Mahadeo Prasad v. State of Uttar Pradesh — 1980 DIGILAW 1037 (ALL)

ORDER K.C. Agarwal, J. - This is a revision under Section 25 of the Provincial Small Cause Courts Act preferred against the judgment of the 6th Additional District Judge, Farrukhabad dated 14-2-1979, dismissing the suit for ejectment of the defendants from the premises in suit and for recovery of Rs. 1194/- as arrears of rent and damages. The plaintiff's case was that the premises in dispute was let out to the defendants on rent. The defendants did not pay the rent from 1-1-1978 up to the date of the suit. A notice of demand was sent which was served upon the defendants, but to no effect, hence the suit. 2. The defendants contested the claim of the plaintiff who alleged that defendant No. 1 did not pay the rent from 1-1-1978. It was pleaded that rent for the month of January, 1918 was sent to the plaintiff, but the plaintiff refused to accept it. The defendants alleged that as the suit was barred by Section 20 Subsection (1) of U.P. Act No. 13 of 1972 the same was liable to be dismissed. 3. On the pleadings of the parties, the Judge, Small Causes, framed four issues. Issue No. 1 was whether the suit was not maintainable as alleged in paragraph 13 of the written statement. The plea taken in paragraph 13 of the written statement was that a contract of lease should have been in writing as required by Article 299 of the Constitution, and as no agreement was executed, the defendant could not be sued for ejectment on the basis of the relationship of landlord and tenant. 4. The other issue was as to whether the defendant was a defaulter. As the opinion of the Judge, Small Causes was that U.P. Act No. 13 of 1972 did not apply to the premises in dispute, he found that the plaintiff was not required to fulfil the grounds given in sub-section (2) of Section 20 of the said Act for getting a decree of ejectment, but as the opinion of the Judge. Small Causes on the first point was that in the absence of a contract in writing the suit was not maintainable, he dismissed the same. Being aggrieved by the dismissal the plaintiff has filed the present revision. 5. Small Causes on the first point was that in the absence of a contract in writing the suit was not maintainable, he dismissed the same. Being aggrieved by the dismissal the plaintiff has filed the present revision. 5. The first question that arises for determination is whether Article 299 of the Constitution applied to a case of lease and whether the plaintiff's suit was liable to be dismissed in the absence of the same. 6. Section 107 of the Transfer of Property Act provides that "a lease of immovable property from year to year or for any term exceeding one year, or reserving a yearly rent, can be made only by a registered instrument. All other leases of immovable property may be made either by a registered instrument or by agreement accompanied by delivery of possession." From the above section it would appear that in case of a lease which is not from year to year or for any term exceeding one year, the same can be oral. Requirement of registration arises only when a lease is in writing, A building can be leased out without a document in writing. Section 107 of the Transfer of Property Act is universally applicable to all leases irrespective of the parties who entered into the same. Leases granted by the Government are, however, outside its operation. The Crown Grants Act exempts such leases from the operation of the Transfer of Property Act. It does not, however, exempt them from the requirement of registration noted (sic) by the Registration Act. Since this question is not involved in the present case it is not necessary to go into the same in further detail. 7. Reverting to the facts of the present case, the plaintiff alleged that the premises in dispute had been let out to the defendants on oral lease and no written document was executed by the defendants. The defendants did not deny that the premises belonged to the plaintiff and that the same had been taken on rent by defendant No.1 i.e. The State of U.P. from the plaintiff. The plea taken was that as Article 299 of the Constitution required every contract to be in writing, the oral contract of lease was not binding on the Government and, therefore, the plaintiff could not bring the suit for ejectment of the defendant on its basis. The plea taken was that as Article 299 of the Constitution required every contract to be in writing, the oral contract of lease was not binding on the Government and, therefore, the plaintiff could not bring the suit for ejectment of the defendant on its basis. Article 299 of the Constitution provides that all contracts made in the exercise of the executive power of the Union or a State shall be expressed to be made by the President or by the Governor of the State, as the case may be and all such contracts and all assurances of property made shall be executed on behalf of the President or the Government by such person and in such a manner as he may direct or otherwise. 8. The question that arises is whether a formal document is necessary to create a lease. I have already dealt with Section 107 of the Transfer of Property Act which does not require any contract in writing for the coming into existence of a valid relationship of landlord and tenant between the Government and the owner of a property. Where the Government takes a building on lease from a private person, a formal document of lease is not necessary as evidence of tenancy of the Government. So far as Article 299 of the Constitution is concerned, it applies to a case of contract. In the instant case, the argument of Shri G.P. Bhargava, learned counsel for the appellant was that a lease is not a contract of transfer, it is an interest, hence no document is required to be executed for inducting the Government as a tenant. From Section 105 of the Transfer of Property Act it appear that a lease is the outcome of the rightful separation of ownership