Thursday, 18 June 2020

Whether the court can infer that tenancy was for more than a year if there is a clause of increase of rent every year in rent note?

As per law laid down by this Court in Ram Kumar Das(supra) there shall be a presumption that the tenancy in the
present case is monthly tenancy. When the clauses of
rent note are cumulatively read, the intention of the
tenant is more than clear that tenancy was only
monthly tenancy, which could have been terminated on
default of payment of rent by 5th day of any month or
by notice of one month. The rent deed did not confer
any right to tenant to continue in the tenancy for a
period of more than one year nor it can be said that
tenancy was created for a period of more than one
year. Clause (9), which noticed the promise of the
tenant of payment of rent by increasing 10% each year
was a promise contingent on tenancy being continued
beyond one year but cannot make the tenancy year to
year or tenancy for a period of more than one year.
Present was a case of tenancy for which no period was
specified and looking to all the clauses
cumulatively, we find that the rent note was not such
kind of rent note, which requires compulsory
registration under Section 17(1)(d).
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVI L APPEA L NO. 2617 O F 2020

SIRI CHAND (DECEASED) THR. LRS. Vs SURINDER SINGH .

ASHO K BHUSHAN, J.
Dated:June 17, 2020.

Leave granted.
2. This appeal has been filed questioning the
judgment of Punjab and Haryana High Court dated
05.09.2018 dismissing the revision filed by the
landlord-appellant.
3. Brief facts giving rise to the appeal are: -
3.1 The appellant is a landlord of a shop
measuring 14 sq. yds. Respondent took the
shop on rent @Rs.2,000/- per month for

running a hair cutting and dressing work.
The respondent-tenant on 27.07.1993 executed
an agreement/rent deed undertaking to pay a
sum of Rs.2,000/- each month. The rent deed
was to be applicable w.e.f. 28.07.1993. The
house tax and electricity bills were
undertaken to be paid by the tenant. Rent
was to be paid up to 5th day in each month to
the owner. In event, the tenant failed to
make the payment of rent up to the prescribed
date in advance, the owner shall have right
to get the shop vacated. The shop owner, if
is in need of the shop, can serve notice of
one month and get the shop vacated from the
tenant. The tenant also undertook to make
the payment of rent money by increasing 10
per cent each year.
3.2 An application under Section 13 of East
Punjab Urban Rent Restriction Act, 1949 was
filed by the appellant-landlord dated
18.03.2006 praying for eviction of the tenant
along with arrears of rent and house tax and

interest on the arrears of rent. The
appellant’s case was that rent is not paid
from 28.01.2004 to 28.07.2004 and from
29.07.2004 to 28.02.2005. House tax since
1999 to 2005 amounting to Rs.22,302/- was not
paid.
3.3 The tenant filed objection to the application
and contended that rate of rent is Rs.1,000/-
per month. It was further pleaded that at
the time of taking shop in question, no other
condition was agreed or settled. However,
the signatures were obtained on some blank
paper as security by the landlord, which
appears to have been fabricated as alleged
rent note. The tenant claimed to have paying
the rent @Rs.1,000/- per month till February,
2006, after which landlord refused to accept
the rent.
3.4 The copy of the rent note dated 27.07.1993
was brought on the record as Exh. A-1. The

Rent Controller held Exh.A-1- rent deed as
proved. The Rent Controller held that rent
note – Exh.A-1 is not signed by both the
parties. The Rent Controller further held
that although time is not specified, but it
is not a lease deed, so not compulsorily
registrable. The Rent Controller also held
that tenant was liable to pay the house tax.
The respondent tendered rent @ Rs.2,000/-
w.e.f. 28.01.2004, which was accepted under
protest. The Rent Controller held that tenant
was in arrears of rent and house tax so the
respondent-tenant is liable to eviction from
the premises in dispute. The Rent Controller
held that there exist relationship of
landlord and tenant between the parties. The
Rent Controller allowed the application of
the appellant and directed eviction of the
respondent from the premises in question.
3.5 An appeal was filed by the tenant against the
order of the Rent Controller. The Appellate

