SC holds Rent Deed does not require compulsory registration, in which no period is specified: Yearly Escalation clause in Deed, cannot make the tenancy year to year

The SC on June 17, 2020 {SIRI CHAND (DECEASED) THR. LRS. vs SURINDER SINGH} held that under Section 106 of the Transfer of Property Act, 1882, when there is no period agreed upon between the parties, duration has to be determined by referring to the purpose and object with which the tenancy is created.

It was observed by the Bench, comprising of Justice Ashok Bhushan, Justice M.R. Shah & Justice V. Ramasubramanian, that the rent note, subject matter of present case, contains only monthly rent and payment month by month. It was held that there shall be a presumption that the tenancy in the present case is monthly tenancy. 

The issue falling for consideration in present case before the SC was as to whether the rent note dated 27.07.1993, which is brought on record as Annexure P3 to the appeal was a document, which required compulsory registration under Section 17(1)(d) of the Registration Act, 1908.

It was held by the Court that in present case, when the clauses of rent note are cumulatively read, the intention of the tenant is more than clear that tenancy was only monthly tenancy, which could have been terminated on default of payment of rent by 5th day of any month or by notice of one month. It was held that the rent deed did not confer any right to tenant to continue in the tenancy for a period of more than one year nor it can be said that tenancy was created for a period of more than one year. It was also held that Clause (9), which noticed the promise of the tenant of payment of rent by increasing 10% each year was a promise contingent on tenancy being continued beyond one year but cannot make the tenancy year to year or tenancy for a period of more than one year. It was held that present was a case of tenancy for which no period was specified and looking to all the clauses cumulatively and the rent note was not such kind of rent note, which requires compulsory registration under Section 17(1)(d).

The SC held that Appellate Court although accepted the finding of the Rent Controller that rate of rent was @ Rs.2,000/- and not Rs.1,000/- but merely on the finding that landlord cannot claim 10% increase of rent every year since the document was not registered had allowed the appeal and set side the judgment. It was held that there is no specific finding by the Appellate Court regarding the liability of the tenant to pay the house tax. It was held that the Appellate Court after holding that document-rent deed was compulsorily registrable and having not registered allowed the appeal. It was held that no finding was returned by the Appellate Court that tenant was not in default and tenant has deposited the necessary amount to save himself from eviction. It was held that the judgment of the Appellate Court is unsustainable. It was concluded that the judgment and decree of the Rent Controller directing eviction ought not to have been interfered by the Appellate Court.

In result, the appeal was allowed by the SC. The judgment and decree of the Rent Controller directing eviction of the tenant was restored.