27 August 2004
Supreme Court
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INDER SAIN BEDI (DEAD) BY LRS. Vs M/S. CHOPRA ELECTRICALS

Bench: ASHOK BHAN,S.H. KAPADIA
Case number: C.A. No.-006405-006405 / 2002
Diary number: 8360 / 2000
Advocates: T. N. SINGH Vs NEERU VAID


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CASE NO.: Appeal (civil)  6405 of 2002

PETITIONER: Sri Inder Sain Bedi (Dead) by Lrs.                               

RESPONDENT: M/s Chopra Electricals                                           

DATE OF JUDGMENT: 27/08/2004

BENCH: Ashok Bhan & S.H. Kapadia  

JUDGMENT: J U D G M E N T

BHAN, J.

Aggrieved against the judgment and decree dated 16.3.2000  passed by the High Court of Delhi, in Regular First Appeal No. 507 of  1993 whereby the High Court has allowed the appeal by setting aside  the judgment and decree passed by the District Judge (hereinafter  referred to as "the Trial Court") and dismissing the suit filed by the  plaintiff/appellant (hereinafter referred to as "the appellant) has come  up in this appeal.

Briefly stated the facts are:

Appellant filed a suit seeking a decree for possession by  ejectment of the defendant/respondent (hereinafter referred to as "the  respondent") and for mesne profit/damages from the date of  institution of the suit  with respect to a portion of property No. B-59/1,  Naraina Industrial Area, Phase II, New Delhi, (hereinafter referred to  as "the suit property") as shown in red colour in the site plan Ex. P.2.   It was averred in the plaint that the Respondent had taken from the  appellant one hall, three offices-cum-store room and toilets for  workmen in the ground  floor and two mezzanine halls on the  mezzanine floor of the suit property shown in the red  colour in the  plan attached with the plaint.    That the suit property had been taken  by the respondent as a licencee in 1981 for a period of 11 months at  a monthly licencee fee of Rs. 4500/- and that respondent continued to  remain in possession even after the expiry of the period of licence  and claimed himself to be tenant of the suit property at a rent of Rs.  4,500/- per month and that appellant accepted the respondent as his  tenant.  It was also alleged in the plaint that respondent had made  several unauthorised additions/alterations etc. which had been shown  in the green colour in the plan attached with the plaint,  Appellant did  not claim possession in respect of unauthorised additions/alterations  made by the respondent in the suit.  [We were informed during the  course of the arguments by the learned counsel for the parties that  the appellant filed Suit No. 519 of 1994 for possession of the portion  shown in the green colour in the plan attached with the plaint.]    That  the appellant served a notice under Section 106 of the Transfer of  Property Act (hereinafter referred to as "the Act")  dated 6.3.1989  terminating the tenancy of the tenanted premises w.e.f. 31.5.1989.  It  was mentioned in the notice that if according to the respondent the

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tenancy ended on any other date  other than the last date of English  calendar month then the respondent should treat its tenancy as  terminated from the close of such a month of tenancy on the expiry of  two months of the service of the notice.  By the said notice,  respondent was also notified that in case respondent does not  comply with the said notice, respondent would be liable to pay  damages/mesne profits at the rate of Rs. 1,000/- per day which claim  was without prejudice to the rights of the appellant to claim  possession.  That the contents of the reply to the notice were false  and baseless.   That the respondent did not vacate the suit property  hence the suit was filed for possession.  Appellant also prayed for a  preliminary decree directing enquiry about the amount of  damages/mesne profits payable by the respondent in accordance  with order 20 Rule 12 of Code of Civil Procedure.

