IMPORTANT POINTS
1. Merely because lease deed was not registered a tenant would not loose the Protection of Rent Control Act.
2. Once transfer of right in building for enjoyment of which consideration of payment of monthly rent has been fixed is admitted presumption of lease not exceeding one year would arise.

Headnote:(i) Kerala Buildings (Lease and Rent Control) Act, 1965-Section 2(6)-Transfer of Property Act, 1882 -Section 107-Registration Act, 1908-Sections 17 and 49-Tenant-Unregistered lease deed-Suit for eviction-Whether tenant entitled to Protection of Rent Act?-Defendant could not be held as lessee by virtue of instrument in question-Instrument in question cannot be taken into consideration-Fact of induction of defendant as tenant and payment of rent admitted-Dehors invalid lease deed created-Lease not exceeding one year stood created by conduct of parties-Defendant became a statutory tenant-Eviction could be considered only when an application is moved under Rent Control Act-Suit not maintainable.
       (ii) Transfer of Property Act, 1882-Section 107-Lease-Unregistered lease deed-Fact of inducting defendant as tenant and payment of monthly rent admitted-Unregistered lease deed cannot be used as evidence-De hors instrument lease stood created as envisaged in second part of Section 107-Presumption of monthly tenancy not exceeding one year arises.
       Held : The lease-deed relied on by the plaintiff was intended to be operative for a period of five years. It is an unregistered instrument. Hence such an instrument cannot create a lease on account of three pronged statutory inhibitions. The first interdict is contained in the first paragraph of Section 107 of the T.P. Act. The second inhibition can be discerned from Section 17(1) of the Registration Act. The third interdict is contained in Section 49 of the Registration Act which speaks about the fatal consequence of non-compliance of Section 17 thereof. The resultant position is insurmountable that so far as the instrument of lease is concerned there is no scope for holding that appellant is a lessee by virtue of the said instrument. The court is disabled from using the instrument as evidence and hence it goes out of consideration in this case, hook, line and sinker. (Paras 8, 9, 10 and 11)
       But the above finding does not exhaust the scope of the issue whether appellant is a lessee of the building. A lease of immovable property is defined in Section 105 of the TP Act. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created. What is mentioned in the three paragraphs of the first part of Section 107 of the TP Act are only the different modes of how leases are created. The first paragraph has been extracted above and it deals with the mode of creating the particular kinds of leases mentioned therein. The third paragraph can be read along with the above as it contains a condition to be complied with if the parties choose to create a lease as per a registered instrument mentioned therein. All other leases, if created, necessarily fall within the ambit of the second paragraph. Thus, dehors the instrument parties can create a lease as envisaged in the second paragraph of Section 107 of the T.P. Act. When lease is a transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the court to determine whether there was in fact a lease otherwise than through such deed. (Paras 12 & 13)
       When it is admitted by both sides that appellant was inducted into the possession of the building by the owner thereof and that appellant was paying monthly rent or had agreed to pay rent in respect of the building, the legal character of appellant s possession has to be attributed to a jural relationship between the parties. Such a jural relationship, on the fact situation of this case, cannot be placed anything different from that of lessor and lessee falling within the purview of the second paragraph of Section 107 of the TP Act extracted above. From the pleadings of the parties there is no possibility for holding that the nature of possession of the appellant in respect of the building is anything other than as a lessee. When it is admitted that legal possession of the building has been transferred to the appellant there is no scope for countenancing even a case of licence. A transfer of right in the building for enjoyment, of which the consideration of payment of monthly rent has been fixed, can reasonably be presumed. Since the lease could not fall within the first paragraph of Section 107 it could not have been for a period exceeding one year. The further presumption is that the lease would fall within the ambit of residuary second paragraph of Section 107 of the T.P. Act. 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 only two 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. (Paras 14, 15 & 16)
       Held, consequently, Appellant occupied the building as a tenant and he paid rent to the landlord and continued as such. Hence with the coming into force of Rent Act he became a statutory tenant whose eviction can be considered only when an application is moved in that behalf before the Rent Control concerned. We, therefore, allow this appeal and set aside the impugned judgment of the High Court. The suit filed by the respondent will stand dismissed without prejudice to the right of the respondent to move under the provision of the Rent Act. (Para 20)

Judgement Key Points

Certainly. Based on the provided legal document, the key points are as follows:

