Supreme Court: Sale Of Minor's Property By Guardian Can Be Avoided Only By Filing Suit To Set Aside Deed Within Period as mentioned Under Art.60 of Limitation Act

  We may notice one more judgment of this Court

relied on by the learned counsel for the appellants

that is G. Annamalai Pillai vs. District Revenue

Officer and others, (1993) 2 SCC 402. The question

which arose for consideration in the said case has

been noticed in paragraph 1 of the judgment in

following words:

“1. The short question for consideration in

this appeal is whether lease deed in dispute, which

was voidable in terms of Section 8(3) of the Hindu

Minority and Guardianship Act, 1956 (the Act) when

validly avoided, was effective from the date of the

lease deed so as to make the transaction void and

unenforceable from the very inception.” {Para 32}

33. The land in dispute was owned by one Janarthanan.

His father, Purushothaman executed a registered lease

deed in favour of appellant on 12.12.1971 on which

date the owner was minor. The appellant filed

application before Tehsildar to be registered as a

tenant which was contested by Janarthanan.

Janarthanan contended that his father has no right or

title to deal with land and lease by his father is in

contravention of Section 8 of Hindu Minority and

Guardianship Act, 1956. Tehsildar held that there was

no valid lease which order was confirmed by the High

Court against which judgment appeal was filed. In

paragraphs 5 and 6 following has been laid down:

“5. We have heard learned counsel for the

parties. We have been taken through the

orders of the Revenue authorities, judgment

of the learned Single Judge and of the

Division Bench of the High Court in writ

appeal. The Division Bench of the High

Court, in a lucid judgment, answered the

question — posed by us in the beginning —

in the affirmative and against the

appellant-Annamalai Pillai on the following

reasoning:

“We have already seen that clause (3) of

Section 8 of the Hindu Minority and

Guardianship Act, 1956, specifically makes

the transaction voidable. The lease

executed by the guardian in this case is

prohibited and in that sense it was

without any authority. On the legal

efficacy and the distinction between

valid, void and voidable agreements, we

find the following passage in Salmond on

Jurisprudence, Twelfth Edition at page

341:

‘… A valid agreement is one which is

fully operative in accordance with the

intent of the parties. A void agreement

is one which entirely fails to receive

legal recognition or sanction, the

declared will of the parties being

wholly destitute of legal efficacy. A

voidable agreement stands midway

between these two cases. It is not a

nullity, but its operation is

conditional and not absolute. By reason

of some defect in its origin it is

liable to be destroyed or cancelled at

the option of one of the parties to it.

On the exercise of this power the

agreement not only ceases to have any

efficacy, but is deemed to have been

void ab initio. The avoidance of it

relates back to the making of it. The

hypothetical or contingent efficacy

which has hitherto been attributed to

it wholly disappears, as if it had

never existed. In other words, a

voidable agreement is one which is void

or valid at the election of one of the

parties to it.’

This distinction has also been

judicially noticed in the Privy Council

judgment reported in Satgur Prasad v.

Harnarain Das and in the Division Bench

judgment in S.N.R. Sundara Rao and Sons,

Madurai v. CIT. The Division Bench held,

following the said Privy Council judgment as

follows:

‘When a person, who is entitled to

dissent from the alienation, does so, his

dissent is in relation to the transaction

as such and not merely to the possession

of the alienee on the date of such

dissent.

The effect of the evidence is,

therefore, to get rid of the transaction

with the result that in law it is as if

the transaction had never taken place.’

We have, therefore, no doubt that when the

fifth respondent avoided the lease executed

by his father, the fourth respondent, the

lease became void from its inception and no

statutory rights, could, therefore, accrue

in favour of the appellant herein.”

6. We agree with the reasoning and the

conclusions reached by the Division Bench

of the High Court and as such this appeal

has to be dismissed.”

34. Learned counsel for the appellants relying on the

above decision contends that sale by Balaraman when

has been avoided by release deed it became void from

the very beginning. There can be no quarrel to the

proposition laid down in G. Annamalai Pillai vs.

District Revenue Officer and others(supra). In the

present case there having been no repudiation of sale

deed on behalf of minor, the question of voidable

sale deed becoming void does not arise.

35. We are, thus, of the considered opinion that in

the present case it was necessary for the person

claiming through minor to bring an action within a

period of three years from the date of the death of

the minor to get sale deed executed by Balaraman set

aside. We, thus, conclude that the sale deeds

executed by Balaraman were not repudiated or avoided

within the period of limitation as prescribed by law.

Issue No.3 is answered accordingly.

36. In view of the foregoing discussions, we do not

find any merit in this appeal. The appeal is

dismissed accordingly.

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.1782 OF 2019

MURUGAN & ORS. Vs. KESAVA GOUNDER (DEAD)

THR. LRS. AND ORS.

Author: ASHOK BHUSHAN, J.

Dated: February 25, 2019.

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Whether the court can look into unregistered lease deed to ascertain the nature and character of possession if it constitutes the main dispute for adjudication by it?