       Respondent in his written statement took preliminary objection  that the plaint was liable to be rejected as the appellant has not given  any valuation in the plaint regarding relief of mesne profit.  Another  preliminary objection taken was that notice to quit served upon the  respondent was bad in law as the date from which the tenancy was  alleged to have been terminated had not been specified and that  premises let out had not been duly identified.  On merits, the  respondent pleaded that the respondent was a tenant in respect of  the  suit property vide agreement dated 26.5.1980 which though  described as a licence deed was in fact a rent note.  Rate of rent of  Rs. 4,500/- per month was not denied.  In reply to para 2 of the plaint  wherein the appellant had described the extent of accommodation let  out to the respondent, respondent pleaded that the premises  described in para 2 of the plaint was substantially correct.   Respondent denied having made any unauthorised  additions/alterations and pleaded that the portion shown in green  colour in the plan attached with the plaint alleged to have been  unauthorisedly constructed by the respondent had in fact been let out  as it is from the commencement of the tenancy in May 1980.  It was  stated that the shed in the rear  and the mezzanine portion shown in  the green colour in the plan attached with the plaint  were in  existence at the time of letting out of the premises as  was clear from  the rent agreement originally executed although the said portion had  been scored off since the appellant did not want to mention the same  as he was apprehensive of the trouble from the Municipal Corporation  of Delhi.   Liability to pay damages at the rate of Rs. 1000/- per day  was also denied.

       Appellant filed replication to the written statement filed by the  respondent denying the  averment in the written statement and  reiterated the averment set out in the plaint.

       On the pleadings of the parties the following issues were  framed by the Trial Court:

"i)      Whether the plaintiff is entitled to a  decree for possession? OPD

ii)     Whether the plaintiff is entitled to claim  damages/mesne profits for use and  occupation of the disputed property from  the defendants? OPP. iii)    Whether the tenancy of the defendant is  terminated validly? OPP iv)     Whether the suit is not maintainable in  the present form? OPD v)      Whether the suit has not been properly  valued for the purposes of court fee and  jurisdiction? OPD

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vi)     Whether the suit is not maintainable in  view of provisions of Delhi Rent Control  Act? OPD vii)    Whether the premises were not let out  for manufacturing purposes? OPD viii)   Relief?"

Issue No. (vii) was amended vide order dated  21.3.1991:

"Whether the premises are let out for  manufacturing purposes? OPD"

Issue Nos. 2 and 5 were taken up together.  It was held that  the tenancy of the respondent had been validity terminated and  respondent having failed to  vacate the tenanted premises after  termination of the tenancy, the appellant is entitled to claim mesne  profits/damages from the respondent  for use and occupation of the  suit property.   Issue No. 4 was decided in favour of the appellant and  against the respondent and it was held that the suit was maintainable.   Issue No. 5 was not pressed by the respondent, and therefore the  same was decided in favour of the appellant.  Issue No. 6 was  decided in favour of the appellant and against the respondent and it  was held that since property had been let out at a rent of more than  Rs. 3,500/- the provisions  of Delhi Rent Control Act were not  applicable.  The only avenues open to the appellant to seek  ejectment of the respondent was to file a suit for possession.  Issue  No. 7 was decided against the appellant and in favour of the  respondent and it was held that the suit property had been let out for  manufacturing purposes.  Issue Nos. 1 and 3 which are the crucial  issues were taken up together. Both these issues were decided in  favour of the appellant and against the respondent.   

Validity of the notice terminating of the tenancy as also the right  of the appellant to claim possession of the suit property was disputed  by the respondent on two grounds: (1) that the tenancy between the  parties had been created for manufacturing purposes and the same  could be terminated in terms of section 106 of the Act by giving six  months notice which was not done; and (2) that the suit for  possession of a part of  tenanted premises was not maintainable and  relief of ejectment from a part of tenanted premises could not be  granted.   Both the contentions were negatived by the trial Court and  the suit was decreed.  It was held that tenancy had been terminated   validly by giving two months notice in terms of clause 15 of the  lease/licence document.  Since the lease/licence document was not  registered document and the tenancy was from month to month the  same could be terminated by giving 15 days notice under  Section  106 of the Act.  Further, the Trial Court held that the suit had been  filed for the entire tenanted premises and not for a part of it as alleged  by the respondent.

       Aggrieved against the judgment and decree of the trial Court  the respondent filed the first appeal which has been disposed of by  the impugned order.  The findings recorded on issue Nos. 2,4,5 to 7  were not contested by either of the parties and accordingly they were  confirmed.  Findings on issues No. 1 and 3 were contested.  The  High Court reversed the findings of the trial Court and accepted the  appeal.  It set aside the order of the trial Court and held that the  appellant had let out the entire premises including the portions shown  in green in plan Ex.P.2.   That the appellant had claimed eviction of  the respondent only from a portion of the tenanted premises which  amounted to splitting of the tenancy which was not permissible in law.   The unity and integrity of the tenancy could not be splitted by the

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landlord by claiming possession of a part of the demised premises  from the tenant.  For the same reason notice of termination of  tenancy was also held to be invalid.

