TMI Blog1998 (9) TMI 666X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 16th March, 1964. This lease was for a period of 21 years commencing from 16th March, 1964 and ending on 15th March, 1985. On the expiry of the said period, the respondent-plaintiff alleging to be a registered partnership firm, filed the aforesaid suit praying for a decree for possession as well as damages @ ₹ 200 per day for illegal occupation of the premises by the appellant-defendant. The defence of the appellant- defendant was that after the expiry of the lease period, it had continued to be a tenant by acceptance of rent by the defendant-landlord and hence it had become a tenant by holding over under Section 116 of the Transfer of Property Act, 1882 (for short 'the Property Act'). Further defence was taken by the appellant-defendant by way of a separate application seeking dismissal of the suit under Order 7 Rule 11(d) of Code of Civil Procedure (for short 'CPC') on the ground that the suit for possession as filed by the plaintiff-respondent, which was an unregistered partnership firm, was not maintainable. Learned Trial Judge, framed relevant issues on the pleadings and came to the conclusion that the defendant-appellant was not a tenant holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was already at an end by efflux of time and that the suit was not based on any of the contractual terms. Reference to the said contract or any of its clauses was purely for mentioning a historical event for supporting the plaintiff's case for decision and such factual narration of past events did not form the foundation of the plaint nor did they Form part of the cause of action. In the alternative, it was contended by Dr. Singhvi that even assuming that the suit could be said to have been partly based on any Of the terms of the contract so as to attract the bar of Section 69(2) of the Partnership Act, this Was in fact based on two causes of action; (i) on the covenant contained in the erstwhile contract; (ii) on the law of the land, namely, common law as well as Section 111(a) read with Section 108 (q) of the Property Act and so far as this latter cause of action is concerned, it cannot in any way be said to be arising out of the contract. Hence the said cause of action was not in any way hit by Section 69(2) of the Partnership Act, He lastly contended without prejudice to his aforesaid contentions that even if a view is taken that the suit as a whole was hit by Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) Such a suit must be for enforcement of a right arising from a contract of the firm with such a third party. Chapter VII of the Partnership Act deals with registration of firms. As per Section 56 thereof the State Government of any State may, by notification in the Official Gazette, direct that the provisions of this Chapter shall not apply to that State or to any part thereof specified in the notification. It is not the case of any party that any such exemption has been granted so as not to make applicable the said Chapter to the pending controversy be-tween the parties. As per Section 57, the State Government may, by notification, appoint a Registrar of Firms for the purpose of the Act. As per Section 58, the registration of a firm can be effected at any time by sending by post or delivering to the Registrar of the area in which any place of business of the firm is Situated or proposed to be situated, for the purpose of getting the firm registered by furnishing relevant data as required by the said Section. As per Section 59, when the Registrar is satisfied that provisions of Section 58 have been duly complied with, he shall record an entry of the statement in a register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint for deciding whether on the averments in the plaint; the suit can be said to have been barred under Section 69 sub-section (2) of tie Partnership Act as that is the only bar which is relied upon by the learned senior counsel for the appellant for non-suiting the plaint. The plaint in the present case is a very short one consisting of five paragraphs. It would, therefore, be appropriate to reproduce these paragraphs. They are as under : 1. The defendant was a Lessee under the plaintiff in respect of ground floor of the main building (except the stair-case and common spaces) as premises No, 6, Marquis Street, Calcutta, butted and bounded as given in the schedule hereunder at a monthly rent of ₹ 2045 payable according to English Calendar month for a term of twenty one years commencing from 16th March, 1964 and ending on 15th March, 1985 under a Registered Lease dated 16th March, 1964. 2. The said lease dated 16th March, 1964 in respect of the suit-premises terminated by efflux of time on the expiry of 15th March, 1985 but the defendant has failed and neglected to quit, vacate and deliver up peaceful possession of suit premises to the plaintiff as required under the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of this Court in Ram Sarup Gupta (Dead) by Lrs. v. Bishun Narain Inter College Ors., [1987] 2 SCC 555 at page 562, wherein it is observed that: The pleadings however should receive a liberal construction; no pedantic approach should be adopted to defeat justice on hair-splitting technicalities. Keeping in view this settled legal position, let us see what has the plaintiff alleged in the suit as the basis of its cause of action. This can be culled out on a conjoint reading of all the aforesaid paragraphs of the plaint. So far as the first paragraph is concerned, it is obvious that the plaintiff has relied on background facts for introducing its case against the defendant. It has traced the History of the