 In the case of Rai Chand Jain v. Miss Chandra Kanta Khosla [MANU/SC/0185/1991 : (1991) 1 SCC 422], dispute arose as to whether certain premises were let out for residential purpose or as to whether there was an oral agreement of letting out the premises to the tenant, for running a press. It was in that perspective, it was held in the said case that a lease deed though unregistered, could be considered for collateral purposes to show the purpose for which the premises was leased out. Thus, the lease deed was referred to for the sole purpose to defeat the claim of subsistence of an oral agreement. The ratio of this authority has been considered in the case of K.B. Saha and Sons Private Limited (supra) and we follow that ratio. In the case of Satish Chand Makhan (supra), another coordinate Bench of this Court declined to accept admissibility of an unregistered lease agreement for determining duration of the lease (9 years in that case) on the reasoning that terms of lease would not constitute collateral purpose. It was observed in this judgment that "nature and character of possession" could constitute collateral purpose but that was not the point which was directly in lis before this Court. In our opinion, nature and character of possession contained in a flawed document (being unregistered) in terms Section 107 of the 1882 Act and Sections 17 and 49 of the Registration Act can form collateral purpose when the "nature and character of possession" is not the main term of the lease and does not constitute the main dispute for adjudication by the Court. In this case, the nature and character of possession constitutes the primary dispute and hence the Court is excluded by law from examining the unregistered deed for that purpose. In respect of the suit out of which this appeal arises, purpose of lease is the main lis, not a collateral incident. {Para 13}

15. In this case, factum of creation of tenancy has been established. But the purpose of tenancy, so as to attract the six months' notice period Under Section 106 of the 1882 Act cannot be established by such evidence as in such a situation, registration of the deed would have been mandatory. The onus would be on the Defendant to establish the fact that manufacturing activity was being carried on from the demised premises. A mere statement by the DW-1 to which we have referred earlier or the purpose of lease as specified in the lease agreement would not be sufficient to demonstrate the purpose of lease to be for manufacturing. This could be proved by explaining what kind of work was being carried on in the factory shed. In such a situation also, the registration of the deed would have been necessary. In absence of such registration, tenancy would have been of "month to month" character. For these reasons, we do not think the High Court erred in law in dismissing the Defendant's appeal. The present appeal shall stand dismissed on the same rationale.

 IN THE SUPREME COURT OF INDIA

Civil Appeal No. 6149 of 2023.

Decided On: 25.09.2023

Paul Rubber Industries Private Limited Vs. Amit Chand Mitra and Ors.

Hon'ble Judges/Coram:

Aniruddha Bose and Vikram Nath, JJ.

Author: Aniruddha Bose, J.

Citation: 2023/INSC/854, MANU/SC/1051/2023.

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How should Appellate court calculate interim compensation when staying eviction decree if vacant land was rented on which tenant has raised construction?

 So far as the question of compensation is concerned, Mr. Naidu is right that it cannot be based on the valuation of the building ‘Garment House’. After all, what was leased out was the land; the construction on the land, if any, made during the subsistence of the tenancy, was to belong to the lessee. Compensation can accordingly be based only on the value of the land, the fruits of which may be said to be lost unto the Plaintiffs as a result of the stay of the eviction decree obtained by them. There is another way of looking at the land value. The land may well be commercially exploited either by retaining the structure (since the terms of the lease permit such retention upon payment) or, alternatively, by demolishing the existing structure and constructing on the land. In either case, the landlord would have to incur capital cost by purchasing the building or paying for the new construction. In either premises, commercial letting of constructed premises cannot be the basis of valuation; it would have to be letting of land.{Para 8}

13 The only legitimate basis for working out interim compensation in our case appears to be the actual price paid for the suit property (i.e. essentially the land) by Respondent No.19. Respondent No.19 has acquired reversionary right of the lessors in the suit property for a sum of Rs.5.50 crores. Evidently, this has been a concrete deal at arms length between men of commerce; it does take into account or, at any rate, must be presumed to have taken into account, all aspects arising out of the lessee’s right to the existing structure at the expiry of the lease. It may safely, at least for our purposes, which, as we have seen above, in any event, involve a certain ad-hocism, be taken as the basis for working out a fair interim compensation.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

CIVIL REVISION APPLICATION NO.357 OF 2017

Vijay Anant Gangan   Vs  Zenabibi Gulam Rasool And Others 

CORAM : S.C. GUPTE, J.

PRONOUNCED ON : 5 NOVEMBER 2020

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Whether the lease is treated as month-to-month tenancy if the lease deed is unregistered?

 (a) Unregistered Lease Deed:

17. As Section 107 of Transfer of Property Act mandates, “a lease of immoveable property from year to year, or for any term exceeding one year or reserving a yearly rent, can be made only by a registered instrument.” Section 17 (1) (d) of the Registration Act, the leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent must be registered. Then, Section 49 of the same Act clearly provides

that a document purporting to be a lease and required to be registered under Section 17 will not be admissible in evidence if the same is unregistered. True, the proviso to this section allows that unregistered lease deed to be looked into for collateral

purposes. But neither the duration of the lease nor its renewal is a collateral purpose; it is one of its core purposes. So, cumulative effect of Section 107 of the Transfer of Property Act, Section 35 of Stamp Act, Sections 17 and 49 of the Registration Act is that an unregistered lease deed as relied on by the Corporation cannot be looked into. The Corporation’s possession admitted,

the very lease must be treated as month-to-month tenancy. Thus, the Corporation has no basis for the renewal of the lease.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

SECOND APPEAL NO. 359 OF 2014

IN

REGULAR CIVIL APPEAL NO. 257 OF 2005

IN

REGULAR CIVIL SUIT NO. 1461 OF 1995

Bharat Petroleum Corporation Ltd. Vs Shri Champalal Vithuram Jajoo

CORAM : DAMA SESHADRI NAIDU, J.