       Ex. D1 is the licence deed dated 26.5.1980.  According to the  appellant  on the basis of this licence deed, the respondent was  permitted to use portion shown in red as a licencee for a period of 11  months.  Ex. P. 3 is another licence agreement dated 1.5.1981 also  for the same portion shown in red but for the subsequent period of 11  months.    While describing the portion permitted to be used by the  respondent on licence basis in both the documents, one line has  been scored off.  It is not disputed that the line, which has been  scored off in both the documents relate to the green portion in plan  Exp. P.2.  Ex. D1 describes the licensed premises as under:

"AND whereas the licencee has approached  the licensor for the use of a part of the building  which include main hall on the ground floor, 3  offices cum store rooms, 2 mezzanine halls,  toilets for workmen shed in the back portion of  the premises and part of open premises  excluding one room with attached W.C."

 Similarly in the document Ex P3 the licensed portion of the premises  has been described as:

"AND whereas the licencee has approached  the licensor for the use of a part of the building  which include main hall on the ground floor, 3  offices cum store rooms, 2 mezzanine halls,  toilets for workmen shed in the back portion of  the premises and part of open premises  excluding one room with attached W.C."

Underlined portion in both the documents has been scored off.

       Shri D.A. Dave, learned senior counsel appearing for appellant  contended that the contents of documents Ex. D1 and P3 will govern  the rights of the parties.  Portion shown in green was not included in  the two documents and did not form part of tenancy and the same  is  unauthorisedly occupied by the respondent.  The suit has been filed  for the portion shown in red in the site plan Ex. P2 which had been let  out to the respondent.    In para 2 of the plaint the appellant has  specifically pleaded that the respondent had taken on rent from him a  portion comprising of hall, 3 office cum store rooms, two mezzanine  halls and toilet on the ground floor of the demised premises.   In reply  to this averment, respondent in his written statement pleaded that the  premises described in para 2 in the plaint as having been let out to  the respondent was substantially correct.  This reply clearly amounts  to admission of the allegations made in the corresponding paragraph  of the plaint.  That in view of this admission made by the respondent  the High Court has gravely erred in recording a finding to the effect  that the appellant had let out the portion shown in green as well to the  respondent.  That the High Court has built  a new case for the  respondent, which was not even pleaded by him,  in holding  that on  the expiry of period of licence the respondent was taken as a tenant  of the entire property of the appellant which was in occupation of the  respondent.  It was also contended that there was no registered  instrument executed creating tenancy therefore tenancy will be  deemed to be from month to month terminable with 15 days notice  and the High Court has erred in holding to the contrary.

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       As against this, Shri Parag Tripathi, learned senior counsel  appearing for the respondent contended that the green portion was  also in existence during the year 1980-81.  It was not made part of  the licence agreement because of some apprehension on the part of  the appellant about the Municipal Corporation of Delhi taking action  for demolition of the said portion, which appeared not to have been  constructed on the basis of any sanction obtained from the said  authority.  He made reference to the original documents Ex. P3 and  Ex. D1 in support of his submission  that the portion delineated in  green in the plan Ex. P2 was in existence  and formed part of  tenancy.  Suit was filed only with respect to the  portion shown in red.    The suit was filed with respect to a portion of the tenanted premises  which is not permissible in law.  As the premises were let out for  manufacturing purposes and the respondent was carrying on  manufacturing activities therein the tenancy will be deemed to be for  manufacturing purposes terminable by giving six months’ notice as  provided in Section 106 of the Act.  The tenancy was not terminated  in accordance with law.

The High Court came to the conclusion that the portion shown  in green was in existence at the time of the creation of the lease in  favour of the respondent.  Otherwise there was no reason why in  documents D1 and Ex.P.3 the same would find mention.  That the  appellant did not want the green portion to be made a part of the  licence/lease apprehending proceedings to be taken for demolition of  the same at the behest of the Municipal Corporation of Delhi.   From  this the High Court inferred that the portion shown in green was in  existence in 1980-81.  After coming to this conclusion the High Court  proceeded to record the following finding :

"In view of this, it has to be inferred that on  expiry of the period of licence the defendant  was taken as a tenant of the entire portion of  property of the plaintiff, which was in  occupation of the defendant."

