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PETITIONER: ALLENBURRY ENGINEERS PRIVATE LTD.

       Vs.

RESPONDENT: RAMAKRISHNA DALMIA & ORS.

DATE OF JUDGMENT15/09/1972

BENCH: SHELAT, J.M. BENCH: SHELAT, J.M. PALEKAR, D.G. MATHEW, KUTTYIL KURIEN DWIVEDI, S.N. CHANDRACHUD, Y.V.

CITATION:  1973 AIR  425            1973 SCR  (2) 257  1973 SCC  (1)   7  CITATOR INFO :  R          1980 SC  86  (5,6)  R          1982 SC 127  (7)  RF         1986 SC 662  (25)  R          1988 SC1164  (4)  R          1988 SC2237  (6)  RF         1989 SC  79  (2)

ACT: Transfer of Property Act-S. 106 and 107-Meaning of the  word ’Manufacturer’-Whether   lease   for   reconditioning    and repairing vehicles is manufacture within s. 106.

HEADNOTE: In  1953,  an  open  piece of land in  the  city  of  Bombay belonging  to  Sir  Sapurji Bhairucha Mills  Co.  Ltd.,  was purchased  by Bharat Insurance Co. Ltd.  In 1947,  the  said piece  of land was leased to Allenberry & Co. on  a  monthly rent of Rs. 1800/-.  In 1950, the appellant Company was  in- corporated  for  the  specific purpose of  taking  over  the business of Allenberry & Co. In 1954, the appellant  Company occupied  the  said  leased land  as  tenant  together  with certain  vehicles belonging to the said Allenberry & Co.  at an  agreed  rent of Rs. 1800/- per mensem.   A  document  of lease  was  executed  by the parties  for  ten  years.   The document  was not, however, registered with the result  that it  could  not  be tendered in evidence as  one  creating  a lease. On  January  20,  1960, the Bharat Insurance  Co.  served  a notice  upon the appellant Company terminating  the  tenancy and  called upon the Company to hand over quiet  and  vacant possession  of the said land or part of it.  Later,  a  suit was filed in the Court of Small Causes at Bombay, and  after nationalisation, the L.I.C. was substituted for that of  the Bharat Insurance Co. as the plaintiff in the said suit.   It was  contended by the appellant that since the  tenancy  was for  manufacturing purposes, one month’s notice  terminating the  tenancy  was  an invalid notice under  s.  106  of  the Transfer  of  Property  Act.  All the  three  Courts  below, however,   concurrently  held  that  the  tenancy  was   not

