectment under Section 13(2)(ii)(b) of the Act.
- The landlord relied on the Supreme Court judgment in Jagdish Lal v. Parma Nand (AIR 2000 SC 1822) in support of the proposition that unauthorized change of user can warrant eviction.
Tenant-Respondent's Arguments
- The tenant denied the rent note's execution (alleging signatures were obtained on blank papers and the document fabricated) and disputed that the shop was let solely for cloth business, asserting it was let for running a business generally.
- The tenant denied installation of machinery in the demised shop and said machinery for manufacturing notebooks was installed at his residence.
- The tenant claimed he had been selling stationery items for some years prior to the ejectment petition and that the landlord had not objected for 3–4 years; the tenant relied on authorities to argue that the change did not amount to change of user requiring eviction.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Gurdial Batra v. Raj Kumar Jain, 1989 (3) SCC 1441 | Section 13(2)(ii)(b) protects the landlord's interest; a change of user is actionable only where prejudice to landlord's interest is shown; small ancillary changes may not constitute change of user. | The court relied on this principle to hold that some prejudice must be shown and applied it to find no actionable change of user where cloth sale changed to stationery sale without evident prejudice. |
| Mohan Lal v. Jai Bhagwan, AIR 1988 SC 1034 | The opinion cites this case in examination of change of user (context provided by the Appellate Authority). | Referred to by the Appellate Authority while examining evidence on change of user; the opinion does not extract a more specific rule from this case in the provided text. |
| Satish Kumar v. Zarif Ahmed and others, 1997 (3) SCC 679 | Leases executed for month-to-month or for a period short of a year may not require compulsory registration; such written agreements may not be compulsorily registrable. | The court used this authority to distinguish month-to-month tenancies from year-to-year leases and to explain that only the latter require registration to be admissible in evidence. |
| Rajendra Pratap Singh v. Rameshwar Prasad, 1998 (7) SCC 602 | Confirms that leases from year to year (or for terms exceeding one year or reserving yearly rent) require registration under Section 17 of the Registration Act read with Section 107 of the Transfer of Property Act. | Cited to support the proposition that the alleged rent deed for one year required registration and therefore was not admissible in evidence. |
| Budh Ram v. Ralla Ram (Through Lrs.), 1987 (4) SCC 75 | Supports the proposition that leases of a year or more are compulsorily registrable. | Relied upon together with other authorities to conclude that the one-year lease in the present case required registration and could not be read as evidence. |
| Anthony v. K.C. Ittoop & Sons, 2000 (6) SCC 394 | Affirms that leases for a year or more require registration under statutory provisions cited. | Used with other decisions to confirm the requirement of registration for the one-year lease in this case, affecting admissibility of Mark 'A-2'. |
| Rana Vidya Bhushan Singh v. Rati Ram, 1969 (Unreported) SC 86 | Authority cited for reading a lease-deed for a collateral purpose under Section 49 of the Registration Act, 1908. | The court noted that even if the lease-deed were read collaterally under Section 49, the change from cloth to stationery would still not amount to prejudicial change of user in the present facts. |
| Rai Chand Jain v. Miss Chandra Kanta Khosla, 1991 (1) SCC 422 | Also cited as authority allowing reading of an unregistered lease-deed for collateral purposes under Section 49 of the Registration Act. | The court observed that even granting such collateral reading, the facts did not show a change of user sufficient to warrant eviction. |
| Atul Castings Ltd. v. Bawa Gurvachan Singh, 2001 (5) SCC 133 | Section 13(2)(ii)(b) should be interpreted purposively and liberally so as to advance the provision's purpose and avoid unduly restrictive readings that defeat the statute's intent. | The court applied the principle of liberal and purposive interpretation to conclude that switching from cloth to stationery, without prejudice to landlord, does not attract eviction under Section 13(2)(ii)(b). |
| Jagdish Lal v. Parma Nand, AIR 2000 SC 1822 | Establishes that an allied or ancillary business carried on in the let premises does not amount to change of user; however, a change to a business that causes prejudice to the premises (e.g., setting up a restaurant) may amount to change of user. | The court distinguished the facts: Jagdish Lal involved a change to a restaurant causing prejudice, whereas the present case involved stationery sales, which the court held did not cause prejudice and thus did not warrant eviction. |
Court's Reasoning and Analysis
The court proceeded in a stepwise manner, applying statutory provisions and the precedents cited in the record to the facts found by the Courts below:
- Admissibility of the rent note (Mark 'A-2'): The court noted the legal position that leases from year to year require registration under Section 17 of the Registration Act, 1908 read with Section 107 of the Transfer of Property Act, 1882. The alleged rent deed in the present case was for one year and was not registered; therefore it was not admissible as evidence. The court relied on a line of Supreme Court decisions (including Rajendra Pratap Singh, Budh Ram and Anthony) to support that year-to-year leases must be registered. The consequence was that the Appellate Authority's view disqualifying the rent note from evidentiary value was legally tenable.