 In para 2 of the plaint the appellant had made a specific  averment that the respondent had taken from the appellant a portion  comprising of hall, 3 office cum store rooms and toilet on the ground  floor and two mezzanine halls in the mezzanine floor.   In  para 2 of  the written statement filed by the respondent it was pleaded that the  premises described in para 2 of the plaint as having been let out to  the respondent was substantially correct.  This reply amounts to  admission of the allegations made in the corresponding paragraph in  the plaint.    Apart from this accommodation which had been let out   to the respondent was specifically mentioned in the rent notes  executed between the parties, i.e., Exs. D1 and P3.   The  accommodation shown in these documents is the same as had been  mentioned in para 2 of the plaint and shown in red colour in the site  plan Ex. P2.  The line "shed in the back portion of the premises and  part of open premises" in the said two documents had been scored  off and had been initialed by both the parties.  The submission of the  learned counsel for the respondent that portion shown in green colour  in the site plan Ex. P2 was a part of the tenanted premises but the  appellant did not want this clause to be retained in these two  documents because of some apprehensions of trouble from the  Municipal Corporation of Delhi, which found favour with the High  Court cannot be accepted.  In fact, by deleting  this line from the  agreement,  the intention of the landlord becomes clear that the  portion which had been scored off was not intended to be let out and  form a part of the tenanted premises.  In so far as the  accommodation shown in these two documents, i.e.  one hall, 3 office  cum store rooms and toilet on the ground floor and two mezzanine  halls on the mezzanine floor, there is no dispute that the portion

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shown in red colour in the site plan Ex. P2 was this portion and for  which a decree of possession was being claimed in the present suit.   In view of the written documents Ex. D1 and P3 it is not permissible  to the respondent to urge or prove or attempt to prove what had  actually been scored off in the said agreements was also intended to  be a part of the tenanted premises.

The appellant had admittedly filed the suit in respect of the  premises as described in the two written documents between the  parties.  The portion shown in the green having been scored off and  initialed by both the parties goes to show that portion shown in the  green had not been let out by the appellant to the respondent.  Even  if it is assumed for the sake of argument, though we are not holding  to be so, that the portion shown in green in the site plan Ex. P2  was  in existence in the year 1980-81 it does not lead to the inference that  this portion was leased out but was not shown as part of the leased  premises apprehending proceedings being taken out for demolition at  the behest of the Municipal Corporation of Delhi.

       The finding recorded by the High Court that on the expiry of  period of licence the respondent was  taken as a tenant of the entire*  portion of the property is against the pleadings of the parties.  This is  altogether a new case which has been made out by the High Court.   The High Court has misconstrued and misinterpreted the two deeds  of licence/lease as well as the plaint in observing that the suit was  filed only with respect to the portion shown in red colour in the plan  whereas the tenancy had been created for both the portion shown in  red colour as well as green  and thus there was a splitting of tenancy  which was not permissible in law.                   Law laid down by this Court in Mohar Singh Vs. Devi Charan  & Ors.,  1988 (3) SCC 63 on which reliance has been placed by the  High Court would not be applicable to the facts and circumstances of  the present case, inasmuch as it is clearly evident from the  documents, i.e., Ext. D1 and Ext P3, that in fact there is no splitting  off the tenancy and suit was filed for recovery of possession of the  suit property  already found indicated in the said document as well as  in Plan Ext. P2 in the red colour.

       Validity of the notice as also the right of the appellant to claim  possession of the tenanted premises was questioned by the  respondent on the ground that as tenancy between the parties had  been created for manufacturing purposes the same could be  terminated only after giving six months’ notice to quit as provided  under Section 106 of the Act, which was not done.  The trial Court  has  negatived this submission  by holding that according to the  provision of Section 106 of the Act a lease for manufacturing purpose  is deemed to be a lease on year to year basis but the same was  subject to the contract to the contrary if any between the landlord and  the tenant.  The landlord and the  tenant can agree to create a  tenancy even for manufacturing purpose for a period of less than one  year.  That in Clause 15 of the lease document it is specifically  mentioned that the tenancy could be terminated by either of the  parties by giving notice of two months.  That the tenancy of the  respondent had been validly terminated by serving a notice in terms  of Clause 15 of the lease document.  The High Court has not given  any reason for reversing this finding and holding that the termination  of the tenancy was invalid.