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satisfactorily  proved to be for manufacturing  purposes  as alleged  by the appellant company and in the absence of  any proof  as  to the terms for which it was  made,  the  notice terminating  the tenancy, although it was a month’s  notice, was  a valid notice and on that footing, decreed  the  suit. Two  questions were raised before this Court: (1)  That  the tenancy  being for manufacturing purposes,  the  presumption laid  down in S. 106, Transfer of Property Act  under  which such  tenancy has to be regarded as a tenancy from  year  to year,  terminable  ’by  a six months’ notice and  not  by  a month’s notice, must apply. (2) The second question was that in any event, the lease was for manufacturing purposes,  and therefore,  the said notice was not valid.   Dismissing  the appeal. HELD : (1) The expression "manufacturing purposes" in S. 106 of  the Transfer of Property Act is used in its popular  and dictionary  meaning.  The burden of proving that  the  lease was for manufacturing purposes lie on the appellant  company who claim,-, it to be so.  That burden is to establish  that the  exclusive or the dominant purpose of the lease was  the manufacturing purpose. [261D] C.   Mackertich  v. Sturt & Co. Ltd., A.I.R. 1970 S.C.  889, referred to. (ii)The  word  ’manufacturer, according to  the  dictionary meaning,  is the making of articles or material by  physical labour or mechanical power.  "Manufacture" implies a change, but every change is not manu- 18-L348Sup.Cf./73 258 facture  and  every change in an article is  the  result  of treatment,  labour and manipulation.  But something more  is necessary  and  there  must  be  transformation  a  new  and different  article  must emerge having a  distinctive  name, character and use. [261F] R.   v.  Wheeler, 2 R. ALD. 349 referred to. (iii)The disputed premises were used mostly for storing the  sal vehicles together with spare parts  etc.,  acquired along  with them or purchased from the market for  repairing and  reconditioning  and  making the said  vehicle  fit  for resale.   There is no evidence except the bare word of’  one witness  that  parts such as chassis and bodies  etc..  were actually manufacture and replaced for the old.  No books  of account  or  log  books  showing the  work  carried  on  the premises or other documents were produced which would  throw light  on the activities carried on the premises.   Even  if the evidence of the said witness were accepted, in toto, and it is held that some spare parts were being manufactured for repairing  or  reconditioning  the  vehicles,  the  dominant purpose of the lease would still have to be regarded as  one ’for  storage  and  resale  ,of the  vehicles  and  not  for manufacturing  purpose.  Manufacturing of spare parts  would then be merely incidental to the main purpose of disposal of these  vehicles.  Therefore, the appellants have  failed  to establish  that  the  dominant  purpose  of  the  lease  was manufacturing  purpose and therefore, the  appellants  could not have challenged the legality of the notice.  That  being the  position, it is not necessary to go into  the  question whether  S. 107 has ail impact on S. 106 of the Transfer  of Property Act. [265 D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  1072  of 1971.

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Appeal  by special leave from the judgment  and  order.dated June  16,  1971 of the Bombay High Court  in  Special  Civil Application No. 1604 of 1969. M.   C. Chagla, R. R. Zaiwala, P. C. Bhartari and Ravinder Narain, for the appellant. V.   M.   Tarkunde,   Madan  Gopal  Gupta  R.   S.   Sharma, Rameshwar,,  Dial,  P.  N.  Chadha and  B.  D.  Sharma,  for respondent No. 1 The Judgment of the Court was delivered by Shelat,  J.  This appeal, by special leave, is  against  the judgment  of  the High Court of Bombay.   When  the  special leave was granted, it ",as confined to the question  whether the tenancy in favour of ’the appellant-company was one  for manufacturing purpose, and if it was so, whether the  notice terminating the tenancy was inadequate ? The appeal first reached hearing before a Division Bench  of this Court.  At that time, the Parties were agreed that  the relationship  between them was that of landlord and  tenant. But 259 the case of the appellant-company was that the lease in  its favour was for a period of ten years, that such a lease  was for  manufacturing  purposes, and therefore,  could  not  be validly terminated by a month’s notice.  The respondents, on the  other  hand,  contended  that  the  lease  was  by   an unregistered document, and that it was not a valid lease  by reason of the provisions of ss. 106 and 107 of the  Transfer of  Property  Act.  The Division Bench did not go  into  the question whether the lease was for manufacturing  purpose,,, or  not.  However, the Division Bench felt that  the  appeal raised  important questions as to the impact of s. 107  upon s.  106  of the Act, and there being so far no  decision  of this  Court upon such a question referred the, appeal  to  a larger Bench.  That is now the matter has come up before us. The  premises with which we are presently concerned  consist of  an open piece of land adjoining Haines Road in the  city of  Bombay.  Prior to 1963, the said piece of land  belonged to  a company called Sir Shapurji, Bharucha Mills  Co.  Ltd. In  1953,  the said piece of land was  purchased  by  Bharat Insurance  Co. Ltd.  It appears that in 1947 the said  piece of  land was leased to Allenbury & Co. on a monthly rent  of Rs. 1800/where the lessee kept a number of American vehicles used  by the army during the Second World War and  purchased by  that  company  from  the  Disposal  Department  of   the Government  of  India.   In or about  1950,  the  appellant- company was incorporated for the specific purpose of  taking over  the business of Allenbury & Co. together with all  its assets and properties including the said vehicles.  In 1954, the  appellant-company  occupied  the said  leased  land  as tenant  together  with such of the said  vehicles  remaining undisposed  of till then at an agreed rent of Rs.  1800/-  a month. It is not in dispute that at ;that time a document of  lease was   executed  by  the-parties,  which  according  to   the appellant,company  provided for a lease for ten years.   The document  was, however, not registered with the result  that it  could  not  be tendered in evidence as  one  creating  a lease.   There was, however, no dispute between the  parties that the appellant company paid and the respondents accepted all  throughout  rent  from  the  appellant-company  at  the aforesaid  agreed rate of Rs. 1,800/- a month.   On  January 20, 1960, the Bharat Insurance Co. Ltd. served a notice upon the  appellant-company thereby terminating the  tenancy  and called  upon it to hand over quiet and vacant possession  of the  said premises on the ground that the  appellant-company

