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1986 DIGILAW 86 (KER)

K. C. Itoop & Sons v. Antony

1986-02-26

V.BHASKARAN NAMBIAR

body1986
JUDGMENT : The substantial question of law that arises for determination in this second appeal is: "Whether a rent deed, compulsorily registerable under the Transfer of Property Act, executed by a tenant in favour of a landlord if not registered can be relied upon to establish the relationship existing between the parties?" 2. The building in this case belonged to a Namboodiri family and is now in possession of the defendant claiming to be a lessee inducted into possession in 1974 on the strength of an unregistered lease deed for a term of five years and on a monthly rent of Rs.140/-. The rights of the Namboodiri family have been obtained by the plaintiff by assignment. The validity of that assignment is no longer in challenge. In the court, a counter part of the unregistered lease deed accepted by the Karanavan of the Namboodiri family was produced (Ext. B 3). If the defendant is in fact a lessee as contended by him, the suit is not maintainable for, the remedy has to be found under the Kerala Buildings (Lease & Rent Control) Act. On the other hand, if the lease is void, the plaintiff is entitled to recovery of possession on the strength of title. 3. The trial court found that there was no valid lease; that the deed not having been registered offended S.107 of the Transfer of Property Act and S.17 of the Registration Act; that the defendant cannot rely on the equitable doctrine of part performance under S.53(A) of the Transfer of Property Act and he did not obtain any valid right to remain in possession. The suit was therefore, decreed. 4. In appeal to the District Court, it was found that the deed was void, but relying on a decision of this Court reported in Neelakantan Sreedharan v. Subba Bhakthan Narayana Bhakthan ( 1975 KLT 128 ) held that the counter part (Ext.B3) was admissible in evidence, it could be relied on for a collateral purpose and can be looked into to decide the rights under which the defendant was holding possession. It thus found that the defendant was in possession as a tenant and therefore, held that the suit for eviction did not lie in the Civil Court. The appeal was thus allowed and the suit was dismissed. 5. It is against this Judgment and decree that the plaintiff has filed this appeal. 6. It thus found that the defendant was in possession as a tenant and therefore, held that the suit for eviction did not lie in the Civil Court. The appeal was thus allowed and the suit was dismissed. 5. It is against this Judgment and decree that the plaintiff has filed this appeal. 6. In deciding the questions raised in the second appeal, the interpretation and impact of S.107 of the Transfer of Property Act and S.17(1)(d) and S.49 of the Registration arise for consideration. 7. S.107 of the Transfer of Property Act insists 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. Other leases can be made either by oral agreement accompanied by delivery of possession or by a registered instrument. In those cases, if the lease is created by a registered instrument, that instrument has to be executed by both the lessor and the lessee. The terms of the yearly lease have thus to be reduced in writing and the writing required registration. The lease is, therefore, void for want of registration and no operative lease came into existence. 8. The next question is whether the unregistered lease deed can be relied on to establish the jural relationship between the parties. The lower court relied on a ruling of this Court in Sreedharan's case ( 1975 KLT 128 ) where it was held thus: "The rent deed is executed by the lessee alone. It is also not registered and therefore it is inadmissible to prove the creation of a lease by an instrument. But, it is admissible to prove the creation of a lease by oral agreement accompanied by delivery of possession as mentioned in S.107 of the T.P Act. The rent deed can be relied on to establish the jural relationship between the parties. It contains an admission or an acknowledgment by the defendant who is sought to be made liable that he is a tenant and that is the best evidence that one can possibly have as to the oral agreement of a lease. It is well known that documents relating to sales, leases and mortgages come into existence only after agreements arrived at between the parties to these transactions. It is well known that documents relating to sales, leases and mortgages come into existence only after agreements arrived at between the parties to these transactions. The lessor and lessee generally agree to the terms of the tenancy beforehand and then reduce to writing what has been agreed upon. In such cases oral agreement of lease can be spelt out of the rent deed executed by the lessee and there can be no bar that would prevent a court from looking into such a document for this purpose." 