Sunday, 6 May 2018

Whether unregistered lease deed can be used for collateral purpose?

 Section 55 of the Rent Control Act deals with the tenancy agreement to be compulsorily registered. Sub section 2 of Section 55 of the Act is relevant here. It reads thus :


"The responsibility of getting such agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and licence or have been let to him, shall prevail, unless proved otherwise."

10. From sub-section 2 of Section 55 of the Rent Control Act, it can be seen that registration of agreement is required to be at the behest of landlord and otherwise burden to prove tenancy or licence is on the tenant. Section 55(2) of the Rent Control Act cannot be read in isolation and has to be read in conformity with the provisions of Section 17 of the Registration Act. Section 17 of the Registration Act refers to the documents of which registration is compulsory. Sub-section (1)(d) relates to leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent.


11. Under Section 107 of the Transfer of Property Act such as lease is to be made only by a registered instrument. So far as the effect of non-registration of lease-deed is concerned, Section 49 in clear and unambiguous words speaks that it can be used only for collateral purpose. It means, the factum of tenancy and possession if disputed between landlords and tenant can be considered even on the basis of unregistered lease-deed, but when it touches the terms and conditions of lease-deed the same cannot be admitted and read in evidence.



IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)



Writ Petition Nos. 3270 and 3271 of 2016



Decided On: 24.07.2017



Prasram Vs. Deepak and Ors.



Hon'ble Judges/Coram:

Indira Jain, J.


Citation: 2017(6) MHLJ 883





1. Rule. Rule made returnable forthwith. Heard finally with the consent of the learned Counsel for the parties.



2. As challenge in both the petitions is identical, they are disposed of by this common judgment.



3. The facts giving rise to the petitions may be stated in brief as under :



"i. Petitioner is the tenant. Respondents are landlords. Petitioner was inducted in the premises in 1993 by original landlady Smt. Vidya Joshi. After the demise of landlady, her son Sunil Joshi stepped into her shoes.



ii. Respondents purchased the property in 2008 from Sunil Joshi. Since then, petitioner was the tenant of respondents.



iii. Respondents filed two civil suits for ejectment and possession of disputed property. R.C.S. No. 82/2014 was for ejectment and for recovery of possession under Section 16(1)(g) of the Maharashtra Rent Control Act, 1999 (hereinafter referred to as 'the Rent Control Act' for short) on the ground of bona fide need. Another R.C.S. No. 343/2015 was based on Section 15 of the Rent Control Act on the ground of default in payment of rent.



iv. It was the case of respondents that their family comprises of three brothers, parents and children. The existing house at Vardhaman Nagar was not sufficient for their requirement. Therefore, they purchased the property from Sunil Joshi for self occupation and residence. According to plaintiffs, plaintiff No. 1 is a practicing advocate and is in need of disputed premises for the purpose of his office. Plaintiff No. 2 also requires disputed premises for running tuition classes. It was submitted that defendant was owner of shop block situated at Gayatri Palace Apartment, near Ayachit Mandir, Nagpur and he did not require the suit shop block.



v. In R.C.S. No. 343/2015, contention of plaintiffs was that after purchase of the property in 2008, petitioner agreed to pay Rs. 500/- per month at the beginning of tenancy. The tenancy was as per English Calendar on month to month basis. According to the plaintiffs, defendant/tenant failed to pay agreed rent since 17/10/2008 and remained in arrears of Rs. 35,500/- as outstanding. Notice was issued to defendant on 04/04/2014. Though defendant received the notice, he failed to comply and pay the arrears of rent. In the light of the above pleadings, plaintiffs claimed decree for eviction, possession and arrears of rent against the defendant. Both the suits came to be decreed by the trial Court.



vi. Appeals were preferred before the District Court. On 28/10/2015, First Appellate Court modified the quantum of rent and upheld the findings recorded by the trial Court regarding eviction and possession of the tenanted premises by the defendant. So far as the suit based on bona fide need is concerned, appeal came to be dismissed.



vii. Being aggrieved by the concurrent findings of the Courts below, these two petitions have been filed by the tenant against the landlords."



4. Heard Shri Nitin Bargat, learned Counsel for petitioner and Shri Anand Jaiswal, learned Senior Counsel for respondents. Learned Counsel for the petitioner submits that lease-deed dated 07/10/2008 was duly proved by the defendant. From the said lease-deed, it can be seen that it was a lease in perpetuity. It is submitted that without considering the vested rights of petitioner and without appreciating duly proved lease-deed in proper perspective, the Courts below committed an error and held that the suit premises were required to be evicted and possession was to be delivered to the respondents.



5. Another contention raised on behalf of petitioner is that by virtue of provisions of Section 55(1) of the Rent Control Act, compulsory requirement of registration of leave and license agreement would indicate that it was obligatory on landlords to get the agreement registered. Learned Counsel submits that tenant was not responsible for not getting the agreement registered and in view of failure of landlords to comply with the statutory requirements, the terms and conditions of unregistered agreement can be gone into and can be read in evidence. In support of submissions, learned Counsel placed reliance on the decision of the Hon'ble Supreme Court in Vishal N. Kalsaria v. Bank of India & ors. - [MANU/SC/0061/2016 : 2016(2) ALL MR 920 (S.C.)] and of this Court in Raj Prasanna Kondur v. Arif Taher Khan & others - [MANU/MH/1264/2004 : 2005(4) Bom.C.R. 383].



