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2013 DIGILAW 791 (CAL)

McLeod & Co. Ltd. v. UCO Bank

2013-10-08

SOUMEN SEN

body2013
Judgment Soumen Sen, J. The plaintiff has filed the suit for recovery of possession and mesne profits. 2. The plaintiff is the owner of Premises No.3, Netaji Subhas Road, Kolkata-700 001. The defendant is a commercial bank and is in occupation of the northern half on the ground floor measuring a total built-up area of 5238 sq.ft. of the said premises (hereinafter referred to as “the suit premises”). Until determination of the tenancy, the defendant was paying a monthly rent of Rs.44/- (Approx.) per sq.ft. inclusive of service tax and municipal taxes at the applicable rate. The defendant has been in occupation and possession of the suit premises since July 1, 1991 and paid rent in terms of the lease agreement till June 30, 2012. The plaintiff determined the tenancy by a notice to quit dated October 18, 2012 w.e.f January 1, 2013 and called upon the defendant to hand over peaceful and vacant possession of the suit premises to the plaintiff. In spite of receipt of the notice to quit, the defendant has failed and/or neglected or refused to vacate and/or make over peaceful and vacant possession of the suit premises to the plaintiff. 3. The tenancy is not governed by the West Bengal Premises Tenancy Act, 1997 and the defendant is not entitled to any protection under the West Bengal Premises Tenancy Act, 1997. The plaintiff in the suit has claimed arrears of rent from July to December, 2012, aggregating Rs.37,07,814/-, mesne profits and interests. 4. In spite of the service of writ of summons, the defendant did not enter appearance in the suit. The report of the Deputy Sheriff dated September 9, 2013 shows that such writ of summons was served upon the defendant on May 13, 2013. The writ of summons sent by Speed-Post with A.D. was received by the defendant bank on May 20, 2013. The Advocate-on-record of the plaintiff in terms of the direction passed by this Court had also sent notices intimating the pendency of the suit. The said notice also had mentioned in terms of the direction passed by this Court that in the event the defendant fails to appear before this Court on returnable date the suit shall be taken up ex parte. The affidavit of service filed by the plaintiff shows that such notices were received by the defendant but the said defendant. The said notice also had mentioned in terms of the direction passed by this Court that in the event the defendant fails to appear before this Court on returnable date the suit shall be taken up ex parte. The affidavit of service filed by the plaintiff shows that such notices were received by the defendant but the said defendant. In spite thereof, the said defendant had failed to appear and contest the proceeding. 5. Although the plaintiff is not obliged to adduce any evidence in view of failure of the defendant to appear and contest the proceeding in spite of opportunities being given to the said defendant to appear and contest, the plaintiff produced a witness and documents to establish its claim in the suit. 6. The plaintiff has produced oral and documentary evidence to substantiate its claim in the suit. 7. Mr. Dhanraj Baid, Chief Executive of the plaintiff adduced evidence on behalf of the plaintiff. 8. The witness has stated that the defendant is occupying a portion of Premises No.3, Netaji Subhas Road, Kolkata – 700 001. In the said premises there are other tenants which, inter alia, include Bank of Maharashtra. The property was rented to UCO Bank on and from July 1, 1991 under an unregistered lease agreement for 21 years. The bank initially paid rent at the rate of Rs.18 per sq.ft. The area under occupation of the bank is 5238 sq. ft. The lease agreement contains an escalation of rent by 25 per cent after every 5 years and in terms thereof the bank had paid increased rent. After 30th June, 2012, the plaintiff had retained numerous letters to the defendant to renew the said lease agreement. The witness has referred to letters dated 11th September, 2012 by which a draft lease agreement was sent to the Zonal Manager, UCO Bank for approval and finalization. The witness has stated that such lease agreement was forwarded after the parties had mutually agreed to the terms which, inter alia, include that the monthly lease rental for the occupied portion would be Rs.105/- per sq. ft. per month plus municipal taxes at applicable rates. The duration of the lease would be for 11 years with 15 per cent increase after expiry of every 3 years on last payable rent. On such basis, the draft lease agreement was forwarded to the Zonal Manager, UCO Bank. ft. per month plus municipal taxes at applicable rates. The duration of the lease would be for 11 years with 15 per cent increase after expiry of every 3 years on last payable rent. On such basis, the draft lease agreement was forwarded to the Zonal Manager, UCO Bank. Thereafter, on numerous occasions, the matter was taken up with the Zonal Manager as well as Deputy General Manager of UCO Bank. The witness referred to the letter dated 29th September, 2012 (Exbt. “L”) and stated that the Deputy General Manager of UCO Bank had requested the Zonal Office to finalize the lease agreement at the revised rate. The Zonal Office was also informed that the Bank of Maharashtra has finalized the rent with the plaintiff at the rate of Rs.105.00/- per sq. ft. 9. The witness has also referred to the letter of the Deputy General Manager of the defendant bank dated October 11, 2012 by which the said officer had informed the Zonal Office that the plaintiff had demanded payment of unpaid rent at the revised rate. Since the said defendant had failed to respond to the said letters and did not pay rent at the revised rent, a legal notice was issued by the plaintiff on October 18, 2012, determining the tenancy and making a demand towards arrears rent payable at the revised rate on and from July, 2012 and municipal taxes as applicable from 1st January, 2013 until recovery of possession. The plaintiff had demanded mesne profits. The plaintiff has exhibited 23 documents during his evidence that were marked as Exhibit “A” to “W”. 10. On the basis of the oral and documentary evidence, it appears that the defendant is in possession of the suit premises under an unregistered lease and had paid rent on the basis of such lease agreement up to June, 2012. The said lease is an unregistered document and, accordingly, it becomes a tenancy from month to month terminable on the part of either lessor or lessee by 15 days’ notice expiring with the end of a month of the tenancy in terms of Section 106 of the Transfer of Property Act. The defendant has become a monthly tenant under the plaintiff. 