and possession. Before the coming into existence of a lease the owner is entitled to enjoy possession of the property, but by lease he excludes himself during the currency of the lease. A lease is not a mere contract, but it is a transfer of interest in land as held in Anwar Ali v. Jamini Lal Roy (AIR 1940 Cal 89). A lease creates a right in rem. In Dhruva Dev Chand v. Harimohinder Singh ( AIR 1968 SC 1024 ) the Supreme Court was called upon to consider whether the doctrine of frustration applied to a lease. A lease creates a right in rem. In Dhruva Dev Chand v. Harimohinder Singh ( AIR 1968 SC 1024 ) the Supreme Court was called upon to consider whether the doctrine of frustration applied to a lease. The Supreme Court held that under a lease of land there is a transfer of right to enjoy that land and Sec. 56 of the Contract Act does not apply to it which is transfer of interest in the property. In Shyam Kumari v. Aizaz Ahmad Ansari ( AIR 1977 All 376 ) a Bench of this Court found that Sec. 56 which is applicable to contracts does not apply to a lease as the lease is a transfer of an interest in the property. 9. From the above authorities it would be found that a lease being not a contract would not be covered by Article 299 of the Constitution. In K. Bhashyam Ayangar v. The Superintendent of Police ( AIR 1951 Mad 855 ) the Madras High Court found that to ascertain whether the Government is the tenant of a house it is not necessary that there should be a formal document of lease as evidence of tenancy. A lease can be inferred from correspondence; in each case there should be a communication signed by an officer with due authority. In Bihar Eastern Gangetic Fishermen's Cooperative Society Ltd. v. Sipahi Singh ( AIR 1977 SC 2149 ) and Mulaim Chand v. State of M.P. 1968 All LJ 745: ( AIR 1968 SC 1218 ) the points are different than the one which arises for decision in our case. In the former case, provisions of Article 299 of the Constitution were held to be applicable for creating fishery rights. The view of the Supreme Court was that the transaction of sale of right to catch and carry away fish being a "profits a prendre" was held to be an immovable property within the meaning of the Transfer of Property Act, and, therefore, the Supreme Court held that Article 299 applied to it. The other case cited was that of Mulaim Chand v. The State of M.P. In this case the Supreme Court found that no question of estoppel or ratification could arise where the provisions of Article 299 have not been complied with. The other case cited was that of Mulaim Chand v. The State of M.P. In this case the Supreme Court found that no question of estoppel or ratification could arise where the provisions of Article 299 have not been complied with. Reading the two cases together it would appear that where a document is not executed in the manner prescribed by Article 299 of the Constitution, the same would not be binding and no rights could be based thereon. In our case the position is altogether different for two reasons which have been given by me above. These reasons were that neither was the lease a contract nor Section 107 of the Transfer of Property Act required any document in writing for creation of a valid lease. 10. The question as to whether a formal document was necessary to create a binding contract and the same could be spelt out from correspondence came up for consideration before the Supreme Court in the Union of India v. N.K. Private Ltd. ( AIR 1972 SC 915 ) in which the Supreme Court held that a binding contract by tender and acceptance could come into existence if the acceptance was by a person duly authorised in that behalf. In the Union of India v. Rallia Ram ( AIR 1963 SC 1685 ) the view taken was that formal execution of an agreement was not necessary and that correspondence could also create a valid agreement. While laying down the above law the Supreme Court noted that there was no provision in the Arbitration Act about the manner in accordance with which agreements had to be executed. Hence their Lordships observed that the letter by which the acceptance on behalf of the Governor General was given to the arbitration agreement was sufficient in itself to create a valid contract. 11. From what I have said above a distinction has to be maintained between cases of contract and a case of oral lease. Oral lease cannot be invalidated for non-compliance of Article 299 of the Constitution as the said Article is not applicable to it. 12. The learned Small Cause Court Judge decided issue No. 3 by holding that the dispute being in respect of a public building U.P. Act No. 13 of 1972 did not apply. Oral lease cannot be invalidated for non-compliance of Article 299 of the Constitution as the said Article is not applicable to it. 12. The learned Small Cause Court Judge decided issue No. 3 by holding that the dispute being in respect of a public building U.P. Act No. 13 of 1972 did not apply. He would have given a decree for ejectment to the plaintiff had he not decided the question of Article 299 against the plaintiff. In Om Kumar v. District Judge, 1980 (UP) Rent CC 134 (139) : (1980 UPLT NOC 52), a Division Bench of this Court had an occasion to deal with the applicability of U.P. Act No. 13 of 1972 with respect to a building which had been let out to a bank. The Bench held that after the amendment made by U.P. Act No. 28 of 1976, U.P. Act No. 13 of 1972 did not apply to a public building. The building which is the subject matter of ejectment in the present case is also a public building. Hence for the reasons given by the Division Bench U.P. Act No. 13 of 1972 would not apply to it as well. For the reason given above the suit is entitled to succeed. 13. In the result, the revision succeeds and is allowed. The judgment and decree of the Judge, Small Causes is set aside and the suit for ejectment, recovery of arrears of rent and damages is decreed. The defendants are given six months time to vacate the premises.