Court did not agree with the findings of the
Rent Controller that document Exh. A-1 was
not compulsorily registrable. Appellate
Court observed that perusal of the document
Exh.A-1 reveals that there would be increase
in the rent to the tune of 10% every year,
hence the document was not executed for a
period of less than a year rather the
intention of the parties is clear that it was
executed for more than one year, hence the
document was required to be registered under
Section 17(1)(d) of the Registration Act,
1908. However, the Appellate Court rejected
the claim of the tenant that rate of rent was
Rs.1,000/- only. The Appellate Court after
holding that document was compulsorily
registrable took the view that the clause
regarding 10% yearly increase cannot be
relied and judgment of Rent Controller was
accordingly set aside and the appeal was
allowed.

3.6 The appellant aggrieved by the order of the
Appellate Court filed a revision before the
High Court. The High Court dismissed the
revision referring to the finding of the
Appellate Court that rent note – Exh.A-1 was
compulsorily registrable. The case of the
landlord to enforce condition in lease deed
regarding increase of the rent was not
relied. Aggrieved by the said judgment, this
appeal has been filed.
4. We have heard learned counsel appearing for the
appellant. No one appeared for the respondent,
though served.
5. Learned counsel for the appellant in support of
the appeal contends that rent note dated 27.07.1993,
which was signed by the tenant was valid Rent note
and was covered within the definition of lease as
given in the Registration Act, 1908. The document
was not registrable under Section 17(1)(d). It is
further contended that the Appellate Court has
without recording the finding that there was no
default on the part of tenant in payment of rent and
house tax has set aside the order of the Rent
Controller.
6. We have considered the submissions of the learned
counsel for the appellant and has perused the
records.
7. First issue, which has arisen for consideration
in this appeal is as to whether the rent note dated
27.07.1993, which is brought on record as Annexure P-
3 to the appeal was a document, which required
compulsory registration under Section 17(1)(d) of the
Registration Act, 1908. The second issue to be
considered is as to whether the Appellate Court could
have set aside the decree of eviction without
recording finding that there was no default on the
part of the tenant in payment of rent and house tax
etc. and the amount deposited by the tenant was
sufficient to save him from eviction.

8. The Registration Act, 1908 contains the
definition of a “lease” under Section 2(7), which is
to the following effect: -
“(7) “lease” includes a counterpart,
kabuliyat, an undertaking to cultivate or
occupy, and an agreement to lease;”
9. We may notice that in the present case, the rent
note is not claimed to be signed by the landlordappellant
rather it is signed only by the respondenttenant.
The trial court after considering materials
on record has returned the findings that appellant
has proved the rent note. The case of the respondent
that appellant has got his signatures on a blank
paper has not been accepted. RW1- Surinder Singh,
respondent in his cross-examination has admitted his
signatures on the rent note. The trial court also
held that by virtue of clause (9) of the rent note,
the respondent is liable to pay increased rate @10%
every year and further he was liable to pay house
tax. Landlord having paid the house tax, he was
entitled to recover the house tax from the
respondent.

10. Section 17(1)(d) of the Registration Act deals
with documents of which registration is compulsory.
Section 17(1)(d), which is relevant for the present
case and has been relied by the Appellate Court is as
follows: -
“17. Documents of which registration is
compulsory.—(l) 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:—
XXXXXXXXXXXXXX
(d) leases of immovable property from year
to year, or for any term exceeding one
year, or reserving a yearly rent;”
11. As per Section 17(1)(d), leases of immovable
property from year to year, or for any term exceeding
one year, or reserving a yearly rent requires
compulsory registration. Whether the rent deed can
be treated to be a lease of immovable property – (i)

