Holding

A lease that is not created by a registered instrument cannot be treated as a year‑to‑year lease under Section 106, so the 15‑day notice was valid and the appeal dismissed.

Summary

The appellant, Samir Mukherjee, occupied premises under an oral lease for manufacturing purposes. The respondents, Davinder K. Bajaj and others, served a 15‑day notice to quit, invoking Section 106 of the Transfer of Property Act, which presumes a month‑to‑month tenancy unless the lease is for agricultural or manufacturing purposes, in which case it is deemed year‑to‑year and requires six months’ notice. The appellant argued that the lease should be treated as a year‑to‑year tenancy and that the notice was invalid, contending that Section 107’s registration requirement did not override the presumption in Section 106. The Supreme Court held that a lease from year to year must be created by a registered instrument under Section 107; absent such registration, the lease cannot be deemed year‑to‑year, and the rule of construction in Section 106 does not apply. Consequently, the 15‑day notice was valid, and the appeal was dismissed.

Issues considered

The applicability of Section 106's legal fiction to an oral lease for manufacturing purposes.
Whether Section 107's requirement of a registered instrument for a year‑to‑year lease overrides the presumption in Section 106.
Whether the 15‑day notice to quit issued by the landlord was valid.
Whether the oral lease created a valid tenancy at all under the Transfer of Property Act.

Legislation cited

Transfer of Property Act, 1882s. 106, s. 107

Subjects

Transfer of Property ActleaseSection 106Section 107oral leasemanufacturing leasenotice periodevictionregistration requirementlegal fiction

Judgment

A SAMIR MUKHERJEE
v.
DAVINDER K. BAJAJ AND ORS.
,.
APRIL 18, 2001

B [SYED SHAH MOHAMMED QUADRI AND S.N. PHUKAN, JJ.]

Tena11cy Laws:·

Transfer ofProperty Act, 1882-Sections 106, 107-Lease-Categories
c of-Execution-Procedure for-Duration. of a lease-Non-indication of- ~

Held, in such cases Section 106 lays down a rule of construction prescribing
the duration of different kinds of/eases by legal fiction-'-Lai1dlord terminating
the tenancy by 15 days' notice-Plea by tenant that such notice is bad in
law as lease granted in his favour for manufacturing purpose would be
deemed to be from year to year requiring·6 months' notice-Tenability·of-
D Tenancy created by an oral agreement-Statut01y requiremeht of Section
107 of a registered instrument for creation of a valid lease ji·om year to ye01;
not satisfied-Held, there being no registered written lease, rule of
construction envisaged in Section 106 deeming a lease for manufacturing
l'
purpose to be lease .from year to year, would not be applicab/e-15 days'
E notice to quit issued to tenant, upheld.

Respondents created tenancy in favour of a11pellant in respect of suit
llroperty by way of an oral agreement. Subsequently, re~]JOndents filed a suit
for eviction of appellant and also for recovery of arrears of rent and damages/
mesne profits. According to respondents, a1Jpellant was a monthly tenant and
F therefore 15 days' notice terminating the tenancy, as required under Section '
-<
106 of Transfer of Property Act was issued. A1Jpellant admitted the tenancy
but pleaded that intention of the parties at the time of its 'creation was to
grant tenancy permanently because· the lease was granted in his favour for
manufacturing purpose; the lease would, thus, be deemed to be from year to
year and, therefore, notice to quit ought to have been. given for 6 months.
G Trial Court decreed the suit in favour of res11ondents on an application filed
under Order XII Rule 6 C.P.C. holding that there was clear admission by ·
appellant A11peal filed before the High Court was dismissed Hence the present
appeal.
.,
On behalf of the appellant, it was contended that since the lease was for
H 88"
/

'"f

SAMIR MUKHERJEE v. D.K. BAJAJ 89
manufacturing pur11ose, legal presumption al! envisaged in Section 106 of A
Transfer of Property Act would apply and, therefore, it was a case of a tenancy
from year to year terminable by 6 months' notice and not by 15 days' notice;
that though under Section 107 of Transfer of Property Act, a lease from year
to year could be made only a registered deed, the said section did not control
the presumption laid down in Section 106 and as such the notice to quit
issued to appellant was bad in law.
B

