http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6  

PETITIONER: ANTHONY

       Vs.

RESPONDENT: KC ITTOOP AND SONS AND OTHERS

DATE OF JUDGMENT:       01/07/2000

BENCH: D.P.Mohapatro, K.T.Thomas, R.C.Lahoti

JUDGMENT:

     J  U D G M E N T Thomas J.  A dispute which constantlycaused  many  litigations to pro long in the past (whether  a lease  could be made by an unregistered instrument when such deed  is  compulsorily  registerable) has  once  again  been raised and that dispute has lengthened the longevity of this litigation through a chequered career.  The successor of the party  who  was mainly responsible for not  registering  the instrument  has  now  been benefited of it as  the  impugned judgment  gave  a decree for eviction of the person who  was admittedly  inducted into possession of the building by  the former.   Though  appellant  claimed  protection  under  the provisions  of  the Rent Control legislation the High  Court discountenanced it on the premise that the document executed by  the parties regarding the transaction is void under law. The  simple  question  now is whether  appellant  can  claim protection  as  a tenant under Kerala Buildings  (Lease  and Rent Control) Act 1965 (for short the Rent Act).

     Facts,  mostly  undisputed,  are the  following:   The building  which is the subject matter of this litigation  is described  as  a shed which originally belonged to a  family the  senior  member  of  which  inducted  the  appellant  in possession  thereof as per a lease deed dated 4.1.1974 which was  ostensibly  meant  for  a period of  five  years.   The monthly  rent  of the building has been fixed  at  Rs.140/-. Appellant  paid  rent of the building at the said rate  till October  1974.  Sometime during this period ownership of the building  happened to be allotted to a female member of  the family  (Devaki)  as  per a partition effected  between  its members.   Thereafter  rent of the building was paid by  the appellant  to the aforesaid Devaki.  Subsequently  ownership of  the building was transferred by Devaki to the respondent who filed the suit as plaintiff (for the sake of convenience respondent  can  be  referred to as the  plaintiff).   The trial  court decreed the suit by repelling the contention of the  appellant  that the suit was not maintainable as he  is protected  from  eviction under the provisions of  the  Rent Act.   The  trial  court found that the appellant is  not  a tenant  as the lease was void on account of non-registration of  the  lease-deed.   In  the first  appeal  filed  by  the appellant  a  District  Judge  held that in  spite  of  non- registration  of the instrument there was a valid tenancy of the building and hence appellant could not be evicted except in accordance with the provisions of the Rent Act.

     In  a  second appeal filed by the respondent a  single judge  of the High Court of Kerala set aside the judgment of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 6  

the  District  Court and remanded the first appeal  to  that court  by  holding  that  the plaintiff  was  inducted  into possession  under  a void lease and hence the  court  should consider  whether, independent of this lease the  defendant was  in possession as a lessee from month to month. Learned single judge pointed out that since it is a question of fact the same has to be decided on the evidence on record.  After the  remand  the District Court entered upon a finding  that despite  the  defect of non-registration of  the  instrument the  facts and circumstances of this case and the  evidence discussed above could clearly show that the parties intended to  create  a lease. The District Judge further  held  that appellant is the tenant as defined in the Rent Act and hence the  plaintiff is not entitled to a decree in this case  and his remedy is to apply before the Rent Control Court.

     When  the matter went up to the High Court again in  a second  appeal a learned single judge did not agree with the approach  made  by the District Judge after remand  and  the following  observations,  inter alia, have been made by  the High Court:

