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Samir Mukherjee v. Davinder K. Bajaj And Others
Factual and Procedural Background
The respondents filed a civil suit seeking eviction of the appellant from the suit premises and recovery of arrears of rent and mesne profits. The appellant had entered the premises under an oral tenancy. While the respondents treated the arrangement as a monthly tenancy and served a 15-day notice under Section 106 of the Transfer of Property Act, 1882, the appellant asserted that the lease was for “manufacturing purposes” and therefore, by operation of the same section, had to be treated as a year-to-year tenancy terminable only by six months’ notice.
The trial court, acting on an application under Order XII Rule 6 CPC, found that the appellant’s written statement contained admissions warranting a decree and granted relief to the respondents. The Delhi High Court (RFA No. 325 of 1997) affirmed that decision. The present appeal to the Supreme Court was by special leave against the High Court’s judgment.
Legal Issues Presented
- Whether an oral lease allegedly created for manufacturing purposes can, by virtue of the presumption in Section 106 of the Transfer of Property Act, be treated as a year-to-year tenancy requiring six months’ notice to terminate.
- Whether the absence of a registered instrument, as mandated by Section 107 of the Transfer of Property Act for leases “from year to year or for any term exceeding one year,” renders the presumption under Section 106 inapplicable.
Arguments of the Parties
Appellant's Arguments
- The tenancy was granted for manufacturing purposes; therefore, the statutory presumption in Section 106 makes it a lease from year to year, terminable only by six months’ notice expiring with the end of the tenancy year.
- Although Section 107 requires registration for year-to-year leases, that provision does not “control” or negate the presumption created by Section 106.
- Consequently, the 15-day notice served by the respondents was invalid, and the decree of eviction is unsustainable.
Respondents' Arguments
- Under the Supreme Court decisions in Ram Kumar Das v. Jagdish Chandra Deo (AIR 1952 SC 23) and Shri Janki Devi Bhagat Trust v. Ram Swarup Jain (1995 5 SCC 314), an unregistered oral lease cannot be construed as a year-to-year tenancy.
- Because there was no registered instrument, Section 107 bars the appellant from claiming the benefit of the year-to-year presumption. The tenancy must therefore be treated as a month-to-month tenancy, validly terminated by 15-day notice.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Ram Kumar Das v. Jagdish Chandra Deo, Dhabal Dev, AIR 1952 SC 23; 1952 SCR 269 | Section 106 is a rule of construction; a year-to-year lease requires a registered instrument under Section 107. | Relied upon to hold that an oral tenancy cannot be treated as year-to-year; therefore, 15-day notice suffices. |
| Shri Janki Devi Bhagat Trust v. Ram Swarup Jain, (1995) 5 SCC 314 | A lease from year to year or exceeding one year is void unless created by a registered instrument. | Used to reinforce that lack of registration defeats appellant’s claim of a year-to-year lease. |
| Krishna Das v. Bidhan Chandra, AIR 1959 Cal 181 | Held that Section 106 presumption is not controlled by Section 107. | Expressly disapproved as based on a misunderstanding of Ram Kumar Das. |
| Balwant Singh v. L. Murari Lal, AIR 1965 All 187 | Took the same view as Krishna Das. | Disapproved for the same reasons. |
| Sati Prasanna Mukherjee v. Md. Fazel, AIR 1952 Cal 320 | Accepted that Section 107 overrides the fiction in Section 106 when no registration exists. | Approved as laying down the correct legal position. |
| Kishan Lal v. Lal Ram Chander, AIR 1952 All 634 | Same principle as Sati Prasanna Mukherjee. | Approved. |
| Jagat Taran Berry v. Sardar Sant Singh, AIR 1980 Del 7; ILR (1980) 1 Del 225 | Held that Sections 106 and 107 are harmonious; Section 106 applies only when a valid registered lease exists. | Cited with approval; Supreme Court concurred with its reasoning. |
Court's Reasoning and Analysis
1. The Court began with a textual examination of Sections 106 and 107 of the Transfer of Property Act. Section 106 merely provides a rule of construction to determine the duration of a lease when a valid lease exists but its term is unspecified. It presupposes a “valid lease.”
2. Under Section 107, any lease “from year to year, or for any term exceeding one year, or reserving a yearly rent” can be created only by a registered instrument. An oral arrangement cannot legally create such a lease.