- Collateral reading of an unregistered document: The court acknowledged authorities (Rana Vidya Bhushan Singh and Rai Chand Jain) allowing an unregistered lease to be read for collateral purposes under Section 49 of the Registration Act. It accepted that such a reading could sometimes be granted, but observed that even if the lease were read collaterally the facts still did not establish a prejudicial change of user in the present case.
- Substance of change-of-user enquiry under Section 13(2)(ii)(b): The court analysed whether changing from cloth trading to stationery (notebooks, etc.) amounted to a change in user that prejudiced the landlord's interest. Relying principally on Gurdial Batra and Atul Castings, the court emphasised that clause (b) is intended to protect the landlord and that a small or non-prejudicial change is not actionable. The court reiterated the requirement that some prejudice to the landlord's interest must be shown.
- Application of precedents to facts: The court compared the present facts with those in Jagdish Lal (where setting up a restaurant was found to be prejudicial) and Gurdial Batra (where sale of television alongside repair work was not treated as change of user). It found that the present change — from cloth merchant to stationery merchant — did not involve structural alteration, installation of machinery in the demised shop, or other facts indicating prejudice to the premises or landlord's interest. The presence of the same wooden shelving for either cloth or stationery was used illustratively in the opinion to show the absence of material change in use.
- Outcome on concurrent findings: Given the legal conclusion that the rent note required registration and the factual conclusion of both lower courts that there was no prejudicial change of user, the court held there was no legal infirmity warranting interference with the concurrent findings of facts by the courts below.
Holding and Implications
Holding: The petition is dismissed. The court affirmed the concurrent factual findings of the lower courts that there was no change of user within the meaning of Section 13(2)(ii)(b) of the Act and agreed with the Appellate Authority that the one-year rent deed (Mark 'A-2') was not admissible in evidence because it was not registered as required.
Petition dismissed.
Implications:
- The immediate legal consequence is that the landlord's petition for ejectment was refused and the tenant remains in occupation; there is no ejectment order based on the change of user pleaded by the landlord.
- The court upheld the principle that leases of a year require registration to be admissible in evidence, reinforcing the lower courts' approach to Mark 'A-2'.
- The court applied and followed the Supreme Court's guidance that Section 13(2)(ii)(b) requires a showing of prejudice to the landlord's interest; a non-prejudicial switch from one commercial article to another (cloth to stationery) does not necessarily amount to change of user warranting eviction.
- No new legal principle or precedent was announced; the decision affirms and applies existing authorities to the facts of this case and declines interference with concurrent findings of fact recorded below.
End of summary — based exclusively on the provided opinion text.
