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2016 (8) TMI 1447

..... to contrary in terms of Section 106 of the Act? - it is the case of the appellant that in terms of the lease, the same could not be terminated unless there was a breach of its provisions. HELD THAT:- A perusal of Section 106 of the Act makes it clear that it creates a deemed monthly tenancy in those cases where there is no express contract to the contrary, which is terminable at a notice period of 15 days. The section also lays down the requirements of a valid notice to terminate the tenancy, such as that it must be in writing, signed by the person sending it and be duly delivered. Admittedly, the validity of the notice itself is not under challenge. In terms of clause 6 of the agreement, the landlord was entitled to terminate the tenancy in case there was a breach of the terms of the agreement or in case of non-payment of rent for three consecutive months and the tenants failed to remedy the same within a period of thirty days of the receipt of the notice. The above said clause of the agreement is clearly contrary to the provisions of Section 106 of the Act. While Section 106 of the Act does contain the phrase ‘in the absence of a contract to the contrary’, it is a wel .....

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..... arrying out business from the Blue Fox Restaurant . Subsequently, the respondents requested the appellant to allow them to run franchise or business dealing with McDonald s family restaurant from the suit premises. In pursuance of the same, the agreement dated 15.10.2004 was terminated, and a tenancy of the suit premises was created in favour of the respondents on the basis of an unregistered agreement dated 07.08.2006 at a rent and on the terms and conditions agreed therein. In terms of the said agreement, the tenancy commenced from 01.08.2006, at a rent of ₹ 20,000/- per month, payable by the tenants-respondents by the 7th day of every succeeding month according to the English calendar. Further, as per the terms of the agreement, in case of breach of the agreement, the landlord-appellant was entitled to terminate the tenancy after serving a notice of period of thirty days. On 30.10.2008, the appellant issued a notice under Section 106 of the Transfer of Property Act, 1882 (hereinafter referred to as the Act ) terminating the monthly tenancy of the respondents in respect of the tenanted premises upon the expiry of 15 days from the date of receipt of the said notice. Upon the .....

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..... f the same by way of filing appeal before the High Court. The High Court observed as under: It is the general proposition of law in view of the provisions of Section 49 of the Indian Registration Act that when a document is required to be registered under a provision of law, it cannot be accepted in evidence of any transaction affecting an immovable property in absence of registration of that document. It is also true that in accordance with the provisions of Section 107 of the Transfer of Property Act, 1882, 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. But the above observation does not exhaust the scope of determination of a question as regards admissibility of an instrument which has been improperly admitted in evidence. The decision of Javer Chand & Ors v. Pukhraj Surana reported in AIR 1961 SC 1655 is an authority for the proposition that once document has been marked as an exhibit in a case and the trial has proceeded all along on the footing that the document was an exhibit in the case and has been used by the parties in examination and cross examination of thei .....

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..... tion 107 prescribes the procedure for execution of a lease between the parties. Under the first paragraph of this section a lease of immovable property from year to year or for any term exceeding one year or reserving yearly rent can be made only by registered instrument and remaining classes of leases are governed by the second paragraph that is to say all other leases of immovable property can be made either by registered instrument or by oral agreement accompanied by delivery of possession. In the case in hand we are concerned with an oral lease which is hit by the first paragraph of Section 107 of the Transfer of Property Act. Under Section 107 parties have an option to enter into a lease in respect of an immovable property either for a term less than a year or from year to year, for any term exceeding one year or reserving a yearly rent. If they decide upon having a lease in respect of any immovable property from year to year or for any term exceeding one year, or reserving yearly rent, such a lease has to be only by a registered instrument. In absence of a registered instrument no valid lease from year to year or for a term exceeding one year or reserving a yearly rent can be .....

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..... f one hundred rupees and upwards. 5. If a document is inadmissible in evidence for want of registration, none of its terms can be admitted in evidence and that to use a document for the purpose of proving an important clause would not be using it as a collateral purpose. 35. In our view, the particular clause in the lease agreement in question cannot be called a collateral purpose. As noted earlier, it is the case of the appellant that the suit premises was let out only for the particular named officer of the respondent and accordingly, after the same was vacated by the said officer, the respondent was not entitled to allot it to any other employee and was therefore, liable to be evicted which, in our view, was an important term forming part of the lease agreement. Therefore, such a Clause, namely, Clause 9 of the Lease Agreement in this case, cannot be looked into even for collateral purposes to come to a conclusion that the respondent was liable to be evicted because of violation of Clause 9 of the Lease Agreement. That being the position, we are unable to hold that Clause 9 of the Lease Agreement, which is admittedly unregistered, can be looked into for the purpose of evicting t .....

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..... as contemplated by section 106 of the Transfer of Property Act, need not be an express contract; it may be implied, but it certainly should be a valid contract. If it is no contract in law, the section will be operative and regulate the duration of the lease. 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 there to. 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. 6. The learned senior counsel submits that in the instant case, the requirements under Section 106 of the Act need to be adhered to, as clause 6 of the agreement operates as a contract to the contrary. 7. We have heard the learned senior counsel appearing on behalf of the parties and have perused the evidence on record. The essential question which arises for our consideration in the instant case is whether the agreement dated 07.08.2006 can be read in evidence, and whether it is a contract to contrary in terms of Section 106 of the Act. 8. At the outset, it would be usef .....

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..... g, signed by the person sending it and be duly delivered. Admittedly, the validity of the notice itself is not under challenge. The main contention advanced on behalf of the respondents is that the impugned judgment and order is valid in light of the second part of Section 107 of the Act, which requires that lease for a term exceeding one year can only be made by way of a registered instrument. 10. At this stage, it will also be useful to examine Clause 6 of the agreement dated 07.08.2006, which reads as under: 6. Default In the event of any default on the part of the Tenants in making payment of the rent for 3 consecutive months or in the event of any breach of any the terms and conditions herein contained and on the part of the tenants to be performed and observed and the landlord shall be entitled to serve a notice on call upon the tenants to make payment of the rent and to remedy for the breach of any of the remaining terms and conditions herein contained and if within a period of 30 days, the Tenants shall fail to remedy the breach the landlord shall be entitled to determine or terminate the tenancy. (emphasis laid by this Court) Thus, in terms of clause 6 of the agreement, th .....

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..... h such deed. ……………… Taking a different view would be contrary to the reality when parties clearly intended to create a lease though the document which they executed had not gone into the processes of registration. That lacuna had affected the validity of the document, but what had happened between the parties in respect of the property became a reality. Non registration of the document had caused onlytwo consequences. One is that no lease exceeding one year was created. Second is that the instrument became useless so far as creation of the lease is concerned. Nonetheless the presumption that a lease not exceeding one year stood created by conduct of parties remains un-rebutted. (emphasis laid by this Court) Thus, in the absence of registration of a document, what is deemed to be created is a month to month tenancy, the termination of which is governed by Section 106 of the Act. 12. Thus, the question of remanding the matter back to the Trial Court to consider it afresh in view of the fact that the same has been admitted in evidence, as the High Court has done in the impugned judgment and order, does not arise at all. While the agreement dat .....

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