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had  sub-let  the said land or part of it.   The  appellant- company  having failed to abide, by that demand. a suit  was filed  in  the  Court of Small Causes at  Bombay.   Oil  the nationalisation of the Life, Insurance Companies and on the 260 Life  Insurance Corporation of India being set up, the  name of  that Corporation was substituted for that of the  Bharat Insurance  Co. as the plaintiff in the said suit.  The  suit was henceforth continued by the Corporation. Although the unregistered document could not go in evidence, the suit as well as the appeal arising therefrom before  the Appellate Bench of the Small Causes Court proceeded on  ,the basis that the relationship between the parties was that  of landlord  and  tenant  as  there was  no  dispute  that  the occupation  of  the premises in question by  the  appellant- company  was as a tenant irrespective of What the  terms  or the  period of that tenancy were, which terms could  not  be proved  as  the  document in respect thereof  could  not  be brought  on  record by reason of its being  an  unregistered document.   The Special Civil Application under Art. 227  of the  Constitution  filed  in  the  High  Court  against  the judgment  of  the Shall Causes Court and  confirmed  by  its Appellate  Bench, also proceeded on the assumption that  the relationship  between the parties was that of  landlord  and tenant.   All  the three courts concurrently held  that  the tenancy,  whatever  its terms ware, was  not  satisfactorily proved  to be for manufacturing purposes as alleged  by  the appellant-company and in the absence of any proof as to  the term for which it was made, whether it was for ten years  or from  year to year, the notice terminating the  tenancy  and calling   upon  the  appellant-company  to  deliver   vacant possession,  although it was a month’s notice, was  not  an invalid notice and on that footing decreed the suit. In  these  circumstances, two questions were  sought  to  be raised  by  Mr. Chagla.  The first was that there  being  no dispute  between the parties that the  relationship  between them  was  that of landlord and tenant and  the  respondents having  accepted  all along the said rent of  Rs.  1800/-  a month,  the  Court-  must proceed upon the  basis  that  the occupation  of the premises by the appellant-company was  in the.,  capacity  as  a tenant.  According  to  him,  if  the appellant-company  can establish that that tenancy  was  for manufacturing purposes, the presumption laid down in s.  106 of  the Transfer of Property Act, under which  such  tenancy has to be regarded as a tenancy from year to year terminable by  a six months’ notice and not by a month’s  notice,  must apply.  It is true, said he, that under s. 107 of the Act  a lease  from  year to year can be made only by  a  registered instrument,  but  that  provision in  no  way  controls  the presumption  laid  down in s. 106 tinder which  once  it  is proved that the parties were in the position of a  landlord and a tenant and the tenancy was for manufacturing purposes. has to be presumed to be ’one from year to year.   According to him, the two sections are independent of each other.  the one 261 dealing  with  the  user and  notice,  and  the  presumption arising   from  such  user,  and  the  other  dealing   with compulsory  registration for. a lease from year to year,  or for a term exceeding one year.  Mr. Tarkunde, appearing  for the   Corporation,,   on  the  other  hand,   disputed   the construction of these two sections suggested by Mr.  Chagla. The  second  question raised by Mr. Chagla was that  in  any event   the  lease  was  for  manufacturing  purposes,   and therefore, the said notice was not valid.  Assuming that Mr.