M.M Kumar, J. — This petition filed by the landlord under Section 15(5) of the East Punjab Urban Rent Restriction Act, 1949 (for brevity, ‘the Act’) challenges concurrent findings of facts recorded by both the Courts below holding that the tenant-respondent has not indulged in change of use of the demised shop as envisaged by Section 13(2)(ii)(b) of the Act. Both the Courts have found that the change of business from cloth merchant to sale of notebooks and stationery items etc. would not amount to change of user within the meaning of Section 13(2)(ii)(b) of the Act especially when the rent note describing the purpose of letting out the demised shop has not been held admissible in evidence for want of registration.
2. The controversy although is legal, yet few facts are necessary for focusing the issue raised. The landlord-petitioner filed an ejectment petition being File No. 19 dated 10.3.1998 claiming that the tenant-respondent took the demised shop on rent from him for setting up his cloth business on a yearly rent of Rs. 16,000/- along with house tax besides other charges for a period of one year. A rent note was also executed by the tenant-respondent in favour of the landlord-petitioner. The ejectment was sought inter alia on the ground that the shop was originally taken on rent by the tenant-respondent for setting up the cloth business and he has started manufacturing note-books by installing heavy machinery in the demised shop under the name and style of ‘Sumit Copy Manufacturers’. The stand taken by the tenant-respondent in his reply was that he never agreed for payment of house tax over and above the rent at the rate of Rs. 16,000/- per year. He also denied that the demised shop was hired only for cloth business by further asserting that it was hired for running business. It was claimed that the tenant-respondent has started stationery business three years prior to the filing of the petition and no machinery for manufacturing the note-books has been installed. He has explained that the machinery has been installed for manufacturing the note-books at his residence. The execution of the rent note has also been denied asserting that the landlord-petitioner had obtained the signatures of the tenant-respondent on blank papers and has fabricated the same.
3. The learned Rent Controller held that although by virtue of Section 17(1) of the Registration Act, 1908 (for brevity, ‘1908 Act’) read with Section 107 of the Transfer of Property Act, 1882 (for brevity, ‘1882 Act’), a lease deed on year to year basis is compulsorily registerable, yet the rent note Mark ‘A-2’ could be read for a collateral purpose. According to Clause 6 of the rent note Mark ‘A-2’, the demised shop is to be used for the business of cloth. The Rent Controller has found that the use of the demised shop has not been confined to cloth merchant alone by the use of word ‘only’ and, therefore, switching to the sale of stationery items was not change of user warranting ejectment of the tenant-respondent.
4. The Appellate Authority, however, found that the non-registration of rent note Mark ‘A-2’ would disqualify the document being read in evidence. Referring to Section 17 of 1908 Act and Section 107 of 1882 Act, the Appellate Authority has held as under :—
“…….I have gone through the rent deed dated 14.4.1985 which was to be effected from 15.4.1985 It bears the signature of Jagdish Chand and Surinder Kumar. In para No. 2 it is scribed that the shop is rented out for one year and in para No. 6 there is written that he will do the business of cloth. So, bare language of para No. 6 indicates that the respondent will run the business of cloth but he has not been debarred from running any other business. Section 17 of the Registration Act deals with the documents which are to be registered. Sub-section (D) of Section 7 deals with lease or immovable property and reads that “lease of immovable property from year to year or if any term exceeding one year or reserving a yearly rent are to be registered”.
Under the Transfer of Property Act Section 107 reads as under :
“A lease of immoveable property from year to year for any term exceeding one year or reserving of yearly rent can be made only by a registered document”.
So from the bare language of both sections when rent deed is for a year or more then that is compulsory registerable. In the case in hand the alleged rent deed Ex. A-2 is for a year and which was to be commenced from 15.4.1985 but the same was not got registered. The trial Court has rightly held that it cannot be read into evidence as it requires registration.”
