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2026 Supreme(UK) 90

HIGH COURT OF UTTARAKHAND AT NAINITAL
Sharad Kumar Sharma, J.
M/s Indian Oil Corporation Limited through Senior Manager Retail Sales and another - Appellants
Versus
Raj Kumar - Respondent
Second Appeal No. 3 of 2019
Decided On : 30-08-2019

Advocates Appeared:
For the Appellant :Mr. I.P. Kohli, Advocate
For the Respondent:Mr. Ishtiaq Ahmed Khan, Advocate along with Mr. Hari Mohan Bhatia, Advocate

Automatic renewal clause in lease deed does not override Section 107 TPA requiring registered instrument for leases exceeding one year; non-compliance results in month-to-month tenancy terminable by notice, despite contractual terms.

Headnote:(A) Transfer of Property Act, 1882 - Sections 105, 106, 107, 116 - Registration Act, 1908 - Section 17 - Lease of immovable property - Renewal clause providing for automatic renewal for further terms unless lessee gives one month’s notice - Renewal or extension of lease exceeding one year requires registered instrument executed by both parties - Automatic renewal clause cannot override statutory mandate of registration - Non-compliance results in holding over as month-to-month tenancy terminable by notice under Section 106 - Preconditions in lease deed, including prior notice of intention to renew, must be satisfied - Statute prevails over contractual terms. (Paras 12, 16-19, 22-27, 29)

(B) Lease - Termination - Default in rent payment - Lessor’s notice determining tenancy valid after expiry of term where no valid renewal - Lessee not entitled to continue possession without fulfilling renewal preconditions or executing fresh registered lease - Mesne profits/damages for unauthorised use post-expiry at rate of last agreed rent with interest awardable. (Paras 8, 10, 37-39)

Facts of the case:
Lease executed for 40 years effective from specified date for land measuring specified sq ft, with escalating rent slabs. Lessee defaulted in paying enhanced rent from certain period. Lessor issued notice terminating tenancy post-expiry demanding arrears and vacant possession. Lessee claimed automatic renewal under lease clause. Suit for ejectment, possession, arrears, mesne profits decreed by trial court, affirmed in first appeal.

Findings of Court:
No valid renewal due to absence of registered instrument and non-fulfilment of preconditions like prior notice. Tenancy became month-to-month post-expiry. Decree for ejectment, recovery of possession, arrears Rs.36,000/-, mesne profits @ Rs.250/- per month till institution with 18% interest, future mesne profits @ Rs.5,000/- till delivery, costs upheld; damages @ Rs.250/- per month with 6% interest from suit date till vacation.

Issues: Whether automatic renewal clause operates without registered deed and prior notice; effect of statutory registration requirement on lease extension; validity of termination notice and entitlement to mesne profits post-expiry.

Ratio Decidendi: Renewal of lease for term exceeding one year or reserving yearly rent mandates registered instrument under Section 107 TPA read with Section 17 Registration Act; automatic renewal ineffective without compliance, leading to month-to-month tenancy on holding over. Preconditions in lease deed enforceable; lessor entitled to re-enter on default after notice.

Result: Second appeal dismissed.

Table of Content
1. appeal admitted for final arguments at admission stage. (Para 1 , 2 , 3)
2. 40-year lease with escalating rent slabs executed. (Para 4 , 5 , 6 , 7)
3. lessee defaulted rent; tenancy terminated by notice. (Para 8 , 10)
4. dispute centers on automatic lease renewal clause. (Para 9 , 11 , 12)
5. renewal requires preconditions and statutory registration. (Para 13 , 14 , 15 , 16 , 17)
6. section 107 tpa mandates registered instrument for renewal. (Para 18 , 19 , 22 , 23)
7. registration act section 17 compels lease renewal registration. (Para 20 , 24 , 25)
8. no prior notice given; renewal preconditions unfulfilled. (Para 26 , 27)
9. precedents reject automatic renewal without registration. (Para 28 , 29 , 30 , 31)
10. no eviction protection under section 29a for lessees. (Para 32 , 33 , 34 , 35)
11. automatic renewal invalid without registration and notice. (Para 36)
12. appeal dismissed; ejectment and mesne profits decreed. (Para 39 , 40 , 41)

JUDGMENT :

Sharad Kumar Sharma, J.

The learned counsel for the respondent Mr. Ishtiyaq Khan seeks leave of the Court to place his authority on record; but, considering the procedural aspects, being followed by the Registry of this Court, his authority cannot be accepted by this Court during the Court proceedings. It has to be filed before the Registry of this Court itself. Hence, while proceeding with the dictation of judgement, simultaneously, the Registry is also directed to accept the vakalatnama of Mr. Ishtiyaq Khan as counsel for the plaintiff/respondent.

2. The present Second Appeal has been preferred by the defendants/appellants, wherein they have challenged the judgement and decree dated 29th March 2017, as rendered by the Civil Judge (Junior Division), Rudrapur, District Udham Singh Nagar, as rendered in Original Suit No. 46 of 2013, Raj Kumar v. Indian Oil Corporation, as well as, the judgement dated 26th September 2018, as rendered by the First Additional District Judge, Udham Singh Nagar in Civil Appeal No. 63 of 2017, Indian Oil Corporation v. Raj Kumar, whereby the judgement of the learned trial Court has been concurrently confirmed by the learned Appellate Court, with the dismissal of the First Appeal of the defendant/appellant. Ultimately, the suit of plaintiff/respondent for ejectment and recovery of possession and damages stood decreed for the nature of relief claimed therein it the Suit.

3. The present Second Appeal came up for consideration before this Court at an admission stage and the same was agreed by the counsel, for the parties to be argued finally at an admission stage itself. In order to deal with the intricacies of the matter, it becomes essential for this Court to precisely deal with the respective case of the parties to the Second Appeal, as it was agitated and pleaded by them before the Courts below.

4. The fact of the matter as involved in the case are that on 6th April 2013, the plaintiff (respondent herein) had instituted a Suit, wherein he has sought a decree in the nature of a decree of ejectment and recovery of possession of the property, more particularly described in para 1 of the plaint, which was constituting to be a land measuring 110 x 115 square ft. situated in Village Haldia, Tehsil Kichha, now in District Udham Singh Nagar, which was let out to the defendants/appellants by the plaintiff/respondent by virtue of a registered Lease Deed, as executed on 25th August 1973. The relief as modulated in the plaint by the plaintiff/respondent was to the following effect:-

“14. That the plaintiff therefore prays:-

(a) That passing a decree for ejectment and recovery of possession of the below bounded land in question measuring 110x150ft. situated at Village – Bandia, Tehsil-Kichcha, District Udham Singh Nagar in favour of the plaintiff and against the defendant, the defendant be directed to restore actual peaceful possession over the same land in question in an absolutely vacant state after removing their entire installations, fittings, fixtures and struc

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