Holding

An unregistered lease deed does not create a lease, but where the parties have a landlord‑tenant relationship evidenced by possession and rent payment, the occupant becomes a statutory tenant under the Kerala Building (Lease and Rent Control) Act, 1965, and eviction can only be effected by the Rent Control Court.

Summary

Anthony was inducted into possession of a shed by the owner under an unregistered lease deed for five years and paid monthly rent. The ownership later passed to the respondents who sued for eviction; the trial court dismissed the tenancy claim and decreed eviction. On first appeal, the district court held that despite the lease being void for non‑registration, a landlord‑tenant relationship existed, making Anthony a statutory tenant under the Kerala Building (Lease and Rent Control) Act, 1965, and that eviction could only be sought before the Rent Control Court. The Kerala High Court reversed this finding and ordered eviction. The Supreme Court allowed the appeal, holding that while an unregistered deed cannot create a lease, the facts showed a landlord‑tenant relationship, rendering the appellant a statutory tenant whose eviction must be pursued under the Rent Act, and set aside the High Court decree.

Issues considered

Whether an unregistered lease deed can create a valid lease and landlord‑tenant relationship.
Whether a person in possession paying rent under such a deed becomes a statutory tenant under the Kerala Building (Lease and Rent Control) Act, 1965.
Effect of the statutory prohibitions in Section 107 of the Transfer of Property Act, 1882 and Sections 17(1) and 49 of the Registration Act, 1908 on the validity of the lease.
Whether payment of rent alone can establish a tenancy independent of a void lease.

Legislation cited

Kerala Building (Lease and Rent Control) Act, 1965s. 2(6), s. 3
Registration Act, 1908s. 17(1), s. 49
Specific Relief Act, 1877s. 53-A
Transfer of Property Act, 1882s. 105, s. 107

Subjects

leaseunregistered leaselandlord-tenant relationshipstatutory tenantrent controlevictionKerala Building (Lease and Rent Control) ActTransfer of Property ActRegistration Act

Judgment

ANTHONY A
v.
KC ITTOOP AND SONS AND ORS.

JULY 21, 2000

[K.T. THOMAS, D.P. MOHAPATRA AND R.C. LAHOTI, JJ.] B

Rent Control and Eviction:

Kera/a Building (Lease and Rent Control) Act, 1965-Sections 2(6), C
(3) and (/)-Relationship of-landlord-Tenant-On the face of an
unregistered lease deed-Person inducted into possession of the building by
the owner-Such person paying monthly rent-Held, that despite an
unregistered lease deed was executed between the parties, there was a
landlord tenant relationship between them-Further, after commencement of
Kera/a Building (Lease and Rent Control) Act, tenant became a statutory D
tenant and could be evicted only on an application moved before the Rent
Control Court-Transfer of Property Act, 1882 sections 107 and 105-
Registration Act, 1908 sections 17(/) and 49.

Words and Phrases:
E
"Let"-Meaning of

Appellant was inducted in possession of the building. It was as per an
unregistered lease-deed which was for a period of five years. Appellant paid
rent to the landlord and later to his successors-in-interest, the respondents. F
Thereafter, the respondents filed suit for eviction against the appellant. The
trial court decreed the suit. Iii the first appeal it was held that inspite of non-
registration of the lease-deed there was a valid tenancy and the appellant
cannot be evicted. This order was set aside in the second appeal ant the first
appeal was remanded back. After remand the district judge held that appellant
is the tenant as defined in the Kerala Building (Lease and Rent Control) Act G
and the respondents are not entitled to a decree. The proper remedy would be
to apply before the Rent Control Court. On the second appeal, High Court
passed an eviction decree in favour of the respondents. Hence, this appeal.

Allowing the appeal, the Court
645 H
646 SUPREME COURT REPORTS (2000) SUPP. I S.C.R.