5. The Appellate Authority also examined in detail the whole evidence with regard to change of user. It also referred to the judgments of the Supreme Court in the cases of Gurdial Batra v. Raj Kumar Jain , 1989 (2) RCR (Rent) 233 (SC) : 1989 (3) SCC 1441 and Mohan Lal v. Jai Bhagwan, 1988 (1) RCR (Rent) 444 (SC) : AIR 1988 SC 1034 and concluded as under :—
“………In the case in hand the shop was not rented out only for the purpose of cloth business. The ld. counsel for the appellant has admitted that the word only is not recorded in para No. 6 of the alleged rent deed mark-A-2. Moreover, the lease deed is not proved on the file and no importance can be given to mark-A-2 and it can be considered only for the collateral purpose, and it is in the evidence that the respondent changed the business in the year 1991-1992 but the eviction application was filed in the year 1995. The arguments of the ld. counsel for the respondent is forceful that the applicant has not objected his business of selling the copies for 3-4 years but he has filed eviction application just for the reason that the rent has increased many folds and I do not agree with the arguments advanced by the ld. counsel for the appellant as the counsel for the appellant has argued, that the letting out purpose of the shop in dispute was run the business of cloth only. In the light of authority relied upon by the counsel for the respondent, I am the view that there is no change of user. The change of user only where the change of user which impairs the value of the rented premises and interest of the landlord is prejudiced. The findings of the trial Court are well reasoned and well based and it requires no interference and the same is hereby confirmed.”
6. Mr. P.C Chaudhary, learned counsel for the landlord-petitioner has argued that the rent note Mark ‘A-2’ can be read into evidence for a collateral purpose, namely, the purpose of use of the demised shop. According to the learned counsel deviation from the purpose for which the demised shop was let out would result into ejectment of the tenant. He has drawn my attention to the express words of Section 13(2)(ii)(b) of the Act and argued that if the tenant without the written consent of the landlord has used the demised building for a purpose other than that for which it was leased, then the tenant is liable to be evicted. In support of his submission, the learned counsel has placed reliance on a judgment of the Supreme Court in the case of Jagdish Lal v. Parma Nand, 2000 (1) RCR (Rent) 381 (SC) : AIR 2000 SC 1822.
7. After hearing the learned counsel, I am of the considered view that this petition does not warrant admission. It is well settled that a lease deed executed for month to month tenancy or for a period of 11 months, though reduced to writing may not require compulsory registration even if possession of tenanted premises might have been delivered to the tenant. For the aforementioned proposition, reliance could be placed on a judgment of the Supreme Court in the case of Satish Kumar v. Zarif Ahmed and others, 1997 (3) SCC 679. However, it is not true in cases where the lease deed is executed for year to year tenancy because it is equally well settled that such a lease-deed would require registration as envisaged by Section 17 of the 1908 Act read with Section 107 of 1882 Act. For the aforementioned proposition, reliance could be placed on three judgments of the Supreme Court in the cases of Rajendra Pratap Singh v. Rameshwar Prasad, 1988 (2) RCR (Rent) 556 (SC) : 1998 (7) SCC 602; Budh Ram v. Ralla Ram Deceased Through Lrs., 1987 (2) RCR (Rent) 309 (SC) : 1987 (4) SCC 75 and Anthony v. K.C Ittoop & Sons, 2000 (2) RCR (Rent) 182 (SC) : 2000 (6) SCC 394. In the present case, the lease was admittedly for a period of one year and, therefore, it would require registration for becoming admissible in evidence. Therefore, there is no legal infirmity in the view taken by the learned Appellate Authority warranting interference of this Court.
