Contingent Clause In Rent Deed To Increase Rent Each Year Cannot Be Read To Mean That Tenancy Was For More Than One Year Period: SC [Read Judgment]

The Supreme Court has observed that, merely because a Rent deed contains a clause which binds the tenant to increase the rent by certain percentage each year, it cannot be read to mean that the tenancy was for a period of more than one year.

In this case, the issue before the Apex Court was whether a rent note signed by the tenant which required compulsory registration under Section 17(1)(d) of the Registration Act, 1908? The Court noted that as per Section 17(1)(d) of the Registration Act, leases of immovable property from year to year, or for any term exceeding one year, or reserving a yearly rent requires compulsory registration. The rent deed in question did not provide for any specific period for which the rent deed was executed. In such a situation, the bench comprising of Justices Ashok Bhushan, MR Shah and V. Ramasubramanian observed:

"When the lease deed does not mention the period of tenancy, other conditions of the lease/rent deed and intention of the parties has to be gathered to find out the true nature of the lease deed/rent deed."

The rent deed in question does not reserve yearly rent and there is no mention in the rent deed that it is a lease from year to year. But there is a clause (9), which provided that the tenant will be bound for making the rent money by increasing 10% each year. Referring to this clause, the court said:

"Clause (9) may or may not operate in view of specific clauses reserving right of landlord to evict the tenant on committing default of non-payment of rent by 5th of every month or when landlord requires shop by giving one month's notice. Clause (9) was a contingent clause which binds the tenant to increase the rent by 10% each year, which was contingent on tenancy to continue for more than a year, but that clause cannot be read to mean that the tenancy was for a period of more than one year."

Therefore, the Court concluded that the rent note was not such kind of rent note, which requires compulsory registration under Section 17(1)(d) of the Act. 

Case no.: CIVIL APPEAL NO. 2617 OF 2020 
Case name: SIRI CHAND (DECEASED) Vs. SURINDER SINGH
Coram: Justices Ashok Bhushan, MR Shah and V. Ramasubramanian

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