1. Tenancy dispute involving an unregistered lease deed for five years — recovery of possession and mesne profits — notice period under Section 106, Transfer of Property Act. (Para 2 , 3 )
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2023 Supreme(SC) 992
SUPREME COURT OF INDIA
ANIRUDDHA BOSE, VIKRAM NATH, JJ.
M/s Paul Rubber Industries Private Limited – Appellant
Versus
Amit Chand Mitra and Another – Respondents
Civil Appeal No. 6149 of 2023, Petition for Special Leave to Appeal (Civil) No. 15774 of 2022
Decided On : 25-09-2023
Advocates appeared:
For the Appellant(s) : Mr. Shakti Kanta Pattanaik, AOR Mr. Santosh Kumar, Adv. Mr. Abhijit Sarkar, Adv. Mr. Rupak Ghosh, Adv.
For the Respondent(s): Mr. Chanchal Kumar Ganguli, AOR Mr. Debmalya Ganguli, Adv. Mr. Anupam Dasadhikari, Adv. Ms. Tuli Ghosh, Adv.
For the Appellant(s) : Mr. Shakti Kanta Pattanaik, AOR Mr. Santosh Kumar, Adv. Mr. Abhijit Sarkar, Adv. Mr. Rupak Ghosh, Adv.
For the Respondent(s): Mr. Chanchal Kumar Ganguli, AOR Mr. Debmalya Ganguli, Adv. Mr. Anupam Dasadhikari, Adv. Ms. Tuli Ghosh, Adv.
IMPORTANT POINT
Parties cannot by implied consent confer upon unregistered document its admissibility.
Headnote:
Transfer of Property Act, 1882 – Sections 105, 106 and 107 – Registration Act, 1908 – Sections 17 and 49 – Tenancy Agreement – Suit seeking recovery of possession as also decree for mesne profit – Lease agreement itself provides a five year duration and ex-facie becomes a document that requires compulsory registration – This is a prohibition for Court to implement and even if Trial Court has taken it in evidence, same cannot confer legitimacy to that document for being taken as evidence at appellate stage – Parties cannot by implied consent confer upon such document its admissibility – Nature and character of possession constitutes primary dispute and Court is excluded by law from examining unregistered deed for that purpose – In absence of registration, tenancy would have been of “month to month” character – High Court not erred in law in dismissing defendant’s appeal – Present appeal dismissed on same rationale. (Paras 10, 13 and 14)
Facts of the case:
Main point to be addressed in this appeal is as to what extent the Court can take cognizance of a clause relating to purpose for which a lease is granted contained in an unregistered deed of lease for immovable property stipulating its duration for a period of five years. In the judgment under appeal, opinion of a Division Bench of the Calcutta High Court is that such deed cannot be received as evidence of any transaction affecting the property over which the lease is executed.
Findings of Court:
Lease was for use by the predecessor of the appellants “for the purpose of his business and/or factory.” The property was described in the schedule to be estimated 16 Cottahs of land “with a factory shed/godown space”. Such description would not be sufficient to establish that the same was for manufacturing purpose.
Result : Appeal dismissed.
Judgement Key Points
The legal judgment emphasizes that parties cannot, through implied consent, confer admissibility upon an unregistered document. Specifically, in the context of lease agreements for immovable property, such documents are subject to strict legal requirements regarding registration. An unregistered lease, even if produced in evidence, cannot be deemed to have legal validity for establishing the transaction's effect on the property or the rights of the parties (!) (!) .
Furthermore, the law clearly stipulates that leases requiring registration—such as those for a period exceeding one year—must be registered to be legally enforceable and to confer rights or obligations regarding the property. The mere existence of an unregistered lease does not automatically render it inadmissible for collateral purposes, such as proving the nature of possession or the purpose of the lease, provided such collateral purpose is separate and independent from the main transaction (!) (!) .
In the case of disputes concerning the purpose of a lease—such as whether it was for manufacturing or other specific use—the court cannot rely solely on unregistered documents to determine the intent or the primary terms of the agreement. The primary dispute, especially when it involves the purpose of possession, is legally excluded from examination of unregistered deeds, as the law mandates registration for such substantive terms to be legally recognized (!) (!) .
Additionally, the law permits the use of unregistered documents for collateral purposes, such as establishing the purpose for which a property was leased or the nature of possession, but only when these are not the main terms of the lease and do not constitute the core dispute. When the primary issue is the purpose of the lease itself, the document's unregistered status precludes its use as evidence for that purpose (!) (!) .
In summary, parties cannot, through implied consent, overcome the statutory requirement of registration for leases that are legally mandated to be registered. The primary legal principle is that unregistered documents cannot be used to establish the main terms or effect of a lease, especially when such terms are central to the dispute. Such documents may only be considered for collateral purposes, provided they are not the main subject of litigation (!) (!) .
