Supreme Court Clarifies Unregistered Lease is Inadmissible as Evidence before the Court to establish the Purpose of the Tenancy
In the case of M/S Paul Rubber Industries Private Limited vs. Amit Chand Mitra & Anr. (2023 LiveLaw (SC) 827), the Supreme Court clarified the application of Section 106 of the Transfer of Property Act, 1882, which requires a six-month notice for the termination of a lease.
The key issue in this case was: –
Whether the leased premises were used for manufacturing, warranting the six-month notice period.
The case stemmed from a tenancy agreement that was initially valid for five years but was not renewed after its expiration. The tenant continued to occupy the property without paying rent. When the landlord eventually sought possession, the tenant argued that the lease was for manufacturing purposes, necessitating a 6-month notice under Section 106 of the Transfer of Property Act, and that the unregistered lease agreement was inadmissible as evidence.
However, the Hon’ble Court ruled that the burden of proof lay with the tenant to demonstrate that manufacturing activities were indeed carried out on the premises, and a mere statement was insufficient. Additionally, The Supreme Court emphasized that the tenancy agreement was compulsory to register under Section 17 of the Registration Act due to its specified term of five years. Therefore, since the tenancy agreement was unregistered, it is inadmissible as evidence in the court.
The Hon’ble Court emphasized that the purpose of the tenancy needed to be established through evidence, such as explaining the nature of work conducted in the factory shed. In the absence of such evidence and registration, the tenancy was considered month-to-month.
Ultimately, the Hon’ble Court found that the tenant failed to prove that the premises were used for manufacturing, thus validating the 15-day notice given by the landlady.
Author of this article:
Adv. Ravish Bhatt,
Partner, R&D Law Chambers,
Dual Qualified Lawyer Solicitor | International Tax Affiliate
Connect with Mr. Bhatt on Linkedin: https://www.linkedin.com/in/adit-ravishbhatt/
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