Supreme Court on Rental Deeds Where Duration of Tenancy is Absent or not Specified

 

In a recent judicial pronouncement, the Hon’ble Supreme Court of India laid down a very interesting proposition in relation to the landlord-tenant disputes. A peculiar problem that is faced by many landlords in India is that they are not able to either evict the tenants or increase the property-rent because of the fact that their ancestors had entered into a Rental Agreement with the tenant that did not specify any time-limit and taking shelter of such Rental Agreement, the tenants have been able to occupy such properties for decades by paying paltry sums of money.

 

In the case of Siri Chand (Deceased) Thr. Lrs. v. Surinder Singh, the Supreme Court discussed Section 17 of the Registration Act, 1908 (in short, “Registration Act”), that provides for the document of which the registration is compulsory. According to S. 17 (1) (d) of the Registration Act, it shall be mandatory to get registered the documents that provide for “leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent.”

 

It was observed by the Court that where a Rental Deed does not prescribe any period for which it is executed, then the text of such Rental Deed needs to be looked into to ascertain the true nature of the Lease Deed/Rental Deed. The Court also took recourse to the rule of construction embedded in Section 106 of the Transfer of Property Act, 1882, which provides that in case the duration of lease is absent from the contract, except in case of agricultural of manufacturing purposes, such Rental Lease shall be deemed to be a lease from month to month basis. To fortify this observation, the Court also cited the case of Ram Kumar Das v. Jagdish Chandra Deo, Dhabal Deb, AIR 1952 SC 23, wherein it was observed as under: -

 

“....... The 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 is conceded that in the case before us the tenancy was not for manufacturing or agricultural purposes. The object was to enable the lessee to build structures upon the land. In these circumstances, it could be regarded as a tenancy from month to month, unless there was a contract to the contrary.

......

It has no doubt been recognised in several cases that the mode in which a rent is expressed to be payable affords a presumption that the tenancy is of a character corresponding thereto. Consequently, when the rent reserved is an annual rent, the presumption would arise that the tenancy was an annual tenancy unless there is something to rebut the presumption.”

 

Relying on the above-stated excerpt, the Court went on to hold that where according to the terms of the Rental Deed, the mode of payment of rent is monthly in nature, the presumption shall be that the same is a monthly tenancy. It further stated that such a Rental Deed does not confer any right to tenant to continue in the tenancy for a period of more than one year and it cannot be said that the tenancy was created for a period of more than one year. Even if there is a promise to increase rent year by year, such promise is contingent on tenancy being continued beyond one year and the same cannot make the tenancy year to year or tenancy for which no period was specified.

 

I think these observations by the Court should provide a sigh of relief to the Landlords who are not able to evict tenants because of legal impediments relating to the duration of Rental Deeds/Leases. Now, the Supreme Court has made it clear that in case, the payment of rent is monthly and if such fact is codified in the Rental Deed, then such tenancy would be monthly in nature and shall not be for a period of more than one year.