1975 Supreme(Mad) 342

Madras High Court
ISMAIL
Rasiklal M.Mehta - Appellant
Versus
Hindustan Photo Films Manufacturing - Respondent
Decided On : 07/25/1975

Headnote:

LEASE - RENEWAL - REGISTRATION - NECESSITY - TRANSFER OF PROPERTY ACT, 1882, SECTION 107 - INTERPRETATION - LEASE FOR A FURTHER PERIOD OF THREE YEARS - REQUIREMENT OF REGISTERED INSTRUMENT - COVENANT FOR RENEWAL - CONSTRUCTION - FRESH LEASE - DISTINCTION BETWEEN GRANT OF TENANCY, RENEWAL OF TENANCY AND CONTINUANCE OF TENANCY - POLICY OF LAW - STAMP ACT AND REGISTRATION ACT - REVENUE COLLECTION AND NOTICE TO OTHER PARTIES - INTENTION OF PARTIES - OPTION FOR RENEWAL - PRE-EMPTION - BILATERAL ACTS OF PARTIES - NEW LEASE - VALIDITY - SUIT FOR DAMAGES FOR BREACH OF CONTRACT - DISMISSAL - JUSTIFICATION.

Fact of the Case:

The appellants were the owners of premises No. 38/3, Mount Road, Madras, which was leased to the respondent for a period of three years from 1-1-64 to 31-12-1966. The lease deed contained a covenant for renewal at the option of the lessee for a further period of three years on the same condition as contained in the lease deed. Before the expiry of the three years, the respondent exercised the option to renew the lease for a further period of three years and the appellants assented to the same. Later, the respondent informed the appellants that it would like to vacate the portion of the premises as it needed more space. The appellants replied that the respondent itself opted for a renewal for another three years and intimated them, which was duly confirmed by them, and that it was nearly a year since then, and that at that stage they were unable to do anything in the matter of the respondent's request. The respondent wrote back stating that the respondent would have been quite happy to continue in the present premises but for the reasons explained to the appellants in person by the respondent's secretary and reiterated in its letter of even number dated 8th December 1967; and that the appellants were also kind enough to appreciate the respondent's need for a change of premises at that stage. The letter proceeded to state that in view of what was stated earlier, the respondent would find it necessary to shift from the present premises to a new building which it had been able to locate, sometime by the end of February 1968, and that the respondent would be glad the appellants would kindly arrange to take over the building from the Secretary of the respondent. The appellants replied stating that by about the expiration of the term of lease, three years under the original agreement, in terms thereof, the respondent itself opted for a renewal for another three years and intimated then also, which was duly confirmed by them; that it was nearly a year since them, and that at that stage they sorry that they were unable to do anything in the matter of the respondent's request through Ex. B-6. On receipt of Ex. B-7, the Administrative Officer of the respondent company wrote Ex. B-8 stating that the respondent, no doubt, desired to continue in the appellants' premises beyond the period of the lease and the appellants were kind enough to agree to that; that the respondent would have been quite happy to continue in the present premises but for the reasons explained to the appellants in person by the respondent's and secretary and reiterated in its letter of even number dated 8th December 1967; and that the appellants were also kind enough to appreciate the respondent's need for a change of premises at that stage. The letter prodded to state that in view of what was stated earlier, the respondent would find it necessary to shift from the present premises to a new building which it had been able to locate, sometime by the end of February 1968, and that the respondent would be glad the appellants would kindly arrange to take over the building from the Secretary of the respondent. The appellants wrote Ex. A-3 dated 6-1-1968 to the respondent stating that they were unable to accede to the respondent's request or determining the arrangement mid-term, since the respondent itself opted for a further period of three years from 1-1-1967 and a year had elapsed in the renewed tern also. In reply to Ex. A-3, the Administrative Officer of the respondent company wrote Ex. B-9 reply dated 14-3-1968 stating that since the termination of the original lease, the respondent had been continuing to occupy the premises on a month to month tenancy basis, and that on count of the respondent's need for greater space, parking facilities etc., it was obliged to vacate the premises. It was further stated therein that although respondent was liable to give the appellants only 15 days' notice, the respondent proposed giving them a longer notice that it would be vacating the premises 30-4-1968. The Administrative Officer of the respondent-company requested appellants to adjust the sum of Rs 18,000 lying with them as three months' advance rent, against the rents for February, March and April 1968. On receipt of B-9, the appellants sent Ex. B-10 dated 23rd March 1968 stating that by letter dated 14th March 1967 the respondent had bound itself to stay on in the property for a further period of three years; that having exercised its option under lease deed dated 22-4-1964, Ex. P-1, and obtained the consent of the appellants for the extension of the lease period, the respondent was in law bound to pay rent and f/f hire charges for the period ending 31st December 1969, whether it used the property or not; and that the respondent's contention that after exercising the option clause, the lease had become a monthly tenancy cannot hold water and it was a clear and wanton breach of contract. On receipt of Ex. B-10, the Administrative Officer of tore respondent-company wrote Ex. B-11 dated 4-4-1968 stating that the respondent could not agree with the appellants' view that the respondent was in law bound to continue as their tenant or to pay rent and furniture hire charges for the premises upto 31-12-69 and that if it had been the intention to do so, the respondent would have executed a lease agreement and got it registered under the Registration Act as was done previously. The Administrative Officer of respondent-company reiterated that respondent would be vacating the premises on 30-4-1968 and that since the respondent informed the appellants of its intention to vacate the premises as far back as October 1967, there was absolutely no cause or justification for the appellants taking any action whatsoever as threatened in their letter Ex. B-10, Ultimately the respondent vacated the premises on 30-4-1968 and handed over possession of the premises the appellants herein. Thereafter the appellants filed the present suit claiming damages for alleged breach of contract said to have been committed by the respondent herein.

Finding of the Court:

The trial Court dismissed the suit instituted by the appellants herein. The trial Court took the view that the respondent was not justified in putting forward the contention that there should be a registered document to cover the renewed period, that a valid renewed lease came into existence, but the respondent had a right to terminate the tenancy by giving a reasonable notice, that such reasonable notice had been given in the present case and that therefore the appellants were not entitled to claim any damages from the respondent herein.

Issues: 1. Whether plaintiff is entitled to rent for May and June, 1968 and 7 days in July, 1968 at Rs. 4,000 p. m.? 2. Whether defendant was bound to enter into a lease for a further period of three years from 1-1-1967? If so, whether there was a breach? 3. Whether plaintiff is entitled to damages at Rs. 200 p.m. for 18 months from 1-1-1967? 4. Whether defendant is entitled to a credit of Rs. 200 p.m. being excess rent realised for the fourth floor of the premises? 5. Whether plaintiff is entitled to interest? If so, at what rate? 6 To what relief?

Ratio Decidendi: A renewed lease can come into existence validly without there being a registered instrument. A covenant for renewal for a further term in a lease deed is more or less in the nature of a provision for extension of the period of lease and that consequently once the option conferred on the lessee or lessor for the renewal of the lease has been exercised all that happens is that the original period of lease gets enlarged and for the enlargement of the said period of lease registered document is necessary. The provisions in such a lease deed may be looked at, as the lease to commence immediately for the first period of three years and a future lease to come into existence on the expiration of the period of the first three years, if the lessee had exercised its option, and both the leases having been reduced to writing in form of Ex. A-1, a registered document, no further registered document was necessary.

Final Decision: The appeal fails and the dismissal of the suit by the trial Court is sustained, though for different reasons.