Dismissing the appeal, the Court

HELD: 1. Section 106 of Tram.fer of Property Act lays down a rule of
construction, which is to a11ply when the 11arties have not s11ecifically agreed
....,
upon as to whether the lease is yearly or monthly. What this section docs is
c
to l>rescribe the duration of the period of different kinds of leases by legal
fiction-leases for agricultural or manufacturing purposes shall be deemed to
be lease from year to year and all other leases shall be deemed to be from
month to month. Existence of a valid lease is a 1>re-requisite to invoke th~
rule of construction embodied in Section 106 of Transfer of Property Act. D
Section 107 of Transfer of Prope11y Act 11rescribes the 11rocedure for execution
of a lease between the parties. Under the said section, a lease of immovabfo
property from year to year or for any term exceeding one year or reserving
yearly rent can be made only by rcgi~1ered instrument. All other leases of
...,.
'i

immovable pro11erty can be made either by registered instrument or by oral
agreement accompanied by delivery of possession. In the 1irescnt case though E
the appellant has claimed that it was a lease for manufacturing 1mrpose,
admittedly there was no registered written lease. Therefore, rule of
construction as envisaged in Section 106 would not be applicable as the
statutory requirement· of Section· 107 of the Transfer of Property Act has not
been satisfied. Hence the plea of appellant that 15 days' notice terminatin~ F
• his tenancy is bad in law would not be sustainable. (92-D-G; 93-G]

Jagat Taran Beery v. Sardar Sant Singh, AIR (1980) Delhi 7, relied on~

Ram Kumar Das v. Jagdish Chandra Deo, Dhaba/ Dev and Am:, Am.
(1952) SC 23 = (1952) 3 SCR 269, distinguished. G
Krishna Das v. Bidhan Chandra, AIR (1959) Calcutta 181 and Ba/want
Singh v. L. Murari Lal, AIR (1965) Allahabad 187, impliedly overruled.

' Shri Janki Devi Bhagat Triist, Agra v. Ram Swarup Jain (Dead) By
Lrs., [1995) 5 SCC 314; Sati Prasanna Mukherjee v. Md. Fazel, AIR (1952) H
.._
+ .
90 SUPREME COURT REPORTS [2001] 3 S.C.R.

A Calcutta 320 and Kishan Lal v. Lal Ram Chander, AIR (1952) Allahabad 634,
referred to.

CIVIL APPELLATE JURISDICTION: CIVIL Appeal No. 1906 of
1998.

B From the Judgment and Order dated 23 .1. 98 of the Delhi High Court in
RF.A. No. 325 of 1997.

Jaideep Gupta, Sanjay Sen, R.S. Biswas, Suchit Mohanty, Satish
Mukherjee, Sarla Chandra and Ms. Indra Sawhney for the Appellant. · r
c M.L. Verma, Navin Chawla, Puneet Arora and Ashok K. Mahajan (NP) ~

for the Respondents.

The Judgment of the ·Court was delivered by ....
PHUKAN, J. In this appeal by special leave the appellant has impugned
D the judgment of the Division Bench of Delhi High Court passed in R.FA No.
3 25 of 1997 by which the High Court upheld the judgment of the Additional r
District Judge, Delhi. ·~

The respondents filed a suit for eviction of the appellant from the suit ,. '</

land and also for recovery. of arrears of rent and damages/mesne profits. '
1c-
E According to respondents the appellant was a monthly tenant and, therefore,
15 days' notice terminating the tenancy, as required under Section 106 of
Transfer of Property Act (for short. 'the Act') was issued, receipt of which
was not disputed. The tenancy W'.1S created by an oral agreement The appellant
admitted the tenancy but pleaded that the intention· of the parties at the time
p· of its creation was to grant tenan.cy permanently because the lease was
granted in favour of the appellant for manufacturing ·purpose and since the ..:
inception of the tenancy, the appellant was carrying on business of
man_ufacturing transmission towers and railway electrification fittings. On
these facts it was pleaded that the lease would be· deemed to be from year
to year as per the provisions of Section 106 of the Act and, therefore, notice
G to quit ought to have been given for 6 months expiring on last date of the
year of the tenancy. Before the Trial Court an application under Order XII Rule
6 C.P.C. was filed which was allowed, as according to the Trial Court in the
written statement there was clear ad,mission by the appellant.