from year to year, (ii) for any term exceeding one
year, (iii) or reserving a yearly rent?
12. We need to notice the relevant clauses of the
rent deed to find out as to whether Section 17(1)(d)
was applicable in the facts of the present case
making Exh.A-1 compulsorily registrable. The
agreement/rent deed, which is written and signed by
the respondent alone contains 16 clauses, which were
promises made by the respondent written in the rent
deed. Clause 1 to 3, 9, 10, 14, 15 and 16, which are
relevant, are as follows: -
“1) I will make the payment of the sum of
Rupees 2,000/- (Two Thousand only)
each month in advance in cash
currency up to date 5 (Five) to the
owner of the shop, Sri Chand.
2) The rent deed will be applicable from
28.07.1993
3) The amount of the house tax and the
electricity bills regarding the
abovesaid shop will be paid by me.
XXXXXXXXXXXXXXXX
9) I will be bound for making the
payment of the rent money by
increasing 10% (ten percent) each
year.

10) If I may not make the payment of the
rent up to the prescribed date in
advance and then there will be right
to the shop owner that he can get the
shop vacated.
XXXXXXXXXXXXXXX
14) I have paid the amount of Rupees
3600/- (Three Thousand Six Hundred
only) to the shop owner as a
security, vacating the shop, handing
over the possession to the shop
owner, I will be entitled for the
refunding of this security amount.
15) If the shop owner is in need of this
shop and then serving the notice of
one-month period, he can get the shop
vacated from me, there will be no
objection to me in this regard.
16) If in any situation, I may not comply
with this agreement/rent deed and
then there will be right to the shop
owner that vacating the shop
forcible, he can take over the
possession from me and may dispossess
me, there will be no objection and
claim of mine or any of my legal
heir.”
13. Clause (1) of the rent deed specifically makes it
clear that monthly tenancy was created on payment of
rent of Rs.2,000/- per month. The payment was to be
made before 5th of each month to the owner. The rent

deed does not provide for any specific period for
which the rent deed was executed. When a rent
deed/lease deed does not provide for a period and
when it provides for payment of rent monthly, whether
tenancy can be treated from year to year or for any
term exceeding one year or reserving a yearly rent?
The rent deed does not reserve yearly rent, hence the
third condition as noted above is not applicable.
The rent deed is not also a lease of immovable
property from year to year. There is no mention in
the rent deed that it is a lease from year to year,
hence the said condition is also not applicable.
14. Only clause which need to be, thus, considered is
as to whether the rent deed was “for any term
exceeding one year”. The present is a case where
rent deed does not prescribe any period for which it
is executed. When the lease deed does not mention
the period of tenancy, other conditions of the
lease/rent deed and intention of the parties has to
be gathered to find out the true nature of the lease
deed/rent deed. The two conditions written in the

rent note are also relevant to notice. First, if
payment of rent in any month is not made up to 5th of
month, owner shall have right to get the shop evicted
and second if the owner is in need of shop, he by
serving notice of one month can get the shop vacated.
This Court had occasion to consider the provision of
Section 106 of the Transfer of Property Act, 1882 and
noted the rule of construction, which is to be
applied when there is no period agreed upon between
the parties in a lease deed. In Ram Kumar Das Vs.
Jagdish Chandra Deo, Dhabal Deb and Another, AIR 1952
SC 23 after quoting Section 106 of the Transfer of
Property Act, 1882, this Court held that when there
is no period agreed upon between the parties,
duration has to be determined by referring to the
purpose and object with which the tenancy is created.
Following observations were made: -
“13. The section lays down a rule of
construction which is to be applied when
there is no period agreed upon between the
parties. In such cases the duration has to
be determined by reference to the object
or purpose for which the tenancy is
created. 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 is
conceded that in the case before us the
tenancy was not for manufacturing or
agricultural purposes. The object was to
enable the lessee to build structures upon
the land. In these circumstances, it could
be regarded as a tenancy from month to
month, unless there was a contract to the
contrary……………………………………”
15. This Court further held that “it has no doubt
been recognised in several cases that the mode in
which a rent is expressed to be payable affords a
presumption that the tenancy is of a character
corresponding thereto. Consequently, when the rent
reserved is an annual rent, the presumption would
arise that the tenancy was an annual tenancy unless
there is something to rebut the presumption.”
16. Clauses of the rent note makes it clear that
there was a categorical promise that tenancy is a
monthly tenancy and rent is paid every month by 5th of
every month. It is true that although in clause (9),
it was mentioned that the tenant will be bound for
making the rent money by increasing 10% each year,
that was promise by the tenant to increase the rent