relations between the parties and has tried to show how the defendant came to occupy the suit premises. Reference to registered lease of 16th March, 1964 in the first paragraph, therefore, cannot be said to be the foundation of the right to sue as tried to be got enforced by the plaintiff through the machinery of the court. It is not possible to agree with the contention of the learned senior counsel Shri Nariman for the appellant that the first paragraph shows the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was trying to enforce solely its right arising out of the erstwhile contract. However, the very same paragraph proceeds further and states in the last line thereof that the defendant had not vacated the premises under the law of the land. This raises the moot question whether the plaint as framed is based on two causes of action or only on one solitary cause of action as submitted by Shri Nariman, learned senior counsel for the appellant-defendant. Dr. Singhvi, learned senior counsel for the plaintiff at the outset submitted that the recitals in paragraph 2 regarding the covenants was by way of a historical fact arid the suit is purely based on the law of the land, namely, the Common Law as well as Section 108(q) read with Section 111(a) of the Property Act. While Shri Nariman for the appellant took an entirely opposite stand by submitting that these very recitals in paragraph 2 show that the suit as based solely on the right arising from the alleged breach of covenant by defendant and the reference to law of the land is by way of abundant caution. As we shall see hereinafter, neither of these extreme covenants can be countenanced. Turning to paragraph 3, it is no doubt true as su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per-son) not entitled to position etc. occupied; It is, therefore, obvious that recitals in paragraph 3 can support the case of the plaintiff both on the ground, if any, that the defendant had committed breach of the covenant and therefore, it was in wrongful occupation and also equally on the ground that under law of the land, the defendant was not entitled to continue in possession after the termination of the period of lease and, therefore, it was in unlawful or wrongful occupation. The words wrongful occupation cannot, therefore, be interpreted to mean only 'in breach of any of the terms and conditions of the contract' and can legitimately take in its sweep unlawful occupation after the lease expired on efflux of time as per Section 111 (a) of the Property Act read with Section 108(q) thereof. The restricted meaning of the term 'wrongful occupation as tried to be suggested by Shri Nariman cannot be accepted. On the contrary, the claim of mesne profits @ ₹ 200 per day as found in paragraph 3 of the plaint clearly shows that the plaintiff treated the defendant to be in unauthorised and illegal occupation after the efflux of time of the lease and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the arbitration clause formed a part of the agreement constituting the partnership it is obvious that the proceeding which is before the Court is to enforce a right which arises from a contract. Whether one views the contract between the parties as a whole or one views only the arbitration clause it is impossible to think that the right to proceed to arbitration is not one of the rights which are founded on the agreement of the parties. So far as the aforesaid decision is concerned, it has to be noted that when an application is moved under Section 8 sub-section (2) of the Arbitration Act for appointment of an arbitrator, such an application has necessarily to be based on the arbitration clause which is a part of the main contract between the parties. Such an application was. therefore, rightly held to be having a direct nexus with the main contract between the parties which covered the arbitration clause. In the facts of the present case, we fail to appreciate how this decision can be of any assistance to Shri Nariman. In the present suit by erstwhile landlord against the erstwhile tenant the claim for possession by itself has nothing to do with the contract of tenancy which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tifies such an inference must always depend upon the facts of each case. Occupation of premises by a tenant whose tenancy is determined is by: virtue of the protection granted by the statute and not because of any right arising from the contract which is deter-mined. The statute protects his possession so long as the conditions which justify a lessor on obtaining an order of eviction against him do not exist. Once the prohibition against the exercise of jurisdiction by the court is removed, the right to obtain possession by the lessor under the ordinary law springs into action and the exercise of the lessor's right to evict the tenant will not unless the statute provides otherwise, be conditioned. (Emphasis supplied) He also invited our attention to another decision of this Court in M.C. Chockalingam Ors. v. V. Manickayasagam Ors., [1974] 1 SCC 48, wherein Goswami, J, speaking for the Court considered the question Whether a contractual tenant after the termination of the tenancy can be said to be in lawful possession of the cinema theatre and would be entitled to renewal of cinema licence as per Rule 13 of the relevant rules. Considering the status of the erstwhile tena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be created by contract and arises only by implication of law when a person who has been in possession under a lawful title continues in possession after that title has been determined, without the consent of the person entitled. A tenancy at