Dated : 27th April 2020.

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When should arbitrator decide the issue of novation of contract?

Learned counsel for the plaintiff has pointed out that the plaintiff and the defendant at the time of execution of the Lease Deed and the Maintenance Agreement were family held companies. The family has exited from the plaintiff company sometimes in September 2018 and a new management has taken over charge of the plaintiff company. It is strongly urged that there is a novation of Agreement and the original Lease Deed and the Maintenance Agreement dated 21.02.2017 stand superseded and novated in view of the terms and conditions settled upon in the emails dated 26.09.2018 and 15.10.2018. In the novated contract, there is no arbitration agreement and hence, the present application is misplaced.

16. It undoubtedly follows that in the original lease deed and the maintenance agreement, the parties have agreed to settle their disputes through arbitration.

17. I may now look at the defence of the plaintiff to the present application. It has strongly been urged that on account of the subsequent novation of the contract through exchange of the emails dated 26.09.2018 and 15.10.2018, a new contract has come into being superseding the Lease Deed dated 21.02.2017 and the Maintenance Agreement of the same date.

21. As noted above, the submission of the plaintiff is that on account of these two communications exchanged between the parties, the old contract got novated and was substituted by a new contract which does not have an arbitration agreement.

22. In this context, reference may be had to Section 62 of the Contract Act which defines novation as follows:-

“62. Effect of novation, rescission, and alteration of contract.—If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.

23. In this context, reference may be had to the judgment of the Supreme Court in Lata Construction and Ors. vs. Dr.Rameshchandra Ramnikalal Shah and Anr., (2000) 1 SCC 586 where the Supreme Court held as follows:-

“9. We may, at this stage, refer to the provisions of Section 62 of the Indian Contract Act which provides as under: “62. If the parties to a contract agree to substitute a new contract for it, or to rescind or alter it, the original contract need not be performed.” This provision contains the principle of “novation” of contract. 10. One of the essential requirements of “novation”, as contemplated by Section 62, is that there should be complete substitution of a new contract in place of the old. It is in that situation that the original contract need not be performed. Substitution of a new contract in place of the old contract which would have the effect of rescinding or completely altering the terms of the original contract, has to be by agreement between the parties. A substituted contract should rescind or alter or extinguish the previous contract. But if the terms of the two contracts are inconsistent and they cannot stand together, the subsequent contract cannot be said to be in substitution of the earlier contract.”

24. Hence, a novation takes place only when there is a complete substitution of a new contract in place of the old. 

In the present case, in my opinion, as the facts noted above show, it cannot be prima facie said that there is a completely new contract and that the old registered Lease Deed dated 21.02.2017 read with the Maintenance Agreement of the same date have been novated and substituted by a completely new contract. The e-mail dated 15.10.2018 sent by the defendant merely agrees to reduction of rent. It does not specifically state that all the terms and conditions of the Lease Deed and the Maintenance Agreement stand superseded or novated. The issue would require deeper consideration and is best left to the arbitral tribunal to adjudicate upon.

IN THE HIGH COURT OF DELHI AT NEW DELHI 

 Pronounced on: 25.01.2021 

 CS(COMM) 377/2020 

KNOWLEDGE PODIUM SYSTEMS PVT. LTD. Vs S M PROFESSIONAL SERVICES PVT. LTD.

CORAM: HON'BLE MR. JUSTICE JAYANT NATH 

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What is the distinction between agreement to lease and agreement for lease?

 For the reasons above recorded, we concur with the view taken by the learned Single Judge that the Indentures are a license and is not a lease. They envisage lease deeds to be executed upon the respondent No.1 complying with the obligations under the Indentures and reaching the stage where the right to have the lease executed is triggered. In conformity with its caption: `Agreement to Lease', the Indenture is a license with features of Agreement to Lease. It is not an Agreement for Lease. The distinctions between the two is that in an Agreement for Lease the transaction is completed and possessory interest is transferred in favour of the lessee to the exclusion of the lessor and an Agreement to Lease requires an Agreement for Lease to be executed. No right, title or interest passes under an Agreement to Lease.

 Bombay High Court

The State Of Maharashtra And Ors vs M/S.Jasubhai Business Services ... on 14 November, 2019

CORAM: PRADEEP NANDRAJOG, CJ. &SMT. BHARATI DANGRE, J.

 [ Per Pradeep Nandrajog, CJ.] 

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Whether the court can interpret sale deed as lease deed considering contents of an auction notice?

1) The submission, which has been much pressed by learned Counsel for the writ Petitioner is that, what was sold to writ Petitioner by Sale Deed dated 25.09.1997 was absolute rights with all rights and interests in the property. The sale in favour of writ Petitioner was not sale of leasehold rights rather it was for all rights, title and interests, hence writ Petitioner acquired freehold rights. 