Before this court, learned counsel for the appellant, Mr. Jaideep Gupta
,
H referring to the provisions of Section 106 of the Act has contend~d that since

,,
SAMIR MUKHERJEE v. D.K. BAJAJ [PHUKAN, J.] 91

the lease was for manufacturing purpose, the legal presumption as envisaged A
in Section 106 of the Act would apply and, therefore, it was a case of a
tenancy from year to year terminable by 6 months' notice and not by 15 days'
notice. The learned counsel has further contended that though under Section
107 of the Act a lease from year to year can be made only by a registered
deed, this section nowhere controls the presumption laid down in Section 106 -B
of the Act and as such the notice to quit in the present appeal is bad in law.
In reply the learned senior counsel for the respondent3, Mr. Verma has
subn~itted that in view of the law laid down by this court in Ram Kumar Das
v. Jagdish Chandra Deo, Dhabal Dev and Anr., AIR [1952] SC 23 = [1952]
3 SCR 269 and Shri Janki Devi Bhagat Trust, Agra v. Ram Swarup Jain
(Dead) By Lrs., [1995] 5 SCC 314, the contention of the learned counsel for C
the respondents is liable to be rejected.

To appreciate the respective contentions that have been put fonmrd by
the learned counsel for the parties we extract below Sections 106 and 107 of
the Act:
"106. Duration of certajn leases in absence of written contract or local D
usage - 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 expiring with the end of a year of the tenancy; and a lease of E
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 expiring with the end of a month of the
tenancy.
Every notice under this section must be in writing signed by or F
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.
G
107. Lease how made - A lease of immovable 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 immovable property may be made either by a .
registered instrument or by oral agreement accompanied by delivery H
92 ·SUPREME COURT REPORTS [2001] 3 S.C.R.

A of possession.

Where a lease of immovable 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;
B
Provided that the State Government may, from. tirtie to time, by
notification in the Offieial~Gazette, direct that leases of immovable
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
c delivery of possession."

Section 106 lays down a rule of construction, which is to apply when
the parties have not specifically agreed upon as to whether the lease is yearly
or monthly. On a plain reading of this section it is clear that legislature has
D classified leases in two categories according to their purposes and this
section would be attracted to construe the duration of a valid lease in the
absence of a contract or local law or usage to the c_ontrary. Where the parties
by a contract have indicated the duration of a leas~; this section would not
apply. What this section does is to prescribe the duration of the period of
different kinds ofleases by legal fiction - leases for agricultural or manufacturing
E purposes shall be deemed .to be lease from year to year and all other leases
shall be deemed to be from month to month. Existence of a valid lease is a
pre-requisite to invoke the rule of construction embodied in Section 106 of
Transfer of Property Act.

section 101 prescribes the procedure ror ·execution of a iease between
F the parties~ Under the first paragraph of this section a lease of immovable
.property from year to year or for any te:rm exceeding one year or reserv'ing
yearly rent can be made only by registered instrument andi remaining classes
of leases are governed by the second paragraph that is to' say all other leases
of immovable property can be made either by registered' instrument or by oral·
.G .·agreement accompanied by delivery of ·possession. ·
In the case in hand we are concerned with an oral lease which is hit by
the first paragraph of Seetion 107 of the Transfer of Property Act. Under
Section 107 parties have an option to enter into a lease in respect of an ,
immovable property either for a term less than a year or from year to year, for
H .· any term exceeding one year or reserving a yearly rent. If they decide upon
SAMIR MUKHERJEE v. D.K. BAJAJ [PHUKAN, J.] 93
.
having a lease in respect of any immovable property from year to year or for A
any term exceeding one year, or reserving yearly rent, such a lease has to be
only by a registered instrument. In absence of a registered instrument no valid
lease from year to year or for a term exceeding one year or reserving a yearly
rent can be created! If the lease is not a valid lease within the meaning of the
opening words of Section 106 the rule of construction embodied therein
would not be attracted. The' above is the legal position on a harmonious B
reading of both the sections.