sufferance does not create the relationship of landlord and tenant. At page 769, it is stated regarding the right of a tenant holding over thus : The Act of holding over after the expiration of the term does not necessarily create a tenancy of any kind. If the lessee remaining in possession after the determination of the term, the common law rule is that he is a tenant on sufferance. The expression holding over is used in the sense of retaining possession. A distinction should be drawn between a tenant continuing in possession after the determination of the lease, without the consent of the landlord and a tenant doing so with the landlord's consent. The former is called a tenant by sufferance in the language of the English law and the latter class of tenants is called a tenant holding over or a tenant at will. The lessee holding over with the consent of the lessor is in a better position than a mere tenant at will. The tenancy on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was no evidence to show that he was a tenant by holding over, had continued in occupation as a tenant at sufferance. However, the nature of the right sought to be enforced by the plaintiff has to be culled out from the recitals in the plaint even against such a tenant at sufferance. Once this stage is reached in the course of arguments of learned counsel for the parties, it becomes at once necessary to see as to whether the relevant recitals in the plaint as seen by us earlier can be said to have referred to the erstwhile contract between the parties purely by way of a historical event or Whether the plaintiff sought to base its cause of action for possession on any of the terms of the contract and or on provisions of general law simpliciter. Dr. Singhvi for the respondent- plaintiff in support of his case submitted that reference to the covenant of the lease as found in paragraph 2 was purely of a historical nature, and it only meant that after the expiry of 15th March, 1985 when the contract was determined by efflux of time on that date, the defendant had not acted according to the covenant of the contract on expiry of 15th March, 1985 but that was purely a historical event wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he present case we are not concerned with any of the other clauses of Section 111. We confine the present decision only on the aforesaid mode of determination of lease of immovable property by efflux of time. It is obvious that such a lease gets determined by efflux of time. The determination is automatic and does not depend upon any Act either on the part of the landlord or on the part of the tenant. When such automatic statutory determination of lease takes place, Section l08(q) gets simultaneously attracted against the erstwhile lessee. Section 108 of the Property Act deals with rights and liabilities of lessors and lessees. The said Section, reads as under: 108. In the absence of a contract or local usage to the contrary, the lessor and the lessee of immovable property, as against one another, respectively, possess the rights and are subject to the liabilities mentioned in the rules next following, or such of them as are applicable to the property leased : A. Rights and Liabilities of the Lessor. It is, therefore, obvious that a statutory obligation is foisted on the lessee on the determination of the lease which earlier existed in his favour. Therefore, on a conjoint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed, on the determination of the tenancy, is inherent in the very relationship of landlord and tenant and will be implied by the law. This is known as the rule in HENDERSON v. SQUIRE, (1869) LR 4 QB 170. The duty of the tenant upon the determination of the tenancy ............... is simply to yield up peaceable and complete possession of the premises demised to him together with all fixtures except those which he is entitled to remove.... This duty will be implied in law if not expressed in the contract between the parties and the tenant will not discharge the duty by merely going out of possession unless he restores possession to the landlord For on the Relation-ship of Landlord and Tenant, 6th Ed. P 838: A lease Usually contains a covenant on the part of the lessee to deliver up the premises on the determination of the term. In the absence of such a covenant or of any express stipulation, the tenant is under an implied contract to restore possession to the landlord . The complete Law of Landlord Tenant by Redman, edited by Hill, 8th Ed. (1939) p. 459. See also VENKATESH NARAYAN v, KR1SHNAJI ARJUN, 8 Bom. 160. Section 108(q) of the Transfer of Property Act has recog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contracting party would be based on such legal obligation and cannot be said to be laying down any inconsistent but legally permissible contractual term. In this Connection Shri Nariman, learned senior counsel for the appellant also invited our attention to the observations in Foa's General Law of Landlord and Tenant, 8th Edn., at page 711. It has been observed by the learned author in paragraph 1083 of Chapter 2 dealing with Rights and Remedies of the Landlord that : Subject to the provisions of the Rent Restriction Acts and to any stipulation or local custom to the contrary (a), and to the right conferred upon him in lieu of emblements by statute (b), the duty of the tenant upon the determination of the tenancy is to yield up peaceable and complete (c) possession of the premises demised to him, together with all fixtures except those which he is entitled to remove; and after entry and demand of possession by the landlord, or any Act upon such entry showing an intention to resume