Amendment To Section 106 Of The Transfer Of Property Act 1882 Shall Apply Retrospectively

CAUSE TITLE:
Manathanath Kunhahammed vs .Kizhakke Theruvathakath Cherammal Thodiyil Unnimoideenkutty

DATE OF JUDGMENT:
6 February 2009

JUDGE(S):
HON’BLE JUSTICE THOMAS P. JOSEPH

PARTIES:
Appellant: Manathanath Kunhahammed
Respondents: Kizhakke Theruvathakath Cherammal Thodiyil Unnimoideenkutty

SUBJECT

The Kerala High Court in this case dealt with 2 important question of law regarding the effect of non-registration vis-s-vis the effect of holding over along with the application and effects of the 2003 amendment to section 106 of the Transfer of Property Act.

IMPORTANT PROVISIONS

Transfer of Property Act, 1882

Section 106 Duration of certain leases in absence of written contract or local usage.—

(1) 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; 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.

(2) Notwithstanding anything contained in any other law for the time being in force, the period mentioned in sub-section (1) shall commence from the date of receipt of notice.

(3) 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.

(4) Every notice under sub-section (1) must be in writing, signed by or on behalf of the person giving it, and either be sent by post to the party who is intended to be bound by it or be tendered or delivered personally to such party, or to one of his family or servants at his residence, or (if such tender or delivery is not practicable) affixed to a conspicuous part of the property.

Section 107 Leases how made.— A lease of immoveable 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 immoveable property may be made either by a registered instrument or by oral agreement accompanied by delivery of possession.

Where a lease of immoveable property is made by a registered instrument, such instrument or, where there are more instruments than one, each such instrument shall be executed by both the lessor and the lessee:

Provided that the State Government may, from time to time, by notification in the Official Gazette, direct that leases of immoveable property, other than leases from year to year, or for any term exceeding one year, or reserving a yearly rent, or any class of such leases, may be made by unregistered instrument or by oral agreement without delivery of possession.

Section 116 Effect of holding over.—If a lessee or under-lessee of property remains in possession thereof after the determination of the lease granted to the lessee, and the lessor or his legal representative accepts rent from the lessee or under-lessee, or otherwise assents to his continuing in possession, the lease is, in the absence of an agreement to the contrary, renewed from year to year, or from month to month, according to the purpose for which the property is leased, as specified in section 106.

Registration Act, 1908

Section 17(1) Documents of which registration is compulsory.- (I) The following documents shall be registered, if the property to which they relate is situate in a district in which, and if they have been executed on or after the date on which, Act 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,-

(a) Instruments of gift of immovable property;

(b) other non-testamentary instruments which purport or operate to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property;

(c) non-testamentary instruments which acknowledge the receipt or payment of any consideration on account of the creation, declaration, assignment, limitation or extinction of any such right, title or interest; and

(d) Leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent;

(e) non-testamentary instruments transferring or assigning any decree or order of a Court or any award when such decree or order or award purports or operates to create, declare, assign, limit or extinguish, whether in present or in future, any right, title or interest, whether vested or contingent, of the value of one hundred rupees and upwards, to or in immovable property:

Provided that the State Government] may, by order published in the Official Gazette, exempt from the operation of this sub-section any leases executed in any district, or part of a district, the terms granted by which do not exceed five years and the annual rents reserved by which do .not exceed fifty rupees.

BRIEF FACTS

• The original plaintiff/ respondent herein (who died during the pendency of this appeal) contended that the scheduled property which was allotted to his share vide partition deed 1348 of 1964 was given on lease to the appellant for a period of 5 years for construction of boats at Rs. 300/- per month. Rs. 3600/- were paid to the respondent as a security amount for observance of the terms and conditions of the agreement.
• Appellant agreed to pay rent every month and surrender the land after the expiry of the lease but he paid the stipulated rent only for 38 months.
• The period of the lease expired on 15.01.1987.
• Respondent issued the notice on28.10.1987 for termination of tenancy by 15.11.1987 along with demand for vacant possession which was not complied with by the appellant. Hence, a suit for recovery of possession, realisation of rent arrears and damages foruse and occupation from 16.11.1987 onwards was filed.
• Appellant defended the suit by contesting that the respondent and his elder brother had given the land in question to him under an oral lease on 15.09.1962 for the stipulated rent of Rs. 25 per month and by receiving Rs. 100/- advance. Appellant further contended that he constructed a shed on the said land which he used for the construction of the boats in pursuance of the lease.
• The agreement of 1982 was executed after the insistence of the respondent. This agreement stipulated the rent of Rs. 300/- per month.
• The respondent claimed to be a commercial lessee and sought protection under section 106 of the Kerala land reforms act. It was further contended by him that notice of termination of the tenancy was not in accordance with the law.
• On the request of the appellant, the matter was sent to Land Tribunal for decision.
• The ld. Tribunal observed that no commercial lease is involved. Ld. Munsiff also accepted the said finding and decreed the suit as prayed for.
• The First appeal was filed before the district judge. The appeal failed. Hence, the second appeal was filed before the Hon’ble High Court of Kerala.

QUESTIONS OF LAW

• Whether the termination of the lease for manufacturing purpose by fifteen days' notice is valid?
• 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?

ARGUMENTS BY THE APPELLANT

• The 15 days notice for termination of tenancy is invalid as it does not conform to the requirements of sec 106(1) of the TPA.
• As it is admitted by the respondent by his averment in the plaint that the lease was for a period of 5 years for the purpose of manufacturing, it could only be terminated by a six month notice.
• Counsel for the appellant relied on a plethora of judgments to contend that amendment of substantive law cannot be given retrospective effect unless it is so provided expressly or by necessary implication.

ARGUMENTS BY THE RESPONDENT

• There is no contention as to the invalidity of the said notice in the written statement of the appellants. In such a case, the validity of the notice cannot be challenged.
• Since the written agreement is an unregistered document, it cannot create a lease for a period of 5 years.
• As it is admitted by the appellant that he was put in possession of the said land, he becomes a tenant holding over.
• It was an agreement to pay monthly rent and its payment till 15.03.1985 amounted to a contract as contrary to the stipulation under section 106 of the TPA. Hence, this should be deemed to be a monthly lease terminable by 15 days notice.
• Respondents relied on the decision of the Hon’ble SC in the case of Dharam Pal v. Harbans Singh to support their contentions against the plea of invalidity of the notice.

ANALYSIS

• The argument of the respondent that the appellant cannot raise the question of the invalidity of notice was rejected by the Hon’ble HC as there was a significant difference in the factual scenario of the present case and the case cited by the respondents.
• The HC however accepted that the unregistered document dated 16.1.1982 could not create a lease for a period of 5 years.
• But, as per the judgment in the case of Mohammed Kunju IshaBeevi v. Elayakunju Shahul Hameed, it was held that, though the lease under which the tenant has been given the possession is void, if the tenant pays the rent and same is accepted by the landlord, the person becomes a tenant by holding over as per Sec 116 of the act.
• On the question of application of the amendment to section 106 of the Transfer of Property Act, the court analyzed the report of the 181st Law Commission along with the object and reasons for the said amendment and reached the conclusion that the amendment to Sec.106 of the Act applicable to suits and proceedings pending at the commencement of Act 3 of 2003 and hence would apply to the present case as well, as an appeal, is a continuation of the suit.

CONCLUSION

The High Court dismissed the Appeal by holding that amendment to Sec.106 of the Act applied with all its vigour to 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 the 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.

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