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Chagla  is  right in the interpretation of ss. 106  and  107 suggested by him, even then the appellant-company has  first to   establish  that  the  lease  in  its  favour  was   for manufacturing purposes and it is then only that it can  take advantage of the rule of presumption laid down in s. 106. The expression ’manufacturing purposes’ in s. 106 is used in its  popular  and  dictionary  meaning.,  the  Transfer   of Property  Act not having supplied any dictionary of its  own for  that expression.  The burden of proving that the  lease was for manufacturing purposes, must for the purposes of  s. 106  of the Transfer of Property Act, lie on the  party  who claims  it  to  be so, in. the present  case  the  appellant company.  That burden is to establish that the exclusive  or at  least  the  dominant  purpose  of  the  lease  was   the manufacturing purpose. [See C. Mockertich v. Steuart &., Co. Ltd.(1)]. The word ’manufacture’, according to its dictionary meaning, is the making,, of articles or material (now on large scale) by physical  labour or mechanical power.  (Shorter  Oxford English Dictionary   Vol.  1,  1203)  According   to   the Permanent Editionof   Words   and   Phrases.   Vol.   26, ’manufacture’ implies a change but  every change is  not manufacture and yet every change in an article is the result of treatment, labour and manipulation.But  something  more is  necessary  and there must be transformation; a  new  and different  article  must emerge having a  distinctive  name, character or use.     "The word ’manufacture"’ saidAbbott, C.J., in R. v. Wheeler(2) "has been generally understood  to denote, either a thing made which is useful for its own sake and  vendible as such, as a medicine, a stove, a  telescope, and many others; or to mean an engine or instrument, or some part  of an engine or instrument, to be employed  either  in themaking  of  some previously known articles or  in  some other useful purpose, as a stocking frame, or a steam engine for  raising  water from mines; or, it may  perhaps,  extend also  to a new process to be carried on by known  implements or elements ’acting (1)  A.I.R. 1970 S.C. 839. (2)  2  B & Ald. 349, cited in Stroud’s Judicial  Dictionary (3rd ed.) Vol. p. 1734. 262 upon  known substances, and ultimately producing some  other known  substance  but  producing it in  a  cheaper  or  more expeditious manner, or of a better or more useful kind.   No more  philosophical or abstract principle can answer to  the word ’manufactures’.  Something of a corporeal and  substan- tial  nature-something  that  can be made by  man  from  the matters subjected to his art and skill, or at the least some new  mode  of employing practically his art  and  skill,  is required  to satisfy the word".  In South Bihar Sugar  Mills v.  Union  of  India,(1) the Act with which  the  Court  was concerned  was the Central Excise and Salt Act, 1944,  which furnished  no special definition of the word  ’manufacture’. The  question.  can  canvassed  there  was  whether   carbon dioxide, one of the constituents of kiln gas produced as one of the processes necessary for refining sugar, could be said to have been manufactured, quite apart from the  manufacture of sugar itself.  This Court held that what was produced was kiln  gas,  a  compound of different gases  and  not  carbon dioxide, though it was one of the different gases which made up  kiln gas and therefore did not attract item 14-H in  the Schedule  to the Act.  Since the Excise ditty  was  leviable under  the Act on manufacture of goods, the Court  explained the connotation of the word ’manufacture’.  In so doing, the Court said that the word ’manufacture’ implied a change, but

