Mrs. Shobha Vikram vs. M/S Rheotech Foundry PVT LTD

Facts

The petitioner, Mrs. Shobha Vikram, filed a suit seeking ejection of the respondent, M/s Rheotech Foundry Pvt Ltd, from a schedule property, along with arrears of rent, GST, and mesne profits. The Commercial Court framed two preliminary issues: (1) whether the plaintiff lawfully terminated the tenancy, and (3) whether the suit was premature. The defendant contended that the notice terminating the tenancy was illegal as the property was an industrial manufacturing unit, requiring six months' notice. The trial court agreed, finding the 15 days' notice insufficient. The petitioner challenged this order before the High Court, arguing that the lease agreement, being unregistered and for a term exceeding one year, was invalid under Section 107 of the Transfer of Property Act, 1882, thus rendering the six-month notice requirement under Section 106 inapplicable.

Held

The Court held that the lease agreement, being for a period of 5 years and unregistered, was invalid under Section 107 of the Transfer of Property Act, 1882. The Supreme Court in Samir Mukherjee (supra) and this Court in Prasanna (supra) have held that if a lease deed is not registered as required under Section 107, the embargo under Section 106 of the Act, which mandates a six-month notice for leases of immovable property for manufacturing purposes, would not apply. The existence of a valid lease is a prerequisite for invoking Section 106. Since the lease in question was not a valid lease within the meaning of Section 107, the rule of construction embodied in Section 106 was not attracted. Therefore, a 15-day notice was sufficient for termination. The finding on preliminary issues 1 and 3 by the trial court was set aside. Issue No. 1 was answered in the affirmative, and Issue No. 3 was answered in the negative. The trial court was directed to proceed with the trial on other issues.

Key Issues

1. Whether the plaintiff proves that the tenancy of the defendant in respect of the schedule property has been lawfully terminated, considering the lease agreement is unregistered and for a term exceeding one year, and whether Section 106 of the Transfer of Property Act, 1882, requiring six months' notice for manufacturing purposes, is applicable. 2. Whether the suit is premature. Petitioner's arguments: The petitioner argued that the lease agreement dated 26.11.2019, for a duration of 5 years from 01.02.2020, was unregistered. As per Section 107 of the Transfer of Property Act, 1882, a lease for a term exceeding one year must be by a registered instrument. Since the lease was not registered, it was invalid. Consequently, the stipulation for six months' notice under Section 106 of the Act for manufacturing purposes could not be invoked. The petitioner relied on Samir Mukherjee vs. Davinder K. Bajaj and Prasanna vs. S. Nagalaxmi. Revenue/State's arguments: The respondent (defendant) contended that the notice dated 13.09.2021, terminating the tenancy with effect from 13.09.2021 and seeking possession by 12.02.2021, was illegal as the demised premises was a manufacturing unit, requiring six months' notice. The judgment does not record specific arguments from the Revenue/State, but the trial court's order reflects their contention.