possession, the tenant and all persons claiming under him are liable to be treated as trespassers (d). This duty will be implied in law if not expressed in the contract; between the parties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efficacy of the statutory obligation foisted upon such a lessee by the express provisions of Section 108(q) read with Section 111(a) of the Property Act. So far as the applicability of the bar of Section 69 sub-section (2) of the Partnership Act is concerned, it is true that it is a penal provision which deprives the plaintiff of its right to get its case examined on merits by the court and simultaneously deprives the court of its jurisdiction to adjudicate on the merits of the controversy between the parties. It will, therefore, have to be strictly construed. It is also true that once on such construction of this provision the bar under Section 69(2) of the Act gets attracted, then the logical corollary will be that the said provision being mandatory in nature would make the suit incompetent on the very threshold. Consequently, it is not necessary for us to examine various decisions of this court Tendered in connection with Section 80 of the CPC or Section 77 of the Indian Railways Act to which our attention was invited by learned senior counsel Shri Nariman. We my proceed on the basis that for sustaining a suit which falls within the sweep of Section 69 sub-section (2), the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stwhile tenant as statutorily imposed on him under Section 108(q) read with Section 111(a) of the Property Act. The non-compliance of the statutory obligation by the defendant when made subject matter of corresponding legal right of the erstwhile landlord cannot be said to be giving rise to enforcement of any contractual right of the plaintiff arising from the expired contract of tenancy. As seen earlier, the controversy would have clearly ended in favour of the respondent and against the appellant if the plaint has referred to only the law of the land under which the defendant was required to be evicted on the expiry of the lease. But unfortunately for the plaintiff the suit is also based on the breach of the covenant of the lease as scen from paragraph 2 of the plaint. It is, therefore, not possible to interpret the averments with reference to the covenant of the lease only as referring to a historical fact as tried to be Submitted by Dr. Singhvi for the respondent. The net effect of this discussion, therefore, is that the plaint as framed by the plaintiff respondent is based on a composite cause of Action consisting of two parts. One part refers to the breach of the covenant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Contract Act, 1872. But that would also be subject to the rider that such an inconsistent contract should not be inconsistent with the provisions of the Indian Contract Act. Thus in absence of any contrary provision in the contract, Section 108 will operate on its own. If there is any contrary provision in the contract it will prevail over the provision in Section 108, provided such contrary provision in the contract is not inconsistent with the main provision of the Indian Contract Act. The combined operation of Section 108 and Section 4 of the Property Act and Section 1 of the Indian Contract Act can be better visualised by illustrations. Clause (b) of Part A of Section 108 deals with statutory rights of lessor to put the lessee in possession of the property leased at the lessee's request That is the mandate of the aforesaid statutory provision. This statutory right of the lessee and Corresponding liability of the lessor can be subject to a contract to the contrary. If under the contract of lease the parties have agreed to a stipulation that the lessor will put the lessee in possession after a period, say, three or four months within which the lessor will effect necessary r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contract to the contrary which permitted the lessee to continue in possession after the determination of lease by efflux of time even for a day more. In this connection, we may usefully refer to a decision of this court While interpreting the phrase contract to the contrary as found in Section 108 of the Property Act, this court in the case of Madan Lal v. Bhai Anand Singh Ors., [1973] 1 SCC 84, speaking through Shri Beg. J., held that if the tenant on determination of lease wants to show that he is not bound to hand over the vacant possession forthwith to the landlord as he has paid the market value of the construction put in by him on the leased premises, there should be an express term to the contrary in the contract of tenancy which would override Section 108(q) obligation and as in the case before this court there was no such express term to the contrary in the lease deed it was held that the obligation under Section 108(q) had to be complied with by the tenant. In this connection following pertinent observations were made in paragraph 4 of the Report as under: .If this had really been the intention of the parties, there was nothing to prevent them from inserting such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the provisions of Section 108(q) read with Section 111 (a) of the Property Act which in turn also sought to enforce the corresponding statutory Obligation of the defendant under the very same statutory provisions. So far as this part of the cause of Action is concerned it stands completely outside the sweep of Section 69 sub- section (2) of the Partnership Act. The net result to this discussion is that the present suit Can be said to be partly barred by Section 69- sub- section (2) so far us it