Indian Oil Corporation Ltd. v. Kailash Chand Bansal (HUF)

1. The present appeal is against the judgment and decree of a learned Single Judge dated 09.10.2013 in IA No. 9155/2013 in CS(OS) No. 1360/2012, whereby an application under Order XII, Rule 6, Code of Civil Procedure (“CPC”) was allowed and a partial decree of ejectment/possession was made against the Indian Oil Corporation (“IOC”), the tenant.

2. Briefly, the IOC entered into a lease deed dated 01.02.1997 with the landlord, Kailash Chand Bansal, as a representative of Hindu Undivided Family, for leasing the property, No. 4, Factory Road (Ring Road), near Safdarjung Hospital, New Delhi (hereafter “the suit property.”) for a period of ten years. The lease deed was valid for a period of 10 years and further renewable for another period of ten years, i.e. till 2017. 2013:DHC:6035-DB RFA(OS) 145/2013 Page 2

3. The learned Single Judge decreed for ejectment/possession in favour of the landlord based on the following admissions by IOC: the fact of tenancy was admitted, it was also admitted that the lease was unregistered, the lease amount was Rs. 20,449.73 per month, and that a notice of termination was served upon IOC on 18.5.2007, which reads as follows, in its relevant part:

4. Accordingly, the learned Single Judge held that since the lease deed was unregistered, it was only a month-to-month tenancy, in line with the decision of the Supreme Court in Payal Vision Limited v. Radhika Choudhary, (2012) 11 SCC 405, “in the absence of any secured term of tenancy under a registered lease deed, the tenancy was only on month to month basis.” Further, as the rent was in excess of Rs. 3,500/- the provisions of the Delhi Rent Control Act, 1958, did not apply, rather, the lease was governed by the provisions of the Transfer of Property Act, 1882 (hereafter “TPA”). Finally, as the notice of termination had been RFA(OS) 145/2013 Page 3 admitted by the IOC in its written statement, under the terms of Section 106 of the TPA, the lease deed stood terminated.

5. Learned counsel for the IOC impugns this order on the basis that although a notice of termination was served upon the IOC, and the lease deed was admittedly unregistered, subsequent meetings and discussions between IOC and Mr. Bansal led to negotiations on the extension of the lease deed, which negated any legal effect of the notice of termination. Here, reliance was placed upon a letter from Mr. Bansal to the IOC on 01.09.2011, which reads as follows: “Today during the negotiations it was agreed that in order to enter into lease agreement with IOC for the Land measuring 1605 Sq. meter on which retail outlet M/s. Bhatia S/s is constructed. I agree to the following rentals which are based on L&DO rates: 1. From Feb 2007 till August 2011 Rs.81,000/- per month. 2. From Sept, 2011 for a period of 19 years 11 months the rental shall be Rs. 11000/- per month with an increase of 5% after every three years.” It was argued that despite this fresh offer, which was under consideration by the IOC, the present suit was filed. Thus, argued counsel, as the notice of termination was succeeded by this fresh offer, no valid termination existed so as to justify a decree on admissions under Order XII, Rule 6.

6. This argument, however, is not convincing. IOC itself admits that no final offer was accepted, so as to constitute a binding contract, or a lease, that would supersede the terms of the lease agreement of 01.02.1997. Neither was any subsequent agreement signed between the parties. In such a case, a mere offer, in the middle of ongoing negotiations, does not vest either party with any legal rights to the property. Rather, the property and the RFA(OS) 145/2013 Page 4 relations between the two parties in this case continue to be governed by the earlier lease deed.

7. On the question of that lease deed, the findings of the learned Single Judge cannot be faulted. Since the property is leased for an amount greater than Rs. 3,500/- the property is governed by the TPA. Sections 106 and 107 of the Act are clear:

8. The IOC admitted in its written submissions, and does not contest in these appeal proceedings, that the lease was unregistered. Hence, only a month-to-month lease existed which was terminable by Mr. Bansal with a notice of 15 days under Sections 106 and 107 quoted above. The factum of the tenancy has also been admitted by the IOC, also as the notice under section 111(h) of the TPA.

9. Thus, in view of such clear and unambiguous admissions, the dictum of the Supreme Court in Payal (supra) controls this case:

10. The IOC’s submissions, based on a reading of Jeevan Diesel’s conclusions, in this Court’s opinion are unmerited. The IOC no doubt stated that it could and was entitled to occupy the premises. That bare averment alone does not better the IOC’s case for a trial on merits. A party may assert something; yet that has to be backed, prima facie by some material. Concededly, the proposal for extension of lease till 2017 did not mature into a binding agreement, much less into an enforceable right (which could have arisen if such agreement had been registered). In the circumstances, the IOC’s admission cannot be termed as conditional or ambiguous.