A HELD: 1.1. An unregistered lease-deed cannot create a lease. But as
the appellant occupied the building as the tenant and paid rent to the landlord
and continued as such, independent of such void lease-deed, landlord-tenant
relationship existed. Hence, with the coming into force of Kerala Building
(Lease and Rent Control) Act, 1965, the appellant became a statutory tenant
whose eviction can be considered only when an application is moved before
B the Rent Control Court. 1653-H; 654-AI

2.1. A lease-deed cannot create a lease on account of statutory inhibitions
under section 107 of Transfer of Property Act, 1882 and sections 17(1) and
49 of the Registration Act, 1908. But this does not exhaust the scope of the
c
c issue whether appellant is a lessee of the building. Section 107 of the Act
states that 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.
(651-D-HI
D
Smt. Shantabai v. State of Bombay, AIR (1958) SC 532; Satish Chand
Makhan v. Goverdhan Das Byas, (198411 SCC 369 and Bajaj Auto Ltd v.
Behari Lal Kohli, AIR (1989) SC 1806, relied on.

2.2. As the appellant was inducted into the possession of the building
E by the owner and paying monthly rent or had agreed to pay rent in respect of
the building, the legal character of appellant's possession bas to be attributed
to a jural relationship between the parties. Therefore, such a jural relationship
is of lessor and lessee falling within the purview of section 107 of the Act.
1652-A-BI

F 2.3. Non-registration of the document bad 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 un-rebutted.1652-G]
G HS Rikhy v. New Delhi Municipal Corporation, (19621 3 SCR 604,
distinguished.

Technicians Studio Pvt. Ltd v. Lila Ghosh, 119771 4 SCC 324 and
Biswabani Pvt. Ltd v. Santosh Kumar Dutta, (198011 SCR 650, relied on.

H 3.1. The word "tenant" is defined in section 2(6) of the Kerala Building ..
ANTHONY v. KC ITTOOP AND SONS [THOMAS, J.] 647
(Lease and Rent Control) Act as "any person by whom or on whose account A
rent is payable for building...". Landlord is defined as including the person
who is receiving or is entitled to receive the rent of a building. Building is
defined as "any building or hut or part of a building or hut, let or to be let

- separately for residential or non-residential purposes...". Thus, the word "let"
has only one meaning, that is to demise on the lease. (649-E)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 5904 of 1999.
B

From the Judgment and Order dated 4.9.97 of the Kerala High Court in
S.A. No. 835 of 1988.
c
T.L. Viswanatha Iyer and T.G.N. Nair for the Appellant.

P. Krishnamurthy S. Prasad, Ms. Ashta Tyagi, Ms. Poonam Prasad for
the Respondents.

The Judgment of the Court was delivered by D

THOMAS, J. A dispute which constantly caused many litigations to
prolong in the past (whether a lease could be made by an unregistered
instrument when such deed is compulsorily registerable) has once again been
raised and that dispute has lengthened the longevity of this litigation through E
a chequered career. The successor of the party who was mainly responsible
for not registering the instrument has now been benefited of it as the impugned
judgment gave a decree for eviction of the person who was admittedly
inducted into possession of the building by the former. Though appellant
claimed protection under the provisions of the Rent Control legislation the
High Court discountenanced it on the premise that the document executed by F
the parties regarding the transaction is void under law. The .simple question
now is whether appellant can claim protection as a tenant under Kerala
Building (Lease and Rent Control) Act, 1965 (for short the Rent Act).

Facts, mostly undisputed, are the following: The building which is the
subject matter of this litigation is described as a shed which originally belonged G
to a family the senior member of which inducted the appellant in possession
thereof as per a lease deed dated 4.1.1974 which was ostensibly meant for a
period of five years. The monthly rent of the building has been fixed at Rs.
140. Appellant paid rent of the building at the said rate till October, 1974.
Sometime during this period ownership of the building happened to be allotted H
648 SUPREME COURT REPORTS [2000) SUPP. I S.C.R.