sought to enforce the obligation of the defendant under Clauses 14 and 17 of the contract of lease read with the relevant recitals in this connection as found in paragraph 2 of the plaint. But it was partly not barred by Section 69 sub -section (-2) in so far as the plaintiff based a part of its cause of Action also on the law of the land, namely, Transfer of Property Act where under the plaintiff had sought to enforce its statutory right under Section 108(q) read with Section 111 (a) of the Property Act. Enforcement of the right had nothing to do with the earlier contract which had stood determined by efflux of time. The first point for determination therefore, has accordingly, to be hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned senior counsel for the respondent Dr. Singhvi submitted that so far as the High Courts decisions are concerned, the Nagpur High Court in Jakiuddin Badruddin Ors. v. Vithoba Jagannath Gadali Anr., AIR (1939) Nagpur 301 and Lahore High Court in Nazir Ahmad Ors. v. Peoples Bank of Northern India Lid., (in- liquidation) through Official Liquidator Ors., AIR 29 (1942) Lahore 289 had taken a contrary view. However, Shri Narirnan for the appellant joined issue on this point and submitted that the aforesaid decision of the Nagpur High Court was not accepted by a latter decision of the same High Court in Abdul Karim v. Ramdas Narayandas Shop, ILR (1951) Nagpur page 31 and the aforesaid Lahore decision was expressly dissented to by two later decisions of the Punjab High Court in Des Raj Prem Chand Anr. (Firm) v, Hira Lal Kali Ram Anr. (Firm), AIR (1952) Punjab 415 and in Puran Mal Ganga Ram (Firm) v. The Central Bank of India Ltd., AIR (1953) Punjab 235. So far as this Court's decisions on this point were concerned Dr. Singhvi appearing for respondent submitted that in The Commissioner of Income Tax, Andhra Pradesh, Hyderabad v. M/s. Jayalakshmi Rice and Oil Mills C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise it had not taken into considera-tion various salient features of such litigations, According to Dr. Singhvi the salient features which were required to be considered were as under : (i) Subsequent registration of the firm would serve the purpose of the Section namely, to enable only registered Firms to file such suits; (ii) Even if subsequently registered the firm would get the suit revived from the date of such registration sufficient penalty would get imposed on the plaintiff firm as it would loose more than three years mesne profits from the date of registration and other financial benefits prior to such a reviving as such subsequent register would have no retrospective effect. (iii) the overriding need for such a liberal view would be to avoid unnecessary multiplicity of proceedings based on mere technicalities'. In this connection it was submitted that even though the suit is found to be barred under Order 69 Rule (2) of the Partnership Act and, therefore, the plaint gets rejected under Order 7 Rule 11(d), as per Order 7 Rule 13 fresh suit can always be filed on the same cause of Action leaving aside the further question whether the said defective suit cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prior leave of the Court. It was held in the said decision that if such a suit was filed by a receiver and if subsequently leave was obtained it would validate the suit. Krishna Iyer, J., noted that filing of the suit without leave of the Court would amount to contempt of the court and still subsequently obtained leave would cure the defect and remove the sin. In paragraph 11 of the Report it was observed that ; Once amends are made by later leave being obtained, the gravamen is gone and the suit can proceed. The pity is that sometimes even such points are expanded into important questions calculated to protract Indian litigation already suffering from un-healthy longevity. Placing reliance on these decisions of this Court, it was submitted by Dr. Singhvi that the decision of this Court in [1989] 3 SCC 476 (supra) requires to be reconsidered. We, prima fade, find substance in what is contended by Dr. Singhvi for the respondent. It is obvious that even if the suit is filed by an unregistered partnership firm, against a third party and is treated to be incompetent as per Section 69 sub-section (2) of the Partnership Act, if pending the suit before a decree is obtained the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, left undecided as not surviving for consideration. Point No. 3: As a result of the aforesaid discussion, it is held that the suit as filed by the respondent was partly barred under Section 69 sub-section (2) of the Partnership Act but was partly not barred and consequently the decree passed by the Trial Court as confirmed by the High Court is held to have remained well sustained and calls for no interference in the present appeal. In the result, this appeal fails and is dismissed. At the request of learned counsel for the appellant, time to vacate the suit premises is granted till 30.6.1999 on the appellant's filing usual undertaking in the Registry of this Court within four weeks from today and also on further condition that from 1.10.1998 till the premises are vacated or till 30.6.1999, whichever is earlier, the appellant will pay by way of occupation charges ₹ 50,000 per month. If any of the conditions of the aforesaid undertaking or the present order is committed breach of, extension of time will stand recalled and the decree for possession will become executable forthwith. In the facts and circumstances of the case, there will be no order as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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