3. Because the appellant’s tenancy was concededly created orally, it could not ripen into a year-to-year tenancy. Consequently, the legal fiction in Section 106 (which would have required six months’ notice) was inapplicable.
4. The Court relied heavily on Ram Kumar Das and Janki Devi Bhagat Trust to reaffirm that the absence of registration is fatal to the appellant’s claim.
5. It then surveyed conflicting High Court authorities. Decisions asserting that Section 106 overrides Section 107 were found to misread Ram Kumar Das and were expressly held to be incorrect. Judgments aligning Sections 106 and 107 harmoniously were approved.
6. Applying the above principles, the Court concluded that the tenancy was month-to-month, validly terminated by a 15-day notice. Accordingly, the trial court and High Court were correct in decreeing eviction.
Holding and Implications
Appeal Dismissed. The decree of eviction stands; parties to bear their own costs.
Implications: The judgment clarifies that an oral tenancy, even if alleged to be for manufacturing purposes, cannot be construed as a year-to-year lease in the absence of a registered instrument. It resolves divergent High Court views by affirming that Section 107’s registration requirement conditions the application of Section 106. No new legal doctrine is created, but existing law is authoritatively restated, strengthening the necessity of registration for long-term leases.
S.N Phukan, J.— In this appeal by special leave the appellant has impugned the judgment of the Division Bench of the Delhi High Court passed in RFA No. 325 of 1997 by which the High Court upheld the judgment of the Additional District Judge, Delhi.
2. The respondents filed a suit for eviction of the appellant from the suit land and also for recovery of arrears of rent and damages/mesne profits. According to the respondents the appellant was a monthly tenant and, therefore, 15 days' notice terminating the tenancy, as required under Section 106 of the Transfer of Property Act (for short “the Act”) was issued, receipt of which was not disputed. The tenancy was created by an oral agreement. The appellant admitted the tenancy but pleaded that the intention of the parties at the time of its creation was to grant tenancy permanently because the lease was granted in favour of the appellant for manufacturing purpose and since the inception of the tenancy, the appellant was carrying on the business of manufacturing transmission towers and railway electrification fittings. On these facts it was pleaded that the lease would be deemed to be from year to year as per the provisions of Section 106 of the Act and, therefore, notice to quit ought to have been given for 6 months expiring on the last date of the year of the tenancy. Before the trial court an application under Order XII Rule 6 CPC was filed which was allowed, as according to the trial court in the written statement there was clear admission by the appellant.
3. Before this Court, learned counsel for the appellant, Mr Jaideep Gupta referring to the provisions of Section 106 of the Act has contended that since the lease was for manufacturing purpose, the legal presumption as envisaged in Section 106 of the Act would apply and, therefore, it was a case of a tenancy from year to year terminable by 6 months' notice and not by 15 days' notice. The learned counsel has further contended that though under Section 107 of the Act a lease from year to year can be made only by a registered deed, this section nowhere controls the presumption laid down in Section 106 of the Act and as such the notice to quit in the present appeal is bad in law. In reply the learned Senior Counsel for the respondents, Mr Verma has submitted that in view of the law laid down by this Court in Ram Kumar Das v. Jagdish Chandra Deo, Dhabal Dev AIR 1952 SC 23, 1952 SCR 269 and Shri Janki Devi Bhagat Trust v. Ram Swarup Jain (1995) 5 SCC 314 the contention of the learned counsel for the appellant is liable to be rejected.
4. To appreciate the respective contentions that have been put forward by the learned counsel for the parties we extract below Sections 106 and 107 of the Act:
“106. Duration of certain leases in absence of written contract or local usage.—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 tenancy.
Every notice under this section must be in writing signed by or on behalf of the person giving it and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such partly, or to one of his family or servants, at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.
107. Leases how made.—A lease of immovable 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 immovable property may be made either by a registered instrument or by oral agreement accompanied by 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.”
5. Section 106 lays down a rule of construction which is to apply when the parties have not specifically agreed upon as to whether the lease is yearly or monthly. On a plain reading of this section it is clear that the legislature has classified leases into two categories according to their purposes and this section would be attracted to construe the duration of a valid lease in the absence of a contract or local law or usage to the contrary. Where the parties by a contract have indicated the duration of a lease, this section would not apply. What this section does is to prescribe the duration of the period of different kinds of leases by legal fiction — leases for agricultural or manufacturing purposes shall be deemed to be lease from year to year and all other leases shall be deemed to be from month to month. Existence of a valid lease is a prerequisite to invoke the rule of construction embodied in Section 106 of the Transfer of Property Act.