by 10% each year for the period of tenancy, though
the period of tenancy was unspecified. Clause (9)
may or may not operate in view of specific clauses
reserving right of landlord to evict the tenant on
committing default of non-payment of rent by 5th of
every month or when landlord requires shop by giving
one month’s notice. Clause (9) was a contingent
clause which binds the tenant to increase the rent by
10% each year, which was contingent on tenancy to
continue for more than a year, but that clause cannot
be read to mean that the tenancy was for a period of
more than one year. We may notice a judgment of
Allahabad High Court in Kashi Nath and Ors. Vs. Abdur
Rahman Khan and Ors., AIR 1922 All. 54. Allahabad
High Court had occasion to consider an agreement
where defendant had contracted to pay eight annas a
year as a rent of the site. Section 17 of the
Registration Act, 1866 was also referred to and
relied by the High Court. The High Court held that
when the terms of the lease are looked at, one sees
that though in fact it might continue for an
undefined number of years, there was no certainty

that it would last for more than one year, hence
lease was held not exceeding a term of one year.
Following was held by the High Court:-
“……………………………………The terms of the kabuliyat
have been read to us. Shortly, they are to
the effect that the Zamindar let the site
to Sheo Prasad on a payment of eight annas
a year and incidental obligations but the
kabuliyat provided that if the eight annas
was not paid in any one year, or if the
tenant failed to make the incidental
payments for marriages et cetra, the lease
would thereby some to an end. Furthermore,
the lease would also come to an end if the
lessee did not conduct himself properly
towards the Zemindar. Therefore, when the
terms of the lease are looked at one sees
that though in fact it might continue for
an undefined number of years, there was no
certainty that it would last beyond the
term of one year. Therefore, it did not
come within the classification of Section
17(d) as being a lease for a term
exceeding one year. That being so, it was
not a document which had compulsorily to
be registered……………………………….”
17. We may notice another judgment of Lahore High
Court in Mengh Raj Vs. Nand Lal and Ors., AIR 1939
Lah.558. In the above case, in the lease, rate of
rent was payable per mensem, condition of payment of
annual rent was also mentioned there. The High Court
noted the condition of the lease and has also applied
the provisions of Section 17(1)(d) of the

Registration Act, 1908 and held that the said lease
was not registrable. In paragraph 1 of the judgment,
the contents of the lease have been quoted, which are
to the following effect: -
“……………………The main provisions of the lease
in question may be translated as follows:
We, Nand Lal and Murli, sweepers of
Hazro, have taken on rent a house
from Mengh Baj of Hazro on
condition of payment of an annual
rent of Rs. 40-8-0 for a period
of one year certain. We agree that
we will live as tenants in this
house and will pay rent at the rate
of Rs. 3-6-0 per mensem, month by
month on a receipt being granted to
us by the landlord. In default of
payment of rent the landlord can
eject us and recover arrears of
rent in any manner he likes. After
the expiry of the term it will be
the option of the landlord to give
the house to us on rent or eject us
and give it to other tenants. We
will have no objection to this. The
term of the lease is from the 1st
Har, Sambat 1984 to the end of
Jeth, Sambat 1985. We have been
tenants under the landlord for a
long time and have been paying
rent.”
18. After considering the conditions of the lease and
referring to Section 17(1)(d), the High Court laid
down following in paragraph 3: -