9. The learned Judge followed a Full Bench decision of the Lahore High Court in Mohan Lal v. Ganda Singh (A.I.R. 1943 Lahore 127 F.B.). It is sufficient to note that in the case before the Full Bench of the Lahore High Court and also in the 1975 decision of this court, the lease deeds in question were not compulsorily registerable. 10. If a lease can be created only by document in writing and registered, the creation of that lease cannot be proved through the very same document which has no legal force. The jural relationship of landlord and tenant cannot be traced to a document which clearly offends the statutory prescription of registration. Where, on the other hand, a lease can be created by oral agreement accompanied by delivery of possession and a document is neither registered nor is executed by both the lessor and the lessee, it may be possible to prove a relationship of landlord and tenant with reference to the oral agreement which can also be a source for the grant of the lease. On this basis, the decision of the learned Single Judge in Sreedharan's case (1975 K.L.T. 128) may not apply to the facts and circumstances of this case where the lease in question is a yearly lease and there is no registered document to evidence that lease. A lease which can be created only by a registered document cannot be created by Court in favour of any party on the strength of an unregistered deed. 11. A lease which can be created only by a registered document cannot be created by Court in favour of any party on the strength of an unregistered deed. 11. The effect of non-registration of document required to be registered is contained in S.49 of the Registration Act which reads thus: "No document required by S.17 or by any provision of the Transfer of Property Act, 1882 to be registered shall- (a) affect any immovable property comprised therein, or (b) confer any power to adopt, or (c) be received as evidence of any transaction affecting such property on conferring such power, unless it has been registered:" 12. A lease of land from year to year or for any term exceeding one year or reserving a yearly rent is compulsorily registerable under S.17(1)(d) of the Registration Act and "lease" has a separate definition in that Act under S.2(7) reading thus: "lease" includes a counterpart, 'Kabuliyat'. and undertaking to cultivate or occupy and an agreement to lease" 13. The impact of S.49 has, therefore, to be considered to decide whether the unregistered lease deed can be received as evidence. A counterpart is a lease within the meaning of that expression in the Registration Act though it may not be a lease as defined in the Transfer of Property Act. A counterpart therefore need not be registered under the Transfer of Property Act while it requires registration under the Registration Act. 14. Where a document is compulsorily registerable either under the Transfer of Property Act or under the Registration Act, no document shall (a) affect any immovable property, (b) confer any power to adopt or (c) be received as evidence of any transaction affecting such property unless that document has been registered. 15. However, the proviso added to S.49 enables this unregistered document to be received as evidence (a) of a contract in a suit for specific performance under Chapter II of the Specific Relief Act, (b) of part performance of a contract for the purpose of S.53 A of the Transfer of Property Act or (c) of any collateral transaction not required to be effected by a registered instrument. It is interesting to note that under the Registration Act 20 of 1866, the relevant section read thus: "No instrument required by S.17 to be registered shall be received in evidence in any civil proceeding in any Court, or shall affect any property comprised therein if unregistered." 16. The consequence of non-registration under the present section is to prohibit the unregistered document from being received not "in evidence", but "as evidence" of any transaction affecting this property. The emphasis on the word "as" was stressed by Venkatasubba Rao, J. in the decision reported in Saraswathamma v. Paddayya (A.I.R. (10) 1923 Madras 297) thus: "What is prohibited by the section is receiving a document as evidence of a transaction, not merely receiving it in evidence, i.e., as a piece of evidence having a bearing on the question to be ultimately decided." 