     It  has  to be noted that if the conclusion  of  this court  on  the  earlier  occasion   were  that  payment  and acceptance  of  rent  pursuant to the void  contract  itself would  bring  about the relationship of landlord and  tenant between  the  parties protected under the  Kerala  Buildings (Lease and Rent Control) Act this court would have certainly dismissed  the suit filed by the plaintiff by so finding and would  not  have remanded the appeal to the lower  appellate court  in  the  manner  in which it  was  done.   The  lower appellate  court has ignored this aspect while purporting to record  a finding that the first defendant would be a tenant protected  by the Kerala Buildings (Lease and Rent  Control) Act even if he had paid rent only under the void lease.  The said  approach  by the appellate court appears to me  to  be totally unsustainable..  I am therefore constrained  to set aside the finding of the lower appellate court  that the first defendant is a tenant protected by the Kerala  Buildings (Lease and Rent Control) Act.  I hold that the  first defendant has not proved that independent of  the void  lease, a relationship of landlord and tenant has  come into  existence  between  the  parties.   In  view  of  this finding,  the  plaintiffs will be entitled to a  decree  for recovery of possession of the plaint schedule property.

     In  this appeal by special leave a bench of two judges heard  this matter and after noticing a conflict of opinions expressed by benches of equal strength it was felt that this appeal should be decided by a larger bench.

     In spite of the chequered career of the litigation the only  question  which has now bogged down to be  decided  is whether  the suit building is held by the appellant under  a lease  or not.  The word tenant is defined in Section 2(6) of  the Rent Act as any person by whom or on whose  account rent  is payable for a building. Landlord is defined as including  the  person who is receiving or is  entitled  to receive  the  rent  of a building. Now  the  definition  of building must be booked into.  In clause (i) it is defined as any building or hut or part of a building or hut, let or to  be  let  separately for residential  or  non-residential purposes´  In  the above context the word let has  only one meaning and that is to demise on lease.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 6  

     The  above three definitions unmistakably point to the necessity  for a building to be covered by a lease under law in  order  to bring such building within the purview of  the Rent  Act.  If there is no lease of a building the Rent  Act has  no application.  Thus what is important now is to  know whether  there has been a lease of the building in question. If  the  appellant  is a lessee of the building, it  is  not disputed  before  us  that jurisdiction of the  civil  court would  stand evacuated and the plaintiff has to approach the Rent  Control Court if he is desirous of getting an order of eviction  on  any one of the grounds recognised in the  Rent Act.

     The lease-deed relied on by the plaintiff was intended to  be  operative  for  a period of five years.   It  is  an unregistered  instrument.   Hence such an instrument  cannot create  a  lease  on  account  of  three  pronged  statutory inhibitions.   The first interdict is contained in the first paragraph  of  Section 107 of the Transfer of Property  Act, 1882 (for short the TP Act ) which reads thus:

     A  lease of immovable property from year to year,  or for  any  term  exceeding one year, or reserving  an  yearly rent, can be made only by a registered instrument.

     (Emphasis  supplied)  (emphasis supplied)  The  second inhibition  can  be  discerned  from Section  17(1)  of  the Registration Act 1908 and it reads thus:  (only the material portion)  Documents  of which registration  is  compulsory. -(1)  the  following  documents shall be registered  if  the property  to  which they relate is situate in a district  in which,  and if they have been executed on or after the  date on  which, Act No.  XVI of 1864, or the Indian  Registration Act,  1866,  or  the Indian Registration Act, 1871,  or  the Indian  Registration  Act, 1877, or this Act came  or  comes into force, namely:  .

     (d) Leases of immovable property from year to year, or for  any  term  exceeding one year, or  reserving  a  yearly rent.

     The  third interdict is contained in Section 49 of the Registration Act which speaks about the fatal consequence of non-compliance  of  Section  17 thereof.  Section  49  reads thus:   49.   Effect  of   non-registration  of   documents required  to be registered.- No document required by Section 17  [or  by  any  provision  of the TP  Act,  1882,]  to  be registered shall

     (a)  affect any immovable property comprised  therein, or

     (b) confer any power to adopt, or

     (c)  be  received  as   evidence  of  any  transaction affecting  such property or conferring such power, unless it has been registered.

