Manthanath Kunhahammed vs Kizhakke Theruvathakath Unnimoideenkutty

O R D E R THOMAS P. JOSEPH, J. -------------------------------------- S.A.No.669 OF 1997 -------------------------------------- Dated this the 6th day of February, 2009.

JUDGMENT

The substantial questions of law arising for a decision are whether

the termination of the lease for manufacturing purpose by fifteen days' notice is

valid and whether, amendment to Section 106 of the Transfer of Property Act,

1882 (for short, "the Act") introduced by the Transfer of Property (Amendment)

Act, 2002 (Act 3 of 2003) applied to pending suits and proceedings.

2. Respondent/plaintiff (he died pending this appeal - Additional

respondents are his legal representatives) claimed that the schedule property

which was allotted to his share as per Ext.A3, partition deed No.1348 of 1964

was leased to the appellant as per an agreement dated 16.1.1982 for a period of

five years for construction of small boats and stipulating payment of rent at the

rate of Rs.300/- per month. Respondent received Rs.3,600/- as advance as

security for the due observance of the terms and conditions of the agreement.

Appellant had agreed to pay the monthly rent each month and surrender the land

on the expiry of the period of lease. Appellant paid the rent only for 38 months

since the date of entrustment. The period of lease expired by 15.1.1987.

Respondent issued Ext.A1, notice on 28.10.1987 terminating the tenancy by

15.11.1987 and demanding vacant possession. Appellant did not comply.

Hence the suit for recovery of possession, realisation of rent arrears and SA No.669/1997 2

damages for use and occupation from 16.11.1987 onwards. Appellant resisted

the suit contending that the respondent and his elder brother had granted to him

the land referred to in the plaint schedule on 15.9.1962 under an oral lease for

manufacturing purpose (construction of small boats) stipulating the monthly rent

payable by him at Rs.25/- per month and receiving Rs.100/- by way of advance.

Pursuant to that lease he constructed a shed in the said land and has been

using it for construction of small boats. Later, as insisted by the respondent an

agreement was executed in the year 1982 stipulating the rent payable at

Rs.300/- per month. He is a commercial lessee of the land entitled to the

protection of Section 106 of the Kerala Land Reforms Act. He also contended

that Ext.A1, notice terminating the tenancy is not in accordance with the law.

Accepting the request of the appellant, the issue regarding commercial lease

was referred to the Land Tribunal for decision. The Land Tribunal found that no

commercial lease is involved and answered the reference accordingly (Ext.B1 is

the order of the Land Tribunal). Learned Munsiff accepted the finding, rejected

the other contentions raised by the appellant and decreed the suit as prayed for.

Appellant preferred A.S.No.128 of 1994 before the learned District Judge. The

contentions raised by the appellant before the learned District Judge did not

succeed. The appeal was dismissed. Hence, this Second Appeal. SA No.669/1997 3

3. Though, in the courts below appellant had sought protection under

Sec. 106 of the Kerala Land Reforms Act, that contention is not pressed before

me. Learned counsel for appellant contends that Ext.A1, notice dated

28.10.1987 terminating the tenancy with 15 days notice by 15.11.1987 is

invalid as it does not conform to the requirement of Sec. 106(1) of the Act.

According to the learned counsel it is the admitted case of the respondent as

seen from the averment in the plaint that the lease is for five years for

manufacturing purpose and hence the lease could be validly terminated only by

six months' notice expiring with the end of the year of the tenancy. Even if it is

assumed that appellant is a tenant holding over the premises, it is contended

that since the lease is for manufacturing purpose and no contract to the

contrary is pleaded or proved by the respondent, the lease must be deemed to

be from year to year, terminable only as aforesaid. In response, learned

counsel for the additional respondents contended that in the absence of specific

contention in the written statement as to how the notice is invalid, appellant

cannot challenge the validity of Ext.A1, notice. It is also contended that since

the agreement of lease though reduced into writing is unregistered, that

instrument cannot create a lease for five years. But it is admitted by the

appellant that he has been put in possession of the premises on agreement to

pay monthly rent. According to the learned counsel, appellant is a tenant holding

over. The agreement to pay monthly rent and its payment every month till SA No.669/1997 4

15.3.1985 amounted to a contract to the contrary as stated in Sec. 106(1) of the

Act. Hence the lease must be deemed to be from month to month terminable by

fifteen days' notice expiring with the end of the month of tenancy. The lease

was created on 16.1.1982. Hence it is contended that Ext.A1, notice dated

28.10.1987 terminating the lease by 15.11.1987 is valid.