In Ram Kumar Das (supra), Section 106 was considered by a bench of
four judges of this court. This court held that this section 106 lays down the
rule of construction which is to be applied when 1there is nci period agreed C
upon between the parties and in such cases duration has to be determined
by the reference to the object for purpose for which tenancy is created. It was
also held that rule of construction embodied in this section applies not only
to express leases of uncertain duration but also to leases implied by law which
may be inferred from possession and acceptance of rent and other
circumstances. It was further held that it is not disputed that a contract to D·
the contrary as· contemplated by Section 106 of the Transfer of Property Act
need not be an express contract; it may be implied, but it certainly should
be a valid contract. On the facts of that case, the court held that 'the
dijji::ulty in applying this rule to the present case arises from the fact that
tenancy ji·om year to year or reserving an yearly rent can be made only by E
registered instrument as lays down in Section 107 of the Transfer of Property
Act.'
(emphasis supplied)

In a recent decision of this court in Janki Devi Bhagat Trust, Agra
(supra) this court held that under Section 107 of the Transfer of Property Act F
a lease of immovable property from year to year or for a term exceeding one
year can be made only by registered instrument and any lease of this kind
would be. void unless it is so created.

In the present case though the appellant has claimed that it was a lease
for manufacturing purpose, admittedly there was no registered written lease. G
Therefore, rule of construction as envisaged 'in Section 106 would not be
.· applicable as the statutory requirement of Section 107 of the Act has not been
satisfied. The plea of the appellant that 15 days notice terminating the present
tendency is bad in law would not be sustainable.

The learned counsel for the appellant has very fairly placed before us H
94 SUPREME COURT REPORTS.· [2001] 3 S.C.R.

A· various decisions of different High Courts. We find that tw1:> different views
are projetted·in· these decisions. One view is that fiction i~ .section 106 was
not intended to override Section I 07.

In Krishna Das.v. Bidhan Chandra, AIR (1959) Calcutta 181 and Ba/want
Singh v. L. Murari Lai, AIR (1965) Allahabad 187 the courts have taken the
B view that Section 106 was not intended to be controlled by Section 107.
Similar view has been expressed by the High Courts of As~aim and Nagaland.
The contrary view has been expressed by the Calcutta High Court in Sati
Prasanna Mukherjee v. Md. Faze/, AIR (1952) Calcutta 320 andAllahqbad
High Court in Kishan Lal v. Lal Ram Chander, AIR (1952) Allahabad 634.
C It is not necessary to refer to all the decisions of other High Courts.

On perusal of these decisions we find the view that fiction in Section
106 was not intended to be controlled by Section 107 was due to
misunderstanding of the decision of this court in Ra1f1 Kumar Das (supra) as
we have already indicated that in Ram Kumar Das (supra), this court did not
D apply rule of construction of Section l 06 as there was rio reg~stered instrument.
The High Courts taking that view have not laid down the 1;,iw correctly.

In Jagat Taran Beeryv. Sardar Sant Singh, AIR (1980) Delhi 7, Delhi
High Court considered the views. expressed by different High Courts and
correctly took the view that there is no conflict between Sections 106 and 107
E of the Act and for application of Section 106 a valid year to year lease shall
be deemed to exist when it is created by a registered instrument; the non-
existence of a registered instrumeqt to create such a lease will by itself exclude
Section 106. '·

For the reasons stated above, we fin.d no merit in the present appeal
F and accordingly it is dismissed. Costs on the parties.

MP. Appeal dismissed.