A to a female member of the family (Devaki) as per a partition effected between
its members. Thereafter rent of the building was paid by the appellant to the
aforesaid Devaki. Subsequently ownership of the building was transferred by
Devaki to the respondent who filed the suit as plaintiff (for the sake of
convenience respondent can be referred to as "the plaintiff''). The trial court
B decreed the suit by repelling the contention of the appellant that the suit was
not maintainable as he is protected from eviction under the provisions of the
Rent Act. The trial court found that the appellant is not a tenant as the lease
was void on account of non-registration of the lease-deed. In the first appeal
filed by the appellant a District Judge held that in spite of non-registration

C
of the instrument there was a valid tenancy of the building and hence appellant
could not be evicted except in accordance with the provisions of the Rent
Act. -
In a second appeal filed by the respondent a single judge of the High
Court of Kerala set aside the judgment of the District Court and remanded the
first appeal to that court by holding that the plaintiff was inducted into
D possession under a void lease and hence the court should consider "whether,
independent of this lease the defendant was in possession as a lessee from
month to month." Learned single judge pointed out that since it is a question
of fact the same has to be decided on the evidence on record. After the
remand the District Court entered upon a finding that despite the defect of
E non-registration of the instrument "the facts and circumstances of this case
and the evidence discussed above could clearly show that the parties intended
to create a lease." The District Judge further held that appellant is the tenant
as defined in the Rent Act and hence the plaintiff is not entitled to a decree
in this case and his remedy is to apply before the Rent Control Court.

F When the matter went up to the High Court again in a second appeal
a learned single judge did not agree with the approach made by the District
Judge after remand and the following observations, inter a/ia, have been
made by the High Court:

"It has to be noted that if the conclusion of this court on the earlier
G
occasion were that payment and acceptance of rent pursuant to the
void contract itself would bring about the relationship of landlord and
tenant between the parties protected under the Kerala Buildings (Lease
and Rent Control) Act this court would have certainly dismissed the
suit filed by the plaintiff by so finding and would not have remanded
H the appeal to the lower appellate court in the manner in which it was
ANTHONY v. KC ITTOOP AND SONS [THOMAS, J.] 649

done. The lower appellate court has ignored this aspect while A
purporting to record a finding that the first defendant would be a
tenant protected by the Kerala Buildings (Lease and Rent Control)
Act even if he had paid rent only under the void lease. The said
approach by the appellate court appears to me to be totally
unsustainable ................................................. .! am therefore constrained B
to set aside the finding of the lower appellate court that the first
defendant is a tenant protected by the Kerala Buildings (Lease and
Rent Control) Act. I hold that the first defendant has not proved that
independent of the void lease, a relationship of landlord and tenant
has come into existence between the parties. In view of this finding,
the plaintiffs will be entitled to a decree for recovery of possession C
of the plaint schedule property:"

In this appeal by special leave a bench of two judges heard this matter
and after noticing a conflict of opinion expressed by benches of equal strength
it was felt that this appeal should be decided by a larger bench.
D
In spite of the chequered career of the litigation the only question
which has now bogged down to be decided is whether the suit building is
held by the appellant under a lease or not. The word "tenant" is defined in
Section 2(6) of the Rent Act as "any person by whom or on whose account
rent is payable for a building..............." Landlord is defined as including "the
person who is receiving or is entitled to receive the rent of a building." Now E
the definition of "building" must be booked into. In clause (i) it is defined as
"any building or hut or part of a building or hut, let or to be let separately
fer residential or non-residential purposes........... In the above context the
word "let" has only one meaning and that is to demise on lease.

The above three definitions unmistakably point to the necessity for a F
building to be covered by a lease under law in order to bring such building
within the purview of the Rent Act. If there is no lease of a building the Rent
Act has no application. Thus what is important now is to know whether there
has been a lease of the building in question. If the appellant is a lessee of
the building, it is not disputed before us that jurisdiction of the civil court G
would stand evacuated and the plaintiff has to approach the Rent Control
Court if he is desirous of getting an order of eviction on any one of the
grounds recognised in the Rent Act.