4. Learned counsel for additional respondents referred me to

the decision of the Supreme Court in Dharam Pal v. Harbans Singh [(2006) 9

SCC 216). It is held in that case that a mere contention that "the notice is illegal,

null and void and ineffective upon the right of the defendant" is not sufficient. It

was observed thus -

"........Law is well settled that an

objection as to the invalidity or insufficiency of

notice under Section 106 of the Transfer of

Property Act should be specifically raised in

the written statement failing which it will be

deemed to have been waived. In the present

case, the only objection taken in the written

statement is that the notice issued by the

plaintiff was "illegal, null and void and

ineffective upon the right of the defendant".

The thrust of the plea raised by the defendant-

appellant in his written statement was that the

notice was issued by the person who did not SA No.669/1997 5

have the authority from the landlord to give the

notice. The plea so taken has been found

devoid of merit by the High Court and the

courts below. The plea that the notice was

insufficient in the sense that it did not give 15

clear days to the tenant to vacate or that the

notice did not terminate the tenancy with the

expiry of the month of the tenancy, has not

been taken in the written statement.

Obviously for want of specific

plea in the written statement, the trial court has

not framed any issue reflecting an objection to

the validity or sufficiency of notice, the plea in

the manner in which it is sought to be urged

before us. The plea as to insufficiency of

notice should be deemed to have been waived

by the appellant and cannot be allowed to be

urged at this stage."

(underline supplied)

According to the learned counsel for additional respondents Ext.A2, reply notice

dated 10.11.1987 keeps silent about the alleged invalidity of Ext.A1, notice and

in the written statement there is no specific contention raised except a vague

statement that the notice (Ext.A1) is not in accordance with the law. But in this

case on the basis of the contention raised in the written statement, an issue SA No.669/1997 6

regarding the validity of termination of the lease was raised by the learned

Munsiff, the parties went to trial on that issue, addressed arguments and the

appellant was permitted to urge that contention in the first appellate court also.

Unlike the facts of this case, the Supreme Court was considering a case where

for lack of proper plea in that regard the trial court did not even raise an issue

regarding the validity of termination of lease and a contention in that regard was

attempted to be raised in the Supreme Court. In the factual situation of this

case the argument that the appellant cannot raise the contention regarding

validity of the termination of the lease has to be rejected.

5 . The lease in this case was created for a period of five years as per

an unregistered agreement dated 16.1.1982. Section 107 of the Act states 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".

(underline supplied)

Section 17(1) of the Registration Act, 1908 is as under:

"Documents of which registration is

compulsory-(1) The following documents shall

be registered if the property to which they relate

is situated in a district in which, and if they have

been executed on or after the date on which, SA No.669/1997 7

Act No.XVI of 1864, or the Indian Registration

Act, 1866, or the Indian Registration Act, 1871,

or the Indian Registration Act, 1877, or this Act

came or comes into force, namely:

(d) leases of immovable property from

year to year, or for any term exceeding one

year, or reserving a yearly rent."

Section 49 of the Registration Act states:

"49. Effect of non-registration of

documents required to be registered - No

document required by S.17 (or by any provision

of the T.P.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 or conferring

such power, unless it has been registered.

(Provided that an unregistered

document affecting immovable property and

required by this Act, or the Transfer of Property

Act, 1882, to be registered may be received as

evidence of a contract in a suit for specific

performance under Chapter II of the Specific

Relief Act, 1877, or as evidence of part

performance of a contract for the purposes of

S.53A of the Transfer of Property Act, 1882 or

as evidence of any collateral transaction not SA No.669/1997 8

required to be effected by registered

instrument)."

