Holding

The lease was for a manufacturing purpose and was yearly; therefore a one‑month notice was invalid and the suit for ejectment must fail.

Summary

The plaintiff Idandas, the landlord, leased an open piece of land to the defendant Anant Ramchandra Phadke, who installed a flour mill and used the land solely for that purpose. The landlord sought eviction, claiming the tenancy was month‑to‑month and that a one‑month notice sufficed, while the tenant argued the lease was for a manufacturing purpose and thus required six months' notice under Section 106 of the Transfer of Property Act. The trial court found the rent was paid yearly, and the High Court held the lease was not for manufacturing, upholding the one‑month notice. On appeal, the Supreme Court applied the test for "manufacturing purpose"—production of a commodity, involvement of labour or machinery, and transformation into a product with a different name and use—finding that wheat was transformed into flour, satisfying all three criteria. Consequently, the lease was deemed a manufacturing lease, the one‑month notice was invalid, and the eviction suit was dismissed. The Court allowed the appeal, set aside the High Court judgment, and awarded costs to the appellant.

Issues considered

Whether the lease granted to the tenant was for a "manufacturing purpose" within the meaning of Section 106 of the Transfer of Property Act.
Whether the lease was a yearly lease or a month‑to‑month tenancy based on the rent receipts.
If the lease was for manufacturing purposes, whether the notice required for termination is six months instead of one month.

Legislation cited

Transfer of Property Acts. 106

Subjects

Transfer of Property Actmanufacturing purposelease terminationnotice periodevictionindustrial leaselegal interpretation

Judgment

11<>1 A
IDANDAS
v.
ANANT RAMCHANDRA PHADKE DEAD BY L. RS.
B
November 20, 1981

[$. MURTAZA FAZAL ALI AND R. B. MISRA, JJ.J

Transfer of Property Act-Section 106-"manufacturing purpose" tests/or
deciding-Wheat changed into flour by application of labour and machinery-
Whtther er manufacturing purpose''. c
A piece of open land belonging to the plaintiff (respondent) was given on
lease to the defendant (appellant). The appellant installed a flour mill on that
land. He did not use it for any purpose other than running the flour mill.

In his suit for eviction of the tenant from the land, the plaintiff claimed
that the tenancy was from month to month and that a month's notice given by D
him to terminate the tenancy was sufficient.

The trial court, on the basis of receipts produced by the plaintiff, held that
rent was paid on an yearly basis.

Upholding the view of the District Judge that the lease was not for a
''manufacturing purpose'', the High Court held that the tenancy was rightly
E
terminated by giving a valid notice.

On further appeal to this Court it was contended on behalf of the tenant
that the lease was for a "manufacturing purpose", and that under ~ection 106 of
the Transfer of Property Act it could be terminated only by giving six months'
notice.

Allowing the appeal,

HELD : The lease was from year to year and was for a Hmanufacturing
purpose", and, therefore, a month's notice was not legal. The suit for ejcctment
should have failed on this ground. [1201 H]
G
When the country is making rapid strides in various spheres of industrial
activity the term "manufacturing purpose" must be given the most liberal inter·
pretation so as to subserve the object of the statute. So interpreted the tests for
deciding whether a lease was for a "manufacturing purpose" arc (i) that a certain
commodity is produced; (ii) that the process of production would involve either
labour or machinery and (iii) that the end product coming into existence after H
the manufacturing process is complete, should have a different name and should
be put to a different use. [1200 B 1201 D-E]
1J98 SUPREME COURT REPORts [198i] l s.c.R..

In the instant case all the three tests have been satisfied because wheat was
transformed into flour by the use of labour and machinery making it fit
for human consumption and, therefore, the lease was for a manufacturing
purpose". [1201 FJ

Al/enburry Engineers Private Ltd. v. Ran1akrishna Dalmia and Ors. [1973] 2
S.C.R. 257 followed.
B
Joyanti Hosiery Mills 'v. Upendra Chandra Das, A.I.R. 1946 Calcutta 317
and John Augustine Peter Mirande and Anr. v. N. Datha Naik, A.l.R, 1971
Mysore 365 approved. ,.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2383 of ~
c 1977.