2)  Before we construe the document, we need to first notice the auction notice by which the property was put to auction. Auction notice, which has been brought on the record as Annexure-R1 indicate that details of four properties were given in the auction notice. {Para 18}

3) A perusal of the details of the properties indicate that property in question is included as Item No. 2, which is mentioned as "This is a lease hold residential plot".Thus, there cannot be any doubt that property in question, which was put in auction was a property as lease hold rights residential plots. When property is auctioned, the terms and conditions of auction are binding on both the parties. When Petitioner submitted his bid in pursuance of the auction notice, he was bidding for lease hold residential plot with a double storied building. While interpreting the Sale Deed, the auction notice has to be looked into to find out the nature of transaction. The Sale Deed cannot be read divorced to the auction notice or contrary to auction notice. Auction of a leasehold residential plot and auction of freehold residential plot carries different connotations. Leasehold rights are limited rights, which are subservient to freehold rights of a property. In giving bid for leasehold rights and freehold rights, different considerations are there. Clause 3 as noted above indicate that the property sold and transferred is in terms of the agreement dated 29.09.1988 between Trilochan Singh Rana and Mrs. Rani Rana to M/s. Ocean Construction Industries Pvt. Ltd. Trilochan Singh Rana and Mrs. Rani Rana were only lease holders. Thus, they could best transfer their right, which was conferred to them by the Indenture dated 18.03.1970.

4) We, thus, find that on true construction of Sale Deed, it is clear that all rights, titles and interests were not conveyed to the Petitioner in the leasehold residential plot, when we read Clauses 1, 2 and 3 together.{Para 25}

IN THE SUPREME COURT OF INDIA

Civil Appeal Nos. 1533 and 1534 of 2019

Decided On: 12.02.2019

Delhi Development Authority  Vs.  Karamdeep Finance & Investment (I) Pvt. Ltd. and Ors.

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Supreme Court: Purported lessee can not claim any right based on unregistered lease deed

We are of the considered opinion, that no reliance can be placed upon the lease deeds allegedly executed between the defaulting rice miller(s) and the Respondent(s), as they do not satisfy the statutory requirements of Section 17(1)(d) of the Registration Act, 1908. These Lease-deeds thus cannot be accepted as evidence of valid transfer of possessory rights. The plea taken by the Appellant-FCI, that such documentation was made only to escape the liability fastened on the defaulting rice millers, carries some weight, though it is a pure question of fact. The High Court nevertheless ought to have refrained from opining on the sufficiency of such lease deeds for recognition of a new legal entity, and consequential non-transfer of liability to the lessees.

IN THE SUPREME COURT OF INDIA

Civil Appeal No. 2070 of 2020 

Decided On: 06.03.2020

 Food Corporation of India  Vs.  V.K. Traders and Ors.

Hon'ble Judges/Coram:

S.A. Bobde, C.J.I., B.R. Gavai and Surya Kant, JJ.

Citation:(2020) 4 SCC 60,MANU/SC/0298/2020

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Whether lease deed is to be registered in case of tenancy-at-will even though rent was payable yearly?

 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

connection 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.”

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 .

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Whether tenant can challenge the title of the landlord in eviction suit if he had admitted ownership of landlord in lease deed?

The legal position as considered and held by the ARC is correct i.e., that the Tenant is bound by the covenant in the lease deed dated 3rd April, 2001; the Landlord is not expected to discharge a higher burden than furnishing the Will and finally, that the Tenant is estopped from challenging the title of the landlord as per Section 116 of the Indian Evidence Act, 1872.

26. The orders of the ARC do not warrant any interference. The question as to whether there were other legal heirs of the Landlord's mother who were co-owners of the tenanted premises has not been raised in the written statement and is clearly an afterthought intended to delay the execution of the eviction petition. Further, the admission in the lease deed clearly shows that the question of co-ownership of the other legal heirs was never an issue at the time of taking the premises on lease and hence, cannot now be raised as an issue.

IN THE HIGH COURT OF DELHI

CM (M) 748/2018 and CM Appl. 26848/2018

Decided On: 27.04.2020

 Mohd. Burhan  Vs.  Triloki Nath Nirmal

Hon'ble Judges/Coram:

Prathiba M. Singh, J.

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Whether small cause court has jurisdiction to entertain the suit for specific performance of an agreement for the renewal of a lease deed?

The Apex Court in Mansukhlal Dhanraj Jain v. Eknath Vithal Ogale MANU/SC/0633/1995 : 1995(2) SCC 665, while considering the provisions of Section 41(1) of the Presidency Small Causes Courts Act, 1882 which was pari materia with Section 26 of the Provincial Small Causes Courts Act, 1887 held that in a suit instituted by a person claiming to be a licensee of the premises for an injunction restraining the licensor from dispossessing the licensee or interfering with the possession or enjoyment of the property by the licensee would relate to the recovery of possession and fell within the exclusive jurisdiction of the Small Causes Court. 

11. Having considered the documents annexed to the Petition and the reply and having heard the counsel, indisputably the parties had a preexisting relationship of lessor and lessee and that in pursuance of a provision for renewal contained in the Lease Deed, Petitioner was seeking a continuation of that relationship. Even though Petitioner states that they are only seeking specific performance, when a Court hears such a matter, the Court must find out what does the suit in substance and in essence says and whether it is relating to the recovery of possession or the recovery of licence fee, rent or other charges between a landlord and tenant or a licensor and licensee. The Court will decide the issue by looking at the kernel and disregarding the chaff, the nature of the cause of action; the character of the reliefs sought and whether the claim of the Petitioner arises from and out of the obligations of the parties as licensor and licensee or landlord and tenant. The garb or cloak which is wrapped around the pleadings by an astute draftsman must be kept aside to deduce the pith and substance of the pleadings.