In view of the above provisions the unregistered instrument dated 16.1.1982

could not create a lease from year to year or for any period exceeding one year

or even reserving a yearly rent. But it is admitted by the appellant that he was

put into possession of the schedule property as a lessee on an agreement to pay

monthly rent. He does not dispute that he had paid the rent every month upto

15.3.1985 (his claim is that he paid the rent upto and inclusive of May, 1985 and

produced Ext.B2, rent receipt dated 30.4.1982). Even when the lessee is

inducted into possession as per an unregistered lease, it is possible to say when

the lessee paid the rent and it is accepted by the landlord that it is a tenancy by

holding over. Mulla on "The Transfer of Property Act", 7th Edition at page 771

states that

"an oral lease for more than one year, if

accompanied by delivery of possession is valid

for one year and the lessee continuing in

possession thereafter with the assent of the

lessor becomes a tenant by holding over".

In Biswabani Pvt. Ltd v. Santhosh Kumar (AIR 1980 SC 226) the tenant was

validly inducted into the premises for a specific period. The renewal lease was

found to be void. The Supreme Court observed:

"..............Even if it is assumed that the

tenant was put in possession for the first time SA No.669/1997 9

under a lease which turned out to be void, as

he came into possession of the premises with

the consent of the landlords and paid rent

from month to month an inference of tenancy

could be drawn and the duration of the

tenancy in such circumstances had to be

deemed to be from month to month....."

In Mohammed Kunju Isha Beevi v. Elayakunju Shahul Hameed (1993 (2) KLT

631) the lease was for a period exceeding one year created as per an

unregistered agreement. Following the decision in Biswabani Pvt. Ltd. v.

Santosh Kumar, it was held that

"..............even though Ext.A1 is a void

lease the defendant who is in possession

under that void lease paid rent and the

landlords accepted the rent upto 12-9-1985.

On the reasoning in the said case we hold that

the defendant became a tenant by holding over

under S.116 of the Transfer of Property Act

even though the provisions of S.107 of the

T.P.Act have not been complied with and that it

can be deemed to be a monthly lease

terminable by 15 days notice."

Appellant therefore, notwithstanding that he was inducted into suit property

under a void lease agreement has to be treated as a tenant holding over, under

Sec. 116 of the Act.

SA No.669/1997 10

6. What then, is the duration of that lease and how is it to be

terminated? Section 106(1) of the Act states:

"In the absence of a contract or local

law or usage to the contrary, a lease of

immovable property for agricultural or

manufacturing purposes 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 the tenancy."

The Section contains two parts, the former part dealing with lease for

agricultural or manufacturing purposes which shall be deemed to be from year

to year terminable by six months' notice and the latter part dealing with lease

for other purposes which shall be deemed to be from month to month

terminable from the part of either parties by 15 days' notice. It is not specifically

averred in the plaint that the tenancy is from month to month but the plaint refers

to the agreement between the parties fixing the monthly rent and the liability of

appellant to pay that rent every month. The provision for payment of monthly

rent can spell out a contract to the contrary regarding the duration of the lease. SA No.669/1997 11

In Jewan Singh v. Mandalal (AIR 1955 Assam 102) a Division Bench of that

court held that the mode in which the rent is expressly payable affords a

presumption that the tenancy is of a character corresponding to the nature of

the monthly or the annual payment. Similar view was taken by a Single Judge of

the Allahabad High Court in Binda Din v. Shrimati Pran Dei (1968 Allahabad

Law Journal 721). In that case it was held that ordinarily in the case of a

tenancy for manufacturing purposes, it should be held to be a tenancy from year

to year terminable by six months' notice but there was nothing in law to prevent

the parties from coming to an agreement between themselves under which

irrespective of the nature of the tenancy they treated the tenancy as a monthly

tenancy. The tenancy was found to be from month to month on account of the

fact that stipulation was for payment of monthly rent, paid by the tenant and

received by the landlord although the tenancy was for manufacturing purpose.