17. A right on the basis of the unregistered document, in respect of a transaction of lease which has to be compulsorily registered, cannot be based on the very deed which cannot affect any immovable property and be received as evidence of any transaction affecting that property. The proviso to S.49, therefore, only enables that document to be received as evidence to furnish the basis of aright which may arise in future on the strength of the unregistered document. Thus, in a suit for specific performance, the unregistered document may be received as evidence as an agreement to convey which can be enforced by a decree to be passed later. Similarly, where a person in possession on the strength of an unregistered lease deed is sought to be dispossessed, the deed can be used as evidence to be used as a shield in a defence available under S.53A of the Transfer of Property Act asserting part performance of the agreement. Similarly if a claim is made for damages for breach of contract, no immovable property is affected by the reception of the unregistered document. It is in that context S.49 also provides that it can be used for a collateral transaction, but if that collateral transaction also required to be effected by a registered instrument, then the unregistered document cannot be used as evidence in that case also. It is in that context S.49 also provides that it can be used for a collateral transaction, but if that collateral transaction also required to be effected by a registered instrument, then the unregistered document cannot be used as evidence in that case also. In the present case, if the defendant's attempt is to prove a yearly lease relying on the proviso to S.49 and his prayer is to receive the unregistered counterpart as evidence of a collateral transaction to grant a yearly lease it cannot be used as evidence for that purpose because, the yearly lease can be effected only by a registered instrument. 18. The scope of the proviso to S.49 has been clearly indicated by Rajamannar, C.J. in the decision reported in Muruga v. Subba Reddiar (A.I.R. 1951 Madras 12) thus: "My view of S.49(c), Registration Act is this. It prohibits the use of an unregistered document in any legal proceeding in which such a document is sought to be relied on in support of a claim to enforce or maintain any right, title or interest to or in immovable property. So long as the document is not sought to be relied on as evidence of any right, title or interest to or in immovable property, there is nothing to prevent the document being received in evidence for other purposes. In this view, it may be that a distinction will have to be made between a suit for specific performance and a suit for damages. In a suit for specific performance, the relief sought does concern title to or interest in land; whereas a claim for damages is personal and may be enforced without in any manner affecting immovable property. The unregistered document will be excluded from evidence only when it is sought to be used "as the foundation of a judgment affecting immovable property comprised in such document". (I think the word "judgment" there is used in the sense of adjudication or decision). Further, if the proceedings do not in any respect affect any immovable property, that is to say, if the proceedings do not result infa decision which has any effect on immovable property, then the section does not apply. (I think the word "judgment" there is used in the sense of adjudication or decision). Further, if the proceedings do not in any respect affect any immovable property, that is to say, if the proceedings do not result infa decision which has any effect on immovable property, then the section does not apply. If the only claim in the proceedings is a personal one for damages for breach of contract, then, there can be no possibility of immovable property being affected by the reception of the unregistered document which may be only used in support of the claim for damages." The defendant in this Court contended that he is entitled to use Ext. B3, the unregistered deed as evidence to prove part performance of the contract as he is entiled to the benefit of S.53 A of the Transfer of Property Act. There are two decisions of the Supreme Court which throw considerable light on this aspect. In the decision reported in Technicians Studio v. Lila Ghosh ( AIR 1977 SC 2425 ), the Supreme Court held thus: "It is well settled that S.53A confers no active title on the transferee in possession, it only imposes a statutory bar on the transferor, (see Probodh Kumar Das v. Dantmara Tea Co. Ltd., 66 Ind App 293: (AIR 1940 PC 1). Thus a person who is let into possession on the strength of a void lease does not acquire any interest in the property but gets under S.53A only a right to defend his possession. As the section says this right is subject to the condition that the transferee has performed or is willing to perform his part of the contract. In this case under the petition of compromise the appellant had to pay a monthly sum of Rs.1000/- as rent during the period of the intended lease which the appellant did. These monthly payments brought the appellant under the coverage of S.53A, but from this fact alone that the appellant had performed his part of the contract, it is not possible to conclude that a tenancy was brought into existence. Even the acceptance of these payments tendered as rent is not decisive of a tenancy. These monthly payments brought the appellant under the coverage of S.53A, but from this fact alone that the appellant had performed his part of the contract, it is not possible to conclude that a tenancy was brought into