8. The findings on the change of user are that there is no machinery installed in the demised shop. The tenant-respondent has, however, started selling stationery items like note-books etc. instead of cloth. Even when the benefit of the judgments of the Supreme Court in Rana Vidya Bhushan Singh v. Rati Ram, 1969 Unreported Judgments (SC) 86 and Rai Chand Jain v. Miss Chandra Kanta Khosla, 1991 (1) RCR (Rent) 128 (SC) : 1991 (1) SCC 422 is granted to the landlord-petitioner of reading the lease-deed for a collateral purpose under Section 49 of 1908 Act, still the change of user from cloth merchant to stationery merchant would not be such a change of user as to require any written consent of the landlord-petitioner. The nature of the use of premises continues to be the same and instead of cloth, the tenant-respondent has started selling the stationery items. In the present time of fast changing world, switching over from one business to another without harming the nature of use of the premises has to be considered permissible without being hit by the mischief of Section 13(2)(ii)(b) of the Act. In Gurdial Batra's case (supra) it has been observed by the Supreme Court that some prejudice must be shown to have been caused to the interest of the landlord which is the rationale of Section 13(2)(ii)(b) of the Act. The observations of their Lordships in this regard read as under :—
“The restriction which is starutorily provided in Section 13(2)(ii)(b) of the Act is obviously one to protect the interest of the landlord and is intended to restrict the use of the landlord's premises taken by the tenant under lease. It is akin to the provision contained in Section 108 of the Transfer of Property Act dealing with the obligations of a lessee. A house let for residential purpose would not be available for being used as a shop even without structural alteration. The concept of injury to the premises which forms the foundation of clause (b) is the main basis for providing clause (b) of Section 13(2)(ii) as a ground for the tenant's eviction. The landlord parts with possession of the premises by giving a lease of the property to the tenant for consideration. Ordinarily, as long as the interest of the landlord is not prejudiced, a small change in the user would not be actionable. In this case, the premises was let out for running of a repair shop. Along with the repair business, sale of television was temporarily carried on. This did not constitute a change of user within the meaning of Section 13(2)(ii)(b) so as to give a cause of action to the landlord to seek eviction of the tenant.”
9. In the case of Atul Castings Ltd. v. Bawa Gurvachan Singh, 2001 (1) RCR (Rent) 532 (SC) : 2001 (5) SCC 133, the Supreme Court has followed the principles of liberal interpretation of Section 13(2)(ii)(b) which should advance the purpose of the provision. Following the view taken in Gurdial Batra's case (supra), their Lordships observed as under :—
“The interpretation of provisions must be purposive and not unduly restrictive or narrow. If Section 13(2)(ii)(b) is interpreted in a restricted and narrow manner, it will be difficult for any tenant occupying a residential building to protect himself from arbitrary eviction and even to have freedom to use the building for residential purpose as he wants. Such interpretation will defeat the intent and purpose of the statute.”
10. When the principles laid down in Gurdial Batra's case (supra) and Atul Castings Ltd.'s case (supra) are applied to the facts of the present case, then it becomes evident that no prejudice is caused to the interest of the landlord-petitioner because same wooden shelves could be used for stalking (stocking?) the cloth where the tenant-respondent might have stocked the stationery items. Such a liberal approach would advance the object of the provision. It was because of such an approach that in Gurdial Batra's case (supra), sale of television along with the cycles and rickshaw repair, when the rent note did not prohibit any other business was considered as permissible. Therefore, there is no scope for interfering with the concurrent findings of facts with the concurrent findings of facts recorded by both the Courts below.
11. In the case of Jagdish Lal (supra) on which reliance has been placed by learned counsel for the landlord-petitioner, it has been observed that if a new business started by the tenant in the premises let out to him was allied business or a business which was ancillary to the main business, then it would not amount to change of user. It has further been observed that it is not enough for the tenant to argue that nature of the building has continued to be commercial no matter to which changed use it has been put. In that case, the change was from general merchant, ready-made and cloth merchant to the setting up of a restaurant for serving tea and cold-drinks and it was found in those circumstances that it would be covered by the mischief of Section 13(2)(ii)(b) of the Act. It is evident that there was prejudice caused to the landlord because making tea, serving the same would result into activities which are harmful to the tenanted premises resulting in prejudice to the interest of the landlord. However, in the present case, the change of user is from cloth merchant to stationery. Therefore, it cannot be said that there is such a drastic change in the nature of business so as to conclude that prejudice is caused to the landlord-petitioner the tenant-respondent is to be ejected.
12. In view of the above, the instant petition does not warrant admission and the same is dismissed.
Petition dismissed.
Alert