11. The defendant has become a monthly tenant under the plaintiff. 11. The ground for termination of the lease appears to be that the parties have failed to mutually agree to the revised rate of rent although the plaintiff contended that the defendant had agreed to pay rent at the rate of Rs.105/- per sq. ft. per month on and from July, 2012. It appears that initially the plaintiff suggested Rs.115/- per sq. ft. per month but the same was reduced to Rs.105/- per sq. ft. per month and on that basis, the draft lease agreement was forwarded to the defendant. The witness has stated that the Bank of Maharashtra had agreed to pay rent at the said rate and has been paying rent at such revised rate. The defendant being similarly placed and situated, is also expected to pay such revised rent and execute the deed of lease forwarded by the plaintiff. 12. The witness has stated that in the event, the defendant executed the lease document and abide by the terms and conditions mentioned in the said draft lease agreement and agree to pay Rs.105/- per sq. ft. on and from July, 2012, the plaintiff is agreeable to continue with the tenancy of the defendant and would not claim eviction. 13. In Anthony Vs. K.C. Ittoop & Sons & Ors. reported in 2000 (6) SCC 394 , the Hon’ble Supreme Court dealing with Sections 105 and 107 of the Evidence Act stated that a lease of immovable property is defined in Section 105 of the TP Act. A transfer of a right to enjoy a property in consideration of a price paid or promised to be rendered periodically or on specified occasions is the basic fabric for a valid lease. The provision says that such a transfer can be made expressly or by implication. Once there is such a transfer of right to enjoy the property a lease stands created. What is mentioned in the three paragraphs of the first part of Section 107 of the TP Act are only the different modes of how leases are created. The first paragraph deals with the mode of creating the particular kinds of leases mentioned therein. All other leases, if created, necessarily fall within the ambit of the second para. Thus, dehors the instrument, parties can create a lease as envisaged in the second para of Section 107. 14. The first paragraph deals with the mode of creating the particular kinds of leases mentioned therein. All other leases, if created, necessarily fall within the ambit of the second para. Thus, dehors the instrument, parties can create a lease as envisaged in the second para of Section 107. 14. Non-registration of the document had caused only two consequences. One is that no lease exceeding one year was created. Second is that the instrument became useless so far as creation of the lease is concerned. Nonetheless the presumption that a lease not exceeding one year stood created by conduct of parties remains unrebutted. 15. When lease is a transfer of a right to enjoy the property and such transfer can be made expressly or by implication, the mere fact that an unregistered instrument came into existence would not stand in the way of the court to determine whether there was in fact a lease otherwise than through such deed. 16. A lease month by month is determinable either lessor or lessee by 15 days’ notice expiring with the end of the month of the tenancy. The lessor is not required to give any reason for determination of such lease. 17. In my view, the lease has been validly determined. 18. However, having regard to the evidence on record, I am of the view, that an opportunity should be given to the defendant to execute the draft lease deed forwarded by the plaintiff to the defendant under cover of a letter dated 11th September, 2012 (Exbt. “I”) collectively on or before 16th December, 2013 and in the event, the defendant executes such lease agreement, the plaintiff shall not claim any mesne profits or interests and the bank would be entitled to pay the arrears revised lease rentals in four equal instalments commencing from 7th January, 2014. The subsequent instalments shall be paid on or before 7th of each succeeding month. The payment of current lease rentals and other terms in that case shall be governed by the lease agreement. However, in the event, the defendant fails to execute the said deed of lease on or before the stipulated date, the plaintiff shall be entitled to a vacant possession of the tenanted suit premises as described in Annexure “A” to the Plaint. There shall also be a decree for a sum of Rs.37,07,814/- being the arrears rent from July, 2012 to December, 2012. There shall also be a decree for a sum of Rs.37,07,814/- being the arrears rent from July, 2012 to December, 2012. The plaintiff shall be entitled to mesne profit at the rate of Rs.105/- per sq.ft. per month for the tenanted portion from January, 2013 till recovery of possession. Such mesne profit is determined on the basis of the evidence that the Bank of Maharashtra in the said building has been paying rent at the rate of Rs.105/- per sq. ft. per month for the areas under its occupation. 19. In course of examination the witness Mr. Dhanraj Baid, has produced a letter dated 6th March, 2013 and a lease deed dated 3rd January, 2013 registered on 19th February, 2013 in respect of a portion of the suit premises. The original copy of the lease document, as would appear from the letter dated 6th March, 2013, was forwarded to the Deputy Manager, Bank of Maharashtra. It appears that Bank of Maharashtra was inducted as a lessee in or about August 28, 1992 and the period of the said lease expired on 31st January, 2012. Thereafter on negotiation a fresh lease was executed. It appears that the Bank of Maharashtra is in occupation of 6150 sq.ft. built up area and paying rent at the rate of Rs.105/- per sq. ft. built up area per month on and from 1st February, 2012. The said lease is for 11 years. 20. In view of the aforesaid, the defendant similarly situated would also be required to pay rent at the rate of Rs.105/- per sq. ft. per month unless there are special circumstances and/or reasons for paying a less amount. The defendant in spite of notice did not appear and contest the proceedings. In view thereof, the mesne profit determined as aforesaid, in my view, is just, fair and reasonable. 21. The plaintiff shall forward the said draft lease agreement along with a copy of this order to the defendant on or before October 16, 2013. 22. The department is directed to draw up the decree as expeditiously as possible.