IMPORTANT POINT
Where as per lease deed rent was payable every month, since lessee was required to pay rates and taxes which were payable either annually or after every six months, and same formed part of rent, it could not be held that rents were payable every six months and not each month.

Headnote:Transfer of Property Act, 1882—Section 105—Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947—Section 12(3)(a)—Lease of suit property and rent was fixed at Rs. 3215 per month which was increased to Rs. 3450 per month—Lessee appellant defaulted in payment of rent for more than six months and respondents lessors issued notice—On receipt of notice lessee tendered rent to lessors for period of fourteen months but same was refused as it did not constitute entire arrears of rent payable by lessees—Lessee was also alleged to have sublet demised premises—Suit for possession on ground that lessee had defaulted in payment of rents—Plea of defendants that rent was payable after every six months and not monthly as claimed by lessors and rent tendered was wrongly refused—Trial Judge came to conclusion that rent was payable every six months and lessors were not entitled to possession in view of provisions of Section 12(3)(a) of Bombay Rent Act and suit was dismissed—Appellate Bench of Small Causes Court found that rent was payable every month and notice terminating tenancy was legal and valid and suit was decreed—High Court affirmed the decree—Appeal—Whether despite specific provision of lease deed for payment of rent on monthly basis in advance, whether trial Court was right in holding that in effect having regard to provisions relating to payment of rates and taxes and other outgoings by lessee, lease would be governed u/s 12(3)(b) and not 12(3)(a) of Bombay Rent Act? No—Question in second appeal was whether appellants therein were lawfully inducted into demised premises and if so, whether they would be bound by decree for possession passed against appellants in other appeal.
       Held : We are of the view that the decision of the Appellate Bench of the Small Causes Court at Bombay as affirmed by the High Court holding that the lease was governed under Section 12 (3) (a) of the Bombay Rent Act was correct. The lease deed makes it abundantly clear that the lease rent was required to be paid on a monthly basis. (Para 33)
       The argument advanced on behalf of the lessee that notwithstanding the said stipulation, since the lessee was required to pay the rates and taxes which formed part of the permitted increase and was, therefore, a part of the rent payable, does not appeal to us. The consequential submission made in this regard that since the rates and taxes were payable either annually or after every six months, and the same formed part of the rent, it must be held that the rents were payable not each month but after every six months, does not also appeal to us. (Para 35)
       Consequently, even though the lease deed contained a provision for payment of the rates and taxes exclusively by the lessee and it is also stipulated that the lessor will have no liability therefor, the lease will still be governed under Section 12 (3) (a) of the Bombay Rent Act as held by the Appellate Bench of the Small Causes Court at Bombay and affirmed by the High Court. The expression “consideration” indicated in Section 105 of the Transfer of Property Act has been used in a generic sense to include the price paid or promised or of money, a share of crops, service or any other thing of value. On the other hand, the lease deed specifies the amount to be paid as rent each month while the rates and taxes and other outgoings are treated to be the separate liability of the lessee, no doubt having regard to the intention of the parties that a building was to be erected by the lessee on the demised land.(Para 37)
       However, having regard to the provisions of the lease deed, there can be little doubt that the decree for possession passed against the lessee will not bind the appellants in the Civil Appeal arising out of S.L.P. (C) No. 7186 of 2006 who have acquired an independent status under the provisions of the deed of lease permitting assignment of the structure to be erected on the demised land. In their case, the question of induction prior to 1st February, 1973, would have no application. Although, it has been submitted by Mr. Ranjit Kumar that the provisions of clause 6 of the lease deed must be read with clause 3(o) thereof, the intention of the parties on the reading of the lease deed as a whole appears to be that the lessee would be entitled to make construction on the demised premises which could be assigned by it to third parties who would acquire an independent right therein subject to the terms and conditions of the head lease. Since the appellants in the Civil Appeal arising out of S.L.P. (C) No. 7186 of 2006 were lawfully inducted into the premises by virtue of clause 6 of the lease deed they will not be affected by the decree for possession passed against the lessee. Civil Appeal arising out of SLP (C) No.7400/06 is, therefore, dismissed, while Civil Appeal arising out of SLP (C) No. 7186/06 is allowed. The judgment and decree of the Appellate Bench of the Small Causes Court as well as High Court is affirmed as far as Civil Appeal arising out of SLP (C) 7400/06 is concerned, and is set aside as far as it relates to the appellants in Civil Appeal arising out of SLP (C) 7186/06. (Paras 39 and 40)

JUDGMENT

Altamas Kabir, J.—Leave granted in both the special leave petitions.

