Case: Allenbury Engineers Pvt. Ltd Vs. Ramkrishna Dalmia and Ors

2. The appeal first reached hearing before a Division Bench of this Court. At that time, the parties were agreed that the relationship between them was that of landlord and tenant. But the case of the appellant-company was that the lease in its favour was for a period of ten years, that such a lease was for manufacturing purposes, and therefore, could not be validity terminated by a months notice. The respondents, on the other hand, contended that the lease was by an unregistered document, and that it was not a valid lease by reason of the provisions of Ss. 106 and 107 of the Transfer of Property Act. The Division Bench did not go into the question whether the lease was for manufacturing purposes or not. However, the Division Bench felt that the appeal raised important questions as to the impact of S. 107 upon S. 106 of the Act, and there being so far no decision of this Court upon such a question referred the appeal to a larger Bench. That is how the matter has come up before us.3. The premises with which we are presently concerned consists of an open piece of adjoining-Haines Road in the City of Bombay. Prior to 1953 the said piece of land belonged to a company called Sir Shapurji Bharucha Mills Co. Ltd. In 1953, the said piece of land was purchased by Bharat Insurance Co. Ltd. It appears that in 1947 the said piece of land was leased to Allenbury and Co. on a monthly rent of Rs. 1800/- where the lessee kept a number of American vehicles used by the army during the Second World War and purchased by the company from the Disposal Department of the Government of India. In or about 1950, the appellant-company was incorporated for the specific purpose of taking over the business of Allenbury and Co. together with all its assets and properties including the said vehicles. In 1954, the appellant-company occupied the said leased land as tenant together with such of the said vehicles remaining undisputed of till then at an agreed rent of Rs. 1800/- a month.4. It is not in dispute that time a document of lease was executed by the parties, which according to the appellant company provided for a lease for ten years. The document was, however, not registered with the result that it could not be tendered in evidence as one creating a lease. There was, however, no dispute between the parties that the appellant-company paid and the respondents accepted all throughout rent from the appellant-company at the aforesaid agreed rate of Rs. 1800/- a month. On January 20, 1960, the Bharat Insurance Co. Ltd. served a notice upon the appellant-company thereby terminating the tenancy and called upon it to hand over quiet and vacant possession of the said premises on the ground that the appellant-company has sub-let the said land or part of it. The appellant-company having failed to abide by that demand, a suit was filed in the Court of Small Causes at Bombay. On the nationalisation of the Life Insurance Companies and on the Life Insurance Corporation of India being set up, the name of that Corporation was substituted for that of the Bharat Insurance Co. as the plaintiff in the said suit. The suit was henceforth continued by the Corporation.5. Although the unregistered document could not go in evidence, the suit as well as the appeal arising therefrom before the Appellate Bench of the Small Causes Court proceeded on the basis that the relationship between the parties was that of landlord and tenant as there was no dispute that the occupation of the premises in question by the appellant-company was as a tenant irrespective of what the terms or the period of that tenancy were, which terms could not be proved as the document in respect thereof could not be brought on record by reason of its being an unregistered document. The Special Civil Application under Article 227 of the Constitution filed in the High Court against the judgment of the Small Causes Court and confirmed by its Appellate Bench, also proceeded on the assumption that the relationship between the parties was that of landlord and tenant. All the three courts concurrently held that the tenancy, whatever its terms were, was not satisfactorily proved to be for manufacturing purposes as alleged by the appellant-company and in the absence of any proof as to the term for which it was made, whether it was for ten years or from year to year, the notice terminating the tenancy and calling upon the appellant-company to deliver vacant possession, although it was a months notice, was not an invalid notice and on that footing decreed the suit.

Reasoning: The working, he said, of overhauling, reconditioning and repairing these vehicles went on until 1957 when reconditioning of vehicles stopped presumably because the vehicles were sold out. The premises had on them a servicing station also with a trench in the centre for washing the vehicles and were spare parts needed for repairs used to be stored. There was also an office and a store room where spare parts, oils and other stores purchased locally were kept. He denied that the premises were used only for repairing the vehicles.Besides his oral testimony, there is one letter on record written by this witness to Allenbury and Co. Ltd., dated November 21, 1950 giving details of stocks lying on these premises when that companys business was taken over by the appellant-company. The schedule to this letter gives particulars of these stocks, viz., 182 vehicles of different types, stores, accessories, spare parts purchased from the market or the Disposal Directorate, tools and other workshop equipment and three cars under repairs. The schedule shows that the premises were used till then for storing the Disposal Vehicles together with spare parts etc. acquired along with them or purchased from the market for repairing and reconditioning and making them fit for resale. There is no evidence except the bare word of wit. Jain that parts such as chassis and bodies etc. were actually manufactured and replaced for the old. No books of account or long books showing the work carried on the premises or other documents were produced which would throw light on the activities carried on the premises. Even if the evidence of Jain were accepted in toto, and we were to find that some spare parts were being manufactured for repairing or reconditioning the vehicles, the dominant purpose of the lease would still have to be regarded as one for storage and resale of the vehicles and not for manufacturing purposes. Manufacturing of spare parts would then be merely incidental to the main purpose of disposal of these vehicles as without repairing or reconditioning them, such disposal could hardly have been possible. In our opinion, the appellants failed to establish that the dominant purpose of the lease was manufacturing purpose. In that view, the appellants could not have challenged the legality of the notice. The High Court, therefore, was right in the conclusion it arrived at and no reason has been shown justifying our interference with it. That being the position, it is not necessary to go into the question whether S. 107 has any impact on S. 106 of the Transfer of Property Act, a question which the Division Bench, while referring this appeal to a larger Bench, thought the appeal raised.