12. In my view, considering the averments in the Petition, prayers sought in this Petition and the averments contained in Paragraph 11 of the rejoinder, this dispute certainly relates to recovery of possession and it is a matter to which Section 26 of Provincial Small Causes Court Act, 1887 applies notwithstanding the fact that some of the reliefs or a portion of the cause of action is structured around a claim for specific performance.

13. The petition, therefore, stands dismissed. Interim relief granted on 13th June 2017 stands vacated.

IN THE HIGH COURT OF BOMBAY

Arbitration Petition (Lodg.) 513 of 2017

Decided On: 01.08.2017

Trent Limited Vs. Nanasaheb Govindrao Aher and Ors.

Hon'ble Judges/Coram:

K.R. Shriram, J.
Citation: MANU/MH/1720/2017

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Whether landlord can claim rent towards lock-in period without pleading that he has sustained loss due to premature vacation of premises?

The reason why I state that the suit as per averments in the plaint itself was not maintainable and should not have been entertained is, that the plaintiff, though pleading breach of contract i.e. Lease Deed and the Maintenance Agreement by the defendant and without pleading any loss from such breach, is seeking relief in the nature of specific performance and which is not permissible in law. The Lease Deed was not specifically enforceable at the instance of the plaintiff as the landlord and on breach of the Lease Deed by the defendant as tenant, by vacating the premises before expiry of the term thereof, the plaintiff was entitled to only damages for breach of contract and the measure of which damages was the loss if any suffered by the plaintiff. However, the plaintiff was required to plead such loss and no loss has been pleaded.

11. The position with respect to rent of lock-in period is akin to that of earnest money/security and qua which the Supreme Court in Kailash Nath Associates Vs. Delhi Development Authority MANU/SC/0019/2015 : (2015) 4 SCC 136, followed by me in Speed Track Cargo Vs. State Bank of Patiala MANU/DE/0359/2016, Palm Art Apparels Pvt. Ltd. Vs. Enkay Builders Pvt. Ltd. MANU/DE/3533/2017, Mera Baba Pvt. Ltd. Vs. Ram Lubhaya Puri MANU/DE/2199/2018, Klintoz Pharmaceuticals Pvt. Ltd. Vs. Ravinder Shankar Mathur MANU/DE/3733/2018, Satish Verma Vs. Garment Craft (India) Pvt. Ltd. MANU/DE/7859/2017 and Mahendera Verma Vs. Suresh T. Kilachand MANU/DE/2352/2019, held that mere entitlement in the agreement to forfeit is not enough and loss/damages from breach of contract has to be proved. In fact, the matter is no longer res integra. The Division Bench of this Court in Tower Vision India Pvt. Ltd. Vs. Procall Pvt. Ltd. MANU/DE/4958/2012 has held that rent of the lock-in period in a Lease Deed cannot be claimed without pleading loss from vacation by the tenant of the property prior to the expiry of the term of lease. 

IN THE HIGH COURT OF DELHI

CS (OS) 3032/2014

Decided On: 06.01.2020

 Deepak Chopra  Vs.  Flakt (India) Pvt. Ltd.

Hon'ble Judges/Coram:

Rajiv Sahai Endlaw, J.

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Whether lessor can adjust money paid by lessee contrary to terms of lease deed?

 So far as the payment made by Petitioner towards lease premium and interest and adjustment thereof by Respondent No. 1 is concerned, Mr. Samdani relied upon the decision of the Apex Court in Industrial Credit Development Syndicate v. Smithaben H. Patel (MANU/SC/0092/1999 : (1999) 3 SCC 80 : (AIR 1999 SC 1036)) to contend that Respondent No. 1 was right in adjusting the amount paid by the Petitioner firstly towards the penal interest, then towards the interest and lastly towards the principle. Having gone through said decision, we are unable to buy the submission of Mr. Samdani. The Apex Court in this case was considering the question as to how the adjustment is to be made by the decree-holder under various heads comprising of principle, cost and interest. The Apex Court held that the payment has to be adjusted strictly in accordance with the direction of the Court, if any and in the absence of such direction the adjustment has to be made subject to an agreement to the contrary between the parties, firstly towards the interest and cost and thereafter towards the principle amount. The Apex Court was dealing with a situation about the adjustment of principle, cost and interest in pursuance of the decree of civil Court. So far as the present case is concerned, the liability of the parties has arisen in out of purely contractual obligation to pay interest, penal interest and premium as specified by clause 2(a) of the said supplementary lease deed. This clause does not stipulate that the payment by Petitioner is to be adjusted firstly towards the penal interest, then towards the interest and lastly towards the lease premium. The said clause simpliciter puts obligation on the part of the petitioner to pay lease premium in 4 annual equal installments with simple interest @ 10% per annum and in the event of delay in payment of installment, to pay penal interest at the prevailing prime lending rate decided by the RBI. Be that as it may, the Petitioner has annexed at Exhibit-D various receipts issued by Respondent No. 1 acknowledging the payment thereof. These receipts acknowledge the Petitioner's payment either to the lease premium or towards the interest or towards the penal interest. In short, whatever payment made by the Petitioner is specifically accepted by Respondent No. 1 either towards the lease premium or interest or penal interest. Now, therefore, it is not permissible for Respondent No. 1 to take a contrary stand. In our view, Respondent No. 1 cannot be permitted to act arbitrarily and therefore Respondent No. 1 shall adjust the said amount paid by the Petitioner as per the acknowledging receipts given by them.