The lease deed relied on by the plaintiff was intended to be operative
for a period of five years. It is an unregistered instrument. Hence s!1ch an H
650 SUPREME COURT REPORTS (2000) SUPP. I S.C.R.

A instrument cannot create a lease on account of three pronged statutory
inhibitions. The first interdict is contained in the first paragraph of Section
107 of the Transfer of Property Act, 1882 (for short the 'TP Act') which reads
thus:

"A lease of immovable property from year to year, or for any term
B exceeding one year, or reserving an yearly rent, can be made only by
a registered instrument."
(Emphasis supplied)

The second inhibition can be discerned from Section 17(1) of the
Registration Act, 1908 and it reads thus: (only the material portion)
c
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 No. XVI of 1864, or the Indian Registration
Act 1866, or the Indian Registration Act, 1871, or the Indian Registration
D 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 ear, or reserving a yearly rent."
E
The third interdict is contained in Section 49 of the Registration Act
which speaks about the fatal consequence of non-compliance of Section 17
thereof. Section 49 reads thus:

"49. Effect of non-registration of documents required to be registered.-
F No document required by Section 17 [or by any provision of the TP
Act, 1882] to be reg;istered shall-

(a) affect any immovable property comprised there, or
(b) confer any power to adopt, or

G (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
H contract in a suit for specific performance under Chapter II of the
ANTHONY v. KC ITTOOP AND SONS [THOMAS, J.] 651
Specific Relief Act, 1877, or as evidence of part perfonnance of A
a contract for the purposes of section 53-A of the Transfer of
Property Act, 1882, or as evidence of any collateral transaction
not required to be effected by registered instrument.]"

No endeavour was made by the counsel to obviate the said interdict
with the help of the exemptions contained in the proviso. B
The resultant position is insunnountable that so far as the instrument
of lease is concerned there is no scope for holding that appellant is a leasee
by virtue of the said instrument. The court is disabled from using the instrument
as evidence and hence it goes out of consideration in this case, hook, line
and sinker(vide Smt. Shantabai v. State ofBombay, AIR (1958) SC 532; Salish C
Chand Makhan v. Govardhan Das Byas, [1984] I SCC 369 and Bajaj Auto
limited v. Behari Lal Kohli, AIR (1989) SC 1806.

But the above finding does not exhaust the scope of the issue whether
appellant is a lessee of the building. A lease ofimmovable property is defined D
in Section I05 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 I07 of the E
TP Act are only the different modes of how leases are created. The first
paragraph has been extracted above and it deals with the mode of creating
the particular kinds of leases mentioned therein. The third paragraph can be
read along with the above as it contains a condition to be complied with if
the parties choose to create a lease as per a registered instrument mentioned F
therein. All other leases, if created, necessarily fall within the ambit of the
second paragraph. Thus, dehors the instrument parties can create a lease as
envisaged in the second paragraph of Section I07 which reds thus:

"All other leases of immovable property may be made either by
registered instrument or by oral agreement accompanied by delivery G
of possession."

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 detennine whether there was in fact a lease, otherwise than H
652 SUPREME COURT REPORTS (2000] SUPP. I S.C.R.

A through such deed. ·,

When it is admitted by both sides that appellant was inducted into the
possession of the building by the owner thereof and that appellant was
paying monthly rent or had agreed to pay rent in respect of the building, the
legal character' of appellant's possession has to be attributed to a jural
B relationship between the parties. Such a jural relationship, on the fact situation
of this case, cannot be placed anything different from that of lessor and
lessee falling within tht: purview of the second paragraph of Section I07 of
the TP Act extracted above. From the pleadings of the parties there is no
possibility for holding that the nature of possession of the appellant in
C respect of the building is anything other than as a lessee.