In Mohammed Kunju Isha Beevi v. Elayakunju Shahul Hameed (referred

supra) though the lease was for a period exceeding one year as per the

agreement which was found to be void for want of registration, the defendant

who was in possession under that void lease paid the rent and the landlord

accepted the same. Hence on the reasoning of the decision in Biswabani Pvt.

Ltd.'s case (referred supra), the defendant was found to be a tenant holding

over under Sec. 116 of the Act. It was held that it could be deemed to be a

monthly lease terminable by 15 days' notice. In this case, the period of five SA No.669/1997 12

years was fixed under a void lease agreement which is ineffective. Appellant

admittedly was inducted into the premises as a lessee with liability to pay the

monthly rent and at any rate he paid the monthly rent upto 15.3.1985. The

period of lease fixed as per the unregistered instrument expired at any rate by

15.1.1987. There is no case or evidence that thereafter the lease was renewed

for any period exceeding one year. These circumstances are sufficient to show

a contract to the contrary as referred to in the first part of Sec. 106(1) of the Act

that the lease was from month to month though it was for manufacturing

purpose. Therefore, Ext.A1, notice dated 28.10.1987 terminating the tenancy

with 15 days' notice is valid.

7. The second question arising for a decision is whether the

amendment to Sec. 106 of the Act introduced by Act 3 of 2003 which got

assent of the President of India on 31.12.2002 would apply to pending suits

and proceedings. Sub-sec. (3) introduced by Act 3 of 2003 and which is

relevant in this case states:

"A notice under sub-section (1) shall not

be deemed to be invalid merely because the

period mentioned therein falls short of the

period specified under that sub-section, where

a suit or proceeding is filed after the expiry of

the period mentioned in that sub-section."

(underline supplied) SA No.669/1997 13

In this case Ext.A1, notice was issued on 28.10.1987, served on the appellant

on 29.10.1987 and terminated the tenancy by 15.11.1987. Appellant was called

upon to vacate the premises on such termination. Learned counsel for additional

respondents contends that even if six months' notice was required for the valid

termination of the lease under Sec. 106(1) of the Act, that six months' period

expired by 14.4.1988 (from Ext.A1, notice dated 28.10.1987). The suit was filed

only on 14.9.1988 much after the expiry of the said period of six months.

8. Learned counsel for appellant made a forceful submission that the

amendment cannot affect the rights of the parties which is already crystalised.

According to the learned counsel, amendment of substantive law cannot be

given retrospective effect unless it is so provided expressly or by necessary

implication. Learned counsel would draw support from the decisions in

Janardhan Reddy v. The State(AIR 1951 SC 124), Namdeo v. Narmadabai

(AIR 1953 SC 228), K.S.Paripoornan v. State of Kerala (AIR 1995 SC 1012)

and C.Gupta v. Glaxo-smithkline Pharmaceuticals Ltd. [(2007)7 SCC 171].

Learned counsel contends that no retrospectivity is given to Sub-sec. (3) of Sec.

106 of the Act either expressly or impliedly.

9. Amendment of substantive law in the absence of express words or

necessary implication cannot be given retrospective application. Where vested

rights are affected by any statutory provision, such provision must normally be SA No.669/1997 14

construed as prospective in its operation. But it is not as if the Legislature is

not competent to take away even vested rights by means of retrospective

legislation. It is therefore to be ascertained whether Act 3 of 2003 applied to

pending suits and proceedings.

10. The Law Commission of India in its 181st Report dated 9th May,

2002 on the need to amend Sec.106 of the Act said :

"..............the purpose of the provision in

Section 106 is to terminate the relationship of

lessor and lessee before the lessor sues for

possession. He has no right of entry till the

tenancy is disrupted. Further, the idea is that

every lessee must have some reasonable

notice before he is asked to vacate the

premises.

If these were the purposes behind

Section 106 but in fact, the lessee had by the

date of suit or the date of dismissal of suit

years later, more than the period specified in

the statute, it is nothing but injustice to the

lessor if he is compelled to file a fresh suit.

Any procedure that leads to multiplicity of

court cases must be avoided."