9. As far as payment of penal interest is concerned, the issue is whether Respondent No. 1 can unilaterally seek to charge 4% additional interest over and above the agreed RBI prime lending rate. In our prima facie opinion, the Respondents are bound by the terms of mutually agreed and as recorded in the supplementary lease deed dated 29th October, 2013. The mutually agreed rate of penal interest is as per the RBI prime lending rate. Respondent No. 1 however by issuing the impugned circular dated 19th August, 2018 decided to charge penal interest at 4% over and above the prime lending rate. In this circular itself the prime lending rate is prescribed by Respondent No. 1 at 9.55% from 1st July, 2018. When there is mutual contract between the parties, the terms of this contract cannot be unilaterally changed. In our prima facie opinion, therefore, the Respondents are not entitled to charge 4% penal interest over and above the prime lending rate.

IN THE HIGH COURT OF BOMBAY

Writ Petition Ld. No. 212 of 2019

Decided On: 20.02.2019

Raghuleela Builders Private Limited Vs. Mumbai Metropolitan Region Development Authority and Ors.

Hon'ble Judges/Coram:

R.V. More and Bharati H. Dangre, JJ.

Citation: AIR 2019(NOC) 827 Bom

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Whether society can challenge lease deed signed by its president?

If it is the plaintiff's case that the President in fact did not have such authority because the subject was one which was prescribed in the internal statute of the society, it was indeed for the plaintiff to produce and prove such internal statute. Neither in the Trial Court nor in this Court is there any attempt made by the plaintiff to produce or prove any such internal statute. In the premises, it must assumed that such internal statue entailing restrictions on the President to act or take initiative in the matter does not exist.

11. Learned Counsel for the respondent-plaintiff is not right in submitting that the onus in such a case is upon the defendants, who assert the existence of such authority in the President. The lease is an executed act here; it has been a registered Lease Deed. If it is the case of the plaintiff that this Lease Deed was executed on its behalf by someone who did not have the authority to do so, it is for the plaintiff to prove such a case at the trial. The question of burden of proof really goes by this primary consideration: If no evidence were to be led before the Court at the trial, who would lose? It is a foregone conclusion that in our case, if there were no evidence before the Court, it is the plaintiff who would fail. The onus to show lack of authority and vitiation of the subject Lease Deed on that account was, in that case, clearly on the plaintiff as someone who questioned the execution of that deed.

12. There is one more reason why the onus was on the plaintiff in the present case. Under Section 106 of the Evidence Act, the burden of proving any fact which is especially within the knowledge of any person is upon that person. Its own internal statute was a matter which was clearly within the special knowledge of the plaintiff. If it was its case that having regard to this internal statute, the executant of the deed could be said to be lacking in authority to do so, it was indeed for it to prove such fact. The plaintiff, as we have noted above, has made no such attempt. The internal statute has, in fact, till date, not seen the light of the day.

 IN THE HIGH COURT OF BOMBAY AT GOA

First Appeal Nos. 6 and 8 of 2010

Decided On: 20.06.2019

 Kantu Shankar Dessai  Vs. Sociedade Agricola Dos Gauncares De Cuncolim E Veroda and Ors.

Hon'ble Judges/Coram:

S.C. Gupte and Prithviraj K. Chavan, JJ.

Citation: 2019(6) MHLJ 910

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How to ascertain when tenant should pay rent to landlord in absence of lease deed?

 The next contention of Learned Counsel for the Defendant was that the rent was payable on demand. Evidently no Lease Deed existed between the parties. The Plaintiff could furnish no document to establish that the rent was payable by the 10th of the succeeding month, similarly the Defendant was not in possession of any document to prove that rent was payable on demand. In the absence of such a document it is relevant to resort to the provisions of Section 106 of the Transfer of Property Act, 1882 (hereinafter "the TP Act"), which inter alia provides that in the absence of a contract or local law or usage to the contract, a lease of immovable property shall be deemed to be a lease from month to month terminable on the part of either a lesser or lessee by fifteen days" notice. I hasten to add that the Act of 1956 envisages no notice for eviction of a tenant, it merely requires proof of default in rent for four months or more hence Notice is not a mandate under the Act of 1956. Therefore, on applying the provisions of Section 106 of the TP Act it is evident that the tenancy shall be presumed to be a tenancy on a month to month basis. In this view of the matter, irrespective of lack of demand for payment of rent by the Plaintiff to the Defendant, it became incumbent upon the Defendant to pay the rent either at the end of the month or by the next month as was the practice, even if it was beyond the 10th of the next month. 

IN THE HIGH COURT OF SIKKIM AT GANGTOK

RFA No. 10 of 2016

Decided On: 01.10.2018

 Taramani Devi Agarwal Vs.  Krishna Company

Hon'ble Judges/Coram:

Meenakshi Madan Rai, Actg. C.J.

Citation: 2019(1) RCR(Rent) 38

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Whether provisions of Maharashtra rent control Act is applicable if open space is given on lease with permission to make construction on it?