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that  a  mere, change in the material was  not  manufacture. There must be such a transformation that a new and different article must emerge having a distinctive name, character  or use.    This  was  also  the  meaning  given  to  the   word ’manufacture’  in  Union of India v. Delhi Cloth  &  General Mills(2).  A notification issued by the Government  of  U.P. under  s. 3A of the U.P. Sales Tax Act, 1948  declared  that the  turnover  in  respect of  medicine  and  pharmaceutical preparations  would not be liable to tax except.(a)  in  the case  of medicine and pharmaceutical preparations  imported into   U.P.,   and  (b)  in  the  case  of   medicines   and pharmaceutical   preparations  manufactured  in   U.P.   The question  was  whether, when in a dispensary  medicines  and pharmaceutical preparations, as prescribed by a doctor,  are mixed,    the  process of mixing results in  manufacture  of medicines. The  question  was answered in  the  negative on the roundthat  when a mixture of different  drugs,  as prescribed   by   a  doctor,  is  prepared  by   a   medical practitioner  or his employee, especially for the use  of  a patient  in  the  treatment  of  an  ailment  or  discomfort diagnosed by such a medical practitioner by his professional skill,  and  which mixture is normally  incapable  of  being passed  from  hand to hand as a  commercial  commodity,  the medical  practitioner supplying the medicine cannot be  said to be a manufacturer of medicine and the mixture can- (1) [1968] 3 S.C.R. 21. (2) [1963] Stipp.  1 S.C.R. 586. 263 not  be said to. be manufactured within the meaning  of  the notification.   In  all  these  cases  the  statute  or  the notification  concerned  did  not  furnish  any   artificial meaning  to  the  expression  ’manufacture’  and  the  Court applied,   therefore,  the  ordinary  meaning  as   commonly understood    to    that   expression.     The    expression ’manufacturing purposes’ in s. 106, thus, means purposes for making  or  fabricating articles or  materials  by  physical labour,  or  skill,  or by mechanical  power,  vendible  and useful  as such.  Such making or fabricating does  not  mean merely a change in an already existing article or  material, but  transforming,, it into a different article or  material having a distinctive name. character or use or fabricating a previously known article by novel process. The two cases cited by Mr. Chagla, viz., Sedgwick v. watliey Combe,  Reid and Co.(1) and Action Borough Council  v.  West Middlesex   Assessment   Committee(2),  would  not   be   of assistance  as the question there discussed was not  as,  to the  meaning  of  the word ’manufacture’,  but  whether  the premises  in question were industrial  hereditaments  within the   meaning   of  s.  3  of  the  Rating   and   Valuation (Apportionment)  Act,  1928.  Likewise, decisions  given  by courts  on  the word ’manufacture’  occurring  in  different statutes  would  not  be of  assistance  where  the  statute concerned   gives  an  artificial  meaning  or   a   special definition. Bearing in mind the connotation of the word ’manufacture’ as understood   in  the  decisions  above-cited,  we  have   to ascertain whether the appellant-company could be said to  be carrying  on  operations in the premises in  question  which could properly be called manufacturing operations.  On  this question,  the evidence on record is general  character  and almost  meager  in  quantum.  Wit.  Choradia,  who  was  the managing  director of the Bharat Insurance Co. between  1950 to  1954 and who used to reside in Delhi where  the  company had  its headquarters,. but occasionally used to  visit  its branch  in  Bombay,  deposed  that  after  the  premises  in