Shri P. Krishnamoorthy learned Senior Counsel contended that a lease
need not necessarily be the corollary of such a situation as possession of the
appellant could as well be permissive. We are unable to agree with the
submission on the fact situation of this case that the appellant's possession
D of the building can be one of mere permissive nature without any right or
liabilities attached to it. When it is admitted that legal possession of the
building has been transferred to the appellant there is no scope for
countenancing even a case of licence. A transfer of right in the building for
enjoyment, of which th1: consideration of payment of monthly rent has been
E fixed, can reasonably be presumed. Since the lease could not fall within the
first paragraph of Section I07 it could not have been for a period exceeding
one year. The further presumption is that the lease would fall within the ambit
of residuary second paragraph of Section I07 of the TP Act.

Taking a different view would be contrary to the reality when parties
F clearly intended to create a lease though the document which they executed
had not gone into the processes of registration. That lacuna had affected the
validity of the document, but what had happened between the parties in
respect of the property became a reality. 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
G the lease is concerned. Nonetheless the presumption that a lease not exceeding
one year stood created by conduct of parties remains un-rebutted.

Shri P. Krishnamoorthy learned counsel cited certain decisions to support
his contention that the court did not treat similar transactions as lease. In HS
H Rikhy v. New Delhi Municipal Corporation, [1962) 3 SCR 604, a contention
ANTHONY v. KC ITTOOP AND SONS [THOMAS, J.] 653
made by a party to the suit that he had a right under the local Rent Control A
Act was negatived on the ground that there was no landlord-tenant relationship
between the parties. In that decision this court did not accept the contention
that the word "letting" which was contemplated in the particular Rent Control
Act included not merely a transfer to a tenant but also to a licensee, or that
the word "rent" precluded the landlord from pleading that there was no
relation of landlord and tenant between the parties. The finding made in that B
case against the plea of landlord was based on the premise that the transfer
was not made by the Municipal Committee in accordance with the law and
hence there was no transfer at all. That decision has no application to the
points involved in the present case.

In Technicians Studio Pvt. Ltd v. Lila Ghosh, [1977] 4 SCC 324 a two
c
judge bench considered the effect of a compromise decree which mentioned
that the defendant would become a direct tenant on a monthly rent of
Rs. 1,000 and the lease would be for a period of sixteen years. But compromise
decree was not registered nor did the parties execute a lease-deed pursuant
thereto. The contention in that case was two fold. First was that by payment D
and acceptance of rent during the period of sixteen years the monthly tenancy
has been created. Second was that the compromise decree can be treated as
evidence of part payment under Section 53A of the TP Act. This court noted
that the High Court has found in agreement with the finding of the subordinate
courts that payment of rent and acceptance of the same did not create any E
tenancy. The said fact finding was not disturbed by this court in that particular
case. However, their lordships observed therein that "whether the relationship
of landlord and tenant exists between the parties depends on whether the
parties intended to create a tenancy and the intention has to be gathered from
the facts and circumstances of the case; it is possible to find on facts of a
given case that payments made by transferee in possession were really not F
in terms of the contract but independent of it and this might justify an
inference of tenancy in his favour. The question is ultimately one of fact."

In Bis'wabani Pvt. Ltd v. Santosh Kumar Dutta, [1980] 1 SCR 650 a two
judge bench of this court found that though a second lease-deed executed
between the parties (on the expiry of the period mentioned in the first lease- G
deed) is void for want of registration, the tenant would continue to be
protected under the relevant Rent Control Act because on the expiry of the
period of first lease the tenant had acquired the right of a statutory tenant.

None of the observations made in the above decision is in conflict with
the view expressed by us ::.hove. Appellant occupied the building as a tenant H
654 SUPREME COURT REPORTS [2000] SUPP. I S.C.R.

A and he paid rent to the landlord and continued as such. Hence with the
coming into force of Rent Act he became a statutory tenant whose eviction
can be considered only when an application is moved in that behalf before
the Rent Control Court concerned. We, therefore, allow this appeal and set
aside the impugned judgment of the High Court. The suit filed by the
B respondent will stand dismissed without prejudice to the right of the
respondent to move under the provision of the Rent Act.

NJ. Appeal allowed.