Appeal by special leave from the judgment and order dated
18th November, 1976 of the Bombay High Court in Civil Appln.
No. 1741 of 1976.

D Gobind Ram Bhatia, R. C. Bhatia and P. C. Kapoor for the
Appellant.

Nemo for the Respondent.

The Judgment of the Court was delivered by
E
FAZAL Au, J. This appeal by special leave is directed against
the judgment of the High Court of Bombay dated December 24,
1975.

The short point of law involved in this case is whether the
F
lease in question granted by the landlord to the appellant-tenant
was a lease for manufacturing purposes. In case the lease was for a
purpose of manufacture then it is manifest that under section 106
of the Transfer of Property Act the lease could be tenninated only
by giving six months notice.
G
The suit was contested by the defendant-tenant. The plaintiff's
case was that the tenancy was from month to month and, therefore,
a month's notice to terminate the tenancy was sufficient and the
provision under section 106 of the Transfer of Property Act was
not attracted. The plaintiff also denied that the lease was for a
H manufacturing purpose. The High Court upheld the judgment of
the District Judge holding that the lease was not for a manufacturing
IDANDAS v. ANANT RAMCHANDRA (Pazal Ali, J.) 1199

purpose and held that the tenancy was rightly terminated as the A
notice was valid.

Mr. Gobind Ram Bhatia, learned counsel for the appellant·
tenant, has submitted a short point of law before us. He submits
that having regard to the process of manufacturing carried on by the
defendant, there can be no doubt that the lease was for a manu- B
facturing purp)se and could be terminated only by six months
notice under Section 105 of the Transfer of Property Act. Notice
was issued to the respondents. That notice was duly served on
them. There is a certificate given by the High Court of Bombay
itself that the notice on the respondents was served. Nobody has
appeared for the respondents to contest this appeal. c
Jn the present case, the admitted facts are as under :

l. That to begin with the lease was given to the defendant
in respect of an open piece of land;
()
2. That on the open piece of land the appellant installed a
flour mill and that the defendant was not using the
land for any other purpose except running a flour mill.

3. That the receipts filed by the tenant clearly show that
the lease was doubtless a yearly one. E
Reliance was placed by the District Judge on the counter-foils
where the plaintiff.landlord tried to make out a case of monthly
tenancy but the entry in the counter-foil being an admission in his
own favour was not admissible against the appellant. On the other

- hand, the trial court has pointed out at page of its judgment that
the receipts produced by the tenant clearly show that the rent used
to be paid from year to year. Exhibits 24 to 26 pertained to the
F

rent paid on an yearly basis right from 1959 to May 31, 1961. On
point of fact, therefore, we are satisfied that in the instant case the
lease was from year to year and, therefore, a month's notice was not
legal if the lease was for a manufacturing purpose. G
The second point which arises for decision is as to the purpose
of the lease. This point is no longer res integra and is concluded
by a clear authority of this Court in A//enburry Engineers Private
Ltd. v. Ramakrishna Dalmia and Ors.(1) where this Court has laid B
(I) [1973) 2 SCR 257.
1200 SUPREME totJRT REPORTS [1982] J s.C.R

A down that the expression "manufacturing ;purposes" in Section 106
of the Transfer of Property Act must be used in its popular and
dictionary meaning as the statute has not defined the word "manu-
facturing purposes". We might state that in the present set up of
our socialistic pattern of society when our country has made strong
strides in various spheres of industrial activities an industrial venture
B must be given the most liberal interpretation so as to subserve the
object of the statute. Of course the burden of proof whether the
purpose of the lease was a manufacturing purpose would be on the
defendant but we are satisfied that the defendant in this case has
amply discharged its onus. In the aforesaid case this Court observed

c as follows:

"The word 'manufacture', according to its dictionary
meaning, is the making of articles or material (now on
large scale) by physical labour or mechanical power.
-
(Shorter Oxford English Dictionary, Vol. I 1203). According
to the Permanent Edition of Words and Phrases Vol. 26,
D 'manufacture' implies a change but every change is not
manufacture and yet every change in an article is the result
of treatment, labour and manipulation. But something
more is necessary and there mast be transformation; a new
and different article must emerge having a distinctive name,
character or use."
E
In coming to this conclusion this Court relied on two of its
earlier decisions in South Bihar Sugar Mills v. Union of India(')
and Union of India v. Delhi Cloth and General Mills('). Even before

-
the decision of this Court, B. K. Mukherjea, J. (as he then was)
who was later elevated to the Bench of this Court and retired as
F Chief Justice of India observed in Joyanti Hosiery Mills v. Upendra
Chandra Das(') as follows :

"To manufacture, according to its Dictionary meaning
means "to work up materials into forms suitable for use". The
word ·'material'' does not necessarily mean the original raw
G material for a finished article may have to go through several
manufacturing processes before it is fit and made ready for
the market. What is itself a manufactured commodity may

H (t) [1968] 3 S.C.R. 21.
(2) [1963] Supp. l S.C.R. 586.
(3) AIR 1946 Cal. 317.
lDANDAS V, ANANT RAMCHANDRA (Pazal Ali, J.) 1201

constitute a "material" for working it up into a different A
product. "Thus, for example for the tanner, the material
would be the raw hide, but the leather itself a manufactured
article would constitute the material for the shoemaker's
business, and we cannot say that the shoe-makers are not
manufacturers because they do not work on raw hides."
8
In the case of John Augustine Peter Mirande and anr. v. N.
Datha Naik(') the Mysore High Court following the Calcutta
decision held that the lease in that case, which was a case of saw
mill, was for munufacturing purposes. We might observe that so

- far as the present case, where the mill is a flour mill, stands higher
than the facts of the case in Mysore case (supra).

Coming now to the tests laid down by this Court the position
c
may be summarised as follows:
1. That it must be proved that a certain commodity was
produced; D
2. That the process of production must involve either
labour or machinery;
3. That the end product which comes into existence after
the manufacturing process is complete, should have a
different name and should be put to a different use.
Io other words, the commodity should be so transfor- E
med so as to lose its original character.

In the instant case what happened was that wheat was trans·

-
formed, by the manufacturing process which involved both labour
and machinery, into flour. The commodity before manufacture was
wheat which could not be consumed by any human being but would
F
·.
be used only for catties or medicine or other similar purposes. The
end product would be flour which was fit for human consumption
and is used by all persons and its complexion has been completely
changed. The name of the commodity after the product came into
existence is Atta and not Gehun (wheat). Thus in the instant case
G
all the three tests have be~n fully satisfied. This being the position
the irresistible inference and the inescapable conclusion would be
that the present lease was one for manufacturing purposes. In this
view of the matter, the notice of one month must be held to be
invalid and suit for ejectment should have failed on that ground.
H
(1) ArR 1971 Mysore J6S.
1202 SUPREME COURT REPORTS [1982] 1 s.c.l.

A We, therefore, allow this appeal, set aside the judgment of the
High Court and dismiss the plaintiff's suit. Before concluding we
would like to add that with due respect, that the judgment of the
High Court is not very satisfactory as it has not made any real
attempt to apply its mind to the substantial question of law that
was involved in the case and seems to have rushed to its conclusions
even without considering the authorities on the subject particularly
B the one referred to in the judgment as also the authoritative decision
of this Court referred to above which was pronounced Jive years
before the judgment of the High Court was given. From such a

-
prestigious High Court as .Bombay we do expect a more careful and
cautious approach in a matter like this. As the respondents have
not appeared before us, we make no order as to costs in this Court.
The appellant will certainly be entitled to costs in the Courts below.
c
P.B.R. Appeal allowed.
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