6. Section 107 prescribes the procedure for execution of a lease between the parties. Under the first para of this section a lease of immovable 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 and remaining classes of leases are governed by the second para, that is to say all other leases of immovable property can be made either by a registered instrument or by an oral agreement accompanied by delivery of possession.
7. In the case in hand we are concerned with an oral lease which is hit by the first para of Section 107 of the Transfer of Property Act. Under Section 107 parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease in respect of any immovable property from year to year or for any term exceeding one year, or reserving a yearly rent, such a lease has to be only by a registered instrument. In the absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be created. If the lease is not a valid lease within the meaning of the opening words of Section 106 the rule of construction embodied therein would not be attracted. The above is the legal position on a harmonious reading of both the sections.
8. In Ram Kumar Das AIR 1952 SC 23, 1952 SCR 269 Section 106 was considered by a Bench of four Judges of this Court. This Court held that this Section 106 lays down the rule of construction which is to be applied when there is no period agreed upon between the parties and in such cases duration has to be determined by reference to the object for the purpose for which tenancy is created. It was also held that the rule of construction embodied in this section applies not only to express leases of uncertain duration but also to leases implied by law which may be inferred from possession and acceptance of rent and other circumstances. It was further held that it is not disputed that a contract to the contrary as contemplated by Section 106 of the Transfer of Property Act need not be an express contract; it may be implied, but it certainly should be a valid contract. On the facts of the case, the Court held (at AIR p. 27, para 13) that
“the difficulty in applying this rule to the present case arises from the fact that a tenancy from year to year or reserving an yearly rent can be made only by registered instrument, as laid down in Section 107 of the Transfer of Property Act”.
(emphasis supplied)
9. In a recent decision of this Court in Janki Devi Bhagat Trust (1995) 5 SCC 314 this Court held that under Section 107 of the Transfer of Property Act a lease of immovable property from year to year or for a term exceeding one year can be made only by a registered instrument and any lease of this kind would be void unless it is so created.
10. In the present case though the appellant has claimed that it was a lease for manufacturing purpose, admittedly there was no registered written lease. Therefore, the rule of construction as envisaged in Section 106 would not be applicable as the statutory requirement of Section 107 of the Act has not been satisfied. The plea of the appellant that 15 days' notice terminating the present tenancy is bad in law would not be sustainable.
11. The learned counsel for the appellant has very fairly placed before us various decisions of different High Courts. We find that two different views are projected in these decisions. One view is that fiction in Section 106 was not intended to override Section 107.
12. In Krishna Das v. Bidhan Chandra AIR 1959 Cal 181 and Balwant Singh v. L. Murari Lal AIR 1965 All 187 the Courts have taken the view that Section 106 was not intended to be controlled by Section 107. Similar view has been expressed by the High Courts of Assam and Nagaland. The contrary view has been expressed by the Calcutta High Court in Sati Prasanna Mukherjee v. Mohd. Fazel AIR 1952 Cal 320 and the Allahabad High Court in Kishan Lal v. Lal Ram Chander AIR 1952 All 634. It is not necessary to refer to all the decisions of other High Courts.
13. On a perusal of these decisions we find the view that fiction in Section 106 was not intended to be controlled by Section 107 was due to a misunderstanding of the decision of this Court in Ram Kumar Das AIR 1952 SC 23, 1952 SCR 269 as we have already indicated that in Ram Kumar Das AIR 1952 SC 23, 1952 SCR 269 this Court did not apply the rule of construction of Section 106 as there was no registered instrument. The High Courts taking that view have not laid down the law correctly.
14. In Jagat Taran Berry v. Sardar Sant Singh AIR 1980 Del 7, ILR (1980) 1 Del 225 the Delhi High Court considered the views expressed by different High Courts and correctly took the view that there is no conflict between Sections 106 and 107 of the Act and for application of Section 106 a valid year-to-year lease shall be deemed to exist only when it is created by a registered instrument; non-existence of a registered instrument to create such a lease will by itself exclude Section 106.
15. For the reasons stated above, we find no merit in the present appeal and accordingly it is dismissed. Costs on the parties.
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