existence. Even the acceptance of these payments tendered as rent is not decisive of a tenancy. In its wider sense rent means any payment made for the use of land or buildings...............In its narrower sense it means payment made by tenant to landlord for property demised to him." (State of Punjab v. British India Corporation Ltd., 1964 (2) SCR 114 (123): ( AIR 1963 SC 1459 at page 1463). Here the payments can be explained, as the courts have dons, as evidence of the appellant's willingness to perform their part of the contract. This does not mean however that there cannot be a relationship of landlord and tenant in any case where the transferee has taken possession of the property under a void lease or in part performance of a contract and is entitled to protection under S. S3 A of the Transfer of Property Act. Such a view would be incorrect and encourage attempts to circumvent the protection of the Rent Acts given to the tenants. Whether the relationship of landlord and tenant exists between the parties depends on whether the parties indented to create a tenancy, and the intention has to be gathered from the facts and circumstances of the case It is possible to find on the facts of a given case that payments made by a transferee in possession were really not in terms of the contract but independent of it, and this might justify an inference of tenancy in his favour. The question is ultimately one of fact." This question was considered in the subsequent ruling of the Supreme Court in Biswabani Pvt. Ltd. v. Santhosh Kumar (A. I. R.1980 S C. 226). In that case, there was originally a valid lease and subsequently the lease was renewed under an unregistered instrument. The renewal was void. The question was whether evidence could be adduced to prove that the possession of the defendant was as a tenant. In that case, there was originally a valid lease and subsequently the lease was renewed under an unregistered instrument. The renewal was void. The question was whether evidence could be adduced to prove that the possession of the defendant was as a tenant. In that context, the Supreme Court had to consider the earlier decision in Technicians Studio's case ( AIR 1977 SC 2425 ) and it was observed thus: "If, as it clearly transpires from the facts of this case, the appellant was a tenant on the date on which the second lease, which is found to be void, was to commence what would be the nature of possession of the appellant during the period of S years, the period sought to be reserved under the second lease and on the expiration of such period? If the appellant was put into possession for the first time under a void lease the appellant could have protected its possession under S.53A. But it must be made distinctly clear that the appellant was in possession on the date on which the second lease now found void was to commence. Would this attempt inchoate or still-born of entering into a fresh contractual tenancy make any difference in the position of the appellant and the nature of his possession? If the second lease is void or inchoate or ineffective or still-born it is not at all effective. If it is not effective it does not impinge upon the nature of the appellant's possession which was that of a tenant. In other words, the appellant continued to remain in possession of the demised premises as tenant because there was no impact of the lease which is found to be void. It must be made distinctly clear that the appellant was not put in possession under the lease which turns out to be void. In such a situation even during the period of 5 years for which the second lease was to be created the appellant continued to be in possession as tenant and this is evidenced by the further fact that rent was accepted from the appellant by respondents 1 and 2." 19. There is yet another decision of the Supreme Court which requires attention. There is yet another decision of the Supreme Court which requires attention. That is the decision in Ram Kumar v. Jagdish Chandra ( AIR 1952 SC 23 ) wherein it was held thus: "So far as the first point is concerned the Courts below have proceeded on the view that a registered instrument signed by the landlord was necessary to create a valid lease for ten years. That view was not questioned before us and we express no opinion on this point. Proceeding, therefore, on the assumption that even though the parties might have intended to create a lease for 10 years, no operative lease came into existence, the only facts admitted are that the defendant remained in possession of the land belonging to the plaintiff with the permission of the Receiver who represented the plaintiff's estate, and paid rent to the latter. From these facts a tenancy could be fairly presumed and the point for determination is, what was the duration of the tenancy that was created in the present case? S.106, T. P. Act lays down: "In the absence of a contract or local law or usage to the contrary, a lease of immovable property for agricultural or manufacturing purpose shall be deemed to be a lease from year to year, terminable on the part of either lessor or lessee, by six months' notice expiring with the end of a year of the tenancy; and a lease of immovable property for any other purpose shall be deemed to be a lease from month to month, terminable, on the part of either lessor or lessee, by fifteen days' notice expiring with the end of a month of tenancy". 