6. Per contra, Shri Anand Jaiswal, learned Senior Counsel for respondents submitted that supervisory jurisdiction in Article 227 of the Constitution of India is exercised for keeping the subordinate courts within the bounds of their jurisdiction and when a subordinate Court has assumed a jurisdiction or has failed to exercise its jurisdiction, which it does have or the jurisdiction though available is being exercised by the Court in a manner not permitted by law and failure of justice or grave injustice has occasioned thereby, the High Court may step in to the exercise its supervisory jurisdiction. Learned Senior Counsel submits that terms and conditions of an unregistered lease-deed cannot be read in evidence though the same can be used for collateral purpose and this being the clear position of law, the trial Court was absolutely justified in holding that unregistered lease-deed cannot be read in evidence and the terms and conditions of the unregistered lease-deed cannot be gone into. According to the learned Senior Counsel, the observations of the first Appellate Court are in clear ignorance of the provisions of the Registration Act to the extent that terms and conditions of lease deed can be read in evidence. It is submitted that the observations per se against the provisions and mandates of law can be negatived and rectified in writ jurisdiction.



7. The next submission on behalf of respondents is that under Section 107 of the Transfer of Property Act, lease created from year to year or for any term exceeding one year or reserving a yearly rent can be only by a registered lease-deed. The reference is also made to the provisions of Section 17(1)(d) of the Registration Act relating to leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent. Learned Senior Counsel submits that under Section 17 of the Registration Act, registration of such a lease is compulsory and consequence of non-registration are found in Section 49 of the Act. The submission is that lease in the present case is an unregistered document and by virtue of Section 49 can be used only for collateral purpose and not beyond the scope of Section 49 of the Registration Act. In support of submissions, learned Senior Counsel pressed into service judgments of the Hon'ble Supreme Court in Shalini Shyam Shetty & anr v. Rajendra Shankar Patil - [MANU/SC/0508/2010 : 2010(8) SCC 329] and Park Street properties Private Limited v. Dipak Kumar Singh & anr. - [MANU/SC/0960/2016 : (2016) 9 SCC 268].



8. With the assistance of the learned Counsel for the parties, this Court has gone through the impugned judgments and orders. Learned Counsel for petitioner could not demonstrate that the trial Court while appreciating the evidence adduced by the parties committed an error of law or manifest error apparent on the face of record. True, the first Appellate Court while appreciating the lease-deed between petitioner and respondents observed that when plaintiffs failed to get lease-deed [Exh. 16] registered as per Section 55(2) of the Rent Control Act, contention of tenant about the terms and conditions subject to which premises have been given to him by landlord on leave and licence shall prevail, unless proved otherwise.



9. Section 55 of the Rent Control Act deals with the tenancy agreement to be compulsorily registered. Sub section 2 of Section 55 of the Act is relevant here. It reads thus :



"The responsibility of getting such agreement registered shall be on the landlord and in the absence of the written registered agreement, the contention of the tenant about the terms and conditions subject to which a premises have been given to him by the landlord on leave and licence or have been let to him, shall prevail, unless proved otherwise."

10. From sub-section 2 of Section 55 of the Rent Control Act, it can be seen that registration of agreement is required to be at the behest of landlord and otherwise burden to prove tenancy or licence is on the tenant. Section 55(2) of the Rent Control Act cannot be read in isolation and has to be read in conformity with the provisions of Section 17 of the Registration Act. Section 17 of the Registration Act refers to the documents of which registration is compulsory. Sub-section (1)(d) relates to leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent.


11. Under Section 107 of the Transfer of Property Act such as lease is to be made only by a registered instrument. So far as the effect of non-registration of lease-deed is concerned, Section 49 in clear and unambiguous words speaks that it can be used only for collateral purpose. It means, the factum of tenancy and possession if disputed between landlords and tenant can be considered even on the basis of unregistered lease-deed, but when it touches the terms and conditions of lease-deed the same cannot be admitted and read in evidence.



12. In view of the above settled legal position, this Court finds substance in the submission of learned Senior Counsel for respondents that the observations made by the first Appellate Court regarding terms and conditions of an unregistered lease-deed are per se against the law and error or law having brought to the notice needs to be corrected in writ jurisdiction.



13. In the present case, landlords have proved by cogent and overwhelming evidence their bona fide requirement and default on the part of tenant to pay rent regularly. On the other hand, tenant could not establish that it was a lease in perpetuity. The tenant has failed to demonstrate any perversity or illegality in the findings recorded by the trial Court granting decree for eviction and possession to the respondents. As such, no interference is warranted in writ jurisdiction. Hence, the following order :



O R D E R



"I. Writ Petition Nos. 3270/2008 and 3271/2008 are dismissed.



II. Rule stands discharged.



III. No order as to costs."



At this stage, learned Counsel for petitioner submits that interim order passed by this Court on 15/06/2016 be continued for a period of four weeks.



Learned Senior Counsel for respondents states that the Court may pass an appropriate order.



On merits and particularly on the grounds on which decree for eviction and possession came to be passed, petitioner is not entitled to continuation of interim relief. However, to avoid denial of an opportunity, four weeks' time is granted on petitioner's submitting an undertaking that in case he fails, he would vacate the suit premises after four weeks.





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