2. Respondent Nos. 1 to 4 in both the special leave petitions are the owners of a plot of land measuring about 2739.50 sq.yds. bearing survey No. 37, situated at Juhu, Greater Bombay. The said land was leased to one M/s. H. Bloch Engineering Pvt. Ltd. by a registered deed of lease dated 3rd November, 1966. By a deed of assignment dated 8th June, 1970, the said lessee transferred and assigned the demised property to M/s. Yashdhir Hotels Pvt. Ltd., a company registered under the Companies Act. The original lease was for 98 years commencing from 1st November, 1966. By virtue of the deed of assignment dated 8th June, 1970, M/s.Yashdhir Hotels Pvt. Ltd. became the lessee of the said land for the unexpired period of the lease and became a tenant under the respondent Nos. 1 to 4. The lease rent was initially fixed at Rs.3,215/- per month, but was thereafter increased to Rs.3,450/- per month. As M/s. Yashdhir Hotels Pvt. Ltd. defaulted in payment of rent for more than six months, the respondent Nos. 1 to 4 issued a notice dated 1st February, 1983 to M/s. Yashdhir Hotels Pvt. Ltd. It appears that on receipt of the notice, M/s. Yashdhir Hotels Pvt. Ltd. tendered rent to the lessors for a period of fourteen months but the same was refused as the same did not constitute the entire arrears of rent payable by the lessees. It was also the claim of the lessors that the lessee had unlawfully sublet the demised property.

3. Having refused to accept the rent for fourteen months tendered by the lessee, the lessors filed a suit, being R.A.E.No.732/2538/1983, claiming possession on the ground that the lessee had defaulted in payment of the rents.

4. Apart from the lessee, certain other parties were made defendants in the suit on the allegation that the suit property had been sublet by the lessee in their favour. The defendants filed their written statements and while admitting that M/s.Yashdhir Hotels Pvt. Ltd. had become the tenant of the leasehold premises by virtue of the deed of assignment, denied that the lessee was in arrears of rent as alleged. According to the defendants, the lease rent, which was initially fixed at Rs. 3,215/- per month and was thereafter enhanced to Rs. 3,450/- per month, was payable after every six months and not monthly as claimed by the lessors. It was also contended that although the rent had been tendered by cheque along with a letter dated 23rd April, 1983, the same had been wrongly refused by the lessors. It was also contended that since the period of lease was 98 years which was still subsisting, and there was no breach of any of the terms and conditions of the lease, the lessors were not entitled to get possession of the suit property. It was the specific case of the defendant Nos. 2 to 5 that under the deed of lease, the lessee was entitled to let out the structure erected on the leasehold property or any part thereof.

5. The learned trial judge, on an assessment of the evidence adduced by the parties, came to the conclusion that the rent of the suit property was payable every six months. Consequently, even if the defendants were in arrears of rent for more than six months on the date of the notice dated 1st February, 1983, the lessors were not entitled to possession in view of the provisions of Section 12 (3) (a) of the Bombay Rents, Hotel and Lodging House Rates (Control) Act, 1947, (hereinafter referred to as the “Bombay Rent Act.”) On the basis of the aforesaid finding, the learned trial court dismissed the lessors’ suit for possession.

6. The lessors preferred an appeal against the said order of the learned trial judge which was numbered as Appeal No.76/1997. In the appeal, the Appellate Bench of the Small Causes Court, Bombay, came to a conclusion that the rent for the demised premises was payable every month and not after six months as held by the trial court. Holding further that the notice terminatin

Click Here to Read the rest of this document

2006 Supreme(SC) 1071

IMPORTANT POINT Where as per lease deed rent was payable every month, since lessee was required to pay rates and taxes which were payable either annually or after every six months, and same formed part of rent, it could not be held that rents were payable every six months and not each month.

Cases Referred (6)

IMPORTANT POINT
Where as per lease deed rent was payable every month, since lessee was required to pay rates and taxes which were payable either annually or after every six months, and same formed part of rent, it could not be held that rents were payable every six months and not each month.