“3. On a construction of the above deed it
is obvious that it is not a lease from
year to year, nor for a term exceeding one
year, and the sole question is whether or
not by it a yearly rent has been reserved
which brings it within the letter of the
Section. In Mt. Aishan v. Municipal
Committee Lahore 92 Ind.Cas. 526 Campbell
J. held that a mere recital of an annual
rate of rent did not constitute the lease,
a lease reserving a yearly rent within the
meaning of Section 17, Registration Act.
The lease in that case was determinable at
any time at the will of the landlord. In
the present case after the expiry of one
year for which the lease was granted, this
lease too was determinable at the end of
Jeth, Sambat 1985. In this aspect the
present lease constituted no more than a
tenancy-at-will after the expiry of the
first year and so appears to be covered by
the decision of Campbell, J. referred to
above. There is considerable body of
authority for the proposition that where
there is a tenancy-at-will created even
though the rent is fixed and is payable
annually, the document is not subject to
compulsory registration. Reference in this
connexion may be made to Muhammad Masam
Khan v. Mt. Bakhtawar (1895) 70 P.R. 1895
where a Division Bench held on a
construction of the document before them
that only those leases must be registered
which are in terms for a period exceeding
one year, a lease reserving a yearly rent,
and containing no other provision
establishing a tenancy-at-will, being
presumably a lease from year to year.”
19. We may notice that in the above case although the
annual rent was mentioned but, however, payment of

monthly rent was mentioned in the lease deed. The
rent note, which we are considering contains only
monthly rent and payment month by month. As per law
laid down by this Court in Ram Kumar Das(supra) there
shall be a presumption that the tenancy in the
present case is monthly tenancy. When the clauses of
rent note are cumulatively read, the intention of the
tenant is more than clear that tenancy was only
monthly tenancy, which could have been terminated on
default of payment of rent by 5th day of any month or
by notice of one month. The rent deed did not confer
any right to tenant to continue in the tenancy for a
period of more than one year nor it can be said that
tenancy was created for a period of more than one
year. Clause (9), which noticed the promise of the
tenant of payment of rent by increasing 10% each year
was a promise contingent on tenancy being continued
beyond one year but cannot make the tenancy year to
year or tenancy for a period of more than one year.
Present was a case of tenancy for which no period was
specified and looking to all the clauses
cumulatively, we find that the rent note was not such
kind of rent note, which requires compulsory
registration under Section 17(1)(d).
20. We may further notice that Rent Controller had
returned a finding regarding rate of rent @
Rs.2,000/- per month and further the tenant was
liable to pay the house tax, which was not paid from
1999 to 2005 and the decree of eviction was passed
accordingly. The Appellate Court although accepted
the finding of the Rent Controller that rate of rent
was @ Rs.2,000/- and not Rs.1,000/- but merely on the
finding that landlord cannot claim 10% increase of
rent every year since the document was not registered
had allowed the appeal and set side the judgment.
There is no specific finding by the Appellate Court
regarding the liability of the tenant to pay the
house tax. The Appellate Court after holding that
document-rent deed was compulsorily registrable and
having not registered allowed the appeal. No finding
was returned by the Appellate Court that tenant was
not in default and tenant has deposited the necessary
amount to save himself from eviction. We, thus, are
of the view that the judgment of the Appellate Court

is unsustainable on the above ground also. We, thus,
are of the view that the judgment and decree of the
Rent Controller directing eviction ought not to have
been interfered by the Appellate Court.
21. In result, the appeal is allowed. The judgment
and decree of the Rent Controller directing eviction
of the tenant is restored. No costs.
......................J.
( ASHOK BHUSHAN )
......................J.
( M.R. SHAH )
......................J.
( V. RAMASUBRAMANIAN )
New Delhi,
June 17, 2020.

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