SA No.669/1997 15

As to the applicability of the amendment to pending proceedings the Law

Commission said:

"..........we are also recommending that

the proposed amendments be applied to

pending proceedings.

We hope that, once these

amendments are brought into force,

unnecessary rounds of litigation will be

avoided and justice will be done to the plaintiff

who had issued the notice, be he the lessor or

lessee."

(underline supplied).

The Government accepted the recommendation contained in the Report and

enacted Act 3 of 2003.

11. Section 3 of Act 3 of 2003 states:

"3. Transitory provisions.- The

provisions of S.106 of the principal Act, as

amended by S.2, shall apply to -

SA No.669/1997 16

(a) all notices in pursuance of which any

suit or proceeding is pending at the

commencement of this Act; and

(b) all notices which have been issued

before the commencement of this Act, but

where no suit or proceeding has been filed

before such commencement."

(underline supplied)

Objects and reasons for amendment to Sec. 106 of the Act are stated in the

Bill. It is as follows:

"Section 106 of the Transfer of Property

Act, 1882, inter alia, provides that the lease of

immovable property for agricultural or

manufacturing purposes shall be deemed to be

a lease from year to year, which may be

terminated either by the lessor or the lessee by

six months' notice expiring with the end of the

year of the tenancy; and a lease of the

immovable property for any other purpose shall

be deemed to be a lease from month to month,

which may be terminated either by the lessor or

lessee by fifteen days' notice expiring by the SA No.669/1997 17

end of the month of the tenancy. The legal

position, which has also been reiterated by the

Supreme Court in Mangilal v. Sugan Chand

AIR 1965 SC 101, 104, is that while computing

the period of notice the day on which the notice

is served is required to be excluded. The Law

Commission of India in its 181st Report on

Amendment to section 106 of the Transfer of

Property Act, 1882 has examined the working

of this section and found that a number of suits

have been filed in ignorance of this legal

position and these suits have been dismissed

on this lone technicality. Such a position

leads to serving of a fresh notice and filing of a

fresh suit which amounts not only to serious

injustice but also to multiplicity of litigations

despite the fact that the defendant had more

time available to him than the prescribed period

of notice by the date when the suit is filed to

evict him or even by the date of judgment

dismissing the suit.

Hence, it is proposed that the

period of notice shall commence from the date

of its receipt and the amendment shall apply to

the pending suits or proceedings and notices

issued before the commencement of the

proposed amendment.

SA No.669/1997 18

The Bill seeks to achieve the

aforesaid object."

(underline supplied)

Commending on the said Object and reasons in "The Transfer of Property Act"

by B.B.Mitra, 18th edition at page 989 the author says:

" the transitory provision itself makes it

quite clear that not only in pending suits but

even in those cases where notices had

already been issued in terms of the old law,

the provisions of the new sec.106 shall apply.

The transitory provision cannot work adversely

to the interest of the lessor but it may affect

the interest of the defendant-lessee because it

may no more be possible for the lessee to

take the plea that the impugned notice is bad

as it did not expire with the end of a year or

month of the tenancy".

(underline supplied) SA No.669/1997 19

The transitory provisions make the amendment to Sec.106 of the Act applicable

to suits and proceedings pending at the commencement of Act 3 of 2003. An

appeal is a continuation of the suit. This appeal was pending in this Court at the

commencement of Act 3 of 2003. Hence Sec.106(3) of the Act introduced by

Act 3 of 2003 applied with all its vigour to Ext.A1, notice dated 28.10.1987 and

the suit filed pursuant to that notice. Sub-sec. (3) of Sec.106 takes care of the

alleged inadequacy for Ext.A1, notice which the appellant has been

complaining about all these years though he was not at all affected or

prejudiced by the alleged inadequacy as the suit was filed after five months of

the date on which according to him the lease could be validly terminated.

A litigation which was initiated two decades back comes to an end.

Appeal is dismissed.

THOMAS P.JOSEPH, Judge.

cks SA No.669/1997 20

Thomas P.Joseph, J.

S.A.No.669 of 1997

Judgment

6th February, 2009.