       We agree with the view taken by the Trial Court that the  tenancy has been validly terminated.  Clause (1) of Section 106 reads  thus:

"106. Duration of certain leases in absence  of written contract or local usage. \026 (1) In

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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; and a  lease from month to month, terminable, on the  part of either lessor or lessee, by fifteen days’  notice."

According to the provisions of Section 106 of the Act  a lease  for the manufacturing purpose is deemed to be a lease  from year to  year but the same is subject to the contract to the contrary between  the parties.   The landlord and the tenant can mutually agree to  create a tenancy for manufacturing purpose for a period less than a  year.  Only in the absence of this kind of contract the lease for  manufacturing purposes would be deemed to be a lease from year to  year.  The same can be created by a registered document in view of  the provision of Section 105 of the act.  In the present case,  admittedly the lease was created for a period of 11 months only and it  was provided in clause 15 that tenancy could be terminated by either  of the parties by giving two months’ notice.  There was a contract to  the contrary between the parties providing for termination of the lease  between the parties by giving a notice of less than six months and as  such it was not necessary for the appellant to terminate the tenancy  by giving six months’ notice.  In view of the terms of the contract  between the parties the tenancy could be terminated by giving two  months’ notice.  In the present case, the lease in question was not  from year to year or for a period exceeding one year.  Since the lease  was not from year to year there was no requirement of giving six  months’ notice.  Manufacturing lease which is not from year to year  does not require six months’ notice for termination.  It will fall in the  second half of Section 106 requiring fifteen days’ notice of  termination.                    This Court had the occasion to examine this point in Shri Janki  Devi Bhagat Trust, Agra Vs. Ram Swarup Jain (dead) by Lrs.,  1995 (5) SCC 314, and it was held thus:

"Section 106 provides, inter alia, that in the  absence of a contract between the parties, a  lease of immovable property for  manufacturing purposes shall be deemed to  be a lease from year to year terminable by six  months’ notice.  In the present case there is a  clear finding to the effect that the lease in  question was not from year to year or for a  period exceeding one year.  Therefore, even  though the lease may be for a manufacturing  purpose, since the lease was not from year to  year, six months’ notice was not required.  A  manufacturing lease which is not from year to  year does not require six months’ notice of  termination.  It will fall in the second half of  Section 106, requiring fifteen days’ notice of  termination.  A lease from month to month or  a lease other than a lease from year to year is  terminable by fifteen days’ notice.  Hence the  notice in the present case is a valid notice to  quit.  The High Court, having come to the  conclusion that the lease was not for a period

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exceeding one year, and was not a lease from  year to year erred in holding that six months’  notice to quit was required.  Such a notice is  required, provided there is no contract to the  contrary, only when a manufacturing lease is,  or is deemed to be, from year to year.  This  not being the case, the lease is terminable by  fifteen days’ notice even if the lease is a  manufacturing lease."  

                   We respectfully agree with the view taken by this Court in the  above quoted case.  Since the lease was for a period of less than one  year notice of six months to quit was not required to be given   In the  present case there was a contract to the contrary between the parties  providing that the tenancy could be terminated by giving two months  notice.  The tenancy had been validly terminated.

We are of the considered view that the High Court has erred in  holding that the appellant had split the tenancy and had asked for  possession of a portion of the tenanted premises.  The High Court  has also erred in holding that the tenancy had not been validly  terminated by serving a notice in accordance with law.  

       For the reasons stated above, the judgment of the High Court is  set aside and the judgment and decree passed by the Trial Court is  restored.  The suit filed by the plaintiff/appellant stands decreed and  the appellant would be entitled to take possession of the demised  premises.  Appeal is allowed with no order as to costs.

       Keeping in view that the respondent is carrying on   manufacturing activities in the demised premises his dispossession is  stayed till 31.5.2005 provided he files an undertaking within a period  of three weeks from today to vacate the premises and hand over  possession of the same to the appellant on or before 31.5.2005.   Further he is required to deposit arrears of rent, if any, and undertake  to pay the rent in future as well.