Legal Category Hierarchy
Table of Contents
2. Admissibility of unregistered lease deed — whether the premises were let for manufacturing purposes requiring six months' notice under Section 106, Transfer of Property Act. (Para 4 , 10 )
3. Unregistered lease for over one year is inadmissible under Section 49, Registration Act — purpose of lease is not a collateral purpose when it is the primary dispute. (Para 7 , 10 , 11 , 12 , 13 , 14 , 15 )
4. Unregistered lease deeds for terms exceeding one year cannot be used to prove the purpose of the lease if such purpose is the main issue in dispute. (Para 10 , 12 , 13 )
5. Appeal dismissed — Trial Court judgment affirmed. (Para 15 )
6. Can an unregistered lease deed for a term exceeding one year be admitted as evidence?
No. Under Section 107 of the Transfer of Property Act and Sections 17 and 49 of the Registration Act, a lease exceeding one year must be registered. If unregistered, it cannot be received as evidence of any transaction affecting the property. (Para 10 , 12 )
7. When can an unregistered lease deed be used for a collateral purpose under Section 49 of the Registration Act?
A collateral transaction must be independent of, or divisible from, the transaction requiring registration. It cannot be used to prove an important clause or a term that constitutes the primary dispute of the case. (Para 12 , 13 )
8. What is the notice period for terminating a lease for manufacturing purposes under Section 106 of the Transfer of Property Act?
In the absence of a contract or local law to the contrary, a lease for agricultural or manufacturing purposes is deemed a year-to-year lease, terminable by six months' notice. (Para 8 , 10 )
9. Who bears the burden of proving that a lease was granted for manufacturing purposes?
The burden of proving that the lease was for manufacturing purposes lies on the party who claims it to be so, requiring specific pleadings and evidence of actual manufacturing activity. (Para 11 , 15 )
JUDGMENT :
ANIRUDDHA BOSE, J.
1. Leave granted.
2. The main point which we have to address in this appeal is as to what extent the Court can take cognizance of a clause relating to purpose for which a lease is granted contained in an unregistered deed of lease for immovable property stipulating its duration for a period of five years. In the judgment under appeal, opinion of a Division Bench of the Calcutta High Court is that such deed cannot be received as evidence of any transaction affecting the property over which the lease is executed. On 27.03.2003, a document captioned “Tenancy Agreement” was executed by and between one Sabita Mitra (the landlady, since deceased), now represented before us by her legal heirs being the two respondents and an incorporated company, Paul Rubber Industries Private Limited. The latter is the appellant in this proceeding. In this judgment, we shall refer to the landlady and her legal representatives as the respondents interchangeably and the appellant Paul Rubber Industries Pvt. Ltd. shall be described as defendant. The property in question comprises of approximately 16 cottahs (one cottah is equivalent to approximately 720 sq. ft.) of land situated at Radha Madhab Dutta Garden Lane, within the city of Kolkata. The tenure of the agreement, as stipulated therein was for a period of five years with provision for renewal for further five years. There is stipulation for further renewal for such period and on such terms and conditions as might have been agreed upon by the parties. This is contained in clause 2 of the agreement. But no such renewal was effected. First five years of the tenancy stood completed on 31.10.2007, and a letter was sent by the landlady on 07.11.2007 seeking enhancement of rent. It does not appear that the defendant had paid rent thereafter. It had, however, raised a plea that such rent used to be collected on behalf of the landlady on due date, but this was stopped after October 2007. Thereafter, on 06.03.2008, the landlady served a notice requiring the defendant to vacate the subject-premises with effect from 31.03.2008. In this letter of 06.03.2008, the defendant was addressed as monthly tenant. Default in payment of monthly rent was highlighted in this letter. It was also specified therein that the landlady needed the said premises for her own use and occupation and for business purpose of her family members. This letter is being projected by the respondents as notice for fifteen days, as per stipulation of Section 106 of the Transfer of Property Act, 1882 (herein after “1882 Act”).
3. The tenant had not delivered vacant possession as a result of which the suit, which gives rise to the present appeal, was instituted by the landlady on 04.09.2008 before the Civil Judge, Senior Division at Sealdah, having jurisdiction over the suit property. The original plaintiff (i.e. the landlady) claimed, interalia, recovery of possession as also decree for mesne profit. Various defences were set up by the defendant in its written statement. One of them was that since it was an agreement for lease under which it was inducted as a tenant and the same was unregistered, the suit was not maintainable. Another plea of the defendant was that the subject property stood vested in the State under the thika tenancy law. This is a special type of tenancy prevalent in the Kolkata region involving multiple-tier of tenancy and ownership structure. The defendant claimed to have filed certain returns before the Thika Controller. This issue was not raised before the High Court and is not in lis before us also. The defendant in the written statement, denied expiry of tenancy on 31.01.2007. As regards default in payment of rent, we have already referred to the defendant’s stand. Altogether, five issues were framed by the Trial Court. The first two issues framed by the Trial Court related to maintainability of the suit in the form it was framed and subsistence of cause of action. These two issues had not been
