Name of the case: M/s. Paul Rubber Industries Pvt. Ltd. Vs. Amit Chand Mitra & Anr.

Case Number: [Civil Appeal No._______ of 2023 arising out of SLP (Civil) No.15774/2022]

Name of Judges: Hon’ble Judges Aniruddha Bose and Vikram Nath

Order Date: 25/09/2023

Facts of the Case:

• 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 (appellant) In this judgment, the landlady and her legal representatives are referred to as the respondents interchangeably and the appellant Paul Rubber Industries Pvt. Ltd. shall be described as defendant.
• 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, 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 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 (“1882 Act”).
• 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. 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 Trial Court observed that the suit premises was let out to the defendant for other purposes other than agricultural or manufacturing purposes and such tenancy of the defendant deemed to be a lease from month to month terminable on the part of either lessor or lessee by 15 days’ notice and after expiry of the term of the lease i.e. on 31.10.07, a clear 15 days’ notice was served upon the defendant requesting him to quit and vacate the suit premises and hand over the peaceful possession of the same to the plaintiff. As such, the plaintiff is entitled to get relief as prayed for. Therefore, the decision was made in favour of the plaintiff.
• An appeal was filed by the defendant before the Division Bench of the High Court, which opined that that the agreement being unregistered, the same could not be looked into for determining the rights and liabilities of the parties and for its duration. The appeal was therefore dismissed.
• An appeal was filed before the Supreme Court, wherein the main issue is 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.

The Hon’ble Supreme Court Observed and Held as Follows:

• In the present appeal, the SC referred to the provisions of Sections 105, 106 and 107 of the 1882 Act and the provisions of Sections 17 and 49 of the Registration Act, 1908 (“1908 Act”). 
• The Court observed that the nature and character of possession contained in a unregistered document in terms Section 107 of the 1882 Act and Sections 17 and 49 of the Registration Act can form collateral purpose when the “nature and character of possession” is not the main term of the lease and does not constitute the main dispute for adjudication by the Court. In this case, the nature and character of possession constitutes the primary dispute and hence the Court is excluded by law from examining the unregistered deed for that purpose. In respect of the suit out of which this appeal arises, purpose of lease is the main Lis, not a collateral incident.
• The Court observed that the expression “manufacturing purposes” in Section 106, thus, means purposes for making or fabricating articles or materials by physical labour, or skill, or by mechanical power, vendible and useful as such. Such making or fabricating does not mean merely a change in an already existing article or material, but transforming it into a different article or material having a distinctive name, character or use or fabricating a previously known article by a novel process. The onus would be on the defendant to establish the fact that manufacturing activity was being carried on from the demised premises.
• A mere statement by the DW-1 or the purpose of lease as specified in the lease agreement would not be sufficient to demonstrate the purpose of lease to be for manufacturing. This could be proved by explaining what kind of work was being carried on in the factory shed. In such a situation also, the registration of the deed would have been necessary. In absence of such registration, tenancy would have been of “month to month” character.
• The present appeal shall stand dismissed on the same rationale as the High Court.