     [Provided  that  an  unregistered  document  affecting immovable property and required by this Act, or the Transfer of  Property Act, 1882, to be registered may be received  as evidence  of  a contract in a suit for specific  performance under  Chapter  II of the Specific Relief Act, 1877,  or  as evidence  of part performance of a contract for the purposes

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 6  

of section 53-A of the Transfer of Property Act, 1882, or as evidence  of  any collateral transaction not required to  be effected by registered instrument.]"

     No  endeavour  was made by the counsel to obviate  the said  interdict with the help of the exemptions contained in the proviso.

     The  resultant position is insurmountable that so  far as  the  instrument of lease is concerned there is no  scope for holding that appellant is a lessee by virtue of the said instrument.  The court is disabled from using the instrument as  evidence and hence it goes out of consideration in  this case, hook, line and sinker (vide Smt.  Shantabai vs.  State of  Bombay:   AIR  1958  SC 532;  Satish  Chand  Makhan  vs. Govardhan  Das Byas, (1984) 1 SCC 369 and Bajaj Auto Limited vs.  Behari Lal Kohli AIR 1989 SC 1806 ).

     But  the  above finding does not exhaust the scope  of the  issue whether appellant is a lessee of the building.  A lease of immovable property is defined in Section 105 of the TP  Act.   A  transfer  of a right to enjoy  a  property  in consideration  of  a price paid or promised to  be  rendered periodically  or on specified occasions is the basic  fabric for  a valid lease.  The provision says that such a transfer can be made expressly or by implication.  Once there is such a  transfer  of right to enjoy the property a  lease  stands created.   What is mentioned in the three paragraphs of  the first  part  of  Section  107 of the TP  Act  are  only  the different  modes  of  how  leases are  created.   The  first paragraph  has  been extracted above and it deals  with  the mode  of  creating the particular kinds of leases  mentioned therein.   The  third paragraph can be read along  with  the above  as it contains a condition to be complied with if the parties  choose  to  create  a lease  as  per  a  registered instrument mentioned therein.  All other leases, if created, necessarily  fall within the ambit of the second  paragraph. Thus,  dehors  the instrument parties can create a lease  as envisaged in the second paragraph of Section 107 which reads thus:

     All  other  leases of immovable property may be  made either  by  a  registered instrument or  by  oral  agreement accompanied by delivery of possession.

     When  lease  is  a transfer of a right  to  enjoy  the property  and  such  transfer can be made  expressly  or  by implication,  the mere fact that an unregistered  instrument came  into existence would not stand in the way of the court to  determine  whether there was in fact a  lease  otherwise than through such deed.

     When  it is admitted by both sides that appellant  was inducted  into  the possession of the building by the  owner thereof  and  that appellant was paying monthly rent or  had agreed  to  pay rent in respect of the building,  the  legal character  of appellants possession has to be attributed to a  jural  relationship  between the parties.  Such  a  jural relationship,  on the fact situation of this case, cannot be placed  anything  different from that of lessor  and  lessee falling  within  the  purview  of the  second  paragraph  of Section  107  of  the  TP Act  extracted  above.   From  the pleadings of the parties there is no possibility for holding that the nature of possession of the appellant in respect of the building is anything other than as a lessee.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 6  

     Shri P.Krishnamoorthy learned Senior Counsel contended that a lease need not necessarily be the corollary of such a situation  as  possession of the appellant could as well  be permissive.   We are unable to agree with the submission  on the  fact  situation  of  this  case  that  the  appellants possession  of  the building can be one of  mere  permissive nature  without  any  right or liabilities attached  to  it. When  it  is admitted that legal possession of the  building has  been transferred to the appellant there is no scope for countenancing  even a case of licence.  A transfer of  right in the building for enjoyment, of which the consideration of payment  of  monthly rent has been fixed, can reasonably  be presumed.   Since the lease could not fall within the  first paragraph of Section 107 it could not have been for a period exceeding  one  year.  The further presumption is  that  the lease  would  fall  within  the ambit  of  residuary  second paragraph of Section 107 of the TP Act.