Appellant/defendant was inducted as tenant vide registered lease-deed dated 21st December, 1970 in the land bearing Survey No. 182, 182-A, C.T.S. No. 5923 to 5951 admeasuring 2086.04 sq.mtrs. ('Suit Property' for short). The lease was of open land and the lessee was permitted to raise construction with a rider that upon expiry of lease period, he shall remove construction at his own cost. Lease period was for 30 years, which came to end on 31st December, 2000. 

Thus, taking into consideration facts of the case and the law laid down by the Apex Court as well as by this Court in aforesaid two cases and for the reasons stated here-in-above, suit property was not "Premises" within the meaning of Section 7(9) of the Maharashtra Rent Control Act, 1999 and, therefore, suit for eviction filed under the general law of the Transfer of Property Act, 1882 was maintainable and as such, provisions of the Maharashtra Rent Control Act were not applicable as the lease in question was for open plot. 

IN THE HIGH COURT OF BOMBAY

Second Appeal No. 638 of 2014

Decided On: 03.05.2019

 Narendra Harilal Jethwa  Vs.  Bholadasji Mandir and Ors.

Hon'ble Judges/Coram:

Sandeep K. Shinde, J.

Citation: 2019(6) MHLJ 885

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Whether a party can adduce evidence as per S 92 of Evidence Act that registered lease deed was never intended to be acted upon?

The learned counsel appearing for the petitioners heavily relied upon judgment of the Hon'ble Supreme Court in the case of M/s. Raval and Co. vs. K.G. Ramachandran reported in MANU/SC/0416/1973 : (1974) 1 Supreme Court Cases 424, to contend that the Courts below could not have gone into the question of validity of the registered lease deed dated 17.07.1995 (Exh. 184) on the basis of unregistered document like the letter dated 27.07.1995 (Exh. 178), because the terms of a registered document executed between the parties ought to prevail and the parties could not be permitted to lead evidence to disprove such terms of registered document. In this context, the position of law pertaining to the exact nature of bar under Section 92 of the Evidence Act has been considered by this Court in the case of Vijay Laxmipati Dasari vs. Laxmibai Ramayya Bolabattin reported in MANU/MH/1832/2016 : 2017(3) ALL Mr. 567, wherein it has been laid down that the power under Section 92 of the Evidence Act would not apply when a party seeks to disprove the contract itself or to prove that the document was not intended to be acted upon and that the intention was totally different. It has been held that the bar applies only when oral evidence is sought to be led to disprove the terms of a contract. While laying down the said position of law, this Court has relied upon judgment of the Hon'ble Supreme Court in the case of R. Janakiraman vs. State reported in MANU/SC/0001/2006 : AIR 2006 S.C. 1106. In the said judgment, the Hon'ble Supreme Court has held as follows:-

"11.6. We may cull out the principles relating to section 92 of the Evidence Act, thus:-

i) Section 92 is supplementary to section 91 and corollary to the rule contained in section 91.

ii) The rule contained in section 92 will apply only to the parties to the instrument or their successors-in-interest. Strangers to the contract (which would include the prosecution in a criminal proceeding) are not barred from establishing a contemporaneous oral agreement contradicting or varying the terms of the instrument. On the other hand, section 91 may apply to strangers also.

iii) The bar under section 92 would apply when a party to the instrument, relying on the instrument, seeks to prove that the terms of the transaction covered by the instrument are different from what is contained in the instrument. It will not apply where anyone, including a party to the instrument, seeks to establish that the transaction itself is different from what it purports to be. To put it differently, the bar is to oral evidence to disprove the terms of a contract, and not to disprove the contract itself, or to prove that the document was not intended to be acted upon and that intention was totally different."

14. Thus, it becomes abundantly clear that merely because Exh. 184 in the present case was a registered lease deed, it could not be said that the respondents were prohibited under Section 92 of the Evidence Act, to lead evidence to show that the said lease deed was never intended to be acted upon. Therefore, it becomes clear that the petitioners cannot contend that once the document at Exh. 184 was a registered document, the Court could not examine the contentions raised on behalf of the respondents at all.

IN THE HIGH COURT OF BOMBAY (NAGPUR BENCH)

Writ Petition No. 4777 of 2014

Decided On: 30.04.2019

Orbit Super Market Private Limited  Vs. Mukta Arvind Bobde and Ors.

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How to ascertain whether particular agreement is lease deed or leave and licence agreement?

Here, the residential portion was let out only as a stopgap

arrangement, and the licence was terminable on the happening of a

contingency. That contingency—the return of the landlady’s son—will

terminate the agreement, the agreement period notwithstanding.

Besides that, there have been restrictions on the use: for example, how

and only for what purpose the bathroom could be used.

70. In Tulsi, the Supreme Court has held that a licensee gets the

possession only with the consent of the licensor and is liable to vacate

when so asked. Then, Shrikant contends that he has had uninterrupted

possession. According to him, though the alleged licence expired in

1989, until 1994 his possession had not been disturbed. That said, once

it is a licence, merely because the licensor has not asked the licencee to

vacate soon after the licence period does not transform the licence into

lease. The length of the period is not, I must say, a determinative factor.

71. In Achintya Kumar Saha, the Supreme Court has reiterated

that the nature of lease and licence to be gathered from surrounding

circumstances. In Amratlal Valji, this Court has relied on the Supreme

Court’s proposition in C.M. Beena’s case. It has held that the difference

between lease and licence is to be determined based on the document

and surrounding circumstances.