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question  were  purchased in 1953 by his  company  from  Sir Shapurji  Bharucha Mills, he visited them and found them  to comprise  an open land with sheds and a godown.  There  were lying  there  army automobiles, jeeps etc., but he  did  not notice at that time any manufacturing process going on.   He again,  visited the premises in 1954 when also he  found  no manufacturing operations going on Wit.  V. G. Kannan was  an accountant  in Allenbury. & Co. Ltd.  He used to go  to  the premises  in  1950  and 1951 to pay  wages  to  the  workmen engaged "here by his company.  The premises had a  workshop, a godown (1) [1931] A. C.446 (2) [1949] 2 K.B. 10. 264 and a small office and the rest was open land.  The  company wound  up its business in 1950, but there were lying in  the premises  steel racks belonging (to his company, to  inspect which he had to go there on several occasions.  He also said that  he  did not see any manufacturing processes  going  on except that the workshop was used for repairing the disposal vehicles  lying  stored there.  This was the  position  till July-August  1954 and till then there was no change  in  the user  of  the premises.  Wit.  J. P. Jain  examined  by  the appellant-company  was  the Central Manager  of  the  Bombay branch of Allenbury & Co. from 1946 to 1950.  Thereafter  he became  the  managing  director  of  the  appellant-company. According to him, Allenbury & Co. Ltd. had in 1948 purchased disposal vehicles which were stored for sale in the premises in question.  The vehicles were in a damaged condition  when they were purchased.  In some cases chassis were missing  or they were bent or broken; most of the parts were broken  and missing.   These  used to be repaired and  then  sold.   The company  had  put up a workshop where  these  vehicles  were repaired, reconditioned and painted before, they were  sold. The repairs, according to him, involved in some cases making of  new  bodies  and  new  parts.   For  that  purpose,  the appellant company had to have in the workshop lathes,  drill machines,  velders  etc. and had employed some  200  to  250 workmen.  When the appellant company took over the  business of  Allenbury  & Co. Ltd. in 195051, there were in  all  189 vehicles  of  different  types in the  suit  premises.   The working,   he  said,  of  overhauling,  reconditioning   and repairing   these   vehicles  went  on   until   1957   when reconditioning  of vehicles stopped presumably  because  the vehicles  were  sold  out.   The  premises  had  on  them  a servicing  station  also  with a trench in  the  centre  for washing the vehicles and where spare part needed for repairs used  to  be stored.  There was also an office and  a  store room  where  spare parts, oils and  other  stores  purchased locally  were kept.  He denied that the premises  were  used only   for  repairing  the  vehicles.   Besides   his   oral testimony,  there  is one letter on record written  by  this witness  to  Allenbury & Co. Ltd., dated November  21,  1950 giving  details of stocks lying on these premises when  that company’s business was taken over by the  appellant-company. The  schedule  to’ this letter gives  particulars  of  these stocks,  viz.,  182  vehicles of  different  types,  stores, accessories,  spare parts purchased from the market  or  the Disposal Directorate, tools and other workshop equipment and three  cars  under  repairs.  The schedule  shows  that  the premises  were  used  till then  for  storing  the  Disposal vehicles,  together  with spare parts etc.  acquired along with them or purchased from the market forrepairing   and reconditioning and making them fit for resale. There   is no evidence except the bare word of wit.  Jain thatparts such  as chassis and bodies etc. were actually  manufactured

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and replaced for the old.            No books of account 265 or log books showing the work carried on on the promises  or other documents were produced which would throw light on the activities carried on the premises.  Even if the evidence of Jain  were accepted in toto, and we were to find  that  some spare  parts  were  being  manufactured  for  repairing   or reconditioning  the  vehicles, the dominant purpose  of  the lease,  would still have to be regarded as one  for  storage and  resale  of  the  vehicles  and  not  for  manufacturing purposes.   Manufacturing  of  spare parts  would  then  be, merely  incidental to the main purpose of disposal of  these vehicles  as without repairing or reconditioning them,  such disposal  could hardly have been possible.  In our  opinion, the appellants failed to establish that the dominant purpose of  the lease was manufacturing purpose.  In that view.  the appellants  could  not have challenged the legality  of  the notice.   The  High  Court,  therefore,  was  right  in  the conclusion  it  arrived  at and no  reason  has  been  shown justifying  our  interference  with  it.  That  being  the,, position,  it  is  not necessary to  go  into  the  question whether  s. 107 has any impact on s. 106 of the Transfer  of Property  Act,  a question which the Division  Bench,  while referring  this appeal to a larger Bench, though the  appeal raised. For  the  reasons  stated  above the  appeal  fails  and  is dismissed  with costs.  Mr. Chagla appealed to us that  Some time may be given to the appellant-company for vacating  the premises  in question as, according to him, there  are  some machines  still lying on the premises which will have to  be removed.   We give the company one month’s time  from  today for vacating and giving quiet possession to the respondent. S.C.                      Appeal dismissed. 266