Wednesday, September 27, 2023

When Can An Unregistered Lease Deed, Which Is Compulsorily Registrable, Be Admitted To Show Nature & Character Of Possession? Supreme Court Explains

The Supreme Court Bench comprising 
Justice Aniruddha Bose and Justice Vikram Nath, while interpreting Section 49 of the Registration Act, 1908, has held that an unregistered lease deed (which is otherwise compulsorily registrable) can be admitted in evidence to show the ‘nature and character of possession’, only when the ‘nature and character of possession’ is not the main term of the lease and is not the primary dispute before the Court for adjudication.
In 2003, a Landlady and Tenant entered into an unregistered Tenancy Agreement in respect of a property (“Premises”) for a period of 5 years. The Tenancy Agreement was not renewed after 5 years but Tenant continued in possession without payment of rent. In 2008, the Landlady sent a notice to the Tenant (addressing him as a monthly tenant) directing him to vacate the Premises within 15 days, which the latter didn’t comply with.

Section 106 of the Transfer of Property Act, 1882 (“TP Act”) stipulates that in the absence of a contract, the lease of immovable property for agricultural or manufacturing purposes shall be from year to year, terminable, on the part of either lessor or lessee, by six months’ notice. It further states that 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.

Section 107 of the TP 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.

Section 17 of the Registration Act, of 1908 provides a list of documents which are to be compulsorily registered and it includes a document whereby an immovable property has been given on lease for a term exceeding one year.

When the Premises were not vacated, the Landlady filed a civil suit seeking recovery of possession and decree for mesne profits.

The Tenant contended that the Premises was let out for manufacturing purpose and hence as per Section 106 of TP Act it could only be terminated by giving a 6 months’ notice. Further, it was a lease agreement for a period exceeding one year under which he was inducted as a Tenant, which requires compulsory registration. The same being unregistered, was not admissible as evidence in court and the suit was accordingly not maintainable.

The Trial Court held that the lease was from month to month being governed by TP Act and was not for any manufacturing purpose. Thus, a notice of 15 days’ was valid and suit was maintainable. The suit was decided in favour of Landlady.

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