20. Referring to this decision, the Supreme Court, in the decision reported in Biswabani Pvt. Ltd.'s case (A.I.R. 1980 S.C. 226), observed thus: "Even if it is assumed that the appellant was put in possession for the first time under a lease which turns out to be void, the appellant came into possession of the premises with the consent of the landlords and paid rent from month to month. As the lease was to be for a period of 5 years, for want of of registration no operative lease came into existence. As the lease was to be for a period of 5 years, for want of of registration no operative lease came into existence. In almost identical circumstances in Ram Kumar Das v. Jagdish Chandra Deb Bhabal Deb 1952 SCR 269 at p. 280 1952 S.C. 23, an inference of tenancy was made and the duration of the tenancy in such circumstances was held to be from month to month". 21. So far as yearly leases are concerned, the position can be summarised thus:- (1) When a yearly lease can be created only by a registered instrument, no operative lease can come into existence on the strength of an unregistered lease deed. The lease so created is void. (2) The jural relationship of landlord and tenant cannot be traced to a document which offends the statutory prescription of registration. The yearly lease cannot therefore be proved through the very same document which does not have any legal force and which cannot affect any immovable property. (3) The unregistered lease deed evidencing a yearly lease cannot be accepted as evidence of that very lease or of any right, title or interest to any immovable property because no such lease can be created by Court on the basis of the unregistered deed. (4) The unregistered deed in such cases can be used only for the limited purposes mentioned in the proviso to S.49 of the Registration Act. Even then, it is excluded from evidence if it is sought to be used "as the foundation of an adjudication or decision affecting immovable property comprised in such document "and can be received as evidence only in respect of those rights which may crystallise in future. (5) When a defence available under S.53A of the Transfer of Property Act is raised relying on part performance of the agreement, the unregistered lease deed being treated as an agreement to lease, the possession saves the person from being dispossessed during the period stipulated. Beyond this term, when there is no agreement, S.53A cannot be pressed into service, for, the possession under the agreement did not confer any right of tenancy and possession alone could not have created a yearly lease. (6) The person in possession can, however, lead evidence, not in terms of the void contract, but independent of it which may justify an inference of tenancy from month to month. (6) The person in possession can, however, lead evidence, not in terms of the void contract, but independent of it which may justify an inference of tenancy from month to month. It is a question of fact to be decided on the materials available. (7) The principles stated in Sreedharan's case (1975 K.L.T 128) have therefore to be confined to lease which can be created orally by delivery of possession and can have no application to yearly leases. The Full Bench decision in Mohan Lal's case (A.I.R. 1943 Lahore 127) expressly referred to rent deeds not compulsorily registerable. 22. In the present case, the defendant was inducted into possession under a void lease. He had no prior possession. The question that will have to be considered by the court below is whether, independent of this lease, the defendant was in possession as a lessee from month to month. It is a question of fact which will have to be decided on the evidence now available. For this, the matter has to go back. 23. In view of the fact that the defendant admits that he has to pay Rs. 140/- per month, the plaintiff will be entitled to that amount at least as damages for use and occupation, even if there is no lease in favour of the defendant. It is open to the plaintiff to move the lower court for any appropriate direction to the defendant for payment of the amount so due from the defendant till the appeal is disposed of. In the result, the Judgment and decree of the lower court are set aside and the matter remanded to the District Court, Trichur for disposal in the light of the observations contained in this Judgment and in accordance with law. The parties will appear in the District Court, Trichur on 11-6-1986. Half the court fee paid will be refunded. S. A. No. 803 of 1981 is disposed of as above. No costs.