     Taking  a  different  view would be  contrary  to  the reality  when  parties  clearly intended to create  a  lease though  the  document which they executed had not gone  into the processes of registration.  That lacuna had affected the validity  of the document, but what had happened between the parties  in  respect of the property became a reality.   Non registration   of   the  document   had  caused   only   two consequences.   One is that no lease exceeding one year  was created.   Second  is that the instrument became useless  so far  as creation of the lease is concerned.  Nonetheless the presumption  that  a  lease  not exceeding  one  year  stood created by conduct of parties remains un-rebutted.

     Shri  P.  Krishnamoorthy learned counsel cited certain decisions  to support his contention that the court did  not treat  similar transactions as lease.  In HS Rikhy vs.   New Delhi Municipal Corporation:  1962 (3) SCR 604, a contention made  by  a party to the suit that he had a right under  the local  Rent  Control  Act was negatived on the  ground  that there  was  no  landlord-tenant   relationship  between  the parties.   In  that decision this court did not  accept  the contention that the word letting which was contemplated in the  particular  Rent  Control  Act included  not  merely  a transfer  to  a tenant but also to a licensee, or  that  the word  rent precluded the landlord from pleading that there was  no relation of landlord and tenant between the parties. The  finding made in that case against the plea of  landlord was  based on the premise that the transfer was not made  by the Municipal Committee in accordance with the law and hence there  was  no  transfer  at  all.   That  decision  has  no application to the points involved in the present case.

     In  Technicians  Studio  Pvt.  Ltd.  vs.   Lila  Ghosh (1977)  4 SCC 324 a two judge bench considered the effect of a compromise decree which mentioned that the defendant would become  a  direct tenant on a monthly rent of Rs.1, 000  and the  lease  would  be for a period of  sixteen  years.   But compromise  decree  was not registered nor did  the  parties execute  a lease- deed pursuant thereto.  The contention  in that  case  was  two fold.  First was that  by  payment  and acceptance  of  rent during the period of sixteen years  the monthly  tenancy  has  been created.  Second  was  that  the compromise decree can be treated as evidence of part payment under  Section 53A of the TP Act.  This court noted that the High  Court  has found in agreement with the finding of  the subordinate  courts  that payment of rent and acceptance  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 6  

the  same did not create any tenancy.  The said fact finding was  not  disturbed by this court in that  particular  case. However,  their lordships observed therein that whether the relationship  of  landlord  and tenant  exists  between  the parties  depends on whether the parties intended to create a tenancy  and the intention has to be gathered from the facts and  circumstances  of the case;  it is possible to find  on facts  of  a given case that payments made by transferee  in possession  were  really  not in terms of the  contract  but independent  of  it and this might justify an  inference  of tenancy  in  his favour.  The question is ultimately one  of fact.

     In  Biswabani  Pvt.  Ltd.  vs.  Santosh  Kumar  Dutta: (1980)  1 SCR 650 a two judge bench of this court found that though  a second lease-deed executed between the parties (on the  expiry of the period mentioned in the first lease-deed) is  void for want of registration, the tenant would continue to  be protected under the relevant Rent Control Act because on  the  expiry of the period of first lease the tenant  had acquired the right of a statutory tenant.

     None of the observations made in the above decision is in  conflict with the view expressed by us above.  Appellant occupied  the  building as a tenant and he paid rent to  the landlord  and continued as such.  Hence with the coming into force  of  Rent  Act  he became  a  statutory  tenant  whose eviction can be considered only when an application is moved in that behalf before the Rent Control Court concerned.  We, therefore,  allow  this  appeal and set aside  the  impugned judgment  of  the  High  Court.    The  suit  filed  by  the respondent  will  stand dismissed without prejudice  to  the right  of the respondent to move under the provision of  the Rent Act.