The absence of registration of a lease deed does not automatically deprive a tenant of protection under the Rent Control Act. The conduct of the parties and the circumstances can establish a landlord-tenant relationship despite the lack of a registered deed (!) .
When there is an admission that a person was inducted into possession of a building by the owner and paid rent or agreed to pay rent, this creates a legal relationship of landlord and tenant. Such possession is presumed to be under a lease not exceeding one year, especially if the lease deed is unregistered and intended for a period of more than one year (!) (!) (!) .
A lease of immovable property can be created expressly or impliedly. Even if the formal lease deed is invalid due to non-registration, the actual conduct of the parties—such as payment of rent and possession—can establish a lease relationship (!) (!) (!) .
The law presumes that a lease not exceeding one year is created by the conduct of the parties, even if the formal instrument is invalid. This presumption supports the conclusion that the person in possession is a tenant protected under the Rent Control Act (!) .
The non-registration of a lease deed intended for a period exceeding one year renders the deed itself invalid for creating a lease, but it does not necessarily negate the existence of a lease relationship based on facts and conduct. Such a relationship can be recognized as a statutory tenancy (!) (!) .
The legal character of possession, when admitted, must be attributed to a landlord-tenant relationship if the parties' conduct indicates an intention to create such a relationship, especially where rent is paid regularly (!) (!) .
The protection under the Rent Control Act is available to a person who has been inducted into possession as a tenant and has paid rent, regardless of whether the formal lease deed is registered or valid under law (!) (!) .
The court's role is to determine the actual intention and relationship between the parties based on facts and conduct, rather than solely on the formal validity of the lease document (!) (!) .
Even if a lease deed is void for want of registration, the ongoing possession and payment of rent can establish a statutory tenancy, which is protected under the Rent Control Act and can only be terminated through proper legal proceedings (!) (!) .
The legal framework supports the view that a lease can be implied from the conduct of the parties, and such an implied lease can afford the tenant protection under the applicable rent control legislation (!) (!) .

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JUDGMENT

Thomas, J.-A dispute constantly caused many litigations to prolong in the past (whether a lease could be made by an unregistered instrument when such deed is compulsorily registerable) has once again been raised and that dispute has lengthened the longevity of this litigation through a chequered career. The successor of the party who was mainly responsible for not registering the instrument has now been benefited of it as the impugned judgment gave a decree for eviction of the person who was admittedly inducted into possession of the building by the former. Though appellant claimed protection under the provisions of the Rent Control legislation the High Court discountenanced it on the premise that the document executed by the parties regarding the transaction is void under law. The simple question now is whether appellant can claim protection as tenant under Kerala Buildings (Lease and Rent Control) Act 1965 (for short the Rent Act).

2. Facts, mostly undisputed, are the following : The building which is the subject matter of this litigation is described as a shed which originally belonged to a family and senior member of which inducted the appellant in possession thereof as per a lease deed dated 4.1.1974 which was ostensibly meant for a period of five years. The monthly rent of the building has been fixed at Rs. 140/-. Appellant paid rent of the building at the said rate till October 1974. Sometime during this period ownership of the building happened to be allotted to a female member of the family (Devaki) as per a partition effected between its members. Thereafter rent of the building was paid by the appellant to the aforesaid Devaki. Subsequently ownership of the building was transferred by Devaki to the respondent who filed the suit as plaintiff (for the sake of convenience respondent can be referred to as "the plaintiff"). The trial Court decreed the suit by repelling the contention of the appellant that the suit was not maintainable as he is protected from eviction under the provisions of the Rent Act. The trial Court found that the appellant is not a tenant as the lease was void on account of non-registration of the lease-deed. In the first appeal filed by the appellant a District Judge held that in spite of non-registration of the instrument there was a valid tenancy of the building and hence appellant could not be evicted except in accordance with the provisions of the Rent Act.

3. In a second appeal filed by the respondent a single judge of the High Court of Kerala set aside the judgment of the District Court and remanded the first appeal to that court by holding that the plaintiff was inducted into possession under a void lease and hence the court should consider "whether, independent of this lease the defendant was in possession as a lessee from month to month." Learned single Judge pointed out that since it is a question of fact the same has to be decided on the evidence on record. After the remand the District Court entered upon a finding that despite the defect of non-registration of the instrument "the facts and circumstances of this case and the evidence discussed above could clearly show that the parties intended to create a lease." The District Judge further held that appellant is the tenant as defined in the Rent Act and hence the plaintiff is not entitled to a decree in this case and his remedy is to apply before the Rent Control Court.

4. When the matter went up to the High Court again in a second appeal a learned single Judge did not agree with the approach made by the District Judge after remand and the following observations, inter alia, have been made by the High Court :

"It has to be noted that if the conclusion of this Court on the earlier occasion were that payment and acceptance of rent pursuant to the void contract itself would bring about the relationship of landlord and tenant between the parties protected under the Kerala Buildings (Lease and Rent Control) Act this court would have certai

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2000 Supreme(SC) 1148

Cases Referred (6)