(b) What sort of possession does the occupier have?

72. Shrikant contends that it would have been impossible for him

to enjoy the property, had he not been in possession. A person’s

occupying a residential property speaks volumes about that occupier’s

possessing the property, and enjoyment without possession, according

to him, is unthinkable and impracticable.

73. In this context, I may note that there are many shades of

possession: say, corporeal possession, incorporeal possession,

constructive possession, adverse possession, de facto possession, de jure

possession, mediate possession, and immediate possession. Indeed,

immediate possession is a direct or primary possession. The person in

direct possession has a higher control over the thing possessed. It means

there is no intermediary or medium. On the contrary, if someone

possesses something through another, the thing remains in possession

of another. That is, the possessor has a lesser control over the thing he

has physically possessed, though.

74. Lexically speaking, ‘possession’ is a chameleonhued

word. G.

W. Paton in his A Textbook of Jurisprudence has ‘pessimistically states’

that the search for its proper meaning is likely to be a fruitless one.[26]

The expression 'possession' is a polymorphous term which assumes

different colours in different contexts. It may carry different meanings

in contextually different backgrounds. It is impossible, as was observed

in Superintendent & Remembrancer of Legal Affairs, West Bengal v. Anil

Kumar Bhunja[27], to work out a completely logical and precise

definition of "possession" uniformly applicable to all situations in the

context of all statutes.

75. As noted in Gunwantlal v. The State of M.P.[28], possession in

a given case need not be physical possession but can be constructive,

having power and control over the article in case in question, while the

persons to whom physical possession is given holds it subject to that

power or control. That is, the word 'possession' means the legal right to

possession. In an interesting case, it was observed that where a person

keeps his firearm in his mother's flat which is safer than his own home,

he must be considered to be in possession of the same. (See Sullivan v.

Earl of Caithness.[29]

76. Here, I must hold that what Shrikant has is mediate

possession, like the mother’s possessing the son’s firearm in Sullivan. To

conclude, his possession is mediate and permissive.

IN THE HIGH COURT OF JUDICATURE AT BOMBAY

CIVIL APPELLATE JURISDICTION

WRIT PETITION NO. 2219 OF 2006

Shrikant Dattatraya Deshpande  Vs  Shalini Waman Bhat 

CORAM

: DAMA SESHADRI NAIDU, J.

DATE OF PRONOUCEMENT : 13th September 2019.

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Whether suit for specific performance of contract is tenable before small causes court?

In the case of (ING Vysya Bank Ltd. v. Modern India Ltd.), MANU/MH/0066/2008 : 2008 (2) Bom. C.R. 255 the learned single Judge of this Court considered an application in section 9 of the Arbitration and Conciliation Act, 1996 for granting interim relief to a licensee against the licensor from terminating his license and taking over possession. In that case also the licensee claimed to be in possession of the licensed premises which was later renewable and consequently the right of extension/renewal of the license was claimed under the agreement. The respondent claimed that the application was essentially for specific performance of the agreement which relief could not be granted by the Court of Small Causes at Bombay under section 19(h) of the Act.

The Court considered that the substance and essence of the suit as required to be seen, to look to the kernel and not the chaff and to see the jural relationship between the parties upon the nature of the cause of action and the character of the reliefs. The Court also observed that in a suit relating to recovery of possession some of the reliefs may be structured around a claim for specific performance. If the theme and the foundation relate to recovery of possession such a relief could not be seen an isolation. Consequently the Civil Court's jurisdiction would have to be considered upon seeing the substance of the suit. The Court further observed that the basis to protect the possession against the dispossession in a preexisting relationship was important to consider and if that relationship was between the licensor and licensee (as also landlord and tenant or lessor and lessee) then the substance of the claim would be to protect the possession against recovery which would be a suit relating to possession. Hence it is observed in para 17 of the judgment that only a suit for specific performance simplicitor would not be covered. But if the suit was not for specific performance but essentially for continuation of the existing leasehold right it would be covered by the aforesaid legislation.

The Court noted that one of the reliefs was the execution of fresh leave and license agreement upon the declaration sought and not a bare relief of specific performance. Consequently it held that the Civil Court would be barred from trying such a suit.

IN THE HIGH COURT OF BOMBAY

Chamber Summons (L) No. 1075 of 2015 in Suit No. 1930 of 2002

Decided On: 26.06.2015

 Manilal & Sons Bombay Forigings Ltd. Vs. Manilal & Sons

Hon'ble Judges/Coram:

R.S. Dalvi, J.

Citation: 2016 Bom RC183.

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Whether it is necessary to adduce oral evidence to prove terms of lease deed?

 Section 91 of the Indian Evidence Act deals with evidence of terms of contracts, grants and other dispositions of property reduced to the form of documents. The lease deed is a document within the meaning of Section 91 and, therefore, no amount of oral evidence is required for elucidation of the terms and conditions stipulated under the said lease deed. The document speaks for itself. So also Section 92 is relevant in the present case which relates to exclusion of evidence of oral agreement. When the document itself is admitted, no oral agreement can improve the defendant's case.

IN THE HIGH COURT OF CALCUTTA

G.A. No. 1058 of 2016 and C.S. No. 100 of 2009

Decided On: 14.02.2018

Kanak Projects Limited  Vs.  Hooghly Printing Company Limited

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